EXHIBIT 10.9
AGREEMENT FOR THE LICENSE AND SUPPLY OF TERMINATORS
This Agreement, effective this 16th day of February, 2000, (the "Effective
Date") is between ORCHID BIOCOMPUTER, INC., a corporation organized and existing
under the laws of the State of Delaware, having a principal place of business at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Orchid"), and NEN LIFE
SCIENCE PRODUCTS, INC., a corporation organized and existing under the laws of
the State of Delaware, having a principal place of business at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("NEN").
WHEREAS, NEN develops, manufactures and sells Terminators for use in the
detection of genetic polymorphisms by the method of GBA;
WHEREAS, NEN owns rights and interests in and to the NEN Patents and other
proprietary rights in and to certain Terminators;
WHEREAS, Orchid uses and sells Kits containing Terminators as a component
or part for the detection of genetic polymorphisms by the method of GBA;
WHEREAS, Orchid owns, or is licensor of, rights and interests in and to
patents and other proprietary rights in and to the detection of polymorphisms by
the method of GBA;
WHEREAS, NEN desires to make an equity investment in Orchid; and
WHEREAS, NEN and Orchid mutually desire to conduct research to further the
development of detection of polymorphisms by the method of GBA; NOW THEREFORE,
the parties, agree as follows:
1. Definitions
For all purposes of this Agreement, the following terms have the meanings
set forth below:
1.1 "Affiliate" means any legal entity directly or indirectly controlling,
controlled by or under common control with Orchid or NEN. For purposes
of this Agreement, "control" means the direct or indirect ownership of
more than fifty percent (50%) of the outstanding voting securities of
the legal entity, or the right to receive more than fifty percent
(50%) of the profits or earnings of the legal entity.
1.2 "Commercially Reasonable Efforts" means efforts and resources used to
bring to market an idea, discovery, product, or method of similar
market potential at a similar stage in its life taking into
consideration potential and market established competitive
alternatives, the competitiveness of the market place, the proprietary
nature of the idea, discovery, product, or method, the regulatory
structure involved, the profitability potential of the idea,
discovery, product or method, and
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other relevant factors. The level of efforts and resources appropriate
are unique for each idea, discovery, product, or method, and change
over time in reflection of changes in its development and in the
marketplace.
1.3 "GBA" means Genetic Bit Analysis or a primer extension assay defined
in the claims of Orchid Patents.
1.4 "Kit" means a kit containing one or more Terminators other than ddNTPs
and one or more reagents to be used for performing GBA.
1.5 "NEN Build-to-Ship Lead Time" means [*][[*]] days measured from the
date an order for Terminators is submitted by Orchid, or such time
period as NEN and Orchid may agree to from time to time, provided,
that if the total quantity ordered for delivery in a given month
exceeds the amount forecasted by Orchid for that month by the lesser
of [*][[*]] percent ([*][[*]]%) of the forecast or [*][[*]]
micromoles, the parties shall negotiate an acceptable lead time.
1.6 "NEN Patents" means U.S. Patent Nos. 5,047,519 and 5,151,507, any
issued divisions, continuations, continuations-in-part re-issues, re-
examinations, renewals or extensions thereof, and any non-U.S.
counterpart of either of said U.S. patents and any divisions,
continuations, continuations-in-part re-issues, re-examinations,
renewals or extensions thereof, which are owned by NEN, or under which
NEN has or obtains the right to grant rights, and which claim a
Terminator or the use of a Terminator, which claim has not lapsed,
become abandoned or been declared invalid or unenforceable by a non-
appealed or unappealable decision or judgement of a court or tribunal
of competent jurisdiction.
1.7 "Net Sales Revenues" means the total revenues invoiced by Orchid for
sales of Kits to third parties for use in the detection of genetic
polymorphisms by a method encompassed by at least one claim in the
Orchid Patents but using a technology platform other than an Orchid
technology platform less (i) sales taxes, tariff duties, and value
added or other excise taxes; (ii) transportation costs; (iii) amounts
credited on returns, replacements and allowances; and (iv) adjustments
for invoice errors (such as pricing errors) that do not involve
product returns, and excluding samples provided for promotional
purposes.
1.8 "Orchid Patents" means U.S. Patent No. 5,888,819, 5,952,174, 6,004,744
and 6,013,431 and any and all patent applications pending and patents
issuing from patent applications pending, or filed during the term of
this Agreement, any where in the world, or issuing from any divisions,
continuations, continuations-in-part of such applications, as well as
all other patents, including re-issues, re-examinations, renewals or
extensions thereof, any where in the world which are owned by Orchid,
or under which Orchid has or obtains the right to grant rights, and
which claim the use of a Terminator, or a method in which a Terminator
may be used, which claim has not lapsed, become abandoned or been
declared invalid or unenforceable by a non-appealed or unappealable
decision or judgment of a court or tribunal of competent jurisdiction.
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COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
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1.9 "Specifications" means the physical, chemical, quality, technical and
other standards for Terminators set forth on attached Schedule 1.9,
as same may be amended from time to time.
1.10 "Term" means the period beginning on the Effective Date and
continuing until the date of the last to expire NEN Patent, unless
earlier terminated as provided herein.
1.11 "Terminators" means alkynylamino acycloterminator analogs ("acyNTP"),
alkynylamino dideoxynucleotide analogs ("ddNTPs"), and other analogs
as to which the parties may agree, which are defined in NEN Patents
and act as chain terminators for a DNA/RNA polymerase.
2. License
2.1 NEN grants to Orchid an exclusive, royalty free, worldwide right and
license in and to the NEN Patents to manufacture, distribute, sell
and use Kits (with the right to grant sub-licenses to resellers who
are not Orchid distributors to sell Kits and to end-users to use
Kits) solely for the detection of genetic polymorphisms by GBA. The
right and license to manufacture granted in this provision does not
include the right to manufacture Terminators except as provided in
paragraphs 3.4.3 and 3.10.2. NEN further grants to Orchid a non-
exclusive, royalty free, worldwide right and license in and to the
NEN Patents to use Terminators, other than ddNTPs, (with the right to
grant sub-licenses) alone for GBA.
2.2 Orchid has been a distributor of ddNTPs purchased from NEN since
January 1, 1998, and, as such a distributor, has had and will
continue to have the right to use and sell ddNTPs purchased by Orchid
from NEN.
2.3 The right to grant sub-licenses under paragraph 2.1 to end-users to
use Terminators, other than ddNTPs, alone and not as a component or
part of a Kit is limited to the use by each end-user of no more than
one (1) micromole of Terminators in any consecutive twelve (12) month
period.
2.4 Notwithstanding paragraph 2.3, in the event Orchid no longer
manufactures, distributes, sells or uses Kits, then Orchid will have
a non-exclusive, royalty-free, worldwide right and license in and to
the NEN Patents to distribute, sell and use Terminators purchased
from NEN(with the right to grant sub-licenses) alone for GBA.
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3. Supply of Terminators
3.1 Purchase
3.1.1 During the Term of this Agreement, NEN will sell to Orchid, and
Orchid will purchase from NEN all of Orchid's requirements of
Terminators, except as provided by paragraphs 3.4.3 and 3.10.2.
3.1.2 All purchase orders placed by Orchid with NEN for Terminators
under this Agreement shall be in writing. The purchase orders
are subject and subordinate to and do not vary the terms and
provisions of this Agreement which, if other or different than
those of the purchase order, will be controlling even if the
purchase order is accepted and filled by NEN.
3.1.3 All purchase orders will be accepted on receipt unless NEN
notifies Orchid within ten (10) days of receipt of the purchase
order that NEN cannot or will not fill the purchase order.
3.1.4 Orchid agrees to provide NEN on the date that this Agreement is
signed by Orchid, and thereafter by the last business day of
each following calendar quarter, with a written, good faith,
rolling twelve (12) month, non-binding monthly forecast of its
expected purchases of Terminators. No forecast can increase the
purchase quantity forecasted for the first quarter over the
quantity forecasted in the last previous forecast for that
quarter by more than the lesser of [*][[*]] percent ([*][[*]]%)
of the last previous forecast for that quarter and [*][[*]]
micromoles.
3.1.5 Orchid agrees to place within fifteen (15) calendar days from
the date Orchid signs this Agreement a binding, non-cancelable
purchase order with NEN to purchase at least [*][[*]] dollars
($[*][[*]] ) of Terminators for the year 2000; such purchase
order not to be deferrable beyond December 31, 2000.
3.1.6 Orchid agrees that it shall not, in any purchase order placed
with NEN pursuant to this Agreement or in any instructions or
other communication related thereto, specify a release or
shipment date to NEN with respect to any order or any portion
thereof such that the period from the date of submission of
order to (i) the release date is less than the NEN Build-to-
Ship Lead Time in effect as of the date of the submission of
the order and (ii) the delivery date is less than the NEN
Build-to-Ship Lead Time in effect as of the date of the
submission of the order plus one (1) business day.
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COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
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3.1.7 Orchid may defer or cancel delivery of any portion or all of
the Terminators specified in a purchase order by notifying NEN
at least three (3) business days prior to the requested
delivery date; provided that any such deferment or cancellation
shall not result in Orchid not meeting its purchase commitment
set forth in paragraph 3.1.5.
3.2 Minimum Orders
3.2.1 During the Term of this Agreement, Orchid will order and take
delivery of the following minimum quantities of Terminators
from NEN:
(1) During the first twelve (12) month period following the
Effective Date:
[*] micromoles;
(2) During the second twelve (12) month period:
[*] micromoles;
(3) During the third twelve (12) month period:
[*] micromoles;
(4) During the fourth twelve (12) month period, and each
subsequent twelve (12) month period:
[*] micromoles.
3.2.2 In the event that Orchid fails to order and take delivery of
the minimum quantity of Terminators in a twelve-month period,
Orchid will pay to NEN, within thirty (30) days after receipt
of an invoice therefore at the end of that twelve-month period,
a sum equal to the purchase price of the quantity of
Terminators by which Orchid failed to reach the minimum
quantity, calculated as if such quantity of Terminators were
purchased in a single order for single delivery at the average
price chargeable for all Terminators in such single order
quantity for that twelve-month period.
3.2.3 If this Agreement is terminated by NEN without cause or by
Orchid for cause (as the term "cause" is used in section 14 of
this Agreement) or pursuant to paragraph 14.2 prior to the end
of a twelve-month period, the minimum quantity of Terminators
Orchid is obligated to order and take delivery from NEN for
that twelve-month period will be pro-rata reduced in proportion
to the time the Agreement was not in effect during the twelve-
month period.
3.2.4 Receipt of payment of the sum set forth in paragraph 3.2.2 is
NEN's sole
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and exclusive remedy for any failure of Orchid to order from
NEN any quantity of Terminators, but not for any failure of
Orchid to meet its purchasing obligations under paragraph 3.1.5
or for any failure of Orchid to accept delivery of any quantity
of Terminators ordered if such order is not timely deferred or
canceled pursuant to paragraph 3.1.7.
3.2.5 The minimum quantity of Terminators of Orchid's purchase
commitment set forth in paragraph 3.2.1 for any given twelve-
month period, or shorter period if the Agreement is terminated,
shall be reduced to the extent that, during that twelve-month
period, (a) NEN is unable or fails for any reason to supply or
deliver a quantity of Terminators against an order submitted by
Orchid and Orchid is not in material breach of this Agreement,
unless such inability or failure is by reason of (i) Orchid not
complying with the provisions of paragraph 3.1.6 or (ii)
Orchid's failure to place and not cancel or defer beyond the
period in question purchase orders for delivery of the minimum
quantity, (b) Orchid purchases Third Party Terminators as
provided by paragraph 3.4.3, and (c) Orchid manufactures or
obtains from another source Terminators as provided by
paragraph 3.10.2.
3.3 Preferred Terminators
3.3.1 Orchid and NEN mutually prefer that, at some future time,
Orchid will have no need for ddNTP Terminators and that NEN
will supply and sell to Orchid all acyNTP Terminators needed.
3.3.2 Both Orchid and NEN, however, recognize that at present Orchid
needs [*] Kits and GBA instrumentation.
3.3.3 Orchid will use Commercially Reasonable Efforts to diligently
refine and develop Kits and GBA instrumentation.
3.3.4 NEN will use Commercially Reasonable Efforts to diligently
refine and develop acyNTP Terminators for optimal use in Kits
and Orchid's present and future GBA instrumentation.
3.3.5 Until such time as Orchid's Kits and GBA instrumentation make
optimal use of acyNTP Terminators to the satisfaction of Orchid
and Orchid's customers, to the extent manufactured by NEN, NEN
will continue to supply and sell to Orchid ddNTP Terminators
and other Terminators under this Agreement.
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COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
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3.4 Improved Terminators
3.4.1 NEN will promptly notify Orchid of any new Terminators
developed by or for it, or supplied to it, when any such new
Terminator is ready for evaluation, and will provide samples of
such new Terminators for Orchid to determine whether the new
Terminator is an improvement (in price or performance) over
existing Terminators.
3.4.2 NEN will offer for sale to Orchid any new Terminators developed
by or for it, or supplied to or manufactured by it, and will
sell such new Terminators to Orchid, if Orchid so desires, on
mutually agreeable terms and conditions; such terms and
conditions to be no less favorable than those by which NEN may
sell such new Terminator to any third party and include a
provision that NEN will not sell such new Terminator to any
third party in quantities of [*] micromoles or more for use in
genotyping applications at a price that is less than [*]
percent ([*]%) of the price charged Orchid for equivalent
quantities of that Terminator.
3.4.3 In the event that, at any time during the Term of this
Agreement, any third party sells or offers to sell any chain
terminators for a DNA/RNA polymerase reactions ("Third Party
Terminator") which is not subject of a claim of a NEN Patent,
and which, in Orchid's reasonable judgment, is an improvement
(in price for similar quantities to be purchased or
performance) over a Terminator then sold to Orchid by NEN,
Orchid may meet any or all of its requirements for Terminators
through purchase of Third Party Terminators from the third
party.
3.4.4 Orchid's right to purchase Third Party Terminators from third
parties notwithstanding the provisions of paragraph 3.1.1 may
not be exercised until NEN has been afforded thirty (30) days
to make an offer to sell to Orchid Terminators which are, in
Orchid's sole and reasonable judgment, at least equal or better
in price and performance to the Third Party Terminators offered
by the third party. The thirty (30) day period mentioned in
this provision shall not begin until Orchid has advised NEN in
writing of the performance and/or price specifications of the
Third Party Terminator and the basis on which Orchid has
concluded that the Third Party Terminator is an improvement
over a Terminator then sold to Orchid by NEN.
3.5 Delivery
3.5.1 Time of Delivery
(1) NEN's obligation of delivery is and will remain on a best
efforts basis. NEN will use its best efforts to deliver to
Orchid such quantity of Terminators or any portion thereof
on or before the date requested in Orchid's purchase order;
provided Orchid is not
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COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
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in material breach of this Agreement and each such purchase
order and other written communication from Orchid to NEN as
to the delivery of such quantity or any portion thereof is
in compliance with paragraphs 3.1.6.
(2) Orchid may cancel any purchase order, in whole or in part
if not delivered on time.
(3) In case of deliveries that would be late if shipped through
normal shipment channels, Orchid may require NEN to ship by
express and NEN will pay the difference between the freight
and the express rate.
3.5.2 NEN will ship Terminators, freight prepaid, F.O.B. NEN's
facility at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
3.5.3 Orchid will be invoiced for all taxes assessed and NEN's
standard handling fee in lieu of all shipping charges, freight,
insurance, special handling (where required) and similar costs.
3.6 Price
3.6.1 Price Schedule
(1) The price schedule for Terminators is on attached Schedule
3.6.1(1). The prices are for Terminators defined as either
ddNTPs or acyNTPs and each group has attached either a
hapten or dye marker and are for single shipment orders.
Quantities of different Terminators within each grouping
and marker type ordered in the same purchase order and
shipped in a single shipment may be added to determine the
lowest unit price for that grouping.
(2) Orchid will be entitled to the single shipment price even
in the event NEN is unable, or unwilling, to ship an order
in a single shipment if the Terminators have been ordered
by Orchid in a single purchase order with a specified
preference in said purchase order for a single shipment of
all Terminators ordered.
(3) The prices for acyNTP Terminators are discounted from the
prices for ddNTP Terminators based on their having equal
biological performance. This discount may be adjusted by
mutual agreement of the parties to reflect any inequity in
performance, but NEN agrees that, during the Term of this
Agreement, the prices for acyNTP Terminators will always be
at discounted prices from those charged by NEN for ddNTP
Terminators.
3.6.2 Price Increases
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(1) NEN, at any time after one (1) year from the Effective Date of
this Agreement, may increase its prices (and amend Schedule
3.6.1(1) accordingly) if it incurs extraordinary increases in its
cost of delivering (including manufacture) Terminators to Orchid
by giving Orchid thirty (30) days prior written notice of such
price change and documentation demonstrating the extraordinary
costs. Prices may be increased by any amount up to [*] of that
Terminator before NEN incurred the extraordinary cost. For the
purpose of this provision, "extraordinary increases" in cost of
delivery means a cumulative increase during the term hereof in
NEN's total cost of delivery (including manufacture) of more than
[*] percent ([*]%) since the latter of the Effective Date or the
last previous price adjustment pursuant to this paragraph.
(2) Orders accepted by NEN prior to the effective date of any price
increase will be invoiced at the accepted price and will not be
subject to the price increase.
(3) As of the effective date of any price increase to Orchid, the
prices charged third parties will be adjusted by NEN such that
they are at least [*] percent ([*]%) of the increased price to
Orchid for equivalent quantities of the same Terminator.
3.7 Premium
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(1)
3.7.2 Orchid shall, for a period of at least three (3) years after
any report required by paragraph 3.7.3, maintain at its
principal place of business true and complete books of account,
records and other data (hereinafter "Records") containing all
particulars reasonably necessary to determine the amounts
payable by Orchid to NEN at the end of each year pursuant to
paragraph 3.7.1. During such three-years periods, NEN shall
have the right to engage an independent, nationally-recognized
accounting firm, reasonably acceptable to Orchid, which firm
may examine during normal business hours and at times
reasonably acceptable to Orchid, on at least two (2) weeks
prior written notice, such Records reasonably necessary to
verify the accuracy of any amounts paid by Orchid to NEN
pursuant to paragraph 3.7.1; provided, however, that such
examination shall not take place more often than once per year
and shall not cover such Records for more than the preceding
three (3) years and provided further that such accounting firm
shall report only to NEN and Orchid only as to the accuracy of
the payments and the reports thereof and shall not disclose any
other information to NEN or any third party disclosed,
discerned or derived from the examination. In the event any
examination on behalf of NEN of Orchid's Records disclose
underpayment to NEN which for any year exceeds [*] percent
([*]%) of the amount theretofore actually paid by Orchid to NEN
with respect to such year, Orchid shall reimburse NEN on demand
for the reasonable and documented costs and expenses,
including, but not limited to, all professional fees, incurred
in connection with any such examination and shall compensate
NEN in an amount equal to the sum of the amount of the
underpayment and all applicable late fees.
3.7.3 The payments set forth in paragraph 3.7.1 shall, if overdue,
bear interest until payment at an annual rate of [*] percent
([*] %) computed from the date when the payment became overdue;
provided, however, that if such [*] percent ([*] %) rate shall
be in excess of that allowed by applicable law, then the
highest rate permitted by law shall apply.
3.8 Payment
3.8.1 Payments will be made in United States Dollars within thirty
(30) days of the invoice date or the shipment date, whichever
is later.
(1) Late payments shall bear interest at the prime rate as
published in The Wall Street Journal on the first business
day of each month in which the payment is late plus two
percent (2%), and calculated on the basis of a three
hundred sixty (360) day year.
3.9 Inspection and Return or Refund
3.9.1 Within thirty (30) days of delivery, Orchid may conduct
acceptance
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testing or verification by [*] that received Terminators are in
conformance with Specifications, are not defective, and are in
good order and condition.
3.9.2 At Orchid's option, NEN will promptly replace, or refund any
payment made on, any Terminator that is in nonconformance with
Specifications, defective or not in good order or condition.
3.9.3 Orchid will as directed by NEN either destroy or return, at
NEN's expense, Terminators that do not conform to their
Specifications, are defective, or are not in good order or
condition.
3.9.4 Orchid's right to replacement or refund does not limit its
rights under paragraph 3.10.2.
3.10 Allocation and Alternate Source
3.10.1 In the event that demand for any Terminator should at any time
exceed NEN's capacity to fill and deliver all of its orders
(and its own need for Terminators), NEN will notify Orchid of
the excess demand. Until such time as the excess demand abates
or NEN's capacity becomes sufficient to meet such demand, NEN
will have the right to equitably allocate its available
supplies, manufacturing capacity, inventory and other
resources, among Orchid, itself and its other customers.
3.10.2 In the event NEN is unable for any reason, other than by
reason of Orchid placing orders that fail to comply with the
provisions of paragraph 3.1.6, to supply Orchid's total
requirements of Terminators for [*] ([*]) days from the
delivery date set out in Orchid's purchase order, Orchid may
itself manufacture or obtain from any other source any portion
or all of its requirements for Terminators for so long as NEN
is unable to supply all of Orchid's requirements and for [*]
months from the date NEN notifies Orchid it is once again able
to meet all of Orchid's requirements. NEN will provide Orchid
with technical assistance and information as may be reasonably
required by Orchid to establish an alternate source of
Terminators, including, but not limited to the right to
manufacture Terminators.
4. Collaborative Research Program
4.1 The parties shall, within [*] days from the Effective Date negotiate
in good faith a collaborative research program agreement.
5. Patent Enforcement
5.1 In the event either party learns that any third party is or might be
infringing, or preparing to infringe, any NEN Patent or Orchid Patent,
it will promptly notify the other of such third-party activity.
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5.2 Each party will be solely responsible for and have the sole right of
taking any action against infringement of a patent or other
proprietary right which is exclusive to it, at its expense and for its
benefit. Neither party, however, has any obligation to take any action
against any infringement.
6. Labeling
6.1 Orchid will ▇▇▇▇ or label in an appropriate manner each Kit it sells
containing a Terminator encompassed by a claim of a NEN Patent with a
patent notice in accordance with the provisions of 35 U.S.C. (S) 287.
6.2 Orchid will label or ▇▇▇▇ in an appropriate manner each Kit it sells
containing an acyNTP Terminator(s) supplied by NEN with a statement
that the Kit incorporates a reagent(s) manufactured and supplied by
NEN.
6.3 Orchid also will label or ▇▇▇▇ in an appropriate manner each Kit it
sells containing an acyNTP Terminator with the respective language set
forth in attached Schedule 6.3.
6.4 For each Kit Orchid will display NEN's logo in an appropriate manner.
6.5 At NEN's earliest opportunity, but in no event later than ninety (90)
days from the Effective Date, NEN will label or ▇▇▇▇ in an appropriate
manner each Terminator (and in all marketing, advertising, promotional
and sales materials, whether print or electronic media, which
materials relate to the use of Terminators for genotyping) it sells to
any third party which may be used to practice any method encompassed
by a claim of an Orchid Patent with the language set forth in attached
Schedule 6.5.
7. Use of Names
7.1 Except as obligated by section 6, nothing in this Agreement confers to
either party any right to use in publicity, advertising, promotion, or
marketing any name, trade name, trade ▇▇▇▇ or other designation of the
other party, without the other party's prior permission, such
permission not to be unreasonably withheld.
7.2 Neither Orchid nor NEN will advertise, promote, market or sell any
product (including Terminators and Kits) under any trade name, trade
▇▇▇▇ or trade dress which is the same as, or confusingly similar to,
any trade name, trademark, or trade dress in which the other, or its
Affiliates, have a prior and existing interest, whether as owner,
licensee or licensor.
8. Confidentiality
8.1 Both NEN and Orchid will keep confidential all (i) prices and price
schedules, (ii) information received from the other that is identified
in writing as being confidential or proprietary at the time it is
delivered or communicated, and (iii)
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information of the other which is delivered or disclosed in
performance of this Agreement and within thirty (30) days from and
after disclosure is identified in writing by the disclosing party to
the recipient as confidential, (collectively, and individually,
"Confidential Information").
8.2 Orchid and NEN will not disclose any Confidential Information of the
other to any person or party other than to employees, consultants or
agents of NEN and of its Affiliates or employees, consultants or
agents of Orchid and of its Affiliates engaged directly or indirectly
in activities related to the supply of Terminators or the
Collaborative Research Program and who have been properly instructed
to and have agreed in writing to maintain the Confidential Information
in confidence.
8.3 Orchid and NEN will take all steps as are reasonably required to
ensure that all persons to whom it is authorized to disclose
Confidential Information of the other will not disclose the same to
any unauthorized person.
8.4 Either Orchid or NEN, however, may disclose:
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8.4.1 Confidential Information of the disclosing party that is known
to the receiving party prior to the time of its disclosure or
communication thereto, to the extent evidenced by written
records;
8.4.2 Confidential Information of the disclosing party that is
disclosed to the receiving party by a third party not under an
obligation of confidentiality;
8.4.3 Confidential Information that becomes published or otherwise
part of the public domain other than as a result of acts by the
receiving party not authorized by this Agreement or otherwise
authorized by the disclosing party; and
8.4.4 Confidential Information that is required to be disclosed by
order of any governmental authority or court of competent
jurisdiction, provided, if the receiving party becomes legally
compelled to disclose Confidential Information of the
disclosing party, the receiving party will provide the
disclosing party with prompt notice so that the disclosing
party may seek a protective order or other appropriate remedy
and/or waive compliance with the provisions of this Agreement,
and, if in the absence of a protective order or the receipt of
a waiver, the receiving party nevertheless is legally required
to disclose Confidential Information of the other to any
governmental authority or court of competent jurisdiction or
else stand liable for contempt or suffer other censure or
penalty, the receiving party may disclose such Confidential
Information, to the most limited extent feasible, without
liability under this Agreement.
8.5 The obligations of this section 8 survive any termination or
expiration of this Agreement.
9. Option to Manufacture
9.1 In the event that Orchid decides to engage a third party to
manufacture Kits for it, Orchid will notify NEN and afford NEN the
opportunity to make an offer to manufacture Kits for Orchid. At the
same time Orchid may solicit and entertain offers from third parties
for the manufacture of Kits. However, Orchid may not accept any third-
party offer until thirty (30) days after it offers the same terms and
conditions as the third-party offer to NEN and NEN has not accepted
such terms and conditions. The option and rights provided by this
paragraph are personal to NEN and may not be sub-licensed or otherwise
transferred without the prior express written approval of Orchid.
9.2 Notwithstanding paragraph 9.1, Orchid agrees not to engage any third
party to manufacture for it any Kit containing a Terminator supplied
to Orchid by NEN.
10. Equity Investment
14
10.1 On or before the date Orchid fulfills its payment obligation under
paragraph 3.6.2(2) to NEN, NEN will purchase one hundred twenty-five
thousand (125,000) shares of Orchid common stock, par value $0.001 per
share, at six dollars ($6.00) per share for an aggregate purchase
price of seven hundred fifty thousand dollars ($750,000), pursuant to
the terms and conditions set forth in the Common Stock Purchase
Agreement to be executed between Orchid and NEN in substantially the
form attached as Schedule 10.1. The parties acknowledge that the per
share purchase price includes a premium over current fair market value
of Orchid's Common Stock as partial consideration for the obligations
of Orchid set forth herein.
11. Announcements
11.1 NEN and Orchid will together draft and make public a joint press
release announcing their execution of this Agreement and its general
terms, but not any prices or price schedules, within ten (10) days of
execution of this Agreement by both parties.
11.2 Any further public announcements of the existence, terms or
performance of this Agreement will be at times and in manners as NEN
and Orchid may mutually agree.
11.3 Nothing in this Agreement, however, prevents either party from making
any public announcement which it is or becomes legally obligated to
make.
12. Warranties
12.1 NEN warrants that, at the time of shipment, any Terminator supplied or
sold to Orchid will (i) be free and clear of all liens and
encumbrances, with NEN having good title thereto, (ii) be free from
any defects in materials and workmanship, and (iii) conform to its
Specifications. NEN warrants that the sale of any Terminator delivered
hereunder will not infringe the claims of any patent covering the
Terminators themselves, but does not warrant against infringement by
reason of the use thereof in combination with other products or in the
operation of any process. Unless stated elsewhere in this Agreement,
NEN MAKES NO OTHER WARRANTY, EXPRESSED OR IMPLIED, WITH RESPECT TO THE
PRODUCTS INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. Notification of any breach of warranty under (ii)
and (iii), above, must be made within thirty (30) days of Orchid's
receipt of the order unless otherwise provided in writing by NEN. No
claim shall be honored if Orchid fails to notify NEN within the period
specified. THE SOLE AND EXCLUSIVE REMEDY OF ORCHID FOR ANY LIABILITY
OF NEN OF ANY KIND INCLUDING LIABILITY BASED UPON WARRANTY (EXPRESSED
OR IMPLIED, WHETHER CONTAINED HEREIN OR ELSEWHERE), STRICT LIABILITY,
CONTRACT, OR OTHERWISE IS LIMITED TO THE REPLACEMENT OF THE GOODS OR
THE REFUND OF THE INVOICE PRICE OF THE GOODS. NEN SHALL
15
NOT IN ANY CASE BE LIABLE FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES OF ANY KIND.
12.2 NEN represents and warrants that none of the NEN Patents are the
subject of any litigation and that it is not aware of any
infringement of any of the NEN Patents.
12.3 NEN MAKES NO WARRANTY OR REPRESENTATION THAT ANY COMBINATION OF A
TERMINATOR WITH ANY OTHER PRODUCT, OR ANY USE OF A TERMINATOR WILL
NOT INFRINGE ANY PATENT, TRADE SECRET OR OTHER PROPRIETARY RIGHT,
FOREIGN OR DOMESTIC, OF ANY THIRD PARTY.
12.4 THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, RESPECTING
TERMINATORS AND NONE ARE CREATED, WHETHER UNDER THE UNIFORM
COMMERCIAL CODE, CUSTOM OR USAGE IN THE INDUSTRY OR THE COURSE OF
DEALINGS BETWEEN THE PARTIES.
13. Indemnification
13.1 NEN agrees to indemnify, defend, and hold harmless Orchid, its
Affiliates and their directors, officers, agents, employees,
representatives and assigns, from and against all liabilities,
damages, expenses and losses (including reasonable attorney fees and
costs), arising out of (i) the negligent actions of NEN, its
employees or any third party acting on behalf or under authority of
NEN in the performance of this Agreement, (ii) any alleged patent
infringement, contributory patent infringement, inducing patent
infringement, or trade secret infringement based on Orchid's purchase
or sale pursuant to the provisions of this Agreement of the
Terminators. At any time during the course of any action involving a
Terminator, or if in NEN's opinion a Terminator is likely to become
the subject of a patent infringement claim, NEN may at its option and
expense, (i) procure for Orchid the right to continue using and
selling pursuant to the provisions of this Agreement the Terminator,
(ii) replace or modify the Terminator so that it becomes non-
infringing or (iii) accept return of the Terminator and refund the
purchase price.
13.2 NEN will not be liable to Orchid under paragraph 13.1 if the patent
or trade secret infringement claim is based on an alteration or
modification of the Terminator.
13.3 Orchid agrees to indemnify, defend and hold harmless NEN, its
Affiliates, and their directors, officers, agents, employees, and
assigns, from and against all liabilities, demands, damages, expenses
and losses (including reasonable attorney fees and costs) arising out
of (i) the negligent actions of Orchid, its employees or any third
party acting on behalf or under authority of Orchid in the
performance of this Agreement, (ii) any sale or use by Orchid of any
Kit or Terminator, except those liabilities, demands, damages,
expenses and losses resulting from NEN's (or its employees' or
agents') negligence, willful misconduct or breach of any
representation or warranty and (iii) any alleged patent infringement,
contributory
16
patent infringement, inducing patent infringement, or trade secret
infringement based on Orchid's use of the Terminators.
13.4 A party seeking indemnification under this Agreement will give prompt
written notice to the indemnifying party of the commencement of any
action (and any prior claims relating to such action) for which the
party seeks indemnification. An indemnifying party will have no
liability or responsibility of any kind to the party seeking the
indemnification if it is not promptly notified.
13.5 If an indemnifying party is given prompt notice, but fails or
declines to assume the defense of any such claim or action within
fifteen (15) days after notice thereof, the indemnified party may
assume the defense of such claim or action for the account and at the
risk of the indemnifying party, and any liabilities related thereto
shall be conclusively deemed a liability of the indemnifying party.
13.6 Except as provided in paragraph 13.5, an indemnifying party will have
sole control of the defense of the action and of all negotiations for
its settlement or compromise. An indemnifying party, however is not
permitted to settle or compromise any claim or action giving rise in
a manner that imposes any restrictions or obligations on the
indemnified party, without the indemnified party's prior written
consent.
13.7 The indemnification rights of an indemnified party under this
Agreement are in addition to all other rights which the indemnified
party may have at law or in equity or otherwise.
13.8 Nothing in this section 13 shall be construed to prohibit the
indemnified party, at its own cost and expense, from retaining
counsel to participate in the claim or action as to which the party
is indemnified.
13.9 This section 13 survives any termination or expiration of this
Agreement.
14. Term and Termination
14.1 The Term of this Agreement is from the Effective Date through to the
expiration date of the last to expire NEN Patent, unless this
Agreement is earlier terminated pursuant to the provisions of
paragraph 14.2, 14.3 or 14.4.
14.2 Orchid and NEN each has the right to terminate this Agreement at any
time after [*] years from the Effective Date, without reason or
cause, upon ninety (90) days prior written notice.
14.3 Orchid and NEN each have the right to terminate this Agreement for
cause if the other fails to make any payment due and owing, or
commits breach of any material provision of this Agreement and fails
to make such payment or remedy such breach within sixty (60) days
after receiving written notice of such default or breach.
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
17
14.4 NEN and Orchid each have the right to terminate this Agreement for
cause if any proceeding is instituted by or against the other seeking
to adjudicate it bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or
seeking an entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial
part of its property or taking any action to authorize any of the
foregoing or similar actions if the proceeding or order or action is
not vacated, denied or dismissed within ninety (90) days after the
other receives written notice of termination from the terminating
party. All rights and licenses granted under this Agreement are
deemed to be, for purposes of Section 365(n) of the United States
Bankruptcy Code, license or rights to "intellectual property" as
defined by Section 101(56) of the United States Bankruptcy Code. The
parties agree to relief from the automatic stay provisions under
Section 362 of the Bankruptcy Code.
14.5 Termination or expiration of this Agreement does not release Orchid
or NEN from any obligation theretofore accrued.
15. Rights After Termination
15.1 Upon a party giving notice of termination of this Agreement, NEN will
fill all accepted purchase orders of Orchid, unless cancelled by
Orchid, and Orchid, its Affiliates and sub-licensees may finish all
Kits in the process of manufacture, and advertise, promote, market
and sell such Kits and all Kits in inventory. Orchid shall pay for
all such outstanding purchase orders filled and shall not submit any
purchase orders after the date of the notice of termination.
15.2 This section 15 shall survive termination of this Agreement.
16. Miscellaneous
16.1 The relationship of Orchid and NEN under this Agreement is that of
independent contractors. The provisions of this Agreement will not be
construed to create between Orchid and NEN the relationship of
principal and agent, joint venturers, co-partners or any other
similar relationship, the existence of which is hereby denied by
Orchid and NEN. Neither party will be liable in any way for any
engagement, obligation, liability, contract, representation or
warranty of the other party to or with any third party. Orchid is not
an agent for NEN and NEN is not an agent for Orchid for any purpose
and each party has no right or authority to assume or create any
obligations, express or implied, on behalf or in the name of the
other party.
16.2 No waiver of any breach of any provision of this Agreement will
constitute a waiver of any prior, concurrent or subsequent breach of
the same or any other provision of this Agreement; and no waiver will
be effective unless in writing.
18
16.3 Any notice required or permitted under this Agreement will be
sufficiently provided and effectively made as of the delivery date if
sent by facsimile and either hand-delivered or sent by overnight
express courier (e.g. Federal Express) and addressed to the receiving
party at its respective address as follows:
Orchid Biocomputer, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: President
With a courtesy copy to:
Kalow Springut & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
NEN Life Science Products, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: President
With a courtesy copy to:
NEN Life Science Products, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Company Secretary
or such other address of which the receiving party has given notice
pursuant to this paragraph 16.3. The effective date of the notice is
the date of receipt of the hand or courier delivery.
16.4 In the event that the performance of this Agreement or of an
obligation hereunder, other than the payment of money, is prevented,
restricted or interfered with by reason of any cause not within the
control of the respective party, and which could not by reasonable
diligence have been avoided by such party, the party so affected,
upon the giving of prompt notice to the other party, as to the nature
and probable duration of such event, will be excused from such
performance to the extent and for the duration of such prevention,
restriction or interference,
19
provided that the party so affected uses its reasonable efforts to
avoid or remove such cause of non-performance and will fulfill and
continue performance under this Agreement whenever and to the extent
such cause or causes are removed. For the purpose of this paragraph,
but without limiting the generality hereof, the following are not
within the control of a party: acts of God; acts or omissions of a
governmental agency or body; compliance with requests,
recommendations, rules, regulations, or orders of any governmental
authority or any officer, department, agency, or instrument thereof;
flood; storm; earthquake; fire; war; insurrection; riot; accidents;
acts of the public enemy; invasion; disease: quarantine restrictions;
strike; labor lockout; differences with workmen; embargoes; delays or
failures in transportation; and acts of a similar nature.
16.5 The laws of the State of Delaware, without regard to conflicts of
laws provisions, govern this Agreement.
16.6 Both NEN and Orchid consent to the personal jurisdiction and venue of
the United States District Court for the District of Delaware; and
such court will have exclusive jurisdiction over any dispute between
the parties arising under this Agreement. NEN and Orchid both further
consent that any process or notice of motion or other application to
the Court or Judge thereof may be served by registered or certified
mail or by personal service, provided a reasonable period of time for
appearance is allowed.
16.7 If any provision of this Agreement is held to be invalid, illegal,
unenforceable or void, such will be without effect on the validity,
legality and enforceability of the remaining provisions or this
Agreement as a whole. Both parties will endeavor to replace the
invalid, illegal, unenforceable or void provision with a valid and
enforceable one which in its equitable effect is most consistent with
the prior provision.
16.8 The section and paragraph headings and numbering are for convenience
only and cannot have any effect on the interpretation or construction
of this Agreement.
16.9 This Agreement is binding upon and inures to the benefit of the
heirs, successors and assigns of the parties hereto, provided that
this Agreement, in whole or in part, is not assignable by either
party without the prior written consent of the other party, such
consent not to be unreasonably withheld, except that either party may
assign this Agreement to any successor by merger or sale of a party
or of substantially all of its business or assets to which this
Agreement pertains and Orchid may assign this Agreement to an
Affiliate of Orchid without any such consent, provided Orchid
guarantees all performance obligations of Affiliate under this
Agreement post assignment. Any effort to assign in violation hereof
is void. In the event of any assignment, the assigning party must
provide the other party with appropriate documentation of the
assignment.
16.10 Each party acknowledges that it has read this Agreement, understands
it, and agrees to be bound by its terms and further agrees that it
constitutes the complete
20
and exclusive understanding between the parties, which supersedes and
merges all prior proposals, understandings and all other agreements,
oral and written, between the parties regarding the subject matter of
this Agreement, including without limitation the letter from NEN to
Orchid dated August 19, 1999; and no party has relied on any
representation not expressly set forth or referred to in this
Agreement.
16.11 No amendment, variation, waiver or modification of any of the terms
or provisions of this Agreement will be effected unless set forth in
writing, specifically referencing this Agreement, and duly signed by
an authorized officer of the party to be bound thereby.
16.12 This Agreement may be executed in two or more counterparts, all of
which constitute one and the same legal instrument and each of which
shall constitute an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
NEN LIFE SCIENCE PRODUCTS, INC. ORCHID BIOCOMPUTER, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- -----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇
President and Chief Executive Officer ---------------------------
Title: CEO
--------------------------
21
SCHEDULE 1.9
SPECIFICATIONS
--------------
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
22
SCHEDULE 3.6.1(1)
PRICE
-----
1. AcyNTP Pricing per Micromole (based on per purchase order/single shipment)
TERMINATOR REPORTER
MICROMOLES HAPTEN DYE
---------- ------ ---
[*]
2. ddNTP Pricing per Micromole (based on per purchase order/single shipment)
-------------------------------------------------------------------------
TERMINATOR REPORTER
MICROMOLES HAPTEN DYE
---------- ------ ---
[*]
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS.
23
SCHEDULE 6.3
ORCHID KIT AND TERMINATOR LABELING
----------------------------------
Labeling to be placed on Kits by Orchid:
---------------------------------------
"This product is distributed and sold under licenses from Orchid Biocomputer,
Inc. and contains reagents sold under license from NEN LIFE SCIENCE PRODUCTS,
INC., for research use only for the detection of genetic polymorphisms by the
method of Genetic Bit Analysis (GBA/(R)/) and are not authorized nor intended
for diagnostic or therapeutic use or for any development of these products. No
other license is intended or granted through sale of this product to purchaser.
Purchase other than by an authorized distributor or reseller does not include
the right to resell or transfer this product either as a stand alone product or
as a component of another product or to otherwise commercially exploit this
product. Any use of this product other than the licensed use without the prior,
express written authorizations of Orchid Biocomputer, Inc. and NEN LIFE SCIENCE
PRODUCTS, INC. is strictly prohibited."
Labeling to be placed by Orchid on acyNTP Terminators sold independent of Kits:
------------------------------------------------------------------------------
"This product is distributed and sold under licenses from Orchid Biocomputer,
Inc. and NEN LIFE SCIENCE PRODUCTS, INC., for research use only for the
detection of genetic polymorphisms by the method of Genetic Bit Analysis
(GBA/(R)/) and are not authorized nor intended for diagnostic or therapeutic use
or for any development of these products. No other license is intended or
granted through sale of this product to purchaser. Purchase does not include or
carry any right to resell or transfer this product either as a standalone
product or as a component of another product or to otherwise commercially
exploit this product. Any use of this product other than the licensed use
without the prior, express written authorization of Orchid Biocomputer, Inc. and
NEN LIFE SCIENCE PRODUCTS, INC. is strictly prohibited.
"This product may not be used for DNA sequencing unless (a) used with a DNA
sequencer instrument purchased from NEN Life Science Products, Inc. or its
sublicensees, or (b) a separate license for such use is obtained from PE
Biosystems, Inc., Foster City, CA."
Labeling to be placed by Orchid on ddNTP Terminators:
----------------------------------------------------
"This product is distributed and sold under licenses from Orchid Biocomputer,
Inc. and NEN LIFE SCIENCE PRODUCTS, INC., for research use only for the
detection of genetic polymorphisms by the method of Genetic Bit Analysis
(GBA/(R)/) and are not authorized nor intended for diagnostic or therapeutic use
or for any development of these products. No other license is intended or
granted through sale of this product to purchaser. Purchase does not include or
carry any right to resell or transfer this product either as a stand alone
product or as a component of another product or to otherwise commercially
exploit this product. Any use of this product other than the licensed use
without the prior, express written authorization of Orchid Biocomputer, Inc. and
NEN LIFE SCIENCE PRODUCTS, INC. is strictly prohibited.
"This product may not be used for DNA sequencing unless (a) used with a DNA
sequencer instrument purchased from NEN Life Science Products, Inc. or its
sublicensees, or (b) a separate license for such use is obtained from PE
Biosystems, Inc., Foster City, CA.
"For Research Use Only: This product is distributed and sold under an
arrangement between ENZO DIAGNOSTICS, INC. and NEN LIFE SCIENCE PRODUCTS, INC.
for research purposes only by the end-user in the research market and is not
intended for diagnostic or therapeutic use. Purchase does not include or carry
any right or license to use, develop, or otherwise exploit this product
commercially. Any commercial use, development or exploitation of this product
without the express prior written authorization of ENZO DIAGNOSTICS, INC. and
NEN LIFE SCIENCE PRODUCTS, INC. is strictly prohibited.
"This product or the use of this product may be covered by one or more Enzo
patents, including the following: U.S. Patent Nos. 4,994,373, 5,476,928,
5,328,824; 5,449,767; 4,707,440; 4,952,685; 5,002,885; and 5,013,831; and DK 164
407 8; and by one or more patents owned by NEN, including U.S. Patent Nos.
5,047,519; 5,151,507; and 5,608,063."
24
SCHEDULE 6.5
NEN TERMINATOR LABELING
-----------------------
Labels to be placed by NEN on Terminators:
-----------------------------------------
"This product may not be used for Genetic Bit Analysis(R) unless (A) used with a
SNPstream(R) instrument purchased from Orchid Biocomputer, Inc., or (B) a
separate license for such use is obtained from Orchid Biocomputer, Inc. of
Princeton NJ."
25
SCHEDULE 10.1
COMMON STOCK PURCHASE AGREEMENT
-------------------------------
THIS AGREEMENT dated as of February 16, 2000 is by and between ORCHID
BIOSCIENCES, INC. (the "Company"), a Delaware corporation with principal offices
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇, and NEN Life Science
Products, Inc. (the "Purchaser"), a Delaware corporation with principal offices
at ▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS the Company wishes to obtain equity financing and the Purchaser is
willing to purchase and the Company is willing to sell, on the terms and
conditions contained in this Agreement, shares of Common Stock of the Company.
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
parties agree as follows:
SECTION 1. Authorization of Sale of the Shares. The Company has authorized
-----------------------------------
the sale to the Purchaser of 125,000 shares (the "Shares") of the Common Stock,
par value per share, of the Company (the "Common Stock") at a purchase price of
$ [*]per share, which price is at a premium to the current fair market value of
the Common Stock.
SECTION 2. Sale and Purchase of Shares; Limitations on Transfer; Certain
-------------------------------------------------------------
Other Rights.
------------
2.1 Sale and Purchase of Shares. At the Closing (as defined in Section
---------------------------
3), the Company will sell to the Purchaser, and the Purchaser will buy from the
Company, upon the terms and conditions hereinafter set forth, the Shares, at an
aggregate purchase price of $ (the "Purchase Price").
2.2 Right of First Refusal. If the Purchaser desires to sell all or any
----------------------
part of the Shares at any time after the Closing and has received in writing an
irrevocable and unconditional bona fide offer (the "Bona Fide Offer") for the
purchase thereof from a third party (the "Offeror"), the Purchaser shall give
written notice (the "BFO Notice") to the Company setting forth the
26
Purchaser's desire to sell such Shares, which BFO Notice shall be accompanied by
a photocopy of the original executed Bona Fide Offer and shall set forth at
least the name and address of the Offeror and the price and terms of the Bona
Fide Offer. The Company and/or its designees may elect to purchase some or all
of the Shares to be transferred (the "Offered Shares") upon the terms and
conditions set forth in the BFO Notice by delivering a written notice of such
election to the Purchaser within twenty (20) days after the date of mailing of
the BFO Notice by the Purchaser. The closing of the purchase and sale of the
Offered Shares shall take place on a date agreed upon by the Purchaser and the
Company but in any event within forty-five (45) days after the date of the
mailing of the BFO Notice, at the principal office of the Company, or such other
place as may be agreed to by the Purchaser and the Company. If the Company and
its designees do not elect to purchase all of the Offered Shares, the Purchaser
may transfer and sell any Offered Shares for which such an election is not made
to the Offeror at a price and on terms no more favorable to the Offeror than
those specified in the BFO Notice, provided that such transfer and sale is
consummated during the 60-day period immediately following the date of mailing
of the BFO Notice by the Purchaser. Any Offered Shares not sold or transferred
during such 60-day period will again be subject to the provisions of this
Section 2.2.
2.3 Restrictions on Offeror. Any Offeror purchasing all or any portion of
-----------------------
the Shares from the Purchaser under Section 2.2 shall be subject to the terms
of this Agreement.
2.4 Exempted Transfers. (a) The Purchaser shall be permitted to transfer
------------------
the Shares owned by it without complying with the provisions of this Section 2
solely in the event of transfer by the Purchaser to any Affiliate of the
Purchaser (a "Permitted Transferee"), provided that any such Permitted
Transferee shall have delivered to the Company the written agreement of such
Permitted Transferee to be bound by all of the provisions of this Agreement to
the same extent as the Purchaser. For the purposes of this Section, "Affiliate"
shall mean any corporation, firm, partnership or other entity which directly or
indirectly controls or is controlled by or is under common control with a party
to this Agreement. "Control" means ownership, directly or through one or more
affiliates, of fifty percent (50%) or more of the shares of stock entitled to
vote for the election of directors, in the case of a corporation, or fifty
percent (50%) or more of the equity interests in the case of any limited
liability company or other type of legal entity, status as a general partner in
any partnership, or any other arrangement whereby a
27
party controls or has the right to control the Board of Directors of directors
or equivalent governing body of a corporation or other entity.
(b) The rights of the Company under Section 2.2 hereof shall not
apply to any pledge of Shares by the Purchaser which creates a mere security
interest, provided the pledgee provides the Company with a written agreement to
be bound hereby to the same extent as the Purchaser.
2.5 Failure to Deliver Shares. If the Purchaser becomes obligated to sell
-------------------------
any Shares to the Company or its designee under this Section 2 and fails to
deliver such Shares in accordance with the terms of this Agreement, the Company
or its designee may, at its option, in addition to all other remedies it may
have, send to the Purchaser the purchase price for such Shares as is herein
specified. Thereupon, the Company upon written notice to the Purchaser, (i)
shall cancel on its books the certificate or certificates representing the
Shares to be sold and (ii) shall issue, in lieu thereof, in the name of the
Company or its assignee, a new certificate or certificates representing such
Shares, and thereupon all of the Purchaser's rights in and to such Shares shall
terminate.
2.6 Term. The provisions of Sections 2.2 through 2.5 shall terminate upon
----
the effective date of the registration of the Shares pursuant to the United
States Securities Exchange Act of 1934.
2.7 Legend. Each certificate evidencing any of the Shares shall bear a
------
legend substantially as follows:
"The shares represented by this certificate are subject to
restrictions on transfer and may not be sold, exchanged, transferred,
pledged, hypothecated, or otherwise disposed of except in accordance
with and subject to all the terms and conditions of a certain Common
Stock Purchase Agreement dated as of March __, 2000, a copy of which
the Company will furnish to the holder of this certificate upon
request and without charge."
2.8 Lock-Up. If, in connection with a registration statement filed by the
-------
Company pursuant to the Securities Act, the Company or its underwriter so
requests, the Purchaser will agree not to sell any Shares for a period not to
exceed 180 days following the effectiveness of such registration.
28
SECTION 3. Delivery of the Shares at the Closing. The completion of the
-------------------------------------
purchase and sale of the Shares being purchased and sold pursuant to this
Agreement (the "Closing") shall occur on a date to be specified by the parties
which shall be no later than March __, 2000, at the offices of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Closing Date"). At the Closing, the Purchaser shall
pay to the Company an amount equal to the Purchase Price and the Company shall
deliver to the Purchaser one or more stock certificates representing the Shares
purchased by the Purchaser, each such certificate to be registered in the name
of the Purchaser. The Company's obligation to close the transaction shall be
subject to the following conditions, any of which may be waived by the Company:
(y) receipt by the Company of funds in the full amount of the Purchase Price for
the Shares being purchased hereunder; and (z) the accuracy of the
representations and warranties made by the Purchaser and the fulfillment of
those undertakings of the Purchaser to be fulfilled prior to the Closing. The
Purchaser's obligation to close the transaction shall be subject to the
fulfillment of the following conditions: (a) the execution and delivery by the
Company of the Registration Rights Agreement in the form attached on Exhibit 1
---------
attached hereto (the "Registration Rights Agreement"); (b) the receipt by the
Purchaser of an opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
counsel to the Company, in the form attached hereto as Exhibit 2; (c) the
---------
receipt by the Purchaser of a copy of a certificate, dated on or immediately
prior to the Closing Date, as to the good standing of the Company in the state
of Delaware; (d) the receipt by the Purchaser of a stock certificate,
representing the Shares; and (e) the receipt by the Purchaser of a certificate
of the Secretary of the Company as to the incumbency of certain officers
executing the Transaction Documents in the form attached hereto as Exhibit 3.
---------
This Agreement and the Registration Rights Agreement are collectively referred
to herein as the "Transaction Documents".
SECTION 4. Representations, Warranties and Covenants of the Company. As
--------------------------------------------------------
used herein, "best knowledge" shall mean and include only actual knowledge of
any officers or directors of the Company. The Company hereby represents and
warrants to, and covenants with, the Purchaser as follows:
4.1. Organization. The Company is duly organized, validly existing
------------
and in
29
good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or qualified to do
business and in good standing in each jurisdiction in which it owns or leases
property or transacts business and where the failure to be so qualified would
have a material adverse effect upon the business, financial condition,
properties or operations of the Company. The Company has delivered to the
Purchaser an accurate and complete copy of its Certificate of Incorporation and
all amendments thereto, including without limitation, all Certificates of
Designation filed with the Secretary of State of Delaware.
4.2. Due Authorization. The Company has all requisite corporate
-----------------
power and authority to execute, deliver and perform its obligations under the
Transaction Documents, and the Transaction Documents have been duly authorized
and validly executed and delivered by the Company and constitute legal, valid
and binding agreements of the Company enforceable against the Company in
accordance with their terms.
4.3. Non-Contravention. The execution and delivery of the
-----------------
Transaction Documents, the issuance and sale of the Shares to be sold by the
Company hereunder, the fulfillment of the terms of the Transaction Documents and
the consummation of the transactions contemplated by the Transaction Documents
will not conflict with or constitute a violation of, or default or give rise to
any benefits or an acceleration of any rights of any third party (with the
passage of time or otherwise) under, any material agreement or instrument to
which the Company is a party or by which it is bound or the charter, by-laws or
other organizational documents of the Company nor result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note or any other evidence of
indebtedness or any material indenture, mortgage, deed of trust or any other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of the property or assets of the Company is subject, nor
conflict with, or result in a violation of, any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company. No consent, approval, authorization or
other order of, or registration, qualification or filing with, any regulatory
body, administrative agency, or other governmental body is required
30
for the valid issuance and sale of the Shares to be sold pursuant to the
Agreement, other than such as have been or will be made or obtained.
4.4 Capitalization. The Shares to be sold pursuant to this Agreement
--------------
have been duly authorized, and when issued and paid for in accordance with the
terms of this Agreement will be validly issued, fully paid and non-assessable
and free of restrictions on transfer, other than restrictions on their transfer
under this Agreement, and under applicable state and federal securities laws.
The outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and non-assessable.
4.5 Related-Party Transactions. Except as disclosed on Schedule 4.5
-------------------------- ------------
attached hereto, no employee, officer, or director of the Company or member of
his or her immediate family is indebted to the Company, nor is the Company
indebted (or committed to make loans or extend or guarantee credit) to any of
them. To the best of the Company's knowledge, none of such persons has any
direct or indirect ownership interest in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation that competes with the Company, except that employees,
officers, or directors of the Company and members of their immediate families
may own stock in publicly traded companies that may compete with the Company.
To the best of the Company's knowledge, no officer or director or any member of
their immediate families is, directly or indirectly, interested in any material
contract with the Company.
4.6 Permits. The Company has all franchises, permits, licenses, and
-------
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or other similar authority.
4.7 Compliance With Other Instruments. The Company is not in
---------------------------------
violation or default of any provision of its Certificate of Incorporation or
Bylaws or in any material respect of any provision of any mortgage, indenture,
agreement, instrument, or contract to which it is a party or by which it is
bound or, to the best of its knowledge, of any federal or state judgment,
31
order, writ, decree, statute, rule, or regulation applicable to the Company. The
execution, delivery, and performance by the Company of this Agreement, the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time or
giving of notice, either a material default under any such provision or an event
that results in the creation of any material lien, charge, or encumbrance upon
any assets of the Company or the suspension, revocation, impairment, forfeiture,
or non-renewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or
properties.
4.8 Litigation. There is no action, suit, proceeding, or
----------
investigation, to the best of the Company's knowledge, pending or currently
threatened against the Company that questions the validity of this Agreement,
the Registration Rights Agreement or the right of the Company to enter into such
agreements, or to consummate the transactions contemplated hereby or thereby, or
that might result, either individually or in the aggregate, in any material
adverse change in the assets, business, properties, prospects, or financial
condition of the Company, or in any material change in the current equity
ownership of the Company. The foregoing includes, without limitation, any
action, suit, proceeding, or investigation pending or currently threatened
involving the prior employment of any of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, their obligations under
any agreements with prior employers, or negotiations by the Company with
potential backers of, or investors in, the Company or its proposed business.
The Company is not a party to, or to the best of its knowledge, named in any
order, writ, injunction, judgment, or decree of any court, government agency, or
instrumentality. There is no action, suit, or proceeding by the Company
currently pending or that the Company currently intends to initiate.
4.9 Offering. Subject in part to the truth and accuracy of the
--------
Purchaser's representations set forth in Section 5.1 of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
32
4.10 Title to Property and Assets; Leases. The Company owns no real
------------------------------------
estate and leases facilities in Princeton, New Jersey. Except (i) as reflected
in the Financial Statements (as defined in paragraph 4.11), (ii) for liens for
current taxes not yet delinquent, (iii) for liens imposed by law and incurred in
the ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like, (iv) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation or
(v) for minor defects in title, none of which, individually or in the aggregate,
materially interferes with the use of such property, the Company owns its
property and assets free and clear of all mortgages, liens, claims, and
encumbrances. With respect to the property and assets it leases, the Company is
in compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims, or encumbrances, subject to
clauses (i)-(v) above.
4.11 Financial Statements and Preliminary Financial Statements. The
---------------------------------------------------------
Company has delivered to the Purchaser its audited financial statements (balance
sheet and profit and loss statement, statement of stockholders' equity and
statement of cash flows including notes thereto) at December 31, 1998 and 1997
for the fiscal years then ended and shall, within thirty (30) days of the date
hereof, deliver to the Purchaser its audited financial statements for the fiscal
year ending December 31, 1999 and the twelve months ended December 31, 1999 (the
"Financial Statements"). The Financial Statements will have been prepared in
accordance with U.S. Generally Accepted Accounting Principles ("GAAP") applied
on a consistent basis throughout the periods indicated and with each other,
except that unaudited financial statements may not contain all footnotes
required by GAAP. The Financial Statements will fairly present the financial
condition and operating results of the Company as of the dates, and for the
periods, indicated therein. Except as set forth in the Financial Statements,
the Company has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually do not exceed
$125,000, and in the aggregate do not exceed $800,000, other than commitments
set forth on Schedule 4.11 attached hereto. Except as disclosed in the
-------------
Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm, or corporation. The Company maintains
and will
33
continue to maintain a standard system of accounting established and
administered in accordance with GAAP.
4.12 Changes. To the best of the Company's knowledge and except as
-------
set forth in Schedule 4.12 herein or as otherwise permitted by this Agreement,
-------------
since December 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition, business
prospects or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the business, properties, prospects, or
financial condition of the Company (as such business is presently conducted and
as it is proposed to be conducted);
(c) any material change to a material contract or arrangement by which the
Company or any of its assets is bound or subject;
(d) any indebtedness incurred by the Company in excess of $25,000;
(e) any change made or authorized to the Company's By-Laws or Charter;
(f) any dividends, whether declared, set aside or paid, with respect to
its capital stock (whether in cash or in kind) or redemptions of any such
capital stock;
(g) any resignation or termination of employment of any key officer of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation of termination of employment of any such officer;
(h) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
(i) to the best of the Company's knowledge, any other event or condition
of any character that might materially and adversely affect the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is proposed to be conducted); or
(j) any agreement or commitment, whether written or oral, by the Company
to do any of the things described in this Section 4.12.
4.13 Patents and Trademarks. The Company owns or possesses sufficient
----------------------
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses,
34
information, and proprietary rights and processes presently used by the Company
in its business (the "Intellectual Property Rights"). To the best knowledge of
the Company, the Intellectual Property Rights are the only intellectual property
rights necessary for its business as now conducted and as proposed to be
conducted and, to the best knowledge of the Company, do not conflict with, or
infringe the rights of others. Except for agreements with its own employees or
consultants, there are no outstanding options, licenses, or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses, or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, and proprietary rights and processes of any other person or entity.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the best of the Company's knowledge, conflict with or result in a
breach of the terms, conditions, or provisions of, or constitute a default
under, any contract, covenant, or instrument under which any of such employees
is now obligated.
4.14 Employees; Employee Compensation. To the best of the Company's
--------------------------------
knowledge, there is no strike, or labor dispute or union organization activities
pending or threatened between it and its employees. None of the Company's
employees belongs to any union or collective bargaining unit. To the best of
its knowledge, the Company has complied in all material respects with all
applicable state and federal equal opportunity and other laws related to
employment. To the best of the Company's knowledge, no employee of the Company
is or will be in violation of any judgment, decree, or order, or any term of any
employment contract, patent disclosure agreement, or other contract or agreement
relating to the relationship of any such
35
employee with the Company, or any other party because of the nature of the
business conducted or to be conducted by the Company or to the use by the
employee of his best efforts with respect to such business. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
4.15 Tax Returns, Payments, and Elections. The Company has filed all
------------------------------------
tax returns and reports as required by all applicable state and Federal laws.
These returns and reports are true and correct in all material respects. The
Company has paid all taxes and other assessments due, except those contested by
it in good faith; provided that for such contested taxes, the Company has
maintained an adequate reserve. The provision for taxes of the Company as shown
in the Financial Statements is adequate for taxes due or accrued as of the date
thereof. The Company has not elected pursuant to the Internal Revenue Code of
1986, as amended ("Code"), to be treated as an S corporation or a collapsible
corporation pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made any other elections pursuant to the Code (other than elections that
relate solely to methods of accounting, depreciation, or amortization) that
would have a material effect on the business, properties, prospects, or
financial condition of the Company. The Company has never had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessments or collection of any tax or
governmental charge. None of the Company's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has ever been
audited by governmental authorities. Since the date of the Financial
Statements, the Company has made adequate provisions on its books of account for
all taxes, assessments, and governmental charges with respect to its business,
properties, and operations for such period. The Company has withheld or
collected from each payment made to each of its employees, the amount of all
taxes, including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.
4.16 Insurance. The Company has in full force and effect fire and
---------
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed. The
36
Company has in full force and effect products liability and errors and omissions
insurance in amounts customary for companies similarly situated.
4.17 Environmental and Safety Laws. To the best of its knowledge, the
-----------------------------
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety (including without
limitation the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended) and to the best of its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law, or regulation.
4.18 Disclosure. The Company has provided the Purchaser with all the
----------
information reasonably available to it that the Purchaser has requested for
deciding whether to purchase the Shares. To the best of the Company's
knowledge, neither this Agreement nor any other written statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
SECTION 5. Representations, Warranties and Covenants of the
------------------------------------------------
Purchaser.
---------
5.1. The Purchaser represents and warrants to, and covenants with, the
Company, as of the date hereof and as of the Closing Date, that: (i) the
Purchaser is an "accredited investor" as defined in Regulation D under the
United States Securities Act of 1933, as amended (the "Securities Act"); and
also is knowledgeable and experienced in making investments in private placement
transactions such as the purchase of the Preferred Shares; (ii) the Purchaser is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in securities presenting an
investment decision like that involved in the purchase of the Shares, including
investments in securities issued by companies comparable to the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (iii) the Purchaser is
acquiring the Shares set forth above for its own account for investment and with
no present intention of distributing any of such Shares, and no arrangement or
understanding exists with any other person regarding the distribution of any of
such Shares; (iv) the Purchaser will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit
37
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the
Shares except (a) in the event the Shares are registered pursuant to an
effective registration statement under the Securities Act, (b) upon delivery of
an opinion of counsel (which shall be in form and substance reasonably
satisfactory to the Company) that such registration is not required, (c) in
connection with a sale, transfer or other disposition made pursuant to Section
144(k) of the Securities Act or (d) to an Affiliate of the Purchaser provided
that (i) in each of cases (a), (c) and (d) set forth above no opinion of counsel
shall be required and (ii) such offer, sale, pledge or transfer does not
otherwise violate the terms of this Agreement; and (v) the Purchaser has had an
opportunity to ask questions and receive answers from the management of the
Company regarding the Company, its business and the offering of the Shares.
5.2. The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and the Registration Rights Agreement and
to consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement
and the Registration Rights Agreement, and (ii) upon the execution and delivery
of this Agreement and the Registration Rights Agreement, this Agreement and the
Registration Rights Agreement shall constitute valid and binding obligations of
the Purchaser enforceable in accordance with their terms.
5.3. The Purchaser acknowledges and understands that there is no
public market for the Shares and that the Purchaser must bear the economic risk
of its investment in the Shares for an indefinite period of time because the
Shares have not been registered under the Securities Act and, therefore, cannot
be sold unless subsequently registered under the Securities Act or an exemption
from such registration is available. The certificates representing the Shares
issued to Purchaser will bear a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN
OPINION OF COUNSEL (WHICH SHALL BE IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY), THAT SUCH
38
REGISTRATION IS NOT REQUIRED, UNLESS SUCH SALE, TRANSFER OR OTHER
DISPOSITION IS MADE PURSUANT TO RULE 144(K) OF THE SECURITIES ACT, IN
WHICH CASE SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY BE MADE AND NO
OPINION OF COUNSEL SHALL BE REQUIRED.
The Company agrees to remove such legend from the certificates representing the
Shares issued to Purchaser at such time as such Shares may be legally sold under
Rule 144 of the Securities Act (or any successor rule) without registration
under the Securities Act, at the request of the Purchaser and upon receipt from
the Purchaser of an opinion, which shall be in form and substance reasonably
satisfactory to the Company, that such legend may be removed.
The Purchaser agrees that any sale, transfer, pledge, hypothecation or
other disposition of the Shares shall be made in compliance with such legend
and the requirements set forth in Section 2.2.
SECTION 6. Survival of Representations, Warranties and Agreements.
------------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein shall survive the execution of this Agreement, the delivery
to the Purchaser of the Shares being purchased, and the payment therefor.
SECTION 7. No Fee. The parties hereto hereby represent that there are no
------
brokers or finders entitled to compensation in connection with the transactions
contemplated hereby.
SECTION 8. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) if to the Company, to:
Orchid BioSciences, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇-▇▇
Attn: President
with a copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇-▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to the Purchaser, to:
NEN Life Science Products, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: President
With a courtesy copy to:
NEN Life Science Products, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Company Secretary
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iv) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
40
SECTION 9. Changes. Any term of this Agreement may be amended or
-------
compliance therewith waived only with the written consent of both parties
hereto.
SECTION 10. Assignment. The rights and obligations under this Agreement
----------
may not be assigned by either party hereto without the prior written consent of
the other party; provided, that such rights and obligations may be assigned by
the Purchaser to a Permitted Transferee (as defined herein).
SECTION 11. Benefit. All statements, representations, warranties,
-------
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement shall be construed to
create any rights or obligations except among the parties hereto, and no person
or entity shall be regarded as a third-party beneficiary of this Agreement.
SECTION 12. Expenses. Each of the parties hereto shall pay its own fees
--------
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 13. No Waiver; Cumulative Remedies. No failure or delay on the
------------------------------
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 14. Headings. The headings of the various sections of this
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
41
SECTION 15. Severability. In case any provision contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 16. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with (a) the internal laws of the State of New Jersey
without giving effect to principles of conflicts of law, and (b) United States
federal law.
SECTION 17. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties.
SECTION 18. Further Assurances. From and after the date of this
------------------
Agreement, upon the request of the Purchaser or the Company, the Company and the
Purchaser shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement and the
Shares.
42
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 16 day of February, 2000.
ORCHID BIOSCIENCES, INC.
By:______________________________________
▇▇▇▇ ▇▇▇▇▇
Chairman and Chief Executive Officer
NEN LIFE SCIENCE PRODUCTS, INC.
By:_____________________________________
Name:
Title:
43
Schedule 4.5
------------
Related Party Transaction
-------------------------
None
Schedule 4.12
-------------
Material Liabilities
--------------------
The Board of Directors of the Company has approved the adoption of a Restated
Certificate of Incorporation and Amended and Restated By laws in anticipation of
a possible public offering by the Company, which documents will be submitted to
the stockholders of the Company for approval at the Annual Meeting of the
shareholders scheduled to be held in March 2000.
44
Exhibit 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of February ____, 2000 by and among Orchid BioSciences, Inc., a Delaware
corporation (the "Company"), with principal offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and NEN Life Science Products Inc. (the
"Stockholder") with principal offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Recitals
WHEREAS, the Company has issued to the Stockholder shares of its Common
Stock, par value per share (the "Common Stock"), pursuant to a Common Stock
Purchase Agreement dated as of the date hereof (the "Purchase Agreement"); and
WHEREAS, among the conditions to the consummation of the transactions
contemplated by the Purchase Agreement is the execution and delivery of a
Registration Rights Agreement providing for the registration rights described
herein.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
herein contained the parties agree as follows:
Agreement
1. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION RIGHTS
1.1 Certain Definitions
-------------------
As used in this Agreement, the following terms shall have the meanings set
forth below:
(a) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(c) "Holder" shall mean the Stockholder and any transferee to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 1.2 and Section 1.8 hereof.
45
(e) "Registrable Securities" shall mean (i) shares of Common Stock and
(ii) any shares of Common Stock issued as a dividend or other distribution with
respect to or in exchange for or in replacement of the shares referenced in (i)
above; provided however, that Registrable Securities shall not include any
shares of Common Stock (i) which have previously been registered or which have
been sold to the public, or which have been sold in a private transaction in
which the transferor's rights under this Agreement are not assigned, or (ii)
with respect to which the registration rights under this Agreement have
terminated under Section 1.15 of this Agreement.
(f) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
(g) "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses.
(h) "Restricted Securities" shall mean any Registrable Securities required
to bear the legends set forth in Section 1.2(b) hereof.
(i) "Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(j) "Rule 145" shall mean Rule 145 as promulgated by the Commission under
the Securities Act as such Rule may be amended from time to time, or any similar
successor rule that may be promulgated by the Commission.
(k) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
(l) "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of Registrable
Securities and fees and disbursements of counsel for any Holder (other than the
fees and disbursements of counsel included in Registration Expenses).
1.2 Restrictions on Transfer
------------------------
(a) Each Holder agrees not to make any disposition of all or any portion
of the Registrable Securities unless and until (i) there is then in effect a
registration statement under the
46
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement or (ii) the transferee has agreed
in writing for the benefit of the Company prior to such transfer, and as a
condition thereof, delivers to the Company a written instrument by which such
transferee agrees to be bound by this Section 1.2, provided and to the extent
such Section is then applicable, and (A) such Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (B) if requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require any of the
documents described in Section 1.2(a) above in connection with any transactions
made pursuant to Rule 144(k), except in unusual circumstances.
Notwithstanding the provisions of 1.2(i) and (ii) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by a Holder which is (A) a partnership to its partners or retired partners (who
retire after the date hereof) in accordance with partnership interests, of (B)
to the Holder's family member or trust for the benefit of an individual Holder,
provided such transfer is without consideration and the transferee will be
subject to the terms of this Section 1.2 to the same extent as if he were an
original Holder hereunder.
(b) Each certificate representing Registrable Securities shall (unless
otherwise permitted by the provisions of this Agreement) be stamped or otherwise
imprinted with legends substantially similar to the following (in addition to
any legend required under applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR AN OPINION OF COUNSEL WHICH SHALL BE IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY BE THE HOLDER'S IN-HOUSE
COUNSEL), THAT SUCH REGISTRATION IS NOT REQUIRED, UNLESS SUCH SALE, TRANSFER OR
OTHER DISPOSITION IS MADE PURSUANT TO RULE 144 OF THE SECURITIES ACT, IN WHICH
CASE SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY BE MADE AND NO OPINION OF
COUNSEL SHALL BE REQUIRED, OR EXCEPT AS OTHERWISE PERMITTED UNDER A CERTAIN
COMMON STOCK PURCHASE AGREEMENT DATED MARCH __, 2000 BETWEEN THE COMPANY AND THE
ORIGINAL HOLDER, A COPY OF WHICH IS AVAILABLE UPON REQUEST FROM THE COMPANY FOR
INSPECTION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE REGISTRATION
RIGHTS AGREEMENT DATED FEBRUARY __, 2000, AS AMENDED, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE OFFICES OF THE
47
COMPANY OR MAY BE AVAILABLE UPON REQUEST.
(c) The Company shall be obligated to reissue promptly unlegended
Registrable Securities at the request of any Holder thereof if the Holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the Registrable
Securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend.
(d) Any legend endorsed on any Registrable Securities pursuant to
applicable state securities laws and any stop-transfer instructions with respect
to any Registrable Securities shall be removed upon receipt by the Company of an
order of the appropriate blue sky authority authorizing such removal.
1.3 REGISTRATION ON FORM S-3
------------------------
(a) After the effective date of the Company's initial public offering (the
"Offering Effective Date"), the Company shall use its best efforts to qualify
for registration on Form S-3 or any comparable or successor form or forms.
After the Company has qualified for the use of Form S-3, the Holder of
Registrable Securities shall have the right, at any time on or after the first
anniversary of the Offering Effective Date, to request registrations on Form S-3
(such request shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended methods of disposition
of such shares by such Holder); provided, however, that the Company shall not be
-------- -------
obligated to effect any such registration if (i) the Holder, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) on Form S-3 at an aggregate price to the public of less than
$1,000,000; (ii) in a given twelve-month period, the Company has effected two
(2) such registrations, (iii) it is to be effected more than five (5) years
after the Offering Effective Date; or (iv) the Company shall have furnished to
such Holder a certificate signed by the President of the Company stating that in
good faith judgment of the Board of Directors of the Company, it would be
materially detrimental to the Company for such registration statement to be
filed in the near future and that it has, therefore, determined to defer the
filing of such registration statement, in which case the Company shall have the
right to defer such filing for a period of not more than one hundred eighty
(180) days after receipt of the request of the Holder, and, provided ,further,
-------- -------
that the Company shall not defer its obligation in this manner more than once in
any twelve-month period.
(b) The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 1.3:
(i) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
48
(ii) After the Company has initiated two (2) such registrations
for the Holder pursuant to this Section 1.3 (counting for these
purposes only registrations which have been declared or ordered
effective and pursuant to which securities have been sold and
registrations which have been withdrawn by the Holder as to which the
Holder has not elected to bear the Registration Expenses pursuant to
Section 1.3(d) hereof and would, absent such election, have been
required to bear such expenses);
(iii) During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of
and ending on a date one hundred eighty (180) days after the effective
date of, a Company-initiated registration, including a demand
registration initiated by the Company on behalf of any holder of
demand registration rights; provided that the Company is actively
employing in good faith all reasonable efforts to cause such
registration statement to become effective.
(c) Subject to the foregoing, upon delivery by the Holder of the notice
described in Section 1.3(a) above, the Company shall (i) promptly give written
notice of the proposed registration to all other Holders (if any) and (ii) as
soon as practicable, use its best efforts to effect such registration
(including, without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with the Securities Act) as would permit or facilitate
the sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder joining in such request as are
specified in a written request received by the Company within twenty (20) days
after such written notice from the Company is mailed or delivered. The
registration statement filed pursuant to the request of the Holder may, subject
to the provisions of Sections 1.3(b) and 1.10 hereof, include other securities
of the Company with respect to which registration rights have been granted, and
may include securities of the Company being sold for the account of the Company.
(d) All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 1.3 hereof shall
be borne by the Company.
(e) If the registration requested pursuant to Section 1.3 is underwritten,
the rights of the Holder to registration pursuant to Section 1.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. The Holder may elect to include in such underwriting all
or a part of its Registrable Securities. Notwithstanding the foregoing, the
Company shall not be obligated to register the Registrable Securities of any
Holder who fails promptly to provide to the Company such information as the
Company may reasonably request at the time to enable the Company to comply with
applicable laws or regulations or to facilitate preparation of the registration
statement.
(f) If the Company shall request inclusion in any registration pursuant to
Section 1.3
49
of securities being sold for its own account, or if other persons shall request
inclusion in any registration pursuant to Section 1.3, the Holder shall offer to
include such securities in the underwriting and may condition such offer on
their acceptance of the further applicable provisions of this Section 1
(including Section 1.10). The Company shall (together with the Holder and other
persons proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters. Notwithstanding any other provision of this
Section 1.3, if the representative of the underwriters advises the Holder in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 1.10 hereof. If a person
who has requested inclusion in such registration as provided above does not
agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company, the underwriter or the Holder. Any
Registrable Securities or other securities excluded shall also be withdrawn from
such registration. If shares are so withdrawn from the registration and if the
number of shares to be included in such registration was previously reduced as a
result of marketing factors pursuant to this Section 1.3(f), then the Company
shall offer to all persons who have retained rights to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among such persons requesting additional inclusion in accordance
with Section 1.10.
1.4 Registration Procedures
-----------------------
In the case of each registration effected by the Company pursuant to
Section 1.3, the Company will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of one hundred twenty
(120) days or until the Holder has completed the distribution described in the
registration statement relating thereto, whichever first occurs; provided,
--------
however, that such 120-day period shall be extended, if necessary, to keep the
-------
registration statement effective until all such Registrable Securities are sold,
provided that Rule 145, or any successor rule under the Securities Act, permits
an offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (I) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(b) Prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
50
(c) Furnish such number of prospectuses and other documents incident
thereto, including any amendment of or supplement to the prospectus, as the
Holder from time to time may reasonably request;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that as thereafter delivered
to the purchasers of such shares such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to such registration statement and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration; and
(g) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
1.5 Indemnification
---------------
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, legal counsel and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification, or compliance has been
effected pursuant to this Section 1, and each underwriter, if any, and each
person who controls within the meaning of Section 15 of the Securities Act any
underwriter, against all expenses, claims, losses, damages, and liabilities (or
actions, proceedings, or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation
51
thereunder applicable to the Company and relating to action or inaction required
of the Company in connection with any such registration, qualification, or
compliance, and will reimburse each such Holder, each of its officers,
directors, partners, legal counsel, and accountants and each person controlling
such Holder, each such underwriter, and each person who controls any such
underwriter for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by such Holder or underwriter specifically
for use in the preparation thereof. It is agreed that the indemnity agreement
contained in this Section 1.5(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by him are included
in the securities as to which such registration, qualification, or compliance is
being effected, indemnify the Company, each of its directors, officers, legal
counsel, and accountants and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, each other such Holder, and each of their officers, directors,
and partners, and each person controlling such Holder, against all expenses,
claims, losses, damages and liabilities (or actions, proceedings, or settlements
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular, or other document (including any related registration statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such Holder,
directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons for any legal or any other expenses reasonably
incurred in connection with investigating and defending or settling any such
claim, loss, damage, liability, or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder
specifically for use in the preparation thereof; provided, however, that the
obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); and provided that in
no event shall any indemnity under this Section 1.5 exceed the gross proceeds
from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such
52
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
1.5 to the extent such failure is not prejudicial. No Indemnifying Party in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof, the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation and no Indemnified Party shall consent to
entry of any judgment or settle such claim or litigation without the prior
written consent of the Indemnifying Party. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.5 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu to indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
1.6 Information by Holder
---------------------
Each Holder of Registrable Securities shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification, or compliance
referred to in this Section 1, except to the extent that the furnishing of such
information would violate any law or any contractual arrangement. The Company
shall not be obligated to register the Registrable Securities of any Holder who
fails promptly to provide to the Company such information as the Company may
reasonably request
53
at the time to enable the Company to comply with applicable laws or regulations
or to facilitate preparation of the registration statement, including any
information that the Holder fails to provide on the basis that such information
would violate any law or any contractual arrangement.
1.7 Rule 144 Reporting
------------------
With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Restricted
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information regarding the Company available as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times from and after ninety (90) days following the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements;
(c) So long as a Holder owns any Restricted Securities, furnish to the
Holder forthwith upon written request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
1.8 Transfer or Assignment of Registration Rights
---------------------------------------------
The rights to cause the Company to register securities granted to a Holder
by the Company under this Section 1 may be transferred or assigned by a Holder
only to a transferee or assignee of not less than 50,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits, and the like), provided
that the Company is given written notice at the time of said transfer or
assignment stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes the obligations of such Holder under this
Section 1 and prior to such transfer, as a condition thereof, delivers to the
Company a written instrument by which such transferee agrees to be bound by this
Agreement.
1.9 "Market Stand-Off" Agreement
---------------------------
54
If requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, a stockholder shall not sell or otherwise transfer
or dispose of any Common Stock (or other securities) of the Company held by such
stockholder (other than those included in the registration) during the one
hundred eighty (180) day period following the effective date of a registration
statement of the Company filed under the Securities Act, provided that:
(a) if the stockholder is not an "affiliate" (as defined under Rule 144)
of the Company nor does it hold beneficially or of record 10% or more of the
outstanding equity securities of the Company at the time a registration
statement is filed, then such agreement shall only apply to the first such
registration statement of the Company including, without limitation, the
Company's initial public offering, including securities to be sold on its behalf
to the public in an underwritten offering; and
(b) all officers and directors of the Company enter into similar
agreements.
The obligations described in this Section 1.9 shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to a Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180) day period.
1.10 Allocation of Registration Opportunities
----------------------------------------
In any circumstance in which all of the Registrable Securities and other
shares of Common Stock of the Company (including shares of Common Stock issued
or issuable upon conversion of share of any currently unissued series of
Preferred Stock of the Company) with registration rights (the "Other Shares")
requested to be included in a registration on behalf of the Holder or other
selling stockholders cannot be so included as a result of limitations of the
aggregate number of shares of Registrable Securities and Other Shares that may
be so included, the number of shares of Registrable Securities and Other Shares
that may be so included shall be allocated among the Holders and the other
selling stockholders requesting inclusion of shares pro rata on the basis of the
number of shares of Registrable Securities and Other Shares held by such Holders
and other selling stockholders, assuming conversion, that such Holders and
selling stockholders had requested to be included in the registration.
1.11 Delay of Registration Opportunities
-----------------------------------
No Holder shall have any right to take any action to restrain, enjoin, or
otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 1.
1.12 Termination of Registration Rights
----------------------------------
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The right of any Holder to request registration or inclusion in any
registration pursuant to Section 1.3 shall terminate on such date after the
Offering Effective Date as all shares of Registrable Securities held or entitled
to be held upon conversion by such Holder may immediately be sold under Rule 144
during any ninety (90) day period.
2. MISCELLANEOUS
2.1 Governing Law
-------------
This Agreement shall be governed in all respects by the laws of the State
of New Jersey, as if entered into by and between New Jersey residents
exclusively for performance entirely within New Jersey, and excluding that body
of laws pertaining to conflicts of laws.
2.2 Successors and Assigns
----------------------
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of and be binding upon the successors, assigns, heirs,
executors and administrators of the parties hereto.
2.3 Entire Agreement; Amendment: Waiver
-----------------------------------
This Agreement (including the Exhibits hereto) constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. This Agreement supersedes any and all prior
understandings as to the subject matter of this Agreement. Neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated,
except by a written instrument signed by the Company and the Holders of at least
fifty percent (50%) of the Registrable Securities. Any such amendment, waiver,
discharge or termination shall be binding on all the Holders, but in no event
shall the obligation of any Holder hereunder be materially increased, except
upon the written consent of such Holder.
2.4 Notices, etc.
-------------
All notices and other communications required or permitted hereunder shall
be in writing and shall be mailed by United States first-class mail, postage
prepaid, or delivered personally by hand or nationally recognized courier
addressed (a) if to the Stockholder, at the address set forth on the first page
of this Agreement, or at such other address as such holder or permitted assignee
shall have furnished to the Company in writing, or (b) if to the Company, at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as the
Company shall have furnished to each holder in writing. All such notices and
other written communications shall be effective on the date of mailing or
delivery.
2.5 Delays or Omissions
-------------------
No delay or omission to exercise any right, power or remedy accruing to any
Holder,
56
upon any breach or default of the Company under this Agreement shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
therefore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder, shall be
cumulative and not alternative.
2.6 Rights; Separability
--------------------
Unless otherwise expressly provided herein, a Holder's rights hereunder are
several rights, not rights jointly held with any of the other Holders. In case
any provision of the Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
2.7 Confidential Information
------------------------
Each Holder acknowledges that the information received by them pursuant
hereto may be confidential and for its use only, and it will not use such
confidential information in violation of the Exchange Act or reproduce, disclose
or disseminate such information to any other person (other than its employees or
agents having a need to know the contents of such information, and its
attorneys), except in connection with the exercise of rights under this
Agreement, unless the Company has made such information available to the public
generally or such Holder is required to disclose such information by a
governmental body.
2.8 Titles and Subtitles
--------------------
The titles of the paragraphs and subparagraphs of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
2.9 Counterparts
------------
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement effective as of the day and year first above written.
ORCHID BIOSCIENCES, INC.
By ____________________________
Name:
Titles:
NEN LIFE SCIENCES PRODUCTS, INC.
By ____________________________
Name:
Title:
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