EXHIBIT 10.9
COLLABORATION AGREEMENT
This Collaboration Agreement ("Agreement") dated as of the 30th day of
May, 1997 between HYSEQ, INC., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇.▇.▇. (hereinafter "HYSEQ") and THE ▇▇▇▇▇▇-▇▇▇▇▇ CORPORATION, having its PE
Applied Biosystems Division at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(hereinafter "▇▇▇▇▇▇-▇▇▇▇▇").
WHEREAS, HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ are interested in collaborating in the
further development and commercialization of a chip-based genetic analysis
system using HYSEQ's proprietary sequencing by hybridization technology ("SBH")
as its foundation; and
WHEREAS, HYSEQ has proprietary technology and know-how with respect to SBH
design development and manufacturing of chips and, is currently using the HyChip
Module, which utilizes superchip technology for research purposes; and
WHEREAS, ▇▇▇▇▇▇-▇▇▇▇▇ has proprietary technology and know-how with respect
to the design, development, and manufacture of the system; and
WHEREAS, the PARTIES wish to enter into that certain stock purchase
agreement of even date with this Agreement whereby ▇▇▇▇▇▇-▇▇▇▇▇ shall invest in
HYSEQ.
NOW THEREFORE, in consideration of the covenants and obligations expressed
herein, the PARTIES agree as follows:
1. BASIC PRINCIPLES OF THE COLLABORATION
1.1. Intent. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ (collectively, the "PARTIES") intend
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that the result of this collaboration (the "Collaboration") will be a chip-based
genetic analysis system, including chips, instrumentation and application
software (the "SYSTEM") using SBH (sequencing by hybridization) as its
foundation, which is brought to market more quickly than either acting alone
could accomplish, with more effective technology than either alone could produce
in the shortened time frame and priced competitively for all markets on a
worldwide basis.
1.2. Mutually Profitable. Both PARTIES intend the Collaboration to be
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mutually profitable, and that both PARTIES share equally in the profits of the
sale of PRODUCTS on such terms as are hereinafter agreed to, or through one or
more amendments to this Agreement.
* CERTAIN INFORMATION IN THIS AGREEMENT AND ON THIS PAGE HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS.
1.3. Adjustment. Both PARTIES recognize that to the extent the actual
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market conditions materialize differently than anticipated, adjustments may be
needed from time to time in order that the intent of the Collaboration may be
fulfilled. Such adjustments shall be made not more often than every six months
in accordance with Article 8.1.
1.4 Pre-Existing Intellectual Properties. Both PARTIES recognize that each
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has rights to pre-existing intellectual properties which may directly or
indirectly contribute to the commercialization of the PRODUCTS. It is
understood that in the process of developing the RESEARCH PROGRAM contemplated
by Article 3 hereof, both PARTIES will reveal to each other relevant
intellectual property that existed prior to the EFFECTIVE DATE of the
Collaboration ("PRIOR IP") under appropriate confidentiality and nondisclosure
provisions, irrespective of whether the PRIOR IP is an issued patent, a pending
PATENT APPLICATION, a trade secret, know-how or otherwise.
1.5 Marketing, Sales, Service, and Support. The PRODUCTS of the
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collaboration will be supported and distributed solely through the ▇▇▇▇▇▇-▇▇▇▇▇
distribution organization. The PRODUCTS will be labeled and marketed under
names of both ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ. ▇▇▇▇▇▇-▇▇▇▇▇ will be responsible for all
expenses associated with sales, support and marketing. ▇▇▇▇▇▇-▇▇▇▇▇ will
evaluate and sell, directly and through its AFFILIATES and distributors,
PRODUCTS worldwide and will use commercially reasonable efforts to sell the
PRODUCTS in their respective markets.
1.6 Funding. Within the scope of the Collaboration Agreement, HYSEQ will
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fully fund, or arrange to fund, development of CHIPS; and ▇▇▇▇▇▇-▇▇▇▇▇, within
the scope of the Collaboration Agreement, will fully fund development of the
SYSTEM as described in the Research Plan (except for CHIPS).
1.7 Scope. The collaboration will be an exclusive arrangement to
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commercialize, on a worldwide basis, HYSEQ's proprietary * DNA array chip
technology in a product for all markets within the application focus (Article
1.8). During the CONTRACT PERIOD, neither party will pursue commercialization
of other chip-based genetic analysis systems with a third-party using *.
1 Application Focus. To the extent practicable, the Parties will make the
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CHIPS and SYSTEMS special purpose, i.e., *. Where the Parties mutually agree
that such limitations are not appropriate, the Parties will cooperate to meet
the customer's needs in light of all the facts and circumstances, e.g. through a
field licensing program in conjunction with the sales of CHIPS and SYSTEMS, or
other arrangements that recognize the relative value to each of the PARTIES.
2. DEFINITIONS
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* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
2.1 "AFFILIATES" shall mean (i) any corporation, firm, partnership or
other entity, whether de jure or de facto, which directly or indirectly owns,
is owned by or is under common ownership with a party to this Agreement to the
extent of at least fifty percent (50%) of the equity (or such lesser percentage
which is the maximum allowed to be owned by a foreign corporation in a
particular jurisdiction) having the power to vote on or direct the affairs of
the entity; and (ii) any person, firm, partnership, corporation or other entity
actually controlled by, controlling or under common control with a party to this
Agreement.
2.2. "EFFECTIVE DATE" shall mean the date of this Agreement first written
above or such later date as the PARTIES shall determine by mutual agreement.
2.3 "EQUITY INVESTMENT AGREEMENT" shall mean the Series B Convertible
Preferred Stock Purchase Agreement entered into between HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇
contemporaneously herewith relating to the investment by ▇▇▇▇▇▇-▇▇▇▇▇ of no less
than $5,000,000 and no more than $10,000,000 in HYSEQ.
2.4 "HYSEQ" shall mean HYSEQ, Inc.
2.5 "HYSEQ PATENT(S)" shall mean all patents and PATENT APPLICATIONS which
claim HYSEQ TECHNOLOGY, which are or become owned by HYSEQ during the CONTRACT
PERIOD or to which HYSEQ otherwise has, now or during the CONTRACT PERIOD, the
right to grant licenses. Included within the definition of HYSEQ PATENTS are
all continuations, continuations-in-part, divisions, patents of addition,
reissues, renewals or extensions thereof, all SPCs and PRIOR IP.
2.6 "HYSEQ TECHNOLOGY" shall mean any and all data, substances, processes,
materials, formulae, know-how and inventions, which are developed by or on
behalf of HYSEQ during or prior to the CONTRACT PERIOD and which are owned by
HYSEQ or with respect to which HYSEQ has a right to grant a license, and which
are related to the development, manufacturing, use, or sale of PRODUCTS.
2.7 "CONTRACT PERIOD" or "CONTRACT TERM" shall mean the term beginning on
the EFFECTIVE DATE and ending on the date of termination. The date of
termination shall be a minimum of five years and shall be extended year by year
automatically, unless the parties mutually agree to terminate the agreement.
2.8 "RC" or "RESEARCH COMMITTEE" shall mean the RESEARCH COMMITTEE which
shall consist of three (3) persons appointed by HYSEQ and three (3) persons
appointed by ▇▇▇▇▇▇-▇▇▇▇▇.
2.9 "RESEARCH PROGRAM" shall mean the research program, approved by the RC
during the CONTRACT PERIOD, to commercialize the PRODUCTS using SBH pursuant to
the Annual Research Plan adopted pursuant to Article 3 hereof and made a
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part of this Agreement in accordance therewith as in effect from time to time
during the term of this Agreement.
2.10 "CHIP" shall mean a * which is made by HYSEQ or using HYSEQ
INTELLECTUAL PROPERTY RIGHTS.
2.11 "P-E SOFTWARE" shall mean software ▇▇▇▇▇▇-▇▇▇▇▇ generates, as
described in the Research Plan.
2.12 "INTELLECTUAL PROPERTY RIGHTS" ("IPR") shall mean rights to protected
Intellectual Properties ("IP"), which shall mean patents, copyrights,
trademarks, trade secrets and maskworks. (IPR may be subject to limitations
and/or obligations in any license from a THIRD PARTY.)
2.13 "INVENTION" shall mean intellectual property amenable to patent
protection.
2.14 "MATERIAL BREACH" shall mean: failure to pay monies, whether payment
for goods, license or royalties, due within forty-five (45) days of their due
date and absent a reasonable dispute about the amount therefor for which the
dispute resolution mechanism has been initiated as provided for herein; failure
of either Party to exercise reasonable diligence in the development of their
respective areas of responsibility; and, material failure of a Party to meet the
production or delivery schedules of its development and supply agreement.
2.15 "▇▇▇▇▇▇-▇▇▇▇▇" means The ▇▇▇▇▇▇-▇▇▇▇▇ Corporation and its AFFILIATES.
2.16 "▇▇▇▇▇▇-▇▇▇▇▇ PATENT(S)" shall mean all patents and PATENT
APPLICATIONS which claim ▇▇▇▇▇▇-▇▇▇▇▇ TECHNOLOGY, which are or become owned by
▇▇▇▇▇▇-▇▇▇▇▇ during the CONTRACT PERIOD or to which ▇▇▇▇▇▇-▇▇▇▇▇ otherwise has,
now or during the term of the CONTRACT PERIOD, the right to grant licenses.
Included within the definition of ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals or
extensions thereof, all SPCs and PRIOR IP.
2.17 "SPC" shall mean a right based upon a patent to exclude others from
making, using or selling a ▇▇▇▇▇▇-▇▇▇▇▇ PRODUCT or a HYSEQ PRODUCT, such as a
Supplementary Protection Certificate from the European Patent Office.
2.18 "THIRD PARTY(IES)" shall mean any party other than a Party to this
Agreement or other than an AFFILIATE of HYSEQ or of ▇▇▇▇▇▇-▇▇▇▇▇.
2.19 "HYSEQ SOFTWARE" shall mean HYSEQ-generated software.
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* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
2.20 "NECESSARY REAGENTS" shall mean reagents, including probes,
proprietary to HYSEQ, required for the use of CHIPS for the use, or uses, for
which any given CHIP is intended and designed.
2.21 "PATENT APPLICATION" shall mean any U.S. application, continuation,
continuation-in-part, reissue, reexamination, division or patent term extension
application or any foreign equivalent of the foregoing.
2.22 "PROSECUTE" shall mean, in the context of prosecuting pending PATENT
APPLICATIONS, taking necessary actions, including conducting oppositions and
interferences, to perfect the patent rights to an INVENTION.
2.23 "PRODUCTS" shall mean the SYSTEM, P-E SOFTWARE, CHIPS, HYSEQ SOFTWARE
and NECESSARY REAGENTS.
2.24 "RESIDUAL KNOWLEDGE" shall mean all Collaboration information in non-
tangible form which is gained and retained in the mind in the normal course of
work by those employees (i) performing under this Agreement and (ii) having
access to Collaboration information, whether confidential or not, that is in
tangible or intangible form and that is not a protected IP.
2.25 "COLLABORATION HYSEQ INTELLECTUAL PROPERTY" shall mean individually
and collectively all inventions, improvements and/or discoveries, maskworks,
computer programs, and other copyrightable material arising out of work
performed pursuant to the obligations of this Agreement, conceived and/or
reduced to practice during the CONTRACT PERIOD solely by one or more employees
or agents of HYSEQ, in furtherance of the RESEARCH PROGRAM. Such Intellectual
Property shall include any patent application and patent throughout the world on
such inventions, improvements and/or discoveries, maskworks, computer programs,
or any copyrightable material produced in connection with this Agreement,
including all copyrights and any extensions and renewals thereof on any and all
such material including translations thereof in any and all countries, filed
pursuant to this Agreement by or on behalf of HYSEQ, its employees or agents.
2.26 "COLLABORATION JOINT INTELLECTUAL PROPERTY" shall mean individually
and collectively all inventions, improvements and/or discoveries, maskworks,
computer programs, and other copyrightable material, arising out of work
performed pursuant to the obligations of this Agreement, which is jointly
conceived and/or reduced to practice during the CONTRACT PERIOD by one or more
employees or agents of HYSEQ, and by one or more employees or agents of ▇▇▇▇▇▇-
▇▇▇▇▇, and related to the RESEARCH PROGRAM. Such Intellectual Property shall
include any patent application and patent throughout the world on such
inventions, improvements and/or discoveries, maskworks, or computer programs or
other copyrightable material produced in connection with this Agreement,
including all copyrights and any extensions and renewals thereof on any and all
such material including translations thereof in any
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and all countries, filed pursuant to this Agreement by or on behalf of a party,
its employees, or agents.
2.27 "COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL PROPERTY" shall mean
individually and collectively all inventions, improvements and/or discoveries,
maskworks, computer programs, and other copyrightable material, arising out of
work performed pursuant to the obligations of this Agreement, conceived and/or
reduced to practice during the CONTRACT PERIOD solely by one or more employees
or agents of ▇▇▇▇▇▇-▇▇▇▇▇, and related to the RESEARCH PROGRAM. Such
Intellectual Property shall include any patent application and patent throughout
the world on such inventions, improvements and/or discoveries, maskworks, or
computer programs or other copyrightable material produced in connection with
this Agreement, including all copyrights and any extensions and renewals thereof
on any and all such material including translations thereof in any and all
countries, filed pursuant to this Agreement by or on behalf of ▇▇▇▇▇▇-▇▇▇▇▇, its
employees or agents.
3. RESEARCH PROGRAM
3.1. Purpose. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall conduct the RESEARCH PROGRAM
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throughout the CONTRACT PERIOD as specified in said RESEARCH PROGRAM. The
objective of the RESEARCH PROGRAM is to commercialize HYSEQ's proprietary chip
technology into a product platform for markets on a worldwide basis, it being
understood that the design and development of the CHIPS will be under the
direction and control of HYSEQ and that the design, development and manufacture
of the SYSTEM (except CHIPS), including the instrument platform, will be under
the direction and control of ▇▇▇▇▇▇-▇▇▇▇▇, and the design, development, and the
manufacture of the reagents and associated analysis software will be under the
joint control of ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ. The RESEARCH COMMITTEE will, in the
context of preparation of its Annual Research Plan, determine the most cost-
effective mechanism for production of the CHIPS and the SYSTEM considering the
expertise of each of the companies in connection therewith.
3.2 RESEARCH COMMITTEE
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3.2.1 Purpose. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall establish the RESEARCH
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COMMITTEE within thirty (30) days after the EFFECTIVE DATE:
(a) to prepare the initial Research Plan and to revise such
Research Plan over time as approved.
(b) to review and evaluate progress under the Research Plan;
(c) to prepare the Research Plan budget for each year;
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(d) to oversee the activities associated with the Research Plan;
and
(e) to coordinate and monitor publication of research results
obtained from and the exchange of information and materials
that relate to the RESEARCH PROGRAM.
(f) to prepare specifications for CHIPS and SYSTEMS;
(g) to develop specifications for product labeling.
The RESEARCH COMMITTEE shall continue to convene for the purposes set forth
in subsection (e), above, from time to time after the termination of this
Agreement.
3.2.2 Membership. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall each appoint, in its
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sole discretion, three members to the RESEARCH COMMITTEE. Substitutes may
be appointed at any time.
3.2.3 Chair. The RESEARCH COMMITTEE shall initially be chaired by the
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senior HYSEQ member. Each year, the Chair shall be rotated between the
parties, i.e., the first year the Chair will be a HYSEQ member, the second
year a ▇▇▇▇▇▇-▇▇▇▇▇ member, and so on.
3.2.4 Meetings. The RESEARCH COMMITTEE shall meet at least quarterly,
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at places and on dates selected by each party in turn. Representatives of
HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇ or both, in addition to members of the RESEARCH
COMMITTEE, may attend such meetings at the invitation of either party.
3.2.5 Minutes. The RESEARCH COMMITTEE shall keep accurate minutes of
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its deliberations which record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to all
RESEARCH COMMITTEE members within ten (10) business days after each
meeting. The party hosting the meeting shall be responsible for the
preparation and circulation of the draft minutes. Draft minutes shall be
edited by the Chair and shall be issued in final form only with the
approval and agreement of a majority of the members.
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3.2.6 Decisions. All technical decisions of the RESEARCH COMMITTEE
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shall be made by majority; provided, however, that the Chair, shall cast
the deciding vote if the RESEARCH COMMITTEE is deadlocked.
3.2.7 Expenses. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall each bear all expenses of
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their respective members related to their participation on the RESEARCH
COMMITTEE.
3.3 Annual Research Plan.
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3.3.1 An initial research plan shall be prepared by the RESEARCH
COMMITTEE for submission to and approval by HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ no later
than one hundred and twenty (120) days after execution of this Agreement.
3.3.2 Reports. During the CONTRACT PERIOD, each party shall furnish
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to the RESEARCH COMMITTEE:
(a) summary written reports within fifteen (15) days after the
end of each calendar year quarter period commencing on the
first complete calendar year quarter following the EFFECTIVE
DATE, describing its progress under the RESEARCH PROGRAM; and
(b) comprehensive written reports within thirty (30) days after
the end of each year of the Agreement, describing in detail
the work accomplished by it under the RESEARCH PROGRAM during
the year and discussing and evaluating the results of such
work.
3.4 Laboratory Facilities and Personnel. Each party shall provide
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laboratory facilities, equipment and personnel for the work to be done by the
party in carrying out the RESEARCH PROGRAM consistent with a company of the
party's size and state of development.
3.5 Diligent Efforts. The PARTIES shall use reasonably diligent efforts
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to achieve the objectives of the RESEARCH PROGRAM.
4. COMMITMENTS AND COSTS AND EXPENSES OF COLLABORATION
4.1 HYSEQ will commit $5 million, including without limitation, amounts
received under that certain grant from the National Institute of Standards and
Technology on or after the EFFECTIVE DATE, toward development of the CHIP
component of the SYSTEM. HYSEQ will commit research, development and
manufacturing resources at
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HYSEQ necessary to achieve the program goals of manufacturing a minimum number
of specific CHIPS in quantities previously agreed to and with performance
characteristics previously agreed to, to meet market demand for such CHIPS.
4.2 ▇▇▇▇▇▇-▇▇▇▇▇ will commit *, including without limitation, amounts
received under that certain grant from the National Institute of Standards and
Technology toward development and commercialization of the instrumentation,
reagents, and software components of the SYSTEM.
▇▇▇▇▇▇-▇▇▇▇▇ shall commit monies and other resources sufficient to realize
the development of the SYSTEM as delineated in the Research Plan. ▇▇▇▇▇▇-▇▇▇▇▇
agrees to pay reasonable "burdened cost" (fully loaded cost) for HYSEQ employees
agreed by ▇▇▇▇▇▇-▇▇▇▇▇ to be assigned to and performing services in the
development of the SYSTEM as described in the Research Plan.
4.3 The amounts committed by each of the PARTIES will be subject to
adjustment by the Annual Budget contemplated by Article 3; provided, however,
that nothing herein shall require either party to commit in excess of the amount
set forth in Article 4.1 or 4.2 without such party's prior written consent.
5. EXCHANGE OF INFORMATION AND CONFIDENTIALITY
5.1 Duties of Confidentiality. Because HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ will be
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cooperating with each other in this collaboration, each may reveal confidential
information to the other in the course of this program. "Confidential
Information" shall include confidential knowledge, know-how, practices,
processes, equipment or information which (a) is obtained or generated during
the course of this work and (b) is related thereto and, except for generated
information (c) is identified at the time of disclosure as "CONFIDENTIAL" and,
in the case of disclosures in non-written form, is identified in writing within
thirty (30) days as confidential. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ agree to hold in
confidence, by using the same degree of care as each uses for information of
like importance, but not less than a reasonable degree of care, any Confidential
Information disclosed by the other party hereunder, and ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ
agree not to disclose same to any third party without the express written
consent of the other or the RC, or, except as may be required for purposes of
advancing the research, investigating, developing, manufacturing or marketing of
the CHIPS or the SYSTEM, or to carry out any litigation concerning the same or
the research covered under this Agreement, provided that each such third party
is informed of the confidentiality of such information and that each said third
party agrees to be bound to at least the same degree of confidentiality as the
PARTIES are bound under this Agreement. This confidentiality requirement shall
remain in force for a period of three (3) years following termination of this
Agreement. Notwithstanding the above, Confidential Information shall not
include, and nothing in this Article shall in any way restrict the
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* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
rights of either HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇ to use, disclose or otherwise deal with,
any information which:
(a) Can be demonstrated to have been in the public domain as of the
Effective Date or comes into the public domain during the term of
this Agreement through no act of the recipient; or
(b) Can be demonstrated to have been independently known to the recipient
prior to the receipt thereof, or made available to the recipient as a
matter of lawful right by a third party; or
(c) Can be demonstrated to have been rightfully received by the recipient
from a third party who did not require the recipient to hold it in
confidence or limit its use and who did not acquire it, directly or
indirectly, from the other party to this Agreement under a continuing
obligation of confidentiality; or
(d) Shall be required for disclosure to any governmental regulatory
agencies pursuant to approval for use; or
(e) Is independently conceived, invented or acquired by researchers of
the recipient who have not been personally exposed to the information
provided to the recipient hereunder; or
(f) Is published by a governmental agency as part of the normal patent
filing and prosecution process.
5.2 Responsibility over Employees and Agents. Each of the parties agrees
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to assume individual responsibility for the actions and omissions of its
respective employees, agents and assigns in conjunction with this research, and
to inform same of the responsibilities for confidentiality and disclosure under
this Agreement, and to obtain their agreement to be bound in the same manner
that the party is bound.
5.3 Nothing herein shall be construed as preventing either party from
disclosing any information to an AFFILIATE of ▇▇▇▇▇▇-▇▇▇▇▇ or HYSEQ or to a sub-
licensee, distributor or joint venture or other associated company of either
party for the purpose of developing or commercializing the CHIPS and the SYSTEM,
provided such AFFILIATE, sub-licensee, distributor or joint venture or other
associated company has undertaken a similar obligation of confidentiality with
respect to the Confidential Information.
5.4 All Confidential Information disclosed by one party to the other
shall remain the intellectual property of the disclosing party. In the event
that a court or other legal or administrative tribunal, directly or through an
appointed master, trustee or receiver, assumes partial or complete control over
the assets of a party to this Agreement based on the insolvency or bankruptcy of
such party, the bankrupt or insolvent party shall promptly notify the court or
other tribunal (i) that Confidential Information received from the other
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party under this Agreement remains the property of the other party and (ii) of
the confidentiality obligations under this Agreement. In addition, the bankrupt
or insolvent party shall, to the extent permitted by law, take all steps
necessary or desirable to maintain the confidentiality of the other party's
Confidential Information and to insure that the court, other tribunal or
appointed maintains such information in confidence in accordance with the terms
of this Agreement.
5.5 No public announcement concerning the existence of or terms of this
Agreement shall be made, either directly or indirectly, by any party to this
Agreement without prior written notice to the other party and, except as may be
legally required, or as may be required for a public offering of securities, or
as may be required for recording purposes, without first obtaining the approval
of the other party and agreement upon the nature and text of such announcement.
The party desiring to make any such public announcement shall inform the other
party of the proposed announcement or disclosure in reasonably sufficient time
prior to public release, and shall provide the other party with a written copy
thereof, in order to allow such other party to comment upon such announcement or
disclosure.
5.6 Neither ▇▇▇▇▇▇-▇▇▇▇▇ nor HYSEQ shall submit for written or oral
publication any manuscript, abstract or the like which includes data or other
information generated and provided by the other party or otherwise developed by
either party in the performance of activities in furtherance of this Agreement
without first obtaining the prior written consent of the RC established in
accordance with Article 3.
5.7 For the avoidance of doubt, nothing in this Agreement shall be
construed as preventing or in any way inhibiting either party from complying
with statutory and regulatory requirements governing the development,
manufacture, use and sale or other distribution of products in any manner which
it reasonably deems appropriate, including, for example, by disclosing to
regulatory authorities confidential or other information received from a party
or THIRD PARTIES. The PARTIES shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to such
information is granted.
6. PATENT PROSECUTION AND LITIGATION
6.1 Intellectual Property.
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6.1.1 Ownership of Intellectual Property
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6.1.1.1 COLLABORATION HYSEQ INTELLECTUAL PROPERTY
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All rights and title to COLLABORATION HYSEQ INTELLECTUAL PROPERTY,
whether patentable or copyrightable or not, shall belong to
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HYSEQ and shall be subject to the terms and conditions of this
Agreement.
6.1.1.2 COLLABORATION JOINT INTELLECTUAL PROPERTY
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All rights and title to COLLABORATION JOINT INTELLECTUAL PROPERTY,
whether patentable or copyrightable or not, shall belong jointly to
▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ and shall be subject to the terms and
conditions of this Agreement.
6.1.1.3 COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL PROPERTY
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All rights and title to COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL
PROPERTY, whether patentable or copyrightable or not, shall belong to
▇▇▇▇▇▇-▇▇▇▇▇. Such ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL PROPERTY shall be
subject to the terms and conditions of this Agreement.
6.1.2 Invention and Intellectual Property Disclosures.
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HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ agree to report the collaboration intellectual
property described in Articles 2.25, 2.26, and 2.27 promptly to each other
and to the RC, and in any event within thirty (30) days of their
identification thereof. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ will promptly prepare
invention disclosure reports on any such COLLABORATION HYSEQ INTELLECTUAL
PROPERTY, COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL PROPERTY, respectively,
and promptly deliver such reports to the RC. The RC shall direct which
party is to prepare the report for COLLABORATION JOINT INTELLECTUAL
PROPERTY. HYSEQ further agrees to report promptly to ▇▇▇▇▇▇-▇▇▇▇▇ the
HYSEQ PRIOR IP, and in any event within thirty (30) days after the
Effective Date. Similarly, ▇▇▇▇▇▇-▇▇▇▇▇ further agrees to report promptly,
to HYSEQ the ▇▇▇▇▇▇-▇▇▇▇▇ PRIOR IP, and in any event within thirty (30)
days after the Effective Date.
6.1.3 Any intellectual property owned by ▇▇▇▇▇▇-▇▇▇▇▇ or HYSEQ
that can contribute to the success of the products from the collaboration
will be made available to the Parties for the development of PRODUCTS under
the terms and conditions of this Agreement. Any intellectual property that
has been licensed to either of the parties will be made available to the
Parties for the development of PRODUCTS under the terms and conditions of
this Agreement, and under terms consistent with those licensing agreements.
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6.2 HYSEQ shall have the first right, using in-house or outside legal
counsel selected by HYSEQ's sole discretion, to prepare, file, PROSECUTE,
maintain and extend HYSEQ PATENTS and other forms of intellectual property
protection for inventions, discoveries, designs, works of authorship and other
know-how generated by HYSEQ during the CONTRACT PERIOD in countries of HYSEQ's
choosing, and HYSEQ shall bear all costs relating to such activities which occur
at HYSEQ's request or direction, except that ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ may agree on
a sharing of patent costs associated with filings outside the U.S. HYSEQ shall
solicit the RC's advice and review of HYSEQ PATENTS, and other forms of
intellectual property, and important prosecution matters relating thereto and
take into consideration the RC's advice thereon. If HYSEQ, prior or subsequent
to filing HYSEQ PATENTS or applications for other forms of intellectual
property, elects not to prepare, file, PROSECUTE or maintain certain of such
HYSEQ PATENTS or certain claims encompassed within such HYSEQ PATENTS, or such
other forms of intellectual property, in one or more countries, HYSEQ shall give
▇▇▇▇▇▇-▇▇▇▇▇ notice thereof within a reasonable period prior to allowing such
patents, claims or other forms of intellectual property, to lapse or become
abandoned or unenforceable, and ▇▇▇▇▇▇-▇▇▇▇▇ shall thereafter have the right, at
its sole expense, to prepare, file, PROSECUTE, and maintain such HYSEQ PATENTS
or divisional PATENT APPLICATIONS related to such certain claims, or such other
forms of intellectual property, in such one or more countries. ▇▇▇▇▇▇-▇▇▇▇▇
shall, at PERKIN-ELMER's expense, provide reasonable assistance to HYSEQ to
facilitate the filing and prosecution of all such HYSEQ PATENTS and shall
execute all documents deemed necessary or desirable therefor. ▇▇▇▇▇▇-▇▇▇▇▇ and
HYSEQ shall each hold all information it presently knows or acquires under this
Article as Confidential Information in accordance with Article 5.
6.3 ▇▇▇▇▇▇-▇▇▇▇▇ shall have the first right, using in-house or outside
legal counsel selected at PERKIN-ELMER's sole discretion, to prepare, file,
PROSECUTE, maintain and extend ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS and other forms of
intellectual property for inventions, discoveries, designs, works of authorship
and other know-how by ▇▇▇▇▇▇-▇▇▇▇▇ during the CONTRACT PERIOD in countries of
PERKIN-ELMER's choosing, and ▇▇▇▇▇▇-▇▇▇▇▇ shall bear all costs relating to such
activities which occur at PERKIN-ELMER's request or direction. ▇▇▇▇▇▇-▇▇▇▇▇
shall solicit the RC's advice and review of such ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS and other
forms of intellectual property and important prosecution matters relating
thereto and take into consideration RC's comments thereon. If ▇▇▇▇▇▇-▇▇▇▇▇,
prior or subsequent to filing ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS, or applications for other
forms of intellectual property, elects not to prepare, file, PROSECUTE or
maintain certain of such ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS or certain claims encompassed
within such ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS, or such other forms of intellectual property,
in one or more countries, ▇▇▇▇▇▇-▇▇▇▇▇ shall give HYSEQ notice thereof within a
reasonable period prior to allowing such patents, claims or other forms of
intellectual property to lapse or become abandoned or unenforceable, and HYSEQ
shall thereafter have the right, at its sole expense, to prepare, file,
PROSECUTE, and maintain such ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS or divisional PATENT
APPLICATIONS related to such certain claims, or such other forms of intellectual
13
property, in such one or more countries. HYSEQ shall, at HYSEQ's expense,
provide reasonable assistance to ▇▇▇▇▇▇-▇▇▇▇▇ to facilitate the filing and
prosecution of all ▇▇▇▇▇▇-▇▇▇▇▇ PATENTS and shall execute all documents deemed
necessary or desirable therefor. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall each hold all
information it presently knows or acquires under this Article as Confidential
Information in accordance with Article 5.
6.4 COLLABORATION JOINT INTELLECTUAL PROPERTY. With respect to
-----------------------------------------
COLLABORATION JOINT INTELLECTUAL PROPERTY, ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ shall jointly
determine the advisability of filing a patent application or application for
other intellectual property thereon. The RC shall appoint one of the PARTIES
the responsibility to prepare, file, PROSECUTE diligently and maintain such
application(s). The PARTIES shall share equally all reasonable costs incurred in
connection with such activities (the non-prosecuting party will promptly
reimburse the prosecuting party); provided that either party may avoid its
responsibility for such costs by assigning its rights in such COLLABORATION
JOINT INTELLECTUAL PROPERTY to the other party. If either party assigns to the
other its rights in such Property as set forth above, the other party shall be
free to decide, in its sole discretion, whether or not to file or continue
prosecution or maintain any such application(s), and whether or not to maintain
any protection issuing thereon in the U.S. and in any foreign country. Any such
filing prosecution or maintenance shall then be at the assignee's sole expense.
6.5 HYSEQ's License of IP to ▇▇▇▇▇▇-▇▇▇▇▇. HYSEQ grants to ▇▇▇▇▇▇-▇▇▇▇▇,
-------------------------------------
a license under HYSEQ PRIOR IP and COLLABORATION HYSEQ IP to make, have made,
use and sell the SYSTEM, PE SOFTWARE, HYSEQ SOFTWARE, and NECESSARY REAGENTS, to
read CHIPS, and to use and sell CHIPS; and to make, or have made, CHIPS, if
HYSEQ chooses not to manufacture, or have manufactured, same; all pursuant to
the purposes of this Collaboration Agreement to make PRODUCTS available to Third
Parties; and to pass on to customers of ▇▇▇▇▇▇-▇▇▇▇▇ the rights to use said
PRODUCTS. However, this license specifically shall not constitute a license to
▇▇▇▇▇▇-▇▇▇▇▇ to manufacture CHIPS, unless HYSEQ chooses not to manufacture or
have manufactured and sell CHIPS to ▇▇▇▇▇▇-▇▇▇▇▇. This license shall be royalty-
free in lieu of payments to be made under this Agreement by ▇▇▇▇▇▇-▇▇▇▇▇ to
HYSEQ based on sales of PRODUCTS. No license is provided hereunder for the use
by ▇▇▇▇▇▇-▇▇▇▇▇ of CHIPS other than for the development, manufacturing and sale
of PRODUCTS by ▇▇▇▇▇▇-▇▇▇▇▇.
6.6 ▇▇▇▇▇▇-▇▇▇▇▇ License of IP to HYSEQ. ▇▇▇▇▇▇-▇▇▇▇▇ grants to HYSEQ a
-----------------------------------
license under ▇▇▇▇▇▇-▇▇▇▇▇ PRIOR IP and COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ IP to make,
have made, and use internally, CHIPS for operation with the SYSTEM, for the
purpose of developing PRODUCTS for sale to Third Parties by ▇▇▇▇▇▇-▇▇▇▇▇. This
license shall be royalty free for CHIPS sold to ▇▇▇▇▇▇-▇▇▇▇▇ by HYSEQ. No
license is provided hereunder for the use by HYSEQ of CHIPS other than for the
development, manufacturing and sale of PRODUCTS by ▇▇▇▇▇▇-▇▇▇▇▇.
14
6.7 Each party, on behalf of itself and its directors, employees,
officers, shareholders, agents, successors and assigns hereby waives any and all
actions and causes of action, claims and demands whatsoever, in law or equity of
any kind it or they may have against the other party, its officers, directors,
employees, shareholders, agents, successors and assigns, which may arise in any
way, except as a result of gross negligence, recklessness, or willful
misconduct, in performance of patent activities under this Article 6.
6.8 Each party, as the case may be, shall disclose to the other, the
complete texts of all PATENTS filed on COLLABORATION ▇▇▇▇▇▇-▇▇▇▇▇ INTELLECTUAL
PROPERTY, COLLABORATION HYSEQ INTELLECTUAL PROPERTY, and COLLABORATION JOINT
INTELLECTUAL PROPERTY, as well as all information received concerning the
institution or possible institution of any interference, opposition, re-
examination, reissue, revocation, nullification or any official proceeding
involving such PATENTS anywhere in the world. Each party shall have the right
to review all such pending applications and other proceedings and make
recommendations concerning them and their conduct. Each party shall keep the
other promptly and fully informed of the course of patent prosecution or other
proceedings including by providing the other party with copies of important,
substantive communications, search reports and THIRD PARTY observations
submitted to or received from patent offices throughout the world. The PARTIES
shall hold all information disclosed to it under this article as confidential
subject to the provisions of Article 5. Each party shall have the right to
assume responsibility for any PATENT or any part thereof (except for PATENTS of
the other party filed on PRIOR IP), which the other party intends to abandon or
otherwise cause or allow to be forfeited.
6.9 In the event of the institution of any suit by a THIRD PARTY against
HYSEQ, ▇▇▇▇▇▇-▇▇▇▇▇ or its sub-licensees for patent infringement involving the
manufacture, use, sale, distribution or marketing of PRODUCTS, the party sued
shall promptly notify the other party in writing. The other party shall have
the right but not the obligation to defend or participate in the defense of such
suit at its own expense. HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall assist one another and
cooperate in any such litigation at the other's request without expense to the
requesting party.
6.10 In the event that HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇ becomes aware of actual or
threatened infringement of a ▇▇▇▇▇▇-▇▇▇▇▇ PATENT or HYSEQ PATENT, or PATENT
resulting from COLLABORATION JOINT INTELLECTUAL PROPERTY, that party shall
promptly notify the other party in writing. The owner of the ▇▇▇▇▇▇-▇▇▇▇▇ PATENT
or HYSEQ PATENT, and either owner of a PATENT resulting from the COLLABORATION
JOINT INTELLECTUAL PROPERTY shall have the first right but not the obligation to
bring, at its own expense, an infringement action against any THIRD PARTY and to
use the other party's name in connection therewith. If an owner of the patent
does not commence a particular infringement action within ninety (90) days, the
other party, after notifying the owner in writing, shall be entitled to bring
such infringement action at its own expense. The party conducting such action
shall have full
15
control over its conduct, including settlement thereof provided such settlement
shall not be made without the prior written consent of the other party if it
would adversely affect the patent rights of the other party. In any event,
HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall assist one another and cooperate in any such
litigation at the other's request without expense to the requesting party. In
the event any PRIOR IP is the subject of litigation, the party conducting the
litigation shall consult with the other party prior to settlement of such
litigation.
6.11 HYSEQ and ▇▇▇▇▇▇-▇▇▇▇▇ shall recover their respective actual out-of-
pocket expenses, or equitable proportions thereof, associated with any
litigation or settlement thereof from any recovery made by any party. Any
excess amount shall be shared between ▇▇▇▇▇▇-▇▇▇▇▇ and HYSEQ in an amount
proportional to their respective losses and expenses.
6.12 The PARTIES shall keep one another informed of the status of their
respective activities regarding any such litigation or settlement thereof.
6.13 An owner of a ▇▇▇▇▇▇-▇▇▇▇▇ PATENT or a HYSEQ PATENT or a PATENT
resulting from COLLABORATION JOINT INTELLECTUAL PROPERTY shall have the first
right to seek extensions of the terms of the patent and to seek to obtain SPCs.
A party who is developing, selling or planning to sell a product covered by a
patent shall have the second right. Each party shall assist the other in the
obtaining of such extensions or SPCs including by authorizing the other party to
act as its agent.
6.14 All rights and licensing granted under or pursuant to this
Agreement by from one PARTY to the other PARTY are, and shall irrevocably be
deemed to be, "intellectual property" as defined in Section 101(56) of the
Bankruptcy Code. In the event of the commencement of a case by or against
either party under any Chapter of the Bankruptcy Code, this Agreement shall be
deemed an executory contract and all rights and obligations hereunder shall be
determined in accordance with Section 365(n) thereof. Unless a party rejects
this Agreement and the other party decides not to retain its rights hereunder,
---
the other party shall be entitled to a complete duplicate (or complete access
to, as appropriate) all intellectual property and all embodiments of such
intellectual property held by the party and the party shall not interfere with
the rights of the other party, which are expressly granted hereunder, to such
intellectual property and all embodiments of such intellectual property from
another entity. Further, this Agreement shall be deemed, upon presentation to
another entity, to be the same as an express instruction by the party to such
other entity to provide such intellectual property and all embodiments of such
intellectual property directly to the other party. Without limiting the
foregoing provisions in this Article, the other party shall be entitled to all
post-bankruptcy-petition improvements, updates, or developments of intellectual
property created hereunder. If such intellectual property is not fully
developed as of the commencement of any bankruptcy case, the other party shall
have the right to complete development of the property.
16
7. TRADEMARKS AND NON-PROPRIETARY NAMES
7.1 ▇▇▇▇▇▇-▇▇▇▇▇, at its expense, shall be responsible for the selection,
registration and maintenance of all trademarks which it employs in connection
with PRODUCTS (except CHIPS) and shall own and control such trademarks. Nothing
in this Agreement shall be construed as a grant of rights, by license or
otherwise, to HYSEQ to use such trademarks for any purpose other than co-
promotion as provided in this Agreement.
7.2 ▇▇▇▇▇▇-▇▇▇▇▇, at its expense, shall be responsible for the selection
and registration of non-proprietary names for ▇▇▇▇▇▇-▇▇▇▇▇ PRODUCT.
7.3 HYSEQ, at its expense, shall be responsible for the selection,
registration and maintenance of all trademarks which it employs in connection
with CHIPS and shall own and control such trademarks. Nothing in this Agreement
shall be construed as a grant of rights, by license or otherwise, to ▇▇▇▇▇▇-
▇▇▇▇▇ to use such trademarks for any purpose other than co-promotion as
provided in this Agreement.
8. FINANCIAL ASPECTS, STATEMENTS AND REMITTANCES
8.1 In accordance with the Principles of Collaboration outlined in
Article 1.2, ▇▇▇▇▇▇-▇▇▇▇▇ will pay to HYSEQ a royalty on the NET SALES (defined
below) of PRODUCTS sold by ▇▇▇▇▇▇-▇▇▇▇▇. The PARTIES will agree upon a method
from which to calculate the shared profits and resulting royalty that should be
paid to HYSEQ by June 19, 1997 or such later date as shall be mutually agreed
upon. Pending resolution of the royalty rate, ▇▇▇▇▇▇-▇▇▇▇▇ will pay to HYSEQ an
initial royalty of * on the NET SALES of PRODUCTS sold by ▇▇▇▇▇▇-▇▇▇▇▇ pursuant
to this Agreement, said initial royalty to be adjusted retroactively once the
royalty rate is determined according to the method. After the first year
following the first commercial sale of a PRODUCT, the royalty shall be subject
to adjustment at the written request of either party in accordance with Article
1.3. Upon such request, both parties will cooperate in providing accurate
information to the other to determine the proper royalty rate in accordance with
the method to reflect the equal sharing in the pre-tax profits on the sale of
PRODUCTS, taking into account the operating costs incurred by each party.
8.1.1 "Net Sales" means the following:
(i) With respect to sales by ▇▇▇▇▇▇-▇▇▇▇▇, or an Affiliate of
▇▇▇▇▇▇-▇▇▇▇▇, or a distributor of ▇▇▇▇▇▇-▇▇▇▇▇ to any
THIRD PARTY, Net Sales means the actual amount of gross
sales of PRODUCTS to a THIRD PARTY, less: trade, cash and
quantity discounts, if any, actually allowed, amounts
refunded for
17
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
faulty or defective product, returns, rejections,
freight, insurance and other transportation costs (except
income taxes), tariffs, duties and similar governmental
charges paid, to the extent included in gross sales
price.
(ii) With respect to sales by ▇▇▇▇▇▇-▇▇▇▇▇ made to any
Affiliate or to any person, firm or corporation enjoying
a special course of dealing with ▇▇▇▇▇▇-▇▇▇▇▇, the Net
Sales shall be determined based on the resale of the
PRODUCTS by such Affiliate, person, firm or corporation
to THIRD PARTIES.
8.2 ▇▇▇▇▇▇-▇▇▇▇▇ shall keep, and require its AFFILIATES and distributors
to keep, complete and accurate records of all sales of PRODUCTS under the
licenses granted herein. HYSEQ shall have the right, at its expense, through a
certified public accountant or like person reasonably acceptable to ▇▇▇▇▇▇-
▇▇▇▇▇, to examine such records during regular business hours during the life of
this Agreement and for six (6) months after its termination; provided, however,
that such examination shall not take place more often than once a year, provided
further that such accountant shall report only as to the accuracy of the royalty
statements and payments, including the magnitude and source of any discrepancy.
The cost of such audits will be paid by HYSEQ, unless a payment discrepancy
unfavorable to HYSEQ greater than or equal to five percent (5%) of the amounts
paid in any reporting period covered by the audit is discovered, in which case
▇▇▇▇▇▇-▇▇▇▇▇ shall pay the cost of the audit. ▇▇▇▇▇▇-▇▇▇▇▇ shall be required
to maintain such records for no more than three (3) years.
8.3 Within sixty (60) days after the close of each calendar quarter,
▇▇▇▇▇▇-▇▇▇▇▇ shall deliver to HYSEQ a true accounting of all PRODUCTS sold by it
and its AFFILIATES and distributors during such quarter and shall at the same
time pay all royalties due. Such accounting shall show sales on a territory-by-
territory and product-by-product basis.
8.4 Any tax paid or required to be withheld on account of HYSEQ based on
royalties payable under this Agreement shall be deducted from the amount of
royalties otherwise due and immediately paid to the applicable taxing
authority. Other than taxes levied against the income of HYSEQ, imposed with
respect to the payment to HYSEQ hereunder (as to which the prior sentence shall
control), ▇▇▇▇▇▇-▇▇▇▇▇ shall be responsible for all taxes however designated.
If such taxes are initially imposed on HYSEQ or HYSEQ is later assessed by any
taxing authority for such taxes, then ▇▇▇▇▇▇-▇▇▇▇▇, upon demand, will promptly
reimburse HYSEQ for such taxes, plus any interest and penalties suffered by
HYSEQ. HYSEQ shall promptly, and if possible in advance, notify ▇▇▇▇▇▇-▇▇▇▇▇ of
any liability under this section. Each party shall secure and send to the other
proof of any such taxes withheld and paid, and ▇▇▇▇▇▇-▇▇▇▇▇ will pay all such
taxes due on sale.
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8.5 All royalties due under this Agreement shall be payable in U.S.
dollars. If governmental regulations prevent remittances from a foreign country
with respect to sales made in that country, the obligation to pay royalties on
sales in that country shall be suspended until such remittances are possible.
Each party shall have the right, upon giving written notice to the other, to
receive payment in that country in local currency.
8.6 Monetary conversions from the currency of a foreign country, in which
a product is sold, into United States currency shall be made at the official
exchange rate in force in that country for financial transactions on the last
business day of the calendar quarter for which the royalties are being paid. If
there is no such official exchange rate, the conversion shall be made at the
rate for such remittances on that date as certified by Citibank, N.A., New York,
New York, U.S.A.
9. TERM AND TERMINATION
9.1 Unless earlier terminated, this Agreement shall come into effect as
of the EFFECTIVE DATE and shall remain in full force for a minimum of five
years, and shall be renewed year-by-year automatically each year thereafter on
the same terms and conditions unless the parties mutually agree to terminate the
Agreement.
9.2 Either party may terminate this Agreement if, at any time, the other
party shall file in any court or agency pursuant to any statute or regulation of
any state or country, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee of the party or of its assets, or if the other party proposes a written
agreement of composition or extension of its debts, or if the other party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other party shall propose or be a party to
any dissolution or liquidation, or if the other party shall make an assignment
for the benefit of creditors.
9.3 Notwithstanding the bankruptcy of HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇, or the
impairment of performance by HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇ of its obligations under this
Agreement as a result of bankruptcy or insolvency of HYSEQ or ▇▇▇▇▇▇-▇▇▇▇▇, the
other party shall be entitled to retain the licenses granted herein, subject to
rights of a party to terminate this Agreement for reasons other than bankruptcy
or insolvency as expressly provided in this Agreement.
9.4 Subject to the provisions of Article 10, this Agreement may be
terminated by either PARTY upon a MATERIAL BREACH of this Agreement by the other
PARTY, subject to providing the breaching PARTY with written notice of such
breach, and an opportunity to cure after such notice that is at least sixty (60)
days prior to termination. At the end of the sixty (60) day notice period,
the other PARTY may terminate this Agreement forthwith if the breaching PARTY
has not cured its breach of the provision(s) identified in the notice. Nothing
in this Agreement shall limit any remedies for breach
19
which may be available pursuant to a judgment of a court, in law or equity,
including termination of this Agreement or of any or all rights hereunder.
9.5 In the event the ▇▇▇▇▇▇-▇▇▇▇▇ board of directors does not approve
the equity investment in HYSEQ on or before June 20, 1997, HYSEQ shall have the
right to terminate this Agreement.
9.6 If there is a change in the majority control of a party through the
purchase of stock or by way of a merger transaction or otherwise as well as
through the purchase of all or substantially all of the business assets of that
party, the other party shall have the right to terminate this Agreement.
10. RIGHTS AND DUTIES UPON TERMINATION
10.1 Upon termination of this Agreement, ▇▇▇▇▇▇-▇▇▇▇▇ shall notify HYSEQ
of the amount of CHIPS that it and its AFFILIATES and distributors then have
on hand, the sale of which would, but for the termination, be subject to
royalty, and ▇▇▇▇▇▇-▇▇▇▇▇, its AFFILIATES and distributors shall thereupon be
permitted to sell that amount of the CHIPS provided that ▇▇▇▇▇▇-▇▇▇▇▇ shall pay
the royalty thereon at the time herein provided for.
10.2 Termination of this Agreement shall terminate all outstanding
obligations and liabilities between the PARTIES arising from this Agreement
except those described in Articles 1.4, 1.8, 2, 3.2.1 (e), 5, 6.2, 6.3, 6.4, 6.5
and 6.6 to the extent required by Article 10; 6.7-6.13, 8.2-8.6 to the extent
required by 10.3; 9; 10; 11.1; 11.2; 11.3; 11.4; 12; as well as any provision
not specified in this paragraph which is clearly meant to survive termination.
10.3 If this Agreement is terminated under Article 9.1, all licenses
granted to HYSEQ under Article 6.6 and to ▇▇▇▇▇▇-▇▇▇▇▇ under Article 6.5 shall
survive such termination and the parties will agree upon the terms applicable
thereto.
10.4 If this Agreement is terminated under Article 9.4, the non-breaching
party shall retain the licenses provided in Article 6 under the terms of Article
10.3
11. WARRANTIES, REPRESENTATIONS, AND PURCHASE AND SALE
11.1 Nothing in this Agreement shall be construed as a warranty that
▇▇▇▇▇▇-▇▇▇▇▇ PATENTS or HYSEQ PATENTS are valid or enforceable or that their
exercise does not infringe any patent rights of THIRD PARTIES. A holding of
invalidity or un-enforceability of any such patent, from which no further appeal
is or can be taken, shall
20
not affect any obligation already accrued hereunder, but shall only eliminate
royalties otherwise due under such patent from the date such holding becomes
final.
11.2 Each party further warrants and represents that it has not, up
through and including the date of this Agreement, omitted to furnish the other
with any information concerning the subject matter of this Agreement which would
be material to its decision to enter into this Agreement and to undertake the
commitments and obligations set forth herein.
11.3 Each party warrants and represents that it has the right to enter
into this Agreement and to perform in accordance therewith.
11.4 HYSEQ warrants that it shall convey good and merchantable title to
all of the CHIPS delivered under this Agreement and that each such unit of CHIPS
shall conform to the specifications and shall be free from defects in materials
and workmanship.
11.5 Sales
-----
11.5.1 Sales and Purchase. Subject to the terms and conditions of
------------------
this Agreement, HYSEQ shall sell to ▇▇▇▇▇▇-▇▇▇▇▇ and ▇▇▇▇▇▇-▇▇▇▇▇
shall purchase CHIPS from HYSEQ. Prior to the first commercial sale
of CHIPS, the parties will develop and enter into a purchase
agreement that will govern the purchase and sale of CHIPS by HYSEQ to
▇▇▇▇▇▇-▇▇▇▇▇.
11.5.2. Price. The price of the CHIPS shall be HYSEQ's cost, as
-----
calculated in accordance with generally accepted accounting
principles, plus five (5%) percent.
12. INDEMNIFICATION
12.1 ▇▇▇▇▇▇-▇▇▇▇▇ shall defend, indemnify and hold harmless HYSEQ,
AFFILIATES of HYSEQ, licensors of HYSEQ and their respective directors,
officers, shareholders, agents and employees, from and against any and all
liability, loss, damages and expenses (including attorneys' fees) as the result
of claims, demands, costs or judgments which may be made or instituted against
any of them arising out of the manufacture, possession, distribution, use,
testing, sale or other disposition by or through ▇▇▇▇▇▇-▇▇▇▇▇ of any ▇▇▇▇▇▇-
▇▇▇▇▇ PRODUCT. PERKIN-ELMER's obligation to defend, indemnify and hold harmless
shall include claims, demands, costs or judgments, whether for money damages or
equitable relief by reason of alleged personal injury (including death) to any
person or alleged property damage, provided, however, the indemnity shall not
extend to any claims against an indemnified party which result from the gross
negligence or willful misconduct of such indemnified party. ▇▇▇▇▇▇-▇▇▇▇▇
21
shall have the exclusive right to control the defense of any action which is to
be indemnified in whole by ▇▇▇▇▇▇-▇▇▇▇▇ hereunder, including the right to select
counsel acceptable to HYSEQ to defend HYSEQ and to settle any claim, provided
that, without the written consent of HYSEQ (which shall not be unreasonably
withheld or delayed), ▇▇▇▇▇▇-▇▇▇▇▇ shall not agree to settle any claim against
HYSEQ to the extent such claim has a material adverse effect on HYSEQ. The
provisions of this Article shall survive and remain in full force and effect
after any termination, expiration or cancellation of this Agreement and PERKIN-
ELMER's obligations hereunder shall apply whether or not such claims are
rightfully brought.
12.2 HYSEQ shall defend, indemnify and hold harmless ▇▇▇▇▇▇-▇▇▇▇▇,
AFFILIATES of ▇▇▇▇▇▇-▇▇▇▇▇, licensors of ▇▇▇▇▇▇-▇▇▇▇▇ and their respective
directors, officers, shareholders, agents and employees, from and against any
and all liability, loss, damages and expenses (including attorneys' fees) as the
result of claims, demands, costs or judgments which may be made or instituted
against any of them arising out of the manufacture, possession, distribution,
use, testing, sale or other disposition by or through HYSEQ or its AFFILIATES of
any HYSEQ PRODUCT. HYSEQ's obligation to defend, indemnify and hold harmless
shall include claims, demands, costs or judgments, whether for money damages or
equitable relief by reason of alleged personal injury (including death) to any
person or alleged property damage, provided, however, the indemnity shall not
extend to any claims against an indemnified party which results from the gross
negligence or willful misconduct of such indemnified party. HYSEQ shall have
the exclusive right to control the defense of any action which is to be
indemnified in whole by HYSEQ hereunder, including the right to select counsel
acceptable to ▇▇▇▇▇▇-▇▇▇▇▇ to defend ▇▇▇▇▇▇-▇▇▇▇▇ and to settle any claim,
provided that, with the written consent of ▇▇▇▇▇▇-▇▇▇▇▇ (which shall not be
unreasonably withheld or delayed), HYSEQ shall not agree to settle any claim
against ▇▇▇▇▇▇-▇▇▇▇▇ to the extent such claim has a material adverse effect on
▇▇▇▇▇▇-▇▇▇▇▇. The provisions of this Article shall survive and remain in full
force and effect after any termination, expiration or cancellation of this
Agreement and HYSEQ's obligations hereunder shall apply whether or not such
claims are rightfully brought.
12.3 A person or entity that intends to claim indemnification under this
Article 12 (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor,
after it determines that indemnification is required of it, shall assume the
defense thereof with counsel mutually satisfactory to the PARTIES; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume
the defense; or, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceedings. The indemnity agreement in this Article 12 shall
not apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected
22
without the consent of the Indemnitor, which consent shall not be withheld
unreasonably. the failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such Indemnitor of any liability to
the Indemnitee under this Article 12, but the omission so to deliver notice to
the Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 12. The Indemnitee under this
Article 12, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigations of any action, claim or
liability covered by this indemnification. In the event that each party claims
indemnity from the other and one party is finally held liable to indemnify the
other, the Indemnitor shall additionally be liable to pay the reasonable legal
costs and attorneys' fees incurred by the Indemnitee in establishing its claim
for indemnity.
13. FORCE MAJEURE
If the performance of any part of this Agreement by either party, or of
any obligation under this Agreement, is prevented, restricted, interfered with
or delayed by reason of any cause beyond the reasonable control of the party
liable to perform, unless conclusive evidence to the contrary is provided, the
party so affected shall, upon giving written notice to the other party, be
excused from such performance to the extent of such prevention, restriction,
interference or delay, provided that the affected party shall use its reasonable
best efforts to avoid or remove such causes of non-performance and shall
continue performance with the utmost dispatch whenever such causes are removed.
When such circumstances arise, the PARTIES shall discuss what, if any,
modification of the terms of this Agreement may be required in order to arrive
at an equitable solution.
14. GOVERNING LAW
This Agreement shall be deemed to have been made in the State of
California and its form, execution, validity, construction and effect shall be
determined in accordance with the laws of the State of California.
15. SEPARABILITY
15.1 In the event any portion of this Agreement shall be held illegal,
void or ineffective, the remaining portions hereof shall be interpreted to
maintain the intent of the parties.
15.2 If any of the terms or provisions of this Agreement are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.
23
16. ENTIRE AGREEMENT
The Agreement, the Stock Purchase Agreement and the Registration Rights
Agreement constitute the sole agreements between the PARTIES relating to the
subject matter hereof and supersede all previous writings and understandings.
Confidential disclosures made pursuant to the Confidentiality Agreement of April
30, 1997 shall remain subject to the terms of that Confidentiality Agreement.
No terms or provisions of this Agreement shall be varied or modified by any
prior or subsequent statement, conduct or act of either of the PARTIES, except
that the PARTIES may amend this Agreement by written instruments specifically
referring to and executed in the same manner as this Agreement.
17. NOTICES
17.1 Any notice required or permitted under this Agreement shall be sent
by air mail, postage pre-paid, to the following addresses of the PARTIES:
TO HYSEQ:
HYSEQ, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
TO ▇▇▇▇▇▇-▇▇▇▇▇:
▇▇▇▇▇▇-▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
24
Attention: *
copy to: PE Applied Biosystems
Legal Department
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: *
17.2 Any notice required or permitted to be given concerning this
Agreement shall be effective upon receipt by the party to whom it is addressed.
18. ATTENDANCE AT BOARD MEETINGS.
Until the earlier of (i) two years from the date hereof or such
later date as determined by HYSEQ or (ii) the termination of the Collaboration
Agreement between the parties. ▇▇▇▇▇▇-▇▇▇▇▇ shall have the right to designate a
representative to attend all meetings of the HYSEQ Board of Directors in a non-
voting observer capacity and to receive notice of such meetings in the same
manner as given to HYSEQ's directors; provided, however, that HYSEQ may require
each person proposing to attend any meeting of the Board of Directors to agree
to hold in confidence and trust and to act in a fiduciary manner with respect to
all information so received during such meetings or otherwise; and provided
further, that HYSEQ reserves the right to exclude an observer from any meeting
or portion thereof if delivery of information or attendance at such meeting by
such person would result in disclosure of trade secrets to such holder or its
representative or would adversely affect the attorney-client privilege between
HYSEQ and its counsel or if ▇▇▇▇▇▇-▇▇▇▇▇ is in direct competition with HYSEQ.
19. ASSIGNMENT
This Agreement and the licenses herein granted shall be binding upon and
inure to the benefit of the successors in interest of the respective parties.
Neither this Agreement nor any interest hereunder shall be assignable by either
party without the written consent of the other provided, however, that ▇▇▇▇▇▇-
▇▇▇▇▇ or HYSEQ may assign this Agreement or any of its rights or obligations
hereunder to any AFFILIATE or to any THIRD PARTY with which it may merge or
consolidate, or to which it may transfer all or substantially all of its assets
to which this Agreement relates, without obtaining the consent of the other
party, subject to the other party assuming all liabilities and obligations under
the Agreement.
25
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
20. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed an original instrument, but all such counterparts
together shall constitute but one agreement.
IN WITNESS WHEREOF, the PARTIES, through their authorized officers, have
executed this Agreement as of the date first written above.
HYSEQ
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇▇▇-▇▇▇▇▇
By: *
___________________
26
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.