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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 14, 1999
(Date of earliest event reported)
HYSEQ, INC.
(Exact name of Registrant as specified in its charter)
Nevada 0-22873 36-3855489
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
670 Almanor Avenue
Sunnyvale, California 94086
(Address of principal executive offices, including zip code)
(408) 524-8100
(Registrant's telephone number, including area code)
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Item 5. Other Events.
This Form 8-K/A amends the Current Report of Form 8-K, filed with the
Securities and Exchange Commission on December 15 , 1999. On December 10,
1999, Hyseq, Inc. entered into a Collaboration and License Agreement (the
"Agreement") with American Cyanamid Company, a subsidiary of American Home
Products Corporation. The Agreement is a multi-year collaboration for the
discovery of genes and the development of gene products exclusively in the
agricultural field.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
10.14 Collaboration and License Agreement dated December 10, 1999
between Hyseq, Inc. and American Cyanamid Company.
99.1 Press Release dated December 14, 1999 (previously filed)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HYSEQ, INC.
/s/ Lewis S. Gruber
-----------------------------
Name: Lewis S. Gruber
Title: President and Chief Executive Officer
Date: March 17, 2000
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EXHIBIT INDEX
ExhibitNo. Description of Exhibit
10.14 Collaboration and License Agreement dated
December 10, 1999 between Hyseq, Inc. and
American Cyanamid Company.
99.1 Press Release dated December 14, 1999 (previously filed).
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COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT ("AGREEMENT"), dated as of December
10, 1999 (the "EFFECTIVE DATE"), is entered into by and between American
Cyanamid Company, a subsidiary of American Home Products Corporation and a
Maine Corporation having its principal offices at 1 Campus Drive, Parsippany,
New Jersey ("ACY"), and Hyseq, Inc., a Nevada corporation having its principal
offices at 670 Almanor Avenue, Sunnyvale, California 94086 ("HYSEQ").
PREAMBLE
A. ACY desires to capitalize on its proprietary position and expertise in
crops and other plants, and related organisms, including organisms with
unique biological activity, through discovery of new gene targets for
product development and for increasing its intellectual property position.
B. ACY has proprietary technology, trade secrets, know-how and existing
partnerships that enable the identification of novel genes, development of
mechanism-based high throughput screens, gene cassette construction,
transformation of plants, plant selection and evaluation and incorporation
of novel genes into elite germplasm.
C. Hyseq has proprietary technology, trade secrets and know-how that
provides a high-throughput production capacity for discovering new gene
targets that can be beneficial to ACY.
D. ACY and Hyseq mutually desire to enter into a collaboration in which
Hyseq will apply its sequencing and other gene discovery technologies to
biological materials provided by ACY (the "COLLABORATION").
E. Concurrently with the execution of this Agreement, ACY and Hyseq are
entering into a software license agreement, pursuant to which ACY shall be
granted a license to the "Hyseq Software" as defined therein ("SOFTWARE
LICENSE AGREEMENT").
NOW, THEREFORE, in consideration of the mutual agreements provided in this
Agreement, Hyseq and ACY agree as follows:
ARTICLE 1
DEFINITIONS
The following capitalized terms used herein shall have the respective meanings
set forth below.
1.1 "ACY DATABASE" means the database created by Hyseq for ACY during the
Collaboration, which shall contain the ACY Results and any other
information relating to the organisms designated for work in the
Collaboration, which database shall be updated
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throughout the Collaboration Term (including any Collaboration Term
Extension Year, as defined below).
1.2 "ACY MATERIALS" means all Libraries and other materials provided by ACY
to Hyseq pursuant to this Collaboration, together with (i) any part,
progeny, mutant or hybrid thereof, (ii) any nucleic acid or other genetic
material therefrom, including any genes, gene sequences and gene sequence
information, (iii) any copy, complement or transcription or expression
product thereof, (iv) any biological or other materials identified in, or
derived from, any of the foregoing, and (v) any related biological
material and associated know-how and data that ACY provides to Hyseq
hereunder.
1.3 "ACY PRODUCT" means a (a) product that tangibly incorporates gene
sequences or products of gene sequences arising out of the ACY Results, or
alternatively, a product that tangibly incorporates gene sequences or
products of gene sequences derived therefrom, which products contain all
or a portion of the aforementioned gene sequences or gene products whether
introduced by genetic modification techniques or by enhancement or other
in situ modification to naturally occurring genes or gene products with
the subsequent development of products containing said genes or gene
products so modified, whether developed through the use of conventional
breeding techniques or otherwise; and a (b) product, including without
limitation, a Compound, the development of which product derived from
information contained in the ACY Database, which information was not
independently available to ACY as may be shown by contemporaneous
documentation. ACY Products shall be inclusive of all classes of products
including without limitation, cosmetics, consumer products, agricultural
products, biopharmaceuticals, diagnostics, research use reagents,
vaccines, food supplements, foodstuffs, feedstuffs, and Nutraceuticals;
and ACY Products shall also include Sales of the ACY Database itself or
the granting of access to all or a portion of said ACY Database in
exchange for monetary consideration, in each case to one or more Third
Party(s) to use other than in a collaboration with ACY.
1.4 "ACQUISITION" has the meaning set forth in Paragraph 9.2.1 hereof.
1.5 *
1.6 "AFFILIATE" means a person or entity that directly or indirectly
controls, is controlled by or is under common control with, a Party to
this Agreement. "CONTROL" (and, with correlative meanings, the terms
"controlled by" and "under common control with") means possession of the
power to direct or cause the direction of the management and policies of
the entity, whether pursuant to the ownership of voting securities, by
contract, or otherwise. However, for purposes of this Agreement, the term
"Affiliate" shall not include subsidiaries or other entities in which a
Party owns a majority of the ordinary voting power to elect the majority
of the board of directors or other governing board but is otherwise
restricted from electing such majority by contract or otherwise, until
such time as (i) such restrictions are no longer in effect, or (ii) the
subsidiary or other entity is otherwise designated by the Party in writing
as being an "Affiliate."
* denotes request for confidential treatment
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1.7 "ACY RESULTS" means any nucleic acid sequence or other biological
material and information related thereto, as generated from ACY Materials,
using Hyseq Technology.
1.8 "ACY TECHNOLOGY" means all proprietary technology, copyrights, trade
secrets, and know-how, including data, processes, procedures, methods,
formulas, protocols, bioinformatics, software, nucleic acid sequences and
other biological materials, and all associated information, relating to
the discovery, identification, and sequencing of genetic information, and
including ACY Materials, ACY Results, the ACY Database, and ACY
Inventions, each of the foregoing categories as in existence at the
Effective Date, or as may be generated, licensed-in or otherwise acquired
by ACY during the term of this Agreement.
1.9 *
1.10 "APPLICABLE LAW" means, with respect to a Party, any domestic or foreign,
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree or other requirement of any governmental authority applicable to
such Party or its properties, business or assets.
1.11 "BANKRUPTCY EVENT" means, with respect to either Party, such Party makes
an assignment for the benefit of its creditors; files a voluntary petition
under federal or state bankruptcy or insolvency laws; a receiver or
custodian is appointed for such Party's business; proceedings are
instituted against such Party under federal or state bankruptcy or
insolvency laws; such Party's business or assets become subject to
attachment, garnishment or other process; or a court or other governmental
authority of competent jurisdiction determines that such Party is
insolvent.
1.12 "CHANGE IN CONTROL" has the meaning set forth in Paragraph 9.2.1 hereof.
1.13 "CLAIMS" has the meaning set forth in Section 8.1.
1.14 *
1.15 "COLLABORATION TERM" and "COLLABORATION TERM EXTENSION YEAR" have the
meanings set forth in Section 2.7.
1.16 "CONTROL" has the meaning set forth in Paragraph 1.5 above.
1.17 "COMPOUND" means a chemical compound or substance, substances derived
from fermentations and fermentation extracts, other natural products
including plant extracts and venoms, together with all complexes, mixtures
and other combinations, prodrugs, analogs, salt forms, racemates, isomers,
derivatives, or other modifications thereof.
1.18 "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 7.1.
* denotes request for confidential treatment
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1.19 "DESIGNATED ORGANISM" means a living body from the plant or animal
kingdoms, other than mammalian or avian species, inclusive of the specific
Genus to which such living body belongs (e.g., examples of various Genera
as shown in Exhibit 1.19 attached hereto), and as designated by ACY in
accordance with Paragraph 2.1.2 hereof.
1.20 "DESIGNATED ORGANISM FAMILY" means the taxonomic family to which a
Designated Organism belongs (e.g., examples of such taxonomic families are
shown in Exhibit 1.19 attached hereto).
1.21 "FIRST COMMERCIAL SALE" means, with respect to any particular Product,
the first arms-length Sale in any jurisdiction to one or more Third
Parties of such Product following receipt of approval from the applicable
regulatory agency in such jurisdiction to market such Product, if such
approval is required prior to marketing.
1.22 "FTE" means the employment or other engagement of one person full time or
more than one person part time, such that the total working time is the
equivalent of one person working full time for a total of 1,800 hours
exclusive of vacation days, sick leave, jury duty, bereavement leave and
holidays, and which FTE is, for purposes of this Agreement, measured in
person - years such that 100 persons employed full time equals 100 FTEs
and ten persons employed half time equals five FTEs.
1.23 "HYSEQ PRODUCTS" has the meaning set forth in Paragraph 5.3.4.
1.24 "HYSEQ SCHEMA" means Hyseq's proprietary database schema for organization
of data, including the logical structure of database tables and the
relationships among such tables.
1.25 "HYSEQ SOFTWARE" means software, including the Hyseq Schema, that is
proprietary to Hyseq, and is licensed to ACY pursuant to the terms and
conditions of the Software License Agreement.
1.26 "HYSEQ TECHNOLOGY" means all proprietary technology, copyrights, trade
secrets, and know-how, including data, processes, procedures, methods,
formulas, protocols, bioinformatics, software (other than Hyseq Software),
biological materials, Hyseq Inventions, and all associated information,
relating to the discovery, identification, and sequencing of genetic
information, all if and to the extent used by Hyseq in the Collaboration
and as in existence at the Effective Date and as may be generated,
licensed-in or otherwise acquired by Hyseq during the term of this
Agreement.
1.27 "INITIAL COLLABORATION TERM" shall be the period extending from December
29, 1999 until June 30, 2003.
1.28 "INITIAL FUNDING" has the meaning set forth in Paragraph 5.1.1.
1.29 "JSC" has the meaning set forth in Section 2.3 hereof.
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1.30 LIBRARY" means a collection of fragments of the nucleic acid from an
organic source material of interest or synthetically derived, * . The
nucleic acid from the source material may be in the form of mRNA and
subsequently converted into cDNA or may be in the form of genomic DNA, and
includes all forms of such nucleic acid * .
1.31 NET SALES" means the aggregate amount invoiced or received for Sales of
all Products hereunder, less the following deductions:
(a) Discounts (including price adjustments related to commercial
programs), returns, allowances (including reasonable bad debt
allowances), and wholesaler chargebacks allowed and taken, but in
any case only in amounts consistent with reasonable and customary
industry standards;
(b) Import, export, excise, sales or use taxes, value added
taxes, and other taxes, tariffs or duties, but not state, federal or
foreign income taxes;
(c) Freight, handling, transportation and insurance prepaid or
allowed; and
(d) Amounts allowed or credited on retroactive price reductions
or rebates.
Any refund of any of the foregoing amounts (including any reversal of bad
debt allowances, whether arising from amounts received in settlement of
bad debts or otherwise) previously deducted from Net Sales shall be
appropriately credited upon receipt thereof.
A Party may, at its option, allocate the above deductions from Sales of
Products based upon accruals estimated reasonably and consistent with a
Party's standard business practices. If a Party elects to utilize such
accruals, actual deductions will be calculated and, if applicable,
adjustments will be made on an annual basis.
If a Sale is to an Affiliate of the seller and such Affiliate is the end
user, then the "amount invoiced" with respect to such Sale shall, for
purposes of calculating Net Sales, be the greater of (a) the actual
amount invoiced, and (b) an amount equal to the sale price of such
quantity of Product to a Third Party in an arm's length Sale with the
seller. If a Sale is for consideration other than cash, then the "amount
invoiced" with respect to such sale is the value of the non-cash
consideration received.
If a Product is sold in combination with another product or products, Net
Sales under such circumstances shall be calculated by multiplying Net
Sales of the combination by the fraction A/(A+B), in which A is the
invoice price of the Product when sold separately, and B is the total
invoice price of any other product or products in combination when sold
separately.
If, on a country-by-country basis, the other product or products in the
combination are not sold separately, Net Sales, for purposes of
determining royalties on the combination Product shall be calculated by
multiplying actual Net Sales of such combination Product
* denotes request for confidential treatment
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by the fraction A/C where A is the invoice price for the Product if sold
separately and C is the invoice price of the combination Product.
If on a country-by-country basis, neither the Product nor the other
product or products is sold separately in said country, Net Sales, for
the purpose of determining royalties on the combination Products shall be
calculated as above except that A shall be the total cost of manufacture
of the Product and C shall be the total cost of manufacture of the
combination Product, as determined in accordance with a Party's customary
accounting practices, consistently applied.
1.32 "NUTRACEUTICAL" means a food, part of a food or other foodstuff, or food
supplement that may be marketed as having a specific health benefit,
including the prevention, amelioration, eradication, or other treatment of
disease.
1.33 "PARTY" OR "PARTIES" means ACY and/or Hyseq as the case may be.
1.34 "PATENTS" means the rights and interests in and to issued patents and
pending patent applications in any country, which are necessary or
commercially desirable to develop, make, have made, use, import, offer for
sale, sell or have sold products hereunder, including, but not limited to,
all provisional applications, substitutions, continuations,
continuations-in-part, divisions, and renewals, all letters patent granted
thereon, and all reissues, reexaminations and extensions thereof, whether
owned solely or jointly by a Party or otherwise controlled by a Party with
the right to transfer rights therein. "HYSEQ PATENTS" shall mean those
Patent Rights covering Hyseq Technology or products arising out of the use
thereof in the Collaboration, owned or otherwise controlled by Hyseq.
"ACY PATENTS" shall mean those Patent Rights owned or otherwise controlled
by ACY. "JOINT PATENTS" shall mean those Patents owned or otherwise
controlled jointly by ACY and Hyseq, including joint patents embodying
jointly developed technology pursuant to the Collaboration.
1.35 "PMTS" and "BIOINFORMATICS PMT" have the meaning set forth in Section 2.6.
1.36 "PRODUCT(S)" means ACY Products and Hyseq Products.
1.37 "PROJECT LEADER" has the meaning set forth in Section 2.5 hereof.
1.38 "RESTRICTED TECHNOLOGY" has the meaning set forth in Section 4.2.3 hereof.
1.39 "SALE" means the sale or other disposition, including without limitation,
a trade or exchange for value, whether by a Party, a licensee or a
sublicensee, of a Product to a Party that is not an Affiliate of the
seller, or to any Party that is both an Affiliate of the seller and the
end user of the Product.
1.40 "SOFTWARE LICENSE FEES" means the fees due Hyseq in consideration of the
grant of a license to ACY under Hyseq Software Technology Rights pursuant
to the Software License Agreement and as described more fully in Section
5.4 hereof.
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1.41 "THIRD PARTY" means any person or entity other than ACY, Hyseq or any of
their respective Affiliates.
1.42 "VALID CLAIM" means any claim of an unexpired patent which has not been
held unenforceable, unpatentable, or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealed or
unappealable within the time allowed for appeal, and which has not been
admitted to be invalid or unenforceable through reissue, reexamination,
disclaimer or otherwise.
1.43 "WORK PLAN" means the written protocol developed in accordance with the
terms and conditions of the Agreement and attached hereto and made a part
hereof by amendment, providing a detailed plan for implementation of
various aspects of the Collaboration, which written protocol shall be
updated and modified by the Parties during the Collaboration Term
(including any Collaboration Term Extension Year), as contemplated by the
provisions of Section 2.2 hereof.
ARTICLE 2
COLLABORATION
2.1 IMPLEMENTATION OF COLLABORATION.
2.1.1 DERIVATION OF ACY MATERIALS. The Parties shall exert
reasonable commercial efforts to collaborate in the discovery and
identification of new genes and new gene targets for product
development wherein Hyseq shall, inter alia, apply its sequencing
and other gene discovery technologies to ACY Materials, all in
accordance with the Work Plan. The ACY Materials shall be derived
from organisms selected by ACY from the * . Representatives of ACY
may, upon reasonable notice, and during business hours, visit the
Hyseq premises where the Hyseq work is being performed and consult
informally with employees of Hyseq engaged in such work for the
benefit of the Collaboration.
2.1.2 DESIGNATION OF ORGANISMS. ACY may designate up to an
aggregate of * Designated Organisms during the Initial Collaboration
Term, exclusive of any Collaboration Term Extension Year, if any.
Hyseq shall have no obligation to prepare * . ACY may designate
additional Designated Organisms * for each additional Designated
Organism designated after the first * . Notwithstanding the
foregoing, Hyseq shall have no obligation to prepare * .
2.1.3 TIMING OF DESIGNATION. At least * Designated Organisms must
be designated by ACY for inclusion in the Collaboration by no later
than March 31, 2000, and no additional Designated Organisms may be
designated after December 31, 2002 for inclusion in the
Collaboration during the Initial Collaboration Term.
2.1.4 ADDITIONAL ORGANISMS. Payment of the * covers initial
Library testing and preparation to determine an appropriate clone
analysis protocol for each such
* denotes request for confidential treatment
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additional Designated Organism. If the Collaboration is extended
for one or more one (1) year extensions as provided in Section 2.7
hereof, ACY shall be entitled to an additional * Designated
Organisms and up to * Libraries (at an analysis depth of * , or
otherwise in accordance with Paragraph 2.1.2 hereof) during each
such Collaboration Term Extension Year, without payment of the * .
2.1.5 ACY DELIVERABLES. ACY shall provide ACY Materials that meet
the specifications set forth in Exhibit 2.1.5 and that are provided
in accordance with a timetable that allows Hyseq to perform its
obligations under this Agreement, and as specified in the Work Plan.
For the avoidance of doubt, the Parties acknowledge that ACY
Materials provided to Hyseq hereunder shall not include biological
materials derived from mammalian or avian organisms.
2.1.6 * As more fully set forth in the Work Plan and subject to
delivery, by ACY, of the ACY Materials in accordance with Paragraph
2.1.5 hereof, Hyseq shall, by utilizing the ACY Materials, process *
at a rate of * during the first quarter of 2000, and commencing on
April 1, 2000, Hyseq shall process * at the rate of * . Hyseq shall
maintain this rate of * for purposes of the Collaboration throughout
the Collaboration Term and any Collaboration Term Extension Year,
unless such rate is otherwise varied in accordance with the
provisions set forth herein, and specified by amendment to the then
obtaining Work Plan (the *). Except as may be requested from time
to time by ACY, and subject to Paragraphs 2.1.8 and 5.2.3, Hyseq
shall not process more than * per quarter of the Initial
Collaboration Term and any Collaboration Term Extension Year. A
maximum of * shall be processed and * total * performed during the
Initial Collaboration Term itself, and a maximum of * shall be
further provided during each Collaboration Term Extension Year,
unless otherwise specified and set forth in the then applicable Work
Plan, and consistent with the provisions of Paragraphs 2.1.8 and
5.2.3 hereof.
2.1.7 *VARIATION. Additionally, although it is contemplated that
* will be processed at an average rate of * per month commencing on
April 1, 2000, and continuing through March 2003, for a total of up
to * , ACY also may vary * .
2.1.8 ACY DIRECTED CHANGES TO THE WORK PLAN AND MIX OF WORK. ACY
may, by notifying Hyseq in writing 90 days prior to implementation
of a desired change, direct that the Work Plan be amended to vary
the type of work to be performed in a quarter. For example, if ACY
determines it will need fewer than * , it may designate an
equivalent amount of work, such as the processing of more * or use
of a consultant, in lieu of some or all of the gel reactions,
without incurring additional cost. For purposes of determining an
equivalent amount of work when no hourly charge is specified (*),
Hyseq will establish the charge based on the ratio of its cost of
performing one type of work to the type of work being substituted
(*). The JSC shall discuss any such substitution of work and
subsequent changes to the Work Plan, and revise the Work Plan in
this regard.
* denotes request for confidential treatment
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2.1.9 ADDITIONAL WORK. If, in the course of processing a Library,
Hyseq or ACY determines that a change in the Work Plan (such as the
use of a different vector) is advisable that cannot be exchanged for
equivalent work as set forth in Paragraphs 2.1.6 through 2.1.8
above, Hyseq will advise ACY of the charge for additional work in
connection therewith and, following consultation, ACY will determine
whether to proceed with the additional work. All such changes and
additional work shall be discussed by the JSC and the Work Plan
shall be amended to detail the new specifications.
2.2 WORK PLANS.
2.2.1 The Work Plan for the first year of the Collaboration shall
be prepared by Hyseq and ACY and approved by the JSC as promptly as
practical after the Effective Date. It shall include a separate
section relating to the establishment of the ACY Bioinformatics Data
Center and technology transfer relevant thereto. For each year of
the Collaboration commencing with the second year, the Work Plan
shall be prepared by Hyseq and ACY and approved by the JSC no later
than thirty (30) days before the end of the prior calendar year.
The Work Plan shall set forth specific research and development
objectives, milestones and resource allocation requirements and
shall be designed to facilitate the earliest practical
identification of novel genes and their function. In no event shall
a Work Plan increase, expand or change the obligations of a Party
without that Party's consent, except as expressly provided in
Paragraphs 2.1.4, 2.1.7, 2.1.8 and 2.1.9 hereof.
2.2.2 Each Work Plan shall be in writing and shall set forth with
reasonable specificity tasks for the period covered by the Work
Plan. The JSC may make adjustments in the Work Plan at its quarterly
meetings or otherwise as it may determine.
2.3 JOINT STEERING COMMITTEE, PROJECT MANAGEMENT TEAMS AND PROJECT LEADERS.
Implementation of the research to be performed in the Collaboration shall
be coordinated by a working technical and scientific team, with oversight
and guidance provided by a steering committee.
2.3.1 ESTABLISHMENT OF JSC. Hyseq and ACY shall establish a "joint
steering committee" (the "JSC"). The JSC will act on behalf of the
two companies and will be responsible for planning and monitoring of
the Collaboration and for setting forth specific research and
development objectives, milestones and resource allocation
requirements, and determining when milestones are met. In
particular, the activities of the JSC shall include reviewing
progress in the Collaboration and recommending necessary adjustments
to the Collaboration as the research and development progresses,
supervising the Project Management Teams, determining the organisms
for which assays will be developed, considering the in-licensing of
additional technology for the Collaboration. The JSC shall have
sole responsibility for budgetary and other financial oversight.
2.3.2 ASSIGNMENT OF TASKS. In planning and monitoring the
Collaboration, the JSC shall assign tasks and responsibilities
taking into account each Party's respective
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specific capabilities and expertise in order in particular to avoid
duplication and enhance efficiency and synergies.
2.3.3 EXPENSES. ACY and Hyseq each shall bear all travel,
lodging, meals and other costs and expenses associated with the
participation of their representatives on the JSC and PMTs.
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2.4 JSC MEMBERSHIP.
Hyseq and ACY each shall appoint, in their sole discretion, up to three
members to the JSC, which shall include a Chair to be designated by ACY
and a Co-Chair to be designated by Hyseq, and shall include commercial
representatives as well as representatives from research. Substitutes or
alternates for the Chair and Co-Chair or other JSC members may be
appointed at any time by notice in writing to the other Party. The
Parties may mutually agree to change the size of the JSC as long as there
shall be an equal number of representatives of each Party on the JSC.
The initial Chair, Co-Chair and other JSC members shall be designated by
the Parties upon execution of this Agreement, and each Party shall notify
the other in writing of their selection of members and any subsequent
changes thereto.
2.4.1 ACTIONS. Each representative of ACY and Hyseq shall have
one vote on the JSC. Any approval, determination, decision or other
action by the JSC shall require the affirmative vote of a majority
of the representatives, provided, however, that the ACY Chair shall
cast the deciding vote if the JSC is deadlocked. Representatives of
the JSC may at any time vote by proxy.
2.4.2 MEETINGS. The JSC shall conduct meetings at an agreed upon
number of times per calendar year, such meetings to alternate
between ACY's offices and Hyseq's offices, unless otherwise agreed.
If approved by a majority of the representatives of the JSC,
meetings may be held telephonically. The Co-Chair or Chair may call
additional meetings at any time beyond the regularly scheduled
meetings, which additional meetings shall be held by videoconference
unless otherwise agreed. A representative of the Party hosting the
meeting will take minutes of meetings. Such minutes will be
distributed for comment prior to the following meeting and will
thereafter be submitted for approval at such following meeting.
2.5 PROJECT LEADERS.
Hyseq and ACY shall each appoint two "project leaders," one of whom shall
serve as such Party's primary technical liaison with the other Party to
discuss technical matters pertaining to the ACY Bioinformatics Data
Center, the other of whom shall serve as the primary contact for matters
relating to the Collaboration in general, and implementation of the
overall Work Plan (each a "PROJECT LEADER").
2.6 PROJECT MANAGEMENT TEAM.
2.6.1 ESTABLISHMENT OF PMTS. Hyseq and ACY shall establish
"Project Management Teams" (the "PMTS") to act on behalf of the two
companies, and to manage the Collaboration as directed by the JSC.
A first PMT shall be established to manage and coordinate the
establishment of the ACY Bioinformatics Data Center and technology
transfer incidental thereto ("BIOINFORMATICS PMT"). Hyseq and ACY
each shall appoint, in their sole discretion, up to five members to
the Bioinformatics PMT, which shall include each Party's
Bioinformatics Project Leader; and shall also include one or more
members with computer hardware,
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computer systems, computer software, and bioinformatics expertise.
A second PMT shall also be established to provide, inter alia,
scientific oversight and recommendation to the JSC for resource
allocations in the implementation of the Work Plan in respect of
other work to be carried out in the course of the Collaboration.
This second PMT shall consist of each Party's Project Leader from
the Bioinformatics PMT, and one or more members with Library
construction and evaluation, sequencing techniques, microarray
techniques, and cluster-based expression profiling expertise.
2.6.2 SELECTION OF MEMBERS. The initial Project Leaders and other
PMT members shall be designated by the Parties upon execution of
this Agreement, and each Party shall notify the other in writing of
their selection of members and any subsequent changes thereto.
Substitutes or alternates for the Project Leaders or other PMT
members may be appointed at any time by notice in writing to the
other Party. The Parties may mutually agree to change the size of
the PMT as long as there shall be an equal number of representatives
of each Party on the PMT.
2.6.3 CHAIRS. Each PMT shall be chaired by its two Project
Leaders. Any disputes or deadlock decisions with respect to the
management of the Collaboration by the PMT shall be referred to the
JSC for timely resolution, but in any event no later than sixty (60)
days from the date of such referral.
2.6.4 PMT MEETINGS AND REPORTS. Unless otherwise agreed or
directed by the JSC, each PMT shall conduct videoconference meetings
on a monthly basis, issue monthly reports to the JSC, and conduct in
person meetings at alternating facilities on at least a semi-annual
basis.
2.7 COLLABORATION TERM.
2.7.1 TERM OF THE COLLABORATION. The initial term of the
Collaboration shall expire on June 30, 2003, unless extended as
provided below or unless earlier terminated by either Party pursuant
to the provisions of this Agreement (hereinafter the Initial
Collaboration Term and each Collaboration Term Extension Year, as
applicable, the "COLLABORATION TERM").
2.7.2 EXTENSION OF THE COLLABORATION. ACY may seek to extend the
Collaboration upon the same terms and conditions provided herein, in
four (4) increments of one (1) year each (each a "COLLABORATION TERM
EXTENSION YEAR"), for up to an additional four (4) years ending on
June 30, 2007, by serving Hyseq with notice of this intent by
December 31 of the third year of the Initial Collaboration Term, and
each consecutive year thereafter for the next three (3) years, as
applicable. Subject to the provisions of Section 2.8 below, Hyseq
may decline to extend the length of the Initial Collaboration Term,
by providing written notice thereof to ACY not later than 15 days
after ACY's notice of intent to so extend.
2.7.3 EVALUATION OF YEARLY RESULTS OF COLLABORATION PRIOR TO EARLY
TERMINATION OF THE COLLABORATION. Prior to serving Hyseq with
notice of early termination of the
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Collaboration in accordance with the provisions set forth in
Paragraph 9.2.1(iii), (iv), or (v) hereof, ACY shall provide notice
to Hyseq of its failure to comply with such provisions. The JSC
shall convene a meeting as soon as practicable thereafter, but in
no event later than within a period of two weeks, to discuss the
progress and results of the Collaboration thus far, and to promptly
determine the reason for the failure to comply with the requisite
obligations and milestones. The JSC shall promptly attempt to
devise a plan to rectify the problems causing such failure
determined by the JSC. If a plan satisfactory to ACY and Hyseq is
decided on by the JSC, ACY shall withdraw its notice of failure to
comply, and the Collaboration shall continue for the remaining time
period of the Collaboration Term (taking into account any time
spent during such discussions and deliberations by the JSC in lieu
of performing work in the Collaboration). The JSC shall cause the
Work Plan to be modified in accordance with their determinations
and future plans in this regard. If a plan satisfactory to ACY is
not decided on by the JSC, ACY may, in its sole discretion, serve
written notice of early termination of the Collaboration in
accordance with the provisions of Paragraph 9.2.1(iii), (iv) or (v)
hereof, which notice shall be retroactive to the date of notice of
failure to comply as provided to Hyseq pursuant to the provisions
of this Paragraph 2.7.3.
2.8 EXCLUSIVITY.
Hyseq warrants and represents that for the duration of the Collaboration
Term inclusive of each Collaboration Term Extension Year, if any, Hyseq
will not itself or together with or on behalf of a Third Party undertake
research or product development and commercialization, and it will not
collaborate with or grant any license rights to or otherwise enable any
Third Party in the * . Hyseq further warrants and represents that with
respect to * , said covenant of exclusivity shall extend for * .
2.9 ACY MATERIALS.
2.9.1 SEGREGATION OF ACY MATERIALS, ACY RESULTS, AND ACY DATABASE.
Hyseq acknowledges that all ACY Materials, ACY Results, and the ACY
Database are each the sole and exclusive property of ACY, and Hyseq
shall maintain same for the benefit of ACY. Hyseq may use the ACY
Materials only for purposes of performing its duties under the
Collaboration and exercising its rights granted in Article 4 hereof.
Subject to the licenses granted to Hyseq pursuant to Article 4
hereof, Hyseq agrees that it will in no event utilize for itself, or
directly or indirectly make available to any Third Party, all or any
portion of the ACY Materials, ACY Results, and ACY Database, without
the express prior written consent of ACY. The foregoing provisions
of this Paragraph do not apply to any actions taken by Hyseq for
verification purposes or to the extent required to perform its
obligations under this Agreement. Hyseq shall maintain all ACY
Materials and the ACY Database, including the ACY Results, separate
and apart from any of its own data and records or those of any Third
Party in its possession. In no event shall Hyseq permit a Third
Party access to any ACY Materials, and in
* denotes request for confidential treatment
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no event shall Hyseq permit a Third Party access to any portion of
the ACY Database that has been indicated by ACY as "proprietary and
strictly confidential," and if applicable, "restricted."
2.9.2 DISPOSITION AFTER EXPIRATION OF THE COLLABORATION. Subject to 2.9.1,
upon expiration of the Collaboration and at the instruction of ACY,
Hyseq shall:
(i) return all or a designated portion of such ACY Materials to
ACY; or
(ii) transfer all or a designated portion of such ACY Materials to
a designee of ACY; or
(iii) maintain for archival purposes, all or a portion of such ACY
Materials and allow ACY reasonable access to same, the
reasonable expenses of such archiving and access to be borne
by ACY; or
(iv) destroy all or a portion of such ACY Materials.
ARTICLE 3
TECHNOLOGY TRANSFER AND ESTABLISHMENT OF ACY
BIOINFORMATICS DATA CENTER
3.1 INSTALLATION. As soon as practicable after the Effective Date, the
Bioinformatics PMT shall initiate the installation of a logical and
physical design of an ACY Bioinformatics Data Center as set forth in
Exhibit 3.1. In connection therewith, the Bioinformatics PMT shall,
within a period of seven (7) business days from the date of receipt of
applicable specifications, approve a plan to purchase equipment, and shall
develop an installation plan which shall be subject to approval by the
Bioinformatics PMT. The installation shall be completed not later than
six (6) months after the later of (i) the approval of said plans, or
(ii) receipt by Hyseq of the Initial Funding.
3.2 * . Hyseq shall, with the participation and assistance of ACY, recruit
and employ or otherwise engage * individuals, all as agreed upon by ACY
and set forth in the Work Plan. The selected FTEs shall install and
implement * , and shall provide continued on-site technical support to
ACY, on premises in the United States as may be designated by ACY from
time to time (*). The Parties contemplate that by the beginning of the
second year of the Collaboration, such * shall be recruited from the New
Jersey area. The * shall be based at the premises designated by ACY, and
shall be required to agree to be bound by terms and conditions consistent
with Article 7 and Section 11.1 hereof. Their key responsibilities shall
be as follows:
3.2.1 *
3.2.2 *
3.2.3 *
* denotes request for confidential treatment
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3.3 EMPLOYEE EXPENSES. All expenses incidental to the recruiting and employ
of the * shall be borne by Hyseq, including their salaries, wages, fringe
benefits, related payroll taxes, overtime, vacation and holiday pay
illness, personal days off with pay, costs of employee fringe benefits,
including health and life insurance, welfare, pension, and profit-sharing
as applicable; and all overhead (except for office space, telephone and
other utilities to be provided without charge by ACY at the ACY designated
facility) associated with their employment hereunder, including general
and administrative expenses; all as expended during the Initial
Collaboration Term and each Collaboration Term Extension Year, as
applicable. Upon termination of this Agreement, ACY may offer to employ
such FTEs directly on mutually agreed terms.
3.4 BIOINFORMATICS TECHNOLOGY TRAINING. Hyseq shall at all times during the
Initial Collaboration Term and any Collaboration Term Extension Year,
exert reasonable commercial efforts to keep the * and the ACY
Bioinformatics PMT abreast of all improvements, customization, upgrades,
and other modifications or additions made to the Hyseq Technology and
Hyseq Software, and Hyseq shall use reasonable commercial efforts to train
such * and ACY Bioinformatics PMT on a timely basis, in the use of same as
applicable to the discharge of Hyseq's obligations hereunder. The * and
representatives of ACY or members of the Bioinformatics PMT shall attend
training sessions on the premises of Hyseq at times to be agreed by the
Parties and set forth in the Work Plan in furtherance of the aforesaid
continued training, provided, however that ACY shall bear all travel,
lodging, meals and other costs incurred by ACY personnel in attending said
training sessions on the premises of Hyseq.
3.5 ADDITIONAL CONSULTATION. Technical training and additional consultation
equal to * shall be provided by Hyseq to ACY during the Initial
Collaboration Term and any Collaboration Term Extension Year, at no
additional cost to ACY.
3.6 ADDITIONAL FTE. Additional technical training and consultation equal to
* hours with respect to * , and up to * , shall be provided by Hyseq
during the Initial Collaboration Term and each Collaboration Term
Extension Year, at no additional cost to ACY.
3.7 REQUESTED FURTHER CONSULTATION. Consultation in addition to that
provided by Hyseq as set forth above shall be provided upon request at the
rate of * plus pre-approved expenses, such as lodging, travel, telephone,
telefax, postage, and facilities and equipment rental, and shipping.
ARTICLE 4
LICENSE GRANTS
4.1 LICENSES GRANTED TO ACY.
4.1.1 SOFTWARE LICENSE. Hyseq and ACY are concurrently entering
into the Software License Agreement pursuant to which Hyseq is
granting to ACY a worldwide, non-exclusive license, with the right
to sublicense, on the terms and conditions set forth therein.
* denotes request for confidential treatment
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4.1.2 COLLABORATION LICENSE. Hyseq hereby grants to ACY a worldwide,
exclusive right and license under Hyseq Technology, Hyseq Patents and
Hyseq's interests in Joint Patents to discover, develop, make, have
made, use, import, offer for sale, and to sell ACY Products in the *
, subject to the payment of royalties as applicable and in accordance
with Article 5 herein. Said license shall extend until termination
of the Collaboration, and then shall apply only to each Designated
Organism Family for one (1) year post termination of the
Collaboration.
4.1.3 THE ACY DATABASE LICENSE(S). Hyseq hereby grants to ACY a worldwide
right and license, with the right to sublicense, under Hyseq
Technology, Hyseq Patents and Hyseq's interests in Joint Patents, to
use the ACY Database, including the ACY Results contained therein,
for any use whatsoever, including all research purposes, to discover,
develop, make, have made, use, import, offer for sale, and to sell
ACY Products in any field, subject to the payment of royalties as
applicable and in accordance with Article 5 herein. ACY's right and
license as granted in this Paragraph 4.1.3 shall be exclusive in the
* and non-exclusive for all applications and fields outside of the *
. ACY retains the exclusive right for use of the ACY Database for
any and all uses and applications whatsoever in the * .
4.1.4 NO OTHER RIGHTS. Except as expressly provided otherwise in this
Agreement and the Software License Agreement, no rights in or to any
Hyseq Technology, Hyseq Software or Hyseq Patents shall be
transferred to ACY, and unless otherwise agreed in writing, ACY is
not granted any other license under the Hyseq Technology, Hyseq
Software, or Hyseq Patents, and warrants and represents that it will
make no use of same except as permitted hereunder.
* denotes request for confidential treatment
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4.2 LICENSES GRANTED TO HYSEQ.
4.2.1 ACY hereby grants to Hyseq a worldwide, fully paid research
use license, with no right to sublicense, under ACY Patents and ACY
Technology, including the ACY Database and ACY Materials, to
undertake its obligations in the Collaboration. Said license shall
extend until termination of the Collaboration.
4.2.2 ACY hereby grants to Hyseq a worldwide, non-exclusive
license, with no right to sublicense, to use the ACY Database for
all applications outside the * , including all research purposes and
to discover, develop, make, have made, use, import, offer for sale,
and to sell Hyseq Products outside the Agricultural Field, subject
to the payment of royalties as applicable and in accordance with
Article 5 herein. Consistent with the prohibition on sublicensing,
no ACY Results or other data will be displayed on, or made available
through the Internet to anyone other than ACY, on sites such as, for
example, "GeneSolutions.com," except as may be otherwise agreed by
the Parties.
4.2.3 Notwithstanding the provisions of Sections 4.2.1 and 4.2.2
above, the licenses granted to Hyseq shall expressly exclude the
right to use any ACY data in the ACY Database if and to the extent
such ACY data has been developed by ACY or an Affiliate of ACY using
technology that is not permitted by contract to be used by Hyseq or
a Third Party, and has been identified to Hyseq as such ("RESTRICTED
TECHNOLOGY").
4.2.4 Except as expressly provided otherwise in this Agreement and
the Software License Agreement, no rights in and to ACY data, the
ACY Database, ACY Materials, ACY Patents, ACY Technology or other
trade secrets or know-how, shall be transferred to Hyseq unless
otherwise agreed in writing. Hyseq is not granted any other license
with respect to same and Hyseq warrants and represents that it shall
make no use of same other than as permitted hereunder. For the
avoidance of doubt, Hyseq is granted no right and license in the *
whatsoever, other than the rights granted in Paragraph 4.2.1.
4.3 RIGHTS IN BANKRUPTCY. The rights granted pursuant to this Agreement
constitute "intellectual property" within the meaning of Sections 101 and
365(n) of the United States Bankruptcy Code. Upon the bankruptcy of
either Party, the non-bankrupt Party shall be further entitled to a
complete duplicate of (or complete access to, as appropriate) any such
intellectual property under which the non-bankrupt Party is not in default
which is the subject of an enforceable license to such non-bankrupt Party,
and same, if not already in its possession, shall be promptly delivered to
such non-bankrupt Party by the bankrupt Party.
* denotes request for confidential treatment
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ARTICLE 5
PAYMENTS, REPORTING, AND AUDIT RIGHTS
5.1 INITIAL COLLABORATION RESEARCH FUNDING.
5.1.1 ACY will pay Hyseq $5.0 million (the "INITIAL FUNDING") on
or before December 29, 1999, * .
5.1.2 * million of said Initial Funding shall be applied by Hyseq
against the purchase and other costs associated with computers to be
used on Hyseq premises for the purpose of the Collaboration, all in
accordance with the Work Plan. All right, title, and interest in
and to said equipment shall reside in ACY during the Collaboration,
provided further that Hyseq shall have an option to purchase said
equipment upon expiration or early termination of this Agreement,
for the sum of * .
5.1.3 * million of said Initial Funding shall be applied by Hyseq
against the purchase and other costs associated with software and
computers to be used on ACY's premises for the purpose of the
Collaboration and otherwise. All right, title, and interest in and
to same shall reside with ACY, except for the Hyseq Software,
including the Hyseq Schema, which is licensed to ACY pursuant to the
Software License Agreement.
5.2 ADDITIONAL COLLABORATION RESEARCH FUNDING.
5.2.1 During the Initial Collaboration Term, ACY shall make
research payments to Hyseq in accordance with the following: *
(payable on the last business day of each such quarter); * (payable
on the last business day of each such calendar quarter); * (payable
on the last business day of each such calendar quarter; and *
(payable on the last business day of such calendar quarter).
5.2.2 If the Collaboration is extended, ACY shall pay * . In
order to avoid any down time in which Hyseq would not be * , ACY may
elect to overlap work performed in each Collaboration Term Extension
Year with that of the last three to six months of the prior term,
and in such event, ACY shall be entitled to * , such that the
payment for * in a Collaboration Term Extension Year shall be
reduced to * .
5.2.3 Provided ACY has not directed changes to the Work Plan and
mix of work in accordance with Paragraph 2.1.8 hereof, if *
processed by Hyseq in accordance with the Work Plan exceeds * in any
given calendar quarter within a year during the Collaboration, and
by the end of the next quarter of said year is not offset by a
reduction * in that quarter, then ACY shall pay Hyseq an additional
* that quarter, which additional fee shall be due within 30 days of
the end of the quarter following the quarter in which the * has
occurred.
* denotes request for confidential treatment
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5.2.4 The Software License Fees are included in fees payable under
this Section 5.2 during the Collaboration Term.
5.2.5 If ACY wishes to designate more than twelve (12) Designated
Organisms prior to December 31, 2002, or more than four (4) new
Designated Organisms in any Collaboration Term Extension Year, ACY
shall be entitled to so designate, subject to Paragraphs 2.1.2 and
2.1.4 and upon payment of * . Said * shall be payable no later than
30 days after receipt by ACY of an invoice to be generated by Hyseq
upon delivery of notice of the additional designation.
5.3 ROYALTIES.
5.3.1 ACY OBLIGATION TO PAY ROYALTIES. ACY shall pay Hyseq
royalties on Net Sales of ACY Products for a period expiring on the
later of (a) the expiration of the last Patent covering any such
Product on a country-by-country basis, or (b) fifteen (15) years
after the First Commercial Sale of such Product hereunder, said
royalty rates set forth below. Upon expiration of the obligation to
pay royalties with respect to a Product pursuant to this Paragraph
5.3.1, the license with respect thereto shall be deemed fully paid.
5.3.2 ACY ROYALTY RATES.
(i) ACY shall pay Hyseq royalties * on Net Sales of
ACY Products in the *, wherein said Product incorporates a
gene sequence or gene product as defined in Paragraph 1.3(a)
herein, in any jurisdictions where the manufacture, use or
sale of such ACY Products are covered by a Valid Claim of a
Patent directed to a composition of matter containing said
Product, or use or manufacture of such Product, which royalty
shall be reduced to * if not covered by any such Patent or if
the Product does not incorporate such gene sequence or gene
product as defined in Paragraph 1.3(b) herein.
(ii) ACY shall pay Hyseq royalties of * on Net Sales
of ACY Products outside the * , wherein said Product
incorporates a gene sequence or gene product as defined in
Paragraph 1.3(a) herein, in any jurisdictions where the
manufacture, use or sale of such ACY Products are covered by a
Valid Claim of a Patent directed to a composition of matter
containing said Product, or manufacture or use of such
Product, which royalty rate shall be reduced to * if the
Product does not incorporate such gene sequence or gene
product as defined in Paragraph 1.3(b) herein. Each such
royalty rate shall be reduced by one-half if the applicable
Product is not covered by any such Patent.
5.3.3 HYSEQ OBLIGATION TO PAY ROYALTIES. Hyseq shall pay ACY
royalties on Net Sales of Hyseq Products for a period expiring on
the later of (a) the expiration of the last Patent covering any such
Hyseq Product on a country-by-country basis, or (b) fifteen (15)
years after the First Commercial Sale by Hyseq of such Hyseq
* denotes request for confidential treatment
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Product hereunder, said royalty rates set forth below. Upon
expiration of the obligation to pay royalties with respect to a
Hyseq Product pursuant to this Paragraph 5.3.3, the license with
respect thereto shall be deemed fully paid.
5.3.4 HYSEQ ROYALTY RATES. In consideration of the licenses
granted to Hyseq herein, Hyseq shall pay ACY royalties of * on Net
Sales of Hyseq products outside the *: (a) that tangibly incorporate
gene sequences or products of gene sequences arising out of the
Collaboration, or alternatively, products that tangibly incorporate
gene sequences or products of gene sequences therefrom, which
products contain all or a portion of said gene sequences or gene
products whether introduced by genetic modification techniques or by
enhancement or other in situ modification to naturally occurring
genes or gene products with the subsequent development of products
containing said genes or gene products so modified; and Hyseq shall
pay ACY royalties of * on Net Sales of Hyseq products, including
without limitation, Compounds, that (b) are developed, made, used
or sold as, or for use as an ingredient in a product outside the * ,
the development of which product derived from information contained
in the ACY Database which information was not independently
available to Hyseq as may be shown by contemporaneous documentation
(collectively referred to herein as "HYSEQ PRODUCTS"), in any
jurisdictions where the manufacture, use or sale of any such Hyseq
Product is covered by a Valid Claim of a Patent directed to a
composition of matter containing such Product, or use or manufacture
of such Product. Each such royalty rate shall be reduced by
one-half if the applicable Product is not covered by any such
Patent.
5.3.5 TIMING OF ROYALTY PAYMENTS. Royalties shall be paid in
arrears on a quarterly basis, with payments due 90 days after the
end of the calendar quarter, for each Product on a
product-by-product basis, commencing upon the First Commercial Sale
of a particular Product in any jurisdiction.
5.3.6 OTHER ROYALTY-RELATED PROVISIONS. If it is necessary for a
Party or its sublicensee to pay a royalty to one or more Third
Parties for making, using or selling a Product in a jurisdiction,
the royalty it pays to the other Party in such jurisdiction will be
reduced by the same proportion as the lowest reduction of royalties
required of one or more of the other licensors (e.g., if one
licensor is required to reduce by * and another is required to
reduce by * , the other Party also will reduce royalties by *),
provided, however, in no event will royalties in any jurisdiction be
reduced, by reason of Third Party royalty reduction, to less than *
of the royalty otherwise payable to the other Party.
5.4 HYSEQ SOFTWARE LICENSE FEES. In addition to the amount specified in
Paragraph 5.1.3, and as set forth in the Software License Agreement, ACY
shall pay Hyseq * for the use of Hyseq Software, including all
Modifications and Upgrades thereto. Said * is included in the amount
payable under Section 5.2 above during the Collaboration Term. Upon
termination of the Collaboration, ACY shall have a paid-up license to the
Hyseq Software, including all modifications, upgrades, and improvements
thereto, all as in
* denotes request for confidential treatment
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existence as of the date of such termination, and shall be entitled to
continue to receive Upgrades and be licensed thereunder, subject to
payment of the Renewal Fee (as defined and further described in the
Software License Agreement), and provided further that if the
Collaboration is terminated prior to June 30, 2003, ACY shall be
responsible for payment of any remaining annual Base License Fee (as
defined in the Software License Agreement) through June 30, 2003, on a
pro rata basis. Upon such termination, ACY shall be responsible for
securing licenses of * Third Party software, and for maintaining service
contracts on any hardware used in connection with the ACY Database. In
connection with the foregoing, Hyseq shall assist ACY in all reasonable
respects, and shall grant ACY access to continued modifications,
upgrades, and improvements to the Hyseq Software, as set forth more fully
in the Software License Agreement.
5.5 NET SALES REPORTS. Within sixty (60) days after the end of each fiscal
quarter following the First Commercial Sale of any Product, the selling
Party shall provide the other Party with a written report setting forth
(i) gross Sales of the applicable Product made during such quarter, (ii)
the deductions taken from gross Sales to arrive at Net Sales, and (iii)
Net Sales of the applicable Product made during such quarter. Each such
Sales report shall include reasonable supporting documentation.
5.6 ACCOUNTING AND AUDITS. Each Party shall keep and maintain proper and
complete records and books of account documenting gross Sales of their
respective Products, deductions taken therefrom to arrive at Net Sales,
and Net Sales. Each Party shall permit an independent public accountant
designated by the other Party, except one to which the other Party shall
have reasonable objection, to have access, no more than once in each
calendar year, but only for as long as royalties are paid under this
Agreement, during regular business hours, and upon reasonable notice, to
inspect its records and books for the sole purpose of determining the
appropriateness of any royalty payments made by the disclosing Party to
the other Party hereunder. If such examination results in a final
determination that royalties have been overstated or understated, the
applicable amount shall be refunded or paid promptly. The fees and
expenses of such accountant shall be paid by requesting Party, unless the
audit results in a final determination that royalty payments have been
understated by more than ten percent (10%) for the period examined, in
which case the audited Party shall pay the fees and expenses of such
accountant. All information obtained by, or provided to, the requesting
Party and/or its accountants pursuant to this Section shall be subject to
obligations of strict confidentiality.
5.7 TAXES. Each Party shall pay any and all taxes levied on account of
royalties or other payments it receives under this Agreement. If
Applicable Laws require that taxes be withheld, the paying Party shall (a)
deduct these taxes from the remittal amount, (b) pay the taxes to the
proper taxing authority, and (c) send proof of payment to the receiving
Party within forty-five (45) days following that payment.
5.8 CURRENCY; CONVERSION. All payments made under this Agreement shall be in
U.S. dollars. With respect to any royalty payment based on Net Sales made
in a currency other than U.S. dollars, each Party shall convert such
currency to U.S. dollars in
* denotes request for confidential treatment
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accordance with the foreign currency conversion procedures, as in effect
from time to time, then used by it in the ordinary course of its
business.
5.9 BLOCKED CURRENCY/ROYALTY RATES.
5.9.1 If by reason of any restrictive exchange laws or
regulations, a Party shall be unable to convert to U.S dollars,
amounts equivalent to the royalties payable hereunder in respect of
Products sold for funds other than U.S. dollars, such royalty
payments shall be deferred until such restrictive practices are
lifted so as to permit such conversion, or until the receiving
Party, at its option, designates a bank of the receiving Party's
choice in the country in question, where such royalties may be
legally remitted in trust for such receiving Party, in local
currency.
5.9.2 If in any country where Products are manufactured or sold,
rates of royalties provided for herein are prohibited by law or
regulation, a Party shall pay such royalties at the highest rate
permitted in that country for licenses of the type herein granted,
and shall be deemed in compliance with its royalty payment
obligations hereunder in so doing.
5.10 BANK ACCOUNTS. All payments made hereunder shall be made by check to the
receiving Party at the respective addresses provided herein, or as may be
indicated from time to time hereunder by the receiving Party in writing.
ARTICLE 6
INVENTIONS AND PATENT RIGHTS
6.1 TITLE.
6.1.1 All inventions, discoveries, know-how, copyrights, and trade
secrets arising from the Collaboration that are made, conceived or
reduced to practice by, or generated solely by Hyseq employees or
Hyseq agents in the course of, or as a result of, performing their
duties under the Collaboration ("HYSEQ INVENTIONS") shall be solely
owned by Hyseq. ACY shall have no rights in any Hyseq Inventions
except as herein granted or as required to exercise its rights and
perform its obligations under the Collaboration. Notwithstanding
the foregoing, Hyseq shall assign to ACY all of its right, title and
interest in and to Hyseq Inventions that are genes or portions
thereof, derived from the ACY Materials and whose identity is
discovered or further determined in the course of, or as a result of
performing said duties under the Collaboration, subject to payment
of any applicable royalties pursuant to Article 5.
6.1.2 Ownership of the Hyseq Software and Modifications and
Upgrades (as defined in the Software License Agreement) shall be in
accordance with the provisions set forth in the Software License
Agreement.
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6.1.3 All inventions, discoveries, know-how, copyrights, and trade
secrets arising from the Collaboration that are made, conceived or
reduced to practice by, or generated solely by ACY employees or ACY
agents in the course of, or as a result of, performing their duties
under the Collaboration ("ACY INVENTIONS") shall be solely owned by
ACY. Hyseq shall have no rights in any ACY Inventions except as
herein granted or as required to exercise its rights and perform its
obligations under the Collaboration.
6.1.4 *
6.1.5 Subject to payment of the applicable fees pursuant to the
terms of this Agreement, ACY retains all right, title, and interest
in and to the ACY Database, including the ACY Results and all
proprietary data contained therein, and including all intellectual
property relating thereto as developed hereunder. ACY shall
determine the disposition of any copyrights, or copyrightable
material, first produced or composed in the performance of the
Collaboration, and relating to the ACY Database.
6.1.6 All ACY Materials shall be solely owned by ACY. Hyseq shall
have no rights in any such materials except as granted herein or as
required to exercise its rights and perform its obligations under
the Collaboration.
6.2 NOTIFICATION. Each Party shall promptly notify the other upon the
making, conceiving or reducing to practice of any invention or discovery
made in accordance with the terms of this Agreement.
6.3 CERTAIN ACY PATENTING RIGHTS. ACY shall have the sole right to prepare,
file, prosecute, maintain and extend patent applications, except as
provided for below, concerning all ACY Inventions. ACY shall have the
first right, using in-house or outside legal counsel selected at ACY's
sole discretion, to prepare, file, prosecute, maintain and extend patent
applications and patents concerning all * , in countries of ACY's choice
throughout the world with appropriate credit to Hyseq representatives,
including the naming of such Parties as inventors where appropriate and in
accordance with the relevant legal requirements, for which ACY shall bear
the costs relating to such activities which occur at ACY's request or
direction.
6.4 CERTAIN PATENTING ELECTIONS OF ACY. If ACY, prior or subsequent to
filing patent applications on any ACY Inventions or * , elects not to
maintain same as a trade secret and also elects not to file, prosecute or
maintain patent applications thereon, or on ensuing patents or certain
claims encompassed by such patent applications or ensuing patents in the
United States of America, ACY shall give Hyseq notice thereof within a
reasonable period prior to allowing such patent applications or patents or
such certain claims encompassed by such patent applications or ensuing
patents to lapse or become abandoned or otherwise unpatentable or
unenforceable, and Hyseq shall thereafter have the right, at its sole
expense, to prepare, file, prosecute and maintain patent applications and
patents or divisional applications related to such certain claims
encompassed by such
* denotes request for confidential treatment
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patent applications or ensuing patents in countries of its choice
throughout the world. ACY patenting efforts shall not be construed as an
election not to maintain or file under this Paragraph if ACY elects to
delay such efforts for strategic purposes.
6.5 * AND DISCOVERIES. The Party filing patent applications for * shall do
so in the name of, and on behalf of, both ACY and Hyseq. Each of Hyseq
and ACY shall hold all information it presently knows or acquires under
this Article 6, which is related to all such patents and patent
applications, as confidential under the provisions of Article 7 hereof.
6.6 ASSIGNMENT OF INVENTIONS. In the event that, despite the provisions of
this Article 6, ACY obtains rights in any Hyseq Invention or Hyseq obtains
any rights in any ACY Invention, except as may be otherwise provided
herein, the Party obtaining such rights agrees to assign all such rights
to the other Party. Each Party will execute any documents reasonably
requested by the other Party in order to implement the provisions of this
Paragraph 6.6.
6.7 EMPLOYEE ASSIGNMENTS. Neither ACY nor Hyseq will permit any employees,
including without limitation, ACY *, or independent contractors to perform
work pursuant to the Collaboration unless such person is contractually
obligated to assign his or her interest in any inventions or other
discoveries to ACY or Hyseq, or both, as applicable.
6.8 ACTUAL OR THREATENED INFRINGEMENT.
6.8.1 In the event either Party becomes aware of any possible
infringement or unauthorized possession, knowledge or use of any
patents, copyrights, or technology of others, Patents, Confidential
Information, Hyseq Technology, ACY Technology, a Party's copyrights,
the ACY Database, the ACY Materials, or other technology of ACY
(collectively, an "Infringement"), that Party shall promptly notify
the other Party and provide it with full details. ACY shall be
responsible for the prosecution, prevention or termination of any
such Infringement, at ACY's expense, in those instances where ACY is
the owner of the underlying information or intellectual property
(solely or jointly with Hyseq) that is the subject of such
Infringement or has been exclusively or co-exclusively licensed same
hereunder. Hyseq shall be responsible for the prosecution,
prevention or termination of any such Infringement, at Hyseq's
expense, in all other instances. If Hyseq does not commence an
action to prosecute, or otherwise take steps to prevent or terminate
an Infringement within one hundred and twenty (120) days from such
notice, then ACY shall have the right and option to take such
reasonable action as considered appropriate to prosecute, prevent or
terminate such Infringement. If ACY does not commence an action to
prosecute, or otherwise take steps to prevent or terminate an
Infringement where Hyseq is the joint owner of underlying
information or intellectual property and same is not licensed
exclusively to ACY, within one hundred and twenty (120) days from
such notice, then Hyseq shall have the right and option to take such
reasonable action as considered appropriate to prosecute, prevent or
terminate such Infringement. If either Party lacks standing to
bring suit,
* denotes request for confidential treatment
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or otherwise determines that it is necessary or desirable for the
other to join any such suit, action or proceeding, the second Party
shall execute all papers and perform such other acts as may be
reasonably required in the circumstances.
6.8.2 Each Party shall, unless otherwise mutually agreed, bear the
cost of any proceeding or suit brought by it. In each case, the
Party bringing suit shall have the right first to reimburse itself
out of any sums recovered in such suit or in its settlement for all
reasonable costs and expenses, including reasonable attorney's fees,
related to such suit or settlement. The remainder is next to be
used to reimburse the other Party for its reasonable costs and
expenses so incurred. Any remaining amounts shall go to the Party
bringing suit. Each Party shall always have the right to be
represented by counsel of its own selection and at its own expense
in any suit instituted under this Paragraph by the other Party for
Infringement. In any action under this Paragraph, the Parties shall
fully cooperate with and assist each other.
6.8.3 LITIGATION STATUS. The Parties shall keep one another
informed of the status of and of their respective activities
regarding any litigation or settlement thereof concerning the
Collaboration, provided that no settlement or consent judgment or
other voluntary final disposition of any suit defended or action
brought by one Party pursuant to this Section may be entered into
without the consent of the other Party if such settlement would
require the non-settling Party to be subject to an injunction or to
make a monetary payment or would adversely affect the non-settling
Party's patent rights or the non-settling Party's other rights under
this Agreement.
6.8.4 In the event that an Infringement claim is brought against
Hyseq or ACY or both, which ACY, in its good faith business
judgment, believes will result in an injunction against Hyseq and/or
ACY, preventing the use of Hyseq Technology necessary or preferable
for use in the Collaboration as contemplated herein, Hyseq shall
have a period of 60 days from written notice of ACY's good faith
determination to (i) procure the right to continue using same at no
additional costs to ACY, or (ii) replace or modify same so that it
becomes non-infringing, at no additional cost to ACY, provided that
such replaced or modified techniques or technology operates in a
reasonably equivalent manner. If Hyseq is unable to procure rights
to continue using such Hyseq Technology as contemplated by (i) or to
otherwise provide a non-infringing alternative as contemplated by
(ii), ACY may terminate the Collaboration, effective 30 days after
notice thereof.
ARTICLE 7
CONFIDENTIALITY
7.1 CONFIDENTIAL INFORMATION. Pursuant to the transactions contemplated by
this Agreement, the Parties may provide to one another confidential
information, including but not limited to each Party's proprietary
materials and/or technologies, inventions, economic information, business
or research strategies, trade secrets and material
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embodiments thereof. As used herein, "CONFIDENTIAL INFORMATION" of a
Party means any such confidential information disclosed by such Party to
the other Party hereunder in written or oral form.
7.2 CONFIDENTIALITY. The recipient shall maintain the providing Party's
Confidential Information in confidence, except if and to the extent that
such disclosure is required by Applicable Law and provided that the
providing Party has received written notice reasonably far in advance of
the proposed disclosure. The recipient shall use the providing Party's
Confidential Information solely to exercise its rights and perform its
obligations under this Agreement, unless otherwise mutually agreed in
writing. Upon request by the providing Party, the recipient shall return
all tangible materials comprising Confidential Information of the
providing Party and return or destroy any notes, copies, summaries or
extracts of the providing Party's Confidential Information.
7.3 EXCLUSIONS. Confidential Information shall not include information that:
(i) is shown by contemporaneous documentation of the recipient to have
been in its possession prior to receipt from the providing Party; (ii) is
or becomes, through no fault of the recipient, publicly known; (iii) is
furnished to the recipient by a Third Party without breach of a duty to
the disclosing Party; or (iv) is independently developed by the recipient
without use of the providing Party's Confidential Information. The
receiving Party will have the burden of proving the availability of any of
the above exemptions.
7.4 TERMINATION. All obligations of confidentiality and non-use imposed
under this Article 7 shall expire five (5) years following termination of
this Agreement.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY HYSEQ. Hyseq shall indemnify and hold ACY and its
Affiliates, and their respective directors, officers, employees and
agents, harmless against all claims, damages, liabilities, losses, costs
and expenses (collectively, "CLAIMS") if and to the extent arising from
(a) the breach by Hyseq of any of its representations, warranties and
covenants hereunder; and (b) any negligent or willful acts or omissions of
Hyseq or its employees or agents in connection with the performance of any
tasks to be performed by Hyseq under this Agreement, except in each case
to the extent any such Claim is subject to indemnification by ACY pursuant
to Section 8.2 below. Indirect or consequential losses or damages are
expressly excluded.
8.2 INDEMNIFICATION BY ACY. ACY shall indemnify and hold Hyseq and its
Affiliates, and their respective directors, officers, employees and
agents, harmless against all Claims if and to the extent arising from (a)
the breach by ACY of any of its representations, warranties and covenants
hereunder; and (b) any negligent or willful acts or omissions of ACY or
its employees or agents in connection with the performance of any tasks to
be performed by ACY under this Agreement, except in each case to the
extent any such Claim is subject to indemnification by Hyseq pursuant to
Section 8.1 above. Indirect or consequential losses or damages are
expressly excluded.
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8.3 PROCEDURE. The indemnified Party shall give prompt written notice to the
indemnifying Party of any suits, claims or demands which may give rise to
any loss for which indemnification may be required under this Article 8;
provided, however, that failure to give such notice shall not impair the
obligation of the indemnifying Party to provide indemnification hereunder
except if and to the extent that such failure materially impairs the
ability of the indemnifying Party to defend the applicable suit, claim or
demand. The indemnifying Party shall be entitled to assume the defense
and control of any suit, claim or demand of any Third Party at its own
cost and expense; provided, however, that the other Party shall have the
right to be represented by its own counsel at its own cost in such
matters. In the event that the indemnifying Party shall decline to assume
control of any such suit, claim or demand, the Party entitled to
indemnification shall be entitled to assume such control, conduct the
defense of, and settle such suit, claim or action, all at the sole cost
and expense of the indemnifying Party. The indemnifying Party shall not
settle or dispose of any such matter in any manner which would adversely
impact the rights or interests of the indemnified Party without the prior
written consent of the indemnified Party, which shall not be unreasonably
delayed or withheld.
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ARTICLE 9
TERM AND TERMINATION
9.1 TERM OF THE AGREEMENT AND EARLY TERMINATION OF THE AGREEMENT BY THE
PARTIES. Subject to Section 9.3 hereof, the term of this Agreement shall
extend through the Collaboration Term and thereafter until expiration of
the last Patent covering the composition, use, or manufacture of a Product
developed hereunder. This Agreement may be earlier terminated as follows:
9.1.1 by mutual written agreement of the Parties, effective as of
the time specified in such written agreement; or
9.1.2 by either Party,
(i) in the event of a Bankruptcy Event of the other
Party, effective immediately upon the occurrence of such
Bankruptcy Event; or
(ii) upon any material breach of this Agreement by the
other Party; provided, however, that the Party alleging such
breach must first give the other Party written notice thereof,
which notice must state that nature of the breach in
reasonable detail and that the Party giving such notice views
such alleged breach as a basis for terminating this Agreement
under this Paragraph 9.1.2 and the Party receiving such notice
must have failed to cure such alleged breach within ninety
(90) days after receipt of such notice.
9.2 EARLY TERMINATION OF COLLABORATION BY ACY.
9.2.1 RIGHT TO TERMINATE. ACY may terminate the Collaboration at
any time in its sole discretion:
(i) in the event of the "Acquisition" of Hyseq by a
Third Party,
(ii) if Hyseq is no longer generally engaged in gene
discovery and sequencing as a primary business activity or is
generally unable to perform the types of obligations set forth
herein; and
beginning on April 1, 2000:
(iii) if Hyseq does not * at the * , subject however
to delivery by ACY of the requisite ACY Materials in
accordance with the timetable set forth in the Work Plan; or
(iv) if Hyseq fails to deliver * in accordance with
the milestones and timetable set forth in the Work Plan, and
provided ACY has first delivered the requisite ACY Materials
in accordance with such timetable; or
* denotes request for confidential treatment
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(v) if Hyseq fails to provide standard reports in
accordance with the milestones set forth in Exhibit 9.2.1(v);
or
(vi) if ACY terminates in accordance with the
provisions of Paragraph 6.8.4 hereof;
said termination to become effective 90 days after written notice
of termination is provided to Hyseq of ACY's intent to so
terminate, except for termination pursuant to this Paragraph
9.2.1(vi), which shall become effective upon 30 days notice. For
purposes hereof, an "ACQUISITION" shall be deemed to have occurred
if Hyseq shall consolidate or merge with another entity, or convey,
sell or lease to another entity all or substantially all of the
stock, assets or business of Hyseq and its subsidiaries, taken as a
whole, or suffer a Change in Control in which another entity shall
come to control Hyseq. "CHANGE OF CONTROL" as used herein shall
mean any transaction or event as a result of which any other entity
acquires or for the first time controls and is able to vote without
restriction (directly or through nominees or beneficial ownership)
fifty percent (50%) or more of the capital stock of Hyseq
outstanding at the time having the power ordinarily to vote for
directors of Hyseq.
9.2.2 EFFECTS OF EARLY TERMINATION OF THE COLLABORATION. Any
termination of the Collaboration shall be without prejudice to the
rights of either Party against the other, then accruing or otherwise
accrued under this Agreement. The licenses granted to ACY pursuant
to Article 4 shall survive early termination of the Collaboration by
ACY under this Section and the licenses granted to Hyseq shall
survive early termination of the Collaboration by ACY under
Paragraph 9.2.1(i), (ii), and (vi). Further, as of the date of
notice of such early termination by ACY of the Collaboration, ACY
shall be released from its future obligations of research funding
pursuant to Article 5 hereof, except for any obligations which have
accrued but have not been satisfied as of the date of notice of such
termination, and any applicable royalty payments or other applicable
fees. Notwithstanding the foregoing, if ACY terminates the
Collaboration in accordance with the provisions of Paragraph
9.2.1(iii), 9.2.1(iv) or 9.2.1(v) before September 30, 2000, ACY
shall be entitled to a refund of the Initial Funding paid in
accordance with Paragraph 5.1.2 hereof, less the actual cost of the
computers purchased, such cost to be determined in accordance with
Hyseq's customary accounting and business procedures, consistently
applied.
9.3 TERMINATION AND SURVIVAL OF PROVISIONS UPON TERMINATION OF THE
COLLABORATION OR THIS AGREEMENT.
9.3.1. Upon any termination of this Agreement, the Collaboration shall
also terminate.
9.3.2. Upon any termination of the Collaboration, if this Agreement is
not also terminated, the following provisions shall terminate and no
longer be in effect: Sections 2.1 through 2.7 inclusive; Section
2.8, except as otherwise provided in
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the last sentence thereof; Article 3; Paragraph 4.1.2, except as
otherwise provided in the last sentence thereof; Paragraph 4.2.1;
Sections 5.1 and 5.2, except for amounts accrued as of the date of
termination; Section 6.7; and Paragraph 9.2.1. All other
provisions shall remain in effect as provided by this Agreement.
9.3.3. Upon any termination this Agreement pursuant to Paragraphs 9.1.1
or 9.1.2, the following provisions of this Agreement shall survive:
Section 2.8, as provided in the last sentence thereof; Section 2.9;
Paragraph 4.1.2, as provided in the last sentence thereof;
Paragraphs 4.1.3 (except as provided below), 4.1.4, 4.2.2 (except as
provided below), 4.2.3, 4.2.4; Section 4.3; Sections 5.1 and 5.2 for
amounts accrued as of the effective date of notice of termination;
Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, and 5.10 (all of which
except as provided below); Sections 9.3, 9.4 and 9.5; and Articles
6, 7, 8, 10 and 11. Notwithstanding the foregoing, the license
granted (pursuant to Paragraph 4.1.3 or 4.2.2 as the case may be) to
the Party terminated for material breach in accordance with the
provisions of Paragraph 9.1.2(ii) hereof and the provisions of
Article 5 pertaining to same shall not survive.
9.3.4. Upon any termination of this Agreement other than pursuant to
Paragraphs 9.1.1 or 9.1.2, the following provisions shall survive:
Section 2.9, Article 5 (with respect to amounts accrued as of the
date of termination), 7, and 8; Sections 9.3, 9.4, and 9.5; and
Articles 10 and 11.
9.3.5. Additionally, Article 1 shall survive any termination of the
Collaboration or this Agreement to the extent defined terms therein
are used in provisions of this Agreement that also survive such
termination.
9.4 CONTINUING LIABILITY. Termination of this Agreement for any reason shall
not release any Party from any liability, obligation or agreement, which
has already accrued, nor affect the survival of any provision hereof,
which is expressly stated to survive such termination. Termination of
this Agreement for any reason shall not constitute a waiver or release of,
or otherwise be deemed to prejudice or adversely affect, any rights,
remedies or claims, whether for damages or otherwise, which a Party may
have hereunder or which may arise out of or in connection with such
termination.
9.5 RETURN OF CONFIDENTIAL INFORMATION. Upon termination of this Agreement,
each Party shall return to the other all Confidential Information of such
other Party that remains in its possession, except that each Party shall
be entitled to retain one (1) copy of any such information for archival
purposes.
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ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 MUTUAL REPRESENTATIONS. Each Party hereby represents and warrants to the
other as follows:
10.1.1 DUE ORGANIZATION. It is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
10.1.2 DUE AUTHORITY. It has power and authority to execute and deliver
this Agreement, and to perform its obligations hereunder.
10.1.3 NO CONFLICT. The execution, delivery and performance by it of
this Agreement and its compliance with the terms and provisions
hereof does not and will not conflict with or result in a breach of
any of the terms and provisions of, or constitute a default under or
a violation of (i) any agreement where such conflict, breach or
default would impair in any material respect the ability of such
Party to perform its obligations hereunder; (ii) the provisions of
its charter document or bylaws; or (iii) any Applicable Law, but,
with respect to this clause (iii), only where such violation could
reasonably be expected to have a material adverse effect on the
ability of such Party to perform its obligations hereunder.
10.1.4 BINDING OBLIGATION. This Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and
binding obligation enforceable against it in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to
or affecting creditors' rights and to the availability of particular
remedies under general equitable principles.
10.1.6 COMPLIANCE WITH APPLICABLE LAWS. It shall perform all of its
obligations hereunder in compliance with all Applicable Laws the
violation of which could reasonably be expected to have a material
adverse effect on such Party's ability to perform its obligations
hereunder.
10.1.7 NO ACTIONS. There are no actions, suits or proceedings pending
or, to its knowledge, threatened against it or its Affiliates, which
affect its ability to carry out its obligations under this
Agreement.
10.1.8 ADDITIONAL HYSEQ REPRESENTATION. In addition to the foregoing,
Hyseq represents and warrants to ACY that, to Hyseq's knowledge as
of the Effective Date, the practice of the Hyseq Technology or Hyseq
Software as contemplated by this Agreement will not constitute
infringement or an unauthorized use of any patent, copyright, trade
secret, proprietary information, license or right therein belonging
to any Third Party.
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10.1.9 ADDITIONAL ACY REPRESENTATION. In addition to the foregoing, ACY
represents and warrants to Hyseq that, to ACY's knowledge as of the
Effective Date, use by Hyseq of the ACY Materials in performing the
Collaboration as contemplated by this Agreement will not constitute
infringement or an unauthorized use of any patent, copyright, trade
secret, proprietary information, license or right therein belonging
to any Third Party.
10.1.10 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental
authority is required on the part of either Party in connection with
the valid execution, delivery and performance of this Agreement,
except for any filings under the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976 or counterpart filings under the
competition laws of other applicable countries or regions in the
world. Any filings under the Hart-Scott-Rodino Antitrust
Improvements Act or other Applicable Laws and regulations in other
countries or regions in the world, if any, will be effected by the
Parties hereto as soon as practicable after the full execution of
this Agreement. If any such filing is effected by the Parties, the
costs attendant thereto shall be borne equally by the Parties. If
this Agreement is enjoined under Hart-Scott-Rodino, this Agreement
shall be null and void.
10.1.11 NO FURTHER REPRESENTATIONS OR WARRANTIES. Except as otherwise
expressly provided in this Agreement or the Software License
Agreement, neither Party makes any representation or warranty of any
kind to the other Party, either express or implied.
ARTICLE 11
MISCELLANEOUS
11.1 RELATIONSHIP OF THE PARTIES. The Parties agree that each is acting as an
independent contractor with respect to the other and nothing contained in
this Agreement is intended, or is to be construed, to constitute ACY and
Hyseq as partners or joint ventures or ACY or Hyseq as an agent of the
other. Neither Party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the name
of the other Party or to bind the other Party to any contract, agreement
or undertaking.
11.2 LIMITATION OF LIABILITY. Neither Party shall have any liability to the
other Party pursuant to this Agreement for any special, indirect or
consequential damages, including but not limited to loss of profits, loss
of business opportunities or loss of business investment.
11.3 NOTICES. Any notice or other communication hereunder shall be in writing
and shall be deemed given when so delivered in person, by overnight
courier (with receipt confirmed) or by facsimile transmission (with
receipt confirmed by telephone or by automatic transmission report) or, if
given by mail, upon receipt, as follows (or to such other persons and/or
addresses as may be specified in writing to the other Party hereto):
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If to Hyseq, to: Hyseq, Inc.
670 Almanor Avenue
Sunnyvale, CA 94086
Attention: Chief Executive Officer
Facsimile: (408) 524-8145
With a copy to: Sachnoff & Weaver, Ltd.
30 South Wacker Drive, 29th Floor
Chicago, IL 60606-7484
Facsimile: (312) 207-6400
If to ACY, to: American Cyanamid Company
Global Agricultural Products Research Division
P. O. Box 400
Princeton, NJ 08543-0400
Attention: President
Facsimile: (609) 275-5234
With a copy to: Assistant General Counsel
One Campus Drive
Parsippany, NJ 07054
Facsimile: (973) 683-4117
11.4 SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement shall
inure to the benefit of, and be binding upon, ACY, Hyseq, and their
respective successors and assigns; provided, however, that neither ACY nor
Hyseq may transfer or assign any of its rights and obligations hereunder
without the prior written consent of the other, except that either Party
may transfer or assign any of its rights and obligations hereunder to an
Affiliate or a person or other entity that acquires all or substantially
all of the business or assets of such Party to which this Agreement
relates, or pursuant to a merger or consolidation. Each Party shall
notify the other promptly following any such transfer, assignment, merger
or consolidation. Any purported assignment in contravention of this
Section 11.4 shall, at the option of the nonassigning Party, be null and
void and of no effect.
11.5 AMENDMENTS AND WAIVERS. No amendment, modification, waiver, termination
or discharge of any provision of this Agreement, nor consent to any
departure by ACY or Hyseq therefrom, shall in any event be effective
unless the same shall be in writing specifically identifying this
Agreement and the provision intended to be amended, modified, waived,
terminated or discharged and signed by the Party against whom enforcement
of such amendment is sought, and each amendment, modification, waiver,
termination or discharge shall be effective only in the specific instance
and for the specific purpose for which given. No provision of this
Agreement shall be varied, contradicted or explained by any oral
agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by the Party against whom
enforcement of such variance, contradiction or explanation is sought.
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11.6 GOVERNING LAW. In the event a dispute, controversy or claim arises under
this Agreement, this Agreement shall, unless otherwise agreed upon by the
Parties or otherwise governed by applicable patent or other federal laws,
be governed by and construed in accordance with the laws of the State of
California or the State of New Jersey, without regard to either state's
choice of law principles, at the election of the respondent to such
dispute, controversy or claim.
11.7 EXPORT LAWS. The Parties acknowledge that each is subject to Applicable
Laws of the United States governing exportation of technical information,
computer software, laboratory prototypes and other commodities and
technology and that the transfer of same outside of the United States may
require a license or other authorization from the appropriate agency of
the United States government, and neither Party shall export same from the
United States, nor re-export same from a country outside of the United
States, without obtaining such license or other authorization.
11.8 ATTORNEYS' FEES. Each Party shall bear its own legal fees incurred in
connection with the transactions contemplated hereby.
11.9 SEVERABILITY. If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest
extent permitted by law, all other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the Parties hereto as nearly as may
be possible; provided, however, that nothing herein shall be construed so
as to defeat the overall intention of the Parties.
11.10 USE OF NAMES. Neither Party shall use the name, trade name or trademark
of the other Party in connection with this Agreement without the express
prior written consent of the other Party.
11.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same
instrument.
11.12 ENTIRE AGREEMENT. This Agreement and the Software License Agreement and
all exhibits and schedules attached hereto and thereto, contain the entire
agreement and understanding of the Parties hereto, and supersedes any
prior agreements or understandings between the Parties with respect to the
subject matter hereof.
11.13 PUBLICITY.
11.13.1 TERMS OF AGREEMENT. Neither Party shall disclose the existence
of this Agreement or any of the terms thereof, or its association
with the other Party, to any Third Party, whether in writing or
orally, without the prior written consent of the other Party, which
consent shall not be unreasonably withheld.
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Notwithstanding the foregoing, either Party may make any such
disclosure if but only to the extent such disclosure is, on advice
of counsel, required by Applicable Law. The disclosing Party
shall use all commercially reasonable efforts to preserve the
confidentiality of this Agreement and the terms thereof
notwithstanding any such required disclosure, and will give the
other Party written notice of such required disclosure, which
notice shall, to the extent reasonably practicable, be given a
reasonable period of time in advance of such required disclosure.
In the event either Party is required to file this Agreement with
the Securities and Exchange Commission, such Party shall apply for
confidential treatment of this Agreement to the fullest extent
permitted by Applicable Law, shall provide the other Party a copy
of the confidential treatment request far enough in advance of its
filing to give the other Party a meaningful opportunity to comment
thereon, and shall incorporate in such confidential treatment
request any reasonable comments of the other Party.
11.13.2 PRESS RELEASES. The Parties will issue a joint press release
following the execution of this Agreement, the form and substance of
which shall be approved by both Parties. Any subsequent press
releases regarding the transactions contemplated hereby shall be
approved in advance by both Parties, such approval not to be
unreasonably withheld or delayed, with the intent that such approval
or a disapproval shall be forthcoming within five (5) business days
from the date of receipt of the text of the intended disclosure.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
AMERICAN CYANAMID COMPANY
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
HYSEQ, INC.
By: ________________________________________
Name: Lewis S. Gruber
Title: President and Chief Executive Officer
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EXHIBIT 1.19
*
36
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EXHIBIT 2.1.5
*
37
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EXHIBIT 3.1
*
38
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EXHIBIT 9.2.1(V)
*
39
