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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 0-22170
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EPOCH PHARMACEUTICALS, INC.
(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C>
Delaware 91-1311592
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
12277 134th Court N.E., Suite 110 98052
(Address of principal executive offices) (Zip Code)
</TABLE>
(425) 821-7535
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Common Stock Purchase Warrants
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports); and (2) has been subject to such filing requirements for the past 90
days. YES |X| NO
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB |X|
Issuer's revenues for its most recent fiscal year were $159,917
As of March 29, 1999, the aggregate market value of the voting stock
held by non-affiliates, computed by reference to the price at which the stock
was sold on such date, was approximately $30,115,484
14,835,214 shares of Common Stock were outstanding at March 29, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
None
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POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes Fred Craves
and/or Sanford Zweifach, as attorney-in-fact, to sign in his behalf and in each
capacity stated below, and to file, all amendments and/or supplements to this
Annual Report on Form 10-KSB.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 6, 1999 EPOCH PHARMACEUTICALS, INC.
(Registrant)
By: /s/ Sanford S. Zweifach
---------------------------------------
Sanford S. Zweifach
President/Chief Financial Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons of the registrant in the capacities
and on the dates indicated.
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<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Chairman of the Board of Directors and
- --------------------------------- Chief Executive Officer July 6, 1999
Fred Craves
/s/ Sanford S. Zweifach President/Chief Financial Officer (Chief
- --------------------------------- Accounting Officer), and Director July 6, 1999
Sanford S. Zweifach
* Director
- ---------------------------------
Richard Dunning July 6, 1999
* Director
- ---------------------------------
Kenneth L. Melmon, M.D. July 6, 1999
</TABLE>
* By: /s/ Sanford S. Zweifach
---------------------------
Sanford S. Zweifach
(Attorney-in-fact)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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<C> <S>
10.21 License Agreement between the Registrant and Perkin-Elmer Corporation dated January 11, 1999
(portions of this Exhibit are omitted and were filed separately with the Secretary of the SEC
pursuant to the Registrant's application requesting confidential treatment under Rule 406 of the
Securities Act).
</TABLE>
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EXHIBIT 10.21
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED
BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933 AND HAVE BEEN
SEPARATELY FILED WITH THE COMMISSION
LICENSE AND SUPPLY AGREEMENT
This License and Supply agreement ("Agreement") dated as of the 11th day of
January, 1999 ("Effective Date") between EPOCH PHARMACEUTICALS, INC., 12277
134th Court NE, Suite 100, Redmond, WA ("Epoch") and THE PERKIN-ELMER
CORPORATION, having its PE Biosystems Division at 850 Lincoln Centre Drive,
Foster City, CA 94404 ("Perkin-Elmer").
ARTICLE I. BACKGROUND OF THE AGREEMENT
1.01 Epoch represents that it has rights under certain patents pertaining to
oligonucleotides having a minor-groove binding moiety covalently
attached thereto ("MGB Oligonucleotide"), and methods for making and
using such MGB Oligonucleotides.
1.02 Perkin-Elmer wishes to acquire exclusive and non-exclusive licenses,
depending on fields of use, under such patents.
1.03 Epoch represents that it has certain know-how relating to the synthesis
of MGB Oligonucleotides, and the design of sequence-specific probes
comprising such oligonucleotides.
1.04 Perkin-Elmer wishes to have Epoch supply (i) MGB Oligonucleotides and
intermediate compounds useful for making MGB Oligonucleotides, and (ii)
information with respect to chemical synthesis and purification
know-how relating to the production of MGB Oligonucleotides using such
intermediate compounds.
ARTICLE II. DEFINITIONS
2.01 "AFFILIATES" means any corporation, firm, partnership or other entity,
whether de jure or de facto, which directly or indirectly owns, is
owned by or is under common ownership with a Party to this Agreement,
as the case may be, to the extent of at least fifty percent of the
equity (or such lesser percentage which is the maximum allowed to be
owned by a foreign corporation in a particular jurisdiction) having the
power to vote on or direct the affairs of the entity.
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2.02 "NET SALES" means (1) with respect to sales by a Party, or an Affiliate
of a Party, to non-affiliated third party purchasers, the actual amount
of gross sales of Licensed Product(s) to a third party, less: trade,
cash and quantity discounts granted at the time invoiced, if any,
actually allowed, amounts refunded for faulty or defective product,
returns, rejections, freight, insurance and other transportation costs
(except income taxes), tariffs, duties and similar governmental charges
paid, to the extent included in gross sales price, (2) with respect to
sales by a Party made to any Affiliate or to any person, firm or
corporation enjoying a special course of dealing with a Party, the Net
Sales will be determined based on the first resale in a bona fide
arms-length transaction of Licensed Product(s) by such Affiliate,
person, firm or corporation to third parties, and (3) with respect to
Licensed Product(s) which are used by a Party, or an Affiliate of a
Party, to supply services or information to a third party for
commercial purposes, or are otherwise disposed of, the Net Sales will
be determined as if such Licensed Product(s) had been sold at the
average Net Sales for such Licensed Product(s) during the past one
hundred and twenty days prior to the supply of such services or
information.
2.03 "LICENSE YEAR" means the twelve month period beginning on the first day
of January, April, July or October next following the Effective Date,
and each twelve month period thereafter, except that the first License
Year will include the period from the Effective Date to the first day
of the twelve month period.
2.04 "PARTY" means Epoch or Perkin-Elmer and, when used in the plural, will
mean Epoch and Perkin-Elmer.
2.05 "LICENSED PATENT" means U.S. Patent No. 5,801,155 titled Covalently
Linked Oligonucleotide Minor Groove Binder Conjugates, issued September
1, 1998, including any Related Patent.
2.06 "RELATED PATENT" means any patent or patent application owned, held, or
otherwise controlled, in whole or in part by Epoch that (1) discloses
and/or claims substantially the same subject matter as a Licensed
Patent, (2) discloses and/or claims improvements to inventions
disclosed or claimed in a Licensed Patent and requires rights under the
Licensed Patent to exploit such improvements, (3) claims priority to, a
Licensed Patent, including but not limited to continuation applications
and patents, continuation-in-part applications and patents, divisional
applications and patents, reexamination applications and patents,
reissue applications and patents, and continuing prosecution
applications and patents, (4) is a parent of U.S. Patent No. 5,801,155,
and/or (5) any foreign equivalents of a Licensed Patent or any patent
or patent application in (1), (2), (3) or (4) above.
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2.07 "LICENSED PRODUCT" means any product for use in the Exclusive Licensed
Field or the Non-Exclusive Licensed Field (i) which, but for the
license granted hereunder, manufacture, use or sale thereof would
infringe at least one Valid Claim of a Licensed Patent, or (ii) which
otherwise uses, incorporates or was developed or manufactured using
Licensed Know-How.
2.08 "MGB OLIGONUCLEOTIDE" means Licensed Product comprising an
oligonucleotide having a minor-groove binding moiety covalently
attached thereto, and, at Perkin-Elmer's option, further comprising
[*]. A Purified MGB Oligonucleotide means an MGB Oligonucleotide that
is at least [*] pure based on the HPLC assay specified in Exhibit B.
2.09 "MGB INTERMEDIATE" means Licensed Product consisting of intermediates
useful for the synthesis of an MGB Oligonucleotide, including but not
limited to [*] . The identity of a MGB Intermediate will be confirmed
based on an assay specified in Exhibit B.
2.10 "PURCHASED PRODUCT" means MGB Intermediate or MGB Oligonucleotide
purchased from Epoch by Perkin-Elmer.
2.11 "PROBE UNIT" means that amount of MGB Intermediate required to make [*]
of a single Purified MGB Oligonucleotide, or [*] of a single Purified
MGB Oligonucleotide, as defined in Exhibit B.
2.12 "KITS" means products containing MGB Oligonucleotides packaged with
other materials and reagents, such other reagents including but not
limited to enzymes, reaction buffers and nucleotide triphosphates. Also
included within the definition of Kits are microfluidic devices
containing or packaged with MGB Oligonucleotides.
2.13 "BARE PROBE" means a MGB Oligonucleotide provided alone.
2.14 "VALID CLAIM" means a claim of a Licensed Patent (or pending
application included in the Related Patents) which has not been held
permanently invalid or otherwise unenforceable by a court of competent
jurisdiction, unappealable or unappealed within the time allowed for
appeal, or has not otherwise finally been held unpatentable by an
appropriate administrative agency, unappealable or unappealed within
the time allowed for appeal.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
3
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2.15 "EXCLUSIVE LICENSED FIELD" means the 5'-Nuclease Assay Field.
2.16 "REAL-TIME NUCLEIC ACID AMPLIFICATION MONITORING FIELD" means the
monitoring of a polymerase chain reaction by detecting a change in a
magnitude of a detectable signal as a function of reaction cycle
practiced outside of the HIVD Field only.
2.17 "5'-NUCLEASE ASSAY FIELD" means the detection of a nucleic acid
sequence based on the cleavage of a nucleic acid probe that is
hybridized to the nucleic acid sequence by a 5' to 3' nuclease activity
of a polymerase enzyme, as generally described in U.S. Patent No.
5,487,972, practiced outside of the HIVD Field only.
2.18 "NON-EXCLUSIVE LICENSED FIELD" means (1) use of MGB Oligonucleotides as
ligation probes in an oligonucleotide ligation assay, generally as
described in U.S. Patent No. 4,883,750; (2) use of MGB Oligonucleotides
in an assay employing a [*]; (3) use of MGB Oligonucleotides as primers
in a primer extension reaction, including but limited to a PCR reaction
or a DNA sequencing reaction, and (4) use of MGB Oligonucleotides in
the Real-Time Nucleic Acid Monitoring Field, to the extent that (1),
(2), (3) and (4) are practiced outside of the Exclusive Licensed Field
and practiced outside of the HIVD Field.
2.19 "PERKIN-ELMER DNA SYNTHESIS AND PURIFICATION PATENTS" means U.S. Patent
Nos. 4,997,927 (GBF), 4,458,066, 5,132,418, 5,153,319, 4,973,679
(Caruthers Process), and 4,415,732, 4,668,777, 4,500,707 (Caruthers
Reagents), including any Related Patent.
2.20 "HUMAN IN VITRO DIAGNOSTICS FIELD" ("HIVD Field") means products and
processes for the measurement of attributes, characteristics, diseases,
traits or other conditions of a human being for the medical management
of that human being.
2.21 "LICENSED KNOW-HOW" means trade secrets, technical information,
experimental data, software and other knowledge now existing and
controlled by Epoch with respect to chemical synthesis and purification
relating to the production of MGB Oligonucleotide using MGB
Intermediate, as described in Section 5.04 and Exhibit C, to the extent
that such information, data, software and knowledge is not publicly
available.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
4
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2.22 "CONFIDENTIAL INFORMATION" means information received by one Party
(Receiving Party) from the other Party (Disclosing Party) (1) that the
Receiving Party has a reasonable basis to believe is confidential to
the Disclosing Party, or is treated by the disclosing Party as
confidential, (2) is identified at the time of disclosure as
"CONFIDENTIAL" and, (3) in the case of disclosures in non-written form,
is identified in writing within thirty (30) days as confidential.
Notwithstanding the above, Confidential Information will not include
any information which:
(1) can be demonstrated to have been in the public domain as of
the Effective Date or comes into the public domain during the
term of this Agreement through no act of the recipient; or
(2) can be demonstrated to have been independently known to the
recipient prior to the receipt thereof, or made available to
the recipient as a matter of lawful right by a third party; or
(3) can be demonstrated to have been rightfully received by the
recipient from a third party who did not require the recipient
to hold it in confidence or limit its use and who did not
acquire it, directly or indirectly, from the other Party to
this Agreement under a continuing obligation of
confidentiality; or
(4) will be required for disclosure to any governmental regulatory
agencies pursuant to approval for use, provided the Disclosing
Party is given reasonable notice of such proposed disclosure
and, if requested by the Disclosing Party, the Receiving Party
uses reasonable efforts to maintain the confidentiality of
such information in such governmental submission; or
(5) is independently conceived, invented or acquired by
researchers of the recipient who have not been personally
exposed to the information provided to the recipient
hereunder; or
(6) is published by a governmental agency as part of the normal
patent filing and prosecution process.
ARTICLE III. LICENSE GRANT
3.01 Exclusive License. Epoch hereby grants to Perkin-Elmer a world-wide
exclusive license under Licensed Patents and Licensed Know-How to make,
use, offer to sell, sell and import Licensed Products in the Exclusive
Licensed Field.
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3.02 Non-Exclusive License. Epoch hereby grants to Perkin-Elmer a world-wide
non-exclusive license under Licensed Patents and Licensed Know-How to
make, use, offer to sell, sell and import Licensed Products in the
Non-Exclusive Licensed Field.
3.03 Sublicenses. Perkin-Elmer will have no right to sublicense its license
rights granted hereunder.
3.04 Restrictions. Perkin-Elmer will not knowingly sell, market, make or
have made, Licensed Products for use outside the Exclusive Licensed
Field or the Non-Exclusive Licensed Field. In the event that
Perkin-Elmer does inadvertently sell, market, make or have made,
Licensed Products for use outside the Exclusive Licensed Field or the
Non-Exclusive Licensed Field, Perkin-Elmer will within thirty (30) days
of learning of such activity cease such activity. Epoch will not
knowingly sell, market, make or have made MGB Intermediate and/or MGB
Oligonucleotide to third parties in the Exclusive Licensed Field. In
the event that Epoch does inadvertently sell, market, make or have made
MGB Intermediate and/or MGB Oligonucleotide to third parties in the
Exclusive Licensed Field, Epoch will within thirty (30) days of
learning of such activity cease such activity.
3.05 Patent Prosecution. To the extent commercially practicable, Epoch will
file and diligently prosecute patent applications with respect to the
Licensed Patent in at least the United States, Germany, France,
Switzerland, United Kingdom, Sweden, Italy, Japan, Australia and
Canada.
ARTICLE IV. LICENSE FEE; ROYALTIES; PAYMENT FOR KNOW-HOW
4.01 License Fees. Perkin-Elmer will, as a license fee, pay to Epoch, within
ten (10) business days after the Effective Date, [*] Dollars [*], [*]%
of which will be creditable against future royalties called for under
Section 4.02. Perkin-Elmer will use credits against future royalties at
a rate not to exceed [*] Dollars [*] per License Year. In addition,
upon the first commercial sale of a Licensed Product for each of the
four uses listed in the definition of "Non-Exclusive Licensed Field,"
Perkin-Elmer will pay to Epoch, within ten (10) business days of each
such first commercial sale, an additional license fee of [*] Dollars
[*].
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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4.02 Royalties. Perkin-Elmer will pay to Epoch royalties on the Net Sales of
Licensed Products sold or otherwise disposed of under the license
granted under Sections 3.01 and 3.02 of this Agreement as follows:
Bare Probes covered by a Valid Claim [*]%
Kits covered by a Valid Claim [*]%
Bare Probes not covered by a Valid Claim [*]%
Kits not covered by a Valid Claim [*]%
No royalties will be owed under this Section 4.02 (1) for the sale by
Perkin-Elmer of any Bare Probes purchased by Perkin-Elmer from Epoch,
and (2) for the sale by Perkin-Elmer of any Bare Probes or Kits not
covered by a Valid Claim in the event that (i) the Licensed Know-How
becomes publicly available, (ii) Perkin-Elmer is placed at a commercial
disadvantage as a result of such know-how becoming publicly available,
and (iii) such know-how was not made publicly available by
Perkin-Elmer.
4.03 Payment for Know-How. Perkin-Elmer will pay to Epoch, as additional
consideration for the transfer of and license under Licensed Know-How,
within ten (10) business days after the Effective Date, [*] Dollars
[*].
4.04 Payment Dates and Statements. Within forty-five (45) days of the end of
each calendar quarter in which Net Sales occur, Perkin-Elmer will
calculate the royalty amount owed to Epoch under this Section 4 and
will remit such amount to Epoch. Such payment will be accompanied by a
statement showing the calculation of the amount owed for Licensed
Products, including the Net Sales of Licensed Products for that quarter
(including the gross invoiced sales and permissible deductions
therefrom), and the exchange rate (as determined pursuant to Section
4.06) used to directly convert any royalty amounts into U.S. Dollars.
4.05 Late Payments. Any payment owed to Epoch under this Agreement that is
not paid on or before the date such payment is due will bear interest,
to the extent permitted by applicable law, at twelve percent (12%) per
annum, calculated on the number of days such payment is delinquent.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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4.06 Currency of Payments. All payments under this Agreement will be made
U.S. Dollars by wire transfer to such bank account as Epoch may
designate from time to time. Any payments due hereunder on Net Sales
outside of the United States will be payable in U.S. Dollars at the
average of the rate of exchange of the currency of the country in which
the Net Sales are made as reported in the New York edition of The Wall
Street Journal, for the last three (3) business days of the quarter for
which the royalties are payable.
4.07 Other Taxes. Perkin-Elmer will pay all sales, use, transfer or similar
taxes, whether foreign, federal (United States), state or local,
however designated, that are levied or imposed by reason of the sale or
transfer of Licensed Products contemplated hereby, and any penalties,
interest and collection or withholding costs associated with any of the
foregoing items.
4.08 Records, Review. Perkin-Elmer will keep accurate records of all
operations affecting payments hereunder, and will permit Epoch or its
duly authorized agent to inspect all such records and to make copies of
or extracts from such records during regular business hours throughout
the term of this Agreement and for a reasonable period of not less than
three (3) years thereafter, provided that the frequency of such
inspections is no more than once per License Year. If the review
results in a determination of an underpayment of royalties to Epoch,
such underpayment will be promptly remitted to Epoch with interest as
provided in Section 4.05. If such inspection determines that Net Sales
were more than 105% of the Net Sales reported by Perkin-Elmer for the
period under review, Perkin-Elmer will pay all of the reasonable costs
of such review.
ARTICLE V. SUPPLY
5.01 Purchases. Subject to the terms and conditions of this Agreement, Epoch
will sell Purchased Product to Perkin-Elmer, and Perkin-Elmer will
purchase such Purchased Product from Epoch. Perkin-Elmer will not
purchase any Licensed Product from any third-party.
5.02 Specifications. Purchased Product will meet the product specifications
set forth in Exhibit B. The Parties will reasonably agree on any
changes to such specifications, and any such changes will be in
writing. Any third party manufacturing Purchased Product for Epoch must
be licensed under Perkin-Elmer DNA Synthesis and Purification Patents.
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5.03 Price. Epoch will charge Perkin-Elmer and Perkin-Elmer will pay Epoch
[*] Dollars [*] per Probe Unit of MGB Intermediate and [*] Dollars [*]
per Probe Unit of MGB Oligonucleotide. At the end of the second License
Year, the Parties will negotiate in good faith to determine a
reasonable volume discount schedule with respect to purchases of both
MGB Intermediate and MGB Oligonucleotide.
5.04 Transfer of Know-How. Within three (3) months of the Effective Date of
this Agreement, Epoch will transfer Licensed Know-How to Perkin-Elmer
to the extent necessary for Perkin-Elmer to make full use of such MGB
Intermediates for the synthesis of MGB Oligonucleotides. Such Licensed
Know-How will include, but not be limited to, that information
specified in Exhibit C. To effect such transfer, during a period
beginning on the Effective date and ending three (3) months thereafter,
Epoch will make available to Perkin-Elmer at least one qualified
full-time-equivalent employee. In addition, Epoch will transfer
Licensed Know-How relating to the optimal sequence for an MGB
Oligonucleotide probe directed against a particular target sequence.
All Licensed Know-How is considered Confidential Information and will
only be used by Perkin-Elmer in connection with the exploitation of the
license rights granted in Article III above. All Licensed Know-How will
remain owned by Epoch. To the extent Licensed Know-How comprises
software, the license rights granted in Article III include only the
right to use and execute such software (in machine-readable object form
only, excluding any source code) and Perkin-Elmer agrees not to modify,
reverse engineer, reverse assemble, decompile or otherwise attempt to
derive source code from such software.
5.05 Purchase Orders. Perkin-Elmer will purchase Purchased Product from
Epoch by issuing a written purchase order identifying Purchased Product
to be purchased, the quantity, price, shipping instructions, delivery
dates, and any other special information. To the extent the terms of
any such purchase order differ from or conflict with the terms of this
Agreement, the terms of this Agreement will govern. Within thirty (30)
days of the date hereof and prior to the end of each calendar month
thereafter, Perkin-Elmer will submit a six-month rolling forecast of
estimated Purchased Product requirements. The forecast for the first
two (2) months will constitute a binding purchase order and the balance
of such Perkin-Elmer's forecast will be non-binding.
5.06 Modifications. Perkin-Elmer may modify, defer or cancel a purchase
order not later than two (2) months prior to the scheduled shipment of
Purchased Product.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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5.07 Shipment. Shipment will be made freight prepaid, F.O.B. Epoch's
facility, to the address set forth on Perkin-Elmer's purchase order.
Epoch will invoice Perkin-Elmer on a separate line for all shipping
charges ("pre-pay and add"). Title and risk of loss will pass from
Epoch to Perkin-Elmer upon delivery to carrier at the F.O.B. point.
5.08 Invoicing; Payment. Epoch will submit an invoice to Perkin-Elmer with
each shipment of Purchased Products. Each invoice will be due and
payable net forty five (45) days from the date of shipment.
5.09 Inspection, Rejection. Perkin-Elmer will inspect all Purchased Product
received for defects and for conformance with the purchase order.
Perkin-Elmer may reject any Purchased Product that is defective or that
fails to conform to the purchase order. Any such rejection must be made
within ten days (10) of receipt of the Purchased Product by
Perkin-Elmer. To reject a Purchased Product, Perkin-Elmer will notify
Epoch of its rejection and will promptly return the rejected Purchased
Product to Epoch. Epoch will immediately replace the Purchased Product
with conforming goods.
5.10 Pre-Payments. Concurrent with execution of this Agreement, in addition
to the License Fees paid under 4.01, Perkin-Elmer will pay Epoch [*] as
a pre-payment towards future purchases of MGB Oligonucleotides and MGB
Intermediates. In addition, on or before February 1, 1999, Perkin-Elmer
will pay Epoch [*] as an additional pre-payment towards future
purchases of MGB Oligonucleotides and MGB Intermediates. Perkin-Elmer
will credit purchases of MGB Intermediates and MGB Oligonucleotides
against these pre-payments at a rate not to exceed [*] per License
Year.
5.11 Security Interest. In order to secure any unused portion of the
pre-payments made under Section 5.10 (up to [*]), Epoch will grant to
Perkin-Elmer a security interest in the Licensed Patent pursuant to the
Security Agreement attached as Exhibit A. Epoch may, at any time,
return all or a portion of the unused prepayments. In the event the
unused balance of the prepayments is Fifty Thousand Dollars ($50,000)
or less, the security interest will terminate.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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5.12 Annual Minimum Purchase. Perkin-Elmer will, during each License Year,
purchase at least [*] worth of MGB Oligonucleotides and/or MGB
Intermediates from Epoch. In the event that Perkin-Elmer has not, by
the end of such License Year, purchased such minimum amount, it will
promptly, within thirty (30) days of the end of such License Year,
purchase an amount of MGB Oligonucleotides and/or MGB Intermediates
necessary to meet such annual minimum amount. Such additional amounts
will not be counted towards the annual minimum amount in the License
Year in which they were purchased.
5.13 Covenant Not To Sue. Perkin-Elmer hereby covenants not to sue Epoch
under Perkin-Elmer DNA Synthesis and Purification Patents for
infringement based upon the manufacture of MGB Oligonucleotides for
Perkin-Elmer. This covenant does not extend to the manufacture of MGB
Oligonucleotides for any party other than Perkin-Elmer. No other rights
are hereby granted or intended to be granted to Epoch either expressly,
impliedly or by estoppel under Perkin-Elmer DNA Synthesis and
Purification Patents or any other patents not specifically identified
in this Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
6.01 Product Warranty. Epoch warrants to Perkin-Elmer that, upon delivery of
any Purchased Product to Perkin-Elmer, such Purchased Product will be
free from defects in material, workmanship, design and title, and will
substantially meet the specifications attached hereto as Exhibit B (or
any mutually agreed upon replacements).
6.02 Documentation Warranty. Epoch further warrants that the Purchased
Product, and all literature, packaging, inserts, accompanying
materials, and any other documentation supplied by Epoch in connection
with the Purchased Product will not contain any misrepresentation as to
the nature or performance of the Purchased Product.
6.03 Remedies. If any Purchased Product fails to meet the foregoing
warranties, in addition to satisfying any other remedies Perkin-Elmer
may have, Epoch will replace such deficient Purchased Product in the
most timely manner possible at its own expense or Epoch will refund to
Perkin-Elmer all costs associated with the purchase and shipping of
that Purchased Product.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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6.04 Disclaimer. EXCEPT FOR THE EXPRESS WARRANTY AGAINST DEFECTS IN DESIGN,
MATERIALS, TITLE AND WORKMANSHIP CONTAINED HEREIN, EPOCH MAKES NO
WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, AND ALL WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
DISCLAIMED BY EPOCH. Without limitation of the foregoing, Epoch
expressly disclaims any liability whatsoever for any damages incurred,
directly or indirectly, in connection with the Licensed Products and/or
the Purchased Products, including without limitation, loss of profits
and special, incidental or consequential damages.
6.05 Representations and Warranties. Each Party represents, warrants and
covenants to the other Party that:
(1) it has the corporate power and authority and legal right to
enter into this Agreement and to perform its obligations
hereunder;
(2) the execution and delivery of this Agreement and the
performance of the transactions contemplated thereby have been
duly authorized by all necessary corporate action of such
Party;
(3) the execution and delivery of this Agreement and the
performance by such Party of any of its obligations under this
Agreement do not and will not (a) conflict with, or constitute
a breach or violation of, any other contractual obligation to
which it is a party, any judgment of any court or governmental
body applicable to such Party or its properties or, to such
Party's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body
applicable to such Party or its properties, and (b) with
respect to the execution and delivery of the Agreement,
require any consent or approval of any governmental authority
or other person;
(4) each Party will to the best of its knowledge without
undertaking a special investigation, disclose to the other
Party any material adverse proceedings, claims or actions that
arise, which would materially interfere with that Party's
performance of its obligations under this Agreement; and
(5) each Party's employees have executed or will execute
agreements whereby all right, title and interest in any
technology and invention(s) will be assigned to their
respective employers.
12
<PAGE> 13
ARTICLE VII. INDEMNITY
7.01 Indemnification of Epoch. Perkin-Elmer will defend, indemnify and hold
Epoch harmless against any judgment, damage, liability, loss, cost or
other expense, including legal fees ("Liability"), resulting from any
third party claims made or proceedings brought against Epoch to the
extent that such Liability arises from Perkin-Elmer's use, marketing ,
distribution or sale of Licensed Product and/or Purchased Product,
except to the extent such claims or proceedings result (1) from Epoch's
negligence or willful act or omission in the manufacture, storage, or
delivery of Licensed Product and/or Purchased Product, (2) from Epoch's
breach of any warranty set forth in Article VI, or (3) infringement of
a patent owned or controlled by a third party, only to the extent such
infringement arises from the inclusion in the Licensed Product of
inventions claimed in a Licensed Patent or the use of the Licensed
Know-How.
7.02 Indemnification of Perkin-Elmer. Epoch will defend, indemnify and hold
Perkin-Elmer harmless against any Liability resulting from any third
party claims made or proceedings brought against Perkin-Elmer to the
extent that such Liability arises (1) from Epoch's negligence or
willful act or omission in the manufacture, storage, or delivery of
Licensed Product and/or Purchased Product or (2) from Epoch's breach of
any warranty set forth in Article VI.
7.03 Indemnification Procedures. This agreement of indemnity is conditioned
upon the indemnified Party's obligation to: (1) advise the indemnifying
Party of any claim or lawsuit, in writing, within ten (10) days after
the indemnified Party has received notice of said claim or lawsuit, or,
within such a time frame as not to materially prejudice the rights of
the indemnifying Party, and (2) assist the indemnifying Party and its
representatives in the investigation and defense of any lawsuit and/or
claim for which indemnification is provided. This agreement of
indemnity will not be valid as to any settlement of a claim or lawsuit
or offer of settlement or compromise without the prior written approval
of the indemnifying Party.
ARTICLE VIII. TERM AND TERMINATION
8.01 Term. Unless terminated earlier as provided herein, this Agreement will
commence on the Effective Date and will remain in full force until the
expiration of the last to expire Licensed Patent.
8.02 Termination. This Agreement may be terminated as follows:
(1) by mutual written agreement of the Parties, effective as of
the time specified in such written agreement; or
13
<PAGE> 14
(2) by either Party, (a) in the event the other Party will file in
any court or agency pursuant to any statute or regulation of
any state or country, a petition in bankruptcy or insolvency
or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the Party or of its
assets, or if the other Party proposes a written agreement of
composition or extension of its debts, or if the other Party
will be served with an involuntary petition against it, filed
in any insolvency proceeding, and such petition will not be
dismissed within sixty days after the filing thereof, or if
the other Party will propose or be a Party to any dissolution
or liquidation, or if the other Party will make an assignment
for the benefit of creditors, or (b) upon any material breach
of this Agreement by the other Party, provided that the Party
alleging such breach must first give the other Party written
notice thereof, which notice must state the nature of the
breach in reasonable detail and the Party receiving such
notice must have failed to cure such alleged breach within
sixty (60) days after receipt of such notice.
(3) Perkin-Elmer may terminate this Agreement at any time upon
sixty (60) days advance written notice to Epoch. In the event
that Perkin-Elmer terminates the Agreement pursuant to this
Section 8.02(3), Perkin-Elmer (1) will release its security
interest in the Licensed Patent granted in Section 5.11 and
Exhibit A, (2) will forfeit any unused portion of the
pre-payments paid to Epoch under Section 5.10, (3) will pay
for any orders placed under Article V prior to termination,
and (4) return all tangible embodiments of the Licensed
Know-How to Epoch.
8.03 Survival. Upon any termination of this Agreement, neither Party will be
relieved of any obligations incurred prior to such termination.
Notwithstanding any termination of this Agreement, the obligations of
the Parties under Articles IV, VI, VII, VIII, and X, as well as under
any licenses which are maintained in effect and any other provisions
which by their nature are intended to survive any such termination,
will survive and continue to be enforceable.
ARTICLE IX. INFRINGEMENT LITIGATION
9.01 Notification. Each Party will notify the other Party in writing of any
suspected infringement(s) of Licensed Patents in the Exclusive Licensed
Field or the Non-Exclusive Licensed Field and will inform the other
Party of any evidence of such infringement(s).
14
<PAGE> 15
9.02 Infringement in Exclusive Licensed Field. Perkin-Elmer will have the
first right to institute suit for infringement(s) in the Exclusive
Licensed Field. Epoch agrees to join as a party plaintiff in any such
lawsuit initiated by Perkin-Elmer, if requested by Perkin-Elmer, with
all costs, attorneys' fees, and expenses to be paid by Perkin-Elmer.
However, if Perkin-Elmer does not institute suit for infringement(s)
within ninety (90) days of receipt of written notice from Epoch of
Epoch's desire to bring suit for infringement in its own name and on
its own behalf, then Epoch may, at its own expense, bring suit or take
any other appropriate action.
9.03 Infringement Outside Exclusive Licensed Field. Epoch will have the sole
right, but not the obligation, to institute suit for infringement and
to recover damages outside of the Exclusive Licensed Field.
9.04 Recovery. Perkin-Elmer will be entitled to any recovery of damages
resulting from a lawsuit brought by it pursuant to Section 9.02. Epoch
will be entitled to recovery of damages resulting from any lawsuit
brought by Epoch pursuant to Section 9.03.
9.05 Settlement. Neither Party may settle with an infringer without the
prior written approval of the other Party if such settlement would
affect the rights of the other Party under the Licensed Patents.
ARTICLE X. GENERAL PROVISIONS
10.01 Force Majeure. If the performance of any part of this Agreement by
either Party, or of any obligation under this Agreement, is prevented,
restricted, interfered with or delayed by reason of any cause beyond
the reasonable control of the Party liable to perform, unless
conclusive evidence to the contrary is provided, the Party so affected
will, upon giving written notice to the other Party, be excused from
such performance to the extent of such prevention, restriction,
interference or delay, provided that the affected Party will use its
reasonable best efforts to avoid or remove such causes of
non-performance and will continue performance with the utmost dispatch
whenever such causes are removed. When such circumstances arise, the
Parties will discuss what, if any, modification of the terms of this
Agreement may be required in order to arrive at an equitable solution.
10.02 Governing Law. This Agreement will be deemed to have been made in the
State of California and its form, execution, validity, construction and
effect will be determined in accordance with the laws of the State of
California.
15
<PAGE> 16
10.03 Informal Dispute Resolution. In an effort to resolve informally and
amicably any claim, controversy, or dispute arising out of or related
to the interpretation, performance, or breach of this Agreement (a
"Dispute") without resorting to litigation, each party will notify the
other party to the Dispute in writing of any Dispute hereunder that
requires resolution. Such notice will set forth the nature of the
Dispute, the amount involved, if any, and the remedy sought. Each party
will promptly designate an executive-level employee to investigate,
discuss and seek to settle the matter between them. If the two
designated representatives are unable to settle the matter within
thirty (30) days after such notification, the matter will be submitted
to Epoch's Chief Executive Officer and Perkin-Elmer's President of the
PE Biosystems Division for consideration. If settlement cannot be
reached through their efforts within an additional thirty (30) days (or
such longer time period as they will agree upon in writing), each party
will have the right to take such action as it deems appropriate. The
statute of limitations of the State of California applicable to the
commencement of a lawsuit will be tolled as of initial written
notification of a dispute to the other party as set forth above for
sixty (60) days (or such longer time as the parties agree in writing)
if all interim deadlines have been complied with by the notifying
party.
10.04 Attorneys' Fees. Except as otherwise provided herein, each party will
bear its own legal fees incurred in connection with the transactions
contemplated hereby, provided, however, that if any party to this
Agreement seeks to enforce its rights under this Agreement by legal
proceedings or otherwise, subject to Section 10.03, the non-prevailing
party will pay all costs and expenses incurred by the prevailing party,
including, without limitation, all reasonable attorneys' fees.
10.05 Separability. In the event any portion of this Agreement will be held
illegal, void or ineffective, the remaining portions hereof will be
interpreted to maintain the intent of the Parties. If any of the terms
or provisions of this Agreement are in conflict with any applicable
statute or rule of law, then such terms or provisions will be deemed
inoperative to the extent that they may conflict therewith and will be
deemed to be modified to conform with such statute or rule of law.
10.06 Entire Agreement. This Agreement constitutes the sole agreement between
the Parties relating to the subject matter hereof and supersede all
previous writings and understandings. Confidential disclosures made
pursuant to previously executed Confidentiality Agreements between
Epoch and Perkin-Elmer will remain subject to the terms of those
Confidentiality Agreements. No terms or provisions of this Agreement
will be varied or modified by any prior or subsequent statement,
conduct or act of either of the Parties, except that the Parties may
amend this Agreement by written instruments specifically referring to
and executed in the same manner as this Agreement.
16
<PAGE> 17
10.07 Assignment. This Agreement and the licenses herein granted will be
binding upon and inure to the benefit of the successors in interest of
the respective Parties. Neither Party will have the power to assign
this Agreement nor any interest hereunder without the written consent
of the other, such consent not to be unreasonably withheld, provided,
however, that Perkin-Elmer or Epoch may assign this Agreement or any of
its rights or obligations hereunder to any Affiliate or to any third
party with which it may merge or consolidate, or to which it may
transfer all or substantially all of its assets or business to which
this Agreement relates, without obtaining the consent of the other
Party, subject to the other Party assuming all liabilities and
obligations under the Agreement.
10.08 Bankruptcy. All rights and licenses granted under this Agreement by
Epoch to Perkin-Elmer will be considered for purposes of Section 365(n)
of the Bankruptcy Code, licenses of rights to "intellectual property"
as defined under Section 101(56) of the Bankruptcy Code. The parties
agree that Perkin-Elmer, as a licensee of such rights under this
Agreement, will retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. In the event that Epoch seeks or
is involuntarily placed under the protection of the Bankruptcy Code,
and the trustee in bankruptcy rejects this Agreement, Perkin-Elmer
hereby elects, pursuant to Section 365(n), to retain all rights granted
to it under this Agreement to the extent permitted by the law.
10.09 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart will be deemed an original
instrument, but all such counterparts together will constitute but one
agreement.
10.10 Notices. Any notice required or permitted under this Agreement will be
sent by air mail, postage pre-paid, to the following addresses of the
Parties:
If to Epoch: If to Perkin-Elmer:
Epoch Pharmaceuticals, Inc. The Perkin-Elmer Corp.
12277 134th Court NE PE Biosystems Division
Suite 100 850 Lincoln Centre Drive
Redmond, WA 98052 Foster City, CA 94404
Attn.: President Attn.: Legal Department
17
<PAGE> 18
IN WITNESS WHEREOF, the Parties, through their authorized officers, have
executed this Agreement as of the date first written above.
EPOCH PHARMACEUTICALS, INC. THE PERKIN-ELMER CORPORATION,
THROUGH ITS PE BIOSYSTEMS
DIVISION
By: /s/ Sanford S. Zweifach By: /s/
-------------------------------- ----------------------------
Name: Name:
Sanford S. Zweifach
-------------------------------- ----------------------------
Title: Title:
President
-------------------------------- ----------------------------
Date: Date:
January 11, 1999 January 11, 1999
-------------------------------- ----------------------------
18
<PAGE> 19
EXHIBIT A
---------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered
into this 11th day of January, 1999 by and between EPOCH PHARMACEUTICALS, INC.,
a Delaware corporation (the "Debtor"), and THE PERKIN-ELMER CORPORATION, a New
York corporation (the "Secured Party").
R E C I T A L S
1. Pursuant to that certain License and Supply Agreement by and between
the Company and the Secured Party of even date herewith (the "License and Supply
Agreement"), Debtor will receive [*] from Secured Party as pre-payment for
certain goods (the "Pre-Payment").
2. As an inducement to Secured Party to provided the Pre-Payment,
Debtor has agreed to grant a security interest as set forth herein.
A G R E E M E N T
1. Security Interest. Pursuant to the Uniform Commercial Code, Debtor
hereby grants to Secured Party a security interest in the property of Debtor
(the "Collateral") described at Paragraph 2 below to secure the Pre-Payment, as
described at Paragraph 3 below.
2. Collateral. The Collateral of Debtor is described as follows: US
Patent No. 5,801,155 titled Covalently Linked Oligonucleotide Minor Groove
Binder Conjugates, issued September 1, 1998 (the "Licensed Patent"), including
any Related Patent. "Related Patent" means any patent or patent application
owned, held, or otherwise controlled, in whole or in part by Epoch that (1)
discloses and/or claims substantially the same subject matter as a Licensed
Patent, (2) discloses and/or claims improvements to inventions disclosed or
claimed in a Licensed Patent and requires rights under the Licensed Patent to
exploit such improvements, (3) claims priority to, a Licensed Patent, including
but not limited to continuation applications and patents, continuation-in-part
applications and patents, divisional applications and patents, reexamination
applications and patents, reissue applications and patents, and continuing
prosecution applications and patents, (4) is a parent of U.S. Patent No.
5,801,155, and/or (5) any foreign equivalents of a Licensed Patent or any patent
or patent application in (1), (2), (3) or (4) above.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
A-1
<PAGE> 20
3. Obligations Secured. The obligations ("Obligations") secured by this
Security Agreement will be any repayment of any unused portion of the
Pre-Payment corresponding to goods not received by Secured Party in accordance
with the terms of the License and Supply Agreement, in excess of Fifty Thousand
Dollars ($50,000).
4. Collateral Encumbrances; Covenants of Debtor.
(a) Debtor owns the Collateral free and clear of any lien
except for the lien created by this Security Agreement, and no effective
financing statement or other instrument similar in effect, which covers all or
any part of the Collateral, exists or is on file in any recording office.
(b) As to the Collateral, Debtor covenants with Secured Party
as follows:
(i) Except as otherwise created by this Security
Agreement, Debtor will keep the Collateral free of all levies, liens,
encumbrances and other security interests of any nature whatsoever.
(ii) Debtor will comply with all laws, statutes and
regulations pertaining to the Collateral.
(iii) Debtor will pay when due all taxes, licenses,
charges and other impositions on or for the Collateral.
(iv) Debtor, at its own expense, (1) will execute,
file and record such assignments, statements, notices and agreements including
without limitation Form UCC-1, if applicable, and assignments, statements,
notices and agreements to be filed with government patent offices, and (2) take
such action and obtain such certificates and documents, in accordance with all
applicable laws, statutes, and regulations (whether state, federal or local), as
necessary to perfect, evidence and continue Secured Party's security interest in
the Collateral, including, without limitation, assignments for security in the
U.S. Patent and Trademark Office and corresponding foreign patent offices. This
subparagraph (iv) is subject to specific performance and injunctive relief for
the benefit of Secured Party in the event of a failure by Debtor to duly comply
with a reasonable request for such compliance.
(v) Debtor will deliver to Collateral Agent all
instruments and other items of Collateral for which possession is required for
perfection.
(vi) Except as otherwise created by this Security
Agreement, Debtor will not create, permit or suffer to exist, and will defend
the Collateral against and take such other action as is necessary to remove, any
lien or encumbrance on the Collateral and will defend the right, title and
interest of Secured Party in and to
A-2
<PAGE> 21
the Collateral and in and to the proceeds thereof against the claims and demands
of all persons whomsoever.
5. Default. In the event of any termination of the License and Supply
Agreement (other than a termination by Debtor under Section 8.02(2)(b) thereof
due to a breach thereof by Secured Party), Debtor will within fifteen (15) days
of such termination reimburse Secured Party the difference between the then
unused portion of the Pre-Payment and Fifty Thousand Dollars ($50,000). Upon
such reimbursement, Secured Party will release its security interest in the
Collateral. In the event Debtor does not so reimburse Secured Party, Secured
Party may declare an event of default.
6. Remedies. Upon the occurrence of an event of default pursuant to
Section 5 hereof, the Secured Party may exercise any rights or remedies that it
may have as a secured party under applicable law.
7. Termination.
(a) This Security Agreement and the security interest granted
to Secured Party by Debtor hereunder will terminate at such time as the unused
portion of the Pre-Payment corresponding to goods not received by Secured Party
in accordance with the terms of the License and Supply Agreement is Fifty
Thousand Dollars ($50,000) or less.
(b) If applicable, and promptly upon termination of this
Security Agreement, the Secured Party agrees to execute and file with the
Washington Secretary of State a termination statement on Form UCC-2 and a
collateral assignment for filing in the Patent and Trademark Office terminating
Secured Party's security interest in the Collateral at the expense of the
Debtor. This subparagraph (b) is subject to specific performance and injunctive
relief for the benefit of Debtor in the event of a failure by the Secured Party
to duly comply with a reasonable request for such compliance.
8. Cumulative Rights. The rights, powers and remedies of Secured Party
under this Security Agreement will be in addition to all rights, powers and
remedies given to Secured Party by virtue of any statute or rule of law, or any
other agreement between Debtor and Secured Party or otherwise, all of which
rights, powers and remedies will be cumulative and may be exercised successively
or concurrently without impairing Secured Party's security interest in the
Collateral.
9. Waiver. Any forbearance or failure or delay by Secured Party in
exercising any right, power or remedy will not preclude the further exercise
thereof, and every right, power or remedy of Secured Party will continue in full
force and effect until such right, power or remedy is specifically waived in a
writing executed by Secured
A-3
<PAGE> 22
Party. Debtor waives any right to require Secured Party to proceed against any
person or to exhaust any of the Collateral or to pursue any remedy in Secured
Party's power.
10. Binding Upon Successors. All rights of Secured Party under this
Security Agreement will inure to the benefit of their successors and assigns,
and all obligations of Debtor will bind its successors and assigns.
11. Entire Agreement; Severability. This Security Agreement, along with
the associated License and Supply Agreement, contains the entire agreement
between Secured Party, and Debtor with respect to the subject matter hereof. If
any of the provisions of this Security Agreement will be held invalid or
unenforceable, this Security Agreement will be construed as if not containing
those provisions and the rights and obligations of the parties hereto will be
construed and enforced accordingly.
12. Choice of Law. This Security Agreement will be construed in
accordance with and governed by the internal laws of the State of Washington,
and where applicable and except as otherwise defined herein, terms used herein
will have the meanings given them in the Washington Uniform Commercial Code.
13. Place of Business; Trade Name; Collateral Location; Records. Debtor
represents that its chief place of business is 12277 134th Court, NE, #110,
Redmond, WA 98052 and that Epoch Pharmaceuticals, Inc., is the only trade name
or style used by Debtor and that Debtor's records concerning the Collateral are
kept at 12277 134th Court, NE, #110, Redmond, WA 98052.
14. Notice. Any written notice, consent or other communication provided
for in this Security Agreement will be deemed given if delivered by hand, by
courier against receipt, by certified or registered mail, return receipt
requested, or by overnight delivery service providing evidence of receipt, at
the following addresses, or to such other address with respect to any party as
such party will notify the other in writing:
Secured Party: The Perkin-Elmer Corp.
PE Biosystems Division
850 Lincoln Centre Drive
Foster City, CA 94404
Attn.: Legal Department
Debtor: Epoch Pharmaceuticals, Inc.
12277 134th Court NE
Suite 100
Redmond, WA 98052
Attn.: President
A-4
<PAGE> 23
15. Attorneys' Fees. In the event of any controversy, claim or dispute
between or among the Debtor and the Secured Party arising out of or relating to
this Security Agreement, or the breach hereof, the prevailing party will be
entitled to recover from the losing party reasonable attorneys' fees, expenses
and costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.
DEBTOR: SECURED PARTY:
EPOCH PHARMACEUTICALS, INC. THE PERKIN-ELMER CORPORATION,
THROUGH ITS PE BIOSYSTEMS
DIVISION
By: /s/ Sanford S. Zweifach By: /s/
-------------------------------- ----------------------------
Name: Name:
Sanford S. Zweifach
-------------------------------- ----------------------------
Title: Title:
President
-------------------------------- ----------------------------
Date: Date:
January 11, 1999 January 11, 1999
-------------------------------- ----------------------------
A-5
<PAGE> 24
EXHIBIT B
---------
SPECIFICATIONS FOR PURCHASED PRODUCT
I. HPLC ASSAY OF MGB OLIGONUCLEOTIDE
1. Equipment
a. Perkin-Elmer UV/Vis Detector or equivalent
b. [*] Ion Exchange Column [*]
c. [*] Rheodyne sample loop (Alltech Associates Inc. or
equivalent)
2. Reagents
A. [*] or equivalent
b. Water, Milli-Q or HPLC grade
c. Standard Buffer Salt is pH [*] Fisher P/N [*] or equivalent
D. [*] Filtration Membrane, [*] (Alltech Associates Inc. or equivalent)
3. [*]
4. [*]
5. [*]
II. PURITY OF MGB OLIGONUCLEOTIDE
The purity of a MGB Oligonucleotide will be determined based on an area
percent of a product peak based on the above-described HPLC Method. A
Purified MGB Oligonucleotide will have a purity of at least [*].
However, the value of the required purity of a MGB Oligonucleotide may
be amended pursuant to Section 10.06 of the Agreement.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
B-1
<PAGE> 25
III. YIELD OF MGB OLIGONUCLEOTIDE
The yield of a MGB Oligonucleotide will be determined based on a
relative area of a product peak as compared to an appropriate internal
standard based on the above-described HPLC Method, where the HPLC
analysis is performed immediately following synthesis of the MGB
Oligonucleotide. A Purified MGB Oligonucleotide will have a yield of at
least [*].
IV. IDENTITY OF MGB INTERMEDIATE
The parties will define a mutually acceptable assay for confirming the
identity of MGB Intermediate supplied to Perkin-Elmer by Epoch.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
B-2
<PAGE> 26
EXHIBIT C
---------
LICENSED KNOW-HOW
The Licensed Know-How transferred from Epoch to Perkin-Elmer will include at
least the following information.
1. Chemical structures of all reagents and probes provided to Perkin-Elmer
by Epoch to the extent necessary for Perkin-Elmer to make full use of
such reagents and probes for the synthesis and/or use of MGB
Intermediates and MGB Oligonucleotides.
2. Details of Epoch's manufacturing and QC methods to extent necessary for
Perkin-Elmer to manufacture MGB Oligonucleotides in conformance with
the specifications set forth in Exhibit B, including at least the
following:
a) detailed description of all DNA synthesis, purification,
formulation and analytical instrumentation, including vendors;
b) detailed DNA synthesis cycles;
c) cleavage conditions;
d) deprotection conditions;
e) purification methods, including HPLC, OPC and other protocols;
f) analytical methods, including HPLC and other protocols;
g) formulation and quantitation methods;
h) [*];
i) [*];
j) stability data of MGB reagents in DNA synthesis reagents and
under cleavage/deprotection conditions;
k) long term stability data of MGB probes;
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
C-1
<PAGE> 27
l) data correlating analytical specs (HPLC, etc.) to performance
of probes in relevant applications;
m) method used for validating probe manufacturing process;
n) method used for monitoring probe manufacturing process; and
o) extinction coefficients (at [*] nm) for MGB reagents.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
C-2
