<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 1999.
Registration No. 333-82685
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
AFFYMETRIX, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 77-0319159
(State or Other Jurisdiction (I.R.S. Employer
of Identification
Incorporation or Organization) Number)
</TABLE>
3380 CENTRAL EXPRESSWAY
SANTA CLARA, CA 95051
(408) 731-5000
(Address, Including zip code, and telephone number, including
area code, of registrant's principal executive offices)
--------------------------
VERN NORVIEL
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AFFYMETRIX, INC.
3380 CENTRAL EXPRESSWAY
SANTA CLARA, CA 95051
(408) 731-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
The Commission is requested to send copies of all communications to:
--------------------------
COPIES TO:
ROBERT V. GUNDERSON, JR., ESQ.
CARLA S. NEWELL, ESQ.
ROBERT C. SEPUCHA, JR., ESQ.
GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The purpose of this amendment no. 1 is solely to file certain exhibits to
the registration statement as set forth below in item 16 of part II.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS.
The exhibits listed in the exhibit index as filed as part of this
registration statement.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<C> <S>
*3.1 Amended and Restated Certificate of Incorporation
(1)3.2 Bylaws
(2)4.1 Summary of Rights to Purchase Shares of Preferred Stock
pursuant to the Rights Agreement dated as of October 15,
1998
23 Consent of Ernst & Young LLP, Independent Auditors
**10.1 Asset Purchase Agreement by and between Beckman Coulter,
Inc. and Affymetrix, Inc.
10.2 Assumption of Certain Liabilities
**10.3 License Agreement
**10.4 Agreement by and among ISIS Innovation Limited and Beckman
Instruments, Inc. dated as of April 17, 1996
**10.5 License Agreement
**10.6 Limited Liability Company Operating Agreement
10.7 Form of Assignment of Assets
**10.8 Letter of Agreement dated July 23, 1998
**10.9 OEM Supply Agreement by and between Beckman Coulter, Inc.
and Affymetrix, Inc.
*10.10 Promissory Note by Susan E. Siegel
*10.11 Amendment to Lease by and between Affymetrix, Inc. and Harry
Locklin dated as of May 12, 1999
*10.12 First Addendum to Lease by and between Solar Oakmead Joint
Venture and Affymetrix, Inc.
*10.13 Amendment No. 1 to the 1996 Nonemployee Directors Stock
Option Plan of Affymetrix, Inc.
**10.14 Letter of Agreement dated as of August 28, 1998
</TABLE>
- ------------------------
(1) Incorporated by reference to the same number exhibit filed with our form 8-K
as filed on September 29, 1998 (File No. 000-28218).
(2) Incorporated by reference to exhibit 3.3 filed with our form 8-K as filed on
October 16, 1998 (File No. 000-28218).
* Previously filed.
** Confidential treatment requested.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on the 26th day of
July, 1999.
<TABLE>
<S> <C> <C>
AFFYMETRIX, INC.
By: /s/ STEPHEN P.A. FODOR, PH.D.
-----------------------------------------
Stephen P.A. Fodor, Ph.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
DIRECTOR
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ STEPHEN P.A. FODOR,
PH.D. President and Chief
- ------------------------------ Executive Officer, July 26, 1999
Stephen P.A. Fodor, Ph.D. Director
Vice President and Chief
Financial Officer
- ------------------------------ (Principal Financial and July 26, 1999
Edward M. Hurwitz Accounting Officer)
- ------------------------------ Chairman of the Board July 26, 1999
John D. Diekman, Ph.D.
- ------------------------------ Director July 26, 1999
Paul Berg, Ph.D.
- ------------------------------ Director July 26, 1999
Adrian Hennah
- ------------------------------ Director July 26, 1999
Vernon R. Loucks, Jr.
- ------------------------------ Director July 26, 1999
Barry C. Ross, Ph.D.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
- ------------------------------ Director July 26, 1999
David B. Singer
- ------------------------------ Director July 26, 1999
Lubert Stryer, M.D.
- ------------------------------ Director July 26, 1999
John A. Young
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ STEPHEN P.A. FODOR,
PH.D.
-------------------------
Stephen P.A. Fodor, Ph.D.
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
Exhibit 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
BECKMAN COULTER, INC.
AND
AFFYMETRIX, INC.
, 1998
----------------
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
____________, 1998, by and between AFFYMETRIX, INC., a California corporation
(the "BUYER") and BECKMAN COULTER, INC., a Delaware corporation (the "SELLER").
The Buyer and the Seller are referred to collectively herein as the "PARTIES."
R E C I T A L S
WHEREAS, Buyer desires to purchase particular assets (and assume the
liabilities relating to such assets) of the Seller, as more fully described in
this Agreement and Seller desires to sell, transfer and convey such assets and
related liabilities to Buyer, all subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the respective covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. DEFINITIONS
"ACQUIRED ASSETS" means all of the right, title, and interest that the
Seller possesses and has the right to transfer in and to the BCI Technology, the
Equipment and the business associated therewith. Buyer shall not receive or
acquire any assets of Seller other than the Acquired Assets.
"ARRAY CHIPS" means a series of polynucleotides arranged in an array on
a substrate to perform quantitative or qualitative analyses.
"ASSUMED LIABILITIES" means
(a) only those liabilities and obligations that arise out of
or relate to the ownership, use or operation of the BCI Technology accruing from
and after the Closing:
(b) Buyer shall not assume any Liabilities, obligations or
commitments of Seller other than the Assumed Liabilities:
"ASSUMPTION AGREEMENT" shall mean the Assumption Agreement attached
hereto as Exhibit A.
"BCI TECHNOLOGY" shall mean and is limited to the specific patents,
copyrights, software concepts and know-how set forth in Schedule 1 and relating
to creating and analyzing polynucleotide sequences in accordance with the
methods claimed in U.S. Patent Nos. 5,436,327 and 5,700,637 and their U.S. and
foreign counterparts and specifically includes all of Seller's intellectual
property rights acquired pursuant to the Isis Agreement.
"BUYER" has the meaning set forth in the preface above.
<PAGE>
"CLOSING" has the meaning set forth in Section 2(d)below.
"EQUIPMENT" shall mean tools and equipment related solely to the
Acquired Assets.
"Exclusive License" shall mean the License Agreement to be entered into
between Buyer and the LLC, attached hereto as Exhibit B.
"ISIS AGREEMENT" means that certain Agreement between Beckman
Instruments, Inc. and Isis Innovation Limited, revised as of April 17, 1996 and
attached hereto as Exhibit C.
"KNOWLEDGE" means actual knowledge of an officer of the relevant Party,
after reasonable inquiry.
"LIABILITY" shall mean any liabilities or obligations of any nature,
whether known or unknown, accrued, absolute, contingent or otherwise.
"LLC" has the meaning set forth in Section 3(b) below.
"Non-Exclusive License" shall mean the license agreement to be entered
into between the Buyer and the LLC, attached hereto as Exhibit D.
"Operating Agreement" means the Limited Liability Company Operating
Agreement of the LLC, attached hereto as Exhibit E.
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, or any similar entity duly
formed under the laws of the State of its formation.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, OTHER than liens for taxes not yet due and
payable.
"SELLER" has the meaning set forth in the preface above.
"SELLER'S WIRE INSTRUCTIONS" means the instructions to be supplied by
Seller to Buyer at the Closing.
"TAXES" shall mean all taxes, however denominated, including any
interest or penalties that may become payable in respect thereof, imposed by any
federal, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, goods and services, AD VALOREM,
earnings, franchise, profits, license, withholding (including all obligations to
withhold or collect for Taxes imposed on others), payroll, employment, excise,
severance, stamp, occupation, premium, property, excess profit or windfall
profit tax, custom duty, value added or other tax, governmental fee or other
like assessment or charge of any kind whatsoever, together with any
2
<PAGE>
interest and any penalty, addition to tax or additional amount (whether payable
directly, by withholding or otherwise).
2. BASIC TRANSACTION.
(a) PURCHASE AND SALE OF ASSETS. On the terms and subject to
the conditions of this Agreement, at the Closing Seller shall sell, transfer,
convey, and deliver to the Buyer, and the Buyer shall purchase, acquire and
accept from the Seller all of its right, title and interest in the Acquired
Assets. Buyer shall not acquire any other assets from Seller.
(b) ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing and the sales and use taxes
involved in or levied on the transaction. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or Liability of
the Seller not included within the definition of Assumed Liabilities.
(c) PURCHASE PRICE. Concurrently herewith, the Buyer agrees
to pay to the Seller [ ](1) payable in immediately available
funds in United States Dollars by wire transfer in accordance with Seller's
Wire Instructions.
(d) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Seller,
4300 North Harbor Boulevard, Fullerton, California, concurrently herewith.
(e) DELIVERIES AT THE CLOSING. At the Closing, (i) the
Seller is executing, and delivering to the Buyer (A) an assignment attached
hereto as Exhibit F and (B) such other instruments of sale, transfer,
conveyance, and assignment as the Buyer and its counsel reasonably may
request; (ii) the Buyer is executing and delivering to the Seller (A) the
Assumption Agreement, and (B) such other instruments of assumption as the
Seller and its counsel reasonably may request; and (iii) the Buyer is
delivering to the Seller the consideration specified in Section 2(c) above.
(f) ALLOCATION. The parties to this Agreement agree to
determine the amount of and allocate the total consideration transferred by
Buyer to the Seller, pursuant to this Agreement (the "Consideration") in
accordance with the fair market value of the assets and liabilities transferred.
The Seller shall promptly after the Closing provide the Buyer with one or more
schedules allocating the Consideration. If the Buyer disagrees with any items
reflected on the schedules so provided, the Buyer shall have the right to notify
the Seller of such disagreement and its reasons for so disagreeing, in which
case the Seller and the Buyer shall attempt to resolve the disagreement;
PROVIDED that the Buyer agrees to accept and be bound by the determination of
the Seller, which agrees that such determination and allocation shall be
reasonable. The Seller and the Buyer agree to prepare and file an IRS Form 8594
in a timely fashion in accordance with the rules under Section 1060 of the Code.
The determination and allocation of the Consideration
- ----------------------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
derived pursuant to this subsection (f) shall be binding on Seller and Buyer for
all Tax reporting purposes.
3. CONDITIONS AND COVENANTS. The seller agrees to consummate the
transactions to be performed by it pursuant to this agreement only upon the
condition and in reliance on the buyer making and hereby affirming the following
covenants:
(a) The Buyer will in accordance with the agreement
attached hereto as Exhibit G perform [ ](2) in contract
research and development services for and under the direction of the Seller
on Array Chip technology and products of interest to the Seller.
(b) The Buyer and the Seller will, at the Closing, establish
Joint Venture, L.L.C., a Delaware limited liability company (the "LLC") pursuant
to the terms of the Operating Agreement. Buyer and its successors in interest
covenants and agrees that the LLC will at all times be an "Affiliate" of the
Buyer or its successors as that term is defined in the Isis Agreement.
(c) The Buyer and the Seller will enter into the 10-year
(renewable thereafter by mutual agreement) OEM Supply Agreement for Array Chips
to be manufactured by Buyer and sold by Seller in the diagnostic and bioresearch
fields attached hereto as Exhibit H.
(d) If the Buyer hereafter desires to negotiate with Oxford
Gene Technology (or any successor in interest) to obtain for the Buyer a more
favorable royalty rate or other terms more favorable than those contained in the
Isis Agreement, the Buyer will: (A) inform Seller of such desire and, if Buyer
engages in such negotiations, of the content, substance and progress of such
negotiations, and (B) will not enter into any agreement which contains a more
favorable royalty rate or other terms more favorable than those contained in the
Isis Agreement [ ].(3)
(e) Subject to due diligence and confirmation of technical
feasibility, the Buyer will use reasonable commercial efforts, in light of
commercial opportunity, to assure that, within ninety (90) days of the
Closing, it will complete the modification of the scanners and other
instruments and systems it currently sells for use with Array Chips to
efficiently interact with the Seller's [ ].(4) Buyer agrees
and covenants that it will use commercially reasonable efforts in light of
commercial opportunity to assure that any scanners and other instruments and
systems it hereafter sells or promotes during the ten (10) years following
the Closing will, at the time of first commercial sale, be configured and
adapted to interact with Seller's then current laboratory information and
management systems. Seller covenants and agrees to keep the Buyer informed of
its developments in laboratory and management systems and of the
modifications required in
- ----------------------
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
<PAGE>
Buyer's scanners, instruments and systems to facilitate use with Seller's
laboratory information and management systems.
(f) The Buyer will, during the ten (10) years following the
Closing, use commercially reasonable efforts to actively promote the Seller
with the Buyer's customers as the preferred source for [ ]
(5) systems and products. Included within such promotion, by way of example
only and not limitation, shall be (A) the Buyer, at least once each calendar
quarter, providing to the Seller a list of customers to whom it has sold a
Buyer scanner, instrument or system for Array Chips in the preceding three
(3) months, such list to include the name and address of the customer, the
identity of a key contract and the type of Buyer scanner, instrument or
system sold (the foregoing information to be used by Seller only to promote
the sale of [ ](6) products and services), (B) semi-annual
meetings between Buyer's marketing and sales staff in charge of its scanners,
instruments and systems products and Seller's marketing and sales staff in
charge of its [ ](7) products and services and any follow-on
or similar products and services to develop, execute and administer
co-marketing and promotional plans and co-making of sales calls for such
products and services, and (C) each party (a "first party") permitting the
other party (a "second party") to use the first party's trademarks and
depictions of its products in marketing and promotional literature (such
second party literature to be subject to the first party's review and
approval, not to be unreasonably withheld or delayed, prior to release by
such second party).
(g) The Buyer will not knowingly, after exercising due
caution, care and diligence, and undertaking reasonable inquiry, sell any of
its Array Chips to an end user who will use such Chips on an instrument,
system or device manufactured or distributed by the Seller. Similarly, the
Buyer will proactively and regularly inform each of its dealers and
distributors that the Buyer's array chips should not be sold to end users who
will use such Array Chips on an instrument, system or device manufactured or
distributed by the Seller. For the avoidance of doubt, Seller's instruments,
systems and devices, as those terms are used in this Subparagraph (g) does
not include [ ](8) products or services.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement.
(a) ORGANIZATION OF THE SELLER. The Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and the Ancillary Agreements and to perform its
obligations hereunder. Without limiting the generality of the foregoing, the
board of directors of the Seller have duly authorized the execution, delivery,
and performance of this Agreement by the Seller. The execution and delivery of
this Agreement and the Ancillary Agreements by the Seller and the performance of
each of this Agreement and the Ancillary Agreements by Seller of its respective
obligations hereunder and thereunder and the consummation of the transactions
contemplated
5
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
herein and therein have been duly and validly authorized by all necessary
corporate action on the part of Seller. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance with its
terms and conditions, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the rights of creditors generally and by general principles of equity.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
its Certificate of Incorporation or Bylaws of the Seller or (ii) to the
Knowledge of the Seller conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Seller is a party or by which it is bound or to which any of the Acquired
Assets is subject (or result in the imposition of any Security Interest upon any
of the Acquired Assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the ability of
the Parties to consummate the transactions contemplated by this Agreement. To
the Knowledge of the Seller, the Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above), except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(d) BROKER'S FEES. The Seller has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(e) INTELLECTUAL PROPERTY. Schedule 4 attached hereto
identifies each patent which has been issued to the Seller with respect to its
intellectual property associated with the Acquired Assets, identifies each
pending patent application which the Seller has made with respect to any of its
intellectual property associated with the Acquired Assets, and identifies each
license, agreement, or other permission (if any) which the Seller has granted to
any third party with respect to any of its intellectual property associated with
the Acquired Assets.
(f) DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except
as expressly set forth in this Section 4 and except that Seller represents it
has good and marketable title to the Acquired Assets, the Seller makes no
representation or warranty, express or implied, at law or in equity, in respect
of the Acquired Assets, Liabilities or operations, including, without
limitation, with respect to merchantability or fitness for any particular
purpose, and any such other representations or warranties are hereby expressly
disclaimed. Buyer hereby acknowledges and agrees that, except to the extent
specifically set forth in this Section 4,
6
<PAGE>
the Buyer is purchasing the Acquired Assets on an "as-is, where-is" basis free
and clear of all Security Interests. Without limiting the generality of the
foregoing, the Seller makes no representation or warranty regarding any assets
other than the Acquired Assets or any liabilities other than the Assumed
Liabilities, and none shall be implied at law or in equity.
(g) NO THIRD PARTY OPTIONS. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire any of
Seller's assets, properties or rights included in the Acquired Assets.
(h) LEGAL PROCEEDINGS. There are no suits, actions, claims,
proceedings or investigations pending or to the Knowledge of the Seller
threatened against, relating to or involving the Acquired Assets before any
court, arbitration or administrative or government body which if finally
determined adversely are reasonably likely, individually or in the aggregate to
have a material adverse effect on the Acquired Assets or on the ability to
consummate this transaction.
(i) Seller, subject to the remainder of this Paragraph,
represents that as of the day prior to this Agreement to its Knowledge the
Isis Agreement is in full force and effect and that to its Knowledge the
Acquired Assets include all of Seller's assets relating to the business in
products licensed under the Isis Agreement. For the avoidance of doubt, the
parties agree that United States Patent No. [ ](9) and its
U.S. and foreign counterparts is not related to the business in products
licensed under the Isis Agreement and is not an Acquired Asset. It is
expressly understood and agreed that if for any reason Buyer shall be deemed
not to be the assignee of the Isis Agreement under this Agreement that Buyer
shall have no right of action or recourse against Seller for breach of
contract or breach of warranty or failure of consideration or tort or under
any other legal or equitable theory and no right to terminate or rescind or
reform this Agreement or any other agreement between the parties nor to
direct, indirect, special or consequential damages of any kind or nature nor
shall Buyer be entitled to demand or receive return of the consideration paid
under this Agreement or any other agreement to Seller; provided that if the
foregoing representations are knowingly false Buyer may demand and receive
return of the monetary consideration paid under Paragraph 2(c). Buyer
recognizes and accepts that it has entered this Agreement and all other
agreements between the parties entirely at its own risk.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller that the statements contained in this Section 5 are
correct and complete as of the date of this Agreement.
(a) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) AUTHORIZATION. The Buyer has all requisite corporate power
and authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and the Ancillary Agreements, to consummate the
transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby and thereby have been duly approved by the
board of directors
7
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
of the Buyer. No other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Buyer and is, and upon execution and delivery the
Ancillary Agreements will be, legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its Certificate of Incorporation or Bylaws or (ii) to the Knowledge of the Buyer
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject. The Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above).
(d) BROKERS' FEES. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
6. COVENANTS.
(a) INDEMNIFICATION. The Buyer will defend, indemnify and hold
the Seller harmless from any and all damages awarded to OGT or agreed to be paid
to OGT by Buyer to effect a settlement, arising out of, related to or connected
with any demands, claims, actions, suits, proceedings, or litigation ("Claims")
brought by Isis Innovation Limited, its successor in interest, Oxford Gene
Technology, or any person or party claiming through them on account of resulting
from or arising out of the transfer of the Isis Agreement from the Seller to the
Buyer. The foregoing indemnity obligations are subject to the following: (1)
Seller shall promptly notify Buyer of the claim or suit for which indemnity is
sought; (2) Seller shall provide Buyer with the opportunity to defend and/or
settle the claim or suit provided that such settlement does not alter or
compromise the status of LLC as an Affiliate of Buyer and the rights of the LLC
as an Affiliate to full and unrestricted access to the licenses and rights to
patents as provided for in the Isis Agreement; and, (3) Seller shall cooperate
fully with Buyer in the defense or settlement of the claim or suit (subject to
the provisos of subparagraph (2) hereof) at the expense of Buyer.
(b) MAINTENANCE AND CONTINUATION OF THE ISIS AGREEMENT. Buyer
agrees to and shall, at all times during the full term of the Isis Agreement (a)
fully, completely and timely comply with all of its duties and obligations under
the Isis Agreement such that Affymetrix is not at any time in breach of such
Agreement, (b) not do any act which could, or with the passage of time could,
give rise to a right in the licensor of the Isis Agreement to terminate such
Agreement,
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(c) not fail to do any act which could, or with the passage of time could, give
rise to a right in the licensor of the Isis Agreement to terminate such
Agreement, and (d) not do any act or take any steps which could, or with the
passage of time could, cause the LLC not to be an Affiliate as that term is
defined in the Isis Agreement. Buyer specifically acknowledges that its duty to
maintain the Isis Agreement, in full force and effect and to maintain the status
of the LLC as an Affiliate of Buyer with full and unrestricted access to the
licenses provided for under the Isis Agreement are essential and material
elements of this Agreement and a material part of the consideration to Seller
under this Agreement. Included, by way of example and not limitation, within the
foregoing acts which Buyer shall not do are: (a) entering into a consortium with
any third party which would entitle such third party to a license under one or
more of the patents which are the subject of the Isis Agreement; or, (b) subject
to the proviso hereafter, extending access to the Isis Agreement and the patents
which are the subject thereof to any Affiliate, other than LLC, which is not
owned one hundred percent (100%) by Buyer; provided that, if the law or
regulations of any country wherein such Affiliate is domiciled prohibit one
hundred percent (100%) ownership of a domestic Person by a foreign Person or tax
incentives in the country of domicile require domestic participation in the
Person to receive the benefit of the tax incentive, then, in such case the
Affiliate may have access to the Isis Agreement and the patents which are the
subject thereof so long as Buyer owns the maximum percentage allowed by such law
or regulation or the maximum percentage that still enables Buyer to receive the
benefit of such tax incentive.
(c) FURTHER ASSURANCES. Upon the terms and subject to the
conditions contained herein, the parties agree, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing.
7. REPURCHASE OPTION. Buyer hereby grants Seller and Seller accepts
an irrevocable option to acquire from Buyer the Acquired Assets for
[ ](10) on the occurrence of either of the following events:
(A) Buyer's sales of products which practice the methods covered by one or
more of the claims of United States Letters Patent Nos. [ ](11)
are less than [ ],(12) or (B) Buyer voluntarily files a
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect or has
a petition in bankruptcy filed against it which is not removed within sixty
(60) days, or Buyer executes and delivers a general assignment for the
benefit of its creditors or Buyer files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against it
in any proceedings in the nature of the foregoing or Buyer seeks, consents to
or acquiesces in the appointment of a trustee, receiver or liquidator for
Buyer or for all or any substantial part of Buyer's assets. Buyer agrees to
provide prompt written notice to Seller of the occurrence of either of the
foregoing events which notice
- ----------------------
(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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shall include an irrevocable offer, open for not less than sixty (60) days,
to sell Buyer the Acquired Assets for [ ](13)
8. MISCELLANEOUS.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement shall
terminate on Closing.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. Except as to the side letter from Seller
to Buyer of even date herewith this Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. Except to a successor to substantially all of
its assets or in connection with a merger or reorganization, no Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, CA 92834-3100
Fax:
Attention: President
- ----------------------
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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Copy to: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, CA 92834-3100
Fax:
Attention: General Counsel
If to the Buyer: Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention: Steve Fodor
Copy to: Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention: Vern Norviel
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the State
of California.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. The Buyer and the Seller will each bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
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(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) VENUE; WAIVERS. Each party hereto irrevocably agrees that
any legal action or proceeding with respect to this Agreement or for recognition
and enforcement of any judgment in respect hereof brought by any other party
hereto or its successors or assigns may be brought and determined in the proper
state or federal court residing in the County of the party to be charged as the
defendant, State of California, and each party hereto hereby irrevocably submits
with regard to any such action or proceeding for itself and in respect to his or
its property, generally and unconditionally, to the exclusive jurisdiction of
the aforesaid courts. Each party hereto hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any clam that it is not
personally subject to the jurisdiction of the courts for any reason other than
the failure to serve process in accordance with this subsection (m), (b) that
it, or its property, is exempt or immune from the jurisdiction of any such court
or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. Any and all service and any
other notice in any such action, suit or proceeding shall be effective against
any party if given personally or by registered or certified mail, return receipt
requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided. Nothing herein contained shall
be deemed to affect the right of any party to serve process in any manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction.
(n) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
ASSIGNOR:
BECKMAN COULTER, INC., a Delaware
corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ASSIGNEE:
AFFYMETRIX, INC., a California corporation
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE>
Exhibit 10.2
EXHIBIT A
ASSUMPTION OF CERTAIN LIABILITIES
Pursuant to that certain Asset Purchase Agreement of even date
herewith (the "AGREEMENT") by and among Beckman Coulter, Inc., a Delaware
corporation ("SELLER") and Affymetrix, Inc., a California corporation ("BUYER"),
for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Buyer hereby does assume the Assumed Liabilities, as such
term is defined in the Agreement, by and subject to the terms and conditions of
the Agreement; provided, however, that Buyer shall assume such liabilities and
obligations only to the extent such liabilities and obligations arise after the
Closing Date (as defined in the Agreement). Except as expressly assumed herein,
Buyer does not assume and shall not in any manner be responsible for any
liability (including without limitation any contingent liability), obligation,
lien or encumbrance of Seller.
AFFYMETRIX, INC., a California corporation
By:
-----------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
<PAGE>
Exhibit 10.3
EXHIBIT B
LICENSE AGREEMENT
License Agreement ("Agreement") effective this 31st day of July 1998
("Effective Date") by and between AFFYMETRIX, INC. a California corporation,
having a place of business at 3380 Central Expressway, Santa Clara, California
95051 ("Affymetrix", as that term is more fully defined in Paragraph 1.2 hereof)
and LLC, a limited liability company formed under the laws of Delaware, having a
place of business at 4300 North Harbor Boulevard, Fullerton, California
92834-3100 ("LLC").
R E C I T A L S
I. Beckman Coulter, Inc. ("BCI"), on even date herewith, in accordance
with that certain Asset Purchase Agreement to which this Agreement is Exhibit B
(the "AP" Agreement), sold and delivered to Affymetrix and Affymetrix purchased
and took from BCI, all of the right, title and interest in and to certain
Acquired Assets, including the BCI Technology (as those terms are defined in the
AP Agreement) that BCI possessed and had the right to transfer. Included within
the BCI Technology were certain patents and applications for patent (the "BCI"
Technology Patents", as that term is further defined in Paragraph 1.4 hereof).
II. LLC is an Affiliate (as that term is hereafter defined) of
Affymetrix and a joint venture of Affymetrix and BCI. LLC was formed under the
Limited Liability Company Operating Agreement which is Exhibit E of the AP
Agreement.
III. Part of the consideration for BCI's sale of the Acquired Assets to
Affymetrix under the AP Agreement was the establishment of LLC as an Affiliate
of Affymetrix and the licensing of LLC under the BCI Technology Patents.
<PAGE>
IV. Affymetrix desires to grant LLC a license under the BCI Technology
Patents and LLC desires to acquire such license.
NOW THEREFORE in consideration of the mutual understandings contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties intending to be legally bound, agree
as follows:
ARTICLE 1.0 DEFINITIONS
The following terms, when used herein with an initial capital letter
and without regard to whether they appear in the singular, plural or possessive
form, shall have the following defined meanings:
1.1 "AFFILIATE" shall mean any corporation or other form of limited
liability legal person, partnership, association, joint venture or other form
of business entity controlled by, controlling or under common control with a
party hereto. As used herein, the word and root "control" in the context of a
corporation shall mean the ownership, directly or indirectly, of more than
fifty percent (50%) of the voting shares or other equity interests entitled
to vote in the election of directors of the corporation; and, in the context
of any other form of business entity, the right to receive more than fifty
percent (50%) of the net profits of such entity and the right to a majority
interest in the management and control of such entity; provided that,
notwithstanding the foregoing definition, LLC may not have as an Affiliate
entitled to receive the benefits of the licenses granted under Section 3.1
hereof (a) a corporation wherein any of the companies listed in Exhibit A
(and their successors and affiliates) is more than a passive investor in such
Affiliate and such corporation does not have the right to manage or control
such Affiliate or (b) a partnership wherein any of the companies listed in
Exhibit A (and their successors and affiliates) is a partner.
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1.2 "AFFYMETRIX" shall mean Affymetrix, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.3 "ARRAY CHIPS" shall mean a series of polynucleotides arranged on a
substrate to perform quantitative or qualitative analyses.
1.4 "BCI TECHNOLOGY PATENTS" means the patents and applications for
patent identified in attached Exhibit I, any continuation, continuation-in-part,
divisional or substitute of any such applications, any U.S. or foreign patent
issuing on any of the foregoing applications and any reissue, reexamination or
extension of such patents.
1.5 "LLC ARRAY CHIP" shall mean an Array Chip which is sold or used by
LLC and, but for the licenses and rights granted herein, would infringe any
valid claim in an unexpired and non-lapsed patent in the BCI Technology Patents.
1.6 "LICENSED PRODUCT" shall mean any LLC Array Chip or component
thereof or any product, kit, instrument or system which, but for the licenses
and rights granted herein, would infringe any valid claim in an unexpired and
non-lapsed patent in the BCI Technology Patents.
1.7 "LICENSED PROCESS" shall mean any process, method or procedure the
practice or use of which, but for the licenses and rights granted herein, would
infringe any valid claim in an unexpired and non-lapsed patent in the BCI
Technology Patents.
1.8 "NET SALES" shall mean the gross receipts of LLC from the sale of
LLC Array Chips to an unaffiliated third party, less those of the following
actually incurred by LLC as an element of such sales: transportation, special
packing and crating charges, insurance, custom duties, commissions, returns,
allowances in lieu of actual resumed or rejected LLC Array Chips, sales, use and
turnover taxes, and trade, quantity, contract and cash discounts. The value of
LLC
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Array Chips transferred by LLC to unaffiliated third parties as free samples or
the use of LLC Array Chips by LLC for sales demonstration purposes or for
quality control or other internal, non-revenue generating purposes shall not be
included in the calculation of Net Sales.
In the event an LLC Array Chip is sold in combination with other
apparatus or products, as part of a kit, or in any other combination, and the
LLC Array Chip is not separately valued on the invoice or other document
evidencing such sale, the Net Sales of the LLC Array Chip shall be the then
current list price for the LLC Array Chip when sold separately or, in the
absence of such list price, shall be determined by multiplying the aggregate
selling price of the combination by a fraction the numerator of which shall be
LLC's standard costs for the LLC Array Chip and the denominator of which shall
be LLC's standard cost for the total combination at the time of the sale. In the
event that both the LLC Array Chip and other product have separate list prices
but are being sold at a combination price which is less than the total of the
separate list prices, then the Net Sales of the LLC Array Chip shall be
determined by multiplying the invoice price charged for the combination by a
fraction, the numerator of which is the list price of the LLC Array Chip and the
denominator of which is the sum of the list prices of the LLC Array Chip and
such other products.
ARTICLE 2.0 LICENSE GRANT
2.1 LICENSE GRANT - Affymetrix hereby grants to LLC and LLC accepts a
royalty-bearing, exclusive, world-wide right and license under the BCI
Technology Patents (a) to make, have made, import, use, sell, lease and
otherwise dispose of Licensed Products in all fields, uses and applications, (b)
to practice Licensed Processes, and (c) to pass on to its direct and indirect
customers of Licensed Products the right to practice Licensed Processes. The
foregoing license includes the sole right to grant sublicenses of equal or
lesser scope. For the
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avoidance of doubt, except for the rights to grant further licenses which is the
exclusive right of BCI, Affymetrix shall continue to have the right (a) to make,
have made, import, use, sell, lease and otherwise dispose of any product covered
by the BCI Technology Patents, (b) to practice Licensed Processes, and (c) to
pass on to its direct and indirect customers of products the right to practice
Licensed Processes.
2.2 PATENT MARKING - LLC shall attach a label or product insert on each
Licensed Product reasonably reflecting patent numbers of issued U.S. patents
covering such Licensed Product and owned by Affymetrix and will reasonably
modify such labels or inserts periodically at the direction of Affymetrix to add
or delete patent numbers.
ARTICLE 3.0 TERM
Unless previously terminated as provided herein, the life of this
License Agreement and the license granted herein shall run from the Effective
Date to the end of the term of the last expiring patent included in the BCI
Technology Patents.
ARTICLE 4.0 ROYALTIES AND ROYALTY REPORTS
4.1 ROYALTIES - Subject to Paragraph 4.2, LLC shall pay Affymetrix
for all of the licenses and rights granted under Paragraph 2.1 a running
royalty of [ ](1) of Net Sales of Royalty-Bearing Products.
4.2 ROYALTY STACKING - If, at any time during the life of this
Agreement, LLC discovers that any LLC Array Chip or the use thereof infringes
claims of an unexpired patent or patents other than those in the BCI
Technology Patents LLC may, if it has not already done so, negotiate with the
owner of such patents for a license on such terms as LLC deems appropriate.
- ----------------------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
Should the license with the owner of such patents (which owner may be
Affymetrix) require the payment of royalties or other consideration to such
owner then the royalties otherwise payable under this Agreement shall be reduced
by the same amount as the royalties paid or payable to such owner.
4.3 ROYALTY REPORTS - LLC shall, commencing with the calendar quarter
which includes its first sale of an LLC Array Chip and each calendar quarter
thereafter, not later than forty-five (45) days after the close of its
accounting books and records for such quarter, provide to Affymetrix an
accounting report of the type and quantity of each LLC Array Chip sold by LLC
during such calendar quarter and the Net Sales received therefrom. The royalty
due and payable to Affymetrix shall accompany such report.
4.4 BOOKS AND RECORDS - LLC shall keep or cause to be kept books,
records and accounts in accordance with generally accepted accounting principles
consistently applied covering LLC's activities hereunder and containing all
information necessary for the true and accurate determination of the amounts
earned and paid hereunder. LLC shall, not more than once per year and upon prior
reasonable written notice from Affymetrix, permit a certified public accountant
appointed and paid for by Affymetrix (the "Auditor") and reasonably acceptable
to LLC to inspect each LLC facility manufacturing LLC Array Chips and to review
the previous two (2) years books, records and accounts to verify the amounts
earned by Affymetrix and paid by LLC hereunder. The Auditors shall furnish to
both parties reports stating only its findings during such inspection as to the
accuracy, or the nature and extent of any inaccuracy of such books, records,
accounts and payments.
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4.4.1 Any deficiency identified by the Auditor between the
amounts actually earned by Affymetrix under this Article 4.0 and the amounts
reported to be earned and paid on by LLC in accordance with Paragraph 4.3
hereof shall, unless disputed by LLC, be paid to Affymetrix within thirty
(30) days of receipt by LLC of the Auditor's report. The parties agree to
diligently negotiate and promptly settle any disputes as to the amount of
royalties earned by Affymetrix and payable by LLC hereunder.
4.5 TAXES ON ROYALTIES - All payments provided for in this Agreement
refer to lawful money of the United States of America. All payments shall be
made by LLC to Affymetrix at the office of Affymetrix designated above and shall
be made in the full amounts as herein specified; provided, however, that
deduction may be made from such payments by LLC for amounts required to be
withheld and paid by LLC in respect of any income tax levied or assessed upon
such payments by, and in accordance with the laws of, any foreign government or
taxing authority. Affymetrix shall have the right at any time or from
time-to-time to contest by appropriate proceedings the validity or amount of any
such income tax withheld. If so requested by Affymetrix, LLC will make such
payments under protest, and, on behalf and at the expense of Affymetrix, take
such other action and render all reasonable assistance that may be required by
Affymetrix in the prosecution of any such proceedings. LLC will obtain and
forward to Affymetrix tax credit receipts or vouchers for all income taxes thus
withheld and paid by LLC.
4.6 ROYALTIES EARNED IN FOREIGN CURRENCY - In the event that either Net
Sales or the royalties set forth above are initially calculated in a foreign
currency, conversion shall be made in each instance by employing the closing
transfer buying rate for United States dollars quoted by the Wall Street
Journal, for the last business day of the calendar quarter which the payment
covers; provided, however, that if a foreign currency not listed in the Wall
Street
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<PAGE>
Journal is involved, then the closing transfer buying rate quoted by Citibank
(New York) shall be employed in effecting such conversion thereof.
ARTICLE 5.0 CONSTRUCTION OF PATENTS
If a judgment or decree is entered, which becomes final through the
exhaustion of all permissible applications for rehearing or review by a superior
tribunal, or through the expiration of the time permitted for such applications
(hereinafter referred to as an "irrevocable judgment"), on the validity, scope,
enforceability or priority of any claim or claims of any patent or patent
application included in the BCI Technology Patents the construction placed upon
any such claim or claims by such irrevocable judgment shall be thereafter
followed with respect to acts occurring thereafter.
If such irrevocable judgment holds any claim invalid or unenforceable
or is adverse to the patent containing such claim as to inventorship, or
construes all applicable claims in a patent so as not to cover LLC Array Chips,
LLC shall be relieved thereafter from payment of royalties under Article 4.0
hereof, as to LLC Array Chips sold after the date of such irrevocable judgment
covered only by such claim or claims to which such irrevocable judgment is
applicable, and from the performance of those other acts which may be required
by this Agreement only as to such claim or claims.
ARTICLE 6.0 PROSECUTION OF INFRINGERS
If LLC determines that a third party is infringing a claim of a patent
in the BCI Technology Patents by making, using or selling a product which
competes with a Licensed Product then being sold by LLC, it shall notify
Affymetrix thereof in writing. Such notice shall include information in LLC's
possession relevant to such third party and the competing product.
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<PAGE>
Affymetrix shall have ninety (90) days in which to either obtain the consent of
such third party to discontinue such infringement or to exercise its right to
bring an action to cause such infringement to cease. Affymetrix shall have no
obligation to bring an action for infringement; provided however, if Affymetrix
does not obtain the consent of such third party to cease infringement or does
not bring suit against the third party under the patent, then LLC shall have the
right to discontinue paying royalties under the effected patent for such product
until either the third party discontinues its infringing activity or Affymetrix
brings a lawsuit against the third party for such infringement.
ARTICLE 7.0 ASSIGNMENT
LLC may not assign this License Agreement in whole or in part without
obtaining the prior written approval of Affymetrix, except that LLC shall have
the right to assign this License Agreement without the consent of Affymetrix to
any Affiliate and to any successor of its entire business or all or
substantially all of the assets of its entire business; provided that LLC may
not sell such Affiliate or its assets other than as part of a transaction
involving LLC as a whole so long as the assets of such Affiliate include this
License Agreement.
ARTICLE 8.0 NOTICES
All notice permitted to be given hereunder shall be in writing and
addressed to the respective parties as follows:
If to Affymetrix: Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention:
-------------------------
If to LLC: LLC
4300 North Harbor Boulevard
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<PAGE>
Fullerton, California 92834-3100
Attention: President
With a copy to: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attention: General Counsel
or such other addresses as may be designated by the respective parties in
writing. A notice shall be deemed given the earlier of the date when actually
received if sent by messenger or facsimile (with notice of receipt in good order
requested and received) or three (3) days after deposit in the United States
registered or certified mail, postage prepaid, and properly addressed.
ARTICLE 9.0 SECTION HEADINGS
Section headings are for convenience only and shall not be construed to
limit or extend the meaning of any portion of this License Agreement.
ARTICLE 10.0 LAW GOVERNING AND CONSTRUCTIONS
10.1 APPLICABLE LAW - This License Agreement shall be governed by and
construed in accordance with the laws of the State of California as if it has
been delivered in California, and all acts performed or required to be performed
hereunder have been performed entirely within such state, not including, however
any conflicts of law rule of California which may direct or refer such
determination to the laws of any other state. Neither party shall be entitled to
nor request injunctive or other equitable relief prior to adjudication on the
merits.
10.2 MEDIATION AND ARBITRATION - Any controversy or conflict involving
this License Agreement, its interpretation or the respective rights or
obligations of the parties shall first be submitted to their respective
Vice-Presidents for resolution. If they cannot agree, the controversy shall be
submitted to mediation to be held in a mutually agreeable neutral place. If
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<PAGE>
the parties still cannot settle the controversy or reach an accommodation, the
matter shall be submitted to binding arbitration to be conducted in California
at a location to be mutually agreed in accordance with the following rules:
(a) There shall be a panel of three (3) arbitrators, all of whom shall
be lawyers and at least two (2) of which shall be competent to fully understand
the technology relating to Array Chips. If the parties cannot agree on the
selection of the three (3) then each shall pick one (1) arbitrator and the two
(2) so chosen shall select the third.
(b) All disputes which are not specifically raised by the parties in
the arbitration process shall be forever waived.
(c) The arbitration proceeding shall be governed by (i) the rules and
understandings set forth in this Paragraph 10.2 or as hereafter agreed upon in
writing by the parties, and (ii) to the extent not inconsistent with such rules
and understandings, by the Commercial Arbitration Rules of the American
Arbitration Association.
(d) The parties agree to refrain from filing a lawsuit with regard to
any aspect of their controversy and to abide by and perform any award rendered
by the arbitrators. The parties further agree that a judgment of a Court having
jurisdiction may be entered upon the award and an execution may be issued for
its collection.
(e) At least two (2) of the panel of arbitrators must agree on each
point in controversy for an award to be rendered.
(f) The arbitration hearing shall be convened within forty-five (45)
days of request therefor by either party. The request shall be in writing and
sent in accordance with Article 8.0. The hearing shall be limited to three days:
Each party shall have a maximum of eight (8) hours to put on its main case and
four (4) hours for rebuttal. Neither party shall engage
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<PAGE>
in extended cross-examination or other tactics which have the effect of
substantially altering this allocation.
(g) The parties agree to exchange all documents they intend to produce
at the hearing at least thirty (30) days in advance of the opening of the
arbitration hearing. There will be no taking of depositions, service of
interrogatories or any other form of discovery other than producing documents
relevant to the proceedings and neither party may compel the appearance of the
other party's employees, officers, directors or consultants.
(h) The arbitrator's decision must be rendered within thirty (30) days
after completion of the arbitration hearing.
(i) A transcript may, at the option of the parties, be made. Either
party may, at its expense, tape record or video tape the proceedings.
(j) All applicable common law or statutory privileges such as
attorney-client or attorney work product shall be applicable to the arbitration
proceedings.
(k) Either party may, at its option, use prepared testimony as long as
the witness whose testimony is so presented is available to the other party for
cross-examination.
(l) Each party shall bear its own expenses for the arbitration and they
shall each share equally in the expenses and fees of the arbitration panel.
ARTICLE 11.0 MISCELLANEOUS
11.1 Nothing in this License Agreement shall be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto without
the express written approval of the other party.
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11.2 Affymetrix makes no warranties as to the validity or scope of any
of the BCI Technology Patents, or that any manufacture, sale, use, or other
disposition of the products licensed hereunder will be free from infringement of
patents, utility models, and/or design patents of third parties. Nothing in this
License Agreement shall be considered as conferring any warranty or
representation as to the usefulness, marketability, or merchantability of any
products sold within the scope of the licenses hereunder. Affymetrix and LLC
agree to hold the other harmless from any personal injury or products liability
claims made as a result of the sale of products licensed hereunder.
11.3 The parties will retain the terms of this License Agreement in
strict confidence, except as may be required by regulatory agencies or courts,
and will then use all reasonable precautions to maintain the terms of this
License Agreement confidential.
11.4 LLC and Affymetrix represents that they are familiar with the
Export Administration Regulations comprising the compilation of official
regulations and policies governing the export licensing of commodities and
technical data promulgated by the United States Department of Commerce, Bureau
of International Commerce, Office of Export Administration. Notwithstanding any
other provisions of this License Agreement, and each assures the other that with
respect to all information and licenses furnished by or under this License
Agreement, that it will comply with such official regulations.
11.5 In the event that any provision of this License Agreement is held
invalid or unenforceable for any reason, such unenforceability shall not affect
the enforceability of the remaining provisions of this License Agreement, and
all provisions of this License Agreement shall be construed so as to preserve
the enforceability hereof.
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11.6 This License Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.7 This License Agreement has been drafted on the basis of mutual
understanding after considerable negotiation and neither party shall be
prejudiced as being the drafter thereof.
ARTICLE 12.0 ENTIRE AGREEMENT, MODIFICATIONS, ETC.
This instrument contains the entire and only agreement between the
parties relative to the subject matter hereof and supersedes all previous
negotiations, representations, undertakings and agreements both written and oral
heretofore made between the parties as to the subject matter. Any
representation, promise or condition in connection herewith not specifically
incorporated herein shall not be binding upon either party.
No modification, renewal, extension, waiver, cancellation or
termination of this License Agreement or of any of the provisions herein
contained shall be valid until and unless made in writing and signed on behalf
of the respective parties by duly authorized officers thereof.
<PAGE>
IN WITNESS WHEREOF, the parties have respectively caused this License
Agreement to be executed on the dates hereinafter indicated.
Beckman Coulter, Inc. Affymetrix, Inc.
By: By:
---------------------------- -----------------------------
Title: Title: President
-------------------------
Date: Date: 15 Sept. 98
-------------------------
<PAGE>
EXHIBIT A
The following companies and their subsidiaries and Affiliates:
[ ](2)
[ ](3)
[ ](4)
[ ](5)
[ ](6)
[ ](7)
[ ](8)
[ ](9)
- ----------------
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
Exhibit 10.4
AGREEMENT
1.0 PARTIES
1.1 The parties to this Agreement are ISIS INNOVATION LIMITED,
a limited liability company organised and existing under the laws of the United
Kingdom and having its Registered Office at University Offices, Wellington
Square, Oxford OX1 2JD, United Kingdom ("LICENSOR") and BECKMAN INSTRUMENTS,
INC., a corporation organized and existing under the laws of the State of
Delaware and having a place of business at 2500 Harbor Boulevard, Fullerton,
California 92634, U.S.A. ("LICENSEE").
2.0 RECITALS
2.1 LICENSOR is a limited liability company wholly owned by
the UNVERSITY OF OXFORD ("UNIVERSITY") formed for the purpose of exploiting
inventions and know-how developed at UNIVERSITY. LICENSOR is the owner of the
entire right, title and interest in and to Licensed Patent Rights (see paragraph
3.1) and in and to the related Technical Information (see paragraph 3.7).
2.2 LICENSEE is in the business of designing, developing,
manufacturing and selling bioanalytical and diagnostic instrument systems and is
interested in acquiring rights in and to the Licensed Patent Rights and related
Technical Information.
2.3 UNIVERSITY and LICENSEE have on April 17, 1991 entered
into the Research and Development Agreement of which a copy is attached as the
Schedule to this Agreement ("R&D Agreement") which provided for LICENSEE to fund
certain research and development directed toward the commercialization of the
inventions included in Licensed Patent Rights. The parties have elected not to
renew the R&D Agreement.
3.0 DEFINITIONS
As used in this Agreement:
3.1 "Licensed Patent Rights" shall mean and include the
following families (a), (b), (c) and (d):
(a) European patent 0 373 203 B designating AT, BE,
CH, DE, FR, GB, IT, LI, LU, NL, SE, in the name of Isis Innovation Limited; US
patent application 08/230.012 in the name of E. M. Southern; Japanese patent
application 505144/89 in the name of Isis Innovation Limited;
All based on and claiming priority from International
Application PCT/GB89/00460 filed 2 May 1989 and British Patent Application
8810400.5 filed 3 May 1988.
<PAGE>
(b) European patent 0 386 229 B designating AT, BE,
CH, DE, FR, GB, IT, LI, LU, NL, SE, in the name of Isis Innovation Limited; US
patent 5,436,327 in the name of Isis Innovation Limited; Japanese patent
application 510012/89 in the name of Isis Innovation Limited;
All based on and claiming priority from International
Application PCT/GB89/01114 filed 21 September 1989 and from British Patent
Application 8822228.6 filed 21 September 1988.
(c) any and all patent applications included herein
pursuant to the provision of Article 10.3 hereof; and
(d) any and all continuations, continuations-in-part,
divisions, re-issues and re-examinations of the aforementioned applications; any
and all Letters Patent which may issue on or as a result of the aforementioned
applications; and any and all foreign patent applications and patents
corresponding to any such applications and patents.
3.2 "Royalty Bearing Product" shall mean and is limited to any
product which is manufactured by or for and sold or otherwise used in the
performance of a service on behalf of third party for money by LICENSEE or by an
Affiliate, and which is covered by either a claim asserted in good faith or any
patent application included in Licensed Patent Rights or a subsisting claim of
any patent included in Licensed Patent Rights.
3.3 "claim asserted in good faith" shall mean and is limited
to any claim, whether allowed or not, contained in any patent application
included in Licensed Patent Rights which can reasonably be considered to be
patentable in view of any and all references and prior art known to the parties
at any time.
3.4 "subsisting claim" shall mean and is limited to any valid
claim of a validly issued, unexpired and non-lapsed patent included in the
Licensed Patent Rights which is not the subject of an interference, opposition,
cancellation or re-examination proceeding.
3.5 "covered by" when used in the context that a product is
covered by a subsisting claim or a claim asserted in good faith means that the
product PER SE, the method of manufacture of such product, or the customarily
intended use of such product must, when such product is sold or manufactured,
constitute (but for the licences herein granted) an infringement of:
(i) a claim asserted in good faith considered as if
it were a subsisting claim; or
(ii) a subsisting claim when interpreted pursuant to
the patent statutes of the country in which the patent issued.
3.6 "Improvements" shall mean and include any invention now or
hereafter owned by LICENSOR during the life of this Agreement or under which
LICENSOR has the right to grant sublicenses, which is covered by the claims
asserted in good faith or subsisting claims of any patent or patent application
included in Licensed Patent Rights.
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3.7 "Technical Information" shall mean and include all
information now owned by LICENSOR or in LICENSOR's possession relating to
technical aspects of the inventions described in Licensed Patent Rights.
3.8 (a) "Net Selling Price" shall mean the invoice price
received by the LICENSEE or an Affiliate for the sale of Royalty Bearing
Products required to be reported hereunder, less trade, contract and quantity
discounts actually allowed, sales, use and turnover taxes (excluding income
taxes), import or export and excise taxes, custom duties, imposts and the like,
and packing and crating charges. The invoice price shall be that of whichever of
LICENSEE or an Affiliate made the sale. In the event a Royalty Bearing Product
is sold in combination with other apparatus or product, as part of a kit, or in
any other combination, and the Royalty Bearing Product is not separately valued
on the invoice or other document evidencing such sale, the selling price of the
Royalty Bearing Product shall be the then current list price for the Royalty
Bearing Product when sole separately or, in the absence of such list price,
shall be determined by multiplying the aggregate selling price of the
combination by a fraction the numerator of which shall be vendor's standard
costs for the Royalty Bearing Product and the denominator of which shall be
vendor's standard cost for the total combination at the time of the sale. In the
event that both the Royalty Bearing Product and other product have separate list
prices but are being sold at a combination price which is less than the total of
the separate list prices, then the selling price of the Royalty Bearing Product
shall be determined by multiplying the invoice price charged for the combination
by the ratio of the list price of the Royalty Bearing Product to the sum of the
list prices of the Royalty Bearing Product and such other product. Where a
Royalty Bearing Product is sold by LICENSEE to an Affiliate or by one Affiliate
to LICENSEE or to another Affiliate at a price which is lower than the current
U.S. list price of that product, then for the purpose of calculating the royalty
due to LICENSOR for the sale price there shall be substituted the current US
list price. If the Affiliate making the sale is not a US company then the
current list price shall be the list price in that vendor's country of
incorporation. Without the prior written consent of LICENSOR, LICENSEE and its
Affiliates shall not accept or solicit any non-monetary consideration in the
sale of Royalty Bearing Products, or in the use of what would otherwise be
Royalty Bearing Products in the performance of services on behalf of third
parties. In the event that LICENSEE or an Affiliate provides an instrument to a
particular customer and/or provides service on an instrument to a particular
customer based, in whole or in part, on that customer's purchase of Royalty
Bearing Products; and the price shown on the invoice to such particular customer
for such Royalty Bearing Product is more than the average price in the reported
period for the Royalty Bearing Product when sold separately to other customers;
and either there is no charge for such instrument and/or such service or the
charge for such instrument and/or service is less than the average charged
therefor to other customers in the reported period when they are provided
separately; then the Net Selling Price for the Royalty Bearing Product to such
particular customer shall be the average price for the Royalty Bearing Product
during the reported period when sold separately.
(b) With respect to Royalty Bearing Products
otherwise used in the performance of a service on behalf of a third party for
money, the Net Selling Price for the purpose of computing royalties shall be
deemed to be the Net Selling Price at which similar Royalty Bearing Products are
currently being sold or offered for sale (i.e. published List Price) in
quantities corresponding to those involved in the disposition with respect to
which royalty is to be determined. Where the Net Selling Price of Royalty
Bearing Products otherwise used in the
3
<PAGE>
performance of a service on behalf of a third party for money cannot be
reasonably determined in this way, then the Net Selling Price for the purpose of
computing royalties hereunder shall be deemed to be the average mark-up of
whichever of LICENSEE or its Affiliate entered into the transaction times such
party's standard cost for such Royalty Bearing Products. "Average mark-up" means
the vendor party's average mark-up above standard cost for similar Royalty
Bearing Products for which a Net Selling Price is established under paragraph
3.8(a) above provided, however, that if there is no such similar Royalty Bearing
Product the vendor party's Net Selling Price shall be deemed to be the sum of
labour (direct and indirect) and the cost of material entering into the
manufacture of such Royalty Bearing Products computed in accordance with
customary accounting procedures.
3.9 The terms "sale," "sold," "otherwise used" or terms of
similar import, as used in this Agreement in reference to the transfer of
Royalty Bearing Products to others, shall mean, in addition to the usual sale
transactions, delivery of Royalty Bearing Products to others, regardless of the
basis of compensation, if any, and the placing of Royalty Bearing Products into
use by LICENSEE or its Affiliates for any purpose other than manufacturing
assurance, quality control, product demonstrations, methods development,
instrument and system validation, service of instruments and systems and
one-time or short-term provision of free samples as sales and marketing
promotions to generate or encourage future customer purchases.
3.10 Affiliate shall mean any corporation or business
association which is controlled by, controlling or under common control with
LICENSEE. In the context of a corporation or other limited liability entity the
word and root "control" means the ownership, directly or indirectly, of more
than fifty percent (50%) of the voting shares or other equity interests entitled
to vote in the election of directors of the corporation or business association;
and, in the context of a partnership, joint venture or other form of business
enterprise the right to receive at least fifty per cent (50%) of the net
proceeds of such enterprise.
3.11 "LICENSEE Consortium" means any group, consortium, joint
venture, partnership, alliance or corporation in which LICENSEE is a participant
which has as one of its principal objectives the development and
commercialisation of products and processes covered by the claims of the
Licensed Patents.
3.12 "life of this Agreement" shall mean the period between
the Effective Date and any termination of this Agreement.
4.0 WARRANTIES AND REPRESENTATIONS
4.1 LICENSOR warrants and represents that it is the sole and
exclusive owner of the entire right, title and interest in and to the inventions
included in the patent applications and patents included in Licensed Patent
Rights and of the Technical Information to be delivered hereunder, and that it
has the right and power to grant the licences of the scope herein granted.
5.0 LICENSES GRANTED
5.1 LICENSOR hereby grants to LICENSEE, for the life of this
Agreement, a non-exclusive right and license to practise all methods and to
make, have made, use and sell all
4
<PAGE>
products covered by a claim asserted in good faith in the Licensed Patent Rights
throughout all countries of the world to the full end of the respective terms of
any such patents included in the Licensed Patent Rights.
5.2 LICENSOR hereby grants to LICENSEE an irrevocable,
non-exclusive, fully-paid, divisible, right and licence to use and have used all
Technical Information in the manufacture, use and sale of any Royalty Bearing
Product throughout the world.
5.3 The rights and licences granted in paragraphs 5.1 and 5.2
shall extend to Affiliates who undertake directly with LICENSOR in writing with
the terms of this Agreement.
5.4 With respect to any United States or foreign patent which
LICENSOR now owns or controls, or which it may hereafter own or control.
LICENSOR agrees that it will not assert any claim or any such patent against any
Royalty Bearing Product, in whole or in part, which has been sold by LICENSEE or
an Affiliate under the licences herein granted.
5.5 LICENSEE shall be responsible for compliance with all
applicable Export Control Regulations and shall indemnify LICENSOR against any
breach of such Regulations.
6.0 REPORTS AND EARNED ROYALTY PAYMENTS
6.1 On the Effective Date of this Agreement LICENSEE agrees
to pay LICENSOR the sum of [ ](1) which sum shall not be
creditable toward earned royalties or minimum payments hereunder and shall
not otherwise be refundable. LICENSOR acknowledges receipt and payment in
full of the foreging sum from LICENSEE.
6.2 Commencing with the semi-annual period in which the first
commercial sale, or other use in the performance of a service on behalf of a
third party for money, occurs, LICENSEE shall thereafter make written reports to
LICENSOR semi-annually during the life of this Agreement within sixty (60) days
after the first day of January and July setting forth the Net Selling Price of
all Royalty Bearing Products which have been sold or otherwise used by LICENSEE
or its Affiliates during the preceding six (6) month-period. LICENSEE shall
notify LICENSOR immediately following the occurrence of the first commercial
sale or other use in the performance of a service for a third party for money.
6.3 Concurrently with the making of each semi-annual
provided for in paragraph 6.2 hereof, LICENSEE subject to the last sentence
of this paragraph 6.3 shall pay LICENSOR royalties computed at the specified
percentages of the Net Selling Prices of all Royalty Bearing Products
included in each such report. The specified percentages are [ ](2) in
relation to consumables, [ ](3) in relation to computer software Royalty
Bearing Products
- --------------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
marketed independently of hardware Royalty Bearing Product, and [ ](4) in
relation to all other Royalty Bearing Products. Notwithstanding anything in
this paragraph 6.3 or paragraph 7.1 or this Agreement to the contrary
(royalties running to minimum) shall neither be due from LICENSEE, nor
payable to LICENSOR until the cumulative royalties at the rates specified
herein in respect of the sales or other use in the performance of a service
for a third party or money by LICENSEE or its Affiliates exceed [ ]
(5).
6.4 Only one (1) royalty shall be paid with respect to any
Royalty Bearing Product sold under or pursuant to the licences herein granted
and such royalty shall be computed upon the Net Selling Price of the vendor
LICENSEE or its Affiliate with respect to the particular Royalty Bearing
Product. Whether or not any particular Royalty Bearing Product is covered by a
subsisting claim or a claim asserted in good faith shall be determined by the
scope of the subsisting claim or claim asserted in good faith of any patent or
patent application in the country of manufacture or in the country in which such
Royalty Bearing Product is first delivered to a customer by the vendor LICENSEE
or Affiliate.
6.5 Under this Agreement a Royalty Bearing Product shall be
considered to be sold when billed out except that upon expiration of any patent
or upon revocation of all subsisting claims or upon the abandonment of all
claims asserted in good faith covering such Royalty Bearing Product or upon any
termination of this Agreement, all shipments made on or prior to the date of
such expiration, revocation, abandonment or termination, which have not been
billed out prior thereto, shall be considered as sold (and therefore subject to
royalty). Royalties paid on Royalty Bearing Products which are not accepted by
customer shall be credited to LICENSEE if and to the extent that the amounts due
from the customer are written off in the books of the vendor LICENSEE or
Affiliates.
7.0 MINIMUM ROYALTIES
7.1 In the event that earned royalties generated hereunder
do not aggregate the minimum sums during each of the twelve-(12)-month
periods set forth in the table below, LICENSOR shall deduct from the
[ ](6) pre-paid royalty of paragraph 6.3 the deficiency between
the actual earned royalties and such minimum sum. The minimum royalty
hereunder during the respective twelve-(12)-month periods is as follows:
Period Minimum Royalty
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7.1.1 the 12-month period ("the [ ](7)
first minimum royalty period") which commences on the first
day after the semi-annual period in which the first
commercial sale
- ------------------
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
6
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;
- -------------
<TABLE>
<CAPTION>
Minimum Royalty
---------------
<S> <C>
7.1.2 the 12-month period ("the second minimum
royalty period") which immediately follows the first minimum [ ](8)
royalty period;
7.1.3 the 12-month period which
immediately follows the second minimum royalty period. [ ](9)
</TABLE>
8.0 RECORDS AND ARRANGEMENTS FOR PAYMENT
8.1 LICENSEE shall keep records showing sales of products
under and pursuant to the licences herein granted (and required to be reported
in accordance with Article 6.0 hereof) in sufficient detail to enable the
royalties payable hereunder to be determined. LICENSEE shall permit its books,
ledgers and records to be examined periodically during regular business hours,
but no more than once during any twelve-(12)-month period, for the purposes only
and to the extent necessary to verify any report provided for in Article 6.0
hereof which has been submitted within three (3) years next preceding the date
of such examination, such examination to be made at the expense of LICENSOR by
an independent auditor who shall report to LICENSOR only the amount of royalties
due and payable hereunder. LICENSOR agrees that any report (and any payment made
pursuant thereto) submitted more than three (3) years preceding the date of any
such examination shall be conclusively presumed to be correct. Any audit
following any termination of this Agreement shall be made within one (1) year
following the effective date of such termination.
8.2 All payments due to LICENSOR under this Agreement shall be
transferred and credited to an account of LICENSOR at such Bank in England as
LICENSOR may from time to time nominate for the purpose. Payments shall be made
in pounds sterling, royalty payments being converted at the official rate of
conversion ruling on the day of actual transfer (without deduction for cost of
transmission).
8.3 Where LICENSEE is obliged to make a payment to LICENSOR
under this Agreement which attracts sales, use excise or other similar taxes or
duties, LICENSEE shall be responsible for payment such taxes and duties.
8.4 Where LICENSEE is obliged by U.S. Federal or State
legislation to deduct form a payment due to LICENSOR under this Agreement
Withholding Tax payable to the Federal or State Government, LICENSEE shall
deduct such tax and pay it to the relevant taxing authority, and shall supply
LICENSOR with a Certificate of Tax Deduction at the time of payment to LICENSOR.
The parties shall co-operate in order that LICENSOR might obtain the appropriate
relief under any applicable US/UK Double Tax Treaty.
- -----------------
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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8.5 In the event that full payment of any amount due from
LICENSEE to LICENSOR under this Agreement is not made by any of the dates
stipulated, LICENSEE shall be liable to pay interest on the amount unpaid at
the rate of [ ](10) over the base rate for the time being of
Barclays Bank PLC, from the date when payment was due until the date of
actual payment.
9.0 SUB-LICENSEES
9.1 Except as stated in paragraph 5.3. and without prejudice
to the right for LICENSEE and those brought within this Agreement pursuant to
paragraph 5.3 to sell Royalty Bearing Products through agents or distributors,
the licences granted in this Agreement carry no sub-licensing rights; and
neither LICENSEE nor any Affiliate will grant any sub-licenses without the prior
written consent of LICENSOR.
9.2 Following receipt of a written request from LICENSEE
LICENSOR will not unreasonably withhold or delay the grant to a member of a
LICENSEE Consortium of a non-exclusive licence under the Licensed Patent Rights
and Technical Information).
10.0 FURNISHING TECHNICAL INFORMATION, PROSECUTION AND MAINTENANCE
OF PATENT APPLICATION AND PATENTS, PATENT MARKING
10.1 Promptly following the Effective Date of this Agreement,
LICENSOR shall furnish all available Technical Information to LICENSEE.
10.2 In clauses 6 and 8 of R&D Agreement, UNIVERSITY accepted
certain confidentiality obligations with regard to what is there described as
confidential information written, prepared or generated by UNIVERSITY in the
course of, and as part of the Project which was the subject of the R&D
Agreement. LICENSEE now undertakes with LICENSOR in similar terms (MUTATIS
MUTANDIS) with regard to Technical Information, LICENSEE also taking into
account the preservation of LICENSOR's patent rights both domestic and foreign,
which might be prejudiced by any premature disclosure or publication.
10.3 LICENSOR shall bring to the attention of LICENSEE any
improvement made by LICENSOR during the term of this Agreement. LICENSOR may
elect to include any such Improvement under the definition of Licensed Patent
Rights upon notice to LICENSOR given within ninety (90) days following the date
upon which LICENSOR discloses such Improvement to LICENSEE.
10.4 LICENSOR agrees to cause to be prosecuted and maintained
(i.e. pay the maintenance fees and taxes) each of the applications included in
the Licensed Patent Rights. LICENSOR shall exercise all reasonable endeavours to
prosecute, obtain and maintain any and all such patent applications and patents.
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(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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10.5 LICENSEE shall procure that all advertising and marketing
material for Licensed Products marketed by LICENSEE or its Affiliates is marked
with the legend "Manufactured and sold under licence from Isis Innovation
Limited, Oxford, England" or such other legend as LICENSOR may reasonably
require. LICENSEE shall also procure that all such advertising and marketing
material, and all product inserts and labels, are marked with such specific
patent numbers and with such legend as LICENSOR may reasonably require.
11.0 HALTING COMPETITION
11.1 Neither party shall be under any obligation to take steps
to halt infringement by others of any patent included in Licensed Patent Rights,
but each party shall notify the other promptly upon becoming aware of such
infringement. LICENSOR may then, at its option, take steps to halt the
infringement and may, for that purpose, bring any action, suit or proceeding
against any person, firm or corporation so infringing such patent or any of
them, necessary to prevent such infringement or recover damages therefrom. All
costs, disbursements and expenses of any such action, suit or proceeding, except
to the extent collected from the party against whom such action, suit or
proceeding is brought, shall be borne by LICENSOR. Any damages or other monies
recovered in such action, suit or proceeding shall be retained by LICENSOR for
its own benefit.
11.2 In the event LICENSOR has not taken appropriate action
within three (3) months after the initial notification under paragraph 11.1,
LICENSEE shall have the right to stop payment of running and minimum royalties
under Articles 6.0 and 7.0 until LICENSOR either brings suit against the
infringing party or licences the infringing party or the infringing party
discontinues its infringing activity. The right to stop payment of royalties
shall not affect in any way LICENSEE's continuing right to the licenses granted
under this Agreement. LICENSEE shall continue to report its sales of Royalty
Bearing Products as required by paragraph 6.2. In addition to the preceding
rights and remedies LICENSEE may, at its option, take steps to halt the
infringement and may, for that purpose, bring any action, suit or proceeding
against any person, firm or corporation so infringing such patent or any of
them, necessary to prevent such infringement or recover damages therefrom. All
costs, disbursements and expenses of any such action, suit or proceeding, except
to the extent collected from the party against whom such action, suit or
proceeding is brought, shall be borne by LICENSEE. Any damages or other monies
recovered in such action, suit or proceeding shall be retained by LICENSEE for
its own benefit.
11.3 Each party shall furnish the other, upon request and
without cost to the recipient, all evidence and information in the first party's
possession relating to any action, suit or proceeding brought by the other party
as provided in this Article 11.0 and shall join therein on a non-controlling
basis to the extent requested by the other party.
11.4 If in any action, suit or proceeding brought by LICENSOR
or LICENSEE pursuant to this Article 11.0 a judgment or decree is entered:
(i) holding each applicable claim or claims invalid;
or
(ii) holding adversely as to inventorship; or
9
<PAGE>
(iii) construing all applicable claims so as not to
read upon a Royalty Bearing Product for which royalties are then being paid by
LICENSEE;
but such judgment or decree is not an irrevocable judgment (as
defined in Article 12.0 hereof) LICENSEE shall thereafter continue to report
accrued earned royalties which would otherwise be required to be reported under
Article 6.0 hereof solely by virtue of any patent included in Licensed Patent
Rights upon which such action, suit or proceeding is based, but no payment of
such royalties shall be required under Article 6.0 hereof in respect of the
territory over which the tribunal entering the judgment or decree has
jurisdiction ("the judgement territory") until the entry of an irrevocable
judgment:
(i) holding each applicable claim or claims valid;
and
(ii) having no holding adverse to inventorship; and
(iii) construing all applicable claims so as to read
upon the Royalty Bearing Product for which royalties have been accrued by
LICENSEE.
Furthermore, during any such period of accrual of earned
royalties the minimum payments due under Article 7.0 shall be reduced by the
proportion which the Net Selling Prices of Royalty Bearing Products reported in
the two preceding semi-annual royalty reports as having been sold in the
judgement territory bears to the aggregate Net Selling Prices of all Royalty
Bearing Products reported in the reports as having been sold worldwide. The
amount of each reduction shall be withheld by LICENSEE alongside the accrued
earned royalties.
Accrued earned royalties and minimum payments not payable
hereunder shall be retained by LICENSEE, and whether or nor earned royalty and
minimum payments shall be restored to their full level as provided in Articles
6.0 and 7.0 hereof shall be determined by the provisions of Article 12.0 hereof.
Accrued earned royalties and minimum payments withheld by LICENSEE hereunder
shall be deposited by LICENSEE in an account bearing the best interest
reasonably obtainable, and such accrued interest shall be paid to or retained by
the party having the right to such accrued royalties and minimum payments.
12.0 CONSTRUCTION OF PATENTS
12.1 If, in any proceeding in which the validity, infringement
or priority of any claim of any patent or patent application included in
Licensed Patent Rights is in issue a judgment or decree is entered which becomes
not further reviewable through the exhaustion of all permissible applications
for rehearing or review by a superior tribunal, or through the expiration of the
time permitted for such applications (hereinafter referred to as an "irrevocable
judgment"), the construction placed upon any such claim by such irrevocable
judgment shall be thereafter followed in the territory over which the tribunal
entering such judgment has jurisdiction, not only as to such claim but as to all
claims to which such construction applies with respect to acts occurring
thereafter. If such irrevocable judgment holds any claim invalid or is adverse
to the patent as to inventorship, or construes all applicable claims so as not
to read upon any Royalty Bearing Product, LICENSEE shall be relieved thereafter
from including in its reports hereunder all such Royalty Bearing Products sold
thereafter in the territory over which
10
<PAGE>
the tribunal entering such judgment has jurisdiction as are covered only by such
claim or by any broader claim to which such judgment is applicable and from the
performance of those other acts which may be required by this Agreement only as
to such claim. If there are two or more conflicting irrevocable judgments with
respect to the same claim the decision of the higher tribunal shall be followed
thereafter, but if the tribunals be of equal dignity, then the decision more
favourable to the claim shall be followed until the least favourable decision
has been followed by the irrevocable judgment of another tribunal of equal or
higher dignity. In the event of conflicting irrevocable judgments of the same
tribunal, the latest shall control.
13.0 CONFLICTING PATENTS
13.1 If at any time during the life of this Agreement LICENSEE
discovers that any Royalty Bearing Product manufactured or sold by LICENSEE
under this Agreement or the use thereof infringes claims of an unexpired patent
or patents owned by another person, firm or corporation, LICENSEE may negotiate
with such other person, firm or corporation for a license on such terms as
LICENSEE deems appropriate. Should the settlement with such person, firm or
corporation include a royalty bearing license the royalties otherwise payable
under this Agreement, including the minimum royalties, shall be reduced by the
same amount as the royalties paid to such other person, firm or corporation but
such reduction shall not exceed one-half (1/2) of the royalties, including
minimum royalties, otherwise payable hereunder.
14.0 [ ](11) LICENSEE
14.1 If LICENSOR shall, at any time during the term of this
Agreement, grant to any other person or legal entity under any patent or
patent application included in licensed patent rights a license which grants
the same or equivalent license rights as are granted herein to LICENSEE
[ ](12), LICENSOR shall so notify LICENSEE [ ](13).
15.0 TERMINATION
15.1 If LICENSEE shall at any time default in the payment of
any royalty or the making of any report hereunder, or shall commit any breach of
any covenant herein contained, or shall make any false report and shall fail to
remedy any such default, breach or report, within ninety (90) days after written
notice thereof by LICENSOR, the latter may, at its option, terminate this
Agreement by notice to such effect and avail itself of such other legal remedies
as are appropriate.
15.2 If LICENSEE shall:
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
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(i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
intervenors of itself or of all or a substantial party of its property;
(ii) admit in writing its inability to pay its debts
or perform its obligations under this Agreement as payment of its debts or
performance of its obligations become due;
(iii) make a general assignment for the benefit of
creditors;
(iv) commence a voluntary case under the Federal
bankruptcy code (as now or hereafter in effect) or be adjudicated a bankrupt or
insolvent;
(v) file a petition seeking to take advantage of any
other law providing for the relief of debtors;
(vi) fail to controvert in a timely or appropriate
manner, or acquiesce in writing to, any petition filed against LICENSEE in any
bankruptcy, re-organisation or insolvency proceeding; or
(vii) take any corporate action for the purpose of
effecting any of the foregoing or their equivalent (if any) under applicable
law;
or if a proceeding or case shall be commenced, without the
application or consent of LICENSEE, in any Court of competent jurisdiction,
seeking:
(I) the liquidation, re-organisation,
dissolution, winding-up, or composition or re-adjustment of debts, of LICENSEE:
(II) the appointment of a trustee, receiver,
custodian, liquidator or the like of LICENSEE, or of all or any substantial part
of its assets; or
(III) similar relief in respect of LICENSEE
under any law providing for the relief of debtors, and such proceeding or case
shall continue undismissed, or unstayed and in effect for a period of sixty (60)
days; or an order for relief against LICENSEE shall be entered in an involuntary
case under the Federal bankruptcy code;
then LICENSOR may be written notice terminate this
Agreement immediately, and avail itself of such other legal remedies as are
appropriate.
15.3 At any time upon thirty (30) days' prior written notice
to LICENSOR, LICENSEE shall have the right to surrender all right and license
acquired by it under any one or more (including all) of the patent applications
and/or patents included in Licensed Patent Rights, and as of the effective date
of said notice all rights of LICENSEE in respect of said patent applications(s)
and/or patent(s) shall cease, and said patent application(s) and/or patents
shall be excluded from the definition of Licensed Patent Rights and from the
scope of this Agreement. Any such surrender shall not relieve LICENSEE of its
obligation to pay royalties due or accrued prior to the effective date of such
notice.
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15.4 Unless previously terminated in accordance with the
foregoing provisions of this Article 15.0 this Agreement and the licenses herein
granted to LICENSEE shall run to the full end of the term of the last expiring
patent included in Licensed Patent Rights.
16.0 RIGHT OF ASSIGNMENT
16.1 The obligations of LICENSEE hereunder, including the
obligation to report and pay royalties, shall run in favour of the successors
and assigns or other legal representatives of LICENSOR.
16.2 LICENSEE's rights under this Agreement and the licences
herein granted shall pass to any person, firm or corporation succeeding to its
business in products licensed hereunder as a result of sale, consolidation,
re-organisation or otherwise, provided such person, firm or corporation shall,
without delay, undertake directly with LICENSOR to comply with the provisions of
this Agreement and to become in all respects bound thereby in the place and
stead of LICENSEE.
17.0 LIMITATION OF LIABILITY
17.1 LICENSOR will use all reasonable endeavours to inform
LICENSEE of any allegation or claim that advice given by Professor Southern or
any other employee, agent or appointee of LICENSOR or UNIVERSITY who provides
consulting or advisory services under or pursuant to this Agreement constitutes
or results in infringement of third-party rights. However, LICENSOR makes no
representation or warranty that such infringement will not take place.
17.2 LICENSOR accepts no responsibility for any use which may
be made of Licensed Products or of any services carried out under or pursuant to
this Agreement, nor for any reliance which may be placed on such Products or
services, nor for advise or information given in connection with them.
17.3 LICENSEE undertakes to make no claim against Professor
Southern or any other employee, agent or appointee of LICENSOR or UNIVERSITY,
being a claim which seeks to enforce against any of them any liability
whatsoever in connection with this Agreement or its subject-matter.
17.4 The liability of either party for any breach of this
Agreement, or arising in any other way out of the subject-matter of this
Agreement, will not extend to any incidental or consequential damages or losses
including (without limitation) loss of profits.
17.5 In any event, the maximum liability of LICENSOR to
LICENSEE under or otherwise in connection with the Agreement or its
subject-matter shall not exceed the return of all monies paid by LICENSEE to
LICENSOR under this Agreement, together with interest on the balance of such
monies from time to time outstanding, accruing from day to day at the Barclays
Bank PLC base rate from time to time in force and compounded annually as at 31
December.
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<PAGE>
17.6 If any sub-paragraph of this Article 17.0 is held to be
invalid or unenforceable under any applicable statue or rule of law then it
shall be deemed to be omitted, and if as a result any party becomes liable for
loss or damage which would otherwise have been excluded then such liability
shall be subject to the remaining sub-paragraphs of this Article 17.0.
18.0 FORCE MAJEURE
18.1 If the performance by either party of any of its
obligations under this Agreement (other than an obligation to make payment)
shall be prevented by circumstances beyond its reasonable control, then such
party shall be excused from performance of that obligation for the duration of
the relevant event.
19.0 NOTICES
19.1 All notices provided for in this Agreement shall be in
writing and shall be considered delivered fourteen days after the date on which
they are deposited in the mail, air mail, postage prepaid, addressed to the
respective parties as follows:
If to LICENSOR: The Managing Director
Isis Innovation Limited
2 South Parks Road
Oxford OX1 3UB ENGLAND
Copy to: The Registrar
University of Oxford
University Offices
Wellington Square
Oxford OX1 2JD ENGLAND
If to LICENSEE: Beckman Instruments, Inc.
Bioanalytical Systems Group
2500 Harbor Boulevard
Fullerton
California 94304 U.S.A.
Attention: Legal Department
Copy to: Beckman Instruments, Inc.
2500 Harbor Boulevard
Fullerton
California 92634 U.S.A.
Attention: Legal Department
or to such other addresses as may be designated by the
respective parties in writing.
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<PAGE>
20.0 ARTICLES TITLES
20.1 The Article titles are for convenience only and shall not
be construed to limit or extend the meaning of any portion of this Agreement.
21.0 LAW GOVERNING AND CONSTRUCTION
21.1 This Agreement shall be governed by English Law. The
English Courts shall have exclusive jurisdiction to deal with any dispute which
has arisen or may arise out of or in connection with the Agreement, unless
LICENSOR voluntarily submits itself to the jurisdiction of some other tribunal.
22.0 ENTIRE AGREEMENT, MODIFICATION, ETC.
22.1 This Agreement contains the entire and only agreement
between the parties respecting the subject-matter hereof, supersedes all
previous negotiations, representations, undertakings and agreements, both
written and oral, heretofore made between the parties with respect to the
subject-matter hereof; and any representation, promise or condition in
connection herewith not specifically incorporated herein shall not be binding
upon either party. No modification, renewal, extension, waiver or cancellation,
and no termination, (except as provided in Article 15.0 hereof) of this
Agreement and any of the provisions herein contained shall be binding unless
signed by the party to be charged. As used in this Article 22.0 the word
"termination" includes any and all means of bringing to an end prior to its
expiration by its own terms this Agreement, or any provisions thereof, whether
by release, discharge, cancellation or otherwise.
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<PAGE>
23.0 EFFECTIVE DATE
23.1 The Effective Date of this Agreement is April 17, 1991.
IN WITNESS whereof, each of the parties hereto has caused this
Agreement to be executed by this duly-authorised executive officer.
EXHIBIT
R&D AGREEMENT
BECKMAN INSTRUMENTS, INC. ISIS INNOVATION LIMITED
By: By:
------------------------------ --------------------------------
16
<PAGE>
Exhibit 10.5
LICENSE AGREEMENT
License Agreement effective this _____ day of _____ 1998 ("Effective
Date") by and between AFFYMETRIX, INC. a ________________ corporation, having a
place of business at 3380 Central Expressway, Santa Clara, California 95051
("Affymetrix", as that term is more fully defined in Paragraph 1.2 hereof) and
LLC, a limited liability company formed under the laws of Delaware, having a
place of business at 4300 North Harbor Boulevard, Fullerton, California
92834-3100 ("Newco").
R E C I T A L S
I. LLC is an Affiliate (as that term is hereafter defined) of
Affymetrix and a joint venture of Affymetrix and Beckman Coulter, Inc. a
Delaware corporation ("BCI"). BCI, as successor in interest of Beckman
Instruments, Inc., is the licensee of that certain License Agreement revised on
April 17, 1996 by and between Beckman Instruments, Inc. and Isis Innovation
Limited (the "Isis License").
II. BCI, on even date herewith, in accordance with that certain Asset
Purchase Agreement attached hereto as Exhibit A (the "AP" Agreement), sold and
delivered to Affymetrix and Affymetrix purchased and took from BCI, all of the
right, title and interest in and to certain Acquired Assets, including the BCI
Technology (as those terms are defined in the AP Agreement) that BCI possessed
and had the right to transfer. Included within the BCI Technology was the Isis
License.
III. Part of the consideration for BCI's sale of the Acquired Assets to
Affymetrix under the AP Agreement was the establishment of LLC as an Affiliate
of Affymetrix and the licensing of LLC under certain of Affymetrix' now owned or
hereafter acquired applications for
<PAGE>
patent and patents relating to the making and using of Array Chips (as that term
is hereafter defined).
IV. Affymetrix desires to grant LLC licenses under certain of its now
owned or hereafter acquired applications for patent and patents relating to the
making and using of Array Chips and LLC desires to acquire such license.
V. NOW THEREFORE in consideration of the mutual understandings
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties intending to be
legally bound, agree as follows:
ARTICLE 1.0 DEFINITIONS
The following terms, when used herein with an initial capital letter
and without regard to whether they appear in the singular, plural or possessive
form, shall have the following defined meanings:
1.1 "AFFILIATE" shall mean any corporation or other form of limited
liability legal person, partnership, association, joint venture or other form of
business entity controlled by, controlling or under common control with a party
hereto. As used herein, the word and root "control" in the context of a
corporation shall mean the ownership, directly or indirectly, of more than fifty
percent (50%) of the voting shares or other equity interests entitled to vote in
the election of directors of the corporation; and, in the context of any other
form of business entity, the right to receive more than fifty percent (50%) of
the net profits of such entity and the right to a majority interest in the
management and control of such entity; provided that, notwithstanding the
foregoing definition, LLC may not have as an Affiliate entitled to receive the
benefits of the licenses granted under Section 3.1 hereof (a) a corporation
wherein any of the companies listed in Exhibit A is more than a passive investor
in such Affiliate and such passive
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<PAGE>
investor does not have the right to manage or control such Affiliate or (b) a
partnership wherein any of the companies listed in Exhibit A is a partner.
1.2 "AFFYMETRIX" shall mean Affymetrix, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.3 "ARRAY CHIPS" shall mean a series of polynucleotides arranged on a
substrate to perform quantitative or qualitative analyses.
1.4 "LLC" shall mean Beckman Coulter, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.5 "LLC ARRAY CHIP" shall mean an Array Chip which is sold or used by
LLC and, but for the licenses and rights granted herein, would infringe any
valid claim in an unexpired and non-lapsed patent in the Patent Rights.
1.6 "BACTERIOLOGY FIELD" shall mean and be limited to:
[ ](1)
1.7 "CLINICAL DIAGNOSIS" shall mean a process in which a sample of
fluid or other material collected from individual humans that is used to aid in
diagnosis of one or more human diseases, the results of such process used for
communication to such persons or their physicians or other caregivers for
clinical decisions in connection with such individual humans.
1.8 "EXPRESSION ANALYSES" shall mean an Array Chip used for
determination of the amount of one or more expressed messenger RNA in a sample.
1.9 "GENE" shall mean a nucleic acid sequence or set of sequences
encoding a distinct messenger nucleic acid and protein as well as polymorphic
variants of such sequence;
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE>
provided that, such polymorphic variants must have at least 99.9% homology with
the underlying gene.
1.10 "LICENSED PRODUCT" shall mean any LLC Array Chip or component
thereof or any product, kit, instrument or system which, but for the licenses
and rights granted herein, would infringe any valid claim in an unexpired and
non-lapsed patent in the Patent Rights.
1.11 "LICENSED PROCESS" shall mean any process, method or procedure the
practice or use of which, but for the licenses and rights granted herein, would
infringe any valid claim in an unexpired and non-lapsed patent in the Patent
Rights.
1.12 "NET SALES" shall mean the gross receipts of LLC from the sale of
LLC Array Chips to an unaffiliated third party, less those of the following
actually incurred by LLC as an element of such sales: transportation, special
packing and crating charges, insurance, custom duties, commissions, returns,
allowances in lieu of actual returned or rejected LLC Array Chips, sales, use
and turnover taxes, and trade, quantity, contract and cash discounts. The value
of LLC Array Chips transferred by LLC to unaffiliated third parties as free
samples or the use of LLC Array Chips by LLC for sales demonstration purposes or
for quality control or other internal, non-revenue generating purposes shall not
be included in the calculation of Net Sales.
In the event a LLC Array Chip is sold in combination with other
apparatus or products, as part of a kit, or in any other combination, and the
LLC Array Chip is not separately valued on the invoice or other document
evidencing such sale, the Net Sales of the LLC Array Chip shall be the then
current list price for the LLC Array Chip when sold separately or, in the
absence of such list price, shall be determined by multiplying the aggregate
selling price of the combination by a fraction the numerator of which shall be
LLC's standard costs for the LLC Array Chip and the
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<PAGE>
denominator of which shall be LLC's standard cost for the total combination at
the time of the sale. In the event that both the LLC Array Chip and other
product have separate list prices but are being sold at a combination price
which is less than the total of the separate list prices, then the Net Sales of
the LLC Array Chip shall be determined by multiplying the invoice price charged
for the combination by a fraction, the numerator of which is the list price of
the LLC Array Chip and the denominator of which is the sum of the list prices of
the LLC Array Chip and such other products.
1.13 "PATENT RIGHTS" shall mean all applications for patent (and any
continuation or continuation-in-part of such applications) and patents (and
reissues of such patents), filed or issued in any country of the world, (a)
now owned or controlled by Affymetrix or at any time during [ ]
(2) commencing with the Effective Date owned or controlled by Affymetrix and
(b) relating to or useful in the manufacture or use or processing of Array
Chips; provided that Patent Rights shall not include the specific claims of
any such applications or patents related to: (i) [ ],(3) or (ii) [ ]
,(4) or (iii) [ ],(5) or (iv) [ ],(6) or (v) [ ].(7) For purposes
of this definition, a patent or application for patent is controlled by
Affymetrix if Affymetrix is a licensee under such patent or application and
Affymetrix has the right to grant sublicenses to third parties, in each case
without regard to whether Affymetrix would thereby be responsible for
reporting to and/or paying royalties to such third party as a result or as a
consequence thereof or as a result
- -----------------
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
or consequence of LLC's use of such patent or application. If a patent or
application for patent is controlled by Affymetrix it shall be sublicensed to
LLC at the same royalty rate as Affymetrix pays to its licensor and subject to
the same restrictions and obligations as apply to Affymetrix promptly after
Affymetrix' acquisition of such control.
ARTICLE 2.0 REPRESENTATIONS AND WARRANTIES
Affymetrix represents and warrants that (a) it owns or otherwise has
the right to grant the licenses and rights provided for herein under all of the
applications or patents presently in the Patent Rights, and (b) it will use
commercially reasonable efforts to obtain the right in any license agreement it
hereafter enters with third parties to obtain rights to applications for patent
or patents of such third parties wherein the applications for patent or patent
are useful or necessary for making or using Array Chips and not subject to
exclusions (i)-(v) of the definition of Patent Rights, to pass such license on
to LLC under the same terms and conditions as those granted to Affymetrix by
such third parties.
ARTICLE 3.0 LICENSE GRANT
3.1 LICENSE GRANT - Subject to the remainder of this Paragraph 3.1,
Affymetrix hereby grants to LLC and LLC accepts a royalty bearing,
non-exclusive, world-wide right and license under the Patent Rights (without the
right to grant sublicenses) to (a) make, have made, import, use, sell, lease and
otherwise dispose of Licensed Products in all fields, uses and applications
except for the Bacteriology Field, (b) to practice Licensed Processes, and
(c) to pass on to its direct and indirect customers of Licensed Products the
right to practice Licensed Processes on any instrument or system distributed
by LLC under a LLC trademark. The foregoing license is subject to the
following provisos: (a) the exception as to the Bacteriology
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<PAGE>
Field shall be only for so long in time and only to the extent that
Affymetrix is excluded from granting licenses to others in such Field by the
license agreement with [ ](8) in effect as of the Effective Date; and (b) the
right to have Licensed Products made for LLC by third parties shall not
extend to any third party which Affymetrix has informed LLC is, at the time
of LLC's intention to use such third party as a supplier, an infringer of the
Patent Rights and against which Affymetrix is either in negotiation to grant
them a license or against which Affymetrix intends to bring litigation to
halt such infringement either within the next six (6) months or within six
(6) months of the conclusion of any pending litigation against another party
involving the Patent Rights, unless the third party intended supplier ceases
its infringement or takes a license from Affymetrix.
3.1.1 LLC shall notify Affymetrix in writing of any third
party that LLC intends to use as a supplier of LLC Array Chips under the license
of Paragraph 3.1. Affymetrix shall, not later than ten (10) business days after
receipt of such notice, inform LLC, in writing, whether such third party is an
infringer of the Patent Rights and Affymetrix is either in negotiation to grant
such third party a license or Affymetrix intends to bring litigation against
such third party to halt such infringement within the next six (6) months or
within six (6) months of the conclusion of any pending litigation against
another party involving the Patent Rights. If Affymetrix fails to provide such
notice then LLC may use such third party as a supplier of LLC Array Chips under
the license of Paragraph 3.1. If Affymetrix notifies LLC that such third party
is an infringer of the Patent rights but fails to grant a license within six (6)
months of such notice or to bring a lawsuit to halt such infringement within the
time periods of the second sentence
- ----------------
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7
<PAGE>
hereof, then LLC may use such third party as a supplier of LLC Array Chips under
the license of Paragraph 3.1.
3.2 PATENT MARKING - LLC shall attach a label or product insert on each
Licensed Product reasonably reflecting patent numbers of issued U.S. patents
covering such Licensed Product and owned by Affymetrix and will reasonably
modify such labels or inserts periodically at the direction of Affymetrix to add
or delete patent numbers.
3.3 NOTIFICATIONS OF NEW PATENT RIGHTS - Affymetrix shall on or about
each anniversary of this Agreement inform LLC of any U.S. patents which have
issued in the preceding twelve (12) months which fall within the definition of
Patent Rights of Paragraph 1.13 and each patent which is controlled by
Affymetrix wherein the agreement granting such control was signed in the
preceding twelve (12) months. Notwithstanding the foregoing or anything in this
License Agreement to the contrary, the failure of Affymetrix to notify LLC of an
addition to the Patent Rights in accordance with this Paragraph 3.3 shall have
no effect on the rights granted to LLC under Paragraph 3.1 and such applications
and patents shall be included in the Patent Rights without regard to whether LLC
does or does not receive such notice.
ARTICLE 4.0 ROYALTIES AND ROYALTY REPORTS
4.1 ROYALTIES - Subject to Paragraph 4.2 and Paragraphs 4.1.1, LLC
shall pay Affymetrix for all of the licenses and rights granted under this
License Agreement, a running royalty of [ ](9) on each LLC Array Chip
used for Expression Analysis and [ ](10) for all other LLC Array Chips,
in each case sold by LLC to an unaffiliated third party or used by LLC on
behalf of an unaffiliated third party. No
- ----------------
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8
<PAGE>
royalty shall be due from LLC to Affymetrix for LLC Array Chips which are: (a)
transferred by LLC to an unaffiliated third party as free samples, or (b) used
by LLC for sales demonstration purposes, or (c) used by LLC for quality control,
testing or any other internal, non-revenue generating purposes.
4.1.1 The royalty of Paragraph 4.1.1 for a LLC Array Chip
used for Expression Analysis shall be the applicable royalty to be paid to
Affymetrix only so long as such royalty, when converted to a percentage of
the actual market selling price (to distributors or end users) of an Array
Chip which is competitive with such LLC Assay Chip and is sold by a party
other than LLC (which party is not infringing the intellectual property
rights of Affymetrix without a license from Affymetrix where Affymetrix is
using reasonable efforts to enforce its patent rights against such party
through litigation) is less than [ ](11). In such event, LLC may require
that the basis of paying royalties be converted from the foregoing fixed
amount of [ ](12) to a percentage [ ](13). LLC shall notify
Affymetrix, in writing, of the occurrence of such event and that the
mechanism described in this Paragraph 4.1.1 should be invoked with respect to
a LLC Array Chip. The parties shall promptly meet and use their best efforts
to negotiate as to whether adjustment in the royalty rate is appropriate, and
if appropriate such new royalty rate. If the parties cannot agree within
ninety (90) days of such notice, all royalties in excess of [ ](14) shall
be placed in escrow and the matter shall be submitted to arbitration for
resolution pursuant to Paragraph 13.2 below. The parties agree that the
following is an
- -----------------
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(14) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
9
<PAGE>
illustration of their intent: If LLC is selling an Array Chip with [ ]
(15), the royalty due to Affymetrix for that LLC Array Chip would be [ ]
(16). If Affymetrix or a third party is selling an Array Chip which is
competitive with the LLC Array Chip at a price to distributors or end users
of [ ](17) the royalty rate paid by LLC, [ ](18) of the
competitive Array Chip would be [ ](19) and there would be no adjustment
in the royalty basis. If the competitive Array Chip is actually selling for
[ ](20) the royalty rate paid by LLC, [ ](21) Array Chip
would be [ ](22) and LLC may require conversion of the royalty for the
LLC Array Chip [ ](23) (not to exceed [ ](24) of such LLC
Array Chip. For purposes of this Paragraph an Array Chip is competitive with
a LLC Array Chip if such Array Chip is directed to the same or substantially
the same set [ ](25) as the LLC Array Chip. If the parties
cannot agree to a royalty percentage, the issue will be submitted to
arbitration in accordance with Article 13.0 hereof.
4.1.2 The royalties herein assume that profits by LLC in association with Array
Chips sales are primarily or exclusively derived from sales of Array Chips. In
the event that material profits are derived primarily from other sources (such
as associated reagent sales),
- ------------------
(15) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(16) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(17) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(18) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(19) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(20) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(21) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(22) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(23) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(24) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(25) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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the parties shall promptly meet and use their best efforts to negotiate an
alternative definition of Net Sales to account for such sales.
4.2 ROYALTY STACKING - If, at any time during the life of this
License Agreement, LLC discovers that any LLC Array Chip or the use thereof
infringes claims of an unexpired patent or patents other than those in the
Patent Rights LLC may, if it has not already done so, negotiate with the
owner of such patents for a license on such terms as LLC deems appropriate.
Should the license with the owner of such patents require the payment of
royalties or other consideration to such owner then the royalties otherwise
payable under this License Agreement shall be reduced [ ](26) based on
the value of the patents other than those in the Patent Rights relative to
the Patent Rights licensed under this Agreement. The parties shall meet
promptly after LLC takes the license under such other patents to agree on the
relative value of such patents and the amount of royalty reduction. If the
parties cannot agree the issue may be submitted to arbitration in accordance
with Article 13.0 hereof.
4.3 ROYALTY REPORTS - LLC shall, commencing with the calendar quarter
which includes its first sale of a LLC Array Chip and each calendar quarter
thereafter, not later than forty-five (45) days after the close of its
accounting books and records for such quarter, provide to Affymetrix an
accounting report of the type and quantity of each LLC Array Chip sold by LLC
during such calendar quarter and the Net Sales received therefrom. The royalty
due and payable to Affymetrix shall accompany such report.
4.4 BOOKS AND RECORDS - LLC shall keep or cause to be kept books,
records and accounts in accordance with generally accepted accounting principles
consistently applied covering LLC's activities hereunder and containing all
information necessary for the true and
- ---------------
(26) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
<PAGE>
accurate determination of the amounts earned and paid hereunder. LLC shall, not
more than once per year and upon prior reasonable written notice from
Affymetrix, permit a certified public accountant appointed and paid for by
Affymetrix (the "Auditor") and reasonably acceptable to LLC to inspect each LLC
facility manufacturing LLC Array Chips and to review the previous two (2) years
books, records and accounts to verify the amounts earned by Affymetrix and paid
by LLC hereunder. The Auditors shall furnish to both parties reports stating
only its findings during such inspection as to the accuracy, or the nature and
extent of any inaccuracy of such books, records, accounts and payments.
4.4.1 Any deficiency identified by the Auditor between the
amounts actually earned by Affymetrix under this Article 4.0 and the amounts
reported to be earned and paid on by LLC in accordance with Paragraph 4.3
hereof shall, unless disputed by LLC, be paid to Affymetrix within thirty
(30) days of receipt by LLC of the Auditor's report. LLC shall also pay
interest on the undisputed amount at the rate of [ ](27) per month. The
parties agree to diligently negotiate and promptly settle any disputes as to
the amount of royalties earned by Affymetrix and payable by LLC hereunder. If
the deficiency between the amount actually due to Affymetrix as reported by
the Auditor and the amount actually paid to Affymetrix by LLC is greater than
[ ](28) in Affymetrix' favor then LLC shall reimburse Affymetrix for the
actual and reasonable expenses of the Auditor.
4.5 TAXES ON ROYALTIES - All payments provided for in this License
Agreement refer to lawful money of the United States of America. All payments
shall be made by LLC to Affymetrix at the office of Affymetrix designated above
and shall be made
- ------------------
(27) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(28) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
12
<PAGE>
in the full amounts as herein specified; provided, however, that deduction may
be made from such payments by LLC for amounts required to be withheld and paid
by LLC in respect of any income tax levied or assessed upon such payments by,
and in accordance with the laws of, any foreign government or taxing authority.
Affymetrix shall have the right at any time or from time-to-time to contest by
appropriate proceedings the validity or amount of any such income tax withheld.
If so requested by Affymetrix, LLC will make such payments under protest, and,
on behalf and at the expense of Affymetrix, take such other action and render
all reasonable assistance that may be required by Affymetrix in the prosecution
of any such proceedings. LLC will obtain and forward to Affymetrix tax credit
receipts or vouchers for all income taxes thus withheld and paid by LLC.
4.6 ROYALTIES EARNED IN FOREIGN CURRENCY - In the event that either Net
Sales or the royalties set forth above are initially calculated in a foreign
currency, conversion shall be made in each instance by employing the closing
transfer buying rate for United States dollars quoted by the Wall Street
Journal, for the last business day of the calendar quarter which the payment
covers; provided, however, that if a foreign currency not listed in the Wall
Street Journal is involved, then the closing transfer buying rate quoted by
Citibank (New York) shall be employed in effecting such conversion thereof.
ARTICLE 5.0 CONSTRUCTION OF PATENTS
If a judgment or decree is entered, which becomes final through the
exhaustion of all permissible applications for rehearing or review by a superior
tribunal, or through the expiration of the time permitted for such applications
(hereinafter referred to as an "irrevocable judgment"), on the validity, scope,
enforceability or priority of any claim or claims of any patent or patent
application included in the Patent Rights the construction placed upon any
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<PAGE>
such claim or claims by such irrevocable judgment shall be thereafter followed
with respect to acts occurring thereafter.
If such irrevocable judgment holds any claim in the Patent Rights
invalid or unenforceable or is adverse to the patent in the Patent Rights
containing such claim as to inventorship, or construes all applicable claims in
a patent in the Patent Rights so as not to cover one or more LLC Array Chips,
LLC shall be relieved thereafter from payment of royalties under Article 4.0
hereof, as to such LLC Array Chips sold after the date of such irrevocable
judgment covered only by such claim or claims to which such irrevocable judgment
is applicable, and from the performance of those other acts which may be
required by this License Agreement only as to such claim or claims.
ARTICLE 6.0 PROSECUTION OF INFRINGERS
If LLC determines that a third party is infringing a claim of a patent
in the Patent Rights by making, using or selling a product which competes with a
LLC Array Chip then being sold by LLC, it shall notify Affymetrix thereof in
writing. Such notice shall include information in LLC's possession relevant to
such third party and the competing product. Affymetrix shall have ninety (90)
days in which to either obtain the consent of such third party to discontinue
such infringement or to exercise its right to bring an action to cause such
infringement to cease. Affymetrix shall have no obligation to bring an action
for infringement; provided however, if Affymetrix does not obtain the consent of
such third party to cease infringement or does not bring suit against the third
party under the patent, then LLC shall have the right to discontinue paying
royalties under the effected patent for LLC Array Chips until either the third
party discontinues its infringing activity or Affymetrix brings a lawsuit
against the third party for such infringement.
14
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ARTICLE 7.0 TERM AND TERMINATION
7.1 TERMINATION BY AFFYMETRIX - If LLC shall at any time be in material
breach of this License Agreement, including but not limited to, default on any
payment hereunder, or of the making of any report hereunder, or shall make any
materially false report and should fail to remedy such material breach within
sixty (60) days after written notice thereof by Affymetrix, the latter may, at
its option, terminate this License Agreement by notice to such effect, provided
that such termination shall not release LLC from its obligation to pay
Affymetrix royalties or other sums due and accrued prior to the date of such
termination.
7.2 TERMINATION BY LLC - LLC shall have the right upon three (3) months
prior written notice to Affymetrix to terminate this License Agreement in its
entirety, such surrender being operative to relieve LLC, as of the effective
date of said notice, of all obligation to pay royalties which would otherwise
have accrued thereafter pursuant to this Agreement. Such termination or
surrender shall not relieve LLC of its obligation to pay royalties or other sums
due and accrued prior to the effective date of such notice.
7.3 TERM - Unless previously terminated as provided herein, the life of
this License Agreement and the license granted herein shall run from the
Effective Date to the end of the term of the last expiring patent now or
hereafter included in the Patent Rights.
7.4 CONTESTING VALIDITY - In the event that LLC or its Affiliates
contests the validity of one or more of the licensed patents or applications
within the Patent Rights, the licenses to such patents or applications (and no
others) shall immediately terminate.
ARTICLE 8.0 EXERCISE OF RIGHTS
The failure by one of the parties under this License Agreement to
assert its rights for any breach of this License Agreement shall not be deemed a
waiver of such rights. The rights and
15
<PAGE>
remedies specified herein, except those specified as exclusive, are in addition
to and shall not restrict any right or remedy either party may have at law or in
equity for any breach of this License Agreement.
ARTICLE 9.0 ASSIGNMENT
LLC may not assign this License Agreement in whole or in part without
obtaining the prior written approval of Affymetrix, except that LLC shall have
the right to assign this License Agreement without the consent of Affymetrix to
any Affiliate and to any successor of its entire business or all or
substantially all of the assets of its entire business; provided that LLC may
not sell such Affiliate or its assets other than as part of a transaction
involving LLC as a whole so long as the assets of such Affiliate include this
License Agreement.
ARTICLE 10.0 [ ](29) LICENSEE
[ ].(30)
ARTICLE 11.0 NOTICES
All notice and payments required or permitted to be given hereunder
shall be in writing and addressed to the respective parties as follows:
If to Affymetrix: Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention: ____________________
If to LLC: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attention: President
With a copy to: Beckman Coulter, Inc.
- ----------------
(29) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(30) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
16
<PAGE>
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attention: General Counsel
or such other addresses as may be designated by the respective parties in
writing. A notice shall be deemed given the earlier of the date when actually
received if sent by messenger or facsimile (with notice of receipt in good order
requested and received) or three (3) days after deposit in the United States
registered or certified mail, postage prepaid, and properly addressed.
ARTICLE 12.0 SECTION HEADINGS
Section headings are for convenience only and shall not be construed to
limit or extend the meaning of any portion of this License Agreement.
ARTICLE 13.0 LAW GOVERNING AND CONSTRUCTIONS
13.1 APPLICABLE LAW - This License Agreement shall be governed by and
construed in accordance with the laws of the State of California as if it has
been delivered in California, and all acts performed or required to be performed
hereunder have been performed entirely within such state, not including, however
any conflicts of law rule of California which may direct or refer such
determination to the laws of any other state or country. Neither party shall be
entitled to nor request injunctive or other equitable relief prior to
adjudication on the merits.
13.2 MEDIATION AND ARBITRATION - Any controversy or conflict involving
this License Agreement, its interpretation or the respective rights or
obligations of the parties shall first be submitted to their respective
Vice-Presidents for resolution. If they cannot agree, the controversy shall be
submitted to mediation to be held in a mutually agreeable neutral place. If the
parties still cannot settle the controversy or reach an accommodation, the
matter shall be
17
<PAGE>
submitted to binding arbitration to be conducted in California at a location to
be mutually agreed in accordance with the following rules:
(a) There shall be a panel of three (3) arbitrators, all of
whom shall be lawyers and at least two (2) of which shall be competent to fully
understand the technology relating to Array Chips. If the parties cannot agree
on the selection of the three (3) then each shall pick one (1) arbitrator and
the two (2) so chosen shall select the third.
(b) All disputes which are not specifically raised by the
parties in the arbitration process shall be forever waived.
(c) The arbitration proceeding shall be governed by (i) the
rules and understandings set forth in this Paragraph 13.2 or as hereafter agreed
upon in writing by the parties, and (ii) to the extent not inconsistent with
such rules and understandings, by the Commercial Arbitration Rules of the
American Arbitration Association.
(d) The parties agree to refrain from filing a lawsuit with
regard to any aspect of their controversy and to abide by and perform any award
rendered by the arbitrators. The parties further agree that a judgment of a
Court having jurisdiction may be entered upon the award and an execution may be
issued for its collection.
(e) At least two (2) of the panel of arbitrators must agree on
each point in controversy for an award to be rendered.
(f) The arbitration hearing shall be convened within
forty-five (45) days of request therefor by either party. The request shall be
in writing and sent in accordance with Article 11.0. The hearing shall be
limited to three days: Each party shall have a maximum of eight (8) hours to put
on its main case and four (4) hours for rebuttal. Neither party shall
18
<PAGE>
engage in extended cross-examination or other tactics which have the effect of
substantially altering this allocation.
(g) The parties agree to exchange all documents they intend to
produce at the hearing at least thirty (30) days in advance of the opening of
the arbitration hearing. There will be no taking of depositions, service of
interrogatories or any other form of discovery other than producing documents
relevant to the proceedings and neither party may compel the appearance of the
other party's employees, officers, directors or consultants.
(h) The arbitrator's decision must be rendered within thirty
(30) days after completion of the arbitration hearing.
(i) A transcript may, at the option of the parties, be made.
Either party may, at its expense, tape record or video tape the proceedings.
(j) All applicable common law or statutory privileges such as
attorney-client or attorney work product shall be applicable to the arbitration
proceedings.
(k) Either party may, at its option, use prepared testimony as
long as the witness whose testimony is so presented is available to the other
party for cross-examination.
(l) Each party shall bear its own expenses for the arbitration
and they shall each share equally in the expenses and fees of the arbitration
panel.
ARTICLE 14.0 MISCELLANEOUS
14.1 Nothing in this License Agreement shall be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto without
the express written approval of the other party.
19
<PAGE>
14.2 Affymetrix makes no warranties as to the validity or scope of any
of the Patent Rights, or that any manufacture, sale, use, or other disposition
of the products licensed hereunder will be free from infringement of patents,
utility models, and/or design patents of third parties. Nothing in this License
Agreement shall be considered as conferring any warranty or representation as to
the usefulness, marketability, or merchantability of any products sold within
the scope of the licenses hereunder. Affymetrix and LLC agree to hold the other
harmless from any personal injury or products liability claims made as a result
of the sale of products licensed hereunder.
14.3 The Parties will retain the terms of this License Agreement in
strict confidence, except as may be required by regulatory agencies or courts,
and will then use all reasonable precautions to maintain the terms of this
License Agreement confidential.
14.4 LLC and Affymetrix represents that they are familiar with the
Export Administration Regulations comprising the compilation of official
regulations and policies governing the export licensing of commodities and
technical data promulgated by the United States Department of Commerce, Bureau
of International Commerce, Office of Export Administration. Notwithstanding any
other provisions of this License Agreement, and each assures the other that with
respect to all information and licenses furnished by or under this License
Agreement, that it will comply with such official regulations.
14.5 In the event that any provision of this License Agreement is held
invalid or unenforceable for any reason, such unenforceability shall not affect
the enforceability of the remaining provisions of this License Agreement, and
all provisions of this License Agreement shall be construed so as to preserve
the enforceability hereof.
20
<PAGE>
14.6 This License Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14.7 This License Agreement has been drafted on the basis of mutual
understanding after considerable negotiation and neither party shall be
prejudiced as being the drafter thereof.
ARTICLE 15.0 ENTIRE AGREEMENT, MODIFICATIONS, ETC.
This instrument contains the entire and only agreement between the
parties relative to the subject matter hereof and supersedes all previous
negotiations, representations, undertakings and agreements both written and oral
heretofore made between the parties as to the subject matter. Any
representation, promise or condition in connection herewith not specifically
incorporated herein shall not be binding upon either party.
No modification, renewal, extension, waiver, cancellation or
termination of this License Agreement or of any of the provisions herein
contained shall be valid until and unless made in writing and signed on behalf
of the respective parties by duly authorized officers thereof.
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IN WITNESS WHEREOF, the parties have respectively caused this License
Agreement to be executed on the dates hereinafter indicated.
Beckman Coulter, Inc. Affymetrix, Inc.
By: By:
------------------------ -------------------------
Title: Title:
--------------------- ----------------------
Date: Date:
---------------------- -----------------------
<PAGE>
Exhibit A
The following companies and their subsidiaries and Affiliates:
[ ](31)
-------------------------
[ ](32)
-------------------------
[ ](33)
-------------------------
[ ](34)
-------------------------
[ ](35)
-------------------------
[ ](36)
-------------------------
[ ](37)
-------------------------
[ ](38)
-------------------------
- -----------------
(31) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(32) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(33) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(34) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(35) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(36) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(37) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(38) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
Exhibit 10.6
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
[NAME NEEDED], LLC
a Delaware limited liability company
Dated as of ___________, 1998
<PAGE>
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
[NAME NEEDED], LLC
PREAMBLE
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is
made and entered into and effective as of the ____ day of _____________, 1998,
by and among Beckman Coulter, Inc., a Delaware corporation ("BCI") , and
Affymetrix, Inc., a _____________ corporation ("Affymetrix") (together, the
"Members"), for the purpose of forming [NAME NEEDED], LLC (the "Company"), a
limited liability company organized under the Delaware Limited Liability Company
Act (the "Act").
ARTICLE I
ORGANIZATIONAL MATTERS
SECTION 1.1 FORMATION. The Members hereby form the Company
under the Act for the purposes and upon the terms and conditions hereinafter set
forth. The rights and liabilities of the Members and of the Members of the Board
of the Company shall be as provided in the Act, except as otherwise expressly
provided herein or in the Certificate. In the event of any inconsistency between
any terms and conditions contained in this Agreement and any non-mandatory
provisions of the Act, the terms and conditions contained in this Agreement
shall govern.
SECTION 1.2 NAME. The name of the Company shall be "[NAME
NEEDED], LLC" The Company may also conduct business at the same time under one
or more fictitious names if the Board determines that such is in the best
interests of the Company. The Board may, from time to time, change the name of
the Company in accordance with the Act and other applicable law.
SECTION 1.3 PRINCIPAL PLACE OF BUSINESS; OTHER PLACES OF
BUSINESS. The principal place of business of the Company is located at 4300 N.
Harbor Boulevard, Fullerton, California 92834-3100, or such other place within
or without the State of Delaware as the Board may from time to time designate.
The Company may maintain offices and places of business at such other place or
places within or outside the State of Delaware as the Board deems advisable.
SECTION 1.4 BUSINESS PURPOSE. The Company may (i) engage in
the business of conducting research, and developing, creating, implementing,
promoting, and marketing products and services in the fields [ ](1)
and, in connection therewith, (ii) make, have made, import, use, sell and
distribute arrays of polynucleotide sequences for all fields, uses and
applications, and systems, instruments, kits, and consumables for use
therewith, and (iii) subject to and in accordance with the terms of this
Agreement do any thing necessary and incidental to the foregoing practices,
uses, and applications.
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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SECTION 1.5 SPECIFIED PURPOSE. The Company shall be a limited
liability company and its sole purposes shall be those specified in Section 1.4,
and this Agreement shall not be deemed to create a company, venture, or
partnership between or among the Members with respect to any other activities
whatsoever. Except as otherwise provided in this Agreement, no Member shall have
any authority to act for, bind, commit, or assume any obligation or
responsibility on behalf of the Company, its properties, or any other Member.
SECTION 1.6 CERTIFICATE OF FORMATION; FILINGS. The Board shall
cause to be executed and filed a Certificate of Formation in the Office of the
Secretary of State of the State of Delaware as required by the Act. The Board
may cause to be executed and filed any duly authorized amendments to the
Certificate from time to time in a form prescribed by the Act.
SECTION 1.7 FICTITIOUS BUSINESS NAME STATEMENTS. Following the
execution of this Agreement, fictitious business name statements shall be filed
and published when and if the Board determines it necessary. Any such statement
shall be renewed as required by applicable law.
SECTION 1.8 REGISTERED OFFICE; DESIGNATED AGENT FOR SERVICE OF
PROCESS. The address of the registered office of the Company in the State of
Delaware is located at 1013 Centre Road, Wilmington, Delaware 19805, and the
registered agent for service of process on the Company in the State of Delaware
at such registered office is The Prentice-Hall Corporation System, Inc. The
Company will continuously maintain a registered office for, and a designated and
duly qualified agent for service of process on, the Company in the State of
Delaware.
SECTION 1.9 TERM. The Company shall commence on the date that
the Certificate is filed with the Office of the Delaware Secretary of State, and
shall continue until terminated pursuant to this Agreement.
SECTION 1.10 LIMITATION ON LIABILITY. Except as otherwise
provided by the Act or as otherwise expressly set forth herein, the debts,
obligations, and liabilities of the Company, whether arising in contract, tort,
or otherwise, shall be solely the debts, obligations, and liabilities of the
Company, and no Member, Board Member, officer (if any be appointed), or agent of
the Company shall be obligated personally for any such debt, obligation, or
liability of the Company solely by reason of being a Member of the Company or
acting as a Board Member, officer, or agent of the Company.
ARTICLE II
DEFINITIONS
The following capitalized words and phrases used in this
Agreement shall have the following meanings:
"ACT" is defined in the Preamble.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the following
adjustments:
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(a) Add to such Capital Account the following items:
(i) The amount, if any, that such Member is obligated to
contribute to the Company upon liquidation of such Member's Membership Interest;
and
(ii) The amount that such Member is obligated to restore
or is deemed to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Subtract from such Capital Account such Member's share of
the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and
(6).
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"AFFILIATE" means, with reference to a specified Person, a
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person. For purposes of the foregoing definition, the word and root "control",
in the context of a limited liability entity, such as a corporation or limited
liability company, means the ownership, directly or indirectly, of more than
fifty percent (50%) of the voting shares or other interests, however designated,
entitled to vote for members of the board of directors, management committee, or
other principal governing body of the organization with direct fiduciary duties
to the owners of the entity, however designated. For purposes of the foregoing
definition, the word and root "control", in the context of a limited liability
business enterprise that is a pass-through entity for tax purposes, such as a
partnership, joint venture, or limited liability company, also means the right
to receive at least fifty percent (50%) of the net proceeds of such enterprise.
"AFFYMETRIX" shall mean Affymetrix, Inc., a California
corporation.
"AGREEMENT" is defined in the Preamble.
"ASSIGNEE" means a Person to whom one or more Units have been
Transferred as permitted under this Agreement, but who has not become a
Substituted Member.
"BOARD" means the Board of Directors of the Company, who have
the sole and complete charge of the affairs of the Company.
"BOARD MEMBER" means a duly elected or appointed member of the
Board.
"BCI" shall mean Beckman Coulter, Inc., a Delaware
corporation.
"CAPITAL ACCOUNT" means the Capital Account maintained for
each Member on the Company's books and records in accordance with the following
provisions:
(a) To each Member's Capital Account there shall be added (a)
such Member's Capital Contributions, (b) such Member's allocable share of Net
Profits and any items
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in the nature of income or gain that are specially allocated to such Member
pursuant to Article 5 hereof or other provisions of this Agreement, and (c) the
amount of any Company liabilities assumed by such Member or that are secured by
any property distributed by the Company to such Member, calculated by reference
to Code Section 752.
(b) From each Member's Capital Account there shall be
subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any
Company Property (other than cash) distributed to such Member (other than any
payment of principal and/or interest to such Member pursuant to the terms of a
loan made by such Member to the Company) pursuant to any provision of this
Agreement, (b) such Member's allocable share of Net Losses and any other items
in the nature of expenses or losses that are specially allocated to such Member
pursuant to Article 5 hereof or other provisions of this Agreement, and (c)
liabilities of such Member assumed by the Company or that are secured by any
property contributed by such Member to the Company, calculated by reference to
Code Section 752. With respect to distributions of Company Property, Capital
Accounts shall first be adjusted to reflect the manner in which the unrealized
income, gain, loss, and deduction inherent in such property (that has not been
previously reflected in Capital Accounts) would be allocated, pursuant to
Article 5 hereof, to the Members if there were a taxable disposition of such
property for its fair market value (taking Code Section 7701(g) into account) on
the date of distribution.
(c) In the event that any interest in the Company is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that such Capital
Account relates to the transferred interest.
(d) The Board, in its discretion and in accordance with the
Code and Regulations, may increase or decrease the Capital Accounts of the
Members to reflect a revaluation of Company Property on the Company's books and
records. Any such adjustments shall be made in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g).
(e) Additional adjustments shall be made to the Members'
Capital Accounts as required by Regulations Sections 1.704-1(b) and 1.704-2 or,
as permitted but not required, in the discretion of the Board. Adjustments to
Capital Accounts in respect to Company income, gain, loss, deduction, and
non-deductible expenditures (or any item thereof) shall be made with reference
to the federal tax treatment of such items (and, in the case of book items, with
reference to federal tax treatment of the corresponding tax items) at the
Company level, without regard to any requisite or elective tax treatment of such
items at the Member level.
(f) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and
applied in a manner consistent with such Regulations. In the event that the
Board shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any additions or subtractions thereto, are computed in
order to comply with such Regulations, the Board may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Member pursuant to Article 11 hereof upon the dissolution
of the Company. The Board shall also make (a) any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Members
and the amount of Company capital reflected on the Company's balance sheet,
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as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in the event that
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
"CAPITAL CONTRIBUTIONS" means, with respect to any Member, the
initial Gross Asset Value of property (other than money) contributed to the
capital of the Company by such Member, whether as an initial Capital
Contribution or as an additional Capital Contribution.
"CASH AVAILABLE FOR DISTRIBUTION" means, with respect to any
fiscal year or other period, all Company cash receipts (but excluding any
proceeds from a Terminating Capital Transaction), after deducting payments for
operating cash expenses, debt service, capital expenditures, and any other
amounts set aside for the restoration, increase, or creation of reasonable
Reserves.
"CERTIFICATE" means the certificate of formation of the
Company filed under the Act in the Office of the Secretary of State of the State
of Delaware for the purpose of forming the Company as a Delaware limited
liability company, and includes any duly executed and filed amendments.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
"COMPANY" is defined in the Preamble.
"COMPANY MINIMUM GAIN" has the meaning set forth in
Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase "partnership
minimum gain."
"COMPANY PROPERTY" means all direct and indirect interests in
real and personal property owned by the Company from time to time, and shall
include both tangible and intangible property (including cash and intellectual
property).
"DEPRECIATION" means, for each fiscal year or other period, an
amount equal to the federal income tax depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such year or other
period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such fiscal
year or other period, Depreciation shall be an amount that bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such fiscal year or other
period bears to such beginning adjusted tax basis; provided, however, that if
the federal income tax depreciation, amortization, or other cost recovery
deduction for such fiscal year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by Board.
"ECONOMIC INTEREST" means a Person's right to share in the Net
Profits, Net Losses, or similar items of, and to receive distributions from, the
Company, but does not include any other rights of a Member, including, without
limitation, the right to vote or to participate in the management of the
Company, or, except as specifically provided in this Agreement or
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required under the Act, any right to information concerning the business and
affairs of the Company.
"GAAP" shall mean generally accepted accounting principals.
"GROSS ASSET VALUE" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such asset, as
determined by the Board and the contributing Member.
(b) The Gross Asset Values of all Company assets immediately
prior to the occurrence of any event described in subsection (a), subsection
(b), subsection (c), or subsection (d) below shall be adjusted to equal their
respective gross fair market values, as determined by the Board using such
reasonable method of valuation as it may adopt, as of the following times:
(i) the acquisition of an additional interest in the
Company (other than in connection with the execution of this Agreement) by a new
or existing Member in exchange for more than a de minimis Capital Contribution,
if the Board reasonably determines that such adjustment is necessary or
appropriate to reflect the relative Economic Interests of the Members in the
Company;
(ii) the distribution by the Company to a Member of more
than a de minimis amount of Company Property as consideration for an interest in
the Company, if the Board reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic interests of the
Members in the Company;
(iii) the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv) at such other times as the Board shall reasonably
determine necessary or advisable in order to comply with Regulations Sections
1.704-1(b) and 1.704-2.
(c) The Gross Asset Value of any Company asset distributed to
a Member shall be the gross fair market value of such asset on the date of
distribution as determined by the Board.
(d) The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the Board reasonably determines that an
adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).
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(e) If the Gross Asset Value of a Company asset has been
determined or adjusted pursuant to subsection (a), subsection (b), or subsection
(d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Profits and Net Losses.
"IMMEDIATE FAMILY" means, and is limited to, an individual
Member's current spouse, parents, current parents-in-law, grandparents,
children, siblings, and grandchildren, or a trust or estate all of the
beneficiaries of which consist of such Member or members of such Member's
Immediate Family.
"INDEMNITEE" is defined in Section 6.8 hereof.
"ISIS AGREEMENT" shall mean that certain Agreement between
BCI and Isis Innovation Limited, revised as of April 17, 1996.
"MAJORITY IN INTEREST" means Members holding in the aggregate
greater than two-thirds (2/3) of the aggregate outstanding Units.
"MANAGEMENT COMPANY" means the Person selected by the Board to
operate the Company pursuant to the Management Agreement to be entered into
between the Board and the Management Company.
"MEMBER" means a Person who owns Units representing a
Membership Interest, including an Assignee of a Membership Interest, but not
merely of an Economic Interest, and who has been duly admitted as a member of
the Company. Initially, the Members shall be the Persons subscribing to this
Agreement as set forth in Exhibit "A" hereof.
"MEMBER MINIMUM GAIN" means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Regulations Section 1.704-2(i) with respect to "partner
minimum gain."
"MEMBER NONRECOURSE DEBT" has the meaning set forth in
Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i) for the phrase "partner nonrecourse deductions."
"MEMBERSHIP INTEREST" means the entire ownership interest of a
Member in the Company at any particular time, including, without limitation, the
Member's Economic Interest, any and all rights to vote and otherwise participate
in the Company's affairs, and the rights to any and all benefits to which a
Member may be entitled as provided in this Agreement or by law, together with
the obligations of such Member to comply with all of the terms and provisions of
this Agreement or law.
"NET PROFITS" or "NET LOSSES" means, for each fiscal year or
other period, an amount equal to the Company's taxable income or loss for such
fiscal year or other period determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain,
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loss, or deduction required to be stated separately pursuant to Code Section
703(a)(1) shall be included in taxable income or loss), with the following
adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this definition shall be added to such taxable income or
loss;
(b) Any expenditure of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Profits or Net Losses pursuant to this definition, shall be
subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company
Property where such gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the Company Property
disposed of, notwithstanding that the adjusted tax basis of such Company
Property differs from its Gross Asset Value;
(d) In lieu of depreciation, amortization, or cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such taxable year;
(e) To the extent an adjustment to the adjusted tax basis
of any asset included in Company Property pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining capital
accounts as a result of a distribution other than in liquidation of a
Member's Membership Interest, the amount of such adjustment shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for the purposes of
computing Net Profits and Net Losses;
(f) If the Gross Asset Value of any Company Property is
adjusted in accordance with the terms of this Agreement, the amount of such
adjustment shall be taken into account in the taxable year of such adjustment as
gain or loss from the disposition of such asset for purposes of computing Net
Profits or Net Losses; and
(g) Notwithstanding any other provision of this definition,
any items that are specially allocated pursuant to Section 5.2 hereof shall not
be taken into account in computing Net Profits or Net Losses.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Sections 1.704-2(b)(1) and 1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in
Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).
"PERCENTAGE INTEREST" means, with respect to each Member, the
percentage set forth opposite such Member's name on Exhibit "A" attached hereto
as it may be amended or supplemented from time to time.
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"PERSON" means and includes an individual, a corporation, a
partnership, a joint venture, a limited liability company, a trust, an
unincorporated organization, a government or any department or agency thereof,
or any entity similar to any of the foregoing.
"QUALIFIED TRANSFEREE" means (i) an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act or (ii) a Person who is
acquiring its Membership Interest in a transaction that does not constitute a
"sale" within the meaning of Section 2(3) of the Securities Act.
"RECOURSE LIABILITY" has the meaning set forth in Regulations
Section 1.752-1(a)(1).
"REGULATIONS" means proposed, temporary, and final Treasury
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding Treasury
Regulations).
"REGULATORY ALLOCATIONS" is defined in Section 5.2.(j) hereof.
"RESERVES" means, with respect to any fiscal year or other
period, funds set aside or amounts allocated during such period to reserves that
shall be maintained in amounts deemed sufficient by the Board for working
capital, to pay taxes, insurance, debt service and other costs or expenses
incident to the ownership of the Company Property and the conduct of business by
the Company as contemplated hereunder.
"RESPONSIBLE PARTY" is defined in Section 6.8(h) hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SUBSTITUTED MEMBER" means an Assignee who is admitted as a
Member to the Company pursuant to Section 9.3 hereof.
"TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Company or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Company.
"TRANSFER" means, with respect to any interest in the Company
(including, without limitation, any part of a Membership Interest), a sale,
conveyance, exchange, assignment, pledge, encumbrance, gift, bequest,
hypothecation, or other transfer or disposition by any other means, whether for
value or no value and whether voluntary or involuntary (including, without
limitation, by operation of law), or an agreement to do any of the foregoing.
"UNIT" means a _____% fractional share of the Membership
Interests of all Members issued pursuant to Section 3.1 hereof. The ownership of
Units may (but need not, in the sole and absolute discretion of the Board) be
evidenced in the form of a certificate for Units.
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ARTICLE III
CAPITAL; CAPITAL ACCOUNTS AND MEMBERS
SECTION 3.1 INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS. The
Members shall initially make the Capital Contributions to the Company set forth
opposite their names on EXHIBIT "A" attached hereto. Each Member shall own Units
in the respective amounts set forth in EXHIBIT "A," as the same may be amended
from time to time. EXHIBIT "A" may be amended from time to time by the Board to
reflect changes of Members under Article 9 hereof or changes in the number of
Units owned by each Member.
SECTION 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS BY MEMBERS. No
Member has the right or obligation to make any additional Capital Contributions
to the Company.
SECTION 3.3 CAPITAL ACCOUNTS. A Capital Account shall be
established and maintained for each Member in accordance with the terms of this
Agreement.
SECTION 3.4 OTHER MATTERS.
(a) Except as otherwise provided in this Agreement, a Member
shall not demand or be entitled to receive a return of or interest on its
Capital Contributions or Capital Account, withdraw any portion of its Capital
Contributions, or receive any distributions from the Company as a return of
capital on account of such Capital Contributions. Under circumstances requiring
or permitting a return of its Capital Contributions, a Member shall have the
right to receive property other than cash as reasonably determined by the Board,
except as may be specifically prohibited by law.
(b) No Member, Board Member, officer, or agent of the Company
shall be required or have a right to lend any funds to the Company. The Company
may, however, borrow funds from time to time, in one or more instances, from one
(1) or more Members or their Affiliates on terms and conditions satisfactory to
the Management Company and the lending Member.
ARTICLE IV
CASH DISTRIBUTIONS
SECTION 4.1 DISTRIBUTIONS IN GENERAL. Except as otherwise
provided in Article 11 hereof, for any fiscal year all Cash Available for
Distribution and net proceeds from any Terminating Capital Transaction shall be
distributed to the Members at such times as may be determined in the sole
discretion of the Board.
SECTION 4.2 ORDER OF DISTRIBUTIONS. Subject to Article 11
hereof, any Cash Available for Distribution shall be distributed to the Members
in proportion to their Percentage Interests.
Any net proceeds of a Terminating Capital Transaction shall be
applied or distributed as follows:
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(a) if a Majority in Interest does not vote to continue the
Company as provided in Section 11.2(b) hereof, as provided in Section 11.3(c)
hereof; or
(b) otherwise, to the Members in proportion to their
Percentage Interests.
SECTION 4.3 OTHER PROVISIONS.
(a) All amounts withheld pursuant to the Code or any provision
of any state or local tax law with respect to any allocation, payment, or
distribution by the Company to the Members shall be treated as amounts
allocated, paid, or distributed, respectively, to the Members pursuant to this
Article 4 and Article 11 hereof for all purposes under this Agreement.
(b) No right is given to any Member to demand and receive
property other than cash as provided in this Agreement. The Board may determine,
in its sole and absolute discretion, to make a distribution in kind of Company
Property to the Members, and such Company Property shall be distributed in such
a fashion as to ensure that the fair market value is distributed and allocated
in accordance with this Article 4 and Articles 5 and 11 hereof; provided,
however, that no Member may be compelled to accept a distribution of any Company
Property in kind unless the ratio that the fair market value of such
distribution bears to such Member's total distribution does not exceed the ratio
that the fair market value of similar distributions in kind bear to the total
distributions to other Members receiving distributions concurrently therewith,
except upon a dissolution and winding up of the Company.
(c) Notwithstanding any provision to the contrary contained in
this Agreement, neither the Company nor the Board, on behalf of the Company,
shall knowingly make a distribution to any Member or the holder of any Economic
Interest on account of its Membership Interest or Economic Interest in the
Company (as applicable) in violation of Section 18-607 of the Act.
(d) In the event that any Member owes any amount to the
Company that is due and unpaid, at the time that a payment or distribution would
be payable to such Member under this Article 4, the amount of such distribution
shall be reduced by the amount of such obligation, together with interest
thereon (except where interest is otherwise provided in a separate agreement
with respect to such obligation), from the date such amount became due and
payable to the Company until payment thereof be made, at a rate of ten percent
(10%) per annum, but not to exceed the maximum rate for such obligation under
any applicable usury laws, which offset shall be deemed to be a payment to the
Company by such Member and shall be applied first to such interest and then to
such obligation. In the event that a distribution has resulted in an overpayment
to any Member for the fiscal period as a whole, the amount of such overpayment
may be offset against subsequent payments or distributions in the manner
permitted by this Section 4.3(d) or the Member may be required to return the
excess distribution.
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ARTICLE V
ALLOCATIONS OF NET PROFITS AND NET LOSSES
SECTION 5.1 ALLOCATION OF NET PROFITS AND NET LOSSES.
(a) Subject to the provisions of Section 5.3(a) hereof, Net
Profits and Net Losses shall be determined and allocated with respect to each
Company taxable year as of the end of such taxable year. Subject to the other
provisions of this Agreement, an allocation to a Member of a share of Net
Profits or Net Losses shall be treated as an allocation of the same share of
each item of income, gain, loss, or deduction that is taken into account in
computing Net Profits or Net Losses.
(b) Subject to Sections 5.2 and 5.3 hereof, Net Profits for
any fiscal year shall be allocated in the following order and priority:
(i) First, [ ](2) to [ ](3) in an amount equal
to the excess, if any, of (A) the cumulative Net Losses allocated to [ ]
(4) pursuant to Section 5.1(c)(i) hereof for all prior fiscal years, over (B)
the cumulative Net Profits allocated to [ ](5) pursuant to this Section
5.1(b)(i) for all prior fiscal years;
(ii) The balance, if any, to [____](6) in proportion to
[____](7) Percentage Interests.
(c) Subject to Sections 5.2 and 5.3 hereof, Net Losses for
any fiscal year shall be allocated in the following order and priority.
(i) First, to [ ](8) in proportion to [ ](9)
Percentage Interests in an amount equal to the excess, if any, of (A) the
cumulative Net Profits allocated pursuant to Section 5.1(b)(ii) hereof, over
(B) the cumulative Net Losses allocated pursuant to this Section 5.1(c)(i)
for all prior fiscal years;
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(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(ii) The balance, if any, [ ](10) to [ ].(11)
(d) Subject to Sections 5.2 and 5.3, all other tax items,
including credits, shall be allocated to [____](12) in proportion to
[____](13) Percentage Interests.
SECTION 5.2 ADDITIONAL SPECIAL ALLOCATIONS. Notwithstanding
the foregoing provisions of this Article 5:
(a) Tax items with respect to Company Property that is
contributed to the Company with a Gross Asset Value that varies from its basis
in the hands of the contributing Member immediately preceding the date of
contribution shall be allocated among the Members for income tax purposes
pursuant to Regulations promulgated under Code Section 704(c) so as to take into
account such variation. The Company shall account for such variation under any
method approved under Code Section 704(c) and the applicable Regulations as
chosen by the Board, including, without limitation, the "traditional method" as
described in Regulations Section 1.704-3(b). If the Gross Asset Value of any
Company asset is adjusted pursuant to subsection (b) of the definition of Gross
Asset Value, subsequent allocations of income, gain, loss, and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations promulgated
thereunder. Allocations pursuant to this Section 5.2(a) are solely for purposes
of federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Net Profits,
Net Losses, and any other items or distributions pursuant to any provision of
this Agreement.
(b) The Nonrecourse Deductions for each taxable year of the
Company shall be allocated to [____](14) in proportion to [____](15)
Percentage Interests.
(c) If there is a net decrease in Company Minimum Gain during
a Company taxable year, then each Member shall be allocated items of Company
income and gain for such taxable year (and, if necessary, for subsequent years)
in an amount equal to such Member's share of the net decrease in Company Minimum
Gain, determined in accordance with Regulations Section 1.704-2(g)(2). This
Section 5.2(c) is intended to comply with the minimum gain chargeback
requirement of Regulations Section 1.704-2(f) and shall be interpreted
consistently
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(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(14) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(15) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
therewith. The allocation otherwise required pursuant to this Section 5.2(c)
shall, however, not apply to a Member to the extent that the minimum gain
chargeback rules are inapplicable in a particular circumstance as specified in
or under the Regulations.
(d) The Member Nonrecourse Deductions shall be allocated each
taxable year to the Member that bears the economic risk of loss (within the
meaning of Regulations Section 1.752-2) for the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable.
(e) If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain for
such taxable year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Member Minimum Gain attributable to
such Member Nonrecourse Debt, determined in a manner consistent with the
provisions of Regulations Section 1.704-2(g)(2). This Section 5.2(e) is intended
to comply with the partner nonrecourse debt minimum gain chargeback requirement
of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(f) If any Member unexpectedly receives an adjustment,
allocation or distribution of the type contemplated by Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes an Adjusted Capital Account
Deficit in such Member's capital account, items of income and gain shall be
allocated to all such Members (in proportion to the amounts of their respective
Adjusted Capital Account Deficits) in an amount and manner sufficient to
eliminate such Adjusted Capital Account Deficits as quickly as possible as of
the end of the Company's taxable year to which adjustment, allocation or
distribution relates. It is intended that this Section 5.2(f) qualify and be
construed as a "qualified income offset" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(d).
(g) In the event that any Member has a deficit Capital Account
at the end of any Company taxable year that is in excess of the sum of (a) the
amount (if any) that such Member is obligated to restore to the Company upon
liquidation of such Member's Membership Interest and (b) the amount such Member
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 5.2(g) shall be made if and only to the extent that such Member would
have a deficit Capital Account in excess of such sum after all other allocations
provided in this Article 5 have been tentatively made as if this Section 5.2(g)
and Section 5.2(e) hereof were not in this Agreement.
(h) If the allocation of Net Loss to a Member as provided in
Section 5.1 hereof would create or increase an Adjusted Capital Account Deficit,
there shall be allocated to such Member only that amount of Net Loss as will not
create or increase an Adjusted Capital Account Deficit. The Net Loss that would,
absent the application of the preceding sentence, otherwise be allocated to such
Member shall be allocated to the other Members.
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<PAGE>
(i) To the extent that an adjustment to the adjusted tax basis
of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations
Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation of
such Member's Membership Interest in the Company, the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis), and such gain or loss shall be specially allocated to the Members in
accordance with their interests in the Company in the event that Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(j) The allocations set forth in Sections 5.2(b), 5.2(c),
5.2(d), 5.2(e), 5.2(f), 5.2(g), 5.2(h), and 5.2(i) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of Regulations
Sections 1.704-1(b) and 1.704-2(i). The Regulatory Allocations may not be
consistent with the manner in which the Members intend to distribute the cash of
the Company or allocate Company income or loss. [ ](16)
(k) For purposes of determining the Net Profits, Net Losses,
and any other items of income, gain, loss, and deduction allocable to any
period, Net Profits, Net Losses, and any such other items shall be determined on
a daily, monthly or other basis, as determined by the Board using any
permissible method under Code Section 706 and the Regulations thereunder.
SECTION 5.3 OTHER PROVISIONS.
(a) For any taxable year during which any part of a Membership
Interest is transferred between the Members or to another Person, the portion of
the Net Profits, Net Losses, and other items of income, gain, loss, deduction,
and credit that are allocable with respect to such part of a Membership Interest
shall be apportioned between the transferor and the transferee based on an
interim closing of the Company's books except as mandated by the Code and the
applicable Regulations or, in the Board's discretion, as permitted under Code
Section 706(d)(2).
(b) Except as provided in Section 5.2(a) hereof, for income
tax purposes under the Code and the Regulations each Company item of income,
gain, loss, and deduction shall be allocated among the Members as its
correlative item of "book" income, gain, loss, or deduction is allocated
pursuant to this Article 5. For this purpose, the term "book" income, gain,
loss, or deduction shall have reference to the meanings and tax accounting
principles adopted in the Regulations promulgated under Code Section 704(b) and
not necessarily to GAAP.
(c) In the event that the Code or any Regulations require
allocations of items of income, gain, loss, deduction, or credit different from
those set forth in this Article 5, the Board is hereby authorized to make new
allocations in reliance on the Code and such Regulations, such new allocations
shall be deemed to be made pursuant to the fiduciary duty of the Board to the
Company and the other Members, and no such new allocation shall give rise to any
claim or cause of action by any Member.
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(16) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
15
<PAGE>
(d) For purposes of determining a Member's proportional share
of the Company's "excess nonrecourse liabilities" within the meaning of
Regulations Section 1.752-3(a)(3), each Member's interest in Company profits
shall be such Member's Percentage Interest.
(e) The Members acknowledge and are aware of the income tax
consequences of the allocations made by this Article 5 and hereby agree to be
bound by the provisions of this Article 5 in reporting their shares of Net
Profits, Net Losses, and other items of income, gain, loss, deduction, and
credit for federal, state, and local income tax purposes.
ARTICLE VI
OPERATIONS
SECTION 6.1 BOARD. To provide for the management and operation
of the Company, the Members shall establish a Board. All actions to be taken by
the Board pursuant to this Agreement shall require the affirmative consent of
four (4) Members of the Board.
(a) The Board shall consist of five (5) Members of the Board,
each of which shall be elected at a meeting of the Unitholders which has been
duly noticed and held and at which a quorum is present, in accordance with
Section 6.4 hereof.
(b) A Board Member need not be a resident of California.
(c) Except as set forth in Section 6.1(d) below, each member
of the Board shall hold office for the term for which he is elected or until his
successor shall have be elected and qualified. During such term, each Member
shall continue to serve as a Board Member until his voluntary withdrawal, death,
or permanent disability. Any vacancy occurring in the Members of the Board shall
be filled by election at an annual or special meeting of the Members called for
that purpose. A Board Member elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any Board Member may resign at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein or, if no time be specified, at the time of its receipt
by the remaining Members of the Board or the Members. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
(d) A Board Member may not be removed at any time except for
actions that constitute gross negligence or willful misconduct, upon the
unanimous vote of the Members.
(e) The Board shall meet from time to time as mutually agreed
upon by all of the Members of the Board. Any action required to be taken at a
meeting of the Board, or any other action which may be taken at a meeting of the
Board may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all the Members of the Board entitled to
vote with respect to the subject matter thereof, as the case may be. Any such
consent signed by all the Members of the Board shall have the same effect as a
unanimous vote, and may be stated as such in any document filed with the
Secretary of State of the State of Delaware or with anyone else.
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<PAGE>
(f) Members of the Board shall be entitled to be reimbursed
for out-of-pocket costs and expenses incurred in the course of his service
hereunder. Members of the Board shall not receive any other fees or salaries for
serving as a Board Member of the Company.
(g) Members of the Board may participate in and act at any
meeting of the Board through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such meeting shall constitute
attendance and presence in person at the meeting of the person or persons so
participating.
SECTION 6.2 MANAGEMENT.
(a) The Board shall be an agent of the Company's business, and
the actions of the Board taken in such capacity and in accordance with this
Agreement shall bind the Company. Except as otherwise expressly provided in this
Agreement or in a separate agreement between the Company and any Member acting
as a Management Company, the Members shall not participate in the control of the
Company, and shall have no right, power, or authority to act for or on behalf
of, or otherwise bind, the Company. Except as expressly provided in this
Agreement or as required by any non-waivable provisions of applicable law, the
Members shall have no right to vote on or consent to any other matter, act,
decision, or document involving the Company or its business.
(b) The Board shall have the sole power and authority to bind
the Company, except and to the extent that such power is expressly delegated in
writing to any other Person by the Board, and such delegation shall not cause
the Board to cease to be the Board of the Company.
(c) Subject to the restrictions set forth in this Agreement,
the Board shall also have the right, power, and authority in the management of
the business and affairs of the Company, to do or cause to be done any and all
acts, at the expense of the Company, deemed by the Board to be necessary or
appropriate to effectuate the business of the Company set forth in Section 1.4
hereof and subject to Section 6.5 below. Without limiting the generality of the
foregoing, in connection with the conduct of the business of the Company as is
limited by the scope of Section 1.4 hereof, the Board shall have full and
complete power and authority, without the approval of any Member:
(i) to conduct any business, and exercise any rights
and powers, permitted of a limited liability company organized under the laws of
the state of Delaware, in any state, territory, district, or foreign country as
the Board deems necessary or advisable;
(ii) to acquire by purchase, lease, contribution, or
otherwise, and/or to otherwise own, hold, operate, maintain, finance, improve,
lease, sell, convey, mortgage, transfer, or dispose of any property or other
assets (real or personal, tangible or intangible) that the Board deems necessary
or advisable and in the best interests of the Company;
(iii) to negotiate, enter into, perform, modify,
extend, terminate, amend, waive, renegotiate and/or carry out any contracts and
agreements of any kind and nature,
17
<PAGE>
including, without limitation, contracts and agreements with any Member or
Affiliate thereof, or any other agent of the Company, as the Board deems
necessary or advisable;
(iv) to lend money, to invest and reinvest its funds,
and to take and hold real and/or personal property for the payment of funds so
loaned or invested;
(v) to sue and be sued, complain and defend, and
participate in administrative, judicial and other proceedings, in the name of,
and behalf of , the Company;
(vi) to pay, collect, compromise, arbitrate or
otherwise adjust or settle any and all claims or demands of or against the
Company; in such amounts and upon such terms and conditions as the Board shall
reasonably determine;
(vii) to, from time to time, employ, engage, hire, or
otherwise secure the services of such Persons, including any Member or Assignee,
or any Persons related thereto or Affiliates thereof, as the Board may deem
necessary or advisable for the proper execution of its duties hereunder,
provided such services are within the scope of the foregoing authority granted
to the Board hereunder, with such employment to be for such reasonable
compensation and upon such reasonable terms and conditions as the Board shall
determine;
(viii) to, from time to time, appoint such officers
and agents of the Company as the Board deems necessary or advisable, define and
modify, from time to time, such officers' and agents' duties, and fix and
adjust, as appropriate, such officers' and agents' compensation;
(ix) to cause the Company to indemnify any Person in
accordance with, and to the fullest extent permitted by, applicable law, and to
obtain, for or on behalf of the Company, any and all types of insurance deemed
necessary or advisable by the Board;
(x) to borrow money and issue evidence of
indebtedness necessary, convenient or incidental to the business of the Company,
and secure the same by mortgage, pledge or other lien or any Company Property or
other assets of the Company;
(xi) to prepare, execute, file, record, publish, and
deliver any and all instruments, documents, or statements necessary or
convenient to effectuate any and all actions that the Board is authorized to
take on behalf of the Company;
(xii) to deal with, or otherwise engage in business
with, or provide services to and receive compensation therefor from, any Person
who has provided or may in the future provide services to, lend money to, sell
property to, or purchase property from the Company, the Members or any Affiliate
of the Members; and
(xiii) to establish and maintain Reserves for such
purposes and in such amounts as the Board deems appropriate from time to time;
and
(xiv) Except as otherwise expressly provided in this
Agreement, any separate agreement between the Company and a Member or as
required by any non-waivable provision of the Act or other applicable law, no
Member shall (a) have any right to vote on or
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<PAGE>
consent to any other matter, act, decision or document involving the Company or
its business or (b) take part in the day-to-day management, or the operation or
control, of the business and affairs of the Company. Except to the extent
expressly delegated by the Board, no Member or other Person shall be an agent
for the Company or have any right, power or authority to transact any business
in the name of the Company or to act for or on behalf of or to bind the Company.
SECTION 6.3 MEETINGS.
(a) Meetings of the Members may be called by the Board or by
Members holding not less than twenty-five percent (25%) of the units entitled to
vote at the meeting. The meeting shall beheld at the principal place of business
of the Company or as designated in the notice or waivers of notice of the
meeting.
(b) Notice of any meeting of the Members shall be given no
fewer than ten (10) days and no more than ninety (90) days prior to the date of
the meeting. Notices shall be delivered in the manner set forth in Section 12.4
and shall specify the purpose or purposes for which the meeting is called. The
attendance of a Member at any meeting shall constitute a waiver of notice of
such meeting, except where a Member attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
(c) A Majority in Interest of the Members entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for transaction of business at any meeting of the Members.
(d) The act of the holders of a Majority in Interest of the
Members entitled to vote at the meeting, present at a meeting at which a quorum
is present, shall be the act of the Members, unless the act of a greater number
is required by statute or this Agreement.
(e) Any action required to be taken at a meeting of the
Members or any other action which may be taken at a meeting of the Members, may
be taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by Members having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which the holders of all of the Units entitled to vote at a meeting were present
and voting. Prompt notice of the taking of the action without a meeting by less
than unanimous consent shall be given in writing to those Members who were
entitled to vote but did not consent in writing.
(f) The Members may participate in and act at any meeting of
Members through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such meeting shall constitute attendance and
presence in person at the meeting of the person or persons so participating.
(g) Each outstanding Unit shall be entitled to one vote upon
each matter submitted to the Members for a vote. In all elections for a Board
Member, all Members shall have the right to cumulative voting.
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<PAGE>
SECTION 6.4 LIMITATIONS ON AUTHORITY OF BOARD. Notwithstanding
any contrary provision of this Agreement, without the written consent of all
Members, the Board shall not have the authority to:
(a) do any act in contravention of this Agreement;
(b) [ ];(17)
(c) [ ];(18)
(d) [ ];(19)
(e) [ ].(20)
SECTION 6.5 RELIANCE BY THIRD PARTIES. Any Person dealing with
the Company or the Board may rely upon a certificate signed by the Management
Company or officer of the Company as to:
(a) the identity of a Board Member, officer of the Company or
any Member of the Company;
(b) the existence or non-existence of any fact or facts that
constitute a condition precedent to acts by the Board or officer of the Company
or in any other manner germane to the affairs of the Company;
(c) the Persons who are authorized to execute and deliver any
instrument or document for or on behalf of the Company; or
(d) any act or failure to act by the Company or as to any
other matter whatsoever involving the Company or any Member.
SECTION 6.6 RECORDS AND REPORTS.
(a) The Board shall cause to be kept, at the principal place
of business of the Company, or at such other location as the Board shall
reasonably deem appropriate, full and proper ledgers, other books of account,
and records of all receipts and disbursements, other financial activities and
the internal affairs of the Company for at least the current and past four (4)
fiscal years.
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(17) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(18) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(19) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(20) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(b) The Board shall also cause to be sent to each Member of
the Company the following:
(i) within ninety (90) days following the end of each
fiscal year of the Company, a report that shall include all necessary
information required by the Members for preparation of its federal, state and
local income or franchise tax or information returns, including each Member's
pro rata share of Net Profits, Net Losses, and any other items of income, gain,
loss, and deduction for such fiscal year; and
(ii) a copy of the Company's federal, state, and
local income tax or information returns for each fiscal year, concurrent with
the filing of such returns.
(c) The Members (personally or through an authorized
representative) may, for purposes reasonably related to their Membership
Interests, examine and copy (at their own cost and expense) the books and
records of the Company at all reasonable business hours.
SECTION 6.7 INDEMNIFICATION AND LIABILITY OF THE BOARD.
(a) The Company shall indemnify and hold harmless the Members
of the Board and officers of the Company (individually, an "Indemnitee"), to the
full extent permitted by law, from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including attorneys' fees and disbursements), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits, or
proceedings, civil, criminal, administrative or investigative, in which the
Indemnitee may be involved, or threatened to be involved as a party or
otherwise, arising out of or incident to the business of the Company or
otherwise relating to the performance or non-performance of any act concerning
the activities of the Company, if the Indemnitee acted in good faith and in a
manner that it believed to be in, or not contrary to, the best interests of the
Company. The termination of an action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, in and of itself, create a presumption or otherwise constitute
evidence that the Indemnitee acted in a manner contrary to that specified in
clause (i) above.
(b) Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit, or proceeding subject to this Section 6.7 shall be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit, or proceeding upon receipt by the Company of a written commitment
by or on behalf of the Indemnitee to repay such amount if it shall be determined
that such Indemnitee is not entitled to be indemnified as authorized in this
Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be
in addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to a vote of a Majority in Interest of all Members, as a
matter of law or equity or otherwise, and shall inure to the benefit of the
heirs, successors, assigns and administrators of the Indemnitee.
(d) Any indemnification provided hereunder shall be satisfied
solely out of the assets of the Company, as an expense of the Company. No Member
shall be subject to personal liability by reason of these indemnification
provisions.
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(e) No Indemnitee shall be denied indemnification in whole or
in part under this Section 6.7 by reason of the fact that the Indemnitee had an
interest in the transaction with respect to which the indemnification applies if
the transaction was otherwise permitted by the terms of this Agreement.
(f) The provisions of this Section 6.7 are for the benefit of
the Indemnities and shall not be deemed to create any rights for the benefit of
any other person or entity.
(g) Neither the Members of the Board, officers of the Company,
Members nor their parents, Affiliates or subsidiaries nor the officers,
directors or employees of any of the foregoing Persons shall be liable to the
Company or to a Member for any losses sustained or liabilities incurred as a
result of any act or omission of any such other Person if such Person acted (or
took no action) in good faith and in a manner that it believed to be in, or not
opposed to, the interests of the Company.
(h) To the extent that a Board Member, officer of the Company
or Member, or any Affiliate or subsidiary, or any officer, director, employee,
or agent of any of the foregoing (each, a "Responsible Party") has, at law or in
equity, duties (including, without limitation, fiduciary duties) to the Company,
any Member or any other Person bound by the terms of this Agreement, such
Responsible Party acting in accordance with this Agreement shall not be liable
to the Company, any Member or any such other Person for its good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties of a Responsible Party otherwise existing
at law or in equity, are agreed by all parties hereto to replace such other
duties to the greatest extent permitted under applicable law.
(i) Whenever a Responsible Party is required or permitted to
make a decision, take or approve an action, or omit to do any of the foregoing
(a) in its discretion, under a similar grant of authority or latitude, or
without an express standard of behavior (including, without limitation,
standards such as "reasonable" or "good faith"), then such Responsible Party
shall be entitled to consider only such interests and factors, including its
own, as it desires, and shall have no duty or obligation to consider any other
interests or factors whatsoever, or (b) with an express standard of behavior
(including, without limitation, standards such as "reasonable" or "good faith"),
then such Responsible Party shall comply with such express standard, but shall
not be subject to any other, different or additional standard imposed by this
Agreement or otherwise applicable law.
SECTION 6.8 COMPETITION WITH THE COMPANY. The Members may
engage or invest in, and devote their time to, any other partnership, alliance,
joint venture, business venture, or activity of any nature and description
(independently or with others), whether or not such other activity may be deemed
or construed to be in competition with the Company, PROVIDED THAT Affymetrix
shall not enter into any other partnership, alliance, joint venture or similar
arrangement with [ ](21) if the purpose or the effect of such activity is
to make them an Affiliate of Affymetrix (as that term is defined in the Isis
Agreement) or otherwise provide any of them with access to the patents or
technology licensed to Affymetrix pursuant to
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(21) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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the Isis Agreement. Notwithstanding anything to the contrary, nothing herein
shall prevent Affymetrix from selling any products to any third parties. Neither
the Company nor any other Member shall have any right by virtue of this
Agreement or the relationship created hereby in or to such other venture or
activity of any Member (or to the income or proceeds derived therefrom), and the
pursuit thereof, and even if competitive with the business of the Company, shall
not be deemed wrongful or improper.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each Member (including, without limitation, each Substituted
Member as a condition to becoming a Substituted Member) represents and warrants
to the Company and each other Member that the following. The representations and
warranties contained in this Article 7 shall be deemed made as of the date
hereof only, except that such representations and warranties with respect to
Persons who become Members after the date hereof shall also be deemed made as of
the earlier of the date such respective Persons acquire an interest in the
Company or the date such respective Persons become a Member or a Substituted
Member, as the case may be.
SECTION 7.1 DUE AUTHORIZATION. All transactions contemplated
by this Agreement to be performed by it have been duly authorized by all
necessary action, including, without limitation, that of its directors and/or
shareholder(s), managing member(s) (or, if there is no managing member, a
majority in interest of all members), committee(s), trustee(s), general
partner(s), or beneficiaries, as the case may be, and as required.
SECTION 7.2 BINDING AND ENFORCEABLE. This Agreement is binding
upon, and enforceable against, such Member in accordance with its terms, except
that such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, and except that the availability of equitable
remedies may be limited by the application of general principles of equity
(regardless of whether the equitable principles are applied in a proceeding at
law or in equity).
SECTION 7.3 NO BREACH OR CONFLICT. The consummation of such
transactions shall not result in a breach or violation of, or a default under,
(a) charter or bylaws, its partnership or operating agreement, or trust
agreement, as the case may be, (b) except for the Isis Agreement, with respect
to which no representations or warranties are made, any agreement by which such
Member or any of such Member's properties or any of its partners, members,
beneficiaries, trustees or shareholders, as the case may be, is or are bound, or
(c) any statute, regulation, order or other law to which such Member or any of
its partners, members, trustees, beneficiaries, or shareholders, as the case may
be, is or are subject, except, in the case of both clauses (a), (b), and (c)
above, for those breaches, violations, or defaults that would not materially and
adversely affect the ability of such Member to perform its obligations under
this Agreement.
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SECTION 7.4 NOT A FOREIGN PERSON. Such Member is neither a
"foreign person" within the meaning of Code Section 1445(f) nor a "foreign
partner" within the meaning of Code Section 1446(e).
SECTION 7.5 INVESTMENT REPRESENTATIONS.
(a) Each Member acknowledges that the Units being offered and
sold to such Member pursuant to this Agreement are without qualification or
registration under the California Corporate Securities Law of 1968 or the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
exemptions from the qualification and registration requirements.
(b) Each Member has not seen, received, been presented with,
or been solicited by any leaflet, public promotional meeting, newspaper or
magazine article or advertisement, radio or television advertisement, or any
other form of advertising or general solicitation with respect to the sale of
the Membership Interest.
(c) Each Member acknowledges that the Units are a "restricted
security" under the Securities Act in that the Units will be acquired from the
Company in a transaction not involving a public offering, and that the Units may
be resold without registration under the Securities Act only in certain limited
circumstances and that otherwise the Units must be held indefinitely.
(d) Each Member has acquired its interest in the Company for
its own account for investment only and not for the purpose of, or with a view
toward, the resale or distribution of all or any part thereof, nor with a view
toward selling or otherwise distributing such interest or any part thereof at
any particular time or under any predetermined circumstances in any transaction
requiring registration under the Securities Act or in violation of federal or
state securities laws. Each Member (other than any Substituted Member who has
not acquired a Membership Interest (i) in a transaction constituting a "sale"
within the meaning of Section 2(3) of the Securities Act or (ii) by gift from a
Person as to whom the Member is a Family Member) further represents and warrants
that it is an "accredited investor" as defined in Rule 501 promulgated under the
Securities Act and is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Company in what it
understands to be a highly speculative and illiquid investment.
SECTION 7.6 INDEPENDENT REPRESENTATION BY COUNSEL AND
ADVISORS. Such Member has been represented by independent advisors, including
legal counsel and tax counsel, in connection with the transactions provided for
in or contemplated by this Agreement and that it has discussed, to the extent it
has deemed appropriate with its independent advisors, including legal counsel
and tax counsel, the consequences, including the federal, state, local, and
other tax consequences and tax return disclosure requirements, of the
transactions, actions and events arising out of or contemplated by this
Agreement and the execution, delivery, and performance of this Agreement.
SECTION 7.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Liability for the breach of the representations, warranties, and agreements set
forth in this Article 7 shall survive
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the execution and delivery of this Agreement by each Member (and, in the case of
a Substituted Member, the admission of such Substituted Member as a Member in
the Company) and the dissolution, liquidation, and termination of the Company.
The Board may, in its sole and absolute discretion on behalf of the Company and
its Members, grant waivers and exceptions to the representations and warranties
contained in this Article 7(but excluding Sections 7.1 - 7.3), but any such
waiver or exception must be in writing and must refer to this Section.
SECTION 7.8 NO OTHER REPRESENTATIONS. NO PERSON HAS MADE ANY
REPRESENTATION OR WARRANTY CONCERNING (I) THE FEDERAL, STATE, LOCAL OR OTHER TAX
(INCLUDING PROPERTY TAX) CONSEQUENCES TO ANY PERSON OF THE TRANSACTIONS, ACTIONS
OR EVENTS (INCLUDING THE ALLOCATION OF TAX ITEMS) THAT MAY ARISE OUT OF OR BE
CONTEMPLATED BY THIS AGREEMENT (COLLECTIVELY, THE "TAX REPRESENTATIONS") OR (II)
ANY PROJECTIONS, CASH FLOWS, POTENTIAL PROFIT, OR YIELDS FROM, PERFORMANCE OF OR
ECONOMIC CONSEQUENCES OF AN INVESTMENT OR MEMBERSHIP IN THE COMPANY
(COLLECTIVELY, THE "ECONOMIC REPRESENTATIONS"). EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES EXPRESSLY PROVIDED IN THIS AGREEMENT OR CONTEMPLATED BY, THIS
AGREEMENT OR THE ASSET PURCHASE AGREEMENT (COLLECTIVELY, "EXPRESS
REPRESENTATIONS"), NO PERSON IS MAKING ANY REPRESENTATION OR WARRANTY AS TO ANY
OTHER MATTER (ALL SUCH REPRESENTATIONS, OTHER THAN THE EXPRESS REPRESENTATIONS,
SHALL BE REFERRED TO HEREIN AS THE "OTHER REPRESENTATIONS"). EACH MEMBER
(INCLUDING, WITHOUT LIMITATION, EACH SUBSTITUTED MEMBER AS A CONDITION TO
BECOMING A SUBSTITUTED MEMBER) ACKNOWLEDGES THAT NO PERSON HAS MADE ANY TAX
REPRESENTATIONS, ECONOMIC REPRESENTATIONS OR OTHER REPRESENTATIONS. CONSISTENT
WITH THE FOREGOING AND AS A MATERIAL INDUCEMENT TO THE OTHER MEMBERS TO ENTER
INTO THIS AGREEMENT, EACH MEMBER (INCLUDING, WITHOUT LIMITATION, EACH
SUBSTITUTED MEMBER AS A CONDITION TO BECOMING A SUBSTITUTED MEMBER) HEREBY
WAIVES (ON BEHALF OF ITSELF, HIMSELF OR HERSELF AND ON BEHALF OF ALL ASSIGNEES
AND ALL HOLDERS) ANY AND ALL RIGHTS HE, SHE OR IT MAY HAVE AT ANY TIME, NOW OR
IN THE FUTURE, TO ASSERT A CLAIM THAT ANY TAX REPRESENTATIONS, ECONOMIC
REPRESENTATIONS OR OTHER REPRESENTATIONS HAVE BEEN MADE BY OR ON BEHALF OF ANY
MEMBER OR ANY OTHER PERSON OR TO SEEK DAMAGES, A RIGHT OF OFFSET OR OTHER RELIEF
BASED UPON AN ALLEGED BREACH OR INACCURACY OF ANY TAX REPRESENTATION, ECONOMIC
REPRESENTATION OR OTHER REPRESENTATIONS. IN THE EVENT ANY MEMBER (OR THE
TRANSFEREE OF ANY INTEREST, INCLUDING UNITS, OF THE MEMBER IN THE COMPANY) TAKES
ANY ACTION TO ASSERT ANY SUCH CLAIM OR SEEK ANY SUCH DAMAGES, RIGHT OF OFFSET OR
OTHER RELIEF WITH RESPECT TO ANY OTHER REPRESENTATIONS, THE MEMBER TAKING THE
ACTION (OR, IN THE EVENT OF ACTION TAKEN BY A TRANSFEREE OF AN INTEREST OF A
MEMBER, SUCH MEMBER) SHALL REIMBURSE THE OTHER MEMBERS AND THE TRANSFEREES OF AN
INTEREST OF A MEMBER, IMMEDIATELY UPON DEMAND, FOR ANY AND ALL LOSSES, COSTS AND
EXPENSES, INCLUDING, WITHOUT LIMITATION, LEGAL FEES, ACCOUNTING FEES,
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CONSULTING FEES, AND COSTS OF RESPONSE, NEGOTIATION, AND DEFENSE, INCURRED BY
THOSE MEMBERS IN CONNECTION WITH OR AS A RESULT OF SUCH ACTION (COLLECTIVELY,
"COSTS"), AND ANY COSTS NOT SO PAID UPON DEMAND SHALL BEAR INTEREST, FROM THE
DATE OF DEMAND UNTIL PAID, AT THE HIGHEST RATE PERMITTED BY APPLICABLE USURY
LAW.
ARTICLE VIII
COVENANTS
SECTION 8.1 NEGOTIATIONS WITH [ ].(22) The parties will
enter into good faith discussions with [ ](23) to become a Member of the
Company. In the event that [ ](24) agrees to become a Member of the
Company, BCI and Affymetrix hereby agree that [ ](25) will acquire its
Membership Interest from BCI. Any initial consideration payable for the Units
to be acquired from BCI by [ ],(26) or any other third party who is
acquiring Units from BCI will be retained by BCI. Any contingent or future
consideration paid by [ ](27) or any third party acquiring Units from BCI
will be shared equitably between BCI and Affymetrix.
SECTION 8.2 MAINTENANCE OF ISIS AGREEMENT. Affymetrix recognizes and accepts
that the maintenance of the Isis Agreement in full force and effect and the good
standing of the Company as an "Affiliate" of Affymetrix (as the term "Affiliate"
is defined in the Isis Agreement) are essential to the viability of the Company
and its ability to sustain its business as defined in Section 1.4 hereof.
Accordingly, Affymetrix represents and warrants to the other Members and
covenants and agrees with the Company that Affymetrix shall at all times (a)
fully, completely and timely comply with all of its duties and obligations under
the Isis Agreement such that Affymetrix is not at any time in breach of such
Agreement, (b) not do any act which could, or with the passage of time could,
give rise to a right in the licensor of the Isis Agreement to terminate such
Agreement, (c) not fail to do any act which could, or with the passage of time
could, give rise to a right in the licensor of the Isis Agreement to terminate
such agreement, (d) not do any act or take any steps which could, or with the
passage of time could, cause the Company not to be an Affiliate, as that term is
defined in the Isis Agreement. Included, by way of example and not limitation,
within the foregoing acts which Affymetrix shall not do are: (a) entering into a
consortium with any third party which would entitle such third party to a
license under one or more of the patents which are the subject of the Isis
Agreement; or, (b) subject to
- -------------------------
(22) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(23) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(24) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(25) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(26) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(27) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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the proviso hereafter, extending access to the Isis Agreement and the patents
which are the subject thereof to any Affiliate, other than Company, which is not
owned one hundred percent (100%) by Affymetrix; provided that, if the law or
regulations of any country wherein such Affiliate is domiciled prohibit one
hundred percent (100%) ownership of a domestic Person by a foreign Person or tax
incentives in the country of domicile require domestic participation in the
Person to receive the benefit of the tax incentive, then, in such case the
Affiliate may have access to the Isis Agreement and the patents which are the
subject thereof so long as Affymetrix owns the maximum percentage allowed by
such law or regulations or the maximum percentage that still enables Affymetrix
to receive the benefit of such tax incentive.
SECTION 8.3 COMPANY PRODUCTS. All products produced or
distributed by the Company which are manufactured pursuant to a license of
intellectual property which is part of the Affymetrix Capital Contribution, will
be co-branded with the name or appropriate identification of the Company and of
Affymetrix.
SECTION 8.4 DISTRIBUTION. BCI or its nominees shall be the
exclusive distributor of all products developed, manufactured, produced,
marketed, or sold and services rendered by the Company.
ARTICLE IX
TRANSFERS OF MEMBERSHIP INTERESTS
SECTION 9.1 TRANSFERS OF MEMBERSHIP INTERESTS. No part of the
interest of a Member shall be subject to the claims of any creditor, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement. No Member may make
or permit a Transfer, directly or indirectly, by operation of law or otherwise,
voluntarily or involuntarily, of all or any portion of its Membership Interest,
and any purported Transfer of a Member's Membership Interest shall be null and
void ab initio, unless approved by the Board, which approval shall not be
unreasonably withheld, provided that the Board may not consent to the transfer
of a Membership Interest that could, or with the passage of time could, cause
the Company not to be an Affiliate, as that term is defined in the Isis
Agreement. A Member may not make or permit a Transfer of all or any part of its
Economic Interest without approval of the other Members, except to an Affiliate.
Without limiting the generality of the foregoing, Affymetrix may not make or
permit a transfer of its Membership Interest or Economic Interest unless such
transfer is concurrent with a transfer of the rights, obligations and interests
of Affymetrix under the Isis Agreement. No Member shall voluntarily withdraw
from the Company. Any purported act in contravention of this Article 9 shall be
null and void and of no force whatsoever.
SECTION 9.2 MEMBER'S RIGHT TO TRANSFER.
(a) It is a condition to any Transfer otherwise permitted
hereunder that the transferee assume by operation of law or express agreement
all of the obligations of the transferring Member under this Agreement with
respect to such Transferred Units, Membership Interest. Any transferee whether
or not admitted as a Substituted Member, shall take subject to the obligations
of the transferor hereunder. Unless admitted as a Substituted Member, no
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transferee, whether by a voluntary Transfer, by operation of law or otherwise,
shall have any rights hereunder, other than the rights of an Assignee as
provided in Section 9.4 hereof.
(b) If a Member is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator, or receiver of such
Member's estate shall have all the rights of a Member, but not more rights than
those enjoyed by other Members, including for the purpose of settling or
managing the estate, and such power as the Incapacitated Member possessed to
Transfer all or any part of its interest in the Company. The Incapacity of a
Member, in and of itself, shall not dissolve or terminate the Company.
(c) It is a condition to any Transfer that the Board receive
written notice of the name and address of the transferee at least ten (10) days
prior to the proposed Transfer and written evidence that each transferee
acknowledges and agrees to make the representations and warranties set forth in
Article 7 hereof.
(d) No Transfer by a Member may be made to any Person if it
would result in the Company being treated as an association taxable as a
corporation for state or federal income tax purposes, (ii) such Transfer is
effectuated through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" within the meaning of Code Section 7704
or (iii) such Transfer would result in the termination of the Company for
federal income tax purposes.
SECTION 9.3 SUBSTITUTED MEMBERS.
(a) No Member shall have the right to substitute a transferee
(including any transferees pursuant to Transfers permitted by Section 9.1
hereof) as a Member in its place. A transferee of the interest of a Member
(other than an Affiliate) may be admitted as a Substituted Member only with the
consent of the Board, which consent may be given or withheld by the Board in
their sole and absolute discretion. The failure or refusal by the Board to
permit a transferee of any such interests to become a Substituted Member shall
not give rise to any cause of action against the Company, the Board or any
Member, except where such failure or refusal breaches the provisions hereinabove
contained. Subject to the foregoing, an Assignee shall not be admitted as a
Substituted Member until and unless it furnishes to the Board (i) evidence of
acceptance, in form and substance satisfactory to the Board, of all the terms,
conditions and applicable obligations of this Agreement, and (ii) such other
documents and instruments as may be required or advisable, in the sole and
absolute discretion of the Board, to effect such Assignee's admission as a
Substituted Member.
(b) A transferee who has been admitted as a Substituted Member
in accordance with this Article 9 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Member under this Agreement
and the transferor shall be relieved of all of its obligations hereunder
accruing subsequent to such admission with respect to the interest Transferred.
(c) Upon the admission of a Substituted Member, the Board
shall amend EXHIBIT A to reflect the name and address of such Substituted Member
and to eliminate, if necessary, the name and address of the predecessor of such
Substituted Member.
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SECTION 9.4 ASSIGNEES. If the Board does not consent under
Section 9.3 hereof to the admission of any transferee in a Transfer consented to
by the Board under Section 9.1 hereof as a Substituted Member, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited liability
company interest under the Act, including, without limitation, the right to
receive distributions, guaranteed payments, indemnity payments, and other
payments from the Company and the share of Net Income, Net Losses, and other
items of income, gain, loss, deduction, and credit of the Company attributable
to the Units assigned to such transferee and the rights to Transfer the Units
provided in this Article 9, but shall not be deemed to be a holder of Units for
any other purpose under this Agreement, and shall not be entitled to effect a
consent or vote with respect to such Units on any matter presented to the
Members for approval (such right to consent or vote, to the extent provided in
this Agreement or under the Act, fully remaining with the transferor Member). In
the event that any such transferee desires to make a further assignment of any
such Units, such transferee shall be subject to all the provisions of this
Article 9 to the same extent and in the same manner as any Members desiring to
make an assignment of Units.
SECTION 9.5 GENERAL PROVISIONS.
(a) No Member may withdraw from the Company other than as a
result of a permitted Transfer of all of such Member's Units in accordance with
this Article 9, with respect to which the transferee becomes a Substituted
Member.
(b) Any Member who shall Transfer all of its remaining Units
in a Transfer permitted pursuant to this Article 9 where such transferee was
admitted as a Substituted Member shall cease to be a Member.
(c) In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer of a Membership Interest by any Member
be made:
(i) to any person or entity who lacks the legal
right, power, or capacity to own a Membership Interest;
(ii) in violation of applicable law;
(iii) if such Transfer would cause the Company either
(i) to cease to be classified as a partnership or (ii) to be classified as a
publicly traded partnership treated as a corporation, in either case for federal
or state income tax purposes;
(iv) if such Transfer would, cause any portion of the
assets of the Company to constitute assets of any employee benefit plan pursuant
to Department of Labor Regulations Section 2510.3-101;
(v) if such Transfer requires the registration of
such Membership Interest pursuant to any applicable federal or state securities
laws;
(vi) if such Transfer causes the Company to become a
reporting company under the Exchange Act; or
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(vii) if such Transfer subjects the Company to
regulation under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or ERISA, each as amended;
To the extent any attempted Transfer would be in violation of
this Section 9.5, it shall be null and void ab initio, and the transferee shall
not acquire any rights or economic interests in the Units or other interests
that otherwise would have been Transferred.
ARTICLE X
ADMISSION OF MEMBERS
SECTION 10.1 ADMISSION OF ADDITIONAL MEMBERS. Additional
Persons (as opposed to Substituted Members which are subject to Article 9
hereof) may be admitted to the Company as Members only upon the selection of,
and on such terms and conditions as may be determined by BCI in its sole
discretion at the time of such admission; PROVIDED that such admission shall be
subject to approval by Affymetrix, which approval shall not be unreasonably
delayed and may only be withheld in the event a Person proposed to be admitted
as an Additional Member owns United States Letters Patent which it has asserted
against Affymetrix and which patents completely and entirely prevent Affymetrix
from continuing its business of making and selling polynucleotide arrays by
photolithographic techniques and such Person refuses to grant Affymetrix a
license to such patents; and provided, further, that no such admission would
affect the Company's ability to comply with any applicable statutes or
regulations. Each Member, by its execution hereof shall be deemed to have
granted the Board the irrevocable power of attorney (which it is hereby agreed
among the Members is coupled with an interest) to amend this agreement in such
ways as may be necessary to admit such additional Members.
SECTION 10.2 AMENDMENT OF AGREEMENT AND CERTIFICATE. For the
admission to the Company of any Member in accordance with this Agreement, the
Board shall take all steps necessary or appropriate under the Act to amend the
records of the Company and, if necessary, to prepare as soon as practical an
amendment of this Agreement (including an amendment of EXHIBIT A) solely for
purposes of reflecting the admission to the Company of that Member and, if
required by law, shall prepare and file an amendment to the Certificate and may
for these purposes exercise the power of attorney granted pursuant to Section
10.1 hereof.
SECTION 10.3 LIMITATION ON ADMISSION OF MEMBERS. No Person
shall be admitted to the Company as an additional Member if, it would result in
the Company being treated as an association taxable as a corporation or publicly
traded partnership for state or federal income tax purposes or otherwise cause
the Company to become a reporting company under the Exchange Act.
SECTION 10.4 REMEDIES. The Members acknowledge that adequate
legal remedies are not likely to exist for any breach of this Article 10 or the
provisions of Article 9 and, accordingly, that the Company and any aggrieved
Member shall have the right to secure injunctive relief in the event of any
actual or threatened breach of Member's obligations under this Article 10 or the
provisions of Article 9.
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ARTICLE XI
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
SECTION 11.1 LIMITATIONS. The Company may be dissolved,
liquidated, and terminated pursuant to and only pursuant to the provisions of
this Article 11, and the parties hereto do hereby irrevocably waive any and all
other rights that they may have to cause a dissolution of the Company or a sale
or partition of any or all of the Company's assets.
SECTION 11.2 EXCLUSIVE CAUSES. Notwithstanding the provisions
of the Act, the following and only the following events shall cause the Company
to be dissolved, liquidated, and terminated:
(a) The occurrence of a Terminating Capital Transaction,
unless a Majority in Interest of all Members votes to continue the Company
following the occurrence of such Terminating Capital Transaction;
(b) Dissolution of the Company by the written election of all
Members or by operation of law, including, without limitation, judicial
dissolution.
SECTION 11.3 LIQUIDATION. In all cases of dissolution of the
Company, the business of the Company shall be continued to the extent necessary
to allow an orderly winding up of its affairs, including the liquidation and
termination of the Company pursuant to the provisions of this Section 11.3, and,
as promptly as practicable, each of the following shall be accomplished:
(a) The Company Property shall be liquidated in an orderly,
businesslike, and commercially reasonable manner.
(b) Any Net Profit, Net Loss, or other item of income, gain,
loss or deduction realized by the Company upon the sale of the Company Property
or transfer in kind shall be deemed recognized and allocated to the Members in
the manner set forth in Article 5 hereof.
(c) The proceeds of sale of Company assets and all other
assets of the Company shall first be applied to payment of all Company debts and
to the establishment of any necessary Reserves, and then shall be distributed to
the Members in proportion to and to the extent of any positive balances in their
respective Capital Accounts.
However, in the event that the Board determines that an
immediate sale of all or any portion of the Company's assets would cause undue
loss to the Members, the Board, in order to avoid such loss, may, to the extent
not then prohibited by the Act, either (i) defer liquidation of and withhold
from distribution for a reasonable time any Company assets except those
necessary to satisfy the Company's debts and obligations or (ii) distribute such
assets to the Members in kind. If any assets are to be distributed in kind, such
assets shall be distributed on the basis of the net fair market value thereof.
SECTION 11.4 NO CAPITAL CONTRIBUTION UPON DISSOLUTION. Each
Member shall look solely to the assets of the Company for all distributions with
respect to the Company, its
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Capital Contribution thereto, its Capital Account, its share of Net Profits or
Net Losses or other items and shall have no recourse therefor (upon dissolution
or otherwise) against any Member. No Member shall be obligated to restore to the
Company any negative balance that may exist or continue in such Member's Capital
Account.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.1 ACCOUNTING AND FISCAL YEAR. Subject to Code
Section 448, the books of the Company shall be kept on such method of accounting
for tax and financial reporting purposes as may be determined by the Board. The
fiscal year of the Company shall end on December 31 of each year, or on such
other date permitted under the Code as the Board shall determine.
SECTION 12.2 ENTIRE AGREEMENT; BINDING PROVISIONS;
SEPARABILITY. This Agreement constitutes the entire agreement between and among
the parties hereto pertaining to the subject matter hereof and fully supersedes
any and all prior agreements or understandings between or among the parties
hereto pertaining to the subject matter hereof. The covenants and agreements
contained in this Agreement shall be binding upon, and inure to the benefit of,
the heirs, executors, administrators, personal representatives, successors and
permitted assigns of the respective parties hereto. Each provision of this
Agreement shall be considered separable, and, if for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation or effect of those
portions of this Agreement that are valid.
SECTION 12.3 FURTHER ASSURANCES. Each of the parties hereto
does hereby covenant and agree on behalf of itself, its successors, and its
assigns, without further consideration, to prepare, execute, acknowledge, file,
record, publish, and deliver such other instruments, documents, and statements,
and to take such other action as may be required by law or necessary to
effectively carry out the purposes of this Agreement.
SECTION 12.4 NOTICES. Any notice, consent, payment, demand, or
communication required or permitted to be given by any provision of this
Agreement shall be in writing and shall be (a) delivered personally to the
Person or to an officer of the Person to whom the same is directed, or (b) sent
by facsimile or registered or certified mail, return receipt requested, postage
prepaid, addressed as follows: if to the Company, to the Company at the address
set forth in Section 1.3 hereof, or to such other address as the Company may
from time to time specify by notice to the Members; if to a Member, to such
Member at the address set forth in EXHIBIT "A", or to such other address as such
Member may from time to time specify by notice to the Company. Any such notice
shall be deemed to be delivered, given and received for all purposes as of (i)
the date so delivered, if delivered personally, (ii) upon receipt, if sent by
facsimile, or (iii) on the date of receipt or refusal indicated on the return
receipt, if sent by registered or certified mail, return receipt requested,
postage prepaid, and properly addressed.
SECTION 12.5 ATTORNEYS' FEES.. In the event that any action or
proceeding is filed by an Member or by the Company as against the Company or any
other Member to enforce any
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of the covenants or conditions hereof, the party in whose favor final judgment
shall be entered shall be entitled to have and recover of any from the other
party reasonable attorneys' fees to be fixed by the court wherein said judgment
is entered.
SECTION 12.6 TAX MATTERS. The Board shall be designated and
shall operate as "tax matters partner" (as defined in Code Section 6231), to
oversee or handle matters relating to taxation of the Company. The Board may
make all Company elections for federal income and all other tax purposes.
SECTION 12.7 GOVERNING LAW. This Agreement, including its
existence, validity, construction, and operating effect, and the rights of each
of the parties hereto, shall be governed by and construed in accordance with the
laws of the State of Delaware.
SECTION 12.8 AMENDMENTS. No amendments to this Agreement shall
be effective without the prior written approval of all Members, which approval
may be given or withheld in the sole and absolute discretion of a Member.
SECTION 12.9 COUNTERPARTS. This Agreement may be executed in
any number of multiple counterparts, each of which shall be deemed to be an
original copy and all of which together shall constitute one agreement, binding
on all parties hereto.
SECTION 12.10 TITLES; PRONOUNS. Article and Section titles are
for descriptive purposes only and shall not control or alter the meaning of this
Agreement as set forth in the text. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural, as
appropriate.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BECKMAN COULTER, INC., a Delaware
corporation
By:
--------------------------------
Its:
--------------------------------
AFFYMETRIX, INC., a corporation
By:
--------------------------------
Its:
--------------------------------
<PAGE>
EXHIBIT "A"
MEMBERS, CAPITAL CONTRIBUTIONS
AND PERCENTAGE INTERESTS
<TABLE>
<CAPTION>
Name of Member Name and Address of Member Contribution Gross Asset Percentage Number of
Value of Interest Units
Contributed
Property
<S> <C> <C> <C> <C> <C>
Affymetrix 1. [ ](28)
2. [ ](29)
BCI
</TABLE>
- ------------------------------
(28) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(29) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
Exhibit 10.7
EXHIBIT F FORM OF ASSIGNMENT OF ASSETS
THIS ASSIGNMENT OF ASSETS (the "ASSIGNMENT") is made as of
this ____ day of ____________, 1998 between BECKMAN COULTER, INC., a Delaware
corporation ("ASSIGNOR"), and AFFYMETRIX, INC., a California corporation
("ASSIGNEE").
WHEREAS, Assignor and Assignee are parties to that certain
Asset Purchase Agreement of even date herewith (the "AGREEMENT");
WHEREAS, Assignor is the owner of the Acquired Assets, as that
term is defined in the Agreement, which specifically includes the license
contained in that certain agreement between Assignor and Isis Innovation
Limited, revised as of April 17, 1996 (the "ISIS AGREEMENT");
NOW, THEREFORE, in consideration of the respective covenants
and promises contained herein and in the Agreement, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Assignor hereby assigns, grants, transfers, sells, sets
over, conveys, and delivers to Assignee and Assignee hereby accepts and assumes
all of Assignor's right, title and interest in and to all of the Acquired
Assets, including without limitation, the Isis Agreement.
2. Assignee hereby acknowledges that Assignor is making no
representation or warranty with respect to the Acquired Assets being conveyed
hereby except as specifically set forth in the Agreement.
3. Assignee does hereby assume and agree to perform, all of
Assignor's obligations under or with respect to the Isis Agreement, and any
other agreements included within the Acquired Assets, accruing from and after
the date hereof. Assignor shall remain liable for all of Assignor's obligations
under or with respect to the Acquired Assets accruing prior to the date hereof.
4. This Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee and their respective heirs, executors,
administrators, successors and assigns.
<PAGE>
5. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed
this Assignment as of the date first written above.
ASSIGNOR:
BECKMAN COULTER, INC., a Delaware corporation
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
ASSIGNEE:
AFFYMETRIX, INC., a California corporation
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
<PAGE>
Exhibit 10.8
EXHIBIT G
July 23, 1998
Mr. Steve Fodor, President
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Dear Mr. Fodor:
This letter, with your signature below, will serve as the outline for agreements
to be hereafter negotiated under which Affymetrix, Inc. ("Affymetrix") has
granted Beckman Coulter, Inc. ("BCI") a credit of [ ](1) to be applied
against contract research and development services to be performed by
Affymetrix on array chip technology and products of interest to BCI. In
addition to other terms and conditions acceptable to the parties, the
agreements will contain the following:
1. BCI will identify the array chip technology or products of interest
(the "Services"). There may be more than one set of Services. Each set
of Services will be embodied in a separate agreement. Unless Affymetrix
is blocked by a pre-existing agreement with a third party, it will
perform the Services requested by BCI.
2. Prior to commencing a set of Services, the parties will agree on, and
embody in the respective agreement, a budget and milestones and a
proposed completion date for such Services.
3. Affymetrix will charge against the credit of [ ](2) on a time and
material basis using billing and overhead rates for the employees
utilized which are at least as favorable as those charged internally by
Affymetrix for its own research and development activities.
4. Affymetrix will use reasonable commercial efforts to complete the
services.
5. BCI will own inventions and know-how generated by Affymetrix in the
performance of the Services. BCI will grant licenses to Affymetrix, on
reasonable terms and conditions to be hereafter negotiated, to use such
patents and know-how on array chips which do not directly compete with
array chips distributed by BCI.
6. If the parties do not sign an agreement for Services embodying the
understandings of this letter within [ ](3) years of the above
date, then Affymetrix, at its option, will either
- -------------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
pay BCI [ ](4) or give BCI shares of Affymetrix stock having a
value of [ ].(5) If Affymetrix elects to give BCI shares of
Affymetrix stock, such shares shall be registered and fungible on
receipt of BCI. [ ].(6)
If the foregoing properly sets forth our intent, please sign both copies of this
letter in the space indicated and return one copy to me; the second copy is for
your files.
Very truly yours,
Beckman Coulter, Inc.
by:
---------------------------------------
title: President & Chief Operating Officer
Understood and Accepted:
Affymetrix, Inc.
by:
---------------------------
title: President/CEO
- --------------
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
Exhibit 10.9
OEM SUPPLY AGREEMENT
OEM SUPPLY AGREEMENT ("Agreement") effective this ___________ day of
___________ 1998 by and between AFFYMETRIX, INC. a California corporation,
having a place of business at 3380 Central Expressway, Santa Clara, California
95051 ("Affymetrix", as that term is further defined in Paragraph 1.2 hereof)
and BECKMAN COULTER, INC., a Delaware corporation, having a place of business at
4300 North Harbor Boulevard, Fullerton, California 92834-3100 ("BCI", as that
term is further defined in Paragraph 1.4 hereof).
R E C I T A L S
I. Affymetrix is in the business of developing, manufacturing and
selling Array Chips (as that term is hereinafter defined).
II. BCI desires to purchase Array Chips from Affymetrix for resale to
BCI customers.
NOW THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
ARTICLE 1.0 DEFINITIONS
The following terms, when used herein with an initial capital letter
and without regard to whether they appear in the singular, plural or possessive
form, shall have the following defined meanings:
1.1 "AFFILIATE" shall mean any corporation or other form of limited
liability legal person, partnership, association, joint venture or other form of
business entity controlled by, controlling or under common control with a party
hereto. As used herein, the word and root "control" in the context of a
corporation shall mean the ownership, directly or indirectly, of more
<PAGE>
than fifty percent (50%) of the voting shares or other equity interests entitled
to vote in the election of directors of the corporation; and, in the context of
any other form of business entity, the right to receive more than fifty percent
(50%) of the net profits of such entity and the right to a majority interest in
the management and control of such entity; provided that notwithstanding the
foregoing definition, BCI may not have as an Affiliate entitled to receive the
benefits of the licenses granted under Section 3.1 hereof (a) a corporation
wherein any of the companies listed in Exhibit A is more than a passive investor
in such Affiliate and such passive investor does not have the right to manage or
control such Affiliate or (b) a partnership wherein any of the companies listed
in Exhibit A is a partner.
1.2 "AFFYMETRIX" shall mean Affymetrix, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.3 "ARRAY CHIPS" shall mean a series of polynucleotides arranged on a
substrate to perform quantitative or qualitative analyses.
1.4 "BCI" shall mean Beckman Coulter, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.5 "BCI SYSTEM" shall mean an instrument, device or system
manufactured or distributed by BCI which uses Array Chips to perform
quantitative or qualitative analyses. For the avoidance of doubt, if an
instrument, device or system is manufactured by a third party and distributed by
BCI only those specific instruments, devices or systems which are sold or leased
or otherwise distributed to end users (directly or indirectly) by BCI are BCI
Systems and the identical instrument, device or system which is sold, leased or
otherwise distributed directly to the end user by the manufacturer or indirectly
from the manufacturer to a third party and then to the end user are not BCI
Systems.
2
<PAGE>
1.6 "PRODUCT" shall mean an Array Chip manufactured by Affymetrix and
sold to BCI under the terms of this Agreement.
ARTICLE 2.0 IDENTIFICATION OF ARRAY CHIPS AS PRODUCTS
2.1 IDENTIFICATION OF ARRAY CHIPS BY AFFYMETRIX - Affymetrix shall,
from time to time, notify BCI, in writing, of: (a) [ ](1) or (b)
[ ](2). Such notice shall contain an offer from Affymetrix to
manufacture and supply such Array Chips to BCI under the terms of this
Agreement. Such notice shall also contain the specifications of such Array
Chip, the transfer price for such Array Chip at an identified annual volume
of purchases by BCI (the "Target Purchases") and a price ladder showing the
transfer prices if the BCI purchases in any year are above or below the
Target Purchases. The proposed transfer prices in such offer shall be fixed
for the first year of BCI purchases.
2.1.1 The Affymetrix offer shall remain open for not less than
[ ](3) from the date of receipt by BCI and may be accepted by BCI, by
written notice to that effect to Affymetrix within such period. If BCI
accepts such offer, such Array Chip shall become a Product under this
Agreement.
2.2 IDENTIFICATION OF ARRAY CHIPS BY BCI - BCI may, from time to time,
propose an Array Chip to be developed by Affymetrix and, when developed,
manufactured by Affymetrix under this Agreement. The BCI proposal shall be in
writing and shall specify the particulars of the
- ----------------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE>
Array Chip and contain an estimate of BCI's anticipated purchases in each of the
next five (5) years.
2.2.1 The BCI proposal shall remain in effect for not less
than [ ](4) from the date of receipt by Affymetrix. Affymetrix may, by
written notice to BCI, at any time within such period offer to develop and
manufacture the proposed Array Chip for BCI. The Affymetrix offer will
include a development schedule, the amount (if any) of Affymetrix development
expenses to be reimbursed by BCI, the specifications for the Array Chip, a
proposed first delivery date when commercial scale deliveries will begin, a
transfer price for such Array Chip at Target Purchases and a price ladder
showing the transfer prices if the BCI purchases in any year are above or
below the Target Purchases. The proposed transfer prices in such offer shall
be fixed for the first year of BCI purchases.
2.2.2 The Affymetrix offer shall remain open for not less than
[ ](5) from the date of receipt by BCI and may be accepted by BCI by
written notice to Affymetrix to that effect within such period. If BCI
accepts such offer such Array Chip shall become a Product under this
Agreement.
2.2.3 Affymetrix and BCI are parties to a research and
development agreement of even date herewith under which Affymetrix has agreed
to perform [ ](6) of contract research and development services on Array
Chip technology and products of interest to BCI (the "R and D Agreement"). To
the extent that any part of the [ ](7) under the R and D
- ---------------
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
<PAGE>
Agreement is unspent and an Affymetrix offer under Paragraph 2.2.1 hereof
includes development expenses to be reimbursed by BCI then BCI shall off-set
such development expenses by applying the unspent R and D funds up to the full
amount of such development expenses.
ARTICLE 3.0 MANUFACTURE AND SUPPLY
3.1 SUPPLY - PURCHASE COMMITMENT - Affymetrix agrees to and shall
manufacture, sell and deliver to BCI and BCI shall purchase and take from
Affymetrix such quantities of the Products as BCI may order in accordance with
Paragraphs 3.4 and 3.4.1 hereof.
3.2 SPECIFICATIONS - Each Product shall conform to its specifications
in the Affymetrix offer of Article 2.0. Such specifications shall automatically
be added to this Agreement, as Exhibit A, concurrently with the BCI acceptance
of such offer. Notwithstanding the preceding sentence, BCI may at any time
request changes, modifications or additions to the specifications either prior
or subsequent to their addition to Exhibit A. Affymetrix will negotiate in good
faith such changes, modifications or additions, including any corresponding
adjustment to the transfer price or other applicable terms and conditions of
this Agreement and will use reasonable commercial efforts to incorporate such
BCI requested changes, modifications or additions. The new specifications will
then be added to Exhibit A in replacement for the specification in the
Affymetrix offer of Article 2.0.
3.3 CHANGES TO THE PRODUCTS - Affymetrix shall notify BCI of any
proposed changes to a Product or to the raw materials used therein, or the
methods for their manufacture, storage or shipment which may alter the Product's
stability or performance. Such notice shall include a full description of the
proposed change and sufficient samples of the proposed new product for BCI
- --------------
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
to determine if the new product meets each and all of the specifications for
such Product in Exhibit A, correlates in all respects with the Product or
requires any operating software change for the BCI System. BCI will complete
such determination promptly, but in no event longer than [ ](8) after
receipt of such samples. If BCI determines that the proposed new product
either does not meet specifications or does not correlate with the existing
Product, then Affymetrix will, at its option, either not make the change or
continue to sell BCI the existing Product for the remainder of the term of
this Agreement. If BCI determines that the proposed new product meets
specifications and correlates with the existing Product but requires a change
to the operating software for the BCI System, then Affymetrix agrees to and
shall: (a) continue to sell BCI the existing Product until the introduction
of BCI's next regularly scheduled software modification for the effected BCI
System and (b) provide sufficient samples of the new product at the prices
specified in Paragraph 4.3, for BCI to perform system validation. If BCI
determines that the proposed new product meets specifications, correlates
with the existing Product and does not require any change to the operating
software, then Affymetrix may make the desired changes and introduce the new
product on ninety (90) days prior written notice.
3.4 FORECASTS AND ORDERING OF PRODUCT - BCI shall, promptly after
acceptance of an Affymetrix offer under Article 2.0 for a Product provide
Affymetrix with a written forecast of the quantities of such Product which BCI
anticipates it will purchase from Affymetrix during each of the next twelve (12)
months. A non-cancelable BCI Purchase Order for the total quantity, if any,
specified during the initial six (6) months of this Agreement, shall accompany
the forecast. The remaining six (6) months of the forecast shall be BCI's best
estimate of its requirements for such
- ----------------
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
6
<PAGE>
Product from Affymetrix during such period. The forecast shall not be binding on
either party and shall be used for planning purposes only.
3.4.1 BCI shall, within ten (10) days of the end of each three
(3) month period commencing with the acceptance of the Affymetrix offer of
Article 2.0 for a Product, send Affymetrix a revised twelve (12) month forecast
for such Product. BCI shall include with each revised forecast a non-cancelable
Purchase Order for the quantities, if any, of such Product specified in months
four (4) through six (6). The remaining six (6) months of the revised forecast
shall be BCI's best estimate of its requirements for such Product from
Affymetrix during such period, shall not be binding on either party and shall be
used for planning purposes only.
3.4.2 Affymetrix shall build Products for BCI only in response
to a BCI Purchase Order and not to a BCI forecast.
3.4.3 Each BCI Purchase Order shall set forth the quantity to
be purchased, the delivery date, the form, in which the Products are to be
shipped and shipping instructions.
3.5 DELIVERY - Affymetrix shall deliver the Products in the
quantities specified in the BCI Purchase Orders, FOB Affymetrix loading dock.
Affymetrix understands and accepts that BCI operates on a "just-in-time"
manufacturing system and that the delivery date specified by BCI in the
non-cancelable Purchase Order is when BCI needs the Products in-house.
Accordingly, Affymetrix will plan, manufacture, test and provide adequate
transportation time to assure that the delivery date is met. Affymetrix will
promptly communicate to the BCI Purchasing Agent any anticipated delays in
delivery so that special shipping or other arrangements can be made.
Affymetrix will be responsible [ ](9). Any disputes arising from
delivery scheduling shall, to the extent possible, be resolved by the BCI
Purchasing Agent and the Affymetrix Account Manager. Any unresolved
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7
<PAGE>
disputes shall be transferred to BCI and Affymetrix Vice-Presidents for
settlement. Any disputes which have not been settled by the party's
Vice-Presidents will be resolved in accordance with Paragraph 14.2.
3.5.1 BCI is not required to accept partial shipments.
3.6 RETURN MATERIAL AUTHORIZATION - Affymetrix agrees to promptly
respond to all requests for return material authorizations and bear all freight
and insurance costs associated with either Products which do not meet
specifications or over shipments of Product.
3.7 PRODUCT PROBLEM - Each party shall promptly communicate to the
other all information which comes to its attention pertaining to adverse
reactions, product anomalies, or stability problems relative to or having a
bearing on the Products. Affymetrix shall promptly investigate and regularly
report back to BCI on its actions contemplated and taken to resolve all such
problems.
3.8 PRODUCT CORRECTIVE ACTION - BCI shall be responsible for,
coordinate and conduct any corrective action required for Products sold
hereunder to its customers. If such corrective action is caused by the failure
or fault of Affymetrix to comply with Paragraphs 3.2 or 5.1, then Affymetrix
shall replace, at no cost to BCI, all Products affected thereby and shall
reimburse BCI for collection of the defective Product and shipment of
replacement Product.
3.8.1 Each party shall retain samples of each quantity of
Products sold hereunder. The number of samples retained shall be specified by
BCI prior to Affymetrix establishing the Target Price and the conditions of
storage shall be specified by the current labeling of the Products and shall be
used to determine if any product failures or product corrective actions are the
result of a failure of Affymetrix to conform with the requirements of
8
<PAGE>
Paragraphs 3.2 or 5.1 or the result of an Affymetrix design or manufacturing
defect and thus the responsibility of Affymetrix or a storage or handling defect
and thus the responsibility of BCI.
3.9 PURCHASE AND SALE FORMS - Any terms and conditions on either a BCI
Purchase Order or an Affymetrix Order Acknowledgment or any other document
relating to the purchase, sale or transfer of Products between the parties which
are in conflict with any of the terms of this Agreement shall be null and void
and without legal effect.
3.10 TECHNICAL LITERATURE AND MARKETING ASSISTANCE - Affymetrix shall
supply BCI with copies of all current and hereafter developed published
technical literature relative to the Products. BCI may freely copy such
literature, in whole or in part, without royalty or payment to Affymetrix
therefor and may use such copies only in conjunction with its sale and customer
support of the Products. BCI shall, prior to using such copied literature,
obtain Affymetrix approval to the copy, graphics and format of such copied
literature, which approval shall not be unreasonably withheld or delayed.
3.11 PROGRAM MANAGER - Each party shall appoint a Program Manager who,
except for notices under Article 6.0, shall be the source of all communications
from, and the addressee of all communications to, such party relative to the
Products. The Program Managers shall meet from time to time, not less than
semi-annually, to discuss each party's performance and resolve any differences.
ARTICLE 4.0 PRICING AND PAYMENT
4.1 PRICING - Subject to Paragraph 4.2, the transfer price from
Affymetrix to BCI or each Product shall be that specified in the Affymetrix
offer of Article 2.0.
9
<PAGE>
4.2 PRICE CHANGES [ ].(10)
4.3 PRICE FOR PRODUCTS USED IN INTERNAL TESTING - Notwithstanding
anything in this Agreement to the contrary, the prices charged by Affymetrix for
Products to be used by BCI for application to the BCI System validation, systems
integration or other internal or quality control testing shall be [ ].(11)
BCI shall identify or its Purchase Order the quantity of Products required
for the foregoing purposes and subject to the prices of this Paragraph 4.3
and certify that such Products are for internal purposes only.
4.4 PAYMENT TERMS - BCI shall pay each Affymetrix invoice for Products
within thirty (30) days of the latter of receipt of the Products or the invoice.
4.5 INVOICE INFORMATION - Affymetrix will include the following
information on all invoices and packing slips: (i) Purchase Order number
including the alpha character prefix, (ii) line item number, (iii) release
number, and, on invoices, the packing slip number. Affymetrix understands and
agrees that failure to comply with these requirements may delay payment.
ARTICLE 5.0 QUALITY ASSURANCE AND COMPLIANCE WITH LAWS
5.1 WARRANTY - Subject to the next sentence, Affymetrix warrants
that the Products are upon receipt by Beckman and shall be for a period of
not less than [ ](12) thereafter [ ](13) and [ ](14).
Affymetrix will use reasonable commercial efforts to
- ---------------
(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(14) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10
<PAGE>
increase the period of the warranty to [ ].(15) Affymetrix shall use
reasonable commercial efforts to [ ](16). Affymetrix' sole obligation
under this warranty is limited to [ ](17).
I. THE FOREGOING WARRANTY SHALL BE IN LIEU OF ANY
OTHER WARRANTIES EXPRESS OR IMPLIED, RESPECTING
THE PRODUCTS SUPPLIED HEREUNDER, INCLUDING, BUT
NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. IN NO CASE SHALL AFFYMETRIX BE LIABLE FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING FROM
OR IN ANY WAY CONNECTED WITH THE WARRANTY OF THIS
PARAGRAPH 5.1.
5.1.1 Affymetrix, subject to the next sentence hereof,
warrants that the Products do not infringe [ ](18) owned by a third
party and not licensed to Affymetrix. The foregoing warranty shall not apply
(a) to a Product wherein BCI specified the Gene or Genes to be incorporated
and it is the Gene or Genes which infringe, or (b) to a Product wherein BCI
specified a change in the design or structure of the Product and but for the
BCI specified change the Product would not infringe, or (c) to a Product
which, in and of itself, does not infringe but only that Product in
combination with something not provided by Affymetrix which infringes.
5.2 QUALITY TESTING - Affymetrix agrees to and shall, prior to shipment
of any of the Products sold hereunder, perform each of the quality tests on such
Products to be hereafter agreed by the parties and attached to this Agreement as
Exhibit B. Affymetrix shall provide a
- ---------------
(15) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(16) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(17) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(18) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
11
<PAGE>
Certificate of Analysis in a form mutually agreed upon by the parties specifying
conformance to the preceding sentence and the numerical or other results of such
testing.
5.3 RECEIPT AND ACCEPTANCE - BCI may reject any shipment of Products
that does not conform to the warranty of Paragraph 5.1
5.4 GOOD MANUFACTURING PRACTICES - Affymetrix represents and warrants
that it will at all times under this Agreement use commercially reasonable
efforts to comply with U.S. FDA good manufacturing practices then in effect and
conform to all other applicable statutes and regulations. BCI may, from time to
time, upon not less than five (5) days prior written notice to Affymetrix
inspect the Affymetrix facilities where the Products are being manufactured
and/or stored.
5.5 QUALITY GOAL - BCI's quality goal is to receive, and Affymetrix'
quality goal is to supply, defect-free material. Accordingly, the parties agree
to a "zero-defect" objective. Affymetrix understands BCI's supplier philosophy
and quality supplier principles, and accepts those principles as the basis of
the relationship between Affymetrix and BCI. Affymetrix and BCI agree to
communicate openly and to work together on quality programs to achieve long-term
success for the businesses involved. Meetings to review progress will be held.
This Paragraph 5.5 is not intended to impose on either party any legal
obligations additional to those imposed by the other sections of this Agreement.
It is intended simply to recognize the quality focus on which the parties'
business relationship is based.
5.6 MSDS - Affymetrix shall, if required by law, provide Material
Safety Data Sheets for the Products, as required by 29 CFR 1910.1200.
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<PAGE>
5.7 REGULATORY APPROVAL - Affymetrix shall assist BCI in obtaining any
regulatory approvals required to make, use and/or sell diagnostic products made
from or with the Products. Such assistance shall be at BCI's expense and
include, but not be limited to, providing such information and data relative to
the Products as may be requested or required by any governmental agency or body.
ARTICLE 6.0 RIGHTS TO BECKMAN
6.1 EXCLUSIVE SELLER AND DISTRIBUTOR - Affymetrix hereby appoints BCI,
and BCI accepts appointment, as Affymetrix' sole and exclusive seller and
distributor throughout the world of the Products for use on BCI Systems. Nothing
in the preceding sentence or this Agreement shall prevent Affymetrix from
selling Array Chips identical to Products for use on Affymetrix systems or
instruments or the instruments or systems of a third party.
6.2 RESTRICTIONS ON AFFYMETRIX - Affymetrix will not knowingly, after
exercising due caution, care and diligence, and undertaking reasonable inquiry,
sell any Array Chips to an end user who will use such Array Chips on a BCI
System. Similarly, Affymetrix will proactively and regularly inform each of its
dealers and distributors of Affymetrix Array Chips that such Array Chips should
not be sold to an end user who will use such Array Chips on a BCI System.
ARTICLE 7.0 CONFIDENTIALITY
7.1 CONFIDENTIALITY - Each party shall maintain in confidence (with the
same level of care as the receiving party uses to safeguard its own highly
confidential and proprietary information, but no less than a reasonable level of
care) any information received during the term of this Agreement from the other
party in written or graphic form or other tangible medium of expression that is
marked confidential. Neither party shall copy nor publish, disseminate nor
13
<PAGE>
disclose such information to any third party or use such information except for
the furtherance of the specific purposes of this Agreement without the express
written permission of such other party. Subject to the next sentence, the
foregoing obligations of confidentiality and non-use shall continue for five (5)
years after the expiration of this Agreement. The obligation of the first two
sentences shall not apply to any information which is: (a) now or hereafter
comes into the public domain, or (b) which is already in the possession of the
receiving party other than as a result of having received it from the disclosing
party and as shown by written records, or (c) is brought to the receiving party
by a third party who does not require that it be maintained confidential or (d)
is independently developed by the receiving party without use of or access to
the information of the disclosing party. Information shall not be deemed to be
in the public domain or in the receiving party's possession merely because it is
embraced by more general information in the public domain or the receiving
party's possession or merely because individual items of the information are in
the public domain or the receiving party's possession. Upon termination of this
Agreement, each party shall, at the other party's request, destroy or return to
such other party all copies of such information; provided that, counsel for each
receiving party may retain one (1) copy of such information solely for the
purpose of monitoring such party's obligation of confidentiality under this
Agreement.
7.2 OBLIGATIONS OF RECEIVING PARTY - Each party agrees that it shall,
at its sole cost, take all measures (including but not limited to court
proceedings) to restrain its officers, employees, directors and agents from
unauthorized use or disclosure of the Information.
7.3 INJUNCTION - Each party, acknowledges and agrees that money damages
would not be a sufficient remedy for its breach of this Article 7.0 and that the
disclosing party shall be entitled to equitable relief including injunction and
specific performance as a remedy for any such
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<PAGE>
breach. Such remedies shall not be deemed the exclusive remedy for the receiving
party's breach but shall be in addition to all other remedies available to the
disclosing party. Article 14.0 shall not be a limitation on the remedies
available to the disclosing party for a breach by the receiving party of this
Article 7.0.
ARTICLE 8.0 THIRD PARTY PATENTS
Subject to the next sentence hereof, Affymetrix agrees to and shall
defend, indemnify and hold BCI and its customers harmless, including
attorneys fees necessary to consider, advise and defend, from and against any
suit, proceeding, claim or loss and any damages or penalties awarded or
agreed to therein so far as such suit or proceeding is based upon an
assertion that the use or sale of Products purchased under this Agreement
constitutes an infringement of [ ](19). The foregoing indemnity shall
not apply (a) to a Product wherein BCI specified the Gene or Genes to be
incorporated and it is the Gene or Genes which infringe, or (b) to a Product
wherein BCI specified a change in the design or structure of the Product and
but for the BCI specified change the Product would not be alleged to
infringe, or, (c) to a Product which, in and of itself, is not alleged to
infringe but only that Product in combination with something not provided by
Affymetrix is alleged to infringe. If a Product is, in such suit or
proceeding, held to infringe and its further use or sale is enjoined
Affymetrix shall, at its sole cost and expense, either (1) procure for BCI
and its direct and indirect customers, the right to continue using and
selling such Product, (2) replace the same with a non-infringing equivalent,
or (3) modify such Product so that it becomes non-infringing. Affymetrix will
be responsible for and manage all court proceedings on behalf of BCI for
claims made under this Paragraph. BCI shall assist Affymetrix
(19) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
at Affymetrix' cost in any reasonable way in handling court proceedings.
Affymetrix has the right on behalf of BCI to settle claims brought under this
Paragraph by third parties.
ARTICLE 9.0 HOLD HARMLESS
9.1 HOLD HARMLESS - Affymetrix agrees to and shall defend, indemnify
and hold BCI, its employees, agents and officers harmless, including
attorneys fees necessary to consider, advise and defend, from and against any
suit or proceeding alleging injury to persons, including death, or property
and any liability, damages or penalties awarded therein and resulting from
and arising out of [ ](20). of Products prior to receipt thereof by BCI.
BCI agrees to and shall defend, indemnify and hold Affymetrix, its employees,
agents and officers harmless, including attorneys fees necessary to consider,
advise and defend, from and against any suit or proceeding alleging injury to
persons, including death, or property and any liability, damages or penalties
awarded therein and resulting from or arising out of [ ](21). Neither
party will settle a claim from a third party without the prior written
consent of the other party hereto. Each indemnifying party will be
responsible for and manage court proceedings on behalf of the indemnified
party on claims brought by a third party under this Paragraph. The
indemnified party shall assist the indemnifying party at the indemnifying
party's cost in any reasonable way in handling court proceedings. The
indemnifying party has the right on behalf of the indemnified party to same
claims from third parties brought under this Paragraph.
9.2 INSURANCE - Each party shall at all times during the term of this
Agreement self insure for, or purchase and maintain, comprehensive general
liability insurance including products liability, contractual liability and
broad form property damage with combined single limits for
(20) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(21) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
bodily injury and/or death and property damage of [ ](22) for any one
occurrence. Such insurance shall also require thirty (30) days' prior written
notice of cancellation or material change in coverage. The insurance to apply to
any claim will be governed by Paragraph 9.1 and with respect to a party's
indemnification obligations thereunder, provide that such insurance is primary
without right of contribution from any other insurance which might otherwise be
available to the insured party and provide that in the event of loss payment
under a policy the insurer shall waive any rights of subrogation against the
insured party and shall waive any set-off or counterclaim or any other deduction
whether by attachment or otherwise as respects the activities under this
Agreement or any other agreement between the parties.
ARTICLE 10.0 TERM AND TERMINATION
10.1 TERM - the term of this Agreement shall be ten (10) years from the
effective date identified on Page 1.
10.2 TERMINATION FOR CAUSE - Should either party be in default as to
any material term of this Agreement and fail to remedy same within forty-five
(45) days after receipt of written notice of such default by the non-defaulting
party, then the non-defaulting party shall have, in addition to all other
remedies available at law or in equity, the right to terminate this Agreement
upon delivery of written notice of termination to the defaulting party, provided
that:
(a) Such notice specifies with particularity the basis for
such default.
(b) Such termination shall only relieve the parties of
obligations which would have arisen under this Agreement after the effective
date of termination and shall in no way relieve the parties from any obligations
existing on the date of such termination.
(22) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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<PAGE>
(c) The failure of the non-defaulting party to terminate this
Agreement for any cause shall not constitute a waiver of such right in the
future as to any subsequent default.
ARTICLE 11.0 NOTICES
All notices provided for in this Agreement shall be in writing and
shall be considered delivered when they are personally delivered or are sent by
facsimile, with acknowledgement of receipt in good order requested and received,
or deposited in the mail, registered first class, postage prepaid, or sent by
DHL, Federal Express or similar overnight carrier, addressed to the respective
parties as follows:
If to Beckman: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attention: President
with a copy to: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attention: General Counsel
If to Affymetrix: Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention: President
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attention: General Counsel
ARTICLE 12.0 SEVERABILITY
12.1 INVALID OR UNENFORCEABLE PROVISIONS - In the event a court of
competent jurisdiction holds any provision of this Agreement to be invalid or
unenforceable, such holding shall have no effect on the remaining provisions and
they shall continue in full force and effect.
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<PAGE>
12.2 CONFLICT WITH APPLICABLE STATUTE - If any of the provisions of
this Agreement are in conflict with any applicable statute or rule of law, then
such provisions shall be deemed inoperative to the extent that they conflict
therewith and shall be deemed to be modified so as to conform with such statute
or rule of law.
12.3 EFFECT AND REMEDIES - In the event that the provisions of this
Agreement are materially altered as a result of Paragraphs 12.1 and 12.2, the
parties will renegotiate the affected terms and conditions to resolve any
inequities.
ARTICLE 13.0 ASSIGNMENT
Neither party shall assign this Agreement to another without the prior
written consent of the other party; provided, however, that either party may
assign this Agreement to an Affiliate or a successor in ownership of all or
substantially all of the business assets of the party seeking to assign this
Agreement. Any other purported assignment shall be void. This Agreement shall be
a binding obligation of the heirs, successors and permitted assigns of all the
right, title and interest of either party hereto.
ARTICLE 14.0 LAW GOVERNING AND CONSTRUCTION
14.1 GOVERNING LAW - This Agreement shall be governed by and construed
in accordance with the laws of California, without regard to the conflicts of
laws provisions thereof. Both parties agree to use their best efforts in a good
faith attempt to settle as promptly as possible any and all disputes arising
from transactions pursuant to this Agreement, but failing an amicable
settlement, such disputes shall be decided in accordance with Paragraph 14.2.
14.2 MEDIATION AND ARBITRATION - Except for breaches or anticipated
breaches of Article 7.0, any controversy or conflict involving this Agreement,
its interpretation or the
19
<PAGE>
respective rights or obligations of the parties shall first be submitted to
their respective Vice-Presidents for resolution. If they cannot agree, the
controversy shall be submitted to mediation to be held in a mutually agreeable
neutral place. If the parties still cannot settle the controversy or reach an
accommodation, the matter shall be submitted to binding arbitration to be
conducted in California at a location to be mutually agreed in accordance with
the following rules:
(a) there shall be a panel of three (3) arbitrators, all of
whom shall be lawyers and at least two (2) of which shall be competent to fully
understand the technology relating to the Products and BCI Systems. If the
parties cannot agree on the selection of the three (3) then each shall pick one
(1) arbitrator and the two (2) so chosen shall select the third.
(b) All disputes which are not specifically raised by the
parties in the arbitration process shall be forever waived.
(c) The arbitration proceeding shall be governed by (i) the
rules and understandings set forth in this Paragraph 14.2 or as hereafter agreed
upon in writing by the parties, and (ii) to the extent not inconsistent with
such rules and understandings, by the Commercial Arbitration Rules of the
American Arbitration Association.
(d) The parties agree to refrain from filing a lawsuit with
regard to any aspect of their controversy and to abide by and perform any award
rendered by the arbitrators. The parties further agree that a judgment of a
Court having jurisdiction may be entered upon the award and an execution may be
issued for its collection.
(e) At least two (2) of the panel of arbitrators must agree on
each point in controversy for an award to be rendered.
(f) The arbitration hearing shall be convened within
forty-five (45) days of request therefor by either party. The request shall be
in writing and sent in accordance with
20
<PAGE>
Article 11.0. The hearing shall be limited to three days: Each party shall have
a maximum of eight (8) hours to put on its main case and four (4) hours for
rebuttal. Neither party shall engage in extended cross-examination or other
tactics which have the effect of substantially altering this allocation.
(g) The parties agree to exchange all documents they intend to
produce at the hearing at least thirty (30) days in advance of taking of
depositions, serving of interrogatories or any other form of discovery and
neither party may compel the appearance of the other party's employees,
officers, directors or consultants.
(h) The arbitrator's decision must be rendered within thirty
(30) days after completion of the arbitration hearing.
(i) A transcript may, at the option of the parties, be made.
Either party may, at its expense, tape record or video tape the proceedings.
(j) All applicable common law or statutory privileges such as
attorney-client or attorney work product shall be applicable to the arbitration
proceedings.
(k) Either party may, at its option, use prepared testimony as
long as the witness whose testimony is so presented is available to the other
party for cross-examination.
(l) Each party shall bear its own expenses for the arbitration
and they shall each share equally in the expenses and fees of the arbitration
panel.
14.3 MUTUALITY - This Agreement has been drafted after considerable
negotiation by the parties and on the basis of mutual understanding; neither
party shall be prejudiced as being the drafter thereof.
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<PAGE>
ARTICLE 15.0 PUBLIC STATEMENTS
Neither party shall make any public announcement or authorize or author
any statement to the press regarding this Agreement or any of its terms or
conditions of the relationships between the parties created by this Agreement
without the prior written permission of the other party. The terms and
conditions of this Agreement shall be maintained as confidential in accordance
with Article 7.0 hereof.
ARTICLE 16.0 FORCE MAJEURE
Each of the parties hereto shall be excused from the performance of its
obligations under this Agreement in the event performance is prevented by Force
Majeure. For purposes of this Agreement, Force Majeure is defined as a cause
beyond the control of the effected party, including but not limited to acts of
God, acts, laws or regulations of any government, civil disorder, strikes,
destruction of production facilities or material by fire, water, earthquake or
storm, epidemics and failures of public utilities or common carriers. The party
incurring a Force Majeure condition shall notify the other party that such
condition exists within five (5) days of the time such party learns of such
condition. Should such Force Majeure condition continue for forty-five (45) days
after such notice, the non-affected party may, at its option, terminate this
Agreement.
ARTICLE 17.0 RELATIONSHIP CREATED
The relationship created by this Agreement shall be strictly that of a
supplier and purchaser. Neither party is hereby constituted an agent or legal
representative of the other party for any purpose whatsoever. Neither party is
granted any right or authority hereunder to assume
22
<PAGE>
or create any obligation, express or implied, or to make any representations,
warranties or guarantees on behalf or in the name of the other party, except to
the extent that such right or authority, or such representations, warranties or
guarantees are expressly provided for in this Agreement.
ARTICLE 18.0 ENTIRE AGREEMENT, MODIFICATION
18.1 ENTIRE AGREEMENT - This instrument contains the entire and only
agreement between the parties respecting the subject matter hereof and
supersedes all previous negotiations, representations, understandings, promises
or conditions, both written and oral, heretofore made between the parties with
respect to the subject matter hereof.
18.2 MODIFICATION - No waiver, alteration or modification of this
Agreement shall be valid unless made in writing and signed by a duly authorized
representative of BCI and Affymetrix.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement by
their duly authorized representatives as of the day and year first written
above.
Beckman Coulter, Inc. Affymetrix, Inc.
By: By:
----------------------------- --------------------------------
Date: July 31, 1998 Date: 31 July 98
<PAGE>
Exhibit 10.14
August 28, 1998
VIA FEDERAL EXPRESS
Mr. Steve Fodor, President
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Dear Mr. Fodor:
This letter, with your signature below, will constitute an Agreement between
Beckman Coulter, Inc. ("BCI") and Affymetrix, Inc. ("Affymetrix") to (i) amend
certain provisions of the agreements signed by the parties on July 31, 1998 as
well as attach certain schedules and exhibits to those agreements that were not
fully completed or not available at the time of such signing; and, (ii) conclude
negotiations with respects to the Limited Liability Company Operating Agreement
("Operating Agreement") which is Exhibit E to the Asset Purchase Agreement and
the Management Agreement referred to in the Operating Agreement. Upon full
execution and delivery of this letter, the amendments, schedules, exhibits and
the Operating Agreement and Management Agreement, as modified by this letter,
shall each become effective. We have agreed as follows:
1. ASSET PURCHASE AGREEMENT
a. Definitions: "BCI Technology". The parties confirm that Schedule 1,
attached to this Letter Agreement, shall constitute "Schedule 1"
referred to in the definition of "BCI Technology". BCI hereby confirms
that Schedule 1 contains all of the information necessary to complete
Schedule 4 of the Asset Purchase Agreement (which Schedule is referred
to in Section 4(e) of the Asset Purchase Agreement), and the parties
hereby agree that Schedule 1 shall also constitute "Schedule 4" for
the purposes of such agreement.
b. Definitions: "Exclusive License". The parties confirm that Exhibit B,
attached to this Letter Agreement, shall constitute "Exhibit B"
referred to in the definition of "Exclusive License".
c. Paragraph 3(a), line 2 - after "Exhibit G" insert "without charge or
cost to Seller,".
d. Paragraph 3(f), line 2 - after "efforts" insert "in light of
commercial opportunity".
<PAGE>
e. Paragraph 4(i), line 15 - after "Paragraph 2(c)" insert "and all
agreements relating to the transaction contemplated in this Agreement
shall be rescinded and of no force or effect."
2. LICENSE AGREEMENT, EXHIBIT D TO THE ASSET PURCHASE AGREEMENT
a. Heading, line 2 - insert (in the blank space) "California".
b. Heading, line 6 - change "Newco" to "LLC".
c. Paragraph 1.1, lines 12 and 15 - after "Exhibit A" insert (and their
successors and affiliates)".
d. Paragraph 1.4 - delete in its entirety.
e. Paragraph 1.13 - rewrite the first two (2) lines as follows: "Patent
Rights" shall mean all applications for patent (and any divisional,
continuation, continuation-in-part or substitute of such applications)
and patents (and reissues and reexaminations of such patents)."
f. Paragraph 3.1, line 8 - change "LLC (both occurrences) to "BCI".
g. Section 3.1.1 - replace the third sentence with the following;
"If Affymetrix notifies BCI that such third party is an infringer of
the Patent Rights and (i) Affymetrix fails to grant a license within
[____________](1) of such notice or (ii) fails to bring litigation to
halt such infringement either within the [_________](2) or within
[________](3) of the conclusion of any pending litigation against
another party involving the Patent Rights, unless the third party
intended supplier ceases its infringements or takes a license from
Affymetrix, then BCI may use such third party as a supplier of BCI
Array Chips under the license of Paragraph 3.1."
h. Section 4.4.1 - delete the second sentence and replace it with the
following:
"BCI shall also pay interest on the amount that is withheld and
finally paid to Affymetrix at the rate of [ ](4) per
month from the date that such amount is due under the Agreement."
- ----------
(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2
<PAGE>
i. Article 6.0, line 9 - after "patent" insert "within the
[__________](5) or within [___________](6) of the conclusion of any
pending litigation against another party involving the Patent
Rights."
j. Article 10.0, line 4 - after "notify BCI" insert "an independent
accounting firm selected by BCI (the "Auditor")"
After line 13 - insert:
"The Auditor shall use such information only for the purposes of
determining whether Affymetrix is in compliance with its obligations
under this Article 10.0. The Auditor shall not be permitted to
disclose any information provided hereunder to BCI except with respect
to a license reported hereunder with which the Auditor disagrees with
an Affymetrix determination (as described in the following sentence)."
k. Article 11, line 7 - change "BCI" to "LLC" line 14 - change
"President" to "General Manager"
3. LIMITED LIABILITY COMPANY OPERATING AGREEMENT, EXHIBIT E TO THE ASSET
PURCHASE AGREEMENT
a. Heading, line 3 - insert (in the blank space) "California".
b. Definition of "Affymetrix" insert (in the blank space) "California".
c. Definition of "Unit" - delete the first line and substitute in its
place "the shares of the Company".
d. Section 6.4 - add the following as clause (f):
"(f) enter, propose to enter or commit the Company to enter into any
Terminating Capital Transactions."
e. Section 6.8 - delete lines 5-9 and substitute in it place the
following:
"Affymetrix shall not [ ](7); provided, that
if the law or regulations of any country where such Affiliate is
domiciled prohibit one hundred percent (100%) ownership of a domestic
Person by a foreign Person or tax incentives in the country of
domicile require domestic
- ----------
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE>
participation in the Person to receive the benefit of the tax
incentive, then, in such case the Affiliate may have access to the
Isis Agreement and the patents which are the subject thereof so long
as Affymetrix owns the maximum percentage allowed by such law or
regulation or the maximum percentage that still enables Affymetrix to
receive the benefit of such tax incentive."
f. Section 8.2 - delete lines 1-6; replace it with the following:
"Affymetrix specifically acknowledges that its duty to maintain the
Isis Agreement in full force and effect and to maintain the status of
Company as an Affiliate of Affymetrix with full and unrestricted
access to the licenses provided for under the Isis Agreement are
essential and material elements of this Agreement and a material part
of the consideration to BCI. Accordingly, Affymetrix agrees to and
shall, at all times during the term of the Isis Agreement (a) fully,
completely and".
g. Add the following as Section 10.5:
"Section 10.5. APPROVAL FOR MEMBER ADMISSIONS, ASSIGNMENTS, TRANSFERS
AND SUBSTITUTIONS. Notwithstanding anything else in Articles 6, 9 or
10 to the contrary, except as provided in this Section 10.5, the
admission of any new Members to the Company, whether as an Assignee,
Additional Person or Substituted Member or otherwise, shall be subject
to the prior written approval of Affymetrix, provided that Affymetrix
will not withhold its approval, except as to third parties who are in
litigation with Affymetrix or are infringing its intellectual property
rights, provided that legal action is taken by Affymetrix against such
infringers within 6 months of notice to Affymetrix by BCI that BCI
want them to become a Member. If Affymetrix does not take legal action
against such third party within such 6 months, then Affymetrix shall
consent to their becoming a new Member to the Company. For the
avoidance of doubt, however, each of BCI and Affymetrix may transfer
all of its rights and obligations under this Agreement and in the
Company without the consent of the other (or any other Member), but
only if such transfer is to a third party acquiring all or
substantially all of the assets of BCI or Affymetrix as the case may
be."
h. Exhibit A
(i) Under "Name and Address", the description currently set forth
opposite "Affymetrix" is hereby deleted and replaced with the
following "Affymetrix, Inc. 3380 Central Expressway, Santa
Clara, California 95051".
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<PAGE>
(ii) Under "Contribution" the following shall be inserted: (a) for
Affymetrix, "[___________];(8) provided that, LLC complies with
Paragraph 5.3 of the Isis Agreement"; and (b) for BCI,
"[__________]".(9)
(iii) Under "Percentage Interest" the following shall be inserted
(a) for Affymetrix, "[_______________]",(10) and (b) for BCI,
"[________________]".(11)
(iv) Under "Number of Units" the following shall be inserted (a)
for Affymetrix, "[___________________]";(12) and (b) for BCI,
"[________________]".(13)
4. MANAGEMENT AGREEMENT BETWEEN LLC AND BECKMAN COULTER
a. Delete Section 8(d) replace it with the following:
"Neither party to this Agreement may transfer or assign this
Agreement, in whole or in part, without the prior written consent of
the other party, provided, that either party may transfer and assign
this Agreement without the consent of the other party to a third party
acquiring all or substantially all of its assets".
5. EXHIBIT G TO THE ASSET PURCHASE AGREEMENT
a. Add the following as new Paragraph 7:
"[________________]."(14)
6. OEM SUPPLY AGREEMENT, EXHIBIT H TO THE ASSET PURCHASE AGREEMENT
a. Paragraph 1.1, lines 12 and 14, after "Exhibit A") insert "(and their
successors and assigns)".
b. Paragraph 2.2.3, line 2 - after "perform" insert [ ](15).
c. Paragraph 3.3, line 1 - after "shall" insert "for each Product sold by
BCI for clinical in vitro diagnostics".
- ----------
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(10) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(11) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(12) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(13) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(14) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(15) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
d. Paragraph 5.1.1, line 10 - after "infringes" insert ", or (d) use of a
Product pursuant to BCI instructions, associated products, software or
reagents so long as the Product, in and of itself, does not directly
infringe, and it is only in combination with such instructions,
associated products, software or reagents that such Products does
directly infringe."
7. CONSORTIUM AGREEMENT
a. Heading, line 4 - insert (in the blank space) "California".
b. Article 2, line 1 - after "shall" insert ", without charge or cost to
BCI,".
c. Paragraph 3.1, line 1 - insert (in the blank space) "ninety (90)".
d. Paragraph 3.3, line 3 - after efforts" insert "consistent with
commercial opportunity".
8. OEM SUPPLY AGREEMENT, EXHIBIT B TO THE CONSORTIUM AGREEMENT
a. Paragraph 1.1, lines 12 and 14 - after "Exhibit A" insert "(and their
successors and affiliates").
b. Paragraph 2.2.3, line 2 - after "perform" insert [ ](16).
9. LICENSE AGREEMENT, EXHIBIT C TO THE CONSORTIUM AGREEMENT
a. Heading, line 2 - insert (in the blank space) "California".
b. Paragraph 1.10, line 3 - change "twenty (20) years to
[ ](17).
c. Paragraph 3.3 - delete lines 1-10 and substitute in their place:
"NOTIFICATION OF NEW PATENT RIGHTS. BCI shall, on or about each
anniversary of this Agreement inform Affymetrix of any U.S. patents
which have issued in the preceding twelve (12) months which fall
within the definition of Patent Rights and each patent which is
controlled by BCI wherein the agreement granting such control was
signed in the preceding twelve (12) months.
10. LICENSE AGREEMENT, EXHIBIT D TO THE CONSORTIUM AGREEMENT
a. Paragraph 1.1, lines 12 and 15 - after "Exhibit A" insert "(and their
successors and affiliates)".
b. Paragraph 1.13 - rewrite the first two (2) lines as follows:
"Patent Rights" shall mean all applications for patent (and any
divisional, continuation, continuation-in-part or substitute of such
applications) and patents (and reissues and reexaminations of such
patents),".
- ----------
(16) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(17) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
6
<PAGE>
c. Section 3.1.1 - replace the third sentence with the following:
"If Affymetrix notifies BCI that such third party is an infringer of
the Patent Rights and (i) Affymetrix fails to grant a license within
[_____________](18) of such notice or (ii) fails to bring
litigation to halt such infringement either within the
[___________](19) or within [____________](20) of the conclusion of
any pending litigation against another party involving the Patent
Rights, unless the third party intended supplier ceases its
infringement or takes a license from Affymetrix, then BCI may use
such third party as a supplier of BCI Array Chips under the license
of Paragraph 3.1."
d. Section 4.4.1 - delete the second sentence and replace it with the
following:
"BCI shall also pay interest on the amount that is withheld and
finally paid to Affymetrix at the rate of [ ](21) per month
from the date that such amount is due under the Agreement."
e. Article 6.0, line 9 - after "patent" insert "within the
[__________](22) or within [___________](23) of the conclusion of
any pending litigation against another party involving the Patent
Rights."
f. Article 10.0, line 4 - after "notify" delete "BCI" and insert "an
independent accounting firm selected by BCI (the "Auditor")"
After line 13 - insert
"The Auditor shall use such information only for the purposes of
determining whether Affymetrix is in compliance with its obligations
under this Article 10.0. The Auditor shall not be permitted to
disclose any information provided hereunder to BCI except with respect
to a license reported hereunder with which the Auditor disagrees with
an Affymetrix determination (as described in the following sentence)."
11. LICENSE AGREEMENT (STAND ALONE)
a. Paragraph 1.1, lines 12 and 15 - after "Exhibit A" insert "(and their
successors and affiliates)".
- ----------
(18) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(19) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(20) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(21) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(22) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(23) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7
<PAGE>
b. Paragraph 1.13 - rewrite the first two (2) lines as follows:
"Patent Rights" shall mean all applications for patent (and any
divisional, continuation, continuation-in-part, or substitute of such
applications) and patents (and reissues and reexamination of such
patents),"
c. Section 3.1.1 - replace the third sentence with the following:
"If Affymetrix notifies BCI that such third party is an infringer of
the Patent Rights and (i) Affymetrix fails to grant a license
within [ ](24) of such notice or (ii) fails to bring
litigation to halt such infringement either within the
[___________](25) or within [__________](26) of the conclusion of
any pending litigation against another party involving the Patent
Rights, unless the third party intended supplier ceases its
infringement or takes a license from Affymetrix, then BCI may use
such third party as a Supplier of BCI Array Chips under the license
of Paragraph 3.1."
d. Section 4.4.1 - delete the second sentence and replace it with the
following:
"BCI shall also pay interest on the amount that is withheld and
finally paid to Affymetrix at the rate of [ ](27) per month
from the date that such amount is due under the Agreement."
e. Article 6.0, line 9 - after "patent" insert "within the
[____________](28) or within [___________](29) of the conclusion of
any pending litigation against another party involving the Patent
Rights."
f. Article 10.0, line 4 - after "notify BCI" inset "an independent
accounting firm selected b BCI (the "Auditor")
After line 13 - insert:
"The Auditor shall use such information only for the purposes of
determining whether Affymetrix is in compliance with its obligations
under this Article 10.0. The Auditor shall not be permitted to
disclose any information provided hereunder to BCI except with respect
to a license reported hereunder with which the Auditor disagrees with
an Affymetrix determination (as described in the following sentence)."
- ----------
(24) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(25) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(26) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(27) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(28) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(29) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8
<PAGE>
12. BCI ACTIONS WITH RESPECT TO ISIS AGREEMENT. Notwithstanding anything to the
contrary in the Operating Agreement or Management Agreement, BCI shall not
take or fail to take any action that causes the LLC to lose its status as
an Affiliate of Affymetrix during the term of the Isis Agreement.
13. NO LOSSES TO AFFYMETRIX FROM LLC. Notwithstanding anything to the contrary
in the Operating Agreement or Management Agreement, the LLC shall be
managed by BCI so that [ ](30) required to be reflected in
Affymetrix' financial statements.
14. BCI INDEMNITY. Except as to actions taken, approved, consented to or
ratified by the Board of Directors of the Limited Liability Operating
Company, at a meeting at which Affymetrix participated and expressly
agreed, BCI shall indemnify Affymetrix for any liability or damage arising
from the activities of the LLC.
15. AFFYMETRIX CONTRIBUTION TO LLC. The initial contribution to the LLC by
Affymetrix is set forth in Exhibit A to the Operating Agreement.
Notwithstanding anything to the contrary in the Operating Agreement or the
Management Agreement, Affymetrix shall not be required to contribute
additional cash or other property to the LLC at any time without its
consent.
16. TERMINATION OF AFFYMETRIX LETTER OF JULY 31, 1998 (NUSSBACKER TO WAREHAM).
The letter of July 31, 1998 from Ken Nussbacker to John Wareham is
terminated and superceded by this letter.
If the foregoing property sets forth our understanding, please sign both copies
in the space indicated and return one copy to me; the second copy is for your
files.
Very truly yours,
Beckman Coulter, Inc.
by:
-----------------------------
title:
----------------------------
Understood and Accepted:
Affymetrix, Inc.
by:
------------------------------
title:
----------------------------
(30) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
9
<PAGE>
SCHEDULE 1
[________________ ].(31)
- ----------
(31) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
amendment No. 1 to the Registration Statement (Form S-3) of the Affymetrix, Inc.
for the registration of 1,000,000 shares of its common stock and to the
incorporation by reference therein of our report dated January 29, 1999 (except
for Note 11, as to which the date is March 25, 1999) with respect to the
financial statements and schedule of Affymetrix, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
Palo Alto, California
July 23, 1999
