<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ----------------------
Commission file number 1-13768
ONCORMED, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1842781
------------------------ ----------------------------------
(State of Incorporation) (I.R.S Employer Identification No.)
205 PERRY PARKWAY
GAITHERSBURG, MARYLAND 20877
----------------------------------------
(Address of principal executive offices)
(Zip code)
(301) 208-1888
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES x NO
----- -----
At May 6, 1997, there were 7,814,022 shares of Common Stock outstanding at a
par value of $.01.
<PAGE> 2
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits filed as part of this Form 10-Q
10.34* Term Sheet, dated February 24, 1997, between the Company
and Oncor.
10.35* License, Services and Marketing Agreement, dated
February 25, 1997, between the Company and Incyte
Pharmaceuticals, Inc.
(b) Reports on Form 8-K
In a report filed on Form 8-K dated March 6, 1997, the Company
announced a collaboration with Incyte Pharmaceuticals, Inc.
* Confidential treatment has been granted. The omitted portions have been
separately filed with the Securities and Exchange Commission.
26
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONCORMED, INC.
Date: April 20, 1998 /s/ DR. TIMOTHY J. TRICHE
-------------------------------------------------------
Dr. Timothy J. Triche, Chairman and Chief Executive
Officer
Date: April 20, 1998 /s/ DR. DOUGLAS DOLGINOW
-------------------------------------------------------
Dr. Douglas Dolginow, President and Chief Operating
Officer
Date: April 20, 1998 /s/ L. ROBERT JOHNSTON, JR.
-------------------------------------------------------
L. Robert Johnston, Jr., Vice President and Chief
Financial Officer
27
<PAGE> 4
ONCORMED, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C>
EX-11 Calculation of Earnings Per Share 29
EX-27 Financial Data Schedule 30
( in EDGAR transmission only)
10.34* Term Sheet, dated February 24, 1997, between the Company and Oncor.
10.35* License, Services and Marketing Agreement, dated February 25, 1997, between the
Company and Incyte Pharmaceuticals, Inc.
</TABLE>
* Confidential treatment has been granted. The omitted portions have been
separately filed with the Securities and Exchange Commission.
28
<PAGE> 1
TERM SHEET
LICENSING ARRANGEMENT
BETWEEN
ONCOR, INC.
AND
ONCORMED, INC.
THIS TERM SHEET CONSTITUTES A BINDING OBLIGATION OF EACH OF ONCOR, INC., A
MARYLAND CORPORATION ("ONCOR"), AND ONCORMED, INC., A DELAWARE CORPORATION
("ONCORMED"). ONCOR AND ONCORMED AGREE TO NEGOTIATE IN GOOD FAITH TO AMEND AND
RESTATE THE EXISTING AGREEMENT (AS DEFINED BELOW). SUCH AMENDED AND RESTATED
AGREEMENT SHALL BE REFERRED TO HEREIN AS THE "NEW AGREEMENT." IN THE EVENT
THAT ANY TERM OR CONDITION OF THE EXISTING AGREEMENT CONFLICTS WITH THE AGREED
UPON TERMS AND CONDITIONS SET FORTH HEREIN, THE TERMS AND CONDITIONS SET FORTH
HEREIN SHALL GOVERN AND CONTROL AND SHALL BE INCORPORATED INTO THE NEW
AGREEMENT AND SUPERSEDE ANY CONFLICTING TERMS AND CONDITIONS OF THE EXISTING
AGREEMENT. THE NEW AGREEMENT, IF AND WHEN EXECUTED, SHALL SUPERSEDE THE
EXISTING AGREEMENT AND THIS TERM SHEET.
AMENDED AND RESTATED TECHNOLOGY LICENSE AGREEMENT
CURRENT ARRANGEMENT Restated Technology License
Agreement, dated as of June 6,
1994 (the "Existing Agreement").
PARTIES Oncor and OncorMed (collectively,
the "Parties").
DEFINED TERMS Capitalized terms used but not
defined herein shall have the
meanings ascribed to such terms
in the Existing Agreement.
IMPROVEMENTS TO ONCOR TECHNOLOGY; In consideration for the
ONCORMED TECHNOLOGY; amendments to the Existing
ASSIGNMENT Agreement set forth herein and
in the New Agreement, OncorMed
agrees that any existing and
future Improvements, whether
discovered, invented, developed
or acquired by OncorMed, to Oncor
Technology or Additional Oncor
Technology shall automatically be
assigned to Oncor without any
further consideration. Oncor
Technology and existing
Improvements to Oncor Technology,
discovered, invented, developed
or acquired by OncorMed, are set
forth on Schedule A hereto.
In consideration for the
amendments to the Existing
Agreement set forth herein and in
the New Agreement, OncorMed shall
be assigned ownership rights to
all existing and future OncorMed
Technology (except Improvements,
whether discovered, invented,
developed or acquired by
OncorMed, to Oncor Technology or
Additional Oncor Technology which
shall automatically be assigned
to Oncor without any further
consideration). Existing
OncorMed Technology is set forth
on Schedule A hereto.
CONFIDENTIAL TREATMENT HAS BEEN GRANTED PURSUANT TO RULE 246-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED PORTIONS HAVE BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 2
The Parties will take all steps
necessary to promptly perfect the
assignment and transfer of (i)
the Improvements to the Oncor
Technology and (ii) the OncorMed
Technology without any further
consideration.
LICENSE In addition to an exclusive
license set forth in the Existing
Agreement in the OncorMed Defined
Field, the New Agreement shall
provide that Oncor shall license
to OncorMed, on a non-exclusive
basis, the Oncor Technology and
the existing and future
Improvements to Oncor Technology
assigned to it for use in the
"New Defined Field," which shall
be defined as: "The provision by
OncorMed of services direct to
third parties other than the
services that are included in the
OncorMed Defined Field." The
exclusive and non-exclusive
license described in the
immediately preceding sentence
shall be referred to herein as
the "License." OncorMed shall
not have the right to grant
sublicenses of any rights
exclusively licensed to it by
Oncor within the OncorMed Defined
Field pursuant to the terms of
the Existing Agreement or the New
Agreement, except with the prior
written approval of Oncor, which
approval shall not be
unreasonably withheld. OncorMed
shall not have the right to grant
sublicenses of any rights
non-exclusively licensed to it by
Oncor within the New Defined
Field pursuant to the terms of
the Existing Agreement or the New
Agreement, except with the prior
written approval of Oncor, which
approval may be withheld at
Oncor's sole discretion.
<PAGE> 3
PAYMENTS In lieu of the royalty payment
(the "Existing Royalty Payment")
set forth in the Existing
Agreement, the New Agreement
shall provide that OncorMed shall
make payments to Oncor (the "New
Payments") equal to the
percentage set forth below of (1)
OncorMed's annual Net Sales (as
reported in OncorMed's quarterly
and annual reports filed from
time to time with the Securities
and Exchange Commission) less (2)
any such Net Sales as shall be
mutually agreed from time to time
by the Parties ((1) less (2)
shall be referred to as the "Base
Revenue"). The payments due
shall be calculated as follows:
(i) for aggregate annual Base
Revenues of up to (****), the
payment due shall be four percent
(4%) of such Base Revenues, (ii)
for aggregate annual Base
Revenues of between (****) and
(****), the payment due shall be
three percent (3%) of such Base
Revenues, and (iii) for aggregate
annual Base Revenues in excess of
(****), the payment due shall be
two percent (2%) of such Base
Revenues. The payments due shall
be calculated and paid quarterly
in arrears within forty-five (45)
days of the end of the previous
quarter. "Net Sales" shall be
defined as: "gross revenues and
fees due to OncorMed and its
sublicensees (which have been
approved by Oncor) from the sale
of any service less (i) any
allowances actually made and
taken for returns, refunds or
recalls; trade discounts actually
allowed in amounts and for
purposes customary in the trade;
an allowance for actual bad
debts, not to exceed six percent
(6%) of gross revenues and fees;
sales, use, value-added and
similar taxes and duties and
similar governmental assessments;
transportation, packing and
shipping insurance actually paid;
and the direct costs (as
determined in accordance with
generally accepted accounting
principles) to OncorMed and its
sublicensees (which sublicensees
have been approved by Oncor) of
any reagents, chemicals, supplies
and materials used in providing
the service." During the first
year the New Agreement is in
effect, OncorMed shall be
obligated to pay at least a
minimum payment equal to $50,000
per quarter. During the second
year the New Agreement is in
effect, OncorMed shall be
obligated to pay at least a
minimum payment equal to $25,000
per quarter. Thereafter,
OncorMed shall not be obligated
to pay Oncor a minimum payment.
Upon the execution of the New
Agreement, OncorMed shall have no
further obligation to pay the
Existing Royalty Payment Amounts.
The New Payments will go into
effect on April 1, 1997.
**** Denotes language for
which confidential
treatment has been
granted pursuant to the
rules and regulations
of the Securities
Exchange Act of 1934,
as amended.
<PAGE> 4
OWNERSHIP RIGHTS Oncor shall own all proprietary
rights, interest in and title to
all (a) Oncor Technology it has
discovered, invented, developed
or acquired, and (b) Additional
Oncor Technology, and that Oncor
alone shall have a direct license
with the licensor of those parts
of the Oncor Technology and
Additional Oncor Technology which
are licensed to Oncor by third
parties. OncorMed shall own all
proprietary rights, interest in
and title to all OncorMed
Technology and that OncorMed
alone shall have a direct license
with the licensor of those parts
of the OncorMed Technology which
are licensed to OncorMed by third
parties. Oncor shall own all
Improvements, whether discovered,
invented, developed or acquired
by OncorMed, to Oncor Technology
and Additional Oncor Technology.
RIGHT OF FIRST OFFER Except for Improvements to Oncor
Technology or Additional Oncor
Technology either discovered,
invented, developed or acquired
by OncorMed and assigned to Oncor
pursuant to the terms set forth
herein, and subject to certain
contractual provisions in which
third parties limit the
transferability of licensed,
assigned or otherwise transferred
technology, prior to the license
or disposition (whether by
assignment or license) to a third
party of Oncor Technology,
Additional Oncor Technology, or
OncorMed Technology (in each case
"Transferable Technology"), the
offering party shall offer the
other party terms for a license
or assignment, and the other
party shall have a thirty (30)
day period in which to license or
acquire the Transferable
Technology on the offered terms.
If the offer is declined or is
not accepted during such period,
the offering party may license or
dispose (whether by assignment,
transfer or license) of the
Transferable Technology to a
third party on terms no more
favorable to the third party than
the terms offered by such
offering party to the other party
to the New Agreement. If the
offer is accepted, the Parties
agree to negotiate in good faith
the terms and conditions of any
such license or acquisition
agreement; provided, however,
that if the Parties are unable to
agree upon the terms and
conditions of any such license or
acquisition agreement within
thirty (30) days of the
acceptance of the offer, the
offering party may license or
dispose (whether by assignment,
transfer or license) of the
Transferable Technology to a
third party on terms no more
favorable to the third party than
the terms offered by such
offering party to the other party
to the New Agreement.
<PAGE> 5
BRCA1 TECHNOLOGY Notwithstanding the right of
first offer referenced above,
in the event a patent is allowed
to OncorMed on BRCA1 technology
OncorMed shall offer
Oncor terms for a license or
assignment of such technology,
and the Parties shall enter into
good faith negotiations for a
license or assignment agreement
on terms and conditions mutually
acceptable to both Parties. In
the event that the Parties are
not able to reach agreement
within ninety (90) days from the
date Oncor first receives such
offer, then OncorMed shall be
entitled to license or assign
such technology to third parties
on terms that are no more
favorable to the third party than
the final terms offered by
OncorMed to Oncor during such
ninety (90) day period (the
"Consideration Period").
BRCA2 TECHNOLOGY At any time prior to the end of
the Consideration Period, Oncor
can exercise a right to enter
into a sublicense for any (****)
technology licensed, acquired or
developed by OncorMed in which
(i) Oncor will pay Fifty Percent
(50%) of the direct expenses
associated with BRCA2 technology
and (ii) Oncor will share in
Fifty Percent (50%) of the revenue
derived from the BRCA2 technology.
PROPRIETARY RIGHTS Oncor will retain the right and
discretion to apply for,
prosecute, maintain and defend
all Proprietary Rights in the
Oncor Technology, the Additional
Oncor Technology and the
Improvements thereto discovered,
invented, developed or acquired
by OncorMed. OncorMed will
retain the right and discretion
to apply for, prosecute, maintain
and defend all Proprietary Rights
in the OncorMed Technology (other
than Improvements, whether
discovered, invented, developed
or acquired by OncorMed, to Oncor
Technology and Additional Oncor
Technology).
PUBLICATIONS OncorMed shall be entitled at its
sole discretion to make any
publication, public announcement,
press release or other disclosure
which incorporates or makes
reference to OncorMed Technology
(other than Improvements, whether
discovered, invented, developed
or acquired by OncorMed, to Oncor
Technology and Additional Oncor
Technology). OncorMed shall have
no obligation to inform Oncor of
any such publication, public
announcement, press release or
other disclosure.
**** Denotes language for
which confidential
treatment has been
granted pursuant to the
rules and regulations
of the Securities
Exchange Act of 1934, as
amended.
<PAGE> 6
ENFORCEMENT Oncor shall have the sole right
to enforce any Proprietary Right
to the Oncor Technology, the
Additional Oncor Technology and
the Improvements thereto
discovered, invented, developed or
acquired by OncorMed. OncorMed
shall have the sole right to
enforce any Proprietary Right to
the OncorMed Technology (other
than Improvements, whether
discovered, invented, developed or
acquired by OncorMed, to Oncor
Technology and Additional Oncor
Technology).
CHANGE IN CONTROL Upon a Change in Control of
OncorMed, the acquiring party
shall have the option to either
(i) maintain the New Agreement or
(ii) terminate the New Agreement
provided that (A) the acquiring
pays the Termination Payments and
(B) the acquiring party shall
have the option to retain the
License in exchange for a (****)
royalty on Net Sales derived from
the technology subject to the
License. Upon a Change in Control
of Oncor, the acquiring party
shall have the option to either
(i) maintain the New Agreement or
(ii) terminate the New Agreement
provided that the License (on a
royalty-free basis) shall remain
in full force and effect
notwithstanding such termination.
In addition, the licenses or
sublicenses that may be
negotiated in the future between
the Parties pursuant as
contemplated herein shall have
separate change in control
provisions that govern. The term
"Change in Control" shall be
defined as: (i) a stockholder
approved merger or consolidation
in which securities possessing
more than fifty percent (50%) of
the total combined voting power
of the outstanding securities of
either Oncor or OncorMed, as the
case may be, are transferred to a
person or persons different from
the persons holding such
securities immediately prior to
such transaction, or (ii) a
stockholder approved sale,
transfer or other disposition of
all or substantially all of the
assets of Oncor or OncorMed, as
the case may be, assets in
complete liquidation or
dissolution of Oncor or OncorMed,
as the case may be." The term
"Termination Payments" shall be
defined as: "An amount equal to
the higher of (i) (****) and (ii)
(****). At the election of the
acquiring party, the Termination
Payments shall be made either (i)
quarterly in arrears within
forty-five (45) days of the end
of the previous quarter until
June 4, 2004 (prorated for any
partial quarters as
appropriate) or (ii) in one lump
sum payment of the then net
present value of the future
Termination Payments as
determined by mutual agreement
between Oncor and the acquiring
party.
CONFIDENTIALITY Section 12(c) of the Existing
Agreement shall be amended to
read as follows: "Upon any
termination of this Agreement,
each party will promptly return
or destroy any Proprietary
Information of the other and any
copies, extracts and derivatives
thereof, except as otherwise set
forth in this Agreement;
provided, however, that each
party shall be entitled to retain
one copy of such Proprietary
Information for its corporate
files solely for use in any
litigation or dispute involving
such Proprietary Information.
**** Denotes language for
which confidential
treatment has been
granted pursuant to
the rules and
regulations of the
Securities Exchange Act
of 1934, as amended.
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Term
Sheet as of the 24th day of February, 1997.
ACCEPTED AND AGREED:
ONCOR, INC.
By: /s/ Cecil Kost
---------------------------------------
Name: Cecil Kost
-------------------------------------
Title: President and COO
------------------------------------
ONCORMED, INC.
By: /s/ Doug Dolginow
---------------------------------------
Name: Doug Dolginow
-------------------------------------
Title: President
------------------------------------
<PAGE> 8
SCHEDULE A
I. (****)
II. (****)
III. (****)
**** Denotes language for which confidential treatment has been granted
pursuant to the rules and regulations of the Securities Exchange
Act of 1934, as amended.
<PAGE> 1
LICENSE, SERVICES AND MARKETING AGREEMENT
THIS LICENSE, SERVICES AND MARKETING AGREEMENT (the "Agreement") dated
as of February 25, 1997 (the "Effective Date"), is entered into between Incyte
Pharmaceuticals, Inc., a Delaware corporation ("Incyte"), having a place of
business located at 3174 Porter Drive, Palo Alto, CA 94304, and OncorMed, Inc.,
a Delaware corporation ("OncorMed"), having a place of business located at 205
Perry Parkway, Gaithersburg, MD 20877.
W I T N E S S E T H:
WHEREAS, Incyte owns or has rights in certain patent rights and
know-how regarding certain high-throughput DNA sequencing, cloning, gene
expression profiling, and data analysis technologies; and
WHEREAS, Incyte has compiled and is compiling, and owns, certain
information and data regarding certain cDNAs (as defined below) and genomic
DNAs in confidential databases which may be useful in human diagnostics and
prognostics; and
WHEREAS, Incyte owns or has rights in certain rights and know-how
regarding certain cDNAs as well as certain of the proteins they encode; and
WHEREAS, OncorMed has expertise in gene function characterization; and
WHEREAS, OncorMed owns or has rights in certain patent rights and
know-how regarding certain technologies associated with DNA analysis and has
expertise in developing diagnostic services; and
WHEREAS, OncorMed can procure human cells and tissues which are
removed for the purpose of patient care and diagnosis, the advancement of
medical research or education and/or discarded; and
WHEREAS, OncorMed desires to cooperate with Incyte for the purposes of
providing Incyte with cells and tissues and coordinating access to the Tissue
Repository (as defined below) utilizing such tissues and in exchange for
Incyte's funding the
CONFIDENTIAL TREATMENT HAS BEEN GRANTED PURSUANT TO RULE 246-2 OF THE SECURITIES
EXCHANGE ACT OF 1934 AS AMENDED. THE OMITTED PORTIONS HAVE BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
1
<PAGE> 2
development of the Tissue Repository and for OncorMed's gaining access to the
Tissue Repository and Tissue Repository Database (as defined below) provided by
Incyte; and
WHEREAS, OncorMed desires to utilize certain gel-based sequencing
technology owned by Incyte for its sequence-based human diagnostics business;
and
WHEREAS, Incyte desires to secure access to technology and rights to
intellectual property resulting from research performed by OncorMed utilizing
Incyte's proprietary DNA sequences, gel based sequencing technology, and/or
other technology of Incyte's provided at Incyte's discretion to OncorMed.
WHEREAS, simultaneous and in connection with entering into this
Agreement, Incyte will purchase 372,555 shares of Common Stock of OncorMed for
$3,000,000 pursuant to the Securities Purchase Agreement between Incyte and
OncorMed.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of the Agreement, the terms defined in this Article 1 shall have
the respective meanings set forth below:
1.1 "Affiliate" shall mean shall mean an entity directly or indirectly
controlling, controlled by or under common control with a Party, where control
means the ownership or control, directly or indirectly, of more than fifty
percent (50%) of all of the voting power of the shares (or other securities or
rights) entitled to vote for the election of directors or other governing
authority, as of the Effective Date or hereafter during the Term of this
Agreement; provided that such entity shall be considered an Affiliate only for
the time during which such control exists.
2
<PAGE> 3
1.2 "cDNA" shall mean a DNA copy of human mRNA.
1.3 "Collaborative Inventions" shall mean any patentable discovery,
improvement, or invention conceived of or reduced to practice by OncorMed and
Incyte personnel during and under this Agreement using Licensed Technology
which are not Incyte Technology, Gene Product Inventions, Technology
Improvements, or Inventions under OncorMed Technology. Any Inventions that are
Collaborative Inventions will be mutually agreed to be such by the Development
Team from time to time.
1.4 "Collaborative Services" shall mean the Gene Functional Studies
Program, Tissue Repository Services and/or any other services which the Parties
mutually agree in writing shall be provided by OncorMed to Incyte during and
under the Term of this Agreement all as set forth in Annex A hereto, as such
Annex A is amended from time to time during the term of this Agreement in
accordance with Section 13.4 hereof.
1.5 "DNA Sequence Information" shall mean any human nucleotide sequence
provided by Incyte to OncorMed.
1.6 "Fair Market Value" shall mean the price or value that would be paid
by a Third Party purchaser in an arm's-length transaction.
1.7 "Full Length Clone(s)" shall mean with respect to a given human gene a
specific, purified cDNA clone containing the nucleotide sequence of the entire
amino acid coding region of such human gene.
1.8 "Gel-Based Sequencing Technology" shall mean technology, whether or
not patentable, developed by Incyte prior to, and during the term of this
Agreement, used by Incyte in its high throughput slab gel-based DNA sequencing
operation, provided to OncorMed during and under this Agreement. and described
in Annex C to this Agreement, as such annex may be amended from time to time
during the term of the Agreement in accordance with Section 13.4 hereof.
1.9 "Gene Functional Studies Program" shall mean functional analyses of
Gene Products, that are provided by OncorMed to Incyte.
3
<PAGE> 4
1.10 "Gene Product Invention(s)" shall mean Invention(s) made by OncorMed
utilizing a Gene Product provided by Incyte to OncorMed during and under this
Agreement.
1.11 "Gene Product(s)" shall mean any DNA Sequence Information or cDNA
clone(s) corresponding to a given gene, and materials that are developed or
derived therefrom, or are based thereon (including without limitation, partial
cDNAs, DNAs, genes, full length cDNAs corresponding thereto, RNAs, peptides,
polypeptides and proteins encoded thereby).
1.12 "Incyte Technology" shall mean all technology owned by Incyte,
including, but not limited to, all patents, patent applications, technical
information, data, materials, apparatuses, know-how and other proprietary
rights, including the Research Information, Gel-Based Sequencing Technology,
Technology Improvements, Gene Products provided by Incyte to OncorMed, Gene
Product Inventions, the LifeSeq Database and Transcript Imaging analysis
technology, proprietary to Incyte, which, on the Effective Date of this
Agreement, or at any time during the term of this Agreement, Incyte owns or has
a right to license. Incyte Technology shall not include Collaborative
Inventions.
1.13 "Invention(s)" shall mean any patentable discovery, improvement, or
invention conceived of or reduced to practice by OncorMed utilizing Licensed
Technology or a Gene Product provided to OncorMed by Incyte during and under
this Agreement including, but not limited to, new uses, processes, methods,
formulas and techniques. Inventorship, which may or may not include Incyte
personnel, is to be established in accordance with U.S. patent law.
1.14 "Licensed Technology" shall mean the technology, including Gel-Based
Sequencing Technology and Gene Product(s) which Incyte provides to OncorMed and
describes in writing in Annex C to this Agreement, as such annex shall be
amended from time to time during the term of the Agreement in accordance with
Section 13.4 hereof.
4
<PAGE> 5
1.15 "Licensing Revenues" shall mean, with respect to a license granted to
a Gene Product Invention, and on a Gene Product by Gene Product basis, the
difference of
(a) all licensing revenues received by Incyte or its Affiliate(s)
from Third Parties (****).
less
(b) (****)
Licensing Revenues shall include non-cash payments Incyte receives from Third
Parties in consideration for Gene Product Invention(s) as above. Licensing
Revenues shall also include consideration received by Incyte with respect to
an assignment or other conveyance by Incyte of its ownership interests in any
Gene Product Invention to a Third Party. The cash value of such non-cash
payments will be determined in good faith by Incyte, and will be reflected in
Incyte's consolidated financial statements prepared on a basis consistent with
generally accepted accounting principles.
(****)
1.16 "Net Sales" shall mean the gross invoiced sales by OncorMed (including
the cash value of non-cash consideration as determined in good faith by
OncorMed, which will be reflected in OncorMed's consolidated financial
statements prepared on a basis consistent with generally accepted accounting
principles) for (****) less
(i) any allowance actually made and taken for returns, refunds or
recalls;
(ii) an allowance for actual bad debts consisting of debt amount
subtracted against revenues in the period during which the debt is
written off for financial purposes on a basis consistent with
generally accepted accounting principles, provided that such amount
not exceed (****) percent of Net Sales;
(iii) sales, value added and other direct taxes; and
(iv) any transportation, packing and shipping insurance costs
actually paid which are incurred in transporting the product in final
form to such customers.
1.17 "OncorMed Clinical Diagnostic Services" shall mean mutation analysis
information provided for a fee or other consideration by OncorMed to Third
Parties relating to an analysis of individual genes.
1.18 "OncorMed Technology" shall mean all technology owned by OncorMed and
any discovery or invention (whether or not patentable) conceived of or reduced
to practice by OncorMed: 1) without use of Incyte Technology as can be
documented by written record created at the time of such independent discovery
or invention, or 2) utilizing the Gel-Based Sequencing Technology or Technology
Improvements solely for purposes of the OncorMed Clinical Diagnostic Services,
and which are not Technology Improvements, Gene Product Inventions or
Collaborative Inventions.
1.19 "Party" shall mean Incyte or OncorMed.
1.20 "Person" shall mean an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.21 "Research Information" shall mean all data, know-how, information,
conclusions and reports produced by OncorMed under the Collaborative Services
pursuant to this Agreement.
1.22 "Technology Improvements" shall mean patents and patent applications,
as well as technical information, data, materials, apparatuses, know-how and
other proprietary rights, whether patentable or not, resulting from OncorMed's
use of Licensed Technology, which are modifications, improvements and
enhancements to such Licensed Technology made by OncorMed during the term (as
defined in 2.3.1 hereof) of this Agreement.
**** Denotes language for which confidential treatment has been granted
pursuant to the rules and regulations of the Securities Exchange Act
of 1934, as amended.
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1.23 "Territory" shall mean the United States, Mexico and Canada.
1.24 "Third Party" shall mean any Person other than Incyte and OncorMed.
1.25 "Tissue Repository" shall mean a repository of human tissue samples
collected by OncorMed, along with corresponding non-confidential patient and
other information with respect to such tissue samples as described in Annex B
to the Agreement, as such Annex shall be amended from time to time during the
term of this Agreement.
1.26 "Tissue Repository Database" shall mean Incyte's relational database
which will contain information provided by the Tissue Repository Services.
1.27 "Tissue Repository Services" shall mean those services pursuant to
which OncorMed will create the Tissue Repository as described in Annex B to the
Agreement, as such Annex shall be amended from time to time during the Term of
this Agreement.
ARTICLE 2
COLLABORATIVE SERVICES
2.1 Performance of Services. During the term of this Agreement, OncorMed,
under the direction of Dr. Douglas Dolginow, or a mutually acceptable
alternate, shall perform the Collaborative Services in accordance with the
Annexes attached hereto and pursuant to the terms and conditions set forth in
this Agreement. In connection therewith, OncorMed will furnish the personnel,
equipment and facilities that OncorMed deems necessary to carry out such
Collaborative Services.
2.2 Collaborative Services.
2.2.1 Tissue Repository Services. OncorMed will provide the Tissue
Repository Services in accordance with the specifications set forth in
Annex B to the Agreement. During the term of this Agreement, Incyte
will provide OncorMed with reasonable access to the Tissue Repository
and Tissue Repository Database; provided that Incyte shall have the
first right to designate tissues for Incyte's
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exclusive use. Incyte will own the Tissue Repository and retain the
sole right to commercialize the Tissue Repository; provided, however,
that if Incyte elects not to maintain the Tissue Repository, OncorMed
may maintain such Tissue Repository on terms to be agreed between the
Parties.
2.2.2 Gene Functional Studies Program. OncorMed will perform the
Gene Functional Studies Program in accordance with the specifications
set forth in Annex D. Incyte shall select specific DNA Sequence
Information of interest for study and will provide to OncorMed Gene
Product(s) corresponding to such DNA sequences, as available. The
Development Team (as defined herein) will develop a (brief) written
plan for studies on the Gene Product(s) provided by Incyte to
OncorMed, setting forth the scope of each gene function study to be
undertaken. A description of the scope of each plan is included in
Annex D, to be amended from time to time during the Term of this
Agreement.
2.2.3 Other Collaborative Services. The Parties, by mutual
agreement, may identify additional Collaborative Services to be
provided by OncorMed during the Term of this Agreement.
2.3 Term of Collaborative Services.
2.3.1 Term. The Term of this Agreement shall commence on the
Effective Date hereof and continue for a period of three (3) years
thereafter unless earlier terminated pursuant to Article 9 (the
"Term").
2.3.2 Extended Term. The Parties may, by mutual agreement, extend
the Term of this Agreement. If each Party agrees to extend the Term
of this Agreement under this Section 2.3.2, each Party agrees to
negotiate in good faith on a project-by-project basis, the fee to be
paid by Incyte for such continued services, it being understood that
Incyte shall no longer be obligated to purchase any minimum dollar
amount of such services.
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2.4 Funding of the Collaborative Services.
2.4.1 Initial Funding (****)
2.4.2 Incyte will fund a minimum of (****) annually during the Term
of this Agreement, which will be paid in equal amounts quarterly in
advance. (****), of such minimum payment per year shall be allocated
to funding of (***). At the end of each quarter, the amount pre-paid
by Incyte will be reconciled with the monthly invoices to be provided
by OncorMed detailed below. Any excess payment by Incyte will be used
to reduce the next quarterly payment, and any shortfall will be paid
by Incyte to OncorMed within thirty days after the reconciliation at
the end of each quarter is complete.
2.4.3 Within five business days after the end of each calender month,
OncorMed will provide an invoice to Incyte of the Fair Market Value,
as agreed in advance by the Development Team, of the services
rendered during the month and funds expended on such services
including a detailed list of services provided, quantity of each
service, price per unit or time expended in performing the service
and price per unit of time. (****). If OncorMed has not provided
Collaborative Services with an aggregate Fair Market Value as agreed
between the Parties of (****) by the of the Term of the Agreement,
Incyte may offer to extend the Term of this Agreement, and direct the
Development Team to specify additional Collaborative Services to be
provided. If Incyte elects not to extend this Agreement or OncorMed
elects not to accept Incyte's offer to extend the Term of this
Agreement, OncorMed will promptly remit to Incyte within 30 days
all remaining funds which have not been expended on Collaborative
Services as specified in Annex A hereto.
2.5 Records and Reports.
2.5.1 Records. OncorMed and Incyte each shall maintain records, in
sufficient detail and in good scientific manner appropriate for patent
purposes, which shall be complete and accurate and shall fully and
properly reflect all work done and results achieved in the performance
of the Collaborative Services (including all data in the form required
under all applicable laws and regulations). OncorMed will maintain
accounting records of expenditures on performance of Collaborative
Services in sufficient detail for Incyte to verify OncorMed's use of
funding provided by Incyte pursuant to Section 2.4.
2.5.2 Inspection of Records. Incyte shall have the right, at its own
expense during normal business hours and upon reasonable notice, to
inspect and copy all such records of OncorMed relating to the
Collaborative Services to the extent reasonably required for Incyte to
protect its interests under the Agreement relating to (i) accounting
for and reconciling records of expenditures relating to OncorMed's
performance of the Collaborative Services and (ii) scientific records
and notes and other materials relating to Gene Product Inventions and
Technology Improvements and Research Information. Incyte shall
maintain such records and the information of OncorMed contained
therein in confidence and shall not use such records or information
except to the extent otherwise permitted by the Agreement.
**** Denotes language for which confidential treatment has been granted
pursuant to the rules and regulations of the Securities Exchange
Act of 1934, as amended.
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2.6 Development Team.
2.6.1 Composition of the Development Team. The Collaborative
Services shall be conducted under the direction of the development
team comprised of three (3) representatives of Incyte and three (3)
representatives of OncorMed (the "Development Team"). The initial
representatives of each Party on the Development Team are set forth on
Annex E attached hereto. Any substitution of its representatives by
either Party will be mutually agreed upon.
2.6.2 Meetings. The Development Team shall meet not less than once
each calendar quarter during the Term of the Agreement unless
otherwise agreed, on such dates and at such times and places as agreed
to by Incyte and OncorMed, alternating between the sites of Incyte and
OncorMed, or such other locations as the Parties shall mutually agree.
Each Party will pay its own expenses relating to the attendance of its
representatives at such meetings. At such meetings, the Development
Team shall determine the scope, priority and Fair Market Value of the
Collaborative Services.
2.6.3 Development Team Reports. Within thirty (30) days following
each Development Team meeting during the Term of this Agreement unless
otherwise agreed, OncorMed shall prepare and provide to each Party a
reasonably detailed written summary report which shall (a) describe
the work performed to date on the Collaborative Services, (b) evaluate
the work performed in relation to the goals of the Collaborative
Services set forth in Annex A, (c) state any determination of the
Development Team not to proceed with any of the Collaborative Services
or any specific project or component thereof, (d) evaluate the results
of Collaborative Services performed to date, and (e) state any
determination of the Development Team regarding any anticipated
regulatory submissions with respect to such Collaborative Services.
2.6.4 Dispute Resolution. All disagreements within the Development
Team with respect to the projects to be performed as the Collaborative
Services and the Fair Market Value of such services shall be resolved
by the presentation of the dispute by the representatives of the
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Development Team to the chief executive officer of each of Incyte and
OncorMed. Such executives shall meet to discuss each Party's view and
to explain the basis for their respective positions of such
disagreement, and in good faith shall attempt to resolve such
disagreement among themselves. If such executives cannot resolve a
dispute within 15 days, the disputed project(s) will not be performed.
2.7 Fair Market Value of Collaborative Services. The determination of the
Fair Market Value of the Collaborative Services shall be made by the
Development Team prior to the initiation of each project, taking into
consideration standard industry rates for comparable services, when available,
as well as other criteria, including but not limited to, the time within which
the services are required to be provided, the volume of services and priority
requested for such services.
2.8 (****)
2.9 Provision of Collaborative Services to Third Parties. In the event
that the Parties agree that OncorMed will perform other Collaborative Services
pursuant to Section 2.2.3 hereof on behalf of a Third Party, OncorMed shall
have the right to approve the terms and conditions (other than the price
payable by the Third Party to Incyte) of such Collaborative Services.
2.10 Revenues for Collaborative Services. All revenues resulting from
commercialization of the Collaborative Services solely funded by Incyte shall
be retained by Incyte. Any revenues generated from commercialization of any
additional Collaborative Services provided pursuant to Section 2.2.3 of the
Agreement and funded jointly by Incyte and OncorMed will be allocated to the
Parties pro rata according to the relative contributions of each Party.
**** Denotes language for which confidential treatment has been granted
pursuant to the rules and regulations of the Securities Exchange Act
of 1934, as amended.
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ARTICLE 3
HEREDITARY CANCER INSTITUTE DATA BASE
OncorMed and Incyte hereby agree, to the extent that Incyte has an interest
therein, to negotiate in relation to the grant of rights from OncorMed to
Incyte for the Hereditary Cancer Institute Database, to the extent that
OncorMed has the right to grant rights thereunder. The Parties also hereby
confirm that no consideration has been received by OncorMed in respect of the
foregoing understanding that the Parties may negotiate a sublicense to the
Hereditary Cancer Institute Database in favor of Incyte.
ARTICLE 4
LICENSED TECHNOLOGY
4.1 Licensed Technology. Incyte hereby grants to OncorMed a non-exclusive,
royalty-free license during the Term of this Agreement (without the right to
sublicense) to the Licensed Technology, the Technology Improvements. Research
Information, the Tissue Repository, the Tissue Repository Database, and the
Gene Product Inventions to use such Licensed Technology, the Technology
Improvements, Research Information, the Tissue Repository, the Tissue
Repository Database, and the Gene Product Inventions solely for the purpose of
providing the Collaborative Services.
4.2 Gel-Based Sequencing Technology.
4.2.1 License during Term of Agreement. Incyte hereby grants
OncorMed a non-exclusive, royalty-bearing license (without the right
to sublicense) to use Incyte's Gel-Based Sequencing Technology and the
Technology Improvements for use solely in OncorMed Clinical Diagnostic
Services during the Term of this Agreement.
4.2.2 License after Termination of Agreement. Incyte hereby grants
OncorMed a non-exclusive royalty-bearing license to the Gel-Based
Sequencing Technology and Technology Improvements, as set forth in
Annex C hereof as of the date of termination of this Agreement, solely
for
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use in OncorMed Clinical Diagnostic Services, which license shall
commence upon the termination of this Agreement and terminate five
years thereafter; provided, however that this license shall not take
effect if this Agreement is terminated pursuant to Section 9.2 hereof.
The royalty rate payable by OncorMed for such license shall be
re-negotiated by the parties on the first and third anniversaries of
the termination of this Agreement.
4.2.3 Sites Licensed to use Gel-Based Sequencing Technology.
OncorMed agrees to notify Incyte in writing of all sites where Gel
Based Sequencing Technology is installed as long as OncorMed retains
a license to such Gel Based Sequencing Technology from Incyte.
4.3 No Implied Licenses. No implied right or license is granted to
OncorMed to utilize the Incyte Technology in a manner not expressly included
within the scope of the licenses granted pursuant to this Agreement. OncorMed
may not transfer any Incyte Technology to any Third Party for any purpose.
ARTICLE 5
PAYMENTS AND ROYALTIES
5.1 Consideration for License to Gel-Based Sequencing Technology. In
consideration for the license to the Gel-Based Sequencing Technology and the
Technology Improvements granted to OncorMed in Section 4.2 above, during the
term of the license to the Gel Based Sequencing Technology , OncorMed shall pay
to Incyte a royalty (****). If OncorMed intends to offer additional OncorMed
Clinical Diagnostics Services which utilize the Gel-Based Sequencing Technology
or Technology Improvements, OncorMed shall pay to Incyte royalties which shall
be determined by mutual written agreement of the Parties prior to any sales of
such services. All payments due under this Section 5.1 shall be made within 30
days of the end of the calendar quarter in which the revenues for sales are
received. (****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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5.2 Fee Payments on Gene Product Inventions. Incyte will pay OncorMed a
percentage of Licensing Revenues in accordance with the guidelines outlined in
schedule of payments attached hereto as Annex F (the "Gene Product Invention(s)
Fee"). (****)
5.3 Records Retention. OncorMed and Incyte each agree to keep for at
least three (3) years records of all revenues they receive related to this
Agreement in sufficient detail to permit the other Party to confirm the
accuracy of its payment calculations; provided, however that with respect to
Incyte's providing of records to OncorMed, that the identity of other
Contributing Institutions and the nature of their contributions and any other
information (except for information as to the amount and the percentage of
Licensing Revenues paid to Contributing Institutions), with respect to other
Contributing Institutions which Incyte is contractually bound to keep
confidential shall not be disclosed to OncorMed. Once a year, at the request
and the expense of the requesting Party, upon at least five (5) days' prior
written notice, the non-investigating Party shall permit a nationally
recognized, independent, certified public accountant appointed by the
requesting Party and acceptable to the non-investigating Party, to examine
these records solely to the extent necessary to verify such calculations,
provided that such accountant has entered into a confidentiality agreement with
the requesting Party substantially similar to the confidentiality provisions of
this Agreement, limiting the use and disclosure of such information to purposes
germane hereto. Results of any such examination shall be made available to
both Incyte and OncorMed. If such examination reveals an underpayment by 10% or
more, the non-investigating Party shall pay all costs of such examination. In
the event such accountant concludes that additional payments were owed, the
additional royalties shall be paid within 30 days of the date the requesting
Party delivers to the other Party such accountant's written report so
concluding.
5.4 Expenses. Unless otherwise agreed or provided herein, Incyte and
OncorMed will each be responsible for its own expenses hereunder.
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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5.5 Late Payments. Late payments by either Party under this Agreement
shall incur interest at the rate of 1.5% per month. A payment shall be deemed
to be late if made more than five (5) business days after such payment is due
under this Agreement.
ARTICLE 6
INTELLECTUAL PROPERTY
6.1 (****)
6.2 Rights to OncorMed Technology. OncorMed retains all rights to the
OncorMed Technology. Incyte may not transfer any OncorMed Technology it may
receive from OncorMed to any Third Party for any purpose.
6.3 Ownership of Collaborative Inventions. All Collaborative Inventions
will be co-owned by Incyte and OncorMed, with each Party owning 50% title in
such Collaborative Invention(s).
6.4 Patent Prosecution, Maintenance, Enforcement and Defense. (****)
shall be responsible for and shall control the preparation, filing,
prosecution, maintenance, enforcement and defense of all patents and patent
applications, copyrights and other proprietary rights related to the Gene
Product Inventions, Technology Improvements, and Collaborative Inventions.
(****) shall pay all costs incurred in connection with Gene Product Inventions
and Technology Improvements, and (****) and (****) shall each pay half of all
costs incurred in connection with Collaborative Inventions.
6.5 Ownership of Patents Refused by (****). If (****) notifies (****) in
writing that (****) refuses to file a patent application for any Gene Product
Invention or Collaborative Invention, (****) shall have the right, at its sole
expense, to prepare and file patent applications it deems desirable to protect
such Invention if mutually agreed by (****). If (****) exercises the foregoing
right, (****) agrees to provide reasonable cooperation in connection with the
foregoing to (****). Rights to such Invention(s) shall be mutually agreed by
the Parties.
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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6.6 Cooperation. As part of the Collaborative Services (****) undertakes
that it shall do all things which are reasonably necessary or desirable to
enable (****) to evaluate all Inventions made or developed by (****) during and
under this Agreement for possible patent protection by (****). (****) shall do
all things which are reasonably necessary or desirable in order for (****) to
establish, maintain and assert any patent rights, including the execution of
all documents necessary or desirable so that title or other rights can be
established by (****) and maintained and so that any patent filings for Gene
Product Inventions and Technology Improvements can be made, prosecuted and
maintained by (****) in accordance with its standard practice for protection of
its intellectual property. Such actions shall include provision by (****) to
(****) of Full Length Clone(s) corresponding to a Gene Product from partial
cDNA clone(s) provided by (****) to (****) under Article 2 hereof. (****)
undertakes that it shall identify to (****) any technology owned by Third
Parties (the "Enabling Technology") of which (****) becomes aware during the
term of the Agreement which is necessary to (****) for use of the Licensed
Technology to provide the Collaborative Services in order for (****) to
negotiate with any such Third Party to obtain access to the Enabling
Technology. Any licensing or other fees required to be paid to Third Parties in
order for (****) to obtain access to the Enabling Technology shall be paid by
(****).
ARTICLE 7
REPRESENTATIONS AND WARRANTIES, COVENANTS AND CLOSING CONDITIONS
7.1 Authorization and Enforcement of Obligations. Each Party hereby
represents and warrants to the other Party that such Party has the corporate
power and authority and the legal right to enter into the Agreement to perform
its obligations hereunder and to grant the licenses granted hereunder.
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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7.2 No Consents. Each Party hereby represents and warrants to the other
Party that all necessary consents, approvals and authorizations of all
governmental authorities and other Persons required to be obtained by such
Party in connection with the Agreement have been obtained.
7.3 No Conflict. Each Party hereby represents and warrants to the other
Party that the execution and delivery of the Agreement and the performance of
such Party's obligations hereunder (a) do not conflict with or violate any
requirement of applicable laws or regulations, and (b) do not conflict with, or
constitute a default under, any contractual obligation of it. As of the
Effective Date, such Party is not a party to any currently pending claim,
action, suit or proceeding related in any way to such Party's Technology.
7.4 No Enabling Technology. Incyte represents and warrants that, as of
the Effective Date, it is not aware of any Enabling Technology necessary for
OncorMed's use of the Licensed Technology, provided that OncorMed follows the
protocol specified by Incyte and utilizes the reagents from the vendor
specified by Incyte.
7.5 Licensed Technology. Incyte represents and warrants that, as of the
Effective Date, to Incyte's knowledge, without having performed any searches or
investigations, there are no Third Party interests or claims to the Licensed
Technology.
7.6 No Third Party Rights. OncorMed represents and warrants that, as of
the Effective Date, (i) it is not a party to any agreements with any Third
Parties which would give rise to any rights or claims of such Third Party to
Invention(s) and Technology Improvements developed by OncorMed under this
Agreement and, (ii) in order to perform the Collaborative Services specified in
the Annexes hereto, as may be amended from time to time, OncorMed does not need
to use any technology owned by or to which a Third Party has rights.
7.7 DISCLAIMER OF WARRANTIES.
7.7.1 EXCEPT FOR THE FOREGOING PROVISIONS OF THIS ARTICLE 7, NOTHING
IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY GIVEN OR
REPRESENTATION MADE BY INCYTE THAT THE USE OF ANY LICENSE GRANTED
HEREUNDER OR THE USE OF THE LICENSED TECHNOLOGY WILL NOT INFRINGE THE
PATENT RIGHTS OF ANY OTHER PERSON. FURTHERMORE, INCYTE MAKES NO
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REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LICENSED TECHNOLOGY AS TO ITS ACCURACY, COMPLETENESS, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. ONCORMED ACKNOWLEDGES THAT
INCYTE PROVIDES SEQUENCING INFORMATION ON AS-IS BASIS AND SUCH
INFORMATION MAY CONTAIN ERRORS. INCYTE EXPRESSLY DISCLAIMS THE
FITNESS OF THE LICENSED TECHNOLOGY FOR USE IN THE DIAGNOSIS OF HUMAN
DISEASE.
7.7.2 NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY
GIVEN OR REPRESENTATION MADE BY ONCORMED THAT THE ONCORMED TECHNOLOGY,
COLLABORATIVE SERVICES, THE TISSUE REPOSITORY OR THE USE OF THE DATA
FROM GENE FUNCTION STUDIES WILL NOT INFRINGE THE PATENT RIGHTS OF ANY
OTHER PERSON. FURTHERMORE, ONCORMED MAKES NO REPRESENTATIONS OR
WARRANTY EXPRESS OR IMPLIED WITH RESPECT TO THE ONCORMED TECHNOLOGY,
THE DATA FROM THE GENE FUNCTION STUDIES, THE TISSUE REPOSITORY OR
COLLABORATIVE SERVICES AS TO THEIR ACCURACY, COMPLETENESS,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. INCYTE
ACKNOWLEDGES THAT ONCORMED PROVIDES THE ONCORMED TECHNOLOGY, THE DATA
FROM GENE FUNCTION STUDIES, THE COLLABORATIVE SERVICES AND THE TISSUE
REPOSITORY ON AN AS-IS BASIS AND THAT SUCH DATA, TISSUES OR SERVICES
MAY CONTAIN ERRORS.
7.8 Covenant of OncorMed on Tissue Repository. Prior to obtaining tissues
for inclusion in the Tissue Repository, OncorMed will obtain all necessary
patient consents, releases, permits and other authorization required by all
applicable federal, state, local and foreign governmental authorities and
agencies thereof for the collection and use of human tissue samples from such
patients . Such consents, releases, permits and authorizations will provide for
the release of such tissue samples at no cost to Incyte.
7.9 Compliance with Laws. Each Party will comply with all applicable laws,
ordinances and regulations of federal, state, local and foreign governmental
authorities and agencies thereof with respect to the performance of its
obligations under the Agreement.
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7.10 (****)
7.11 Execution of Proprietary Information and Inventions Agreement. Each
employee of OncorMed that performs work on the Collaborative Services or
otherwise has access to the Licensed Technology, Technology Improvements or
Gene Product Inventions shall have executed a Proprietary Information and
Invention Agreement in the form attached hereto as Annex G prior to obtaining
access to the Licensed Technology, Technology Improvements, or Gene Product
Inventions.
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ARTICLE 8
CONFIDENTIALITY AND PUBLICATION
Unless otherwise agreed in writing, each Party agrees to hold in
confidence and not disclose to any Third Party Information received from the
other Party. For purposes of this Agreement, "Information" shall mean
technical and business information belonging to each Party, including, where
appropriate and without limitation, any information, business, financial,
scientific data, transcript and nucleic acid sequence data, patent disclosures,
patent applications, structures, models, techniques, processes, software and
hardware configurations, compositions, compounds, apparatus and the like.
All Incyte Technology and OncorMed Technology is hereby confirmed to
be confidential under the terms of this Agreement.
The foregoing obligation shall not apply to Information which:
(a) the receiving Party can demonstrate by record, either
in print or electronic media, had been previously discovered by or was
known to the receiving Party prior to the time of receipt; or
(b) was in the public domain at the time of receipt by
the receiving Party; or
(c) becomes part of the public domain through no fault of
the receiving Party; or
(d) is lawfully received by the receiving Party from a
Third Party having a right to disclose it to the receiving Party; or
(e) is required to be disclosed in a judicial or
administrative proceeding or to an administrative agency after all
reasonable legal remedies or steps for maintaining such information in
confidence have been utilized; or
(f) the receiving Party independently discovered or
developed the Information without the aid, application, or
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use of Information, as can be documented by written records created at
the time of such independent discovery or development.
Neither Party may use the confidential Information or the other Party for any
purpose except as specifically provided in this Agreement.
ARTICLE 9
TERMINATION
9.1 Termination by Incyte.
9.1.1 Prior to the expiration of the Term of this Agreement in
accordance with Section 2.3.1 or 2.3.2, Incyte shall submit written
notice of its intention to terminate specifying the reasons for such
termination and the actions, if any, that OncorMed may take to
remediate the circumstances giving rise to such notice of termination.
If OncorMed does not take appropriate action to remediate the
circumstances set forth in Incyte's notice to Incyte's satisfaction
within ten (10) business days of receipt of such notice, this
Agreement is terminated and OncorMed will promptly return to Incyte
all remaining funds paid by Incyte pursuant to Section 2.4 hereof, or
other funding pursuant to any extension under Section 2.3.2, which
have not been expended in paying the Fair Market Value of the
Collaborative Services in accordance with Annex A hereto.
9.1.2 Incyte shall have the right to earlier terminate this
Agreement in accordance with the provisions of Section 9.1.1 hereof in
the event that (****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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9.2 Termination for Change of Control Either Party may terminate this
Agreement upon a Change of Control of the other Party. "Change of Control" for
purposes of this Section 9.2 shall mean (i) the consolidation of a Party with
or merger of a Party with or into any Third Party pursuant to which the
stockholders of a Party immediately prior to such consolidation or merger will
not own, immediately after such consolidation or merger, at least a majority of
the voting power of the surviving entity's voting securities or (ii) an event
or series of events as a result of which more than 50% of the combined voting
power of the then outstanding securities of a Party entitled to vote generally
in the election of directors becomes beneficially owned by one Third Party or
group of Third Parties. "Group" and "beneficial ownership" for purposes of the
preceding sentence shall have the meanings set forth in Section 13(d)(1) of the
Securities Exchange Act of 1934, as amended, and Rules 13d-3 and 13d-5 under
such Act. Upon termination of this Agreement pursuant to this Section 9.2, the
licenses granted by Incyte to OncorMed pursuant to Sections 4.1 and 4.2.1 will
terminate.
9.3 Termination for Cause. Either Party may terminate this Agreement upon
or after the breach of any material provision of this Agreement by the other
Party if the other Party has not cured such breach within thirty (30) days
after notice thereof by the non-breaching Party. Upon termination of this
Agreement pursuant to this Section 9.2, the licenses granted by Incyte to
OncorMed pursuant to Section 4.1 and 4.2.1 will terminate.
9.4 Effect of Expiration or Termination.
9.4.1 Expiration or termination of this Agreement shall not relieve
the Parties of any obligation accruing prior to such expiration or
termination, and the provisions of Sections 4.2.2, 5.1, 5.2, 5.3, 5.5,
and 9.4 and Articles 6, 7, 8, 10, 12 and 13 any causes of action
arising under this Agreement shall survive the expiration or
termination of this Agreement.
9.4.2 Upon termination of this Agreement pursuant to Section 9.2
hereof, OncorMed shall, at Incyte's written request, return or destroy
all materials and records associated with Research Information,
Licensed Technology, Technology Improvements and Gene Product
Inventions.
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9.4.3 Upon termination of the license(s) granted by Incyte to
OncorMed under Section 4.2.2 of this Agreement, OncorMed shall, at
Incyte's written request, return or destroy all records associated
with Gel Based Sequencing and Technology Improvements.
9.4.4 Upon expiration of the Term of this Agreement, or upon
termination of this Agreement pursuant to Section 9.1 or 9.3 hereof,
OncorMed shall, at Incyte's written request, return or destroy all
materials and records associated with Research Information, Technology
Improvements, and Gene Product Inventions.
9.4.5 Notwithstanding the above, one copy of each record regarding
Gel-Based Sequencing Technology and Technology Improvements specified
in Annex C of this Agreement may be retained at the New York office of
Brobeck, Phleger and Harrison solely such that such record may be made
available to OncorMed as required for purposes of regulatory
compliance.
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 Indemnification by OncorMed. OncorMed shall indemnify and hold Incyte
harmless from all losses, liabilities, damages and expenses, including
reasonable attorneys' fees and costs resulting from any claim, demand, action
or proceeding by a Third Party arising out of any breach of this Agreement by
OncorMed or any act or omission of OncorMed in connection with (i) its
collection, use and storage of human tissues for the Tissue Repository and (ii)
its performance of the Collaborative Services and Tissue Repository Services.
10.2 Indemnification and Insurance for OncorMed Clinical Diagnostic
Services. OncorMed shall maintain liability insurance including product
liability insurance with respect to the sale of OncorMed Clinical Diagnostic
Services Products by OncorMed in such amount as OncorMed customarily maintains
with respect to the research, development and sales of its other services.
OncorMed shall maintain such insurance for so long as it continues to sell any
OncorMed Clinical Diagnostic Services which utilize the Gel-Based Sequencing
Technology, and thereafter for so long as OncorMed maintains insurance for
itself covering such research, development or sales. OncorMed
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shall indemnify and hold Incyte harmless from all claims, demands, liabilities,
damage and expenses, including reasonable attorneys' fees and costs, resulting
from any claim, demand, action or proceeding arising out of or in connection
with OncorMed Clinical Diagnostic Services which utilize the Gel-Based
Sequencing Technology, except for those claims covered by Incyte's indemnity in
favor of OncorMed in Section 10.3 hereof.
10.3 Indemnification by Incyte. Incyte shall indemnify and hold OncorMed
and its officers, directors, employees and agents harmless from all losses,
liabilities, damages and expenses, including but not limited to reasonable
attorneys' fees and costs, resulting from any claim, demand, action or
proceeding by a Third Party regarding the infringement by Licensed Technology
of any patent, copyright, trademark, trade secret or other intellectual
property right of any Third Party, or regarding any misrepresentation made by
Incyte or its agents to Third Parties with respect to the Collaborative
Services.
10.4 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 10 shall promptly notify the other Party
(the "Indemnitor") of any claim, demand, action or proceeding for which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall have
the right to the extent the Indemnitor so desires, to control the defense
thereof with counsel of its selection; provided, however, that the Indemnitee
shall have the right to retain its own advisory counsel, with the fees and
expenses to be paid by the Indemnitee, if representation of the Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other party
represented by such counsel in such proceedings. If Indemnitor does not elect
within (30) days after such notice to so control the defense of such
proceeding, Indemnitee may undertake such control, and Indemnitor shall be
entitled to advisory counsel of its own selection. The indemnity agreement in
this Article 10 shall not apply to amounts paid in settlement of any claim,
demand, action or proceeding if such settlement is effected without the written
consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver notice to the Indemnitor within a reasonable time after
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such Indemnitor of any liability to the Indemnitee
under this Article 10, but the omission so to
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deliver notice to the Indemnitor will not relieve it of any liability that it
may have to the Indemnitee otherwise than under this Article 10. The
Indemnitee under this Article 10 and its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigation
and defense of any action, claim or liability covered by this indemnification
and furnish all evidence and assistance within its control.
ARTICLE 11
FORCE MAJEURE
Neither Party shall be held liable or responsible to the other Party
nor be deemed to have defaulted under or breached the Agreement for failure or
delay in fulfilling or performing any term of the Agreement to the extent, and
for so long as, such failure or delay is caused by or results from causes
beyond the reasonable control of the affected Party including but not limited
to fire, floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or other Party.
ARTICLE 12
DISPUTE RESOLUTION
The Parties to this Agreement shall first use all reasonable efforts
to amicably resolve any disputes arising out of or relating to the Agreement by
direct discussions or mediation. If, after ninety (90) days, the Parties fail
to resolve the dispute, either Party may submit the dispute to final and
binding arbitration held in a venue specified by the Party against which the
arbitration has been submitted and administered by the American Arbitration
Association ("AAA"), pursuant to the Commercial Arbitration Rules of the AAA at
the time of submission before a single neutral, independent, and impartial
arbitrator ("Arbitrator") applying the procedural rules relating to such
arbitration in such venue; provided, however, that disputes among the
Development Team representatives related to projects to be performed under the
Collaborative Services and the Fair Market Value of Collaborative Services will
not be submitted to arbitration, but will be resolved in accordance with
Section 2.6.4 hereof.
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The Arbitrator's award shall be a final and binding determination of the
dispute and shall be fully enforceable as an arbitration award by any court of
competent jurisdiction over the Parties. The prevailing Party shall be entitled
to recover its reasonable attorneys' fees and expenses, including arbitration
administration fees, incurred in connection with such proceeding. Neither
Party nor the Arbitrator may disclose the existence, content, or results of any
arbitration hereunder without the prior written consent of both Parties.
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ARTICLE 13
MISCELLANEOUS
13.1 Notices. Any consent, notice or report required or permitted to be
given or made under the Agreement by one of the Parties hereto to the other
Party shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery, U.S. first class mail or courier), U.S. first
class mail or courier, postage prepaid (where applicable), addressed to such
other Party at its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addressor and (except as
otherwise provided in the Agreement) shall be effective upon receipt by the
addressee.
If to Incyte:
------------------------------
------------------------------
------------------------------
Attention:
------------------
Telecopier:
------------------
with a copy to: Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Stanton D. Wong, Esq.
Telecopier: (415) 983-1200
If to OncorMed:
------------------------------
------------------------------
------------------------------
Attention:
------------------
Telecopier:
------------------
with a copy to: Brobeck, Phleger & Harrison LLP
1633 Broadway, 47th Floor
New York, NY 10019
Attention: Alexander D. Lynch, Esq.
Telecopier: (212) 586-7878
13.2 Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
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13.3 Assignment. Neither Party shall assign its rights or obligations under
the Agreement, in whole or in part, by operation of law or otherwise, without
the prior written consent of the other Party, to any other Person, including
Company X. Any purported assignment in violation of this Section 13.3 shall be
void.
13.4 Waivers and Amendments. No change, modification, extension,
termination or waiver of the Agreement, or any of the provisions herein
contained, shall be valid unless made in writing and signed by duly authorized
representatives of the Parties hereto. The waiver by either Party hereto of
any right hereunder or the failure to perform or of a breach by the other Party
shall not be deemed a waiver of any other right hereunder or of any other
breach or failure by said other Party whether of a similar nature or otherwise.
13.5 Public Announcements. Except as required by applicable law or
regulations, Incyte and OncorMed shall jointly approve any public announcements
relating to the transactions described herein or the relationship between the
parties.
13.6 Entire Agreement. The Agreement, including the Annexes hereto,
embodies the entire understanding between the Parties and supersedes any prior
understanding and agreements between and among them respecting the subject
matter hereof. There are no representations, agreements, arrangements or
understandings, oral or written, between the Parties hereto relating to the
subject matter of the Agreement which are not fully expressed herein.
13.7 Severability. Any of the provisions of the Agreement which are
determined to be invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or unenforceable the remaining
provisions hereof and without affecting the validity or enforceability of any
of the terms of the Agreement in any other jurisdiction.
13.8 Counterparts. The Agreement 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.
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IN WITNESS WHEREOF, the Parties have executed the Agreement as of the
date first set forth above.
Incyte
By /s/ RANDY SCOTT
----------------------------------------------
Title
-------------------------------------------
OncorMed
By /s/ DOUG DOLGINOW
----------------------------------------------
Title
-------------------------------------------
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ANNEX A
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX B
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX C
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX D
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX E
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX F
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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ANNEX G
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the Securities
Exchange Act of 1934, as amended.
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Schedule 5.1
(****)
**** Denotes language for which confidential treatment has been
granted pursuant to the rules and regulations of the
Securities Exchange Act of 1934, as amended.
36
