Development and Supply Agreement - Innogenetics NV and Cepheid
DEVELOPMENT AND SUPPLY AGREEMENT
THIS DEVELOPMENT AND SUPPLY AGREEMENT (the "Agreement") is made and
entered into as of this ____ day of November, 1998, (the "Effective Date") by
and between INNOGENETICS N.V., a Belgian company with its principal office at
Industriepark 7- box 4, B-9052 Ghent, Belgium, ("INNOGENETICS") and CEPHEID, a
California corporation with its principal office at 1190 Borregas Avenue,
Sunnyvale, California 94089 ("CEPHEID").
R E C I T A L S
A. INNOGENETICS has certain proprietary technology and experience
relating to diagnostic assay reagents, protocols, and detection systems.
B. CEPHEID has the ability to apply its proprietary microelectronics,
micromachining and microfluidics technologies in the development of test
systems, breadboards and prototypes to optimize INNOGENETICS diagnostic assay
procedures.
C. The parties desire to enter into this Agreement to develop,
manufacture, and commercialize innovative diagnostic systems integrating
proprietary INNOGENETICS assays and technologies, and proprietary CEPHEID
technologies and systems.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
"CEPHEID IP" shall mean all copyrights, trademarks, Know-How,
and inventions (as evidenced by authorship on a patent application or utility
model) developed during the Term of the R&D Collaboration solely by CEPHEID
employees or consultants which do not incorporate Confidential Information
belonging to INNOGENETICS.
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"Change of Control" shall mean either (a) an event where a
company other than INNOGENETICS acquires, merges with, or in some manner gains a
controlling interest (greater than 50% equity ownership or the right by contract
or otherwise to elect a majority of the Board of Directors) in CEPHEID, or (b)
an event where a company other than CEPHEID acquires, merges with, or in some
manner gains a controlling interest (greater than 50% equity ownership or the
right by contract or otherwise to elect a majority of the Board of Directors) in
INNOGENETICS.
"Confidential Information" shall mean (a) all proprietary
information and materials, patentable or otherwise, of a Party which is
disclosed by or on behalf of such Party to the other Party, including, but not
limited to formulations, techniques, methodology, equipment, data, reports,
Know-How, preclinical and clinical trials and the results thereof, sources of
supply, patent positions and business plans, including any negative
developments, and (b) any other information designated by the disclosing Party
to the other Party as confidential or proprietary, whether or not related to the
Project; provided however, Confidential Information shall not include
information disclosed which: (i) was known or used by the receiving Party prior
to its date of disclosure to the receiving Party, as evidenced by the prior
written records of the receiving Party; or (ii) either before or after the date
of the disclosure to the receiving Party is lawfully disclosed without
restriction on disclosure to the receiving Party by an independent, unaffiliated
third party rightfully in possession of the Confidential Information; or (iii)
either before or after the date of the disclosure to the receiving Party becomes
published or generally known to the public through no fault or omission on the
part of the receiving Party; or (iv) is required to be disclosed by the
receiving Party to comply with applicable laws, to defend or prosecute
litigation or to comply with governmental regulations, provided that the
receiving Party provides prior written notice of such disclosure to the other
Party and takes reasonable and lawful actions to avoid and/or minimize the
degree of such disclosure.
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"Field" shall mean (i) human diagnostics, as evidenced by
regulatory labeling indicating approval for use in human diagnostics or for
investigation of putative clinical utility by a diagnostics laboratory in a
clinical research setting (e.g. For Investigational Use Only or For Research Use
Only); (ii) food testing; and (iii) veterinary testing. Additional fields
associated with opportunities that may arise during the course of the R&D
Collaboration will be the subject of good faith negotiations between the
Parties.
"INNOGENETICS IP" shall mean all copyrights, trademarks,
Know-How and inventions (as evidenced by authorship on a patent application or
utility model) developed during the Term of the R&D Collaboration solely by
INNOGENETICS employees or consultants which do not incorporate Confidential
Information belonging to CEPHEID.
"Joint IP" shall mean all copyrights, Know-How and inventions
(as evidenced by authorship on a joint application for a patent or utility
model) developed during the Term of the R&D Collaboration jointly by
INNOGENETICS and CEPHEID employees or consultants.
"Know-How" shall mean all information, patentable or otherwise,
of a Party (whether solely or jointly owned) which (a) is used or developed in
the R&D Collaboration and (b) is reasonably useful or necessary or is required
to develop, use, manufacture, distribute and/or sell the Products.
"Net Sales" shall mean revenues actually received by CEPHEID
from a third party attributable to sale or transfer of any product less costs
actually identified on the invoice and allowed directly attributable to such
sale or transfer, including (i) discounts, in amounts customary in the trade,
for quantity purchases, cash payments and prompt payments, (ii) credits or
refunds for claims or returns, (iii) any transportation or insurance premiums
paid by CEPHEID and (iv) taxes, including sales, use, excise, import, export and
other taxes and duties borne by CEPHEID.
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"Party" shall mean INNOGENETICS or CEPHEID; "Parties" shall mean
both INNOGENETICS and CEPHEID and their affiliates (defined as an entity in
which INNOGENETICS or CEPHEID has greater than 50% equity ownership or
controlling interest).
"Prior IP" shall mean any patents, patent applications,
copyrights, trademarks, licenses, and Know-How, owned by a Party prior to the
date of this Agreement.
"Production Unit" shall mean a Product produced using final
production equipment and processes, resulting in a unit that can be used, as
required, for clinical trials and obtaining product registration, or that can be
sold.
"Products" shall mean systems, subsystems, consumables, and
software resulting from the R&D Collaboration and incorporating proprietary
CEPHEID technology and proprietary INNOGENETICS technology, or systems,
subsystems, and consumables incorporating proprietary CEPHEID technology that
are specifically designed and produced according to INNOGENETICS approved
Product Requirements and Specifications for use with proprietary INNOGENETICS
technology and assay procedures.
"Product Requirements and Specifications" shall mean a detailed
listing of design features and performance characteristics of Products that are
required to meet the defined needs of the intended customers or users, that are
required to achieve success in the defined markets, and which are deemed to be
technically feasible by the Parties. Product Requirements and Specifications
will be developed as part of the Work Plan for a given Product or group of
Products prior to initiation of the development phase for that Product or
Products. Product Requirements and Specifications can be modified during the
development phase upon approval by the R&D Committee.
"R&D Collaboration" shall mean the collaboration between the
Parties pursuant to this Agreement.
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"R&D Committee" shall mean the research and development
committee comprised of three members from the technical and commercial
management teams of each of CEPHEID and INNOGENETICS.
"Term" shall have the meaning described in Section 8 of this
Agreement.
"Territory" shall mean any and all countries of the world.
"Work Plan" shall mean a detailed work plan setting forth
Product Requirements and Specifications, as well as a budget and development
milestones and timetables established by the Parties for the development of the
Products. A Work Plan will be developed for each Product or group of Products to
be developed under the R&D Collaboration.
2. R&D COMMITTEE AND WORK PLAN.
The Parties shall appoint their members of the R&D Committee
within 15 days after the Effective Date of this Agreement. The R&D Committee
shall establish a Work Plan within 60 days after the Effective Date of this
Agreement. The R&D Committee shall have the authority to make all decisions
concerning the conduct of the R&D Collaboration, including annual updates of,
and modifications to, the Work Plan. With respect to all matters to be decided
by the R&D Committee, the decision of a majority of all the members of the R&D
Committee shall be determinative. Any modifications to the Work Plan shall be in
writing. All meetings of the R&D Committee shall be summarized in writing and
sent to both Parties. At least two representatives of each Party shall be
present at such meetings. All decisions made by the R&D Committee shall be
approved in writing by all members before becoming effective. The R&D Committee
shall meet at least quarterly, alternating between CEPHEID's headquarters in
California and INNOGENETICS' headquarters in Belgium, or in other mutually
agreed upon venues, or by video conferencing.
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3. RESEARCH AND DEVELOPMENT COLLABORATION.
3.1 R&D Collaboration Phases. The R&D Collaboration shall
proceed in a minimum of three major phases:
3.1.1 Phase 1 - Feasibility Demonstration and Method
Optimization. Test systems, breadboards, and prototypes shall be developed to
demonstrate the feasibility of various analytical processes integral to the
performance of INNOGENETICS' existing and future test methods, including rapid,
micro-PCR, homogeneous detection, and sample preparation and DNA or RNA
extraction for human genomic and pathogen samples. Prototypes shall be designed
according to the requirements of INNOGENETICS' assay reagents and protocols, and
will be used to optimize the INNOGENETICS assay procedures. The results from
this feasibility and optimization work will enable the definition of
specifications for saleable products to be developed by CEPHEID on behalf of
INNOGENETICS.
As part of Phase I, the following prototypes will be
delivered by CEPHEID to INNOGENETICS, according to schedules to be established
in the Work Plan:
I-CORE/Smart Cycler(TM):
- One optical thermal cycler prototype (8 reaction sites,
100ul tube, sprung heater design, 2 color optics).
- Two optical thermal cycler prototypes (8 reaction sites,
25ul tube, sprung heater design, 4 color optics).
Sample Preparation Cartridges:
- Prototype HCV Extraction Cartridges (number to be
determined).
- Prototype Genomic DNA Extraction Cartridges (number to
be determined).
3.1.2 Phase 2 - Product Development (Near-Term
Products). As determined by the Product Requirements and Specification efforts
of the R&D
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Committee, and by the results of the feasibility/optimization work of Phase 1,
the Parties envision that several potential products will be developed by
CEPHEID on behalf of INNOGENETICS, such as:
- I-CORE based thermal cycler as a precursor to LIPA
hybridization
- I-CORE based thermal cycler with homogeneous detection
(fluorescent dye based)
- Sample preparation cartridge for HCV RNA extraction and
concentration (or general pathogen RNA extraction)
- Sample preparation device for human genomic DNA
extraction and concentration (HLA model).
Each of these projects will be defined by a Work Plan, outlining
Product Requirements and Specifications, as well as budget and development
milestones and timetable.
3.1.3 Phase 3 - Product Development (Long-Term
Products). Both INNOGENETICS and CEPHEID realize that there is considerable
value in developing systems that provide true automation of important diagnostic
test procedures. Accordingly, they have together conceived of a fully integrated
system or system based on the complete integration of their respective
technologies and carrying out a complete diagnostic procedure from sample
preparation through detection and result reporting. Based on the results of the
feasibility/optimization work of Phase 1, a system or systems will be jointly
specified that will provide the basis for joint research and development
activities directed toward this fully integrated system. Such joint
specification may lead to continued feasibility work, or to a development
program, under a Work Plan.
3.1.4 Modification of Phase 1. If feasibility of I-CORE
based procedures or either sample preparation cartridge is not demonstrated
within the time frame projected for Phase 1, the R&D Committee may recommend
that the feasibility work be extended, or the applicable portion of the program
be terminated. Such
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extension or termination shall be subject to approval by the management
committees of both INNOGENETICS and CEPHEID.
3.1.5 Modification of Phase 2. Following the Phase 1
feasibility work and upon initiation of development of specified products, the
R&D Committee shall define and agree upon milestones within the development Work
Plan. If the Parties do not achieve the milestones, the R&D Committee may
recommend that the development work be extended, or the applicable portion of
the program be terminated. Such extension or termination shall be subject to
approval by the management committees of both INNOGENETICS and CEPHEID.
3.1.6 R&D Collaboration Termination. A decision to
terminate the R&D Collaboration shall be based on the objective assessment by
both Parties of technical and/or commercial issues. If after such objective
assessment, both Parties cannot reach agreement, then the matter shall be
referred to arbitration in accordance with Section 15. If the R&D Collaboration
is terminated, either Party shall be able to use Joint IP developed during the
R&D Collaboration, subject to the terms and conditions of Section 6.7.
3.2 R&D Collaboration Employees. In order to facilitate
the R&D Collaboration, employees of either Party may be assigned to work on the
premises of the other Party for specified periods of time and for specifically
defined projects, provided that visits shall be on mutually convenient dates and
during mutually convenient business hours and shall not unreasonably interrupt
the operations of the other Party. Each Party shall require each of its
employees and consultants assigned to the R&D Collaboration to execute an
agreement for the assignment of inventions and for the protection of
Confidential Information in such reasonable form as may from time to time be
used by such Party and approved by the other Party.
3.3 R&D Collaboration Funding.
INNOGENETICS shall fund the fully loaded Research, Development and
Engineering ("RD&E") costs that CEPHEID incurs on behalf of INNOGENETICS in
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performing work of the R&D Collaboration to develop INNOGENETICS specified
products.
3.3.1 Phase 1 Funding. Such RD&E costs shall be
comprised of direct RD&E costs, RD&E overhead, and direct costs and allocated
overhead of constructing and delivering prototype systems and cartridges as
described in 3.1.1.
Estimated funding requirements for Phase I are as follows:
<TABLE>
<CAPTION>
($000's)
Q1 Q2 Q3 Q4 Total
-- -- -- -- -----
<S> <C> <C> <C> <C> <C>
I-CORE/Smart Cycler(TM) $[**] -- -- -- $[**]
Sample Prep Cartridges $[**] $[**] $[**] $[**] $[**]
Total $[**] $[**] $[**] $[**] $[**]
</TABLE>
The above quarterly funding estimates are for a time period commencing December
1, 1998 and ending November 30, 1999. Funding provided to CEPHEID by
INNOGENETICS, under the Heads of Agreement dated August 19, 1998 and executed by
the Parties, that exceeded the actual expenditures incurred by CEPHEID in
carrying out the applicable activities under the Heads of Agreement, shall be
credited towards the funding estimates above.
The above funding estimates are based on a fully loaded RD&E FTE cost of
$[**]. This FTE cost may be adjusted on an annual basis, as necessary,
provided that CEPHEID provides evidence of increased costs of FTE's directed to
the R&D Collaboration.
3.3.2 Phase 2 and 3 Funding. INNOGENETICS shall fund the
fully loaded RD&E costs that CEPHEID incurs in connection with the completion of
INNOGENETICS specified products, based on the prototypes developed and evaluated
in Phase 1. Such expenses may include, but are not limited to, INNOGENETICS
specific user software and user interface, instrument chassis and external case,
and any scale-up
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costs specific to the INNOGENETICS products. Budgets will be included in Work
Plans for Phases 2 and 3 Products shall be developed and approved by the
Research Committee at the appropriate time prior to initiation of associated
RD&E activities.
3.3.3 Reconciliation. Required funding for Phase 1, 2
and 3 shall be estimated by the Parties and set forth in the Work Plan. The
estimated funding shall be paid by INNOGENETICS to CEPHEID in advance on a
quarterly basis, after receipt of the corresponding invoice from CEPHEID. Within
90 days after the end of each phase of Phase 1, 2, and 3 CEPHEID shall submit
its actual RD&E costs in reasonable detail. If such actual cost, as approved in
advance by the R&D Committee, exceeds the amounts paid CEPHEID, INNOGENETICS
shall promptly pay CEPHEID the difference, and if such actual cost for Phase 1
or 2 is less than the amounts paid CEPHEID, INNOGENETICS shall receive a credit
against its future funding obligations in the amount of such difference or for
Phase 3 CEPHEID shall promptly pay INNOGENETICS the difference.
3.3.4 Records. The Parties shall keep true and accurate
records to substantiate the expenditure of all funds paid for the RD&E, to
document Net Sales amounts, or as necessary to carry out other obligations under
this Agreement. Upon request, the Parties shall permit an authorized independent
certified public accountant to inspect once per calendar year such records in
confidence in order to verify only the information subject to the inspection.
Such examination shall be at the cost of the Party requesting the inspection,
unless the accountant concludes that the records show a difference of 5% or
more, in which case the examination will be paid by the audited Party.
3.3.5 Diligence. CEPHEID will be responsible to hire and
retain scientists with sufficient qualifications, skill, and experience to carry
out its obligations under this Agreement. During the term of the R&D
Collaboration, CEPHEID shall use all reasonable efforts and proceed diligently
to perform the obligations and activities set out for CEPHEID in the Work Plan,
including, without limitation, using its good faith
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efforts to allocate the required number of scientists. CEPHEID shall conduct all
work under the Work Plan in compliance with all requirements of applicable laws,
rules, and regulations, and all other applicable good laboratory practices in an
attempt to achieve its objectives efficiently and expeditiously.
3.3.6 R&D Collaboration Reporting. Within forty-five
(45) days following the end of each quarter during the term of the R&D
Collaboration, CEPHEID shall provide to INNOGENETICS written reports (i)
summarizing the activities and results obtained under the Work Plan during such
quarter; (ii) setting forth the number and allocation of FTE's devoted to the
Work Plan with reference to the different activities performed during such
quarter.
4. LICENSES.
4.1 Exclusive License Grant. During the Term of the R&D
Collaboration and Supply Agreement (as per Section 7 thereof), CEPHEID hereby
grants INNOGENETICS a royalty-free, worldwide, exclusive license to sell and
have sold the Products that incorporate INNOGENETICS proprietary technology or
are intended for use solely with INNOGENETICS' proprietary technology or assay
methods.
4.2 Non-Exclusive License Grant. During the Term of the R&D
Collaboration and Supply Agreement, CEPHEID hereby grants INNOGENETICS a
royalty-free, worldwide, non-exclusive license to sell and have sold generically
applicable products developed in the course of the R&D Collaboration, the
applications of which are not limited to use with INNOGENETICS proprietary
technology or assay methods.
4.3 Non-exclusive Trademark License. CEPHEID hereby grants
INNOGENETICS a royalty-free worldwide, non-exclusive license to use CEPHEID
trademarks in connection with marketing and sale of the Products identified in
Sections 4.1 and 4.2. INNOGENETICS agrees to submit the use of such trademarks
in any literature or product inserts or labeling to CEPHEID for review and
approval prior to use
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and to use the trademarks only in a manner approved by CEPHEID. INNOGENETICS
shall clearly reference CEPHEID in any marketing literature and product inserts.
5. NON-COMPETE.
5.1 DNA Extraction Sample Preparation Cartridge. If the R&D
Collaboration results in development of a sample preparation cartridge for
extraction of genomic DNA that does not incorporate proprietary INNOGENETICS
technology and that is generically applicable for any procedure based on
analysis of human genomic DNA, then CEPHEID agrees not to provide such cartridge
for sale by another party to be licensed and approved for use in [**], which are
current market areas for INNOGENETICS; for a time period of [**] following the
supply to INNOGENETICS by CEPHEID of the number of Production Units necessary to
conduct clinical trials, marketing trials and product registration.
5.2 Viral Nucleic Acid Extraction Sample Preparation Cartridge.
If the R&D Collaboration results in the development of a sample preparation
cartridge for extraction of viral nucleic acid that does not incorporate
proprietary INNOGENETICS technology and that is generically applicable for any
procedure based on analysis of viral nucleic acid, then CEPHEID agrees not to
provide such cartridge for sale by another party to be licensed and approved for
use in [**], which are applications areas currently under development by
INNOGENETICS for a time period of [**] following the supply to INNOGENETICS by
CEPHEID of the number of Production Units necessary to conduct clinical trials,
marketing trials and product registration.
5.3 Royalties. If after the applicable time period for
non-compete, CEPHEID provides a generically applicable cartridge for sale by
another party for any of the listed applications (as referenced in 5.1 and 5.2),
then CEPHEID will pay to
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INNOGENETICS, within 60 days after the end of each calendar quarter, a royalty
of [**] on CEPHEID's Net Sales of such cartridge(s), up to a cumulative amount
equal to [**] of the R&D funding provided by INNOGENETICS to CEPHEID for
development of such specific cartridge(s). All such royalties shall be payable
in United States dollars. In addition, INNOGENETICS will be able to purchase
such generic cartridges from CEPHEID at pricing terms no less favorable (taken
as a whole, based on volume and other terms) than those provided to other
companies to whom the generic cartridges are sold by CEPHEID.
5.4 Distribution Rights. As outlined in 4.1, INNOGENETICS will
have exclusive distribution rights for Products in the Field and Territory. As
outlined in 4.2, INNOGENETICS will have non-exclusive distribution rights for
generically applicable products developed in the course of the R&D
Collaboration, in the Field and Territory. Such rights shall extend to third
parties with whom INNOGENETICS has a distributor agreement. INNOGENETICS shall
have responsibility for obtaining all permits and regulatory approvals necessary
to sell the Products within its Territory.
5.5 Third Party Collaborations. Subject to the terms and
conditions of this Agreement, the Parties shall each have the right to enter
into collaborations with third parties.
6. INTELLECTUAL PROPERTY.
6.1 CEPHEID Third Party Intellectual Property. CEPHEID shall be
responsible at its cost for securing rights to any third party intellectual
property related to systems, subsystems, and non-reagent consumables (such as
disposable reaction tubes), required to make, use, and/or sell Products in the
Field.
6.2 INNOGENETICS Third Party Intellectual Property. INNOGENETICS
shall be responsible at its cost for securing rights to any third party
intellectual property related to reagents and detection (such as **), required
to make, use, and/or sell Products in the Field.
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6.3 Other Technologies. For technologies that are not clearly
applicable to systems or reagents and detection, the Parties shall discuss and
determine where responsibility for securing a license shall lie.
6.4 Prior Intellectual Property. Each Party owns their
respective Prior IP, and the other Party shall not obtain any rights thereto,
except as expressly set forth in this Agreement.
6.5 CEPHEID Intellectual Property. CEPHEID shall solely own all
CEPHEID IP.
6.6 INNOGENETICS Intellectual Property. INNOGENETICS shall
solely own all INNOGENETICS IP.
6.7 Joint Intellectual Property. Both INNOGENETICS and CEPHEID
shall jointly own all Joint IP. Either Party shall have a first right of refusal
to exclusively license some or all of the Joint IP, under terms to be
negotiated. If neither Party opts to take an exclusive license to some or all of
the Joint IP, then each Party shall receive an unrestricted royalty-bearing
license, under terms to be negotiated, to use such Joint IP outside of the R&D
Collaboration, subject to any limitations imposed by dominating Prior IP of
either Party. The Parties will agree and define which of the Parties will have
responsibility for filing and maintaining the joint patents, on a case by case
basis. Costs for filing and maintaining will be equally shared by both Parties,
unless a different cost sharing formula for a particular joint patent, is agreed
upon by both Parties. If a joint patent is infringed by a third party, the
Parties will jointly decide on the appropriate action. No Party will take action
in response to a third party infringement of a joint patent without consent of
the other Party, which shall not be unreasonably withheld.
7. SUPPLY AGREEMENT.
7.1 Exclusive Supplier. For the Term of this Agreement, CEPHEID
shall supply INNOGENETICS with one hundred percent (100%) of its requirements
for the CEPHEID systems, subsystems and consumables that are incorporated in the
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Products. Such systems, subsystems, and consumables shall be subject to
CEPHEID's terms and conditions of sale, as the same may be modified from time to
time, but not more than once per year.
7.2 Pricing. Such systems, subsystems, and consumables shall be
sold to INNOGENETICS at transfer prices that shall be established in the
following manner: target transfer prices will be established at the time that
such Products are specified, as part of the Product Requirements and
Specifications under the Work Plan. Final transfer prices shall be agreed upon
at least 90 days prior to sale to INNOGENETICS. Transfer prices shall be
reviewed and subject to renegotiation at the request of either Party, but no
more than once per year. CEPHEID shall be responsible for any royalty payments
to Lawrence Livermore National Laboratories ("LLNL") relating to the sale of
such systems, subsystems and consumables based on technology licensed from LNL
to CEPHEID.
7.3 Transfer Price Estimates. For the I-CORE based system, the
estimated transfer prices are as follows, subject to unit volumes and specific
product characteristics that may be required by INNOGENETICS: Per I-CORE site:
$[**]; Per Reaction Tube: $[**]. These estimated transfer prices are based
on estimated standard cost plus a certain percent profit margin for CEPHEID.
7.4 Pricing Formula. The cost plus profit margin method shall be
generally applied by CEPHEID in establishing transfer prices. However, the
Parties recognize that other formulas for revenue sharing and transfer pricing
may be more appropriate for other market or product opportunities, depending
upon unit volumes, price per test and other market conditions. In order to
ensure an equitable sharing of return for both parties, such other formulas
shall be considered by the Parties on an opportunity by opportunity basis, and
agreed upon in the course of establishing target transfer prices as part of the
Work Plan for a Product or group of Products.
7.5 CEPHEID Records. CEPHEID shall keep true and correct records
to substantiate the supply price charged to INNOGENETICS pursuant to this
Section 7.
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Upon request of INNOGENETICS, CEPHEID shall permit INNOGENETICS or its
authorized representative to inspect once per calendar year records for the
preceding two calendar years in confidence in order to verify the supply price
charged to INNOGENETICS.
7.6 Product Need Forecasts; Minimum Purchase Requirements. At
the initiation of Phase 2 of the Research and Development Collaboration and on
an annual basis thereafter, INNOGENETICS shall provide CEPHEID with a written
two-year forecast of Products required. This forecast shall be comprised of a
one year forecast (first 6 months of monthly requirements and following 2
quarters of quarterly requirements) and a one year projection. This forecast
will be updated quarterly. CEPHEID shall notify INNOGENETICS as soon as possible
in the event CEPHEID determines that it would be unable to supply PRODUCTS in
accordance with the forecasted orders. Upon launch of the said Products, the
first three months of the updated forecast will represent a purchase commitment.
In addition, the Parties shall negotiate a schedule of minimum annual purchase
requirements for each Product.
7.7 Manufacturing Rights. The Parties agree that the
manufacturing of Products, excluding biologically active components, shall be
the responsibility of CEPHEID. INNOGENETICS shall be responsible for the
manufacturing of the biologically active components and shall have the right to
incorporate the biologically active components into the Products. INNOGENETICS
shall have the final Product responsibility towards its customers and regulatory
bodies. In the case that all test specific biologically active components would
need to be incorporated into the Production Units within a single production
process, CEPHEID as well as INNOGENETICS shall have to approve the manufacturing
plans as well as the procedures and facilities where such production will take
place. The procedures and facilities shall, in any case, allow the manufacturing
of Products under conditions acceptable to the regulatory bodies of those
countries where Products shall be sold.
7.8 Security of Supply.
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7.8.1. Product Quality, Safety, and Conformity. All
Products supplied to INNOGENETICS, including the containerization and packaging
thereof (as defined and agreed upon as part of the Product Requirements and
Specifications) shall, at the time of delivery, be free from manufacturing
defects (including, without limitation, defects in material and workmanship),
and shall be manufactured, packaged, and supplied in conformity in all aspects
with the Product Requirements and Specifications, and International Airfreight
Transport Association requirements in force at such time. CEPHEID shall have
carried out the applicable and agreed upon tests and quality control procedures
relative to the Products prior to the delivery thereof. The Products shall be of
merchantable quality, and generally safe for their intended use.
7.8.2. Changes in Product Requirements and
Specifications. No amendment shall be made to the Product Requirements and
Specifications without the prior written approval of the other Party; without
limitation of the foregoing, the manufacturing process, labeling, packing
components with respect to any Product shall not be changed if such change could
affect the performance or registration of any such Product without the prior
written consent of INNOGENETICS. In the event of any agreed-upon change, CEPHEID
shall provide reasonable documentation to enable INNOGENTICS to appropriately
modify the Product Requirements and Specifications to be applied to the Product
thereunder.
7.8.3. Modifications to Products or Production Process.
If CEPHEID makes any improvement, modification, or adjustment to any of the
Products of the production process thereof during the Term of this Agreement,
CEPHEID shall notify INNOGENETICS as soon as is practicable. INNOGENETICS shall
have the option of including or not including in the Products such improvement,
modification, or adjustment as it shall request, on a schedule and at a cost
agreed upon by the Parties.
7.8.4. Certification of Conformity to Product
Requirements and Specifications. CEPHEID will undertake in respect of each
delivery of Products to INNOGENETICS to give notice to INNOGENETICS with such
delivery, the appropriate
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documentation in which CEPHEID certifies that the Products in such delivery have
been analyzed and meet the applicable Product Requirements and Specifications.
Such documentation shall also set forth the batch or lot number of the Products,
the date of manufacture, and as applicable, batch-to-batch test data and
expiration dates for such Products. The configuration of such documentation as
well as the testing methods to be applied to ensure conformity of the delivered
Products to the applicable Product Requirements and Specifications shall be
agreed upon by both Parties as part of the approval of the Product Requirements
and Specifications.
7.8.5. Notification of Non-Conformance or Customer
Complaints. Each Party shall notify the other Party promptly of the discovery
and nature of any non-conformance of any Product to its Product Requirements and
Specifications and regarding any material complaints such Party may receive from
customers, or from any governmental or regulatory authority in respect to such
Product, its manufacture, or its constituents. Upon notification by either
Party, the appropriate Party or Parties (depending upon whether the
non-conformance is related to hardware, software, and/or reagents) shall conduct
a quality assurance/quality control investigation and shall inform the other
Party or Parties regarding the findings of such investigation, as soon as such
findings are available, and in any event within two (2) weeks of the other
Party's notification. In addition, each Party shall inform the other Party of
any and all defects it discovers within its production process that might
influence the performance of the Products delivered to INNOGENETICS. Upon
INNOGENETICS's request, CEPHEID shall provide to INNOGENETICS all reasonable
information and assistance necessary for INNOGENETICS to understand and resolve
complaints received from its customers or regulatory authority.
7.8.6. Quality Audits and Inspections. CEPHEID shall
allow INNOGENETICS and its duly authorized representatives, and the personnel of
appropriate regulatory authorities, reasonable access to such premises as are
used in the production and testing of the Products for the purpose of conducting
a quality audit
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thereof. As appropriate, INNOGENTICS shall allow CEPHEID and its duly authorized
representatives reasonable access to such premises as are used in the
incorporation of biologically active components into Products, for the purpose
of CEPHEID's rendering its approval of such facilities and procedures, as per
Section 7.7.
7.8.7. Inability to Supply Products. Subject to the
provisions in Section 21 regarding excusable delays as a result of force
majeure, upon written notice to CEPHEID from INNOGENETICS, CEPHEID shall
transfer the applicable technology, know-how, and licenses to INNOGENETICS to
make, have made, sell, and have sold Products, upon the occurrence of any of the
following events, (i ) - (v ) below. However the Parties recognize that the
underlying objective of this Agreement is to realize an economical and
reasonable way the mutual interests and requirements of the Parties. In the
instance of an inability to supply Products, the Parties will meet to discuss
potential solutions in order to avoid the recurrence of the inability to supply
Products.
(i) CEPHEID is unable to supply such Product or Product component for any
reason, including by reason of non-compliance with regulatory requirements or
the commencement by or against CEPHEID any bankruptcy or insolvency proceeding,
or CEPHEID is unable to supply any such Product or Product component conforming
in all respects with the representations and warranties set forth in the
Agreement;
(ii) CEPHEID notifies INNOGENETICS that it is unwilling to manufacture or supply
such Product or Product component;
(iii) CEPHEID fails to meet three (3) consecutive scheduled delivery dates, or
delivery is delayed by more than three (3) months, or fails to meet an agreed
upon replacement date by more than thirty (30) days.
(iv) CEPHEID shall be in violation, breach or default of any material
representation, warranty, covenant, or agreement contained in the Agreement and
shall not have cured or undertake to cure the same within sixty (60) days after
INNOGENETICS's request to do so;
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(v) CEPHEID fails, over any twelve (12) month period, to deliver more than
eighty percent (80%) of INNOGENETIC's orders for Products in accordance with
INNOGENETICS's forecast.
CEPHEID will make all necessary efforts to ensure that such technology transfer
is finalized within three (3) months after being given written notice by
INNOGENETICS that such technology transfer is requested according to this
paragraph 7.8 of the Agreement. Such technology transfer shall be at CEPHEID's
expense. INNOGENETICS shall use the transferred technology only for the
manufacture and sale of the Products affected under the applicable event or
events above.
7.9 Freedom from Liens and Encumbrances. Upon payment to CEPHEID
by INNOGENETICS under the terms of Section 7.2, the Products supplied to
INNOGENTICS by CEPHEID shall be free of all liens and encumbrances of any kind.
8. TERM.
8.1 Supply Agreement. Unless earlier terminated in accordance
with the provisions of this Section 8, Section 7 "Supply Agreement" shall remain
in effect as from the Effective Date of this Agreement for as long as Products
are purchased by INNOGENETICS from CEPHEID in amounts at least equivalent to the
minimum purchase requirements.
8.2 R&D Collaboration. Unless earlier terminated in accordance
with the provisions of this Section 8.2 "R&D Collaboration" shall remain in
effect as long as CEPHEID and INNOGENETICS identify product development
opportunities of mutual interest, under mutually acceptable terms, they will
continue to collaborate to introduce important, innovative products to the
diagnostics marketplace.
8.3 Termination. This Agreement may be terminated as follows:
(a) by mutual written consent of the Parties; and
(b) failure by either Party or its Affiliates to comply
with any of the material obligations contained in this Agreement shall entitle
the other Party to give the
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defaulting Party notice specifying the nature of the default and requiring it to
cure such default. If such default is not cured within 60 days after the receipt
of such notice (or, if such default cannot be cured within such 60-day period,
if the Party in default does not commence and diligently continue actions to
cure such default), the notifying Party shall be entitled, without prejudice to
any other rights conferred on it by this Agreement, in addition to any other
remedies available to it by law or in equity, to terminate this Agreement
immediately by giving written notice. The right of either Party to terminate the
Agreement, as hereinabove provided, shall not be affected in any way by its
waiver or failure to take action with respect to any previous default.
9. ASSIGNABILITY.
9.1 Assignment by CEPHEID. Upon prior approval by INNOGENETICS
not to be unreasonably withheld, CEPHEID may assign all its rights and duties
under this Agreement.
9.2 Assignment by INNOGENETICS. Upon prior approval by CEPHEID
not to be unreasonably withheld, INNOGENETICS may assign all its rights and
duties under this Agreement.
10. CHANGE OF CONTROL
10.1 Survival of Rights. In the event of a Change of Control of
CEPHEID, the following rights that INNOGENETICS enjoys under this Agreement
shall survive, as follows:
a) Systems, subsystems, and consumables comprising
Products that are manufactured by CEPHEID or its vendors and sold to
INNOGENETICS will continue to be sold to INNOGENETICS at the same transfer
prices and the same minimum purchase requirements in effect at the time of the
Change of Control for at least eighteen (18) months following the Change of
Control. If after 18 months following the Change of Control, INNOGENETICS is
unable to purchase the applicable systems, subsystems, and
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consumables from CEPHEID under substantially equivalent terms, INNOGENETICS
shall automatically obtain a royalty-free license to manufacture these systems,
subsystems, and consumables themselves, or to contract for their manufacture by
vendors of INNOGENETICS' selection. CEPHEID will also transfer to INNOGENETICS
the applicable technology and Know-How necessary to enable INNOGENETICS to
manufacture the applicable systems, subsystems, and consumables.
b) R&D Collaborations underway at the time of Change of Control
will be carried out to completion, as defined by development of product or
products that are fully specified at the time. Such R&D Collaborations will
proceed according to the agreed upon Work Plans with INNOGENETICS providing
funding at the agreed upon levels. If CEPHEID is unable to supply the products
resulting from these collaborations to INNOGENETICS, then INNOGENETICS will
receive a royalty-free license to manufacture these products themselves.
10.2 Termination. INNOGENETICS may elect to terminate part or
all of this Agreement with CEPHEID in the event of the Change of Control in
either CEPHEID or INNOGENETICS, but in so electing, INNOGENETICS must provide at
least six (6) months notice of its intention to do so. If INNOGENETICS elects to
terminate the Agreement as a result of a change of control in INNOGENETICS, and
in so terminating, INNOGENETICS no longer wishes to market and sell Products
that have been developed or sold up to that point, then CEPHEID will have the
option to receive a license to the associated INNOGENETICS technology and to
sell or have sold the associated Products, at terms to be negotiated.
11. CONFIDENTIAL INFORMATION.
Each Party hereto shall maintain the Confidential Information of
the other Party in confidence during the term of this Agreement and during the
period ending two years after the termination of the R&D Collaboration, and
shall not disclose, divulge or otherwise communicate such Confidential
Information to others, or use it for any purpose,
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except as permitted or contemplated by this Agreement or pursuant to, and in
order to carry out, the terms and objectives of this Agreement, and hereby
agrees to exercise every reasonable precaution to prevent the unauthorized
disclosure of such Confidential Information by any of its directors, officers,
employees, consultants, subcontractors, agents or sublicensees. The parties
agree that the R&D Committee must provide written consent before either Party
can publish scientific results related to the R&D Collaboration.
12. REPRESENTATIONS.
12.1 Representations of INNOGENETICS. INNOGENETICS hereby
represents to CEPHEID as follows:
a) it is a corporation validly existing and in good
standing under the laws of Belgium and has the corporate power and authority to
conduct its business and to own its assets and is duly qualified or licensed to
do business in Belgium
b) it has the power and authority to execute, deliver
and perform this Agreement and the transactions contemplated hereby, has taken
all necessary corporate action to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
c) this Agreement has been executed and delivered by
INNOGENETICS and constitutes a valid and binding obligation of INNOGENETICS
enforceable against it in accordance with its terms.
12.2 Representations of CEPHEID. CEPHEID hereby represents to
INNOGENETICS as follows:
a) it is a corporation validly existing and in good
standing under the laws of California and has the corporate power and authority
to conduct its business and to own its assets and is duly qualified or licensed
to do business in California.
b) it has the power and authority to execute, deliver
and perform this Agreement and the transactions contemplated hereby, has taken
all necessary corporate
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action to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
c) this Agreement has been executed and delivered by
CEPHEID and constitutes a valid and binding obligation of CEPHEID enforceable
against it in accordance with its terms.
d) All the material contracts, agreements, and
instruments to which CEPHEID is a party, are valid, binding and in full force
and effect in all material respects. CEPHEID has complied with all the material
provisions of all its material contracts, obligations, agreements, plans,
arrangements, and commitments, and there does not exist any event of default
under any such agreement which would have a material adverse effect on the
condition, financial or otherwise, of CEPHEID. There is no action, suit,
proceeding or investigation pending or threatened against CEPHEID before any
court or before any governmental or administrative agency for the renegotiation
of or any other adjustment of any such agreement.
e) To CEPHEID's knowledge, there is pending or overtly
threatened action, suit, proceeding or claim, or to CEPHEID's knowledge, any
basis therefore, nor would there be, to CEPHEID's knowledge, any basis therefore
as a result of the services proposed to be conducted by CEPHEID hereby, whether
or not purportedly on behalf of CEPHEID, to which CEPHEID is or may be named as
a party or its property is or may be subject to, to CEPHEID's knowledge, to
which any officer, key employee or principal stockholder of CEPHEID is subject,
and in which (in any case) an unfavorable outcome, ruling or finding would have
a material adverse effect on the condition, financial or otherwise, or
operations of CEPHEID; and CEPHEID has no knowledge of any unasserted claim, the
assertion of which is likely and which, if asserted, will seek damages, an
injunction or other legal, equitable, monetary or nonmonetary relief, which
claim (individually or collectively with other asserted claims) if sustained
would have a material adverse effect on the condition, financial or otherwise,
operations of CEPHEID. CEPHEID has not admitted in writing its inability to pay
its debts generally as they
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become due, filed or consented to the filing against it of a petition of
bankruptcy or a petition to take advantage of any insolvency act, made an
assignment for the benefits of creditors, consented to the appointment of a
receiver for itself or for the whole or any substantial portion of its property
or had a petition of bankruptcy filed against it, been adjudicated a bankruptcy
or filed a petition or answer seeking reorganization or arrangement under any
law or statute of any jurisdiction similar to the laws of the United States.
f) Upon receipt of at least two (2) business days notice
and during normal business hours, CEPHEID agrees to provide INNOGENETICS
reasonable access to CEPHEID's research and development facilities, books and
records and full cooperation by the directors, officers, employees, technicians,
scientists and other agents and representatives of CEPHEID to the extent
necessary to fulfill its obligations under this Agreement and to utilize the
benefits of the licenses granted herein.
g) CEPHEID shall not conduct any work under the Work
Plan that knowingly infringes the valid intellectual property of any third
party.
12.3. Representations of CEPHEID and INNOGENETICS. CEPHEID and
INNOGENETICS shall not enter into any other agreement or arrangement, or grant
any rights, inconsistent with the terms reflected herein.
13. COVENANTS.
13.1. Covenants of Innogenetics. INNOGENETICS covenants with
CEPHEID, in so far as it relates to the R&D work and supply and distribution
activities, as follows:
a) INNOGENETICS will at all times maintain product
liability insurance covering the Products in commercially reasonable amounts and
will name CEPHEID as a co-insured on such insurance.
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b) INNOGENETICS will obtain and maintain at its cost all
regulatory approvals necessary for the manufacture, sale, exportation and
importation of the Products.
13.2. Indemnification. Each Party covenants, in so far as it
relates to the R&D Collaboration and supply and distribution activities, as
follows: each Party shall indemnify, defend, and hold harmless the other Party,
its Affiliates, its licensees and its sublicensees, and their respective
directors, officers, employees, and agents, from any and all liabilities,
damages, losses, penalties, costs and expenses (including the fees of attorneys
and other professional advisors) arising of or resulting from: gross negligence,
recklessness or intentional acts or omissions of such Party and its Affiliates,
and their respective directors, officers, employees, and agents, in connection
with the work performed by such Party under this Agreement.
13.3. Notice. In the event that either Party is seeking an
indemnification under this Article, such Party shall inform the indemnifying
Party of a claim as soon as reasonably practicable after it receives notice of
the claim, and shall permit the indemnifying Party to assume direction and
control of the defense of the claim (including the right to settle at the sole
discretion of the indemnifying Party) in the defense of the claim.
14. NOTICES. All notices, requests, demands, and other communications
made in connection with this Agreement shall be in writing, shall be employ the
English language, and shall be deemed to have been duly given on the date of
delivery if delivered by hand delivery or by facsimile to the person identified
below for five days after mailing if mailed by certified or registered mail
postage prepaid return receipt requested addressed as follows:
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If to CEPHEID: CEPHEID
1190 Borregas Avenue
Sunnyvale, CA 94089
Attention: President
Facsimile: 408-541-4192
Confirmation Number: 408-541-4191
With a copy to: Heller Ehrman White & McAuliffe
2500 Sand Hill Road, Ste. 100
Menlo Park, California 94025
Attention: August J. Moretti
Facsimile: (650) 234-4229
Confirmation Number: (650) 234-4200
If to INNOGENETICS: INNOGENETICS
Industriepark 7-Box 4, B-9052
Ghent, Belgium
Attention: Business Development Dept.,
Dirk Pollet, Ph.D.
Facsimile: 32-9-241-0799
Confirmation Number: 32-3-252-3752
With a copy to: INNOGENETICS
Industriepark 7-Box 4, B-9052
Ghent, Belgium
Attention: Corporate Counsel
Johan Van den Eynde
Facsimile: 32-9-241-0799
Confirmation Number: 32-9-241-0711
Such addresses may be changed from time to time by means of a notice
given in the matter provided in this section.
15. DISPUTE RESOLUTION. In the event that a dispute arises between the
Parties relating to or arising from this Agreement, the Parties shall negotiate
in good faith to resolve such dispute. Any resolution reached by the Parties
shall be binding on the Parties. In the event that the Parties fail to reach a
resolution within 30 days, then the dispute shall be submitted to the Chief
Executive Officers of INNOGENETICS and
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CEPHEID who shall negotiate in good faith for a period of 30 days to resolve
such dispute. In the event that such officers do not reach a resolution with
respect to such dispute, such dispute shall be resolved by binding arbitration
to take place in London, England pursuant to the administrative authority of the
London Court of International Arbitration and under the UNCITRAL Arbitration
Rules now in force, with such modifications as the Parties shall agree. All
proceedings and all pleadings shall be in English. The Parties shall attempt by
agreement to nominate a sole arbitrator within 20 days of filing an arbitration
notice. If the Parties fail to nominate a sole arbitrator during such period,
the sole arbitrator shall be appointed by the London Court of International
Arbitration. The arbitration award shall be final and binding on the Parties.
16. GOVERNING LAW. In the event of a dispute, the Agreement will be
governed by and construed by either Belgian or California law as determined by
the arbitrator pursuant to Section 15.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument. All counterparts shall be considered an original of
this Agreement.
18. NO AGENCY. Nothing herein shall be deemed to constitute either Party
as the agent or representative of the other Party, or both Parties as joint
venturers or partners for any purpose. Each Party shall be an independent
contractor, not an employee or partner of the other Party, and the manner in
which a Party renders its services under this Agreement shall be within such
Party's sole discretion. Neither Party shall be responsible for the acts or
omissions of the other Party, and neither Party will have authority to speak
for, represent or obligate the other Party in any way without prior written
authority from the other Party.
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19. WAIVER. The waiver by either Party of a breach or a default of any
provisions of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provisions, nor shall
any delay or omission on the part of either Party to exercise or avail itself of
any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Party.
20. FORCE MAJEURE.
20.1 General Force Majeure. In the event that either Party is
prevented from performing or is unable to perform any of its obligations under
this Agreement due to any act of God; fire; casualty; flood; war; strike;
lockout; failure or public utilities; injunction or any act, exercise, assertion
or requirement of governmental authority; epidemic; destruction of production
facilities; riots; insurrection; inability to procure or use materials, labor,
equipment, transportation or energy; or any other cause beyond the reasonable
control of the Party invoking this Section 20, if such Party shall have used its
best efforts to avoid such occurrence, such Party shall give notice to the other
Party promptly in writing, and thereupon the affected Party's performance shall
be excused and the time for performance shall be extended for the period of
delay or inability to perform due to such occurrence. Each party will take
reasonable efforts to prevent loss of equipment and information due to any act
of God or accident (including earthquake), including off-site archiving of
critical records and data.
20.2. Unforeseen Developments. The underlying objective of this
Agreement is to realize in an economical and reasonable way the mutual interests
and requirements of the Parties. If, at any time, this Agreement should no
longer meet this objective because of economic developments or political changes
that could not be reasonably foreseen at the time of the signing of this
Agreement, thus causing undue and prolonged hardship to a Party, the Parties
shall meet to discuss a mutually agreeable solution according to the economic
and reasonable objectives of this Agreement.
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21. PUBLICITY. Neither party will disclose the existence or the terms of
this Agreement without the prior written consent of the other party, which
consent will not be unreasonably withheld.
22. NON-SOLICITATION. During the term of the R&D Collaboration, each
Party agrees not to induce any employee of the other Party participating in the
R&D Collaboration to discontinue its employment with that Party in order to
become employed by or associated with any business, enterprise, or effort that
is associated with its own business.
23. GENERAL. This document contains the entire agreement between the
Parties with respect to the subject matter of this Agreement and supersedes the
Heads of Agreement dated August 19, 1998 executed by the parties and all prior
and contemporaneous correspondence, understandings and discussions between the
Parties. This Agreement may be modified only by a subsequent written agreement
signed by both Parties. If any provision of this Agreement is held to be
unenforceable, the remaining provisions shall continue unaffected. This
Agreement shall be binding on the parties hereto and their respective successors
and assigns.
IN WITNESS WHEREOF, the Parties have entered into this Agreement on the
first date written above.
INNOGENETICS CEPHEID
By: By:
--------------------------------- ---------------------------------
Its: Its:
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