Joint Development and Commercialization Agreement - deCODE genetics ehf. and PE Corp.
EXECUTION COPY
JOINT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Joint Development and Commercialization Agreement ("Agreement") dated as of
the 16th day of July, 2001 ("Effective Date") is by and between deCODE GENETICS,
ehf., an Icelandic corporation, located at Hlioarsmari 15, 200 Kopavogur,
Iceland ("deCODE"), and PE CORPORATION (NY), a New York corporation, through its
Applied Biosystems Group, located at 850 Lincoln Centre Drive, Foster City, CA
94404 ("ABG").
BACKGROUND
A. ABG has certain skills, proprietary technology and know-how
related to the development of bioanalytical instrumentation systems including
associated software and reagents, and the marketing, sales and support of
products incorporating such systems.
B. deCODE has certain skills, proprietary technology and know-how
related to the operation and management of large scale genotyping facilities,
including particular expertise in the development of software to manage and
analyze data generated by such facilities.
C. deCODE and ABG desire to form a joint development and
commercialization program with the objective of developing and commercializing
software products for the collection, organization and analysis of genotyping
information subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, do hereby agree as follows:
AGREEMENT
1. DEFINITIONS
1.1 "ABG Instrumentation" means instrumentation developed or
marketed by ABG.
1.2 "ABG API" means APIs provided to deCODE by ABG that provide
access to the functional capabilities within ABG software,
including, but not limited to, the ABG LIMS System, which is
necessary to access data necessary for the operation of a
Collaboration Product, including, but not limited to: sample
management, container management, location management,
genotype marker management, genotype assay management, and
genotype results management.
1
<PAGE> 3
EXECUTION COPY
1.3 "ABG LIMS System" means LIMS systems developed or marketed by
ABG, including but not limited to SQL*LIMS, SQL*GT, and Life
Science LIMS.
1.4 "Administration Cost" means salaries and overhead of general
management, finance, human resources, and legal functions as
calculated as a percentage of sales based on the current
fiscal year allocations using a Party's customary practices
and procedures in accordance with United States generally
accepted accounting principles ("GAAP").
1.5 "Affiliate" means
(A) an organization of which 50% or more of the voting
stock or participating profit interest is controlled
or owned directly or indirectly by either Party;
(B) an organization that directly or indirectly owns or
controls 50% or more of the voting stock of a Party;
(C) an organization, the majority ownership of which is
directly or indirectly common to the majority
ownership of either Party; or
(D) an organization under (A), (B), or (C) immediately
above in which the amount of the ownership is less
than 50% and that amount is the maximum amount
permitted by law.
1.6 "Algorithm Development" means the invention or refinement of
logical operations (numeric, textual, graphic, or otherwise)
into a form expressable in the form of software code.
1.7 "API" means an application programming interface through which
multiple elements of software (e.g., Components) can
communicate, exchange information, and work together,
including a documented description of the use of the API and
the behavior of the multi-element system when the API is
invoked.
1.8 "Background ABG Intellectual Property" means all Intellectual
Property Rights that (A) are owned by, either partially or
wholly, or licensed to, or otherwise controlled by, ABG as of
the Effective Date; or (B) become owned by, either partially
or wholly, or licensed to, or otherwise controlled by, ABG,
during the term of this Agreement, but that do not arise out
of work performed under this Agreement, and which relate to
ABG LIMS Systems used in the Genotyping Field; provided,
however, this definition expressly excludes any Intellectual
Property Rights relating to instrumentation or reagents..
2
<PAGE> 4
EXECUTION COPY
1.9 "Background deCODE Intellectual Property" means all
Intellectual Property Rights that (A) are owned by, either
partially or wholly, or licensed to, or otherwise controlled
by, deCODE as of the Effective Date, which relate to the
Genotyping Field; or (B) become owned by, either partially or
wholly, or licensed to, or otherwise controlled by, deCODE,
during the term of this Agreement, but that do not arise out
of work performed under this Agreement and which relate to the
Genotyping Field.
1.10 "Collaboration ABG Intellectual Property" means all
Intellectual Property Rights arising out of work performed
under this Agreement that are conceived solely by one or more
employees or agents of ABG or its Affiliates.
1.11 "Collaboration deCODE Intellectual Property" means all
Intellectual Property Rights arising out of work performed
under this Agreement that are conceived solely by one or more
employees or agents of deCODE or its Affiliates.
1.12 "Collaboration Joint Intellectual Property" means all
Intellectual Property Rights arising out of work performed
under this Agreement, that are jointly conceived by one or
more employees or agents of deCODE or its Affiliates, and by
one or more employees or agents of ABG or its Affiliates.
1.13 "Collaboration Product" means products developed under the
Joint Development Program and incorporating Existing deCODE
Genotyping Software or New deCODE Genotyping Software for use
in the Genotyping Field in conjunction with ABG APIs and other
ABG software, including any Improvement Product developed
pursuant to Section 3.5.
1.14 "Collaboration Profit" means [CONFIDENTIAL TREATMENT
REQUESTED] provided however, in no event will the deductions
for [CONFIDENTIAL TREATMENT REQUESTED] For avoidance of doubt,
Development Funding paid to deCODE by ABG pursuant to Sections
3.9 and 5.1 will not be deducted from Collaboration Revenue
for purposes of computing Collaboration Profit.
1.15 "Collaboration Revenue" means all revenue received by ABG in
connection with the sale of a software product incorporating a
Collaboration Product, including software, informatics
services, and informatics support, including revenues
collected under Software Maintenance Plans and Custom
Maintenance Plans. Collaboration Revenue would exclude any
revenues received by ABG as a result of the sale by ABG of
instrument or reagent products.
3
<PAGE> 5
EXECUTION COPY
1.16 "Componentization" means the separation and isolation of
elements of a larger software system into discrete and
separately deployable units. These Components may be dependent
on other Components or applications for data, but the
Components do not make assumptions about the specific source
of these data, so long as the data are formatted properly
according to the Component's APIs.
1.17 "Components" shall have the meaning set forth at Exhibit A.
1.18 "Confidential Information" means confidential knowledge,
know-how, practices, processes, equipment, software,
algorithms and formulas, sources codes, product designs,
sales, cost and other financial statements and financial
projections; product development and business plans, marketing
and distribution plans or other information that:
(A) is disclosed by a Party in a tangible form and is
clearly labeled as confidential or proprietary at the
time of disclosure; or,
(B) is disclosed by a Party in nontangible form, and is
summarized in a writing that is delivered to the
other Party within 30 days after disclosure; or,
(C) is disclosed by a Party under circumstances in which
a reasonable person would understand that such
information is confidential and proprietary to the
disclosing Party.
Notwithstanding (A), (B), and (C) immediately above,
Confidential Information will not include, and nothing in
Section 8 will in any way restrict the rights of either deCODE
or ABG to use, disclose or otherwise deal with, any
information that:
(A) was in the public domain as of the Effective Date or
comes into the public domain during the term of this
Agreement through no act of the receiving Party; or,
(B) was independently known to the receiving Party prior
to the receipt thereof, or made available to the
receiving Party as a matter of lawful right by a
third party; or,
(C) is independently conceived, invented or acquired by
the receiving Party by persons who were not exposed
to the information; or
(D) subject to Section 8.8, is required to be disclosed
by law, court order, or other legal processes .
4
<PAGE> 6
EXECUTION COPY
1.19 "Content Associated Software" means software developed or sold
by deCODE, including Collaboration Product, that is designed
for, and promoted for, and capable of, use only with deCODE
Content, either alone or in conjunction with third-party data
or publicly available data, but shall not include any such
software solely for use with third-party data or publicly
available data.
1.20 "Cost of Goods Sold" means the total cost of producing a
product including material, labor and overhead, any associated
royalty expense, and costs to distribute the product to a
customer as determined using a Party's customary practices and
procedures in accordance with GAAP.
1.21 "CPI-U" shall have the meaning assigned to such term in
Section 2.1.2.
1.22 "Custom Maintenance Plan" means a Software Maintenance Plan
which has been specifically designed and developed for an
individual customer.
1.23 "deCODE Content" means data sets, databases and other
compilations of genotyping information and data developed,
created or acquired by deCODE, either internally or by or from
third parties and to which deCODE has the right to use.
1.24 "Development Funding" means the amount to be paid by ABG to
deCODE for the development and commercialization of
Collaboration Products during the initial 3 year Exclusive
Period. In addition, in the event that the Exclusive Period is
extended by the Parties, such Development Funding shall
continue to be paid by ABG to deCODE at deCODE's then current
rate, which shall be no lower than [CONFIDENTIAL TREATMENT
REQUESTED] per annum plus any inflation allowance based on 4
FTEs as provided in Section 2.1.2.
1.25 "Exclusive Period" means the period beginning on the earlier
of (A) 6 months following the Effective Date or (B) the first
commercial sale of a Collaboration Product, and ending 3 years
later; provided, however, the Exclusive Period may be extended
as set forth at Section 2.1.2.
1.26 "Existing deCODE Genotyping Software" means the software
Components listed on Exhibit A prior to their
Componentization.
1.27 "Full-Time Equivalent" or "FTE" means full-time employee
having the appropriate skill and experience to conduct a
specified activity and who is dedicated to the conduct of the
specified activity or, in the case of less than full-time
dedication, a full-time equivalent person-year, based on a
total of forty-five (45) weeks or one thousand six hundred
eighty eight (1,688) hours per year, of work on or directly
related to the specified activity.
5
<PAGE> 7
EXECUTION COPY
1.28 "Genotyping Field" means activities directed to generating,
editing and analyzing markers from an individual's DNA, RNA,
or other molecular representation of an individual's genotype,
but excluding gene expression studies.
1.29 "Golden Master" means the final version of a software product
in installable form on a specific physical medium (e.g., a
CD).
1.30 "Improvement Product" means an updated or enhanced version of
a Collaboration Product deemed by ABG, in consultation with
deCODE, to be reasonably necessary to maintain the commercial
viability of the Collaboration Product during the
Non-Exclusive Period.
1.31 "Improvement Product Profit" means [CONFIDENTIAL TREATMENT
REQUESTED] in connection with the sale or support of an
Improvement Product to a third party (i) less trade, cash and
quantity discounts, if any, actually allowed, amounts refunded
for faulty or defective product, returns, rejections, freight,
insurance and other transportation costs, tariffs, duties,
sales tax, and similar governmental charges paid (except
income taxes) ("Net Improvement Product Revenue"); and (ii)
less [CONFIDENTIAL TREATMENT REQUESTED] each as reasonably
attributable to the Improvement Product and provided that in
no event will the deductions for [CONFIDENTIAL TREATMENT
REQUESTED] For avoidance of doubt, the funds received by
deCODE from ABG pursuant to Section 3.5(C) will not be
included in either (i) or (ii) to be deducted from the revenue
received for an Improvement Product for purposes of computing
Improvement Product Profit.
1.32 "Intellectual Property Rights" means all intellectual property
rights worldwide arising under statutory or common law, and
whether or not perfected, including, without limitation, the
following:
(A) all patents, patent applications and patent rights,
including divisions, continuations,
continuations-in-part, renewals, reissues, continuing
prosecution, and extensions of the foregoing (as and
to the extent applicable) now existing, hereafter
filed, issued or acquired;
(B) all rights associated with works of authorship
including copyrights, copyright applications,
copyright registrations, mask works, mask work
applications, and mask work registrations;
(C) all rights associated with trademarks, including any
logos, designs, variations or translations thereof;
6
<PAGE> 8
EXECUTION COPY
(D) all rights relating to the protection of trade
secrets and confidential information; and
(E) all know-how.
1.33 "Joint Commercialization Program" means the collaborative
commercialization program to be conducted by deCODE and ABG as
defined herein.
1.34 "Joint Development Program" means the collaborative
development program to be conducted by deCODE and ABG pursuant
to a mutually agreed upon Workplan, as defined herein.
1.35 "Joint Steering Committee" or "the JSC" will have the meaning
set forth at Section 6.1.
1.36 "Net Collaboration Revenue" means:
(A) with respect to sales by a Party, or an Affiliate of
a Party, to non-affiliated third-party purchasers,
the actual amount of Collaboration Revenue received
from sales of Collaboration Product to a third party,
less: trade, cash and quantity discounts, if any,
actually allowed, amounts refunded for faulty or
defective product, returns, rejections, freight,
insurance and other transportation costs, tariffs,
duties, sales tax, and similar governmental charges
paid (except income taxes);
(B) with respect to sales by a Party made to any
Affiliate, the Net Collaboration Revenue will be
determined as if such Collaboration Product had been
sold to a non-affiliated third-party purchaser; and
(C) with respect to Collaboration Product that is used by
a Party, or an Affiliate of a Party, to supply
services or information to a third party for
commercial purposes, or are otherwise disposed of,
excluding demonstration or other marketing activities
performed for no or de minimis compensation, the Net
Collaboration Revenue will be determined as if such
Collaboration Product had been sold to a
non-affiliated third party purchaser.
1.37 "New deCODE Genotyping Software" means Collaboration Product
to be used in the Genotyping Field developed by ABG and deCODE
during the term of this Agreement and under the Joint
Development Program other than software that is merely an
adaptation of Existing deCODE Genotyping Software to ABG's
APIs.
1.38 "New Product Release" means that stage in the development of a
Collaboration Product at which, under ABG's established
procedures as
7
<PAGE> 9
EXECUTION COPY
implemented by the JSC, unrestricted sale of the Collaboration
Product to unaffiliated third-party customers is authorized.
1.39 "Non-Exclusive Period" means the period beginning upon the
expiration of the Exclusive Period and ending 2 years
thereafter; provided, however, the Parties may agree to extend
the Non-Exclusive Period for one or more additional 2-year
periods thereafter.
1.40 "Party" means deCODE or ABG and, when used in the plural,
means deCODE and ABG.
1.41 "Quarter" means a three month period beginning on or about the
first day of January, April, July or October next following
the Effective Date, and each three month period thereafter,
except that the first Quarter will include the period from the
Effective Date to the first day of the nearest such three
month period after the Effective Date. Precise dates for the
beginning and ending of Quarters may vary in accordance with
ABG's customary accounting practices and procedures in
accordance with GAAP. Upon deCODE's request, ABG will provide
deCODE with a schedule of ABG's fiscal Quarters.
1.42 "Related Patent" means any patent or patent application that:
(A) claims improvements to inventions disclosed or
claimed in a Subject Patent and requires rights under
the Subject Patent to exploit such improvements;
(B) claims priority to a Subject Patent, including but
not limited to continuation applications and patents,
continuation-in-part applications and patents,
divisional applications and patents, reexamination
applications and patents, reissue applications and
patents, continuing prosecution applications and
patents, extensions, and renewals;
(C) is a parent of a Subject Patent; or
(D) any foreign equivalent of a Subject Patent or any
patent or patent application set forth in (A), (B),
or (C) immediately above, including Patent
Cooperation Treaty applications, European Patent
Convention applications, or applications under
similar administrative international conventions that
may be filed with respect thereto, and all
corresponding national patents and patent
applications.
1.43 "Sales and Marketing Cost" means the fully-burdened cost
associated with marketing, selling, distributing and
supporting a product as determined using a Party's customary
practices and procedures in accordance with
8
<PAGE> 10
EXECUTION COPY
GAAP including the following: installation cost, warranty
cost, distribution cost, direct marketing cost, marketing
overhead cost, direct selling cost, and selling overhead cost.
1.44 "Software Maintenance Plan" means any arrangement pursuant to
which ABG provides a customer with (i) software support to
answer or resolve any technical questions or problems related
to the use of the Collaboration Products and/or (ii)
maintenance to correct errors, de-bug or provide enhancements
in the form of patches, updates, new releases, or new versions
of the Collaboration Products.
1.45 "Start Development Checkpoint" means that point in a project
at which, under ABG's established procedures as implemented by
the JSC, a report is produced which documents that the
following parameters have been established with respect to a
Collaboration Product:
(A) technical feasibility;
(B) determination of funding and staffing levels required
to effect New Product Release;
(C) product definition and specifications, including a
target minimum sales price; and
(D) a schedule for New Product Release.
1.46 "Subject Intellectual Property" means Background deCODE
Intellectual Property, Collaboration deCODE Intellectual
Property, Collaboration Joint Intellectual Property,
Background ABG Intellectual Property, or Collaboration ABG
Intellectual Property, including Subject Patents.
1.47 "Subject Patent" means any patent or patent application
claiming or disclosing Background deCODE Intellectual
Property, Collaboration deCODE Intellectual Property,
Collaboration Joint Intellectual Property, Background ABG
Intellectual Property or Collaboration ABG Intellectual
Property, including any Related Patents.
1.48 "System Maintenance" means correction of defects in
Collaboration Product that arise through use of the
Collaboration Product within its specified configuration
parameters, but does not include defects in Collaboration
Product that arise through use of Collaboration Product in
unsupported system configurations, which shall in no case
include defects in any ABG API or other ABG software.
1.49 "System Testing" means evaluation of all functions of
Collaboration Product, including evaluation of behavior of
interaction pathways through
9
<PAGE> 11
EXECUTION COPY
Collaboration Product, which shall in no case include
evaluation of any ABG API or other ABG software.
1.50 "System Validation" means testing of Collaboration Product to
confirm the numerical or computational accuracy of results
produced by Collaboration Product, which shall in no case
include testing of any ABG API or other ABG software.
1.51 "Workplan" means an annual detailed written product
definition, specifications, deliverables and deliverables
schedule, including a budget for the foregoing consistent with
the Development Funding being provided for such period, as
developed by the Parties and approved from time to time by the
JSC. The first Workplan will be completed by the Parties prior
to 90 days after the Effective Date.
2. EXCLUSIVITY; COSTS; DILIGENCE
2.1 Exclusivity.
2.1.1 During the Exclusive Period. During the Exclusive
Period, deCODE will develop and commercialize
Collaboration Product for use in the Genotyping Field
exclusively with ABG. This exclusivity obligation
will not apply (A) to software for use in the
Genotyping Field which is used solely by deCODE,
within deCODE's facilities, whether for its internal
research programs, or as part of a collaboration with
a third party, or as a contract research
organization, or (B) to deCODE Content Associated
Software.
2.1.2 Extension of the Exclusive Period. The Exclusive
Period may be extended by up to 3 additional 1 year
periods, at ABG's election, provided that (A) ABG
pays to deCODE Development Funding to support 4 FTEs
per year at deCODE's then current rate, which shall
be no lower than [CONFIDENTIAL TREATMENT REQUESTED]
(plus an inflation allowance based on 4 FTEs which
for the first additional 1 year term such inflation
allowance shall be the difference between December
2003 and December 2000 in the Consumer Price Index
for All Urban Consumers ("CPI-U"); for the second
additional 1 year term such inflation allowance shall
be the difference between the December 2004 and
December 2001 in the CPI-U; for the third additional
1 year term such inflation allowance shall be the
difference between the December 2005 and December
2002 in the CPI-U), and (B) ABG continues the profit
sharing arrangement set forth herein at Section 5.2.
10
<PAGE> 12
EXECUTION COPY
2.1.3 During the Non-Exclusive Period. During the
Non-Exclusive Period, deCODE may at its sole option
develop and commercialize software products for use
in the Genotyping Field non-exclusively with ABG.
However, during the Non-Exclusive Period, ABG will be
the exclusive distributor of Collaboration Products
developed during the Exclusive Period under the Joint
Development Program, subject to the same profit
sharing arrangement for such Collaboration Products
as set forth at Section 5.2.
2.2 Responsibility for Costs. Except as provided at Section 5.1,
[CONFIDENTIAL TREATMENT REQUESTED]
2.3 Diligence. The Parties will use commercially reasonable
efforts to conduct the Joint Development Program and Joint
Commercialization Program in accordance with the terms and
conditions of this Agreement.
3. DEVELOPMENT OF COLLABORATION PRODUCT
3.1 Scope of Joint Development Program
3.1.1 Adaptation of Existing deCODE Genotyping Software to
ABG APIs. deCODE and ABG will work together to adapt
and optimize Existing deCODE Genotyping Software for
use in conjunction with ABG LIMS Systems through ABG
APIs for use in the Genotyping Field, as set forth in
the Workplan from time to time.
3.1.2 Development of New deCODE Genotyping Software. deCODE
and ABG will work together to define and develop New
deCODE Genotyping Software for use in the Genotyping
Field, as set forth in the Workplan from time to
time.
3.2 Priority. deCODE and ABG will complete the adaptation of
Existing deCODE Genotyping Software to ABG APIs prior to
beginning the development of any New deCODE Genotyping
Software.
3.3 Schedule; Workplan. Activities related to the adaptation of
Existing deCODE Genotyping Software to ABG APIs will be
performed by the Parties in accordance with the schedule and
milestones set forth in the relevant Workplan. The Parties
anticipate that such activities will be substantially complete
within one year after the Effective Date.
3.4 Responsibilities.
11
<PAGE> 13
EXECUTION COPY
3.4.1 deCODE Responsibilities. As set forth in the
Workplan, deCODE will have primary responsibility, in
consultation with ABG, for the following activities
in connection with the development of Collaboration
Products under the Joint Development Program:
3.4.1.1 Componentization of Existing deCODE
Genotyping Software. deCODE will use
commercially reasonable efforts to effect
the Componentization of Existing deCODE
Genotyping Software.
3.4.1.2 Algorithm Development for Collaboration
Products. deCODE will effect Algorithm
Development with respect to Existing deCODE
Genotyping Software.
3.4.1.3 System Maintenance of Collaboration
Products. deCODE will use commercially
reasonable efforts to provide System
Maintenance to correct code defects and
provide minor enhancements that remedy
design defects in the Collaboration Products
during the Joint Development Program.
3.4.1.4 Documentation for Collaboration Products.
deCODE will provide to ABG, as available,
all end user, administrative, API and other
documentation that it has developed or will
develop for commercial-use purposes of the
Collaboration Products, as reasonably
necessary to support the use of such
Collaboration Products.
3.4.1.5 System Testing of Collaboration Products.
deCODE will provide System Testing to
thoroughly test and verify the proper
functioning of all functions of the
Collaboration Products, including testing of
the interactions among the Components of the
Collaboration Products, including but not
limited to specific "use cases" that are
submitted to the JSC and approved as part of
a "test plan."
3.4.1.6 System Validation of Collaboration Products.
deCODE will provide System Validation to
thoroughly verify the accuracy of all
computational algorithms in the
Collaboration Products. In the event that a
certain error rate is inherent in the
operation of an algorithm, deCODE will
characterize that error rate and provide it
to the JSC.
3.4.2 ABG Responsibilities. ABG will have primary
responsibility, in consultation with deCODE, for the
following activities in
12
<PAGE> 14
EXECUTION COPY
connection with the development of Collaboration
Products under the Joint Development Program:
(A) Pre-release acceptance testing, including
integration testing, of Collaboration
Products, according to standards established
in the relevant Workplan and as further
refined by the JSC; and
(B) Provide a product definition of
Collaboration Product to the JSC for its
approval.
3.5 Development of Improvement Products During the Non-Exclusive
Period.
(A) If at any time during the Non-Exclusive Period ABG
desires to develop an Improvement Product, ABG will
communicate in writing its desire to deCODE,
including providing to deCODE a proposed commercially
reasonable Workplan for carrying out the development
of the Improvement Product. The proposed Workplan
would specify at least the following information: (1)
a detailed description of the functionality of the
Improvement Product; (2) the anticipated number of
people required to effect the development of the
Improvement Product; and (3) the anticipated time
required to effect the development of the Improvement
Product.
(B) deCODE would then have 45 days from receipt of the
proposed Workplan to determine whether the proposed
Workplan was adequate for the development of the
Improvement Product and, if not, to provide ABG with
suggestions regarding revising the Workplan for such
development. In either case, deCODE shall respond
with a budget setting forth the estimated amount
deCODE would charge ABG to develop the Improvement
Product, based upon the information provided in the
proposed Workplan. The Parties agree to conduct good
faith discussions to finalize the Workplan and the
budget within 30 days following deCODE's response.
(C) Upon agreement by the Parties as to the contents of
the Workplan and the budget for the development of
the Improvement Product, deCODE shall undertake the
development of the Improvement Product, in accordance
with the approved Workplan and the budget, and ABG
shall pay deCODE the amount set forth in the budget,
as provided in Section 5.1(C).
13
<PAGE> 15
EXECUTION COPY
(D) The Parties shall share the Improvement Product
Profit realized in connection with the Improvement
Product in the same proportion as set forth at
Section 5.2.
(E) Solely in the event that the development of the
Improvement Product is in clear and direct conflict
with deCODE's principal businesses, deCODE may elect
not to conduct the development of the Improvement
Product, in which case the Improvement Product shall
not be developed by either Party; except that, deCODE
will not decline to perform maintenance fixes or
routine enhancements to the normal functions of the
original Collaboration Product for any reason.
3.6 Information Exchange. The Parties will keep each other
informed with respect to all activities directly related to
the Joint Development Program, including without limitation
access to design plans and drawings, specifications,
engineering change orders, software, supplier information,
nucleic acid sequences, processes, materials, and chemistries
directly related to Collaboration Product(s) and will relay
any and all information directly related to the Joint
Development Program to each other through the JSC. The JSC
will participate in engineering milestone reviews for
Collaboration Product.
3.7 Development Teams. Each Party will assign personnel to its
development team with the appropriate skills and experience to
accomplish the work established in the Workplan. It is
expected that such teams will work together to accomplish the
objectives of the Joint Development Program including, if
appropriate, conducting efforts at the same facility.
3.8 Collaboration Data. Each Party shall use good scientific
practices and shall comply in all material respects with
applicable regulations and customary good laboratory and
clinical practices in the performance of the Joint Development
Program (including all data in the form required to be
maintained under any applicable governmental regulations).
Such records shall comprise books, results, reports, research
notes, charts, graphs, comments, computations, analyses,
recordings, photographs, computer programs and documentation
thereof, computer information storage means, samples of
materials and other graphic or written data generated in
connection with the Joint Development Program. Each Party
shall provide the other Party the right to inspect its data
upon reasonable notice and not more than once per year, and
shall provide summaries of its data, to the extent reasonably
required for the performance of each Party's obligations under
this Agreement and the Joint Development Program; provided,
however, such records will be considered to be Confidential
Information of the disclosing Party and each Party will
maintain such Confidential Information in confidence in
accordance with Section 8 and shall not use
14
<PAGE> 16
EXECUTION COPY
such records or information of the other Party except to the
extent otherwise permitted by this Agreement.
3.9 Development Funding to deCODE. See Section 5.1.
4. COMMERCIALIZATION OF COLLABORATION PRODUCT
4.1 Scope of Joint Commercialization Program. Immediately after
the Effective Date, ABG and deCODE shall commence their
efforts to commercialize the Collaboration Product as further
defined in this Article 4.
4.2 Responsibilities.
4.2.1 deCODE Responsibilities. During the term of this
Agreement, deCODE will have responsibility, in
consultation with ABG, for the following support and
manufacturing activities in connection with the Joint
Commercialization Program. The extent of deCODE's
obligations with respect to each category of support
activity set forth at Section 4.2.1.1 et seq. will be
limited to the specified number of person-hours for
each activity.
4.2.1.1 Training. deCODE will train ABG technical,
marketing, service/support, and sales
personnel in the installation,
administration, trouble-shooting, and use of
the Collaboration Products. Subject to
Section 4.2.1.6, deCODE's obligation with
respect to training under this Section
4.2.1.1 will not exceed a total of 600
person-hours.
4.2.1.2 Marketing Support. deCODE will provide ABG
with substantive input and review of
marketing materials and product manuals.
deCODE will also provide to ABG marketing
personnel clear information about the
benefits of Collaboration Product features
relative to others, and the rationale for
certain design decisions in the
Collaboration Product. deCODE will also
permit ABG to use the deCODE facility as a
reference site for the Collaboration
Products, and allow the production of
promotional materials; provided, that any
Confidential Information received by ABG
during such facility visits shall be
governed by the non-disclosure/non-use
provisions in Section 8.1. Subject to
Section 4.2.1.6, deCODE's obligation with
respect to marketing support under this
Section 4.2.1.2 will not exceed a total of
300 person-hours.
15
<PAGE> 17
EXECUTION COPY
4.2.1.3 Sales Support. deCODE will provide technical
consultation to ABG sales representatives,
and provide demonstration versions of
Collaboration Products for use by ABG sales
representatives. deCODE will also make
available knowledgeable personnel for sales
meetings with select customers, upon
reasonable notice and as determined by the
JSC. Subject to Section 4.2.1.6, deCODE's
obligation with respect to sales support
under this Section 4.2.1.3 will not exceed a
total of 700 person-hours.
4.2.1.4 Second-Line Support for Collaboration
Products. deCODE shall provide routine
maintenance and upgrades for Collaboration
Product; and, under circumstances which
cannot be resolved by ABG under ABG's
first-line of support under Section 4.2.2.4,
deCODE shall provide technical consultation
to ABG support personnel to resolve problems
encountered by customers of the
Collaboration Product. Upon reasonable
notice and as determined by the JSC, deCODE
will provide direct consultation to
customers encountering problems, and will
also be available to visit customers with
ABG support personnel to resolve problems
with the Collaboration Product. deCODE will
use commercially reasonable efforts to
provide answers to support questions as
quickly as possible, and will make a support
person available to speak with ABG
representatives Monday through Friday,
between the hours of 9AM and 6PM local time
in Iceland, excluding Icelandic holidays, a
list of which shall be provided to ABG on an
annual basis. deCODE will provide a
voicemail contact number for messages left
at other times. deCODE will respond to
messages from ABG support personnel as
quickly as possible, during the hours stated
above. Subject to Section 4.2.1.6, deCODE's
obligation with respect to second-line
customer support under this Section 4.2.1.4
will not exceed a total of 1600
person-hours.
4.2.1.5 Manufacturing. deCODE will provide ABG with
a Golden Master of each Collaboration
Product. In the event any problems are
encountered with the Golden Master by ABG,
deCODE will promptly replace it.
4.2.1.6 Additional Support for Collaboration
Products. Any support requested by ABG under
Sections 4.2.1.1, 4.2.1.2. 4.2.1.3, or
4.2.1.4, above and beyond the specified
number of person-hours will be provided to
ABG by
16
<PAGE> 18
EXECUTION COPY
deCODE using commercially reasonable efforts for
additional consideration in the amount of $115 per
person-hour, plus reimbursement for all reasonable
out-of-pocket expenses for travel, meals and lodging.
Furthermore, it is expected that the support
requirements will be highest in the period
immediately following the commercial release of a
Collaboration Product. Therefore, deCODE will use
commercially reasonable efforts to fulfill these
requirements with more personnel available in the
period immediately following the commercial release
of a Collaboration Product. The $115 per person-hour
rate will be reviewed annually and revised, if
necessary, by the JSC as may be required to reflect
current market rates and inflation for comparable
professional services. Monies spent by ABG for
support provided to ABG by deCODE pursuant to this
Section 4.2.1.6 will be included within Cost of Goods
Sold of Collaboration Product.
4.2.2 ABG Responsibilities. During the term of this
Agreement, ABG will be primarily responsible in
consultation and with the support of deCODE as set
forth at Section 4.2.1, for the following activities
in connection with the Joint Commercialization
Program:
4.2.2.1 Marketing. ABG will (A) provide a marketable
product definition of Collaboration Product
to the JSC for the JSC's approval; (B)
undertake and pay for all necessary sales
forecasting for Collaboration Products as
determined by the JSC; (C) define the
product positioning of Collaboration
Product; and (D) conduct all marketing and
advertising and promotion activities for
Collaboration Product as determined by the
JSC.
4.2.2.2 Sales. ABG will conduct all selling activity
related to Collaboration Product, including
customer prospecting, customer
qualification, customer demos, producing
statements of work, and negotiating prices,
subject to Section 4.4. In some cases, ABG
may request that deCODE help support these
selling activities, especially Collaboration
Product demonstrations. In the event deCODE
determines, in its sole discretion, to
participate in such activities, ABG shall
compensate deCODE at the rate of $115 per
person hour.
4.2.2.3 Development of Support Plans. ABG will
design, develop and submit to the JSC for
its approval all Software Maintenance Plans
and Custom Maintenance
17
<PAGE> 19
EXECUTION COPY
Plans (collectively, the "Plans"), which are
to be implemented and sold during the term
of this Agreement, including the cost
structure and proposed payment terms of such
Plans.
4.2.2.4 First-Line Support. ABG will conduct all
customer services and support related to the
Collaboration Product. In the event that ABG
personnel cannot resolve any customer
support issue, ABG shall contact deCODE for
assistance as provided in Section 4.2.1.4.
4.2.2.5 Installation and Customization. ABG will
conduct all installation and customization
of Collaboration Products, including
configuration and integration of the
Collaboration Products with other software
products (including the ABG LIMS System) and
with customers' existing information
systems. ABG will also create all
customer-specific software (custom code)
around the Collaboration Product components,
utilizing the Collaboration Product APIs.
Any customization of the Collaboration
Products that requires modification of
source code will be performed by deCODE,
subject to approval by the JSC.
4.2.2.6 Manufacturing. ABG will manufacture all
discs, packaging, promotional materials and
instructional manuals related to
Collaboration Product
4.2.2.7 Taxes. ABG shall be solely responsible for
any sales, use, gross receipts, value-added,
excise, property or other tax, tariff, duty
or assessment and income taxes and related
interest and penalties collected, levied or
imposed by national governments, state or
provincial governments, local governments,
or any subdivision of the foregoing and
arising out of or related to the sale of the
Collaboration Product to an end user.
4.3 Support. Each Party's obligation to provide support for the
Collaboration Product shall be performed in accordance with
the following classifications and priorities:
CATASTROPHIC: A catastrophic defect
renders Collaboration Product unusable
because an entire function is unusable and
no workaround exists, or the defect is of
such a nature that use of Collaboration
Product will cause loss of data integrity or
result in data
18
<PAGE> 20
EXECUTION COPY
loss. Catastrophic defects also include
significant and non-obvious quantitative
errors.
SERIOUS: A serious defect will
typically not affect data integrity (meaning
loss of data, corruption of data or give the
wrong answer), but affects the customer's
ability to use Collaboration Product as
designed. It may be a failure, design issue,
or a documentation error or omission. A work
around may or may not exist.
MINOR: Minor defects are those that
will only have a limited effect on the
customers' usage of Collaboration Product.
Based on the severity of a defect and other
considerations (e.g., the likelihood of
encountering the defect, or certain business
considerations) ABG personnel will set the
relative priority of these code and design
defects according to the following scale:
P1: Must be fixed immediately
P2: Must be fixed in pending
maintenance release or checkpoint.
P3: Should be fixed after P2
defects are fixed.
P4: Should be fixed if time
permits. If time does not permit, these defects
should either be closed with a resolution Not to be
Fixed or closed with a resolution Deferred.
4.4 Pricing. [CONFIDENTIAL TREATMENT REQUESTED] responsibility for
the pricing of Collaboration Product, or any other product or
service resulting in Collaboration Revenue, except that, if
the estimated Collaboration Revenue for a given product or
service is [CONFIDENTIAL TREATMENT REQUESTED] then the price
of the Collaboration Product or other product or service will
require approval by [CONFIDENTIAL TREATMENT REQUESTED]
4.5 Branding. The Collaboration Product and all associated manuals
and promotional materials will carry the ABG brand and logo.
In addition, ABG will be required to place a deCODE trademark,
logo or design in all instructional manuals, promotional
materials and on the outside of any packaging material for all
Collaboration Product components; provided, however, that in
the event no such materials are delivered to customers, all
servers, CPUs and other hardware on which the Collaboration
Products are installed shall be labeled with a sticker
containing the deCODE trademark, logo or design. The placement
and arrangement of the deCODE trademark, logo or design may be
less prominent than ABG's trademark, logo or design, and shall
be subject to deCODE's prior written consent and approval.
19
<PAGE> 21
EXECUTION COPY
4.6 Software Escrow Account. deCODE and ABG will establish and
maintain a software escrow account with DSI Technology Escrow
Services containing the source code for all Collaboration
Products (the "Software Escrow Account"). The terms of the
Software Escrow Account, including terms relating to ABG's
access to the Software Escrow Account and audit rights, will
be as set forth in the Preferred Software Escrow Agreement set
forth as Exhibit B of this Agreement. The Software Escrow
Account will be established not later then 90 days following
the Effective Date. All fees related to the establishment and
maintenance of the Software Escrow Account will be shared
equally, on a 50/50 basis by the Parties
5. PAYMENTS AND VALUE SHARING
5.1 Payments
(A) Development Funding to deCODE. ABG shall pay deCODE
Development Funding at a rate of [CONFIDENTIAL
TREATMENT REQUESTED] during the initial three year
Exclusive Period for the development and
commercialization of Collaboration Product pursuant
to the Joint Development Program.
(B) Additional Compensation. In addition, in
consideration for deCODE's research and development
expenses in developing the Existing deCODE Genotyping
Software prior to the Effective Date, ABG shall pay
deCODE [CONFIDENTIAL TREATMENT REQUESTED] which
amount shall be non-refundable and non-creditable,
during the first three years of the Exclusive Period
as follows:
Year 1 [CONFIDENTIAL TREATMENT REQUESTED]
Year 2 [CONFIDENTIAL TREATMENT REQUESTED]
Year 3 [CONFIDENTIAL TREATMENT REQUESTED]
(C) Each of the foregoing Payments will be made in four
equal quarterly installments, and paid on the last
business day of each Quarter. (For purposes of
clarification, Year 1 will consist of the first 4
Quarters, Year 2 will consist of the second 4
Quarters, and Year 3 will consist of the third 4
Quarters, following the Effective Date of this
Agreement.)
The Exclusive Period can be extended with the additional
payments of Development Funding as set forth in Section 2.1.2.
5.2 Profit Sharing. ABG shall submit a Collaboration Revenue
statement to deCODE which shall set forth the amount of
Collaboration Revenue during each Quarter and shall also
include a calculation of Collaboration Profit. Each such
statement shall be accompanied by the payment due
20
<PAGE> 22
EXECUTION COPY
deCODE which shall amount to [CONFIDENTIAL TREATMENT
REQUESTED] and the balance of Collaboration Profit will be
retained by ABG. All payments due under this Section 5.2 will
be due 45 days following the end of each Quarter.
5.3 Payments. All payments under this Agreement will be made in
United States dollars by wire transfer to a bank account
designated by the Party receiving the payment, without
deductions of taxes, charges or any other duties that may be
imposed. For converting payments due on sales made in
currencies other than United States dollars into United States
dollars, the payments will be converted at the rate of
exchange for United States dollars and each currency involved
as quoted by The Wall Street Journal, Eastern Edition on the
last business day of the relevant Quarter.
6. JOINT STEERING COMMITTEE
6.1 Purpose. A joint steering committee will be established to
oversee all aspects of the Joint Development Program and Joint
Commercialization Program established by this Agreement
(referred to as "Joint Steering Committee" or "the JSC"). The
duties of the Joint Steering Committee will include, but not
be limited to, the following:
(A) implementation of any changes to the Joint
Development Program or the Joint Commercialization
Program;
(B) approval of the Workplan submitted by ABG and deCODE
and approval of any modifications or additions to the
Workplan from time to time;
(C) approval of the allocation and reallocation, if
necessary, of the FTEs;
(D) approval of departures from pricing limits specified
in Section 4.4 of this Agreement;
(E) approval of any Collaboration Product enhancements
that go beyond normal "maintenance";
(F) approval of any customer specific modifications that
require changes to Collaboration Product source code;
(G) determination of appropriate action to be taken in
the event that activities within the Joint
Development Program infringe any Intellectual
Property Rights of a third party.
21
<PAGE> 23
EXECUTION COPY
(H) review and approval of the Software Maintenance Plans
and Custom Maintenance Plans; and
(I) any other responsibilities as may be assigned to the
JSC pursuant to this Agreement or as may be mutually
agreed upon by the Parties from time to time.
6.2 Membership. The Joint Steering Committee will be comprised of
3 employees from deCODE and 3 employees from ABG, appointed at
the sole discretion of the respective Parties. Substitute
employees may be appointed at any time upon written notice to
the other Party. The Joint Steering Committee will be chaired
in the first year by a senior representative from ABG, and
thereafter on a rotating annual basis, by a senior
representative from deCODE or ABG. The initial composition of
the Joint Steering Committee will be as follows:
For deCODE: [CONFIDENTIAL
TREATMENT
REQUESTED]
For ABG: [CONFIDENTIAL
TREATMENT
REQUESTED]
6.3 Meetings. The Joint Steering Committee will meet as often as
is reasonably necessary to accomplish its purpose which shall
in no case be less than once per Quarter, on a mutually
agreeable date and at a mutually agreeable place or, in the
absence of such agreement, such place shall alternate between
the location of each of the Parties. Representatives of deCODE
or ABG, or both, in addition to members of the Joint Steering
Committee, may attend such meetings at the invitation of
either Party.
6.4 Joint Steering Committee Decisions and Dispute Resolution.
Decisions by the Joint Steering Committee will be made by
consensus. If the Joint Steering Committee is unable to reach
agreement with respect to a particular matter within its
purview, within 30 days, the matter will be submitted in
writing to the President of deCODE and the President of the
ABG for discussion and resolution. In the event that the
Presidents of each Party cannot reach agreement within 10
business days after receiving the written submission from the
Joint Steering Committee, which period may be extended by
mutual agreement of the Parties, then either Party may
initiate arbitration in accordance with the rules and
procedures set forth in Exhibit C. Except, to the extent a
dispute relates directly to limits imposed on deCODE by
Icelandic laws, or conflicts with deCODE's contracts with the
Icelandic Ministry of Health, the Icelandic health
institutions and/or other relevant Icelandic governmental
agencies, in
22
<PAGE> 24
EXECUTION COPY
which case, then deCODE's President will have the right to
make a final and binding decision.
6.5 Expenses. The Parties will each bear all expenses of their
respective members related to their participation on the Joint
Steering Committee.
7. INTELLECTUAL PROPERTY; PATENT PROSECUTION AND LITIGATION; LICENSES;
TRADEMARKS
7.1 Ownership of Intellectual Property.
7.1.1 Background deCODE Intellectual Property and
Collaboration deCODE Intellectual Property. All
rights and title and interest in and to Background
deCODE Intellectual Property and Collaboration deCODE
Intellectual Property, whether patentable or
copyrightable or not, shall remain the exclusive
property of deCODE and will be subject to the terms
and conditions of this Agreement.
7.1.2 Background ABG Intellectual Property and
Collaboration ABG Intellectual Property. All rights
and title and interest in and to Background ABG
Intellectual Property and Collaboration ABG
Intellectual Property, whether patentable or
copyrightable or not, shall remain the exclusive
property of ABG and will be subject to the terms and
conditions of this Agreement.
7.1.3 Collaboration Joint Intellectual Property. All rights
and title and interest in and to Collaboration Joint
Intellectual Property, whether patentable or
copyrightable or not, will belong jointly to ABG and
deCODE and will be subject to the terms and
conditions of this Agreement. Each Party will have
the right to independently utilize the Collaboration
Joint Intellectual Property, without accounting to
the other Party, only to the extent that the
utilization of the Collaboration Joint Intellectual
Property by ABG does not require rights under
Background deCODE Intellectual Property,
Collaboration deCODE Intellectual Property, or any
other Intellectual Property Rights owned by, either
partially or wholly, or licensed to deCODE, and that
utilization of the Collaboration Joint Intellectual
Property by deCODE does not require rights under
Background ABG Intellectual Property, Collaboration
ABG Intellectual Property, or any other Intellectual
Property Rights owned by, either partially or wholly,
or licensed to ABG. Additionally, each Party will
have the right but not the obligation to bring, at
its own expense, an infringement action against any
third party under its interest in Collaboration Joint
Intellectual Property, subject to the same
limitations set forth above with
23
<PAGE> 25
EXECUTION COPY
respect to the utilization of the Collaboration Joint
Intellectual Property by deCODE or ABG. The Parties
will assist one another and cooperate in any such
litigation at the other's reasonable request, and, if
a Party is necessary in order to institute or
maintain an infringement suit by the other Party as
defined by law, that Party agrees to be joined in the
suit.
7.2 Filing of Patent Applications.
7.2.1 Collaboration deCODE Intellectual Property. deCODE
shall have the right, using such legal counsel
selected by deCODE in its sole discretion, to
prepare, file, prosecute, maintain and extend patent
applications for Collaboration deCODE Intellectual
Property in countries of deCODE's choosing. deCODE
will bear all costs relating to such activities.
deCODE may if it so desires solicit ABG's advice and
review of the patent applications, and deCODE may if
it so desires take into consideration ABG's advice
thereon.
7.2.2 Collaboration ABG Intellectual Property. ABG shall
have the right, using legal counsel selected by ABG
in its sole discretion, to prepare, file, prosecute,
maintain and extend patent applications for
Collaboration ABG Intellectual Property in countries
of ABG's choosing. ABG will bear all costs relating
to such activities. ABG may if it so desires solicit
deCODE's advice and review of the patent
applications, and ABG may if it so desires take into
consideration deCODE's advice thereon.
7.2.3 Collaboration Joint Intellectual Property. ABG and
deCODE will jointly have the right, using such legal
counsel as selected by both Parties, to prepare,
file, prosecute, maintain and extend patent
applications for Collaboration Joint Intellectual
Property in countries of the Parties choosing. But,
if the utilization of the Collaboration Joint
Intellectual Property would necessarily infringe
claims of patents or patent applications claiming
Background ABG Intellectual Property, the
Collaboration Joint Intellectual Property will, for
the purposes of this Section 7.2.3 only, be treated
as Collaboration ABG Intellectual Property under
Section 7.2.2; and, if the utilization of the
Collaboration Joint Intellectual Property would
necessarily infringe claims of patents or patent
applications claiming Background deCODE Intellectual
Property, the Collaboration Joint Intellectual
Property will, for the purposes of this Section 7.2.3
only, be treated as Collaboration deCODE Intellectual
Property under Section 7.2.1. If only one Party
("Filing Party") desires to file a patent application
in one or more countries, then the Filing Party will
thereafter have the right, at its sole expense, to
prepare, file, prosecute, and maintain the
applications in its own name in the one or more
countries. The other Party will,
24
<PAGE> 26
EXECUTION COPY
at its own expense, assign said patent applications
to the Filing Party and provide reasonable assistance
to the Filing Party at the Filing Party's expense to
facilitate the filing and prosecution of all the
patent applications that the other Party has elected
not to pursue, and the other Party will execute all
documents deemed necessary or desirable therefor. The
Filing Party will provide to the other Party a
royalty-free non-exclusive license, with right to
sublicense, under all the patent applications that
the other Party has elected not to pursue and the
Filing Party has elected to pursue under this Section
7.2.3. ABG and deCODE will each hold all information
it presently knows or acquires under this Section
7.2.3 as Confidential Information in accordance with
Section 8.
7.3 License of Intellectual Property.
7.3.1 Grant to ABG. deCODE hereby grants to ABG a
non-exclusive, world-wide, royalty-free,
non-transferable, non-assignable (subject to Section
12.7) license under Background deCODE Intellectual
Property and Collaboration deCODE Intellectual
Property, only to the extent such Background deCODE
Intellectual Property and Collaboration deCODE
Intellectual Property directly relates to
Collaboration Products, to develop, make, import,
use, offer to sell, distribute and sell Collaboration
Products in the Genotyping Field only to the extent
reasonably necessary for ABG to carry out its
activities under the Joint Development Program and
the Joint Commercialization Program.
7.3.1.1 Sublicenses. ABG will have no right to
sublicense its license rights granted at
Section 7.3.1 beyond those rights granted to
its customers through the sale of
Collaboration Product.
7.3.2 Grant to deCODE. ABG hereby grants to deCODE a
non-exclusive, world-wide, royalty-free,
non-transferable, non-assignable (subject to Section
12.7) license under Background ABG Intellectual
Property and Collaboration ABG Intellectual Property
to develop, make, use, offer to sell, and sell
Collaboration Products in the Genotyping Field only
to the extent deemed necessary by ABG for deCODE to
carry out its activities under the Joint Development
Program and Joint Commercialization Program.
7.3.3 No Other Licenses. No rights other than those
expressly granted in Section 7.3.1 are hereby granted
or intended to be granted to or by either Party,
either expressly, impliedly, or by estoppel, under
Background deCODE Intellectual
25
<PAGE> 27
EXECUTION COPY
Property, Collaboration deCODE Intellectual Property,
Collaboration Joint Intellectual Property, Background
ABG Intellectual Property, Collaboration ABG
Intellectual Property, or any other Intellectual
Property Rights of either deCODE or ABG.
7.4 Interfering Third Party Intellectual Property. If a Party
believes that any activities within the Joint Development
Program infringe any Intellectual Property Rights of a third
party, that Party will promptly notify the Joint Steering
Committee. The Joint Steering Committee shall be responsible
for determining the appropriate action to be taken.
7.5 Patent Litigation.
7.5.1 Defense Against Third Party Claims. In the event of
the institution of any suit by a third party against
deCODE or ABG alleging that the manufacture, use,
sale, distribution or marketing of a Collaboration
Product infringes a third party Intellectual Property
Right, the Party sued will promptly notify the other
Party in writing. The Parties named in such suit will
have the right to defend, and the other Party shall
have the right to participate in the defense, of such
suit each at its own expense. deCODE and ABG will
assist one another and cooperate in any such
litigation at the other's reasonable request without
expense to the requesting Party. The Party conducting
such action will have full control over its conduct,
including settlement thereof. But, no settlement of
an action will be made without the prior written
consent of the other Party if such settlement would
materially adversely affect the rights of the other
Party, the consent shall not be unreasonably withheld
or delayed.
7.5.2 Prosecution of Infringement Action. In the event that
deCODE or ABG become aware of actual or threatened
infringement of any Collaboration deCODE Intellectual
Property, Collaboration ABG Intellectual Property, or
Collaboration Joint Intellectual Property, that Party
will promptly notify the other Party in writing. The
owner the of the Intellectual Property Rights will
have the first right but not the obligation to bring,
at its own expense, an infringement action against
the alleged infringer and to use the other Party's
name in connection therewith. If the owner of the
Intellectual Property Rights does not commence a
particular infringement action within 90 days, the
other Party, after notifying the owner in writing,
will be entitled to bring the infringement action at
its own expense. The Party conducting the action will
have full control over its conduct, including
settlement thereof. But, no settlement of an action
will be made without the prior written consent of the
other Party if such settlement would materially
adversely affect the rights of the other Party, such
26
<PAGE> 28
EXECUTION COPY
consent not to be unreasonably withheld or delayed.
In any event, deCODE and ABG will assist one another
and cooperate in any such litigation at the other's
reasonable request without expense to the requesting
Party, and, if a Party is necessary in order to
institute or maintain an infringement action by the
other Party as defined by law, that Party will join
such action, represented by its own counsel.
7.5.3 Expenses. deCODE and ABG have the right to recover
their respective actual out-of-pocket expenses, or
proportionate share thereof, in connection with any
litigation or settlement thereof from any recovery
made by any Party. Any excess amount will be shared
between ABG and deCODE in an amount proportional to
their respective expenses.
7.5.4 Information. The Parties will keep one another
reasonably informed of the status of their respective
activities regarding any litigation described at
Sections 7.5.1. or 7.5.2, or settlement thereof.
7.6 Effect of Bankruptcy. All rights and licenses granted under
this Agreement by one Party to the other Party are, and will
irrevocably be deemed to be, "intellectual property" as
defined in Section 101(56) of Title 11, U.S. Code ("Bankruptcy
Code"). In the event of the commencement of a case by or
against either Party under any Chapter of the Bankruptcy Code,
this Agreement will be deemed an executory contract and all
rights and obligations hereunder will be determined in
accordance with Section 365(n) thereof.
7.7 Trademarks and Non-Proprietary Names. All rights and title and
interest in and to the Parties' existing trademarks, logos,
designs and distinctive marks, shall remain the exclusive
property of the respective Parties. The Joint Steering
Committee, at equally shared expense between each Party, will
be responsible for the selection, registration and maintenance
of all trademarks that it employs in connection with
Collaboration Products, and both Parties will own and control
such trademarks jointly for use in the Genotyping Field.
Nothing in this Agreement will be construed as a grant of
rights, by license or otherwise, to either Party to use any
trademark for any purpose other than marketing and sale of
Collaboration Product as provided in this Agreement. ABG, at
its expense, will be responsible for the selection of
non-proprietary names for Collaboration Product sold by ABG.
27
<PAGE> 29
EXECUTION COPY
8. CONFIDENTIALITY
8.1 Non-Disclosure; Non-Use. Because deCODE and ABG will be
cooperating with each other under this Agreement, each may
reveal Confidential Information to the other. The Parties
agree, by using the same degree of care as each uses for its
own Confidential Information which shall in no case be less
than a reasonable degree of care, to hold in confidence any
Confidential Information disclosed by the other Party
hereunder, and not to disclose any Confidential Information to
any third party, and not to use any Confidential Information
disclosed by the other Party hereunder for purpose other than
carrying out its obligations under this Agreement, without the
express written consent of the other Party. Each Party will
disclose Confidential Information only to its employees or
agents who have a need to know. Each Party will use
Confidential Information only for purposes of furthering the
Joint Development Program or Joint Commercialization Program.
With respect to any Confidential Information that is revealed
by a Party to the other Party, the confidentiality/non-use
requirement of this Section 8.1 will remain in force for a
period of 5 years after the expiration or termination of this
Agreement except that, where the Confidential Information is a
legally cognizable trade secret under United States Law, this
confidentiality/non-use requirement will remain in force for
the life of the trade secret.
8.1.1 Injunctive Relief. The Parties hereby agree to advise
the other immediately in the event that it learns or
has reason to believe that any person who has access
to Confidential Information, or any portion thereof,
has violated or intends to violate the terms of this
Agreement; and each Party will, at is expense,
cooperate with the other Party in seeking injunctive
relief or other equitable relief in its own name or
that of the other Party against that person.
8.2 Responsibility over Employees and Agents. Each Party will
assume individual responsibility for the actions and omissions
of its respective employees, agents and consultants, and to
inform same of the responsibilities under Article 8 of this
Agreement, and to obtain their agreement to be bound in the
same manner that the Party is bound.
8.3 Affiliates. Nothing herein will be construed as preventing
either Party from disclosing any information to its Affiliates
for the purpose of furthering the Joint Development Program or
Joint Commercialization Program, provided such Affiliate has
undertaken a similar obligation of confidentiality with
respect to the Confidential Information.
8.4 Bankruptcy. All Confidential Information disclosed by one
Party to the other will remain the Intellectual Property of
the disclosing Party. A bankrupt or insolvent Party will, to
the extent permitted by law, take all steps necessary or
desirable to maintain the confidentiality of the other
28
<PAGE> 30
EXECUTION COPY
Party's Confidential Information and to ensure that the court
or other tribunal maintain such information in confidence in
accordance with the terms of this Agreement. In the event that
a court or other legal or administrative tribunal, directly or
through an appointed master, trustee or receiver, assumes
partial or complete control over the assets of a Party to this
Agreement based on the insolvency or bankruptcy of such Party,
the bankrupt or insolvent Party will promptly notify the court
or other tribunal
(A) that Confidential Information received from the other
Party under this Agreement remains the property of
the other Party; and,
(B) of the confidentiality obligations under this
Agreement.
8.5 Publication. Neither ABG nor deCODE will submit for written or
oral publication any manuscript, abstract or the like that
includes data or other Confidential Information generated and
provided by the other Party or otherwise developed by either
Party under the Joint Development Program or Joint
Commercialization Program without first obtaining the prior
written consent of the other Party, which consent will not be
unreasonably withheld or delayed. If written consent or
written denial is not provided by the other Party within 90
days, the first Party will have the right to publish. But, the
foregoing will not apply to customary literature that is
prepared for marketing and sales purposes and that does not
contain Confidential Information.
8.6 Publicity. Neither Party nor any of its Affiliates will
originate any news or any other public disclosure relating to
this Agreement without the prior written approval of the other
Party, such approval not to be unreasonably withheld or
delayed, except that nothing in this Section 8.6 shall prevent
either Party from issuing statements that such Party
reasonably determines to be necessary to comply with
applicable law (including the disclosure requirements of the
U.S. Securities and Exchange Commission, Nasdaq or any other
stock exchange on which securities issued by such Party are
traded); provided, however, that, to the extent practicable
under the circumstances, such Party shall provide the other
Party with a copy of the proposed text of such statements
sufficiently in advance of the scheduled release thereof to
afford such other Party a reasonable opportunity to review and
comment upon the proposed text.
8.7 Compliance with Statutory Requirements. Nothing in this
Agreement will be construed as preventing or in any way
inhibiting either Party from complying with statutory or
regulatory requirements governing the development,
manufacture, use, sale, or other distribution, of
Collaboration Product in any manner that it reasonably deems
appropriate, including, for example, by disclosing to
regulatory authorities Confidential Information or other
information received from a Party or third parties. The
Parties will take reasonable measures to assure that no
unauthorized
29
<PAGE> 31
EXECUTION COPY
use or disclosure is made by others to whom access to such
information is granted under this Section 8.7.
8.8 Compelled Disclosure. In the event that a Party ("Disclosing
Party") is legally compelled (by deposition, interrogatory,
request for documents, subpoena, civil investigation demand or
similar process) to disclose any Confidential Information, the
Disclosing Party will provide prompt prior written notice of
such compulsion to the other Party, so that the other Party
may seek a protective order or other appropriate remedy or, if
appropriate, waive compliance with the terms of this
Agreement. In the event that such protective order or other
remedy is not obtained, the Disclosing Party will disclose
only that portion of Confidential Information that it is
advised by opinion of counsel is legally required to be
disclosed, or else stand liable for contempt or suffer other
censure or penalty, and will exercise its best effort to
obtain reliable assurance that confidential treatment required
hereby will be accorded such Confidential Information; and the
Disclosing Party will not be liable for such disclosure unless
such disclosure was caused by or resulted from a previous
disclosure by the Disclosing Party not permitted by this
Agreement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS; DISCLAIMERS
9.1 Each Party represents, warrants and covenants to the other
Party that:
(A) it has the corporate power and authority and legal
right to enter into this Agreement and to perform its
obligations hereunder;
(B) the execution and delivery of this Agreement and the
performance of the transactions contemplated thereby
have been duly authorized by all necessary corporate
action of the Party;
(C) the execution and delivery of this Agreement and the
performance by the Party of any of its obligations
under this Agreement do not and will not:
(1) conflict with, or constitute a breach or
violation of, any other contractual
obligation to which it is a Party, any
judgment of any court or governmental body
applicable to the Party or its properties,
or, to the Party's knowledge, any statute,
decree, order, rule or regulation of any
court or governmental agency or body
applicable to the Party or its properties;
and
(2) require any consent or approval of any
governmental authority or other person;
30
<PAGE> 32
EXECUTION COPY
(D) each Party will, to the best of its knowledge without
undertaking a special investigation, disclose to the
other Party any material adverse proceedings, claims
or actions that arise that would materially interfere
with that Party's performance of its obligations
under this Agreement; and
(E) each Party's employees have executed or will execute
agreements whereby all right, title and interest in
any Intellectual Property Rights will be assigned to
their respective employers.
9.2 Freedom to Operate. deCODE represents and warrants to ABG
that, to the best of its knowledge, the incorporation of any
Existing deCODE Genotyping Software into Collaboration
Products hereunder will be free from infringement of patent,
copyright or other Intellectual Property Rights of third
parties.
9.3 Rights Under Incorporated Third-Party Software. deCODE
represents and warrants that, to the best of its knowledge,
after undertaking a reasonable investigation, ABG and ABG's
customers will have all Intellectual Property Rights in any
third-party software, or software derived from third party
software, incorporated in any Existing deCODE Genotyping
Software incorporated in Collaboration Products necessary to
freely utilize such Existing deCODE Genotyping Software
without any obligation to any third party.
9.4 Disclaimers. NOTHING CONTAINED IN THIS AGREEMENT WILL BE
CONSTRUED AS:
(A) A WARRANTY OR REPRESENTATION BY EITHER PARTY AS TO
THE VALIDITY, ENFORCEABILITY, OR SCOPE OF ANY PATENT;
(B) A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE,
SALE, OFFER FOR SALE, LEASE, IMPORT, USE OR OTHER
DISPOSITION OF ANY COLLABORATION PRODUCTS HEREUNDER
WILL BE FREE FROM INFRINGEMENT OF PATENT, COPYRIGHT
OR OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH AT SECTIONS 9.2 AND 9.3;
(C) A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THEIR ENFORCEMENT OF ANY PATENT INCLUDING
WITHOUT LIMITATION THE PROSECUTION, DEFENSE OR
CONDUCT OF ANY ACTION OR SUIT CONCERNING INFRINGEMENT
OF ANY SUCH PATENT;
31
<PAGE> 33
EXECUTION COPY
(D) CONFERRING ANY RIGHT TO USE IN ADVERTISING,
PUBLICITY, OR OTHERWISE, ANY TRADEMARK, TRADE NAME OR
NAMES, OR ANY CONTRACTION, ABBREVIATION OR SIMULATION
THEREOF, OF EITHER PARTY;
(E) AN OBLIGATION UPON EITHER PARTY TO MAKE ANY
DETERMINATION AS TO THE APPLICABILITY OF ANY OF ITS
PATENTS TO ANY COLLABORATION PRODUCT;
(F) AN INDUCEMENT BY ONE PARTY TO THE OTHER TO USE ANY
PATENTS OR TO MAKE, USE, OR SELL COLLABORATION
PRODUCTS COVERED BY ANY PATENTS, OR AN INDUCEMENT OF
THE OTHER PARTY'S CUSTOMERS TO PURCHASE OR OTHERWISE
USE COLLABORATION PRODUCTS COVERED BY ANY PATENTS;
(G) AN ADMISSION BY EITHER PARTY THAT ANY OF ITS
COLLABORATION PRODUCTS INFRINGE ANY PATENTS OF THE
OTHER PARTY; OR
(H) A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH
RESPECT TO THE MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE, OF ANY COLLABORATION PRODUCTS
HEREUNDER.
10. INDEMNIFICATION; LIMITATION OF LIABILITY
10.1 ABG's Indemnity. ABG will defend, indemnify and hold harmless
deCODE and its Affiliates, and their respective directors,
officers, employees and agents, from and against any judgment,
damage, liability, loss, cost or other expense, including
legal fees ("Liability"), arising out of or resulting from any
third-party claims made or proceedings brought against deCODE
to the extent that the Liability arises from the following:
(A) The willful misconduct, recklessness, gross
negligence or fraudulent acts or omissions of ABG or
its Affiliates, and their respective directors,
officers, employees and agents in connection with the
development, marketing, manufacture, storage,
handling, commercialization, distribution, use or
sale of Collaboration Product; or,
(B) from ABG's breach of any warranty set forth in
Section 9.
32
<PAGE> 34
EXECUTION COPY
10.2 deCODE's Indemnity. deCODE will defend, indemnify and hold
harmless ABG and its Affiliates, and their respective
directors, officers, employees and agents, from and against
any Liability, arising out of or resulting from any
third-party claims made or proceedings brought against ABG to
the extent that the Liability arises from the following:
(A) The willful misconduct, recklessness, gross
negligence or fraudulent acts or omissions of deCODE
or its Affiliates, and their respective directors,
officers, employees and agents in connection with the
development, marketing, manufacture,
commercialization, use or sale of Collaboration
Product; or,
(B) from deCODE's breach of any warranty set forth in
Section 9.
10.3 Notice; Choice of Attorney. A person that intends to claim
indemnification under this Section 10 (the "Indemnitee") will
promptly notify the other Party (the "Indemnitor") of any
Liability in respect of which the Indemnitee intends to claim
indemnification. The Indemnitor will assume the defense and
settlement thereof with counsel of its choice, reasonably
satisfactory to the other Party. An Indemnitee will have the
right to retain its own counsel, with the fees and expenses to
be paid by the Indemnitor if Indemnitor does not assume the
defense; or, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate due
to actual or potential material and substantial differing
interests between such Indemnitee and the other Party. The
Indemnitee's failure to deliver notice to the Indemnitor
promptly after the commencement of any such action, if
prejudicial to the Indemnitor's ability to defend the action,
will relieve the Indemnitor of any liability to the Indemnitee
under this Section 10, but the omission to deliver notice to
the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Section
10.
10.4 Consent Required. The indemnity provisions in this Section 10
will not apply to amounts paid in settlement of any Liability
if the settlement is effected without the consent of the
Indemnitor. The Indemnitor shall have the right to settle any
Liability at the sole discretion of the Indemnitor, provided
that such settlement does not compromise any obligation, or
right (including Intellectual Property Rights) or otherwise
adversely affect, the Indemnitee or the other Party.
10.5 Cooperation. The Indemnitee under this Section 10, its
employees and agents, will cooperate fully with the Indemnitor
and its legal representatives in the investigations of any
action, claim or Liability covered by this indemnification. In
the event that each Party claims indemnity from the other and
one Party is finally held liable to indemnify the other, the
Indemnitor will additionally be liable to pay the reasonable
33
<PAGE> 35
EXECUTION COPY
legal costs and attorneys' fees incurred by the Indemnitee in
establishing its claim for indemnity.
10.6 LIMITATION OF LIABILITY. THE LIABILITY OF A PARTY WITH RESPECT
TO ANY AND ALL SUITS, ACTIONS, LEGAL PROCEEDINGS, CLAIMS,
DEMANDS, DAMAGES, COSTS AND EXPENSES ARISING OUT OF ITS
PERFORMANCE OR NONPERFORMANCE OF ANY OBLIGATIONS UNDER THIS
AGREEMENT, WHETHER BASED ON CONTRACT, WARRANTY, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), STRICT LIABILITY,
STATUTORY OR OTHERWISE, WILL BE LIMITED TO (A) DIRECT, ACTUAL
DAMAGES INCURRED AS A RESULT OF THE PARTY'S FAILURE TO PERFORM
ITS OBLIGATIONS AS REQUIRED BY THIS AGREEMENT, AND (B) WILL
NOT EXCEED IN THE AGGREGATE A SUM EQUAL TO THE TOTAL AMOUNT OF
COLLABORATION REVENUE RECEIVED OR RETAINED BY THE PARTY UNDER
THIS AGREEMENT. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY OR TO ANY OTHER PERSON OR ENTITY WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT, FOR ANY (A) INCIDENTAL,
SPECIAL, CONSEQUENTIAL OR INDIRECT DAMAGES, OR (B) DAMAGES
RESULTING FROM LOSS OF SALE, BUSINESS, PROFITS, OPPORTUNITY OR
GOODWILL, EVEN IF THE REMEDIES PROVIDED FOR IN THIS AGREEMENT
FAIL OF THEIR ESSENTIAL PURPOSE AND EVEN IF EITHER PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF ANY OF THE FOREGOING
DAMAGES.
11. TERM AND TERMINATION
11.1 Term. Unless terminated earlier as provided in this Section
11, this Agreement will commence on the Effective Date and
will remain in full force until the expiration of the
Non-Exclusive Period as may be extended hereunder.
11.2 Termination
11.2.1 By Mutual Agreement. This Agreement may be terminated
without cause by mutual written agreement of the
Parties, effective as of the time specified in such
written agreement.
11.2.2 Bankruptcy or Material Breach. This Agreement may be
terminated by either Party,
(A) in the event the other Party files in any
court or agency under any statute or
regulation of any state or country, a
34
<PAGE> 36
EXECUTION COPY
petition in bankruptcy or insolvency or for
reorganization or for the appointment of a
receiver or trustee of the other Party or of
its assets, or if the other Party proposes a
written agreement of composition or
extension of its debts, or if the other
Party will be served with an involuntary
petition against it, filed in any insolvency
proceeding, and the petition is not
dismissed within 60 days after the filing
thereof, or if the other Party will propose
or be a Party to any dissolution or
liquidation, or if the other Party will make
an assignment for the benefit of creditors,
subject in any case to applicable bankruptcy
laws; or
(B) upon any material breach of this Agreement
by the other Party; except that,
(1) the Party alleging such breach must
first give the other Party written
notice thereof, which notice must
state the nature of the breach in
reasonable detail and the other
Party must have failed to cure such
alleged breach within 60 days after
receipt of the notice; and
(2) the Party alleging the breach must
terminate the Agreement within 1
year of first giving the other
Party such written notice.
11.2.3 Survival of Obligations. Upon any termination of this
Agreement, by expiration of the term or otherwise,
neither Party will be relieved of any obligations
incurred prior to such termination. Despite any
termination of this Agreement, the rights and
obligations of the Parties under, and the provisions
of Sections 1, 2.2, 3.8, 4.2.2.7, 5.2, 5.3, 7.1, 7.2,
7.5 (solely with respect to suits commenced before
the effective date of termination of this Agreement),
8, 9.4, 10, 11.2.3, 11.2.5, 11.2.6 and 12, as well as
any other provisions that by their nature are
intended to survive any termination, will survive and
continue to be enforceable.
11.2.4
Termination Upon Notice. ABG may terminate this Agreement upon
sixty (60) days notice to deCODE, provided however, that such
notice is give after the first anniversary of the Effective
Date. Upon termination pursuant to this Section 11.2.4, ABG
may elect to continue, by its own efforts and at its sole
expense, to exclusively market only those Collaboration
Products which were being sold or marketed by the Parties at
the time of such termination, for the remainder of the initial
Exclusive Period, and the associated Non-Exclusive Period,
without the right of
35
<PAGE> 37
EXECUTION COPY
extension of the Exclusive Period (the "Marketing Option"). In
order to exercise the Marketing Option, ABG must delivery
written notice to deCODE which notice shall acknowledge ABG's
obligation to continue to share Collaboration Profit with
deCODE as set forth in Section 5.2 of the Agreement. In the
event ABG elects to so exercise the Marketing Option, then in
addition to the provisions set forth in Section 11.2.3,
Sections 7.3.1 and 7.3.3 shall survive the termination of this
Agreement but only until the expiration of the time period
specified in the Marketing Option.
11.2.5 Access To Software Escrow Account. In the event that
the Agreement is terminated by ABG under Section
11.2.2(A), and subject to applicable law, ABG will be
permitted to obtain access to the materials deposited
in the Software Escrow Account established pursuant
to Section 4.6 ("Escrow Materials") pursuant to and
in accordance with the terms and conditions of the
Preferred Software Escrow Agreement.
11.2.6 Access to Source Code Upon Expiration or Termination
of this Agreement. In the event that, following the
expiration or termination of this Agreement, ABG
continues to maintain Collaboration Products under
any Software Maintenance Plan(s) and/or Custom
Maintenance Plan(s), deCODE agrees to provide ABG
with (i) access to all relevant source code for the
Collaboration Products subject to such Software
Maintenance Plan(s) and/or Custom Maintenance
Plan(s), (ii) reasonable assistance with respect to
ABG's utilization of such relevant source code, and
(iii) a continued license to use the source code
strictly for the purposes set forth in this Section
11.2.6; provided, however, that (i) ABG's use of such
source code shall be strictly limited to providing
contracted for maintenance services under Software
Maintenance Plan(s) and/or Custom Maintenance
Plan(s), and (ii) ABG shall continue to share all
Collaboration Profit from such Software Maintenance
Plan(s) and/or Custom Maintenance Plan(s) with deCODE
as set forth in Section 5.2 of this Agreement as if
this Agreement was still in full force and effect.
12. GENERAL PROVISIONS
12.1 Force Majeure. Except for the payment of money, if the
performance of any part of this Agreement by either Party, or
of any obligation under this Agreement, is prevented,
restricted, interfered with or delayed by reason of any cause
beyond the reasonable control of the Party liable to perform,
unless conclusive evidence to the contrary is provided, the
Party so affected will, upon giving written notice to the
other Party, be excused from the performance to the extent of
the prevention, restriction, interference or delay; provided,
however, the affected Party will use its
36
<PAGE> 38
EXECUTION COPY
reasonable best efforts to avoid or remove the causes of
non-performance and will continue performance with the utmost
dispatch whenever the causes are removed. When the
circumstances arise, the Parties will discuss what, if any,
modification of the terms of this Agreement may be required in
order to arrive at an equitable solution.
12.2 Governing Law; Attorneys' Fees. This Agreement will be deemed
to have been made in the State of Delaware, and its form,
execution, validity, construction and effect will be
determined in accordance with the laws of the State of
California, without reference to conflicts of law principles.
Any suit arising out of or relating to this Agreement must be
brought and tried only in the State or Federal courts in New
York County, New York. In the event that any Party shall
commence any proceeding to enforce or interpret the provisions
of this Agreement, the prevailing Party in any such action or
proceeding will be entitled to recover reasonable attorneys'
fees and costs incurred in connection with such suit, action
or proceeding in addition to whatever other remedies may also
be available.
12.3 Books and Records. Using a Party's customary practices and
procedures in accordance with GAAP, each Party will keep and
maintain proper and complete records and books of account
sufficient in detail to enable the verification of monies
spent and received by each Party in connection with each
Party's obligations under this Agreement, including, but not
limited to, Collaboration Revenue and Collaboration Profit.
The books and records will be retained for a period of at
least 3 years after the end of the period for which such books
and records pertain. Each Party will have the right from time
to time (not to exceed once per calendar year) during normal
business hours and upon 2 weeks written notice, to inspect in
confidence, or have an agent, accountant or other
representative inspect in confidence, the books and records.
The Party initiating the inspection will bear the costs
thereof unless the inspection reveals a discrepancy
unfavorable to that Party of at least 10%, in which case the
other Party will pay the costs of the inspection. If the
inspection results in a final determination that amounts have
been overstated or understated, the applicable amount will be
refunded or paid promptly by the appropriate Party, which
shall in no case be more than 30 days. The inspecting Party
will treat all information learned in the course of any audit
or inspection as Confidential Information, and will maintain
such Confidential Information in strict confidence, except to
the extent necessary for the Party to reveal such information
in order to enforce its rights under this Agreement or if
disclosure is required by law. The public accounting firm
employees shall sign a customary confidentiality agreement as
a condition precedent to their inspection, and shall report to
the inspecting Party only that information which would be
contained in a properly prepared royalty report.
37
<PAGE> 39
EXECUTION COPY
12.4 Severability. If a court or an arbitrator of competent
jurisdiction holds any provision of this Agreement to be
illegal, unenforceable, or invalid, in whole or in part for
any reason, that provision will be deemed severed from the
rest of the Agreement, and the validity and enforceability of
the remaining provisions, or portions thereof, will not be
affected.
12.5 Entire Agreement. This Agreement and all exhibits referred to
in this Agreement, together with the Preferred Software Escrow
Agreement constitute the final, complete, and exclusive
statement of the terms of the agreement between the Parties
pertaining to the subject matter of this Agreement and
supersedes all prior and contemporaneous understandings or
agreements of the Parties. No Party has been induced to enter
into this Agreement by, nor is any Party relying on, any
representation or warranty outside those expressly set forth
in this Agreement.
12.6 Modification of Agreement. No terms or conditions of this
Agreement will be varied or modified by any prior or
subsequent statement, conduct or act of either of the Parties,
except that the Parties may supplement, amend, or modify this
Agreement by written instruments specifically referring to,
and executed in the same manner as, this Agreement.
12.7 Assignment. Neither Party has the power to assign this
Agreement nor any of its rights or obligations hereunder
without the prior written consent of the other Party, except
that either Party may assign this Agreement or any of its
rights or obligations to any Affiliate or to any third party
with which it may merge or consolidate, or to which it may
transfer all or substantially all of its assets to which this
Agreement relates, without obtaining the consent of the other
Party. Any unauthorized assignment will be void. Subject to
the foregoing, the rights and obligations of the Parties will
bind and inure to the benefit of their respective successors
and assigns.
12.8 Relationship. Nothing contained in this Agreement will be
construed to make the Parties' partners, joint venturers,
principles, agents or employees of the other. Neither Party
will have the right, power, or authority, express or implied,
to bind the other Party.
12.9 Waiver. No waiver of a breach, failure of any condition, or
any right or remedy, contained in or granted by the provisions
of this Agreement will be effective unless it is in writing
and signed by the Party waiving the breach, failure, right or
remedy. No waiver of any breach, failure, right or remedy will
be deemed a waiver of any other breach, failure, right or
remedy, whether or not similar, nor will any waiver constitute
a continuing waiver unless the writing so specifies.
12.10 Export Control Regulations. The rights and obligations of the
Parties under this Agreement, shall be subject in all respects
to United States laws and regulations as shall from time to
time govern the license and delivery
38
<PAGE> 40
EXECUTION COPY
of technology and products abroad, including the United States
Foreign Assets Control Regulations, Transaction Control
Regulations and Export Control Regulations, as amended, and
any successor legislation issued by the Department of
Commerce, International Trade Administration, or Office of
Export Licensing. Without in any way limiting the provisions
of this Agreement, each Party agrees that, unless prior
authorization is obtained from the Office of Export Licensing,
it will not export, reexport, or transship, directly or
indirectly, to any country, any of the technical data
disclosed to it by the other party hereto if such export would
violate the laws of the United States or the regulations of
any department or agency of the United States Government
12.11 Construction.
12.11.1 Headings; Sections and Exhibits. Headings contained
in this Agreement are for convenience only and will
not be used in the interpretation of this Agreement.
References herein to sections and exhibits are to the
sections and exhibits, respectively, of this
Agreement. The exhibits are hereby incorporated
herein by reference and made a part of this
Agreement. Should any inconsistency exist or arise
between a provision of this Agreement and a provision
of any exhibit or other incorporated writing, the
provision of this Agreement will prevail.
12.11.2 No Construction Against Drafter. Each Party and its
counsel have participated fully in the review and
revision of this Agreement. Any rule of construction
to the effect that ambiguities are to be resolved
against the drafting Party will not apply in
interpreting this Agreement.
12.11.3 Certain Words and Terms. Unless the context clearly
requires otherwise,
(A) the plural and singular numbers will each be
deemed to include the other;
(B) the masculine, feminine, and neuter genders
will each be deemed to include the others;
(C) "will," "will agree," or "agrees" are
mandatory, and "may" is permissive;
(D) "or" is not exclusive; and
(E) "includes" and "including" are not limiting.
39
<PAGE> 41
EXECUTION COPY
12.12 Counterparts. This Agreement may be executed in any number of
counterparts, and each counterpart will be deemed an original
instrument, but all counterparts together will constitute but
one agreement.
12.13 Counting Days. Unless otherwise specified, "days" will be
considered calendar days. Calendar days will be counted by
excluding the first day and including the last day, unless the
last day is a Saturday, Sunday, or a legal holiday, and then
it will be excluded. "Business days" will exclude Saturdays,
Sundays, and all legal holidays in the United States and
Iceland.
12.14 Notices.
12.14.1 Sufficient Notice. All notices, requests, demands, or
other communications under this Agreement will be in
writing. Notice will be sufficiently given for all
purposes as follows:
(A) when personally delivered to the recipient,
notice is effective on delivery;
(B) when mailed certified mail, return receipt
requested, notice is effective on receipt,
if delivery is confirmed by a return
receipt;
(C) when delivered by Federal
Express/Airborne/United Parcel Service/DHL
WorldWide, or United States Express Mail,
charges prepaid or charged to the sender's
account, notice is effective on delivery, if
delivery is confirmed by the delivery
service; and
(D) when sent by telex or fax to the last telex
or fax number of the recipient known to the
Party giving notice, notice is effective on
receipt, provided that
(1) a duplicate copy of the notice is
promptly given by first-class or
certified mail or by
overnight delivery, or
(2) the receiving Party delivers a
written confirmation of receipt.
Any notice given by telex or fax
will be deemed received on the next
business day if it is received
after 5:00 p.m. (recipient's time)
or on a non-business day.
12.14.2 Notice Refused, Unclaimed, Or Undeliverable. Any
correctly addressed notice that is refused,
unclaimed, or undeliverable because of an act or
omission of the Party to be notified will be deemed
effective as of the first date that said notice was
refused,
40
<PAGE> 42
EXECUTION COPY
unclaimed, or deemed undeliverable by the postal
authorities, messenger, or overnight delivery
service.
12.14.3 Addresses. Addresses for purpose of giving notice are
as follows:
If to deCODE: deCODE genetics, ehf.
Hlioarsmari 15,
200 Kopavogur,
Iceland
FAX No.: 011-354 (570) 1902
Attn.: President
If to ABG: Applied Biosystems
850 Lincoln Centre Drive
Foster City, CA 94404
FAX No.: 650-638-6677
Attn.: Legal Department
[Signature Page Follows]
41
<PAGE> 43
EXECUTION COPY
The Parties , through their authorized officers, have executed this Agreement as
of the Effective Date.
deCODE GENETICS, ehf. PE CORPORATION (NY), THROUGH
ITS APPLIED BIOSYSTEMS GROUP
By: /s/ Kari Stefansson By: /s/ Michael W. Hunkapiller
-------------------------------- ---------------------------
Name: Kari Stefansson Name: Michael W. Hunkapiller
-------------------------------- -------------------------
Title: CHIEF EXECUTIVE OFFICER Title: Senior Vice President
-------------------------------- and President Applied
Biosystems Group
------------------------
Date: July 16, 2001 Date: July 16, 2001
-------------------------------- -------------------------
42
<PAGE> 44
EXECUTION COPY
EXHIBIT A
SOFTWARE COMPONENTS
The following describes the division of Existing deCODE Genotyping Software into
independently deployable components ("Components"). The aim of this division is
to allow customers to obtain only those components that they need, since
offering a single monolithic application is often a significant impediment in a
marketplace where customers have their own development groups and where
integration with existing software systems is necessary.
To provide ABG with the flexibility it needs to commercialize Existing deCODE
Genotyping Software in the form of Collaboration Products, each of these
Components would interact with each other exclusively through documented
application programming interfaces ("APIs"). deCODE would design, in
consultation with ABG, and implement and test these APIs, and would provide to
ABG documentation and support in their use sufficient for ABG to utilize the
Components in an integrated system adapted to a customers requirements.
Documentation of these APIs would not be provided to customers or to any other
third parties.
Collaboration Product Components would interact with ABG software through ABG
APIs.
A. GenoType Project Administrator (GTPA)
The GTPA would be the Component that serves as the primary interface between the
user and the various other Components of the Collaboration Product. In general,
the user would access Components from the GTPA user interface. Most data used
and generated by other Components would be represented in the GTPA UI. In
general, the GTPA Component would serve as the "system dashboard" for the
Collaboration Product.
B. GenoTypeLabManager (GTLM)
The GTLM Component would be used for genotype run scheduling; viewing and
prioritizing genotype runs, panel preparation, PCR scheduling and rescheduling.
It would include detailed view of each plate run and integration with a general
search functionality. The GTLM would enforce the registration of run information
through barcode scanning at various checkpoints in the workflow. This module
would be integrated with the ABG LIMS System through ABG APIs.
C. GenoTypeResultManager (GTRM)
The GTRM Component would provide all tools for automated calling of alleles and
quality values from "raw" instrument data, perform various consistency checks
and quality control operations against the called alleles, and provide all the
user interface tools for viewing, editing, and manipulating the allele calls and
"drilling down" to the "raw" instrument data. deCODE would remove all
third-party code from the GTRM
1
<PAGE> 45
EXECUTION COPY
Component (e.g., TrueAllele) and replace such code with operationally-equivalent
deCODE code that was not improperly derived from third party code. The GTRM
would be based on modules that are appropriate for each genotyping method (e.g.,
micro-satellites and SNPs) and the quality control parameters may be method
dependent. This module would also provide a tool for exporting selections of the
genotypes into third-party tools or a verified genotype database used by the
optional downstream analysis components in the GTPA.
This module would be integrated with the ABG LIMS System through ABG APIs;
specifically, it would use the object model and other representational elements
of genotyping results that are in the ABG LIMS System, and would preserve ABG
LIMS System user interface as the primary interface from which genotyping
results are viewed and edited. It is anticipated that users would launch the
GTRM from the ABG LIMS System genotyping results management user interface.
D. Integration with ABG LIMS System Marker and Assay Management
All deCODE components would, wherever appropriate, integrate with the Genotype
Marker and Assay Management capabilities of the ABG LIMS System through the
API's provided by ABG.
E. Miscellaneous Core Utilities
Examples of Miscellaneous Core Utilities would include Import Tools,
Administrative Tools (e.g., set up of users, roles, and other necessary software
configuration options).
F. Integration with ABG LIMS System
All Collaboration Product Components would be modified to use the ABG LIMS
System for all sample, container, and location management data and capabilities.
These capabilities include sample logging, tracking of sub-sampling and sample
pooling operations, representing and recording transfers of samples among
containers of various types, and tracking the physical location of samples
within a laboratory.
Other Collaboration Product Components would use the information (e.g., sample
IDs, sample locations, containers, etc.) that is generated and managed by the
ABG LIMS System.
G. PedigreeManagement
This component provides features to compute the layout of pedigree drawings,
editing, importing, exporting and other manipulation related to pedigrees.
deCODE would remove all third-party code from this Component (e.g., Cyrillic)
and replace such code with operationally-equivalent deCODE code.
H. PhenotypeQueryTool
This component provides more advanced query tool options, beyond the basic
capabilities in GTPA, for defining patient sets from phenotypes and other
relevant
2
<PAGE> 46
EXECUTION COPY
parameters. This module would be of interest for users with wealth of phenotypic
data where patient stratification can be of importance.
I. Linkage And Association Tools
This component provides genetic analysis tools through deCODE's advanced Allegro
calculation engine and other simpler statistical algorithms. Appropriate GUI
modules for viewing the results are provided as well which are integrated into
the GTPA framework.
J. Haplotype Analysis
This component provides advanced analytical tools to calculate haplotypes from
genotypes, framework for viewing haplotypes in tabular and pedigree view as well
as data-mining algorithms to discover important patterns in haplotypes.
3
<PAGE> 47
EXECUTION COPY
EXHIBIT B
PREFERRED SOFTWARE ESCROW AGREEMENT
Account Number
------------------------
This Agreement is effective __________________, 2001 among DSI Technology Escrow
Services, Inc. ("DSI"), deCODE genetics, ehf. ("Depositor") and PE Corporation
(NY) through its Applied Biosystems Group ("Preferred Beneficiary"), who
collectively may be referred to in this Agreement as "the parties."
A. Depositor and Preferred Beneficiary have entered or will enter into a
license agreement, development agreement, and/or other agreement regarding
certain proprietary technology of Depositor, having an effective date of July
16, 2001 (referred to in this Agreement as "the License Agreement").
B. Depositor desires to avoid disclosure of its proprietary technology
except under certain limited circumstances.
C. The availability of the proprietary technology of Depositor is critical
to Preferred Beneficiary in the conduct of its business and, therefore,
Preferred Beneficiary needs access to the proprietary technology under certain
limited circumstances.
D. Depositor and Preferred Beneficiary desire to establish an escrow with
DSI to provide for the retention, administration and controlled access of the
proprietary technology materials of Depositor.
E. The parties desire this Agreement to be supplementary to the License
Agreement pursuant to 11 United States [Bankruptcy] Code, Section 365(n).
ARTICLE 1 -- DEPOSITS
1.1 Obligation to Make Deposit. Upon the signing of this Agreement by the
parties, Depositor shall deliver to DSI the proprietary technology and other
materials ("Deposit Materials") required to be deposited by the License
Agreement or, if the License Agreement does not identify the materials to be
deposited with DSI, then such materials will be identified on an Exhibit A. If
Exhibit A is applicable, it is to be prepared and signed by Depositor and
Preferred Beneficiary. DSI shall have no obligation with respect to the
preparation, signing or delivery of Exhibit A.
1.2 Identification of Tangible Media. Prior to the delivery of the Deposit
Materials to DSI, Depositor shall conspicuously label for identification each
document, magnetic tape,
1
<PAGE> 48
EXECUTION COPY
disk, or other tangible media upon which the Deposit Materials are written or
stored. Additionally, Depositor shall complete Exhibit B to this Agreement by
listing each such tangible media by the item label description, the type of
media and the quantity. The Exhibit B must be signed by Depositor and delivered
to DSI with the Deposit Materials. Unless and until Depositor makes the initial
deposit with DSI, DSI shall have no obligation with respect to this Agreement,
except the obligation to notify the parties regarding the status of the deposit
account as required in Section 2.2 below.
1.3 Deposit Inspection. When DSI receives the Deposit Materials and the
Exhibit B, DSI will conduct a deposit inspection by visually matching the
labeling of the tangible media containing the Deposit Materials to the item
descriptions and quantity listed on the Exhibit B. In addition to the deposit
inspection, Preferred Beneficiary may elect to cause a verification of the
Deposit Materials in accordance with Section 1.6 below.
1.4 Acceptance of Deposit. At completion of the deposit inspection, if DSI
determines that the labeling of the tangible media matches the item descriptions
and quantity on Exhibit B, DSI will date and sign the Exhibit B and mail a copy
thereof to Depositor and Preferred Beneficiary. If DSI determines that the
labeling does not match the item descriptions or quantity on the Exhibit B, DSI
will (a) note the discrepancies in writing on the Exhibit B; (b) date and sign
the Exhibit B with the exceptions noted; and (c) mail a copy of the Exhibit B to
Depositor and Preferred Beneficiary. DSI's acceptance of the deposit occurs upon
the signing of the Exhibit B by DSI. Delivery of the signed Exhibit B to
Preferred Beneficiary is Preferred Beneficiary's notice that the Deposit
Materials have been received and accepted by DSI.
1.5 Depositor's Representations. Depositor represents as follows:
a. Depositor lawfully possesses all of the Deposit Materials
deposited with DSI;
b. With respect to all of the Deposit Materials, Depositor has the
right and authority to grant to DSI and Preferred Beneficiary
the rights as provided in this Agreement;
c. The Deposit Materials are not subject to any lien or other
encumbrance;
d. The Deposit Materials consist of the proprietary technology and
other materials identified either in the License Agreement or
Exhibit A, as the case may be; and
e. The Deposit Materials are readable and useable in their current
form or, if the Deposit Materials are encrypted, the decryption
tools and decryption keys have also been deposited.
1.6 Verification. Preferred Beneficiary shall have the right, at Preferred
Beneficiary's expense, to cause a verification of any Deposit Materials. A
verification determines, in
2
<PAGE> 49
EXECUTION COPY
different levels of detail, the accuracy, completeness, sufficiency and quality
of the Deposit Materials. If a verification is elected after the Deposit
Materials have been delivered to DSI, then only DSI, or at DSI's election an
independent person or company selected and supervised by DSI, may perform the
verification. In the event DSI elects to have an independent person or company
perform the verification DSI shall require such person or entity to enter into
confidentiality agreements which incorporate provisions of the character and
scope of Section 2.1.
1.7 Deposit Updates. Unless otherwise provided by the License Agreement,
Depositor shall update the Deposit Materials within 60 days of each release of a
new version of the product which is subject to the License Agreement. Such
updates will be added to the existing deposit. All deposit updates shall be
listed on a new Exhibit B and the new Exhibit B shall be signed by Depositor.
Each Exhibit B will be held and maintained separately within the escrow account.
An independent record will be created which will document the activity for each
Exhibit B. The processing of all deposit updates shall be in accordance with
Sections 1.2 through 1.6 above. All references in this Agreement to the Deposit
Materials shall include the initial Deposit Materials and any updates.
1.8 Removal of Deposit Materials. The Deposit Materials may be removed
and/or exchanged only on written instructions signed by Depositor and Preferred
Beneficiary, or as otherwise provided in this Agreement.
1.9 Ownership. Notwithstanding anything contained herein to the contrary,
the parties recognize and acknowledge that ownership of the Deposit Materials
shall remain with Depositor at all times.
ARTICLE 2 -- CONFIDENTIALITY AND RECORD KEEPING
2.1 Confidentiality. DSI shall maintain the Deposit Materials in a secure,
environmentally safe, locked facility which is accessible only to authorized
representatives of DSI. DSI shall have the obligation to reasonably protect the
confidentiality of the Deposit Materials. Except as provided in this Agreement,
DSI shall not copy, disclose, transfer, make available, or use the Deposit
Materials. DSI shall not disclose the content of this Agreement to any third
party. If DSI receives a subpoena or other order of a court or other judicial
tribunal pertaining to the disclosure or release of the Deposit Materials, DSI
will immediately notify the parties to this Agreement. It shall be the
responsibility of Depositor and/or Preferred Beneficiary to challenge any such
order; provided, however, that DSI does not waive its rights to present its
position with respect to any such order. DSI will not be required to disobey any
court or other judicial tribunal order. (See Section 7.5 below for notices of
requested orders.)
2.2 Status Reports. DSI will issue to Depositor and Preferred Beneficiary a
report profiling the account history at least semi-annually. DSI may provide
copies of the
3
<PAGE> 50
EXECUTION COPY
account history pertaining to this Agreement upon the request of any party to
this Agreement.
2.3 Audit Rights. During the term of this Agreement, Depositor and Preferred
Beneficiary shall each have the right to inspect the written records of DSI
pertaining to this Agreement. Any inspection shall be held during normal
business hours and following reasonable prior notice.
ARTICLE 3 -- GRANT OF RIGHTS TO DSI
3.1 Right to Make Copies. DSI shall have the right to make copies of the
Deposit Materials only as reasonably necessary to perform this Agreement. DSI
shall copy all copyright, nondisclosure, and other proprietary notices and
titles contained on the Deposit Materials onto any copies made by DSI. With all
Deposit Materials submitted to DSI, Depositor shall provide any and all
instructions as may be necessary to duplicate the Deposit Materials including
but not limited to the hardware and/or software needed.
3.3 Right to Transfer Upon Release. Depositor hereby grants to DSI the right
to transfer the Deposit Materials to Preferred Beneficiary for use by Preferred
Beneficiary in accordance with Section 4.5 only upon the occurrence of a Release
Condition and only in accordance with the provisions of Article 4. Except upon
such a release or as otherwise provided in this Agreement, DSI shall not
transfer the Deposit Materials.
ARTICLE 4 -- RELEASE OF DEPOSIT
4.1 Release Conditions. As used in this Agreement, "Release Condition" shall
mean the following:
a. Depositor's material breach of the License Agreement which
breach has not been cured within the applicable cure period; or
b. Depositor has ceased to conduct business.
4.2 Filing For Release. If Preferred Beneficiary believes in good faith that
a Release Condition has occurred, Preferred Beneficiary may provide to DSI
written notice of the occurrence of the Release Condition along with:
a. evidence satisfactory to DSI that Preferred Beneficiary has
previously notified Depositor of such Release Condition in
writing;
b. a written demand that the Deposit Materials be released and
delivered to Preferred Beneficiary;
4
<PAGE> 51
EXECUTION COPY
c. a written undertaking from the Preferred Beneficiary that the
Deposit Materials being released to the Preferred Beneficiary
will be used only as permitted under the terms of the License
Agreement; and
d. specific instructions from the Preferred Beneficiary for the
delivery of the Deposit Materials.
Upon receipt of such notice, DSI shall provide a copy of the notice and all
supporting documentation provided by Preferred Beneficiary pursuant to (a)
through (d) to Depositor by commercial express mail.
4.3 Contrary Instructions. From the date DSI mails the notice requesting
release of the Deposit Materials, Depositor shall have twenty business days to
deliver to DSI Contrary Instructions. "Contrary Instructions" shall mean the
written representation by Depositor that a Release Condition has not occurred or
has been cured. Upon receipt of Contrary Instructions, DSI shall send a copy to
Preferred Beneficiary by commercial express mail. Additionally, DSI shall notify
both Depositor and Preferred Beneficiary that there is a dispute to be resolved
pursuant to the Dispute Resolution section (Section 7.3) of this Agreement.
Subject to Section 5.2, DSI will continue to store the Deposit Materials without
release pending (a) joint instructions from Depositor and Preferred Beneficiary;
(b) resolution pursuant to the Dispute Resolution provisions of Section 7.3; or
(c) order of a court.
4.4 Release of Deposit. If DSI does not receive Contrary Instructions from
the Depositor, DSI is authorized to release the Deposit Materials to the
Preferred Beneficiary or, if more than one beneficiary is registered to the
deposit, to release a copy of the Deposit Materials to the Preferred
Beneficiary. However, DSI is entitled to receive any fees due DSI before making
the release. Any copying expense in excess of $300 will be chargeable to
Preferred Beneficiary. This Agreement will terminate upon the release of the
Deposit Materials held by DSI.
4.5 Right to Use Following Release. Unless otherwise provided in the License
Agreement, upon release of the Deposit Materials in accordance with this Article
4, Preferred Beneficiary shall have the right to use the Deposit Materials
solely in accordance with the provisions of the License Agreement. Preferred
Beneficiary shall be obligated to maintain the confidentiality of the released
Deposit Materials.
ARTICLE 5 -- TERM AND TERMINATION
5.1 Term of Agreement. The initial term of this Agreement is for a period of
one year. Thereafter, this Agreement shall automatically renew from year-to-year
unless (a) Depositor and Preferred Beneficiary jointly instruct DSI in writing
that the Agreement is terminated; or (b) the Agreement is terminated by DSI for
nonpayment in accordance with Section 5.2. If the Deposit Materials are subject
to another escrow agreement with DSI, DSI reserves the right, after the initial
one year term, to adjust the anniversary date
5
<PAGE> 52
EXECUTION COPY
of this Agreement to match the then prevailing anniversary date of such other
escrow arrangements.
5.2 Termination for Nonpayment. In the event of the nonpayment of fees owed
to DSI, DSI shall provide written notice of delinquency to all parties to this
Agreement. Any party to this Agreement shall have the right to make the payment
to DSI to cure the default. If the past due payment is not received in full by
DSI within one month of the date of such notice, then DSI shall have the right
to terminate this Agreement at any time thereafter by sending written notice of
termination to all parties. DSI shall have no obligation to take any action
under this Agreement so long as any payment due to DSI remains unpaid.
5.3 Disposition of Deposit Materials Upon Termination. Upon termination of
this Agreement, DSI shall destroy, return, or otherwise deliver the Deposit
Materials in accordance with Depositor's instructions. If there are no
instructions, DSI may, at its sole discretion, destroy the Deposit Materials or
return them to Depositor. DSI shall have no obligation to return or destroy the
Deposit Materials if the Deposit Materials are subject to another escrow
agreement with DSI.
5.4 Survival of Terms Following Termination. Upon termination of this
Agreement, the following provisions of this Agreement shall survive:
a. Depositor's Representations (Section 1.5);
b. The obligations of confidentiality with respect to the Deposit
Materials (Section 2.1);
c. The rights and obligations granted in the sections entitled
Right to Transfer Upon Release (Section 3.2) and Right to Use
Following Release (Section 4.5), if a release of the Deposit
Materials has occurred prior to termination;
d. The obligation to pay DSI any fees and expenses due;
e. The provisions of Article 7; and
f. Any provisions in this Agreement which specifically state they
survive the termination or expiration of this Agreement.
ARTICLE 6 -- DSI'S FEES
6.1 Fee Schedule. DSI is entitled to be paid its standard fees and expenses
applicable to the services provided. DSI shall notify the party responsible for
payment of DSI's fees at least 90 days prior to any increase in fees. For any
service not listed on DSI's standard fee schedule, DSI will provide a quote
prior to rendering the service, if requested.
6
<PAGE> 53
EXECUTION COPY
6.2 Payment Terms. DSI shall not be required to perform any service unless
the payment for such service and any outstanding balances owed to DSI are paid
in full. Fees are due upon receipt of a signed contract or receipt of the
Deposit Materials whichever is earliest. If invoiced fees are not paid, DSI may
terminate this Agreement in accordance with Section 5.2. Late fees on past due
amounts shall accrue interest at the rate of one and one-half percent per month
(18% per annum) from the date of the invoice.
ARTICLE 7 -- LIABILITY AND DISPUTES
7.1 Right to Rely on Instructions. DSI may act in reliance upon any
instruction, instrument, or signature reasonably believed by DSI to be genuine.
DSI may assume that any employee of a party to this Agreement who gives any
written notice, request, or instruction has the authority to do so. DSI shall
not be responsible for failure to act as a result of causes beyond the
reasonable control of DSI.
7.2 Indemnification. DSI shall be responsible to perform its obligations
under this Agreement and to act in a reasonable and prudent manner with regard
to this escrow arrangement. Provided DSI has acted in the manner stated in the
preceding sentence, Depositor and Preferred Beneficiary each agree to indemnify,
defend and hold harmless DSI from any and all claims, actions, damages,
arbitration fees and expenses, costs, attorney's fees and other liabilities
incurred by DSI relating in any way to this escrow arrangement.
7.3 Dispute Resolution. Any dispute relating to or arising from this
Agreement shall be resolved by arbitration under the Commercial Rules of the
American Arbitration Association. Unless otherwise agreed by Depositor and
Preferred Beneficiary, arbitration will take place in San Diego, California,
U.S.A. Any court having jurisdiction over the matter may enter judgment on the
award of the arbitrator(s). Service of a petition to confirm the arbitration
award may be made by First Class mail or by commercial express mail, to the
attorney for the party or, if unrepresented, to the party at the last known
business address.
7.4 Controlling Law. This Agreement is to be governed and construed in
accordance with the laws of the State of California, without regard to its
conflict of law provisions.
7.5 Notice of Requested Order. If any party intends to obtain an order from
the arbitrator or any court of competent jurisdiction which may direct DSI to
take, or refrain from taking any action, that party shall:
a. Give DSI at least two business days' prior notice of the
hearing;
b. Include in any such order that, as a precondition to DSI's
obligation, DSI be paid in full for any past due fees and be
paid for the reasonable value of the services to be rendered
pursuant to such order; and
7
<PAGE> 54
EXECUTION COPY
c. Ensure that DSI not be required to deliver the original (as
opposed to a copy) of the Deposit Materials if DSI may need to
retain the original in its possession to fulfill any of its
other duties.
ARTICLE 8 -- GENERAL PROVISIONS
8.1 Entire Agreement. This Agreement, which includes the Exhibits described
herein, embodies the entire understanding among the parties with respect to its
subject matter and supersedes all previous communications, representations or
understandings, either oral or written. DSI is not a party to the License
Agreement between Depositor and Preferred Beneficiary and has no knowledge of
any of the terms or provisions of any such License Agreement. DSI's only
obligations to Depositor or Preferred Beneficiary are as set forth in this
Agreement. No amendment or modification of this Agreement shall be valid or
binding unless signed by all the parties hereto, except that Exhibit A need not
be signed by DSI, Exhibit B need not be signed by Preferred Beneficiary and
Exhibit C need not be signed.
8.2 Notices. All notices, invoices, payments, deposits and other documents
and communications shall be given to the parties at the addresses specified in
the attached Exhibit C. It shall be the responsibility of the parties to notify
each other as provided in this Section in the event of a change of address. The
parties shall have the right to rely on the last known address of the other
parties. Unless otherwise provided in this Agreement, all documents and
communications may be delivered by First Class mail.
8.3 Severability. In the event any provision of this Agreement is found to
be invalid, voidable or unenforceable, the parties agree that unless it
materially affects the entire intent and purpose of this Agreement, such
invalidity, voidability or unenforceability shall affect neither the validity of
this Agreement nor the remaining provisions herein, and the provision in
question shall be deemed to be replaced with a valid and enforceable provision
most closely reflecting the intent and purpose of the original provision.
8.4 Successors. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties. However, DSI shall have no
obligation in performing this Agreement to recognize any successor or assign of
Depositor or Preferred Beneficiary unless DSI receives clear, authoritative and
conclusive written evidence of the change of parties.
8.5 Regulations. Depositor and Preferred Beneficiary are responsible for and
warrant compliance with all applicable laws, rules and regulations, including
but not limited to customs laws, import, export, and re-export laws and
government regulations of any country from or to which the Deposit Materials may
be delivered in accordance with the provisions of this Agreement.
8
<PAGE> 55
EXECUTION COPY
------------------------------------ -----------------------------------
Depositor Preferred Beneficiary
By: By:
--------------------------------- --------------------------------
Name: Name:
------------------------------- ------------------------------
Title: Title:
------------------------------ -----------------------------
Date: Date:
------------------------------- -----------------------------
DSI Technology Escrow Services, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
9
<PAGE> 56
EXECUTION COPY
EXHIBIT A
MATERIALS TO BE DEPOSITED
Account Number
-------------------------
Depositor represents to Preferred Beneficiary that Deposit Materials delivered
to DSI shall consist of the following:
------------------------------------ -----------------------------------
Depositor Preferred Beneficiary
By: By:
--------------------------------- --------------------------------
Name: Name:
------------------------------- ------------------------------
Title: Title:
------------------------------ -----------------------------
Date: Date:
------------------------------- -----------------------------
10
<PAGE> 57
EXECUTION COPY
EXHIBIT B
DESCRIPTION OF DEPOSIT MATERIALS
<TABLE>
<S> <C>
Depositor Company Name
-----------------------------------------------------------------------
Account Number
-------------------------------------------------------------------------------
Product Name Version
--------------------------------------------------- ---------------------
(Product Name will appear on Account History report)
DEPOSIT MATERIAL DESCRIPTION:
Quantity Media Type & Size Label Description of Each Separate
Item
(Please use other side if additional space is needed)
Disk 3.5" or
-------- ----
DAT tape mm
-------- ----
CD-ROM
--------
Data cartridge tape
-------- ----
TK 70 or tape
-------- ----
Magnetic tape
-------- ----
Documentation
--------
Other
-----------------------
PRODUCT DESCRIPTION:
Operating System
-----------------------------------------------------------------------------
Hardware Platform
----------------------------------------------------------------------------
DEPOSIT COPYING INFORMATION:
Is the media encrypted? Yes / No If yes, please include any passwords and the decryption
tools.
Encryption tool name Version
------------------------------------ ------------------------------
Hardware required
-----------------------------------------------------------------------------
Software required
-----------------------------------------------------------------------------
I certify for DEPOSITOR that the above described DSI has inspected and accepted the above
Deposit Materials have been transmitted to DSI: materials (any exceptions are noted above):
</TABLE>
11
<PAGE> 58
EXECUTION COPY
<TABLE>
<S> <C>
Signature Signature
------------------------------- ----------------------------------
Print Name Print Name
------------------------------ ---------------------------------
Date Date Accepted
------------------------------------ ------------------------------
Exhibit B#
---------------------------------
</TABLE>
Send materials to: DSI, 9265 Sky Park Ct., Suite 202, San Diego, CA 92123 (858)
694-1900
12
<PAGE> 59
EXECUTION COPY
EXHIBIT C
DESIGNATED CONTACT
Account Number
----------------------
<TABLE>
<S> <C>
Notices, deposit material returns and
communications to Depositor Invoices to Depositor should be
should be addressed to: addressed to:
Company Name:
------------------------------- ----------------------------------------
Address:
------------------------------------ ----------------------------------------
------------------------------------ ----------------------------------------
------------------------------------ ----------------------------------------
Designated Contact: Contact:
------------------------- --------------------------------
Telephone:
---------------------------------- ----------------------------------------
Facsimile: P.O.#, IF REQUIRED:
---------------------------------- ---------------------
Notices and communications to Invoices to Preferred Beneficiary
Preferred Beneficiary should be addressed to: should be addressed to:
Company Name:
------------------------------- ----------------------------------------
Address:
------------------------------------ ----------------------------------------
------------------------------------ ----------------------------------------
------------------------------------ ----------------------------------------
Designated Contact: Contact:
-------------------------
Telephone:
----------------------------------
Facsimile: P.O.#, IF REQUIRED:
---------------------------------- ---------------------
</TABLE>
Requests from Depositor or Preferred Beneficiary to change the designated
contact should be given in writing by the designated contact or an authorized
employee of Depositor or Preferred Beneficiary.
<TABLE>
<S> <C>
Contracts, Deposit Materials and notices to Invoice inquiries and fee remittances
DSI should be addressed to: to DSI should be addressed to:
DSI DSI
Contract Administration Accounts Receivable
Suite 202 Suite 1450
9265 Sky Park Court 425 California Street
San Diego, CA 92123 San Francisco, CA 94104
Telephone: (858) 694-1900 (415) 398-7900
Facsimile: (858) 694-1919 (415) 398-7914
Date:
---------------------------------
</TABLE>
13
<PAGE> 60
EXECUTION COPY
EXHIBIT C
ALTERNATIVE DISPUTE RESOLUTION
In the event the President of deCODE and President of ABG are unable to reach
agreement within the time period provided regarding any issue which is the
responsibility of the JSC and which has been submitted to them as provided in
Section 6.4, then such issue may be resolved by binding Alternative Dispute
Resolution ("ADR") in the manner described below:
1) If any Party intends to begin an ADR to resolve an issue that falls
within the responsibility of the JSC and has been escalated as provided
in Section 6.4, such Party will provide written notice to the other
Party and to counsel for the other Party informing the other Party of
such intention and the issues to be resolved ("Original Notice"). Within
10 business days after the receipt of the Original Notice, the other
Party may by written notice to the counsel for the Party initiating ADR,
add additional issues within the responsibility of the JSC which remain
unresolved. From the date of receipt of the Original Notice ("Notice
Date") and until such time as any matter has been finally settled by
ADR, the running of the time periods in which a Party must cure a breach
of this Agreement will be suspended as to any non-performance by a Party
which is effected by the subject matter of the ADR.
2) Within 5 business days following the Notice Date a neutral will be
selected by the then President of the Center for Public Resources
("CPR"), 14th Floor, 366 Madison Avenue, New York, New York 10017. The
neutral will be an individual who will preside in resolution of any
issues within the responsibility of the JSC which remain unresolved
after being escalated as provided in Section 6.4. The neutral selected
will be a member of the Judicial Panel of the CPR and will not be an
employee, director or shareholder of either a Party or of an Affiliate
of either Party.
3) Each Party will have 10 business days from the date the neutral is
selected to object in good faith to the selection of that person. If
either Party makes such an objection, the then president of the CPR will
as soon as possible thereafter, select another neutral under the same
conditions set forth above. This second selection will be final.
4) No later than 90 business days after selection, the neutral will hold a
hearing to resolve each of the issues identified by the Parties.
a) Each Party will have the right to be represented by counsel at
the hearing.
b) The hearing will be held at such place as agreed upon by the
Parties or if they are unable to agree at a place designated by
the neutral.
14
<PAGE> 61
EXECUTION COPY
5) The ADR proceeding will be confidential and the neutral will issue
appropriate protective orders to safeguard each Parties' Confidential
Information. Except as required by law, no Party will make (or instruct
the neutral to make) any public announcement with respect to the
proceedings or decision of the neutral without the prior written consent
of each other Party. The existence of any unresolved issues within the
responsibility of the JSC which are submitted to ADR, and the decision
of the neutral, will be kept in confidence by the Parties and the
neutral, except as required in connection with the enforcement of any
decision or as otherwise required by applicable law.
6) It is the intention of the Parties that discovery, although permitted as
described herein, will be limited except in exceptional circumstances.
The neutral will permit such limited discovery necessary for an
understanding of any legitimate issue within the responsibility of the
JSC raised in the ADR, including the production of documents. Each Party
will be permitted but not required to take the deposition of not more
than 5 persons, each such deposition not to exceed 6 hours in length. If
the neutral believes that exceptional circumstances exist, and
additional discovery is necessary for a full and fair resolution of the
issue, the neutral may order such additional discovery as the neutral
deems necessary. At the hearing the Parties may present testimony
(either by live witness or deposition) and documentary evidence. The
neutral will have sole discretion with regard to the admissibility of
any evidence and all other materials relating to the conduct of the
hearing.
7) Each Party will be entitled to no more than 4 hours of hearing to
present testimony or documentary evidence. The testimony of both Parties
will be presented during the same calendar day. Such time limitation
will include any direct, cross or rebuttal testimony, but such time
limitation will only be charged against the Party conducting such
direct, cross or rebuttal testimony. It will be the responsibility of
the neutral to determine whether the Parties have had the 4 hours to
which they are entitled. If the neutral believes that exceptional
circumstances exist, and additional hearing time is necessary for a full
and fair resolution of the issue, the neutral may order such additional
hearing time as the neutral deems necessary.
8) At least 15 business days prior to the date set for the hearing, each
Party will submit to the other Party and the neutral a list of all
documents on which such Party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, such
Party intends to call at such hearing and a brief summary of each
witnesses testimony.
9) At least 5 business days prior to the hearing, each Party must submit to
the neutral and serve on each other Party a proposed ruling on each
issue to be resolved. Such writing will be limited to presenting the
proposed ruling, will contain no
15
<PAGE> 62
EXECUTION COPY
argument or analysis of the facts or issues, and will be limited to not
more than 10 pages.
10) Not more than 5 business days following the close of hearings, the
Parties may each submit post hearing briefs to the neutral addressing
the evidence and issues to be resolved. Such post hearing briefs will
not be more than 50 pages.
11) The neutral will rule on each issue within the responsibility of the JSC
which remains unresolved after the hearing as expeditiously as possible,
but in no event more than 30 days after the close of the hearing. The
neutral will, in rendering his decision, apply the substantive law of
the state of California, U.S.A., and without giving effect to its
principles of conflicts of law, and without giving effect to any rules
or laws relating to arbitration. The neutral is not empowered with the
remedy of termination of the Agreement.
12) Any judgment upon an award rendered by the neutral, if any, may be
entered in any court having jurisdiction thereof. The decision rendered
in any such ADR will be final and not appealable, except in cases of
fraud or bad faith on the part of the neutral or any Party to the ADR
proceeding in connection with the conduct of such proceedings, and will
be enforceable in any court of competent jurisdiction.
13) The neutral will have the option to assess costs and expenses to the
non-prevailing Party, otherwise the Parties will pay their own costs
(including, without limitation, attorneys fees) and expenses in
connection with such ADR.
16