Exhibit 10.3
EXHIBIT B
LICENSE AGREEMENT
License Agreement ("Agreement") effective this 31st day of July 1998
("Effective Date") by and between AFFYMETRIX, INC. a California corporation,
having a place of business at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000 ("Affymetrix", as that term is more fully defined in Paragraph 1.2 hereof)
and LLC, a limited liability company formed under the laws of Delaware, having a
place of business at 0000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx
00000-0000 ("LLC").
R E C I T A L S
X. Xxxxxxx Xxxxxxx, Inc. ("BCI"), on even date herewith, in accordance
with that certain Asset Purchase Agreement to which this Agreement is Exhibit B
(the "AP" Agreement), sold and delivered to Affymetrix and Affymetrix purchased
and took from BCI, all of the right, title and interest in and to certain
Acquired Assets, including the BCI Technology (as those terms are defined in the
AP Agreement) that BCI possessed and had the right to transfer. Included within
the BCI Technology were certain patents and applications for patent (the "BCI"
Technology Patents", as that term is further defined in Paragraph 1.4 hereof).
II. LLC is an Affiliate (as that term is hereafter defined) of
Affymetrix and a joint venture of Affymetrix and BCI. LLC was formed under the
Limited Liability Company Operating Agreement which is Exhibit E of the AP
Agreement.
III. Part of the consideration for BCI's sale of the Acquired Assets to
Affymetrix under the AP Agreement was the establishment of LLC as an Affiliate
of Affymetrix and the licensing of LLC under the BCI Technology Patents.
IV. Affymetrix desires to grant LLC a license under the BCI Technology
Patents and LLC desires to acquire such license.
NOW THEREFORE in consideration of the mutual understandings contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties intending to be legally bound, agree
as follows:
ARTICLE 1.0 DEFINITIONS
The following terms, when used herein with an initial capital letter
and without regard to whether they appear in the singular, plural or possessive
form, shall have the following defined meanings:
1.1 "AFFILIATE" shall mean any corporation or other form of limited
liability legal person, partnership, association, joint venture or other form
of business entity controlled by, controlling or under common control with a
party hereto. As used herein, the word and root "control" in the context of a
corporation shall mean the ownership, directly or indirectly, of more than
fifty percent (50%) of the voting shares or other equity interests entitled
to vote in the election of directors of the corporation; and, in the context
of any other form of business entity, the right to receive more than fifty
percent (50%) of the net profits of such entity and the right to a majority
interest in the management and control of such entity; provided that,
notwithstanding the foregoing definition, LLC may not have as an Affiliate
entitled to receive the benefits of the licenses granted under Section 3.1
hereof (a) a corporation wherein any of the companies listed in Exhibit A
(and their successors and affiliates) is more than a passive investor in such
Affiliate and such corporation does not have the right to manage or control
such Affiliate or (b) a partnership wherein any of the companies listed in
Exhibit A (and their successors and affiliates) is a partner.
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1.2 "AFFYMETRIX" shall mean Affymetrix, Inc., its divisions and
Affiliates and its and their permitted successors and assigns.
1.3 "ARRAY CHIPS" shall mean a series of polynucleotides arranged on a
substrate to perform quantitative or qualitative analyses.
1.4 "BCI TECHNOLOGY PATENTS" means the patents and applications for
patent identified in attached Exhibit I, any continuation, continuation-in-part,
divisional or substitute of any such applications, any U.S. or foreign patent
issuing on any of the foregoing applications and any reissue, reexamination or
extension of such patents.
1.5 "LLC ARRAY CHIP" shall mean an Array Chip which is sold or used by
LLC and, but for the licenses and rights granted herein, would infringe any
valid claim in an unexpired and non-lapsed patent in the BCI Technology Patents.
1.6 "LICENSED PRODUCT" shall mean any LLC Array Chip or component
thereof or any product, kit, instrument or system which, but for the licenses
and rights granted herein, would infringe any valid claim in an unexpired and
non-lapsed patent in the BCI Technology Patents.
1.7 "LICENSED PROCESS" shall mean any process, method or procedure the
practice or use of which, but for the licenses and rights granted herein, would
infringe any valid claim in an unexpired and non-lapsed patent in the BCI
Technology Patents.
1.8 "NET SALES" shall mean the gross receipts of LLC from the sale of
LLC Array Chips to an unaffiliated third party, less those of the following
actually incurred by LLC as an element of such sales: transportation, special
packing and crating charges, insurance, custom duties, commissions, returns,
allowances in lieu of actual resumed or rejected LLC Array Chips, sales, use and
turnover taxes, and trade, quantity, contract and cash discounts. The value of
LLC
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Array Chips transferred by LLC to unaffiliated third parties as free samples or
the use of LLC Array Chips by LLC for sales demonstration purposes or for
quality control or other internal, non-revenue generating purposes shall not be
included in the calculation of Net Sales.
In the event an LLC Array Chip is sold in combination with other
apparatus or products, as part of a kit, or in any other combination, and the
LLC Array Chip is not separately valued on the invoice or other document
evidencing such sale, the Net Sales of the LLC Array Chip shall be the then
current list price for the LLC Array Chip when sold separately or, in the
absence of such list price, shall be determined by multiplying the aggregate
selling price of the combination by a fraction the numerator of which shall be
LLC's standard costs for the LLC Array Chip and the denominator of which shall
be LLC's standard cost for the total combination at the time of the sale. In the
event that both the LLC Array Chip and other product have separate list prices
but are being sold at a combination price which is less than the total of the
separate list prices, then the Net Sales of the LLC Array Chip shall be
determined by multiplying the invoice price charged for the combination by a
fraction, the numerator of which is the list price of the LLC Array Chip and the
denominator of which is the sum of the list prices of the LLC Array Chip and
such other products.
ARTICLE 2.0 LICENSE GRANT
2.1 LICENSE GRANT - Affymetrix hereby grants to LLC and LLC accepts a
royalty-bearing, exclusive, world-wide right and license under the BCI
Technology Patents (a) to make, have made, import, use, sell, lease and
otherwise dispose of Licensed Products in all fields, uses and applications, (b)
to practice Licensed Processes, and (c) to pass on to its direct and indirect
customers of Licensed Products the right to practice Licensed Processes. The
foregoing license includes the sole right to grant sublicenses of equal or
lesser scope. For the
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avoidance of doubt, except for the rights to grant further licenses which is the
exclusive right of BCI, Affymetrix shall continue to have the right (a) to make,
have made, import, use, sell, lease and otherwise dispose of any product covered
by the BCI Technology Patents, (b) to practice Licensed Processes, and (c) to
pass on to its direct and indirect customers of products the right to practice
Licensed Processes.
2.2 PATENT MARKING - LLC shall attach a label or product insert on each
Licensed Product reasonably reflecting patent numbers of issued U.S. patents
covering such Licensed Product and owned by Affymetrix and will reasonably
modify such labels or inserts periodically at the direction of Affymetrix to add
or delete patent numbers.
ARTICLE 3.0 TERM
Unless previously terminated as provided herein, the life of this
License Agreement and the license granted herein shall run from the Effective
Date to the end of the term of the last expiring patent included in the BCI
Technology Patents.
ARTICLE 4.0 ROYALTIES AND ROYALTY REPORTS
4.1 ROYALTIES - Subject to Paragraph 4.2, LLC shall pay Affymetrix
for all of the licenses and rights granted under Paragraph 2.1 a running
royalty of [ ](1) of Net Sales of Royalty-Bearing Products.
4.2 ROYALTY STACKING - If, at any time during the life of this
Agreement, LLC discovers that any LLC Array Chip or the use thereof infringes
claims of an unexpired patent or patents other than those in the BCI
Technology Patents LLC may, if it has not already done so, negotiate with the
owner of such patents for a license on such terms as LLC deems appropriate.
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(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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Should the license with the owner of such patents (which owner may be
Affymetrix) require the payment of royalties or other consideration to such
owner then the royalties otherwise payable under this Agreement shall be reduced
by the same amount as the royalties paid or payable to such owner.
4.3 ROYALTY REPORTS - LLC shall, commencing with the calendar quarter
which includes its first sale of an LLC Array Chip and each calendar quarter
thereafter, not later than forty-five (45) days after the close of its
accounting books and records for such quarter, provide to Affymetrix an
accounting report of the type and quantity of each LLC Array Chip sold by LLC
during such calendar quarter and the Net Sales received therefrom. The royalty
due and payable to Affymetrix shall accompany such report.
4.4 BOOKS AND RECORDS - LLC shall keep or cause to be kept books,
records and accounts in accordance with generally accepted accounting principles
consistently applied covering LLC's activities hereunder and containing all
information necessary for the true and accurate determination of the amounts
earned and paid hereunder. LLC shall, not more than once per year and upon prior
reasonable written notice from Affymetrix, permit a certified public accountant
appointed and paid for by Affymetrix (the "Auditor") and reasonably acceptable
to LLC to inspect each LLC facility manufacturing LLC Array Chips and to review
the previous two (2) years books, records and accounts to verify the amounts
earned by Affymetrix and paid by LLC hereunder. The Auditors shall furnish to
both parties reports stating only its findings during such inspection as to the
accuracy, or the nature and extent of any inaccuracy of such books, records,
accounts and payments.
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4.4.1 Any deficiency identified by the Auditor between the
amounts actually earned by Affymetrix under this Article 4.0 and the amounts
reported to be earned and paid on by LLC in accordance with Paragraph 4.3
hereof shall, unless disputed by LLC, be paid to Affymetrix within thirty
(30) days of receipt by LLC of the Auditor's report. The parties agree to
diligently negotiate and promptly settle any disputes as to the amount of
royalties earned by Affymetrix and payable by LLC hereunder.
4.5 TAXES ON ROYALTIES - All payments provided for in this Agreement
refer to lawful money of the United States of America. All payments shall be
made by LLC to Affymetrix at the office of Affymetrix designated above and shall
be made in the full amounts as herein specified; provided, however, that
deduction may be made from such payments by LLC for amounts required to be
withheld and paid by LLC in respect of any income tax levied or assessed upon
such payments by, and in accordance with the laws of, any foreign government or
taxing authority. Affymetrix shall have the right at any time or from
time-to-time to contest by appropriate proceedings the validity or amount of any
such income tax withheld. If so requested by Affymetrix, LLC will make such
payments under protest, and, on behalf and at the expense of Affymetrix, take
such other action and render all reasonable assistance that may be required by
Affymetrix in the prosecution of any such proceedings. LLC will obtain and
forward to Affymetrix tax credit receipts or vouchers for all income taxes thus
withheld and paid by LLC.
4.6 ROYALTIES EARNED IN FOREIGN CURRENCY - In the event that either Net
Sales or the royalties set forth above are initially calculated in a foreign
currency, conversion shall be made in each instance by employing the closing
transfer buying rate for United States dollars quoted by the Wall Street
Journal, for the last business day of the calendar quarter which the payment
covers; provided, however, that if a foreign currency not listed in the Wall
Street
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Journal is involved, then the closing transfer buying rate quoted by Citibank
(New York) shall be employed in effecting such conversion thereof.
ARTICLE 5.0 CONSTRUCTION OF PATENTS
If a judgment or decree is entered, which becomes final through the
exhaustion of all permissible applications for rehearing or review by a superior
tribunal, or through the expiration of the time permitted for such applications
(hereinafter referred to as an "irrevocable judgment"), on the validity, scope,
enforceability or priority of any claim or claims of any patent or patent
application included in the BCI Technology Patents the construction placed upon
any such claim or claims by such irrevocable judgment shall be thereafter
followed with respect to acts occurring thereafter.
If such irrevocable judgment holds any claim invalid or unenforceable
or is adverse to the patent containing such claim as to inventorship, or
construes all applicable claims in a patent so as not to cover LLC Array Chips,
LLC shall be relieved thereafter from payment of royalties under Article 4.0
hereof, as to LLC Array Chips sold after the date of such irrevocable judgment
covered only by such claim or claims to which such irrevocable judgment is
applicable, and from the performance of those other acts which may be required
by this Agreement only as to such claim or claims.
ARTICLE 6.0 PROSECUTION OF INFRINGERS
If LLC determines that a third party is infringing a claim of a patent
in the BCI Technology Patents by making, using or selling a product which
competes with a Licensed Product then being sold by LLC, it shall notify
Affymetrix thereof in writing. Such notice shall include information in LLC's
possession relevant to such third party and the competing product.
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Affymetrix shall have ninety (90) days in which to either obtain the consent of
such third party to discontinue such infringement or to exercise its right to
bring an action to cause such infringement to cease. Affymetrix shall have no
obligation to bring an action for infringement; provided however, if Affymetrix
does not obtain the consent of such third party to cease infringement or does
not bring suit against the third party under the patent, then LLC shall have the
right to discontinue paying royalties under the effected patent for such product
until either the third party discontinues its infringing activity or Affymetrix
brings a lawsuit against the third party for such infringement.
ARTICLE 7.0 ASSIGNMENT
LLC may not assign this License Agreement in whole or in part without
obtaining the prior written approval of Affymetrix, except that LLC shall have
the right to assign this License Agreement without the consent of Affymetrix to
any Affiliate and to any successor of its entire business or all or
substantially all of the assets of its entire business; provided that LLC may
not sell such Affiliate or its assets other than as part of a transaction
involving LLC as a whole so long as the assets of such Affiliate include this
License Agreement.
ARTICLE 8.0 NOTICES
All notice permitted to be given hereunder shall be in writing and
addressed to the respective parties as follows:
If to Affymetrix: Affymetrix, Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention:
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If to LLC: LLC
0000 Xxxxx Xxxxxx Xxxxxxxxx
0
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
With a copy to: Xxxxxxx Xxxxxxx, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
or such other addresses as may be designated by the respective parties in
writing. A notice shall be deemed given the earlier of the date when actually
received if sent by messenger or facsimile (with notice of receipt in good order
requested and received) or three (3) days after deposit in the United States
registered or certified mail, postage prepaid, and properly addressed.
ARTICLE 9.0 SECTION HEADINGS
Section headings are for convenience only and shall not be construed to
limit or extend the meaning of any portion of this License Agreement.
ARTICLE 10.0 LAW GOVERNING AND CONSTRUCTIONS
10.1 APPLICABLE LAW - This License Agreement shall be governed by and
construed in accordance with the laws of the State of California as if it has
been delivered in California, and all acts performed or required to be performed
hereunder have been performed entirely within such state, not including, however
any conflicts of law rule of California which may direct or refer such
determination to the laws of any other state. Neither party shall be entitled to
nor request injunctive or other equitable relief prior to adjudication on the
merits.
10.2 MEDIATION AND ARBITRATION - Any controversy or conflict involving
this License Agreement, its interpretation or the respective rights or
obligations of the parties shall first be submitted to their respective
Vice-Presidents for resolution. If they cannot agree, the controversy shall be
submitted to mediation to be held in a mutually agreeable neutral place. If
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the parties still cannot settle the controversy or reach an accommodation, the
matter shall be submitted to binding arbitration to be conducted in California
at a location to be mutually agreed in accordance with the following rules:
(a) There shall be a panel of three (3) arbitrators, all of whom shall
be lawyers and at least two (2) of which shall be competent to fully understand
the technology relating to Array Chips. If the parties cannot agree on the
selection of the three (3) then each shall pick one (1) arbitrator and the two
(2) so chosen shall select the third.
(b) All disputes which are not specifically raised by the parties in
the arbitration process shall be forever waived.
(c) The arbitration proceeding shall be governed by (i) the rules and
understandings set forth in this Paragraph 10.2 or as hereafter agreed upon in
writing by the parties, and (ii) to the extent not inconsistent with such rules
and understandings, by the Commercial Arbitration Rules of the American
Arbitration Association.
(d) The parties agree to refrain from filing a lawsuit with regard to
any aspect of their controversy and to abide by and perform any award rendered
by the arbitrators. The parties further agree that a judgment of a Court having
jurisdiction may be entered upon the award and an execution may be issued for
its collection.
(e) At least two (2) of the panel of arbitrators must agree on each
point in controversy for an award to be rendered.
(f) The arbitration hearing shall be convened within forty-five (45)
days of request therefor by either party. The request shall be in writing and
sent in accordance with Article 8.0. The hearing shall be limited to three days:
Each party shall have a maximum of eight (8) hours to put on its main case and
four (4) hours for rebuttal. Neither party shall engage
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in extended cross-examination or other tactics which have the effect of
substantially altering this allocation.
(g) The parties agree to exchange all documents they intend to produce
at the hearing at least thirty (30) days in advance of the opening of the
arbitration hearing. There will be no taking of depositions, service of
interrogatories or any other form of discovery other than producing documents
relevant to the proceedings and neither party may compel the appearance of the
other party's employees, officers, directors or consultants.
(h) The arbitrator's decision must be rendered within thirty (30) days
after completion of the arbitration hearing.
(i) A transcript may, at the option of the parties, be made. Either
party may, at its expense, tape record or video tape the proceedings.
(j) All applicable common law or statutory privileges such as
attorney-client or attorney work product shall be applicable to the arbitration
proceedings.
(k) Either party may, at its option, use prepared testimony as long as
the witness whose testimony is so presented is available to the other party for
cross-examination.
(l) Each party shall bear its own expenses for the arbitration and they
shall each share equally in the expenses and fees of the arbitration panel.
ARTICLE 11.0 MISCELLANEOUS
11.1 Nothing in this License Agreement shall be construed as conferring
any right to use in advertising, publicity, or other promotional activities any
name, trade name, trademark, or other designation of either party hereto without
the express written approval of the other party.
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11.2 Affymetrix makes no warranties as to the validity or scope of any
of the BCI Technology Patents, or that any manufacture, sale, use, or other
disposition of the products licensed hereunder will be free from infringement of
patents, utility models, and/or design patents of third parties. Nothing in this
License Agreement shall be considered as conferring any warranty or
representation as to the usefulness, marketability, or merchantability of any
products sold within the scope of the licenses hereunder. Affymetrix and LLC
agree to hold the other harmless from any personal injury or products liability
claims made as a result of the sale of products licensed hereunder.
11.3 The parties will retain the terms of this License Agreement in
strict confidence, except as may be required by regulatory agencies or courts,
and will then use all reasonable precautions to maintain the terms of this
License Agreement confidential.
11.4 LLC and Affymetrix represents that they are familiar with the
Export Administration Regulations comprising the compilation of official
regulations and policies governing the export licensing of commodities and
technical data promulgated by the United States Department of Commerce, Bureau
of International Commerce, Office of Export Administration. Notwithstanding any
other provisions of this License Agreement, and each assures the other that with
respect to all information and licenses furnished by or under this License
Agreement, that it will comply with such official regulations.
11.5 In the event that any provision of this License Agreement is held
invalid or unenforceable for any reason, such unenforceability shall not affect
the enforceability of the remaining provisions of this License Agreement, and
all provisions of this License Agreement shall be construed so as to preserve
the enforceability hereof.
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11.6 This License Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.7 This License Agreement has been drafted on the basis of mutual
understanding after considerable negotiation and neither party shall be
prejudiced as being the drafter thereof.
ARTICLE 12.0 ENTIRE AGREEMENT, MODIFICATIONS, ETC.
This instrument contains the entire and only agreement between the
parties relative to the subject matter hereof and supersedes all previous
negotiations, representations, undertakings and agreements both written and oral
heretofore made between the parties as to the subject matter. Any
representation, promise or condition in connection herewith not specifically
incorporated herein shall not be binding upon either party.
No modification, renewal, extension, waiver, cancellation or
termination of this License Agreement or of any of the provisions herein
contained shall be valid until and unless made in writing and signed on behalf
of the respective parties by duly authorized officers thereof.
IN WITNESS WHEREOF, the parties have respectively caused this License
Agreement to be executed on the dates hereinafter indicated.
Xxxxxxx Xxxxxxx, Inc. Affymetrix, Inc.
By: By:
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Title: Title: President
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Date: Date: 15 Sept. 98
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EXHIBIT A
The following companies and their subsidiaries and Affiliates:
[ ](2)
[ ](3)
[ ](4)
[ ](5)
[ ](6)
[ ](7)
[ ](8)
[ ](9)
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(2) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(3) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(4) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(5) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(6) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(7) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(8) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(9) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
