Exhibit 10.2


 


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[ * ]
SUPPLY AGREEMENT


 


This [ * ]
SUPPLY AGREEMENT (hereinafter referred to as the “Supply
Agreement”), effective as of the date of last signature herein (“Effective Date”) is made and entered into by and among (i) CombiMatrix Corporation, which is a corporation organized
under the law of the state of Delaware and has a primary business address
located at 6500 Harbour Heights Parkway, Suite 303,
Mukilteo, Washington 98275 (hereinafter referred to as “CombiMatrix”) and (ii) Illumina, Inc.,
which is a corporation organized under the law of the state of
Delaware and has a primary business address located at 9885 Towne
Centre Drive, San Diego, CA 92121-1975  (hereinafter
referred to as “Illumina”).


 


AGREEMENT


 


In
consideration of the mutual covenants, agreements, representations, warranties,
and conditions contained herein, the Parties hereby agree as follows:


 


1.              Definitions.


 


1.1                               The term “Parties” means CombiMatrix and Illumina, and “Party” means
either CombiMatrix or Illumina.


 


1.2                               The term “Field of Use” is defined to be [ * ].


 


1.3                               The term “QC Test”
is defined to be procedures set forth on Exhibit B.


 


1.4                               The term “Indemnitees”
is defined in Section 9.2.


 


1.5                               The term “[ * ] Exclusivity” is
defined in Section 3.7.


 


1.6                                 The term “[ * ]”
means [ * ].


 


1.7                               Additional terms and phrases are as defined
in Exhibit D.


 


2.              Term; Termination.


 


2.1                               The “Term” begins on the Effective Date and ends on the End Date.
The “End Date” is [ * ],
unless terminated earlier as permitted in this Supply Agreement, or extended
longer as the Parties may mutually agree in a written amendment to this Supply
Agreement, in which case the End Date is the actual date of termination of this
Supply Agreement.


 


2.2                               Each Party has the right to terminate this
Supply Agreement earlier than the natural End Date stated in Section 2.1,
upon (i) material breach of this Supply Agreement by the other Party,
provided the non-breaching Party provides written notice of the material breach
to the breaching Party and the breaching Party does not cure the breach within
thirty (30) days after the


 


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date
that the notice is sent, in which case the non-breaching Party has the right to
provide written notice of termination effective immediately or on a date set
forth in the notice of termination, (ii) the institution of proceedings in
receivership, bankruptcy, or insolvency by or against the other Party or an
assignment for the benefit of creditors or dissolution or liquidation of the
other Party’s business whether voluntarily or by a third party, or (iii) pursuant
to Section 19.2 (force majeure), provided the Party having the right to
terminate this Supply Agreement provides written notice of termination
effective immediately or on a date set forth in the notice. All parties have
the right to relief in equity and/or law for breach of this Supply Agreement.


 


2.3                               Subject to Section 3.5, Illumina has the
right to terminate this Supply Agreement earlier than the natural End Date upon
[ * ] prior written notice to
CombiMatrix.


 


2.4                               In the event that the Parties extend this
Supply Agreement beyond the natural End Date, CombiMatrix will have the right
to terminate this Supply Agreement upon sixty (60) days prior written notice to
Illumina if Illumina does not submit purchase orders that in the aggregate
(with its Affiliates) total [ * ] over any
one year extension period beginning on the first day of the first extension
period. For clarity, this Section 2.4 is not applicable during the first
year of this Supply Agreement.


 


2.5                               Notwithstanding anything herein to the
contrary, in the event of termination or expiration of this Supply Agreement
for any reason, including for default by a Party, the Parties shall have no
further rights and obligations to each other under this Supply Agreement, other
than the continuing rights and obligations set forth in this Section 2.5.
Termination or expiration does not relieve either Party of any liability or obligation
that accrued hereunder prior to the date of such termination nor preclude
either Party from pursuing all rights and remedies it may have hereunder or at
law or in equity with respect to any breach of this Supply Agreement, nor
prejudice either Party’s right to obtain performance of any obligation. All
rights and obligations of the Parties set forth herein that expressly or by
their nature survive the expiration or termination of this Supply Agreement,
including confidentiality and payment obligations, and Sections 3.2, 3.4, 4-6,
8-18, 19 (except for 19.2), and C1 (only second sentence), C3, C7, and C8 shall
continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Supply Agreement, until they are satisfied,
or by their nature, expire and shall bind the Parties and their legal
representatives, successors, and permitted assigns.


 


3.              Supply; Rights; Limitations.


 


3.1                               Supply of [ * ]. CombiMatrix
agrees to supply [ * ] to Illumina and its
Affiliates for use in the Field of Use according to the pricing given in Exhibit A
and the terms and conditions set forth in this Supply Agreement, including in
this Section 3 and Exhibit C.


 


3.2                               License to [ * ]. Under Patent
Rights and Know How Rights, and pursuant to payment for [ * ]
according to this Supply Agreement, CombiMatrix hereby grants to Illumina and
its Affiliates the royalty-free perpetual right to use and have used [ * ] in and for the Field of Use throughout the world. For
clarity, the license in this Section 3.2 does not grant Illumina or its
Affiliates or any party other than CombiMatrix the right to practice under
Patent Rights or Know How Rights outside the Field of Use or the right to


 


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manufacture or have manufactured [ * ]. For
additional clarity, except as explained in the previous sentence, the license
in this Section 3.2 permits Illumina and its Affiliates to make, have
made, sell, have sold, offer for sale, have offered for sale, use, have used,
import, and have imported Illumina Products, and nothing in this Supply
Agreement will limit the rights of Illumina and its Affiliates to confer rights
of use and resale upon any party that purchases or otherwise receives an
Illumina Product from Illumina or an Affiliate thereof. For further clarity,
any additional rights with respect to Patent Rights and Know How Rights that
CombiMatrix may grant to Illumina and its Affiliates are in separate agreements
between the Parties if and when such agreements are executed.


 


3.3                               Pricing
Updates. CombiMatrix agrees that, upon Illumina’s request,
it will enter into good-faith negotiations with Illumina to update the pricing
in Exhibit A to include pricing for [ * ].


 


3.4                               QC Test. If a [ * ] passes the QC Test listed in Exhibit B, then it
is judged to be acceptable and may not be returned to CombiMatrix for refund.


 


3.5                               Purchase Order
Commitment. Illumina agrees to submit purchase orders itself
or by its Affiliates for [ * ] that, in
the aggregate over the period beginning on the Effective Date and ending on [ * ], total [ * ]. For
clarity, Illumina may submit purchase orders that exceed the [ * ] minimum. Upon termination of the Supply Agreement
before [ * ] under Sections 2.1, 2.2 (if
CombiMatrix is the terminating party), 2.3, or 19.2, Illumina shall pay to
CombiMatrix a non-refundable amount that is equal to [ * ]
minus the sum of all amounts already paid by Illumina or its Affiliates, or
already committed to be paid, to CombiMatrix up to the End Date, for the supply
of [ * ] under this Supply Agreement. For
clarity, termination of this Supply Agreement at any time after Illumina has
paid to CombiMatrix the sum of [ * ] or more
for purchase of [ * ] under this Supply Agreement
shall not require any additional payment by Illumina, other than amounts owed
under outstanding purchase orders. Any post-termination payment due pursuant to
this Section 3.5 shall be made within thirty (30) days after the End Date.


 


3.6                               [ * ] and Custom Kit. Illumina
agrees that a [ * ] can be used to create one or
more Custom Kits of [ * ] (i.e.,
uses included in all Custom Kits made from that [ * ]).  If Illumina sells more than one Custom Kit
made from a particular [ * ], for each
Custom Kit sold beyond the first Custom Kit (i.e, for the 2nd and each higher Custom Kit sold), Illumina
will pay an “Extra-Kit Amount” to
CombiMatrix.  In the first 12 month
period starting on the Effective Date, the Extra-Kit Amount is [ * ].  In each
successive 12-month period, the Extra-Kit Amount is [ * ]
than in the previous 12-month period.


 


3.7                               Option for [ * ]Exclusivity. Illumina has
a [ * ] period that starts on the
Effective Date and ends [ * ] after the
Effective Date to purchase [ * ]
Exclusivity.  [ * ]


 


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[ * ].  Illumina can purchase [ * ] Exclusivity [ * ].  If and when purchased, [ * ]
Exclusivity terminates if Illumina purchases less than a rolling two quarter
average of [ * ] worth of CombiMatrix
products in any quarter starting from the time [ * ] Exlusivity
starts and continuing on thereafter. Illumina will be given the chance to make
up any shortfall in purchase within [ * ] after the
end of the quarter in order to maintain [ * ] Exclusivity.  This additional purchase counts in the
shortfall rolling average period but not outside the shortfall rolling-average
period (i.e., next period’s rolling average) — i.e., no double counting. If [ * ] Exclusivity begins during a quarter, the [ * ] purchase minimum will be prorated accordingly. [ * ]. “[ * ] Exclusivity”
is defined as the [ * ] of [ * ] by CombiMatrix to Illumina and its Affiliates and
CombiMatrix not entering into agreements with [ * ]
where CombiMatrix is a supplier of [ * ] for [ * ], wherein the [ * ] are used
in [ * ] products [ * ].


 


3.8                               Audit and
Inspection.  Illumina or
its designee shall have the right to inspect, audit and/or test all [ * ] or services ordered hereunder, and the facilities in
which they are produced or offered, at reasonable times before, during and/or
after manufacture or performance as well as after delivery or performance. If
any inspection or test is made on CombiMatrix’s premises, it shall be done at a
date and time mutually agreeable, and Illumina shall provide CombiMatrix with
at least fifteen (15) business days advance notice prior to such inspection.
CombiMatrix shall provide reasonable facilities and assistance for the safety
and convenience of Illumina’s inspectors in such manner as shall not unreasonably
hinder or delay CombiMatrix’s performance hereunder.   In the event of a nonconformance or an issue
during an inspection or audit, Illumina may, at Illumina’s sole discretion,
send CombiMatrix a written notice requesting that CombiMatrix provide a written
corrective and preventative action plan to Illumina (the “Corrective and
Preventative Action Plan”).  The
Corrective and Preventative Action Plan shall be submitted to Illumina within
ten (10) business days of such notice and shall include either (1) a
description of the reasons for the non-conformity or defect and the actions
CombiMatrix has taken or will take to reduce the likelihood that a similar
non-conformity or defect will not occur in a future shipment of [ * ] to Illumina or (2) if CombiMatrix believes that
there is no nonconformance, issue, nonconformity, or defect, an explanation of
why CombiMatrix feels that it is in compliance with its responsibilities under
this Supply Agreement.  Illumina may not
request more than two such inspections per year.  Each inspection may not last more than five
business days.  CombiMatrix is not
obligated to devote more than 80 man hours of work by its personnel or agents
during each inspection.  Illumina will
reimburse CombiMatrix for any materials or reagents expended at Illumina’s
request during an inspection. 
CombiMatrix, in its sole discretion, shall pick which of its personnel
and/or agents are involved in an inspection. 
Such inspections are limited to portions of CombiMatrix facilities and
processes used to produce [ * ] under
this Supply Agreement.


 


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4.              Inventions.


 


4.1                               Except as
otherwise stated, any invention, discovery, innovation, improvement,
suggestion, addition, or idea, whether patentable or not, that is made or
arises under this Supply Agreement, is an “Invention”.
Each Party retains title to and all rights in and to any Invention, Patent, or other intellectual property right that
arises from performance of the Parties’ respective obligations or rights under
this Supply Agreement, subject to the terms and conditions of any agreement in
place between a Party and that Party’s respective employees, agents, and/or
contractors, wherein such agreement pertains to inventions and assignment of
rights related thereto. Inventorship is determined by applicable patent law.
Illumina retains all intellectual property rights pertaining to the Custom
Content in a [ * ].


 


4.2                               Except as otherwise stated herein, if any
Invention arises under this Supply Agreement from the joint inventive
contribution of Illumina and CombiMatrix, it is a “Joint
Invention” and is jointly owned by Illumina and CombiMatrix. The
Parties are jointly responsible for all costs and expenses associated with any
Joint Invention. The Parties shall determine which of them shall manage
prosecution of any Patent directed to a Joint Invention, where the
determination will be based on the subject matter of the Joint Invention and
the Party whose expertise is most aligned with that Joint Invention. Each Party
has (i) the right to be informed of the patent status of a Joint
Invention, of which status includes the right to receive all substantive
correspondence to and from a patent office and (ii) a right to have its
comments and requests regarding the Joint Invention considered by the managing
Party with good faith and reason; the managing Party agrees to manage the
prosecution in a manner that recognizes and respects the rights of the other
Party. A Party has the right to discontinue paying costs and fees associated
with prosecution of a patent application or an issued patent for any Joint
Invention, provided that a Party who discontinues paying such costs will no
longer have the right to participate in prosecution decisions regarding that
Joint Invention and the other Party will have no obligation to keep that Party
informed of prosecution matters regarding that Joint Invention. Other than as
expressly stated in this Section 4.2, neither Party has any obligation to
account to the other Party for a Joint Invention.


 


4.3                               Rights of CombiMatrix in Inventions
pertaining to [ * ] in the Field of Use are included
within Patent Rights or Know How Rights, as the case may be, and are subject to
the license in Section 3.2. CombiMatrix is not granted (expressly or
implied) any license or other right under any intellectual property owned by or
licensed to Illumina or its Affiliates, except for rights in Joint Inventions
as provided in Section 4.2.


 


5.              Confidentiality.


 


5.1                               To the extent
permitted by law, each Party agrees to treat in confidence, and not disclose to
any individual or entity (except as permitted herein), for a period beginning
on the Effective Date and ending three years after the End Date, any written
information provided to it by the other Party under this Supply Agreement that
is stamped “CONFIDENTIAL,” (or with a similar designation) (“Confidential Information”), except for information that (i) was
previously known to the receiving party other than from disclosure by the
disclosing party, (ii) is or becomes publicly available through no fault
of the receiving party, (iii) is disclosed to the receiving party by a
third party who has the right to disclose that information without breaching a
confidentiality obligation to the other Party, (iv) is independently
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reliance on the information provided by the providing Party, or (v) is
required to be disclosed by law, court order, rule, or regulation, provided
that promptly after becoming aware of the requirement for disclosure pursuant
to this part (v), and prior to any disclosure, the Party who is required to
make the disclosure notifies the other Party and assists that other Party in
any lawful efforts it may undertake to limit, restrict, or cancel the
requirement to disclose and, thereafter, only discloses that amount of
information that is necessary to meet the requirement.


 


5.2                               Any oral
disclosures between the parties shall be identified as being CONFIDENTIAL by
written notice delivered to the other party within 30 days after the date of
the oral disclosure and shall be included in Confidential Information
accordingly.


 


5.3                               A receiving Party may use Confidential
Information only as necessary to further the objectives of this Supply
Agreement. A receiving Party shall protect the Confidential Information using
at least the same degree of care it uses to protect its own Confidential
Information, but in no event shall it use less than reasonable care. A
receiving Party has the right to disclose the Confidential Information to its
employees, Affiliates, agents, directors, officers, and representatives
provided that any such individual needs to have the Confidential Information to
further the objectives of this Supply Agreement and has signed a written
agreement of nondisclosure and limited use, of which agreement must have terms
no less stringent than those set forth herein.


 


5.4                               A receiving Party shall promptly return any
Confidential Information upon the request of the other Party; however, it may
retain one copy of returned Confidential Information in its legal files only to
ensure compliance with this Supply Agreement.


 


6.              Notices.


 


6.1                               All notices,
requests, demands, and other communications required hereunder shall be in
writing and are deemed to have been given if delivered or mailed by
certified mail, return receipt requested, or delivered by hand or by messenger
to the person named below on the date such notice, request, demand, or other
communication is received by the Party to whom they are sent:


 


(i)                                     if to CombiMatrix, to:


 


CombiMatrix Corporation


6500 Harbour Heights Parkway, Suite 303


Mukilteo, WA 98275


Attention: CEO


cc: General Counsel


Facsimile: 425-493-2010


 


(ii)                                  if to Illumina, to:


 


Illumina, Inc.


9885 Towne Centre Drive


San Diego, CA 92121-1975


Attention: Vice President, Business Development


cc: General Counsel


Facsimile: 858-202-4766


 


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7.              Amendment.


 


7.1                               No amendment,
alteration, or modification of the terms of this Supply Agreement is valid
unless made in writing and signed by duly authorized representatives of the
Parties.


 


7.2                               Any valid
amendment, alteration, or modification of this Supply Agreement becomes a part
of the original Supply Agreement.


 


8.              Previous Agreements; Entire
Agreement.


 


8.1                               Except for the
Confidentiality Agreement between the Parties, effective October 9, 2008,
of which agreement is applicable on its terms, this Supply Agreement, including
all Exhibits and valid amendments, supersedes any and all agreements, either
oral or written, between the Parties with respect to the subject matter of this
Supply Agreement and contains all the covenants and agreements between the
Parties with respect to the subject matter of this Supply Agreement.
Notwithstanding the foregoing, the Parties may have entered into or may in the
future enter into other agreements that relate to CombiMatrix technology but
not to the supply rights and obligations of this Supply Agreement.


 


8.2                               This Supply
Agreement may not be contradicted by evidence of any prior or contemporaneous
statements or agreements.


 


8.3                               No Party has
been induced to enter into this Supply Agreement by, nor is any Party relying
on, any representation, understanding, agreement, commitment, or warranty
outside those expressly set forth in this Supply Agreement.


 


9.              Liability; Indemnification.


 


9.1                               The
indemnification and liability provisions of Sections 9.2, 9.3, and 9.4 are
applicable to this Supply Agreement only to the extent the indemnification
provisions in Exhibit C are not applicable.


 


9.2                               Indemnification. Subject to Sections 9.1, 9.3, and 9.4, each
Party (as first Party) shall defend, indemnify and hold harmless the other
Party (as second Party) and its Affiliates, officers, directors, employees,
agents and representatives (collectively with the indemnified Party, the “Indemnitees”) from and against any and all third party
claims, actions, demands, judgments, expenses, damages, and awards (including,
without limitation, liability for court costs and reasonable fees of attorneys
and other professionals), collectively “Claims”,
brought or to which the second Party is subject as a direct result of (a) the
gross negligence or intentional wrongdoing of the first Party, (b) breach
of this Supply Agreement, including breach of Section 9.3 or any
misrepresentation or breach of a warranty, by a first Party, or (c) only
with respect to


 


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Illumina as a first party
and CombiMatrix as a second party, the manufacture or sale of a [ * ] comprising Custom Content specified by Illumina or its
Affiliates. For clarity, CombiMatrix has no obligation to determine if [ * ] ordered by Illumina as Custom Content are subject to
third-party intellectual property rights.


 


9.3                               The obligation of the first Party to defend,
indemnify and hold harmless set forth herein is conditioned upon (i) prompt
written notice to the first Party of any Claim for which indemnification is
sought, (ii) complete control of the defense and settlement thereof by the
indemnifying first Party, (iii) cooperation of the Indemnitees in such
defense, and (iv) the terms and conditions of this Supply Agreement. The
first Party is responsible for all indemnification costs and expenses,
including reimbursement of reasonable costs and expenses of the second Party.


 


9.4                               Limit on Liability. NOTWITHSTANDING ANY PROVISION IN THIS
SUPPLY AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER FOR LOST PROFITS, DATA, OR BUSINESS, OR FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE, EXEMPLARY, OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING
OUT OF OR IN CONNECTION WITH THIS SUPPLY AGREEMENT, HOWEVER CAUSED AND ON ANY
THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT
LIABILITY, OR OTHERWISE). THE TOTAL AND CUMULATIVE LIABILITY OF A PARTY ARISING
UNDER OR IN CONNECTION WITH THIS SUPPLY AGREEMENT SHALL IN NO EVENT EXCEED [ * ], PROVIDED, HOWEVER, THAT THIS LIMIT ON LIABILITY SHALL
NOT APPLY TO THE EXTENT THE LIABILITY IS A DIRECT RESULT OF THE GROSS
NEGLIGENCE, BAD FAITH, WILLFUL DEFAULT, BREACH, OR MISCONDUCT OF THAT PARTY.
THE LIMITATIONS SET FORTH IN THIS SECTION SHALL APPLY EVEN IF A PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.


 


10.       Assignment.


 


10.1                        This Supply
Agreement is binding upon and inures to the benefit of the Parties and their
respective successors and permitted assigns.


 


10.2                        This Supply
Agreement and the rights, benefits, or obligations hereunder shall not be
assigned or delegated in whole or in part by either Party without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld, delayed, or require any additional contractual consideration, except
that either Party may assign this Supply Agreement to an Affiliate without the
need for consent of the other Party, but will provide notice of the assignment
no later than thirty (30) days after such assignment. For clarity, CombiMatrix
will provide written notice and obtain Illumina’s consent before assigning this
Supply Agreement to any party, including an Affiliate, that would give Illumina
the right to [ * ]


 


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[ * ]  is in effect at the time of the
assignment.


 


10.3                        Any purported
assignment or delegation other than in accordance with this Section is
void and ineffective for all purposes.


 


11.       Confidentiality of Agreement
Terms.


 


11.1                        Subject to
contrary law, regulation, or court order, the Parties agree to maintain the
terms of this Supply Agreement in confidence, even if not tangibly marked with
a CONFIDENTIAL marking, under the terms and conditions of Article 5.


 


12.       Warranties; Lack of Warranty


 


12.1                        CombiMatrix represents and warrants the
following: (i) it is duly authorized to grant the rights and licenses it
grants to Illumina and its Affiliates under this Supply Agreement, (ii) it
is the owner of the Patent Rights and Know How Rights, and (iii) as of the
Effective Date, CombiMatrix does not have rights (by ownership or license) to
any intellectual property other than Patent Rights and Know How Rights, wherein
such intellectual property would be infringed by the practice by Illumina, its
Affiliates, or its customers of the rights granted under Section 3.2 of
this Supply Agreement.


 


12.2                        EXCEPT AS
EXPRESSLY STATED IN THIS SUPPLY AGREEMENT, INCLUDING EXHIBIT C, COMBIMATRIX
MAKES NO WARRANTIES OR REPRESENTATIONS WHATSOEVER, INCLUDING, WITHOUT
LIMITATION, EXPRESS OR IMPLIED WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY,
OR FITNESS FOR A PARTICULAR PURPOSE AND ALL SUCH WARRANTIES AND ANY RELATED
WARRANTIES ARE EXPRESSLY DISCLAIMED.


 


13.       Paragraph Headings;
Interpretation; Counterparts.


 


13.1                        Paragraph
headings are inserted herein solely for convenience and shall not be construed
as part of this Supply Agreement.


 


13.2                        The terms “shall”
and “will” are used synonomously; any use of “for example” is understood to be
a non-limiting example; any use of “including” is understood to be followed by “but
not limited to” even if that phrase is not written; the singular and plural
terms are synonomous except as the context otherwise requires; the Supply
Agreement shall not be interpreted for or against either Party merely because a
Party drafted this Supply Agreement.


 


13.3                        The Parties may
execute this Supply Agreement in counterparts, and each counterpart is deemed
an original, and all counterparts, as a collective, constitute one agreement.


 


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14.       Waiver.


 


14.1                        No term or
condition of this Supply Agreement is deemed to have been waived, and there is
no estoppel against the enforcement of any provision of this Supply Agreement,
except by written instrument of the Party who has the right to grant such
waiver or estoppel.


 


14.2                        No such written
waiver is deemed a continuing waiver unless specifically stated therein, and
each such waiver shall operate only as to the specific term or condition waived
and does not constitute a waiver of such term or condition for the future or as
to any act other than that specifically waived.


 


15.       Severability.


 


15.1                        If, for any
reason, any provision of this Supply Agreement is held in whole or in part to
be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Supply Agreement,
and each such other provision shall, to the full extent consistent with the
law, continue in full force and effect, and the invalid, illegal, or
unenforceable provision or part thereof shall, to the extent possible, be
construed to effect its original intent.


 


16.       Governing Law.


 


16.1                        This Supply
Agreement is deemed entered into in, and shall be interpreted, construed,
performed, and enforced in all respects in accordance with, the laws of
Washington State.


 


17.       Official Language.


 


17.1                        The official
language of this Supply Agreement is English.


 


17.2                        Documents or
notices not orginally written in English will have no effect under this Supply
Agreement until they have been translated into English and then transmitted to
the receiving party.


 


17.3                        The English
translation shall be the controlling form of document or notice.


 


18.       Authority.


 


18.1                        Each Party
represents and warrants that it is duly authorized to enter into this Supply
Agreement and that in so doing it is not in violation of the terms or conditions
of any contract or other agreement to which it may be a party.


 


19. Additional Terms.


 


19.1                        No Third-Party Beneficiaries. 
Nothing in this Supply Agreement is intended to or shall confer upon any
person who is not a party to this Supply Agreement any rights, benefits or
remedies of any nature whatsoever under or by reason of this Supply Agreement,
nor shall any


 


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such person be entitled to assert any claim
hereunder, other than the rights granted to an Affiliate of Illumina including
under Section 3.2.


 


19.2        Force
Majeure.  Neither Party is
responsible for any failure to perform or delay attributable in whole or in
part to any cause beyond its reasonable control, including but not limited to
fire, flood, tornado, earthquake, hurricane, lightning, government actions,
actual or threatened acts of war, terrorism, civil disturbance or insurrection,
sabotage, labor shortages or disputes not particular to a Party, failure or
delay in delivery by such Party’s suppliers or subcontractors, transportation
difficulties, shortage of energy, raw materials or equipment.  In the event of any such delay, the date of
delivery or performance shall, at the request of the Party affected by the
force majeure, be deferred for a period equal to the time lost by reason of the
delay.  Notwithstanding the foregoing, if
such delay lasts for a period of three (3) months or more, the Party not
affected by the force majeure is entitled to terminate this Supply Agreement
effective immediately by providing written notice.


 


19.3        Bankruptcy.  For purposes of Section 365(n) of
Title 11 of the United States Code, as amended, and any foreign equivalents
thereof (“Bankruptcy Code”), all rights and
licenses granted under this Supply Agreement are licenses of rights to “intellectual
property” as such term is used in the Bankruptcy Code.  In the event of the commencement of
bankruptcy proceedings by or against a Party under the Bankruptcy Code, that
Party agrees that the other Party shall retain and may fully exercise all of
such licensed rights under this Supply Agreement (including any license granted
hereunder) and all of its rights and elections under the Bankruptcy Code.


 


19.4        Relationship of the Parties.  The Parties are independent contractors and
are engaged in the operation of their own respective businesses.  Nothing contained in this Supply Agreement
shall be construed as creating a partnership, joint venture, or agency
relationship between the Parties or, except as otherwise expressly provided in
this Supply Agreement, as granting either Party the authority to bind or
contract any obligation in the name of or on the account of the other Party or
to make any statements, representations, warranties, or commitments on behalf
of the other Party.


 


19.5        Publicity; Use of Names.  Each Party shall obtain the prior written
consent of the other on all press releases or other public announcements
relating to this Supply Agreement, including its existence or its terms.
CombiMatrix agrees that it will not publicly disclose that it has entered into
this Supply Agreement with Illumina or otherwise use the name of Illumina or
its Affiliates, without the prior written consent of Illumina.  Illumina agrees that it will not publicly
disclose that it has entered into this Supply Agreement with CombiMatrix or
otherwise use the name of CombiMatrix or its Affiliates, without the prior
written consent of CombiMatrix. 
Notwithstanding any of the foregoing, if required by law, including
without limitation by the U.S. Securities and Exchange Commission or any stock
exchange or Nasdaq, then a Party may issue a press release or other public
announcement regarding this Supply Agreement or any products developed and/or
commercialized hereunder provided that the other Party has received
prior written notice of such intended press release or public announcement if
practicable under the circumstances, and an opportunity to seek a protective
order if practicable under the circumstances, and the Party subject to the
requirement includes


 


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in such press release or
public announcement only such information relating to this Supply Agreement or
any products developed and/or commercialized hereunder as is required by such
law.


 


IN WITNESS WHEREOF, the Parties have executed this Supply Agreement
effective as of the date last written below by their duly authorized
representatives.


 


	
  CombiMatrix
  Corporation:

  	
   

  
	
  Signature:

  	
   

  	
   /s/
  Amit Kumar

  	
   

  
	
  Printed Name:

  	
   

  	
   Amit
  Kumar, Ph.D.

  	
   

  
	
  Title:

  	
   

  	
   President &
  CEO

  	
   

  
	
  Date:

  	
   

  	
   September 29,
  2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Illumina, Inc.:

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   /s/
  Joel McComb

  	
   

  
	
  Printed Name:

  	
   

  	
   Joel
  McComb

  	
   

  
	
  Title:

  	
   

  	
   Senior
  Vice President and General Manager

  	
   

  
	
  Date:

  	
   

  	
   September 29,
  2009

  	
   

  



 


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Exhibit A:  Pricing


 


[ * ]


 


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[ * ]


 


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Exhibit B:  QC Test


 


[ * ]


 


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Exhibit C


 


Additional Terms and Conditions for Supply of [ * ]


 


C1.          Purchase Orders; Specifications.


 


C1.1a      Illumina
or its Affiliates will order [ * ] by
submitting a purchase order that will include the Custom Content of each [ * ] to be supplied and the timing and particulars for
delivery of same. (Reference to Illumina in this Exhibit C is understood
to be Illumina or its Affiliate, as applicable.) The [ * ]
for each [ * ] ordered hereunder will be
Confidential Information of Illumina and will be marked Confidential. For the
purpose of clarity, all orders of [ * ] are
hereby marked as confidential and, therefore, are Confidential Information of
Illumina under this Supply Agreement. The terms and conditions of this Supply
Agreement and any consistent purchase order submitted by Illumina and accepted
by CombiMatrix will control any and all procurement of [ * ] by
or on behalf of Illumina and shall supersede the terms of any orders, invoices,
or other documents issued by CombiMatrix. CombiMatrix will accept any purchase
order that is consistent with the terms of this Supply Agreement. In addition
to rights under Paragraph C6, Illumina may modify or cancel any purchase order
by providing CombiMatrix written notice of such change prior to CombiMatrix
beginning [ * ]; such modification or
cancellation may include, but is not limited to, modifying the quantity of and
the delivery date of [ * ].


 


C1.1b      The
term “Production Time” is defined as the
number of days between receipt by CombiMatrix of a valid purchase order from
Illumina for [ * ] and the day upon which
CombiMatrix delivers the [ * ] to a
common carrier for shipment.  The
Production Time for [ * ] shall not
exceed [ * ] business days, and CombiMatrix
shall use its best efforts to have [ * ] ordered
by Illumina achieve a Production Time of [ * ] business
days or less.  For clarity, as Illumina
may specify shipping and thus shipping times (such as not accepting packages on
particular days or delivering on particular days, using multi-day shipping instead
of overnight shipping, etc.), Production Time excludes the period for which the
[ * ] are in transit to Illumina.  In the event that CombiMatrix will not be
able to meet a Production Time of [ * ] business
days, CombiMatrix shall notify the Illumina employee(s) generating the
purchase order via email and will also provide an estimate of what the revised
Production Time will be.  If Illumina
responds via e-mail that it still desires delivery of the original [ * ] ordered (the “Order”),
CombiMatrix shall ship the Order as under the revised Production Time and the
original purchase order terms, and Illumina will be obligated to pay for the
Order according to the terms of this Supply Agreement.  If Illumina does not verify via response
email within [ * ] business days that it still
desires the Order (measured from the day that the original email was sent by
CombiMatrix to Illumina), and CombiMatrix has confirmed that the email was
received and acknowledged, CombiMatrix will consider the Order to be cancelled
with no financial obligations incurred by Illumina for the original Order, and
CombiMatrix will not ship the Order.


 


C1.2        CombiMatrix shall not make any changes to the
[ * ] or changes to the manufacturing process of [ * ] or techniques that would result in a change
in any [ * ] specification, performance, or functionality as measured pursuant to Exhibit B
without first obtaining the prior written approval of Illumina, which shall not
be


 


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unreasonably withheld or delayed.  Notwithstanding the foregoing, as Exhibit A
contains price reductions over time, CombiMatrix has (subject solely to its own
judgment) the right to make refinements to its process of producing [ * ], possibly including but not limited to [ * ].  For clarity, a [ * ] shall be judged acceptable if it passes the QC Test in Exhibit B.


 


C1.3        In the event CombiMatrix
determines that [ * ] will no longer be made
available to Illumina, CombiMatrix will provide written notice to Illumina no
less than [ * ] calendar days prior to the date
on which the [ * ] will no longer be available
to Illumina. Illumina will have [ * ] calendar
days from that notice within which to place an end-of-life purchase order
having shipping and delivery-time terms that are consistent with previous
purchase orders filled under this Supply Agreement. For the avoidance of doubt,
Illumina has the right to place an end-of-life purchase order prior to the
natural End Date of this Supply Agreement.


 


C1.4        If
either Party believes that forecasting is necessary to ensure the required
volume of supply, then CombiMatrix and Illumina will negotiate in good faith to
amend this Supply Agreement to set forth terms and conditions regarding
quarterly forecasts.


 


C2.  Pricing; Payment; Taxes; Invoice. The
pricing in Exhibit A is for [ * ] from a [ * ]. Payments by Illumina for purchase of a [ * ] are due hereunder within thirty (30) calendar days
after receipt of an invoice from CombiMatrix. Any [ * ]
purchased hereunder may become a component part of an Illumina Product
manufactured by Illumina and/or bought for re-sale, and no retail sales tax is
applicable. All payments shall be made free and clear of, and without reduction
for, any withholding or other taxes, unless CombiMatrix has the legal
obligation to collect taxes, in which case the appropriate amount will be added
to its invoice to Illumina. CombiMatrix shall render a separate invoice for
each shipment made hereunder to Illumina’s Accounts Payable Department, or as
specified on the purchase order, on the day each shipment is made. Each invoice
shall include at least the following information,; as applicable: (i) Illumina’s
purchase order number, (ii) Illumina’s part number if provided by
Illumina, (iii) the quantity of goods shipped, (iv) the date shipped,
(v) the address to which the goods were shipped, and (vi) any other
information requested by Illumina to be on the invoice. In addition to the
price of [ * ] ordered (and required taxes, if
any, as explained above), an invoice will include any costs to be paid by
Illumina pursuant to Paragraph C5. A minor discrepancy regarding the
information required by Illumina to be set forth on an invoice does not relieve
Illumina from timely payment.


 


C3.          Quality Testing. If the QC Test
in Exhibit B is performed by Illumina or its Affiliate on a [ * ] and the [ * ] passes
the QC Test, then the [ * ] is judged
to be acceptable and may not be returned to CombiMatrix for refund. If any [ * ] does not pass the QC Test when performed by Illumina
or its Affiliate, then Illumina


 


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shall
provide written notice and [ * ] to
CombiMatrix within 30 days of Illumina receiving the [ * ],
and CombiMatrix will provide Illumina with a replacement [ * ]
within thirty (30) days at no additional charge to Illumina. In the event the
replacement [ * ] is not provided within the
stated time period or does not pass the QC Test, then CombiMatrix will immediately
refund to Illumina the purchase price (including costs and expenses paid
according to Paragraph C5) of the initial [ * ] that
failed the QC Test. In the event that the notice of failure to pass QC and [ * ] is not received by CombiMatrix within 30 days of
Illumina receiving the [ * ], then
CombiMatrix is not required to replace the [ * ] or refund
the purchase price.


 


C4.          Title
and Risk of Loss.  Shipments of [ * ] shall be FOB point of origin. Title and risk of loss
or damages to a [ * ] will pass to Illumina upon
delivery of the [ * ] by CombiMatrix to the
transportation carrier. CombiMatrix will make every reasonable effort to assist
Illumina in filing any claims associated with improper transportation and
handling or loss or damages to a [ * ] during
transit.


 


C5.  Shipping;
Packing; Insurance; Delivery. All transportation and
transportation insurance costs will be the responsibility of Illumina and, if
paid by CombiMatrix, the actual costs will be set forth on the invoice for
reimbursement by Illumina. Illumina shall have the right to specify shipper and
insurer that will be used to ship [ * ]. If
Illumina fails to specify a shipper and/or insurer, then CombiMatrix may select
the shipper and/or insurer. CombiMatrix shall be responsible for proper packing
of [ * ]. Illumina may request CombiMatrix
to provide special packaging at the expense of Illumina. CombiMatrix shall not
combine in the same container [ * ] to be
sent to different receiving locations. CombiMatrix shall ship [ * ] in the quantity as specified on the purchase order to
the point of destination specified on the purchase order and no later than the
date specified on the purchase order.


 


C6.          Failure to Deliver or Meet
Requirements.  CombiMatrix shall
immediately provide Illumina written notice of any inability to or delay in
delivering [ * ] under this Supply Agreement
or any purchase order hereunder. In the event CombiMatrix fails, for any reason
including, without limitation, to supply [ * ] that meet
specifications, quantities required, or delivery dates, Illumina shall have all
rights and remedies available at law, including, but not limited to: (a) the
right to cancel all or a part of the purchase order(s) affected by the
failure, (b) require CombiMatrix to ship [ * ]
via an expedited delivery method, and CombiMatrix will pay difference in cost
and expense over normal shipping, or (c) the right to terminate this
Supply Agreement by providing thirty (30) days written notice to CombiMatrix.


 


C7.          Infringement
Indemnification by CombiMatrix.


 


C7.1        Subject
to Paragraphs C8 and C9, and Sections 9.1 and 9.4, CombiMatrix shall defend,
indemnify and hold harmless Illumina, its Affiliates, its customers, and the
respective officers, directors, employees, distributors, and representatives of
each (“Illumina Indemnitees”) from and against
any and all claims, actions, or demands (including, without limitation,
liability for court costs and reasonable fees of attorneys and other
professionals),


 


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collectively,
alleging that the [ * ] sold to
Illumina hereunder infringes any intellectual property right of any third party
(collectively “Infringement Claims”), except to
the extent any such Infringement Claim is a direct result of (a) CombiMatrix’s
compliance with a custom specification, including Custom Content, provided by
Illumina to CombiMatrix, (b) a combination with, an addition to, or a
modification of the [ * ] after
delivery by CombiMatrix to Illumina or its designee, or (c) use of the [ * ] in a manner not permitted under this Supply Agreement.
However, to the extent any of (a), (b), or (c) is applicable to an
Infringement Claim, that Infringement Claim shall not be excluded from
the obligation to indemnify the Illumina Indemnitees to the extent the
Infringement Claim: (i) arose as a result of the gross negligence or
intentional wrongdoing of CombiMatrix, or (ii) arose as a result of breach
of this Supply Agreement by CombiMatrix, including misrepresentation of any
representation or breach of any warranty made herein.


 


C7.2        In
the event use by Illumina, its Affiliates or a customer of either of any [ * ], or a product made therefrom that comprises [ * ] in a [ * ], is
enjoined due to infringement of any third party’s intellectual property rights,
and the infringement is not a direct result of an exception set forth in
Paragraph C7.1 (a), (b), or (c), Illumina shall permit CombiMatrix: (1) to
procure for Illumina the right to use or continue to use such [ * ] or product free of any liability for patent
infringement; or (2) replace or modify the applicable [ * ]
without any material loss in functionality so as to avoid infringement; or (3) refund
the purchase price and the transportation costs of such [ * ],
except that CombiMatrix will not refund the purchase price of [ * ] already received by Illumina and that pass the QC
Test  If infringement is alleged, then
CombiMatrix may decline to make further shipments of the [ * ]
without being in breach of this Supply Agreement.


 


C8.          Indemnification
Conditions. The obligation to indemnify in Paragraph C7 is
conditioned upon: 1) prompt written notice provided by Illumina of any
Infringement Claim for which indemnity is sought; 2) complete control of the
defense and settlement thereof by CombiMatrix; 3) cooperation of the Illumina
Indemnitees in such defense, and 4) the terms and conditions of this Supply Agreement.
CombiMatrix shall be responsible for all indemnification costs and expenses,
including the reasonable costs of the Illumina Indemnitees.


 


C9.          Insurance. Throughout the
Term of this Supply Agreement so long as CombiMatrix is supplying [ * ] to Illumina, and for [ * ]
thereafter, each Party shall maintain general liability and property damage
liability insurance coverage. Such insurance shall have policy limits of no
less than $[ * ] per occurrence for death or
personal injury, $[ * ] per
occurrence for real and personal property damage, and $[ * ]umbrella
aggregate liability per year.


 


C10.            Warranty
for [ * ]. CombiMatrix warrants that a [ * ] will, for a QC test done within 30 days of Illumina’s
receipt of the [ * ], pass the QC test.


 


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EXHIBIT
D


ADDITIONAL
DEFINITIONS APPLICABLE TO [ * ], SUPPLY
AGREEMENT, [ * ]


 


The
term “Affiliate” is defined as any person or
entity that controls, is controlled by, or is under common control with a
Party, wherein control is the right to control, directly or indirectly, more
than fifty percent (50%) of the equity securities or other ownership interests
in the subject entity entitled to vote in the election of directors or with the
power to direct or elect management of such subject entity.


 


The
term “Custom Content” is defined as all [ * ] information provided or otherwise disclosed by
Illumina or its Affiliates to CombiMatrix to [ * ]
having said [ * ] information.


 


The
term “Custom Kit” is defined as a product
made by or for Illumina or any of its Affiliates, wherein the product contains [ * ]. For clarity, a Custom Kit may or may not include
additional components, including but not limited to other consumables,
reagents, and instructions sheets.


 


The
term “[ * ]” is defined as [ * ] made by CombiMatrix or an Affiliate thereof for
Illumina or an Affiliate thereof pursuant to the Supply Agreement.


 


The
term “[ * ]” is defined as [ * ].


 


The
term “Illumina Product” is defined as a
product, including a Custom Kit, made by or for Illumina or any of its
Affiliates using or containing [ * ].


 


The
term “Know How Rights” is defined as any and
all rights, other than Patent Rights, that CombiMatrix and its Affiliates have
in knowledge, information, methods, or material, all of which are necessary for
the use, development, manufacture, or commercialization of [ * ],
including the [ * ], software (including
Software), consumables, and equipment related therewith. If and when a right
within Know How Rights becomes part of the subject matter of the claims of one
or more Patents, such Know How Rights shall be included within Patent Rights.


 


The
term “[ * ]” is defined as [ * ].


 


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The
term “[ * ]” is defined to mean the right to [ * ] using CombiMatrix-supplied [ * ],
using CombiMatrix Know-How Rights and Patent Rights regarding production of [ * ], and using the [ * ].


 


The term “[ * ]” is
defined as [ * ].


 


The
term “[ * ]” is defined as [ * ].


 


The term “[ * ]” is
defined as [ * ].


 


The
term “Patent Rights” is defined as any and
all rights CombiMatrix and its Affiliates have in Patents that are directed
towards [ * ], and related software (including
Software), consumables, and equipment of the same, as well as methods and
compositions for making and using same, including the [ * ].
For clarity, Patent Rights includes rights CombiMatrix has in Patents through
ownership, license, or other manners of transfer of rights as of the Effective
Date and during the Term.


 


The
term “Patents” is defined as United States
and non-United States (i) unexpired letters patents (including inventor’s
certificates) that have not lapsed or been held invalid or unenforceable by a
court or administrative body of competent jurisdiction from which no appeal can
be taken or has been taken within the required time period, including, without
limitation, any substitution, extension, registration, confirmation, reissue,
reexamination, renewal or any like filing thereof and (ii) pending
applications for letters patent that have not been the subject of a rejection
notice to which a response cannot be filed or from which an appeal cannot be
taken or in respect of which the applicable period of appeal has expired,
including, without limitation, any continuation, division, or
continuation-in-part thereof and any provisional applications.


 


The
term “Software” is defined as software or
firmware programs owned by or licensed to CombiMatrix and provided with the [ * ] by CombiMatrix, and any updates and upgrades of the
foregoing provided by CombiMatrix.


 


The
term “Supply Agreement” is defined as the
agreement between the Parties pertaining to supply of [ * ]
by CombiMatrix to Illumina and its Affiliates.


 


The
term “[ * ]” is defined as [ * ].


 


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The
term “[ * ]” is defined as [ * ].


 


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