Document:

Exhibit 10.1

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. 
Asterisks denote omissions.

 

 

CONSUMER GENOMICS AND HAPTM  TECHNOLOGY
LICENSE

AGREEMENT

 

BETWEEN

 

SCIONA LIMITED

 

AND

 

GENAISSANCE PHARMACEUTICALS, INC.

 

 

17 November 2003

 

 

EXECUTION COPY

 

CONSUMER GENOMICS AND HAPTM
TECHNOLOGY LICENSE AGREEMENT

THIS AGREEMENT,
effective as of November 17, 2003 (the “Effective
Date”), between SCIONA LIMITED, a
corporation duly organized and existing under the laws of United Kingdom, and
having its principal place of business at 25 Broadmarsh Business and Innovation
Centre, Harts Farm Way, Havant Hampshire, PO9 1HS, United Kingdom; and GENAISSANCE PHARMACEUTICALS, INC., a corporation duly organized and
existing under the laws of the State of Delaware, and having its principal
place of business at Five Science Park, New Haven, Connecticut 06511.

 

WITNESSETH:

 

WHEREAS, Sciona has
developed a fully integrated solution for providing personalized well-being
advice and formulations based on established genotype-phenotype links; and

 

WHEREAS, Genaissance
has developed a fully integrated solution for connecting genomic variation to
phenotypes, which is known as HAPTM
Technology, and which combines Genaissance’s proprietary HAPTM Database of proprietary gene
polymorphisms, including specific single nucleotide polymorphism (SNPs) and
haplotype markers, known as HAPTM
Markers, the DecoGen® Informatics
System, Genaissance’s dedicated clinical genotyping facilities, and
Genaissance’s genetic association expertise (as such capitalized terms and
other capitalized terms are hereinafter defined); and

 

WHEREAS, Genaissance
is interested in the exploitation of the HAP
Technology for consumer genomics and research projects to identify new genetic
links in the consumer genomics area; and

 

WHEREAS, Sciona and
its Affiliates are interested in obtaining access to the HAP Technology and related genetic
association expertise for use in developing genetic tests containing HAP Markers for use by consumers in
selecting Consumer Products and in making lifestyle choices; and

 

WHEREAS, Sciona is
interested in using Genaissance as its exclusive provider of genotyping
services to support sales of genetic tests containing HAP Markers, and as its preferred provider
of genotyping services to support sales of certain other genetic tests, in each
case in North America and other territories in which Genaissance has an
appropriately qualified laboratory; and

 

WHEREAS, Genaissance
is willing to grant Sciona access to its HAP
Technology, and to provide such genotyping services, as well as certain support
services, all upon the terms and conditions set forth below; and

 

 

 

WHEREAS, Genaissance
and Sciona also wish to collaborate to discover HAP Marker associations and to sell HAP Marker association delivery services;

 

NOW THEREFORE, in
consideration of the premises and of the covenants herein contained, the
Parties hereto mutually agree as follows:

 

1.                                      DEFINITIONS.

 

1.1                               “Affiliate” shall mean any corporation or
other entity that directly or indirectly controls, is controlled by or is under
common control with a Party.  A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than fifty
percent (50%) of the outstanding voting stock or other ownership interest of
the other corporation or entity, or if it possesses, directly or indirectly,
the power to manage, direct or cause the direction of the management and
policies of the corporation or other entity or the power to elect or appoint
more than fifty percent (50%) of the members of the governing body of the
corporation or other entity.  Any such
other relationship as in fact results in actual control over the management,
business and affairs of a corporation or other entity shall also be deemed to
constitute control.  Each of Prelude
Trust plc and Abbey National Treasury Services Overseas Holding are expressly
excluded from the definition of Sciona’s “Affiliates”.

 

1.2                               “Agreement” means this document, together
with all Exhibits and Schedules hereto.

 

1.3                               “Confidential Information”  means (a) all proprietary materials,
data, know-how (including Know-How) or other information received by a Party or
its Affiliates from the other Party or its Affiliates in connection with the
performance of this Agreement (and which, in the case of Sciona and its
Affiliates as recipient, shall include the HAP
Database and all information contained therein related to HAP Markers and their associations and the
DecoGen Informatics System), and
(b) all other materials, data, know-how or other information disclosed or
supplied by or on behalf of either Party or its Affiliates and identified as
“Confidential” or “Proprietary.”

 

1.4                               “Consumer Product” shall mean any product
or service, other than a Prescription Product or a Medical Diagnosis Product,
that is directly or indirectly marketed, sold or provided to consumers in a
manner that indicates such product or service is intended for use in a Consumer
Products Market.

 

1.5                               “Consumer Products Market” shall mean
personal, family or household purposes, including over-the-counter medicines,
cosmetics, fragrances, vitamins and supplements, foods, and beverages.

 

1.6                               “Control”
or “Controlled” means with respect to
any Know-How, Patent Right or other intellectual property right, the possession
(whether by license, other than pursuant to this Agreement, or ownership) by a
Party or its Affiliates of the ability to grant to the other Party or its
Affiliates access and/or a license as provided herein without violating the
terms of any

 

2

 

agreement or other arrangement
with any Third Party pursuant to which the relevant Party or its Affiliates
derive their right, title or interest in such intellectual property, and
provided that the terms of such Third Party agreement or arrangement are not
entered into for the primary purpose of avoiding or restricting any liability
or obligation arising under this Agreement.

 

1.7                               “DecoGenâ Informatics System” or “DecoGen Informatics System” shall mean the
system that permits access to the HAP Database and includes the DecoGenâ Data Manager Software and DecoGenâ Browser Software and any associated
user manuals, whether existing on the Effective Date (as described in Exhibit
1.7) or developed by Genaissance during the Access Period and Controlled by
Genaissance.  For the avoidance of
doubt, the DecoGen Informatics System
does not include (a) any source code, or (b) Third Party software that Sciona or
its Affiliates have independently of Genaissance licensed from a Third Party.

 

1.8                               “Dual-Purpose Product” shall mean any
Consumer Product that includes a HAP
Marker Genetic Test that may be used by a Licensed Healthcare Practitioner to
make a medical diagnosis for human subjects.

 

1.9                                                                               “Field of Use” shall mean the (a) discovery
of HAP Marker Associations and
(b) the development, manufacturing, marketing and selling of HAP Marker Genetic Tests, in each case,
solely for use by Sciona, Affiliates of Sciona, and other Permitted Sciona
Partners in the development, manufacturing, marketing and selling of (i)
Consumer Products and (ii) Dual-Purpose Products to the extent that such
products are (or, in the case of products in development or manufacture, are intended
to be) marketed and sold by Sciona and Permitted Sciona Partners solely as
Consumer Products, provided however,
that Genaissance retains the right to enter into Permitted Third Party
Agreements.  The Field of Use explicitly
excludes the use of HAP Marker
Genetic Tests in the discovery, development, manufacture, marketing, selling or
prescribing of Medical Diagnosis Products, Prescription Products, or, to the
extent intended for uses other than as a Consumer Product, Dual Purpose
Products, and is subject to rights granted by Genaissance to Third Parties
under agreements that exist as of the Effective Date and are listed in Exhibit
1.9.

 

1.10                        “First Commercial Sale” shall mean the
first sale for use or consumption by the general public of a Genetic Test in a
country.

 

1.11                        “Genaissance” shall mean Genaissance
Pharmaceuticals, Inc.

 

1.12                        “Genaissance Know-How”  shall mean any Know-How Controlled by
Genaissance as of the Effective Date or during the Access Period, including,
without limitation, any data on the sequence, frequency and distribution of HAP Markers and other information
contained in the HAP Database.

 

1.13                        “Genaissance Patent Rights”  shall mean, individually and
collectively, the HAP Marker
Patent Rights and the HAP Marker
Association Patent Rights.

 

3

 

1.14                        “Genaissance Territory” shall mean any
country or geographic region for which Genaissance operates a laboratory that
meets all material technical requirements reasonably requested by Sciona (or its
Affiliates) for performing the Genetic Tests.

 

1.15                        “Gene” means a nucleic acid sequence
(including allelic variations thereof) that (a) contains the sequence
information for the transcription, translation or amino acid sequence of a
designated protein, and (b) satisfies the criteria set forth in Exhibit 1.17
hereto.

 

1.16                        “Genetic Tests”  shall mean individually and collectively the HAP Marker Genetic Tests and the Sciona
Genetic Tests.

 

1.17                        “HAPÔ Database” or “HAP Database” shall mean Genaissance’s proprietary database
containing annotated data on the sequence, frequency and distribution of
polymorphisms and HAP Markers
discovered from analysis of genetic material contained in the Index Repository,
as more fully described in Exhibit 1.17 hereto.

 

1.18                        “HAPÔ Marker” or “HAP
Marker” shall mean any human polymorphism or human haplotype that is
present in the HAP Database at
any time during the Access Period.  The
term HAP Marker shall not include
any polymorphism or haplotype that is obtained independently by Sciona without
access to the HAP Database or use
of its contents, as evidenced by contemporary written documents.

 

1.19                        “HAP Marker Association” shall mean an
association between a Phenotype and a specific HAP
Marker or combination of HAP
Markers, including associations arising out of the activities described in
Article 3.  The term HAP Marker Association shall not include
any association between a Phenotype and a specific HAP Marker or combination of HAP Markers that is obtained independently by Sciona without
access to the HAP Database or use
of its contents, as evidenced by contemporary written documents.

 

1.20                        “HAP Marker Association Patent Rights”
shall mean Patent Rights claiming any HAP
Marker Association or use thereof.

 

1.21                        “HAP Marker Genetic Test” shall mean a
genetic test that is designed for and intended for use in detecting the
presence or absence of one or more HAP
Markers in a human individual, which test may be designed and intended for
additional uses.

 

1.22                        “HAP Marker Patent Rights” shall mean
Patent Rights claiming any HAP
Markers, combination of HAP Markers
or in each case, use thereof.

 

1.23                        “Healthcare
Practitioner” shall mean any provider of health related advice or
services to humans, including medical doctors, dentists, optometrists,
psychologists, physician assistants, nurses, nurse practitioners, dieticians,
genetic counselors, physical therapists and personal fitness trainers.

 

4

 

1.24                        “Index Repository” means Genaissance’s
proprietary collection of immortalized cell lines established from unrelated
and related individuals from various geographical origins and from members of
extended families.

 

1.25                        “Know-How” shall mean proprietary data,
information, inventions, practices, methods, knowledge, know-how, trade
secrets, processes, formulas, assays, skills, experience, techniques, results
of experimentation and testing, including clinical test data, analytical and
quality control data, regulatory submissions, copyrights, and other intellectual
property of any kind, not covered by claims of any Patent Rights, in each case
owned or Controlled by either Party or its Affiliates.

 

1.26                        “Licensed Healthcare Practitioner” shall
mean any Healthcare Practitioner who is licensed or authorized under the laws
and regulations of a country (or other applicable jurisdiction) to order
Prescription Products or Medical Diagnosis Products for humans.

 

1.27                        “Medical Diagnosis Product” shall mean any
diagnostic product or procedure that is intended for use in making a specific
medical diagnosis for human subjects, which use is lawful under applicable laws
or regulations or eligible for reimbursement by a governmental body or health
care payor in each case only if such use is prescribed by a Licensed Healthcare
Practitioner (in his/her capacity as such).

 

1.28                        “Net Revenues” shall mean collectively: (a)
Net Sales; (b) all revenues received by Sciona and its Affiliates from Third
Parties (including Permitted Sciona Partners) in respect of the sale of [**] or
other products or services that are sold or otherwise provided by Sciona or its
Permitted Sciona Partners in connection with [**]; and (c) all other revenue
and consideration received by Sciona and its Affiliates from Third Parties
(including Permitted Sciona Partners) in respect of [**], including [**].  For the avoidance of doubt, revenues and
other consideration received by Sciona and its Affiliates hereunder shall
include consideration in any form, including any license or distribution
signing fee, any license or distribution maintenance fee, minimum royalty
payments, lump sum payments and earned royalties, and shall also include
research and development funding and any consideration received for an equity
interest in, or other investment in Sciona (or an Affiliate) to the extent such
research and development funding or consideration is given as part of the same
transaction or related series of transactions with, and exceeds that which
would have been received in the absence of, the grant of the sublicense or
other rights hereunder.

 

1.29                        “Net Sales”
shall mean the gross sales revenues invoiced by Sciona and its Affiliates on
the sale, transfer, disposition or other provision of HAP Marker Genetic Tests,
less the following customary deductions: (i) normal and customary trade, cash
and other discounts, allowances and credits; (ii) credits or allowances
actually granted for damaged goods, returns or rejections; (iii) sales or
similar taxes that are included in the billing amount; (iv) freight, postage,
shipping, customs duties and insurance charges that are included in the billing
amount and (v) actual bad debts.  The
transfer or sale of HAP Marker Genetic Tests by Sciona to an
Affiliate of

 

5

 

Sciona shall not be considered
a sale, but in such case, Net Revenues shall be determined based on the
invoiced sales price by the Affiliate to its Third Party customer, less the
deductions allowed under this Section 1.29.

 

1.30                        “Patent Rights” shall mean patents, patent
applications or supplementary protection certificates (SPCs) that are
owned or Controlled by a Party or its Affiliates.

 

1.31                        “Party” means Genaissance or Sciona, as the
case may be, and “Parties” means
Genaissance and Sciona.

 

1.32                        “Permitted Sciona Partner” shall mean any
(a) Affiliate, (b) any Third Party that is granted a sublicense by Sciona as
permitted pursuant by Section 2.1(c) in its capacity as such sublicensee;
and (c) any other Third Party that is granted distribution rights (or other
rights to purchase for resale) with respect to HAP
Marker Genetic Tests in its capacity as such distributor; provided, that Sciona may not grant any
Third Party sublicense or distribution rights hereunder (other than with the
prior written consent of Genaissance) if Genaissance already has entered
into an agreement with such Third Party or its Affiliates, which agreement
includes a license to HAP Markers
for use in the discovery, development, manufacturing, marketing or selling of,
or other activities relating to, Dual-Purpose Products, Prescription Products
or Medical Diagnosis Products.

 

1.33                        “Permitted Third Party Agreement” shall
mean an agreement that (a) is entered into after the Effective Date by
Genaissance and a Third Party who is engaged in the business of discovering,
developing, manufacturing, marketing or selling of Prescription Products or
Medical Diagnosis Products and (b) grants the Third Party a license to use the HAP Database, the HAP Markers or the DecoGen Informatics System (the “Licensed
Technology”) in a field of use that includes the development, manufacturing, marketing
and selling of Consumer Products and one or more of Prescription Products or
Medical Diagnosis Products, provided,
however, that (i) Genaissance reasonably
believes the Third Party intends to use the Licensed Technology to discover,
develop, manufacture, market or sell a Prescription Product or a Medical
Diagnosis Product, and (ii) if the Third Party seeks to partner with
Genaissance or an Affiliate of Genaissance to develop, manufacture, market or sell a Consumer Product, then
Genaissance will not agree to be such a partner unless the Third Party agrees
that Genaissance may use Sciona as Genaissance’s exclusive partner for Consumer
Products (and, for the avoidance of doubt, Sciona shall have the right to
require Genaissance to so partner with Sciona on an exclusive basis).  For the
avoidance of doubt, any such partnering arrangement will be subject
to Sciona’s and Genaissance’s rights and obligations under Section 2.4,
Section 2.5 and Article 3 of this Agreement.

 

1.34                        “Phenotype” shall mean (a) an individual’s
response to any substance or treatment, including Consumer Products and
Prescription Products, or (b) the presence of, or susceptibility for, any
disease or condition.

 

6

 

1.35                        “Prescription Product” shall mean any
therapeutic product or therapeutic treatment that generally requires a
prescription by a Licensed Healthcare Practitioner under applicable laws or
regulations or is eligible for reimbursement by a governmental body or a health
care provider only if prescribed by a Licensed Healthcare Practitioner.

 

1.36                        “Sciona” or “Sciona Ltd.” shall mean Sciona Ltd.

 

1.37                        “Sciona Genetic Test” shall mean any
genetic test other than a HAP
Marker Genetic Test that (a) is developed, marketed or sold solely by Sciona or
one of its Affiliates or jointly by Sciona or one of its Affiliates and one or
more other parties, which may include Genaissance, and (b) is designed to
detect the presence or absence of a polymorphism or haplotype in a human
individual.

 

1.38                        “Third Party” shall mean any corporation,
person or other entity other than Genaissance or Sciona or their respective
Affiliates.

 

1.39                        “Transition Period” shall mean the period
of time commencing on the Effective Date and expiring on the first to occur of
the following: (a) [**] months thereafter, (b) on the date on which Sciona
first achieves positive net income determined in accordance with generally
accepted accounting principles in the United Kingdom consistently applied, or
(c) on the date on which Sciona and its Affiliates has first obtained or
achieved cumulative combined Third Party financing (equity or debt) and sales
revenues of at least $[**], as calculated on a monthly basis from the Effective
Date.  For
the avoidance of doubt, the amount of financing or sales revenues
obtained by Sciona before the Effective Date shall not be applicable to subpart
(c) of the preceding sentence.

 

1.40                        “Valid Claim” means any claim of an issued
and unexpired patent comprising a Patent Right, which claim has not been held
unenforceable, unpatentable or invalid by a final decision of a court or governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal,
and which has not been admitted to be invalid or unenforceable through reissue,
re-examination or disclaimer and which is not subject to an interference action.  “Valid
Claim” also means
any pending application for a patent included within the Patent Rights to the
extent the invention(s) described in the claims of such application have not
been abandoned without being refiled in another application or finally rejected
by an administrative agency action from which no appeal can be taken.

 

1.41                        The following terms have the
meanings set forth in the corresponding Sections of this Agreement:

 

7

 

	
  Term

  	
   

  	
  Section

  
	
  “Access Period”

  	
   

  	
  10.1(a)

  
	
  “Genaissance Collaboration IP”

  	
   

  	
  3.3

  
	
  “HAP Marker Association Collaboration Agreement”

  	
   

  	
  3.2

  
	
  “Installation Site”

  	
   

  	
  2.8(a)

  
	
  “Investment Agreement”

  	
   

  	
  5.1

  
	
  “Joint Collaboration IP”

  	
   

  	
  3.3

  
	
  “Minimum Annual Payments”

  	
   

  	
  5.4

  
	
  “Royalties”

  	
   

  	
  5.2

  
	
  “Sciona Collaboration IP”

  	
   

  	
  3.3

  
	
  “Service
  Fees”

  	
   

  	
  5.3

  
	
  “Shares”

  	
   

  	
  5.1

  
	
  “Software
  Product”

  	
   

  	
  2.8(c)

  
	
  “Sublease”

  	
   

  	
  4.1

  

 

1.42                        Interpretation.  Whenever any provision of this Agreement
uses the term “including” (or “includes”), such term shall be deemed to mean
“including without limitation” and “including but not limited to” (or “includes
without limitations” and “includes but is not limited to”) regardless of
whether the words “without limitation” or “but not limited to” actually follow
the term “including” (or “includes”); “herein,” “hereby,” “hereunder,” “hereof”
and other equivalent words shall refer to this Agreement as an entirety and not
solely to the particular portion of this Agreement in which any such word is
used; all definitions set forth herein shall be deemed applicable whether the
words defined are used herein in the singular or the plural; wherever used
herein, any pronoun or pronouns shall be deemed to include both the singular
and plural and to cover all genders; all references to days, months, quarters
or years are references to calendar days, calendar months, calendar quarters or
calendar years; and any reference to any federal, national, state, local or
foreign statute or law shall be deemed to also refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.

 

8

 

2.                                      GRANT
OF RIGHTS

 

2.1                               HAP Technology License in the Field of Use.

 

(a)                                  During
the Access Period.  Subject to the
terms and conditions of this Agreement, Genaissance hereby grants to Sciona the
exclusive, worldwide license (with the limited rights to sublicense as set
forth in Section 2.1(c)) under Genaissance Know-How and Genaissance Patent
Rights to use the HAP Database,
the HAP Markers and the DecoGen Informatics System solely in the
Field of Use during the Access Period. 
Without limiting the rights and remedies contained in
Section 10.4(b) or otherwise available, if at any time Sciona breaches a
provision of Section 5.4 and Sciona fails to cure such breach within
thirty (30) days after receipt of written notice from Genaissance (which notice
shall be served by Genaissance within thirty (30) days following Genaissance’s
actual knowledge of such breach), Genaissance may, at its sole option, convert
the exclusive license described in clause 2.1(a)(i) to a non-exclusive license
upon written notice to Sciona; unless Sciona’s breach is solely due to
Genaissance’s failure to perform, in all material respects, its obligations
under this Agreement or any agreement entered into by the Parties with respect
to Genetic Tests as described in Sections 2.4 and 2.5.

 

(b)                                 Following
the Access Period.  Subject to the
terms and conditions of this Agreement, Genaissance hereby grants to Sciona the
exclusive, worldwide license (with the limited rights to sublicense as set forth in
Section 2.1(c)) under Genaissance Know-How and Genaissance Patent
Rights to use HAP Markers solely
in the further development, manufacturing, marketing and selling of HAP Marker Genetic Tests solely for use by
Sciona, Affiliates of Sciona, and other Permitted Sciona Partners in the
development, manufacturing, marketing and selling of (i) Consumer Products and
(ii) Dual-Purpose Products to the extent that such products are (or, in the
case of products in development or manufacture, are intended to be) marketed
and sold by Sciona and Permitted Sciona Partners solely as Consumer Products; provided, that, in each case, such HAP Markers
may only be used in HAP Marker
Genetic Tests developed solely by Sciona (or one of its Affiliates) or jointly
by the Parties during the Access Period pursuant to Article 3 herein.

 

(c)                                  Sublicense
Rights.  Sciona shall have the right
to grant sublicenses of the rights granted pursuant to this Section 2.1
and Section 3.3 to its Affiliates. 
In addition, to the extent required for the development, manufacture,
marketing, selling or performance of HAP
Marker Genetic Tests as permitted under the license rights granted to Sciona
pursuant to this Section 2.1 and Section 3.3, and consistent with the
rights granted to Genaissance pursuant to Section 2.4, Sciona shall have
the right to grant Third Parties the right to use the HAP Markers to be detected
by such HAP Marker Genetic
Tests.  Except to the extent provided in
the prior sentences, with respect to use of certain HAP Markers, Sciona’s right
to sublicense use of the HAP
Database shall be limited to only such portions of the HAP Database as may be necessary to market
and sell  HAP Marker Genetic Tests, Consumer
Products and Dual Purpose Products as may be agreed to by the Parties from time
to time, which agreement by Genaissance may not be unreasonably delayed or
withheld.

 

9

 

2.2                               HAP Technology Rights Outside the Field of Use.  Subject to any pre-existing Third Party
rights, Genaissance hereby grants to Sciona a non-exclusive option during the
Access Period to obtain the non-exclusive license under the Genaissance Patent
Rights and Genaissance Know-How to use the HAP
Database, HAP Markers and the DecoGen Informatics System outside of the
Field of Use on such terms and conditions as the Parties may negotiate in good
faith.  For the avoidance of doubt, such
option shall not be applicable with respect to any pre-existing exclusive Third
Party rights or any exclusive rights granted by Genaissance to Third Parties at
any time during the Access Period.

 

2.3                               Reservation of Rights.  Notwithstanding the rights granted to Sciona under
this Article 2, Genaissance at all times reserves (a) its rights to the HAP Markers and other information
contained in the HAP Database,
(b) its right to use the HAP Database
and DecoGen Informatics System to
research, develop, have developed, use, manufacture, have manufactured, sell
and have sold products, including the right to grant exclusive and
non-exclusive licenses to Third Parties with respect to Genaissance Know-How or
Patent Rights related to such purposes outside the Field of Use, and (c) its
right to perform genotyping services for Third Parties engaged in the business
of discovering, developing, manufacturing, marketing or selling of Consumer
Products even if the polymorphisms to be genotyped pursuant to such services
are in the HAP Database, provided, however, that such polymorphisms
are specified solely by the Third Party without access to or use of the HAP Database.

 

2.4                               HAP Marker Genetic Tests.  Sciona hereby grants to Genaissance the
exclusive right during the Access Period (a) to develop genotyping assays for
the HAP Marker Genetic Tests, and
(b) subject to any pre-existing Sciona arrangement described on Schedule 2.4,
to process or perform HAP Marker
Genetic Tests sold by Sciona and Permitted Sciona Partners to customers in a
Genaissance Territory and returned by the consumer (or relevant Third Party)
for analysis.  The specific assay
quality and other performance requirements for such services shall be agreed to
by the Parties on a project-by-project basis. 
Sciona shall pay Genaissance fees for  such
assay development services and for such performance of HAP Marker Genetic Tests, which fees shall
be determined in accordance with Section 5.3.  If Genaissance fails to perform satisfactorily, in all material
respects, the services described in this Section 2.4 with respect to a
specific HAP Marker Genetic Test,
then Sciona (or any applicable Permitted Sciona Partner) shall be able to enter
into an agreement with a Third Party for the provision of such services with
respect to such HAP Marker
Genetic Test.

 

2.5                               Sciona Genetic Tests.

 

(a)                                  Rights
of First Negotiation.  As provided
in Section 2.5(b) below, Sciona shall grant to Genaissance and its
Affiliates rights of first negotiation during the Access Period: (i) to develop
genotyping assays for any and all Sciona Genetic Tests, and (ii) subject to any
pre-existing Sciona arrangement described on Schedule 2.4 (as amended
from time to time),  to perform
any and all Sciona Genetic Tests sold in a Genaissance Territory.  Sciona shall pay

 

10

 

Genaissance fees for such assay
development services and for such performance of the Sciona Genetic Tests,
which fees shall be determined in accordance with Section 5.3.

 

(b)                                 Notice.  If, at any time during the Access Period,
Sciona wishes to develop a new Sciona Genetic Test or materially change an
existing Sciona Genetic Test, or Sciona wishes to sell Sciona Genetic Tests in
a Genaissance Territory, then save to the extent that the development, change
or sale of such Sciona Genetic Test is subject to any pre-existing Sciona
arrangement described on Schedule 2.4 (as amended from time to time),
Sciona shall promptly notify Genaissance and grant Genaissance the exclusive
right to negotiate, in accordance with Section 2.5(c), the right to
develop genotyping assays for such Genetic Test, or perform such Genetic Test
in the Genaissance Territory, as the case may be.

 

(c)                                  Negotiating
Period. If Genaissance notifies Sciona within [**] days after receipt of
the notice described in Section 2.5(b) that Genaissance desires to
negotiate an arrangement regarding the relevant Sciona Genetic Test, then for
[**] days following Genaissance’s notice, Sciona will negotiate [**] with
Genaissance on a good faith basis to reach a definitive agreement with
Genaissance with respect to the Sciona Genetic Test.  If Genaissance fails to provide written notice to Sciona as
specified in this Section 2.5(c) or the Parties fail to reach agreement on
the principal terms of such arrangement (including compensation) within [**]  days after
Genaissance provides Sciona with written notice, Sciona will be permitted to
enter into negotiations and conclude an agreement with a Third Party, subject
to Genaissance having a [**] day right of refusal to substantially match any
agreement reached by Sciona and a Third Party.

 

2.6                               No Grant of Other Technology or Patent Rights and
Covenant Not to Sue.

 

(a) Except as
otherwise expressly provided in this Agreement, under no circumstances shall a
Party hereto or its Affiliates, as a result of this Agreement, obtain any
ownership interest in or other right to any technology, know-how, patents,
patent applications, data, products, or biological materials of the other Party
or its Affiliates, including items owned, Controlled or developed by the other
Party or its Affiliates, or transferred by the other Party or its Affiliates to
said Party, at any time pursuant to this Agreement.

 

(b) Genaissance
covenants and agrees (on its behalf and on behalf of its Affiliates) that, for
so long as Sciona is compliant with its royalty obligations pursuant to
Section 5.2, it shall not assert against Sciona or any Permitted Sciona
Partner any patent or other intellectual property right that would block Sciona
or Permitted Sciona Partners from exercising the license rights granted
pursuant to Sections 2.1 and 3.3.

 

2.7                               Third Party Patents. 
The Parties acknowledge that, in order to discover, develop
and/or commercialize one or more products, they may require licenses under
Third Party patent rights or other rights, and it is hereby agreed that it
shall be each Party’s responsibility to satisfy itself as to the need for such
licenses and, if necessary, to obtain such licenses at its sole cost and
expense.

 

11

 

2.8                               Installation and Use of the HAP Technology.

 

(a)                                  Installation,
Training, Support and Updates. 
Genaissance shall install, [**] the DecoGen
Informatics System and the HAP
Database on a Sciona database server at Sciona’s United States facility located
at Five Science Park, New Haven, CT (the “Installation Site”) at a time
mutually agreed upon by the Parties. 
Genaissance will provide, [**] of on-site training at the Installation
Site, installation documentation, and a user manual.  For the duration of the Access Period, phone or email support
will also be available to Sciona between the hours of 8:30 A.M. and 5:30 P.M.
(Eastern Standard Time) Mondays through Fridays, except when Genaissance is
officially closed (e.g., for holidays or weather emergencies).  Genaissance shall provide any updates to the
DecoGen Informatics System and
the HAP Database at the
Installation Site on a [**] basis.

 

(b)                                 Remote
Access.  Sciona may access the DecoGen Informatics System and the HAP Database at the Installation Site from
computers at other remote Sciona sites and Sciona shall have the right to
install copies of the DecoGen
Informatics System and the HAP
Database at different Sciona sites (or have all copies transferred to another
Sciona site).  Should Sciona request the
assistance of Genaissance in accessing or transferring the DecoGen Informatics System and the HAP Database, Sciona shall reimburse
Genaissance for [**] in providing such assistance.

 

(c)                                  Restrictions
on Use.  Sciona’s use of the DecoGen Informatics System and the HAP Database (each, a “Software Product”)
shall be subject to the following conditions:

 

(i)                                     To
the extent that a Software Product incorporates or requires the use of any
commercially available operating system software that is licensed by
Genaissance from a Third Party as described in Exhibit 1.7, as may be
supplemented from time to time, and Genaissance does not have the right to
freely sublicense such Third Party software, Sciona shall be responsible for
obtaining any necessary license and paying all fees and charges associated with
Sciona’s use of any such software;

 

(ii)                                  Sciona
agrees to use the Software Products in accordance with the terms and conditions
of this Agreement and not to use the Software Products for processing data for
Third Parties other than Permitted Sciona Partners, or to make the Software
Product(s) available to Third Parties except as permitted pursuant to
Section 2.1(c);

 

(iii)                               Sciona
agrees to make copies of the Software Products (or any part of the contents
thereof) only to the extent reasonably necessary for the exercise of its rights
hereunder, and that all such copies will be treated as Confidential Information
of Genaissance and further agrees to establish

 

12

 

reasonable
security measures to prevent copies of the Software Products from being made
available to unauthorized Third Parties;

 

(iv)                              Except
with the express written permission of Genaissance, Sciona agrees that it will
not attempt to reverse engineer, reverse compile or otherwise obtain access to
the source code of the Software Products; and

 

(v)                                 Sciona
may not adapt or modify the Software Products without the express written
permission of Genaissance.

 

3.                                      HAP MARKER ASSOCIATION DISCOVERY SERVICES.

 

3.1                               Collaboration.  During the Access Period, (a) Sciona and
its Affiliates shall collaborate with Genaissance and its Affiliates on an
exclusive basis to discover HAP
Marker Associations in the Field of Use (including Dual-Purpose Products) or to
sell (or provide to Third Parties) HAP
Marker Association discovery services in the Field of Use; and (b) Genaissance
and its Affiliates shall collaborate with Sciona and its Affiliates on an
exclusive basis to discover HAP
Marker Associations in the Field of Use or to sell (or provide to Third
Parties) HAP Marker Association
discovery services in the Field of Use; provided,
that if Sciona’s exclusive license described in clause 2.1(a)(i) is converted
to a non-exclusive license pursuant to Section 2.1(a), the obligation of
Genaissance and its Affiliates to collaborate on an exclusive basis shall be
converted to a non-exclusive obligation.

 

3.2                               HAP Marker Association
Collaboration Agreement.  The
further terms that the Parties may agree to from time to time in relation to
any collaboration to discover HAP Marker
Associations will be the subject of a separate agreement to be negotiated in
good faith by the Parties (a “HAP Marker Association
Collaboration Agreement”). 
The fee paid by Sciona for any particular service performed pursuant to
a HAP Marker
Association Collaboration Agreement shall [**].

 

3.3                               Intellectual Property Rights.  Save as otherwise expressly
agreed in the HAP Marker
Association Collaboration Agreement, (i) Genaissance shall own all HAP Marker Association Patent Rights and
related Know-How conceived or reduced to practice by either Party or its
Affiliates in the conduct of such collaboration and all other intellectual
property conceived or reduced to practice solely by employees, agents and
consultants of Genaissance or its Affiliates in the conduct of such
collaboration (collectively the “Genaissance
Collaboration IP”), subject to the exclusive right to Sciona to exploit
the Genaissance Collaboration IP in the Field of Use as provided in
Section 2.1; (ii) Sciona shall own all other intellectual property
conceived or reduced to practice solely by employees, agents or consultants of
Sciona or its Affiliates in the conduct of such collaboration (the “Sciona Collaboration IP”), subject to a
non-exclusive right to Genaissance and its Affiliates to exploit the Sciona
Collaboration IP outside of the Field of Use; and (iii) all other intellectual
property conceived or reduced to practice jointly by employees, agents or
consultants of Sciona or its Affiliates and employees, agents and

 

13

 

consultants of Genaissance or
its Affiliates in the conduct of such collaboration (the “Joint Collaboration IP”) shall be owned
jointly by Genaissance and Sciona; provided,
that Sciona shall have the exclusive right to exploit all such Joint
Collaboration IP in the Field of Use as provided in Section 2.1 and both
Parties shall have the non-exclusive right to exploit all such Joint
Collaboration IP outside of the Field of Use. 
With respect to the Joint Collaboration IP, subject to each Party’s
license rights, each of the Parties shall be free to use and exploit the Joint
Collaboration IP without any accounting or payment to, or consent of, the other
Party; provided, that either Party may only sell,
license, sub-license or otherwise transfer its rights in any such invention
without the consent of the other Party in a manner that is consistent with the
licenses granted pursuant to this Agreement and is otherwise consistent with
this Agreement.

 

4.                                      PRODUCT
AND BUSINESS DEVELOPMENT

 

4.1                               United
States Operations.  Unless otherwise
agreed to by the Parties, during the Access Period and subject to the consent
of Genaissance’s landlord, Genaissance shall grant Sciona and its Affiliates
the right to occupy and conduct their business from premises located at Five
Science Park, New Haven, Connecticut as provided in a sublease agreement, by
and between the Parties (the “Sublease”),
substantially in the form as Exhibit 4.1 hereto.  The Sublease shall provide, among other
things, that (a) Genaissance [**] Sciona [**] during the Transition Period, and
(b) following the Transition Period, for the remainder of the Access Period (or
if shorter, such period as Sciona is in actual occupation of such space
pursuant to the Sublease), Sciona [**] Genaissance [**]  Unless otherwise agreed by the Parties, the
Sublease shall [**].

 

4.2                               Business Development Support.  During the Transition Period,
Genaissance shall provide Sciona or its United States’ Affiliate with the
following business development and technical support services: (a) one full
time project manager (the identity of which manager shall be reasonably
acceptable to Sciona and Genaissance and who shall be an employee of
Genaissance); (b) [**] percent ([**]%) of the costs of a senior business
development manager (which manager shall initially be Melisse Shaban and
thereafter, such person shall be reasonably acceptable to Sciona and
Genaissance and who shall be a consultant hired for such purpose or otherwise
an employee of Genaissance), (c) access to senior Genaissance scientists,
including the [**] to support Sciona’s business development activities as
reasonably required by Sciona but not to exceed [**] percent ([**]%) of a
full-time equivalent unless otherwise agreed to by Genaissance, (d) [**]
percent ([**]%) of the Third Party search fee to identify and recruit a Chief
Executive Officer for Sciona, and (e) use of other facilities and members of
Genaissance’s [**] teams from time-to-time as reasonably required by Sciona to
carry out the operations contemplated by this Agreement.  Such
services shall be subject to such reasonable limitations as the Parties shall
negotiate in good faith upon the reasonable request of Genaissance.

 

14

 

5.                                      FINANCIAL
TERMS

 

5.1                               Shares
of Sciona Stock.  As consideration
for the rights granted to Sciona pursuant to Article 2, Genaissance will acquire
152,290 shares of Sciona stock (the “Shares”) pursuant to the terms of an
Investment Agreement, dated as of the Effective Date, by and between the
Parties in substantially the form of Exhibit 5.1 hereto (the “Investment Agreement”).  The number of Shares issued to Genaissance
is, as of the Effective Date, equal to thirty percent (30%) of the issued share
capital of Sciona on a fully diluted basis taking into account: (i) all
unissued shares in the capital of Sciona allocated to the employee option pool
of Sciona (whether or not options have been granted over such shares and in any
event being not less than 50,408 Ordinary Shares, (ii) 44,444 A Ordinary Shares
which may be issued in connection with the acquisition of Genostic Pharma
Limited by Sciona (whether or not such deferred consideration shares are
actually issued), and (iii) the Shares acquired by Genaissance pursuant to the
Investment Agreement.

 

5.2                               Royalties.  Sciona will pay Genaissance, on a quarterly basis, a royalty equal
to [**] percent ([**]%) of Net Revenues, less any Service Fees paid to
Genaissance by Sciona for the performance of HAP
Marker Genetic Tests in the Genaissance Territory during such
quarter (the “Royalty”).  The Royalties shall be payable on a
country-by-county and Test-by-Test basis for the longer of (a) ten (10) years
after the date of First Commercial Sale of such Genetic Test, or (b) the last
to expire of Genaissance’s Patent Rights covering any applicable HAP Marker(s) or HAP Marker Association.  The Royalties shall be due within [**] days
following the end of each quarter.  The Parties
acknowledge that Royalties may be payable after the expiration of the life of
all Valid Claims covering the applicable HAP
Marker(s) or HAP Marker
Association; however, the Parties have agreed that such Royalties are payable
on the sale of products that were developed only during the life of such Claims
and that no Royalty is payable on any products developed by the practice of
such Claims after their expiration. 
Because of the nature of the Valid Claims, the Parties believe that
their economic value can be measured only by reference to the sales of products
developed by the practice of such Valid Claims and such method is fair and
equitable, even though the sales may occur following expiration of the Valid
Claims.

 

5.3                               Service Fees.  In consideration for the development of genotyping assays for the
Genetic Tests and the performance of such Genetic Tests in a Genaissance
Territory (as described in Sections 2.4 and 2.5 above), Sciona will pay
Genaissance fees to be agreed to by the Parties on a project-by-project basis,
which fees shall [**], plus [**] percent ([**]%) (the “Service Fees”).

 

5.4                               Minimum Payments.  Sciona shall pay Genaissance the following aggregate minimum
levels of Royalties and Service Fees (the “Minimum
Annual Payment”) each
year during the Access Period:

 

	
  Calendar
  Year

  	
   

  	
  Minimum
  Annual Payment

  	
   

  
	
  2003

  	
   

  	
  $

  	
  150,000 

  	
   (incl. amounts paid by Sciona prior to the Effective Date)

  	
   

  
	
  2004

  	
   

  	
  $

  	
  500,000

  	
   

  	
   

  
	
  2005

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
   

  
	
  2006

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
   

  
	
  2007

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
   

  

 

15

 

No Minimum Annual Payment shall
be payable after the Access Period.  For
2003, the aggregate Royalties and Service Fees paid by Sciona to Genaissance
shall be calculated within twenty (20) days following the end of the year;
thereafter, the aggregate Royalties and Service Fees paid by Sciona to
Genaissance shall be calculated every three (3) months (i.e., within twenty
(20) days following the end of each calendar quarter).  In the event that the aggregate Royalties
and Services Fees are less than the Minimum Annual Payment (or twenty-five
percent (25%) of the Minimum Annual Payment for calculations made every three
(3) months), Sciona will pay Genaissance the Minimum Annual Payment (or
twenty-five percent (25%) thereof as applicable) less the aggregate Royalties
and Service Fees paid by Sciona.  Such
payment shall be made within thirty (30) days following the end of the year or
three month period, as applicable.

 

5.5                               Royalty Reports and Audits.

 

(a)                                  Royalty
Reports.  Within twenty (20) days
following each quarter, Sciona shall furnish to Genaissance a written quarterly
report showing: (i) the gross sales of HAP Marker Genetic Tests during the
reporting period and the calculation of Net Revenues from such gross sales
(including the deductions allowed under Section 1.29); (ii) all other
consideration received by Sciona and its Affiliates in connection with this
Agreement; (iii) the Service Fees paid to Genaissance during the reporting
period; (iv) the calculations of Net Sales, Net Revenues and Royalties for such
reporting period; (v) withholding taxes, if any, required by law to be deducted
in respect of such Royalties; (vi) the dates of the First Commercial Sales of HAP Marker Genetic Tests in any country
during the reporting period; and (vii) the exchange rates used in determining
the amount of United States dollars payable hereunder.  If no Royalty is due for any royalty period
hereunder, Sciona shall so report. 
Sciona and its Affiliates shall keep complete and accurate records in
sufficient detail to properly reflect Net Revenues and to enable the Royalties
payable hereunder to be determined.

 

(b)                                 Audits.  Upon the written request of Genaissance,
Sciona shall permit an independent certified public accountant selected by
Genaissance and acceptable to Sciona, which acceptance shall not be
unreasonably withheld, to have access during normal business hours to such
records of Sciona and its Affiliates as may be necessary to verify the accuracy
of the Royalties described herein.  Both
Parties shall use commercially reasonable efforts to schedule all such
verifications within forty-five (45) days after Genaissance makes its written
request.  In the event Genaissance’s
independent certified public accountant concludes that additional Royalties
were owed to Genaissance during such period, the additional Royalty shall be
paid by Sciona within thirty (30) days of the date Genaissance delivers to
Sciona such independent certified public accountant’s written report so
concluding, with interest thereon accruing under this Agreement.  In the event Genaissance’s independent
certified public accountant concludes that there was an overpayment of Royalties
to Genaissance during such period, the overpayment shall be repaid by
Genaissance within thirty (30) days of the date Genaissance received such

 

16

 

independent certified public
accountant’s written report so concluding. 
The fees charged by such independent certified public accountant shall
be paid by Genaissance unless the audit discloses an underpayment of the
Royalties payable by Sciona for the audited period of more than five percent
(5%), in which case Sciona shall pay the reasonable fees and expenses charged
by such representative.

 

5.6                               Withholding Taxes.  Sciona shall deduct withholding taxes from
Royalties and pay them to the proper tax authorities only to the extent
required by applicable laws.  Sciona
shall be responsible for all other taxes, duties and other governmental
charges, including value added taxes (VAT) and import duties, and shall not
deduct any other withholding or any other taxes, duties or governmental charges
from the payments under this Agreement, save to the extent required by
applicable laws.  Sciona shall maintain
official receipts of payment of any withholding taxes and forward these
receipts to Genaissance within thirty (30) days.  The Parties will exercise diligent efforts to ensure that any
withholding taxes imposed are reduced as far as possible under the provision of
any treaties applicable to any payment made hereunder.

 

5.7                               Late Payments.  Any payments that have not been paid thirty (30) days after the
date such payments are due under this Agreement shall entitle, but not
obligate, Genaissance to charge interest on the outstanding payment at a rate
equal to the prime rate as published in The Wall Street Journal, Eastern
Edition, on the first day of each calendar quarter in which such payments are
overdue, plus two (2) percentage points, calculated on the number of days such
payment is delinquent.

 

5.8                               Currency Exchange; Blocked Currency.  All payments shall be made in United States
dollars in immediately available funds. 
With respect to Net Revenues invoiced or received (as the case may be)
in a currency other than United States dollars, the Royalties shall be
expressed in the foreign currency of the entity making and then converted to
United States dollars by using the selling exchange rate for conversion of the
foreign currency into United States Dollars, quoted for current transactions
reported under the heading “Currency Trading – Exchange Rates” in The Wall
Street Journal in the United States for the last business day of
such reporting period to which such payment pertains.  If The Wall Street Journal ceases to be published, then the
rate of exchange to be used shall be that reported in such other business
publication of national circulation in the United States as the Parties
reasonably agree.  If at any time legal
restrictions in any country prevent the prompt remittance of any payments with
respect to sales or services in that country, Sciona shall have the right and
option to make such payments by depositing the amount thereof in local currency
to Genaissance’s account in a bank or depository in such country.

 

17

 

6.                                      INTELLECTUAL PROPERTY

 

6.1                               Ownership
of Intellectual Property.

 

(a)                                  Ownership
of the HAP Marker  Database and DecoGen Informatics System.  Subject to the rights and licenses granted under this Agreement, and subject to any
pre-existing rights of Third Parties, Genaissance shall have sole
ownership of (i) the HAP Database
and all information contained therein, and (ii) the DecoGen Informatics System.

 

(b)                                 Ownership
of HAP Markers.  Genaissance shall have sole ownership of all
right, title and interest in all HAP
Markers, and, subject to Section 6.2(c) all HAP Marker Patent Rights. 
Sciona and its Affiliates shall execute and deliver, without charge to
Genaissance (other than reimbursement of Sciona’s reasonable out of pocket
costs and expenses), assignment of all of its right, title and interest in and
to HAP Markers to Genaissance
subject to Sciona’s right to use the HAP
Markers pursuant to the terms of this Agreement.

 

(c)                                  Ownership
of HAP Marker Associations.  Genaissance shall have sole ownership of all
right, title and interest in all HAP
Marker Associations and, subject to Section 6.2(c), all HAP Marker Association Patent Rights,
including without limitation Genaissance Collaboration IP.  Sciona and its Affiliates shall disclose to
Genaissance any HAP Marker
Associations discovered solely by employees of Sciona or its Affiliates or
others acting on their behalf.  All
information relating to such HAP Marker Associations shall be deemed the Confidential Information
of Genaissance subject to the terms of Article 7, and Genaissance shall take all reasonable
steps to maintain such information in confidence consistent with those steps
taken to protect other information that Genaissance regards as proprietary or
confidential and that is of similar value or importance.  Sciona
shall execute and deliver, without charge to Genaissance (other than
reimbursement of Sciona’s reasonable out of pocket costs and expenses),
assignment of all of its right, title and interest in and to HAP Marker Associations to Genaissance
subject to Sciona’s right to use the HAP
Marker Associations pursuant to the terms of this Agreement.

 

(d)                                 Cooperation
of Employees.  Each Party represents
and agrees that all employees or others acting on its behalf or on behalf of
its Affiliates pursuant to this Agreement shall be obligated under a binding
written agreement to assign to such Party all inventions made or conceived by
such employee or other person.

 

6.2                               Filing, Prosecution and Maintenance of Patent Rights.

 

(a)                                  Filing, Prosecution and Maintenance. 
Subject to Section 6.2(c) below, Genaissance shall have sole
responsibility for and control over the filing, prosecution and maintenance of
the Genaissance Patent Rights, at Genaissance’s expense.

 

(b)                                 Cooperation.  Genaissance shall keep Sciona informed
regarding the status and prosecution of the HAP
Marker Patent Rights and the HAP
Marker Association Patent Rights licensed to Sciona.  Sciona shall be provided in a timely manner with copies of all
correspondence with the U.S. Patent & Trademark Office (or the applicable
foreign patent office) and with the opportunity to review and comment upon any
papers, responses or other filings

 

18

 

prepared by Genaissance for
submission to the said offices in advance of their filing and Genaissance shall
use reasonable efforts to incorporate any comments requested by Sciona.

 

(c)                                  Assignment.  In the event that (i) Genaissance determines
that it will not seek Patent Rights with respect to any potentially patentable HAP Marker or HAP Marker Association licensed to Sciona pursuant to
Section 2.1(a), or (ii) Genaissance files patents claiming HAP Markers
or HAP Marker
Associations in one or more countries but subsequently determines, on a
country-by-country basis, that it will not file, prosecute or maintain any
Genaissance Patent Right for which Sciona has license rights, then Genaissance
shall promptly notify Sciona and any other licensee of such Genaissance Patent
Rights of its decision.  Sciona and any
other licensee of such Genaissance Patent Rights shall, without charge to
Sciona (other than reimbursement of Genaissance’s reasonable out of pocket
costs and expenses) have the option to require Genaissance to assign absolutely
all right, title and interest in such Genaissance Patent Rights to Sciona and
any such other licensee.

 

6.3                               Enforcement of the Patent Rights.

 

(a)                                  Right to Enforce by Genaissance.  Each
Party agrees to provide written notice to the other Party promptly after
becoming aware of any infringement of any of the Genaissance Patent Rights
licensed to Sciona.  The Parties shall
discuss a strategy to prosecute any such infringement.  If the Parties do not agree on whether or
how to proceed with enforcement activity (i) within [**] days following the
notice of alleged infringement, or (ii) within [**] days before the time limit,
if any, set forth in the appropriate laws and regulations for filing of such
actions, whichever comes first, then Genaissance shall have the right, but not
the obligation, to take any action that it reasonably deems necessary to obtain
a discontinuance of such infringement or to bring suit against the Third Party
infringer.  Sciona and its Affiliates
will reasonably cooperate with Genaissance in any such suit or action and
Genaissance shall reimburse Sciona and its Affiliates for their reasonable out
of pocket expenses as provided in Section 6.3(c) below.  Genaissance shall keep Sciona reasonably
informed of all material developments in connection with any such claim, suit
or proceeding.

 

(b)                                 Right
to Enforce by Sciona.  In the event Genaissance does not take
any action to obtain a discontinuance of such infringement or bring suit
against the Third Party infringer within [**], then Sciona shall have the
right, but not the obligation, at its own expense to bring suit against the
Third Party infringer.  If required by
law, Genaissance shall permit any action under this Section 6.3 to be
brought in its name, including being joined as party-plaintiffs.  Sciona acknowledges that other Third Parties
may be licensees of the Genaissance Patent Rights and shall have rights
identical to Sciona to prosecute infringers. 
In any suit or action by Sciona in which Genaissance, as necessary, is
named a party-plaintiff as owner of the Genaissance Patent Rights, Genaissance
shall notify such other licensees, if any, of the existence of such legal
action and allow the other licensees to join as a plaintiff upon such
licensees’ request.  In addition, in the
event another licensee instigates an infringement suit or action, Sciona and
its Affiliates hereby consent to being joined as plaintiffs in such suit solely
for the purpose of procuring standing to

 

19

 

bring the action and at the
sole expense of the instigating licensee. 
To the extent Sciona desires to participate in any strategic decisions
affecting the prosecution of the action brought by another licensee, Sciona
acknowledges that it and the other licensee(s) will necessarily have to reach a
mutual agreement concerning strategy, litigation expenses and subject to
Section 6.3(c) below, sharing of any recovery or damages.  In no event shall Sciona or any other
licensee enter into any settlement which admits or concedes that any aspect of
the Genaissance Patent Rights is invalid or unenforceable without the prior
written consent of Genaissance, which consent shall not be unreasonably
withheld or delayed.  Genaissance will
reasonably cooperate with Sciona and any other licensee in any suit or action
and Sciona shall reimburse Genaissance and its Affiliates for their reasonable
out of pocket expenses as provided in Section 6.3(c) below.  In no event shall Genaissance incur any
liability or expense in connection with any action of Sciona or its Affiliates
or any joint action of Sciona or its Affiliates and any other licensee.

 

(c)                                  Procedures;
Expenses and Recoveries.  Subject to
any Third Party licensee’s rights as described in Section 6.3(b), the
Party initiating any infringement suit or action under this Section 6.3
shall have the sole and exclusive right to select counsel for any such suit or
action and shall pay all expenses of the suit, including attorneys’ fees and
court costs.  If such Party obtains any
damages, license fees, royalties or other compensation (including any amount
received in settlement of such litigation) in connection with such suit or
action, such amounts shall be allocated between the Parties as follows:

 

(i)                                     First,
the Party (and its Affiliates) initiating such suit or action shall be
reimbursed for all expenses of the suit or action, including attorneys’ fees
and disbursements, court costs and other litigation expenses not otherwise recovered;

 

(ii)                                  Second,
the other Party (and its Affiliates) shall be reimbursed for all expenses of
the suit or action, including attorneys’ fees and disbursements, court costs
and other litigation expenses not otherwise recovered; and

 

(iii)                               Third,
the balance shall be allocated between the Parties as follows: [**] percent
([**]%) to the Party initiating the suit or action and [**] percent ([**]%) to
the other Party.

 

6.4                               Patent Marking. 
Sciona agrees to comply (and to cause its Affiliates and
other Permitted Sciona Partners to comply) with any applicable patent marking
statutes in any country in which HAP Marker
Genetic Tests are sold hereunder.

 

7.                                      CONFIDENTIALITY

 

7.1                               Confidential
Information.  All Confidential
Information disclosed by a Party or its Affiliates (the “Disclosing Party”) to the
other Party or its Affiliates (the “Receiving Party”) during the term of this
Agreement shall not be used by the Receiving Party except in connection with
the activities contemplated by this Agreement or in order to further the
purposes of this

 

20

 

Agreement, shall be maintained
in confidence by the Receiving Party and shall not otherwise be disclosed by
the Receiving Party to any Third Party who is not a consultant of, or an
advisor to, or a Permitted Sciona Partner of, the Receiving Party, without the
prior written consent of the Disclosing Party, except to the extent that the
Confidential Information:  (a) was known
or used by the Receiving Party prior to its date of disclosure to the Receiving
Party, as demonstrated by legally admissible evidence available to the
Receiving Party; (b) either before or after the date of the disclosure to the
Receiving Party is lawfully disclosed to the Receiving Party by sources other
than the Disclosing Party rightfully in possession of the Confidential
Information and not bound by confidentiality obligations to the Disclosing
Party; (c) either before or after the date of the disclosure to the Receiving
Party becomes published or generally known to the public through no fault or
omission on the part of the Receiving Party; or (d) is independently developed
by or for the Receiving Party without reference to or reliance upon the
Confidential Information, as demonstrated by competent written records.  In addition, the provisions of this
Section 7.1 shall not preclude the Receiving Party from disclosing
Confidential Information to the extent such Confidential Information is
required to be disclosed by the Receiving Party to comply with applicable laws,
to defend or prosecute litigation or to comply with governmental regulations; provided that the Receiving Party provides
prior written notice of such disclosure to the Disclosing Party, provides the
Disclosing Party, to the extent possible, with sufficient time and opportunity
to obtain a protective order for such Confidential Information and takes
reasonable and lawful actions to avoid and/or minimize the degree of such
disclosure.  Specific information shall
not be deemed to be within any of the foregoing exclusions merely because it is
embraced by more general information falling within these exclusions.

 

7.2                               Employee
and Advisor Obligations. 
Genaissance and Sciona each agree that they shall provide Confidential
Information received from the other Party or its Affiliates only to their
respective employees, consultants, advisors, Permitted Sciona Partners who have
a need to know such Confidential Information to assist such Party or its
Affiliates in fulfilling its obligations under this Agreement, provided that such Affiliates, employees,
consultants, advisors, and Permitted Sciona Partners agree to treat such
information and materials as confidential and to use such information and
materials in accordance with the terms of this Agreement.

 

7.3                               Injunctive Relief.  The Parties hereto understand and agree that remedies
at law may be inadequate to protect against any breach of any of the provisions
of this Article 7 by either Party or their Affiliates, employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf.  Accordingly, each Party and its
Affiliates may be entitled to the granting of injunctive relief by a court of
competent jurisdiction against any action that constitutes any such breach of
this Article 7.

 

7.4                               Publication. 
Either Party may publish or present data and/or results
generated utilizing the HAP
Markers, provided, that in the
event that a Party or one of its Affiliates desire to publish or present any
Confidential Information of the other Party or its Affiliates, then the
proposed disclosure shall be subject to the prior review by the other Party
solely to determine (i)

 

21

 

whether the proposed disclosure
contains the Confidential Information of the other Party or its Affiliates or
(ii) whether the information contained in the proposed disclosure should be the
subject of a patent application prior to such disclosure.  Each Party shall provide the other Party
with the opportunity to review any proposed abstract, manuscript or
presentation which discloses Confidential Information of the other Party or its
Affiliates by delivering a copy thereof to the other Party no less than sixty
(60) days before its intended submission for publication or presentation.  The other Party shall have thirty (30) days
from its receipt of any such abstract, manuscript or presentation in which to
notify the Party in writing of any specific objections to the disclosure, based
on either the need to seek patent protection or concern regarding the specific
disclosure of the Confidential Information. 
In the event a Party objects to the disclosure, the other Party agrees
not to submit the publication or make the presentation containing the
objected-to information until the Party is given a reasonable additional period
of time (not to exceed an additional fifteen (15) days) to seek patent
protection for any material in the disclosure which it believes is patentable
or, in the case of Confidential Information, to allow the Party to delete any
Confidential Information of the other Party or its Affiliates from the proposed
disclosure.  Each Party agrees to delete
from the proposed disclosure any Confidential Information of the other Party or
its Affiliates upon request.

 

8.                                      REPRESENTATIONS AND WARRANTIES

 

8.1                               Representations, Warranties and Covenants of
Genaissance.  Genaissance
represents and warrants to and covenants with Sciona that:

 

(a)                                  Genaissance
is a corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Delaware;

 

(b)                                 Genaissance
has the legal right, authority and power to enter into this Agreement and to
grant the rights and licenses granted to Sciona in this Agreement, including
the license of Genaissance Patent Rights and Genaissance Know-How and the
rights to use the HAP Markers and DecoGen Informatics System, in
each case in accordance with the terms of this Agreement;

 

(c)                                  Genaissance
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement;

 

(d)                                 upon
the execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Genaissance enforceable in accordance with its
terms, except as enforceability may be limited in the future by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);

 

22

 

(e)                                  the
performance of its obligations under this Agreement will not conflict with its
charter documents or result in a breach of any agreements, contracts or other
arrangements to which it is a party;

 

(f)                                    all
of its employees, officers, consultants and advisors who are supporting the
performance of its obligations under this Agreement shall have executed or will
have executed agreements or have existing obligations under law requiring
assignment to Genaissance of all intellectual property made during the course
of and as the result of their association with Genaissance and obligating the
individual to maintain as confidential Genaissance’s Confidential Information
as well as confidential information of a Third Party that Genaissance may
receive, to the extent required to support Genaissance’s obligations hereunder;

 

(g)                                 Except
as otherwise disclosed in writing to Sciona prior to the Effective Date, Genaissance
is not engaged in, has not received any written notice of, and is not aware of
any written threat of, litigation, arbitration or other judicial proceeding
alleging that the Genaissance Patent Rights, Genaissance Know-How and/or DecoGen Informatics
System (or any part of any of the foregoing) infringes a Third Party’s
intellectual property rights;

 

(h)                                 Genaissance
is not aware of any existing, pending or threatened infringement of the
Genaissance Patent Rights, Genaissance Know-How or DecoGen Informatics System
by a Third Party;

 

(i)                                     to
the best of Genaissance’s actual knowledge, the existing rights of Genaissance
in the Genaissance Patent Rights, Genaissance Know-How and DecoGen Informatics System
as licensed to Sciona, its Affiliates and Permitted Sciona Partners pursuant to
this Agreement do not infringe any right, title or interest of any Third Party;

 

(j)                                     to
the best of Genaissance’s actual knowledge, the Genaissance Patent Rights,
Genaissance Know-How and DecoGen Informatics System are owned by
Genaissance free from all encumbrances and other Third Party interests (other
than existing Third Party license agreements entered into by Genaissance as set
forth in Exhibit 1.9);

 

(k)                                  Genaissance
and its Affiliates shall hold in confidence the identity of the consumers of
Consumer Products and Dual-Purpose Products and shall comply with applicable
laws, regulations and guidelines regarding confidentiality of patient records
and genetic information.  To the extent
applicable, Genaissance and its Affiliates shall comply with all applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and its related regulations (“HIPAA”), including any and all
requirements regarding the privacy and security of health information.  Genaissance and its Affiliates shall notify
Sciona orally and in writing within twenty-four (24) hours of its discovery of
any personal data in its possession that is improperly used, copied or removed
by anyone except to an authorized representative of Genaissance or Sciona or
their respective Affiliates, as the case may be.  Genaissance and its Affiliates shall cooperate with Sciona in
taking such steps as is deemed appropriate, to enjoin the

 

23

 

misuse, regain possession of
the data, and otherwise protect each Parties’ rights and the privacy of each
consumer of Genetic Tests;

 

(l)                                     to
the extent applicable to Genaissance and its Affiliates, Genaissance and its
Affiliates shall make commercially reasonable efforts to identify and comply
with applicable laws, regulations and guidelines in the use and performance of
the Genetic Tests hereunder, including laws, regulations and guidelines
concerning genetic testing and shipping of biological samples; and

 

(m)                               during
the Access Period, Genaissance will not enter into any agreements, contracts or
other arrangements that would be inconsistent with its obligations under this
Agreement.

 

8.2                               Representations, Warranties and Covenants of
Sciona.  Sciona represents
and warrants to and covenants with Genaissance that:

 

(a)                                  Sciona
is a corporation duly organized, validly existing and in corporate good
standing under the laws of England;

 

(b)                                 Sciona
has the legal right, authority and power to enter into this Agreement, and to
extend the rights and licenses granted to Genaissance in this Agreement;

 

(c)                                  Sciona
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement;

 

(d)                                 upon
the execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Sciona enforceable in accordance with its
terms, except as enforceability may be limited in the future by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);

 

(e)                                  the
performance of its obligations under this Agreement will not conflict with
Sciona’s charter documents or result in a breach of any agreements, contracts
or other arrangements to which it is a party;

 

(f)                                    all
of its employees, officers, consultants and advisors who are supporting the
performance of its obligations under this Agreement shall have executed or will
have executed agreements or have existing obligations under law requiring
assignment to Sciona of all intellectual property made during the course of and
as the result of their association with Sciona and obligating the individual to
maintain as confidential Sciona’s Confidential Information as well as
confidential information of a Third Party that Sciona may receive, to the
extent required to support Sciona’s obligations hereunder;

 

24

 

(g)                                 Sciona
and its Affiliates shall hold in confidence the identity of the consumers of
Consumer Products and Dual-Purpose Products and shall make commercially
reasonable efforts to identify and comply with (i) applicable laws, regulations
and guidelines regarding confidentiality of patient records and genetic
information, and (ii) all applicable requirements of HIPAA, including any and
all requirements regarding the privacy and security of health information.  Sciona and its Affiliates shall notify
Genaissance orally and in writing within twenty-four (24) hours of its
discovery of any personal data in its possession that is improperly used,
copied or removed by anyone except to an authorized representative of
Genaissance or Sciona or their respective Affiliates, as the case may be.  Sciona and its Affiliates shall cooperate
with Genaissance in taking such steps as is deemed appropriate, to enjoin the
misuse, regain possession of the data, and otherwise protect each Parties’
rights and the privacy of each consumer of Genetic Tests;

 

(h)                                 to
the extent applicable to Sciona and its Affiliates, Sciona and its Affiliates
shall make commercially reasonable efforts to identify and comply with all
applicable laws, regulations and guidelines in the manufacture, distribution,
marketing, sale, use, and performance of any Genetic Test, including laws,
regulations and guidelines concerning the proper acquisition of any diagnostic
or laboratory samples, informed consent requirements, genetic testing and
shipping of biological samples; and

 

(i)                                     during
the Access Period, Sciona will not enter into any agreements, contracts or
other arrangements that would be inconsistent with its obligations under this
Agreement.

 

8.3                               Limited Warranties relating to Performance of
the DecoGen Informatics
System.  Genaissance warrants
that the DecoGen Informatics
System delivered to Sciona represents the latest version of the DecoGen Informatics System that is
available to licensees of the HAP
Database.  Genaissance does not
represent that the operations of the DecoGen
Informatics System will be trouble-free or that the DecoGen Informatics System contains no errors.  Genaissance’s only obligation to Sciona with
respect to the DecoGen
Informatics System will be to use reasonable efforts consistent with its normal
business practices to correct any errors.

 

8.4                               WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH
RESPECT TO THE HAP DATABASE, HAP MARKERS, DECOGEN INFORMATICS SYSTEM,
GENETIC TESTS, PATENT RIGHTS, GOODS, SERVICES OR OTHER SUBJECT MATTER OF THIS
AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE
FOREGOING.  IN ADDITION, SCIONA
ACKNOWLEDGES THAT THE HAP
DATABASE AND DECOGEN INFORMATICS SYSTEM MAY CONTAIN INFORMATION THE ACQUISITION
OR USE OF WHICH IS COVERED BY ONE OR MORE VALID PATENTS OF THIRD PARTIES.  GENAISSANCE MAKES NO

 

25

 

REPRESENTATION
OR WARRANTIES WITH RESPECT TO SCIONA’S USE OF THE INFORMATION TO BE PROVIDED TO
IT HEREUNDER.  GENAISSANCE MAKES NO
WARRANTY THAT THE HAP DATABASE
DOES NOT CONTAIN ERRORS OR THAT THE HAP
DATABASE CONTAINS ALL HAP MARKERS
THAT ARE ACTUALLY PRESENT BUT NOT DETECTED IN THE INDEX REPOSITORY.

 

8.5                               Interpretation

 

(a)                                  Awareness.  In this Section 8, the term “so far as
[a Party] is aware” or any similar or equivalent word shall be construed to
mean those matters within the actual knowledge of the senior management of the
relevant Party and those matters which would be apparent to such senior
managers upon carrying out commercially reasonable inquiries into such matters.

 

(b)                                 Actual knowledge.  In this Section 8, the term “actual
knowledge” shall be construed to mean those matters that are within the actual
knowledge of the senior management of the relevant Party without the
performance of any inquiry.

 

9.                                      INDEMNITY

 

9.1                               Sciona Indemnity Obligations.  Sciona agrees to defend,
indemnify and hold Genaissance and its Affiliates and their respective
directors, officers, employees and agents harmless from all claims, losses,
damages, fees or expenses (including attorneys’ fees) relating to or arising as
a result of: (a) any actual or asserted violations of any applicable law or
regulation by Sciona or its Permitted Sciona Partners, including any allegation
or determination that any Genetic Tests (or any products or services
distributed in connection therewith) manufactured, marketed, distributed, sold
or performed hereunder are not in compliance with any applicable law or
regulation; (b) any unauthorized disclosure by Sciona or the Permitted Sciona
Partners of Third Party confidential information obtained by Sciona or the
Permitted Sciona Partners; (c) any claims for bodily injury, death or property
damage, or infringement of intellectual property rights attributable to the
manufacture, distribution, marketing, sale, use or performance of any Genetic
Tests (or any products or services distributed in connection therewith),
provided that indemnification for infringement of intellectual property rights
shall not include the products, materials (other than genes, polymorphisms or
other components of Genetic Tests that are specified by Sciona), tools,
methodologies and technologies (x) provided by, or (y) selected and used by,
Genaissance in performing any Collaboration Agreement or in providing services
pursuant to any agreement entered into pursuant to Sections 2.4 and 2.5; (d)
any product recall ordered by a governmental agency or required by a confirmed
failure of any product sold or performed in connection with this Agreement as
reasonably determined by the Parties hereto; (e) any claims by employees or
contractors of Sciona or its Affiliates for bodily injury, death or property
damage arising out of the performance by Sciona or its Permitted Sciona
Partners of any activities under this Agreement; (f) claims brought by Third
Parties against Genaissance and its Affiliates in respect of the negligence,
recklessness or intentional misconduct of Sciona or

 

26

 

Permitted Sciona Partners in
connection with activities under this Agreement; or (g) a breach of any of the
representations, warranties or covenants made hereunder by Sciona.

 

9.2                               Genaissance Indemnity
Obligations. Genaissance
agrees to defend, indemnify and hold Sciona and its Affiliates and their
respective directors, officers, employees and agents harmless from all claims,
losses, damages, fees or expenses (including attorneys’ fees) relating to or
arising as a result of: (a) any unauthorized disclosure by Genaissance or its
Affiliates of Third Party confidential information obtained by Genaissance or
its Affiliates; (b) any claims by employees or contractors of Genaissance or
its Affiliates for bodily injury, death or property damage arising out of the
performance by Genaissance or its Affiliates of any activities under this
Agreement; (c) claims brought by Third Parties against Sciona, its Affiliates
or Permitted Sciona Partners in respect of the negligence, recklessness or
intentional misconduct of Genaissance in connection with its activities under
this Agreement, including the performance by Genaissance or its Affiliates of
Genetic Tests pursuant to Sections 2.4 and 2.5; (d) any claims brought by Third
Parties against Sciona or its Affiliates for bodily injury, death, property
damage or infringement of intellectual property rights by the products,
materials (other than genes, polymorphisms and other components of Genetic
Tests that are specified by Sciona), tools, methodologies and technologies (x)
provided by, or (y) selected and used by, Genaissance in performing any
Collaboration Agreement or in providing services pursuant to any agreement
entered into pursuant to Sections 2.4 and 2.5; or (e) a breach of any of the
representations, warranties or covenants made hereunder by Genaissance.

 

9.3                               Limitation
on Indemnity Obligations.  Neither
Party nor its respective Affiliates, employees or agents shall be entitled to
the indemnities set forth in Section 9.1 or Section 9.2 where the
claim, loss, damage or expense for which indemnification is sought was caused
by a grossly negligent or intentional act or omission by the other Party, its
Affiliates, directors, officers, employees or authorized agents.

 

9.4                               Procedure.  If the Party being indemnified hereunder
or its respective employees or agents (the “Indemnitee”)
intends to claim indemnification under this Article 9, the Indemnitee
shall promptly notify the other Party (the “Indemnitor”)
of any loss, claim, damage, liability or action in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall
assume the defense thereof with counsel mutually satisfactory to the Parties; provided, however, that an Indemnitee
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the Indemnitor, if representation of such Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other Party represented by
such counsel in such proceedings.  The
indemnity agreement in this Article 9 shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement
is effected without the consent of the Indemnitor, which consent shall not be
withheld or delayed unreasonably.  The failure to
deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Article 9, but the omission so to deliver notice to the Indemnitor
will not

 

27

 

relieve it of any liability that it may have
to any Indemnitee otherwise than under this Article 9.  The Indemnitee under this Article 9, its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification.  The Indemnitor
shall additionally be liable to pay the reasonable legal costs and attorneys’
fees incurred by the Indemnitee in establishing its claim for indemnity if such
claim is upheld by a court of competent jurisdiction as successful or if such
claim is settled or as otherwise agreed by the Parties.

 

9.5                               Insurance.  Each Party shall maintain insurance,
including product liability insurance, with respect to its activities under
this Agreement.  Such insurance shall be
in such amounts and subject to such deductibles as the Parties may agree based
upon standards prevailing in the industry at the time; provided, that, as of the First Commercial
Sale of a Genetic Test, Sciona shall maintain a minimum of One Million Dollars
($1,000,000) in product liability insurance until the earlier of (a) closing of
the first financing round of Sciona after the Effective Date or (b)
June 30, 2004, by which date Sciona shall have obtained and shall
thereafter maintain an amount of product liability insurance that is equal to
Sciona’s projected Net Sales for each twelve (12) month period covered by the
insurance policy, provided that
Sciona shall not be required to maintain more than Ten Million Dollars
($10,000,000) in product liability insurance.

 

10.                               TERM AND TERMINATION

 

10.1                        Access Period.

 

(a)                                  Unless this Agreement is sooner terminated in
accordance with the provisions of this Article 10, the “Access
Period” shall mean the period that commences on the Effective Date
and expires five (5) years from the Effective Date, subject to one (1) two-year
extension on terms mutually agreeable to Sciona and Genaissance,
including [**], which [**] shall be [**]. 
The Parties shall use reasonable endeavors to agree on the full and
final terms of such extension.

 

(b)                                 Upon
the expiration of the Access Period (or if earlier, termination of this
Agreement), Sciona shall return to Genaissance or destroy all copies (including
electronic copies) of the HAP Database
and DecoGen Informatics System,
including the deletion of all such copies from all computers on which such
database or software has been installed or transmitted.  Notwithstanding termination or expiration of
the Access Period, any license granted to Sciona pursuant to
Section 2.1(b) shall survive the termination or expiration of the Access
Period.

 

10.2                        Term of Agreement.  This Agreement shall become effective as of the
Effective Date and except as otherwise provided in Sections 10.2 or 10.4, shall
remain in effect until the later of: 
(i) the expiration of all obligations to make payments set forth in
Articles 4 and 5, and (ii) the expiration of all licenses and other rights
granted in Article 2.

 

10.3                        Termination by Either Party.  This Agreement may be terminated immediately upon written notice to the other Party upon the
occurrence of any of the following events:

 

28

 

(a)                                  the
other Party commits a material breach of this Agreement (other than: (i) in
respect of a failure by Sciona to make a payment pursuant to Section 5.2
or Section 5.3, in which event the right of Genaissance to terminate this
Agreement is as set forth in Section 10.4(a); and (ii) in respect of a
failure by Sciona to make any Minimum Annual Payment, in which event the right
of Genaissance to terminate this Agreement is as set forth in
Section 10.4(b)); and the breaching Party fails to remedy such breach
within thirty (30) days after written notice thereof by the non-breaching
Party; or

 

(b)                                 the
other Party ceases to do business, or otherwise terminates its business
operations; or

 

(c)                                  the
other Party enters into and/or itself applies for, and/or calls meetings of
members and/or creditors with a view to, one or more of a moratorium,
administration, liquidation (of any kind, including provisional), or
composition and/or arrangement (whether under deed or otherwise) with
creditors, and/or have any of its property subjected to one or more of
appointment of a receiver (of any kind), enforcement of security, distress, or execution
of a judgment (in each case to include similar events under the laws of the
applicable country); or

 

(d)                                 the
other Party commits fraud or any unlawful act in connection with or affecting
this Agreement.

 

10.4                        Termination by Genaissance.  In addition to Genaissance’s rights under
Section 10.2, Genaissance may terminate this Agreement immediately upon
written notice to Sciona upon the occurrence of any of the following events:

 

(a)                                  after
sixty (60) days’ written notice from Genaissance of termination pursuant to
this section 10.4(a), Sciona fails to make any undisputed payment due or
owing pursuant to Section 5.2 or Section 5.3; or

 

(b)                                 Sciona
fails to pay Genaissance at least fifty percent (50%) of the Minimum Annual
Payments in each of two consecutive years and Genaissance is in compliance, in
all material respects, with the terms and conditions of Section 2.1(a), provided, that if Genaissance exercises its rights to terminate pursuant
to this clause 10.4(b), Genaissance shall offer to sell its Shares to the other
shareholders of Sciona for £1 in aggregate for all such Shares pursuant to the
terms of the articles of association of Sciona; or

 

(c)                                  after
thirty (30) days’ written notice from Genaissance, Sciona fails to remedy any
material breach of the Investment Agreement (save where the breach concerned is
a breach of the warranty provisions set out in clause 7 and/or schedule 1,
of the Investment Agreement, in which event Genaissance shall have no right to
terminate this Agreement); or

 

(d)                                 Sciona
and its Affiliates fail to obtain or achieve cumulative combined sales revenues
and Third Party financing (equity or debt) of at least two million U.S. dollars
($2,000,000) within eighteen (18) months of the Effective Date; provided, that if Genaissance

 

29

 

exercises its rights to
terminate pursuant to this clause 10.4(d), Genaissance shall offer to sell its
Shares to the other shareholders of Sciona for £1 in aggregate for all such
Shares pursuant to the terms of the articles of association of Sciona.  For the avoidance of doubt, the
amount of financing or sales revenues obtained by Sciona before the Effective
Date shall not be applicable to this Section 10.4(d).

 

10.5                        Effect of
Termination; Survival.

 

(a)                                  Termination
of this
Agreement for any reason or expiration of this Agreement shall be
without prejudice to any rights or obligations that shall have accrued to the
benefit of either Party prior to such termination or expiration, including
Sciona’s obligation to pay Royalties, Service Fees and Minimum Annual
Payments.  Such termination or
expiration shall not relieve either Party from obligations which are expressly
indicated to survive termination or expiration of this Agreement.  The remedies set forth in this
Article 10 are not exclusive and are without prejudice to any other rights
conferred on the non-breaching Party by this Agreement and any other remedies available
to it by law or in equity.

 

(b)                                 The
following sections of this Agreement shall survive any termination or
expiration of this Agreement: Section 3.3,
5.5 (in respect of matters, facts and circumstances arising only during the
term of this Agreement), 5.7, 5.8, 6.1 and 10.5 and Articles 7, 9 (in respect
of matters, facts and circumstances arising only during the term of this
Agreement) and 11.

 

11.                               MISCELLANEOUS

 

11.1                        Force Majeure.  Neither Party shall be held liable or responsible to
the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, including fire, floods,
embargoes, war, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or the
other Party; provided, however,
that the Party so affected shall use reasonable commercial efforts to avoid or
remove such causes of nonperformance, and shall continue performance hereunder
with reasonable dispatch whenever such causes are removed.  Either Party shall provide the other Party with
prompt written notice of any delay or failure to perform that occurs by reason
of force majeure.  The Parties shall
mutually seek a resolution of the delay or the failure to perform as noted
above.

 

11.2                        Consequential Damages.  Neither Party shall be liable under this
Agreement for special, incidental or consequential damages or for loss of
profit or lost revenue, even if advised of the possibility of such
damages.  NEITHER PARTY HERETO WILL BE
LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT
OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST
PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF
ANY NOTICE OF SUCH DAMAGES, EXCEPT AS A RESULT OF A MATERIAL BREACH OF THE
CONFIDENTIALITY AND USE

 

30

 

OBLIGATIONS IN
ARTICLE 7.  NOTHING IN THIS
SECTION 11.2 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS
OR OBLIGATIONS OF EITHER PARTY.

 

11.3                        Assignment.  Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by either Party without the prior
written consent of the other Party, such consent not to be unreasonably
withheld.  Any purported assignment or
transfer in violation of the preceding sentence shall be void.  Any permitted assignee or transferee shall
assume all obligations of its assignor under this Agreement.  No assignment or transfer shall relieve
either Party of responsibility for the performance of any accrued obligation
that such Party then has hereunder.

 

11.4                        Severability.  In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of the relevant jurisdiction, the validity
of the remaining provisions shall not be affected and the rights and
obligations of the Parties shall be construed and enforced as if the Agreement
did not contain the particular provisions held to be unenforceable, provided
that the Parties shall negotiate in good faith a modification of this Agreement
with a view to revising this Agreement in a manner which reflects, as closely
as is reasonably practicable, the commercial terms of this Agreement as
originally signed.

 

11.5                        Notices. 
Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage prepaid
(where applicable), addressed to such other Party at its address indicated
below, or to such other address as the addressee shall have last furnished in
writing to the addressor and shall be effective upon receipt by the addressee.

 

	
  If to
  Genaissance:

  	
   

  	
  Genaissance
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  Five Science
  Park

  
	
   

  	
   

  	
  New Haven,
  Connecticut  06511

  
	
   

  	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
   

  	
  Telephone:
  (203) 773-1450

  
	
   

  	
   

  	
  Facsimile:
  (203) 562-9377

  
	
   

  	
   

  	
   

  
	
  If to
  Sciona:

  	
   

  	
  Sciona
  Limited

  
	
   

  	
   

  	
  25
  Broadmarsh Business and Innovation Centre

  
	
   

  	
   

  	
  Harts Farm
  Way

  
	
   

  	
   

  	
  Havant
  Hampshire

  
	
   

  	
   

  	
  P09 HIS

  
	
   

  	
   

  	
  United
  Kingdom

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
  Facsimile:

  

 

31

 

11.6                        Applicable Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
giving effect to the choice of laws provisions thereof.

 

11.7                        Dispute Resolution.

 

(a)                                  The
Parties hereby agree that they will attempt in good faith to resolve any
controversy or claim arising out of or relating to this Agreement promptly by
negotiations.  If a controversy or claim
should arise hereunder, the matter shall be referred to an individual
designated by the Chief Executive Officer (or the equivalent position) of
Genaissance and an individual designated by the Chief Executive Officer (or the
equivalent position) of Sciona (the “Representatives”).  If the matter has not been resolved within
[**] days of the first meeting of the Representatives of the Parties (which
period may be extended by mutual agreement) concerning such matter, subject to
rights to injunctive relief and specific performance, and unless otherwise
specifically provided for herein, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, will be settled as set forth
in Section 11.7(b).

 

(b)                                 All
disputes arising in connection with this Agreement shall be finally settled by
binding arbitration conducted in New York, New York under the Commercial
Arbitration Rules of the American Arbitration Association by a single
arbitrator appointed in accordance with said Rules.  Notwithstanding the above, either Party has the right to bring
suit in a court of competent jurisdiction against the other Party for (i) any
breach of such other Party’s duties of confidentiality pursuant to
Article 7 of this Agreement and (ii) any infringement of its own
proprietary rights by the other Party. 
Judgment upon the arbitrator’s award may be entered in any court of
competent jurisdiction.  The award of
the arbitrator may include compensatory damages against either Party, but under
no circumstances will the arbitrator be authorized to, nor shall he, award
punitive damages or multiple damages against either Party.  The Parties agree not to institute any
litigation or proceedings against each other in connection with this Agreement
except as provided in this Section 11.7.

 

11.8                        Publicity. 
Except as required by law, Genaissance and Sciona each agree
not to disclose the existence or any terms or conditions of this Agreement to
any Third Party without consulting the other Party prior to such
disclosure.  Notwithstanding the
foregoing, Genaissance and Sciona agree that a press release will be issued
promptly after execution of this Agreement in the form to be attached as Exhibit
11.8 and information contained in such press release can be used as a
routine reference in the usual course of business to describe the terms of this
transaction, and Genaissance and Sciona may disclose such information without
consulting the other Party.  The Parties
may thereafter from time to time mutually agree on revisions to material to be
used as a routine reference, which revisions shall be submitted by one Party
for the review

 

32

 

and approval of the other Party
at least ten (10) business days prior to the anticipated use or disclosure of
the revised material, such approval not to be unreasonably withheld.

 

11.9                        Headings.  The captions to the several Articles and
Sections hereof are not a part of this Agreement, but are merely guides or
labels to assist in locating and reading the several Articles and Sections
hereof.

 

11.10                 No Partnership.  It is expressly agreed that the relationship between
Genaissance and Sciona shall not constitute a partnership, joint venture or
agency.  Neither Genaissance nor Sciona
nor their Affiliates shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other Party to do so.

 

11.11                 Exports.  The Parties acknowledge that the export of technical data,
materials or products is subject to the exporting Party receiving any necessary
export licenses and that the Parties cannot be responsible for any delays
attributable to export controls which are beyond the reasonable control of
either Party.  Genaissance and Sciona
agree not to export or re-export, directly or indirectly, any information,
technical data, the direct product of such data, samples or equipment received
or generated under this Agreement in violation of any applicable export control
laws or governmental regulations. 
Genaissance and Sciona agree to obtain similar covenants from their
Affiliates, licensees, sublicensees and contractors with respect to the subject
matter of this Section.

 

11.12                 Waiver.  The waiver by either Party of a breach or default of any
provision of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of either Party to exercise or avail itself
of any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Party.

 

11.13                 Entire Agreement.  This Agreement and the Investment Agreement constitute
the entire agreement between the Parties with respect to its subject matter and
supersedes all previous written or oral representations, agreements and
understandings between the Parties, including the confidentiality agreement
between the Parties dated February 1, 2002.  This Agreement may be amended, or any term hereof modified, only
by a written instrument duly executed by both Parties hereto.

 

11.14                 Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

[THE NEXT PAGE IS THE SIGNATURE PAGE]

 

33

 

IN WITNESS
WHEREOF, the Parties have executed this Agreement as of the date of this
Agreement.

 

 

	
  GENAISSANCE
  PHARMACEUTICALS, INC.

  	
  SCIONA LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ Kevin Rakin

  	
   

  	
  By

  	
  /s/ Christopher J. Martin

  	
   

  
	
   

  	
   

  
	
  Title

  	
  President & Chief Executive Officer

  	
   

  	
  Title

  	
  Chief Executive Officer

  	
   

  
										

 

34

 

Exhibit 1.7

 

1.                                       Description of the DecoGen® Informatics System

 

DecoGen® Browser Software

 

•                  Description:  The DecoGen
Browser software allows a user to browse genes, polymorphism data and clinical
data; perform association analysis; calculate linkage disequilibrium; view
Haplotype phylogenies; create and save projects based on clinical cohorts.  The browser only operates on genes for which
haplotypes have been built.  Statistical
analyses are run using SAS.  The gene
structure, polymorphisms and haplotypes must be in the HAP Database for each gene to be
viewed.  DecoGen® DataManager software and gene structures
are required to load customer-created polymorphisms or haplotypes.  Additional gene structures may be added to
the HAP Database via purchase of
additional software or custom services from Genaissance.

 

•                  Sciona
provides:  Hardware for database
server, file server and desktop clients; appropriate Oracle license, database
administrator support for (DBA) for installation and data updates; a server and
license for SAS.

 

DecoGen® DataManager Software

 

•                  Description:  The DecoGen
DataManager software allows a user to browse genes and polymorphism data, in
more detail than provided by the DecoGen
Browser software, but does not include any clinical analysis tools.  DecoGen
DataManager software requires that the gene structure, polymorphisms and
genotypes be in the HAP Database
for information on each gene to be viewed, but does not require the presence of
haplotypes.  DecoGen DataManager software provides full access to the HAP Database Schema and has tools for
importing a variety of data including polymorphisms, genotypes and haplotypes
for any gene whose structure is in the HAP
Database.  Polymorphism and other types
of data in the HAP Database may
also be exported using DecoGen
DataManager.  This software does not
include any clinical analysis tools. 
Additional gene structures may be added to the HAP Database via purchase of additional
software or custom services from Genaissance.

 

•                  Sciona
provides: Hardware for database server, file server and desktop clients;
appropriate Oracle license, database administrator support for (DBA) for
installation and data updates.

 

2.               Technical
Specifications for the HAP
Database and DecoGen Informatics
System

 

2.1                               HAP Database

 

Installation and Operating Requirements

 

The HAPTM Database
is an Oracle database which requires the following minimum configuration:

 

 

	
  2.1.1

  	
   

  	
  Database
  Configuration

  	
   

  
	
   

  	
   

  	
  Software:           Oracle
  [**] Edition.

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1.2

  	
   

  	
  Hardware
  Requirements

  
	
   

  	
   

  	
  Server:

  	
  [**]

  
	
   

  	
   

  	
  Memory:

  	
  [**] GB,
  depending on number of users.

  
	
   

  	
   

  	
  SWAP Space:

  	
  [**].

  
	
   

  	
   

  	
  CD_ROM
  Device:

  	
  [**]

  
	
   

  	
   

  	
  CPU:

  	
  [**]

  
	
   

  	
   

  	
  Tape device:

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1.3

  	
   

  	
  Disk Space
  Requirements:

  
	
   

  	
   

  	
  Oracle
  Software:

  	
  ~ [**] GB
  ([**] Edition)

  
	
   

  	
   

  	
  Database:

  	
  [**].

  
	
   

  	
   

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1.4

  	
   

  	
  Operating
  System Software Requirements

  
	
   

  	
   

  	
  Operating
  System:

  	
  [**].

  
	
   

  	
   

  	
   

  	
  [**].

  
	
   

  	
   

  	
   

  	
  [**].

  

 

2.2                               The DecoGen Informatics
System

 

Cross-platform
application, built on top of the HAP Database.  The client application resides on a shared drive and is invoked
by running a batch initialization file from the client machine.

 

Installation and Operating Requirements 

 

2.2.1                        DecoGen® Client

 

Minimum
recommended client configuration:

 

	
  •

  	
   

  	
  CPU: [**];

  
	
  •

  	
   

  	
  Memory:
  [**];

  
	
  •

  	
   

  	
  Hard disk:
  [**];

  
	
  •

  	
   

  	
  Operating
  System: Window [**].

  
	
  •

  	
   

  	
  Java Runtime version: [**]

  

 

2.2.2                        SAS
Server

 

	
  •

  	
   

  	
  SAS Software
  8.2 release on NT or Windows 2000 server (Service Pack 2)

  
	
  •

  	
   

  	
  [**] memory

  
	
  •

  	
   

  	
  [**] Drives
  for OS and Data

  

 

2

 

	
  •

  	
   

  	
  [**]

  
	
  •

  	
   

  	
  CD-Rom

  
	
  •

  	
   

  	
  SAS Software
  8.2 required components must include SAS/BASE, SAS/STAT, SAS/CONNECT,
  SAS/IntrNet, and SAS/Graph.

  

 

3

 

Exhibit 1.9

 

Third Party Licenses to HAP
Technology

 

Strength License Agreement with
AstraZeneca UK Limited, dated September 5, 2003

 

Technology and Database License
Agreement with Millennium Pharmaceuticals, Inc., dated January 7, 2003

 

Research Collaboration and
License Agreement with Bayer AG and Bayer Healthcare LLC, dated
January 15, 2003

 

License Agreement with Wayne
State University, dated March 11, 2003

 

Agreement with Pharmacia &
Upjohn Company, dated December 13, 2002

 

MednosticsTM Collaboration and
License Agreement with Biogen, Inc., dated January 31, 2002

 

HAP Focus Trial License
Agreement with Biogen, Inc., dated December 21, 2001

 

HAP Focus Trial License
Agreement with AstraZeneca, dated November 29, 2001

 

Agreement with Pfizer Inc.,
dated August 31, 2001, as amended May 16, 2002 and February 6, 2003

 

HAP2000 Agreement with Janssen Research
Foundation, dated November 22, 2000, as amended November 22, 2002

 

Collaboration Agreement with
Gene Logic, Inc., dated June 28, 2000

 

 

Exhibit 1.17

 

The HAPTM
Database shall consist of Genaissance’s proprietary information and publicly
available information.  The Genes
selected for HAPTM Marker discovery include the vast array of drug targets
such as receptors, signal transduction proteins, metabolizing enzymes and
immunomodulators.  In addition,
Genaissance currently adds annotations from publicly available databases, such
as HGVBase and dbSNP.  An individual
investigator can quickly relate Genaissance’s proprietary information to
existing public domain data and place the information in a biological context
that is useful for discovery and pharmacogenetic applications.

 

The current procedure
for discovering HAPM Markers for a Gene is to sequence, from the
Index Repository, ninety-three (93) individual samples of human genomic DNA,
one sample of chimpanzee genomic DNA and one sample of gorilla genomic
DNA.  The genomic regions of each Gene,
which are targeted for sequencing, are as follows.

 

(i) “Exons”
shall mean the genomic DNA segments of a Gene whose sequence information is
translated into the protein product of that Gene.  The goal is to obtain sequence information for all Exons of a
Gene.

 

(ii)
“Exon/Intron Junction” shall mean the junctions between the Exons and the
Introns in genomic DNA.  Beginning with
the initiation codon at one end of a Gene and ending with the termination codon
at the other end of a Gene, the goal is to obtain sequence information for each
Exon/Intron Junction within this genomic region.

 

(iii)
“Introns” shall mean the genomic DNA segments of a Gene, which are located
between Exons.  Beginning with the
initiation codon at one end of a Gene and ending with the termination codon at
the other end of a Gene, the goal is to obtain a minimum of ten (10) to twenty
(20) bases and a maximum of one hundred (100) bases of sequence information
from the Exon/Intron Junction into the Intron for every Intron within this genomic
region.

 

(iv)
“Promoter” shall mean the genomic region that is immediately upstream of the
transcription start site of the Gene. 
The goal is to obtain sequence information for up to one (1) thousand
bases of the Promoter.

 

(v)
“Three-Prime Untranslated Region” shall mean the genomic region immediately
downstream from the termination codon of a Gene.  The goal is to obtain sequence information for at least one
hundred (100) bases of the Three-Prime Untranslated Region downstream of the
termination codon.

 

Specific
genomic sequence information is required to meet the goals outlined in (i)
through (v) above.  If genomic sequence
information is available for a majority of these regions, even if the available
genomic sequence information is not sufficient to meet all of the goals in (i)
through (v) above, a Gene will still be queued for HAP Marker discovery.

 

Once a Gene is
completely sequenced, HAP Markers will be constructed for that
Gene and placed into the HAP Database.  A Gene shall be considered completely sequenced if [**] is
obtained for at least [**] percent ([**]%) [**] targeted for [**].  A [**] targeted for [**] within a [**] shall
be considered completely sequenced if [**] is obtained for at least [**] from the
[**].

 

 

If a [**]
targeted for [**], each of the [**] will be [**].  However, the presence of runs of guanine and cytosine, secondary
structure or errors in publicly available sequence information may prevent the
generation of sufficient sequence information for that Gene to be considered completely
sequenced.  Thus, if the [**] meet the
[**] after the [**], HAP Markers [**] Gene and [**] the HAP
Database, with an [**] the Gene [**].

 

Genaissance
shall use commercially reasonable efforts to incorporate into the HAP
Database other information about Genes, including: (i) genomic structure; (ii)
cDNA and protein sequences; (iii) publicly available polymorphisms and
haplotypes from high through-put databases such as dbSNP; and (iv) location of
these publicly available polymorphisms within the genomic structure and also in
the messenger RNA if these polymorphisms cause coding changes.

 

2

 

Schedule 2.4

 

Third Party Arrangements for Genetic Tests

 

None

 

3Exhibit 10.1

 

Form 10-QSB for quarter ended
December 31, 2003

 

Purchase Agreement

 

Date: 7-11-03

 

RECEIVED OF Kevin Swanson and/or Assignee the sum of Twenty Thousand
and no/100 ($20,000.00) Dollars Hamilton Ret Acct as earnest money and in part
payment for the purchase of property at 2411 7th St. NW, Rochester, situated in
the County of Olmsted, State of Minnesota and legally described as follows:
    to be supplied

 

together with the following personal property:    see
addendum  

 

all of which property the undersigned has this day sold to the Buyer
for the sum of: One Million Eight Hundred Thousand ($1,800,000.00) Dollars,
which the Buyer agrees to pay in the following manner: Earnest money herein
paid $20,000 and cash as set forth on the addendum, on or before 9/15/03, the
date of closing and the balance of $ see addendum by financing as shown on the
attached addendum.

 

1.               DEED/MARKETABLE TITLE: Subject to
performance by the Buyer, the Seller agrees to executed and deliver a General
Warranty Deed conveying marketable title to said premises subject only to the
following exceptions:

 

(a) Building and zoning laws, ordinances, State and Federal
regulations, (b) Restrictions relating to use or improvement of the premises
without effective forfeiture provision, (c) Reservation of any minerals or
mineral rights to the State of Minnesota, (d) Utility and drainage easements
which do not interfere with present improvements, (e) Rights of tenants as
follows: None

 

2.               REAL ESTATE TAXES.  Real estate taxes due and payable in the
year of closing shall be prorated between Seller and Buyer on a calendar year
basis to the actual date of closing unless otherwise provided in this
Agreement.  Real estate taxes payable in
the years prior to closing shall be paid by Seller.  Real estate taxes payable in the years subsequent to closing
shall be paid by Buyer.

 

3.               SPECIAL ASSESSMENTS. SELLER SHALL PAY on
the date of closing all installments of special assessments certified for
payment with the real estate taxes due and payable in the year of closing.

SELLER SHALL PAY ON DATE OF CLOSING all other special assessments
levied as of the date of this Agreement.

SELLER SHALL PROVIDE FOR PAYMENT OF special assessments pending as of
the date of this Agreement for improvements that have been ordered by the City
Council or other governmental assessing authorities.  (Seller’s provision for payment shall be by payment into escrow
of 1 1/2 times the estimated amount of the assessments.)

If a special assessment becomes pending after the date of this Agreement
and before the date of closing, Buyer may, at Buyer’s option: (a) Assume
payment of the pending special assessment without adjustment to the purchase
price; or (b) Require Seller to pay the pending special assessment (or escrow
for payment of same a sum equal to 1 1/2 times the projected

 

 

pending assessment) and Buyer shall pay a commensurate increase on the
purchase price of the property, which increase shall be the same as the
estimated amount of the assessment; or (c) Declare this Agreement null and void
by notice to Seller, and earnest money shall be refunded to Buyer.  Seller shall pay on date of closing any
deferred real estate taxes or special assessments payment of which is required
as a result of the closing of this sale.

 

4.               PRORATIONS.  All items customarily prorated and adjusted in connection with
the closing of the sale of the property herein including but not limited to
rents, operating expenses , interest on any debt assumed by Buyer, shall be
prorated as of the date of closing.  It
shall be assumed that the Buyer will own the property for the entire date of
the closing.

 

5.               DAMAGES TO REAL PROPERTY.  If there is any loss or damage to the
property between the date hereof and the date of closing, for any reason, the
risk of loss shall be on the Seller.  If
the property is destroyed or substantially damaged before the closing, this
Purchase Agreement shall become null and void, at Buyer’s option.  Buyer shall have the right to terminate this
Purchase Agreement within 30 days after Seller notifies Buyer of such
damage.  Upon said termination, the
earnest money shall be refunded to Buyer and Buyer and Seller agree to sign a
cancellation of Purchase Agreement.

 

6.               EXAMINATION OF TITLE.  Within a reasonable time after acceptance of
this Agreement, Seller shall furnish Buyer with an Abstract of Title or a
Registered Property Abstract certified to date including proper searches
covering bankruptcies and State and Federal judgments, liens, and levied and
pending special assessments.  Buyer shall
have 10 business days after receipt of the Abstract of Title or Registered
Property Abstract either to have Buyer’s attorney examine the title and provide
Seller with written objections or, at Buyer’s own expense, to make an
application for a title insurance policy and notify Seller of the
application.  Buyer shall have 10
business days after receipt of the commitment for title insurance to provide
Seller with a copy of the commitment and written objections.  Buyer shall be deemed to have waived any
title objections not made within the applicable 10 day period set forth above,
except that this shall not operate as a waiver of Seller’s covenant to deliver
a Warranty Deed, unless a Warranty Deed is not specified above. If any
objections is so made, Seller shall have 10 business days from receipt of
Buyer’s written title objections to notify Buyer of Seller’s intention to make
title marketable within 120 days from Seller’s receipt of such written
objection.  If notice is given, payments
hereunder required shall be postponed pending correction of title, but upon
correction of title and within 10 days after written notice to Buyer the
parties shall perform this Purchase Agreement according to its terms.  If no such notice is given or if notice is
given but title is not corrected within the time provided for, this Purchase
Agreement shall be null and void, at option of Buyer; neither party shall be
liable for damages hereunder to the other and earnest money shall be refunded
to Buyer.  Buyer and Seller agree to sign
cancellation of Purchase Agreement.  If
title to the property be found marketable or be so made within said time, and
Buyer shall default in any of the agreements and continue in default for a
period of 10 days, then and in that case the Seller may terminate this contract
and on such termination all payments made upon this contract shall be retained
by Sellers as liquidated damages, time being of the essence.  This provision shall not deprive either
party of the right to enforce the specific performance of this contract
provided this contract has not been terminated and provided action to enforce
such specific performance shall be commenced within six months after such right
of action shall arise.

 

 

7.               POSSESSION.  Seller shall deliver possession of the property on the date of
closing.

 

8.               REPRESENTATIONS AND WARRANTIES.  See attached addendum.

 

9.               TIME IS OF THE ESSENCE FOR ALL
PROVISIONS OF THIS CONTRACT.

 

10.         WELL DISCLOSURE STATEMENT.  No well.

 

11.         ADDENDA. 
Attached is one addenda which is made a part of this Agreement.

 

12.         MISCELLANEOUS PROVISIONS.

(a)          Survival. 
All of the warranties, representations, and covenants of this Agreement
shall survive and be enforceable after the closing.

(b)         Entire Agreement; Modification.  This Agreement constitutes the complete
agreement between the parties and supercedes any prior oral or written
agreements between the parties regarding the property.  There are no verbal agreements that change
this Agreement and no waiver of any of its terms will be effective unless in a
writing executed by the parties.

(c)          Successors and Assigns.  If this Agreement is assigned, all
provisions of this Agreement shall be binding on successors and assigns.

 

13.         ACCEPTANCE DEADLINE.  This offer to purchase, unless accepted sooner, shall be null and
void at 11:59 P.M.
                                                     ,
and in such event all earnest money shall be refunded to Buyer.

 

NOTICE

 

	
   

  	
   

  	
   

  	
   

  	
  Represents

  	
   

  
	
   

  	
   

  	
  (Company Name)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Represents

  	
   

  
	
   

  	
   

  	
  (Company Name)

  	
   

  	
   

  

 

 

THIS IS A LEGALLY BINDING CONTACT, IF NOT UNDERSTOOD, SEEK COMPETENT
ADVICE.

 

	
  Dated:

  	
  Dated: 7-11-03

  	
   

  
	
  SELLER:  Waters Instruments,
  Inc.

  	
  BUYER:

  	
  /s/ Kevin Swanson

  	
   

  	
   

  
	
  SELLER:

  	
  /s/ Gregory Anshus, CFO

  	
   

  	
  BUYER:

  	
   

  
	
   

  	
  SELLING AGENT:

  	
  /s/ Ron Braasch

  	
   

  	
   

  
									

 

 

Rochester Facility

 

	
  Purchase Price

  	
   

  	
  $1,800,000

  
	
   

  	
   

  	
   

  
	
  9 Cap

  	
   

  	
  $162,000

  
	
   

  	
   

  	
   

  
	
  Square footage

  	
   

  	
  66,000.00

  
	
   

  	
   

  	
   

  
	
  Average rent

  	
   

  	
  $2.45 per sq ft

  
	
   

  	
   

  	
   

  
	
  Waters existing Space rent

  	
   

  	
  $7.00 per sq ft  With ability
  to flex down based on tenants needs

  
	
   

  	
   

  	
   

  
	
  Approximately 15,000 sq ft

  	
   

  	
  $105,000.00 Annual  Will
  consolidate operations to 15,000 sq ft

  
	
   

  	
   

  	
   

  
	
  Water commitment

  	
   

  	
  $35,000 4 months

  

 

With option to enter into long term lease once needs are known.

 

Pass through prorated on square footage.

 

 

ADDENDUM TO PURCHASE AGREEMENT

 

Addendum to Purchase Agreement between parties dated 7-11-2003
pertaining to the purchase and sale of the property at 2411 7th St. NW,
Rochester.

 

	
  (1)

  	
   

  	
  Offer is subject to Buyer receiving acceptable financing within 15
  days of acceptance.

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  Seller to supply Buyer with environmental appraisal study within 5
  days of acceptance.

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  Offer is subject to Buyer at Buyers cost having property inspected
  for the following:

  
	
   

  	
   

  	
  Heating, cooling, elec, roof, structure, within 20 days of final
  acceptance.

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  It is understood that, and Seller at Seller’s cost, Buyer may do a
  1031 tax deferred exchange and that Seller shall not incur any additional
  cost for this to occur.

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  Air compressor to stay with property, Buyer has interest in buying
  furniture and partition that Seller chooses not to move.

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  Seller to lease back for 4 months from date of closing the
  approximate 15,000 sf to be used by Seller at $9,000.00/month, and to pay pro
  rata utilities, taxes, triple net.

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  Any contingency which does not meet with Buyer’s approval shall null
  and void this agreement and all earnest monies shall be returned to Buyer.

  
	
   

  	
   

  	
   

  
	
  (8)

  	
   

  	
  Buyer and Seller to agree on sales allocation.

  

 

Offer is accepted, closing date to be on or before Oct. 30, 03.  It is understood that Ron Braasch of Braasch
Commercial Real Estate will be a 50% partner in this transaction.

 

 

	
   

  	
  /s/ Kevin Swanson

  	
   

  	
  7/11/03

  

 

1

 

ASSIGNMENT OF PURCHASE AGREEMENT

 

Kevin Swanson hereby assigns his interest in and to that certain Real
Estate Purchase Agreement dated the 11th day of July, 2003, between
Kevin Swanson and/or Assigns and Waters Instruments, Inc., to JES Enterprises
of Rochester LLC, a Minnesota limited liability company (an undivided 1⁄2
interest) and to Ronald W. Braasch (an undivided 1⁄2 Interest).  JES Enterprises of Rochester LLC and Ronald
W. Braasch hereby accept this assignment and assume the benefits, liabilities
and obligations of Kevin Swanson under such Purchase Agreement.

 

	
   

  	
  Assignor:

  
	
  Date:  10/21/03

  	
   

  
	
   

  	
  /s/ Kevin Swanson

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Assignees:

  
	
   

  	
   

  
	
   

  	
  JES Enterprises of Rochester LLC

  
	
   

  	
   

  
	
  Date:  10/21/03

  	
  By:

  	
  /s/ Janet E. Swanson

  	
   

  
	
   

  	
   

  	
  Its:  Chief Manager

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:  10/21/03

  	
  /s/  Ronald W. Braasch

  	
   

  
						

 

 

AMENDMENT TO PURCHASE AGREEMENT

 

Date:  October 28, 2003.

 

The undersigned parties to that certain Purchase Agreement dated
July 11, 2003, pertaining to the purchase and sale of property at 2411 7th
Street NW, Rochester, Minnesota, hereby mutually agree to amend said Purchase
Agreement as follows:

 

1.                                       The
purchase price of $1,800,000.00, is hereby allocated between parcels A, B, C,
and D, on attached Exhibit “A” as follows:

 

	
  Parcel

  	
   

  	
  Purchase
  price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  $

  	
  200,000.00

  	
   

  
	
  B

  	
   

  	
  $

  	
  210,000.00

  	
   

  
	
  C

  	
   

  	
  $

  	
  630,000.00

  	
   

  
	
  D

  	
   

  	
  $

  	
  760,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  1,800,000.00

  	
   

  

 

 

2.                                       Except
as herein modified, the Purchase Agreement is hereby ratified and confirmed in
all respects.

 

	
  SELLER

  	
  BUYER

  
	
   

  	
   

  
	
  Waters Instruments, Inc.

  	
  /s/ Kevin Swanson

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Gregory Anshus

  	
   

  	
   

  
	
  Its:

  	
  CFO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]