Exhibit 10.31
NON COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (this "Agreement") is entered into
as of March 28, 2003 (the "Closing Date"), by and among Vertex
Pharmaceuticals Incorporated, a Massachusetts corporation ("Vertex"), and
Invitrogen Corporation, a Delaware corporation ("Invitrogen").
INTRODUCTION
WHEREAS, pursuant to the Asset Purchase Agreement by and among
Vertex, PanVera LLC, a Delaware limited liability company (the "Seller"), and
Invitrogen dated as of February 4, 2003 (the "Asset Purchase Agreement"), the
Seller has sold to Invitrogen the Business Assets (as such term is defined in
the Asset Purchase Agreement), and Invitrogen has assumed from the Seller the
Assumed Liabilities (as such term is defined in the Asset Purchase Agreement);
and
WHEREAS, Vertex is the sole member of Vertex Pharmaceuticals (San
Diego) LLC, a Delaware limited liability company ("Vertex SD") and Vertex SD
is the sole member of Seller; and
WHEREAS, this Agreement is entered into pursuant to, and was a
condition precedent to the closing of the transactions contemplated by, the
Asset Purchase Agreement. Vertex acknowledges that Invitrogen would not
consummate the purchase of the Acquired Assets and assumption of the Assumed
Liabilities pursuant to the Asset Purchase Agreement without the benefit of
the agreements set forth herein. Vertex further acknowledges that without the
restrictions set forth herein, Invitrogen's business and the value of the
Business Assets and the Assumed Liabilities will be materially adversely
affected.
TERMS
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
SECTION 1. DEFINITIONS. Any term not otherwise specifically defined
herein shall have the meaning ascribed to it in the Asset Purchase Agreement.
For the purposes of this Agreement, the terms set forth in this Section 1
have the meanings as set forth below:
Section 1.1 "Affiliate" means any trust, business trust, joint venture,
partnership, corporation, limited liability company, company, association or
any other entity which owns, is owned by or is under common ownership with, a
party. For the purposes of this definition, the term "owns" (including, with
correlative meanings, the terms "owned by" and "under common ownership with")
as used with respect to each party, will mean the possession (directly or
indirectly) of more than fifty percent (50%) of the outstanding voting or
equity interest in such corporation or comparable equity interest in any
other type of entity, or the possession of the power to otherwise control the
management and policies of such entity.
Section 1.2 "Assay" means a test used in the context of drug discovery
research for determining the effect of a chemical compound on a biomolecular
target.
Section 1.3 "Assay Development Collaboration Agreement" means a written
agreement between Vertex SD and/or any of its Affiliates and a non-Affiliated
third party, the sole purpose of which is to fund the development of an Assay
or Assays by Vertex SD and/or any of its Affiliates and under which the
non-Affiliated third party and Vertex SD and/or any of its Affiliates shall
each have rights to use such Assay or Assays for ongoing research solely
directed to the development of therapeutic products for use in humans and/or
other vertebrates, such agreement to be identified to Invitrogen by Vertex SD
promptly upon its being entered into; PROVIDED THAT:
(i) the value of all consideration received by Vertex SD and/or
its Affiliates (whether directly or indirectly) in connection with the
development and delivery of the Assay or Assays under all such agreements
will not exceed $4,000,000 in any calendar year;
(ii) the Assay or Assays to be developed under such agreement
are to be utilized by Vertex SD and/or its Affiliates for ongoing research
solely directed to the development of therapeutic products for use in humans
and/or other vertebrates and are developed for the purpose of advancing such
research;
(iii) neither party to such agreement shall at any time assign,
transfer or convey any technology or intellectual property rights (if any)
developed under such agreement to any party which is not an Affiliate to a
party to such agreement;
(iv) each party to such agreement shall be prohibited from
providing any Assays developed thereunder to any other non-Affiliated party;
(v) at no time shall Vertex SD and/or its Affiliates perform in
any manner under such an agreement until such time as (i) a Non-Affiliated
third party to an earlier agreement has accepted all Assays under any earlier
agreement, or (ii) Vertex SD has terminated any earlier agreement previously
in existence;
(vi) promptly following execution of any such agreement, Vertex
SD will provide to Invitrogen a summary certified by an officer of Vertex SD
of each such agreement with sufficient information for Invitrogen to
determine whether the terms and conditions of such agreement comply with the
provisions of this Agreement; provided, however, that if Invitrogen
reasonably cannot determine that such agreement complies with the provisions
of this Agreement, then Invitrogen shall provide written notification to
Vertex SD and promptly following receipt of such notice, Vertex SD shall
provide a redacted copy of such agreement to Invitrogen's outside counsel for
the sole purpose of enabling such counsel to determine that such agreement
complies with the provisions of this Agreement; and
(vii) no such third party will acquire any rights to use any
Assay provided under such agreement for any purpose other than its internal
research purposes.
-2-
Section 1.4 "Assay Development Collaboration Partner" means a third
party who is not an Affiliate of Vertex SD and who enters into an Assay
Development Collaboration Agreement with Vertex SD or any of its Affiliates.
Section 1.5 "Bona Fide Collaboration Agreement" means a written
collaboration agreement between Vertex SD and/or any of its Affiliates and a
non-Affiliated third party who contributes to research and/or development
(either by actively conducting research and/or funding research by Vertex SD
and/or any of its Affiliates) pursuant to which (a) Vertex SD and/or its
Affiliate, as applicable, and a non-Affiliated third party each has rights to
commercially exploit in the field of human therapeutics a material share of
the technology and the intellectual property rights therein that are
developed in the collaboration; (b) Vertex SD and/or its Affiliate, as
applicable, has, as of the date of execution of such Bona Fide Collaboration
Agreement, a bona fide intent to commercially exploit such rights as it
acquires; and (c) the activities anticipated by the agreement include
research, pre-clinical development and/or clinical development, such
pre-clinical development to include at least two animal studies, of
therapeutic products for use in humans and/or other vertebrates.
Section 1.6 "Bona Fide Research Partner" means any non-Affiliated third
party to a Bona Fide Collaboration Agreement with Vertex SD or any of its
Affiliates.
Section 1.7 "Controlling Affiliate" shall mean an Affiliate of Vertex
which was not previously formed or acquired by any Affiliate of Vertex (other
than a Controlling Affiliate) that has the right to elect a majority of the
Board of Directors of Vertex.
Section 1.8 "DNA Product" means any product, other than a Fast Dye
Product, that is covered by an intellectual property right acquired by the
Buyer pursuant to the Asset Purchase Agreement and is comprised of DNA or a
peptide encoded by DNA. To the extent that a cell which contains DNA that is
covered by an intellectual property right acquired by the Buyer pursuant to
the Asset Purchase Agreement, such cell shall be a DNA Product.
Section 1.9 "Fast Dye Products" means a composition of matter that
comprises a first reagent which is a dye capable of redistributing from one
face of a cellular membrane to a second face of the membrane in response to
changes in membrane potential with a time constant of less than 15
milliseconds as determined in accordance with the methodology described in
Example IV of U.S. Patent No. 6,342,379, and a second reagent selected from
the group consisting of fluorophores capable of undergoing energy transfer
with the first reagent by either (i) donating excited state energy to the
first reagent, or (ii) accepting excited state energy from the first reagent,
said second reagent being located adjacent to either the first face of the
membrane or the second face of the membrane; provided, however, that the
first reagent described above shall not include DiSBAC4(3).
Section 1.10 "Fast Dye Restricted Period" means the period commencing on
the Closing Date and ending on December 31, 2004.
Section 1.11 "GeneDriver Patent Rights" means all rights under the
patents and patent applications listed on Exhibit A-1 hereto and all
continuations, divisions, reissues, reexaminations, extensions, substitutions
and continuations-in-part with respect thereto, and all United States and
foreign patents issuing therefrom.
-3-
Section 1.12 "Genomescreen Patent Rights" means all rights under the
patents and patent applications listed on Exhibit A-2 hereto and all
continuations, divisions, reissues, reexaminations, extensions, substitutions
and continuations-in-part with respect thereto, and all United States and
foreign patents issuing therefrom.
Section 1.13 "Non-DNA Product" means any product, other than a Fast Dye
Product or a DNA Product, which is covered by an intellectual property right
acquired by the Buyer pursuant to the Asset Purchase Agreement.
Section 1.14 "Product" means assays, proteins, probes or reagents,
including the products listed on Schedule 1.1(a) to the Asset Purchase
Agreement, but excluding Fast Dye Products.
Section 1.15 "Research Field" means the investigation of biological
and/or biochemical processes, and/or research and development of biological
and/or biochemical products and/or drug discovery.
Section 1.16 "Research Services" means any service rendered to Vertex SD
and/or any of its Affiliates by a non-Affiliated person, other than pursuant
to a Bona Fide Collaboration Agreement or an Assay Development Collaboration
Agreement, to the extent the provision of such services requires that such
person obtain a license or sublicense of rights retained by Vertex SD
pursuant to the Asset Purchase Agreement.
Section 1.17 "Restricted Period" means the period beginning on the
Closing Date and ending on the fifth anniversary thereof, subject to any
applicable extension pursuant to Section 2(i) hereof.
Section 1.18 "Service" means any service which employs, consumes or
manufactures any Product.
Section 1.19 "Supply" means to make available for use at a location
other than a Vertex Party's facility.
Section 1.20 "Vertex Parties" means any of Vertex's Affiliates.
SECTION 2. COVENANTS NOT TO COMPETE.
(a) Except as expressly provided in the next sentence, during the
Fast Dye Restricted Period, neither Vertex nor any Vertex Party shall (i)
Supply, nor attempt or purport to Supply any Fast Dye Product, nor (ii)
provide, nor attempt or purport to provide, any service employing a Fast Dye
Product other than pursuant to a Bona Fide Collaboration Agreement, and in
such case, only if the activities involving the Fast Dye Products are
performed at a Vertex Party's facilities. Notwithstanding the foregoing,
during the Fast Dye Restricted Period Vertex shall be entitled to Supply Fast
Dye Products and provide any services employing Fast Dye Products to up to
two (2) Bona Fide Research Partners (which are parties to Bona Fide
Collaboration Agreements) per each calendar year period ending on December 31
during the Fast Dye Restricted Period.
-4-
(b) RESEARCH FIELD.
(i) During the Restricted Period, except as otherwise expressly
provided in this Section 2, neither Vertex nor any Vertex Party shall sell or
otherwise transfer to a party other than a Vertex Party, nor attempt or
purport to sell or otherwise transfer to a party other than a Vertex Party,
any Product for use in the Research Field or provide any Service in the
Research Field.
(ii) During the Restricted Period, neither Vertex nor any
Affiliate of Vertex shall sell or otherwise transfer, nor attempt or purport
to sell or otherwise transfer, any Product for use in the Research Field or
provide any Service in the Research Field that employs any technology claimed
or covered in the Genomescreen Patent Rights or GeneDriver Patent Rights.
(c) Other than the restrictions set forth in Section 2(a) which
shall remain applicable, the provisions of this Section 2 shall not (i)
restrict Vertex or its Affiliates from entering into or performing its
obligations under any Bona Fide Collaboration Agreements and Assay
Development Collaboration Agreements; (ii) limit the rights of Vertex and its
Affiliates to Supply DNA Products to any unaffiliated third party who is a
party to any Bona Fide Collaboration Agreements or an Assay Development
Collaboration Agreement; (iii) limit the right of Vertex and its Affiliates
to Supply DNA Products to any unaffiliated third party who is providing
Research Services for the benefit of Vertex or its Affiliates; (iv) restrict
Vertex or its Affiliates from making available to any third party any drug or
drug candidate; or (v) limit the rights exercisable by Vertex and its
Affiliates under the Amended and Restated Technology Agreements (as defined
in the Asset Purchase Agreement).
(d) If Vertex or any of its affiliates shall transfer, assign, sell
or otherwise convey any third party (the "Transferee") any interest in any
intellectual property right associated with the Business and licensed to or
retained by Vertex or any of its Affiliates under the Asset Purchase
Agreement or any of its Ancillary Agreements, Vertex or its applicable
Affiliate shall require that such Transferee shall restrict its use of such
intellectual property rights so as to comply with all of the obligations set
forth in Sections 2(a) and 2(b) herein.
(e) If a court of competent jurisdiction shall declare any provision
or restriction contained in this Agreement unenforceable or void, the other
provisions of this Agreement shall nonetheless remain in full force and
effect, and Vertex and Invitrogen hereby authorize and empower such court to
treat any such unenforceable provision as having been modified, but only to
the minimum extent deemed necessary by the court to render it enforceable and
for the court to enforce it fully to such extent.
(f) Vertex expressly acknowledges that any material breach of this
Section 2 by or on behalf of Vertex or any Vertex Party shall be presumed to
result in irreparable harm to Invitrogen and that the remedy at law shall be
presumed to be inadequate and that upon any such material breach, Invitrogen
shall be presumed to be entitled (without the need for posting any bond or
other security) to injunctive relief in any court of competent jurisdiction,
in equity or otherwise, and to enforce the specific performance of Vertex or
such Vertex Parties' obligations under these provisions, which presumptions
shall be required to be rebutted by Vertex. The
-5-
rights conferred upon Invitrogen by the preceding sentence shall not be
exclusive of, but shall be in addition to, any other rights or remedies which
Invitrogen may have at law, in equity or otherwise.
(g) Vertex recognizes that Vertex and its Affiliates have become
familiar with the Proprietary Assets of the Business that are being conveyed
and assigned to Invitrogen pursuant to the Asset Purchase Agreement. Vertex
further recognizes that the scope of the Business is independent of location
(such that it is not practical to limit the restrictions contained in this
Section 2 to a specified county, city, state, country, continent or part
thereof), and that, accordingly, the restrictions contained in this Section 2
are reasonable in all respects and necessary to protect the goodwill and
Proprietary Assets of Invitrogen and that, without such protection,
Invitrogen's customer and client relations and competitive advantage would be
materially adversely affected. It is specifically recognized by Vertex that
Invitrogen would not enter this Agreement and the Asset Purchase Agreement
without the restrictions contained in this Section 2. Vertex acknowledges
that the restrictions contained in this Section 2 do not impose an undue
hardship on Vertex or any of the Vertex Parties and that Vertex and the
Seller have received adequate consideration in respect thereof.
(h) Other than the restrictions set forth in Sections 2(a) and
2(b)(ii) which shall remain applicable, nothing in this Section 2 shall limit
the right of Vertex and its Affiliates to acquire any business through a
merger, consolidation, purchase of stock or assets, or otherwise, and to
operate any such acquired business thereafter if the annual consolidated
gross revenue of such acquired business attributable to activities otherwise
prohibited by this Agreement does not exceed 20% of the annual consolidated
gross revenues of such acquired business as a whole, as demonstrated by
reference to the most recently available financial statements of such
acquired business as of the time of the consummation of the acquisition
thereof by the applicable Vertex Party; PROVIDED that Vertex or its Affiliate
that acquired such business shall in good faith use its commercially
reasonable efforts to divest to a non-Affiliate, through sale or other
similar transaction, the portion of the acquired business the operation of
which is otherwise prohibited by this Agreement as soon as possible, but in
no event later than two (2) years following the acquisition of such business
(even if such two (2) year period concludes after the expiration of the
Restricted Period).
(i) Other than the restrictions set forth in Sections 2(a) and
2(b)(ii) which shall remain applicable, nothing in this Section 2 shall apply
to a Controlling Affiliate of Vertex or to any Affiliates of the Controlling
Affiliate (other than the Owner and the Owner's direct and indirect
subsidiaries at the time such Controlling Affiliate becomes an Affiliate).
SECTION 3. NOTICES. All notices and other communications provided for
under this Agreement will be in English in writing, shall expressly reference
the section(s) of this Agreement to which they pertain, and shall be
delivered to the other party, effective upon receipt, and in each case will
be addressed to the parties at the following addresses or to such other
addresses as may be designated by the parties from time to time during the
term of this Agreement:
If to Invitrogen: If to Vertex:
Invitrogen Corporation Vertex Pharmaceuticals Incorporated
-6-
1600 Faraday Avenue 130 Waverly Street
Carlsbad, CA 92008 Cambridge, MA 02139
Attn: Contracts Department Attn: CEO
Fax: 760-603-7229 Fax: 617-444-6580
With a Copy to: With a Copy to:
Invitrogen Vertex Pharmaceuticals Incorporated
1600 Faraday Avenue 130 Waverly Street
Carlsbad, CA 92008 Cambridge, MA 02139
Attn: General Counsel Attn: General Counsel
Fax: 760-603-7229 Attn: 617-444-6483
SECTION 4. MISCELLANEOUS.
(a) The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other
provision of this Agreement. This Agreement will, subject to the terms
hereof, become binding upon execution and delivery by Invitrogen and Vertex.
(b) This Agreement together contains the entire agreement and
understanding between the parties and supersedes all prior agreements,
understandings and representations relating to the subject matter of this
Agreement.
(c) This Agreement will be governed by the laws of The Commonwealth
of Massachusetts, without regard to conflicts of laws principles.
(d) The waiver by any party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other or subsequent breach by the breaching party of such or any other
provision.
(e) The section headings contained in this Agreement are for
convenience only and shall not in any way affect the interpretation or
enforceability of any provision of this Agreement.
(f) No amendments or variation of the terms and conditions of this
Agreement shall be valid unless the same is in writing and signed by all
parties to this Agreement.
(g) This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together
shall constitute one and the same instrument.
(h) Nothing herein expressed or implied is intended to confer or
shall be construed as confirming upon or giving to any person other than the
parties hereto any rights or benefits under or by reason of this Agreement.
(i) Neither this Agreement nor any right or obligation hereunder may
be
-7-
assigned or delegated, in whole or part, by Vertex without the prior express
written consent of Invitrogen; provided, however, that Vertex may, without
the written consent of Invitrogen, assign this Agreement and its rights and
delegate its obligations hereunder in connection with the transfer or sale of
all or substantially all of its business, or in the event of its merger,
consolidation, change in control or similar transaction. Neither this
Agreement nor any right or obligation hereunder may be assigned or delegated,
in whole or part, by Invitrogen without the prior express written consent of
Vertex; provided, however, that Invitrogen may, without the written consent
of Vertex, assign this Agreement and its rights and delegate its obligations
hereunder (i) to a wholly owned subsidiary; (ii) in connection with the
transfer or sale of all or substantially all of the Acquired Assets, or (iii)
in the event of its merger, consolidation, change in control or similar
transaction. Any permitted assignee shall assume all obligations of its
assignor under this Agreement. Any purported assignment in violation of this
Section 4(i) shall be void.
-8-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
VERTEX PHARMACEUTICALS INCORPORATED
By: /s/ Ian F. Smith
--------------------------------
Name: Ian F. Smith
Tital: Treasurer
INVITROGEN CORPORATION
By: /s/ John D. Thompson
--------------------------------
Name: John D. Thompson
Title: Vice President, Corporate
Development
-9-