REDACTED
EXHIBIT 10.307
**CONFIDENTIAL TREATMENT REQUESTED**
HCV PROBE LICENSE AGREEMENT
BETWEEN
CHIRON CORPORATION
F. HOFFMANN-LA ROCHE LTD.
AND
ROCHE MOLECULAR SYSTEMS, INC.
HCV PROBE LICENSE AGREEMENT
TABLE OF CONTENTS
PAGE
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RECITALS 3
ARTICLE 1: DEFINITIONS 3
ARTICLE 2: LICENSE GRANTS 12
ARTICLE 3: PAYMENTS, ROYALTIES 15
ARTICLE 4: RECORDS AND REPORTS 15
ARTICLE 5: OTHER ACTIONS 17
ARTICLE 6: REPRESENTATIONS AND WARRANTIES 19
ARTICLE 7: TERM AND TERMINATION 21
ARTICLE 8: CONFIDENTIALITY 24
ARTICLE 9: INDEMNITY 25
ARTICLE 10: ALTERNATIVE DISPUTE RESOLUTION 26
ARTICLE 11: MISCELLANEOUS 27
ARTICLE 12: FIELD RESTRICTIONS AND OTHER COVENANTS 30
ARTICLE 13: INFRINGEMENT BY THIRD PARTIES 32
ARTICLE 14: EUROPEAN COMMUNITY PROVISIONS 34
EXHIBIT A: COMPENSATION TO CHIRON
EXHIBIT B: CHIRON PATENT LIST
EXHIBIT C: [CONFIDENTIAL TREATMENT REQUESTED] PATENT LIST
EXHIBIT D: CHIRON LICENSED PRODUCTS & UNIT SIZES
EXHIBIT E: FORM OF REPORT
EXHIBIT F: EXISTING LICENSES
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HCV PROBE LICENSE AND OPTION AGREEMENT
This agreement (hereinafter "Agreement") is made by and between CHIRON
CORPORATION, a Delaware corporation, of 4560 Horton Street, Emeryville,
California 94608 (hereinafter referred to as "CHIRON"), F. HOFFMANN-LA ROCHE
LTD., a Swiss corporation, of Grenzacherstrasse 124, Basel, Switzerland
(hereinafter referred to as "ROCHE PARENT"), and ROCHE MOLECULAR SYSTEMS,
INC., a Delaware corporation, of 1145 Atlantic Avenue, Suite 100, Alameda,
California 94501 (hereinafter referred to as "RMS" and collectively with
ROCHE PARENT, "ROCHE").
BACKGROUND
WHEREAS, CHIRON and ROCHE currently own or control certain patent rights
relating to the hepatitis C virus ("HCV"), as defined below.
WHEREAS, CHIRON and ROCHE have as of the date hereof entered into that
certain Settlement Agreement (the "Settlement Agreement") pertaining to the
settlement of the certain litigation matters described therein.
WHEREAS, in consideration of and subject to the execution and delivery of the
Settlement Agreement, CHIRON is willing to grant licenses to ROCHE under
certain patent rights relating to HCV for use in assays for the detection of
nucleic acid sequences for use in IN VITRO diagnostics (excluding use in
Blood Screening, as defined below, but without limiting the effect of the
Blood Screening Agreement, as defined below), all on the terms and conditions
set forth herein.
WHEREAS, in consideration of and subject to the execution and delivery of the
Settlement Agreement, ROCHE is willing to grant licenses to CHIRON under
certain patent rights relating to HCV for use in assays for the detection of
nucleic acid sequences for use in Blood Screening and the Transplantation
Field, as defined below, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above provisions and the mutual
covenants contained herein, CHIRON and ROCHE hereby agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement the following words and phrases shall have the following
meanings:
1.1 "ADR" means Alternative Dispute Resolution in accordance with
Article 10.
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1.2 "Affiliate" means an entity that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with, a specified entity. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any entity,
means: (a) the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that entity, whether
through the ownership of voting securities or by contract or otherwise; or
(b) the ownership of at least fifty percent (50%) of the voting securities of
that entity. Notwithstanding anything to the contrary contained herein,
"Affiliate" shall not include, in the case of CHIRON, Novartis AG or any
Affiliate of Novartis AG, unless Novartis shall have acquired direct control
of a majority of the Board of Directors of CHIRON. Notwithstanding anything
to the contrary contained herein, "Affiliate" shall not include, in the case
of ROCHE, Genentech Inc. or any Affiliate of Genentech Inc., nor Laboratory
Corporation of America Holdings or any Affiliate of Laboratory Corporation of
America Holdings.
1.3 "Authorized Distributor" means a BONA FIDE, unaffiliated
distributor, but excluding any entity which is a Major IVD Manufacturer (as
defined below) that is not licensed in the Field (as defined below) under one
or more of the CHIRON Licensed Patents (as defined below) or is affiliated
with, or directly or indirectly controlled by, such a Major IVD Manufacturer,
except to the extent that such unlicensed Major IVD Manufacturer or its
Affiliates distributes CHIRON Licensed Product for ROCHE or its Affiliates on
a local country basis and in the same manner in which it distributes other
diagnostic products for ROCHE or its Affiliates and ROCHE and its Affiliates
are not otherwise selling CHIRON Licensed Products in such country.
1.4 "Average Unit Price" or "AUP" means with respect to CHIRON
Licensed Products sold by ROCHE or its Affiliates from and including the
first day of the Calendar Quarter commencing immediately prior to the
Effective Date, with respect to a Calendar Quarter (as defined below), Net
Sales of such future CHIRON Licensed Product by ROCHE or its Affiliates
calculated on a per Unit basis, in a country or Region, on a
product-by-product basis, using customary and reasonable methodologies for
determining average unit pricing generally consistent with the definition
herein of Net Sales, during the preceding two (2) Calendar Quarters.
1.5 "Bayer Cross License" means the Cross-License Agreement by and
between Chiron Diagnostics Corporation and CHIRON dated November 30, 1998, as
amended from time to time.
1.6 "Blood Screening" means the commercial use of products that
detect nucleic acid sequences(s) for: (a) the screening of blood, plasma or
blood components intended for transfusion or for use in blood products (e.g.,
without
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limitation, immunoglobulins); or (b) confirmatory or supplemental testing of
the same samples otherwise screened for purposes described in Section 1.6(a).
1.7 "Blood Screening Agreement" means the Blood Screening HCV/HIV
Probe License Agreement by and between CHIRON and ROCHE dated as of the
Effective Date, as amended from time to time.
1.8 "Calendar Quarter" means the three (3) month period beginning
January 1, April 1, July 1 or October 1. For Net Sales outside the United
States, the Calendar Quarter and Calendar Year (as defined below) shall be
consistent with ROCHE financial reporting practices.
1.9 "Calendar Year" means January 1 through December 31.
1.10 "CHIRON Future HCV Sequence Patent Rights" means any and all
Valid Claims Directed to HCV of United States and foreign patents and patent
applications: (a) which are based upon inventions conceived or rights
acquired [CONFIDENTIAL TREATMENT REQUESTED] (as defined below); (b) which
claim HCV nucleic acid sequence(s) or a method to use (other than in the
manufacture of peptides) or detect such sequences specifically; (c) which are
owned by, licensed to or otherwise controlled by CHIRON or its Affiliates,
with rights to license or sublicense; and (d) with respect to which CHIRON
has the right to grant the option provided for in Section 2.6 of this
Agreement. For purposes of this Agreement, an invention will be deemed to
have been conceived if there is a patent, patent application, written
invention disclosure statement or other tangible document (whether or not
witnessed) describing such invention.
1.11 "CHIRON Licensed Patents" means Valid Claims Directed to HCV
which cover the manufacture, use, sale, offer for sale or importation of a
Product that are contained within any of the following: (a) the patents and
applications identified in Exhibit B and any continuation,
continuation-in-part and divisional applications therefrom; (b) any reissued
or reexamined patents obtained from such patents and applications; (c) all
foreign counterparts of such patents and applications; and (d) all future
patents and applications which are based on inventions conceived by CHIRON or
its Affiliates on or before the Effective Date.
1.12 "CHIRON Licensed Products" means Products which are
manufactured, used, offered for sale, imported or sold under circumstances
which would, in the absence of the licenses granted under Sections 2.1 and
2.3 constitute an infringement of a Valid Claim of the CHIRON Licensed
Patents, including without limitation the Products identified in Exhibit D,
as modified from time to time by mutual agreement of the parties or as
determined in accordance with Section 5.2.
1.13 "Directed to HCV" means that the claim or technology in
question is directed to methods, compositions, reagents or kits specifically
for use in nucleic
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acid-based diagnostic assays for the detection of HCV nucleic acid
sequence(s), or specifically for use in the manufacture of any compositions
or reagents for use in, or manufacture of nucleic acid-based diagnostic
assays for detection of HCV nucleic acid sequence(s) (excluding, for example,
PCR claims and technology and other methods for detection of nucleic acid
sequence(s) generally which involve nucleic acid amplification). The
terminology "specifically for use" as used in this Section 1.13, is intended
to exclude inventions suitable for use with viruses or analytes other than
HCV (including by way of example and not by way of limitation, inventions
relating to PCR, or assay formats, improved expression systems, detectable
labels, instrumentation, packaging and the like), which shall not be
considered "specifically for use" in HCV detection as contemplated by this
Section 1.13 and shall therefore not be considered as "Directed to HCV"
hereunder.
1.14 "Earned Royalty" shall have the meaning specified in paragraph
2 of Exhibit A.
1.15 "Effective Date" means the date of full execution of this
Agreement.
1.16 "End User" means a person or entity who is a final purchaser of
a Product, and whose use of a Product results in the Product's consumption,
operation, destruction or loss of activity.
1.17 "Field" means the commercial use of human IN VITRO diagnostic
products that detect nucleic acid sequences of HCV. Expressly excluded from
the Field are: (a) products in Blood Screening; (b) products specifically
labeled or promoted for use in the Transplantation Field (as defined below).
1.18 "Foundational Patents" means the CHIRON Licensed Patents
identified in Exhibit B which are stated therein to be Foundational Patents.
1.19 "HCV" means any viral isolate of the hepatitis C virus
described in the CHIRON Licensed Patents or classified as HCV by the
International Committee on the Taxonomy of Viruses (or any body that replaces
such Committee) or any subtype of such isolate and further includes any
isolate that is at least forty percent (40%) homologous to any such isolate
and of the same genomic type and substantially the same genomic organization,
any isolate that has a genome that either hybridizes to or is substantially
identical to any such isolate or its compliment, and any defective or
modified form of any of the above isolates.
1.20 "HCV Qualitative Assay" means a Product which: (a) is an assay;
(b) detects or measures the presence of HCV in an analyzed sample; (c) does
not determine the quantity of HCV in the analyzed sample; and (d) is not by
itself, through a single use, capable of being used as an HCV Classification
Assay, an
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HCV Genotyping Assay or an HCV Resistance Assay (as each is defined herein).
1.21 "HCV Quantitative Assay" means a Product which: (a) is an
assay; (b) measures the presence of HCV in an analyzed sample; (c) does
determine the quantity of HCV in the analyzed sample; and (d) is not by
itself, through a single use, capable of being used as an HCV Classification
Assay, an HCV Genotyping Assay or an HCV Resistance Assay.
1.22 "HCV Genotyping Assay" means a Product which is an assay or
method (e.g., sequencing) that is labeled or promoted as being useful through
a single use to determine and differentiate individual genotypes of an HCV
virus that are present in an analyzed sample.
1.23 An "[CONFIDENTIAL TREATMENT REQUESTED]" means
[CONFIDENTIAL TREATMENT REQUESTED].
1.24 "HCV Resistance Assay" means a Product which is an assay or
method (e.g., sequencing) that is labeled or promoted as being useful to
detect through a single use the specific drug resistance mutation(s) present
in the HCV virus in an analyzed sample.
1.25 "HCV Taqman Qualitative/Quantitative Assay" means a Product
which: (a) is an assay; (b) detects and measures the presence of HCV in an
analyzed sample by utilization of ROCHE's proprietary 5' nuclease detection
method; (c) does determine the quantity of HCV in an analyzed sample; and
(d) is not by itself, through a single use capable of being used as only an
HCV Qualitative Assay, HCV Classification Assay, HCV Genotyping Assay or HCV
Resistance Assay.
1.26 "Infringing Third Party Sales" means sales by a Major IVD
Manufacturer of Products: (a) which infringe one or more of the CHIRON
Licensed Patents; or (b) as to which a license under one or more of the
CHIRON Licensed Patents has been granted, but as to which the licensee is not
paying royalties thereunder.
1.27 "Licensed Patents" means the CHIRON Licensed Patents and the
ROCHE Optioned Patents.
1.28 "Major IVD Manufacturer" means a commercial entity (and its
Affiliates) that manufactures, sells and engages in other commercial
activities with respect to IN VITRO diagnostic products, and has a
significant marketing presence in one or more Regions. Major IVD
Manufacturers include Abbott, Bayer, Johnson & Johnson, Pasteur, Sanofi, Dade
Behring, Organon Teknika, Becton Dickinson, bioMerieux, BioRad, Fujirebio,
Beckman Coulter, Visible Genetics, Innogenetics, and PE Corporation and each
of their successors and
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assigns and any other entity which commands in the future at least an
equivalent presence as measured by total product sales as do any of the
foregoing entities as of the Effective Date in such Region.
1.29 "Minimum Royalty" and "Minimum Royalty Amount" shall have the
meanings specified in paragraph 3 of Exhibit A.
1.30 "Net Sales" means the amount billed or invoiced for CHIRON
Licensed Products sold by ROCHE or its Affiliates, less:
(a) Discounts actually allowed and taken;
(b) Amounts repaid or credited by reason of rejection or return;
(c) To the extent separately stated on purchase orders, invoices or
other documents of sale, taxes levied on and/or other governmental
charges made as to production, transportation or insurance charges;
(d) The reasonable value of the instrument, instrument financing,
consumables other than the CHIRON Licensed Products in question
(including without limitation sample preparation) and service
components of an operating or capital lease for instrumentation on
which the CHIRON Licensed Products are used (collectively, "Associated
Goods and Equipment"), for which the charges are included in the price
of the CHIRON Licensed Products purchased, provided that the methods
for determining such value shall be proposed by ROCHE and subject to
CHIRON's written consent, not to be unreasonably withheld;
(e) Charges for freight, handling and transportation paid by the
selling entity; and
(f) Sales, use and value-added taxes and other similar taxes incurred
and separately stated on invoices.
(1) Net Sales shall include all sales to non-Affiliate
third parties, including sales to Authorized Distributors in countries where,
due to regulatory constraints and/or market practice, substantially all sales
of the relevant CHIRON Licensed Product are made through distributors,
provided that ROCHE shall use reasonable efforts in connection with sales to
such Authorized Distributors to comply with clause (A) immediately below.
With respect to sales to all other Authorized Distributors, if Net Sales are
based on the transfer price to the Authorized Distributor rather than End
User sales, either: (A) Net Sales on which royalties shall be calculated
shall be deemed to be not less than the higher of the average selling price
for the applicable Product in the United States or the European Union; or
(B) the parties shall adopt another mechanism for preserving for CHIRON the
same economics as if such sales had been made to the End
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User by ROCHE or its Affiliate rather than the Authorized Distributor. Any
such mechanism shall be proposed by ROCHE and shall be subject to CHIRON's
prior written consent, which shall not be unreasonably withheld. CHIRON shall
not withhold its consent to a proposal by ROCHE to calculate Net Sales at
[CONFIDENTIAL TREATMENT REQUESTED] of the transfer price to an Authorized
Distributor or such lesser percentage as reflects reasonably the distributor
mark-ups prevailing generally in the relevant country.
(2) For clarity of understanding, Net Sales shall not
include any CHIRON Licensed Product furnished to third parties for which no
payment is received, such as, experimental, test market, promotional or other
free goods. On the other hand, Net Sales shall include any CHIRON Licensed
Product furnished in return for payment, whether or not such CHIRON Licensed
Product is for commercial, research or other use. For clarity of
understanding, Minimum Royalties shall apply to each Unit of CHIRON Licensed
Product Shipped to a customer for any purpose, except for Units Shipped to
third parties at no charge for: (A) use in ROCHE's preclinical or clinical
trials in the Field or the Transplantation Field; (B) testing, quality
control or evaluation purposes; or (C) replacement of rejected or defective
goods. Without limiting the foregoing, CHIRON Licensed Products furnished to
third parties at price discounts, including, without limitation, free goods
furnished as part of sales promotions, shall be subject to Minimum Royalties.
(3) A sale shall be deemed to have been made and Earned
Royalties or Minimum Royalties incurred (except as specifically set forth in
Section 1.30(2) and this Section 1.30(3)) when the CHIRON Licensed Product is
consumed, invoiced or shipped by ROCHE or its Affiliates to a non-Affiliate
third party ("Shipped"); provided that where an invoice is issued, the
obligations to pay Earned Royalties and Minimum Royalties hereunder shall
arise on the invoice date. Sales to or between Affiliates shall not be
included in Net Sales or Minimum Royalties until ROCHE or its Affiliate
consumes the CHIRON Licensed Product in providing a commercial service for a
non-Affiliate third party or Ships the CHIRON Licensed Product to a
non-Affiliate third party.
(4) In the event that a CHIRON Licensed Product subject to
royalties hereunder is sold in combination with another Product or assay,
other than the Associated Goods and Equipment covered under clause (d) above,
for a single price (a "Combination Product"), Net Sales from sales of a
Combination Product, for purposes of calculating royalties due under this
Agreement, shall be calculated by multiplying the Net Sales of that
Combination Product by the fraction A/(A+B), where A is the AUP in the
country of sale, during the applicable reporting period, of the CHIRON
Licensed Product subject to royalties hereunder if sold separately in the
country of sale, and B is the AUP in the country of sale, during the
applicable reporting period, of the other Product(s) or assay(s) sold
separately in the country of sale. In the event that no such separate sales
are made, Net Sales, for purposes of determining royalty payments on such
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Combination Products, shall be a reasonable apportionment of the gross amount
invoiced therefor based upon the relative contribution of the CHIRON Licensed
Product subject to royalties hereunder to the price of the Combination
Product. Such apportionment for Combination Products currently or previously
sold shall be a reasonable apportionment of the gross amount invoiced
therefor based upon the relative contribution of the CHIRON Licensed Product
subject to royalties hereunder to the price of the Combination Product. Such
apportionment shall be determined by ROCHE based upon its past practice and
experience subject to CHIRON's written consent, not to be unreasonably
withheld. The apportionment of future Combination Products will be handled in
this same fashion prior to the first Unit Shipped or consumed by ROCHE or an
Affiliate in providing a commercial service, or resolved in accordance with
Section 5.2. Notwithstanding the above, if a CHIRON Licensed Product is an
assay that is capable in a single use of being used in more than one fashion
(e.g., as both an HCV Quantitative Assay and as an HCV Qualitative Assay),
such CHIRON Licensed Product is not a Combination Product solely for that
reason, but shall be treated for purposes of calculating the applicable
Minimum Royalty Amounts in the same fashion as the HCV Taqman
Qualitative/Quantitative Assay, as set forth in Exhibit A.
(5) In the event a sale of a CHIRON Licensed Product is
conditioned upon the payment of an initial licensing fee, access fee or other
required fee the payment of which is a prerequisite to the Shipment,
consumption or use of a CHIRON Licensed Product, Net Sales, for the purpose
of determining royalty payments on such CHIRON Licensed Product, shall
include a reasonable apportionment of the amount invoiced for such fee, based
upon the relative value of the intellectual property contained within the
CHIRON Licensed Product subject to royalties hereunder to the intellectual
property contained within the other product or service components Shipped,
licensed, consumed or used. Such apportionment shall be determined by ROCHE
based upon its past practice and experience subject to CHIRON's written
consent, not to be unreasonably withheld, and shall not include any portion
of a licensing fee, access fee or other required fee reasonably allocated
with specificity to the access, license or use of the ROCHE PCR patents.
(6) In the event that ROCHE or its Affiliates perform
assays for commercial purposes utilizing CHIRON Licensed Products, Net Sales
means the invoiced amount for the patient result provided as a result of
performance of such assays, less a reasonable deduction for the value of the
services and or other products provided therewith, less the applicable
deductions pursuant to this Section 1.30. The allocation of value to services
or other products provided shall be determined by ROCHE based upon its past
practice and experience, and shall be subject to CHIRON's prior written
consent, which shall not be unreasonably withheld.
1.31 "PCR" means polymerase chain reaction technology.
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1.32 "Product(s)" means reagents, compositions or kits suitable for
use in the Field or the Transplantation Field.
1.33 "Product Category" has the meaning set forth in paragraph 3 of
Exhibit A.
1.34 "Region" shall mean one of the four (4) following regions:
Region I: North America (United States and possessions, Puerto
Rico, Canada and Mexico);
Region II: European Union;
Region III: Japan; or
Region IV: All other countries of the world.
1.35 "ROCHE Future HCV Sequence Patent Rights" means any and all
Valid Claims Directed to HCV of United States and foreign patents and patent
applications: (a) which are based on inventions conceived or rights acquired
[CONFIDENTIAL TREATMENT REQUESTED]; (a) are not ROCHE Optioned Patents (as
defined below); (b) which claim HCV nucleic acid sequence(s) or a method to
use (other than in the manufacture of peptides) or detect such sequences
specifically; (c) which are owned by, licensed to or otherwise controlled by
ROCHE or its Affiliate, with rights to license or sublicense; and (d) with
respect to which ROCHE has the right to grant the option provided for in
Section 2.7 of this Agreement. For purposes of this Agreement, an invention
will be deemed to have been conceived if there is a patent, patent
application, written invention disclosure statement or other tangible
document (whether or not witnessed) describing such invention.
1.36 "ROCHE Optioned Patents" means: (a) the patents and
applications identified in Exhibit C and any continuation,
continuation-in-part and divisional applications therefrom; (b) any reissued
or reexamined patents obtained from such patents and applications; (c) all
foreign counterparts of such patents and applications; and (d) all future
patents and applications which are based on inventions conceived by ROCHE or
its Affiliates on or before the Effective Date, to the extent the items
described in clauses (a) through (d) of this Section 1.36 contain a Valid
Claim Directed to HCV which covers the manufacture, use, sale, offer for sale
or importation of a Product.
1.37 "ROCHE Optioned Product" means a Product which is manufactured,
used, offered for sale, imported or sold under circumstances which would, in
the absence of the licenses for which an option is granted under Section 2.5,
constitute an infringement of a Valid Claim of the ROCHE Optioned Patents.
1.38 "Shipped" has the meaning set forth in Section 1.30(3).
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1.39 "Transplantation Field" means the commercial use of products
that detect nucleic acid sequences for the screening of any biological
materials intended for transfusion or transplantation, in each case from any
donor, including autologous donors, other than the transfusion or
transplantation of blood or its derivatives, components or replacements.
1.40 "Unit" means, for each CHIRON Licensed Product, the number of
individual patient results generated by the use of a CHIRON Licensed Product.
The number of patient results that each CHIRON Licensed Product generates
shall be mutually determined by the parties through good faith negotiation
and resolved if necessary through the ADR process in accordance with Article
10 of this Agreement. Following such determination, the number of Units
contained in each CHIRON Licensed Product will be set forth on a schedule to
be attached as Exhibit D to this Agreement. The determination of the number
of "Units" in future CHIRON Licensed Products developed by ROCHE shall be
handled in accordance with Section 5.2 and Exhibit D shall be modified
accordingly. If future CHIRON Licensed Products are developed by ROCHE or its
Affiliates that do not contain reagents or other single-use consumable
materials, a method for calculating the number of "Units" in such CHIRON
Licensed Product shall be determined in accordance with Section 5.2.
1.41 "Valid Claim" means a claim in any issued, active, unexpired
patent which has not been withdrawn, cancelled, lapsed or disclaimed, or held
unpatentable, invalid or permanently unenforceable by a non-appealed or
nonappealable final decision by a court or other appropriate body of
competent jurisdiction. The scope of a Valid Claim shall be limited to its
terms as defined by any such court or decision-making body of competent
jurisdiction in a nonappealable or non-appealed final decision.
ARTICLE 2
LICENSE GRANTS
2.1 CHIRON GRANTS. Subject to the terms and conditions of this
Agreement, CHIRON hereby grants to ROCHE and its Affiliates, so long as they
remain Affiliates of ROCHE, a worldwide, semi-exclusive license, without the
right to sublicense, under the CHIRON Licensed Patents to research, develop,
make, have made, import, use, offer for sale and sell CHIRON Licensed
Products for use in the Field. CHIRON covenants not to sue any End User of a
CHIRON Licensed Product (with respect to which ROCHE has performed all of its
material obligations under this Agreement) to the extent of activities in the
Field or otherwise permitted under this Agreement. Conversely no immunity
from suit shall apply to End User activities in Blood Screening, except as
provided in the Blood Screening Agreement, or otherwise outside of the Field.
CHIRON retains the right to conduct research in any field, including to
develop Products and, subject to Section 2.3 and the Blood Screening
Agreement, retains all rights
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outside of the Field, including the nonexclusive right to practice and to
grant licenses under the CHIRON Licensed Patents to make, have made, use,
import, offer for sale and sell any products in the Transplantation Field.
2.2 EXCLUSION FROM CHIRON LICENSE. ROCHE acknowledges that neither
ROCHE nor its Affiliates are licensed under this Agreement to perform
research or to develop any product other than a CHIRON Licensed Product.
2.3 CHIRON TRANSPLANTATION FIELD LICENSE. Subject to the terms and
conditions of this Agreement, CHIRON hereby grants to ROCHE and its
Affiliates, so long as they remain Affiliates of ROCHE, a worldwide,
non-exclusive license, without the right to sublicense, under CHIRON Licensed
Patents to research, develop, make, have made, import, use, offer for sale
and sell CHIRON Licensed Products for use in the Transplantation Field.
CHIRON covenants not to sue any End User of such CHIRON Licensed Products
(with respect to which ROCHE has performed all of its material obligations
under this Agreement) to the extent of activities in the Transplantation
Field or as otherwise permitted under this Agreement. Conversely, no immunity
from suit under this Section 2.3 shall apply to End User activities in Blood
Screening, except as provided in the Blood Screening Agreement, or otherwise
outside of the Transplantation Field.
2.4 SEMI-EXCLUSIVE CHIRON LICENSE. The license granted under
Section 2.1 shall be semi-exclusive to ROCHE and its Affiliates.
Semi-exclusive means that, in addition to licenses to third parties under
existing agreements referenced in Exhibit F including, without limitation,
the [CONFIDENTIAL TREATMENT REQUESTED], and licenses that may be granted by
such licensees, including licenses that may be granted by [CONFIDENTIAL
TREATMENT REQUESTED], CHIRON retains only the right to practice under the
CHIRON Licensed Patents and/or to grant additional licenses under one or
more of the CHIRON Licensed Patents in the Field as follows:
(a) In the event that a license referenced in Exhibit F is terminated,
including without limitation the [CONFIDENTIAL TREATMENT REQUESTED],
CHIRON shall have the right to replace such license with a new license,
consistent with the limitations required hereby and the scope, field
and territory of the license that is replaced. Notwithstanding anything
herein to the contrary, the [CONFIDENTIAL TREATMENT REQUESTED] under
the [CONFIDENTIAL TREATMENT REQUESTED] between CHIRON and [CONFIDENTIAL
TREATMENT REQUESTED] if terminated, could be replaced by a new license
to a new licensee and containing terms determined by CHIRON in its
discretion without any restrictions imposed by this Agreement;
provided, however, that if [CONFIDENTIAL TREATMENT REQUESTED] CHIRON
enters into a license to replace the [CONFIDENTIAL TREATMENT REQUESTED]
with a third party that is not [CONFIDENTIAL TREATMENT REQUESTED], as
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the case may be, or an Affiliate, successor, assignee or licensee of
either of them, CHIRON shall promptly provide ROCHE a written summary
of the applicable royalty terms thereof and true copies of extracts of
the applicable contract terms (including definitions and methods of
calculating royalty amounts), and [CONFIDENTIAL TREATMENT REQUESTED] of
the receipt by ROCHE of notice from CHIRON, provided, further however,
that [CONFIDENTIAL TREATMENT REQUESTED]. (For the avoidance of doubt,
[CONFIDENTIAL TREATMENT REQUESTED] contained in this Section 2.4(a)
[CONFIDENTIAL TREATMENT REQUESTED];
(b) Following the last to expire of the Foundational Patents, the
license hereunder shall be nonexclusive; and
(c) Notwithstanding this Section 2.4, CHIRON retains the nonexclusive
right under the CHIRON Licensed Patents to conduct research in any
field, including to develop Products and, subject to the Blood
Screening Agreement, all rights outside of the Field and in the
Transplantation Field, including the nonexclusive right to practice and
to grant licenses under the CHIRON Licensed Patents to make, have made,
use, import, offer for sale and sell any products in the
Transplantation Field.
2.5 ROCHE OPTIONED PATENTS. Subject to the terms and conditions of
this Agreement, ROCHE hereby grants to CHIRON and its Affiliates, so long as
they remain Affiliates of CHIRON, an option to enter into a worldwide,
non-exclusive, [CONFIDENTIAL TREATMENT REQUESTED], [CONFIDENTIAL TREATMENT
REQUESTED] license, with no right to sublicense except to have made or to
conduct research, under ROCHE Optioned Patents to research, develop, make,
have made, import, use, offer for sale and sell ROCHE Optioned Products for
use in Blood Screening and in the Transplantation Field.
2.6 CHIRON FUTURE HCV SEQUENCE PATENT RIGHTS. CHIRON grants to ROCHE
a non-exclusive option to obtain one or more non-exclusive, worldwide
licenses, or sublicenses, as the case may be, with a right to sublicense to
ROCHE Affiliates only, under the CHIRON Future HCV Sequence Patent Rights, to
make, have made, use, import, offer for sale and sell CHIRON Licensed
Products and/or products in the Field and/or the Transplantation Field.
[CONFIDENTIAL TREATMENT REQUESTED].
2.7 ROCHE FUTURE HCV SEQUENCE PATENT RIGHTS. ROCHE grants to CHIRON
a non-exclusive option to obtain one or more non-exclusive, worldwide
licenses, or sublicenses, as the case may be, with a right to sublicense to
CHIRON Affiliates only, under the ROCHE Future HCV Sequence Patent Rights, to
make, have made, use, import, offer for sale and sell ROCHE Optioned Products
and/or products in Blood Screening and/or the Transplantation Field.
[CONFIDENTIAL TREATMENT REQUESTED].
14
ARTICLE 3
PAYMENTS, ROYALTIES
With respect both to CHIRON Licensed Products sold or Shipped, ROCHE
shall make payments to CHIRON as set forth in Exhibit A.
ARTICLE 4
RECORDS AND REPORTS
4.1 NET SALES REPORT. ROCHE shall, within sixty (60) days after the
last day of each Calendar Quarter commencing after [CONFIDENTIAL TREATMENT
REQUESTED], deliver to CHIRON a true and accurate report for the prior
Calendar Quarter, substantially in the form attached as Exhibit E to this
Agreement, which shall state the amount of monies due hereunder, if any, as
Earned Royalties and Minimum Royalties, and shall include all information
reasonably necessary to calculate such amount, including, but not limited to,
the following information, presented by country and Region and by product and
Product Category (as defined in paragraph 3 of Exhibit A):
(a) the amount of Net Sales, expressed in United States Dollars (with
applicable exchange rates to the extent specifically requested in
writing by CHIRON), and the applicable Earned Royalty rate or rates,
and all credits and adjustments thereto;
(b) the number of Units Shipped and the applicable Minimum Royalty
Amounts, and adjustments to Units Shipped (returns, replacements,
etc.); and
(c) a statement of the basis for any deviation from the Earned Royalty
rates and Minimum Royalty Amounts as expressed in paragraphs 2 and 3 of
Exhibit A.
4.2 PAYMENT DATES. Not later than the date each report required
under Section 4.1 is due, ROCHE shall pay to CHIRON the royalty due under
this Agreement for the period covered by such report. If no royalties are
due, ROCHE shall so report, stating the reasons why no such royalty is due.
4.3 PAYMENT PROCEDURES. ROCHE shall pay royalties and all other
payments due hereunder to CHIRON in immediately available funds on the due
date by wire transfer to:
Bank of America-San Francisco
San Francisco, California
Account Name: Chiron Corporation
Account Number: [CONFIDENTIAL TREATMENT REQUESTED]
15
ABA #: [CONFIDENTIAL TREATMENT REQUESTED]
Reference: ROCHE HCV Probe License Agreement
or at such place and in such other manner as CHIRON may designate in a notice
signed by CHIRON's Treasurer or Controller to ROCHE.
4.4 TAXES ON ROYALTIES. ROCHE shall deduct from amounts payable
hereunder all taxes assessed or imposed against, or required to be withheld
from, royalty payments due and shall pay such amount to the appropriate
fiscal or tax authorities on behalf of CHIRON. ROCHE shall forward promptly
to CHIRON all tax receipts received by ROCHE evidencing payment of such taxes.
4.5 AUDIT. ROCHE shall keep reasonably detailed and accurate records
and books of account to enable a determination of the amounts payable by
ROCHE and its Affiliates to CHIRON hereunder. Upon thirty (30) days written
notice by CHIRON, and not more frequently than once per Calendar Year, CHIRON
may have such records and books of account examined during reasonable
business hours by a mutually acceptable independent certified public
accountant selected by CHIRON and at CHIRON's expense, whose acceptance shall
not unreasonably be withheld by ROCHE, for the purpose of verifying the
amounts due hereunder; provided that such independent accountant agrees to
provide CHIRON only the information necessary to verify the calculation of
amounts due hereunder. A copy of any final written report provided by the
independent accountant to CHIRON shall be given concurrently to ROCHE. Such
examination shall not be permitted unless it is requested within three (3)
years following the end of the Calendar Year to which the books and records
pertain. Where such examination results in a finding that ROCHE underpaid
CHIRON by the greater of [CONFIDENTIAL TREATMENT REQUESTED], ROCHE shall
reimburse CHIRON for its reasonable costs and expenses in conducting such
examination. ROCHE and CHIRON shall promptly rectify any overpayments or
underpayments by repaying such amounts together with interest thereon at an
annual rate equal to the lesser of: (a) [CONFIDENTIAL TREATMENT REQUESTED] as
published in the Wall Street Journal, or (b) the maximum rates permitted by
applicable law, from the time such payment was originally due to the time it
is paid.
4.6 CONFIDENTIALITY OF AUDIT. CHIRON agrees that all audited
information shall be confidential to ROCHE and its Affiliates, and that any
person or entity conducting an audit on behalf of CHIRON pursuant to Section
4.5 shall be required to protect the confidentiality of such information.
4.7 PAYMENT IN UNITED STATES CURRENCY. All payments shall be made in
United States Dollars and shall be made on the dates set forth herein. The
Net Sales amount calculated hereunder for sales in countries other than the
United States shall be converted into equivalent United States Dollars in
accordance with the methods used for internal financial reporting purposes
within ROCHE.
16
4.8 LATE PAYMENT FEE. Any payment, including, without limitation,
royalty payments, made by ROCHE hereunder after the date such payment is due,
as set forth in this Article 4 hereof, shall bear interest at the lesser of:
(a) [CONFIDENTIAL TREATMENT REQUESTED] as published in the Wall Street
Journal as of the date such payment was due, or (b) the maximum rate
permitted by applicable law.
ARTICLE 5
OTHER ACTIONS
5.1 PATENT VALIDITY; ENFORCEABILITY. Immediately upon the Effective
Date, or as soon as possible thereafter, ROCHE shall discontinue any
opposition, challenge, compulsory license application or the like with
respect to the CHIRON Licensed Patents. Immediately after the Effective Date,
or as soon as possible thereafter, CHIRON shall discontinue any opposition,
challenge, interference or the like with respect to the ROCHE Optioned
Patents.
5.2 FUTURE PRODUCTS DIRECTED TO HCV.
(a) Promptly upon its determination to Ship, or to provide a commercial
service utilizing, a Product Directed to HCV not then set forth as a
CHIRON Licensed Product on Exhibit D, ROCHE shall provide CHIRON with
written notice of such Product and the parties will engage in good
faith negotiations to determine the existing or new Product Category
for such Product as set forth on Exhibit A, the number of Units in such
Product pursuant to Section 1.40, the reasonable value of Associated
Goods and Equipment, if any, to be deducted from the Net Sales of such
Product pursuant to Section 1.30(d), and, if such Product is a
Combination Product, the apportionment of the gross amount to be
invoiced for such Product pursuant to Section 1.30(4). As set forth in
these Sections, [CONFIDENTIAL TREATMENT REQUESTED]. Promptly following
such determinations, CHIRON will prepare a revised Exhibit D to include
this Product and such revised Exhibit D shall be incorporated into and
become part of this Agreement.
(b) If ROCHE determines to Ship, or to provide a commercial service
utilizing, a Product Directed to HCV not then set forth on Exhibit D
as a CHIRON Licensed Product and ROCHE reasonably believes that the
manufacture, use or sales of such Product would not, in the absence of
the licenses granted pursuant to Sections 2.1 and 2.3, constitute an
infringement of a Valid Claim of a CHIRON Licensed Patent, then ROCHE's
written notice to CHIRON shall set forth the basis of ROCHE's
reasonable belief in sufficient detail to permit CHIRON to evaluate the
matter. [CONFIDENTIAL TREATMENT REQUESTED].
17
(c) ROCHE may elect, in its reasonable discretion, to commence
Shipping, or the provision of a commercial service utilizing, a Product
Directed to HCV not then set forth on Exhibit D as a CHIRON Licensed
Product [CONFIDENTIAL TREATMENT REQUESTED], PROVIDED ROCHE shall make a
reasonable determination as to the applicable existing Product Category
to determine the applicable Minimum Royalty Amount and shall utilize a
reasonable determination of the number of Units in such Product and the
deductions and apportionment for the calculation of Earned Royalty due
on the Net Sales of such Product. [CONFIDENTIAL TREATMENT REQUESTED],
any underpayment or overpayment of the Minimum Royalty or Earned
Royalty shall be rectified in accordance with the provisions set forth
in Section 4.8; [CONFIDENTIAL TREATMENT REQUESTED].
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 CORPORATE AUTHORITY. Each party represents and warrants to the
other party that it has the necessary corporate authority to enter into this
Agreement.
6.2 RIGHT TO GRANT. Each party represents and warrants that they
have the right to grant the licenses granted in Article 2 hereof and that
they are the sole owner of their respective Licensed Patents, subject to
licenses existing as of the Effective Date. CHIRON represents and warrants to
ROCHE that, to the best of its knowledge, neither CHIRON nor any of its
Affiliates have transferred to [CONFIDENTIAL TREATMENT REQUESTED] or any if
its Affiliates (a) before December 1, 1998, title to any patent or patent
application Directed to HCV in the Field existing on that date; or (b) on or
after that date, title to any patent, patent application or invention
Directed to HCV in the Field.
6.3 CURRENT LICENSES. CHIRON represents and warrants that: (a) as of
the Effective Date the entities set forth in Exhibit F are the only parties
to which it has granted any licensed rights or other grants or immunities to
one or more of the CHIRON Licensed Patents in the Field; and (b) Exhibit F
contains a complete and accurate description of the effective scope, field
and territory of such grant as of the Effective Date. CHIRON also represents
and warrants that [CONFIDENTIAL TREATMENT REQUESTED] except as disclosed in
Exhibit F.
6.4 COMPLETE PATENT LIST. CHIRON represents and warrants to ROCHE
that, to the best of its knowledge and belief, Exhibit B contains a complete
list, as of the Effective Date, of all patents and patent applications owned
by, licensed to (with a right to sublicense), or otherwise controlled by
CHIRON or its Affiliates containing claims Directed to HCV in the Field. To
the extent that any other patent or patent application owned by, licensed to
(with a right to sublicense) or otherwise controlled by CHIRON or its
Affiliates and filed on or before the
18
Effective Date contains a claim Directed to HCV in the Field, such patent or
patent application shall be automatically added to the CHIRON Licensed
Patents. Upon ROCHE's written request, not more frequently than annually,
CHIRON shall provide ROCHE with an updated Exhibit B and a report of the
prosecution status of applications within CHIRON Licensed Patents. ROCHE
represents and warrants to CHIRON that, to the best of its knowledge and
belief, Exhibit C contains a complete list, as of the Effective Date, of all
patents and patent applications owned by, licensed to (with a right to
sublicense), or otherwise controlled by ROCHE or its Affiliates containing
claims Directed to HCV in the Field. To the extent that any other patent or
patent application owned by, licensed to (with a right to sublicense) or
otherwise controlled by ROCHE or its Affiliates and filed on or before the
Effective Date contains a claim Directed to HCV in the Field, such patent or
patent application shall be automatically added to the ROCHE Optioned
Patents. Upon CHIRON's written request, not more frequently than annually,
ROCHE shall provide CHIRON with an updated Exhibit C and a report of the
prosecution status of applications within ROCHE Optioned Patents.
6.5 EXCLUSIONS. Nothing contained in this Agreement shall be
construed as:
(a) A representation or warranty by any party hereto as to the validity
of any patent rights which are the subject of this Agreement;
(b) A representation or warranty that anything made, used, imported,
offered for sale, sold or otherwise disposed of under any of the patent
rights which are the subject of this Agreement is or will be free from
infringement of patents of third parties or of patents of either party
that are not Directed to HCV;
(c) An obligation to bring or prosecute actions or suits against third
parties for infringement of any patent rights which are the subject of
this Agreement;
(d) A grant of any right to bring or prosecute actions or suits against
third parties for infringement of any patent rights which are the
subject of this Agreement; or
(e) A grant, by implication, estoppel or otherwise, of any license,
option, covenant or right other than those which are expressly stated
herein, including without limitation (i) any license under any patent
or patent application (or claim thereof) not within the Licensed
Patents, or (ii) any covenant by CHIRON or ROCHE not to sue under any
such patent or patent application (or claim thereof).
19
6.6 FURTHER ROCHE ASSURANCE. ROCHE acknowledges that the inclusion
of ROCHE Affiliates within the license and option grants pursuant to Sections
2.1, 2.3 and 2.6 is intended to enable ROCHE to utilize the manufacturing and
sales capabilities of its Affiliates in connection with the manufacture and
sale of CHIRON Licensed Products in a manner substantially similar to the
involvement of such Affiliates in the manufacture and sale of ROCHE's
products generally. ROCHE shall not, directly or indirectly, take any action
having or intended to have the effect of sublicensing ROCHE's rights under
any of the CHIRON Licensed Patents, other than to a BONA FIDE Affiliate,
including, without limitation, by creating Affiliates specifically in
connection with CHIRON Licensed Products, or through other third party
arrangements such as joint ventures, collaborations, or distribution
arrangements with distributors. ROCHE and its Affiliates are licensed
hereunder to sell and distribute CHIRON Licensed Products only under the
label, name and trademark rights owned by, licensed to or otherwise
controlled by ROCHE or its Affiliates, and only through the sales force of
ROCHE or its Affiliates, or through Authorized Distributors. ROCHE and its
Affiliates are not licensed to perform OEM manufacturing of CHIRON Licensed
Products for a third party other than an Authorized Distributor; to supply
CHIRON Licensed Products for resale to any third party other than an
Authorized Distributor; to permit any Authorized Distributor or other third
party to sell any CHIRON Licensed Products under another third party label,
name or trademark or to permit any Authorized Distributor or other third
party to sell any CHIRON Licensed Products under the Authorized Distributor's
or any third party's own label, name or trademark for use on an instrument
bearing the label name or trademark of a party other than ROCHE or its
Affiliates; provided, however, that nothing in this Section 6.6 shall be
construed to limit the rights of ROCHE or its Affiliates to engage in
activities with such third parties, to the extent such third parties have
obtained rights under the CHIRON Licensed Patents permitting such activities.
6.7 LIMITATION OF WARRANTY. EXCEPT AS SPECIFICALLY SET FORTH HEREIN,
NO PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 7
TERM AND TERMINATION
7.1 TERM. This Agreement shall be in effect from the Effective Date
until the last to expire of the CHIRON Licensed Patents issued under the
authority of the Patent and Trademark Office of the United States (the
"Term"), unless earlier terminated pursuant to Sections 7.2 or 7.3 below.
7.2 VOLUNTARY TERMINATION. ROCHE shall have the right to voluntarily
terminate all, but not less than all, licenses granted to ROCHE and its
affiliates
20
under this Agreement on not less than six (6) months prior written notice to
CHIRON. Notwithstanding the above, ROCHE may voluntarily terminate all, but
not less than all, licenses granted to ROCHE and its Affiliates under this
Agreement on a country-by-country basis, on not less than six (6) months
prior written notice to CHIRON, after the [CONFIDENTIAL TREATMENT REQUESTED]
anniversary of the Effective Date.
7.3 TERMINATION BY CHIRON. CHIRON may terminate this Agreement only
upon any of the following grounds:
(a) ROCHE's or its Affiliate's material breach of this Agreement,
including, without limitation, a breach resulting from ROCHE's or its
Affiliate's failure to pay any sums due hereunder, where such breach
shall not have been remedied within thirty (30) days of the receipt of
a written notification from CHIRON identifying the breach and requiring
its remedy; whereupon termination under this Section 7.3(a) shall be
effective upon the expiration of such thirty (30) day cure period,
subject to Section 7.6; or
(b) [CONFIDENTIAL TREATMENT REQUESTED]
7.4 ENFORCEMENT AFTER TERMINATION. Upon valid termination of this
Agreement under Section 7.2 or 7.3, ROCHE and its Affiliates shall have no
further rights under CHIRON Licensed Patents and CHIRON shall not be limited
to its remedies under this Agreement, to the extent of such termination.
7.5 ACCRUED RIGHTS. Termination of this Agreement for whatever
reason shall not affect any rights which have accrued prior to termination,
including without limitation royalty obligations occurring during the Term,
calculated in accordance with Article 3 and Exhibit A.
7.6 ROCHE CHALLENGE TO SECTION 7.3(a) TERMINATION. In the event
ROCHE provides written notification to CHIRON prior to expiration of the
thirty (30) day notice/cure period referenced in Section 7.3(a) that ROCHE
disputes whether the grounds for termination under Section 7.3(a) are
present, such dispute shall be submitted to ADR pursuant to Article 10. The
thirty (30) day notice/cure period shall be suspended during the pendancy of
such ADR, provided that during the pendancy of the ADR, ROCHE shall continue
to make any disputed payments to CHIRON, on the condition that CHIRON shall
repay ROCHE the amounts of such disputed payments if ROCHE prevails in the
ADR, plus interest at the rate described in Section 4.8. Notwithstanding
anything in this Section 7.6 to the contrary, ROCHE may submit a dispute
concerning a method by which amounts payable by ROCHE and its Affiliates to
CHIRON hereunder are calculated only one time, and any resolution from the
ADR shall bind the parties as to such calculation method thereafter.
21
7.7 ROCHE CHALLENGE TO SECTION 7.3(b) TERMINATION. In the event that
ROCHE, within thirty (30) days of receiving notice of termination by CHIRON
for the grounds set forth in Section 7.3(b) above, provides written notice to
CHIRON that ROCHE disputes whether such grounds are present, such dispute
shall be submitted to ADR pursuant to Article 10 and termination of this
Agreement shall be suspended during the pendancy of the ADR, provided that
ROCHE suspends its action, suit or proceeding (other than in an ADR
proceeding between the parties as permitted by Section 7.3(b) and Article
10) [CONFIDENTIAL TREATMENT REQUESTED], and continues to perform all of its
material obligations hereunder.
7.8 AUDIT RESULTS NOT GROUNDS FOR TERMINATION. CHIRON's request for
an audit under Section 4.5 shall not be treated as a notice of breach under
Section 7.3(a). In the event such audit determines there has been an
underpayment by ROCHE, such underpayment shall not constitute grounds for
termination by CHIRON under Section 7.3(a) unless: (a) ROCHE has failed to
rectify such underpayment in accordance with Section 4.5; (b) ROCHE has
failed to rectify such underpayment after notification and opportunity to
cure under Section 7.3(a); and (c) any ADR requested by ROCHE, pursuant to
Section 7.6, and directed to any dispute concerning such underpayment,
results in a determination favorable to CHIRON and ROCHE has failed to
rectify such underpayment. Notwithstanding the foregoing, ROCHE shall
continue to make the disputed payments to CHIRON, on the condition that
CHIRON shall repay ROCHE the amounts of such disputed payments with respect
to which ROCHE prevails in the ADR, plus interest at the rate described in
Section 4.8.
7.9 SURVIVAL. The following provisions of this Agreement shall
survive termination or expiration of this Agreement, in accordance with their
respective terms: Article 1; Sections 4.5, 4.6, 4.7, 4.8, 6.7, 7.4, 7.5 and
7.9; Articles 8, 9, and 10; Sections 11.9 through 11.14; and Section 14.1.
ARTICLE 8
CONFIDENTIALITY
8.1 OBLIGATION. From time to time during the Term, CHIRON and ROCHE
may provide to each other information concerning patents, patent
applications, license agreements and other confidential or proprietary
information related to this Agreement (the "Information"). Each party
receiving the Information (the "Receiving Party") shall during the Term and
for a period of three (3) years after termination hereof: (a) maintain the
Information in confidence; (b) not disclose the Information to any third
party, other than employees, agents or consultants of the Receiving Party,
its Affiliates or permitted sublicensees who have a need to know the
Information and who are bound by confidentiality obligations to the Receiving
Party no less restrictive than those contained herein; and (c) not use the
Information for any purpose not directly related to performance hereunder or
otherwise authorized under this Agreement.
22
8.2 EXCLUSIONS. The obligations of this Article 8 shall not apply to
any Information which: (a) is or which becomes generally known to the public
by publication or by means other than a breach of a duty by the Receiving
Party; (b) is otherwise known by the Receiving Party at the time of
disclosure by the other party; (c) otherwise becomes available to the
Receiving Party from a third party not in breach of confidentiality
obligations to the other party; or (d) is developed by or for the Receiving
Party independent of any disclosure from the other party. The Receiving Party
also shall be permitted to make disclosures of Information which are
reasonably necessary in connection with a possible grant of a permitted
sublicense by the Receiving Party or in due diligence related to a possible
acquisition, merger, consolidation, substantial asset transfer or similar
transaction of the Receiving Party, provided that the recipient is bound to
the Receiving Party by confidentiality obligations with respect to the
Information no less restrictive than those contained herein. Nothing herein
shall prevent the Receiving Party from making such disclosures of Information
as are reasonably required by law, regulation (including 37 C.F.R. Section
1.56), or order of any court or governmental agency; provided that the
Receiving Party has provided reasonable advance notice to allow the
disclosing party the opportunity to seek a protective order or otherwise
contest, prevent or limit such disclosure.
8.3 RETURN OF INFORMATION. Upon termination of this Agreement for
any reason, the Receiving Party shall return, or at the option of the
disclosing party, certify destruction of, all Information and copies thereof;
provided that the Receiving Party may retain one copy thereof in its law
department files solely for evidentiary and regulatory purposes.
8.4 DISCLOSURE OF AGREEMENTS AND TERMS. The parties shall issue a
joint press release disclosing the existence and certain financial terms of
this Agreement. CHIRON may disclose any of the terms in the Agreement to any
Affiliate of CHIRON or to Abbott or Bayer or a permitted sublicensee;
provided that the recipient of such disclosure is obligated to
confidentiality terms no less restrictive that those contained in this
Article 8. CHIRON and ROCHE may each disclose the amounts of the Prior Sales
Royalty, the Pre-Paid Minimum Royalty (as defined in Exhibit A) individually
and/or in the aggregate and the amounts thereof that will be recognized from
time-to-time in its respective financial statements. Each party may disclose
any information contained in or regarding this Agreement to the extent
required in its respective reasonable judgment by applicable law, regulation
or order of any court or governmental agency. Further, each party may
determine in its respective discretion to file this Agreement under the
Securities and Exchange Act of 1934 or otherwise with any United States or
foreign governmental agency, even if that filing may result in this Agreement
becoming available to the public generally. The filing party shall seek
confidential treatment for at least the essential financial terms hereof in
connection with any such filing, subject to applicable law and regulation,
and shall notify the other party in advance of any such filing and consider
such
23
suggestions as the other party may make as to the terms herein as to which
the filing party should seek confidential treatment.
ARTICLE 9
INDEMNITY
9.1 ROCHE INDEMNITY. ROCHE shall indemnify, defend and hold harmless
CHIRON and its Affiliates and their officers, directors, shareholders,
employees, representatives and agents, against any claim, demand, loss,
damage or injury, including reasonable attorneys' fees, asserted by a third
party, arising from, relating to, or otherwise in respect of, (a) the
manufacture, use or sale of CHIRON Licensed Products, or (b) any breach by
ROCHE or its Affiliates of any representation, warranty or covenant under
this Agreement; provided, however, that such indemnity shall not extend to
damages arising directly from any breach or willful or negligent act of
CHIRON or its Affiliates.
9.2 CHIRON INDEMNITY. CHIRON shall indemnify, defend and hold
harmless ROCHE and its Affiliates and their officers, directors,
shareholders, employees, representatives and agents, against any claim,
demand, loss, damage or injury, including reasonable attorneys' fees,
asserted by a third party, arising from, relating to, or otherwise in respect
of, (a) the manufacture, use or sale of ROCHE Licensed Products, if Chiron
exercises the options granted in Sections 2.5 or 2.7,or (b) any breach by
CHIRON or its Affiliates of any representation, warranty or covenant under
this Agreement; provided, however, that such indemnity shall not extend to
damages arising directly from any breach or willful or negligent act of ROCHE
or its Affiliates.
9.3 INDEMNIFICATION PROCEDURES. In the event either party claims
indemnification pursuant to this Article 9, the indemnified party shall
promptly notify the indemnifying party in writing upon becoming aware of any
claim to which such indemnification may apply. Delay in providing such notice
shall constitute a waiver of the indemnifying party's indemnity obligations
hereunder only if the indemnifying party's ability to defend such claim is
materially impaired thereby. The indemnifying party shall have the right to
assume and solely control the defense of the claim at its own expense. If the
right to assume and solely control the defense is exercised, the indemnified
party shall have the right to participate in, but not to control, such
defense at its own expense, and the indemnifying party's indemnity
obligations shall be deemed not to include attorneys' fees and litigation
expenses incurred by the indemnified party after the assumption of the
defense by the indemnifying party. If the indemnifying party does not assume
the defense of the claim, the indemnified party may defend the claim at the
indemnifying party's expense. The indemnified party shall not settle or
compromise the claim without the prior written consent of the indemnifying
party, and the indemnifying party shall not settle or compromise the claim in
any manner which would have an adverse effect on the indemnified party
without the consent of the indemnified party, which consent, in each case,
shall not be
24
unreasonably withheld. The indemnified party shall reasonably cooperate with
the indemnifying party and shall make available to the indemnifying party all
pertinent information under the control of the indemnified party, all at the
expense of the indemnifying party.
9.4 SUNSET. The provisions of Sections 9.1 and 9.2 shall continue in
effect on a claim-by-claim basis, after the termination of this Agreement,
only until the expiration of the last to expire statute of limitations
applicable to such claim.
9.5 LIMITATION OF LIABILITY. Neither party shall be liable to the
other for any consequential, special, indirect or exemplary damages or for
the loss of profits arising from the performance or nonperformance of this
Agreement or any acts or omissions associated herewith.
ARTICLE 10
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that BONA-FIDE disputes may from time to time
arise which relate to any aspect of this Agreement, including, without
limitation, any of the parties' rights and/or obligations hereunder, and
including, without limitation, disputes relating to the interpretation, form,
validity, performance and/or termination of this Agreement or relating to
infringement, scope, claims construction, or (without limiting the effect of
Section 7.3(b)) validity or enforceability of the Licensed Patents. In the
event of the occurrence of any dispute, a party may, by notice to the other
party, have such dispute referred to their respective employees designated
below or their successors, for attempted resolution by good faith
negotiations within ninety (90) days after such notice is received. Said
designated officers are as follows:
For ROCHE:
PRESIDENT
ROCHE MOLECULAR SYSTEMS, INC.
For CHIRON:
PRESIDENT
BLOOD TESTING
In the event the designated officers, after such good faith
negotiations, are not able to resolve such dispute within such ninety (90)
day period, or any agreed extension thereof, a party may invoke the
provisions for binding ADR as set forth in Paragraph 9 of the Settlement
Agreement. Neither party shall seek recourse against the other hereunder in
any court or other forum, except as permitted by Paragraph 9 of the
Settlement Agreement or as may be necessary to enforce a
25
determination made in ADR pursuant to this Article 10 and Paragraph 9 of the
Settlement Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 ASSIGNMENT.
(a) ROCHE and its Affiliates may not assign or transfer any
rights under this Agreement without the prior written consent of
CHIRON, except to an ROCHE Affiliate, and then only for so long as the
assignee remains an ROCHE Affiliate, or as part of the sale or transfer
of all or substantially all of ROCHE's and all of its Affiliates'
assets and businesses to which this Agreement relates. In the case of a
permitted assignment or transfer, the performance of the assignee shall
be guaranteed by ROCHE.
(b) CHIRON and its Affiliates may not assign or transfer any
rights under this Agreement without the prior written consent of ROCHE,
except to a CHIRON Affiliate, and then only for so long as the assignee
remains a CHIRON Affiliate, or as part of the sale or transfer of all
or substantially all of CHIRON's and all of its Affiliates' assets and
businesses to which this Agreement relates. In the case of a permitted
assignment or transfer, the performance of the assignee shall be
guaranteed by CHIRON.
11.2 FORCE MAJEURE. A party hereto shall not be liable for, nor
shall this Agreement be terminable or cancelable by reason of, any delay or
default in any such party's performance hereunder, to the extent that such
default or delay is caused by events beyond such party's reasonable control
including, but not limited to: acts of God; regulation, law or action of any
government or agency thereof; war or insurrection; civil commotion; labor
disturbances; epidemic; or failure of suppliers, public utilities or common
carriers. Each party shall give prompt notice to the other party of such
cause, and shall take whatever reasonable steps are necessary to relieve the
effect of such cause as rapidly as possible.
11.3 SEVERABILITY. In the event that any one or more of the
provisions of this Agreement should for any reason be held by any court or
authority having jurisdiction over this Agreement or over the parties hereto
to be invalid, illegal or unenforceable, such provision or provisions shall
be reformed to approximate as nearly as possible the intent of the parties,
in such jurisdiction; elsewhere, this Agreement shall not be affected.
11.4 ENTIRE AGREEMENT. This Agreement together with the Exhibits,
Attachments and Schedules constitutes the entire agreement among the parties
26
relating to the subject matter of this Agreement. There are no other
understandings, representations or warranties of any kind.
11.5 AMENDMENT. This Agreement shall not be altered, extended or
modified except by written agreement of the parties.
11.6 WAIVER. Failure by a party hereunder to enforce any right under
this Agreement shall not be construed as a waiver of such right or any other
rights under this Agreement; nor shall a waiver by a party hereunder in one
or more instances be construed as constituting a continuing waiver or as a
waiver in other instances.
11.7 COSTS. Each of the parties hereto shall be responsible for its
respective legal and other costs incurred in relation to the preparation of
this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.
Facsimile copies of signatures for a party shall be deemed to be originals
for purposes of execution of the Agreement and for determining the Effective
Date.
11.9 NOTICES.
(a) Any notice or other document to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if personally
delivered or sent by first class mail, or express or air mail or other postal
service, or by certified mail, return receipt requested.
(b) Any notice required by this Agreement shall be forwarded to the
respective addresses and marked for the attention of the persons set forth
below unless such addresses subsequently change by written notice to the
other party:
ROCHE: F. Hoffmann-La Roche Ltd.
Grenzacherstrasse 124
Basel
Bale 4002
Switzerland
Attn: Head of Diagnostics Division
Copy to: General Counsel
Roche Molecular Systems, Inc.
1145 Atlantic Avenue
Alameda, CA 94501
27
CHIRON: Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attn.: President, Blood Testing
Copy to: General Counsel
Chiron Corporation
4560 Horton Street
Emeryville, CA 94608
(c) Any such notice or other document shall be deemed to have been
effective when received by the addressee. To prove the giving of a notice or
other document it shall be sufficient to show that it was received.
11.10 GOVERNING LAW. All matters affecting the interpretation, form,
validity, performance and termination of this Agreement shall be decided and
interpreted under the laws of the State of New York, excluding any choice of
law rules which may direct application of the laws of any other jurisdiction.
11.11 RELATIONSHIP OF THE PARTIES. The relationship of the parties
under this Agreement is that of independent contractors. Nothing contained in
this Agreement is intended or is to be construed so as to constitute the
parties as partners, joint venturers or agents of the other. Neither party or
its Affiliates has any express or implied right or authority under this
Agreement to assume or create any obligations or make any representations or
warranties on behalf of or in the name of the other party or its Affiliates.
11.12 HEADINGS. The headings of the Articles and Sections in this
Agreement have been inserted for convenience only and do not constitute part
of this Agreement.
11.13 NO TRADEMARK RIGHTS. No right, express or implied, is granted by
this Agreement to either party to use in any manner the name, trade name or
trademark of the other party in connection with the performance of this
Agreement.
11.14 NO IMPLIED LICENSES. No license, express or implied, is
granted by this Agreement to either party, other than the licenses or options
granted under Sections 2.1, 2.3 and Sections 2.5 through 2.7.
ARTICLE 12
FIELD RESTRICTIONS AND OTHER COVENANTS
12.1 ROCHE COVENANT REGARDING BLOOD SCREENING.
28
(a) ROCHE and its Affiliates shall not label or promote any CHIRON
Licensed Product labeled or promoted for use in the Field or the
Transplantation Field in any respect for use in Blood Screening; and ROCHE
shall use commercially reasonable efforts to prevent its Authorized
Distributors from labeling or promoting any CHIRON Licensed Products labeled
or promoted for use in the Field or the Transplantation Field in any respect
for use in Blood Screening.
(b) Further, ROCHE and its Affiliates and Authorized Distributors
shall include on or with each CHIRON Licensed Product labeled or promoted for
use in the Field or the Transplantation Field a statement to the effect that
the CHIRON Licensed Product is not for use for testing or screening pooled
samples containing specimens from more than one individual, or otherwise in
blood or plasma screening, using language to be determined by ROCHE and
approved in advance in writing by CHIRON, which approval shall not be
unreasonably withheld. The location of such notice shall be the product
insert of such CHIRON Licensed Products or such other reasonably prominent
location to be determined by ROCHE.
(c) In the event that ROCHE or CHIRON becomes aware of any material
use in Blood Screening of CHIRON Licensed Products labeled or promoted for
use in the Field or the Transplantation Field, such party will promptly
notify the other in writing of the relevant facts and, if so requested by
CHIRON, ROCHE will (i) meet and confer with CHIRON in good faith to determine
what steps either or both should take to abate such infringing use and (ii)
notify in writing any of its customers that engages in such infringing use
that use of the relevant CHIRON Licensed Product in Blood Screening may
infringe one or more of the CHIRON Licensed Patents.
(d) Without limiting the labeling and promoting obligations under
this Section 12.1, CHIRON shall not sue ROCHE, its Affiliates, its Authorized
Distributors or its End User customers for the sale or use as a confirmatory
or supplemental test in conjunction with the screening of blood, plasma or
blood products (a "Confirmatory Test") of a CHIRON Licensed Product that is
labeled or promoted for use in the Field or the Transplantation Field, if the
End User customer has substantial non-infringing uses for such CHIRON
Licensed Product in the Field or the Transplantation Field. Further, ROCHE
shall not be obligated to notify such customers pursuant to Section
12.1(c)(ii) with respect to such CHIRON Licensed Product.
(e) Nothing in this Section 12.1 shall apply to any product to the
extent that ROCHE's activity and that of its Affiliates with respect to such
product is either for or through an entity licensed in Blood Screening under
the CHIRON Licensed Patents.
29
12.2 ROCHE COVENANT REGARDING PRODUCT LABELING. ROCHE and its
Affiliates shall include on or with each CHIRON Licensed Product a statement
as to the number of Units contained within each such CHIRON Licensed Product,
using such language to be determined by ROCHE and approved in advance in
writing by CHIRON, which approval shall not be unreasonably withheld. The
location of such statement shall be in the product insert of such CHIRON
Licensed Products or such other reasonably prominent location to be
determined by ROCHE.
12.3 PATENT MARKING. ROCHE and its Affiliates shall include a patent
notice on each CHIRON Licensed Product to identify the CHIRON Licensed
Patents which such CHIRON Licensed Product, but for the licenses granted
herein, would infringe one or more Valid Claims (or for which royalties are
being paid); provided, however, identification of CHIRON Licensed Patents on
a CHIRON Licensed Product shall in no way be deemed to be an admission by
ROCHE or its Affiliates, or raise a presumption, that such CHIRON Licensed
Product is in fact covered by such CHIRON Licensed Patent.
12.4 CHIRON COVENANT REGARDING FIELD.
(a) CHIRON and its Affiliates shall not, and CHIRON shall require
any of its future licensees under the CHIRON Licensed Patents that are
licensed in Blood Screening to agree not to, label or promote, in any respect
for use in the Field, any product sold in, labeled or promoted for use in
Blood Screening [CONFIDENTIAL TREATMENT REQUESTED], which product detects
nucleic acid sequences of HCV.
(b) Further, CHIRON and its Affiliates shall, and CHIRON shall
require its future licensees in Blood Screening to, include with each such
HCV product sold by CHIRON or its Affiliates or licensees in Blood Screening
a statement to the effect that such product is not for use in the Field,
using language to be determined by CHIRON and approved by ROCHE, which
approval shall not be unreasonably withheld. The location of such notice
shall be in the product insert for such product or such other reasonably
prominent location to be determined by CHIRON.
(c) In the event that CHIRON or ROCHE becomes aware of any material
use of any such product in the Field, such party will promptly notify the
other in writing of the relevant facts and, if so requested by ROCHE, CHIRON
will (i) meet and confer with ROCHE in good-faith to determine what steps
either or both of them should take to abate such use and (ii) notify in
writing any of its customers that engage in such use that use of the relevant
product in the Field may infringe one or more of the CHIRON Licensed Patents.
(d) Nothing in this Section 12.4 shall apply to any product to the
extent that CHIRON's activity and that of its Affiliates or licensees with
respect to such
30
product either (i) is for or through an entity that is licensed under the
CHIRON Licensed Patents in the Field or (ii) is within CHIRON's rights to
practice in the Field, pursuant to its rights retained under, and subject to
the limitations of, Section 2.1.
ARTICLE 13
INFRINGEMENT BY THIRD PARTIES
13.1 NOTICE OF INFRINGEMENT. Each party shall notify the other if it
becomes aware of Infringing Third Party Sales. CHIRON shall have the
exclusive right to take action against any infringement of any of the CHIRON
Licensed Patents, in its sole discretion, subject to this Article 13.
13.2 INFRINGEMENT LITIGATION.
(a) In the event that "substantial" Infringing Third Party Sales are
occurring in a country in which ROCHE or its Affiliates or an Authorized
Distributor is selling a CHIRON Licensed Product (in each such country, the
"Impacted Product"), and ROCHE has notified CHIRON pursuant to Section 13.1
of the existence of such infringement in [CONFIDENTIAL TREATMENT REQUESTED]
(an "Infringement Notice"), then the provisions of this Section 13.2 shall
apply. For purposes of this Section 13.2, an Infringing Third Party Sale
shall be considered substantial in a country if the infringing third party
achieves market share of at least [CONFIDENTIAL TREATMENT REQUESTED] of the
Aggregated Products in such country as determined by an Independent Auditor
paid for by ROCHE. For purposes of this Section 13.2, "Major Country" shall
mean the United States, Germany, United Kingdom or Japan. For purposes of
this Section 13.2, "Aggregated Products" means the number of CHIRON Licensed
Products of the Applicable Product Category and Competitive Products sold in
a country, and "Competitive Products" means Products which are sold in the
Field and which compete with a CHIRON Licensed Product sold by ROCHE or its
Affiliates in a country.
(b) If either (i) the Infringement Notice identified an Impacted
Product in the United States and CHIRON fails to institute legal action in
the United States [CONFIDENTIAL TREATMENT REQUESTED] following receipt by
CHIRON of the Infringement Notice and infringement is not otherwise abated,
or (ii) the Infringement Notice identified an Impacted Product in a Major
Country other than the United States and CHIRON fails to institute legal
action against the infringing party in at least one of the United States, the
Netherlands, Germany, United Kingdom or Japan, [CONFIDENTIAL TREATMENT
REQUESTED] following receipt by CHIRON of the Infringement Notice and
infringement is not otherwise abated; then ROCHE shall be relieved of the
obligation to pay the portion of Earned Royalties set forth in Section
13.2(c) and [CONFIDENTIAL TREATMENT REQUESTED], with respect to the Impacted
Product until such time as CHIRON institutes such legal action as described
in this Section 13.2(b); provided,
31
however, that CHIRON need not initiate or continue any such legal action, if,
after reasonably diligent effort (including reasonably diligent effort by
ROCHE if requested by CHIRON), CHIRON is unable to acquire admissible
evidence sufficient to establish a prima facia case of infringement under the
law of the applicable country.
(c) If CHIRON has not instituted such legal action at the end of
such [CONFIDENTIAL TREATMENT REQUESTED], to the extent required under
Section 13.2(b), and such infringement is not otherwise abated, the Earned
Royalty with respect to an Impacted Product shall be reduced by [CONFIDENTIAL
TREATMENT REQUESTED]. If, at the end of each [CONFIDENTIAL TREATMENT REQUESTED]
thereafter, CHIRON has not instituted such legal action, to the extent so
required, and infringement is not otherwise abated, such Earned Royalties
shall be reduced by an [CONFIDENTIAL TREATMENT REQUESTED] of the original
Earned Royalties, such that if legal action required under Section 13.2(b)
has not commenced and the infringement is not otherwise abated by the end of
the [CONFIDENTIAL TREATMENT REQUESTED] following receipt by CHIRON of the
Infringement Notice, [CONFIDENTIAL TREATMENT REQUESTED] shall be payable
hereunder with respect to the Impacted Product.
(d) The obligations to pay Earned Royalties and Minimum Royalties
shall be reinstated on a prospective basis at such time as ROCHE receives
written notice of the institution of legal action in accordance with Section
13.2(b) or the infringement is otherwise abated, all subject to Section
13.2(e).
(e) If legal action required under Section 13.2(b) has not been
instituted and the infringement is not otherwise abated for more than
[CONFIDENTIAL TREATMENT REQUESTED] following receipt by CHIRON of the
Infringement Notice, and if, as a result of the infringement, sales of the
Impacted Product in a Major Country by ROCHE, its Affiliates or an Authorized
Distributor have declined by [CONFIDENTIAL TREATMENT REQUESTED] or more
during the preceding [CONFIDENTIAL TREATMENT REQUESTED], then upon
reinstatement of Earned Royalties and Minimum pursuant to Section 13.2(d),
the parties shall meet and confer regarding possible adjustments to the
Earned Royalties and Minimum Royalties for the Impacted Product in view of
such degradation of the market. The parties will discuss possible rate
reductions, as well as a plan for reinstating the original economic
expectations of the parties. It is expected that any agreement for reduction
of Earned Royalties and Minimum Royalties will be phased out over time, so as
to return to the Earned Royalties and Minimum Royalties set forth in Exhibit
A. If the parties fail to reach agreement on any such adjustment, the matter
shall be submitted for resolution by ADR, except that in the event of ADR,
each party shall submit to the neutral a proposal with respect to adjustments
pursuant to this Section 13.2(e). The neutral shall be empowered to choose
one proposal or the other,
32
but shall not be empowered to order any such adjustment other than as
proposed by one of the parties.
13.3. COOPERATION. ROCHE and its Affiliates shall cooperate with
CHIRON in connection with any legal action referred to in this Article 13.
ARTICLE 14
EUROPEAN COMMUNITY PROVISIONS
14.1 TERMINATION IN EUROPEAN COMMUNITY. Notwithstanding the
provisions of Article 7, this Agreement, with respect to the European
Community, shall terminate in each member country seventeen (17) years from
the Effective Date or on the expiration of the last to expire of the patents
within the CHIRON Licensed Patents in such member country based upon a patent
existing or a patent application pending as of the Effective Date, whichever
is later; provided, however, that prior to the termination of this Agreement
in the first member country in which it would otherwise terminate pursuant to
the foregoing, ROCHE may, in its discretion, elect by written notice to
CHIRON to extend this Agreement as to all such member countries for an
additional term which shall expire on a country-by-country basis on the
expiration date of the last to expire patent within the CHIRON Licensed
Patents existing in such member country as of the date of such extension.
14.2 COMPETITION NOTIFICATION. If either party (the "Notifying
Party") elects to file a notification with respect to this Agreement (a
"Notification") with the Competition Directorate of Commission of European
Community (the "Commission") in accordance with regulations established by
the Commission, the Notifying Party shall provide a non-confidential version
of the final draft to the other party for comment at least thirty (30) days
before making the filing and shall consider in good faith the modification
thereto, if any, that the other party may propose. The other party shall
execute all documents reasonably required by the Notifying Party and shall
otherwise reasonably cooperate in connection with the Notification. The
Notifying Party shall bear all costs incurred by it relating to the
Notification.
14.3 REFORMATION. If, at any time during the Term, either party
receives a request or other communication from the Commission with respect to
the Notification (a "Request"), such party shall promptly inform the other of
the nature of the Request. In the event that the Commission indicates in a
Statement of Objection(s) that this Agreement will violate the provisions of
Article 81 or 82 of the Treaty of Rome, then the parties shall amend this
Agreement by making those minimal modifications necessary to satisfy the
concerns of the Commission as set forth in the Statement of Objection(s).
Notwithstanding the foregoing, the parties agree that ROCHE shall retain
substantially the same license rights at substantially the same royalties as
specified under this Agreement.
33
IN WITNESS WHEREOF this Agreement has been executed by duly authorized
officers of CHIRON and ROCHE as of the Effective Date.
CHIRON CORPORATION
By: /s/ SEAN P. LANCE
-----------------
Sean P. Lance
Title: Chairman and Chief Executive Officer
Date: October 10, 2000
F. HOFFMANN-LA ROCHE LTD
By: /s/ HEINO VON PRONDZYNSKI
-------------------------
Title: Head of Diagnostics
Date: 10/10/2000
By: /s/ S. SCHWAN
-------------
Title: Head of Diagnostics Finance
Date: 10/10/2000
ROCHE MOLECULAR SYSTEMS, INC.
By: /s/ KATHY ORDONEZ
-----------------
Title: President & CEO
Date: October 10, 2000
34
EXHIBIT A
COMPENSATION TO CHIRON CORPORATION
1. PRIOR SALES ROYALTY. In consideration of the licenses granted pursuant to
Sections 2.1 and 2.3, within ten (10) days of the Effective Date ROCHE shall
pay [CONFIDENTIAL TREATMENT REQUESTED], for all sales of CHIRON Licensed
Products [CONFIDENTIAL TREATMENT REQUESTED], and [CONFIDENTIAL TREATMENT
REQUESTED] for all sales of Chiron Licensed Products [CONFIDENTIAL TREATMENT
REQUESTED], that would have, in the absence of the licenses granted pursuant
to Section 2.1 and 2.3 and under the Blood Screening Agreement, constituted
an infringement of a Valid Claim of a CHIRON Licensed Patent (the "Prior
Sales Royalty"). The Prior Sales Royalty shall be nonrefundable and fully
earned when paid.
2. EARNED ROYALTY. In consideration of the licenses granted pursuant to
Sections 2.1 and 2.3, ROCHE shall pay earned royalties equal to [CONFIDENTIAL
TREATMENT REQUESTED] of Net Sales of CHIRON Licensed Products, that would,
[CONFIDENTIAL TREATMENT REQUESTED].
Earned Royalties shall be payable quarterly, commencing with the
Calendar Quarter ending [CONFIDENTIAL TREATMENT REQUESTED], within sixty (60)
days following the end of each Calendar Quarter, and shall be accompanied by
a report pursuant to Article 4 of this Agreement.
3. MINIMUM ROYALTY. Notwithstanding the Earned Royalties due pursuant to
Paragraph 2 of this Exhibit A, and subject to the adjustments referenced in
Paragraphs 2 and 3(b) of this Exhibit A, royalties paid to CHIRON under this
Agreement in any Calendar Quarter shall not be less than a minimum royalty in
such quarter (the "Minimum Royalty") calculated as follows:
The Minimum Royalty for each Calendar Quarter shall be the sum of the
products obtained by multiplying (x) [CONFIDENTIAL TREATMENT REQUESTED] in
each category within the CHIRON Licensed Products (a "Product Category") and
in each Region times (y) the applicable minimum amount (the "Minimum Royalty
Amount"), each of which Minimum Royalty Amounts shall be calculated by the
following equation:
[CONFIDENTIAL TREATMENT REQUESTED]
Where:
A equals [CONFIDENTIAL TREATMENT REQUESTED](the "Minimum Amount/Test");
B equals [CONFIDENTIAL TREATMENT REQUESTED]
C equals [CONFIDENTIAL TREATMENT REQUESTED].
Minimum Amount/Test
FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
TRANSPLANTATION FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
(a) Within ten (10) days of the Effective Date, ROCHE shall pre-pay
[CONFIDENTIAL TREATMENT REQUESTED], for all sales of CHIRON Licensed Products
made [CONFIDENTIAL TREATMENT REQUESTED], that would, in the absence of the
licenses granted pursuant to Sections 2.1 and 2.3, constitute an infringement
of a Valid Claim of a CHIRON Licensed Patent (the "Pre-Paid Minimum
Royalty"). The Pre-Paid Minimum Royalty shall be nonrefundable except as
provided below. The unamortized balance from time-to-time of the Pre-Paid
Minimum Royalty, [CONFIDENTIAL TREATMENT REQUESTED], shall be applied to
reduce the Minimum Amount/Test for each Product Category by the following
amounts:
Minimum Amount/Test
FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
TRANSPLANTATION FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
2
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
(b) Minimum Royalty shall be determined on a [CONFIDENTIAL TREATMENT
REQUESTED], except to the extent [CONFIDENTIAL TREATMENT REQUESTED].
(c) In the event that action by governmental pricing or
reimbursement authority or other governmental agency in a country results in
a requirement that ROCHE or its Affiliates sell a CHIRON Licensed Product
[CONFIDENTIAL TREATMENT REQUESTED] (after adjustment as provided in Paragraph
3(a) of Exhibit A), excluding for the purpose of calculating the impact of
such price reduction any currency exchange rate fluctuations from the
Effective Date (i.e., the calculation shall be made using the exchange rate
in effect as of the Effective Date), [CONFIDENTIAL TREATMENT REQUESTED]. If
any such action or series of actions results in a requirement that ROCHE or
its Affiliates sell a CHIRON Licensed Product [CONFIDENTIAL TREATMENT
REQUESTED], then at the request of ROCHE, the parties shall meet and
reasonably consider greater adjustment to the Minimum Amount/Test with
respect to the CHIRON Licensed Product in that country. No adjustment shall
be made to the Minimum Amount/Test unless mutually agreed or determined
pursuant to ADR as provided in this subparagraph 3(c).
[CONFIDENTIAL TREATMENT REQUESTED]
(d) Within sixty (60) days of the third anniversary of the Effective
Date and every third anniversary thereafter during the Term of this Agreement
the parties shall meet and reasonably consider adjustment to the Minimum
Amount/Test with respect to each CHIRON Licensed Product based on the average
price increase if any for diagnostics products on an industry-wide basis in
each Region over the prior three-year period; provided that no adjustment
shall be made to any Minimum Amount/Test unless mutually agreed or determined
pursuant to ADR as provided in this subparagraph 3(d), and provided further
that [CONFIDENTIAL TREATMENT REQUESTED].
(e) Minimum Royalties shall be payable quarterly, net of the
applicable portion of the Pre-Paid Minimum Royalty pursuant to paragraph 3(a)
of Exhibit A, commencing with the Calendar Quarter ending
[CONFIDENTIAL TREATMENT REQUESTED], within sixty (60) days following the end
of each Calendar Quarter. Such payment shall be accompanied by a report
pursuant to Article 4 and shall be fully creditable against Earned Royalties
payable pursuant to paragraph 2 of Exhibit A for the same Calendar Quarter.
(f) [CONFIDENTIAL TREATMENT REQUESTED]
ROCHE shall only be entitled to a single adjustment by reason of
this Paragraph 3(f) with respect to [CONFIDENTIAL TREATMENT REQUESTED]
3
4. SINGLE ROYALTY PER CHIRON LICENSED PRODUCT. Only one payment of Earned
Royalty shall be due with respect to any Net Sales or only one payment of
Minimum Royalty Amount shall be due with respect to any Unit of CHIRON
Licensed Product Shipped, irrespective of the number of patents or Valid
Claims in the CHIRON Licensed Patents covering such CHIRON Licensed Product.
5. DISPUTE RESOLUTION. Any dispute between CHIRON and ROCHE regarding whether
any adjustment to or credits against Earned Royalties or Minimum Royalties
under this Exhibit A is appropriate, and which the parties fail to resolve
themselves may only be resolved by resort to the ADR provisions of Article
10. Until such dispute is resolved, ROCHE shall pay CHIRON the Earned Royalty
or Minimum Royalty provided for herein without benefit of the applicable
disputed adjustment on the condition that CHIRON shall repay ROCHE the
amounts of such disputed payments if ROCHE prevails in the ADR, plus interest
at the rate described in Section 4.8.
4
EXHIBIT B - HCV
PAGE 1 OF 3
CHIRON HCV PATENTS
FOUNDATIONAL PATENTS
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT B - HCV
PAGE 2 OF 3
NON-FOUNDATIONAL PATENTS
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT B - HCV
PAGE 3 OF 3
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT C - HCV
PAGE 1 OF 1
ROCHE HCV PATENTS
[CONFIDENTIAL TREATMENT REQUESTED]
Exhibit D
PRODUCT CODES, HCV KITS: MAX
LABELED
DESCRIPTION SAP/ PART NO. CAPACITY UNITS CONTROLS
- -----------------------------------------------------------------------------------------------
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
Exhibit D-1
PRODUCT CODES, HCV KITS*: MAX
LABELED
DESCRIPTION SAP/ PART NO. CAPACITY UNITS CONTROLS
- -----------------------------------------------------------------------------------------------
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
*CONFIDENTIAL TREATMENT REQUESTED
[EXHIBIT E - PAGE 1]
HCV PROBES ROYALTY REPORT
REGION_: ______________________
FOR THE QUARTER ENDING____________
Adjusted for Pre-Paid Royalty
-----------------------------
Number Maximum Minimum Pre-Paid Minimum Pre-Paid
of Product Units per Minimum Labeled Royalty Minimum Minimum Minimum Royalty Minimum Minimum
Product Sold Product Units Amount/Test Capacity Amount Royalty Amount/Test Amount/Test Amount Royalty Royalty
- ------- ---- ------- ----- ----------- -------- ------ ------- ----------- ----------- ------ ------- -------
HCV Quantitative
[SKU#1]
[SKU#2]
[SKU#3]
[SKU#4]
HCV Qualitative
[SKU#1]
[SKU#2]
[SKU#3]
[SKU#4]
[CONFIDENTIAL TREATMENT REQUESTED]
HCV Genotyping
[SKU#1]
[SKU#2]
[SKU#3]
[SKU#4]
HCV Resistance
[SKU#1]
[SKU#2]
[SKU#3]
[SKU#4]
Total
-------
$0
=======
Example [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
*FOR PURPOSES OF CALCULATING NUMBER OF UNITS, TO AVOID DOUBLE COUNTING FOR
AMPLIFICATION AND DETECTION UNITS, THE NUMBER OF UNITS IN THE DETECTION KIT
WILL BE USED.
[EXHIBIT E - PAGE 2]
HCV PROBES ROYALTY REPORT
REGION_: __________________
FOR THE QUARTER ENDING _________
Earned
Royalty Earned Royalty
Product Sales Deductions Net Sales Rate Royalty Payment Date
- ------- ----- ---------- --------- ------- ------- ------------
HCV Quantitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HCV Qualitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
[CONFIDENTIAL TREATMENT REQUESTED]
HCV Genotyping
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HCV Resistance
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
------------
Total $0
============
Example [CONFIDENTIAL TREATMENT REQUESTED]
HCV EXHIBIT F
EXISTING LICENSES OR RIGHTS GRANTED IN THE FIELD UNDER THE LICENSED PATENTS
AS OF THE EFFECTIVE DATE
1. [CONFIDENTIAL TREATMENT REQUESTED]
2. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
3. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
4. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
5. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
6. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]