REDACTED
EXHIBIT 10.311
**CONFIDENTIAL TREATMENT REQUESTED**
AGREEMENT
between
GEN-PROBE INCORPORATED
and
CHIRON CORPORATION
Dated as of June 11, 1998
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS...............................................................................1
1.1 "Affiliate"...............................................................................1
1.2 "Applicable Purchase Price"...............................................................2
1.3 "Applicable Royalty"......................................................................4
1.4 "Blood Screening Assays"..................................................................4
1.5 "Blood Screening Field"...................................................................4
1.6 "Blood Screening Instruments".............................................................4
1.7 "Blood Screening Term"....................................................................4
1.8 "CDS".....................................................................................4
1.9 "Change in Control".......................................................................5
1.10 "Chiron Copyrights".......................................................................5
1.11 "Chiron HCV Patent Rights"................................................................5
1.12 "Chiron HIV Patent Rights"................................................................5
1.13 "Chiron Know-How".........................................................................5
1.14 "Chiron IP Rights"........................................................................6
1.15 "Chiron Marks"............................................................................6
1.16 "Chiron Patent Rights"....................................................................6
1.17 [PROVISION ASSIGNED]......................................................................6
1.18 [PROVISION ASSIGNED]......................................................................6
1.19 [PROVISION ASSIGNED]......................................................................6
1.20 [PROVISION ASSIGNED]......................................................................6
1.21 [PROVISION ASSIGNED]......................................................................7
1.22 "Commercially Reasonable Efforts".........................................................7
1.23 "Confidential Information"................................................................7
1.24 "Development Costs".......................................................................8
1.25 "Development Program".....................................................................8
1.26 "Effective Date"..........................................................................8
1.27 [PROVISION ASSIGNED]......................................................................8
1.28 "FDA".....................................................................................8
1.29 "First Commercial Sale....................................................................8
1.30 "Future Blood Screening Assays"...........................................................8
1.31 [PROVISION ASSIGNED]......................................................................8
1.32 "Gen-Probe Copyrights"....................................................................8
1.33 "Gen-Probe Know-How"......................................................................9
1.34 "Gen-Probe IP Rights".....................................................................9
1.35 "Gen-Probe Marks".........................................................................9
1.36 "Gen-Probe Patent Rights".................................................................9
1.37 "HCV".....................................................................................9
1.38 "HIV-1"...................................................................................9
1.39 "Initial Blood Screening Assays".........................................................10
1.40 [PROVISION ASSIGNED].....................................................................10
i
1.41 "Japanese HIV Qualitative Blood Screening Assay..........................................10
1.42 "Leader/Magnetic Separation Instrument"..................................................10
1.43 "Major Distributor"......................................................................10
1.44 "Manufacturing Cost".....................................................................10
1.45 "Manufacturing Royalty"..................................................................10
1.46 "Net Sales"..............................................................................11
1.47 [PROVISION ASSIGNED].....................................................................13
1.48 "Pass Through Royalty....................................................................13
1.49 "Person".................................................................................13
1.50 "Product"................................................................................13
1.51 "Rare Reagents"..........................................................................13
1.52 "Sales Royalty"..........................................................................14
1.53 "Supervisory Board"......................................................................14
1.54 "Territory"..............................................................................14
1.55 "Third Party"............................................................................14
1.56 "Tigris Instrument"......................................................................14
1.57 "TMA Assay"..............................................................................15
1.58 "Transfer Price".........................................................................15
1.59 "Valid Claim"............................................................................17
ARTICLE 2 REPRESENTATIONS AND WARRANTIES...........................................................17
2.1 By Each Party............................................................................17
2.2 By Chiron................................................................................18
2.3 DISCLAIMER OF WARRANTIES.................................................................18
ARTICLE 3 BLOOD SCREENING PRODUCTS.................................................................19
3.1 Initial Blood Screening Assays...........................................................19
3.2 Future Blood Screening Assays............................................................24
3.3 Blood Screening Instruments..............................................................30
3.4 Appointment of Major Distributor.........................................................35
3.5 Records and Reports......................................................................35
3.6 Interim Opportunities....................................................................35
ARTICLE 4 [PROVISION ASSIGNED].....................................................................36
4.1 [PROVISION ASSIGNED].....................................................................36
4.2 [PROVISION ASSIGNED].....................................................................40
4.3 [PROVISION ASSIGNED].....................................................................45
4.4 [PROVISION ASSIGNED].....................................................................51
4.5 [PROVISION ASSIGNED].....................................................................56
4.6 [PROVISION ASSIGNED].....................................................................58
4.7 [PROVISION ASSIGNED].....................................................................58
ARTICLE 5 SUPERVISORY BOARDS.......................................................................59
5.1 Supervisory Boards.......................................................................59
5.2 Reports..................................................................................60
ii
ARTICLE 6 SUPPLY TERMS.............................................................................60
6.1 Manufacture and Sale.....................................................................60
6.2 Manufacturing Practices..................................................................60
6.3 Forecasts and Orders.....................................................................61
6.4 Delivery and Acceptance..................................................................63
6.5 Packaging................................................................................64
6.6 Warranty.................................................................................64
6.7 Independent Purchaser Status.............................................................64
6.8 Invoicing................................................................................64
6.9 Sales and Use Taxes......................................................................64
6.10 Non-Commercial Products..................................................................64
6.11 Internal Commercial Use..................................................................65
6.12 Safety Stocks............................................................................65
ARTICLE 7 PAYMENTS AND REPORTS.....................................................................66
7.1 Reports..................................................................................66
7.2 Exchange Rates...........................................................................66
7.3 Audits...................................................................................66
7.4 Payment Method...........................................................................67
7.5 Exchange Control.........................................................................67
7.6 Withholding Taxes........................................................................67
7.7 Late Payments............................................................................67
ARTICLE 8 CONFIDENTIALITY..........................................................................68
8.1 Confidential Information.................................................................68
8.2 Terms of this Agreement..................................................................68
8.3 Permitted Disclosures....................................................................69
ARTICLE 9 INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS .............................................69
9.1 Ownership of Inventions .................................................................69
9.2 Patent Rights ...........................................................................73
9.3 Copyrights ..............................................................................73
9.4 Trademarks ..............................................................................74
9.5 No other Technology Rights ..............................................................74
9.6 Third Party Technology ..................................................................74
ARTICLE 10 INDEMNIFICATION AND INSURANCE ...........................................................75
10.1 Indemnity ...............................................................................75
10.2 Procedure................................................................................75
10.3 Insurance ...............................................................................76
ARTICLE 11 TERM AND TERMINATION ....................................................................76
11.1 Expiration ..............................................................................76
11.2 Termination .............................................................................76
iii
11.3 Effect of Expiration and Termination ....................................................77
ARTICLE 12 CONDITIONS PRECEDENT ....................................................................78
12.1 Due Execution and Delivery ..............................................................78
12.2 Accuracy of Representations and Warranties ..............................................78
12.3 Governmental Approvals ..................................................................78
12.4 Due Diligence ...........................................................................78
ARTICLE 13 ARBITRATION .............................................................................78
13.1 Executive Mediation .....................................................................78
13.2 Arbitration Procedure ...................................................................79
13.3 Review ..................................................................................80
ARTICLE 14 ACCESS FEES .............................................................................80
ARTICLE 15 MISCELLANEOUS ...........................................................................81
15.1 Notices .................................................................................81
15.2 Force Majeure ...........................................................................81
15.3 Assignment ..............................................................................82
15.4 Severability ............................................................................82
15.5 Applicable Law ..........................................................................83
15.6 Entire Agreement ........................................................................83
15.7 Expenses and Attorney's Fees ............................................................83
15.8 Independent Contractors .................................................................83
15.9 Waiver ..................................................................................83
15.10 Drafting Party ..........................................................................83
15.11 Third Parties ...........................................................................84
15.12 Affiliates ..............................................................................84
15.13 Counterparts ............................................................................84
iv
AGREEMENT
THIS AGREEMENT dated as of June 11, 1998 (this "Agreement"), is entered into
between GEN-PROBE INCORPORATED, a Delaware corporation ("Gen-Probe"), having a
place of business at 10210 Genetic Center Drive, San Diego, California 92121,
and CHIRON CORPORATION, a Delaware corporation ("Chiron"), having a place of
business at 4560 Horton Street, Emeryville, California 94608.
RECITALS
WHEREAS, Gen-Probe owns or has rights in certain patent rights, other
intellectual property rights and technology regarding in vitro diagnostic assays
based on or utilizing transcription-mediated amplification and regarding certain
instruments to conduct such assays.
WHEREAS, Chiron owns or has rights in certain patent rights, other intellectual
property rights and technology regarding hepatitis C virus and type 1 human
immunodeficiency virus and the detection thereof.
WHEREAS, Gen-Probe has developed certain assays and instruments, which utilize
INTER ALIA such Gen-Probe patent rights, other intellectual property rights and
technology which Chiron wishes to distribute and sell, for use in the blood
screening and [PROVISION ASSIGNED], on the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article I shall have
the respective meanings set forth below:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, more than fifty
percent (50%) of the voting stock or other ownership interest of the other
Person (or such lesser percentage as is the maximum percentage permitted under
applicable law for foreign ownership where control is exercised by contract or
otherwise), or if it directly or indirectly possesses the power to direct or
cause the direction of the management and policies of the other Person by any
means whatsoever. Without limiting the generality of the foregoing, the
Affiliates of Chiron expressly exclude Novartis AG ("Novartis"), a Switzerland
corporation, or any Affiliate of Novartis, unless and until such time as
Novartis has the right to elect a majority of the board of directors of Chiron
under the Governance Agreement dated as of November 20,
1
1994 between Novartis and Chiron. Notwithstanding anything else set forth in
this section, for purposes of the definition of Net Sales only, a Person shall
be regarded as in control of another Person if it owns, or directly or
indirectly controls, at least fifty percent (50%) of the voting stock or other
ownership interest of the other Person (or such lesser percentage as is the
maximum percentage permitted under applicable law for foreign ownership where
control is exercised by contract or otherwise), or if it directly or indirectly
possesses the power to direct or cause the direction of the management and
policies of the other Person by any means whatsoever.
1.2 "APPLICABLE PURCHASE PRICE" shall mean, with respect to any
Blood Screening Assay and with respect to [PROVISION ASSIGNED], each on a per
unit basis, the following price:
1.2.1 With respect to each Initial Blood Screening Assay, and
each Future Blood Screening Assay which includes as a constituent element an
assay for HCV (other than those sold pursuant to Sections 3.1.4(b) or 3.6), and
except as set forth in Section 1.2.2 below, an amount equal to:
(a) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales thereof
when (i) no FDA-approved Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED], and (ii) no
FDA-approved nucleic acid probe-based assay for HCV for use in the Blood
Screening Field (either as an independent or combination assay) is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED].
(b) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales thereof
when (i) no FDA-approved Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED], and (ii) an
FDA-approved nucleic acid probe-based assay for HCV for use in the Blood
Screening Field (either as an independent or combination assay) is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED].
(c) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales thereof
when (i) an FDA-approved Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED], and (ii) no
FDA-approved nucleic acid probe-based assay for HCV for use in the Blood
Screening Field (either as an independent or combination assay) is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED].
(d) [CONFIDENTIAL TREATMENT REQUESTED] of Net Sales thereof
when (i) an FDA-approved Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field is then being
sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED], and (ii) an
FDA-approved
2
nucleic acid probe-based assay for HCV for use in the Blood Screening Field is
then being sold in the United States by [CONFIDENTIAL TREATMENT REQUESTED].
(e) Notwithstanding the foregoing, in the event that the
United States government requires Chiron to grant a license under the Chiron HCV
Patent Rights to a Third Party for use in the Blood Screening Field, based on a
determination that Gen-Probe has failed to supply the Initial Blood Screening
Assay for the qualitative detection of HCV and HIV in sufficient quantities,
with sufficient performance, or in a timely manner, then such mandated license
shall not constitute a license within the meaning of Section 1. 2. 1 (a) through
(d) . Any such license to a Third Party which is mandated by the United States
government for any reason other than Gen-Probe's failure as described in the
preceding sentence shall constitute a license within the meaning of Section
1.2.1 (a) through (d).
1.2.2 With respect to each Initial Blood Screening Assay sold
in Japan, an amount equal to:
(a) Beginning on the earlier of (i) the [CONFIDENTIAL
TREATMENT REQUESTED] of the First Commercial Sale by CDS in Japan of the
Japanese HIV Qualitative Blood Screening Assay or (ii) the [CONFIDENTIAL
TREATMENT REQUESTED] of the Initial Blood Screening Assay for the qualitative
detection of both HCV and HIV-1, and until the earlier of the [CONFIDENTIAL
TREATMENT REQUESTED] of the date of the First Commercial Sale by CDS in Japan of
the Japanese HIV Qualitative Blood Screening Assay or the [CONFIDENTIAL
TREATMENT REQUESTED] of the date of The First Commercial Sale of the Initial
Blood Screening Assay for the qualitative detection of both HCV and HIV-1, an
amount equal to [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of such
Initial Blood Screening Assay sold in Japan.
(b) After the [CONFIDENTIAL TREATMENT REQUESTED] of the
earlier of (i) the [CONFIDENTIAL TREATMENT REQUESTED] by CDS in Japan of the
Japanese HIV Qualitative Blood Screening Assay or (ii) the [CONFIDENTIAL
TREATMENT REQUESTED] of the Initial Blood Screening Assay for the qualitative
detection of both HCV and HIV-1, the amount determined under Section 1.2.1.
1.2.3 With respect to each Future Blood Screening Assay which
does not include as a constituent element an assay for HCV, an amount equal to
the sum of:
(a) the Manufacturing Cost of such Future Blood Screening
Assay, PLUS
(b) [CONFIDENTIAL TREATMENT REQUESTED] of the positive
remainder of:
(i) the Net Sales of such Assay (except that solely for
the purpose of this Section 1.2.3. such sales shall not include sales by any
distributor of Chiron, but shall instead include sales by Chiron to all such
distributors, so long as the sales price is within industry standards for
distributor margins), minus
3
(ii) the Manufacturing Cost of such Future Blood Screening
Assay AND such reasonable incremental costs incurred by either party (as
approved by the supervisory board) as may be reasonably and fairly attributed to
such Future Blood Screening Assay, which such costs shall be reimbursed to the
party incurring them. (It is the intent of the parties that for each such Future
Blood Screening Assay for which Chiron is the distributor, such incremental
costs shall include Chiron's incremental distribution costs.)
PROVIDED, HOWEVER, that the percentage referred to in (b) above shall be
adjusted to reflect the value of patent rights contributed by either party
covering the marker which is the subject of such Future Blood Screening Assay,
with the amount of the adjustment determined by the Supervisory Board based on
the value of such patent rights and the degree of exclusivity which is provided
for the Future Blood Screening Assay, pursuant to Section 3.2.8(c).
1.2.4 With respect to [PROVISION ASSIGNED], an
amount equal to the Applicable Purchase Price then in effect pursuant to Section
1.2.1.
1.3 "APPLICABLE ROYALTY" shall mean, with respect to each Product, the
aggregate of the Manufacturing Royalty, Pass Through Royalty and Sales Royalty
applicable thereto (if any).
1.4 "BLOOD SCREENING ASSAYS" shall mean, collectively, the Initial
Blood Screening Assays and the Future Blood Screening Assays.
1.5 "BLOOD SCREENING FIELD" shall mean the nucleic acid probe based
testing of human blood, plasma or other blood products intended for direct
transfusion or other administration to humans.
1.6 "BLOOD SCREENING INSTRUMENTS" shall mean the Tigris Instrument and
the Leader/Magnetic Separation Instrument for use in the Blood Screening Field
(each with such modifications as are developed by Gen-Probe pursuant to the
Development Program under Section 3.3.1 below and as subsequently modified
pursuant to Section 3.3.7 below) and such other instrument(s) for use in the
Blood Screening Field as are developed by Gen-Probe after the Effective Date and
offered to and accepted by Chiron (all pursuant to Section 3.3.8 below).
1.7 "BLOOD SCREENING TERM" shall mean the period commencing on the
Effective Date and expiring on the later of (a) the date [CONFIDENTIAL TREATMENT
REQUESTED] the First Commercial Sale of the first Blood Screening Assay in the
Territory for use in the Blood Screening Field (other than any sale as may be
made pursuant to Section 3.1.4(b) or Section 3.6), and (b) the date
[CONFIDENTIAL TREATMENT REQUESTED] the First Commercial Sale of the last Blood
Screening Assay launched prior to the date specified in clause (a) above in the
Territory for use in the Blood Screening Field.
1.8 "CDS" shall mean Chugai Diagnostics Science Co. Ltd., a Japanese
corporation.
4
1.9 "CHANGE IN CONTROL" shall mean, with respect to a party, (a) the
acquisition of such party by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger effected
exclusively for the purpose of changing the domicile of such party); (b) the
sale, transfer or other disposition of all or substantially all of the assets of
such party (including without limitation all of its assets relating to this
Agreement); or (c) the sale of all or substantially all of the capital stock of
such party; UNLESS in each of clauses (a) through (c) above, such party's
stockholders of record immediately prior to such acquisition or sale hold (by
virtue of the securities issued in consideration for such party's acquisition or
sale or otherwise) greater than fifty percent (50%) of the total voting power of
the surviving or acquiring entity.
1.10 "CHIRON COPYRIGHTS" shall mean all rights under the copyright
laws of any jurisdiction in the world, together with all rights commonly
referred to as "moral rights," in and to the Blood Screening Assays,
[PROVISION ASSIGNED], Blood Screening Instruments or [PROVISION ASSIGNED] in
which Chiron has an ownership or other licensable interest during the Blood
Screening Term or the [PROVISION ASSIGNED]; all to the extent and only to the
extent that Chiron has the right to grant licenses, immunities or other
rights thereunder.
1.11 "CHIRON HCV PATENT RIGHTS" shall mean (a) all United States and
foreign patent applications covering (i) the composition of matter of HCV or
any nucleotide sequence thereof or (ii) the use thereof in the Blood
Screening Field or the [PROVISION ASSIGNED]; (b) all patents that have issued
or in the future issue from such patent applications, including without
limitation utility, model and design patents and certificates of invention;
and (c) all divisionals, continuations, continuations-in-part, reissues,
renewals, extensions or additions to any such patent applications and
patents; but only to the extent that Chiron has or hereafter acquires an
ownership or other licensable interest, and all to the extent and only to the
extent that Chiron has the right to grant licenses, immunities or other
rights thereunder.
1.12 "CHIRON HIV PATENT RIGHTS" shall mean (a) all United States and
foreign patent applications covering (i) the composition of matter of HIV-1
or any nucleotide sequence thereof or (ii) the use thereof in the Blood
Screening Field or the [PROVISION ASSIGNED]; (b) all patents that have issued
or in the future issue from such patent applications, including without
limitation utility, model and design patents and certificates of invention;
and (c) all divisionals, continuations, continuations-in-part, reissues,
renewals, extensions or additions to any such patent applications and
patents; but only to the extent that Chiron has or hereafter acquires an
ownership or other licensable interest, and all to the extent and only to the
extent that Chiron has the right to grant licenses, immunities or other
rights thereunder.
1.13 "CHIRON KNOW-HOW" shall mean all information of any type
whatsoever (including without limitation, formulae, procedures, protocols,
techniques, data and results of experimentation and testing), which is
Confidential Information of Chiron and which (i) relates to the Chiron Patent
Rights and which is necessary to exploit the Chiron Patent Rights for use in
the Blood Screening Field or [PROVISION ASSIGNED] or (ii) is disclosed by
Chiron pursuant to Article 8, all to the extent and only to the extent that
Chiron has the right to grant licenses, immunities or other rights thereunder.
5
1.14 "CHIRON IP RIGHTS" shall mean, collectively, the Chiron
Copyrights, Chiron Know-How and Chiron Patent Rights.
1.15 "CHIRON MARKS" shall mean those trademarks owned by or licensed to
Chiron (other than pursuant to this Agreement) which are used to market any
Product in accordance with the provisions of this Agreement.
1.16 "CHIRON PATENT RIGHTS" shall mean (a) the Chiron HCV Patent
Rights and the Chiron HIV Patent Rights and such other Chiron patent rights
which claim markers or their uses as may become subject to this Agreement
pursuant to the terms hereof with respect to Future Blood Screening Assays
and [PROVISION ASSIGNED] sold by Chiron or pursuant to Article 9; (b) all
patents that have issued or in the future issue therefrom, including without
limitation utility, model and design patents and certificates of invention;
and (c) all divisional, continuations, continuations-in-part, reissues,
renewals, extensions or additions to any such patent applications and
patents; in each case in which Chiron has an ownership or other licensable
interest, and all to the extent and only to the extent that Chiron has or
hereafter acquires the right to grant licenses, immunities or other rights
thereunder.
1.17 [PROVISION ASSIGNED]
1.18 [PROVISION ASSIGNED]
1.19 [PROVISION ASSIGNED]
1.20 [PROVISION ASSIGNED]
6
1.21 [PROVISION ASSIGNED]
1.22 "COMMERCIALLY REASONABLE EFFORTS" shall mean:
1.22.1 With respect to Chiron's efforts under this Agreement to
promote, market and sell a Product, that level of effort devoted by Chiron to
promote, market and sell products of similar market size and market character,
and in the absence of/without consideration of revenue from any licensee (other
than Gen-Probe) of the Chiron IP Rights.
1.22.2 With respect to a party's efforts under this Agreement to
develop a Product, that level of effort devoted by such party to develop
products of similar market size and market character, and, in the case of
Chiron, in the absence of/without consideration of revenue from any licensee
(except the other party) of such party's IP Rights.
1.22.3 With respect to Gen-Probe's efforts under this Agreement to
manufacture (or have manufactured) and supply a Product, that level of effort
devoted by Gen-Probe to manufacture (or have manufactured) and supply products
of similar market size and market character, and in the absence of/without
consideration of revenue from any licensee (other than Chiron) of the Gen-Probe
IP Rights.
1.22.4 In all other instances that level of effort which would be
devoted by an independent entity reasonably seeking to pursue its own business
efforts in light of all relevant circumstances.
1.23 "CONFIDENTIAL INFORMATION" shall mean, with respect to a party,
all information of any kind whatsoever (including without limitation,
compilations, data, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies, and techniques), and all tangible and intangible embodiments thereof
of any kind whatsoever (including without limitation, apparatus, compositions,
documents, drawings, machinery, patent applications, records, reports), which is
(i) not generally known, (ii) disclosed by such party to the other party
pursuant to and in accordance with the terms of Section 8.1 of this Agreement,
and (iii) marked, identified as, or otherwise acknowledged to be confidential at
the time of disclosure to the other party.
Notwithstanding the foregoing, Confidential Information of a party shall not
include information which the other party can establish by written documentation
(a) to have been publicly known prior to disclosure of such information by the
disclosing party to the other party, (b) to have become publicly known, without
fault on the part of the other party, subsequent to disclosure of such
information by the disclosing party to the other party, (c) to have been
received by the other party at any time from a source, other than the disclosing
party, rightfully having possession of and the right to disclose such
information, (d) to have been otherwise known by the other party
7
prior to disclosure of such information by the disclosing party to the other
party, or (e) to have been independently developed by employees or agents of the
other party without access to or use of such information disclosed by the
disclosing party to the other party.
1.24 "DEVELOPMENT COSTS" shall mean, with respect to any Product, the
fully-burdened cost to a party of conducting the research and development
(including clinical trials and regulatory submissions) of such Product,
including the cost of materials, direct labor and overhead, all as determined in
accordance with such party's standard accounting practices for other products
researched and developed by such party pursuant to and in accordance with the
applicable Development Program (including the applicable budget).
1.25 "DEVELOPMENT PROGRAM" shall mean, with respect to each TMA Assay
or instrument developed pursuant to this Agreement, the product development
program as described in Article 3 or 4, as applicable, below to develop such TMA
Assay or instrument.
1.26 "EFFECTIVE DATE" shall mean the date on which all the conditions
precedent set forth in Article 12 have been satisfied in full or waived by the
mutual written agreement of the parties.
1.27 [PROVISION ASSIGNED]
1.28 "FDA" shall mean the United States Food and Drug Administration,
or the successor thereto.
1.29 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product,
the first sale for use by a Third Party of such Product in any country in the
Territory.
1.30 "FUTURE BLOOD SCREENING ASSAYS" shall mean those TMA Assays which
are conducted by the Blood Screening Instruments for use in the Blood Screening
Field and are selected by the Supervisory Board pursuant to Section 3.2.1 below
and developed pursuant to the Development Program under Section 3.2.2 below.
1.31 [PROVISION ASSIGNED]
1.32 "GEN-PROBE COPYRIGHTS" shall mean all rights under the
copyright laws of any jurisdiction in the world, together with all rights
commonly referred to as "moral rights" in and to the Blood Screening
Instruments or [PROVISION ASSIGNED] in which Gen-Probe has an ownership or
other licensable interest during the Blood Screening Term or the
[PROVISION ASSIGNED];
8
all to the extent and only to the extent that Gen-Probe has
the right to grant licenses, immunities or other rights thereunder.
1.33 "GEN-PROBE KNOW-HOW" shall mean all information of any type
whatsoever (including without limitation, formulae, procedures, protocols,
techniques, data and results of experimentation and testing), which is
Confidential Information of Gen-Probe and which (i) relates to the Gen-Probe
Patent Rights and which is necessary to exploit the Gen-Probe Patent Rights
for use in the Blood Screening Field or [PROVISION ASSIGNED] or (ii) is
disclosed by Gen-Probe pursuant to Article 8, all to the extent and only to
the extent that Gen-Probe has the right to grant licenses, immunities or
other rights thereunder.
1.34 "GEN-PROBE IP RIGHTS" shall mean, collectively, the Gen-Probe
Copyrights, Gen-Probe Know-How and Gen-Probe Patent Rights.
1.35 "GEN-PROBE MARKS" shall mean those trademarks owned by or licensed
to Gen-Probe (other than pursuant to this Agreement) which are used to market
any Product in accordance with the provisions of this Agreement.
1.36 "GEN-PROBE PATENT RIGHTS" shall mean (a) all the patents and
patent applications which cover nucleic acid probe assays and instrument
technologies, to the extent necessary for use in the Initial Blood Screening
Assays, [PROVISION ASSIGNED], Initial Blood Screening Instruments, or
[PROVISION ASSIGNED] but only to the extent in each case (i) of the design of
the Products as of the Effective Date and (ii) that Gen-Probe has an
ownership or other licensable interest therein; (b) such other Gen-Probe
patent rights which claim markers or their uses as may become subject to this
Agreement pursuant to the terms hereof with respect to Future Blood Screening
Assays and [PROVISION ASSIGNED], (c) such Gen-Probe patent
rights with respect to any future modifications to any Blood Screening
Instrument or [PROVISION ASSIGNED] as become subject to this
Agreement pursuant to Sections 3.3.7 or 4.4.8, respectively, and such
Gen-Probe patent rights with respect to any future Blood Screening Instrument
or [PROVISION ASSIGNED] as are developed by Gen-Probe after the
Effective Date and offered to and accepted by Chiron (all pursuant to
Sections 3.3.8 or 4.4.9, respectively) or; (d) such other Gen-Probe patent
rights which become subject to this Agreement pursuant to pursuant to Article
9; (e) all patents that have issued or in the future issue therefrom,
including without limitation utility, model and design patents and
certificates of invention; and (f) all divisional, continuations,
continuations-in-part, reissues, renewals, extensions or additions to any
such patent applications and patents; but only to the extent that Gen-Probe
has or hereafter acquires an ownership or other licensable interest, in each
case, and all to the extent and only to the extent that Gen-Probe has the
right-to grant licenses, immunities or other rights thereunder.
1.37 "HCV" shall mean hepatitis C virus.
1.38 "HIV" or HIV-1" shall mean type 1 human immunodeficiency virus.
9
1.39 "INITIAL BLOOD SCREENING ASSAYS" shall mean those four (4) TMA
Assays for use in the Blood Screening Field developed pursuant to the
Development Program under Section 3.1.1 below (a) for the qualitative detection
of both HCV and HIV-1, (b) for the confirmatory qualitative detection of HCV,
(c) for the confirmatory qualitative detection of HIV-1, and (d) for the
qualitative detection of HIV-1 for sale and use in Japan only.
1.40 [PROVISION ASSIGNED]
1.41 "JAPANESE HIV QUALITATIVE BLOOD SCREENING ASSAY" shall mean the
Initial Blood Screening Assay for the qualitative detection of HIV-1 developed
for sale and use in Japan only.
1.42 "LEADER/MAGNETIC SEPARATION INSTRUMENT" shall mean the manual
instrument, and related software and appropriate repair parts, for DNA/RNA
amplified assay processing incorporating a separate magnetic wash station and a
chemiluminescent detection system (Leader HC) required to perform the following
steps: (a) magnetic separation of the captured target RNA/DNA, (b) washing and
aspiration of the captured target RNA/DNA, and (c) chemiluminescent detection
steps needed to support Gen-Probe's patented Hybridization Protection Assay
(HPA) and TMA Assay processes and associated reagent product lines.
1.43 "MAJOR DISTRIBUTOR" shall mean [CONFIDENTIAL TREATMENT REQUESTED]
(excluding the interim opportunities described in Section 3.6 below) of the
Blood Screening Assays to be conducted on the Blood Screening Instruments for
use in the Blood Screening Field in the United States.
1.44 "MANUFACTURING COST" shall mean, with respect to any Product, the
fully-burdened cost to a party (expressed on a per unit basis) of manufacturing
or having manufactured such Product, together with the packaging thereof,
including the cost of materials, direct labor, quality control, warranty parts
and labor, and overhead (but excluding royalties paid or payable to Third
Parties), all as determined in accordance with such party's standard accounting
practices for other products manufactured.
1.45 "MANUFACTURING ROYALTY" shall mean, with respect to any Product,
the amount payable by Chiron to Gen-Probe if Chiron assumes the right to
manufacture or have manufactured such Product under the terms of this Agreement.
The Manufacturing Royalty shall be determined by the Supervisory Board pursuant
to the principles set forth below, and if the Supervisory Board is unable to
agree, shall be subject to resolution pursuant to Article 13.
1.45.1 With respect to any Initial Blood Screening Assay(s) or
Future Blood Screening Assay(s), the Manufacturing Royalty shall be payable in
lieu of the Transfer Price and Applicable Purchase Price hereunder, and shall
mean an amount equal to the Applicable
10
Purchase Price for such Assay then in effect, less (i) the Manufacturing Cost to
Chiron of such Assay(s), and less (ii) an amount designed to permit Chiron to
recover the costs incurred in connection with assuming the right to manufacture
or have manufactured such Assay(s), but in no event less than a commercially
reasonable royalty for the Gen-Probe IP Rights applicable to such Assay(s). The
costs referenced in subparagraph (ii) hereof shall include, without limitation,
the fully burdened costs incurred by Chiron in connection with the transfer of
manufacturing rights (to the extent not borne by Gen-Probe directly), including
capital costs of any investment in facilities or equipment, amortized in
accordance with generally accepted accounting principles, but only to the extent
required in connection with the transfer under the provisions of this Agreement
and only after proper consideration and allocation as to the then-remaining
Blood Screening Term (i.e., a facility built in the last year of the Blood
Screening Term will not be charged entirely to Gen-Probe). Once the costs
referred to in subparagraph (ii) have been recovered, the deduction from the
Applicable Purchase Price pursuant to subparagraph (ii) shall cease.
1.45.2 [PROVISION ASSIGNED]
1.45.3 [PROVISION ASSIGNED]
1.46 "NET SALES" shall mean, with respect to any Product(s), on a per
unit basis where applicable and in the aggregate where applicable, the gross
sales price of such Product(s) invoiced by any of (i) Chiron, (ii) Chiron's
Affiliates, (iii) Gen-Probe, (iv) CDS or, (v) only as to Blood Screening Assays,
[CONFIDENTIAL TREATMENT REQUESTED], (all of which are individually referred to
hereafter in this Section 1.46 as "Seller") following shipment to unaffiliated
Third Parties less, to the extent actually paid or accrued by such Seller (a)
discounts, rebates or chargebacks actually allowed and taken, to the extent
consistent with industry practices and price reductions given for similar
products by such Seller; and/or (b) amounts
11
repaid or credited by reason of rejection, spoilage, expiration or return;
and/or (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, or transportation or insurance charges; and/or (d) charges for
freight, handling and transportation; and/or (e) sales, use and value-added
taxes and other similar taxes incurred and separately stated on invoices; and/or
(f) customs duties, surcharges and other governmental charges incurred in
exporting or importing such Product.
1.46.1 In the event that a Product is sold in combination with
another product (a "Combination Product") for a single price in a particular
period, Net Sales from sales of a Combination Product for that period, for
purposes of this Agreement, shall be calculated by multiplying the Net Sales of
that Combination Product for that period by the fraction A/(A+B), where A is the
average per unit Net Sales of the Product sold separately in the country of sale
in that period and B is the average per unit Net Sales of the other product(s)
sold separately in the country of sale in that period. This calculation shall be
made for each Product comprising the Combination Product and the results added.
In the event that no such separate sales are made in the applicable period, Net
Sales of such Combination Product shall be determined based on a reasonable
apportionment of the gross amount invoiced therefore based upon the relative
contribution of the Product to the price of the Combination Product. Such
apportionment shall be negotiated in good faith between the parties and resolved
pursuant to Article 13 if they are unable to agree.
1.46.2 [PROVISION ASSIGNED]
1.46.3 [PROVISION ASSIGNED]
1.46.4 For purposes of calculating Net Sales, a party may, at
its option, determine the allowable deductions from gross sales based on
accruals estimated reasonably and consistently with such party's standard
accounting practices. If such accruals are used, the other party will be so
notified, and the actual deductions shall be calculated and the Net Sales will
be adjusted, if necessary, to reflect such actual deductions, on an annual
basis.
12
1.47 [PROVISION ASSIGNED]
1.48 [PROVISION ASSIGNED]
1.48.1 [PROVISION ASSIGNED]
1.48.2 [PROVISION ASSIGNED]
1.49 "PERSON" shall mean an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.50 "PRODUCT" shall mean a Blood Screening Assay,
[PROVISION ASSIGNED], Blood Screening Instrument, [PROVISION ASSIGNED] or
Rare Reagent.
1.51 "RARE REAGENTS" shall mean, with respect to any Blood Screening
Assay or [PROVISION ASSIGNED], those enzymes, nucleic acids (probes and
primers), buffers, target capture particles and other biochemical components and
reagents which are necessary to manufacture or conduct such TMA Assay and (a)
are not generally available from other sources for such use, or (b) if generally
available from other sources for such use, are subject to purchase commitments
by Gen-Probe.
13
1.52 "SALES ROYALTY" shall mean, with respect to any Blood Screening
Assay or [PROVISION ASSIGNED], the following royalty:
1.52.1 With respect to each Future Blood Screening Assay or
[PROVISION ASSIGNED] for which Gen-Probe is the sole funding party under
Section 3.2.3(b) or Section 4.2.1(b), below, the royalty set forth in such
section.
1.52.2 [PROVISION ASSIGNED]
1.52.3 [PROVISION ASSIGNED]
1.52.4 [PROVISION ASSIGNED]
1.53 "SUPERVISORY BOARD" shall mean the committees comprising
representatives of Gen-Probe and Chiron as described in Section 5.1 below.
1.54 "TERRITORY" shall mean the entire world; PROVIDED, HOWEVER, that
the Territory for the Japanese HIV Qualitative Blood Screening Assay shall be
Japan only.
1.55 "THIRD PARTY" shall mean any Person other than Gen-Probe, Chiron
and their respective Affiliates.
1.56 "TIGRIS INSTRUMENT" shall mean the integrated, automated
instrument, and related software and appropriate repair parts, for DNA/RNA
amplified assay processing incorporating all systems required to perform the
following steps: (a) lysis/annealing, (b) enzymatic amplification, (c)
hybridization/selection, (d) detection/decontamination, which utilize processing
steps that include heating/cooling, reagent addition, mixing, chemiluminescent
14
detection and aspiration needed to support Gen-Probe's patented Hybridization
Protection Assay (HPA) and TMA Assay processes and associated reagent product
lines.
1.57 "TMA ASSAY" shall mean an in vitro diagnostic assay based on or
utilizing transcription-mediated amplification.
1.58 "TRANSFER PRICE" shall mean, with respect to any Product, on a per
unit basis, the following price:
1.58.1 With respect to any Initial Blood Screening Assay, the
objective of the parties is to share equally the aggregate cost of maintaining
safety stocks of raw components, work-in-progress, and finished goods as
required by CBER or by market demand. The Transfer Price, based on this
objective, is expected to range between [CONFIDENTIAL TREATMENT REQUESTED] the
Applicable Purchase Price, but it no case shall it be less than Gen-Probe's
Manufacturing Cost. Subject to these guidelines, the Transfer Price shall be
determined by the Supervisory Board and reviewed annually.
1.58.2 With respect to any Future Blood Screening Assay, the
objective of the parties is to share equally the aggregate cost of maintaining
safety stocks of raw components, work-in-progress, and finished goods as
required by CBER or by market demand. The Transfer Price, based on this
objective, is expected to range between [CONFIDENTIAL TREATMENT REQUESTED] the
estimated Applicable Purchase Price, but it no case shall it be less than
Gen-Probe's manufacturing Cost. Subject to these guidelines, the Transfer Price
shall be determined by the Supervisory Board and reviewed annually.
1.58.3 [PROVISION ASSIGNED]
1.58.4 [PROVISION ASSIGNED]
1.58.5 [PROVISION ASSIGNED]
15
1.58.6 [PROVISION ASSIGNED]
1.58.7 [PROVISION ASSIGNED]
1.58.8 With respect to any initial Tigris Blood Screening
Instrument or initial [PROVISION ASSIGNED], including warranty, an amount
equal to the amount actually invoiced to Gen-Probe by the manufacturer, plus
shipping, plus the amount of Gen-Probe's warranty obligation (the "Actual
Instrument Cost"). Chiron shall have no obligation to pay the Actual
Instrument Cost to the extent such Cost exceeds
[CONFIDENTIAL TREATMENT REQUESTED], reasonably adjusted for inflation after
the Effective Date (the "Adjusted Maximum Instrument Price"). Such excess
cost shall be paid by Gen-Probe. To the extent that Gen-Probe pays any such
excess cost and the Actual Instrument Cost for any subsequent Instrument is
less than the Adjusted Maximum Instrument Price, the amount paid by Chiron to
Gen-Probe for such subsequent Instruments shall be the Adjusted Maximum
Instrument Price, until such time as Gen-Probe has recovered all excess costs
paid by it, and thereafter the amount paid shall be the Actual Instrument
Cost. Should CBER mandate modifications to any Blood Screening Instrument
which results in extraordinary increases in the cost of the Instrument, the
parties shall negotiate in good faith with respect to adjusting the amounts
set forth herein.
1.58.9 With respect to any Leader/Magnetic Separation Blood
Screening Instrument or [PROVISION ASSIGNED], an amount equal to the lesser
of (a) [CONFIDENTIAL TREATMENT REQUESTED], reasonably adjusted for inflation,
and (b) [CONFIDENTIAL TREATMENT REQUESTED] of the Manufacturing Cost of such
Blood Screening Instrument or [PROVISION ASSIGNED]. Should CBER mandate
modifications to any Blood Screening Instrument which results in
extraordinary increases in the cost of the Instrument, the parties shall
negotiate in good faith with respect to adjusting the amounts set forth
herein.
16
1.58.10 For purposes of Sections 1.58.1 through 1.58.3 above,
the estimated Applicable Purchase Price of any assay shall be (a) for the first
year following the First Commercial Sale of such assay, the reasonably estimated
weighted average of the Applicable Purchase Price of such assay (calculated in
United States dollars), as determined by the mutual agreement of the parties
prior to the date of the first delivery of such assay to Chiron hereunder; and
(b) for each year thereafter, the actual weighted average of the Applicable
Purchase Price of such assay (calculated in United States dollars) for the
preceding year.
1.59 "Valid Claim" shall mean (a) as to any technology of a party
(whether or not "Core Technology" of that party), a claim of an issued patent
that has not been held unenforceable or invalid by an agency or a court of
competent jurisdiction in any final judgment as to which the owner or rights
holder has no further right of appeal and, in addition (b) as to any Core
Technology of a party, a claim of a patent application which is being prosecuted
or pursued in good faith for the United States and which meets the requirements
for patentability under applicable law and that has not been abandoned or
finally rejected without the possibility of appeal or refiling. "Core
Technology" shall mean as to Chiron the technology claimed in the patents and
patent applications set forth in Schedule "B" (together with any unlisted
patents and patent applications which claim priority from the listed patents and
any and all patents that have issued or in the future issue from the foregoing
patents and patent applications and all divisionals, continuations,
continuations-in-part, reissues, renewals, re-examinations, extensions, or
additions thereof) and as to Gen-Probe the technology claimed in the patents and
patent applications set forth in Schedule "C" (together with any unlisted
patents and patent applications which claim priority from any of the listed
patents and any and all patents that have issued or in the future issue from the
foregoing patents and patent applications and all divisionals, continuations,
continuations-in-part, reissues, renewals, re-examinations, extensions, or
additions thereof). Either party may contest whether a claim in a pending patent
application for the United States meets the requirements for patentability under
applicable law. Such contest shall be made pursuant to the procedures
established by Article 13 except that (i) in lieu of submitting the issue to a
single arbitrator, the issue shall be submitted to a panel of three patent
attorneys with experience in the subject matter for binding determination and
(ii) there shall be no appeal from the decision of the majority of such panel.
The burden of proof before the arbitrators shall be a preponderance of the
evidence.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 BY EACH PARTY. Each party hereby represents and warrants to the
other party as of the date of the execution of this Agreement (except as
specifically otherwise indicated below) as follows:
2.1.1 CORPORATE EXISTENCE AND POWER. Such party (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the state in which it is incorporated; (b) has the corporate power and
authority and the legal right to own and operate its
17
property and assets, to lease the property and assets it operates under lease,
and to carry on its business as it is now being conducted; and (c) is in
compliance with all requirements of applicable law, except to the extent that
any noncompliance would not have a material adverse effect on the properties,
business, financial or other condition of such party and would not materially
adversely affect such party's ability to perform its obligations under this
Agreement.
2.1.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such party
(a) has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
2.1.3 CONSENTS. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been obtained on
or before the Effective Date.
2.1.4 NO CONFLICT. The execution and delivery of this
Agreement and the performance of such party's obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or regulations, and
(b) do not conflict with, or constitute a default under, any contractual
obligation of such party.
2.1.5 NO NOTICE OF INFRINGEMENT. As of the Effective Date,
except as otherwise disclosed in writing to the other party, such party has not
received any written notice from a Third Party alleging that any technology of
such party to be utilized in any Product (as and to the extent defined as of the
Effective Date) to be made or sold pursuant to this Agreement would infringe the
issued patents of such Third Party.
2.2 BY CHIRON. Chiron hereby represents and warrants to Gen-Probe that
Chiron has not granted any license in the United States or Japan (except as
Chiron has advised Gen-Probe in writing) or other rights or interests in or
under the Chiron HCV Patent Rights to any Person for use in the Blood Screening
Field.
2.3 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY EITHER PARTY THAT ANY
PATENT WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE GEN-PROBE
PATENT RIGHTS OR CHIRON PATENT RIGHTS, THAT ANY PATENT WITHIN THE GEN-PROBE
PATENT RIGHTS OR CHIRON PATENT RIGHTS WHICH ISSUES WILL BE VALID, OR THAT THE
USE OF ANY LICENSE GRANTED HEREUNDER OR THAT THE USE OF ANY GEN-PROBE PATENT
RIGHTS OR CHIRON PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF ANY OTHER PERSON. FURTHERMORE (EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN SECTION 6.6 BELOW), NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE GEN-PROBE
PATENT RIGHTS OR
18
CHIRON PATENT RIGHTS OR THE PRODUCTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
ARTICLE 3
BLOOD SCREENING PRODUCTS
3.1 INITIAL BLOOD SCREENING ASSAYS.
3.1.1 DEVELOPMENT PROGRAMS.
(a) ESTABLISHMENT. Prior to the date of this Agreement,
Gen-Probe has expended significant effort and resources in the development of
the Initial Blood Screening Assays to be conducted by the Blood Screening
Instruments for use in the Blood Screening Field. Promptly following the
Effective Date, Gen-Probe shall prepare and submit to Chiron a written
Development Program and budget for each Initial Blood Screening Assay, which
shall set forth (i) the specifications for such Initial Blood Screening Assay,
(ii) a proposed schedule for the Development Program, and (iii) the parties'
respective obligations to develop such Initial Blood Screening Assay and to
conduct such clinical trials and apply for such regulatory approvals as
necessary or appropriate to make and sell in the Territory such Initial Blood
Screening Assay to be conducted by the Blood Screening Instruments for use in
the Blood Screening Field; PROVIDED, HOWEVER, that any responsibilities of
Chiron under the Development Program for any Initial Blood Screening Assay shall
be subject to the prior express written consent of Chiron. The Development
Program as proposed by Gen-Probe for each Initial Blood Screening Assay may not
be modified except by the action of the Supervisory Board.
(b) RESPONSIBILITIES. Gen-Probe shall develop each Initial
Blood Screening Assay in accordance with the applicable specifications and the
applicable Development Program documents, and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell each such Initial Blood Screening Assay to be
conducted by the Blood Screening Instruments in the Territory for use in the
Blood Screening Field. Chiron shall consult with Gen-Probe on such matters and
Gen-Probe shall reasonably consider Chiron's advice and recommendations on all
matters relating to such Development Program.
(c) CONDUCT OF DEVELOPMENT. Gen-Probe, and Chiron in the event
it undertakes or is assigned by the Supervisory Board any responsibilities in
connection with the Development Program for each such Initial Blood Screening
Assay, shall conduct their respective obligations under the Development Program
for each Initial Blood Screening Assay in compliance in all material respects
with all requirements of applicable laws and regulations and all applicable good
laboratory, clinical and manufacturing practices. Gen-Probe and Chiron each
shall proceed diligently with their respective obligations under each such
Development Program and shall use their respective Commercially Reasonable
Efforts to achieve its objectives
19
efficiently and expeditiously. Gen-Probe and Chiron each shall allocate
sufficient personnel, equipment, facilities and other resources to each such
Development Program to carry out their respective obligations and to accomplish
the objectives thereof.
(d) SUBCONTRACTS. Upon approval of the Supervisory Board which
shall not be unreasonably withheld by either party (and except as to such
subcontracts which exist as of the Effective Date), Gen-Probe and Chiron each
may subcontract portions of the Development Program for each Initial Blood
Screening Assay to be performed by it in the normal course of its business;
PROVIDED, HOWEVER, that (i) unless the other party gives its prior written
consent, such subcontracting shall not involve the transfer (including but not
limited to any sublicense) of any intellectual property rights of the other
party or Confidential Information of the other party to Third Parties; (ii) if
the other party consents to the subcontractor's access to Confidential
Information of the other party, the subcontracted party shall enter into a
confidentiality agreement with the subcontracting party incorporating the terms
of Article 8 below; (iii) the subcontracting party shall supervise such
subcontract work; (iv) the subcontracted party shall be in compliance in all
material respects with all requirements of applicable laws and regulations,
together with all applicable good laboratory, clinical and manufacturing
practices; (v) prior to subcontracting any portion of the Development Program to
a Third Party, [CONFIDENTIAL TREATMENT REQUESTED]; and (vi) if required by the
Supervisory Board, the subcontracted party shall enter into an agreement with
the subcontracting party to effectuate the provisions of Article 9 below, and
which shall include a provision for assignment of inventions arising from the
subcontracted work.
3.1.2 FUNDING. [CONFIDENTIAL TREATMENT REQUESTED]; PROVIDED,
HOWEVER, that Chiron shall reimburse Gen-Probe for the mutually-agreed amount of
Development Costs associated with implementing those modifications (if any) to
the applicable specifications and the applicable Development Program documents
as Chiron proposes and Gen-Probe agrees. In the event it undertakes or is
assigned by the Supervisory Board any responsibilities in connection with the
Development Program for each such Initial Blood Screening Assay, Chiron shall
pay all Development Costs of conducting its obligations under the Development
Program for each Initial Blood Screening Assay.
3.1.3 MANUFACTURING.
(a) Subject to Section 3.1.3(b) below, [CONFIDENTIAL TREATMENT
REQUESTED] for use in the Blood Screening Field in accordance with Article 6
below.
(b) If Gen-Probe (i) fails at any time during the Blood
Screening Term to [CONFIDENTIAL TREATMENT REQUESTED] or the Supervisory Board
agrees within fifteen days of such event that Gen-Probe shall retain the
manufacturing responsibility hereunder); or (ii) fails to supply Chiron
[CONFIDENTIAL TREATMENT REQUESTED] for an Initial Blood Screening Assay ordered
in accordance with Section 6.3 below, [CONFIDENTIAL TREATMENT REQUESTED] (unless
the Supervisory Board agrees within fifteen days of such event that Gen-Probe
shall retain the manufacturing responsibility hereunder), then Chiron shall have
the right to, and if Chiron elects to manufacture or have
20
manufactured, the obligation to use Commercially Reasonable Efforts to,
manufacture (or to have manufactured) its requirements of such Initial Blood
Screening Assay, to be conducted by the Blood Screening Instruments in the
Territory for use in the Blood Screening Field; PROVIDED, HOWEVER, such right of
Chiron shall be on an assay-by-assay basis for a failure to supply and provided
further that to the extent Gen-Probe is able to meet Chiron's requirements for
Rare Reagents in accordance with this agreement, Gen-Probe shall retain the
exclusive right to manufacture (or to have manufactured) and the obligation to
supply Chiron with its requirements of the Rare Reagents for use in such Initial
Blood Screening Assay in accordance with Article 6 below. In such event, Chiron
shall consider in good faith, as its preferred alternative upon Gen-Probe's
request, to take over control and responsibility for the facility used by
Gen-Probe to manufacture the Initial Blood Screening Assays, and Gen-Probe
promptly shall provide such reasonable technical assistance, at Gen-Probe's sole
cost, as necessary to enable Chiron to exercise its rights to manufacture (or
have manufactured) such Initial Blood Screening Assay.
(c) If either party exercises any right granted hereunder to
have any Initial Blood Screening Assay manufactured, then (i) such party shall
first require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
3.1.4 COMMERCIALIZATION.
(a) Except as otherwise set forth in Sections 3.1.4(b),
3.1.4(d) and 3.6 below, during the Blood Screening Term, Gen-Probe hereby grants
to Chiron the exclusive distribution right in the Territory, at Chiron's sole
cost, directly or through distributors, to promote, market and sell the Initial
Blood Screening Assays to be conducted by the Blood Screening Instruments for
use in the Blood Screening Field. Chiron shall use its Commercially Reasonable
Efforts to promote, market, sell and meet the reasonably foreseeable market
demands for the Initial Blood Screening Assays in the Territory to be conducted
by the Blood Screening Instruments for use in the Blood Screening Field.
(b) CDS shall have the exclusive right, at its sole cost, to
promote, market and sell the Japanese HIV Qualitative Blood Screening Assay in
Japan for use in the Blood Screening Field until the earlier of (i)
[CONFIDENTIAL TREATMENT REQUESTED] after the First Commercial Sale of the
Japanese HIV Qualitative Blood Screening Assay in Japan for use in the Blood
Screening Field, and (ii) the [CONFIDENTIAL TREATMENT REQUESTED] in Japan for
use in the Blood Screening Field. Thereafter, subject to Section 3.1.4(d) below,
during the Blood Screening Term, Chiron shall have the exclusive right, at its
sole cost, to promote, market and sell the Japanese HIV Qualitative Blood
Screening Assay in Japan for use in the Blood Screening Field. Chiron's Japanese
Affiliate shall support the marketing in Japan for the Japanese HIV Qualitative
Blood Screening Assay in a manner to be agreed upon between CDS and Chiron's
Japanese Affiliate and not inconsistent with CDS's marketing program.
21
(c) Subject to regulatory requirements, the Initial Blood
Screening Assays shall be marketed under such trademarks as may be determined by
the Supervisory Board to give adequate recognition to the respective
contributions and interests of the parties, and, if applicable, the Major
Distributor. It is the intention of the parties that both parties' contributions
and interests will be recognized.
(d) CDS shall have the right to co-promote the Initial Blood
Screening Assays in Japan, provided that such co-promotion conforms with the
marketing, product, pricing, and promotional strategy as determined by Chiron or
the Major Distributor (provided that no such strategy shall preclude
co-promotion).
3.1.5 LICENSES.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under each Development Program to develop the
Initial Blood Screening Assays, and (ii) to manufacture or have manufactured the
Initial Blood Screening Assays. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) During the Blood Screening Term, Gen-Probe hereby grants
to Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights
to conduct Chiron's obligations, if any, under each Development Program to
develop the Initial Blood Screening Assays. Chiron shall not have the right to
grant sublicenses under such license, without the prior express written consent
of Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) any Initial Blood Screening Assay under
Section 3.1.3(b) above, during the balance of the Blood Screening Term,
Gen-Probe shall grant to Chiron a nonexclusive (except to the extent that
Gen-Probe elects to meet the requirements of CDS as provided under Section
3.1.4(b) above) license in the Territory under the Gen-Probe IP Rights to
exercise its rights under Section 3.1.3(b) above to manufacture (or have
manufactured) such Initial Blood Screening Assays to be conducted by the Blood
Screening instruments for use in the Blood Screening Field. Chiron shall not
have the right to grant sublicenses under such license, without the prior
express written consent of Gen-Probe.
3.1.6 COMPENSATION TO GEN-PROBE. In consideration for the
rights granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) TRANSFER PRICE. Within thirty (30) days after receipt of
each shipment and invoice of Initial Blood Screening Assays from Gen-Probe,
Chiron shall pay to Gen-Probe the Transfer Price for each Initial Blood
Screening Assay purchased by Chiron or its Affiliates.
22
(b) APPLICABLE PURCHASE PRICE. Within forty-five days after
the end of each calendar month, if the Applicable Purchase Price for each
Initial Blood Screening Assay sold by Chiron, its Affiliates, or the Major
Distributor (other than sales pursuant to Sections 3.1.4(b) or 3.6) during such
calendar month is greater than the Transfer Price for such Initial Blood
Screening Assay previously paid by Chiron or its Affiliates to Gen-Probe, then
Chiron shall pay the difference to Gen-Probe. If the Applicable Purchase Price
for an Initial Blood Screening Assay sold by Chiron, its Affiliates, or the
Major Distributor (other than sales pursuant to Sections 3.1.4(b) or 3.6) during
such calendar month is less than the Transfer Price for such Initial Blood
Screening Assay previously paid by Chiron, its Affiliates, or the Major
Distributor to Gen-Probe, then Gen-Probe shall pay the difference to Chiron.
(c) ADJUSTMENT TO APPLICABLE PURCHASE PRICE.
(i) If, in any calendar quarter, the average Net Sales
price per unit in the United States for the Initial Blood Screening Assay for
the qualitative detection of both HCV and HIV-1 (other than sales pursuant to
Sections 3.1.4(b) or 3.6) is [CONFIDENTIAL TREATMENT REQUESTED], (PROVIDED,
HOWEVER, that such threshold price shall be adjusted for inflation occurring
after the Effective Date which increases Gen-Probe's net Manufacturing Cost,
pursuant to a fair method to be agreed upon by the parties), then the parties
shall meet and negotiate in good faith concerning an adjustment to the
Applicable Purchase Price in the Territory designed to compensate Gen-Probe with
respect to the disproportionate burden which, as the party bearing the
manufacturing cost, it would bear from the reduction in the average selling
price. At such time, if any, the parties will consider, as one alternative, the
establishment of a fixed transfer price for the Initial Blood Screening Assays.
(ii) Within sixty (60) days after the end of each calendar
quarter, Chiron shall prepare and provide Gen-Probe with a report showing in
reasonably specific detail for such calendar quarter the calculation of the
weighted average of the Net Sales price per unit in the Territory for the
Initial Blood Screening Assay for the qualitative detection of both HCV and
HIV-1 (other than sales pursuant to Sections 3.1.4(b) or 3.6).
(d) APPLICABLE ROYALTY. Within sixty (60) days after the end
of each calendar quarter, Chiron shall pay to Gen-Probe the Applicable Royalty,
if any, for each Initial Blood Screening Assay sold by Chiron or its Affiliates
during such calendar quarter.
(e) RARE REAGENT PRICE. Within thirty (30) days after receipt
of each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to [CONFIDENTIAL TREATMENT REQUESTED] of the Manufacturing Cost for
all Rare Reagents purchased by Chiron for use in manufacturing Initial Blood
Screening Assays under Section 3.1.3(b) above.
3.1.7 COMPENSATION TO CHIRON. Gen-Probe shall cause CDS to pay
to Chiron an amount equal to [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales
of each Japanese HIV Qualitative Blood Screening Assay sold by CDS in Japan
prior to [CONFIDENTIAL TREATMENT REQUESTED] by CDS in Japan of the Japanese HIV
23
Qualitative Blood Screening Assay, and (b) [CONFIDENTIAL TREATMENT REQUESTED] of
the Net Sales of each Japanese HIV Qualitative Blood Screening Assay sold by CDS
in Japan for sales [CONFIDENTIAL TREATMENT REQUESTED] by CDS in Japan of the
Japanese HIV Qualitative Blood Screening Assay. The payment provisions of
Article 7 shall apply to CDS. The payments due hereunder shall be made within
forty-five (45) days after the end of each calendar quarter.
3.2 FUTURE BLOOD SCREENING ASSAYS.
3.2.1 SELECTION.
(a) From time to time during the Blood Screening Term, the
Supervisory Board shall discuss the selection and establishment of one or more
Development Programs for one or more Future Blood Screening Assays to be
conducted by the Blood Screening Instruments.
(b) If both parties wish to develop a Future Blood Screening
Assay, the Supervisory Board shall discuss in good faith and establish a
mutually acceptable written Development Program and a budget for such
development (both of which shall be updated at least annually) for such Future
Blood Screening Assay which shall set forth (i) the specifications for such
Future Blood Screening Assay, and (ii) the parties' respective obligations to
develop such Future Blood Screening Assay and to conduct such clinical trials
and apply for such regulatory approvals as necessary or appropriate to make and
sell the Future Blood Screening Assays in the Territory for use in the Blood
Screening Field.
(c) If one party wishes to develop the Future Blood Screening
Assay and the other party does not, the party wishing to conduct such
development shall have the right to proceed at its sole expense, in accordance
with a Development Program, including a budget, to be updated annually, approved
by the Supervisory Board (which approval shall not be unreasonably withheld or
delayed), provided that such Developing Party may elect to cease such
development at any time in its discretion. The other party shall have no
obligation to fund any of the Development Costs of conducting the Development
Program for such Future Blood Screening Assay. In any event, Chiron shall have
the exclusive right to market and sell all Future Blood Screening Assays
pursuant to Section 3.2.5.
3.2.2 DEVELOPMENT PROGRAMS.
(a) RESPONSIBILITIES. With respect to each Future Blood
Screening Assay and subject to the provisions of Section 3.2.1, Gen-Probe and
Chiron each shall conduct their respective obligations under the Development
Program established by the Supervisory Board for such Future Blood Screening
Assay to develop such Future Blood Screening Assay in accordance with the
specifications established by the Supervisory Board, and to conduct such
clinical trials and apply for and endeavor to obtain such regulatory approvals
as necessary or appropriate to make and sell such Future Blood Screening Assay
to be conducted by the Blood Screening Instruments in the Territory for use in
the Blood Screening Field. Each party shall
24
have the right to consult with the other party regarding any Development Program
pursuant to Section 3.2.1(c) and the other party shall reasonably consider such
party's advice and recommendations.
(b) CONDUCT OF DEVELOPMENT. Gen-Probe and Chiron shall conduct
their respective obligations under the Development Program for each Future Blood
Screening Assay in compliance in all material respects with all requirements of
applicable laws and regulations and all applicable good laboratory, clinical and
manufacturing practices. Gen-Probe and Chiron each shall proceed diligently with
their respective obligations under each such Development Program and shall use
their respective Commercially Reasonable Efforts to achieve its objectives
efficiently and expeditiously. Gen-Probe and Chiron each shall allocate
sufficient personnel, equipment, facilities and other resources to each such
Development Program to carry out their respective obligations and to accomplish
the objectives thereof.
(c) SUBCONTRACTS. Upon approval of the Supervisory Board,
which shall not be unreasonably withheld by either party, Gen-Probe and Chiron
each may subcontract portions of the Development Program for each Future Blood
Screening Assay to be performed by it in the normal course of its business;
PROVIDED, HOWEVER, that (i) unless the other party gives its prior written
consent, such subcontracting shall not involve the transfer (including but not
limited to sublicense) of any intellectual property rights of the other party or
the Confidential Information of the other party to Third Parties; (ii) if the
other party consents to the subcontractor's access to Confidential Information
of the other party, the subcontracted party shall enter into a confidentiality
agreement with the subcontracting party incorporating the terms of Article 8
below; (iii) the subcontracting party shall supervise such subcontract work;
(iv) the subcontracted party shall be in compliance in all material respects
with all requirements of applicable laws and regulations, together with all
applicable good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party,
[CONFIDENTIAL TREATMENT REQUESTED]; and (vi) if required by the Supervisory
Board, the subcontracted party shall enter into an agreement with the
subcontracting party to effectuate the provisions of Article 9 below, and which
shall include a provision for assignment of inventions arising from the
subcontracted work.
3.2.3 FUNDING.
(a) Subject to Section 3.2.3(b) below, [CONFIDENTIAL TREATMENT
REQUESTED] the aggregate Development Costs of conducting the Development Program
for each Future Blood Screening Assay which they mutually agree to develop.
Within thirty (30) days after the end of each calendar quarter, each party shall
report to the other all Development Costs incurred by such party (if any) during
such calendar quarter in conducting the Development Program for each Future
Blood Screening Assay. Within thirty (30) days after receiving such reports, the
parties shall make such payments to each other as are necessary to cause each
party to have paid its appropriate share under this section of the aggregate
budgeted Development Costs incurred with respect to the Development Program for
such Future Blood Screening Assay during such calendar quarter.
25
(b) In the case of a Future Blood Screening Product which is
funded by one party pursuant to Section 3.2.1(c), such party shall be solely
responsible for all Development Costs of such Future Blood Screening Assay.
(i) If the funding party is Gen-Probe, Chiron shall
pay, in accordance with Section 3.2.7(c) below, an additional royalty to
Gen-Probe equal to a percentage, established by the Supervisory Board at the
time of approval of the Development Program, of Net Sales of such Future Blood
Screening Assay, until the aggregate royalty paid to Gen-Probe solely under this
sentence effectively reimburses Gen-Probe for disproportionate budgeted
Development Costs incurred by Gen-Probe with respect to the Development Program
for such Future Blood Screening Assay.
(ii) If the funding party is Chiron, Chiron shall be
entitled to offset against amounts owing to Gen-Probe solely with respect to
such Future Blood Screening Assay an amount equal to a percentage, established
by the Supervisory Board at the time of approval of the Development Program, of
Net Sales of such Future Blood Screening Assay, until the aggregate offset taken
solely under this sentence effectively reimburses Chiron for disproportionate
budgeted Development Costs incurred by Chiron with respect to the Development
Program for such Future Blood Screening Assay.
(iii) The additional royalty or offset established by
the Supervisory Board shall be intended to enable the funding party to recover
such Development Costs for such Development Program within the longer of (i)
[CONFIDENTIAL TREATMENT REQUESTED] or (ii) a period equal to [CONFIDENTIAL
TREATMENT REQUESTED]. The additional royalty or offset shall be set based on the
information available to the Supervisory Board at the time of its initial
approval of the Development Program and shall not be adjusted thereafter except
at the sole discretion of the Supervisory Board.
3.2.4 MANUFACTURING.
(a) Subject to Section 3.2.4(b) below, [CONFIDENTIAL TREATMENT
REQUESTED] for use in the Blood Screening Field in accordance with Article 6
below.
(b) If Gen-Probe (i) fails at any time during the Blood
Screening Term to [CONFIDENTIAL TREATMENT REQUESTED] or the Supervisory Board
agrees within fifteen days of such event that Gen-Probe shall retain the
manufacturing responsibility hereunder) or (ii) fails to supply Chiron
[CONFIDENTIAL TREATMENT REQUESTED] Blood Screening Assay ordered in accordance
with Section 6.3 below, [CONFIDENTIAL TREATMENT REQUESTED] (unless the
Supervisory Board agrees within fifteen days of such event that Gen-Probe shall
retain the manufacturing responsibility hereunder), then Chiron shall have the
right to, and if Chiron elects to manufacture or have manufactured, the
obligation to use Commercially Reasonable Efforts to, manufacture (or to have
manufactured) its requirements of such Future Blood Screening Assays, all to the
extent that any such Assay is to be conducted by the Blood Screening Instruments
in the Territory for use in the Blood Screening Field; PROVIDED, HOWEVER, such
right of Chiron shall be on an assay-by-assay basis for a failure to
26
supply and provided further that to the extent Gen-Probe is able to meet
Chiron's requirements for Rare Reagents in accordance with this Agreement,
Gen-Probe shall retain the exclusive right to manufacture (or to have
manufactured) and the obligation to supply Chiron with its requirements of the
Rare Reagents for use in such Future Blood Screening Assay in accordance with
Article 6 below. In such event, Chiron shall consider in good faith, as its
preferred alternative upon Gen-Probe's request, to take over control and
responsibility for Gen-Probe's facility used to manufacture the Future Blood
Screening Assays, and Gen-Probe promptly shall provide such reasonable technical
assistance, at Gen-Probe's sole cost, as necessary to enable Chiron to exercise
its rights to manufacture (or have manufactured) such Future Blood Screening
Assay.
(c) If a party exercises any right granted hereunder to have
any Future Blood Screening Assay manufactured, then (i) such party shall first
require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
3.2.5 COMMERCIALIZATION.
(a) During the Blood Screening Term, Gen-Probe hereby grants
to Chiron the exclusive distribution right in the Territory, at Chiron's sole
cost, directly or through distributors, to promote, market and sell the Future
Blood Screening Assays to be conducted by the Blood Screening Instruments for
use in the Blood Screening Field. Chiron shall use its Commercially Reasonable
Efforts to promote, market, sell and meet the reasonably foreseeable market
demands for the Future Blood Screening Assays in the Territory to be conducted
by the Blood Screening Instruments for use in the Blood Screening Field.
(b) Subject to regulatory requirements, the Future Blood
Screening Assays shall be marketed under such trademarks as may be determined by
the Supervisory Board to give adequate recognition to the respective
contributions and interests of the parties, and, if applicable, the Major
Distributor. It is the intention of the parties that both parties' contributions
and interests will be recognized.
3.2.6 LICENSES.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under each Development Program to develop the
Future Blood Screening Assays, and (ii) to manufacture or have manufactured the
Future Blood Screening Assays. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
27
(b) During the Blood Screening Term, Gen-Probe hereby grants
to Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights
to conduct Chiron's obligations, if any, under each Development Program to
develop the Future Blood Screening Assays. Chiron shall not have the right to
grant sublicenses under such license, without the prior express written consent
of Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) any Future Blood Screening Assays under
Section 3.2.4(b) above, during the balance of the Blood Screening Term,
Gen-Probe shall grant to Chiron a nonexclusive license in the Territory under
the Gen-Probe IP Rights to exercise its rights under Section 3.2.4(b) above to
manufacture (or have manufactured) such Future Blood Screening Assays to be
conducted by the Blood Screening Instruments for use in the Blood Screening
Field. Chiron shall not have the right to grant sublicenses under such license,
without the prior express written consent of Gen-Probe.
3.2.7 COMPENSATION TO GEN-PROBE. In consideration for the
rights granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) TRANSFER PRICE. Within thirty (30) days after receipt of
each shipment and invoice of Future Blood Screening Assays from Gen-Probe,
Chiron shall pay to Gen-Probe the Transfer Price for each Future Blood Screening
Assay purchased by Chiron or its Affiliates.
(b) APPLICABLE PURCHASE PRICE. Within forty-five (45) days
after the end of each calendar month, if the Applicable Purchase Price for each
Future Blood Screening Assay sold by Chiron, its Affiliates, or the Major
Distributor during such calendar month is greater than the Transfer Price for
such Future Blood Screening Assay previously paid by Chiron or its Affiliates to
Gen-Probe, then Chiron shall pay the difference to Gen-Probe. If the Applicable
Purchase Price for a Future Blood Screening Assay sold by Chiron, its
Affiliates, or the Major Distributor during such calendar month is less than the
Transfer Price for such Future Blood Screening Assay previously paid by Chiron
or its Affiliates to Gen-Probe, then Gen-Probe shall pay the difference to
Chiron.
(c) APPLICABLE ROYALTY. Within sixty (60) days after the end
of each calendar quarter, Chiron shall pay to Gen-Probe the Applicable Royalty,
if any, for each Future Blood Screening Assay sold by Chiron or its Affiliates
during such calendar quarter.
(d) RARE REAGENT PRICE. Within thirty (30) days after receipt
of each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to [CONFIDENTIAL TREATMENT REQUESTED] of the Manufacturing Costs
for all Rare Reagents purchased by Chiron for use in manufacturing Future Blood
Screening Assays under Section 3.2.4(b) above.
28
3.2.8 NONCOMPETITION.
(a) During the Blood Screening Term, [CONFIDENTIAL TREATMENT
REQUESTED], other than pursuant to this Agreement and except as provided in
Section 3.2.8(b), (c), or (d) below, and except as follows:
(i) Chiron and/or its Affiliates shall have the right
to develop, manufacture and/or sell [CONFIDENTIAL TREATMENT REQUESTED]. For this
purpose, [CONFIDENTIAL TREATMENT REQUESTED]. Chiron and/or its Affiliates shall
also have the right to develop, manufacture and/or sell [CONFIDENTIAL TREATMENT
REQUESTED], by an applicable regulatory authority, for use (i) in place of, or
(ii) in conjunction with, a Product for the Blood Screening Field. No grant of
any license to Chiron by Gen-Probe under this Agreement shall apply to any
non-TMA Assay.
(ii) In the event that Chiron (or its Affiliates)
elects to develop, manufacture or sell an [CONFIDENTIAL TREATMENT REQUESTED]. In
the event that Chiron elects to develop, manufacture or sell [CONFIDENTIAL
TREATMENT REQUESTED].
(b) Subject to the provisions of Section 1.2.1, during the
Blood Screening Term, Chiron shall have the right, in its sole discretion, to
grant licenses to Third Parties under the Chiron HCV Patent Rights or the Chiron
HIV Patent Rights, with the following limitations. With respect to the patent
rights for each virus, [CONFIDENTIAL TREATMENT REQUESTED]. Any further licenses,
except for a license of the type described in Section 1.2.1(e) above, of such
patent rights for such virus in such country for use in the Blood Screening
Field [CONFIDENTIAL TREATMENT REQUESTED].
(c) During the Blood Screening Term, [CONFIDENTIAL TREATMENT
REQUESTED]. Such opportunity may involve nonexclusive or exclusive rights to the
virus or marker, as negotiated by the parties through the Supervisory Board.
Such negotiation shall include a determination of the Applicable Purchase Price
pursuant to Section 1.2.3, which shall take into account the extent to which the
opportunity is exclusive or nonexclusive. If the arrangement accepted by the
Supervisory Board is nonexclusive, the party holding the intellectual property
for the virus or marker shall be free to license rights to such virus or marker
to Third Parties for use in the Blood Screening Field; and if not, licensing
shall be subject to such restrictions as are then agreed upon.
(d) Nothing contained in this Article 3 shall preclude
Gen-Probe from [CONFIDENTIAL TREATMENT REQUESTED]. In the event that Gen-Probe
commercializes any such product for the Blood Screening Field, [CONFIDENTIAL
TREATMENT REQUESTED]. Gen-Probe shall reasonably consider extending such
[CONFIDENTIAL TREATMENT REQUESTED] as to other countries for which it has a
right to do so.
29
(e) During the Blood Screening Term, Gen-Probe shall not grant
to any Third Party a license under the Gen-Probe IP Rights to develop or
commercialize (i) a TMA assay for use in the Blood Screening Field or (ii) an
assay utilizing Gen-Probe's "Hybridization Protection Assay" ("HPA") for use in
the Blood Screening Field.
3.3 BLOOD SCREENING INSTRUMENTS.
3.3.1 DEVELOPMENT PROGRAM.
(a) ESTABLISHMENT. Prior to the date of this Agreement,
Gen-Probe has expended significant effort and resources in the development of
the Blood Screening Instruments for use in the Blood Screening Field. Promptly
following the Effective Date, Gen-Probe shall prepare and submit to Chiron a
written Development Program and budget for each Blood Screening Instrument
(excluding modifications and future instruments as described in Sections 3.3.7
and 3.3.8, respectively), which shall set forth (i) the specifications for such
Blood Screening Instrument, (ii) a schedule for such Development Program, and
(iii) the parties' respective obligations to develop such Blood Screening
instrument and (if applicable) to conduct such clinical trials and apply for
such regulatory approvals as necessary or appropriate to make and sell in the
Territory such Blood Screening Instrument for use in the Blood Screening Field;
PROVIDED, HOWEVER, that any responsibilities of Chiron under the Development
Program for any Blood Screening instrument shall be subject to the prior express
written consent of Chiron. The Development Program as proposed by Gen-Probe for
each Blood Screening Instrument may not be modified except by the action of the
Supervisory Board.
(b) RESPONSIBILITIES. Gen-Probe shall develop each of the
Blood Screening Instruments in accordance with the applicable specifications and
the applicable Development Program documents and shall conduct such clinical
trials and apply for and endeavor to obtain such regulatory approvals as
necessary or appropriate to make and sell each of the Blood Screening
Instruments in the Territory for use in the Blood Screening Field. Chiron shall
consult with Gen-Probe on such matters and Gen-Probe shall reasonably consider
Chiron's advice and recommendations on all matters relating to such Development
Program.
(c) CONDUCT OF DEVELOPMENT. Gen-Probe and Chiron, in the event
it undertakes or is assigned by the Supervisory Board any responsibilities in
connection with the Development Program for each such Initial Blood Screening
Assay, shall conduct their respective obligations under the Development Program
for the Blood Screening Instruments in compliance in all material respects with
all requirements of applicable laws and regulations, if any, and all applicable
good laboratory, clinical and manufacturing practices. Gen-Probe and Chiron each
shall proceed diligently with their respective obligations under such
Development Program and shall use their respective Commercially Reasonable
Efforts to achieve its objectives efficiently and expeditiously. Gen-Probe and
Chiron each shall allocate sufficient personnel, equipment, facilities and other
resources to such Development Program to carry out their respective obligations
and to accomplish the objectives thereof.
30
(d) SUBCONTRACTS. Upon approval of the Supervisory Board which
shall not be unreasonably withheld by either party (and except as to such
subcontracts which exist as of the Effective Date), Gen-Probe and Chiron each
may subcontract portions of the Development Program for the Blood Screening
Instruments to be performed by it in the normal course of its business;
PROVIDED, HOWEVER, that (i) unless the other party gives its prior written
consent, such subcontracting shall not involve the transfer (including but not
limited to sublicense) of any intellectual property rights of the other party or
the Confidential Information of the other party to Third Parties; (ii) if the
other party consents to the subcontractor's access to Confidential Information
of the other party, the subcontracted party shall enter into a confidentiality
agreement with the subcontracting party incorporating the terms of Article 8
below; (iii) the subcontracting party shall supervise such subcontract work;
(iv) the subcontracted party shall be in compliance in all material respects
with all requirements of applicable laws and regulations, together with all
applicable good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party,
[CONFIDENTIAL TREATMENT REQUESTED]; and (vi) if required by the Supervisory
Board, the subcontracted party shall enter into an agreement with the
subcontracting party to effectuate the provisions of Article 9 below, and which
shall include a provision for assignment of inventions arising from the
subcontracted work.
3.3.2 FUNDING. [CONFIDENTIAL TREATMENT REQUESTED]; PROVIDED,
HOWEVER, that Chiron shall reimburse Gen-Probe for the Development Costs
associated with implementing those modifications (if any) to the applicable
specifications and the applicable Development Program documents as Chiron
proposes and Gen-Probe agrees. In the event it undertakes or is assigned by the
Supervisory Board any responsibilities in connection with the Development
Program for each such Blood Screening Instrument, Chiron shall pay all
Development Costs of conducting its obligations under the Development Program
for the Blood Screening Instruments.
3.3.3 MANUFACTURE.
(a) Subject to Sections 3.3.3(b) and 3.3.3(c) below
[CONFIDENTIAL TREATMENT REQUESTED] for use in the Blood Screening Field in
accordance with Article 6 below.
(b) If Gen-Probe [CONFIDENTIAL TREATMENT REQUESTED] to
manufacture any of the Blood Screening Instruments (excluding future instruments
as described in Sections 4.4.8, respectively), [CONFIDENTIAL TREATMENT
REQUESTED]. Any such subcontracts for the manufacture of any of the Blood
Screening Instruments (in whole), or any of the major functional components or
disposables thereof, shall be subject to the approval of the Supervisory Board
which shall not be unreasonably withheld by either party.
(c) If Gen-Probe fails to supply Chiron [CONFIDENTIAL
TREATMENT REQUESTED] for a Blood Screening Instrument ordered in accordance with
Section 6.3 below, for any [CONFIDENTIAL TREATMENT REQUESTED] (unless the
Supervisory Board agrees within fifteen days of such event that Gen-Probe shall
retain the manufacturing
31
responsibility hereunder), then Chiron shall have the right to, and if Chiron
elects to manufacture or have manufactured, the obligation to use Commercially
Reasonable Efforts to, manufacture (or to have manufactured) its requirements of
such Blood Screening Instrument in the Territory for use in the Blood Screening
Field. In such event, Gen-Probe promptly shall provide such reasonable technical
assistance, at Gen-Probe's sole cost, as necessary to enable Chiron to exercise
its rights to manufacture (or have manufactured) such Blood Screening Instrument
for use in the Blood Screening Field and Gen-Probe shall provide to Chiron,
directly or indirectly, to the greatest possible extent, all remedies available
to Gen-Probe against any Instrument manufacturer which has failed to supply
Gen-Probe in accordance with the applicable manufacturing contract.
(d) If either party exercises any right granted hereunder to
have any Blood Screening Instrument manufactured, then (i) such party shall
first require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
3.3.4 COMMERCIALIZATION.
(a) Except as otherwise set forth in Sections 3.3.4(b),
3.3.4(d) and 3.6 below, during the Blood Screening Term, Gen-Probe hereby grants
to Chiron the exclusive distribution right in the Territory, at Chiron's sole
cost, directly or through distributors, to promote, market and sell the Blood
Screening Instruments to conduct Blood Screening Assays for use in the Blood
Screening Field (recognizing the lack of clear distinction between the Blood
Screening Field and Clinical Diagnostic Field in certain countries). Chiron
shall use its Commercially Reasonable Efforts to promote, market, sell and meet
the reasonably foreseeable market demands for the Blood Screening Instruments in
the Territory for use in the Blood Screening Field. [CONFIDENTIAL TREATMENT
REQUESTED].
(b) CDS shall have the exclusive right, at its sole cost, to
promote, market and sell the Blood Screening Instruments in Japan for use in the
Blood Screening Field until the earlier of (i) [CONFIDENTIAL TREATMENT
REQUESTED] of the Japanese HIV Qualitative Blood Screening Assay in Japan for
use in the Blood Screening Field, and (ii) [CONFIDENTIAL TREATMENT REQUESTED]
for the qualitative detection of both HCV and HIV-1 in Japan for use in the
Blood Screening Field. Thereafter, subject to Section 3.3.4(d) below, during the
Blood Screening Term, Chiron shall have the exclusive right, at its sole cost,
to promote, market and sell the Blood Screening Instruments in Japan for use in
the Blood Screening Field. Chiron's Japanese Affiliate shall support the
marketing in Japan for the Blood Screening Instruments, in a manner to be agreed
upon between CDS and Chiron's Japanese Affiliate and not inconsistent with CDS's
marketing program, during the period in which CDS has the exclusive right to
sell such Instruments.
32
(c) Subject to regulatory requirements the Blood Screening
Instruments shall be marketed under such trademarks as may be determined by the
Supervisory Board to give adequate recognition to the respective contributions
and interests of the parties, and, if applicable, the Major Distributor. It is
the intention of the parties that both parties' contributions and interests will
be recognized.
(d) CDS shall have the right to co-promote the Blood Screening
Instruments in Japan, provided that such co-promotion conforms with the
marketing, product, pricing, and promotional strategy as determined by Chiron or
the Major Distributor (provided that no such strategy shall preclude
co-promotion).
(e) Chiron shall have the right, and the obligation, at its
sole expense, to maintain and service all Blood Screening Instruments placed in
the Territory for use in the Blood Screening Field. Chiron shall be a party to
all service contracts for all such Blood Screening Instruments, including those
Blood Screening Instruments that are placed by CDS in Japan for use in the Blood
Screening Field. Chiron shall have the right to charge a fee to the users of
such Blood Screening Instruments for such service.
3.3.5 LICENSES.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's, obligations under the Development Program to develop the
Blood Screening Instruments, and (ii) to manufacture or have manufactured the
Blood Screening Instruments. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) During the Blood Screening Term, Gen-Probe hereby grants
to Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights
to conduct Chiron's obligations, if any, under the Development Program to
develop the Blood Screening Instruments. Chiron shall not have the right to
grant sublicenses under such license, without the prior express written consent
of Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) the Blood Screening Instruments under Section
3.3.3(c) above, during the balance of the Blood Screening Term, Gen-Probe shall
grant to Chiron a nonexclusive license in the Territory under the Gen-Probe IP
Rights to exercise its rights under Section 3.3.3(c) above to manufacture (or
have manufactured) the Blood Screening Instruments to conduct the Blood
Screening Assays for use in the Blood Screening Field. Chiron shall not have the
right to grant sublicenses under such license, without the prior express written
consent of Gen-Probe.
3.3.6 COMPENSATION TO GEN-PROBE. In consideration for the
rights granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
33
(a) TRANSFER PRICE. Within thirty (30) days after receipt of
each shipment and invoice of Blood Screening Instruments from Gen-Probe, Chiron
shall pay to Gen-Probe the Transfer Price for each Blood Screening Instrument
purchased by Chiron or its Affiliates.
(b) INSTRUMENT SALES IN THE UNITED STATES AND CANADA. Chiron,
its Affiliates and the Major Distributor shall be entitled to retain
[CONFIDENTIAL TREATMENT REQUESTED] of Blood Screening Instruments by Chiron, its
Affiliates or the Major Distributor in the United States or Canada. After
Chiron, its Affiliates and the Major Distributor have received [CONFIDENTIAL
TREATMENT REQUESTED], within forty-five (45) days after the end of each fiscal
quarter, Chiron shall pay to Gen-Probe a percentage of Net Sales of each Blood
Screening Instrument sold by Chiron, its Affiliates or the Major Distributor to
independent customers in the United States and Canada during such fiscal
quarter, calculated using the same percentage rate as is used in the then
effective Applicable Purchase Price payable to Gen-Probe for Initial Blood
Screening Assays pursuant to Section 1.2.1.
(c) INSTRUMENT SALES OUTSIDE THE UNITED STATES AND CANADA. CDS
and Chiron each shall retain [CONFIDENTIAL TREATMENT REQUESTED] of Blood
Screening Instruments outside the United States and Canada.
(d) SERVICE REVENUES. Chiron shall retain [CONFIDENTIAL
TREATMENT REQUESTED] consideration for the maintenance and servicing of the
Blood Screening Instruments.
3.3.7 MODIFICATIONS TO BLOOD SCREENING INSTRUMENTS. The rights
granted by Gen-Probe to Chiron with respect to any of the Blood Screening
Instruments during the Blood Screening Term shall extend to and include any and
all modifications to such Blood Screening Instrument as are developed during the
Blood Screening Term to improve the sample processing, amplification, detection,
analysis, or reliability of such Blood Screening Instrument which utilize the
same base technologies and which do not change the fundamental character of such
Blood Screening Instrument, to the extent that Gen-Probe is not prohibited as of
the Effective Date from granting such rights. It is the intent of the parties
that this Section applies to improvements to the existing Blood Screening
Instruments, but not to an instrument which is fairly considered to be a new
instrument. From time to time during the Blood Screening Term, the Supervisory
Board shall consider potential modifications to the initial Development Program
for the Blood Screening Instruments and to the Blood Screening Instruments. The
Supervisory Board shall allocate as between the parties the cost of any
modification which it approves.
3.3.8 OTHER BLOOD SCREENING INSTRUMENTS. If Gen-Probe develops
any new instrument for use with TMA Assays in the Blood Screening Field, it
shall offer to grant to Chiron, during the Blood Screening Term and on
reasonable terms to be negotiated, rights to such instrument comparable to the
rights granted under this Agreement as to the Blood Screening Instruments
existing on the Effective Date, to the extent that Gen-Probe reasonably
concludes that it is not prohibited as of the Effective Date from granting such
rights.
34
3.4 APPOINTMENT OF MAJOR DISTRIBUTOR. [CONFIDENTIAL TREATMENT
REQUESTED].
3.5 RECORDS AND REPORTS.
3.5.1 RECORDS. Gen-Probe and Chiron each shall maintain
records, in sufficient detail appropriate for regulatory or patent purposes,
which shall be complete and accurate and shall fully and properly reflect all
work done and results achieved in the performance of the Development Programs
for Blood Screening Assays and Blood Screening Instruments (including all data
in the form required under all applicable laws and regulations).
3.5.2 INSPECTION OF RECORDS. Gen-Probe and Chiron each shall
have the right, during normal business hours and upon reasonable notice, to
inspect all such records of the other party to the extent reasonably required
for the performance of the Development Programs for Blood Screening Assays and
Blood Screening Instruments. The parties shall develop reasonable procedures for
requesting and delivering copies of such records to each other as may be
necessary for the performance of the Development Programs for Blood Screening
Assays and Blood Screening Instruments. Each party shall maintain such records
and the information of the other party contained therein in confidence
incorporating the terms of Article 8 below and shall not use such records or
information except to the extent otherwise permitted by this Agreement.
3.5.3 DEVELOPMENT REPORTS AND INFORMATION. Gen-Probe and
Chiron each shall keep the other informed of the progress of such party under
the Development Programs for Blood Screening Assays and Blood Screening
Instruments. Within thirty (30) days following the end of each calendar quarter
during the term of the Development Programs for Blood Screening Assays and Blood
Screening Instruments, and within thirty (30) days following the expiration or
termination of such Development Programs, Gen-Probe and Chiron each shall
prepare and provide to the other party a reasonably detailed written summary
report which shall describe the work performed by such party to date under such
Development Programs.
3.6 INTERIM OPPORTUNITIES.
3.6.1 AMERICAN RED CROSS.
(a) Gen-Probe is contemplating entering into an agreement with
the American Red Cross (the "ARC") to supply Initial Blood Screening Assays for
testing pooled plasma samples for HIV and HCV contamination (the "ARC
Agreement"). The provisions of this Section 3.6.1(a) shall be effective
immediately upon Chiron's consent to the terms of the ARC Agreement between
Gen-Probe and the ARC, which consent shall not be unreasonably withheld. Upon
approval of the ARC Agreement by Chiron following the signing of this Agreement
by both parties, then notwithstanding anything to the contrary in this
Agreement, Chiron hereby grants to Gen-Probe a license under the Chiron IP
Rights, and Gen-Probe reserves the right under the Gen-Probe IP Rights, to make,
use and sell Initial Blood Screening Assays in order to perform Gen-Probe's
obligations under the ARC Agreement. Gen-Probe shall not have the right
35
to grant sublicenses under such license, without the prior express written
consent of Chiron. The license to be granted hereunder shall not be subject to
the conditions of Article 12.
(b) Gen-Probe shall be the lead contact with the ARC initially
for purposes of the ARC Agreement. Following the signing of this Agreement,
Gen-Probe shall provide timely notice to Chiron of all meetings scheduled with
the ARC and Chiron shall have the right to participate in meetings with the ARC
and the formulation of strategy in connection with the ARC Agreement. Following
the signing of this Agreement, the parties will agree on a plan to provide for
the transition of responsibility for the management of the overall relationship
with ARC to Chiron and will consider the transition of responsibility for the
ARC Agreement.
(c) [CONFIDENTIAL TREATMENT REQUESTED].
3.6.2 OTHER INTERIM OPPORTUNITIES. The parties will pursue on
a mutually-agreeable basis other opportunities (e.g., opportunities other than
the above-described program with ARC) for sales of any Initial Blood Screening
Assay in the United States for use in the Blood Screening Field prior to FDA
approval of the Initial Blood Screening Assay for both HIV-1 and HCV for unit
donor testing ("Interim Opportunities"). It is the parties' intention that any
such Interim Opportunities be addressed on the terms set forth in this Agreement
for the Initial Blood Screening Assays, except that the Applicable Purchase
Price for the Initial Blood Screening Assays for Interim Opportunities, absent
further agreement of the parties, shall be [CONFIDENTIAL TREATMENT REQUESTED].
Each party shall be obligated to use Commercially Reasonable Efforts to respond
to such Interim Opportunities. None of the provisions of this Section 3.6.2
shall apply to sales outside the United States.
ARTICLE 4
[PROVISION ASSIGNED]
36
ARTICLE 5
SUPERVISORY BOARDS
5.1 SUPERVISORY BOARDS.
5.1.1 COMPOSITION. The Development Programs for the
Products in each of the Blood Screening Field and the [PROVISION ASSIGNED]
shall be supervised by a Blood Screening Supervisory Board and a
[PROVISION ASSIGNED], respectively. Each Supervisory Board shall be comprised
of three (3) named representatives of Gen-Probe and three (3) named
representatives of Chiron. Each party shall appoint its respective
representatives to each Supervisory Board from time to time, and may
substitute one or more of its representatives, in its sole discretion,
effective upon notice to the other party of such change.
5.1.2 MEETINGS. Each Supervisory Board shall meet not less
than once each calendar quarter during the term of this Agreement, on such dates
and at such times and places as agreed to by Gen-Probe and Chiron, alternating
between San Diego and Emeryville, or such
59
other locations as the parties shall agree. All meetings shall be set at times
and place to be mutually agreed.
5.1.3 ACTIONS. Each party's representatives shall collectively
have one vote as to all matters. Any approval, determination or other action
agreed to both parties' representatives shall be the approval, determination or
other action of the Supervisory Board. All board actions require a unanimous
vote. Any matters as to which a Board cannot reach a unanimous vote shall be
presented to the parties' respective presidents for consideration, in accordance
with Article 13.
5.2 REPORTS. Within thirty (30) days following each Supervisory Board
meeting during the term of this Agreement, the Supervisory Board shall prepare
and provide to each party a reasonably detailed written summary report which
shall describe any approval, determination or other action by the Supervisory
Board.
ARTICLE 6
SUPPLY TERMS
6.1 MANUFACTURE AND SALE. On the terms and subject to the conditions of
this Article 6, Gen-Probe shall manufacture, or have manufactured, sell and
deliver to Chiron, and Chiron shall purchase from Gen-Probe, such amounts of the
Products, as Chiron orders pursuant to Section 6.3.4 below. Gen-Probe shall
cause its subcontract manufacturers, if any, to comply with the provisions of
this Article 6. Gen-Probe shall use Commercially Reasonable Efforts to meet the
market demand for the Products as to which it has undertaken an obligation to
manufacture. During the due diligence period following signing of this contract
the parties will meet to discuss manufacturing plans for the Products.
6.2 MANUFACTURING PRACTICES.
6.2.1 SPECIFICATIONS. Gen-Probe shall manufacture all the
Products under this Agreement in accordance with all applicable laws and
regulations and in conformity with the product specifications.
6.2.2 AUDIT. Chiron shall have the right, at its sole expense,
to audit Gen-Probe for compliance with Section 6.2.1 upon reasonable notice
during normal business hours and not more than once in each calendar year (or
such additional times as may be necessary to ensure compliance with all material
requirements).
6.2.3 CERTIFICATES OF ANALYSIS. Gen-Probe shall provide
certificates of analysis to Chiron for all the Blood Screening Assays,
[PROVISION ASSIGNED] and Rare Reagents manufactured and supplied hereunder
based upon a reference standard reasonably proposed by Gen-Probe and
acceptable to Chiron.
60
6.2.4 QUALITY CONTROL INFORMATION. Upon the reasonable request
of Chiron, Gen-Probe shall provide Chiron with such reasonable information,
including analytical and manufacturing documentation, requested by Chiron
regarding quality control of the Products. Chiron shall treat all such
information disclosed pursuant to this Section as confidential information of
Gen-Probe subject to the provisions of Article 8 below.
6.3 FORECASTS AND ORDERS.
6.3.1 Forecasts.
(a) INITIAL FORECASTS. Not less than six months prior to
the date of the first anticipated delivery of any Product by Gen-Probe to
Chiron, Chiron shall prepare and provide Gen-Probe with a written forecast of
the estimated requirements of Chiron and its Affiliates for each Blood
Screening Assay, Blood Screening Instrument, [PROVISION ASSIGNED], or Rare
Reagent for each of the twelve (12) calendar months beginning with the month
of the first anticipated delivery of any Product. Gen-Probe shall respond to
Chiron's forecast in writing within thirty (30) days and shall have no
obligation with respect to such forecast unless it has approved such forecast
in writing. Gen-Probe shall use Commercially-Reasonable Efforts to meet the
market demand for the Products as to which it has undertaken an obligation to
manufacture.
Not less than three months prior to the date of the first
anticipated delivery of any Product, Chiron shall prepare and provide Gen-Probe
with a more current written forecast covering the same Products and period.
Gen-Probe shall respond to Chiron's updated forecast in writing within ten (10)
days. Gen-Probe shall have no obligation with respect to such updated forecast
to the extent that the forecasted quantity of any Product has been increased by
more than fifteen percent (15%) for the first three-month period of such
forecast, or by more than twenty-five percent (25%) for the twelve-month period
of such forecast, from the previously-approved amount for such Product unless it
has approved such increase in writing.
The parties recognize that forecasting the first year for any
Product will be difficult and that actual experience may significantly vary from
the forecast. Without modifying any other provision of this Agreement, the
parties agree to work together to address the first year supply of Products, and
to use Commercially Reasonable Efforts to satisfy the market need.
(b) REGULAR MONTHLY FORECASTS. Beginning with the first day of
the month of the first Product delivery and prior to the first day of each
subsequent month, Chiron shall update its prior forecast by extending the
forecast to cover a period of not less than 12 months beyond the date of
Gen-Probe's receipt of the updated forecast (which date is referred to as the
"Forecast Date"). Absent Gen-Probe's prior written consent, such updated
forecast shall be subject to the following restrictions:
(i) Chiron may not modify the previously-forecasted
amount of any Product for the three-month period following the Forecast Date.
61
(ii) Chiron may not modify its previously-forecasted
amount of any Blood Screening Assay, [PROVISION ASSIGNED], or Rare Reagent
for the fourth through sixth months covered by the forecast by more than fifteen
percent (15%) per month from the previously-forecasted amount.
(iii) Chiron may not modify its previously-forecasted
amount of any Blood Screening Assay, [PROVISION ASSIGNED], or Rare Reagent
for the seventh through eleventh months covered by the forecast by more than
twenty-five percent (25%) per month from the previously-forecasted amount.
(iv) Chiron may not forecast an amount of any Blood
Screening Assay, [PROVISION ASSIGNED], or Rare Reagent for the twelfth
month which is more than twenty-five percent (25%) greater than the amount
forecasted for the eleventh month.
(v) Chiron may not increase its forecast for any
Blood Screening Instrument or [PROVISION ASSIGNED] for the fourth through
sixth months covered by the forecast by more than twenty-five percent (25%)
per month from the previously forecasted amount.
Chiron shall prepare each forecast based upon Chiron's good faith determination
of the past and reasonably anticipated market demand for each Product and in
doing so shall recognize in good faith limitations imposed by arrangements, if
any, with subcontractors of Gen-Probe for the manufacture and supply of such
Product or any component thereof.
6.3.2 PURCHASE OBLIGATION. Chiron shall be required to
purchase not less than ninety percent (90%) of the quantity of each Product
estimated for the initial three-month period covered in each forecast (other
than the first such forecast) under Section 6.3.1(a) above.
6.3.3 ORDERS. Except as otherwise set forth below in this
Section 6.3.3, Chiron shall make all purchases of Products hereunder by
submitting to Gen-Probe a single binding purchase order for each calendar month.
Not less than three months prior to the date of the first anticipated delivery
of any Product, Chiron shall deliver to Gen-Probe its initial binding purchase
order, which shall specify the quantity ordered, the place of delivery and the
requested delivery date for each of the three months beginning with the first
Product delivery. Not less than ninety days prior to the first day of the first
month following the period of the first binding purchase order, and not less
than 90 days prior to the first day of each succeeding month, Chiron shall
deliver to Gen-Probe a binding purchase order for such month, which shall
specify the quantity ordered, the place of delivery and the requested delivery
date. Each purchase order shall be in writing in a form reasonably acceptable to
Gen-Probe. The requested delivery date shall be not be less than ninety (90)
days after the date of such purchase order. If the quantity of any Product
ordered by Chiron for delivery in any calendar month exceeds the quantity of
such Product set forth in the most recent forecast, then Gen-Probe shall provide
Chiron with written notice of the anticipated delivery date for, and use
Commercially Reasonable Efforts to deliver, the amount of Product in excess of
the forecasted amount. In the event of a conflict between the terms and
62
conditions of any purchase order and this Agreement, the terms and conditions of
this Agreement shall prevail.
6.3.4 SUPPLY OBLIGATION. Gen-Probe shall be required to
supply in any month the quantity of each Product ordered by Chiron pursuant
to Section 6.3.3 to the extent such quantity of such Product was set forth in
the most recent forecast. If the quantity of any Blood Screening Assay,
[PROVISION ASSIGNED] or Rare Reagent ordered by Chiron under Section 6.3.4
below for any calendar period exceeds the forecasted amount, Gen-Probe shall
use its Commercially Reasonable Efforts to supply such excess. If Gen-Probe
becomes aware of any fact indicating that Gen-Probe may be unable to meet
Chiron's forecasted demand as to any Product, Gen-Probe shall promptly
provide written notice of such fact to Chiron. The Supervisory Board shall
then meet to discuss the relevant circumstances and appropriate actions.
6.4 DELIVERY AND ACCEPTANCE.
6.4.1 DELIVERY. Unless Gen-Probe is otherwise instructed by
Chiron, all the Products supplied under this Agreement shall be shipped f.o.b.
place of manufacture to such location as designated by Chiron in the applicable
purchase order. Gen-Probe shall pre-pay all freight, insurance charges, taxes,
import and export duties, inspection fees and other charges applicable to the
sale and transport of the Products purchased by Chiron hereunder and add such
charges to the applicable invoice. Title and risk of loss and damages to the
Products purchased by Chiron hereunder shall pass to Chiron upon receipt by the
carrier. Chiron shall have the right to select the carrier. Subject to the
guidance of the Supervisory Boards, Gen-Probe shall provide warehouse capability
for Products after sale to Chiron and pending further delivery instructions. The
Supervisory Boards shall reasonably allocate the cost of such warehouse
capability between the parties.
6.4.2 REJECTION AND CURE.
(a) BLOOD SCREENING ASSAYS AND [PROVISION ASSIGNED]. If a
shipment of Blood Screening Assays or [PROVISION ASSIGNED] or any portion
thereof is spoiled, damaged or defective, or fails to have the appropriate
remaining life, then Chiron shall have the right to reject such shipment or
the portion thereof that fails to so conform, as the case may be. Chiron
shall give written notice to Gen-Probe of its rejection hereunder, within
thirty (30) days after Chiron's receipt of such shipment, specifying the
grounds for such rejection. All or any part of any shipment may be held for
Gen-Probe's disposition, at Gen-Probe's expense if found to be not in
conformance with the applicable specifications. Gen-Probe shall use its
Commercially Reasonable Efforts to cure such rejection or replace such
rejected shipment (or portion of shipment) after receipt of notice of
rejection thereof.
(b) BLOOD SCREENING INSTRUMENTS AND [PROVISION ASSIGNED].
If any Blood Screening Instrument or [PROVISION ASSIGNED] is
damaged, defective or fails to conform to the specifications therefor, then
Chiron shall have the right to reject such damaged, defective or
nonconforming Blood Screening Instrument or [PROVISION ASSIGNED].
Chiron shall give written notice to both Gen-Probe and any manufacturer
designated by
63
Gen-Probe of its rejection hereunder, within ten (10) days after installation
of such Instrument, specifying the grounds for such rejection. The Blood
Screening Instrument or [PROVISION ASSIGNED] shall be held for Gen-Probe's
disposition, at Gen-Probe's expense, if found to be damaged, defective or
nonconforming. Gen-Probe shall use its Commercially Reasonable Efforts to
replace such rejected Blood Screening Instrument or [PROVISION ASSIGNED]
after receipt of notice of rejection thereof.
6.4.3 LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, GEN-PROBE'S SOLE LIABILITY TO CHIRON,
AND CHIRON'S SOLE REMEDY, WITH RESPECT TO THE SPECIFIC MATTERS ADDRESSED UNDER
SECTION 6.4.2 ABOVE SHALL BE THE REJECTION AND REPLACEMENT OF NON-CONFORMING
PRODUCTS. NOTHING IN THIS SECTION SHALL LIMIT ANY RIGHTS OR REMEDIES UNDER
ARTICLE 10 OR ANY RIGHT OF CHIRON TO ASSUME RESPONSIBILITY FOR THE MANUFACTURE
OF THE PRODUCTS UNDER ARTICLES 3 AND 4.
6.5 PACKAGING. All Products supplied under this Agreement shall be
packaged in such manner as Chiron reasonably determines and Gen-Probe does not
reasonably object.
6.6 WARRANTY. Gen-Probe warrants that all the Products delivered to
Chiron pursuant to this Agreement shall conform with the applicable
specifications, shall be free from defects in material and workmanship, and
shall be manufactured in compliance with applicable laws and regulations. Any
and all warranties by subcontract manufacturers of the Blood Screening
Instruments and the [PROVISION ASSIGNED] shall inure to the benefit
of Chiron, to the extent permitted by such subcontract manufacturer. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, GEN-PROBE MAKES NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS. GEN-PROBE
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
6.7 INDEPENDENT PURCHASER STATUS. Chiron shall be an independent
purchaser and reseller of the Products. Chiron shall be free to use and resell
the Products on such terms as it may, in its sole discretion, determine,
including price, returns, credits and discounts.
6.8 INVOICING. Upon shipment of the Products to Chiron, Gen-Probe shall
submit invoices therefor to Chiron.
6.9 SALES AND USE TAXES. Any federal, state, county or municipal sales
or use tax, excise or similar charge, or other tax assessment (other than that
assessed against income), assessed or charged on the sale of the Products sold
by Gen-Probe to Chiron pursuant to this Agreement shall be paid by Chiron.
6.10 NON-COMMERCIAL PRODUCTS. Gen-Probe agrees to provide to Chiron
reasonable quantities of Blood Screening Assays and [PROVISION ASSIGNED]
manufactured by
64
Gen-Probe for uses other than sale to customers, including without limitation
research studies, marketing studies, internal research and development, and
troubleshooting (all for Chiron's use only in direct furtherance of the express
purposes of this Agreement and without any implied license for any purpose other
than such express purposes), to the extent such Products are specifically
ordered by Chiron for such purposes ("Non-commercial Products"). The entire
compensation to Gen-Probe for Non-commercial Products shall be not greater than
[CONFIDENTIAL TREATMENT REQUESTED] of Gen-Probe's Manufacturing Cost. The
quantities of Non-commercial Products ordered by Chiron shall be subject to
review by the Supervisory Board.
6.11 INTERNAL COMMERCIAL USE. Subject to Section 1.52.4, for all
Products which are used commercially by Chiron or its Affiliates, Chiron shall
pay to Gen-Probe the compensation which would be due Gen-Probe had such Products
been the subject of an arm's-length commercial sale by Chiron or the Major
Distributor (if applicable).
6.12 SAFETY STOCKS. Immediately following the execution of this
Agreement by both parties, the parties will meet and confer and negotiate in
good faith in order to agree upon provisions concerning the arrangements for a
safety stock of each of the Products and plans for the creation of the initial
safety stock and a reasonable schedule therefor. It is the parties' intent to
agree upon such provisions within sixty (60) days of the date of this Agreement.
The Supervisory Boards will from time-to-time review the adequacy of such
arrangements for such safety stocks. Notwithstanding any other provision of this
Agreement, if Gen-Probe is otherwise unable to deliver any Product in accordance
with this Agreement, then that portion (if any) of the safety stock of that
Product stored at Gen-Probe facilities may be applied to meet Chiron's demand
for that Product, provided that Gen-Probe shall then be required to restore the
safety stock within the applicable periods for cure of a failure to supply
pursuant to Article 3 or 4, unless otherwise mutually agreed. Gen-Probe shall
give Chiron fifteen (15) days prior written notice before using any safety stock
Product in a manner which reduces the amount of the safety stock.
With respect to any Initial Blood Screening Assay or Future Blood
Screening Assay, the objective of the parties is to share equally the aggregate
cost of maintaining safety stocks of raw components, work-in-progress, and
finished as required by CBER. Gen-Probe will carry the safety stock of raw
components and work-in-progress for such Assays, and will carry one month's
safety stock in the event that more than two months' supply of such Assays is
mandated as safety stock. Chiron shall carry all other safety stocks for such
Assays, unless such responsibility places a disproportionate burden with respect
to overall safety stock costs on Chiron, in which event the Supervisory Board
will readjust the parties' responsibilities.
65
ARTICLE 7
PAYMENTS AND REPORTS
7.1 REPORTS. Within forty-five (45) days after the end of each
calendar month or fiscal quarter during the Blood Screening Term or
[PROVISION ASSIGNED], as applicable in connection with Chiron's payment
obligations hereunder, Chiron shall furnish to Gen-Probe a written report
showing in reasonably specific detail (a) the gross sales, on a
Product-by-Product and country-by-country basis, of all Products sold by
Chiron and its Affiliates (or, as to Blood Screening Assays, the Major
Distributor, or any other distributor for Chiron in Japan, Germany, Italy,
France or the United Kingdom) to independent customers in the Territory
during such period as to which Chiron is obligated to make payments hereunder
based on Product sales and the calculation of Net Sales on a worldwide basis
from such gross sales; (b) all amounts owing to Gen-Probe hereunder payable
in United States dollars, if any, which shall have accrued hereunder based
upon such sales of Products; (c) the withholding taxes, if any, required by
law to be deducted in respect of such sales; (d) the date of the First
Commercial Sale of each Product in each country in the Territory during such
period; and (e) the exchange rates used in determining the amount of United
States dollars. Chiron shall keep complete and accurate records in sufficient
detail to properly reflect all gross sales and Net Sales and to enable all
amounts payable hereunder to be determined. Each party shall provide the
other with the information concerning access to instruments required by
Section 4.4.7. CDS shall provide Chiron with information as to sales of the
Initial Blood Screening Assay sold in Japan by CDS within forty-five days
after the end of each calendar quarter.
7.2 EXCHANGE RATES. With respect to sales of Products invoiced in
United States dollars, all such amounts calculated under this Agreement shall be
expressed in United States dollars. With respect to sales of Products invoiced
in a currency other than United States dollars, all such amounts calculated
under this Agreement shall be expressed in the domestic currency of the party
making the sale together with the United States dollar equivalent of such
amounts calculated using Chiron's standard accounting methods, for calculating
worldwide sales of its other products.
7.3 AUDITS.
7.3.1 Upon the written request of either party (the "Requesting
Party") and not more than once in each calendar year, the other party (the
"Responding Party") shall permit an independent certified public accounting firm
of nationally recognized standing, selected by the Requesting Party and
reasonably acceptable to the Responding Party, at the Requesting Party's
expense, to have access during normal business hours to such of the records of
the Responding Party as may be reasonably necessary to verify the accuracy of
the payment reports and invoices hereunder for any year ending not more than
thirty-six (36) months prior to the date of such request. The accounting firm
shall disclose to the Requesting Party only whether the payment reports and
invoices are correct or not and the specific details concerning any
discrepancies. No other information shall be shared.
66
7.3.2 If such accounting firm concludes that undercharged or
overcharged amounts are owing from one party to the other for such period, the
appropriate party shall pay such amounts within thirty (30) days of the date the
Requesting Party delivers to the Responding Party such accounting firm's written
report so concluding. The fees charged by such accounting firm shall be paid by
the Requesting Party; PROVIDED, HOWEVER, if the audit discloses either (a) that
the amounts payable by the Responding Party for the audited period are more than
one hundred five percent (105%) of the amounts actually paid for such period, or
(b) that the amounts charged by the Responding Party for the audited period are
more than one hundred five percent (105%) of the amounts actually incurred for
such period, then the Responding Party shall pay the reasonable fees and
expenses charged by such accounting firm.
7.3.3 The Requesting Party shall treat all financial information
subject to review under this Section 7.3 as confidential, and shall cause its
accounting firm to retain all such financial information in confidence with a
confidentiality agreement reasonably acceptable to the Responding Party.
7.4 PAYMENT METHOD. All payments by Chiron to Gen-Probe under this
Agreement shall be paid in United States dollars, and all such payments shall be
originated from a United States bank located in the United States and made by
bank wire transfer in immediately available funds to such account as Gen-Probe
shall designate before such payment is due.
7.5 EXCHANGE CONTROL. If at any time legal restrictions prevent the
prompt remittance of part or all royalties with respect to any country in the
Territory where the Product is sold, payment shall be made through such lawful
means or methods as the parties reasonably shall determine.
7.6 WITHHOLDING TAXES. Chiron shall be entitled to deduct the amount of
any withholding taxes, value-added taxes or other taxes, levies or charges
(other than United States taxes) with respect to amounts payable by Chiron, its
Affiliates or, in the case of Products for the Blood Screening Field, by the
Major Distributor or distributors in Japan, Germany, Italy, France, or the
United Kingdom, or any taxes required to be withheld by Chiron, its Affiliates,
or such distributors, to the extent Chiron, its Affiliates, or such distributors
pay to the appropriate governmental authority on behalf of Gen-Probe such taxes,
levies or charges. Chiron shall use reasonable efforts to minimize any such
taxes, levies or charges required to be withheld on behalf of Gen-Probe by
Chiron, its Affiliates, or such distributors. Chiron promptly shall deliver to
Gen-Probe proof of payment of all such taxes, levies and other charges, together
with copies of all communications from or with such governmental authority with
respect thereto.
7.7 LATE PAYMENTS. Unless otherwise provided in this Agreement, a party
shall pay interest to the other party on the aggregate amount of any amounts
payable by such party that are not paid on or before the date such amounts are
due under this Agreement at a rate per annum equal to the lesser of the prime
rate of interest as reported by Bank of America NT&SA in San Francisco,
California, from time to time, plus two percent (2%), or the highest rate
permitted by applicable law, calculated on the number of days such payment is
delinquent.
67
ARTICLE 8
CONFIDENTIALITY
8.1 CONFIDENTIAL INFORMATION. For the period commencing on the date
this Agreement is first signed by both parties and ending seven (7) years
following the expiration or earlier termination hereof, a party (the "Receiving
Party") shall maintain in confidence the Confidential Information of the other
party, and shall not disclose, use, or grant the use of the Confidential
Information of the other party (the "Disclosing Party") except on a need-to-know
basis to its (and its Affiliates') directors, officers and employees, and to its
consultants and to other Third Parties, and then only to the extent that such
disclosure or use is reasonably necessary in connection with such party's
activities as expressly authorized by this Agreement. To the extent that
disclosure to any Person is authorized by this Agreement, prior to disclosure,
the Receiving Party shall obtain written agreement of such Person to hold in
confidence and not disclose, use or grant the use of the Confidential
Information of the other party except as expressly permitted under this
Agreement. The parties agree that the term of the non-disclosure and non-use
obligations of a Third Party will end seven (7) years after the end of the
contractual arrangement with such Third Party. Each Receiving Party shall notify
the Disclosing Party promptly upon discovery of any unauthorized use or
disclosure of the Disclosing Party's Confidential Information. Upon the
expiration or earlier termination of this Agreement, each party shall return to
the other party all tangible items regarding the Confidential Information of the
other party and all copies thereof; PROVIDED, HOWEVER, that each Receiving Party
shall have the right to retain one (1) copy for its legal files for the sole
purpose of determining its obligations hereunder. Notwithstanding the foregoing
and Section 1.23, unless otherwise mutually agreed in writing, neither party
shall have any obligation to the other party pursuant to this Article 8 or
pursuant to Article 9 with respect to use of Confidential Information of the
Disclosing Party unless, prior to disclosure, such Confidential Information is
specifically identified in writing to the Receiving Party and the Receiving
Party agrees in writing to accept such Confidential Information.
8.2 TERMS OF THIS AGREEMENT. For the period commencing on the date this
Agreement is first signed by both parties and ending on the expiration or
earlier termination hereof, without the prior express written consent of the
other party, which shall not be unreasonably withheld or delayed, neither party
shall (a) disclose any financial terms or conditions of this Agreement to any
Third Party, except as reasonably required in connection with such party's
activities hereunder, or under appropriate confidentiality restrictions to
potential Third Party distributors or assignees, or (b) originate any initial
disclosure to any third party of the existence or terms of this Agreement prior
to the Effective Date (unless pursuant to an appropriate confidentiality
agreement); or (c) originate any initial publicity, news release or any other
public announcement (written or oral) relating to this Agreement or the
existence of an arrangement among the parties. Notwithstanding the foregoing,
prior to the Effective Date, the parties shall mutually agree upon a joint press
release relating to this Agreement for issuance on or after the Effective Date.
Either party shall thereafter be free to disclose any information contained in
the public disclosure approved pursuant to this Section 8.2 or which is made
without confidentiality restrictions pursuant to Section 8.3.
68
8.3 PERMITTED DISCLOSURES. The confidentiality obligations under this
Article 8 shall not apply to the extent that a party is required to disclose
information by applicable law, regulation or order of a governmental agency or a
court of competent jurisdiction, provided that such party shall provide written
notice thereof to the other party and sufficient opportunity to object to any
such disclosure or to request confidential treatment thereof.
ARTICLE 9
INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS
9.1 OWNERSHIP OF INVENTIONS.
9.1.1 Except as otherwise set forth in Sections 9.1.2 through 9.1.7
below, the entire right and title in all discoveries, inventions or other
technology, data or information (whether patentable or not), together with all
patent and other intellectual property rights therein, made or conceived during
and as a result of a Development Program or the performance of other obligations
under this Agreement, (e.g., manufacturing) (collectively, the "Inventions") (a)
by employees of Gen-Probe or others acting solely on behalf of Gen-Probe (the
"Gen-Probe Inventions") shall be owned solely-by Gen-Probe, (b) by employees of
Chiron or others acting solely on behalf of Chiron (the "Chiron Inventions")
shall be owned solely by Chiron, and (c) jointly by employees of Gen-Probe or
others acting on behalf of Gen-Probe and employees of Chiron or others acting on
behalf of Chiron (the "Joint Inventions") shall be owned jointly by Gen-Probe
and Chiron.
(a) Chiron Inventions shall be included within the Chiron IP
Rights, Gen-Probe Inventions shall be included within the Gen-Probe IP Rights,
and Joint Inventions shall be within both the Chiron IP Rights and Gen-Probe IP
Rights, so that they are available for use within the scope of this Agreement.
(b) Each party shall have the right, subject to the provisions of
this Agreement, to freely exploit, transfer, license or encumber its rights in
both its own inventions hereunder (except that each party expressly agrees that
this sentence does not create in any way an implied license to the intellectual
property of the other party and that there are no such implied licenses in this
Agreement) and in any Joint Invention hereunder (or the patent and other
intellectual property rights therein) without the consent of, or compensation or
accounting to, the other party, except as to a Joint Invention to the extent
that:
(i) Such use or application of a Joint Invention would require
a license from the other party (under a Valid Claim other than those claiming
the Joint Invention) each party expressly agreeing that in this Agreement there
are no implied licenses to the intellectual property of the other party); and
69
(ii) except that, absent mutual written agreement, no use of
any such Joint Invention shall be made during any term of this Agreement in
connection with a Competitive Probe Assay (which shall mean for all purposes of
this Agreement (i) as to both parties, a nucleic acid probe-based assay which is
used for the same clinical indication as any Initial Blood Screening Assay,
Future Blood Screening Assay, or [PROVISION ASSIGNED] developed
under this Agreement; and (ii) as to Gen-Probe, a nucleic acid probe-based assay
which is used for the same clinical indication as any [PROVISION ASSIGNED].)
9.1.2 Neither Chiron nor Gen-Probe shall have any rights in or
to the patent rights or other intellectual property rights of the other party
for any use or application other than those expressly and specifically granted
by this Agreement.
9.1.3 The parties acknowledge and agree that, notwithstanding
that only limited rights have been granted hereunder, certain new technology may
be discovered, invented or created solely by Chiron through Chiron's use of the
Gen-Probe IP Rights within the uses and in the manner contemplated by this
Agreement. The Parties also acknowledge and agree that, notwithstanding that
only limited rights have been granted hereunder, certain new technology may be
discovered, invented or created solely by Gen-Probe through Gen-Probe's use of
the Chiron IP Rights within the uses and in the manner contemplated by this
Agreement. The rights and obligations of the Parties with respect to all such
new technology shall be governed by this Article 9.
9.1.4 As used herein, a "Derivative Invention" shall mean any
Invention made after the date of this Agreement and claimed in a Valid Claim of
the Inventing Party which:
(a) is discovered, invented or created by a party (the
"Inventing Party") during any term of this Agreement; and
(b) was made through or with, and would not have been made but
for, the Inventing Party's use of Confidential Information of the other party
(the "Disclosing Party") which was specifically identified to the Inventing
Party in writing prior to disclosure and which the Inventing Party elected to
receive, if such information was confidential when the invention was made.
9.1.5 Neither party shall use any Derivative Invention in
connection with a Competitive Probe Assay during any term of this Agreement.
9.1.6 A Disclosing Party shall have the exclusive option to
acquire, on Commercially Reasonable Terms, all right, title and interest in any
Derivative Invention which represents an improvement to, and as to which any
substantial use would infringe a Valid Claim for, Core Technology of the
Disclosing Party. The option hereby granted the Disclosing Party shall expire
six (6) months after the Derivative Invention is first disclosed to the
Disclosing Party by the Inventing Party unless the Disclosing Party has elected
within such period to exercise such option. With respect to any such Derivative
Invention, following the Disclosing Party's election to acquire ownership: (a)
The Disclosing Party may use such Derivative Invention for all uses
70
and purposes other than those prohibited by Section 9.1.5 and other than those
which would require a license from the Inventing Party under a Valid Claim
(other than a Valid Claim for the Derivative Invention). The Disclosing Party
shall have the right to license the Derivative Invention without the consent of
the Inventing Party, but any such license shall contain the same use
restrictions set forth in the first sentence of this subparagraph (a); and (b)
the Inventing Party may use such Derivative Invention for (i) any of the
purposes expressly permitted by the terms of this Agreement with respect to the
Confidential Information of the Disclosing Party and (ii) any use or application
which does not require a license of a Valid Claim of the Disclosing Party, but
only to the extent that such use is not made in connection with any product
which competes directly with a nucleic acid probe-based assay product of the
Disclosing Party which has been sold as of the Effective Date of this Agreement.
The Inventing Party shall not have the right to sublicense its rights hereunder
except with the consent of the Disclosing Party, which consent shall not be
unreasonably withheld. In any event, any such sublicense approved by the
Disclosing Party shall contain the same use restrictions set forth in clauses
(i) and (ii) of this subparagraph (b).
(c) The "Commercially Reasonable Terms" referred to above shall
give full recognition, in favor of the Disclosing Party, to both the value of
the Confidential Information of such Disclosing Party with which the Derivative
Invention was made (and without which the Derivative Invention would not have
been made) and the value of the rights granted to the Inventing Party as to such
Derivative Invention. The "Commercially Reasonable Terms" referred to above
shall also give full recognition, in favor of the Inventing Party, to the value
of the inventive application of such Confidential Information.
9.1.7 An Inventing Party shall own all right, title and
interest in any Derivative Invention which is not subject to Section 9.1.6 or
which the Disclosing Party does not elect to acquire within the six-month period
permitted by Section 9.1.6. With respect to any such Derivative Invention,
(a) The Inventing Party may use such Derivative Invention for
all uses and purposes other than those prohibited by Section 9.1.5, but only to
the extent that (i) such use does not require a license under a Valid Claim of
the Disclosing Party or further rights to Confidential Information of the
Disclosing Party which was previously disclosed hereunder or (ii) such use is
not made in connection with any product which competes directly with a nucleic
acid probe-based assay product of the Disclosing Party which is sold as of the
Effective Date of this Agreement. The Inventing Party shall have the right to
license the Derivative Invention without the consent of the Disclosing Party,
but any such license shall contain the same use restrictions set forth in the
first sentence of this subparagraph (a); and
(b) The Disclosing Party may use such Derivative Invention (i)
for any of the purposes expressly permitted by the terms of this Agreement and
(ii) pursuant to the terms of a license granted under Section 9.1.7(c), for all
uses and applications other than those prohibited under Section 9.1.5, which
would not require a license from the Inventing Party under a Valid Claim (other
than a Valid Claim for the Derivative Invention). Upon exercise of the option
for a license, the Disclosing Party shall not have the right to sublicense its
rights thereunder except
71
with the consent of the Inventing Party, which consent shall not be unreasonably
withheld. In any event, any such sublicense approved by the Inventing Party
shall contain the same use restrictions set forth in clauses (i) and (ii) of
this subparagraph (b).
(c) Upon request, the Inventing Party shall grant a
nonexclusive license to the Disclosing Party on Commercially Reasonable Terms to
be negotiated to enable the Disclosing Party to use such Derivative Invention
for the purposes described in Section 9.1.7(b)(ii). The "Commercially Reasonable
Terms" referred to above shall give full recognition, in favor of the Disclosing
Party, to the value of the Confidential Information of such Disclosing Party
with which the Derivative Invention was made (and without which the Derivative
Invention would not have been made). The "Commercially Reasonable Terms"
referred to above shall also give full recognition, in favor of the Inventing
Party, to the value of the inventive application of such Confidential
Information.
9.1.8 Without limiting the generality of Section 9.1.7, each
Inventing Party under Section 9.1.7 agrees not to assert its rights in a
Derivative Invention in such a manner as would block or diminish the Disclosing
Party's rights to practice, independently of the Derivative Invention itself,
the technology of the Disclosing Party directly related to the Confidential
Information with which the Derivative Invention was made and without which the
Derivative Invention would not have been made.
9.1.9 Gen-Probe and Chiron shall promptly report to each other
any and all Derivative Inventions as each may discover, invent or create during
the Blood Screening Term and [PROVISION ASSIGNED].
9.1.10 Gen-Probe and Chiron shall execute and deliver to each
other such assignments, instruments or other documents as each may reasonably
consider necessary to assure compliance with the provisions of this Section 9.1.
Chiron shall have the exclusive right to prosecute and defend any and all
patents and patent applications concerning any Derivative Invention owned by
Chiron and, as between Gen-Probe and Chiron, Chiron shall be solely responsible
for the expense of such patents and patent applications. Gen-Probe shall have
the exclusive right to prosecute and defend any and all proceedings concerning
any Derivative Invention owned by Gen-Probe and, as between Gen-Probe and
Chiron, Gen-Probe shall be solely responsible for the expense of such
proceedings. As to any Derivative Invention assigned to the Disclosing Party
upon exercise of the option described in Section 9.1.6, the Disclosing Party
shall take all such actions as may be reasonably and specifically requested by
the Inventing Party in connection with the prosecution of a patent application
to protect the Inventing Party's rights in the Derivative Invention under
Section 9.1.6(b), provided that the Inventing Party shall be fully responsible
for all incremental costs and expenses incurred in connection with any such
actions. If the Inventing Party requests any such action, the parties shall
thereafter reasonably cooperate in the prosecution of such patent application.
9.1.11 In the event the Parties cannot agree as to the
classification of any technology for any purpose under this Article 9 (including
the mediation described in Section 13.1), the Parties shall consider in good
faith the possibility of submitting such disputes for
72
accelerated decision by an expert arbitration under such guidelines and
expedited schedule as may be mutually agreed (provided that no party shall be
under an obligation to so agree). In the absence of such mutual agreement, such
disagreement or dispute as to classification shall be resolved by arbitration as
provided in this Agreement, except that the arbitrator may, at the request of
either party, appoint one or more experts, individually or jointly, to advise
and report on such classification, and the arbitrator shall place such reliance
on such advice or report as he or she deems appropriate.
9.1.12 Nothing in this Agreement shall be interpreted as giving
a party the right to analyze, dissect, or disassemble any instrument, reagent,
component, object, software or other property of the other party provided under
the terms of this Agreement, and which is not properly available from other
sources which have the right to transfer such property and authorize such
activity, in order to circumvent the need for a license of the technology
reflected therein.
9.2 PATENT RIGHTS. Except as provided in Section 9.1.10, each party
shall be responsible for and shall control, at its sole expense, the
preparation, filing, prosecution, maintenance and enforcement of all patent
rights owned by or licensed to it (except for those patent rights licensed to it
from the other party) which are the subject of this Agreement. The parties shall
jointly have the right to prepare, file, prosecute, maintain, and enforce patent
rights covering Joint Inventions as described in Section 9.1.1 and the expenses
thereof shall be reasonably shared by parties as they may agree prior to the
initiation of any such proceedings. Each party shall cooperate with the other
party, execute all lawful papers and instruments and make all rightful oaths and
declarations, as reasonably requested by the other party and at the other
party's expense, as may be necessary in connection with the preparation,
prosecution, maintenance and enforcement of all patent rights which are the
subject of this Agreement. Each party shall place appropriate patent markings on
all products which would infringe the patent rights of the other party licensed
under this Agreement, to the extent such patent marking is required by
applicable law, regulation or order to enable the other party to enforce such
patent rights, all as requested in writing by the other party.
9.3 COPYRIGHTS.
9.3.1 GEN-PROBE COPYRIGHTS. Chiron hereby acknowledges that
Gen-Probe has claimed, or may claim, copyright protection with respect to
certain parts of the Products and related materials. Chiron further acknowledges
the validity of Gen-Probe's right to claim copyright protection with respect to
such items. Chiron shall take no action or make no omission which is in any way
inconsistent with Gen-Probe's claim of copyright protection with respect to such
items.
9.3.2 CHIRON COPYRIGHTS. Gen-Probe hereby acknowledges that
Chiron has claimed, or may claim, copyright protection with respect to certain
parts of the Products and related materials. Gen-Probe further acknowledges the
validity of Chiron's right to claim copyright protection with respect to such
items. Gen-Probe shall take no action or make no omission which is in any way
inconsistent with Chiron's claim of copyright protection with respect to such
items.
73
9.3.3 COPYRIGHT PROTECTION. In order to protect against
infringement of the other party's copyrights, each party shall mark all of the
other party copyrighted materials, as requested by the other party in writing,
used by such party in conducting its activities contemplated by this Agreement
with appropriate copyright markings. Each party shall cooperate with the other
party, take such actions and execute such documents, as reasonably requested by
the other party and at the other party's expense, to assist the other party in
the protection of the other party's copyrights. Any dispute as to which party
owns a copyright in will be resolved pursuant to Article 13.
9.4 TRADEMARKS.
9.4.1 GEN-PROBE MARKS. Gen-Probe shall own the Gen-Probe Marks
and shall pay all expenses of the registration thereof. Except as otherwise
expressly set forth in this Agreement, Chiron shall not use, without the prior
express written consent of Gen-Probe, any Gen-Probe Marks, or any word, title,
expression, trademark, design or marking that is confusingly similar thereto.
Subject to Section 6.5, Chiron shall not alter, remove, cover or modify any
Gen-Probe Marks from the Products, their packaging or labeling without
Gen-Probe's prior express written consent. Gen-Probe shall control, at its sole
cost, the registration, prosecution, maintenance and enforcement of the
Gen-Probe Marks.
9.4.2 CHIRON MARKS. Chiron shall own the Chiron Marks and
shall pay all expenses of the registration thereof. Except as otherwise
expressly set forth in this Agreement, Gen-Probe shall not use, without the
prior express written consent of Chiron, any Chiron Marks, or any word, title,
expression, trademark, design or marking that is confusingly similar thereto,
Subject to section 6.5, Gen-Probe shall not alter, remove, cover or modify any
Chiron Marks from the Products, their packaging or labeling without Chiron's
prior express written consent. Chiron shall control, at its sole cost, the
registration, prosecution, maintenance and enforcement of the Chiron Marks.
9.5 NO OTHER TECHNOLOGY RIGHTS. Except as otherwise expressly provided
in this Agreement, under no circumstances shall a party, as a result of this
Agreement, obtain any ownership interest or other right in any discovery,
invention or other technology, data or information (or any patent, copyright,
trademark, or other intellectual property rights therein) of the other party,
including items transferred by the other party to such party at any time
pursuant to this Agreement. Except as expressly provided in this Agreement,
neither party shall be under any obligation to grant to the other party any
rights in any patent, copyright, trademark, or other intellectual property.
9.6 THIRD PARTY TECHNOLOGY. The Supervisory Boards will discuss
Third Party patent rights which may be necessary for Future Blood Screening
Assays or (ii) modifications to Initial Blood Screening Assays,
[PROVISION ASSIGNED], Blood Screening Instruments, or [PROVISION ASSIGNED].
The supervisory board will consider the costs of acquiring rights in such
Third Party patent rights in connection with such Products, allocate the
costs between the parties, and agree upon methods for implementing such cost
allocations.
74
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 INDEMNITY.
10.1.1 BY GEN-PROBE. Gen-Probe shall indemnify and hold
Chiron harmless from and against all losses, liabilities, damages and
expenses (including reasonable attorneys' fees and costs) resulting from any
claims, demands, actions or other proceedings by any Third Party arising from
(a) the breach of any representation, warranty or covenant by Gen-Probe under
this Agreement, (b) the failure of Gen-Probe or its subcontractor to
manufacture the Products in conformity with the specifications therefor, (c)
the negligence or willful misconduct of Gen-Probe in performing its
obligations under this Agreement; or (d) the manufacture, sale, or use of any
instrument or assay (including any [PROVISION ASSIGNED]) sold by or on behalf
of Gen-Probe, its Third Party licensees, or any of their Affiliates, or
distributors (other than by Gen-Probe to Chiron under the terms of this
Agreement); in each case except to the extent arising from the negligence or
willful misconduct of Chiron.
10.1.2 BY CHIRON. Chiron shall indemnify and hold Gen-Probe
harmless from and against all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) resulting from any claims,
demands, actions or other proceedings by any Third Party arising from (a) the
breach of any representation, warranty or covenant by Chiron under this
Agreement, (b) the failure of Chiron or its subcontractor to manufacture a
Products in conformity with the specifications therefor, in the event Chiron
has assumed responsibility for the manufacture of such Product, (c) the
negligence or willful misconduct of Chiron in performing its obligations
under this Agreement; or (d) except to the extent Section 10.1.1 applies, the
manufacture, sale, or use of any instrument or assay (including any
[PROVISION ASSIGNED]) sold by or on behalf of Chiron, or its Affiliates, or
distributors; except in each case to the extent arising from the negligence
or willful misconduct of Gen-Probe.
10.2 PROCEDURE. A party (the "Indemnitee") that intends to
claim indemnification under this Article 10 shall promptly notify the other
party (the "Indemnitor") of any claim, demand, action or other proceeding for
which the Indemnitee intends to claim such indemnification. The Indemnitor shall
have the right to participate in, and, to the extent the Indemnitor so desires,
jointly with any other indemnitor similarly noticed, to assume the defense
thereof with counsel selected by the Indemnitor; PROVIDED, HOWEVER, that the
Indemnitee shall have the right to retain its own counsel, with the reasonable
fees and expenses to be paid by the Indemnitee, if the Indemnitee reasonably
determines that representation of the Indemnitee by counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing interests
between the Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity obligations under this Article 10 shall not apply to
amounts paid in settlement of any claim, demand, action or other proceeding if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be unreasonably withheld or delayed. The failure to deliver notice to
the Indemnitor within a reasonable time after the commencement of
75
any such action or other proceeding, if prejudicial to its ability to defend
such action or other proceeding, shall relieve such Indemnitor of any liability
to the Indemnitee under this Article 10, but the omission so to deliver notice
to the Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 10. The Indemnitor may not settle,
or otherwise consent to an adverse judgment in, any such action or other
proceeding that diminishes the rights or interests of the Indemnitee without the
express written consent of the Indemnitee. The Indemnitee, its employees and
agents, shall cooperate fully with the Indemnitor and its legal representatives
in the investigation of any claim, demand, action or other proceeding covered by
this indemnification.
10.3 INSURANCE. Each party shall maintain liability insurance
(including product liability insurance) with respect to conduct of its
obligations under this Agreement in such amounts as it customarily maintains
with respect to the conduct of its similar activities. Each party shall maintain
such insurance for so long as each continues to conduct such obligations, and
thereafter for so long as it maintains insurance for itself covering its similar
activities.
ARTICLE 11
TERM AND TERMINATION
11.1 EXPIRATION. Unless terminated earlier pursuant to Section 11.2
below, this Agreement shall expire (i) as to the Blood Screening Assays and the
Blood Screening Instruments, on the expiration of the Blood Screening Term and
(ii) as to the [PROVISION ASSIGNED].
11.2 TERMINATION.
11.2.1 BREACH. Each party may terminate the portions of this
Agreement relating to the Blood Screening Field or the portions of this
Agreement relating to the [PROVISION ASSIGNED], as the case may be, upon or
after the breach of any material provision of this Agreement, if the breaching
party has not cured such breach within ninety (90) days after notice thereof
from the non-breaching party.
(a) If the breaching party is not obligated as of the date of
the breach in connection with the provisions of this Agreement pertaining to
both the Blood Screening Field and the [PROVISION ASSIGNED], then a
termination pursuant to Section 11.2.1, 11.2.2 or 11.2.3 of the portions of this
Agreement relating to the Blood Screening Products shall not affect the portions
of this Agreement relating to [PROVISION ASSIGNED], and a termination of
the portions of this Agreement relating to [PROVISION ASSIGNED] shall
not affect the portions of this Agreement relating to Blood Screening Products.
If the breaching party is obligated as of the date of the breach in connection
with the provisions of this Agreement pertaining to both the Blood Screening
Field and the [PROVISION ASSIGNED], then the non-breaching party may
terminate this Agreement in its entirety for any material breach if the
breaching party has not cured such breach within ninety (90) days after notice.
76
(b) Any dispute with respect to the right of a party to
terminate all or a portion of this Agreement pursuant to this Section 11.2.1
shall be subject to resolution pursuant to Article 13. During the pendency of
any arbitration proceeding, at the request of the non-breaching party, the
arbitrator may take such interim steps and make such preliminary orders as
the arbitrator deems necessary to preserve the rights of the non-breaching
party pending a final arbitration award, including ordering the grant, on a
temporary basis, of such licenses or rights as may be necessary to enable the
non-breaching party to preserve its economic interest in the Products for the
Blood Screening Field and/or the Products for the [PROVISION ASSIGNED], as
the case may be. At the conclusion of any such arbitration, if the arbitrator
determines that the respondent materially breached this Agreement and that
money damages will not adequately compensate the claimant and that no other
remedy is adequate in the circumstances considered as a whole, then the
arbitrator may order the breaching party to grant to the non-breaching party
such rights (including a nonexclusive, worldwide license, bearing a
reasonable commercial royalty, under intellectual property rights of the
breaching party which are the subject of this Agreement) as may be reasonably
necessary to enable the claimant to complete development already in progress
of, make, use, offer for sale, sell and/or import Products for use in the
Blood Screening Field and/or the [PROVISION ASSIGNED], as the case may be,
for the lesser of (a) five years or (b) the then-remaining period of this
Agreement.
11.2.2 VOLUNTARY BANKRUPTCY. Each party may terminate this
Agreement if the other party shall (a) seek the liquidation, dissolution, or
winding up of itself (other than dissolution or winding up for the purposes of
reconstruction or amalgamation) or the composition or readjustment of all or
substantially all of its debts, (b) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or substantially all of its assets, (c) make a general
assignment for the benefit of its creditors, (d) commence a voluntary case under
the Bankruptcy Code, (e) file a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or readjustment of debts, or (f) adopt any resolution of its Board
of Directors or stockholders for the purpose of effecting any of the foregoing.
11.2.3 INVOLUNTARY BANKRUPTCY. Each party may terminate this
Agreement if a proceeding or case shall be commenced without the application or
consent of the other party and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
following shall be entered and continue unstayed in effect, for a period of
ninety (90) days from and after the date service of process is effected upon the
other party, seeking (a) its liquidation, reorganization, dissolution or winding
up, or the composition or readjustment of all or substantially all of its debts,
(b) the appointment of a trustee, receiver, custodian, liquidator or the like of
itself or of all or substantially all of its assets, or (c) similar relief under
any law relating to bankruptcy, insolvency, reorganization, winding up or
composition or readjustment of debts.
11.3 EFFECT OF EXPIRATION AND TERMINATION. Except as provided in
Section 11.2.1(b), upon expiration or termination of this Agreement, the portion
of this Agreement relating to Products for the Blood Screening Field, or the
portion of this Agreement relating to Products for
77
the [PROVISION ASSIGNED], all rights and licenses granted hereunder with
respect to the terminated portions of this Agreement shall terminate. Expiration
or termination of all or a portion of this Agreement shall not relieve the
parties of any obligation accruing prior to such expiration or termination. The
provisions of Section 3.6.1, 6.6 (product warranties), 7.3 (audit of payments),
and Articles 8, 9, 10, and 13 shall survive the expiration or termination of
this Agreement.
ARTICLE 12
CONDITIONS PRECEDENT
The effectiveness of, and the parties' respective obligations under,
this Agreement (other than Section 3.6.1 and Article 8) are subject to the
satisfaction in full or the waiver by the mutual written agreement of the
parties of the following conditions precedent within thirty (30) days after the
date of this Agreement. If all such conditions precedent have not been satisfied
in full, or waived by the mutual written agreement of the parties, on or before
such date, then unless the parties otherwise mutually agree in writing, this
Agreement shall be void.
12.1 DUE EXECUTION AND DELIVERY. Each party shall have duly and validly
executed and delivered this Agreement.
12.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties by each party shall be true and correct in all respects as of the
Effective Date as if made as of such date.
12.3 GOVERNMENTAL APPROVALS. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been obtained.
12.4 DUE DILIGENCE. Each party shall have completed its due diligence
to its reasonable satisfaction. Each party will be conclusively presumed to have
completed its due diligence to its reasonable satisfaction unless its delivers
to the other party a notice of objection within the thirty (30) days following
the date on which this Agreement is first signed by both parties.
ARTICLE 13
ARBITRATION
13.1 EXECUTIVE MEDIATION. Prior to submitting any dispute arising out
of or related to this Agreement to arbitration pursuant to Section 13.2, the
matter shall be submitted to the Chief Executive Officers of the parties for
resolution. If such officers are unable to resolve the matter directly, they
may, by mutual agreement utilize such dispute resolution methods, including
mediation, as are mutually agreed. If no resolution is reached within fifteen
(15) days following
78
submission of such dispute to such officers, unless otherwise mutually agreed,
the dispute shall be submitted to arbitration pursuant to Section 13.2.
13.2 ARBITRATION PROCEDURE. Any controversy or claim relating to,
arising out of, or in any way connected to any provision of this Agreement shall
be finally resolved by final and binding arbitration in accordance with this
Section by a single arbitrator who is a former state or federal judge, to be
conducted in California. Unless the parties agree otherwise, the arbitration
shall be conducted by JAMS/Endispute, or by any similar arbitration provider who
can provide a former judge to conduct such arbitration if JAMS/Endispute is no
longer in existence. JAMS/Endispute may order a change of venue upon a showing
of good cause by respondent. Subject to the JAMS/Endispute Appeal Procedure
described in Section 13.3 below, the decision of the arbitrator shall be final,
nonappealable and binding upon the parties, and it may be entered in any court
of competent jurisdiction. The arbitrator shall be bound by all rules relating
to the admissibility of evidence, including without limitation, all relevant
privileges and the attorney work product doctrine. Discovery shall be permitted
in accordance with the rules and procedures of the forum state unless otherwise
agreed to by the parties or ordered by the arbitrator on the basis of strict
necessity adequately demonstrated by the party requesting an extension of time.
The arbitrator shall have the power to grant equitable relief where applicable
under the law. The arbitrator shall issue a written opinion setting forth his or
her decision and the reasons therefor within thirty (30) days after the
arbitration proceeding is concluded. The obligation of the parties to submit any
dispute arising under or related to this Agreement to arbitration as provided in
this Article 13 shall survive the expiration or earlier termination of this
Agreement. Notwithstanding the foregoing, but subject to Section 11.2.1(b),
either party may seek and obtain an injunction or other appropriate relief from
a court to preserve or protect intellectual property rights or to preserve the
status quo with respect to any matter pending conclusion of the arbitration
proceeding, but no such application to a court shall in any way be permitted to
stay or otherwise impede the process of the arbitration proceeding.
79
13.3 REVIEW. The decision of the arbitrator shall be subject to review
only in accordance with the "Optional Appeal Procedure" of JAMS/Endispute in
effect upon execution of this Agreement or any other comparable arbitration
appeal procedure. The parties agree to submit any request for review in
accordance with said procedure. The JAMS/Endispute Appeal Panel appointed under
said procedure will apply the same standard of review as the first-level
appellate court in the jurisdiction where the arbitration was conducted would
apply under similar circumstances. The decision and award of the JAMS/Endispute
Appeal Panel (and the decision and award of the original arbitrator if there is
no appeal pursuant to this Section 13.3) will be final for all purposes and
binding upon the parties, and it may be entered in any court of competent
jurisdiction.
ARTICLE 14
ACCESS FEES
In consideration for the rights granted to Chiron by this Agreement
with respect to TMA and HPA, Chiron shall pay to Gen-Probe, the following
nonrefundable amounts upon the occurrence of each event set forth below:
(i) [CONFIDENTIAL TREATMENT REQUESTED]; and
(ii)[CONFIDENTIAL TREATMENT REQUESTED]
80
(iii)[CONFIDENTIAL TREATMENT REQUESTED].
ARTICLE 15
MISCELLANEOUS
15.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties to the other shall be
in writing, addressed to such other party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor, and shall be effective upon receipt by the addressee.
If to Gen-Probe: Gen-Probe Incorporated
10210 Genetic Center Drive
San Diego, California 92121
Attention: President and
Chief Executive Officer
If to Chiron; Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attention: President and
Chief Executive Officer
15.2 FORCE MAJEURE. In the event that a party is prevented or delayed
from fulfilling or performing any of its obligations under this Agreement (other
than an obligation to pay money) due to the occurrence of causes beyond the
reasonable control of such party, including but not limited to fires, floods,
embargoes, wars, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or the
other party, then such party's performance shall be excused, and the time for
performance shall be extended, for the period of inability or delay due to such
occurrence; PROVIDED, HOWEVER, that such party shall have used its Commercially
Reasonable Efforts to avoid such inability or delay, and such party shall have
given prompt written notice to the other party of such occurrence. Nothing
contained in this section shall limit Chiron's right to manufacture or have
manufactured any Product pursuant to the terms of this Agreement, provided
always that in the event of a force majeure, Chiron and Gen-Probe shall apply
all legally-available safety stocks to meet Chiron's need before such right to
manufacture or have manufactured shall accrue and further provided that Chiron
shall not exercise such right in the event of a force majeure unless the
Supervisory Board has met and discussed all available options and reasonably not
been able to agree that re-establishment of production at a Gen-Probe facility
is the most efficient alternative for maintaining continuity of production.
81
15.3 ASSIGNMENT.
15.3.1 This Agreement may not be directly or indirectly
assigned or otherwise transferred, nor, except as expressly provided hereunder,
may any right or obligations hereunder be assigned or transferred by either
party (whether voluntarily, by operation of law or otherwise) without the
consent of the other party which shall not be unreasonably withheld: PROVIDED,
HOWEVER, that, except as otherwise provided in Section 15.3.2 below, either
party may, without such consent, assign or transfer this Agreement and its
rights and obligations hereunder in connection with the transfer or sale of all
or substantially all of its assets (including without limitation all of its
assets relating to this Agreement), or in the event of its merger,
consolidation, other Change in Control or similar transaction. Any permitted
assignee or transferee shall assume all obligations of its assignor or
transferor under this Agreement. On any such assignment, the assignor shall be
relieved of all obligations assigned hereunder, except those accrued prior to
the date of assignment and except as provided in Section 15.3.2 below. Any
purported assignment or transfer in violation of this Section 15.3 shall be
void.
15.3.2 Assignment by a party of its rights and obligations
under this Agreement shall not relieve that party of its obligations under
Article 8, Article 9 or Article 13. Assignment by a party of its rights and
obligations under this Agreement shall not relieve it of its obligations under
Sections 3.2.8 (b) or any then-existing restrictions on licensing of
intellectual property pertaining to specific viruses or markers as to which such
party became obligated, prior to such assignment, pursuant to the last sentence
of Section 3.2.8 (c) and if following such assignment such transferring party
makes, uses or sells any nucleic acid probe-based assay for use in the Blood
Screening Field for the detection or quantitation of any virus or marker subject
to Sections 3.2.8 (b) or such licensing restrictions of Section 3.2.8(c), such
use shall be considered as a "license" for purposes of Section 3.2.8 (b) or such
licensing restrictions of Section 3.2.8(c); however a license to the assignee
pursuant to Section 15.3.1 shall not be considered a license for purposes of
Section 3.2.8(b) or such licensing restrictions of Section 3.2.8(c).
15.3.3 Assignment of Chiron's rights and obligations with
respect to the Blood Screening Field to the Major Distributor or its Affiliate
(at any time after appointment of the Major Distributor) shall terminate the
application of Sections 1.2.1 (c) or (d).
15.4 SEVERABILITY. Each party hereby acknowledges that it does not
intend to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries. Should one or
more provisions of this Agreement be or become invalid, the parties shall
substitute, by mutual consent, valid provisions for such invalid provisions,
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the parties would have
entered into this Agreement with such provisions. In case such provisions cannot
be agreed upon, the invalidity of one or several provisions of this Agreement
shall not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provisions.
82
15.5 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
15.6 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written heretofore made which are
directly related to the subject matter of this Agreement. The confidential
disclosure agreement between the parties dated as of November 5, 1996, the
confidential disclosure agreement between the parties dated as of May 27, 1997,
(as extended as of August 27, 1997 and February 26, 1998), and the confidential
disclosure agreement between the parties dated as of April 13, 1998 shall be and
are terminated as of the first date this Agreement has been signed by both
parties, without prejudice to any rights accruing thereunder prior to such
termination. Nothing contained in this section shall affect other agreements
between the parties which are not directly related to the subject matter of this
agreement, including but not limited to all agreements concerning the resolution
of CIBA CORNING DIAGNOSTICS CORP. V. GEN-PROBE INC., United States District
Court for the Southern District of California case number 96-552H (CGA) and
related proceedings. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties.
15.7 EXPENSES AND ATTORNEY'S FEES. The prevailing party in any dispute
between the parties which is the subject of arbitration or litigation shall be
entitled to recover the expenses reasonably incurred in connection with such
arbitration or litigation, including reasonable attorney's fees. The amount of
such expenses and fees due the prevailing party shall be subject to the
arbitration provisions of Article 13.
15.8 INDEPENDENT CONTRACTORS. It is expressly agreed that Gen-Probe and
Chiron shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture or agency. Neither
Gen-Probe nor Chiron shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the party to do so.
15.9 WAIVER. The waiver by either party of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
15.10 DRAFTING PARTY. The provisions of this Agreement, and the
documents and instruments referred to in the Agreement, have been prepared,
examined, negotiated and revised by each party and their respective lawyers, and
no implication will be drawn and no provision will be construed against any
party by virtue of the purported identity of the drafter of this Agreement, or
any portion of this Agreement.
83
15.11 THIRD PARTIES. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any Third Party.
15.12 AFFILIATES. The rights and obligations of Chiron under this
Agreement shall apply to Chiron's Affiliates, and the rights and obligations of
Gen-Probe under this Agreement shall apply to Gen-Probe's Affiliates, provided
that Chiron and Gen-Probe shall be fully responsible for the performance by
their respective Affiliates of their respective obligations under this
Agreement.
15.13 COUNTER-PARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
GEN-PROBE INCORPORATED CHIRON CORPORATION.
By /s/ HENRY L. NORDHOFF By /s/ SEAN P. LANCE
--------------------- -----------------
Henry L. Nordhoff Sean P. Lance
President and Chief President and Chief
Executive Officer Executive Officer
84
SCHEDULE A
[PROVISION ASSIGNED]
85
THIS DOCUMENT IS ATTACHED IN LIEU OF SCHEDULES B AND C
------------------------------------------------------
1. Immediately following the signing of this Agreement, the parties
will meet and seek to agree on the Core Technologies of each party as referred
to in Article 9 of the foregoing Agreement, which are to be described in writing
and substituted for this document upon approval by each party.
2. Nothing contained in this attachment or in the Agreement shall
obligate the parties to negotiate the issue of Core Technology designations, to
successful conclusion. The effectiveness of the Agreement is expressly made
subject to the completion of Schedules B and C within ten (10) days following
the signing of the Agreement.
3. If the parties are unable to agree on the content of the respective
Core Technology schedules, neither shall have any obligation except pursuant to
Articles 8 and 13 of the Agreement.
Initials: /s/HLN /s/SPL
------ ------
86