EXHIBIT 10.40
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED BASED UPON A REQUEST
FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934 AND HAVE BEEN SEPARATELY FILED
WITH THE COMMISSION.
April 5, 2004
Qiagen NV
c/o Qiagen GmbH
Max. Volmer-Strasse
402721 Hilden, Germany
Attention: Peer Schatz, President and CEO
Gentlemen:
This Letter Amendment serves to document our mutual understanding and
agreement to certain changes to our Co-Exclusive License and Supply Agreement
dated November 4, 2002 (the "Agreement"). All capitalized terms not defined in
this Letter Amendment shall have the meaning set forth in the Agreement.
1. AMENDMENT OF SECTION 2.2(a). For Calendar Year 2004, and subject to
mutual agreement on amendments to Section 8.4 as envisioned in paragraphs 6 and
7 hereof, for 2005 to 2008, Section 2.2(a) of the Agreement is amended to read:
"(a) CO-EXCLUSIVE RIGHT. Epoch shall have the right to directly
market, distribute and sell Similar Products in the Field in the
Territory. Epoch may market, promote, sell and distribute under its label
products substantially similar to Custom Probe Sets, and other Epoch
products, including those which measure the expression levels of the same
gene as any Catalogue Probe Set (provided that Epoch agrees that,
notwithstanding any other provision of this Agreement, if it manufactures
catalogue products in the Field for itself which measure the expression
levels of the same gene as targeted by a then-existing Catalogue Probe Set
of Qiagen, Epoch will not use the same probe sequence as designated by
Qiagen in such Catalogue Probe Set). Epoch shall not have the right to
appoint any third party as a distributor and/or licensee of Similar
Products in the Field in the Territory. The limitations and restrictions
set forth herein do not restrict Epoch from appointing any third party as
a distributor, or from itself acting as a distributor, outside the Field."
If the parties reach mutual agreement on amendments to Section 8.4 as envisioned
in paragraphs 6 and 7 hereof, for 2005 to 2008, Section 2.2(a) of the Agreement
shall revert to the text as written prior to this letter amendment.
2. [*] CUSTOM PROBE SETS. The definition of "Custom Probe Set" in
Article 1 is amended to read:
"CUSTOM PROBE SET" means an MGB Eclipse Probe, designed to measure the
expression level of a specific target gene with a probe sequence designed
by the customer and determined using the MGB Eclipse Software. Orders for
Epoch's MGB Eclipse Probes with respect to Custom Probe Sets shall be
filled by Epoch and shipped to Qiagen for packaging, at [*], [*], [*]or
[*] yield, or any other yield proposed by Qiagen and agreed to by Epoch,
such agreement to not be unreasonably withheld. Epoch will make the [*]
Custom Probe Sets available for sale by Qiagen by April 23, 2004."
3. SUGGESTED LIST PRICE OF [*] CUSTOM PROBE SETS. Exhibit A to the
Agreement, referenced in Section 4.1(a) of the Agreement is amended to add the
following line items to Section B:
U.S. JAPAN EUROPE
$ (YEN) (EUROS)
----- ----- -------
MGB ECLIPSE PROBES
[*] [*] [*] [*]
EPOCH PRIMERS (EACH)
[*] [*] [*] [*]
4. PRICING OF [*] CUSTOM PROBE SETS. Section 4.1(a) of the Agreement is
hereby amended to add the following sentence at the end:
"In addition to the foregoing, the initial Suggested Retail Prices for the
[*] Custom Probe Sets, is set forth on Exhibit A to this Agreement, which
price may be adjusted by Epoch as set forth above. With respect to the [*]
Custom Probe Sets only, Qiagen shall pay Epoch for each MGB Eclipse Probe
and relevant Epoch Primers purchased hereunder, [*] percent ([*]%) of the
Suggested Retail Price for such MGB Eclipse Probe as of the date of
order."
5. QUARTERLY MINIMUMS. Section 8.4 of the Agreement is hereby deleted
in its entirety and replaced with the following:
"8.4 MINIMUM QUARTERLY SALES, SHORTFALL ORDERS OR PAYMENTS.
In the event that Qiagen's Net Sales of Products and Epoch Primers
to its non-Affiliate customers in each quarter set forth below do
not exceed the amounts set forth below:
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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CALENDAR QUARTER ENDING QUARTERLY MINIMUM NET SALES
- ----------------------- ---------------------------
March 31, 2004 US $[*]
June 30, 2004 US $[*]
September 30, 2004 US $[*]
December 31, 2004 US $[*]
then, either:
(I) At least twenty (20) days prior to the end of such calendar
quarter, Qiagen shall place one or more purchase orders for a
volume of Product Deliverables which results in Epoch
receiving payment from Qiagen in an amount which is at least
the lesser of (i) [*] percent ([*]%) of the dollar amount by
which Qiagen's Net Sales fell short in such quarter, or (ii)
[*] dollars (US$[*]) (a "Shortfall Order"); provided, however,
that for the purchase obligation for the first calendar
quarter of 2004 Qiagen shall place any Shortfall Order with
Epoch for the Q1, 2004 obligation by April 15, 2004; and
provided further that Qiagen shall be permitted to specify the
details (e.g., sequences) of the Product Deliverables
contained in any Shortfall Order within thirty (30) days of
placing the relevant purchase order(s); or
(II) within fifteen (15) days following the end of such calendar
quarter, Qiagen shall issue a report of the amount of the
deficiency in Net Sales for such quarter, and within thirty
(30) days of the end of such calendar quarter shall pay to
Epoch a payment equal to the lesser of (i) [*] percent ([*]%)
of the amount of the deficiency in Net Sales for such quarter,
or (ii) [*] dollars (US $[*]) (a "Shortfall Payment").
To the extent Net Sales in any calendar quarter exceed the relevant
quarterly minimum, such excess shall not be credited against Net
Sales for a subsequent quarter. To the extent that any Shortfall
Order is determined to have been greater than the minimum amount
required pursuant to (I) above based on the actual deficiency in Net
Sales for the relevant calendar quarter, Qiagen shall be allowed to
credit any such excess Shortfall Order against any subsequent
Shortfall Order. For purposes of this Section 8.4, Qiagen's Net
Sales in currency other than U.S. dollars shall be converted into
U.S. dollars for such calculation on a monthly basis, based on the
average exchange rate during the applicable quarter, according to
the exchange rates published in the U.S. West Coast edition of The
Wall Street Journal.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH
COMMISSION.
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Qiagen's obligations to place a Shortfall Order or make a Shortfall
Payment with respect to any calendar quarter under this Section 8.4,
are subject to the following: that during the relevant quarter,
there has been no material disruption of supply or availability of
the Product Deliverables, including, from and after April 23, 2004,
the [*] Custom Probe Sets, which was beyond the control of Qiagen,
that during the relevant quarter, there has been no material
disruption in access by Qiagen or Qiagen customers to the MGB
Eclipse Software resulting from a defect in the MGB Eclipse Software
and which disruption was not within Qiagen's reasonable control to
remedy, and that the number of Product Deliverables rejected by
Qiagen and accepted for replacement or refund pursuant to Section
3.5(b) has not exceeded [*] percent ([*]%) of the volume of Product
Deliverables delivered in such quarter.
6. NEGOTIATION OF SHORTFALL PAYMENT CAP FOR 2005. Commencing on or
before November 1, 2004, the parties will negotiate in good faith a Shortfall
Payment cap for each quarter in 2005 (in lieu of the $[*] cap set forth in
Section 8.4 as amended above). If the parties agree on such Shortfall Payment
caps for 2005, then Section 8.4 shall be amended to reflect such agreed upon
Shortfall Payment caps and Section 8.4 shall be amended to reflect the following
quarterly minimum Net Sales levels for 2005:
CALENDAR QUARTER ENDING QUARTERLY MINIMUM NET SALES
- ----------------------- ---------------------------
March 31, 2005 US $[*]
June 30, 2005 US $[*]
September 30, 2005 US $[*]
December 31, 2005 US $[*]
If the parties fail to agree on amended Shortfall Payment caps for each quarter
in 2005 by December 15, 2004, then the Agreement shall become non-exclusive as
of January 1, 2005.
7. NEGOTIATION OF MINIMUMS FOR 2006, 2007 AND 2008. Concurrently with
the negotiations of the Shortfall Payment caps for 2005, the parties will
negotiate in good faith quarterly minimum Net Sales and Shortfall Payment caps
for each calendar quarter in 2006, 2007 and 2008 and will enter into an
appropriate amendment to Section 8.4 once agreement is reached. If the parties
fail to agree on quarterly minimum Net Sales and Shortfall Payment caps for each
calendar quarter in 2006, 2007 and 2008 by June 30, 2005, then the Agreement
shall become non-exclusive as of January 1, 2006.
8. CONTINUED EFFECTIVENESS OF THE AGREEMENT. In all other respects, we
agree that the Agreement shall remain in full force and effect. In the ease of a
conflict between any provision of this Letter Amendment and the Agreement, this
Letter Amendment shall take precedent.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION.
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Please indicate your acceptance and agreement with the terms of this
Letter Amendment by signing where indicated below,
EPOCH BIOSCIENCES, INC.
/s/ William Gerber, M.D
-------------------------------
William Gerber, M.D., Chief
Executive Officer
Agreed and accepted:
QIAGEN NV
By: /s/ Peer Schatz
-------------------------
Title: President and CEO
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