EXHIBIT 10.201**
CONFIDENTIAL TREATMENT
AGREEMENT
dated as of the 17th day of August, 1989
between
CHIRON CORPORATION
and
ORTHO DIAGNOSTIC SYSTEMS INC.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
-----
[** This exhibit was filed in connection with Registrant's request for
confidential treatment pursuant to Rule 24b-2 for Exhibit 10.14 to
the Registrant's Form 1O-Q report for the period ended September 30,
1994 and a consequent order by the Commission dated November 30,
1994.]
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Abbott Immunodiagnostic Payments . . . . . . . . . . . . . . . 2
1.2 Abbott Related Expense . . . . . . . . . . . . . . . . . . . 2
1.3 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Annual Margin . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Applicable Market Share . . . . . . . . . . . . . . . . . . . 3
1.6 Average Abbott Payment . . . . . . . . . . . . . . . . . . . . 3
1.7 Average Abbott Related Expense . . . . . . . . . . . . . . . . 3
1.8 Calendar Quarter . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Chiron Expenses . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Chiron Know-How . . . . . . . . . . . . . . . . . . . . . . . 4
1.11 Chiron Operating Expenses . . . . . . . . . . . . . . . . . . 4
1.12 Chiron Patents . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Combination Product . . . . . . . . . . . . . . . . . . . . . 5
1.14 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 5
1.15 Excluded Expenses . . . . . . . . . . . . . . . . . . . . . . 5
1.16 Field of Use . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.17 Final Profits . . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Gross Profits . . . . . . . . . . . . . . . . . . . . . . . . 6
1.19 (a) Hepatitis Antigens . . . . . . . . . . . . . . . . . . . 6
(b) Hepatitis Antibodies . . . . . . . . . . . . . . . . . . 6
(c) HCV Antigens . . . . . . . . . . . . . . . . . . . . . . 6
(d) HCV Antibodies . . . . . . . . . . . . . . . . . . . . . 6
(e) Retrovirus Antigens . . . . . . . . . . . . . . . . . . . 6
(f) Retrovirus Antibodies . . . . . . . . . . . . . . . . . . 7
(g) Antigens . . . . . . . . . . . . . . . . . . . . . . . . 7
(h) Antibodies . . . . . . . . . . . . . . . . . . . . . . . 7
1.20 Hepatitis C virus or HCV . . . . . . . . . . . . . . . . . . . 7
1.21 Immunoassay, Immunologically . . . . . . . . . . . . . . . . . 9
1.22 Know-How . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.23 Net Abbott Immunodiagnostic Payments . . . . . . . . . . . . . 9
1.24 Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.25 Operating Profits . . . . . . . . . . . . . . . . . . . . . . 9
1.26 Ortho Expenses . . . . . . . . . . . . . . . . . . . . . . . . 9
1.27 Ortho Know-How . . . . . . . . . . . . . . . . . . . . . . . . 10
1.28 Ortho Operating Expense . . . . . . . . . . . . . . . . . . . 10
1.29 Ortho Patents. . . . . . . . . . . . . . . . . . . . . . . . . 11
1.30 Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.31 Preliminary Expenses . . . . . . . . . . . . . . . . . . . . . 11
1.32 Preliminary Profits . . . . . . . . . . . . . . . . . . . . . 11
1.33 Preliminary Revenues . . . . . . . . . . . . . . . . . . . . . 12
1.34 Presumed Abbott Total Profits . . . . . . . . . . . . . . . . 12
i.
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1.35 Presumed Additional Abbott Expense . . . . . . . . . . . . . . 12
1.36 Presumed Additional Abbott Payments . . . . . . . . . . . . . 12
1.37 Presumed Additional Abbott Units . . . . . . . . . . . . . . . 12
1.38 Principal Affiliate . . . . . . . . . . . . . . . . . . . . . 12
1.39 Product . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.40 Raw Material . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.41 Shipped . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.42 Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . 13
1.43 Total Operating Expenses . . . . . . . . . . . . . . . . . . . 13
1.44 Total Revenues . . . . . . . . . . . . . . . . . . . . . . . . 13
1.45 Unforeseen Expenses . . . . . . . . . . . . . . . . . . . . . 13
1.46 Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
MANAGEMENT
2.1 (a) General . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Independence . . . . . . . . . . . . . . . . . . . . . . 15
(c) Activities . . . . . . . . . . . . . . . . . . . . . . . 15
(d) No Fiduciary Duty . . . . . . . . . . . . . . . . . . . . 16
2.2 Supervisory Board . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Meetings of the Supervisory Board . . . . . . . . . . . . . . 17
2.4 Functions and Powers of the Supervisory Board . . . . . . . . 17
2.5 Supervisory Board Actions . . . . . . . . . . . . . . . . . . 22
2.6 Obligations of Parties . . . . . . . . . . . . . . . . . . . . 22
2.7 Limitations of Powers of the Supervisory Board . . . . . . . . 23
2.8 Revised Projections . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
NEW TECHNOLOGIES
3.1 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
RIGHTS IN PATENTS AND KNOW-HOW
ARTICLE V
LICENSE
5.1 Chiron Know-How and Patents. . . . . . . . . . . . . . . . . . 27
5.2 Ortho Grant to Chiron. . . . . . . . . . . . . . . . . . . . . 28
ii.
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ARTICLE VI
SUPPLY OF ANTIGENS AND ANTIBODIES
6.1 Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Specifications . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Delivery Terms . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Rejection of Raw Material . . . . . . . . . . . . . . . . . . 31
6.6 GMP Conditions . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
LIMITATIONS ON SUPPLY OF ANTIGENS AND ANTIBODIES
7.1 Supply of Raw Material . . . . . . . . . . . . . . . . . . . . 33
7.2 Chiron Breach of Delivery Obligation . . . . . . . . . . . . . 33
7.3 Escrow of Manufacturing Process . . . . . . . . . . . . . . . 35
ARTICLE VIII
PAYMENTS
8.1 Profit Sharing . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Abbott Immunodiagnostic Payments . . . . . . . . . . . . . . . 40
8.4 Reallocation of Final Profits . . . . . . . . . . . . . . . . 40
8.5 Form of Payment. . . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.7 Combination Products . . . . . . . . . . . . . . . . . . . . . 42
8.8 Examination of Books . . . . . . . . . . . . . . . . . . . . . 43
8.9 Interest on Overdue Payments . . . . . . . . . . . . . . . . . 44
ARTICLE IX
PATENT LITIGATION
9.1 Defense of Patent Litigation . . . . . . . . . . . . . . . . . 45
9.2 Patent Claims Against Third Parties . . . . . . . . . . . . . 45
ARTICLE X
WARRANTY, INDEMNIFICATION AND INSURANCE
10.1 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.2 Product Liability and Indemnification . . . . . . . . . . . . 46
10.3 Trade Dress . . . . . . . . . . . . . . . . . . . . . . . . . 49
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
iii.
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ARTICLE XI
CONFIDENTIALITY
11.1 Confidentiality Provisions . . . . . . . . . . . . . . . . . . 49
11.2 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XII
TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
12.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.2 Termination by Mutual Agreement . . . . . . . . . . . . . . . 51
12.3 Termination by Default . . . . . . . . . . . . . . . . . . . . 51
12.4 Termination by Court Order . . . . . . . . . . . . . . . . . . 52
12.5 Effective Date of Termination . . . . . . . . . . . . . . . . 52
12.6 Rights and Obligations on Term, Termination or Suspension . . 53
12.7 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . 54
12.8 Effect of Termination on Abbott Agreement . . . . . . . . . . 56
12.9 Cessation of Product Sales and Allocation of Certain Rights . 57
(a) Cessation by Ortho of HCV Product Sales . . . . . . . . . 57
(b) Minimum Sales of Non-HCV Products . . . . . . . . . . . . 57
(c) Definitive Agreement . . . . . . . . . . . . . . . . . . 58
ARTICLE XIII
MISCELLANEOUS
13.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 58
13.2 Non-competition . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Absence of Existing Competition . . . . . . . . . . . . . 58
(b) Future Business . . . . . . . . . . . . . . . . . . . . . 59
(c) Confidentiality . . . . . . . . . . . . . . . . . . . . . 60
13.3 Use of Parties Name . . . . . . . . . . . . . . . . . . . . . 60
13.4 Assignability . . . . . . . . . . . . . . . . . . . . . . . . 61
13.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 62
13.7 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . 62
13.8 Notice and Reports . . . . . . . . . . . . . . . . . . . . . . 63
13.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
13.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.12 Relationship of the Parties . . . . . . . . . . . . . . . . . 64
13.13 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . 65
(a) Disputes . . . . . . . . . . . . . . . . . . . . . . . . 65
(b) Alternative Dispute Resolution . . . . . . . . . . . . . 65
(c) Costs and Fees . . . . . . . . . . . . . . . . . . . . . 68
iv.
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(d) Confidentiality . . . . . . . . . . . . . . . . . . . . . 68
(e) Award . . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.14 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . 68
13.15 Representations . . . . . . . . . . . . . . . . . . . . . . . 69
13.16 Execution of Agreement and Guarantee by Johnson and
Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.17 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.18 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 69
13.19 Import and Export Controls . . . . . . . . . . . . . . . . . . 70
13.20 European Economic Community . . . . . . . . . . . . . . . . . 70
13.21 General Warranty . . . . . . . . . . . . . . . . . . . . . . . 71
v.
EXHIBITS
EXHIBIT A Accounting Methodology (Section 8.8)
EXHIBIT B Existing Chiron Agreements (Sections 5.1 and 6.1)
EXHIBIT C Criteria for Contractual Agreements (Section 6.6)
EXHIBIT D Principal Ortho Affiliates (Section 1.38)
EXHIBIT E Certain Ortho Affiliates, Principal Countries and Directors of
Ortho (Section 13.2)
EXHIBIT F Excluded Raw Material (Sections 1.19(a) and (e); 6.1)
EXHIBIT G Use of Parties' Names (Section 13.3)
EXHIBIT H Certain Abbott Agreements (Section 8.3)
vi.
AGREEMENT
This Agreement ("Agreement"), dated as of the 17th day of August,
1989, is made and entered into by and between CHIRON CORPORATION ("Chiron"), a
Delaware corporation, with offices at 4560 Horton Street Emeryville, California
94608 and ORTHO DIAGNOSTIC SYSTEMS INC. ("Ortho"), a New Jersey corporation,
with offices at Route 202, Raritan, New Jersey 08869.
RECITALS
A. Chiron and Ortho have entered into a License, Research and Supply
Agreement dated as of October 3, 1986 ("License Agreement") to collaboratively
develop certain diagnostic products related to hepatitis viruses and human
immunodeficiency virus using recombinant DNA and antibody technologies.
B. Chiron and Ortho also have entered into a Distribution and
Sales Agreement ("Distribution Agreement") dated as of August 31, 1987
related to the distribution of a human immunodeficiency virus confirmatory
test developed by Chiron.
C. Ortho and Chiron wish Ortho to sublicense certain of its
rights under the License Agreement to Abbott Laboratories, an Illinois
corporation ("Abbott") and intend to enter into a License and Supply
Agreement of even date herewith among Chiron, Ortho and Abbott (the "Abbott
Immunodiagnostics Agreement").
D. Chiron and Ortho wish to restructure and expand the scope of the
License Agreement and the Distribution Agreement.
1.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree, effective as of the
Effective Date, as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement the following definitions shall
apply.
1.1 ABBOTT IMMUNODIAGNOSTIC PAYMENTS shall mean all amounts paid
to Ortho or Chiron, as the case may be, by Abbott pursuant to the Abbott
Immunodiagostics Agreement. Such term shall include all actual Abbott
Immunodiagnostic Payments paid to Chiron and Ortho in respect of a given year
whether or not received during such year.
1.2 ABBOTT RELATED EXPENSE shall mean that portion of Ortho Expense,
if any, and of Chiron Expense, fairly allocable to the performance of their
respective obligations under the Abbott Immunodiagnostics Agreement.
1.3 AFFILIATE shall mean any company or entity controlled by,
controlling, or under common control with either party hereto and shall
include without limitation any company fifty percent (50%) or more of whose
voting stock or participating profit interest is owned or controlled,
directly or indirectly, by either party, and any company which owns or
controls, directly or indirectly, fifty percent (50%) or more of the voting
stock of either party.
1.4 ANNUAL MARGIN shall mean * with respect to calendar year
1993, * with respect to calendar year 1994 and * with respect to each
calendar year thereafter.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
2.
1.5 APPLICABLE MARKET SHARE shall mean (i) if the number of Units
of Products containing HCV Antigens or Antibodies ("HCV Products") Shipped by
* and * is equal to or greater than the * of the number of HCV Products
Shipped * (other than * ), then the * obtained by * the * of the
number of Units of HCV Products Shipped * by the total number of Units of
HCV Products Shipped * (including * ), and (ii) in all other cases, the
* obtained by * the number of Units of HCV Products Shipped * by the *
of the number of Units of HCV Products Shipped by * (other than *
1.6 AVERAGE ABBOTT PAYMENT shall mean the quotient obtained by
dividing Abbott Immunodiagnostic Payments for a given period by the aggregate
number of Units of Product Shipped by Abbott in such period.
1.7 AVERAGE ABBOTT RELATED EXPENSE shall mean the quotient
obtained by dividing Abbott Related Expense for a given period by the
aggregate number of Units of Product Shipped by Abbott in such period.
1.8 CALENDAR QUARTER shall mean a three (3) month period beginning
on each January 1, April 1, July 1 and October 1.
1.9 CHIRON EXPENSES shall mean, subject to the limitations in
Article II, the fully burdened and fairly allocable costs to Chiron and its
Affiliates, on a consolidated basis, of performing its obligations under this
Agreement and the Abbott Immunodiagnostics Agreement, including depreciation
or amortization of capital
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
3.
expenditures related thereto, but excluding (i) Excluded Expenses and (ii)
general and administration expenses (which shall include without limitation the
expense of all accounting, finance and management information functions). Such
expenses shall be determined by Chiron in accordance with Exhibit A on a
consistent basis and shall consist of Raw Material manufacturing costs, research
and development costs, regulatory affairs, royalties, and other fully burdened,
fairly allocable costs in direct support of other functions which may be
allocated to Chiron in accordance with Article II and all outside legal costs
related thereto (including, without limitation, defense and other costs incurred
as provided for in Article IV, IX or X below).
1.10 CHIRON KNOW-HOW shall mean all inventions, discoveries, trade
secrets, information, experience, data, formulas, procedures and results, and
improvements thereon, developed, owned, licensed (with a right to sublicense to
Ortho) or controlled by Chiron (including Chiron's Affiliates) which relate to
or are used directly in connection with the development, manufacture, or use of
Antigens, Antibodies or Products.
1.11 CHIRON OPERATING EXPENSES shall mean any Chiron Expense
incurred in connection with research and development of Antigens and
Antibodies, and any such expenses with respect to marketing or sales
activities, if any, assigned to Chiron by the Supervisory Board, and the
depreciable or amortizable portion of those capital expenditures related
thereto.
1.12 CHIRON PATENTS shall mean all patent applications, owned,
licensed (with a right to sublicense to Ortho) or controlled by Chiron or any
Chiron Affiliate relating to the Chiron Know-How which are based on
inventions made prior to or during the term of this Agreement in the United
States or any foreign jurisdiction,
4.
including any addition, continuation, continuation-in-part, or division thereof
or any substitute application therefor; any patent issued with respect to such
patent application or any other patent owned, licensed (with a right to
sublicense to Ortho) or controlled by Chiron which relates to or is used
directly or indirectly in connection with the development, manufacture, or use
of Antigens, Antibodies or Products; any reissue or extension of any such
patents, and any confirmation patent or registration patent or patent of
addition based on any such patents.
1.13 COMBINATION PRODUCT shall mean a product which, in addition to
utilizing or containing Antigens or Antibodies, contains another component as an
Immunologically active ingredient.
1.14 EFFECTIVE DATE shall mean November 1, 1989.
1.15 EXCLUDED EXPENSES means any and all costs and expenses
incurred in defending, settling or otherwise discharging any liability to a
third party (including employees) based upon acts or omissions that are
tortious, in breach of contract, in violation of applicable law or in
violation of obligations under this Agreement, except (a) as otherwise
expressly provided in this Agreement, including Article IX (Patent Litigation)
and Article X (Indemnity) or (b) to the extent that a contractual obligation
or the specific act or omission is expressly approved by the Supervisory
Board.
1.16 FIELD OF USE shall mean the use of any Immunoassay for the
direct or indirect detection of hepatitis viruses or retroviruses in humans
or human samples.
1.17 FINAL PROFITS shall mean Total Revenues minus Total Expenses. All
Abbott Immunodiagnostics Payments received by Chiron or Ortho in respect of any
year shall be included in the calculation of Final Profits for such year,
notwithstanding that such payments are received by Chiron or Ortho after the
close of such year.
5.
1.18 GROSS PROFITS shall mean Net Sales minus the sum of (a) all
Chiron Expenses included in cost of goods sold by Ortho and (b) all Ortho
Expenses included in cost of goods sold by Ortho, determined pursuant to the
accounting methodology set forth on Exhibit A.
1.19 (a) HEPATITIS ANTIGENS shall mean any peptide, polypeptide or
ligand and all proteins which react Immunologically with antibodies which are
Immunologically reactive with Hepatitis B virus, Delta antigen, Hepatitis A
virus, Hepatitis C viruses, or any other virus that is at any time classified as
a hepatitis virus by the International Committee on the Taxonomy of Viruses (or
by any body that replaces that committee).
(b) HEPATITIS ANTIBODIES shall mean any and all antibodies or
fragments thereof or other anti-ligands Immunologically reactive with any of the
viruses referenced in Paragraph (a) above except those listed in Exhibit F.
(c) HCV ANTIGENS shall mean any peptide, polypeptide or ligand
and all proteins which react Immunologically with antibodies which are
Immunologically reactive with HCV.
(d) HCV ANTIBODIES shall mean any and all antibodies or
fragments thereof or other anti-ligands Immunologically reactive with HCV
Antigens.
(e) RETROVIRUS ANTIGENS shall mean any peptide, polypeptide or
ligand which reacts Immunologically with antibodies which are Immunologically
reactive with any human retrovirus, including any human immunodeficiency virus,
except those listed in Exhibit F.
6.
(f) RETROVIRUS ANTIBODIES shall mean any and all antibodies or
fragments thereof or other anti-ligands Immunologically reactive with Retrovirus
Antigens.
(g) ANTIGENS shall mean Hepatitis Antigens and Retrovirus
Antigens.
(h) ANTIBODIES shall mean Hepatitis Antibodies and Retrovirus
Antibodies.
1.20 HEPATITIS C VIRUS or HCV may be used interchangeably throughout
this Agreement and shall mean any viral isolate, other than isolates within the
viral classes Hepatitis A, Hepatitis B (including Hepatitis B-2) and Hepatitis
delta, including any subtypes of such classes, that:
(a) is included in the viral class established by the
International Committee on the Taxonomy of Viruses, or any body that replaces
the Committee, and termed Hepatitis C (or other name selected by the
Committee), including any subtype of such class, wherein the class includes
an isolate having genomic sequences, cDNA transcripts of which are disclosed
in an "Existing Chiron HCV Patent Application," which means:
(i) United States patent application serial no. 122,714
filed 18 November 1987 (hereinafter "USSN 122,714"); or
(ii) a United States patent application filed on or before
the effective date of this Agreement that claims the benefit of the filing date
of USSN 122,714 under Title 35, section 120, of the United States Code; or
7.
(iii) a non-United States patent application that claims
priority under the Paris Convention from a United States patent application
identified in (i) or (ii) above; or
(b) (i) is at least * homologous at the amino acid level
to an isolate having genomic sequences that are disclosed in an Existing
Chiron HCV Patent Application determined by a comparison of the corresponding
protein sequences encoded by the entire available genomes of the isolates
with the software available on the Dayhoff protein data base, or if the
Dayhoff data base is not available, any scientifically recognized protein
sequence data base in the public domain; and
(ii) has a genome that contains a least *
non-overlapping sequences of * nucleotides wherein each such
non-overlapping sequence either hybridizes to, or is at least * identical
to, a corresponding sequence of twenty (20) nucleotides or its complement,
disclosed in an Existing Chiron HCV Patent Application; and,
(iii) has a genome of the same nucleic acid type (I.E.,
RNA or DNA) as an isolate having genomic sequences, cDNA transcripts of
which are disclosed in an Existing Chiron HCV Patent Application; and
(iv) has an organization of coding domains in its genome
similar to an isolate having genomic sequences, cDNA transcripts of which are
disclosed in an Existing Chiron HCV Patent Application; or
(c) any defective form of an isolate defined by (a) or (b),
wherein "defective" means a deletion of a portion of the genome including
deletions leading to replication defects.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
8.
This definition is independent of the definition of HCV in any Chiron
patent application.
1.21 IMMUNOASSAY, IMMUNOLOGICALLY and the like refer to both antigen/
immunoglobulin binding and other ligand/anti-ligand binding phenomena, excluding
nucleic acid hybridization.
1.22 KNOW-HOW shall mean all inventions, discoveries, trade secrets,
information, experience, data, formulas, procedures and results, and
improvements thereon, which relate to or are used directly in connection with
the development, manufacture, or use of Antigens, Antibodies or Products.
1.23 NET ABBOTT IMMUNODIAGNOSTIC PAYMENTS shall mean the excess, if
any, of Abbott Immunodiagnostic Payments over Abbott Related Expenses.
1.24 NET SALES shall mean, with respect to each Product, (i) the total
of all charges invoiced to unaffiliated third party customers by Ortho or its
Principal Affiliates for sale, directly or indirectly, of Products, less sales
and excise taxes, import duties and other governmental charges imposed directly
upon and actually paid by Ortho or such Affiliates, customary discounts allowed
and taken, corporate rebates and credits or refunds for goods returned, plus
(ii) the total of all intercompany transfer prices to Affiliates of Ortho which
are not Principal Affiliates, less sales and excise taxes, import duties and
other governmental charges imposed directly upon and actually paid by Ortho.
1.25 OPERATING PROFITS shall mean Final Profits minus Abbott
Immunodiagnostics Payments.
1.26 ORTHO EXPENSES shall mean, subject to the limitations in Article
II the fully burdened and fairly allocable costs to Ortho and its Principal
Affiliates, on a
9.
consolidated basis, of performing Ortho's obligations under this Agreement
and the Abbott Immunodiagnostics Agreement, including depreciation or
amortization of capital expenditures related thereto, but excluding (i)
Excluded Expenses and (ii) general and administration expenses (which shall
include without limitation the expense of all accounting, finance and
management information functions). Such expenses shall be determined by Ortho
in accordance with Exhibit A on a consistent basis and shall consist of
Product development, Product manufacturing, instrument services, marketing,
sales, distribution, instrument and software research and development,
technical service, regulatory affairs, clinical services and royalties and
other fully burdened, fairly allocable costs in direct support of other
functions which may be allocated to Ortho in accordance with Article II and
all outside legal costs related thereto (including, without limitation,
defense and other costs incurred as provided in Article IV, IX or X below).
1.27 ORTHO KNOW-HOW shall mean all inventions, discoveries, trade
secrets, information, experience, data, formulas, procedures and results, and
improvements thereon, developed, owned, licensed (with a right to sublicense
to Chiron) or controlled by Ortho or Ortho's Principal Affiliates which
relate to or are used directly in connection with the development,
manufacture, or use of Antigens, Antibodies or Products.
1.28 ORTHO OPERATING EXPENSE shall mean any Ortho Expense incurred
in connection with research and development, marketing and sales and the
depreciable or amortizable portion of those capital expenditures relating
thereto, except that end user instrument amortization expense shall be
treated as a manufacturing cost rather than an Ortho Operating Expense.
10.
1.29 ORTHO PATENTS shall mean all patent applications owned,
licensed (with a right to sublicense to Chiron) or controlled by Ortho or
Ortho's Principal Affiliates relating to the Ortho Know-How which are based
on inventions made prior to or during the term of this Agreement in the
United States or any foreign jurisdiction, including any addition,
continuation, continuation-in-part, or division thereof or any substitute
application therefor; any patent issued with respect to such patent
application or any other patent owned, licensed (with a right to sublicense
to Chiron) or controlled by Ortho which relates to or is used directly or
indirectly in connection with the development, manufacture, or use of
Antigens, Antibodies or Products; any reissue or extension of any such
patents, and any confirmation patent or registration patent or patent of
addition based on any such patents.
1.30 PATENTS shall mean all patent applications which are based on
inventions made prior to or during the term of this Agreement in the United
States or any foreign jurisdiction, which relate to or are used directly or
indirectly in connection with the development, manufacture or use of
Antigens, Antibodies or Products, including any addition, continuation,
continuation-in-part, or division thereof or any substitute application
therefor; any patent issued with respect to such patent application; any
reissue or extension of any such patent, and any confirmation patent or
registration patent or patent of addition based on any such patent.
1.31 PRELIMINARY EXPENSES shall mean Chiron Expenses plus Ortho
Expenses less Ortho Expenses of Ortho's Principal Affiliates.
1.32 PRELIMINARY PROFITS shall mean Preliminary Revenues minus
Preliminary Expenses. All Abbott Immunodiagnostic Payments received by Chiron or
Ortho in respect of a Calendar Quarter shall be included in the calculation of
Preliminary Profits
11.
for such quarter, notwithstanding that such payments are received by Chiron or
Ortho after the close of such quarter.
1.33 PRELIMINARY REVENUES shall mean Abbott Immunodiagnostic Payments
plus Net Sales less Net Sales by Ortho's Principal Affiliates plus the total of
all intercompany transfer prices by Ortho to its Principal Affiliates for
Products.
1.34 PRESUMED ABBOTT TOTAL PROFITS shall mean (i) Abbott
Immunodiagnostic Payments less Abbott Related Expenses plus (ii) Presumed
Additional Abbott Payments less Presumed Additional Abbott Expenses.
1.35 PRESUMED ADDITIONAL ABBOTT EXPENSE shall mean the dollar
amount obtained by multiplying (i) Presumed Additional Abbott Units, times
(ii) Average Abbott Related Expense.
1.36 PRESUMED ADDITIONAL ABBOTT PAYMENTS shall mean a dollar amount
calculated by multiplying (i) Presumed Additional Abbott Units, times (ii) the
Average Abbott Payment.
1.37 PRESUMED ADDITIONAL ABBOTT UNITS shall mean the number of Units
obtained by multiplying (i) the number of Units of Product containing or
utilizing HCV Antigens or Antibodies Shipped by Ortho and its Affiliates,
subject to Section 8.4(c) below, times (ii) the Applicable Market Share.
1.38 PRINCIPAL AFFILIATE shall mean, with respect to Ortho, an
Affiliate of Ortho listed on Exhibit D hereto that has accepted a sublicense
from Ortho hereunder and has agreed to be bound by the terms hereof as
applicable to Ortho as long as they are applicable to Ortho and successors in
interest of such Principal Affiliates. Exhibit D may be amended by Ortho from
time to time to add additional Affiliates by written notice to Chiron.
12.
1.39 PRODUCT shall mean any and all Immunoassays, Immunoassay kits or
Immunoassay test configurations (excluding the instrument portion thereof), the
manufacture, sale or use of which utilize or contain Antigens or Antibodies.
1.40 RAW MATERIAL shall mean a composition of matter which contains
one (1) distinct type of Antigen or Antibody.
1.41 SHIPPED shall have the meaning assigned to that term in the
Abbott Immunodiagnostics Agreement.
1.42 TOTAL EXPENSES shall mean Chiron Expenses plus Ortho Expenses.
1.43 TOTAL 0PERATING EXPENSES shall mean Chiron Operating Expense plus
Ortho Operating Expense.
1.44 TOTAL REVENUES shall mean Net Sales plus Abbott Immunodiagnostic
Payments.
1.45 UNFORESEEN EXPENSES shall mean any reasonable Chiron Expenses
or Ortho Expenses which are not contemplated by an Approved Budget, which
could not reasonably have been foreseen at the time revised projections for
the calendar year in question are first submitted to the Supervisory Board
pursuant to Section 2.8 below, and which are incurred in connection with
defending, settling or otherwise discharging any liability to a third party
(including expenses contemplated under Article IX (Patent Litigation) and
Article X (Indemnity)) or are incurred as a result of loss or damage beyond
the control of either party, including, without limitation, fire, earthquake,
other natural disasters, acts of God, acts of public enemy, riot, vandalism,
insurrection, governmental regulation of the sale of Products or the
transportation thereof, strikes or other labor disturbances, boycotts, and
shortages of material or labor; provided, that no expense shall be treated as
an Unforeseen Expense for purposes of Section 2.8 except to
13.
the extent the party that incurs such expense uses reasonable efforts to
mitigate the unforseen event that lead to such expense and such expense is
reasonable in the light of all the surrounding circumstances.
1.46 UNITS shall have the meaning assigned to that term in the Abbott
Immunodiagnostics Agreement.
ARTICLE II
MANAGEMENT
2.1 (a) GENERAL. The parties are entering this Agreement with the
following express intentions which, subject to all other terms of this
Agreement, shall establish the framework for the decisions of the Supervisory
Board, any neutral acting under Section 2.4 and the parties (other than Ortho
when acting under Subsection 2.4(b)(iii) in any year in which Net Abbott
Immunodiagnostic Payments exceed * and Presumed Abbott Total Profits exceed
* , and in any year in which Ortho can demonstrate with creditable
evidence that the foregoing can be reasonably expected to exceed such
amounts). These intentions shall serve as a general guide for the exercise of
business judgment by the parties, but are not intended to and do not create
any obligation or impose any liability upon either party with respect to the
good faith exercise of such judgment.
(i) The parties intend that their activities under this
Agreement generally shall be directed toward optimizing the profit of each of
them under this Agreement while at the same time developing a strong, efficient,
effective and growing presence in the markets for Products worldwide.
(ii) The parties intend that their activities optimize the
commercial potential of all of their respective Patents and Know How under this
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
14.
Agreement and that the presence in the market of Products not be limited to HCV
bloodscreening Products.
(iii) The parties intend periodically to evaluate
critically the commercial success of their activities under this Agreement and
to initiate such corrective action as may be necessary in order to optimize
Final Profits.
(b) INDEPENDENCE. Subject to the terms of this Agreement, the
activities and resources of each party under this Agreement shall be managed by
Chiron and Ortho, each acting independently and in its own capacity, with
supervision of the Supervisory Board being exercised to the degree set forth
below. Except as expressly set forth herein, properties used or acquired in
connection with the activities contemplated by this Agreement (including,
without limitation, tangible and intangible personal property) shall be owned by
one or the other of the parties, and not jointly. Each party shall account to
the other party for all income and expense associated with the conduct of its
activities under this Agreement and shall advise the Supervisory Board of the
same, all as provided herein.
(c) ACTIVITIES. Subject to any alternative assignment made in
accordance with Section 2.4 below, Chiron will be primarily responsible for
research and for manufacturing Raw Materials, and Ortho will be primarily
responsible for Product development, instruments and software, regulatory
affairs, Product manufacturing, marketing, distribution and sales. Except as (i)
expressly provided to the contrary in this Agreement, or (ii) when acting
pursuant to a Plan and Budget approved by the Supervisory Board, any neutral or
Ortho to the extent provided in Section 2.4, each party shall perform such
functions (or cause them to be performed by others) in such manner as it
believes in good faith to be consistent with the intention of the parties in
15.
entering into this Agreement and neither party shall intentionally act under
this Agreement in such a way as to compromise the objectives of the parties as
set forth in this Section 2.1.
(d) NO FIDUCIARY DUTY. The provisions, contained in this Section
2.1 and this Agreement are not intended to create and shall not create any
fiduciary duty on either party and shall not require either party to expend
funds or efforts or commit resources in excess of that approved by the
Supervisory Board or as otherwise expressly provided for in Article II. Neither
party shall be awarded damages for any breach by the other party of its
obligations under Section 2.1 of this Agreement except for compensatory damages
actually incurred and proven (any exemplary or punitive damages being hereby
waived) up to a maximum of * per year.
2.2 SUPERVISORY BOARD. Chiron and Ortho shall create, within sixty
days after the date of this Agreement, a six member supervisory board (the
"Supervisory Board"). Three members of the Supervisory Board shall be selected
by Chiron and three members of the Supervisory Board shall be selected by Ortho.
Members of the Supervisory Board shall be composed of senior officers and/or
directors of each party and shall include at least the chief executive officers
(or, in the absence of an officer with such title, the president) of Chiron and
Ortho. Members of the Supervisory Board shall serve in such capacities, on such
terms and conditions, and for such duration as shall be determined by the party
selecting such person for membership on the Supervisory Board. Any member of the
Supervisory Board may be removed at any time, with or without cause or notice,
by the party who has selected such person for membership on the Supervisory
Board. An alternate member designated by a party may serve temporarily in the
absence of a permanent member designated by such party.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
16.
2.3 MEETINGS OF THE SUPERVISORY BOARD. The Supervisory Board:
(i) shall hold meetings at such times as shall be
determined by a majority of the entire membership of the Board but in no event
shall such meetings be held less frequently than once every three months; notice
of any such meeting shall be provided to each member of the Board no later than
thirty days prior to the scheduled date of such meeting (unless such notice is
waived in writing by any such member), which notice shall contain the date, time
and place of such meeting and describe the proposed agenda of items to be
discussed at such meeting, responsibility for arranging meetings will alternate
between the parties on a quarterly basis;
(ii) may conduct meetings in person or by conference
telephone, provided that any decision made during a telephone conference meeting
is evidenced in a conformed writing signed by one of the members of such Board
selected by each of the parties;
(iii) shall keep minutes reflecting actions taken at
meetings; and
(iv) may act without a meeting if prior to such action a
written consent thereto is signed by all members of the Board.
2.4 FUNCTIONS AND POWERS OF THE SUPERVISORY BOARD.
(a) The activities of the parties under this Agreement shall be
supervised by the Supervisory Board only to the extent set forth herein. The
Supervisory Board shall perform the following functions:
(i) consider and approve, annually before the end of each
calendar year, the strategic plan (the "Plan") for the activities of the parties
under this Agreement for the next succeeding year and approve a budget
(excluding the Abbott
17.
Immunodiagnostic Payments) (the "Budget") for the next succeeding calendar year
consistent with such Plan. Any Budget so approved by the Supervisory Board is
hereinafter referred to as an "Approved Budget." The Plan shall include at least
the following: Products to be marketed, the schedule for Product introductions,
the research and development projects to be undertaken by each party and other
similar matters of strategic importance. The Plan shall not include, among other
things, approval of numbers of employees, approval of the distribution of
expenses within each of the categories listed in (B) below, and other similar
matters of tactical (as opposed to strategic) importance. The Budget shall (A)
subject to Section 2.8(b) below, include the maximum amounts which each party
may have included as part of Chiron Operating Expense or Ortho Operating
Expense, respectively, for such year; and (B) specify at least the following
budget categories: cost of goods sold, research, development, marketing, sales
and distribution; and (C) identify the capital expenditures of each party
relevant to this Agreement; and (D) will include a budgeted Gross Profit and
budgeted Operating Profit;
(ii) approve, annually before the end of each calendar
year, any alternative assignment of responsibilities to the parties for the
performance of specific functions contemplated by the Plan;
(iii) monitor progress of the activities contemplated
hereby and performance of the parties against the Plan and Budget, and agree to
amendments to the Plan and Budget from time to time as deemed appropriate;
(iv) oversee the obligations of Chiron and Ortho under
this Agreement and propose changes or modifications as necessary;
18.
(v) review progress reports provided by either party,
pursuant to the terms of this Agreement, or as otherwise necessary to monitor
the activities of the parties under the Plan and the Budget;
(vi) review and analyze research, development and marketing
literature and other available information relating to Antigens and Antibodies
and/or Products;
(vii) suggest new avenues or areas of research and
development for Antigens and Antibodies and/or Products, including possible
acquisition of third party technology, as they are identified;
(viii) encourage and facilitate ongoing cooperation between
the parties hereto in order to optimize the commercialization of the Products
and the profitability of the activities contemplated hereby to the parties,
including consideration of and recommendations to the parties regarding the
possible licensing to others of any Chiron or Ortho Patents or Chiron or Ortho
Know-How that are not otherwise being exploited under this Agreement;
(ix) approve any agreements with third parties to be made
by the parties jointly regarding the subject matter of this Agreement; and
(x) perform such other functions as appropriate to further
the purposes of this Agreement as determined by the parties.
(b) Subject to paragraph (c) below, if by the end of any
calendar year (a "Prior Year"), the Supervisory Board fails to agree on a Plan
and a Budget for the next succeeding calendar year (the "New Year"), Ortho,
subject to the over-all limitation on amounts which may be charged as Chiron
Operating Expenses and Ortho Operating Expenses as set forth below, and to
Chiron's right to charge sums expended
19.
on research and development as set forth in subsection (ii) below, shall in its
sole discretion determine the Plan and Budget for the New Year, the allocation
of Operating Expenses to specific Budget categories, and any alternative
assignment of responsibilities to the parties for the performance of specific
functions contemplated by the Plan; provided, that Chiron shall in any event be
responsible for research and for manufacturing Antigens and Antibodies. In any
such year, the Budget for Operating Expenses determined by Ortho for the New
Year shall not exceed the following:
(i) Total Operating Expenses for the New Year shall not
exceed an amount (the "Expense Budget") equal to * of Net Sales for the Prior
Year. In the event that the Supervisory Board does not approve a Budget for
calendar year 1990, for purposes of this subsection (i) Net Sales for the Prior
Year shall be deemed to be *
(ii) Chiron Operating Expenses for research and development
for the New Year shall not exceed * of the Expense Budget and, notwithstanding
any lesser amount budgeted by Ortho, (A) subject to paragraph (c) below, in
calendar years 1990, 1991, and 1992, and in any year in which Net Abbott
Immunodiagnostic Payments are less than * or Presumed Abbott Total Profits are
less than * , or Chiron can demonstrate with creditable evidence that the
foregoing cannot reasonably be expected to exceed such amounts, Chiron, in its
sole discretion, may charge as Chiron Operating Expense for research and
development up to an amount equal to * of the Expense Budget, and (B) in any
other year, in it sole discretion, Chiron may charge as Chiron Operating Expense
for research and development up to an amount equal to * of Abbott
Immunodiagnostic Payments for the Prior Year. Subject to the foregoing,
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
20.
Chiron shall in good faith endeavor to spend the amount budgeted by Ortho (plus
or minus * of such amount) for Chiron Operating Expenses for research and
development.
(iii) Ortho Operating Expenses for the New Year shall not
exceed * of the Expense Budget.
(c) If, by the end of November in any year of operating under
a prescribed Budget of the type set forth in paragraph (b) above, the
Supervisory Board again fails to agree on a Plan and a Budget for the next
succeeding calendar year, and either (i) the next succeeding year is calendar
year 1991 or 1992, or (ii) the next succeeding year is calendar year 1993 or
later, and Net Abbott Immunodiagnostic Payments did not exceed * or
Presumed Abbott Total Profits did not exceed * in the immediately preceding
four calendar quarters, then the Plan and Budget for such succeeding calendar
year shall be determined by a neutral third party as set forth in paragraph
(d) below.
(d) In order to effectuate the purposes of paragraph (c)
above, in any year in which the parties are operating under a prescribed
budget in accordance with paragraph (b) above, the parties shall, no later
than June 30 of that year, identify and retain an independent third party to
serve as the neutral, if required, for establishing the Budget for the
following year. If the parties have been unable to agree upon and retain
such a neutral by June 30, the neutral shall be selected by Arthur Andersen &
Co., unless either party or Johnson & Johnson employs or has employed such
accounting firm on a regular basis, in which case Arthur Andersen & Co. shall
designate an independent certified public accounting firm to select the
neutral.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
21.
(e) If, in accordance with paragraph (c) above, the Plan and
Budget for a calendar year is to be determined by a neutral, the neutral shall
establish such Plan and Budget no later than January 15 of that year; provided,
that if for any reason the Plan and Budget has not been established by such
date, the parties shall operate for one additional Calendar Quarter under a Plan
and Budget determined in the manner set forth in paragraph (b) above. The
neutral shall establish the Plan and Budget by reference to the objectives of
the parties hereunder as set forth in Section 2.1 above and by reference to the
proposals, if any, submitted by each of the parties.
(f) Nothing in this Agreement shall prevent either party from
incurring any expenses in connection with the transactions contemplated hereby;
provided, that neither party may charge any such expenses as Chiron Expenses or
Ortho Expenses in accordance with Section 8.1 of this Agreement unless (i) with
respect to Chiron Operating Expenses and Ortho Operating Expenses, the same
shall have been approved by the Supervisory Board through an effective Budget
and Plan or as otherwise provided in Section 2.4(b) and (c) above, and (ii) with
respect to all other Chiron Expenses and Ortho Expenses, the same shall be
reasonable in relation to the volume of Product sold and in the light of the
purposes of this Agreement.
2.5 SUPERVISORY BOARD ACTIONS. Actions to be taken by the
Supervisory Board pursuant to the terms of this Agreement shall be taken only
following the affirmative vote of a majority of the entire Supervisory Board.
2.6 OBLIGATIONS OF PARTIES.
(a) Chiron and Ortho shall provide the Supervisory Board with
reasonable access during regular business hours to all records and documents
which it may reasonably require in order to perform its obligations hereunder;
provided that if
22.
such records and documents are under a bona fide obligation of confidentiality
to a third party other than an Affiliate, then Chiron or Ortho, as the case may
be, may withhold access thereto to the extent necessary to satisfy such
obligation.
(b) Each party will make reasonable reports to the other party
and to the Supervisory Board with respect to its functions and tasks provided
for in this Agreement or otherwise assigned to it in accordance with Section 2.4
above.
(c) As to any Approved Budget, the parties shall in good faith
endeavor to spend up to the limits provided therein. As to any Budget other
than an Approved Budget, and subject to Section 2.4(b)(ii) above, Chiron shall
in good faith endeavor to spend the amount budgeted (plus or minus * , for
Chiron Operating Expenses for research and development. The parties recognize
however, that business conditions may necessitate the expenditure of lesser
amounts. The parties shall notify each other of any anticipated material under
expenditures.
2.7 LIMITATIONS OF POWERS OF THE SUPERVISORY BOARD. The Supervisory
Board shall only have such powers as are delegated to it hereunder.
2.8 REVISED PROJECTIONS.
(a) The parties acknowledge that from time to time it may be
desirable to vary an Approved Budget in view of a projected Gross Profit for the
year which will result in increasing the Final Profit contemplated in the
Approved Budget. In order to effect the purpose of this Section 2.8, each party
shall notify the Supervisory Board and the other party promptly of any changes
in projected Gross Profit. Such notice shall reflect the good faith projections
of such party and shall specify in reasonable detail the basis for the revised
projections, including (i) the effect on
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
23.
projected Gross Profit of actual Net Sales to date and (ii) the actual Gross
Profit achieved in the preceding calendar quarter annualized.
(b) If in any calendar year projected Gross Profit exceeds the
budgeted Gross Profit, each party, acting in good faith, may increase the
maximum amount of Chiron Operating Expenses and Ortho Operating Expenses, as the
case may be, in excess of those provided in the Approved Budget in an amount
equal to the GREATER of:
(i) the amount, if any, approved by the Supervisory
Board, or
(ii) in the absence of any such approval by the
Supervisory Board, by the amount of such party's respective allocable share of
* of the difference between most recent projected Gross Profits and budgeted
Gross Profits; provided, that neither party may charge any such additional
expenses as additional Chiron Operating Expenses or Ortho Operating Expenses, as
the case may be, to the extent such expenses exceed such party's allocable share
of the amount by which actual Operating Profits (disregarding the affects of any
Unforeseen Expenses) exceed the budgeted Operating Profit. Each party's
allocable share of such amount shall equal the ratio of its respective budgeted
Operating Expenses to budgeted Total Operating Expenses. By way of example, if
an Approved Budget provides as follows:
Net Sales *
Gross Profit
Chiron Operating Expenses
Ortho Operating Expenses
Budgeted Operating Profit
and projected Gross Profit equals * , Ortho may, in its discretion, incur
additional Ortho Operating Expenses as follows:
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
24.
Difference between projected
and budgeted Gross Profit: *
* of that
difference: *
Ortho's allocable share
(budgeted Ortho Operating
Expenses to budgeted Total
Operating Expenses): *
Additional permitted Ortho
Operating Expenses: *
ARTICLE III
NEW TECHNOLOGIES
3.1 NOTIFICATION. Subject to bona fide confidentiality and other
obligations to third parties, other than their respective Affiliates, each party
agrees to use reasonable efforts to notify the other promptly as it becomes
aware of competitive or complementary technology and developments pertaining to
the development or manufacture of Antigens, Antibodies or Products and related
test configurations and related assay systems and technology related to
instrument or other diagnostic read-out systems. Subject to the approval of the
Supervisory Board each party agrees to pursue and attempt to acquire if not
already acquired, (and will use its best efforts to obtain a right to sublicense
to the other party and to Abbott), from third parties such rights to
Immunoassay technology and/or patents or both as either (a) is or becomes
necessary to permit (i) Chiron to develop and manufacture Antigens and
Antibodies, (ii) such Antigens and Antibodies to be incorporated into Products
or (iii) Ortho to make, use and sell Products or (b) represents a substantial
improvement in the performance characteristics of Antigens, Antibodies or
Products, but including in either case, technology related to instrument or
other diagnostic reading systems. Nothing in this
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
25.
Section 3.1 shall preclude either party from acquiring Immunoassay technology or
patents or both and charging costs incurred in connection therewith as Chiron
Expenses or Ortho Expenses; provided, however, that without the prior approval
of the Supervisory Board (or that of Ortho acting in its sole discretion under
Subsection 2.4(b)(iii) or any neutral acting under Section 2.4), any costs
incurred in connection therewith shall not be charged as Chiron Expenses or
Ortho Expenses, and provided further, the party acquiring any such technology
shall promptly notify the other party of such acquisition.
ARTICLE IV
RIGHTS IN PATENTS AND KNOW-HOW
4.1 Subject to the rights granted herein, with respect to Patents and
Know-How:
(a) Each party shall own the entire right, title and interest in
and to all Patents and Know-How invented solely by it; and
(b) Any Patent or Know-How invented jointly by the parties shall
be jointly owned by the parties.
4.2 Each party (the "filing party") shall at its discretion, file,
prosecute, maintain and defend against opposition proceedings the Patents it
owns, covering inventions and discoveries arising in connection with the
Know-How it owns in such countries as the filing party shall determine. During
the term of this Agreement, the filing party shall, at the reasonable request of
the other party, file for such additional patents with respect to the Know-How
owned by the filing party in such additional countries as the
26.
other party reasonably deems necessary to protect its licensed rights under this
Agreement.
The filing party shall keep the other party apprised of the status of
each Patent and shall give reasonable consideration to any suggestions or
recommendations of the other party concerning the preparation, filing,
prosecution, maintenance and defense thereof. If, during the term of this
Agreement, the filing party intends to allow any Patent to lapse or become
abandoned without having first filed a substitute, the filing party shall,
whenever practicable, notify the other party of such intention at least sixty
(60) days prior to the date upon which such Patent shall lapse or become
abandoned, and the other party shall thereupon have the right, but not the
obligation, to assume responsibility for the prosecution, maintenance and
defense thereof.
4.3 No party makes any warranty with respect to the validity,
perfection or dominance of any patent or other proprietary right included in its
Know-How as Patents or with respect to the absence of rights in third parties
which may be infringed by the manufacture or sale of any product.
4.4 Each party agrees to bring to the attention of the other party
any patent or patent application it discovers, or has discovered, and which
relates to the subject matter of this Agreement, and to cooperate with each
other so that each party can determine whether valid rights of a third party may
be infringed.
ARTICLE V
LICENSE
5.1 CHIRON KNOW-HOW AND PATENTS. During the term of this Agreement,
Chiron hereby grants to Ortho an exclusive worldwide license, without the right
to
27.
sublicense except to its Principal Affiliates, and subject to the restrictions
contained herein and to the existing agreements identified in Exhibit B attached
hereto, to the Chiron Know-How and any Chiron Patents to make, have made, use
and sell Products within the Field of Use, and to the degree necessary, any
further license necessary to make the warranties made by Chiron and Ortho in the
Abbott Immunodiagnostics Agreement true and complete in all respects.
5.2 ORTHO GRANT TO CHIRON. During the term of this Agreement, Ortho
hereby grants to Chiron and its Affiliates a non-exclusive, * license, without
the right to sublicense, throughout the world to use all Ortho Know-How and
Ortho Patents for performing Chiron's research, manufacturing and other
obligations to Ortho under this Agreement and Chiron's obligations under the
Abbott Immunodiagnostics Agreement and for no other purpose, provided, however,
that subject to the confidentiality, but not the use, restrictions of Article
XI, Chiron shall have the right to use clinical data relating to the Antigens
and Antibodies for internal purposes, including research purposes and for the
development of improved Antigens, Antibodies and technologies for the
manufacture thereof.
ARTICLE VI
SUPPLY OF ANTIGENS AND ANTIBODIES
6.1 SUPPLY. Chiron, within the limitations contained in this Article,
shall supply Ortho with such quantities of Raw Material manufactured under GMP
conditions as Ortho may require for manufacture and sale of Products. Ortho
agrees during the term of this Agreement to obtain solely from Chiron all Raw
Material that Ortho requires. Notwithstanding the foregoing, Ortho need not
obtain from Chiron Raw
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
28.
Material identified in Exhibit F hereto. Chiron agrees during the term of this
Agreement to supply Raw Material solely to Ortho for use within the Field of
Use. Notwithstanding the foregoing, Chiron may also supply Raw Material to any
third parties (1) listed in Exhibit B for the purposes listed therein; (2) who
are subject to a duty permitting their use thereof only for research purposes
and not for commercialization of the results of such research by Chiron or any
third party; (3) for all uses outside the Field of Use, but only if such third
party is under an obligation not to use such Raw Material within the Field of
Use and, with respect to any such use, and also as to (2) above, Chiron uses
reasonable efforts to abate such use and, as to any such agreements entered into
after the date hereof, subject to applicable law, Chiron will obtain and attempt
to enforce the contractual right to terminate any such supply in the event of
material breach of such obligation by such third party; (4) if and to the
extent approved in writing by Ortho; or (5) to Abbott under the Abbott
Immunodiagnostics Agreement.
6.2 SPECIFICATIONS. For each Raw Material, Chiron shall propose, in
writing, reasonable initial release specifications. Upon proposing such initial
release specifications, Chiron shall be obligated to meet Ortho's requirements
of such Raw Material complying with such initial release specifications. After
delivery of a Raw Material by Chiron, Ortho and Chiron shall agree, in writing,
on acceptance criteria and final release specifications for the Raw Material
based on actual testing of delivered Raw Material, which together shall comprise
the Raw Material specifications (the "Specifications"). Until such agreement is
reached, the initial release specifications proposed by Chiron shall be the
Specifications for the Raw Material.
29.
6.3 QUANTITY.
(a) For all Products intended for commercial sale, Ortho shall
submit a requirements forecast for the relevant Raw Material for the upcoming
year. The requirements forecast shall be updated each quarter and extended one
quarter so as to provide a continuous forecast for a one-year period. At the
latest, one hundred twenty (120) days prior to a scheduled delivery date, Ortho
will place its firm quantity orders for such scheduled delivery.
(b) If Ortho shall request delivery of the Raw Material in
amounts that exceed * , of the initially forecasted quarterly requirements,
Chiron shall use its best efforts to manufacture and supply such additional
amounts. If Chiron is unable to supply the additional amount of Raw Material
within sixty (60) days after the requested delivery date, then Ortho may obtain
such additional amounts of Raw Material from third parties pursuant to Section
7.2(a) hereof; provided, however, that failure by Chiron to deliver such
additional amounts of Raw Material shall not constitute a default and shall not
entitle Ortho to have the second sourcing rights described in Section 7.2(b) or
to have access to the escrowed manufacturing process described in Section 7.3
hereof.
6.4 DELIVERY TERMS. All deliveries to Ortho of Raw Material by Chiron
hereunder shall be F.O.B. at Chiron's plant in Emeryville, California, or other
Chiron designated place of delivery within the United States. Title to, and risk
of loss or damage of, any shipment of Raw Material shall pass to Ortho upon
acceptance of delivery at Chiron's facility. Costs associated with risk of loss
or damage of any shipment and the actual cost of freight, insurance, packaging
and any custom duties and
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
30.
taxes incurred by either party and its Affiliates with respect to the Raw
Materials or Products shall be Chiron Expenses or Ortho Expenses, as the case
may be.
6.5 REJECTION OF RAW MATERIAL.
(a) If Ortho wishes to reject any delivery of Raw Material as
not conforming to the Specifications determined in accordance with Section 6.2,
Ortho must notify Chiron within thirty (30) days after receipt of delivery of
any shipment of non-conforming Raw Material; if the Specifications for such Raw
Material call for testing at a later date, then Ortho must notify Chiron within
ten (10) days of such later date and must include in such notification a report
of analysis of the allegedly non-conforming Raw Material determined in
accordance with the methods set forth in the Specifications. Chiron shall notify
Ortho within thirty (30) days after receipt of such report whether it accepts
Ortho's claim.
If Chiron disagrees with Ortho's determination of the alleged
non-conformity, then an independent laboratory, mutually agreed upon by the
parties, shall analyze a sample, to be furnished by Ortho, of the identical
batch of allegedly non-conforming Raw Material delivered to Ortho, and both
parties shall be bound by such laboratory's results of such analysis. If Ortho
shall not have an identical batch for analysis, then Chiron shall provide a
sample from the shipment for testing.
If Chiron or the independent laboratory confirms the delivery's
non-conformity, Chiron shall replace the non-conforming Raw Material with
conforming Raw Material within forty-five (45) days after the date of Chiron's
notification to Ortho of its acceptance of Ortho's claim of non-conformity or
its receipt of the report of the independent laboratory confirming the
non-conformity. The replacement of the Raw Material by Chiron pursuant to this
Article shall represent the sole remedy of Ortho against
31
Chiron, its Affiliates and licensees for non-conforming Raw Material, except
that failure to so replace non-conforming Raw Material may, at Ortho's
discretion, constitute a Supply Shortfall under Section 7.2.
(b) Unless Chiron requests the return to it of a non-conforming
batch of Raw Material, Ortho promptly shall destroy the entire batch of
non-conforming Raw Material included in the delivery and shall provide Chiron
with written certification of such destruction. Upon receipt of Chiron's request
for return of non-conforming Raw Material, Ortho promptly shall dispatch to
Chiron the entire remaining batch of Raw Material contained in the delivery.
6.6 GMP CONDITIONS.
(a) Chiron shall manufacture Raw Material for use in clinical
testing and for use in Products for commercial sale under FDA Good Manufacturing
Practices pursuant to the Criteria for Contractual Agreements (attached as
Exhibit C hereto) or pursuant to a facilities license issued to Chiron by the
FDA.
(b) In order to determine and ensure compliance with FDA and
Quality Assurance standards, Chiron shall upon reasonable advance notice
permit authorized representatives of the FDA or Ortho to audit Chiron's
manufacturing process for Raw Material and Chiron shall promptly act upon
reasonable suggestions to correct deficiencies discovered by such audit, if
any. Despite this right of Ortho to audit Chiron's manufacturing process for
Raw Material, the compliance of Chiron with Good Manufacturing Practices
(GMP) and of Raw Material with specifications shall be the sole
responsibility of Chiron. Raw Material not manufactured under GMP standards
shall be deemed non-conforming.
32.
ARTICLE VII
LIMITATIONS ON SUPPLY OF ANTIGENS AND ANTIBODIES
7.1 SUPPLY OF RAW MATERIAL. Chiron shall use its best efforts to
supply Ortho with quantities of Raw Material ordered by Ortho pursuant to
Article VI hereof, but will not be responsible for any direct, indirect,
consequential, punitive or other damages resulting from its inability to
manufacture or supply requested quantities of conforming Raw Material. If Chiron
shall fail to deliver requested quantities of Raw Material, the sole remedy of
Ortho shall be replacement under Section 6.5 or second sourcing and
manufacturing rights under Sections 7.2 and 7.3.
7.2 CHIRON BREACH OF DELIVERY OBLIGATION.
(a) Subject to the terms of Article VI and notwithstanding
Section 13.7 hereof, if Chiron fails in any material respect to supply to Ortho,
within the periods specified below following the scheduled delivery date, Raw
Material ordered by Ortho pursuant to Article VI for use in Products for
commercial sale in sufficient quantity or in such quality as contained in the
applicable Specifications (a "Supply Shortfall"), Ortho shall give Chiron
written notice of any alleged Supply Shortfall and Ortho shall have the right to
manufacture or acquire the Raw Material involved from an alternate or second
source and the right to make or have made such Raw Material as necessary to
remedy such Supply Shortfall, following the notice and cure periods and pursuant
to the terms provided in paragraph (b) below. (Chiron shall keep Ortho
reasonably advised of its progress in curing any Supply Shortfall and will
notify Ortho as early as reasonably possible if it will be unable to cure a
Supply Shortfall within the respective expiration dates provided in clauses
7.2(b).)
33.
(b) If Chiron shall have been unable to substantially cure a
Supply Shortfall within forty-five (45) days following receipt by it of
written notice thereof by delivering or arranging for the delivery to Ortho
of conforming Raw Material in sufficient commercial quantities to meet
scheduled forecasts, then Chiron hereby grants to Ortho a non-exclusive,
revocable (as herein provided) license to Chiron Know-How, Chiron Patents,
and to the escrow manufacturing process of Section 7.3 to make or have made
Raw Material for use in or sale of Products in the Field of Use. This right
and license shall be terminable by Chiron when and to the extent Chiron is
ready, willing and able to resume supply of the Raw Material involved to
Ortho and its Affiliates and such supplies meet the applicable
Specifications. Notwithstanding the foregoing, the right and license granted
to Ortho shall not be terminable and Ortho may continue to manufacture or to
purchase Raw Material from a second source for the longer of (a) the
remainder of any fixed term alternate sourcing supply agreement or (b) the
period ending when Chiron has demonstrated its ability to fill Ortho's orders
for conforming Raw Material for one year after the latest Supply Shortfall
with respect thereto. When negotiating second source contracts, Ortho will
use its reasonable efforts subject to sound business judgment to protect
Chiron's interest in recovering the exclusive right to manufacture Raw
Material by limiting the duration of such contracts and the minimum quantity
to be supplied thereunder. All costs of acquiring Raw Material from an
alternate source shall be an Ortho Expense and otherwise the provisions of
Section 8.1 shall not be affected. Ortho shall pay to Chiron the full amounts
specified in Section 8.1 below, including, without limitation, payments in
respect of sales of Products containing Raw Material, whether such Raw
Material is supplied by Chiron or by a secondary source pursuant to this
Section 7.2. This Section 7.2 shall not
34.
apply to any failure to deliver Raw Material not intended to be incorporated
in Products for commercial sale.
(c) To effectuate the alternate manufacture provisions of
this Section 7.2, Chiron shall promptly upon Ortho's request, with respect to
any Raw Material, provide Ortho with all information and materials sufficient
to enable Ortho to prepare, file and prosecute with the FDA an establishment
license application for such Raw Material. In addition to such assistance in
respect to obtaining an establishment license, Chiron shall, at Ortho's
request, assist Ortho in preparing to be an alternate manufacturer by
providing Ortho with manufacturing experience. To this end Chiron shall, if
so requested by Ortho, give Ortho sufficient information, assistance and
organisms so that Ortho may run at least three, full scale batch runs.
7.3 ESCROW OF MANUFACTURING PROCESS.
(a) With respect to all Raw Materials, within 30 days of
submitting an establishment license application to the FDA, but in any event
not later than 60 days prior to the first commercial sale of Product
containing or utilizing such Raw Materials, Chiron will place (i) with a
mutually agreed upon escrow agent a description of its process of the
manufacture of each Raw Material in sufficiently clear and detailed terms
that it can be readily followed an carried out by a trained biologist to make
said Raw Material, and (ii) with a depository, all organisms containing the
genetic material necessary to enable such biologist to so make said Raw
Material. Furthermore, should Chiron alter, modify or change its process for
manufacturing said Raw Material, Chiron will amend the description in escrow
and the material deposited to include such alteration, modification or
change. The description held in escrow and the organisms held in a depository
pursuant to this Section 7.3 shall be available to Ortho only in the
35.
event and to the extent necessary to remedy a Supply Shortfall pursuant to
Section 7.2. In such event, Chiron shall, upon reasonable request, provide
reasonable assistance to Ortho, such as instructing appropriately trained
personnel, as may be necessary to enable Ortho to manufacture said Raw
Material. Title to any and all copies or embodiments of the description shall
remain in Chiron. Title to any and all organisms, progeny of organisms, and
genetic material derived from organisms shall remain in Chiron. Ortho shall
not allow, without prior written approval of Chiron, use of the information
in the description, the organism or any genetic material derived therefrom
for any purpose other than carrying out the limited manufacturing rights
granted pursuant to Section 7.2. For example and without limitation, Ortho
shall not allow the alteration or mutation of the organism or its progeny, or
the cloning or sequencing of any genetic material derived from the organism
or its progeny without the prior written approval of Chiron. In the event of
any unauthorized use of the information in the description, the organism, its
progeny or any genetic material derived therefrom, all resulting data,
biological material, and/or inventions shall be the property of Chiron and
shall be promptly and fully delivered to Chiron.
(b) Upon termination by Chiron of the limited manufacturing
rights granted Ortho pursuant to Section 7.2, Ortho shall immediately cease
to use the information supplied by the escrow agent and the organism and
shall return such information and all copies or other embodiments thereof to
the escrow agent, and shall return the organism, its progeny and any genetic
material derived therefrom, to the depository or destroy it, at Chiron's
option.
36.
ARTICLE VIII
PAYMENTS
8.1 PROFIT SHARING.
(a) Within ninety (90) days after the end of each Calendar
Quarter, Ortho shall calculate the Preliminary Profits for such quarter based
upon Net Sales invoiced, Ortho Expenses accrued, Chiron Expenses accrued and
Abbott Immunodiagnostic Payments received by Chiron and Ortho in respect of said
Calendar Quarter.
(b) Within ninety (90) days after the end of each Calendar
Quarter, Ortho shall pay to Chiron (i) an amount equal to Chiron Expenses
accrued during such quarter, plus (ii) an amount equal to fifty percent (50%) of
positive Preliminary Profits, if any, for such quarter, provided, however, that
Ortho may offset against any payment owed to Chiron under this paragraph (b) the
amount of any Abbott Immunodiagnostic Payments made directly to Chiron by Abbott
in respect of such quarter; provided, further, however, that if the sum of such
Abbott Immunodiagnostic Payment exceeds the sum of Chiron Expenses plus fifty
percent (50%) of positive Preliminary Profits, if any, for such quarter, Ortho
shall make no payment to Chiron and Chiron shall pay such excess amount to Ortho
in cash within thirty (30) days after receipt by Chiron of the report from Ortho
for such quarter.
(c) Within ninety (90) days after the end of each Calendar Year
in which Final Profits is a positive amount, Ortho shall pay to Chiron, or
Chiron shall pay to Ortho, as the case may be, an amount equal to the difference
between fifty percent (50%) of such Final Profits and the sum of all positive
Preliminary Profits paid to (or retained by) Chiron pursuant to Section
8.1(b)(ii) above.
37.
(d) If, for any Calendar Year in which Final Profits is a
positive amount, the amount of the payment provided for in paragraph (c) above
exceeds * of such Final Profits, such payment shall include interest on the
amount of such payment at the average prime rate for such year (as reported in
the Wall Street Journal) as if the amount of such payment had been a loan
outstanding for a six month period.
(e) Ortho will establish and maintain the intercompany
transfer price by Ortho to its Affiliates for Products in good faith and,
subject to applicable law and regulation in the relevant foreign jurisdiction
and reasonable sales expenses anticipated to be incurred by its Affiliate, at
a level that is consistent with maximizing profits of each of the parties
under this Agreement. In the event Chiron establishes that Ortho has not
complied with the foregoing, Ortho shall pay to Chiron an amount equal to the
additional sums Chiron would have received if Ortho had so complied. Such
additional payment shall be Chiron's only remedy for any breach by Ortho of
this Section 8.1(e); provided, that continued material failure of Ortho to
comply with this provision based on its intentional or grossly negligent
conduct shall be grounds for termination under Section 12.3 below.
8.2 * For each calendar year in which Final Profit is a negative
amount,
(a) Chiron shall pay to Ortho* * for such calendar year
received (or retained) by it pursuant to Section 8.1(b)(ii) above;
(b) In any calendar year, if the Budget, if any, approved by the
Supervisory Board for such year contemplated a negative Final Profit, Chiron
shall pay
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
38.
to Ortho in cash an amount equal to * of the lesser of actual negative Final
Profit or budgeted negative Final Profit for such year, within 30 days after
receipt by Chiron of Ortho's year end accounting for such calendar year;
(c) In any calendar year through December 31, 1992, if the
Budget, if any, approved by the Supervisory Board did not contemplate a negative
Final Profit, or if the Supervisory Board did not approve a Budget for that
year, Chiron shall not make any payment in cash in respect of such negative
amount to Ortho (other than the reconciling payment, if any, under subsection
8.2(a) above) and no such negative amount shall be carried forward into any
subsequent calendar year;
(d) In any calendar year beginning after December 31, 1992, (A)
if the Supervisory Board did not approve a budget for such year, or (B) if the
Budget, if any, for such year approved by the Supervisory Board did not
contemplate a negative Final Profit, then Chiron shall not make any payment in
cash to Ortho (other than the reconciling payment under subsection 8.2(a) above)
in respect of such negative Final Profit, but * ) of such negative amount
(together with interest on the unrecovered portion thereof at the prime rate
from the date of final year end accounting until recovered in full) may be
charged by Ortho against any future Preliminary or Final Profit amounts that are
positive, provided, that no such charge shall reduce any such future Preliminary
or Final Profit to a negative amount; and
(e) In any calendar year beginning after December 31, 1992,
if the Budget, if any, for such year approved by the Supervisory Board
contemplated a negative Final Profit, and the actual amount of the negative
Final Profit exceeds the negative amount contemplated in such Budget, then
Chiron shall not make any payment to Ortho (other than the reconciling
payment under Section 8.2(a) above) in respect of
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
39.
the amount by which actual negative Final Profit exceeds the budgeted negative
Final Profit, but * of such excess amount (together with interest thereon at
the prime rate from the date of the final year end accounting until recovered in
full) may be charged by Ortho against any future Preliminary or Final Profit
amounts that are positive, provided, that no such charge shall reduce any such
future Preliminary or Final Profit to a negative amount.
8.3 ABBOTT IMMUNODIAGNOSTIC PAYMENTS. Except as disclosed in Exhibit
H, Ortho and Chiron each represents and warrants to the other that neither it
nor any of its Affiliates is a party to any agreement with Abbott or any of
Abbott's Affiliates relating to the development, manufacture, marketing,
distribution or sale of any Raw Material or any Products which contain or
utilize any Raw Material, other than the Abbott Immunodiagnostics Agreement.
Ortho and Chiron each covenants and agrees that, notwithstanding any other
provision to the contrary contained herein, it will not enter into any such
Agreement with Abbott or its Affiliates without the prior written consent of the
other party.
8.4 REALLOCATION OF FINAL PROFITS.
(a) For each calendar year after calendar year 1992 for which
there is no Plan and Budget approved by the Supervisory Board and in which Net
Abbott Immunodiagnostic Payments exceed * and Presumed Abbott Total Profits
exceed * this Section 8.4(a) shall apply. When this Section 8.4(a) applies,
Ortho shall pay to Chiron * of the excess, if any, of Presumed Abbott Total
Profits over the sum of Final Profits plus the Annual Margin.
(b) That portion of any payment due to Chiron under paragraph
(a) that does not exceed * of Net Abbott Immunodiagnostic Payments, if
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
40.
any, for such calendar year shall be paid within 90 days of the end of such
year. The unpaid balance of such payment shall be due and payable from time to
time within 90 days of the end of each succeeding Calendar Quarter for which
there are Net Abbott Immunodiagnostic Payments, in amounts that do not exceed
* of such Net Abbott Immunodiagnostic Payments, together with interest on the
amount so paid calculated at the average prime rate (as reported in the Wall
Street Journal) from the end of the calendar year in respect of which such
payment was calculated, until paid.
(c) For purposes of this Section 8.4, in each year in which
Ortho or its Affiliates do not Ship any Product (other than Products which
contain or utilize HCV Antigens or Antibodies and no other Antigens or
Antibodies) to unaffiliated third parties in Japan, all calculations made under
this Section 8.4 (including, without limitation, the calculation of Final
Profits, the number of Units of Product Shipped by Ortho, and the number of
Presumed Additional Abbott Units) shall be determined by excluding from the
relevant calculation all Units of Product Shipped to unaffiliated third parties
in Japan, and all expenses and revenues associated therewith.
8.5 FORM OF PAYMENT. All payments due to Chiron or Ortho hereunder
shall be paid in United States dollars in immediately available funds, for
Chiron's or Ortho's account, to a bank in the United States designated in
writing by Chiron or Ortho, as the case may be, provided that where calculations
are made with respect to Net Sales or other amounts that are made or expended in
countries outside the United States, all invoiced prices and other component
charges, allowances, credits, costs, taxes and duties used to determine Net
Sales or such other expenses shall be converted from the invoiced currency to
the equivalent in United States dollars, computed at the
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
41.
exchange rate reported in the Wall Street Journal on the last business day in
the Calendar Quarter during which such Net Sales were made or expenses incurred.
8.6 REPORTS.
(a) Within sixty (60) days after the end of each Calendar
Quarter, Chiron shall provide Ortho with a written report setting forth in
reasonable detail Chiron Expenses for such quarter and Abbott Immunodiagnostic
Payments received by Chiron during such quarter.
(b) Within ninety (90) days after the end of each Calendar
Quarter, Ortho shall provide Chiron with a written report setting forth in
reasonable detail the Preliminary Revenues and Preliminary Expenses for such
quarter and the resulting calculation of the amount to be paid to Chiron or to
Ortho pursuant to Section 8.1 above.
(c) Within ninety (90) days after the end of each fourth
Calendar Quarter, Ortho shall provide Chiron with a written report setting forth
in reasonable detail the number, description and aggregate Net Sales for such
quarter; Abbott Immunodiagnostic Payments received by Ortho during such quarter,
and Ortho Expenses for such quarter, and Total Revenues and Total Expenses for
the calendar year ending with such quarter, and the resulting calculation of the
amount to be paid to Chiron or Ortho pursuant to Section 8.1 above; together
with the calculation contemplated by Section 8.4 and data in reasonable detail
in support of such calculation.
8.7 COMBINATION PRODUCTS. In the event a Combination Product is
marketed by Ortho, the Supervisory Board shall agree upon the portion of net
sales of such Combination Product that will be treated as Net Sales for purposes
of Section 8.1 and the portion of Chiron expenses and Ortho expenses in respect
of such Product that
42.
may be charged as Chiron Expenses or Ortho Expenses, respectively. Should the
Supervisory Board be unable to agree to such allocations, the matter shall be
resolved by a certified public accountant in the manner provided for in Section
8.8(b).
8.8 EXAMINATION OF BOOKS.
(a) Chiron and Ortho each shall keep and maintain complete and
accurate books of account in respect of their activities under this Agreement in
accordance with generally accepted accounting principles consistently applied.
The parties shall retain such records for so long as the parties shall mutually
determine.
(b) As soon as reasonably practicable following the execution of
this Agreement, but in no event later than December 31, 1989, the parties shall
agree to a statement of accounting principles and methodologies which shall be
in accordance with generally accepted accounting principles and which shall be
attached hereto as Exhibit A. The agreed statement shall be equally applicable
to all calculations made by each party under this Agreement. In the event of any
disagreement in the preparation of Exhibit A or in future as to such statement
or its application to the activities of either party, such disagreement shall be
resolved by agreement between the independent certified public accounting firm
employed regularly by each party, or, failing such agreement, by another
independent certified public accounting firm selected by such firms. Such
disagreement shall be resolved in a manner which is consistent with the
provisions of this Agreement and Exhibit A or, in the absence of any applicable
provision, in a manner which is fair and reasonable to both parties. Each party
shall provide to the other annually a certification of an independent certified
public accountant to the effect that the calculations made by such party under
this Agreement were consistent with the principles and methodologies set forth
in Exhibit A.
43.
(c) In addition to any other inspection rights of Chiron, Chiron
shall have the right, for any period during which Ortho or its Affiliates shall
be manufacturing or distributing any Product or incurring any Ortho Expenses and
for three years thereafter, to examine the relevant books and records of account
of Ortho and its Affiliates engaged in activities under this Agreement at normal
business hours, upon reasonable demand, to determine whether appropriate
accounting and payment have been made by Ortho hereunder. Any expenses incurred
by Chiron in connection with any such examination shall not be charged as Chiron
Expenses.
(d) In addition to any other inspection rights of Ortho, Ortho
shall have the right for any period during which Chiron or its Affiliates shall
be incurring any Chiron Expenses or receiving Abbott Immunodiagnostic Payments
and for three years thereafter, to examine the relevant books and records of
account of Chiron and its Affiliates engaged in activities under this Agreement
at normal business hours, upon reasonable demand, to determine whether
appropriate accounting and payment have been made by Chiron hereunder. Any
expenses incurred by Ortho in connection with any such examination shall not be
charged as Ortho Expenses.
8.9 INTEREST ON OVERDUE PAYMENTS. If any sum due hereunder is not
paid in full on the due date, * (as published from time to time by the WALL
STREET JOURNAL), or the maximum permitted by law, whichever is lower, shall
accrue and become payable upon any unpaid balance from the date of the debtor's
receipt of a respective written notice from the recipient until such time as
payment is made in full.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
44.
ARTICLE IX
PATENT LITIGATION
9.1 DEFENSE OF PATENT LITIGATION.
(a) In the event that either party or an Affiliate or customer
of either party is sued by a third party charging infringement of a patent
resulting from the manufacture of any Antigens, Antibodies or Products by the
parties or any of their Affiliates, the party which is sued (or whose customer
is sued) shall promptly notify the other.
(b) Each party shall control its own defense in any such patent
litigation. Neither party will object to the intervention of the other in any
such litigation and, to the extent that their interests are consistent, each
will cooperate and provide reasonable assistance to the other with respect to
such litigation. The reasonable costs and expenses of defense of such suit and
all amounts reasonably paid to third parties in damages (including royalties)
and settlement may be charged as an Ortho Expense or a Chiron Expense, as the
case may be, provided, that where applicable, such expenses are fairly allocable
to the Products.
9.2 PATENT CLAIMS AGAINST THIRD PARTIES. If, in the opinion of either
party hereunder, any Patent to the extent licensed hereunder has been infringed
by the making, using or selling of a product of a third party, such party
hereunder shall give notice to the party owning the Patent alleged to be
infringed, whereupon such Patent-owning party may, at its discretion, take such
steps as it may consider necessary to prosecute such infringement. If the
Patent-owning party does not bring suit within ninety (90) days after notice by
the other party, the other party shall then have the right, and will become
entitled by the Patent-owning party, to bring suit and the Patent-owning
45.
party shall cooperate in connection therewith including but not limited to
permitting the other party to sue in its name, if necessary. In any such
litigation brought by either party, the other party shall have the right to be
represented by counsel. All damages recovered as a result of any such
infringement shall be shared equally by Chiron and Ortho. All fairly allocable
expenses incurred in connection with such infringement may be charged as Ortho
Expenses or Chiron Expenses, as the case may be.
ARTICLE X
WARRANTY, INDEMNIFICATION AND INSURANCE
10.1 WARRANTIES. CHIRON DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE, AND ANY WARRANTIES CONCERNING THE INHERENT PROPERTIES OF
ANTIBODIES OR ANTIGENS SUPPLIED HEREUNDER, EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT. CHIRON MAKES NO WARRANTY AS TO THE MERCHANTABILITY
OR FITNESS FOR PARTICULAR PURPOSE OF ANY PRODUCT OF CHIRON KNOW-HOW,
IMPROVEMENTS THEREON OR CHIRON PATENTS.
10.2 PRODUCT LIABILITY AND INDEMNIFICATION.
(a) Notwithstanding the definition of Excluded Expenses in this
Agreement, but subject to the provisions of subsections (b) through (g) below,
there may be included as Ortho Expenses and Chiron Expenses the amount of any
and all liabilities, damages, losses, costs and expenses, including attorney's
fees (collectively, the "Liabilities"), arising from any suit or claim by a
third party alleging personal injury or
46.
property damage based on the use, manufacture or sale of any Product by Ortho or
its Affiliates, directly or indirectly including without limitation any product
liabilities resulting from the inherent properties of any Raw Material or
Product, the use by Ortho or any of its Affiliates of any Antigens or
Antibodies, the development or manufacture of any Product by Ortho or Chiron or
any of their respective Affiliates or the use of any Product manufactured, used
or sold by Ortho, Chiron or their Affiliates by any human being regardless of
whether such use was completed by the parties.
(b) Notwithstanding the provisions of (a) above, Ortho shall
indemnify and hold Chiron and its Affiliates harmless from and against
Liabilities finally determined by a court of competent jurisdiction or by
specific reference in a settlement agreement to which both parties have
consented to have arisen solely from the fault or negligence (but not the strict
liability or liabilities resulting from the inherent properties of any Raw
Material or Product) of Ortho or its Affiliates or licensee (other than Abbott)
relating to the use, manufacture or sale of any Product.
(c) Notwithstanding the provisions of (a) above, Chiron shall
indemnify and holds Ortho and its Affiliates harmless from and against
Liabilities finally determined by a court of competent jurisdiction or by
specific reference in a settlement agreement to which both parties have
consented to have arisen solely from the fault or negligence (but not the strict
liability or liabilities resulting from the inherent properties of any Raw
Material or Product) of Chiron relating to the manufacture of any Raw Material.
(d) For the avoidance of doubt, (i) expenses incurred by either
party as an indemnity pursuant to subsections 10.2(b) or (c) shall not be
included in Ortho Expenses or Chiron Expenses, (ii) reasonable costs and
expenses incurred by the
47.
party defending a claim subject to Section 10.2(b) or (c) shall be included in
Ortho Expenses or Chiron Expenses, as the case may be, and (iii) neither Section
10.2(b) or (c) shall apply if it has been determined by a court of competent
jurisdiction or by specific reference in a settlement agreement to which both
parties consented that there was fault or negligence of both parties, or their
respective Affiliates, as, for example, might be the case if Ortho was found to
be negligent in failing to discover the effect of any negligence of Chiron.
(e) Nothing in Section 10.2(b) or (c) shall require either party
to indemnify the other for lost profits.
(f) Each party shall notify the other promptly upon receipt of
any notice of any product liability claim or lawsuit subject to this Section
10.2. Such notice shall be a condition to any indemnity provided for herein.
Ortho shall be responsible for defending any such claim except as to any claim
for which Ortho expects to seek indemnity under subsection 10.2(c) above, in
which case Chiron shall defend such claim. Chiron or Ortho, as the case may be,
may participate in any such litigation controlled by the other at its election
and expense. Ortho may settle any such suit controlled by it with Chiron's
consent, which shall not be unreasonably withheld. Chiron may settle any such
suit controlled by it with Ortho's consent, which shall not be unreasonably
withheld.
(g) Ortho may charge as Ortho Expenses the reasonable costs of
product liability insurance (if any), out-of-pocket costs of product recall or
market withdrawal and amounts paid to third parties to settle or otherwise
dispose of all liability of both parties in all product liability suits without
limit if Ortho is acting under Subsection 2.4(b)(iii) and otherwise up to a
maximum of * per suit,
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
48.
notwithstanding the definition of Excluded Expenses in this Agreement.
Settlement expenses in excess of such amount shall require the consent of the
Supervisory Board, which if obtained may be charged as Ortho Expenses. Chiron
may charge as Chiron Expenses the reasonable costs of product liability
insurance (if any).
10.3 TRADE DRESS.
Chiron shall indemnify and hold harmless Ortho with respect to any
liabilities arising solely out of the use of Chiron's name and logo on any
labeling, advertising or promotional materials, which use is alleged to infringe
a third party trademark; provided, that this indemnity shall not apply to any
use of Chiron's name or logo other than in the manner provided for in Section
13.3 below. Ortho shall notify Chiron promptly upon receipt of notice of any
such claim or lawsuit, which notice shall be a condition to the indemnity
provided for herein. Chiron shall be responsible for defending any such claim.
Chiron may in its sole discretion settle any such suit. Costs incurred in
connection with any such suit shall not be charged as Chiron Expenses.
ARTICLE XI
CONFIDENTIALITY
11.1 CONFIDENTIALITY PROVISIONS. During the term of this Agreement
and for a period of five years following the termination of this Agreement, each
party shall maintain in confidence all information disclosed by the other party
hereto which such party knows or has reason to know are trade secrets or other
proprietary information of the other, including without limitation information
relating to Antigens and Antibodies, Products, Patents, Know-How, and the
business plans of the other party, and shall not use such trade secrets or
proprietary information except as permitted by this Agreement
49.
or disclose the same to anyone other than those of its Affiliates (or, in the
case of Ortho, only its Principal Affiliates), licensees, employees, agents or
subcontractors as are necessary in connection with such party's activities as
contemplated in this Agreement. Each party shall obtain a written agreement
prior to disclosure to any such Affiliates, employees, licensees (other than
Abbott), agents and subcontractors to hold in confidence and not make use of
such trade secrets or proprietary information for any purpose other than those
permitted by this Agreement. Each party shall use a similar effort to that which
it uses to protect its own trade secrets or proprietary information to ensure
that its Affiliates, licensees (other than Abbott), employees, agents and
subcontractors do not disclose or make any unauthorized use of trade secrets or
proprietary information of the other party hereto. Each party shall notify the
other promptly upon discovery of any unauthorized use or disclosure of the
other's trade secrets or proprietary information.
11.2 EXCEPTIONS. The obligation of confidentiality contained in this
Article XI shall not apply to the extent that (a) any party (the "Recipient") is
required to disclose information by law, order or regulation of a governmental
agency or a court of competent jurisdiction or (b) the Recipient can demonstrate
that: (i) the received information was at the time of receipt already in the
public domain or thereafter enters the public domain other than as a result of
actions of the Recipient, its Affiliates, employees, licensees (other than
Abbott), agents or subcontractors, in violation hereof; (ii) the received
information was rightfully known by the Recipient or its Affiliates (as shown by
its written records) prior to the date of receipt by Recipient from the other
party hereunder; or (iii) the received information is disclosed to the Recipient
or its
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Affiliates on an unrestricted basis by a source unrelated to any party to this
Agreement and not under a duty of confidentiality to the other party.
ARTICLE XII
TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
12.1 TERM.
(a) Unless earlier terminated pursuant to the terms of this
Article XII, this Agreement shall continue to be effective until December 31,
2039, PROVIDED that the term of this Agreement shall be automatically renewed
for a period of five years from such termination date or any renewal termination
date unless one of the parties hereto shall notify the other party, in writing,
five years in advance of such termination date, of its intent to terminate this
Agreement.
(b) Section 12.1(a) notwithstanding, this Agreement with respect
to the European Economic Community shall terminate on a country-by-country basis
on the expiration of the last to expire Patent Right based upon a patent
application pending as of the Effective Date of this Agreement; provided,
however, that until December 31, 2039, each party shall have the right on a
country-by-country basis to renew this Agreement for successive one year periods
by providing the other party with written notice of such renewal prior to any
termination date.
12.2 TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated
upon mutual written agreement between the parties.
12.3 TERMINATION BY DEFAULT. If either party intentionally or as a
result of its own gross negligence defaults in the performance of, or fails to
be in compliance with, any material agreement, condition, or covenant of this
Agreement, and such
51.
default or noncompliance shall not have been substantially remedied, or steps
initiated to substantially remedy the same to the other party's reasonable
satisfaction, within sixty (60) days (subject to the provisions of Section 13.12
hereof) after receipt by the defaulting party of a written notice thereof from
the other party, the party not in default may terminate this Agreement, at the
option of such party and by written notice to the defaulting party.
12.4 TERMINATION BY COURT ORDER. This Agreement may be terminated as
to a particular Antigen or Antibody by the party to be restrained upon the
issuance of a final order or decree issued in a bona fide proceeding by or
before any competent governmental agency or judicial authority which restrains
or enjoins in any material respect the manufacture of said Antigen or Antibody
by Chiron or Chiron's sale or transfer to Ortho, or the purchase or use of said
Antigens or Antibodies by Ortho or the manufacture or sale by Ortho of the
respective Product(s), provided that any such termination shall not apply to
those countries in which the restrained party's performance is not restrained or
impaired by such order or decree.
If prior to the issuance of such decree either party believes that its
issuance cannot be avoided then either party may request the other party to
agree to the termination of this Agreement as provided in the foregoing
sentence, which agreement will not be unreasonably withheld.
12.5 EFFECTIVE DATE OF TERMINATION. Unless otherwise provided herein,
termination by either party pursuant to this Article XII shall be by written
notice to the other party and shall be effective on the date of delivery of such
notice to the other party hereto.
52.
12.6 RIGHTS AND OBLIGATIONS ON TERM, TERMINATION OR SUSPENSION.
(a) Unless expressly provided to the contrary, the provisions of
Articles IX, X and XI (in either case with respect to a cause of action arising
during the term of this Agreement) shall survive the termination of this
Agreement as well as those rights and/or obligations which by their intent or
meaning have a validity beyond the termination of this Agreement.
(b) Termination by either party pursuant to this Article XII
shall not prejudice any other remedy that a party might have in law or equity,
except that neither party may claim compensation for lost opportunity or like
consequential damages arising out of the fact of such termination.
(c) Promptly upon termination of this Agreement pursuant to
Sections 12.2 or 12.4 of this Article, except as to information in the public
domain, each party, its Affiliates and licensees shall return all confidential
documentation and information received from the other party, its Affiliates or
licensors which may be in the possession of such party or that of its Affiliates
or licensees; provided, however, that the returning party may retain an archival
copy of said confidential information in its legal department to enable
compliance with its confidentiality obligations.
(d) Promptly upon termination of this Agreement pursuant to
Section 12.3 of this Article, except as to information in the public domain,
each party, its Affiliates and licensees shall return all confidential
documentation and information received from the other party, its Affiliates or
licensors which may be in the possession of such party or that of its Affiliates
or licensees; provided, however, that the returning party may retain an archival
copy of said confidential information in its legal department to enable
compliance with its confidentiality obligations; and further provided, however,
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that the party not in default need not return any confidential documentation
and information of the defaulting party and, notwithstanding Section 11.1
hereof, may continue to use such documentation and information solely for the
purposes and subject to applicable license and supply terms of this Agreement
upon payment of a reasonable royalty if the default of the defaulting party,
as determined by agreement or admission, binding arbitration, or, in the case
of (a) below, the final and non-appealable decision of a court of competent
jurisdiction was either: (a) the willful or grossly negligent breach of the
confidentiality provisions hereof or (b) the willful or grossly negligent
breach by Chiron of the exclusive nature of the license to Ortho hereunder or
by Ortho of the requirements purchase obligation hereunder, such that the
effect of such breach, to the extent not cured or mitigated, is to deprive
the non-defaulting party of the fundamental benefits of its bargain under
this Agreement.
(e) In the event of a partial termination of this Agreement in
the European Economic Community pursuant to Section 12.1(b) above, each
Principal Affiliate of Ortho that uses or sells Product in the European Economic
Community or makes or has made Product in the European Economic Community for
resale in the European Economic Community, shall, effective as of the date of
such partial termination, no longer be deemed to be a Principal Affiliate for
purposes of this Agreement, but shall be treated simply as an Affiliate of
Ortho.
12.7 ACCOUNTING. Upon any termination of this Agreement pursuant to
this Article XII:
(a) The parties shall, within ninety (90) days after
termination, prepare reports and make payments in a manner substantially the
same as provided for
54.
in Article VIII hereof, to account for unaccounted Net Sales, Abbott
Immunodiagnostic Payments, Chiron Expenses and Ortho Expenses;
(b) The Supervisory Board shall cause to be prepared and furnish
to the parties hereto a statement of any assets owned jointly by the parties
pursuant to this Agreement, other than Patents and Know-How (subject to
paragraph (c) below), and shall proceed as promptly as practicable, but in an
orderly and business-like manner, to liquidate such assets, and to make
arrangements for the assumption of any remaining joint obligations of the
parties under existing licenses and agreements with third parties entered into
pursuant to this Agreement. Subject to the approval of the Supervisory Board,
either party or any Affiliate thereof shall be permitted to acquire all or a
part of such assets upon no less favorable terms than offered by a third party,
or, if no such terms are offered, at fair value.
(c) Except as otherwise expressly provided herein (including,
without limitation, Section 12.6(d)), (i) each party shall remain the owner of
its Patents and Know-How; (ii) all Patents and Know-How that are jointly owned
shall remain jointly owned; and (iii) all express or implied licenses to such
Patents and Know-How hereunder shall terminate.
(d) Until the payments contemplated by this paragraph (d)
have been made in full, Ortho shall pay to Chiron or Ortho may retain, as the
case may be, in the following order of priority, and promptly upon receipt by
Ortho, that portion of Abbott Immunodiagnostic Payments equal to (i) Chiron
Expenses incurred in connection with the performance of Chiron's obligations
under that Agreement, (ii) any accrued by unpaid amounts due to Chiron under
Section 8.4 above, and (iii) any accrued by unpaid amounts due to Ortho under
Section 8.2 above.
55.
(e) The parties shall cooperate in securing an amendment
(which shall be effective promptly upon payment in full of the amounts set
forth in paragraph (d) above) to the Abbott Immunodiagnostics Agreement to
provide for direct payment to Chiron of that portion of the Abbott
Immunodiagnostics Payments equal to the sum of (i) Chiron Expenses incurred
in connection with the performance of Chiron's obligations under that
Agreement and (ii) * ) of the difference between the Abbott
Immunodiagnostic Payments and such Chiron expenses.
(f) Subject to the foregoing, all proceeds of the liquidation
of assets as set forth in paragraph (b) above shall be distributed in the
following order of priority:
(i) to pay, pro rata, all previously unreimbursed
Chiron Expenses and Ortho Expenses;
(ii) to pay to Chiron any accrued but unpaid amounts
due to Chiron pursuant to Section 8.4 above;
(iii) to pay to Ortho any accrued but unpaid losses
carried forward pursuant to Section 8.2 above; and
(iv) * to Chiron and * to Ortho.
12.8 EFFECT OF TERMINATION ON ABBOTT AGREEMENT. Any termination of
this Agreement pursuant to Article XII above shall not, in and of itself,
reduce or terminate the license granted to Abbott under the Abbott
Immunodiagnostics Agreement, including Abbott's right to use any portion of
the Know-How licensed by Chiron to Ortho.
* Confidential portions of material have been omitted and filed
separately with the Securities and Exchange Commission.
56.
12.9 CESSATION OF PRODUCT SALES AND ALLOCATION OF CERTAIN RIGHTS.
(a) CESSATION BY ORTHO OF HCV PRODUCT SALES. Ortho shall have
the right, at any time in any year following the year in which payments have
been made under Section 8.4(a) or in any year in which Ortho may show by
creditable evidence that payments will be made in respect of such year under
such section, to reduce or cease entirely the commercial sale by Ortho and
its Affiliates of any or all Products which contain or utilize HCV Antigens
or HCV Antibodies, provided, however, that in the event Ortho ceases all such
sales, neither party nor any of their respective Affiliates thereafter,
directly or indirectly, may make, have made, use or sell Products which
contain or utilize HCV Antigens or HCV Antibodies, other than pursuant to the
Abbott Immunodiagnostic Agreement, without the express written agreement of
the other party.
(b) MINIMUM SALES OF NON-HCV PRODUCTS. Ortho shall have the
right, at any time in any year following a year in which payments have been
made under Section 8.4(a) or in any year in which Ortho may show creditable
evidence that payments will be made in respect of such year, to reduce or
cease entirely the commercial sale of any or all Products, other than those
which contain or utilize HCV Antigens or HCV Antibodies ("non-HCV Products").
In the event Ortho fails to achieve and maintain a minimum of at least *
per year in the aggregate of Net Sales of all non-HCV Products for any two
consecutive years in which Section 8.4(a) applies, Chiron may cause the
Agreement to become non-exclusive with respect to all non-HCV Products and
all Antigens and Antibodies other than HCV Antigens and HCV Antibodies. In
the event that this Agreement becomes non-exclusive pursuant to this
paragraph (b), Ortho shall grant to Chiron and its Affiliates, upon Chiron's
request, a non-exclusive, irrevocable, worldwide license, with the right to
sublicense, under Ortho
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
57.
Know-How and Ortho Patents to make, have made, use and sell Products, other than
Products which contain or utilize HCV Antigens or HCV Antibodies, within the
Field of Use. The license shall bear a royalty equal to * of Chiron's pretax
profit from the sale or licensing of Products or Antigens or Antibodies subject
thereto.
(c) DEFINITIVE AGREEMENT. At such time as any such license is
granted pursuant to paragraphs (b) above, each party shall negotiate in good
faith and execute a definitive license agreement embodying the provisions
outlined above and such other terms and conditions as are reasonable and
customary.
ARTICLE XIII
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. As of the Effective Date, the License
Agreement and the Distribution Agreement shall be terminated and of no
further force and effect. This Agreement contains the entire agreement of the
parties regarding the subject matter hereof and supersedes all prior
agreements, understandings and negotiations regarding the same. The parties
acknowledge that there have been various statements, both oral and written,
pertaining to the making of this Agreement and the parties' performance
hereunder. The parties agree that neither has relied on any such statements,
but instead have relied upon the representations and warranties explicitly
set forth herein. This Agreement may not be changed, modified, amended or
supplemented except by a written instrument signed by both parties hereto.
13.2 NON-COMPETITION
(a) ABSENCE OF EXISTING COMPETITION. Ortho represents and
warrants to Chiron that, to the best of its knowledge and belief, except as set
forth in Exhibit E hereto and other than the Principal Ortho Affiliates, neither
J&J nor any
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
58.
Affiliate of J&J in the principal countries designated as such on Exhibit E is
presently engaged in the business of developing, manufacturing, marketing or
distributing Immunological assays for the detection of hepatitis viruses or
retroviruses in humans or human samples. As used herein, the best knowledge and
belief of Ortho shall be limited to the actual knowledge and belief of all of
its directors, R. R. Rodenbaugh, Vice President - Business Development and J.
Goldstein, Group Vice President, without any such persons having made any
inquiry or investigation concerning such matters. Ortho represents and warrants
to Chiron that a complete list of its directors is included in Exhibit E hereto.
(b) FUTURE BUSINESS. Ortho covenants and agrees that, except as
expressly set forth below, neither Ortho nor any Affiliate of Ortho listed on
Exhibit D hereto (whether or not such Affiliate has accepted a sublicense
hereunder and agreed to be bound by the terms hereof) nor any of their
respective successors in interest shall engage in the business of developing,
manufacturing, marketing or distributing Antigens or Antibodies or any Product
which contains or utilizes Antigens or Antibodies other than, through Ortho and
with Chiron, as contemplated by this Agreement. Notwithstanding the generality
of the foregoing, Chiron agrees that Ortho's Affiliates, the Advance Care
Products Division, and Johnson & Johnson Professional Diagnostics Division, both
being divisions of Ortho Pharmaceutical Corporation, a New Jersey corporation
("Advance Care" and "J&J Professional Diagnostics", respectively, may, either
independently or with third parties, engage in the business of developing,
manufacturing, marketing or distributing Products which contain or utilize
Retrovirus Antigens for sale into either (i) the over-the-counter consumer
market (the "OTC Field") or (ii) the physicians' office market (the "MD Field")
or (iii) both the OTC Field and
59.
the MD Field; provided, that in the event Advance Care or J&J Professional
Diagnostics elect to engage in such business, Ortho shall, at Chiron's request,
grant back to Chiron (x) an exclusive, irrevocable, worldwide, * license as to
Chiron Know-How and Chiron Patents, (y) a non-exclusive, irrevocable, worldwide,
* license as to Ortho Know-How and Ortho Patents existing as of the date of
this Agreement, to the extent such license is necessary, to utilize such
Retrovirus Antigens in Products and (z) a non-exclusive, irrevocable, worldwide,
* license as to Ortho Patents and Ortho Know-How acquired during the term of
this Agreement as to which the costs thereof are charged as Ortho Expenses; said
licenses in each case of (x), (y) and (z) to make, have made, buy and sell
Products and, in whichever of the OTC Field or the MD Field or both that Advance
Care and/or J&J Professional Diagnostics are so engaged and to do such acts and
things and convey such other rights under this Agreement as may be necessary for
Chiron to engage in such business in such field, either independently or with a
third party.
(c) CONFIDENTIALITY. Ortho further covenants and agrees that
Ortho will not sell, assign, license, transfer or otherwise convey to J&J or any
Affiliate of J&J any Chiron or Ortho Patent or Ortho Know-How; provided,
however, that with the agreement of the receiving Affiliate to be bound by the
terms of this Agreement, Ortho may transfer Ortho Patents or Ortho Know-How to
any Principal Ortho Affiliate; and provided further, that in no event shall
Ortho transfer Ortho Patents or Ortho Know-How to J&J Professional Diagnostics
or Advance Care, unless either or both has waived its right to make the election
referred to in (b) above.
13.3 USE OF PARTIES NAME. Subject to any applicable law or regulation
to the contrary, the parties agree that in all advertising, promotional
materials and
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
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product labeling where the corporate name and/or logo of Ortho appear (other
than as a trademark), the Chiron corporate name and/or logo shall also appear
and be given equal prominence with Ortho's, and neither party's name and/or logo
shall be positioned above the other or positioned further from the center of the
display than the other. The prominence of each party's name and/or logo shall be
in the same proportion to the trademark as is shown on Exhibit G attached
hereto. The foregoing shall not apply to the use of Ortho's name as a trademark,
provided, however, that in the event any variation of the word "Ortho" is used
as all or part of a trademark, then in all advertising, promotional material or
product labeling in which such trademark appears, the corporate name and/or logo
of both parties also shall appear in accordance with the foregoing. Exhibit G is
an example of a label and print advertisement which the parties agree is
reflective of the foregoing agreements. This Section 13.3 shall apply to any
corporate name or logo of Ortho or any successor to Ortho. Except as provided
above, Ortho may advertise the products in its discretion and neither Chiron nor
Ortho shall have any right, express or implied, to use in any manner the other's
name, tradenames, or trademarks.
13.4 ASSIGNABILITY. Notwithstanding any provision to the contrary
contained herein or in the Abbott Immunodiagnostics Agreement, this Agreement
may not be assigned or otherwise transferred nor may rights hereunder be
sublicensed and any purported assignment, transfer or sublicense shall be void
if made, without the prior written consent of each party, which consent, subject
to applicable law, may be granted or withheld in the absolute discretion of such
party. Chiron, however, hereby consents to the Abbott Immunodiagnostics
Agreement. Notwithstanding the foregoing, (a) neither party will unreasonably
withhold its consent to any assignment by the other party
61.
to one of its Affiliates of all of its rights hereunder, and (b) no consent need
be obtained by either party to assign its rights and obligations hereunder to a
successor to substantially all of the business of said party and in such cases
assignment will be automatic. Any permitted or consented assignment, transfer or
sublicense shall be binding upon and inure to the benefit of and be enforceable
by any permitted or consented successors and assignees of the parties hereto.
13.5 SEVERABILITY. If any part of this Agreement shall be held
unenforceable, the remainder of the Agreement shall nevertheless remain in full
force and effect. The parties agree that any such unenforceable part shall, if
possible, be reformed to be rendered enforceable while still substantially
maintaining the intent of the parties.
13.6 FURTHER ASSURANCES . Each party hereto agrees to execute,
acknowledge and deliver such further instruments, and to do all such other acts
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
13.7 FORCE MAJEURE. Neither Ortho nor Chiron shall be liable for any
failure or delay in performance under this Agreement which is due in whole or in
part directly or indirectly to any cause of any nature beyond the reasonable
control of such party, including, without in any way limiting the generality of
the foregoing, fire, explosion, earthquake, storm, flood, strike, lockout, labor
difficulties, war, insurrection, riot, act of God or the public enemy, or any
law, act, order, export or import control regulations, proclamation, decree,
regulation, ordinance, or instructions of local, federal or foreign governmental
or other public authorities, or judgment or decree of a court of competent
jurisdiction (not arising out of breach by such party of this Agreement). In the
event of the happening of such a cause, the party so affected shall give prompt
62.
written notice to the other party, stating the period of time the same is
expected to continue and shall take all reasonable measures to ensure that the
effects of such case of force majeure are kept as minimal as possible.
13.8 NOTICE AND REPORTS. All notices required by this Agreement shall
be in writing. All notices and reports shall be mailed by first class mail
postage prepaid, to the parties at the following addresses or such other
addresses as may be designated in writing by the respective parties:
To Ortho: Ortho Diagnostic Systems Inc.
Route 202
Raritan, New Jersey 08869
Attn: President
Copy to: Johnson & Johnson
Chief Patent Counsel
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933-7003
To Chiron: Chiron Corporation
4560 Horton Street
Emeryville, California 94608
Attn: Office of the President
Copy to: Office of Legal Counsel
Copy to: Brobeck, Phleger & Harrison
One Market Plaza
Spear Street Tower
San Francisco, California 94105
Attn: William G. Green, Esq.
Any notices shall be deemed given when received by the other party or (if sent
by registered or certified first class mail) when sent.
13.9 EXPENSES. Each party shall bear its own expenses if not expressly
agreed otherwise in this Agreement.
63.
13.10 WAIVER. The waiver by either party of a breach of any provision
contained herein shall in no way be construed as a waiver of any subsequent
breach of such provision or the waiver of the provision itself.
13.11 PUBLICITY. Each party agrees to consult with the other and to
seek to coordinate all publicity concerning the existence and terms of this
Agreement to the extent reasonably practical. Neither party shall disclose the
specific financial terms of this Agreement to any third party without the prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld. This Section 13.11 shall not apply to the extent that any
disclosure is (a) of information in the public domain, (b) required to prevent a
third party conflict with this Agreement or to comply with any applicable law,
regulation or order of a bona fide government authority or (c) made under a
confidentiality agreement binding upon the recipient to whom such disclosure is
reasonably necessary (i) in order to define the scope of rights which could be
granted to such recipient without violating this Agreement or (ii) for any
similar valid business purpose. The parties acknowledge that Chiron may file
this document with the Securities and Exchange Commission pursuant to applicable
regulations, provided that in so doing Chiron shall use reasonable efforts to
delete financial terms to the extent permitted by law or regulation.
13.12 RELATIONSHIP OF THE PARTIES. Both parties are independent
contractors under this Agreement. Notwithstanding the parties' agreement to
share certain profits relating to their collaboration, nothing contained in this
Agreement is intended nor is it to be construed so as to constitute Chiron and
Ortho as partners or joint venturers with respect to this Agreement. Employees
of each party remain employees of said party and shall be considered at no time
agents of or render a fiduciary duty to the
64.
other party. Neither party hereto shall have any expenses or implied right or
authority to assume or create any obligations on behalf of or in the name of the
other party or to bind the other party to any other contract, agreement or
undertaking with any third party.
13.13 DISPUTE RESOLUTION.
(a) DISPUTES. The parties recognize that a bona fide dispute
as to certain matters may from time to time arise during the term of this
Agreement which relate to any party's rights and/or obligations hereunder. In
the event of the occurrence of such a dispute, any party may, by written notice
to the other, have such dispute referred to their respective officer designated
below or their successors, for attempted resolution by good faith negotiations
within thirty (30) days after such notice is received. Said designated officers
are as follows:
For Ortho - President or Chairman
For Chiron - President
In the event the designated officers are not able to resolve such
dispute within such thirty-day period, any party may invoke the provisions of
paragraph (b) below within such thirty day period.
(b) ALTERNATIVE DISPUTE RESOLUTION. Any dispute, controversy
or claim arising out of or relating to the validity, construction,
enforceability or performance of this Agreement, shall be settled by binding
Alternative Dispute Resolution ("ADR") in the manner described below:
(i) If a party intends to begin an ADR to resolve a
dispute, such party shall provide written notice (the "ADR Request") to counsel
for the other party informing such other party of such intention and the issues
to be resolved.
65.
From the date of the ADR Request and until such time as any matter has been
finally settled by ADR, the running of the time periods contained in Section 8.2
as to which party must cure a breach of this Agreement shall be suspended as to
the subject matter of the dispute.
(ii) Within ten (10) business days after the receipt of
the ADR Request, the other party may, by written notice to the counsel for
the party initiating ADR, add additional issues to be resolved. Within twenty
(20) business days following the receipt of the ADR Request a neutral shall
be selected by the then-President of the Center for Public Resources ("CPR"),
680 Fifth Ave., New York, New York 10019. The neutral shall be an individual
who shall preside in resolution of any disputes between the parties. The
neutral selected shall be a member of the Judicial Panel of the CPR and shall
not be an employee, director or shareholder of any party or of an Affiliate
of either party. Either party shall have ten (10) business days from the date
the neutral is selected to object in good faith to the selection of that
person. If any party makes such an objection, the then-President of the CPR
shall, as soon as possible thereafter, elect another neutral under the same
conditions set forth above. This second selection shall be final.
(iii) No later than ninety (90) business days after
selection, the neutral shall hold a hearing to resolve each of the issues
identified by the parties and shall render the award as expeditiously thereafter
as possible but in no event more than thirty (30) days after the close of
hearings. In making the award the neutral shall rule on each disputed issued and
shall adopt in whole or in part the proposed ruling of one of the parties on
each disputed issue.
66.
(iv) It is the intention of the parties that discovery,
although permitted as described herein, will be extremely limited except in
exceptional circumstances. The neutral shall permit such limited discovery
necessary for an understanding of any legitimate issue raised in the ADR,
including the production of documents. Each party shall be permitted but not
required to take the deposition of not more than five (5) persons, each such
deposition not to exceed six (6) hours in length. If the neutral believes that
exceptional circumstances exist, and additional discovery is necessary for a
full and fair resolution of the issues, he or she may order such additional
discovery as he or she deems necessary. At the hearing the parties may present
testimony (either by live witness or deposition) and documentary evidence. The
hearing shall be held at such place as agreed upon by the parties of if they are
unable to agree at a place designated by the neutral. Each party shall have the
right to be represented by counsel. The neutral shall have sole discretion with
regard to the admissibility of any evidence and all other matters relating to
the conduct of the hearing. The neutral shall, in rendering his or her decision,
apply the substantive law of New Jersey without giving effect to its principles
of conflicts of law, and without giving effect to any rules or laws relating to
arbitration. The decision of the neutral shall be final and not appealable,
except in cases of fraud or bad faith on the part of the neutral or any party to
the ADR proceeding in connection with the conduct of such proceedings.
(v) At least fifteen (15) business days prior to the date
set for the hearing, each party shall submit to the other party and the neutral
a list of all documents on which such party intends to rely in any oral or
written presentation to the neutral and a list of all witnesses, if any, such
party intends to call at such hearing and a brief summary of each witness's
testimony. At least five (5) business days prior to the
67.
hearing, each party must submit to the neutral and serve on the other party a
proposed ruling on each issue to be resolved. Such writing shall be limited to
representing the proposed rulings, shall contain no argument or analysis of the
facts of issues, and shall be limited to not more than fifty (50) pages. Not
more than five (5) business days following the close of hearings, the parties
may each submit post hearing briefs to the neutral addressing the evidence and
issues to be resolved. Such post hearing briefs shall not be more than ten (10)
pages.
(c) COSTS AND FEES. The neutral shall determine the
proportion in which the parties shall pay the costs and fees of the ADR. Each
party shall pay its own costs (including, without limitation, attorneys fees)
and expenses in connection with such ADR.
(d) CONFIDENTIALITY. The ADR proceeding shall be
confidential and the neutral shall issue appropriate protective orders to
safeguard each party's Confidential Information. Except as required by law, no
party shall make (or instruct the neutral to make) any public announcement with
respect to the proceedings or decision of the neutral without the prior written
consent of each other party. The existence of any dispute submitted to ADR, and
the award of the neutral, shall be kept in confidence by the parties and the
neutral, except, as required in connection with the enforcement of such award or
as otherwise required by applicable law.
(e) AWARD. Any judgment upon the award rendered by the
neutral may be entered in any court having jurisdiction thereof.
13.14 CHOICE OF LAW. This Agreement shall be construed and
interpreted according to the laws of the State of New Jersey.
68.
13.15 REPRESENTATIONS. It is the mutual desire and intent of the
parties to provide certainty as to their future rights and remedies against each
other by defining the extent of their mutual undertakings as provided herein.
Each of the parties hereto acknowledges and agrees (i) that no representation or
promise not expressly contained in this Agreement has been made by the other
party hereto or by any of its agents, employees, representatives or attorneys;
(ii) that this Agreement is not being entered into on the basis of, or in
reliance on, any promise or representation, expressed or implied, covering the
subject matter hereof, other than those which are set forth expressly in this
Agreement; and (iii) that each party has had the opportunity to be represented
by counsel of its own choice in this matter, including the negotiations which
preceded the execution of this Agreement.
13.16 EXECUTION OF AGREEMENT AND GUARANTEE BY JOHNSON AND JOHNSON.
The obligations of Chiron under this Agreement are expressly conditioned upon
(i) the execution by J&J of an Agreement, in form and substance satisfactory to
Chiron, whereby J&J *
and (ii) the execution of a guarantee by J&J of
payments due to Chiron under Article VIII.
13.17 CAPTIONS. Paragraph captions are inserted for convenience only
and in no way are to be construed to define, limit or affect the construction or
interpretation hereof.
13.18 COUNTERPARTS. This agreement (a) may be executed by each party
hereto upon a separate copy, in which event all of such copies shall constitute
a single
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
69.
counterpart of this Agreement; (b) shall become effective when each of the
parties has signed the same or a separate copy hereof; and (c) may be executed
in two or more counterparts, in which event it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
13.19 IMPORT AND EXPORT CONTROLS. Both parties shall comply with all
applicable laws and regulations governing the shipment and importation of
pharmaceutical products.
13.20 EUROPEAN ECONOMIC COMMUNITY. The parties jointly shall notify
this Agreement to the Commission of the European Economic Community and shall
apply for and cooperate in securing a negative clearance and/or exemption under
Section 85(3) of the Treaty of Rome unless counsel is of the opinion that the
Agreement is exempt pursuant to the terms of one or more block exemptions.
Chiron and Ortho shall select mutually acceptable counsel to prepare and
prosecute such submission on behalf of both parties. In the event the parties
are unable to agree with respect to any issue relating to the notification,
counsel for the parties shall attempt to resolve the issue by adopting a
position on behalf of the parties which most closely reflects the existing
provisions of this Agreement and shall not adopt any other position; provided,
however, that if the parties ultimately are unable to agree, each party shall be
free to submit its own views with respect to such disputed issue. Any expenses
incurred by either party in connection with such submission may be charged as
Chiron Expenses or Ortho Expenses, as the case may be. In the event such
exemption is granted but expires before this Agreement would otherwise
terminate, the parties shall jointly apply for and cooperate in obtaining a
renewal of such exemption in the manner provided above.
70.
13.21 GENERAL WARRANTY. Subject to the limitations set forth herein,
each party warrants that it has the right to enter into this Agreement and grant
the rights and undertake the obligations set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.
CHIRON CORPORATION
By. /s/ Gregory Lawless
------------------------------------
Gregory Lawless
President
ORTHO DIAGNOSTIC SYSTEMS INC.
By: /s/ William W. Crouse
------------------------------------
William W. Crouse
President
71.
EXHIBIT A
ACCOUNTING METHODOLOGY (SECTION 8.8)
A-1.
EXHIBIT B
EXISTING AGREEMENTS
Pursuant to an Agreement between Cooper Development Company ("CDC") and
Chiron Corporation ("Chiron"), dated August 4, 1986, Chiron granted to CDC a
"Semi-exclusive License in the Territory to use the Chiron technology to
manufacture, use and sell Test Kits within the Field of Use."
Definitions:
"CHIRON REAGENTS" shall mean the following core and surface antigens:
p25gag; p3lpol; env 2; env 5; all as further described in Exhibit A hereto.
"DIPSTICK TEST" shall mean a test kit (be it in EIA or FLIP format) used to
detect the presence of antibodies to viruses associated with AIDS, as described
and configured in the IND Application.
"FIELD OF USE" shall mean diagnostic and/or blood bank screening for AIDS
in any health care market using Test Kits, including, but not restricted to,
blood banks, alternative testing sites and hospitals (including transfusion
centers, transplantation centers, emergency rooms and plasmapheresis centers).
B-1.
"FLIP TEST" shall mean an assay system containing fluorescent liposomes for
signal measurements to detect the presence of antibodies to viruses associated
with AIDS, but excluding (a) systems containing fluorescence assays not based on
liposome technology, (b) liposome tests without fluorescent signal measures, or
(c) systems based on particle concentration assays.
"SEMI-EXCLUSIVE LICENSE" shall mean a license containing the right to
exclude all other persons except (a) Chiron and its Affiliates and (b) one
licensee (other than CDC) and the affiliates of such other licensee (which shall
not have the power to sublicense) selected by Chiron.
"TERRITORY" shall mean all countries except the Republic of Korea.
"TEST KITS" shall mean any and all blood screening or diagnostic Dipstick
Test and FLIP Test, the development, manufacture, sale or use of which utilize
Chiron Technology or Chiron Reagents and which detect the presence of antibodies
to viruses associated with AIDS.
B-2.
"CHIRON TECHNOLOGY" shall mean all of the patent rights and/or
rights to patent applications ("Patents"), inventions, information, data,
trade secrets, know-how and other proprietary rights owned by Chiron at
present directly related to the development, identification, manufacture,
production, use and marketing of the Chiron Reagents and Test Kits and Minor
Improvements thereon, as hereinafter defined, developed by Chiron during the
term of this Agreement.
"MAJOR IMPROVEMENTS" shall mean those improvements in the Chiron
Technology which relate to the Chiron Reagents and which if they were to be
incorporated into Test Kits to be distributed in the United States would
require the approval of an IND or successor approved by the Office of
Biologics the U.S. Food and Drug Administration ("F.D.A.") or the equivalent
approved by that other bureau of the FDA as may have jurisdiction before Test
Kits incorporating such improvements could be marketed.
"MINOR IMPROVEMENTS" shall mean those improvements in the Chiron
Technology which relate to the Chiron Reagents and which if they were to be
incorporated into Test Kits to be distributed in the United States would not
require the approval of an IND or successor approved by the Office of
Biologics of the U.S. Food and Drug Administration ("F.D.A.") or the
equivalent approved by that other bureau of the FDA as may have jurisdiction
before Test
B-3.
Kits incorporating such improvements could be marketed.
LICENSING OF MAJOR IMPROVEMENTS. In the event Chiron develops Major
Improvements to Chiron Technology, Chiron shall consider CDC as a possible
licensee, consistent with third party rights, of such Major Improvements, and
shall discuss with CDC mutually acceptable license rights.(1)
- --------------------------
1) Chiron agrees that the rights of Ortho under its agreement
with Chiron will constitute third party rights with respect to which the
rights of CDC to Major Improvements (as defined in the Chiron/CDC Agreement)
are subject.
B-4.
Pursuant to an agreement between Organon Teknika N.V. ("OT"), and
CHIRON Corporation ("CHIRON"), dated August 17, 1984, CHIRON granted to OT a
"non-exclusive license, with right to grant sublicenses, under such Licensed
Patents and to such Licensed Technology as are necessary to enable OT to use
the Antigen to make, have made, and use and sell Product(s) within the
Territory."
Definitions:
"Antigen" shall mean the hepatitis B core antigen falling within
the scope of the Licensed Patents and developed by CHIRON using recombinant
DNA technology.
"Product(s)" shall mean any product produced by OT, or by any third
party under rights derived from OT, which contains the Antigen in any
quantity and is intended to be used in substantially the form produced for
the purpose of assisting in the diagnosis of disease in humans.
"Territory" shall mean all of the countries of the world except the
Republic of Korea.
B-5.
ANTICIPATED AGREEMENT
(Such agreement shall be of five years or less duration and shall
not permit transfer of access to the relevant reagents or technology to
nonaffiliates by assignment, sublicense, research contract or by operation of
law in a merger, liquidation, sale of business or change in control of the
contract partner.)
Lucky Ltd.
Non-exclusive license within the Republic of Korea to sell
diagnostic ELISA test kits containing existing CHIRON AIDS reagents.
B-6.
EXHIBIT C
CRITERIA FOR CONTRACTUAL AGREEMENTS
Establishment and product license applications are approved
based upon, among other things, demonstration that all manufacturing and
testing steps for each licensed product are performed in licensed facilities
and/or under the strict control and supervision of the licensee Title 21,
Code of Federal Regulations, Section 600.3(u). Therefore, in order to receive
approval for the performance of certain manufacturing steps at facilities
other than those included in your establishment license, it will be necessary
to submit a written agreement between you and each participating outside
facility. The agreement must be dated and signed by responsible individuals
at each establishment and should contain the following specifications:
1. A complete description of all steps that will be
performed at the outside facility including the operating procedures that
will be used and the degree of responsibility provided by each establishment.
This section should include details related to packaging and labeling for
shipment to and from the outside facility, manner of shipment (including
temperature monitoring in the shipping container), storage and handling.
2. Designation of a responsible individual from your
establishment that will supervise the operations performed at the outside
facilities. Please indicate whether such supervision will be direct
(on-site), or by other means that will assure us such operations are
performed under the control of the licensed manufacturer.
3. A description of all standard operating procedures and
manufacturing record forms (batch production records) that will accompany the
product to and from the outside facility. There should be provisions for you
to receive complete copies of all batch production records, including test
and laboratory observation data for each
C-1.
lot of product manufactured. A complete record of manufacturing of each lot
of product must be maintained by your establishment. Summaries of the results
of testing or manufacturing operations are not acceptable in lieu of complete
copies of manufacturing records.
4. If the product is to be stored and distributed at outside
facilities, a complete description of the distribution and recall system
should be provided.
5. The agreement should include permission for authorized
representatives of this agency to inspect those portions of the outside
facility related to manufacturing and testing of the product.
6. Written assurance that each outside manufacturing
establishment complies with Good Manufacturing Practice Regulations (GMPs)
should also be provided
7. Indication whether the outside facility is registered
with this Agency should be provided.
C-2.
EXHIBIT D
PRINCIPAL ORTHO AFFILIATES
BELGIUM ITALY
Ortho Diagnostic Systems N.V. Ortho Diagnostic Systems S.p.A.
Antwerpseweg 19-21 Via Palmanova, 67
B-2340 Beerse, Belgium 20132 Milano, Italy
CANADA JAPAN
Ortho Diagnostic Systems, Inc., Ortho Diagnostic Systems K.K.
a Division of Ortho Pharmaceutical 1-38, Shiba-Koen, 3-Chome
(Canada) Ltd. Minato-Ku, Tokyo, Japan
19 Green Belt Drive
Don Mills, Ontario, Canada
M3C 1L9
FRANCE ENGLAND
Ortho Diagnostic Systems, S.A. Ortho Diagnostic Systems Ltd.
69, Rue De La Belle Etoile Enterprise House
ZAC Paris Nord II Station Road
95700 Roissy En France Loudwater
France High Wycombe
Bucks, HP10 9UF
England
GERMANY JOHNSON & JOHNSON PROFESSIONAL
DIAGNOSTICS, INC.
Ortho Diagnostic Systems 2675 Long Lake Road
G.m.b.H. Roseville, Minnesota 55113
Karl-Landsteiner-Strasse 1
P.O. Box 13 40
D-6903 Neckargemund
West Germany
SPAIN ADVANCED CARE PRODUCTS, a Division of
Ortho Pharmaceutical Corporation
Ortho Diagnostic Systems, a Route 202
Division of Johnson & Johnson, S.A. Raritan, New Jersey 08869
Crta. Madrid-Valencia KM 24,700
28500 Arganda del Rey
Madrid, Spain
D-1.
EXHIBIT E
CERTAIN ORTHO AFFILIATES
*
ORTHO DIRECTORS
Mr. Ronald G. Gelbman
Company Group Chairman
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
Mr. William W. Crouse
President
Ortho Diagnostic Systems, Inc.
U.S. Route 202
Raritan, New Jersey 08869
Mr. Robert L. Zocca
General Attorney and Ortho Diagnostics Board Attorney
Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
PRINCIPAL COUNTRIES
*
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
E-1.
EXHIBIT F
EXCLUDED RAW MATERIALS
1. *
2. *
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
F-1.
ORTHO* HCV ANTIBODY
ELISA TEST SYSTEM
EXHIBIT G
IMMUNOENZYME ASSAY FOR DETECTION OF ANTIBODY TO HEPATITIS C VIRUS
(ANTI-HCV) IN HUMAN SERUM OR PLASMA
STORE AT 2 TO 8 DEG.C
480 TEST KIT CONTAINS:
5 Microwell Plates Coated with Hepatitis C Virus (HCV) Recombinant Antigen
(8 strips of 12 wells each in holder)
10 packets PBS Buffer--phosphate-buffered saline (PBS) in crystalline form
2 vials Polysorbate 20 (4.0 ml each)--polyoxyethlhylene sorbitan
monolaurate
1 bottle Specimen Diluent (150 ml)--phosphate-buffered saline with protein
stabilizers
1 bottle Conjugate (Murine Monoclonal) (125 ml)--anti-human IgG (murine
monoclonal) conjugated to horseradish peroxidase with protein
stabilizers
2 vials OPD Tablets (15 tablets per vial)--contains o-phenylenediamine+2HCLI
1 bottle Substrate Buffer (155 ml)--citrate-phosphate buffer with 0.02%
hydrogen peroxide
1 vial Positive Control (Human) (1.0 ml)
Source: Heat-treated human serum or plasma containing anti-HCV and
nonreactive for hepatitis B surface antigen (HBsAg) and antibody to
human Immunodeficiency virus type 1 (HIV-1)
Preservative: 0.02% thimerosal
1 vial Negative Control (Human) (1.0 ml)
Source: Human serum or plasma nonreactive for HBsAg, antibody to HIV-1
and anti-HCV
Preservative: 0.02% thimerosal
CAUTION: HANDLE AS IF CAPABLE OF TRANSMITTING INFECTIOUS AGENTS.
For In Vitro Diagnostic Use
Co-developed with Chiron Corporation
Emeryville, CA 94608
[LOGO] [LOGO]
Manufactured by
Ortho Diagnostic Systems Inc.
A Johnson & Johnson Company
Raritan, NJ 08869
+ Trademark
U.S. License 156
EXHIBIT H
CERTAIN ABBOTT AGREEMENTS
1. JOHNSON & JOHNSON AND ABBOTT, EXECUTED 17 AUGUST 1989
Assuring the pass through to each other of HCV Antigen and Antibody
technology employed in each parties products.
2. ADVANCED CARE PRODUCTS, DIVISION OF ORTHO PHARMACEUTICAL CORPORATION AND
ABBOTT, EXECUTED 17 AUGUST 1989
General development and marketing agreement concerning
over-the-counter diagnostic products which, in its generality could
include Products.
AMENDMENT TO COLLABORATION AGREEMENT
THIS AMENDMENT dated as of the 22nd day of December, 1989 (the
"Amendment"), to the Agreement dated as of the 17th day of August, 1989 (the
"Agreement"), is made by and between CHIRON CORPORATION ("Chiron"), a
Delaware corporation with offices at 4560 Horton Street, Emeryville,
California 94608, and ORTHO DIAGNOSTIC SYSTEMS INC. ("Ortho"), a New Jersey
corporation with offices at Route #202, Raritan, New Jersey 08869.
RECITALS
A. Chiron and Ortho have entered into the Agreement to
collaboratively develop and commercialize certain diagnostic products related
to hepatitis viruses and retroviruses.
B. Chiron and Ortho have identified certain assets held by E.I.
du Pont de Nemours & Co. ("Du Pont"), a Delaware corporation with offices at
1007 Market Street, Wilmington, Delaware 19898 ("Du Pont"), which Chiron and
Ortho believe would be useful in their collaboration.
C. Chiron and Ortho wish to buy such assets from Du Pont, and Du
Pont is willing to sell such assets to Chiron and Ortho.
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
1.
D. Chiron and Ortho believe that the purchase of such assets
requires certain modifications to the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree to amend the Agreement,
effective as of the Purchase Date, as follows:
ARTICLE I
DEFINITIONS
1.1 ADDITIONAL DEFINITIONS. Article I of the Agreement is hereby
amended to add the following new definitions:
"PURCHASE AGREEMENT shall mean the agreement attached hereto
as Exhibit A by and among Du Pont, Chiron and Ortho.
PURCHASED INTANGIBLE ASSETS shall mean those assets
identified in Article 2, subparagraphs 2.01 through 2.09 (except
for written materials delivered in connection with subparagraph
2.07) of the Purchase Agreement, except to the extent such assets
are incapable as a matter of law of being effectively transferred
independently of a transfer of the business of making and selling
Products.
PURCHASE DATE shall mean the date upon which the Purchase
Agreement is fully executed.
CHIRON PURCHASE PRICE shall mean Nine Million Dollars
($9,000,000).
ORTHO PURCHASE PRICE shall mean the sum of (i) Three Million
Dollars ($3,000,000), the price Ortho must pay for the Purchased
Intangible Assets, and (ii) the price Ortho must pay for all other
assets in accordance with the Purchase Agreement.
2.
DU PONT PRODUCTS shall mean those products identified in
Exhibit B attached hereto, together with all improvements and
additions thereto and replacements thereof developed within
the scope of this Agreement.
DU PONT BUSINESS ASSETS shall mean the 'Business Assets'
as such term is defined in the Purchase Agreement.
MANUFACTURING INFORMATION, RESEARCH AND DEVELOPMENT
INFORMATION, MANUFACTURING AND SUPPLY AGREEMENT, and all other
terms defined in the Purchase Agreement and not otherwise
defined herein shall have the respective meanings assigned to
such terms in the Purchase Agreement."
1.2 AMENDMENTS TO DEFINITIONS. Article I of the Agreement is
hereby further amended as follows:
(a) Section 1.16 is amended to read as follows:
"FIELD OF USE shall mean the use of any
(a) Immunoassay for the direct or indirect detection of
retroviruses or hepatitis viruses in humans or human samples,
and (b) whether or not included in the foregoing, any
Du Pont Product."
(b) Section 1.19(b) is amended to delete the phrase
", except those listed in Exhibit F."
(c) Section 1.19(e) is amended to delete the phrase
", except those listed in Exhibit F."
(d) Section 1.39 is amended to add at the end thereof:
", including without limitation the Du Pont Products."
3.
ARTICLE II
PURCHASE AND DISPOSITION OF DU PONT ASSETS
2.1 AMENDMENTS TO ARTICLE III. Article III of the Agreement is
hereby amended to add a new Section 3.2 to read in its entirety as follows:
"3.2 DU PONT BUSINESS ASSETS.
(a) Chiron and Ortho shall purchase from Du Pont the
Purchased Intangible Assets and shall own, use and dispose
of such asssets in accordance with the terms of this
Agreement and the Purchase Agreement. Irrespective of
either party's Purchase Price contribution, each party shall
have the right, independent of the other, to utilize such
Purchased Intangible Assets, together with all other Du Pont
Business Assets, to the degree necessary or appropriate to
carry out the purposes contemplated in this Agreement. Any
sublicensing or other commercial use by either party of the
Du Pont Business Assets other than to carry out the purposes
of this Agreement shall require the prior written consent of
the other party.
(b) In accordance with Paragraph 3.01 of the Purchase
Agreement, Chiron shall pay Du Pont the Chiron Purchase
Price and Ortho shall pay to Du Pont the Ortho Purchase Price.
*
* Confidential portions of material have been omitted
and filed separately with the Securities and Exchange
Commission.
4.
(c) Each of Ortho and Chiron agrees to indemnify the
other and to hold it, its officers, directors and
affiliates harmless from and against any loss, claim,
damage or expense incurred as a result of such party's
failure to comply with any of its obligations to Du
Pont pursuant to the Purchase Agreement.
(d) Any intangible property developed as a result
of any improvement, repair, revision or modification
of the Purchased Intangible Assets shall be owned,
used and disposed of in accordance with the terms of
this Agreement and the Purchase Agreement, provided
that such improvement, repair, revision or modification
(i) uses Du Pont Manufacturing Information or Research
and Development Information and (ii) is paid for
using funds charged as an Ortho Expense or a Chiron
Expense.
(e) Without the prior written consent of the other
party, neither Ortho nor Chiron will (i) supplement,
amend or enter into any collateral agreement with Du
Pont regarding the Purchase Agreement or the
Manufacturing and Supply Agreement or (ii) amend any
third-party license or other agreement assigned or
transferred by Du Pont pursuant to the Purchase
Agreement with respect to the Purchased Intangible
Assets.
(f) The Du Pont Epstein-Barr Test in micro-titre
format (as identified as Schedule 1.01 to the
Purchase Agreement),
*
* Confidential portions of material have been
omitted and filed separately with the
Securities and Exchange Commission.
5.
(g) Ortho and Chiron agree to exercise jointly the
rights and powers granted to them pursuant to Section
20.11 of the Purchase Agreement and to do all things
necessary to act jointly and in common pursuant to that
Section."
ARTICLE III
SUPPLY OF ANTIGENS AND ANTIBODIES
3.1 AMENDMENT TO SECTION 6.1. Section 6.1 of the
Agreement is hereby amended to delete in its entirety the third
sentence thereof and to substitute therefor the following:
"Notwithstanding the foregoing, Chiron need not manufacture
and Ortho need not obtain from Chiron any of the Raw Materials
contained in the Products identified in Exhibit F hereto until
and unless the Supervisory Board determines that a Raw
Material shall be manufactured by Ortho, Chiron or one of
their Affiliates, in which event Chiron shall have the first
right to manufacture and supply such Raw Material pursuant to
the terms of this Agreement."
ARTICLE IV
TERMINATION
4.1 AMENDMENTS TO ARTICLE XII. Article XII shall be
amended as follows:
6.
(a) Section 12.9(c) is amended to insert after the words
"license agreement" in the third line thereof the words "or other agreement."
(b) A new Section 12.10 is hereby added to read in its
entirety as follows:
"12.10 EFFECT OF TERMINATION ON DU PONT BUSINESS
ASSETS.
(a) In the event Ortho elects to terminate its exclusive
rights under this Agreement or such rights become non-exclusive
pursuant to Section 12.9(b) hereof, Chiron shall have the
right in its election to operate the collaborative business
and to use the Du Pont Business Assets for that purpose
pursuant to Section 12.9(b) hereof. If Chiron elects to
exercise this option, Chiron shall have the right to purchase
from Ortho any and all Du Pont Business Assets (including all
improvements and additions thereto and replacements thereof)
then owned by Ortho at
*
If this
Agreement is otherwise terminated in accordance
with its terms, the Du Pont Intangible Assets, including
improvements, repairs, revisions or modifications pursuant to
Section 3.2(d) hereof, will be included within the assets
jointly owned by the parties under Section 12.7 of this
Agreement, except that any patents and know-how owned by
Chiron and Ortho in accordance with the terms of Section 3.2
hereof should be accounted for pursuant to Section 12.7
(notwithstanding subsection (c) thereof), and all express or
implied licenses to use such patents and know-how under this
Agreement, as amended, shall terminate.
(b) In the event of termination or partial termination of
this Agreement, Ortho agrees
* = Confindential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
7.
to do all things necessary (including without limitation
executing and delivering notices and other documents requested
by Chiron or Du Pont) to enable Chiron to acquire and exercise
the jointly exercisable rights and powers granted to Ortho and
Chiron pursuant to Section 20.11 of the Purchase Agreement."
ARTICLE V
EXHIBITS
5.1 AMENDMENTS TO EXHIBITS. Exhibit F to the Agreement is
hereby deleted and replaced by a new Exhibit F in the form attached hereto.
ARTICLE VI
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. The Agreement as hereby amended
contains the entire agreement of the parties regarding the subject matter
hereof and supersedes all prior agreements, understandings, representations
and negotiations regarding the same. With the exception of those sections
expressly amended by this Amendment, all terms and conditions set forth in
the Agreement are hereby restated and remain in full force and effect, and
all references herein and hereafter to this Agreement shall be to this
Agreement as hereby amended. The Agreement as hereby modified may not be
changed, modified, amended or supplemented except by a written instrument
signed by the parties hereto.
8.
6.2 NO RELIANCE. Each party hereto acknowledges and
represents that it has relied solely on its own evaluation of the Du Pont
Business Assets in entering into this Amendment and the transactions
contemplated herein.
6.3 FURTHER ASSURANCES. Each party hereto agrees to execute,
acknowledge and deliver such further instruments, and to do all such other
acts as may be necessary or appropriate in order to carry out the purposes
and intent of this Amendment or the Agreement as hereby amended.
6.4 CONDITION TO EFFECTIVENESS. This Amendment shall be
effective only upon the execution and delivery of the Purchase Agreement;
provided, that in the event no Closing shall occur thereunder, this Amendment
shall be null and void and of no further effect.
6.5 COUNTERPARTS. This Amendment may be executed in two or
more counterparts, in which event it shall not be
9.
necessary in making proof of this Amendment to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first written above.
CHIRON CORPORATION
BY: /s/ Gregory Lawless
--------------------------
Gregory Lawless
President
ORTHO DIAGNOSTIC SYSTEMS INC.
By: /s/ William W. Crouse
--------------------------
William W. Crouse
President
10.
EXHIBIT B
DU PONT PRODUCTS
Lysate-based ELISA for HIV-1 antibodies
Lysate-based ELISA for HIV-2 antibodies
Lysate-based Western Blot for HIV-1 antibodies
Lysate-based Western Blot for HIV-2 antibodies
Lysate-based ELISA for HTLV-1 antibodies
Lyzate-based Western Blot for HTLV-1 antibodies
Env-9-based ELISA for HTLV-1 antibodies
ELISA for HIV-1/HIV-2 antibodies
ELISA for Hepatitis B core antibodies
ELISA for EBV antibodies (VCA IgG)
ELISA for EBV antibodies (VCA IgM)
ELISA for EBV antibodies (EBNA)
ELISA for EBV antibodies (EA-R)
ELISA for EBV antibodies (EA-D)
ELISA for EBV antibodies (EA-R&D)
Slide tests for EBV antibodies
HIVCHEK-TM- membrane assay for HIV-1 antibodies
HIVCHEK-TM- 1+2 membrane assay for HIV-1, HIV-2 antibodies
11.
EXHIBIT F
EXCLUDED RAW MATERIALS
*
* = Confidential portions of material have been omitted and filed separately
with the Securities and Exchange Commission.
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