CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.6
AGREEMENT
between
GEN-PROBE INCORPORATED
and
CHIRON CORPORATION
Dated as of June 11, 1998
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS .................................................... 1
1.1 "Affiliate"..................................................... 1
1.2 "Applicable Purchase Price"..................................... 2
1.3 "Applicable Royalty"............................................ 4
1.4 "Blood Screening Assays"........................................ 4
1.5 "Blood Screening Field"......................................... 5
1.6 "Blood Screening Instruments"................................... 5
1.7 "Blood Screening Term".......................................... 5
1.8 "CDS"........................................................... 5
1.9 "Change in Control"............................................. 5
1.10 "Chiron Copyrights"............................................. 5
1.11 "Chiron HCV Patent Rights"...................................... 6
1.12 "Chiron HIV Patent Rights"...................................... 6
1.13 "Chiron Know-How"............................................... 6
1.14 "Chiron IP Rights".............................................. 6
1.15 "Chiron Marks".................................................. 6
1.16 "Chiron Patent Rights".......................................... 7
1.17 "Clinical Diagnostic Assays".................................... 7
1.18 "Clinical Diagnostic Field"..................................... 7
1.19 "Clinical Diagnostic Instruments"............................... 7
1.20 "Clinical Diagnostic Term"...................................... 7
1.21 "Combo Clinical Diagnostic Assay"............................... 8
1.22 "Commercially Reasonable Efforts"............................... 8
1.23 "Confidential Information"...................................... 8
1.24 "Development Costs"............................................. 9
1.25 "Development Program"........................................... 9
1.26 "Effective Date"................................................ 9
1.27 "Exclusive Future Clinical Diagnostic Assays"................... 9
1.28 "FDA"........................................................... 9
1.29 "First Commercial Sale"......................................... 9
1.30 "Future Blood Screening Assays"................................. 9
1.31 "Future Clinical Diagnostic Assays"............................. 9
1.32 "Gen-Probe Copyrights".......................................... 10
1.33 "Gen-Probe Know-How"............................................ 10
1.34 "Gen-Probe IP Rights"........................................... 10
1.35 "Gen-Probe Marks"............................................... 10
1.36 "Gen-Probe Patent Rights"....................................... 10
1.37 "HCV"........................................................... 11
1.38 "HIV-1"......................................................... 11
1.39 "Initial Blood Screening Assays"................................ 11
1.40 "Initial Clinical Diagnostic Assays"............................ 11
1.41 "Japanese HIV Qualitative Blood Screening
Assay".......................................................... 11
1.42 "Leader/Magnetic Separation Instrument"......................... 11
1.43 "Major Distributor"............................................. 11
1.44 "Manufacturing Cost"............................................ 11
1.45 "Manufacturing Royalty"......................................... 12
1.46 "Net Sales"..................................................... 13
1.47 "Nonexclusive Future Clinical Diagnostic
Assays"......................................................... 14
1.48 "Pass Through Royalty".......................................... 15
1.49 "Person"........................................................ 15
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1.50 "Product"....................................................... 15
1.51 "Rare Reagents"................................................. 15
1.52 "Sales Royalty"................................................. 15
1.53 "Supervisory Board"............................................. 16
1.54 "Territory"..................................................... 16
1.55 "Third Party"................................................... 16
1.56 "Tigris Instrument"............................................. 16
1.57 "TMA Assay"..................................................... 17
1.58 "Transfer Price"................................................ 17
1.59 "Valid Claim"................................................... 19
ARTICLE 2 REPRESENTATIONS AND WARRANTIES.................................... 20
2.1 By Each Party................................................... 20
2.2 By Chiron....................................................... 21
2.3 DISCLAIMER OF WARRANTIES........................................ 21
ARTICLE 3 BLOOD SCREENING PRODUCTS.......................................... 21
3.1 Initial Blood Screening Assays.................................. 21
3.2 Future Blood Screening Assays................................... 27
3.3 Blood Screening Instruments..................................... 35
3.4 Adjustments to Blood Screening Compensation..................... 41
3.5 Records and Reports............................................. 41
3.6 Interim Opportunities........................................... 42
ARTICLE 4 CLINICAL DIAGNOSTIC PRODUCTS...................................... 43
4.1 Initial Clinical Diagnostic Assays.............................. 43
4.2 Exclusive Future Clinical Diagnostic Assays..................... 47
4.3 Nonexclusive Future Clinical Diagnostic Assays.................. 53
4.4 Clinical Diagnostic Instruments................................. 61
4.5 Certain Gen-Probe Rights........................................ 67
4.6 Chiron Co-Promotion Rights...................................... 70
4.7 Records and Reports............................................. 70
ARTICLE 5 SUPERVISORY BOARD................................................. 71
5.1 Supervisory Board............................................... 71
5.2 Reports......................................................... 72
ARTICLE 6 SUPPLY TERMS...................................................... 72
6.1 Manufacture and Sale............................................ 72
6.2 Manufacturing Practices......................................... 72
6.3 Forecasts and Orders............................................ 73
6.4 Delivery and Acceptance......................................... 75
6.5 Packaging....................................................... 76
6.6 Warranty........................................................ 76
6.7 Independent Purchaser Status.................................... 76
6.8 Invoicing....................................................... 77
6.9 Sales and Use Taxes............................................. 77
6.10 Non-Commercial Products......................................... 77
6.11 Internal Commercial use......................................... 77
6.12 Safety Stocks................................................... 77
ARTICLE 7 PAYMENTS AND REPORTS.............................................. 78
7.1 Reports......................................................... 78
7.2 Exchange Rates.................................................. 78
7.3 Audits.......................................................... 79
7.4 Payment Method.................................................. 79
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7.5 Exchange Control................................................ 79
7.6 Withholding Taxes............................................... 80
7.7 Late Payments................................................... 80
ARTICLE 8 CONFIDENTIALITY................................................... 80
8.1 Confidential Information........................................ 80
8.2 Terms of this Agreement......................................... 81
8.3 Permitted Disclosures........................................... 81
ARTICLE 9 INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS....................... 82
9.1 Ownership of Inventions......................................... 82
9.2 Patent Rights................................................... 86
9.3 Copyrights...................................................... 87
9.4 Trademarks...................................................... 88
9.5 No Other Technology Rights...................................... 88
ARTICLE 10 INDEMNIFICATION AND INSURANCE.................................... 88
10.1 Indemnity....................................................... 88
10.2 Procedure....................................................... 89
10.3 Insurance....................................................... 90
ARTICLE 11 TERM AND TERMINATION............................................. 90
11.1 Expiration...................................................... 90
11.2 Termination..................................................... 90
11.3 Effect of Expiration and Termination............................ 92
ARTICLE 12 CONDITIONS PRECEDENT............................................. 92
12.1 To Both Parties' Obligations.................................... 92
12.2 To Gen-Probe's Obligations...................................... 92
12.3 Governmental Approvals.......................................... 92
12.4 Due Diligence................................................... 92
ARTICLE 13 ARBITRATION...................................................... 93
13.1 Binding Arbitration............................................. 93
13.2 Arbitration Procedure........................................... 93
13.3 Review.......................................................... 94
ARTICLE 14 ACCESS FEES...................................................... 94
ARTICLE 15 MISCELLANEOUS.................................................... 95
15.1 Notices......................................................... 95
15.2 Force Majeure................................................... 95
15.3 Assignment...................................................... 96
15.4 Severability.................................................... 96
15.5 Applicable Law.................................................. 97
15.6 Entire Agreement................................................ 97
15.7 Expenses and Attorneys Fees..................................... 97
15.8 Independent Contractors......................................... 98
15.9 Waiver.......................................................... 98
15.10 Drafting Party.................................................. 98
15.11 Third Parties................................................... 98
15.12 Affiliates...................................................... 98
15.13 Counterparts.................................................... 98
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AGREEMENT
THIS AGREEMENT dated as of June 11, 1998 (this "Agreement"), is entered
into between GEN-PROBE INCORPORATED, a Delaware corporation ("Gen-Probe"),
having a place of business at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, and CHIRON CORPORATION, a Delaware corporation ("Chiron"), having a place
of business at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000.
RECITALS
WHEREAS, Gen-Probe owns or has rights in certain patent rights, other
intellectual property rights and technology regarding in vitro diagnostic assays
based on or utilizing transcription-mediated amplification and regarding certain
instruments to conduct such assays.
WHEREAS, Chiron owns or has rights in certain patent rights, other
intellectual property rights and technology regarding hepatitis C virus and type
1 human immunodeficiency virus and the detection thereof.
WHEREAS, Gen-Probe has developed certain assays and instruments, which
utilize inter alia such Gen-Probe patent rights, other intellectual property
rights and technology which Chiron wishes to distribute and sell, for use in the
blood screening and clinical diagnostics fields, on the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth below, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall
have the respective meanings set forth below:
1.1 "Affiliate" shall mean, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person. A Person shall be regarded as in control of another
Person if it owns, or directly or indirectly controls, more than fifty percent
(50%) of the voting stock or other ownership interest of the other Person (or
such lesser percentage as is the maximum percentage permitted under applicable
law for foreign ownership where control is exercised by contract or otherwise),
or if it directly or indirectly possesses the power to direct or cause the
direction of the management and policies of the other Person by any means
whatsoever. Without limiting the generality of the foregoing, the Affiliates of
Chiron expressly exclude Novartis AG ("Novartis"), a Switzerland corporation, or
any Affiliate of Novartis, unless and until such time as Novartis has the right
to elect a majority of the board of directors of Chiron under the Governance
Agreement dated as of November 20, 1994 between Novartis and Chiron.
Notwithstanding anything else set forth in this section, for purposes of the
definition of Net Sales only, a Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at least fifty
percent (50%) of the voting stock or other ownership interest of the other
Person (or such lesser percentage as is the maximum percentage permitted under
applicable law for foreign ownership where control is exercised by contract or
otherwise), or if it directly or indirectly possesses the power to direct or
cause the direction of the management and policies of the other Person by any
means whatsoever.
1.2 "Applicable Purchase Price" shall mean, with respect to any Blood
Screening Assay and with respect to the Combo Clinical Diagnostic Assay, each on
a per unit basis, the following price:
1.2.1 With respect to each Initial Blood Screening Assay, and each
Future Blood Screening Assay which includes as a constituent element an assay
for HCV (other than those sold pursuant to Sections 3.1.4(b) or 3.6), and except
as set forth in Section 1.2.2 below, an amount equal to:
(a) Forty-three percent (43%) of Net Sales thereof when (i) no
FDA-approved Initial Blood Screening Assay to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field is then being sold in
the United States by [***], and (ii) no FDA-approved nucleic acid probe-based
assay for HCV for use in the Blood Screening Field (either as an independent or
combination assay) is then being sold in the United States by [***].
(b) Forty-seven and five-tenths percent (47.5%) of Net Sales thereof
when (i) no FDA-approved Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field is then being
sold in the United States by [***], and (ii) an FDA-approved nucleic acid
probe-based assay for HCV for use in the Blood Screening Field (either as an
independent or combination assay) is then being sold in the United States by
[***].
(c) Thirty-seven percent (37%) of Net Sales thereof when (i) an
FDA-approved Initial Blood Screening Assay to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field is then being sold in
the United States by [***], and (ii) no FDA-approved nucleic acid probe-based
assay for HCV for use in the Blood Screening Field (either as an independent or
combination assay) is then being sold in the United States by [***].
*** Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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(d) Forty-two percent (42%) of Net Sales thereof when (i) an
FDA-approved Initial Blood Screening Assay to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field is then being sold in
the United States by [***], and (ii) an FDA-approved nucleic acid
probe-based assay for HCV for use in the Blood Screening Field is then being
sold in the United States by [***].
(e) Notwithstanding the foregoing, in the event that the United
States government requires Chiron to grant a license under the Chiron HCV Patent
Rights to a Third Party for use in the Blood Screening Field, based on a
determination that Gen-Probe has failed to supply the Initial Blood Screening
Assay for the qualitative detection of HCV and HIV in sufficient quantities,
with sufficient performance, or in a timely manner, then such mandated license
shall not constitute a license within the meaning of Section 1.2.1 (a) through
(d). Any such license to a Third Party which is mandated by the United States
government for any reason other than Gen-Probe's failure as described in the
preceding sentence shall constitute a license within the meaning of Section
1.2.1 (a) through (d).
1.2.2 With respect to each Initial Blood Screening Assay sold in
Japan, an amount equal to:
(a) Beginning on the earlier of (i) the [***] of the First
Commercial Sale by CDS in Japan of the Japanese HIV Qualitative Blood Screening
Assay or (ii) the First Commercial Sale of the Initial Blood Screening Assay for
the qualitative detection of both HCV and HIV-1, and until the earlier of the
[***] of the date of the First Commercial Sale by CDS in Japan of the Japanese
HIV Qualitative Blood Screening Assay or the [***] of the date of The First
Commercial Sale of the Initial Blood Screening Assay for the qualitative
detection of both HCV and HIV-1, an amount equal to [***] of the Net Sales of
such Initial Blood Screening Assay sold in Japan.
(b) After the [***] of the earlier of (i) the date of the First
Commercial Sale by CDS in Japan of the Japanese HIV Qualitative Blood Screening
Assay or (ii) the First Commercial Sale of the Initial Blood Screening Assay for
the qualitative detection of both HCV and HIV-1, the amount determined under
Section 1.2.1.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
-3-
1.2.3 With respect to each Future Blood Screening Assay which does
not include as a constituent element an assay for HCV, an amount equal to the
sum of:
(a) the Manufacturing Cost of such Future Blood Screening Assay,
plus
(b) fifty percent (50%) of the positive remainder of:
(i) the Net Sales of such Assay (except that solely for the
purpose of this Section 1.2.3. such sales shall not
include sales by any distributor of Chiron, but shall
instead include sales by Chiron to all such
distributors, so long as the sales price is within
industry standards for distributor margins), minus
(ii) the Manufacturing Cost of such Future Blood Screening
Assay and such reasonable incremental costs incurred by
either party (as approved by the supervisory board) as
may be reasonably and fairly attributed to such Future
Blood Screening Assay, which such costs shall be
reimbursed to the party incurring them. (It is the
intent of the parties that for each such Future Blood
Screening Assay for which Chiron is the distributor,
such incremental costs shall include Chiron's
incremental distribution costs.)
provided, however, that the percentage referred to in (b) above shall be
adjusted to reflect the value of patent rights contributed by either party
covering the marker which is the subject of such Future Blood Screening Assay,
with the amount of the adjustment determined by the Supervisory Board based on
the value of such patent rights and the degree of exclusivity which is provided
for the Future Blood Screening Assay, pursuant to Section 3.2.8(c).
1.2.4 With respect to the Combo Clinical Diagnostic Assay, an amount
equal to the Applicable Purchase Price then in effect pursuant to Section 1.2.1.
1.3 "Applicable Royalty" shall mean, with respect to each Product, the
aggregate of the Manufacturing Royalty, Pass Through Royalty and Sales Royalty
applicable thereto (if any).
1.4 "Blood Screening Assays" shall mean, collectively, the Initial Blood
Screening Assays and the Future Blood Screening Assays.
-4-
1.5 "Blood Screening Field" shall mean the nucleic acid probe based
testing of human blood, plasma or other blood products intended for direct
transfusion or other administration to humans.
1.6 "Blood Screening Instruments" shall mean the Tigris Instrument and the
Leader/Magnetic Separation Instrument for use in the Blood Screening Field (each
with such modifications as are developed by Gen-Probe pursuant to the
Development Program under Section 3.3.1 below and as subsequently modified
pursuant to Section 3.3.7 below) and such other instrument(s) for use in the
Blood Screening Field as are developed by Gen-Probe after the Effective Date and
offered to and accepted by Chiron (all pursuant to Section 3.3.8 below).
1.7 "Blood Screening Term" shall mean the period commencing on the
Effective Date and expiring on the later of (a) the date ten (10) years after
the First Commercial Sale of the first Blood Screening Assay in the Territory
for use in the Blood Screening Field (other than any sale as may be made
pursuant to Section 3.1.4(b) or Section 3.6), and (b) the date five (5) years
after the First Commercial Sale of the last Blood Screening Assay launched prior
to the date specified in clause (a) above in the Territory for use in the Blood
Screening Field.
1.8 "CDS" shall mean Chugai Diagnostics Science Co. Ltd., a Japanese
corporation.
1.9 "Change in Control" shall mean, with respect to a party, (a) the
acquisition of such party by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation, but excluding any merger effected
exclusively for the purpose of changing the domicile of such party); (b) the
sale, transfer or other disposition of all or substantially all of the assets of
such party (including without limitation all of its assets relating to this
Agreement); or (c) the sale of all or substantially all of the capital stock of
such party; unless in each of clauses (a) through (c) above, such party's
stockholders of record immediately prior to such acquisition or sale hold (by
virtue of the securities issued in consideration for such party's acquisition or
sale or otherwise) greater than fifty percent (50%) of the total voting power of
the surviving or acquiring entity.
1.10 "Chiron Copyrights" shall mean all rights under the copyright laws of
any jurisdiction in the world, together with all rights commonly referred to as
"moral rights," in and to the Blood Screening Assays, Clinical Diagnostic
Assays, Blood Screening Instruments or Clinical Diagnostic Instruments in which
Chiron has an ownership or other licensable interest during the Blood Screening
Term or the Clinical Diagnostic Term ; all to the extent and only to the extent
that Chiron has the right to grant licenses, immunities or other rights
thereunder.
-5-
1.11 "Chiron HCV Patent Rights" shall mean (a) all United States and
foreign patent applications covering (i) the composition of matter of HCV or any
nucleotide sequence thereof or (ii) the use thereof in the Blood Screening Field
or the Clinical Diagnostic Field; (b) all patents that have issued or in the
future issue from such patent applications, including without limitation
utility, model and design patents and certificates of invention; and (c) all
divisionals, continuations, continuations-in-part, reissues, renewals,
extensions or additions to any such patent applications and patents; but only to
the extent that Chiron has or hereafter acquires an ownership or other
licensable interest, and all to the extent and only to the extent that Chiron
has the right to grant licenses, immunities or other rights thereunder.
1.12 "Chiron HIV Patent Rights" shall mean (a) all United States and
foreign patent applications covering (i) the composition of matter of HIV-1 or
any nucleotide sequence thereof or (ii) the use thereof in the Blood Screening
Field or the Clinical Diagnostic Field; (b) all patents that have issued or in
the future issue from such patent applications, including without limitation
utility, model and design patents and certificates of invention; and (c) all
divisionals, continuations, continuations-in-part, reissues, renewals,
extensions or additions to any such patent applications and patents; but only to
the extent that Chiron has or hereafter acquires an ownership or other
licensable interest, and all to the extent and only to the extent that Chiron
has the right to grant licenses, immunities or other rights thereunder.
1.13 "Chiron Know-How" shall mean all information of any type whatsoever
(including without limitation, formulae, procedures, protocols, techniques, data
and results of experimentation and testing), which is Confidential Information
of Chiron and which (i) relates to the Chiron Patent Rights and which is
necessary to exploit the Chiron Patent Rights for use in the Blood Screening
Field or Clinical Diagnostic Field or (ii) is disclosed by Chiron pursuant to
Article 8, all to the extent and only to the extent that Chiron has the right to
grant licenses, immunities or other rights thereunder.
1.14 "Chiron IP Rights" shall mean, collectively, the Chiron Copyrights,
Chiron Know-How and Chiron Patent Rights.
1.15 "Chiron Marks" shall mean those trademarks owned by or licensed to
Chiron (other than pursuant to this Agreement) which are used to market any
Product in accordance with the provisions of this Agreement.
-6-
1.16 "Chiron Patent Rights" shall mean (a) the Chiron HCV Patent Rights
and the Chiron HIV Patent Rights and such other Chiron patent rights which claim
markers or their uses as may become subject to this Agreement pursuant to the
terms hereof with respect to Future Blood Screening Assays and Future Clinical
Diagnostic Assays sold by Chiron or pursuant to Article 9; (b) all patents that
have issued or in the future issue therefrom, including without limitation
utility, model and design patents and certificates of invention; and (c) all
divisional, continuations, continuations-in-part, reissues, renewals, extensions
or additions to any such patent applications and patents; in each case in which
Chiron has an ownership or other licensable interest, and all to the extent and
only to the extent that Chiron has or hereafter acquires the right to grant
licenses, immunities or other rights thereunder.
1.17 "Clinical Diagnostic Assays" shall mean, collectively, the Initial
Clinical Diagnostic Assays and the Future Clinical Diagnostic Assays.
1.18 "Clinical Diagnostic Field" shall mean the nucleic acid probe based
testing of samples taken from a human patient for the purpose of detecting,
identifying or quantifying, or testing for drug susceptibility of, hepatitis
virus, other viral organisms, or cancer (including markers of early disease
stages), for the purpose of research, diagnosis or medical care; provided,
however, that the Clinical Diagnostic Field shall exclude the Blood Screening
Field. For purposes of clarity and to avoid uncertainty, the Clinical Diagnostic
Field shall exclude testing for genetic predisposition to disease. For purposes
of clarity and to avoid uncertainty, the Clinical Diagnostic Field shall include
the use in connection with the testing described above of standards and controls
which are not taken from a human patient.
1.19 "Clinical Diagnostic Instruments" shall mean the Tigris Instrument
and the Leader/Magnetic Separation Instrument for use in the Clinical Diagnostic
Field (each with such modifications as are developed by Gen-Probe pursuant to
the Development Program under Section 4.4.1 below and as subsequently modified
pursuant to Section 4.4.8 below), and such other instrument(s) for use in the
Clinical Diagnostic Field as are developed by Gen-Probe after the Effective Date
and offered to and accepted by Chiron (all pursuant to Section 4.4.9 below).
1.20 "Clinical Diagnostic Term" shall mean the period commencing on the
Effective Date and expiring on the later of (a) the date ten (10) years after
the First Commercial Sale of the first Clinical Diagnostic Assay in the
Territory for use in the Clinical Diagnostic Field sold by Chiron, and (b) the
date five (5) years after the First Commercial Sale of the last Clinical
Diagnostic Assay launched prior to the date specified in clause (a) above in the
Territory for use in the Clinical Diagnostic Field.
-7-
1.21 "Combo Clinical Diagnostic Assay" shall mean the Initial Clinical
Diagnostic Assay for the qualitative detection of both HCV and HIV-1.
1.22 "Commercially Reasonable Efforts" shall mean:
1.22.1 With respect to Chiron's efforts under this Agreement to
promote, market and sell a Product, that level of effort devoted by Chiron to
promote, market and sell products of similar market size and market character,
and in the absence of/without consideration of revenue from any licensee (other
than Gen-Probe) of the Chiron IP Rights.
1.22.2 With respect to a party's efforts under this Agreement to
develop a Product, that level of effort devoted by such party to develop
products of similar market size and market character, and, in the case of
Chiron, in the absence of/without consideration of revenue from any licensee
(except the other party) of such party's IP Rights.
1.22.3 With respect to Gen-Probe's efforts under this Agreement to
manufacture (or have manufactured) and supply a Product, that level of effort
devoted by Gen-Probe to manufacture (or have manufactured) and supply products
of similar market size and market character, and in the absence of/without
consideration of revenue from any licensee (other than Chiron) of the Gen-Probe
IP Rights.
1.22.4 In all other instances that level of effort which would be
devoted by an independent entity reasonably seeking to pursue its own business
efforts in light of all relevant circumstances.
1.23 "Confidential Information" shall mean, with respect to a party, all
information of any kind whatsoever (including without limitation, compilations,
data, formulae, models, patent disclosures, procedures, processes, projections,
protocols, results of experimentation and testing, specifications, strategies,
and techniques), and all tangible and intangible embodiments thereof of any kind
whatsoever (including without limitation, apparatus, compositions, documents,
drawings, machinery, patent applications, records, reports), which is (i) not
generally known, (ii) disclosed by such party to the other party pursuant to and
in accordance with the terms of Section 8.1 of this Agreement, and (iii) marked,
identified as, or otherwise acknowledged to be confidential at the time of
disclosure to the other party.
Notwithstanding the foregoing, Confidential Information of a party shall
not include information which the other party can establish by written
documentation (a) to have been publicly known prior to disclosure of such
information by the disclosing party to the other party, (b) to have become
publicly known, without fault on the part of the other party, subsequent to
disclosure of such information by the disclosing party to the other party, (c)
to have been received by the other party at any time from a source,
-8-
other than the disclosing party, rightfully having possession of and the right
to disclose such information, (d) to have been otherwise known by the other
party prior to disclosure of such information by the disclosing party to the
other party, or (e) to have been independently developed by employees or agents
of the other party without access to or use of such information disclosed by the
disclosing party to the other party.
1.24 "Development Costs" shall mean, with respect to any Product, the
fully-burdened cost to a party of conducting the research and development
(including clinical trials and regulatory submissions) of such Product,
including the cost of materials, direct labor and overhead, all as determined in
accordance with such party's standard accounting practices for other products
researched and developed by such party pursuant to and in accordance with the
applicable Development Program (including the applicable budget).
1.25 "Development Program" shall mean, with respect to each TMA Assay or
instrument developed pursuant to this Agreement, the product development program
as described in Article 3 or 4, as applicable, below to develop such TMA Assay
or instrument.
1.26 "Effective Date" shall mean the date on which all the conditions
precedent set forth in Article 12 have been satisfied in full or waived by the
mutual written agreement of the parties.
1.27 "Exclusive Future Clinical Diagnostic Assays" shall mean those TMA
Assays, other than the Initial Clinical Diagnostic Assays, which are conducted
by the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field
for the purpose of detecting, identifying, quantifying, or testing for the drug
susceptibility of the viral organisms set forth on Schedule A pursuant to
Section 4.2.1 below and developed pursuant to the Development Program under
Section 4.2.2 below.
1.28 "FDA" shall mean the United States Food and Drug Administration, or
the successor thereto.
1.29 "First Commercial Sale" shall mean, with respect to any Product, the
first sale for use by a Third Party of such Product in any country in the
Territory.
1.30 "Future Blood Screening Assays" shall mean those TMA Assays which are
conducted by the Blood Screening Instruments for use in the Blood Screening
Field and are selected by the Supervisory Board pursuant to Section 3.2.1 below
and developed pursuant to the Development Program under Section 3.2.2 below.
1.31 "Future Clinical Diagnostic Assays" shall mean, collectively, the
Exclusive Future Clinical Diagnostic Assays and the Nonexclusive Future Clinical
Diagnostic Assays.
-9-
1.32 "Gen-Probe Copyrights" shall mean all rights under the copyright laws
of any jurisdiction in the world, together with all rights commonly referred to
as "moral rights," in and to the Blood Screening Instruments or Clinical
Diagnostic Instruments in which Gen-Probe has an ownership or other licensable
interest during the Blood Screening Term or the Clinical Diagnostic Term; all to
the extent and only to the extent that Gen-Probe has the right to grant
licenses, immunities or other rights thereunder.
1.33 "Gen-Probe Know-How" shall mean all information of any type
whatsoever (including without limitation, formulae, procedures, protocols,
techniques, data and results of experimentation and testing), which is
Confidential Information of Gen-Probe and which (i) relates to the Gen-Probe
Patent Rights and which is necessary to exploit the Gen-Probe Patent Rights for
use in the Blood Screening Field or Clinical Diagnostic Field or (ii) is
disclosed by Gen-Probe pursuant to Article 8, all to the extent and only to the
extent that Gen-Probe has the right to grant licenses, immunities or other
rights thereunder.
1.34 "Gen-Probe IP Rights" shall mean, collectively, the Gen-Probe
Copyrights, Gen-Probe Know-How and Gen-Probe Patent Rights.
1.35 "Gen-Probe Marks" shall mean those trademarks owned by or licensed to
Gen-Probe (other than pursuant to this Agreement) which are used to market any
Product in accordance with the provisions of this Agreement.
1.36 "Gen-Probe Patent Rights" shall mean (a) all the patents and patent
applications which cover nucleic acid probe assays and instrument technologies,
to the extent necessary for use in the Initial Blood Screening Assays, Initial
Clinical Diagnostic Assays, Initial Blood Screening Instruments, or Initial
Clinical Diagnostic Instruments but only to the extent in each case (i) of the
design of the Products as of the Effective Date and (ii) that Gen-Probe has an
ownership or other licensable interest therein; (b) such other Gen-Probe patent
rights which claim markers or their uses as may become subject to this Agreement
pursuant to the terms hereof with respect to Future Blood Screening Assays and
Future Clinical Diagnostic Assays, (c) such Gen-Probe patent rights with respect
to any future modifications to any Blood Screening Instrument or Clinical
Diagnostic Instrument as become subject to this Agreement pursuant to Sections
3.3.7 or 4.4.8, respectively, and such Gen-Probe patent rights with respect to
any future Blood Screening Instrument or Clinical Diagnostic Instrument as are
developed by Gen-Probe after the Effective Date and offered to and accepted by
Chiron (all pursuant to Sections 3.3.8 or 4.4.9, respectively) or ; (d) such
other Gen-Probe patent rights which become subject to this Agreement pursuant to
pursuant to Article 9; (e) all patents that have issued or in the future issue
therefrom, including without limitation utility, model and design patents and
certificates of invention; and (f) all divisional, continuations,
continuations-in-part, reissues, renewals, extensions or additions to any such
patent applications and patents; but only to the extent that Gen-Probe has or
hereafter acquires an ownership or other licensable interest, in
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each case, and all to the extent and only to the extent that Gen-Probe has the
right to grant licenses, immunities or other rights thereunder.
1.37 "HCV" shall mean hepatitis C virus.
1.38 "HIV" or HIV-1" shall mean type 1 human immunodeficiency virus.
1.39 "Initial Blood Screening Assays" shall mean those four (4) TMA Assays
for use in the Blood Screening Field developed pursuant to the Development
Program under Section 3.1.1 below (a) for the qualitative detection of both HCV
and HIV-1, (b) for the confirmatory qualitative detection of HCV, (c) for the
confirmatory qualitative detection of HIV-1, and (d) for the qualitative
detection of HIV-1 for sale and use in Japan only.
1.40 "Initial Clinical Diagnostic Assays" shall mean those four (4) TMA
Assays for use in the Clinical Diagnostics Field developed pursuant to the
Development Program under Section 4.1.1 below (a) for the qualitative detection
of both HCV and HIV-1, (b) for the qualitative detection of HCV, (c) for the
qualitative detection of HIV-1, and (d) for the quantitative detection of HIV-1,
including such future improvements as may be agreed by the parties.
1.41 "Japanese HIV Qualitative Blood Screening Assay" shall mean the
Initial Blood Screening Assay for the qualitative detection of HIV-1 developed
for sale and use in Japan only.
1.42 "Leader/Magnetic Separation Instrument" shall mean the manual
instrument, and related software and appropriate repair parts, for DNA/RNA
amplified assay processing incorporating a separate magnetic wash station and a
chemiluminescent detection system (Leader HC) required to perform the following
steps: (a) magnetic separation of the captured target RNA/DNA, (b) washing and
aspiration of the captured target RNA/DNA, and (c) chemiluminescent detection
steps needed to support Gen-Probe's patented Hybridization Protection Assay
(HPA) and TMA Assay processes and associated reagent product lines.
1.43 "Major Distributor" shall mean the Third Party, if any, appointed
by Chiron or its Affiliate as the sole and exclusive distributor (excluding the
interim opportunities described in Section 3.6 below) of the Blood Screening
Assays to be conducted on the Blood Screening Instruments for use in the Blood
Screening Field in the United States.
1.44 "Manufacturing Cost" shall mean, with respect to any Product, the
fully-burdened cost to a party (expressed on a per unit basis) of manufacturing
or having manufactured such Product, together with the packaging thereof,
including the cost of materials, direct labor, quality control, warranty parts
and labor, and overhead (but excluding royalties paid or payable to Third
Parties), all as determined in accordance with such party's standard accounting
practices for other products manufactured.
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1.45 "Manufacturing Royalty" shall mean, with respect to any Product, the
amount payable by Chiron to Gen-Probe if Chiron assumes the right to manufacture
or have manufactured such Product under the terms of this Agreement. The
Manufacturing Royalty shall be determined by the Supervisory Board pursuant to
the principles set forth below, and if the Supervisory Board is unable to agree,
shall be subject to resolution pursuant to Article 13.
1.45.1 With respect to any Initial Blood Screening Assay(s) or
Future Blood Screening Assay(s), the Manufacturing Royalty shall be payable in
lieu of the Transfer Price and Applicable Purchase Price hereunder, and shall
mean an amount equal to the Applicable Purchase Price for such Assay then in
effect, less (i) the Manufacturing Cost to Chiron of such Assay(s), and less
(ii) an amount designed to permit Chiron to recover the costs incurred in
connection with assuming the right to manufacture or have manufactured such
Assay(s), but in no event less than a commercially reasonable royalty for the
Gen-Probe IP Rights applicable to such Assay(s). The costs referenced in
subparagraph (ii) hereof shall include, without limitation, the fully burdened
costs incurred by Chiron in connection with the transfer of manufacturing rights
(to the extent not borne by Gen-Probe directly), including capital costs of any
investment in facilities or equipment, amortized in accordance with generally
accepted accounting principles, but only to the extent required in connection
with the transfer under the provisions of this Agreement and only after proper
consideration and allocation as to the then-remaining Blood Screening Term
(i.e., a facility built in the last year of the Blood Screening Term will not be
charged entirely to Gen-Probe). Once the costs referred to in subparagraph (ii)
have been recovered, the deduction from the Applicable Purchase Price pursuant
to subparagraph (ii) shall cease.
1.45.2 With respect to any Initial Clinical Diagnostic Assay(s), the
Manufacturing Royalty shall be payable in lieu of the Transfer Price hereunder,
and shall mean an amount equal to a percentage of Net Sales of such Assay(s)
determined by subtracting from the Transfer Price (i) the Manufacturing Cost to
Chiron of such Assay(s), and (ii) an amount designed to permit Chiron to recover
the costs incurred in connection with assuming the right to manufacture or have
manufactured such Assay(s), but in no event less than a commercially reasonable
royalty for the Gen-Probe IP Rights applicable to such Assay(s). The costs
referenced in subparagraph (ii) hereof shall include, without limitation, the
fully burdened costs incurred by Chiron in connection with the transfer of
manufacturing rights (to the extent not borne by Gen-Probe directly), including
capital costs of any investment in facilities or equipment, amortized in
accordance with generally accepted accounting principles, but only to the extent
required in connection with the transfer under the provisions of this Agreement
and only after proper consideration and allocation as to the then-remaining
Clinical Diagnostic Term (i.e., a facility built in the last year of the
Clinical Diagnostic Term will not be charged entirely to Gen-Probe). Once the
costs referred to in
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subparagraph (ii) have been recovered, the deduction from the Transfer Price
pursuant to subparagraph (ii) shall cease.
1.45.3 With respect to any Future Clinical Diagnostic Assay Blood
Screening Instrument or Clinical Diagnostic Instrument, there will be no
Manufacturing Royalty. Upon assumption of the right to manufacture or have
manufactured any such Assay or Instruments, Chiron will cease to pay Gen-Probe
the Transfer Price with respect to such Assay or Instruments.
1.46 "Net Sales" shall mean, with respect to any Product(s), on a per unit
basis where applicable and in the aggregate where applicable, the gross sales
price of such Product(s) invoiced by any of (i) Chiron, (ii) Chiron's
Affiliates, (iii) Gen-Probe, (iv) CDS or, (v) only as to Blood Screening Assays,
the Major Distributor, or any other distributor for Chiron in Japan, Germany,
Italy, France, or the United Kingdom, (all of which are individually referred to
hereafter in this Section 1.46 as "Seller") following shipment to unaffiliated
Third Parties less, to the extent actually paid or accrued by such Seller (a)
discounts, rebates or chargebacks actually allowed and taken, to the extent
consistent with industry practices and price reductions given for similar
products by such Seller; and/or (b) amounts repaid or credited by reason of
rejection, spoilage, expiration or return; and/or (c) to the extent separately
stated on purchase orders, invoices or other documents of sale, taxes levied on
and/or other governmental charges made as to production, or transportation or
insurance charges; and/or (d) charges for freight, handling and transportation;
and/or (e) sales, use and value-added taxes and other similar taxes incurred and
separately stated on invoices; and/or (f) customs duties, surcharges and other
governmental charges incurred in exporting or importing such Product.
1.46.1 In the event that a Product is sold in combination with
another product (a "Combination Product") for a single price in a particular
period, Net Sales from sales of a Combination Product for that period, for
purposes of this Agreement, shall be calculated by multiplying the Net Sales of
that Combination Product for that period by the fraction A/(A+B), where A is the
average per unit Net Sales of the Product sold separately in the country of sale
in that period and B is the average per unit Net Sales of the other product(s)
sold separately in the country of sale in that period. This calculation shall be
made for each Product comprising the Combination Product and the results added.
In the event that no such separate sales are made in the applicable period, Net
Sales of such Combination Product shall be determined based on a reasonable
apportionment of the gross amount invoiced therefore based upon the relative
contribution of the Product to the price of the Combination Product. Such
apportionment shall be negotiated in good faith between the parties and resolved
pursuant to Article 13 if they are unable to agree.
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1.46.2 In the event that Chiron (or its Affiliate)invoices Third
Parties for performance of Clinical Diagnostic Assays in the reference testing
laboratory of Chiron (or its Affiliate), the amount of Net Sales per assay
performed shall be equal to the average per unit Net Sales for sales of Clinical
Diagnostic Assay in the country in which such assay is performed during the
quarter in which such assay is performed, or, if such Clinical Diagnostic Assay
is not sold for commercial use in such country during such quarter, the
worldwide average per unit Net Sales for sales of such Clinical Diagnostic Assay
for such quarter, or, if such Clinical Diagnostic Assay is not sold commercially
in any country, a reasonable apportionment shall be made of the gross amount
invoices for performance of the assay between the value of the assay and the
value of the laboratory services associated therewith, taking into account the
average selling prices of similar products. Such apportionment shall be
negotiated in good faith between the parties and resolved pursuant to Article 13
if they are unable to agree.
1.46.3 With respect to each Clinical Diagnostic Assay only, Net
Sales shall exclude the cost (determined in accordance with applicable industry
standards) of the Clinical Diagnostic Instrument and the service components of
an operating lease, capital lease, reagent rental arrangement or similar program
for which the cost of such components is included in the price of such Clinical
Diagnostic Assay purchased by the lessee or renter of the instrument.
1.46.4 For purposes of calculating Net Sales, a party may, at its
option, determine the allowable deductions from gross sales based on accruals
estimated reasonably and consistently with such party's standard accounting
practices. If such accruals are used, the other party will be so notified, and
the actual deductions shall be calculated and the Net Sales will be adjusted, if
necessary, to reflect such actual deductions, on an annual basis.
1.47 "Nonexclusive Future Clinical Diagnostic Assays" shall mean those TMA
Assays which are conducted by the Clinical Diagnostic Instruments for use in the
Clinical Diagnostic Field for the purpose of detecting, identifying,
quantifying, or testing for the drug susceptibility of viral organisms or cancer
(other than those which are the subject of the Initial Clinical Diagnostic
Assays or the Exclusive Future Clinical Diagnostic Assays) which are selected
pursuant to Section 4.3.1 below and developed under Section 4.3.2 below, subject
to the provisions of Section 4.3.7 below.
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1.48 "Pass Through Royalty" shall mean, with respect to any Clinical
Diagnostic Assay, the following royalty:
1.48.1 With respect to each Initial Clinical Diagnostic Assay (other
than the Combo Clinical Diagnostic Assay, an amount not to exceed [***] of the
Net Sales of such Initial Clinical Diagnostic Assay, equal to the amount of the
royalties owing by Gen-Probe to any Third Party in connection with the
manufacture, use or sale of such Initial Clinical Diagnostic Assay by Chiron and
its Affiliates.
1.48.2 With respect to each Future Clinical Diagnostic Assay, an
amount equal to the sum of (a) an amount not to exceed [***] of the
Net Sales of such Future Clinical Diagnostic Assay, equal to the amount of the
royalties owing by Gen-Probe to any Third Party in connection with the
manufacture, use or sale of such Future Clinical Diagnostic Assay by Chiron and
its Affiliates for Third Party technology which is also used in any Initial
Clinical Diagnostic Assay, plus (b) to the extent approved by the Supervisory
Board, the amount of the royalties owing by Gen-Probe to any Third Party in
connection with the manufacture, use or sale of such Future Clinical Diagnostic
Assay by Chiron and its Affiliates, for Third Party technology which is not used
in any Initial Clinical Diagnostic Assay, provided, however, that Gen-Probe
shall not have any obligation under this Agreement with respect to any such
Third Party technology except pursuant to further express written agreement.
1.49 "Person" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.50 "Product" shall mean a Blood Screening Assay, Clinical Diagnostic
Assay, Blood Screening Instrument, Clinical Diagnostic Instrument or Rare
Reagent.
1.51 "Rare Reagents" shall mean, with respect to any Blood Screening Assay
or Clinical Diagnostic Assay, those enzymes, nucleic acids (probes and primers),
buffers, target capture particles and other biochemical components and reagents
which are necessary to manufacture or conduct such TMA Assay and (a) are not
generally available from other sources for such use, or (b) if generally
available from other sources for such use, are subject to purchase commitments
by Gen-Probe.
1.52 "Sales Royalty" shall mean, with respect to any Blood Screening Assay
or Clinical Diagnostic Assay, the following royalty:
1.52.1 With respect to each Future Blood Screening Assay or
Exclusive Future Clinical Diagnostic Assay for which Gen-Probe is the sole
funding party under Section 3.2.3(b) or Section 4.2.1(b), below, the royalty set
forth in such section.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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1.52.2 Except as set forth in Section 1.52.4 below, with respect to
the Exclusive Future Clinical Diagnostic Assays, the applicable percentage set
forth below of the Net Sales of all Exclusive Future Clinical Diagnostic Assays:
That Portion of Annual Net Sales of
Rate all Excl. Future Clin. Diag. Assays
---- -----------------------------------
[***] [***]
1.52.3 Except as set forth in Section 1.52.4 below, with respect to
the Nonexclusive Future Clinical Diagnostic Assays, the applicable percentage
set forth below of the Net Sales of all Nonexclusive Future Clinical Diagnostic
Assays:
That Portion of Annual Net Sales of
Rate all Nonexcl. Future Clin. Diag. Assays
---- --------------------------------------
[***] [***]
1.52.4 With respect to each Future Clinical Diagnostic Assay sold
for use in reference laboratories owned or operated by Chiron (or its
Affiliates), [***] of the Net Sales of such
Future Clinical Diagnostic Assay for use in such reference laboratories.
1.53 "Supervisory Board" shall mean the committees comprising
representatives of Gen-Probe and Chiron as described in Section 5.1 below.
1.54 "Territory" shall mean the entire world; provided, however, that the
Territory for the Japanese HIV Qualitative Blood Screening Assay shall be Japan
only.
1.55 "Third Party" shall mean any Person other than Gen-Probe, Chiron and
their respective Affiliates.
1.56 "Tigris Instrument" shall mean the integrated, automated instrument,
and related software and appropriate repair parts, for DNA/RNA amplified assay
processing incorporating all systems required to perform the following steps:
(a) lysis/annealing, (b) enzymatic amplification, (c) hybridization/ selection,
(d) detection/decontamination, which utilize processing steps that include
heating/cooling, reagent addition, mixing, chemiluminescent detection and
aspiration needed to support Gen-Probe's patented Hybridization Protection Assay
(HPA) and TMA Assay processes and associated reagent product lines.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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1.57 "TMA Assay" shall mean an in vitro diagnostic assay based on or
utilizing transcription-mediated amplification.
1.58 "Transfer Price" shall mean, with respect to any Product, on a per
unit basis, the following price:
1.58.1 With respect to any Initial Blood Screening Assay, the
objective of the parties is to share equally the aggregate cost of maintaining
safety stocks of raw components, work-in-progress, and finished goods as
required by CBER or by market demand. The Transfer Price, based on this
objective, is expected to range between [***] the Applicable Purchase Price, but
it no case shall it be less than Gen-Probe's Manufacturing Cost. Subject to
these guidelines, the Transfer Price shall be determined by the Supervisory
Board and reviewed annually.
1.58.2 With respect to any Future Blood Screening Assay, the
objective of the parties is to share equally the aggregate cost of maintaining
safety stocks of raw components, work-in-progress, and finished goods as
required by CBER or by market demand. The Transfer Price, based on this
objective, is expected to range between [***] the estimated Applicable Purchase
Price, but it no case shall it be less than Gen-Probe's Manufacturing Cost.
Subject to these guidelines, the Transfer Price shall be determined by the
Supervisory Board and reviewed annually.
1.58.3 With respect to the Combo Clinical Diagnostic Assay, in the
first year following the First Commercial Sale thereof, an amount equal to [***]
of the estimated Applicable Purchase Price thereof for such year (calculated
pursuant to Section 1.58.10). Subject to the guidelines set forth in 1.58.1 and
1.58.2, the Transfer Price shall be determined by the Supervisory Board and
reviewed annually.
1.58.4 With respect to the Initial Clinical Diagnostic Assay for the
qualitative detection of HCV, an amount equal to (a) [***] for the first three
years after the First Commercial Sale thereof, and (b) [***] thereafter;
provided, however, that each such price shall be adjusted on each anniversary of
the Effective Date, pursuant to a fair method to be agreed upon by the parties,
to reflect any net increase (after considering additional manufacturing
efficiencies) in Gen-Probe's costs due to inflation or extraordinary increases
in the cost of raw components.
1.58.5 With respect to the Initial Clinical Diagnostic Assay for the
qualitative detection of HIV-1, an amount equal to (a) [***] for the first three
years after the First Commercial Sale thereof, and (b) [***] thereafter;
provided, however, that each such price shall be adjusted on each anniversary of
the Effective Date, pursuant to a fair method to be agreed upon by the parties,
to reflect any net increase (after considering additional manufacturing
efficiencies) in Gen-Probe's costs due to inflation or extraordinary increases
in the cost of raw components.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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1.58.6 With respect to the Initial Clinical Diagnostic Assay for the
quantitative detection of HIV-1, an amount equal to (a) [***] for the first
three years after the First Commercial Sale thereof, and (b) [***] thereafter;
provided, however, that each such price shall be adjusted on each anniversary of
the Effective Date, pursuant to a fair method to be agreed upon by the parties,
to reflect any net increase (after considering additional manufacturing
efficiencies) in Gen-Probe's costs due to inflation or extraordinary increases
in the cost of raw components. The price set forth herein assumes a kit size of
100 tests. If more than ten percent (10%) of the tests in a standard kit are
required for use as standards and controls or duplicate tests for patient
results, then the parties shall negotiate in good faith to adjust the price set
hereunder, to the benefit of Chiron.
1.58.7 With respect to any Future Clinical Diagnostic Assay, an
amount equal to one hundred twenty percent (120%) of the Manufacturing Cost of
such Future Clinical Diagnostic Assay.
1.58.8 With respect to any initial Tigris Blood Screening Instrument
or initial Tigris Clinical Diagnostic Instrument, including warranty, an amount
equal to the amount actually invoiced to Gen-Probe by the manufacturer, plus
shipping, plus the amount of Gen-Probe's warranty obligation (the "Actual
Instrument Cost"). Chiron shall have no obligation to pay the Actual Instrument
Cost to the extent such Cost exceeds [***], reasonably adjusted for inflation
after the Effective Date (the "Adjusted Maximum Instrument Price"). Such excess
cost shall be paid by Gen-Probe. To the extent that Gen-Probe pays any such
excess cost and the Actual Instrument Cost for any subsequent Instrument is less
than the Adjusted Maximum Instrument Price, the amount paid by Chiron to
Gen-Probe for such subsequent Instruments shall be the Adjusted Maximum
Instrument Price, until such time as Gen-Probe has recovered all excess costs
paid by it, and thereafter the amount paid shall be the Actual Instrument Cost.
Should CBER mandate modifications to any Blood Screening Instrument which
results in extraordinary increases in the cost of the Instrument, the parties
shall negotiate in good faith with respect to adjusting the amounts set forth
herein.
1.58.9 With respect to any Leader/Magnetic Separation Blood
Screening Instrument or Leader/Magnetic Separation Clinical Diagnostic
Instrument, an amount equal to the lesser of (a) [***], reasonably adjusted for
inflation, and (b) [***] of the Manufacturing Cost of such Blood Screening
Instrument or Clinical Diagnostic Instrument. Should CBER mandate modifications
to any Blood Screening Instrument which results in extraordinary increases in
the cost of the Instrument, the parties shall negotiate in good faith with
respect to adjusting the amounts set forth herein.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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1.58.10 For purposes of Sections 1.58.1 through 1.58.3 above, the
estimated Applicable Purchase Price of any assay shall be (a) for the first year
following the First Commercial Sale of such assay, the reasonably estimated
weighted average of the Applicable Purchase Price of such assay (calculated in
United States dollars), as determined by the mutual agreement of the parties
prior to the date of the first delivery of such assay to Chiron hereunder; and
(b) for each year thereafter, the actual weighted average of the Applicable
Purchase Price of such assay (calculated in United States dollars) for the
preceding year.
1.59 "Valid Claim" shall mean (a) as to any technology of a party (whether
or not "Core Technology" of that party), a claim of an issued patent that has
not been held unenforceable or invalid by an agency or a court of competent
jurisdiction in any final judgment as to which the owner or rights holder has no
further right of appeal and, in addition (b) as to any Core Technology of a
party, a claim of a patent application which is being prosecuted or pursued in
good faith for the United States and which meets the requirements for
patentability under applicable law and that has not been abandoned or finally
rejected without the possibility of appeal or refiling. "Core Technology" shall
mean as to Chiron the technology claimed in the patents and patent applications
set forth in Schedule "B" (together with any unlisted patents and patent
applications which claim priority from the listed patents and any and all
patents that have issued or in the future issue from the foregoing patents and
patent applications and all divisionals, continuations, continuations-in-part,
reissues, renewals, re-examinations, extensions, or additions thereof) and as to
Gen-Probe the technology claimed in the patents and patent applications set
forth in Schedule "C" (together with any unlisted patents and patent
applications which claim priority from any of the listed patents and any and all
patents that have issued or in the future issue from the foregoing patents and
patent applications and all divisionals, continuations, continuations-in-part,
reissues, renewals, re-examinations, extensions, or additions thereof). Either
party may contest whether a claim in a pending patent application for the United
States meets the requirements for patentability under applicable law. Such
contest shall be made pursuant to the procedures established by Article 13
except that (i) in lieu of submitting the issue to a single arbitrator, the
issue shall be submitted to a panel of three patent attorneys with experience in
the subject matter for binding determination and (ii) there shall be no appeal
from the decision of the majority of such panel. The burden of proof before the
arbitrators shall be a preponderance of the evidence.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 By Each Party. Each party hereby represents and warrants to the other
party as of the date of the execution of this Agreement (except as specifically
otherwise indicated below) as follows:
2.1.1 Corporate Existence and Power. Such party (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
state in which it is incorporated; (b) has the corporate power and authority and
the legal right to own and operate its property and assets, to lease the
property and assets it operates under lease, and to carry on its business as it
is now being conducted; and (c) is in compliance with all requirements of
applicable law, except to the extent that any noncompliance would not have a
material adverse effect on the properties, business, financial or other
condition of such party and would not materially adversely affect such party's
ability to perform its obligations under this Agreement.
2.1.2 Authorization and Enforcement of Obligations. Such party (a)
has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
2.1.3 Consents. All necessary consents, approvals and authorizations
of all governmental authorities and other Persons required to be obtained by
such party in connection with this Agreement have been obtained on or before the
Effective Date.
2.1.4 No Conflict. The execution and delivery of this Agreement and
the performance of such party's obligations hereunder (a) do not conflict with
or violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of such
party.
2.1.5 No Notice of Infringement. As of the Effective Date, except as
otherwise disclosed in writing to the other party, such party has not received
any written notice from a Third Party alleging that any technology of such party
to be utilized in any Product (as and to the extent defined as of the Effective
Date) to be made or sold pursuant to this Agreement would infringe the issued
patents of such Third Party.
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2.2 By Chiron. Chiron hereby represents and warrants to Gen-Probe that
Chiron has not granted any license in the United States or Japan (except as
Chiron has advised Gen-Probe in writing) or other rights or interests in or
under the Chiron HCV Patent Rights to any Person for use in the Blood Screening
Field.
2.3 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED
AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY EITHER PARTY THAT ANY PATENT
WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE GEN-PROBE PATENT
RIGHTS OR CHIRON PATENT RIGHTS, THAT ANY PATENT WITHIN THE GEN-PROBE PATENT
RIGHTS OR CHIRON PATENT RIGHTS WHICH ISSUES WILL BE VALID, OR THAT THE USE OF
ANY LICENSE GRANTED HEREUNDER OR THAT THE USE OF ANY GEN-PROBE PATENT RIGHTS OR
CHIRON PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR OTHER INTELLECTUAL PROPERTY
RIGHTS OF ANY OTHER PERSON. FURTHERMORE (EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
IN SECTION 6.6 BELOW), NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE GEN-PROBE PATENT RIGHTS OR CHIRON PATENT
RIGHTS OR THE PRODUCTS, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
ARTICLE 3
BLOOD SCREENING PRODUCTS
3.1 Initial Blood Screening Assays.
3.1.1 Development Programs.
(a) Establishment. Prior to the date of this Agreement, Gen-Probe
has expended significant effort and resources in the development of the Initial
Blood Screening Assays to be conducted by the Blood Screening Instruments for
use in the Blood Screening Field. Promptly following the Effective Date,
Gen-Probe shall prepare and submit to Chiron a written Development Program and
budget for each Initial Blood Screening Assay, which shall set forth (i) the
specifications for such Initial Blood Screening Assay, (ii) a proposed schedule
for the Development Program, and (iii) the parties' respective obligations to
develop such Initial Blood Screening Assay and to conduct such clinical trials
and apply for such regulatory approvals as necessary or appropriate to make and
sell in the Territory such Initial Blood Screening Assay to be conducted by the
Blood Screening Instruments for use in the Blood Screening Field; provided,
however, that any responsibilities of Chiron under the Development Program for
any Initial Blood Screening Assay shall be subject to the prior express written
consent of Chiron. The Development Program as proposed by Gen-Probe for each
Initial Blood Screening Assay may not be modified except by the action of the
Supervisory Board.
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(b) Responsibilities. Gen-Probe shall develop each Initial Blood
Screening Assay in accordance with the applicable specifications and the
applicable Development Program documents, and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell each such Initial Blood Screening Assay to be
conducted by the Blood Screening Instruments in the Territory for use in the
Blood Screening Field. Chiron shall consult with Gen-Probe on such matters and
Gen-Probe shall reasonably consider Chiron's advice and recommendations on all
matters relating to such Development Program.
(c) Conduct of Development. Gen-Probe, and Chiron in the event it
undertakes or is assigned by the Supervisory Board any responsibilities in
connection with the Development Program for each such Initial Blood Screening
Assay, shall conduct their respective obligations under the Development Program
for each Initial Blood Screening Assay in compliance in all material respects
with all requirements of applicable laws and regulations and all applicable good
laboratory, clinical and manufacturing practices. Gen-Probe and Chiron each
shall proceed diligently with their respective obligations under each such
Development Program and shall use their respective Commercially Reasonable
Efforts to achieve its objectives efficiently and expeditiously. Gen-Probe and
Chiron each shall allocate sufficient personnel, equipment, facilities and other
resources to each such Development Program to carry out their respective
obligations and to accomplish the objectives thereof.
(d) Subcontracts. Upon approval of the Supervisory Board which shall
not be unreasonably withheld by either party (and except as to such subcontracts
which exist as of the Effective Date), Gen-Probe and Chiron each may subcontract
portions of the Development Program for each Initial Blood Screening Assay to be
performed by it in the normal course of its business; provided, however, that
(i) unless the other party gives its prior written consent, such subcontracting
shall not involve the transfer (including but not limited to any sublicense) of
any intellectual property rights of the other party or Confidential Information
of the other party to Third Parties; (ii) if the other party consents to the
subcontractor's access to Confidential Information of the other party, the
subcontracted party shall enter into a confidentiality agreement with the
subcontracting party incorporating the terms of Article 8 below; (iii) the
subcontracting party shall supervise such subcontract work; (iv) the
subcontracted party shall be in compliance in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party, [***];
and (vi) if required by the Supervisory Board, the subcontracted party shall
enter into an agreement with the subcontracting party to effectuate the
provisions of Article 9
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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below, and which shall include a provision for assignment of inventions arising
from the subcontracted work.
3.1.2 Funding. Gen-Probe shall pay all Development Costs of
conducting its obligations under the Development Program for each Initial Blood
Screening Assay; provided, however, that Chiron shall reimburse Gen-Probe for
the mutually-agreed amount of Development Costs associated with implementing
those modifications (if any) to the applicable specifications and the applicable
Development Program documents as Chiron proposes and Gen-Probe agrees. In the
event it undertakes or is assigned by the Supervisory Board any responsibilities
in connection with the Development Program for each such Initial Blood Screening
Assay, Chiron shall pay all Development Costs of conducting its obligations
under the Development Program for each Initial Blood Screening Assay.
3.1.3 Manufacturing.
(a) Subject to Section 3.1.3(b) below, Gen-Probe shall have the
exclusive right and the obligation to manufacture (or to have manufactured) and
supply Chiron with its requirements of the Initial Blood Screening Assays in
the Territory for use in the Blood Screening Field in accordance with Article 6
below.
(b) If Gen-Probe (i) fails at any time during the Blood Screening
Term to maintain the applicable FDA (CBER) license for the facility used to
manufacture an Initial Blood Screening Assay (unless Gen-Probe is approved by
CBER to manufacture from an alternate location or the Supervisory Board agrees
within fifteen days of such event that Gen-Probe shall retain the manufacturing
responsibility hereunder); or (ii) fails to supply Chiron within [***] after the
requested delivery date with Chiron's monthly requirements for an Initial Blood
Screening Assay ordered in accordance with Section 6.3 below, for any [***]
(unless the Supervisory Board agrees within fifteen days of such event that
Gen-Probe shall retain the manufacturing responsibility hereunder), then Chiron
shall have the right to, and if Chiron elects to manufacture or have
manufactured, the obligation to use Commercially Reasonable Efforts to,
manufacture (or to have manufactured) its requirements of such Initial Blood
Screening Assay, to be conducted by the Blood Screening Instruments in the
Territory for use in the Blood Screening Field; provided, however, such right of
Chiron shall be on an assay-by-assay basis for a failure to supply and provided
further that to the extent Gen-Probe is able to meet Chiron's requirements for
Rare Reagents in accordance with this agreement, Gen-Probe shall retain the
exclusive right to manufacture (or to have manufactured) and the obligation to
supply Chiron with its requirements of the Rare Reagents for use in such Initial
Blood Screening Assay in accordance with Article 6 below. In such event, Chiron
shall consider in good faith, as its preferred alternative upon Gen-Probe's
request, to take over control and responsibility for the facility used by
Gen-Probe to manufacture the Initial Blood Screening Assays, and Gen-Probe
promptly shall provide such
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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reasonable technical assistance, at Gen-Probe's sole cost, as necessary to
enable Chiron to exercise its rights to manufacture (or have manufactured) such
Initial Blood Screening Assay.
(c) If either party exercises any right granted hereunder to have
any Initial Blood Screening Assay manufactured, then (i) such party shall first
require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
3.1.4 Commercialization.
(a) Except as otherwise set forth in Sections 3.1.4(b), 3.1.4(d) and
3.6 below, during the Blood Screening Term, Gen-Probe hereby grants to Chiron
the exclusive distribution right in the Territory, at Chiron's sole cost,
directly or through distributors, to promote, market and sell the Initial Blood
Screening Assays to be conducted by the Blood Screening Instruments for use in
the Blood Screening Field. Chiron shall use its Commercially Reasonable Efforts
to promote, market, sell and meet the reasonably foreseeable market demands for
the Initial Blood Screening Assays in the Territory to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field.
(b) CDS shall have the exclusive right, at its sole cost, to
promote, market and sell the Japanese HIV Qualitative Blood Screening Assay in
Japan for use in the Blood Screening Field until the earlier of (i) [***] after
the First Commercial Sale of the Japanese HIV Qualitative Blood Screening Assay
in Japan for use in the Blood Screening Field, and (ii) the [***] in Japan for
use in the Blood Screening Field. Thereafter, subject to Section 3.1.4(d) below,
during the Blood Screening Term, Chiron shall have the exclusive right, at its
sole cost, to promote, market and sell the Japanese HIV Qualitative Blood
Screening Assay in Japan for use in the Blood Screening Field. Chiron's Japanese
Affiliate shall support the marketing in Japan for the Japanese HIV Qualitative
Blood Screening Assay in a manner to be agreed upon between CDS and Chiron's
Japanese Affiliate and not inconsistent with CDS's marketing program.
(c) Subject to regulatory requirements, the Initial Blood Screening
Assays shall be marketed under such trademarks as may be determined by the
Supervisory Board to give adequate recognition to the respective contributions
and interests of the parties, and, if applicable, the Major Distributor. It is
the intention of the parties that both parties' contributions and interests will
be recognized.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(d) CDS shall have the right to co-promote the Initial Blood
Screening Assays in Japan, provided that such co-promotion conforms with the
marketing, product, pricing, and promotional strategy as determined by Chiron or
the Major Distributor (provided that no such strategy shall preclude
co-promotion).
3.1.5 Licenses.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under each Development Program to develop the
Initial Blood Screening Assays, and (ii) to manufacture or have manufactured the
Initial Blood Screening Assays. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) During the Blood Screening Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's obligations, if any, under each Development Program to develop
the Initial Blood Screening Assays. Chiron shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) any Initial Blood Screening Assay under
Section 3.1.3(b) above, during the balance of the Blood Screening Term,
Gen-Probe shall grant to Chiron a nonexclusive (except to the extent that
Gen-Probe elects to meet the requirements of CDS as provided under Section
3.1.4(b) above) license in the Territory under the Gen-Probe IP Rights to
exercise its rights under Section 3.1.3(b) above to manufacture (or have
manufactured) such Initial Blood Screening Assays to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field. Chiron shall not
have the right to grant sublicenses under such license, without the prior
express written consent of Gen-Probe.
3.1.6 Compensation to Gen-Probe. In consideration for the rights
granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) Transfer Price. Within thirty (30) days after receipt of each
shipment and invoice of Initial Blood Screening Assays from Gen-Probe, Chiron
shall pay to Gen-Probe the Transfer Price for each Initial Blood Screening Assay
purchased by Chiron or its Affiliates.
(b) Applicable Purchase Price. Within forty-five days after the end
of each calendar month, if the Applicable Purchase Price for each Initial Blood
Screening Assay sold by Chiron, its Affiliates, or the Major Distributor (other
than sales pursuant to Sections 3.1.4(b) or 3.6) during such calendar month is
greater than the Transfer Price for such Initial Blood Screening Assay
previously paid by Chiron or its Affiliates to Gen-Probe, then
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Chiron shall pay the difference to Gen-Probe. If the Applicable Purchase Price
for an Initial Blood Screening Assay sold by Chiron, its Affiliates, or the
Major Distributor (other than sales pursuant to Sections 3.1.4(b) or 3.6) during
such calendar month is less than the Transfer Price for such Initial Blood
Screening Assay previously paid by Chiron, its Affiliates, or the Major
Distributor to Gen-Probe, then Gen-Probe shall pay the difference to Chiron.
(c) Adjustment to Applicable Purchase Price.
(i) If, in any calendar quarter, the average Net Sales price
per unit in the United States for the Initial Blood Screening Assay for the
qualitative detection of both HCV and HIV-1 (other than sales pursuant to
Sections 3.1.4(b) or 3.6) is [***], (provided, however, that such threshold
price shall be adjusted for inflation occurring after the Effective Date which
increases Gen-Probe's net Manufacturing Cost, pursuant to a fair method to be
agreed upon by the parties), then the parties shall meet and negotiate in good
faith concerning an adjustment to the Applicable Purchase Price in the Territory
designed to compensate Gen-Probe with respect to the disproportionate burden
which, as the party bearing the manufacturing cost, it would bear from the
reduction in the average selling price. At such time, if any, the parties will
consider, as one alternative, the establishment of a fixed transfer price for
the Initial Blood Screening Assays.
(ii) Within sixty (60) days after the end of each calendar
quarter, Chiron shall prepare and provide Gen-Probe with a report showing in
reasonably specific detail for such calendar quarter the calculation of the
weighted average of the Net Sales price per unit in the Territory for the
Initial Blood Screening Assay for the qualitative detection of both HCV and
HIV-1 (other than sales pursuant to Sections 3.1.4(b) or 3.6).
(d) Applicable Royalty. Within sixty (60) days after the end of each
calendar quarter, Chiron shall pay to Gen-Probe the Applicable Royalty, if any,
for each Initial Blood Screening Assay sold by Chiron or its Affiliates during
such calendar quarter.
(e) Rare Reagent Price. Within thirty (30) days after receipt of
each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to [***] of the Manufacturing Cost for all Rare Reagents purchased
by Chiron for use in manufacturing Initial Blood Screening Assays under Section
3.1.3(b) above.
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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3.1.7 Compensation to Chiron. Gen-Probe shall cause CDS to pay to
Chiron an amount equal to [***] of the Net Sales of each Japanese HIV
Qualitative Blood Screening Assay sold by CDS in Japan prior to the [***] by CDS
in Japan of the Japanese HIV Qualitative Blood Screening Assay, and (b) [***] of
the Net Sales of each Japanese HIV Qualitative Blood Screening Assay sold by CDS
in Japan for sales [***] by CDS in Japan of the Japanese HIV Qualitative Blood
Screening Assay. The payment provisions of Article 7 shall apply to CDS. The
payments due hereunder shall be made within forty-five (45) days after the end
of each calendar quarter.
3.2 Future Blood Screening Assays.
3.2.1 Selection.
(a) From time to time during the Blood Screening Term, the
Supervisory Board shall discuss the selection and establishment of one or more
Development Programs for one or more Future Blood Screening Assays to be
conducted by the Blood Screening Instruments.
(b) If both parties wish to develop a Future Blood Screening Assay,
the Supervisory Board shall discuss in good faith and establish a mutually
acceptable written Development Program and a budget for such development (both
of which shall be updated at least annually) for such Future Blood Screening
Assay which shall set forth (i) the specifications for such Future Blood
Screening Assay, and (ii) the parties' respective obligations to develop such
Future Blood Screening Assay and to conduct such clinical trials and apply for
such regulatory approvals as necessary or appropriate to make and sell the
Future Blood Screening Assays in the Territory for use in the Blood Screening
Field.
(c) If one party wishes to develop the Future Blood Screening Assay
and the other party does not, the party wishing to conduct such development
shall have the right to proceed at its sole expense, in accordance with a
Development Program, including a budget, to be updated annually, approved by the
Supervisory Board (which approval shall not be unreasonably withheld or
delayed), provided that such Developing Party may elect to cease such
development at any time in its discretion. The other party shall have no
obligation to fund any of the Development Costs of conducting the Development
Program for such Future Blood Screening Assay. In any event, Chiron shall have
the exclusive right to market and sell all Future Blood Screening Assays
pursuant to Section 3.2.5.
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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3.2.2 Development Programs.
(a) Responsibilities. With respect to each Future Blood Screening
Assay and subject to the provisions of Section 3.2.1, Gen-Probe and Chiron each
shall conduct their respective obligations under the Development Program
established by the Supervisory Board for such Future Blood Screening Assay to
develop such Future Blood Screening Assay in accordance with the specifications
established by the Supervisory Board, and to conduct such clinical trials and
apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell such Future Blood Screening Assay to be conducted
by the Blood Screening Instruments in the Territory for use in the Blood
Screening Field. Each party shall have the right to consult with the other party
regarding any Development Program pursuant to Section 3.2.1(c) and the other
party shall reasonably consider such party's advice and recommendations.
(b) Conduct of Development. Gen-Probe and Chiron shall conduct their
respective obligations under the Development Program for each Future Blood
Screening Assay in compliance in all material respects with all requirements of
applicable laws and regulations and all applicable good laboratory, clinical and
manufacturing practices. Gen-Probe and Chiron each shall proceed diligently with
their respective obligations under each such Development Program and shall use
their respective Commercially Reasonable Efforts to achieve its objectives
efficiently and expeditiously. Gen-Probe and Chiron each shall allocate
sufficient personnel, equipment, facilities and other resources to each such
Development Program to carry out their respective obligations and to accomplish
the objectives thereof.
(c) Subcontracts. Upon approval of the Supervisory Board, which
shall not be unreasonably withheld by either party, Gen-Probe and Chiron each
may subcontract portions of the Development Program for each Future Blood
Screening Assay to be performed by it in the normal course of its business;
provided, however, that (i) unless the other party gives its prior written
consent, such subcontracting shall not involve the transfer (including but not
limited to sublicense) of any intellectual property rights of the other party or
the Confidential Information of the other party to Third Parties; (ii) if the
other party consents to the subcontractor's access to Confidential Information
of the other party, the subcontracted party shall enter into a confidentiality
agreement with the subcontracting party incorporating the terms of Article 8
below; (iii) the subcontracting party shall supervise such subcontract work;
(iv) the subcontracted party shall be in compliance in all material respects
with all requirements of applicable laws and regulations, together with all
applicable good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party, [***];
and (vi) if required by the Supervisory Board, the subcontracted party shall
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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enter into an agreement with the subcontracting party to effectuate the
provisions of Article 9 below, and which shall include a provision for
assignment of inventions arising from the subcontracted work.
3.2.3 Funding.
(a) Subject to Section 3.2.3(b) below, Gen-Probe and Chiron each
shall pay one half (1/2) of the aggregate Development Costs of conducting the
Development Program for each Future Blood Screening Assay which they mutually
agree to develop. Within thirty (30) days after the end of each calendar
quarter, each party shall report to the other all Development Costs incurred by
such party (if any) during such calendar quarter in conducting the Development
Program for each Future Blood Screening Assay. Within thirty (30) days after
receiving such reports, the parties shall make such payments to each other as
are necessary to cause each party to have paid its appropriate share under this
section of the aggregate budgeted Development Costs incurred with respect to the
Development Program for such Future Blood Screening Assay during such calendar
quarter.
(b) In the case of a Future Blood Screening Product which is funded
by one party pursuant to Section 3.2.1(c), such party shall be solely
responsible for all Development Costs of such Future Blood Screening Assay.
(i) If the funding party is Gen-Probe, Chiron shall pay, in
accordance with Section 3.2.7(c) below, an additional royalty to Gen-Probe equal
to a percentage, established by the Supervisory Board at the time of approval of
the Development Program, of Net Sales of such Future Blood Screening Assay,
until the aggregate royalty paid to Gen-Probe solely under this sentence
effectively reimburses Gen-Probe for disproportionate budgeted Development Costs
incurred by Gen-Probe with respect to the Development Program for such Future
Blood Screening Assay.
(ii) If the funding party is Chiron, Chiron shall be entitled
to offset against amounts owing to Gen-Probe solely with respect to such Future
Blood Screening Assay an amount equal to a percentage, established by the
Supervisory Board at the time of approval of the Development Program, of Net
Sales of such Future Blood Screening Assay, until the aggregate offset taken
solely under this sentence effectively reimburses Chiron for disproportionate
budgeted Development Costs incurred by Chiron with respect to the Development
Program for such Future Blood Screening Assay.
(iii) The additional royalty or offset established by the
Supervisory Board shall be intended to enable the funding party to recover such
Development Costs for such Development Program within the longer of (i) [***] or
(ii) a period equal to the duration of such Development Program. The additional
royalty or offset shall be set based on the information available to the
Supervisory Board at the time of its initial approval of
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*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
the Development Program and shall not be adjusted thereafter except at the sole
discretion of the Supervisory Board.
3.2.4 Manufacturing.
(a) Subject to Section 3.2.4(b) below, Gen-Probe shall have the
exclusive right and the obligation to manufacture (or to have manufactured) and
supply Chiron with its requirements of the Future Blood Screening Assays in the
Territory for use in the Blood Screening Field in accordance with Article 6
below.
(b) If Gen-Probe (i) fails at any time during the Blood Screening
Term to maintain the applicable FDA (CBER) license for the facility used to
manufacture the Future Blood Screening Assays (unless Gen-Probe is approved by
CBER to manufacture from an alternate location or the Supervisory Board agrees
within fifteen days of such event that Gen-Probe shall retain the manufacturing
responsibility hereunder) or (ii) fails to supply Chiron within [***] after the
requested delivery date with Chiron's monthly requirements for a Future Blood
Screening Assay ordered in accordance with Section 6.3 below, for any [***]
(unless the Supervisory Board agrees within fifteen days of such event that
Gen-Probe shall retain the manufacturing responsibility hereunder), then Chiron
shall have the right to, and if Chiron elects to manufacture or have
manufactured, the obligation to use Commercially Reasonable Efforts to,
manufacture (or to have manufactured) its requirements of such Future Blood
Screening Assays,, all to the extent that any such Assay is to be conducted by
the Blood Screening Instruments in the Territory for use in the Blood Screening
Field; provided, however, such right of Chiron shall be on an assay-by-assay
basis for a failure to supply and provided further that to the extent Gen-Probe
is able to meet Chiron's requirements for Rare Reagents in accordance with this
Agreement, Gen-Probe shall retain the exclusive right to manufacture (or to have
manufactured) and the obligation to supply Chiron with its requirements of the
Rare Reagents for use in such Future Blood Screening Assay in accordance with
Article 6 below. In such event, Chiron shall consider in good faith, as its
preferred alternative upon Gen-Probe's request, to take over control and
responsibility for Gen-Probe's facility used to manufacture the Future Blood
Screening Assays, and Gen-Probe promptly shall provide such reasonable technical
assistance, at Gen-Probe's sole cost, as necessary to enable Chiron to exercise
its rights to manufacture (or have manufactured) such Future Blood Screening
Assay.
(c) If a party exercises any right granted hereunder to have any
Future Blood Screening Assay manufactured, then (i) such party shall first
require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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party shall enter into an agreement with such party to the extent necessary to
effectuate the provisions of Article 9 below.
3.2.5 Commercialization.
(a) During the Blood Screening Term, Gen-Probe hereby grants to
Chiron the exclusive distribution right in the Territory, at Chiron's sole cost,
directly or through distributors, to promote, market and sell the Future Blood
Screening Assays to be conducted by the Blood Screening Instruments for use in
the Blood Screening Field. Chiron shall use its Commercially Reasonable Efforts
to promote, market, sell and meet the reasonably foreseeable market demands for
the Future Blood Screening Assays in the Territory to be conducted by the Blood
Screening Instruments for use in the Blood Screening Field.
(b) Subject to regulatory requirements, the Future Blood Screening
Assays shall be marketed under such trademarks as may be determined by the
Supervisory Board to give adequate recognition to the respective contributions
and interests of the parties, and, if applicable, the Major Distributor. It is
the intention of the parties that both parties' contributions and interests will
be recognized.
3.2.6 Licenses.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under each Development Program to develop the
Future Blood Screening Assays, and (ii) to manufacture or have manufactured the
Future Blood Screening Assays. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) During the Blood Screening Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's obligations, if any, under each Development Program to develop
the Future Blood Screening Assays. Chiron shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) any Future Blood Screening Assays under
Section 3.2.4(b) above, during the balance of the Blood Screening Term,
Gen-Probe shall grant to Chiron a nonexclusive license in the Territory under
the Gen-Probe IP Rights to exercise its rights under Section 3.2.4(b) above to
manufacture (or have manufactured) such Future Blood Screening Assays to be
conducted by the Blood Screening Instruments for use in the Blood Screening
Field. Chiron shall not have the right to grant sublicenses under such license,
without the prior express written consent of Gen-Probe.
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3.2.7 Compensation to Gen-Probe. In consideration for the rights
granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) Transfer Price. Within thirty (30) days after receipt of each
shipment and invoice of Future Blood Screening Assays from Gen-Probe, Chiron
shall pay to Gen-Probe the Transfer Price for each Future Blood Screening Assay
purchased by Chiron or its Affiliates.
(b) Applicable Purchase Price. Within forty-five (45) days after the
end of each calendar month, if the Applicable Purchase Price for each Future
Blood Screening Assay sold by Chiron, its Affiliates, or the Major Distributor
during such calendar month is greater than the Transfer Price for such Future
Blood Screening Assay previously paid by Chiron or its Affiliates to Gen-Probe,
then Chiron shall pay the difference to Gen-Probe. If the Applicable Purchase
Price for a Future Blood Screening Assay sold by Chiron, its Affiliates, or the
Major Distributor during such calendar month is less than the Transfer Price for
such Future Blood Screening Assay previously paid by Chiron or its Affiliates to
Gen-Probe, then Gen-Probe shall pay the difference to Chiron.
(c) Applicable Royalty. Within sixty (60) days after the end of each
calendar quarter, Chiron shall pay to Gen-Probe the Applicable Royalty, if any,
for each Future Blood Screening Assay sold by Chiron or its Affiliates during
such calendar quarter.
(d) Rare Reagent Price. Within thirty (30) days after receipt of
each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to [***] of the Manufacturing Costs for all Rare Reagents purchased
by Chiron for use in manufacturing Future Blood Screening Assays under Section
3.2.4(b) above.
3.2.8 Noncompetition.
(a) During the Blood Screening Term, neither party shall develop,
manufacture or sell (whether alone, with or by its Affiliate, or in
collaboration with any Third Party) any nucleic acid probe based assay
specifically intended for use in the Blood Screening Field (recognizing the
lack of clear distinction between blood screening and clinical diagnostic
markets in some countries), other than pursuant to this Agreement and except as
provided in Section 3.2.8(b), (c), or (d) below, and except as follows:
(i) Chiron and/or its Affiliates shall have the right to
develop, manufacture and/or sell non-TMA assays for use in the Blood Screening
Field, alone or in collaboration with a Third Party, using a new or improved
nucleic acid probe based assay method and instrumentation for such assay method
which is demonstrated to be technologically superior to the technologies
incorporated in the Products for the Blood Screening Field. For
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the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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this purpose, superiority of the other technology must be demonstrated using
reasonable measures, which shall include significant advantages as compared
with TMA Assays and a significant negative impact on sales and profits of Blood
Screening Assays. Chiron and/or its Affiliates shall also have the right
to develop, manufacture and/or sell any non-TMA assay for use in the Blood
Screening Field, alone or in collaboration with a Third Party, using a new or
improved nucleic acid probe based assay method and instrumentation for such
assay method which is mandated, by an applicable regulatory authority, for use
(i) in place of, or (ii) in conjunction with, a Product for the Blood Screening
Field. No grant of any license to Chiron by Gen-Probe under this Agreement shall
apply to any non-TMA Assay.
(ii) In the event that Chiron (or its Affiliates) elects to
develop, manufacture or sell an assay in the Blood Screening Field using
another technology for the same virus or marker as a Blood Screening Assay
pursuant to Section 3.2.8(a)(i), and Chiron ceases to market and sell such
Blood Screening Assay, directly or through distributors, Gen-Probe shall have
the right to market and sell such Blood Screening Assay, and Chiron shall grant
to Gen-Probe such licenses under Chiron IP Rights as are necessary to enable
such activities by Gen-Probe. In such event, Gen-Probe shall pay Chiron a
percentage of Net Sales by Gen-Probe of such Blood Screening Assay, to be
negotiated reasonably and in good faith by the parties, which will be based on
the revenue sharing reflected in the Applicable Purchase Price of such Blood
Screening Assay under this Agreement, equitably adjusted to reflect the
additional marketing and sales costs assumed by Gen-Probe. In the event that
Chiron elects to develop, manufacture or sell an assay in the Blood Screening
Field using another technology for the same virus or marker as a Blood
Screening Assay pursuant to Section 3.2.8(a)(i), and Chiron continues to market
and sell such Blood Screening Assay, directly or through distributors,
Gen-Probe shall have the right to co-promote such Blood Screening Assay. If
Gen-Probe exercises such right to co-promote, the parties will negotiate in
good faith to adjust the Applicable Purchase Price in order to compensate
Gen-Probe for the expenses incurred for such co-promotion.
(b) Subject to the provisions of Section 1.2.1, during the Blood
Screening Term, Chiron shall have the right, in its sole discretion, to grant
licenses to Third Parties under the Chiron HCV Patent Rights or the Chiron HIV
Patent Rights, with the following limitations. With respect to the patent rights
for each virus, and in the United States and Japan only, once Chiron has
granted [***] with respect to such virus for use in the Blood Screening Field,
upon the grant of [***] license to such patent rights for such virus in such
country for use in the Blood Screening Field, Chiron shall pay to Gen-Probe
[***] of all consideration received by Chiron in return for the grant of such
license for such virus, including upfront fees, royalties and non-cash
consideration. Any further licenses, except for a license of the type
described in Section 1.2.1(e) above, of such patent rights for such virus in
such country for use in the Blood Screening Field may be granted
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*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
only with the prior written consent of Gen-Probe which shall not be unreasonably
withheld so long as Chiron adequately compensates Gen-Probe. A license by Chiron
for an HIV or HCV assay for the sole purpose of confirming or supplementing the
results of a Blood Screening Assay shall not be considered as a license subject
to the terms and restrictions of this section, so long as such confirmatory or
supplemental assay is mandated by applicable regulatory authorities or demanded
by the market.
(c) During the Blood Screening Term, neither party shall grant to
any Third Party any license or other rights to develop or commercialize any
nucleic acid probe-based assay for any virus or marker for which there is no
Blood Screening Assay then being developed or commercialized under this
Agreement for use in the Blood Screening Field (including an assay for the sole
purpose of confirming or supplementing the results of a Blood Screening Assay),
unless such party has first presented to the Supervisory Board the opportunity
to develop and commercialize a TMA Assay for such virus or marker under this
Agreement for use in the Blood Screening Field. Such opportunity may involve
nonexclusive or exclusive rights to the virus or marker, as negotiated by the
parties through the Supervisory Board. Such negotiation shall include a
determination of the Applicable Purchase Price pursuant to Section 1.2.3, which
shall take into account the extent to which the opportunity is exclusive or
nonexclusive. If the arrangement accepted by the Supervisory Board is
nonexclusive, the party holding the intellectual property for the virus or
marker shall be free to license rights to such virus or marker to Third Parties
for use in the Blood Screening Field; and if not, licensing shall be subject to
such restrictions as are then agreed upon.
(d) Nothing contained in this Article 3 shall preclude Gen-Probe
from developing, manufacturing, using or selling nucleic acid probes to
ribosomal RNA pursuant to U.S. Patent No. 4,851,330, or U.S. Patent No.
5,288,611 and divisional, continuations, continuations-in-part, reissues,
renewals, extensions or additions (the "Ribosomal RNA Patents"). Gen-Probe shall
be entitled to use Hybridization Protection Assays ("HPA") in connection with
any such nucleic acid probes to ribosomal RNA. In the event that Gen-Probe
commercializes any such product for the Blood Screening Field, [***]. Gen-Probe
shall reasonably consider extending such [***] as to other countries for which
it has a right to do so.
(e) During the Blood Screening Term, Gen-Probe shall not grant to
any Third Party a license under the Gen-Probe IP Rights to develop or
commercialize (i) a TMA assay for use in the Blood Screening Field or (ii) an
assay utilizing Gen-Probe's "Hybridization Protection Assay" ("HPA") for use in
the Blood Screening Field.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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3.3 Blood Screening Instruments.
3.3.1 Development Program.
(a) Establishment. Prior to the date of this Agreement, Gen-Probe
has expended significant effort and resources in the development of the Blood
Screening Instruments for use in the Blood Screening Field. Promptly following
the Effective Date, Gen-Probe shall prepare and submit to Chiron a written
Development Program and budget for each Blood Screening Instrument (excluding
modifications and future instruments as described in Sections 3.3.7 and 3.3.8,
respectively), which shall set forth (i) the specifications for such Blood
Screening Instrument, (ii) a schedule for such Development Program, and (iii)
the parties' respective obligations to develop such Blood Screening Instrument
and (if applicable) to conduct such clinical trials and apply for such
regulatory approvals as necessary or appropriate to make and sell in the
Territory such Blood Screening Instrument for use in the Blood Screening Field;
provided, however, that any responsibilities of Chiron under the Development
Program for any Blood Screening Instrument shall be subject to the prior express
written consent of Chiron. The Development Program as proposed by Gen-Probe for
each Blood Screening Instrument may not be modified except by the action of the
Supervisory Board.
(b) Responsibilities. Gen-Probe shall develop each of the Blood
Screening Instruments in accordance with the applicable specifications and the
applicable Development Program documents and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell each of the Blood Screening Instruments in the
Territory for use in the Blood Screening Field. Chiron shall consult with
Gen-Probe on such matters and Gen-Probe shall reasonably consider Chiron's
advice and recommendations on all matters relating to such Development Program.
(c) Conduct of Development. Gen-Probe and Chiron, in the event it
undertakes or is assigned by the Supervisory Board any responsibilities in
connection with the Development Program for each such Initial Blood Screening
Assay, shall conduct their respective obligations under the Development Program
for the Blood Screening Instruments in compliance in all material respects with
all requirements of applicable laws and regulations, if any, and all applicable
good laboratory, clinical and manufacturing practices. Gen-Probe and Chiron each
shall proceed diligently with their respective obligations under such
Development Program and shall use their respective Commercially Reasonable
Efforts to achieve its objectives efficiently and expeditiously. Gen-Probe and
Chiron each shall allocate sufficient personnel, equipment, facilities and other
resources to such Development Program to carry out their respective obligations
and to accomplish the objectives thereof.
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(d) Subcontracts. Upon approval of the Supervisory Board which shall
not be unreasonably withheld by either party (and except as to such subcontracts
which exist as of the Effective Date), Gen-Probe and Chiron each may subcontract
portions of the Development Program for the Blood Screening Instruments to be
performed by it in the normal course of its business; provided, however, that
(i) unless the other party gives its prior written consent, such subcontracting
shall not involve the transfer (including but not limited to sublicense) of any
intellectual property rights of the other party or the Confidential Information
of the other party to Third Parties; (ii) if the other party consents to the
subcontractor's access to Confidential Information of the other party, the
subcontracted party shall enter into a confidentiality agreement with the
subcontracting party incorporating the terms of Article 8 below; (iii) the
subcontracting party shall supervise such subcontract work; (iv) the
subcontracted party shall be in compliance in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party, [***];
and (vi) if required by the Supervisory Board, the subcontracted party shall
enter into an agreement with the subcontracting party to effectuate the
provisions of Article 9 below, and which shall include a provision for
assignment of inventions arising from the subcontracted work.
3.3.2 Funding. Gen-Probe shall pay all Development Costs of
conducting its obligations under the Development Program for the Blood Screening
Instruments; provided, however, that Chiron shall reimburse Gen-Probe for the
Development Costs associated with implementing those modifications (if any) to
the applicable specifications and the applicable Development Program documents
as Chiron proposes and Gen-Probe agrees. In the event it undertakes or is
assigned by the Supervisory Board any responsibilities in connection with the
Development Program for each such Blood Screening Instrument, Chiron shall pay
all Development Costs of conducting its obligations under the Development
Program for the Blood Screening Instruments.
3.3.3 Manufacture.
(a) Subject to Sections 3.3.3(b) and 3.3.3(c) below, Gen-Probe shall
have the exclusive right and the obligation to manufacture (or to have
manufactured) and supply Chiron with its requirements of the Blood Screening
Instruments in the Territory for use in the Blood Screening Field in accordance
with Article 6 below.
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***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
(b) If Gen-Probe [***] to manufacture any of the Blood Screening
Instruments (excluding future instruments as described in Sections 4.4.8,
respectively), [***]. Any such subcontracts for the manufacture of any of the
Blood Screening Instruments (in whole), or any of the major functional
components or disposables thereof, shall be subject to the approval of the
Supervisory Board which shall not be unreasonably withheld by either party.
(c) If Gen-Probe fails to supply Chiron [***] for a Blood Screening
Instrument ordered in accordance with Section 6.3 below, for any [***] (unless
the Supervisory Board agrees within fifteen days of such event that Gen-Probe
shall retain the manufacturing responsibility hereunder), then Chiron shall have
the right to, and if Chiron elects to manufacture or have manufactured, the
obligation to use Commercially Reasonable Efforts to, manufacture (or to have
manufactured) its requirements of such Blood Screening Instrument in the
Territory for use in the Blood Screening Field. In such event, Gen-Probe
promptly shall provide such reasonable technical assistance, at Gen-Probe's sole
cost, as necessary to enable Chiron to exercise its rights to manufacture (or
have manufactured) such Blood Screening Instrument for use in the Blood
Screening Field and Gen-Probe shall provide to Chiron, directly or indirectly,
to the greatest possible extent, all remedies available to Gen-Probe against any
Instrument manufacturer which has failed to supply Gen-Probe in accordance with
the applicable manufacturing contract.
(d) If either party exercises any right granted hereunder to have
any Blood Screening Instrument manufactured, then (i) such party shall first
require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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3.3.4 Commercialization.
(a) Except as otherwise set forth in Sections 3.3.4(b), 3.3.4(d) and
3.6 below, during the Blood Screening Term, Gen-Probe hereby grants to Chiron
the exclusive distribution right in the Territory, at Chiron's sole cost,
directly or through distributors, to promote, market and sell the Blood
Screening Instruments to conduct Blood Screening Assays for use in the Blood
Screening Field (recognizing the lack of clear distinction between the Blood
Screening Field and Clinical Diagnostic Field in certain countries). Chiron
shall use its Commercially Reasonable Efforts to promote, market, sell and meet
the reasonably foreseeable market demands for the Blood Screening Instruments in
the Territory for use in the Blood Screening Field. [***]
(b) CDS shall have the exclusive right, at its sole cost, to
promote, market and sell the Blood Screening Instruments in Japan for use in the
Blood Screening Field until the earlier of (i) [***] of the Japanese HIV
Qualitative Blood Screening Assay in Japan for use in the Blood Screening Field,
and (ii) [***] for the qualitative detection of both HCV and HIV-1 in Japan for
use in the Blood Screening Field. Thereafter, subject to Section 3.3.4(d) below,
during the Blood Screening Term, Chiron shall have the exclusive right, at its
sole cost, to promote, market and sell the Blood Screening Instruments in Japan
for use in the Blood Screening Field. Chiron's Japanese Affiliate shall support
the marketing in Japan for the Blood Screening Instruments, in a manner to be
agreed upon between CDS and Chiron's Japanese Affiliate and not inconsistent
with CDS's marketing program, during the period in which CDS has the exclusive
right to sell such Instruments.
(c) Subject to regulatory requirements, the Blood Screening
Instruments shall be marketed under such trademarks as may be determined by the
Supervisory Board to give adequate recognition to the respective contributions
and interests of the parties, and, if applicable, the Major Distributor. It is
the intention of the parties that both parties' contributions and interests will
be recognized.
(d) CDS shall have the right to co-promote the Blood Screening
Instruments in Japan, provided that such co-promotion conforms with the
marketing, product, pricing, and promotional strategy as determined by Chiron or
the Major Distributor (provided that no such strategy shall preclude
co-promotion).
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(e) Chiron shall have the right, and the obligation, at its sole
expense, to maintain and service all Blood Screening Instruments placed in the
Territory for use in the Blood Screening Field. Chiron shall be a party to all
service contracts for all such Blood Screening Instruments, including those
Blood Screening Instruments that are placed by CDS in Japan for use in the Blood
Screening Field. Chiron shall have the right to charge a fee to the users of
such Blood Screening Instruments for such service.
3.3.5 Licenses.
(a) During the Blood Screening Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under the Development Program to develop the
Blood Screening Instruments, and (ii) to manufacture or have manufactured the
Blood Screening Instruments. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) During the Blood Screening Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's obligations, if any, under the Development Program to develop
the Blood Screening Instruments. Chiron shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Gen-Probe.
(c) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) the Blood Screening Instruments under Section
3.3.3(c) above, during the balance of the Blood Screening Term, Gen-Probe shall
grant to Chiron a nonexclusive license in the Territory under the Gen-Probe IP
Rights to exercise its rights under Section 3.3.3(c) above to manufacture (or
have manufactured) the Blood Screening Instruments to conduct the Blood
Screening Assays for use in the Blood Screening Field. Chiron shall not have the
right to grant sublicenses under such license, without the prior express written
consent of Gen-Probe.
3.3.6 Compensation to Gen-Probe. In consideration for the rights
granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) Transfer Price. Within thirty (30) days after receipt of each
shipment and invoice of Blood Screening Instruments from Gen-Probe, Chiron shall
pay to Gen-Probe the Transfer Price for each Blood Screening Instrument
purchased by Chiron or its Affiliates.
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(b) Instrument Sales in the United States and Canada. Chiron, its
Affiliates and the Major Distributor shall be entitled to retain [***] of Blood
Screening Instruments by Chiron, its Affiliates or the Major Distributor in the
United States or Canada. After Chiron, its Affiliates and the Major Distributor
have received [***] , within forty-five (45) days after the end of each fiscal
quarter, Chiron shall pay to Gen-Probe a percentage of Net Sales of each Blood
Screening Instrument sold by Chiron, its Affiliates or the Major Distributor to
independent customers in the United States and Canada during such fiscal
quarter, calculated using the same percentage rate as is used in the then
effective Applicable Purchase Price payable to Gen-Probe for Initial Blood
Screening Assays pursuant to Section 1.2.1.
(c) Instrument Sales Outside the United States and Canada. CDS and
Chiron each shall retain [***] of Blood Screening Instruments outside the United
States and Canada.
(d) Service Revenues. Chiron shall retain [***] in consideration for
the maintenance and servicing of the Blood Screening Instruments.
3.3.7 Modifications to Blood Screening Instruments. The rights
granted by Gen-Probe to Chiron with respect to any of the Blood Screening
Instruments during the Blood Screening Term shall extend to and include any and
all modifications to such Blood Screening Instrument as are developed during the
Blood Screening Term to improve the sample processing, amplification, detection,
analysis, or reliability of such Blood Screening Instrument which utilize the
same base technologies and which do not change the fundamental character of such
Blood Screening Instrument, to the extent that Gen-Probe is not prohibited as of
the Effective Date from granting such rights. It is the intent of the parties
that this Section apply to improvements to the existing Blood Screening
Instruments, but not to an instrument which is fairly considered to be a new
instrument. From time to time during the Blood Screening Term, the Supervisory
Board shall consider potential modifications to the initial Development Program
for the Blood Screening Instruments and to the Blood Screening Instruments. The
Supervisory Board shall allocate as between the parties the cost of any
modification which it approves.
3.3.8 Other Blood Screening Instruments. If Gen-Probe develops any
new instrument for use with TMA Assays in the Blood Screening Field, it shall
offer to grant to Chiron, during the Blood Screening Term and on reasonable
terms to be negotiated, rights to such instrument comparable to the rights
granted under this Agreement as to the Blood Screening Instruments existing on
the Effective Date, to the extent that Gen-Probe reasonably
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omitted portions.
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concludes that it is not prohibited as of the Effective Date from granting such
rights.
3.4 Appointment of Major Distributor. Chiron shall not appoint more than
[***] in the United States for the Blood Screening Assays and Blood Screening
Instruments (i.e., the Major Distributor).
3.5 Records and Reports.
3.5.1 Records. Gen-Probe and Chiron each shall maintain records, in
sufficient detail appropriate for regulatory or patent purposes, which shall be
complete and accurate and shall fully and properly reflect all work done and
results achieved in the performance of the Development Programs for Blood
Screening Assays and Blood Screening Instruments (including all data in the form
required under all applicable laws and regulations).
3.5.2 Inspection of Records. Gen-Probe and Chiron each shall have
the right, during normal business hours and upon reasonable notice, to inspect
all such records of the other party to the extent reasonably required for the
performance of the Development Programs for Blood Screening Assays and Blood
Screening Instruments. The parties shall develop reasonable procedures for
requesting and delivering copies of such records to each other as may be
necessary for the performance of the Development Programs for Blood Screening
Assays and Blood Screening Instruments. Each party shall maintain such records
and the information of the other party contained therein in confidence
incorporating the terms of Article 8 below and shall not use such records or
information except to the extent otherwise permitted by this Agreement.
3.5.3 Development Reports and Information. Gen-Probe and Chiron each
shall keep the other informed of the progress of such party under the
Development Programs for Blood Screening Assays and Blood Screening Instruments.
Within thirty (30) days following the end of each calendar quarter during the
term of the Development Programs for Blood Screening Assays and Blood Screening
Instruments, and within thirty (30) days following the expiration or termination
of such Development Programs, Gen-Probe and Chiron each shall prepare and
provide to the other party a reasonably detailed written summary report which
shall describe the work performed by such party to date under such Development
Programs.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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3.6 Interim Opportunities.
3.6.1 American Red Cross.
(a) Gen-Probe is contemplating entering into an agreement with the
American Red Cross (the "ARC") to supply Initial Blood Screening Assays for
testing pooled plasma samples for HIV and HCV contamination (the "ARC
Agreement"). The provisions of this Section 3.6.1(a) shall be effective
immediately upon Chiron's consent to the terms of the ARC Agreement between
Gen-Probe and the ARC, which consent shall not be unreasonably withheld. Upon
approval of the ARC Agreement by Chiron following the signing of this Agreement
by both parties, then notwithstanding anything to the contrary in this
Agreement, Chiron hereby grants to Gen-Probe a license under the Chiron IP
Rights, and Gen-Probe reserves the right under the Gen-Probe IP Rights, to make,
use and sell Initial Blood Screening Assays in order to perform Gen-Probe's
obligations under the ARC Agreement. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron. The license to be granted hereunder shall not be subject to the
conditions of Article 12.
(b) Gen-Probe shall be the lead contact with the ARC initially for
purposes of the ARC Agreement. Following the signing of this Agreement,
Gen-Probe shall provide timely notice to Chiron of all meetings scheduled with
the ARC and Chiron shall have the right to participate in meetings with the ARC
and the formulation of strategy in connection with the ARC Agreement. Following
the signing of this Agreement, the parties will agree on a plan to provide for
the transition of responsibility for the management of the overall relationship
with ARC to Chiron and will consider the transition of responsibility for the
ARC Agreement.
(c) Gen-Probe shall pay to Chiron an amount equal to [***] of the
revenue received by Gen-Probe from the ARC Agreement.
3.6.2 Other Interim Opportunities. The parties will pursue on a
mutually-agreeable basis other opportunities (e.g., opportunities other than the
above-described program with ARC) for sales of any Initial Blood Screening Assay
in the United States for use in the Blood Screening Field prior to FDA approval
of the Initial Blood Screening Assay for both HIV-1 and HCV for unit donor
testing ("Interim Opportunities"). It is the parties' intention that any such
Interim Opportunities be addressed on the terms set forth in this Agreement for
the Initial Blood Screening Assays, except that the Applicable Purchase Price
for the Initial Blood Screening Assays for Interim Opportunities, absent further
agreement of the parties, shall be [***]. Each party shall be obligated to use
Commercially Reasonable Efforts to respond to such Interim Opportunities. None
of the provisions of this Section 3.6.2 shall apply to sales outside the United
States.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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ARTICLE 4
CLINICAL DIAGNOSTIC PRODUCTS
4.1 Initial Clinical Diagnostic Assays.
4.1.1 Development Programs.
(a) Establishment. Prior to the date of this Agreement, Gen-Probe
has expended effort and resources in the development of the Initial Clinical
Diagnostic Assays to be conducted by the Clinical Diagnostic Instruments for use
in the Clinical Diagnostic Field. Promptly following the Effective Date,
Gen-Probe shall disclose to Chiron Gen-Probe's written Development Program and
budget for each Initial Clinical Diagnostic Assay, which shall set forth (i) the
specifications for such Initial Clinical Diagnostic Assay, (ii) a proposed
schedule for the Development Program, and (iii) the plan for development of such
Initial Clinical Diagnostic Assay, conduct of such clinical trials, and
application for such regulatory approvals as necessary or appropriate to make
and sell in the Territory such Initial Clinical Diagnostic Assay to be conducted
by the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field;
all Development Work shall be conducted by Gen-Probe alone except as the parties
may otherwise agree. In the event Chiron requests modifications of the initial
Development Program written by Gen-Probe, the Clinical Diagnostic Supervisory
Board shall consider such requested modifications and develop, if it deems
appropriate, a revised Development Program and budget and shall assign
responsibilities to the parties in connection therewith. The Development Program
as proposed by Gen-Probe for each Initial Assay may not be modified except by
the action of the Supervisory Board. Notwithstanding the foregoing, unless the
parties otherwise agree in writing, neither party shall have any obligation
under this Article 4 with respect to the Combo Clinical Diagnostic Assay.
(b) Responsibilities. Gen-Probe shall develop each Initial Clinical
Diagnostic Assay in accordance with the applicable specifications and the
applicable Development Program documents, and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell each such Initial Clinical Diagnostic Assay to be
conducted by the Clinical Diagnostic Instruments in the Territory for use in the
Clinical Diagnostic Field. Through its Supervisory Board members, Chiron shall
present any advice and recommendations on all matters relating to such
Development Program which Chiron, as exclusive distributor of the Initial
Clinical Diagnostic Assays, may have.
(c) Conduct of Development. Gen-Probe shall conduct its obligations
under the Development Program for each Initial Clinical Diagnostic Assay in
compliance in all material respects with all requirements of applicable laws and
regulations and all applicable good laboratory, clinical and manufacturing
practices. Gen-Probe shall proceed diligently with its respective obligations
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under each such Development Program and shall use its Commercially Reasonable
Efforts to achieve its objectives efficiently and expeditiously. Gen-Probe shall
allocate sufficient personnel, equipment, facilities and other resources to each
such Development Program to carry out its obligations and to accomplish the
objectives thereof.
(d) Subcontracts. Upon approval of the Supervisory Board which shall
not be unreasonably withheld by either party (and except as to subcontracts
which exist as of the Effective Date), Gen-Probe may subcontract portions of the
Development Program for each Initial Clinical Diagnostic Assay to be performed
by it in the normal course of its business; provided, however, that (i) unless
Chiron gives its prior written consent, such subcontracting shall not involve
the transfer (including but not limited to sublicense) of any Chiron IP Rights
or Confidential Information to Third Parties; (ii) if Chiron consents to the
subcontractor's access to Confidential Information the subcontracted party shall
enter into a confidentiality agreement with the subcontracting party
incorporating the terms of Article 8 below; (iii) the subcontracting party shall
supervise such subcontract work; (iv) the subcontracted party shall be in
compliance in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; (v) prior to subcontracting any portion of the
Development Program to a Third Party, Gen-Probe will offer Chiron the
opportunity to perform such portion on terms which, taken as a whole, are equal
to or better than those which could be obtained from a Third Party; and (vi) if
required by the Supervisory Board, the subcontracted party shall enter into an
agreement with Gen-Probe to effectuate the provisions of Article 9 below, and
which shall include a provision for assignment of inventions arising from the
subcontracted work.
4.1.2 Funding. Gen-Probe shall pay all Development Costs for each
Initial Clinical Diagnostic Assay under the initial Development Program written
by Gen-Probe pursuant to Section 4.1.1. In the event Chiron, as exclusive
distributor of the Initial Clinical Diagnostic Assays, requests modifications of
the initial Development Program written by Gen-Probe, the Clinical Diagnostic
Supervisory Board shall consider such requested modifications and, if such
modifications are approved, Chiron shall pay for such modifications, in an
amount to be agreed by the parties.
4.1.3 Manufacturing.
(a) Subject to Section 4.1.3(b) below, Gen-Probe shall have the
exclusive right and the obligation to manufacture (or to have manufactured) and
supply Chiron with its order requirements for the Initial Clinical Diagnostic
Assays in the Territory for use in the Clinical Diagnostic Field in accordance
with Article 6 below.
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(b) If Gen-Probe fails to supply Chiron within forty-five (45) days
of the requested delivery date with Chiron's monthly requirements for an Initial
Clinical Diagnostic Assay as most recently forecasted and ordered in accordance
with Section 6.3 below, for any three (3) months in any nine-month period then
Chiron shall have the right, at its option, to manufacture (or to have
manufactured) its requirements of such Initial Clinical Diagnostic Assay to be
conducted by the Clinical Diagnostic Instruments in the Territory for use in the
Clinical Diagnostic Field; provided, however, that to the extent Gen-Probe is
able to meet Chiron's requirements for Rare Reagents in accordance with this
Agreement, Gen-Probe shall retain the exclusive right to manufacture (or to have
manufactured) and the obligation to supply Chiron with its requirements of the
Rare Reagents for use in such Initial Clinical Diagnostic Assay in accordance
with Article 6 below. In such event, Gen-Probe promptly shall provide such
reasonable technical assistance, at Gen-Probe's sole cost, as necessary to
enable Chiron to exercise its rights to manufacture (or have manufactured) such
Initial Clinical Diagnostic Assay.
(c) Chiron shall maintain at its expense a sixty (60) day finished
goods safety stock for each Initial Clinical Diagnostic Assay and Gen-Probe
shall maintain a thirty (30) day finished goods safety stock for each Initial
Clinical Diagnostic Assay. The Supervisory Board shall periodically review the
adequacy of the amount of the safety stock held by each party and make
adjustments thereto as appropriate.
(d) Upon (i) any notice of anticipated supply problem issued by
Gen-Probe pursuant to Section 6.3.4 or (ii) any failure of Gen-Probe to supply
Chiron as set forth in Section 4.1.3(b) and prior to Chiron's assumption of
manufacturing responsibilities, the Supervisory Board shall meet and discuss in
good faith alternative manufacturing strategies and shall select the strategy
which meets the supply and quality requirements of the parties at the least cost
to the parties collectively.
(e) If either party exercises any right granted hereunder to have
any Initial Clinical Diagnostic Assay manufactured, then (i) such party shall
first require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
-45-
4.1.4 Commercialization.
(a) Subject to Section 4.5 below, during the Clinical Diagnostic
Term, Gen-Probe hereby grants to Chiron the exclusive distribution right in the
Territory, at Chiron's sole cost, to promote, market and sell, directly or
through distributors, the Initial Clinical Diagnostic Assays to be conducted by
the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field.
Chiron shall use its Commercially Reasonable Efforts to promote, market, sell
and meet the reasonably foreseeable market demands for the Initial Clinical
Diagnostic Assays in the Territory to be conducted by the Clinical Diagnostic
Instruments for use in the Clinical Diagnostic Field.
(b) Subject to regulatory requirements, the Initial Clinical
Diagnostic Assays shall be marketed under such trademarks as may be determined
by the Supervisory Board to give adequate recognition to the respective
contributions and interests of the parties, and, if applicable, the Major
Distributor. It is the intention of the parties that both parties' contributions
and interests will be recognized.
4.1.5 Licenses.
(a) During the Clinical Diagnostic Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under each Development Program to develop the
Initial Clinical Diagnostic Assays, and (ii) to manufacture or have manufactured
the Initial Clinical Diagnostic Assays. Gen-Probe shall not have the right to
grant sublicenses under such license, without the prior express written consent
of Chiron.
(b) During the Clinical Diagnostic Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's rights and obligations under this Agreement with respect to the
Initial Clinical Diagnostic Assays. Chiron shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Gen-Probe.
(c) Subject to Section 4.5 below, if Chiron exercises its option to
acquire the right to manufacture (or have manufactured) any Initial Clinical
Diagnostic Assay under Section 4.1.3(b) above, during the balance of the
Clinical Diagnostic Term, Gen-Probe shall grant to Chiron a nonexclusive (except
to the extent that Gen-Probe elects to meet the requirements of CDS as provided
under Section 4.5.4 above) license in the Territory under the Gen-Probe IP
Rights to exercise its rights under Section 4.1.3(b) above to manufacture (or
have manufactured) such Initial Clinical Diagnostic Assay to be conducted by the
Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field. Chiron
shall not have the right to grant sublicenses under such license, without the
prior express written consent of Gen-Probe.
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4.1.6 Compensation to Gen-Probe. In consideration for the rights
granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) Transfer Price. Within thirty (30) days after receipt of each
shipment and invoice of Initial Clinical Diagnostic Assays from Gen-Probe,
Chiron shall pay to Gen-Probe the Transfer Price for each Initial Clinical
Diagnostic Assay purchased by Chiron or its Affiliates.
(b) Applicable Purchase Price. Within forty-five (45) days after the
end of each calendar month, Chiron shall pay to Gen-Probe the Applicable
Purchase Price for each Combo Clinical Diagnostic Assay sold by Chiron or its
Affiliates during such calendar month is greater than the Transfer Price for
such Combo Clinical Diagnostic Assay previously paid by Chiron or its Affiliates
to Gen-Probe, then Chiron shall pay the difference to Gen-Probe. If the
Applicable Purchase Price for the Combo Clinical Diagnostic Assay sold by Chiron
or its Affiliates during such calendar month is less than the Transfer Price for
such Combo Clinical Diagnostic Assay previously paid by Chiron or its Affiliates
to Gen-Probe, then Gen-Probe shall pay the difference to Chiron.
(c) Adjustment to Applicable Purchase Price. The Applicable Purchase
Price for the Combo Clinical Diagnostic Assay shall be adjusted pursuant to the
process set forth in Section 3.1.6(c).
(d) Applicable Royalty. Within sixty (60) days after the end of each
calendar quarter, Chiron shall pay to Gen-Probe the Applicable Royalty, if any,
for each Initial Clinical Diagnostic Assay sold by Chiron or its Affiliates
during such calendar quarter.
(e) Rare Reagent Price. Within thirty (30) days after receipt of
each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to one hundred twenty percent (120%) of the Manufacturing Cost for
all Rare Reagents purchased by Chiron for use in manufacturing Initial Clinical
Diagnostic Assays under Section 4.1.3(b) above.
4.2 Exclusive Future Clinical Diagnostic Assays.
4.2.1 Selection.
(a) From time to time during the Clinical Diagnostic Term, Chiron
will notify the Supervisory Board of its plan to develop an Exclusive Future
Clinical Diagnostic Assay to be conducted by the Clinical Diagnostic Instruments
for use in the Clinical Diagnostic Field.
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(b) As to any Exclusive Future Clinical Diagnostic Assay, if
Gen-Probe in good faith requests that such Assay be developed and Chiron
declines to initiate development of such Assay, and if Chiron does not hold
controlling intellectual property rights with respect to the marker for such
Assay, then Gen-Probe shall have the right to develop such Clinical Diagnostic
Assay at its sole expense, in accordance with a Development Program, including a
budget developed by Gen-Probe, updated annually, approved by the Supervisory
Board (which approval shall not be unreasonably withheld or delayed), provided
that Gen-Probe may elect to cease such development at any time in its
discretion. Chiron shall have no obligation to fund any of the Development Costs
of conducting the Development Program for such Exclusive Future Clinical
Diagnostic Assay. In any event, Chiron shall have the exclusive right to market
and sell such Exclusive Future Clinical Diagnostic Assay.
(i) Commencing upon the First Commercial Sale of such Assay,
Chiron shall pay to Gen-Probe, in addition to the other Applicable Royalty, an
additional royalty equal to a percentage, established by the Supervisory Board
at the time of approval of the Development Program, of Net Sales of such
Exclusive Future Clinical Diagnostic Assay, until the aggregate royalty paid to
Gen-Probe solely under this sentence equals the aggregate budgeted Development
Costs incurred by Gen-Probe with respect to the Development Program for such
Exclusive Future Clinical Diagnostic Assay.
(ii) The additional royalty established by the Supervisory
Board shall be intended to enable Gen-Probe to recover such Development Costs
for such Development Program within the longer of (i) [***] or (ii) a period
equal to the duration of such Development Program. The additional royalty shall
be set based on the information available to the Supervisory Board at the time
of its initial approval of the Development Program and shall not be adjusted
thereafter except at the sole discretion of the Supervisory Board.
(c) With respect to the Exclusive Future Clinical Diagnostic Assay
for the quantitative detection of HCV, Chiron shall conduct a feasibility study
with respect to development and commercialization of such Assay. Following the
feasibility study the Supervisory Board will review the results and discuss
potential further development of such Assay. Chiron agrees to develop such Assay
if (i) the technical performance of such Assay (together with the
instrumentation to conduct such assay) with respect to market-based criteria is
superior to competitive nucleic acid probe-based assays for quantitation of HCV
expected to be available at the anticipated First Commercial Sale of such
Exclusive Future Clinical Diagnostic Assay and (ii) the financial return to
Chiron from such Exclusive Future Clinical Diagnostic Assay (together with the
instrumentation to conduct such assay) is expected to exceed the potential
return from other available competitive nucleic acid probe-based assays for the
quantitation of HCV, all based on the customary decision-making process used by
Chiron in connection with new product evaluation.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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4.2.2 Development Programs.
(a) Responsibilities. With respect to each Exclusive Future Clinical
Diagnostic Assay and subject to the provisions of Section 4.2.1, Chiron, and
Gen-Probe (if applicable), shall conduct their obligations under the Development
Program established by the Supervisory Board for such Exclusive Future Clinical
Diagnostic Assay to develop such Exclusive Future Clinical Diagnostic Assay in
accordance with the specifications pursuant to Section 4.2.1, and to conduct
such clinical trials and apply for and endeavor to obtain such regulatory
approvals as necessary or appropriate to make and sell such Exclusive Future
Clinical Diagnostic Assay to be conducted by the Clinical Diagnostic Instruments
in the Territory for use in the Clinical Diagnostic Field.
(b) Conduct of Development. Chiron, and Gen-Probe (if applicable),
shall conduct their respective obligations under the Development Program for
each such Exclusive Future Clinical Diagnostic Assay in compliance in all
material respects with all requirements of applicable laws and regulations and
all applicable good laboratory, clinical and manufacturing practices. Chiron,
and Gen-Probe (if applicable), each shall proceed diligently with their
respective obligations under each such Development Program and shall use their
respective Commercially Reasonable Efforts to achieve its objectives efficiently
and expeditiously. Chiron shall have the right to discontinue development of any
Exclusive Future Clinical Diagnostic Assay being developed by Chiron under this
Section 4.2.2 at any time, in its sole discretion. Gen-Probe and Chiron each
shall allocate sufficient personnel, equipment, facilities and other resources
to each such Development Program to carry out their obligations and to
accomplish the objectives thereof.
(c) Subcontracts. Chiron, and Gen-Probe (subject to the prior
written consent of Chiron), each may subcontract portions of the Development
Program for each Exclusive Future Clinical Diagnostic Assay to be performed by
it in the normal course of its business; provided, however, that (i) unless the
other party gives its prior written consent, such subcontracting shall not
involve any transfer (including but not limited to any sublicense) of any
intellectual property rights of the other party or Confidential Information of
the other party to Third Parties; (ii) if the other party consents to the
subcontractor's access to the other party's Confidential Information, the
subcontracted party shall enter into a confidentiality agreement with the
subcontracting party incorporating the terms of Article 8 below; (iii) the
subcontracting party shall supervise such subcontract work; (iv) the
subcontracted party shall be in compliance in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party, each
party will offer the other party the opportunity to perform such portion on
terms which, taken as a whole, are equal to or better than those which could be
obtained from a Third Party; and (vi)
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if required by the Supervisory Board, the subcontracted party shall enter into
an agreement with the subcontracting party to effectuate the provisions of
Article 9 below, and which shall include a provision for assignment of
inventions arising from the subcontracted work.
4.2.3 Funding. Chiron shall pay all Development Costs of conducting
the Development Program for each Exclusive Future Clinical Diagnostic Assay
which it develops and Gen-Probe shall pay all Development Costs of conducting
the Development Program for each Exclusive Future Clinical Diagnostic Assay
which it develops.
4.2.4 Manufacturing.
(a) Subject to Section 4.2.4(b) below, Gen-Probe shall have the
right to manufacture or to have manufactured and supply Chiron with Chiron's
requirements for each Exclusive Future Clinical Diagnostic Assay to be conducted
by the Clinical Diagnostic Instruments in the Territory for use in the Clinical
Diagnostic Field, provided that Gen-Probe is able to meet Chiron's reasonable
requirements as to timing and quantity of Exclusive Future Clinical Diagnostic
Assays, meeting the warranty requirements of Section 6.6, at a cost equal to or
better than that available from other manufacturers. If Gen-Probe elects to
manufacture or to have manufactured the Exclusive Future Clinical Diagnostic
Assay, pursuant to the preceding sentence, Gen-Probe shall be obligated to
supply Chiron with its requirements of such Exclusive Future Clinical Diagnostic
Assay in accordance with Article 6.
(b) With respect to each Exclusive Future Clinical Diagnostic Assay
which Gen-Probe declines to manufacture or, if Gen-Probe elects to manufacture,
with respect to each Exclusive Future Clinical Diagnostic Assay which Gen-Probe
fails to supply Chiron within forty-five (45) days of the requested delivery
date with Chiron's monthly requirements for a Exclusive Future Clinical
Diagnostic Assay as most recently forecasted and ordered in accordance with
Section 6.3 below, for any three (3) months in any nine-month period, then
Chiron shall have the right, at its option, to manufacture (or to have
manufactured) its requirements of such Exclusive Future Clinical Diagnostic
Assay to be conducted by the Clinical Diagnostic Instruments in the Territory
for use in the Clinical Diagnostic Field; provided, however, that to the extent
Gen-Probe is able to meet Chiron's requirements for Rare Reagents in accordance
with this Agreement, Gen-Probe shall retain the exclusive right to manufacture
(or to have manufactured) and the obligation to supply Chiron with its
requirements of the Rare Reagents for use in such Exclusive Future Clinical
Diagnostic Assay in accordance with Article 6 below. If Gen-Probe declines to
manufacture as described above, Gen-Probe promptly shall provide reasonable
technical assistance, with the cost to be shared equally by the parties, as
necessary to enable Chiron to exercise its rights to manufacture (or have
manufactured) such Exclusive Future Clinical Diagnostic Assay. If Gen-Probe
elects to manufacture but fails to supply Chiron as described above, Gen-
-50-
Probe promptly shall provide such reasonable technical assistance, at
Gen-Probe's sole cost, as necessary to enable Chiron to exercise its rights to
manufacture (or have manufactured) such Exclusive Future Clinical Diagnostic
Assay.
(c) Chiron shall maintain at its expense a sixty (60) day finished
goods safety stock for each Exclusive Future Clinical Diagnostic Assay and
Gen-Probe shall maintain a thirty (30) day finished goods safety stock for each
Exclusive Future Clinical Diagnostic Assay which Gen-Probe manufactures. The
Supervisory Board shall periodically review the adequacy of the amount of the
safety stock held by each party and make adjustments thereto as appropriate.
(d) Upon any failure of Gen-Probe to supply Chiron as set forth in
Section 4.2.4(b) and prior to Chiron's assumption of manufacturing
responsibilities, the Supervisory Board shall meet and discuss in good faith
alternative manufacturing strategies and shall select the strategy which meets
the supply and quality requirements of the parties at the least cost to the
parties collectively.
(e) If either party exercises any right granted hereunder to have
any Exclusive Future Clinical Diagnostic Assay manufactured, then (i) such party
shall first require that the subcontracted party shall enter into a
confidentiality agreement with such party incorporating the terms of Article 8
below; (ii) such party shall supervise such subcontract work; (iii) the
subcontracted party shall comply in all material respects with all requirements
of applicable laws and regulations, together with all applicable good
laboratory, clinical and manufacturing practices; and (iv) the subcontracted
party shall enter into an agreement with such party to the extent necessary to
effectuate the provisions of Article 9 below.
4.2.5 Commercialization.
(a) Subject to Section 4.5.2 below, during the Clinical Diagnostic
Term, Gen-Probe hereby grants to Chiron the exclusive right in the Territory, at
its sole cost, directly or through distributors, to promote, market and sell the
Exclusive Future Clinical Diagnostic Assays to be conducted by the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field. Chiron shall
use its Commercially Reasonable Efforts to promote, market, sell and meet the
reasonably foreseeable market demands for such Exclusive Future Clinical
Diagnostic Assays in the Territory for use in the Clinical Diagnostic Field.
(b) Subject to regulatory requirements, the Exclusive Future
Clinical Diagnostic Assays shall be marketed under such trademarks as may be
determined by the Supervisory Board to give adequate recognition to the
respective contributions and interests of the parties, and, if applicable, the
Major Distributor. It is the intention of the parties that both parties'
contributions and interests will be recognized.
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4.2.6 Licenses.
(a) During the Clinical Diagnostic Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's obligations under each Development Program to develop the
Exclusive Future Clinical Diagnostic Assays. Chiron shall not have the right to
grant sublicenses under such license, without the prior express written consent
of Gen-Probe.
(b) With respect to each Exclusive Future Clinical Diagnostic Assay
which Gen-Probe manufactures under Section 4.2.4 above, for such period as may
be agreed by the parties, Chiron hereby grants to Gen-Probe a nonexclusive
license in the Territory under the Chiron IP Rights to manufacture such
Exclusive Future Clinical Diagnostic Assay to be conducted by the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field. Gen-Probe shall
not have the right to grant sublicenses under such license, without the prior
express written consent of Chiron.
(c) Subject to Section 4.5.2 below, if Chiron exercises its option
to acquire the right to manufacture (or have manufactured) any Exclusive Future
Clinical Diagnostic Assay under Section 4.2.4(b) above, during the balance of
the Clinical Diagnostic Term, Gen-Probe hereby grants to Chiron a nonexclusive
license in the Territory under the Gen-Probe IP Rights to exercise its rights
under Section 4.2.4(b) above to manufacture (or have manufactured) such
Exclusive Future Clinical Diagnostic Assays to be conducted by the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field. Chiron shall
not have the right to grant sublicenses under such license, without the prior
express written consent of Gen-Probe.
4.2.7 Compensation to Gen-Probe. In consideration for Gen-Probe's
participation in the Development Programs and the licenses granted to Chiron
under this Article 4, Chiron shall pay to Gen-Probe the following amounts:
(a) Transfer Price. With respect to Exclusive Future Clinical
Diagnostic Assays sold by Gen-Probe to Chiron hereunder, within thirty (30) days
after receipt of each shipment and invoice of Exclusive Future Clinical
Diagnostic Assays from Gen-Probe, Chiron shall pay to Gen-Probe the Transfer
Price for each Exclusive Future Clinical Diagnostic Assay purchased by Chiron or
its Affiliates.
(b) Applicable Royalty. Within forty-five (45) days after the end of
each fiscal quarter, Chiron shall pay to Gen-Probe the Applicable Royalty for
each Exclusive Future Clinical Diagnostic Assay sold by Chiron or its Affiliates
during such fiscal quarter.
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(c) Rare Reagent Price. With respect to Rare Reagents manufactured
sold by Gen-Probe to Chiron hereunder, within thirty (30) days after receipt of
each shipment and invoice of Rare Reagents, Chiron shall pay to Gen-Probe an
amount equal to one hundred twenty percent (120%) of the Manufacturing Cost for
all Rare Reagents purchased by Chiron for use in manufacturing Exclusive Future
Clinical Diagnostic Assays under Sections 4.2.4(b) and 4.2.4(c) above.
4.3 Nonexclusive Future Clinical Diagnostic Assays.
4.3.1 Selection.
(a) From time to time during the Clinical Diagnostic Term, either
party (the "Developing Party") may elect to commence development of one or more
Nonexclusive Future Clinical Diagnostic Assays. Not later than the time at which
the Developing Party has completed the First Phase of the Design Review Process
(as defined in Section 4.3.7) with respect to Nonexclusive Future Clinical
Diagnostic Assay for the detection or quantitation of a marker, the Developing
Party shall inform the Supervisory Board of its intent to develop such
Nonexclusive Future Clinical Diagnostic Assay. At the time set forth in Section
4.3.7, the Developing Party may, in its discretion, give a Blocking Notice with
respect to the marker which is the subject of such Nonexclusive Future Clinical
Diagnostic Assay, pursuant to Section 4.3.7. At such time, the other party will
inform the Developing Party of any intellectual property rights held by the
other party with respect to such marker.
(b) If development is not blocked through a Blocking Notice of the
other party, the Developing Party shall have the right to proceed with
development, in its discretion and at its sole expense. (Nothing contained in
this Section 4.3.1 shall constitute an implied license of the intellectual
property of the other party to the Developing Party.) The Developing Party may
discontinue development of such Nonexclusive Future Clinical Diagnostic Assay at
any time, in its discretion.
(c) Subject to Sections 4.3.7 and 4.4.7 below, Gen-Probe shall have
the right to grant to one or more Affiliates or Third Parties a license under
the Gen-Probe IP Rights to develop and commercialize one or more Nonexclusive
Future Clinical Diagnostic Assays, provided that Gen-Probe shall retain the
first right to manufacture, or have manufactured, such Nonexclusive Future
Clinical Diagnostic Assays for such Affiliate or Third Party licensee. If any
such Affiliate or Third Party has completed the First Phase of the Design Review
Process of any such Nonexclusive Future Clinical Diagnostic Assay, Gen-Probe
shall inform the Supervisory Board in the same manner as is set forth in Section
4.3.1(a).
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(d) Neither party shall have any obligation to license to the other
party any intellectual property for viruses or markers which might be used in
Nonexclusive Future Clinical Diagnostic Assays, except to the extent that such
intellectual property is otherwise licensed to the other party under Section
4.3.6. If a party elects to license any such virus or marker to the other party,
such license shall be governed by a separately negotiated license agreement.
4.3.2 Development.
(a) Conduct of Development. Gen-Probe and Chiron each shall conduct
its development of each Nonexclusive Future Clinical Diagnostic Assay which it
selects for development under Section 4.3.1 above in compliance in all material
respects with all requirements of applicable laws and regulations and all
applicable good laboratory, clinical and manufacturing practices. Subject to
Section 4.3.1(b), each party shall proceed diligently with its obligations under
each such Development Program and shall use its Commercially Reasonable Efforts
to achieve its objectives efficiently and expeditiously.
(b) Subcontracts. Either party may subcontract portions of the
Development Program for each Nonexclusive Future Clinical Diagnostic Assay to be
performed by it in the normal course of its business; provided, however, that
(i) unless the other party gives its prior written consent, such subcontracting
shall not involve the transfer (including but not limited to sublicense) of any
IP Rights or Confidential Information of the other party to Third Parties; (ii)
if the other party consents to the subcontractor's access to Confidential
Information the subcontracted party shall enter into a confidentiality agreement
with the subcontracting party incorporating the terms of Article 8 below; (iii)
the subcontracting party shall supervise such subcontract work; (iv) the
subcontracted party shall be in compliance in all material respects with all
requirements of applicable laws and regulations, together with all applicable
good laboratory, clinical and manufacturing practices; (v) prior to
subcontracting any portion of the Development Program to a Third Party, a party
will offer to the other party the opportunity to perform such portion on terms
which, taken as a whole, are equal to or better than those which could be
obtained from a Third Party; and (vi) if required by the Supervisory Board, the
subcontracted party shall enter into an agreement with the subcontracting party
to effectuate the provisions of Article 9 below, and which shall include a
provision for assignment of inventions arising from the subcontracted work.
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4.3.3 Funding.
(a) The Developing Party shall pay all Development Costs of
conducting the Development Program for each Nonexclusive Future Clinical
Diagnostic Assay.
4.3.4 Manufacturing.
(a) Subject to Section 4.3.4(b) below, Gen-Probe shall have the
right to manufacture or to have manufactured and supply Chiron with Chiron's
requirements for each Nonexclusive Future Clinical Diagnostic Assay to be
conducted by the Clinical Diagnostic Instruments in the Territory for use in the
Clinical Diagnostic Field, provided that Gen-Probe is able to meet Chiron's
reasonable requirements as to timing and quantity of Nonexclusive Future
Clinical Diagnostic Assays, meeting the warranty requirements of Section 6.6, at
a cost equal to or better than that available from other manufacturers. If
Gen-Probe elects to manufacture or to have manufactured the Nonexclusive Future
Clinical Diagnostic Assay, pursuant to the preceding sentence, Gen-Probe shall
be obligated to supply Chiron with its requirements of such Nonexclusive Future
Clinical Diagnostic Assay in accordance with Article 6.
(b) With respect to each Nonexclusive Future Clinical Diagnostic
Assay which Gen-Probe declines to manufacture or, if Gen-Probe elects to
manufacture, with respect to each Nonexclusive Future Clinical Diagnostic Assay
which Gen-Probe fails to supply Chiron within forty-five (45) days of the
requested delivery date with Chiron's monthly requirements for a Nonexclusive
Future Clinical Diagnostic Assay as most recently forecasted and ordered in
accordance with Section 6.3 below, for any three (3) months in any nine-month
period then Chiron shall have the right, at its option, to manufacture (or to
have manufactured) its requirements of such Nonexclusive Future Clinical
Diagnostic Assay to be conducted by the Clinical Diagnostic Instruments in the
Territory for use in the Clinical Diagnostic Field; provided, however, that to
the extent Gen-Probe is able to meet Chiron's requirements for Rare Reagents in
accordance with this Agreement, Gen-Probe shall retain the exclusive right to
manufacture (or to have manufactured) and the obligation to supply Chiron with
its requirements of the Rare Reagents for use in such Nonexclusive Future
Clinical Diagnostic Assay in accordance with Article 6 below. If Gen-Probe
declines to manufacture as described above, Gen-Probe promptly shall provide
reasonable technical assistance, with the cost to be shared equally by the
parties, as necessary to enable Chiron to exercise its rights to manufacture (or
have manufactured) such Nonexclusive Future Clinical Diagnostic Assay. If
Gen-Probe elects to manufacture but fails to supply Chiron as described above,
Gen-Probe promptly shall provide such reasonable technical assistance, at
Gen-Probe's sole cost, as necessary to enable Chiron to exercise its rights to
manufacture (or have manufactured) such Nonexclusive Future Clinical Diagnostic
Assay.
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(c) Chiron shall maintain at its expense a sixty (60) day finished
goods safety stock for each Nonexclusive Future Clinical Diagnostic Assay and
Gen-Probe shall maintain a thirty (30) day finished goods safety stock for each
Nonexclusive Future Clinical Diagnostic Assay which Gen-Probe manufactures. The
Supervisory Board shall periodically review the adequacy of the amount of the
safety stock held by each party and make adjustments thereto as appropriate.
(d) Upon (i) any notice of anticipated supply problem issued by
Gen-Probe pursuant to Section 6.3.4 or (ii) any failure of Gen-Probe to supply
Chiron as set forth in Section 4.3.4(b) and prior to Chiron's assumption of
manufacturing responsibilities, the Supervisory Board shall meet and discuss in
good faith alternative manufacturing strategies and shall select the strategy
which meets the supply and quality requirements of the parties at the least cost
to the parties collectively.
(e) If either party exercises any right granted hereunder to have
any Nonexclusive Future Clinical Diagnostic Assay manufactured, then (i) such
party shall first require that the subcontracted party shall enter into a
confidentiality agreement with such party incorporating the terms of Article 8
below; (ii) such party shall supervise such subcontract work; (iii) the
subcontracted party shall comply in all material respects with all requirements
of applicable laws and regulations, together with all applicable good
laboratory, clinical and manufacturing practices; and (iv) the subcontracted
party shall enter into an agreement with such party to the extent necessary to
effectuate the provisions of Article 9 below.
(f) Subject to Section 4.3.7 below, Gen-Probe shall have the right
to manufacture (or to have manufactured) its requirements of such each
Nonexclusive Future Clinical Diagnostic Assay for which it is the Developing
Party pursuant to Section 4.3.1 above in the Territory for use in the Clinical
Diagnostic Field.
4.3.5 Commercialization.
(a) Subject to Section 4.3.5(c), during the Clinical Diagnostic
Term, Gen-Probe hereby grants to Chiron, directly or through distributors, the
right in the Territory, at its sole cost, to promote, market and sell the
Nonexclusive Future Clinical Diagnostic Assays for which Chiron is the
Developing Party pursuant to Section 4.3.1, to be conducted by the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field. Chiron shall
use its Commercially Reasonable Efforts to promote, market, sell and meet the
reasonably foreseeable market demands for such Nonexclusive Future Clinical
Diagnostic Assays in the Territory for use in the Clinical Diagnostic Field.
-56-
(b) Subject to Section 4.3.5(c) and Section 4.6, during the Clinical
Diagnostic Term, Gen-Probe shall have the exclusive right in the Territory, at
its sole cost, to promote, market and sell the Nonexclusive Future Clinical
Diagnostic Assays for which Gen-Probe is the Developing Party pursuant to
Section 4.3.1 to be conducted by the Clinical Diagnostic Instruments for use in
the Clinical Diagnostic Field.
(c) Although the parties do not intend to develop assays for the
same primary clinical indication, the parties acknowledge that such a situation
may arise. If a party develops a new Nonexclusive Future Clinical Diagnostic
Assay for the same primary clinical indication (e.g., a different marker for
screening for the same cancer) as a Nonexclusive Future Clinical Diagnostic
Assay then being sold by the other party, and the Developing Party of the new
Nonexclusive Future Clinical Diagnostic Assay does not hold patents or patent
applications covering the marker which is the subject of the Nonexclusive Future
Clinical Diagnostic Assay developed by it, then such Developing Party shall
offer to the other party the first opportunity to promote, market and sell such
new Nonexclusive Future Clinical Diagnostic Assay on commercially reasonable
terms and conditions to be negotiated by the parties in good faith. Such terms
shall provide the selling party at least reimbursement of its costs plus a
standard distribution margin, and shall provide reasonable diligence commitments
to the Developing Party. If the other party elects not to market and sell such
Nonexclusive Future Clinical Diagnostic Assay, or the parties are unable to
agree on the terms of such a distribution arrangement, the Developing Party
shall have the exclusive right to market and sell such Nonexclusive Future
Clinical Diagnostic Assay. Notwithstanding the foregoing, nothing herein shall
require Chiron or its Affiliates to grant to a Third Party licensee of Gen-Probe
any rights to promote, market or sell a Nonexclusive Future Clinical Diagnostic
Assay developed by Chiron or its Affiliates; and nothing herein shall require a
Third Party licensee of Gen-Probe to offer to Chiron any right to promote,
market or sell any Nonexclusive Future Clinical Diagnostic Assay developed by
such Third Party licensee.
(d) Subject to regulatory requirements, the Nonexclusive Clinical
Diagnostic Assays shall be marketed by Chiron pursuant to Section 4.3.5(a), or
by the party obtaining marketing rights under Section 4.3.5(c), under such
trademarks as may be determined by the Supervisory Board to give adequate
recognition to the respective contributions and interests of the parties, and,
if applicable, the Major Distributor. It is the intention of the parties that
both parties' contributions and interests will be recognized.
-57-
4.3.6 Licenses.
(a) During the Clinical Diagnostic Term, Gen-Probe hereby grants to
Chiron a nonexclusive license in the Territory under the Gen-Probe IP Rights to
conduct Chiron's obligations under each Development Program to develop the
Nonexclusive Future Clinical Diagnostic Assays as to which Chiron is the
Developing Party. Chiron shall not have the right to grant sublicenses under any
license granted by or under this Section, without the prior express written
consent of Gen-Probe.
(b) With respect to each Nonexclusive Future Clinical Diagnostic
Assay which Gen-Probe manufacture pursuant to Section 4.3.4(a) during the
Clinical Diagnostic Term, Chiron hereby grants to Gen-Probe a nonexclusive
license in the Territory under the Chiron IP Rights to manufacture and have
manufactured such Nonexclusive Future Clinical Diagnostic Assay to be conducted
by the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field.
Gen-Probe shall not have the right to grant sublicenses under such license,
without the prior express written consent of Chiron.
(c) Subject to Section 4.5.2 below, if Chiron exercises its option
to acquire the right to manufacture (or have manufactured) any Nonexclusive
Future Clinical Diagnostic Assay under Section 4.3.4(b) above, during the
balance of the Clinical Diagnostic Term, Gen-Probe shall grant to Chiron a
nonexclusive license in the Territory under the Gen-Probe IP Rights to exercise
its rights under Section 4.3.4(b) above to manufacture (or have manufactured)
such Nonexclusive Future Clinical Diagnostic Assays to be conducted by the
Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field. Chiron
shall not have the right to grant sublicenses under such license, without the
prior express written consent of Gen-Probe.
(d) Notwithstanding any other provision of this Section 4.3.6,
neither party shall have any obligation to license to the other party any
intellectual property claiming viruses or markers which might be used in
Nonexclusive Future Clinical Diagnostic Assays. If a party elects to license any
such virus or marker to the other party, such license shall be governed by a
separately negotiated license agreement.
4.3.7 Blocking Rights.
(a) Neither party (nor any Affiliate or Third Party licensee of
Gen-Probe) shall have the right to commence development of (and subsequently
commercialize) any Nonexclusive Future Clinical Diagnostic Assay to be conducted
by the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field
which is directed to the same virus or marker for the same primary clinical
indication as a Nonexclusive Future Clinical Diagnostic Assay which is then
being sold by the other party; and Gen-Probe shall not grant any further
licenses to any Affiliate or Third Party under the Gen-Probe IP Rights to
develop or commercialize a Nonexclusive Future Clinical Diagnostic Assay to be
conducted by
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the Clinical Diagnostic Instruments for use in the Clinical Diagnostic Field
directed to such virus or marker for the same primary clinical indication.
(b) With respect to any Nonexclusive Future Clinical Diagnostic
Assay which a party selects for development under Section 4.3.1 above and
subject to Section 4.3.7(c) below, if such party gives express written notice (a
"Blocking Notice"), together with reasonably satisfactory evidence, to the other
party that it has completed Phase 1 of the Design Review Process (as defined
below) of such Nonexclusive Future Clinical Diagnostic Assay and thereafter such
party diligently continues the good faith development or sale of such
Nonexclusive Future Clinical Diagnostic Assay, then during the effectiveness of
the Blocking Notice, (a) the other party (and if the other party is Gen-Probe,
any Affiliate or Third Party licensee of Gen-Probe) shall have no right to
develop or commercialize a Nonexclusive Future Clinical Diagnostic Assay to be
conducted by the Clinical Diagnostic Instruments for use in the Clinical
Diagnostic Field which is directed to the same virus or marker for the same
primary clinical indication as the Nonexclusive Future Clinical Diagnostic Assay
which is the subject of the Blocking Notice; (b) if the other party is
Gen-Probe, Gen-Probe shall not grant any further licenses to any Affiliate or
Third Party under the Gen-Probe IP Rights to develop or commercialize a
Nonexclusive Future Clinical Diagnostic Assay to be conducted by the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field directed to the
same virus or marker for the same primary clinical indication as the
Nonexclusive Future Clinical Diagnostic Assay which is the subject of the
Blocking Notice; and (c) the other party shall not (and shall cause its
Affiliates not to) enforce any patent rights acquired after the effective date
of such Blocking Notice (except rights acquired pursuant to a patent application
filed before such date) to preclude such party from developing or
commercializing such Nonexclusive Future Clinical Diagnostic Assay. For purposes
of this Section 4.3.7, "Phase 1 of the Product Design Review Phase" shall have
the meaning set forth in the Quality System Regulations ("QSRs"), i.e., the
design input (product requirements document), design development (technical
plan) and risk analysis.
(c) A Blocking Notice given by a party shall be effective for the
applicable Nonexclusive Future Clinical Diagnostic Assay on the date of such
notice and shall remain in effect, until (i) the notice is voluntarily and
irrevocably withdrawn by such party by giving express written notice of
withdrawal to the other party, or (ii) the party which gave the Blocking Notice
discontinues development of the Nonexclusive Future Clinical Diagnostic Assay
which is the subject of the Blocking Notice, or (iii) the First Commercial Sale
of a Product developed under such Blocking Notice. Notwithstanding any other
provision of this section, a party may not have in effect at any time Blocking
Notices for more than seven (7) Nonexclusive Future Clinical Diagnostic Assays
which have not received applicable regulatory approval, if any, for sale in the
United States, or such greater number as may be established by the Supervisory
Board. Upon termination of a Blocking Notice pursuant to clauses
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(i), or (ii) or (iii) of this section, the party which gave such notice shall
then obtain the right to use such Blocking Notice in connection with another
Nonexclusive Future Clinical Diagnostic Assay. Upon termination of a Blocking
Notice by a party pursuant to clause (i) or (ii), a Blocking Notice for the same
virus or marker may not be issued by that party during the succeeding six
months.
(d) Notwithstanding the foregoing, a Blocking Notice given by a
Developing Party shall not preclude the other party (or a then-existing
Affiliate or Third Party licensee of Gen-Probe) from developing and
commercializing a Nonexclusive Future Clinical Diagnostic Assay with respect to
a virus or marker that (i) is claimed in an issued patent or pending patent
application owned by or licensed to the other party (other than pursuant to this
Agreement) and (ii) is not claimed in an issued patent of the Developing Party.
(e) Prior to the Effective Date, the parties shall meet and agree in
writing upon viruses and markers with potential utility for Nonexclusive Future
Clinical Diagnostic Assays which each party currently has in development and as
to which each party shall have the exclusive right, but not the obligation, to
issue a Blocking Notice during the first one hundred and eighty (180) days
following the Effective Date. For the thirty (30) days following the Effective
Date, neither party shall issue a Blocking Notice for a virus or marker not on
its agreed list.
4.3.8 Compensation to Gen-Probe. In consideration for the licenses
granted to Chiron under this Article 4, Chiron shall pay to Gen-Probe the
following amounts:
(a) Transfer Price. With respect to Nonexclusive Future Clinical
Diagnostic Assays sold by Gen-Probe to Chiron hereunder, within thirty (30) days
after receipt of each shipment and invoice of Nonexclusive Future Clinical
Diagnostic Assays from Gen-Probe, Chiron shall pay to Gen-Probe the Transfer
Price for each Nonexclusive Future Clinical Diagnostic Assay purchased by Chiron
or its Affiliates.
(b) Applicable Royalty. Within forty-five (45) days after the end of
each fiscal quarter, Chiron shall pay to Gen-Probe the Applicable Royalty for
each Nonexclusive Future Clinical Diagnostic Assay sold by Chiron or its
Affiliates during such fiscal quarter.
(c) Rare Reagent Price. With respect to Rare Reagents sold by
Gen-Probe to Chiron hereunder, within thirty (30) days after receipt of each
shipment and invoice of Rare Reagents, Chiron shall pay to gen-probe an amount
equal to one hundred twenty percent (120%) of the manufacturing cost for all
rare reagents purchased by Chiron for use in manufacturing nonexclusive future
clinical Diagnostic Assays under Section 4.3.4(a) above.
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4.4 Clinical Diagnostic Instruments.
4.4.1 Development Program.
(a) Establishment. Prior to the date of this Agreement, Gen-Probe
has expended significant effort and resources in the development of the Clinical
Diagnostic Instruments for use in the Clinical Diagnostic Field. Promptly
following the Effective Date, Gen-Probe shall prepare and submit to Chiron a
written Development Program and budget for each Clinical Diagnostic Instrument
(excluding modifications and future instruments as described in Sections 4.4.8
and 4.4.9, respectively), which shall set forth the specifications for such
Clinical Diagnostic Instrument and a schedule for such Development Program. The
Development Program proposed by Gen-Probe for each Clinical Diagnostic
Instrument may not be modified except by the action of the Supervisory Board. In
the event Chiron requests modifications of the initial Development Program
written by Gen-Probe, the Clinical Diagnostic Supervisory Board shall consider
such requested modifications and develop, if it deems appropriate, a revised
Development Program.
(b) Responsibilities. Gen-Probe shall develop each of the Clinical
Diagnostic Instruments in accordance with the applicable specifications and the
applicable Development Program Documents, and shall conduct such clinical trials
and apply for and endeavor to obtain such regulatory approvals as necessary or
appropriate to make and sell the Clinical Diagnostic Instruments in the
Territory for use in the Clinical Diagnostic Field. Through its Supervisory
Board members, Chiron shall present any advice and recommendations on all
matters relating to such Development Program which Chiron, as exclusive
distributor of the Initial Clinical Diagnostic Assays, may have.
(c) Conduct of Development. Gen-Probe shall conduct its respective
obligations under the Development Program for the Clinical Diagnostic
Instruments in compliance in all material respects with all requirements of
applicable laws and regulations and all applicable good laboratory, clinical and
manufacturing practices. Gen-Probe shall proceed diligently with its respective
obligations under such Development Program and shall use its respective
Commercially Reasonable Efforts to achieve its objectives efficiently and
expeditiously.
(d) Subcontracts. Upon approval of the Supervisory Board, which
shall not be unreasonably withheld by either party, Gen-Probe may subcontract
portions of the Development Program for the Clinical Diagnostic Instruments to
be performed by it in the normal course of its business; provided, however, that
(i) unless Chiron gives its prior written consent, such subcontracting shall not
involve the transfer (including but not limited to sublicense) of any
intellectual property rights of the other party or the Confidential Information
of Chiron to Third Parties; (ii) if Chiron consents to the subcontractor's
access to Confidential Information of the other party, the subcontracted party
shall enter into a confidentiality agreement with Gen-Probe
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incorporating the terms of Article 8 below; (iii) Gen-Probe shall supervise such
subcontract work; (iv) the subcontracted party shall be in compliance in all
material respects with all requirements of applicable laws and regulations,
together with all applicable good laboratory, clinical and manufacturing
practices; (v) prior to subcontracting any portion of the Development Program to
a Third Party, Gen-Probe will offer Chiron the opportunity to perform such
portion on terms which, taken as a whole, are equal to or better than those
which could be obtained from a Third Party; and (vi) if required by the
Supervisory Board, the subcontracted party shall enter into an agreement with
Gen-PROBE to effectuate the provisions of Article 9 below, and which shall
include a provision for assignment of inventions arising from the subcontracted
work.
4.4.2 Funding. Gen-Probe shall pay all Development Costs of
conducting its obligations under the Development Program for the Clinical
Diagnostic Instruments.
4.4.3 Manufacture.
(a) Subject to Sections 4.4.3(b) and 4.4.3(c) below, Gen-Probe shall
have the exclusive right and the obligation to manufacture (or to have
manufactured) and supply Chiron with its requirements of the Clinical Diagnostic
Instruments in the Territory for use in the Clinical Diagnostic Field in
accordance with Article 6 below.
(b) If Gen-Probe desires to subcontract with any Third Party (other
with than RELA, Inc., a Colorado corporation and except as to such other
subcontracts which exist as of the Effective Date) to manufacture the Clinical
Diagnostic Instruments, Gen-Probe shall grant to Chiron the first right of
negotiation for the right of Chiron to manufacture such Clinical Diagnostic
Instrument (excluding future instruments as described in Sections 4.4.8,
respectively), provided that Chiron is able to do so on commercially reasonable
and competitive terms and conditions, before Gen-Probe may offer such
opportunity to any Third Party. Any such subcontracts for the manufacture of any
of the Clinical Diagnostic Instruments (in whole), or any of the major
functional components or disposables thereof, shall be subject to the approval
of the Supervisory Board which shall not be unreasonably withheld by either
party.
(c) If Gen-Probe fails to supply Chiron within forty-five (45) days
after the requested delivery date with Chiron's monthly requirements for a
Clinical Diagnostic Instrument ordered in accordance with Section 6.3 below, for
any three (3) months in any nine-month period (unless the Supervisory Board
agrees within fifteen days of such event that Gen-Probe shall retain the
manufacturing responsibility hereunder), then Chiron shall have the right to,
and if Chiron elects to manufacture or have manufactured, the obligation to use
Commercially Reasonable Efforts to, manufacture (or to have manufactured) its
requirements of such Clinical Diagnostic Instrument in the Territory for use in
the Clinical Diagnostic Field. In such event, Gen-Probe promptly
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shall provide such reasonable technical assistance, at Gen-Probe's sole cost, as
necessary to enable Chiron to exercise its rights to manufacture (or have
manufactured) such Clinical Diagnostic Instrument for use in the Clinical
Diagnostic Field and Gen-Probe shall provide to Chiron, directly or indirectly,
to the greatest possible extent, all remedies available to Gen-Probe against any
Instrument manufacturer which has failed to supply Gen-Probe in accordance with
the applicable manufacturing contract.
(d) If a party exercises any right granted hereunder to have any
Clinical Diagnostic Instrument manufactured, then (i) such party shall first
require that the subcontracted party shall enter into a confidentiality
agreement with such party incorporating the terms of Article 8 below; (ii) such
party shall supervise such subcontract work; (iii) the subcontracted party shall
comply in all material respects with all requirements of applicable laws and
regulations, together with all applicable good laboratory, clinical and
manufacturing practices; and (iv) the subcontracted party shall enter into an
agreement with such party to the extent necessary to effectuate the provisions
of Article 9 below.
4.4.4 Commercialization.
(a) During the Clinical Diagnostic Term, Gen-Probe hereby grants to
Chiron the nonexclusive distribution right in the Territory, at Chiron's sole
cost, to promote, market and sell the Clinical Diagnostic Instruments to conduct
the Clinical Diagnostic Assays for use in the Clinical Diagnostic Field. Chiron
shall use its Commercially Reasonable Efforts to promote, market, sell and meet
the reasonably foreseeable market demands for the Clinical Diagnostic
Instruments in the Territory for use in the Clinical Diagnostic Field. No
nucleic acid probe based assays other than the Blood Screening Assays and the
Clinical Diagnostic Assays shall be conducted on the Clinical Diagnostic
Instruments purchased by Chiron, except as specifically provided in Section
4.4.7 as to Gen-Probe, its affiliates and the two (2) Third Party licensees of
Gen-Probe.
(b) Subject to regulatory requirements, the Clinical Diagnostic
Instruments shall be marketed under such trademarks as may be determined by the
Supervisory Board to give adequate recognition to the respective contributions
and interests of the parties, and, if applicable, the Major Distributor. It is
the intention of the parties that both parties' contributions and interests will
be recognized.
(c) Chiron shall have the sole right, and the obligation, at its
sole expense, to maintain and service all Clinical Diagnostic Instruments placed
by Chiron or its Affiliates in the Territory for use in the Clinical Diagnostic
Field. With respect to those Clinical Diagnostic Instruments placed by
Gen-Probe, its Affiliates or Third Parties in the Territory for use in the
Clinical Diagnostic Field, Chiron shall have no obligation or right to service
such Clinical Diagnostic Instruments absent a separate and mutual agreement for
such service. Gen-Probe grants
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a first right of refusal to Chiron with respect to the opportunity to service
Clinical Diagnostic Instruments placed by Gen-Probe.
4.4.5 Licenses.
(a) During the Clinical Diagnostic Term, Chiron hereby grants to
Gen-Probe a nonexclusive license in the Territory under the Chiron IP Rights (i)
to conduct Gen-Probe's obligations under the Development Program to develop the
Clinical Diagnostic Instruments, and (ii) to manufacture or have manufactured
the Clinical Diagnostic Instruments. Gen-Probe shall not have the right to grant
sublicenses under such license, without the prior express written consent of
Chiron.
(b) If Chiron exercises its option to acquire the right to
manufacture (or have manufactured) the Clinical Diagnostic Instruments under
Section 4.4.3(c) above, during the balance of the Clinical Diagnostic Term,
Gen-Probe shall grant to Chiron a nonexclusive license in the Territory under
the Gen-Probe IP Rights to exercise its rights under Section 4.4.3(c) above to
manufacture (or have manufactured) the Clinical Diagnostic Instruments to
conduct the Clinical Diagnostics Assays for use in the Clinical Diagnostic
Field. Chiron shall not have the right to grant sublicenses under such license,
without the prior express written consent of Gen-Probe.
4.4.6 Compensation to Gen-Probe. In consideration for the rights
granted, and the obligations accepted, by Gen-Probe, Chiron shall pay to
Gen-Probe the following amounts:
(a) Transfer Price. Within thirty (30) days after receipt of each
shipment and invoice of Initial Clinical Diagnostic Instruments from Gen-Probe,
Chiron shall pay to Gen-Probe the Transfer Price for each Clinical Diagnostic
Instrument purchased by Chiron or its Affiliates.
(b) Applicable Royalty. Within forty-five (45) days after the end of
each fiscal quarter, Chiron shall pay to Gen-Probe the Applicable Royalty for
each Clinical Diagnostic Instrument manufactured by Chiron pursuant to Section
4.4.3(b) or (c) above and sold by Chiron or its Affiliates during such fiscal
quarter.
(c) Service Revenues. Chiron shall retain the aggregate revenues
received by Chiron and its Affiliates in consideration for the maintenance and
servicing of the Clinical Diagnostic Instruments placed by Chiron and its
Affiliates.
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4.4.7 Access to Instruments.
(a) Except as otherwise provided in this Agreement, Gen-Probe, its
Affiliates, and its Third Party licensees and distributors shall have the right
to access Clinical Diagnostic Instruments placed by Chiron for the purpose of
selling to the users of such Clinical Diagnostic Instruments TMA Assays (other
than the Initial Clinical Diagnostic Assays, Exclusive Future Clinical
Diagnostic Assays, and Nonexclusive Future Clinical Diagnostic Assays as to
which Chiron has acquired the exclusive right to sell). Except as otherwise
provided in this Agreement, Chiron, its Affiliates and distributors shall have
the right to access Clinical Diagnostic Instruments placed by Gen-Probe, its
Affiliates, and Third Parties for the purpose of selling to the users of such
Clinical Diagnostic Instruments Clinical Diagnostic Assays for use in the
Clinical Diagnostics Field.
(b) Promptly after the Effective Date, the Supervisory Board shall
define an Access Fee, which shall be a per assay fee payable by Chiron,
Gen-Probe and Gen-Probe's Third Party Licensees, with respect to TMA Assays sold
for use Clinical Diagnostic Instruments placed by another party pursuant to
subparagraph (a). Such per assay fee shall be based on the following elements,
considered on a country by country basis: actual amortized instrument costs,
cost of capital associated with the instrument, estimated volume of tests to be
run on an instrument, and estimated service costs per instrument, consistent
with industry standards. With respect to use by Third Party licensees of
Clinical Diagnostic Instruments placed by Chiron, the Access Fee will include an
agreed upon premium, which is estimated to be not more than 30% of the Access
Fee.
(c) Access Fees collected from all sellers of TMA Assays for use on
the Clinical Diagnostic Instruments shall be allocated between Chiron and
Gen-Probe based on the percentage of the installed instrument base placed by
each, determined in a manner agreed upon by the Supervisory Board.
(d) In the event that either party develops a Blood Screening Assay
or a Clinical Diagnostic Assay, or a Gen-Probe Third Party licensee (if and as
permitted by this Agreement) develops a new TMA Assay, for use on the Clinical
Diagnostic Instruments, such developing party shall be responsible for all costs
associated with installing or implementing such TMA Assay on the Clinical
Diagnostic Instruments. Unless otherwise agreed, Chiron shall have the right to
perform such installation on instruments serviced by Chiron. If Chiron performs
servicing activities for Gen-Probe or its Third Party licensee in connection
with such installation or implementation on instruments placed by Chiron,
Gen-Probe or Third Parties, then Chiron shall be reimbursed for Chiron's costs
of performing such activities.
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(e) Gen-Probe shall be responsible to Chiron for establishing and
maintaining quality control of all TMA Assays developed, manufactured or sold by
Gen-Probe or its Third Party Licensees to be conducted by the Clinical
Diagnostic Instruments, other than TMA Assays sold by Chiron pursuant to this
Agreement, including assurance that no such TMA Assay creates any impairment in
the functionality for the customer of any Clinical Diagnostic Instrument or
Clinical Diagnostic Assay sold hereunder.
(f) Each party shall keep complete and accurate records in
sufficient detail to properly reflect all servicing costs, TMA Assay sales, and
other matters necessary to enable calculation of amounts payable pursuant to
this Section 4.4.7. Each party shall have the right to audit the other party's
records regarding the calculation of such amounts under Section 7.3 below.
(g) During the Clinical Diagnostic Term, Gen-Probe may grant to not
more than two (2) Third Parties the right to access the Clinical Diagnostic
Instruments placed by Chiron under this Agreement. Gen-Probe shall give Chiron
prior written notice of its intent to grant such rights to each such Third Party
licensee and Chiron shall have the right to consent, which consent by Chiron
shall not be unreasonably withheld (without requiring further economic
consideration from Gen-Probe or such Third Party to Chiron; provided, that an
arrangement with the Third Party for reciprocal servicing, support or promotion
shall not be deemed further economic consideration from Gen-Probe or such Third
Party), to such grant as to any particular Third Party (other than bioMerieux
S.A. or bioMerieux Xxxxx, Inc., as to whom Gen-Probe shall have the absolute
right to make such a grant.) Chiron may not grant to Third Parties any rights to
access the Clinical Diagnostic Instruments placed by Chiron under this Agreement
(except for distributors of Chiron for purposes of selling assays developed
under this Agreement).
4.4.8 Modifications to Clinical Diagnostic Instruments. The rights
granted by Gen-Probe to Chiron with respect to any of the Clinical Diagnostic
Instruments during the Clinical Diagnostic Term shall extend to and include any
and all modifications to such Clinical Diagnostic Instruments as are developed
during the Clinical Diagnostic Term to improve the sample processing,
amplification, detection, analysis, or reliability of such Clinical Diagnostic
Instrument which utilize the same base technologies and which do not change the
fundamental character of such Clinical Diagnostic Instrument, to the extent that
Gen-Probe is not prohibited as of the Effective Date from granting such rights.
It is the intent of the parties that this Section apply to improvements to the
existing Clinical Diagnostic Instruments, but not to an instrument which is
fairly considered to be a new instrument.
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4.4.9 Other Clinical Diagnostic Instruments. If Gen-Probe develops
any new instrument for use with TMA Assays in the Clinical Diagnostic Field, it
shall offer to grant to Chiron, during the Clinical Diagnostic Term and on
reasonable terms to be negotiated, rights to such instrument comparable to the
rights granted under this Agreement as to the Clinical Diagnostic Instruments
existing on the Effective Date, to the extent that Gen-Probe reasonably
concludes that it is not prohibited as of the Effective Date from granting such
rights.
4.5 Certain Gen-Probe Rights.
4.5.1 Subject to the other provisions of this Section 4.5.1,
Chiron's rights under Section 4.1 above regarding the Initial Clinical
Diagnostic Assay for the quantitative detection of HIV-1, shall be exclusive
unless and until Chiron fails to elect in writing, within thirty (30) days
following Chiron's receipt from Gen-Probe of a copy of the application submitted
to the FDA for approval of such Initial Clinical Diagnostic Assay in the United
States, to be bound by the minimum sales obligations therefor set forth below
(stated as a percentage of the sum of (a) the aggregate sales during such year
of Chiron's bDNA assay for the quantitative detection of HIV, plus (b) the
aggregate sales of the Initial Clinical Diagnostic Assay for the quantitative
detection of HIV-1) in each of the years indicated following FDA approval
thereof in the United States, provided that sufficient Clinical Diagnostic
Instruments and such Initial Clinical Diagnostic Assays for the quantitative
detection of HIV-1 are available to Chiron:
Period after Minimum percentage
FDA approval during such year
------------ ----------------
First year [***]
Second year [***]
Third year and
each year thereafter [***]
During the period prior to Chiron's election, if any, commencing at
such time as the Supervisory Board determines that the Initial Clinical
Diagnostic Assay for the quantitative detection of HIV-1 is available for use in
marketing studies, Gen-Probe shall provide such Initial Clinical Diagnostic
Assay for at least four (4) marketing studies with respect to such Initial
Clinical Diagnostic Assay and Chiron shall manage such marketing studies. Each
party shall bear the costs of its activities in connection with such marketing
studies.
Commencing with the First Commercial sale of the Initial Clinical
Diagnostic Assay for the quantitative detection of HIV-1, Gen-Probe and its
Affiliates shall have the right to co-promote such Initial Clinical Diagnostic
Assay, provided that such co- promotion conforms with the marketing, product,
pricing and promotional strategy as determined by Chiron.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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If Chiron fails to elect to be bound by the minimum sales
obligations as provided above or if Chiron fails to meet the minimum sales
obligations set forth above for any year, then Chiron's exclusive rights under
Section 4.1 above regarding such Initial Clinical Diagnostic Assay shall become
co-exclusive.
For purposes of this Section 4.5, "co-exclusive" shall mean that
Chiron's exclusive rights and licenses shall be exclusive as to all other
Persons, except as to Gen-Probe, its Affiliates and not more than one (1) other
licensee of Gen-Probe in each country with respect to such assay.
4.5.2 Chiron shall be required to obtain regulatory approval in the
United States, or at least two of Japan, Germany, Italy, Spain or France, to
sell at least the following aggregate number of Initial Clinical Diagnostic
Assays and Exclusive Future Clinical Diagnostic Assays within the time
designated:
Anniversary Number of Required
of the Effective Date Approved Assays
--------------------- ---------------
3 [***]
5 [***]
7 [***]
If Chiron does not meet the above requirement for approved assays,
it may count as one approved assay for purposes of the above requirement each
two (2) Initial Clinical Diagnostic Assays or Exclusive Future Clinical
Diagnostic Assays which it has submitted to an applicable regulatory agency in
the United States or at least two of Japan, Germany, Italy, Spain or France, if
Chiron is prosecuting such application(s) in good faith as of the required date.
If Chiron has failed to meet any of the above requirements, then
Chiron's exclusive rights under Section 4.2 above (and the exclusive licenses
granted by Gen-Probe to Chiron under the Gen-Probe IP Rights under Section 4.2
above) regarding each Exclusive Future Clinical Diagnostic Assay which is not
then being sold, or which has not then completed Phase 1 of the Design Review
Process, shall become coexclusive with Gen-Probe and shall thereafter be subject
to the provisions of Section 4.3 (except for the licensing right of Section
4.3.1(d)). All Sales Royalties for any Exclusive Clinical Diagnostic Assay sold
by Chiron shall continue to be governed by Section 1.52.2.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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4.5.3
(a) Except for assays which Chiron has on the market or in
development as of the Effective Date, if Chiron (whether directly or through its
Affiliate) promotes, markets or sells any nucleic acid probe-based assay which
is directed to the same virus or marker for the same primary clinical indication
as any Clinical Diagnostic Assay which has been developed and is then being sold
and as to which Chiron holds the exclusive right to promote, market or sell
hereunder, then Chiron's rights regarding such Clinical Diagnostic Assay under
Section 4.1 or 4.2 above (and the licenses regarding such Clinical Diagnostic
Assay granted by Gen-Probe to Chiron under the Gen-Probe IP Rights under Section
4.1 or 4.2 above) shall become co-exclusive, as defined in Section 4.5.1.
(b) For assays which Chiron has on the market or in
development as of the Effective Date, if (i) a Clinical Diagnostic Assay is
developed under this Agreement as to which Chiron holds the exclusive right to
promote, market or sell hereunder, and (ii) Chiron or its Affiliate promotes,
markets or sells any nucleic acid probe-based assay which is directed to the
same virus or marker for the same primary clinical indication as such Clinical
Diagnostic Assay at the time an application is submitted to the FDA for approval
of such Clinical Diagnostic Assay, then in order to retain its exclusive rights,
Chiron shall be required to elect, within thirty (30) days following Chiron's
receipt of a copy of the FDA application, to be bound by a minimum sales
obligation for such Clinical Diagnostic Assay to be negotiated in good faith,
which shall be designed to accomplish a transition to such Clinical Diagnostic
Assay over a three-year period following FDA approval (not to exceed the annual
targets set forth in Section 4.5.1). If Chiron fails to elect to be bound by the
minimum sales obligations as provided above or if Chiron fails to meet the
minimum sales obligations for any year, then Chiron's exclusive rights under
Section 4.1 or 4.2 above regarding such Clinical Diagnostic Assay shall become
co-exclusive.
4.5.4 CDS (and its Affiliates) shall have the right to co-market the
Initial Clinical Diagnostic Assays for the qualitative detection of HIV, and for
the quantitative detection of HIV, and the Exclusive Future Clinical Diagnostic
Assay for the qualitative detection of HBV in Japan, China, Taiwan and Korea for
use in the Clinical Diagnostic Field, and to retain all proceeds thereof without
compensation to Chiron. CDS shall have the right to co-promote the Combo
Clinical Diagnostic Assay, if sold by Chiron, the Initial Clinical Diagnostic
Assay for the qualitative detection of HCV, and the Future Clinical Diagnostic
Assays in Japan, China, Taiwan and Korea for use in the Clinical Diagnostic
Field, provided that such co-promotion conforms with the marketing, product,
pricing, and promotional strategy as determined by Chiron or the Major
Distributor (provided that no such strategy shall preclude co-promotion).
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4.5.5 Gen-Probe and its Affiliates shall have the right to
co-promote the Clinical Diagnostic Assays for use in the Clinical Diagnostic
Field, provided that such co-promotion conforms with the marketing, product,
pricing, and promotional strategy as determined by Chiron or the Major
Distributor, if applicable, provided that no such strategy shall preclude
co-promotion).
4.5.6 Except to the extent provided in Section 4.5.1, 4.5.2 or
4.5.3, during the Clinical Diagnostic Term, Gen-Probe shall not grant any
licenses to any Third Parties (other than bioMerieux S.A., bioMerieux Xxxxx,
Inc., and their Affiliates) under the Gen-Probe IP Rights for the development,
manufacture, use or sale of (i) a TMA Assay directed to the markers in the
Clinical Diagnostic Field which are identified in Schedule A or (ii) an assay
directed to the markers in the Clinical Diagnostic Field which are identified in
Schedule A utilizing Gen-Probe's "Hybridization Protection Assay" ("HPA").
4.6 Chiron Co-Promotion Rights. Chiron and its Affiliates shall have the
right to co-promote any Gen-Probe assays (in addition to the Clinical Diagnostic
Assays) which are developed by Gen-Probe and its Affiliates which can be
conducted by the Clinical Diagnostic Instruments and provided that Gen-Probe has
the right to grant such rights and provided that such co-promotion conforms with
the marketing, product, pricing, and promotional strategy as determined by
Gen-Probe (provided that no such strategy shall preclude co-promotion).
4.7 Records and Reports.
4.7.1 Records. Gen-Probe and Chiron each shall maintain records, in
sufficient detail appropriate for patent purposes, which shall be complete and
accurate and shall fully and properly reflect all work done and results achieved
in the performance of the Development Programs for Clinical Diagnostic Assays
and Clinical Diagnostic Instruments (including all data in the form required
under all applicable laws and regulations).
4.7.2 Inspection of Records. Gen-Probe and Chiron each shall have
the right, during normal business hours and upon reasonable notice, to inspect
and copy all such records of the other party to the extent reasonably required
for the performance of the Development Programs for Clinical Diagnostic Assays
and Clinical Diagnostic Instruments. The parties shall develop reasonable
procedures for requesting and delivering copies of such records to each other as
may be necessary for the performance of the Development Programs for Blood
Screening Assays and Blood Screening Instruments. Each party shall maintain such
records and the information of the other party contained therein in confidence
incorporating the terms of Article 8 below and shall not use such records or
information except to the extent otherwise permitted by this Agreement.
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4.7.3 Development Reports and Information. Gen-Probe and Chiron
shall keep each other informed of their progress under the Development Programs
for Clinical Diagnostic Assays and Clinical Diagnostic Instruments. The parties
shall develop reasonable procedures for requesting and delivering copies of such
records to each other as may be necessary for the performance of the Development
Programs for Clinical Diagnostic Assays and Clinical Diagnostic Instruments.
Within thirty (30) days following the end of each calendar quarter during the
term of the Development Programs for Clinical Diagnostic Assays and Clinical
Diagnostic Instruments, and within thirty (30) days following the expiration or
termination of such Development Programs, Gen-Probe and Chiron each shall
prepare and provide to the other party a reasonably detailed written summary
report which shall describe the work performed by such party to date under such
Development Programs.
ARTICLE 5
SUPERVISORY BOARDS
5.1 Supervisory Boards.
5.1.1 Composition. The Development Programs for the Products in each
of the Blood Screening Field and the Clinical Diagnostic Field shall be
supervised by a Blood Screening Supervisory Board and a Clinical Diagnostic
Supervisory Board, respectively. Each Supervisory Board shall be comprised of
three (3) named representatives of Gen-Probe and three (3) named representatives
of Chiron. Each party shall appoint its respective representatives to each
Supervisory Board from time to time, and may substitute one or more of its
representatives, in its sole discretion, effective upon notice to the other
party of such change.
5.1.2 Meetings. Each Supervisory Board shall meet not less than once
each calendar quarter during the term of this Agreement, on such dates and at
such times and places as agreed to by Gen-Probe and Chiron, alternating between
San Diego and Emeryville, or such other locations as the parties shall agree.
All meetings shall be set at times and place to be mutually agreed.
5.1.3 Actions. Each party's representatives shall collectively have
one vote as to all matters. Any approval, determination or other action agreed
to both parties' representatives shall be the approval, determination or other
action of the Supervisory Board. All board actions require a unanimous vote. Any
matters as to which a Board cannot reach a unanimous vote shall be presented to
the parties' respective presidents for consideration, in accordance with Article
13.
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5.2 Reports. Within thirty (30) days following each Supervisory Board
meeting during the term of this Agreement, the Supervisory Board shall prepare
and provide to each party a reasonably detailed written summary report which
shall describe any approval, determination or other action by the Supervisory
Board.
ARTICLE 6
SUPPLY TERMS
6.1 Manufacture and Sale. On the terms and subject to the conditions of
this Article 6, Gen-Probe shall manufacture, or have manufactured, sell and
deliver to Chiron, and Chiron shall purchase from Gen-Probe, such amounts of the
Products, as Chiron orders pursuant to Section 6.3.4 below. Gen-Probe shall
cause its subcontract manufacturers, if any, to comply with the provisions of
this Article 6. Gen-Probe shall use Commercially Reasonable Efforts to meet the
market demand for the Products as to which it has undertaken an obligation to
manufacture. During the due diligence period following signing of this contract
the parties will meet to discuss manufacturing plans for the Products.
6.2 Manufacturing Practices.
6.2.1 Specifications. Gen-Probe shall manufacture all the Products
under this Agreement in accordance with all applicable laws and regulations and
in conformity with the product specifications.
6.2.2 Audit. Chiron shall have the right, at its sole expense, to
audit Gen-Probe for compliance with Section 6.2.1 upon reasonable notice during
normal business hours and not more than once in each calendar year (or such
additional times as may be necessary to ensure compliance with all material
requirements).
6.2.3 Certificates of Analysis. Gen-Probe shall provide certificates
of analysis to Chiron for all the Blood Screening Assays, Clinical Diagnostic
Assays and Rare Reagents manufactured and supplied hereunder based upon a
reference standard reasonably proposed by Gen-Probe and acceptable to Chiron.
6.2.4 Quality Control Information. Upon the reasonable request of
Chiron, Gen-Probe shall provide Chiron with such reasonable information,
including analytical and manufacturing documentation, requested by Chiron
regarding quality control of the Products. Chiron shall treat all such
information disclosed pursuant to this Section as confidential information of
Gen-Probe subject to the provisions of Article 8 below.
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6.3 Forecasts and Orders.
6.3.1 Forecasts.
(a) Initial Forecasts. Not less than six months prior to the date of
the first anticipated delivery of any Product by Gen-Probe to Chiron, Chiron
shall prepare and provide Gen-Probe with a written forecast of the estimated
requirements of Chiron and its Affiliates for each Blood Screening Assay, Blood
Screening Instrument, Clinical Diagnostic Assay, Clinical Diagnostic Instrument,
or Rare Reagent for each of the twelve (12) calendar months beginning with the
month of the first anticipated delivery of any Product. Gen-Probe shall respond
to Chiron's forecast in writing within thirty (30) days and shall have no
obligation with respect to such forecast unless it has approved such forecast in
writing. Gen-Probe shall use Commercially Reasonable Efforts to meet the market
demand for the Products as to which it has undertaken an obligation to
manufacture.
Not less than three months prior to the date of the first
anticipated delivery of any Product, Chiron shall prepare and provide Gen-Probe
with a more current written forecast covering the same Products and period.
Gen-Probe shall respond to Chiron's updated forecast in writing within ten (10)
days. Gen-Probe shall have no obligation with respect to such updated forecast
to the extent that the forecasted quantity of any Product has been increased by
more than fifteen percent (15%) for the first three-month period of such
forecast, or by more than twenty-five percent (25%) for the twelve-month period
of such forecast, from the previously-approved amount for such Product unless it
has approved such increase in writing.
The parties recognize that forecasting the first year for any Product will
be difficult and that actual experience may significantly vary from the
forecast. Without modifying any other provision of this Agreement, the parties
agree to work together to address the first year supply of Products, and to use
Commercially Reasonable Efforts to satisfy the market need.
(b) Regular Monthly Forecasts. Beginning with the first day of the
month of the first Product delivery and prior to the first day of each
subsequent month, Chiron shall update its prior forecast by extending the
forecast to cover a period of not less than 12 months beyond the date of
Gen-Probe's receipt of the updated forecast (which date is referred to as the
"Forecast Date"). Absent Gen-Probe's prior written consent, such updated
forecast shall be subject to the following restrictions:
(i) Chiron may not modify the previously-forecasted amount of
any Product for the three-month period following the Forecast Date.
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(ii) Chiron may not modify its previously-forecasted amount of
any Blood Screening Assay, Clinical Diagnostic Assay, or Rare Reagent for the
fourth through sixth months covered by the forecast by more than fifteen percent
(15%) per month from the previously-forecasted amount.
(iii) Chiron may not modify its previously-forecasted amount
of any Blood Screening Assay, Clinical Diagnostic Assay, or Rare Reagent for the
seventh through eleventh months covered by the forecast by more than twenty-five
percent (25%) per month from the previously-forecasted amount.
(iv) Chiron may not forecast an amount of any Blood Screening
Assay, Clinical Diagnostic Assay, or Rare Reagent for the twelfth month which is
more than twenty-five percent (25%) greater than the amount forecasted for the
eleventh month.
(v) Chiron may not increase its forecast for any Blood
Screening Instrument or Clinical Diagnostic Instrument for the fourth through
sixth months covered by the forecast by more than twenty-five percent (25%) per
month from the previously forecasted amount.
Chiron shall prepare each forecast based upon Chiron's good faith determination
of the past and reasonably anticipated market demand for each Product and in
doing so shall recognize in good faith limitations imposed by arrangements, if
any, with subcontractors of Gen-Probe for the manufacture and supply of such
Product or any component thereof.
6.3.2 Purchase Obligation. Chiron shall be required to purchase not
less than ninety percent (90%) of the quantity of each Product estimated for the
initial three-month period covered in each forecast (other than the first such
forecast) under Section 6.3.1(a) above.
6.3.3 Orders. Except as otherwise set forth below in this Section
6.3.3, Chiron shall make all purchases of Products hereunder by submitting to
Gen-Probe a single binding purchase order for each calendar month. Not less than
three months prior to the date of the first anticipated delivery of any Product,
Chiron shall deliver to Gen-Probe its initial binding purchase order, which
shall specify the quantity ordered, the place of delivery and the requested
delivery date for each of the three months beginning with the first Product
delivery. Not less than ninety days prior to the first day of the first month
following the period of the first binding purchase order, and not less than 90
days prior to the first day of each succeeding month, Chiron shall deliver to
Gen-Probe a binding purchase order for such month, which shall specify the
quantity ordered, the place of delivery and the requested delivery date. Each
purchase order shall be in writing in a form reasonably acceptable to Gen-Probe.
The requested delivery date shall be not be less than ninety (90) days after the
date of such purchase order. If the quantity of any Product ordered by Chiron
for delivery in any calendar month exceeds the quantity of such Product set
forth in the most recent
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forecast, then Gen-Probe shall provide Chiron with written notice of the
anticipated delivery date for, and use Commercially Reasonable Efforts to
deliver, the amount of Product in excess of the forecasted amount. In the event
of a conflict between the terms and conditions of any purchase order and this
Agreement, the terms and conditions of this Agreement shall prevail.
6.3.4 Supply Obligation. Gen-Probe shall be required to supply in
any month the quantity of each Product ordered by Chiron pursuant to Section
6.3.3 to the extent such quantity of such Product was set forth in the most
recent forecast. If the quantity of any Blood Screening Assay, Clinical
Diagnostic Assay or Rare Reagent ordered by Chiron under Section 6.3.4 below for
any calendar period exceeds the forecasted amount, Gen-Probe shall use its
Commercially Reasonable Efforts to supply such excess. If Gen-Probe becomes
aware of any fact indicating that Gen-Probe may be unable to meet Chiron's
forecasted demand as to any Product, Gen-Probe shall promptly provide written
notice of such fact to Chiron. The Supervisory Board shall then meet to discuss
the relevant circumstances and appropriate actions.
6.4 Delivery and Acceptance.
6.4.1 Delivery. Unless Gen-Probe is otherwise instructed by Chiron,
all the Products supplied under this Agreement shall be shipped f.o.b. place of
manufacture to such location as designated by Chiron in the applicable purchase
order. Gen-Probe shall pre-pay all freight, insurance charges, taxes, import and
export duties, inspection fees and other charges applicable to the sale and
transport of the Products purchased by Chiron hereunder and add such charges to
the applicable invoice. Title and risk of loss and damages to the Products
purchased by Chiron hereunder shall pass to Chiron upon receipt by the carrier.
Chiron shall have the right to select the carrier. Subject to the guidance of
the Supervisory Boards, Gen-Probe shall provide warehouse capability for
Products after sale to Chiron and pending further delivery instructions. The
Supervisory Boards shall reasonably allocate the cost of such warehouse
capability between the parties.
6.4.2 Rejection and Cure.
(a) Blood Screening Assays and Clinical Diagnostic Assays. If a
shipment of Blood Screening Assays or Clinical Diagnostic Assays or any portion
thereof is spoiled, damaged or defective, or fails to have the appropriate
remaining life, then Chiron shall have the right to reject such shipment or the
portion thereof that fails to so conform, as the case may be. Chiron shall give
written notice to Gen-Probe of its rejection hereunder, within thirty (30) days
after Chiron's receipt of such shipment, specifying the grounds for such
rejection. All or any part of any shipment may be held for Gen-Probe'
disposition, at Gen-Probe's expense if found to be not in conformance with the
applicable specifications. Gen-Probe shall use its Commercially Reasonable
Efforts to cure such rejection or replace such rejected shipment
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(or portion of shipment) after receipt of notice of rejection thereof.
(b) Blood Screening Instruments and Clinical Diagnostic Instruments.
If any Blood Screening Instrument or Clinical Diagnostic Instrument is damaged,
defective or fails to conform to the specifications therefor, then Chiron shall
have the right to reject such damaged, defective or nonconforming Blood
Screening Instrument or Clinical Diagnostic Instrument. Chiron shall give
written notice to both Gen-Probe and any manufacturer designated by Gen-Probe of
its rejection hereunder, within ten (10) days after installation of such
Instrument, specifying the grounds for such rejection. The Blood Screening
Instrument or Clinical Diagnostic Instrument shall be held for Gen-Probe's
disposition, at Gen-Probe's expense, if found to be damaged, defective or
nonconforming. Gen-Probe shall use its Commercially Reasonable Efforts to
replace such rejected Blood Screening Instrument or Clinical Diagnostic
Instrument after receipt of notice of rejection thereof.
6.4.3 LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE SPECIFICALLY SET
FORTH IN THIS AGREEMENT, GEN-PROBE'S SOLE LIABILITY TO CHIRON, AND CHIRON'S SOLE
REMEDY, WITH RESPECT TO THE SPECIFIC MATTERS ADDRESSED UNDER SECTION 6.4.2 ABOVE
SHALL BE THE REJECTION AND REPLACEMENT OF NON-CONFORMING PRODUCTS. NOTHING IN
THIS SECTION SHALL LIMIT ANY RIGHTS OR REMEDIES UNDER ARTICLE 10 OR ANY RIGHT OF
CHIRON TO ASSUME RESPONSIBILITY FOR THE MANUFACTURE OF THE PRODUCTS UNDER
ARTICLES 3 AND 4.
6.5 Packaging. All Products supplied under this Agreement shall be
packaged in such manner as Chiron reasonably determines and Gen-Probe does not
reasonably object.
6.6 Warranty. Gen-Probe warrants that all the Products delivered to Chiron
pursuant to this Agreement shall conform with the applicable specifications,
shall be free from defects in material and workmanship, and shall be
manufactured in compliance with applicable laws and regulations. Any and all
warranties by subcontract manufacturers of the Blood Screening Instruments and
the Clinical Diagnostic Instruments shall inure to the benefit of Chiron, to the
extent permitted by such subcontract manufacturer. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, GEN-PROBE MAKES NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PRODUCTS. GEN-PROBE DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS AND IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
6.7 Independent Purchaser Status. Chiron shall be an independent purchaser
and reseller of the Products. Chiron shall be free to use and resell the
Products on such terms as it may, in its sole discretion, determine, including
price, returns, credits and discounts.
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6.8 Invoicing. Upon shipment of the Products to Chiron, Gen-Probe shall
submit invoices therefor to Chiron.
6.9 Sales and Use Taxes. Any federal, state, county or municipal sales or
use tax, excise or similar charge, or other tax assessment (other than that
assessed against income), assessed or charged on the sale of the Products sold
by Gen-Probe to Chiron pursuant to this Agreement shall be paid by Chiron.
6.10 Non-Commercial Products. Gen-Probe agrees to provide to Chiron
reasonable quantities of Blood Screening Assays and Clinical Diagnostic Assays
manufactured by Gen-Probe for uses other than sale to customers, including
without limitation research studies, marketing studies, internal research and
development, and troubleshooting (all for Chiron's use only in direct
furtherance of the express purposes of this Agreement and without any implied
license for any purpose other than such express purposes), to the extent such
Products are specifically ordered by Chiron for such purposes ("Non-commercial
Products"). The entire compensation to Gen-Probe for Non-commercial Products
shall be not greater than [***] of Gen-Probe's Manufacturing Cost. The
quantities of Non-commercial Products ordered by Chiron shall be subject to
review by the Supervisory Board.
6.11 Internal Commercial Use. Subject to Section 1.52.4, for all Products
which are used commercially by Chiron or its Affiliates, Chiron shall pay to
Gen-Probe the compensation which would be due Gen-Probe had such Products been
the subject of an arm's-length commercial sale by Chiron or the Major
Distributor (if applicable).
6.12 Safety Stocks. Immediately following the execution of this Agreement
by both parties, the parties will meet and confer and negotiate in good faith in
order to agree upon provisions concerning the arrangements for a safety stock of
each of the Products and plans for the creation of the initial safety stock and
a reasonable schedule therefor. It is the parties' intent to agree upon such
provisions within sixty (60) days of the date of this Agreement. The Supervisory
Boards will from time-to-time review the adequacy of such arrangements for such
safety stocks. Notwithstanding any other provision of this Agreement, if
Gen-Probe is otherwise unable to deliver any Product in accordance with this
Agreement, then that portion (if any) of the safety stock of that Product stored
at Gen-Probe facilities may be applied to meet Chiron's demand for that Product,
provided that Gen-Probe shall then be required to restore the safety stock
within the applicable periods for cure of a failure to supply pursuant to
Article 3 or 4, unless otherwise mutually agreed. Gen-Probe shall give Chiron
fifteen (15) days prior written notice before using any safety stock Product in
a manner which reduces the amount of the safety stock.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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With respect to any Initial Blood Screening Assay or Future Blood
Screening Assay, the objective of the parties is to share equally the aggregate
cost of maintaining safety stocks of raw components, work-in-progress, and
finished as required by CBER. Gen-Probe will carry the safety stock of raw
components and work-in-progress for such Assays, and will carry one months
safety stock in the event that more than two months' supply of such Assays is
mandated as safety stock. Chiron shall carry all other safety stocks for such
Assays, unless such responsibility places a disproportionate burden with respect
to overall safety stock costs on Chiron, in which event the Supervisory Board
will readjust the parties' responsibilities.
ARTICLE 7
PAYMENTS AND REPORTS
7.1 Reports. Within forty-five (45) days after the end of each calendar
month or fiscal quarter during the Blood Screening Term or Clinical Diagnostic
Term, as applicable in connection with Chiron's payment obligations hereunder,
Chiron shall furnish to Gen-Probe a written report showing in reasonably
specific detail (a) the gross sales, on a Product-by-Product and
country-by-country basis, of all Products sold by Chiron and its Affiliates (or,
as to Blood Screening Assays, the Major Distributor, or any other distributor
for Chiron in Japan, Germany, Italy, France or the United Kingdom) to
independent customers in the Territory during such period as to which Chiron is
obligated to make payments hereunder based on Product sales and the calculation
of Net Sales on a worldwide basis from such gross sales; (b) all amounts owing
to Gen-Probe hereunder payable in United States dollars, if any, which shall
have accrued hereunder based upon such sales of Products; (c) the withholding
taxes, if any, required by law to be deducted in respect of such sales; (d) the
date of the First Commercial Sale of each Product in each country in the
Territory during such period; and (e) the exchange rates used in determining the
amount of United States dollars. Chiron shall keep complete and accurate records
in sufficient detail to properly reflect all gross sales and Net Sales and to
enable all amounts payable hereunder to be determined. Each party shall provide
the other with the information concerning access to instruments required by
Section 4.4.7. CDS shall provide Chiron with information as to sales of the
Initial Blood Screening Assay sold in Japan by CDS within forty-five days after
the end of each calendar quarter.
7.2 Exchange Rates. With respect to sales of Products invoiced in United
States dollars, all such amounts calculated under this Agreement shall be
expressed in United States dollars. With respect to sales of Products invoiced
in a currency other than United States dollars, all such amounts calculated
under this Agreement shall be expressed in the domestic currency of the party
making the sale together with the United States dollar equivalent of such
amounts calculated using Chiron's standard accounting methods for calculating
worldwide sales of its other products.
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7.3 Audits.
7.3.1 Upon the written request of either party (the "Requesting
Party") and not more than once in each calendar year, the other party (the
"Responding Party") shall permit an independent certified public accounting firm
of nationally recognized standing, selected by the Requesting Party and
reasonably acceptable to the Responding Party, at the Requesting Party's
expense, to have access during normal business hours to such of the records of
the Responding Party as may be reasonably necessary to verify the accuracy of
the payment reports and invoices hereunder for any year ending not more than
thirty-six (36) months prior to the date of such request. The accounting firm
shall disclose to the Requesting Party only whether the payment reports and
invoices are correct or not and the specific details concerning any
discrepancies. No other information shall be shared.
7.3.2 If such accounting firm concludes that undercharged or
overcharged amounts are owing from one party to the other for such period, the
appropriate party shall pay such amounts within thirty (30) days of the date the
Requesting Party delivers to the Responding Party such accounting firm's written
report so concluding. The fees charged by such accounting firm shall be paid by
the Requesting Party; provided, however, if the audit discloses either (a) that
the amounts payable by the Responding Party for the audited period are more than
one hundred five percent (105%) of the amounts actually paid for such period, or
(b) that the amounts charged by the Responding Party for the audited period are
more than one hundred five percent (105%) of the amounts actually incurred for
such period, then the Responding Party shall pay the reasonable fees and
expenses charged by such accounting firm.
7.3.3 The Requesting Party shall treat all financial information
subject to review under this Section 7.3 as confidential, and shall cause its
accounting firm to retain all such financial information in confidence with a
confidentiality agreement reasonably acceptable to the Responding Party.
7.4 Payment Method. All payments by Chiron to Gen-Probe under this
Agreement shall be paid in United States dollars, and all such payments shall be
originated from a United States bank located in the United States and made by
bank wire transfer in immediately available funds to such account as Gen-Probe
shall designate before such payment is due.
7.5 Exchange Control. If at any time legal restrictions prevent the prompt
remittance of part or all royalties with respect to any country in the Territory
where the Product is sold, payment shall be made through such lawful means or
methods as the parties reasonably shall determine.
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7.6 Withholding Taxes. Chiron shall be entitled to deduct the amount
of any withholding taxes, value-added taxes or other taxes, levies or charges
(other than United States taxes) with respect to amounts payable by Chiron, its
Affiliates or, in the case of Products for the Blood Screening Field, by the
Major Distributor or distributors in Japan, Germany, Italy, France, or the
United Kingdom, or any taxes required to be withheld by Chiron, its Affiliates,
or such distributors, to the extent Chiron, its Affiliates, or such distributors
pay to the appropriate governmental authority on behalf of Gen-Probe such taxes,
levies or charges. Chiron shall use reasonable efforts to minimize any such
taxes, levies or charges required to be withheld on behalf of Gen-Probe by
Chiron, its Affiliates, or such distributors. Chiron promptly shall deliver to
Gen-Probe proof of payment of all such taxes, levies and other charges, together
with copies of all communications from or with such governmental authority with
respect thereto.
7.7 Late Payments. Unless otherwise provided in this Agreement, a
party shall pay interest to the other party on the aggregate amount of any
amounts payable by such party that are not paid on or before the date such
amounts are due under this Agreement at a rate per annum equal to the lesser of
the prime rate of interest as reported by Bank of America NT&SA in San
Francisco, California, from time to time, plus two percent (2%), or the highest
rate permitted by applicable law, calculated on the number of days such payment
is delinquent.
ARTICLE 8
CONFIDENTIALITY
8.1 Confidential Information. For the period commencing on the date
this Agreement is first signed by both parties and ending seven (7) years
following the expiration or earlier termination hereof, a party (the "Receiving
Party") shall maintain in confidence the Confidential Information of the other
party, and shall not disclose, use, or grant the use of the Confidential
Information of the other party (the "Disclosing Party") except on a need-to-know
basis to its (and its Affiliates') directors, officers and employees, and to its
consultants and to other Third Parties, and then only to the extent that such
disclosure or use is reasonably necessary in connection with such party's
activities as expressly authorized by this Agreement. To the extent that
disclosure to any Person is authorized by this Agreement, prior to disclosure,
the Receiving Party shall obtain written agreement of such Person to hold in
confidence and not disclose, use or grant the use of the Confidential
Information of the other party except as expressly permitted under this
Agreement. The parties agree that the term of the non-disclosure and non-use
obligations of a Third Party will end seven (7) years after the end of the
contractual arrangement with such Third Party. Each Receiving Party shall notify
the Disclosing Party promptly upon discovery of any unauthorized use or
disclosure of the Disclosing Party's Confidential Information. Upon the
expiration or earlier
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termination of this Agreement, each party shall return to the other party all
tangible items regarding the Confidential Information of the other party and all
copies thereof; provided, however, that each Receiving Party shall have the
right to retain one (1) copy for its legal files for the sole purpose of
determining its obligations hereunder. Notwithstanding the foregoing and Section
1.23, unless otherwise mutually agreed in writing, neither party shall have any
obligation to the other party pursuant to this Article 8 or pursuant to Article
9 with respect to use of Confidential Information of the Disclosing Party
unless, prior to disclosure, such Confidential Information is specifically
identified in writing to the Receiving Party and the Receiving Party agrees in
writing to accept such Confidential Information.
8.2 Terms of this Agreement. For the period commencing on the date
this Agreement is first signed by both parties and ending on the expiration or
earlier termination hereof, without the prior express written consent of the
other party, which shall not be unreasonably withheld or delayed, neither party
shall (a) disclose any financial terms or conditions of this Agreement to any
Third Party, except as reasonably required in connection with such party's
activities hereunder, or under appropriate confidentiality restrictions to
potential Third Party distributors or assignees, or (b) originate any initial
disclosure to any third party of the existence or terms of this Agreement prior
to the Effective Date (unless pursuant to an appropriate confidentiality
agreement); or (c) originate any initial publicity, news release or any other
public announcement (written or oral) relating to this Agreement or the
existence of an arrangement among the parties. Notwithstanding the foregoing,
prior to the Effective Date, the parties shall mutually agree upon a joint press
release relating to this Agreement for issuance on or after the Effective Date.
Either party shall thereafter be free to disclose any information contained in
the public disclosure approved pursuant to this Section 8.2 or which is made
without confidentiality restrictions pursuant to Section 8.3.
8.3 Permitted Disclosures. The confidentiality obligations under
this Article 8 shall not apply to the extent that a party is required to
disclose information by applicable law, regulation or order of a governmental
agency or a court of competent jurisdiction, provided that such party shall
provide written notice thereof to the other party and sufficient opportunity to
object to any such disclosure or to request confidential treatment thereof.
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ARTICLE 9
INVENTIONS AND INTELLECTUAL PROPERTY RIGHTS
9.1 Ownership of Inventions.
9.1.1 Except as otherwise set forth in Sections 9.1.2 through 9.1.7
below, the entire right and title in all discoveries, inventions or other
technology, data or information (whether patentable or not), together with all
patent and other intellectual property rights therein, made or conceived during
and as a result of a Development Program or the performance of other obligations
under this Agreement, (e.g., manufacturing) (collectively, the "Inventions") (a)
by employees of Gen-Probe or others acting solely on behalf of Gen-Probe (the
"Gen-Probe Inventions") shall be owned solely by Gen-Probe, (b) by employees of
Chiron or others acting solely on behalf of Chiron (the "Chiron Inventions")
shall be owned solely by Chiron, and (c) jointly by employees of Gen-Probe or
others acting on behalf of Gen-Probe and employees of Chiron or others acting on
behalf of Chiron (the "Joint Inventions") shall be owned jointly by Gen-Probe
and Chiron.
(a) Chiron Inventions shall be included within the Chiron IP Rights,
Gen-Probe Inventions shall be included within the Gen-Probe IP Rights, and Joint
Inventions shall be within both the Chiron IP Rights and Gen-Probe IP Rights, so
that they are available for use within the scope of this Agreement.
(b) Each party shall have the right, subject to the provisions of
this Agreement, to freely exploit, transfer, license or encumber its rights in
both its own inventions hereunder (except that each party expressly agrees that
this sentence does not create in any way an implied license to the intellectual
property of the other party and that there are no such implied licenses in this
Agreement) and in any Joint Invention hereunder (or the patent and other
intellectual property rights therein) without the consent of, or compensation or
accounting to, the other party, except as to a Joint Invention to the extent
that:
(i) Such use or application of a Joint Invention would require
a license from the other party (under a Valid Claim other than those claiming
the Joint Invention) each party expressly agreeing that in this Agreement there
are no implied licenses to the intellectual property of the other party); and
(ii) except that, absent mutual written agreement, no use of
any such Joint Invention shall be made during any term of this Agreement in
connection with a Competitive Probe Assay (which shall mean for all purposes of
this Agreement (i) as to both parties, a nucleic acid probe-based assay which is
used for the same clinical indication as any Initial Blood Screening Assay,
Future Blood Screening Assay, or Initial Clinical Diagnostic Assay developed
under this Agreement; and (ii) as to Gen-Probe, a nucleic acid probe-based assay
which is used for the same clinical indication as any Exclusive Future Clinical
Diagnostic Assay.)
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9.1.2 Neither Chiron nor Gen-Probe shall have any rights in or to
the patent rights or other intellectual property rights of the other party for
any use or application other than those expressly and specifically granted by
this Agreement.
9.1.3 The parties acknowledge and agree that, notwithstanding that
only limited rights have been granted hereunder, certain new technology may be
discovered, invented or created solely by Chiron through Chiron's use of the
Gen-Probe IP Rights within the uses and in the manner contemplated by this
Agreement. The Parties also acknowledge and agree that, notwithstanding that
only limited rights have been granted hereunder, certain new technology may be
discovered, invented or created solely by Gen-Probe through Gen-Probe's use of
the Chiron IP Rights within the uses and in the manner contemplated by this
Agreement. The rights and obligations of the Parties with respect to all such
new technology shall be governed by this Article 9.
9.1.4 As used herein, a "Derivative Invention" shall mean any
Invention made after the date of this Agreement and claimed in a Valid Claim of
the Inventing Party which:
(a) is discovered, invented or created by a party (the
"Inventing Party") during any term of this Agreement; and
(b) was made through or with, and would not have been made but
for, the Inventing Party's use of Confidential Information of the other party
(the "Disclosing Party") which was specifically identified to the Inventing
Party in writing prior to disclosure and which the Inventing Party elected to
receive, if such information was confidential when the invention was made.
9.1.5 Neither party shall use any Derivative Invention in connection
with a Competitive Probe Assay during any term of this Agreement.
9.1.6 A Disclosing Party shall have the exclusive option to acquire,
on Commercially Reasonable Terms, all right, title and interest in any
Derivative Invention which represents an improvement to, and as to which any
substantial use would infringe a Valid Claim for, Core Technology of the
Disclosing Party. The option hereby granted the Disclosing Party shall expire
six (6) months after the Derivative Invention is first disclosed to the
Disclosing Party by the Inventing Party unless the Disclosing Party has elected
within such period to exercise such option. With respect to any such Derivative
Invention, following the Disclosing Party's election to acquire ownership: (a)
The Disclosing Party may use such Derivative Invention for all uses and purposes
other than those prohibited by Section 9.1.5 and other than those which would
require a license from the Inventing Party under a Valid Claim (other than a
Valid Claim for the Derivative Invention). The Disclosing Party shall have the
right to license the Derivative Invention without the consent of the Inventing
Party, but any such license shall contain the same use restrictions set forth in
the first sentence of this subparagraph (a); and (b) the Inventing Party may use
such Derivative Invention
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for (i) any of the purposes expressly permitted by the terms of this Agreement
with respect to the Confidential Information of the Disclosing Party and (ii)
any use or application which does not require a license of a Valid Claim of the
Disclosing Party, but only to the extent that such use is not made in connection
with any product which competes directly with a nucleic acid probe-based assay
product of the Disclosing Party which has been sold as of the Effective Date of
this Agreement. The Inventing Party shall not have the right to sublicense its
rights hereunder except with the consent of the Disclosing Party, which consent
shall not be unreasonably withheld. In any event, any such sublicense approved
by the Disclosing Party shall contain the same use restrictions set forth in
clauses (i) and (ii) of this subparagraph (b).
(c) The "Commercially Reasonable Terms" referred to above shall give
full recognition, in favor of the Disclosing Party, to both the value of the
Confidential Information of such Disclosing Party with which the Derivative
Invention was made (and without which the Derivative Invention would not have
been made) and the value of the rights granted to the Inventing Party as to such
Derivative Invention. The "Commercially Reasonable Terms" referred to above
shall also give full recognition, in favor of the Inventing Party, to the value
of the inventive application of such Confidential Information.
9.1.7 An Inventing Party shall own all right, title and interest in
any Derivative Invention which is not subject to Section 9.1.6 or which the
Disclosing Party does not elect to acquire within the six-month period permitted
by Section 9.1.6. With respect to any such Derivative Invention,
(a) The Inventing Party may use such Derivative Invention for
all uses and purposes other than those prohibited by Section 9.1.5, but only to
the extent that (i) such use does not require a license under a Valid Claim of
the Disclosing Party or further rights to Confidential Information of the
Disclosing Party which was previously disclosed hereunder or (ii) such use is
not made in connection with any product which competes directly with a nucleic
acid probe-based assay product of the Disclosing Party which is sold as of the
Effective Date of this Agreement. The Inventing Party shall have the right to
license the Derivative Invention without the consent of the Disclosing Party,
but any such license shall contain the same use restrictions set forth in the
first sentence of this subparagraph (a); and
(b) The Disclosing Party may use such Derivative Invention (i)
for any of the purposes expressly permitted by the terms of this Agreement and
(ii) pursuant to the terms of a license granted under Section 9.1.7(c), for all
uses and applications other than those prohibited under Section 9.1.5, which
would not require a license from the Inventing Party under a Valid Claim (other
than a Valid Claim for the Derivative Invention). Upon exercise of the option
for a license, the Disclosing Party shall not have the right to sublicense its
rights thereunder except with the consent of the Inventing Party, which
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consent shall not be unreasonably withheld. In any event, any such sublicense
approved by the Inventing Party shall contain the same use restrictions set
forth in clauses (i) and (ii) of this subparagraph (b).
(c) Upon request, the Inventing Party shall grant a
nonexclusive license to the Disclosing Party on Commercially Reasonable Terms to
be negotiated to enable the Disclosing Party to use such Derivative Invention
for the purposes described in Section 9.1.7(b)(ii). The "Commercially Reasonable
Terms" referred to above shall give full recognition, in favor of the Disclosing
Party, to the value of the Confidential Information of such Disclosing Party
with which the Derivative Invention was made (and without which the Derivative
Invention would not have been made). The "Commercially Reasonable Terms"
referred to above shall also give full recognition, in favor of the Inventing
Party, to the value of the inventive application of such Confidential
Information.
9.1.8 Without limiting the generality of Section 9.1.7, each
Inventing Party under Section 9.1.7 agrees not to assert its rights in a
Derivative Invention in such a manner as would block or diminish the Disclosing
Party's rights to practice, independently of the Derivative Invention itself,
the technology of the Disclosing Party directly related to the Confidential
Information with which the Derivative Invention was made and without which the
Derivative Invention would not have been made.
9.1.9 Gen-Probe and Chiron shall promptly report to each other any
and all Derivative Inventions as each may discover, invent or create during the
Blood Screening Term and Clinical Diagnostic Term.
9.1.10 Gen-Probe and Chiron shall execute and deliver to each other
such assignments, instruments or other documents as each may reasonably consider
necessary to assure compliance with the provisions of this Section 9.1. Chiron
shall have the exclusive right to prosecute and defend any and all patents and
patent applications concerning any Derivative Invention owned by Chiron and, as
between Gen-Probe and Chiron, Chiron shall be solely responsible for the expense
of such patents and patent applications. Gen-Probe shall have the exclusive
right to prosecute and defend any and all proceedings concerning any Derivative
Invention owned by Gen-Probe and, as between Gen-Probe and Chiron, Gen-Probe
shall be solely responsible for the expense of such proceedings. As to any
Derivative Invention assigned to the Disclosing Party upon exercise of the
option described in Section 9.1.6, the Disclosing Party shall take all such
actions as may be reasonably and specifically requested by the Inventing Party
in connection with the prosecution of a patent application to protect the
Inventing Party's rights in the Derivative Invention under Section 9.1.6(b),
provided that the Inventing Party shall be fully responsible for all incremental
costs and expenses incurred in connection with any such actions. If the
Inventing Party requests any such action, the parties shall
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thereafter reasonably cooperate in the prosecution of such patent application.
9.1.11 In the event the Parties cannot agree as to the
classification of any technology for any purpose under this Article 9 (including
the mediation described in Section 13.1), the Parties shall consider in good
faith the possibility of submitting such disputes for accelerated decision by an
expert arbitration under such guidelines and expedited schedule as may be
mutually agreed (provided that no party shall be under an obligation to so
agree). In the absence of such mutual agreement, such disagreement or dispute as
to classification shall be resolved by arbitration as provided in this
Agreement, except that the arbitrator may, at the request of either party,
appoint one or more experts, individually or jointly, to advise and report on
such classification, and the arbitrator shall place such reliance on such advice
or report as he or she deems appropriate.
9.1.12 Nothing in this Agreement shall be interpreted as giving a
party the right to analyze, dissect, or disassemble any instrument, reagent,
component, object, software or other property of the other party provided under
the terms of this Agreement, and which is not properly available from other
sources which have the right to transfer such property and authorize such
activity, in order to circumvent the need for a license of the technology
reflected therein.
9.2 Patent Rights. Except as provided in Section 9.1.10, each party shall
be responsible for and shall control, at its sole expense, the preparation,
filing, prosecution, maintenance and enforcement of all patent rights owned by
or licensed to it (except for those patent rights licensed to it from the other
party) which are the subject of this Agreement. The parties shall jointly have
the right to prepare, file, prosecute, maintain, and enforce patent rights
covering Joint Inventions as described in Section 9.1.1 and the expenses thereof
shall be reasonably shared by parties as they may agree prior to the initiation
of any such proceedings. Each party shall cooperate with the other party,
execute all lawful papers and instruments and make all rightful oaths and
declarations, as reasonably requested by the other party and at the other
party's expense, as may be necessary in connection with the preparation,
prosecution, maintenance and enforcement of all patent rights which are the
subject of this Agreement. Each party shall place appropriate patent markings on
all products which would infringe the patent rights of the other party licensed
under this Agreement, to the extent such patent marking is required by
applicable law, regulation or order to enable the other party to enforce such
patent rights, all as requested in writing by the other party.
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9.3 Copyrights.
9.3.1 Gen-Probe Copyrights. Chiron hereby acknowledges that
Gen-Probe has claimed, or may claim, copyright protection with respect to
certain parts of the Products and related materials. Chiron further acknowledges
the validity of Gen-Probe's right to claim copyright protection with respect to
such items. Chiron shall take no action or make no omission which is in any way
inconsistent with Gen-Probe's claim of copyright protection with respect to such
items.
9.3.2 Chiron Copyrights. Gen-Probe hereby acknowledges that Chiron
has claimed, or may claim, copyright protection with respect to certain parts of
the Products and related materials. Gen-Probe further acknowledges the validity
of Chiron's right to claim copyright protection with respect to such items.
Gen-Probe shall take no action or make no omission which is in any way
inconsistent with Chiron's claim of copyright protection with respect to such
items.
9.3.3 Copyright Protection. In order to protect against infringement
of the other party's copyrights, each party shall xxxx all of the other party
copyrighted materials, as requested by the other party in writing, used by such
party in conducting its activities contemplated by this Agreement with
appropriate copyright markings. Each party shall cooperate with the other party,
take such actions and execute such documents, as reasonably requested by the
other party and at the other party's expense, to assist the other party in the
protection of the other party's copyrights. Any dispute as to which party owns a
copyright in will be resolved pursuant to Article 13.
9.4 Trademarks.
9.4.1 Gen-Probe Marks. Gen-Probe shall own the Gen-Probe Marks and
shall pay all expenses of the registration thereof. Except as otherwise
expressly set forth in this Agreement, Chiron shall not use, without the prior
express written consent of Gen-Probe, any Gen-Probe Marks, or any word, title,
expression, trademark, design or marking that is confusingly similar thereto.
Subject to Section 6.5, Chiron shall not alter, remove, cover or modify any
Gen-Probe Marks from the Products, their packaging or labeling without
Gen-Probe's prior express written consent. Gen-Probe shall control, at its sole
cost, the registration, prosecution, maintenance and enforcement of the
Gen-Probe Marks.
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9.4.2 Chiron Marks. Chiron shall own the Chiron Marks and shall pay
all expenses of the registration thereof. Except as otherwise expressly set
forth in this Agreement, Gen-Probe shall not use, without the prior express
written consent of Chiron, any Chiron Marks, or any word, title, expression,
trademark, design or marking that is confusingly similar thereto. Subject to
Section 6.5, Gen-Probe shall not alter, remove, cover or modify any Chiron Marks
from the Products, their packaging or labeling without Chiron's prior express
written consent. Chiron shall control, at its sole cost, the registration,
prosecution, maintenance and enforcement of the Chiron Marks.
9.5 No Other Technology Rights. Except as otherwise expressly provided in
this Agreement, under no circumstances shall a party, as a result of this
Agreement, obtain any ownership interest or other right in any discovery,
invention or other technology, data or information (or any patent, copyright,
trademark, or other intellectual property rights therein) of the other party,
including items transferred by the other party to such party at any time
pursuant to this Agreement. Except as expressly provided in this Agreement,
neither party shall be under any obligation to grant to the other party any
rights in any patent, copyright, trademark, or other intellectual property.
9.6 Third Party Technology. The Supervisory Boards will discuss Third
Party patent rights which may be necessary for (i) initial blood Screening
Assays, Initial Clinical Diagnostic Assays, Future Blood Screening Assays or
(ii) modifications to Initial Blood Screening Assays, Initial Clinical
Diagnostic Assays, Blood Screening Instruments, or Clinical Diagnostic
Instrument. The supervisory board will consider the costs of acquiring rights in
such Third Party patent rights in connection with such Products, allocate the
costs between the parties, and agree upon methods for implementing such cost
allocations.
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 Indemnity.
10.1.1 By Gen-Probe. Gen-Probe shall indemnify and hold Chiron
harmless from and against all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) resulting from any claims,
demands, actions or other proceedings by any Third Party arising from (a) the
breach of any representation, warranty or covenant by Gen-Probe under this
Agreement, (b) the failure of Gen-Probe or its subcontractor to manufacture the
Products in conformity with the specifications therefor, (c) the negligence or
willful misconduct of Gen-Probe in performing its obligations under this
Agreement; or (d) the manufacture, sale, or use of any instrument or assay
(including any Nonexclusive Future Clinical Diagnostic Assay) sold by or on
behalf of Gen-Probe, its Third Party licensees, or any of their Affiliates, or
distributors (other than by Gen-Probe to Chiron under the terms of this
Agreement); in each case except to the
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extent arising from the negligence or willful misconduct of Chiron.
10.1.2 By Chiron. Chiron shall indemnify and hold Gen-Probe harmless
from and against all losses, liabilities, damages and expenses (including
reasonable attorneys' fees and costs) resulting from any claims, demands,
actions or other proceedings by any Third Party arising from (a) the breach of
any representation, warranty or covenant by Chiron under this Agreement, (b) the
failure of Chiron or its subcontractor to manufacture a Products in conformity
with the specifications therefor, in the event Chiron has assumed responsibility
for the manufacture of such Product, (c) the negligence or willful misconduct of
Chiron in performing its obligations under this Agreement; or (d) except to the
extent Section 10.1.1 applies, the manufacture, sale, or use of any instrument
or assay (including any Nonexclusive Future Clinical Diagnostic Assay) sold by
or on behalf of Chiron, or its Affiliates, or distributors; except in each case
to the extent arising from the negligence or willful misconduct of Gen-Probe.
10.2 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 10 shall promptly notify the other party (the
"Indemnitor") of any claim, demand, action or other proceeding for which the
Indemnitee intends to claim such indemnification. The Indemnitor shall have the
right to participate in, and, to the extent the Indemnitor so desires, jointly
with any other indemnitor similarly noticed, to assume the defense thereof with
counsel selected by the Indemnitor; provided, however, that the Indemnitee shall
have the right to retain its own counsel, with the reasonable fees and expenses
to be paid by the Indemnitee, if the Indemnitee reasonably determines that
representation of the Indemnitee by counsel retained by the Indemnitor would be
inappropriate due to actual or potential differing interests between the
Indemnitee and any other party represented by such counsel in such proceedings.
The indemnity obligations under this Article 10 shall not apply to amounts paid
in settlement of any claim, demand, action or other proceeding if such
settlement is effected without the consent of the Indemnitor, which consent
shall not be unreasonably withheld or delayed. The failure to deliver notice to
the Indemnitor within a reasonable time after the commencement of any such
action or other proceeding, if prejudicial to its ability to defend such action
or other proceeding, shall relieve such Indemnitor of any liability to the
Indemnitee under this Article 10, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to any
Indemnitee otherwise than under this Article 10. The Indemnitor may not settle,
or otherwise consent to an adverse judgment in, any such action or other
proceeding that diminishes the rights or interests of the Indemnitee without the
express written consent of the Indemnitee. The Indemnitee, its employees and
agents, shall cooperate fully with the Indemnitor and its legal representatives
in the investigation of any claim, demand, action or other proceeding covered by
this indemnification.
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10.3 Insurance. Each party shall maintain liability insurance (including
product liability insurance) with respect to conduct of its obligations under
this Agreement in such amounts as it customarily maintains with respect to the
conduct of its similar activities. Each party shall maintain such insurance for
so long as each continues to conduct such obligations, and thereafter for so
long as it maintains insurance for itself covering its similar activities.
ARTICLE 11
TERM AND TERMINATION
11.1 Expiration. Unless terminated earlier pursuant to Section 11.2 below,
this Agreement shall expire (i) as to the Blood Screening Assays and the Blood
Screening Instruments, on the expiration of the Blood Screening Term and (ii) as
to the Clinical Diagnostic Assays and Clinical Diagnostic Instruments, on the
expiration of the Clinical Diagnostic Term.
11.2 Termination.
11.2.1 Breach. Each party may terminate the portions of this
Agreement relating to the Blood Screening Field or the portions of this
Agreement relating to the Clinical Diagnostic Field, as the case may be, upon or
after the breach of any material provision of this Agreement, if the breaching
party has not cured such breach within ninety (90) days after notice thereof
from the non-breaching party.
(a) If the breaching party is not obligated as of the date of the
breach in connection with the provisions of this Agreement pertaining to both
the Blood Screening Field and the Clinical Diagnostic Field, then a termination
pursuant to Section 11.2.1, 11.2.2 or 11.2.3 of the portions of this Agreement
relating to the Blood Screening Products shall not affect the portions of this
Agreement relating to Clinical Diagnostic Products, and a termination of the
portions of this Agreement relating to Clinical Diagnostic Products shall not
affect the portions of this Agreement relating to Blood Screening Products. If
the breaching party is obligated as of the date of the breach in connection with
the provisions of this Agreement pertaining to both the Blood Screening Field
and the Clinical Diagnostic Field, then the non-breaching party may terminate
this Agreement in its entirety for any material breach if the breaching party
has not cured such breach within ninety (90) days after notice.
(b) Any dispute with respect to the right of a party to terminate
all or a portion of this Agreement pursuant to this Section 11.2.1 shall be
subject to resolution pursuant to Article 13. During the pendency of any
arbitration proceeding, at the request of the non-breaching party, the
arbitrator may take such interim steps and make such preliminary orders as the
arbitrator deems necessary to preserve the rights of the non-breaching party
pending a final arbitration award, including ordering the grant,
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on a temporary basis, of such licenses or rights as may be necessary to enable
the non-breaching party to preserve its economic interest in the Products for
the Blood Screening Field and/or the Products for the Clinical Diagnostic Field,
as the case may be. At the conclusion of any such arbitration, if the arbitrator
determines that the respondent materially breached this Agreement and that money
damages will not adequately compensate the claimant and that no other remedy is
adequate in the circumstances considered as a whole, then the arbitrator may
order the breaching party to grant to the non-breaching party such rights
(including a nonexclusive, worldwide license, bearing a reasonable commercial
royalty, under intellectual property rights of the breaching party which are the
subject of this Agreement) as may be reasonably necessary to enable the claimant
to complete development already in progress of, make, use, offer for sale, sell
and/or import Products for use in the Blood Screening Field and/or the Clinical
Diagnostic Field, as the case may be, for the lesser of (a) five years or (b)
the then-remaining period of this Agreement.
11.2.2 Voluntary Bankruptcy. Each party may terminate this Agreement
if the other party shall (a) seek the liquidation, dissolution, or winding up of
itself (other than dissolution or winding up for the purposes of reconstruction
or amalgamation) or the composition or readjustment of all or substantially all
of its debts, (b) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or substantially all of its assets, (c) make a general assignment for the
benefit of its creditors, (d) commence a voluntary case under the Bankruptcy
Code, (e) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
readjustment of debts, or (f) adopt any resolution of its Board of Directors or
stockholders for the purpose of effecting any of the foregoing.
11.2.3 Involuntary Bankruptcy. Each party may terminate this
Agreement if a proceeding or case shall be commenced without the application or
consent of the other party and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
following shall be entered and continue unstayed in effect, for a period of
ninety (90) days from and after the date service of process is effected upon the
other party, seeking (a) its liquidation, reorganization, dissolution or winding
up, or the composition or readjustment of all or substantially all of its debts,
(b) the appointment of a trustee, receiver, custodian, liquidator or the like of
itself or of all or substantially all of its assets, or (c) similar relief under
any law relating to bankruptcy, insolvency, reorganization, winding up or
composition or readjustment of debts.
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11.3 Effect of Expiration and Termination. Except as provided in Section
11.2.1(b), upon expiration or termination of this Agreement, the portion of this
Agreement relating to Products for the Blood Screening Field, or the portion of
this Agreement relating to Products for the Clinical Diagnostic Field, all
rights and licenses granted hereunder with respect to the terminated portions of
this Agreement shall terminate. Expiration or termination of all or a portion of
this Agreement shall not relieve the parties of any obligation accruing prior to
such expiration or termination. The provisions of Section 3.6.1, 6.6 (product
warranties), 7.3 (audit of payments), and Articles 8, 9, 10, and 13 shall
survive the expiration or termination of this Agreement.
ARTICLE 12
CONDITIONS PRECEDENT
The effectiveness of, and the parties' respective obligations under, this
Agreement (other than Section 3.6.1 and Article 8) are subject to the
satisfaction in full or the waiver by the mutual written agreement of the
parties of the following conditions precedent within thirty (30) days after the
date of this Agreement. If all such conditions precedent have not been satisfied
in full, or waived by the mutual written agreement of the parties, on or before
such date, then unless the parties otherwise mutually agree in writing, this
Agreement shall be void.
12.1 Due Execution and Delivery. Each party shall have duly and validly
executed and delivered this Agreement.
12.2 Accuracy of Representations and Warranties. All representations and
warranties by each party shall be true and correct in all respects as of the
Effective Date as if made as of such date.
12.3 Governmental Approvals. All necessary consents, approvals and
authorizations of all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been obtained.
12.4 Due Diligence. Each party shall have completed its due diligence to
its reasonable satisfaction. Each party will be conclusively presumed to have
completed its due diligence to its reasonable satisfaction unless its delivers
to the other party a notice of objection within the thirty (30) days following
the date on which this Agreement is first signed by both parties.
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ARTICLE 13
ARBITRATION
13.1 Executive Mediation. Prior to submitting any dispute arising out of
or related to this Agreement to arbitration pursuant to Section 13.2, the matter
shall be submitted to the Chief Executive Officers of the parties for
resolution. If such officers are unable to resolve the matter directly, they
may, by mutual agreement utilize such dispute resolution methods, including
mediation, as are mutually agreed. If no resolution is reached within fifteen
(15) days following submission of such dispute to such officers, unless
otherwise mutually agreed, the dispute shall be submitted to arbitration
pursuant to Section 13.2.
13.2 Arbitration Procedure. Any controversy or claim relating to, arising
out of, or in any way connected to any provision of this Agreement shall be
finally resolved by final and binding arbitration in accordance with this
Section by a single arbitrator who is a former state or federal judge, to be
conducted in California. Unless the parties agree otherwise, the arbitration
shall be conducted by JAMS/Endispute, or by any similar arbitration provider who
can provide a former judge to conduct such arbitration if JAMS/Endispute is no
longer in existence. JAMS/Endispute may order a change of venue upon a showing
of good cause by respondent. Subject to the JAMS/Endispute Appeal Procedure
described in Section 13.3 below, the decision of the arbitrator shall be final,
nonappealable and binding upon the parties, and it may be entered in any court
of competent jurisdiction. The arbitrator shall be bound by all rules relating
to the admissibility of evidence, including without limitation, all relevant
privileges and the attorney work product doctrine. Discovery shall be permitted
in accordance with the rules and procedures of the forum state unless otherwise
agreed to by the parties or ordered by the arbitrator on the basis of strict
necessity adequately demonstrated by the party requesting an extension of time.
The arbitrator shall have the power to grant equitable relief where applicable
under the law. The arbitrator shall issue a written opinion setting forth his or
her decision and the reasons therefor within thirty (30) days after the
arbitration proceeding is concluded. The obligation of the parties to submit any
dispute arising under or related to this Agreement to arbitration as provided in
this Article 13 shall survive the expiration or earlier termination of this
Agreement. Notwithstanding the foregoing, but subject to Section 11.2.1(b),
either party may seek and obtain an injunction or other appropriate relief from
a court to preserve or protect intellectual property rights or to preserve the
status quo with respect to any matter pending conclusion of the arbitration
proceeding, but no such application to a court shall in any way be permitted to
stay or otherwise impede the process of the arbitration proceeding.
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13.3 Review. The decision of the arbitrator shall be subject to review
only in accordance with the "Optional Appeal Procedure" of JAMS/Endispute in
effect upon execution of this Agreement or any other comparable arbitration
appeal procedure. The parties agree to submit any request for review in
accordance with said procedure. The JAMS/Endispute Appeal Panel appointed under
said procedure will apply the same standard of review as the first-level
appellate court in the jurisdiction where the arbitration was conducted would
apply under similar circumstances. The decision and award of the JAMS/Endispute
Appeal Panel (and the decision and award of the original arbitrator if there is
no appeal pursuant to this Section 13.3) will be final for all purposes and
binding upon the parties, and it may be entered in any court of competent
jurisdiction.
ARTICLE 14
ACCESS FEES
In consideration for the rights granted to Chiron by this Agreement with
respect to TMA and HPA, Chiron shall pay to Gen-Probe, the following
nonrefundable amounts upon the occurrence of each event set forth below:
(i) ten million dollars ($10,000,000) upon the Effective Date; and
(ii) fifteen million dollars ($15,000,000) upon the date on which
the following has occurred: (a) thirty (30) days has passed since submission to
the FDA of an Investigational New Device application for the Initial Blood
Screening Assay for the qualitative detection of both HCV and HIV-1 for use
on the Tigris Instrument in the Blood Screening Field; provided that no clinical
hold notice has been issued by the FDA as to such application, and no agreement
has been reached with the FDA to delay the clinical trial, within such
thirty-day period; and (b) Gen-Probe has installed a Tigris Instrument at the
clinical site and completed technologist training and proficiency testing with
a panel of specimens and control materials with respect to the instrument and
the Initial Blood Screening Assay for the qualitative detection of both HCV and
HIV-1.
(iii) ten million dollars ($10,000,000) upon receipt of the
required marketing approval from the FDA to market the Initial Blood Screening
Assay for the qualitative detection of both HCV and HIV-1 in the United States
for use in the Blood Screening Field on the Tigris Instrument.
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ARTICLE 15
MISCELLANEOUS
15.1 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the parties to the other shall be
in writing, addressed to such other party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor, and shall be effective upon receipt by the addressee.
If to Gen-Probe: Gen-Probe Incorporated
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President and
Chief Executive Officer
If to Chiron: Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President and
Chief Executive Officer
15.2 Force Majeure. In the event that a party is prevented or delayed from
fulfilling or performing any of its obligations under this Agreement (other than
an obligation to pay money) due to the occurrence of causes beyond the
reasonable control of such party, including but not limited to fires, floods,
embargoes, wars, acts of war (whether war is declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances, acts of
God or acts, omissions or delays in acting by any governmental authority or the
other party, then such party's performance shall be excused, and the time for
performance shall be extended, for the period of inability or delay due to such
occurrence; provided, however, that such party shall have used its Commercially
Reasonable Efforts to avoid such inability or delay, and such party shall have
given prompt written notice to the other party of such occurrence. Nothing
contained in this section shall limit Chiron's right to manufacture or have
manufactured any Product pursuant to the terms of this Agreement, provided
always that in the event of a force majeure, Chiron and Gen-Probe shall apply
all legally-available safety stocks to meet Chiron's need before such right to
manufacture or have manufactured shall accrue and further provided that Chiron
shall not exercise such right in the event of a force majeure unless the
Supervisory Board has met and discussed all available options and reasonably not
been able to agree that re-establishment of production at a Gen-Probe facility
is the most efficient alternative for maintaining continuity of production.
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15.3 Assignment.
15.3.1 This Agreement may not be directly or indirectly assigned or
otherwise transferred, nor, except as expressly provided hereunder, may any
right or obligations hereunder be assigned or transferred by either party
(whether voluntarily, by operation of law or otherwise) without the consent of
the other party which shall not be unreasonably withheld: provided, however,
that, except as otherwise provided in Section 15.3.2 below, either party may,
without such consent, assign or transfer this Agreement and its rights and
obligations hereunder in connection with the transfer or sale of all or
substantially all of its assets (including without limitation all of its assets
relating to this Agreement), or in the event of its merger, consolidation, other
Change in Control or similar transaction. Any permitted assignee or transferee
shall assume all obligations of its assignor or transferor under this Agreement.
On any such assignment, the assignor shall be relieved of all obligations
assigned hereunder, except those accrued prior to the date of assignment and
except as provided in Section 15.3.2 below. Any purported assignment or transfer
in violation of this Section 15.3 shall be void.
15.3.2 Assignment by a party of its rights and obligations under
this Agreement shall not relieve that party of its obligations under Article 8,
Article 9 or Article 13. Assignment by a party of its rights and obligations
under this Agreement shall not relieve it of its obligations under Sections
3.2.8 (b) or any then-existing restrictions on licensing of intellectual
property pertaining to specific viruses or markers as to which such party became
obligated, prior to such assignment, pursuant to the last sentence of Section
3.2.8 (c) and if following such assignment such transferring party makes, uses
or sells any nucleic acid probe-based assay for use in the Blood Screening Field
for the detection or quantitation of any virus or marker subject to Sections
3.2.8 (b) or such licensing restrictions of Section 3.2.8(c), such use shall be
considered as a "license" for purposes of Section 3.2.8 (b) or such licensing
restrictions of Section 3.2.8(c); however a license to the assignee pursuant to
Section 15.3.1 shall not be considered a license for purposes of Section
3.2.8(b) or such licensing restrictions of Section 3.2.8(c).
15.3.3 Assignment of Chiron's rights and obligations with respect to
the Blood Screening Field to the Major Distributor or its Affiliate (at any time
after appointment of the Major Distributor) shall terminate the application of
Sections 1.2.1 (c) or (d).
15.4 Severability. Each party hereby acknowledges that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the parties shall substitute, by mutual
consent, valid provisions for such invalid provisions, which valid provisions in
their economic effect are sufficiently
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similar to the invalid provisions that it can be reasonably assumed that the
parties would have entered into this Agreement with such provisions. In case
such provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have
entered into this Agreement without the invalid provisions.
15.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.
15.6 Entire Agreement. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written heretofore made which are
directly related to the subject matter of this Agreement. The confidential
disclosure agreement between the parties dated as of November 5, 1996, the
confidential disclosure agreement between the parties dated as of May 27, 1997,
(as extended as of August 27, 1997 and February 26, 1998), and the confidential
disclosure agreement between the parties dated as of April 13, 1998 shall be and
are terminated as of the first date this Agreement has been signed by both
parties, without prejudice to any rights accruing thereunder prior to such
termination. Nothing contained in this section shall affect other agreements
between the parties which are not directly related to the subject matter of this
agreement, including but not limited to all agreements concerning the resolution
of Ciba Corning Diagnostics Corp. v. Gen-Probe Inc., United States District
Court for the Southern District of California case number 96-552 H (CGA) and
related proceedings. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties.
15.7 Expenses and Attorney's Fees. The prevailing party in any dispute
between the parties which is the subject of arbitration or litigation shall be
entitled to recover the expenses reasonably incurred in connection with such
arbitration or litigation, including reasonable attorney's fees. The amount of
such expenses and fees due the prevailing party shall be subject to the
arbitration provisions of Article 13.
15.8 Independent Contractors. It is expressly agreed that Gen-Probe and
Chiron shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture or agency. Neither
Gen-Probe nor Chiron shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the party to do so.
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15.9 Waiver. The waiver by either party of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
15.10 Drafting Party. The provisions of this Agreement, and the documents
and instruments referred to in the Agreement, have been prepared, examined,
negotiated and revised by each party and their respective lawyers, and no
implication will be drawn and no provision will be construed against any party
by virtue of the purported identity of the drafter of this Agreement, or any
portion of this Agreement.
15.11 Third Parties. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any Third Party.
15.12 Affiliates. The rights and obligations of Chiron under this
Agreement shall apply to Chiron's Affiliates, and the rights and obligations of
Gen-Probe under this Agreement shall apply to Gen-Probe's Affiliates, provided
that Chiron and Gen-Probe shall be fully responsible for the performance by
their respective Affiliates of their respective obligations under this
Agreement.
15.13 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
GEN-PROBE INCORPORATED CHIRON CORPORATION
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxx X. Xxxxx
----------------------------- -------------------------------
Xxxxx X. Xxxxxxxx Xxxx X. Xxxxx
President and Chief President and Chief
Executive Officer Executive Officer
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SCHEDULE A
POTENTIAL EXCLUSIVE FUTURE CLINICAL DIAGNOSTIC ASSAYS
[***]
Each of the viruses included in this list shall include mutants, variants and
related subtypes.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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THIS DOCUMENT IS ATTACHED IN LIEU OF SCHEDULES B AND C
1. Immediately following the signing of this Agreement, the parties will
meet and seek to agree on the Core Technologies of each party as referred to in
Article 9 of the foregoing Agreement, which are to be described in writing and
substituted for this document upon approval by each party.
2. Nothing contained in this attachment or in the Agreement shall obligate
the parties to negotiate the issue of Core Technology designations to successful
conclusion. The effectiveness of the Agreement is expressly made subject to the
completion of Schedules B and C within ten (10) days following the signing of
the Agreement.
3. If the parties are unable to agree on the content of the respective
Core Technology schedules, neither shall have any obligation except pursuant to
Articles 8 and 13 of the Agreement.
Initials: /s/ /s/
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