REDACTED
Exhibit 10.308
**CONFIDENTIAL TREATMENT REQUESTED**
HIV PROBE LICENSE AGREEMENT
BETWEEN
CHIRON CORPORATION
X. XXXXXXXX-XX XXXXX LTD.
AND
ROCHE MOLECULAR SYSTEMS, INC.
HIV PROBE LICENSE AGREEMENT
TABLE OF CONTENTS
PAGE
RECITALS 3
ARTICLE 1: DEFINITIONS 3
ARTICLE 2: LICENSE GRANTS 13
ARTICLE 3: PAYMENTS, ROYALTIES 15
ARTICLE 4: RECORDS AND REPORTS 15
ARTICLE 5: OTHER ACTIONS 18
ARTICLE 6: REPRESENTATIONS AND WARRANTIES 19
ARTICLE 7: TERM AND TERMINATION 22
ARTICLE 8: CONFIDENTIALITY 24
ARTICLE 9: INDEMNITY 25
ARTICLE 10: ALTERNATIVE DISPUTE RESOLUTION 27
ARTICLE 11: MISCELLANEOUS 27
ARTICLE 12: FIELD RESTRICTIONS AND OTHER COVENANTS 30
ARTICLE 13: INFRINGEMENT BY THIRD PARTIES 32
ARTICLE 14: EUROPEAN COMMUNITY PROVISIONS 34
EXHIBIT A: COMPENSATION TO CHIRON
EXHIBIT B: CHIRON PATENT LIST
EXHIBIT C: [CONFIDENTIAL TREATMENT REQUESTED] PATENT LIST
EXHIBIT D: CHIRON LICENSED PRODUCTS & UNIT SIZES
EXHIBIT E: FORM OF REPORT
EXHIBIT F: EXISTING LICENSES
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HIV PROBE LICENSE AND OPTION AGREEMENT
This agreement (hereinafter "Agreement") is made by and between CHIRON
CORPORATION, a Delaware corporation, of 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000 (hereinafter referred to as "CHIRON"), X. XXXXXXXX-XX XXXXX
LTD., a Swiss corporation, of Xxxxxxxxxxxxxxxxx 000, Xxxxx, Xxxxxxxxxxx
(hereinafter referred to as "ROCHE PARENT"), and ROCHE MOLECULAR SYSTEMS, INC.,
a Delaware corporation, of 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx
00000 (hereinafter referred to as "RMS" and collectively with ROCHE PARENT,
"ROCHE").
BACKGROUND
WHEREAS, CHIRON and ROCHE currently own or control certain patent rights
relating to the human immunodeficiency virus ("HIV"), as defined below.
WHEREAS, CHIRON and ROCHE have as of the date hereof entered into that certain
Settlement Agreement (the "Settlement Agreement") pertaining to the settlement
of the certain litigation matters described therein.
WHEREAS, in consideration of and subject to the execution and delivery of the
Settlement Agreement, CHIRON is willing to grant licenses to ROCHE under certain
patent rights relating to HIV for use in assays for the detection of nucleic
acid sequences for use in IN VITRO diagnostics (excusing use in Blood Screening,
as defined below, but without limiting the effect of the Blood Screening
Agreement, as defined below), all on the terms and conditions set forth herein.
WHEREAS, in consideration of and subject to the execution and delivery of the
Settlement Agreement, ROCHE is willing to grant to CHIRON an option to license
certain patent rights relating to HIV for use in assays for the detection of
nucleic acid sequences for use in Blood Screening and the Transplantation Field
(as defined below), all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above provisions and the mutual
covenants contained herein, CHIRON and ROCHE hereby agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement the following words and phrases shall have the following
meanings:
1.1 "ADR" means Alternative Dispute Resolution in accordance with Article 10.
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1.2 "Affiliate" means an entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with, a specified entity. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any entity, means: (a) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that entity, whether through the
ownership of voting securities or by contract or otherwise; or (b) the ownership
of at least fifty percent (50%) of the voting securities of that entity.
Notwithstanding anything to the contrary contained herein, "Affiliate" shall not
include, in the case of CHIRON, Novartis AG or any Affiliate of Novartis AG,
unless Novartis shall have acquired direct control of a majority of the Board of
Directors of CHIRON. Notwithstanding anything to the contrary contained herein,
"Affiliate" shall not include, in the case of ROCHE, Genentech Inc. or any
Affiliate of Genentech Inc., nor Laboratory Corporation of America Holdings or
any Affiliate of Laboratory Corporation of America Holdings.
1.3 "Authorized Distributor" means a BONA FIDE, unaffiliated distributor,
but excluding any entity which is a Major IVD Manufacturer (as defined below)
that is not licensed in the Field (as defined below) under one or more of the
CHIRON Licensed Patents (as defined below) or is affiliated with, or directly or
indirectly controlled by, such a Major IVD Manufacturer, except to the extent
that such unlicensed Major IVD Manufacturer or its Affiliates distributes CHIRON
Licensed Product for ROCHE or its Affiliates on a local country basis and in the
same manner in which it distributes other diagnostic products for ROCHE or its
Affiliates and ROCHE and its Affiliates are not otherwise selling CHIRON
Licensed Products in such country.
1.4 "Average Unit Price" or "AUP" means with respect to CHIRON Licensed
Products sold by ROCHE or its Affiliates from and including the first day of the
Calendar Quarter commencing immediately prior to the Effective Date, with
respect to a Calendar Quarter (as defined below), Net Sales of such future
CHIRON Licensed Product by ROCHE or its Affiliates calculated on a per Unit
basis, in a country or Region, on a product-by-product basis, using customary
and reasonable methodologies for determining average unit pricing generally
consistent with the definition herein of Net Sales, during the preceding two (2)
Calendar Quarters.
1.5 "Bayer Cross License" means the Cross-License Agreement by and between
Chiron Diagnostics Corporation and CHIRON dated November 30, 1998, as amended
from time to time.
1.6 "Blood Screening" means the commercial use of products that detect
nucleic acid sequences(s) for: (a) the screening of blood, plasma or blood
components intended for transfusion or for use in blood products (e.g., without
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limitation, immunoglobulins); or (b) confirmatory or supplemental testing of the
same samples otherwise screened for purposes described in Section 1.6(a).
1.7 "Blood Screening Agreement" means the Blood Screening HCV/HIV Probe
License Agreement by and between CHIRON and ROCHE dated as of the Effective
Date, as amended from time to time.
1.8 "Calendar Quarter" means the three (3) month period beginning January
1, April 1, July 1 or October 1. For Net Sales outside the United States, the
Calendar Quarter and Calendar Year (as defined below) shall be consistent with
ROCHE financial reporting practices.
1.9 "Calendar Year" means January 1 through December 31.
1.10 "CHIRON Future HIV Sequence Patent Rights" means any and all Valid
Claims Directed to HIV of United States and foreign patents and patent
applications: (a) which are based upon inventions conceived or rights acquired
[CONFIDENTIAL TREATMENT REQUESTED] (as defined below); (b) which claim HIV
nucleic acid sequence(s) or a method to use (other than in the manufacture of
peptides) or detect such sequences specifically; (c) which are owned by,
licensed to or otherwise controlled by CHIRON or its Affiliates, with rights to
license or sublicense; and (d) with respect to which CHIRON has the right to
grant the option provided for in Section 2.5 of this Agreement. For purposes of
this Agreement, an invention will be deemed to have been conceived if there is a
patent, patent application, written invention disclosure statement or other
tangible document (whether or not witnessed) describing such invention.
1.11 "CHIRON Licensed Patents" means Valid Claims Directed to HIV which
cover the manufacture, use, sale, offer for sale or importation of a Product
that are contained within any of the following: (a) the patents and applications
identified in Exhibit B and any continuation, continuation-in-part and
divisional applications therefrom; (b) any reissued or reexamined patents
obtained from such patents and applications; (c) all foreign counterparts of
such patents and applications; and (d) all future patents and applications which
are based on inventions conceived by CHIRON or its Affiliates on or before the
Effective Date.
1.12 "CHIRON Licensed Products" means Products which are used by or sold to
an End User under circumstances and in jurisdictions, such that in the absence
of the licenses granted under Sections 2.1 and 2.3, such use or sale would
constitute an infringement of a Valid Claim of the CHIRON Licensed Patents,
including without limitation the Products identified in Exhibit D, as modified
from time to time by mutual agreement of the parties or as determined in
accordance with Section 5.2.
1.13 "Directed to HIV" means that the claim or technology in question is
directed to methods, compositions, reagents or kits specifically for use in
nucleic
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acid-based diagnostic assays for the detection of HIV nucleic acid
sequence(s), or specifically for use in the manufacture of any compositions or
reagents for use in, or manufacture of nucleic acid-based diagnostic assays for
detection of HIV nucleic acid sequence(s) (excluding, for example, PCR claims
and technology and other methods for detection of nucleic acid sequence(s)
generally which involve nucleic acid amplification). The terminology
"specifically for use" as used in this Section 1.13, is intended to exclude
inventions suitable for use with viruses or analytes other than HIV (including
by way of example and not by way of limitation, inventions relating to PCR, or
assay formats, improved expression systems, detectable labels, instrumentation,
packaging and the like), which shall not be considered "specifically for use" in
HIV detection as contemplated by this Section 1.13 and shall therefore not be
considered as "Directed to HIV" hereunder.
1.14 "Earned Royalty" shall have the meaning specified in Paragraph 2 of
Exhibit A.
1.15 "Effective Date" means the date of full execution of this Agreement.
1.16 "Eligible Third Party License" means a license agreement in the Field
entered into by CHIRON or Bayer or their respective Affiliates with a Licensed
Third Party (as defined below) after the Effective Date and includes any
material amendment made after the Effective Date to a license existing on the
Effective Date, other than the Bayer Cross License, which: (a) grants such
Licensed Third Party the license under one or more of the CHIRON Licensed
Patents to make, have made, use, import, offer for sale or sell Product which
ROCHE is licensed to make, have made, use, import, offer for sale or sell under
this Agreement; and (b) imposes payment obligations which would have the effect
of providing more favorable license payment terms to such Licensed Third Party
than the terms to ROCHE under this Agreement.
1.17 "End User" means a person or entity who is a final purchaser of a
Product, and whose use of a Product results in the Product's consumption,
operation, destruction or loss of activity.
1.18 [CONFIDENTIAL TREATMENT REQUESTED].
1.19 "Field" means the commercial use of human IN VITRO diagnostic products
that detect nucleic acid sequences of HIV. Expressly excluded from the Field
are: (a) products in Blood Screening; and (b) products specifically labeled or
promoted for use in the Transplantation Field (as defined below).
1.20 "Foundational Patents" means the CHIRON Licensed Patents identified in
Exhibit B which are stated therein to be Foundational Patents.
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1.21 "HIV" means any viral isolate of the human immunodeficiency virus
classified as HIV by the International Committee on the Taxonomy of Viruses (or
any body that replaces such Committee) or any subtype of such isolate and
further includes any isolate that is at least forty percent (40%) homologous to
any such isolate and of the same genomic type and substantially the same genomic
organization, any isolate that has a genome that either hybridizes to or is
substantially identical to any such isolate or its compliment, and any defective
or modified form of any of the above isolates.
1.22 "HIV Qualitative Assay" means a Product which: (a) is an assay; (b)
detects or measures the presence of HIV in an analyzed sample; (c) does not
determine the quantity of HIV in the analyzed sample; and (d) is not by itself,
through a single use, capable of being used as an HIV Genotyping Assay or an HIV
Resistance Assay (as each is defined herein).
1.23 "HIV Quantitative Assay," means a Product which: (a) is an assay; (b)
measures the presence of HIV in an analyzed sample; (c) does determine the
quantity of HIV in the analyzed sample; and (d) is not by itself, through a
single use, capable of being used as an HIV Genotyping Assay or an HIV
Resistance Assay.
1.24 "HIV Genotyping Assay" means a Product which is an assay or method
(e.g., sequencing) that is labeled or promoted as being useful through a single
use to determine and differentiate individual genotypes of an HIV virus that are
present in an analyzed.
1.25 "HIV Resistance Assay" means a Product which is an assay or method
(e.g., sequencing) that is labeled or promoted as being useful to detect through
a single use the specific drug resistance mutation(s) present in the HIV virus
in an analyzed sample.
1.26 "HIV Taqman Qualitative/Quantitative Assay" means a Product which: (a)
is an assay; (b) detects and measures the presence of HIV in an analyzed sample
by utilization of ROCHE's proprietary 5' nuclease detection method; (c) does
determine the quantity of HIV in an analyzed same; and (d) is not by itself,
through a single use capable of being used as only an HIV Qualitative Assay, HIV
Classification Assay, HIV Genotyping Assay or HIV Resistance Assay.
1.27 "Infringing Third Party Sales" means sales by a major IVD Manufacturer
of Products: (a) which infringe one or more of the CHIRON Licensed Patents; or
(b) as to which a license under one or more of the CHIRON Licensed Patents has
been granted, but as to which the licensee is not paying royalties thereunder.
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1.28 "Licensed Patents" means the CHIRON Licensed Patents and the ROCHE
Optioned Patents.
1.29 "Licensed Third Party" means an unaffiliated third party to whom
CHIRON or Bayer or their respective Affiliates grants a license or a covenant
not to xxx after the Effective Date, under which license or covenant not to xxx
such third party is allowed to make, have made, use, import, offer for sale or
sell any Product, directly or indirectly, under one or more of the CHIRON
Licensed Patents. Expressly excluded from Licensed Third Party are: (a) any
Affiliate of CHIRON; (b) Bayer or any of its Affiliates (to the extent operating
under the Bayer Cross License); or (c) any entity which receives a judicially,
or other governmental agency, imposed license or freedom from suit under any one
or more of the CHIRON Licensed Patents and does not otherwise have a Voluntary
License (as defined below).
1.30 "Major IVD Manufacturer" means a commercial entity (and its
Affiliates) that manufactures, sells and engages in other commercial activities
with respect to IN VITRO diagnostic products, and has a significant marketing
presence in one or more Regions. Major IVD Manufacturers include Abbott, Bayer,
Xxxxxxx & Johnson, Pasteur, Sanofi, Dade Behring, Organon Teknika, Becton
Xxxxxxxxx, bioMerieux, BioRad, Fujirebio, Xxxxxxx Xxxxxxx, Visible Genetics,
Innogenetics and PE Corporation and each of their successors and assigns and any
other entity which commands in the future at least an equivalent presence as
measured by total product sales as do any of the foregoing entities as of the
Effective Date in such Region.
1.31 "Minimum Royalty" and "Minimum Royalty Amount" shall have the meanings
specified in Paragraph 4 of Exhibit A.
1.32 "Net Sales" means the amount billed or invoiced for CHIRON Licensed
Products sold by ROCHE or its Affiliates, less:
(a) Discounts actually allowed and taken;
(b) Amounts repaid or credited by reason of rejection or return;
(c) To the extent separately stated on purchase orders, invoices or
other documents of sale, taxes levied on and/or other governmental
charges made as to production, transportation or insurance charges;
(d) The reasonable value of the instrument, instrument financing,
consumables other than the CHIRON Licensed Products in question
(including without limitation sample preparation) and service
components of an operating or capital lease for instrumentation on
which the CHIRON Licensed Products are used (collectively,
"Associated Goods and Equipment"), for which the charges are
included in the price of the
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CHIRON Licensed Products purchased, provided that the methods
for determining such value shall be proposed by ROCHE and subject to
CHIRON's written consent, not to be unreasonably withheld;
(e) Charges for freight, handling and transportation paid by the selling
entity; and
(f) Sales, use and value-added taxes and other similar taxes incurred and
separately stated on invoices.
(1) Net Sales shall include all sales to non-Affiliate third parties,
including sales to Authorized Distributors in countries where, due to regulatory
constraints and/or market practice, substantially all sales of the relevant
CHIRON Licensed Product are made through distributors, provided that ROCHE shall
use reasonable efforts in connection with sales to such Authorized Distributors
to comply with clause (A) immediately below. With respect to sales to all other
Authorized Distributors, if Net Sales are based on the transfer price to the
Authorized Distributor rather than End User sales, either: (A) Net Sales on
which royalties shall be calculated shall be deemed to be not less than the
higher of the average selling price for the applicable Product in the United
States or the European Union; or (B) the parties shall adopt another mechanism
for preserving for CHIRON the same economics as if such sales had been made to
the End User by ROCHE or its Affiliate rather than the Authorized Distributor.
Any such mechanism shall be proposed by ROCHE and shall be subject to CHIRON's
prior written consent, which shall not be unreasonably withheld. CHIRON shall
not withhold its consent to a proposal by ROCHE to calculate Net Sales at
[CONFIDENTIAL TREATMENT REQUESTED] of the transfer price to an Authorized
Distributor or such lesser percentage as reflects reasonably the distributor
xxxx-ups prevailing generally in the relevant country.
(2) For clarity of understanding, Net Sales shall not include any
CHIRON Licensed Product furnished to third parties for which no payment is
received, such as, experimental, test market, promotional or other free goods.
On the other hand, Net Sales shall include any CHIRON Licensed Product furnished
in return for payment, whether or not such CHIRON Licensed Product is for
commercial, research or other use. For clarity of understanding, Minimum
Royalties shall apply to each Unit of CHIRON Licensed Product Shipped to a
customer for any purpose, except for Units Shipped to third parties at no charge
for: (A) use in ROCHE's preclinical or clinical trials in the Field or the
Transplantation Field; (B) testing, quality control or evaluation purposes; or
(C) replacement of rejected or defective goods. Without limiting the foregoing,
CHIRON Licensed Products furnished to third parties at price discounts,
including, without limitation, free goods furnished as part of sales promotions,
shall be subject to Minimum Royalties.
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(3) A sale shall be deemed to have been made and Earned Royalties or
Minimum Royalties incurred (except as specifically set forth in Section 1.32(2)
and this Section 1.32(3)) when the CHIRON Licensed Product is consumed, invoiced
or shipped by ROCHE or its Affiliates to a non-Affiliate third party
("Shipped"); provided that where an invoice is issued, the obligations to pay
Earned Royalties and Minimum Royalties hereunder shall arise on the invoice
date. Sales to or between Affiliates shall not be included in Net Sales or
Minimum Royalties until ROCHE or its Affiliate consumes the CHIRON Licensed
Product in providing a commercial service for a non-Affiliate third party or
Ships the CHIRON Licensed Product to a non-Affiliate third party.
(4) In the event that a CHIRON Licensed Product subject to royalties
hereunder is sold in combination with another Product or assay, other than the
Associated Goods and Equipment covered by Clause (d) above, for a single price
(a "Combination Product"), Net Sales from sales of a Combination Product, for
purposes of calculating royalties due under this Agreement, shall be calculated
by multiplying the Net Sales of that Combination Product by the fraction
A/(A+B), where A is the AUP in the country of sale, during the applicable
reporting period, of the CHIRON Licensed Product subject to royalties hereunder
if sold separately in the country of sale, and B is the AUP in the country of
sale, during the applicable reporting period, of the other Product(s) or assays
sold separately in the country of sale. In the event that no such separate sales
are made, Net Sales, for purposes of determining royalty payments on such
Combination Products, shall be a reasonable apportionment of the gross amount
invoiced therefor based upon the relative contribution of the CHIRON Licensed
Product subject to royalties hereunder to the price of the Combination Product.
Such apportionment for Combination Products currently or previously sold shall
be a reasonable apportionment of the gross amount invoiced therefor based upon
the relative contribution of the CHIRON Licensed Product subject to royalties
hereunder to the price of the Combination Product. Such apportionment shall be
determined by ROCHE based upon its past practice and experience subject to
CHIRON's written consent, not to be unreasonably withheld. The apportionment of
future Combination Products will be handled in this same fashion prior to the
first Unit Shipped or consumed by ROCHE or an Affiliate in providing a
commercial service, or resolved in accordance with Section 5.2. Notwithstanding
the above, if a CHIRON Licensed Product is an assay that is capable in a single
use of being used in more than one fashion (e.g., as both an HIV Quantitative
Assay and as an HIV Qualitative Assay), such CHIRON Licensed Product is not a
Combination Product solely for that reason, but shall be treated for purposes of
calculating Minimum Royalties in the same fashion as the HCV Taqman
Qualitative/Quantitative Assay, as set forth in Exhibit A.
(5) In the event a sale of a CHIRON Licensed Product is conditioned
upon the payment of an initial licensing fee, access fee or other required fee
the payment of which is a prerequisite to the Shipment, consumption or use of a
CHIRON Licensed Product, Net Sales, for the purpose of determining royalty
payments on such CHIRON Licensed Product, shall include a reasonable
10
apportionment of the amount invoiced for such fee, based upon the relative value
of the intellectual property contained within the CHIRON Licensed Product
subject to royalties hereunder to the intellectual property contained within the
other product or service components Shipped, licensed, consumed or used. Such
apportionment shall be determined by ROCHE based upon its past practice and
experience subject to CHIRON's written consent, not to be unreasonably withheld,
and Net Sales shall not include any portion of a licensing fee, access fee or
other required fee reasonably allocated with specificity to the access, license
or use of the ROCHE PCR patents.
(6) In the event that ROCHE or its Affiliates perform assays
for commercial purposes utilizing CHIRON Licensed Products, Net Sales means the
invoiced amount for the patient result provided as a result of performance of
such assays, less a reasonable deduction for the value of the services and or
other products provided therewith, less the applicable deductions pursuant to
this Section 1.32. The allocation of value to services or other products
provided shall be determined by ROCHE based upon its past practice and
experience, and shall be subject to CHIRON's prior written consent, which shall
not be unreasonably withheld.
1.33 "PCR" means polymerase chain reaction technology.
1.34 "Product(s)" means reagents, compositions or kits suitable for use in
the Field or the Transplantation Field.
1.35 "Product Category" has the meaning set forth in Paragraph 4 of Exhibit
A.
1.36 "Region" shall mean one of the four (4) following regions:
Region I: Xxxxx Xxxxxxx (Xxxxxx Xxxxxx xxx xxxxxxxxxxx, Xxxxxx Xxxx,
Xxxxxx and Mexico);
Region II: European Union;
Region III: Japan; or
Region IV: All other countries of the world.
1.37 "ROCHE Future HIV Sequence Patent Rights" means any and all Valid
Claims Directed to HIV of United States and foreign patents and patent
applications: (a) which are based upon inventions conceived or rights acquired
[CONFIDENTIAL TREATMENT REQUESTED]; (b) which claim HIV nucleic acid sequence(s)
or a method to use (other than in the manufacture of peptides) or detect such
sequences specifically; (c) which are owned by, licensed to or otherwise
controlled by ROCHE or its Affiliate, with rights to license or sublicense; and
(d) with respect to which ROCHE has the right to grant the option provided for
in Section 2.6 of this Agreement. For purposes of this Agreement, an invention
will be deemed to have been conceived if there is a
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patent, patent application, written invention disclosure statement or other
tangible document (whether or not witnessed) describing such invention.
1.38 "ROCHE Optioned Patents" means: (a) the patents and applications
identified in Exhibit C and any continuation, continuation-in-part and
divisional applications therefrom; (b) any reissued or reexamined patents
obtained from such patents and applications; (c) all foreign counterparts of
such patents and applications; and (d) all future patents and applications which
are based on inventions conceived by ROCHE or its Affiliates on or before the
Effective Date, to the extent the items described in clauses (a) through (d) of
this Section 1.38 contain a Valid Claim Directed to HIV which covers the
manufacture, use, sale, offer for sale or importation of a Product.
1.39 "ROCHE Optioned Products" means Products which are manufactured, used,
offered for sale, imported or sold under circumstances which would, in the
absence of the licenses for which an option is granted under Section 2.6,
constitute an infringement of a Valid Claim of the ROCHE Optioned Patents.
1.40 "Shipped" has the meaning set forth in Section 1.32(3).
1.41 "Transplantation Field" means the commercial use of products that
detect nucleic acid sequences for the screening of any biological materials
intended for transfusion or transplantation, in each case from any donor,
including autologous donors, other than the transfusion or transplantation of
blood or its derivatives, components or replacements.
1.42 "Unit" means, for each CHIRON Licensed Product, the number of
individual patient results generated by the use of a CHIRON Licensed Product.
The number of patient results that each CHIRON Licensed Product currently or
previously sold generates shall be mutually determined by the parties through
good faith negotiation and resolved if necessary through the ADR process in
accordance with Article 10 of this Agreement. Following such determination, the
number of Units contained in each CHIRON Licensed Product will be set forth on a
schedule to be attached as Exhibit E to this Agreement. The determination of the
number of "Units" in future CHIRON Licensed Products developed by ROCHE shall be
handled in accordance with Section 5.2, and Exhibit D shall be modified
accordingly. If future CHIRON Licensed Products are developed by ROCHE or its
Affiliates that do not contain reagents or other single-use consumable
materials, a method for calculating the number of "Units" in such CHIRON
Licensed Product shall be determined in accordance with Section 5.2.
1.43 "Valid Claim" means a claim in any issued, active, unexpired patent
which has not been withdrawn, cancelled, lapsed or disclaimed, or held
unpatentable, invalid or permanently unenforceable by a non-appealed or
nonappealable final decision by a court or other appropriate body of competent
jurisdiction. The scope of a Valid Claim shall be limited to its terms as
defined by any such court or decision-making body of competent
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jurisdiction in a non-appealable or non-appealed final decision.
1.44 "Voluntary License" means a license or covenant not to xxx granted by
contract under any one or more of the CHIRON Licensed Patents to make, use,
offer for sale, import or sell Products in the Field or the Transplantation
Field, except to the extent granted by compulsion of law, such as a compulsory
license, whether by court order or action of other governmental authority.
ARTICLE 2
LICENSE GRANTS
2.1 CHIRON GRANTS. Subject to the terms and conditions of this Agreement,
CHIRON hereby grants to ROCHE and its Affiliates, so long as they remain
Affiliates of ROCHE, a worldwide, semi-exclusive license, without the right to
sublicense, under the CHIRON Licensed Patents to research, develop, make, have
made, import, use, offer for sale and sell CHIRON Licensed Products for use in
the Field. CHIRON covenants not to xxx any End User of a CHIRON Licensed Product
(with respect to which ROCHE has performed all of its material obligations under
this Agreement) to the extent of activities in the Field or otherwise permitted
under this Agreement. Conversely, no immunity from suit shall apply to End User
activities in Blood Screening, except as provided in the Blood Screening
Agreement, or otherwise outside of the Field. CHIRON retains the right to
conduct research in any field, including to develop Products and, subject to
Section 2.3 and the Blood Screening Agreement, retains all rights outside of the
Field, including the nonexclusive right to practice and to grant licenses under
the CHIRON Licensed Patents to make, have made, use, import, offer for sale and
sell any products in the Transplantation Field.
2.2 EXCLUSION FROM CHIRON LICENSE. ROCHE acknowledges that neither ROCHE
nor its Affiliates are licensed under this Agreement to perform research or to
develop any product other than a CHIRON Licensed Product.
2.3 CHIRON TRANSPLANTATION FIELD LICENSE. Subject to the terms and
conditions of this Agreement, CHIRON hereby grants to ROCHE and its Affiliates,
so long as they remain Affiliates of ROCHE, a worldwide, non-exclusive license,
without the right to sublicense, under CHIRON Licensed Patents to research,
develop, make, have made, import, use, offer for sale and sell CHIRON Licensed
Products for use in the Transplantation Field. CHIRON covenants not to xxx any
End User of such CHIRON Licensed Products (with respect to which ROCHE has
performed all of its material obligations under this Agreement) to the extent of
activities in the Transplantation Field or as otherwise permitted under this
Agreement. Conversely, no immunity from suit under this Section 2.3 shall apply
to End User activities in Blood Screening, except as
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provided in the Blood Screening Agreement, or otherwise outside of the
Transplantation Field.
2.4 SEMI-EXCLUSIVE CHIRON LICENSE. The license granted under Section 2.1
shall be semi-exclusive to ROCHE and its Affiliates. Semi-exclusive means that,
in addition to licenses to third parties under existing agreements referenced in
Exhibit G including, without limitation, the [CONFIDENTIAL TREATMENT REQUESTED],
and licenses that may be granted by such licensees, including licenses that may
be granted by [CONFIDENTIAL TREATMENT REQUESTED], CHIRON retains only the right
to practice in the field under the CHIRON Licensed Patents and/or to grant
additional licenses under one or more of the CHIRON Licensed Patents in the
Field as follows:
(a) CHIRON may grant up to [CONFIDENTIAL TREATMENT REQUESTED] in the Field,
if CHIRON is not engaged in the sale of Products;
(b) If CHIRON has not granted [CONFIDENTIAL TREATMENT REQUESTED] under
Section 2.4(a) and CHIRON is not then engaged in the sale of Products,
CHIRON shall have the right, in its sole discretion, in lieu of such
worldwide license, to grant [CONFIDENTIAL TREATMENT REQUESTED] under the
Licensed Patents in the Field in each Region;
(c) If CHIRON chooses to engage in the sale of Products, such activities
shall replace [CONFIDENTIAL TREATMENT REQUESTED] CHIRON is permitted to
grant under Section 2.4(a) if CHIRON's sales are worldwide; or, if
CHIRON's sales are regional, such activities shall replace [CONFIDENTIAL
TREATMENT REQUESTED] CHIRON is permitted to grant under Section 2.4(b) in
each Region in which CHIRON sells such Products;
(d) Licenses granted under Section 2.4(a) or 2.4(b) shall not include the
right to grant sublicenses, except to Affiliates for so long as they remain
Affiliates of the licensee;
(e) In the event that a license referenced in Exhibit F is terminated,
including without limitation the [CONFIDENTIAL TREATMENT REQUESTED], CHIRON
shall have the right to replace such license with a new license, consistent
with the limitations required hereby and the scope, field and territory of
the license that is replaced. Notwithstanding anything herein to the
contrary, the [CONFIDENTIAL TREATMENT REQUESTED] under the [CONFIDENTIAL
TREATMENT REQUESTED], if terminated, could be replaced by a new license to
a new licensee and containing terms determined by CHIRON in its discretion
without any restrictions imposed by this Agreement; provided, however,
that if [CONFIDENTIAL TREATMENT REQUESTED] CHIRON enters into a
14
license to replace the [CONFIDENTIAL TREATMENT REQUESTED] with a third
party that is not [CONFIDENTIAL TREATMENT REQUESTED], or an Affiliate,
successor, assignee or licensee of [CONFIDENTIAL TREATMENT REQUESTED],
ROCHE shall have the rights provided by Paragraph 6 of Exhibit A with
respect thereto;
(f) Following the last to expire of the Foundational Patents, the license
hereunder shall be nonexclusive; and
(g) Notwithstanding this Section 2.4, CHIRON retains the nonexclusive right
under the CHIRON Licensed Patents to conduct research in any field,
including to develop Products and, subject to the Blood Screening
Agreement, all rights outside of the Field and in the Transplantation
Field, including the nonexclusive right to practice and to grant licenses
under the CHIRON Licensed Patents to make, have made, use, import, offer
for sale and sell any products in the Transplantation Field.
2.5 CHIRON FUTURE HIV SEQUENCE PATENT RIGHTS. CHIRON grants to ROCHE a
non-exclusive option to obtain one or more non-exclusive, worldwide licenses, or
sublicenses, as the case may be, with a right to sublicense to ROCHE Affiliates
only, under the CHIRON Future HIV Sequence Patent Rights, to make, have made,
use, import, offer for sale and sell CHIRON Licensed Products and/or products in
the Field and/or the Transplantation Field. [CONFIDENTIAL TREATMENT REQUESTED].
2.6 ROCHE OPTIONED PATENTS AND ROCHE FUTURE HIV SEQUENCE PATENT RIGHTS.
ROCHE grants to CHIRON a non-exclusive option to obtain one or more
non-exclusive, worldwide licenses, or sublicenses, as the case may be, with a
right to sublicense solely to CHIRON Affiliates only, under the ROCHE Optioned
Patents and ROCHE Future HIV Sequence Patent Rights, to make, have made, use,
import, offer for sale and sell ROCHE Optioned Products and/or products in Blood
Screening and/or the Transplantation Field. [CONFIDENTIAL TREATMENT REQUESTED].
ARTICLE 3
PAYMENTS, ROYALTIES
With respect both to CHIRON Licensed Products sold or Shipped, ROCHE shall
make payments to CHIRON as set forth in Exhibit A.
ARTICLE 4
RECORDS AND REPORTS
4.1 NET SALES REPORT. ROCHE shall, within sixty (60) days after the last
day of each Calendar Quarter commencing after [CONFIDENTIAL TREATMENT
REQUESTED], deliver to CHIRON a true and accurate report for
15
the prior Calendar Quarter, substantially in the form attached as Exhibit E
to this Agreement, which shall state the amount of monies due hereunder, if any,
as Earned Royalties and Minimum Royalties, and shall include all information
reasonably necessary to calculate such amount, including, but not limited to,
the following information, presented by country and Region and by product and
Product Category (as defined in Paragraph 4 of Exhibit A):
(a) the amount of Net Sales, expressed in United States Dollars (with
applicable exchange rates to the extent specifically requested in writing
by CHIRON), and the applicable Earned Royalty rate or rates, and all
credits and adjustments thereto;
(b) the number of Units Shipped and the applicable Minimum Royalty
Amounts, and adjustments to Units Shipped (returns, replacements,
etc.); and
(c) a statement of the basis for any deviation from the Earned Royalty
rates and Minimum Royalty Amounts as expressed in Paragraphs 3 and 4 of
Exhibit A.
4.2 PAYMENT DATES. Not later than the date each report required under
Section 4.1 is due, ROCHE shall pay to CHIRON the royalty due under this
Agreement for the period covered by such report. If no royalties are due, ROCHE
shall so report, stating the reasons why no such royalty is due.
4.3 PAYMENT PROCEDURES. ROCHE shall pay royalties and all other payments
due hereunder to CHIRON in immediately available funds on the due date by wire
transfer to:
Bank of America-San Francisco
San Francisco, California
Account Name: Chiron Corporation
Account Number: [CONFIDENTIAL TREATMENT REQUESTED]
ABA #: [CONFIDENTIAL TREATMENT REQUESTED]
Reference: ROCHE HIV Probe License Agreement
or at such place and in such other manner as CHIRON may designate in a notice
signed by CHIRON's Treasurer or Controller to ROCHE.
4.4 TAXES ON ROYALTIES. ROCHE shall deduct from amounts payable hereunder
all taxes assessed or imposed against, or required to be withheld from, royalty
payments due and shall pay such amount to the appropriate fiscal or tax
authorities on behalf of CHIRON. ROCHE shall forward promptly to CHIRON all tax
receipts received by ROCHE evidencing payment of such taxes.
16
4.5 AUDIT. ROCHE shall keep reasonably detailed and accurate records and
books of account to enable a determination of the amounts payable by ROCHE and
its Affiliates to CHIRON hereunder. Upon thirty (30) days written notice by
CHIRON, and not more frequently than once per Calendar Year, CHIRON may have
such records and books of account examined during reasonable business hours by a
mutually acceptable independent certified public accountant selected by CHIRON
and at CHIRON's expense, whose acceptance shall not unreasonably be withheld by
ROCHE, for the purpose of verifying the amounts due hereunder; provided that
such independent accountant agrees to provide CHIRON only the information
necessary to verify the calculation of amounts due hereunder. A copy of any
final written report provided by the independent accountant to CHIRON shall be
given concurrently to ROCHE. Such examination shall not be permitted unless it
is requested within three (3) years following the end of the Calendar Year to
which the books and records pertain. Where such examination results in a finding
that ROCHE underpaid CHIRON by the greater of [CONFIDENTIAL TREATMENT
REQUESTED], ROCHE shall reimburse CHIRON for its reasonable costs and expenses
in conducting such examination. ROCHE and CHIRON shall promptly rectify any
overpayments or underpayments by repaying such amounts together with interest
thereon at an annual rate equal to the lesser of: (a) [CONFIDENTIAL TREATMENT
REQUESTED] as published in the Wall Street Journal, or (b) the maximum rates
permitted by applicable law, from the time such payment was originally due to
the time it is paid.
4.6 CONFIDENTIALITY OF AUDIT. CHIRON agrees that all audited information
shall be confidential to ROCHE and its Affiliates, and that any person or entity
conducting an audit on behalf of CHIRON pursuant to Section 4.5 shall be
required to protect the confidentiality of such information.
4.7 PAYMENT IN UNITED STATES CURRENCY. All payments shall be made in United
States Dollars and shall be made on the dates set forth herein. The Net Sales
amount calculated hereunder for sales in countries other than the United States
shall be converted into equivalent United States Dollars in accordance with the
methods used for internal financial reporting purposes within ROCHE.
4.8 LATE PAYMENT FEE. Any payment, including, without limitation, royalty
payments, made by ROCHE hereunder after the date such payment is due, as set
forth in this Article 4 hereof, shall bear interest at the lesser of: (a)
[CONFIDENTIAL TREATMENT REQUESTED] as published in the Wall Street Journal as of
the date such payment was due, or (b) the maximum rate permitted by applicable
law.
17
ARTICLE 5
OTHER ACTIONS
5.1 PATENT VALIDITY; ENFORCEABILITY. Immediately upon the Effective Date,
or as soon as possible thereafter, ROCHE shall discontinue any opposition,
challenge, compulsory license application or the like with respect to the CHIRON
Licensed Patents, [CONFIDENTIAL TREATMENT REQUESTED]. Immediately after the
Effective Date, or as soon as possible thereafter, CHIRON shall discontinue any
opposition, challenge, interference or the like with respect to the ROCHE
Optioned Patents.
5.2 FUTURE PRODUCTS DIRECTED TO HIV.
(a) Promptly upon its determination to Ship, or to provide a commercial
service utilizing, a Product Directed to HIV not then set forth as a CHIRON
Licensed Product on Exhibit D, ROCHE shall provide CHIRON with written
notice of such Product and the parties will engage in good faith
negotiations to determine the existing or new Product Category for such
Product as set forth on Exhibit A, the number of Units in such Product
pursuant to Section 1.42, the reasonable value of Associated Goods and
Equipment, if any, to be deducted from the Net Sales of such Product
pursuant to Section 1.32(d), and, if such Product is a Combination Product,
the apportionment of the gross amount to be invoiced for such Product
pursuant to Section 1.32(4). As set forth in these Sections, [CONFIDENTIAL
TREATMENT REQUESTED]. Promptly following such determinations, CHIRON will
prepare a revised Exhibit D to include this Product and such revised
Exhibit D shall be incorporated into and become part of this Agreement.
(b) If ROCHE determines to Ship, or to provide a commercial service
utilizing, a Product Directed to HIV not then set forth on Exhibit D as a
CHIRON Licensed Product and ROCHE reasonably believes that the sales of
such Product would not, in the absence of the licenses granted pursuant to
Sections 2.1 and 2.3, constitute an infringement of a Valid Claim of a
CHIRON Licensed Patent, then ROCHE's written notice to CHIRON shall set
forth the basis of ROCHE's reasonable belief in sufficient detail to permit
CHIRON to evaluate the matter. [CONFIDENTIAL TREATMENT REQUESTED].
(c) ROCHE may elect, in its reasonable discretion, to commence Shipping, or
the provision of a commercial service utilizing, a Product Directed to HIV
not then set forth on Exhibit D as a CHIRON Licensed Product [CONFIDENTIAL
TREATMENT REQUESTED], PROVIDED ROCHE shall make a reasonable determination
as to the applicable existing Product Category to determine the applicable
Minimum Royalty Amount and shall utilize a reasonable determination of the
number of Units in such
18
Product and the deductions and apportionment for the calculation of Earned
Royalty due on the Net Sales of such Product. [CONFIDENTIAL TREATMENT
REQUESTED], any underpayment or overpayment of the Minimum Royalty or
Earned Royalty shall be rectified in accordance with the provisions set
forth in Section 4.8; [CONFIDENTIAL TREATMENT REQUESTED].
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 CORPORATE AUTHORITY. Each party represents and warrants to the other
party that it has the necessary corporate authority to enter into this
Agreement.
6.2 RIGHT TO GRANT. Each party represents and warrants that they have the
right to grant the licenses or options granted in Article 2 hereof and that they
are the sole owner of their respective Licensed Patents, subject to licenses
existing as of the Effective Date. CHIRON represents and warrants to ROCHE that,
to the best of its knowledge, neither CHIRON nor any of its Affiliates have
transferred to [CONFIDENTIAL TREATMENT REQUESTED] or any if its Affiliates (a)
before December 1, 1998, title to any patent or patent application Directed to
HIV in the Field existing on that date; or (b) on or after that date, title to
any patent, patent application or invention Directed to HIV in the Field.
6.3 CURRENT LICENSES. CHIRON represents and warrants that: (a) as of the
Effective Date the entities set forth in Exhibit F are the only parties to which
it has granted any licensed rights or other grants or immunities to one or more
of the CHIRON Licensed Patents in the Field; and (b) Exhibit F contains a
complete and accurate description of the effective scope, field and territory of
such grant as of the Effective Date. CHIRON also represents and warrants that
[CONFIDENTIAL TREATMENT REQUESTED] except as disclosed in Exhibit F.
6.4 COMPLETE PATENT LIST. CHIRON represents and warrants to ROCHE that, to
the best of its knowledge and belief, Exhibit B contains a complete list, as of
the Effective Date, of all patents and patent applications owned by, licensed to
(with a right to sublicense), or otherwise controlled by CHIRON or its
Affiliates containing claims Directed to HIV in the Field. To the extent that
any other patent or patent application owned by, licensed to (with a right to
sublicense), or otherwise controlled by CHIRON or its Affiliates and filed on or
before the Effective Date contains a claim Directed to HIV in the Field, such
patent or patent application shall be automatically added to the CHIRON Licensed
Patents. Upon ROCHE's written request, not more frequently than annually, CHIRON
shall provide ROCHE with an updated Exhibit B and a report of the prosecution
status of applications within CHIRON Licensed Patents. ROCHE represents and
warrants to CHIRON that, to the best of its knowledge and belief, Exhibit C
contains a complete list, as of the Effective Date, of all
19
patents and patent applications owned by, licensed to (with a right to
sublicense), or otherwise controlled by ROCHE or its Affiliates containing
claims Directed to HIV in the Field. To the extent that any other patent or
patent application owned by, licensed to (with a right to sublicense), or
otherwise controlled by ROCHE or its Affiliates and filed on or before the
Effective Date contains a claim Directed to HIV in the Field, such patent or
patent application shall be automatically added to the ROCHE Optioned Patents.
Upon CHIRON's written request, not more frequently than annually, ROCHE shall
provide CHIRON with an updated Exhibit C and a report of the prosecution status
of applications within ROCHE Optioned Patents.
6.5 EXCLUSIONS. Nothing contained in this Agreement shall be construed as:
(a) A representation or warranty by any party hereto as to the validity of
any patent rights which are the subject of this Agreement;
(b) A representation or warranty that anything made, used, imported,
offered for sale, sold or otherwise disposed of under any of the patent
rights which are the subject of this Agreement is or will be free from
infringement of patents of third parties or of patents of either party that
are not Directed to HIV;
(c) An obligation to bring or prosecute actions or suits against third
parties for infringement of any patent rights which are the subject of this
Agreement;
(d) A grant of any right to bring or prosecute actions or suits against
third parties for infringement of any patent rights which are the subject
of this Agreement; or
(e) A grant, by implication, estoppel or otherwise, of any license, option,
covenant or right other than those which are expressly stated herein,
including without limitation (i) any license under any patent or patent
application (or claim thereof) not within the Licensed Patents, or (ii) any
covenant by CHIRON or ROCHE not to xxx under any such patent or patent
application (or claim thereof).
6.6 FURTHER ROCHE ASSURANCE. ROCHE acknowledges that the inclusion of ROCHE
Affiliates within the license and option grants pursuant to Sections 2.1, 2.3
and 2.5 is intended to enable ROCHE to utilize the manufacturing and sales
capabilities of its Affiliates in connection with the manufacture and sale of
CHIRON Licensed Products in a manner substantially similar to the involvement of
such Affiliates in the manufacture and sale of ROCHE's products generally. ROCHE
shall not, directly or indirectly, take any action having or intended to have
the effect of sublicensing ROCHE's rights
20
under any of the CHIRON Licensed Patents, other than to a BONA FIDE
Affiliate, including, without limitation, by creating Affiliates specifically in
connection with CHIRON Licensed Products, or through other third party
arrangements such as joint ventures, collaborations, or distribution
arrangements with distributors. ROCHE and its Affiliates are licensed hereunder
to sell and distribute CHIRON Licensed Products only under the label, name and
trademark rights owned by, licensed to or otherwise controlled by ROCHE or its
Affiliates, and only through the sales force of ROCHE or its Affiliates, or
through Authorized Distributors. ROCHE and its Affiliates are not licensed to
perform OEM manufacturing of CHIRON Licensed Products for a third party other
than an Authorized Distributor; to supply CHIRON Licensed Products for resale to
any third party other than an Authorized Distributor; to permit any Authorized
Distributor or other third party to sell any CHIRON Licensed Products under
another third party label, name or trademark or to permit any Authorized
Distributor or other third party to sell any CHIRON Licensed Products under the
Authorized Distributor's or any third party's own label, name or trademark for
use on an instrument bearing the label name or trademark of a party other than
ROCHE or its Affiliates; provided, however, that nothing in this Section 6.6
shall be construed to limit the rights of ROCHE or its Affiliates to engage in
activities with such third parties, to the extent such third parties have
obtained rights under the CHIRON Licensed Patents permitting such activities.
6.7 LIMITATION OF WARRANTY. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NO
PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, ARISING
BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 7
TERM AND TERMINATION
7.1 TERM. This Agreement shall be in effect from the Effective Date until
the last to expire of the CHIRON Licensed Patents issued under the authority of
the Patent and Trademark Office of the United States (the "Term"), unless
earlier terminated pursuant to Sections 7.2 or 7.3 below.
7.2 VOLUNTARY TERMINATION. ROCHE shall have the right to voluntarily
terminate all, but not less than all, licenses granted to ROCHE and its
Affiliates under this Agreement on not less than six (6) months prior written
notice to CHIRON. Notwithstanding the above, ROCHE may voluntarily terminate
all, but not less than all, licenses granted to ROCHE and its Affiliates under
this Agreement on a country-by-country basis, on not less than six (6) months
prior written notice to CHIRON, after the [CONFIDENTIAL TREATMENT REQUESTED]
anniversary of the Effective Date.
21
7.3 TERMINATION BY CHIRON. CHIRON may terminate this Agreement only upon
any of the following grounds:
(a) ROCHE's or its Affiliate's material breach of this Agreement,
including, without limitation, a breach resulting from ROCHE's or its
Affiliate's failure to pay any sums due hereunder, where such breach
shall not have been remedied within thirty (30) days of the receipt of
a written notification from CHIRON identifying the breach and requiring
its remedy; whereupon termination under this Section 7.3(a) shall be
effective upon the expiration of such thirty (30) day cure period,
subject to Section 7.6; or
(b) [CONFIDENTIAL TREATMENT REQUESTED]
7.4 ENFORCEMENT AFTER TERMINATION. Upon valid termination of this Agreement
under Section 7.2 or 7.3, ROCHE and its Affiliates shall have no further rights
under CHIRON Licensed Patents and CHIRON shall not be limited to its remedies
under this Agreement, to the extent of such termination.
7.5 ACCRUED RIGHTS. Termination of this Agreement for whatever reason shall
not affect any rights which have accrued prior to termination, including without
limitation royalty obligations occurring during the Term, calculated in
accordance with Article 3 and Exhibit A.
7.6 ROCHE CHALLENGE TO SECTION 7.3(a) TERMINATION. In the event ROCHE
provides written notification to CHIRON prior to expiration of the thirty (30)
day notice/cure period referenced in Section 7.3(a) that ROCHE disputes whether
the grounds for termination under Section 7.3(a) are present, such dispute shall
be submitted to ADR pursuant to Article 10. The thirty (30) day notice/cure
period shall be suspended during the pendancy of such ADR, provided that during
the pendancy of the ADR, ROCHE shall continue to make any disputed payments to
CHIRON, on the condition that CHIRON shall repay ROCHE the amounts of such
disputed payments if ROCHE prevails in the ADR, plus interest at the rate
described in Section 4.8. Notwithstanding anything in this Section 7.6 to the
contrary, ROCHE may submit a dispute concerning a method by which amounts
payable by ROCHE and its Affiliates to CHIRON hereunder are calculated only one
time, and any resolution from the ADR shall bind the parties as to such
calculation method thereafter.
7.7 ROCHE CHALLENGE TO SECTION 7.3(b) TERMINATION. In the event that ROCHE,
within thirty (30) days of receiving notice of termination by CHIRON for the
grounds set forth in Section 7.3(b) above, provides written notice to CHIRON
that ROCHE disputes whether such grounds are present, such dispute shall be
submitted to ADR pursuant to Article 10 and termination of this Agreement shall
be suspended during the pendancy of the ADR, provided that ROCHE suspends its
action, suit or proceeding (other than an ADR proceeding between the parties
22
as permitted by Section 7.3 (b) and Article 10) [CONFIDENTIAL TREATMENT
REQUESTED] and continues to perform all of its material obligations hereunder.
7.8 AUDIT RESULTS NOT GROUNDS FOR TERMINATION. CHIRON's request for an
audit under Section 4.5 shall not be treated as a notice of breach under Section
7.3(a). In the event such audit determines there has been an underpayment by
ROCHE, such underpayment shall not constitute grounds for termination by CHIRON
under Section 7.3(a) unless: (a) ROCHE has failed to rectify such underpayment
in accordance with Section 4.5; (b) ROCHE has failed to rectify such
underpayment after notification and opportunity to cure under Section 7.3(a);
and (c) any ADR requested by ROCHE, pursuant to Section 7.6, and directed to any
dispute concerning such underpayment, results in a determination favorable to
CHIRON and ROCHE has failed to rectify such underpayment. Notwithstanding the
foregoing, ROCHE shall continue to make the disputed payments to CHIRON, on the
condition that CHIRON shall repay ROCHE the amounts of such disputed payments
with respect to which ROCHE prevails in the ADR, plus interest at the rate
described in Section 4.8.
7.9 SURVIVAL. The following provisions of this Agreement shall survive
termination or expiration of this Agreement, in accordance with their respective
terms: Article 1; Sections 4.5, 4.6, 4.7, 4.8, 6.7, 7.4, 7.5 and 7.9; Articles
8, 9, and 10; Sections 11.9 through 11.14; and Section 14.1.
ARTICLE 8
CONFIDENTIALITY
8.1 OBLIGATION. From time to time during the Term, CHIRON and ROCHE may
provide to each other information concerning patents, patent applications,
license agreements and other confidential or proprietary information related to
this Agreement (the "Information"). Each party receiving the Information (the
"Receiving Party") shall during the Term and for a period of three (3) years
after termination hereof: (a) maintain the Information in confidence; (b) not
disclose the Information to any third party, other than employees, agents or
consultants of the Receiving Party, its Affiliates or permitted sublicensees who
have a need to know the Information and who are bound by confidentiality
obligations to the Receiving Party no less restrictive than those contained
herein; and (c) not use the Information for any purpose not directly related to
performance hereunder or otherwise authorized under this Agreement.
8.2 EXCLUSIONS. The obligations of this Article 8 shall not apply to any
Information which: (a) is or which becomes generally known to the public by
publication or by means other than a breach of a duty by the Receiving Party;
(b) is otherwise known by the Receiving Party at the time of disclosure by the
other party; (c) otherwise becomes available to the Receiving Party from a third
party not in breach of confidentiality obligations to the other party; or (d) is
developed by or for the Receiving Party independent of any disclosure from the
other party.
23
The Receiving Party also shall be permitted to make disclosures of
Information which are reasonably necessary in connection with a possible
grant of a permitted sublicense by the Receiving Party or in due diligence
related to a possible acquisition, merger, consolidation, substantial asset
transfer or similar transaction of the Receiving Party, provided that the
recipient is bound to the Receiving Party by confidentiality obligations with
respect to the Information no less restrictive than those contained herein.
Nothing herein shall prevent the Receiving Party from making such disclosures
of Information as are reasonably required by law, regulation (including 37
C.F.R. Section 1.56), or order of any court or governmental agency; provided
that the Receiving Party has provided reasonable advance notice to allow the
disclosing party the opportunity to seek a protective order or otherwise
contest, prevent or limit such disclosure.
8.3 RETURN OF INFORMATION. Upon termination of this Agreement for any
reason, the Receiving Party shall return, or at the option of the disclosing
party, certify destruction of, all Information and copies thereof; provided that
the Receiving Party may retain one copy thereof in its law department files
solely for evidentiary and regulatory purposes.
8.4 DISCLOSURE OF AGREEMENTS AND TERMS. The parties shall issue a joint
press release disclosing the existence and certain financial terms of this
Agreement. CHIRON may disclose any of the terms in the Agreement to any
Affiliate of CHIRON or to Xxxxxx or Bayer or a permitted sublicensee; provided
that the recipient of such disclosure is obligated to confidentiality terms no
less restrictive that those contained in this Article 8. CHIRON and ROCHE may
each disclose the amounts of the Prior Sales Royalty, the European License Fee
and the U.S. License Fee (as these terms are defined in Exhibit A) individually
and/or in the aggregate and the amounts thereof that will be recognized from
time-to-time in its respective financial statements. Each party may disclose any
information contained in or regarding this Agreement to the extent required in
its respective reasonable judgment by applicable law, regulation or order of any
court or governmental agency. Further, each party may determine in its
respective discretion to file this Agreement under the Securities and Exchange
Act of 1934 or otherwise with any United States or foreign governmental agency,
even if that filing may result in this Agreement becoming available to the
public generally. The filing party shall seek confidential treatment for at
least the essential financial terms hereof in connection with any such filing,
subject to applicable law and regulation, and shall notify the other party in
advance of any such filing and consider such suggestions as the other party may
make as to the terms herein as to which the filing party should seek
confidential treatment.
ARTICLE 9
INDEMNITY
9.1 ROCHE INDEMNITY. ROCHE shall indemnify, defend and hold harmless CHIRON
and its Affiliates and their officers, directors, shareholders,
24
employees, representatives and agents, against any claim, demand, loss,
damage or injury, including reasonable attorneys' fees, asserted by a third
party, arising from, relating to, or otherwise in respect of, (a) the
manufacture, use or sale of CHIRON Licensed Products, or (b) any breach by ROCHE
or its Affiliates of any representation, warranty or covenant under this
Agreement; provided, however, that such indemnity shall not extend to damages
arising directly from any breach or willful or negligent act of CHIRON or its
Affiliates.
9.2 CHIRON INDEMNITY. CHIRON shall indemnify, defend and hold harmless
ROCHE and its Affiliates and their officers, directors, shareholders, employees,
representatives and agents, against any claim, demand, loss, damage or injury,
including reasonable attorneys' fees, asserted by a third party, arising from,
relating to, or otherwise in respect of, (a) the manufacture, use or sale of
ROCHE Licensed Products, if CHIRON exercises the options granted in Section 2.6,
or (b) any breach by CHIRON or its Affiliates of any representation, warranty or
covenant under this Agreement; provided, however, that such indemnity shall not
extend to damages arising directly from any breach or willful or negligent act
of ROCHE or its Affiliates.
9.3 INDEMNIFICATION PROCEDURES. In the event either party claims
indemnification pursuant to this Article 9, the indemnified party shall promptly
notify the indemnifying party in writing upon becoming aware of any claim to
which such indemnification may apply. Delay in providing such notice shall
constitute a waiver of the indemnifying party's indemnity obligations hereunder
only if the indemnifying party's ability to defend such claim is materially
impaired thereby. The indemnifying party shall have the right to assume and
solely control the defense of the claim at its own expense. If the right to
assume and solely control the defense is exercised, the indemnified party shall
have the right to participate in, but not to control, such defense at its own
expense, and the indemnifying party's indemnity obligations shall be deemed not
to include attorneys' fees and litigation expenses incurred by the indemnified
party after the assumption of the defense by the indemnifying party. If the
indemnifying party does not assume the defense of the claim, the indemnified
party may defend the claim at the indemnifying party's expense. The indemnified
party shall not settle or compromise the claim without the prior written consent
of the indemnifying party, and the indemnifying party shall not settle or
compromise the claim in any manner which would have an adverse effect on the
indemnified party without the consent of the indemnified party, which consent,
in each case, shall not be unreasonably withheld. The indemnified party shall
reasonably cooperate with the indemnifying party and shall make available to the
indemnifying party all pertinent information under the control of the
indemnified party, all at the expense of the indemnifying party.
9.4 SUNSET. The provisions of Sections 9.1 and 9.2 shall continue in effect
on a claim-by-claim basis, after the termination of this Agreement, only
25
until the expiration of the last to expire statute of limitations applicable
to such claim.
9.5 LIMITATION OF LIABILITY. Neither party shall be liable to the other for
any consequential, special, indirect or exemplary damages or for the loss of
profits arising from the performance or nonperformance of this Agreement or any
acts or omissions associated herewith.
ARTICLE 10
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that BONA-FIDE disputes may from time to time arise
which relate to any aspect of this Agreement, including, without limitation, any
of the parties' rights and/or obligations hereunder, and including, without
limitation, disputes relating to the interpretation, form, validity, performance
and/or termination of this Agreement or relating to infringement, scope, claims
construction, or (without limiting the effect of Section 7.3(b)) validity or
enforceability of the Licensed Patents. In the event of the occurrence of any
dispute, a party may, by notice to the other party, have such dispute referred
to their respective employees designated below or their successors, for
attempted resolution by good faith negotiations within ninety (90) days after
such notice is received. Said designated officers are as follows:
For ROCHE:
PRESIDENT
ROCHE MOLECULAR SYSTEMS, INC.
For CHIRON:
PRESIDENT
BLOOD TESTING
In the event the designated officers, after such good faith negotiations,
are not able to resolve such dispute within such ninety (90) day period, or any
agreed extension thereof, a party may invoke the provisions for binding ADR as
set forth in Paragraph 9 of the Settlement Agreement. Neither party shall seek
recourse against the other hereunder in any court or other forum, except as
permitted by Paragraph 9 of the Settlement Agreement or as may be necessary to
enforce a determination made in ADR pursuant to this Article 10 and Paragraph 9
of the Settlement Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 ASSIGNMENT.
26
(a) ROCHE and its Affiliates may not assign or transfer any
rights under this Agreement without the prior written consent of
CHIRON, except to an ROCHE Affiliate, and then only for so long as the
assignee remains an ROCHE Affiliate, or as part of the sale or transfer
of all or substantially all of ROCHE's and all of its Affiliates'
assets and businesses to which this Agreement relates. In the case of a
permitted assignment or transfer, the performance of the assignee shall
be guaranteed by ROCHE.
(b) CHIRON and its Affiliates may not assign or transfer any
rights under this Agreement without the prior written consent of ROCHE,
except to a CHIRON Affiliate, and then only for so long as the assignee
remains a CHIRON Affiliate, or as part of the sale or transfer of all
or substantially all of CHIRON's and all of its Affiliates' assets and
businesses to which this Agreement relates. In the case of a permitted
assignment or transfer, the performance of the assignee shall be
guaranteed by CHIRON.
11.2 FORCE MAJEURE. A party hereto shall not be liable for, nor shall this
Agreement be terminable or cancelable by reason of, any delay or default in any
such party's performance hereunder, to the extent that such default or delay is
caused by events beyond such party's reasonable control including, but not
limited to: acts of God; regulation, law or action of any government or agency
thereof; war or insurrection; civil commotion; labor disturbances; epidemic; or
failure of suppliers, public utilities or common carriers. Each party shall give
prompt notice to the other party of such cause, and shall take whatever
reasonable steps are necessary to relieve the effect of such cause as rapidly as
possible.
11.3 SEVERABILITY. In the event that any one or more of the provisions of
this Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement or over the parties hereto to be invalid,
illegal or unenforceable, such provision or provisions shall be reformed to
approximate as nearly as possible the intent of the parties, in such
jurisdiction; elsewhere, this Agreement shall not be affected.
11.4 ENTIRE AGREEMENT. This Agreement together with the Exhibits,
Attachments and Schedules constitutes the entire agreement among the parties
relating to the subject matter of this Agreement. There are no other
understandings, representations or warranties of any kind.
11.5 AMENDMENT. This Agreement shall not be altered, extended or modified
except by written agreement of the parties.
11.6 WAIVER. Failure by a party hereunder to enforce any right under this
Agreement shall not be construed as a waiver of such right or any other rights
under this Agreement; nor shall a waiver by a party hereunder in one or
27
more instances be construed as constituting a continuing waiver or as a waiver
in other instances.
11.7 COSTS. Each of the parties hereto shall be responsible for its
respective legal and other costs incurred in relation to the preparation of this
Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same instrument. Facsimile copies
of signatures for a party shall be deemed to be originals for purposes of
execution of the Agreement and for determining the Effective Date.
11.9 NOTICES.
(a) Any notice or other document to be given under this Agreement shall
be in writing and shall be deemed to have been duly given if personally
delivered or sent by first class mail, or express or air mail or other postal
service, or by certified mail, return receipt requested.
(b) Any notice required by this Agreement shall be forwarded to the
respective addresses and marked for the attention of the persons set forth below
unless such addresses subsequently change by written notice to the other party:
ROCHE: X. Xxxxxxxx-Xx Xxxxx Ltd.
Xxxxxxxxxxxxxxxxx 000
Xxxxx
Xxxx 0000
Xxxxxxxxxxx
Attn.: Head of Diagnostics Division
Copy to: General Counsel
Roche Molecular systems, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
CHIRON: Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn.: President, Blood Testing
Copy to: General Counsel
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
28
(c) Any such notice or other document shall be deemed to have been
effective when received by the addressee. To prove the giving of a notice or
other document it shall be sufficient to show that it was received.
11.10 GOVERNING LAW. All matters affecting the interpretation, form,
validity, performance and termination of this Agreement shall be decided and
interpreted under the laws of the State of New York, excluding any choice of law
rules which may direct application of the laws of any other jurisdiction.
11.11 RELATIONSHIP OF THE PARTIES. The relationship of the parties under
this Agreement is that of independent contractors. Nothing contained in this
Agreement is intended or is to be construed so as to constitute the parties as
partners, joint venturers or agents of the other. Neither party or its
Affiliates has any express or implied right or authority under this Agreement to
assume or create any obligations or make any representations or warranties on
behalf of or in the name of the other party or its Affiliates.
11.12 HEADINGS. The headings of the Articles and Sections in this Agreement
have been inserted for convenience only and do not constitute part of this
Agreement.
11.13 NO TRADEMARK RIGHTS. No right, express or implied, is granted by this
Agreement to either party to use in any manner the name, trade name or trademark
of the other party in connection with the performance of this Agreement.
11.14 NO IMPLIED LICENSES. No license, express or implied, is granted by
this Agreement to either party, other than the licenses or options granted under
Sections 2.1, 2.3, 2.5 and 2.6.
ARTICLE 12
FIELD RESTRICTIONS AND OTHER COVENANTS
12.1 ROCHE COVENANT REGARDING BLOOD SCREENING.
(a) ROCHE and its Affiliates shall not label or promote any CHIRON Licensed
Product labeled or promoted for use in the Field or the Transplantation Field in
any respect for use in Blood Screening; and ROCHE shall use commercially
reasonable efforts to prevent its Authorized Distributors from labeling or
promoting any CHIRON Licensed Products labeled or promoted for use in the Field
or the Transplantation Field in any respect for use in Blood Screening.
(b) Further, ROCHE and its Affiliates and Authorized Distributors shall
include on or with each CHIRON Licensed Product labeled or promoted for use in
the Field or the Transplantation Field a statement to the effect that the
29
CHIRON Licensed Product is not for use for testing or screening pooled
samples containing specimens from more than one individual, or otherwise in
blood or plasma screening, using language to be determined by ROCHE and approved
in advance in writing by CHIRON, which approval shall not be unreasonably
withheld. The location of such notice shall be the product insert of such CHIRON
Licensed Products or such other reasonably prominent location to be determined
by ROCHE.
(c) In the event that ROCHE or CHIRON becomes aware of any material use in
Blood Screening of CHIRON Licensed Products labeled or promoted for use in the
Field or the Transplantation Field, such party will promptly notify the other in
writing of the relevant facts and, if so requested by CHIRON, ROCHE will (i)
meet and confer with CHIRON in good faith to determine what steps either or both
should take to xxxxx such infringing use and (ii) notify in writing any of its
customers that engages in such infringing use that use of the relevant CHIRON
Licensed Product in Blood Screening may infringe one or more of the CHIRON
Licensed Patents.
(d) Without limiting the labeling and promoting obligations under this
Section 12.1, CHIRON shall not xxx XXXXX, its Affiliates, its Authorized
Distributors or its End User customers for the sale or use as a confirmatory or
supplemental test in conjunction with the screening of blood, plasma or blood
products (a "Confirmatory Test") of a CHIRON Licensed Product that is labeled or
promoted for use in the Field or the Transplantation Field, if the End User
customer has substantial noninfringing uses for such CHIRON Licensed Product in
the Field or the Transplantation Field. Further, ROCHE shall not be obligated to
notify such customers pursuant to Section 12.1(c)(ii) with respect to such
CHIRON Licensed Product.
(e) Nothing in this Section 12.1 shall apply to any product to the extent
that ROCHE's activity and that of its Affiliates with respect to such product is
either for or through an entity licensed in Blood Screening under the CHIRON
Licensed Patents.
12.2 ROCHE COVENANT REGARDING PRODUCT LABELING. ROCHE and its Affiliates
shall include on or with each CHIRON Licensed Product a statement as to the
number of Units contained within each such CHIRON Licensed Product, using such
language to be determined by ROCHE and approved in advance in writing by CHIRON,
which approval shall not be unreasonably withheld. The location of such
statement shall be product insert of such CHIRON Licensed Products or such other
reasonably prominent location to be determined by ROCHE.
12.3 PATENT MARKING. ROCHE and its Affiliates shall include a patent notice
on each CHIRON Licensed Product to identify the CHIRON Licensed Patents which
such CHIRON Licensed Product, but for the licenses granted
30
herein, would infringe one or more Valid Claims (or for which royalties are
being paid); provided, however, identification of CHIRON Licensed Patents on a
CHIRON Licensed Product shall in no way be deemed to be an admission by ROCHE or
its Affiliates, or raise a presumption, that such CHIRON Licensed Product is in
fact covered by such CHIRON Licensed Patent.
12.4 CHIRON COVENANT REGARDING FIELD.
(a) CHIRON and its Affiliates shall not, and CHIRON shall require any of
its future licensees under the CHIRON Licensed Patents that are licensed in
Blood Screening to agree not to, label or promote, in any respect for use in the
Field, any product sold in, labeled or promoted for use in Blood Screening
[CONFIDENTIAL TREATMENT REQUESTED], which product detects nucleic acid sequences
of HIV.
(b) Further, CHIRON and its Affiliates shall, and CHIRON shall require its
future licensees in Blood Screening to, include with each such HIV product sold
by CHIRON or its Affiliates or licensees in Blood Screening a statement to the
effect that such product is not for use in the Field, using language to be
determined by CHIRON and approved by ROCHE, which approval shall not be
unreasonably withheld. The location of such notice shall be in the product
insert for such product or such other reasonably prominent location to be
determined by CHIRON.
(c) In the event that CHIRON or ROCHE becomes aware of any material use of
any such product in the Field, such party will promptly notify the other in
writing of the relevant facts and, if so requested by ROCHE, CHIRON will (i)
meet and confer with ROCHE in good-faith to determine what steps either or both
of them should take to xxxxx such use and (ii) notify in writing any of its
customers that engage in such use that use of the relevant product in the Field
may infringe one or more of the CHIRON Licensed Patents.
(d) Nothing in this Section 12.4 shall apply to any product to the extent
that CHIRON's activity and that of its Affiliates or licensees with respect to
such product either (i) is for or through an entity that is licensed under the
CHIRON Licensed Patents in the Field or (ii) is within CHIRON's rights to
practice in the Field, pursuant to its rights retained under, and subject to the
limitations of, Section 2.1.
ARTICLE 13
INFRINGEMENT BY THIRD PARTIES
13.1 NOTICE OF INFRINGEMENT. Each party shall notify the other if it
becomes aware of Infringing Third Party Sales. CHIRON shall have the exclusive
right to take action against any infringement of any of the CHIRON Licensed
Patents, in its sole discretion, subject to this Article 13.
31
13.2 INFRINGEMENT LITIGATION.
(a) In the event that "substantial" Infringing Third Party Sales are
occurring in a country in which ROCHE or its Affiliates or an Authorized
Distributor is selling a CHIRON Licensed Product (in each such country, the
"Impacted Product"), and ROCHE has notified CHIRON pursuant to Section 13.1 of
the existence of such infringement in [CONFIDENTIAL TREATMENT REQUESTED] (an
"Infringement Notice"), then the provisions of this Section 13.2 shall apply.
For purposes of this Section 13.2, an Infringing Third Party Sale shall be
considered substantial in a country if the infringing third party achieves
market share of at least [CONFIDENTIAL TREATMENT REQUESTED] of the Aggregated
Products in such country as determined by an Independent Auditor paid for by
ROCHE. For purposes of this Section 13.2, "Major Country" shall mean the United
States, Germany, United Kingdom or Japan. For purposes of this Section 13.2,
"Aggregated Products" means the number of CHIRON Licensed Products of the
applicable Product Category and Competitive Products sold in a country, and
"Competitive Products" means Products which are sold in the Field and which
compete with a CHIRON Licensed Product sold by ROCHE or its Affiliates in a
country.
(b) If either (i) the Infringement Notice identified an Impacted Product in
the United States and CHIRON fails to institute legal action in the United
States [CONFIDENTIAL TREATMENT REQUESTED] following receipt by CHIRON of the
Infringement Notice and infringement is not otherwise abated, or (ii) the
Infringement Notice identified an Impacted Product in a Major Country other than
the United States and CHIRON fails to institute legal action against the
infringing party in at least one of the United States, the Netherlands, Germany,
United Kingdom or Japan, [CONFIDENTIAL TREATMENT REQUESTED] following receipt by
CHIRON of the Infringement Notice and infringement is not otherwise abated; then
ROCHE shall be relieved of the obligation to pay the portion of Earned Royalties
set forth in Section 13.2(c) and [CONFIDENTIAL TREATMENT REQUESTED], with
respect to the Impacted Product until such time as CHIRON institutes such legal
action as described in this Section 13.2(b); provided, however, that CHIRON need
not initiate or continue any such legal action, if, after reasonably diligent
effort (including reasonably diligent effort by ROCHE if requested by CHIRON),
CHIRON is unable to acquire admissible evidence sufficient to establish a prima
facia case of infringement under the law of the applicable country.
(c) If CHIRON has not instituted such legal action at the end of such
[CONFIDENTIAL TREATMENT REQUESTED], to the extent required under Section
13.2(b), and such infringement is not otherwise abated, the Earned Royalty with
respect to an Impacted Product shall be reduced by [CONFIDENTIAL TREATMENT
REQUESTED]. If, at the end of each [CONFIDENTIAL TREATMENT REQUESTED]
thereafter, CHIRON has not
32
instituted such legal action, to the extent so required, and infringement
is not otherwise abated, such Earned Royalties shall be reduced by an
[CONFIDENTIAL TREATMENT REQUESTED] of the original Earned Royalties, such that
if legal action required under Section 13.2(b) has not commenced and the
infringement is not otherwise abated by the end of the [CONFIDENTIAL TREATMENT
REQUESTED] following receipt by CHIRON of the Infringement Notice, [CONFIDENTIAL
TREATMENT REQUESTED] shall be payable hereunder with respect to the Impacted
Product.
(d) The obligations to pay Earned Royalties and Minimum Royalties shall be
reinstated on a prospective basis at such time as ROCHE receives written notice
of the institution of legal action in accordance with Section 13.2(b) or the
infringement is otherwise abated, all subject to Section 13.2(e).
(e) If legal action required under Section 13.2(b) has not been instituted
and the infringement is not otherwise abated for more than [CONFIDENTIAL
TREATMENT REQUESTED] following receipt by CHIRON of the Infringement Notice, and
if, as a result of the infringement, sales of the Impacted Product in a Major
Country by ROCHE, its Affiliates or an Authorized Distributor have declined by
[CONFIDENTIAL TREATMENT REQUESTED] or more during the preceding [CONFIDENTIAL
TREATMENT REQUESTED], then upon reinstatement of Earned Royalties and Minimum
pursuant to Section 13.2(d), the parties shall meet and confer regarding
possible adjustments to the Earned Royalties and Minimum Royalties for the
Impacted Product in view of such degradation of the market. The parties will
discuss possible rate reductions, as well as a plan for reinstating the original
economic expectations of the parties. It is expected that any agreement for
reduction of Earned Royalties and Minimum Royalties will be phased out over
time, so as to return to the Earned Royalties and Minimum Royalties set forth in
Exhibit A. If the parties fail to reach agreement on any such adjustment, the
matter shall be submitted for resolution by ADR, except that in the event of
ADR, each party shall submit to the neutral a proposal with respect to
adjustments pursuant to this Section 13.2(e). The neutral shall be empowered to
choose one proposal or the other, but shall not be empowered to order any such
adjustment other than as proposed by one of the parties.
13.3 COOPERATION. ROCHE and its Affiliates shall cooperate with CHIRON in
connection with any legal action referred to in this Article 13.
ARTICLE 14
EUROPEAN COMMUNITY PROVISIONS
14.1 TERMINATION IN EUROPEAN COMMUNITY. Notwithstanding the provisions of
Article 7, this Agreement, with respect to the European Community, shall
terminate in each member country seventeen (17) years from the Effective Date or
on the expiration of the last to expire of the patents within the CHIRON
33
Licensed Patents in such member country based upon a patent existing or a patent
application pending as of the Effective Date, whichever is later; provided,
however, that prior to the termination of this Agreement in the first member
country in which it would otherwise terminate pursuant to the foregoing, ROCHE
may, in its discretion, elect by written notice to CHIRON to extend this
Agreement as to all such member countries for an additional term which shall
expire on a country-by-country basis on the expiration date of the last to
expire patent within the CHIRON Licensed Patents existing in such member country
as of the date of such extension.
14.2 COMPETITION NOTIFICATION. If either party (the "Notifying Party")
elects to file a notification with respect to this Agreement (a "Notification")
with the Competition Directorate of Commission of European Community (the
"Commission") in accordance with regulations established by the Commission, the
Notifying Party shall provide a non-confidential version of the final draft to
the other party for comment at least thirty (30) days before making the filing
and shall consider in good faith the modification thereto, if any, that the
other party may propose. The other party shall execute all documents reasonably
required by the Notifying Party and shall otherwise reasonably cooperate in
connection with the Notification. The Notifying Party shall bear all costs
incurred by it relating to the Notification.
14.3 REFORMATION. If, at any time during the Term, either party receives a
request or other communication from the Commission with respect to the
Notification (a "Request"), such party shall promptly inform the other of the
nature of the Request. In the event that the Commission indicates in a Statement
of Objection(s) that this Agreement will violate the provisions of Article 81 or
82 of the Treaty of Rome, then the parties shall amend this Agreement by making
those minimal modifications necessary to satisfy the concerns of the Commission
as set forth in the Statement of Objection(s). Notwithstanding the foregoing,
the parties agree that ROCHE shall retain substantially the same license rights
at substantially the same royalties as specified under this Agreement.
34
IN WITNESS WHEREOF this Agreement has been executed by duly authorized officers
of CHIRON and ROCHE as of the Effective Date.
CHIRON CORPORATION
By: /s/ XXXX X. XXXXX
-----------------
Xxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
Date: October 10, 2000
X. XXXXXXXX-XX XXXXX LTD
By: /s/ XXXXX VON PRONDZYNSKI
-------------------------
Title: Head of Diagnostics
Date: 10/10/2000
By: /s/ X. XXXXXX
-------------
Title: Head of Diagnostics Finance
Date: 10/10/2000
ROCHE MOLECULAR SYSTEMS, INC.
By: /s/ XXXXX XXXXXXX
-----------------
Title: President & CEO
Date: October 10, 2000
2
HIV EXHIBIT A
COMPENSATION TO CHIRON
1. PRIOR SALES ROYALTY. In consideration of the licenses granted pursuant to
Sections 2.1 and 2.3, within 10 (ten) days of the Effective Date ROCHE shall pay
[CONFIDENTIAL TREATMENT REQUESTED], for all sales of CHIRON Licensed Products
[CONFIDENTIAL TREATMENT REQUESTED], that would have, in the absence of the
licenses granted pursuant to Sections 2.1 and 2.3 and under the Blood Screening
Agreement, constituted an infringement of a Valid Claim of a CHIRON Licensed
Patent (the "Prior Sales Royalty"). The Prior Sales Royalty shall be refundable
in full within thirty (30) days, with interest calculated from the date of
payment in accordance with Section 4.8, in the event [CONFIDENTIAL TREATMENT
REQUESTED].
2. LICENSING FEES. Within thirty (30) days of [CONFIDENTIAL TREATMENT
REQUESTED], ROCHE shall pay to CHIRON a licensing fee of [CONFIDENTIAL TREATMENT
REQUESTED] (the "European Licensing Fee"). In addition, within thirty (30) days
of the date [CONFIDENTIAL TREATMENT REQUESTED] that, in the absence of the
licenses granted under Sections 2.1 and 2.3, would result in sales of Products
by ROCHE or its Affiliates constituting an infringement of such claims, ROCHE
shall pay to CHIRON a licensing fee of [CONFIDENTIAL TREATMENT REQUESTED]. The
European Licensing Fee and the U.S. Licensing Fee shall be nonrefundable and
fully earned when paid.
3. EARNED ROYALTY. In consideration of the licenses granted pursuant to Sections
2.1 and 2.3, ROCHE shall pay earned royalties equal to [CONFIDENTIAL TREATMENT
REQUESTED] of Net Sales of CHIRON Licensed Products, that would, in the absence
of the licenses granted pursuant to Sections 2.1 and 2.3, constitute an
infringement of a Valid Claim of a CHIRON Licensed Patent (the "Earned
Royalty"); [CONFIDENTIAL TREATMENT REQUESTED].
Earned Royalties shall be payable quarterly, commencing with the
Calendar Quarter ending [CONFIDENTIAL TREATMENT REQUESTED], and shall be
initially due upon the [CONFIDENTIAL TREATMENT REQUESTED] and thereafter within
sixty (60) days following the end of each Calendar Quarter, and shall be
accompanied by a report pursuant to Article 4 of this Agreement.
4. MINIMUM ROYALTY. Notwithstanding the Earned Royalties due pursuant to
paragraph 3 of Exhibit A, and subject to the adjustments referenced in
paragraphs 3 and 4(b) of Exhibit A, royalties paid to CHIRON under this
Agreement in any Calendar Quarter shall not be less than a minimum royalty in
such quarter (the "Minimum Royalty"), calculated as follows:
The Minimum Royalty for each Calendar Quarter shall be the sum of the products
obtained by multiplying (x) [CONFIDENTIAL TREATMENT REQUESTED] in each
1
category within the CHIRON Licensed Products (a "Product Category") and in
each Region times (y) the applicable minimum amount (the "Minimum Royalty
Amount"), each of which Minimum Royalty Amounts shall be calculated by the
following equation:
[CONFIDENTIAL TREATMENT REQUESTED]
Where:
A equals [CONFIDENTIAL TREATMENT REQUESTED] (the "Minimum Amount/Test");
B equals [CONFIDENTIAL TREATMENT REQUESTED] and
C equals [CONFIDENTIAL TREATMENT REQUESTED].
Minimum Amount/Test
FIELD: REGION I REGION II REGION III REGION IV
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
TRANSPLANTATION FIELD:
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
(a) The Minimum Royalty shall be determined on a [CONFIDENTIAL
TREATMENT REQUESTED], except to the extent adjusted [CONFIDENTIAL TREATMENT
REQUESTED].
(b) In the event that action by governmental pricing or reimbursement
authority or other governmental agency in a country results in a requirement
that
2
ROCHE or its Affiliates sell a CHIRON Licensed Product [CONFIDENTIAL
TREATMENT REQUESTED], excluding for the purpose of calculating the impact of
such price reduction any currency exchange rate fluctuations from the Effective
Date (i.e., the calculation shall be made using the exchange rate in effect as
of the Effective Date), [CONFIDENTIAL TREATMENT REQUESTED]. If any such action
or series of actions results in a requirement that ROCHE or its Affiliates sell
a CHIRON Licensed Product [CONFIDENTIAL TREATMENT REQUESTED], then at the
request of ROCHE, the parties shall meet and reasonably consider greater
adjustment to the Minimum Amount/Test amount with respect to the CHIRON Licensed
Product in that country. No adjustment shall be made to the Minimum Amount/Test
unless mutually agreed or determined pursuant to ADR as provided in this
subparagraph 4(b).
[CONFIDENTIAL TREATMENT REQUESTED]
(c) Within sixty (60) days of the third anniversary of the Effective Date
and every third anniversary thereafter during the Term of this Agreement the
parties shall meet and reasonably consider adjustment to the Minimum Amount/Test
with respect to each CHIRON Licensed Product based on the average price increase
for diagnostics products on an industry-wide basis in each Region over the prior
three-year period; provided that no adjustment shall be made to any Minimum
Amount/Test unless mutually agreed or determined pursuant to ADR as provided in
this subparagraph 4(c), and provided further that [CONFIDENTIAL TREATMENT
REQUESTED].
(d) Minimum Royalties shall be payable quarterly commencing with the
Calendar Quarter ending [CONFIDENTIAL TREATMENT REQUESTED], and shall be
initially due upon [CONFIDENTIAL TREATMENT REQUESTED] and thereafter within
sixty (60) days following the end of each Calendar Quarter. Such payment shall
be accompanied by a report pursuant to Article 4 and shall be fully creditable
against Earned Royalties payable pursuant to paragraph 3 of Exhibit A for the
same Calendar Quarter.
5. SINGLE ROYALTY PER CHIRON LICENSED PRODUCT. Only one payment of Earned
Royalty shall be due with respect to any Net Sales or only one payment of
Minimum Royalty shall be due with respect to any Unit of CHIRON Licensed Product
Shipped, whatever is higher, irrespective of the number of patents or Valid
Claims in the CHIRON Licensed Patents covering such CHIRON Licensed Product.
6. MOST FAVORED LICENSE ADJUSTMENT. In the event after the Effective Date that
CHIRON enters into an [CONFIDENTIAL TREATMENT REQUESTED], CHIRON shall promptly
provide ROCHE a written summary of the applicable royalty terms thereof and,
upon request, true copies of the applicable contract terms (including
definitions and methods of calculating royalty amounts). ROCHE shall have the
[CONFIDENTIAL TREATMENT REQUESTED], only by giving written notice of such
election to CHIRON written sixty (60) days of the receipt by ROCHE of notice
from CHIRON; provided, however, that [CONFIDENTIAL TREATMENT REQUESTED]. For the
avoidance of doubt, [CONFIDENTIAL TREATMENT REQUESTED], but would otherwise
retain all
3
rights to most favored licensee status contained in this Agreement with respect
to other Product Categories and countries.
7. ROYALTY STACKING. If ROCHE's Aggregate Royalty Percentage exceeds
[CONFIDENTIAL TREATMENT REQUESTED] of Net Sales for a CHIRON Licensed Product,
then:
(a) [CONFIDENTIAL TREATMENT REQUESTED]
(b) [CONFIDENTIAL TREATMENT REQUESTED]:
(i) [CONFIDENTIAL TREATMENT REQUESTED]
(ii) [CONFIDENTIAL TREATMENT REQUESTED]
(c) [CONFIDENTIAL TREATMENT REQUESTED].
(d) As utilized herein, "Aggregate Royalty Percentage" shall mean the
[CONFIDENTIAL TREATMENT REQUESTED] as per paragraph 3 of this Exhibit A and the
[CONFIDENTIAL TREATMENT REQUESTED] in [CONFIDENTIAL TREATMENT REQUESTED]
8. DISPUTE RESOLUTION. Any dispute between CHIRON and ROCHE regarding whether
any adjustment to or credits against Earned Royalties or Minimum Royalties under
this Exhibit A is appropriate, and which the parties fail to resolve themselves
may only be resolved by resort to the ADR provisions of Article 10. Until such
dispute is resolved, ROCHE shall pay CHIRON the Earned Royalty or Minimum
Royalty provided for herein without benefit of the applicable disputed
adjustment on the condition that CHIRON shall repay ROCHE the amounts of such
disputed payments if ROCHE prevails in the ADR, plus interest at the rate
described in Section 4.8.
4
EXHIBIT B - HIV
PAGE 1 OF 1
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT C - HIV
PAGE 1 OF 1
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT D
PRODUCT CODES, HIV KITS
MAX
LABELED
DESCRIPTION SAP/PART NO. CAPACITY UNITS CONTROLS
---------------------------------------------------------------------------------
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED[CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED][CONFIDENTIAL TREATMENT REQUESTED] [CONFIDEN
Exhibit D-1
PRODUCT CODES, HIV KITS*:
MAX
LABELED
DESCRIPTION SAP/PART NO. CAPACITY UNITS CONTROLS
---------------------------------------------------------------------------------
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREACONFIDENTCONFIDENTCONFIDENT
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED CONFIDENTIAL TREACONFIDENTCONFIDENTCONFIDENT
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT REQUESTED
*CONFIDENTIAL TREATMENT REQUESTED
[EXHIBIT E - PAGE 1]
HIV PROBES ROYALTY REPORT
REGION _: ___________________
FOR THE QUARTER ENDING ____________
Number Maximum Minimum
of Product Units per Minimum Labeled Royalty Minimum
Product Sold Product Units Amount/Test Capacity Amount Royalty
------- ---- ------- ----- ----------- --------- ------- -------
HIV Quantitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HIV Qualitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
[CONFIDENTIAL TREATMENT REQUESTED]
HIV Genotyping
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HIV Resistance
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
Total
[EXHIBIT E - PAGE 2]
HIV PROBES ROYALTY REPORT
REGION _: ___________________
FOR THE QUARTER ENDING ____________
Earned
Royalty Earned Royalty
Product Sales Deductions Net Sales Rate Royalty Payment Due
------- ----- ---------- --------- ---- ------- -----------
HIV Quantitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HIV Qualitative
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
[CONFIDENTIAL TREATMENT REQUESTED]
HIV Genotyping
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
HIV Resistance
[SKU #1]
[SKU #2]
[SKU #3]
[SKU #4]
---------
Total $0
---------
---------
HIV EXHIBIT F
EXISTING LICENSES OR RIGHTS GRANTED IN THE FIELD UNDER THE LICENSED PATENTS
AS OF THE EFFECTIVE DATE
1. [CONFIDENTIAL TREATMENT REQUESTED]
2. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
3. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
4. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
5. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
6. [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
1
