EXHIBIT 10.43
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMENDMENT NO. 3 TO
AGREEMENT
This Amendment No. 3 ("AMENDMENT NO. 3") is entered effective April 1,
2002 (the "AMENDMENT EFFECTIVE DATE") pursuant to and amending that certain
Agreement (as defined below) between Gen-Probe Incorporated, a Delaware
corporation ("GEN-PROBE") and Chiron Corporation, a Delaware corporation
("CHIRON"), on behalf of itself and its Affiliates. Capitalized terms used but
not defined herein shall have the meanings set forth in the Agreement.
Recitals
A. The parties entered into the Agreement as of June 11, 1998 pursuant to
which, among other things, the parties described their respective rights and
obligations with respect to production planning and inventory management
processes. The Agreement was amended by the following: (i) June 11, 1998
Collaboration Agreement, (ii) June 11, 1998 Supplemental letter agreement, (iii)
June 26, 1998 Addendum to Collaboration Agreement, (iv) June 30, 1998
Supplemental letter agreement, (v) June 30, 1998 Consent, (vi) December 1, 1998
letter agreement re American Red Cross revenues, (vii) December 7, 1999 First
amendment to Collaboration Agreement, (viii) February 1, 2000 Second amendment
to Collaboration Agreement, (ix) June 7, 2001 Supplemental agreement no. 1
(Customer training and Support), (x) October 30, 2001 Confidentiality and Joint
Interest Agreement, (xi) April 4, 2001 Agreement re Arbitration. In addition,
the parties entered into that certain Definitive Written Settlement Agreement
dated December 4, 2001 (the "Settlement Agreement").
B. The parties have discussed a proposed revision to and clarification of
their respective rights and obligations with respect to production planning and
inventory management processes, and have agreed to make certain additional
changes to the Agreement in connection therewith, in accordance with the
provisions of this Amendment No. 3.
C. By this Amendment No. 3, the parties desire to revise and clarify
their respective rights and obligations, as described herein, applicable to all
Blood Screening Assays, including one or more Future Blood Screening Assays to
be conducted by the Blood Screening Instruments to be developed under the terms
of the Agreement.
Agreement
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth in this Amendment No. 3, the parties agree as follows:
1. DEFINITIONS.
1.1 "Agreement" means that certain Agreement entered into as of June
11, 1998 by and between Gen-Probe Incorporated, a Delaware corporation with a
principal place of business at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx XX 00000
and Chiron Corporation, a Delaware corporation, with a place of business at
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000, on behalf of itself and its
Affiliates, as amended by the amendments referenced in Recital A above.
1.2 "Settlement Agreement" means that certain Definitive Written
Settlement Agreement dated December 5, 2001 executed by and between Chiron
Corporation and Gen-Probe Incorporated.
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1.3 "Supplemental Agreement" means that certain Supplemental
Agreement No. 2 dated December 5, 2001 executed by and between Chiron
Corporation and Gen-Probe Incorporated.
1.4 The following definitions shall be added to the Agreement, for
the purpose of the amendments made by this Amendment No. 3, by adding the
following subsections to Section 1 of the Agreement:
"1.60 "Customer" means the Third Party to whom Blood Screening Assays are
sold, transferred or otherwise conveyed by Chiron, its Affiliates or the
Major Distributor.
1.61 "Forecast" means the twelve-month rolling forecast of Chiron's
estimated purchase requirements of Blood Screening Assays over the period
covered by the forecast, as set forth in Section 6.3.1 of the Agreement, as
amended pursuant to this Amendment No. 3.
1.62 "Lot" means each of Gen-Probe's manufacturing lots of Blood Screening
Assays.
1.63 "Purchase Order" means the binding purchase order of Blood Screening
Assays delivered in accordance with the provisions of Section 6.3.3 of the
Agreement, as amended pursuant to this Amendment No. 3."
2. FORECASTS AND ORDERS. Section 6.3 of the Agreement and its
associated subsections are hereby deleted and replaced in their entirety with
the following:
"6.3 Forecasts and Orders.
6.3.1 Forecasts.
(a) On or before the first (1st) day of each calendar month
during the term of this Agreement, Chiron shall provide to Gen-Probe a
Forecast, covering the period commencing the calendar month immediately
succeeding the month in which the Forecast is delivered (for example, on
January 1, Chiron will deliver a rolling twelve (12) month, showing
Chiron's estimated purchase requirements over the period covered by the
Forecast. The Forecast shall include purchase requirements, at the
following level of detail:
(i) for the first (1st), second (2nd) and third (3rd)
calendar months covered by the Forecast, the Forecast shall specify the
Blood Screening Assays by packaging configuration, including kit size
and/or catalogue part number, and associated quantities for purchase from
Gen-Probe by Chiron in such three-month period;
(ii) for the fourth (4th), fifth (5th) and sixth
(6th) calendar months covered by the Forecast, the Forecast shall specify
the Blood Screening Assays and ancillary materials, by labeling requirement
detailed according to the provisions of Schedule A.1, attached hereto, and
associated quantities that Chiron expects to order from Gen-Probe by Chiron
in such period; and
(iii) for the seventh (7th) through twelfth (12th)
calendar months covered by the Forecast, the Forecast shall specify the
estimated purchase requirements, by test, and associated quantities that
Chiron expects to order from Gen-Probe by Chiron in such period.
(iv) Subject to the additional provisions set forth in
subparagraph (v) below, in each Forecast delivered, Chiron may not (A)
amend the quantities of Blood Screening Assays from the quantities
specified for the first (1st), second (2nd) and third (3rd) calendar months
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in the immediately preceding Forecast; (B) amend the quantities of Blood
Screening Assays specified in the Forecast for the fourth (4th), fifth (5th) and
sixth (6th) calendar months in the immediately preceding Forecast to an amount
that is less than [***] nor more than [***] of the amount forecasted when the
month being amended was the sixth (6th) calendar month; (C) amend the quantities
of Blood Screening Assays specified in the Forecast for the seventh (7th)
calendar month in the immediately preceding Forecast as it transitions to the
sixth (6th) calendar month in the delivered Forecast to an amount that is less
than [***] nor more than [***] of the quantity of Blood Screening Assays
specified in the previous Forecast when the month in question was the seventh
(7th) calendar month; or (D) amend the quantities of Blood Screening Assays
specified in the Forecast for the eighth (8th) calendar month in the immediately
preceding Forecast as it transitions to the seventh (7th) calendar month in the
delivered Forecast to an amount that is less than [***] nor more than [***] of
the quantity of Blood Screening Assays specified in the previous Forecast when
the month in question was the eighth (8th) calendar month. For example, on
January 1, Chiron will deliver a Forecast in which February is the first (1st)
calendar month and September is the eighth (8th) calendar month of the Forecast.
If Chiron estimates in such Forecast that in August, the seventh (7th) calendar
month, it will require [***] tests, Chiron may not decrease its Forecast below
[***] tests nor increase it above [***] tests as that month transitions to the
sixth (6th) calendar month in the next Forecast. Similarly, if Chiron estimates
in a Forecast that in September, the eighth (8th) calendar month, it will
require [***] tests, then in the subsequent Forecast Chiron may not decrease its
Forecast below [***] tests nor increase it above [***] tests when that month
transitions to the seventh (7th) calendar month. For purpose of the convenience
of reference hereafter, the Forecast delivered in which the applicable calendar
month is the eighth (8th) month is referred to as the "original Forecast"; and
the quantity as forecast in any subsequent Forecast, amended as permitted under
this Section (i.e. the Forecast delivered in which the applicable month
transitions to the next lower month, such as from the eighth (8th) month to the
seventh (7th)), is referred to as the "amended Forecast."
(v) Notwithstanding the provisions of subparagraph (iv) above, the
parties acknowledge that Gen-Probe incurs substantial expense ramping up
production and otherwise preparing to meet quantities forecasted by Chiron, even
in periods commencing the seventh (7th) calendar month and beyond in the
then-current Forecast. Therefore, the parties agree that Chiron may NOT reduce
the Forecast DOWN under subparagraph (iv)(B) and (C), above, in the aggregate to
an amount that is less than [***] of the highest quantity of Blood Screening
Assays specified in any Forecast. (For example, on January 1, Chiron will
deliver a Forecast in which February 1 is the first (1st) month and September is
the eighth (8th) month of the Forecast. If Chiron estimates in such Forecast
that in September it will require [***] tests, then Chiron may not amend the
Forecast, at any time or in the aggregate, to an amount that is less than [***]
tests deliverable in September. In addition, if, in the subsequent Forecast when
the month in question transitions from the eighth (8th) to the seventh (7th)
month, Chiron increases the Forecast of the month in question from [***] tests
to [***] tests, then Chiron may not amend the Forecast to an amount that is less
than [***] tests deliverable in September (i.e. [***]). Similarly, if in the
next Forecast, when the month in question transitions from the seventh (7th) to
the sixth (6th) month, Chiron further increases the Forecast to [***] tests,
then Chiron may not amend the Forecast to an amount that is less than [***]
tests deliverable in September (i.e. [***]).)
(b) Commencing in the first full month following the Amendment Effective
Date, the parties shall meet monthly, on or before the twenty-second (22nd) day
of each calendar month, to review the previous month's performance and the
current Forecast and production plan
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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for the purpose of making production planning and inventory management
decisions necessary to meet Customer supply needs in a cost-efficient manner.
Such production planning meetings shall be attended by qualified members of
each party, and shall be sponsored by Chiron's Director of Global Supply Chain
Management and Gen-Probe's Vice-President of Manufacturing - Blood Products.
The parties shall implement a standing agenda in the form set forth in Schedule
A.2, attached hereto, and may consider such additional information as is agreed
upon by both parties.
(c) In the event that any disagreement arises between the parties
pursuant to the obligations imposed in this Section 6.3.1, the parties shall
submit such dispute first to a discussion between responsible managers, and if
they cannot agree, then to the Supervisory Board for resolution as soon as is
reasonably achievable. In the event that the Supervisory Board is (i) unable to
resolve the issue at its next meeting, or (ii) is unable or unwilling to meet
within the thirty (30) day period after submittal of the issue to the
Supervisory Board, then the issue shall be referred by the parties for
resolution in accordance with the terms of Article 13 herein.
6.3.2 Purchase Obligation.
(a) Chiron shall be required to purchase, in the respective month,
the quantity of Blood Screening Assays, by part number, specified in each
Forecast for the first (1st), second (2nd) or third (3rd) covered by each
Forecast. If any Forecast fails to conform to with the provisions of Section
6.3.1, considered in the aggregate, then for purposes of determining Chiron's
purchase obligation under this Section 6.3.2(a) such non-conforming Forecast
shall be revised to comply with such provisions of Section 6.3.1.
(b) Notwithstanding anything in this Agreement to the contrary,
the expiration or sooner termination of this Agreement, other than a termination
by Chiron for default of Gen-Probe in accordance with the provisions of Section
11.2.1 and subject to the provisions of Section 15.2 governing force majeure
events, shall not operate to extinguish Chiron's obligation to purchase the
quantity of Blood Screening Assays specified in accordance with Section 6.3.1
through the eighth (8th) calendar month covered by the Forecast in effect as
of the effective date of expiration or sooner termination.
(c) In the event that any disagreement arises between the parties
pursuant to the obligations imposed in this Section 6.3.2, the parties shall
submit such dispute first to a discussion between responsible managers, and if
they cannot agree, then to the Supervisory Board for resolution as soon as is
reasonably achievable. In the event that the Supervisory Board is (i) unable to
resolve the issue at its next meeting, or (ii) is unable or unwilling to meet
within the thirty (30) day period after submittal of the issue to the
Supervisory Board, then the issue shall be referred by the parties for
resolution in accordance with the terms of Article 13 herein.
6.3.3 Purchase Orders.
(a) Chiron shall submit to Gen-Probe a binding Purchase Order on
or before the fifth (5th) day of each calendar month during the term hereof
covering the Blood Screening Assays forecasted by Chiron for the third (3rd)
calendar month covered by the then-current Forecast (for example, on January 5,
Chiron will submit a Purchase Order for Blood Screening Assays to be delivered
in April). Each Purchase Order shall be in writing and reasonably similar to the
sample Purchase Order attached hereto as Schedule A.3. Each Purchase Order shall
specify the quantity of Blood Screening Assays ordered (by packaging
configuration, including kit size and/or catalogue part number), the place of
delivery, the requested delivery date, and such other information as Gen-Probe
reasonably requests. Chiron may not request a delivery date for any Blood
Screening Assays that is less than eighty-five (85) days or more than
ninety-five (95) days after the date of the applicable Purchase Order (for
example, a Purchase Order submitted to
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Gen-Probe on January 5 may only specify a delivery date between the first and
the tenth of April).
(b) Purchase Orders submitted to Gen-Probe by Chiron shall be
binding on Gen-Probe as to that quantity of Blood Screening Assays set forth in
the then-current Forecast for such calendar month. If the quantity of any Blood
Screening Assays ordered by Chiron for any calendar month exceeds the quantity
of such Blood Screening Assays set forth in the then-current Forecast for such
month, then Gen-Probe shall use Commercially Reasonable Efforts to deliver the
amount of Blood Screening Assays in excess of the forecasted amount. Gen-Probe
shall provide Chiron with written notice of the anticipated delivery date for
such additional Blood Screening Assays.
(c) In the event that any Purchase Order received from Chiron
herein fails to order Blood Screening Assays of the types and in the amounts
specified in the then-current Forecast for the applicable calendar month,
Gen-Probe shall have the right to reject such Purchase Order(s). Gen-Probe shall
notify Chiron in writing within ten (10) days of receipt of such Purchase
Order(s). If not rejected by Gen-Probe within ten (10) days of receipt, such
Purchase Order(s) shall be deemed accepted by Gen-Probe. In the event that
Gen-Probe rejects a purchase order Chiron shall have 5 days to correct the
purchase order and resubmit it to Gen-Probe.
(d) In the event that any disagreement arises between the
parties pursuant to the obligations imposed in this Section 6.3.3, the parties
shall submit such dispute first to a discussion between responsible managers,
and if they cannot agree, then to the Supervisory Board for resolution as soon
as is reasonably achievable. In the event that the Supervisory Board is (i)
unable to resolve the issue at its next meeting, or (ii) is unable or unwilling
to meet within the thirty (30) day period after submittal of the issue to the
Supervisory Board, then the issue shall be referred by the parties for
resolution in accordance with the terms of Article 13 herein.
(e) In the event of a conflict between the terms and conditions
of any Purchase Order and this Agreement, the terms and conditions of this
Agreement shall prevail.
6.3.4 Inventory.
(a) The parties agree that the amount of inventory sufficient to
ensure uninterrupted testing by Customers in the event of a disruption of supply
of Blood Screening Assays from Gen-Probe is a minimum of (5) months' forward
demand for such Blood Screening Assays, as determined by the most current
Forecast. Accordingly, Chiron shall purchase and maintain a minimum of a five
(5) months inventory of Blood Screening Assays based on the latest Chiron
Forecast. The five (5) months inventory will be maintained at Chiron's
warehousing facilities (which facilities are set forth in Schedule A.4 attached
hereto). As Chiron develops greater visibility of customer inventory, Chiron has
the right to reduce its inventory by including the inventory held at the
customer sites. However, Chiron must ensure that the inventory level held by
Chiron (taking into account up to (5) months' inventory that Chiron can show is
held by each customer) is sufficient to always supply each customer with a
minimum of 5 months' supply. Prior to reducing their inventory, Chiron must
submit their inventory plan to the Supervisory Board for review and approval.
(b) Notwithstanding the foregoing, Gen-Probe shall maintain
sufficient inventory of raw materials and work in progress as necessary to meet
the production requirements for Chiron's commitments for the first through
eighth months of Chiron's most current Forecast.
(c) Each party shall give an independent certified public
accounting firm selected by the other party access to the applicable records
(and the applicable records of any Affiliate or Major Distributor) for the
purpose of permitting the audit, at the auditing party's
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expense and in accordance with Section 7.3 of this Agreement, of compliance
with this Section 6.3.4.
6.3.5 Supply Obligation.
(a) Gen-Probe shall be required to supply in any given month the
quantity of Blood Screening Assays ordered by Chiron pursuant to a Purchase
Order as to that quantity of Blood Screening Assays set forth in the
then-current Forecast for such month, as the forecasted demand may be amended as
permitted in Section 6.3.1(a)(iv) above. If Gen-Probe becomes aware of any fact
indicating that Gen-Probe may be unable to meet Chiron's forecasted demand as
specified in the original Forecast as to any Blood Screening Assay or indicating
that Gen-Probe may be unable to meet Chiron's forecasted demand as specified in
an amended Forecast permitted under Section 6.3.1(a)(iv), Gen-Probe shall
promptly provide written notice of such fact to Chiron's Director of Global
Supply Chain Management and Gen-Probe's Vice-President of Manufacturing - Blood
Products. Chiron's Director of Global Supply Chain Management and Gen-Probe's
Vice-President of Manufacturing - Blood Products shall meet and attempt to agree
upon a resolution, including exploring ways to meet such increased demand. If
the parties cannot agree on such a resolution, then the issue will be referred
to the Supervisory Board for resolution no later than the latter of (i) thirty
(30) days after such referral, or (ii) the next regularly scheduled Supervisory
Board meeting. If the Supervisory Board fails to resolve the issue, the parties
may invoke the provisions of Article 13 herein. The failure of Gen-Probe to
supply that quantity of Blood Screening Assays in a Chiron Purchase Order in
excess of Chiron's forecasted demand as specified in the then-current Forecast
or amended Forecast, as permitted under Section 6.3.1(a)(iv) for such month,
shall not trigger the Chiron manufacturing rights set forth in Section 3.2.4(b)
of the Agreement.
(b) Gen-Probe shall ensure that the expiration date for Blood
Screening Assays supplied to Chiron shall be no earlier than (i) eleven (11)
months after the date of delivery into warehouse inventory if designated for
export; and (ii) eight (8) months after the date of delivery into warehouse
inventory if designated for delivery in the United States. This provision only
applies to Lots of Blood Screening Assays manufactured after the Amendment
Effective Date (i.e., Lot 13 and beyond).
(c) The minimum expiration dating requirement set forth in Section
6.3.5(b) exclude controls, [***] and [***]. The parties will set dating
requirements for these products on or prior to June 30, 2002.
6.3.6 Warehouse/Distribution Support for Order Processing. During the term
that Gen-Probe provides warehousing support under Section 6.4.4 of this
Agreement, Gen-Probe will provide reasonable staff support to Chiron, such staff
to be responsible for order packing and processing in connection with the sales
of Blood Screening Assays by Chiron. As of the Amendment Effective Date, such
support is estimated to be [***]. Changes to the number of Gen-Probe full-time
equivalent employees necessary to support order packing and processing shall
have no effect on this Agreement, but Gen-Probe will give Chiron reasonable
notice of such changes. Such employee(s) shall be responsible for (i) completing
order processing (including order packing and confirmations of shipment to
Chiron), (ii) maintaining files for special customer requirements, if any, and a
history of shipments for Chiron, (iii) maintaining familiarity with part numbers
and master lot requirements for Blood Screening Assays, and (iv) communicating
regularly with Chiron on Purchase Orders and shipments, recording/reporting
status of shipments, problem fact finding, and resolution of order and/or
shipment problems."
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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3. DELIVERY. Section 6.4.1 of the Agreement is hereby deleted and
replaced in its entirety by the following:
"6.4.1 Delivery.
(a) For so long as Gen-Probe provides the warehousing
support under Section 6.4.4, all Blood Screening Assays purchased by Chiron
under this Agreement shall be transferred to the warehouse location more
particularly described in Section 6.4.4 without shipping charges to Chiron.
Chiron shall be responsible for the cost of shipment out of such warehouse
facility to any other location, including to Chiron Customers.
(b) At such time as Gen-Probe no longer provides the
warehousing support under Section 6.4.4, all Blood Screening Assays
purchased by Chiron under this Agreement shall be shipped f.o.b. place of
manufacture to such location as designated by Chiron in the applicable
Purchase Order. Chiron shall have the right to select the carrier.
(c) Chiron shall be responsible for all freight, insurance
charges, taxes, import and export duties, inspection fees and other charges
applicable to the sale and transport of Blood Screening Assays purchased by
Chiron (i) for transfer out of the warehouse to Customers, during the
period that Gen-Probe provides the warehousing support under Section 6.4.4
and (ii) to such location designated by Chiron in the applicable Purchase
Order, at such time as Gen-Probe no longer provides the warehousing support
under Section 6.4.4. Gen-Probe shall, to the extent possible, charge such
expenses to Chiron's carrier accounts or pre-pay such charges. When
Gen-Probe pre-pays such charges, it shall invoice such charges to Chiron in
reasonable detail, specifying the Blood Screening Assays to which such
charges apply. Chiron shall pay all such invoices within thirty (30) days
of date of invoice.
(d) When Blood Screening Assays are shipped from the
Gen-Probe warehouse, the dry ice fee of [***] for each shipping box
containing frozen material is a freight charge to be prepaid by Gen-Probe,
and for which Gen-Probe shall invoice Chiron. The dry ice fee, as well as
the other charges enumerated in Sections 6.4.1(a) and (c) above shall be
deducted from the gross sales price of Blood Screening Assays as set forth
in Section 1.46 herein."
4. WAREHOUSING. The following new Section 6.4.4 is hereby added to the
end of Section 6.4 of the Agreement:
"6.4.4 Warehousing.
(a) Gen-Probe shall provide warehouse capability for Blood
Screening Assays after sale to Chiron, in accordance with the provisions of
this Section 6.4.4. Chiron may notify Gen-Probe in writing at any time
after June 30, 2002 or earlier upon the breach by Gen-Probe of any of its
obligations under this Section 6.4.4, of its intention to assume the
warehousing function internally. Such notice shall indicate a date not less
than 30 days after the date of such notice on which Chiron will assume the
warehousing function. Gen-Probe may notify Chiron in writing on or before
November 1 of any year during the term hereof of its decision to terminate
its provision of the warehouse capabilities described in this Section 6.4.4
and inventory management described in Section 6.4.5, effective January 1 of
the immediately succeeding year."
(b) Gen-Probe shall provide adequate warehouse storage at
its Willow Court facility for all Blood Screening Assays purchased by
Chiron prior to delivery of such Blood Screening Assays to Chiron or
Chiron's Customer. Such storage services shall include, as applicable based
on the type of Blood Screening Assay, frozen, refrigerated, and ambient
physical storage space. Gen-Probe shall maintain appropriate safety and
security systems for such storage
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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space, including monitoring of frozen and cold facilities and providing
appropriate backup systems, in accordance with applicable state and federal
regulations.
(c) Gen-Probe shall maintain frozen inventoried Blood Screening
Assays in core-packs, unless otherwise agreed by the parties in writing.
(d) During the period in which Gen-Probe is providing warehousing
storage services to Chiron under this Section 6.4.4, Gen-Probe shall segregate,
as appropriate, any Blood Screening Assays being warehoused for Chiron pursuant
to this Section 6.4.4 and identify such Blood Screening Assays as Chiron's
property. Except as otherwise permitted in this Agreement, Gen-Probe shall not,
and shall not permit any third party to, sell, assign, pledge, encumber,
dispose of, or suffer a lien or encumbrance upon or against any interest in the
Blood Screening Assays held by Gen-Probe pursuant to this Section 6.4.4.
(e) Gen-Probe shall provide Chiron with information regarding all
transfers to Chiron, and Chiron shall track and maintain inventory in Chiron's
accounting system for all Blood Screening Assays held by Gen-Probe under this
Section 6.4.4. The parties shall cooperate in good faith in the performance of
a periodic inventory reconciliation between Chiron's records and a physical
count to be conducted on all Blood Screening Assays held by Gen-Probe pursuant
to this Section 6.4.4. Such reconciliation shall be conducted once every other
month, unless otherwise agreed to by the parties in writing. In the event that
such reconciliation identifies discrepancies, the parties shall investigate in
good faith the cause of such discrepancies. Each party shall rectify, at its
expense, any discrepancies identified which result from such party's failure to
act in accordance with the terms of this Agreement or reasonable business
practices. If a discrepancy cannot be attributed to either party, then
Gen-Probe shall rectify such discrepancy at its expense.
(f) For so long as Gen-Probe provides warehousing support under this
Section 6.4.4 and for as long thereafter as necessary to cover claims
resulting from such warehousing support, Chiron shall maintain: (1) product
liability and general commercial liability insurance having a limit of not less
than [***]; and (2) property damage insurance at replacement value for the
Blood Screening Assays located at Gen-Probe's warehousing facility, pursuant to
one or more insurance policies with reputable insurance carriers. Chiron
hereby waives subrogation for the benefit of Gen-Probe with respect to the
physical loss of such Blood Screening Assays, except for losses due to the
negligence of Gen-Probe or a breach of Gen-Probe's obligations under this
Section 6.4.4. Chiron shall not cause or permit such insurance to be cancelled
or modified to materially reduce its scope or limits of coverage for so long as
Gen-Probe is providing warehousing support described in Section 6.4.4 or
thereafter as provided above.
(g) For so long as Gen-Probe provides warehousing support under this
Section 6.4.4 and for so long thereafter as necessary to cover claims resulting
from such warehousing support, Gen-Probe shall maintain commercial general
liability insurance in the amount of [***], including bailee's legal liability,
and Chiron shall be designated as an "additional insured" as respects its
rights under this Section 6.4.4. Gen-Probe shall maintain such other types of
insurance, with appropriate limits of liability, that are usual and customary
for the nature of Gen-Probe's warehousing operations pursuant to this Section
6.4.4. Gen-Probe shall not cause or permit such insurance to be cancelled or
modified to materially reduce its scope or limits of coverage for so long as
Gen-Probe is providing warehousing support described in Section 6.4.4 or
thereafter as provided above.
(h) Chiron shall be permitted reasonable access to Blood Screening
Assays held by Gen-Probe pursuant to this Section 6.4.4 during Gen-Probe's
normal business hours and upon reasonable notice to Gen-Probe. Chiron shall
retain the right to remove from Gen-Probe's
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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warehouse facility all or any portion of the Blood Screening Assays held by
Gen-Probe pursuant to this Section 6.4.4, upon reasonable advance notice to
Gen-Probe.
(i) Gen-Probe shall have the right to require Chiron to
dispose of, or otherwise remove from Gen-Probe's warehousing facility, any
and all Blood Screening Assays stored by Gen-Probe pursuant to this
Section 6.4.4 of which the expiration date has passed.
(j) Except for any losses resulting from the negligence of
Gen-Probe or a breach of Gen-Probe's obligations under this Section 6.4.4,
Chiron shall bear all risk of loss or damage with respect to the Blood
Screening Assays once purchased by Chiron, whether located at Gen-Probe's
warehousing facility or elsewhere.
(k) Gen-probe agreed in Supplemental Agreement to provide the
warehouse capabilities described in this Section 6.4.4 and inventory management
described in Section 6.4.5 for a period commencing on January 1, 2001 through
December 31, 2001, and further agreed in the Settlement Agreement to extend the
provision of those services through December 31, 2002, subject to the right of
Gen-Probe to increase the charge for those services as limited by the CPI
described in Section 6.4.5(e).
5. INSURANCE CERTIFICATES.
5.1 Unless previously provided to Gen-Probe by Chiron, concurrent
with the execution of this Amendment No. 3, Chiron shall deliver to Gen-Probe
certificates evidencing the insurance referred to in Section 6.4.4(g) of the
Agreement, as amended by this Amendment No. 3.
5.2 Unless previously provided to Chiron by Gen-Probe, concurrent
with the execution of this Amendment No. 3, Gen-Probe shall deliver to Chiron
certificates evidencing the insurance referred to in Section 6.4.4(h) of the
Agreement, as amended by this Amendment No. 3.
6. INVENTORY MANAGEMENT. The following new Section 6.4.5 is hereby added
to the end of Section 6.4, following newly added Section 6.4.4:
"6.4.5 Inventory Management: For so long as Gen-Probe is providing
the warehousing support services described under Section 6.4.4, the
following additional provisions shall apply:
(a) Gen-Probe will provide necessary staff support to Chiron,
such staff to be responsible, as described below, for inventory management
and shipping of Blood Screening Assays from Gen-Probe's San Diego
facilities as required under this Agreement. As of the Amendment Effective
Date, such necessary staff is estimated to be [***] employees. Changes in
the number of full-time equivalent employees necessary to support
inventory management shall have no effect on this Agreement, but Gen-Probe
will give Chiron reasonable notice of such changes.
(b) Gen-Probe shall, through the services of the support staff
designated under Section 6.4.5(a) above, provide the following services to
Chiron:
(i) Inventory management of all inventory, including
reagents, Blood Screening Instruments and parts, packing and shipping
materials, etc.;
(ii) Packing of kitted components, including
verification of all kitted components to work order, transfer of kitted
components into shipping containers, application of dry ice, gel packs,
etc. as required and final assembly and quality control of shipping
containers;
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
9
(iii) Arrangement of and handling transfer to freight
forwarders of all shipments of reagents, ancillaries (TTU, TTC, sealing cards,
etc.) and Blood Screening Instruments, using Chiron's carrier accounts for
freight charges;
(iv) Entry of all appropriate system transactions to
process shipments, including material issue transactions, printing and
application of shipping labels and packing slips;
(v) Completion of shipping paperwork, including freight
bills and/or SLI's, dangerous goods forms and maintenance of records; and
(vi) Interaction with carriers, including pre-arranging
pick-ups, faxing of paperwork to carriers and Chiron to reserve appropriate
space on flights, loading carrier upon arrival, forwarding all paperwork to
appropriate finance and record-keeping personnel, performing any post-shipment
follow-up to ensure timely delivery, informing interested parties of results,
and investigating any post-shipment problems such as flight delays, orders
canceled prior to pick-up, product returns, etc.
(c) Gen-Probe will be responsible for arranging direct shipments
to Customers located in the United States. With respect to shipments outside the
United States, Gen-Probe shall only be responsible for arranging shipments to
Chiron's primary foreign distribution points (where such Chiron distribution
points exist), not to exceed one such distribution point per country.
(d) When Chiron desires that Blood Screening Assays be shipped
to a Customer out of Chiron's inventory held by Gen-Probe under Section 6.4.4,
Chiron will provide Gen-Probe with a shipping request. Each shipping request
shall be in writing and in a form mutually agreeable to Chiron and Gen-Probe.
Gen-Probe will use Commercially Reasonable Efforts to ship Blood Screening
Assays so that the Blood Screening Assays will arrive at the designated Customer
location by the delivery date set forth in such request, at Chiron's expense.
Gen-Probe will give special attention to emergency orders, but shall not be in
breach of such obligation if Gen-Probe has used Commercially Reasonable Efforts
to expedite shipment for such emergency orders.
(e) Chiron shall pay to Gen-Probe a monthly fee of [***] for the
warehousing services rendered by Gen-Probe pursuant to Section 6.4.4 and the
inventory management services described in this Section 6.4.5. Gen-Probe shall
have the right to invoice Chiron, and payment to Chiron will be due on the fifth
(5th) day of each month. Gen-Probe shall have the right to increase such monthly
fee once in each twelve month period, provided, that (i) the increase for the
period January 1 through December 31, 2002 shall not exceed an amount equal to
[***] multiplied by a fraction (1) the numerator of which is the index number in
the Consumer Price Index for the Standard Metropolitan Statistical Area (or
equivalent) that then includes San Diego, California, as published by the U.S.
Department of Labor or other authoritative federal government agency, for
October 1, 2001 and (2) the denominator of which is said index number for
October 1, 2001 and (ii) increases in such monthly fees for periods subsequent
to December 31, 2002 shall be limited in this same fashion. Payments that are
past-due under this Section shall bear a late payment charge at the lesser of
the London Interbank Offered Rate (LIBOR) or the highest rate permitted by
applicable law."
(f) Promptly following any termination of the provisions of
warehousing support services described under Section 6.4.4, the parties will
meet to consider the reduced inventory management, packing and shipping needs of
Chiron, and amend this Section 6.4.5 accordingly."
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
10
7. SAFETY STOCKS. Section 6.12 (Safety Stocks) is hereby deleted and
replaced, in its entirety, as follows:
"6.12 Safety Stocks.
(a) The Supervisory Board will from time-to-time review and
establish the appropriate level of Safety Stocks for the Blood Screening
Assays. The parties agree that the appropriate level of Safety Stock for
the Initial Blood Screening Assay as of the Amendment Effective Date is
reflected in the five month inventory requirement described in Section
6.3.4 above.
(b) With respect to any Initial Blood Screening Assay or Future
Blood Screening Assay, the objective of the parties is to share equally the
aggregate cost of maintaining safety stocks of raw components, work in
progress, and finished goods as required by CBER."
8. SCOPE OF AMENDMENT NO. 3. The parties hereto agree that the
Forecasts and Orders provisions set forth in Section 2 of this Amendment No. 3
address the rights and obligations of each party with respect to Lot 13 and
subsequent Lots. Except as expressly stated herein, nothing in Section 2 of this
Amendment No. 3 shall apply in any respect to the rights or obligations of the
parties with respect to Lots 1-12. Accordingly, and for ease of implementation,
the parties agree that the Forecast and Orders provisions set forth in Section 2
will apply commencing with and applying to the Forecast due April 1, 2002 from
Chiron (covering the 12 months ending April 30, 2003). Notwithstanding the
above, the Order Processing provisions of new Section 6.3.6 shall govern the
rights and obligations of each party from and after the Amendment Effective
Date. Except as set forth in this Section 8, from and after the Amendment
Effective Date, this Amendment No. 3 shall apply in all respects to the
Agreement.
9. LIMITED TERMS APPLICABLE TO [***]. The parties agree to equally share
the "variable manufacturing cost" of those portions of [***] held in inventory
by Gen-Probe and Chiron that are unsold, not retained for R&D or other internal
purpose by either party and scrapped due to product expiration, net of the
aggregate purchase price previously paid by Chiron to Gen-Probe for expired
units held in Chiron's inventory. For the purpose of this Amendment No. 3, [***]
will be used as the "variable manufacturing cost" to value scrap material. To
the extent necessary to avoid product outdating and if requested by Chiron,
Gen-Probe agrees to re-label, at Gen-Probe's expense and in accordance with all
international and domestic labeling requirements, such Blood Screening Assays in
[***] that may be relabeled with twenty-four (24) expiration dates.
10. EFFECT OF AMENDMENT NO. 3 ON SUPPLEMENTAL AGREEMENT. As of the
Amendment Effective Date, the Supplemental Agreement shall terminate in all
respects. Each party's obligations under such Supplemental Agreement shall
terminate as of such date; provided, however, that such termination shall not
act to bar claims under the terms of the Supplemental Agreement that arose
prior to such Amendment Effective Date.
11. NO OTHER AMENDMENT. Except as expressly set forth in this Amendment No.
3, all other terms and conditions of the Agreement and the Settlement Agreement
are hereby ratified and shall continue in full force and effect.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
11
12. COUNTERPARTS. This Amendment No. 3 may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to be
executed as of April 1, 2002 and the persons signing below warrant that they
are duly authorized to sign for and on behalf of the respective parties.
Gen-Probe: Chiron:
GEN-PROBE INCORPORATED, CHIRON CORPORATION
a Delaware corporation a Delaware corporation
By /s/ XXXXX X. XXXXXXXX By /s/ XXXXXXX X. XXXXX
----------------------------------- -----------------------------------
Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxx
President and Chief Executive Officer Senior Vice President and
President, Blood Testing
[SEAL]
12
Schedule A.1
Labeling Requirements
PART
NUMBER DESCRIPTION LABEL OPTIONS
------ ----------- -------------
[***]
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
SCHEDULE A.2
Standing Agenda for Production Planning Meetings
Purpose:
Review Forecast and production plan and make the appropriate production
planning and inventory management decisions to meet Customer supply needs in a
cost efficient manner.
Agenda:
- Review previous month performance
- Shipments
- Inventory
- Production
- Delivery
- Review current Forecast and production plan
- [***]
- Timing/feasibility for next production?
- "What If analysis" - Risk and risk management discussion
- Outstanding issues [***]
- Review Plan and Key Decisions.
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Schedule A.3
Sample Purchase Order
------------------------
PURCHASE ORDER SUPPLIER:
------------------------ GEN-PROBE INCORPORATED CHIRON
P.O.# 45059813 00000 XXXXXXX XXXXXX XXXXX
Order Date: 21-May-2002 XXX XXXXX XX 00000
Buyer: Xxxx Xxxxxxxx
Phone #: 000-000-0000 Vendor Contact: XXXXXX XXXXXX
Fax #: 000-000-0000 Phone #: 000-000-0000
Fax #: 000-000-0000
------------------------
A copy of this purchase order was faxed to Xxxxxx Xxxxxx at Gen-Probe.
Equal Opportunity Contract Clause (EOC)
Chiron Corporation is committed to the provisions outlined
in the Equal Opportunity Clauses of Executive Order 11246,
(60-1.4), Section 503 of the Rehabilitation Act of 1973,
(60-741.5), and, Section 402 of the Vietnam Veterans
Readjustment Act of 1974, (60-250.4), As well as any other ----------
regulations pertaining to these orders. SAMPLE
----------
Please fax a copy of the packing list to Xxxxx Xxxxx at Chiron Corp at 000-000-0000.
-----------------------------------------------------------------------------------------------------
Item # QTY/UOM Chiron Mat# Price Extended Price
Vendor Mat#
Material Description
-----------------------------------------------------------------------------------------------------
1 170 EA [***] [***] per EA [***]
301030-PROCLEIX (TM), 5000 IVD TEST KIT
[***]
[***]
2 35 EA [***] [***] per EA [***]
301031
301031-PROCLEIX (TM), 1000 IVD TEST KIT
[***]
[***]
3 885 EA [***] [***] per EA [***]
301027-PROCLEIX (TM), ASSAY FLUIDS, IVD
[***]
[***]
4 443 EA [***] [***] per EA [***]
301038-PROCLEIX (TM), AUTO DETECT, IVD
[***]
[***]
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 1 of 3
------------------------
PURCHASE ORDER SUPPLIER:
------------------------ GEN-PROBE INCORPORATED CHIRON
P.O.# 45059813 00000 XXXXXXX XXXXXX XXXXX
Order Date: 21-May-2002 XXX XXXXX XX 00000
Buyer: Xxxx Xxxxxxxx
Phone #: 000-000-0000 Vendor Contact: XXXXXX XXXXXX
Fax #: 000-000-0000 Phone #: 000-000-0000
Fax #: 000-000-0000
------------------------
----------
SAMPLE
----------
-----------------------------------------------------------------------------------------------------
Item # QTY/UOM Chiron Mat# Price Extended Price
Vendor Mat#
Material Description
-----------------------------------------------------------------------------------------------------
5 575 EA [***] [***] per EA [***]
301026-PROCLEIX (TM), DISCR PROBE, IVD
[***]
6 60 EA [***] [***] per EA [***]
301036
000000-XXXXXXXX (XX),XXX-0/XXX XXXXX,XXX
[***]
7 465 EA [***] [***] per EA [***]
301035
301035-PROCLEIX (TM),HIV-1/HCV CONTR,IVD
[***]
8 50 EA [***] [***] per EA [***]
301034
301034-PROCLEIX (TM), PROF PANELS, IVD
[***]
9 885 CAS [***] [***] per CAS [***]
GP
TU0022-TEN TUBE UNIT (TTU), ESAS
[***]
10 885 CAS [***] [***] per CAS [***]
GP
104578-TEN TUBE CASSETTE (TTC)
[***]
11 7,630 CAS [***] [***] per CAS [***]
GP
102085-SEALING CARDS (35/PKG)
[***]
12 38 EA [***] [***] per EA [***]
[***]
[***]
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 2 of 3
------------------------
PURCHASE ORDER SUPPLIER:
------------------------ GEN-PROBE INCORPORATED CHIRON
P.O.# 45059813 00000 XXXXXXX XXXXXX XXXXX
Order Date: 21-May-2002 XXX XXXXX XX 00000
Buyer: Xxxx Xxxxxxxx
Phone #: 000-000-0000 Vendor Contact: XXXXXX XXXXXX
Fax #: 000-000-0000 Phone #: 000-000-0000
Fax #: 000-000-0000
------------------------
----------
SAMPLE
----------
-----------------------------------------------------------------------------------------------------
Item # QTY/UOM Chiron Mat# Price Extended Price
Vendor Mat#
Material Description
-----------------------------------------------------------------------------------------------------
DELIVERY DATE: [***]
-----------------------------------------------------------------------------------------------------
TOTAL NET ITEM VALUE EXCLUDING TAX [***] USD
Free on board SHIPPING POINT
Payment Terms: Within 30 days Due net
REMIT TO: DELIVER TO:
Chiron Corporation Chiron Warehouse
Accounts Payable Department C/O Gen-Probe Incorporated
0000 Xxxxxx Xxxxxx 00000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxx Xxxxx, XX 00000
Attn: P.O.#45059813 Attn: P.O.# 45059813
Supplier Confirmation By: For Chiron Corp. By:
(If Requested) ----------------------------- -----------------------------
Authorized Agent, Title, Date Authorized Agent, Title, Date
***Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
Page 3 of 3
Schedule A.4
List of Warehousing Facilities
Gen-Probe Incorporated
00000 Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxxx
BOMI France Snc
Rue de la Maison Rouge
Parc d'activities Xxxxx Xxxx
00000 Xxxxxx
Xxxxxx
Dade Berhring Diagnostics Pty Ltd
Xxxxx Xxxx 00-00
0000 Xxxx Xxxx
Xxx Xxxxx Xxxxx, Xxxxxxxxx
