***CONFIDENTIAL TREATMENT REQUESTED***
EXHIBIT 10.311
CROSS-LICENSE AGREEMENT
This Cross-License Agreement, (this "Agreement") is made, effective as of the
Effective Date, as defined below, by and between Chiron Corporation, a Delaware
corporation ("Chiron"), and Chiron Diagnostics Corporation, a Delaware
corporation ("CDC").
BACKGROUND
1. Chiron and Bayer Corporation, an Indiana corporation ("Purchaser"), have
entered into that certain Stock Purchase Agreement dated as of September 17,
1998 (the "Stock Purchase Agreement"), pursuant to which Purchaser is acquiring
the stock of CDC, effective on the Closing, as defined in the Stock Purchase
Agreement (such time referred to herein as the "Effective Date"). Pursuant to
the Stock Purchase Agreement, Chiron and CDC have further entered into that
certain Asset Transfer Agreement (the "Asset Transfer Agreement"), pursuant to
which, prior to the Closing, Chiron will transfer to CDC certain assets of
Chiron. Also pursuant to the Asset Transfer Agreement, prior to the Closing, CDC
will transfer to Chiron certain assets of CDC. Chiron and CDC each wish to
grant licenses to the other under certain patent rights and know-how which will
be owned by the licensing party after giving effect to the Asset Transfer
Agreement, all as further described below.
2. Chiron currently owns or controls certain patent rights relating to
hepatitis C virus ("HCV") and human immunodeficiency virus ("HIV"), and after
giving effect to the Asset Transfer Agreement, Chiron will own or control
certain patent rights theretofore owned or controlled by CDC relating to each of
HCV and HIV. Upon the Effective Date, Chiron is willing to grant licenses to
CDC under certain patent rights relating to each of HCV and HIV for use in
nucleic acid probe assays for in vitro diagnostics (excluding use in Blood
Screening, as defined below), all on the terms and conditions set forth herein.
3. Chiron currently owns or controls certain patent rights other than those
related to HCV or HIV, and after giving effect to the Asset Transfer Agreement,
Chiron will own or control certain patent rights theretofore owned or controlled
by CDC other than those related to HCV and HIV. Upon the Effective Date, Chiron
is willing to grant certain licenses to CDC under such patent rights, all on the
terms and conditions set forth herein.
4. CDC currently owns or controls certain patent rights, and after giving
effect to the Asset Transfer Agreement, CDC will own or control certain patent
rights theretofore owned or controlled by Chiron. Upon the Effective Date, CDC
is willing to grant certain licenses to Chiron under all such patent rights, all
on the terms and conditions set forth herein.
5. Each party is willing to grant to the other certain licenses under
certain know-how, all on the terms and conditions set forth herein.
1
AGREEMENT
NOW, THEREFORE, in consideration of the above provisions and the mutual
covenants contained herein, the parties agree as follows:
1. DEFINITIONS
Capitalized terms not defined in this Agreement shall have the meanings set
forth in the Stock Purchase Agreement. The following defined terms shall have
the meanings set forth below:
1.1 "AFFILIATE" shall mean 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, and (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 (other than Chiron and any of its direct or indirect subsidiaries).
For clarity of understanding, following the Effective Date, Affiliates of CDC
shall mean Purchaser and its Affiliates.
1.2 "ANCILLARY AGREEMENTS" shall have the meaning set forth in the
Stock Purchase Agreement.
1.3 "BLOOD SCREENING" shall mean (i) the screening of blood, plasma or
blood components intended for transfusion or for use in blood products (e.g.,
immunoglobulins), and (ii) the screening of any biological materials intended
for transfusion or transplantation, in each case from any donor, including
autologous donors.
1.4 "CDC HCV/HIV PROBE PRODUCT" shall mean a Probe IVD Product which
is researched, developed, manufactured, used or sold by CDC, a CDC Affiliate or
a permitted sublicensee of CDC, under circumstances which would, in the absence
of the licenses granted under Section 2.1, constitute an infringement of a Valid
Claim of a Chiron HCV/HIV Patent.
1.5 "CDC KNOW-HOW" shall mean all Know-How which is owned or
controlled by CDC or the Subsidiaries, as of the Effective Date, after giving
effect to the Asset Transfer Agreement, except for Know-How which CDC is
prohibited from licensing to Chiron hereunder pursuant to third party agreements
binding on CDC as of the Effective Date.
1.6 "CDC NON-HCV/HIV PRODUCT" shall mean an IVD Product (i) which is
researched, developed, manufactured, used or sold by or on behalf of CDC, a CDC
Affiliate or a permitted sublicensee of CDC, under circumstances which would, in
the absence of the licenses granted under Section 2.2, constitute an
infringement of a Valid Claim of a Chiron Non-HCV/HIV Patent, and (ii) which
does not infringe a Valid Claim of a Chiron HCV/HIV Patent.
2
1.7 "CDC PATENT" shall mean (i) any patent or patent application (or
any patent issued thereon) which is within Included Company Patents or
Transferred Chiron Patents, and any divisions, extensions, renewals, reissues,
reexamination certificates and continuations of such patents and patent
applications; or (ii) any invention which is the subject of a patent application
filed by CDC or its then Affiliates, or a written invention disclosure received
by CDC or its then Affiliates from a person obligated to assign inventions to
CDC or its then Affiliates, in each case within [CONFIDENTIAL TREATMENT
REQUESTED] following the Effective Date, which falls within the scope of the
claims of any Included Company Patent, Transferred Chiron Patent, a patent or
patent application referenced in Schedule 1.7(a) of the Stock Purchase
Agreement, an Excluded Chiron Patent or a Transferred Company Patent, together
with any patent applications claiming such invention (or any patent issued
thereon) and any divisions, extensions, renewals, reissues, reexamination
certificates and continuations thereof; or (iii) any CDC Sublicensable Patent as
to which Chiron has elected, pursuant to Section 2.6, to take a sublicense.
1.8 "CDC SUBLICENSABLE PATENT" shall mean any patent or patent
application (i) which is licensed to CDC or the Subsidiaries by a third party as
of the Effective Date; or which is licensed to Chiron or any Other Chiron
Affiliate by a third party under a license agreement which is assigned to CDC
pursuant to the Asset Transfer Agreement; and (ii) as to which CDC has the right
to grant a sublicense to Chiron.
1.9 "CHIRON HCV/HIV PATENT" shall mean (i) any patent or patent
application (or any patent issued thereon) listed in Schedule 1.7(a) of the
Stock Purchase Agreement, and any divisions, extensions, renewals, reissues,
reexamination certificates and continuations of such patents and patent
applications; or (ii) any invention which is the subject of a patent application
filed by Chiron or its Affiliates, or a written invention disclosure received by
Chiron or its then Affiliates from a person obligated to assign inventions to
Chiron or its then Affiliates, in each case within the [CONFIDENTIAL TREATMENT
REQUESTED] following the Effective Date, which falls within the scope of the
claims of a patent or patent application listed in Schedule 1.7(a) of the Stock
Purchase Agreement, together with any patent applications claiming such
invention (or any patent issued thereon) and any divisions, extensions,
renewals, reissues, reexamination certificates and continuations thereof; or
(iii) any Chiron Sublicensable Patent with respect to HCV or HIV as to which CDC
has elected, pursuant to Section 2.5, to take a sublicense.
1.10 "CHIRON IVD KNOW-HOW" means that Know-How which is owned or
controlled by Chiron or any Other Chiron Affiliate, as of the Effective Date,
after giving effect to the Asset Transfer Agreement, which relates to the
Included Businesses, except for Know-How which Chiron is prohibited from
licensing to CDC hereunder pursuant to third party agreements binding on Chiron
as of the Effective Date.
1.11 "CHIRON NON-HCV/HIV PATENT" shall mean (i) any patent or patent
application (or any patent issued thereon) which is within Excluded Chiron
Patents, and any divisions, extensions, renewals, reissues, reexamination
certificates and continuations of such patents and patent applications; or (ii)
any invention which is the subject of a patent application filed by Chiron or
its Affiliates, or a written invention disclosure received by Chiron or its
Affiliates from a person obligated to assign inventions to Chiron or its
Affiliates, in each case within the [CONFIDENTIAL TREATMENT REQUESTED] following
the Effective Date, which falls
3
within the scope of the claims of any Included Company Patent, Transferred
Company Patent, Excluded Chiron Patent or Transferred Chiron Patent, together
with any patent applications claiming such invention (or any patent issued
thereon) and any divisions, extensions, renewals, reissues, reexamination
certificates and continuations thereof; or (iii) any Chiron Sublicensable Patent
other than those with respect to HCV or HIV, as to which CDC has elected,
pursuant to Section 2.5, to take a sublicense.
1.12 "CHIRON SUBLICENSABLE PATENT" shall mean a patent or patent
application which is subject to a license agreement identified as an Excluded
Chiron License, or a Transferred Company License, or any other license agreement
covering patents or patent applications which are used in Products or Products
In Development as of the Effective Date, in each case, as to which Chiron has
the right to grant a sublicense to CDC.
1.13 "INFORMATICS PRODUCT" shall mean any product or service
consisting of information technology for use in healthcare, excluding IVD
Products.
1.14 "IVD PRODUCT" shall mean a product for use in IN VITRO testing of
human specimens for the purpose of diagnosis, prognosis, or monitoring the
progress of disease or monitoring the effect of treatment of disease, in the
human from which the specimens were taken. For the avoidance of doubt, IVD
Products expressly exclude all products for use in Blood Screening, and all
Vaccine/Therapeutic Products.
1.15 "KNOW-HOW" shall mean unpatented inventions, discoveries,
information, trade secrets, data, results and biological materials.
1.16 "LICENSED CDC PRODUCT" shall mean a CDC HCV/HIV Probe Product or a
CDC Non-HCV/HIV Product.
1.17 "Licensed Chiron Patent" shall mean a Chiron HCV/HIV Patent or a
Chiron Non-HCV/HIV Patent.
1.18 "LICENSED CHIRON PRODUCT" shall mean a product which is
researched, developed, manufactured, used or sold by Chiron, a Chiron Affiliate
or a permitted sublicensee, under circumstances which would, in the absence of
the licenses granted under Section 2.3 or 2.4, constitute an infringement of a
Valid Claim of a CDC Patent.
1.19 "NET SALES" shall mean the amount billed or invoiced for products
sold by CDC, its Affiliates, or its sublicensees, less:
i) Discounts actually allowed and taken;
ii) Amounts repaid or credited by reason of rejection or return;
iii) To the extent separately stated on purchase orders,
invoices or other documents of sale, taxes levied on and/or other
governmental charges made as to production, or transportation or
insurance charges;
4
iv) The reasonable value of the instrument, instrument financing,
consumables other than the products in question, and service
components of an operating or capital lease for instrumentation
on which the products are used, for which the charges are included
in the price of the products purchased by the lessee, provided
that the methods for determining such values shall be proposed by
CDC and subject to Chiron's written consent, not to be
unreasonably withheld;
v) Charges for freight, handling and transportation paid by the
selling entity; and
vi) Sales, use and value-added taxes and other similar taxes incurred
and separately stated on invoices.
1.19.1 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 CDC HCV/HIV Probe IVD Product and competitive third
party products are made through Authorized Distributors, provided that
CDC shall use reasonable efforts in connection with sales to such
Authorized Distributors to comply with clause (i) 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 (i) 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 (ii) the parties shall adopt another mechanism for
preserving for Chiron the same economics as if such sales had been made
by CDC or its Affiliate or its sublicensee rather than the Authorized
Distributor. Any such mechanism shall be proposed by CDC and shall be
subject to Chiron's written consent, which shall not be unreasonably
withheld.
1.19.2 For clarity of understanding, Net Sales shall not include
any 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 product furnished in return
for payment, whether or not such product is for commercial, research or
other use. For clarity of understanding, Minimum Royalties shall apply
to each Unit of product shipped to a customer for any purpose, except for
Units supplied to third parties at no charge (i) for use in Purchaser's
preclinical or clinical trials; or (ii) for testing, quality control or
evaluation purposes. Without limiting the foregoing, 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. A sale shall be deemed to have been made and Earned Royalties
or Maximum Royalties incurred, (except as specifically set forth in this
Section 1.19.2) when the product is shipped ("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 until an Affiliate
consumes the product in providing a commercial service for a
non-Affiliate third party or Ships the product to a non-Affiliate third
party.
5
1.19.3 In the event that product subject to royalties hereunder is
sold in combination with another product or active component, other than
instrumentation covered under Section 1.19(iv) above, for a single price
(a "Combination Product"), Net Sales from sales of a Combination Product,
for purposes of calculating royalties due or allocating profits 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 average per
unit selling price in the country of sale, during the applicable
reporting period, of the product subject to royalties hereunder if sold
separately in the country of sale and B is the average per unit selling
price in the country of sale, during the applicable reporting period, of
the other product(s) or component(s) 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 product subject to royalties
hereunder to the price of the Combination Product. Such apportionment
shall be determined by CDC based upon its past practice and experience,
and shall be subject to Chiron's written consent, which shall not be
unreasonably withheld.
1.19.4 In the event that CDC or a CDC Affiliate performs assays
for commercial purposes utilizing CDC HCV/HIV Probe Products, Net Sales
shall mean 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 Section 1.19. The allocation of value
to services or other products provided shall be determined by CDC based
upon its past practice and experience, and shall be subject to Chiron's
written consent, which shall not be unreasonably withheld.
1.20 "OPEN KIT" shall mean a bDNA based assay kit comprising solely the
generic components of bDNA assay kits, then offered as IVD Products, and
excluding any target probe(s).
1.21 "PROBE IVD PRODUCT" shall mean an IVD Product for the detection or
quantification of nucleic acid sequences.
1.22 "RESEARCH TOOL" shall mean a product sold for research use only
and not for use as an IVD Product, the manufacture, use or sale of which, but
for the licenses granted under Section 2.4, would infringe a CDC Patent.
Notwithstanding the foregoing, Research Tools specifically exclude Open Kits.
1.23 "THERAMETRICS PRODUCT" shall mean a product having both an IVD
Product component and a Vaccine/Therapeutic Product component, wherein such
components are contained in a single package and wherein the information
provided by the IVD Product component is medically and functionally related to
the IN VIVO effect provided by the Vaccine/Therapeutic Product component.
6
1.24 "UNIT" shall mean the number of individual patient results
generated by the use of a CDC HCV/HIV Probe Product, such that the number of
Units contained in such CDC HCV/HIV Probe Product equals the number of patient
results which are obtained through use of such CDC HCV/HIV Probe Product assay
kit, as determined in a manner to be proposed by CDC, and subject to Chiron's
written consent, which shall not be unreasonably withheld.
1.25 "VACCINE/THERAPEUTIC PRODUCT" shall mean any product that is
intended for IN VIVO effect regardless of whether the method of administration
is IN VIVO, or EX VIVO, to prevent, control, treat, mitigate or alter the course
of disease or otherwise maintain or improve health, including for the avoidance
of doubt, IN VIVO or EX VIVO genetic manipulation, excluding all IVD Products.
1.26 "VALID CLAIM" shall mean a claim in any issued, active, unexpired
Licensed Chiron Patent or CDC Patent (as the context indicates) which has not
been withdrawn, canceled, lapsed or disclaimed, or held unpatentable, invalid or
unenforceable by a non-appealed or nonappealable 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 jurisdiction.
2. LICENSE AND OPTION GRANTS
2.1 CHIRON HCV/HIV PATENTS. Subject to the terms and conditions of
this Agreement and subject to the rights of third parties under existing license
agreements listed in Schedule 2.13(j) of the Stock Purchase Agreement, Chiron
hereby grants to CDC and its Affiliates, for so long as they remain Affiliates,
a worldwide license under the Chiron HCV/HIV Patents to research, develop, make,
have made, use and sell CDC HCV/HIV Probe Products. Such license shall bear
royalties in accordance with Section 3.1.
2.1.1 The license granted under this Section 2.1 is transferable
only pursuant to Section 11.5. CDC shall have the right to grant sublicenses
hereunder as follows:
(a) CDC shall not grant any sublicenses, with respect to
HCV or HIV, prior to the earlier of the effective date of the first license
granted by Chiron pursuant to Section 2.1.3, or the first commercial sale of a
Probe IVD Product by Chiron pursuant to Section 2.1.3, with respect to HCV or
HIV, respectively.
(b) Thereafter, CDC may, with respect to each of HCV and
HIV, grant up to [CONFIDENTIAL TREATMENT REQUESTED], on a cumulative basis. In
lieu of [CONFIDENTIAL TREATMENT REQUESTED], CDC may elect to offer [CONFIDENTIAL
TREATMENT REQUESTED] with respect to each of HCV and HIV, in each of the four
regions identified in Section 2.1.3(b), on a cumulative basis.
(i) Notwithstanding the foregoing, CDC shall not
grant any such sublicense, whether worldwide or regional, without Chiron's prior
written consent (which shall not be unreasonably withheld), [CONFIDENTIAL
TREATMENT REQUESTED].
7
(ii) After the test set forth in Section 2.1.1 (b)
(i) has been satisfied, CDC may grant sublicenses in its discretion, subject to
the limits of this Section 2.1.1.
(c) Each sublicense granted by CDC hereunder with respect
to HCV shall bear earned royalties and minimum royalties which are at least
[CONFIDENTIAL TREATMENT REQUESTED] (measured as [CONFIDENTIAL TREATMENT
REQUESTED] of the earned royalties or minimum royalties) [CONFIDENTIAL TREATMENT
REQUESTED] earned royalties and minimum royalties payable by [CONFIDENTIAL
TREATMENT REQUESTED] licensees of Chiron pursuant to Section 2.1.3, with respect
to HCV, in the relevant region; provided that after Chiron has granted
[CONFIDENTIAL TREATMENT REQUESTED] authorized under Section 2.1.3 with respect
to any region, or Chiron is engaged in the sale of Probe IVD Product directed to
HCV and Chiron has granted [CONFIDENTIAL TREATMENT REQUESTED] authorized under
Section 2.1.3 with respect to HCV with respect to any region, CDC shall not be
required to impose on its sublicensees earned royalties and minimum royalties
which are [CONFIDENTIAL TREATMENT REQUESTED] than the [CONFIDENTIAL TREATMENT
REQUESTED] earned royalties and minimum royalties payable by [CONFIDENTIAL
TREATMENT REQUESTED] of Chiron pursuant to Section 2.1.3 with respect to HCV in
the relevant region.
(d) The Earned Royalties and Minimum Royalties payable by
CDC to Chiron under this Agreement with respect to sublicensee sales in any
region shall be equal to the applicable amounts payable pursuant to Exhibit A
hereto [CONFIDENTIAL TREATMENT REQUESTED].
(e) Except as provided in this Section 2.1.1, any
sublicense permitted under this Section 2.1.1 shall be subject to all of the
terms and conditions of this Agreement.
(f) In the event that a sublicense granted by CDC pursuant
to Section 2.1.1(b) is terminated, CDC shall have the right to replace such
license consistent with the limitations set forth in this Section 2.1.1.
2.1.2 CDC acknowledges and agrees that the inclusion of CDC
Affiliates within the license grant pursuant to Section 2.1 is intended to
enable CDC to utilize the manufacturing and sales capabilities of its Affiliates
in connection with the manufacture and sale of CDC HCV/HIV Probe Products in a
manner substantially similar to the involvement of such Affiliates in the
manufacture and sale of Purchaser's products generally. CDC and its Affiliates
shall not evade the sublicensing provisions of Section 2.1.1 by creating
affiliates specifically in connection with CDC HCV/HIV Probe Products, or
through other third party arrangements such as joint ventures, collaborations,
or distribution arrangements with distributors other than Authorized
Distributors as defined herein. CDC and its Affiliates are licensed hereunder
only to sell or distribute CDC HCV/HIV Probe Products, under the label, name and
trademark of CDC or its Affiliates, only through the sales force of CDC or its
Affiliates, or through the following entities (which entities are referred to
herein as "Authorized Distributors"): (i) local third party distributors which
are not engaged, and which are not affiliates (based on the criteria in Section
1.1, except that the definition of control shall be based on either
Section 1.1(a) or (b)) of any entity which is engaged, in the global sale of
diagnostic products or (ii) an entity to which CDC is then authorized to grant a
sublicense
8
pursuant to Section 2.1.1 and with which CDC then enters into a distribution
agreement in lieu of granting a sublicense. CDC and its Affiliates are not
licensed to perform OEM manufacturing of CDC HCV/HIV Probe Products for a third
party other than an Authorized Distributor; to supply CDC HCV/HIV Probe Products
for resale to any third party other than an Authorized Distributor; or to permit
any Authorized Distributor or other third party to sell any CDC HCV/HIV Probe
Product under another third party label, name or trademark or to permit any
Authorized Distributor or other third party to sell any CDC HCV/HIV Probe
Product under its own label, name or trademark for use on an instrument bearing
the label name or trademark of another party, except pursuant to a sublicense
authorized pursuant to Section 2.1.1.
2.1.3 The license granted to CDC and its Affiliates under this
Section 2.1 shall be semi-exclusive with respect to Probe IVD Products.
Semi-exclusive means that, in addition to licenses to third parties existing as
of the date of the Stock Purchase Agreement, Chiron retains the right to
practice under the Chiron HCV/HIV Patents itself, subject to the Non-Competition
Agreement, and/or to grant [CONFIDENTIAL TREATMENT REQUESTED] under the Chiron
HCV/HIV Patents, in each case to research, develop, make, have made, use and
sell Probe IVD Products with respect to each of HCV and HIV, as follows:
(a) Except to the extent CDC otherwise consents pursuant
to Section 2.1.3(e) below, with respect to each of HCV and HIV, Chiron may grant
up to [CONFIDENTIAL TREATMENT REQUESTED] with respect to Probe IVD Products if
Chiron is not directly engaged in the sale of Probe IVD Products directed to HCV
or HIV, as the case may be, or Chiron may grant [CONFIDENTIAL TREATMENT
REQUESTED] if Chiron is directly engaged in the sale of Probe IVD Products
directed to HCV or HIV, as the case may be.
(b) (i) If Chiron has granted one worldwide license
pursuant to Section 2.1.3(a), and Chiron is not then directly engaged in the
sale of Probe IVD Products with respect to HCV or HIV, as applicable, Chiron
shall thereafter have the right, in Chiron's sole discretion, in lieu of the
[CONFIDENTIAL TREATMENT REQUESTED] permitted pursuant to Section 2.1.3(a), to
grant a license for each of HCV and HIV in each of the following four regions:
(aa) North America, (bb) the European Union, (cc) Japan and (dd) all other
countries of the world.
(ii) If Chiron has not granted any worldwide
license pursuant to Section 2.1.3(a), and Chiron is not directly engaged in the
sale of Probe IVD Products with respect to HCV or HIV, as applicable, Chiron
shall have the right to grant up to [CONFIDENTIAL TREATMENT REQUESTED] for each
of HCV and HIV in each of the four regions described above with CDC's prior
written consent. Such regional sublicenses may not be granted until the
expiration of [CONFIDENTIAL TREATMENT REQUESTED] after the Effective Date.
After the [CONFIDENTIAL TREATMENT REQUESTED] the Effective Date, regional
sublicenses pursuant to this Section 2.1.3 (b) (ii) may be granted only with
CDC's prior written consent, not to be unreasonably withheld, unless and until
Chiron has granted [CONFIDENTIAL TREATMENT REQUESTED]; and thereafter Chiron
shall have the right to grant any further regional licenses pursuant to this
Section 2.1.3 (b) at its sole discretion. In the event that Chiron elects to
grant [CONFIDENTIAL TREATMENT REQUESTED] with respect to HCV, the provisions of
Paragraph 3(b) of Exhibit A shall apply in lieu of the provisions of Paragraph
3(a) of Exhibit A.
9
(c) If Chiron chooses to engage directly in sales of Probe
IVD Products directed to HCV (subject to the Non-Compete Agreement), such
activities of Chiron shall replace [CONFIDENTIAL TREATMENT REQUESTED] Chiron is
permitted to grant under Section 2.1.3(a) if Chiron's sales are worldwide; or if
Chiron's sales are regional, such activities shall replace [CONFIDENTIAL
TREATMENT REQUESTED] of the [CONFIDENTIAL TREATMENT REQUESTED] which Chiron is
permitted to grant under Section 2.1.3 (b), in each region where Chiron sells
such Probe IVD Product directed to HCV. For the avoidance of doubt, it is
understood that Chiron shall have no right to engage directly in sales of IVD
Probe Products directed to HCV in any country in which [CONFIDENTIAL TREATMENT
REQUESTED] (whether global or regional) granted by Chiron under this Section
2.1.3 are in effect.
(d) The limitations with respect to Chiron's ability to
grant licenses under the Chiron HCV/HIV Patents set forth in Sections 2.1.3(a)
and (b) shall be effective from the date of the Stock Purchase Agreement. With
respect to each license which Chiron is permitted to grant under this Section
2.1.3:
(i) Chiron shall have the right to select the
licensee and negotiate the terms of the license in its complete and sole
discretion, except as expressly agreed in this Agreement.
(ii) Chiron shall retain 100% of the proceeds of
any such license.
(iii) Any such additional licenses shall be subject
to the terms set forth in Paragraph 3 of Exhibit A.
(iv) Such additional licenses shall not include the
rights to grant sublicenses, except to Affiliates for so long as they remain
Affiliates of the licensee, and shall contain provisions not less restrictive
than those set forth in Section 2.1.2.
(e) With respect to each of HCV and HIV, Chiron shall not
have the right to grant licenses under the Chiron HCV/HIV Patents for the
research, development, manufacture, use or sale of Probe IVD Products beyond
those permitted under Section 2.1.3(a) or (b) except with the prior written
consent of CDC, which may be granted in CDC's sole discretion. In the event
that a license granted by Chiron pursuant to Section 2.13(a) or (b) is
terminated, Chiron shall have the right to replace such license with a new
license, consistent with the limitations set forth in Section 2.1.3(a) or (b).
(f) Notwithstanding the foregoing, Chiron retains a
non-exclusive right under the Chiron HCV/HIV Patents to conduct research with
respect to Probe IVD Products.
(g) The following provisions shall apply with respect to
third party patents directed to HCV, which are within the scope of Valid Claims
of Chiron HCV/HIV Patents, and Valid Claims of which, but for licenses granted
pursuant to this Section 2.1.3 (g), would be infringed by the manufacture, use
or sale of CDC HCV/HIV Probe Products directed to HCV which being sold or under
development as of the Effective Date ("Third Party HCV Patents").
10
(i) If a Third Party HCV Patent is owned or
controlled by a licensee of Chiron pursuant to Section 2.1.3 (a) or (b), Chiron
agrees that it will not acquire a license under such Third Party HCV Patent for
use in Probe IVD Products (but without limiting Chiron's rights to acquire a
license only for use in Blood Screening), unless Chiron [CONFIDENTIAL TREATMENT
REQUESTED].
(ii) If a Third Party HCV Patent is owned by an
entity other than a licensee of Chiron pursuant to Section 2.1.3 (a) or (b), and
if Chiron acquires a license under such Third Party HCV Patent for use in Probe
IVD Products (but without limiting Chiron's right to acquire a license only for
use in Blood Screening), Chiron will [CONFIDENTIAL TREATMENT REQUESTED].
(h) All licenses entered into by Chiron pursuant to this
Section 2.1.3 shall be with parties actively engaged, or reasonably expected to
be actively engaged, in the sale and distribution of Probe IVD Products in the
region or regions covered by the license and the terms thereof shall be
bona-fide commercial terms negotiated at arm's length.
2.2 CHIRON NON-HCV/HIV PATENTS. Subject to the terms and conditions
of this Agreement, and subject to any rights of third parties existing as of the
date of the Stock Purchase Agreement under license agreements listed in Schedule
2.13(j) of the Stock Purchase Agreement, Chiron hereby grants to CDC and its
Affiliates (i) an exclusive worldwide license, under the Chiron Non-HCV/HIV
Patents to research, develop, make, have made, use and sell CDC Non-HCV/HIV
Products and Open Kits; and (ii) a non-exclusive worldwide license, under the
Chiron Non-HCV/HIV Patents to research, develop, make, have made, use and sell
Research Tools. CDC shall have the right to grant sublicenses under such
licenses, except to the extent restricted pursuant to Section 2.5. [CONFIDENTIAL
TREATMENT REQUESTED].
2.3 CDC PATENTS.
(a) Subject to the terms and conditions of this Agreement, CDC
hereby grants to Chiron and its Affiliates an exclusive worldwide license, with
the right to sublicense except to the extent restricted pursuant to Section 2.6,
under the CDC Patents to research, develop, make, have made, use and sell any
and all products for use in Blood Screening.
(b) To the extent any CDC Patents are subject to the exclusive
license to Ortho under the Chiron/Ortho Agreement, CDC hereby grants Chiron an
exclusive worldwide license, with right to sublicense, except to the extent
restricted pursuant to Section 2.6, under such CDC Patents, to research,
develop, make, have made, use and sell any and all products subject to the
Chiron/Ortho Agreement.
(c) CDC hereby grants to Chiron a non-exclusive worldwide
license under the CDC Patents, (i) to research, develop, make, have made, use
and sell any and all Vaccine/Therapeutic Products and Informatics Products, with
the right to sublicense except to the extent restricted pursuant to Section 2.6;
and (ii) subject to the Non-Competition Agreement, to
11
conduct internally or for or with third parties, research of all types and for
all purposes, whether internal, collaborative, commercial, or non-commercial.
(d) CDC hereby grants to Chiron a non-exclusive, worldwide
license under the CDC Patents, to research, develop, make, have made, use and
sell any and all Therametrics Products, with the right to sublicense except to
the extent restricted pursuant to Section 2.6, and subject to the following.
Chiron hereby grants to CDC the option to manufacture and supply on an exclusive
basis and on commercially reasonable terms, any IVD Product which is a component
of a Therametrics Product, if the manufacture, use or sale of such IVD Product
would, but for the license granted hereunder, infringe a Valid Claim of a CDC
Patent. Such option shall be exercisable by CDC on written notice to Chiron
within [CONFIDENTIAL TREATMENT REQUESTED] following receipt by CDC of written
notice from Chiron describing the IVD Product in question. If CDC exercises
such option, the parties shall negotiate in good faith a supply agreement on
reasonable commercial terms. Any terms which cannot be agreed upon within
[CONFIDENTIAL TREATMENT REQUESTED] after exercise of the option shall be
submitted for resolution under Article 10. If CDC fails to exercise the option,
Chiron shall be free to manufacture or have manufactured and sell the IVD
Product pursuant to the license granted herein.
(e) [CONFIDENTIAL TREATMENT REQUESTED]. For avoidance of
doubt, this Section 2.3 (e) shall not apply to any supply agreement pursuant to
Section 2.3(d).
2.4 OPTION FOR RESEARCH TOOLS. CDC hereby grants to Chiron an option
to obtain one or more non-exclusive licenses, on commercially reasonable terms
and royalty rates to be negotiated in good faith, under the CDC Patents, to
make, have made, use and sell Research Tools. Such option shall be exercised by
Chiron on a Research Tool by Research Tool basis.
2.5 CHIRON SUBLICENSABLE PATENTS.
2.5.1 [CONFIDENTIAL TREATMENT REQUESTED] following the Effective
Date, Chiron shall grant sublicenses to CDC under any or all of the Chiron
Sublicensable Patents, as requested by CDC by its giving written notice thereof
to Chiron. Such sublicenses shall have the same scope and be subject to the
same terms and conditions as set forth in Section 2.1, in the case of Chiron
Sublicensable Patents claiming HCV or HIV; and shall have the same scope and be
subject to the same terms and conditions as set forth in Section 2.2, in the
case of other Chiron Sublicensable Patents, in each case to the extent permitted
under the terms of the underlying third party license. [CONFIDENTIAL TREATMENT
REQUESTED] following the Effective Date, Chiron shall not grant any sublicenses
to third parties under the Chiron Sublicensable Patents which would preclude
Chiron from granting the rights to CDC set forth above. Following [CONFIDENTIAL
TREATMENT REQUESTED], Chiron shall be free to grant any sublicenses under the
Chiron Sublicensable Patents to third parties under any terms and conditions,
including the granting of exclusive sublicenses. In the event that CDC requests
such a sublicense [CONFIDENTIAL TREATMENT REQUESTED] the Effective Date, Chiron
will grant such sublicense, subject to any and all intervening rights of third
parties, to the extent Chiron is then permitted to do so.
12
2.5.2 All sublicenses granted to CDC hereunder shall be subject
to all of the terms and conditions of the underlying third party license
agreements; including without limitation all royalty and other payment
obligations to the third party licensor; provided that CDC shall be subject to
such obligations only from the time of the grant of such sublicense to CDC but
only to the extent attributable solely to sales of licensed products by CDC, its
Authorized Distributors, or, to the extent permitted hereunder, its Affiliates
and sublicensees, under such sublicenses; and further PROVIDED that
[CONFIDENTIAL TREATMENT REQUESTED] shall be due Chiron (as opposed to a third
party licensor) with respect to any such sublicenses. Upon its election to
receive a sublicense, CDC shall be obligated to perform the obligations of a
licensee under the underlying third party license with respect to its activities
as a sublicensee. CDC shall pay Chiron all amounts owing to the third party
licensor with respect to CDC's activities in sufficient time for Chiron to meet
its payment requirements to the third-party licensors. If required under the
third-party license, the parties shall execute any documentation necessary to
give effect to such sublicense. CDC and its Affiliates shall indemnify and
defend Chiron against any loss or claim resulting from a breach of an underlying
license relating to Chiron Sublicensable Patents based on the acts or omissions
of CDC or its Affiliates, Authorized Distributors or permitted sublicensees.
2.6 CDC SUBLICENSABLE PATENTS.
2.6.1 [CONFIDENTIAL TREATMENT REQUESTED] following the Effective
Date, CDC shall grant sublicenses to Chiron under any or all of the CDC
Sublicensable Patents as requested by Chiron by its giving written notice
thereof to CDC. Such sublicenses shall have the same scope and be subject to
the same terms and conditions as set forth in Section 2.3, to the extent
permitted under the terms of the underlying third party license. [CONFIDENTIAL
TREATMENT REQUESTED] following the Effective Date, CDC shall not grant any
sublicenses under the CDC Sublicensable Patents which would preclude CDC from
granting to Chiron the rights set forth above. Following [CONFIDENTIAL
TREATMENT REQUESTED], CDC shall be free to grant any sublicenses under the CDC
Sublicensable Patents to third parties under any terms and conditions, including
the granting of exclusive sublicenses. In the event that Chiron requests such a
sublicense [CONFIDENTIAL TREATMENT REQUESTED] the Effective Date, CDC will grant
such sublicense, subject to any and all intervening rights of third parties, to
the extent CDC is then permitted to do so.
2.6.2 All sublicenses granted to Chiron hereunder shall be
subject to all of the terms and conditions of the underlying third party license
agreements, including without limitation all royalty and other payment
obligations to the third party licensor, provided that Chiron shall be subject
to such obligations only from the time of the grant of such sublicense to Chiron
but only to the extent attributable solely to sales of licensed products by
Chiron, or its Affiliates or sublicensees, under such sublicenses; PROVIDED
further that [CONFIDENTIAL TREATMENT REQUESTED] shall be due CDC (as opposed to
a third party licensor) with respect to any such sublicenses. Upon its election
to receive a sublicense, Chiron shall be obligated to perform the obligations of
licensee under such underlying third party license with respect to its
activities as sublicensee. Chiron shall pay to CDC all amounts owing to the
third party licensor with respect to Chiron's activities in sufficient time for
CDC to meet its payment requirements to the third-party licensors. If required
under the third party license, the parties shall execute any documentation
necessary to give effect to such sublicense. Chiron shall indemnify and defend
CDC against any loss or claim resulting from a
13
breach of an underlying license relating to CDC Sublicensable Patents based on
the acts or omissions of Chiron, its Affiliates or permitted sublicensees.
2.7 KNOW-HOW.
(a) Recognizing the difficulty in segregating unpatented
information transferred to CDC from that which remains with Chiron, (i) CDC
hereby grants to Chiron a perpetual, irrevocable, non-exclusive, royalty-free
license under CDC Know-How, for any and all purposes, with right to sublicense
and to transfer; and (ii) Chiron hereby grants to CDC a perpetual, irrevocable,
non-exclusive, royalty-free license under the Chiron IVD Know-How for all
purposes, with right to sublicense and to transfer. Chiron and CDC each agree
to use the same degree of care with respect to disclosure of Chiron IVD Know-How
and CDC Know-How as such party uses with respect to other Know-How owned by it.
CDC Know-How and Chiron IVD Know-How shall not be deemed Information received
from the other party for purposes of Article 8.
(b) Notwithstanding the foregoing, the parties acknowledge that
title to CDC Know-How existing as of the Effective Date which is subject to the
exclusive license to Ortho under the Chiron/Ortho Agreement has been transferred
to Chiron under the Asset Transfer Agreement as part of the Excluded
Hepatitis/Retrovirus Patents and Know-How. Any such know-how which remains in
the possession of CDC shall remain subject to such exclusive license to Ortho.
2.8 RETAINED INTERESTS. Each party retains all right, title and
interest in and to all of its patents, patent applications, know-how and other
intellectual property except to the extent expressly granted to the other party,
under this Agreement, the Stock Purchase Agreement or the Ancillary Agreements.
For the avoidance of doubt, Chiron grants no rights or interests to CDC or its
Affiliates in or to any patents, patent applications, Know-How or other
intellectual property ("Chiron Intellectual Property"), except Chiron
Intellectual Property which is related to the continued conduct of the Business,
including Chiron Intellectual Property that covers Products or Products in
Development, but excluding Chiron Intellectual Property which does not cover
Products or Products in Development and may cover Future Products.
2.9 [CONFIDENTIAL TREATMENT REQUESTED]; MEDICARE DATABASE. Subject to
the terms and conditions of the agreement, Chiron hereby grants to
CDC and its Affiliates a non-exclusive worldwide [CONFIDENTIAL TREATMENT
REQUESTED] license, without right to sublicense, under the following
technologies, solely for the purpose of research and development of IVD
Products: (i) the patent applications set forth in Exhibit B hereto,
together with any patents issued thereon and any divisions, extensions,
renewals, reissues, reexamination certificates and continuations thereof
(collectively, [CONFIDENTIAL TREATMENT REQUESTED]); and (ii) that certain
medicare database retained by Chiron as part of the Informatics Business (the
"Medicare Database"). The Medicare Database is made available to CDC and its
Affiliates as it exists at Closing. Nothing herein shall require Chiron to
maintain, improve or enhance such database following the Closing. If Chiron
elects to improve or enhance such database, or to add information to it,
Chiron agrees to offer CDC and its Affiliates such improvements or
enhancements, and/or a subscription to access such additional information on
commercially reasonable terms.
Promptly following the Effective Date, Chiron shall facilitate
access by CDC to the [CONFIDENTIAL TREATMENT REQUESTED] software and the
Medicare database, including, but not limited to, providing or obtaining
connectivity or free standing electronic copies where appropriate for CDC to
have effective access to such software and database in an independently
useable form.
Nothing herein shall require Chiron to take any action to
prosecute, maintain or defend any [CONFIDENTIAL TREATMENT REQUESTED] patent
application or patents.
Nothing herein shall be deemed to grant CDC or its Affiliates
any right to commercialize [CONFIDENTIAL TREATMENT REQUESTED] or the Medicare
Database, or any products using, incorporating or based on [CONFIDENTIAL
TREATMENT REQUESTED] or the Medicare Database.
2.10 OTHER SUBLICENSES. Notwithstanding the restrictions on
sublicensing set forth in Section 2.1.1, Chiron hereby consents to the grant
by CDC of sublicenses as set forth in the following agreements, in connection
with the assignment, transfer and conveyance of such agreements from Chiron
to CDC, which sublicenses shall not count against the limits set forth in
Section 2.1.1: [CONFIDENTIAL TREATMENT REQUESTED].
3. ROYALTIES, FEES AND RECORDS
3.1 CDC HCV/HIV PROBE PRODUCTS. In addition to any amounts payable
pursuant to Section 2.5, if any, CDC and its Affiliates agree to make payments
to Chiron as set forth in Exhibit A. Exhibit A also sets forth the manner in
which such compensation may be adjusted.
3.2 LICENSES UNDER CHIRON NON-HCV/HIV PATENTS, CDC PATENTS, CDC
KNOW-HOW, CHIRON IVD KNOW-HOW. [CONFIDENTIAL TREATMENT REQUESTED] with respect
to the licenses granted under Sections 2.2, 2.3, 2.7, or 2.9 except those
payable pursuant to Section 2.5 or 2.6, if any.
3.3 LICENSE FEE. Conditioned upon the occurrence of the Closing under
the Stock Purchase Agreement, CDC hereby agrees to pay Chiron a license fee of
[CONFIDENTIAL TREATMENT REQUESTED] payable on the Effective Date. CDC shall be
entitled to a refund of the portion of such license fee which has not then
become non-refundable, in accordance with the
14
schedule set forth below, in the event that CDC elects to terminate all, but not
less than all, licenses granted to it under this Agreement (a "CDC
Termination"). The portions of the license fee which are non-refundable shall
increase over time, as follows, and between anniversaries of the Effective Date,
shall increase ratably to the levels set forth below.
DATE OF CDC TERMINATION NON-REFUNDABLE PORTION OF
LICENSE FEE
On Effective Date [CONFIDENTIAL TREATMENT
REQUESTED]
One year after Effective Date [CONFIDENTIAL TREATMENT
REQUESTED]
Two years after Effective Date [CONFIDENTIAL TREATMENT
REQUESTED]
Three years after Effective Date [CONFIDENTIAL TREATMENT
REQUESTED]
3.4 RECORDS AND REPORTS. CDC shall keep complete and accurate records
of the sale by it, its Affiliates, and permitted sublicensees of products
subject to Earned Royalties or Minimum Royalties (each as defined in Exhibit A)
pursuant to Exhibit A, and the sublicensed party shall keep complete and
accurate records of the sale of products for which royalties are payable under
Section 2.5 or 2.6, as the case may be. Within 60 days following the end of
each calendar quarter commencing with the first full or partial calendar quarter
following the Effective Date, CDC shall deliver to Chiron a written report for
such period setting forth, for each country to the extent relevant, the Net
Sales of products subject to Earned Royalties or Minimum Royalties under Exhibit
A and, with respect to products subject to Minimum Royalties under Exhibit A,
the number of Units of each type of such products sold, which report shall also
set forth the amounts payable pursuant to Exhibit A, and the calculation of such
amounts, for such period. Each party shall deliver to the other such reports as
are required pursuant to Section 2.5 or 2.6, as the case may be.
3.5 AUDIT.
(a) Chiron shall have the right to audit the records of CDC, its
Affiliates, and permitted sublicensees using an independent certified public
accounting firm reasonably acceptable to CDC, during reasonable business hours
and on reasonable notice but not more than once per calendar year, solely for
the purpose of verifying the earned Royalties and Minimum Royalties payable
pursuant to this Agreement for the twelve (12) full quarters immediately
preceding the date of the audit, provided that such accountants agree to keep
all information received strictly confidential and agree to provide to Chiron
only the information necessary to verify the calculation of amounts due
hereunder.
(b) If any such audit discloses an underpayment of [CONFIDENTIAL
TREATMENT REQUESTED] or more for the period of such audit, which shall be at
least four (4) full quarters in length, CDC shall bear the costs of such audit.
Otherwise such audit shall be at the expense of Chiron. Underpayments resulting
from withholding taxes pursuant to Section 4.3 or currency controls pursuant to
Section 4.5 shall not be deemed underpayments for the purposes of this Section
3.5 (b).
15
4. PAYMENT
4.1 QUARTERLY PAYMENT. Payments shall be made as provided in Exhibit
A, except that any payments required pursuant to Sections 2.5 or 2.6 shall be
made in accordance with the applicable third party license agreement.
4.2 PAYMENT METHOD; DEFAULT INTEREST. All payments under this
Agreement shall be made by bank wire transfer to the bank account designated in
writing by the party receiving the royalty payments. Any late payments shall
bear interest at the lesser of (i) [CONFIDENTIAL TREATMENT REQUESTED] rate as
published in the Wall Street Journal as of the date payment is due; or (ii) the
maximum rate permitted by applicable law.
4.3 WITHHOLDING TAX. Except as otherwise required under Section 2.5
or 2.6, where required to do so by applicable law or treaty, the royalty-paying
party shall withhold taxes required to be paid to a taxing authority on account
of such income to the payee, and the royalty-paying party shall furnish the
payee with satisfactory evidence of such withholding and payment in order to
permit the payee to obtain a tax credit or other relief as may be available
under the applicable law or treaty. The royalty-paying party shall cooperate
with the payee in obtaining exemption from withholding taxes where available
under applicable laws and treaties.
4.4 CURRENCY. All payments shall be in U.S. 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 Purchaser, unless otherwise
required pursuant to Section 2.5 or 2.6.
4.5 CURRENCY CONTROLS. If, by law, regulations, or fiscal policy of a
particular country, payment as provided for above is restricted or forbidden,
notice thereof in writing will be given to the payee and payment of the royalty
will be made through such lawful means or methods as the payee designates. If
the payee fails to so designate such lawful means or methods within 60 days
after such notice is given to the payee, the payment of royalties by the
royalty-paying party will be made by the deposit thereof in local currency to
the credit of the payee in a recognized banking institution designated by the
payee or, if none be designated by the payee within such period of 60 days, in a
recognized banking institution of which the royalty-paying party shall notify
the payee.
5. REPRESENTATIONS AND WARRANTIES
5.1 EXCEPT AS SPECIFICALLY SET FORTH IN THE STOCK PURCHASE AGREEMENT,
NO PARTY MAKES ANY REPRESENTATION OR WARRANTIES, EITHER EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT WILL ANY
PARTY LICENSING TECHNOLOGY TO THE OTHER PARTY HAVE, AS A RESULT OF SUCH LICENSE,
ANY OBLIGATION OR LIABILITY FOR LOSS OF REVENUE OR PROFIT, OR FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
16
In particular, with no limitation implied, nothing in this Agreement will
be construed as:
(i) A warranty or representation as to the validity or scope of any of
the Licensed Chiron Patents or the CDC Patents;
(ii) A warranty or representation that anything made, used, sold, or
otherwise disposed of under the licenses granted in this Agreement
is or will be free from infringement of patents of third parties;
(iii) An obligation to bring or prosecute actions or suits against third
parties for infringement, except as set forth in Section 6.4;
(iv) Except as otherwise provided in the Stock Purchase Agreement or
the Ancillary Agreements, conferring the right to use in
advertising, publicity, or otherwise any trademark, trade name, or
any contraction, abbreviation, simulation, or adaptation thereof,
of another party; or
(v) Except to the extent expressly provided in Article 2 hereof,
conferring by implication, estoppel, or otherwise any license or
rights under any patents or other proprietary rights of Chiron,
CDC or their respective Affiliates.
6. PATENT MATTERS
6.1 PATENT PROSECUTION. Each party shall be responsible, at its sole
expense and in its sole discretion, for the filing, prosecution, maintenance,
defense and enforcement of patents owned by it.
6.2 EXCHANGE OF INFORMATION. The parties shall keep each other
currently advised in writing of any substantial changes in the status of their
respective patent rights which are licensed hereunder, including but not limited
to notice of the issuance of patents on pending patent applications included
therein, reexaminations, reissues, and interferences and oppositions, and
provide further updates on the status of such patent rights at the request of
the other party. The parties need not disclose information subject to
attorney-client privilege.
6.3 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS. CDC shall promptly
notify Chiron in the event that it becomes aware of any claim alleging that the
manufacture, use or sale of any CDC HCV/HIV Probe Product infringes any third
party patent or intellectual property rights. Chiron shall promptly notify CDC
in the event that it becomes aware of any claim alleging that the manufacture,
use or sale of any Licensed Chiron Product utilizing any CDC Patents relating to
bDNA infringes any third party patent or intellectual property right. Pursuant
to Section 9.1, the party manufacturing or selling the product in question (the
"Product Owning Party") shall be responsible for the defense of such claim, at
its sole cost, except as provided herein. Chiron, in its sole discretion, shall
have the exclusive right (but not the obligation) to assume and
17
solely manage the defense of any such claim, at Chiron's expense, to the extent
that such claim relates to specific HCV or HIV nucleotide sequences, or the
defense of such claim relates to activities or intellectual property of Chiron.
CDC shall have the exclusive right (but not the obligation) to assume and solely
manage the defense of any such claim, at CDC's expense, to the extent such claim
relates to bDNA technology, or the defense of such claim relates to activities
or intellectual property of CDC. If the other party elects to exercise such
right with respect to any such defense, the Product Owning Party shall take all
appropriate and necessary actions to assist the other party in such defense. If
the other party elects not to assume control of such defense, the Product
Owning Party shall nonetheless keep the other party fully and promptly informed
with respect thereto, including provision of notice of all discovery relating to
the other party's activities or intellectual property, and copies of all
documents and deposition records with respect thereto. Nothing in Section 6.3
shall limit in any way the Product Owning Party's obligations under Section 9.1
with respect to such claim, including without limitation the Product Owning
Party's obligation to indemnify the other party and the other party's Affiliates
against any damages or other liabilities arising from any such action.
6.4 INFRINGEMENT BY THIRD PARTIES.
6.4.1 Each party shall notify the other if it becomes aware of
infringement by third parties of any patent rights licensed hereunder, (other
than Chiron Sublicensable Patents or CDC Sublicensable Patents) if such
infringement is within the field of uses licensed to such party under this
Agreement. The patent owning party shall have the exclusive right to take
action against such infringement in its sole discretion, subject to this Section
6.4.
6.4.2 In the event that a third party is engaged in the sale of
Probe IVD Products which infringe the Chiron HCV/HIV Patents (other than a
Chiron Sublicensable Patent), the parties shall meet and confer, and negotiate
in good faith regarding patent enforcement or licensing strategy, recognizing
that (i) Chiron will control any litigation with respect to such patent
enforcement, and (ii) that each party will have an interest in any settlement of
such infringement involving a license under the Chiron HCV/HIV Patents which is
not specifically authorized under Section 2.1.1 or 2.1.3.
In general, the parties intend to utilize licensing solutions to
the extent such licenses can be structured to fairly protect the economic
interests of the parties. If, however, the parties agree to pursue legal
action, the parties shall also agree upon a reasonable allocation of both
litigation costs and recoveries.
6.4.3 In the event that (i) the parties fail to reach agreement
pursuant to Section 6.4.2; and (ii) the infringing product sold by the third
party in a country is "substantially competitive" with a CDC HCV/HIV Probe
Product directed to HCV which is then sold by CDC, a CDC Affiliate, an
Authorized Distributor or a CDC sublicensee in the same country (an "Affected
CDC Product"); and (iii) CDC has notified Chiron pursuant to Section 6.4.1 of an
Affected CDC Product in [CONFIDENTIAL TREATMENT REQUESTED] (the "6.4.1.Notice"),
then the provisions of this Section 6.4.3 shall apply. For this purpose, a
third party infringing product shall be considered "substantially competitive"
in a country if it achieves a market share in at least [CONFIDENTIAL TREATMENT
REQUESTED] of the market for Probe IVD Products directed to HCV in such country.
For this purpose, "Major Country" shall mean the United States, Germany, the
United Kingdom or Japan.
18
(a) If either (i) the 6.4.1 Notice identified an
Affected CDC Product in the United States, and Chiron fails to institute
legal action in the United States within [CONFIDENTIAL TREATMENT REQUESTED]
following receipt by Chiron of the 6.4.1 Notice and the infringement is not
otherwise abated, or (ii) the 6.4.1 Notice identified an Affected CDC 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, the United Kingdom or Japan, within
[CONFIDENTIAL TREATMENT REQUESTED] following receipt by Chiron of the 6.4.1.
Notice, and the infringement is not otherwise abated; then CDC or its
sublicensee shall be relieved of the obligation to pay that portion of Earned
Royalties set forth in Section 6.4.3(b), and [CONFIDENTIAL TREATMENT REQUESTED],
with respect to Affected CDC Products until such time as Chiron institutes such
legal action as described in this Section 6.4.3 (a).
(b) If Chiron has not instituted such legal action at the
end of such [CONFIDENTIAL TREATMENT REQUESTED] period and the infringement is
not otherwise abated, the Earned Royalties with respect to the Affected CDC
Products shall be reduced by [CONFIDENTIAL TREATMENT REQUESTED]. If, at the end
of each [CONFIDENTIAL TREATMENT REQUESTED] thereafter, Chiron has not instituted
such legal action and the infringement is not otherwise abated, such Earned
Royalties shall be reduced by an additional [CONFIDENTIAL TREATMENT REQUESTED]
of the original Earned Royalties, such that if the legal action has not
commenced and the infringement is not otherwise abated by the end of the
[CONFIDENTIAL TREATMENT REQUESTED] from receipt by Chiron of the 6.4.1 Notice,
[CONFIDENTIAL TREATMENT REQUESTED] shall be payable hereunder with respect to
the Affected CDC Products.
(c) The obligations to pay Earned Royalties and Minimum
Royalties shall be reinstated on a prospective basis at such time as CDC
receives written notice of the institution of legal action in accordance with
Section 6.4.3 (a) or the infringement is otherwise abated, all subject to
Section 6.4.3 (d).
(d) If legal action as described in Section 6.4.3 (a) has
not been instituted and the infringement is not otherwise abated for more than
[CONFIDENTIAL TREATMENT REQUESTED] following receipt by Chiron of the 6.4.1
Notice, and if, as a result of the infringement, sales of the Affected CDC
Product in a Major Country by CDC, its Affiliate, sublicensee or Authorized
Distributor have declined by [CONFIDENTIAL TREATMENT REQUESTED] or more during
the preceding [CONFIDENTIAL TREATMENT REQUESTED] period, then upon reinstatement
of Earned Royalties and Minimum Royalties pursuant to Section 6.4.3 (c), the
parties shall meet and confer regarding possible adjustments to the Earned
Royalties and Minimum Royalties for the Affected CDC 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 agreed upon reduction of Earned Royalties or
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 pursuant to Article 10, except that in the event of arbitration, each
party shall submit to the neutral a proposal with respect to adjustments
pursuant to this Section 6.4.3(d). The neutral shall be empowered to choose
19
one proposal or the other, but shall not be empowered to order any such
adjustment other than as proposed by one of the parties.
6.4.4 CDC and its sublicensees shall cooperate with Chiron in
connection with any legal action brought hereunder. Any recovery by Chiron in
any such legal action shall first be applied to reimburse all costs incurred by
Chiron or CDC in connection with such action, and the remainder shall be
allocated between the parties as agreed pursuant to Section 6.4.2; or, if no
agreement has been reached, the remainder shall be retained by Chiron.
7. TERM, TERMINATION
7.1 TERM. This Agreement shall be effective as of the Effective Date,
and shall remain in force until the expiration of the last to expire of the
Licensed Chiron Patents and the CDC Patents (provided, however, that no
royalties shall be payable only with respect to CDC HCV/HIV Probe Products
unless the manufacture, use or sale of which would, in the absence of a license,
constitute an infringement of a Valid Claim of Chiron HCV/HIV Patents).
7.2 EARLY TERMINATION. Either party may terminate the licenses
granted hereunder to the other party, without affecting the licenses granted to
the terminating party, in the following events:
(a) If the other party materially breaches this Agreement and
has failed to cure or demonstrate the nonexistence of the breach within 60 days
after receipt of a written notice and demand to cure such breach; or
(b) If the other party files in any court or agency pursuant
to any bankruptcy or insolvency law a petition in bankruptcy or insolvency or
for reorganization or similar arrangement or for the appointment of a
receiver or trustee of such party or its assets; if the other party is served
with an involuntary petition against it in any insolvency proceeding, upon
the ninety-first (91st) day after such service if such involuntary petition
has not previously been stayed or dismissed; or if the other party makes an
assignment for the benefit of its creditors. All licenses granted under or
pursuant to this Agreement are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the U.S.
Bankruptcy Code. The parties agree that the licensee of such rights under
this Agreement shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code, subject to performance by such
licensee of its preexisting obligations under this Agreement.
7.3 VOLUNTARY TERMINATION. CDC shall have the right to voluntarily
terminate all, but not less than all, rights and licenses granted to CDC or its
Affiliates under this Agreement, during the three years following the Effective
Date, on not less than six months prior written notice to Chiron. No such
termination shall affect any rights or licenses granted to Chiron or its
Affiliates hereunder.
20
7.4 SURVIVAL. The following provisions of this Agreement shall
survive expiration or termination of this Agreement, together with all
obligations accrued prior to such expiration or termination: Article 1,
Section 2.7, Section 2.8, Section 3.4, Section 3.5, Section 5.1, Section 6.3,
any agreement reached pursuant to Section 6.4.2, this Section 7.4, Article 8,
Article 9, and Article 10.
8. CONFIDENTIAL INFORMATION
From time to time during the term of this Agreement, Chiron and CDC 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 of this Agreement and for a period of
three years after termination hereof: (i) maintain the Information in
confidence, (ii) not disclose the Information to any third party, other than
employees, agents or consultants of the Receiving Party or its Affiliates or
sublicensees who have a need to know the Information and who are bound by
confidentiality obligations to the Receiving Party not less restrictive than
those contained herein and (iii) not use the Information for any purpose not
directly related to performance or otherwise authorized under this Agreement.
The obligations of this Article 8 shall not apply to any Information which 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; or which is otherwise known by
the Receiving Party at the time of disclosure by the other party; or which
otherwise becomes available to the Receiving Party from a third party not in
breach of confidentiality obligations to the other party; or which is developed
by the Receiving Party independent of any disclosure from the other party. The
Receiving Party shall also 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 Confidential
Information no less restrictive than those set forth herein. Nothing herein
shall prevent the Receiving Party from making such disclosures of Information as
are reasonably required by law, regulation, 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. 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.
9. INDEMNIFICATION
9.1 MUTUAL INDEMNITIES. Chiron shall indemnify, defend and hold
harmless CDC and its Affiliates and their officers, directors, shareholders,
employees, representatives and agents, against any claim, demand, loss, damage
or injury, including reasonable attorneys' fees, arising from, relating to, or
otherwise in respect of the manufacture, use or sale of Licensed Chiron
Products, provided, however, that such indemnity shall not extend to damages
arising directly from any breach or willful or negligent act of CDC or its
Affiliates. CDC shall indemnify, defend and hold harmless Chiron and its
Affiliates and their officers, directors, shareholders, employees,
representatives and agents, against any claim, demand, loss, damage or injury,
including reasonable
21
attorneys' fees, arising from, relating to or otherwise in respect of the
manufacture, use or sale of Licensed CDC Products, 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 INDEMNIFICATION PROCEDURES. A party claiming indemnification
pursuant to Section 9.1 (the "indemnified party") shall promptly notify the
other party (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 if, and 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 control the defense of the claim at its own expense. If the right to
assume and have sole control of 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 indemnified
party after the assumption of the defense by 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 will not settle or compromise the claim without the prior written consent
of indemnifying party, and the indemnifying party will 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,
will not be unreasonably withheld. The indemnified party shall reasonably
cooperate with the indemnifying party and will make available to indemnifying
party all pertinent information under the control of the indemnified party, all
at the expense of the indemnifying party.
10. ALTERNATIVE DISPUTE RESOLUTION
10.1 The parties recognize that bona fide disputes as to certain
matters may arise from time to time. In the event of the occurrence of such a
dispute, either party may, by written notice to the other party, have such
dispute referred to the respective Presidents of Chiron and CDC or their
successors, for attempted resolution by good faith negotiations within 30 days
after such notice is received. In the event that such designated officers are
not able to resolve the referred dispute within the 30-day period, either party
may invoke the provisions of Section 10.2.
10.2 Any dispute, controversy or claim arising out of or relating to
the validity, construction, enforceability or performance of this Agreement
shall be settled by binding Alternative Dispute Resolution ("ADR") in the manner
described below:
10.2.1 If a party intends to begin an ADR to resolve a dispute,
that party shall provide written notice (the "ADR Request") to counsel for the
other party informing the other party of its intention and the issues to be
resolved. From the date of the ADR Request and until such time as any matter
has been finally settled by ADR, the running of the time periods contained in
Section 7.2 as to which a party must cure a breach of this Agreement shall be
suspended as to the subject matter of the dispute.
22
10.2.2 Within 10 business days after the receipt of the ADR
Request, the other party may, by written notice to the counsel for the party
initiating ADR, add additional issues to be resolved. Within 20 business days
following the receipt of the ADR Request a neutral shall be selected by the
then-President of the Center for Public Resources ("CPR"), 000 Xxxxx Xxx., Xxx
Xxxx, Xxx Xxxx 00000. The neutral shall be an individual who shall preside in
resolution of any disputes between the parties. The neutral selected shall be a
member of the Judicial Panel of the CPR and shall not be an employee, director
or shareholder of any party or of an Affiliate of any party and shall agree to
comply with the time deadlines imposed by this Section 10.2 and such extension
of times as the parties may agree upon. Any party shall have 10 business days
from the date the neutral is selected to object in good faith to the selection
of that person. If any party makes such an objection, the then-President of the
CPR shall, as soon as possible thereafter, elect another neutral under the same
conditions set forth above. This second selection shall be final.
10.2.3 No later than 90 business days after selection, the neutral
shall hold a hearing to resolve each of the issues identified by the parties and
shall render the award as expeditiously thereafter as possible but in no event
more than 60 days after the close of hearings, except in an extraordinary
situation where such time limitation would deprive either party of procedural
due process. In making the award the neutral shall rule on each disputed issue
and shall adopt in whole or in part the proposed ruling of one of the parties on
each disputed issue. Such ruling and award shall be in writing, and shall set
forth the reasons therefor.
10.2.4 The parties intend that discovery, although permitted as
described below, will be limited except in exceptional circumstances, as
determined by the neutral. The neutral shall permit limited discovery as
necessary for an understanding of any legitimate issue raised in the ADR,
including the production of documents. Each party shall be permitted but not
required to take the deposition of not more than five persons, and each such
deposition shall not exceed six hours in length. If the neutral believes that
exceptional circumstances exist, and additional discovery is necessary for a
full and fair resolution of the issues, additional discovery as the neutral
deems necessary may be ordered. At the hearing the parties may present
testimony (either by live witness or deposition) and documentary evidence. The
hearing shall be held at such place as is agreed upon by the parties or if they
are unable to agree at a place designated by the neutral. Each party shall have
the right to be represented by counsel. The neutral shall have sole discretion
with regard to the admissibility of any evidence and all other matters relating
to the conduct of the hearing. The neutral shall in rendering a decision, apply
the substantive law of New York without giving effect to any rules or laws
relating to arbitration, and shall attempt to resolve any dispute based upon the
terms of this Agreement as written. The decision of the neutral shall be final
and not appealable, except in cases of fraud or bad faith on the part of the
neutral or any party to the ADR proceeding in connection with the conduct of
such proceedings.
10.2.5 At least 15 business days prior to the date set for the
hearing, each party shall submit to the other party and the neutral a list of
all documents on which the party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, the party
intends to call at the hearing together with a brief summary of each witness'
expected testimony. At least five business days prior to the hearing, each
party must submit to the neutral and serve on the other party a proposed ruling
on each issue to be resolved. The document containing the proposed rulings
shall be limited to the proposed rulings, and shall contain no argument or
analysis of the facts or issues,
23
and shall be limited to not more than 50 pages. No more than five business
days following the close of hearings, the parties may each submit post hearing
briefs to the neutral addressing the evidence and issues to be resolved. The
post-hearing briefs shall not be more than 30 pages.
10.3 The neutral shall determine the proportion in which the parties
shall pay the costs and fees of the ADR. Unless otherwise determined by the
neutral, each party shall pay its own costs (including, without limitation,
attorneys' fees) and expenses in connection with such ADR.
10.4 The ADR proceeding shall be confidential, and the neutral shall
issue appropriate protective orders to safeguard each parties' Information.
Except as required by law, no party shall make (or instruct the neutral to make)
any public announcement with respect to the proceedings or decision of the
neutral without the prior written consent of each other party. The existence of
any dispute submitted to ADR, and the award of the neutral, shall be kept in
confidence by the parties and the neutral, except as required in connection with
the enforcement of such award or as otherwise required by applicable law.
10.5 Any judgment upon the award rendered by the neutral may be entered
in any court having jurisdiction thereof.
10.6 Nothing in this Article 10 shall be deemed to preclude a party
from bringing suit against the other party in a court of competent jurisdiction
to enforce, or enjoin infringement of, such party's intellectual property
rights.
11. MISCELLANEOUS
11.1 PROVISIONS CONTRARY TO LAW. In performing this Agreement, the
parties shall comply with all applicable laws. Nothing in this Agreement shall
be construed so as to require the violation of any law, and wherever there is
any conflict between any provision of this Agreement and any law the law shall
prevail, but in such event the affected provision of this Agreement shall be
adjusted only to the extent necessary to bring it within the applicable law,
provided that such adjustment shall be consistent with the intent of the
parties, as evidenced by this Agreement as a whole.
11.2 NOTICES. Any notice, report, demand or other communication
required or permitted to be given under this Agreement shall be in writing in
English, and shall be delivered by hand or sent by prepaid telex, cable or
telecopy or sent, postage prepaid, by registered, certified or express mail with
return receipt requested, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied or, if
mailed, on the date shown on the return receipt, as follows (unless changed by
notice so given):
(i) For Chiron:
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx
X.X.X.
Telefax: (000) 000-0000
Attn: President
24
cc: General Counsel
Telefax: (000) 000-0000
(ii) For CDC:
Chiron Diagnostics Corporation
000 Xxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Telefax: (000) 000-0000
Attn: President
in each case, with a copy to Purchaser:
Bayer Corporation
Business Group Diagnostics
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telefax: (000) 000-0000
Attn: Division Counsel
11.3 FORCE MAJEURE. Neither party to this Agreement shall be liable
for delay or failure in the performance of any of its obligations, other than an
obligation to make payments to the other party hereunder, if such delay or
failure is due to causes beyond its reasonable control, including, without
limitation, acts of God, fires, earthquakes, strikes and labor disputes, acts of
war, civil unrest or intervention of any governmental authority, but any such
delay or failure shall be remedied by such party as soon as is reasonably
possible.
11.4 USE OF NAMES. Except as provided in the Stock Purchase Agreement
and the other Ancillary Agreements, no party shall use the name of the other in
any promotional communications or advertising, without the prior written consent
of the party whose name is used.
11.5 ASSIGNMENT
11.5.1 Chiron may assign its rights as a licensee of any CDC
Patent or CDC Know-How under this Agreement to any Affiliate of Chiron or any
successor in interest to all or substantially all of that part of Chiron's
business to which such CDC Patent or CDC Know-How relates; and Chiron may assign
its rights as a licensor hereunder in whole or in part to any successor in
interest to some or all of Licensed Chiron Patents or Chiron IVD Know-How, as
applicable. CDC may assign its rights as a licensee of any Licensed Chiron
Patent or Chiron IVD Know-How under this Agreement to any Affiliate of CDC or
any successor in interest to all or substantially all of that part of CDC's
business to which such Licensed Chiron Patent or Chiron IVD Know-How relates;
and CDC may assign its rights as a licensor hereunder in whole or in part to any
successor in interest to some or all of CDC Patents or the CDC Know-How, as
applicable.
25
11.5.2 Except as set forth in this Section 11.5, no party shall
have the right or power to assign its rights and obligations under this
Agreement without the prior written consent of the other party hereto. This
Agreement shall inure to the benefit of and be binding on the parties' permitted
assigns and successors in interest. In the event of a transfer of any Licensed
Chiron Patent, CDC Patent, CDC Know-How or Chiron IVD Know-How, the transferor
shall make provisions for the continued enjoyment of the rights under such
Licensed Chiron Patent, CDC Patent, CDC Know-How or Chiron IVD Know-How granted
under this Agreement.
11.6 NO THIRD-PARTY BENEFICIARIES. Except as set forth in Article 9,
this Agreement is entered into solely for the benefit of the parties hereto and
Purchaser, and the provisions of this Agreement shall be for the sole and
exclusive benefit of such parties. Nothing herein contained will be deemed to
create any third party beneficiaries or confer any benefit or rights on or to
any person not a party hereto other than Purchaser, and no person not a party
hereto shall be entitled to enforce any provisions hereof or exercise any rights
hereunder or other than Purchaser.
11.7 WAIVERS AND MODIFICATIONS. The failure of any party to insist on
the performance of any obligation hereunder shall not act as a waiver of such
obligation. No waiver, modification, release or amendment of any obligation
under this Agreement shall be valid or effective unless in writing and signed by
both parties hereto.
11.8 CHOICE OF LAW. This Agreement is subject to and shall be
construed and enforced in accordance with the laws of the State of New York.
11.9 HEADINGS. The headings of the Sections of this Agreement have
been inserted for convenience of reference only and do not constitute a part of
this Agreement.
11.10 ENTIRE AGREEMENT. This Agreement, together with the Stock
Purchase Agreement, the other Ancillary Agreements and any agreement executed
and delivered by the parties hereto concurrently herewith and the Exhibits
attached hereto, constitutes the entire agreement between Chiron and CDC with
respect to the subject matter hereof. There are no representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein or therein. This Agreement, the Stock Purchase
Agreement and the other Ancillary Agreements supersede all prior agreements
between the parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
26
11.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date(s)
written below.
CHIRON CORPORATION CHIRON DIAGNOSTICS
CORPORATION
By: /s/ XXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
--------------------------------- ---------------------------------
Name: /s/ Xxxxx X. Xxxxx Name: /s/ Xxxxxxx X. Xxxxx
------------------------------- --------------------------------
Title: /s/ Chief Financial Officer Title: /s/ Assistant Secretary
------------------------------ -------------------------------
Date: /s/ November 30, 1998 Date: /s/ November 30, 1998
------------------------------- --------------------------------
Exhibits
A Compensation to Chiron
Attachment A-1: Summary of Adjustments to HCV Earned Royalties and
Minimum Payments
B [CONFIDENTIAL TREATMENT REQUESTED] Patent Applications
27
Exhibit A
COMPENSATION TO CHIRON
1. EARNED ROYALTY. In consideration of the licenses granted pursuant to
Section 2.1, CDC agrees to pay earned royalties as a percentage of Net Sales of
CDC HCV/HIV Probe Products, as follows:
[CONFIDENTIAL TREATMENT REQUESTED]
(a) Earned Royalties shall be adjusted [CONFIDENTIAL TREATMENT
REQUESTED].
(b) Earned Royalties shall be payable quarterly commencing with the
first full or partial calendar quarter following the Effective Date, within
sixty (60) days following the end of each calendar quarter, and shall be
accompanied by a report pursuant to Section 3.4 of this Agreement.
2. MINIMUM ROYALTY. CDC agrees to pay Chiron a minimum patent royalty
[CONFIDENTIAL TREATMENT REQUESTED] of CDC HCV/HIV Probe Products shipped which
are directed to HCV ("Minimum Royalty"). Initially, such Minimum Royalties
shall be as follows:
[CONFIDENTIAL TREATMENT REQUESTED]
(a) Minimum Royalties shall be determined on [CONFIDENTIAL TREATMENT
REQUESTED], excluding those countries in which the Minimum Royalties are
adjusted pursuant to Paragraph 2(b). Minimum Royalties in such countries shall
be determined on a country by country, product by product basis. Minimum
Royalties shall be adjusted, [CONFIDENTIAL TREATMENT REQUESTED].
(b) At the request of Purchaser, the parties agree to meet and
reasonably consider adjustment to the Minimum Royalty with respect to any CDC
HCV/HIV Probe Product in any country in the event that action by a governmental
pricing or reimbursement authority or other governmental agency results in a
requirement that CDC sell such CDC HCV/HIV Probe Product at a price below
[CONFIDENTIAL TREATMENT REQUESTED] for such product in such country, provided
that no adjustment shall be made to the Minimum Royalty unless mutually agreed
or determined pursuant to the last sentence of this Paragraph 3 (b). The
parties intend that adjustments be made to cause the Minimum Royalty with
respect to the affected CDC HCV/HIV Probe Product in the affected country to be
consistent with the economic expectations of the parties hereunder to the
greatest extent possible, and to bear a similar relationship to the mandated
maximum pricing of the product as is borne by the Minimum Royalties specified in
Paragraph 2. If the parties are unable to agree on an adjustment mechanism, the
matter shall be submitted for resolution under Article 10, except that any
arbitration shall be conducted in the same manner as is set forth in Section
6.4.3 (d).
28
(c) Minimum Royalties shall be payable quarterly commencing with the
first full or partial calendar quarter following the Effective Date, within
sixty (60) days following the end of each calendar quarter, shall be accompanied
by a report pursuant to Section 3.4, and shall be fully creditable against
Earned Royalties payable pursuant to Paragraph 1 above for the same calendar
quarter.
3. MOST FAVORED LICENSEE. In the event that Chiron grants any license to
any third party under the Chiron HCV/HIV Patents for any Probe IVD Product
pursuant to Section 2.1.3, Chiron agrees to give written notice to CDC of its
intent to grant such license, without specifying the identity of the potential
licensee, at least [CONFIDENTIAL TREATMENT REQUESTED] prior to the effective
date of such license. Chiron further agrees to give written notice to CDC of
the granting of any such additional license [CONFIDENTIAL TREATMENT REQUESTED]
following the effective date thereof, which notice shall identify [CONFIDENTIAL
TREATMENT REQUESTED].
(a) In the event that Chiron grants [CONFIDENTIAL TREATMENT REQUESTED]
pursuant to Section 2.1.3(a), and subject to paragraph 3(c), the [CONFIDENTIAL
TREATMENT REQUESTED] hereunder with respect CDC HCV/HIV Probe Products directed
to HCV shall [CONFIDENTIAL TREATMENT REQUESTED], and the [CONFIDENTIAL TREATMENT
REQUESTED] with respect to CDC HCV/HIV Probe Products directed to HIV shall
[CONFIDENTIAL TREATMENT REQUESTED], each on a product-by-product basis, without
action by CDC, [CONFIDENTIAL TREATMENT REQUESTED]. With respect to CDC HCV/HIV
Probe Products directed to HCV, in determining the [CONFIDENTIAL TREATMENT
REQUESTED]. Such [CONFIDENTIAL TREATMENT REQUESTED] shall be effective
prospectively from the later of the date of execution of the third party license
or the date on which the third party earned royalties and minimum royalties
become effective. The foregoing [CONFIDENTIAL TREATMENT REQUESTED] shall be
made on a [CONFIDENTIAL TREATMENT REQUESTED] if [CONFIDENTIAL TREATMENT
REQUESTED] third party license [CONFIDENTIAL TREATMENT REQUESTED] granted by
Chiron are [CONFIDENTIAL TREATMENT REQUESTED]. Otherwise, Paragraph 3(b) shall
apply.
(b) In the event that Chiron elects to grant [CONFIDENTIAL TREATMENT
REQUESTED] with respect to HCV or HIV pursuant to Section 2.1.3(b), the
following provisions shall apply in lieu of Paragraph 3(a) with respect to such
[CONFIDENTIAL TREATMENT REQUESTED]. Subject to Paragraph 3(c), the
[CONFIDENTIAL TREATMENT REQUESTED] hereunder with respect to CDC HCV/HIV Probe
Products directed to HCV and sold [CONFIDENTIAL TREATMENT REQUESTED]
shall [CONFIDENTIAL TREATMENT REQUESTED], and the [CONFIDENTIAL TREATMENT
REQUESTED] with respect to CDC HCV/HIV Probe Products directed to HIV and sold
[CONFIDENTIAL TREATMENT REQUESTED] shall be [CONFIDENTIAL TREATMENT REQUESTED],
each on a product by product basis, without action by CDC, to [CONFIDENTIAL
TREATMENT REQUESTED].
29
(c) In no event shall [CONFIDENTIAL TREATMENT REQUESTED] made pursuant
to Paragraph 3(a) or 3(b) result in [CONFIDENTIAL TREATMENT REQUESTED]. For the
avoidance of doubt, Attachment A-1 describes the application of Paragraphs 3(a),
(b) and (c) in various licensing situations.
(d) [CONFIDENTIAL TREATMENT REQUESTED] as specified in Paragraph 3(a)
or 3(b) will be made only if the patent portfolio licensed to the third party
with respect to HCV does not contain any patents or patent applications which
are owned by Chiron, or licensed to Chiron with right to sublicense, and which
are not Chiron HCV/HIV Patents. If additional HCV patents or patent
applications are offered to the third party, either (i) Chiron will offer to
include such patents or patent applications within the Chiron HCV/HIV Patents on
the terms set forth in this Agreement [CONFIDENTIAL TREATMENT REQUESTED], or
(ii) [CONFIDENTIAL TREATMENT REQUESTED] specified in Paragraph 3(a) or 3(b) will
not be made.
(e) In addition, if [CONFIDENTIAL TREATMENT REQUESTED] the third party
referenced in Paragraph 3(a), taken as a whole, are more favorable to the
licensee than the corresponding terms of this Agreement, CDC shall have the
right to substitute, on a prospective basis, all, but not less than all, of such
terms for the corresponding terms of this Agreement, by giving written notice to
Chiron within thirty (30) days following receiving notice of such license terms.
Such substituted terms shall become effective upon Chiron's receipt of the
written notice from CDC accepting such terms.
(f) CDC shall remain liable hereunder for all amounts payable to
Chiron under the original terms of this Agreement with respect to all product
sales prior to the effective date of [CONFIDENTIAL TREATMENT REQUESTED] terms
pursuant to Paragraph 2 (b) or Paragraph 3 (a), (b) or (d) above.
4. SINGLE ROYALTY PER PRODUCT. Only one Earned Royalty and Minimum Royalty
shall be due with respect to a sale of any CDC HCV/HIV Probe Product,
irrespective of the number of patents or Valid Claims in the Licensed Chiron
Patents covering such product, and such Earned Royalty and Minimum Royalty shall
be those applicable to HCV if such product is covered by Valid Claim in the
Licensed Chiron Patents directed to both HCV and HIV.
30
Attachment A-1
Application of Adjustments to HCV and HIV Earned Royalties and Minimum Royalties
[CONFIDENTIAL TREATMENT REQUESTED]
EXAMPLE OF HCV ROYALTY CALCULATION
[CONFIDENTIAL TREATMENT REQUESTED]
31
EXHIBIT B
[CONFIDENTIAL TREATMENT REQUESTED]
