Exhibit 10.3

Confidential

Certain information has been excluded from this exhibit because it (i) is not
material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

 

 

 

 

IVD TEST KIT development AND SUPPLY AGREEMENT

This IVD Test Kit Development and Supply Agreement (the “Agreement”) is
effective as of the date of last signature below (the “Effective Date”) and is
made by and between Illumina, Inc., a Delaware corporation (“Illumina”) and
Adaptive Biotechnologies Corp., a Washington corporation (“Partner”).  Illumina
and Partner may be referred to each individually as a “Party” and collectively
as the “Parties.”

Recitals

WHEREAS, Partner desires to develop and commercialize in vitro diagnostic test
kits under two brand names for use on an Illumina sequencing instrument.  Such
test kits would: (a) include nucleic acid sample preparation, library
preparation, and off-instrument software components developed by Partner; and
(b) utilize nucleic acid sequencing consumable components and on-instrument
software provided by Illumina.

WHEREAS, under this Agreement, Illumina will develop and supply certain
instruments, custom software, and components for the development,
commercialization and use of such test kits, and provide Partner certain
regulatory and related support for such test kits;

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:

Article I.
Definitions

In addition to those terms defined elsewhere, the following capitalized terms
have the respective meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly, through one or more intermediaries Controls, is Controlled by, or
is under common Control with, such first Person for so long as such other Person
Controls, is Controlled by, or is under common Control with such first
Person.  For purposes of this definition, “Control” means the possession, direct
or indirect, of the power to direct or cause the direction of the management of
a Person, whether through ownership interests, by contract, or
otherwise.  Without limiting the generality of the foregoing, a Person will be
deemed to Control any other Person in which it owns, directly or indirectly,
more than 50% of the outstanding shares, stock, securities or other ownership
interests of such Person.  

“Change in Control” means the occurrence of any of the following, directly or
indirectly, in one transaction or in a series of transactions: (a) any direct or
indirect acquisition of Partner (or any Affiliate of Partner that Controls
Partner) by means of merger, consolidation, purchase, exchange or contribution
of securities, or other means; (b) any other consolidation or merger of Partner
(or any Affiliate of Partner that Controls Partner) with or into any other
Person; (c) the sale, transfer, assignment, or other disposition of securities
of Partner (or any Affiliate of Partner that Controls Partner) representing a
majority of the voting power of Partner’s outstanding voting securities or a
majority of the voting power of the outstanding voting securities of any
Affiliate of Partner that Controls Partner; (d) any other transaction(s) in
which the holders of the outstanding securities of Partner immediately before
such transaction do not, immediately after such transaction(s), retain Control
of Partner, or any other transaction(s) in which the holders of the outstanding
securities of any Affiliate that Controls Partner immediately before such
transaction do not, immediately after such transaction(s), retain Control of
such Affiliate; or (e) the direct or indirect sale, transfer, assignment, or
other disposition of all or substantially all of the business or assets of
Partner to which this Agreement relates.

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“clonoSEQ IVD Test Kit” means an IVD Test Kit for assessment and monitoring of
minimal residual disease in connection with treatment or management of patients
with lymphoid malignancies, which is currently expected to be marketed under
Partner’s clonoSEQ® brand (but may be marketed under an alternative brand as
specified in the Development Plan).

“Commercially Reasonable Efforts” means, with respect to the efforts to be
expended by a Party in performing its obligations specified in this Agreement,
the reasonable, diligent, good faith efforts to accomplish such obligations as
such Party would normally use to accomplish similar obligations under similar
circumstances within the life sciences industry.  [***]  “Commercially
Reasonable” has an equivalent meaning.

“Confidential Information” means all information and know-how and any tangible
embodiments thereof provided or disclosed by the Disclosing Party to the
Receiving Party in the course of performing this Agreement, including: research
data, manufacturing processes and techniques, scientific, manufacturing, and
business plans, and information relating to present or future products, sales,
suppliers, customers, or employees; provided that all disclosures of
Confidential Information in written or tangible form must be identified or
marked as “Confidential” (or using similar language), and all disclosures of
Confidential Information in oral or visual form must be identified as such at
the time of disclosure and confirmed in writing by the Disclosing Party within
[***] calendar days of such disclosure (email acceptable).

“Customer” means an end-user purchaser of an IVD Test Kit.  

“Development Plan” means the written development plan describing the activities
of each Party necessary to develop and commercialize each IVD Test Kit in
accordance with this Agreement.  Each Development Plan will include at least:
(a) the configuration of the subject IVD Test Kit, and the Illumina Components
and IVD Hardware utilized in the subject IVD System; (b) the plans and timelines
for the development and optimization of the IVD Test Kit and IVD System,
including the type, amount, and any applicable pricing of Illumina Components,
IVD Hardware and Custom Software required for such development and optimization,
including expected delivery dates therefor; (c) the requirements for development
of the Custom Software for Partner; (d) the intended use statement for the IVD
Test Kit; (e) a description of the development steps, testing,
validation,  studies and regulatory path planned by Partner necessary in order
to pursue Regulatory Approval and commercialize the IVD Test Kit (including
analytical or pre-clinical studies, stability studies, and clinical studies);
(f) a description of any development steps, testing, validation, studies and
regulatory path planned by Illumina necessary for any expansion of claims
concerning the IVD Hardware or Illumina Components and associated costs (if any)
to be paid by Partner in connection with such work; and (f) directional
(non-binding) pricing for IVD Hardware and Illumina Components, applicable to
Customers. Upon execution by the Parties in an amendment to this Agreement
pursuant to Section 10.10, each Development Plan will be incorporated into this
Agreement in Exhibit B.  Each reference to the Development Plan in this
Agreement refers to the applicable Development Plan relating to the subject IVD
Test Kit.

“Distributor” means a Third Party distributor or reseller authorized by Partner
to purchase IVD Kits from Partner or its Affiliate and re-sell those IVD Kits to
Customers.

“Documentation” means, to the extent necessary to obtain each Regulatory
Approval as may be required for the intended use of the IVD Test Kit and IVD
System in the Territory pursuant to this Agreement as set forth in the
Development Plan: (a) applications, registrations, licenses, authorizations and
Regulatory Approvals concerning the applicable Illumina Components and IVD
Hardware as necessary; (b) correspondence and reports submitted to or received
from Regulatory Authorities (including minutes and official contact reports
relating to any communications with any Regulatory Authority), including all
adverse event files and complaint files that relate specifically to the
applicable Illumina Components and IVD Hardware; and (c) analytical, clinical,
manufacturing and controls, and other data relied upon and submitted in support
of any of the foregoing with respect to the applicable Illumina Components and
IVD Hardware.

“Expansion Field” means genetic testing of human samples using the immunoSEQ Dx
Test Kit for any field outside of the Initial Field that is expressly agreed to
by the Parties in a Development Plan or amendment to this Agreement (in each
case pursuant to Section 10.10) ; provided however, that the Expansion Field
includes only analytical claims and excludes the use of the IVD Test Kit as a
companion diagnostic.

“Field” means the Initial Field and any Expansion Fields.

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“Force Majeure “ means any cause beyond such Party’s reasonable control,
including acts of God, fire, flood, tornado, earthquake, hurricane, lightning,
any action taken by government or a regulatory authority, actual or threatened
acts of war, terrorism, civil disturbance or insurrection, sabotage, labor
shortages or disputes, failure or delay in delivery by Illumina’s suppliers or
subcontractors that is beyond Illumina’s ability to cure, or interruption or
failure of any utility service.

“Illumina Components” means those components set forth on Exhibit A which
Illumina or its Affiliate will supply to Partner and its Customers for use in an
IVD System pursuant to a Development Plan.  Illumina Components may include new
versions to the extent provided in accordance with Section 4.02.

“Initial Field” means: (a) with respect to the clonoSEQ IVD Test Kit, genetic
testing of DNA libraries from human genomic DNA extracted from peripheral whole
blood, formalin-fixed paraffin-embedded tissue, or bone marrow for the
assessment and monitoring of minimal residual disease in connection with
treatment or management of patients with lymphoid malignancies; and (b) with
respect to the immunoSEQ Dx IVD Test Kit, genetic testing of DNA libraries from
human genomic DNA extracted from peripheral whole blood, formalin-fixed
paraffin-embedded tissue, or bone marrow for the assessment and monitoring of
solid tumors and T-cell lymphomas; provided however, that in each case the
Initial Field includes only analytical claims and excludes the use of an IVD
Test Kit as a companion diagnostic.

“Intellectual Property Right(s)” means all rights in patent, copyrights,
know-how, trademark, service mark and trade dress rights and other industrial or
intellectual property rights under the Laws of any jurisdiction, whether
registered or not and including all applications or rights to apply therefor and
registrations with respect thereto.

“IVD Hardware” means Illumina’s NextSeq 550Dx sequencing instrument.

“IVD System” means a complete in vitro diagnostic system consisting of: (a) IVD
Hardware; (b) Illumina Components; (c) the Custom Software (as defined in
Section 2.01(c)); and (d) an IVD Test Kit.  Each IVD System will be described in
more detail in the applicable Development Plan.  

“IVD Test Kit” means a kitted assay developed by Partner for in vitro diagnostic
use with IVD Hardware, Illumina Components, and Custom Software in an IVD System
in the Territory in the Initial Field and any Expansion Fields, which may
consist generally of nucleic acid sample preparation reagents, sample QC,
library preparation reagents, and off-instrument analysis and interpretation
software that will accept IVD Hardware standard output files.  Each IVD Test Kit
will be described in more detail in the applicable Development Plan.

“immunoSEQ Dx IVD Test Kit” means an IVD Test Kit for the assessment and
monitoring of solid tumors and T-cell lymphomas in the Initial Field and
potentially other uses in any Expansion Field, which is currently expected to be
marketed under Partner’s immunoSEQ Dx brand (but may be marketed under an
alternative brand as specified in the Development Plan).

“Law” means: (a) all statutes, regulations, ordinances, directives, standards or
legislation to which a Party is subject and that are binding on the Party as a
matter of law; (b) common law and the law of equity as applicable to a Party;
(c) court orders, judgments or decrees that are binding a Party; (d) industry
codes of practice, policies, or standards in each case to the extent enforceable
against a Party by a governmental authority or Regulatory Authority as law; and
(e) applicable policies, rules, or orders made or given by a governmental
authority or Regulatory Authority that are binding on a Party as a matter of
law.

“Net Sales” means the gross amount invoiced for the arm’s length sale, transfer
or other disposition of the IVD Test Kit in the Territory to a Customer or
Distributor by Partner or its Affiliate, less the following items to the extent
actually paid, taken, or incurred with respect to such sale, transfer, or other
disposition, all in accordance with GAAP (except as otherwise provided below):

(i)Credits and allowances for returns (actual, or estimated to the extent
Partner estimates such returns for purposes of its financial reporting in
accordance with GAAP), rejections, recalls, or billing corrections;

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(ii)separately itemized freight, postage, shipping and insurance, handling and
other transportation costs, as well as actual, reasonable, Customer training or
other product implementation expenditures, provided that such items are passed
on to the purchaser at cost or reasonable estimation of actual cost;

(iii)separately itemized sales, use, value added, medical device excise, and
other similar taxes (excluding income taxes), tariffs, customs duties,
surcharges and other governmental charges levied on the production, sale,
transportation, delivery or use of the IVD Test Kit or Custom Software in the
Territory that are incurred at time of sale or are directly related to the sale,
are actually paid and are included in the gross amount invoiced; and

(iv)any quantity, cash or other trade discounts, rebates, credit card fees paid,
or charge backs.

No deductions may be made for sales commissions or collection costs.  Partner’s
transfer of an IVD Test Kit or to an Affiliate (unless such transfer is to an
Affiliate end-user) will not be included in Net Sales.  For the avoidance of
doubt, the gross amount invoiced by Affiliates to Customers for sale, transfer
or other disposition of an IVD Test Kit (including access to Custom Software) in
the Territory is included in Net Sales.  If an IVD Test Kit is sold,
transferred, or otherwise disposed of or provided to a third party, in a manner
that is not an arm’s-length transaction (including without limitation,
transactions with related parties, transactions made under duress or threat of
litigation, transactions made for no consideration, and transactions made
pursuant to a collaboration, joint venture, or similar relationship), or for
non-monetary consideration, then Net Sales for such transaction will equal the
average Net Sales from the arm’s length sale of such IVD Test Kit in the
applicable country during the same Period; provided however, that discounts on
IVD Test Kits provided for [***] shall only be treated as generating Net Sales
in the amount of the discounted price actually paid, subject to permissible
deductions.  Any IVD Test Kits provided for [***] will be considered sales not
at arm’s length for purposes of determining Net Sales.

If there is not sufficient information available to determine average Net Sales
for the above calculations, Illumina and Partner will negotiate in good faith an
appropriate Net Sales value, taking into consideration the fair market value of
such IVD Test Kit and the Net Sales from similar IVD Test Kits in similar
countries.  

“Person” means an individual or firm, trust, corporation, partnership, joint
venture (whether entity-based or by contract), limited liability company,
association, unincorporated organization, or other legal or governmental entity.

“Regulatory Approval” means all approvals, licenses, consents, authorizations,
clearances and CE marking (including self-certification when applicable) from
applicable Regulatory Authorities required to commercialize the IVD Test Kit,
IVD System, Custom Software, Illumina Components, or IVD Hardware (as the
context requires) in a given jurisdiction.

“Regulatory Authority” means any national, supranational, regional, state or
local regulatory agency, administration, department, bureau, commission, council
or other governmental entity including the FDA, the EMA, the PMDA, and any
notified body or other equivalent entity, involved in the granting or receipt of
approvals, licenses, consents, authorizations, clearances, and CE marking
(including self-certification when applicable) for in vitro diagnostic devices.

“Territory” means the United States and any other jurisdictions specified in the
Development Plan for the applicable IVD Test Kit. For clarity, the Parties will
consider in good faith, but will not be obliged, to expand the Territory outside
of the United States.

Article II.
Development and Commercialization of the IVD Test Kits

2.01Development of the IVD Test Kits.  This agreement concerns IVD Test Kits for
development and commercialization in the Initial Field and any Expansion Fields
in the Territory by Partner for use with Illumina Components on IVD Hardware
running Custom Software to be developed and provided by Illumina.  These
activities will be undertaken as follows, with additional details to be provided
in each applicable Development Plan:

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(a)Subject to the terms and conditions of this Agreement, the Parties will use
Commercially Reasonable Efforts to develop and obtain Regulatory Approval as
necessary for each IVD Test Kit in the Initial Field and any agreed Expansion
Fields in the Territory in accordance with the Development Plan;  

(b)Illumina will develop and transfer to Partner a custom test execution
software module for use on the IVD Hardware with each IVD Test Kit, pursuant to
the Development Plan (the “Custom Software”);

(c)Illumina will, subject to Section 2.05, use Commercially Reasonable Efforts
to seek, obtain, and maintain any necessary Regulatory Approvals for the IVD
Hardware and Illumina Components, in each case to the extent required under
applicable Law to enable Partner to develop and commercialize each IVD Test Kit
in the Territory, in accordance with the Development Plan and this Agreement;

(d)Partner will use Commercially Reasonable Efforts to seek, obtain, and
maintain Regulatory Approvals for each IVD Test Kit and the Custom Software in
the Territory, in accordance with the Development Plan and this Agreement;

(e)Illumina will, subject to Section 2.05, provide to Partner reasonable support
in connection with Partner seeking, obtaining and maintaining Regulatory
Approvals for each IVD Test Kit and Custom Software in the Territory, in
accordance with the Development Plan; and

(f)Partner will purchase, and Illumina will sell to Partner, the IVD Hardware
and Illumina Components as necessary for performance of each Development Plan
pursuant to Section 2.02 below.  

For clarity, Partner may sell IVD Test Kits in the Territory in the Initial
Field and any Expansion Field, with the latter to be identified by an amendment
to this Agreement made pursuant to Section 10.10.  If additional Custom Software
or modification of existing Custom Software is required to support IVD Test Kits
in an Expansion Field, Partner will pay Illumina for the development of such
Custom Software in accord with Exhibit D.  If, in connection with any Expansion
Field, Illumina agrees to pursue additional Regulatory Approvals for IVD
Hardware or Illumina Components pursuant to Section 2.05, the Parties will in
good faith negotiate terms for Illumina to pursue any such additional Regulatory
Approvals and the costs to be paid by Partner to Illumina in connection with the
pursuit of those Regulatory Approvals.  

A Development Plan may only be amended or added by written agreement pursuant to
Section 10.10.  For clarity, neither Party is under any obligation to enter into
any amendment to this Agreement.

For clarity, except to the extent expressly provided in this Agreement, in the
Development Plan, or in a separate agreement entered into by the Parties,
Partner will be solely responsible for: (i) developing and testing each IVD Test
Kit (including analytical or pre-clinical studies, validation studies, stability
studies, and clinical studies directly related thereto); (ii) preparing and
submitting regulatory filings and obtaining Regulatory Approvals for each IVD
Test Kit (and related Custom Software); and (iii) marketing, selling,
supporting, supplying and otherwise commercializing each IVD Test Kit (and
related Custom Software).

Further for clarity, except to the extent expressly provided in this Agreement,
in the Development Plan, or in a separate agreement entered into by the Parties,
Illumina will be solely responsible for: (i) developing and testing all IVD
Hardware and Illumina Components as needed to support IVD Test Kits in the
Territory in the Field pursuant to the terms and conditions of this Agreement
(including any required studies directly related thereto); (ii) preparing and
submitting regulatory filings and obtaining Regulatory Approvals for IVD
Hardware and Illumina Components as may be required to permit their marketing
and use with IVD Test Kits in the Territory in the Initial Field and any agreed
upon Expansion Field pursuant to the terms and conditions of this Agreement; and
(iii) marketing, selling, supporting, supplying and otherwise commercializing
IVD Hardware and Illumina Components in the Territory pursuant to the terms and
conditions of this Agreement.

2.02Supply and Purchase of IVD Hardware and Illumina Components.  

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(a)All IVD Hardware and Illumina Components purchased by Partner for development
and testing of IVD Test Kits under this Agreement will be purchased at the
prices set forth in Exhibit A (which prices, for clarity, only apply with
respect to products to be used under and in accordance with this Agreement)and
the terms of purchases made pursuant to this Agreement will be governed by
Illumina’s standard terms and conditions of sale applicable to such product, as
such standard terms and conditions may be updated from time to time pursuant to
Illumina’s prevailing practices (the “Standard Terms”). The Standard Terms as of
the Effective Date are attached as Exhibit C.  

(b)Notwithstanding anything to the contrary in the Standard Terms, to the extent
any provision of the Standard Terms conflicts with a provision in this
Agreement, the provision in this Agreement will control.  To the extent any
provision of the Standard Terms would prevent Partner’s exercise of the rights
expressly granted to Partner in this Agreement, or to the extent any provision
of the Standard Terms would allow Partner to act in a manner prohibited by this
Agreement, such provision will not apply to Partner or this Agreement.  In
interpreting the Standard Terms, Partner’s use of a product in any manner not
permitted by this Agreement will be deemed a use of the product not in
accordance with the Standard Terms and a breach of the Standard Terms.  This
Agreement, including the Standard Terms as incorporated herein, exclusively
governs Partner’s ordering, purchase, and use of Illumina Components and IVD
Hardware in connection with the IVD Test Kits, and overrides any conflicting,
amending, or additional terms or conditions contained in any purchase orders or
similar documents, all of which are hereby rejected and are null and
void.  Illumina’s failure to object to any such terms or conditions will not
constitute a waiver by Illumina, nor constitute acceptance by Illumina of such
terms or conditions.

2.03Joint Steering Committee and Alliance Managers.  

(a)Within [***] after the Effective Date, the Parties will establish a joint
steering committee (the “JSC”), which will serve as a forum for the Parties to
oversee the development and commercialization of the IVD Test Kits under this
Agreement.  

(b)Each Party will also appoint an Alliance Manager who will be responsible for
the day-to-day coordination of the Party’s activities under a Development Plan
and whose responsibilities may be further defined thereby.  

(c)The JSC will consist of [***] representatives from each Party, including the
Alliance Managers, each with the requisite experience and expertise to enable
such person to carry out his or her responsibilities as a member of the
JSC.  Each Party may substitute one or more of its representatives to the JSC by
written notice to the other Party.  Prior to Regulatory Approval of the first
IVD Test Kit in the United States or the European Union, the JSC will meet at
least quarterly, or as otherwise agreed to by the Parties.  After such
Regulatory Approval of the first IVD Test Kit, the JSC will meet at least
bi-annually or as otherwise agreed to by the Parties.  The location of such
meetings will alternate between locations designated by Illumina and locations
designated by Partner.  Attendance at such meetings may be in person or by
telephone.  For the avoidance of doubt, the JSC may not modify a Development
Plan unless the Parties execute an amendment to this Agreement to reflect such
modification.

2.04Milestone Payments; Development Fees; Excess Hours.  Partner will pay the
[***] milestone payments to Illumina set forth in Exhibit D upon achievement of
the milestones set forth therein.  Partner will notify Illumina in writing
within [***] business days of its satisfaction of each milestone in Exhibit D
and will make the specified payments no later than [***] calendar days after
such notice.  For additional work specified in a Development Plan to be
performed at an hourly rate, Illumina will invoice Partner for all such hours at
the rate set forth in Exhibit D (unless otherwise agreed by the Parties), and
Partner will pay such invoiced amounts within [***] days of receiving each
invoice.

2.05Regulatory Matters.  

(a)The Parties will in good faith consider any guidance and feedback obtained
from Regulatory Authorities in response to either Party’s attempts to obtain
Regulatory Approval, including that obtained during pre-submission meetings (or
foreign equivalent), and will work together, in a Commercially Reasonable
manner, to negotiate a corresponding amendment to the Development Plan (e.g.,
timelines, scope, or limits to support) or other provisions of this Agreement in
a mutually acceptable manner.

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(b)Except as set forth in (d) below, Illumina will not be required under this
Agreement to obtain any new (as of the Effective Date) Regulatory Approvals (or
otherwise expand or modify any existing Regulatory Approvals) for Illumina
Components or IVD Hardware unless expressly specified in a Development Plan. The
Parties will in good faith negotiate terms for Illumina to pursue any such
additional Regulatory Approvals and the costs to be paid by Partner to Illumina
in connection with the pursuit of those Regulatory Approvals.  

(c)Illumina will not be required under this Agreement to provide any regulatory
support for: (i) site-specific regulatory submissions before the U.S. FDA (or
any similar submissions before any similar foreign Regulatory Authority); (ii)
expansions of indications or uses of an IVD Test Kit in fields other than the
Initial Field and any agreed Expansion Field (including technical changes and/or
multiple kit versions to facilitate such claims); or (iii) except as set forth
in (d) below, expansions of uses of an IVD Test Kit for any sample type for
which Illumina has not previously received regulatory clearance or approval for
the corresponding Illumina Components and IVD Hardware, all unless otherwise
agreed pursuant to Section 2.05(b).  

(d)Partner acknowledges that as of the Effective Date the IVD Hardware has
received Regulatory Approval from the FDA in the United States for use with the
following sample types: DNA libraries from human genomic DNA extracted from
peripheral whole blood or formalin-fixed paraffin-embedded tissue. The Initial
Field includes those sample types as well as DNA libraries from human genomic
DNA extracted from bone marrow.  Partner will use Commercially Reasonable
Efforts to include sample type claims directed at DNA libraries from human
genomic DNA extracted from bone marrow in pursuing Regulatory Approval for the
IVD Kits from the FDA in the United States.  If, despite those efforts, the FDA
indicates it is necessary for Illumina to update the Regulatory Approval for the
IVD Hardware to include sample type claims directed at DNA libraries from human
genomic DNA extracted from bone marrow in order for Partner to receive
Regulatory Approval for the IVD Test Kit in the Initial Field, Illumina will
[***] use Commercially Reasonable Efforts to do so.

2.06Compliance.  In performing under this Agreement and developing and
commercializing the IVD Test Kits, Partner will at all times comply with the
Illumina Regulatory and Safety Compliance Rider, attached to this Agreement as
Exhibit E.  Specifically, and without limiting the foregoing, Partner will not
market, sell, or otherwise commercialize an IVD Test Kit in any jurisdiction
where such activities are prohibited by Law, or in any manner prohibited by Law.

2.07Regulatory Correspondence.  If reasonably related to IVD Hardware, Illumina
Components or Custom Software, Partner will promptly (within [***] business days
of receipt) provide Illumina with copies of any and all correspondence received
from any Regulatory Authority pertaining to obtaining or maintaining Regulatory
Approval for an IVD Test Kit or Custom Software.  

Article III.
Commercialization of IVD Test Kits

3.01Commercialization and Support.  Partner will use Commercially Reasonable
Efforts to: (a) manufacture, and commercialize each IVD Test Kit and distribute
the Custom Software for use with each IVD Test Kit in the Territory; provided
however, that it is understood that commercial adoption of the IVD Test Kit will
be determined by Customers who may use (in addition to or in lieu of) other in
vitro diagnostic test kits, including ones which may be commercialized by
Partner (such commercialization in no way being restricted by this Agreement);
(b) provide product support and technical support for each IVD Test Kit and
Custom Software in accord with its standard warranty and customer service
practices; and (c) refer to Illumina all support inquiries which Partner has
reasonably determined to be caused by, or directed to, the IVD Hardware or
Illumina Components.  Illumina will use Commercially Reasonable Efforts to
manufacture and commercialize the IVD Hardware and Illumina Components to
Customers in the Territory during the Change Period as well as to provide
product support and technical support for the IVD Hardware and Illumina
Components, including providing telephone support to Partner and its Customers,
in accordance with its standard warranty and customer service practices. Partner
will advise Customers to purchase the IVD Hardware and Illumina Components from
Illumina.    Subject to the terms and conditions of this Agreement, Partner may
use Distributors to sell IVD Test Kits in the Territory in the ordinary course
of business and will be responsible and liable for all activities of such
Distributors in selling IVD Test Kits. Any act and omission of a Distributor
that would constitute a breach of this Agreement if performed (or not performed)
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Partner will constitute a breach of this Agreement by Partner.  Partner will not
perform genetic testing services commercially using IVD Test Kits.

3.02Reagent Rental Program.  If Partner wishes to implement a reagent rental
program associated with an IVD System and Illumina agrees, the Parties may
negotiate a separate agreement in good faith, and Partner will purchase the IVD
Hardware for such program from Illumina and lease such IVD Hardware to its
Customers; provided, however, Partner must retain title to the IVD Hardware and
may not resell or otherwise transfer any of the IVD Hardware.  [***]

3.03Custom Software.  

(a)Illumina will develop and verify each Custom Software module pursuant to the
Development Plan and in accordance with the specifications agreed-upon in the
Development Plan.  The Parties will test the Custom Software as set forth in the
Development Plan.  Partner will be responsible for validating the performance of
the Custom Software relative to the IVD Test Kit.    

(b)As between the Parties, Illumina will retain ownership of the Custom
Software.  Upon completion and verification of the Custom Software by Illumina
pursuant to the Development Plan, Illumina will deliver to Partner an executable
version of the Custom Software wrapped in an installer package, including
instructions for installation.  Subject to the terms and conditions of this
Agreement, Illumina hereby grants to Partner the non-transferable, exclusive (to
the extent provided below) right during the Term to: (i) duplicate and
distribute such installer package, solely in executable object code, to its
Customers in the Territory; and (ii) install, or permit the installation, of the
Custom Software on its own and Customers’ IVD Hardware in the Territory by
running such installer package.  Any purported sublicense, transfer, grant, or
other conveyance of the rights granted in this Section 3.03(b) (or any portion
of such rights) is prohibited and will be null, void, and of no effect;
provided, however, that Partner may sublicense the foregoing rights to its
Distributors. The exclusivity of the preceding grant applies only to the
specific executable object code iteration of Custom Software delivered to
Partner, and not to any underlying code or components thereof, and means only
that Illumina will not distribute the specific iteration of Custom Software
delivered to Partner directly to Customers in executable object code.  Partner
acknowledges that Illumina and its Affiliates develop and commercialize similar
software for themselves and for third parties using the same or similar
underlying source code as may be used in developing the Custom Software, and
agrees that nothing in this Agreement is intended to in any way prohibit or
limit such activities.  Notwithstanding the exclusivity of the preceding grant,
and anything to the contrary, Illumina and its Affiliates will not in any way be
prohibited from, or limited in, using, copying, creating derivative works of,
distributing, sub-licensing, or otherwise exploiting in any way any source code
underlying the Custom Software for any purpose.  

(c)Partner will not receive the source code for the Custom Software.  Partner
may not, directly or indirectly, on its own behalf or by assisting or enabling
any third party: (i) modify, adapt, improve, translate, reverse engineer,
decompile, disassemble, or create derivative works of the Custom Software; (ii)
attempt to defeat, avoid, by-pass, remove, deactivate, or otherwise circumvent
any software protection mechanisms in the Custom Software, including without
limitation, any such mechanism used to restrict or control the functionality of
the Software, or (iii) attempt to derive the source code or the underlying
ideas, algorithms, structure, or organization form of the Custom Software.  

(d)Partner is solely responsible for distributing and otherwise commercializing
the Custom Software.  Without limiting the generality of the foregoing, Partner
is solely responsible for: (i) providing the Custom Software to its Customers,
by distributing the installer package or installing the Custom Software as set
forth in (b) above; and (ii) except to the limited extent expressly set forth in
(e) below, supporting the Custom Software and its own and Customers’ use of the
Custom Software.  For clarity, Partner may only install, or allow its Customers
to install, the Custom Software on the IVD Hardware for which it was designed,
and for use with the IVD Test Kit for which it was designed, as specified in the
Development Plan.

(e)In relation only to its performance with the IVD Test Kit, Partner will test,
validate, and accept the Custom Software pursuant to the Development Plan.  In
connection with such testing and validation, Illumina will provide Partner with
a software requirement document, software verification protocol, and
verification test report.  Partner may submit these documents in seeking
Regulatory Approval for the IVD Test Kit and Custom Software.  Following
Partner’s acceptance of the Custom Software pursuant to the Development Plan:

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(i)if Illumina identifies any malfunction in the Custom Software that interferes
with the functionality of the Custom Software and other similar custom software
modules developed for Illumina’s other in vitro diagnostic development partners
for use with the IVD Hardware, or produces other fixes, enhancements,
modifications or improvements to the Custom Software, Illumina will notify
Partner and will remedy such malfunction, and deliver to Partner a new version
of the Custom Software (for distribution to its Customers pursuant to this
Section 3.03) within a Commercially Reasonable period of time; and

(ii) if Partner desires that Illumina provide any fixes, enhancements,
modifications, or improvements to the Custom Software not addressed by Section
3.03(e)(i), the Parties will negotiate in good faith the terms under which
Illumina may perform such work.  

(f)For clarity, Illumina will not be required to provide any enhancements,
modifications, fixes, or improvements to the Custom Software except to the
limited extent set forth in Section 3.03(e)(i) above or as the Parties may
otherwise agree pursuant to Sections 3.03(e)(ii) above.

(g)Partner may not charge for the Custom Software separately from the amount
charged for the entire IVD Test Kit.

3.04Forecasting.  

(a)Purchases by Partner.  Partner will, on a quarterly basis on or before the
first day of each calendar quarter, provide Illumina with a forecast
representing Partner’s good faith estimate of the type and amount of IVD
Hardware and Illumina Consumables that Partner expects to purchase for use in
developing and testing IVD Test Kits [***] (“Forecast”).  Each Forecast
thereafter will be accompanied by a Purchase Order for all IVD Hardware and
Illumina Consumables not already covered by previous Purchase Orders.  Partner
may only provide one Forecast per quarter; if Partner provides more than one
Forecast in any given calendar quarter, Illumina may, in its discretion, reject
all but the first Forecast.  

(b)Purchases by Customers.  Beginning at least [***] before the first expected
Regulatory Approval of an IVD Test Kit, each Forecast will also include a
non-binding Forecast representing Partner’s good faith estimate of the type and
amount of IVD Test Kits that Partner expects its Customers to purchase in the
aggregate during the following [***], on a month-by-month basis.

(c)Supply by Illumina.  Illumina will use Commercially Reasonable Efforts to
supply Illumina Components to Partner in accord with all Forecasts and to make
IVD Hardware available for purchase by Customers in the Territory during the
Change Period.

Article IV.
Quality

4.01Quality Audits.  During the Term of this Agreement, Illumina agrees to allow
Partner (at Partner’s sole expense) to audit Illumina’s operations that pertain
to Illumina Components or the IVD Hardware, upon [***] days’ prior written
notice, during normal business hours, no more often than [***] per calendar year
only to the extent necessary to satisfy Partner’s obligations under applicable
Law. Such notice will list the names, titles, and affiliations of every Partner
representative that Partner wishes to attend the audit.  Illumina may in its
reasonable discretion deny access to any person on such list (by providing
Partner with reasonable prior notice) and may deny access to any person not
included on such list.  The locations, times, dates, scope, and goals for such
audits must be reasonably agreed upon in writing by the Parties prior to
commencement of the audit.  Partner will comply with all of Illumina’s
reasonable directions when conducting any audit.  All information learned by
Partner in the course of such audit is Illumina Confidential Information.  If
requested by Illumina, Partner will ensure that any person conducting the audit
sign Illumina’s confidentiality agreement prior to conducting such audit;
provided that the terms thereof are substantially similar to the confidentiality
obligations in this Agreement.  Partner will issue, in writing, to Illumina all
findings of any such audit within [***] days of the audit.

4.02Product Changes.

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(a)As used in this Article IV, the period of time commencing on the Effective
Date and ending [***] years thereafter is referred to as the “Change
Period.”  Partner acknowledges that Illumina is constantly innovating and
developing new products and new versions of products.  Illumina acknowledges
that voluntary changes to IVD Hardware and/or Illumina Components and/or Custom
Software may incur costs and risks for both Parties and will only be considered
during the Change Period with a Commercially Reasonable rationale and
justification.  With respect to IVD Hardware, Illumina does not intend to make
material changes during the Change Period.  Illumina will provide notice to
Partner if a change to IVD Hardware during the Change Period requires
implementation at Customer sites as a field upgrade.  With regard to Illumina
Components, Illumina will provide Partner with written notice of any material
voluntary changes to form, fit, or function during the Change Period at least
[***] prior to making such change, in order to allow Partner to plan
accordingly.  As used in this paragraph and in (b) below, a material change is a
change that Illumina reasonably expects to require Partner to make a filing or
submission to any Regulatory Authority in connection with obtaining or
maintaining Regulatory Approval for the IVD Test Kit.

(b)Illumina reserves the right to make changes to IVD Hardware, Illumina
Components and Custom Software due to safety, applicable Law, regulatory
requirements, or failure to conform to specifications, and may be required to
make changes caused by Force Majeure.  Illumina will notify Partner in writing
of any such material changes during the Change Period and will exert
Commercially Reasonable Efforts to do so as promptly as practicably
possible.  Following such notice, and upon Partner’s reasonable request,
Illumina will discuss with Partner the steps necessary to migrate to successor
instruments, modified Illumina Components or modified Custom Software, if any,
and use Commercially Reasonable Efforts to assist (as applicable) Partner and
its Customers with such transition in accordance with this Agreement.  

(c)Other than the changes described in (a) and (b) above, Illumina will continue
to sell and provide support for the IVD Hardware and Illumina Components in the
original form used for development and regulatory submission on the terms set
forth herein throughout the Change Period.  Notwithstanding anything to the
contrary, Illumina makes no guarantee, and is not required to ensure, that the
IVD Hardware or Illumina Components will be manufactured or sold following the
Change Period.  Unless expressly stated otherwise in this Agreement, including
as set forth in (a) and (b) above, Illumina is under no obligation to notify
Partner of any changes to existing products or development of new
products.  Prior to expiration of the Change Period, upon Partner’s request the
Parties will in good faith discuss the terms of a potential transition of the
affected IVD Test Kit(s) for use with newer IVD Hardware and/or Illumina
Components and/or Custom Software.  

Article V.
Revenue Share; Records and Accounting

5.01Revenue Share.  In consideration of the right to commercialize the IVD Test
Kits for use with IVD Hardware, Illumina Components and Custom Software, and
other activities and consideration of Illumina contemplated by this Agreement,
Partner will pay Illumina a revenue share determined pursuant to the following
schedule (such amount referred to as the “Revenue Share”):  

[***]% of aggregate Net Sales of IVD Test Kits [***]

[***]% of aggregate Net Sales of IVD Test Kits [***]

[***]% of aggregate Net Sales of IVD Test Kits [***]

5.02Reporting.  Partner will furnish to Illumina a written report within [***]
after the close of each calendar quarter (March 31, June 30, September 30 and
December 31) (each, a “Period”) showing on a product-by-product and
country-by-country basis: (a) the number of IVD Test Kits sold, transferred, or
otherwise disposed of, and the number of IVD Test Kits used by Partner and its
Affiliates in performing genetic testing services (if any); (b) the gross amount
invoiced during the Period for IVD Test Kits; (c) a detailed explanation of any
IVD Test Kits sold, transferred, or otherwise disposed of during the Period in
any transaction that was not at arm’s length; (d) a reasonably detailed
calculation of Net Sales during the Period; (e) the official exchange rates used
in determining the Revenue Share (which exchange rates must be those quoted by a
reputable source, such as the Wall Street Journal, oanda.com, the Financial
Times, or a recognized money center bank

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such as JP Morgan, Bank of America, or an equivalent); and (f) the amount of
Revenue Share payable to Illumina.  Payment of the Revenue Share earned during a
Period will accompany such report.

5.03Payments.  Other than payment for Illumina Components and IVD Hardware
purchased by Partner, which will be governed by the Standard Terms, all payments
required under this Agreement from Partner will be paid in the United States
Dollars by wire or ACH transfer pursuant to the following instructions or such
other wire or ACH transfer instructions as Illumina may reasonably
designate.  Partner may not deduct or withhold any wire transfer fees, bank
charges, or any other fees or charges incurred in connection with making such
payment.

Account Name:  [***]

Bank Name: [***]

Bank Address: [***]

 

ABA: [***]

Routing: [***]

Swift: [***]

Account: [***]

BIC: [***]

5.04Records.  Partner will maintain written records with respect to its
operations for such period pursuant to this Agreement in sufficient detail to
enable Illumina or its designated accountants to confirm compliance with the
terms of this Agreement and the accuracy and completeness of the amounts of
Revenue Share and any other payments payable to Illumina, and further agrees to
permit said records to be audited from time to time, on reasonable prior notice
during normal business hours, to the extent necessary to confirm compliance with
the terms of this Agreement and verify the accuracy and completeness of the
amounts of Revenue Share and other payments due hereunder; provided Illumina
will not be entitled to perform more than one audit in any calendar
year.  [***]  Illumina will invoice Partner for any amount due resulting from
such an audit, and Partner will pay such invoice within [***] of Partner’s
receipt of such invoice.

5.05Taxes.  If applicable Law requires any amount to be withheld against any
amount owed by Partner to Illumina under this Agreement (each, a “Withholding”),
Partner will withhold such taxes from the amount due and shall timely furnish
Illumina with proof of payment of such taxes. If applicable Law requires
Illumina to pay such Withholding, and will not permit Partner to pay such
Withholding, the Parties will in good faith negotiate a payment mechanism that
results in Illumina receiving and retaining the full amounts to which it is
entitled net of the Withholding. Each Party will provide the other if the paying
Party, full and complete documentation as is reasonably required for each type
of payment due for which an exemption from, or a reduction in, any withholding
taxes is claimed.

Article VI.
Intellectual Property

6.01Rights Granted to Partner.  

(a) Subject to, and contingent upon compliance with, the terms and conditions of
this Agreement and any applicable Standard Terms, Partner’s purchase of Illumina
Components and IVD Hardware from Illumina and its Affiliates under this
Agreement confers upon Partner the limited, non-exclusive, non-transferable,
right under the Illumina Intellectual Property Rights to use purchased Illumina
Components and IVD Hardware to develop the applicable IVD Test Kit during the
Term and solely for use in the Territory in the Initial and any Expansion Fields
with the IVD Hardware and Illumina Components, strictly in accordance with the
Development Plan for such IVD Test Kit. For clarity, the rights granted in this
Section 6.01: (i) expressly exclude any and all rights to, and Partner and its
Affiliates may not, make, have made, sell, have sold, offer for sale, and/or
have offered for sale Illumina Components; and (ii) are in addition to the
rights granted in the Standard Terms.  

(b)Subject to, and contingent upon compliance with, the terms and conditions of
this Agreement, Illumina hereby grants to Partner the right to reference the
device listing for the IVD Hardware in support of seeking Regulatory Approval
for the IVD Test Kits and Custom Software during the Term in the Territory.  To
the extent

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required by the FDA (or similar Regulatory Authority in a Territory designated
in the applicable Development Plan) Illumina will prepare and submit a letter of
authorization documenting such right.

(c)Any purported transfer, grant, or other conveyance of the rights granted in
this Section 6.01 (or any portion of such rights) will be null, void, and of no
effect. The Parties agree that this Section 6.01 is intended to, and does, alter
the effect of the exhaustion of patent rights that could otherwise result if the
sale of Illumina Components and IVD Hardware was made without restriction.

6.02Rights Granted to Illumina.  

(a)Subject to, and contingent upon compliance with, the terms and conditions of
this Agreement, Partner hereby grants to Illumina and its Affiliates a limited,
nonexclusive, non-transferable, non-sublicensable license under such
Intellectual Property Rights of Partner as may be necessary for Illumina to
perform its obligations and exercise its rights under this Agreement.

(b)Any purported transfer, grant, or other conveyance of the rights granted in
this Section 6.02 (or any portion of such rights) will be null, void, and of no
effect.  

6.03Improvements.  Partner hereby grants to Illumina and its Affiliates a
nonexclusive, irrevocable, transferable, sublicensable, perpetual, worldwide,
royalty-free, fully paid-up license under any and all Intellectual Property
Rights generated by or on behalf of Partner under this Agreement that claim or
are otherwise directed to: (a) any IVD Hardware, Illumina Component, or Custom
Software; (b) any use of any IVD Hardware, Illumina Component, or Custom
Software; or (c) any improvement, enhancement, alteration, or modification of
any IVD Hardware, Illumina Component, or Custom Software or use of any IVD
Hardware, Illumina Component, or Custom Software, in each case to develop, make,
have made, use, sell, offer for sale, have sold, import, and otherwise
commercialize and exploit products and services embodying such Intellectual
Property Rights or which would, but for this license, infringe upon such
Intellectual Property Rights .  

Article VII.
Indemnification; Limitation of Liability; Insurance

7.01Partner Indemnification.  Partner will defend, indemnify and hold harmless
Illumina, its Affiliates, and their respective officers, directors,
representatives, employees, successors and assigns (“Illumina Indemnitee(s)”),
from and against any and all claims, causes of action, and proceedings brought
or asserted by a third party (“Claims”), and all associated losses, liabilities,
damages, fines, and penalties of any and every kind, including legal expenses
and reasonable attorneys’ fees (“Losses”) to the extent resulting from or
arising out of Partner’s or a Partner Indemnitee’s: (a) development, use, or
commercialization of the IVD Test Kits or Custom Software; (b) breach of this
Agreement, including any representation, warranty or failure to exert good faith
or Commercially Reasonable Efforts as required; (c) gross negligence or
intentional misconduct in performing or failing to perform under this Agreement;
or (d) sale (including making, using, selling, offering for sale, and importing)
by or on behalf of Partner of an IVD Test Kit in the Territory that infringes
the Intellectual Property Rights of a third party; in each case except to the
extent resulting from or arising out of Illumina’s or an Illumina Indemnitee’s
gross negligence, intentional misconduct, or breach of this Agreement.

7.02Illumina Indemnification.  Illumina will defend, indemnify and hold harmless
Partner, its Affiliates, and their respective officers, directors,
representatives, employees, successors and assigns (“Partner Indemnitee(s)”),
from and against any and all Claims and Losses to the extent resulting from or
arising out of Illumina’s or an Illumina Indemnitee’s: (a) breach of this
Agreement, including any representation, warranty or failure to exert good faith
or Commercially Reasonable Efforts as required; or (b) gross negligence or
intentional misconduct in performing or failing to perform under this Agreement;
in each case except to the extent resulting from or arising out of Partner’s or
an Partner Indemnitee’s gross negligence, intentional misconduct, or breach of
this Agreement.

7.03Indemnity Procedure. The indemnifying Party’s obligations under this Article
VII are conditioned on the Party seeking indemnification: (a) giving the
indemnifying Party prompt written notice of the Claim; provided, however, that
failure to provide such notice will not relieve the indemnifying Party from its
liability or obligations under this

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Article VII, except to the extent of any material prejudice as a direct result
of such failure; (b) reasonably cooperating with the indemnifying Party, at the
indemnifying Party’s expense, in connection with the defense and settlement of
the Claim, including providing accurate and complete information requested by
the indemnifying Party; and (c) permitting the indemnifying Party to solely
control the defense and settlement of the Claim; provided, however, that the
indemnifying Party may not settle the Claim, enter into or otherwise consent to
an adverse judgment or order, or make any admission as to liability or fault
that would adversely affect the indemnified Party, without the indemnified
Party’s prior written consent, which will not be unreasonably withheld or
delayed.  Further, the indemnified Party will have the right to participate (but
not control) and be represented in any suit or action by counsel of its
selection at its own cost.

7.04Product-related Indemnification.  Additionally, each Party will defend,
indemnify, and hold harmless the other Party (and any other indemnitees
expressly provided in the Standard Terms) for Claims and Losses relating to the
purchase, manufacture, and use of IVD Hardware and Illumina Components purchased
by Partner from Illumina under this Agreement if and to the extent, and subject
to all terms and conditions, provided in the Standard Terms.  For clarity,
Illumina’s defense, indemnification, and hold harmless obligations with respect
to the Illumina Components and IVD Hardware, and Partner’s and its Customers’
purchase and use of such products, are limited solely to those obligations
expressly provided in the Standard Terms for such products.

7.05Limited Liability.  

(a)EXCEPT AS STATED IN (C) BELOW, AND EXCEPT WITH RESPECT TO LIABILITY ARISING
FROM: (I) A PARTY’S DEFENSE AND INDEMNIFICATION OBLIGATIONS UNDER ARTICLE
VII,  BUT ONLY WITH RESPECT TO DAMAGES ACTUALLY PAID OR TO BE PAID BY THE
INDEMNIFIED PARTY TO THE THIRD PARTY CLAIMANT; BUT OTHERWISE TO THE FULLEST
EXTENT PERMITTED BY LAW, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR COSTS OF
PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, LOST PROFITS, LOSS OF DATA OR
BUSINESS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, OR
PUNITIVE DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, HOWEVER ARISING OR CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, MISREPRESENTATION,
BREACH OF STATUTORY DUTY, OR OTHERWISE).  FOR CLARITY, DAMAGES INCURRED AS A
RESULT OF EITHER PARTY’S BREACH OF SECTION 3.01 ARE NOT SUBJECT TO THIS SECTION
7.05.

(b)EXCEPT AS STATED IN (C) BELOW, AND EXCEPT TO THE EXTENT ARISING FROM: (I)
PARTNER’S BINDING COMMITMENT TO PURCHASE PRODUCT PURSUANT TO ONE OR MORE ISSUED
AND ACCEPTED PURCHASE ORDERS; (II) PARTNER’S REVENUE SHARE OBLIGATIONS; OR (III)
A PARTY’S DEFENSE AND INDEMNIFICATION OBLIGATIONS UNDER ARTICLE VII; BUT
OTHERWISE TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY’S CUMULATIVE
LIABILITY UNDER OR ARISING OUT OF THIS AGREEMENT, INCLUDING ANY CAUSE OF ACTION
IN CONTRACT, NEGLIGENCE, OR TORT (INCLUDING STRICT LIABILITY), WILL NOT EXCEED
[***].

(c)THE LIMITATIONS OF LIABILITY IN THIS SECTION 7.05 APPLY EVEN IF A PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH LIABILITY, AND NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.  NOTWITHSTANDING (A) AND (B)
ABOVE AND ANYTHING TO THE CONTRARY, THIS AGREEMENT DOES NOT LIMIT LIABILITY OF
EITHER PARTY FOR ANY INFRINGEMENT OF THE OTHER PARTY’S INTELLECTUAL PROPERTY
RIGHTS.

7.06Insurance. Each Party will obtain and maintain insurance coverage as
follows: (a) a policy for liability (including professional and errors and
omissions) in the amount of no less than [***] per occurrence; and (b)
separately a policy for commercial general liability and public liability
insurance in the amount of no less than [***], in the case of each of (a) and
(b) to protect the Illumina Indemnitees under the indemnification provided
hereunder.  Each Party will maintain such insurance at all times during the Term
and if any such insurance is “Claims Made” insurance, for a period of [***]
years thereafter.  

Article VIII.
Term and Termination

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8.01Term.  The term of this Agreement will begin on the Effective Date and
continue for 6 years unless terminated earlier in accordance with this Article
VIII or extended by amendment pursuant to Section 10.10 (the “Term”).

8.02Early Termination. Without limiting any other rights of termination
expressly provided in this Agreement or under Law, this Agreement may be
terminated early as follows:  

(a)Breach of Provision.  If a Party materially breaches this Agreement and fails
to cure such breach within [***] days after receiving written notice of the
breach from the other Party, then the non-breaching Party may terminate this
Agreement with immediate effect by providing written notice of termination to
the other Party.  Notwithstanding the foregoing, and without limiting any other
right or remedy of Illumina, the breach by either Party of any term in Article
VI under this Agreement gives the other Party the right to seek injunctive
relief, damages and/or terminate this Agreement with immediate effect upon
written notice.  

(b)Bankruptcy and Insolvency.  A Party may terminate this Agreement, effective
immediately upon written notice, if the other Party becomes the subject of a
voluntary or involuntary petition in bankruptcy, for winding up of that Party,
or any proceeding relating to insolvency, receivership, administrative
receivership, administration liquidation or Partner voluntary arrangement or
scheme of arrangement with its creditors that is not dismissed or set aside
within [***] days.

(c)Termination for Change in Control.  Partner will promptly (in any event
within [***] business days) notify Illumina in writing if it undergoes any
Change in Control.   If any Change in Control occurs while any Development Plan
is active (i.e. prior to Regulatory Approval of the IVD Test Kit being developed
by Partner under the Development Plan) and results in Partner being Controlled
by, or under common Control with, or this Agreement being assigned or otherwise
transferred to, any Person that manufactures or sells, or has publicly announced
its intention to manufacture or sell, nucleic acid sequencing instruments or any
Affiliate of such a Person (each an “Instrument Supplier”), Illumina may, within
30 days after receipt of such notice (or other notice of such transaction(s) if
Partner fails to provide such notice), elect to terminate the active Development
Plan(s), and if no Development Plans have been completed this entire Agreement,
by providing [***] days’ prior written notice to Partner or its successor in
interest.    

(d)Development Plans.  If the Parties are unable to reach agreement upon and
enter into the first Development Plan within [***] of the Effective Date, or if
at any time after the second anniversary of the Effective Date there are no
active Development Plans in place, either Party may terminate this Agreement
upon written notice to the other Party.

8.03Right to Cease Delivery.  In addition to any other remedies available to
Illumina under this Agreement or at Law, Illumina reserves the right to suspend
shipping Illumina Components to Partner and its Customers immediately on the
actual occurrence of any of the following: (a) Partner uses, or directly induces
its Customers to use, the Illumina Components outside the Field; (b) Partner
fails to pay invoices or Revenue Share when due, subject to any applicable cure
periods; (c) Partner materially breaches any representation, warranty, or
covenant made hereunder; or (d) if any governmental authority prohibits Illumina
from manufacturing or supplying the Illumina Components, or prohibits the sale
of a IVD Test Kit or IVD System.  In each case Illumina will resume shipping
Illumina Components to Partner and its Customers if Illumina receives reasonable
assurances that the situation giving rise to such suspension has been remedied
or is otherwise not applicable.

8.04Survival of Obligations.   Termination or expiration of this Agreement will
not relieve the Parties of any liability or obligation which accrued hereunder
prior to the effective date of such termination or expiration nor preclude
either Party from pursuing all rights and remedies it may have hereunder or at
Law or in equity with respect to any breach of this Agreement, nor prejudice
either Party’s right to obtain performance of any obligation.  The following
provisions will survive termination or expiration of this Agreement: Article I,
Sections 2.06 and 2.07, Article V, Sections 6.02 and 6.03, Article VII, Sections
8.04 and 8.05, Article IX, and Article X.

8.05No Damages for Termination or Expiration.  THIS AGREEMENT NEITHER GUARANTEES
SUPPLY OR PURCHASE BY EITHER PARTY.  NEITHER PARTY WILL BE LIABLE TO THE OTHER
PARTY FOR DAMAGES OF ANY KIND (INCLUDING WITHOUT LIMITATION DAMAGES ON ACCOUNT
OF PRESENT OR PROSPECTIVE PROFITS, OR ON ACCOUNT OF EXPENDITURES, INVESTMENTS,
OR COMMITMENTS MADE IN

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CONNECTION WITH THIS AGREEMENT, OR IN CONNECTION WITH THE DEVELOPMENT OR
MAINTENANCE OF THE BUSINESS OR GOODWILL OF THE OTHER PARTY) BY REASON OF
EXPIRATION OF THIS AGREEMENT OR PROPER EXERCISE OF ITS RIGHT TO TERMINATE THIS
AGREEMENT IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS
AGREEMENT, AND EACH PARTY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE TO RECEIVE ANY
SUCH DAMAGES.  

Article IX.
Protection of Confidential Information

9.01Confidentiality.  The Parties acknowledge that a Party (the “Receiving
Party”) may have access to Confidential Information of the other Party (the
“Disclosing Party”) in connection with this Agreement.  During the Term and for
a period of [***] years thereafter, the Receiving Party will hold the Disclosing
Party’s Confidential Information in confidence using at least the degree of care
that is used by the Receiving Party with respect to its own Confidential
Information, but no less than reasonable care.  The Receiving Party may disclose
the Confidential Information of the Disclosing Party solely on a need to know
basis to its employees, contractors, officers, directors, representatives, and
those of its Affiliates, under written confidentiality and restricted use terms
or undertakings consistent with this Agreement; provided that the Receiving
Party will be liable for all acts and omissions of such Persons that constitute
a breach of this Article IX, or that would constitute a breach of this Article
IX if performed (or not performed) by the Receiving Party, with respect to such
Confidential Information.  The Receiving Party may not use the Disclosing
Party’s Confidential Information for any purpose other than exercising its
rights and fulfilling its obligations under this Agreement.  The Confidential
Information will at all times remain the property of the Disclosing Party.  The
Receiving Party will, upon written request of the Disclosing Party, return to
the Disclosing Party or destroy the Confidential Information of the Disclosing
Party.  Notwithstanding the foregoing, the Receiving Party may maintain one copy
of the Disclosing Party’s Confidential Information to be retained by the
Receiving Party’s Legal Department or other appropriate department for archival
purposes only.  

9.02Exceptions.  Notwithstanding any provision contained in this Agreement to
the contrary, neither Party will be required to maintain in confidence or be
restricted in its use of any of the following: (a) information that, at the time
of disclosure to the Receiving Party, is in the public domain through no breach
of this Agreement or breach of another obligation of confidentiality owed to the
Disclosing Party or its Affiliate by the Receiving Party or its Affiliate; (b)
information that, after disclosure hereunder, becomes part of the public domain
by publication or otherwise, except by breach of this Agreement or breach of
another obligation of confidentiality owed to the Disclosing Party or its
Affiliate by the Receiving Party or its Affiliate; (c) information that was in
the Receiving Party’s or its Affiliate’s possession at the time of disclosure
hereunder by the Disclosing Party unless subject to an obligation of
confidentiality or restricted use owed to the Disclosing Party or its Affiliate;
(d) information that is independently developed by or for the Receiving Party or
its Affiliates without use of or reliance on Confidential Information of the
Disclosing Party; or (e) information that the Receiving Party receives from a
third party where such third party was under no obligation of confidentiality to
the Disclosing Party or its Affiliate with respect to such information.  

9.03Disclosures Required by Law.  The Receiving Party may disclose Confidential
Information of the Disclosing Party as required by court order, operation of
Law, or government regulation (including those of the Securities Exchange
Commission), or the rules of any stock exchange; provided that, the Receiving
Party: (a) promptly notifies the Disclosing Party of the specifics of such
requirement prior to the actual disclosure, or promptly thereafter if prior
notice is impractical under the circumstances; (b) uses diligent and reasonable
efforts to limit the scope of such disclosure or obtain confidential treatment
of the Confidential Information if available; and (c) allows the Disclosing
Party to participate in the process undertaken to protect the confidentiality of
the Disclosing Party’s Confidential Information including cooperating with the
Disclosing Party at the Disclosing Party’s expense in its efforts to permit the
Receiving Party to comply with the requirement in a manner that discloses the
least amount necessary, if any, of the Confidential Information of the
Disclosing Party.

9.04Disclosure of Agreement.  The terms and existence of this Agreement are each
Party’s Confidential Information.  

Article X.
Miscellaneous

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10.01Notices.  All notices required or permitted under this Agreement must be in
writing to the following address (or any other address designated by the Party
in writing), in English, and will be deemed received only when: (a) delivered
personally; (b) three days after having been sent by registered or certified
mail, return receipt requested, postage prepaid (or five days for international
mail); or (c) one day after deposit with a commercial express courier specifying
next day delivery or, for international courier packages, two days after deposit
with a commercial express courier specifying two-day delivery, with written
verification of receipt.  

If to Illumina:

If to Partner:

[***]

[***]

With a copy to:

[***]

With a copy to:

[***]

10.02Representations and Warranties.  Each Party represents, warrants, and
covenants that: (a) it has the right and authority to enter into this Agreement
without violating the terms of any other agreement; (b) the person(s) signing
this Agreement on its behalf has the right and authority to bind the Party to
this Agreement; and (c) neither it nor any of its Affiliates has been debarred
or is subject to debarment and neither it nor any of its Affiliates will use in
any capacity, in connection with performance of its obligations hereunder, any
Person who has been debarred pursuant to Section 306 of the United States
Federal Food, Drug, and Cosmetic Act or who is the subject of a conviction
described in such section.  

FOR CLARITY AND NOTWITHSTANDING ANYTHING TO THE CONTRARY: (I) ILLUMINA’S SOLE
REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION AND DEFENSE OBLIGATIONS WITH
RESPECT TO PRODUCTS PURCHASED BY PARTNER AND ITS CUSTOMERS ARE CONTAINED
EXCLUSIVELY IN THE APPLICABLE STANDARD TERMS; AND (II) EACH PARTY’S SOLE
REPRESENTATIONS, WARRANTIES, AND INDEMNIFICATION AND DEFENSE OBLIGATIONS WITH
RESPECT TO THIS AGREEMENT AND PRODUCTS TO BE DEVELOPED AND COMMERCIALIZED IN
CONNECTION THEREWITH  ARE LIMITED TO THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT.  ALL OTHER EXPRESS OR IMPLIED WARRANTIES (INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OF THIRD PARTY RIGHTS AND
FITNESS FOR A PARTICULAR PURPOSE) ARE EXPLICITLY DISCLAIMED.  

10.03Non-Exclusive Relationship. Each Party acknowledges and agrees that, during
the Term and thereafter, nothing in this Agreement will create any form of
exclusive relationship between the Parties with respect to the subject matter of
this Agreement, or prevent either Party from: (a) entering into competing
business relationships with one or more third parties for the research,
development and/or commercialization of any other product or service that might
compete with any of the other Party’s products, including an IVD Test Kit or IVD
System in any respect and/or (b) conducting research, development and/or
commercialization with respect to any product in any manner whatsoever outside
the scope of this Agreement, including products that might compete with any of
the other Party’s products, including an IVD Test Kit or IVD System; provided
that, for clarity, in either case neither Party may use the other Party’s
Confidential Information and/or Intellectual Property Right in such activities.

10.04Legal Compliance.  Nothing in this Agreement is intended, or should be
interpreted, to prevent either Party from complying with, or to require a Party
to violate, any applicable Law. Should either Party reasonably conclude that any
portion of this Agreement is or may be in violation of a change in a Law made
after the Effective Date, or if any such change or proposed change would
materially alter the amount or method of compensating Illumina for services
performed for, or Revenue Share owed by, Partner the Parties agree to negotiate
in good faith written modifications to this Agreement as may be necessary to
establish compliance with such changes, and to reflect applicable changes in
compensation warranted by such legal changes, with any mutually agreed upon
modifications added to this Agreement by written amendment in accordance with
Section 10.10 of this Agreement.

10.05Independent Parties. The Parties are independent contractors, and the
relationship between the Parties does not constitute a partnership, joint
venture or agency of any kind.  Neither Party has the authority to make any

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statements, representations or commitments of any kind, or to take any action,
which is binding on the other Party, without the prior written consent of the
other Party.

10.06Governing Law; Jurisdiction; Dispute Resolution.  This Agreement and any
dispute or claim arising out of or in connection with it or its subject matter
or formation will be governed and construed in accordance with the laws of the
State of California, U.S.A., without regard to provisions on the conflicts of
laws. Each Party irrevocably consents to the jurisdiction of the U.S. District
Court for the Northern District of California.  The Parties agree that the
United Nations Convention on Contracts for the International Sale of goods will
not apply to this Agreement.

10.07Severability.  If any provision of this Agreement is held to be invalid or
unenforceable in any jurisdiction in which this Agreement is being performed,
the remainder of this Agreement will be valid and enforceable and the Parties
will negotiate in good faith a substitute, valid and enforceable provision which
most nearly effects the Parties’ intent in entering into this Agreement.

10.08No Waiver; Rights and Remedies.  The failure or delay of either Party to
exercise any right or remedy provided herein or to require any performance of
any term of this Agreement may not be construed as a waiver, and no single or
partial exercise of any right or remedy provided herein, or the waiver by either
Party of any breach of this Agreement will not prevent a subsequent exercise or
enforcement of, or be deemed a waiver of any subsequent breach of, the same or
any other term of this Agreement.  Except as expressly provided in this
Agreement, the rights and remedies of each Party under this Agreement are
cumulative and not exclusive of any rights or remedies provided by Law.  

10.09Injunctive Relief.  Each Party acknowledges that its breach or threatened
breach of Article 6 or Article 9 may cause irreparable damage to the other
Party.  Therefore, in the event of any such breach or threatened breach, the
other Party will be entitled, in addition to all other rights and remedies
available at Law, to seek injunctive relief against the breach or threatened
breach without having to post bond or other security.  

10.10Entire Agreement; Amendment; Waiver.  This Agreement, together with the
Standard Terms, represents the entire agreement between the Parties regarding
the subject matter hereof and supersedes all prior discussions, communications,
agreements, and understandings of any kind and nature between the Parties with
respect to the development and commercialization of IVD Test Kits.  Any
agreements between the Parties, whether existing or later made, concerning the
development, commercialization or use of other products are not affected or
superseded by this Agreement.  The Parties acknowledge and agree that by
entering into this Agreement, they do not rely on any statement, representation,
assurance or warranty of any Person other than as expressly set out in this
Agreement. Each Party agrees that it will have no right or remedy (other than
for breach of contract) in respect of any statement, representation, assurance
or warranty (whether made negligently or innocently) other than as expressly set
out in this Agreement. Nothing in this Section 10.10 will exclude or limit
liability for fraud. No amendment to this Agreement (including changes to any
Development Plan or addition of any Development Plan) will be effective unless
in writing and signed by both Parties.  No waiver of any right, condition, or
breach of this Agreement will be effective unless in writing and signed by the
Party who has the right to waive the right, condition or breach and delivered to
the other Party.

10.11Counterparts.  This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original, and all of which will constitute
one and the same instrument.

10.12Assignment; Illumina Affiliates; Third Party Beneficiaries.  Except in
connection with a sale of substantially all of the assets of its clinical in
vitro diagnostics business or a Change in Control (in each case subject to
Section 8.02(c)), Partner may not assign or transfer this Agreement, without the
prior written consent of Illumina, which consent may not be unreasonably
withheld, conditioned or delayed.  Illumina may assign or transfer this
Agreement to one or more of its Affiliates or in connection with a sale of
substantially all of the assets of its in vitro diagnostics partnership business
or a Change in Control.  Illumina invoices and other documentation may come from
an Illumina Affiliate, and Partner will honor those just as if they came
directly from Illumina. Any assignment or transfer of this Agreement made in
contravention of the terms hereof will be null and void.  Subject to the
foregoing, this Agreement will be binding on and inure to the benefit of the
Parties’ respective successors and permitted assigns.  There are no third party
beneficiaries to this Agreement.

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10.13Further Assurance.  Each Party will execute and deliver such further
documents and take such further actions as the other Party may reasonably
request to evidence and implement the provisions and intent of this Agreement.

10.14Costs.  Each Party will bear its own costs and expenses incurred in
connection with the negotiation and execution of this Agreement.

10.15Force Majeure.  Neither Party will be in breach of this Agreement nor
liable for any failure to perform or delay in the performance of this Agreement
attributable in whole or in part to any Force Majeure.  In the event of any such
delay the delivery date for performance will be deferred for a period equal to
the time lost by reason of the delay.  Notwithstanding anything in this
Agreement to the contrary, Partner’s payment obligations are not affected by
this provision.

10.16Headings and Certain Rules of Construction.  Sections, titles and headings
in this Agreement are for convenience only and are not intended to affect the
meaning or interpretation hereof.  Whenever required by the context, the
singular term includes the plural, the plural term includes the singular, and
the gender of any pronoun includes all genders.  As used in this Agreement
except as the context may otherwise require, the words “include,” “includes,”
“including,” and “such as” are deemed to be followed by “without limitation” or
“but not limited to,” whether or not they are in fact followed by such words or
words of like import, and “will” and “shall” are used synonymously.  Except as
expressly stated, any reference to “days” will be to calendar days, and
“business day” means all days other than Saturdays, Sundays, or a national or
local holiday recognized in the United States, any reference to “calendar month”
will be to the month and not a 30 day period, and any reference to “calendar
quarter” will mean the first three calendar months of the year, the fourth
through sixth calendar months of the year, the seventh through ninth calendar
months of the year, and the last three calendar months of the year.  Whenever
the last day for the exercise of any right or the discharge of any obligation
hereunder falls on, or any notice is deemed to be given on, a Saturday, Sunday,
or national holiday, the Party having such right or obligation will have until
5:00 pm PST on the next succeeding business day to exercise such right or to
discharge such obligation or the Party giving notice will be deemed to have
given notice on the next succeeding business day.  No usage of trade, course of
performance, or other regular practice between the Parties hereto may be used to
interpret or alter the terms and conditions of this Agreement.  Unless otherwise
expressly provided in this Agreement, any agreement, instrument, or statute
defined or referred to means such agreement, instrument, or statute as from time
to time amended, modified, or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein.  The Parties have participated jointly in the
negotiation and drafting of this Agreement.  If an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the Parties and no presumption or burden of proof will arise favoring
or disfavoring any Party because of the authorship of any provision of this
Agreement.  

[Signature Page Follows Directly]

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signature page to

IVD TEST KIT development AND SUPPLY AGREEMENT

 

 

IN WITNESS WHEREOF, effective as of the Effective Date, each of the Parties have
executed this Agreement by their duly authorized officers or representatives.

 

Illumina, Inc.

By:/s/ John Leite
Name: John Leite
Title: VP, Business Development
Date: September 23, 2019

Adaptive Biotechnologies Corp.

By: /s/ Chad Robins
Name: Chad Robins
Title: CEO & Co-Founder
Date: September 23, 2019

 

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exhibit A

ILLUMINA COMPONENTS, IVD HArdware, AND PRICING

[***]

 

 

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Confidential

 

EXHIBIT B

DEVELOPMENT PLANS

[to be added]

 

 

 

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Confidential

 

EXHIBIT C

STANDARD TERMS

[***]

 

 

 

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Confidential

 

EXHIBIT D

FEES AND MILESTONE PAYMENTS

Partner will pay to Illumina the following amounts upon achievement of the
corresponding milestones:

Technology Access Fee (Milestone):

[***], payable as follows: (a) [***] upon acceptance of a verified Custom
Software module by Partner as meeting the specification requirements set forth
in the Development Plan for the first IVD Test Kit, and (b) [***] upon
installation of the Custom Software module at a clinical trial site.

 

[***]

 

 

 

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EXHIBIT E

ILLUMINA REGULATORY AND SAFETY COMPLIANCE RIDER

[***]