Exhibit 10.9


 


 


 


 


 


 


 


 


 


 


 


 


 


RESTATED ALLIANCE AGREEMENT


 


RESTATED STRATEGIC ALLIANCE
AGREEMENT


 


among


 


APPLERA CORPORATION,


 


CELERA DIAGNOSTICS, LLC


 


and


 


ABBOTT LABORATORIES


 


 


 


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


RESTATED STRATEGIC ALLIANCE
AGREEMENT


 


Table of Contents


 




	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II EXCLUSIVITY

  	
   

  	
  16

  	
   

  
	
  2.1

  	
   

  	
  Exclusivity Obligations

  	
   

  	
  16

  	
   

  
	
  2.2

  	
   

  	
  Exceptions to Exclusivity

  	
   

  	
  17

  	
   

  
	
  2.3

  	
   

  	
  Outside Exclusive Areas

  	
   

  	
  17

  	
   

  
	
  2.4

  	
   

  	
  [***]

  	
   

  	
  18

  	
   

  
	
  2.5

  	
   

  	
  QSR Claims;
  Commercialization of Non-Alliance Products and Reagents for Research Use Only

  	
   

  	
  18

  	
   

  
	
  2.6

  	
   

  	
  OEM Alliance Products

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III JOINT REVIEW
  BOARD

  	
   

  	
  20

  	
   

  
	
  3.1

  	
   

  	
  Composition

  	
   

  	
  20

  	
   

  
	
  3.2

  	
   

  	
  Responsibilities

  	
   

  	
  20

  	
   

  
	
  3.3

  	
   

  	
  Meetings

  	
   

  	
  22

  	
   

  
	
  3.4

  	
   

  	
  Decisions

  	
   

  	
  22

  	
   

  
	
  3.5

  	
   

  	
  Minutes

  	
   

  	
  22

  	
   

  
	
  3.6

  	
   

  	
  In-License Decisions

  	
   

  	
  22

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV ALLIANCE
  PROGRAM

  	
   

  	
  23

  	
   

  
	
  4.1

  	
   

  	
  Initial Program Efforts

  	
   

  	
  23

  	
   

  
	
  4.2

  	
   

  	
  New Product Concept
  Documents

  	
   

  	
  23

  	
   

  
	
  4.3

  	
   

  	
  Acquisition of Products or
  Companies in the Alliance Field

  	
   

  	
  24

  	
   

  
	
  4.4

  	
   

  	
  Rejected NPCD

  	
   

  	
  25

  	
   

  
	
  4.5

  	
   

  	
  Non-Alliance Product

  	
   

  	
  26

  	
   

  
	
  4.6

  	
   

  	
  Work Plans

  	
   

  	
  26

  	
   

  
	
  4.7

  	
   

  	
  R&D Plan

  	
   

  	
  26

  	
   

  
	
  4.8

  	
   

  	
  Technical Assistance

  	
   

  	
  27

  	
   

  
	
  4.9

  	
   

  	
  Conduct of the Alliance
  Program

  	
   

  	
  27

  	
   

  
	
  4.10

  	
   

  	
  Records

  	
   

  	
  28

  	
   

  
	
  4.11

  	
   

  	
  Reports

  	
   

  	
  28

  	
   

  
	
  4.12

  	
   

  	
  Commercialization of
  Alliance Products

  	
   

  	
  28

  	
   

  
	
  4.13

  	
   

  	
  Disposition of Alliance
  Product

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REGULATORY
  APPROVALS

  	
   

  	
  29

  	
   

  
	
  5.1

  	
   

  	
  Regulatory Approvals

  	
   

  	
  29

  	
   

  
	
  5.2

  	
   

  	
  Regulatory Communications

  	
   

  	
  29

  	
   

  
	
  5.3

  	
   

  	
  Product Inserts and
  Labeling

  	
   

  	
  29

  	
   

  
	
  5.4

  	
   

  	
  Inspection and Audit of
  Supplier

  	
   

  	
  29

  	
   

  
	
  5.5

  	
   

  	
  Inspection and Audit of
  Distributor

  	
   

  	
  29

  	
   

  






 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


i

















 




	
  5.6

  	
   

  	
  Localization

  	
   

  	
  30

  	
   

  
	
  5.7

  	
   

  	
  Regulatory Compliance And
  Related Matters

  	
   

  	
  30

  	
   

  
	
  5.8

  	
   

  	
  Field Actions

  	
   

  	
  30

  	
   

  
	
  5.9

  	
   

  	
  Existing Products

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI MANUFACTURING
  RIGHTS

  	
   

  	
  31

  	
   

  
	
  6.1

  	
   

  	
  Manufacturing

  	
   

  	
  31

  	
   

  
	
  6.2

  	
   

  	
  Manufacturing Practices.

  	
   

  	
  31

  	
   

  
	
  6.3

  	
   

  	
  Manufacturing Records

  	
   

  	
  32

  	
   

  
	
  6.4

  	
   

  	
  Warranty

  	
   

  	
  32

  	
   

  
	
  6.5

  	
   

  	
  Terms of Supply

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII SALES,
  MARKETING AND SUPPORT

  	
   

  	
  33

  	
   

  
	
  7.1

  	
   

  	
  Distributor

  	
   

  	
  33

  	
   

  
	
  7.2

  	
   

  	
  Selling Price

  	
   

  	
  33

  	
   

  
	
  7.3

  	
   

  	
  Marketing

  	
   

  	
  34

  	
   

  
	
  7.4

  	
   

  	
  Diligence

  	
   

  	
  34

  	
   

  
	
  7.5

  	
   

  	
  Service and Support

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII INSTRUMENTS

  	
   

  	
  34

  	
   

  
	
  8.1

  	
   

  	
  Instrument
  Commercialization

  	
   

  	
  34

  	
   

  
	
  8.2

  	
   

  	
  Instrument Co-Promotion

  	
   

  	
  35

  	
   

  
	
  8.3

  	
   

  	
  Instrument Distribution

  	
   

  	
  35

  	
   

  
	
  8.4

  	
   

  	
  OEM Instruments

  	
   

  	
  35

  	
   

  
	
  8.5

  	
   

  	
  Alliance Funded Instrument

  	
   

  	
  36

  	
   

  
	
  8.6

  	
   

  	
  Instrument Funding

  	
   

  	
  36

  	
   

  
	
  8.7

  	
   

  	
  Rejected Instrument

  	
   

  	
  36

  	
   

  
	
  8.8

  	
   

  	
  OEM Opportunity

  	
   

  	
  36

  	
   

  
	
  8.9

  	
   

  	
  Instruments for Performing
  Tests in Exclusive Areas

  	
   

  	
  37

  	
   

  
	
  8.10

  	
   

  	
  Technology and Patent
  Rights

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX SHARING OF
  COSTS AND REVENUES

  	
   

  	
  38

  	
   

  
	
  9.1

  	
   

  	
  Quarterly Cost and Revenue
  Estimate

  	
   

  	
  38

  	
   

  
	
  9.2

  	
   

  	
  Cost and Revenue
  Statements

  	
   

  	
  38

  	
   

  
	
  9.3

  	
   

  	
  Statement of Net
  Investment

  	
   

  	
  38

  	
   

  
	
  9.4

  	
   

  	
  Equalization Payments

  	
   

  	
  38

  	
   

  
	
  9.5

  	
   

  	
  Maximum Costs

  	
   

  	
  39

  	
   

  
	
  9.6

  	
   

  	
  Modifying Terms

  	
   

  	
  39

  	
   

  
	
  9.7

  	
   

  	
  Payment Terms

  	
   

  	
  39

  	
   

  
	
  9.8

  	
   

  	
  Record Keeping

  	
   

  	
  39

  	
   

  
	
  9.9

  	
   

  	
  Audits

  	
   

  	
  40

  	
   

  
	
  9.10

  	
   

  	
  Tax Matters

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X OWNERSHIP,
  LICENSE AND TECHNOLOGY TRANSFER

  	
   

  	
  45

  	
   

  
	
  10.1

  	
   

  	
  Abbott Independent Rights

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Applera Independent Rights

  	
   

  	
  45

  	
   

  
	
  10.3

  	
   

  	
  Abbott Alliance Technology
  and Alliance Patent Rights

  	
   

  	
  45

  	
   

  






 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


ii

















 




	
  10.4

  	
   

  	
  Applera Alliance
  Technology and Alliance Patent Rights

  	
   

  	
  45

  	
   

  
	
  10.5

  	
   

  	
  Joint Alliance Technology
  and Joint Alliance Patent Rights

  	
   

  	
  46

  	
   

  
	
  10.6

  	
   

  	
  Employee Assignment and
  Disclosure

  	
   

  	
  47

  	
   

  
	
  10.7

  	
   

  	
  Transfer of Applera Technology

  	
   

  	
  48

  	
   

  
	
  10.8

  	
   

  	
  Transfer of Abbott
  Technology

  	
   

  	
  48

  	
   

  
	
  10.9

  	
   

  	
  No Title Transfer

  	
   

  	
  49

  	
   

  
	
  10.10

  	
   

  	
  Applera License Grant to
  Abbott in the Alliance Field

  	
   

  	
  49

  	
   

  
	
  10.11

  	
   

  	
  Abbott License Grant to
  Applera in the Alliance Field

  	
   

  	
  50

  	
   

  
	
  10.12

  	
   

  	
  Abbott License Grant to
  Applera Outside the Alliance Field

  	
   

  	
  50

  	
   

  
	
  10.13

  	
   

  	
  Applera License Grant to
  Abbott Outside the Alliance Field

  	
   

  	
  51

  	
   

  
	
  10.14

  	
   

  	
  Royalty Rate Factors and
  License Terms

  	
   

  	
  51

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI PATENT RIGHTS
  MAINTENANCE AND ENFORCEMENT

  	
   

  	
  54

  	
   

  
	
  11.1

  	
   

  	
  Independent Patent Rights

  	
   

  	
  54

  	
   

  
	
  11.2

  	
   

  	
  Alliance Patent Rights

  	
   

  	
  54

  	
   

  
	
  11.3

  	
   

  	
  Joint Alliance Patent
  Rights

  	
   

  	
  55

  	
   

  
	
  11.4

  	
   

  	
  Alliance Patent Rights
  Enforcement Outside Exclusive Areas

  	
   

  	
  55

  	
   

  
	
  11.5

  	
   

  	
  Alliance Patent Rights
  Enforcement in the Exclusive Areas

  	
   

  	
  56

  	
   

  
	
  11.6

  	
   

  	
  Joint Alliance Patent
  Rights Enforcement

  	
   

  	
  56

  	
   

  
	
  11.7

  	
   

  	
  Defense of Third Party
  Infringement Actions

  	
   

  	
  57

  	
   

  
	
  11.8

  	
   

  	
  Non-Alliance Product
  Infringement Issues

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII TRADEMARKS

  	
   

  	
  57

  	
   

  
	
  12.1

  	
   

  	
  Trademark Usage

  	
   

  	
  57

  	
   

  
	
  12.2

  	
   

  	
  Labels

  	
   

  	
  58

  	
   

  
	
  12.3

  	
   

  	
  Party Trademark Rights

  	
   

  	
  58

  	
   

  
	
  12.4

  	
   

  	
  New Trademark Rights

  	
   

  	
  58

  	
   

  
	
  12.5

  	
   

  	
  Trademark Challenges

  	
   

  	
  58

  	
   

  
	
  12.6

  	
   

  	
  Post-Termination Rights

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII COPYRIGHTS

  	
   

  	
  59

  	
   

  
	
  13.1

  	
   

  	
  Copyright License

  	
   

  	
  59

  	
   

  
	
  13.2

  	
   

  	
  Copyright Marking

  	
   

  	
  59

  	
   

  
	
  13.3

  	
   

  	
  Copyright Infringement

  	
   

  	
  59

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV
  CONFIDENTIALITY

  	
   

  	
  59

  	
   

  
	
  14.1

  	
   

  	
  Confidentiality

  	
   

  	
  59

  	
   

  
	
  14.2

  	
   

  	
  Terms of Agreement

  	
   

  	
  60

  	
   

  
	
  14.3

  	
   

  	
  Permitted Disclosures

  	
   

  	
  60

  	
   

  
	
  14.4

  	
   

  	
  Disclosure to Investors
  and Rating Agencies

  	
   

  	
  61

  	
   

  
	
  14.5

  	
   

  	
  Term of Obligations

  	
   

  	
  61

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XV REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  61

  	
   

  
	
  15.1

  	
   

  	
  Representations

  	
   

  	
  61

  	
   

  
	
  15.2

  	
   

  	
  Represented by Counsel

  	
   

  	
  62

  	
   

  
	
  15.3

  	
   

  	
  Disclaimer Of Warranties

  	
   

  	
  62

  	
   

  






 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


iii

















 




	
  ARTICLE XVI
  INDEMNIFICATION

  	
   

  	
  62

  	
   

  
	
  16.1

  	
   

  	
  By Abbott

  	
   

  	
  62

  	
   

  
	
  16.2

  	
   

  	
  By Applera

  	
   

  	
  63

  	
   

  
	
  16.3

  	
   

  	
  Procedure

  	
   

  	
  63

  	
   

  
	
  16.4

  	
   

  	
  Insurance

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVII TERM AND
  TERMINATION

  	
   

  	
  64

  	
   

  
	
  17.1

  	
   

  	
  Expiration

  	
   

  	
  64

  	
   

  
	
  17.2

  	
   

  	
  Termination of an Alliance
  Product or NPCD

  	
   

  	
  64

  	
   

  
	
  17.3

  	
   

  	
  Termination by Mutual
  Agreement

  	
   

  	
  64

  	
   

  
	
  17.4

  	
   

  	
  Termination by Abbott

  	
   

  	
  64

  	
   

  
	
  17.5

  	
   

  	
  Termination by Applera

  	
   

  	
  64

  	
   

  
	
  17.6

  	
   

  	
  Other Termination

  	
   

  	
  65

  	
   

  
	
  17.7

  	
   

  	
  Rights and Obligations

  	
   

  	
  65

  	
   

  
	
  17.8

  	
   

  	
  Termination for Force
  Majeure

  	
   

  	
  69

  	
   

  
	
  17.9

  	
   

  	
  Termination for Change of
  Control

  	
   

  	
  69

  	
   

  
	
  17.10

  	
   

  	
  Termination for Insolvency

  	
   

  	
  72

  	
   

  
	
  17.11

  	
   

  	
  Product Inserts and
  Labeling

  	
   

  	
  72

  	
   

  
	
  17.12

  	
   

  	
  Return Material

  	
   

  	
  72

  	
   

  
	
  17.13

  	
   

  	
  Share Net Investment

  	
   

  	
  72

  	
   

  
	
  17.14

  	
   

  	
  Liabilities

  	
   

  	
  73

  	
   

  
	
  17.15

  	
   

  	
  Post-Termination
  Activities

  	
   

  	
  73

  	
   

  
	
  17.16

  	
   

  	
  Survival

  	
   

  	
  73

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XVIII DISPUTE
  RESOLUTION

  	
   

  	
  73

  	
   

  
	
  18.1

  	
   

  	
  Disputes

  	
   

  	
  73

  	
   

  
	
  18.2

  	
   

  	
  JRB Resolution

  	
   

  	
  74

  	
   

  
	
  18.3

  	
   

  	
  Executive Officer
  Resolution

  	
   

  	
  74

  	
   

  
	
  18.4

  	
   

  	
  Notice of ADR

  	
   

  	
  74

  	
   

  
	
  18.5

  	
   

  	
  Designation of Neutral

  	
   

  	
  74

  	
   

  
	
  18.6

  	
   

  	
  ADR Rules

  	
   

  	
  75

  	
   

  
	
  18.7

  	
   

  	
  Hearing

  	
   

  	
  75

  	
   

  
	
  18.8

  	
   

  	
  Evidence for Hearing

  	
   

  	
  75

  	
   

  
	
  18.9

  	
   

  	
  Hearing Procedure

  	
   

  	
  75

  	
   

  
	
  18.10

  	
   

  	
  Post-Hearing Briefs

  	
   

  	
  76

  	
   

  
	
  18.11

  	
   

  	
  Ruling by Neutral

  	
   

  	
  76

  	
   

  
	
  18.12

  	
   

  	
  Allocation of Expenses

  	
   

  	
  76

  	
   

  
	
  18.13

  	
   

  	
  Binding Result

  	
   

  	
  76

  	
   

  
	
  18.14

  	
   

  	
  Statute of Limitations

  	
   

  	
  77

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIX MISCELLANEOUS

  	
   

  	
  77

  	
   

  
	
  19.1

  	
   

  	
  Governing Law

  	
   

  	
  77

  	
   

  
	
  19.2

  	
   

  	
  Publicity

  	
   

  	
  77

  	
   

  
	
  19.3

  	
   

  	
  No Implied Licenses

  	
   

  	
  77

  	
   

  
	
  19.4

  	
   

  	
  Waiver

  	
   

  	
  77

  	
   

  
	
  19.5

  	
   

  	
  Assignment

  	
   

  	
  77

  	
   

  
	
  19.6

  	
   

  	
  Independent Contractors

  	
   

  	
  78

  	
   

  






 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


iv

















 




	
  19.7

  	
   

  	
  Further Actions

  	
   

  	
  78

  	
   

  
	
  19.8

  	
   

  	
  Notices

  	
   

  	
  78

  	
   

  
	
  19.9

  	
   

  	
  Force Majeure

  	
   

  	
  78

  	
   

  
	
  19.10

  	
   

  	
  No Consequential Damages

  	
   

  	
  79

  	
   

  
	
  19.11

  	
   

  	
  Third Party Rights

  	
   

  	
  79

  	
   

  
	
  19.12

  	
   

  	
  Complete Agreement

  	
   

  	
  79

  	
   

  
	
  19.13

  	
   

  	
  Counterparts

  	
   

  	
  79

  	
   

  
	
  19.14

  	
   

  	
  Headings

  	
   

  	
  79

  	
   

  
	
  19.15

  	
   

  	
  Severability

  	
   

  	
  79

  	
   

  
	
  19.16

  	
   

  	
  Amendment

  	
   

  	
  80

  	
   

  
	
  19.17

  	
   

  	
  Controlling Document

  	
   

  	
  80

  	
   

  






 


Exhibits


 




	
  EXHIBIT 1.13

  	
   

  	
  Financial Terms

  
	
  EXHIBIT 1.22

  	
   

  	
  Carveouts

  
	
  EXHIBIT 1.62 (a)

  	
   

  	
  NPCD — Development

  
	
  EXHIBIT 1.62 (b)

  	
   

  	
  NPCD — Feasibility

  
	
  EXHIBIT 1.77

  	
   

  	
  R&D Plan

  
	
  EXHIBIT 1.95

  	
   

  	
  Work Plan

  
	
  EXHIBIT 2.2

  	
   

  	
  Exceptions to
  Exclusivity

  
	
  EXHIBIT 2.2(a)

  	
   

  	
  Exceptions to
  Exhibit 2.2

  
	
  EXHIBIT 2.6

  	
   

  	
  OEM Alliance Products

  
	
  EXHIBIT 4.1

  	
   

  	
  Approved NPCDs

  
	
  EXHIBIT 4.7(a)(i)

  	
   

  	
  Initial R&D Plan

  
	
  EXHIBIT 4.7(a)(ii)

  	
   

  	
  Initial R&D Plan
  Budget

  
	
  EXHIBIT 9.2

  	
   

  	
  Cost and Revenue
  Statement

  
	
  EXHIBIT 9.3

  	
   

  	
  Net Investment
  Statement

  
	
  EXHIBIT 17.7(c)

  	
   

  	
  Post-Termination Royalties

  
	
  EXHIBIT 19.12

  	
   

  	
  Further Amendments to
  Amendment Nos. 2 and 2a

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  






 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


v














 


RESTATED STRATEGIC ALLIANCE
AGREEMENT


 


THIS RESTATED STRATEGIC ALLIANCE AGREEMENT (this “Agreement”), effective as of January 9, 2006 (the “Effective Date”), is entered into among APPLERA CORPORATION, a
Delaware corporation (“Applera”),
having a place of business at 301 Merritt 7, Norwalk, Connecticut 06851, CELERA
DIAGNOSTICS, LLC, a Delaware limited liability company (“CDx”), having a place of business at 1401 Harbor Bay
Parkway, Alameda, California 94502, and ABBOTT LABORATORIES, an Illinois
corporation (“Abbott”), having a place of business at 100 Abbott Park
Road, Abbott Park, Illinois 60064-6400.


 


WHEREAS, Abbott is a global, diversified healthcare company with
expertise in the discovery, development, manufacture and marketing of
pharmaceuticals, nutritionals, and medical products, including devices and
diagnostics;


 


WHEREAS, Applera, through its business units Applied Biosystems, Celera
Genomics, and CDx, has expertise and technology applicable to genetic research
and molecular diagnostic product development;


 


WHEREAS, the Parties (as defined below) entered into a Strategic
Alliance Agreement dated June 24, 2002, as amended, to engage in a
collaborative program for the discovery, research, development and
commercialization worldwide of novel molecular in vitro diagnostic products and
services; and


 


WHEREAS, the Parties desire to modify and clarify such collaborative
program in a fully restated agreement on the terms and conditions of this
Agreement.


 


NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the Parties agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


1.1           “Abbott Alliance Patent
Rights” means Alliance Patent
Rights that claim inventions conceived solely by employees or agents of Abbott
or any Abbott Affiliate.


 


1.2           “Abbott Alliance
Technology” means the Alliance
Technology Derived solely by employees or agents of Abbott or any Abbott
Affiliate.


 


1.3           “Abbott Independent
Patent Rights” means Independent
Patent Rights owned or Controlled by Abbott or any Abbott Affiliate.


 


1.4           “Abbott Independent
Technology” means Independent
Technology owned or Controlled by Abbott or any Abbott Affiliate.


 


1.5           “Abbott Existing
Product(s)” means the LCx
instrument system and uniquely associated accessories and consumables (“System”)
and the LCx HIV and HCV assays (collectively “Viral Assays”). 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


1.6           “Affiliate(s)” means, with respect to any person or entity, any
other person or entity, which controls, is controlled by or is under common
control with such person or entity. For purposes of this definition, a person
or entity is in “control” of an entity if it owns or controls more than fifty
percent (50%) of the equity securities of the subject entity entitled to vote
in the election of directors (or, in the case of an entity that is not a
corporation, for the election of the corresponding managing authority), or
otherwise has the power to control the management and policies of such other
entity. An entity only retains the rights and is subject to the obligations of
an Affiliate for so long as such entity continues to satisfy the definition in
this Section 1.6.


 


1.7           “Alliance Accounting
Policies” means the accounting
policies adopted by the JRB (as defined in Section 3.1) to be used in
determining the net of sharing of Revenue less Allowable Expenses pursuant to Article IX.


 


1.8           “Alliance Field” means the manufacture, use or Commercialization of
any product or service for the in vitro amplification, detection,
quantification, extraction or sequencing of a nucleic acid in or from a human
biological sample for the purpose of: (a)  diagnosing, detecting or
monitoring any disease, state, condition, trait or characteristic of a human
being for medical management; (b) exercising quality assurance and quality
control testing of human blood or plasma from which biological therapeutic
agents may be derived for resale; (c) [***]; or (d) screening human
organs, tissues or cells for transplantation. The Alliance Field does not
include the research, development, manufacture, use or Commercialization of any
Carveout; the internal research by either Party for therapeutic development,
including clinical trials; or research, development, manufacture, use,
Commercialization, or testing in Epidemiology or Biosecurity (as each such term
is defined below).


 


1.9           “Alliance Patent Rights” means Patent Rights that claim any Alliance
Technology.


 


1.10         “Alliance Program” means the collaborative research and Development,
manufacturing, regulatory and Commercialization activities in the Exclusive
Areas undertaken pursuant to a JRB-approved Work Plan conducted by the Parties
in accordance with this Agreement or the Prior Alliance Agreement. The Alliance
Program does not include such activities by a Party on Non-Alliance Products.


 


1.11         “Alliance Product(s)” means any product, including, without limitation,
any Reagent, kit, consumable or Instrument described in Sections 8.4 and 8.5,
or any combination or component thereof, that: (a) is Commercialized under
the Alliance Program; or (b) is the subject of a JRB-approved Work Plan;
or (c) otherwise becomes an Alliance Product pursuant to this Agreement.
An Alliance Product will include software to the extent such software is
distributed in connection with the Reagent or kit. Alliance Product does not
include: 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


2

















 


(x) any
Carveout; or (y) any Non-Alliance Product. For purposes of this Agreement,
the term “Alliance
Product” will also include any
service that: (d) is Commercialized under the Alliance Program; (e) is
the subject of a JRB-approved Work Plan; or (f) is provided by or for a
Party (i) through use of an Alliance Product or (ii) in support of a
customer’s use of an Alliance Product.


 


1.12         “Alliance
Technology” means Technology and/or Materials that are Derived by or for a
Party during performance of the Alliance Program or a program approved by the
JRB under the Prior Alliance Agreement and the Derivation of which is jointly
funded by the Parties pursuant to this Agreement or pursuant to a program
approved by the JRB under the Prior Alliance Agreement.


 


1.13         “Allowable Expenses” has the meaning defined in Exhibit 1.13
hereof.


 


1.14         “Analyte Specific
Reagents” or “ASR” means nucleic acid sequences, and similar reagents
which, through specific binding or chemical reactions with substances in a
specimen, are intended for use in a diagnostic application for identification
and/or quantification of an individual chemical substance in a biological
specimen, as further defined in 21 CFR 864.4020(a), as may be amended or
replaced from time to time, or in equivalent foreign regulations.


 


1.15         “Applera Alliance Patent
Rights” means Alliance Patent Rights
that claim inventions conceived solely by employees or agents of Applera or any
Applera Affiliates.


 


1.16         “Applera Alliance
Technology” means Alliance
Technology Derived solely by employees or agents of Applera or any Applera
Affiliates.


 


1.17         “Applera Existing
Products” means: (a) ViroSeq
HIV Genotyping Kit and associated software; (b) HLA Sequencing based
typing Kits (HLA-DRB, Codon 86 for HLA-DRB, HLA-A, HLA-B) and associated
software; and (c) Cystic Fibrosis mutation screening system available as
Analyte Specific Reagents and General Purpose Reagents.


 


1.18         “Applera Independent
Patent Rights” means Independent
Patent Rights owned or Controlled by Applera or any Applera Affiliate.


 


1.19         “Applera Independent
Technology” means Independent
Technology owned or Controlled by Applera or any Applera Affiliate.


 


1.20         “Biosecurity” means the detection of biological or chemical
agents, pathogens, microorganisms or other infectious agents in the
environment, agriculture, food or water.


 


1.21         [***].


 


1.22         “Carveout(s)” means, collectively and individually, the products
described in Exhibit 1.22 hereto. For purposes of this Agreement,
Carveouts are not in the Alliance Field.


 


1.23         “Commencement Date” means January 1, 2006 with respect to matters
pertaining to budgets to be approved by the JRB.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


3

















 


1.24         “Commercial Entity” means any Third Party or its Affiliates that is
engaged in the commercial sale of products in the In Vitro Diagnostics Field.


 


1.25         “Commercialize” and cognates thereof mean the sale, transfer or
co-promotion of a product or service to a Third Party for commercial purposes.
For example, an Alliance Product will be Commercialized when it or its use is
provided to any Third Party for cash or other consideration.


 


1.26         “Competing Product(s)” means any product in the Alliance Field that (a) is,
or is intended to be, Commercialized in the current or intended Customer
Segment as, and (b) except as provided in Section 2.5(b), has or
incorporates the same Clinical Intent as, an Alliance Product. A product in the
Alliance Field may be a Competing Product despite differences in the marker
used or the technology employed. “Clinical Intent”
means providing the same clinical utility, intended use or the same clinical
information. “Customer
Segment” means distinct customer
types on a country-by-country basis, for example, clinical diagnostic labs,
blood/specimen screening labs and point of care customers. A product in the
Alliance Field having the same Clinical Intent in the same Customer Segment as
an Alliance Product will be a Competing Product despite differences in
effectiveness, efficiency or price. In no event will a product Commercialized
outside the Alliance Field be considered a Competing Product. For purposes of
this Agreement, the term “Competing Product”
will include any service in the Alliance Field that is, or is intended to be,
Commercialized in the same Customer Segment as, and, except as provided in Section 2.5(b),
has the same Clinical Intent as, a service that is an Alliance Product. As
provided in Section 2.5(e), a product sold to purchasers before
JRB-approval of an NPCD-Development for a competing Alliance Product will be a
Competing Product only for sales to new customers, which sales occur after JRB
approval of the NPCD-Development for the Alliance Product. Competing Products
will not include primers and probes labeled “For Research Use Only” or other
comparable label that are sold as reagents to an individual customer for
testing with the same Clinical Intent as an Alliance Product unless they are
used for testing in the Exclusive Areas as defined in Sections 1.39(a) — (d) or
in the Exclusive Areas as defined in Sections 1.39(e) — (g) and they
incorporate Alliance Technology. In such case the Party supplying the research
use primers and probes as reagents to the individual customer may not
Facilitate the sale of such primers and probes to additional customers.


 


1.27         “Conditionally Exclusive
Areas” means any product or service
in the Alliance Field that is [***]. “Conditionally Exclusive Areas”
specifically excludes [***] unless they are Alliance Products.


 


1.28         “Confidential Information” means non-public proprietary data, information,
Materials, Technology or Instruments (and all tangible and intangible
embodiments thereof), which is owned or Controlled by a Party, is disclosed by
such Party (“Disclosing
Party”) to the other Party (“Receiving Party”) pursuant to this Agreement, and is designated as
Confidential Information by the Disclosing Party at the time of disclosure or
pursuant to this Agreement. Confidential Information will not include data,
information, Materials, Technology or Instruments which, and only to the
extent, a Receiving Party can establish by written documentation: (a) is
part of the public domain prior to disclosure of such information by the Disclosing
Party to the Receiving Party or becomes part of the public domain, without the
fault of the Receiving Party, subsequent to disclosure of such information by
the Disclosing Party to 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


4

















 


the
Receiving Party; (b) has been received by the Receiving Party at any time
from a source, other than the Disclosing Party, rightfully having possession of
and the right to disclose such information free of confidentiality obligations;
(c) has been otherwise known by the Receiving Party free of
confidentiality obligations prior to disclosure of such information by the
Disclosing Party to the Receiving Party; (d) has been independently
developed by employees or others on behalf of the Receiving Party without
access to or use of such information disclosed by the Disclosing Party to the
Receiving Party. Specific aspects or details of Confidential Information will
not be deemed to be within the public knowledge or in the prior possession of
the Receiving Party merely because the aspects or details of the Confidential
Information are embraced by general disclosures in the public domain. In
addition, any combination of Confidential Information will not be considered in
the public knowledge or in the prior possession of the Receiving Party merely
because individual elements thereof are in the public domain or in the prior
possession of the Receiving Party unless the combination and its principles are
in the public knowledge or in the prior possession of the Receiving Party. With
respect to Confidential Information which is jointly created, owned or
Controlled by the Parties under this Agreement, exceptions (a) through (d) of
this Section 1.28 will continue to apply; provided, however, that for
application of exceptions (b) through (d) of this Section 1.28,
a Party must establish that the exception applies by virtue of written
documentation from a Third Party rather than the written documentation of the
Receiving Party. Further, for avoidance of doubt, Confidential Information will
include Confidential Information received by the Disclosing Party from a Third
Party. Prior to disclosure of such Third Party Confidential Information to the
Receiving Party the Disclosing Party will determine that it has the right to
make such disclosure, advise the Receiving Party that the disclosure includes
Third Party Confidential Information and provide the Receiving Party with the
terms and conditions of any agreement between the Third Party and the
Disclosing Party respecting such Third Party Confidential Information.


 


1.29         “Contract Half Year” means a consecutive and continuous six (6)-month
period commencing on January 1, 2006 and on each subsequent July 1
and January 1 thereafter during the term of this Agreement.


 


1.30         “Contract Year” means a consecutive and continuous twelve
(12)-month period commencing on January 1, 2006 and on each subsequent January 1
during the term of this Agreement.


 


1.31         “Controls” or “Controlled”
and cognates thereof mean with respect to Technology, Patent Rights, Materials,
and/or Confidential Information, the possession of the ability to grant
licenses or sublicenses, to distribute Copyrighted Works or to otherwise
disclose, without violating the terms of any agreement or other arrangement
with, or the rights of, any Third Party.


 


1.32         “Copyrighted Works” means original works of authorship, including,
without limitation, computer programs (in source code, object code or other
form), notes, sketches, drawings and reports.


 


1.33         “Deliverable Alliance
Technology” means that portion of
Alliance Technology that is responsive to goals and deliverables specifically
identified in NPCDs.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


5

















 


1.34         “Derived” and cognates thereof mean obtained, developed,
acquired, made, invented, discovered, created, synthesized, designed, or
resulting from, based upon or otherwise generated (whether directly or
indirectly, or in whole or in part).


 


1.35         “Development” means actions or activities by a Party following
proof of feasibility to validate the design of a product or service for
eventual Commercialization.


 


1.36         “Development Costs” has the meaning defined in Exhibit 1.13
hereof.


 


1.37         “Distributor” means, with respect to an Alliance Product, the
Party that Commercializes such Alliance Product in accordance with this
Agreement.


 


1.38         “Epidemiology” means the screening or testing of groups of people
or populations for the study of the patterns, causes, or control of disease in
groups of people.


 


1.39         “Exclusive Areas” means the products and services that are used or
distributed for use in the Alliance Field in:




	
   

  	
  (a)

  	
   

  	
  detecting,
  classifying or quantifying nucleic acid sequences of any of the following
  [***];

  
	
   

  
	
   

  	
  (b)

  	
   

  	
  detecting,
  classifying or quantifying any human gene or genetic variation that causes 

  
	
  or is
  linked to [***];

  
	
   

  
	
   

  	
  (c)

  	
   

  	
  detecting,
  classifying or quantifying any human gene or genetic variation that causes 

  
	
  or is
  linked to [***];

  
	
   

  
	
   

  	
  (d)

  	
   

  	
  detecting,
  classifying or quantifying the combination of [***] genes and genetic
  variations 

  
	
  therein
  for predicting [***], or any modifications thereof approved by the JRB;

  
	
   

  
	
   

  	
  (e)

  	
   

  	
  detecting,
  classifying or quantifying human genes and expression products encoded 

  
	
  by such genes
  for predicting [***] as those products are defined in the JRB-approved Work
  Plans dated July 12, 2005, or any modifications thereof approved by the
  JRB;

  
	
   

  
	
   

  	
  (f)

  	
   

  	
  detecting,
  classifying or quantifying any human gene or genetic variation for 

  
	
  predicting
  [***] as that product is defined in the JRB-approved Work Plan dated
  July 12, 2005, or any modifications thereof approved by the JRB; and

  
	
   

  
	
   

  	
  (g)

  	
   

  	
  detecting,
  classifying or quantifying nucleic acid sequences of any other [***] 

  
	
  associated
  with a human medical condition expressly added to the Exclusive Areas by
  decision of the JRB pursuant to a JRB-approved Work Plan under this
  Agreement.

  






 


“Exclusive Areas” specifically
excludes [***] unless they are Alliance Products. The products and services
specified in this definition are subject to the provisions of Section 2.4.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


6

















 


1.40         “Existing Patent Rights” means Patent Rights that are reasonably necessary
for performance under this Agreement and that are owned or Controlled by a
Party as of the effective date of the Prior Alliance Agreement.


 


1.41         “Existing Products” means Abbott Existing Products and Applera
Existing Products.


 


1.42         “Existing Technology” means Technology and Materials that are reasonably
necessary for performance under this Agreement and that are owned or Controlled
by a Party as of the effective date of the Prior Alliance Agreement.


 


1.43         “Exploit” means: (a) with respect to a Patent Right,
making, having made, using, selling, offering for sale or importing an invention
claimed in such Patent Right or granting license rights under such Patent
Right; (b) with respect to Technology, using or transferring the
Technology or part thereof in conjunction with the making, having made, using,
selling, offering for sale and importing of a product or method or granting
license rights under such Technology; and (c) with respect to Copyrighted
Works, copying, performing or distributing the Copyrighted Work or granting
license rights under such Copyrighted Work.


 


1.44         “FDA” means the Food and Drug Administration of the
United States, or a successor thereto and any foreign equivalent.


 


1.45         “Facilitate” and cognates thereof means to sell, distribute or
promote a product or a service, or to partner with a Third Party to sell, distribute
or promote a product or service, where such product or service is promoted as a
Competing Product or distributed with knowledge of its use as a Competing
Product. In the case of Instruments, “facilitating” is distributing or loading
Instruments with software, or distributing, promoting or actively assisting in
the development of software for the Instrument, that is specific to a Competing
Product (i.e., software specific to a diagnostic application).


 


1.46         “General Purpose
Instrument” means a device which,
if introduced into the United States, is not or would not be subject to
pre-market notification or approval under then-applicable FDA regulations.


 


1.47         “General Purpose Reagent” or “GPR” means
chemical or biological reagents that (a) are not Analyte Specific Reagents
and (b) have general laboratory application.


 


1.48         “In Vitro Diagnostics
Field” means the products related
to and services associated with in vitro measuring, observing and/or
determining attributes, characteristics, diseases, traits or other conditions
of a human being for medical management.


 


1.49         “Incremental Net Sales” means:


 


	
   

  	
  (a)

  	
   

  	
  With
  respect to an Alliance Product Commercialized after rejection of the NPCD 

  
	
  as
  described in Section 4.4 (a) (“New Alliance Product”), Incremental Net Sales means:

  



 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 


7

















 


(i)    where the New Alliance Product, if sold
outside the Alliance Program, would have been a Competing Product, all sales of
such New Alliance Product less any Cannibalized Sales of Alliance Products
which were being sold at the time such New Alliance Product was first sold. “Cannibalized Sales” for purposes of this Section 1.49(a)(i) means
sales resulting solely from the switch by an existing customer from an existing
Alliance Product to the New Alliance Product where both such Alliance Products
have the same Clinical Intent, but does not include any increased sales
resulting from price or volume increases attributable to the switch by an
existing customer to the New Alliance Product; or


 


(ii)   where the New Alliance Product, if sold
outside the Alliance Program, would not have been a Competing Product, all
sales of such New Alliance Product.


 


	
   

  	
  (b)

  	
   

  	
  With respect to an OEM
  Instrument or Alliance Instrument that is Commercialized after 

  
	
  rejection as described in
  Section 8.7 (“New
  Alliance Instrument”), Incremental
  Net Sales means:

  



 


(i)    where the New Alliance Instrument, if sold
outside the Alliance Program, would have been a Competing Product, all sales of
such New Alliance Instruments, all service revenue associated with such New
Alliance Instruments, and all sales of other Alliance Products which are for
use on such New Alliance Instruments, less any Cannibalized Sales of other
Alliance Products which were being sold at the time such New Alliance
Instruments were first sold. “Cannibalized Sales”
for purposes of this Section 1.49(b)(i) means sales resulting solely
from the switch by an existing customer from an existing OEM Instrument or
Alliance Instrument to the New Alliance Instrument, but does not include any
increased sales resulting from price or volume increases attributable to the
switch by an existing customer to the New Alliance Instrument; or


 


(ii)   where the New Alliance Instrument, if sold
outside the Alliance Program, would not have been a Competing Product, all
sales of such New Alliance Instruments, all service revenue associated with
such New Alliance Instruments, and all sales of other Alliance Products which
are for use on such New Alliance Instruments.


 


1.50         “Independent Patent
Rights” means Existing Patent
Rights and Post-Signature Patent Rights.


 


1.51         “Independent Technology” means Existing Technology and Post-Signature
Technology.


 


1.52         [***].


 


1.53         “Initial Activities” means NPCDs and Work Plans for Alliance Products
that the Parties have proposed to be the focus of the first three (3) Contract
Years, including the budget for each of the first three (3) Contract
Years.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


8

















 


1.54         “Instrument” means any hardware, software, device, platform or
any combination or component thereof, including any uniquely associated
accessories and consumables, which is related to the automation of in vitro
amplification, detection, quantification, or sequencing of a nucleic acid in or
from a human biological sample for the purpose of: (i) diagnosing,
detecting or monitoring any disease, state, condition, trait or characteristic
of a human being for medical management; (ii) exercising quality assurance
and quality control testing of human blood or plasma from which biological
therapeutic agents may be derived for resale; (iii) [***]; or (iv) screening
human organs, tissues or cells for transplantation. The term “Instrument” excludes (a) Reagents and kits containing
Reagents, (b) instruments for the preparation of human biological samples
containing nucleic acids, (c) instruments which are the subject of supply
arrangements existing as of the Effective Date between a Party and a Third
Party, including modifications, amendments or extensions to such arrangements,
provided such arrangements are not inconsistent with such Party’s obligations
under this Agreement, and (d) instruments which are manufactured by Abbott
as of the Effective Date and in any subsequent modified form, provided such
instruments are not Competing Products.


 


1.55         “Joint Alliance Patent
Rights” means Alliance Patent
Rights that claim inventions jointly conceived by employees or agents of both
Parties.


 


1.56         “Joint Alliance
Technology” means Technology and
Materials that are Derived jointly by or for both Parties during performance of
the Alliance Program and the Derivation of which is jointly funded by the
Parties pursuant to this Agreement or the Prior Alliance Agreement.


 


1.57         “Licensing Revenue” means the aggregate cash or other consideration
received by a Party in consideration for a license under Alliance Technology or
Alliance Patent Rights (including, without limitation, royalties received by
such Party based on sales by a Third Party of products or services
incorporating Alliance Technology or covered by Alliance Patent Rights.) In the
event consideration for license rights under Alliance Technology or Alliance
Patent Rights is not monetary, the Parties will agree upon the monetary value
of such consideration or a means for sharing the non-monetary consideration.


 


1.58         “Major Market Country” means the United States, the member countries of
the European Patent Convention, Japan and Canada.


 


1.59         “Materials” means, individually and collectively, Reagents,
formulations, nucleic acids including DNA, RNA and PNA, plasmids,
microbiological cultures or strains, cell lines, peptides, compounds,
compositions, and combinations or components thereof.


 


1.60         “Net Investment” means, with respect to the Alliance Program, the
following net assets of a Party: (a) inventory; (b) receivables
(including any receivables from the other Party in accordance with this
Agreement); (c) equipment placed as part of a Reagent Rental Program net
of depreciation; and (d) cumulative amounts paid to the other Party
pursuant to Section 9.3(c); less (e) cumulative amounts received from
the other Party pursuant to Section 9.3(c) and payables (including
amounts payable by one Party to another in accordance with this 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


9

















 


Agreement)
and other liabilities, if any. Net Investment will not include any amounts
payable by one Party to another pursuant to Section 9.3.


 


1.61         “Net Sales” means:


 


	
   

  	
  (a)

  	
   

  	
  the gross invoiced price of
  an Alliance Product or Alliance Products sold by a Party to a Third 

  
	
  Party, less the following,
  to the extent charged as part of the invoiced price, separately stated on the
  invoice and paid by or credited to, as the case may be, the Third Party:

  



 


(i)    credits, allowances, discounts and rebates
to, and charge backs from the account of, Third Parties for spoiled, damaged,
out-dated, rejected or returned Alliance Products;


 


(ii)   actual freight, postage, transportation and
insurance costs incurred in delivering Alliance Products;


 


(iii)  reasonable and customary cash, quantity and
trade discounts actually given to Third Parties;


 


(iv)  sales, use, value-added and other direct taxes
to the extent billed to and paid by the Third Party; and


 


(v)   customs duties, surcharges and other
governmental charges incurred in connection with the exportation or importation
of Alliance Products.


 


	
   

  	
  (b)

  	
   

  	
  With respect to
  Combination Products, the gross invoiced price of such 

  
	
  Combination Products billed
  to Third Parties by a Party, less: the allowances and adjustments referred to
  in Sections 1.61(a)(i)-(v), multiplied by the fraction A/A+B, where A is the
  gross selling price of the Alliance Product sold separately during the
  royalty period in question, and B is the gross selling price of the other
  diagnostic product(s) in the Combination Product having significant,
  independent utilities sold separately during the royalty period in question
  and that are not covered by Valid Claims of the non-selling Party’s Patent
  Rights or employing the non-selling Party’s Confidential Information. If
  there is no established current gross selling price for the Alliance Product
  A or for the other diagnostic product(s) B, then for the purposes of
  calculating Net Sales, the Parties agree to discuss in good faith the
  relative values of Alliance Product A and the other diagnostic
  product(s) B so as to arrive at a fair gross invoiced price for
  Combination Products upon which to base the Net Sales thereof. For purposes
  of this Agreement, “Combination
  Product” means an Alliance
  Product that is sold together in combination with one (1) or more
  diagnostic products having significant independent diagnostic utility and not
  covered by a Valid Claim of the non-selling Party’s Patent Rights or
  employing the non-selling Party’s Confidential Information.

  



 


	
   

  	
  (c)

  	
   

  	
  With respect to an
  Alliance Product for which the gross invoiced price includes an 

  
	
  amount to compensate a
  Party for the amortized cost of instrumentation, services, and/or other
  equipment supplied without charge to a customer under a RAP or other
  successor or similar plan (collectively a “RAP Product”),
  the Net Sales of such RAP Product will

  



 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


10

















 


first be
calculated in accordance with the definition of Net Sales under paragraph (a) of
this Section 1.61 and then will be reduced by the amount of the price
increase reasonably and demonstrably attributable solely to the amortized cost
of the instrumentation, equipment and service which is provided to customers
free of charge, in accordance with the United States Generally Accepted
Accounting Practices (“GAAP”) of such
Party consistently applied.


 


	
   

  	
  (d)

  	
   

  	
  Net Sales will not include
  Alliance Products used in clinical trials, for research or 

  
	
  other non-commercial uses,
  or supplied as commercial samples or as charitable or humanitarian donations,
  so long as a Party receives no compensation in any form for such
  use/donation.

  
	
   

  
	
   

  	
  (e)

  	
   

  	
  Net Sales for services
  will be the gross revenue received therefor.

  
	
   

  
	
   

  	
  (f)

  	
   

  	
  Net Sales for products
  other than Alliance Products will be calculated in the same 

  
	
  manner set forth in this
  Section 1.61 to the extent applicable.

  



 


1.62         “New Product Concept
Document” or “NPCD” means


 


	
   

  	
  (a)

  	
   

  	
  in the case of an “NPCD — Development”, a written description of a concept of interest 

  
	
  to a Party for Development
  of a product or service in the Alliance Field that describes the proposed
  Alliance Product including the following information: (i) test or
  service type; (ii) intended diagnostic use or expected medical
  indications or disease state for such use; (iii) target customers;
  (iv) sampling requirements; (v) testing frequency;
  (vi) expected product or service pricing; (vii) peak unit sales and
  revenues; (viii) description of freedom to operate issues or special
  technologies necessary to develop the product, service or technology;
  (ix) competitive landscape issues, including market research;
  (x) each Party’s Independent Technology and Independent Patent Rights
  expected to be applicable to the proposed product or service and its
  manufacture or use and associated royalties and milestones owed to Third
  Parties; (xi) the specific proposed study design, including identification of
  each goal and deliverable of the proposed study; (xii) the proposed Supplier;
  (xiii) the proposed Distributor; (xiv) synergies with other Alliance Products
  or Carveouts; and (xv) estimated pro-forma profit and loss statement. An NPCD
  — Development will generally be in the form attached hereto as
  Exhibit 1.62(a); and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  in the case of an “NPCD — Feasibility”, a written description of a concept of interest 

  
	
  to a Party for
  establishing feasibility of a product or service in the Alliance Field that
  describes the proposed Alliance Product including the following information:
  (i) test or service type; (ii) intended diagnostic use or expected
  medical indications or disease state for such use; (iii) testing
  frequency; (iv) description of freedom to operate issues or special
  technologies necessary to develop the product, service or technology; and
  (v) the details of a feasibility study including expected outcomes or
  feasibility objectives. An NPCD — Feasibility will generally be in the form
  attached hereto as Exhibit 1.62(b) and will be limited to a maximum
  of twelve (12) months of feasibility studies, unless extended by mutual
  agreement of the Parties.

  



 


(collectively, NPCD — Development and NPCD — Feasibility will be
referred to in this Agreement as “NPCD”).


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


11

















 


1.63         “Non-Alliance Product” means:


 


	
   

  	
  (a)

  	
   

  	
  any [***], the research or
  Development of which involves a collaboration between a 

  
	
  Party and a Third Party
  [***]; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
   

  	
  products and services in
  the Alliance Field which, except as provided in Section 4.5, are not 

  
	
  Competing Products and
  which (i) have been rejected as an NPCD, or (ii) are in the
  Optional Areas and were never submitted to the JRB, and (iii) the
  research, Development or Commercialization of which is conducted by a Party
  outside the Alliance Program in accordance with Article IV.

  



 


1.64         “Optional Areas” means any product or service in the Alliance Field
that is in neither the Exclusive Areas nor the Conditionally Exclusive Areas.


 


1.65         “Partnership Tax Return” means any return or report of Taxes due, any
claims for refund of Taxes, any information return with respect to Taxes, or
any other similar report, declaration or document, including any amendments
related thereto, and supporting information.


 


1.66         “Party” means Abbott or Applera and its respective
Affiliates, and “Parties” means Abbott and Applera and their respective
Affiliates.


 


1.67         “Passive Investor” means any person or entity that holds securities
other than for the purpose of changing or influencing the control or management
of the issuer of the securities, and any person or entity that files a Schedule
13 G with the Securities and Exchange Commission (or any successor form
thereto) with respect to any securities will be deemed a Passive Investor in
those securities.


 


1.68         “Patent Rights” means rights conferred by: (a) patent
applications filed in any country; (b) all patents including supplemental
protection certificates that have issued or in the future issue from any of the
foregoing, including, without limitation, utility models, design patents and
certificates of invention; and (c) all divisionals, continuations,
continuations-in-part, reissues, re-examination certificates, renewals, extensions
or additions to any such patents and patent applications.


 


1.69         “Permitted Affiliate” means a Party’s Restructuring Successor and any
entity that is Totally Controlled by a Party or its Restructuring Successor.


 


1.70         [***].


 


1.71         “Post-Signature Patent
Rights” means Patent Rights that
are reasonably necessary for performance under this Agreement and that a Party
acquires ownership or Control of at any time during the term of this Agreement
and the Prior Alliance Agreement as a result of activities by the Party outside
the Alliance Program.


 


1.72         “Post-Signature
Technology” means Technology and
Materials that are reasonably necessary for performance under this Agreement
and that a Party acquires ownership or Control of at any time during the term of
this Agreement and the Prior Alliance Agreement as a result of activities by
the Party thereof outside the Alliance Program.


 






[***] indicates material that has been omitted
pursuant to a request for confidential treatment. The omitted material has been
filed separately with the Securities and Exchange Commission.


 


12














 


1.73         “Post-Termination
Acquired Product” means any product
or service in the Alliance Field that is first acquired by a Party from a Third
Party after the Termination Date and any product or service under development
by a Third Party which product or service is first acquired by a Party after
the Termination Date through the purchase of controlling securities of the
Third Party or through a purchase of assets from the Third Party.


 


1.74         “Post-Termination
Competing Product” means any
product or service in the Alliance Field that is first Commercialized by a
Party after the Termination Date and is a Competing Product, excluding all
Post-Termination Acquired Products.


 


1.75         “Prior Alliance Agreement” means the Strategic Alliance Agreement between the
Parties dated June 24, 2002, and Amendments Nos. 1, 2, 2a and 3 to the
Strategic Alliance Agreement dated December 20, 2002, January 22,
2003, January 28, 2005, and March 31, 2004, respectively.


 


1.76         “QSR Standard” means the regulations set forth in 21 CFR Chapter
1, Part 820, et seq., as such regulations may be amended or replaced from
time to time, and any foreign law, statute or regulation relating to current
good manufacturing practices.


 


1.77         “R&D Plan” means a written description which sets forth the
plan for research and Development of products and services within the Exclusive
Areas pursuant to JRB-approved NPCDs and Work Plans. In connection with each
R&D Plan, the Parties will agree upon a budget (the “R&D Plan Budget”) in accordance with Section 4.7(a).


 


1.78         “Reagent Rental Program” or “RAP” means a
program for the Commercialization of one or more Alliance Products in
conjunction with an Instrument whereby the price for the Alliance Products
includes the acquisition cost or leasing cost of the Instrument, the cost of
servicing the Instrument and/or other items of cost recovery in connection with
supply and support of the Instrument.


 


1.79         “Reagents” means oligonucleotides, including primers and
probes, Analyte Specific Reagents, General Purpose Reagents, enzymes, proteins,
controls, substrates, co-factors, buffers or any combination thereof.


 


1.80         “Regulatory Approval” means the technical, medical and scientific
licenses, registrations, authorizations and approvals required for marketing or
use of a product (including, without limitation, approvals of Pre-Market
Approval Applications, Investigational Device Exemptions, Biologic License
Applications, Investigational New Drug Applications, 510k notices, pre- and
post- approvals, pricing and third party reimbursement approvals, and labeling
approvals and any supplements and amendments to any of such approvals) of any
national, supra-national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity, necessary
for the Development, manufacture, distribution, marketing, promotion, offer for
sale, use, import, export or sale of Alliance Products in a regulatory
jurisdiction.


 


1.81         “Regulatory Authority” means the FDA and/or any national, supra-national
(e.g., the European Commission, the Council of the European Union, or the
European Agency for the Evaluation of Medicinal Products), regional, state or
local regulatory agency, 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


13

















 


department,
bureau, commission, council or other governmental entity in each country or
supra-national territory of the world having jurisdiction over granting a
Regulatory Approval for an Alliance Product.


 


1.82         “Regulatory Filings” means a Pre-Market Approval Application, 510(k) notice,
Biologic License Application, Investigational Device Exemption, and/or any
other comparable filings as may be required by Regulatory Authorities to obtain
Regulatory Approvals for a product in the Alliance Field.


 


1.83         “Restructuring Successor” means any entity formed by or on behalf of a Party
for purposes of reincorporation in a new jurisdiction, formation of a new
parent holding company, or otherwise, provided that the ownership of the new
entity immediately after any such event is substantially the same as the
ownership of the Party immediately prior to such event.


 


1.84         “Revenue(s)” means, with respect to each Alliance Product, the
sum of the following, determined in accordance with Alliance Accounting
Policies and GAAP, consistently applied: (a) Licensing Revenue; (b) Services
Revenue; (c) Sales Revenue; and (d) any proceeds from the sale of
capital assets included in Net Investments.


 


1.85         “Sales Revenue” means, with respect to the sale or other
disposition of any Alliance Product in an arms-length transaction, the gross
sales price, including all taxes, duties, freight, insurance and other charges
actually billed by or for a Party to Third Parties or the other Party, less the
reasonable and customary deductions from such gross amounts to the extent
actually paid by or charged to the account of the Party, including, without
limitation:


 


(a)        reasonable
and customary credits, allowances, discounts and rebates to, and chargebacks
from customers for spoiled, damaged, out-dated and returned Alliance Product;


 


(b)        reasonable
and customary cash, quantity and trade discounts, rebates and other price
reductions for such Alliance Product given to such customers; and


 


(c)        sales,
use, value-added and other direct taxes (but not income taxes of any kind)
imposed upon the sale of such Alliance Product to such customers.


 


Sales Revenue will include, without any
deductions, any amounts actually invoiced by a Party as reimbursement for costs
associated with authorized distribution of Alliance Products prior to
Regulatory Approval. Sales Revenue will not include any product furnished to
Third Parties for which no payment is receivable, such as, experimental, test
market, promotional or other free goods. On the other hand, Sales Revenue will
include any product sold, whether or not such product is for commercial,
research or other use.


 


Sale or transfer of an Alliance Product by or
for a Party to an Affiliate of that Party for re-sale by such Affiliate will
not be considered a sale for the purpose of this provision, but the resale by
such Affiliate to a Third Party or to the other Party will be a sale for such
purposes. Sale or transfer of an Alliance Product by or for a Party to an
Affiliate of that Party for end-use by such Affiliate will be considered a sale
for the purposes of this provision. The Sales 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


14

















 


Revenue for any such transfer
between a Party and its Affiliate or between Affiliates of the same Party will
be handled in accordance with the following procedure:


 


(x)            if
the Supplier of an Alliance Product also uses the same Alliance Product for
clinical studies of a therapeutic product run by (i) the Supplier or its
Affiliates, or (ii) in the case of Applera only, a pharmaceutical company
which Controls the therapeutic product that is the subject of a Collaboration,
then the Supplier will transfer the Alliance Product at the Supplier’s cost; and


 


(y)           if
the Supplier of an Alliance Product is different from the Party using the same
Alliance Product for clinical studies of a therapeutic product run by (i) such
other Party or its Affiliates, or (ii) in the case of Applera only, a
pharmaceutical company which Controls the therapeutic product that is the
subject of a Collaboration, then the Supplier will transfer the Alliance
Product to the other Party at the Target Minimum Sales Price.


 


1.86         “Services Revenue” means, with respect to training, service and
support of consumers using an Alliance Product and with respect to services
rendered by a Party using an Alliance Product, all proceeds actually received
by a Party for the gross sales price, including all taxes, duties, insurance
and other charges actually billed by or for a Party to


 


Third Parties or the other Party, less the
deductions from such gross amounts to the extent actually paid by or charged to
the account of the Party, including, without limitation:


 


(a)        cash,
quantity and trade discounts, rebates and other price reductions for such
services given to such customers; and


 


(b)        sales,
use, value-added and other direct taxes (but not income taxes of any kind)
imposed upon the sale of such services to such customers.


 


1.87         “Supplier” means, with respect to an Alliance Product, the
Party that manufactures such Alliance Product in final form intended for
Commercialization in accordance with this Agreement.


 


1.88         “Target Minimum Sales
Price” means a minimum unit price
for an Alliance Product in each of the following geographic territories: North
America, Japan, Europe (to the extent of the member countries of the European
Union and Switzerland), and the rest of the world.


 


1.89        “Tax(es)” means any and all federal, state, local, foreign,
and other net income, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, profits, license, excise, lease, severance,
stamp, occupation, premium, customs, duties or other taxes, fees, assessments
or charges of any kind whatever, together with any interest and penalties
thereto imposed by any governmental or other taxing authority.


 


1.90         “Technology” means conceptions, ideas, innovations,
discoveries, inventions, processes, machines, biological materials, formulae,
equipment, compositions of matter, improvements, enhancements, modifications,
technological developments, know-how, show-how, methods, techniques, systems,
designs, production systems and plans, software, 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


15

















 


documentation,
data, programs and information (irrespective of whether in human or
machine-readable form) and works of authorship, whether or not patentable,
copyrightable, or susceptible to any other form of legal protection.


 


1.91         “Termination Date” means the date of expiration of this Agreement
pursuant to Section 17.1 or the date of termination pursuant to any other
provision of this Agreement.


 


1.92         “Third Party” means an individual, corporation or other entity
other than the Parties or their Permitted Affiliates.


 


1.93         “Total Control” and cognates thereof mean direct or indirect ownership
of one hundred percent (100%) of the voting equity (other than a nominal number
of shares that may be owned by management or directors as directed by
applicable law).


 


1.94         “Valid Claim” means a claim in any issued, active, unexpired
patent which has not been withdrawn, cancelled, lapsed or disclaimed, or held
unpatentable, invalid or generally unenforceable by a non-appealed or
nonappealable final decision by a court or other appropriate body of competent
jurisdiction.


 


1.95         “Work Plan(s)” means a written description which sets forth in
reasonably specific detail the description and specification of the product to
be developed pursuant to a JRB-approved NPCD; the plans for research,
Development, clinical, regulatory, manufacturing and Commercialization
activities, including use of any Third Party to perform material portions of
such activities; the timeline, work plan budget, and expected distribution of
responsibilities for such activities (including identification of the proposed
Supplier and Distributor of the contemplated Alliance Product); the expected
commercial return from such product or project; the estimated cost of the
proposed Alliance Product; the estimated market size; and any information that
may impact the ability of either Party to Commercialize the proposed Alliance
Product, such as the availability or cost of raw materials or Third Party
intellectual property, contract restrictions or royalty obligations. A Work
Plan will generally be in the form attached hereto as Exhibit 1.95.


 


ARTICLE
II



EXCLUSIVITY


 


2.1           Exclusivity Obligations.
Except as otherwise provided in this Agreement, during the term of this
Agreement, the Parties will work exclusively with each other in all activities
pursuant to a JRB-approved NPCD — Feasibility, Development, submissions of
Regulatory Filings, manufacturing, and Commercialization activities in the
Exclusive Areas and with respect to the Alliance Products. In accordance with
the terms of this Agreement, each Party (a) will use its experience and
will exert commercially reasonable efforts to maximize sales of and profits
from Alliance Products, (b) will share relevant information with respect
to the Exclusive Areas; provided, however, that a Party will have no
obligation, unless required by law, to share information about a product or
service in the Exclusive Areas that such Party does not intend to Commercialize
before termination or expiration of this Agreement pursuant to Section 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


16

















 


17.1 or 17.6, and (c) will
not exchange information, discuss any collaboration or work with a Third Party
which is a Commercial Entity regarding products or services in the Exclusive
Areas or regarding Alliance Products unless, prior to such exchange, discussion
or activity, the Party has given notice to the other Party of termination pursuant
to Section 17.6. The prohibition of Section 2.1(c) will not
apply to [***] unless they are Alliance Products or [***] that solely perform
[***].


 


2.2           Exceptions to Exclusivity.
Notwithstanding anything to the contrary in Section 2.1 above:


 


(a)        Each
Party will have the right to continue to perform, outside the Alliance Program,
its obligations under bona fide agreements with Third Parties in effect as of
the effective date of the Prior Alliance Agreement, such obligations in the
Alliance Field being listed in Exhibit 2.2 hereto (except for routine
confidentiality agreements, material transfer agreements and other standard
agreements executed by a Party in the ordinary course of business, which
agreements have no material impact on the Parties’ ability to perform their
obligations under this Agreement). Any material amendments or any extensions to
such agreements after the Effective Date will be subject to prior written
consent of the other Party, which consent will not be unreasonably withheld or
delayed; provided, however, that neither Party will be obligated to obtain the
prior written consent of the other Party to amend or extend the agreements
listed in Exhibit 2.2(a) if such amendment or extension does not
include activity in the Exclusive Areas.


 


(b)        Each
Party, without notice to or cooperation of the other Party, and solely at its
own cost, may independently conduct research and development directed to
products or services in the Exclusive Areas; provided, however, that any such
product or service must be the subject of a NPCD-Development proposed to the
JRB pursuant to Section 4.2 before any Development, Regulatory Filings,
manufacturing or Commercialization activities. A Party may conduct any
activities subject to this Section 2.2(b) without notice to the other
Party or JRB approval of such activity after notice to the other Party of
termination of this Agreement pursuant to Section 17.6.


 


(c)        Either
Party will have the right to continue to develop, manufacture and Commercialize
General Purpose Instruments or Instruments labeled for “Research Use Only” and General Purpose Reagents outside of the
Alliance Program.


 


2.3           Outside Exclusive Areas.
Except as otherwise provided in this Article II and Article IV of
this Agreement, each Party may work alone or with any Third Party outside the
Exclusive Areas and each Party may research, develop, manufacture and/or
Commercialize any product or service outside the Exclusive Areas; provided,
however,


 


(a)        a
Proposing Party (as defined in Section 4.2) conducting research or
Development for a product or service in the Conditionally Exclusive Areas must
submit an NPCD-Development to the JRB for review pursuant to Section 4.2
before commencing any submission of Regulatory Filing, manufacturing or
Commercialization activities, except for [***] in which a Third Party [***] is
involved, in which case the Proposing Party must use reasonable efforts to have
any [***] that results from such collaboration distributed through the Alliance
Program; and


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


17

















 


(b)        if
the product or service is in the Optional Areas, the Proposing Party may, but
is not required to, submit an NPCD to the JRB for review pursuant to Section 4.2.


 


(c)        If
the non-Proposing Party accepts the NPCD described in Section 2.3(a) or
2.3(b), the subject product or service becomes an Alliance Product and is added
to the Exclusive Areas pursuant to Section 1.39(g).


 


(d)        If
the non-Proposing Party rejects the NPCD described in Section 2.3(a) or
2.3(b), the Proposing Party may develop and/or Commercialize the product or
service which is the subject of the rejected NPCD as a Non-Alliance Product on
its own or with a Third Party pursuant to Section 4.4(b). The Proposing
Party will not have any obligation to share revenues from the Commercialization
of such Non-Alliance Product or any right to seek reimbursement from the
non-Proposing Party for any expenses associated with such Non-Alliance Product;
provided, however, the Proposing Party will pay royalties to the non-Proposing
Party if the Non-Alliance Product uses any Alliance Technology or Alliance
Patent Rights; and further provided, the Proposing Party and its Affiliates
will pay to the non-Proposing Party, in accordance with Section 10.14, a
royalty on Net Sales of Non-Alliance Products at a rate not greater than [***]
percent ([***]%).


 


(e)        If
a Party wishes to Commercialize an Alliance Product outside the Alliance Field,
it must obtain the prior written consent of the other Party, which consent will
not be unreasonably withheld or delayed, except such written consent will not
be required to the extent such Alliance Product is used in a bona fide clinical
study with respect to a therapeutic product.


 


2.4           [***]. Until June 30,
2007, the Parties will work exclusively with each other to consider whether
products and services in the Alliance Field for [***]. Unless otherwise agreed
by the JRB pursuant to this Section 2.4, such products and services will
be excluded from the Alliance Field as of July 1, 2007. The Parties will
work together to complete an assessment of the strategy and costs to enter the
[***] in Europe and Japan, with such assessment to be completed by April 1,
2007. The JRB will review the assessment and determine by June 30, 2007 if
the Alliance Program will fund the Development of products or services to enter
such [***] in the Alliance Field in Europe and Japan. If the JRB approves
funding for the Development of such products or services, [***] applications
would continue to be part of the Alliance Field. If the JRB does not approve
such funding, [***] applications would be excluded from the Alliance Field as
of July 1, 2007, and each Party would be free to pursue, outside the
Alliance Field, the Development and Commercialization of [***] products and
services on its own or with a Third Party.


 


2.5           QSR Claims; Commercialization of
Non-Alliance Products and Reagents for Research Use Only.


 


(a)        The
Parties must Commercialize through the Alliance Program all Alliance Products
which have been designed or manufactured under the QSR Standard through the
Alliance Program.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


18

















 


(b)        Each
Party may Commercialize directly or through a distributor any product in the
Alliance Field that is outside the Exclusive Areas and Conditionally Exclusive
Areas, provided that such product is a Non-Alliance Product. In addition, each
Party may Commercialize directly or through a distributor any primers or probes
outside the Alliance Field, provided that such primers or probes (i) are
prominently labeled “For Research Use Only. Not For Use In Diagnostic
Procedures” or any comparable label subsequently required by applicable
Regulatory Authority, (ii) are not claimed by the Party that they were
manufactured under the QSR Standard, except that they may be claimed to have
been manufactured under a certified quality system with traceable
documentation, and (iii) are not Commercialized by the Party in a manner
that Facilitates use as a Competing Product. Further, each Party will use
commercially reasonable efforts to cause its distributors to label or promote
such primers and probes in accordance with the terms of this Section 2.5(b).


 


(c)        Notwithstanding
Section 2.5(b) to the contrary, if a member of the JRB of one Party
learns or is given notice by the other Party that primers or probes distributed
by or for the one Party and labeled “For Research Use Only” or any comparable
label are being used by a Third Party purchaser “off label” as a Competing
Product, the Parties will discuss an appropriate course of action for such
alleged violation of Section 2.5(b), which may include (i) discontinuance
of sales of the specific primers and probes to such Third Party purchasers or (ii) sharing
with the other Party all profits derived from the sales of the primers and
probes that were used as Competing Products. “For Research Use Only” primers
and probes sold for use for the same Clinical Intent as an Alliance Product
will not be a Competing Product except as provided in Section 1.26.


 


(d)        In
the event the Parties cannot agree that a violation of Section 2.5(b) has
occurred, or on an appropriate course of action to remedy the violation, or if
the supplying Party fails to perform its obligations which are the agreed —upon
remedies for the violation, the other Party, by invoking the binding
alternative dispute resolution (“ADR”) proceeding in accordance with Article XVIII
of this Agreement, may seek a determination as to whether the activities of the
supplying Party or its Third Party purchasers are violations of Section 2.5(b) and
an appropriate remedy for such violation, which remedy shall make, to the
extent possible, the injured Party whole.


 


(e)        Section 2.5(c) will
not apply where the primers or probes being used by Third Party purchasers as
Competing Products were first distributed to such Third Party purchasers prior
to the NPCD-Development directed to the Alliance Product being approved by the
JRB. For the avoidance of doubt, Section 2.5(e) applies only to sales
of such primers or probes to those Third Party purchasers who purchased such
primers or probes prior to the JRB approval of the applicable NPCD-Development.


 


2.6           OEM Alliance Products. For
current and replacement [***] products (“OEM Alliance Products”)
which are not within the [***], which current OEM Alliance Products are set
forth in Exhibit 2.6, Abbott will pay to Applera, in accordance with Section 10.14(b),
a royalty of (a) [***] percent ([***]%) of Net Sales of all such [***] OEM
Alliance Products during the term of this Agreement; and (b) [***] percent
([***]%) of Net Sales of all such [***] OEM Alliance Products sold during
calendar year [***] and [***] percent ([***]%) of Net Sales of all such [***]
OEM Alliance Products sold from [***] through the remaining 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


19

















 


term of this Agreement. As
consideration for such royalty payments, Applera will not sell or assist others
in selling products in the Alliance Field which are Competing Products with the
OEM Alliance Products. Abbott will bear all expenses associated with
Development, manufacture, and Commercialization of OEM Alliance Products
incurred after the Effective Date and Applera will not be charged for any such
expenses. For the purposes of this Section 2.6,  “replacement product”
is any product that detects the same analyte and essentially functions in the
same manner as a current OEM Alliance Product. For the avoidance of doubt, a
non-sequencing based [***] product is not a Competing Product with any OEM
Alliance Product. Any products which are subject to the royalty payments
pursuant to this Section 2.6 will not be Alliance Products for the
purposes of this Agreement.


 


ARTICLE III




JOINT REVIEW BOARD


 


3.1           Composition. The Joint Review
Board (the “JRB”) will comprise three (3) named
representatives of Abbott and three (3) named representatives of Applera.
Each Party will designate one (1) of its JRB representatives to serve as
co-chair of the JRB. Each Party will notify the other Party in writing of its
initial representatives to the JRB within ten (10) days after the
Effective Date, and each Party may substitute one (1) or more
representatives from time to time effective upon written notice to the other
Party. The members of the JRB may establish subcommittees to oversee particular
projects or activities from time to time, and such subcommittees will be
constituted as the JRB agrees.


 


3.2           Responsibilities. The JRB will
be responsible for:


 


(a)        reviewing
NPCDs proposed by either Party for inclusion in the Alliance Program and
determining whether such NPCDs and will become Alliance Products;


 


(b)        developing
and implementing the Initial Activities and all subsequent Work Plans and,
subject to Section 7.1, allocating responsibility for Alliance Program
activities between the Parties, taking into consideration their relevant
expertise and available resources;


 


(c)        monitoring
and reviewing the progress of the Alliance Program and the results thereof;


 


(d)        recommending
to the Parties any modifications to the Initial Activities and subsequent Work
Plans;


 


(e)        facilitating
an effective exchange of information between the Parties regarding the Alliance
Program;


 


(f)         establishing
procedures by which the Parties evaluate on an individual basis potential
professional publications which may disclose Confidential Information of the
other Party;


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


20

















 


(g)        evaluating
additional technologies, assets, products or other commercial opportunities
that may be necessary or useful to the Alliance Program and recommending the
acquisition or in-licensing of these opportunities to the Parties;


 


(h)        approving
Alliance Accounting Policies and any subsequent changes thereto, budgets,
allowed budget deviations and levels of expenditure by the Parties in the
Alliance Program;


 


(i)         approving
termination of Alliance Products and NPCDs pursuant to Section 17.2;


 


(j)         approving
the disposition of an Alliance Product(s) to a Third Party, subject to
agreement by the Parties as to allocation of compensation for their respective
investment in such Alliance Product pursuant to Section 4.13;


 


(k)        approving
Party proposals regarding Development, acquisition or distribution of
Instruments pursuant to Article VIII;


 


(l)         managing
preparation by the Parties of and approving the quarterly statements of Revenues
and Allowable Expenses and of Net Investment, as set forth in Sections 9.1 and
9.2, respectively;


 


(m)       managing
preparation by the Parties of and approving quarterly and annual combined
statements of Revenues, Allowable Expenses and Net Investment of the Alliance
Program;


 


(n)        overseeing
the Commercialization activities of the Alliance Program;


 


(o)        determining
a Target Minimum Sales Price and recommending the average selling price for
each Alliance Product in each geographic area specified in Section 1.88;


 


(p)        managing
preparation by the Parties of and annually approving a rolling three-year
business plan that addresses each of the JRB responsibilities as set forth in
this Section 3.2;


 


(q)        consistent
with and subject to Articles XI, XII and XIII of this Agreement, overseeing
intellectual property used, created by or impacting the Alliance Program,
including, without limitation: (i) assigning responsibility for the
preparation, filing, prosecution and maintenance of Joint Alliance Patent
Rights; (ii) reviewing all invention disclosures arising under or relating
to the Alliance Program for the purposes of making patent application filing
recommendations to the Parties and for determining proper inventorship and
ownership of such inventions; (iii) establishing policies for the filing
of foreign patent applications arising from the Alliance Program; (iv) creating
and approving, as necessary, a budget for management of intellectual property
issues; (v) determining which Alliance Products should be marked with which
Patent Right numbers; and (vi) addressing any other intellectual property
issues referred to the JRB pursuant to the terms of this Agreement; and


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


21

















 


(r)         reviewing
the [***] markets assessment set forth in Section 2.4 and determining by June 30,
2007 whether the Alliance Program will fund the Development of products or
services to enter such markets in the Alliance Field in Europe and Japan.


 


3.3           Meetings. Unless otherwise
mutually agreed to by the co-chairs, the JRB will meet at least once following
each calendar quarter during the term of this Agreement, on dates at least
forty-five (45) days after the end of each calendar quarter and at such times
as agreed to by the co-chairs of the JRB, alternating between Des Plaines,
Illinois, and Alameda, California, or such other locations as the Parties
mutually agree. Upon the mutual agreement of the co-chairs, any such meeting
may be conducted by telephone or videoconference. At such meetings, the JRB
will discuss the activities conducted under the Alliance Program and the
results thereof and any matters referred to it within the scope of its
responsibilities as set forth in Section 3.2. Each Party may permit such
visitors to meetings of the JRB as the Parties mutually agree. Each Party will
be responsible for its own costs in connection with the meetings of the JRB.


 


3.4           Decisions. The JRB will be
deemed to have made a decision only following written agreement of the
co-chairs. Any dispute or deadlock within the JRB will be finally resolved in
the manner specified in Article XVIII. To the extent reasonably necessary
to any decision, the JRB may retain appropriate expert assistance, the costs of
which will be shared equally by the Parties.


 


3.5           Minutes. Within ten (10) business
days following each JRB meeting, a representative to the JRB of the Party
hosting such meeting (who was present at such meeting) will prepare and provide
to each Party a copy of the minutes of such meeting which will summarize the
decisions of the JRB. Such minutes will be final and enforceable under this
Agreement only after being adopted by the written acceptance by the JRB
co-chairs.


 


3.6           In-License Decisions.


 


(a)        In
the event performance pursuant to the Alliance Program may require rights to
intellectual property, Materials and/or Technology from a Third Party, and the
JRB decides to pursue such rights, the JRB will decide what rights are
reasonably necessary and which Party will negotiate for such rights. The JRB
also will decide on allocation between the Parties of the costs associated with
obtaining and maintaining such rights. Such rights so obtained will be
considered Joint Alliance Technology or Joint Alliance Patent Rights, as
appropriate.


 


(b)        In
the event the JRB cannot agree whether the Parties should negotiate for or
obtain such rights, then either Party may, upon written notice to the other
Party, independently pursue such rights at its sole expense and such rights
will be Independent Patent Rights and Independent Technology, as the case may
be, of the acquiring Party. If, as a result, the acquiring Party is required to
pay monetary consideration to the Third Party for the sale or use of an
Alliance Product, the acquiring Party may seek to have such monetary
consideration included as Allowable Expenses. If the other Party disputes the
necessity of the license for the Alliance Product or the reasonableness of any
part of the monetary consideration, the acquiring Party may submit the issues
to ADR under Article XVIII of this Agreement. Whatever monetary 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


22

















 


consideration
is determined by the ADR to be reasonable and necessary to permit sale or use
of the Alliance Product, up to the total payable by the acquiring Party to the
Third Party for sale or use of the Alliance Product, will be Allowable
Expenses. The acquiring Party will be solely responsible for any difference
between the monetary consideration determined by ADR and the monetary
consideration the acquiring Party agreed to pay the Third Party. In the event
the other Party does not pay any monetary consideration to the acquiring Party
during the Alliance Program for the license under this Section 3.6(b),
then the other Party will not have any rights under such license after
termination of this Agreement.


 


(c)        In
the event a Party acquires or has the opportunity to acquire from a Third Party
tissue or blood samples or other biological material that may be useful in
performance of the Alliance Program, and such material is available in excess
of material needed by the Party for Non-Alliance Products or products outside
of the Alliance Field, the Party may offer such Material to the JRB. Any such
offer must include a description of the material, a summary of its potential
usefulness to the Alliance Program, the monetary costs associated with
acquiring and using the offered material and a description of any contractual
restrictions on or obligations associated with using the offered material in
the Alliance Program. The JRB will decide to accept or reject the offer within
sixty (60) days after the required information is submitted to the JRB. If the
JRB accepts the offer, the monetary costs associated with acquiring and using
the offered material will be Allowable Expenses. If the JRB rejects the offer,
subject to the terms and conditions of this Agreement, the Party making the
offer may use the material for its own benefit and at its own cost.


 


ARTICLE
IV



ALLIANCE PROGRAM


 


4.1           Initial Program Efforts. At
its first meeting after the Effective Date, the JRB will terminate all pending
NPCDs outside the Exclusive Areas. Thereafter, each Party may bring NPCDs in
any area within the Alliance Field to the other Party as set forth below. The
NPCDs which were approved by the JRB as indicated in the minutes of the JRB for
its meeting of September 1, 2005, as listed on Exhibit 4.1, will
continue according to their existing Work Plans.


 


4.2           New Product Concept Documents:
Feasibility and Development. During the term of this Agreement, each Party is
entitled to propose NPCDs (the “Proposing Party”)
to the JRB that will be subject to the following procedures:


 


(a)        Feasibility.
The Proposing Party, at any time, may submit an NPCD — Feasibility to each
member of the JRB. If rejected or not acted on by the non-Proposing Party
within sixty (60) days after receipt, the Proposing Party may pursue the
proposed product or service pursuant to Section 4.4. If accepted by the
non-Proposing Party, the Proposing Party may explore the feasibility of such
proposed product or service for a period of up to twelve (12) months, with
joint funding from the other Party for such evaluation in the NPCD —
Feasibility. The outcome of such feasibility evaluation will result in one of
the following activities: (i) the Proposing Party submits an NPCD —
Development pursuant to Section 4.2(b) or (ii) the Parties
mutually agree not to further pursue the proposed product or service; provided,
however, the 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


23

















 


Proposing
Party must submit an NPCD — Development if the feasibility evaluation has been
completed under an NPCD — Feasibility with joint funding and the Proposing
Party intends to develop the subject product or service in the Alliance Field.


 


(b)        Development.
The Proposing Party, either after completion of the feasibility study described
in an NPCD — Feasibility or without first submitting an NPCD — Feasibility, may
submit an NPCD — Development to the JRB. The Proposing Party will submit to
each member of the JRB an NPCD — Development and Work Plan for a proposed
product or service. Within sixty (60) days after receipt of the NPCD —
Development and Work Plan, the non-Proposing Party will make its final decision
whether to designate the proposed product or service as an Alliance Product,
and shall so notify the JRB in writing, whereupon the JRB immediately will
determine that such proposed product or service has become an Alliance Product.


 


(c)        After
the JRB has determined that a proposed product or service has become an
Alliance Product and added such Alliance Product to the R&D Plan, such
Alliance Product will be added to the Exclusive Areas unless or until the
project is terminated by the JRB pursuant to Section 17.2.


 


(d)        The
date on which the non-Proposing Party approves an NPCD in accordance with Section 4.2(a) or
4.2(b) will set the start date for calculating expenses incurred by the
Proposing Party, for the purpose of calculating the [***] share of Development
Costs, including costs of a feasibility evaluation pursuant to the accepted
NPCD-Feasibility where applicable, to be reimbursed to the Proposing Party. Any
expenses incurred by the Proposing Party prior to approval by the non-Proposing
Party of an NPCD in accordance with Section 4.2(a) or 4.2(b) will
not be shared by the Parties, and will be borne solely by the Proposing Party.


 


(e)        The
non-Proposing Party may reject an NPCD for any reason. Once a non-Proposing
Party declines to include a proposed product or service as part of the Alliance
Program, that Party cannot later include such proposed product or service in
the Alliance Program. The non-Proposing Party which rejected the NPCD may not
develop or Commercialize in the Exclusive Areas or Conditionally Exclusive Areas
the product or service which was the subject of the rejected NPCD unless such
rejecting Party submits its own NPCD to the JRB and such NPCD is accepted by
the other Party. However, if the rejected NPCD is directed to a product or
service in the Optional Areas, both the non-Proposing Party and the Proposing
Party may independently develop and Commercialize such product or service as
Non-Alliance Products in the Optional Areas.


 


(f)         If,
after rejection of any NPCD — Development, the Proposing Party fails to
diligently pursue Development of the Non-Alliance Product specified in the
rejected NPCD — Development within one (1) year after its rejection, then
such NPCD — Development will no longer be considered a rejected NPCD, and,
except for products or services in the Optional Areas, either Party must
resubmit the NPCD to the JRB for reconsideration before any rights pursuant to Section 4.4
may be available to the Parties.


 


4.3           Acquisition of Products or
Companies in the Alliance Field. If, during the term of this Agreement, a
Party acquires or plans to acquire from a Third Party, directly or as 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


24

















 


part of an acquisition of a
Third Party, a product or service (“Acquired Product”)
that is in the Exclusive Areas or is a Competing Product, the Party must either
divest itself of such Acquired Product or reach agreement with the other Party
on terms by which the Acquired Product would become an Alliance Product. If the
Acquired Product is in the Conditionally Exclusive Areas, the acquiring Party
must offer to make the Acquired Product an Alliance Product under terms and
conditions to be negotiated with the other Party. In all events, whether the
Acquired Product is in the Exclusive Areas or Conditionally Exclusive Areas or
is a Competing Product, the acquiring Party will propose reasonable terms and
conditions to the non-acquiring Party that do not place the non-acquiring Party
in a less advantageous position as a result of the proposed acquisition of the
Acquired Product. If the Parties do not agree on such terms and conditions, the
matter will be resolved by binding ADR in accordance with Article XVIII.
If the Acquired Product is in the Optional Areas, then the acquiring Party may,
but is not obligated to, negotiate with the other Party to make the Acquired
Product an Alliance Product. If the Acquired Product is a General Purpose
Instrument or an Instrument labeled “For Research Only”, this Section 4.3
will not apply. If the Acquired Product is an Instrument registered with an
applicable Regulatory Authority, the provisions of Section 8.8(b) will
apply with respect to Instruments registered for use in the Exclusive Areas and
the Conditionally Exclusive Areas.


 


4.4           Rejected NPCD.


 


(a)        In
the event the non-Proposing Party rejects an NPCD in the Exclusive Areas, or
the JRB fails to make a decision regarding an NPCD in the Exclusive Areas
within the applicable time frame set forth in Section 4.2, then the
Proposing Party either may (i) proceed at its own cost with the research
and Development of the product or service specified in such rejected NPCD, so
long as it is not a Competing Product, or (ii) abandon the product or
service proposed in such NPCD. If the Proposing Party proceeds with the
research and/or Development of such product or service and it is
Commercialized, such product or service will become an Alliance Product as of
the date of first Commercialization. The rejecting Party will pay to the
Proposing Party, pursuant to Section 10.14(b)(vii) and (viii), [***]
percent ([***]%) of Incremental Net Sales of such Alliance Product until the
Proposing Party has recovered [***] percent ([***]%) of the Proposing Party’s
Development Costs for such Alliance Product, including any feasibility costs
where an NPCD-Feasibility was rejected by the other Party. The date on which
the NPCD is rejected by the other Party will set the start date for calculating
the [***] percent ([***]%) share of the Development Costs to be reimbursed to
the Proposing Party pursuant to this Section 4.4(a).


 


(b)        In
the event the non-Proposing Party rejects an NPCD in the Conditionally
Exclusive Areas or the Optional Areas, or the JRB fails to make a decision
regarding an NPCD in the Conditionally Exclusive Areas or the Optional Areas
within the applicable time frame set forth in Section 4.2, then, subject
to Section 4.5, the Proposing Party may proceed with the research,
Development, submission of Regulatory Filing, manufacturing and/or
Commercialization activities with respect to any product or service specified
in such NPCD as a Non-Alliance Product.


 


(c)        For
the avoidance of doubt, a Party may conduct research, Development, submission
of Regulatory Filing, manufacturing and/or Commercialization activities with
respect to products and services in the Optional Areas, except where such
product 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


25

















 


or
service is a Competing Product, without first submitting to the JRB or
obtaining a rejection of an NPCD.


 


(d)        In
the event that the other Party rejects an NPCD-Feasibility in the Optional
Areas or the Conditionally Exclusive Areas and subsequently accepts an NPCD —
Development for the same product or service, the non-Proposing Party will pay
to the Proposing Party [***] percent ([***]%) of Incremental Net Sales of such
product or service in the same manner as set forth in Section 4.4(a) until
the Proposing Party has recovered [***] percent ([***]%) of its costs of the
applicable feasibility studies.


 


4.5           Non-Alliance Product.


 


(a)        The
rejecting Party will not take any action intended to prevent or frustrate the
Proposing Party’s ability to Commercialize a Non-Alliance Product. If a Non-Alliance
Product requires use of Alliance Products for which the other Party is the
Supplier, the other Party will continue to manufacture such Alliance Products
for the Proposing Party under terms and conditions similar to those applicable
to the sale of such Alliance Products to other customers, including providing
service and support as required by Section 7.5. The other Party will not
make a modification of its then-current Instruments or then-current Reagents
which has or is likely to have the effect of rendering incompatible the
Non-Alliance Product.


 


(b)        If,
pursuant to Section 4.2, a Party rejects an NPCD and the Proposing Party
wishes to Commercialize in the Conditionally Exclusive Areas such Non-Alliance
Product for a different or additional Clinical Intent than was specifically
identified in the rejected NPCD, then the Proposing Party must submit a new
NPCD, but only to the extent of the different or additional Clinical Intent.
This new NPCD will be subject to all of the terms and conditions regarding the
review process and disposition of an NPCD.


 


4.6           Work Plans. In conjunction
with its approval of an NPCD, the JRB will accept, modify or require the
Proposing Party to modify the proposed Work Plan submitted by the Proposing
Party. Once accepted by the JRB, a Work Plan may not be modified except as set
forth in writing and duly authorized by the JRB.


 


4.7           R&D Plan.


 


(a)        Within
thirty (30) days after the Effective Date, the Parties will have agreed on a
detailed R&D Plan, including the Initial Activities to be pursued pursuant
to the Alliance Program (the “Initial R&D Plan”),
as set forth in Exhibit 4.7(a)(i) attached hereto. In addition, the
Parties will have agreed on an initial budget for each of the first three (3) Contract
Years directed to Development Costs associated with the Initial R&D Plan
(the “Initial
R&D Plan Budget”), as set forth
on Exhibit 4.7(a)(ii). The Initial R&D Plan Budget will be binding on
the Parties for the first Contract Year and will [***] by the Parties, until
the JRB approves NPCDs and reallocates such Development Costs. The Initial
R&D Plan Budget for the second Contract Year will be [***] percent ([***]%)
of the Initial R&D Plan Budget for the first Contract Year, and for the
third Contract Year will be [***] percent ([***]%) of the Initial R&D Plan
Budget for the first Contract Year; these percentages will be binding on the
Parties unless otherwise modified by the JRB.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


26














 


(b)        The
Initial R&D Plan Budget will include maximum allowed spending in the
Exclusive Areas by each Party during each Contract Half Year and Contract Year
and will be allocated on an Alliance Product-by-Alliance Product basis..


 


(c)        Each
Party is responsible for any Development Costs incurred that exceeds its
maximum allowed levels during a Contract Half Year and Contract Year as set
forth in the Initial R&D Plan Budget and any subsequent R&D Plan
Budget. If a Party spends less than projected during a Contract Year, such
reduced spending will accrue to the benefit of both Parties during such
Contract Year; provided, however, if a Party spends less than projected in any
Contract Half Year during a Contract Year, its unspent funds will be carried
over to subsequent Contract Half Year within such Contract Year and will be
added to that Party’s subsequent Contract Half Year’s allowance within such
Contract Year. The Parties will exchange reports of actual Development Cost
spending under the R&D Plan in each Contract Half Year within forty-five
(45) days after the end of such Contract Half Year, and the Parties shall agree
on a binding R&D Plan Budget for the subsequent Contract Half Year. Each
Party will use its best efforts to support the R&D Plan in the Exclusive
Areas.


 


(d)        The
JRB will update the Initial R&D Plan by the first day of the second
Contract Year, for the following three Contract Years, including the Initial
R&D Plan Budgets by Contract Year and Contract Half Year. Thereafter, the
JRB shall update the R&D Plan and the R&D Plan Budget directed to
Development Costs at least annually by each subsequent January 1 during
the term of this Agreement,  for the
subsequent three (3)-Contract Years. The first Contract Year of each R&D
Plan will include fixed Development Cost limits allocated to each Party and
detailed responsibilities for each Party, and the second and third Contract
Years of each R&D Plan will contain general responsibilities and maximum
R&D Plan Budgets for such Contract Years.


 


(e)        Each
Party may request reimbursement from the Alliance Program of any Development
Costs incurred in excess of the amount allocated to that Party for a Contract
Year by written request to the JRB. Any such request must be supported by
appropriate evidence of such expenditures and the reasons therefor. The other
Party, through the JRB, in its sole discretion may reject any such request.


 


4.8           Technical Assistance. Promptly
following the designation of an Alliance Product, each Party will provide to
the other Party, pursuant to the applicable Work Plan, and in accordance with
the responsibilities of each Party, such Technology, including Confidential
Information, as reasonably necessary to conduct the Work Plan. The cost of
Materials provided by one Party to another pursuant to this Section 4.8
will be Allowable Expenses.


 


4.9           Conduct of the Alliance Program.
During the term of this Agreement, each Party will conduct its obligations
under the Alliance Program in accordance with the applicable Work Plan(s), and
will use commercially reasonable efforts to accomplish the objectives thereof.
Each Party will provide the personnel, Materials, equipment and other resources
reasonably necessary to conduct its obligations under the Work Plan(s) for
the Alliance Program. Subject to Section 2.3, each Party may employ Third
Parties as contractors, agents or sublicensees to perform its responsibilities
under a Work Plan; provided, however, if the Party proposes to disclose the
other Party’s Confidential Information to such Third Party, the Party must
first 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


27

















 


obtain the other Party’s
approval in accordance with Articles X and XIV. Each Party will perform its
obligations under the Alliance Program (whether itself, or with or through a
contractor, agent or sublicensee) in accordance with high scientific and
professional standards, and in compliance in all material respects with the
requirements of applicable laws, regulations, current good laboratory practices
and the QSR Standard.


 


4.10         Records. Each Party will
maintain records, in sufficient detail and in a good scientific, professional
and business-like manner, appropriate for patent, manufacturing, quality and
Regulatory Approval purposes, which records must be complete and accurate and
must fully and properly reflect its work done, results achieved and costs and
expenses incurred in the performance of each Work Plan. Non-financial records
related to the performance of a Party’s obligations, and financial records
related to Revenues received and Allowable Expenses incurred within the
Alliance Program through the most recently completed calendar quarter, will be
made available to the other Party within forty-five (45) days of any reasonable
written request by such other Party. Each Party will maintain such records and
the information of the other Party contained therein in confidence in
accordance with Article XIV.


 


4.11         Reports. Each Party will keep
the other Party informed of the progress of its activities under each Work
Plan. Within forty-five (45) days following the last day of each Contract Half
Year during the term of this Agreement, and within thirty (30) days following
termination of each Work Plan, each Party will prepare, and provide to each
member of the JRB, a reasonably detailed written summary report which will
describe its work done and results achieved in the performance of each Work
Plan.


 


4.12         Commercialization of Alliance
Products. Commercialization of an Alliance Product may not occur until the
JRB agrees in writing that the Alliance Product is ready for Commercialization.
The Supplier designated in the applicable Work Plan pursuant to Section 4.6
will provide written specifications and copies of the product labeling to each
Party’s designee at a reasonable time prior to the decision on
Commercialization and will propose to the JRB the Target Minimum Sales Price
and an average selling price for the Alliance Product.


 


4.13         Disposition of Alliance Product.
A Party may propose to the JRB the disposition of an Alliance Product or a line
of Alliance Products to a Third Party. Any such proposal must include terms by
which the other Party receives compensation for its investment in the Alliance
Product(s) and for any Alliance Technology (to the extent it is
Confidential Information) or Alliance Patent Rights solely-owned by the other
Party that are required for Commercialization of the Alliance Product(s). The
other Party, pursuant to its participation in the JRB, may approve the proposal
or seek different terms. The other Party may also offer to acquire the Alliance
Product(s) on terms that reflect the Third Party’s offer and the other
Party’s investment in the Alliance Product(s). If the other Party acquires the
Alliance Product or line of Alliance Products, it will thereafter be a
Non-Alliance Product. If the Parties cannot agree on the disposition of the
Alliance Product or line of Alliance Products, the JRB must reject the
proposal. The JRB may elect to terminate the Alliance Product or line of
Alliance Products pursuant to Section 17.2.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


28

















 


ARTICLE
V



REGULATORY APPROVALS


 


5.1           Regulatory Approvals. The Supplier
of an Alliance Product will be responsible for the preparation, filing,
presentation and maintenance of all Regulatory Filings and for obtaining
Regulatory Approval for such Alliance Product, unless otherwise agreed to by
the JRB. Notwithstanding the foregoing, the Parties will consult with each
other to develop a regulatory strategy for each Alliance Product and the
Supplier will in good faith consider recommendations of the other Party
regarding regulatory strategy for such Alliance Product.


 


5.2           Regulatory Communications. To
the extent practical in view of deadlines, the Supplier will provide the other
Party (if requested in writing by the other Party) with an opportunity, in
advance of submission to a Regulatory Authority, to review and comment on all
Regulatory Filings (including written responses to any Regulatory Authority
questions) regarding each Alliance Product. The Supplier will provide to the
other Party copies of all material written communications from the Supplier to
applicable Regulatory Authorities (in advance of filing if possible), copies of
all material written communications received by the Supplier from such
Regulatory Authorities promptly after receipt, and any adverse finding or
communication, oral or written, by such Regulatory Authority regarding each
Alliance Product.


 


5.3           Product Inserts and Labeling.
Unless otherwise agreed to by the JRB, the Supplier of an Alliance Product will
be responsible for the text and regulatory compliance of all package labels,
product inserts, operator manuals and end-user training materials used in
connection with the Commercialization of such Alliance Product. All labels and
labeling will prominently identify the Supplier as the manufacturer of such
Alliance Product and the Distributor for each Alliance Product. If the Supplier
and Distributor are the same Party, the JRB will determine how the other Party
will be identified on all labels and labeling. To the extent a Party is subject
to contractual obligations or restrictions as of the Effective Date that may
have an impact on the obligations set forth in this Section 5.3, that
Party will generally describe such obligations and restrictions to the JRB
prior to a JRB decision on Commercialization of an affected Alliance Product.


 


5.4           Inspection and Audit of Supplier.
The Supplier of an Alliance Product will allow representatives of the other
Party to inspect and audit each facility at which the Supplier manufactures
such Alliance Product, but only to the extent related to Alliance Products,
upon reasonable notice during normal business hours, not more than once in any
twelve (12) month period. The Supplier will use its commercially reasonable
efforts to notify the other Party within three (3) business days after any
Regulatory Authority notifies it of any impending inspection or audit of any
such facility. The Supplier will notify the other Party in writing of the
results of such inspection or audit promptly after such inspection or audit has
occurred. The Supplier will provide the other Party with copies of any
documentation of action resulting therefrom, and all correspondence relating
thereto.


 


5.5           Inspection and Audit of
Distributor. In the event a Regulatory Authority notifies the Distributor
of an impending audit and such audit involves any Alliance Product being
distributed by the Distributor, regardless of which Party is the Supplier for
such Alliance Product, 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


29

















 


the Distributor will notify the
other Party promptly after receipt of such notice. The Distributor will notify
the other Party in writing of the results of such inspection or audit promptly
after such inspection or audit has occurred. The Distributor will provide the
other Party with copies of any documentation of action resulting therefrom, and
all correspondence relating thereto.


 


5.6           Localization. The Supplier of
an Alliance Product will provide translations in all languages as agreed to by
the JRB and implement such translations by modifying the documentation and
labeling of such Alliance Products and translating all screens and displays
into such languages so that they comply with the local regulatory requirements
for sale and clinical use in such countries. The Supplier of an Alliance
Product also will translate all such Alliance Product’s required technical
product literature, including, without limitation, operator manuals, service
manuals, training manuals and labeling into such languages as approved by the
JRB. Additional languages will be subject to mutual agreement of the Parties.


 


5.7           Regulatory Compliance And Related
Matters. Within ninety (90) days after the Effective Date,
quality/regulatory representatives from both Parties will meet to define and
document processes for exchange of customer complaints, trends or other
information concerning Alliance Products necessary to be shared between the
Parties to ensure compliance with the Quality System Regulation provisions of
the applicable Regulatory Authorities or other international agencies for
conformity to QSR Standard, ISO and other applicable regulatory requirements.
The document prepared pursuant to this Section 5.7 and subject to Section 5.8,
also will define how notices, corrective actions or recall of Alliance Products
will be handled. The recommendations of the quality/regulatory representatives
will become effective when approved by the JRB. These processes may be modified
from time to time in writing by the JRB.


 


5.8           Field Actions.


 


(a)        Any
Field Action with respect to an Alliance Product identified in Section 4.1
as having been an Existing Product will be the sole responsibility and at the
sole cost of the Party that provided the Existing Product to the Alliance
Program for the entire duration in which such product is an Alliance Product;
provided, however, in the event the Parties determine that such Field Action is
as a result of the gross negligence of the other Party, then in such case, the
other Party will be solely responsible for any Field Action resulting from such
gross negligence and at such Party’s sole cost. For purposes of this Agreement,
“Field Action” means any product quality related communication to
a customer or recall of the Alliance Product. In each instance, the Party
responsible for the Field Action will consult with the other Party in as much
in advance of the Field Action as is commercially reasonable.


 


(b)        Any
Field Action with respect to an Alliance Product that was not converted from an
Existing Product will be determined by the JRB and all associated costs will be
considered Allowable Expenses; provided, however, in the event the Parties
determine that a Field Action is as a result of the gross negligence of one
Party, then in such case, such Party will be solely responsible for any Field
Actions resulting from such gross negligence and at such Party’s sole cost,
which cost will not be considered Allowable Expense.


 


(c)        With
respect to Field Actions described in Section 5.8(b), in the event the JRB
fails within a timely manner (depending on the regulatory requirements and 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


30

















 


breadth
and scope of the issue, as early as twenty-four (24) hours) to approve an
appropriate action plan to address a Field Action, either Party may initiate a
Field Action unilaterally, with the understanding that the initiating Party
will be responsible to pay all costs associated with such Field Action, subject
to possible modifications pursuant to this Section 5.8. If the initiating
Party determines that the costs for such Field Action should be either an
Allowable Expense or an expense of the other Party as a result of such Party’s
gross negligence, then the initiating Party may request the JRB to appoint a
neutral medical expert in the relevant area associated with the alleged cause
of such Field Action. The appointed neutral medical expert will assess whether
a Field Action was necessary and will determine as follows:


 


(i)    If the Field Action was necessary, then the
costs paid by the initiating Party should be considered Allowable Expenses; or


 


(ii)   If the Field Action was not necessary, then
the initiating Party must bear its own costs and such costs will not be
considered Allowable Expenses.


 


The determination of necessity by the neutral
medical expert is a binding and non-appealable decision.


 


(d)        In
the event either Party believes that the cause of the Field Action was as a
result of the gross negligence of the other Party, then a Party may take only
the issue of allocation of costs to ADR for a neutral to decide pursuant to Article XVIII.


 


5.9           Existing Products. The Parties
recognize that some of the provisions of this Article V may not apply to
some Alliance Products that are identified in Section 4.1 as having been
Existing Products. The Parties acknowledge and agree that any regulatory issues
and liability resulting from such regulatory issues associated with such
Alliance Products, which issues and liabilities arise from activities prior to such
Existing Product’s conversion to an Alliance Product, will be the sole
responsibility of the Party contributing such Existing Product.


 


ARTICLE
VI



MANUFACTURING RIGHTS


 


6.1           Manufacturing. During the term
of this Agreement, the JRB, in conjunction with acceptance of a Work Plan, will
determine which Party will manufacture (or have manufactured) each Alliance
Product or components thereof, taking into consideration the demonstrated
expertise and cost to manufacture of each Party in the manufacture of similar
products and any technology rights necessary to manufacture the Alliance
Products.


 


6.2           Manufacturing Practices.


 


(a)        The
Supplier of an Alliance Product will manufacture (or have manufactured) such
Alliance Product in conformity with its written specifications and in
accordance with all applicable laws and regulations. If a Supplier is unable to
supply pursuant to the terms of this Agreement an FDA-approved or FDA-cleared
Alliance Product due to non-compliance with FDA regulations, such event, subject
to Sections 6.2(b) and (c), will be deemed 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


31

















 


a
material breach of this Agreement and the other Party may terminate this
Agreement pursuant to Section 17.4 or 17.5, as the case may be.


 


(b)        For
purposes of this Section 6.2, such inability to supply will only be deemed
material if: (i) the duration of the inability to supply is at least [***];
and either (ii) the Sales Revenue generated by the affected Alliance
Product is greater than [***] percent ([***]%) of the total Sales Revenue of
all Alliance Products, both as measured during the [***] period immediately
preceding the inability to supply; or (iii) the affected Alliance Product
provided at least [***] in Margin (as defined below) to the Alliance Program
during the [***] period immediately preceding the inability to supply. For
purposes of this Section 6.2, “Margin” means
Distribution Margin (as defined below) of the affected Alliance Product, less: (A) Marketing
and Advertising Expenses; (B) Selling and Promotion Expenses; and (C) General
and Administrative Expenses. For further purposes of this Agreement, “Distribution Margin” means Sales Revenue and Service Revenue less Cost
of Goods Sold.


 


(c)        As
a condition to asserting material breach pursuant to this Section 6.2, the
Party asserting material breach must have first in good faith provided the
other Party with assistance as reasonably requested by such other Party to
attempt to relocate the manufacturing of the affected Alliance Product to
either: (i) a manufacturing location of the Party asserting the material
breach; or (ii) a manufacturing location of a Third Party.


 


(d)        For
purposes of this Section 6.2, a Party wishing to exercise its right to
terminate pursuant to this Section 6.2, must provide the other Party with
written notice of termination within sixty (60) days after the date such right
accrued. Failure to provide written notice of termination within such sixty
(60)-day period precludes such Party from asserting material breach thereafter
for the same facts and circumstances giving rise to such right to terminate.
Further, the sixty (60) day cure period set forth in Sections 17.4 and 17.5, as
the case may be, will not be applicable to this Section 6.2.


 


6.3           Manufacturing Records. Upon
the reasonable request of the other Party, the Supplier of an Alliance Product
will provide the other Party with copies of, or access to, manufacturing
information, including batch records, process flows, analytical performance
data, quality assurance documents agreed to by the Parties pursuant to Sections
5.7 and 5.8 and other documentation, requested by the other Party regarding
manufacture and quality control of an Alliance Product. The requesting Party
will treat all such information disclosed as Confidential Information of the
Supplier subject to the provisions of Article XIV.


 


6.4           Warranty. The Supplier of an
Alliance Product will warrant to the other Party and to a bona fide purchaser
of such Alliance Product that all units of such Alliance Product supplied to
such purchaser conform with the applicable specifications, are free from
defects in material and workmanship and were designed and manufactured in
compliance with applicable laws and regulations. EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS
OR IMPLIED, WITH RESPECT TO ALLIANCE PRODUCTS. EACH PARTY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS AND IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


32

















 


PARTICULAR PURPOSE AND
NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.


 


6.5           Terms of Supply. The Supplier
and Distributor will agree on terms of supply of Alliance Products, such as a
transfer price at Supplier’s Cost of Goods Sold, as defined in Exhibit 1.13,
production and sale forecasts, delivery terms, risk of loss terms, and other
ordinary commercial terms. Unless they are the same Party, on the first
business day of each calendar month, the Distributor of an Alliance Product
will provide to the Supplier of that Alliance Product with a written, rolling
estimate of expected dispositions of each model of the Alliance Product and
parts thereof for each of the immediately succeeding four (4) calendar
quarters. Such estimates will not be binding on the Distributor but will be
used by the Supplier for production scheduling. If applicable, the Distributor
will promptly provide the Supplier with any material changes to the estimates
that may arise before the next monthly estimate.


 


ARTICLE
VII



SALES, MARKETING AND SUPPORT


 


7.1           Distributor. Unless otherwise
agreed to by the JRB, Abbott will be the worldwide Distributor for all Alliance
Products. Abbott may designate an Abbott Affiliate and a Third Party
distributor to distribute Alliance Products.


 


7.2           Selling Price. Each
Distributor Commercializing an Alliance Product in the Alliance Field, in its
sole discretion, will determine the final sales price of such Alliance Product;
provided, however, that the Distributor will use commercially reasonable
efforts to meet or exceed the average sales price and Target Minimum Sales Price
recommended by the JRB. In the event the Distributor does not achieve the
Target Minimum Sales Price recommended by the JRB on the sale of an Alliance
Product and to the extent the failure to achieve the Target Minimum Sales Price
is predominantly due to the bundling of an Alliance Product with other products
or providing discounts on Alliance Products in order to sell other products,
the Distributor will be responsible to the other Party for the shortfall. If
the Distributor and the other Party disagree as to the cause of the shortfall,
the Parties will submit the matter to the JRB for resolution. If the JRB cannot
resolve the matter, it will be resolved by binding ADR in accordance with Article XVIII.
As part of any such ADR proceeding, the other Party will be entitled to an
audit of applicable Distributor records limited to determining the reasons for
the shortfall. Any discount to the sales price of such Alliance Product will be
consistent with the overall discounting policy of the Distributor in connection
with the sale of its other diagnostic products and, when considered in relation
to the percentage discount applicable to the Distributor’s diagnostic products
which are sold together with or in connection with such Alliance Product, will
not materially adversely affect Sales Revenue. The pricing policy and structure
applied to Alliance Products will be the same as applied to other comparable
products and services offered by the Distributor in comparable markets, and any
discounts, rebate or pricing adjustments the Distributor establishes for
Alliance Products will not disproportionately reduce the price of Alliance
Products versus other Distributor products and services. The provisions of this
Section 7.2 will not apply to Non-Alliance Products, Competing Products or
any other product or service in which the Parties compete with each other.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


33

















 


7.3           Marketing. Annually the
Distributor will prepare a marketing strategy for Alliance Products for which
it is the Distributor. Except for Existing Products converted to Alliance
Products pursuant to Section 4.1, prior to the introduction of each
Alliance Product that measures a new analyte, the Distributor will provide the
other Party with a copy of a marketing plan for such Alliance Product and with
a reasonable opportunity to comment on the marketing plan before it becomes
effective. The Distributor will conduct the promotion, marketing and sales
activities for each Alliance Product in accordance with the concepts outlined
in the marketing strategy. The Distributor will book all Alliance Product
sales, subject to the sharing of Revenues and Allowable Expenses in accordance
with Article IX hereof.


 


7.4           Diligence. The Distributor
will use commercially reasonable efforts to promote, market, sell and support
the sale of Alliance Products for which it is the Distributor, such efforts to
be no less than those used by such Party with respect to other products which
have the same or similar market potential. If the Distributor wishes to
discontinue promotion and sale of an Alliance Product, the Distributor will
give the other Party ninety (90) days advance written notice thereof. The other
Party, within such ninety (90)-day period, with the prior written consent of
the JRB, may elect to become the Distributor for such Alliance Product, in which
event, the original Distributor will cooperate in a transition to the other
Party designed to avoid adverse effects in the market for such Alliance
Product. If the other Party does not elect to become the Distributor for the
Alliance Product, the Alliance Product, at the end of the ninety (90)-day
period, will be considered terminated pursuant to Section 17.2 hereof.


 


7.5           Service and Support. The
Distributor will use commercially reasonable efforts to provide service and
support to customers purchasing the Alliance Products sold by such Distributor.
These efforts will be consistent with the efforts used by the Distributor with
respect to other diagnostic products it markets and distributes for which it
provides service and support and which have the same or similar market
potential, or as otherwise described in an approved NPCD.


 


ARTICLE
VIII



INSTRUMENTS


 


8.1           Instrument Commercialization.


 


(a)        Each
Party, alone or with any Third Party, may develop and Commercialize, directly
or indirectly, for any purpose any Instrument or any associated
application-specific software outside the Alliance Field or in the Optional
Areas. Such Instruments include, for example, Instruments for protein analysis.


 


(b)        Each
Party, alone or with any Third Party, may develop and Commercialize, directly
or indirectly, any Instrument for use in the Alliance Field, provided, such
Instrument is labeled “Research Use Only. Not For Use In Diagnostic Procedures”
or other comparable label restriction under applicable Regulatory Authority, or
is a General Purpose Instrument.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


34

















 


(c)        Each
Party, alone or with any Third Party, may develop and Commercialize, directly
or indirectly, any Instrument registered with a Regulatory Authority for use in
the Exclusive Areas or Conditionally Exclusive Areas, provided, (i) sales
of such Instruments are solely to end users and (ii) the Party
Commercializing such Instruments does not Facilitate use as a Competing
Product.


 


(d)        For
the avoidance of doubt, it is the intent of the Parties that no Party may
Commercialize in the Exclusive Areas an Instrument registered with an
applicable Regulatory Authority in a manner inconsistent with obligations of
this Agreement that will damage the Alliance Program’s objectives of maximizing
sales of Alliance Products in the Exclusive Areas. If a Party believes the
other Party has intentionally deviated from the principle of this Section 8.1(d),
the first Party may provide notice thereof to the other Party and the Parties
will discuss resolution of the matter. If the first Party is not satisfied
after such discussion, such Party may initiate ADR proceedings in accordance
with Article XVIII.


 


8.2           Instrument Co-Promotion. A
Distributor of an Alliance Product may contract for the promotion in the
Alliance Field of Instruments that are then being offered for sale by any
manufacturer of Instruments. In the event the Instrument is offered for sale by
the other Party and was developed by that Party without funding by the Alliance
Program, (a) the Distributor may promote such Instrument only to customers
in the Alliance Field in conjunction with the sale of an Alliance Product, and (b) the
terms of the promotion contract will be as agreed by the Parties. The Party
supplying the Instrument will be free to sell the same Instrument independently
of the Distributor in any market. The Parties will not share any commission or
other compensation received by the Distributor for the promotion of Instruments
pursuant to this Section 8.2.


 


8.3           Instrument Distribution. A
Distributor of an Alliance Product may become a distributor in the Alliance
Field for Instruments (other than Instruments subject to Sections 8.2, 8.4 or
8.5) acquired from a manufacturer of such Instruments. If the manufacturer is
the other Party: (a) the Distributor may Commercialize such Instrument
only to customers in the Alliance Field in conjunction with the sale of an
Alliance Product; (b) the transfer price to the Distributor for the
Instrument will be no greater than the lowest offered by the manufacturer to
any Third Party for the same Instrument on comparable terms in the Alliance
Field; and (c) the terms of the distribution contract will be as agreed by
the Parties. The Party supplying the Instrument will be free to sell the same
Instrument independently of the Distributor in any market. The costs incurred
by the Distributor, including the transfer price of the Instrument and other
selling costs, will be Allowable Expenses and the revenue from the Distributor’s
sale of the Instrument will be included in Sales Revenue.


 


8.4           OEM Instruments. Either Party
may propose to the JRB entering into a contract with an Instrument manufacturer
for the manufacture and sale to one or both Parties for distribution in the
Alliance Field of a pre-existing Instrument modified by the manufacturer to
meet specifications approved by the JRB and funded through the Alliance Program
(“OEM Instrument”). Any such contract will preclude the manufacturer
from distributing the OEM Instrument in the Alliance Field or selling the OEM
Instrument to a Third Party for resale in the Alliance Field. If the
manufacturer is a Party, the price of the OEM Instrument will be the Party’s 


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


35

















 


[***]. For purposes of this
Agreement, the OEM Instrument will be considered an Alliance Product.


 


8.5           Alliance Funded Instrument.
Either Party may propose to the JRB, pursuant to Section 4.2, the design
and Development of a new Instrument for the Alliance Program or a successor for
or an improvement of an Instrument that is an Alliance Product (“Alliance Instrument”). If the JRB approves the Alliance Instrument
proposal, the Parties will work exclusively together on Development and
Commercialization of such Alliance Instrument pursuant to an approved Work Plan
and associated budget. Any such Alliance Instrument approved by the JRB will be
an Alliance Product.


 


8.6           Instrument Funding. If, at the
time of JRB approval of an OEM Instrument proposal pursuant to Section 8.4
or an Alliance Instrument proposal pursuant to Section 8.5, Applera,
through its Applied Biosystems Group (“ABI”) states,
in writing, an intent to Commercialize the developed OEM Instrument or Alliance
Instrument outside the Alliance Program, the Parties will negotiate terms for
sharing all budgeted costs for the Development of such Instrument, but in no
event will Abbott’s share be greater than [***] percent ([***]%) of the total
costs, unless otherwise agreed by the Parties. In addition, Applera will bear
[***] associated with features of the Instrument requested by Applera for
customers outside the Alliance Field. If, at the time of JRB approval of an OEM
Instrument proposal pursuant to Section 8.4 or an Alliance Instrument
proposal pursuant to Section 8.5, ABI does not state, in writing, an
intent to Commercialize the developed OEM Instrument or Alliance Instrument,
Abbott will bear [***] percent ([***]%) and Applera will bear [***] percent
([***]%) of all budgeted costs for Development of the Instrument. In this case,
both Abbott and CDx may Commercialize such Instrument independently for use
with Non-Alliance Products and through the Alliance Program. However, ABI will
not have the right to Commercialize the OEM Instrument or Alliance Instrument
outside the Alliance Program unless the Parties negotiate an arrangement under
mutually acceptable terms in a separate agreement.


 


8.7           Rejected Instrument. If the
JRB rejects an OEM Instrument proposed pursuant to Section 8.4 or an
Alliance Instrument proposed pursuant to Section 8.5, or an Alliance
Instrument prior to Commercialization, the Proposing Party, alone or with a
Third Party, may continue Development of the proposed OEM Instrument or
Alliance Instrument. The Proposing Party will bear [***] incurred by it in
developing the OEM Instrument or Alliance Instrument, and in the case of an
Alliance Instrument previously funded by the Alliance Program, the Proposing
Party will bear [***] incurred subsequent to the JRB rejection. If the rejected
OEM Instrument or Alliance Instrument is Commercialized by the Alliance Program
for use in the performance of testing that uses Alliance Products in the
Exclusive Areas, the non-Proposing Party will pay to the Proposing Party,
pursuant to Section 10.14(b)(vii) and (viii), [***] percent ([***]%)
of Incremental Net Sales of Alliance Products sold for use on such rejected OEM
Instrument or Alliance Instrument until the Proposing Party is reimbursed [***]
percent ([***]%) of the Proposing Party’s Development Costs for the rejected
OEM Instrument or Alliance Instrument.


 


8.8           OEM Opportunity.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted
material has been filed separately with the Securities and Exchange Commission.


 


36

















 


(a)        ABI
will be the preferred supplier of Alliance Instruments to the Alliance Program.
ABI will have a right to submit a bid to be the OEM manufacturer of any
Alliance Instrument, subject to the bidding process determined by the JRB. If
ABI meets or exceeds the specifications of such bid, and the bids of all other
companies which submit such bids, ABI will be awarded the rights to be the OEM
manufacturer of the subject Alliance Instrument pursuant to such bid.


 


(b)        In
the event ABI has an opportunity to be an OEM manufacturer for a Third Party in
connection with an Instrument to be registered with a Regulatory Authority for
use in the Exclusive Areas or Conditionally Exclusive Areas, ABI will inform
the JRB in writing of such opportunity and provide information, subject to Article XIV,
concerning the specifications of such Instrument as requested by the JRB. Once
such information is provided to the JRB by ABI, the JRB will have [***] to
determine if it wishes ABI to manufacture such Instrument exclusively for the
Alliance Program. If the JRB informs ABI that it wishes ABI to manufacture such
Instrument exclusively for the Alliance Program, ABI will negotiate terms with
the JRB for ABI to provide the Instrument exclusively to the Alliance Program.
If ABI and the JRB reach agreement, ABI may not manufacture such Instrument for
any Third Party. If the JRB and ABI do not reach agreement or the JRB fails to
act within [***] of ABI providing all requested information on such Instrument
specifications to the JRB, and the proposed Instrument is not subject to Section 8.9
below, ABI may elect to be the OEM manufacturer of such Instrument to a Third
Party, including a Third Party who Facilitates use of the Instrument as a
Competing Product; provided, however, that the terms of the agreement between
ABI and the Third Party are no better in terms of value to the Third Party than
the last best offer of the JRB.


 


8.9           Instruments for Performing Tests
in Exclusive Areas. In the event (a) the Instrument subject to Section 8.8(b) is
an Instrument that is intended for use within the Exclusive Areas, and (b) the
Alliance Program, pursuant to an Instrument supply agreement with ABI, is
purchasing or has made a commitment to purchase an Instrument registered with a
Regulatory Authority that has the [***] and is for sale or intended for sale in
the same [***] as the Instrument in the OEM opportunity, ABI cannot become an
OEM manufacturer of such Instrument for a Third Party whether or not the JRB
elects to have such Instrument manufactured by ABI for the Alliance Program.
ABI may request the JRB to waive the restriction of this Section 8.9 for
any particular OEM Instrument opportunity. For the avoidance of doubt, nothing
herein will restrict ABI from any commercial activities including OEM supply of
Instruments that are not registered with a Regulatory Authority or the sale of
any Instruments registered with a Regulatory Authority to an end-user so long
as such sale does not Facilitate a Competing Product.


 


8.10         Technology and Patent Rights.
Except pursuant to a separate agreement, a Party purchasing an Instrument from
the other Party will not get any right under the other Party’s Technology and
Patent Rights directed to Instruments to make or have made such Instrument.


 






[***] indicates material that
has been omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


37














 


ARTICLE IX



SHARING OF COSTS AND REVENUES


 


9.1           Quarterly Cost and Revenue Estimate. No later than
the second business day after the end of each of the first three calendar
quarters in a calendar year (end March, June and September) during the
term of this Agreement, the Parties will exchange estimated cost and revenue
statements for the calendar quarter just ended in a form substantially the same
as the form set forth in Exhibit 9.2, attached hereto. For each fourth
calendar quarter ending December 31, the Parties will exchange quarterly
cost and revenue estimates no later than the third business day of January in
the calendar year immediately following such fourth quarter.


 


9.2           Cost and Revenue Statements. Within forty-five (45)
days following the end of each calendar quarter during the term of this
Agreement, each Party will prepare and furnish to the other Party a written
statement, in reasonably specific detail, stated in United States dollars, of
Revenues and Allowable Expenses incurred during the preceding calendar quarter,
in a form substantially the same as the form set forth in Exhibit 9.2,
attached hereto. The Parties will agree on exchange rate calculations that each
Party will use when preparing these statements.


 


9.3           Statement of Net Investment. Within forty-five (45)
days following the end of each calendar quarter during the term of this
Agreement, each Party will prepare and furnish to the other Party a written
statement, in reasonably specific detail, setting forth, in United States
dollars, the Party’s balance of Net Investment in the Alliance Program as of
the end of the preceding calendar quarter, in a form substantially the same as
the form set forth in Exhibit 9.3, attached hereto. The balance of Net
Investment for each Party may not include the manufacturing equipment,
instruments and account receivables on the books of such Party as of the
execution date of the Prior Alliance Agreement.


 


9.4           Equalization Payments. Within thirty (30) days
following receipt of each statement rendered pursuant to Sections 9.2 and 9.3:


 


(a)        the Party
with the higher Revenue will pay to the Party with the lower Revenue [***] in
Revenue between the Parties;


 


(b)        the Party
with the lower actual Allowable Expenses will pay to the Party with the higher
actual Allowable Expenses [***] in actual Allowable Expenses between the
Parties;


 


(c)        the Party
with the lower Net Investment balance will pay the Party with the higher Net
Investment balance [***] in Net Investment between the Parties at the end of
such calendar quarter, except that the Party with the lower Net Investment
balance may, in lieu of making a payment [***] between the respective Net
Investments, elect to pay the other Party a financing fee equal to the weighted
average cost of capital of the other Party times [***] in Net Investment
between the Parties, times [***]. Weighted average cost of capital will be
calculated as cost of equity times (market value of equity/(market value of
equity + market value of debt)) + cost of debt times (1- tax rate) times (market
value of debt/(market value of equity + market 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


38

















 


value of
debt)). For purposes of this Section 9.4(c), market value of debt equals
book value of debt, cost of debt equals the U.S. ten (10) year Treasury
rate, tax rate equals the marginal U.S. and applicable state tax rate of the
other Party, and cost of equity equals the long term equity premium per Goldman
Sachs with an assumed beta of 1 + cost of debt; and


 


(d)       the payments
due from/to a Party pursuant to Sections 9.4 (a) through (c) may be
offset against each other, such that a single payment may be made by one Party
to the other Party to fulfill the requirements of this Section 9.4.


 


9.5           Maximum Costs. The Parties agree to set a limit on
Development Costs, Marketing and Advertising Expenses, Selling and Promotion
Expenses and General and Administrative Expenses for each Contract Half Year,
and, unless otherwise agreed by the JRB, a Party exceeding its allocated
portion of such costs and expenses must absorb the overrun. The Parties’
agreement with respect to Development Costs is set forth in Section 4.7.
Similarly, every six (6) months, the Parties will agree for the following
two Contract Half Years on a limit for Marketing and Advertising Expenses and
Selling and Promotion Expenses (collectively, as a percentage of Net Sales of
Alliance Products (excluding OEM Alliance Products)), and General and
Administrative Expenses.


 


9.6           Modifying Terms. Upon the request of either Party,
the JRB will consider the definitions of Allowable Expenses and Net Investment,
and the components thereof, and, if approved by the JRB, the JRB will modify
the definitions and provide each Party with written notice of the modified
definitions and the date on which such modified definitions will become
effective.


 


9.7           Payment Terms. All payments hereunder will be in
United States dollars in immediately available funds and will be made by wire
transfer from a United States bank located in the United States to such bank
account as payee may designate in writing from time to time.


 


(a)        Any payments
or portions thereof due hereunder which are not paid on the date such payments
are due under this Agreement will bear interest at a rate equal to the lesser
of (i) the prime rate as published in The Wall Street Journal, Eastern
Edition, under the heading “Money Rates,”
on the first day of each calendar quarter in which such payments are overdue,
plus one (1) percentage point, and (ii) the maximum rate permitted by
law, calculated on the number of days such payment is delinquent, compounded
monthly using a three hundred sixty-five (365)-day year.


 


(b)        If at any
time legal restrictions prevent the prompt remittance of any monies owed with
respect to Revenues in any jurisdiction, the remitting Party will notify the
receiving Party and make such payments by depositing the amount thereof in
local currency in a bank account or other depository in such country in the
name of the receiving Party or its designee, and the remitting Party will have
no further obligations under this Agreement with respect thereto.


 


9.8           Record Keeping. Each Party will maintain, and will
use commercially reasonable efforts to cause its licensees, sublicensees,
contractors and agents to maintain, books 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


39

















 


of account and accurate records relating to
Revenues, Allowable Expenses and Net Investments with respect to the Alliance
Program and all amounts payable or receivable under this Agreement, in
sufficient detail to permit the other Party to confirm the correctness of such
items. All books of account and records will be maintained for a period not less
than relevant time permitted for audit of such accounts and records pursuant to
Section 9.9 and for any applicable tax period pursuant to Section 9.10.


 


9.9           Audits.


 


(a)       Upon the
written request of a Party (the “Requesting Party”)
and not more than once in each calendar year, the other Party (the “Responding Party”) will permit an independent certified public
accounting firm of nationally recognized standing, selected by the Requesting
Party and reasonably acceptable to the Responding Party, at the Requesting
Party’s expense, to have access during normal business hours to such of the
records of the Responding Party as may be reasonably necessary to verify (i) compliance
with the terms of this Article IX and all associated definitions in Article I
and Exhibit 1.13, and (ii) the accuracy of the reports provided under
this Article IX, for any year ending not more than thirty-six (36) months
prior to the date of such request. Further, an audit may not cover a year that
was already the subject of a previous audit under this Agreement. The
Responding Party also will permit the accounting firm to visibly inspect any
tangible asset included within Net Investment. The accounting firm will
disclose to the Requesting Party only whether the reports and records are correct
or not and the specific details concerning any discrepancies. All other
information will be Confidential Information of the Responding Party and may
not be shared with the Requesting Party.


 


(b)        If such
accounting firm concludes that additional amounts were owed during the audited
period, the Party owing such amounts will pay such additional amounts within
thirty (30) days of the date the Requesting Party delivers to the Responding
Party such accounting firm’s written report so concluding. The fees charged by
such accounting firm will be paid by the Requesting Party; provided, however, (i) if
the audit discloses that the actual Revenues for such period are more than one
hundred five percent (105%) of the Revenues reported for such period, then the
Responding Party will pay the reasonable fees and expenses charged by such
accounting firm, and (ii) if the audit discloses that the Allowable
Expenses of the Responding Party reported for such period are more than one
hundred five percent (105%) of the actual Allowable Expenses of the Responding
Party for such period, then the Responding Party will pay the reasonable fees
and expenses charged by such accounting firm, but the total of such fees and
expenses payable by the Responding Party will not be more than Fifty Thousand
dollars ($50,000).


 


9.10         Tax Matters.


 


(a)        The Parties
understand and agree that the activities and other undertakings evidenced by
this Agreement result in a partnership for purposes of federal income taxation
and for the purposes of certain state and/or local income tax laws which
incorporate or follow federal income tax principles as to tax partnerships. For
every other purpose of this Agreement, however, and not withstanding any other
provision in this Agreement, expressed or implied, to the contrary, the Parties
understand and agree that their legal relationship to each other under
applicable law with respect to all activities is as set forth in Section 19.6
and is not 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


40

















 


one of
partnership; that the liabilities of the Parties will be several and not joint
or collective except as might otherwise be provided for and pursuant to this
Agreement.


 


(b)        The Parties
intend that solely for Tax purposes and pursuant to the provisions of
Subchapter K of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986,
as amended (the “Code”), the alliance created by this Agreement will be
treated as a partnership for United States income tax purposes and each Party
agrees not to elect to be excluded from the application of said Subchapter K.
The Parties further intend that pursuant to the provisions of those state
and/or local income tax laws that incorporate or follow federal income tax
principles as to tax partnerships, the alliance created by this Agreement will
be treated as a partnership for Tax purposes and each Party agrees not to elect
to be excluded from the application of such provisions. As such, the Parties
agree to have the partnership file all required federal, state and local
Partnership Tax Returns and to make any appropriate elections, including an election
to deduct currently research and Development expenditures incurred by the
partnership pursuant to Section 174(a) of the Code.


 


(c)        The effective
date of the partnership will be the effective date of the Prior Alliance
Agreement, and the partnership will continue in full force and effect from and
after such date until terminated as provided in this Agreement.


 


(d)        Solely for
income tax purposes, each Party will be considered and deemed to own an
interest in the profits, losses and capital of this partnership as determined
under the provisions of this Agreement.


 


(e)        For purposes
of reporting on federal, state and/or local Partnership Tax Returns, each Party
will keep accounts on the accrual method of accounting. The taxable year of the
partnership for purposes of reporting on federal, state and/or local
Partnership Tax Returns will be the fiscal year ending June 30. Within
ninety (90) days after the end of each fiscal year, a Tax representative from
each Party will provide the other Party with a schedule of partnership Revenue
and Allowable Expenses reportable by the partnership for its taxable year.


 


(f)         Audits of
each Party’s records will be performed pursuant to the provisions of Section 9.9.


 


(g)        Abbott will
be responsible for filing any and all federal, state and/or local Partnership
Tax Returns covering operations reportable by the partnership and pursuant to
this Agreement. Abbott agrees to use its best efforts in the preparation and
filing of such Partnership Tax Returns, acting on behalf of itself and Applera,
but in doing so, Abbott will incur no liability to Applera with regard to such
Partnership Tax Returns or elections relating thereto. Each Party will fill out
Tax information requests so that Abbott can accurately and timely prepare the
appropriate Partnership Tax Returns. Abbott will send to Applera a copy of the
Partnership Tax Returns at least thirty (30) days prior to the due date,
including extensions of time, for filing such Partnership Tax Returns, and
Applera will approve of such Partnership Tax Returns at least fifteen (15) days
prior to the due date. Abbott and Applera agree to resolve in good faith any
issues arising as a result of the review of such returns. The due date for
filing the Partnership Tax Returns may be extended by the tax matters partner
as defined in Section 6231(a)(7) of the Code (“TMP”) if either Party requests such an extension. Both
Parties agree to 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


41

















 


share
equally the expenses of hiring an independent certified public accountant to
prepare the Partnership Tax Returns.


 


(h)        All
correspondence relating to the preparation and/or filing of any and all
federal, state and/or local Partnership Tax Returns of the partnership will be
mailed to Abbott or Applera at the address provided in Section 9.10 (q) or
as otherwise agreed in writing by the Parties. Applera agrees to provide to
Abbott on a timely basis all information required and necessary to enable
Abbott to fulfill and satisfy its obligations and responsibilities.


 


(i)         Abbott is
designated the TMP. The designation as TMP will be effective only for
operations conducted by the Parties pursuant to this Agreement. The TMP will
not bind Applera to any agreement, extend the statute of limitations, settle
any outstanding audit, litigate any unsettled audit issues, choose a forum for
litigation, appeal an adverse lower court decision, file a Request for
Administrative Adjustment, make any election with respect to federal, state or
local income tax law, or take any other actions affecting Tax matters without
obtaining the prior written concurrence of Applera. The TMP will inform
Applera, on a timely basis, of any Tax matters, including, but not limited to,
progress of any Internal Revenue Service (“IRS”) audit,
receipt of a Revenue Agent’s Report, and notice of an Appeals Conference.
Neither Party will enter into a settlement agreement with the IRS with respect
to any partnership item, as defined by Section 6231(a)(3) of the
Code, or file a notice of inconsistent treatment under Section 6222(b) of
the Code without first notifying the other Party within thirty (30) days of
such proposed action. Applera will furnish the TMP, within thirty (30) days of
receipt of the request, such information as the TMP may reasonably request to
permit it to provide the IRS with sufficient information for purposes of
Sections 6223 and 6050K of the Code. Both Parties agree that filing Partnership
Tax Returns requires the use of a federal identification number. Abbott, as
TMP, will file an application with the IRS to obtain a federal identification
number for the partnership. Both Parties will agree on a name for the
partnership.


 


(j)         Both Parties
agree that the TMP may engage, upon Applera’s prior written consent, which
consent will not be unreasonably withheld or delayed, an outside consultant to
assist in settling or litigating any outstanding partnership audit issues with
the IRS or any other taxing authority. Such expenses are expenses of the
partnership and will be shared equally by the Parties. This provision will be
applicable for any audits of the partnership during the term of this Agreement
and any audits that occur after termination of the partnership under the terms
of this Agreement.


 


(k)        All items of
income, gain, loss, deduction and credit will be allocated to each Party as set
forth in this Agreement. All items of tax credit will be allocated in the same
proportion as the corresponding item of income or deduction. All tax credit
recapture and depreciation recapture will be allocated to each Party in the
same proportion as the corresponding credit and depreciation was allocated. Any
item of income, gain, loss or deduction with respect to any property deemed
contributed to the partnership by a Party will, solely for income tax purposes,
be allocated between the Parties so as to take into account any variation
between the adjusted basis of such property for federal income tax purposes and
its fair market value as of the date of contribution in accordance with Section 704(c) of
the Code and Treasury Regulation Section 1.704-3. In the event that the
IRS upon audit imputes, under Section 482 of the Code, any item of income,
gain, loss, deduction or credit to either Party as a result of the 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


42

















 


Party’s
actual or deemed furnishing of property, products, facilities or services under
this or any other agreement between Applera or Abbott and the partnership, the
correlative item of income, gain, loss, deduction or credit of the partnership
resulting from such imputation will be specially allocated to the Party to
which the item of income, gain, loss, deduction or credit is imputed. It is the
intention of this section to place the Parties in the same economic position as
if such adjustment under Section 482 of the Code had not been made.


 


(l)         All
allocation methods described herein for income, gain, loss or deduction will be
utilized for allocation of income, gain, loss, or deduction for financial
accounting purposes, including financial capital accounts, as well as for
income tax purposes. Each Party will have a capital account that will be
maintained in a manner that will comply with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv), as amended from time to time.
Appropriate adjustments will be made in each Party’s capital account to
effectuate any audit adjustment imposed by any tax authorities on any item of
income, gain, loss, deduction or credit.


 


(m)       The
partnership will terminate upon the effective termination of this Agreement by
any Party or as provided by law. Upon termination, the partnership will
dissolve and distribute any and all partnership assets and liabilities in
accordance with the Party’s positive capital accounts and the terms of this
Agreement. Should either Party have a deficit in its capital account at the
time of dissolution of the partnership, such Party will contribute sufficient
funds to the partnership to eliminate such deficit. Distributions upon
dissolution and contributions to restore deficits in capital accounts will be
made by the end of the taxable year during which the dissolution of the
partnership occurs, or, if later, within ninety (90) days after the date of
such dissolution. It is the intention of the Parties that the partnership will
terminate for federal and state income tax purposes at such time that the
activities of the Parties evidenced by this Agreement are no longer deemed to be
partnership activities for any such purpose.


 


(n)        It is the
intention of the Parties that their capital accounts will be determined in a
manner so that allocations in this Agreement will have, or be deemed to have,
substantial economic effect under Section 704(b) of the Code and
Treasury Regulations thereunder. Furthermore, it is the intention of the
Parties to comply with all requirements of Section 704(b) of the Code
and Treasury Regulations thereunder regarding the treatment of any item of
income, gain, loss, deduction or credit not specifically addressed in this
Agreement.


 


(o)        Each Party
will cooperate (and cause their respective Affiliates to cooperate) with the
other Party in connection with matters relating to the preparation and filing
of Partnership Tax Returns and the examination of Partnership Tax Returns by
any taxing authority. Such cooperation will include making all information and
documents in their possession relating to the partnership available to the
other Party. Applera will also make available to Abbott, as reasonably
requested and available, personnel (including officers and employees and agents
of Applera or its Affiliates) responsible for preparing, maintaining and
interpreting information and documents relevant to the partnership, and
personnel reasonably required as witnesses or for purposes of providing
information or documents in connection with any administrative or judicial
proceedings relating to Tax matters of the partnership. The Party receiving
information or documents provided under this Section 9.10 will keep such
information or documents confidential, except as may otherwise be necessary in
connection with the filing of Partnership Tax Returns or in connection with any
administrative or judicial proceedings.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


43

















 


Each Party will preserve and keep all records relating to the assets
and activities of the partnership for so long as the contents thereof may
become material in the administration of any matter under the Code or other
applicable Tax law, but in any event, until the later of (i) the
expiration of any applicable statute of limitations with respect to any
Partnership Tax Return and (ii) the expiration of the applicable statute
of limitations of both Parties (for all Tax returns which include the Party’s
share of partnership items).


 


Each Party will be responsible for its own Tax liabilities resulting
from (i) payments received under this Agreement and (ii) its share of
partnership items and partnership allocations determined pursuant to the
provisions of this Agreement. Any income or other Taxes which a Party is
required by law to pay or withhold on behalf of a receiving Party with respect
to royalties or other payments payable to a receiving Party under this
Agreement will be deducted from the amount of such royalties or other payments
due, and paid or withheld as appropriate by the paying Party on behalf of the
receiving Party. Any such Tax required by law to be paid or withheld will be an
expense of, and borne solely by, the receiving Party. The paying Party will
furnish the receiving Party with the best available evidence of such payment or
amount withheld as soon as practicable after such payment is made or such
amount is withheld. The Parties will reasonably cooperate in completing and
filing documents required under the provisions of any applicable tax laws or
under any other applicable law in connection with the making of any required
tax payment or withholding tax in connection with any claim for exemption from,
or a reduction in the rate of withholding, or in connection with any claim to a
refund of or credit for any such payment.


 


(p)        The Parties
agree that any Taxes that are imposed upon the partnership by any governmental
entity or political subdivision thereof are an expense of the partnership. Such
expenses will pass through to the partners in accordance with the terms of this
Agreement and, in particular, the principles of this Section 9.10.


 


(q)        Mailing
address for correspondence relevant to this Section 9.10:


 


If to Abbott:


 


Tax Division D-367/AP6D

100 Abbott Park Road

100 Abbott Park Road

Abbott Park, IL 60064-6057

Attn: Vice President, Taxes


 


If to Applera:


 


Applera Corporation


 


301 Merritt 7

P.O. Box 5435

Norwalk, CT 06856-5435

Attn: Vice President, Corporate Tax


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


44

















 


ARTICLE X



OWNERSHIP, LICENSE AND TECHNOLOGY TRANSFER


 


10.1         Abbott Independent Rights. Nothing in this Agreement
is intended to change ownership or Control of Abbott Independent Technology or
Abbott Independent Patent Rights. Subject to Sections 10.11 and 11.1, Abbott
and its Affiliates may Exploit all Abbott Independent Technology and Abbott
Independent Patent Rights in any field and territory without restriction;
provided, however, during the term of this Agreement, Abbott will give the JRB
advance written notice of any intention to license any Abbott Independent
Technology or Abbott Independent Patent Rights in the Exclusive Areas and
Conditionally Exclusive Areas.


 


10.2         Applera Independent Rights. Nothing in this Agreement
is intended to change ownership or Control of Applera Independent Technology or
Applera Independent Patent Rights. Subject to Sections 10.10 and 11.1, Applera
and its Affiliates may Exploit all Applera Independent Technology and Applera
Independent Patent Rights in any field and territory without restriction;
provided, however, during the term of this Agreement, Applera will give the JRB
advance written notice of any intention to license any Applera Independent
Technology or Applera Independent Patent Rights in the Exclusive Areas and
Conditionally Exclusive Areas.


 


10.3         Abbott Alliance Technology and Alliance Patent Rights.
Abbott will own all right, title and interest in and to all Abbott Alliance
Technology and all Abbott Alliance Patent Rights; provided, however, during the
term of this Agreement, neither Abbott nor its Affiliates may Exploit any Abbott
Alliance Technology or Abbott Alliance Patent Rights except as follows:


 


(a)        Abbott and
its Affiliates may use Abbott Alliance Technology and Abbott Alliance Patent
Rights in the Exclusive Areas in the performance of Abbott’s obligations
pursuant to this Agreement.


 


(b)        Abbott and
its Affiliates, if Abbott is an acquiring Party pursuant to Section 4.3 or
a Proposing Party pursuant to Section 4.4, may independently or with a
Third Party use Abbott Alliance Technology and Abbott Alliance Patent Rights
for Non-Alliance Products, provided Abbott pays to Applera royalties on Net
Sales of such Non-Alliance Products in accordance with Section 10.14(b) at
the rate determined for Section 2.3(d).


 


(c)        Abbott and
its Affiliates may use Abbott Alliance Technology and Abbott Alliance Patent
Rights for its or a Third Party’s (under contract with Abbott or its
Affiliates) research, Development, manufacture, use and Commercialization of
products and services outside the Alliance Field.


 


(d)        Abbott and
its Affiliates may not grant any right or license to use Abbott Alliance
Technology or Abbott Alliance Patent Rights in the Exclusive Areas without the
prior approval of Applera, and all revenue and other consideration (e.g.,
cross-license rights or supply or distribution rights) received by Abbott or
its Affiliates in consideration for any such approved license will constitute
Licensing Revenue. Upon written notice to Applera, Abbott or its Affiliates may
grant to a Third Party a nonexclusive right and license to use Abbott Alliance 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


45

















 


Technology
or Abbott Alliance Patent Rights in the Alliance Field but outside the
Exclusive Areas; provided, however, that Abbott pays to Applera in accordance
with Section 10.14, [***] percent ([***]%) of all revenue and other
consideration (e.g., cross-license rights or supply or distribution rights)
received by Abbott or its Affiliates in consideration for such license.


 


(e)        Upon written
notice to Applera, Abbott or its Affiliates may grant to a Third Party a
nonexclusive right and license to use Abbott Alliance Technology or Abbott
Alliance Patent Rights outside the Alliance Field without accounting to
Applera.


 


(f)         In
settlement of a lawsuit or alternate dispute resolution procedure involving
enforcement of an Abbott Alliance Patent Right against a Third Party, Abbott or
its Affiliates may grant license rights to the Third Party under the Abbott
Alliance Patent Rights in dispute in the Alliance Field but outside the
Exclusive Areas, provided: (i) the Third Party grants license rights to
Abbott under Third Party Patent Rights in dispute, if any; (ii) Abbott
uses commercially reasonable efforts to obtain sufficient rights to bring the
Third Party Patent Rights within Abbott Independent Patent Rights; and (iii) any
revenue received by Abbott from the Third Party as consideration for activities
in the Alliance Field after the Effective Date covered by the Abbott Alliance
Patent Rights will be shared as provided in Section 10.3(d).


 


(g)        Notwithstanding
the provisions of this Section 10.3, Abbott may Exploit without limitation
or restriction any Abbott Alliance Technology that is not Confidential
Information.


 


10.4         Applera Alliance Technology and Alliance Patent Rights.
Applera will own all right, title and interest in and to all Applera Alliance
Technology and all Applera Alliance Patent Rights; provided, however, during
the term of this Agreement, neither Applera nor its Affiliates may Exploit any
Applera Alliance Technology or Applera Alliance Patent Rights except as
follows:


 


(a)        Applera and
its Affiliates may use Applera Alliance Technology and Applera Alliance Patent
Rights in the Exclusive Areas in the performance of Applera’s obligations
pursuant to this Agreement.


 


(b)        Applera and
its Affiliates, if Applera is an acquiring Party pursuant to Section 4.3
or a Proposing Party pursuant to Section 4.4, may independently or with a
Third Party, use Applera Alliance Technology and Applera Alliance Patent Rights
for Non-Alliance Products, provided Applera pays to Abbott royalties on Net
Sales of such Non-Alliance Products in accordance with Section 10.14(b) at
the rate determined for Section 2.3(d).


 


(c)        Applera and
its Affiliates may use Applera Alliance Technology and Applera Alliance Patent
Rights for its or a Third Party’s (under contract with Applera or its Affiliates)
research, Development, manufacture, use and Commercialization of products and
services outside the Alliance Field.


 


(d)        Applera and
its Affiliates may not grant any right or license to use Applera Alliance
Technology or Applera Alliance Patent Rights in the Exclusive Areas without the
prior approval of Abbott, and all revenue and other consideration (e.g.,
cross-license rights or supply or distribution rights) received by Applera or
its Affiliates in consideration for any such 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


46

















 


approved
license will constitute Licensing Revenue. Upon written notice to Abbott,
Applera or its Affiliates may grant to a Third Party a nonexclusive right and
license to use Applera Alliance Technology or Applera Alliance Patent Rights in
the Alliance Field but outside the Exclusive Areas; provided, however, that
Applera pays to Abbott in accordance with Section 10.14, [***] percent
([***]%) of all revenue and other consideration (e.g., cross-license rights or
supply or distribution rights) received by Applera in consideration for such license.


 


(e)        Upon written
notice to Abbott, Applera or its Affiliates may grant to a Third Party a
nonexclusive right and license to use Applera Alliance Technology or Applera
Alliance Patent Rights outside the Alliance Field without accounting to Abbott.


 


(f)         In
settlement of a lawsuit or alternate dispute resolution procedure involving
enforcement of an Applera Alliance Patent Right against a Third Party, Applera
or its Affiliates may grant license rights to the Third Party under the Applera
Alliance Patent Rights in dispute in the Alliance Field but outside the
Exclusive Areas, provided: (i) the Third Party grants license rights to
Applera under Third Party Patent Rights in dispute, if any; (ii) Applera
uses commercially reasonable efforts to obtain sufficient rights to bring the
Third Party Patent Rights within Applera Independent Patent Rights; and (iii) any
revenue received by Applera from the Third Party as consideration for
activities in the Alliance Field after the Effective Date covered by the Applera
Alliance Patent Rights will be shared as provided in Section 10.4(d).


 


(g)        Notwithstanding
the provisions of this Section 10.4, Applera may Exploit without
limitation or restriction any Applera Alliance Technology that is not
Confidential Information.


 


10.5         Joint Alliance Technology and Joint Alliance Patent
Rights. Applera and Abbott will jointly own all right, title and interest
in and to all Joint Alliance Patent Rights and Joint Alliance Technology and
during the term of this Agreement, neither Party nor its Affiliates will have
the right to Exploit any Joint Alliance Patent Rights and Joint Alliance
Technology except as follows:


 


(a)        A Party may
use the Party’s interest in Joint Alliance Patent Rights and Joint Alliance
Technology in the Exclusive Areas in the performance of such Party’s
obligations pursuant to this Agreement.


 


(b)        A Party, if
it is an acquiring Party pursuant to Section 4.3 or a Proposing Party
pursuant to Section 4.4, may independently, or with a Third Party, use its
interest in Joint Alliance Patent Rights and Joint Alliance Technology for
Non-Alliance Products, provided such Party pays to the other Party royalties on
Net Sales of such Non-Alliance Products in accordance with Section 10.14(b) at
the rate determined for Section 2.3(d).


 


(c)        Without
approval of the other Party, a Party may use Joint Alliance Patent Rights and
Joint Alliance Technology for its or a Third Party’s (under contract with such
Party) research, Development, manufacture, use and Commercialization of
products and services outside the Alliance Field.


 


(d)        A Party and
its Affiliates may not grant any right or license to use that Joint Alliance
Technology or Joint Alliance Patent Rights in the Exclusive Areas without the 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


47

















 


prior
approval of the other Party, and all revenue and other consideration (e.g.,
cross-license rights or supply or distribution rights) received by such Party
or its Affiliates in consideration for any such approved license will
constitute Licensing Revenue. A Party may grant to a Third Party a nonexclusive
right and license to use the Party’s interest in Joint Alliance Patent Rights
and Joint Alliance Technology in the Alliance Field but outside the Exclusive
Areas; provided, however, that the granting Party pays to the other Party in
accordance with Section 10.14, [***] percent ([***]%) of all revenue and
other consideration (e.g., cross-license rights or supply or distribution
rights) received by the granting Party in consideration for such license.


 


(e)        A Party may
grant to a Third Party a nonexclusive right and license to use the Party’s
interest in Joint Alliance Patent Rights outside the Alliance Field without
accounting to the other Party.


 


(f)         In
settlement of a lawsuit or alternate dispute resolution procedure involving
enforcement of a Joint Alliance Patent Right against a Third Party, the Third
Party may be granted license rights under the Joint Alliance Patent Rights in
dispute in the Alliance Field but outside the Exclusive Areas, provided the
Third Party grants license rights on the same terms to each Party under any
Third Party Patent Rights in dispute at least to the extent of the Alliance
Field.


 


(g)        Notwithstanding
the provisions of this Section 10.5, each Party may Exploit without
limitation or restriction any Joint Alliance Technology that is not
Confidential Information.


 


10.6         Employee Assignment and Disclosure. To the extent
permissible under applicable law, each Party will cause each employee and
contractor conducting work on such Party’s behalf under this Agreement to sign
a contract that (a) compels prompt disclosure to the Party of all
Technology Derived by such employee or contractor during any performance under
the Alliance Program and (b) automatically assigns to the Party all right,
title and interest in and to all such Technology. Each Party will require each
employee and contractor conducting work on such Party’s behalf under this
Agreement to maintain records in sufficient detail and in a good scientific
manner appropriate for patent purposes to properly reflect all work done.


 


10.7         Transfer of Applera Technology. Applera will use
commercially reasonable efforts to make available to Abbott all Applera
Independent Technology and Applera Alliance Technology that is reasonably
necessary for Abbott to perform its obligations under this Agreement. Without
the prior written consent of Applera, neither Abbott nor its Affiliates may use
any Applera Independent Technology or Applera Alliance Technology that is
Applera Confidential Information for any purpose not expressly authorized by
the terms of this Agreement. Moreover, Applera will disclose and make available
to Abbott and its Affiliates, upon Abbott’s request and at Abbott’s sole
expense, Applera Alliance Technology to the extent licensed to Abbott or its
Affiliates pursuant to Section 10.10(a) or 10.13 of this Agreement.


 


10.8         Transfer of Abbott Technology. Abbott will use
commercially reasonable efforts to make available to Applera all Abbott
Independent Technology and Abbott Alliance Technology that is reasonably
necessary for Applera to perform its obligations under this Agreement. Without
the prior written consent of Abbott, neither Applera nor its Affiliates may 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


48

















 


use any Abbott Independent Technology or
Abbott Alliance Technology that is Abbott Confidential Information for any
purpose not expressly authorized by the terms of this Agreement. Moreover,
Abbott will disclose and make available to Applera and its Affiliates, upon
Applera’s request and at Applera’s sole expense, Abbott Alliance Technology to
the extent licensed to Applera or its Affiliates pursuant to Section 10.11(a) or
10.12 of this Agreement.


 


10.9         No Title Transfer. The transfer to a Party of any
physical item that embodies any Independent Technology or Alliance Technology
owned by the transferring Party will not be, and will not be construed to be, (a) a
sale, lease, offer to sell or lease or other transfer of title or ownership to
the receiving Party of such Independent Technology or Alliance Technology, or (b) a
license to the receiving Party (except as expressly provided in this Agreement)
under such Independent Technology or Alliance Technology.


 


10.10       Applera License Grant to Abbott in the Alliance Field.
Subject to the terms and conditions of this Agreement,


 


(a)        Applera
hereby grants to Abbott and its Affiliates a worldwide, nonexclusive license,
with no right to grant sublicenses, under Applera Independent Patent Rights,
Applera Independent Technology, Applera Alliance Patent Rights and Applera
Alliance Technology in the Exclusive Areas solely to the extent necessary for
Abbott: (i) to perform its obligations expressly set forth in this
Agreement; and (ii) to Commercialize Alliance Products during the term of
this Agreement.


 


(b)        The license
granted in Section 10.10(a)(i) and (ii) will be royalty-free
during the term of this Agreement, except and only to the extent of royalties
due to Third Parties for use of Applera Independent Technology or Applera
Independent Patent Rights.


 


(c)        Applera
hereby grants to Abbott and its Affiliates a worldwide, royalty-bearing,
nonexclusive license, with no right to grant sublicenses, under Applera
Alliance Patent Rights and Applera’s Deliverable Alliance Technology solely to
the extent necessary to permit Abbott and its Affiliates to Commercialize
Non-Alliance Products. This license will be subject to royalties in accordance
with Section 10.14 on Net Sales of such Non-Alliance Products at the rate
determined in Section 2.3(d) and will survive expiration or
termination of this Agreement.


 


(d)        Applera
hereby grants to Abbott and its Affiliates a worldwide, royalty-bearing,
nonexclusive license, with no right to grant sublicenses, under Applera
Independent Patent Rights and under Applera Independent Technology that was
previously used by Abbott or its Affiliates in Commercialization of an Alliance
Product, solely to the extent necessary to permit Abbott and its Affiliates to
Commercialize Non-Alliance Products that had been subject to rejected NPCDs in
the Conditionally Exclusive Areas. Abbott will pay Applera in accordance with Section 10.14(b) a
royalty on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d).
The license granted in this Section 10.10(d) will survive expiration
or termination of this Agreement. No license is granted under any Applera
Independent Patent Rights or Applera Independent Technology for products or
services in the Optional Areas or outside the Alliance Field.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


49














 


(e)        Notwithstanding
the provisions of this Section 10.10, Abbott may Exploit without
limitation, restriction or payment any Applera Independent Technology that,
through no fault of Abbott, is not Confidential Information.


 


10.11       Abbott License Grant to Applera in the Alliance Field.
Subject to the terms and conditions of this Agreement,


 


(a)        Abbott hereby
grants to Applera and its Affiliates a worldwide, nonexclusive license, with no
right to grant sublicenses, under Abbott Independent Patent Rights, Abbott
Independent Technology, Abbott Alliance Patent Rights and Abbott Alliance
Technology in the Exclusive Areas solely to the extent necessary for Applera: (i) to
perform its obligations expressly set forth in this Agreement; and (ii) to
Commercialize Alliance Products during the term of this Agreement.


 


(b)        The license
granted in Section 10.11(a)(i) and (ii) will be royalty-free
during the term of this Agreement, except and only to the extent of royalties
due to Third Parties for use of Abbott Independent Technology or Abbott
Independent Patent Rights.


 


(c)        Abbott hereby
grants to Applera and its Affiliates a worldwide, royalty-bearing, nonexclusive
license, with no right to grant sublicenses, under Abbott Alliance Patent
Rights and Abbott’s Deliverable Alliance Technology solely to the extent
necessary to permit Applera and its Affiliates to Commercialize Non-Alliance
Products. This license will be subject to royalties in accordance with Section 10.14
on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d) and
will survive expiration or termination of this Agreement.


 


(d)        Abbott hereby
grants to Applera and its Affiliates a worldwide, royalty-bearing, nonexclusive
license, with no right to grant sublicenses, under Abbott Independent Patent
Rights and under Abbott Independent Technology that was previously used by
Applera or its Affiliates in Commercialization of an Alliance Product, solely
to the extent necessary to permit Applera and its Affiliates to Commercialize
Non-Alliance Products that had been subject to rejected NPCDs in the
Conditionally Exclusive Areas. Applera will pay Abbott in accordance with Section 10.14(b) a
royalty on Net Sales of such Non-Alliance Products at the rate determined in Section 2.3(d).
The license granted in this Section 10.11(d) will survive expiration
or termination of this Agreement. No license is granted under any Abbott
Independent Patent Rights or Abbott Independent Technology for products or
services in the Optional Areas or outside the Alliance Field.


 


(e)        Notwithstanding
the provisions of this Section 10.11, Applera may Exploit without
limitation, restriction or payment any Abbott Independent Technology that,
through no fault of Applera, is not Confidential Information.


 


10.12       Abbott License Grant to Applera Outside the Alliance Field.
In consideration of Applera’s joint funding pursuant to this Agreement, Abbott
hereby grants to Applera and its Affiliates the following worldwide,
royalty-bearing licenses outside the Alliance Field under the following license
terms:


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


50

















 


(a)        for products,
other than therapeutic products, outside the Alliance Field, a nonexclusive
license, as determined in accordance with the procedures specified in Section 10.14(c),
under Abbott’s Deliverable Alliance Technology and any Abbott Alliance Patent
Rights, with a royalty rate negotiated and determined taking into account the
factors identified in Section 10.14(a), and in any event of not more than
[***] percent ([***]%) on Net Sales of products which incorporate or use such
Deliverable Alliance Technology or the manufacture, use, sale, offer for sale
or import of which is covered by a Valid Claim of the Abbott Alliance Patent
Rights, such license to be subject to the terms and conditions specified in Section 10.14(b);


 


(b)        the licenses,
except if terminated pursuant to Section 17.4, will survive expiration or
termination of this Agreement. No royalty will be payable for use of Abbott’s
Deliverable Alliance Technology that, through no fault of Applera, is not
Abbott Confidential Information; and


 


(c)        for
therapeutic products, there is no license absent separate agreement by the
Parties.


 


10.13       Applera License Grant to Abbott Outside the Alliance Field.
In consideration of Abbott’s joint funding pursuant to this Agreement, Applera
hereby grants to Abbott and its Affiliates the following worldwide,
royalty-bearing licenses outside the Alliance Field under the following license
terms:


 


(a)        for products,
other than therapeutic products, outside the Alliance Field, a nonexclusive
license, as determined in accordance with the procedures specified in Section 10.14(c),
under Applera’s Deliverable Alliance Technology and any Applera Alliance Patent
Rights, with a royalty rate negotiated and determined taking into account the
factors identified in Section 10.14(a), and in any event of not more than
[***] percent ([***]%) on Net Sales of products which incorporate or use such
Deliverable Alliance Technology or the manufacture, use, sale, offer for sale
or import of which is covered by a Valid Claim of the Applera Alliance Patent
Rights, such license to be subject to the terms and conditions specified in Section 10.14(b);


 


(b)        the licenses,
except if terminated pursuant to Section 17.5, will survive expiration or
termination of this Agreement. No royalty will be payable for use of Applera’s
Deliverable Alliance Technology that, through no fault of Abbott, is not
Applera Confidential Information; and


 


(c)        for
therapeutic products, there is no license absent separate agreement by the
Parties.


 


10.14       Royalty Rate Factors and License Terms. Each royalty
obligation under Sections 2.3(d), 4.4(a), 10.10(c) and (d), 10.11(c) and
(d), 10.12, 10.13 and 17.7(b) will be governed by this Section 10.14
as follows:


 


(a)        In each case
the royalty rate will be negotiated by the Parties but will not be greater than
the rate specified, or in the event the Parties cannot reach agreement on 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


51

















 


the royalty
rate by negotiation and the issue is referred to ADR under Article XVIII,
the following factors will be considered in determining the royalty rate:


 


(i)    the strength of the intellectual property
subject to the license;


 


(ii)   the profitability of the products to which
such intellectual property would be applicable;


 


(iii)  whether the intellectual property is
foundational to the product or merely incidental;


 


(iv)  the market royalty rate, if any, for licenses
to intellectual property of similar scope for related or alternative
technologies;


 


(v)   the ease with which the intellectual property
can be avoided or designed around;


 


(vi)  whether the licensee will need to obtain
licenses to intellectual property controlled by Third Parties in order to
Commercialize a royalty bearing product;


 


(vii) whether the license is exclusive,
semi-exclusive or nonexclusive;


 


(viii)                whether the royalty rate will be
dependent upon achievement of specified sales thresholds; and


 


(ix)   such other factors as are usual and customary
in determining a reasonable royalty (e.g., the Georgia-Pacific factors).


 


(b)        Licenses
subject to this Section 10.14 will include the following terms and
conditions:


 


(i)    if the license being negotiated is other
than exclusive, the royalty rate will be subject to adjustment to be at least
as favorable to the licensee and its Affiliates as the royalty rate provided to
any other of the licensor’s licensees under the same rights for comparable
products in comparable markets (most favored licensee protection);


 


(ii)   the royalty rate will be additive to any
royalty owed to a Third Party (Third Party royalties additional);


 


(iii)  Third Party royalties owed will be passed
through by the licensor without mark-up (no mark-up on any pass through);


 


(iv)  if a product is subject to more than one
license which is subject to this Section 10.14 or, for a given license, a
product is subject to 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


52

















 


multiple patents or technology
grants, then the royalty rate will be the highest rate applicable for a given
license, but royalties will not be cumulative, except for any Third Party
royalties (no royalty stacking);


 


(v)   the term for royalty payments will be: (A) for
licenses under Patent Rights, until expiration of the last to expire of the
licensed patents on products which, but for the license, would infringe a Valid
Claim of the licensed patents; and (B) for licenses under Technology, for
a period of ten (10) years commencing from the first Commercialization of any
product which is made using or otherwise embodies the Technology, but only if
and for so long as Technology is Confidential Information;


 


(vi)  net sales will be calculated in the same
manner as Net Sales;


 


(vii) royalty payments will made in accordance with Section 9.7
within seventy-five (75) days after the end of each calendar quarter for sales
during such preceding calendar quarter, and each royalty payment will be
accompanied by a written report of net sales of the applicable products or
services sold during the preceding calendar quarter and the royalties due;


 


(viii)                the Party and its Affiliates
paying royalties will keep records sufficient to determine royalties due and
will make them available for audit in accordance with Sections 9.8 and 9.9; and


 


(ix)   such other terms and conditions as are usual
and customary.


 


(c)        The terms and
conditions for licenses under Sections 2.3(d), 4.4(a), 10.10(c) and (d),
10.11(c) and (d), 10.12, 10.13 and 17.7(b) will be negotiated and
determined in accordance with the following procedures:


 


(i)    the Parties will negotiate for a period of
three (3) months commencing from written notice by the prospective
licensee to the prospective licensor. The royalty factors and terms set forth
in Sections 10.14(a) and 10.14(b) will be used as guidance to the
Parties; and


 


(ii)   if after completion of the three (3) month
negotiation period the Parties are unable to reach agreement, the issue of the
license terms will be submitted to ADR pursuant to Sections 18.1 through 18.5,
with each side required to submit its last, best proposed terms to the neutral.
The neutral will select one of the Parties’ proposals and the prospective
licensee will have the option of either electing to enter into an agreement with
the terms of the selected proposal or to forever forgo its right to a license.


 


(d)        Royalties
paid by one Party to the other Party in accordance with this Section 10.14,
for purposes of the Alliance Program, will not be considered as Revenue of the
receiving Party or Allowable Expenses for the paying Party.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


53

















 


ARTICLE XI


 


PATENT RIGHTS MAINTENANCE AND
ENFORCEMENT


 


11.1         Independent Patent Rights. Each Party will have the
exclusive right, but not the obligation, at its sole expense, to prepare, file,
prosecute, maintain and abandon all of its Independent Patent Rights. A Party
will give the other Party sixty (60) days advance written notice of its
intention to assign to a Third Party any of its Independent Patent Rights to
the extent reasonably related to the Exclusive Areas and the Conditionally
Exclusive Areas. To the extent the JRB determines an Independent Patent Right
claims the manufacture, use, sale, offer for sale or import of an Alliance
Product as of the date of assignment of such Independent Patent Right to a Third
Party, the Party assigning the Independent Patent Right will reserve for itself
and the other Party a nonexclusive, royalty-free, worldwide, irrevocable
license to Commercialize the Alliance Product during the term of this Agreement
and after termination pursuant to Sections 17.7(b)(ii) and (iii). Assigned
Independent Patent Rights will be subject to licenses granted prior to such
assignment pursuant to Sections 10.10 and 10.11 with respect to Non-Alliance
Products. Expenses associated with preparation, filing, prosecution and
maintenance of Independent Patent Rights will not be Allowable Expenses.


 


11.2         Alliance Patent Rights. Each Party will have the
exclusive right, but not the obligation, at its sole expense, to prepare, file,
prosecute and maintain all of its Alliance Patent Rights. All reasonable costs
and fees incurred by a Party in connection with preparation, filing,
prosecution and maintenance of Alliance Patent Rights in a Major Market Country
will be Allowable Expenses. To the extent any Alliance Patent Right is or
becomes reasonably necessary for or important to performance by either Party of
any aspect of the Alliance Program or reasonably necessary for or important to
manufacture or Commercialization of an Alliance Product, the Party owning such
Alliance Patent Right will exercise commercially reasonable efforts consistent
with good faith business practices to maintain ownership or Control of such
Alliance Patent Rights.


 


(a)        To the extent
a Party elects not to file for an Alliance Patent Right in a Major Market
Country or elects to abandon any Alliance Patent Right already filed in any
country, that Party will notify the other Party in writing not less than sixty
(60) days prior to the date such election is irrevocable without additional cost,
and will offer the other Party the opportunity to assume, at the other Party’s
sole expense, the right to file for, prosecute and maintain such Alliance
Patent Right in such country. If the other Party accepts the offer by written
notice to the first Party, the first Party will assign such Alliance Patent
Right to the other Party and will reasonably assist the other Party in assuming
the filing, prosecution and maintenance of such Alliance Patent Right in such
country. Such Alliance Patent Right thereafter will be the other Party’s
Independent Patent Rights.


 


(b)        With respect
to each United States patent application that is an Alliance Patent Right, not
less than sixty (60) days before filing any application for corresponding
patent protection in foreign countries, the Party owning the Alliance Patent
Right will give to JRB a copy of the priority application and written notice of
the foreign countries selected for filing. The JRB, in writing within thirty
(30) days after such notice, may reject any selected country outside the Major
Market Countries and may request filing of applications in 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


54

















 


additional
foreign countries. The Party will file in such additional countries and may
file in the rejected countries. All reasonable costs associated with filing,
prosecution and maintenance of applications in Major Market Countries and in
any such additional countries requested by the JRB will be Allowable Expenses.
Expenses associated with filing, prosecution and maintenance in rejected
countries will be borne solely by the filing Party.


 


(c)        At least once
annually, each Party will provide to the other Party a written report of the
status of each pending and issued Alliance Patent Right.


 


11.3         Joint Alliance Patent Rights. The JRB will determine
which Party will control the preparation, filing, prosecution and maintenance
of each Joint Alliance Patent Right (“Controlling Party”).
The Controlling Party will prepare, file, prosecute and maintain all such Joint
Alliance Patent Rights in each of the Major Market Countries and such other
countries as the JRB approves, and the reasonable expenses thereof will be
Allowable Expenses.


 


(a)        If the
Controlling Party elects not to apply for a Joint Alliance Patent Right in any
country (other than a Major Market Country or such other countries as the JRB
approves) or elects to abandon any Joint Alliance Patent Right already filed in
any country, the Controlling Party will notify the other Party in writing not
less than sixty (60) days prior to the date such election is irrevocable
without additional cost, and will offer the other Party the opportunity to
assume, at the other Party’s sole expense, the right to file for, prosecute and
maintain such Alliance Patent Right in such country. If the other Party accepts
the offer by written notice to the Controlling Party, the Controlling Party
will assign its interest in such Joint Alliance Patent Right to the other Party
and will reasonably assist the other Party in assuming the filing, prosecution
and maintenance of such Joint Alliance Patent Right in such country. Such Joint
Alliance Patent Right thereafter will be the other Party’s Independent Patent
Rights.


 


(b)        With respect
to filing, prosecution and maintenance of each Joint Alliance Patent Right, the
Controlling Party will provide to the other Party: (i) a copy of the
patent application sufficiently prior to filing to permit the other Party
reasonable opportunity to review and make reasonable comments thereon; (ii) a
copy of the patent application promptly after such filing; (iii) copies of
all substantive communications received from patent office(s) with respect
to such filings; and (iv) copies of all substantive communications to be
sent to the patent office(s) with respect to such filings sufficiently
before a due date to permit the other Party to review and make reasonable
comments thereon.


 


(c)        The other
Party, when requested by the Controlling Party, will use commercially
reasonable efforts to assist the Controlling Party in preparing, filing or
maintaining the patent applications and patents within the Joint Alliance
Patent Rights. The reasonable expenses associated with providing such
assistance will be Allowable Expenses.


 


11.4         Alliance Patent Rights Enforcement Outside Exclusive
Areas. A Party will have the exclusive right, but not the obligation, at
its sole expense, to enforce all of its Alliance Patent Rights outside the
Exclusive Areas in the Alliance Field. Any recovery realized as a result of
such suit, claim or action or related settlement may be retained by the Party;
provided, however, that if a settlement grants rights under the Alliance Patent
Rights to the accused Third Party, Section 10.3(f) or 10.4(f) will
apply. Expenses incurred in any such enforcement will not 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


55

















 


be Allowable Expenses. To the extent the
alleged infringement or the scope of the settlement is outside the Alliance
Field, there will be no sharing between the Parties of any expenses or
recoveries.


 


11.5         Alliance Patent Rights Enforcement in the Exclusive Areas.
Each Party will promptly notify the other Party in writing if it learns of any
actual, alleged or threatened infringement of any Alliance Patent Right by a
Third Party in the Exclusive Areas. The Party owning the affected Alliance
Patent Right will have the first right, but not the obligation, at its own
expense, to bring suit (or take other appropriate legal action) against any
actual, alleged or threatened infringement of the Alliance Patent Right by a
Third Party in the Exclusive Areas, including the defense and settlement, to
the extent such infringement is in the Exclusive Areas. If the owning Party
does not initiate an infringement action or otherwise take affirmative measures
to abate any such actual, alleged or threatened Third Party infringement of the
Alliance Patent Right within ninety (90) days of the later of: (a) receiving
notification from the other Party under this Section 11.5 of such
infringement; (b) sending notice to the other Party under this Section 11.5
of such infringement; or (c) receiving a written request from the other
Party to take action with respect to such infringement, then the other Party
will have the right, but not the obligation, at its own expense, to bring suit
(or take other appropriate legal action) against any such actual, alleged or
threatened infringement of the Alliance Patent Right by a Third Party in the
Exclusive Areas, including the defense and settlement thereof. In the event
either Party brings an infringement action in accordance with this Section 11.5,
such Party will notify the other Party in writing at least fifteen (15) days
prior to filing such action and the other Party will provide reasonable
assistance and authority to file and bring the action, including, if required
to bring such action, being joined as a party plaintiff; provided, however,
that neither Party will be required to transfer any right, title or interest in
or to any of its Alliance Patent Rights to the other Party or a Third Party to
confer standing on a Party hereunder. In addition, if either Party brings an
infringement action hereunder, the other Party will have the right to be
represented separately in such action by counsel of its own choice, at its own
expense. Any recovery realized as a result of such suit, claim or action or
related settlement will first be applied pro rata to reimburse the Parties’
reasonable costs and expenses in connection with such suit, claim or action,
and any remaining amounts will be Licensing Revenue. Reasonable expenses not
offset will be Allowable Expenses; provided, however, that the Party not
bringing the infringement action may, by written notice to the other Party
within sixty (60) days from receipt of the notice of intent to file such
action, elect to opt-out from any monetary recovery resulting from such action,
including any settlement proceeds, and in such case, the reasonable expenses of
the Party prosecuting the action will not be Allowable Expenses.


 


11.6         Joint Alliance Patent Rights Enforcement. Each Party,
at its own expense, will have the right, but not the obligation, to initiate an
action to enforce a Joint Alliance Patent Right against accused infringer(s) outside
the Alliance Field. The Party initiating the action will notify the other Party
and identify the accused infringer(s). The other Party will cooperate in any
such action by (i) agreeing to be named as party to the action solely to
the extent necessary to maintain the action, and (ii) not granting any
license under the Joint Alliance Patent Right to the identified accused
infringer(s) until after such action is finally resolved. No Party will
settle the action without the other Party’s prior written consent, which
consent will not be unreasonably withheld or delayed, if the terms of
settlement would deprive the other Party of its rights in the asserted Joint
Alliance Patent Rights. Any recovery realized as a result of such suit, claim
or 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


56

















 


action or related settlement will first be
applied pro rata to reimburse the Parties’ reasonable costs and expenses in
connection with such suit, claim or action, and any remaining amounts will be
retained by the Party initiating the action. Reasonable expenses not offset
will not be Allowable Expenses. A Party wishing to enforce a Joint Alliance
Patent Right against infringement in the Alliance Field will notify the JRB in
writing and identify the accused infringer(s). If the JRB approves of the
action, any monetary recovery will be considered Licensing Revenue and all
reasonable expenses incurred in the enforcement action will be Allowable
Expenses. If the enforcement action for infringement in the Alliance Field is
not approved by the JRB, the Party wishing to enforce a Joint Alliance Patent
Right may still bring the action, but such Party will be solely responsible for
all expenses incurred in the enforcement action and will be solely entitled to
retain any monetary recovery. In either case, the other Party will cooperate in
any such action by (i) agreeing to be named as party to the action solely
to the extent necessary to maintain the action, and (ii) not granting any
license under the Joint Alliance Patent Right to the identified accused
infringer(s) until after such action is finally resolved. Any settlement
will be subject to Section 10.5(f), and no Party will settle the action
without the other Party’s prior written consent, which consent will not be
unreasonably withheld or delayed, if the terms of settlement would deprive the
other Party of its rights in the asserted Joint Alliance Patent Rights.


 


11.7         Defense of Third Party Infringement Actions. Each
Party will promptly notify the other Party in the event of a claim or suit by a
Third Party alleging infringement of a Third Party patent based on use of
Alliance Technology or manufacture, use, sale, offer for sale or import of an
Alliance Product by a Party or customer. Promptly after such notice, the
Parties will confer. The Party against whom the action is filed will defend and
control the defense, and the other Party will cooperate with the defending
Party. If the alleged infringement is in the Alliance Field: (a) all
reasonable costs associated with the defense of the action will be Allowable
Expenses; (b) any payment as damages or in settlement allocated to sales
of Alliance Products during the term of this Agreement which are recognized as
Revenue will be approved by the JRB pursuant to Section 3.6 and if
approved will be Allowable Expenses; and (c) any settlement that requires
payment to the Third Party for the prospective right to Commercialize the
Alliance Product in the Alliance Field will require approval of the JRB
pursuant to Section 3.6. Each Party will individually bear the risks and
costs of infringing Third Party Patent Rights for its activities which are
either outside the term of this Agreement or outside the Alliance Field for any
product such Party manufactures or Commercializes.


 


11.8         Non-Alliance Product Infringement Issues. Each Party
will have the exclusive right, at its sole expense, to defend and control the
defense of any action alleging infringement of a Third Party’s patent by such
Party’s Non-Alliance Products.


 


ARTICLE XII


 


TRADEMARKS


 


12.1         Trademark Usage. Subject to continuing compliance
with applicable quality control standards, each Party will permit use of its
trademark or trade name with each Alliance Product to appropriately acknowledge
its contribution to the research, Development, manufacture or distribution
thereof. The JRB will determine the trademarks, trade names and domain names to
be used in connection with promotion, distribution and sale of each Alliance 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


57

















 


Product (collectively, the “Marks”). In addition to trademarks, trade names or domain
names owned by a Party and used to Commercialize Alliance Products (“Party Marks”), the JRB may adopt new trademarks, trade names or
domain names for Alliance Products (“New Marks”).
Either Party may propose a New Mark to the JRB for approval. Prior to submission
to the JRB, such Party must first determine the availability of such New Mark
in the Major Market Countries. Neither the Supplier nor the Distributor thereof
may alter, remove or modify such Marks, or affix any other trademark to such
Alliance Product, without the prior written consent of the JRB.


 


12.2         Labels. Each Alliance Product will be distributed in
the original packages under the original labels with the original inserts
provided by Supplier, unless otherwise agreed to by the JRB. The Distributor thereof
may alter, remove or modify such packages, labels or inserts, or add any other
packaging, label or insert to such Alliance Product if necessary to comply with
local requirements, but the Distributor may not alter, remove or modify Marks
used on such packages, labels or inserts without the prior written consent of
the JRB.


 


12.3         Party Trademark Rights. Each permitted use of a Party
Mark, to the extent used in the Alliance Program, will clearly indicate the
respective Party’s ownership of the Mark. Except as permitted by the JRB
pursuant to Section 12.1, nothing in this Agreement is intended to grant
to either Party any license or interest in the Party Marks of the other Party.
Each Party acknowledges the other Party’s claim of ownership of Party Marks of
such other Party. A Party’s use of the other Party’s Party Marks will inure to
the benefit of and be on behalf of the owner thereof. To the extent enforceable
under applicable law, a Party will not challenge the ownership of any Party
Mark, and a Party will not take any action that is inconsistent with, or may
impair, the other Party’s right, title and interest to its Party Marks. Neither
Party will represent to any Third Party that it has any ownership interest in
such Party Marks of the other Party.


 


12.4         New Trademark Rights. The Parties will have the right
to use New Marks relating to any Alliance Product solely in connection with the
promotional, marketing and sales activities of the Alliance Program. The
Distributor for a particular Alliance Product will own the New Marks associated
therewith. The Distributor will be responsible for obtaining and maintaining
registration of and for enforcing and defending such New Marks. All costs
associated with the search for and the registration, maintenance, defense and
enforcement of any approved New Mark will be considered Allowable Expenses. In
the event the Distributor transfers an Alliance Product to the other Party for
distribution pursuant to Section 7.4, the Distributor will assign to the
other Party all New Marks associated with the transferred Alliance Product and
goodwill associated therewith. In the event an Alliance Product is terminated
pursuant to Section 17.2, the JRB will decide, on a case by case basis,
whether one Party may own the New Mark associated with the terminated Alliance
Product in the post-termination period for a nominal royalty to be paid to the
other Party, or whether it is better to prohibit either Party from using the
New Mark and let the New Mark go unused and be subject to Third Party use under
applicable law.


 


12.5         Trademark Challenges. Each Party will promptly notify
the other Party in writing of any challenges to the validity or allegations of
infringement or unauthorized use of any of the Party Marks of the other Party
that are used in connection with the Alliance Program,  actual or threatened, that may come to such
Party’s attention. Unless the JRB otherwise 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


58

















 


determines, each Party will be responsible
for and will assume all expenses of the defense and enforcement of its Party
Marks.


 


12.6         Post-Termination Rights. Upon termination or
expiration of this Agreement, the Distributor may continue to use the Marks on
the terms agreed to previously by the Parties solely in connection with
promotion, marketing, distribution and sale of Alliance Products permitted
after such termination or expiration as provided in Article XVII. Except
as provided in the preceding sentence, each Party will discontinue all use of
Party Marks owned by the other Party on termination or expiration of this
Agreement. Upon termination or expiration of this Agreement, each Party will
cooperate with the other Party and execute any and all documents requested for
the purpose of canceling any registered user or other rights with respect to
the other Party’s Party Marks that such Party may have acquired in operating
hereunder.


 


ARTICLE XIII


 


COPYRIGHTS


 


13.1         Copyright License. To the extent a Party’s
Copyrighted Works are included in its Independent Technology and Alliance
Technology, the Party hereby grants to the other Party licenses of the scope
granted under the corresponding Independent Technology and Alliance Technology
pursuant to Article X. Copyrighted Works that are part of Joint Alliance
Technology will be subject to Section 10.5.


 


13.2         Copyright Marking. The Supplier will ensure that any
Copyrighted Works associated with Alliance Products are marked with appropriate
copyright markings and accompanied with appropriate restrictive licenses, and
the Distributor may not remove such markings and licenses. Each Party may copy
and distribute to its sales representatives Alliance Product advertising,
literature and other materials prepared by or on behalf of a Party for the
purpose of fulfilling its obligations under this Agreement.


 


13.3         Copyright Infringement. Upon becoming aware of any
infringement of any of the other Party’s copyrights that are used in connection
with the Alliance Program, such Party will promptly notify the other Party in
writing of any such infringement and will provide the other Party with
reasonable assistance in initiating and prosecuting any legal action against
any infringer of the other Party’s copyrights.


 


ARTICLE XIV


 


CONFIDENTIALITY


 


14.1         Confidentiality. Subject to this Article XIV,
each Party will: (a) maintain in confidence the Confidential Information
of the other Party; (b) have the right to use the Confidential Information
of the other Party solely for the purpose of performing its obligations and
exercising its rights under this Agreement; (c) not use or grant to others
the use of the Confidential Information of the other Party except as expressly
permitted hereby; and (d) not disclose the Confidential Information of the
other Party except on a need-to-know basis to such Party’s directors, officers,
employees, agents, consultants and contractors, to the extent such 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


59

















 


disclosure is reasonably necessary in
connection with such Party’s activities as expressly authorized by this
Agreement. Each Party will ensure that any of its directors, officers,
employees, agents, consultants and contractors having access to the other Party’s
Confidential Information is under a contractual obligation to the Party to hold
in confidence and not use such Confidential Information, except as permitted
under this Agreement. To the extent that disclosure to any person is authorized
by this Agreement, prior to disclosure, a Party will obtain written agreement
of such person to hold in confidence and not disclose, use or grant the use of
the Confidential Information of the other Party except as expressly permitted
under this Agreement. Each Party will notify the other Party promptly upon
discovery of any unauthorized use or disclosure of the other Party’s
Confidential Information. In performance of its obligation under this Section 14.1,
each Party will exercise the same degree of care as it exercises with respect
to its own proprietary information.


 


14.2         Terms of Agreement. No Party may disclose any terms
or conditions of this Agreement to any Third Party without the prior consent of
the other Party; provided, however, that a Party may disclose, under terms of
confidentiality equivalent to those in this Article XIV, the terms or
conditions of this Agreement (a) on a need-to-know basis to its legal and
financial advisors to the extent such disclosure is reasonably necessary, and (b) to
a Third Party in connection with: (i) a private placement equity
investment in such Party greater than Ten Million dollars ($10,000,000); (ii) a
merger, consolidation or similar transaction by such Party; or (iii) the
sale or other transfer of all or substantially all of such Party’s assets to
which this Agreement pertains. Notwithstanding the provisions of this Section 14.2,
a Party may disclose to potential customers and partners general aspects of
this Agreement, provided that no financial terms of this Agreement are
disclosed.


 


14.3         Permitted Disclosures. The confidentiality
obligations under this Article XIV will not apply to the extent that a
Party is required to disclose information (a) by applicable law,
regulation or order of a governmental agency or a court of competent
jurisdiction, or (b) pursuant to the rules and regulations of any
exchange or market on which a Party’s securities are traded or listed;
provided, however, that: (i) in the case of any such disclosure being
required under legal, regulatory or judicial process, such Party will: (A) provide
written notice thereof to the other Party; (B) consult with the other
Party with respect to such disclosure and use all reasonable efforts to provide
the other Party with sufficient opportunity to object to any such disclosure or
to request confidential treatment thereof; and (C) disclose only that
portion of Confidential Information or other information disclosed of which is
restricted hereunder that it determines (based on advice of its legal counsel)
is legally required to be disclosed, and will exercise its commercially
reasonable efforts to obtain reliable assurance that confidential treatment
required hereby will be accorded such information; and (ii) in the case
any Party determines (based on advice of its legal counsel) that it is required
to make a disclosure permitted under this Section 14.3, other than as a
result of legal, regulatory or judicial process, such Party will use all
reasonable efforts to provide the other Party with sufficient opportunity to
object to any such disclosure or request confidential treatment thereof. The
confidentiality obligations of this Article XIV also will not apply to the
content of professional publications that have been approved for publication
pursuant to the requirements of the procedure to be established by the JRB
pursuant to Section 3.2(f).


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


60














 


14.4         Disclosure to Investors and Rating Agencies.
Notwithstanding Sections 14.2 and 14.3, each Party may disclose the financial
results of the Alliance Program to its current and potential investors
(including securities analysts) and rating agencies. The scope of such
disclosure will be of the type ordinarily disclosed by corporations in the
healthcare field to investors and rating agencies. For avoidance of doubt, each
Party may disclose Alliance Program end user sales, which sales include
end-user sales of Alliance Products plus OEM Alliance Products, and its share
of operating profit or loss, as calculated in Section 9.2, in its
quarterly earnings releases and related filings with the U.S. Securities and
Exchange Commission. The disclosing Party will provide the other Party with two
(2) business days’ prior notice of any extraordinary financial disclosure.


 


14.5         Term of Obligations. The obligations of Sections 14.1
and 14.3 will expire five (5) years after termination or expiration of
this Agreement. Within such five (5) year period, either Party may notify,
in writing, the other Party of Confidential Information considered to be a
trade secret of the notifying Party, in which event, the other Party will
comply with the terms of Sections 14.1 and 14.3 with respect to such identified
trade secret so long as it retains the characteristics of Confidential
Information.


 


ARTICLE XV



REPRESENTATIONS AND WARRANTIES


 


15.1         Representations. Each Party represents and warrants
to the other Party as of the Effective Date as follows:


 


(a) except as otherwise identified in writing and
delivered to the other Party prior to the Effective Date, the execution,
delivery to the other Party and performance by it of this Agreement and its
compliance with the terms and provisions of this Agreement do not and will not
conflict, in any material respect, with, or result in a breach of, any of the
terms or provisions of: (i) any other contractual obligations of such
Party, except as more specifically described on Exhibit 2.2 hereto; (ii) the
provisions of its charter, operating documents or bylaws; or (iii) any
order, writ, injunction or decree of any court or governmental authority
entered against it or by which it or any of its property is bound except where
such breach or conflict would not materially impact the Party’s ability to meet
its obligations hereunder;


 


(b) this Agreement is a legal and valid obligation
binding upon such Party and enforceable in accordance with its terms except as
(i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights and (ii) equitable principles of general applicability;


 


(c) such Party is a corporation duly organized,
validly existing and in good standing under the laws of the state or other
jurisdiction of incorporation or formation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof
except where failure to be in good standing would not materially impact the
Party’s ability to meet its obligations hereunder;


 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


61

















 


(d) such
Party is duly authorized, by all requisite corporate action, to execute and
deliver this Agreement and the execution, delivery and performance of this
Agreement by such Party does not require any shareholder action or approval,
and the person executing this Agreement on behalf of such Party is duly
authorized to do so by all requisite corporate action; and


 


(e) no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority is required on the part of such Party in connection with
the valid execution, delivery and performance of this Agreement, except for any
filings under any applicable securities, trade, or competition laws and except
where the failure to obtain any of the foregoing would not have a material
adverse impact on the ability of such Party to meet its obligations hereunder.


 


15.2         Represented by Counsel. Each Party represents that it
has been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the Parties agree that
no presumption will apply against the Party which drafted such terms and
provisions.


 


15.3         Disclaimer Of Warranties. EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 15.1, NEITHER PARTY MAKES ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY
ALLIANCE PRODUCTS, ALLIANCE TECHNOLOGY, ALLIANCE PATENT RIGHTS, OR ANY OF ITS
INDEPENDENT TECHNOLOGY OR INDEPENDENT PATENT RIGHTS. ADDITIONALLY, EACH PARTY
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED,
THAT THE MANUFACTURE, USE, SALE, OFFER FOR SALE, IMPORT, COPYING OR
DISTRIBUTION OF ANY ALLIANCE PRODUCT OR OTHER PRODUCT OR METHOD SUBJECT TO THIS
AGREEMENT WILL NOT INFRINGE OR MISAPPROPRIATE THE INTELLECTUAL PROPERTY RIGHTS
OF ANY THIRD PARTY. ALL TECHNOLOGY PROVIDED BY ONE PARTY TO THE OTHER PARTY
PURSUANT TO THIS AGREEMENT IS PROVIDED “AS IS.”


 


ARTICLE XVI



INDEMNIFICATION


 


16.1         By Abbott. Abbott will indemnify and hold harmless
Applera, its Affiliates and their respective directors, officers, employees and
agents (“Applera
Indemnitees”) from and against all
losses, liabilities, damages and expenses, including reasonable attorneys’ fees
and costs (collectively, “Liabilities”), incurred as a result of any claims,
demands, actions or other proceedings by any Third Party to the extent
resulting from: (a) the material breach of any representation, warranty or
covenant by Abbott under this Agreement; (b) the use by Abbott of any
Technology of Applera or Confidential Information of Applera provided hereunder
(except to the extent indemnified by Applera under clause (c) of Section 16.2);
(c) subject to Sections 11.7 and 11.8, the infringement of any
intellectual property rights of a Third Party by Abbott 


 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


62

















 


Existing Products prior to but not after
becoming Alliance Products; or (d) the negligence or willful misconduct of
Abbott. The obligation to indemnify pursuant to Section 16.1(a) will
expire three (3) years after expiration or termination of this Agreement.
The indemnity obligations pursuant to Sections 16.1(b), (c) and (d) will
continue so long as a cause of action giving rise to the right of
indemnification may be brought by the Applera Indemnitees.


 


16.2        By Applera. Applera will indemnify and hold harmless Abbott,
its Affiliates and their respective directors, officers, employees and agents (“Abbott
Indemnitees”) (For purposes of this Article XVI, the term “Indemnitee” may refer to either or both the Applera
Indemnitees and the Abbott Indemnitees, as the context may indicate) from and
against all Liabilities, incurred as a result of any claims, demands, actions
or other proceedings by any Third Party to the extent resulting from: (a) the
material breach of any representation, warranty or covenant by Applera under
this Agreement; (b) the use by Applera of any Technology of Abbott or
Confidential Information of Abbott provided hereunder (except to the extent
indemnified by Abbott under clause (c) of Section 16.1); (c) subject
to Sections 11.7 and 11.8, the infringement of any intellectual property rights
of a Third Party by Applera Existing Products prior to but not after becoming
Alliance Products; or (d) the negligence or willful misconduct of Applera.
The obligation to indemnify pursuant to Section 16.2(a) will expire
three (3) years after expiration or termination of this Agreement. The
indemnity obligations pursuant to Sections 16.2(b), (c) and (d) will
continue so long as a cause of action giving rise to the right of
indemnification may be brought by the Abbott Indemnitees.


 


16.3         Procedure. If a Party or Indemnitee intends to claim
indemnification under this Article XVI, it will promptly notify the other
Party (the “Indemnitor”) in writing of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such indemnification, and
the Indemnitor may participate in, and, to the extent the Indemnitor so
desires, assume the defense of such claim, demand, action or proceeding with
counsel mutually satisfactory to the Parties; provided, however, that an
Indemnitee will have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between the Indemnitee and any other Party
represented by such counsel in such proceeding. The obligations of this Article XVI
will not apply to amounts paid in settlement of any claim, demand, action or
other proceeding if such settlement is effected without the consent of the
Indemnitor, which consent will not be unreasonably withheld or delayed. The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any such action, if prejudicial to its ability to
defend such action, will relieve the Indemnitor of any obligation to the
Indemnitee under this Article XVI. The Indemnitee will reasonably
cooperate with the Indemnitor and its legal representatives in the
investigation of any claim, demand, action or other proceeding covered by this Article XVI.


 


16.4         Insurance. During the term of this Agreement and so
long as Alliance Products are being sold or used, each Party will maintain
comprehensive general liability, property damage, and product liability
insurance, through insurance carriers with an A.M. Best Rating of A-VII or
better rating. Such insurance coverage will be maintained with policy limits to
reasonably cover the obligations and the scope of activities contemplated
herein, and will name the other Party as an additional insured. Each Party
will, at the reasonable request of the other Party, provide the other Party
with evidence of such insurance coverage. Notwithstanding 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


63

















 


the foregoing, and only upon written notice
to Applera of its agreement to provide protection of the scope contemplated by
this Section 16.4, Abbott may self-insure against each risk identified in
this Section 16.4 in amounts not less than the amounts identified as
appropriate hereunder.


 


ARTICLE XVII



TERM AND TERMINATION


 


17.1         Expiration. This Agreement will commence on the
Effective Date and, unless earlier terminated pursuant to this Article XVII,
will continue in effect until June 24, 2017.


 


17.2         Termination of an Alliance Product or NPCD. The JRB
will have the right to terminate an Alliance Product (including a JRB-approved
NPCD project), without terminating this Agreement in its entirety. An Alliance
Product may only be terminated by the JRB at the end of a Contract Year. The
Party requesting termination of the Alliance Product by the JRB (“Requesting Party”) must provide the non-Requesting Party with at
least one Contract Half Year’s prior written notice of its request to
terminate.


 


(a) If the
terminated Alliance Product had been in the Conditionally Exclusive Areas or
the Optional Areas prior to JRB approval of the NPCD or the terminated Alliance
Product was an OEM Instrument or Alliance Instrument subject to
Section 8.4 or 8.5, the non-Requesting Party may Commercialize the
terminated Alliance Product as a Non-Alliance Product subject to the terms of
Sections 2.3(d) and 4.4(b).


 


(b) If the
terminated Alliance Product had been in the Exclusive Areas,
Section 1.26(a)-(f), prior to JRB approval of the NPCD, upon termination
of an Alliance Product under this Section 17.2, except to the extent
necessary to perform its obligations pursuant to continuing other Alliance
Products under the Alliance Program, each Party will promptly return to the
other Party (unless otherwise approved by the JRB and except for one copy for
archival purposes only) all physical embodiments of any of the other Party’s
Independent Technology, Confidential Information and Copyrighted Works that
were provided by the other Party under this Agreement and that are unique to
the terminated Alliance Product.


 


17.3         Termination by Mutual Agreement. The Parties may
agree to terminate this Agreement at any time on mutually agreed upon terms.


 


17.4         Termination by Abbott. Abbott may terminate this
Agreement by a written notice to Applera that identifies a material breach by
Applera of its material obligations hereunder, and such termination will be
effective sixty (60) days after the written notice unless the identified breach
has been cured by Applera in the interim. If the breach has been cured prior to
expiration of the sixty (60)-day cure-period, the notice of termination will be
void. In lieu of seeking termination of this Agreement, Abbott may seek
compensatory damages and/or equitable relief as a remedy of an uncured material
breach by Applera.


 


17.5         Termination by Applera. Applera may terminate this
Agreement by a written notice to Abbott that identifies a material breach by
Abbott of its material obligations hereunder, and such termination will be
effective sixty (60) days after the written notice unless the identified breach
has been cured by Abbott in the interim. If the breach has been cured prior 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


64

















 


to expiration of the sixty (60)-day
cure-period, the notice of termination will be void. In lieu of seeking
termination of this Agreement, Applera may seek compensatory damages and/or
equitable relief as a remedy of an uncured material breach by Abbott.


 


17.6         Other Termination. For calendar year 2009, if the
Revenue of the Alliance Program is [***] or the Total Operating Profit of the
Alliance Program is [***], either Party may give notice by no later than April 1,
2010 of its intent to terminate this Agreement, and upon such notice, this
Agreement will terminate on December 31, 2010. In determining Total
Operating Profit of the Alliance Program for purposes of this Section 17.6,
all non-recurring, extraordinary items having a value of more than [***] shall
be excluded from the calculation. For the purposes of this Agreement, “Total Operating Profit” means, with respect to the Alliance Program, the
combined Revenue of the Parties less the combined Allowable Expenses of the
Parties. For the purposes of this Section 17.6, Revenue includes Alliance
Products and OEM Alliance Products.


 


17.7         Rights and Obligations. The following rights and
obligations will apply on and after the Termination Date:


 


(a) On the Termination Date, the Parties will enter
into a [***] tail down period (“TDP”). During this period, each Party may continue to
sell: (i) any Alliance Products that it was a Distributor for and that was
Commercialized prior to the Termination Date; and (ii) any Alliance
Products that it was designated by the JRB as Distributor for and Regulatory
Approval was filed for prior to the Termination Date. After the expiration of
the relevant TDP, each Party may continue to sell the Alliance Products
described in Sections 17.7(a)(i) and (ii) subject, to the extent
applicable, to the license grants hereunder.


 


(b) Effective as of the Termination Date:


 


(i)    Each Party hereby grants a worldwide,
royalty-bearing, nonexclusive license, as determined in accordance with the
terms and procedures specified in Section 10.14, with no right to grant
sublicenses, under its solely-owned Alliance Patent Rights and Deliverable
Alliance Technology to the other Party to Exploit (without the right to grant
further licenses) any product or service in the Alliance Field. The license
granted herein will continue until the last to expire of the granting Party’s
Alliance Patent Rights. The license granted herein does not require any
additional disclosure of Alliance Technology to the other Party. The royalty
for licenses granted pursuant to this Section 17.7(b)(i) will be
negotiated and determined taking into account the factors identified in Section 10.14(a),
and in any event the greater of [***] percent ([***]%) of Net Sales of products
sold or services rendered pursuant to such licenses or the TDP Royalty (as
defined in Section 17.7(c)), to the extent applicable pursuant to Section 17.7(c).


 


(ii)   Each Party hereby grants a worldwide,
royalty-bearing, nonexclusive license, as determined in accordance with the
terms and procedures specified in Section 10.14, with no right to grant
sublicenses under its Independent Patent Rights to the other Party solely to
the extent necessary to Exploit (without the right to grant further licenses): (A) the
license granted in Section 17.7(b)(i); (B) Joint Alliance Patent
Rights in the Alliance Field; and (C) 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


65

















 


the
other Party’s solely-owned Alliance Patent Rights in the Alliance Field. The
royalty for licenses granted pursuant to this Section 17.7(b)(ii) will
be negotiated and determined taking into account the factors identified in
Section 10.14(a), and in any event, will not be more than [***] percent
([***]%) of such Net Sales of products sold or services rendered pursuant to
such licenses plus any pass through royalty rates due to Third Parties or the
TDP Royalty, to the extent applicable pursuant to Section 17.7(c).


 


(iii)  Each Party hereby grants to the other Party a
worldwide, royalty-bearing, nonexclusive license, as determined in accordance
with the terms and procedures specified in Section 10.14, with no right to
grant sublicenses, under the granting Party’s Independent Patent Rights and
Independent Technology to the extent, and only to the extent, such Independent
Patent Rights or Independent Technology were used by the other Party prior to
the Termination Date in Commercialization of a Non-Alliance Product of the
other Party or an Alliance Product, to Exploit (without the right to grant
further licenses) solely in the Alliance Field those products or services that
are: (A) first Commercialized by the other Party after the Termination
Date; (B) not subject to the licenses granted under Section 17.7(b)(ii);
and (C) not a Competing Product (“New Post-Termination Products”). The Parties will negotiate the applicable
royalty rate on Net Sales of such New Post-Termination Products in the Alliance
Field; provided, however, that the royalty rate will be negotiated and
determined taking into account the factors identified in Section 10.14,
and in any event not more than [***] percent ([***]%) of such Net Sales, plus
any royalties due to Third Parties for use of such Independent Patent Rights or
Independent Technology.


 


(iv)  Each Party who is a Supplier of an Alliance
Product as of the Termination Date will promptly disclose to the other Party
(to the extent not already disclosed) all Technology, including batch records
for each Alliance Product, used by the Supplier prior to the Termination Date
in manufacturing the Alliance Product. The Supplier also will, to the extent
permitted, grant to the other Party any intellectual property rights reasonably
necessary to permit the other Party to use the manufacturing Technology.


 


(c)        In
consideration for the post-termination rights granted in Sections 17.7(a) and
(b) and the value each Party contributed to the Alliance Program, each
Party will pay to the other Party a percentage on Division Margin, as defined
in Exhibit 17.7(c), of all Alliance Products, of all Post-Termination
Competing Products and, for the first twelve (12) months after
Commercialization of only those Post-Termination Acquired Products that are
subject to Section 17.7(d)(i)(A), any of which are sold or otherwise
disposed of in the Alliance Field by such Party, in the amounts and for the
periods of time as set forth in Exhibit 17.7(c) (“TDP Royalty”), unless otherwise provided to the contrary.


 


(d)        For purposes
of this Article XVII, with respect to a Party that Commercializes a
Post-Termination Acquired Product that is also a Competing Product, one of the
following scenarios will occur:


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 


66

















 


(i)    if the Party acquiring a Post-Termination
Acquired Product is also the Distributor of the competing Alliance Product and
such acquisition is closed within the first twenty - four (24) months after the
Termination Date, then the acquiring Party must provide prompt written notice
to the other Party regarding the Post-Termination Acquired Product, and the
other Party, within thirty (30) days after receipt of such notice, may elect,
by providing written notice to the acquiring Party, either:


 


     (A)     to
accept TDP Royalties on both the Post-Termination Acquired Product that is a
Competing Product and the competing Alliance Product for the first twelve (12)
months following acquisition, unless the Parties mutually agree that such
period be shorter, and then at the end of the twelve (12) month period, or such
other mutually agreed upon period, such other Party would control the competing
Alliance Product and the acquiring Party would control the Post-Termination
Acquired Product and neither product will be subject to any further TDP
Royalties; or


 


     (B)      to
immediately control the competing Alliance Product. In the event the other
Party makes an election under this Section 17.7(d)(i)(B), there will be a ninety
(90) day transition of the competing Alliance Product to the other Party,
during which time the other Party will continue to receive TDP Royalties on
sales by the Distributor of such competing Alliance Product (but will not
receive any TDP Royalties on the Post-Termination Acquired Product) and
thereafter the competing Alliance Product will not be subject to any further
TDP Royalties;


 


(ii)   if the Party acquiring a Post-Termination
Acquired Product is also the Distributor of the competing Alliance Product and
such acquisition is closed after the first twenty-four (24) months after the
Termination Date, then the acquiring Party must provide prompt written notice
to the other Party regarding the Post-Termination Acquired Product, and the
other Party will immediately control the competing Alliance Product; provided,
however, there will be a ninety (90) day transition of the competing Alliance
Product to the other Party, during which time the other Party will continue to
receive TDP Royalties on sales by the Distributor of such competing Alliance
Product (but will not receive any TDP Royalties on the Post-Termination
Acquired Product) and thereafter the competing Alliance Product will not be
subject to any further TDP Royalties; or


 


(iii)  if the Party acquiring a Post-Termination
Acquired Product is not the Distributor of the competing Alliance Product, then
the acquiring Party must provide prompt written notice to the Distributor
regarding the Post-Termination Acquired Product, and the Distributor will
immediately control the competing Alliance Product and neither product will be
subject to any further TDP Royalties.


 






[***] indicates material that has been omitted
pursuant to a request for confidential treatment. The omitted material has been
filed separately with the Securities and Exchange Commission.


 


67














 


In no event will Section 17.7 apply to Post-Termination Acquired
Products that are not Competing Products. For the avoidance of doubt, neither
Party will be subject to any obligations regarding Target Minimum Sales Price
after the Termination Date.


 


(e)        In the event
termination is pursuant to Section 17.4 or 17.5 for breach of this
Agreement, any amounts payable pursuant to Section 17.7(c) by the
Party in breach of this Agreement to the other Party will be increased by [***]
percent ([***]%) (e.g., [***] times the applicable rate of the TDP Royalty) and
any amounts payable by the other Party to the Party in breach of this Agreement
will be decreased by [***] percent ([***]%) (e.g., [***] times the applicable
rate of the TDP Royalty).


 


(f)         A Party who
was a Supplier will continue to manufacture Alliance Products for the other
Party under terms and conditions similar to those regarding the supply of such
Alliance Products during the term of this Agreement, including providing
service and support as required by Section 7.5, and will ensure that any
such Alliance Product will not be incompatible with the other Party’s
then-current Instruments or then-current Reagents, depending on whether the
Alliance Product is a Reagent or an Instrument for a period of [***] following the Termination Date; except that:


 


(i)    A Party who was a Supplier may discontinue
manufacturing any Alliance Product that is not an Instrument for any reason
following termination or expiration of this Agreement, upon providing the other
Party with thirty - six (36) months prior written notice; and


 


(ii)   A Party who was a Supplier of an Instrument
pursuant to Section 8.4 or 8.5 may, upon providing the other Party with eithteen
(18) months prior written notice, discontinue supplying such Instrument following
the Termination Date if the annual number of such Instruments purchased from
the Supplier by the other Party falls below [***] percent ([***]%) of the level
of those such Instruments purchased from the Supplier by the other Party during
the twelve (12) month period prior to sending such notice. The Supplier may
also, by eithteen (18) months prior written notice to the other Party,
discontinue providing service and parts for the Instrument whose supply to the
other Party is being discontinued.


 


(g)        A Party who
was a Supplier will use commercially reasonable efforts to deliver all final
orders during the thirty-six (36) month wind-down period for Alliance Products
under Section 17.7(f)(i) and the eighteen (18) month wind-down period
for Alliance Products under Section 17.7(f)(ii) whose supply to the
other Party is being discontinued. Upon any such discontinued supply of an
Alliance Product, the Supplier, if requested in writing by the other Party,
will license and transfer to the other Party at that other Party’s sole
expense, royalty-free (subject to any pass through) and without the right to
sublicense, all Technology, including software source code and documentation
that is reasonably necessary to allow such other Party to support its own
manufacture of the Alliance Product in the future. The Party who was a Supplier
will be under no obligation to implement Product Innovations requested by the
other Party after the Termination Date. “Product Innovation”
means a modification that would require [***]. However, the Party who was a
Supplier will be obligated to implement reasonable Product Improvements
requested 


 






[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.


 


68

















 


by and at
the expense of the other Party. “Product Improvement”
means a modification that does not require [***].


 


(h)        Subsequent to
the Termination Date: (i) the Parties will continue to share in the
revenue from licenses granted during the term of this Agreement pursuant to
Sections 10.3(d), 10.4(d) and 10.5(d) for the duration of any royalty
or other payment obligation under such licenses; and (ii) each Party will
be permitted, upon prior written notice to the other Party, to grant licenses
in the Alliance Field to its solely-owned Alliance Patent Rights and Alliance
Technology and to Joint Alliance Patent Rights and Joint Alliance Technology:
provided, however, that revenue derived from such licenses: (A) in the
Exclusive Areas will be Licensing Revenue to be shared equally by the Parties; (B) in
the Alliance Field outside the Exclusive Areas will be shared by the Parties
pursuant to Sections 10.3(d), 10.4(d) or 10.5(d), as applicable; and (C) outside
the Alliance Field will not be shared by the Parties.


 


(i)    The intention of the TDP is to provide each
Party consideration for the rights granted in this Section 17.7 and for
its relative contribution to the Alliance Program. Accordingly each Party
agrees not to take action after the Termination Date that is intended to or has
the effect of disrupting or frustrating the purposes of the TDP and Section 17.7.


 


17.8         Termination for Force Majeure. In the event performance
by a Party is excused pursuant to Section 19.9 for a continuous period of
nine (9) months, the other Party will have the option of terminating this
Agreement upon written notice to the excused Party.


 


17.9         Termination for Change of Control.


 


(a)        If a Party, a
New Party (as defined in Section 17.9(b)(v)) it creates pursuant to Section 17.9(b) or
its permitted assignee pursuant to Section 19.5, is subject to a Change of
Control (as defined in Section 17.9(b)) during the term of this Agreement,
the following provisions will apply:


 


(i)    If within nine (9) months after such
Change of Control the Change of Control has actually, materially and adversely
affected the rights or reasonably contemplated benefits of the other Party
pursuant to this Agreement (an “Actual Adverse Effect”),
then the other Party may within such nine (9) months terminate this
Agreement by giving written notice to the Party subject to the Change of
Control specifying in reasonable detail the Actual Adverse Effect upon which
such termination is based.


 


(A)      If such Change of Control does not result
in an Actual Adverse Effect within nine (9) months after such Change of
Control, but the other Party believes in good faith that the Change of Control
is likely to result in an Actual Adverse Effect within twenty-one (21) months
after such Change of Control, then the other Party may, within nine (9) months
after such Change of Control, give notice to the Party subject to the Change of
Control of its belief regarding such likely Actual Adverse Effect, specifying
in reasonable detail (1) 


 






[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.


 


69

















 


the rights and/or benefits that the
other Party believes may be affected, and (2) the reasons that the other
Party believes such rights and/or benefits may be affected.


 


(B)       If the other Party sends a notice
pursuant to Section 17.9(a)(ii)(A), this Agreement will terminate on the
date which is twenty-one (21) months after the Change of Control if, as of such
date, the Change of Control has caused an Actual Adverse Effect and such Actual
Adverse Effect occurred either (1) in the manner and for the reasons
specified in the notice to the Party which was the subject of the Change of
Control under Section 17.9(a)(ii)(A) or (2) in a manner and for
reasons reasonably related to the manner and reasons specified in such notice.


 


(ii)   Notwithstanding the foregoing Sections
17.9(a)(i) and (ii), no termination of this Agreement under this Section 17.9
will be effective with respect to any event, facts or circumstances alleged to
be a Change of Control if the Party subject to the alleged Change of Control,
within sixty (60) days after receipt of the notice from the other Party
pursuant to Section 17.9(a)(i), establishes that there was no Change of
Control.


 


(b)        For purposes
of this Agreement, “Change
of Control” will mean with respect
to either Party: (i) the acquisition by a Third Party of twenty percent
(20%) or more of the combined voting power of the then outstanding voting
securities of the Party entitled to vote generally in the election of directors
(the “Combined
Voting Power”); provided, however,
that the acquisition by a Third Party that is a Passive Investor of twenty
percent (20%) or more of the Combined Voting Power will not be deemed a Change
of Control for purposes of this Agreement unless and until such Third Party
ceases to be a Passive Investor; (ii) over any twenty-four (24) month
period, individuals who constitute the board of directors of the Party as of
the beginning of the period (the “Incumbent Board”)
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director during such period whose election or nomination
for election by the Party’s stockholders was approved in advance by a vote of
at least a majority of the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Party in which such person is named as a
nominee for director without objection to such nomination) will be, for
purposes of this Section 17.9(b)(ii), considered as though such person
were a member of the Incumbent Board; (iii) the sale or transfer of a
substantial portion of the assets of the Party that are related to that Party’s
performance pursuant to this Agreement, directly or indirectly through the sale
or transfer of ownership interests in the assets or the entity owning such
assets, other than to a Permitted Affiliate of that Party (where for these
purposes a “substantial portion” of the assets related to performance pursuant
to this Agreement will mean assets material to a Party’s performance pursuant
to this Agreement); or (iv) a merger or combination with a Third Party
resulting in a Party’s stockholders ceasing to own at least sixty percent (60%)
of the equity voting power of the merged or combined enterprise.


 


Notwithstanding the foregoing, it will not be a Change of Control if: (v) a
Party transfers or otherwise disposes of a substantial portion (as defined
above and further refined below) of the assets related to that Party’s
performance pursuant to this Agreement to an entity formed by that Party or a
Permitted Affiliate (the “New Party”)
and then spins off to its stockholders all or a portion of the equity of that
entity (a “Spin Off”); and (vi) the New Party 


 






[***] indicates material that has been
omitted pursuant to a request for confidential treatment. The omitted material
has been filed separately with the Securities and Exchange Commission.


 


70

















 


becomes a Party to this Agreement (it being
understood for purposes of this Section 17.9 that no consent of the other
Party shall be required therefor); provided, however, that so long as the Party
doing the Spin Off owns at least thirty-five percent (35%) of the issued and
outstanding equity of the New Party, from and after the consummation of the
Spin Off, a Change of Control will be deemed to have occurred if any of the
events referred to in Sections 17.9(b)(i) through (iv) above occurs
with respect to either the Party doing the Spin Off or the New Party. For the
purposes of this Section 17.9(b), it is understood that, with respect to
intellectual property rights, a New Party will be deemed to have received a “substantial
portion” of the assets related to a Party’s performance pursuant to this
Agreement if that New Party has or receives all rights owned or Controlled by
the Party doing the Spin Off as of the date of the Spin Off (whether by
assignment or exclusive or nonexclusive license) that are necessary for that
New Party’s performance pursuant to this Agreement.


 


(c)        In the event
this Agreement is terminated pursuant to this Section 17.9, each Party
will be entitled to the rights and subject to the obligations created in
Sections 17.7(a), (b), (c), (d), (f) and (g).


 


(d)        For purposes
of this Agreement, a Change of Control of CDx will be deemed a Change of
Control of Applera.


 


(e)        Notwithstanding
anything to the contrary contained in this Agreement (including Section 19.5),
in the event of a Spin Off pursuant to Section 17.9(b), the Party doing
the Spin Off, from and after the date of the Spin Off, will no longer be subject
to any obligations or have any rights under this Agreement, including any right
to use any Alliance Technology and Alliance Patent Rights; provided that the
Party doing the Spin Off is released from such obligations only if and so long
as the following conditions are met:


 


(i)    after the Spin Off, the New Party must have
all material physical assets that were used by the Party doing the Spin Off
exclusively in its performance under this Agreement as of the date of the Spin
Off;


 


(ii)   the Party doing the Spin Off will not solicit
any employee of the New Party for two (2) years after the date of the Spin
Off; provided, however, that (A) a general advertisement of job
opportunities will not be deemed solicitation, (B) this restriction will
not apply to cases where an employee of the New Party initiates employment
discussions with the Party doing the Spin Off, and (C) this restriction
will not apply to former employees of the Party doing the Spin Off who are no
longer employed by the New Party;


 


(iii)  after the Spin Off, the New Party will own or
Control all Alliance Technology and all Alliance Patent Rights that the Party
doing the Spin Off owned or Controlled prior to the Spin Off and the Party
doing the Spin Off will not retain any rights under any such Alliance Patent
Rights or Alliance Technology;


 


(iv)  after the Spin Off, the New Party and the
other Party acting as part of the Alliance Program, in accordance with the
terms of this 


 






[***] indicates material that has been omitted pursuant to a request for
confidential treatment. The omitted material has been filed separately with the
Securities and Exchange Commission.


 


71

















 


Agreement, will own all Alliance
Products that existed before or will exist after the date of the Spin Off and
the Party doing the Spin Off will have no rights to any such Alliance Product;


 


(v)   the Party doing the Spin Off, as part of the
Spin Off, will grant to the New Party a worldwide, irrevocable, nonexclusive
license in the Exclusive Areas (subject to Section 8.10) on the same terms
as immediately prior to the Spin Off under all Independent Technology and
Independent Patent Rights owned or Controlled by the Party doing the Spin Off
as of the date of the Spin Off that is sufficient to permit the New Party to
exercise all rights and perform all obligations under this Agreement after the
Spin Off, including (A) the right to grant the other Party or Third
Parties rights necessary to permit research, Development and Commercialization
of Alliance Products, and (B) the right to make, have made, use, sell,
offer for sale and import all Alliance Products of the Alliance Program before
and after the date of the Spin Off; and


 


(vi)  except as may be agreed separately by the JRB
after the Spin Off, the Party doing the Spin Off will not be entitled to any
revenue from Alliance Program activities after the date of the Spin Off or
pursuant to any post-termination provisions of Section 17.7 (it being
understood that this Section 17.9(e)(vi) will not apply to any
economic interest resulting from any retained equity interest in the New Party
by the Party doing the Spin Off).


 


17.10       Termination for Insolvency. A Party may terminate this
Agreement by providing thirty (30) days prior written notice to the other Party
in the case of any adjudication of bankruptcy or insolvency, appointment of a
receiver by a court of competent jurisdiction, assignment for the benefit of
creditors, or institution of liquidation proceedings by or against the other
Party. Neither Party will deem termination pursuant to the application of this Section 17.10
to be a breach of this Agreement by a Party.


 


17.11       Product Inserts and Labeling. Post termination or
expiration of this Agreement, each Party will be responsible for providing the
Supplier with the text and documentation regarding any applicable regulatory
compliance of all package labels, product inserts, operator manuals and
end-user training materials used in connection with the Commercialization of
such Alliance Products. All labels and labeling will prominently identify the
appropriate Party as the manufacturer of an Alliance Product.


 


17.12       Return Material. Except to the extent necessary to
perform its rights and obligations pursuant to Section 17.7, each Party
will promptly return to the other Party (unless otherwise mutually agreed in
writing by the Parties and except for one copy for archival purposes only) all
physical embodiments of any of the other Party’s Independent Technology,
Confidential Information and Copyrighted Works, that were provided by such
other Party under this Agreement.


 


17.13       Share Net Investment. During the TDP, each Party will
continue to provide to the other Party Net Investment data as specified in Section 9.2.
Equalization payments will continue to be made as specified in Section 9.3,
factored as follows: (a) [***] percent 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


72

















 


([***]%) for the [***] of the TDP; (b) [***]
percent ([***]%) for the [***] of the TDP; (c) [***] percent ([***]%) for
the [***] of the TDP; and (d) [***] percent ([***]%) for the [***] of the
TDP. At the expiration of the TDP, investment equalization held by each Party
will be returned to the other Party within sixty (60) days after such
expiration.


 


17.14       Liabilities. Termination of this Agreement will not
release either Party from any obligation or liability which may have accrued at
the time of termination, or preclude either Party from pursuing all rights at
law and in equity with respect to any default under this Agreement.
Notwithstanding the foregoing, neither Party will be liable for punitive,
exemplary or consequential damages incurred by the other Party arising out of
any default under this Agreement.


 


17.15       Post-Termination Activities.


 


(a)        Each Party
will render a post-termination report as required by Sections 4.11, 9.1, and
9.2 within the period specified in such provisions after the date of
termination or expiration of this Agreement. Each Party will be entitled to
conduct one audit in accordance with Section 9.9 within ninety (90) days
after the date of termination or expiration. To the extent surviving
termination, each Party will continue to comply with the terms of all licenses
granted to it in accordance with Section 10.14.


 


(b)        During the
relevant TDP, within sixty (60) days after the end of each fiscal calendar
quarter, each Party will furnish the other Party with a written statement, in
reasonably specific detail, stating in United States dollars for the
immediately preceding fiscal calendar quarter or part thereof, the Division
Margin as described in Section 17.7(c) and the royalties accrued
thereunder. Each such statement will be accompanied by payment of the amount
payable, if any, pursuant to Section 17.7(c).


 


(c)        During the
relevant TDP, each Party will keep records in accordance with Section 9.6
and will be entitled to an annual audit in accordance with Section 9.7
solely to the extent necessary to establish and confirm amounts payable
pursuant to Section 17.7.


 


17.16       Survival. Termination of this Agreement will be without
prejudice to any rights that may have accrued to the benefit of a Party prior
to such expiration or termination. Without limiting the foregoing, Articles I,
V, VI (except for Section 6.2), IX, XVI, and XVIII, and Sections 4.10,
4.11, 7.1, 7.4, 7.5, 10.9 through 10.13, 10.14, 11.1 through 11.3, 11.5, 11.6,
11.7, 12.6, 13.1, 14.1, 14.2, 14.3, 14.5, 17.7, 17.11 through 17.16, 19.1,
19.5, 19.7, 19.8, 19.9, 19.10, and 19.15 will survive any expiration or
termination of this Agreement to the extent necessary to effect the purposes
thereof.


 


ARTICLE XVIII



DISPUTE RESOLUTION


 


18.1         Disputes. Any dispute, controversy or claim initiated
by either Party arising out of, resulting from, or relating to this Agreement,
or the performance by either Party of its obligations under this Agreement
(other than bona fide Third Party actions or proceedings filed or instituted in
an action or proceeding by a Third Party against a Party to this Agreement), 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


73

















 


whether before or after termination of this
Agreement, unless resolved pursuant to Section 18.2 or 18.3, will be
finally resolved by binding alternative dispute resolution (“ADR”) in accordance with this Article XVIII.


 


18.2         JRB Resolution. Before initiating arbitration, the
dispute will be brought to the attention of the JRB, which will attempt in good
faith to achieve a resolution. Either Party may convene a special meeting of
the JRB for the purpose of resolving disputes.


 


18.3         Executive Officer Resolution. If the JRB is unable to
resolve such a dispute within twenty-eight (28) days after the first
presentation of such dispute to the JRB or if the dispute arises by failure of
the JRB to reach a decision as provided in Section 3.4, the Parties will
send written notice of the dispute to their respective presidents (or their
executive officer designees) of the affected subsidiaries, divisions, or
business units. The respective officers will attempt to resolve such dispute by
good faith negotiations within twenty-eight (28) days after receipt of such
notice. If the Parties fail to resolve the dispute or their representatives
fail to meet or speak directly within twenty-eight (28) days of the notice of
the dispute, then either Party may refer the matter to ADR proceeding as
provided herein.


 


18.4         Notice of ADR. To begin any such ADR, a Party will
provide written notice to the other Party of the issues to be resolved by such
ADR. Within fourteen (14) days after receipt of such notice, the other Party
may, by written notice to the Party initiating the ADR, add additional issues
to be resolved within the same ADR.


 


18.5         Designation of Neutral. Within fourteen (14) days
following receipt of the notice required by Section 18.4, the Parties will
select a mutually acceptable neutral to preside in the resolution of any
dispute in such ADR proceeding. If the Parties are unable to agree on a
mutually acceptable neutral within such period, either Party may request the
President of the CPR Institute for Dispute Resolution (the “CPR”), 366 Madison Avenue, 14th Floor, New York, New
York 10017, to select a neutral pursuant to the following procedures:


 


(a)        The CPR will
submit to the Parties a list of not less than five (5) candidates within
fourteen (14) days after receipt of the request, along with a Curriculum Vitae
for each candidate. No candidate will be a current or past employee, director,
or shareholder of either Party.


 


(b)        Such list
will include a statement of disclosure by each candidate of any circumstance
likely to affect his or her impartiality.


 


(c)        Each Party
will number the candidates in order of preference (with the number one (1) signifying
the greatest preference) and will deliver the list to the CPR within seven (7) days
following receipt of the list of candidates. If a Party believes a conflict of
interest exists regarding any of the candidates, the Party will provide a
written explanation of the conflict to the CPR along with its list showing its
order of preference for the candidates. Any Party failing to return a list of
preferences on time will be deemed to have no order of preference.


 


(d)        If the
Parties collectively have identified fewer than three (3) candidates
deemed to have conflicts, the CPR will designate as the neutral the candidate
for whom the Parties collectively have indicated the greatest preference. If a
tie results between two 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


74

















 


candidates,
the CPR may designate either candidate. If the Parties collectively have
identified three (3) or more candidates deemed to have conflicts, the CPR
will review the explanations regarding conflicts, and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate for whom
the Parties collectively have indicated the greatest preference, or (ii) issue
a new list of not less than five (5) candidates, in which case the
procedures set forth in subsections 18.5(a) through (d) will be
repeated.


 


18.6         ADR Rules. Any such ADR will be conducted under the
then current CPR Rules for Non-Administrated Arbitration by a single
neutral, except that the Parties agree that there will be no discovery. Any
such ADR will be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. Any
arbitration will be held in Denver, Colorado.


 


18.7         Hearing. No earlier than twenty-eight (28) days but
no later than sixty (60) days after the selection, the neutral will hold a
hearing to resolve each of the issues identified by the Parties.


 


18.8         Evidence for Hearing. At least seven (7) days
prior to the hearing, each Party will submit the following to the other Party
and the neutral:


 


(a)        a copy of all
exhibits on which such Party intends to rely in any oral or written
presentation to the neutral;


 


(b)        a list of any
witnesses such Party intends to call at the hearing, and a short summary of the
anticipated testimony of each witness;


 


(c)        a proposed
ruling on each issue to be resolved, together with a request for a specific
damage award or other remedy for each issue. The proposed rulings and remedies
may not contain any recitation of the facts or any legal arguments and may not
exceed one (1) page per issue; and


 


(d)        a brief in
support of such Party’s proposed rulings and remedies, provided that the brief
may not exceed twenty (20) pages. This page limitation will apply
regardless of the number of issues raised in the ADR proceeding.


 


Except as expressly set forth in Sections 18.8(a) through (d), no
discovery will be required or permitted by any means, including depositions,
interrogatories, requests for admissions, or production of documents.


 


18.9         Hearing Procedure. The hearing will be conducted on
not more than two (2) consecutive days and will be governed by the
following rules:


 


(a)        Each Party
will be entitled to five (5) hours of hearing time to present its case.
The neutral will determine whether each Party has had the five (5) hours
to which it is entitled.


 


(b)        Each Party
will be entitled, but not required, to make an opening statement, to present
regular and rebuttal testimony, documents or other evidence, to cross-examine
witnesses, and to make a closing argument. Cross-examination of witnesses will
occur 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


75

















 


immediately
after their direct testimony, and cross-examination time will be charged
against the Party conducting the cross-examination.


 


(c)        The Party
initiating the ADR will begin the hearing and, if it chooses to make an opening
statement, will address not only issues it raised but also any issues raised by
the responding Party. The responding Party, if it chooses to make an opening
statement, also will address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other evidence,
and closing arguments will proceed in the same sequence.


 


(d)        Except when
testifying, witnesses will be excluded from the hearing until closing
arguments.


 


(e)        Settlement
negotiations, including any statements made therein, will not be admissible
under any circumstances. Affidavits prepared for purposes of the ADR hearing
also will not be admissible. As to all other matters, the neutral will have
sole discretion regarding the admissibility of any evidence.


 


18.10       Post-Hearing Briefs. Within seven (7) days
following completion of the hearing, each Party may submit to the other Party
and the neutral a post-hearing brief in support of its proposed rulings and
remedies, provided that such brief may not contain or discuss any new evidence
and may not exceed ten (10) pages. This page limitation will apply
regardless of the number of issues raised in the ADR proceeding.


 


18.11       Ruling by Neutral. The neutral will rule on each
disputed issue within fourteen (14) days following completion of the hearing.
Such ruling will adopt in its entirety the proposed ruling and remedy of one of
the Parties on each disputed issue but may adopt one Party’s proposed rulings
and remedies on some issues and the other Party’s proposed rulings and remedies
on other issues. The neutral may not issue any written opinion or otherwise
explain the basis of the ruling.


 


18.12       Allocation of Expenses. The neutral will be paid a
reasonable fee plus expenses. These fees and expenses, along with the
reasonable legal fees and expenses of the prevailing Party (including all
expert witness fees and expenses), the fees and expenses of a court reporter,
and any expenses for a hearing room, will be paid as follows:


 


(a)        If the
neutral rules in favor of one Party on all disputed issues in the ADR, the
losing Party will pay one hundred percent (100%) of such fees and expenses.


 


(b)        If the neutral
rules in favor of one Party on some issues and the other Party on other
issues, the neutral will issue with the rulings a written determination as to
how such fees and expenses will be allocated between the Parties. The neutral
will allocate fees and expenses in a way that bears a reasonable relationship
to the outcome of the ADR, with the Party prevailing on more issues, or on
issues of greater value or gravity, recovering a relatively larger share of its
legal fees and expenses.


 


18.13       Binding Result. The rulings of the neutral and the
allocation of fees and expenses will be binding, non-reviewable, and
non-appealable, and may be entered as a final 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


76

















 


judgment in any court having jurisdiction.
All submissions to the ADR will be Confidential Information of the submitting
Party and the results of the ADR will be Confidential Information of each
Party.


 


18.14       Statute of Limitations. In no event will a demand for
ADR be made after the date when institution of a legal or equitable proceeding
based upon such claim, dispute or other matter in question would be barred by
the applicable statute of limitations.


 


ARTICLE XIX



MISCELLANEOUS


 


19.1         Governing Law. This Agreement will be governed by,
interpreted and construed in accordance with the laws of Delaware, without
regard to the conflict of laws principles thereof.


 


19.2         Publicity. Each Party may distribute the initial
press release. Other press releases or other similar public communication by
either Party relating to this Agreement, will be subject to Article XIV
and must be approved in advance by the other Party, which approval will not be
unreasonably withheld or delayed, except for those communications required by
applicable law (which will be provided to the other Party as soon as
practicable after the release or communication thereof). Neither disclosures of
information for which consent has previously been obtained, nor information of
a similar nature to that which has been previously disclosed publicly with
respect to this Agreement, will require advance approval.


 


19.3         No Implied Licenses. Except to the extent and only to
the extent necessary to enable a Party to conduct its obligations under this
Agreement, only licenses and rights granted expressly herein will be of legal
force and effect and no license or other right will be created hereunder by
implication, estoppel or otherwise.


 


19.4         Waiver. No waiver by a Party hereto of any breach or
default of any of the covenants or agreements herein set forth will be deemed a
waiver as to any subsequent and/or similar breach unless the waiver is in a
writing signed by authorized representatives of both Parties.


 


19.5         Assignment. Except as permitted by Section 17.9,
neither Party may assign any right or delegate any obligation hereunder, except
as otherwise expressly provided in this Agreement, other than to a Permitted
Affiliate, without the prior written consent of the other Party, such consent
not to be withheld if the proposed assignment or delegation would not be
reasonably expected to materially diminish such Party’s rights and reasonably
contemplated benefits under this Agreement (any refusal to provide consent on
this basis must be in writing and must include a reasonably detailed
explanation of the basis for the refusal). Any permitted assignee will assume
all obligations of its assignor under this Agreement and a Change of Control in
the assignee will be deemed to be a Change of Control in the assignor for
purposes of Section 17.9. Any purported assignment in violation of this Section 19.5
will be void. The terms and conditions of this Agreement will be binding upon
and inure to the benefit of the successors and permitted assigns of the
Parties.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


77

















 


19.6         Independent Contractors. The relationship of the
Parties hereto is that of independent contractors. The Parties hereto are not
deemed to be agents, partners or joint ventures of the others for any purpose
as a result of this Agreement or the transactions contemplated thereby.


 


19.7         Further Actions. Each Party agrees to: (a) execute,
acknowledge and deliver such further documents and instruments; (b) grant
such rights; and (c) perform all such other acts as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.


 


19.8         Notices. All requests and notices required or
permitted to be given to the Parties hereto will be given in writing, will
expressly reference the section(s) of this Agreement to which they
pertain, and will be delivered to the other Party, effective on receipt, at the
appropriate address as set forth below or to such other addresses as may be
designated in writing by the Parties from time to time during the term of this
Agreement.


 


If to Applera and/or CDx:


 


Celera Diagnostics LLC

1401 Harbor Bay Parkway

Alameda, California 94502

Attn: President


 


with a copy to:


 


Applera Corporation

301 Merritt 7

Norwalk, Connecticut 06851

Attn: Senior Vice President and General Counsel


 


If to Abbott:


 


Abbott Molecular Inc.

1300 East Touhy Avenue

Des Plaines, Illinois 60018

Attn: President


 


with a copy to:


 


Abbott Laboratories

100 Abbott Park Road, D-322/AP6D

Abbott Park, Illinois 60064-6049

Attn: Divisional Vice President, Domestic Legal Operations


 


19.9         Force Majeure. Nonperformance of a Party (other than
for the payment of money) will be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, acts of terrorism,
governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control and not 


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


78

















 


caused by the negligence, intentional conduct
or misconduct of the nonperforming Party; provided, however, that the
nonperforming Party will use commercially reasonable efforts to resume
performance as soon as reasonably practicable.


 


19.10       No Consequential Damages. IN NO EVENT WILL A PARTY BE
LIABLE FOR SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER,
INCLUDING, WITHOUT LIMITATION, LOST PROFITS ARISING FROM OR RELATING TO ANY
BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN
THIS SECTION 19.10 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION
RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER ARTICLE XVI ABOVE.


 


19.11       Third Party Rights. Notwithstanding anything to the
contrary in this Agreement, the grant of rights by each Party under this
Agreement will be subject to and limited in all respects by the terms of
agreements with Third Parties by which such Party acquired any Control of
intellectual property rights, and all rights granted under this Agreement will
be limited to the extent of such Party’s Control.


 


19.12       Complete Agreement. This Agreement, together with these
exhibits, constitutes the entire agreement between the Parties regarding the
subject matter hereof, and all prior representations, understandings and
agreements regarding the subject matter hereof, either written or oral,
expressed or implied, are superseded and will be and are of no effect;
provided, however, rights and obligations under the Prior Alliance Agreement
will continue to the extent they are not inconsistent with this Agreement.
Nothing in this Agreement is intended to affect or modify the terms of or
relationship established by the Instrument Supply Agreement dated September 24,
2004 or the Source Code License dated September 24, 2004, both between
Abbott and Applera, through the Applied Biosystems Group. Amendment Nos. 2 and
2a to the Prior Alliance Agreement survive the execution of this Agreement as
further amended by the Parties and set forth in Exhibit 19.12, attached
hereto.


 


19.13       Counterparts. This Agreement may be executed in
counterparts, each of which will be deemed to be an original and together will
be deemed to be one and the same agreement.


 


19.14       Headings. The captions to the several articles and
sections hereof are not a part of this Agreement, but are included merely for
convenience of reference only and are not intended to affect its meaning or
interpretation.


 


19.15       Severability. Should any part or provision of this
Agreement be held unenforceable or in conflict with the law of any
jurisdiction, the validity of the remaining parts or provisions will not be
af­fected by such holding. In the event a part or provision of this Agreement
held unenforceable or in conflict with law affects consideration to either Party,
the Parties agree to negotiate in good faith amendment of such part or
provision in a manner consistent with the intention of the Parties as expressed
in this Agreement.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


79

















 


19.16       Amendment. This Agreement may be amended or modified
only by a written document signed by authorized representatives of both
Parties.


 


19.17       Controlling Document. In the event there is a conflict
between the terms or conditions of this Agreement and the terms and conditions
of Exhibit 8.2, the terms and conditions of this Agreement will control.


 


IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.


 


	
  APPLERA
  CORPORATION

  	
  ABBOTT
  LABORATORIES

  
	
  By:

  	
  /s/
  Kathy Ordoñez

  	
   

  	
  By:

  	
  /s/
  Edward Michael

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
  (Signature)

  
	
  Kathy
  Ordoñez

  	
  Edward
  Michael

  
	
  (Printed
  Name)

  	
  (Printed
  Name)

  
	
  Senior
  Vice President

  	
  Corporate
  Vice President

  
	
  (Title)

  	
  (Title)

  
	
  January 9,
  2006

  	
  1/9/06

  
	
  Date

  	
  Date

  
						



 


 


	
  CELERA DIAGNOSTICS, LLC.

  
	
  By:

  	
  /s/ Kathy Ordoñez

  	
   

  
	
   

  	
  (Signature)

  



Kathy Ordoñez


(Printed Name)


President


(Title)


January 9, 2006


Date


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 


80














 


EXHIBIT
1.13


 


“FINANCIAL TERMS”


 


Allowable Expenses will be determined in accordance
with the Alliance Accounting Policies and will have the meaning as set forth in
this Exhibit 1.13, as may be amended by the JRB from time to time.  Notwithstanding anything in this Agreement to
the contrary, Allowable Expenses will exclude any deductions from Revenues.


 


“Allowable Expenses”
means, with respect to the Alliance Program, the sum of the following internal
and external expenses of a Party to the extent incurred for research,
development, manufacturing, registration or Commercialization activities,
calculated in accordance with GAAP, consistently applied: (a) Cost of
Goods Sold; (b) Development Costs (c) Marketing and Advertising
Expenses; (d) Selling and Promotion Expenses; (e) amounts paid to
Third Parties in connection with product liability and related claims regarding
an Alliance Product (together with legal fees and costs of defending such
claims), other than specific amounts for which one Party owes the other Party a
duty of indemnification under Article XVI (excluding Section 16.1(c) and
Section 16.2(c)) of this Agreement; (f) recall expenses for such
Alliance Product; (g) General and Administrative Expenses; (h) patent
related expenses to the extent allowable under Article XI; and (i) book
value of capital assets sold.  Allowable
Expenses will not include fines and other monetary penalties imposed by a
Regulatory Authority or competent judicial authority for violations of
applicable laws and regulations attributable to only one Party.


 


“Allowable Expense for
Patents” is defined, with respect to the Alliance Program, in Article XI.


 


“Cost of Goods Sold”
means, with respect to an Alliance Product or the service or support of an
Alliance Product, the actual direct and indirect costs incurred by Distributor
or Supplier identifiable to the Alliance Program in support of the procurement,
production, warehousing, shipment, or after-market service and support
(including manufacturing variances, obsolescence, inventory reserves,
non-conforming production runs, warranty, field service, training and complaint
handling) of the finished or intermediate form of such Alliance Product (a) invoiced
by Distributor to customers who are not Affiliates (or are Affiliates but are end
uses of such Alliance Product), or (b) invoiced by Supplier to
Distributor, as determined in accordance with United States generally accepted
accounting principles, consistently applied. 
Direct costs will include direct labor (including fringe benefits),
direct materials (including taxes and duties), third-Party contract costs,
royalties due to Third Parties for intellectual property rights from a Party to
the extent applicable to Alliance Products, handling, transportation and
insurance, the cost of facilities utilized for the storage and distribution of
such Alliance Product, and customs duties, surcharges and other governmental
charges incurred in exporting or importing such Alliance Product in final or
intermediate form to such customers or Distributor.  Indirect costs identifiable to the production
effort will include, but not be limited to, items treated as “manufacturing
overhead” such as indirect labor and materials, fringe benefits, occupancy
costs (including electricity, water, waste disposal, other utilities and
property taxes), depreciation of property, plant and equipment used in the
manufacturing process and other costs allocable to the manufacturing process.


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


“Development Costs”
means, with respect to the Alliance Program, the actual direct and indirect
costs incurred by a Party identifiable to the Alliance Program in support of: (a) the
research, development, and clinical studies required to support development and
registration for an Alliance Product (other than amounts paid to the other
Party); (b) the manufacture and validation of pilot and scale up lots; and
(c) the application for regulatory approval (if any is required),
including software for system operation and/or data analysis, calculated in
accordance with GAAP, consistently applied. 
The actual costs will include the direct and indirect costs of
conducting research, development, and clinical activities with respect to the
Alliance Program.  Direct costs will
include direct labor (including fringe benefits), direct materials (including
taxes and duties) and Third-Party contract costs required to acquire samples,
conduct research, and perform development and regulatory activities related to
the Alliance Program.  Indirect costs
identifiable to the research and development effort will include, but not be limited
to, items treated as “research and development overhead” such as indirect labor
and materials, fringe benefits, occupancy costs (including electricity, water,
waste disposal, other utilities and property taxes), depreciation of property,
plant and equipment used in the research and development process and other
costs identifiable to the Alliance Program in support of the research and
development process.


 


“Marketing and Advertising
Expenses” means, with respect to the Alliance Program, the actual
direct and indirect costs identifiable to the Alliance Program in support of
the marketing and advertising of an Alliance Product or the Alliance Program or
activities in support of the selection and management of the product portfolio
of the Alliance Program, calculated in accordance with GAAP, consistently
applied.  Direct internal costs will
include, but not be limited to, salaries and related fringe benefits of
marketing personnel directly involved with the advertising and promotion of an
Alliance Product.  Direct external costs
will include, but not be limited to, the following: (a) advertisements
appearing in journals, newspapers, magazines and other media (including direct
mail and electronic media); (b) publication and medical information
activities; (c) seminars, medical meetings and conventions; (d) promotional
literature, visual aids and other selling and training materials; (e) market
research; (f) symposia, advisory panels and opinion leader development
activities; (g) patient assistance program activities; (h) other
Alliance Product-related public relations and communication activities; and (i) expenses
of post-registration marketing oriented studies.  Indirect internal costs identifiable to the
marketing and advertising effort will include, without limitation, indirect
labor, fringe benefits and office related expenses, including occupancy.


 


“Operating Profit”
means, with respect to the Alliance Program, the combined, before tax, Revenue
of the Parties less Allowable Expenses of the Parties, as defined in Exhibit 1.13
and in the form substantially the same as the form set forth in Exhibit 9.1.


 


“Selling and Promotion
Expenses” means, with respect to the Alliance Program, the actual
direct and indirect costs identifiable to the Alliance Program necessary for
the selling, promotion or support of an Alliance Product, calculated in
accordance with GAAP, consistently applied. 
Direct internal costs will include costs identifiable to the Alliance
Program for the sales and/or promotion of an Alliance Product including, but
not limited to, salaries and related fringe benefits of the field-based sales
organizations and professional services personnel and their related
transportation and travel expenses, training, sales meetings, call detail
reporting, sales personnel monitoring and tracking, computer hardware and
software (to the extent not 


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


capitalized as capital equipment), and expenses
associated with selling to the managed care market.  Indirect internal costs identifiable to the
selling and promotion effort will include, but not be limited to, indirect
labor, fringe benefits and office expenses, including occupancy.


 


“General and Administrative
Expenses” will be charged to the Alliance Program as follows: (a) Applera
will charge expenses based on the specific build of the Applera budget as
approved by the JRB; and (b) Abbott will charge the greater of: (i) the
amount charged by Applera; or (ii) four percent (4%) of sales, less the
amount charged by Applera.


 


Exclusions.  Items
specifically excluded from Allowable Expenses are as follows:


 


(a)                                  For Applera and
Abbott – corporate charges for Executive Management and any upfront and
milestone license payments, including such payments for in-licensed technology
or amortization thereof, subject to Sections 11.7 and 11.8, except for
milestone payments to be made by: (i) Abbott to (A) [***] and (B) [***];
and (ii) Applera to (A) [***]; and (B) [***], or unless approved
by the JRB.


 


(b)                                 Any overruns of
the JRB-approved budget for the separate periods of July 1 through December 31
and January 1 through June 30 in Development Costs, Marketing and
Advertising Expenses, General and Administrative Expenses, and Selling and
Promotion Expenses.  Cost of Goods Sold
will be held to the budget, subject to variance for sales volumes.


 


(c)                                  Any other
exclusion specified in this Agreement.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
1.22


 


CARVEOUTS


 


1.                                       All existing
and future products using In Situ Hybridization (including Fluorescence In Situ
Hybridization) for detection of a deletion, translocation, inversion,
duplication or amplification of a target human chromosomal segment comprising
at least 2 kilobases (whether or not contiguous) in cells having substantially
intact cellular or nuclear membranes. 
For avoidance of doubt, any oligonucleotide probe in such products need
not hybridize to each and every base in the target human chromosomal segment,
but only to sufficient bases to identify the deletion, translocation, inversion,
duplication or amplification of such segment.


 


2.                                       The field of
Diabetes and Obesity.


 


For purposes of this Agreement, “Diabetes” means
both “Type 1 Diabetes” and “Type 2 Diabetes”, wherein:


 


“Type 1 Diabetes” means insulin-dependent diabetes mellitus
as diagnosed according to criteria published in the Report of the Expert
Committee on the Diagnosis and Classification of Diabetes Mellitus (DIABETES
CARE, Vol. 24, Supp. 1, January 2001) whereby fasting plasma glucose level
is greater than or equal to 126 milligrams per deciliter and for which the
primary cause is beta-cell destruction; and


 


“Type 2 Diabetes” means non-insulin-dependent diabetes
mellitus as diagnosed according to criteria published in the Report of the
Expert Committee on the Diagnosis and Classification of Diabetes Mellitus
(Diabetes Care, Vol. 24, Supp. 1, January 2001) whereby fasting plasma
glucose level is greater than or equal to 126 milligrams per deciliter.


 


For
purposes of this Agreement, “Obesity” means
the condition of excess body fat (adipose tissue), in accordance with the
National Institutes of Health Federal Obesity Clinical Guidelines for adults,
whereby body mass index calculated by dividing body mass in kilograms by height
in meters squared is equal to or greater than twenty-five (25) (for purposes of
this definition, Obesity shall include an overweight condition in accordance
with the above guidelines and comparable obesity and overweight condition in
children).


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
1.62(a)


 


NPCD - Development


 


EXAMPLE


 


	
  New
  Product Concept Document

  	
  Prepared
  by: John M. Robinson

  
	
   

  	
  Date:
  January 3, 2006

  
	
   

  	
  JRB
  Due Date: March 3, 2006

  



 


Description:  RealTime [***] assay development – [***]


 


Intended Use:  The RealTime [***] assay is an in vitro polymerase chain reaction assay for the detection
of [***].  The assays is intended to be
used on the m2000 System, but can also utilize manual sample preparation
procedures.


 


Indications for Use:  [***] is a leading cause of [***], and
transmission to the [***] can be prevented through the use of prophylactic
antibiotics during [***].  Currently
[***] are screened at [***] by culture to determine their [***] status,
following established [***] guidelines. 
Studies have demonstrated significant improvement in detection and
turnaround time using molecular techniques. 
These specimens would be batched for testing.  Ultimately, point of care testing will expand
this testing to individuals without [***] care at the time of [***].


 


Type of Project:


 


o  Discovery                                                        x  New Product

o  Feasibility                                                        o  Product Improvement

o  Technology Development

x  Assay Development

o  Platform Development

o  Software Development


 


Discovery Project Study Design:


 


Diagnostic:
N/A


Potential
Therapeutic Use if any: N/A


 


Customer Requirements:  1) Assay sensitivity for [***] greater than
or equal to enriched culture; 2) Provide [***] transport system; 3) Automation
on the m2000 System for improved turn around time, with a manual sample
preparation option.


 


Market Description:  The current practice to screen [***] by
culture to determine their [***] status is well established as clinical practice.  Molecular methods are being established for
the detection of this [***] to replace culture, which has been shown to have
poor sensitivity.  Specimens are batched
for testing in current practice, but the market may move to point of care
testing at the time of [***] as this technology develops.  This assay is a logical extension of the
m2000 System [***] menu, particularly for [***] customers.


 


Price Target:  $[***]/test


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


Competition (including other
markers): [***].


 


Product Introduction Strategy:  [***].


 


5-Year Sales Forecast:  (2007: [***]); 2008: [***]; 2009: [***];
2010: [***]; 2011: [***]; 2012: [***]


 


Intellectual Property status
(including third party patents of interest):




FTO on sequences to be determined (low risk); all
other FTO in place.


 


Launch Schedule: [***]


 


                                [***]


 


                                [***]


 


Estimated Project Cost:


 


	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  	
   

  	
   

  
	
  R&D $

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  Other $

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  External $

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  



 


Regulatory Plan:  [***].


 


Manufacturing Plan:  Assay reagents: Des Plaines.  Sample transport system: MML.  Sample prep reagents: Promega. m2000 System:
Tecan and AB.


 


Risk Assessment:  Product is late to the market and NAT
reimbursement may not be sufficient.


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


EXHIBIT
1.62 (b)


 


NPCD – Feasibility


 


	
  New Product Concept Document

  	
  Prepared
  by:

  
	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
  JRB
  Due Date:

  



 


Description:


 


Intended Use:


 


Indications for Use:


 


Type of Project: Feasibility


 


Discovery Project Study Design:


 


Diagnostic:


Potential
Therapeutic Use if any:


 


Customer Requirements:


 


Market Description:


 


Price Target:


 


Competition (including other markers):


 


Product Introduction Strategy:


 


5-Year Sales Forecast:


 


Intellectual Property status (including third party patents
of interest):


 


Launch Schedule:


 


Estimated Project Cost:


 


Regulatory Plan:


 


Manufacturing Plan:


 


Risk Assessment:


 






[***] indicates material
that has been omitted pursuant to a request for confidential treatment. The
omitted material has been filed separately with the Securities and Exchange
Commission.


 

















 


EXHIBIT
1.95


 


Work Plan


 


EXAMPLE


 


RealTime [***] Work Plan January 3,
2006


 


Objective:


 


Launch a realtime PCR assay for the m2000 System
that detects [***].


 


Status:


 


Initiation of feasibility phase


 


Product Components:


 


· [***]


· [***]


· [***]


· [***]


· [***]


· [***]


 


Project Deliverables:


 


·Feasibility/Design Input
Phase:

·finalize
primer/probe sequence/format

·reagent kit DOE
and calibrator/control plan

·confirm system
protocols and preliminary parameters

·codes
qualified, ddocs initiated

·preliminary
performance verification

·D&D Plan,
CRD/PDR, Risk Analysis


 


·Design Verification/Design
Transfer Phase:

·verification
studies complete

·manufacturing
specifications documented

·stability
testing in progress

·test/process
validations complete

·validation lots
approved

·clinical
software ready

·clinical sites
and documentation ready


 


·Pre-Market Review

·validation
summary

·[***] labeling
complete

·[***]
submission complete

·FLTS approved

·launch software
ready

·[***]
submission strategy


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


Clinical and Regulatory Plan:


 


Technical File for [***] and the [***] completed
with internal data. [***].


 


Resources and Project Team:


 


The project is headed by the project manager, who
also serves as the technical leader during the feasibility phase.




·R&D team: scientists
responsible for the assay design and optimization of the
amplification/detection reagents, development of the controls, verification and
validation of the assay design, reagent stability, documentation and validation
of the manufacturing processes and specifications, design control
documentation, and submissions.

·sTPD:
scientists responsible for the Design Transfer activities.

·Quality:
Quality Unit scientist responsible for Design Control Documentation and
compliance maintenance.

·Regulatory:
representative for regulatory plan and submission review.

·Clinical
research: includes clinical research associates, statistics support, and
medical writing, responsible for clinical plan, protocol and brochure,
execution of clinical studies, summary of data, labels and submission writing.

·Systems
software and integration: responsible to complete software and assay file
development/validation, data reduction methods, and system Risk Analysis.

·Other team
participants funded separately: marketing, TPD, Focus Factory, Planning, QA,
doc control, safety, CSC


 


Project cost:


 


2006: $[***]

2007: $[***]


 


Project Concerns/Risks:


 


·sequence FTO


 


Open Issues:


 


·none


 


Key Milestone Dates (LBE):


 


·Feasibility/Design Input
Review: [***]

·Design
Verification/Design Transfer Review: [***]

·Pre-Market
Review ([***] Launch): [***]

·[***] Launch:
[***]


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 





















 


EXHIBIT
2.2


 


EXCEPTIONS TO EXCLUSIVITY


 


Abbott Agreements


 


[***]


 


Applera Agreements


 


[***]


 


[***]


 


[***]


 


[***]






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


EXHIBIT
2.2(a)


 


EXCEPTIONS TO EXHIBIT 2.2


 


Abbott Agreements


 


[***]


 






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


EXHIBIT
2.6


 


OEM ALLIANCE PRODUCTS

(not within the Exclusive Areas)


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]


 


[***]






[***]
indicates material that has been omitted pursuant to a request for confidential
treatment. The omitted material has been filed separately with the Securities
and Exchange Commission.


 

















 


EXHIBIT
4.1


 


Approved NPCDs


 


NPCDs Proposed by Abbott


 


·                  m-2000 hardware/software and reagents


·                  HIV


·                  HCV


·                  [***]


·                  HBV (ASR and CE only)


·                  HCV GT


 


NPCDs Proposed by Applera


 


·                  Fragile X


·                  DVT


·                  ViroSeq update – 2.7


·                  CF IVD and CF Luminex


·                  HCV GT (CE)


·                  MI Risk


·                  Breast Cancer (Metastasis and ER Status)


 


·                  Note: [***]


 


Final NPCDs for all approved NPCDs will be included
as attachments to this Exhibit.


 






[***] indicates material that has been omitted
pursuant to a request for confidential treatment. The omitted material has been
filed separately with the Securities and Exchange Commission.


 














 


EXHIBIT
4.7(a)(i)


 


Initial R&D Plan


 


Three
Year R&D Plan Projections    12-27-05


 


	
  Project

  	
   

  	
  Q1 06

  	
   

  	
  Q2 06

  	
   

  	
  Q3 06

  	
   

  	
  Q4 06

  	
   

  	
  Q1/2 07

  	
   

  	
  Q3/4 07

  	
   

  	
  Q1/2 08

  	
   

  	
  Q3/4 08

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Administration

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT HCV US

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT HBV

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT HCV GT

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT Assay Support

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  System Support

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  m2000
  System [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***] Assays

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  m2000 System [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Luminex Automation

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT Assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Luminex assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT Assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Luminex assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  RT Assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Luminex assay

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  without [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  half year totals

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  Without [***] the
  Calendar Quarter totals are:

  
	
  [***] [***] [***] [***]

  
	
  First Half year 2006 =
  [***]

  
	
  Second half year 2006 =
  [***]

  
	
  Note that this includes
  [***] in the second half year

  



 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


	
   

  	
   

  	
   

  	
  1st Half

  CY06

  	
   

  	
  2nd Half

  CY06

  	
   

  	
  1st Half

  CY07

  	
   

  	
  2nd Half

  CY07

  	
   

  	
  1st Half

  CY08

  	
   

  	
  2nd Half

  CY08

  	
   

  
	
  1

  	
  HCV GT

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  2

  	
  CF IVD

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  3

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  4

  	
  Luminex Beads

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  5

  	
  DVT-5

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  6

  	
  Fragile X [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  7

  	
  ViroSeq 2.7

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  8

  	
  ViroSeq upgrades

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  9

  	
  Platform Core Software

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  10

  	
  Myocardial Infarct
  Research[***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
  Breast Cancer [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  Research[***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
  Mgmt, Product [***],
  Scientific Services

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  15

  	
  SQS 3.0

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  12

  	
  Regulatory &
  QA

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  16

  	
  New Projects

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
  Total CDx Expense

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [***]Funding

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
  Delta

  	
   

  	
  $

  	
  ([***]

  	
  )

  	
  $

  	
  ([***]

  	
  )

  	
  $

  	
  ([***]

  	
  )

  	
  $

  	
  ([***]

  	
  )

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  	
   

  



 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT 4.7(a)(ii)


 


Initial R&D Plan Budget


 


The
agreed budget for the first six (6) months of 2006 will not exceed the
following:


 


Celera Diagnostics       $[***]                               Abbott:       $[***]


 


The
target budget for the second half of 2006 will be:


 


Celera Diagnostics       $[***]                               Abbott:       $[***]


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
9.2


 


Cost and Revenue Statement


 


Strategic
Alliance Agreement

Applera Corporation, Celera Diagnostics, and Abbott Laboratories

Cost and Revenue Statement

For the Quarter Ended xx/xx/xxxx

($000’s)


 


	
   

  	
   

  	
  Last Forecast

  (as of xx/xx/xx)

  	
   

  	
  Actuals

  	
   

  	
  Variance

  Fav/(Unfav)

  	
   

  
	
  Sales

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Product Cost

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Service
  Cost

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other
  Manufacturing Cost

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manufacturing
  Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other
  Charges to Cost of Goods Sold:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Manufacturing Management

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Expense

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Royalties

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Freight and Distribution

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Other Charges to Cost of Goods Sold

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Distribution
  Margin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Research
  and Development

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S,G&A

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marketing / Advertising

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Selling

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Administration

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allowable Expense for Patents

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  S,G&A

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Operating
  Profit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
9.2


 


Sales


 


Strategic
Alliance Agreement

Applera Corporation, Celera Diagnostics, and Abbott Laboratories

Alliance Sales

For the Quarter Ended xx/xx/xxxx

($000’s)


 


	
   

  	
   

  	
  Last Forecast

  (as of xx/xx/xx)

  	
   

  	
  Actuals

  	
   

  	
  Variance

  Fav/(Unfav)

  	
   

  
	
  Product
  Segments

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product AA1 (e.g., m2000RT Product A)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product AA2 (e.g., m2000RT Product B)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product AA3 (e.g., m2000RT Product C)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Product Family A (e.g., Total m2000RT)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product BB1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product BB2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product BB3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Product Family B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Product Family C (e.g., [***])

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Product Segment Sales

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






* Product Segments & Families as defined by
the JRB.


 


[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


Exhibit 9.3


 


Net Investment Statement


 


Strategic
Alliance Agreement

Applera Corporation, Celera Diagnostics, and Abbott Laboratories

Net Investment Statement

As of xx/xx/xxxx

($000’s)


 


	
   

  	
   

  	
  Actuals

  	
   

  
	
  Receivables

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prepaid Expenses

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Inventory

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Service Equipment

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Past Payments to the Alliance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Investment in Alliance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Payables

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Other Liabilities

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Past Amounts Received from the Alliance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Alliance Liabilities

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Net
  Investment in Alliance

  	
   

  	
   

  	
   

  



 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
17.7(c)


 


POST-TERMINATION ROYALTIES


 


(% royalty on division
margin as provided in Section 17.7(c))


 


(12-month periods after
Termination Date)


 


	
  Year of TDP

  	
   

  	
  Royalty

  	
   

  
	
  1

  	
   

  	
  [***]

  	
  %

  
	
  2

  	
   

  	
  [***]

  	
  %

  
	
  3

  	
   

  	
  [***]

  	
  %

  
	
  4

  	
   

  	
  [***]

  	
  %

  
	
  5

  	
   

  	
  [***]

  	
  %

  
	
  6 and thereafter

  	
   

  	
  [***]

  	
  %

  



 


Division Margin will mean
actual Distribution Margin for the particular TDP year less (i) Marketing
and Advertising Expenses, Selling and Promotion Expenses, Allowable Expenses
for Patents, and General and Administrative Expenses and (ii) Development
Costs, with each stated as a fixed percentage, reflecting the ratio of the
actual expenses in clauses (i) and (ii), respectively, incurred in the
Alliance Program during the final consecutive twelve (12) month period prior to
the Termination Date, to the actual Sales Revenue and Service Revenue earned
during that same period, except that the year-over-year growth in Development
Costs that exceed ten percent (10%) will not be considered Allowable Expenses.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


EXHIBIT
19.12


 


FURTHER AMENDMENTS TO AMENDMENT NOS. 2 AND 2A


 


1.                                       Revised Profit
Split.  For the period starting on January 1,
2006 and ending on June 30, 2007 (“Settlement Period”)
with respect to Applera Existing Products as defined in Article 1.17 of
the Agreement, and any Alliance Product resulting from JRB-approved submissions
by Applera, including, without limitation, [***] (“Settlement
Products”), the Parties will exclude from the equalization payment
calculation pursuant to Articles 9.4 (a) and (b) of the Agreement the
amounts used in determining the Settlement Profit (defined below) of the
Settlement Products.  Rather, the Parties
acknowledge and agree that solely during the Settlement Period the equalization
payment calculation pursuant to Articles 9.4 (a) and (b) of the
Agreement for the Settlement Profit from the manufacture and sale of Settlement
Products will be conducted in the following manner:


 


(a)                                  During the calendar year January 2006 through December 2006,
Applera will receive Settlement Profit for the Settlement Products until the
total Settlement Profit in a given calendar quarter, when added to the
Settlement Profit from all previous quarters, if any, within the calendar year,
equals the year-to-date (“YTD”) amount
shown in the table below (such quarterly amount being the “Profit
Target” for that quarter).  However,
such Profit Target will be reduced in each calendar quarter by an amount equal
to the percent of [***] Profit shown below (such Profit to be calculated in the
same manner as Settlement Profit) in that calendar quarter, if any, for Abbott’s
RealTime [***] product or any JRB-approved variant thereof (“Modified Profit Target”). 
It is understood that the Modified Profit Target cannot be less than
zero.


 


(b)                                 During the calendar periods from January 2007 through March 2007,
and April 2007 through June 2007, the Modified Profit Target will
equal 50% of the sum of the quarterly Modified Profit Target for the period July 2006
through December 2006.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


	
   

  	
   

  	
  2006

  	
   

  	
  2007

  	
   

  
	
  $ Thousands

  	
   

  	
  Q1 YTD

  	
   

  	
  Q2 YTD

  	
   

  	
  Q3 YTD

  	
   

  	
  Q4 YTD

  	
   

  	
  Q1

  	
   

  	
  Q2 YTD

  	
   

  
	
  Profit Target

  (cumulative)

  	
   

  	
  $[***]

  	
   

  	
  $[***]

  	
   

  	
  $[***]

  	
   

  	
  $[***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***] Profit

  (% deducted of

  actual)

  	
   

  	
  [***]%

  	
   

  	
  [***]% Q1

  [***]% Q2

  	
   

  	
  [***]% Q1

  [***]% Q2

  [***]% Q3

  	
   

  	
  [***]% Q1

  [***]% Q2

  [***]% Q3

  [***]% Q4

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Modified Profit

  Target

  	
   

  	
  $[***] less

  [***]
  Profit

  	
   

  	
  $[***] less

  less [***]

  Profit

  	
   

  	
  $[***] less

  [***]
  Profit

  	
   

  	
  $[***] less

  [***]
  Profit

  	
   

  	
  [***]% of

  Q4 2006

  Modified

  Profit Target

  

  Less

  

  Q2 2006

  Modified

  Profit Target

  	
   

  	
  [***]% of

  Q4 2006

  Modified

  Profit

  Target

  

  Less

  

  Q2 2006

  Modified

  Profit

  Target

  	
   

  



 


(c)                                  Any Revenues and Allowable Expenses attributable to
Settlement Products recognized in a calendar year in excess of the Profit
Target or the Modified Profit Target, as the case may be, for that calendar
quarter will be treated in accordance with Articles 9.4 (a) and (b).


 


(d)                                 Any shortfall between the Profit Target or Modified Profit
Target, as the case may be, and the Settlement Profit for calendar year 2006
and separately for the calendar period from January 2007 through June 2007,
will not carryover into subsequent periods nor will Abbott be obligated, at the
end of calendar year 2006 or June 2007, to pay Applera for such shortfall,
if any.


 


2.                                       Settlement
Profit.  “Settlement Profit” will be
Revenue from the sale or distribution of Settlement Products by a Party to a
Third Party that is recognized in a calendar quarter during the Settlement
Period, less the sum of (a) Cost of Goods Sold of such Settlement Products
recognized in that calendar year, (b) three percent (3%) of such Revenue
in lieu of freight and distribution, and (c) fifteen percent (15%) of such
Revenue in lieu of Marketing and Advertising Expenses and Selling and
Promotional Expenses attributable to such Settlement Products.  For the purpose of calculating the settlement
profit, Celera Diagnostics, LLC will classify costs related to field service
support activities as COGS rather than Selling and Marketing Expenses.


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.


 

















 


3.                                       At the
expiration of the Settlement Period, the Parties will no longer follow the
revised profit split described above, but rather will follow the profit split
set forth in Articles 9.4 (a) and (b).


 






[***] indicates material that has been omitted pursuant to a request
for confidential treatment. The omitted material has been filed separately with
the Securities and Exchange Commission.