exv10w79



 





	 	 
	 	***Text Omitted and Filed
Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

And 240.24b-2





Exhibit 10.79


MODIFIED BLOOD SCREENING INSTRUMENT -

eSAS 2 ADDENDUM




AMENDING




AGREEMENT ENTERED INTO AS OF JUNE 11, 1998




BY AND BETWEEN




GEN-PROBE INCORPORATED, A DELAWARE CORPORATION




AND




CHIRON CORPORATION




effective as of January 1, 2002




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	1. Definitions
	 	 	2	 
	1.1 Agreement
	 	 	2	 
	1.2 Binder
	 	 	2	 
	1.3 Budget
	 	 	2	 
	1.4 eSAS 2 Instrument
	 	 	2	 
	1.5 eSAS 2 Development Costs
	 	 	2	 
	1.6 eSAS 2 Development Program
	 	 	2	 
	1.7 eSAS 2 Addendum Term
	 	 	2	 
	1.8 FTE Labor Rate
	 	 	2	 
	1.9 Material Modification
	 	 	2	 
	1.10 Non-material Modification
	 	 	2	 
	1.11 Product Requirements Document
	 	 	3	 
	1.12 Resource Plan
	 	 	3	 
	1.13 Software Requirements Specifications
	 	 	3	 
	1.14 Technical Plan
	 	 	3	 
	1.15 Timeline
	 	 	3	 
	2. eSAS 2 Development Program
	 	 	4	 
	2.1 Objective
	 	 	4	 
	2.2 General Conduct of Development
	 	 	4	 
	2.3 No Liability if Commercially Reasonable Efforts Are Expended
	 	 	4	 
	2.4 Project Management
	 	 	4	 
	2.4.1 Principles of Project Management
	 	 	4	 
	2.4.2 Project Manager
	 	 	5	 
	2.4.3 Project Manager’s Responsibilities
	 	 	5	 
	2.4.4 Project Leaders
	 	 	6	 
	2.4.5 Reports
	 	 	6	 
	2.4.6 Meetings of the Supervisory Board
	 	 	6	 
	2.5 Development Responsibilities
	 	 	6	 
	2.5.1 Principal Responsibility; General Statement
	 	 	6	 
	2.5.2 Regulatory/Licensure
	 	 	7	 
	2.5.3 Project Leader Disagreements
	 	 	7	 
	3. Modifications
	 	 	7	 
	3.1 eSAS 2 Development Program Definition
	 	 	7	 
	3.1.1 [...***...] Modules
	 	 	7	 
	3.1.2 [...***...] Three Modules
	 	 	8	 
	3.2 Modifications
	 	 	8	 
	3.2.1 Request for Modifications
	 	 	8	 
	3.2.2 Monthly Progress Reports
	 	 	9	 
	3.3 Material Modifications
	 	 	9	 
	3.3.1 Request for Material Modifications
	 	 	9	 
	3.3.2 Initial Analysis of Impact of Proposed Material Modification
	 	 	9	 
	3.3.3 Preparation of Modified eSAS 2 Development Program
	 	 	9	 
	3.3.4 Acceptance of Modified eSAS 2 Development Program
	 	 	10	 
	3.3.5 Effective Date of Modified eSAS 2 Development Program
	 	 	10	 
	3.4 Notice of Significant Changes
	 	 	11	 
	4. Changes to eSAS 2 Instrument after Completion Date
	 	 	11	 






***Confidential Treatment Requested




-i-









 








TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	5. eSAS 2 Development Costs
	 	 	11	 
	5.1 Chiron to pay Development Costs
	 	 	11	 
	5.2 Definition and Calculation of eSAS 2 Development Costs
	 	 	12	 
	5.2.1 eSAS 2 Development Costs; FTE Labor Rate
	 	 	12	 
	5.2.2 Comparison with Resource Plan
	 	 	12	 
	5.2.3 Methodology
	 	 	12	 
	5.3 Payment of eSAS 2 Development Costs
	 	 	12	 
	5.3.1 Accrued eSAS 2 Development Costs
	 	 	13	 
	5.3.2 Monthly Notices; Payments
	 	 	13	 
	5.3.3 Invoices
	 	 	13	 
	5.4 Reimbursement of eSAS 2 Development Costs
	 	 	13	 
	6. Manufacturing and Commercialization
	 	 	13	 
	6.1 eSAS 2 Instrument Manufacturing Costs
	 	 	13	 
	6.2 Rights to Manufacture and Sell
	 	 	13	 
	6.2.1 Blood Screening Field
	 	 	13	 
	6.2.2 Clinical Diagnostic Field
	 	 	14	 
	6.2.3 Right to Acquire All Rights to Manufacture and Commercialize
	 	 	14	 
	6.3 Consideration on eSAS 2 Instrument Sales
	 	 	14	 
	6.4 Authorization Letter
	 	 	17	 
	7. Ownership; License Grant
	 	 	17	 
	7.1 Ownership
	 	 	17	 
	7.2 License Grant
	 	 	17	 
	7.3 Roche Immunity
	 	 	17	 
	8. Addendum Effective Date; Term; Termination
	 	 	18	 
	8.1 Term of eSAS 2 Addendum
	 	 	18	 
	8.2 Termination for Breach
	 	 	18	 
	8.2.1 Default
	 	 	18	 
	8.2.2 Right to Cure Event of Default
	 	 	18	 
	8.2.3 Effect of Termination for Breach
	 	 	19	 
	8.3 Termination by Chiron
	 	 	19	 
	8.4 Continuance of eSAS 2 Development Program following Termination
	 	 	19	 
	8.4.1 Election
	 	 	19	 
	8.4.2 Funding and Conduct of Development
	 	 	19	 
	8.4.3 Reimbursement of Development Costs
	 	 	19	 
	8.4.4 Control of the Program upon Unilateral Funding
	 	 	20	 
	8.4.5 Rights under Agreement
	 	 	20	 
	9. Escalation
	 	 	20	 
	9.1 Escalation Process
	 	 	20	 
	9.2 Remedies in Event of Default
	 	 	20	 
	9.3 Survival
	 	 	21	 
	10. No Other Amendment
	 	 	21	 
	11. Counterparts
	 	 	21	 






 









 






MODIFIED BLOOD SCREENING INSTRUMENT -

eSAS 2 ADDENDUM




     This Modified Blood Screening Instrument — eSAS 2 Addendum (“eSAS 2 Addendum”) is entered
into, effective as of January 1, 2002 (“Addendum Effective Date”) pursuant to and amending that
certain Agreement entered into as of June 11, 1998 (“Agreement”) by and between Gen-Probe
Incorporated, a Delaware corporation (“Gen-Probe”) with a principal place of business at 10210
Genetic Center Drive, San Diego CA 92121, and Chiron Corporation, a Delaware corporation (“Chiron;”
Chiron and Gen-Probe each is individually referred to as “Party” and collectively are referred to
as the “Parties”) with a place of business at 4560 Horton Street, Emeryville, CA 94608.



Recitals




     A. The Parties entered into the Agreement as of June 11, 1998. The Agreement was amended by
the following: (i) June 11, 1998 Supplemental letter agreement, (ii) June 26, 1998 Addendum to
Collaboration Agreement, (iii) June 30, 1998 Supplemental letter agreement, (iv) June 30, 1998
Consent, (v) December 7, 1999 Amendment to Collaboration Agreement, (vi) February 1, 2000 Amendment
No. 2 to Collaboration Agreement, (vii) June 7, 2001 Supplemental agreement no. 1 (Customer
training and Support), (viii) October 30, 2001 Confidentiality and Joint Interest Agreement, (ix)
April 1, 2002 Amendment No. 3 (warehousing and shipping), (x) the Short Form Agreement dated
November 16, 2001 and the Definitive Written Settlement Agreement dated December 5, 2001, (xi) the
Future Blood Screening Assay — Ultrio Addendum dated as of January 1, 2002 (the “Ultrio Development
Addendum”), (xii) March 5, 2003 Amendment No. 4 (Milestone for Ultrio on Tigris); (xiii) the Future
Blood Screening Assay — WNV Addendum dated as of June 1, 2003 (the “Ultrio Development Addendum”)
and (xiv) January 1, 2004 Amendment No. 5 (Applicable Purchase Price).



     B. In the Agreement, the Parties agreed to discuss, during the term thereof, the selection and
establishment of one or more Development Programs for one or more Blood Screening Instruments.



     C. The Parties have discussed the proposed development of an eSAS 2 Instrument system,
consisting of the following multiple modules: (i) a front end pipettor; (ii) an automated reagent
addition station; (iii) an automated target capture bay; (iv) an automated incubation module; and
(v) a data management to track sample and system interactions to meet customer demands of
throughput and automation required for pooled donor screening by NAT.



     D. The Parties intend that the development of each module in the eSAS 2 Instrument system will
provide improved automation or replacement of current aging or obsolete instrument components with
newer technology, all without [...***...] the assay sensitivity or specificity; subject to all the
terms and conditions of this eSAS 2 Addendum, the Parties will agree that each such module within
the eSAS 2 Instrument system will be a modification to a “Blood Screening Instrument”, as provided
in Section 3.3.7 of the Agreement.



     E. By this eSAS 2 Addendum, the Parties desire to provide for the development of the eSAS 2
Instrument by Chiron pursuant to the Agreement, as clarified and amended by the terms and
conditions more particularly described in this eSAS 2 Addendum.



***Confidential Treatment Requested




2









 








Agreement




     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth in
this eSAS 2 Addendum, the Parties agree as follows:


1. Definitions. All capitalized terms used but not defined in this eSAS 2 Addendum shall
have the meanings set forth in the Agreement.




     1.1 Agreement means the Agreement (as defined in the Preamble of this eSAS 2
Addendum), as amended by the agreements referred to in Recital A of this eSAS 2 Addendum and as may
be subsequently amended.



     1.2 Binder means that certain three-ring binder, with one or more volumes, entitled
“eSAS 2 Development Program for the eSAS 2 Instrument (Gen-Probe/Chiron eSAS 2 Development
Addendum, dated as of ___, 2004) Binder,” in which certain documents, materials or other items
incorporated into this eSAS 2 Addendum by reference are kept. The original Binder and an
additional volume of the Binder, labeled “Amendments to eSAS 2 Development Program” and reflecting
any changes, modifications or amendments to the Binder, are maintained by and located at the
premises of Chiron. A copy of the original Binder, and a copy of the additional volume of the
Binder, each signed by both Parties, shall be maintained by and located at the premises of
Gen-Probe.



     1.3 Budget means the budgeted eSAS 2 Development Costs of the eSAS 2 Development
Program. The Budget shall include the estimated cost of the eSAS 2 Development Program on a
monthly basis through the end of the eSAS 2 Development Program. A preliminary Budget is attached
hereto as Schedule 1.3. The Budget may be amended from time to time in accordance with the
provisions of Section 3 below.



     1.4 eSAS 2 Instrument is defined on Schedule 1.4.



     1.5 eSAS 2 Development Costs means, with respect to this eSAS 2 Addendum only, the
development costs defined in Section 5 hereof.



     1.6 eSAS 2 Development Program means the development program for the development of
the eSAS 2 Instrument system under the terms of this eSAS 2 Addendum, an outline of which is set
forth in Schedule 1.6 hereto and as such development program for each module of the eSAS 2
Instrument system is described in the Binder, and consisting of (i) the Product Requirements
Documents, (ii) the Software Requirements Specifications, (iii) the Technical Plan, (iv) the
Resource Plan included within the Technical Plan, and (v) the Budget.



     1.7 eSAS 2 Addendum Term is defined in Section 8.1.



     1.8 FTE Labor Rate is defined in Section 5.2.1.



     1.9 Fully Burdened Manufacturing Costs is defined in Section 6.1.1.



     1.10 Material Modification means a change or amendment to the eSAS 2 Development
Program that materially affects the requirements set forth in the then-current Product Requirements
Document, Software Requirement Specifications, Technical Plan, Resource Plan or Budget, including
without limitation any modification that could significantly degrade the assay sensitivity or
specificity all as further defined in Section 3.3.



3









 





     1.11 Non-material Modification means a change or amendment to the eSAS 2 Development
Program other than a Material Modification. Agreement among the Project Management that a
modification is a “Non-material Modification” hereunder as described in Section 3.2 below shall be
conclusive.



     1.12 Product Requirements Document (or “PRD”) means the specifications for each module
within the eSAS 2 Instrument system, each of which includes as a component thereof the applicable
Software Requirements Specifications. The initial Product Requirements Document for two of the
five (5) modules described in Schedule 1.4 are attached hereto as Schedule 1.12-A and Schedule
1.12-B. The PRD for each of the remaining three (3) modules described in Schedule 1.4 will be
developed, and each PRD after agreement between the parties may be amended from time to time in
accordance with the provisions of Section 3 below. Each PRD, as it may be developed and/or amended
from time to time, shall be retained in the Binder under the heading “Product Requirements Document
(PRD, Revision ___, dated xx/xx/xx).”



     1.13 Resource Plan means the description of (i) a Party’s personnel to be allocated to
the eSAS 2 Development Program, including the name of the specific personnel or the qualification
or grade of unidentified personnel, and dedicated amount of time and periods for the commitment of
such personnel required for the eSAS 2 Development Program, and (ii) equipment, tools, software, or
other special items, the purchase, license or leasing of which is specifically required for use by
such personnel to support the eSAS 2 Development Program. The initial Resource Plan is attached
hereto as Schedule 1.13. The Resource Plan may be amended from time to time in accordance with the
provisions of Section 3 below. The Resource Plan, as it may be amended from time to time, shall be
retained in the Binder under the heading “Resource Plan.”



     1.14 Software Requirements Specifications (or “SRS”) means the specifications for the
software component of the eSAS 2 Development Program. The initial Software Requirements
Specifications for two of the five (5) modules described in Schedule 1.4 are attached hereto as
Schedule 1.14-A and Schedule 1.14-B. The SRS for each of the remaining three (3) modules described
in Schedule 1.4 will be developed, and each SRS after agreement between the parties may be amended
from time to time in accordance with the provisions of Section 3 below. The SRS, as it may be
developed and/or amended from time to time, shall be retained in the Binder under the heading
“Software Requirements Specifications (SRS, Revision ___, dated xx/xx/xx).”



     1.15 Technical Plan means the statement of work prepared for the development of the
eSAS 2 Instrument, including the responsibilities to be performed by each Party, the
responsibilities to be performed jointly, the schedule for performance of those responsibilities,
an overall development timeline and a Resource Plan. The initial Technical Plan is attached hereto
as Schedule 1.15. The Technical Plan may be amended from time to time in accordance with the
provisions of Section 3 below. The Technical Plan, as it may be amended from time to time, shall
be retained in the Binder under the heading “Technical Plan, Revision ___, dated xx/xx/xx.”



     1.16 Third Party OEM means any third party original equipment manufacturer supplying
any component of the eSAS 2 Instrument, including without limitation pipettors, automated reagent
addition stations, automated target capture bays or automated incubation modules.



     1.17 Timeline means the overall development timeline included within the Technical
Plan.



4









 





2. eSAS 2 Development Program.




     2.1 Objective. Subject to the terms of the Agreement, as amended by this eSAS 2
Addendum, the Parties each shall conduct their respective obligations under the eSAS 2 Development
Program as established in accordance with the terms hereof, and shall apply for and endeavor to
obtain such regulatory approvals as necessary or appropriate to make and sell the eSAS 2 Instrument
in the Territory for use in the Blood Screening Field.



     2.2 General Conduct of Development. The Parties, using Commercially Reasonable
Efforts, shall conduct their respective obligations under the eSAS 2 Development Program in
compliance in all material respects with all requirements of applicable laws and regulations and
all applicable good laboratory, clinical and manufacturing practices. In addition, the Parties
each shall proceed diligently with their respective obligations under the eSAS 2 Development
Program and shall use their respective Commercially Reasonable Efforts to achieve the objectives of
the eSAS 2 Development Program efficiently and expeditiously. The Parties each shall allocate such
personnel, equipment, facilities and other resources to the eSAS 2 Development Program to carry out
their respective obligations and to accomplish the objectives thereof, all as is more particularly
described in the eSAS 2 Development Program, as amended from time to time during the term of this
eSAS 2 Addendum, in accordance with the provisions of Section 3. Each Party shall have the right
to consult with the other Party regarding the eSAS 2 Development Program and the obligation to
reasonably consider the other Party’s advice.



     2.3 No Liability if Commercially Reasonable Efforts Are Expended. Neither Party will
be in breach of its obligations to the other hereunder and such Party shall be deemed to have
exercised Commercially Reasonable Efforts, so long as such Party shall have committed the resources
described in the eSAS 2 Development Program. The payment of eSAS 2 Development Costs between the
Parties shall be due and payable without respect to the achievement of any particular deliverable
specified in the eSAS 2 Development Program.



     2.4 Project Management.



          2.4.1 Principles of Project Management. The Parties agree that in the process of
exercising their responsibilities, the Project Management (consisting of the Project Manager and
Project Leaders, as set forth herein) should have routine access to such information needed to
assess progress under and costs of the eSAS 2 Development Program. Specifically, the Parties agree
that the Project Leaders shall be invited to participate in all team meetings, and will have access
to team meeting minutes, timecards and other expense records, except to the extent the Project
Leader for the Party assigned principal responsibility under Section 2.5.3 of this eSAS 2 Addendum
for an activity determines in its reasonable discretion that any such meetings or minutes contain
confidential, proprietary information of the responsible Party. In
such cases, the Project Manager shall (i) determine whether the Project Leader for the Party
not having primary responsibility for the activity can attend all or a portion of such meeting,
(ii) provide a copy of the meeting minutes to the Project Leader not having primary responsibility
for the activity with such confidential, proprietary information redacted, and (iii) to the extent
that such minutes had proprietary or confidential information redacted, inform the Project Leader
not having primary responsibility of the general nature of any decisions made at such meeting which
affect the PRD, SRS, Timeline or Budget; provided, however that the Project Manager may only redact
information comprising Chiron intellectual property and know how or confidential business issues.
Project Leaders will have access to non-confidential and non-proprietary information of the other
Party necessary to perform their responsibilities under the eSAS 2 Development Program, including
those listed under 2.4.4. Project Leaders will inform and coordinate all activities, including
meetings with




5









 







personnel involved in the performance of the eSAS 2 Development Program, with the
Project Manager. The primary point of contact for the eSAS 2 Development Program at Chiron will be
Chiron’s Project Manager, the primary point of contact at Gen-Probe will be Gen-Probe’s Project
Leader. In order to maintain an efficient and orderly development the Parties will communicate
through the primary points of contact as much as possible when requesting information concerning
the progress of the eSAS 2 Development Program. Confidentiality will be maintained in accordance
with Section 8.1 of the Agreement, and disclosure of any information under this Section 2.4.1 shall
be governed by that certain Confidentiality and Joint Interest Agreement, by and between the
Parties, dated as of October 30, 2001.




          2.4.2 Project Manager. The project associated with development and commercial sale of
the eSAS 2 Instrument will be managed under a Project Manager, the responsibilities of which are
described in Section 2.4.3. A Project Manager appointed by Chiron will manage the eSAS 2
Development Program. As of the Addendum Effective Date, the Project Manager shall be [...***...].
Any change by Chiron of the Project Manager must be approved by the Supervisory Board, which
approval shall not be unreasonably withheld.




          2.4.3 Project Manager’s Responsibilities. The Project Manager shall be responsible
for the following activities, together with such other activities as the Parties may agree:




               (a) Managing all matters relating to the eSAS 2 Development Program under this eSAS 2
Addendum, including each Party’s respective responsibilities and contributions and receiving
reports from the Project Leaders;



               (b) Providing written progress reports monthly to the Parties and presenting status reports to
the Supervisory Board in accordance with Section 2.4.6 below;



               (c) Submitting and receiving the reports, materials and documents required to be delivered
under this eSAS 2 Addendum;



               (d) Overseeing the process of proposing, and submitting to the Parties, any proposed
modifications to the Product Requirements Document, Software Requirement Specifications, Technical
Plan, Resource Plan or Budget, and in the event the Parties cannot agree, presenting the same to
the Supervisory Board in an objective and neutral manner;



               (e) Arranging any meetings to be held between the Parties and participating, to the extent the
Project Manager deems appropriate, in meetings of the Project Leaders;



               (f) Maintaining, for record keeping purposes, a log book or notes containing summaries and
dates of all material communications and deliveries between the Parties of which the Project
Manager is aware, consistent with the Parties’ protocol for such sharing of confidential
information set forth in that certain Confidentiality and Joint Interest Agreement, by and between
the Parties, dated as of October 30, 2001;



               (g) Implementing appropriate practices and procedures to manage the progress under this eSAS 2
Addendum;



               (h) Fostering good communication between the Parties. It is intended by the Parties that both
Parties share, through reports from the Project Leaders to the Project Manager, in the information
concerning the progress made in the eSAS 2 Development Program and the cause of any delays. It is
expected that the Project Leaders will make recommendations to the Project Manager for



***Confidential Treatment Requested




6









 







preferred paths when substantial delays are identified and multiple paths forward are identified.
Understanding that it takes time for information to flow up the chain of command, the Project
Manager will inform Gen-Probe of delays and progress on resolution as soon as it becomes available
to him; and




               (i) It is understood that both companies hold proprietary trade secret know-how and processes
regarding their respective technologies that are not necessarily shared as part of this Agreement.
On occasion it may occur that a full understanding of difficulties in the progress of development
may require a detailed understanding of this proprietary know-how and processes. Each Party will
endeavor to appraise the other of the outcomes and consequences of these difficulties, while
protecting the confidentiality of the information.



          2.4.4 Project Leaders. Gen-Probe and Chiron will each appoint a project leader (each
a “Project Leader”) who is responsible for (a) assembling project teams for his or her respective
Party and (b) completing project responsibilities allocated to such Party in Section 2.5. For the
purposes of completing the eSAS 2 Development Program, these Project Leaders will report to the
Project Manager. The Project Leader employed by a Party shall be responsible for reporting to the
employing Party whether he or she believes the other Party has proceeded diligently with its stated
obligations under the eSAS 2 Development Program, has allocated sufficient personnel, equipment,
facilities and other resources to achieve the objectives of the eSAS 2 Development Program and has
exercised Commercially Reasonable Efforts to achieve its objectives efficiently and expeditiously.




          2.4.5 Reports. In addition to the records and reports required to be kept by the
Parties under Section 3.5 of the Agreement, each Project Leader will provide to the Project
Manager, in writing, a progress report delivered on or before the 15th day of each calendar month
during the term of the eSAS 2 Development Program. These reports will cover technical progress as
well as financial expenditures. The Project Manager may rely on any such reports for the purpose
of making his or her progress report to the Supervisory Board described in Section 2.4.6 below.




          2.4.6 Meetings of the Supervisory Board. The Supervisory Board shall meet from time to
time during the term of this eSAS 2 Addendum, but not less frequently than once each calendar
quarter during the term hereof. Not less frequently than quarterly, a regular agenda item at the
regularly scheduled Supervisory Board meeting shall be to receive a report from the Project Manager
and conduct a review of the eSAS 2 Development
Program to assess progress of the development and the potential for commercialization of the
eSAS 2 Instrument.




     2.5 Development Responsibilities.



          2.5.1 Principal Responsibility; General Statement. The Parties’ intention is the smooth and
efficient conduct of development, and the Parties desire by this Section 2.5 to provide guiding
principles by which the responsible Party may make day-to-day decisions and by which the approval
process more particularly described in Section 3 below shall be governed. The Parties intend that
the eSAS 2 Instrument development will be conducted primarily and principally by [...***...] with
consultation and discussion from [...***...], under the supervision of the Project Manager, as
follows: (i) [...***...] will have principal responsibility under this eSAS 2 Addendum for the
[...***...] of the eSAS 2 Instrument, [...***...] and [...***...] for [...***...] and
[...***...],[...***...] with [...***...] for [...***...] and [...***...] of the eSAS 2 Instruments,
[...***...] of [...***...] and [...***...] of [...***...], and [...***...] of [...***...] and
[...***...], and (ii) [...***...] will assist in the development and approval of [...***...] of
each instrument, provide [...***...] to its [...***...] (meaning [...***...] from the [...***...]
and [...***...] as applicable) to facilitate development of a [...***...], provide [...***...] to
its [...***...],




***Confidential Treatment Requested




7









 







provide [...***...] including [...***...] to [...***...] required for the
development under the confidentiality terms of the Agreement, and will have principal
responsibility under this eSAS 2 Addendum for the [...***...] of the [...***...] and [...***...],
for the development of the [...***...] for [...***...] specifically related to the [...***...] and
[...***...], and for the formulation of the [...***...] for [...***...] and for each [...***...]
with [...***...] to the [...***...] for [...***...]. The Parties shall jointly agree upon all
validation activities and software development per PRD and SRS. The Party to whom principal
responsibility is allocated in this Section 2.5 has the power to make day-to-day decisions
regarding matters within the area of such responsibility, consistent with the overall eSAS 2
Development Program. The Parties’ obligations with respect to certain warehousing and shipping are
subject to Amendment No. 3.




          2.5.2 Regulatory/Licensure. Gen-Probe and Chiron have entered into that certain
Definitive Written Settlement Agreement, dated December 5, 2001. Section 2(a) of the Definitive
Written Settlement Agreement incorporates by reference the provisions of the Short Form Agreement
(attached as Exhibit A to the Definitive Written Settlement Agreement). The Parties hereby
expressly incorporate the provisions of Section F.6 of the Short Form Agreement between the
Parties, dated November 16, 2001, into this eSAS 2 Addendum, as amended by the memorandum from
[...***...] to [...***...] setting forth the parties’ agreed upon regulatory strategy, attached
hereto as Schedule 2.5.2. Pursuant and subject to Section F.6 of the Short Form Agreement, as
amended by Schedule 2.5.2, Gen-Probe agrees to use its best efforts to (i) regularly review blood
screening regulatory/licensure strategy and management of regulatory submissions with Chiron, (ii)
provide draft copies of all written regulatory submissions to Chiron at least five working days
prior to the proposed date of their submission, (iii) make available the appropriate personnel for
a discussion of any advice or recommendations of Chiron on any regulatory submissions and (iv)
reasonably consider such advice or recommendations, but Gen-Probe is not required to accept such
advice and recommendations; in each case as reasonably attainable by Gen-Probe. All disagreements
on regulatory/licensure issues shall be addressed by the Supervisory Board and, if necessary, by
implementation of the escalation procedure described in Article 13 of the Agreement, excluding
arbitration. For issues that cannot be resolved through such procedures, Gen-Probe’s Chief
Executive Officer shall have the right to make a final decision. Gen-Probe shall have no
obligation under this eSAS 2 Addendum to apply for or endeavor to obtain regulatory approval for any eSAS 2 Instrument
(or any module within the eSAS 2 Instrument system) that fails to meets the criteria set forth in
the applicable PRD and SRS. Costs of all regulatory and licensing activities (including Gen-Probe
internal eSAS 2 Development Costs) will be included in the eSAS 2 Development Costs and paid for by
Chiron.




          2.5.3 Project Leader Disagreements. It is recognized that the Project Leaders may
disagree on approaches. Even though one Party has the principal responsibility for development in
the functional area described in Section 2.5, disagreements that cannot be resolved by Project
Management may be brought to the Supervisory Board. However, work will proceed in accordance with
the choice of the principally responsible Party, while being discussed at the Supervisory Board.
In the event that the Parties do not agree at the Supervisory Board level, the Party with principal
responsibility may continue to proceed per their best judgment. If a disagreement arises in a
functional area for which responsibility is shared and resolution cannot be achieved at the
Supervisory Board, except as to Regulatory/Licensure Strategy that shall be governed by Section
2.5.2 above, work shall be suspended in such functional area until a resolution is reached through
Article 13 of the Agreement, including arbitration.




3. Modifications.




     3.1 eSAS 2 Development Program Definition.



***Confidential Treatment Requested




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          3.1.1 [...***...] Modules. The Parties have prepared and agreed upon an eSAS 2
Development Program, as described in the Binder, for [...***...] modules in the eSAS2 Instrument
system, and will need to prepare and agree upon an eSAS 2 Development Program for the remaining
[...***...] modules in the eSAS2 Instrument system. The eSAS 2 Development Program, as described
in the Binder with respect to [...***...] modules and as prepared and agreed upon with respect to
the remaining [...***...] modules, will govern the rights and responsibilities of the Parties until
changed in accordance with the provisions hereof. The Parties recognize and anticipate that
additional clarification and refinement of the eSAS 2 Development Program, including changes, if
any, necessary to reflect accepted delays in, or increases in costs of, development, will be
required as development proceeds. The Parties intend that this eSAS 2 Addendum establish a process
by which the Parties will amend the eSAS 2 Development Program, in accordance with the terms
described in this Section 3.




          3.1.2 [...***...] Modules. Either Party may propose an eSAS 2 Development
Program for each of the remaining [...***...] modules in the eSAS2 Instrument system. Each such
proposal shall describe (i) the Product Requirements Documents, (ii) the Software Requirements
Specifications, (iii) the Technical Plan, (iv) the Resource Plan included within the Technical
Plan, and (v) the Budget for the development of one module in the eSAS 2 Instrument system. The
Project Manager, and under his or her supervision, the Project Leaders and their respective teams,
will review each such proposed eSAS 2 Development Program. Upon agreement between the Project
Leaders, then such approved eSAS 2 Development Program shall be included within the Binder. If the
Project Leaders are unable to agree upon a proposed eSAS 2 Development Program, then the
Supervisory Board shall review the proposed eSAS 2 Development Program and make a determination
with respect to whether such proposed eSAS 2 Development Program shall be approved by the parties.
If the Supervisory Board has met and consulted without resolution, then the parties shall implement
the escalation procedure described in Article 13 of the Agreement to resolve such impasse.




     3.2
Modifications.




          3.2.1
Request for Modifications.




               (a) Either party may propose either Material or Non-material Modifications to any part of the
eSAS 2 Development Program, including the Product Requirements Document (and the Software
Requirements Specifications that form part thereof), the Resource Plan (and the Technical Plan that
forms part thereof), and the Budget, and including without limitation a request for a change to the
FTE Labor Rate, as defined in Section 5.2.1, from time to time, as follows:



                    (i) Chiron may propose and implement such Modifications from time to time in its sole
discretion. However, unless Gen-Probe shall have approved a Material Modification using the
process more particularly set forth in this Section 3, Chiron shall have no right to reimbursement
of Development Costs for such Material Modification and Gen-Probe shall have no obligation to
pursue regulatory approval or otherwise pursue development efforts with respect thereto.



                    (ii) Gen-Probe may propose such Modifications from time to time. The process applicable to
approval and implementation of any such proposed modifications shall be as described in this
Section 3.



               (b) Changes, modifications or improvements to the eSAS 2 Instrument, after the Completion Date,
are governed by the provisions of Section 4 below.



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               (c) The Project Manager, and under his or her supervision, the Project Leaders and their
respective teams, will review any proposed modification to the eSAS 2 Development Program; if the
two Project Leaders mutually agree that a particular modification is a Material Modification or is
a Non-material Modification, then such determination shall be conclusive. If the Project Leaders
are unable to agree whether a particular requested modification is a Material or Non-material
Modification, then the Supervisory Board shall review the requested change and make a determination
with respect to whether such requested modification is a Material or Non-material Modification. If
the Supervisory Board has met and consulted without resolution, then either Party may, in its
discretion, determine that the Parties have reached an impasse with respect thereto and implement
the escalation procedure described in Article 13 of the Agreement to resolve such impasse.



               (d) If the two Project Leaders mutually agree that a particular modification is a Non-material
Modification and both Project Leaders mutually agree to implement such Non-material Modification,
no additional approval shall be needed from the parties to implement such Non-material
Modification.



          3.2.2 Monthly Progress Reports. Unless changes to the specifications described in
Section 3.2.1 constitute a Material Modification, any Non-Material Modifications shall be reported
in the monthly summary progress reports pursuant to Section 2.4.4 and shall not be subject to the
approval process described in Section 3.3.




     3.3 Material Modifications.



          3.3.1 Request for Material Modifications. In the event that one Party desires to
request a Material Modification to the
eSAS 2 Development Program from time to time during the term hereof, such Party (the
“requesting party”) shall submit to the other Party such request in writing, in sufficient detail
to enable the other Party (the “receiving party”) to evaluate the request. Without limiting the
foregoing, the requesting party shall prepare a revised draft version of the Budget, reflecting any
changes necessary to fully implement the requested Material Modification to the eSAS 2 Development
Program.




          3.3.2 Initial Analysis of Impact of Proposed Material Modification. Promptly upon
receipt of such request, but in any event not more than [...***...] thereafter, the Parties
shall conduct a preliminary analysis of the impact that the requested Material Modification would
have, including without limitation the impact any such proposed Material Modification would have on
the Budget and/or the PRD and/or SRS, and shall meet and conduct an analysis of the impact of such
Material Modification on the economics of marketing and sale of the eSAS 2 Instrument. Should
either Party conclude, in its reasonable discretion, that the potential for [...***...] is
[...***...] and [...***...] by any proposed change to the eSAS 2 Development Program requested in
accordance with this Section 3.3, the Party shall notify the other of such determination in
writing. In such event, Chiron may elect among one of the following three choices: (i) to
terminate participation in the eSAS 2 Development Program under the provisions of Section 8.3, (ii)
to implement the Material Modification without Gen-Probe’s approval under this Section 3, in which
event Chiron shall have no right to reimbursement of Development Costs for such Material
Modification and Gen-Probe shall have no obligation to pursue regulatory approval or otherwise
pursue development efforts with respect thereto, or (iii) to continue the eSAS 2 Development
Program unaffected without such Material Modification.




          3.3.3 Preparation of Modified eSAS 2 Development Program. Unless Chiron terminates the eSAS
2 Development Program under Section 8.3 below or elects to continue the eSAS 2




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Development Program
unaffected without such Material Modification under Section 3.3.2, promptly upon completion of the
review and analysis under Section 3.3.2, Chiron shall complete and deliver to Gen-Probe revisions
to the Product Requirements Document, Software Requirements Specification, Technical Plan, Resource
Plan or Budget, as applicable, responsive to the request. Costs incurred by Chiron to prepare such
response to the request shall be included in eSAS 2 Development Costs hereunder.




          3.3.4 Acceptance of Modified eSAS 2 Development Program.




               (a) Unless Chiron terminates the eSAS 2 Development Program under Section 8.3 below or elects
to continue the eSAS 2 Development Program unaffected without such Material Modification under
Section 3.3.2, the Parties shall promptly, but not later than thirty (30) days after preparation by
Chiron of a modified eSAS 2 Development Program under Section 3.3.2 meet and consult with respect
to the proposed modified eSAS 2 Development Program. Without limiting the other bases on which it
shall be reasonable for Gen-Probe to withhold approval, it shall be reasonable for Gen-Probe to
withhold approval of any Modification that could result in a material degradation in assay
sensitivity or specificity, or that affects Gen-Probe’s effort or contribution of resources or the
amount of costs for which Gen-Probe is entitled to be reimbursed by Chiron. Subject to the
unconditional rights of Gen-Probe under Section 3.2.1(a) above to preclude Chiron from
reimbursement for Material Modifications and to withhold participation in the regulatory approval
process, it shall be unreasonable to withhold
approval of any request for modification made (i) to reflect actual eSAS 2 Development Costs
incurred (or not incurred) to the date of such proposed modification that (A) with respect to the
eSAS 2 Instrument taken as a whole, when aggregated with all previously authorized modifications,
falls within [...***...] percent ([...***...]%) of the original Budget approved and in effect as of
the date this eSAS 2 Addendum was executed by the Parties, or (B) with respect to any discreet
component, when aggregated with all previous authorized modifications for such component, falls
within [...***...] percent ([...***...]%) of the original portion of the Budget for such component
approved and in effect as of the date this eSAS 2 Addendum was executed by the Parties, or (ii) to
reflect actual changes to the Timeline incurred to the date of such proposed modification which do
not impact the Budget in excess of the foregoing thresholds.



               (b) Each Party shall, upon completion of the consultation and review under paragraph (a),
deliver to the other Party either a written acceptance of the proposed modified eSAS 2 Development
Program or a detailed written statement specifying the basis for rejection. The requesting party
may, in response to a rejection, revise the proposed modified eSAS 2 Development Program to reflect
the discussions of the Parties, and redeliver the revised proposed modified eSAS 2 Development
Program for further review, until the Parties agree upon the Material Modification. Either Party
may, in its discretion and with notice to the other Party, determine that the Parties have reached
an impasse with respect to any proposed material modification and deliver the request to the
Supervisory Board for determination.



               (c) If a Party delivers the request to the Supervisory Board for determination, the
Supervisory Board shall promptly, but not later than the later of (i) thirty (30) days after
receipt of a requested modified eSAS 2 Development Program, or (ii) the next regularly scheduled
Supervisory Board meeting, meet and discuss the proposed Material Modification to eSAS 2
Development Program.



               (d) If the Supervisory Board has met and consulted without resolution, then either Party may, in
its discretion, determine that the Parties have reached an impasse with respect to any proposed
modification and implement the escalation procedure described in Article 13 of the Agreement



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to
resolve such impasse. Notwithstanding anything to the contrary in this eSAS 2 Addendum or the
Agreement, all Material Modifications, whether agreed or determined through arbitration, shall be
finally determined and documented in accordance with this Section 3.3.




          3.3.5 Effective Date of Modified eSAS 2 Development Program. At such time as the
Parties (or, if applicable, the Supervisory Board) shall have accepted a modified eSAS 2
Development Program incorporating a Material Modification, or any portion thereof, the Parties
shall evidence such agreement by initialing the revised Product Requirements Document, Software
Requirements Specification, Technical Plan, Resource Plan or Budget, as applicable. The eSAS 2
Development Program as so modified and approved shall constitute the eSAS 2 Development Program
hereunder and be incorporated by reference into this eSAS 2 Addendum, and shall supersede the
preceding eSAS 2 Development Program, or applicable portions thereof, for all purposes. In order
to evidence their agreement to the revised eSAS 2 Development Program, the Parties shall include it
in an additional volume of the Binder, labeled “Amendments to eSAS 2 Development Program,” in which
all amendments and modifications to the eSAS 2 Development Program will be kept.




     3.4 Notice of Significant Changes. Each Party will give three (3) calendar months
notice to the other Party prior to any proposal of a
significant reduction or increase in resources from the then-current Resource Plan in order to
allow the Parties time to divert resources either to or from the eSAS 2 Development Program. Any
significant changes to the Budget or the Resource Plan shall be effective only upon the expiration
of three (3) months from the delivery of such notice, unless the Parties both agree to a shorter
period of time in writing.


4. Changes to eSAS 2 Instrument after Completion Date. Notwithstanding the provisions of
Section 3, the Parties recognize that, after the eSAS 2 Instrument development is completed, the
market may demand or regulatory changes may require that special enhancements or modifications be
made to the eSAS 2 Instrument, and that either Party may desire to adopt such changes. Any such
enhancements or modifications shall be governed by Section 3.3 of the Agreement.




5. eSAS 2 Development Costs.




     5.1 [ *** ] to pay Development Costs. [...***...] is responsible for and agrees
to pay the [...***...] eSAS 2 Development Costs, as defined in and subject to Section 5.2 below.
Such costs shall be payable as described in Section 5.3 herein. The Budget has been prepared for
the purpose of permitting [...***...] to plan for eSAS 2 Development Program expenditures related
to eSAS 2 Development Costs hereunder and represents the Parties’ best estimate of such eSAS 2
Development Costs, but does not represent a “fixed price maximum” or other guaranteed maximum cost
of the development required for the eSAS 2 Development Program.



     5.2 Definition and Calculation of eSAS 2 Development Costs. “eSAS 2 Development Cost”
with respect to the eSAS 2 Development Program means the fully-burdened cost of conducting the
research and development (including domestic and international regulatory and licensing activities)
of the eSAS 2 Instrument, and shall include the [...***...] of [...***...] that are [...***...] for
the [...***...] and [...***...] of such quantities of the eSAS 2 Instrument [...***...] the
[...***...]. Costs will be calculated in accordance with United States generally accepted
accounting principles, consistently applied (“U.S. GAAP”), or as otherwise mutually agreed in
writing between the Parties.



          5.2.1 eSAS 2 Development Costs; FTE Labor Rate.




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               (a) In lieu of accounting specifically for and receiving direct reimbursement for certain eSAS
2 Development Costs, the Parties have agreed to include reimbursement for those certain categories
of eSAS 2 Development Costs within an agreed-upon labor rate for full time equivalent personnel
(the “FTE Labor Rate”). Each party will calculate its own FTE Labor Rate. Those categories of
“eSAS 2 Development Costs” included within the FTE Labor Rate are those costs more particularly
described on Schedule 5.2.1a, in paragraph 2 entitled “eSAS 2 Development Costs included
within FTE Labor Rate”. Neither Party shall be reimbursed separately for eSAS 2 Development Costs
included within FTE Labor Rate. Those categories of “eSAS 2 Development Costs” not included within
the FTE Labor Rate are those costs more particularly described on Schedule 5.2.1a, in
paragraph 3 entitled “eSAS 2 Development Costs not included within FTE Labor Rate”. Each Party
shall be reimbursed separately for eSAS 2 Development Costs not included within FTE Labor Rate.



                    (i) The FTE Labor Rate in effect as of the Addendum Effective Date is set forth in paragraph 1
on the attached Schedule 5.2.1a, and is included in the Resource Plan and reflected in the
Budget. Either Party shall have the right to request a change in the FTE Labor Rate reflected on
the attached Schedule 5.2.1a on a prospective basis under the approval process set forth in
Section 3. In the event aggregate actual eSAS 2 Development Costs incurred by a Party during any
calendar year that are reimbursed through the FTE Labor Rate exceeded, or fell short of, the agreed
FTE Labor Rate reflected in the Budget for such calendar year, either Party may seek a request for
modification of the eSAS 2 Development Program to reflect such actual costs. Acceptance of such
request for modification shall be governed by Section 3.3.4. Notwithstanding the foregoing,
throughout the term of this eSAS 2 Addendum, in the event either Party requests a modification to
the FTE Labor Rate hereunder, the modified FTE Labor Rate shall be calculated using the same
methodology as that used to calculate the FTE Labor Rate in effect as of the Addendum Effective
Date. The methodology used to calculate the FTE Labor Rate in effect as of the Addendum Effective
Date is described on the attached Schedule 5.2.1b, entitled “FTE Labor Rate Analysis”.



          5.2.2 Comparison with Resource Plan. The planned resources, and the associated costs,
will be broken out on a monthly basis and analyzed against the Resource Plan included within the
Technical Plan, and reflected in the Budget.




     5.3 Payment of eSAS 2 Development Costs. In addition to the provisions of Article 7
of the Agreement, the Parties agree as follows:




          5.3.1 Accrued eSAS 2 Development Costs. Each Party has already incurred, prior to the
date of execution of this eSAS 2 Addendum, certain eSAS 2 Development Costs. [...***...] shall
reimburse [...***...] for its eSAS 2 Development Costs incurred prior to and until the date of
execution of this eSAS 2 Addendum. Attached to this eSAS 2 Addendum as Schedule 5.3.1 is a
summary of the eSAS 2 Development Costs incurred by the Parties prior to the execution of this eSAS
2 Addendum.




          5.3.2 Monthly Notices; Payments. At the end of each month, each Party shall calculate
its actual expenditures and FTE Labor amounts for eSAS 2 Development Costs it incurred during such
month and shall promptly provide to the other Party a reasonably detailed written breakdown of such
costs. [...***...] shall invoice [...***...] for the amount of such costs incurred by [...***...]
during such month under Section 5.3.3 below.




          5.3.3 Invoices. [...***...] will invoice [...***...] for the amounts described in this
Section 5.3 and all invoices will be due and payable thirty (30) days from the date of the invoice.
In the event payment is not received within such period, Chiron shall pay a service charge equal
to the amount




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overdue multiplied by the LIBOR in effect on the first day of such calendar month,
but not exceeding the maximum allowable rate.




     5.4 Reimbursement of eSAS 2 Development Costs. Chiron will be entitled to
reimbursement, if at all, of eSAS 2 Development Costs solely from revenues from the eSAS 2
Instrument, as more particularly described in Section 3.3.6 of the Agreement as amended by Section
6.3 of this Addendum.



6. Manufacturing and Commercialization.




     6.1 eSAS 2 Instrument Manufacturing Costs.



          6.1.1 The “Fully-Burdened Manufacturing Costs” of the eSAS 2 Instrument for purposes of this
eSAS 2 Addendum (including revised Section 3.3.6 of the Agreement) shall mean [...***...] percent
([...***...] %) of the reasonable Third Party OEM invoice cost of the eSAS 2 Instrument (including
freight, taxes, etc.,). The foregoing amount shall be used in lieu of the actual internal costs
incurred or allocated to the purchase for QA, purchasing, receiving and warehousing, etc.




          6.1.2 Gen-Probe is entitled to review, evaluate, and in its discretion independently verify
the basis of Chiron’s Fully-Burdened Manufacturing Cost using an independent Third Party, in
accordance with the provisions of Section 7.3 of the Agreement.




     6.2 Rights to Manufacture and Sell.



          6.2.1 Blood Screening Field. Notwithstanding Section 3.3.3 of the Agreement, Chiron
shall have the exclusive right and obligation during the eSAS 2 Addendum Term to manufacture (and
have manufactured) the eSAS 2 Instruments to satisfy Chiron’s requirements of eSAS 2 Instruments in
the Territory for use in the Blood Screening Field. If Chiron elects to subcontract the
manufacture of the eSAS2 Instrument, then Chiron shall comply with the requirements of Section
3.3.3(d) of the Agreement. Gen-Probe agrees to comply with the obligation to provide reasonable
technical assistance, at Chiron’s sole cost, as necessary or appropriate to enable Chiron to
fulfill its obligation and exercise the right to manufacture (or have manufactured) the eSAS 2
Instrument for use in the Blood Screening Field, including delivering specifications and other
know-how to Chiron and causing responsive Gen-Probe personnel that possess such know-how to be
available to Chiron, in each case as reasonably necessary to enable Chiron to exercise the rights
granted and fulfill its obligations hereunder. Chiron shall have the exclusive distribution right
in the Territory to promote, market and sell the eSAS 2 Instrument to conduct Blood Screening
Assays in the Blood Screening Field, as set forth in Section 3.3.4 of the Agreement. Nothing in
this eSAS 2 Addendum shall affect Gen-Probe’s obligations to Chiron under the Agreement with
respect to the manufacture and supply of existing Blood Screening Instruments or Chiron’s
obligations to Gen-Probe under the Agreement with respect to the commercialization of existing
Blood Screening Instruments.




          6.2.2 Clinical Diagnostic Field. Notwithstanding Section 6.2.1 of this eSAS 2 Addendum or
Sections 3.3.4 or 4.4.3 of the Agreement, Gen-Probe shall have the exclusive right to manufacture
(and have manufactured) the eSAS 2 Instruments for use in the Clinical Diagnostic Field. Chiron
agrees to provide Gen-Probe such reasonable technical assistance, at Gen-Probe’s sole cost, as
necessary or appropriate to enable Gen-Probe to exercise the right to manufacture (or have
manufactured) the eSAS 2 Instrument for use in the Clinical Diagnostic Field, including without
limitation delivering manufacturing drawings, specifications and other know-how to Gen-Probe and
causing responsive Chiron personnel that possess such know-how to be available to Gen-Probe, in
each case as reasonably




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necessary to enable Gen-Probe to exercise the rights granted hereunder.
Notwithstanding Section 4.4.4 of the Agreement, Gen-Probe shall have the exclusive distribution
right in the Territory to promote, market and sell the eSAS 2 Instrument in the Clinical Diagnostic
Field to the extent, as of the Addendum Effective Date, that Chiron has the ability to grant such
rights to Gen-Probe.




          6.2.3 Right to Acquire All Rights to Manufacture and Commercialize. Gen-Probe shall
have the right, but not the obligation, to acquire from Chiron the exclusive right to manufacture
and distribute the eSAS 2 Instrument in all fields at the expiration or sooner termination of the
eSAS 2 Addendum Term for any reason under Section 8 of this Addendum. Gen-Probe may exercise such
right by providing Chiron with written notice of election under this Section 6.2.3, together with
payment in an amount equal to the eSAS 2 Development Costs for which [...***...] is entitled to
reimbursement hereunder but for which [...***...] has not yet received reimbursement under Section
3.3.6(b) of the Agreement, as amended by Section 6.3 below. Gen-Probe may rely upon and base its
calculation of such amount upon the accounting [...***...] from time to time from [...***...] under
Section 3.3.6 of the Agreement, as amended by Section 6.3 below.




     6.3 Consideration on eSAS 2 Instrument Sales. In consideration for the rights granted
and obligations undertaken by the Parties in this eSAS 2 Addendum, the consideration received on
the sale, transfer or other disposition of the eSAS 2 Instrument will be governed by this Section
6.3. Except as otherwise provided in Section 8.3 of this eSAS 2 Addendum, Section 3.3.6 of the
Agreement is amended and restated in its entirety as follows but solely with respect to
consideration on the sale, transfer or other disposition of the eSAS 2 Instrument.



     “3.3.6 Compensation for eSAS 2 Instruments. In consideration for the rights granted,
and the obligations accepted, by the Parties, each Party shall pay to the other the applicable
amounts described in this Section 3.3.6.



          a) Definitions.





               (i) Revenues from the eSAS 2 Instrument. As used in this Section 3.3.6
“revenues from the eSAS 2 Instrument” for a fiscal quarter shall mean all amounts received
by a Party or a Party’s Affiliates for the sale, transfer, placement, lease or other
disposition of the eSAS 2 Instruments during such fiscal quarter; provided, however, that:




                    (A) Revenues for Collaboration Combination Products. If an eSAS 2 Instrument
is sold in combination with one or more non-eSAS instruments or instrument components (a
“Collaboration Combination Product”) for a single price or on a single invoice to the
customer, the “revenues from the eSAS 2 Instrument” with respect to such Collaboration
Combination Product shall be calculated by multiplying the total amount received by a Party
or its Affiliates for such Collaboration Combination Product by the fraction A/B, where A is
gross selling price of the eSAS 2 Instrument sold separately and B is the gross single price
or aggregate prices on a single invoice to the customer for such Collaboration Combination
Product. Such calculation of the Collaboration Combination Product revenues shall be
negotiated in good faith between the Parties and resolved pursuant to Article 13 if they are
unable to agree.




                    (B) Revenues for Lease, Rental or Placement Programs. If the eSAS 2 Instrument
is not sold separately but rather is leased, placed or rented pursuant to a reagent/rental
program or comparable sale or lease program (including instrument upgrade/maintenance
programs) (each a “Program”) where the instrument revenue is included in



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such Program revenue, then the “revenues from the eSAS 2 Instrument” with respect to such
Program shall: (i) be [...***...] percent ([...***...] %) of the Fully Burdened
Manufacturing Costs [...***...] % until Chiron has been reimbursed for all eSAS 2
Development Costs, and [...***...] percent ([...***...] %) thereafter; based upon an
imputed instrument depreciation factor consistent with Chiron’s then-current accounting
policy that provides for a depreciation of at least three (3) years for each eSAS 2
Instrument.




                    (C) Nothing herein shall amend the manner in which the Agreement determines the
revenues for Combination Products where the eSAS 2 Instrument is sold in combination with
one or more Third Party products.




               (ii) As used in this Section 3.3.6:




                    (A) the “Chiron Blood Screening Split” used under Section 3.3.6(b) below with respect
to sales of the eSAS 2 Instrument in the Blood Screening Field shall be the remainder of (I)
[...***...] percent ([...***...] %) less (II) the Gen-Probe Blood Screening Split.




                    (B) the “Gen-Probe Blood Screening Split” used under Section 3.3.6(b) below with
respect to sales of the eSAS 2 Instrument in the Blood Screening Field shall be calculated,
for a given fiscal quarter, by taking the dollar weighted average of the Applicable Purchase
Price earned by Gen-Probe for all Blood Screening Assays sold as calculated under 1.2.1 and
1.2.3 of the Agreement during such fiscal quarter.




                    (C) the “Chiron Clinical Diagnostic Split” used under Section 3.3.6(c) below with
respect to sales of the eSAS 2 Instrument in the Clinical Diagnostic Field shall be equal to
the Gen-Probe Blood Screening Split.




                    (D) the “Gen-Probe Clinical Diagnostic Split” used under Section 3.3.6(c) below with
respect to sales of the eSAS 2 Instrument in the Clinical Diagnostic Field shall be equal to
the Chiron Blood Screening Split.



          b) Instrument Sales; Chiron Sales of eSAS 2 Instruments.





               (i) Until [...***...] has been reimbursed for all eSAS 2 Development Costs, within
forty-five (45) days following the end of each fiscal quarter Chiron shall (A) first,
calculate (and provide written notice to Gen-Probe of such calculation) the revenues from
eSAS 2 Instruments sold and received by Chiron or its Affiliates during such fiscal quarter;
(B) second, calculate (and provide written notice to Gen-Probe of such calculation)
[...***...] percent ([...***...]%) of the Fully Burdened Manufacturing Costs for the eSAS 2
Instruments sold in such fiscal quarter by Chiron and its Affiliates; (C) third, calculate
(and provide written notice to Gen-Probe of such calculation) and retain the lesser of (I)
revenues from eSAS 2 Instruments sold and received by Chiron and its Affiliates in such
fiscal quarter or (II) [...***...] percent ([...***...] %) of the Fully Burdened
Manufacturing Costs for the eSAS 2 Instruments sold in such fiscal quarter by Chiron and its
Affiliates; (D) fourth, apply and credit (and provide written notice to Gen-Probe of such
calculation) the difference between such retained amount and [...***...] percent
([...***...]%) of the Fully Burdened Manufacturing Costs for the eSAS 2 Instruments sold in
such fiscal quarter by Chiron and its Affiliates as reimbursement to Chiron of the eSAS 2
Development Costs; (E) fifth, calculate (and provide written notice to Gen-Probe of such



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calculation) and retain the Chiron Blood Screening Split, if any; and (F) sixth, pay to
Gen-Probe an amount equal to the Gen-Probe Blood Screening Split, if any.




               (ii) After [...***...] has been reimbursed for all eSAS 2 Development Costs under
subparagraph 3.3.6(b)(i) above, within forty-five (45) days following the end of each fiscal
quarter Chiron shall thereafter (A) first, calculate (and provide written notice to
Gen-Probe of such calculation) revenues from eSAS 2 Instruments sold and received by Chiron
and its Affiliates in such fiscal quarter; (B) second, calculate (and provide written notice
to Gen-Probe of such calculation) and retain [...***...] percent ([...***...] %) of the
Fully Burdened Manufacturing Costs for the eSAS 2 Instruments sold in such fiscal quarter by
Chiron and its Affiliates; (C) third, calculate (and provide written notice to Gen-Probe of
such calculation) and retain the Chiron Blood Screening Split, if any; and (D) fourth, pay
to Gen-Probe an amount equal to the Gen-Probe Blood Screening Split, if any.




               (iii) If the eSAS 2 Instrument is not sold separately by Chiron but rather is leased,
placed or rented by Chiron pursuant to a Program (as defined in subsection 3.3.6(a)(i)(B)),
within forty-five (45) days following the end of each fiscal quarter Chiron shall calculate
(and (provide written notice to Gen-Probe of such calculation) and shall be entitled to
retain any and all revenues from the eSAS 2 Instruments sold, leased, placed or rented
pursuant to a Program and received by Chiron and its Affiliates in such fiscal quarter.



          c) Instrument Sales; Gen-Probe Sales of eSAS 2 Instruments.





               (i) Within forty-five (45) days following the end of each fiscal quarter Gen-Probe
sells eSAS 2 instruments Gen-Probe shall (A) first, calculate (and provide written notice to
Chiron of such calculation) the revenues for the eSAS 2 Instruments received by Gen-Probe
and its Affiliates during such fiscal quarter from the sale, transfer, placement, lease or
other disposition of the eSAS 2 Instrument in the Clinical Diagnostic Field; (B) second,
calculate (and provide written notice to Chiron of such calculation) and retain [...***...]
percent ([...***...]%) of the Fully Burdened Manufacturing Costs for such eSAS 2
Instruments; (C) third, calculate (and provide written notice to Chiron of such calculation)
and retain an amount equal to the Gen-Probe Clinical Diagnostic Split, if any; and (D)
fourth, pay to Chiron an amount equal to the Chiron Clinical Diagnostic Split, if any.




          d) Service Revenues. Each Party is entitled to retain the aggregate
commercially reasonable revenues received by such Party and its Affiliates in consideration
for required maintenance and servicing of the eSAS 2 Instruments consistent with standard
industry practices; provided, however that the revenues retained may not exceed [...***...]
percent ([...***...] %) of the Fully Burdened Manufacturing Costs of the eSAS 2 Instruments
per year; provided however that in the event that the revenues exceed [...***...] percent
([...***...]%) of the Fully Burdened Manufacturing Costs of the eSAS 2 Instruments in any
given year, such excess shall be shared by Gen-Probe and Chiron such that, for maintenance
and service revenues of eSAS 2 Instruments used in the Blood Screening Field, the parties
shall receive such amount equal to their respective Blood Screening Splits, and for
maintenance and service revenues of eSAS2 Instruments used in the Clinical Diagnostic Field,
the parties shall receive such amount equal to their respective Clinical Diagnostic Splits.



     6.4 Authorization Letter. Chiron will allow Gen-Probe to directly access OEM suppliers of
eSAS-2 Instruments to purchase or modify eSAS- 2 Instruments for the Clinical Diagnostic Field.



***Confidential Treatment Requested




17









 







Chiron will not make any agreement with sub-contract manufacturers that will restrict Gen-Probe’s
ability to negotiate its own contract with the vendors for the manufacture and purchase of modified
eSAS- 2 Instruments for the Clinical Diagnostic Field. In addition, the Parties acknowledge that
Gen-Probe shall have the right to purchase the eSAS 2 Instrument from any Third Party that Chiron
employs to manufacture the eSAS 2 Instrument. Promptly following the execution of an agreement
between Chiron and a Third Party for the manufacture of the eSAS 2 Instrument, and at Gen-Probe’s
written request, Chiron shall execute the authorization letter attached hereto as Schedule
6.4 (“Sales Authorization Letter”).




7. Ownership; License Grant.




     7.1 Ownership. Ownership of any Inventions incorporated in the eSAS 2 Instrument or
otherwise made in the course of the eSAS 2 Development Program shall be “Joint Inventions” and
shall be allocated as provided in Section 9.1 of the Agreement for Joint Inventions; provided,
however, that (a) during the eSAS 2 Addendum Term Gen-Probe hereby grants to Chiron under its
rights in and to such Joint Inventions an exclusive right to make, use, sell and import such Joint
Inventions in the Blood Screening Field and (b) during the eSAS 2 Addendum Term, Chiron hereby
grants to Gen-Probe under its rights in and to such Joint Inventions an exclusive right to make,
use, sell and import such Joint Inventions in the Clinical Diagnostic Field. Neither Party shall
have the right to sublicense or otherwise transfer its right, title or interest in or to the Joint
Inventions without the prior written consent of the other Party.



     7.2 License Grant. During the eSAS 2 Addendum Term, Gen-Probe hereby grants to Chiron
a license under all intellectual property rights of Gen-Probe now-owned or hereafter acquired to
the extent reasonably necessary for Chiron to perform its obligations under the eSAS 2 Development
Program and for the manufacture, use or sale of eSAS 2 Instruments in the Blood Screening Field,
but only to the extent that Gen-Probe has or hereafter acquires an ownership or other licensable
interest in such intellectual property rights and has the right to grant licenses, immunities or
other rights thereunder. During the eSAS 2 Addendum Term, Chiron hereby grants to Gen-Probe a
license under all intellectual property rights of Chiron now-owned or hereafter acquired to the
extent reasonably necessary for Gen-Probe to perform its obligations under the eSAS 2 Development
Program and for the manufacture, use or sale of eSAS 2 Instruments in the Clinical Diagnostic
Field, but only to the extent that Chiron has or hereafter acquires an ownership or other
licensable interest in such intellectual property rights and has the right to grant licenses,
immunities or other rights thereunder. The licenses hereby granted shall extend only to the extent
of the design of the eSAS 2 Instrument as of the date of this eSAS 2 Addendum and to any future
design modifications approved and adopted in accordance with the terms hereof. The license hereby
granted shall be royalty-free except to the extent the licensing Party has an obligation to pay
royalties to a Third Party pursuant to the Agreement. The license granted by Gen-Probe in Section
3.3.5(c) of the Agreement shall apply to the manufacture of eSAS 2 Instruments by or for Chiron for
use in the Blood Screening Field. Except as expressly provided herein, neither Party grants to the
other Party any license or other interest in and to such Party’s intellectual property rights or
other rights. For the avoidance of doubt, nothing in this Section 7.2 shall be construed as a
grant by Chiron to Gen-Probe for an express or implied license in, to or under the Chiron HIV
Patent Rights or the Chiron HCV Patent Rights.



     7.3 [...***...] Immunity. For the avoidance of doubt, [...***...] confirms that
[...***...] shall be entitled to the benefit of the immunity from suit previously granted to
[...***...], and subject to the limitations as granted to [...***...], by [...***...] and
[...***...] under the [...***...] related Patents,



***Confidential Treatment Requested




18









 







which immunity was previously granted to [...***...]
(and a party to be designated by [...***...]) by [...***...] and [...***...].




8. Addendum Effective Date; Term; Termination.




     8.1 Term of eSAS 2 Addendum. This eSAS 2 Addendum shall become effective on the
Addendum Effective Date and shall continue in effect through the Blood Screening Term, as it may be
amended or extended from time to time, unless sooner terminated in accordance with the provisions
hereof. Termination of this eSAS 2 Addendum shall be governed by the terms of this Section 8 and
termination of the Agreement is governed by Section 11 of the Agreement.



     8.2 Termination for Breach.



          8.2.1 Default. Either Party (the “nondefaulting party”) has the right, upon written
notice to the other Party (the “defaulting party”), to terminate the eSAS 2 Development Program,
upon the occurrence of any of the following events of default and the expiration of any applicable
period of time for cure:




               (a) if a Party fails to make a payment required under Sections 5.3.1 or 5.3.3 hereunder;



               (b) if a Party invoices for amounts using expenditures not falling within the definition of
eSAS 2 Development Costs or not included within the Budget.



               (c) if a Party fails to exercise Commercially Reasonable Efforts to commit the resources
described in the eSAS 2 Development Program or to exercise Commercially Reasonable Efforts achieve
the objectives of the eSAS 2 Development Program; provided, however, that the failure to
successfully complete the development of the eSAS 2 Instrument, or to complete the development of
the eSAS 2 Instrument on the Timeline set forth in the Technical Plan or for the amounts described
in the Budget or to the specifications set forth in the PRD or the SRS shall not be deemed to be a
breach of this eSAS 2 Addendum; and



               (d) if a Party defaults under the Agreement or this eSAS 2 Addendum which default results in
the termination of the Agreement of this eSAS 2 Addendum.



          8.2.2 Right to Cure Event of Default. Upon the occurrence of any event of default
entitling a Party to terminate this eSAS 2 Addendum, the non-defaulting party shall send to the
defaulting party notice of event of default, specifying in reasonable detail the nature of the
default. The defaulting party will have thirty (30) days following the date of receipt of such
notice within which to cure the breach or event of default. Failure to cure the default within
such time period will result in termination of the eSAS 2 Development Program without further
notice by the non-defaulting party, unless such non-defaulting party extends the cure period by
written notice or withdraws the default notice. (The expiration of the period for such right to
cure without cure, extension or withdrawal of the default notice is referred to as the
“effective date of termination”.)




          8.2.3 Effect of Termination for Breach. Upon a termination of this eSAS 2 Addendum
for default under this Section 8.2:




               (a) Subject to the rights of the Parties under Section 9.3, the eSAS 2 Development Program shall
be terminated.



***Confidential Treatment Requested




19









 








               (b) The non-defaulting party’s rights under the Agreement and this eSAS 2 Addendum shall
remain in full force and effect unchanged.



               (c) The defaulting party’s rights under the Agreement and this eSAS 2 Addendum with respect to
all Products, other than the eSAS 2 Instrument, shall remain in full force and effect unchanged.



               (d) The defaulting party’s rights under the Agreement and this eSAS 2 Addendum with respect to
the eSAS 2 Instrument shall terminate and be of no further force and effect. The defaulting party
may not undertake a development substantially similar to the eSAS 2 Development Program with any
other Party for a period of [...***...] from the date of termination.



               (e) If Chiron is the defaulting party, Chiron shall pay to Gen-Probe in addition to any other
rights or remedies available to Gen-Probe at law or equity, promptly upon receipt of an invoice
therefore, an amount equal to (i) [...***...] for which an [...***...] has been [...***...], (ii)
[...***...] not yet [...***...] but [...***...] in the [...***...], whether or not disputed, as
[...***...] in the [...***...], and (iii) an [...***...] by [...***...], with [...***...] provided
to [...***...], to [...***...] the [...***...] of [...***...] the [...***...], if applicable.



     8.3 Termination by Chiron. Chiron may elect to terminate this eSAS 2 Addendum under
this Section 8.3 for convenience at any time during the eSAS Term in its sole discretion upon
written notice to Gen-Probe. Following any such termination, Chiron shall pay, promptly upon
receipt of an invoice therefor, to Gen-Probe an amount equal to (i) [...***...] in the [...***...]
for which an [...***...] has been [...***...] and (ii) [...***...] not yet [...***...] but
[...***...] in the [...***...] whether or not disputed, as set [...***...] in the [...***...].



     8.4 Continuance of eSAS 2 Development Program following Termination.



          8.4.1 Election. Following any termination of this eSAS 2 Addendum for breach by
Chiron in accordance with Section 8.2 or termination by Chiron in accordance with Section 8.3,
Gen-Probe may elect to continue the eSAS 2 Development Program by providing written notice to
Chiron on or before the effective date of termination under Section 8.2.




          8.4.2 Funding and Conduct of Development. If Gen-Probe elects pursuant to this
Section 8.4 to continue funding the eSAS 2 Development Program, Gen-Probe shall be solely
responsible for the current funding of all eSAS 2 Development Costs, including those applicable to,
or incurred by Chiron under the terms of this
Agreement, from and after the effective date of termination under Section 8.2, subject to the
right to reimbursement more particularly described below.





               Reimbursement of Development Costs. If Gen-Probe elects to continue
development of the eSAS 2 Instrument in accordance with this Section 8.4, then before
distribution of compensation as provided in revised Section 3.3.6 of the Agreement (amended
as provided in Section 6.3 above), Gen-Probe shall be first entitled to reimbursement of all
eSAS 2 Development Costs incurred by Gen-Probe from and after the effective date of such
termination and election to continue. Section 3.3.6 of the Agreement is amended to add the
following, as a new Section 3.3.6A, inserted before revised Section 3.3.6 of the Agreement
(amended as provided in Section 6.3 above), as follows



***Confidential Treatment Requested




20









 








“3.3.6A Notwithstanding anything to the contrary in this Section 3.3.6, until Gen-Probe has
been reimbursed for all eSAS 2 Development Costs, within forty-five (45) days following the end of
each fiscal quarter Chiron shall (A) first, calculate (and provide written notice to Gen-Probe of
such calculation) the revenues from the eSAS 2 Instrument received by Chiron or its Affiliates
during such fiscal quarter; (B) second, calculate and retain (and provide written notice to
Gen-Probe of such calculation) [...***...] ([...***...] %) of the Fully Burdened Manufacturing
Costs for the eSAS 2 Instruments sold in such fiscal quarter; (C) third, calculate and pay to
Gen-Probe the lesser of (I) the remainder of the revenues calculated in (A) and the Fully Burdened
Manufacturing Costs retained in (B) from each eSAS 2 Instrument sold in such fiscal quarter
received by Chiron or its Affiliates or (II) [...***...] percent ([...***...] %) of the Fully
Burdened Manufacturing Costs of such eSAS 2 Instruments sold in such fiscal quarter (and provide
written notice to Gen-Probe of such calculation); (D) fourth, apply and credit the difference
between such amount paid to Gen-Probe for the eSAS 2 Instrument sold in such fiscal quarter as
reimbursement to Gen-Probe for the eSAS 2 Development Costs (and provide written notice to
Gen-Probe of such calculation); (E) fifth, calculate (and provide written notice to Gen-Probe of
such calculation) and retain the Chiron Blood Screening Split, if any; and (F) sixth, pay to
Gen-Probe an amount equal to the Gen-Probe Blood Screening Split, if any. Until such time as
Chiron receives written notice from Gen-Probe that Gen-Probe has been reimbursed for all eSAS 2
Development Costs, then the provisions of Section 3.3.6 of the Agreement (amended as provided in
Section 6.3 above) shall govern the distribution of consideration received on sale, transfer or
other distribution of the eSAS 2 Instrument.”




          8.4.3 Control of the Program upon Unilateral Funding. Gen-Probe shall have the right
to appoint the Project Manager from and after the effective date of termination by Chiron under
Section 8.3 and the decision to continue the program. Gen-Probe shall have the right to make such
Material Modifications to the eSAS 2 Development Program that it deems necessary or prudent in its
reasonable discretion, without the acceptance of the other Party as otherwise required under
Section 3.3.4 of this eSAS 2 Addendum. Notwithstanding the above, Gen-Probe shall remain obligated
to provide Chiron with a copy of the eSAS 2 Development Program, and all notice and reporting
obligations set forth herein shall remain in full force and effect.




          8.4.4 Rights under Agreement. Except as expressly modified by this Section 8.3, the
Parties shall retain all rights and obligations allocated pursuant to Section 3.2 of the Agreement.




9. Escalation.




     9.1 Escalation Process. Prior to implementing the arbitration process more
particularly described in Article 13 of the Agreement, the Parties agree to escalate any dispute
first to a discussion between responsible managers, and if they cannot agree, then to the
Supervisory Board. However the Parties explicitly acknowledge that in the event of the need for an
urgent decision the Party with primary responsibility will proceed to make the decision, and
implement. It is agreed that the Party with primary responsibility will make all reasonable and
timely efforts to inform the other Party of the issue requiring decision, particularly where the
issue is one of some consequence.



     9.2 Remedies in Event of Default. Neither Party shall be entitled to exercise any remedy
otherwise available to it at law or in equity unless and until such Party shall have provided the
other Party with notice of such event of default, reasonably specifying the nature of the default,
and any applicable period of time for cure thereof shall have expired without cure, and the
procedures defined in Article 13 of the Agreement shall have been first exhausted.



***Confidential Treatment Requested




21









 








     9.3 Survival. Upon a termination of this eSAS 2 Addendum, the following provisions of
this eSAS 2 Addendum shall survive such termination: Sections 2.3, 2.4.1, 8, 9, and 10.


10. No Other Amendment. Except as expressly set forth in this eSAS 2 Addendum, all other
terms and conditions of the Agreement, the Parties’ Definitive Written Settlement Agreement, dated
December 5, 2001, and the Short Form Agreement, dated November 16, 2001, are hereby ratified and
shall continue in full force and effect. All other terms and conditions of the Agreement, the
Definitive Written Settlement Agreement, and the Short Form Agreement shall continue in full force
and effect. In the event of a conflict between the terms of this eSAS 2 Addendum and the
Agreement, the terms of this eSAS 2 Addendum shall control. The provisions of this eSAS 2 Addendum
are intended to, and hereby, supercede any provisions in the Definitive Written Settlement
Agreement entered into by and between the Parties, dated December 5, 2001, and the Short Form
Agreement entered into by and between the Parties, dated November 16, 2001, on the same subject
matter.



11. Counterparts. This eSAS 2 Addendum may be executed in counterparts, each of such shall
be deemed an original, and all of which together shall constitute one and same instrument.




[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]




22









 








     IN WITNESS WHEREOF, the Parties have caused this eSAS 2 Addendum to be executed and the
persons signing below warrant that they are duly authorized to sign for and on behalf of the
respective Parties.



	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED,	 	CHIRON CORPORATION,
	a Delaware corporation	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	/s/ Henry L. Nordhoff
	 	 	 	/s/ Gene W. Walther

	

	 	 
	 	 	 	 
	Its:

	 	 	 	Its:	 	 
	

	 	President & CEO
	 	 	 	President

	

	 	 
	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	

	 	12-21-04
	 	 	 	18 Feb. 2005

	

	 	 
	 	 	 	 







23










 






Schedule 1.12-A

PRD – robotic sample handling and transport system




24









 








Schedule 1.12-B

PRD – front end pipettor




25









 








Schedule 1.3




Budget




Preliminary Budget







	 	 	 	 	 
	2002
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]	 	 
	CBT cost @ [...***...]/FTE

	 	[...***...]
	 	 
	GP cost @ [...***...]/FTE

	 	—  	 	 
	

	 	 	 	 
	Total Project

	 	[...***...]	 	 
	 











	 	 	 	 	 
	2003
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]
	 	 
	CBT cost @ [...***...]/FTE

	 	[...***...]	 	 
	GP cost @ [...***...]/FTE

	 	[...***...]	 	 
	

	 	 	 	 
	Total Project

	 	[...***...]	 	 
	 











	 	 	 	 	 
	2004
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]	 	 
	CBT cost @ [...***...]/FTE

	 	[...***...]
	 	 
	GP cost @ [...***...]/FTE

	 	[...***...]	 	 
	

	 	 	 	 
	Total Project

	 	[...***...]	 	 
	 











	 	 	 	 	 
	Total Budget

	[...***...]	 	 	 








***Confidential Treatment Requested




26









 








Schedule 1.4




Description of eSAS 2 Instrument system




     The eSAS 2 Instrument system consists of the following modules:



	 	 	 	 	 	 
	 
	 	Name of Module	 	 	Specifications	 
	 	(i) a front end pipettor
	 	 	 	 
	 	(ii) an automated reagent addition station
	 	 	 	 
	 	(iii) an automated target capture bay

	 	 	 	 
	 	(iv) an automated incubation module
	 	 	 	 
	 	(v) a data management to track sample and system
interactions to meet customer demands of throughput and
automation required for pooled donor screening by NAT
	 	 	 	 
	 





27









 






Schedule 1.6




eSAS 2 Development Program Outline






	1.  	Product Requirements Document (PRD)
	 
	2.  	Software Requirements Specification
	 
	3.  	Technical Plan
	 
	4.  	Resource Plan
	 
	5.  	Budget




28









 











Schedule 5.2.1a

eSAS 2 Development Costs




1. Reimbursable FTE Rate. [$[...***...] per FTE per calendar year]



2. eSAS 2 Development Costs included within FTE Labor Rate. eSAS 2 Development Costs
included within FTE Labor Rate consist of all attributable costs associated with the development of
the eSAS 2 Instrument and modifications to associated instrument system platforms that may be
required for such eSAS 2 Instrument (calculated in accordance with United States generally accepted
accounting principles, or as otherwise mutually agreed in writing between the Parties) incurred
prior to the Completion Date and includes pilot development; validation studies necessary for
product and process licensure; clinical studies; licensing activities; and the manufacture and
ultimate disposition of conformance lots of material, calculated as follows:




               (a) Shared development costs include: research and development associated with the eSAS 2
Development Program; clinical studies; validation exclusively associated with the particular
analyte; development lots; document preparation specific to the development;



               (b) The planned resources, and the associated costs, will be broken out on a monthly basis and
analyzed against the Resource Plan included within the Technical Plan, and reflected in the Budget;



               (c) Salaried staff costs included within the Budget will be adjusted to reflect actual staff
costs. Salary information may be aggregated to protect the identity of individuals. This salary
information will be verifiable on a need to know basis to a select number of personnel from each
company;



               (d) Cost for wage laborers plus the applicable overhead charge for such labor (calculated at
the rates and charges described in Section 5.2.1) paid to personnel described in the Resource Plan,
including the eSAS 2 Development Program project manager and personnel engaged to perform QA
testing for the eSAS 2 Development Program;



               (e) Costs for engineering prototypes and manufacturing pilot modules required for the eSAS 2
Development Program;



               (f) Costs of inventory consumed in the eSAS 2 Development Program, including raw material,
intermediates and finished goods, and conformance lots, whether reject or not, that arise from the
eSAS 2 Development Program or are necessary to support the eSAS 2 Development Program, and scrap
material, including raw materials and development materials that arise from the eSAS 2 Development
Program but excluding eSAS 2 Instrument and scrap materials used strictly for internal research
purposes or consumed in development programs other than the eSAS 2 Development Program;



               (g) Costs for conformance product documentation;



               (h) Costs for courier and mail service fees for delivery of items between Gen-Probe and
Chiron;



               (i) Costs of travel, lodging and reasonable per diem expenses for employee and consultants of
Gen-Probe or Chiron incurred in furtherance of their activities hereunder, providing



***Confidential Treatment Requested





 









 







training or participating on the Supervisory Board to the extent such costs are not included
within the overhead charge applicable to labor costs;




               (j) Costs of foreign registration, marketing studies to support registration, and market
research costs necessary to better define requirements or to support national decision-making;



               (k) Such other categories as the Parties may agree from time to time using the approval
process described in Section 2.5.2.



               (l) All budgeted expenses of Departments directly involved with the eSAS 2 Development Program



               (m) Appropriate portions of budgeted costs of departments indirectly involved in the eSAS 2
Development Program.



3. eSAS 2 Development Costs not included within FTE Labor Rate.




               (a) Cost of conformance lot materials consumed in performance of eSAS 2 Development Product or
clinical trials.



               (b) Significant Third Party consultant charges (i.e. CRO, regulatory expertise, etc.) to the
extent not captured within the FTE rates in Item 2 above.



               (c) Third Party development and hardware acquisition costs.



 









 





Schedule 5.2.1b




FTE Labor Rate Analysis






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	(Controllable)	 	 	(Controllable)	 	 	(Controllable)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Salary & Wage	 	 	Other	 	 	Total	 	 	 	 	 	 	Deprec/	 	 	 	 	 	 	 	 	 	 	Indirect	 	 	Total Cost	 	 	eSAS	 	 	eSAS	 
	Cost Center	 	 	 	 	 	Expense	 	 	Costs	 	 	Costs	 	 	Benefits	 	 	Amort	 	 	Facilities	 	 	I/S	 	 	Allocation	 	 	per Employee	 	 	HC	 	 	Cost	 
	Quality Assurance
	 	 	11038	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	VP Operations
	 	 	13010	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Ots Engineering
	 	 	13011	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Ots Development Manufacturing
	 	 	13012	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Ots Bb Product Support
	 	 	13017	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Program Management
	 	 	16015	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Clinical Affairs
	 	 	16021	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	VP Regulatory & Quality
	 	 	16022	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Regulatory Affairs
	 	 	16023	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Research
	 	 	16041	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Bloodbank
	 	 	16071	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Marketing-Bloodbank
	 	 	17019	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Validation
	 	 	11039	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	VP Diagnostic Development
	 	 	16056	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Std Development
	 	 	16052	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	VP Sales/Marketing
	 	 	17005	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Prod.Planning
	 	 	11005	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	—	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	QC Microbiology
	 	 	11023	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Stability
	 	 	11035	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	QC Analytical
	 	 	11037	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Instrument Development
	 	 	16019	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	Performance QC
	 	 	13016	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 	 	 	[***]	 
	Adjusted Controllable Total (total less non cc
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[***]	 	 	 	[***]	 
	related expenses)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[***]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[***]	 	 	 	[***]	 






	 	 	 	 	 
	Cost/FTE w/o 6021
	 	 	[***]	 
	Cost/FTE w-6021
	 	 	[***]	 
	Cost/FTE w/o 6021 & w/o G&A
	 	 	[***]	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	HR	 	 	Finance	 	 	 	 	 	 	 
	G&A Allocations:	 	*Based on H/C	 	 	**Based on Tot Cont	 	 	***Bonus Pool	 	 	Allocations	 
	Controllables
	 	 	[***]	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 
	Benefits
	 	 	[***]	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 
	Deprec/Ammort
	 	 	—	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 
	Facilities
	 	 	[***]	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 
	Human Resources
	 	 	[***]	 	 	 	[***]	 	 	 	 	 	 	 	[***]	 
	Total Allocation
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 






	 	 	 	 	 
	Changes to center 60-71 Controllables
	 	 	 	 
	Remove Inventory Used (AC620)
	 	 	[***]	 
	Remove Inventory Used Valuation Adjustment
	 	 	[***]	 
	Remove Inventory Used-Clin
	 	 	[***]	 
	Remove Inventory Used-Adjs
	 	 	[***]	 
	Remove Standard Cost Applied
	 	 	[***]	 
	Remove Work Order Scrap-Diag
	 	 	[***]	 
	 
	 	 	[***]	 





***Confidential Treatment
Requested.















 








Schedule 5.3.1




Accrued eSAS 2 Development Costs







	 	 	 	 	 
	2002 Summary
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]	 	 
	CBT cost @[...***...]/FTE

	 	[...***...]
	 	 
	GP cost @ [...***...]/FTE

	 	—  	 	 
	

	 	 	 	 
	          [...***...]

	 	[...***...]	 	 
	 











	 	 	 	 	 
	2003 Summary
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]
	 	 
	CBT cost @ [...***...]/FTE

	 	[...***...]	 	 
	GP cost @ [...***...]/FTE

	 	[...***...]	 	 
	

	 	 	 	 
	Total Project

	 	[...***...]	 	 
	 











	 	 	 	 	 
	6 Months 2004 Summary
	 	 	 	 
	CBT Grand Total Hours

	 	[...***...]	 	 
	CBT Avg Monthly FTE

	 	[...***...]	 	 
	CBT cost @ [...***...]/FTE

	 	[...***...]
	 	 
	GP cost @ [...***...]/FTE

	 	[...***...]	 	 
	Total Project

	 	[...***...]	 	 
	 











	 	 	 	 	 
	Total Accrued Development Cost

	 	[...***...]
	 	 








***Confidential Treatment Requested




 









 








Schedule 6.4




Sales Authorization Letter




[DATE]




[NAME OF THIRD PARTY MANUFACTURER]




Dear Sir or Madam:



Chiron Corporation (“Chiron”) and [NAME OF THIRD PARTY MANUFACTURER] entered into that certain
[NAME OF AGREEMENT] dated as of ______ (the “Chiron/[NAME OF THIRD PARTY MANUFACTURER]
Agreement”) for the manufacture of eSAS 2 instruments for use in blood screening (the “eSAS 2
Instruments”). As used herein, “blood screening” means the nucleic acid probe based testing of
human blood, plasma or other human blood products intended for transfusion or other administration
to humans for purpose of detecting the presence or absence of viral organisms, and expressly
excludes diagnostic testing. Chiron and Gen-Probe Incorporated (“Gen-Probe”) are parties to certain
agreements pursuant to which, among other things, Chiron has granted Gen-Probe the right to
purchase certain eSAS 2 Instruments directly from NAME OF THIRD PARTY MANUFACTURER.



Accordingly, Chiron therefore authorizes [NAME OF THIRD PARTY MANUFACTURER] to: accept orders from,
manufacture for and deliver to Gen-Probe eSAS 2 Instruments under the financial terms and
conditions contained in the Chiron/[NAME OF THIRD PARTY MANUFACTURER] Agreement.




Sincerely,




Chiron Corporation





 









 








Schedule 2.5.2




eSAS 2 Regulatory Strategy









INTEROFFICE MEMORANDUM




To: [...***...]




Date:
May 30, 2003




From: [...***...]




Copies: [...***...]




Subject: eSAS 2.0 Regulatory Strategy and Contract Requirements









This memo is to document the Regulatory strategy and expectations for eSAS 2.0, and address both
U.S. and International submission requirements.




[...***...]




This concludes the Regulatory Strategy.





***Confidential Treatment Requested