Exhibit 10.331


 


	
  CONFIDENTIAL

  	
   

  	
  REDACTED
  VERSION

  



 


[***] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION. 
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS.


 


 


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


 


	
  1.

  	
  Definitions

  	
   

  
	
   

  	
  1.1

  	
  Agreement

  	
   

  
	
   

  	
  1.2

  	
  Binder

  	
   

  
	
   

  	
  1.3

  	
  Budget

  	
   

  
	
   

  	
  1.4

  	
  eSAS 2
  Instrument

  	
   

  
	
   

  	
  1.5

  	
  eSAS 2
  Development Costs

  	
   

  
	
   

  	
  1.6

  	
  eSAS 2
  Development Program

  	
   

  
	
   

  	
  1.7

  	
  eSAS 2
  Addendum Term

  	
   

  
	
   

  	
  1.8

  	
  FTE Labor Rate

  	
   

  
	
   

  	
  1.9

  	
  Material
  Modification

  	
   

  
	
   

  	
  1.10

  	
  Non-material
  Modification

  	
   

  
	
   

  	
  1.11

  	
  Product
  Requirements Document

  	
   

  
	
   

  	
  1.12

  	
  Resource Plan

  	
   

  
	
   

  	
  1.13

  	
  Software
  Requirements Specifications

  	
   

  
	
   

  	
  1.14

  	
  Technical Plan

  	
   

  
	
   

  	
  1.15

  	
  Timeline

  	
   

  
	
  2.

  	
  eSAS 2 Development Program

  	
   

  
	
   

  	
  2.1

  	
  Objective

  	
   

  
	
   

  	
  2.2

  	
  General
  Conduct of Development

  	
   

  
	
   

  	
  2.3

  	
  No
  Liability if Commercially Reasonable Efforts Are Expended

  	
   

  
	
   

  	
  2.4

  	
  Project
  Management

  	
   

  
	
   

  	
   

  	
  2.4.1

  	
  Principles
  of Project Management

  	
   

  
	
   

  	
   

  	
  2.4.2

  	
  Project Manager

  	
   

  
	
   

  	
   

  	
  2.4.3

  	
  Project
  Manager’s Responsibilities

  	
   

  
	
   

  	
   

  	
  2.4.4

  	
  Project Leaders

  	
   

  
	
   

  	
   

  	
  2.4.5

  	
  Reports

  	
   

  
	
   

  	
   

  	
  2.4.6

  	
  Meetings
  of the Supervisory Board

  	
   

  
	
   

  	
  2.5

  	
  Development
  Responsibilities

  	
   

  
	
   

  	
   

  	
  2.5.1

  	
  Principal
  Responsibility; General Statement

  	
   

  
	
   

  	
   

  	
  2.5.2

  	
  Regulatory/Licensure

  	
   

  
	
   

  	
   

  	
  2.5.3

  	
  Project
  Leader Disagreements

  	
   

  
	
  3.

  	
  Modifications

  	
   

  
	
   

  	
  3.1

  	
  eSAS 2
  Development Program Definition

  	
   

  
	
   

  	
   

  	
  3.1.1

  	
  [***] Modules

  	
   

  
	
   

  	
   

  	
  3.1.2

  	
  [***] Modules

  	
   

  
	
   

  	
  3.2

  	
  Modifications

  	
   

  
	
   

  	
   

  	
  3.2.1

  	
  Request
  for Modifications

  	
   

  
	
   

  	
   

  	
  3.2.2

  	
  Monthly
  Progress Reports

  	
   

  
	
   

  	
  3.3

  	
  Material
  Modifications

  	
   

  
	
   

  	
   

  	
  3.3.1

  	
  Request for
  Material Modifications

  	
   

  
	
   

  	
   

  	
  3.3.2

  	
  Initial
  Analysis of Impact of Proposed Material Modification

  	
   

  
	
   

  	
   

  	
  3.3.3

  	
  Preparation
  of Modified eSAS 2 Development Program

  	
   

  
	
   

  	
   

  	
  3.3.4

  	
  Acceptance
  of Modified eSAS 2 Development Program

  	
   

  
	
   

  	
   

  	
  3.3.5

  	
  Effective
  Date of Modified eSAS 2 Development Program

  	
   

  
	
   

  	
  3.4

  	
  Notice
  of Significant Changes

  	
   

  
	
  4.

  	
  Changes
  to eSAS 2 Instrument after Completion Date

  	
   

  



 


i





















 


	
  5.

  	
  eSAS 2 Development Costs

  	
   

  
	
   

  	
  5.1

  	
  [***] to pay Development Costs

  	
   

  
	
   

  	
  5.2

  	
  Definition
  and Calculation of eSAS 2 Development Costs

  	
   

  
	
   

  	
   

  	
  5.2.1

  	
  eSAS 2
  Development Costs; FTE Labor Rate

  	
   

  
	
   

  	
   

  	
  5.2.2

  	
  Comparison
  with Resource Plan

  	
   

  
	
   

  	
   

  	
  5.2.3

  	
  Methodology

  	
   

  
	
   

  	
  5.3

  	
  Payment of eSAS 2
  Development Costs

  	
   

  
	
   

  	
   

  	
  5.3.1

  	
  Accrued
  eSAS 2 Development Costs

  	
   

  
	
   

  	
   

  	
  5.3.2

  	
  Monthly
  Notices; Payments

  	
   

  
	
   

  	
   

  	
  5.3.3

  	
  Invoices

  	
   

  
	
   

  	
  5.4

  	
  Reimbursement
  of eSAS 2 Development Costs

  	
   

  
	
  6.

  	
  Manufacturing and
  Commercialization

  	
   

  
	
   

  	
  6.1

  	
  eSAS 2
  Instrument Manufacturing Costs

  	
   

  
	
   

  	
  6.2

  	
  Rights
  to Manufacture and Sell

  	
   

  
	
   

  	
   

  	
  6.2.1

  	
  Blood
  Screening Field

  	
   

  
	
   

  	
   

  	
  6.2.2

  	
  Clinical
  Diagnostic Field

  	
   

  
	
   

  	
   

  	
  6.2.3

  	
  Right
  to Acquire All Rights to Manufacture and Commercialize

  	
   

  
	
   

  	
  6.3

  	
  Consideration
  on eSAS 2 Instrument Sales

  	
   

  
	
   

  	
  6.4

  	
  Authorization
  Letter

  	
   

  
	
  7.

  	
  Ownership; License Grant

  	
   

  
	
   

  	
  7.1

  	
  Ownership

  	
   

  
	
   

  	
  7.2

  	
  License Grant

  	
   

  
	
   

  	
  7.3

  	
  [***] Immunity

  	
   

  
	
  8.

  	
  Addendum
  Effective Date; Term; Termination

  	
   

  
	
   

  	
  8.1

  	
  Term of
  eSAS 2 Addendum

  	
   

  
	
   

  	
  8.2

  	
  Termination
  for Breach

  	
   

  
	
   

  	
   

  	
  8.2.1

  	
  Default

  	
   

  
	
   

  	
   

  	
  8.2.2

  	
  Right
  to Cure Event of Default

  	
   

  
	
   

  	
   

  	
  8.2.3

  	
  Effect
  of Termination for Breach

  	
   

  
	
   

  	
  8.3

  	
  Termination
  by Chiron

  	
   

  
	
   

  	
  8.4

  	
  Continuance
  of eSAS 2 Development Program following Termination

  	
   

  
	
   

  	
   

  	
  8.4.1

  	
  Election

  	
   

  
	
   

  	
   

  	
  8.4.2

  	
  Funding and Conduct
  of Development

  	
   

  
	
   

  	
   

  	
  8.4.3

  	
  Reimbursement of
  Development Costs

  	
   

  
	
   

  	
   

  	
  8.4.4

  	
  Control
  of the Program upon Unilateral Funding

  	
   

  
	
   

  	
   

  	
  8.4.5

  	
  Rights under Agreement

  	
   

  
	
  9.

  	
  Escalation

  	
   

  
	
   

  	
  9.1

  	
  Escalation
  Process

  	
   

  
	
   

  	
  9.2

  	
  Remedies
  in Event of Default

  	
   

  
	
   

  	
  9.3

  	
  Survival

  	
   

  
	
  10.

  	
  No
  Other Amendment

  	
   

  
	
  11.

  	
  Counterparts

  	
   

  



 





















 


	
  CONFIDENTIAL

  	
   

  	
  REDACTED
  VERSION

  



 


 


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.


 


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


 


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 [***], provide [***] including
[***] to [***] required for the development under
the confidentiality terms of


 


7





















 


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. 


 


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,


 


8





















 


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 [***] 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.


 


(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;


 


9





















 


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 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


 


10





















 


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 to resolve such impasse.  Notwithstanding anything to the contrary in
this eSAS 2 Addendum or the


 


11





















 


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.


 


12





















 


5.2.1                        eSAS
2 Development Costs; FTE Labor Rate. 



 


(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


 


13





















 


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


 


14





















 


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


 


15





















 


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 [***] 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 calculation) and retain the Chiron


 


16





















 


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.


 


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


 


18





















 


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.


 


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


 


19





















 


(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 forth in the approved Budget.


 


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


 


 “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


 


20





















 


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.


 


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


 


21





















 


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.


 


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,

  a Delaware corporation

  	
  CHIRON
  CORPORATION,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/HANK NORDHOFF

  	
   

  	
  By:

  	
  /s/ GENE W.
  WALTHER

  	
   

  
	
  Its:

  	
  President &
  CEO

  	
   

  	
  Its:

  	
  President

  	
   

  
	
  Date:

  	
  12-21-04

  	
   

  	
  Date:

  	
  18 Feb. 2005

  	
   

  
												



 


22





















 


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

  	
   

  	
  [***]

  	
   

  



 





















 


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

  	
   

  	
   

  



 





















 


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


 





















 


	
  CONFIDENTIAL

  	
   

  	
  REDACTED
  VERSION

  



 


Schedule 1.12-A


PRD – robotic sample handling and transport system


 





















 


	
  CONFIDENTIAL

  	
   

  	
  REDACTED
  VERSION

  



 


Schedule 1.12-B


PRD – front end pipettor


 





















 


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.


 


Background:  [***] instruments
are intended for the eSAS 2.0 system. 
The [***] is to be used as
a [***] for the addition of [***] and [***],
and replaces the [***]
instrument.  The [***] instrument, called the [***], will automate current manual [***] steps for [***] of [***],[***], etc. 
These [***] instruments
will be placed in separate areas of the lab, as the steps associated with their
use are during the [***] and [***] stages of the [***] procedure.


 


Current timelines reflect
a [***] launch of the [***] instruments in [***] approximately [***]. 
Within the [***], the
initial estimate on the timeline is [***],[***] launch plan for both
instruments.  This date will be updated
concurrent with the completion of the relevant Gen-Probe/Chiron Agreement.


 


Business
Assumptions:  The following information
is intended to outline responsibility, per the current Gen-Probe/Chiron
Agreement for U.S. and International submissions as they relate to this
project.  Certain assumptions with regard
to contractual obligations have been made to complete this assessment.  Those are:


 


1.                                       [***] is the [***] entity responsible for [***]
or [***]  [***] regarding the [***],[***]or
any other component that is an addition to, or modification of, the current
eSAS blood screening system.


2.                                       [***] responsible for [***][***][***] for the blood screening
system.


3.                                       [***] will receive a complete copy of the [***], including [***] and reports, relating to the development of the [***] instrument, hardware and software
components.


4.                                       There
may be more than one model number applied to the [***] instrument, with modifications to the instrument as
necessary for subsequent applications.  
Therefore, [***]will have
direct access to [***].


5.                                       The
[***] instrument will be [***] marked according to the appropriate
directive(s) (e.g. EMC directive, Medical Device Directive) prior to being
delivered to [***] as a completed
component of the eSAS system.


 





















 


6.                                       No
changes or improvements in the instrument or software will be made, once
approved by [***], without prior
approval by [***].


 


Because a [***] launch of the [***] and [***]
is planned in [***] the [***] and [***],
no considerations have been made in regard to [***]
requirements for [***] [***]
component.  A [***], or [***],
approach to implementation of the [***]
and [***] could alter the
regulatory strategy presented below.


 


4.


 


Additional
Background:  The original eSAS submission
(formally called the Chiron Procleix System) incorporated general purpose
laboratory equipment, primarily the [***],[***], and [***].  Two [***] components, the [***] and [***]),
were developed for the system.  The [***] is [***]
from 510(k) submission requirements and only [***] brief descriptions in the [***] 510(k).  The [***] was
a [***] for FDA and the [***] of the submission was about the [***] of the [***] components.


 


[***]
Requirements and Strategy:


 


5.                                       The
[***] and [***]


 


The [***] is intended to replace the [***] instrument, and will have [***], which [***] replace the [***]
currently used with the [***].  The [***]
is a [***] that will not interact
with either the [***] or the [***].


 


The [***] reads [***] and [***],
creates [***],[***] and [***]
into the appropriate [***] within
the [***] and sends the [***] to the [***].  The [***] is partly responsible for [***], and as such is ultimately classified
as a “[***] under FDA guidance on [***] in medical devices.  This FDA guidance document specifies which [***] must be submitted according to the [***], and will be used as the guidance
within the project team for determining the deliverables for the
submission.  Additionally, [***] testing will be required and the
protocol(s) and results will be presented in the submission.  All changes to [***] will also be submitted. 
Because this is [***] of a [***] instrument, but does not affect [***] or [***]
steps, it is anticipated that this will be designated as a [***]. 
A [***] typically has a [***] review cycle.  The sheer volume of the [***] and [***]
documentation, and the protocols and results from the [***] testing may be [***] to the typical 30 day cycle, however.


 


The [***] is basically an [***] that is usually classified by [***] as [***].  Because it is [***] and does not interact or interfere with the normal [***] or [***]
process, it should be presented to FDA that there are [***] for this particular component, other
than a [***] in the [***] of the component itself and it’s use
in the overall system.


 


If a [***], or [***]
implementation is planned for the [***]
and the [***], then it should be
presented to FDA that a [***] will
be submitted for the [***] and it’s
associated [***], but [***] submission is intended for the [***].


 


[***]


 


Any changes to [***] as a result of the implementation of
the [***] or [***] will require a [***], since the [***] are [***]
specific and were submitted through the [***]
process.  All [***] is to be submitted [***] and [***]
in all submissions to allow the most rapid [***] review.


 


5.1                                 [***] Regulatory Requirements and Strategy


 





















 


Any component that is
part of an [***] system must first
be tested to ensure that it meets the safety requirements of the appropriate [***] for that component (e.g. [***]). 
Once that has been established, the use of the component (or instrument)
is defined for the [***] system
and “[***]” testing is
performed.  This testing demonstrates
that the instrument [***] as [***] within the [***] system.  Upon
successful [***] testing, the
instrument (and its associated software) is [***]
compliant with the [***]
for that [***] application.


 


A [***] has [***]
been approved by [***] (Gen-Probe’s
[***]) for the Chiron Procleix HIV-1/HCV
Assay and the Chiron Procleix System. 
The major components of the Chiron Procleix System were [***] according to each component’s
appropriate [***] by the component’s
[***] prior to the development of
the [***] for the overall [***] and system.  This has [***]
to be an [***] and [***] manner to [***] that the system component meets it’s safety
requirements, and can be [***] to
different [***] applications as
long as [***] is achieved for each
[***] application.


 


The [***] instrument should be tested according
to the standards of the appropriate [***] prior
to being delivered to [***].  [***] testing
(which should be the same as the [***] testing
mentioned in the [***] section of
this document) can be performed at [***] or
[***], and the results of that
testing, along with the [***] of [***] product [***] testing for the instrument, will be presented to the [***] to amend the current [***]. 
While the [***] and [***] documentation may be required for the
[***] for the instrument itself,
it is [***] that extensive [***] documentation will be required for
the [***] submission.  However, the [***] will [***]
audit [***].  In addition, results of the [***] testing will [***] be required for the [***] amendment as well as [***] or [***].


 


This concludes the
Regulatory Strategy.


 





















 


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 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


 





















 


Schedule 5.2.1b


FTE Labor Rate Analysis


 


	
  Cost
  Center

  	
   

  	
   

  	
   

  	
  (Controllable)

  Salary & Wage

  Expense

  	
   

  	
  (Controllable)

  Other

  Costs

  	
   

  	
  (Controllable)

  Total

  Costs

  	
   

  	
  Benefits

  	
   

  	
  Deprec/

  Amort

  	
   

  	
  Facilities

  	
   

  	
  I/S

  	
   

  	
  Indirect

  Allocation

  	
   

  	
  Total Cost

  per Employee

  	
   

  	
  eSAS

  HC

  	
   

  	
  eSAS

  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

  *Based
  on H/C

  	
   

  	
  Finance

  **Based
  on Tot Cont

  	
   

  	
  ***Bonus Pool

  	
   

  	
  Allocations

  	
   

  
	
  G&A 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

  	
   

  	
  [***]

  	
   

  	 

	
   

  	
   

  	
  [***]

  	
   

  	 




 





















 


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

  	
   

  	
  —

  	
   

  
	
  Total Project

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  [***]

  	
   

  



 





















 


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