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	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. 


 
 

TERM SHEET    
    


        This binding Term Sheet sets forth the agreement of Chiron Corporation ("Chiron"), on the one hand, and F. Hoffmann-La Roche Ltd. and Roche
Molecular Systems, Inc. (collectively, "Roche"), on the other, with respect to the settlement of their current arbitration relating to royalties ("Arbitration"), through amendment of the HIV
Probe License Agreement by and between the parties effective as of October 10, 2000 ("Clinical Diagnostics Agreement") and the Blood Screening HIV Probe License Agreement by and between the
parties effective as of January 1, 2001 ("Blood Screening Agreement," collectively with the Clinical Diagnostics Agreement, the "Agreements"). Terms not defined in this Term Sheet have the
meanings given to them in the applicable Agreement. This Term Sheet shall become effective as of September 3, 2004. 


	1.
	Definitions:



	a.
	"Additional
Chiron Patents" means Valid Claims Directed to HIV that cover the manufacture, use, sale, offer for sale, or importation of a Product that are contained within all patents
and applications, including future patents or applications, that are based on inventions conceived by CHIRON or its Affiliates on or before  [***] but are not CHIRON Licensed Patents, and are owned by
Chiron or its Affiliates as of  [***].



	b.
	Excluded
Party" means [***] and any of its affiliates and any successors or assigns to any of their business relating to the CHIRON Licensed Patents, and any
third person that is licensed, now or in the future, under the CHIRON Licensed Patents; in each case, that is acquired by Roche or which acquires Roche after [***], but
excluding [***].



	c.
	"Limiting
Event," with respect to an Agreement, means (i) the permissible assignment of such Agreement to any Excluded Party, or (ii) any Roche Affiliate that is involved
in the businesses to which such Agreement relates becoming directly or indirectly controlled by an Excluded Party (control being defined as set forth in Section 1.2 of such Agreement).



	d.
	"Option
Products" means Products that are used by or sold to an End User under circumstances and in jurisdictions, such that in the absence of the license granted pursuant to
Section 2.5 of the Clinical Diagnostics Agreement, such use or sale would constitute an infringement of a Valid Claim of the CHIRON Future HIV Sequence Patent Rights.



	e.
	"Qualified
Product" means Licensed Products sold by Roche or the Roche portion of the business of an Excluded Party that, prior to a Limiting Event, Roche had offered for commercial
sale or commercially sold or in respect of which Roche had filed with the Food and Drug Administration a Section 510(k) Premarket Notification or a Section 515 Premarket Approval and any
improvements of such Licensed Products or modifications thereto after the Limiting Event.



	f.
	"Roche
Products" means all assays sold by Roche for the detection, quantitation, genotyping or other analyses of nucleic acid sequences Directed to HIV ("Purpose") for use in in vitro
diagnostics and/or Blood Screening, including without limitation the following products of Roche: Amplicor HIV-1 test, v. 1.0; Amplicor HIV-1 Monitor test, v. 1.0; Amplicor
HIV-1 Monitor test, v. 1.5; COBAS Amplicor HIV-1 Monitor test, v. 1.5; Ampliscreen HIV-1 test, v. 1.5; and COBAS Ampliscreen HIV-1 test, v. 1.5; and all
versions of and successors and substitutes therefor. 





1







 



	g.
	"Territory"
means the United States, its territories and possessions, Puerto Rico, Canada, and Mexico.






	2.
	The
parties hereby irrevocably stipulate as follows:



	a.
	The
CHIRON Licensed Patents in the Territory are valid and enforceable;



	b.
	The
making, use, offer for sale, sale, or importation of any Roche Product in the Territory, where a CHIRON Licensed Patent has issued and prior to the expiration of such CHIRON
Licensed Patent, would, in the absence of the licenses granted in the Agreements, as applicable, constitute infringement of one or more claims of such CHIRON Licensed Patent;



	c.
	The
license fees and royalty payments set forth in the Agreements are due to Chiron for sales of the Roche Products in the Territory;



	d.
	Roche
releases any claims it asserted in the Arbitration (or arising out of the same facts and circumstances as the claims it asserted in the Arbitration) that are contrary to the
foregoing subsections a, b, and c; and



	e.
	Chiron
and Roche Molecular Systems, Inc., with the express authorization of F. Hoffmann-La Roche Ltd., shall, immediately upon approval of this Term Sheet by
Chiron's Board of Directors, execute the stipulation appended hereto as Exhibit A ("Stipulation") and request that the arbitrator in the Arbitration enter an award in the Arbitration consistent
with such stipulation. Roche Molecular Systems, Inc. shall thereafter promptly exercise commercially reasonable efforts to support any steps Chiron may undertake to have such stipulated
arbitration award promptly confirmed by a court of competent jurisdiction selected by Chiron.



	f.
	Nothing
in this Term Sheet or the Stipulation shall apply to claims of the CHIRON Licensed Patents that are not directed to the Purpose; by way of example but not by way of limitation,
Valid Claims of CHIRON Licensed Patents directed to immunoassays, antigens, antibodies, and/or proteins are expressly excluded from the terms of this Term Sheet and the Stipulation, including, without
limitation, Sections 2(a) and 2(b), subject to the final sentence of Section 8(a).






	3.
	Royalty
Provisions. The royalty provisions of the Agreements are amended as follows:



	a.
	Clinical
Diagnostics Agreement



	i.
	All
monies already paid to Chiron pursuant to the Clinical Diagnostics Agreement shall be retained by Chiron and are non-refundable, including, without
limitation, the Ten Million United States Dollars (USD$10,000,000) U.S. Licensing Fee, any royalties for sales made prior to January 1, 2001, and any royalties for sales made thereafter but
prior to [***].



	ii.
	For
sales in Region I during the period from [***] through  [***], Earned Royalties, as defined in Exhibit A, will be modified as follows:



	x.
	The
[***] percent ([***]%)
rate set forth in Paragraph 3 of Exhibit A shall be [***] adjusted to  [***] percent ([***]%);



	y.
	the
Minimum Amount/Test set forth in Paragraph 4 of Exhibit A for the HIV Qualitative Assay field shall be
US$[***], rather than US$[***]; and



	z.
	the
Minimum Amount/Test set forth in Paragraph 4 of Exhibit A for the HIV Quantitative Assay field shall be
US$[***], rather than US$[***].






	iii.
	On
or within 10 days following January 1, 2005, Roche shall pay Chiron Fifty-Two Million United States Dollars (USD52,000,000) in cumulative
Earned Royalties for sales made in 








2







 



Region I
after January 1, 2005 and continuing through the life of the applicable CHIRON Licensed Patent(s). Subject to Section 5, such payment shall be nonrefundable. Upon this
Term Sheet becoming binding on all of the parties pursuant to Section 10, the definition of "CHIRON Licensed Patents" in the Clinical Diagnostics Agreement shall be expanded to include the
"Additional Chiron Patents." Subject to Sections 5 and 6, upon the payment of such amount, nothing further shall be due to Chiron from Roche in consideration of the licenses granted pursuant to
Sections 2.1 and 2.3 of the Clinical Diagnostics Agreement for sales in Region I of CHIRON Licensed Products made after January 1, 2005. 



	iv.
	With
respect to CHIRON Future HIV Sequence Patent Rights acquired by Chiron after [***] but prior
to ("[***]"), pursuant to Section 2.5 of the Clinical Diagnostics Agreement, Chiron agrees to grant such rights to Roche
on the following payment terms:



	w.
	If
Chiron may license such rights to Roche without incurring any incremental payment obligation to any person arising from the granting or exercise by Roche of such
license, Roche's payment obligation set forth in Section 3(a)(iii) shall be [***]with respect to sales by Roche
and Roche Affiliates of Option Products in Region I through the [***], and [***]  shall be due to Chiron from Roche in consideration of such license for
sales in Region I of Option Products through the  [***]. For sales in Regions other than Region I and for sales in any Region after the  [***], Roche's
payment obligations for such license shall be determined in accordance with subsection y.




	x.
	If
Chiron would incur any incremental payment obligation to any person arising from the granting or exercise by Roche of such license, Roche  [***] and [***]
shall be due to Chiron from Roche in
consideration of such license for sales in Region I of Option Products through the [***]. For sales in Regions other than Region
I and for sales in any Region after the [***], Roche's payment obligations for such license shall be determined in accordance
with subsection y..



	y.
	Roche's
payment obligations for sales of Option Products not established by subsections w and × shall be  [***] and resolved, if necessary, through the ADR process in accordance with
Article 10 of the Clinical Diagnostics
Agreement to determine the terms that are commercially reasonable.



	z.
	The
terms of the Clinical Diagnostic Agreement shall be modified as necessary to make such Agreement (i) no less protective of Chiron with respect to licenses
granted pursuant to Section 2.5 than such Agreement is with respect to the licenses set forth in Sections 2.1 and 2.3, including, by way of example but not limitation, with respect to payment,
reporting, and audit rights; and (ii) consistent with any agreement under which Chiron acquires any CHIRON Future HIV Sequence Patent Rights after  [***] but prior to the [***], including, by way of
example but not limitation, with respect to payment, reporting, and audit rights.









	b.
	Blood
Screening Agreement



	i.
	All
monies already paid to Chiron pursuant to the Blood Screening Agreement shall be retained by Chiron and are non-refundable, including, without limitation,
any royalties for sales made prior to [***].



	ii.
	For
sales in Region II during the period from [***] through  [***], the Earned Royalty Amounts under Exhibit A will be modified as follows:



	x.
	the
applicable Earned Royalty Amount for Blood Screening will be $[***]; and 









3







 





	y.
	the
applicable Earned Royalty Amount for Plasma Fractionation will be $[***].






	iii.
	On
or within 10 days following January 1, 2005, Roche shall pay Chiron Twenty-Six Million United States Dollars (USD26,000,000) in cumulative
Earned Royalties for sales made in Region II after January 1, 2005 and continuing through the life of the applicable CHIRON Licensed Patent(s). Subject to Section 5, such payment
shall be nonrefundable. Upon this Term Sheet becoming binding on all of the parties pursuant to Section 10, the definition of "CHIRON Licensed Patents" in the Blood Screening Agreement shall be
expanded to include the "Additional Chiron Patents." Subject to Sections 5 and 6, upon the payment of such amount, nothing further shall be due to Chiron from Roche in consideration of the
licenses granted pursuant to Section 2.1 of the Blood Screening Agreement for sales in Region II of CHIRON Licensed Products made after January 1, 2005.







	4.
	For
purposes of this Term Sheet, a Product shall be deemed to have been sold in the Region in which the Product is used by an End User resulting in the Product's consumption,
operation, destruction, or loss of activity.



	5.
	a.    At
any time on or after January 25, 2005, Roche may notify Chiron that it desires a partial refund of the payments made pursuant to Sections 3(a)(iii) and
3(b)(iii). Roche's request shall be deemed to have been made on the Refund Request Date set forth in Exhibit C that immediately follows the effective date of such notice. Within
forty-five (45) days after such Refund Request Date, Chiron shall refund to Roche the Refund Amounts set forth on Exhibit C for each Agreement that correspond to such Refund
Request Date.



	b.
	As
of such Refund Request Date, the payments made by Roche pursuant to Section 3(a)(iii) shall no longer be deemed to be cumulative Earned Royalties for sales made in
Region I after January 1, 2005 under the Clinical Diagnostics Agreement. Under the Clinical Diagnostics Agreement, from such Refund Request Date through the Term of the Clinical Diagnostics
Agreement:



	i.
	the
Earned Royalty rate for sales of Licensed Products in the Territory shall be the Clinical Diagnostics Earned Royalty Rate set forth in Exhibit C that
corresponds to such Refund Request Date;



	ii.
	the
Minimum Amount/Test set forth in Paragraph 4 of Exhibit A for the HIV Qualitative Assay field shall be the Minimum Amount/Test for the HIV Qualitative
Assay field set forth in Exhibit C that corresponds to such Refund Request Date; and



	iii.
	the
Minimum Amount/Test set forth in Paragraph 4 of Exhibit A for the HIV Quantitative Assay field shall be the Minimum Amount/Test for the HIV
Quantitative Assay field set forth in Exhibit C that corresponds to such Refund Request Date.






	c.
	As
of such Refund Request Date, the payments made pursuant to Section 3(b)(iii) shall no longer be deemed to be cumulative Earned Royalties for sales made in Region II
after January 1, 2005 under the Blood Screening Agreement. Under the Blood Screening Agreement, from such Refund Request Date through the through the Term of the Blood Screening Agreement:



	i.
	the
applicable Earned Royalty Amount for Blood Screening shall be the Earned Royalty Amount for Blood Screening set forth in Exhibit C that corresponds to such
Refund Request Date; and



	ii.
	the
applicable Earned Royalty Amount for Plasma Fractionation shall be the Earned Royalty Amount for Plasma Fractionation set forth in Exhibit C that corresponds
to such Refund Request Date. 








4








 



	d.
	After
October 2, 2006, Roche shall no longer be entitled to any refund pursuant to this Section 5.






	6.
	Except
with respect to products as to which Earned Royalties will be paid at adjusted rates and amounts pursuant to Section 5 and Exhibit C and products coming within the
terms of Section 7, the most favored nations provisions of the Agreements shall be of no further force or effect, retrospectively, currently, or prospectively, with respect to Region I, in the
case of the Clinical Diagnostics Agreement, and Region II, in the case of the Blood Screening Agreement.



	7.
	a.    Except
as provided in Sections 7(b) and 7(c), the royalty provisions of the Agreements as amended by this Term Sheet will not benefit any Excluded Party (as defined
above) or apply to any products developed by or on behalf of any Excluded Party. Rather, to the extent any such person or product benefits from the licenses granted under the Agreements, the royalty
provisions set forth in the Agreements prior to their amendment by this Term Sheet shall apply.



	b.
	If
a Limiting Event should occur with respect to the Clinical Diagnostics Agreement, the royalty provisions of this Term Sheet, including, without limitation, the payments made
pursuant to Section 3(a)(iii):



	i.
	shall
apply in the twelve-month period following such Limiting Event with respect to, and only with respect to a volume of Qualified Products having an aggregate selling
price equal to [***] of such Qualified Products sold in the Territory by Roche during the Calendar Year immediately preceding
such Limiting Event plus [***] percent ([***]%), and



	ii.
	shall
apply in each of the successive twelve-month periods following such Limiting Event with respect to, and only with respect to a volume of Qualified Products having
an aggregate selling price equal to [***] plus [***]
percent ([***]%).






	c.
	If
a Limiting Event should occur with respect to the Blood Screening Agreement, the royalty provisions of this Term Sheet, including, without limitation, the payments made pursuant to
Section 3(b)(iii):



	i.
	shall
apply in the twelve-month period following such Limiting Event with respect to, and only with respect to a volume of Qualified Products having an aggregate selling
price equal to [***] of such Qualified Products sold in the Territory by Roche during the Calendar Year immediately preceding
such Limiting Event plus [***] percent ([***]%), and



	ii.
	shall
apply in each of the successive twelve-month periods following such Limiting Event with respect to, and only with respect to a volume of Qualified Products having
an aggregate selling price equal to [***] plus [***]  percent ([***]%).









	8.
	a.    Neither
Roche nor any of its Affiliates (each, a "Roche Party") shall initiate, bring, or otherwise challenge the validity or enforceability of, or seek to oppose the
issuance of or narrow the issued or applied for claims, scope, or duration of, any of the claims of a CHIRON Licensed Patent in the Territory, directed to the Purpose, including, without limitation,
any interferences, reexaminations, or other proceedings in the U.S. Patent and Trademark Office or any other office, administration, or agency in the Territory. In addition, no Roche Party shall
"support", as defined in Section 7.3(b) of the Clinical Diagnostics Agreement, any third person in initiating, bringing, or otherwise challenging the validity or enforceability of, or seeking
to oppose the issuance of or narrow the issued or applied for claims, scope, or duration of, any of the claims of a CHIRON Licensed Patent in the Territory, directed to the Purpose, including, without
limitation, any interferences, reexaminations, or other proceedings in the U.S. Patent and Trademark Office or any other office, administration, or agency in the Territory. Further, none of the Roche
Parties 


5







 

shall
challenge the validity or enforceability of any patent containing a claim within the CHIRON Licensed Patents in the Territory, or "support," as defined in Section 7.3(b) of the Clinical
Diagnostics Agreement, a challenge by a third party to the validity or enforceability of any such patent to the extent such challenge could invalidate or impair the enforceability of any claim
directed to the Purpose; provided, however, that nothing in this Term Sheet amends, derogates, or changes in any way the rights and obligations of Roche Diagnostics GmbH under the Cross License
Agreement on HIV (Immunoassays) between Roche Diagnostics GmbH, Dade Behring, Ortho Clinical Diagnostics, and Chiron dated November, 2002. 


	b.
	Roche
shall direct its counsel to convey all Subject Documents (as defined below) to Roche, except that each firm may maintain one archival copy of the Subject Documents (solely for
use in a manner not inconsistent with the purposes of this Section 8), and Roche shall confirm its receipt of the Subject Documents to Chiron. Roche shall use all commercially reasonable
efforts to prevent any Subject Documents from being used by, or for the benefit of, any third person and shall take all commercially reasonable steps to prohibit such use from occurring. "Subject
Documents" means any writing prepared for or in connection with representation of Roche, whether in paper, electronic, or other form, prepared in connection with the Arbitration or the facts and
circumstances relating thereto or relating to the validity or enforceability of the CHIRON Licensed Patents, including any and all pleadings, briefs, declarations, and other papers submitted in the
Arbitration, drafts thereof, deposition transcripts, summaries thereof, memoranda, attorney or consultant work product, and any writing containing any Designated Materials (as defined in the
Protective Order in the Arbitration) of Chiron or excerpts or analysis thereof. Notwithstanding anything provided in this Section 8 to the contrary, expressly recognizing that Stephen S.
Rabinowitz, Esq. and his present firm Fried, Frank, Harris, Shriver & Jacobson LLP (collectively "Fried Frank") have been and are representing Laboratory Corporation of America Holdings and its
affiliates in a civil action commenced by Chiron and pending in the United States District Court for the Central District of California Case No. 04 CV 1064 MRP (the "LabCorp Case"), nothing
done (in the past, present or future) by Fried Frank in or in connection with the LabCorp Case in contravention of written instructions from Roche following September 3, 2004 of which Chiron
has received notice shall be deemed to be a violation by Roche of this Section 8; provided that (i) Roche shall instruct Fried Frank not to make any use in the future of any Subject
Document Fried Frank prepared in the course of acting on behalf of Roche in the Roche/Chiron arbitration and to otherwise comply with this Section 8, and (ii) that Roche otherwise
complies with this Section 8.






	9.
	Each
party shall bear its own fees incurred in connection with the Arbitration and shall bear half the expenses of the arbitrator.



	10.
	By
executing this Term Sheet, each party agrees to be bound by its terms, subject in the case of Chiron to approval by the Chiron Board of Directors. It is the current intention of
the parties to execute definitive amendments to the Agreements that will supercede this Term Sheet, however, if such definitive amendments are not prepared and/or executed by the parties, this Term
Sheet will remain binding upon the parties. This Term Sheet (including the Stipulations in Exhibits A and B and the chart in Exhibit C hereto, which are incorporated herein by reference), the
Agreements, and the Settlement Agreement effective as of October 10, 2000 constitute the complete agreement between the parties and supersede all prior or contemporaneous agreements or
representations, written or oral, concerning the subject matter of this Term Sheet. No party shall rely on any oral or written representation other than as expressly set forth herein. This Term Sheet
and all matters arising out of or relating to this Term Sheet shall be interpreted and enforced under the laws of the State of New York. The provisions of Section 9 of the Settlement Agreement
effective as of October 10, 2000 shall apply to any dispute arising out of or relating to this Term Sheet. 


6







 
	11.
	Each
party may issue a press release disclosing the existence of this Term Sheet. The terms of this Term Sheet and the definitive agreements based on this Term Sheet ("Terms") will be
"Information" of both parties pursuant to Article 8 of the Clinical Diagnostics Agreement. Notwithstanding the foregoing, (i) the Terms shall be expressly subject to Section 8.4
of the Clinical Diagnostics Agreement and (ii) Chiron may disclose such Terms to [***] and  [***],
provided that the recipient of such disclosure has agreed to
confidentiality obligations applicable to the Terms no less restrictive than those contained in Article 8 of the Clinical Diagnostics Agreement.



	12.
	This
Section 12 shall be immediately binding on each party upon execution of this Term Sheet by all of Chiron, Roche Molecular Systems, Inc., and F.
Hoffmann-La Roche Ltd. At such time, each of Chiron and Roche Molecular Systems, Inc. shall execute the Renewed Stipulation Re Delayed Rendering of Award appended hereto as
Exhibit B and promptly submit such stipulation to the arbitrator in the Arbitration. 



AGREED
TO AND ACCEPTED BY: 


Chiron
Corporation 



	

By:	
 	

/s/  JEKENT      	
 	

 
	Date:	 	Sept. 3, 2004	 	 
	

AGREED TO AND ACCEPTED BY:
	

F. Hoffmann-La Roche Ltd.
	

By:	
 	

/s/  HEINO VON PRONDZYNSKI      	
 	

 
	 	 	/s/  ROBERT YATES      	 	 
	Date:	 	3 Sept 04	 	 
	

AGREED TO AND ACCEPTED BY:
	

Roche Molecular Systems, Inc.
	

By:	
 	

/s/  H. DREISMANN      	
 	

 
	Date:	 	September 3, 2004	 	 




7








  



 
 

EXHIBIT A
  before The honorable
  Charles B. Renfrew, arbitrator    
    



	




 IN THE MATTER OF THE ARBITRATION

BETWEEN

CHIRON CORPORATION,

Claimant

AND

ROCHE MOLECULAR SYSTEMS, INC.,

Respondent	


 	





STIPULATED ARBITRATION AWARD




Stipulation  


Chiron
Corporation and Roche Molecular Systems, Inc., on behalf of themselves and their affiliates, hereby irrevocably stipulate as follows: 


	1.
	"Agreements"
means the HIV Probe License Agreement by and between the parties effective as of October 10, 2000 and the Blood Screening HIV Probe License Agreement by and between
the parties effective as of January 1, 2001;



	2.
	"Blood
Screening" means the commercial use of products that detect nucleic acid sequence(s) for: (a) the screening of blood, plasma or blood components intended for transfusion
or for use in blood products (e.g., without limitation, immunoglobulins); or (b) confirmatory or supplemental testing of the same samples otherwise screened for purposes described in (a);



	3.
	"Directed
to HIV" means that the claim or technology in question is directed to methods, compositions, reagents or kits specifically for use in nucleic acid-based
diagnostic assays for the detection of HIV nucleic acid sequence(s), or specifically for use in the manufacture of any compositions or reagents for use in, or manufacture of nucleic
acid-based diagnostic assays for detection of HIV nucleic acid sequence(s) (excluding, for example, polymerase chain reaction claims and technology and other methods for detection of
nucleic acid sequence(s) generally which involve nucleic acid amplification). The terminology "specifically for use" as used in this definition, is intended to exclude inventions suitable for use with
viruses or analytes other than HIV (including by way of example and not by way of limitation, inventions relating to polymerase chain reaction, or assay formats, improved expression systems,
detectable labels, instrumentation, packaging and the like), which shall not be considered "specifically for use" in HIV detection as contemplated by this definition and shall therefore not be
considered as "Directed to HIV" hereunder;



	4.
	"HIV"
means any viral isolate of the human immunodeficiency virus classified as HIV by the International Committee on the Taxonomy of Viruses (or any body that replaces such Committee)
or any subtype of such isolate and further includes any isolate that is at least forty percent (40%) homologous to any such isolate and of the same genomic type and substantially the same genomic
organization, any isolate that has a genome that either hybridizes to or is substantially identical to any such isolate or its compliment, and any defective or modified form of any of the above
isolates;



	5.
	"Patent"
means U.S. Patent No. 6,531,276 B1;



	6.
	"Roche
Products" means all assays sold by Roche Molecular Systems, Inc. for the detection, quantitation, genotyping or other analyses of nucleic acid sequences Directed to HIV
for use in in vitro diagnostics and/or Blood Screening, including without limitation the following products of Roche Molecular Systems, Inc.: Amplicor HIV-1 test, v. 1.0; Amplicor
HIV-1 Monitor test, v. 1.0; 


8







 

Amplicor
HIV-1 Monitor test, v. 1.5; COBAS Amplicor HIV-1 Monitor test, v. 1.5; Ampliscreen HIV-1 test, v. 1.5; and COBAS Ampliscreen HIV-1 test, v.
1.5; and all versions and successors and substitutes therefor; 



	7.
	The
Patent is valid and enforceable;



	8.
	The
making, use, offer for sale, sale, or importation into the United States of any Roche Product would, in the absence of the licenses granted in the Agreements, as applicable,
constitute infringement of one or more claims of the Patent;



	9.
	The
license fees and royalty payments set forth in the Agreements are due to Chiron for sales of the Roche Products in the United States;



	10.
	Roche
Molecular Systems, Inc., on behalf of itself and its affiliates, releases any claims it asserted in the Arbitration (or arising out of the same facts and circumstances as
the claims it asserted in the Arbitration) that are contrary to the foregoing Sections 7, 8, and 9; and



	11.
	The
parties hereby request that the Arbitrator enter an award in the above-captioned Arbitration consistent with the forgoing stipulation. Roche Molecular Systems, Inc. shall
thereafter promptly exercise commercially reasonable efforts to support any steps Chiron may undertake to have such stipulated arbitration award promptly confirmed by a court of competent jurisdiction
selected by Chiron. 






	

Date: August    , 2004	
 	

Agreed:	

 
	 	 	 	

	

 	
 	

Stephen S. Rabinowitz

FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
	

 	
 	

Charles B. Cohler

PAUL, HASTINGS, JANOFSKY & WALKER LLP
	

 	
 	

Attorneys for Roche Molecular Systems, Inc.
	

Date: August    , 2004	
 	

Agreed:	

 
	 	 	 	

	

 	
 	

Rachel Krevans

Mathew I. Kreeger

Wesley E. Overson

Lawrence B. Berroya

Peter P. Meringolo

MORRISON & FOERSTER LLP
	

 	
 	

Attorneys for Chiron Corporation




9







 

IT
IS SO ORDERED. 



	

By:	

 Hon. Charles B. Renfrew, Arbitrator	
 	

 
	

Date:	

	
 	

 




10








  



 
 

EXHIBIT B
  before The honorable
  Charles B. Renfrew, arbitrator    
    



	




 IN THE MATTER OF THE ARBITRATION

BETWEEN

CHIRON CORPORATION,

Claimant

AND

ROCHE MOLECULAR SYSTEMS, INC.,

Respondent	


 	





RENEWED STIPULATED RE DELAYED RENDERING OF AWARD




Stipulation  


Chiron
Corporation and Roche Molecular Systems, Inc., on behalf of themselves and their affiliates, jointly agree and stipulate as follows: 


Notwithstanding
Section 9(d)(12) of Settlement Agreement by and between the parties effective as of October 10, 2000, which requires that the Arbitrator render an award in this
Arbitration together with a decision on the award in writing ("Award") within seven calendar days following the submission of post-hearing briefs, the parties jointly request that the
Arbitrator not render the Award prior to September 14, 2004, at 4:00 p.m. 



	

Date: August    , 2004	
 	

Agreed:	

 
	 	 	 	

	

 	
 	

Stephen S. Rabinowitz

FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
	

 	
 	

Charles B. Cohler

PAUL, HASTINGS, JANOFSKY & WALKER LLP
	

 	
 	

Attorneys for Roche Molecular Systems, Inc.
	

Date: August    , 2004	
 	

Agreed:	

 
	 	 	 	

	

 	
 	

Rachel Krevans

Mathew I. Kreeger

Wesley E. Overson

Lawrence B. Berroya

Peter P. Meringolo

MORRISON & FOERSTER LLP
	

 	
 	

Attorneys for Chiron Corporation




11








  



 
 

EXHIBIT C
  
    REFUND SCHEDULE AND ADJUSTED ROYALTY RATES    
    



	Refund

Request

Date
	 	Refund

Amount:

Clinical

Diagnostics

(MM)
	 	Refund

Amount:

Blood

Screening

(MM)
	 	Clinical

Diagnostics

Earned

Royalty

Rate
	 	Minimum

Amount/Test:

HIV Qualitative

Assay
	 	Minimum

Amount/Test:

HIV Quantitative

Assay
	 	Earned

Royalty

Amount:

Blood

Screening
	 	Earned

Royalty

Amount:

Plasma

Fractation

	2/1/05	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	3/31/05	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	6/30/05	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	9/30/05	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	12/31/05	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	3/31/06	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	6/30/06	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	10/2/06	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]
	12/31/06	 	$	[***]	 	$	[***]	 	[***]	%	$	[***]	 	$	[***]	 	$	[***]	 	$	[***]





        [***]
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. 


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TERM SHEET


EXHIBIT A before The honorable Charles B. Renfrew, arbitrator


EXHIBIT B before The honorable Charles B. Renfrew, arbitrator


EXHIBIT C REFUND SCHEDULE AND ADJUSTED ROYALTY RATES