exv10w96



 





EXHIBIT 10.96




***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

And 240.24b-2




SETTLEMENT AGREEMENT




     THIS SETTLEMENT AGREEMENT is made and entered into this 1st day of August,
2006 (the “Effective Date”), by and among Bayer Corporation, an Indiana corporation whose principal
place of business is 100 Bayer Road, Pittsburgh, Pennsylvania (”Bayer Corp.”), Bayer HealthCare
LLC, a Delaware limited liability company wholly-owned by Bayer Corp. whose principal place of
business is 555 White Plains Road, Tarrytown, New York (“Bayer HealthCare” and, together with Bayer
Corp. and their respective predecessors and successors in interest, “Bayer”), and Gen-Probe
Incorporated, a Delaware corporation whose principal place of business is 10210 Genetic Center
Drive, San Diego, California (together with its predecessors and successors in interest,
“Gen-Probe”). Each of Bayer and Gen-Probe are sometimes referred to herein, individually, as a
“Party” and, together, as the “Parties.”



     WHEREAS, the Parties wish to settle their claims against each other in the following legal
actions (collectively, the “Actions”): (i) the lawsuit titled Gen-Probe Inc. v. Bayer
HealthCare LLC, et al. brought in the U.S. District Court for the Southern District of
California (San Diego), Case Number 04-CV-565, naming Bayer HealthCare and Bayer Corp. as
defendants and alleging certain patent infringement claims (“California Action 565”); (ii) the
lawsuit titled Gen-Probe Inc. v. Bayer HealthCare 



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LLC, et al. brought in the U.S. District Court for the Southern District of California
(San Diego), Case Number 05-CV-1668, naming Bayer HealthCare and Bayer Corp. as defendants and
alleging certain patent infringement claims (“California Action 1668”); (iii) the lawsuit titled
Bayer HealthCare, LLC v. Gen-Probe Incorporated brought in the U.S. District Court for the
District of Massachusetts (Boston), Case Number 05-12084-RCL, naming Gen-Probe as defendant and
alleging certain claims for breach of contract (the “Massachusetts Action”); (iv) the arbitration
titled Gen-Probe Incorporated v. Bayer HealthCare LLC, et al., JAMS Reference Number
1240015058 (“JAMS Arbitration 058”); and (v) the arbitration titled Bayer HealthCare LLC v.
Gen-Probe Incorporated, JAMS Reference Number 1100045987 (“JAMS Arbitration 987” and, together
with JAMS Arbitration 058, the “JAMS Arbitrations”);




     WHEREAS, on June 15, 2006, Bayer HealthCare and Gen-Probe entered into a Short Form Settlement
Agreement pursuant to which Bayer HealthCare and Gen-Probe agreed to resolve the Actions, and in
particular, to negotiate final, definitive documentation with respect to the settlement in good
faith; and



     WHEREAS, the Parties hereto confirm their desire to settle and resolve their claims against
each other in the Actions and intend to memorialize their settlement in this definitive agreement
(the “Settlement Agreement”);



     NOW, THEREFORE, in exchange for the mutual promises and covenants contained herein and other
good and valuable consideration the receipt and sufficiency



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of which is hereby acknowledged, intending to be legally bound, the Parties agree as follows:



1.0 Definitions




     As used in this Settlement Agreement, the following terms shall have the meanings set forth
below:



     1.1 “Actions” has the meaning assigned in the recitals.



     1.2 “Affiliate” means a Person that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with, a specified Person. For purposes of
this definition, “control” (including with correlative meanings, the terms “controlling,”
“controlled by” and “under common control with”), as applied to any Person, means: the possession,
directly or indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the beneficial ownership (within the meaning of the
Securities Exchange Act of 1934, as amended) of voting securities, by contract or otherwise and
shall include the beneficial ownership (within the meaning of the Securities Exchange Act of 1934,
as amended) of at least fifty percent (50%) of the voting securities of that Person.



     1.3 “Bayer” has the meaning assigned in the preamble.



     1.4 “bDNA” means the fundamental branched nucleic acid method of signal amplification of
nucleic acids claimed in United States Patent No. 5,849,481 and employed in the VERSANT® bDNA tests
listed in Schedule 2, and modifications or



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enhancements to such method that do not materially modify the basic operation or basic
performance of such method.



     1.5 “bDNA Nucleic Acid Assays” means Nucleic Acid Assays with respect to which bDNA is the
sole method of amplification.



     1.6 “Blood Screening” means: (i) the screening of blood, plasma or blood components intended
for transfusion or for use in blood products (e.g., immunoglobulins), and (ii) the screening of any
biological materials intended for transfusion or transplantation, in each case, from any donor,
including autologous donors.



     1.7 “California Action 565” has the meaning assigned in the recitals.



     1.8 “California Action 1668” has the meaning assigned in the recitals.



     1.9 “Chiron” means Chiron Corporation, and its predecessors and successors in interest.



     1.10 “Chiron IVD Know-How” means any and all know-how that relates to end-point TMA Assays for
HCV and/or HIV and that was owned or controlled by Chiron as of the effective date of the Chiron
License Agreement and was licensed to Bayer pursuant to the Chiron License Agreement. For the
avoidance of doubt, Bayer has no obligation to provide any know-how, whether or not licensed by
Chiron to Bayer under the Chiron License Agreement, to Gen-Probe or its Affiliates during the term
of this Sublicense Agreement or thereafter.



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     1.11 “Chiron License Agreement” means that certain Cross-License Agreement by and between
Chiron and Chiron Diagnostics Corporation, as predecessor-in-interest of Bayer, effective as of
November 30, 1998, as amended on June 30, 2005, and as amended from time to time hereafter.



     1.12 “Chiron Patents” means all HCV and HIV patents and patent applications (or any patents
issued thereon) of Chiron related to In Vitro Diagnostics as to which Bayer, and/or any of its
Affiliates, has acquired license rights with the right to sublicense pursuant to the Chiron License
Agreement as of the Effective Date, including those United States patents listed on Schedule
1.



     1.13 “Collaboration Agreement” means the Agreement dated June 11, 1998 to which Gen-Probe and
Bayer (as successor-in-interest to Chiron, CDC and Bayer Corporation in the field of In Vitro
Diagnostics) are parties, together with a Supplemental Agreement to the Collaboration Agreement,
dated April 2, 2001.



     1.14 “Current Bayer NAD Products” means the products of Bayer identified on Schedule
2, as manufactured, used, imported and sold by, or for, Bayer as of the Effective Date and any
such products incorporating modifications, releases, revisions, updates or enhancements that do not
materially modify the basic construction, basic operation or basic performance thereof.



     1.15 “Current TIGRIS Instrument” has the meaning assigned in Section 1.40.



     1.16 “Dispute” has the meaning assigned in Section 8.2.



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     1.17 “DTS Systems” means one or more of the following testing systems: the
DTSâ 400, the DTSâ 800, and the DTSâ 1600.



     1.18 “DTS Supply Exercise Notice” has the meaning assigned in Article 7.




     1.19 “Effective Date” has the meaning assigned in the preamble.



     1.20 “Excluded Third Party Product” means a product that is packaged under and/or labeled with
the name and/or trademark of a Major IVD Party but not the name and/or trademark of Bayer or a
Bayer Affiliate.



     1.21 “Future Bayer bDNA HIV, HBV, HCV Assays” means any and all bDNA Nucleic Acid Assays of
Bayer for HIV, HBV and/or HCV that are not Current Bayer NAD Products.



     1.22 “Future Bayer Other Nucleic Acid Assays” means any and all Nucleic Acid Assays of Bayer
that are not Current Bayer NAD Products or Future bDNA HIV, HBV, HCV Assays.



     1.23 “Future Gen-Probe Instruments” means any and all future instrument systems of Gen-Probe,
including systems for use in Blood Screening and/or in In Vitro Diagnostics. For the avoidance of
doubt, Future Gen-Probe Instruments shall not include the TIGRIS Instrument.



     1.24 “Gen-Probe” has the meaning assigned in the preamble.



     1.25 “HBV” means hepatitis B virus.



     1.26 “HCV” means hepatitis C virus.



     1.27 “HIV” means human immunodeficiency virus.



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     1.28 “In Vitro Diagnostics” means the in vitro testing of human specimens for the purpose of
diagnosis, prognosis or monitoring the progress of disease or monitoring the effect of treatment of
disease in the human from whom the specimens were taken, but excluding Blood Screening.



     1.29 “JAMS Arbitration 058” has the meaning assigned in the recitals.



     1.30 “JAMS Arbitration 987” has the meaning assigned in the recitals.



     1.31 “JAMS Arbitrations” has the meaning assigned in the recitals.



     1.32 “Major IVD Party” means a Third Party that has global annual sales of In Vitro
Diagnostics products in excess of $300 million.



     1.33 “Massachusetts Action” has the meaning assigned in the recitals.



     1.34 “Nucleic Acid Assay” means an assay for the detection or quantification of nucleic acid
sequences.



     1.35 “Party” and “Parties” have the meanings assigned in the preamble.



     1.36 “Person” means any individual, partnership, firm, corporation, limited liability company,
association, trust, unincorporated organization or other entity.



     1.37 “Settlement Agreement” has the meaning assigned in the recitals.



     1.38 “Specific Bayer Patent Rights” means (a) the Specific Bayer Patents, (b) any and all
divisions, continuations, extensions, renewals, reissues, and reexamination certificates thereof,
(c) any and all patents and patent applications claiming or otherwise entitled to common priority
therewith and (d) any and all foreign or United States patent equivalents of the foregoing.



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     1.39 “Specific Bayer Patents” means the patents and patent applications identified on
Schedule 3.



     1.40 “Specific Gen-Probe Patent Rights” means (a) the Specific Gen-Probe Patents, (b) any and
all divisions, continuations, extensions, renewals, reissues, and reexamination certificates
thereof, (c) any and all patents and patent applications claiming or otherwise entitled to common
priority therewith and (d) any and all foreign or United States patent equivalents of the
foregoing; provided, however, that (i) no patent or patent application claiming or otherwise
entitled to common priority with U.S. Patent No. 5,955,261, and no division, continuation,
extension, renewal, reissue, or reexamination certificate of any such patent or patent application
and no foreign or United States equivalent of the foregoing shall be included within the “Specific
Gen-Probe Patent Rights” if and to the extent such patent, patent application, division,
continuation, extension, renewal, reissue, reexamination certificate or foreign or United States
equivalent claims methods, compositions or articles of manufacture for the detection of ribosomal
nucleic acid targets or transfer nucleic acid targets, and (ii) U.S. Patent No. 5,932,416, any and
all divisions, continuations, extensions, renewals, reissues, and reexamination certificates
thereof, and any and all foreign or United States patent equivalents of the foregoing shall not be
included within the Specific Gen-Probe Patent Rights if and to the extent such division,
continuation, extension, renewal, reissue, reexamination certificate or foreign or United States
equivalent claims methods,



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compositions or articles of manufacture within the scope of the subject matter claimed in U.S.
Patent No. 5,932,416. 



     1.41 “Specific Gen-Probe Patents” means the patents identified on Schedule 4.



     1.42 “Stipulated Final Award” has the meaning assigned in Section 6.4.



     1.43 “Sublicense Agreement” has the meaning assigned in Article 3.



     1.44 “Third Party” means any Person other than Bayer and Gen-Probe or their Affiliates.



     1.45 “TIGRIS Instrument” means the TIGRIS® automated instrument system for use with
end-point TMA Nucleic Acid Assays, including for Blood Screening and in In Vitro Diagnostics, as
manufactured, used, imported and sold by or for Gen-Probe as of the Effective Date (the “Current
TIGRIS Instrument”) and any modification, release, revision, update or enhancement thereto, solely
as such modification, release, revision, update or enhancement does not materially modify the basic
construction, basic operation or basic performance of the Current TIGRIS Instrument. For the
avoidance of doubt, TIGRIS Instrument does not include any instrument system for use in Nucleic
Acid Assays that provide any kinetic or “real-time” results.



     1.46 “TMA” means the methods for target amplification of nucleic acid, using reverse
transcriptase and RNA polymerase, claimed in United States Patent No. 5,399,491.



     1.47 “TMA Nucleic Acid Assays” means Nucleic Acid Assays with respect to which TMA is the sole
method of amplification.



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     The words “hereof”, “herein” and “hereunder” and words of like import used in this Settlement
Agreement shall refer to this Settlement Agreement as a whole and not to any particular provision
of this Settlement Agreement. References to Articles, Sections, Schedules and Exhibits are to
Articles, Sections, Schedules and Exhibits of this Settlement Agreement unless otherwise specified.
All Exhibits and Schedules attached hereto or referred to herein are hereby incorporated in and
made a part of this Settlement Agreement as if set forth in full herein. Any capitalized term used
in any Exhibit or Schedule but not otherwise defined therein shall have the meaning given to such
term in this Settlement Agreement. Any singular term in this Settlement Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words “include”, “includes”
or “including” are used in this Settlement Agreement, they shall be deemed to be followed by the
words “without limitation,” whether or not they are in fact followed by those words or words of
like import. References to any agreement or contract are to that agreement or contract as amended,
modified or supplemented from time to time. References to any Person include the permitted
successors and assigns of that Person. Any reference to “days” means calendar days unless
otherwise specified. This Settlement Agreement shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if all Parties had prepared it.
Nothing in this Settlement Agreement shall be construed as an admission by any Party of any breach,
liability or wrongdoing with respect to the subject matter of the Actions.



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2.0 Execution and Delivery of Releases




     2.1 Contemporaneous with the execution and delivery of this Settlement Agreement, Bayer, by
its authorized representatives, shall have executed and delivered to Gen-Probe a Release in the
form attached hereto as Exhibit A, which release shall be effective as of the Effective
Date.



     2.2 Contemporaneous with the execution and delivery of this Settlement Agreement, Gen-Probe,
by its authorized representative, shall have executed and delivered to Bayer a Release in the form
attached hereto as Exhibit B, which release shall be effective as of the Effective Date.



3.0 Sublicense Granted by Bayer to Gen-Probe




     Contemporaneous with the execution and delivery of this Settlement Agreement, authorized
representatives of Gen-Probe and Bayer HealthCare shall have executed and delivered the Sublicense
Agreement concerning the Chiron Patents and Chiron IVD Know How attached hereto as Exhibit
C (the “Sublicense Agreement”).



4.0 Freedom to Operate Rights




     4.1 Gen-Probe hereby covenants not to sue Bayer, its Affiliates, officers, directors,
employees, distributors, representatives, attorneys, customers to the extent of products acquired
from Bayer and its Affiliates, suppliers to the extent of products produced for Bayer, or their
respective successors, heirs and assigns, for infringement of existing and future patents of
Gen-Probe or its Affiliates, anywhere in the world, solely



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to the extent such infringement arises from the manufacture, use, import or sale by, or for,
Bayer of the Current Bayer NAD Products.



     4.2 Gen-Probe hereby covenants not to sue Bayer, its Affiliates, officers, directors,
employees, distributors, representatives, attorneys, customers to the extent of products acquired
from Bayer and its Affiliates, suppliers to the extent of products produced for Bayer, or their
respective successors, heirs and assigns, for infringement of existing and future patents of
Gen-Probe or its Affiliates, anywhere in the world, solely to the extent such infringement arises
from the manufacture, use, import or sale by, or for, Bayer of Future Bayer bDNA HIV, HBV, HCV
Assays.



     4.3 Gen-Probe hereby covenants not to sue Bayer, its Affiliates, officers, directors,
employees, distributors, representatives, attorneys, customers to the extent of products acquired
from Bayer and its Affiliates, suppliers to the extent of products produced for Bayer, or their
respective successors, heirs and assigns, for infringement of any claim within the Specific
Gen-Probe Patent Rights solely to the extent such infringement arises from the manufacture, use,
import or sale by, or for, Bayer of Future Bayer Other Nucleic Acid Assays.



     4.4 Bayer hereby covenants not to sue Gen-Probe, its Affiliates, officers, directors,
employees, distributors, representatives, attorneys, customers to the extent of products acquired
from Gen-Probe and its Affiliates, suppliers to the extent of products produced for Gen-Probe, or
their respective successors, heirs and assigns, for infringement of existing and future patents of
Bayer or its Affiliates, anywhere in the



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world, (excluding the Chiron Patents) solely to the extent such infringement arises from the
manufacture, use, import or sale by, or for, Gen-Probe of the TIGRIS Instrument.



     4.5 Bayer hereby covenants not to sue Gen-Probe, its Affiliates, officers, directors,
employees, distributors, representatives, attorneys, customers to the extent of products acquired
from Gen-Probe and its Affiliates, suppliers to the extent of products produced for Gen-Probe, or
their respective successors, heirs and assigns, for infringement of any claim within the Specific
Bayer Patent Rights solely to the extent such infringement arises from the manufacture, use, import
or sale by, or for, Gen-Probe of Future Gen-Probe Instruments. Bayer hereby represents and
warrants that the Specific Bayer Patents constitute all of the patents and patent applications
applicable to the manufacture, use, import or sale of the Current TIGRIS Instrument held by Bayer
or any of its Affiliates as of the Effective Date.



     4.6 The covenants not to sue granted under this Article 4: (a) shall apply and extend to the
Affiliates of Bayer and of Gen-Probe, as applicable, only so long as such Persons retain their
status as Affiliates of the relevant Party and (b) subject to the termination of such covenants, as
set forth in Section 4.7, shall continue in full force and effect notwithstanding any alienation of
the subject patents by Bayer or Gen-Probe or their respective Affiliates, as applicable.



     4.7 Not withstanding any other provision in this Agreement, the covenants not to sue in favor
of any Party under this Article 4 shall not extend to the manufacture,



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use, import or sale by, or for, such Party (or such Party’s Affiliate) of Excluded Third Party
Products or components thereof.



     4.8 The covenants not to sue granted under this Article 4 shall continue in full force and
effect until the expiration of the last applicable patent to expire.



5.0 Payments




     5.1 In partial consideration for the covenants not to sue granted under Article 4, within
fifteen (15) days of the Effective Date, Bayer shall pay to Gen-Probe an initial, lump-sum,
non-refundable license fee in the amount of five million dollars ($5,000,000) by wire transfer of
immediately available funds to Gen-Probe’s account pursuant to the following instructions: Account
number 4721117042, Wells Fargo Bank, San Diego, CA 92122, routing number 121000248.



     5.2 In the event that Bayer makes, has made, imports, or sells any Current Bayer NAD Product,
any Future Bayer bDNA HIV, HBV, HCV Assay or any Future Bayer Other Nucleic Acid Assay on or after
January 1, 2007 (“Bayer Royalty Event No. 1”), then Bayer shall pay to Gen-Probe a one-time,
lump-sum, non-refundable license fee in the amount of ten million three hundred thousand dollars
($10,300,000) by wire transfer of immediately available funds to the account notified by Gen-Probe
to Bayer in writing. If such Royalty Event No. 1 occurs in January 2007, such one-time license fee
shall be paid by Bayer to Gen-Probe no later than January 31, 2007. Bayer shall provide written
notice to Gen-Probe within five (5) business days of January 1, 2007 as to whether Bayer believes
the payment described in this Section 5.2 is due. If such Royalty



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Event No. 1 occurs after January 31, 2007, such one-time license fee shall be paid by Bayer to
Gen-Probe no later than one (1) month after such occurrence.



     5.3 In the event that Bayer makes, has made, imports, or sells any Current Bayer NAD Product,
any Future Bayer bDNA HIV, HBV, HCV Assay, or any Future Bayer Other Nucleic Acid Assay on or after
January 1, 2008 (“Royalty Event No. 2”), then Bayer shall pay to Gen-Probe a one-time, lump-sum,
non-refundable royalty of sixteen million four hundred thousand dollars ($16,400,000) by wire
transfer of immediately available funds to the account notified by Gen-Probe to Bayer in writing.
If such Royalty Event No. 2 occurs in January 2008, such one-time license fee shall be paid by
Bayer to Gen-Probe no later than January 31, 2008. Bayer shall provide written notice to Gen-Probe
within five (5) business days of January 1, 2008 as to whether Bayer believes the payment described
in this Section 5.3 is due. If such Royalty Event No. 2 occurs after January 31, 2008, such
one-time license fee shall be paid by Bayer to Gen-Probe no later than one (1) month after such
occurrence.



     5.4 No license fees, royalties or other payments, except for those explicitly set forth in
this Article 5, shall be payable by any Party in respect of the covenants not to sue granted under
Article 4.



6.0 Disposition of Actions




     6.1 Contemporaneous with the execution and delivery of this Settlement Agreement and documents
in the forms attached hereto as Exhibits A, B and C, the Parties shall execute and,
promptly thereafter, but in any event within two (2) business



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days, file a stipulation of dismissal with prejudice of Gen-Probe’s claims and Bayer
HealthCare’s and Bayer Corp.’s counterclaims in California Action 565 in the form attached hereto
as Exhibit D.



     6.2 Contemporaneous with the execution and delivery of this Settlement Agreement and documents
in the forms attached hereto as Exhibits A, B and C, the Parties shall execute and,
promptly thereafter, but in any event within two (2) business days, file a stipulation of dismissal
with prejudice of Gen-Probe’s claims and Bayer HealthCare’s and Bayer Corp.’s counterclaims in
California Action 1668 in the form attached hereto as Exhibit E.



     6.3 Contemporaneous with the execution and delivery of this Settlement Agreement and documents
in the forms attached hereto as Exhibits A, B and C, the Parties shall execute and,
promptly thereafter, but in any event within two (2) business days, file a stipulation of dismissal
with prejudice of Bayer’s claims in the Massachusetts Action in the form attached hereto as
Exhibit F.



     6.4 Contemporaneous with the execution and delivery of this Settlement Agreement and documents
in the forms attached hereto as Exhibits A, B and C, the Parties shall execute and promptly
thereafter, but in any event within two (2) business days, file the Stipulated Final Award in the
JAMS Arbitrations in the form attached hereto as Exhibit G, which award shall be final,
binding, and not subject to appeal. The Parties agree that the term of Collaboration Agreement, to
the extent that such Collaboration Agreement concerns Clinical Diagnostic Products and the Clinical



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Diagnostic Field (each as defined in the Collaboration Agreement) and to the extent the
Collaboration Agreement remains extant following entry of the Stipulated Final Award, shall
terminate as of October 1, 2010, absent any subsequent event that may result in extension of the
term or earlier termination.



     6.5 Each Party shall bear the costs, expenses, and attorneys’ fees that it has incurred
arising from or related to any and all of the Actions and the legal representation that it has
received with respect thereto and with respect to the preparation, negotiation and execution of
this Settlement Agreement and the ancillary agreements attached hereto. Without limiting the
generality of the foregoing, each Party (i) acknowledges and agrees that the award of litigation
expenses under the Interim Award dated June 24, 2005 under JAMS Arbitration 058 shall be deemed
satisfied by the payment of the license fee by Bayer to Gen-Probe pursuant to Section 5.1 and (ii)
hereby retracts and irrevocably waives its request for an award of fees and expenses associated
with the supplemental dispute regarding the determination of a reasonable royalty under JAMS
Arbitration 058.



     6.6 None of the Parties shall appeal or otherwise directly or indirectly challenge any of the
orders, awards or judgments in any of the Actions that may result from the execution and filing of
the stipulations of dismissal and final awards contemplated by this Article 6.



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7.0 Supply Arrangement




     At the written request of Bayer delivered prior to July 1, 2008 (the “DTS Supply Exercise
Notice”), Gen-Probe shall supply or, if commercially viable, permit its manufacturer to supply,
Bayer, on commercially reasonable terms, with one or more or all of the DTS Systems, as determined
by Bayer, for sale and/or distribution by Bayer for use with TMA Nucleic Acid Assays. Each of
Bayer and Gen-Probe will use its commercially reasonable best efforts to negotiate and reduce the
aforementioned commercially reasonable terms to a definitive written agreement within ninety (90)
days of Gen-Probe’s receipt of the DTS Supply Exercise Notice.



8.0 Governing Law; Dispute Resolution




     8.1 This Settlement Agreement shall be governed by the laws of the State of California,
without giving effect to its principles or rules of conflict of laws to the extent such principles
or rules are not mandatorily applicable by statute and would require or permit the application of
the laws of another jurisdiction.



     8.2 Any dispute, controversy or claim in respect of the interpretation or enforcement of the
provisions of this Settlement Agreement or of the ancillary agreements attached hereto, or in
respect of the transactions contemplated hereby or thereby, including inability of the Parties to
reach a definitive agreement pursuant to Article 7.0, (each, a “Dispute”) shall, if mutually
agreeable to the Parties, be finally settled by Alternative Dispute Resolution (“ADR”) in
accordance with the provisions set forth in Exhibit H. If such ADR process is not mutually
acceptable to the Parties



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with respect to a particular Dispute, then exclusive jurisdiction and venue to resolve such
Dispute shall be in the United States District Court for the Southern District of California.
Solely to the extent that the United States District Court for the Southern District of California
shall lawfully decline to exercise jurisdiction, the Parties agree that any Dispute shall be
finally resolved by ADR in accordance with the provisions set forth in Exhibit H.



9.0 Mutual Representations and Warranties




     Without limiting any of the other representations, warranties and undertakings made by the
Parties under this Settlement Agreement, each of Gen-Probe and Bayer hereby represents and
warrants to one another that:




     (a) Each is duly organized and is a validly existing corporation or limited liability
company, as applicable, in good standing under the laws of its respective jurisdiction of
incorporation or organization, as applicable.




     (b) Each has the power and authority to execute and deliver this Settlement Agreement
and to perform its obligations hereunder.




     (c) This Settlement Agreement constitutes a valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally or by the principles governing the availability of
equitable remedies.



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     (d) The execution and delivery this Settlement Agreement and the performance of its
obligations hereunder will not conflict with or result in a default under any agreement or
understanding or any judgment, award, order, writ, injunction or decree of any court,
governmental body or arbitrator to which such Party or any of its Affiliates is a party or
by which it or any of its Affiliates is bound.




     (e) There is no action, suit, dispute or governmental, administrative, arbitration or
regulatory proceeding pending or, to the best of such Party’s knowledge, threatened against
or relating to such Party which, in any case, could prevent such Party from carrying out its
obligations under this Settlement Agreement.




     (f) Each of the representations and warranties made by such Party in the ancillary
agreements attached hereto as exhibits is true and correct.



10.0 Advice of Counsel




     The Parties acknowledge that they have been represented by counsel of their choice throughout
the negotiation and preparation of this Settlement Agreement, that they are entering into this
Settlement Agreement willingly and voluntarily, and that they have reviewed and fully understand
the terms, conditions, and obligations imposed by this Settlement Agreement.



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11.0 Integration




     This Settlement Agreement is intended by the Parties as a final expression of their agreement
and as a complete and exclusive statement of its terms. This Settlement Agreement, including the
recitals set forth herein and the ancillary agreements attached hereto as exhibits, constitutes
the entire and only agreement and understanding between the Parties and supersedes any and all
prior discussions, negotiations and/or agreements, whether oral or in writing, among the Parties
relating to the settlement of the Actions, including the Short Form Settlement Agreement.



12.0 Counterparts




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



13.0 Headings




     All article and section captions or titles are inserted herein for the reference of the
Parties only and are without contractual significance or effect.



(Remainder of page intentionally left blank.)




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14.0 Severability




     If any term or other provision of this Settlement Agreement is invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other terms, conditions and provisions
of this Settlement Agreement shall nevertheless remain unaffected, in full force and effect. Upon
such determination that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this Settlement Agreement so as to
effect the original intent of the Parties as closely as possible in a mutually acceptable manner
in order that the transactions contemplated by this Settlement Agreement be consummated as
originally contemplated to the fullest extent possible.



15.0 No Other Representations




     Other than as explicitly set forth herein the Parties acknowledge and agree that no
representations, statements, covenants, promises, inducements or warranties have been offered or
made in exchange for entering into this Settlement Agreement.



16.0 Confidentiality




     16.1 The Parties acknowledge and agree that the terms and conditions of this Settlement
Agreement and, subject to the terms and conditions set forth therein, the ancillary agreements
attached hereto are confidential. Subject to Article 22 below, the Parties agree not to disclose
any term or condition of this Settlement Agreement or any ancillary agreement attached hereto to
any Third Party. Notwithstanding the foregoing



22









 







sentence, the obligations of confidentiality under this Article 16 shall not apply to
information or material:




     (a) which is required to be disclosed by subpoena, order or other requirement of a
court, administrative agency, or other governmental body; provided that the Party required
to disclose has provided reasonable advance notice to allow the other Party the opportunity
to seek a protective order or otherwise contest, prevent or limit such disclosure; and
provided, further, that the confidentiality and non-use obligations set forth in this
Article 16 shall continue to be fully applicable to any information or material disclosed
pursuant to this Section 16.1(a) except solely with respect to the required disclosure as
described above; or




     (b) which is provided in connection with due diligence related to a possible
acquisition, merger, consolidation, sale of stock, sale of significant assets or similar
transaction by either Party; provided that the recipient(s) are bound by satisfactory
confidentiality obligations in favor of the non-disclosing Party but which are no less
restrictive than those contained in this Settlement Agreement; or




     (c) which is required to be disclosed in order to comply with any applicable laws,
rules or regulations, including the rules of any stock exchange on which such Party’s
securities are traded; provided that the disclosing Party shall use commercially reasonable
efforts to provide reasonable advanced notice



23









 







to allow the other Party the opportunity to comment as to the nature and extent of such
disclosure and, consistent with its obligations under applicable laws, rules or regulations,
the disclosing Party shall reasonably consider such comments.



     16.2 The terms of this Article 16 shall survive for a period of five (5) years after the
expiration or earlier termination of the Sublicense Agreement.



17.0 Further Assurances




     The Parties shall perform all legally proper acts and execute all documents as are reasonably
necessary to carry out the intent of this Settlement Agreement.



18.0 No Waiver




     This Settlement Agreement may not be waived, altered, extended, or modified except by written
agreement of the Parties.



19.0 Binding Effect




     19.1 Except as otherwise expressly provided in this Article 19, this Settlement Agreement, and
the rights and obligations of the Parties hereunder, shall not be assignable or transferable, in
whole or in part, whether by operation of law or otherwise, by any Party without the prior written
consent of the other Parties, and any purported transfer or assignment by any Party in violation of
this Article 19 shall constitute a material breach of this Settlement Agreement and shall be null
and void ab initio.



     19.2 Notwithstanding Section 19.1:



24









 







     (a) Bayer shall have the right to assign or transfer this Settlement Agreement, whether
by operation of law or otherwise, to (i) any Affiliate of Bayer or (ii) any Third Party that
acquires all of the business and operations of Bayer relating to In Vitro Diagnostics;
provided, however, that such assignment or transfer is permitted under the terms of the
Chiron License Agreement without terminating or otherwise adversely affecting the sublicense
rights and/or options granted under the Sublicense Agreement; and provided, further, that
such Affiliate or Third Party executes an assignment and assumption agreement in form and
substance reasonably acceptable to Gen-Probe affirming its agreement to be bound by the
terms and conditions of this Settlement Agreement.




     (b) Gen-Probe shall have the right to assign or transfer this Settlement Agreement,
whether by operation of law or otherwise, to (i) any Affiliate(s) of Gen-Probe or (ii) any
Third Part(ies) that acquire all of the business and operations of Gen-Probe relating to
Blood Screening and/or In Vitro Diagnostics; provided, however, that such Affiliate(s) or
Third Part(ies) execute an assignment and assumption agreement in form and substance
reasonably acceptable to Bayer affirming their agreement to be bound by the terms and
conditions of this Settlement Agreement.



     19.3 This Settlement Agreement shall be binding upon and inure to the benefit of the Parties
and their respective permitted successors and assigns. Notwithstanding anything to the contrary
contained herein, in the event that Bayer or Gen-Probe assigns



25









 







or transfers its rights and obligations to a Third Party in accordance with this Agreement,
then immediately following such assignment or transfer such Party’s rights and obligations under
this Agreement shall terminate and all rights and obligations hereunder shall be vested solely in
such Third Party assignee or transferee; provided that, in the case of Gen-Probe, if such transfer
or assignment should relate solely to either (a) the business and operations of Gen-Probe relating
to Blood Screening or (b) the business and operations of Gen-Probe relating to In Vitro
Diagnostics, then Gen-Probe shall continue to enjoy the rights granted, and to bear the obligations
undertaken, under this Agreement with respect to that portion of its business and operations that
was not so transferred or assigned. For the avoidance of doubt, if this Agreement shall be
assigned or transferred by either Bayer HealthCare or Bayer Corp. to a Third Party that acquires
all of the business and operations of Bayer relating to In Vitro Diagnostics pursuant to Section
19.2(a)(ii) above, then immediately following such assignment or transfer all of Bayer HealthCare’s
and Bayer Corp.’s rights and obligations under this Agreement shall terminate.



20.0 No Third-Party Beneficiaries




     This Settlement Agreement shall not confer any rights or remedies upon any Person other than
the Parties and their respective permitted successors and assigns.



21.0 Notices




     Any notice required or permitted to be given under this Settlement Agreement shall be in
writing and delivered in accordance with this Article 21. A notice shall be



26









 







considered served two (2) days after it is deposited in the national postal system in a sealed
envelope with sufficient postage affixed, or with a national overnight courier service that offers
proof of delivery, and addressed to the Party to whom such notice is directed at the appropriate
address given below (or to such other address as the applicable Party shall notify to the other in
accordance with this Article 21):



	 	 	 	 	 
	 

	 	(a) If to Bayer:
	 	Bayer HealthCare LLC
	 

	 	 	 	Diagnostics Division
	 

	 	 	 	511 Benedict Avenue
	 

	 	 	 	Tarrytown, New York 10591
	 

	 	 	 	Attention: Law & Patents
	 
	 	 	 	 
	 

	 	(b) If to Gen-Probe:
	 	Gen-Probe Incorporated
	 

	 	 	 	10210 Genetic Center Drive
	 

	 	 	 	San Diego, California 92121-4362
	 

	 	 	 	Attention: General Counsel






22. Press Release




     Subject to Section 16.1, no Party shall make issue any further press release regarding this
Settlement Agreement, the ancillary agreements attached hereto or the transactions contemplated
hereby or thereby, without the prior consent of the other Party, such consent not to be
unreasonably withheld.



(Remainder of page intentionally left blank.)




27









 








     IN WITNESS WHEREOF, Bayer and Gen-Probe state that they have read this Settlement Agreement,
have consulted with their counsel about it, and fully understand and accept its terms in their
entirety and without reservation.



	 	 	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC	 	 	 	GEN-PROBE INCORPORATED
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Anthony P. Bihl, III	 	 	 	By:	 	/s/ Henry L. Nordhoff
	 

	 	 
	 	 	 	 	 	 
	 

	 	Anthony P. Bihl, III
	 	 	 	 	 	Henry L. Nordhoff
	Title:

	 	President, Diagnostics Division
	 	 	 	Title:
	 	President and CEO
	 
	 	 	 	 	 	 	 	 
	Date: August 2, 2006	 	 	 	Date: August 1, 2006






	 	 	 	 	 	 	 
	BAYER CORPORATION	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	/s/ George J. Lykos	 	 	 	 
	 

	 	 
 	 	 	 	 
	Title:
	 	Sr. VP, Chief Legal Officer	 	 	 	 
	 

	 	 
 	 	 	 	 





Date:
August 4, 2006





28









 








LIST OF SCHEDULES AND EXHIBITS




	 	 	 
	Schedule 1

	 	Chiron US Patents
	 
	 	 
	Schedule 2

	 	Current Bayer NAD Products
	 
	 	 
	Schedule 3

	 	Specific Bayer Patents
	 
	 	 
	Schedule 4

	 	Specific Gen-Probe Patents
	 
	 	 
	Exhibit A

	 	Release by Bayer
	 
	 	 
	Exhibit B

	 	Release by Gen-Probe
	 
	 	 
	Exhibit C

	 	Sublicense Agreement
	 
	 	 
	Exhibit D

	 	Stipulation of Dismissal of California Action 565
	 
	 	 
	Exhibit E

	 	Stipulation of Dismissal of California Action 1668
	 
	 	 
	Exhibit F

	 	Stipulation of Dismissal of Massachusetts Action
	 
	 	 
	Exhibit G

	 	Final Award in JAMS Arbitrations
	 
	 	 
	Exhibit H

	 	Alternative Dispute Resolution






 









 






Schedule 1




Chiron US Patents




	 	 	 	 	 	 	 
	Inventors	 	US Patent No	 	Patent Date
	Houghton, et al.

	 	 	5,714,596	 	 	02-03-98
	“

	 	 	6,074,816	 	 	06-13-00
	“

	 	 	5,712,088	 	 	01-27-98
	“

	 	 	5,863,719	 	 	01-26-99
	Miyamura, et al.

	 	 	5,372,928	 	 	12-13-94
	“

	 	 	5,959,092	 	 	09-28-99
	Cha, et al.

	 	 	6,071,693	 	 	06-06-00
	Chien, et al.

	 	 	6,416,944	 	 	07-09-00
	Weiner

	 	 	5,851,759	 	 	12-22-98
	Luciw, et al.

	 	 	6,531,276	 	 	03-11-03






 









 






Schedule 2




Current Bayer NAD Products




VERSANTâ bDNA Products




HCV 3.0 test

HCV 2.0 test

HIV 3.0 test

HIV 2.0 test

HBV 3.0 test

HBV 1.0 test

System 340 instrument system

440 Instrument system, solely for use with bDNA Nucleic Acid Assays




VERSANTâ LIPA Products




LIPA 1.0 test

LIPA 2.0 test

AutoLIPA instrument system




TRUGENEâ Genotyping Products




HIV test

HCV test

HBV test

Genotyping instrument system




Quantigene Products



bDNA signal amplification components and software




 









 








Schedule 3




Specific Bayer Patents



U.S. Patent No. 6,436,349 “FLUID HANDLING APPARATUS FOR AN AUTOMATED ANALYZER,” Carey et al.,
issued August 29, 2002.



U.S. Patent Application No. 10/868,579, “FLUID HANDLING APPARATUS FOR AN AUTOMATED ANALYZER,” Carey
et al., filed June 15, 2004 (published as US 2006-0013729 without new apparatus claims).



U.S. Patent Application No. 11/200,905, “AUTOMATED METHOD FOR USE BY A CLINICAL ANALYZER,” Carey et
al., filed August 10, 2005 (published as US 2005-0266570 A1 without new method claims).





 









 








Schedule 4




Specific Gen-Probe Patents




U.S. Patent No. 5,955,261 to Kohne




U.S. Patent No. 5,451,503 to Hogan et al.




U.S. Patent No. 5,424,413 to Hogan et al.




U.S. Patent No. 5,030,557 to Hogan et al.




 









 





Exhibit A




Release by Bayer




 









 





RELEASE




     In consideration of the mutual promises and covenants contained in the Settlement
Agreement among Bayer Corporation, Bayer HealthCare LLC and Gen-Probe Incorporated (the
“Settlement Agreement”), to which this Release is attached as an exhibit, and the ancillary
agreements executed and delivered pursuant thereto, together with other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Bayer Corporation and
Bayer HealthCare LLC, (collectively the “RELEASORS”), hereby remise, release and forever
discharge, effective as of the date hereof, Gen-Probe Incorporated and its Affiliates, officers,
directors, employees, distributors, representatives, attorneys, customers to the extent of
products acquired from Gen-Probe and its Affiliates, suppliers to the extent of products produced
for Gen-Probe, or their respective successors, heirs and assigns, (collectively the “RELEASEES”),
of and from all debts, actions, causes of action, suits, accounts, covenants, contracts,
agreements and damages, and any and all claims, demands, and liabilities whatsoever, of every name
and nature, both at law and in equity related to the foregoing (collectively, the “Claims”), which
the RELEASORS now have or ever had against the RELEASEES, from the beginning of time to the date
of this Release, arising out of, related to, or connected with any infringement of existing
patents of Bayer Corporation or Bayer HealthCare LLC (but specifically excluding the Chiron
Patents, as defined in the Settlement Agreement) with respect to the manufacture, use, import,



1









 







offer for sale or sale, in each case, prior to the date hereof, of the TIGRIS®
automated instrument system of Gen-Probe, as manufactured, used, imported and sold by Gen-Probe as
of or prior to the Effective Date. Notwithstanding the preceding sentence, nothing contained
herein shall remise, release or discharge any Claim of RELEASORS arising out of, related to or
connected with the Settlement Agreement, the schedules and exhibits attached thereto and/or the
ancillary agreements executed and delivered pursuant thereto, and/or the transactions contemplated
by any of the foregoing.



     The RELEASORS EXPRESSLY UNDERSTAND that California Civil Code Section 1542 provides as
follows:




A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the debtor.


THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY EXPRESSLY WAIVED BY RELEASORS to
the fullest extent that they may waive all such rights and benefits, if any, of such provisions
pertaining to the specific claims released herein. In addition, RELEASORS hereby waive, to the
same extent set forth in the immediately preceding sentence, any provision comparable to California
Civil Code Section 1542 in any other jurisdiction, if in any way applicable, and RELEASORS hereby
acknowledge that these waivers are an essential and material term of this Release.




2









 








     In connection with such waiver, RELEASORS acknowledge that they have been advised of and have
considered the possibility that they may not now fully know the number or magnitude of all the
Claims that they may have against the RELEASEES with respect to the matters released herein, and
that they may hereafter discover Claims presently unknown or unsuspected, or facts in addition to
or different from those that they now know or believe to be true, with respect to the matters
released herein. Nevertheless, it is the intention of the RELEASORS, through this Release, fully,
finally, and forever to settle and release all Claims, to the extent set forth herein, which may
exist, or heretofore have existed against the RELEASEES, and agree that, with respect to the Claims
released herein, this Release is a full and final release. In executing this Release, the
undersigned acknowledges and agrees that it is acting fully and freely upon its own investigation
and knowledge and is voluntarily executing this document of its own free will.



     By executing this Release, the undersigned agrees and acknowledges that its representatives
have read this document with care and with the advice of counsel, and that, except as set forth in
the Settlement Agreement, the exhibits and schedules attached thereto and/or the ancillary
agreements executed and delivered pursuant thereto, no representation of fact or opinion has been
made to the undersigned by anyone which has induced the undersigned in any manner to execute this
Release.



3









 





     This Release shall be governed by the laws of the State of California, without giving effect
to is principles or rules of conflict of laws to the extent such principles or rules are not
mandatorily applicable by statute and would require or permit the application of the laws of
another jurisdiction.



     IN WITNESS HEREOF, the undersigned caused this release to be executed by its duly authorized
representative this 1st day of August, 2006.



	 	 	 	 	 
	BAYER CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	George J. Lykos	 	 
	 

	 	 

	 	 
	Title:
	 	Sr. VP, Chief Legal Officer	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	BAYER HEALTHCARE LLC	 	 
	 
	 	 	 	 
	By:
	 	/s/ Anthony P. Bihl, III	 	 
	 

	 	 

	 	 
	Title:
	 	President	 	 
	 

	 	 

	 	 






4









 







Exhibit B




Release by Gen-Probe




1









 





RELEASE




     In consideration of the mutual promises and covenants contained in the Settlement
Agreement among Bayer Corporation, Bayer HealthCare LLC and Gen-Probe Incorporated (the
“Settlement Agreement”), to which this Release is attached as an exhibit, and the ancillary
agreements executed and delivered pursuant thereto, together with other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Gen-Probe Incorporated
(the “RELEASOR”), hereby remise, release and forever discharge, effective as of the date hereof,
Bayer Corporation and Bayer HealthCare LLC (collectively “Bayer”) and their Affiliates, officers,
directors, employees, distributors, representatives, attorneys, customers to the extent of
products acquired from Bayer and its Affiliates, suppliers to the extent of products produced for
Bayer,, or their respective successors, heirs and assigns, (collectively the “RELEASEES”), of and
from all debts, actions, causes of action, suits, accounts, covenants, contracts, agreements and
damages, and any and all claims, demands, and liabilities whatsoever, of every name and nature,
both at law and in equity related to the foregoing (collectively, the “Claims”), which the
RELEASOR now has or ever had against the RELEASEES, from the beginning of time to the date of this
Release, arising out of, related to, or connected with any infringement of existing patents of
Gen-Probe with respect to the manufacture, use, import, offer for sale or sale, in each case,
prior to the date hereof, of the Current Bayer NAD Products (as defined in the Settlement



 









 




Agreement). Notwithstanding the preceding sentence, nothing contained herein shall remise,
release or discharge any Claim of RELEASOR arising out of, related to or connected with the
Settlement Agreement, the schedules and exhibits attached thereto and/or the ancillary agreements
executed and delivered pursuant thereto, and/or the transactions contemplated by any of the
foregoing. Nothing herein shall be deemed a release of Chiron Corporation or any of its
subsidiaries, divisions, Affiliates, corporate parents, joint ventures, partnerships, limited
partnerships, predecessors, successor and assigns (other than Bayer HealthCare LLC, as set forth
herein) or any director, officer, general partner, limited partner, employee, servant, agent or
representative of the foregoing.




     The RELEASOR EXPRESSLY UNDERSTANDS that California Civil Code Section 1542 provides as
follows:




A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the debtor.


THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ARE HEREBY EXPRESSLY WAIVED BY RELEASOR to the
fullest extent that they may waive all such rights and benefits, if any, of such provisions
pertaining to the specific claims released herein. In addition, RELEASOR hereby waives, to the
same extent set forth in the immediately preceding sentence, any provision comparable to California
Civil Code


2









 






Section 1542 in any other jurisdiction, if in any way applicable, and RELEASOR hereby acknowledges
that these waivers are an essential and material term of this Release.




     In connection with such waiver, RELEASOR acknowledges that it has been advised of and have
considered the possibility that they may not now fully know the number or magnitude of all the
Claims that it may have against the RELEASEES with respect to the matters released herein, and that
they may hereafter discover Claims presently unknown or unsuspected, or facts in addition to or
different from those that they now know or believe to be true, with respect to the matters released
herein. Nevertheless, it is the intention of the RELEASOR, through this Release, fully, finally,
and forever to settle and release all Claims, to the extent set forth herein, which may exist, or
heretofore have existed against the RELEASEES, and agree that, with respect to the Claims released
herein, this Release is a full and final release. In executing this Release, the undersigned
acknowledges and agrees that it is acting fully and freely upon its own investigation and knowledge
and is voluntarily executing this document of its own free will.



     By executing this Release, the undersigned agrees and acknowledges that its representatives
have read this document with care and with the advice of counsel, and that, except as set forth in
the Settlement Agreement, the exhibits and schedules attached thereto and/or the ancillary
agreements executed and delivered pursuant



3









 







thereto, no representation of fact or opinion has been made to the undersigned by anyone which
has induced the undersigned in any manner to execute this Release.



     This Release shall be governed by the laws of the State of California, without giving effect
to is principles or rules of conflict of laws to the extent such principles or rules are not
mandatorily applicable by statute and would require or permit the application of the laws of
another jurisdiction.



     IN WITNESS HEREOF, the undersigned caused this release to be executed by its duly authorized
representative this 1st day of August, 2006.



	 	 	 	 	 
	GEN-PROBE INCORPORATED	 	 
	 
	 	 	 	 
	By:
	 	/s/ Henry L. Nordhoff	 	 
	 

	 	 

	 	 
	Title:
	 	CEO	 	 
	 

	 	 

	 	 






4









 






Exhibit C




Sublicense Agreement




 









 





Sublicense Agreement




     This Sublicense Agreement is made and entered into as of this 1st day of August, 2006
(the “Effective Date”), by and between Bayer HealthCare LLC (“Bayer”), a Delaware limited liability
company and the successor-in-interest to Chiron Diagnostics Corporation (“CDC”), acting through its
Diagnostics Division and having a principal place of business at 511 Benedict Avenue, Tarrytown,
New York, and Gen-Probe Incorporated (“Gen-Probe”), a Delaware corporation whose principal place of
business is 10210 Genetic Center Drive, San Diego, California. Each of Bayer and Gen-Probe are
sometimes referred to herein, individually, as a “Party” and, together, as the “Parties.”



     WHEREAS, Bayer is a licensee of certain patent rights and know-how belonging to Chiron
Corporation (together with Chiron Corporation’s successors and assigns, “Chiron”) relating to
hepatitis C virus (“HCV”) and human immunodeficiency virus (“HIV”) (the “Chiron Patents” and
“Chiron IVD Know-How”, as defined below);



     WHEREAS, on June 15, 2006, Bayer and Gen-Probe entered into a Short Form Settlement Agreement
(the “Short Form Settlement Agreement”) pursuant to which the Parties agreed to resolve (a) the two
consolidated arbitration proceedings conducted by the Judicial Arbitration and Mediation Service
(JAMS) in Orange County, California, (JAMS Ref. Nos. 1240015058 & 1100045987) (collectively, the
“Arbitrations”), (b) the patent litigation pending in the United States District Court for the
Southern District of California (Civil Action Nos. 04 CV-565 and 05 CV-1668), and (c) the
litigation pending in the United States District Court for the District of Massachusetts (Civil
Action No. 05-12084-RCL).



-1-









 





     WHEREAS, the Arbitrations resulted in an Interim Arbitrator’s Opinion and Award dated June 24,
2005 (the “Interim Award”), and an Award Following Supplemental Hearing Related to Royalty Issues,
dated March 3, 2006 (the “Supplemental Award”), which, in part, found that Gen-Probe is entitled to
a sublicense under the Chiron Patents limited to certain products and for a limited period of time;



     WHEREAS, the Short Form Settlement Agreement provides that the Arbitrations be concluded with
a stipulated final award that adopts and incorporates the Interim Award, the Supplemental Award,
and, by reference, the terms of a written license agreement to be agreed upon by the Parties with
respect to standard licensing arrangements not otherwise covered by the Interim Award and the
Supplemental Award;



     WHEREAS, the Short Form Settlement Agreement provides for the voluntary grant by Bayer to
Gen-Probe of certain additional sublicense rights under the Chiron Patents (as defined below)
relating to certain future instrument platforms and to certain extended periods of time;



     WHEREAS, simultaneously with the execution of this Sublicense Agreement the Parties are
entering into a definitive written Settlement Agreement (the “Definitive Settlement Agreement”) as
to which this Sublicense Agreement will be appended; and



     WHEREAS, the Parties now desire to enter into a definitive written sublicense agreement in
accordance with and giving effect to the foregoing.



     NOW, THEREFORE, in exchange for the mutual promises and covenants contained herein and other
good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, the Parties agree as follows:



-2-









 





ARTICLE
1 – DEFINITIONS




     1.1 “Affiliate” means an entity that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, a specified entity.
For purposes of this definition, “control” (including with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as applied to any entity, means:
(a) the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of that entity, whether through the ownership of voting securities or by
contract or otherwise; and (b) the ownership of at least fifty percent (50%) of the voting
securities of that entity.



     1.2 “Arbitrations” has the meaning assigned in the recitals.




     1.3 “Bayer” has the meaning assigned in the preamble.



     1.4 “Blood Screening” means: (i) the screening of blood, plasma or blood components intended
for transfusion or for use in blood products (e.g., immunoglobulins), and (ii) the screening of any
biological materials intended for transfusion or transplantation, in each case from any donor,
including autologous donors.



     1.5 “CDC” has the meaning assigned in the preamble.




     1.6 “Chiron” has the meaning assigned in the recitals.



     1.7 “Chiron IVD Know-How” means any and all know-how that relates to End-Point TMA Qualitative
Assays for HCV and/or HIV and that was owned or controlled by Chiron as of the effective date of
the Chiron License Agreement and was licensed to Bayer pursuant to the Chiron License Agreement.



-3-









 





     1.8 “Chiron License Agreement” means that certain Cross-License Agreement by and between
Chiron and CDC, as predecessor-in-interest of Bayer, effective as of November 30, 1998, as amended
June 30, 2005, and as amended from time to time hereafter.



     1.9 “Chiron Patents” means all existing and future HCV and HIV patents and patent applications
(or any patents issued thereon) related to the Field as to which Bayer, and/or any of its
Affiliates, has acquired license rights with the right to sublicense pursuant to the Chiron License
Agreement as of the Effective Date, including, without limitation, those United States patents
listed in Schedule 1 attached hereto and made a part hereof.



     1.10 “Collaboration Agreement” has the meaning assigned in Section 2.6.



     1.11 “Collaboration Licensed Product” has the meaning assigned in Section 2.6.



     1.12 “Combination Product” has the meaning assigned in Section 1.34.



     1.13 “Confidential Matter” has the meaning assigned in Section 6.1.



     1.14 “Earned Royalties” has the meaning assigned in Schedule 2.



     1.15 “Effective Date” has the meaning assigned in the preamble.



     1.16 “End-Point TMA Assay” means a TMA Nucleic Acid Assay that utilizes chemiluminesence (and
not fluoresence) to provide an end-point result following the completion of the amplification
process, and is not designed or intended to provide any kinetic or “real-time” results.



     1.17 “End-Point TMA Qualitative Assay” means an End-Point TMA Assay which: (a) detects or
measures the presence of a target nucleic acid in an analyzed sample; (b) is not designed or
intended to, and does not, determine the quantity of target nucleic acid in the analyzed sample;
and (c) is not, by itself, through a single use, capable of being used as a genotyping or
resistance assay.



-4-









 





     1.18 “Field” means In Vitro Diagnostics.



     1.19 “First Commercial Sale” means the date of first sale of a Licensed Product by Gen-Probe
or its Affiliates anywhere in the world in the ordinary course of business to a Third Party.



     1.20 “Gen-Probe Existing Semi-Automated Instrumentation” means (a) the LEADER®
Systems manufactured, used, imported, or sold by Gen-Probe as of the Effective Date (i.e., the
LEADER HC+ System, the LEADER 450i System, and the LEADER 50i System) and (b) the DTS®
Systems manufactured, used, imported, or sold by Gen-Probe as of the Effective Date (i.e., the DTS
400 System, the DTS 800 System, and the DTS 1600 System), but specifically excluding the TIGRIS
Instrument System.



     1.21 “Gen-Probe Future Instrumentation” means any and all manual, semi-automated, or
fully-automated instrument systems for performing End-Point TMA Assays first brought to market by
Gen-Probe during the term hereof, but specifically excluding the TIGRIS Instrument System.



     1.22 “HCV” means hepatitis C virus.



     1.23 “HIV” means human immunodeficiency virus.



     1.24 “In Vitro Diagnostics” means the in vitro testing of human specimens for the purpose of
diagnosis, prognosis, or monitoring the progress of disease or monitoring the effect of treatment
of disease, in the human from whom the specimens were taken, but excluding Blood Screening.



     1.25 “Indemnified Party” has the meaning assigned in Section 5.6(d).



     1.26 “Indemnifying Party” has the meaning assigned in Section 5.6(d).



     1.27 “Interim Award” has the meaning assigned in the recitals.



-5-









 





     1.28 “Licensed Patent Rights” means: (1) the Chiron Patents and any divisions, extensions,
renewals, reissues, reexamination certificates and continuations of such patents and patent
applications; and (2) any patents and patent applications claiming HCV and/or HIV nucleic acid
sequences which are based on inventions conceived by Chiron or its Affiliates on or before October
10, 2000 and which fall within the scope of the claims of any Chiron Patent, together with any
patent applications claiming such invention (or any patent issued thereon) and any divisions,
extensions, renewals, reissues, reexamination certificates and continuations thereof; and (3) any
and all foreign or United States patent equivalents, as applicable, of the foregoing rights
described in this subsection.



     1.29 “Licensed Product(s) for Existing Instrumentation” means the following products,
individually or collectively as the context may require, but only to the extent that Gen-Probe has
been granted license rights pursuant to Section 2.1 below or has exercised the option granted under
Section 2.3 below:



          (a) Gen-Probe End-Point TMA Qualitative Assays directed to HCV, and





          (b) Gen-Probe End-Point TMA Qualitative Assays directed to HIV,
but limited to such assays that are designed, packaged, labeled, promoted and sold for use on
Gen-Probe Existing Semi-Automated Instrumentation and specifically excluding any such assays if
sold for use or used on the TIGRIS Instrument System.




     1.30 “Licensed Product(s) for Future Instrumentation” means the following products,
individually or collectively as the context may require, but only to the extent that Gen-Probe has
been granted license rights pursuant to Section 2.2 below or has exercised the option granted under
Section 2.3 below:



          (a) Gen-Probe End-Point TMA Qualitative Assays for HCV, and




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          (b) Gen-Probe End-Point TMA Qualitative Assays for HIV,
but limited to such assays that are designed, packaged, labeled, promoted and sold for use on
Gen-Probe Future Instrumentation and specifically excluding any such assays if sold for use or used
on the TIGRIS Instrument System.




     1.31 “Licensed Product(s)” means, individually or collectively as the context may require,
Licensed Product(s) for Existing Instrumentation and Licensed Product(s) for Future
Instrumentation.



     1.32 “Losses” has the meaning assigned in Section 5.6(a).



     1.33 “Minimum Royalties” has the meaning assigned in Schedule 2.



     1.34 “Net Sales” means the amount billed or invoiced for Licensed Products sold less all of
the following items to the extent applicable:




	 	i)	 	Discounts actually allowed and taken;
	 
	 	ii)	 	Amounts repaid or credited by reason of rejection or return;
	 
	 	iii)	 	To the extent separately stated on purchase orders, invoices or
other documents of sale, taxes levied on and/or other governmental charges made
as to production, or transportation or insurance charges;
	 
	 	iv)	 	The reasonable value of the instrument, instrument financing,
consumables other than the products in question, and service components of an
operating or capital lease for instrumentation on which the products are used,
for which the charges are included in the price of the products purchased by
the lessee, provided that the methods for determining such values shall be
proposed by Gen-Probe and subject to Bayer’s written consent, not to be
unreasonably withheld, conditioned or delayed;
	 
	 	v)	 	Charges for freight handling and transportation paid by the
selling entity; and
	 
	 	vi)	 	Sales, use and value-added taxes and other similar taxes
incurred and separately stated on invoices.





     Net Sales shall include all sales to Third Parties including sales to Authorized Distributors
in countries where, due to regulatory constraints and/or market practice,



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substantially all sales of the relevant Licensed Product and competitive Third Party products
are made through Authorized Distributors (as defined below), provided that Gen-Probe shall
calculate Net Sales at one hundred thirty percent (130%) of the transfer price to an Authorized
Distributor or such lesser percentage as reflects reasonably the distributor mark-ups prevailing
generally in the relevant country.



     For clarity of understanding, Net Sales shall not include any Licensed Product furnished to
Third Parties for which no payment is received, such as experimental, test market, promotional or
other free goods. On the other hand, Net Sales shall include any Licensed Product furnished in
return for payment, whether or not such product is for commercial, research or other use. For
clarity of understanding, Minimum Royalties (as defined in Schedule 2 attached hereto) shall apply
to each Unit of Licensed Product shipped to a Third Party customer for any purpose, except for
Units supplied to such Third Party customers at no charge: (i) for use in Gen-Probe’s preclinical
or clinical trials; or (ii) for testing, quality control or evaluation purposes. Without limiting
the foregoing, Licensed Products furnished to Third Parties at price discounts, including without
limitation free goods furnished as part of sales promotions, shall be subject to Minimum Royalties.
A sale shall be deemed to have been made and Earned Royalties (as defined in Schedule 2 attached
hereto) or Minimum Royalties incurred (except as specifically set forth in this Section 1.34) when
the Licensed Product is shipped to the Third Party; provided that where an invoice is issued, the
obligations to pay Earned Royalties and Minimum Royalties hereunder shall arise on the invoice
date. Sales to or between Affiliates shall not be included in Net Sales.



     In the event that a Licensed Product subject to royalties hereunder is sold in combination
with another product or active component, other than instrumentation covered under Section



-8-









 




1.34(iv) above, for a single price (a “Combination Product”), Net Sales from sales of a
Combination Product, for purposes of calculating royalties due under this Agreement, shall be
calculated by multiplying the Net Sales of that Combination Product by the fraction A/(A+B), where
A is the average per unit selling price in the country of sale, during the applicable reporting
period, of the Licensed Product subject to royalties hereunder if sold separately in the country of
sale and B is the average per unit selling price in the country of sale, during the applicable
reporting period, of the other product(s) or component(s) sold separately in the country of sale.
In the event that no such separate sales are made, Net Sales, for purposes of determining royalty
payments on such Combination Products, shall be a reasonable apportionment of the gross amount
invoiced therefor based upon the relative contribution of the Licensed Product subject to royalties
hereunder to the price of the Combination Product. Such apportionment shall be determined by
Gen-Probe based upon its past practice and experience, and shall be subject to Bayer’s written
consent, which shall not be unreasonably withheld, conditioned or delayed.




     1.35 “Nucleic Acid Assay” means an assay for the detection or quantification of nucleic acid
sequences.



     1.36 “Party” and “Parties” have the meanings assigned in the preamble.



     1.37 “Short Form Settlement Agreement” has the meaning assigned in the recitals.



     1.38 “Supplemental Award” has the meaning assigned in the recitals.



     1.39 “Third Party” means any entity or entities other than Bayer and Gen-Probe or their
Affiliates. For purposes hereof, Authorized Distributors shall be considered Third Parties unless
the specific circumstances indicate otherwise.



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     1.40
“TIGRIS Instrument System” means the TIGRIS® automated instrument system for use with
End-Point TMA Assays, as manufactured, used, imported and sold by or for Gen-Probe as of the
Effective Date (the “Current TIGRIS Instrument”) and any modification, release, revision, update or
enhancement thereto, solely as such modification, release, revision, update or enhancement does not
materially modify the basic construction, basic operation or basic performance of the Current
TIGRIS Instrument. For the avoidance of doubt, TIGRIS Instrument does not include any instrument
system for use with nucleic acid assays that provide any kinetic or “real-time” results.



     1.41 “TMA” means the methods for target amplification of nucleic acid, using reverse
transcriptase and RNA polymerase, claimed in United States Patent No. 5,399,49.



     1.42 “TMA Nucleic Acid Assay” means a Nucleic Acid Assay with respect to which TMA is the sole
method of amplification.



     1.43 “Unit” means the number of individual patient results generated by the use of a Licensed
Product, such that the number of Units contained in such Licensed Product equals the number of
patient results which are obtained through use of such Licensed Product assay kit, as determined in
a manner to be proposed by Gen-Probe, and subject to Bayer’s written consent which shall not be
unreasonably conditioned, withheld or delayed.



     1.44 “Valid Claim” means a claim in any issued, active, unexpired Licensed Patent Right which
has not been withdrawn, canceled, lapsed or disclaimed, or held unpatentable, invalid or
unenforceable by a non-appealed or non-appealable decision by a court or other appropriate body of
competent jurisdiction. The scope of a Valid Claim shall be limited to its terms as defined by any
such court or decision-making body of competent jurisdiction.



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ARTICLE
2 – LICENSE AND OPTION GRANTS




     2.1 License Grant – TMA Qual Assays for Existing Instruments. Subject to the terms
and conditions of this Sublicense Agreement, Bayer hereby grants to Gen-Probe and its Affiliates a
worldwide, non-exclusive, non-transferable (subject to Article 8) right and license, with no right
to grant any sublicense to any Third Party, to research, develop, make, have made, use, import,
offer to sell and sell Licensed Products for Existing Instrumentation. Such sublicense shall be
limited to the Field and shall be effective only during the period beginning on the Effective Date
and ending on October 1, 2010 (subject to extension pursuant to Section 2.3 below).



     2.2 License Grant – TMA Qual Assays for Future Instruments. Subject to the terms and
conditions of this Sublicense Agreement, Bayer hereby grants to Gen-Probe and its Affiliates a
worldwide, non-exclusive, non-transferable (subject to Article 8) right and license, with no right
to grant any sublicense to any Third Party,




     (a) to research, develop, make, have made, import and use, but not to offer to sell or
sell, Licensed Products for Future Instrumentation in the Field and effective only during
the period beginning on the Effective Date and ending on October 1, 2010 (subject to
extension pursuant to Section 2.3 below); and




     (b) to offer to sell and sell Licensed Products for Future Instrumentation in the Field
and effective only during the period beginning on January 1, 2009 and ending on October 1,
2010 (subject to extension pursuant to Section 2.3 below).



     2.3 Option to Extend License(s). Bayer hereby grants Gen-Probe an option to extend
the period(s) of the license rights granted in Sections 2.1 and/or 2.2 above to the expiration date
of the last to expire patent in the Licensed Patent Rights. To be effective, such option must be



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exercised by Gen-Probe by (a) written notice to Bayer delivered prior to October 1, 2010, and
(b) payment to Bayer of a one-time initial license fee of One Million Dollars ($1,000,000.00) by
wire transfer (in accordance with instructions provided by Bayer) within 10 days following written
notice of option exercise. Any reference in this Agreement to the “sublicense rights granted
hereunder” or other words of similar import or meaning shall include the extended duration of the
sublicense rights arising pursuant to the exercise of Gen-Probe’s option right under this Section
2.3.



     2.4 No OEM or Third Party Product Licenses. Gen-Probe acknowledges and agrees that
the inclusion of Gen-Probe Affiliates within the sublicenses granted pursuant to this Article 2 is
intended to enable Gen-Probe to utilize the manufacturing and sales capabilities of its Affiliates
in connection with the manufacture and sale of Licensed Products in a manner substantially similar
to the involvement of such Affiliates in the manufacture and sale of Gen-Probe’s products
generally. Gen-Probe and its Affiliates shall not evade the sublicensing restrictions of this
Article 2 by creating Affiliates specifically in connection with Licensed Products, or through
other Third Party arrangements such as joint ventures, collaborations, or distribution arrangements
with distributors other than Authorized Distributors as defined herein. Gen-Probe and its
Affiliates are sublicensed hereunder only to sell or distribute Licensed Products, under the
name(s) and/or trademark(s) and/or service mark(s) of Gen-Probe or its Affiliates, only through the
sales force of Gen-Probe or its Affiliates, or through local Third Party distributors which are not
engaged, and which are not Affiliates of any entity which is engaged, in the global sale of
diagnostic products (which entities are referred to herein as “Authorized Distributors”) which are
not Affiliates of Gen-Probe. Gen-Probe and its Affiliates are not sublicensed (a) to perform OEM
manufacturing of Licensed Products for a Third Party



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other than an Authorized Distributor; (b) to supply Licensed Products for resale to any Third
Party other than an Authorized Distributor; (c) to permit any Authorized Distributor or other Third
Party to sell any Licensed Product under any Third Party name(s) and/or trademark(s) and/or service
mark(s); or (d) to permit any Authorized Distributor or other Third Party to sell any Licensed
Product for use on an analytical instrument that is labeled with any Third Party name(s) and/or
trademark(s) and/or service mark(s). Furthermore, with respect to the limited “have made” rights
granted under the provisions of this Article 2, neither Gen-Probe nor any Gen-Probe Affiliate shall
enter into any arrangement with a Third Party for supply or manufacture of nucleic acid components
where such Third Party or an Affiliate of such Third Party also distributes or sells a Licensed
Product.



     2.5 No Implied Licenses. Except as expressly granted under this Article 2, no other
right, license or sublicense is granted by Bayer to Gen-Probe under any patent or other
intellectual property right, and the Parties intend that no such grant should be otherwise
construed or implied, whether by estoppel or by some other manner.



     2.6 Collaboration Agreement. Gen-Probe and Bayer (as successor-in-interest to Chiron,
CDC and Bayer Corporation in the Field) are parties to a Collaboration Agreement, dated June 11,
1998 and a Supplemental Agreement to the Collaboration Agreement, dated April 2, 2001
(collectively, and as interpreted and applied by the Interim Award and the Supplemental Award, the
“Collaboration Agreement”). The Parties hereby acknowledge and agree that, under the Collaboration
Agreement, Gen-Probe and its Affiliates are licensed to research, develop, make, have made, use and
import certain nucleic acid probe assays for sale to Bayer and its Affiliates (the “Collaboration
Licensed Products”). Nothing in this Agreement shall limit, amend or otherwise modify such rights
of Gen-Probe and its Affiliates and, further, Bayer hereby



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acknowledges and agrees that the Collaboration Licensed Products that are actually sold to
Bayer and its Affiliates shall not be considered Licensed Products hereunder and no Minimum
Royalties, Earned Royalties or other amounts shall be payable by Gen-Probe or its Affiliates to
Bayer or its Affiliates in connection with any research, development, manufacture, use, import or
sale to Bayer of any such Collaboration Licensed Products authorized by the Collaboration Agreement
without considering this Sublicense Agreement.



     2.7 Chiron IVD Know-How. Subject to the terms and conditions of this Sublicense
Agreement, Bayer grants to Gen-Probe and its Affiliates a non-exclusive, royalty-free license under
the Chiron IVD Know-How for any and all purposes within the scope of the rights granted under
Section 2.1 and Section 2.2, and as such rights may be extended pursuant to Section 2.3. For the
avoidance of doubt, Bayer has no obligation to provide any know-how, whether or not licensed by
Chiron to Bayer under the Chiron License Agreement, to Gen-Probe or its Affiliates during the term
of this Sublicense Agreement or thereafter.



ARTICLE
3 – PAYMENTS TO BAYER




     3.1 Royalty Payments. In partial consideration for the sublicense granted pursuant to
Article 2 above, Gen-Probe shall pay Bayer the greater of the relevant Minimum Royalty or the
Earned Royalty, each as detailed in Schedule 2, attached hereto and made a part hereof. For the
avoidance of doubt, (i) no Earned Royalties or Minimum Royalties shall be payable with respect to
any Licensed Product unless the manufacture, use, import or sale of such product would, except for
the licenses granted hereunder, constitute an infringement of a Valid Claim in the Licensed Patent
Rights and (ii) only one Earned Royalty or Minimum Royalty shall be due with respect to the sale of
any Licensed Product, irrespective of the number of patents or Valid Claims in the Licensed Patent
Rights that cover such product, and such Earned Royalty or Minimum



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Royalty shall be those applicable to HCV if such product is covered by Valid Claims in the
Licensed Patent Rights directed to both HCV and HIV. Further, Earned Royalties and Minimum
Royalties shall be payable only in the event and to the extent that Net Sales (within the meaning
of Section 1.33) are generated by Gen-Probe and will not be payable if no such Net Sales are
generated (e.g., as a result of a decision by Gen-Probe not to commercialize any Licensed
Products), it being the agreement of the Parties that Bayer has not been guaranteed any minimum
levels of royalties or other compensation under this Agreement.



ARTICLE
4 – PAYMENTS AND RECORDS




     4.1 Records and Reports. Gen-Probe shall keep complete and accurate records of the
sales by it and its Affiliates of products subject to Earned Royalties or Minimum Royalties
pursuant to Article 3 above and Schedule 2. Within forty five (45) days following the end of each
calendar quarter ending March 31, June 30, September 30 and December 31, and commencing with the
first full or partial calendar quarter following the First Commercial Sale of a Licensed Product,
Gen-Probe shall deliver to Bayer a written report for such period setting forth, for each country
to the extent relevant, the Net Sales of Licensed Products subject to Earned Royalties or Minimum
Royalties under Article 3 above and Schedule 2, and the number of Units of each type of such
products sold or distributed on a no-charge basis pursuant to Section 1.34 of this Agreement, which
report shall also set forth the amounts payable pursuant to Schedule 2, and the calculation of such
amounts, for such period. Gen-Probe also shall deliver to Bayer a supplemental written report for
each calendar year, delivered together with the report for the fourth quarter of each year, setting
forth the countries where Authorized Distributors are used for sale of Licensed Products.
Gen-Probe shall make available during any audit pursuant to Section 4.2 documentation supporting
product sales made by such Authorized Distributor and



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the manner in which the transfer price had been adjusted in accordance with Section 1.13 of
this Agreement. Gen-Probe shall maintain its books and records relating to the sales of Licensed
Products for at least the longer of five (5) years from the date each royalty report is submitted
to Bayer or one (1) year from the resolution of any dispute arising from an audit pursuant to
Section 4.2 (if an audit has been requested).



     4.2 Audit. Bayer and/or Chiron shall have the right to audit the records of Gen-Probe
and its Affiliates using an independent certified public accounting firm reasonably acceptable to
Gen-Probe, during reasonable business hours and on reasonable notice but not more than once per
calendar year, solely for the purpose of verifying the royalties payable pursuant to this
Sublicense Agreement for the twelve (12) full quarters immediately preceding the date of the audit,
provided that such accountants shall agree to keep all information received strictly confidential
and agree to provide to Bayer and Chiron only the information necessary to verify the calculation
of amounts due hereunder. Notwithstanding the foregoing, such reports to Bayer and/or Chiron may
include a description of the procedures performed, whether Gen-Probe’s calculations are accurate,
and a description of any discrepancies in sufficient detail to permit the Parties to discuss
appropriate remedies while preserving to the greatest extent possible the confidentiality of
business sensitive information of Gen-Probe. If any such audit discloses an underpayment of five
percent (5%) or more for the period of such audit, which shall be at least four (4) quarters in
length, Gen-Probe shall bear the costs of such audit. Otherwise, such audit shall be at the
expense of Bayer or Chiron, as the case may be. Underpayments resulting from withholding taxes
shall not be deemed underpayments for the purposes of this Section 4.2.



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     4.3 Payment. Payment of royalties due Bayer shall accompany each of the statements to
be submitted in accordance with Section 4.1 above. Gen-Probe shall be responsible for the payment
of royalties to Bayer on any sales of Licensed Products by Gen-Probe’s Affiliates.



     4.4 Late Payment. If royalties are not paid by Gen-Probe when due, interest shall
accrued and be paid to Bayer on the unpaid royalties at the lesser of (i) two percent (2%)_above
the 90 day U.S. Dollar LIBOR rate as published in the Wall Street Journal as of the date payment is
due or (ii) the maximum rate permitted by law, calculated from the date on which each respective
payment should have been paid until the date of the applicable actual payment.



     4.5 Withholding Tax. Gen-Probe shall withhold taxes required to be paid to a taxing
authority on account of payment of royalties to Bayer hereunder (and shall have no obligation to
increase or gross-up the amount payable to Bayer in connection with such withholding taxes), and
Gen-Probe shall furnish Bayer with satisfactory evidence of such withholding and payment in order
to permit Bayer to obtain a tax credit or other relief as may be available under the applicable law
or treaty. Gen-Probe shall cooperate with Bayer in obtaining exemption from withholding taxes
where available under applicable laws and treaties.



     4.6 Currency. All payments due hereunder shall be payable in United States Dollars.
All royalties due for sales in countries foreign to the United States shall be converted (for the
purposes of calculation only) into equivalent United States Dollars at the exchange rate published
in the Wall Street Journal at the close of business on the last business day of the applicable
quarterly reporting period.



     4.7 Currency Control. If, by law, regulations, or fiscal policy of a particular
country, payment as provided for above is restricted or forbidden, notice thereof in writing will
be given to Bayer and payment of the royalty will be made through such lawful means or methods as



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Bayer designates. If Bayer fails to so designate such lawful means or methods within sixty
(60) days after such notice is given to Bayer, the payment of royalties by Gen-Probe will be made
by the deposit thereof in local currency to the credit of Bayer in a recognized banking institution
designated by Bayer or, if none be designated by Bayer within such period of sixty (60) days, in a
recognized banking institution of which Gen-Probe shall notify Bayer. Any payment made pursuant to
this Section 4.7 shall not be considered late or past due nor constitute a breach of this
Agreement, including for purposes of Sections 4.4 and 7.1, if such payment is made within
forty-five (45) days of (i) Bayer’s designation of lawful means and methods of payment or (ii) the
expiration of the sixty (60) day period described in this Section above.



ARTICLE
5 – REPRESENTATIONS; COVENANTS; INFRINGEMENT




     5.1 Representations and Warranties of Bayer. Bayer represents and warrants to
Gen-Probe that:




     (a) Bayer is the successor in interest to CDC under the Cross License Agreement and has
the full right and power to grant Gen-Probe the sublicense rights being granted pursuant to
the terms of this Sublicense Agreement (including the extension to the duration of such
sublicense rights, if Gen-Probe exercises its option rights under Section 2.3) and, upon
execution and delivery of this Agreement and upon exercise of Gen-Probe’s option rights
under Section 2.3, as applicable, Gen-Probe will acquire valid and subsisting sublicense
rights on the terms and conditions set forth in this Agreement, such sublicense rights being
free and clear of any liens, claims, encumbrances, pledges, security interests, options,
rights of first refusal or restrictions on transfer of any nature whatsoever.



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     (b) There is no pending Bayer patent application relating to HIV or HCV that if issued
would cover the manufacture, use, importation, offer for sale, or sale of HCV TMA products
manufactured by Gen-Probe and sold by Bayer as of the Effective Date. To the best of
Bayer’s knowledge, Schedule 1 hereto completely and correctly identifies all U.S. patents
included within the Chiron Patents as of the date hereof. To Bayer’s actual knowledge, as
of the Effective Date, the Licensed Patent Rights are valid and enforceable.




     (c) Except as set forth on Schedule 4, within the past two years, neither Bayer nor
Bayer Corporation, the parent of Bayer, has received any written notice alleging that any
Bayer HIV or HCV bDNA or TMA-based products sold by Bayer infringes patent rights of any
Third Party relating to nucleic acid sequences for HIV or HCV, and Bayer is not aware of any
pending or threatened litigations, actions, claims or proceedings asserting any such
infringement.




     d) With respect to the Chiron License Agreement, (i) Bayer has heretofore delivered to
Gen-Probe’s internal general counsel (subject to the confidentiality provisions of Article 6
hereof and solely for the purpose of verification of the representations set forth in
Section 5.1(e)) a true, correct and complete copy of all portions of the Chiron License
Agreement and the June 30, 2005 amendment relevant to representations set forth in Section
5.1(e); (ii) within five (5) days following execution of both this Sublicense Agreement and
a reasonable confidentiality agreement between Bayer external legal counsel for Gen-Probe,
Bayer will deliver to external counsel a true, correct and complete copy of the Chiron
License Agreement and the June 30, 2005 amendment and shall reasonably cooperate with
Gen-Probe’s external counsel in



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connection with counsel’s verification of the representations set forth in Section
5.1(e)); (iii) the June 30, 2005 amendment to the Chiron License Agreement is the only
amendment to the Chiron License Agreement and no negotiations or discussions are underway as
of the Effective Date to amend or modify the Chiron License Agreement; (iv) the Chiron
License Agreement is in full force and effect as of the Effective Date and there exists no
material breach or default or event which would (with the passage of time, or notice, or
both) constitute a material breach or default thereunder by Bayer or, to the knowledge of
Bayer, Chiron, which would reasonably be expected to result in the termination of the Chiron
License Agreement, a right of Bayer or Chiron, as the case may be, to terminate the Chiron
License Agreement, or in the termination, suspension or other material impairment of the
sublicense rights being granted to Gen-Probe hereunder, (v) neither the execution, delivery
and performance of this Agreement, nor the consummation of the transactions contemplated
hereby, (A) will result in a breach or default or event which would (with the passage of
time, or notice, or both) constitute a breach or default thereunder, (B) will terminate or
modify (or result in Chiron having the right to terminate or modify) the rights of Bayer
under the Chiron License Agreement or (C) will require any consent, approval, waiver or
other action by Chiron or, to the knowledge of Bayer, any other Person, (vi) the voluntary
termination right granted to Bayer under Section 7.3 of the Chiron License Agreement has
lapsed and is of no further force or effect, (vii) Bayer has not previously exercised, and
has no ongoing rights to exercise, any option or right under the Chiron License Agreement
with respect to the Chiron Sublicensable Patents, as defined in the Chiron License
Agreement, and (vii) the



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sublicenses granted hereunder shall survive any termination of the Chiron License
Agreement.




     (e) The Earned Royalties and Minimum Royalties identified on Schedule 2 attached hereto
relating to Licensed Products for HCV are equal to, and shall be adjusted from time to time
so that they continue to be equal to, the lowest Earned Royalties and Minimum Royalties, (as
defined under the Chiron License Agreement), required to be imposed by Bayer on its
sublicensees under the Chiron License Agreement in respect of Bayer’s sublicensees for HCV
products, it being the agreement of the Parties that the Earned Royalties and Minimum
Royalties payable by Gen-Probe for any Licensed Products for HCV hereunder shall not exceed
the lowest applicable Earned Royalties and Minimum Royalties that Bayer is required to
impose on its sublicensees for such Licensed Products under the Chiron License Agreement.
Within sixty (60) days of any event that requires or permits adjustment of the Earned
Royalties and Minimum Royalties identified on Schedule 2 so that they are equal to the
lowest Earned Royalties and Minimum Royalties required to be imposed by Bayer on its
sublicensees under the Chiron License Agreement, Bayer shall notify Gen-Probe of such event
and of the amount of adjusted Earned Royalties and/or Minimum Royalties.



     5.2 Mutual Representations and Warranties. Without limiting any of the other
representations, warranties, and undertakings made by the Parties under this Sublicense Agreement,
each of Gen-Probe and Bayer hereby represents and warrants to the other that:




     (a) Each is a duly organized and validly existing corporation or limited liability
company, as applicable, in good standing under the laws of its respective jurisdictions of
incorporation or organization, as applicable.



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     (b) Each has the power and authority to execute and deliver this Sublicense Agreement
and perform its obligations hereunder.




     (c) This Sublicense Agreement constitutes a valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors, rights generally or by the principles governing the availability of
equitable remedies.




     (d) Neither it nor any of its Affiliates is a party to, subject to, or bound by any
agreement, understanding or judgment, award, order, writ, injunction or decree of any court,
governmental body or arbitrator which would (i) prevent it from performing under this
Sublicense Agreement or (ii) conflict with or be breached by the execution, delivery or
performance by it of this Sublicense Agreement. There is no action, suit, dispute or
governmental, administrative, arbitration or regulatory proceeding pending or, to such
Party’s knowledge, threatened against or relating to such Party which, in each case, could
prevent such Party from carrying out its obligations under this Sublicense Agreement.



     5.3 Certain Limitations. Notwithstanding the above, nothing in this Sublicense
Agreement shall be construed as:




     (a) a warranty or representation by Bayer as to the scope or validity of any claim or
patent in the Licensed Patent Rights;




     (b) a warranty or representation by Bayer that any product made, used, or sold by
Gen-Probe under any license granted hereunder is or will be free from infringement of
patents of any Third Parties;



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     (c) an obligation or requirement on the part of Bayer to file or prosecute any patent
application or to secure or maintain any patent in the Licensed Patent Rights;




     (d) subject to section 5.5, an obligation or requirement on the part of Bayer to bring
or prosecute any action or suit against any Third Party for infringement of any patent in
the Licensed Patent Rights;




     (e) subject to Gen-Probe’s right to use Bayer’s name(s) in public announcements or
other disclosures made pursuant to Section 6.1 or 6.5, conferring a right on Gen-Probe or
its Affiliates to use in advertising, publicity, or any other manner any trademark or trade
name of Bayer without the prior, specific written consent of Bayer; or




     (f) a warranty or representation by Bayer that any product sold or service performed by
Gen-Probe or its Affiliates, whether covered by the Licensed Patent Rights or not, is
efficacious, safe, or in compliance with any law or regulation.



     5.4 Performance under Chiron License Agreement. (a) Bayer will notify Chiron of the
execution and delivery of this Sublicense Agreement and, in connection with the audit rights
granted to Chiron under Section 4.2 above, Bayer will provide Chiron with copies of Gen-Probe’s
quarterly reports provided under Section 4.1. Bayer covenants and agrees (i) to use its reasonable
best efforts to maintain the Chiron License Agreement in full force and effect and (ii) not to take
(or permit to be taken) any actions (including, without limitation, permitting any amendment,
modification or waiver of the Chiron License Agreement) that could reasonably be expected to result
in the termination, material restriction or material impairment of, or otherwise have a material
adverse effect on Bayer’s rights under the Chiron License Agreement as the same relate to the
Licensed Patent Rights or on the sublicense rights granted to Gen-Probe and its



-23-









 







Affiliates hereunder. Bayer will promptly provide written notice to Gen-Probe of any written
notices that Bayer receives under the Chiron License Agreement from Chiron that relate to or
affect, whether positively or adversely, the Licensed Patent Rights, including, but not limited to,
notice of issuance of patents on pending patent applications, reexaminations, reissues, and
interferences and oppositions and similar developments affecting the Licensed Patent Rights. If
and to the extent that Bayer has the right to exercise any options or rights under the Chiron
License Agreement that relate to or affect the Licensed Patent Rights, Bayer will give timely
written notice to Gen-Probe and will reasonably consult with Gen-Probe as to the exercise of such
options or rights for the benefit of Gen-Probe. Bayer shall ensure that Gen-Probe receives the
full benefit of any amendments or modifications to the terms of the Chiron License Agreement which
are permitted hereunder and which are relate to or affect the sublicense rights granted to
Gen-Probe under Article 2 above. Notwithstanding anything to the contrary contained herein or in
the Chiron License Agreement, the sublicenses granted hereunder shall survive any termination of
the Chiron License Agreement.



     (b) If Bayer receives or delivers any written notice of default under the Chiron License
Agreement, Bayer will promptly (but in any event at least thirty (30) days prior to the expiration
of any applicable cure period) provide written notice to Gen-Probe thereof.



     5.5 Infringement by Third Parties. Each Party shall notify the other if it becomes
aware of significant infringement by a Third Party of any Licensed Patent Rights. Bayer shall
reasonably consult with Gen-Probe in connection with any such Third Party infringement of Licensed
Patent Rights, and shall diligently and in good faith, subject to Bayer’s commercially reasonable
judgment, pursue its rights under Section 6.4 of the Chiron License Agreement for the benefit of
Gen-Probe. In this regard, Bayer shall give due consideration to economic interests of



-24-









 







Gen-Probe’s which are affected by such infringement. Bayer shall keep Gen-Probe reasonably
advised with respect to all material developments concerning such Third Party infringement to the
extent that such disclosure to Gen-Probe does not violate any confidentiality obligation to which
Bayer is subject. Gen-Probe shall reasonably cooperate with Chiron and/or Bayer in connection with
any legal action brought against a Third Party infringer of the Licensed Patent Rights, provided
that all reasonable costs and expenses incurred by Gen-Probe in connection with such cooperation
shall be reimbursed by Bayer in accordance with Section 6.4.4. of the Chiron License Agreement.



     5.6 Indemnification.




     (a) Gen-Probe shall defend Bayer at Gen-Probe’s cost and expense, and will indemnify
and hold harmless Bayer, from and against any and all claims, losses, costs, damages, fees
or expenses, including reasonable attorneys’ fees (collectively, “Losses”) arising out of or
in connection with any action, suit, claim, or proceeding threatened or brought against
Bayer by any Third Party arising out of the manufacture, design, commercialization, use,
marketing or sale by Gen-Probe or its Affiliates of any Licensed Product, including, but not
limited to, any actual or alleged injury, damage, death, or other consequence occurring to
any legal or natural person or property, as a result, directly or indirectly, of the
possession, use or consumption of a Licensed Product, claimed by reason of breach of
warranty, negligence, product defect, or other similar cause of action, regardless of the
form in which any such claim is made, provided, however, that such indemnity shall not
extend to any Losses proximately caused by any breach of this Agreement by Bayer or any
willful misconduct or negligent act of Bayer or its Affiliates.



-25-









 






     (b) Bayer shall defend Gen-Probe and its Affiliates at Bayer’s cost and expense, and
will indemnify and hold harmless Gen-Probe and it Affiliates, from and against any and all
Losses arising out of or in connection with any action, suit, claim, or proceeding
threatened or brought against Gen-Probe or any of its Affiliates by Chiron or any of its
Affiliates in respect of the payment of royalties by Gen-Probe in connection with the sale
of the Licensed Products, to the extent such payments have actually been made by Gen-Probe
and comply with the terms and condition of this Sublicense Agreement.




     (c) Each Party shall defend the other Party and its Affiliates at the indemnifying
Party’s cost and expense, and will indemnify and hold harmless the other Party and it
Affiliates, from and against any and all Losses (whether or not involving a Third Party
claim) arising out of or in connection with any breach or inaccuracy of any representation
or warranty made by the indemnifying Party in this Agreement or any breach or
non-performance of any covenant, agreement or undertaking made by the indemnifying Party in
this Agreement..




     (d) A Party claiming indemnification pursuant to this Section 5.6 (the Indemnified
Party”) shall promptly notify the other Party (the “Indemnifying Party”) in writing upon
becoming aware of any claim to which such indemnification may apply. Unreasonable delay in
providing such notice shall constitute a waiver of the Indemnifying Party’s indemnity
obligations hereunder if, and only if, the Indemnifying Party’s ability to defend such claim
is materially impaired thereby. The Indemnifying Party shall have the right to assume and
control the defense of the claim at its own expense. If the right to assume and have sole
control of the defense is exercised, the



-26-









 







Indemnified Party shall have the right to participate in, but not to control, such
defense at its own expense, and the Indemnifying Party’s indemnity obligations shall be
deemed not to include attorneys’ fees and litigation expenses incurred by the Indemnified
Party after the assumption of the defense by the Indemnifying Party. If the Indemnifying
Party does not assume the defense of the claim, the Indemnified Party may defend the claim
at the Indemnifying Party’s expense. The Indemnified Party will not settle or compromise
the claim without the prior written consent of the Indemnifying Party, and the Indemnifying
Party will not settle or compromise the claim in any manner which would have an adverse
effect on the Indemnified Party without the consent of the Indemnified Party, which consent,
in each case, will not be unreasonably conditioned, withheld or delayed. Each Party shall
reasonably cooperate with the other and will make available to the other all pertinent
information under the control of such Party, all at the expense of requesting Party.



     5.7 Survival of Representations and Warranties. The representations and warranties of
the Parties set forth herein shall survive the termination or expiration of this Agreement.



     5.8 Marking; Regulatory Filings. Gen-Probe and its Affiliates shall mark Licensed
Products made, used, imported, or sold in the United States with appropriate United States patent
numbers of the relevant patents in Licensed Patent Rights in compliance with United States patent
laws. Gen-Probe shall use commercially reasonable efforts to obtain approval for the use of the
“CE” mark on all Licensed Products sold by Gen-Probe for use in the European Union. Gen-Probe
shall have the right to make all regulatory filings required throughout the world in connection
with the development, manufacture, use, marketing, sale and distribution of any Licensed Products
and to control all aspects of such filing and any related proceedings.



-27-









 





ARTICLE
6 – CONFIDENTIALITY




     6.1 This Sublicense Agreement, all Schedules and attachments hereto, and all written
information and materials exchanged between the Parties in performing hereunder, shall be deemed
“Confidential Matter” as provided below. Notwithstanding the foregoing, Gen-Probe shall have the
right to identify itself as a sublicensee of Bayer and Chiron, and to refer to the existence of
this Agreement, in public announcements. Further, Gen-Probe shall have the right to make public
announcements concerning significant developments with respect to Licensed Products hereunder,
provided that, subject to Section 6.5 below, Gen-Probe shall reasonably consult with Bayer
concerning the timing and content of such announcements.



     6.2 Confidential Matter received by a Party from the other shall not be disclosed by such
receiving Party to any Third Party, or used by such receiving Party for its benefit, or that of a
Third Party, except as expressly provided herein.



     6.3 To be accorded treatment as Confidential Matter, however, such information and materials:




     (a) must be first disclosed to the receiving Party in writing and be clearly identified
as “Confidential;” or




     (b) if first disclosed orally, must be reduced to writing by the disclosing Party and
be clearly identified as “Confidential,” and delivered to the receiving Party within thirty
(30) days of its first oral disclosure to the receiving Party; or




     (c) if a physical item, must be clearly identified as “Confidential,” or words to the
same effect, or be accompanied by a writing specifically identifying such item as
“Confidential.”



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Information and material provided by one party to the other hereunder which is not identified as
“Confidential,” as provided above shall be considered as given and received without any obligation
of confidentiality or nonuse and the receiving Party shall be free to use such information in any
way it sees fit, subject only to any rights that the disclosing Party may have under the relevant
patent laws.



     6.4 Notwithstanding the foregoing, “Confidential Matter” shall not include any information or
material that:




     (a) is known by the receiving Party prior to receipt from the disclosing party as
evidenced by documents in the possession of the receiving Party at the time of disclosure,
or




     (b) after receipt from the disclosing Party, is disclosed to the receiving Party by a
third party having the legal right to do so, or




     (c) is available to the public at the time of receipt from the disclosing Party, or




     (d) becomes available to the public after receipt from the disclosing Party through no
fault of the receiving Party, or




     (e) is developed by the receiving Party independently of information received from the
disclosing Party.



     6.5 Further, the obligations of confidentiality and nonuse of this Article 6 shall not apply
to information or material:




     (a) which is required to be disclosed by subpoena, order or other requirement of a
court, administrative agency, or other governmental body provided that the receiving party
has provided reasonable advance notice to allow the disclosing Party the opportunity to seek
a protective order or otherwise contest, prevent or limit such



-29-









 







disclosure and provided further the confidentiality and non-use obligations set forth
in this Article 6 shall continue to be fully applicable to any information or material
disclosed pursuant to this subsection 6.5(a) except solely with respect to the required
disclosure as described above; or




     (b) which is provided in connection with due diligence related to a possible
acquisition, merger, consolidation, sale of stock, sale of significant assets or similar
transaction by either Party, provided that the recipient(s) are bound by satisfactory
confidentiality obligations in favor of each of the Parties but which are no less
restrictive than those contained in this Agreement; or




     (c) which is required to be disclosed in order to comply with any applicable laws,
rules or regulations, including, without limitation, the rules of any stock exchange on
which such Party’s securities are traded, provided that the disclosing Party shall use
reasonable best efforts to provide reasonable advance notice to allow the other Party the
opportunity to comment as to the nature and extent of such disclosure and, consistent with
its obligations under applicable laws, rules or regulations, the disclosing Party shall
reasonably consider such comments.



     6.6 Each Party shall use the same level of care in complying with the obligations hereof
respecting Confidential Matter as it does with respect to its own information of similar nature.
The Parties mutually represent and warrant that each and every employee who will have access to the
other party’s Confidential Matter hereunder shall be under contractual obligation not to disclose
or use such Confidential Matter except as directed by such Party. Each Party hereby agrees that it
shall advise each and every of its employees who will have access to the



-30-









 







other Party’s Confidential Matter of the restrictions on disclosure and use of such
Confidential Matter set forth in this Article 6.



ARTICLE
7 – TERM AND TERMINATION




     7.1 Termination. (a) Either Party may terminate this Sublicense Agreement at any time
if the other Party fails to perform any material covenant, condition, or limitation herein, and has
failed to cure its breach within sixty (60) days after receipt of written notice of such breach,
such termination being without prejudice to the non-breaching Party’s other rights and remedies at
law or in equity. For the avoidance of doubt, any termination, material impairment or material
restriction of the Chiron License Agreement shall be deemed to constitute a material breach of this
Sublicense Agreement by Bayer, and shall entitle Gen-Probe, in addition to its other rights and
remedies at law or in equity, to terminate this Sublicense Agreement effective immediately upon
written notice to Bayer.



     (b) If either Party files in any court or agency pursuant to any bankruptcy or insolvency law
a petition in bankruptcy or insolvency or for reorganization or similar arrangement or for the
appointment of a receiver or trustee of such Party or its assets, if either Party is served with an
involuntary petition against it in any insolvency proceedings, upon the ninety-first (91st) day
after such service if such involuntary petition has not previously been stayed or dismissed or if
either party makes an assignment for the benefit of its creditors, then, in each case, the other
Party shall have the right to terminate this Agreement effective immediately upon written notice to
such Party. All licenses granted under or pursuant to this Agreement are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
“intellectual property” as defined under Section 101(52) of the U.S. Bankruptcy Code. The Parties
agree that Gen-Probe shall retain and may fully exercise all of its



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rights and elections under the U.S. Bankruptcy Code, subject to the performance of its
preexisting obligations under this Agreement.



     7.2 Term. Unless earlier terminated as provided in this Article 7, this Sublicense
Agreement shall continue in full force until October 1, 2010, or, if Gen-Probe exercises the option
granted under Section 2.3, until the expiration date of the last to expire patent in the Licensed
Patents Rights.



     7.3 Survival. Upon expiration or earlier termination of this Sublicense Agreement,
all obligations of confidentiality created under Article 6 above shall survive and continue for a
period of five (5) years from the date of termination. All obligations of the Parties with respect
to infringement and other indemnities (Section 5.6), as well as any other provision which, by its
nature, is intended to survive termination, shall survive and continue to be enforceable without
limitation. Further, any expiration or termination of this Agreement shall not affect any
liability or obligation which accrued prior to such expiration or termination.



     7.4 Unforeseen Circumstances. Neither Party shall be liable in damages for, nor shall
this Sublicense Agreement be terminable or cancelable because of, any delay or default in any such
Party’s performance hereunder if such default or delay is caused by events beyond such party’s
reasonable control including, but not limited to, acts of God, regulation or law or other action of
any government or agency thereof, war or insurrection, civil commotion, destruction of production
facilities or materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or
failure of suppliers, public utilities or common carriers. Each Party agrees to endeavor to
promptly resume its performance hereunder if such performance is delayed or interrupted by reason
of such forces majeure as listed above. This Section 7.4 shall not apply to any termination,
material impairment, or material restriction of the Chiron License Agreement.



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ARTICLE
8 – ASSIGNMENT AND CHANGE OF CONTROL 




     8.1 Except as otherwise expressly provided in this Article 8, this Sublicense Agreement and
the rights and obligations of the Parties under this Sublicense Agreement shall not be assignable
or transferable, whether in whole or in part, whether by operation of law or otherwise, by any
Party without the written consent of the other Parties. Any purported transfer or assignment by
either Party in violation of this Article 8 shall constitute a material breach of this Sublicense
Agreement and shall be null and void ab initio.



     8.2 Notwithstanding Section 8.1,:




     (a) Bayer shall have the right to assign or transfer this Agreement, whether by
operation of law or otherwise to (i) any Affiliate of Bayer or (ii) any Third Party that
acquires all or substantially all of the assets, business and operations relating to the HCV
and HIV Nucleic Acid Assay products of Bayer; provided, however, that such assignment or
transfer is permitted under the terms of the Chiron License Agreement without terminating or
otherwise adversely affecting the sublicense rights and/or options granted hereunder; and
provided, further, that in connection with any such assignment, Bayer shall obtain an
undertaking from such Affiliate or Third Party, in form and substance reasonably acceptable
to Gen-Probe, to assume and be bound by the terms of this Sublicense Agreement and the
Chiron License Agreement.




     (b) Gen-Probe shall have the right to assign or transfer its rights and obligations
under this Sublicense Agreement to (i) any Affiliate of Gen-Probe or (ii) any Third Party
that acquires all or substantially all of the assets, business and operations relating to In
Vitro Diagnostics; provided, however, that in connection with any such assignment, Gen-Probe
shall obtain an undertaking from such Affiliate or Third Party, in



-33-









 







form and substance reasonably acceptable to Bayer, to assume and be bound by the terms
of this Sublicense Agreement.



     8.3 Subject to the terms of this Article 8 set forth above, this Sublicense Agreement will be
binding upon, inure to the benefit of and be enforceable by the Parties and their respective
permitted successors and assigns.




ARTICLE 9 – FIELD RESTRICTIONS AND OTHER COVENANTS 




     9.1 Gen-Probe Covenant Regarding Blood Screening .



     9.1.1 Gen-Probe and its Affiliates shall not label or promote any Licensed Product labeled or
promoted for use as an IVD product for use in Blood Screening; and Gen-Probe shall use commercially
reasonable efforts to prevent its Authorized Distributors from labeling or promoting any Licensed
Product labeled or promoted for use as an IVD product in any respect for use in Blood Screening.



     9.1.2 Further, Gen-Probe and its Affiliates and Authorized Distributors shall, to the extent
permitted by law (e.g., without limitation, regulatory, e.g., US FDA, requirements), include on or
with each Licensed Product labeled or promoted for use as an IVD Product a statement as follows:
“This product is not intended for use for testing or screening pooled samples containing specimens
from more than one individual, or otherwise in blood or plasma screening”, or such other language
proposed by Gen-Probe for the reasonable approval of Bayer. The location of such notice shall be
the product insert of such Licensed Products or such other reasonably prominent location to be
determined by Gen-Probe.



     9.1.3 In the event that Gen-Probe becomes aware of any material use in Blood Screening of
Licensed Products labeled or promoted for use as an IVD Product, Gen-Probe will promptly notify
Bayer in writing of the relevant facts and, if so requested by Bayer, Gen-Probe



-34-









 







will (i) meet and confer with Bayer and Chiron in good faith to determine what steps either or
both should take to abate such infringing use and (ii) notify in writing, with a contemporaneous
copy to Bayer, any of its customers that engages in such infringing use that use of the relevant
Licensed Product in Blood Screening may infringe one or more of the Chiron Patents.



     9.1.4 Nothing in this Section 9.1 shall apply to any product to the extent that Gen-Probe’s
activity and that of its Affiliates with respect to such product is separately licensed in Blood
Screening under the Chiron Patents.



     9.2 Gen-Probe Covenant Regarding Product Labeling. Gen-Probe and its Affiliates
shall, to the extent permitted by law (e.g., without limitation, regulatory, e.g., US FDA,
requirements such as pertaining to Analyte Specific Reagents), include on or with each Licensed
Product directed to HCV a statement as to the number of Units contained within each such Licensed
Product, using such language to be determined by Gen-Probe and approved in advance in writing by
Bayer, which approval shall not be unreasonably withheld. The location of such statement shall be
in the product insert of such Licensed Products or such other reasonably prominent location to be
determined by Gen-Probe.



ARTICLE
10 – OTHER PROVISIONS




     10.1 Governing Law. This Sublicense Agreement shall be governed by, and the rights of
the Parties hereunder shall be determined and enforced in accordance with, the laws of the State of
New York without reference to its conflict of laws principles.



     10.2 Construction. This Sublicense Agreement shall not be strictly construed against
any party hereto, whether that party is the drafting party or not, and shall instead be liberally
construed to effectuate the purposes and goals set forth herein. References to Articles, Sections
and Schedules are to Articles, Sections and Schedules of this Agreement unless otherwise



-35-









 







specified. All Schedules attached hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized term used in any
Schedule but not otherwise defined therein shall have the meaning given to such term in this
Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not
they are in fact followed by those words or words of like import. References to any agreement or
contract are to that agreement or contract as amended, modified or supplemented from time to time.
References to any Person include the permitted successors and assigns of that Person. Any
reference to “days” means calendar days unless otherwise specified.



     10.3 Notices. Any notice required or permitted by this Sublicense Agreement shall be
in writing and delivered in accordance with this Section 10.3. A notice shall be considered served
five (5) days after it is deposited in the national postal system in a sealed envelope with
sufficient postage affixed, or two (2) days after it is deposited in a national overnight courier
service that offers proof of delivery, and addressed to the party to whom such notice is directed
at the appropriate address given below (or to such different address as Bayer or Gen-Probe in the
future may designate in writing):



	 	 	 	 	 
	 

	 	(a) If to Bayer:
	 	Bayer HealthCare LLC
	 

	 	 	 	Diagnostics Division
	 

	 	 	 	511 Benedict Avenue
	 

	 	 	 	Tarrytown, New York 10591
	 

	 	 	 	Attention: Law & Patents
	 
	 	 	 	 
	 

	 	(b) If to Gen-Probe:
	 	Gen-Probe Incorporated
	 

	 	 	 	10210 Genetic Center Drive
	 

	 	 	 	San Diego, California 92121-4362
	 

	 	 	 	Attention: General Counsel






-36-









 






     10.4 Effect of Headings. All article and section captions or titles are inserted
herein for ready reference only and are without contractual significance or effect.



     10.5 Integration. This Sublicense Agreement, together with the schedules and exhibits
attached hereto, constitutes the entire agreement between the Parties relating to the sublicense
rights granted hereunder and supersedes any and all prior discussions, negotiations and/or
agreements, whether oral or in writing, between the Parties relating to such sublicense rights,
including the Short Form Settlement Agreement. There are no understandings, representations, or
warranties of any kind relating to the sublicense rights granted hereunder except as expressly set
forth herein.



     10.6 Waiver. This Sublicense Agreement may not be waived, altered, extended, or
modified except by written agreement of the Parties.



     10.7 Independent Contractors. The performance of each Party hereunder is undertaken
as an independent contractor and not as an agent or partner of the other Party. Neither Party
shall enter into or incur, or hold itself out to Third Parties as having authority to enter into or
incur on behalf of the other Party, any contractual obligation, expense, or liability whatsoever.



     10.8 Severability. If any provision of this Sublicense Agreement is held invalid,
illegal, unenforceable or in conflict with the law of any jurisdiction, all other terms, conditions
and provisions of this Agreement shall nevertheless remain unaffected, in full force and effect.
Upon such determination that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.



-37-









 





     10.9 Multiple Executions. This Sublicense Agreement may be executed in one or more
copies, each of which will be deemed to be an original, but all of which together will constitute
one and the same instrument, however, this Sublicense Agreement shall have no force or effect until
executed by both Parties.



     10.10 Further Assurances. The Parties shall perform all legally proper acts and
execute all documents as are reasonably needed for carrying out the intent of this Sublicense
Agreement.



     10.11 Alternative Dispute Resolution. Any dispute, controversy or claim arising out
of or relating to this Agreement, or the breach, termination or validity thereof or the
transactions contemplated thereby (“Dispute”) shall be resolved in accordance with Section 8.2 of
the Definitive Settlement Agreement and Exhibit H to the Definitive Settlement Agreement.



     IN WITNESS WHEREOF, the Parties have duly signed and have made delivery to the other.



	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC	 	GEN-PROBE INCORPORATED
	 
	 	 	 	 	 	 
	By:

	 	/s/ Anthony P. Bihl, III	 	By:	 	/s/ Henry L. Nordhoff
	 

	 	 
	 	 	 	 
	 

	 	Anthony P. Bihl, III
	 	 	 	Henry L. Nordhoff
	Title:

	 	President, Diagnostics Division
	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	Date: August 2, 2006	 	Date: August 1, 2006






-38-









 






SCHEDULE 1: CHIRON US PATENTS




	 	 	 	 	 	 	 
	Inventors	 	US Patent No	 	Patent Date
	Houghton, et al.

	 	 	5,714,596	 	 	02-03-98
	“

	 	 	6,074,816	 	 	06-13-00
	“

	 	 	5,712,088	 	 	01-27-98
	“

	 	 	5,863,719	 	 	01-26-99
	Miyamura, et al.

	 	 	5,372,928	 	 	12-13-94
	“

	 	 	5,959,092	 	 	09-28-99
	Cha, et al.

	 	 	6,071,693	 	 	06-06-00
	Chien, et al.

	 	 	6,416,944	 	 	07-09-00
	Weiner

	 	 	5,851,759	 	 	12-22-98
	Luciw, et al.

	 	 	6,531,276	 	 	03-11-03






-39-









 






SCHEDULE 2: ROYALTY PAYMENTS




[***]




*** Confidential Treatment Requested




-40-









 








SCHEDULE 3




[***]




*** Confidential Treatment Requested




-41-









 








SCHEDULE 4




[***]




** Confidential Treatment Requested





-42-









 








Exhibit D




Stipulation of Dismissal of California Action 565





 









 




LATHAM & WATKINS LLP 

Stephen P. Swinton (Bar No. 106398)

Alexander E. Long (Bar No. 216634)

600 West Broadway, Suite 1800

San Diego, California 92101-3375




Telephone: (619) 236-1234

Facsimile: (619) 696-7419




GEN-PROBE INCORPORATED

R. William Bowen, Jr. (102178)

10210 Genetic Center Drive

San Diego, CA 92121-4362

Telephone: (858) 410-8918

Facsimile: (858) 410-8637




Attorneys for Plaintiff and Counterclaim Defendant

GEN-PROBE INCORPORATED




UNITED STATES DISTRICT COURT




SOUTHERN DISTRICT OF CALIFORNIA




	 	 	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED,
	 	CASE NO. 04-CV-565 LAB (WMc)
	 
	 	 	 	 	 	 	 	 
	 
	 	Plaintiff,	 	STIPULATION FOR DISMISSAL WITH
	 
	 	 	 	 	 	PREJUDICE, AND [PROPOSED] ORDER
	v.
	 	 	 	 	 	THEREON
	 
	 	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC and BAYER CORPORATION,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Defendants.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC, et al.,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Counterclaim Plaintiffs,	 	 	 	 
	v.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Counterclaim Defendant.	 	 	 	 










			
	Attorneys At Law	 	 
	       San Diego	 	 







 









 




     IT IS HEREBY STIPULATED by and between the parties to this action, through their designated
counsel, that the above-captioned action be and hereby is dismissed with prejudice pursuant to
Federal Rule of Civil Procedure 41(a)(1). The parties shall be responsible for their own costs and
attorneys’ fees.



     Notwithstanding this dismissal, the Honorable Magistrate Judge William McCurine Jr. shall have
continuing jurisdiction to enforce the terms of the settlement agreement between the parties.



IT IS SO STIPULATED:




	 	 	 	 	 	 	 	 
	LATHAM
& WATKINS LLP
	 	SELTZER CAPLAN MCMAHON VITEK	 
	 
	 	 	 	 	 	 	 
	By:
	 	/s/ Alexander E. Long, Esq.	 	By:	 	/s/ Richard A. Clegg, Esq.	 
	 
	 	 	 	 	 	 	 
	 
	 	Alexander E. Long, Esq.	 	 	 	Richard A. Clegg, Esq.	 
	 
	 	Attorney for Plaintiff	 	 	 	Attorney for Defendants Bayer	 
	 
	 	Gen-Probe, Incorporated	 	 	 	Healthcare LLC and Bayer Corp.	 
	 
	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED
	 	BAYER HEALTHCARE LLC	 
	 
	 	 	 	 	 	 	 
	By:
	 	/s/ R. William Bowen, Jr.	 	By:	 	/s/ Anthony P. Bihl, III	 
	 
	 	 	 	 	 	 	 
	 
	 	R. William Bowen, Jr.	 	 	 	Anthony P. Bihl, III	 
	 
	 	Vice President, General	 	 	 	President, Diagnostics Division	 
	 
	 	Counsel & Secretary	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	BAYER CORPORATION	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	By:	 	/s/ George J. Lykos	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	George J. Lykos	 
	 
	 	 	 	 	 	Senior Vice President	 







	 	 	IT IS SO ORDERED:





Dated: 8/7/06




	 	 	 
	 
	 	/s/ William McCurine, Jr.
	 
	 
	 
	 	The Honorable William McCurine, Jr.
	 
	 	UNITED STATES MAGISTRATE JUDGE








			
	 	 	 
	
	 	 
	Attorneys At Law	 	 
	       San Diego	 	 








1









 






Exhibit E




Stipulation of Dismissal of California Action 1668




 









 




LATHAM & WATKINS LLP 

Stephen P. Swinton (Bar No. 106398)

Alexander E. Long (Bar No. 216634)

600 West Broadway, Suite 1800

San Diego, California 92101-3375




Telephone: (619) 236-1234

Facsimile: (619) 696-7419




GEN-PROBE INCORPORATED

R. William Bowen, Jr. (102178)

10210 Genetic Center Drive

San Diego, CA 92121-4362

Telephone: (858) 410-8918

Facsimile: (858) 410-8637




Attorneys for Plaintiff and Counterclaim Defendant

GEN-PROBE INCORPORATED




UNITED STATES DISTRICT COURT




SOUTHERN DISTRICT OF CALIFORNIA




	 	 	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED,
	 	CASE NO. 05-CV-1668 B (WMc)
	 
	 	 	 	 	 	 	 	 
	 
	 	Plaintiff,	 	STIPULATION FOR DISMISSAL WITH
	 
	 	 	 	 	 	PREJUDICE, AND [PROPOSED] ORDER
	v.
	 	 	 	 	 	THEREON
	 
	 	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC and BAYER CORPORATION,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Defendants.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BAYER HEALTHCARE LLC, et al.,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Counterclaim Plaintiffs,	 	 	 	 
	v.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED,	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Counterclaim Defendant.	 	 	 	 







			
	 	 	 
	
	 	 
	Attorneys At Law	 	 
	       San Diego	 	 







 









 




     IT IS HEREBY STIPULATED by and between the parties to this action, through their designated
counsel, that the above-captioned action be and hereby is dismissed with prejudice pursuant to
Federal Rule of Civil Procedure 41(a)(1). The parties shall be responsible for their own costs and
attorneys’ fees.



     Notwithstanding this dismissal, the Honorable Magistrate Judge William McCurine Jr. shall have
continuing jurisdiction to enforce the terms of the settlement agreement between the parties.



IT IS SO STIPULATED:




	 	 	 	 	 	 	 	 
	LATHAM
& WATKINS LLP
	 	SELTZER CAPLAN MCMAHON VITEK	 
	 
	 	 	 	 	 	 	 
	By:
	 	/s/ Alexander E. Long, Esq.	 	By:	 	/s/ Richard A. Clegg, Esq.	 
	 
	 	 	 	 	 	 	 
	 
	 	Alexander E. Long, Esq.	 	 	 	Richard A. Clegg, Esq.	 
	 
	 	Attorney for Plaintiff	 	 	 	Attorney for Defendants Bayer	 
	 
	 	Gen-Probe, Incorporated	 	 	 	Healthcare LLC and Bayer Corp.	 
	 
	 	 	 	 	 	 	 
	GEN-PROBE INCORPORATED
	 	BAYER HEALTHCARE LLC	 
	 
	 	 	 	 	 	 	 
	By:
	 	/s/ R. William Bowen, Jr.	 	By:	 	/s/ Anthony P. Bihl, III	 
	 
	 	 	 	 	 	 	 
	 
	 	R. William Bowen, Jr.	 	 	 	Anthony P. Bihl, III	 
	 
	 	Vice President, General	 	 	 	President, Diagnostics Division	 
	 
	 	Counsel & Secretary	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	BAYER CORPORATION	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	By:	 	/s/ George J. Lykos	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	George J. Lykos	 
	 
	 	 	 	 	 	Senior Vice President	 







	 	 	IT IS SO ORDERED:





Dated: 8/7/06




	 	 	 
	 
	 	/s/ William McCurine, Jr.
	 
	 
	 
	 	The Honorable William McCurine, Jr.
	 
	 	UNITED STATES MAGISTRATE JUDGE







			
	 	 	 
	
	 	 
	Attorneys At Law	 	 
	       San Diego	 	 







1









 






Exhibit F




Stipulation of Dismissal of Massachusetts Action




 









 





UNITED STATES DISTRICT COURT




FOR THE

DISTRICT OF MASSACHUSETTS




	 	 	 	 	 	 	 
	 


	 	 	)	 	 	 
	BAYER HEALTHCARE LLC,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                    Plaintiff,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	CIVIL ACTION NO. 05-12084-RCL
	 

	 	 	)	 	 	 
	GEN-PROBE INCORPORATED,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                    Defendant.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 


	 	 	 	 	 	 






STIPULATION OF DISMISSAL




     Plaintiff Bayer HealthCare LLC and defendant Gen-Probe Incorporated, constituting all of the
parties to this proceeding, hereby stipulate, pursuant to Fed. R. Civ. P. 41(a)(1)(ii), that this
action, including any and all claims, counterclaims, and defenses asserted herein, is hereby
dismissed with prejudice and without costs or attorneys’ fees to any party.



	 	 	 
	BAYER HEALTHCARE LLC

	 	GEN-PROBE INCORPORATED
	 
	By its attorneys,

	 	By its attorneys,
	 
	/s/
Brian A. Davis

	 	/s/ Michael P. Boudett
	 

	 	 
	Brian A. Davis (BBO No. 546462)

	 	Michael P. Boudett (BBO No. 558757)
	Laurence D. Pierce (BBO No. 399283)

	 	Barbara A. Fiacco (BBO No. 633618)
	CHOATE, HALL & STEWART LLP

	 	FOLEY HOAG LLP
	Two International Place

	 	155 Seaport Boulevard
	Boston, Massachusetts 02110

	 	Boston, Massachusetts 02110
	Tele: 617-248-5000

	 	Tele: 617-832-1000
	Date: August ___, 2006
	 	 






 









 






Exhibit G




Final Award in JAMS Arbitrations




 









 





JUDICIAL ARBITRATION AND MEDIATION SERVICE




IN THE CONSOLIDATED ARBITRATIONS BETWEEN




	 	 	 	 	 	 	 
	 


	 	 	)	 	 	 
	GEN-PROBE INCORPORATED,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                     Claimant,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	JAMS Ref. No. 1240015058
	 

	 	 	)	 	 	 
	BAYER CORPORATION

	 	 	)	 	 	 
	and BAYER HEALTHCARE LLC,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                    Respondents and Counter-Claimants.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 


	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	and
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 


	 	 	)	 	 	 
	BAYER HEALTHCARE LLC,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                     Claimant,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	v.

	 	 	)	 	 	JAMS Ref. No. 1100045987
	 

	 	 	)	 	 	 
	GEN-PROBE INCORPORATED,

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	                    Respondent.

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 
	 	 	 	 	 	 





STIPULATED FINAL AWARD




     Pursuant to the settlement agreement executed by Bayer Corporation and Bayer HealthCare LLC
(collectively, “Bayer”), and Gen-Probe Incorporated (“Gen-Probe”) as of August 1, 2006, the parties
hereby stipulate, and the Arbitrator hereby orders, that the terms described below shall constitute
the final award for purposes of these consolidated arbitration proceedings:



STIPULATED FINAL AWARD




 









 









	1.	 	The parties and the Arbitrator hereby adopt and incorporate by reference the
terms of the Interim Arbitrator’s Opinion and Award, dated June 24, 2005, and appended
hereto as Exhibit 1 (the “Interim Award”), provided, however, that the Arbitrator’s
award of attorneys’ fees and costs to Gen-Probe contained in such Interim Award shall
be deemed to have been satisfied by Bayer. No additional payment of attorneys’ fees or
costs by Bayer shall be required;






	2.	 	Except as modified pursuant to Paragraph 3 hereof, the parties and the
Arbitrator hereby adopt and incorporate by reference the terms of the Award Following
Supplemental Hearing Related to Royalty Issues, dated March 3, 2006, and appended
hereto as Exhibit 2 (the “Supplemental Award”), provided, however, that neither party
shall be entitled to recover any attorneys’ fees or costs in connection with the
proceedings related to such Supplemental Award;






	3.	 	The parties have separately approved and signed a written Sublicense Agreement
to implement the terms of the Supplemental Award; and






	4.	 	Any and all claims or counterclaims of the parties in the consolidated
arbitration proceeding titled Bayer HealthCare LLC v. Gen-Probe Incorporated, JAMS Ref.
No. 1100045987, shall be dismissed with prejudice and without attorneys’ fees or costs
to either party.






	5.	 	This Stipulated Final Award shall be binding, non-reviewable, and
non-appealable.





SO STIPULATED BY THE PARTIES:




STIPULATED FINAL AWARD




-2-









 








	 	 	 	 	 
	Date:   August 8, 2006 	LATHAM & WATKINS LLP

 	 
	 	By:  	/s/
Stephen P. Swinton	 
	 	 	Stephen P. Swinton 	 
	 	 	Attorneys for Gen-Probe Incorporated 	 
	 
	Date:   August 3, 2006 	CHOATE, HALL & STEWART LLP

 	 
	 	By:  	/s/
Brian A. Davis 	 
	 	 	Brian A. Davis 	 
	 	 	Attorneys for Bayer Corporation and 

Bayer
HealthCare LLC 	 
	 
	SO ORDERED BY THE ARBITRATOR:

 	 
	Date:   August 18, 2006 	By:  	/s/
Edward J. Wallin	 
	 	 	Hon. Edward J. Wallin (Ret.) 	 
	 	 	Arbitrator 	 
	 



STIPULATED FINAL AWARD




-3-









 








Exhibit H




Alternate Dispute Resolution




 









 





Alternate Dispute Resolution





     The parties recognize that from time to time a dispute may arise relating to either party’s
rights or obligations under this Agreement. The parties agree that any such dispute shall be
resolved by the Alternative Dispute Resolution (“ADR”) provisions set forth in this Exhibit, the
result of which shall be binding upon the parties.



     1. Negotiation. To begin the ADR process, a party first must send written notice of the
dispute to the other party for attempted resolution by good faith negotiations between their
respective presidents (or their designees) of the affected subsidiaries, divisions, or business
units within twenty-eight (28) days after such notice is received (all references to “days” in this
ADR provision are to calendar days).



     2. Mediation. If the dispute has not been resolved by negotiation within 28 days of the
disputing party’s notice, or if the parties have failed to confer within 28 days after delivery of
the notice, the parties shall endeavor to settle the dispute by mediation under the Mediation
Procedures of the CPR Institute for Dispute Resolution (“CPR”), 366 Madison Avenue, 14th Floor, New
York, New York 10017. Unless otherwise agreed, the parties will select a mediator from the CPR
Panels of Distinguished Neutrals. All negotiations and proceedings pursuant to paragraphs 1 and 2
shall be confidential and shall be treated as compromise and settlement negotiations for purposes
of applicable rules of evidence and any additional confidentiality protections provided by
applicable law.



1









 





     3. Arbitration. If the dispute has not been resolved by mediation as provided herein within
90 days of the initiation of such procedure, either party may propose in writing to the other party
that the dispute be resolved by arbitration. If arbitration is permissive rather than mandatory
pursuant to Section 8.2 of the Settlement Agreement, the other party may object to the arbitration
proposal if such party does not agree to arbitrate the dispute at issue. Failure of the other
party to object in writing to arbitration within fourteen (14) calendar days shall be conclusively
deemed to be consent to such arbitration pursuant to Section 8.2 of this Settlement Agreement. Any
dispute submitted to arbitration shall be resolved in accordance with, except as otherwise
expressly set forth in this Exhibit H, the CPR Rules for Non-Administered Arbitration in effect on
the date of this agreement, by a sole arbitrator selected from the CPR Panel, except that if the
amount in controversy exceeds $ 1,000,000, either party may opt for an arbitration conducted by
three independent and impartial arbitrators, none of whom shall be appointed by either party. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16 to the exclusion of
state laws inconsistent therewith, and judgment upon the award rendered by the arbitrator(s) may be
entered by any court having jurisdiction thereof. The parties shall have the right to be
represented by counsel in such a proceeding. The arbitrator(s) are not empowered to award damages
in excess of compensatory damages, and each party hereby irrevocably waives any right to recover
such damages with respect to any dispute between them resolved by arbitration.



     The ADR proceeding shall take place at a location agreed upon by the parties. If the parties
cannot agree, the neutral shall designate a location more than 100 miles from the principal place
of business of either party or any of their subsidiaries or affiliates.



2









 





     The parties intend that discovery, although permitted to the extent described below, will be
limited as described below except in exceptional circumstances, as determined by the neutral panel.
The panel shall permit discovery as necessary for an understanding of any legitimate issue raised
in the ADR, including depositions, interrogatories, requests for admissions, and production of
documents. If the panel deems the taking of depositions appropriate, a party shall not take the
deposition of more than five (5) individuals, and each deposition shall not exceed six (6) hours in
length. If the panel deems interrogatories or requests for admissions appropriate, a party shall
not submit more than ten (10) interrogatories or more than ten (10) requests for admission.
Requests for production of documents shall be viewed conservatively by the panel and shall be
narrowly directed to the issue in dispute.



     Unless otherwise agreed by the parties or otherwise expressly set forth herein, the neutral
panel shall apply the Federal Rules of Evidence to the proceedings.



     Prior to the completion of in person testimony, each party shall submit a proposed ruling on
each issue to be resolved, together with a request for a specific damage award or other remedy for
each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any
legal arguments and shall not exceed one (1) page per issue. The arbitrator(s) shall rule on each
disputed issue within thirty (30) days following completion of in person testimony. Such ruling
shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed
issue but may adopt one party’s proposed rulings and remedies on some issues and the other party’s
proposed rulings and remedies on other issues. The neutral shall not issue any written opinion or
otherwise explain the basis of the ruling.



3









 





     The arbitrator(s) shall be paid a reasonable fee plus expenses. These fees and expenses, along
with the reasonable legal fees and expenses of the prevailing party (including all expert witness
fees and expenses and reasonable costs of discovery), the fees and expenses of a court reporter,
and any expenses for a hearing room, shall be paid as follows:




     (a) If the arbitrator(s) rules in favor of one party on all disputed issues in the ADR,
the losing party shall pay 100% of such fees and expenses.




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



     The rulings of the arbitrator(s) and the allocation of fees and expenses shall be binding,
non-reviewable, and non-appealable, and may be entered as a final judgment in any court having
jurisdiction.



     The existence of the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed
confidential information in accordance with and subject to Article 16.0 of this Settlement
Agreement.




4