***Text Omitted and Filed
Separately
with the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2.
AMENDMENT NO. 2 TO
LICENSE, DEVELOPMENT AND COOPERATION AGREEMENT
This Amendment
No. 2 (“ Amendment No. 2 ”) is entered
into effective as of April 28, 2009 (the “
Amendment Effective Date ”), pursuant to and amending
that certain License, Development and Cooperation Agreement (the
“ Agreement ”) between Gen-Probe Incorporated, a
Delaware corporation (“ Gen-Probe ”) and
DiagnoCure, Inc., a company organized under the laws of the
Province of Quebec, Canada (“ DiagnoCure ”).
Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
A. The
parties entered into the Agreement as of November 19, 2003
pursuant to which, among other things, the parties described their
respective rights and obligations with respect to the development,
manufacture, marketing and distribution of Licensed Products for
the detection and measurement of PCA3 as a marker for prostate
cancer. The Agreement was previously amended on May 24, 2006
(“ Amendment No. 1 ”).
B. Pursuant
to the Agreement, Gen-Probe has commenced development of an in
vitro diagnostic test kit for the detection and measurement of
PCA3 as a marker for prostate cancer.
C. The
parties desire to clarify and/or modify certain aspects of their
relationship pursuant to the Agreement, in the manner set forth in
this Amendment No. 2.
NOW, THEREFORE,
for and in consideration of the mutual covenants and agreements set
forth in this Amendment No. 2, the parties hereby agree to
amend the Agreement as follows:
1. Unless
otherwise stated herein, all capitalized terms shall have the
meaning set forth in the Agreement.
2. Section 1.31
of the Agreement shall be deleted and replaced in its entirety by
the following:
1.31 “
Net Sales ” shall mean the aggregate amount of revenue
in U.S. Dollars (converted as necessary for sales made in a
currency other than U.S. Dollars into U.S. Dollars at the
applicable Exchange Rate) realized by Gen-Probe or its Affiliates
or its or their respective sublicensees or distributors from End
Users for any Licensed Product sold or otherwise disposed of, or
Licensed Methods practiced, for consideration less only the
allowable deductions set forth in subsections (a) through
(c) below (and Gen-Probe shall ensure that all sales and other
dispositions of the Licensed Products in any country shall be by
Gen-Probe or its Affiliates or its or their respective sublicensees
or distributors directly to End Users); provided , however,
in any country of the world that is not a Major Country (as defined
below in this Section) where it is not commercially
feasible
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for Gen-Probe
to have a direct sales force or a sublicensee and where Gen-Probe
has a contract with a distributor for the sale of Licensed Product
in such non-Major Country as specified in such contract (such
distributor, an “ Authorized Distributor ,” such
country, a “ Distributor Country ” and such
contract, a “ Distributor Contract ”),
“Net Sales” shall mean the aggregate amount of revenue
in U.S. Dollars (converted as necessary for sales made in a
currency other than U.S. Dollars into U.S. Dollars at the
applicable Exchange Rate) realized by Gen-Probe or its Affiliates
for any Licensed Product sold or otherwise disposed of, or any
Licensed Methods practiced, in such Distributor Country (less only
the allowable deductions set forth in subsections (a) through
(c) below), and shall not mean revenue based upon End User
pricing for such Licensed Product ( unless such Licensed
Product was not sold or otherwise disposed of by the Authorized
Distributor for such Distributor Country under the applicable
Distributor Contract, in which event, this proviso shall not apply
and the sale or other disposition of such Licensed Product in such
Distributor Country shall be treated in the same manner as it would
be treated in any country that is not a Distributor Country and
mean revenue based upon End User pricing). For purposes of this
Section, “ Major Country ” shall mean (i)
[...***...], and/or (ii) [...***...] (A) in which any Licensed
Product is sold or otherwise disposed of, or any Licensed Methods
are practiced, by or though Gen-Probe or any of its Affiliates, or
any of its or their respective sublicensees or distributors and
which sublicensee or distributor (or any of their respective
Affiliates) has its primary place of business in [...***...],
and/or (B) from which any Licensed Product is distributed, sold or
otherwise disposed of by Gen-Probe or any of its Affiliates or any
of its or their respective sublicensees or distributors into
[...***...].
For any
Licensed Product sold or otherwise disposed of, or Licensed Methods
practiced, for consideration other than cash, the revenue from each
such Licensed Product shall be deemed to be the average price
charged for identical or similar (after reasonable adjustments)
Licensed Products sold or Licensed Methods practiced by Gen-Probe
or its Affiliates during the same royalty period in
“arms-length” transactions.
The following
deductions shall be permitted to the extent customary and actually
taken and allowed in the applicable country, and, in each case, as
determined and allocated in accordance with U.S. generally accepted
accounting principles, consistently applied (GAAP) (and, in each
case, solely to the extent such deduction is directly related to a
sale of a Licensed Product in the applicable country where such
sale was made):
(a)
customary credits and allowances granted by Gen-Probe and its
Affiliates (if any) for such Licensed Products on account of
refunds, price
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reductions,
price discounts or rebates, whether arising out of recalls,
rejections, returns or otherwise relating to Licensed Products sold
during or prior to such royalty period (and for which royalties
were previously paid to DiagnoCure hereunder);
(b)
excise taxes, sales taxes, value added taxes, consumption taxes,
customs duties and other taxes or duties (excluding income taxes or
franchise taxes) imposed with respect to such Licensed Products;
and
(c)
transportation charges (including packing, insurance, and freight
costs) actually incurred by Gen-Probe or its Affiliate in
connection with the sales of such Licensed Products.
3. A new
Section 3.2.5 shall be added to the Agreement as
follows:
3.2.5
Gen-Probe shall supply Gen-Probe’s current TMA PCA3 ASR
product to DiagnoCure until the date on which the FDA approves a
Gen-Probe in vitro diagnostic test for PCA3. Gen-Probe shall
supply the current TMA PCA3 ASR product to DiagnoCure on commercial
terms [...***...]. Gen-Probe hereby grants DiagnoCure an option to
a sublicense to develop, make, have made, use, sell, offer for sale
and import Licensed Products intended for use as laboratory
developed tests within DiagnoCure’s or its Affiliate’s
laboratories in the United States. Such option to a sublicense
shall only be exercisable by DiagnoCure if [...***...] and, as a
result, [...***...] (in which event, upon exercise of the option by
DiagnoCure upon written notice to Gen-Probe, DiagnoCure would have
the right under the sublicense to develop and commercialize the
laboratory developed test and Gen-Probe would use its best efforts
to promptly grant such sublicense to DiagnoCure). The parties
acknowledge that, unless otherwise agreed by the parties, such
option shall not include the right for DiagnoCure to sell Licensed
Products in the United States to Third Parties for use in
laboratories other than those laboratories owned by DiagnoCure
and/or its Affiliates.
4. A new
Section 4.1.6 shall be added to the Agreement as
follows:
4.1.6
Gen-Probe shall pay DiagnoCure Five Hundred Thousand U.S. Dollars
(US$500,000) on an annual basis, which payment shall be
non-refundable and non-cancelable and due and payable within ten
(10) days of the Amendment Effective Date for 2009, and shall
be due and payable by [...***...] of each subsequent calendar year.
Subject to, and without limiting, Section 10.2.5, Gen-Probe
shall continue to pay this annual payment to DiagnoCure
(A) until the earlier of (i) two (2) years after
Gen-Probe’s filing of an application with the FDA for
regulatory approval of a Licensed Product that is a TMA PCA3
assay
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***Confidential Treatment
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in the United
States, (ii) FDA approval of a Licensed Product that is a PCA3
assay in the United States, or (iii) the date on which
DiagnoCure obtains co-exclusive rights pursuant to
Section 10.2.4; and (B) if applicable, as set forth in
Section 10.2.5. Fifty percent (50%) of each such annual payment (
e.g. , US$250,000) (each, a “ Permitted Deduction
Amount ”) may be deducted by Gen-Probe against future
royalties due and payable to DiagnoCure by Gen-Probe pursuant to
Section 4.2. Solely during the period that Gen-Probe is
deducting the Permitted Deduction Amounts, the royalty payment
thresholds shall be as set forth in the table below instead of as
set forth in Section 4.2(a). For the avoidance of doubt, upon
Gen-Probe’s recoupment of the Permitted Deduction Amounts as
set forth herein, the provisions set out in the table below shall
no longer have any force or effect and the applicable royalty
payment thresholds shall again be those set forth in
Section 4.2(a).
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Permitted Deduction
Amounts
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Royalty thresholds
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Royalty thresholds
for
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deductible from
future
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for 8% annual
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16% annual royalties
on
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royalties
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royalties on Net
Sales
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Net Sales of
Licensed
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(by way of example)
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of Licensed
Products
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Products
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If there is one
Permitted Deduction Amount equal to US$250,000
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Up to US$53.125
million in cumulative Net Sales
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In excess of
US$53.125 million in cumulative Net Sales
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If there are
two Permitted Deduction Amounts, each equal to
US$250,000
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Up to US$56.25
million in cumulative Net Sales
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In excess of
US$56.25 million in cumulative Net Sales
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If there are
three Permitted Deduction Amounts, each equal to
US$250,000
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Up to US$59.375
million in cumulative Net Sales
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In excess of
US$59.375 million in cumulative Net Sales
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5. A new
Section 4.5 shall be added to the Agreement as
follows:
(a)
Issuance of Shares . Within fifteen (15) days after the
Amendment Effective Date (the “ Closing Date ”),
Gen-Probe shall purchase Four Million Nine Hundred Thousand
(4,900,000) shares of DiagnoCure Series A convertible
preferred shares of DiagnoCure for an aggregate purchase price of
Five Million U.S. Dollars (US$5,000,000) (the “ Original
Purchase Price ”), no par value (the “
Series A Preferred ”).
(b)
Conversion . Each share of the Series A Preferred shall
initially be convertible into one share of DiagnoCure’s
common stock (the “ Common Shares ”). The
conversion rate will be subject to adjustment for dilutive
issuances as provided below. The Series&
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