Exhibit 10.58
NOTE: Portions of this Exhibit
are the subject of a Confidential Treatment Request by the
Registrant to the Securities and Exchange Commission (the
“Commission”). Such portions have been redacted and are
marked with a “[***]” in place of the redacted
language. The redacted information has been filed separately with
the Commission.
MANUFACTURING AND DISTRIBUTION
AGREEMENT
This Manufacturing and Distribution
Agreement (“Agreement”) is entered into as of this 27th
of October, 2005 (the “Effective Date”) by and between
PRINCETON BIOMEDITECH CORPORATION, a New Jersey Corporation
(“PBM”), having its principal place of business at 4242
U.S. Route 1, Monmouth Junction, New Jersey 08852, and NANOGEN,
INC., a Delaware Corporation (“NANOGEN”), having its
principal place of business at 10398 Pacific Center Court, San
Diego, California 92121.
RECITALS
A. PBM and SYN-X Pharma, Inc., an
Ontario Corporation (SYNX), having its principal place of business
at 1 Marmac Drive, Toronto, Ontario M9W 1E7, Canada, have
previously entered into a DEVELOPMENT AND MANUFACTURING AGREEMENT
as of October 9, 2001 (“PBM/SYNX Agreement”)
directed to the development, manufacturing and marketing of certain
point of care diagnostic products.
B. SYNX is now a wholly owned
subsidiary of NANOGEN.
C. SYNX has assigned its
intellectual property relating to the PBM/SYNX agreement to NANOGEN
and assigned to NANOGEN its interest in the Cross License Agreement
included in the Roche Agreements.
D. PBM and SYNX have terminated the
PBM/SYNX Agreement as of the Effective Date of this
Agreement.
E. PBM and NANOGEN have entered into
a DEVELOPMENT AGREEMENT as of the Effective Date of this Agreement
under which they intend to develop certain point of care diagnostic
products referred to therein and herein as “Development
Products” and to develop a Reader.
F. PBM and NANOGEN now wish to
provide for the exclusive manufacture by PBM of the Development
Products contemplated to be developed under the DEVELOPMENT
AGREEMENT and for distribution and sale of the Development Products
and Reader.
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NOW, THEREFORE, in consideration of
the foregoing premises, which are incorporated into and made a part
of this Agreement, and of the mutual covenants which are set forth
herein, PBM and NANOGEN hereby agree as follows:
ARTICLE 1
DEFINITIONS
Unless the context requires
otherwise, the following terms, when used in this Agreement, shall
have the respective meanings specified in this Article 1, such
meanings to be equally applicable to the singular and plural forms
of the defined terms:
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1.1
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“Affiliate” shall mean any person or
entity which directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, a Party. As used in this definition of
“Affiliate”, control means, with respect to an entity,
the legal or beneficial ownership of 50% or more of the voting or
equity interests of the entity or the power or right to direct the
management and affairs of the entity.
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1.2
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“cGMP” shall mean current good
manufacturing practices related to diagnostic pharmaceutical
products under applicable laws, rules and regulations in all
relevant jurisdictions, including without limitation the guidelines
of good manufacturing practices determined by the FDA and the
equivalent European regulatory body.
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1.3
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“Collaboration Agreements” shall
mean this Agreement and the DEVELOPMENT AGREEMENT by and between
PBM and NANOGEN of even date herewith.
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1.4
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“Development Product” shall mean a
Product or New Assay that is jointly developed by the Parties under
the DEVELOPMENT AGREEMENT.
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1.5
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“Development Product Specifications”
shall mean the specifications for a specific Development Product
determined as provided in Section 2.2a) of the DEVELOPMENT
AGREEMENT.
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1.6
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“FDA” shall mean the United States
Food and Drug Administration, or any successor entity
thereto.
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1.7
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“FD & C Act” shall mean the
United States Federal Food, Drug & Cosmetic Act, as
amended.
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1.8
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“Gross
Revenues” shall mean the gross revenues received by PBM or
Nanogen from its direct sales to its customers of Development
Products. As used herein, the term “customers” includes
end users and distributors.
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1.9
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“NANOGEN
Inventory” shall mean the inventory of Development Products
and Readers maintained by NANOGEN under this Agreement.
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1.10
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“NANOGEN
Reagent” shall mean natural or recombinant antigen controls
and/or antibodies which can be polyclonal or monoclonal, to
NT-proBNP selected by
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NANOGEN or, if applicable,
previously selected by NANOGEN and accepted by PBM under the
Development Agreement, for use by PBM in the development and
manufacture of the Development Products.
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1.11
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“NANOGEN
Reagent Specifications” shall mean the specifications for a
NANOGEN Reagent as provided in Section 2.1 e) of the
DEVELOPMENT AGREEMENT.
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1.12
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“Net
Revenues” shall mean a Party’s Gross Revenues less
aggregate royalties payable to third parties on the sales of
Development Products under licensing or other agreements in effect
as of the Effective Date (“Royalties”) and less the
cost of freight, sales taxes, VAT and other taxes on such sales,
customs duties, returns, allowances, rebates, and
insurance.
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1.13
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“New
Assay” shall mean a human in vitro diagnostic assay for an
analyte (i) which the Parties undertake to develop under this
Agreement; and (ii) the performance criteria and
specifications of which assay meets or exceeds specifications and
criteria therefor to which both Parties agree in writing as set
forth in Exhibit C of the Development Agreement.
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1.14
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“New
Product” shall mean a Product that is not read upon by a
claim in a PBM Patent.
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1.15
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“Party” shall mean either PBM or
NANOGEN and ‘Parties” shall mean PBM and
NANOGEN.
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1.16
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“PBM
Patent” shall mean an issued patent in any country of the
world owned or licensed by and to PBM or patents which PBM has the
freedom to operate and which is listed on, or which issues from a
patent application listed on Exhibit A hereto, including any
reissue patent, reexamined patent, and patents issuing on
continuation, continuation-in-part and divisional applications of
any listed patent application and foreign equivalents of any of the
listed patents and patent applications.
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1.17
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“PBM
Reagents” shall mean all reagents other than NANOGEN Reagents
used in Development Products.
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1.18
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“PBM/SelfCare Joint Venture” shall
mean the intellectual property agreement between PBM and [***],
SelfCare’s successor.
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1.19
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“Product” shall mean a human in
vitro diagnostic assay for NT-proBNP alone (i) for use restricted
to Point of Care market segments, whereby Point of Care means
analysis conducted in an instrument or in a system which is
designed for a throughput of less than [***] specimens per hour;
and (ii) the performance criteria of which assay meets or exceeds
the Standard Criteria and Specifications in Exhibit G, hereto
attached.
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*** Confidential portions omitted
and filed separately with the Commission.
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1.20
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“Reader” shall mean a quantitative
reader for use with Development Products to determine the
concentration of a target analyte(s) present in a patient
sample.
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1.21
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“Regulatory Approval” shall mean,
with respect to any country or jurisdiction, all governmental and
regulatory registrations and approvals (including, but not limited
to, approvals of all Product and Quantitative Reader labeling and
packaging) required for the marketing, distribution and sale of
Products and the Quantitative Reader in such country or
jurisdiction.
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1.22
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“Roche
Agreements” shall mean collectively that certain Settlement
Agreement among SYN-X Pharma, Inc. et al and Roche
Diagnostics GmbH et al having an effective date of
July 17, 2003 (the “Settlement Agreement”) and
that certain Cross License Agreement on NT-proBNP between SYN-X
Pharma, Inc. and Roche Diagnostics GmbH having an effective date of
July 17, 2003 (the “Cross License
Agreement”).
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1.23
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“Royalties” shall have the meaning
set forth in Section 1.12.
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ARTICLE 2
COMMERCIAL MANUFACTURE OF NANOGEN
REAGENTS AND
DEVELOPMENT
PRODUCTS
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2.1
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NANOGEN
to Supply NANOGEN Reagents Exclusively to PBM
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a)
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NANOGEN shall
have the right and obligation to manufacture, or have manufactured
NANOGEN Reagents for use in the commercial production of
Development Products. NANOGEN shall not, directly or indirectly,
supply, provide, sell, distribute, or deliver NANOGEN Reagents for
use in Development Products except as provided in this Agreement
and PBM shall not, directly or indirectly, procure NANOGEN Reagents
from any source other than NANOGEN or NANOGEN’s designee
except as provided in this Agreement for the Development Products.
NANOGEN shall not directly or indirectly supply NANOGEN Reagents
except to PBM as provided in the agreement. Nothing in this
Agreement shall preclude, or be deemed to preclude, NANOGEN from
directly or indirectly, supplying, providing, distributing or
delivering NANOGEN Reagents for use as or in New
Products.
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b)
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NANOGEN shall
produce, deliver and supply NANOGEN Reagents to PBM, FOB
PBM’s production facility, on a timely basis, in sufficient
quantities and meeting the agreed upon specifications to permit PBM
to manufacture the quantities of Development Products forecast by
NANOGEN and PBM as provided in Article 3.
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c)
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Prior to the
initial delivery by NANOGEN of NANOGEN Reagents to PBM for the
production of Development Products, the Parties shall discuss and
mutually agree upon reasonable procedures applicable to the
supplying of NANOGEN Reagents to PBM. The procedures to which the
Parties agree may be supplemented, revised, amended or modified
from time to time by mutual agreement.
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d)
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Unless
otherwise agreed by the Parties, NANOGEN’s compensation for
the manufacture and supply of NANOGEN Reagents to PBM shall be its
share of the Net Revenues of Development Products as provided
hereinafter.
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2.2
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PBM to be
Exclusive Manufacturer of Development Products and the
Reader.
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a)
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Except as
expressly provided herein, PBM shall have the exclusive right and
obligation to manufacture, or have manufactured, Development
Products in amounts sufficient to supply the reasonably forecasted
demand therefor. PBM shall also have the right and obligation to
manufacture, or have manufactured sufficient quantities of the
Reader to supply the reasonably forecasted demand therefore. Except
as expressly provided herein, (i) PBM is to be the exclusive
manufacturer of Development Products and the Reader and
(ii) NANOGEN shall not authorize, permit or facilitate,
directly or indirectly, any other person or other entity to
manufacture Development Products and Reader,or directly or
indirectly procure Development Products or Readers from any other
person or entity than PBM. PBM shall not subcontract the
manufacture of Development Products without the written consent of
NANOGEN.
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b)
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Prior to the
initial manufacture of Development Products, the Parties shall
discuss and mutually agree upon reasonable procedures applicable to
the production and delivery by PBM of Development Products to
NANOGEN Inventory and for the transfer of Developed Products from
NANOGEN Inventory to PBM and other authorized distributors
(including subdistributors) and customers therefor. Without
limiting the foregoing, PBM shall not be required by the terms of
this Agreement to accept orders from NANOGEN to produce production
runs of Development Products in production runs that are less than
[***] units.
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c)
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PBM shall
(i) timely produce Development Products and Readers according
to the Binding Orders provided by NANOGEN according to
Section 3.1 and (ii) timely package and deliver
Development Products to NANOGEN Inventory.
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d)
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Unless
otherwise agreed by the Parties, PBM’s compensation for the
manufacture, packaging and delivery of Development Products shall
be its share of the Net Revenues of Development Products as
provided hereinafter.
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e)
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In allocating
its manufacturing capacity, PBM will give preference to
manufacturing Development Products at its Princeton manufacturing
facility.
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f)
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PBM shall have
the right and obligation to manufacture, or to have a subcontractor
manufacture, Readers which are suitable for use with Development
Products.
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*** Confidential portions omitted
and filed separately with the Commission.
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g)
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Unless
otherwise agreed, Development Products and Readers shall be
provided by PBM in industry-standard packaging. The cost to PBM of
any other packaging requested by NANOGEN shall be separately
invoiced and paid by NANOGEN.
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h)
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NANOGEN shall
maintain its own inventory of Development Products and Readers and
may contract, at a reasonable cost to be negotiated later, with PBM
and/or its Affiliates for inventory storage and freight
services.
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i)
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PBM’s
compensation for the manufacture, packaging and delivery of Reader
shall be according to Section 4.2d) and 0, herein.
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2.3
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Continuity of Supply
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Each of the Parties shall assure
each other of a continuous supply, in the case of NANOGEN, of
NANOGEN Reagents to PBM and, in the case of PBM, of Development
Products and Readers to NANOGEN.
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2.4
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Raw
Materials and Components .
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PBM shall provide, at its cost and
expense, the Readers and all raw materials, components, and other
resources required in connection with production of a Development
Product in accordance with the Development Product Specifications
for that product, except that the NANOGEN Reagents shall be
supplied by NANOGEN at its sole cost and expense. PBM represents
and warrants to NANOGEN that PBM currently has access to, and
during the entire term of this Agreement will make all commercially
reasonable efforts to maintain access to, sufficient supplies of
raw materials, utilities, container/closure systems, packaging
materials, labor, and all other items required to perform the
services and supply of the Readers and Development Products
required of PBM hereunder without interruption, unless otherwise
provided for by this Agreement. PBM will conduct audits of its
suppliers of raw materials and components of the Development
Products and the Reader on a regular basis to monitor whether such
suppliers are producing the raw materials and components in
accordance with all applicable laws, rules and regulations,
including, but not limited to, the requirements of cGMP, and to
determine whether such suppliers will continue to be able to supply
a sufficient quantity and quality of such raw materials and
components. Upon request, PBM will supply NANOGEN with certificates
stating that any related supplier complies with all such laws,
rules and regulations. NANOGEN represents and warrants to PBM that
NANOGEN currently has access to, and during the entire term of this
Agreement will make all commercially reasonable efforts to maintain
access to, sufficient supplies of raw materials, utilities,
container/closure systems, packaging materials, labor, and all
other items required to perform the services and supply the NANOGEN
Reagents required of NANOGEN hereunder without interruption, unless
otherwise provided for by this Agreement. NANOGEN will conduct
audits of its suppliers of raw materials and components of the
Reagents on a regular basis to monitor whether such suppliers are
producing the Reagents, raw materials and components in accordance
with all applicable laws, rules and regulations, including, but not
limited to, the requirements of cGMP, and to determine whether such
suppliers will continue to be able to supply a
sufficient
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quantity and quality of such raw
materials and components. Upon request, NANOGEN will supply PBM
with certificates stating that any related supplier complies with
all such laws, rules and regulations.
ARTICLE 3
FORECASTING, ORDERING, PACKAGING
AND
SHIPPING OF DEVELOPMENT
PRODUCTS
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a)
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Once Commercial
production of Development Products is set to commence, not later
than 45 days before each calendar quarter, a representative of
NANOGEN and a representative of PBM shall meet, telephonically or
in person, to formulate a nonbinding rolling forecast, on a quarter
by quarter basis for that quarter and each of the next three
quarters, the forecast to include at least the
following:
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(i)
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the amount of
NANOGEN Reagents to be produced by NANOGEN and delivered to
PBM;
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(ii)
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the amount of
each Development Product to be produced by PBM for distribution by
NANOGEN and its sub-distributors;
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(iii)
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the amount of
each Development Product to be produced by PBM for distribution by
PBM and its sub-distributors;
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(iv)
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the quantity of
Readers to be procured by PBM for distribution by NANOGEN and its
sub-distributors; and
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(v)
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the quantity of
Readers to be procured by PBM for distribution by PBM and its
sub-distributors.
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b)
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The forecast
for the first of the four quarters shall be a binding order
(“Binding Order”), to the extent provided below, on the
Parties on the day that is 45 days before the beginning of that
quarter unless the Parties earlier agree to a modification of that
forecast. When a forecast becomes a binding order, NANOGEN agrees
to produce, or have produced, and deliver to PBM at least 80% of
the binding order amount of NANOGEN Reagents, and PBM agrees to
produce and NANOGEN agrees to take delivery into NANOGEN Inventory
of at least 80% of the binding order amount of Development Products
on a product-by-product basis. PBM also agrees to procure not less
than 80% of the binding order quantity of Readers and NANOGEN
agrees to take delivery into NANOGEN Inventory of at least 80% of
the quantities of Readers ordered by NANOGEN for distribution by it
and its sub-distributors. In the circumstance where a Development
Product or Reader is not produced by PBM in the ordered amount,
NANOGEN will have the right to retain in NANOGEN Inventory an
allocation of the actual amount produced in the same percentage as
its percentage of the ordered amount provided for in this
Section.
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3.2
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Purchase
Orders for Development Products and Readers
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NANOGEN shall order Development
Products and Readers by written purchase orders specifying the
quantity of each Development Product and Readers to be produced and
the delivery date to be met by PBM. The purchase order for Readers
will also specify price and payment terms, according to
Section 42 (d) and (e) herein. NANOGEN shall submit
each such purchase order at least 45 days in advance of each
quarter in which the Development Product is to be delivered and 90
days in advance of the delivery date for the Reader. PBM shall use
reasonable efforts to meet any request of NANOGEN for delivery into
NANOGEN Inventory of Development Products and Readers in less than
45 days and 90 days, respectively, and, further, use reasonable
efforts to accommodate any changes requested by NANOGEN in delivery
schedules for Development Products and Readers following
PBM’s receipt of purchase orders from NANOGEN. PBM shall
supply Development Products and Readers in the quantity and on or
before the date confirmed by PBM in each purchase order received by
it. Should PBM be unable to supply a Development Product or Readers
in the quantity and by (i) in the case of Development
Products, the later of the date of delivery specified in the
purchase order or 45 days from the date of receipt by PBM of the
purchase order and (ii) in the case of Readers, the later of
the date specified in the purchase order or 90 days from the date
of receipt of the purchase order by PBM, PBM shall so advise
NANOGEN within 10 days of receipt of such purchase order. The terms
and conditions of this Agreement shall be controlling in the event
of any inconsistency between the terms hereof and any terms set
forth in the purchase order.
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3.3
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Packaging
and Labeling of Development Products .
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Development Products shall be
packaged and labeled by PBM in accordance with all relevant
requirements of the jurisdiction into which they are being
distributed as well as in accordance with both Parties requirements
as communicated to PBM from time to time. Development Products for
NT-proBNP shall also be labeled as required by the Cross License
Agreement, including Section 14.2 thereof which requires that
the package be labeled to identify certain patents owned by Roche
and that the package and the package insert carry the legend
“Made under license from Roche Diagnostics GmbH”. The
Parties shall agree upon the packaging for Development Products for
NT-proBNP and provide Roche with a copy thereof at least 90 days
before commercialization.
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3.4
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Delivery
of Development Products and Readers .
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Delivery by PBM of the Development
Products and Readers into the NANOGEN Inventory shall be FOB
PBM’s facility. Title to the Development Products and Readers
ordered by NANOGEN shall pass to NANOGEN at the time of the proper
delivery of the Development Products and Readers to NANOGEN’s
carrier.
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3.5
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Inspection and Acceptance.
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Development Products will be
accepted by NANOGEN upon delivery into NANOGEN Inventory based upon
a quality control release process to which the Parties agree
and
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with the certificate of analysis
required by Section 7.1. NANOGEN shall have the right to
inspect Development Products and Readers delivered into NANOGEN
Inventory after acceptance for conformance to the Development
Products Specifications for such products and specifications for
their packaging. In the event NANOGEN rejects Development Products
or Readers it shall state the reason therefor and, at its election
PBM, shall promptly replace the rejected inventory (the
“Rejected Inventory”) or request that the Rejected
Inventory be withdrawn or segregated from NANOGEN Inventory for
testing by PBM. If PBM retests and does not agree that the Rejected
Inventory was properly rejected, the Parties shall each appoint one
individual to negotiate the remedy if any to which NANOGEN or PBM
is entitled. If the individuals cannot agree on such remedy, if
any, then the dispute resolution measures of Article 13 will be
implemented. The only remedy to which NANOGEN is entitled under
this section is replacement of the Rejected Inventory or that
portion thereof properly rejected.
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3.6
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Shipping
of Development Products and Readers from NANOGEN
Inventory.
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At the request of NANOGEN, and if
NANOGEN and PBM have agreed that the NANOGEN Inventory will be
maintained at a PBM facility, according to 2.1(h) herein, PBM shall
ship Development Products and Readers from NANOGEN Inventory to
NANOGEN customers FOB PBM’s facility and in accordance with
the shipping and handling instructions specified by NANOGEN in
writing in each shipping and handling order. The form of shipping
and handling order shall be agreed to by Nanogen and PBM. All
Development Products and Readers shall be shipped to
NANOGEN’s designee in appropriate shipping containers as
agreed by the Parties.
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3.7
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Promotional Materials.
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All promotional materials for
Development Products and Reader prepared by either Party shall be
submitted to the other Party for review prior to their distribution
to potential or actual customers or to the media. Without limiting
the generality of the following, either Party shall have the right,
in the exercise of its discretion, to reject such materials which
(i) do not meet the requirements therefore set by the FDA and
other regulatory agencies in jurisdictions in which the Development
Products and Readers are promoted and sold; (ii) do not meet a
Party’s guidelines for use of the Party’s trademarks as
published by the Party from time to time; and (iii) do not
conform to the requirements of the Roche Agreements.
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3.8
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Purchase
Orders for NANOGEN Reagents .
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PBM shall order NANOGEN Reagents by
written purchase orders specifying the quantity of each Reagent to
be produced and the delivery date to be met by Nanogen. PBM shall
submit each such purchase order within thirty (30) days after
receipt of NANOGEN’S Development Product twelve
(12) month forecast according to Section 3.1, herein.
NANOGEN shall use reasonable efforts to meet any request of PBM for
delivery into PBM’s inventory of Reagents thirty
(30) days before Nanogen’s submission of each
Development Product purchase order, and, further, use reasonable
efforts to accommodate any changes requested by PBM in delivery
schedules for the NANOGEN
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Reagents following NANOGEN’S
receipt of purchase orders from PBM. NANOGEN shall supply NANOGEN
Reagents in the quantity and on or before the date designated in
each purchase order received by it. Should NANOGEN be unable to
supply a Reagent in the quantity and by the later of the date of
delivery specified in the purchase order or 30 days before
Nanogen’s Development Product purchase order from the date of
receipt by NANOGEN of the purchase order NANOGEN shall so advise
PBM within five (5) days of receipt of such purchase order.
The terms and conditions of this Agreement shall be controlling in
the event of any inconsistency between the terms hereof and any
terms set forth in the purchase order. NANOGEN understands and
agrees that PBM’s ability to provide the Development Product
is dependent on NANOGEN’s ability to supply the Reagent in a
timely manner.
ARTICLE 4
DISTRIBUTION, REVENUE SHARING,
PAYMENT
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4.1
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Distribution Rights
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a)
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PBM
Distribution Rights . , PBM and its Affiliates designated by it shall
have the exclusive right to distribute Development Products in the
United States, including its territories and the Commonwealth of
Puerto Rico, and in South Korea and shall have the nonexclusive
right to distribute Development Products in the Peoples’
Republic of China And India. The Parties acknowledge that the
distribution rights provided hereunder are subject to a cross
licensing agreement between Roche Diagnostics GmbH and Nanogen and
PBM shall co-operate with Nanogen to comply with the terms of that
agreement. PBM’s distribution rights include the right to
appoint sub-distributors. The minimum terms applicable to
agreements for distribution of Development Products in the United
States are set forth in Exhibit B hereto. PBM will not grant
sub-distribution rights for Development Products in the United
States on terms less favorable than those set forth in Exhibit
B.
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b)
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NANOGEN
Distribution Rights . Subject to the rights of Roche Diagnostics GmbH
arising under the Roche Agreements and the exclusive rights of PBM
in the United States and South Korea, and the nonexclusive rights
of PBM in the People’s Republic of China and India as set
forth in Section 4.1 a) above, NANOGEN shall have the
exclusive right (nonexclusive in the People’s Republic of
China and India), to distribute Development Products subject to the
terms of the cross license with Roche Diagnostics GmbH and the
non-exclusive right to distribute Readers outside the United States
and its territories and outside South Korea subject to
Nanogen’s fulfillment of section 2.1(f) of the Development
Agreement for Reader development cost. NANOGEN’s distribution
rights include the right to appoint sub-distributors. The minimum
terms applicable to agreements for distribution of Development
Products and Readers by NANOGEN outside the United States through
sub-distributors are set forth on Exhibit C hereto. NANOGEN will
not grant sub-distribution rights outside the United States on
terms less favorable than those set forth in Exhibit C.
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c)
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NANOGEN
Obligation to Negotiate with PBM . NANOGEN will negotiate in good faith with PBM
concerning granting PBM sub-distribution rights for Development
Products outside the United States and its territories and South
Korea, the People’s Republic of China and India on a
country-by-country basis (including territorially restricted areas
within a country) in those countries where PBM can demonstrate that
it has agreements with sub-distributors containing terms which
would be applicable to distribution of Development Products and
Readers no less favorable than those terms applicable to
sub-distributors appointed by NANOGEN as set forth in Exhibit C.
Notwithstanding its obligation to negotiate in good faith under
this Section 4.1 c), it shall be solely in NANOGEN’s
discretion to grant distribution rights to PBM outside the United
States except as provide in Section 4.1 a). Countries or
territories that PBM receives distribution rights for the
Development Products under the terms of this agreement shall be as
listed in Exhibit F, hereto attached, which may be amended from
time to time.
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d)
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Trademarks . All
trademarks applied to the Readers shall be owned by PBM. All
trademarks applied to Development Products shall be owned by
NANOGEN except those trademarks that are listed on Exhibit D
attached hereto which are owned by PBM. If permitted by the Roche
Agreement, NANOGEN shall cooperate with PBM in the selection of a
trademark for the products distributed by PBM and its
sub-distributors that is not confusingly similar to the trademark
used on Development Products distributed by NANOGEN and its
sub-distributors. If selection of a different trademark for use on
Development Products distributed by PBM and by PBM’s
sub-distributors is not permitted by the Roche Agreement, then
NANOGEN will use its best efforts to obtain such consent by Roche
within 30 days of the Effective Date hereof. In the circumstance
where a different trademark is selected for use on Development
Products distributed by PBM and PBM’s sub-distributors,
NANOGEN and PBM will negotiate in good faith an agreement
permitting PBM the right to use the trademark on the Development
Products exclusively for PBM.
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4.2
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Allocation of Net Revenues, Reporting, and
Payment.
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a)
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The Net
Revenues received on the sales of Development Products in the
United States and South Korea through PBM or a PBM subdistributor,
will be divided between NANOGEN and PBM in the ratio of [***]% to
NANOGEN and [***]% to PBM. In the People’s Republic of China
and India and in other countries where Nanogen grants distribution
rights to PBM other than in the United States and South Korea, Net
Revenues of the Parties will be divided between NANOGEN and PBM in
the ratio of [***]% to NANOGEN and [***]% to PBM. Net Revenues on
the sales of Development Products where distribution is exclusively
by NANOGEN or a NANOGEN sub-distributor other than PBM will be
divided between NANOGEN and PBM in the ratio of [***]% to PBM and
[***]% to NANOGEN, provided; however, that in the case of such
sales outside the United States by NANOGEN or its sub-distributor,
PBM will receive not less than $[***] per NT-proBNP
assay.
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*** Confidential portions omitted
and filed separately with the Commission.
11
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b)
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In the
circumstance where NANOGEN introduces a New Product into a country
after the introduction into that country of a Development Product
for the same application or similar intended use, i.e. for either
the determination of NT-proBNP or for a combination of NT-proBNP
and other analytes, (i) Net Revenues on the Development Product
having the same application as the New Product will be divided in
the ratio of [***]% to PBM and [***]% to NANOGEN in the United
States and South Korea and [***]% to PBM and [***]% to NANOGEN in a
country other than the United States and Korea where PBM or its
sub-distributors have distribution rights and [***]% to PBM and
[***]% to NANOGEN where NANOGEN has exclusive Distribution Rights
and (ii) PBM shall have the right to co-distribute in that country
if prior to introduction of the New Product, distribution had been
exclusively by NANOGEN or its sub-distributors. In any country
where PBM acquires the right to co-distribute, its agreements with
sub-distributors will be on terms no less favorable than those set
forth on Exhibit C.
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c)
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Not later than
30 days from the end of each quarter after the commencement of
commercial sales of a Development Product, both NANOGEN and PBM
will prepare a report of their respective Gross Revenues, Royalties
owed third parties and Net Revenues from sales of that Development
Product during the previous quarter and the amount in United States
dollars it is required to provide the other Party as its share of
Net Revenues and fax or e-mail such report to the other party. The
report shall also contain the number of units of each Development
Product sold by the Party. The Party required to pay the greater
amount to the other for a calendar quarter as determined under
Sections 4.1 and 4.2 will pay to the other the difference between
the amount it is required to provide the other and the amount it is
entitled to receive from the other. Payment shall be not more than
30 days from the end of a quarter.
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d)
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The initial
price of the Reader to be paid PBM by NANOGEN (“Reader
Price”) shall be $[***] per Reader. PBM shall have the right
to increase or decrease the Reader Price based on actual cost
analyses performed by PBM and reviewed and accepted by NANOGEN on
an annual bases.
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e).
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Payments for
the Readers are net thirty (30) days from the date of
PBM’s invoice to NANOGEN or if PBM is required to make any
Reader prepayments, NANOGEN agrees to pay for the Readers it has
ordered within 5 business days after receipt of a proforma invoice
from PBM for the Readers it has ordered so that PBM can establish a
line of credit in favor of the manufacturer for the
Readers.
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4.4
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Third
Party Royalties.
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Each Party shall be required to pay
the Royalties owed third parties on the sales of Development
Products made by it or its Distributors under licensing or other
agreements requiring a Royalty. Royalties payable to third parties
shall be calculated by each Party based on its sales, and/or the
sales of its distributors according to the protocols set forth
in
*** Confidential portions omitted
and filed separately with the Commission.
12
the applicable third party
agreement. In the case of a Royalty owed by NANOGEN to a third
party, for example, Roche Diagnostics GmbH or the Ottawa Heart
Institute, on sales by PBM or its distributors, PBM will report to
NANOGEN its sales and other information necessary for NANOGEN to
comply with its reporting obligations under third party agreements
on a timely basis. The report will be accompanied by payment of the
royalties accruing on the sales by PBM or its distributors during
the reporting period. In the case of a Royalty owed by PBM to a
third party, for example, Abbott Laboratories, on sales by NANOGEN
or its distributors, NANOGEN will report to PBM its sales and other
information necessary for PBM to comply with its reporting
obligations under third party agreements on a timely basis. The
report will be accompanied by payment of the royalties accruing on
the sales by NANOGEN or its distributors during the reporting
period. The reports will be in a form reasonably satisfactory to
NANOGEN and PBM. The Party having the obligation under an agreement
with a third party to pay a Royalty on sales of Development
Products shall make the Royalty remittance to the third party on
its own sales and those of its distributors and on behalf of the
other Party.
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4.5
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Distribution Obligations.
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Prior to initiating
commercialization of the Development Products and Readers, the
Parties shall establish the duties of each with respect to
providing technical/customer support for the Development Products
and the Readers. Each of NANOGEN and PBM shall use commercially
reasonable efforts, and require its subdistributors to use
commercially reasonable efforts to promote, market distribute, sell
and provide technical/customer support for the Development Products
and the Reader in the territories in which they sell Development
Products and Readers.
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4.6
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[***]
Development Products.
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Prior to the beginning of the [***]
year of commercialization of a Development Products, the Parties
will agree to an allocation of the Development Product that may be
disposed of [***] to their distributors and subdistributors.
Development Product provided [***] by PBM shall be at PBM’s
expense. Development Product provided by NANOGEN [***] shall be
charged by and payable to PBM by NANOGEN at $[***] for a single
analyte test and $[***] for a double window test and multiples of
$[***] for each analyte in a panel. Development Product provided
under this Section shall not exceed more than [***] percent
([***]%) of the Developed Product actually sold by PBM and NANOGEN
in any twelve (12) month period.
ARTICLE 5
OWNERSHIP OF INTELLECTUAL
PROPERTY,
LICENSES,
CONFIDENTIALITY
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5.1
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Intellectual Property
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a)
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Nothing in this
agreement shall be deemed to give PBM any rights in, right to use
or license in any of NANOGEN’s existing or future
intellectual property, including without limitation, patents
confidential information, technology,
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*** Confidential portions omitted
and filed separately with the Commission.
13
production methods and procedures,
know-how and the like (collectively “Intellectual
Property”), except as explicitly provided in Section 5.2
a). NANOGEN Intellectual Property does not include any rights
granted SYNX under the Roche Agreements.
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b)
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Nothing in this
Agreement shall be deemed to give NANOGEN any rights in, right to
use or license in any of PBM’s existing or future
Intellectual Property, including without limitation, patents
confidential information, technology, production methods and
procedures, know-how and the like (collectively “Intellectual
Property”), except as explicitly provided in Section 5.2
b).
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c)
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Any
Intellectual Property exclusively developed after the date hereof
by NANOGEN shall remain the sole and exclusive property of
NANOGEN.
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d)
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Any
Intellectual Property exclusively developed after the date hereof
by PBM shall remain the sole and exclusive property of
PBM.
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e)
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Any
Intellectual property that is jointly or cooperatively developed by
the Parties after the date hereof shall be jointly owned to the
extent of the respective contributions thereto (the “Jointly
Owned Intellectual Property”). Each Party hereby grants to
the other a fully paid-up, perpetual exclusive license to all
licensing and commercialization rights in such Jointly Owned
Intellectual Property for the field pertaining to the other
party’s business (the “Field-Exclusive Jointly Owned
Intellectual Property License”). Any Party may transfer the
Jointly Owned Intellectual Property, as well as the Field-Exclusive
Jointly Owned Intellectual property License, in connection with the
sale of all or substantially all of its assets. The parties shall
share equally in the cost of and responsibility for patent filing,
maintenance and enforcement, and shall cooperate fully in any such
endeavor.
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a)
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NANOGEN hereby
grants to PBM a license to NANOGEN Intellectual Property in the
NANOGEN Reagents to manufacture, use, distribute and sell the
Development Products in accordance with Development Product
Specifications, subject to the terms and conditions of this
Agreement, for the sole and exclusive purpose of incorporating the
NANOGEN Reagents into Development Products.
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b)
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PBM hereby
grants to NANOGEN a right to PBM’s intellectual property
rights, if any, in the Development Products, to distribute and sell
the Development Products throughout the world, subject to the terms
and conditions of this Agreement. Notwithstanding forgoing, Nanogen
shall not have the right to use PBM’s intellectual property
to manufacture the Development Products and/or products.
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14
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5.3
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Confidential Information
.
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a)
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During the term
of this Agreement and for a period of three (3) years
thereafter, the receiving party (the “Receiving Party”)
shall maintain in confidence all Confidential Information, as
defined in Section 5.3 b) below, and shall not use, disclose
or grant use of such Confidential Information except as expressly
authorized in this Agreement. The Receiving Party may disclose the
Confidential Information, as authorized hereunder, only to those
employees or consultants of the Receiving Party w
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