PCR PATENT LICENSE AGREEMENT

A.  

RMS owns and has the right to grant licenses to practice under certain United States Patents describing and claiming, inter alia, nucleic acid amplification processes known as polymerase chain reaction (“PCR”), homogeneous PCR, and RT-PCR (“reverse transcription PCR”).

B.  

GH desires to obtain a non-exclusive license from RMS to use the Licensed Technology to perform certain PCR-based human in vitro clinical laboratory services, and RMS is willing to grant such a license to GH on the terms and subject to the conditions provided exclusively in this Agreement.

1.  

Definitions

1.1  

The term “Affiliate” shall mean with respect to a given Party:

a)  

an organization which, directly or indirectly, controls such Party;

b)  

an organization which is, directly or indirectly, controlled by such Party; or

c)  

an organization which is controlled, directly or indirectly, by the ultimate parent company which controls, directly or indirectly, such Party.

For purposes of this paragraph, “control” shall mean the ownership of fifty percent (50%) or more of the voting stock or equity interests of an organization or otherwise having the power to govern or direct the financial and the operating policies or to appoint the management of such organization.

With respect to RMS, the term “Affiliate” shall not include Genentech, Inc., 1 DNA Way, South San Francisco, California 94080-4990, U.S.A. (“Genentech”) nor Chugai Pharmaceutical Co., Ltd, 1-9, Kyobashi 2-chome, Chuo-ku, Tokyo, 104-8301 Japan (“Chugai”).

1.2  

“Combination Service” shall mean a Licensed Service offered in combination with another non-PCR testing service or together with a non-testing service(s) such as a specialized interpretive service or a consultative service (e.g., genetic counseling) as part of a package, where the Licensed Service is not separately billed.

1.3  

“Diagnostic Product” shall mean an assemblage of reagents, including but not limited to reagents packaged in the form of a kit, useful in performing a Licensed Service.

1.4  

“Effective Date” shall mean the date on which the last signatory to this Agreement signs this Agreement.

1.5  

“Licensed Field” shall mean the field of clinical laboratory services that detect the presence, absence and/or quantity of a nucleic acid sequence for the detection, diagnosis, confirmation, prognosis, management and/or treatment of a human disease or condition, including, but not limited to, such services: to identify predisposition to disease, disease susceptibility, confirm disease, predict therapeutic effectiveness or monitor disease progress; used in the course of human clinical trials; for Parentage Determination; and for tissue transplant typing, including testing performed on animal tissue intended for use in xenotransplantation. Licensed Field shall specifically exclude any services performed for the screening of blood and/or blood products.

1.6  

“Licensed Service(s)” shall mean the performance by GH of an in vitro procedure within the Licensed Field which utilizes the Licensed Technology. Licensed Services include, but are not limited to, any combination of the steps of collecting a sample for analysis, isolating nucleic acid sequences from the sample, amplifying one or more desired sequences, analyzing the amplified material, including sequence analysis, and reporting the results.

1.7  

“Licensed Technology” shall mean, subject to the following limitations, the Valid Claims of the United States patents listed in Attachment I to this Agreement and any reissue or reexamination patents thereof. No rights under any kit claims of such patents are included in this definition or licensed under this Agreement. With the exception of the reaction mixture claims of United States Patents Nos. 5,804,375, 5,693,517, 5,476,774 and 6,127,155, the plasmid claims of the 5,476,774 patent, the primer claims of United States Patent No. 5,573,906, and the probe claims of United States Patent No. 5,110,920, no rights under any apparatus, device, composition of matter, reagent or substance claims of such patents are included in this definition or licensed under this Agreement.

1.8  

“Net Service Revenues” shall mean the gross invoice price for the Licensed Services performed by GH (or the fair market value for any nonmonetary consideration which GH agrees to receive in exchange for Licensed Services), less the following deductions where they are factually applicable and are not already reflected in the gross invoice price:

a)  

discounts allowed and taken, in amounts customary in the trade (which shall include the difference between the dollar amount charged by GH for a Licensed Service and the Medicare and/or Medicaid Limits of Allowance and/or reimbursement limitations of a Third Party insurance program); and

b)  

actual bad debt which bad debt GH can prove and document that it was reasonable and diligent in its efforts to collect payment.

1.8.1  

The Net Service Revenues of those Licensed Services that are performed by GH for any person, firm or corporation controlling, controlled by or under common control with GH, or enjoying a special course of dealing with GH, shall be determined based on the average selling price of such Licensed Services to all Third Parties during the period in question.

1.8.2  

It is hereby understood and agreed that, to the extent feasible, Licensed Services and Combination Services shall at all times be invoiced, listed and billed by GH as ^. a separate item in GH’s invoices, bills and reports to customers. Net Service Revenues for determining royalties with respect to a Licensed Service which is part of a Combination Service shall be determined by multiplying the gross invoice price of the Combination Service, less applicable deductions, by the appropriate fraction in Attachment II hereto. The fraction specified in Attachment II for a particular Licensed Service included in a Combination Service shall be set by RMS after consultation

with GH, as accurately reflecting the value contributed by the Licensed Service to the overall value of the Combination Service as offered by GH, and as provided in Section 2.4. Attachment II hereto shall be modified as new Combination Services are identified and new royalty-bearing fractions set, and as set forth in Section 2.4.

1.9  

“Parentage Determination” shall mean analysis of human genetic material to ascertain whether two or more individuals are biologically related, but specifically excludes analysis of forensic evidence for a sexual assault investigation.

1.10  

“Territory” shall mean the United States and its possessions and the Commonwealth of Puerto Rico.

1.11  

“Third Party” shall mean an entity other than an Affiliate of either Party to this Agreement.

1.12  

" Valid Claim ” shall mean a claim of a patent which has not expired or been disclaimed, cancelled, held invalid or held unenforceable by a decision of a court or other governmental agency of competent jurisdiction, from which no further appeal is possible or has been taken within the time period provided under applicable law for such an appeal.

2.  

Grant

2.1  

Grant . Upon the terms and subject to the conditions and restrictions of this Agreement, RMS hereby grants to GH, and GH hereby accepts from RMS, a royalty-bearing, non-exclusive, personal, non-transferable license under the Licensed Technology solely to perform Licensed Services within the Territory.

2.2  

Performance of Licensed Services Only . The Licensed Technology may be used solely for the performance of Licensed Services and for no other purpose whatsoever, and no other right, immunity or license is granted to GH expressly, impliedly or by estoppel.

2.3  

Personal License . GH expressly acknowledges and agrees that the license granted hereunder is personal to GH alone and GH shall have no right to sublicense, assign or otherwise transfer or share its rights under the foregoing license.

2.4  

Combination Service(s) . For each Combination Service that GH intends to offer pursuant to this Agreement, and at least sixty (60) days before GH intends to offer any such Combination Service, GH shall:

a)  

notify RMS of such proposed Combination Service, such notice to include a complete and detailed description of the proposed Combination Service; and

b)  

obtain from RMS a duly authorized agreement, in the form of Attachment II hereto, for such Combination Service, which agreement shall indicate the fraction or

percentage of the package price of such Combination Service, less appropriate deductions, on which royalties shall be paid hereunder.

For any Combination Service(s) for which GH has not satisfied the criteria set forth in subsections (a) and (b) above, the royalty payable on such Combination Service shall be assessed on 100% of the package price of such Combination Service, less applicable deductions. As to all other Licensed Services offered by GH which are not part of a Combination Service, GH agrees to inform RMS of the availability from GH of each such Licensed Service within thirty (30) days after GH commences offering the Licensed Service.

2.5  

Credit for Licensed Technology Rights . RMS hereby grants to GH the right and GH accepts and agrees to credit RMS as the source of its Licensed Technology rights in GH’s promotional materials and any other materials intended for distribution to Third Parties as follows:

“This service is performed pursuant to an agreement with Roche Molecular Systems, Inc.”

3.  

Additional Limitations and Acknowledgment Regarding Diagnostic Products

4.  

Royalties, Records and Reports

4.1  

Royalties . For the rights and privileges granted under Section 2.1 of this Agreement, GH shall pay to RMS royalties equal to *** percent (***%) of GH’s Net Service Revenues.

No royalty is due on PCR-based assays performed solely for the purpose of evaluating a procedure to be used as a Licensed Service after validation.

No royalty is due on assays performed with Roche labeled diagnostic kits or Third Party diagnostics kits licensed by Roche, which convey human diagnostic label license rights to end users.

4.2  

Reports . GH shall deliver to RMS, within forty-five (45) days after the end of and for each quarterly calendar period during the Term, i.e. the three (3) month periods that are January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31 (each a “Reporting Period”), a true and accurate royalty report (“Royalty Report”). Each Royalty Report shall indicate the number of Licensed Services performed during the relevant Reporting Period and the detail specified on the “Summary

Royalty Report,” a copy of which is attached hereto as Attachment III, or on a form generated by GH which duplicates the format of the Summary Royalty Report. If no royalties are due for a given Royalty Period, it shall be so reported. The correctness and completeness of each Royalty Report shall be attested to in writing by an authorized representative of GH.

In the event GH is unable to calculate Net Service Revenues as prescribed in Section 1.8, GH shall so inform RMS, and upon RMS’s written consent, GH shall calculate royalties as follows:

Upon receipt by RMS of satisfactory documentation verifying GH’s actual percentage of gross billings for Licensed Services and/or Combination Services collected for GH’s most recently ended fiscal year (the “Collection Rate