Back to top

STRATEGIC ALLIANCE AGREEMENT

Strategic Alliance Agreement

STRATEGIC ALLIANCE AGREEMENT | Document Parties: CIPHERGEN BIOSYSTEMS INC | QUEST DIAGNOSTICS INCORPORATED You are currently viewing:
This Strategic Alliance Agreement involves

CIPHERGEN BIOSYSTEMS INC | QUEST DIAGNOSTICS INCORPORATED

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: STRATEGIC ALLIANCE AGREEMENT
Governing Law: Delaware     Date: 7/28/2005
Industry: Scientific and Technical Instr.     Law Firm: Wilson Sonsini Goodrich Rosati; Baker McKenzie LLP     Sector: Technology

50 of the Top 250 law firms use our Products every day

EXHIBIT 10.44

 

STRATEGIC ALLIANCE AGREEMENT

 

 

BETWEEN

 

 

QUEST DIAGNOSTICS INCORPORATED

 

 

AND

 

 

CIPHERGEN BIOSYSTEMS, INC.

 

 

DATED:  JULY 22, 2005

 

***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 



 

Table of Contents

 

1.

DEFINITIONS

 

 

 

 

2.

GENERAL

 

 

 

 

3.

RIGHTS OF EXCLUSIVITY

 

 

 

 

4.

PRESENTATION AND REVIEW OF PLANS; ELECTIONS BY QUEST DIAGNOSTICS

 

 

 

 

5.

DEVELOPMENT OF LICENSED LABORATORY TESTS

 

 

 

 

6.

COMMERCIALIZATION OF LICENSED LABORATORY TESTS AND TEST KIT SERVICES

 

 

 

 

7.

DEVELOPMENT OF TEST KITS

 

 

 

 

8.

COMMERCIALIZATION OF LICENSED LABORATORY TEST COMPONENTS AND TEST KITS

 

 

 

 

9.

PROVISION OF INSTRUMENTS, PROPRIETARY SUPPLIES AND TEST KITS

 

 

 

 

10.

RECORDS

 

 

 

 

11.

CONFIDENTIALITY

 

 

 

 

12.

PROPRIETARY RIGHTS AND LICENSES

 

 

 

 

13.

WARRANTIES

 

 

 

 

14.

INDEMNIFICATION AND LIMITATION OF LIABILITY

 

 

 

 

15.

TERM AND TERMINATION

 

 

 

 

16.

MISCELLANEOUS PROVISIONS

 

 

 

 

TABLE OF SCHEDULES

 

SCHEDULE A

DEFINITIONS

 

SCHEDULE B

STRATEGY AND BUDGET

 

SCHEDULE C

REQUIRED CONTENTS FOR EACH PLAN

 

SCHEDULE D

REQUIRED CONTENTS FOR THE PLAN SUPPLEMENT

 

SCHEDULE E

ROYALTIES AND FEES TO CIPHERGEN

 

SCHEDULE F

ROYALTIES TO QUEST DIAGNOSTICS

 

SCHEDULE G

LIST OF CIPHERGEN PATENTS

 

SCHEDULE H

LIST OF CIPHERGEN COLLABORATION AGREEMENTS

 

SCHEDULE I

LIST OF QUEST DIAGNOSTICS PATENTS

 

SCHEDULE J

QUEST NETWORK MEMBERS

 

SCHEDULE K

PROTEINCHIP PRODUCTS

 

 

 

 

 

 

i



 

STRATEGIC ALLIANCE AGREEMENT

 

THIS STRATEGIC ALLIANCE AGREEMENT (“ Agreement ”) is made as of July 22, 2005 (the “ Effective Date ”) between QUEST DIAGNOSTICS INCORPORATED a Delaware corporation with offices at 1290 Wall Street West, Lyndhurst, New Jersey 07071 (“ Quest Diagnostics ”), and CIPHERGEN BIOSYSTEMS, INC. , a Delaware corporation with offices at 6611 Dumbarton Circle, Fremont, California 94555 (“ Ciphergen ”).  Each of Quest Diagnostics and Ciphergen may be referred to herein as a “ Party ” and together as the “ Parties .”

 

RECITALS:

 

A.                                    Quest Diagnostics is a leading provider of diagnostic testing, information and services and has substantial experience in the development and commercialization of products having Clinical Diagnostic Applications (as such terms are defined below).

 

B.                                      Ciphergen develops, manufactures and markets its ProteinChip Systems using its patented surface enhanced laser desorption/ionization (“ SELDI ”) technology and also owns and operates a division directed toward the development and commercialization of products for the field of Clinical Diagnostics, including the discovery (principally through Ciphergen Collaboration Agreements) of disease-specific Biomarkers and protein signatures that could be utilized in Licensed Laboratory Tests and Test Kits (as such terms are defined below).

 

C.                                      The Parties desire to collaborate in a strategic alliance to develop and commercialize certain in vitro Licensed Laboratory Tests and Test Kits on the terms and conditions set forth in this Agreement.

 

D.                                     Contemporaneously herewith, the Parties are entering into a Stock Purchase Agreement pursuant to which Quest Diagnostics will acquire shares of Ciphergen’s Common Stock and warrants to acquire shares of Ciphergen’s Common Stock to be issued by Ciphergen (the “ Stock Purchase Agreement ”).

 

NOW, THEREFORE, in consideration of the foregoing, the mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties hereto, intending to be legally bound, hereby agree as follows:

 

1.                                       DEFINITIONS .

 

Capitalized terms used in this Agreement will have the meanings respectively ascribed to them in Schedule A hereto.

 


(1)           ProteinChip® is a registered trademark of Ciphergen, but is written in this Agreement without the circle-R mark for convenience.

 



 

2.                                       GENERAL .

 

2.1                                  Strategic Alliance .  Pursuant to the terms and conditions of this Agreement, the Parties hereby form a strategic alliance, purely contractual in nature, and not to be construed as a joint venture of any kind, all as set forth in and subject to the terms and conditions of this Agreement (the “ Strategic Alliance ”).

 

2.2                                  Relationship of the Parties .  The relationship of the Parties pursuant to this Agreement is that of independent contractors.  Nothing in this Agreement is intended or will be deemed to constitute a joint venture, partnership, agency or employer-employee relationship between the Parties.  Neither Party will incur any debts or make any commitments for the other Party.

 

2.3                                  Ciphergen Research and Development Efforts .  Ciphergen has provided to Quest a strategic plan prepared by Ciphergen together with a draft overall budget with respect to the activities that Ciphergen will take in support of the activities in preparation for development of the plans for Licensed Laboratory Tests pursuant to this Agreement.  During the Base Term, Ciphergen will devote sufficient resources to prepare and present to Quest Diagnostics three (3) Plans as contemplated by this Agreement.  Without limiting the generality of the foregoing, Ciphergen shall use commercially reasonable efforts to maintain and fund the Ciphergen Collaboration Agreements (including supplying laboratory equipment, biochips and other supplies, in a manner required by such agreements and otherwise consistent with past practice), use commercially reasonable efforts to maintain its existing Biomarker Discovery Center® laboratories currently devoted to activities directed toward discovery of Biomarkers for Clinical Diagnostic applications, and use commercially reasonable efforts to retain the employees identified in Schedule B , substantially all of whose time will be involved with supporting the activities of Ciphergen under this Agreement.  For clarity, Ciphergen may in its sole discretion determine the specific employees that perform activities under this Agreement and change such employees from time to time.  Subject to the foregoing, Ciphergen in its sole discretion may continue its research and development efforts, including such efforts related to any Ciphergen Platform Technology, or other technologies.  Other than as provided below with respect to Development Programs and Test Kit Development Programs, this Agreement does not impose any research or development requirements upon Ciphergen with respect to any particular Application.  For clarity, nothing herein is intended to prevent Ciphergen from modifying its rights or, obligations under any Collaboration Agreement or, subject to the terms of this Agreement (including without limitation the restrictions under Article 3 and the licenses and restrictions with respect to Ciphergen Collaboration IP under Article 12), otherwise exercising any of its rights under any such Collaboration Agreement, in either case in a manner that would not adversely impact Ciphergen’s ability to perform its obligations under this Agreement.  Except as expressly provided herein, nothing in this Agreement will be deemed by implication to restrict Ciphergen’s development of other products and services within or outside the Field (provided such development does not infringe upon any Intellectual Property of Quest Diagnostics or any of its Affiliates).

 

2



 

2.4                                  Quest Diagnostics Research and Development Efforts .  Quest Diagnostics will use commercially reasonable efforts and provide sufficient resources to develop Licensed Laboratory Tests on the basis of the Development Elections, including by having personnel devoted to the development of such tests as indicated in Schedule B, providing sample management expertise, and providing regulatory advice.  In addition, Quest Diagnostics will provide to Ciphergen certain funding pursuant to the terms of the Credit Agreement, the proceeds of which can only be used to pay costs and expenses directly related to the preparation of Plans and development activities contemplated by this Agreement.  During the Term, Quest Diagnostics in its sole discretion may continue its independent research and development efforts, including such efforts related to any diagnostic testing, diagnostic information, and diagnostic services (provided such development does not infringe upon any Intellectual Property of Ciphergen or any of its Affiliates).  Other than as provided below with respect to Development Programs and Test Kit Development Programs, this Agreement does not impose any research or development requirements upon Quest Diagnostics with respect to any Application.  Except as expressly provided herein, nothing in this Agreement will be deemed by implication to restrict Quest Diagnostics’ development of other products and services within or outside the Field (provided such development does not infringe upon any Intellectual Property of Ciphergen or any of its Affiliates).

 

2.5                                  Steering Committee .  The cooperation of the Parties pursuant to this Agreement will be managed by a committee (the “ Steering Committee ”), which will address issues relating to this Strategic Alliance, including without limitation the selection of tests to be the subject of each Plan, the review of budgets for each Plan, the assessment of each Plan and Plan Supplement and any necessary modifications to the Ciphergen Platform Technology to meet the requirements of the Clinical Diagnostics markets and FDA.  The Steering Committee will also establish the objectives of the Parties with respect to regulatory matters pertaining to Licensed Laboratory Tests and Test Kits under this Agreement, including (i) matters relating to CPT coding by the American Medical Association, reimbursement and coverage of Licensed Laboratory Tests and Test Kit Services by the Centers for Medicare and Medicaid Services, and matters relating to FDA and regulatory agency pre-market review of Test Kits; and (ii) comparable matters in countries outside the United States.  The Steering Committee will provide a written report, no less than once each quarter, to each of the Parties regarding actions taken and proposed to be taken with respect to this Strategic Alliance as well as results achieved and any issues that need to be addressed by the Parties.  The Steering Committee will consist of equal representation from each Party with at least two (2) and no more than three (3) representatives appointed from time to time by each Party (with contemporaneous notice to the other Party), for a total maximum of six (6) members.  Each Party will have the right to remove, provide alternates and substitute such representatives in its sole discretion, and reasonably permit other of its employees to participate in meetings of the Steering Committee as observers, subject to prior advance written notice.  All Steering Committee members, alternates, substitutes, employees and observers will be required to adhere to the same duties of confidentiality set forth in Article 11 hereof.  Any act of the Steering Committee as provided in this Agreement or otherwise will require the approval of (a) a majority of the members present at the meeting (or voting by proxy) and (b) at least one (1) member appointed by each Party.  In the event of deadlock on any issue,

 

3



 

such issue must be resolved by the mutual written agreement of the Parties.  Notwithstanding the foregoing, the Steering Committee cannot bind either or both Parties or amend the Agreement except as expressly agreed to by the Parties in writing.  Meetings of the Steering Committee will occur with such frequency as the Steering Committee will determine, but not less frequently than quarterly.  Unless otherwise agreed, meetings of the Steering Committee will alternate between the offices of the Parties.  The Steering Committee will keep and maintain minutes of its proceedings, which will be approved by the Steering Committee as provided above.  The Steering Committee may appoint one or more working committees for purposes of coordinating the day-to-day activities associated with the development of Licensed Laboratory Tests and Test Kits, which working committees will operate with the same procedures as the Steering Committee.

 

2.6                                  Reports and Access .  During the Base Term, within thirty (30) days after the end of each calendar quarter, Ciphergen will provide Quest Diagnostics with a written report with respect to (a) any developments with respect to Licensed IP that may have a Clinical Diagnostic Application; (b) if applicable, the expected timetable for developing Plans to be presented to Quest Diagnostics, and additional preliminary information regarding such Plans; and (c) financial information regarding the costs and expenses incurred by Ciphergen in connection with this Agreement, as well as a forecast (with comparison to the approved budget) regarding the costs and expenses that Ciphergen expects to incur during the following twelve (12) months, to the extent reasonably necessary to substantiate amounts loaned to Ciphergen pursuant to the Credit Agreement.  Ciphergen additionally will provide such additional information regarding such items as Quest Diagnostics reasonably requests from time to time related to the Strategic Alliance.  Ciphergen will consult with Quest Diagnostics in advance regarding any Applications for which Ciphergen intends to develop a Plan.  Ciphergen will also provide Quest Diagnostics with reasonable access to Ciphergen’s employees and the collaborators under the Ciphergen Collaboration Agreements and such other information as Quest Diagnostics reasonably requests regarding Biomarkers or other intellectual property having potential Clinical Diagnostic Application that are under review or consideration by Ciphergen or under the Ciphergen Collaboration Agreements, in each case for inclusion or included in a Plan.

 

2.7                                  Base Term .  As used in this Agreement, “ Base Term ” means the period beginning on the Effective Date and ending on the earliest of:

 

(a)                                   the date that is three (3) years after the Effective Date; or

 

(b)                                  the date Quest Diagnostics has Commercially Launched three (3) Licensed Laboratory Tests under this Agreement. 

 

Notwithstanding the foregoing, the Parties shall continue activities after the Base Term with respect to the development of a Licensed Laboratory Test and Test Kit to the extent that a Plan has been accepted by Quest Diagnostics pursuant to Section 4.3 during the Base Term but development activities have not been completed during the Base Term for

 

4



 

a Licensed Laboratory Test and/or a Test Kit with respect to such Plan.  This obligation shall expire two (2) years after the end of the Base Term.

 

3.                                       RIGHTS OF EXCLUSIVITY .

 

3.1                                  In the Exclusive Territory .

 

(a)                                   Rights for the Licensed Laboratory Tests in the Exclusive Territory .  Quest Diagnostics will have the exclusive right (even as to Ciphergen) in the Exclusive Territory to market Licensed Laboratory Tests developed pursuant to any Development Program and to perform such Licensed Laboratory Tests through the Quest Network, subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof.  With respect to each Licensed Laboratory Test, Quest Diagnostics’ exclusivity under this Section 3.1(a) will expire upon the expiration of the Exclusive Period therefor and thereafter become nonexclusive with respect to such Licensed Laboratory Test in the Exclusive Territory.  During such Exclusive Period, Ciphergen will not have the right to market or perform Licensed Laboratory Tests in the Exclusive Territory.

 

(b)                                  Rights for the Test Kits in the Exclusive Territory .  Quest Diagnostics will have the right (which will be exclusive during the Exclusive Period for a particular Test Kit with respect to Commercial Clinical Laboratories) in the Exclusive Territory to purchase such Test Kits from Ciphergen, to market Test Kit Services, and to provide Test Kit Services through the Quest Network, subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof.  With respect to each Test Kit, Quest Diagnostics’ exclusivity under this Section 3.1(b) will expire upon the expiration of the Exclusive Period therefor and thereafter become nonexclusive with respect to such Test Kit in the Exclusive Territory.  During such Exclusive Period, Ciphergen will not have the right to market or perform Test Kit Services in the Exclusive Territory.  Notwithstanding the foregoing, Ciphergen will have the exclusive right (even as to Quest Diagnostics) to manufacture and have manufactured Test Kits and to market, distribute, sell, import, or otherwise commercialize Test Kits in the Exclusive Territory solely for Permitted Sales, as set forth in Section 8.1 hereof.

 

3.2                                  In the Non-Exclusive Territory .

 

(a)                                   Rights for the Licensed Laboratory Tests in the Non-Exclusive Territory .  Quest Diagnostics will have a non-exclusive right in the Non-Exclusive Territory to market Licensed Laboratory Tests developed pursuant to any Development Program and to perform such Licensed Laboratory Tests through the Quest Network, subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof. 

 

(b)                                  Rights for the Test Kits in the Non-Exclusive Territory .  Quest Diagnostics will have a non-exclusive right in the Non-Exclusive Territory to purchase Test Kits from Ciphergen, to market Test Kit Services, and to provide Test Kit Services, in

 

5



 

each case through the Quest Network and subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof.  Quest Diagnostics will not have the right to manufacture, have manufactured, market, distribute, sell, import, or otherwise commercialize any Test Kit in the Non-Exclusive Territory.  Ciphergen will have the exclusive right (even as to Quest Diagnostics) to manufacture, have manufactured, market, distribute, sell, import, or otherwise commercialize Test Kits in the Non-Exclusive Territory.

 

3.3                                  In the Restricted Territory .

 

(a)                                   Rights for the Licensed Laboratory Tests in the Restricted Territory.   Quest Diagnostics will also have a non-exclusive right in the Restricted Territory to market Licensed Laboratory Tests developed pursuant to any Development Program and perform such Licensed Laboratory Tests through the Quest Network, subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof and subject to any rights granted by Ciphergen to a Third Party in the Restricted Territory after the Effective Date which have been noticed to Quest Diagnostics in accordance with this Section 3.3(a).  Ciphergen may, in its sole discretion and at any time, grant one or more Third Parties rights (whether exclusive, non-exclusive or otherwise) to market, perform, or otherwise commercialize such Licensed Laboratory Test in the Restricted Territory (“ Restricted Territory Laboratory Test Rights ”) regardless of whether such Restricted Territory Laboratory Test Rights would exclude Quest Diagnostics from having, partially or entirely, any rights to such Licensed Laboratory Tests in any or all jurisdictions within the Restricted Territory.  Ciphergen shall notify Quest Diagnostics in writing thirty (30) or fewer days prior to the anticipated execution of any agreement (the “ Anticipated Execution Date ”) pursuant to which Ciphergen intends to grant to a Third Party Restricted Territory Laboratory Test Rights.  Thereafter, Ciphergen shall notify Quest Diagnostics in writing of the actual execution of such agreement, which notice shall describe the general scope of the Restricted Territory Laboratory Test Rights, including if and how such Restricted Territory Laboratory Test Rights restrict Quest Diagnostics’ rights with respect to Licensed Laboratory Tests in the Restricted Territory granted under this Section 3.3(a), and such restrictions shall be effective the later of thirty (30) days after the Anticipated Execution Date or the effective date of such Third Party agreement.

 

(b)                                  Rights for the Test Kits in the Restricted Territory.   Quest Diagnostics will have the non-exclusive right in the Restricted Territory to purchase Test Kits from Ciphergen, to market Test Kit Services, and to provide Test Kit Services, subject to payment of royalties and fees as provided in Section 6.3 and Article 9 hereof and subject to any rights granted by Ciphergen to a Third Party in the Restricted Territory after the Effective Date which have been noticed to Quest Diagnostics in accordance with this Section 3.3(b).  Ciphergen may, in its sole discretion and at any time, grant one or more Third Parties rights (whether exclusive, non-exclusive or otherwise) to purchase Test Kits from Ciphergen, market Test Kit Services, and/or provide or otherwise commercialize Test Kit Services in the

 

6



 

Restricted Territory (“ Restricted Territory Test Kit Rights ”) regardless of whether such Restricted Territory Test Kit Rights would exclude Quest Diagnostics from having, partially or entirely, from any rights to such Test Kits in any or all jurisdictions within the Restricted Territory.  Ciphergen shall notify Quest Diagnostics in writing by the Anticipated Execution Date pursuant to which Ciphergen grants to a Third Party Restricted Territory Test Kit Rights.  Thereafter, Ciphergen shall notify Quest Diagnostics in writing of the actual execution of such agreement, which notice shall describe the general scope of the Restricted Territory Test Kit Rights, including if and how such Restricted Territory Test Kit Rights restrict Quest Diagnostics’ rights with respect to Test Kits in the Restricted Territory granted under this Section 3.3(b), and such restrictions shall be effective the later of thirty (30) days after the Anticipated Execution Date or the effective date of such Third Party agreement.  Quest Diagnostics will not have the right to manufacture, have manufactured, market, distribute, sell, import, or otherwise commercialize any Test Kit in the Restricted Territory.  Ciphergen will have the exclusive right (even as to Quest Diagnostics) to manufacture, have manufactured, market, distribute, sell, import, or otherwise commercialize Test Kits in the Restricted Territory.

 

(c)                                   Samples from the Restricted Territory.   Notwithstanding the provisions of Section 3.3(a) and (b) hereof, Quest Diagnostics will have the right to perform Licensed Laboratory Tests and provide Test Kit Services outside the Restricted Territory on patient samples originating from the Restricted Territory.  For clarity and without limiting the foregoing, Quest Diagnostics may conduct marketing and promotional activities in the Restricted Territory in which Ciphergen has an agreement with one or more Third Parties granting Restricted Territory Laboratory Test Rights or Restricted Territory Test Kit Rights, as applicable, in such jurisdiction but only in connection with the promotion of Quest Diagnostics’ overall testing capabilities or the offer or sale of other tests performed by Quest Diagnostics or another member of the Quest Network.

 

3.4                                  N on-Compete for Commercial Clinical Laboratories in the Exclusive Territory .  During the Base Term, Ciphergen will not license to any Commercial Clinical Laboratory any Ciphergen Licensed Technology (whether or not within the Field) or otherwise collaborate with or license to any Commercial Clinical Laboratory (including any Commercial Clinical Laboratory outside the Exclusive Territory) any Intellectual Property with respect to the development or performance of any Clinical Diagnostic Application (whether or not within the Field and whether or not involving the use of Ciphergen Licensed Technology), except to the extent that:

 

(a)                                   Quest Diagnostics makes a Pass Election with respect to a Plan, or revokes a Development Election, involving such Ciphergen Licensed Technology or other Intellectual Property (in which case Ciphergen may pursue the Application on the terms provided in Section 4.6 hereof); or

 

(b)                                  The collaboration or license involves activities within the Restricted Territory with a Third Party, which Third Party does not own or manage (directly or

 

7



 

through an Affiliate) a Commercial Clinical Laboratory in the United States, for no more than one (1) Application once Ciphergen has presented the first plan to Quest Diagnostics pursuant to Section 4.1 hereof (the “ First Plan ”), for no more than two (2) Applications after Ciphergen has presented two (2) Plans to Quest Diagnostics pursuant to Section 4.1 hereof and for any number of Applications after Ciphergen has presented three (3) Plans to Quest Diagnostics pursuant to Section 4.1, provided, however , that such Applications are not the subject of any Development Programs or proposed Plans and are directed towards health conditions for which the market opportunities in the Exclusive Territory are insufficient to render the development of such Applications for the Exclusive Territory commercially reasonable (e.g., [***]) and further provided that if Ciphergen is to perform significant development or similar activities under any such collaboration or license it can reasonably demonstrate that the performance of such activities are not likely to interfere with the performance by Ciphergen of its obligations under this Agreement; or

 

(c)                                   it constitutes a Permitted Sale of Test Kits to Commercial Clinical Laboratories as permitted under Section 8.1 of this Agreement.

 

3.5                                  Collaboration with other Diagnostics Companies .  Except as contemplated by this Agreement, during the six (6) month period after execution of this Agreement, Ciphergen will not establish any collaboration, licensing or similar arrangement with any other commercial Clinical Diagnostics company and thereafter Ciphergen will not take any actions inconsistent with the terms of this Agreement.  During the Base Term, except as contemplated by this Agreement, Ciphergen will not establish any collaboration, licensing or similar arrangement with any other Commercial Clinical Laboratory to develop any laboratory tests or to develop any FDA-cleared biochips, test kits or supplies except to the extent that Ciphergen has presented a Plan with respect to such arrangement to Quest Diagnostics and the Parties have been unable to reach agreement on such arrangement within sixty (60) days of Quest Diagnostics receipt of such Plan.  Notwithstanding the foregoing, Ciphergen may license a commercial Clinical Diagnostics company (other than a Commercial Clinical Laboratory) to manufacture or commercialize FDA-cleared biochips, test kits or supplies based on Licensed Laboratory Tests developed pursuant to this Strategic Alliance, subject to the rights of Quest Diagnostics under Article 8.  Nothing contained in Section 3.2(a) or Section 3.3(a) shall be deemed to permit Ciphergen to license any other Commercial Clinical Laboratory to develop any Licensed Laboratory Test that is the subject of a Development Program or proposed Plan under this Strategic Alliance (as opposed to licensing a Commercial Clinical Laboratory in the Non Exclusive Territory or the Restricted Territory to perform the applicable clinical laboratory tests using Proprietary Supplies as to which Quest Diagnostics would be entitled to receive a fee on the terms contemplated by Section 8.2(a)(ii)).

 

3.6                                  Non-Compete for Licensed Laboratory Tests and Test Kits .  Quest Diagnostics and its Affiliates will not be under any restriction from developing or commercializing any Clinical Laboratory Tests, test kits or other products or services that may compete with

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

8



 

any Licensed Laboratory Test or Test Kit that has been developed (or is under development) under any Development Program, provided that such development does not infringe any Intellectual Property of Ciphergen or its Affiliates.  During the Exclusive Period for a Licensed Laboratory Test or Test Kit, Ciphergen and its Affiliates will not develop or commercialize any Clinical Laboratory Tests, test kits or other products or services that are directed at the same Application as such Licensed Laboratory Test or Test Kit that has been developed (or is under development) under any Development Program or establish any collaboration, licensing or similar arrangement with any Clinical Diagnostics Company (other than Quest Diagnostics) to do so.  Except as provided under this Agreement, during the Base Term, Ciphergen shall not perform any Clinical Laboratory Tests (except as reasonably necessary in connection with the development of Test Kits).

 

3.7                                  Non-Solicitation .  For the period commencing on the Effective Date and ending one (1) year following the date of the commercialization of the last Test Kit commercialized under this Agreement, neither Party will hire, solicit, induce, encourage or attempt to induce or encourage any employee of the other Party who has been involved with this Strategic Alliance governed by this Agreement to terminate his or her employment with such other Party or to breach any other obligation to such other Party, and each of the Parties hereto agrees to maintain an updated list of employees deemed to be involved with this Strategic Alliance for purposes of this Section 3.7, which list will be made available to the other Party at its request.  

 

3.8                                  Third Party Conflicts .  Each Party will ensure that its future agreements with Third Parties do not conflict with any provision of this Agreement and have covenants that provide the other Party with the rights expressly contemplated by this Agreement.

 

3.9                                  Ciphergen Customer Contracts .  During the Base Term, Ciphergen will (consistent with Ciphergen’s past practices):

 

(a)                                   Except as otherwise provided herein, include in its supply and related contracts a covenant restricting use of instruments and supplies involving SELDI Technology to “research use only.”

 

(b)                                  Subject to subsection (c) hereof, use commercially reasonable efforts to ensure that its instruments, biochips and supplies involving SELDI Technology are not supplied to Commercial Clinical Laboratories located outside the Restricted Territory (i.e., located in the Exclusive Territory or Non-Exclusive Territory).  Ciphergen will cease providing supplies to any such Commercial Clinical Laboratories located outside the Restricted Territory to the extent the law permits.  Notwithstanding the foregoing, Ciphergen shall have the right to continue to supply [***] instruments, biochips and supplies involving SELDI Technology in accordance with the [***] by and between [***] and Ciphergen, effective May 6, 2003 (the [***]), and nothing in this Agreement is intended to limit or otherwise restrict Ciphergen’s right to supply [***] in accordance with the [***]

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

9



 

(c)                                   Use commercially reasonable efforts to obtain exclusive diagnostic rights for the Exclusive Territory with respect to any Intellectual Property developed by Third Parties using instruments or supplies involving SELDI Technology that are supplied by Ciphergen.

 

3.10                            Passive Sales .  To the extent required by law, nothing in this Agreement shall prevent passive sales of Test Kits and Test Kit Services in the applicable jurisdictions.

 

4.                                       PRESENTATION AND REVIEW OF PLANS; ELECTIONS BY QUEST DIAGNOSTICS .

 

4.1                                  Identification of Applications; Preparation of Plans .  During the Base Term, Ciphergen expects from time to time to discover or otherwise identify Ciphergen Licensed Technology or other technology that enables the development of an Application within the Field.  Ciphergen will use commercially reasonable efforts to provide Quest Diagnostics with at least three (3) Plans during the first two (2) years of the Base Term, with the first Plan to be provided within three (3) months after the Effective Date and the next two (2) Plans to be provided one (1) approximately every six (6) months thereafter.  At such time as Ciphergen believes any Application has sufficient supporting data, including data related to commercial potential, to render it appropriate for development, Ciphergen will review with the Steering Committee whether it would be appropriate to prepare a Plan for such Application.  The intent of the Parties is for the Steering Committee to select the tests to be developed based on medical need, market potential and likelihood of success.  Following agreement by the Steering Committee of a particular Application, Ciphergen will use commercially reasonable efforts to promptly prepare a Plan for each such Application, and to obtain such consents under the Ciphergen Collaboration Agreements necessary to effectuate the Plan.  Notwithstanding the foregoing, the Parties agree that the Application for the First Plan will be [***].

 

4.2                                  Presentation of Plans .  Promptly after preparing any Plan, except as described below, Ciphergen will present and offer the Plan to Quest Diagnostics for its review.

 

4.3                                  Review of Plans .  Within sixty (60) days from the receipt of any Plan from Ciphergen, Quest Diagnostics will review such Plan and use commercially reasonable efforts to provide Ciphergen with a Plan Supplement with respect to such Plan.  Within ninety (90) days from the receipt of any Plan from Ciphergen (a “ Plan Review Period ”), Quest Diagnostics will determine whether to accept the Plan and make a Development Election or reject the Plan and make a Pass Election for the Application.  In the event that the Plan does not include the information required by Schedule C (a “ Plan Deficiency ”) and Quest Diagnostics notifies Ciphergen of such deficiency within thirty (30) days after receipt of the Plan, the Plan Review Period will not begin until Ciphergen presents to Quest Diagnostics a Plan that remedies such Plan Deficiency; provided, however, that if the Plan Deficiency is associated with the preliminary assessment of the projected cost of obtaining freedom to operate with respect to any Third Party patent rights related to Ciphergen Licensed IP that may be desirable for the commercialization of the Licensed Laboratory Test that is the subject of the Plan in the Exclusive Territory, then the Plan will not be regarded as having a Plan Deficiency, the Plan Review Period will be

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

10



 

extended by thirty (30) days, and the Parties will use commercially reasonable efforts to cooperate and address such preliminary assessment.  If Quest Diagnostics does not notify Ciphergen of a Plan Deficiency within thirty (30) days after receipt of such Plan, the Plan will be deemed not to have a Plan Deficiency.  During the Plan Review Period, Ciphergen will afford Quest Diagnostics’ officers and employees full access to the information and data related to such Plan and its corresponding Application, such access to include meetings with such officers and employees of Ciphergen as Quest Diagnostics reasonably requests, and Ciphergen will provide such additional information as Quest Diagnostics reasonably requests related to the Application and the Plan as promptly as practicable.  During the Base Term, the Steering Committee will have the responsibility for making any appropriate modification to the Plan.  Notwithstanding the foregoing, the Parties understand with respect to the First Plan that time is of the essence and each Party shall use its commercially reasonable efforts to expedite the preparation, delivery and acceptance process for the First Plan.

 

4.4                                  Number and Revocation of Development Elections; Development Programs .

 

(a)                                   Quest Diagnostics will have the right to make only three (3) Development Elections in the aggregate during the Base Term, unless otherwise agreed by the Parties.

 

(b)                                  Each Plan that results in a Development Election that is not subsequently revoked in accordance with the terms hereof is referred to herein as a “ Development Program ”.

 

(c)                                   Notwithstanding the foregoing, in the event that Quest Diagnostics determines in good faith that a Development Program will result in a Licensed Laboratory Test that is either medically infeasible or commercially infeasible, then Quest Diagnostics will notify Ciphergen of such determination and will provide the information used to reach such determination within fifteen (15) days of reaching such determination.  The Steering Committee will meet within thirty (30) days of such notification to discuss potential remedies and amendments to the Development Program to ensure feasibility, unless Ciphergen informs Quest Diagnostics in writing that such a meeting is not required.  At any time that is at least fifteen (15) days after such Steering Committee meeting or receipt of such notification by Ciphergen that a Steering Committee meeting is not required, Quest Diagnostics may, at its sole discretion, revoke the relevant Development Election with the effect that:

 

(i)                                      Quest Diagnostics will no longer have any obligation to pursue the Development Program; and

 

(ii)                                   Quest Diagnostics will cease all development activities with respect to such Development Program; and

 

(iii)                                Quest Diagnostics will have no obligations under this Agreement with respect to such Development Program, including but not limited to the

 

11



 

payment of royalties and fees under Section 6.3 and Article 9 hereof; provided, however, that the foregoing will in no event constitute (a) waiver of any rights or remedies of Quest Diagnostics with respect to any breach or non-performance by Ciphergen; or (b) waiver, assignment or transfer of any of Quest Diagnostics ownership interest in Intellectual Property developed under such Development Program by Quest Diagnostics; and

 

(iv)                               Subject to the foregoing and Section 4.6 below, Ciphergen may pursue development opportunities with respect to an Application that is the subject of such Development Program with any Third Party, provided that there is no other Development Program or proposed Plan that addresses the same Application and such development does not infringe any Intellectual Property of Quest Diagnostics or any of its Affiliates.

 

4.5                                  Effect of a Development Election .  In the event that Quest Diagnostics, in its sole discretion, makes a Development Election for a Plan during the applicable Plan Review Period, Quest Diagnostics will have the exclusive right to develop the Licensed Laboratory Test, as provided herein, that is the subject of such Plan and resulting Development Program, provided that such Development Election is not subsequently revoked as provided in Section 4.4(c). 

 

4.6                                  Effect of a Pass Election or Revocation of a Development Election .  Notwithstanding anything to the contrary in this Agreement, in the event Quest Diagnostics makes a Pass Election with respect to any Plan or later revokes a Development Election as provided in Section 4.4(c), Ciphergen may pursue, either individually or in collaboration with a Third Party, any development and commercialization opportunities with respect to the Application that is the subject of such Plan or such Development Election, without any restriction or liability to Quest Diagnostics (to the extent such development does not infringe any Intellectual Property of Quest Diagnostics or any of its Affiliates), except to the extent there is an active Development Program that addresses the same Application; provided, however , that Ciphergen will not enter into any agreement with a Third Party Commercial Clinical Laboratory for the development of an Application that was the subject of a Plan hereunder on terms more favorable (when taken as a whole) than the most favorable terms on which such Plan was offered to Quest Diagnostics pursuant to this Article 4.

 

5.                                       DEVELOPMENT OF LICENSED LABORATORY TESTS .

 

5.1                                  Quest Diagnostics to Develop the Licensed Laboratory Tests .

 

(a)                                   For each Development Election, subject to the provisions of Section 4.4(c) hereof, Quest Diagnostics will use commercially reasonable efforts to develop the proposed Licensed Laboratory Test substantially in accordance with the Development Program.  A Development Program may be updated or otherwise modified from time to time by the Steering Committee or its designee.

 

12



 

(b)                                  In the event that Quest Diagnostics breaches its obligations under Section 5.1(a) hereof, Ciphergen must give written notice of such breach within sixty (60) days of Ciphergen becoming aware of such breach.  If Quest Diagnostics fails to cure such breach within sixty (60) days after being given such notice, the corresponding Development Election will be deemed to be revoked, and the provisions of Sections 4.4(c)(i) through 4.4(c)(iv) hereof will apply.  Such deemed revocation of the Development Election will be Ciphergen’s sole and exclusive remedy with respect to any breach under Section 5.1(a) hereof.

 

5.2                                  Written Reports .  Quest Diagnostics will provide to the Steering Committee written reports on the progress of each Development Program at least once per calendar quarter.  Quest Diagnostics will afford Ciphergen’s officers and employees reasonable access to the information and data related to the development of each Licensed Laboratory Test, such access to include meetings with the officers, directors and employees of Quest Diagnostics with responsibility for the Development Program, and provide such additional information as Ciphergen reasonably requests with respect to the Development Program in a timely manner. 

 

5.3                                  Role of Ciphergen .  Ciphergen will provide such reasonable assistance as Quest Diagnostics or the Steering Committee and working committees reasonably request with respect to each Development Program, including (at Ciphergen’s cost) (a) having appropriate employees of Ciphergen present from time to time at the facility at which Quest Diagnostics is working on any Development Program and providing access to any Separate IP or Technology of Ciphergen relevant to the Development Program; and (b) using commercially reasonable efforts to provide to Quest Diagnostics any specimens required to support such development activities, subject to applicable laws and reasonable availability of such specimens for such purposes.

 

5.4                                  Regulatory Issues .  The Steering Committee may modify any Development Program to reflect changes in the regulatory environment including, if necessary or strategically warranted, the pursuit of regulatory approval or clearance of the corresponding Licensed Laboratory Test.

 

5.5                                  Costs of Development .  Each Party will be responsible for its costs and expenses in connection with its obligations under this Agreement, including in connection with supporting the development of Licensed Laboratory Tests and Test Kits pursuant to this Agreement, and in developing the Plans or the Plan Supplements, as the case may be.

 

5.6                                  Certain Regulatory Impediments .  In the event that Quest Diagnostics develops or wishes to develop a Licensed Laboratory Test pursuant to a corresponding Development Program but due to a change in law, regulation, regulatory interpretation or otherwise, Quest Diagnostics cannot perform the Licensed Laboratory Test unless the necessary medical devices, consumables, components or other constituent parts (including but not limited to reagents (including ASRs), instrumentation or software) for such Licensed Laboratory Test is or are cleared or approved by the FDA, then upon notice from Quest Diagnostics, Ciphergen will use commercially reasonable efforts to obtain such clearance or approval as promptly as is commercially reasonable, and Quest Diagnostics will

 

13



 

support these efforts.  The above notwithstanding, Quest Diagnostics will not be responsible for the cost of applying for or receiving FDA clearance or approval for the instrumentation associated with the Licensed Laboratory Test or Test Kit (including the cost of any clinical trials or other clinical proof required for the FDA process), such cost being the sole responsibility of Ciphergen.

 

6.                                       COMMERCIALIZATION OF LICENSED LABORATORY TESTS AND TEST KIT SERVICES .

 

6.1                                  Commercialization by Quest Diagnostics

 

(a)                                   During the Exclusive Period with respect to a Test Kit for which Quest Diagnostics is precluded from performing the corresponding Licensed Laboratory Test as set forth in Section 12.2(a)(iv)(3) hereof, Quest Diagnostics at its cost will use commercially reasonable efforts to market and perform the Test Kit Services in the Exclusive Territory.  Any corporation, limited liability company, partnership or other entity within the Quest Network will have the same rights as Quest Diagnostics to market and perform Licensed Laboratory Tests and to provide Test Kit Services as contemplated by this Agreement in accordance with the terms and conditions of this Agreement, subject to payment to Ciphergen of the royalties and fees specified in Section 6.3 and Article 9 hereof.

 

(b)                                  Quest Diagnostics may market a Licensed Laboratory Test or Test Kit Service, in each case subject to the limitations set forth in Section 3.3 hereof, for uses other than for the Application as specified in the applicable Development Program, subject to such limitations as are required by applicable law.

 

6.2                                  Pricing of Licensed Laboratory Tests and Test Kits .  Quest Diagnostics will have the sole right to determine the prices that it charges to Third Parties for Licensed Laboratory Tests and Test Kit Services, including the right to determine whether any Licensed Laboratory Tests or Test Kit Services are covered under [***].  Ciphergen will, if and to the extent reasonably requested by Quest Diagnostics, meet with payers regarding the reimbursement and coverage of Licensed Laboratory Tests and Test Kit Services by such payers.

 

6.3                                  Royalties to Ciphergen .  Quest Diagnostics will pay Ciphergen a royalty each calendar quarter for each Licensed Laboratory Test or Test Kit used to provide a Test Kit Service that is covered by a Valid Claim within the Patent Rights.  The fee will be determined as set forth in Schedule E hereto. Quest Diagnostics will determine the fee payable on a quarterly basis as of the end of each calendar quarter, with payment of the fee being made within thirty (30) days after the end of such quarter.  Quest Fee-For-Service Sales based on foreign revenue will be converted to U.S. dollars at the rate of exchange published in The Wall Street Journal , Eastern U.S Edition, on the last business day of each calendar quarter.  Quest Diagnostics will provide Ciphergen, together with each payment under this Section 6.3, a schedule detailing the calculation of the royalty, including without limitation any calculation resulting from the conversion of foreign revenue to U.S. dollars as set forth herein.

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

14



 

6.4                                  Third Party Patent Rights .

 

(a)                                   Ciphergen will use commercially reasonable efforts to obtain, with the appropriate rights (if necessary) to sublicense to Quest Diagnostics, any Third Party patent rights that are required to make, use and commercialize Ciphergen Platform Technology to the extent necessary or useful to allow Ciphergen Platform Technology to be used to develop, make, sell or perform Licensed Laboratory Tests or sell and use Test Kits in accordance with this Agreement.

 

(b)                                  Subject to the direction of the Steering Committee, Ciphergen shall use commercially reasonable efforts to obtain, with the appropriate rights to sublicense to Quest Diagnostics, any Third Party patent rights that are required for the Quest Network to assemble, perform and otherwise commercialize any Licensed Laboratory Test in accordance with this Agreement to the extent that Ciphergen is not otherwise required to obtain such Third Party patent rights pursuant to Section 6.4(a) hereof.  Quest Diagnostics will, as appropriate, assist Ciphergen in fulfilling its obligations under this Section 6.4(b).

 

(c)                                   In the event that Ciphergen is unable to obtain sublicensable rights to one or more Third Party patents that are required pursuant to Section 6.4(b) hereof, then, subject to the direction of the Steering Committee, Quest Diagnostics (for its behalf) will use commercially reasonable efforts to obtain the appropriate rights to such Third Party patents.  Ciphergen will, as appropriate, assist Quest Diagnostics in fulfilling its obligations under this Section 6.4(c). 

 

(d)                                  Subject to the direction of the Steering Committee, Ciphergen will use commercially reasonable efforts to obtain any Third Party patent rights that are required to make, use and commercialize (and for the Quest Network or any Third Party to whom Ciphergen sells Test Kits to use) any Test Kit in accordance with this Agreement to the extent that Ciphergen is not otherwise required to obtain such Third Party patent rights pursuant to Section 6.4(a) hereof.  Ciphergen may, at its discretion, obtain such rights in conjunction with any license agreement entered pursuant to Section 6.4(b) hereof.  Quest Diagnostics will, as appropriate, assist Ciphergen in fulfilling its obligations under this Section 6.4(d).

 

6.5                                  Financial Obligations Associated with Third Party Patent Rights .

 

(a)                                   Ciphergen Sole Responsibility .  Ciphergen will be solely responsible for any payments associated with any Third Party patent rights as to which Ciphergen is required to obtain pursuant to Section 6.4(a) hereof and any payments associated with any Ciphergen Collaboration Agreements, regardless of the manner in which any such payments are calculated or paid.

 

(b)                                  Ciphergen Third Party Royalties related to Licensed Laboratory Tests .  To the extent that Ciphergen is obligated under a written agreement to pay, and does pay, any Ciphergen Third Party Royalty pursuant to Section 6.4(b) hereof, Quest Diagnostics will reimburse Ciphergen [***] of the amount of such

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

15



 

Ciphergen Third Party Royalty, such reimbursement to be added to the fee due to Ciphergen under Section 6.3 hereof, subject to timely receipt of an invoice from Ciphergen with respect to such payment.

 

(c)                                   Quest Third Party Royalties .  To the extent that Quest Diagnostics is obligated under a written agreement to pay, and does pay, any Quest Third Party Royalty pursuant to Section 6.4(c) hereof, Quest Diagnostics will deduct [***] of the amount of such Quest Third Party Royalty from the fee payable to Ciphergen under Section 6.3 hereof.  Quest Diagnostics will provide Ciphergen with documentation supporting any such deductions at the time at which the corresponding fee is paid.

 

(d)                                  Ciphergen Third Party Royalties related to Test Kits .  To the extent that Ciphergen is obligated under a written agreement to pay, and does pay, any Ciphergen Third Party Royalty pursuant to Section 6.4(d) hereof as result of any Ciphergen sale or transfer of a Test Kit to Quest Diagnostics during the Exclusive Period therefor, Quest Diagnostics will reimburse Ciphergen [***] of the amount of such Ciphergen Third Party Royalty, such reimbursement to be added to the fee due to Ciphergen under Section 6.3 hereof, subject to timely receipt of an invoice from Ciphergen with respect to such payment.  Quest Diagnostics will not be required to reimburse any Ciphergen Third Party Royalty due with respect to any sale or transfer of a Test Kit to a Third Party or any sale to the Quest Network after the Exclusive Period therefor. 

 

(e)                                   Other Third Party Payments .  Ciphergen will be solely responsible for any obligations pursuant to Section 6.4(b), Section 6.4(c) or Section 6.4(d) hereof that do not accrue with each performance of a Licensed Laboratory Test or each sale of a Test Kit (such as an up-front, lump sum, and regular periodic payments not tied to the individual performances of any Licensed Laboratory Test or the individual sale of any Test Kit) (“ Other Third Party Payment ”). 

 

6.6                                  Inclusion in Cost of Goods .  For clarity, all amounts payable to a Third Party and allocable to Platform Technology, Licensed Laboratory Tests or Test Kits (or any component thereof) including royalties and other payments for Intellectual Property rights will be included in a Party’s cost of good sold therefor to the extent such amounts are expensed by such Party in its consolidated financial statements prepared in accordance with GAAP, except to the extent reimbursed or creditable to the other Party.

 

7.                                        DEVELOPMENT OF TEST KITS .

 

7.1                                  Ciphergen to Develop the Test Kits .  Following the Commercial Launch of each Licensed Laboratory Test (or such earlier time as Ciphergen deems appropriate), Ciphergen will, subject to the infeasibility exception set forth below, use commercially reasonable efforts to develop the corresponding Test Kit on a timely basis including obtaining clearance or approval by the FDA or such other Regulatory Authorities for marketing in the applicable jurisdiction as may be appropriate.  Such development will be in accordance with a plan (including a budget and plans for seeking appropriate regulatory approvals or clearances)

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

16



 

prepared by Ciphergen and approved by the Steering Committee (each a “ Test Kit Development Program ”).  If either Party reasonably believes that the development of a Test Kit hereunder will be or has become commercially or medically infeasible or impractical, it may request in writing the Steering Committee to review the same and provide the Steering Committee with relevant available information and the Steering Committee shall promptly meet within thirty (30) days of such request and review such information and make a determination with respect thereto.  If the Steering Committee determines that the development of a Test Kit hereunder is commercially or medically infeasible or impractical, neither Party shall have any further obligations under this Agreement with respect to such development.

 

7.2                                  Roles of the Parties .  The respective roles of the Parties in connection with the development of any Test Kit will be as specified in the Test Kit Development Program.  In general, Ciphergen will assume primary responsibility for the development of each such Test Kit.  Without limiting the generality of the foregoing, Ciphergen will be responsible for the costs and expenses associated with seeking and obtaining clearance or approval from the FDA and other domestic or foreign Regulatory Authorities, the costs associated with clinical trials and obtaining specimens, royalties and other fees paid to license any Third Party patent rights required to commercialize a Test Kit (other than as provided in Section 6.5), and any market research expenses associated with a Test Kit, as may be commercially reasonable to implement the Test Kit Development Program.  Quest Diagnostics will provide such reasonable assistance as Ciphergen may reasonably request with respect to the Test Kit Development Program, including having appropriate employees of Quest Diagnostics present from time to time at the facility at which Ciphergen is working on any Test Kit Development Program and providing access to (i) any Separate IP or Technology of Quest Diagnostics relevant to the Test Kit Development Program and (ii) any Joint Know-How in Quest Diagnostics’ possession.  Ciphergen will afford Quest Diagnostics’ officers and employees full access to the information and data related to the development of each Test Kit, such access to include meetings with the officers, directors and employees of Ciphergen with responsibility for the Test Kit Development Program, and provide such additional information as Quest Diagnostics will reasonably request related to the Test Kit Development Program as promptly as practicable.  Likewise, Quest Diagnostics will afford Ciphergen’s officers and employees full access to the information and data related to the development and performance of each Test Kit and corresponding Licensed Laboratory Test (to the extent allowable by applicable law), such access to include meetings with the officers, directors and employees of Quest Diagnostics related thereto, and provide such additional information as Ciphergen will reasonably request related to the Test Kit Development Program as promptly as practicable.  Additionally upon the request of Ciphergen, Quest Diagnostics agrees to act as a clinical trial site for each Test Kit, subject to Ciphergen agreeing to reimburse Quest Diagnostics for its direct costs and expenses with respect thereto.  Quest Diagnostics will provide such additional assistance as the Steering Committee and any working committees request.

 

17



 

8.                                       COMMERCIALIZATION OF LICENSED LABORATORY TEST COMPONENTS AND TEST KITS .

 

8.1                                  Restrictions .  As permitted by Article 3 hereof, Ciphergen will have the exclusive right to manufacture and have manufactured Test Kits and Proprietary Supplies specifically intended for or known by Ciphergen to be used for performance of Licensed Laboratory Tests or any Clinical Laboratory Test that has the same or substantially similar functionality to any such Licensed Laboratory Test.  Test Kits and Proprietary Supplies specifically intended or known by Ciphergen to be used for performance of Licensed Laboratory Tests or any Clinical Laboratory Test that has the same or substantially similar functionality to any such Licensed Laboratory Test may be marketed, distributed, sold or otherwise commercialized by Ciphergen only as provided in this Section 8.1.  Ciphergen will have the exclusive right to use, market, distribute, sell, import, or otherwise commercialize Test Kits as follows (each a “ Permitted Sale ” and collectively “ Permitted Sales ”):

 

(a)                                   Sales to Quest Diagnostics .  To Quest Diagnostics and members of the Quest Network.

 

(b)                                  Outside the Exclusive Territory .  To any Third Party, including Commercial Clinical Laboratories, located outside the Exclusive Territory (and only for use outside the Exclusive Territory).

 

(c)                                   Sales to Laboratories that are not Commercial Clinical Laboratories .  To any laboratory that is not a Commercial Clinical Laboratory (and only for use by such laboratory).  In the event that Ciphergen becomes aware that any such laboratory, pursuant to any sales contract, license, or other agreement with Ciphergen, is transferring any Test Kits to a person or entity within the Exclusive Territory that is a Commercial Clinical Laboratory, Ciphergen will, subject to typical breach-and-cure provisions, terminate the agreement(s) under which such laboratory purchases and uses Test Kits and cease selling Test Kits to such laboratory for a period of at least one (1) year from the date of termination of the agreement(s) with the respective laboratory.

 

(d)                                  After the Exclusive Period .  To any Third Party not described in Sections 8.1(a), 8.1(b), or 8.1(c) hereof but only following the applicable Exclusive Period.

 

(e)                                   Test Kit Components .  Ciphergen agrees that, except to the extent that Quest Diagnostics agrees to an allocation as provided in this Section 8.1(e), any Test Kit will be sold only as part of a package that contains all of the components and instructions to perform the corresponding Test Kit Service, excluding instruments and excluding any supplies and other materials that are commonly available and not sold by or under license from Ciphergen.  Notwithstanding the foregoing, in the event that Ciphergen wishes to sell (directly or through a licensee) a Test Kit for which certain components of the Test Kit that are not commonly available (such as certain reagents) are or may be purchased separately from Ciphergen or a Third Party, Quest Diagnostics agrees to negotiate in good faith to allow such

 

18



 

sales, provided that the Parties are able to agree on a reasonable price allocation for the various components of the Test Kit that may be purchased separately.

 

8.2                                  Compensation to Quest Diagnostics

 

(a)                                   General .  Quest Diagnostics will be entitled to receive from Ciphergen a fee for: 

 

(i)                                      each Test Kit derived from a Licensed Laboratory Test developed by Quest Diagnostics and Proprietary Supplies specifically intended for or known by Ciphergen to be used for performance of Licensed Laboratory Tests or any Clinical Laboratory Test that has the same or substantially similar functionality to any such Licensed Laboratory Test, in each case that is sold by Ciphergen to any Third Party other than a member of the Quest Network with respect to sales of Test Kits, on an Application basis, for ten (10) years from the first commercial sale of a Test Kit for such Application following clearance of the Test Kit for such Application by the FDA or other Regulatory Authority; and

 

(ii)                                   other Proprietary Supplies to the extent the same have been developed solely pursuant to the Strategic Alliance (or are otherwise materially based on or embody any Intellectual Property of Quest Diagnostics or any of its Affiliates) and are sold by Ciphergen to any Third Party other than a member of the Quest Network, for ten (10) years from the first commercial sale of such Proprietary Supplies.

 

Such fee will be determined as set forth in Schedule F hereto.  The fee will be paid on a quarterly basis within thirty (30) days after the end of each calendar quarter, with Ciphergen supplying Quest Diagnostics with a schedule providing reasonable detail regarding the calculation of the fee, including Ciphergen Net Sales during such quarter. 

 

(b)                                  Currency Adjustments .  Ciphergen Net Sales received in foreign currency will be converted to U.S. dollars at the rate of exchange published in The Wall Street Journal , Eastern U.S Edition, on the last business day of each calendar quarter.  Ciphergen will provide Quest Diagnostics, together with each payment under this Section 8.2, a schedule detailing the calculation of Ciphergen Net Sales resulting from the conversion of foreign revenue to U.S. dollars as set forth herein.

 

(c)                                   Quest Diagnostics Biomarker Royalties .  Quest Diagnostics will be entitled to receive from Ciphergen a fee for each product (other than a Test Kit) developed using Quest Diagnostics Biomarker IP and sold by Ciphergen to any Third Party.  The fee will be determined as set forth in Schedule F hereto.  The fee will be paid on a quarterly basis within thirty (30) days after the end of each calendar quarter, with Ciphergen supplying Quest Diagnostics with a schedule providing reasonable detail regarding the calculation of the fee, including the Net Sales of such product during such quarter.

 

19



 

8.3                                  Commercialization .  Ciphergen at its cost will use commercially reasonable efforts to market and sell Test Kits.  Ciphergen will have the sole right to determine prices that it charges to Third Parties for Test Kits, subject to the limitations set forth in Section 9.6 hereof.

 

9.                                       PROVISION OF INSTRUMENTS, PROPRIETARY SUPPLIES AND TEST KITS .

 

9.1                                  Instruments .  Pursuant to an equipment loan agreement to be entered into by the Parties on the Effective Date or promptly thereafter and as part of a Supply Agreement (defined below), Ciphergen will loan to Quest Diagnostics two (2) ProteinChip System Series 4000 instrument systems and related servicing as needed for use in the development of Licensed Laboratory Tests in accordance with the applicable Development Program, at no cost to Quest Diagnostics (the “ Loaned Instruments ”). Ciphergen will also provide to Quest Diagnostics Instruments and related servicing to perform Licensed Laboratory Tests and Test Kit Services for a fee as determined in Schedule E hereto.

 

9.2                                  Provision of Proprietary Supplies .  During any period during which Quest Diagnostics is entitled to perform each Licensed Laboratory Test under this Agreement, Ciphergen will, in accordance with the applicable Supply Agreement, provide Quest Diagnostics with such supply of the Proprietary Supplies as Quest Diagnostics will request from time to time and as are necessary for Quest Diagnostics to perform such Licensed Laboratory Test.  The fee for such Proprietary Supplies will be determined as set forth in Schedule E hereto. 

 

9.3                                  Provision of Test Kits .  Following the commercial availability of each Test Kit, Ciphergen will, in accordance with the applicable Supply Agreement, provide Quest Diagnostics with such Test Kits as Quest Diagnostics will request from time to time for purposes of providing Test Kit Services hereunder.  The fee for such Test Kits will be determined as set forth in Schedule E hereto.

 

9.4                                  Supply Agreement .  All Instruments, Proprietary Supplies and Test Kits will be provided pursuant to the terms of one or more separate supply agreements (each a “ Supply Agreement ”) to be negotiated between the Parties at a later date.  Each such Supply Agreement will specify the terms under which such Instruments, Proprietary Supplies and Test Kits may be transferred by Quest Diagnostics or sold by Ciphergen to members of the Quest Network and will have customary terms, consistent with the terms of this Agreement.  Except as set forth in Section 9.7, Quest Diagnostics shall not have the right to manufacture itself or through others or to obtain from Third Parties any Instruments, Proprietary Supplies and/or Test Kits supplied to Quest Diagnostics by Ciphergen pursuant to the Supply Agreement.

 

9.5                                  Priority for Supplies .  Quest Diagnostics will be treated by Ciphergen as a high priority customer for deliveries of quantities ordered in accordance with the appropriate Supply Agreements for Proprietary Supplies and Test Kits.

 

9.6                                  Most Favored Customer Pricing .  Notwithstanding any provision in this Agreement to the contrary:

 

20



 

(a)                                   The payment to Ciphergen per Instrument for performing Licensed Laboratory Tests and Test Kits Services will not be higher than [***].

 

(b)                                  The payment to Ciphergen per Licensed Laboratory Test in royalties and for Proprietary Supplies, in the aggregate, will not be higher than [***].

 

(c)                                   The payment to Ciphergen per Test Kit Service in royalties, if any, and for the corresponding Test Kit, in the aggregate, [***].

 

For purposes of determining [***]

 

9.7                                  Escrow Agreement .  Simultaneously with the execution of the applicable Supply Agreement, the Parties will enter into a technology escrow agreement to protect Quest Diagnostics in the event that Ciphergen fails to provide the Instruments, Proprietary Supplies or Test Kits to Quest Diagnostics or otherwise materially breaches its obligations under this Agreement and/or the Supply Agreement in a manner related to Ciphergen’s supply obligations.

 

9.8                                  Third Party Suppliers .  For clarity, subject to the other terms and conditions of this Agreement including Article 11, Ciphergen shall have the right to fulfill all or part of its supply and support obligations under this Agreement through one or more Third Parties; provided, however, that Ciphergen shall: (a) remain primarily liable for such Third Parties’ performance or non-performance of such supply and support obligations and any breach of this Agreement by such Third Parties; (b) provide Quest Diagnostics prompt written notice of its intent to engage each such Third Party; and (c) engage such Third Parties solely pursuant to an enforceable written agreement that (i) binds such Third Parties to the terms and conditions of this Agreement and the applicable Supply Agreement (including any terms relating to the quality and efficacy of the supply and support provided and the establishment of an appropriate technology escrow agreement for any supplies to be provided), (ii) is at least as protective of Quest Diagnostics’ and its Affiliates’ as this Agreement (including Article 11), and (iii) specifically provides that Quest Diagnostics is an intended third party beneficiary of such agreement with respect to Ciphergen’s supply and support obligations as set forth herein or in the applicable Supply Agreement.

 


***                            Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the commission. ***

 

21



 

10.                                RECORDS .

 

10.1                            Records .  Each Party will maintain complete and accurate records relating to all information reasonably required to calculate royalties or other fees due from one Party to the other Party or otherwise required to be included in any reports to be provided hereunder or arising from such Party’s performance of its obligations hereunder.

 

10.2                            Audits .  During the term of this Agreement, each Party will have the right, during normal business hours and upon reasonable notice, to cause a mutually agreeable accounting firm or other appropriate independent Third Party to inspect and audit the other Party’s records referenced in Section 10.1 hereof pursuant to this Agreement, but no more often than once per year.  Any such audit must be conducted within three (3) years following the close of the year to which such records relate.  Each Party will pay the other Party all amounts that such Party has underpaid the other Party as revealed by any such audit, plus interest accrued thereon as provided in Section 10.3 hereof (from the applicable original due date).  The costs of such audits will be borne solely by the Party requesting the audit; provided, however, that in the event such an audit reveals either a material failure by the Party being audited or a failure to pay any amount due by more than ten percent 


SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window