COLLABORATION AGREEMENT
Roche Molecular Systems, Inc.
Affymetrix, Inc.
------------------------
THE SYMBOL "**" IS USED THROUGHOUT THIS EXHIBIT TO INDICATE THAT A
PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION
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CONTENTS
I. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. NO OTHER IMPLIED LICENSE; DISTRIBUTION RESTRICTIONS.. . . . . . . . . . . 6
III. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IV. PRODUCT DEVELOPMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
V. LONG RANGE FORECASTS AND PERFORMANCE MEASURES.. . . . . . . . . . . . . . 11
VI. SUPPLY AND MARKETING. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
VII. OWNERSHIP; DEVELOPMENT LICENSE; CONFIDENTIALITY . . . . . . . . . . . . . 15
VIII. MANAGEMENT OF RELATIONSHIP; DISPUTES. . . . . . . . . . . . . . . . . . . 17
IX. TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
X. WARRANTY AND WARRANTY DISCLAIMERS . . . . . . . . . . . . . . . . . . . . 20
XI. LIMITED LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
XII. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
XIII. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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This Agreement is entered as of February 1, 1998 (the "Effective Date") by
and between Affymetrix, Inc. ("AFFX"), a Delaware corporation, with its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Telephone: ▇▇▇.▇▇▇.▇▇▇▇; Fax: ▇▇▇.▇▇▇.▇▇▇▇) and Roche Molecular Systems,
Inc. ("RMS"), a Delaware corporation, with a place of business at ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (Telephone: ▇▇▇.▇▇▇.▇▇▇▇;
Fax: ▇▇▇.▇▇▇.▇▇▇▇).
I. DEFINITIONS.
(a) "Affiliate" means any corporation or other business entity in which
either party to this Agreement owns or controls, directly or indirectly, at
least fifty percent (50%) of the outstanding stock or other voting rights
entitled to elect directors, or in which such party is owned or controlled
directly or indirectly by at least fifty percent (50%) of the outstanding stock
or other voting rights entitled to elect directors; but in any country where the
local law does not permit foreign equity participation of at least fifty percent
(50%), then "Affiliate" includes any company in which such party owns or
controls or is owned or controlled by, directly or indirectly, the maximum
percentage of outstanding or voting rights permitted by local law.
Notwithstanding the foregoing, the term "Affiliate" shall not include Genentech,
Inc. a company located at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
(b) "AFFX Development Allocation" for a Product for a period shall mean
[**] for that Product for that period.
(c) "AFFX Development Cost" shall mean for any particular Product: (i) an
amount of development cost determined [**], unless the parties mutually agree by
written amendment of such Development Plan to increase that number. AFFX
Development Cost shall [**.]
(d) "Chip" shall mean a genetic analysis chip developed by and
manufactured by AFFX according to the Specifications for the Kit in which that
Chip is to be incorporated (or according to Exhibit A, as applicable).
(e) "Chip Cost" shall mean the per Chip cost for each Chip associated with
a Product as calculated according to the method specified in the Development
Plan for that Product (as determined in accordance with generally accepted
accounting principles). Chip Cost for a particular Chip will vary [**.] Chip
Cost will include, without limitation, [**.] Chip Cost shall [**.] Chip Cost
shall [**.]
(f) "Deductible Expenses" for a period with respect to a Product shall
mean [**,] except for other expenses expressly and unambiguously excluded from
RMS Deductible Expenses in this Agreement. RMS agrees that all Deductible
Expenses for a period will be used
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fully and only for the foregoing activities in that period. [**.]
Notwithstanding the foregoing, RMS shall pay AFFX (according to the terms and
conditions of this Agreement) the Chip Cost of all Chips purchased from AFFX,
and the cost of all Readers purchased from AFFX, whether such Chips or
Readers are acquired for promotional purposes or otherwise.
(g) "Deficit" will have the meaning specified in the definition of "Gross
Profit" below.
(h) "Delivery Dates" shall mean the dates designated as such in Section
VI(b)(i).
(i) "Development Costs" for a Product shall mean [**.]
(j) "Development Cost Recoupment Percentage" with respect to each Product
shall mean a percentage of [**.]
(k) "Development Plan" and "Development Schedule" shall mean,
respectively, a plan and schedule determined according to the procedure in
Section IV(a).
(l) "Executive Steering Committee" shall have the meaning specified in
Section VIII(a)(v) below.
(m) "Gross Profit" for a period shall mean [**.] A negative Gross Profit
may also be referred to as a "Deficit."
(n) "Joint Business Revenue" for a period with respect to a Product shall
mean [**] for that Product during that period.
(o) "Kits" shall mean RMS-manufactured human diagnostic assay kits
incorporating a Chip and containing all necessary reagents according to the
Specifications (or according to Exhibit A, as applicable) for that Kit and sold
for a single kit price.
(p) "Long Range Forecast" shall mean the forecast designated as such in
Section V(a).
(q) "Manufacturing Facility Fee" shall mean [**].
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(r) "Marketing Plan" shall mean for a Product for any period a written
plan that RMS will develop in conjunction with AFFX, for that Product for such
period, that the Executive Steering Committee will approve. The Marketing Plan
will set sales and marketing strategy for that Product, including, without
limitation, plans for marketing materials, clinical trials and studies under
Article IV, trade show participation, advertising, marketing efforts and the
like that AFFX will perform and the amounts to be expended and reimbursed by
RMS, as well as a non-binding suggested pricing structure for that Product and
reports that the parties will exchange related to marketing efforts. Unless a
suggested pricing structure for a period is specifically changed in a new
Marketing Plan, it will remain in effect and be deemed part of the then
applicable Marketing Plan.
(s) "Net Sales" means the [**.]
(t) "PMA" shall mean a pre-market approval with the US Food and Drug
Administration ("FDA").
(u) "Products" shall mean (i) those Kits set forth on Exhibit A, (ii) any
other Kits developed hereunder by mutual agreement of the parties. However,
"Products" shall not include any of the foregoing that, the Executive Steering
Committee determines are either technically or commercially not feasible, or
with respect to which RMS loses rights under relevant sections of this
Agreement.
(v) "Project Coordinator" shall have the meaning specified in Section
VIII(a).
(w) "Proprietary Information" shall have the meaning specified in Section
VII(e).
(x) "Reader" shall mean a reader for reading a particular Chip provided by
a party to the other party. "AFFX Readers" shall mean Readers provided by AFFX
as specified on Exhibit B. "RMS Readers" shall mean Readers provided by RMS
conforming to specifications determined as needed for a particular Chip, as
shown in the Development Plan for such Chip. Neither party shall be responsible
for any development, production, sales or other costs associated with the other
party's Readers (and such costs shall not be included in or reflected in
Development Costs for any Product or Chip).
(y) "RMS Development Allocation" for a Product for a period shall mean
[**.]
(z) "RMS Development Cost" shall mean for any particular Product [**.]
RMS Development Cost shall [**.] RMS Development Cost shall [**.]
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(aa) "RMS Manufacturing Cost" shall mean for any particular Product [**.]
RMS Manufacturing Cost will include [**.] RMS Manufacturing Cost shall [**.]
(bb) "Specifications" shall mean specifications determined according to the
procedure in Section IV(a). Notwithstanding the Specifications developed by such
procedure, Specifications of specific characteristics for Chips to be sold as
part of a Product shall adhere to the base technical specifications for minimum
and maximum Chip sizes and features set forth in Exhibit C ("Chip
Specifications").
(cc) "Third Party Patents" shall mean the patents specified in Exhibit D.
II. NO OTHER IMPLIED LICENSE; DISTRIBUTION RESTRICTIONS.
(a) Except as expressly and unambiguously granted in this Agreement, no
transfer or sale of Chips to or by RMS and its Affiliates in any form will
constitute any implied or express right or license under AFFX's intellectual
property other than as follows:
(i) a worldwide, nonexclusive, nontransferable right to market and
sell chips developed by AFFX prior to the Effective Date, for
Diagnostic Applications, in accordance with all the terms and
conditions of this Agreement (but only if and to the extent, and on
the terms, agreed by action of the Executive Steering Committee it
being understood that AFFX' current HIV and p53 chips are being made
available pursuant to this Agreement and the attached Exhibit A),
including, without limitation, the following. RMS shall have no right
to, and will not: (a) sell or distribute chips bundled with any
products or services except as part of Products (and will not further
bundle the Products, directly or indirectly, with other products);
(b) make or have made chips in any manner (except as permitted in
accordance with Section VI(g)); (c) sell, distribute or use chips or
Products for any purpose or use in the fields of detection and/or
identification of bacterial and fungal microorganisms or the
determination of antibiotic resistance of such bacterial and fungal
microorganisms;
(ii) a worldwide, exclusive, nontransferable right to market and sell
any jointly developed Kits or Products, for Diagnostic Applications,
in accordance with all the terms and conditions of this Agreement,
including, without limitation, the following. RMS shall have no right
to, and will not: (a) sell or distribute Chips bundled with any
products or services except as part of Products (and will not further
bundle the Products, directly or indirectly, with other products);
(b) make or have made Chips in any manner (except as permitted in
accordance with Section VI(g)); (c) sell, distribute or use Chips
or Products for any purpose or
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use in the fields of detection and/or identification of bacterial and
fungal microorganisms or the determination of antibiotic resistance
of such bacterial and fungal microorganisms. As used herein Diagnostic
Applications shall mean the use of products for the measurement,
observation or determination of attributes, characteristics, diseases,
traits or other conditions of human beings for diagnostic purposes
wherein the results of such use are communicated directly or
indirectly to a patient or a patient's primary caregiver, wherein such
products shall include reagents, enzymes, or materials, suitable to
perform a nucleic acid amplification based assay.
(b) Except as otherwise agreed to by the parties, RMS shall have no rights
to market or sell, or permit others to market or sell any chips not developed
under this Agreement.
(c) Except as otherwise permitted hereunder, during the term of this
Agreement AFFX will not market or sell, or permit others to market or sell,
Chips developed in accordance with this Agreement. The foregoing does not apply
to: (i) the marketing or sale of newly developed chips that perform functions
similar to the functions performed by Chips (for avoidance of doubt a newly
developed chip includes, without limitation, any chip where thirty percent (30%)
of more of the masks of such chip are different than the masks of a Chip
developed under this Agreement.; or (ii) any Chips developed by AFFX prior to
the Effective Date or other than under this Agreement, even if such Chips are
used in Kits or Products hereunder.
III. PAYMENTS.
(a) INITIAL DESIGN FEES. With respect to each Product, RMS shall pay AFFX
a design fee of [**] for each Chip shift mask set design and a design fee of
[**] for each Chip non-shift mask set design that AFFX needs to create to
implement the Development Plan for such Product. RMS will pay such fees [**] on
receipt of AFFX's invoice for each mask design, which AFFX shall issue when AFFX
receives the complete target sequence for each such mask set design.
(b) MANUFACTURING FACILITY FEES. Upon adoption of each Development Plan,
RMS shall pay AFFX the Manufacturing Facility Fee specified in such Development
Plan. AFFX shall make available to RMS the records specifically showing how each
Manufacturing Facility Fee is spent. If circumstances result in an underage or
an overage in connection with a Manufacturing Facility Fee, the Executive
Steering Committee shall resolve, in good faith, adjustment of the Manufacturing
Facility Fee and the impact on the corresponding Product and Development Plan
and on each party's respective Development Cost and Manufacturing Cost. The
parties acknowledge that AFFX, at its sole discretion, may apply the
Manufacturing Facility Fee to the fabrication or establishment of new
facilities, or to the renovation of, addition of new lines to, or
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other modification or extension of existing facilities. The Manufacturing
Facility Fee shall be recovered only pursuant to subsection (d) below.
(c) CHIP SALES. In connection with the supply arrangement under Article VI
below, for each Chip (as the partial purchase price for such Chip) RMS shall pay
AFFX the Chip Cost, [**] after receipt of AFFX's invoice therefor, which will be
issued on or after shipping of such Chips.
(d) PRODUCT SALES. For each Product sold or distributed by RMS, RMS shall
pay to AFFX [**] the Joint Business Revenue (as the balance of the purchase
price for the Chips), and retain [**] of the Joint Business Revenue. For each
Product sold or distributed by RMS where there are Gross Profits, RMS shall,
[**].
(e) PAYMENT TERMS. All payments to AFFX under this Agreement are
non-refundable and non-creditable (where "non-creditable" means only that
payments made to AFFX are not intended as advances against future payments,
and shall not otherwise affect the recovery of RMS Development Costs and
Manufacturing Facility Fees as described herein). All such payments are to be
made in US dollars in the United States. All conversions from foreign
currency to US dollars will be determined on the last business day of each
calendar quarter in the calendar quarter in which the payment, revenue,
expenditure, or other transaction involving non-US currency occurred, based
on the exchange rate of Wall Street Journal on the last day of that quarter.
In no event will AFFX be required: (i) to make up any portion of any Deficit,
(ii) to make any refund of any amounts paid to AFFX, or (iii) to apply any
Deficit or anticipated Deficit to reduce or eliminate any payment hereunder.
Late payments shall bear interest at the lower of: (i) the Bank of America
[**] or (ii) the maximum rate allowed by law. All prices and payments to AFFX
are exclusive of taxes, duties, shipping, withholdings and the like, all of
which will be borne by RMS (except taxes or withholdings based on AFFX's
income, but only if such taxes and withholdings are fully creditable against
US income taxes, RMS supplies any and all necessary or requested certificates
and documentation, and RMS gives AFFX notice of the
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requirement for such taxes and withholdings and allows AFFX the opportunity
to protest their assessment and collection.
(f) RECORDS AND AUDIT RIGHTS. RMS shall keep complete and accurate records
reflecting all information necessary or useful in verifying the accuracy of each
payment report. AFFX shall also keep complete and accurate records reflecting
all information necessary or useful in verifying the accuracy of its
manufacturing and development costs relevant to determination of payments to be
made by RMS to AFFX hereunder. Each party shall have the right to hire an
independent certified public accountant to inspect all such records so required
to be kept by the other (which accountant shall be reasonably acceptable to the
other party and shall agree in writing to keep all information confidential
except as needed to disclose any discovered discrepancies); provided, such
audit: (i) is conducted during normal business hours, (ii) is conducted no more
often then once per [**] (unless a discrepancy greater than [**] is discovered
in favor of the auditing party), and (iii) is conducted only after the auditing
party has given thirty days prior written notice. The auditing party shall bear
the full cost and expense of such audit, unless a discrepancy in excess of [**]
of the underage in favor of the auditing party is discovered, in which event the
audited party shall bear the full cost and expense of such audit. Regardless of
the amount of discrepancy discovered, all discrepancies (and interest thereon)
shall be immediately due and payable.
IV. PRODUCT DEVELOPMENT.
(a) PRODUCT SPECIFICATIONS. With respect to each Product, other than those
listed on Exhibit A, AFFX and RMS shall mutually and in good faith determine
written specifications ("Specifications") and a written development plan and
schedule ("Development Plan" and "Development Schedule") for such Product. Any
changes to the Specifications, Development Plan or Development Schedule for a
Product shall be subject to the mutual, good faith written approval of the
parties, which approval shall not be unreasonably withheld.
For the Products listed on Exhibit A, draft Specifications,
Development Plans and Development Schedules are attached in Exhibit E. The
parties acknowledge that such drafts are incomplete as of the Effective Date.
The Executive Steering Committee shall complete the Specifications, Development
Plans and Development Schedules for the Products listed in Exhibit A within
sixty (60) days after the Effective Date.
(b) AFFX DEVELOPMENT OBLIGATIONS. For each Product AFFX will use
reasonable commercial efforts to perform the following activities: (i) undertake
and complete non-clinical development of the applicable Chip according to the
Specifications, including manufacturing scale-up, (ii) prepare and provide RMS
with non-clinical development information for each applicable Chip necessary for
PMA and similar filings and (iii) supply clinical trial units of
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Chips; provided that RMS provides as soon as reasonably possible on a
continuing basis forecasts of its clinical supply needs. In addition to
payments under Section III, RMS will, promptly upon invoice, reimburse AFFX
for Chip Costs in connection with the foregoing.
(c) RMS DEVELOPMENT OBLIGATIONS.
(i) RMS shall at its expense use reasonable commercial efforts to
expeditiously obtain in the United States, and each country set forth
in the Development Plan all applicable regulatory approvals for each
Product and to perform the following activities with respect to each
Product, at its own expense and in accordance with the Development
Plan and Development Schedule: (A) undertake and complete non-clinical
development of the Product according to the Specifications, including
manufacturing scale-up and development of any readers, assay
equipment, or other non-Chip equipment necessary for marketing of the
Product (provided, however, that no part of the costs of such non-Chip
development shall be made part of RMS or AFFX Development Costs or
Deductible Expenses), (B) complete all preclinical work (other than
that for which AFFX is obligated under subsection (b) above) for the
Product, (C) conduct and manage all clinical trials, including
statistical analysis and evaluation, and (D) prepare and file all
applicable IDE and PMA and similar documents and obtain all necessary
regulatory, reimbursement and pricing approvals in the United States,
and each country in the Development Plan. RMS further agrees to use
its reasonable efforts to file a PMA (or similar filing) for each
Product set forth on Exhibit A in the United States and each country
in the Development Plan within [**] from the date of the US IDE filing
and to file PMA's in the United States and similar filings in the
countries in the Development Plan for each other Product within [**]
of the applicable US IDE filing. RMS's obligations hereunder shall
include, without limitation, all testing and other activity necessary
or useful to ensure compliance with applicable FDA and other Approval
Entity rules and regulations. Within [**] after a Product becomes a
Product, RMS will provide AFFX with a summary pre-clinical and
clinical plan in reasonable detail (and reasonably acceptable to AFFX)
for such Product for the United States and each country in the
Development Plan and will provide a status report and update with
respect thereto every [**].
(ii) RMS shall be entitled to submit the filings in its name;
provided, however, that notwithstanding anything else in this
Agreement, AFFX shall have: (A) at all times full access to all
filings and all information and data relevant to any Product or former
Product and (B) the right to fully use and cross reference all such
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submissions, approvals, information and data and, if RMS ceases active
marketing or distribution in a country with respect to a Product or if
a Product ceases to be a Product, to have such submissions, approvals,
information and data transferred to AFFX's name. RMS will assist AFFX
in doing so and will provide AFFX with copies of all the foregoing
promptly as they are created.
(iii) In the event that AFFX believes that RMS is not using
reasonable efforts to perform any of the foregoing responsibilities
with respect to a Product and that such failure has or may cause a
delay with respect to the Development Schedule or the aforementioned
period for PMA (or similar) filing, AFFX will provide written notice
of this to RMS. Upon such written notice, RMS will have ninety (90)
days to explain to AFFX in writing the cause of the delay. If the
delay is caused by RMS's failure to use reasonable efforts to perform
any of the foregoing responsibilities, AFFX shall have the right to
terminate this Agreement with respect to the particular Product if the
time from IND filing to PMA (or similar) filings referred to above is
or will be exceeded.
(d) MUTUAL SUPPORT. Each party may, upon mutual agreement of the parties,
support the other by performing on the other's behalf certain of the other's
obligations under subsections (b) or (c) as applicable. The supporting party
will be paid for any such support within [**] of any invoice amounts equal to
that party's Development Costs. The party being supported may request a good
faith non-binding estimate of such costs.
V. LONG RANGE FORECASTS AND PERFORMANCE MEASURES.
(a) LONG RANGE FORECASTS. As part of each Development Plan, RMS shall
designate at least [**] of the countries listed in such Development Plan
including the United States as "Forecast Countries." If a Development Plan lists
fewer than [**] countries including the United States then all countries in such
Development Plan shall be Forecast Countries. At least [**] prior to anticipated
commencement by RMS of clinical trials in support of an anticipated regulatory
submission for a Product in a Forecast Country, RMS will supply AFFX, in a form
reasonably acceptable to AFFX, with a preliminary [**] forecast for such
Forecast Country. At least [**] prior to any anticipated regulatory submission
or a similar filing in a Forecast Country, RMS will supply AFFX with a [**]
forecast for each applicable Product in such Forecast Country. Upon the first
marketing approval in each Forecast Country, but in no case less than [**] prior
to the first significant marketing activity or other Product launch activity in
such Forecast Country, RMS will supply AFFX with a [**] forecast for each
applicable Product for such Forecast Country reasonably acceptable to AFFX (a
"Long Range Forecast"); upon any subsequent marketing approval in any such
Forecast Country, RMS will update the then applicable Long Range Forecast for
such Forecast Country in a manner reasonably acceptable to
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AFFX to reflect the new Product or indication. [**] before the end of the
period covered by any Long Range Forecast (whether defined in this sentence
or the preceding sentence), RMS will supply AFFX with a [**] forecast for
each Product for such Forecast Country reasonably acceptable to AFFX (also a
"Long Range Forecast"). Each [**] forecast will contain forecasts for each
Product [**]. If the parties cannot agree on a Long Range Forecast (or update
thereto) for a Forecast Country the matter shall be resolved by the Executive
Steering Committee. All forecasts will be reasonable and made in good faith
with the understanding that AFFX will rely on those forecasts for planning
its production infrastructure. Each Long Range Forecast will be broken down
by [**] Product in a form that is reasonably acceptable to AFFX.
(b) MARKETING EFFORTS. RMS will use diligent efforts to market and
distribute each Product in the United States and each country specified in the
Development Plan for that Product.
(c) PERFORMANCE MEASURES. If Net Sales of any Product in a particular
country in any applicable period are not [**] (i) AFFX shall have the right to
market, sell and otherwise distribute (or appoint third parties, including
without limitation other distributors, to conduct such activities) such Product
in such country, and (ii) AFFX may terminate this Agreement with respect to such
Product in such country.
Neither RMS nor any of its Affiliates will develop, manufacture,
purchase, distribute or market (or have or enter into any agreement or
arrangement with respect to) any product based on or incorporating a genetic
analysis chip or probe array component competitive with a Product as long as
this Agreement remains in effect for such Product; provided, however, that RMS
may consult with AFFX (which consultations shall be in good faith) regarding
specific business proposals that may include such competing products if such
competing products and/or proposal would not materially detract from the sale of
Products hereunder.
If this Agreement has been terminated [**] in the Development Plan for
a particular Product, the Executive Steering Committee shall determine the
commercial feasibility of continuing to market that Product in any countries.
VI. SUPPLY AND MARKETING.
(a) AFFX SUPPLY OBLIGATIONS. Subject to the terms and conditions of this
Agreement, AFFX shall use reasonable commercial efforts to fill (by full or
partial shipment) RMS's orders for Chips, FOB AFFX's plant.
(b) QUANTITY; FORECASTS; ORDERS.
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(i) With respect to each Product, and in addition to the Long Range
Forecasts of Section V(a), RMS shall deliver to AFFX (i) at least [**]
prior to the [**] in which the first commercial sale of such Product
is projected to occur, a forecast of RMS's quantity requirements for
each Chip to be incorporated into such Product, broken down by form
(wafer or packaged), for the [**] in which the first commercial sale
of such Product is projected to occur and (ii) at least [**] prior to
the calendar quarter in which the first commercial sale of such
Product is projected to occur, RMS's firm order and requested delivery
dates ("Delivery Dates") for such Chips for such [**] (which shall be
subject to agreement by AFFX, which agreement shall not be
unreasonably withheld). Thereafter, RMS shall deliver to AFFX within
[**] after the beginning of each calendar quarter, RMS's firm order
and Delivery Dates for Chips for such Product for the next [**] and a
forecast of its quantity requirements for such Chips for the
subsequent [**]. If a required forecast or order for a [**] is not
timely submitted for a Product, the immediately preceding forecast of
Chips for that Product for that [**] shall become the new forecast or
order; if there is no preceding forecast for a [**], the forecast or
order for the immediately preceding [**] shall become the forecast or
order.
(ii) For each forecast, the quantity of any Chip forecast for
delivery in the first of the [**] forecast shall be not less than [**]
or more than [**] of the most recent previous forecast for such [**].
In addition, firm orders for a particular [**] shall not cover a
quantity of Chips more than [**] larger or smaller than the quantity
of such Chips ordered for the previous [**].
(iii) The total quantity of each Chip ordered by RMS for delivery
in any [**] may not be less than [**] of RMS's most recent required
forecast for such Chip for such [**]. In addition, AFFX's supply
obligation will not extend to more than [**] of RMS's most recent
forecast for such Chip for such [**]. If a RMS Chip requirement for
any [**] exceeds [**] of RMS's most recent forecast for such Chip for
such [**], AFFX and RMS will discuss in good faith the additional
amount, if any, that AFFX is willing to supply consistent with its
other obligations and RMS will adjust its order accordingly. RMS shall
indemnify AFFX and reimburse it promptly upon request for all
reasonable out of pocket costs and expenses, (including the cost of
carrying increased inventory if requested by RMS to do so) to the
extent caused by any deviation in order quantities from the limits
imposed by the preceding sentence, and AFFX will act reasonably to
mitigate any such costs and expenses.
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(iv) RMS shall also be able to order from AFFX the AFFX Readers and
other non-Chip products set forth on Exhibit B, pursuant to AFFX'
[**], and AFFX will use reasonable efforts to fill such orders,
subject to acceptance of each order by AFFX at its sole discretion.
During the term of this Agreement if [**] provided, however, that RMS
adopts all of the additional restrictions, obligations and license
limitations imposed in such agreement.
(v) RMS's forecasts and orders of Chips, AFFX Readers, and other
non-Chip products shall separately identify items to be used as free
samples, shall be made on a country-by-country basis, and shall
reflect its good faith expectations of customer demand. RMS shall act
in a commercially reasonable manner to schedule orders to avoid
creating over or under capacity problems for AFFX. RMS may indicate on
each order of Chips whether such Chips should be shipped as wafers
(the default if the order does not otherwise clearly indicate) or cut
into individual chips and packaged ready for use with AFFX Readers.
For any orders of Chips packaged for AFFX Readers, RMS must also order
the AFFX Readers that will be used, sold or distributed with such
Chips from or through AFFX.
(c) RMS'S MARKETING OBLIGATIONS. RMS represents, warrants and covenants:
[**.]
(d) CHIP CONFORMANCE. At the time of shipment all Chips shall conform
[**.]
(e) MANUFACTURING PROCESS CHANGES. Prior to implementing any material
change to its manufacturing processes for Chips, AFFX shall give notice to RMS
of sufficient details of the planned change to allow RMS to consider the impact
of such change on regulatory requirements for the Products associated with such
Chips. The Executive Steering Committee shall determine how such changes can be
made to minimize such regulatory impact, and AFFX shall endeavor to accommodate
input from the Executive Steering Committee and RMS to achieve the changes with
minimum regulatory impact.
(f) RMS SUPPLY OBLIGATIONS. AFFX may, at AFFX' discretion, order from RMS
any available RMS Readers for use in markets that are not directly competitive
with the markets for Products (as shown in the Development Plans for such
Products) according to terms and conditions, prices and discounts to be mutually
determined by the parties. During the term of this Agreement if RMS [**;]
provided, however, that AFFX adopts all of the additional restrictions,
obligations and license limitations imposed in such agreement.
14
(g) SECOND SOURCE RIGHT. If AFFX: (i) fails to fill at [**] of the
Delivery Dates for such firm orders, or (ii) fails to supply any Chips to RMS
for more than [**] where there are properly forecast firm orders for Chips
outstanding; then RMS may provide written notice that RMS wants AFFX to
establish a second source for Chips. If RMS exercises its right to have AFFX
establish a second source for Chips, then AFFX shall use diligent efforts to
establish such a second source reasonably acceptable to RMS, and will negotiate
a license for the necessary rights and technology with a suitable royalty with
such second source; provided that if such second source is not able to provide
any Chips to RMS within [**] after RMS makes the request for a second source,
then RMS may provide written notice to AFFX that RMS wishes to manufacture Chips
itself. If RMS exercises its right to manufacture, AFFX will grant RMS a
worldwide, non-exclusive, non-transferable license with right of sublicense
under its rights in Chips to make, have made, import, distribute, offer for
sale, and sell Chips, subject to negotiation and on-going payment of a
reasonable royalty to AFFX, and only for so long as AFFX remains unable to
supply Chips. Nothing in this section will relieve either party of its other
obligations under this Agreement.
VII. OWNERSHIP; DEVELOPMENT LICENSE; CONFIDENTIALITY.
(a) OWNERSHIP. Intellectual Property shall mean all inventions (whether or
not patentable), works of authorship, know-how, designs, and other developments
created during the course of this Agreement. The parties will jointly own the
rights in Intellectual Propertry created hereunder except that (i) Intellectual
Property relating to [**] and (ii) Intellectual Property relating to [**.] Any
assignments necessary to accomplish the foregoing are hereby made and each party
will execute such further documents as may be reasonably requested by the other
with respect thereto. Neither party will be obligated under this Agreement to
obtain [**.] Notwithstanding the foregoing: [**] shall not be subject to the
provisions of this Article VII.
(b) JOINTLY OWNED INTELLECTUAL PROPERTY. Jointly owned Intellectual
Property may be exploited by either party for uses by such party and its
Affiliates and wholly-owned subsidiaries [**.] Jointly owned Intellectual
Property may be non-exclusively licensed to third parties by either party
worldwide provided that [**.] With respect to patent rights in jointly owned
Intellectual Property, the parties will mutually discuss whether to obtain,
maintain, enforce or defend such patent rights and if one refuses to take any
such joint action requested by the other, the other may proceed at its own
expense and the party refusing to take action will similarly assist such other
party; no such action will change the foregoing ownership provisions, but a
party that unilaterally enforces the joint patent rights (after refusal by the
other to do so jointly) will be entitled to retain all proceeds of such action.
(c) NON-JOINTLY OWNED INTELLECTUAL PROPERTY. Each party shall have the
right, but not the obligation, to file patent applications relating to any
Intellectual Property solely owned by
15
such party ("Owning Party"). If the Owning Party does not file a patent
application in such solely owned Intellectual Property ("Invention") within
[**] after requested to do so by the other party ("Non-owning Party"), then
the Owning Party shall advise the Non-owning Party of its decision not to
file such patent applications within [**] thereafter, and the Non-owning
Party shall have the right, but not the obligation, to file such patent
applications for such Inventions on behalf of the Owning Party; provided,
however, that such filing shall not result in any change in ownership in any
Invention. [**.] Each party hereby grants to the other party a non-exclusive,
worldwide, royalty-free license to make, have made, use, sell, offer to sell,
import, export, and otherwise fully exploit the Inventions assigned to such
party pursuant to subsection (a) above; provided, however, that such license
shall not be sublicensable and shall not extend to any underlying technology
or rights in such Invention.
(d) DEVELOPMENT LICENSE. Subject to the terms and conditions of this
Agreement and terminating upon the termination of this Agreement for any reason,
each party hereby agrees not to assert any patents, copyrights, trade secret
rights, and other proprietary or intellectual property rights owned or
controlled by such party against the other party provided that the other party's
use of such rights is solely in fulfilling its obligations hereunder.
(e) CONFIDENTIALITY. Each party may give the other party (hereinafter
respectively "Disclosing Party" and "Receiving Party") access to its
"Proprietary Information", as herein defined. "Proprietary Information" shall
mean any and all information, data, know-how, whether written, oral or computer
readable, technical or non-technical, including financial information obtained
from the other party, as well as tangible materials, including without
limitation samples, chemicals, software, models, drawings or diagrams,
including, without limitation, all Intellectual Property. Proprietary
Information shall not include any information which a party has expressly
authorized for publication. Disclosing Party and Receiving Party, on behalf of
itself and its employees, agree that any Proprietary Information disclosed by
Disclosing Party will be disclosed on the following terms:
(i) Proprietary Information disclosed by Disclosing Party to
Receiving Party hereunder will be received and held in strict
confidence for a period of five (5) years from the date of disclosure
of such Proprietary Information to the Receiving Party.
(ii) Receiving Party will take all reasonable steps as are necessary
to prevent the unauthorized disclosure of Proprietary Information to
third parties.
(iii) Receiving Party will not utilize Proprietary Information except
for the express purposes of: (A) performing this Agreement;
(B) for use in obtaining approval by the FDA and any Approval
Entities; or (C) as otherwise expressly
16
permitted in this Agreement, unless it obtains Disclosing Party's
prior written consent to such utilization.
(iv) Receiving Party may disclose Proprietary Information to its
agents, consultants, collaborators and clinical investigators only to
the extent necessary to fulfill the obligations of this Agreement,
file and prosecute applications, respond to governmental and
regulatory inquiries, or as otherwise expressly provided in this
Agreement, provided such party(s) agrees to be bound by the terms of
this Section VII(e).
(f) EXCEPTIONS. The commitments set forth in subsection (e)(i) - (iv)
above shall not extend to any information disclosed by one party to the other if
one or more of the following conditions should exist:
(i) information which is now or becomes a part of the public domain
without the fault of Receiving Party;
(ii) information which Receiving Party can reasonably demonstrate
through written documentation was already known to Receiving Party at
the time of disclosure;
(iii) information which is subsequently disclosed to Receiving Party
by a third party having no obligation of confidentiality to Disclosing
Party or its representatives;
(iv) information which is independently developed by or for Receiving
Party and Receiving Party can prove this by documentary evidence; or
(v) information which is required by law, regulation, rule, act or
order of any governmental authority to be disclosed. Receiving Party
shall give Disclosing Party timely, prior notification if it intends
to disclose any Proprietary Information pursuant to the terms of the
preceding sentence in order that Disclosing Party shall have an
opportunity to intervene to limit or prevent disclosure of such
Proprietary Information; Receiving Party shall disclose only the
minimum Proprietary Information required to be disclosed in order to
comply with its disclosure obligations.
Notwithstanding the foregoing, anything assigned to a party in
connection with this Agreement shall be deemed Proprietary Information of such
party disclosed by such party to the other and exceptions (ii) and (iv) above
will not be applicable thereto.
17
VIII. MANAGEMENT OF RELATIONSHIP; DISPUTES.
(a) PROJECT COORDINATORS. Each party will have a "Project Coordinator."
The Project Coordinators will be responsible for day-to-day communications
between the parties.
(i) Either party may change its Project Coordinator at any time and
from time to time by giving the other party written notice.
(ii) The Project Coordinators will meet every month to discuss the
progress of the development and marketing efforts and, if applicable,
to exchange information.
(iii) Project Coordinators are not authorized to amend, alter or
extend this Agreement in any manner.
(iv) If the Project Coordinators disagree on any issue, and cannot
resolve it within two (2) weeks, either Project Coordinator may submit
the problem to the Executive Steering Committee.
(v) An Executive Steering Committee will consist of three (3) people
from each party and shall meet at least quarterly to:
(1) Twice per year adopt or readopt an operating budget and a
Marketing Plan. Within the parameters of this Agreement, the
budget and Marketing Plan will describe the major financial and
non-financial responsibilities of the parties (e.g.,
manufacturing, sales, marketing, development, etc. and major
objectives and Gross Profits.)
(2) Quarterly review performance versus budget.
(3) Take actions to ensure Gross Profit objectives are met,
including Gross Profit optimization.
(4) Consider possible new products that might be suitable for
collaboration between the parties, and
(5) Timely adopt Long Range Forecasts.
(vi) Each party: (A) may change its members of the Executive Steering
Committee at any time and (B) will cause its members of the Executive
Steering Committee to act reasonably, in good faith and consistent
with both the terms and
18
spirit of this Agreement. The Executive Steering Committee may
take action only by the unanimous written consent of all members
identified above. If an issue remains unresolved after
consideration by the Executive Steering Committee, any Executive
Steering Committee member may escalate it to the Chief Executive
Officers of the parties for resolution.
(b) DISPUTE ESCALATION. With the exception of interim equitable relief,
neither party will institute legal proceedings regarding a bona fide dispute
until it has exercised reasonable good faith efforts to achieve resolution
through the foregoing procedure.
IX. TERM AND TERMINATION.
(a) TERM. Unless terminated earlier as provided herein, this Agreement
shall commence on the Effective Date and with respect to each Product this
Agreement shall have an initial term of ten (10) years starting on the date of
adoption of the Development Plan for such Product, and the Agreement as a whole
shall terminate after termination with respect to all Products.
(b) TERMINATION. This Agreement may be terminated in its entirety by a
party for cause immediately upon the occurrence of any of the following events:
(i) If the other ceases to do business, or otherwise terminates its
business operations;
(ii) If the other shall fail to promptly secure or renew any license,
registration, permit, authorization or approval essential to the
conduct of its business in the manner contemplated by this Agreement
in any significant country, or if any such license, registration,
permit, authorization or approval is revoked or suspended and not
reinstated within sixty (60) days or diligent efforts are not being
made to effect such reinstatement; provided, however, that such
termination shall only extend to the countries and Products affected
by the failure of such party to maintain such license, registration,
permit, authorization or approval;
(iii) If the other materially breaches any material provision of
this Agreement and fails to cure such breach within sixty (60) days of
written notice describing the breach and the intent of such party to
terminate if such breach is not cured within such period (provided,
however, that nothing in this subsection shall prevent a party from
seeking immediate, injunctive relief where appropriate to protect
Proprietary Information or such party's proprietary or intellectual
property rights); or
19
(iv) If the other shall seek protection under any bankruptcy,
receivership, trust deed, creditors arrangement, composition or
comparable proceeding, or if any such proceeding is instituted against
the other (and not dismissed within 120 days); or
(v) With respect to a particular Product, if RMS fails to order the
minimum quantities of such Product specified in the Development Plan
therefor, then, upon thirty (30) days of written notice to RMS
describing the breach and AFFX's intent to terminate if such breach is
not cured within thirty (30) days, AFFX may terminate this Agreement
but only with respect to such Product.
(c) EFFECT OF TERMINATION. Sections IV(c)(ii), VI(c), Articles II, III
(except III(a)), VII, IX, X, XI, XII, and XIII, all rights to payment, and
remedies for breaches shall survive termination of this Agreement. Obligations
of the parties under firm orders for purchase and delivery of Chips at the time
of such termination shall remain in effect, except that in the case of
termination under Section IX(b) the terminating party may elect whether
obligations under firm orders will remain in effect; provided, however, that
AFFX will not be obligated with respect to any Delivery Dates (for firm orders
or otherwise) more than [**] after termination if the reason for termination is
not due to a breach by AFFX, or more than [**] after termination if the reason
for termination is due to a breach by AFFX. Each party will promptly return all
Proprietary Information of the other (and all copies and abstracts thereof) that
it is not entitled to use under the surviving terms of this Agreement, provided
that the parties shall not be required to return archival or backup copies of
such Proprietary Information as long as efforts are taken to erase such copies
where practicable, and such copies remain subject to the confidentiality
obligations of this Agreement. Termination of this Agreement with respect to a
particular Product in a particular country shall have the same effect as
termination of this entire Agreement, but with respect to the applicable Product
(including Chips) and country only. Termination is not the sole remedy under
this Agreement and, whether or not termination is effected, all other remedies
will remain available.
X. WARRANTY AND WARRANTY DISCLAIMERS.
[**.] EXCEPT FOR THE FOREGOING WARRANTIES, AND, IN CONNECTION WITH CHIPS, THE
WARRANTY OFFERED TO END USERS IN AFFX'S THEN-CURRENT END USER CHIP SALES
AGREEMENT AFFX DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE CHIPS OR PRODUCTS OR PERFORMANCE OR NONINFRINGEMENT, DOES NOT
MAKE ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO CHIPS OR PRODUCTS,
SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE AND DOES NOT MAKE ANY WARRANTY
TO RMS'S CUSTOMERS OR AGENTS. AFFX HAS NOT
20
AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS
PROVIDED ABOVE.
XI. LIMITED LIABILITY.
EXCEPT IN CONNECTION WITH ARTICLE VII OF THIS AGREEMENT, [**.] THIS ARTICLE DOES
NOT LIMIT LIABILITY FOR BODILY INJURY OF A PERSON.
XII. INDEMNITY.
(a) INDEMNIFICATION OF RMS FROM INFRINGEMENT. AFFX shall indemnify, defend
and hold harmless RMS and its officers, directors, employees, agents and
representatives and RMS's Affiliates, their officers, directors, employees,
agents and representatives ("RMS Indemnitees") [**] excluded from AFFX's
indemnity obligation by the immediately preceding sentence.
Where [**.]
21
(b) INDEMNITY RELATING TO PRODUCTS.
(i) INDEMNIFICATION BY RMS RMS shall indemnify, defend and hold
harmless AFFX and its officers, directors, employees, agents and
representatives and AFFX' Affiliates, their officers, directors,
employees, agents and representatives ("AFFX Indemnitees") from and
against any and all liabilities, claims, demands, actions, suits,
losses, damages, costs and expenses (including reasonable attorneys'
fees) paid to third parties (collectively, "Damages") [**.]
(ii) INDEMNIFICATION BY AFFX AFFX shall indemnify, defend and hold
harmless RMS and its officers, directors, employees, agents and
representatives and RMS Affiliates, their officers, directors,
employees, agents and representatives ("RMS Indemnitees") from and
against any and all liabilities, claims, demands, actions, suits,
losses, damages, costs and expenses (including reasonable attorneys'
fees) paid to third parties (collectively, "Damages") [**.]
(c) CONDITIONS OF INDEMNIFICATION If either party proposes to seek
indemnification from the other under the provisions of this Article XII, it
shall notify the other party within fifteen (15) days of receipt of notice of
any such claim or suit and shall cooperate fully with the other party in the
defense of such claims or suits. No settlement or compromise shall be binding
on a party hereto without its prior written consent.
XIII. GENERAL.
(a) AMENDMENT AND WAIVER -- Except as otherwise expressly provided herein,
any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or in any particular
instance and either retroactively or prospectively) only with the written
consent of the parties. However, it is the intention of the parties that this
Agreement be controlling over additional or different terms of any purchase
order, confirmation, invoice or similar document, even if accepted in writing by
both parties, and that waivers and amendments shall be effective only if made by
non-pre-printed agreements clearly understood by both parties to be an amendment
or waiver. The failure of either party to enforce its rights under this
Agreement at any time for any period shall not be construed as a waiver of such
rights.
(b) GOVERNING LAW AND LEGAL ACTIONS -- This Agreement shall be governed by
and construed under the laws of the State of California and the United States
without regard to conflicts of laws provisions thereof and without regard to the
United Nations Convention on
22
Contracts for the International Sale of Goods. In any action or proceeding to
enforce rights under this Agreement, the prevailing party shall be entitled
to recover costs and attorneys' fees.
(c) HEADINGS -- Headings and captions are for convenience only and are not
to be used in the interpretation of this Agreement.
(d) NOTICES -- Notices under this Agreement shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery courier
service or mailed by certified or registered mail, return receipt requested to
the parties to the addresses first set forth above or as amended by notice
pursuant to this subsection. If not received sooner, notice by mail shall be
deemed received 5 days after deposit in the US mails.
(e) ENTIRE AGREEMENT -- This Agreement supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
(f) SEVERABILITY -- If any provision of this Agreement is held to be
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
(g) RELATIONSHIP OF PARTIES -- The parties hereto expressly understand and
agree that the other is an independent contractor in the performance of each and
every part of this Agreement. Each party (the "Indemnifying Party") is solely
responsible for all of its employees and its labor costs and expenses arising in
connection with this Agreement and is responsible for and will indemnify the
other party from any and all claims, liabilities, damages, debts, settlements,
costs, attorneys' fees, expenses, and liabilities arising out of conduct or
omissions of the Indemnifying Party's employees relating to personal injury or
▇▇▇▇▇▇▇'▇ compensation.
(h) ASSIGNMENT -- This Agreement and the rights hereunder are not
transferable or assignable without the prior written consent of the parties
hereto, and any such attempted assignment or transfer shall be void and without
effect, except for rights to payment and except to a person or entity who
acquires all or substantially all of the assets or business of a party, whether
by sale, merger or otherwise.
(i) PUBLICITY AND PRESS RELEASES -- Except to the extent necessary under
applicable laws the parties agree that no press releases or other publicity
relating to the substance of the matters contained herein will be made without
joint approval. A press release announcing this Agreement will be jointly
developed and released by the parties.
23
(j) FORCE MAJEURE -- No liability or loss of rights hereunder shall result
to either party from delay or failure in performance (other than payment) caused
by force majeure, that is, circumstances beyond the reasonable control of the
party affected thereby, including, without limitation, acts of God, fire, flood,
war, government action, compliance with laws or regulations (including, without
limitation, those related to infringement), strikes, lockouts or other serious
labor disputes, or shortage of or inability to obtain material or equipment.
(k) REMEDIES -- Except as otherwise expressly stated in this Agreement,
the rights and remedies of a party set forth herein with respect to failure of
the other to comply with the terms of this Agreement (including, without
limitation, rights of full termination of this Agreement) are not exclusive, the
exercise thereof shall not constitute an election of remedies and the aggrieved
party shall in all events be entitled to seek whatever additional remedies may
be available in law or in equity.
(l) BASIS OF BARGAIN -- EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL
BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT
AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER
THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS AGREEMENT.
AFFX RMS
By /s/ By /s/
------------------------- -------------------------
Name ▇▇▇▇▇▇▇ P.A. ▇▇▇▇▇, Ph.D. Name ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------- -------------------------
Title President and CEO Title Vice President
------------------------- -------------------------
24
EXHIBIT A
INITIAL PRODUCTS
- HIV drug resistance profiling
- p53 mutation detection
25
EXHIBIT B
NON-CHIP PRODUCTS
- HP Readers
- AFFX Fluidics Station
- AFFX GeneChip Operating System Software
26
EXHIBIT C
BASE TECHNICAL SPECIFICATIONS
[**]
27
EXHIBIT D
THIRD PARTY PATENTS
[**]
28
EXHIBIT E
[**]
29
