0000912057-03-000242.txt : 20030515 0000912057-03-000242.hdr.sgml : 20030515 20030515171922 ACCESSION NUMBER: 0000912057-03-000242 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFFYMETRIX INC CENTRAL INDEX KEY: 0000913077 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 770319159 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28218 FILM NUMBER: 03706098 BUSINESS ADDRESS: STREET 1: 3380 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051 BUSINESS PHONE: 4085226000 MAIL ADDRESS: STREET 1: 3380 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051 10-Q 1 a2111472z10-q.htm 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NO. 0-28218

AFFYMETRIX, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		77-0319159 (I.R.S. Employer Identification Number)
3380 CENTRAL EXPRESSWAY SANTA CLARA, CALIFORNIA (Address of principal executive offices)		95051 (Zip Code)

Registrant's telephone number, including area code: (408) 731-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ý No o

COMMON SHARES OUTSTANDING ON APRIL 30, 2003: 58,795,089

AFFYMETRIX, INC.

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)	2
		Condensed Consolidated Balance Sheets at March 31, 2003 and December 31, 2002	2
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002	3
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	27
	Item 5.	Other Information	28
	Item 6.	Exhibits and Reports on Form 8-K	37
SIGNATURES			39

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

			March 31, 2003			December 31, 2002
						(Note 1)
ASSETS
Current assets:
	Cash and cash equivalents		$	25,947		$	67,888
	Available-for-sale securities			402,662			293,570
	Accounts receivable			54,067			65,986
	Inventories			28,132			26,739
	Prepaid expenses			3,105			3,380
	Other current assets			162			390

		Total current assets		514,075			457,953
Property and equipment, net				69,824			72,836
Acquired technology rights, net				30,123			23,039
Goodwill				18,601			18,601
Notes receivable from employees				1,563			1,674
Other assets				25,187			27,300

			$	659,373		$	601,403

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable and accrued liabilities		$	64,148		$	66,864
	Deferred revenue			34,314			19,381

		Total current liabilities		98,462			86,245
Deferred revenue				53,412			—
Other long-term liabilities				8,178			8,322
Convertible subordinated notes				368,900			368,900
Common stock purchase rights				3,000			3,000
Stockholders' equity:
	Common stock			588			585
	Additional paid-in capital			359,779			355,515
	Notes receivable from stockholders			(741	)		(720	)
	Deferred stock compensation			(7,320	)		(8,015	)
	Accumulated other comprehensive income			781			515
	Accumulated deficit			(225,666	)		(212,944	)

		Total stockholders' equity		127,421			134,936

			$	659,373		$	601,403

Note 1:

The condensed consolidated balance sheet at December 31, 2002 has been derived from the audited consolidated financial statements at that date included in the Company's Form 10-K for the fiscal year ended December 31, 2002.

See accompanying notes.

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

				Three Months Ended March 31,
				2003			2002
Revenue:
	Product sales			$	46,754		$	46,057
	Product related revenue				14,394			11,154

		Total product and product related revenue			61,148			57,211
	Royalties and other revenue				3,154			4,954
	Revenue from Perlegen Sciences				2,509			5,971

			Total revenue		66,811			68,136

Costs and expenses:
	Cost of product sales				16,820			19,435
	Cost of product related revenue				2,193			1,259
	Cost of revenue from Perlegen Sciences				2,509			5,971
	Research and development				15,905			16,689
	Selling, general and administrative				27,975			23,490
	Amortization of deferred stock compensation				695			3,707
	Amortization of purchased intangibles				281			281
	Charge for acquired in-process research and development				10,096			—

			Total costs and expenses		76,474			70,832

Loss from operations					(9,663	)		(2,696	)
Interest income and other, net					2,375			4,244
Interest expense					(4,900	)		(4,929	)

Net loss before income taxes					(12,188	)		(3,381	)
Income tax provision					(534	)		(200	)

Net loss				$	(12,722	)	$	(3,581	)

Basic and diluted net loss per share				$	(0.22	)	$	(0.06	)

Shares used in computing basic and diluted net loss per share					58,549			57,809

See accompanying notes.

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

					Three Months Ended March 31,
					2003			2002
Cash flows from operating activities:
	Net loss				$	(12,722	)	$	(3,581	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation and amortization				5,742			5,221
		Amortization of intangible assets				1,101			900
		Amortization of investment premiums, net				59			1,024
		Stock compensation				695			3,707
		Realized gain on sales of investments				(345	)		(1,301	)
		Write down of equity investments				496			—
		Amortization of debt offering costs				441			442
		Accretion of interest on notes receivable from stockholders				(21	)		(22	)
		Accretion of interest on notes receivable				(90	)		—
		Gain on disposal of equipment				(59	)		—
		Change in operating assets and liabilities:
			Accounts receivable, net			11,919			4,279
			Inventories			(1,393	)		(518	)
			Prepaid expenses			275			(2	)
			Other assets			193			310
			Accounts payable and accrued liabilities			(3,078	)		(12,845	)
			Deferred revenue			68,345			279

				Net cash provided by (used in) operating activities		71,558			(2,107	)

Cash flows from investing activities:
	Capital expenditures					(2,671	)		(9,449	)
	Purchases of available-for-sale securities					(258,569	)		(83,003	)
	Proceeds from the sales or maturities of available-for-sale securities					150,097			100,145
	Collection of notes receivable from employees					1,131			—
	Issuance of notes receivable to employee					(1,000	)		—
	Purchase of non-marketable equity investment					(1,000	)		—
	Purchase of technology rights					(5,904	)		—

				Net cash (used in) provided by investing activities		(117,916	)		7,693

Cash flows from financing activities:
	Issuance of common stock					4,267			636

				Net cash provided by financing activities		4,267			636

				Effect of exchange rate changes on cash		150			67
Net (decrease) increase in cash and cash equivalents						(41,941	)		6,289
Cash and cash equivalents at beginning of period						67,888			58,795

Cash and cash equivalents at end of period					$	25,947		$	65,084

See accompanying notes.

AFFYMETRIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(UNAUDITED)

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of Affymetrix, Inc. ("Affymetrix" or the "Company") and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included.

Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

Reclassifications

Certain amounts in 2002 have been reclassified to conform to the 2003 presentation.

Revenue Recognition

Product Sales

Product sales, including revenues from Perlegen Sciences, include sales of GeneChip® probe arrays and related instrumentation. Probe array and instrumentation revenues are recognized when earned, which is generally upon shipment and transfer of title to the customer and fulfillment of any significant post-delivery obligations. Reserves are provided for anticipated warranty expenses at the time the associated revenue is recognized.

Product Related Revenue

Product related revenue includes subscription fees earned under EasyAccess™ agreements and license fees, milestones and royalties earned from collaborative product development and supply agreements, service revenue, revenue from custom probe array design fees and software revenue.

Revenue from subscription fees is recorded ratably over the term of the related EasyAccess™ agreements.

The Company has entered into collaborative arrangements which generally include a research and product development phase and a manufacturing and supply phase. These arrangements may include up-front nonrefundable license fees, milestones, product supply and distribution arrangements and royalties based on the sale of final product by the partner. In these arrangements, up-front nonrefundable payments are generally recognized over the research and product development phase, milestones are recognized when earned, revenue from the sale of product is recognized as a component of product sales when the product is shipped to the partner and royalties are recognized when earned,

generally when the partner sells the final product to end customers. Any payments received which are not yet earned are included in deferred revenue.

Revenue related to extended warranty arrangements is deferred and recognized over the applicable periods. Revenue from custom probe array design fees associated with our of GeneChip® CustomExpress™ products are recognized when the associated products are shipped. In 2002, custom probe array design fees were included in research revenue based on the fact that the Company had not fully commercialized this product offering.

Royalties and Other Revenue

Royalties and other revenue includes royalties earned from third party license agreements and research revenue which mainly consists of amounts earned under government grants. Additionally, other revenue includes fees earned through the license of the Company's intellectual property. In 2002, research revenue also includes custom probe array design fees.

Royalty revenues include amounts earned from the sale of products by third parties which have been licensed under the Company's intellectual property portfolio. Royalty revenues are recognized under the terms of the related agreements generally upon manufacture or shipment of a product by a licensee.

Research revenue is mainly comprised of amounts earned under government grants. Research revenue is recorded in the period in which the associated costs are incurred. The costs associated with these grants are reported as research and development expense.

License revenues are generally recognized upon execution of the agreement unless the Company has continuing performance obligations, in which case the license revenue is recognized ratably over the period of expected performance.

Derivative Instruments

During the normal course of business, the Company is exposed to foreign currency exchange risk arising from transactions that are denominated in currencies other than the United States dollar. To manage these risks associated with foreign currency exchange, the Company began utilizing derivative financial instruments in the first quarter of 2003. Derivatives are financial instruments that derive their value from one or more underlying financial instruments. As a matter of policy, the Company may only enter into derivative instruments that are either foreign currency forward contracts or swaps. The Company's derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. In addition, the Company does not enter into derivative contracts for trading or speculative purposes, and is not party to any leveraged derivative instrument. The notional amounts of derivatives do not represent actual amounts exchanged by the parties to the instrument, and, thus, are not a measure of exposure to the Company through its use of derivatives. Additionally, the Company enters into derivative agreements only with highly rated counterparties and does not expect to incur any losses resulting from non-performance by other parties.

Basic and Diluted Net Loss Per Share

Basic net loss per share is calculated using the weighted average number of shares of common stock outstanding during the period less the weighted-average number of shares of common stock subject to repurchase. Diluted net loss per share gives effect to dilutive stock options and warrants (calculated based on the treasury stock method) and convertible debt (calculated on an as-if-converted method). The calculation of diluted net loss per share excludes shares of potential common stock if their effect is anti-dilutive.

Shares used in computing basic and diluted net loss per share is as follows (in thousands):

	Three Months Ended March 31,
	2003		2002
Weighted-average shares outstanding	58,676		58,034
Less: Weighted-average shares of common stock subject to repurchase	(127	)	(225	)

Weighted-average shares used in computing basic and diluted net loss per share	58,549		57,809

The excluded securities, on an actual outstanding basis, were as follows (in thousands):

	March 31,
	2003	2002
Options and warrants	10,759	11,520
Convertible subordinated notes	3,803	3,810
Common stock subject to repurchase	122	206

Stock-Based Compensation

At March 31, 2003, the Company has six stock-based employee and non-employee director compensation plans, which are more fully described in the Company's Annual Report on Form 10-K. The Company has elected to continue to follow the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations for these plans. During the three month ended March 31, 2003, no stock-based compensation cost is reflected in net loss, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant in accordance with FASB Statement No. 148. During the three months ended March 31, 2002, employee-based stock compensation relates to the modification of certain previously granted awards.

The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, as amended by SFAS 148, to stock-based employee compensation (in thousands, except per share amounts):

	Three Months Ended March 31,
	2003			2002
Net loss—as reported	$	(12,722	)	$	(3,581	)
Add: Stock-based employee compensation expense included in reported net loss		—			1,605
Deduct: Total stock-based employee compensation expense determined under fair value method for all awards		(7,466	)		(13,092	)

Pro forma net loss	$	(20,188	)	$	(15,068	)

Loss per share:
Basic loss per common share—as reported	$	(0.22	)	$	(0.06	)

Basic loss per common share—pro forma	$	(0.34	)	$	(0.26	)

Recent Accounting Pronouncements

In November 2002, the FASB issued the FASB Interpretation No. 45 (or FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," which clarifies the requirements for a guarantor's accounting and disclosures of certain guarantees issued and outstanding. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The disclosure requirements in this Interpretation were effective beginning in January 2003. The adoption of FIN 45 did not have a significant impact on the Company's consolidated financial statements (See Note 11).

entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The adoption of the disclosure requirements of FIN 46 did not have a significant impact on the Company's consolidated financial statements. The complete adoption of FIN 46 is not expected to have a material impact on the Company's consolidated financial statements.

NOTE 2—PRODUCT SALES AND PRODUCT RELATED REVENUE

The components of product sales are as follows (in thousands):

		Three Months Ended March 31,
		2003		2002
Probe arrays and related supplies		$	39,065	$	34,987
Instruments			7,689		11,070

	Total product sales	$	46,754	$	46,057

The components of product related revenue are as follows (in thousands):

		Three Months Ended March 31,
		2003		2002
Subscription fees		$	7,575	$	7,981
Service and other			4,441		3,173
License fees and milestone revenue			2,378		—

	Total product related revenue	$	14,394	$	11,154

NOTE 3—COLLABORATIVE AGREEMENTS

The Company has agreements with many entities to develop and test probe arrays for the detection of certain gene sequences, mutations or organisms. Under such agreements, the Company may receive development fees and may receive payments upon achievement of certain technical goals.

F. Hoffmann-La Roche Ltd. ("Roche")

In February 1998, Affymetrix entered into a non-exclusive collaborative development agreement with Roche to initially develop probe array-based diagnostic products. Under the terms of the agreement the parties are collaborating to develop mutually agreed upon arrays directed to selected genes, as well as associated instrumentation and reagents. In January 2003, the Company expanded its collaboration with Roche by granting Roche access to its GeneChip® technologies to develop and commercialize GeneChip® laboratory tests for DNA analysis, genotyping and resequencing applications, as well as for RNA expression analysis, in a broad range of human disease areas. Using

Affymetrix' GeneChip® technologies, Roche is seeking to develop and market tests for diseases such as cancer, osteoporosis, cardiovascular, metabolic, infectious and inflammatory diseases. Under the terms of the collaborative agreement, Roche paid Affymetrix an up-front, nonrefundable license fee of $70.0 million. Affymetrix will recognize this amount as a component of product related revenue over the research and product development phase which is expected to approximate five years. The agreement, which is subject to Roche's option to terminate on December 31, 2007 or any time on or after June 2, 2013, with one year's prior notice, includes a broad range of other compensation payable by Roche to Affymetrix throughout the life of the agreement based on annual royalties on sales of diagnostic kits, milestone payments for technical and commercial achievements, a manufacturing and supply agreement, and related license installments.

NOTE 4—INVENTORIES

Inventories consist of the following (in thousands):

		March 31, 2003		December 31, 2002
Raw materials		$	8,667	$	8,023
Work-in-process			3,345		2,597
Finished goods			16,120		16,119

	Total	$	28,132	$	26,739

NOTE 5—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following (in thousands):

		March 31, 2003		December 31, 2002
Accounts payable		$	16,756	$	15,174
Accrued compensation and related liabilities			11,675		16,687
Accrued interest on convertible subordinated notes			1,300		5,789
Accrued sales and use tax			3,021		3,135
Accrued legal			4,294		2,897
Accrued royalties			19,460		15,645
Other			7,642		7,537

	Total	$	64,148	$	66,684

NOTE 6—COMPREHENSIVE INCOME (LOSS)

The components of comprehensive income (loss) are as follows (in thousands):

	Three Months Ended March 31,
	2003			2002
Net loss	$	(12,722	)	$	(3,581	)
Foreign currency translation adjustment		150			67
Unrealized loss on equity investment		—			(2,927	)
Unrealized gain (loss) on debt securities		334			(3,853	)
Unrealized loss on hedging contracts		(218	)		—

Comprehensive loss	$	(12,456	)	$	(10,294	)

NOTE 7—PERLEGEN SCIENCES, INC.

In October 2000, Affymetrix formed Perlegen Sciences, Inc. ("Perlegen") as a wholly-owned subsidiary. In connection with the formation of Perlegen, the Company contributed to Perlegen the rights to use certain intellectual property with no cost basis and we have rights to use and commercialize certain data generated by Perlegen in the array field. From Perlegen's inception through March 30, 2001 the operating results of Perlegen were consolidated into the Company's financial statements. On March 30, 2001, Perlegen completed a private financing with outside investors raising approximately $100.0 million, which reduced our ownership position in Perlegen to approximately 53%. Two of the outside investors in this financing included trusts of which two of the Company's current directors are trustees. The investments by these trusts represented less than $0.6 million of the total financing for Perlegen. In connection with Perlegen's March 30, 2001 financing, the Company, and certain of its affiliates, including its chief executive officer Stephen P.A. Fodor, placed a portion of its collective holdings (approximately 8%) into an irrevocable voting trust, relinquishing certain voting rights and, as such, the Company relinquished control of Perlegen. Under the terms of the voting trust, the trustee, U.S. Bank Corp. (formerly State Street Bank and Trust Company of California), was required to vote the shares held in the trust on all matters subject to shareholder vote in proportion to the votes of all non-Affymetrix shareholders.

On January 9, 2003, the Company entered into an agreement with Perlegen to license certain Perlegen technologies that are expected to accelerate the Company's plan to design and commercialize microarrays for whole genome and candidate region DNA analysis. In addition to broadening our access to Perlegen technologies, this licensing agreement advances by approximately three years the Company's prior commercialization rights to the Perlegen single nucleotide polymorphism (SNP) database for development of chip-based products. Under the terms of the licensing agreement, the Company paid Perlegen a total of $15.0 million in cash and granted Perlegen a $3.0 million credit which will be applied against the margin on the Company's future sales of chips to Perlegen. This credit expires in three years. This new agreement also eliminates any future royalty obligations for array products that the Company commercializes based on information contained in Perlegen's SNP database. Affymetrix engaged an independent third party to conduct a valuation analysis of the licenses acquired. Based upon that independent valuation, Affymetrix recorded a charge of approximately

$10.1 million related to in-process research and development in the first quarter of 2003. The remaining $4.9 million was recorded as an intangible asset and will be amortized over the useful lives of the various components of the asset from six to ten years.

The charge associated with licensing the Perlegen SNP database was included in acquired in-process research and development in the consolidated statement of operations as the database has no alternative future use to Affymetrix. Specifically, the database contains over one million SNPs and will be used in the Company's research and development program to develop high quality, high density DNA analysis microarray products. The value of the SNP database license was determined by estimating the net present value of future cash flows expected from the sale of DNA analysis products developed from this database using a present value discount rate of 30.0%, which is based on Affymetrix' weighted cost of capital adjusted for the risks associated with the in-process research project in which the SNP database content will be used. Upon entering into this license agreement in January 2003, the Company's DNA analysis development program was approximately 33% complete.

The estimates used by the Company in valuing the licensed technologies were based upon assumptions the Company believes to be reasonable but which are inherently uncertain and unpredictable. The Company's assumptions may be incomplete or inaccurate, and no assurance can be given that unanticipated events and circumstances will not occur. Accordingly, actual results may vary from the projected results.

On January 27, 2003, Perlegen announced that it completed the first closing of a private financing round led by Maverick Capital, raising an aggregate of approximately $30.2 million. The terms of the voting trust allow it to be terminated once Affymetrix' and its affiliates cease to own 45% or more of the voting securities of Perlegen. As a result of this financing, the Company's collective equity ownership in Perlegen (including that of its affiliates) was reduced to approximately 43%. Accordingly, following Perlegen's January 27, 2003 financing, the voting trust has been terminated. In connection with Perlegen's January 27, 2003 financing, the Company agreed to have the right to designate two members of Perlegen's Board of Directors which shall consist of not more than seven members. Previously, the Company had the right to designate three of the seven members of Perlegen's Board. The Company's two current designees to Perlegen's Board are also members of our Board of Directors.

The Company accounts for its ownership interest in Perlegen on the equity method as the Company and its affiliates do not control the strategic, operating, investing and financing activities of Perlegen. As the Company's investment in Perlegen has no basis for accounting purposes under generally accepted accounting principles, the Company has not recorded any proportionate share of Perlegen's operating losses in its financial statements since the completion of Perlegen's initial financing.

NOTE 8—INTANGIBLE ASSETS

Acquired technology rights are comprised of licenses to technology covered by patents to third parties and are amortized over the expected useful life of the underlying patents, which range from one to fifteen years. Accumulated amortization of these rights amounted to $5.4 and $5.3 million at March 31, 2003 and December 31, 2002, respectively.

The expected future annual amortization expense of our acquired technology rights and other intangible assets is as follows (in thousands):

For the Year Ending December 31,	Amortization Expense
2003, remainder thereof	$	3,455
2004		3,477
2005		3,460
2006		3,443
2007		3,443
Thereafter		13,502

Total expected future annual amortization	$	30,780

NOTE 9—ACCOUNTING FOR DERIVATIVE INSTRUMENTS

The Company has international operations and during the normal course of business is exposed to foreign currency exchange risks as a result of transactions that are denominated in currencies other than the United States dollar. During the quarter ended March 31, 2003, the Company entered into foreign currency forward contracts to manage a portion of the volatility of transactions that are denominated in foreign currencies. The Company's forward contracts have maturities of less than one year. In addition, these contracts are specific cash flow hedges and corresponding gains and losses on these contracts will be recorded as a component of other comprehensive income in the Company's condensed consolidated statements of operations upon settlement. As of March 31, 2003, all of the Company's foreign currency forward contracts were open; therefore, no gain or loss was recognized in earnings during the period.

NOTE 10—LEGAL PROCEEDINGS

General

Affymetrix has been in the past and continues to be a party to various arbitration and litigation proceedings, which has consumed and may in the future continue to consume substantial financial and managerial resources and which could adversely affect its business, financial condition and results of operations. If in any pending or future intellectual property litigation involving the Company or its collaborative partners, the Company is found to have infringed the valid intellectual property rights of third parties, the Company, or its collaborative partners, could be subject to significant liability for damages, could be required to obtain a license from a third party, which may not be available on reasonable terms or at all, or could be prevented from manufacturing and selling its products. In addition, if the Company is unable to enforce its patents and other intellectual property rights against others, or if its patents are found to be invalid or unenforceable, third parties may more easily be able to introduce and sell DNA array technologies that compete with the Company's GeneChip® technology, and its competitive position could suffer. Affymetrix expects to devote substantial financial and managerial resources to protect its intellectual property rights and to defend against the claims

described below as well as any future claims asserted against them. Further, because of the substantial amount of discovery required in connection with any litigation, there is a risk that confidential information could be compromised by disclosure.

Applera Corporation Litigation

On July 5, 2000, Applera Corporation and related corporate plaintiffs ("Applera"), filed a lawsuit in the United States District Court for the District of Delaware alleging that certain of the Company's products infringe five Applera patents related to processes for making oligonucleotides and reagents that the Company purchases from Applera licensed vendors. Applera served Affymetrix with the complaint on October 16, 2000. On January 30, 2001, Affymetrix filed a motion to dismiss Applera's lawsuit pending in Delaware for lack of subject matter jurisdiction. On January 25, 2001, Affymetrix filed a declaratory judgment action against Applera in the United States District Court for the Southern District of New York seeking, among other things, a declaration that the Company has not infringed any of Applera's subject patents, which lawsuit was stayed by the Court in New York pending the Delaware Court's ruling on the aforementioned motion to dismiss. On September 27, 2001, the District Court for the District of Delaware granted the Company's motion to dismiss for lack of subject matter jurisdiction. On October 3, 2001, the New York Court restored the New York case to active status.

On April 17, 2002, the New York Court heard oral argument on Applera's motions to bifurcate or dismiss certain of Affymetrix' claims, including claims of breach of contract and antitrust violations by Applera. On May 24, 2002, the Court rejected Applera's motion to dismiss Affymetrix' breach of contract and antitrust claims and agreed to bifurcate and stay discovery on antitrust issues as well as on all damages issues. Following the Court's order, on June 6, 2002, Applera filed its counterclaim in the New York case alleging infringement of four of the five patents originally asserted in the Delaware action. Affymetrix filed a motion seeking summary judgment that the last to expire of Applera's subject patents had, in fact, expired as a matter of law in 2001 in accordance with a terminal disclaimer that had been filed in the Patent Office during prosecution of that patent. On December 24, 2002 the court granted Affymetrix' motion. As a result of the Court's ruling, it is now clear that all of the patents asserted by Applera have expired. Discovery is ongoing and no trial date has been set.

Affymetrix believes that Applera's claims are without merit and that all of Applera's patents subject to this litigation have now expired. However, Affymetrix cannot be sure that it will prevail in these matters. Affymetrix' failure to successfully defend against Applera's allegations could result in a material adverse effect on its business, financial condition and results of operations.

Purported Shareholder Class Action Lawsuit

2003. The lawsuit alleges, among other things, that Affymetrix' January 29, 2003 financial guidance was misleading and GlaxoSmithKline plc sold Affymetrix shares during the first quarter of 2003 while in possession of material nonpublic information.

Affymetrix believes that the claims set forth in this purported shareholder class action lawsuit are without merit. However, Affymetrix cannot be sure that it will prevail in these matters. Affymetrix' failure to successfully defend itself against these allegations could result in a material adverse effect on its business, financial condition and results of operations.

Administrative Litigation and Proceedings

The Company's intellectual property is expected to be subject to significant additional administrative and litigation actions. For example, in Europe and Japan, third parties are expected to oppose significant patents that the Company owns or controls. Currently, Multilyte Ltd. and ProtoGene Laboratories, Inc. are parties that have filed oppositions against Affymetrix' EP 0-619-321 Patent in the European Patent Office, and PamGene B.V. has filed an opposition against Affymetrix' EP 0 728 520. Also, Abbott Laboratories, Applera, Clondiag, CombiMatrix and Roche Diagnostics filed oppositions against Affymetrix' EP 0 834 575. These procedures will result in the patent being either upheld in its entirety, allowed to issue in amended form in designated European countries, or revoked.

At this time, the Company cannot determine the outcome of any of the matters described above.

NOTE 11—COMMITMENTS

Product Warranty

In connection with the disclosure requirements of FIN 45 adopted by the Company at December 31, 2002, the following table depicts product warranty activity during the three months ended March 31, 2003 (in thousands):

Balance at December 31, 2002	$	1,924
New warranties issued		420
Warranty activity		(601	)

Balance at March 31, 2003	$	1,743

Extension of Credit

In July 2001, the Company made an extension of credit to an executive of the Company of up to $1.2 million. Proceeds from the extension of credit may be drawn in one lump-sum or in periodic draws. As of March 31, 2003, no amounts under the extension of credit were drawn. Any amounts drawn from the extension of credit would be due on the earliest of four years from when the extension of credit is drawn upon or when the executive leaves the Company. Interest would accrue at the IRS imputed rate of interest and is payable after two years.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations as of March 31, 2003 and for the three month periods ended March 31, 2003 and 2002 should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2002.

All statements in this quarterly report that do not discuss past results are forward-looking statements. Forward-looking statements are based on management's current expectations and are therefore subject to certain risks and uncertainties, including those discussed under the section titled "Risk Factors" included in this report. Specific uncertainties which could cause our actual results to differ materially from those projected include, but are not limited to, risks of our ability to achieve and sustain higher levels of revenue, higher gross margins, reduced operating expenses, market acceptance, personnel retention, uncertainties relating to the length and severity of the current global economic weakness, the reduction in overall capital spending in the academic and biotechnology sectors, changes in government funding policies, unpredictable fluctuations in quarterly revenues, uncertainties related to cost and pricing of Affymetrix products, dependence on collaborative partners, uncertainties relating to sole source suppliers, uncertainties relating to FDA, and other regulatory approvals, competition, risks relating to intellectual property of others and the uncertainties of patent protection and litigation.

We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

Overview

We have developed and intend to establish our GeneChip® system as the platform of choice for acquiring, analyzing and managing complex genetic information. Our integrated GeneChip® platform consists of disposable DNA probe arrays containing gene sequences on a chip, certain reagents for use with the probe arrays, a scanner and other instruments used to process the probe arrays, and software to analyze and manage genetic information obtained from the probe arrays. We sell our products directly to pharmaceutical, biotechnology, agrochemical, diagnostics and consumer products companies as well as academic research centers, private foundations and clinical reference laboratories in the United States, Europe and Japan. We also sell some of our products through authorized distributors, principally in the Asia Pacific region.

We have incurred operating losses each year since our inception, including a loss of approximately $12.7 million during the three months ended March 31, 2003 and, as of such date, had an accumulated deficit of approximately $225.7 million. Our losses have resulted principally from costs incurred in research and development, manufacturing and from selling, general and administrative costs associated with our operations, including the costs of patent related litigation. These costs have exceeded our revenues and interest income, which to date have been generated principally from product sales, technology access and other license fees, royalties, collaborative research and development agreements, and from interest earned on cash and investment balances. Our ability to generate significant revenues and become profitable is dependent in large part on our ability to expand our customer base, increase sales of our current products to existing customers, manage our expense growth, as well as our ability to enter into additional supply, license and collaborative arrangements and on our ability and that of our collaborative partners to successfully manufacture and commercialize products incorporating our technologies in new applications and in new markets.

Our operating results vary and depend on numerous factors. Revenues are principally impacted by the volume and price of product sales; the timing of orders and deliveries of products, design fees, royalties, license fees, and other research revenues under collaborative and licensing agreements.

Expenses are principally impacted by the cost of goods for products, the magnitude and duration of research and development, sales and marketing and general and administrative expenses. General and administrative expenses are particularly subject to variation as a result of fluctuations in the intensity of legal activities associated with our on-going intellectual property litigation and recent purported securities class action litigation.

Our operating results may also fluctuate significantly depending on other factors. To maintain or gain market acceptance of our products in the face of the introduction of new products by our competitors, we may have to reduce or discount the price of our products resulting in an adverse impact on revenues and gross margins. Other factors that may significantly impact our operating results include: the outcome of ongoing or future litigation; the need for additional royalty bearing licenses; adoption of new technologies; the cost, quality and availability of reagents and components; regulatory actions; and third-party reimbursement policies.

F. Hoffmann-La Roche Ltd.

In January 2003, we expanded our collaboration with Roche by granting Roche access to our GeneChip® technologies to develop and commercialize GeneChip® laboratory tests for DNA analysis, genotyping and resequencing applications, as well as for RNA expression analysis, in a broad range of human disease areas. Using our GeneChip® technologies, Roche is seeking to develop and market tests for diseases such as cancer, osteoporosis, cardiovascular, metabolic, infectious and inflammatory diseases. Under the terms of the collaborative agreement, Roche paid us an up-front, nonrefundable license fee of $70.0 million. We will recognize this amount as a component of product related revenue over the research and product development phase which is expected to approximate five years. The agreement, which is subject to Roche's option to terminate on December 31, 2007 or any time on or after June 2, 2013, with one year's prior notice, includes a broad range of other compensation payable by Roche to us throughout the life of the agreement based on annual royalties on sales of diagnostic kits, milestone payments for technical and commercial achievements, a manufacturing and supply agreement, and related license installments.

Perlegen Sciences, Inc.

On January 9, 2003, we entered into an agreement with Perlegen to license certain Perlegen technologies that are expected to accelerate our plan to design and commercialize microarrays for whole genome and candidate region DNA analysis. In addition to broadening our access to Perlegen technologies, this licensing agreement advances by approximately three years our prior commercialization rights to the Perlegen single nucleotide polymorphism (SNP) database for development of chip-based products. Under the terms of the licensing agreement, we paid Perlegen a total of $15.0 million in cash and granted Perlegen a $3.0 million credit which will be applied against the margin on our future sales of chips to Perlegen. This credit expires in three years. This new agreement also eliminates any future royalty obligations for array products that we commercialize based on information contained in Perlegen's SNP database. We engaged an independent third party to conduct a valuation analysis of the licenses acquired. Based upon that independent valuation, we recorded a charge of approximately $10.1 million related to in-process research and development in the first quarter of 2003. The remaining $4.9 million was recorded as an intangible asset and will be amortized over the useful lives of the various components of the asset from six to ten years.

On January 27, 2003, Perlegen announced that it completed the first closing of a private financing round led by Maverick Capital, raising an aggregate of approximately $30.2 million. As a result of this financing, our collective equity ownership in Perlegen (including that of its affiliates) was reduced to approximately 43%. The terms of the voting trust allow it to be terminated once we and our affiliates cease to own 45% or more of the voting securities of Perlegen. Accordingly, following Perlegen's January 27, 2003 financing, the voting trust has been terminated. In connection with Perlegen's

January 27, 2003 financing, we agreed to have the right to designate two members of Perlegen's Board of Directors which shall consist of not more than seven members. Previously, we had the right to designate three of the seven members of Perlegen's Board. Our two current designees to Perlegen's Board are also members of our Board of Directors.

Results of Operations

Revenue

Amounts in 2002 have been reclassified to conform to the 2003 presentation, exclusive of revenue from Perlegen Sciences.

Three Months Ended March 31, 2003 and 2002

The components of product sales are as follows (in thousands):

		Three Months Ended March 31,
		2003		2002
Probe arrays and related supplies		$	39,065	$	34,987
Instruments			7,689		11,070

	Total product sales	$	46,754	$	46,057

Product Sales. Product sales increased to $46.8 million for the three months ended March 31, 2003 compared to $46.1 million for the three months ended March 31, 2002. The increase was primarily due to growth in unit sales and an increase in the average sales price of GeneChip® probe arrays and related supplies. These increases were partially offset by a decrease in instrument revenue related to a decline in unit sales of our GeneChip® instrument platform primarily as a result of cautious capital spending by academic and biotechnology customers. Revenue from sales of probe arrays and related supplies increased to $39.1 million from $35.0 million for the three months ended March 31, 2003 and 2002, respectively. Revenue from sales of instruments decreased to $7.7 million from $11.1 million for the three months ended March 31, 2003 and 2002, respectively.

The components of product related revenue are as follows (in thousands):

		Three Months Ended March 31,
		2003		2002
Subscription fees		$	7,575	$	7,981
Service and other			4,441		3,173
License fees and milestone revenue			2,378		—

	Total product related revenue	$	14,394	$	11,154

Product Related Revenue. Product related revenue increased to $14.4 million for the three months ended March 31, 2003 compared to $11.2 million for the three months ended March 31, 2002. The increase was primarily due to an increase in license fees earned of $2.4 million in connection with the Roche agreement signed in January 2003, an increase in service revenue and the inclusion of custom probe array design fees in 2003 due to the full commercialization of our custom product offering. These increases were partially offset by a decrease in software revenue related to a decline in sales of our GeneChip® instrument platform primarily as a result of cautious capital spending by academic and biotechnology customers. Revenues from custom probe array design fees are reported in royalties and other revenue in 2002. Subscription fees earned under EasyAccess™ agreements decreased to

$7.6 million from $8.0 million for the three months ended March 31, 2003 and 2002, respectively. Service and other revenue, which primarily consists of service revenue in 2003 and 2002 and custom probe array design fees in 2003, increased to $4.4 million from $3.2 million for the three months ended March 31, 2003 and 2002, respectively. License fees and milestone revenue, which consists of license fees earned in connection with the Roche agreement signed in January 2003, is $2.4 million for the three months ended March 31, 2003.

Royalties and Other Revenue. Royalties and other revenue decreased to $3.2 million for the three months ended March 31, 2003 compared to $5.0 million for the three months ended March 31, 2002. The decrease was primarily due to a decrease in new license agreements and the reporting of custom probe array design fees as product related revenue starting in January 2003 due to the full commercialization of our custom product offering. The decrease was partially offset by increased research activity related to an existing grant. In 2002, custom probe array design fees are reported in royalties and other revenue.

Revenue From Perlegen Sciences, Inc. Revenue from the sale of wafers to Perlegen, an affiliated party, decreased to $2.5 million for the three months ended March 31, 2003 compared to $6.0 million for the three months ended March 31, 2002. The decrease was consistent with the decrease in Perlegen's contractual obligations.

Cost of Product Sales and Cost of Product Related Revenues. Cost of product sales decreased to $16.8 million for the three months ended March 31, 2003 compared to $19.4 million for the three months ended March 31, 2002. The decrease in cost of product sales resulted principally from a decline in unit sales of our GeneChip® instrument platform. Cost of product related revenue increased to $2.2 million for the three months ended March 31, 2003 compared to $1.3 million for the three months ended March 31, 2002. The increase in cost of product related revenues was primarily due to the inclusion of costs associated with our custom probe array design fees starting in January 2003 due to the full commercialization of our custom product offering. In 2002, the costs of custom probe array design fees are reported as research and development expense. Gross margin on product and product related revenue improved to 68.9% for the three months ended March 31, 2003 compared to 63.8% for the three months ended March 31, 2002. Principal factors that favorably impacted gross margin included: favorable changes in product sales mix, improved probe array manufacturing yields, and the recognition of $2.4 million of license revenue from the Roche agreement signed in January 2003.

Research and Development Expenses. Research and development expenses, which primarily consist of basic research, product research and development and manufacturing process and development, decreased to $15.9 million for the three months ended March 31, 2003 compared to $16.7 million for the three months ended March 31, 2002. The decrease in research and development expenses was primarily due to the reporting of the costs of custom probe array design fees as cost of product related revenue starting in January 2003 due to the full commercialization of our custom product offering and the decrease in product development costs associated with the product release of our GeneChip® Scanner 3000 in January 2003. In 2002, costs of custom probe array design fees are reported as research and development expense.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $28.0 million for the three months ended March 31, 2003 compared to $23.5 million for the three months ended March 31, 2002. The increase in selling, general and administrative expenses was primarily due to increased investments in our sales and support infrastructure in Japan and an increase in general legal expenses related to new license agreements. We expect legal costs to vary substantially as the intensity of legal activity changes. There can be no assurance that we have adequately estimated our exposure for potential damages associated with pending or future litigation.

Amortization of Deferred Stock Compensation. Upon the acquisition of Neomorphic in October 2000, the fair value of unvested common stock subject to restricted stock agreements and the intrinsic value of the unvested options held by employees were deducted from the purchase price and allocated to deferred stock compensation. The deferred stock compensation of $30.0 million is being amortized to compensation expense over the remaining vesting term, generally two to four years. The fair value of unvested options held by non-employees was also deducted from the purchase price and will be periodically revalued as they vest in accordance with applicable accounting guidance. Stock compensation expense decreased to $0.7 million for the three months ended March 31, 2003 compared to $3.7 million for the three months ended March 31, 2002. In addition to the amortization of previously recorded deferred stock compensation for the three months ended March 31, 2002, we also recorded a charge of $1.6 million associated with certain options granted to one of our former officers whose employment status changed effective January 1, 2002.

Amortization of Purchased Intangibles. During the three months ended March 31, 2003 and 2002, we incurred charges of $0.3 million for the amortization of purchased intangibles related to the acquisition of Neomorphic, Inc.

Acquired In-process Research and Development. During the three months ended March 31, 2003, we recorded a charge of approximately $10.1 million related to acquired in-process research and development. The charge associated with licensing the Perlegen SNP database was included in acquired in-process research and development in the consolidated statement of operations as the database has no alternative future use to us. Specifically, the database contains over one million SNPs and will be used in our research and development program to develop high quality, high density DNA analysis microarray products. The value of the SNP database license was determined by estimating the net present value of future cash flows expected from the sale of DNA analysis products developed from this database using a present value discount rate of 30.0%, which is based on our weighted cost of capital adjusted for the risks associated with the in-process research project in which the SNP database content will be used. Upon entering into this license agreement in January 2003, our DNA analysis development program was approximately 33% complete.

The estimates used by us in valuing the licensed technologies were based upon assumptions we believe to be reasonable but which are inherently uncertain and unpredictable. Our assumptions may be incomplete or inaccurate, and no assurance can be given that unanticipated events and circumstances will not occur. Accordingly, actual results may vary from the projected results.

Interest Income and Other, Net. Interest income and other, net decreased to $2.4 million for the three months ended March 31, 2003 compared to $4.2 million for the three months ended March 31, 2002. The decrease in interest income and other, net was primarily due to a decrease in interest income because we experienced lower returns on our cash and marketable securities portfolio. This decrease was partially offset by favorable foreign currency variances experienced during the quarter ended March 31, 2003.

Interest Expense. Interest expense remained flat at $4.9 million for the three months ended March 31, 2003 and 2002, respectively. Interest expense is primarily comprised of interest that we pay on our convertible subordinated notes which come due in 2006 and 2007.

Income Tax Provision. The provision for income tax increased to $0.5 million for the three months ended March 31, 2003 compared to $0.2 million for the three months ended March 31, 2002. For the three months ended March 31, 2003, the provision consists of current taxes accrued on the profits attributable to our foreign operations and state and federal taxes. For the three months ended March 31, 2002, the provision consists of current taxes accrued on the profits attributable to our foreign operations and state taxes. Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109") provides for the recognition of deferred tax assets if realization of

such assets is more likely than not. Based upon the weight of available evidence, which includes the historical operating performance and the reported cumulative net losses in all prior years, at March 31, 2003, we provided a full valuation allowance against our net deferred tax assets.

Liquidity and Capital Resources

We have financed our operations primarily through the sale of equity and debt securities, government grants, collaborative agreements, interest income, product sales and licensing of our technology. Our material future obligations are as follows (in thousands):

	Total		2003		2004-2005		2006-2007		After 2007
Convertible subordinated notes	$	368,900	$	—	$	—	$	368,900	$	—
BCI commitment (See Note 3 to our Consolidated Financial Statements from our Form 10-K for the fiscal year ended December 31, 2002)		5,000		—		5,000		—		—
Operating leases		67,086		4,777		14,825		13,801		33,683
Other commitments		8,250		300		1,700		2,000		4,250

Total contractual obligations	$	449,236	$	5,077	$	21,525	$	384,701	$	37,933

Net cash provided by operating activities was $71.6 million for the three months ended March 31, 2003, as compared to cash used in operating activities of $2.1 million for the three months ended March 31, 2002. The improvement in our net cash flow from operating activities was primarily due to an increase in deferred revenue resulting from the Roche transaction and a decrease in our accounts receivable relative to the three months ended March 31, 2002. The improvement was partially offset by an increase in our net loss relative to the three months ended March 31, 2002 primarily due to the $10.1 million charge taken in January 2003 related to the acquisition of in-process research and development and a decrease in our accounts payable relative to the three months ended March 31, 2002.

Our investing activities, other than purchases, sales and maturities of available-for-sale securities, primarily consisted of capital expenditures, the purchase of an option to license technology, and the purchase of technology rights of $2.7 million, $3.0 million and $2.9 million, respectively, for the three months ended March 31, 2003, as compared to capital expenditures of $9.4 million for the three months ended March 31, 2002. Capital expenditures during the three months ended March 31, 2003 related primarily to investments in storage management systems, along with continued expansion in manufacturing and other operating facilities.

Net cash provided by financing activities was $4.3 million for the three months ended March 31, 2003, as compared to cash provided by financing activities of $0.6 million for the three months ended March 31, 2002, The cash provided by financing activities of $4.3 million in 2003 and $0.6 million in 2002 resulted from the net proceeds from the exercise of stock options.

As of March 31, 2003, we had cash, cash equivalents and available-for-sale securities of $428.6 million compared to $361.5 million at December 31, 2002. We anticipate that our existing capital resources will enable us to maintain currently planned operations and planned capital expenditures for the foreseeable future. However, this expectation is based on our current operating plan and capital expenditure plan, which is subject to change, and therefore we could require additional funding. In addition, we expect that our capital requirements will remain consistent with fiscal 2002 levels. Our long-term capital expenditure requirements will depend on numerous factors, including: the expansion of commercial scale manufacturing capabilities; our ability to maintain existing collaborative and customer arrangements and establish and maintain new collaborative and customer arrangements; the progress of our research and development programs; initiation or expansion of research programs and

collaborations; the costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; the effectiveness of product commercialization activities and arrangements; the purchase of patent licenses; and other factors. We have no credit facility or other committed sources of capital. To the extent capital resources are insufficient to meet future capital requirements, we will have to raise additional funds to continue the development of our technologies. There can be no assurance that such funds will be available on favorable terms, or at all. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in dilution to our stockholders. If adequate funds are not available, we may be required to curtail operations significantly or to obtain funds by entering into collaboration agreements on unattractive terms. Our inability to raise capital would have a material adverse effect on our business, financial condition and results of operations.

Critical Accounting Policies

Certain accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result they are subject to an inherent degree of uncertainty. In applying those policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. Our significant accounting policies include:

Revenue Recognition

Product Sales

Product Related Revenue

Revenue from subscription fees is recorded ratably over the term of the related EasyAccess™ agreements.

We have entered into collaborative arrangements which generally include a research and product development phase and a manufacturing and supply phase. These arrangements may include up-front nonrefundable license fees, milestones, product supply and distribution arrangements and royalties based on the sale of final product by the partner. In these arrangements, up-front nonrefundable payments are generally recognized over the research and product development phase, milestones are recognized when earned, revenue from the sale of product is recognized as a component of product sales when the product is shipped to the partner and royalties are recognized when earned, generally when the partner sells the final product to end customers. Any payments received which are not yet earned are included in deferred revenue.

Revenue related to extended warranty arrangements is deferred and recognized over the applicable periods. Revenue from custom probe array design fees associated with our GeneChip® CustomExpress™ products are recognized when the associated products are shipped. In 2002, custom

probe array design fees were included in research revenue based on the fact that we have not fully commercialized this product offering.

Royalties and Other Revenue

Royalties and other revenue includes royalties earned from third party license agreements and research revenue which mainly consists of amounts earned under government grants. Additionally, other revenue includes fees earned through the license of our intellectual property. In 2002, research revenue also includes custom probe array design fees.

Royalty revenues include amounts earned from the sale of products by third parties which have been licensed under our intellectual property portfolio. Royalty revenues are recognized under the terms of the related agreements generally upon manufacture or shipment of a product by a licensee.

License revenues are generally recognized upon execution of the agreement unless we have continuing performance obligations, in which case the license revenue is recognized ratably over the period of expected performance.

A portion of our sales and accounts receivable are denominated in foreign currencies. Historically, we have not hedged our foreign currency exposures and have not had significant foreign currency differences. However, in 2002 we established a Foreign Exchange Risk Management Committee ("FXRMC") which has been chartered to review and manage foreign currency exposures. In early 2003, we began hedging activities in order to manage the risks associated with a portion of our foreign currency exposures (See Note 9).

Available-for-Sale Securities

We report all debt securities with maturities at the date of purchase of three months or less that are readily convertible into cash and have insignificant interest rate risk as cash equivalents. Cash equivalents and available-for-sale securities consist of marketable equity and debt securities. Management determines the appropriate classification of debt securities at the time of purchase. As of March 31, 2003 and December 31, 2002, our investments in debt securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income in stockholders' equity. The cost of debt securities is adjusted for amortization of premiums and discounts to maturity. This amortization is included in interest income. Realized gains and losses on available-for-sale securities are also included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. The fair values of securities are based on quoted market prices. All of our available-for-sale securities are included in current assets as management considers the securities readily available to fund current operations.

Accounting for Perlegen and Other Equity Investments

As of December 31, 2002, we owned an approximately 53% ownership interest in Perlegen and we have accounted for our ownership interest in Perlegen on the equity method since March 30, 2001 as we determined that we do not control its operations. Factors we considered in determining our level of control in Perlegen included the fact that we and certain of our affiliates had placed approximately 8% of our voting rights into an irrevocable voting trust which was required to vote in proportion to the votes of the other shareholders, we had no ability to terminate or modify the trust unilaterally, we had

the right to appoint only three out of seven seats on Perlegen's board and we had no commitment to provide additional funding to Perlegen.

Following Perlegen's January 27, 2003 financing, our ownership interest in Perlegen (including that of our affiliates) was reduced to approximately 43%. As such, we continue to account for our ownership interest in Perlegen on the equity method as we and our affiliates continue to collectively control less than 50% of the voting shares of Perlegen and also continue to have no control over the strategic, operating, investing and financing activities of Perlegen. Factors we consider in determining our level of control in Perlegen included the fact that we and certain of our affiliates own less than 50% of the voting shares of Perlegen, we have the right to appoint only two out of seven seats on Perlegen's board and we have no commitment to provide additional funding to Perlegen.

Equity investments in venture-stage entities are classified on our classified balance sheet in other assets. We periodically assess the carrying value of these equity investments based on information available to us. These investments are accounted for on the cost method because we own less than 20% of the respective entities and we do not have significant influence over the operations of the issuers. We record gains/losses upon sale of the investment, and losses when there has been an other than temporary decline in the value of these investments. We recognized expense of $0.5 million for the three months ended March 31, 2003 and no amounts for the three months ended March 31, 2002 as a result of charges related to other than temporary declines in the fair values of certain of our marketable equity securities.

Accounts and Notes Receivable

Trade accounts receivables are recorded at net invoice value and notes receivables are recorded at contractual value plus accrued interest. Interest income on notes receivable is recognized according to the terms of each related agreement. We consider receivables past due based on the related contractual terms. We review our exposure to amounts receivable and reserve specific amounts if collectibility is no longer reasonably assured. We also reserve a percentage of the net trade receivable balance based on collection history.

Inventories

We carry our inventories at the lower of cost or market, cost being determined on the first-in, first-out method. We apply judgment in determining the provisions for slow moving, excess and obsolete inventories based on historical experience and anticipated product demand.

Accounting for Intangible Assets

Our intangible assets are comprised principally of technology rights. We apply judgment in determining the useful lives of our intangible assets and whether such assets are impaired. Factors we consider include the life of the underlying patent, the expected period of benefit from the use of the technology, existence of competing technology and potential obsolescence. To date, we have not experienced any impairment to our intangible assets.

Contingencies

We are subject to legal proceedings principally related to intellectual property matters. Based on the information available at the balance sheet dates, we assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. If losses are probable and reasonably estimable, we will record a reserve in accordance with SFAS 5, "Accounting for Contingencies." Any reserves recorded may change in the future due to new developments in each matter.

Recent Accounting Pronouncements

In November 2002, the FASB issued the FASB Interpretation No. 45 (or FIN 45), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," which clarifies the requirements for a guarantor's accounting and disclosures of certain guarantees issued and outstanding. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor's fiscal year-end. The disclosure requirements in this Interpretation were effective beginning in January 2003. The adoption of FIN 45 did not have a significant impact on our consolidated financial statements (See Note 11).

In January 2003, the FASB issued Interpretation No. 46 (or FIN 46), "Consolidation of Variable Interest Entities." FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. A variable interest entity is a corporation, partnership, trust, or any other legal structures used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The adoption of the disclosure requirements of FIN 46 did not have a significant impact on our consolidated financial statements. The complete adoption of FIN 46 is not expected to have a material impact on our consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to interest rate risk relates primarily to our investment portfolio and our convertible subordinated notes. Fixed rate securities and borrowings may have their fair market value adversely impacted due to fluctuations in interest rates, while floating rate securities may produce less income than expected if interest rates fall and floating rate borrowings may lead to additional interest expense if interest rates increase. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates.

The primary objective of our investment activities is to preserve principal while at the same time maximize yields without significantly increasing risk. To achieve this objective, we invest our excess cash in debt instruments of the U.S. Government and our agencies and high-quality corporate issuers, and, by policy, restrict our exposure to any single corporate issuer by imposing concentration limits. To minimize the exposure due to adverse shifts in interest rates, we maintain investments at an average maturity of generally less than three years.

The table below presents the principal amounts and weighted-average interest rates by year of maturity for our investment portfolio subject to interest rate risk:

	2003			2004			2005			2006			2007			Thereafter			Total		Fair Value at March 31, 2003
	(Dollar amounts in thousands)
ASSETS:
Available-for-sale debt securities	$	110,907		$	277,391		$	12,194		$	—		$	—		$	—		$	400,492	$	403,169
Average interest rate		5.13	%		3.83	%		6.39	%
Loan receivable																	4,415
Average interest rate																	7.5	%
LIABILITIES:
5% convertible subordinated notes	$	—		$	—		$	—		$	150,000		$	—		$	—		$	150,000	$	144,750
Average interest rate											5.00	%
4.75% convertible subordinated notes		—			—			—			—			218,900			—			218,900		194,274
Average interest rate														4.75	%

We are exposed to equity price risks on the marketable portion of equity securities in our portfolio of investments entered into to further our business and strategic objectives. We typically do not attempt to reduce or eliminate our market exposure on these securities. A 10% adverse change in equity prices would not result in a material decrease of in our available-for-sale securities based on our position at March 31, 2003. However, actual results may differ materially.

We derive a portion of our revenues in foreign currencies, predominantly in Europe and Japan. Historically, we have not hedged our foreign currency exposures and have not had significant foreign currency differences. However, in 2002 we established a Foreign Exchange Risk Management Committee ("FXRMC") which has been chartered to review and manage foreign currency exposures. In early 2003, the FXRMC began hedging activities by using foreign currency forward contracts to manage a portion of the currency exposures created from our activities denominated in foreign currencies (See Note 9).

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Based on their evaluation as of a date within 90 days of the filing date of this Quarterly Report on Form 10-Q, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Changes in internal controls. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

We have been in the past and continue to be a party to litigation which has consumed and may in the future continue to consume substantial financial and managerial resources and which could adversely affect our business, financial condition and results of operations. If in any pending or future intellectual property litigation involving us or our collaborative partners, we are found to have infringed the valid intellectual property rights of third parties, we, or our collaborative partners, could be subject to significant liability for damages, could be required to obtain a license from a third party, which may not be available on reasonable terms or at all, or could be prevented from manufacturing and selling our products. In addition, if we are unable to enforce our patents and other intellectual property rights against others, or if our patents are found to be invalid or unenforceable, third parties may more easily be able to introduce and sell DNA array technologies that compete with our GeneChip® technology, and our competitive position could suffer. We expect to devote substantial financial and managerial resources to protect our intellectual property rights and to defend against the claims described below as well as any future claims asserted against us. Further, because of the substantial amount of discovery required in connection with any litigation, there is a risk that confidential information could be compromised by disclosure.

Applera Corporation Litigation

On July 5, 2000, Applera Corporation and related corporate plaintiffs ("Applera") filed a lawsuit in the United States District Court for the District of Delaware alleging that certain of our products infringe five Applera patents related to processes for making oligonucleotides and reagents that we purchase from Applera licensed vendors. Applera served us with the complaint on October 16, 2000. On January 30, 2001, we filed a motion to dismiss Applera's lawsuit pending in Delaware for lack of subject matter jurisdiction. On January 25, 2001, we filed a declaratory judgment action against Applera in the United States District Court for the Southern District of New York seeking, among other things, a declaration that we have not infringed any of Applera's subject patents, which lawsuit was stayed by the Court in New York pending the Delaware Court's ruling on the aforementioned motion to dismiss. On September 27, 2001, the District Court for the District of Delaware granted our motion to dismiss for lack of subject matter jurisdiction. On October 3, 2001, the New York Court restored the New York case to active status.

On April 17, 2002, the New York Court heard oral argument on Applera's motions to bifurcate or dismiss certain of our claims, including claims of breach of contract and antitrust violations by Applera. On May 24, 2002, the Court rejected Applera's motion to dismiss our breach of contract and antitrust claims and agreed to bifurcate and stay discovery on antitrust issues as well as on all damages issues. Following the Court's order, on June 6, 2002, Applera filed its counterclaim in the New York case alleging infringement of four of the five patents originally asserted in the Delaware action. We filed a motion seeking summary judgment that the last to expire of Applera's subject patents had, in fact, expired as a matter of law in 2001 in accordance with a terminal disclaimer that had been filed in the Patent Office during prosecution of that patent. On December 24, 2002 the court granted our motion. As a result of the Court's ruling, it is now clear that all of the patents asserted by Applera have expired. Discovery is ongoing and no trial date has been set.

We believe that Applera's claims are without merit and that all of Applera's patents subject to this litigation have now expired. However, we cannot be sure that we will prevail in these matters. Our failure to successfully defend against Applera's allegations could result in a material adverse effect on our business, financial condition and results of operations.

Purported Shareholder Class Action Lawsuit

On April 10, 2003, two individuals filed a purported shareholder class action lawsuit under the federal securities laws in the United States District Court for the Northern District of California. The defendants in this case include the Company, three of its executive officers and one outside director. The lawsuit relates to our January 29, 2003 announcement of our financial expectations for 2003 and subsequent announcement on April 3, 2003, updating our financial guidance for the first quarter of 2003. The lawsuit alleges, among other things, that our January 29, 2003 financial guidance was misleading and that GlaxoSmithKline plc sold Affymetrix shares during the first quarter of 2003 while in possession of material nonpublic information.

We believe that the claims set forth in this purported shareholder class action lawsuit are without merit. However, we cannot be sure that we will prevail in these matters. Our failure to successfully defend against these allegations could result in a material adverse effect on our business, financial condition and results of operations.

Administrative Litigation and Proceedings

The Company's intellectual property is expected to be subject to significant additional administrative and litigation actions. For example, in Europe and Japan, third parties are expected to oppose significant patents that we own or control. Currently, Multilyte Ltd. and ProtoGene Laboratories, Inc. are parties that have filed oppositions against our EP 0-619-321 Patent in the European Patent Office, and PamGene B.V. has filed an opposition against our EP 0 728 520. Also, Abbott Laboratories, Applera, Clondiag, CombiMatrix and Roche Diagnostics filed oppositions against our EP 0 834 575. These procedures will result in the patent being either upheld in its entirety, allowed to issue in amended form in designated European countries, or revoked.

Further, in the United States, we expect that third parties will continue to "copy" the claims of our patents in order to provoke interferences in the United States Patent & Trademark Office, and Affymetrix may copy the claims of others. These proceedings could result in our patent protection being significantly modified or reduced, and could result in significant costs and consume substantial managerial resources.

At this time, the Company cannot determine the outcome of any of the matters described above.

ITEM 5. OTHER INFORMATION

RISKS RELATED TO OUR BUSINESS

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following discussion highlights some of these risks and others are discussed elsewhere in this Quarterly Report on Form 10-Q.

WE HAVE A HISTORY OF OPERATING LOSSES AND MAY INCUR FUTURE LOSSES.

We have experienced significant operating losses since inception. We incurred net losses of $1.6 million in 2002 and $33.1 million in 2001. Although we had net income of $0.6 million and $2.9 million for the three months ended September 30, 2002 and December 31, 2002, respectively, we incurred a net loss of $12.7 million for the three months ended March 31, 2003 and, consequently, have no assurance of continued profitability.

OUR QUARTERLY RESULTS HAVE HISTORICALLY FLUCTUATED SIGNIFICANTLY AND MAY CONTINUE TO FLUCTUATE UNPREDICTABLY, WHICH COULD CAUSE OUR STOCK PRICE TO DECREASE.

Our revenues and operating results may fluctuate significantly due in part to factors that are beyond our control and which we cannot predict. The timing of our customers' orders may fluctuate from quarter to quarter. However, we have historically experienced customer ordering patterns for GeneChip® instrumentation and GeneChip® arrays where the majority of the shipments occur in the second half of a quarter. These ordering patterns may limit management's ability to accurately forecast our future revenues. Because our expenses are largely fixed in the short to medium term, any material shortfall in revenues will materially reduce our profitability and may cause us to experience losses. In particular, our revenue growth and profitability depend on sales of our GeneChip® products. Other factors that could cause sales for these products to fluctuate include:

•: our inability to produce products in sufficient quantities and with appropriate quality;
•: the loss of or reduction in orders from key customers;
•: the frequency of experiments conducted by our customers;
•: our customers' inventory of GeneChip® products;
•: the receipt of relatively large orders with short lead times; and
•: our customers' expectations as to how long it takes us to fill future orders.

Some additional factors that could cause our operating results to fluctuate include:

•: weakness in the global economy and changing market conditions;
•: general economic conditions affecting our target industries; and
•: changes in the attitude of the pharmaceutical industry towards the use of genetic information and genetic testing as a methodology for drug discovery.

Each of these factors have impacted, and may in the future impact, the demand for our products and our quarterly operating results. For example, as a result of cautious capital spending by academic and biotech customers and general economic weakness in the biotechnology sector during the first quarter of 2003, we reported that product and product related revenue as well as net income for the first quarter of 2003 would be lower than our previous financial guidance. Although we are expanding our customer base, our revenues are generated from a relatively small number of pharmaceutical and biotechnology companies, academic research centers and clinical reference laboratories. We expect that these customers will in the aggregate continue to account for a substantial portion of revenues for the foreseeable future. In the event that we continue to experience cautious capital spending by academic and biotech customers and general economic weakness in the biotechnology sector as we did in the first quarter of 2003, revenue expectations from these customer segments may continue to fluctuate.

OUR BUSINESS DEPENDS ON RESEARCH AND DEVELOPMENT SPENDING LEVELS FOR PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES AND ACADEMIC AND GOVERNMENTAL RESEARCH INSTITUTIONS.

We expect that our revenues in the foreseeable future will be derived primarily from products and services provided to pharmaceutical and biotechnology companies and academic, governmental and other research institutions. Our success will depend upon their demand for and use of our products and services. Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by these customers. For example, reductions in capital expenditures by these customers may result in lower than expected instrumentation sales and similarly, reductions in

operating expenditures by these customers could result in lower than expected GeneChip® array sales. These reductions and delays may result from factors that are not within our control, such as:

•: changes in economic conditions;
•: changes in government programs that provide funding to companies and research institutions;
•: changes in the regulatory environment affecting life sciences companies and life sciences research;
•: market-driven pressures on companies to consolidate and reduce costs; and
•: other factors affecting research and development spending.

WE MAY LOSE CUSTOMERS IF WE ARE UNABLE TO MANUFACTURE OUR PRODUCTS AND ENSURE THEIR PROPER PERFORMANCE AND QUALITY.

We produce our products in an innovative and complicated manufacturing process which has the potential for significant variability in manufacturing yields. We may experience difficulties in meeting customer, collaborator and internal demand, in which case we could lose customers or be required to delay new product introductions, and demand for our products could decline. Furthermore, if our products do not consistently meet our customers' performance expectations, demand for our products will decline. Because we have a relatively limited production history, we cannot be sure we fully understand all of the factors that affect our manufacturing processes or product performance. As a result, manufacturing and product quality issues may arise as we increase production rates at our manufacturing facility and launch new products. In addition, we do not maintain any backup manufacturing capabilities for the production of our GeneChip® arrays and GeneChip® instruments. Any interruption in our ability to continue operations at our existing manufacturing facilities could delay our ability to develop or sell our products, which could result in lost revenue and seriously harm our business, financial condition and results of operations.

We rely on internal quality control procedures to verify our manufacturing process. We test only selected probe arrays from each wafer and only selected probes on such probe arrays. It is therefore possible that probe arrays that do not meet all of our performance specifications may not be identified before they are shipped. We have observed a variety of product performance issues at low frequency, including problems aligning software grids with array images, speckling on some arrays, and fluorescent haze in a variety of patterns on array images. On one occasion we discovered ambiguities in a gene database build that was used in the design of a set of our GeneChip® arrays. As a result, we redesigned these arrays and had discussions with our affected customers to address their individual needs and to offer replacement arrays to these customers. Customer concern over the accuracy of the probe sequences on our arrays affected sales of this set of arrays as well as other products. We believe our acquisition of Neomorphic, Inc. in 2000 will further enable us to refine and ensure the accuracy of the public domain sequence databases. Despite these efforts, because of the rapidly evolving nature of the public domain sequence databases, sequence errors and ambiguities may not be found prior to the commercial release of a product.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS AND WE WILL BE UNABLE TO MANUFACTURE OUR PRODUCTS IF SHIPMENTS FROM THESE SUPPLIERS ARE DELAYED OR INTERRUPTED.

We depend on our vendors to provide components of in required volumes, at appropriate quality and reliability levels, and in compliance with regulatory requirements. Key parts of the GeneChip® product line, such as the hybridization oven, certain reagent kits and lithographic masks as well as certain raw materials used in the synthesis of probe arrays, are currently available only from a single source or limited sources. For example, we rely on Enzo Diagnostics, Inc. to manufacture various

labeling kits recommended for the processing of samples for use with probe arrays in expression analysis applications. In addition, components of our manufacturing equipment and certain raw materials used in the synthesis of probe arrays are available from one of only a few suppliers. If supplies from these vendors were delayed or interrupted for any reason, we would not be able to get manufacturing equipment, produce probe arrays, or sell scanners or other components for our GeneChip® products in a timely fashion or in sufficient quantities or under acceptable terms.

OUR SUCCESS WILL REQUIRE THAT WE ESTABLISH A STRONG INTELLECTUAL PROPERTY POSITION AND THAT WE CAN DEFEND OURSELVES AGAINST INTELLECTUAL PROPERTY CLAIMS FROM OTHERS.

Maintaining a strong patent position is critical to our competitive advantage. Litigation on these matters has been prevalent in our industry and we expect that this will continue. Patent law relating to the scope of claims in the technology fields in which we operate is still evolving and the extent of future protection is highly uncertain, so there can be no assurance that the patent rights that we have or may obtain will be valuable. Others have filed, and in the future are likely to file, patent applications that are similar or identical to ours or those of our licensors. To determine the priority of inventions, we will have to participate in interference proceedings declared by the United States Patent and Trademark Office that could result in substantial costs in legal fees and could substantially affect the scope of our patent protection. We cannot assure investors that any such patent applications will not have priority over our patent applications. In addition, we have incurred and may in future periods incur substantial costs in litigation to defend against patent suits brought by third parties and when we initiate such suits. We currently are engaged in litigation regarding our intellectual property rights with Applera Corporation. For additional information concerning intellectual property litigation, see the section of this Form 10-Q entitled "Legal Proceedings."

In addition to patent protection, we also rely upon copyright and trade secret protection for our confidential and proprietary information. There can be no assurance, however, that such measures will provide adequate protection for our copyrights, trade secrets or other proprietary information. In addition, there can be no assurance that trade secrets and other proprietary information will not be disclosed, that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to or disclose our trade secrets and other proprietary information. There can be no assurance that we can effectively protect our copyrights, trade secrets or other proprietary information. If we cannot obtain, maintain or enforce intellectual property rights, competitors can design probe array systems similar to our GeneChip® technology.

Our success depends in part on us neither infringing patents or other proprietary rights of third parties nor breaching any licenses that may relate to our technologies and products. We are aware of third-party patents that may relate to our technology, including reagents used in probe array synthesis and in probe array assays, probe array scanners, synthesis techniques, polynucleotide amplification techniques, assays, and probe arrays. We routinely receive notices claiming infringement from third parties as well as invitations to take licenses under third party patents. There can be no assurance that we will not infringe on these patents or other patents or proprietary rights or that we would be able to obtain a license to such patents or proprietary rights on commercially acceptable terms, if at all.

WE EXPECT TO FACE INCREASING COMPETITION.

The market for clinical genomics products is currently limited and highly competitive, with several large companiess already having significant market share. Companies such as Abbott Laboratories, Becton Dickinson, Bayer AG, Celera Diagnostics, Roche Diagnostics, Johnson & Johnson, bioMérieux and Beckman Coulter have the strategic commitment to diagnostics, the financial and other resources to invest in new technologies, substantial intellectual property portfolios, substantial experience in new product development, regulatory expertise, manufacturing capabilities and the distribution channels to

deliver products to customers. Established diagnostic companies also have an installed base of instruments in several markets, including clinical and reference laboratories, which are not compatible with the GeneChip® system and could deter acceptance of our products. In addition, these companies have formed alliances with genomics companies which provide them access to genetic information that may be incorporated into their diagnostic tests.

Future competition will likely come from existing competitors as well as other companies seeking to develop new technologies for sequencing and analyzing genetic information. In addition, pharmaceutical and biotechnology companies have significant needs for genomic information and may choose to develop or acquire competing technologies to meet these needs. In the clinical genomics field, competition will likely come from established diagnostic companies, companies developing and marketing DNA probe tests for genetic and other diseases and other companies conducting research on new technologies to ascertain and analyze genetic information. Further, in the event that we develop new technology and products that compete with existing technology and products of well established companies, there can be no guarantee that the marketplace will readily adopt any such new technology and products that we may introduce in the future.

IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH COLLABORATIVE PARTNERS, WE MAY HAVE DIFFICULTY DEVELOPING AND SELLING OUR PRODUCTS AND SERVICES.

We believe that our success in penetrating our target markets depends in part on our ability to develop and maintain collaborative relationships with key companies as well as with key academic researchers. Currently, our significant collaborative partners include Millennium Pharmaceuticals, Inc. in the development of GeneChip® technology applications for use in drug discovery and development, Nuvelo, Inc. in the development and commercialization of a DNA sequencing chip, and Roche Molecular Systems and bioMérieux in the development of our diagnostic chip products. Relying on these or other collaborative relationships is risky to our future success because:

•: our partners may develop technologies or components competitive with our GeneChip® products;
•: our existing collaborations may preclude us from entering into additional future arrangements;
•: our partners may not obtain regulatory approvals necessary to continue the collaborations in a timely manner;
•: some of our agreements may terminate prematurely due to disagreements between us and our partners;
•: our partners may not devote sufficient resources to the development and sale of our products;
•: our partners may be unable to supply products to us on a timely basis;
•: our collaborations may be unsuccessful; or
•: we may not be able to negotiate future collaborative arrangements on acceptable terms.

OUR SUCCESS DEPENDS ON THE CONTINUOUS DEVELOPMENT OF NEW PRODUCTS.

We compete in markets that are new, intensely competitive, highly fragmented and rapidly changing, and many of our current and potential competitors have significantly greater financial, technical, marketing and other resources. In addition, many current and potential competitors have greater name recognition, more extensive customer bases and access to proprietary genetic content. The continued success of our GeneChip® products will depend on our ability to produce products with smaller feature sizes and greater information capacity at our current or lower costs. If we fail to keep

pace with emerging technologies our products will become uncompetitive, our pricing and margins will decline and our business will suffer.

RISKS ASSOCIATED WITH TECHNOLOGICAL OBSOLESCENCE.

The DNA probe array field is undergoing rapid technological changes. New technologies, techniques or products could emerge which might allow the packing and analysis of genomic information at a similar or higher density to our microarray technology. Other companies may begin to offer products that are directly competitive with, or are technologically superior to our products. Although we know of no such technology at the present time, there can be no guarantee that we will be able to maintain our technological advantages over emerging technologies in the future. Over time, we will need to respond to technological innovation in a rapidly changing industry.

OUR CURRENT SALES, MARKETING AND TECHNICAL SUPPORT ORGANIZATION MAY LIMIT OUR ABILITY TO SELL OUR PRODUCTS.

To assist our sales and support activities, we have entered into distribution agreements through certain distributors, principally in markets outside of North America, Europe and Japan. These and other third parties on whom we rely for sales, marketing and technical support in these geographic areas may decide to develop and sell competitive products or otherwise become our competitors, which could harm our business. Although we have invested significant other resources to expand our direct sales force and our technical and support staff, including the opening of a Tokyo office in January 2003 to provide direct sales in that region, we may not be able to establish a sufficiently sized global sales, marketing or technical support organization to sell, market or support our products globally.

RISKS ASSOCIATED WITH EXPORT SALES AND OPERATIONS.

Our plan to continue to expand our international presence entails a number of risks, including: unexpected changes in, or impositions of, legislative or regulatory requirements, including export and trade barriers and taxes; longer payment cycles and greater difficulty in accounts receivable collection; and currency exchange fluctuations. We are also subject to general geopolitical risks in connection with international operations, such as political, social and economic instability, potential hostilities and changes in diplomatic and trade relationships. We cannot assure investors that one or more of the foregoing factors will not have a material adverse effect on our business, financial condition and operating results or require us to modify our current business practices.

WE MAY BE EXPOSED TO LIABILITY DUE TO PRODUCT DEFECTS.

The risk of product liability claims is inherent in the testing, manufacturing, marketing and sale of human diagnostic and therapeutic products. We may seek to acquire additional insurance for clinical liability risks. We may not be able to obtain such insurance or general product liability insurance on acceptable terms or in sufficient amounts. A product liability claim or recall could have a serious adverse effect on our business, financial condition and results of operations.

CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION COULD REDUCE DEMAND FOR OUR PRODUCTS.

Genetic testing has raised ethical issues regarding privacy and the appropriate uses of the resulting information. For these reasons, governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, such concerns may lead individuals to refuse to use genetics tests even if permissible. Any of these scenarios could reduce the potential markets for our clinical

genomics products, which could have a material adverse effect on our business, financial condition and results of operations.

HEALTHCARE REFORM AND RESTRICTIONS ON REIMBURSEMENTS MAY LIMIT OUR RETURNS ON DIAGNOSTIC PRODUCTS THAT WE MAY DEVELOP WITH OUR COLLABORATORS.

We may develop diagnostic or therapeutic products our collaborators. The ability of our collaborators to commercialize such products may depend, in part, on the extent to which reimbursement for the cost of these products will be available under U.S. and foreign regulations governing reimbursement for clinical testing services by government authorities, private health insurers and other organizations. In the U.S., third-party payor price resistance, the trend towards managed health care and legislative proposals to reform health care or reduce government insurance programs could reduce prices for health care products and services, adversely affect the profits of our customers and collaborative partners and reduce our future royalties.

WE MAY NOT SUCCESSFULLY OBTAIN REGULATORY APPROVAL OF ANY DIAGNOSTIC OR OTHER PRODUCT WHICH WE OR OUR COLLABORATIVE PARTNERS DEVELOP.

The United States Food and Drug Administration must approve any drug product before it can be marketed in the U.S. A drug product must also be approved by the regulatory agencies of foreign governments before the product can be sold outside the U.S. Commercialization of any therapeutic, diagnostic or other product, including diagnostic testing products, outside of the research environment that we or our collaborators may develop may depend upon successful completion of preclinical studies and clinical trials. Preclinical testing and clinical development are long, expensive and uncertain processes and we do not know whether we, or any of our collaborative partners, will be permitted to undertake clinical trials of any potential products. It may take us or our collaborative partners many years to complete any such testing, and failure can occur at any stage of testing. Delays or rejections of potential products may be encountered based on changes in regulatory policy for product approval during the period of product development and regulatory agency review. Moreover, if and when our projects reach clinical trials, we or our collaborative partners may decide to discontinue development of any or all of these projects at any time for commercial, scientific or other reasons. Any of the foregoing matters could have a material adverse effect on our business, financial condition and results of operations

Even where a product is exempted from FDA clearance or approval, the FDA may impose restrictions as to the types of customers to which we can market and sell our products. Such restrictions may materially and adversely affect our business, financial condition and results of operations.

Medical device laws and regulations are also in effect in many countries, ranging from comprehensive device approval requirements to requests for product data or certifications. The number and scope of these requirements are increasing. We may not be able to obtain regulatory approvals in such countries or may incur significant costs in obtaining or maintaining our foreign regulatory approvals. In addition, the export by us of certain of our products which have not yet been cleared for domestic commercial distribution may be subject to FDA or other export restrictions.

BECAUSE OUR BUSINESS DEPENDS ON KEY EXECUTIVES AND SCIENTISTS, OUR INABILITY TO RECRUIT AND RETAIN THESE PEOPLE COULD HINDER OUR BUSINESS EXPANSION PLANS.

We are highly dependent on our officers and our senior scientists and engineers, including scientific advisors. Our product development and marketing efforts could be delayed or curtailed if we are unable to attract or retain key talent.

We rely on our scientific advisors and consultants to assist us in formulating our research, development and commercialization strategy. All of these individuals are engaged by other employers and have commitments to other entities that may limit their availability to us. Some of them also consult for companies that may be our competitors. A scientific advisor's other obligations may prevent him or her from assisting us in developing our technical and business strategies.

To expand our research, product development and sales efforts we need additional people skilled in areas such as bioinformatics, organic chemistry, information services, regulatory affairs, manufacturing, sales, marketing and technical support. Competition for these people is intense. We will not be able to expand our business if we are unable to hire, train and retain a sufficient number of qualified employees. There can be no assurance that we will be successful in hiring or retaining qualified personnel, and our failure to do so could have a material adverse impact on our business, financial condition and results of operations.

PERLEGEN, WITH WHICH WE HAVE A CUSTOMER, INVESTMENT AND TECHNOLOGY RELATIONSHIP, IS A DEVELOPMENT STAGE COMPANY.

Perlegen is a development stage company and there can be no assurance that it will achieve commercial success. Although in January 2003 Perlegen completed a $30 million round of private financing in which we did not participate, there can be no assurance as to the availability or terms of any necessary future financing. If Perlegen were required to curtail or suspend operations or have difficulty raising any additional required financing to fund operations, negative consequences to us could occur, including (i) reduction in the underlying value of our holdings in Perlegen (we currently account for our approximate 43% ownership interest in Perlegen on a zero basis in our financial statements), (ii) inability to collect accounts receivable ($6.4 million at March 31, 2003) arising under our wafer supply arrangement, and (iii) a decline in gross product margins if our commercial volumes were not sufficient enough to offset any shortfall in volume from Perlegen. For additional information concerning our relationship with Perlegen, including our ownership interest in Perlegen, our collaborative relationship with Perlegen and existing relationships between certain of our directors and officers and Perlegen, see the section of this Form 10-Q entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 of Notes to Consolidated Financial Statements.

OUR STRATEGIC EQUITY INVESTMENTS MAY RESULT IN LOSSES.

We periodically make strategic equity investments in various publicly traded and non-publicly traded companies with businesses or technologies that may complement our business. The market values of these strategic equity investments may fluctuate due to market conditions and other conditions over which we have no control. Other than temporary fluctuations in the market price and valuations of the securities that we hold in other companies will require us to record losses relative to our ownership interest. This could result in future charges on our earnings and as a result, it is uncertain whether or not we will realize any long term benefits associated with these strategic investments.

FUTURE ACQUISITIONS MAY DISRUPT OUR BUSINESS AND DISTRACT OUR MANAGEMENT.

We have previously engaged in acquisitions and may do so the future in order to exploit technology or market opportunities. If we acquire another company, we may not be able to successfully integrate the acquired business into our existing business in a timely and non-disruptive manner or at all. Furthermore, an acquisition may not produce the revenues, earnings or business synergies that we anticipate. If we fail to integrate the acquired business effectively or if key employees of that business leave, the anticipated benefits of the acquisition would be jeopardized. The time, capital management other resources spent on an acquisition that fails to meet our expectations could cause our business and

financial condition to be materially and adversely affected. In addition, acquisitions can involve non-recurring charges and amortization of significant amounts of deferred stock compensation that could adversely affect our results of operations.

THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN EXTREMELY VOLATILE.

The market price of our common stock is extremely volatile. To demonstrate the volatility of our stock price, during the twelve-month period ending on March 31, 2003, the volume of our common stock traded on any given day has ranged from 293,400 to 7,921,800 shares, a 2,600% difference. Moreover, during that period, our common stock has traded as low as $13.80 per share and as high as $29.93 per share, a 117% difference. Based on the reported high and low prices, the market price of our common stock has changed as much as $3.49 per share in a single day and its market price has changed more than $3.00 per share 4 times in a single day during the twelve-month period ending March 31, 2003.

Furthermore, volatility in the stock price of other companies has often led to securities class action litigation against those companies. For example, a purported securities class action lawsuit was filed against us in the United States District Court for the Northern District of California after a drop in our stock price following our April 3, 2003 announcement updating our financial guidance for the first quarter of 2003. For additional information concerning this purported securities class action lawsuit, see the section of this Form 10-Q entitled "Legal Proceedings." This securities litigation against us and any future securities litigation against us could result in substantial costs and divert management's attention and resources, which could seriously harm our business, financial condition and results of operations.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a): EXHIBITS:

Exhibit Number		Description of Document
3.1	(1)	Restated Certification of Incorporation.
3.2	(2)	Bylaws.
3.3	(3)	Amendment No. 1 to the Bylaws dated as of April 25, 2001.
4.1	(4)	Rights Agreement dated October 15, 1998 between Affymetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent.
4.2	(5)	Indenture dated as of September 22, 1999, between Affymetrix, Inc. and The Bank of New York, as Trustee.
4.3	(6)	Amendment No. 1 to Rights Agreement, dated as of February 7, 2000, between Affymetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent.
4.4	(7)	Indenture, dated as of February 14, 2000 between Affymetrix, Inc. and The Bank of New York, as Trustee.
4.5	(8)	Registration Rights Agreement, dated as of February 14, 2000, between Affymetrix, Inc. and certain purchasers listed on the signature page thereto.
10.55	†	Secured Promissory Note in the principal amount of $400,000 executed by Trevor J. Nicholls, Ph.D. dated January 8, 2003 pursuant to an extension of credit made to Dr. Nicholls by the Company on June 21, 2002.
10.56	†	Secured Promissory Note in the principal amount of $600,000 executed by Trevor J. Nicholls, Ph.D. dated January 8, 2003 pursuant to an extension of credit made to Dr. Nicholls by the Company on June 21, 2002.
10.57	*	Common Terms Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.58	*	License Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003
10.59	*	Affymetrix Instrument and Chip Supply Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.60	*	Research & Development Collaboration Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.61	*	Diagnostic Product and Instrument Agency Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.62	*	Affymetrix Instrument Agency Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.

(1): Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K as filed on June 13, 2000 (File No. 000-28218).
(2): Incorporated by reference to Appendix C to the Registrant's definitive proxy statement on Schedule 14A as filed on April 29, 1998 (File No. 000-28218).
(3): Incorporated by reference to Exhibit 3.3 to the Registrant's Form 10-Q as filed on May 15, 2001 (File No. 000-28218).
(4): Incorporated by reference to Exhibit 1 to the Registrant's Form 8-A as filed on October 16, 1998 (File No. 000-28218).
(5): Incorporated by reference to Exhibit 4.2 to the Registrant's registration statement on Form S-4 as filed on October 14, 1999 (File No. 333-88987).

(6)

Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-A/A as filed on March 29, 2000 (File No. 000-28218).

(7)

Incorporated by reference to Exhibit 4.4 to the Registrant's registration statement on Form S-3 as filed on May 11, 2000 (File No. 333-36790).

(8)

Incorporated by reference to Exhibit 4.3 filed with Registrant's registration statement on Form S-3 as filed on May 11, 2000 (File No. 333-36790).

*

Confidential Treatment requested.

†

Management contract, compensatory plan or arrangement.

(b): REPORTS ON FORM 8-K.

On January 30, 2003, the Company filed a Report on Form 8-K to report under Item 7 (Financial Statements, Pro Forma Financial Information and Exhibits) and Item 9 (Regulation FD Disclosure) that the Company posted on its website an Unaudited Adjusted Condensed Consolidated Statements of Operations for 2002 to illustrate what the impact would have been on the Company's 2002 Statements of Operations as the result of two changes in the Company's business that occurred in January 2003.

On January 30, 2003, the Company filed a Report on Form 8-K to report under Item 5 (Other Events) that the Company entered into a non-exclusive licensing and distribution agreement with F. Hoffmann-La Roche Ltd.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	By:	/s/ GREGORY T. SCHIFFMAN
	Name:	Gregory T. Schiffman
	Title:	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

May 15, 2003

Certification

I, Stephen P.A. Fodor, Ph.D., Chairman and Chief Executive Officer, certify that:

1.

I have reviewed this Form 10-Q for the period ended March 31, 2003 of Affymetrix, Inc.;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a.: designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.: evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c.: presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a.: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

/s/ STEPHEN P.A. FODOR, PH.D.

Name: Stephen P.A. Fodor, Ph.D.
Title: Chairman and Chief Executive Officer

Certification

I, Gregory T. Schiffman, Senior Vice President and Chief Financial Officer, certify that:

1.

I have reviewed this Form 10-Q for the period ended March 31, 2003 of Affymetrix, Inc.;

2.

3.

4.

a.: designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.: evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c.: presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.

a.: all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b.: any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.

Date: May 15, 2003

/s/ GREGORY T. SCHIFFMAN

Name: Gregory T. Schiffman
Title: Senior Vice President and Chief Financial Officer

AFFYMETRIX, INC.

EXHIBIT INDEX

MARCH 31, 2003

Exhibit Number		Description of Document
3.1	(1)	Restated Certification of Incorporation.
3.2	(2)	Bylaws.
3.3	(3)	Amendment No. 1 to the Bylaws dated as of April 25, 2001.
4.1	(4)	Rights Agreement dated October 15, 1998 between Affymetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent.
4.2	(5)	Indenture dated as of September 22, 1999, between Affymetrix, Inc. and The Bank of New York, as Trustee.
4.3	(6)	Amendment No. 1 to Rights Agreement, dated as of February 7, 2000, between Affymetrix, Inc. and American Stock Transfer & Trust Company, as Rights Agent.
4.4	(7)	Indenture, dated as of February 14, 2000 between Affymetrix, Inc. and The Bank of New York, as Trustee.
4.5	(8)	Registration Rights Agreement, dated as of February 14, 2000, between Affymetrix, Inc. and certain purchasers listed on the signature page thereto.
10.55	†	Secured Promissory Note in the principal amount of $400,000 executed by Trevor J. Nicholls, Ph.D. dated January 8, 2003 pursuant to an extension of credit made to Dr. Nicholls by the Company on June 21, 2002.
10.56	†	Secured Promissory Note in the principal amount of $600,000 executed by Trevor J. Nicholls, Ph.D. dated January 8, 2003 pursuant to an extension of credit made to Dr. Nicholls by the Company on June 21, 2002.
10.57	*	Common Terms Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.58	*	License Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003
10.59	*	Affymetrix Instrument and Chip Supply Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.60	*	Research & Development Collaboration Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.61	*	Diagnostic Product and Instrument Agency Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.
10.62	*	Affymetrix Instrument Agency Agreement between F. Hoffmann-La Roche Ltd. and Affymetrix, Inc. dated January 29, 2003.

(1): Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K as filed on June 13, 2000 (File No. 000-28218).
(2): Incorporated by reference to Appendix C to the Registrant's definitive proxy statement on Schedule 14A as filed on April 29, 1998 (File No. 000-28218).
(3): Incorporated by reference to Exhibit 3.3 to the Registrant's Form 10-Q as filed on May 15, 2001 (File No. 000-28218).
(4): Incorporated by reference to Exhibit 1 to the Registrant's Form 8-A as filed on October 16, 1998 (File No. 000-28218).
(5): Incorporated by reference to Exhibit 4.2 to the Registrant's registration statement on Form S-4 as filed on October 14, 1999 (File No. 333-88987).
(6): Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-A/A as filed on March 29, 2000 (File No. 000-28218).

(7): Incorporated by reference to Exhibit 4.4 to the Registrant's registration statement on Form S-3 as filed on May 11, 2000 (File No. 333-36790).
(8): Incorporated by reference to Exhibit 4.3 filed with Registrant's registration statement on Form S-3 as filed on May 11, 2000 (File No. 333-36790).
*: Confidential Treatment requested.
†: Management contract, compensatory plan or arrangement.

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AFFYMETRIX, INC. TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AFFYMETRIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
AFFYMETRIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
AFFYMETRIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
AFFYMETRIX, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 (UNAUDITED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURES
Certification
AFFYMETRIX, INC. EXHIBIT INDEX MARCH 31, 2003
EX-10.55 3 a2111472zex-10_55.htm EXHIBIT 10.55

EXHIBIT 10.55

PROMISSORY NOTE

SECURED BY DEED OF TRUST

(HOUSING RELOCATION LOAN
PURSUANT TO AN EXTENSION
OF CREDIT MADE ON JUNE 21, 2002)

$400,000.00	Santa Clara, California
	January 8, 2003

1. FOR VALUE RECEIVED, the undersigned, Trevor J. Nicholls (“Maker”), hereby promises to pay to Affymetrix, Inc., a Delaware corporation (“Holder”), at 3380 Central Expressway, Santa Clara, California, or such other place as Holder may from time to time designate by written notice to Maker, the sum of Four Hundred Thousand Dollars ($400,000.00) together with interest on the unpaid principal hereof from the date hereof at the rate equal to the IRS imputed interest rate per annum, on the terms and conditions specified herein. Subject to paragraphs 2 and 4 below, the entire principal amount under this Promissory Note (this “Note”), together with any accrued and unpaid interest, shall be due and payable on January 7, 2008. The Maker hereby certifies that such sum shall be used for the exclusive purpose of the purchase of his new principal residence in connection with his transfer to a new principal place of work.

2. This Note may be prepaid in whole or in part at any time without penalty. All amounts payable hereunder shall be payable in lawful money of the United States of America.

3. This Note is secured by the Deed of Trust made by Maker for the benefit of Holder encumbering certain real property commonly known as 230 Wooded View Drive, Los Gatos, California 95032. Such Deed of Trust will be subordinate only to (i) a deed of trust (the “First Deed of Trust”) made by Maker, as trustor, for the benefit of an institutional lender that loaned money to Maker for the purpose of financing the original purchase price of the Property (or any refinancing of the principal amount of same); or (ii) a deed of trust made by Maker, as trustor, for the benefit of lender that loaned money to Maker in the form of a home improvement or home equity loan not to exceed $250,000 (the “Junior Deeds of Trust”).

4. Notwithstanding anything to the contrary contained in this Note, the entire principal balance of this Note, together with accrued but unpaid interest, shall become immediately due and payable, upon the occurrence of any of the following:

a. The 90^th day following the date of any sale, conveyance, assignment, alienation or any other form of transfer of the Property, or any part thereof or interest therein, whether voluntary or involuntary, other than the First Deed of Trust or the Junior Deeds of Trust;

b. Default in the performance or observance of any of the material covenants, conditions, provisions or agreements contained in this Note or in the Deed of Trust;

c. Default in the performance or observance of any of the material covenants, conditions, provisions or agreements contained in any deed of trust (“Senior Deed of Trust”) which is or becomes a lien against the Property senior to the lien of the Deed of Trust, or any promissory note or obligation secured by such Senior Deed of Trust;

d. The 90^th day following the termination of Maker’s employment with the Company by the Company or Maker for any reason; or

e. Default in the performance or observance of any of the material, covenants, conditions, provisions, or agreements contained in that certain Note of even date herewith in the amount of $600,000.00.

The failure of Holder to exercise any of the rights created by law or by this Note, or to promptly enforce any of the provisions hereof, shall not constitute a waiver of the right to exercise any such rights or to enforce any such provisions. The waiver by Holder or any breach of or default under any term, covenant or condition herein or in any other agreement referred to above shall not be deemed to be a waiver of any subsequent breach of or default under the same or any other such term, covenant or condition.

Holder may elect to forgive up to one hundred percent (100%) of the interest accrued during each calendar year during the term of this Note based on Maker’s achievement of annual performance criteria as determined by Maker in its sole and absolute discretion.

5. Maker hereby waives demand and presentment for payment, notice of non-payment and dishonor, protest and notice of protest, and the benefit of any homestead exemption which may by law be waived as to this obligation.

6. This Note may not be assigned, transferred, hypothecated, sold or otherwise disposed of by the Maker without the prior written consent of Holder, which consent may be withheld in its sole discretion. All of the rights and/or duties of Holder hereunder shall be freely assignable.

7. In the event Maker defaults on payment of this Note and such default continues for a period of sixty (60) days following written notice from Holder, Holder may, at its election, subsequent thereto charge a default rate of interest equal to 10% per annum. In the event this Note is placed in the hands of an attorney for collection, Holder shall be entitled to recover its reasonable attorneys’ fees and costs incurred in collection of this Note.

8. This Note shall be construed in accordance with and governed by the laws of the State of California.

	MAKER:

	/s/ Trevor J. Nicholls
	Name:	Trevor J. Nicholls
	Address:	230 Wooded View Drive
		Los Gatos, CA 95032

SPOUSAL CONSENT

The undersigned spouse of Maker hereby approves the terms and conditions of this Note. The undersigned hereby agrees to be irrevocably bound by the terms of the Note and the Amended and Restated Deed of Trust attached as Exhibit A hereto and further agrees that any community property interest shall be similarly bound. The undersigned hereby appoints the undersigned’s spouse as attorney-in-fact for the undersigned with respect to any amendment or exercise of rights or obligations hereunder.

	SPOUSE:


	/s/ J.M. Nicholls
	Name: J.M. Nicholls

RECORDING REQUESTED BY				EXHIBIT A

WHEN RECORDED MAIL TO:

Affymetrix, Inc.

3380 Central Expressway

Santa Clara, CA 95051

Attention: General Counsel

SPACE ABOVE LINE FOR RECORDER’S USE

AMENDED AND RESTATED

DEED OF TRUST

THIS AMENDED AND RESTATED DEED OF TRUST (this “Trust Deed”) is made as of January 8, 2003, by TREVOR J. NICHOLLS (“Trustor”), in favor of STEWART TITLE OF CALIFORNIA, INC. (“Trustee”), for the benefit of AFFYMETRIX, INC., a Delaware corporation (“Beneficiary”), who amend and restate that certain Deed of Trust dated January 8, 2003 and recorded on January 10, 2003 as Document No. 16742159, Office Records, Santa Clara County, California, as follows:

Trustor irrevocably grants, transfers and assigns to Trustee in trust, with power of sale, that certain property (the “Property”) located in Santa Clara County, California, more particularly described in Exhibit A attached hereto, together with the rents, issues and profits thereof; subject, however, to the right, power and authority hereinafter given to and conferred upon Trustor to collect and apply such rents, issues and profits, for the purpose of securing: (i) payment of the aggregate amount of One Million Dollars ($1,000,000.00) with interest thereon according to the terms of those certain promissory notes (individually a “Note” and collectively, the “Notes”) of even date herewith made by Trustor, and extensions or renewals thereof; (ii) the performance of each agreement of Trustor incorporated by reference or contained herein or reciting it is so secured; and (iii) payment of additional sums and interest thereon which may hereafter be loaned to Trustor, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust.

A. To protect the security of this Deed of Trust and with respect to the Property, Trustor agrees:

(i) To keep the Property in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good and workmanlike manner any building constructed thereon which may be damaged or destroyed and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of the Property may be reasonably necessary, the specific enumerations herein not excluding the general.

(ii) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary; and to pay all costs and expenses, including

the cost of evidence of title and attorneys’ fees in a reasonable sum, in any action or proceeding in which Beneficiary may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust.

(iii) To pay (a) at least ten (10) business days before delinquency, all taxes and assessments affecting the Property, including assessments on appurtenant water stock; (b) when due, all encumbrances, charges and liens, with interest, on the Property or any part thereof, which appear to be prior or superior hereto; and (c) all costs, fees and expenses of this Deed of Trust.

Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary may, but without obligation to do so and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Beneficiary is hereby authorized (a) to enter upon the Property for such purposes; (b) to appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary; (c) to pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and (d) in exercising such powers, to pay necessary expenses, employ counsel and pay his or her reasonable fees.

(iv) To pay immediately and without demand all sums so expended by Beneficiary, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby, any amount demanded by Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded.

B. It is mutually agreed:

(i) That any award of damages in connection with any condemnation for public use of or injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary.

(ii) That, by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure to so pay.

(iii) That, at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Notes for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Beneficiary may reconvey any part of the Property, consent to the making of any map or plat thereof, join in granting any easement thereon, or join in any extension agreement or any agreement subordinating the lien or charge hereof.

(iv) That, upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Notes to Trustee for cancellation and retention or other disposition as Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as “the person or persons legally entitled thereto.”

(v) That, as additional security, Trustor hereby given to and confers upon Beneficiary the right, power and authority, during the continuance of these trusts to collect the rents, issues and profits of the Property, reserving unto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may, at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of the Property or any part thereof, in its own name sue for or otherwise collect such rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorneys’ fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of the Property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice.

(vi) That, upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement thereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold the Property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Notes and all documents evidencing expenditures secured hereby.

After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in said notice for sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor or Trustee, may purchase at such sale.

After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including cost of evidence of title in connection with sale, Trustee shall apply (in the following order) the proceeds of sale to the payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof, all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto.

(vii) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Trustee and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of the proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the predecessor trustee, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor or

Trustee hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee.

(viii) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the Notes secured hereby, whether or not named herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or the neuter, and the singular number includes the plural.

(ix) The Trustee accepts this trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor or Trustee shall be a party unless brought by Trustee.

Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge thereof does not exceed the maximum allowed by laws.

The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to it at the address hereinbefore set forth.

C. Insurance and Damage Claims. Trustor shall maintain fire and other insurance on the Property consistent with industry standards. All proceeds of any claim, demand, award, settlement or other payment arising or resulting from or otherwise relating to any such insurance or any loss or destruction of, injury or damage to the Property (a “Damage Claim”) are hereby assigned and shall be payable and delivered to Beneficiary (any such proceeds of any Damage Claim being referred to in this Trust Deed as “Damage Proceeds”). Trustor shall take all action reasonably necessary or required by Beneficiary in order to protect Trustor’s and Beneficiary’s rights and interests with respect to any Damage Claim, including the commencement of, appearance in and prosecution of any appropriate action or other proceeding, and Beneficiary may in its discretion participate in any such action or proceeding at the expense of Trustor.

D. Transfer.

(i) Trustor agrees that Trustor shall not directly or indirectly sell, transfer or convey, whether voluntarily, involuntarily or by operation of law, or suffer or permit the same, all or any part of the Property subject to this Deed of Trust (each of which actions or events being herein called a “Transfer”) without Beneficiary’s prior written consent.

(ii) If any Transfer occurs without Beneficiary’s prior written consent, then, at its sole option, Beneficiary may, by written notice to Trustor, declare all obligations secured by this Deed of Trust immediately due and payable. Trustor shall notify Beneficiary promptly in writing of all Transfers.

E. Event of Default.

Each of the following events constitutes a default by Trustor of its obligations hereunder:

(i) The failure by Trustor to perform or comply with any material obligation, covenant or condition contained in the Notes or this Deed of Trust;

(ii) The occurrence of any Transfer without Trustee’s prior written consent;

(iii) The occurrence of any event set forth in Section 4 of either Note; or

(iv) The occurrence of a default under any senior lien on the Property.

F. Subordination.

This Deed of Trust is junior and subordinate to that certain deed of trust in favor of Bank of America, N.A. in the amount of $1,000,000.00 dated January 8, 2003.

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust effective as of the date first set forth above.

							“Trustor”


							Trevor J. Nicholls

EXHIBIT A

DESCRIPTION OF PROPERTY

The land referred to herein is situated in the State of California, County of Santa Clara, Town of Los Gatos, and is described as follows:

Lot 18, as shown on that certain Map of Tract No. 3907, which Map was filed for record in the office of the Recorder of the County of Santa Clara, State of California on March 22, 1965, in Book 192 of Maps, page(s) 25, 26 and 27.

STATE OF CALIFORNIA )
COUNTY OF )

On , 2000, before me, , Notary Public, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and office seal.

__________________________________
Signature of Notary

(SEAL)

EX-10.56 4 a2111472zex-10_56.htm EXHIBIT 10.56

EXHIBIT 10.56

PROMISSORY NOTE

SECURED BY DEED OF TRUST

(HOUSING RELOCATION LOAN
PURSUANT TO AN EXTENSION
OF CREDIT MADE ON JUNE 21, 2002)

$600,000.00	Santa Clara, California
	January 8, 2003

1. FOR VALUE RECEIVED, the undersigned, Trevor J. Nicholls (“Maker”), hereby promises to pay to Affymetrix, Inc., a Delaware corporation (“Holder”), at 3380 Central Expressway, Santa Clara, California, or such other place as Holder may from time to time designate by written notice to Maker, the sum of Six Hundred Thousand Dollars ($600,000.00) together with interest on the unpaid principal hereof from the date hereof at the rate equal to the IRS imputed interest rate per annum, on the terms and conditions specified herein. Subject to paragraphs 2 and 4 below, the entire principal amount under this Promissory Note (this “Note”), together with any accrued and unpaid interest, shall be due and payable on January 7, 2008. The Maker hereby certifies that such sum shall be used for the exclusive purpose of the purchase of his new principal residence in connection with his transfer to a new principal place of work.

2. This Note may be prepaid in whole or in part at any time without penalty. All amounts payable hereunder shall be payable in lawful money of the United States of America.

b. Default in the performance or observance of any of the material covenants, conditions, provisions or agreements contained in this Note or in the Deed of Trust;

d. The 90^th day following the termination of Maker’s employment with the Company by the Company or Maker for any reason; or

e. Default in the performance or observance of any of the material, covenants, conditions, provisions, or agreements contained in that certain Note of even date herewith in the amount of $400,000.00.

8. This Note shall be construed in accordance with and governed by the laws of the State of California.

	MAKER:

	/s/ Trevor J. Nicholls
	Name:	Trevor J. Nicholls
	Address:	230 Wooded View Drive
		Los Gatos, CA 95032

SPOUSAL CONSENT

	SPOUSE:


	/s/ J.M. Nicholls
	Name: J.M. Nicholls

RECORDING REQUESTED BY			EXHIBIT A

WHEN RECORDED MAIL TO:

Affymetrix, Inc.

3380 Central Expressway

Santa Clara, CA 95051

Attention: General Counsel

SPACE ABOVE LINE FOR RECORDER’S USE

AMENDED AND RESTATED

DEED OF TRUST

A. To protect the security of this Deed of Trust and with respect to the Property, Trustor agrees:

(ii) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary; and to pay all costs and expenses, including

B. It is mutually agreed:

(i) That any award of damages in connection with any condemnation for public use of or injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary.

Trustee hereunder, the book and page where this Deed of Trust is recorded and the name and address of the new Trustee.

Beneficiary may charge for a statement regarding the obligation secured hereby, provided the charge thereof does not exceed the maximum allowed by laws.

The undersigned Trustor, requests that a copy of any notice of default and any notice of sale hereunder be mailed to it at the address hereinbefore set forth.

D. Transfer.

E. Event of Default.

Each of the following events constitutes a default by Trustor of its obligations hereunder:

(i) The failure by Trustor to perform or comply with any material obligation, covenant or condition contained in the Notes or this Deed of Trust;

(ii) The occurrence of any Transfer without Trustee’s prior written consent;

(iii) The occurrence of any event set forth in Section 4 of either Note; or

(iv) The occurrence of a default under any senior lien on the Property.

F. Subordination.

This Deed of Trust is junior and subordinate to that certain deed of trust in favor of Bank of America, N.A. in the amount of $1,000,000.00 dated January 8, 2003.

IN WITNESS WHEREOF, Trustor has executed this Deed of Trust effective as of the date first set forth above.

							“Trustor”


							Trevor J. Nicholls

EXHIBIT A

DESCRIPTION OF PROPERTY

The land referred to herein is situated in the State of California, County of Santa Clara, Town of Los Gatos, and is described as follows:

STATE OF CALIFORNIA )
COUNTY OF )

WITNESS my hand and office seal.

__________________________________
Signature of Notary

(SEAL)

EX-10.57 5 a2111472zex-10_57.htm EXHIBIT 10.57

EXHIBIT 10.57

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

COMMON TERMS AGREEMENT

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

CONTENTS


I.	Glossary.
II.	Confidentiality
III.	Management of Relationship
IV.	Dispute Resolution
V.	Ownership of Diagnostic Products and Instruments
VI.	General

COMMON TERMS AGREEMENT

January 29, 2003

This COMMON TERMS AGREEMENT (the “Agreement”) is effective as of the date first written above (“Effective Date”) between Affymetrix, Inc., a Delaware corporation (“Affymetrix”), and F. Hoffmann-La Roche Ltd. ( “Roche”).

WHEREAS, Affymetrix and Roche intend to collaborate in the development and commercialization of diagnostic products in connection with and in the field of DNA chip technology;

WHEREAS, Affymetrix and Roche will enter into the Collaboration Agreements (as defined below) to govern and formalize such collaboration and commercialization;

WHEREAS, Affymetrix and Roche believe that it is in their best interests to enter into this agreement to serve as a single umbrella agreement stipulating certain common terms applicable to each of the Collaboration Agreements;

NOW THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, Affymetrix and Roche agree as follows:

The terms hereof shall govern each and all of the Collaboration Agreements. However, if any Collaboration Agreement contains terms contrary to or that directly conflict with the terms of this Agreement, the terms of such Collaboration Agreement shall govern for that particular document (in lieu of the terms of this Agreement). Furthermore, provisions in the Collaboration Agreements may expand or supplement any provision of this Agreement for that particular document.

I. Glossary.

(a) “Affiliate” means (i) an organization, that directly or indirectly controls a Party; (ii) an organization, which is directly or indirectly controlled by a Party; (iii) an organization which is controlled, directly or indirectly, by the ultimate parent company of a Party or (iv) in any country where the local law does not permit foreign equity participation of at least fifty percent (50%), then “Affiliate” includes any organization 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. For these purposes, “control” shall mean the ownership of 50% or more of the voting stock of such organization or otherwise having the power to govern the financial and the operating policies or to appoint the management of such organization. Each Party to this Agreement shall be liable to the other Party to this Agreement for breach hereof by any of such Party’s Affiliates, and any such breach shall be deemed a breach by such Party. Notwithstanding the foregoing, the term “Affiliate” shall not include, with respect to Affymetrix, Perlegen Sciences, Inc. (“Perlegen”), or with respect to Roche, Genentech, Inc. (“Genentech”) or Chugai Pharmaceutical Co., Ltd. (“Chugai”), unless and until such corporation becomes a direct or indirect wholly-owned subsidiary of Affymetrix (in the case of Perlegen) or Roche (in the case of Genentech or Chugai).

(b) “Array” shall mean a microarray incorporating or embodying Intellectual Property of Affymetrix.

(d) “Affymetrix Indemnitees” shall mean Affymetrix and its officers, directors, employees, agents and representatives, and Affymetrix’ Affiliates and their officers, directors, employees, agents and representatives.

(e) “Affymetrix Instrument Agency Agreement” shall mean that certain Affymetrix Instrument Agency Agreement, dated as of the Effective Date hereof, between Affymetrix and Roche.

(f) “Affymetrix Instruments” shall mean fluidics station(s), work station(s), probe array reader(s), scanner(s), Instrument Control Software and other non-chip products developed and manufactured by or for Affymetrix utilized to process samples or apply samples to an Array, to read or analyze the results of a test or kit, or to otherwise facilitate the use of Arrays.

(g) “Affymetrix Technology” shall mean technology, excluding [***], owned by Affymetrix relating to photolithographic arrays of nucleic acids for the detection of nucleic acids, and [***] Affymetrix [***] the Collaboration.

(h) “Affymetrix Territories” shall mean the territories where Affymetrix has a direct sales force or a contracted distributor of Affymetrix Instruments, which list may be updated from time to time by Affymetrix to add or delete “Affymetrix Territories” without Roche’s prior consent to reflect changes in the territories where Affymetrix has a direct sales force or a contracted distributor, provided that Affymetrix shall provide reasonably prompt notice to Roche of the addition or deletion of any Affymetrix Territory.

(i) “Affymetrix Trademarks” shall mean the registered and unregistered trademarks, service marks, trade names, icons, logos, trade dress, and other indications owned by or licensed to Affymetrix as may be updated from time to time by Affymetrix without Roche’s prior consent provided that Affymetrix shall provide notice to Roche of any such update.

(j) “ASRs” means Analyte Specific Reagents (as such term is defined in 21 CFR 864.4020).

(k) “Authority” means a governmental authority or regulatory agency with jurisdiction over any subject matter of the Collaboration Agreements.

(l) “Base Markup” shall mean the product of (i) [***] multiplied by (ii) the [***].

(m) “Catalog Chips” shall mean non custom-designed Arrays as made generally available to Affymetrix customers in writing from time to time.

(n) “Chip” shall mean a photolithographic Array of nucleic acids.

(o) “Claim” shall mean a claim or lawsuit brought against either Party.

(p) “Collaboration” shall mean the collaboration between Affymetrix and Roche, as set forth in the Collaboration Agreements, to develop and commercialize diagnostic products in connection with and in the field of DNA chip technology, and to develop certain instrumentation and related software for use with Arrays.

(q) “Collaboration Agreements” shall mean (i) this Agreement, (ii) the License Agreement, (iii) the Supply Agreement, (iv) the Affymetrix Instrument Agency Agreement, (v) the Diagnostic Product Agency Agreement, (vi) the Standstill Agreement and (vii) the R&D Agreement.

(r) “Collaboration IP” means all inventions, discoveries, improvements, works of authorship, copyrightable subject matter, trade secrets, know-how and other information or technology (other than Content), and any and all Intellectual Property Rights therein and appurtenant thereto created after the Effective Date in furtherance of the Collaboration, whether developed by Affymetrix or Roche alone, jointly or with a Third Party, including Improvements to either party’s Existing Technology (but excluding New Content).

(s) “Collaboration Manager” shall have the meaning specified in Section III(a) of this Agreement.

(t) “Component Chip” shall have the meaning assigned thereto in Section III(a) of the Supply Agreement.

(u) “Confidential Information” shall mean any non-public information designated or marked as confidential disclosed by either Party to the other, either directly or indirectly, in writing, oral (and confirmed as confidential in writing within 30 days of disclosure), visual or electronic form, technical or non-technical or by inspection of tangible objects, including, but not limited to, software, trade secrets, patents, patent applications, inventions (whether patentable or not), data, know-how, algorithms, diagrams, drawings, processes, research, product or strategic plans or collaborations or partnerships, financial information, business models, and information relating to corporate finance and governance.

(v) “Content” shall mean a probe, reagent or enzyme (or a pattern consisting of a multiple of these) with a patentable or patented established association of genetic information including but not limited to DNA sequence information, SNPs, haplotypes and/or gene expression information, with a human attribute, characteristic, disease, trait, or other condition of clinical diagnostic or prognostic relevance.

(w) “CRO” shall mean a clinical research agency that is a commercial entity providing clinical trial services, including but not limited to laboratory services, to pharmaceutical and biotechnological companies for drug development purposes.

(x) “Cross-License Agreement” shall mean that certain Cross-License Agreement, dated as of the Effective Date, between Affymetrix and Roche.

(y) “Customers” shall mean (i) all laboratories (other than Physician Office Labs and Pharma Labs) and (ii) CROs, which laboratories or CROs are purchasing Diagnostic Products for their own use (including without limitation in such laboratory’s or CRO’s capacity as an

independent contractor for others, but not as a reseller of Diagnostic Products or their components).

(z) “Custom Array” means any Array created or to be created based on specifications provided by Roche or a Third Party, which Array is not a Catalog Chip.

(aa) “Damages” shall mean liabilities, claims, demands, actions, suits, losses and damages, and all costs and expenses (including reasonable attorneys’ fees), paid to Third Parties in connection with any such item.

(bb) “Database” shall mean a collection of Datapoints derived from an Array that is made available for license broadly in whole or in part for use to derive additional information.

(cc) “Datapoints” shall mean a base, single nucleotide polymorphism, Gene, or expressed sequence tag (EST) represented on an Array and comprises all probe pairs on the array that represent the base, single nucleotide polymorphism, Gene, or EST.

(dd) “Designation” shall mean all Trademarks, notices and other designations.

(ee) “Development Chip” shall have the meaning assigned thereto in Section III(a) of the Supply Agreement.

(ff) “Development Plan” shall mean a project plan determined according to the R&D Agreement.

(gg) “Diagnostic Instrument” shall mean instruments utilized or utilizable to process samples for or apply samples to a Diagnostic Product, to read or analyze the results of a Diagnostic Product, or to otherwise facilitate the use of a Diagnostic Product, including the related instrument control software to operate such instruments and analyze such results.

(hh) “Diagnostic Method” shall mean any of the following: (i) genotyping and resequencing human or human pathogen DNA analysis for the quantitative and/or qualitative detection of DNA sequences and variants, including, but not limited to, mutations (including without limitation methylation-based mutations), deletions, insertions and motif shifts, for any disease, (ii) measuring human gene expression for cancer and (iii) measuring human gene expression for Inflammation.

(ii) “Diagnostic Product” shall mean a product, product kit, reagent or group of reagents, data or Database, sold together or separately, utilizing one or more Diagnostic Methods that contains the essential active reagents and components (other than Diagnostic Instruments) necessary to measure, observe or determine for diagnostic purposes human attributes, characteristics, diseases, traits or other conditions of human beings, that includes (i) one or more Chips and (ii) reagents and/or enzymes, suitable to perform a detection assay (whether or not together with a nucleic acid amplification). Products developed under the P450 Collaboration Agreement do not, however, constitute Diagnostic Products and are excluded from the scope of the Collaboration Agreements.

(jj) “Diagnostic Product Agency Agreement” shall mean that certain Diagnostic

Product Agency Agreement, dated as of the Effective Date hereof, between Affymetrix and Roche.

(kk) “Diagnostic Software” shall mean software necessary to use Diagnostic Products for a Diagnostic Use other than Instrument Control Software.

(ll) “Diagnostic Use” shall mean the diagnostic use of microarrays as a component of a Diagnostic Product for the measurement, observation or determination of attributes, characteristics, diseases, traits or other conditions of a human being or human pathogen for the medical management of a human or where the results of such use are communicated directly or indirectly to a patient or a medical professional providing care to a patient for the purpose of treating such patient but excluding any use for which an Array is utilized (i) at the point of care for the patient or in a physician’s office (if such physician’s office would not constitute a Customer hereunder); or (ii) by a consumer who purchased such microarray via retail or another direct-to-consumer sales channel).

(mm) “Disclosing Party” shall have the meaning set forth in Section II(a) of this Agreement.

(nn) “Distribution Agreement” shall mean that certain Distribution Agreement, dated as of the Effective Date, between Affymetrix and Roche.

(oo) “Effective Date” shall have the meaning set forth in the preamble to this Agreement.

(pp) “Executive Representatives” shall have the meaning set forth in Section III(b)(i).

(qq) “Existing Technology” means inventions (whether or not patentable), discoveries, improvements, works of authorship, copyrightable subject matter, designs, trade secrets, know-how and other information or technology, and all Intellectual Property Rights therein and appurtenant thereto, existing as of the Effective Date, excluding Content.

(rr) “FDA” shall mean the United States Food and Drug Administration or its successor agency.

(ss) “Fully Loaded Cost” shall mean the Party’s cost of goods sold determined on a quarterly basis for manufacturing and supplying a particular product in accordance with US GAAP and in a manner that is consistent with such Party’s methods for determining its product costs as publicly reported, which includes all costs associated with converting raw starting materials into packaged product including, but not limited to, raw materials, direct labor, indirect labor, warranty expenses, Third Party royalties and overhead.

(tt) “Gene” or “gene” shall refer to a nucleic acid sequence encoding a distinct RNA. A Gene may be represented by a partial nucleic acid sequence representing an expressed sequence tag (“EST”). Multiple ESTs from the same Gene are considered a single Gene. Polymorphic variants of a nucleic acid sequence are considered a single Gene, provided that such polymorphic variants must have at least 99% homology with the underlying Gene. If a nucleic acid sequence encodes multiple distinct RNAs due to alternative splicing, each alternative

internal splice variant is considered a distinct Gene.

(uu) “Gross Sales” as to a Diagnostic Product, Diagnostic Instrument or Affymetrix Instruments Sold, as the case may be, means the total amount invoiced by any person to the end-user, distributor, agent or the like, on account of or relating to such Sale.

(vv) “Improvements” means: (i) for copyrightable or copyrighted material, each and every translation (including translations into other computer languages), modification, adaptation, derivation, enhancement, update, correction, addition, extension, upgrade, improvement, alteration, compilation, abridgment or other form in which an existing work may be recast, transformed or adapted; (ii) for patentable or patented material, any improvements, additions, developments and other enhancements or changes thereon; and (iii) for materials, processes or other Intellectual Property which is protected by trade secret, any new materials, processes or other Intellectual Property relating to such existing trade secret material, including new materials, processes or other Intellectual Property which may be protected by copyright, patent and/or trade secret law.

(ww) “Inflammation” shall mean any disease entity for which an acute or chronic inflammatory response, typically characterized by neutrophil infiltration and degranulation and abnormal levels of mediators like cytokines, is a major cause of or driver for sustaining the disease, as commonly understood and generally accepted.

(xx) “Instrument Control Software” shall mean Instrument control software currently employed by Affymetrix in the operation of Affymetrix Instruments, together with any improvements or extensions other than disease specific software and any other software developed by Affymetrix for specific applications in the control of Affymetrix Instruments.

(yy) “Intellectual Property Rights” or “IPR’s” shall mean all worldwide statutory or common law rights relating to Intellectual Property.

(zz) “Intellectual Property” shall mean all (i) patents, patent applications and rights to file patent applications, (ii) works of authorship, including copyrights, (iii) trade/industrial secrets and confidential information, (iv) other intangible property rights analogous to those set forth above, and (v) as applicable, any applications, registrations, reissues or extensions of any of the foregoing and any divisions, continuations or continuation-in-part of any applications or substitutes therefor and any foreign counterparts, now existing or hereafter acquired, but excludes any trademark, trade name, service mark or similar rights.

(aaa) “Joint Steering Committee” or “JSC” shall have the meaning set forth in Section III(d) of this Agreement.

(bbb) “Joint Research Management Committee” shall have the meaning given to such term in Section III(c) of this Agreement.

(ccc) “JSC Marketing Lead” shall have the meaning set forth in Section III(d)(i) of this Agreement.

(ddd) “License Agreement” shall mean that certain License Agreement, dated as of the

date hereof, between Affymetrix and Roche.

(eee) "Manufacturing Lockup Point" shall mean the time after which Roche and Affymetrix have agreed on the manufacturing process to be used to achieve Chip specifications for use in obtaining Regulatory Approvals.

(fff) “Market Development Plan” shall mean for a Diagnostic Product for any period, a written plan that Roche will develop in conjunction with Affymetrix, for that Diagnostic Product for such period, as approved by the Joint Research Management Committee. The Market Development Plan will set sales and marketing strategy for that Diagnostic Product, including, without limitation, plans for marketing materials, clinical trials and studies under the R&D Agreement, trade show participation, advertising, marketing efforts and the like that Affymetrix will perform and the amounts to be expended and reimbursed by Roche, as well as a non-binding suggested pricing structure for that Diagnostic 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 Market Development Plan, it will remain in effect and be deemed part of the then applicable Market Development Plan.

(ggg) “Markup Percentage” shall mean the percentage mark up over [***] embedded in the [***] as set forth in the Supply Agreement as of the Effective Date, which percentage [***] Collaboration.

(hhh) “Net Sales” shall mean the gross amount invoiced by Roche or Roche’s Affiliates to end-users, distributors, agents or the like, for sales of a Diagnostic Product, less:

(i) volume discounts, sales rebates, allowances, returns and sales taxes (to the extent such sales taxes are invoiced separately by end users’ distributors or agents), in all cases, other than as included in Sales Expenses; and then

(ii) [***]% of the remaining amount after the deduction in (i) above for Sales Expenses; and then

(iii) if a Reagent Agreement Plan is utilized for a Diagnostic Product, [***]% of the remaining amount, after the deductions in (i) and (ii) above, as an agreed deduction for Reagent Rental; and then

(iv) to the extent PCR Technology is included as a functional component of a Diagnostic Product, one of the following deductions (reflecting the agreed upon value of the Diagnostic Product attributable to Roche’s PCR Technology from time to time):

(1) for Diagnostic Product sales through December 31, 2005, [***]% of the remaining amount from the sale of such Diagnostic Product;

(2) for Diagnostic Product sales after December 31, 2005 through December 31, 2010, [***]% of the remaining amount from the sale of such Diagnostic Product;

(3) for Diagnostic Product sales after December 31, 2010 through December 31, 2015, [***]% of the remaining amount from the sale of such Diagnostic Product; or

(4) for Diagnostic Product sales after December 31, 2015, [***].

Notwithstanding the foregoing, in the case of internal use by Roche or its Affiliate of Diagnostic Products in connection with providing diagnostic services to customers on a commercial basis, Net Sales for such Diagnostic Products will be (i) if such Diagnostic Product is then sold or furnished to Third Parties, the then current average Net Sales per such Diagnostic Product so sold or furnished, and (ii) if not then so sold or furnished, a reasonable Net Sales amount that would apply between Roche and its arm’s length customers, taking into account the Net Sales amount of any comparable Diagnostic Products and all other relevant factors.

(iii) “New Content” means all new or novel inventions, discoveries or Improvements relating to, based on or derived from the Content, that are created after the Effective Date in the furtherance of the Collaboration, whether developed by Affymetrix or Roche alone, jointly or with a Third Party.

(jjj) “P450 Collaboration Agreement” shall mean that certain Collaboration Agreement between Affymetrix and Roche regarding the development, manufacture and distribution of a diagnostic product relating to cytochrome P450s exclusively.

(kkk) “Party” or “party” shall, unless the context requires otherwise, mean Affymetrix or Roche, as the case may be, and “Parties” or “parties” shall mean both Affymetrix and Roche.

(lll) “PCR” means the polymerase chain reaction process and technology involving the amplification of a nucleic acid sequence and the complement of that sequence by repeated cycles of oligonucleotide mediated, template directed synthesis involving the extension of a component primer oligonucleotide by incorporation of monomeric nucleotide triphosphates whereby the sequence, its complement and subsequent synthetic copies thereof are repeatedly separated and used as templates for further cycles of synthesis.

(mmm) “PCR Technology” shall mean the PCR technologies, methods and compositions owned by or licensed to Roche, including but not limited to patents issued through December 31, 2005.

(nnn) “Person” or “person” shall mean a natural person, corporation, partnership, limited liability company, trust, joint venture, any governmental authority or any other entity or organization.

(ooo) “Pharma Labs” shall mean laboratories located within pharmaceutical or biotechnology companies utilized by their own researchers to conduct internal development, clinical research or clinical trials.

(ppp) “Physical Defects” shall mean defects which Roche reasonably determines after consultation with Affymetrix, to result from the manufacture or handling of Arrays by

Affymetrix prior to shipment (rather than, for example, design defects relating to Specifications provided by Roche, or end-user errors in sample preparation or processing), and to be the cause of impaired hybridization of a sufficient number of probe pairs to affect the efficacy or quality of probe set data.

(qqq) “Physician Office Lab” shall mean a laboratory to which each of the following apply: (i) it is owned and operated by a physician or group of up to [***] physician(s) or by a practice management organization or financing entity that makes it available for the use of not more than [***] physicians and (ii) [***]% or more of the tests performed are upon samples taken from patients treated by such physician(s). Laborgemeinschaften and similar laboratories are not Physician Office Labs, however.

(rrr) “Project Committee” shall have the meaning specified in Section III(a) of this Agreement.

(sss) “Project Plan” means a written agreement that is negotiated, prepared, agreed to and executed by both parties with respect to any proposed cooperative activity pursuant to the R&D Agreement, which shall define the terms and conditions applicable for a specific research and development project, including, without limitation, schedules of work and annual research plans, agreed annual budgets, supervision roles for each party, payment obligations and terms, ownership of IPR’s and Collaboration IP and licensing arrangements between the parties.

(ttt) “R&D Agreement” shall mean that certain Research and Development Collaboration Agreement, dated as of the Effective Date, between Affymetrix and Roche.

(uuu) “Reagent Agreement Plan” means a program (whether known as a Reagent Agreement Plan, Reagent Rental Plan or other successor or similar plan) for the Sale of one or more Diagnostic Products (without necessary Diagnostic Instruments therefore) in conjunction with the supply of necessary Diagnostic Instruments and servicing for a combined price.

(vvv) “Reagent Rental Expenses” shall mean services which are included in reagent prices such as Diagnostic Instrument services costs, Diagnostic Instrument depreciation, finance expense, disposables and rental fees.

(www) “Receiving Party” shall have the meaning set forth in Section II(b) of this Agreement.

(xxx) “Roche” shall have the meaning set forth in the preamble to this Agreement.

(yyy) “Roche Customers” shall mean purchasers, excluding Roche and its Affiliates, of Diagnostic Products sold by Roche or its Affiliates.

(zzz) “Roche Indemnitees” shall mean Roche and its officers, directors, employees, agents and representatives and Roche’s Affiliates, their officers, directors, employees, agents and representatives.

(aaaa) “Roche Instruments” shall mean Diagnostic Instruments developed and manufactured by or for Roche and/or its Affiliates.

(bbbb) “Roche Technology” shall mean the Roche-provided specifications for Diagnostic Products and their components, PCR Technology, any other technology owned or controlled by Roche or its Affiliates relating to nucleic acid analysis, and any other technology owned or controlled by Roche or its Affiliates useful for the performance of the Collaboration, [***].

(cccc) “Roche Trademarks” shall mean the registered and unregistered trademarks, service marks, trade names, icons, logos, trade dress, and other indications owned by Roche as may be updated from time to time by Roche without Affymetrix’ prior consent provided that Roche shall provide written notice to Affymetrix of any such update.

(dddd) “Regulatory Approvals” means, for an applicable product or test, with respect to the United States, regulatory approval of the FDA, or for any other country or jurisdiction, regulatory approval from any applicable Regulatory Authority for such other country or jurisdiction.

(eeee) “Regulatory Authority” means any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental or quasi-governmental entity, including, without limitation, the FDA.

(ffff) “Residuals” shall mean that information and/or technology which is used incidentally and retained in the unaided memory of those employees of the Receiving Party who have had rightful access to designated information and technology of the Disclosing Party in the course of the Collaboration; provided, however, that “Residuals” shall not include any information or technology which (i) an employee of the Receiving Party deliberately commits to memory in order that such information and technology would be classified as “Residuals” hereunder; (ii) if used, would have a detrimental effect on the Disclosing Party’s principal business; or (iii) is related to microarray technology.

(gggg) “Sale” or “sale” means the act of selling, leasing or otherwise placing, distributing or disposing. “Sell,” “sell,” “Sold” or “sold” shall have related meanings.

(hhhh) “Sales Expenses” shall mean the agreed upon percentage deduction in lieu of deductions for actual internal expenses of Roche and/or Roche’s Affiliates for (i) tariffs, duties and taxes imposed upon the production, sale, delivery or use of a Diagnostic Product and/or Diagnostic Instrument, as applicable (excluding sales taxes that are separately invoiced to end users’ distributors or agents), (ii) distribution and other customary expenses, such as freight, transportation and insurance expenses and (iii) cash discounts, retroactive price reductions or any credits to end-users on account of settlement of a complaint.

(iiii) “Software” shall mean Affymetrix’ instrumentation software, in object code only, for controlling Affymetrix Instruments.

(jjjj) “Standstill Agreement” shall mean that certain Standstill Agreement, dated as of the date hereof, between Affymetrix and Roche.

(kkkk) “Supply Agreement” shall mean that certain Affymetrix Instrument and Chip Supply Agreement, dated as of the Effective Date, between Affymetrix and Roche.

(llll) “Technology” shall mean technology relating to photolithographic arrays of nucleic acids for the detection of nucleic acids, and any other technology useful for the performance of the Collaboration.

(mmmm) “Third Party” shall mean a person or entity which is neither a Party to any Collaboration Agreement nor an Affiliate of a Party to any Collaboration Agreement.

(nnnn) “Trademarks” shall mean the Affymetrix Trademarks and the Roche Trademarks.

(oooo) “United States” or “U.S.” means the United States of America, its territories and possessions, including the Commonwealth of Puerto Rico.

(pppp) “Unserved Territory” shall mean territories where Affymetrix does not have a direct sales force or distributor of Affymetrix Instruments.

(qqqq) “US GAAP” shall mean United States generally accepted accounting principles as in effect from time to time, consistently applied.

II. Confidentiality.

(a) Use. Each Party covenants and agrees that, with respect to the other Party’s Confidential Information, it shall not (except as permitted by this Section II or with the prior written consent of the Party who is disclosing, the “Disclosing Party”): (i) disclose Confidential Information to any person other than its or its Affiliates employees, counsel, auditors and consultants who, in each case, have a need to know and have prior to receiving any Confidential Information signed a nondisclosure agreement, the provisions of which are at least as restrictive as the provisions of this Section II, or are otherwise bound by obligations of confidentiality at least as restrictive; (ii) use Confidential Information in any manner not expressly permitted by the Collaboration Agreements or (iii) use Confidential Information for the benefit of anyone but the Disclosing Party or otherwise in pursuit of the Collaboration. Each Party shall keep in confidence and prevent the acquisition, disclosure, use or misappropriation by any person or persons of the other Party’s Confidential Information, provided, however, that neither Party shall be liable for disclosure of any such information that is disclosed as permitted by this Section II or with the prior written consent of the other Party.

(b) Degree of Care. The Party to whom Confidential Information is being disclosed (the “Receiving Party”) shall use the same care to avoid disclosure, publication or dissemination of Confidential Information as it uses with its own similar confidential information, provided that the Receiving Party shall use at least reasonable care.

(c) Exclusions. Confidential Information shall not include any information disclosed to the Receiving Party that it can demonstrate: (i) previously was in its possession, as shown by its pre-existing records, without violation of any obligation of confidentiality; (ii) was received from a Third Party without violation of any obligation of confidentiality; (iii) was publicly known and made generally available prior to such disclosure; (iv) becomes publicly known and made generally available, through no action or inaction of the Receiving Party, after such disclosure; or (v) was independently developed by the Receiving Party without using Disclosing

Party’s Confidential Information.

(d) Legal Processes. If the Receiving Party is required by law, regulation or the rules of a national stock exchange to disclose Confidential Information, it shall give the Disclosing Party timely written notice of such requirement before disclosing any such information and shall cooperate with the Disclosing Party to seek a protective order, confidential treatment or other appropriate measures to limit the extent of disclosure.

(e) No Warranty. ALL CONFIDENTIAL INFORMATION IS PROVIDED “AS IS”. EACH PARTY MAKES NO WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, REGARDING ITS ACCURACY, COMPLETENESS OR PERFORMANCE.

(f) Return of Materials. All documents, software, reagents and other tangible objects containing or including the Disclosing Party’s Confidential Information and all copies thereof that are in the Receiving Party’s possession, shall be and remain the property of the Disclosing Party and shall be, upon the Disclosing Party’s written request, promptly returned to the Disclosing Party or destroyed, except for a single copy thereof that may be retained by Receiving Party’s internal or external legal counsel for the sole purpose of determining the scope of obligations under the Collaboration Agreements.

(g) Residuals. Subject to existing patent and copyright protection and applicable licenses and unless agreed otherwise in a Project Plan, each party shall be entitled to use Residuals associated with any Confidential Information for any purpose whatsoever including use in development, manufacturing, marketing and maintenance of its products and services.

(h) No Transfer or License. Nothing in this Section II is intended to grant or transfer any right to either Party under any patent, copyright or other Intellectual Property right of the other Party, nor shall this Section II grant or transfer to any Party any right in or to the Confidential Information of the other Party except as expressly set forth herein.

III. Management of Relationship.

(a) Collaboration Managers. Every project for the development of a Diagnostic Product or Diagnostic Instrument by the Parties shall have a “Project Committee” that shall oversee such development. The members of a particular Project Committee shall be appointed by the Parties in such number as decided by the Parties on a project-by-project basis. In addition, for each project, each Party will have the right to appoint a “Collaboration Manager” which shall oversee every Project Committee. The Collaboration Managers will be responsible for day-to-day communications between the Parties. Each Party shall appoint its respective Collaboration Manager promptly following the Effective Date by giving the other Party written notice.

(i) Either Party may change its Collaboration Manager at any time and from time to time by giving the other Party written notice.

(ii) The Collaboration Managers will meet every month to discuss the progress of the development, manufacturing and marketing efforts and, if applicable, to exchange information.

(iii) Collaboration Managers are not authorized to amend, alter or extend the Collaboration Agreements in any manner.

(b) Appointment of Executive Representatives.

(i) Each of Affymetrix and Roche will designate one of its senior executives of level Vice President or higher to serve as its Executive Representative (each, an “Executive Representative”) with respect to the business relationship to be established by the Collaboration Agreements. The Executive Representatives are responsible for establishing the high level goals for the Collaboration and monitoring the activities of the Joint Research Management Committee. The Executive Representatives shall meet as needed at any time upon the reasonable request of either Party.

(ii) The initial Executive Representatives shall be appointed by each Party within ten (10) days of the Effective Date. Either Party may change its Executive Representative from time to time upon written notice to the other Party, but the Parties agree to exercise this right with restraint to help ensure reasonable continuity in management of the relationship.

(c) Joint Research Management Committee. The Parties shall establish and maintain a Joint Research Management Committee (“Joint Research Management Committee”) in accordance with the R&D Agreement.

(d) Joint Steering Committee. The Parties shall establish and maintain a Joint Market Development Management Committee (“Joint Steering Committee” or “JSC”) in accordance with the following provisions:

(i) The Joint Steering Committee shall consist of six members, three members to be appointed by each of Affymetrix and Roche, with one of the three being designated each Party’s JSC Marketing Lead (the “JSC Marketing Lead”). Each Party may with notice to the other substitute any of its members serving on the Joint Steering Committee. The Parties agree to appoint the members within 10 days of the Effective Date. The Joint Steering Committee shall propose recommendations to the Parties regarding the Market Development Plan(s). All recommendations of the Joint Steering Committee shall be made unanimously. No Chairperson shall be appointed and each member of the Joint Steering Committee shall have only one vote.

(ii) The Joint Steering Committee shall be responsible for implementing, managing and reviewing compliance with the Collaboration and shall in particular: (A) review and propose amendments to the Collaboration Agreements from time to time in such manner as may be appropriate; (B) monitor progress of the Market Development Plan(s); (C) report regularly to the Executive Representatives of the Parties upon the progress of the Market Development Plan(s); and (D) via each Party’s JSC Marketing Lead, be the initial medium for transfer of information between the Parties in connection with the Market Development Plan(s).

(iii) In the event of any dispute upon any material matter in connection with the Collaboration Agreements (having used all reasonable endeavors and negotiated in

good faith), any issue in dispute not resolved by the Joint Steering Committee within a reasonable time should be referred to the Executive Representative of each Party (which Executive Representative shall not be a member of the Joint Steering Committee) for resolution.

(e) Review of Reagent Agreement Plan Provisions.

(i) The Parties agree that the current provisions which apply to calculate the royalties under Section III(c) of the License Agreement in the context of Reagent Agreement Plan Sales have been developed on the basis of limited financial data. In order to apply the royalty provisions and define Net Sales for the purposes of this Agreement, assumptions as to relative contribution to the value of products offered through Reagent Agreement Plans have been made. In order to refine the application in a fair fashion once more information and market experience has been obtained in the sale of Diagnostic Products, the Parties agree to meet and negotiate in good faith to determine the formulas or amounts to apply in determining royalties on Diagnostic Product Sales within [***] days of the date [***] years from the date of this Agreement. The Parties agree that a purpose of potential revisions to the Agreement will be to properly recognize the value contributed by Roche in connection with Reagent Agreement Plans as well as to provide Affymetrix the benefit of its royalties independent of the business model chosen to sell products and maximize mutual economic advantage.

(ii) In order to assist in monitoring the fairness of the terms of the financial provisions of the Collaboration Agreements, the Parties agree that they will jointly prepare, with each party providing such information as it has access to, an annual report solely for their respective internal uses and for the purposes of this Agreement, covering the prior year including the following information:

(1) the [***] to customers of [***] under [***] in such year;

(2) the [***] for [***] or [***] to Third Parties both under [***] and [***] during such year;

(3) information with respect to the [***] or [***] for [***] comparable to [***] under [***] by Roche or Third Parties or other specifically identified factors relevant to evaluating the [***] that [***] of [***] under [***] during such year; and

(4) a breakdown of the [***] to [***] with an explanation for [***].

IV. Dispute Resolution. With the exception of interim equitable relief, neither Party will institute legal proceedings regarding a bonafide dispute until it has exercised reasonable good faith efforts to achieve resolution through the procedures outlined in the Section IV.

(a) Project Disputes. If for any particular Project, a dispute arises between the Parties or the Parties disagree on any issue, such dispute shall first be attempted to be resolved by the Collaboration Managers, if any, or the Joint Research Management Committee if

Collaboration Managers have not yet been appointed. If such dispute cannot be resolved by the Collaboration Managers (or the Joint Research Management Committee, as the case may be) within two weeks, such dispute shall be submitted to the Executive Representatives of each of the Party for resolution. If such dispute cannot be resolved by the Executive Representatives within two weeks thereafter, such shall be submitted to an Executive Vice President (or person of equivalent status) of each of the Parties for resolution. If such dispute cannot be resolved by the Executive Vice Presidents within two weeks thereafter, such dispute shall be submitted to the Chief Executive Officers of each of the Parties for resolution. Any dispute that remains unresolved by the Chief Executive Officers, shall be submitted to arbitration as set forth in Section IV(c) below.

(b) Joint Steering Committee Disputes. If a dispute arises between the Joint Steering Committee members on any issue relating to research and development, such dispute shall first be attempted to be resolved by the Joint Steering Committee. If such dispute cannot be resolved by the Joint Steering Committee within two weeks, such dispute shall be submitted to the Executive Representatives of each of the Party for resolution. If such dispute cannot be resolved by the Executive Representatives within two weeks thereafter, such shall be submitted to an Executive Vice President (or person of equivalent status) of each of the Parties for resolution. If such dispute cannot be resolved by the Executive Vice Presidents within two weeks thereafter, such dispute shall be submitted to the Chief Executive Officers of each of the Parties for resolution. Any dispute that remains unresolved by the Chief Executive Officers, shall be submitted to arbitration as set forth in Section IV(c) below.

(c) Mediation. If a resolution cannot be reached utilizing the foregoing procedures set forth in Section IV(b) above within 60 days, the Parties agree that such dispute shall be submitted to non-binding mediation and shall be submitted to JAMS, or its successor, for mediation, and if the matter is not resolved through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration as set forth in Section IV(d) below. Either Party may commence mediation by providing to JAMS and the other Party a written request for mediation, setting forth the subject of the dispute and the relief requested. The Parties will cooperate with JAMS and with one another in selecting a mediator from JAMS’ panel of neutrals, and in scheduling the mediation proceedings. The Parties covenant that they will participate in the mediation in good faith, and that they will share equally in its costs. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the Parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the Parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. Either Party may initiate arbitration with respect to the matters submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or 45 days after the date of filing the written request for mediation, whichever occurs first. The mediation may continue after the commencement of arbitration if the Parties so desire. Unless otherwise agreed by the Parties, the mediator shall be disqualified from serving as arbitrator in the case. The provisions of this Section IV(c) may be enforced by any court of competent jurisdiction. The Parties will pay their own costs (including, without limitation, attorneys fees) and expenses in connection with such mediation.

(d) Arbitration. If a resolution cannot be reached utilizing the foregoing procedures set forth in Section IV(c) above within 60 days of termination of the mediation, such dispute shall be submitted to binding arbitration for final settlement (in lieu of litigation) as set forth in Section VI(c) hereof. Notwithstanding the foregoing, either Party shall be entitled to proceed in any manner in order to receive interim equitable relief against the other Party.

V. Ownership of Diagnostic Products and Instruments. Unless otherwise agreed between the Parties and set forth in any Project Plan, and subject only to the rights and license grants expressly set forth in the Collaboration Agreements and/or in any Project Plan:

(a) Existing Technology. Each Party shall have and retain all right, title and interest in and to its Existing Technology. Without limiting the foregoing, subject only to the express license grants under this Agreement and/or in any Project Plan, Affymetrix owns and retains all right, title and interest in and to the Affymetrix Technology existing as of the Effective Date and Roche owns and retains all right, title and interest in and to the Roche Technology existing as of the Effective Date.

(b) Collaboration IP.

(i) Collaboration IP relating to the manufacture or design of photolithographic microarrays (other than the Content placed thereon) or of packaging for photolithographic microarrays or to Instrument Control software (as opposed to disease-specific software or software which is developed specifically for a Roche Instrument) for analyzing the results of tests conducted with photolithographic microarrays shall be owned exclusively by Affymetrix, irrespective of the inventor or which Party bore the cost of developing the same.

(ii) Subject to (i) above, Collaboration IP relating to Roche Diagnostic Products, Roche Instruments and software for analyzing the results of tests using Diagnostic Products which is disease-specific or which is developed specifically for a Roche Instrument, and all data arising from all trials and usage of Diagnostic Products and all Regulatory Approvals related thereto, shall be owned exclusively by Roche, and Collaboration IP relating to Affymetrix Diagnostic Products, Affymetrix Instruments and software for analyzing the results of tests using such Diagnostic Products which is disease-specific or which is developed specifically for an Affymetrix Instrument, and all data arising from all trials and usage of such Diagnostic Products and all Regulatory Approvals related thereto, shall be owned exclusively by Affymetrix irrespective of the inventor or which Party bore the cost of developing the same.

(iii) Subject to (i) and (ii) above, Collaboration IP relating to or based on the Affymetrix Technology (or other Existing Technology or Intellectual Property Rights of Affymetrix), including, without limitation, all Improvements thereof or thereto shall be owned exclusively by Affymetrix, and Collaboration IP relating to or based on the Roche Technology (or other Existing Technology or Intellectual Property Rights of Roche), including, without limitation, all Improvements thereof or thereto shall be owned exclusively by Roche, in each case regardless of the inventor.

Accordingly, unless otherwise expressly agreed between the Parties and set forth in any Project Plan, and subject only to the rights and license grants expressly set forth in the Collaboration Agreements and/or in any Project Plan, neither Party nor any of its Affiliates will have any right or license to use, make, have made, copy, distribute, adapt, prepare derivatives of, display, perform, Sell, import or sublicense any Diagnostic Product, Roche Instrument or Affymetrix Instrument so developed by Roche or Affymetrix, as the case may be, or any data or regulatory approvals related thereto, or authorize or purport to authorize any Third Party to do any of the foregoing, and/or to the extent expressly provided in any Collaboration Agreement. Each Party hereby agrees to assign and transfer, and hereby assigns and transfers to the other Party, any and all right, title and interest such Party has or may have, as and from the date of creation, in and to any Intellectual Property Rights in Intellectual Property created after the Effective Date in the course of the Collaboration necessary to effect the allocation of ownership rights set forth in this Section. Each Party agrees to cooperate with the other and take all reasonable additional actions and execute such agreements, instruments and documents as may be reasonably required to perfect the other’s ownership interest in accordance herewith including, without limitation, the execution and delivery of necessary and appropriate instruments of assignment (in recordable form, where appropriate or when requested).

VI. General.

(a) Amendment and Waiver. Except as otherwise expressly provided therein, no provision of any Collaboration Agreements may be modified, amended, rescinded, canceled or waived (either generally or in any particular instance and either retroactively or prospectively) except by a written instrument signed by the Parties thereto; provided that any unilateral undertaking or waiver by one Party in favor of the other shall be enforceable if undertaken in a writing signed by the Party to be charged. The failure of either Party to enforce its rights under any Collaboration Agreement at any time for any period shall not be construed as a waiver of such rights.

(b) Governing Law. This Agreement and the other Collaboration Agreements shall be governed by and construed under the laws of the State of California without regard to conflicts of laws provisions thereof that would require the application of the law of any other jurisdiction, and without regard to the United Nations Convention on Contracts for the International Sale of Goods. Any dispute, claim or controversy arising out of or relating to this Agreement or any other Collaboration Agreement or the breach, termination, enforcement, interpretation or validity hereof or thereof, including the determination of the scope or applicability of this Agreement or any other Collaboration Agreement to arbitrate, shall be determined by final and binding arbitration in San Francisco, California (except for an action for intereim equitable relief otherwise permitted under the Collaboration Agreements and/or unless otherwise agreed by the Parties), before a sole arbitrator, in accordance with the laws of the State of California for agreements made in and to be performed in that State. The arbitration shall be administered by JAMS (or its successor) pursuant to its Comprehensive Arbitration Rules and Procedures; provided, however, if the Parties mutually elect, the arbitration can be administered by JAMS pursuant to its Streamlined Arbitration Rules and Procedures instead of its Comprehensive Arbitration Rules and Procedures. The arbitrator’s decision shall be reduced to

writing, signed by the arbitrator, and mailed to each of the parties and their legal counsel. All decisions of the arbitrator shall be final, binding and conclusive on the parties. The arbitrator or a court of appropriate jurisdiction may issue a writ of execution to enforce the arbitrator’s judgment. Judgment may be entered upon such a decision in accordance with applicable law in any court having jurisdiction thereof. The Parties will pay their own costs (including, without limitation, attorneys fees) and expenses in connection with such arbitration. Notwithstanding the foregoing, the Parties acknowledge that each Party’s performance under this Agreement and each of the other Collaboration Agreements is unique and may not be easily or readily performed by another party and hereby agree that specific performance may be considered by the arbitrator as a resolution to any dispute.

(c) Remedies. 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) shall be finally settled exclusively by binding arbitration as set forth in Section VI(b). Notwithstanding the foregoing, either party shall be entitled to proceed in any manner in order to receive interim equitable relief against the other party.

(d) Headings. Headings and captions in each of the Collaboration Agreements are for convenience only and are not to be used in the interpretation of the Collaboration Agreements.

(e) Notices. All notices and requests required or authorized hereunder except as otherwise set forth therein in the Collaboration Agreements, shall be given in written form either by facsimile, personal delivery to the Party to whom notice is given, or by certified mail, postage prepaid, return receipt requested. Separate notice is specifically provided in Section VII(a) of the Supply Agreement. Notice given by facsimile shall be deemed delivered as of the date of the facsimile confirmation, provided such facsimile is confirmed in writing, mailed or personally delivered promptly thereafter. The date upon which any other notice is delivered, or if the notice is given by certified mail, the date five days after it is deposited in the U.S. mails, shall be deemed to be the date of such notice, irrespective of the date appearing therein. In addition, the address of the Parties may be changed by notice given in accordance with this Section.

Affymetrix:	Affymetrix, Inc.
	3380 Central Expressway
	Santa Clara, California 95051
	Attention:	General Counsel
	Telephone:	(408) 731-5151
	Facsimile:	(408) 731-5394

With a copy to:	Milbank, Tweed, Hadley & McCloy LLP
	Five Palo Alto Square
	3000 El Camino Real
	Palo Alto, California 94306
	Attention:	Douglas A. Tanner, Esq.
	Telephone:	(650) 739-7000
	Facsimile:	(650) 739-7100

Roche:	F. Hoffmann-La Roche, Ltd.
	Grenzacherstrasse 124
	CH-4070 Basel
	Switzerland
	Attention:	Head, Diagnostic Division
	Telephone:	+41 (61) 688-7100
	Facsimile:	+41 (61) 691-9757

With a copy to:	Roche Molecular Systems
	4300 Hacienda Drive
	Pleasanton, California 94588
	Attention:	General Counsel
	Telephone:	(925) 730-8030
	Facsimile:	(510) 814-2956

(f) Entire Agreement. Each of the Collaboration Agreements constitutes and expresses the final, complete and exclusive agreement and understanding between the Parties with respect to its subject matter and supersedes all previous and contemporaneous communications, representations or agreements, whether written or oral, with respect to the subject matter thereof.

(g) Severability. If any term or provision of any of the Collaboration Agreements is found to be invalid under any applicable statute or rule of law, then that provision notwithstanding, such Collaboration Agreement shall remain in full force and effect and such provision shall be deleted unless such a deletion would frustrate the intent of the Parties with respect to any material aspect of the relationship established thereby, in which case, such Collaboration Agreement and the licenses and rights granted thereunder shall be deemed amended in such a manner as to most closely approximate the original intention of the Parties while remaining valid under such applicable statute or rule of law.

(h) Relationship of Parties. The relationship between or among the Parties and any of their Affiliates created by the Collaboration Agreements, individually and as a whole, is that of independent contractors and no other relationship is intended, including a partnership, franchise, joint venture or (except as specifically set forth in the Agency Agreement) agency. Each Party hereby waives the benefit of any state or federal statutes dealing with the establishment and regulation of franchises.

(i) Assignment. The Collaboration Agreements and the rights thereunder are not transferable or assignable without the prior written consent of the Parties thereto, 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, in the case of Affymetrix, all or substantially all of Affymetrix’ assets or business, or, in the case of Roche, all or substantially all the assets or business of the diagnostic business units, worldwide, of F. Hoffmann-La Roche Ltd. and its Affiliates, taken as a whole, in each case whether by sale, merger or otherwise.

(j) Publicity and Press Releases. The Parties will cooperate in good faith in the preparation of all joint press releases (if any) in connection with the relationship established

under the Collaboration Agreements. The content, form and timing of all joint press releases must be acceptable to each Party. Each Party shall be responsible for the preparation, content, form and timing of its own unilateral press releases; provided, that such Party shall: (i) submit the proposed release to the other for review in a manner timely to the anticipated release date for the press release; and (ii) consider, in good faith, suggestions regarding additions, deletions and/or changes made by the other Party. The Parties may jointly create a briefing document including appropriate responses to press inquiries regarding the Collaboration Agreements and the relationship formed hereunder, to be distributed as a guide to appropriate executives of the Parties. To the extent any proposed disclosure under this Section VI(j) includes financial information or data identified to the Collaboration Agreements, such disclosure shall be treated as Confidential Information pursuant to Section II(d).

(k) Force Majeure. If the performance of any obligation under any Collaboration Agreement is prevented, restricted or interfered with by any reason of fire, flood, earthquake, explosion or other casualty or accident, strikes or labor dispute, inability to procure or obtain delivery of parts, supplies or power, war, terrorism or other violence, any law, order, proclamation, regulation, ordinance, demand or requirement of any governmental agency, the Party so affected, upon giving prompt notice to the other Party, shall be excused from such performance to the extent of such prevention; provided, however, that the Party so affected shall resume performance hereunder with dispatch whenever such causes are removed and shall reasonably cooperate with the other Party to cause any such cause to be removed.

(l) Performance by Affiliates. To the extent that any term or provision of the Collaboration Agreements contemplates, permits or requires performance by any Affiliate of a Party, such Party shall cause each such Affiliate to perform each and every obligation of such Party under such Collaboration Agreement in accordance with the terms and conditions hereof. Further, it is expressly understood that a Party may from time to time perform some or all of its obligations hereunder through one or more of its Affiliates, and such Affiliates are and shall be intended Third Party beneficiaries of this Agreement.

(m) Consents. Each Party will use its reasonable efforts to obtain any regulatory consents or Third Party approvals required for the performance of any and all of its obligations hereunder.

(n) Basis of Bargain. EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY DISCLAIMERS AND REMEDY LIMITATIONS IN THE COLLABORATION AGREEMENTS ARE MATERIAL BARGAINED FOR BASES OF SUCH AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER SUCH COLLABORATION AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO SUCH COLLABORATION AGREEMENT.

(o) Counterparts. Each of the Collaboration Agreements may be executed in counterpart signatures, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

AFFYMETRIX:			ROCHE:

Affymetrix, Inc.			F. Hoffmann-La Roche Ltd.

By:	/s/ Barbara A. Caulfield		By:	/s/ Heino von Prondzynski
	Name:	Barbara A. Caulfield		Name: Heino von Prondzynski
	Title:	Executive Vice President and General		Title: Head, Diagnostic Division
		Counsel

			By:	/s/ Gregory F. Heath
				Name: Gregory F. Heath
				Title: Head, Business Development and Licensing

EX-10.58 6 a2111472zex-10_58.htm EXHIBIT 10.58

EXHIBIT 10.58

License Agreement

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

CONTENTS

I.	Common Terms and Definitions.
II.	License Grants.
III.	Payments
IV.	Covenants
V.	PCR License Option
VI.	Term and Termination.
VII.	Warranty and Warranty Disclaimers.
VIII.	Limited Liability.
IX.	Indemnity.
Exhibit A:		Roche PCR Patents
Exhibit B:		[***]
Exhibit C:		Affymetrix Designation and Branding Guidelines

LICENSE AGREEMENT

January 29, 2003

This LICENSE AGREEMENT (the “Agreement”) is effective as of the date first written above (“Effective Date”) between Affymetrix, Inc., a Delaware corporation (“Affymetrix”), and F. Hoffmann-La Roche Ltd. (“Roche”).

I. Common Terms and Definitions.

(a) Common Terms.

(i) All capitalized terms not otherwise defined herein shall have the meanings set forth in the Common Terms Agreement, dated as of even date herewith, between Affymetrix and Roche (the “Common Terms Agreement”).

(ii) This Agreement shall be governed by and subject to the provisions contained in the Common Terms Agreement, in accordance with its terms.

(b) Definitions.

(i) “Acceptance Notice” has the meaning set forth in Section VI(k)(ii).

(ii) “Base Sales Royalty” shall have the meaning set forth in Section III(c)(i).

(iii) “Comparable License” has the meaning set forth in Section VI(k)(i).

(iv) “Competing Products” means all products that test for the same analytes and that directly compete with a Diagnostic Product being sold by Roche in that Major Territory, including specifically the competing Roche Diagnostic Product.

(v) “Defined Technology” shall mean all Intellectual Property owned by Affymetrix (other than as set forth below) useful for the detection of nucleic acids for any human diagnostic purpose that, (i) insofar as it relates to [***], utilizes less than [***] (“[***]”) or [***] and has a [***]; or (ii) insofar as it involves [***], utilizes [***], provided that each [***] contains no more than [***] individual [***]; provided that “Defined Technology” does not include any [***] or [***] pertaining to [***], or, in addition, any [***] that is subject to existing exclusive rights that would prevent the granting of the covenant contained in Section IV(a).

(vi) “Enforcement Proceeding” shall have the meaning set forth in Section III(c)(ii)(2).

(vii) “First Sale” shall have the meaning set forth in Section III(c)(i)(B).

(viii) “Human Identity Field” means the field of use comprising products and processes utilizing PCR for the sole purpose of determining human identity or distinguishing among human beings, whether living or dead. The term “Human Identity Field” shall included parentage testing to determine if two or more human beings are biologically related as parent and child and forensic testing for use in, or in preparation for, death investigations or other legal proceedings, but such term shall specifically exclude testing for tissue typing.

(ix) “In Vitro Human Diagnostics Field” means the measurement, observation or determination of attributes, characteristics, diseases, traits or other conditions of a human being for the medical management of that human being, including without limitation:

(1) genetic testing, including determinations of genetic predisposition;

(2) oncology and cancer predisposition testing;

(3) testing for tissue typing (excluding the Human Identity Field);

(4) infectious disease detection, screening, confirmation and monitoring; and

(5) therapeutic drug monitoring.

For purposes of this Agreement, the term “In Vitro Human Diagnostics Field” shall not include the Human Identity Field, nor shall such term include the measurement or observation of samples of material other than samples of material obtained from human beings. In no event shall the term “In Vitro Human Diagnostics Field” include or be construed to include the performance of PCR for the detection of pathogens for use in blood bank screening and the plasma fractionation industry.

(x) “Licensed Patent” shall have the meaning set forth in Section III(c)(ii)(1).

(xi) “Major Competitor” shall mean [***], [***], [***] or [***], or any other entity that competes with the business currently constituting the diagnostic business units, worldwide, of F. Hoffmann-La Roche Ltd. and its Affiliates, taken as a whole, provided that any entity shall only be a “Major Competitor” for so long as it continues to compete with such units.

(xii) “Major Territory” shall mean any of the following: (i) United States, (ii) Canada, (iii) Great Britain, (iv) Germany, (v) France, (vi) Italy, (vii) Spain, (viii) Japan, (ix) Australia, (x) China, (xi) South Korea, (xii) Taiwan and (xiii) Singapore.

(xiii) “Minimum Sales Royalty” shall have the meaning set forth in Section III(c)(i).

(xiv) “More Favorable Terms” shall have the meaning set forth in Section IV(j)(i).

(xv) “PCR License” shall have the meaning set forth in Section V.

(xvi) “PCR License Option” shall have the meaning set forth in Section V.

(xvii) “PCR Option Fee” shall have the meaning set forth in Section V.

(xviii) “Relevant Product” shall mean a product that tests for the same [***] and that is or would [***] with a [***] that is either (i) being [***] in the relevant [***] or (ii) [***] and with respect to which [***] (A) has spent at least [***] toward the development of such product, as certified in writing by [***] to Affymetrix; (B) has actually purchased [***] specifically for the development of that product; and (C) has not abandoned the [***].

(xix) “Roche Content” shall mean marketable Content that is either (i) developed by Roche at Roche’s cost and expense or (ii) developed by a Third Party at Roche’s cost and expense.

(xx) “Roche Content Development Costs” shall mean the reasonable costs of the sum of (i) employees (on an FTE basis), (ii) overhead expenses and (iii) any other cost that is expensed for financial accounting purposes under US GAAP, in each case as actually incurred by Roche for development of Roche Content. Roche Content Development Costs will not include, for example, capital expenditures or any costs that are to be amortized or depreciated for financial accounting purposes under US GAAP.

(xxi) “Roche PCR Patents” shall mean those patents listed on Exhibit A attached hereto.

(xxii) “[***]” shall mean the [***] Roche to [***] the [***] by Roche for [***] as set forth in Section III(c) of this Agreement, as determined on a [***] basis.

(xxiii) “[***]” shall mean a [***] that Roche elects to use in connection with its [***] in order to [***] in accordance with Section III(c) of this Agreement.

(xxiv) “Substantial Infringer” shall mean a Third Party infringer of Affymetrix Technology which has achieved at least [***]% of the total Sales of all Relevant Products in a Major Territory for their particular Relevant Product, which Relevant Product is Substantially Infringing Affymetrix’ Array patents.

(xxv) “Substantial Infringement” shall have the meaning set forth in Section III(c)(ii)(1).

(xxvi) “Substantially Infringing” shall have the meaning set forth in Section III(c)(ii)(1).

(xxvii) “Termination Date” shall have the meaning set forth in Section VI(a).

II. License Grants.

(a) Affymetrix Technology License. Except as expressly and unambiguously granted in this Agreement, no transfer or Sale in any form of Arrays, Affymetrix Instruments or Diagnostic Products by any of Roche and its Affiliates will constitute any implied or express right or license under the Affymetrix Technology or any Content of Affymetrix other than the normal implied license to end-users associated with the Sale of a Diagnostic Product by Roche or its Affiliates. Subject to the terms and conditions of this Agreement, Affymetrix hereby grants to Roche a limited, [***], [***], [***] (except as provided in Section VI(i) of the Common Terms Agreement), [***] license, during the term of this Agreement, under the [***] (to the extent Affymetrix is not prevented under its existing contracts to license such [***] to Roche and its Affiliates) to [***], [***] and [***] to [***] for a [***]. Notwithstanding the foregoing, Roche shall have no right to, and will not (i) [***], [***] or [***] or [***] alone, as a [***] or [***] any [***] except as [***], (ii) [***] or [***] in any manner (except as provided in Section III(h)(ii)) or (iii) [***] or [***] or [***].

(b) Obligations to Customers. Any and all obligations associated with Roche’s business shall remain the sole responsibility of Roche. Any and all sales and other agreements between Roche and its customers are and shall remain Roche’s exclusive responsibility, except as provided in the Supply Agreement, and shall have no effect on Roche’s obligations pursuant to this Agreement. Roche agrees to provide all technical support and product service (including support for adaptation for diagnostic uses) for the use of the Diagnostic Products by its customers, other than as set forth in the Supply Agreement.

(c) Trademark License. Subject to the terms and conditions of this Agreement, including Section IV(h) below, Affymetrix hereby grants to Roche a nonexclusive, worldwide, nontransferable, nonsublicensable, royalty-free license, during the term of this Agreement, to use and display Affymetrix Trademarks on Diagnostic Products, Diagnostic Instruments, components of such Diagnostic Products or Diagnostic Instruments, and materials related to the marketing, promotion and/or use of Diagnostic Products or Diagnostic Instruments. No other right to use the Affymetrix name or any Affymetrix Trademark is granted or implied by this Agreement.

III. Payments. In consideration for the rights and licenses granted to it under this Agreement, Roche shall pay Affymetrix the following amounts on the dates specified, which amounts shall be nonrefundable and noncreditable except as provided in this Agreement:

(a) Initial Payment. US$70,000,000 on or within seven days after the Effective Date.

(b) Annual License Installment Payments. Annual license installment payments (the “License Installment Payments”) shall be deemed earned as of January 1, but payable no later than June 1 (or the first business day thereafter) for the particular year specified as follows:

Payment Date		U.S. Dollar Amount
[***]		[***]
[***]		[***]
[***]		[***]
[***]		[***]
[***]		[***]
[***]		[***]

There [***] the payment due in [***]. The actual amount of License Installment Payments indicated above will be [***] actually payable in cash to Affymetrix on [***] earned through [***] pursuant to Section III(c) below. For example, if during calendar year [***], Roche would be required to make payments of $[***] in [***] pursuant to Section III(c), then Roche would [***] to Affymetrix, representing the [***]. If on the other hand during calendar year [***], Roche would be required to [***] pursuant to Section III(c), then Roche would [***] and would carry a $[***] (but, for avoidance of doubt, [***]) payable pursuant to Section III(c).

(i) Roche and its Affiliates shall pay Affymetrix quarterly royalties of [***]% of Net Sales (the “Base Sales Royalty”); provided, however, that the Base Sales Royalty associated with any particular Diagnostic Product may be reduced to no less than [***]% of Net Sales associated with that Diagnostic Product sold by Roche or its Affiliates (the “Minimum Sales Royalty”) if:

(A) the Diagnostic Product sold utilizes any Content developed by a Third Party for which Roche must pay royalties on Net Sales to such Third Party or to Affymetrix for remittance to such Third Party (in which case the Base Sales Royalty may be reduced (to no less than the Minimum Sales Royalty), such reduction to be calculated on a dollar for dollar basis based on royalties actually paid to Third Parties and earned based on the sale of such Diagnostic Product); and/or

(B) the Diagnostic Product sold utilizes any Roche Content and Roche, at its option, has elected in writing (which election has been provided to Affymetrix prior to the first commercial sale of such Diagnostic Product) the [***] for such Diagnostic Product (in which case the Base Sales Royalty, to the extent such royalty rate would not drop below the Minimum Sales Royalty after taking into account the royalty reduction set forth in Section III(c)(i)(A) above, for such [***] may be reduced on a dollar for dollar basis for Roche Content Development Costs (i) incurred on or prior to the time the relevant [***] was first

sold (a “First Sale”), and (ii) any additional Roche Content Development Costs incurred after such [***] First Sale that result in material improvements or revisions to the Roche Content utilized by the [***]. If Roche elects the [***] for a Diagnostic Product, the amount of the reduction in the royalty attributable to the Roche Content Development Costs for such [***] shall not exceed the aggregate amount of Roche Content Development Costs actually incurred for that particular [***] (and once Roche has been reimbursed its Roche Content Development Costs for such [***] in full, the royalty reduction set forth in this Section III(c)(i)(B) shall cease).

(ii) Patent Enforcement.

(1) Notice of Substantial Infringement. In the event Roche becomes aware of an alleged Substantial Infringement of a patent included in the Affymetrix Technology (a “Licensed Patent”) in a given Major Territory by an unlicensed Third Party other than Genentech or Chugai, Roche may provide written notice thereof to Affymetrix (inclusive of documentary evidence of infringement and market data as to the infringing Sales activity which are reasonably reliable). “Substantial Infringement” or “Substantially Infringing” as used in this Section III(c)(ii) shall mean that the alleged infringing Sales of a Substantial Infringer.

(2) Enforcement and Royalty Abatements. If Affymetrix fails, within [***] of delivery of such notice of Substantial Infringement of a Licensed Patent by a Third Party in a given Major Territory, to enter into license negotiations with or Enforcement Proceedings in such Major Territory against such Third Party, or if having timely entered into license negotiations with or Enforcement Proceedings against such Third Party, Affymetrix fails to cause the Substantial Infringer to cease such Substantial Infringement within the relevant Major Territory within [***] of delivery of said notice, then until Affymetrix provides written notice to Roche that such Substantial Infringer has ceased Substantial Infringement in such Major Territory: (i) if the Substantially Infringing Sales are at least [***]%, but less than [***]%, of [***] in such Major Territory in any particular [***], Roche shall be entitled to a [***]% [***] payable to Affymetrix on Roche’s and its Affiliates’ [***] that are [***] with such Substantially Infringing Sales in such Major Territory as of such notice; or (ii) if the Substantially Infringing Sales are at least [***]% of [***] in such Major Territory in any particular [***], then Roche shall be entitled to a [***] such that the [***] is equal to [***]% of the [***] of the [***] on such product’s [***]. The actual dollar amount of [***] under (i) and (ii) above shall be [***] the next year’s [***] payable pursuant to Section III(b), if any. Notwithstanding the foregoing, (i) if Roche [***] the Third Party that is a Substantial Infringer, in any case, [***], Roche shall [***] as provided in the immediately preceding sentence. An “Enforcement Proceeding” shall mean a court action or other legal action brought before a competent patent authority in the relevant Major Territory. In the event that a Substantial Infringement notice has been given with respect to [***] Major Territories for the same Third Party, Affymetrix’ obligation to enter into license negotiations with or Enforcement Proceedings against such Third Party within [***] of such notice or obtain the cessation of Substantial Infringement within [***] shall be satisfied with respect to all such Major Territories provided Affymetrix

takes required action and achieves results within the required time period in no [***] Major Territories, including the most significant Major Territory to [***], if any, [***]. No [***] in any such Major Territory at any time provided that [***] as indicated above, and upon successful completion of Enforcement Proceedings in any particular Major Territory, Affymetrix shall notify Roche and, provided the Substantial Infringement remains in one or more Major Territories, [***] any Major Territory if Affymetrix commences action in a replacement Major Territory under the requirements above as if a new notice of Substantial Infringement has been given; provided that the [***] period shall be [***]. In the event that Affymetrix fails to enter into a license with such Third Party for any Major Territory or to achieve the cessation of Substantial Infringement in any Major Territory within the [***] period above, then each Major Territory shall thereafter [***] for such Third Party under this paragraph, and provided that Substantial Infringement remains in [***] Major Territories, no [***] in such Major Territory under the requirements above as if a new notice of Substantial Infringement has been given, provided that the [***] period shall be [***]. If no Substantial Infringement exists in any such Major Territory, then a suit in any other country where Substantial Infringement exists shall satisfy Affymetrix’ obligation hereunder.

(3) Continuing Royalty Payment Obligations. Except to the extent provided in Section III(c)(i)(B) above with respect to specific Diagnostic Products, Roche’s obligation to pay royalties on the Net Sales of Diagnostic Products Sold by Roche and its Affiliates shall remain in effect to the extent provided for in this Agreement notwithstanding any alleged infringement by any Third Party of any of the Licensed Patents.

(4) No Roche Right to Enforce the Licensed Patents. It is expressly understood that nothing contained herein shall in any way grant or be construed to grant to Roche the right to enforce the Licensed Patents or any other Affymetrix Technology. Affymetrix shall have the sole right to bring legal action to enforce the Licensed Patents against any alleged infringement by any Third Party.

(d) Milestone Payments. Whenever during the term of this Agreement (which shall include the contract year following the delivery of an Early Termination Notice (as defined below)), Affymetrix or Roche achieves one of the following milestones that has not been met before with respect to a given [***] or [***], as applicable (each, a “Milestone”), Roche shall pay Affymetrix the amounts set forth below (each, a “Milestone Payment”), provided that such Milestone Payments do not exceed US$[***] in the aggregate or US$[***] in any calendar quarter, with any [***] subject to such [***] and [***]; and, provided further, that any [***] shall be due and payable (subject to such [***]) upon notice of early termination of this Agreement:

(i) Upon the earlier to occur of (A) initial [***] for a particular [***] in any of the [***], [***] or [***], or (B) [***] for such [***] in the [***] of at least $[***] over [***], then for such [***]:

(1) US$[***] if Affymetrix has [***] substantially to the [***] of such [***]; or

(2) US$[***] if Affymetrix has [***] substantially to the [***] of such [***]; and

(ii) US$[***] upon Affymetrix’ [***] or Affymetrix’ [***] to the [***] of a [***] (e.g., [***]), including [***], if required, for use in connection with a [***] that complies with either (i) all the [***] (including [***]) set forth on Exhibit B hereto or (ii) all the desired [***] (including [***]) set forth on Exhibit B hereto.

Milestone Payments on Milestones achieved during the term of this Agreement shall be paid in accordance with Section III(e) below, but not, in the case of (iii) above, unless and until the [***] of such [***] in any of the [***], [***] or [***]. Notwithstanding anything to the contrary herein, [***]% of the amount of Milestone Payments paid will be [***] to Affymetrix on [***] earned through [***] pursuant to Section III(c) above, after [***] set forth under Section III(b) above, if applicable.

(e) Payment Terms. All payments to Affymetrix under this Agreement are non-refundable. All such payments are to be made in US dollars in the United States by wire transfer of immediately available funds. 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 relevant spot exchange rate published in the Wall Street Journal on the last day of that quarter. In no event will Affymetrix be required: (i) to pay any portion of any deficit and (ii) to make any refund of any amounts paid to Affymetrix. Except as otherwise set forth herein, payments shall be due 60 days following the end of each quarter or date of invoice. Late payments shall bear interest at the lower of: (xi) the Bank of America prime rate or (y) the maximum rate allowed by law. All prices and payments to Affymetrix are exclusive of taxes, duties, shipping, withholdings and the like, all of which will be borne by Roche (except taxes or withholdings based on Affymetrix’ income), except such taxes and withholdings that are fully creditable against US income taxes where Roche (i) supplies any and all necessary or requested certificates and documentation to receive such credit, and (ii) gives Affymetrix notice of the requirement for such taxes and withholdings and allows Affymetrix the opportunity to protest their assessment and collection.

(f) Taxes.

(i) Any and all amounts payable hereunder by a party using a license granted under or pursuant to this Agreement do not include any government taxes (including without limitation sales, use, excise, and value added taxes) or duties imposed by any governmental agency that are applicable to the export, import, or purchase of the Diagnostic Products and the licensee shall bear all such taxes and duties (other than taxes on the net income of the licensor). When the licensor has the legal obligation to collect and/or pay such taxes, the appropriate amount shall be added to the licensee’s invoice and paid by the licensee, unless the licensee provides the licensor with a valid tax exemption certificate authorized by the appropriate taxing authority.

(ii) All payments by a party using a license granted under or pursuant to this Agreement are expressed as net amounts and shall be made free and clear of, and without reduction for, any withholding taxes. Any such taxes that are otherwise imposed on payments to the licensor shall be the sole responsibility of the licensee. The licensee shall provide the licensor with official receipts issued by the appropriate taxing authority or such other evidence as is reasonably requested by the licensor to establish that such taxes have been paid. If the licensor uses a foreign tax credit received by the licensor as a result of the payment of withholding taxes by the licensee and thereby reduces the amount of United States income tax that the licensor otherwise would have paid, the licensor shall refund to the licensee the amount of such reduction with respect to such foreign tax credit.

(g) Records and Audit Rights. A Party using a license granted under or pursuant to this Agreement shall provide to the licensor within 60 calendar days of the end of each calendar quarter a royalty report outlining the Diagnostic Products (or components thereof) Sold, Net Sales associated thereto, royalties due and payments made (and credits or offsets taken) in accordance with this Section III or other applicable provisions. Such royalty report will show breakdowns for each Diagnostic Product in each country, and shall constitute Confidential Information. The licensee shall keep complete and accurate records reflecting all information necessary or useful in verifying the accuracy of each report. The licensor shall have the right to hire an independent certified public accountant to inspect all records required to be kept by the licensee pursuant to this Agreement (which accountant shall be reasonably acceptable to the licensee and shall keep all information confidential except to disclose the fact and amount of any discrepancies); provided, such audit: (i) is conducted during normal business hours, (ii) is conducted no more often then once per year, (iii) is conducted only after the licensor has given 30 days prior written notice, and (iv) the audited Party has the ability to review the accountant’s report on any discrepancies to confirm the report does not contain any other Confidential Information. The audited Party shall, at its own expense, make such records (or copies thereof) available to the accountant at a single location in the U.S. The licensor shall bear the full cost and expense of such audit, unless a discrepancy in excess of 5% of the underage in favor of the licensor is discovered, in which event the licensee shall bear the full cost and expense of such audit. Regardless of the amount of discrepancy discovered, all discrepancies (and interest thereon at the rate set forth in the sixth sentence of Section III(e) above) shall be immediately due and payable.

(h) Default After Acquisition. If the business currently constituting Affymetrix should become controlled by, acquire control of or come under common control with a Major Competitor and following such change in circumstance Affymetrix or its successor shall have materially breached one or more of the Collaboration Agreements in a manner that, in Roche’s reasonable judgment, materially adversely affects the economic opportunity intended to be conveyed to Roche by the Collaboration Agreements as a whole and such default remains uncured 60 days after Roche gives Affymetrix or its successor notice of such default in reasonable detail, then at any time while such default remains uncured:

(i) [***], Roche may [***] and thereupon [***] payable as set forth below in the [***] of: (A) the [***] pursuant to [***] (B) [***] (or portion thereof) < font size="2" style="font-size:10.0pt;">[***] (C) [***].

(ii) [***], Roche may [***] (A) [***] and thereupon [***] payable as set forth below in the [***] of: (1) the [***] pursuant to [***] (2) any [***] (or portion thereof) [***] (3) [***], or (B) [***] Roche [***] to allow [***] the [***], [***], [***] (except as set forth in Section VI(i) of the Common Terms Agreement), [***] under the [***] to make [***] then being sold, effective upon the [***], provided, that Roche shall [***] only the [***] set forth in [***] above (without regard to any [***] then in existence) as consideration for [***].

(iii) The foregoing remedies (in (i) or (ii) above) shall be in addition to, and not in lieu of, all remedies otherwise available under this Agreement or otherwise. Any [***] in a year under this Section III(h) shall be [***] from the date Roche [***].

IV. Covenants. Roche and Affymetrix covenant to one another as follows:

(a) Affymetrix Covenant Not to Sue. For the term of this Agreement, Affymetrix hereby agrees that it will not bring or initiate any action, whether civil or criminal, against Roche or its Affiliates for Roche’s or its Affiliate’s use (or, with respect to human diagnostic products procured or sold by Roche or its Affiliates, in each case against its customers for such customers’ use or against its suppliers for such suppliers’ use) of the Defined Technology to make or have made and sell diagnostic products for any human diagnostic use, subject to Roche’s compliance with the following requirements and limitations:

(i) For any Defined Technology used by Roche or its Affiliates, Roche shall pay to Affymetrix a commercially reasonable royalty to be determined in good faith by Roche and Affymetrix for the period of time such Defined Technology is used;

(ii) Prior to using any [***] to produce a particular [***] using [***], Roche or its Affiliate shall (A) indicate to Affymetrix [***] and (B) give Affymetrix [***] for such [***] in lieu of such [***]; provided that Roche or its Affiliate shall give Affymetrix the opportunity after each [***] to [***] using the [***] and to agree to [***] of such [***]; and provided further that if Affymetrix agrees to [***], it shall notify Roche within [***] from the date the [***] by Roche to Affymetrix; provided Affymetrix shall have [***] for [***]. Notwithstanding the foregoing, in the event an [***] (except as to [***]) with the [***] Third Party, the time to respond shall be [***]. If Affymetrix elects to do so, Roche or its Affiliate shall hire Affymetrix to [***] using the [***]. Such [***] shall apply only to the [***] of such [***]; and

(iii) The covenant not to sue set forth under this Section IV(a) shall not apply to [***], [***] or [***], or any entity controlled, controlling or under common control with any of them, regardless of their statuses as a supplier or customer of Roche.

(b) Roche Covenant Not to Sue. For the terms of this Agreement, Roche hereby agrees that it will not bring or instigate any action, whether civil or criminal, against Affymetrix or its Affiliates for Affymetrix’ or its Affiliate’s use (or, with respect to human diagnostic products produced by or for Affymetrix and sold by Affymetrix or its Affiliates directly or through normal channels of distribution, against its suppliers or customers for their

use) of Roche Technology (other than PCR Technology and Roche Content), to use, make or have made and sell any microarray product for use by Affymetrix or its customers for any human diagnostic purpose or research use, provided that for any Roche Technology used by Affymetrix or its Affiliates, Affymetrix shall pay to Roche a commercially reasonable royalty to be determined in good faith by Roche and Affymetrix for the period of time such Roche Technology is used.

(c) Expiration Dates. Roche will not ship any Diagnostic Product from inventory after the expiration date affixed to or otherwise accompanying such Diagnostic Product or the Array contained therein, or where the remaining shelf life for such Diagnostic Product or the Array contained therein, as measured by the difference between the ship date and the expiration date for such Diagnostic Product or the Array contained therein, is not of reasonable length.

(d) Compliance with Law; Regulatory Approval.

(i) Each Party will maintain compliance with all laws, rules, codes, regulations and other legal requirements applicable to its performance under this Agreement, in accordance with the regulatory approach and requirements determined by the Parties (as set forth below).

(ii) Roche shall determine the regulatory strategy and Regulatory Approvals required to undertake such strategy, and shall notify Affymetrix of such determinations promptly, but in no event later than three months before the earlier of the relevant product’s first Sale or the Manufacturing Lock-up Point. Roche shall not proceed if the strategy presents a material regulatory or legal risk or obligations beyond those that would apply to a component supplier. In the event Affymetrix notifies Roche that it believes that the strategy will present a material risk or obligation, the Parties will seek resolution pursuant to Section VI(b) of the Common Terms Agreement. Roche will determine the proposed product launch schedule(s) in consultation with Affymetrix. Affymetrix shall use commercially reasonable efforts to undertake steps necessary to achieve Roche’s regulatory strategy and product launch schedule. Unless otherwise agreed by the Parties in writing, Roche hereby agrees that if it determines that a Diagnostic Product requires Regulatory Approval, Roche shall (i) secure at its own expense all such Regulatory Approval(s) required for distributing a Diagnostic Product prior to distribution of such Diagnostic Product to the extent it determines to pursue such distribution; (ii) reimburse Affymetrix for all Affymetrix expenses related to regulatory compliance with respect to an Array included in a Diagnostic Product beyond steps necessary to be a component supplier under applicable regulations; (iii) and shall comply with all laws, rules, codes, regulations and other legal requirements applicable to the distribution of such Diagnostic Product; and (iv) provide to Affymetrix copies of relevant applications and related documents, all of which will constitute Confidential Information. Upon Affymetrix’ exercise of its option to take over distribution or development of a Diagnostic Product following Roche’s giving of an Early Termination Notice, Roche and its Affiliates shall take all commercially reasonable steps to transfer and deliver all registrations, approvals, and government authorizations of Roche or its Affiliate associated with such Diagnostic Product to, and shall inure to the benefit of, Affymetrix

or its designee, at no cost to Affymetrix other than lawfully imposed transfer fees. In connection with any data transferred to Affymetrix, Affymetrix shall comply with all legal requirements in connection with such use.

(e) Export Control. Each Party agrees that distribution of the Diagnostic Products and Roche Instruments under this Agreement shall comply with applicable U.S. export control laws, rules and regulations, including but not limited to, the U.S. Export Administration Act, the U.S. International Emergency Economic Powers Act, the U.S. Trading with the Enemy Act or any other similar law, rule or regulation imposing restrictions on U.S. trade with foreign countries.

(f) Communications with Authorities. Each Party will immediately notify the other Party of any adverse or unexpected results with or before an Authority or any actual or potential action of an Authority relevant to a Diagnostic Product of which the first Party becomes aware. In the event an Authority raises issues regarding this Agreement, the Parties will use their reasonable commercial efforts to satisfy the Authority’s concerns without any change to this Agreement. If an Authority cannot be satisfied without any change to this Agreement, the parties will work with one another reasonably and in good faith to attempt to achieve mutually acceptable resolution that does not materially compromise either Party’s rights and that changes this Agreement to the minimum extent necessary. Each Party agrees promptly to provide the other Party with copies of all correspondence to or from an Authority and summaries of oral dealings with such Authority.

(g) Significant Problems. Each Party will keep the other informed as to any significant problems encountered with the Diagnostic Products that relate to components or products supplied by the other Party and any solutions arrived at for those problems, and will communicate promptly to the other Party any and all material modifications, design changes or improvements of the Diagnostic Products suggested by any customer or by any employee or agent of such Party, as long as such disclosures do not violate any existing confidentiality obligations that such Party has to any Third Party, and such Party shall use reasonable efforts to obtain the right to disclose such information; and the receiving Party will, within a reasonable time after receiving any information about problems with the Diagnostic Products, inform the other Party of the steps (if any) that the receiving Party intends to take with respect to such problems.

(h) Potential Infringement. Each Party will notify the other Party of: (i) any potential infringement of any of such other Party’s Intellectual Property of which it becomes aware; (ii) any potential infringement by any Third Party of any of the Intellectual Property incorporated in, embodied by or relied upon to manufacture a Diagnostic Product; or (iii) any potential infringement by a Diagnostic Product of any Content or Intellectual Property owned or asserted to be owned by a Third Party of which it becomes aware. Either Party’s notice under this Section IV(h) shall be Confidential Information and shall not be disclosed to the alleged infringer or any other party without the other Party’s prior written consent.

(i) Designations and Branding. The branding of Diagnostic Product shall be determined by Roche after consultation with Affymetrix. Subject to the applicable regulatory requirements, each Diagnostic Product shall bear an Affymetrix Designation substantially in the

form agreed to by the Parties and attached hereto as Exhibit C or as otherwise agreed by the Parties in writing. Furthermore, an Affymetrix Designation shall appear on all promotional, instructional and other materials that accompany such Diagnostic Products in form and in accordance with the branding guidelines set forth on Exhibit C (which may be updated from time to time by providing a copy of the revised branding guidelines to Roche; Roche shall use commercially reasonable efforts to implement such revised guidelines promptly), unless otherwise agreed by the Parties in writing. All use of Affymetrix’ name or the Designations of Affymetrix on any Diagnostic Product and all promotional, instructional and other materials related thereto shall be subject to Affymetrix’ branding guidelines then in effect and shall be done in compliance with applicable law and any regulatory strategy adopted. All Designations will be printed in English unless otherwise mutually agreed by the Parties in writing.

(j) Materials and Literature. Roche will be responsible for determining all promotional, advertising, educational and other materials and programs, labels, label claims, package data sheets, and other literature relating to the Diagnostic Products after consultation with Affymetrix. None of such materials will misrepresent the Affymetrix components of the Diagnostic Products or refer to such components in a manner that is reasonably likely to prejudice Affymetrix’ Intellectual Property incorporated therein. Roche agrees that it is solely responsible for the compliance of such materials and literature with any applicable laws, regulations, or rules. Roche’s use of materials and literature will be consistent with the regulatory regime adopted by the Parties pursuant to Section IV(d). Roche will not violate any applicable laws, regulations, or rules with respect to use and sale of Diagnostic Products.

(k) Most Favorable Terms and Conditions.

(i) More Favorable Terms (“More Favorable Terms”) shall be determined by evaluating the new [***] initially to determine if it involves a [***] or not. A “[***]” is a [***] granted by Affymetrix conveying the right to [***] to [***] and which has a scope [***] than the scope of the [***], and covers at least one of the [***], [***] or the combination of [***], [***] and the [***]. After such determination, the [***] will be evaluated as a whole using the following factors: (a) for a [***] only, the [***] shall be taken into account; (b) the [***] shall not be taken into account; (c) the [***] that are [***] to those that Roche is receiving hereunder will be measured for the [***] by the [***]; (d) the [***] that are [***] to those that Roche is receiving hereunder will be measured for [***], so that the More Favorable Terms will [***]; (e) [***] such as [***] the Third Party shall not be taken into account; and (f) the combined effect of the [***] under the [***] and the [***] for [***] by Affymetrix [***].

(ii) If, after the Effective Date, Affymetrix grants to any Third Party a [***] but under More Favorable Terms than those given to Roche under this Agreement, Affymetrix shall notify Roche in accordance with this Section IV(j) of such More Favorable Terms, and Roche shall have the right and option to (with respect to [***] in [***] and applicable to the [***] to which the [***]) substitute such More Favorable Terms for the [***]. In the event a [***] does not include all three of the [***], [***] and the combination of [***], [***] and the [***] geographical markets, the amount of the [***] shall be [***] based on the [***] in the [***] geographic areas. Such right and option shall be exercisable by Roche by providing written notice of acceptance to

Affymetrix within [***] of the date of receipt of notice from Affymetrix of such More Favorable Terms (“Acceptance Notice”).

(iii) Roche’s right as described above to elect such More Favorable Terms shall extend only for so long as and shall be conditioned on Roche’s acceptance of all the same conditions, favorable or unfavorable, under which such More Favorable Terms shall be available to such Third Party in the particular license including any limitations or restrictions in the applicable scope of license, any increase in license fees. Upon Roche’s acceptance of all such More Favorable Terms of such Third Party agreement, pursuant to an Acceptance Notice within the ninety (90) day period as provided above, the More Favorable Terms shall be effective as to Roche as of the effective date of such Third Party agreement.

(iv) Promptly following the end of each calendar month in which a transaction has occurred in which Affymetrix has granted a license as described above to a Third Party on More Favorable Terms, Affymetrix shall provide written notice to Roche indicating: (x) that it has entered into such a license; (y) the territories covered by the license; and (z) the material terms and conditions of the license. Any notice delivered to Roche under this paragraph shall be signed by at least one of the following officers of Affymetrix: the Chief Executive Officer, the President, the Chief Financial Officer, the Chief Operating Officer, the General Counsel or a Senior Vice President of Business Development. For purposes of this paragraph, a transaction shall be deemed to have “occurred” upon the execution of a definitive agreement with the Third Party granting a license; provided that the application of More Favorable Terms shall only apply to any Diagnostic Product of Roche upon the commercial launch to the public of a competitive Diagnostic Product of the Third Party in the applicable geographic market (except as to any up front payments in Comparable Licenses).

(l) Sublicenses. To the extent that Third Party Content is utilized in a Diagnostic Product, and Roche has or obtains a license granting Roche the right to use such Third Party Content for that Diagnostic Product, Roche agrees to use commercially reasonable efforts to obtain the right with no additional cost to Roche to sublicense to Affymetrix and its Affiliates in connection with any transfer pursuant to Section VI(b), on terms no less favorable than those granted to Roche or its Affiliates. To the extent that Affymetrix licenses or otherwise causes the development of any Third Party Content for use in a potential Diagnostic Product during the term of this Agreement, Affymetrix agrees to use commercially reasonable efforts to obtain, at no additional cost to Affymetrix, the right to sublicense to Roche and its Affiliates any license granting Affymetrix the right to use such Third Party Content on terms no less favorable to Roche than those granted to Affymetrix.

(m) No Challenge of Intellectual Property. Each party agrees that it and each of its Affiliates will not (and will immediately cease) challenge, attack or otherwise question the validity of any Intellectual Property of the other party licensed under this Agreement or any other Collaboration Agreement during the term of this Agreement. Each party agrees that it will not fund or otherwise aid or cause any Third Parties (including, without limitation, Genentech or Chugai) in any challenge, attack or questioning of validity of any Intellectual Property of the

other party licensed pursuant to this Agreement or any other Collaboration Agreement during the term of this Agreement.

V. PCR License Option. Affymetrix agrees to pay Roche within [***] Dollars ($[***]) for the option and related rights set forth in this Section V (the “PCR Option Fee”). From the Effective Date through the earliest of (i) [***], or (ii) [***] after any termination of this Agreement pursuant to Section VI(b), Affymetrix shall have the option (the “PCR License Option”) to cause Roche to grant to Affymetrix and its Affiliates a [***], [***] under the [***] to [***] (including those transferred to Affymetrix pursuant to Section VI(b)) in the [***] upon Roche’s [***] (the “PCR License”). If Affymetrix exercises the PCR License Option, it shall pay Roche the [***] for the [***] PCR License then elected by Affymetrix on the date of exercise of the PCR License Option; provided that the [***] shall be [***]. Notwithstanding the foregoing, in [***] Affymetrix [***] to Roche for [***] under the PCR License on [***]; and, in addition, the Parties agree that the [***] attributable to PCR for [***] the PCR License, shall be [***] (i) 40% through [***], and (ii) thereafter, the [***]%, the [***] Roche provides [***] in the [***] to Affymetrix or any Third Party or the [***] by a mutually agreed upon industry expert to reflect the [***] as a [***] of the product sold.

VI. Term and Termination.

(a) Term. Unless terminated earlier as provided herein, this Agreement shall commence on the Effective Date and shall terminate on December 31, 2020 (the “Termination Date”).

(b) Early Termination without Cause. Roche shall have the option of terminating this Agreement in its entirety effective on December 31, 2007, June 2, 2013 or any date after June 2, 2013 but prior to the Termination Date by written notice to Affymetrix (“Early Termination Notice”) as provided herein. An Early Termination Notice must be provided at least one year prior to early termination. If Roche terminates effective as of June 2, 2013, Roche shall pay to Affymetrix the License Installment Payment deemed earned January 1, 2013 and payable June 1, 2013 but shall have no obligation to pay any further License Installment Payment required hereunder (but shall continue to pay royalties on Diagnostic Product sales through the final termination date of this Agreement in accordance with the terms hereof). The Early Termination Notice must enumerate all Diagnostic Products developed, under development or that were abandoned or discontinued in connection with the decision to provide an Early Termination Notice by Roche, and Roche shall fully respond to reasonable Affymetrix inquiries regarding such Diagnostic Products in order to permit Affymetrix to notify Roche which Diagnostic Products, whether existing or currently under development, it intends to continue to market and/or develop. Affymetrix shall notify Roche with respect to each such Diagnostic Product in one or more notices, not later than 180 days after delivery of the Early Termination Notice. Promptly after each such Affymetrix notice, Roche shall transfer to Affymetrix all such Diagnostic Products so designated by Affymetrix for distribution and/or development by Affymetrix.

Roche agrees to assist Affymetrix in facilitating the transition of the sale of Diagnostic Products from Roche to Affymetrix as set forth in the foregoing sentence and to provide reasonable support to Affymetrix to continue sales of Diagnostic Products (including for a period

of time reasonably necessary to develop a replacement Diagnostic Instrument, a supply of all Diagnostic Instruments developed and then commercially marketed (or abandoned or discontinued in connection with the decision to provide an Early Termination Notice) by Roche at their [***] plus a [***]% of [***]), to the extent Roche has therefore commenced marketing of such Diagnostic Instruments). Roche shall use commercially reasonable efforts to provide all necessary ancillary products, technical, marketing, and customer information then in its possession or control as is necessary to continue selling and supporting the Diagnostic Products previously distributed by Roche and will work with Affymetrix at Affymetrix’ option so that Affymetrix could being selling such products as soon as possible but not later than upon termination by Roche. All Roche Intellectual Property used in such Diagnostic Products (and the Diagnostic Instruments used in connection therewith), other than jointly-owned Collaboration IP, shall be made available for license to Affymetrix and its Affiliates on commercially reasonable terms (including the right to [***] (i) royalties payable to Third Parties by virtue of use of Third Party Content and (ii) the development costs of any Affymetrix Content utilized, against any royalties payable to Roche under the PCR License), with other customary and usual terms and conditions. In addition, to the extent Roche has been granted licenses by Third Parties to use Third Party Content in any Diagnostic Product previously distributed by Roche which include the right to sublicense Affymetrix pursuant to Section IV(l), Roche shall sublicense or assign all such licenses to Affymetrix and its Affiliates on terms no less favorable than those granted to Roche or its Affiliates. All tangible and intangible property (other than regulatory materials and data pursuant to Section IV(d)(ii) above, as to which Roche hereby warrants that such is a true, complete and accurate copy of its regulatory materials and data) transferred or licensed to Affymetrix pursuant to this Section VI(b) would be transferred AS IS, WHERE IS, WITH ALL FAULTS and with a full disclaimer of any express or implied warranties. In the event this Agreement is terminated pursuant to this Section VI(b), Roche agrees not to take any action that would harm or interfere with the regulatory status, regime or strategy established for a Diagnostic Product.

If Roche terminates this Agreement prior to January 1, 2021, Affymetrix shall be deemed to have been granted a worldwide, nonexclusive license to use the Roche Content utilized in any [***] pursuant to the terms in the following sentence. If a Diagnostic Product transferred to Affymetrix pursuant to this Section VI(b) is then being commercially sold and includes patented Roche Content as to which Roche had theretofore exercised [***], the royalty rate applicable to such patented Roche Content shall not exceed [***]% of [***] minus (but not below zero) all [***] used in such [***], and the aggregate [***] pursuant to [***] shall [***] the associated [***] not recovered pursuant to the [***]. All tangible property selected by Affymetrix for transfer pursuant to this Section VI(b) will be transferred [***] to Roche or its Affiliates.

Furthermore, if Roche terminates this Agreement pursuant hereto, Affymetrix shall be deemed to have been granted a fully-paid, royalty-free, worldwide, nonexclusive license to use all data in Roche’s possession or control relating to the transferred Diagnostic Products other than for use proscribed by Section III(e)(ii) of the Supply Agreement.

(c) Termination for Cause. 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 Party materially breaches any material provision of this Agreement and fails to cure such breach within 180 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 Confidential Information, such Party’s proprietary or intellectual property rights or otherwise for any reason to mitigate damages);

(iii) If the other Party 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 Party (and not dismissed within 90 days).

(d) Intellectual Property Infeasibility. If one or more [***] are [***] or the combination of [***], but excluding [***] that are [***] or the combination of [***], that [***] within [***] that prevents [***] with [***], or prevents [***], then at any time thereafter but in no event after [***], Roche [***] Affymetrix, [***] in such notice. Upon the [***], Affymetrix shall [***] whose [***] is the [***] remaining between such [***] and [***] and whose denominator is [***], provided that such [***] shall in no event exceed US$[***]. If Roche [***] pursuant to the [***] set forth in this Section VI(d) above, Roche shall indicate its choice to do one of the following in the above-described [***]:

(i) [***] and [***], representing up to [***]% of the [***]. The specific amount of the [***] payable upon [***] pursuant to this Section VI(d) shall be calculated by multiplying $[***] between the [***] pursuant to this Section VI(d) above and [***] and whose denominator is [***]; or

(ii) honor the [***], in accordance with Section V above (except for terms describing when such option may be exercised), for [***] after the [***] pursuant to this Section VI(d) above.

(e) Effect of Termination. Sections III (Payments), V (PCR License Option), VI (Term and Termination), VII (Warranty), VII (Limited Liability) and IX (Indemnity), all rights to payment in effect through the final termination date of this Agreement pursuant to Section VI (Term and Termination), the Common Terms Agreement, remedies for breaches or any other provision that, by its terms, survives termination shall survive termination of this Agreement. Obligations of the Parties under firm orders for purchase and delivery of Arrays at the time of such termination shall remain in effect, except that in the case of termination under Section VI(c), the terminating Party may elect whether obligations under firm orders will remain in effect. Each Party will promptly return or destroy all Confidential Information of the other in accordance with Section II(f) of the Common Terms Agreement. Termination is not the sole

remedy under this Agreement and, whether or not termination is effected, all other remedies will remain available.

VII. Warranty and Warranty Disclaimers.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR ANOTHER COLLABORATION AGREEMENT, AFFYMETRIX DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ARRAYS OR DIAGNOSTIC PRODUCTS OR PERFORMANCE OR NON-INFRINGEMENT THEREOF, DOES NOT MAKE ANY WARRANTY, EXPRESS, IMPLIED OR OTHERWISE, WITH RESPECT TO ARRAYS OR DIAGNOSTIC PRODUCTS, SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE, AND DOES NOT MAKE ANY WARRANTY OF ANY KIND TO ROCHE’S CUSTOMERS OR AGENTS. AFFYMETRIX HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

VIII. Limited Liability.

EXCEPT IN CONNECTION WITH SECTION II (CONFIDENTIALITY) OF THE COMMON TERMS AGREEMENT OR AMOUNTS PAYABLE UNDER SECTION XII (WARRANTY) OR SECTION IX (INDEMNITY) OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, MULTIPLE, OR EXEMPLARY DAMAGES, OR LOST PROFITS.

IX. Indemnity.

(a) Indemnification from Infringement.

(i) Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against liability resulting from infringement by the Arrays of any Third Party patent (other than Roche patents, patents of any Affiliate of Roche or patents of Genentech or Chugai) or from any matter referred to in the second sentence of (ii) below, provided Affymetrix is promptly notified of any and all threats, claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; Affymetrix will not be responsible for any settlement it does not approve in writing (provided, however, that Affymetrix will consult with Roche if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Roche receives under this Agreement in a materially negative manner). The foregoing obligation of Affymetrix does not apply with respect to Arrays or portions or components: (w) not supplied by Affymetrix; (x) made in whole or in part in accordance to Roche specifications or requests, to the extent the infringement was caused thereby; (y) which are modified by Roche or any Third Party after shipment by Affymetrix, if the alleged infringement relates to such modification; or (z) combined, processed or used with other

products (including, without limitation, as part of Diagnostic Products), processes or materials where the alleged infringement relates to such combination, process or use.

Where Roche facilitates or fails to stop (to the extent within its power) allegedly infringing activity after being notified thereof or after being informed of modifications that would have avoided the alleged infringement, the foregoing indemnification provisions will apply but Affymetrix will not need to pay any settlement, judgment, or other amounts attributable to events occurring after giving such notice to Roche.

(ii) Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against liability resulting from infringement by Roche Technology of any Third Party patent (other than Affymetrix patents, patents of any Affiliate of Affymetrix or patents of Perlegen) or from any matter referred to in the second sentence of subsection (i) above, provided Roche is promptly notified of any and all threats, claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; Roche will not be responsible for any settlement it does not approve in writing (provided, however, that Roche will consult with Affymetrix if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Affymetrix receives under this Agreement in a materially negative manner). The foregoing obligation of Roche does not apply with respect to Roche Technology used in Diagnostic Products: (y) which are modified by Affymetrix after shipment by Roche, if the alleged infringement relates to such modification; or (z) combined, processed or used with other products, processes or materials where the alleged infringement relates to such combination, process or use.

Where Affymetrix facilitates or fails to stop (to the extent within its power) allegedly infringing activity after being notified thereof or after being informed of modifications that would have avoided the alleged infringement, the foregoing indemnification provisions will apply but Roche will not need to pay any settlement, judgment, or other amounts attributable to events occurring after giving such notice to Affymetrix.

(b) Indemnity Relating to Products. Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against any and all Damages based upon or arising out of the import, sale or use of Diagnostic Products except to the extent that such Damages (i) relate to or arise from Arrays or Affymetrix Instruments supplied by Affymetrix or any matter to be indemnified by Affymetrix pursuant to Section IX(a)(i) or (ii) arise after the transfer of such Diagnostic Products to Affymetrix pursuant to Section VI(b).

(c) Conditions of Indemnification. If either Party proposes to seek indemnification from the other under the provisions of this Section IX, it shall notify the other Party within 15 days of receipt of notice of any Claim and shall cooperate fully with the other Party in the defense of such claims or suits. The indemnified Party shall cooperate with the indemnifying Party (at the indemnifying Party’s expense) in all respects in connection with the defense of any such Claim. The indemnifying Party shall, upon written notice from the indemnified Party of a Claim, undertake to conduct all proceedings or negotiations in connection with the Claim, assume the defense thereof, and all other required steps or proceedings to settle

or defend any such Claim, including the selection of counsel that shall be approved by the indemnified Party, which approval shall not be unreasonably withheld, and payment of all reasonable expenses. The indemnified Party shall have the right to employ separate counsel and participate in the defense at the indemnified Party’s sole expense. If the indemnifying Party fails to defend or settle in good faith any Claim as provided above, then the indemnified Party shall have the right to take over sole control of the defense of the Claim and all negotiations for its settlement or compromise, provided that the indemnifying Party shall be liable for (and shall pay as they become due) all costs and expenses (including attorneys’ fees) reasonably incurred by the indemnified Party in its defending or negotiating settlement of the Claim. Notwithstanding the foregoing, the Party primarily responsible for handling the Claim (as determined above) will first obtain the prior written consent of the other Party for any settlement of a Claim that (i) does not include a complete release of the other Party from all liability with respect thereto, (ii) compromises the rights of the other Party, or (iii) imposes any restrictions on the other Party.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

AFFYMETRIX:			ROCHE:


Affymetrix, Inc.			F. Hoffmann-La Roche Ltd.



By:	/s/ Barbara A. Caulfield		By:	/s/ Heino von Prondzynski
	Name:	Barbara A. Caulfield		Name:	Heino von Prondzynski
	Title:	Executive Vice President and		Title:	Head, Diagnostic Division
		General Counsel




			By:	/s/ Gregory F. Heath
				Name:	Gregory F. Heath
				Title:	Head, Business Development and
					Licensing

EXHIBIT A

ROCHE PCR PATENTS

FOUNDATIONAL PCR PATENTS

[* * *]

U.S. Patent No. 4,683,195 - Issued: July 28, 1987

Process for Amplifying, Detecting, and/or Cloning Nucleic Acid Sequences

U.S. Patent No. 4,683,202 - Issued: July 28, 1987

Process for Amplifying Nucleic Acid Sequences

U.S. Patent No. 4,965,188 - Issued: October 23, 1990

Process for Amplifying, Detecting, and/or Cloning Nucleic Acid Sequences Using a Thermostable Enzyme

U.S. Patent No. 6,040,166 - Issued: March 21, 2000

Kits for amplifying and detecting nucleic acid sequences, including a probe

U.S. Patent No. 6,197,563 - Issued: March 6, 2001

Kits for amplifying and detecting nucleic acid sequences

U.S. Patent No. 5,219,727 - Issued: June 15, 1993

Quantitation of Nucleic Acids Using the Polymerase Chain Reaction

U.S. Patent No. 5,310,652 - Issued: May 10, 1994

Reverse Transcription With Thermostable DNA Polymerase - High Temperature Reverse Transcription

U.S. Patent No. 5,322,770 - Issued: June 21, 1994

Reverse Transcription With Thermostable DNA Polymerases - High Temperature Reverse Transcription

U.S. Patent No. 5,407,800 - Issued: April 18, 1995

Reverse Transcription With Thermus thermophilus Polymerase

U.S. Patent No. 5,476,774 - Issued: December 19, 1995

Quantitation of Nucleic Acids Using the Polymerase Chain Reaction

U.S. Patent No. 5,641,864 - Issued: June 24, 1997

Kits for High Temperature Reverse Transcription of RNA

IMPROVEMENTS

[* * *]

U.S. Patent No. 4,800,159 - Issued: January 24, 1989

Process for Amplifying, Detecting, and/or Cloning Nucleic Acid Sequences

U.S. Patent No. 5,066,584 - Issued: November 19, 1991

Methods for Generating Single-Stranded DNA by the Polymerase Chain Reaction

U.S. Patent No. 5,075,216 - Issued: December 24, 1991

Methods for DNA Sequencing with Thermus aquaticus DNA Polymerase

U.S. Patent No. 5,091,310 - Issued: February 25, 1992

Structure-Independent Amplification by PCR

U.S. Patent No. 5,142,033 - Issued: August 25, 1992

Structure-Independent Amplification by PCR

U.S. Patent No. 5,314,809 - Issued: May 24, 1994

Methods for Nucleic Acid Amplification

U.S. Patent No. 5,389,512 - Issued: February 14, 1995

Method for Determining the Relative Amount of a Viral Nucleic Acid Segment in a Sample by the Polymerase Chain Reaction

U.S. Patent No. 5,411,876 - Issued: May 2, 1995

Use of Grease or Wax in the Polymerase Chain Reaction

U.S. Patent No. 5,418,149 - Issued: May 23, 1995

Reduction of Non-Specific Amplification Using dUTP and Uracil DNA Glycosylase

U.S. Patent No. 5,512,462 - Issued: April 30, 1996

Methods and Reagents for the Polymerase Chain Reaction Amplification of Long DNA Sequences

U.S. Patent No. 5,561,058 - Issued: October 1, 1996

Methods For Coupled High Temperatures Reverse Transcription And Polymerase Chain Reactions

U.S. Patent No. 5,565,339 - Issued: October 15, 1996

Compositions and Methods for Inhibiting Dimerization of Primers During Storage of Polymerase Chain Reaction Reagents

U.S. Patent No. 5,618,703 - Issued: April 8, 1997

Unconventional Nucleotide Substitution in Temperature Selective RT-PCR

U.S. Patent No. 5,693,517 - Issued: December 2, 1997

Reagents And Methods For Coupled High Temperature Reverse Transcription And Polymerase Chain Reactions

U.S. Patent No. 6,001,611 - Issued: December 14, 1999

Modified Nucleic Acid Amplification Primers

U.S. Patent No. 6,274,386 - Issued: August 14, 2001

Reagent Preparation Containing Magnetic Particles in Tablet Form

U.S. Patent No. 6,365,375 - Issued: April 2, 2002

Method of Primer-Extension Preamplification PCR

U.S. Patent No. 6,509,157 - Issued: January 21, 2003

3 Blocked Nucleic Acid Amplification Primers

DETECTION METHODS

[* * *]

U.S. Patent No. 4,582,789 - Issued: April 15, 1986

Process for Labeling Nucleic Acids Using Psoralen Derivatives

U.S. Patent No. 4,789,630 - Issued: December 6, 1988

Ionic Compounds Containing the Cationic Meriquinone of a Benzidine

U.S. Patent No. 5,210,015 - Issued: May 11, 1993

Homogeneous Assay System Using the Nuclease Activity of a Nucleic Acid Polymerase

U.S. Patent No. 5,278,043 - Issued: January 11, 1994

Ruthenium-Lumazine Energy Transfer Systems

U.S. Patent No. 5,468,613 - Issued: November 21, 1995

Process for Detecting Specific Nucleotide Variations and Genetic Polymorphisms Present in Nucleic Acids

U.S. Patent No. 5,487,972 - Issued: January 30, 1996

Nucleic Acid Detection by the 5’-3’ Exonuclease Activity of Polymerases Acting on Adjacently Hybridized Oligonucleotides

U.S. Patent No. 5,491,063 - Issued: February 13, 1996

Methods for In-Solution Quenching of Fluorescently Labeled Oligonucleotide Probes

U.S. Patent No. 5,571,673 - Issued: November 5, 1996

Methods for In-Solution Quenching of Fluorescently Labeled Oligonucleotide Probes

U.S. Patent No. 5,573,906 - Issued: November 12, 1996

Detection Of Nucleic Acids Using A Hairpin Forming Oligonucleotide Primer And An Energy Transfer Detection System

U.S. Patent No. 5,604,099 - Issued: February 18, 1997

Process for Detecting Specific Nucleotide Variations and Genetic Polymorphisms Present in Nucleic Acids

U.S. Patent No. 5,804,375 - Issued: September 8, 1998

Reaction Mixtures For Detection Of Target Nucleic Acids

U.S. Patent No. 5,994,056 - Issued: November 30,1999

Homogeneous Methods For Nucleic Acid Amplification And Detection

U.S. Patent No. 6,171,785 - Issued: January 9, 2001

Methods And Devices For Homogeneous Nucleic Acid Amplification And Detection

U.S. Patent No. 6,214,979 - Issued: April 10, 2001

Homogeneous Assay System

ENZYMES

[* * *]

U.S. Patent No. 4,889,818 - Issued: December 26, 1989

Purified Thermostable Enzyme

U.S. Patent No. 5,079,352 - Issued: January 7, 1992

Purified Thermostable Enzyme

U.S. Patent No. 5,352,600 - Issued: October 4, 1994

Purified Thermostable Enzyme

U.S. Patent No. 5,374,553 - Issued: December 20, 1994

DNA Encoding a Thermostable Nucleic Acid Polymerase Enzyme From Thermotoga maritima

U.S. Patent No. 5,405,774 - Issued: April 11, 1995

DNA Encoding a Mutated Thermostable Nucleic Acid Polymerase Enzyme From Thermus Species Sps17

U.S. Patent No. 5,420,029 - Issued: May 30, 1995

Mutated Thermostable Nucleic Acid Polymerase Enzyme From Thermotoga maritima

U.S. Patent No. 5,455,170 - Issued: October 3, 1995

Mutated Thermostable Nucleic Acid Polymerase Enzyme From Thermus Species Z05

U.S. Patent No. 5,466,591 - Issued: November 14, 1995

5’ to 3’ Exonuclease Mutations of Thermostable DNA Polymerases

U.S. Patent No. 5,491,086 - Issued: February 13, 1996

Purified Thermostable Nucleic Acid Polymerase and DNA Coding Sequences From Pyrodictium Species

U.S. Patent No. 5,618,711 - Issued: April 8, 1997

Recombinant Expression Vectors and Purification Methods for Thermus Thermophilus DNA Polymerase

U.S. Patent No. 5,624,833 - Issued: April 29, 1997

Purified Thermostable Nucleic Acid Polymerase Enzyme From Thermotoga maritima

U.S. Patent No. 5,665,551 - Issued: September 9, 1997

Purified Nucleic Acid Encoding A Thermostable Pyrophosphatase

U.S. Patent No. 5,674,738 - Issued: October 7, 1997

DNA Encoding Thermostable Nucleic Acid Polymerase Enzyme From Thermus Species Z05

U.S. Patent No. 5,677,152 - Issued: October 14, 1997

Nucleic Acid Amplification Using A Reversibly Inactivated Thermostable Enzyme

U.S. Patent No. 5,773,258 - Issued: June 30, 1998

Nucleic Acid Amplification Using A Reversibly Inactivated Thermostable Enzyme

U.S. Patent No. 5,789,224 - Issued: August 4, 1998

Recombinant Expression Vectors And Purification Methods For Thermus Thermophilus DNA Polymerase

U.S. Patent No. 5,795,762 - Issued: August 18, 1998

5’ To 3’ Exonuclease Mutations Of Thermostable DNA Polymerase

U.S. Patent No. 5,939,292 - Issued: August 17, 1999

Thermostable DNA Polymerases Having Reduced Discrimination Against Ribo-NTPs

U.S. Patent No. 5,968,799 - Issued: October 19, 1999

Purified Thermostable Nucleic Acid Polymerase Enzyme From Thermosipho africanus

U.S. Patent No. 6,127,155 - Issued: October 3, 2000

Stabilized Thermostable Nucleic Acid Polymerase Compositions Containing Non-Ionic Polymeric Detergents

U.S. Patent No. 6,228,628 - Issued: May 8, 2001

Mutant Chimeric DNA Polymerase

U.S. Patent No. 6,346,379 - Issued: February 12, 2002

Thermostable DNA Polymerases Incorporating Nucleoside Triphosphates Labeled with Fluorescein Family Dyes

U.S. Patent No. 6,399,320 - Issued: June 4, 2002

Modified DNA-polymerase from Carboxydothermus hydrogenoformans and its use for coupled reverse transcription and polymerase chain reaction

SPECIFIC PATHOGENS

[* * *]

Viral detection in general:

U.S. Patent No. 5,176,995 - Issued: January 26, 1993

Detection of Viruses by Amplification and Hybridization

HIV-related patents:

U.S. Patent No. 5,008,182 - Issued: April 16, 1991

Detection of AIDS Associated Virus by Polymerase Chain Reaction

U.S. Patent No. 5,386,022 - Issued: January 31, 1995

Primers and Probes for the Amplification and Detection of AIDS Associated Nucleic Acids

U.S. Patent No. 5,594,123 - Issued: January 14, 1997

Primers and Probes for the Amplification and Detection of AIDS Associated Nucleic Acids

U.S. Patent No. 5,599,662 - Issued: February 4, 1997

Improved Oligonucleotide Primers and Probes for Detection of HIV-1

U.S. Patent No. 5,908,743 - Issued: June 1, 1999

GAG Gene Primers For Detection Of HIV-1

HCV-related patents:

U.S. Patent No. 5,527,669 - Issued: June 18, 1996

Methods, Primers and Probes for Detection of Hepatitis C and Novel Variants

U.S. Patent No. 5,580,718 - Issued: December 3, 1996

Primers and Probes for Detection of Hepatitis C and Novel Variants

U.S. Patent No. 5,837,442 - Issued: November 17, 1998

Oligonucleotide Primers For Amplifying HCV Nucleic Acid

HPV-related patents:

U.S. Patent No. 5,447,839 - Issued: September 5, 1995

Detection of Human Papillomavirus by the Polymerase Chain Reaction

U.S. Patent No. 5,527,898 - Issued: June 18, 1996

Detection of Human Papillomavirus by the Polymerase Chain Reaction

U.S. Patent No. 5,639,871 - Issued: June 17, 1997

Detection of Human Papillomavirus

U.S. Patent No. 5,705,627 - Issued: January 6, 1998

Detection Of Human Papillomavirus By The Polymerase Chain Reaction Using Specific L1, And E6 Probes

Mycobacteria-related patents:

U.S. Patent No. 5,422,242 - Issued: June 6, 1995

Mycobacterium Primers and Probes

U.S. Patent No. 5,643,723 - Issued: July 1, 1997

Detection Of A Genetic Locus Encoding Resistance To Rifampin In Mycobacterial Cultures And In Clinical Specimens

Miscellaneous pathogens:

U.S. Patent No. 5,079,351 - Issued: January 7, 1992

Oligonucleotides and Kits for Detection of HTLVI and HTLVII Viruses by Hybridization

U.S. Patent No. 5,232,829 - Issued: August 3, 1993

Detection Of Chlamydia Trachomatis By Polymerase Chain Reaction Using Biotin Labelled DNA Primers & Capture Probes

U.S. Patent No. 5,268,268 - Issued: December 7, 1993

Detection of HTLVI and HTLVII Viruses by Hybridization

U.S. Patent No. 5,389,515 - Issued: February 14, 1995

Isolated Nucleotide Sequences for Identifying Neisseria Gonorrhoeae

U.S. Patent No. 5,491,225 - Issued: February 13, 1996

PCR Primers for Detection of Legionella Species and Methods for Controlling Visual Intensity in Hybridization Assays

U.S. Patent No. 5,508,168 - Issued: April 16, 1996

Methods and Reagents for the Detection of Herpes Simplex Virus, Treponema pallidum,

and Haemophilus ducreyi

U.S. Patent No. 5,550,040 - Issued: August 27, 1996

Method, Reagents And Kits For The Detection Of Neisseria Gonorrhoeae

U.S. Patent No. 5,593,836 - Issued: January 14, 1997

Primers and Probes for Detecting Pneumocystis Carinii

U.S. Patent No. 5,614,388 - Issued: March 25, 1997

PCR Primers for Detection of Legionella Species and Methods for Controlling Visual Intensity in Hybridization Assays

U.S. Patent No. 5,620,847 - Issued: April 15, 1997

Method And Reagents For Detection Of Bacteria In Cerebrospinal Fluid

U.S. Patent No. 5,635,348 - Issued: June 3, 1997

Method And Probes For Identifying Bacteria Found In Blood

U.S. Patent No. 5,912,117 - Issued: June 15, 1999

Method For Diagnosis Of Lyme Disease

U.S. Patent No. 6,090,557 - Issued: July 18, 2000

Neisseria gonorrhoeae-Specific Oligonucleotides

CANCER

[* * *]

U.S. Patent No. 5,057,410 - Issued: October 15, 1991 Chimeric Messenger RNA Detection Methods

U.S. Patent No. 5,543,296 - Issued: August 6, 1996

Detection of Carcinoma Metastases by Nucleic Acid Amplification

U.S. Patent No. 5,766,888 - Issued: June 16, 1998

Detection Of Carcinoma Metastases By Nucleic Acid Amplification

HUMAN GENETICS / IDENTITY / TYPING

[* * *]

U.S. Patent No. 5,110,920 - Issued: May 5, 1992

HLA Typing Method and DNA Probes Used Therein

U.S. Patent No. 5,310,893 - Issued: May 10, 1994

Method for HLA-DP Typing

U.S. Patent No. 5,451,512 - Issued: September 19, 1995

Methods and Reagents for HLA Class I A Locus DNA Typing

U.S. Patent No. 5,464,945 - Issued: November 7, 1995

Oligonucleotide Probes Specific for the Human Alpha Satellite Locus

U.S. Patent No. 5,550,039 - Issued: August 27, 1996

Oligonucleotide Primers for HLA Class I B Locus DNA Typing

U.S. Patent No. 5,541,065 - Issued: July 30, 1996

Method for HLA DP Typing

U.S. Patent No. 5,567,809 - Issued: October 22, 1996

Methods and Reagents for HLA DRBeta DNA Typing

U.S. Patent No. 5,643,724 - Issued: July 1, 1997

Methods and Reagents for Glycophorin A Typing

U.S. Patent No. 5,648,482 - Issued: July 15, 1997

Primers Targeted To Cyp2d6 Gene For Detecting Poor Metabolizers Of Drugs

U.S. Patent No. 5,665,548 - Issued: September 9, 1997

Characterization And Detection Of Sequences Associated With Autoimmune Diseases

U.S. Patent No. 5,763,184 - Issued: June 9, 1998

Nucleotide Sequence Variation In The ABO Glycosyltransferase Gene

U.S. Patent No. 5,844,108 - Issued: December 1, 1998

Primers Targeted To NAT2 Gene For Detection Of Poor Metabolizers Of Drugs

U.S. Patent No. 6,194,561 - Issued: February 27, 2001

Characterization And Detection Of Sequences Associated With Autoimmune Diseases

SAMPLE PREPARATION

U.S. Patent No. 4,946,952 - Issued: August 7, 1990

Process For Isolating Nucleic Acids

U.S. Patent No. 5,063,162 - Issued: November 5, 1991

Process For Isolating Nucleic Acids Utilizing Protease Digestion

U.S. Patent No. 5,501,963 - Issued: March 26, 1996

Amplification And Detection Of Nucleic Acids In Blood Samples

U.S. Patent No. 6,403,786 - Issued: June 11, 2002

Heterocyclic Compounds And Their Use For Isolating Nucleic Acids

MISCELLANEOUS

U.S. Patent No. 5,451,505 - Issued: September 19, 1995

Methods for Tagging and Tracing Materials With Nucleic Acids

EXHIBIT B

[***]

EXHIBIT C

AFFYMETRIX DESIGNATION AND BRANDING GUIDELINES

[See attached]

Guidelines for Affymetrix Co-Branding Logo and Tagline

Powered by Affymetrix. The Way Ahead.™

The following co-branding guidelines have been designed for licensees and partners integrating or otherwise incorporating Affymetrix technologies into their products. These guidelines outline proper usage of the Affymetrix trademark Powered by Affymetrix. The Way Ahead.™ and related images in materials including (but not limited to):

Print and broadcast advertising, collateral literature, promotional materials, instructional tools, reference materials, and web sites, or for use on products, labels, packaging, package inserts, user guides and product manuals.

This document is intended for use in conjunction with:

Principles and Elements of the Affymetrix Visual Identity: Corporate Style Guide.

(See accompanying document.)

Following these guidelines will help protect our valuable trademark rights and strengthen our corporate and brand identities. By using an Affymetrix trademark, in whole or in part, you acknowledge that Affymetrix has exclusive rights to the trademark and promise that you will not interfere with Affymetrix’ rights in the trademark, including challenging Affymetrix’ use, registration of, or application to register such trademark, alone or in combination with other words, anywhere in the world, and that you will use commercially reasonable efforts not to not harm, misuse, or bring into disrepute any Affymetrix trademark. The goodwill derived from using any part of an Affymetrix trademark exclusively inures to the benefit of and belongs to Affymetrix. Except for the limited right to use as expressly permitted under these guidelines, no other rights of any kind are granted hereunder, by implication or otherwise. If you have questions regarding these guidelines, please talk to your Affymetrix representative, or contact the Affymetrix Legal Department.

Authorized Use of Logo & Trademark:

“Powered by Affymetrix. The Way Ahead.™”

Print Advertising

Print advertising featuring products based on Affymetrix technologies should bear at least one “Powered by Affymetrix” reference in the body copy. In addition, the “Powered by Affymetrix. The Way Ahead.™” logo should appear at approximately half the size of the partner’s logo and tagline (2:1 |

Partner:Affymetrix) (the “Approved Proportion”), and not less than 50 points in width.

Attributions noting Affymetrix’ ownership of or exclusive rights to trademarks and logos are required. For example:

Affymetrix, the Affymetrix logo, and “The Way Ahead.” are trademarks owned or used by Affymetrix, Inc.

Broadcast Advertising

In television or radio, please use the following guidelines based on length of spot:

10-second spots:	One mention at close of spot. “Powered by Affymetrix.”
	(About 1.5 seconds.) No pre-approval required.

30-second spots:	One mention in main copy that could incorporate the phrase, “Powered by Affymetrix.” (About 1.5 seconds.)
	And one mention at the close of spot that reads, “Powered by Affymetrix. The Way Ahead.” (About 2.5 seconds.)
	No pre-approval required.

60-second spots:	One sentence in main copy focused specifically on Affymetrix technology and incorporating the tagline, “Powered by Affymetrix.” (About 5 seconds).
	And one mention at the close of spot that reads, “Powered by Affymetrix. The Way Ahead.” (About 2.5 seconds.)
	Review and/or collaboration requested prior to production; pre-approval is not required.

Collateral Materials

Similarly, collateral materials including (but not limited to) product literature, brochures, direct mail, posters, sales materials, programs, and presentations (slide or PowerPoint) should bear at least one “Powered by Affymetrix” reference in the body copy. In addition, the “Powered by Affymetrix. The Way Ahead.™” logo should appear in the Approved Proportion to the partner’s logo and tagline. It may appear on the last page, back panel, rear title slide, or in another position where it is clearly noticeable by the reader/viewer. However, you may use your discretion as to the location of the logo on the page to bring balance or symmetry to the layout.

Again, we require the following trademark attributions:

Affymetrix, the Affymetrix logo, and “The Way Ahead.” are trademarks owned or used by Affymetrix, Inc.

Web Sites

References on company web sites need only bear the appropriate trademark symbols upon first mention (e.g., if mentioned on the home page). In instances where content jumps to sub-levels, however, the appropriate trademark should be repeated upon first mention at each sub-level.

Products

On products such as microarrays where label “real estate” or live area is at a premium, partners are permitted to use the tagline only. However, we strongly recommend partners collaborate with Affymetrix on solutions in these cases.

The Roche AmpliChip™ cartridge label, for example, demonstrates an instance in which the company logo and product name (Roche AmpliChip™) should take precedence over the “Powered by Affymetrix. The Way Ahead.™” logo, since it’s physically impossible to feature both logos on a single array. Consequently, it is acceptable to Affymetrix to feature only the text version of the signature on one or two lines on the cartridge label, printing specifications permitting. And if during the layout stage the partners feel two lines unduly clutter the cartridge label, they may opt to feature the “Powered by Affymetrix” line only.

Examples: Powered by Affymetrix.

The Way Ahead.™

Powered by Affymetrix.

Packaging

Array, reagent, software, and instrumentation packaging, however, should bear the entire logo treatment. The logo should appear in the Approved Proportion to the partner’s logo and tagline, and not less than 50 points in width. Ideally, the logo will appear on the main panel (front or top view facing the reader), and on at least one side panel (right or left).

Package Inserts

Since package inserts contain in-depth technical and/or product-related information, it will suffice to mention that a product incorporates (or is powered by) an Affymetrix technology. However, as with all other collateral materials, the logo should appear in the Approved Proportion to the partner’s logo and tagline. Again, the logo may appear no less than 50 points in width to ensure embedded text remains readable.

Similarly, we require the following trademark attributions:

Affymetrix, the Affymetrix logo, and “The Way Ahead.” are trademarks owned or used by Affymetrix, Inc.

User Guides, Product Manuals, & Quick Reference Cards

As with other collateral materials, documents that accompany or support products including (but not limited to) user guides, product manuals, and quick reference cards should bear at least one “Powered by Affymetrix” reference in the body copy. In addition, the “Powered by Affymetrix. The Way Ahead.™” logo should appear in the Approved Proportion to the partner’s logo and tagline. It may appear on the last inside page, back cover, or in another position where it is clearly noticeable by the reader/viewer. However, you may use your discretion as to the location of the logo and taglines on the page to bring balance or symmetry to the layout.

Again, we require the following trademark attributions:

Affymetrix, the Affymetrix logo, and “The Way Ahead.” are trademarks owned or used by Affymetrix, Inc.

Additional Guidelines for Partners

Compatibility

Partners may use “Affymetrix” as a reference in promotional materials to indicate that third-party products are compatible with a referenced Affymetrix product or technology, provided they comply with the following requirements.

a. The Affymetrix name is not part of the third-party product name.

b. The Affymetrix name is used in a referential phrase such as “runs on,” “for use with,” “for,” or “compatible with.”

c. The Affymetrix name appears less prominent than the product name.

d. The product is in fact compatible with, or otherwise works with, the referenced Affymetrix product.

e. The reference to Affymetrix does not create a sense of endorsement, sponsorship, or false association with Affymetrix, Affymetrix products, or services.

f. The use does not show Affymetrix or its products in a false or derogatory light.

Unauthorized Use of Affymetrix Trademarks

Company, Product, or Service Name
may not use or register, in whole or in part, Affymetrix®, GeneChip®, or any other Affymetrix trademark, including Affymetrix-owned graphic symbols, logos, icons, or an alteration thereof, as or as part of a company name, trade name, product name, or service name except as specifically noted in these guidelines.

Affymetrix Logo and Affymetrix-owned Graphic Symbols
You may not use the Affymetrix logo or any other Affymetrix-owned graphic symbol, logo, or icon on or in connection with web sites, products, packaging, manuals, promotional/advertising materials, or for any other purpose except

pursuant to an express written trademark license from Affymetrix, such as a partner agreement.

Further, white space equivalent to the x-height of the body must surround the logo on all four sides as shown below:

Variations, Takeoffs or Abbreviations
You may not use a real Affymetrix logo or other variation of the Affymetrix logo for any purpose. Third parties cannot use a variation, phonetic equivalent, foreign language equivalent, takeoff, or abbreviation of an Affymetrix trademark for any purpose. For example:

Not acceptable: Affy genechip

For acceptable usage, partners may refer to the Affymetrix web site for guidance: http://www.affymetrix.com/corporate/media/guidelines.affx.

Disparaging Manner
You may not use an Affymetrix trademark or any other Affymetrix-owned graphic symbol, logo, or icon in a disparaging manner.

Endorsement or Sponsorship
You may not use Affymetrix®, GeneChip®, or any other Affymetrix trademark, including Affymetrix-owned graphic symbols/logos, or icons, in a manner that would imply Affymetrix’ affiliation with or endorsement, sponsorship, or support of a third-party product or service.

Merchandise Items
You may not manufacture, sell, or give away merchandise items, such as pens and notebooks, bearing Affymetrix®, GeneChip®, or any other Affymetrix trademark, including symbols, logos, or icons, except pursuant to an express written trademark license from Affymetrix.

Affymetrix’ Trade Dress
You may not imitate the distinctive Affymetrix packaging, web site design, logos, or typefaces.

Slogans and Taglines
You may not use or imitate an Affymetrix slogan or tagline as your own.

Examples:		“Tools to take you as far as your vision.™”
		“The Way Ahead.™”

Domain Names
You may not use an identical or virtually identical Affymetrix trademark as a second-level domain name.

Not acceptable: “affymetrix.com” “GeneChip.com”

The GeneChip® Trademark
You may not use the GeneChip trademark alone, except to denote or refer to the Affymetrix GeneChip® brand product line.

EX-10.59 7 a2111472zex-10_59.htm EXHIBIT 10.59

EXHIBIT 10.59

Confidential Treatment has been requested for portions of this exhibit. This copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.

Affymetrix Instrument and Chip Supply Agreement

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

TABLE OF CONTENTS

I.	Introduction

II.	Common Terms and Definitions.

III.	Chip and Affymetrix Instrument Supply

IV.	Custom Array Development

V.	Proprietary Rights

VI.	Compensation

VII.	Manufacturing Process Change.

VIII.	Technical Support and Product Service

IX.	Intellectual Property Ownership

X.	Warranty

XI.	Limited Liability

XII.	Indemnity

XIII.	Term and Termination

XIV.	Miscellaneous.

Annex 1:	Current Form of Customer Service Provider Addendum

Annex 2:	Current Affymetrix Instrument Service Level Packages

Annex 3:	Software Maintenance Terms and Conditions


Exhibit A:	Affymetrix Instrument Pricing Schedule

Exhibit B:	Catalog Chip and Custom Array Pricing Schedule

AFFYMETRIX INSTRUMENT AND CHIP SUPPLY AGREEMENT

January 29, 2003

This AFFYMETRIX INSTRUMENT AND CHIP SUPPLY AGREEMENT (“Agreement”) is effective as of the date first written above (“Effective Date”) between Affymetrix, Inc., a Delaware corporation (“Affymetrix”), and F. Hoffmann-La Roche Ltd. ( “Roche”).

I. Introduction.

(a) Affymetrix has research, development and manufacturing capabilities and facilities, and has developed certain rights relevant to DNA probe array-based technology.

(b) Roche has research, development and manufacturing capabilities required for the development and commercialization of diagnostic products utilizing DNA probe array-based technology.

(c) As part of the Collaboration, Affymetrix and Roche desire to enter into an agreement whereby Affymetrix will supply Roche with DNA probe arrays, instruments related thereto and other products related to the foregoing for use in or with Diagnostic Products developed by the Parties pursuant to the Collaboration.

(d) In consideration of the mutual covenants and promises contained in this Agreement, Affymetrix and Roche agree as follows:

II. Common Terms and Definitions.

(a) Common Terms.

(i) Unless otherwise defined herein, all capitalized terms shall have the meanings set forth in the Common Terms Agreement, dated as of even date herewith, between Affymetrix and Roche (the “Common Terms Agreement”).

(ii) This Agreement shall be governed by and subject to the provisions contained in the Common Terms Agreement, in accordance with its terms.

(b) Definitions.

(i) “Affymetrix Instrument Pricing Schedule” shall have the meaning set forth in Section III(g)(i).

(ii) “Affymetrix Instrument Service Level Packages” shall have the meaning set forth in Section III(i).

(iii) “Affymetrix Service Levels” shall have the meaning set forth in Section VIII(a).

(iv) “Chip Improvement Inventions” shall mean all inventions that are conceived or first reduced to practice by an employee or contractor of a Party or its

Affiliates resulting from design or use of the Arrays supplied hereunder which relate to probe Array manufacturing techniques, probe Array layouts, probe Array packaging techniques, probe Array assay techniques (but only insofar as such assay techniques relate to processes that occur following nucleic acid extraction and are directly related to Arrays of nucleic acid probes), and probe Array software analysis techniques relating to the creation of genetic information such as but not limited to genotypes, sequences, base calls and qualitative or quantitative expression levels. Chip Improvement Inventions shall not include analytic software which takes such genetic information discussed in the preceding sentence and from such information derives predictions, prognoses, diagnoses, treatment recommendations, or related information or is specific to particular Content. It is hereby understood that inventions made independently of design or use of Arrays (such as those inventions made in the course of design or use of Roche’s proprietary technologies or other non-Affymetrix technologies) are not Chip Improvement Inventions within the meaning of this Agreement. Chip Improvement Inventions shall further not include any other inventions that are conceived of or reduced to practice by an employee or contractor of a Party or its Affiliates including, for example, expression data or discoveries resulting therefrom, targets identified through the use of the Arrays, or correlations between genetic sequences and function.

(v) “Content Chips” shall have the meaning set forth in Section III(a)(iii).

(vi) “Fully Loaded Cost Plus Basis” shall mean, for a particular Catalog Chip or Custom Array, as the case may be, the sum of (i) [***] and (ii) the [***].

(vii) “[***] Transfer Prices” shall have the meaning given to such term on Exhibit B hereto.

(viii) “Initial Design Fee” shall have the meaning set forth in Section VI(a).

(ix) “Manufacturing Facility Fee” shall mean the amount specified in the Development Plan for a Diagnostic Product that Affymetrix may need to build, staff, and otherwise prepare a manufacturing facility for the production of Arrays for a Diagnostic Product.

(x) “Projected Base Markup” shall mean the product of (i) [***] multiplied by (ii) the [***].

(xi) “Projected Fully Loaded Cost” shall mean the [***].

(xii) “Projected Fully Loaded Cost Plus Basis” shall mean, for a particular Array, as the case may be, the sum of (i) [***] and (ii) the [***].

(xiii) “Projected Markup Percentage” shall mean the percentage mark up over [***] embedded in the [***] as set forth in the Supply Agreement as of the Effective Date, which percentage [***] the Collaboration.

(xiv) “Return Materials Authorization” shall have the meaning set forth in Section VI(d).

(xv) “Services” shall mean technical support and product service (including support for adaptation for diagnostic uses).

(xvi) “Specification” shall mean written design and/or manufacturing specifications for a particular Array or Diagnostic Product incorporating an Array, as applicable, either set forth in the Development Plan as then in effect or as provided by Roche to Affymetrix.

III. Chip and Affymetrix Instrument Supply.

(a) Chip Supply. Beginning on the Effective Date, Affymetrix agrees to deliver Chips to Roche, in accordance with and subject to the terms of this Agreement, as follows:

(i) for Roche’s use as components of Diagnostic Products (“Component Chips”);

(ii) for Roche’s use in connection with its own development of Diagnostic Products (“Development Chips”);

(iii) in a quantity limited to an aggregate number of Chips of up to [***] such Chips per [***] through [***], for Roche’s use exclusively to develop Content for Diagnostic Products (“Content Chips”); provided that Roche shall, for each Content development program, notify Affymetrix of the Content intended to be developed and its expected application; and

(iv) in the event Roche needs additional Chips for Content discovery, Roche may propose to Affymetrix specific content discovery programs and Affymetrix will consider extending the right to purchase Content Chips, specifically considering that such past and further use does not erode or otherwise compromise Affymetrix’ research supply business with its customers.

(b) Physical Defects. Affymetrix will promptly replace any Chips that have Physical Defects [***] Roche; provided Roche gives notice to Affymetrix and returns such Chips within the Chips’ remaining shelf life and otherwise in accordance with the procedures in Section VI(d) hereof. If such Component Chip has already been incorporated into a Diagnostic Product that has been shipped to a Customer, then to the extent that Diagnostic Products can be salvaged on a commercial basis, Affymetrix will pay the [***], and to the extent the components of that Diagnostic Product cannot be salvaged, Affymetrix will reimburse Roche for Roche’s [***] in which such Component Chip was included.

(c) Forecasts. On at least a quarterly basis, Roche will provide a reasonable, good faith forecast of Custom Arrays and Catalog Chips to be supplied by Affymetrix (such forecasts to be supplied with the Affymetrix part number, if any). The forecasts shall indicate, with respect to each part number (or Chip design in the absence of part number), whether those

Chips are to be used as Component Chips, Development Chips or Content Chips, and will provide a [***]-quarter rolling projection of product demand; provided that (i) the next quarter in such forecast shall constitute a firm commitment obligating Roche to issue purchase orders for delivery of at least [***]% of the next quarter forecast quantities (100% of such next quarter forecast quantities, the “Firm Commitment”) of each type of Chip (by part number, if any) set forth therein in such quarter, and (ii) the subsequent quarters of such forecast will be for capacity planning purposes only, and shall not constitute a firm commitment to issue any purchase orders. The forecast will be provided according to a mechanism and on forms to be agreed upon in good faith by the Parties. Affymetrix shall supply at least [***]% of the Firm Commitment and will use commercially reasonable efforts to supply [***]% of the Firm Commitment of Chips in any forecast period and to meet the time specified in any purchase order in any forecast period; provided, that manufacture will be firmly scheduled and specific delivery times will be confirmed by Affymetrix only after receipt of the purchase order specific to those Chips to be delivered. After the initial forecast, if the aggregate number of ordered Chips of a particular type forecast for a quarter increases by more than [***]% from the forecast provided for the previous quarter, then [***]% of the number of such Chips above the [***]% increase shall be supplied in a reasonable time after the initial delivery time projection, but shall not be subject to breach on account of late supply thereof, unless Affymetrix has given its prior consent to supply such Chips.

(d) Use and Transfer of Chips and Data Therefrom.

(i) Roche may not: (A) transfer the Chips to Third Parties, except Component Chips as components of a Diagnostic Product and pursuant to the License Agreement; (B) purposefully use any Chip, or data generated by any Chip supplied pursuant to this Agreement or any Database to develop or discover Content (other than Content Chips); (C) reverse engineer Chips delivered hereunder; (D) reuse any individual Chip; (E) use Chips or Sell Chips for use in diagnostic or other settings requiring FDA or other regulatory agency approval unless Roche obtains such approval; or (F) use Chips or sell such Chips for use in any manner that is inconsistent with any legal or regulatory requirement. Roche understands that neither the Chips nor the Affymetrix Instruments have received FDA or other regulatory agency approval as supplied under this Agreement.

(ii) Unless otherwise expressly permitted by any Collaboration Agreement, Roche shall not sell, distribute or otherwise transfer to Third Parties any data or Database derived from any Arrays supplied pursuant to this Agreement, except in connection with a Diagnostic Product, provided that Roche shall not sell, distribute or transfer on a commercial basis a standalone Database.

(e) Packing and Shipping. Arrays will be packed in Affymetrix’ standard shipping packages and shipped to the address specified by Roche in accordance with quality assurance and packaging procedures determined by Affymetrix from time to time. If a particular Custom Array requires any packaging, process or procedure other than those Affymetrix utilizes for its Catalog Chips, then upon the reasonable request of Roche, Affymetrix shall perform such packaging, processes or procedures at an additional charge on a [***]. Roche agrees to provide to Affymetrix, [***], the training, Technology, know-how, equipment and Intellectual Property

licenses required to perform such packaging, processes and procedures requested by Roche that are different than those Affymetrix utilizes for its Catalog Chips.

Deliveries of Arrays will be F.O.B. Affymetrix’ facility or the facility of its sales representative. Affymetrix will ship via a carrier selected by Roche or, if none is specified by Roche, Affymetrix will select the carrier. Title and risk of loss or damage for deliveries will pass to Roche upon Affymetrix’ actual delivery of the Arrays to the carrier for shipment to Roche. Roche will pay all shipping costs, duties and sales taxes. Roche will advise Affymetrix in writing if insurance is desired on any shipments of Arrays, and will reimburse Affymetrix for all such insurance charges.

(f) Genetic Information. Affymetrix will endeavor to provide Roche with sufficient genetic information to identify the Genes on each Catalog Chip provided, if any. If Affymetrix updates its information about any Catalog Chips to include additional or different genetic sequence information relevant to the development of Diagnostic Products, Affymetrix will endeavor to provide such information to Roche.

(g) Affymetrix Instruments.

(i) Affymetrix Instrument Purchases by Roche for Diagnostic Product Development. Affymetrix agrees to supply Roche and its Affiliates with Affymetrix Instruments for use with Arrays for use in the development of Diagnostic Products in accordance with the Collaboration Agreements. Such Affymetrix Instruments shall be purchased pursuant to purchase orders provided to Affymetrix at the prices and on terms and conditions set forth on the Affymetrix Instrument Pricing Schedule (the “Affymetrix Instrument Pricing Schedule”) attached hereto as Exhibit A, and Affymetrix will fill such orders with not less than the priority afforded any other purchaser. Roche shall have the option to [***] hereunder for [***] Affymetrix [***] Affymetrix’ [***] then in effect. Roche shall have no right to sell, distribute or otherwise transfer any Affymetrix Instrument supplied under this Agreement except to its Affiliates exclusively for use in the development of Diagnostic Products or in subsection (ii) below.

(ii) Affymetrix Instrument Purchases for Reagent Agreement Plans. Affymetrix agrees to supply Roche and its Affiliates with Affymetrix Instruments for use with Diagnostic Products that are sold pursuant to a Reagent Agreement Plan. Such Affymetrix Instruments shall be purchased pursuant to purchase orders provided to Affymetrix at the prices and on terms and conditions set forth on the Affymetrix Instrument Pricing Schedule attached hereto as Exhibit A, and Affymetrix will fill such orders with not less than the priority afforded any other purchaser. Roche shall have no right to sell, distribute or otherwise transfer any Affymetrix Instrument supplied under this Section, except to its Affiliates exclusively for use in a Reagent Agreement Plan.

(iii) Affymetrix Instrument Purchases by Customers of Roche. Other than as set forth in Section III(g)(ii) above, Affymetrix agrees to supply Roche Customers of Diagnostic Products with Affymetrix Instruments for use with Diagnostic Products that are sold pursuant to the Collaboration Agreements, provided that such Customers are located and taking delivery in an Affymetrix Territory. Such Affymetrix Instruments

shall be purchased pursuant to purchase orders provided by the Customer to Affymetrix at Affymetrix’ then current prices and terms and conditions, and Affymetrix will fill such orders with not less than the priority afforded any other purchaser. Affymetrix Instrument purchases by Customers who are located or taking delivery in an Unserved Territory shall be governed by the terms of the Agency Agreement.

(iv) Affymetrix Instrument Packaging and Shipping. Affymetrix Instruments purchased by Roche or its Affiliate will be packed in Affymetrix’ standard shipping packages and shipped to the address specified by Roche or its Affiliate in accordance with quality assurance and packaging procedures determined by the Parties from time to time. Deliveries will be F.O.B. Affymetrix’ facility or the facility of its sales representative. Affymetrix will ship via a carrier selected by Roche or its Affiliate or, if none is specified by Roche or its Affiliate, Affymetrix will select the carrier. Title and risk of loss or damage for deliveries will pass to Roche or its Affiliate upon Affymetrix’ actual delivery of the Affymetrix Instruments to the carrier for shipment to Roche or its Affiliate. Roche or its Affiliate will pay all shipping costs, duties and sales taxes. Roche or its Affiliate will advise Affymetrix in writing if insurance is desired on any shipments of Affymetrix Instruments, and will reimburse Affymetrix for all such insurance charges.

(h) Terms of Service.

(i) Any service provided by Affymetrix on Affymetrix Instruments shall be governed by Affymetrix’ then-current forms of Customer Service Provider Addendum and Current Affymetrix Instrument Service Level Packages, the current forms of which are attached hereto as Annexes 1 and 2 (the “Affymetrix Instrument Service Level Packages”); and

(ii) Notwithstanding anything to the contrary in this Agreement, Annex 3 hereto, or such amended version as may be reasonably adopted from time to time, shall govern the terms of all Software maintenance and upgrades.

IV. Custom Array Development.

(a) Product Specifications. In addition to the terms of Section III above, with respect to each Custom Array required for a Diagnostic Product, Roche shall supply Specifications for such Custom Array along with an initial supply forecast for the Diagnostic Product incorporating such Custom Array. Without limitation, Affymetrix acknowledges and agrees that the Specifications constitute Roche Technology (to the extent the technology contained in the Specifications does not constitute the Intellectual Property of Affymetrix or a Third Party).

(b) Shelf Life of Arrays. Each Custom Array shall have a shelf life of at least [***] after the Array has been shipped by Affymetrix to Roche. Affymetrix shall use commercially reasonable efforts to increase shelf life and to use appropriate shipping methods to preserve shelf life.

(c) Affymetrix Development Obligations. In addition to the terms of Section III above, for each Custom Array for which Affymetrix receives Specifications, Affymetrix will use reasonable commercial efforts to undertake and complete non-clinical development of the applicable Custom Array according to the Specifications, including manufacturing scale-up. Affymetrix shall also prepare and provide Roche with non-clinical development information for each applicable Custom Array, each as required by the applicable Development Plan.

V. Proprietary Rights.

Other than as agreed by the Parties pursuant to the Collaboration, Roche shall not buy arrays of diverse nucleic acids on solid supports from a Third Party if such arrays materially infringe or would materially infringe the patent or copyright rights of Affymetrix or its Affiliates. Roche and Affymetrix will notify each other of: (i) any potential infringement of any of Affymetrix’ Intellectual Property (i.e., Affymetrix Technology) of which that Party becomes aware; (ii) any potential infringement by any Third Party of any of the Affymetrix Intellectual Property incorporated in, embodied by or relied upon to manufacture a Diagnostic Product; or (iii) any potential infringement by a Diagnostic Product of any Content or Intellectual Property owned or asserted to be owned by a Third Party of which that Party becomes aware. All notifications under this Section V shall be treated as Confidential Information and shall not be disclosed to the alleged infringer or any other party.

VI. Compensation.

(a) Initial Design Fees. With respect to the Specifications for each Custom Array Roche provides to Affymetrix, Roche shall pay Affymetrix a design fee equal to [***] of the design of such Custom Array [***] thereon for each Custom Array set design that Affymetrix would need to create to implement the Development Plan for such Diagnostic Product (the “Initial Design Fee”). Roche will pay such Initial Design Fee upon delivery of the Specifications, including the complete target sequence for each mask set design.

(b) Pricing of Chips, Affymetrix Instrumentation and Custom Arrays.

(i) Custom Arrays and Catalog Chips.

(a) Array Pricing. Affymetrix shall sell all Chips supplied to Roche under this Agreement [***] other than Chips in [***] per year for Content Development in the first [***] years of this Agreement in [***] Arrays (or an equivalent) pursuant to Section III(c. To set a baseline for the [***] and to provide [***] transfer prices, Exhibit B hereto contains a schedule of the [***] Transfer Prices for Chips (the [***] price that Affymetrix will charge for Component Chips and Development Chips sold to Roche) produced in the format, with the number of features, for the particular year and with packaging [***], as set forth therein. For Component Chips and Development Chips, the purchase price will be subject to the [***] Transfer Price. Although the Parties agree that [***] of a Chip may differ depending on a variety of cost factors, including, but not limited to, wafer size, number of features on the Chip, and manufacturing and packaging costs, Affymetrix agrees that [***], as set forth on Exhibit B, shall be [***] during the term of this Agreement and shall be subject to Roche’s audit in accordance with Section VI(e) below. Affymetrix shall determine the amount of any [***] of a

Chip versus the projected [***] of such Chip on a quarterly basis within 45 days of each quarter. To the extent such [***] exceeds [***]% for that quarter, (i) in the case of an [***], Roche will be credited the amount of the [***] in the next quarter following the [***], and (ii) in the case of an [***], Affymetrix will be credited the amount of the [***] in the next quarter following the [***]. Pricing for [***] purchased pursuant to Section III(a)(iv) will be at prices equal to Affymetrix’ [***] price of [***], which is [***] each.

(b) Price [***]. The Array pricing set forth on Exhibit B is based on technological improvements Affymetrix expects to make over time. Affymetrix agrees to [***] for Arrays purchased by Roche pursuant to this Agreement as described on Exhibit B, [***].

(c) Technology Reinvestment Covenant. In addition, Affymetrix agrees to invest at least [***] of the [***] in the Affymetrix Technology and broad-based applications research.

(ii) Affymetrix Instrumentation. Pricing shall be subject to Section III(g).

(c) Manufacturing Facilities Fee. Upon adoption of each Development Plan (or as agreed between the Parties in advance if there is no Development Plan for a Diagnostic Product), Roche shall pay Affymetrix the Manufacturing Facility Fee, if any, specified in such Development Plan. Affymetrix shall make available to Roche the records specifically showing how each Manufacturing Facility Fee was spent on a product-by-product basis. If circumstances result in an underage or an overage in connection with a Manufacturing Facility Fee paid to Affymetrix, the Joint Research Management Committee shall resolve, in good faith, adjustment of the Manufacturing Facility Fee and the impact on the corresponding Diagnostic Product and Development Plan and on each Party’s respective Manufacturing Cost. The Parties acknowledge that Affymetrix, 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 other modification or extension of existing facilities.

(d) Acceptance; Payment Terms. All amounts referred to in this Section VI will be invoiced by Affymetrix when due. All Arrays will be deemed accepted unless they are returned to Affymetrix within [***] days of delivery to Roche, with a written explanation of the basis on which such Arrays have been returned on Affymetrix’ standard “Return Materials Authorization” according to the procedures provided for in such Return Materials Authorization. All payments will be made to Affymetrix [***] days from the acceptance by Roche, but no more than [***] days after delivery. Late payments shall bear interest at the lower of: (i) the Bank of America prime or (ii) the maximum rate allowed by law. All payments in this Agreement will be made in the form of a check or wire transfer to Affymetrix in U.S. Dollars. Acceptance of Arrays by Roche shall have no effect on the provisions set forth in Section X (Warranty) and Section XII (Indemnity) of this Agreement.

(e) Records and Audit Rights. Affymetrix shall keep complete and accurate records reflecting all information necessary or useful in verifying the accuracy of each invoice and the determination of the [***] for any Arrays supplied to Roche or its Affiliates hereunder

and the difference between the [***] and the [***] for any such Arrays. Roche shall have the right to hire an independent certified public accountant to inspect all records required to be kept by Affymetrix pursuant to this Agreement (which accountant shall be reasonably acceptable to Affymetrix and shall keep all information confidential except to disclose the fact and amount of any discrepancies), provided, such audit: (i) is conducted during normal business hours, (ii) is conducted no more often then once per year, (iii) is conducted only after Roche has given Affymetrix at least thirty (30) days’ prior written notice, and (iv) Affymetrix has the ability to review the accountant’s report on discrepancies to confirm the report does not contain any other Confidential Information. Affymetrix shall, at its own expense, make such records (or copies thereof) available to the accountant at a single location in the U.S. Roche shall bear the full cost and expense of such audit, unless the actual amount determined in such review to be payable by Roche is more than [***]% lower than the amount charged to Roche by Affymetrix, in which event Affymetrix shall bear the full cost and expense of such audit. Regardless of the amount of discrepancy discovered, all discrepancies (and interest thereon at the rate set forth in Section VI(d) above) shall be due and payable within 30 days of the discovery of the discrepancy.

VII. Manufacturing Process Change.

(a) Affymetrix shall, prior to implementing any manufacturing or packaging change to an Array utilized in a Diagnostic Product or an Affymetrix Instrument used or to be used in connection with a Diagnostic Product, in each case, for which the Manufacturing Lockup Point has occurred, provide written notice of any proposed manufacturing or packaging change to the Head of Regulatory Affairs of Roche Molecular Systems to the extent such change could (i) reasonably be seen to have a regulatory impact on the Diagnostic Product or its distribution, or (ii) otherwise be material. Such notice shall include details of the planned manufacturing or packaging change to allow Roche to consider the impact of such change on the safety, efficacy or regulatory requirements for such Diagnostic Product. Affymetrix will not undertake such proposed change without the prior written consent of Roche, which consent shall be provided within 20 business days after receipt of such notice from Affymetrix.

(b) In addition to the foregoing, Affymetrix agrees to use commercially reasonable efforts to notify Roche in advance in writing of every manufacturing or packaging change not falling within subsection (a)(i) or (ii) above with respect to Arrays or Affymetrix Instruments utilized in or for a Diagnostic Product for which the Manufacturing Lockup Point has occurred. Affymetrix shall certify to Roche in such notice that Affymetrix reasonably believes that the change specified in any such notice could not reasonably be expected to have an adverse regulatory impact on the Diagnostic Product, the relevant Affymetrix Instrument or its components.

VIII. Technical Support and Product Service.

(a) Support and Service. Affymetrix shall offer Services for purchasers of Affymetrix Instruments supplied under this Agreement on terms of Affymetrix’ standard Affymetrix Instrument Service Agreement attached as Annex 1 hereto (which may be reasonably modified by Affymetrix from time to time) and at Roche’s specified service level (which current service levels are listed on Annex 2 hereto (which may be reasonably modified by Affymetrix from time to time), the “Affymetrix Service Levels”) at the election of Roche. Fees for each

Affymetrix Service Level shall be determined from time-to-time by Affymetrix and quoted to the end-user of an Affymetrix Instrument at the time of sale of such product.

(b) Support and Service for Software. Affymetrix shall offer maintenance and upgrades for Software for all end-users of Affymetrix Instruments (including Roche and its Affiliates) in accordance with and on the terms and conditions of its standard Software Maintenance Agreement attached as Annex 3 hereto (which may be reasonably modified by Affymetrix from time to time).

IX. Intellectual Property Ownership.

Any inventions made during the course of and as part of this Agreement shall be owned as set forth in Section V of the Common Terms Agreement. In addition, Roche and its Affiliates agree to assign to Affymetrix at Affymetrix’ cost all Chip Improvement Inventions. Each Party agrees to provide periodic written reports to the other Party identifying inventions, technological improvements and developments assignable to the other Party under Section V of the Common Terms Agreement relating to probe array technology.

X. Warranty.

(a) Affymetrix warrants only to Roche that the Custom Arrays, during the shelf life marked on such Custom Arrays, will conform to the applicable Specifications (which shall include appropriate agreed-upon tolerance levels) and is otherwise free of Physical Defects, and that the Catalog Chips, Affymetrix Instruments, and related software will conform in all material respects to Affymetrix’ then-current standard customer warranty included in Affymetrix’ applicable customer sales agreement. The foregoing warranties do not apply to Arrays, Affymetrix Instruments, or software that have been mishandled, mistreated or used or maintained or stored other than in conformity with Affymetrix’ instructions. ROCHE’S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE FOREGOING WARRANTIES SHALL BE THOSE SET FORTH IN SECTIONS III(b), XII(a) AND XII(b) OF THIS AGREEMENT.

(b) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AFFYMETRIX DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ARRAYS, INSTRUMENTS, RELATED SOFTWARE OR DIAGNOSTIC PRODUCTS OR PERFORMANCE OR NON-INFRINGEMENT THEREOF, DOES NOT MAKE ANY WARRANTY, EXPRESS, IMPLIED OR OTHERWISE, WITH RESPECT TO ARRAYS, INSTRUMENTS, RELATED SOFTWARE OR DIAGNOSTIC PRODUCTS, SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE, AND DOES NOT MAKE ANY WARRANTY OF ANY KIND TO ROCHE CUSTOMERS OR ROCHE’S AGENTS. AFFYMETRIX HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

XI. Limited Liability.

EXCEPT IN CONNECTION WITH SECTION II (CONFIDENTIALITY) OF THE COMMON TERMS AGREEMENT OR AMOUNTS PAYABLE UNDER SECTION X (WARRANTY) OR SECTION XII (INDEMNITY) OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER

ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, MULTIPLE, OR EXEMPLARY DAMAGES, OR LOST PROFITS.

XII. Indemnity.

(a) Indemnification from Infringement.

(i) Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against liability resulting from any Third Party claim of infringement by the Arrays of any Third Party patent (other than Roche patents, patents of any Affiliate of Roche or patents of Genentech or Chugai) or from any matter referred to in the second sentence of (ii) below, provided Affymetrix is promptly notified of any and all threats, claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; Affymetrix will not be responsible for any settlement it does not approve in writing (provided, however, that Affymetrix will consult with Roche if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Roche receives under this Agreement in a materially negative manner). The foregoing obligation of Affymetrix does not apply with respect to Arrays or portions or components: (w) not supplied by Affymetrix; (x) made in whole or in part in accordance to Specifications or requests of Roche, to the extent the infringement was caused thereby; (y) which are modified by Roche or any Third Party after shipment by Affymetrix, if the alleged infringement relates to such modification; or (z) combined, processed or used with other products (including, without limitation, as part of Diagnostic Products), processes or materials where the alleged infringement relates to such combination, process or use.

(ii) Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against liability resulting from any Third Party claim of infringement by Roche Technology incorporated into any Array pursuant to the Specifications provided by Roche to Affymetrix (other than Affymetrix patents, patents of any Affiliate of Affymetrix or patents of Perlegen) or from any matter referred to in the second sentence of subsection (i) above, provided Roche is promptly notified of any and all threats, claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; Roche will not be responsible for any settlement it does not approve in writing (provided, however, that Roche will consult with Affymetrix if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Affymetrix receives under this Agreement in a materially negative manner). The foregoing obligation of Roche does not apply with respect to Roche Technology

used in Diagnostic Products: (y) which are modified by Affymetrix or any Third Party after shipment by Roche, if the alleged infringement relates to such modification; or (z) combined, processed or used with other products, processes or materials where the alleged infringement relates to such combination, process or use.

(b) Indemnity Relating to Products

(i) Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against all Damages based upon or arising out of Physical Defects.

(ii) Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against any and all Damages based upon or arising out of Roche’s or its Affiliate’s import, sale or use of Diagnostic Products except to the extent that such Damages (i) relate to or arise from Physical Defects or (ii) arise after the transfer of such Diagnostic Products to Affymetrix pursuant to Section VI(b) of the License Agreement.

(c) Conditions of Indemnification. If either Party proposes to seek indemnification from the other under the provisions of this Section XII, it shall notify the other Party within 15 days of receipt of notice of any Claim and shall cooperate fully with the other Party in the defense of such claims or suits. The indemnified Party shall cooperate with the indemnifying Party (at the indemnifying Party’s expense) in all respects in connection with the defense of any such Claim. The indemnifying Party shall, upon written notice from the indemnified Party of a Claim, undertake to conduct all proceedings or negotiations in connection with the Claim, assume the defense thereof, and all other required steps or proceedings to settle or defend any such Claim, including the selection of counsel that shall be approved by the indemnified Party, which approval shall not be unreasonably withheld, and payment of all reasonable expenses. The indemnified Party shall have the right to employ separate counsel and participate in the defense at the indemnified Party’s sole expense. If the indemnifying Party fails to defend or settle in good faith any Claim as provided above, then the indemnified Party shall have the right to take over sole control of the defense of the Claim and all negotiations for its settlement or compromise, provided that the indemnifying Party shall be liable for (and shall pay as they become due) all costs and expenses (including attorneys’ fees) reasonably incurred by the indemnified Party in its defending or negotiating settlement of the Claim. Notwithstanding the foregoing, the Party primarily responsible for handling the Claim (as determined above) will first obtain the prior written consent of the other Party for any settlement of a Claim that (i) does not include a complete release of the other Party from all liability with respect thereto, (ii) compromises the rights of the other Party, or (iii) imposes any restrictions on the other Party.

XIII. Term and Termination.

(a) Term. Unless terminated earlier as provided herein, this Agreement shall commence on the Effective Date and shall terminate on December 31, 2020 (the “Termination Date”).

(b) Early Termination without Cause. Roche shall have the option of terminating this Agreement in its entirety effective on either December 31, 2007, June 2, 2013 or any date after June 2, 2013 but prior to the Termination Date by written notice to Affymetrix (“Early Termination Notice”) as provided herein. An Early Termination Notice must be provided at least one year prior to early termination. Affymetrix shall continue to supply Arrays and Affymetrix Instruments for Diagnostic Products through the end of the year following the date such Early Termination Notice was provided. No Arrays or Affymetrix Instruments may be ordered by Roche after delivery of an Early Termination Notice to Affymetrix if the delivery date, as reasonably determined by Affymetrix, would be later than the date of this Agreement is to be terminated pursuant to the Early Termination Notice (regardless of Development Plans or forecasts setting different product delivery projections, orders or schedules).

(c) Termination for Cause. 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 Party materially breaches any material provision of this Agreement and fails to cure such breach within 180 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, such Party’s proprietary or intellectual property rights or otherwise for any reason to mitigate damages); or

(d) Effect of Termination. Sections X (Warranty), XI (Limited Liability) XII (Indemnity) and XIII (Term and Termination), all rights to payment in effect through the final termination date of this Agreement pursuant to Section XIII (Term and Termination), the Common Terms Agreement, remedies for breaches or any other provision that, by its terms, should survive termination to carry out the purposes of this Agreement, shall survive termination of this Agreement. Obligations of the Parties under firm orders for purchase and delivery of Arrays and Affymetrix Instruments at the time of such termination shall remain in effect, except that in the case of termination under Section XIII(c) the terminating Party may elect whether obligations under firm orders will remain in effect; provided, however, that Affymetrix will not be obligated with respect to any delivery dates (for firm orders or otherwise) more than thirty (30) days after the effective date of termination if the reason for termination is not due to a breach by Affymetrix, or more than one hundred eighty (180) days after termination if the reason

for termination is due to a breach by Affymetrix. Each Party will promptly return or destroy all Confidential Information of the other in accordance with Section II(f) of the Common Terms Agreement. Termination is not the sole remedy under this Agreement and, whether or not termination is effected, all other remedies will remain available.

XIV. Miscellaneous.

(a) No Regulatory Approval. ROCHE UNDERSTANDS THAT THE ARRAYS AND AFFYMETRIX INSTRUMENTS DELIVERED HEREUNDER ARE DELIVERED WITHOUT APPROVAL BY THE FDA OR ANY COMPARABLE FOREIGN REGULATORY AGENCY. ROCHE AGREES NOT TO USE THE ARRAYS OR AFFYMETRIX INSTRUMENTS DELIVERED HEREUNDER IN ANY CLINICAL OR OTHER SETTING REQUIRING FDA (OR COMPARABLE AGENCY) REVIEW OR APPROVAL IN THE ABSENCE OF OBTAINING SUCH APPROVAL. THE ARRAYS AND SYSTEMS ARE NOT LICENSED EXCEPT AS SPECIFICALLY RECITED HEREIN OR IN ANY COLLABORATION AGREEMENT UNDER ANY INTELLECTUAL PROPERTY RIGHTS OF AFFYMETRIX.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their properly and duly authorized officers or representatives as of the date first above written.

AFFYMETRIX:			ROCHE:

Affymetrix, Inc.			F. Hoffmann-La Roche Ltd.


By:	/s/ Barbara A. Caulfield		By:	/s/ Heino von Prondzynski
	Name:	Barbara A. Caulfield		Name:	Heino von Prondzynski
	Title:	Executive Vice President and General Counsel		Title:	Head, Diagnostic Division



			By:	/s/ Gregory F. Heath
				Name:	Gregory F. Heath
				Title:	Head, Business Development and Licensing

ANNEX 1

FORM OF CUSTOMER SERVICE PROVIDER ADDENDUM

[See attached]

Affymetrix Instrument Service Terms and Conditions

1. General. This agreement (“Service Contract”) is made and entered into by and between [Affymetrix] (“Affymetrix”) and the customer (“Customer”) identified on the related purchase order for the provision of the services described on the related Affymetrix quote pertaining to Affymetrix instruments, probe arrays, applications, software, and/or services which have been sold or leased by Affymetrix to Customer (the “Affymetrix Instrument(s)”), and any Affymetrix software installed on the workstation, which software is owned and licensed by Affymetrix to Customer (the “Applications”). Any part or subassembly of an Affymetrix Instrument that is sold or provided to Customer by Affymetrix shall be deemed “Covered Parts.” The Applications and Affymetrix Instruments are collectively referred to herein as the “System.”

2. Services. Subject to the service level elected by the Customer (as initially specified on Annex 2 of the Supply Agreement), during the Term of this Service Contract and in exchange for Customer’s payment of the agreed to fee, Affymetrix shall provide to Customer the services as stated on the related quote (the “Covered Services”), which can include:

(a) Repair. Affymetrix or its designee shall repair or otherwise correct any material reproducible failure or malfunction. A failure or malfunction shall be “material” if it represents a substantial nonconformity with Affymetrix’ current published specifications for the Affymetrix Instrument and Customer determines (and notifies Affymetrix) that such error or malfunction substantially interferes with Customer’s normal use of the Affymetrix Instrument. All Affymetrix instruments require a consistent and reliable power source in order to perform optimally. The GeneArray Scanner also requires a significant amount of current, 13-15A on a 110V line, or 6-8A on a 220V line. Whichever system configuration is chosen, both systems require a dedicated circuit or line in order to allow for peaks in power required and the headroom that entails. Affymetrix assumes no responsibility for damage caused by any power supply circuit or related units.

(b) Preventative Maintenance and Performance Checks. Affymetrix or its designee will perform on-site preventative maintenance and performance checks on the instruments as set forth in Affymetrix’ current published preventative maintenance procedures and instrument service specifications.

(c) Customer Support. Telephone customer support shall be provided by Affymetrix during normal business hours. Reasonable telephone support shall be available only to those employees of Customer who have been trained by Affymetrix in the use of the instruments.

(d) Service Limitations. Customer agrees to follow the operation procedures published by Affymetrix, including procedures for routine maintenance. Affymetrix shall have no obligation to support the following:

(i) Neglect, misuse, accidents, or the failure to perform routine operational maintenance;

(ii) Improper or inadequate adjustment, calibration or operation of the Affymetrix Instruments by Customer or its designee;

(iii) Modifications made to the Affymetrix Instrument or System without the prior written approval of Affymetrix;

(iv) Unapproved Relocation of the Affymetrix Instrument or System;

(v) Failure or fluctuation of electrical power, lightning or static; fire, water spill, flooding, chemical spill, earthquake, military or civil disturbance, or acts of God;

(vi) The use of media, supplies or other products not supplied or approved by Affymetrix;

(vii) The use of any equipment, software, or peripherals which are not part of the Affymetrix Instrument or System; or

(viii) Any computer related hardware, unless otherwise on the Sales Quote.

Customer shall reimburse Affymetrix at Affymetrix’ then-current service call fees, including all labor, parts and zone charges, for all work of Affymetrix or its designee incurred in investigating any failure or malfunction that Affymetrix reasonably determines not to be part of the Covered Services.

3. Installation Services. When this Service Contract is entered into concurrently with the initial purchase, lease or license of the System, and upon Customer’s request, Affymetrix or its designee may provide on-site installation assistance for the System and such other services as Affymetrix reasonably determines are necessary to permit Customer to begin use of the System. Customer shall promptly perform all tasks reasonably requested by Affymetrix or its designee in connection with such installation and site preparation.

4. Limitations. Any and all instruments, software, other products, or any parts or subassemblies of the foregoing that are not provided by Affymetrix or its designee shall be deemed “Non-Covered Equipment.” Affymetrix shall have no obligations with respect to Non-Covered Equipment; moreover, and notwithstanding anything herein to the contrary, Affymetrix shall have no obligation to provide Covered Services in connection with any Affymetrix Instruments or Covered Parts:

(a) that have been substantially altered by Customer, including any serial numbers or other identifying markings;

(b) that do not incorporate all of Affymetrix’ engineering improvements or other fixes that Affymetrix requests Customers to implement;

(d) that have been operated in conditions outside of Affymetrix’ environmental or electrical site specifications as defined in the product operation, installation or maintenance manuals provided with the Affymetrix Instruments;

(e) that have been operated in hazardous environments or used to analyze hazardous materials that may cause residual contamination;

(f) that have been repaired or maintained by anyone other than Affymetrix or its designee, except such routine operational maintenance as set forth in the product operation, installation or maintenance manuals provided with the Affymetrix Instrument.

5. Access and Service Safety. Customer will provide Affymetrix and its designees reasonable and safe access to all Affymetrix Instruments and Systems for the provision of any services and for any audit of compliance with Affymetrix’ installation and operational guidelines. If environmental or operational contamination creates a hazard for Affymetrix personnel, Affymetrix may supervise Customer’s performance of service procedures. Customer is responsible for proper disposal of all contaminated material and of contaminated parts that cannot be safely returned to Affymetrix. Any Affymetrix services that Affymetrix may provide in connection with the activities contemplated by this paragraph shall be deemed not to be Covered Services, and Customer shall reimburse Affymetrix at Affymetrix’ then-current service call fees, including all labor, parts and zone charges, for all such work of Affymetrix or its designee.

6. Relocation of Covered Equipment. If any Affymetrix Instrument is moved from its installation position, Affymetrix may, at its discretion, determine that such Affymetrix Instrument has been relocated (a “Relocation”). Relocation of Affymetrix Instruments may result in service charges as follows:

(a) “Approved Relocation.” Relocation of Affymetrix Instruments by Affymetrix or its designees is permitted. Affymetrix Instruments may be moved with the assistance of Affymetrix at Affymetrix’ service call fees, including all labor, parts and zone charges. With prior written approval of Affymetrix, Customer may move specified Affymetrix Instruments without incurring any charges. Customer will contact Affymetrix prior to moving any Affymetrix Instrument.

(b) “Unapproved Relocation.” Any Service Contract or warranty covering an Affymetrix Instrument shall be rendered void and unenforceable by Relocation of such Affymetrix Instrument without the prior written approval of Affymetrix. At the discretion of Affymetrix, upon completion of a maintenance inspection and service at Affymetrix’ then-current service call fees, including all labor, parts and zone charges, the subject Service Contract or warranty may be reinstated.

(c) “New Site Location.” Relocation of Affymetrix Instruments may result in additional service charges and modification of response times, as determined by Affymetrix.

7. Obsolete Products. Covered Parts, Affymetrix Instruments or System that are no longer offered for sale or license by Affymetrix (“Obsoleted Items”) will be maintained and repaired on a reasonable efforts basis by Affymetrix. If Affymetrix determines in its discretion that support and service of such Obsolete Items is no longer reasonable, Affymetrix shall notify Customer of such determination and such Obsoleted Item shall be deemed not to be a Covered Part, Affymetrix Instrument or System.

8. Billable Services. All services performed by Affymetrix on Customer’s Non-Covered Equipment or which are not Covered Services (collectively, “Billable Services”) shall be billable to Customer at Affymetrix’ then-current service call fees, including all labor, parts and zone charges.

9. Ownership. All replaced parts removed from the System in connection with any services shall become the property of Affymetrix upon their replacement. Any and all modifications to the Affymetrix Instrument or System, including all intellectual property rights associated therewith, made or provided by Affymetrix pursuant to the Service Contract, whether alone or with any contribution from Customer or its employees, agents or contractors, shall be owned exclusively by Affymetrix. To the extent Customer or its employees, agents or contractors, may acquire any right or interest therein by operation of law, Customer irrevocably assigns all such right and interest exclusively to Affymetrix. Customer shall maintain and enforce agreements and policies with its employees, agents and contractors sufficient to give effect to the provisions of this Paragraph.

10. Limited Warranty. Affymetrix warrants that it will render the services hereunder in a good and workmanlike manner. As Affymetrix’ sole responsibility and Customer’s exclusive remedy in the event of any material failure to meet such standard, Affymetrix shall make a reasonable effort to remedy any resulting discrepancies. Any claim based on the foregoing warranty must be submitted in writing in accordance with Affymetrix’ standard procedures within thirty (30) days after delivery or the date of the required delivery of the pertinent services at issue. EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH, AFFYMETRIX MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE SERVICES. AFFYMETRIX SPECIFICALLY DISCLAIMS, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

11. Limitation of Liability. The total liability of Affymetrix (including its employees, agents, subcontractors and suppliers) for all claims, whether in contract, tort (including negligence, product liability and strict liability), or otherwise, arising out of, connected with, or resulting from any performance or on performance hereunder shall not exceed the total fees hereunder allocable to the services that give rise to the claim, up to a maximum of twelve (12) months for the services at issue. In no event shall Affymetrix be liable for any incidental, consequential, indirect, or special damages (including, without limitation, damages for loss of revenue, cost of capital, claims of customers for service interruptions or failure of supply, and costs and expenses incurred in connection with labor, overhead, transportation, installation, or removal of equipment or programming or substitute facilities or supply sources), even if Affymetrix has been advised of the possibility of such damages.

12. Delays. The time within which Affymetrix obligations are required to be fulfilled hereunder will be extended for a period equal to the time lost by reason of any delay arising directly or indirectly from causes beyond Affymetrix’ reasonable control, including without limitation, acts of God, unforeseeable circumstances, acts or omissions of any governmental authority, war riot, revolution, fires, floods, earthquakes, strikes, labor disputes, sabotage, epidemics, failure to obtain timely instructions or information from Customer, or necessary and proper labor, materials, components, facilities or transportation.

	AFFYMETRIX
	By: __________________________

	Name:
	Title:

	CUSTOMER
	By: __________________________

	Name:
	Title:

ANNEX 2

CURRENT INSTRUMENT SERVICE LEVEL PACKAGES

	Phone Coverage	Telephone Response	On-Site Response	Emergency Visits	Preventative Maintenance Visits	Applications Training	Affymetrix Instrument Relocation	Exclusions	Annual Price
Diagnostic Premium Service	Mon-Fri; 8am-5pm, excluding holidays	8 hours or less	96 hours or less	Three	One	None	None	Scanner Laser, Power Supply and Consumables	Standard Affymetrix pricing
Prevention Plus	Mon-Fri; 8am-5pm, excluding holidays	8 hours or less	96 hours or less	Three	One	None	None	Scanner Laser, Power Supply and Consumables	Standard Affymetrix pricing
Assurance	Mon-Fri; 8am-5pm, excluding holidays	8 hours or less	72 hours or less	Unlimited	One	None	None	Consumables	Standard Affymetrix pricing
Elite	Mon-Fri; 8am-5pm, excluding holidays	4 hours or less	48 hours or less	Unlimited	One	2 Days	1 Per Year	Consumables	Standard Affymetrix pricing
Diagnostic Level	*	*	*	*	*	*	*	*	*

* Roche or a purchaser of Affymetrix Instruments may request that Affymetrix roll out a new service level suitable for the diagnostics marketplace. Upon receipt of such a request, Affymetrix will use commercially reasonable efforts to meet such request (and set a corresponding commercially reasonable price for such enhanced services).

Affymetrix reserves the right to modify its service levels in effect (and prices therefor) from time to time.

ANNEX 3

Affymetrix Software Maintenance Terms and Conditions

1. General — This agreement (the “Software Maintenance Agreement”) constitutes an offer by [Affymetrix] (“Affymetrix”) to provide to the customer (“Customer”) identified below certain services described herein relating to the instrumentation software (the “SOFTWARE”). The Software Maintenance Agreement shall be effective as of the date Customer first receives the SOFTWARE (the “Effective Date”). If Customer’s service order is deemed an offer, Affymetrix’ acceptance is expressly conditional on Customer’s acceptance of these terms; if these terms are considered an offer by Affymetrix, Customer’s acceptance is expressly limited to these terms. Any additional or different terms or conditions proposed by Customer shall not become part of this Agreement. To the extent that a purchase order or other form is used by Customer for accounting convenience, Affymetrix objects to any proposed changes. Subject to the terms hereof, Affymetrix will provide Support Services to Customer for the number of copies of SOFTWARE for which Customer is licensed.

2. Support Services — “Support Services” consist of (a) Error Correction and Telephone Support provided to the technical support contact concerning the installation and use of the then-current release of SOFTWARE and the Previous Sequential Release thereof and (b) Product Updates / Upgrades that Affymetrix in its sole discretion makes generally available (if Customer has purchased such Product Upgrade). Notwithstanding the foregoing, nothing herein shall be construed as a guarantee that Affymetrix will release Product Updates / Upgrades during the term, or any renewal term, of this Software Maintenance Agreement.

A “Product Update” consists of one (1) copy of published revisions to the printed documentation and one (1) copy of revisions to the SOFTWARE which are not designated by Affymetrix as products for which it charges a separate fee.

A “Product Upgrade” is a new software product that contains enhancements to the SOFTWARE. Affymetrix shall advise Customer of recent Product Upgrades.

All Product Updates and Upgrades provided to Customer hereunder shall be governed by the terms of the applicable license agreement(s) (including without limitation the Server Software License Agreement and/or End-User License Agreement) relating to the SOFTWARE (collectively, the “License Agreement”). Upon installation of Product Updates or Upgrades, all prior versions or releases thereof shall be destroyed by Customer. Upon written request from Affymetrix, Customer shall certify in writing the destruction of all such prior versions in accordance with this section.

Customer shall pay Affymetrix, at Affymetrix’ then-current standard consulting rates plus related expenses incurred therewith, for all additional services rendered by Affymetrix hereunder, including without limitation, for Product Upgrades that Customer has elected to purchase and re-installation of any SOFTWARE as a result of hardware or software upgrades.

3. Fees and Payment — Customer shall pay Affymetrix the Annual Maintenance Fee for the initial term, and each renewal term, of the Software Maintenance Agreement. Annual Maintenance Fees will be billed on an annual basis and payable in advance. Overdue payment of any such fee shall bear interest at the lesser of eighteen percent (18%) per annum or the maximum rate allowed under applicable law.

If Customer elects to obtain Support Services, Support Services must be purchased to cover all copies of the applicable SOFTWARE. If Customer fails to purchase/renew maintenance for the Software, or if such maintenance is terminated pursuant to the terms of this Agreement, Customer may continue to use such Software pursuant to the License granted hereunder but will not be entitled to receive maintenance services for such Software. To reinstate such services, Customer must pay all maintenance fees on a cumulative basis for periods during which Customer did not purchase coverage. Customer shall be responsible for all taxes associated with Support Services other than U.S. taxes based on Affymetrix’ net income. Each payment by Customer is due within thirty (30) days from receipt of the applicable Affymetrix invoice.

If any payment is not made within one hundred and eighty (180) days of the applicable due date, Support Services will be Terminated.

Customer shall pay Affymetrix the purchase price of any Product Upgrades Customer elects to purchase at Affymetrix’ then current price for such Product Upgrade.

4. Error Correction - Affymetrix will exercise commercially reasonable efforts to correct any Error reported by Customer in the then-current, unmodified release of SOFTWARE in accordance with the priority level reasonably assigned to such Error by Affymetrix.

(a) Priority A Errors. Affymetrix shall promptly commence the following procedures:

(i) assign Affymetrix engineers to correct the Error;

(ii) notify Affymetrix management that such Errors have been reported and of steps being taken to correct such Error(s);

(iii) provide Customer with periodic reports on the status of the corrections; and

(iv) initiate work to provide Customer with a Workaround or Fix.

(b) Priority B Errors. Affymetrix shall exercise commercially reasonable efforts to include the Fix for the Error in the next regular SOFTWARE maintenance release.

If Affymetrix believes that a problem reported by Customer may not be due to an Error in the SOFTWARE, Affymetrix will so notify Customer. At that time, Customer may (1) instruct Affymetrix to proceed with problem determination at its possible expense as set forth below, or (2) instruct Affymetrix that Customer does not wish the problem pursued at its possible expense.

If Customer requests that Affymetrix proceed with problem determination at its possible expense and Affymetrix determines that the error was not due to an Error in the SOFTWARE, Customer shall pay Affymetrix, at Affymetrix’ then-current and standard consulting rates, for all work performed in connection with such determination, plus reasonable related expenses incurred therewith. If Customer instructs Affymetrix that it does not wish the problem pursued at its possible expense or if such determination requires effort by Affymetrix in excess of Customer’s instructions, Affymetrix may, at its sole discretion, elect not to investigate the problem with no liability therefor.

Customer shall not be liable for (i) problem determination or repair to the extent problems are due to Errors in the SOFTWARE, (ii) work performed under this paragraph in excess of its instructions or (iii) work performed after Customer has notified Affymetrix that it no longer wishes work on the problem determination to be continued at its possible expense (such notice shall be deemed given when actually received by Affymetrix).

5. Exclusions - Under this Agreement Affymetrix shall have no obligation to support:

(a) Any Computer related hardware, unless otherwise agreed in writing by Affymetrix and the Customer.

(b) Any On-Site support, unless otherwise agreed in writing by Affymetrix and the Customer.

(c) SOFTWARE that is altered, damaged or modified, except by Affymetrix, or any portion of the SOFTWARE incorporated with or into other software;

(d) SOFTWARE that is not the then-current release or immediately Previous Sequential Release;

(e) SOFTWARE problems caused by Customer’s negligence, abuse or misapplication, use of SOFTWARE other than as specified in the Affymetrix’ user manual or Documentation, or by other factors beyond the control of Affymetrix; or

(f) SOFTWARE installed on any computer hardware that is not supported by Affymetrix or any computer or workstation not strictly complying with specifications listed in Documentation; or Software for which a license under the License Agreement has not been obtained or applicable fees have not been paid for any copy of SOFTWARE.

Affymetrix shall have no liability for any changes in Customer’s hardware which may be necessary to use SOFTWARE due to a Workaround or maintenance release.

8. Definitions —

(a) “Annual Maintenance Fee” shall be as set forth in the Sales Quote.

(b) “Documentation” shall mean the manual(s) relating to the use of the SOFTWARE delivered by Affymetrix to Customer.

(c) “Error” means an error in the SOFTWARE which significantly degrades the SOFTWARE as compared to the Affymetrix published performance specifications.

(d) “Error Correction” means the use of reasonable commercial efforts to correct Errors..

(e) “Fix” means the repair or replacement of object or executable code versions of SOFTWARE to remedy an Error.

(f) “Previous Sequential Release” means at any time the version or release of SOFTWARE which has been replaced by the then-current version or release of such SOFTWARE. Notwithstanding anything to the contrary herein, a Previous Sequential Release will be supported by Affymetrix only for a period of six (6) months after release of the then-current version or release.

(g) “Priority A Error” means an Error which renders SOFTWARE inoperative or causes the SOFTWARE to fail catastrophically.

(h) “Priority B Error” means an Error which substantially degrades the performance of SOFTWARE or materially restricts Customer’s use of the SOFTWARE.

(i) “Priority C Error” means an Error which causes only a minor impact on the performance of SOFTWARE or Customer’s use of SOFTWARE.

(j) “Support Services” or “Maintenance” means Affymetrix’ support services as described in Section 2.

(k) “Telephone Support” means technical assistance provided by Affymetrix to the technical support contact during normal business hours concerning the installation and use of the then-current release of SOFTWARE and the Previous Sequential Release.

(l) “Workaround” means a change in the procedures followed or data supplied by Customer to avoid an Error without substantially impairing Customer’s use of SOFTWARE.

9. Miscellaneous - THESE TERMS AND CONDITIONS CONSTITUTE A SERVICE AGREEMENT AND NOT A PRODUCT WARRANTY. THE SOFTWARE AND ALL MATERIALS RELATED TO THE SOFTWARE ARE SUBJECT EXCLUSIVELY TO THE WARRANTIES SET FORTH IN THE LICENSE AGREEMENT. THIS SOFTWARE MAINTENANCE AGREEMENT SHALL NOT CHANGE OR SUPERSEDE ANY TERM OF THE LICENSE AGREEMENT EXCEPT TO THE EXTENT UNAMBIGUOUSLY CONTRARY THERETO.

[ ]:

By:
Name (Print):
Title:
Date:

Signature of Buyer Officer or Designee. By signing the above, the signatory is representing and warranting that they are authorized to enter into this Agreement on behalf of Buyer.

EXHIBIT A

AFFYMETRIX INSTRUMENT PRICING SCHEDULE

Number of Affymetrix Instruments Purchased per Calendar Year	Discount	Projected Sales Price Per Affymetrix Instrument System*
[***]	[***]%	$[***]
[***]	[***]%	$[***]
[***]	[***]%	$[***]
[***]	[***]%	$[***]
[***]	[***]%	$[***]
[***]	[***]%	$[***]

The “Projected Sales Price Per Affymetrix Instrument” is based on [***] pricing. The actual sales price will be based on the appropriate discount (as indicated above) on the [***] Affymetrix price list.

* An “Affymetrix Instrument System” consists of the following components or the then-comparable version:

• GeneChip Scanner 3000;

• GeneChip Fluidics Station 400;

• GeneChip Hybridization Oven; and

• GeneChip Workstation consisting of a computer workstation, a copy of the Microarray Suite computer software for the Affymetrix Instrument System and a user license for such software

EXHIBIT B

COMPONENT CHIP AND DEVELOPMENT CHIP PRICING SCHEDULE

	2003	2004	2005	2006	2007

Chips per wafer (commercial)	[***]	[***]	[***]	[***]	[***]
Feature size	[***]	[***]	[***]	[***]	[***]
# of features per chip	[***]	[***]	[***]	[***]	[***]
Packaging	[***]	[***]	[***]	[***]	[***]
Projected transfer price	[***]	[***]	[***]	[***]	[***]
[***] Transfer Price	[***]	[***]	[***]	[***]	[***]

Note:

• [***] format available for Roche internal development effort [***] before commercial availability

• We expect packaging to be based on [***] after [***]; transfer price [***] packaging [***]

The “[***] Transfer Price” shall be the [***] transfer price set forth above from 2003 to 2007 ([***] or [***] packaging, as indicated). The [***] Transfer Price for [***] Arrays with the specifications set forth above throughout the remaining term of this Agreement after 2007 shall be equal to the [***] set forth above in the table ([***], as indicated).

EX-10.60 8 a2111472zex-10_60.htm EXHIBIT 10.60

EXHIBIT 10.60

Research & Development Collaboration Agreement

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

TABLE OF CONTENTS



Section 1	Statement of Purpose

Section 2	Common Terms and Definitions

Section 3	Management

Section 4	Project Proposals and Implementation

Section 5	Projects for Diagnostic Products

Section 6	Market Development Activities.

Section 7	Performance of Collaboration Projects for Instrumentation and Other Products

Section 8	License Grants

Section 9	General Applicable Provisions

Section 10	Warranty Disclaimers

Section 11	Infringement, Indemnity, Etc.

Section 12	Term and Termination

Section 13	Limitation of Liability

Section 14	No Implied Obligations

RESEARCH & DEVELOPMENT COLLABORATION AGREEMENT

January 29, 2003

THIS RESEARCH & DEVELOPMENT COLLABORATION AGREEMENT (“Agreement”) is effective as of the date first written above (the “Effective Date”) between F. Hoffmann-La Roche Ltd. (“Roche”) and Affymetrix, Inc., a Delaware corporation (“Affymetrix”).

R E C I T A L S

A. The Parties desire to collaborate (the “Collaboration” as more specifically defined in the “Common Terms Agreement” dated as of even date herewith, between Affymetrix and Roche) in the development and commercialization of diagnostic products in connection with and in the field of DNA chip technology and in the development of certain instrumentation and related software for use with microarrays using Affymetrix Technology. In connection with such Collaboration, the Parties are entering into the Collaboration Agreements.

B. Pursuant to the Collaboration, the Parties desire that Affymetrix, upon Roche’s request in accordance with the terms of this Agreement, shall undertake mutually agreed research and development projects, in collaboration with Roche, focusing on the development and validation of specific Diagnostic Products for Diagnostic Use.

C. The Parties further desire that Roche (and/or its Affiliates), pursuant to the Collaboration, will undertake research and development activities in collaboration with Affymetrix to develop instrumentation for use with Arrays which shall have a cost and throughput which makes feasible the widespread use of such instrumentation by Customers and other purchasers of Diagnostic Products. The Parties also contemplate that they may undertake related collaborative research and development activities to develop improved chip packaging based on Affymetrix’ Existing Technology as well as analytical software for use with Roche’s instruments.

D. In connection with such research and development projects, the Parties will combine certain of their scientific, intellectual property, development and financial resources as specified herein and under the Collaboration Agreements, to (i) facilitate the development of such specific Diagnostic Products for Diagnostic Use, which Diagnostic Products will be commercialized as described in the Collaboration Agreements; and (ii) to facilitate the development by the Parties of instrumentation for use with Arrays and such improved chip packaging and analytical software for use with such instruments.

E. The Parties intend that the research and development goals and the responsibilities for any given research and development project pursuant to this Agreement shall be formulated by the Parties on a project-by-project basis, and that all research and development activities between the Parties shall be governed by and conducted in accordance with the terms and conditions set forth in this Agreement, subject to any express modifications made in a Project Plan.

A G R E E M E N T

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, promises and undertakings set forth herein, the Parties agree as follows:

Section 1 Statement of Purpose

The Parties wish to pursue collaborative activities in the development and commercialization of Diagnostic Products, chip packaging, instrumentation and related software in connection with and in the field of DNA chip technology. This Agreement, together with the Collaboration Agreements, provides the terms, conditions and covenants which will govern their relationship for purposes of such research and development, both with respect to specifically identified projects and general cooperative research and development undertakings.

Section 2 Common Terms and Definitions

2.1 Common Terms

(a) All capitalized terms not otherwise defined herein shall have the meanings set forth in the Common Terms Agreement.

(b) This Agreement shall be governed by and subject to the provisions contained in the Common Terms Agreement, in accordance with its terms.

2.2 Definitions

(a) “Hosted Employees” means, as applicable, employees of either Affymetrix or Roche, or their respective Affiliates, who are invited to participate in research, development or other activities located at the other Party’s or its Affiliate’s facilities and who participate in such activities. “Hosted Employees” means all Hosted Employees, Affymetrix’ Hosted Employees or Roche’s Hosted Employees, as the context may require.

(b) “Jointly-Owned IP” shall have the meaning set forth in Section 9.3(a).

(d) “Standard Fully Loaded FTE” means (i) [***], such as [***], incurred in a period related to an activity plus (ii) [***] (i.e., [***] and [***]), plus [***], [***] and [***] for the equivalent number of full-time employees in a 12-month period (with the portion of a full-time equivalent year devoted by an employee to the Collaboration determined by dividing the number of days during any 12-month period devoted by such employee to the Collaboration by the total number of working days during the 12-month period, with appropriate proportional adjustment for normal vacation and holiday days).

Section 3 Management

3.1 Joint Research Management Committee. The Parties shall establish and maintain a Joint Research Management Committee (the “Joint Research Management Committee” or “JRMC”) in accordance with the following provisions:

(a) The JRMC shall consist of six members, three members to be appointed by each of Affymetrix and Roche, with one of the three designated each Party’s JRMC primary contact (a “Primary Contact”). Each Party may, with notice to the other Party, replace any of its members serving on the JRMC. The Parties shall designate their respective members within ten (10) days of the Effective Date. The JRMC shall propose recommendations to the Parties regarding the Project Plans. All recommendations of the JRMC shall be made unanimously. No chairperson shall be appointed and each member of the JRMC shall have only one vote.

(b) The JRMC shall be responsible for negotiating, preparing, executing, implementing, managing and reviewing compliance with the Project Plans and shall in particular: (i) evaluate projects proposed by either Party and make recommendations to the Parties regarding projects selected for approval; (ii) negotiate, prepare and execute Project Plans, including, without limitation, schedules of work and budgets for each such Project Plan; (iii) review and propose amendments to the Project Plans from time to time in such manner as may be appropriate; (iv) monitor progress of the Project Plans; (v) report regularly to the Executive Representatives of the Parties upon the progress of the Project Plans; and (vi) via each Party’s Primary Contact, be the initial medium for transfer of information between the Parties regarding current or proposed projects.

3.2 Appointment of Managers. Each Party will designate Project Managers to represent and lead that Party in the day-to-day activities associated with each project undertaken pursuant to this Agreement or a Project Plan. The Project Managers will lead their respective development teams in the day-to-day development work to be performed under the Agreement, including: planning and coordination of all technical efforts; reviewing and responding to proposals presented by the other Party’s Project Managers; helping in the preparation of Project Plans; reporting to the JRMC; and working together to resolve any conflicts that may arise in connection with a project. Either Party may change its Project Managers upon written notice to the other Party, but, as with their Executive Representatives, the Parties agree to exercise this right with restraint to help ensure reasonable continuity in management of the relationship.

3.3 JRMC Meetings

(a) The JRMC shall meet as needed at any time upon the reasonable request of either Party during the term of the Project Plans, and in any event no less frequently than quarterly, to review the current status of the Collaboration, to consider potential additional areas of cooperation, and to resolve any escalations. The Project Managers will assist the Primary Contacts in the preparation of agendas for the JRMC meetings. Additionally, the Project Managers will present information concerning progress on areas of Collaboration as requested by the JRMC, as well as provide input on potential areas for future cooperation between the Parties.

(b) Unless otherwise agreed by the Parties, all meetings of the JRMC shall be held by teleconference or in person in Alameda or Santa Clara Counties, California or as may be otherwise agreed. Meetings shall be scheduled with at least thirty (30) day’s notice (provided that conference calls may be scheduled with at least fifteen (15) day’s notice); the Primary Contact of the Party that seeks to convene a particular meeting shall be responsible for the meeting notice and scheduling. The quorum for JRMC meetings shall be at least two members from each Party.

3.4 Technical Reports and Access to Information. Each Party will keep and maintain adequate records containing technical and laboratory data generated in the course of the performance of such Party’s responsibilities under the Project Plans to enable it to furnish complete and accurate information to the other Party regarding such Project Plans activities and results. Each Party shall provide reasonably-detailed written reports describing the results of the development work performed by such Party pursuant to the Project Plans. Such reports shall be delivered to the other Party at the JRMC meetings within forty-five (45) days following each March 31, June 30, September 30 and December 31, after commencement of the initial project plan, or at such other time(s) as the JRMC requires. Without limiting the foregoing, each Party agrees to provide the other Party reasonable access to appropriate data and information relating to the Collaboration hereunder, and to give required notices and to respond to inquiries in a reasonable timeframe in order to facilitate the timely completion of the Project Plans contemplated herein.

Section 4 Project Proposals and Implementation

4.1 Proposal and Evaluation of Projects. Either Party may, from time to time, deliver to the JRMC a non-binding proposal regarding an area of cooperation between the Parties. Such proposal shall be in writing and shall be sent by the proposing Party to the JRMC and the other Party’s Executive Representative. The JRMC shall promptly evaluate the proposal in good faith and the Parties shall mutually agree whether to proceed with such proposal based on the recommendation of the JRMC.

4.2 Implementation of Projects. In the event that the Parties agree to pursue a proposed area of cooperation, the JRMC shall proceed in good faith to negotiate, prepare and document the cooperative undertaking in a Project Plan according to the processes set out in this Agreement. It shall be the responsibility of the JRMC in consultation with the Project Managers of the Parties to negotiate, prepare, agree to and execute Project Plans prior to initiation of proposed projects. The Project Managers shall cooperate and consult with the JRMC in good faith to prepare Project Plan(s) as appropriate for the activities contemplated by the Parties under this Agreement. The Project Managers and/or the JRMC may associate such other personnel as they or it may deem desirable in connection with negotiation, preparation and agreement of Project Plans and may, from time to time, add to, delete from and/or modify the Project Plans as agreed.

4.3 Hosted Employees. During the course of the relationship established by this Agreement, it is anticipated that the Parties may choose to allow Hosted Employees to visit and/or work on the Parties’ or their respective Affiliates’ respective premises. Each Hosted Employee shall retain his or her status as an employee of his or her respective company while

assigned to work at the hosting Party’s premises. Each assigning Party shall have sole and exclusive discretion and control in selecting those of its employees assigned as Hosted Employees, but shall exercise such discretion and control in good faith and with the goal of providing competent and productive personnel capable of promoting and advancing the objectives of the particular assignment.

4.4 Responsibility for Hosted Employees. Each Party shall be solely responsible for all wages and other compensation, and for all U.S., Swiss or other federal, state, cantonal, local, FICA and other similar withholding and payments required in connection with all its employees assigned as Hosted Employees at the other Party’s or its Affiliates’ facilities and shall defend, indemnify and hold the hosting Party harmless from and against any claim or liability which may accrue as a result of any failure to pay or withhold any of the foregoing. Each Party shall maintain insurance or, if applicable, shall adequately self insure to protect itself and the hosting Party from claims: (i) by its employees assigned as Hosted Employees under workers’ compensation, disability acts and similar laws; (ii) for damages because of bodily injury, disease or death of any such Hosted Employee or of any other person that arise out of any negligent act or omission or willful misconduct of any such Hosted Employee; and (iii) any property damages arising from negligent acts or omissions or willful misconduct of any such Hosted Employees.

4.5 Conduct and Activities of Hosted Employees

(a) Hosted Employees will observe the working hours, working rules and holiday schedule of the hosting Party while working at the hosting Party’s premises. Each hosting Party shall have the right to request the replacement of any Hosted Employee for any reasonable cause. Upon such a request, the assigning Party shall recall such disapproved personnel as soon as is reasonably possible and may replace the disapproved personnel with another qualified employee.

(b) Where Hosted Employees are assigned to particular activities managed by the Project Managers in accordance with this Agreement, such Project Managers shall jointly coordinate the day-to-day activities of Hosted Employees; except that, where a Party’s Project Manager is not also a Hosted Employee (i.e. is not resident at the other Party’s facilities with the Hosted Employees), the hosting Party’s Project Manager shall coordinate the day-to-day activities with the assigning Party’s Project Manager.

(c) The hosting Party shall, at its expense, use reasonable efforts to supply a suitable work environment, including capital equipment and supplies reasonably required by Hosted Employees in order to carry out the purposes of their assignment.

4.6 Compliance with Laws. In performing all research and development projects pursuant to this Agreement, each Party shall comply with all applicable laws and regulations pertaining to the performance of its obligations under this Agreement and any Project Plan.

4.7 Performance of Research & Development Projects. Each Party agrees to use its commercially reasonable efforts to faithfully perform and complete the research and development tasks and related tasks assigned to it and to cooperate with the other Party as may be mutually agreed pursuant to Project Plans from time to time.

Section 5 Projects for Diagnostic Products

5.1 Performance of Projects Relating to Diagnostic Products. Affymetrix, upon Roche’s request in accordance with the terms of this Agreement, agrees to use its commercially reasonable efforts to perform research and development projects in collaboration with Roche, pursuant to mutually agreed Project Plans, focusing on the development and validation of specific Diagnostic Products for Diagnostic Use, to assist in accordance with the reasonable request of Roche in conducting clinical trials for such Diagnostic Products and to assist Roche in seeking Regulatory Approval, at Roche’s cost, for such Diagnostic Products. The research and development goals and responsibilities shall be formulated by the Parties on a project-by-project basis. Roche shall own all data and information resulting from clinical trials and all Regulatory Approvals relating to such Diagnostic Products, unless otherwise agreed in any Project Plan.

5.2 Payments. Subject to the terms of applicable Project Plans, Roche will reimburse Affymetrix for [***], within the budget set forth in the applicable Project Plan, in connection with the performance of its obligations under this Section 5, as mutually agreed upon in advance, on a [***] determined annually, together with [***] used in connection with such research and development, plus [***] on such supplies. Affymetrix will submit invoices to Roche on a monthly basis in arrears for such costs and expenses. All amounts shall be stated and paid in U.S. Dollars. Roche shall make payments to Affymetrix hereunder within sixty (60) days after the date of Affymetrix’ invoice therefor; provided, however, that if Roche, in good faith, disputes the amount of any invoice line item, Roche may withhold the payment of the disputed portion upon notice to Affymetrix within thirty (30) days after receipt of the applicable invoice, and the Parties shall resolve the dispute in accordance with Section IV of the Common Terms Agreement.

5.3 Budgetary Control. Notwithstanding the terms and conditions of any Project Plan, Roche shall have [***], to [***] the budgeted level of any Project Plan within the scope of this Section 5 or to [***] such projects. Any such [***] or [***] shall be made upon reasonable notice to Affymetrix not less than thirty (30) days nor longer than ninety (90) days. In the event of any such [***] or [***], Roche will [***] Affymetrix [***] of [***] or [***] performance after such [***] or [***] incurred within 180 days of notice of termination.

Section 6 Market Development Activities.

6.1 Option. At Affymetrix’ option, exercisable at any time during the term of this Agreement upon written notice to Roche, Roche agrees to use its commercially reasonable efforts to provide the relevant skills, know-how and human resources as reasonably requested by Affymetrix to assist Affymetrix to obtain Regulatory Approval of tests for in vitro diagnostic applications being developed by Affymetrix independently of the Collaboration. If Affymetrix exercises its option hereunder:

(a) the market development goals and responsibilities for any such assistance shall be formulated by the Parties on a project-by-project basis and set forth in a written Market Development Plan.

(b) Affymetrix will [***] Roche for Roche’s [***] within the [***] as set forth in the Market Development Plan, in connection with the performance of its obligations under this Section 6, including any [***] Regulatory Approvals, on a [***] determined annually, together with [***] and [***] used in connection with such market development, plus [***] on such materials and supplies. All amounts shall be stated and paid in U.S. Dollars. Affymetrix shall make payments to Roche hereunder within sixty (60) days after the date of Roche’s invoice therefor; provided, however, that if Affymetrix, in good faith, disputes the amount of any invoice line item, Affymetrix may withhold the payment of the disputed portion upon notice to Roche within thirty (30) days after receipt of the applicable invoice, and the Parties shall resolve the dispute in accordance with Section IV of the Common Terms Agreement.

Section 7 Performance of Collaboration Projects for Instrumentation and Other Products

7.1 Development of Instrumentation. Subject to such terms as may be agreed between the Parties and set forth in any Project Plan, Roche (and/or its Affiliates), in its sole discretion, may undertake research and development activities in collaboration with Affymetrix to develop instrumentation for use with Arrays which shall have a cost and throughput which makes feasible the widespread use of such instrumentation by Customers and other purchasers. The Parties also contemplate that they may undertake related collaborative research and development activities to develop improved chip packaging based on Affymetrix’ Existing Technology and analytical software for use with Roche Instruments, and that the terms of any such projects shall be detailed in appropriate Project Plans and/or separate written agreement(s) between the Parties.

7.2 Payments. Subject to the terms of applicable Project Plans, Roche will [***] Affymetrix for [***], within the budget set forth in the applicable Project Plan, in connection with the performance of its obligations under this Section 7, as mutually agreed upon in advance, on a [***] determined annually, together with [***] used in connection with such research and development, plus [***] on such supplies. All amounts shall be stated and paid in U.S. Dollars. Roche shall make payments to Affymetrix hereunder within sixty (60) days after the date of Affymetrix’ invoice therefor; provided, however, that if Roche, in good faith, disputes the amount of any invoice line item, Roche may withhold the payment of the disputed portion upon notice to Affymetrix within thirty (30) days after receipt of the applicable invoice, and the Parties shall resolve the dispute in accordance with Section IV of the Common Terms Agreement.

7.3 Budgetary Control. Notwithstanding the terms and conditions of any Project Plan, Roche shall have [***], to [***] the budgeted level of any Project Plan within the scope of this Section 7 or to [***] such projects. Any such [***] or [***] shall be made upon reasonable notice to Affymetrix not less than thirty (30) nor longer than ninety (90) days. In the event of any such [***] or [***], Roche will [***] Affymetrix [***] of [***] or [***] performance after such [***] or [***] incurred within 180 days of notice of termination.

Section 8 License Grants.

8.1 R&D License to Affymetrix. Upon the terms and subject to the conditions of this Agreement, including the limitations set forth in Section 8.2 below, and subject to any expressly contrary terms in any Project Plan, Roche hereby grants (to the extent Roche is not prevented under its existing contracts to license such technology to Affymetrix and its Affiliates) to Affymetrix and its Affiliates during the term of this Agreement a limited, [***], [***],[***] (except as provided in Section VI(i) of the Common Terms Agreement), [***], [***] license to use and develop the [***], and [***] thereof, solely as necessary for purposes of Affymetrix’ (or its Affiliates’) research and development activities under this Agreement to develop [***] for sale to [***].

8.2 Limitations on R&D License to Affymetrix. The license granted in Section 8.1 is to be used only for [***] activities under this Agreement, and not for [***]. Nothing in this Agreement shall be construed to grant Affymetrix or its Affiliates the [***], or any of Affymetrix’ or its Affiliates’ license rights hereunder, and any such sublicensing is strictly prohibited. Affymetrix, on behalf of itself and its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Roche to Affymetrix and its Affiliates are [***], and (ii) nothing in this Agreement shall limit or restrict Roche’s right to grant similar rights and licenses to one or more additional persons, firms or entities, or to exercise such rights itself.

8.3 R&D License to Roche. Upon the terms and subject to the conditions of this Agreement, including the limitations set forth in Section 8.4 below, and subject to any expressly contrary terms in any Project Plan, Affymetrix hereby grants (to the extent Affymetrix is not prevented under its existing contracts to license such technology to Roche and its Affiliates) to Roche and its Affiliates during the term of this Agreement a limited, [***], [***], [***] (except as provided in Section VI(i) of the Common Terms Agreement), [***], [***] license to use and develop the [***], and [***] thereof, solely as necessary for purposes of Roche’s (or its Affiliates’) research and development activities under this Agreement to develop [***] for sale to [***].

8.4 Limitations on R&D License to Roche. The license granted in Section 8.3 is to be used only for [***] activities under this Agreement, and not for [***]. Nothing in this Agreement shall be construed to grant Roche or its Affiliates the [***], or any of Roche’s or its Affiliates’ license rights hereunder, and [***] is strictly prohibited. Roche, on behalf of itself and its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Affymetrix to Roche and its Affiliates are non-exclusive, and (ii) subject to the provisions of the Collaboration Agreements, this Agreement shall not otherwise limit or restrict Affymetrix’ right to grant similar rights and licenses to one or more additional persons, firms or entities, or to exercise such rights itself.

8.5 Instrument License to Roche. Upon the terms and subject to the conditions of this Agreement, including the limitations set forth in Section 8.6 below, and subject to any expressly contrary terms in any Project Plan, Affymetrix hereby grants (to the extent Affymetrix is not prevented under its existing contracts to license such technology to Roche and its Affiliates) to Roche and its Affiliates during the term of this Agreement a [***], [***], [***], [***] (except as

provided in Section VI(i) of the Common Terms Agreement), [***], [***] license to [***], [***] incorporating or using [***] and [***] solely for the [***] and [***] of [***] for [***] use with [***] incorporating [***] in accordance with the Collaboration Agreements.

8.6 Limitations on Instrument License to Roche. Nothing in this Agreement shall be construed to grant Roche or its Affiliates the right to [***] the [***], or any of Roche’s or its Affiliates’ license rights hereunder, and any such [***] is strictly prohibited. Roche, on behalf of itself and its Affiliates, hereby acknowledges that: (i) the rights and licenses granted by Affymetrix to Roche and its Affiliates are [***], and (ii) subject to the provisions of the Collaboration Agreements, this Agreement shall not otherwise limit or restrict Affymetrix’ right to grant similar rights and licenses to one or more additional persons, firms or entities, or to exercise such rights itself.

Section 9 General Applicable Provisions

9.1 Application. The Parties understand and agree that it is generally desirable that the activities contemplated in this Agreement be governed by Project Plans negotiated and drafted pursuant to this Agreement whenever practicable. However, in addition to the Common Terms Agreement, the Parties wish to set forth below certain provisions, as provided in Sections 9 through Section 14 hereof, which will govern and apply as default provisions in the event that the terms of a specific Project Plan do not encompass such provisions, or in the event that any activities involving the exchange or development of information and/or technology occur outside the scope of a Project Plan for any reason (including that either Party may elect not to establish a Project Plan or that the Parties may have already exchanged or developed information prior to execution of this Agreement). In the event of an inconsistency between the generally applicable provisions set forth in the Common Terms Agreement, in Sections 9 through Section 14 of this Agreement and the terms of a specific Project Plan, the terms set forth in the Project Plan will supersede these generally applicable articles.

9.2 Title and Property Rights in Technology.

(a) Ownership of Intellectual Property. Unless otherwise expressly agreed between the parties and set forth in any Project Plan, all right, title and interest in and to Collaboration IP will be owned as set forth in Section V of the Common Terms Agreement.

(b) Licenses Relating to Collaboration IP. Each Party agrees to grant, and hereby does grant, to the other Party under such Party’s respective right, title and interest in and to its Collaboration IP a limited, non-exclusive, non-sublicensable, non-transferable (except as provided in Section VI(i) of the Common Terms Agreement), fully paid, royalty-free license to use and develop Collaboration IP, and Improvements thereof, solely for the development, manufacture, marketing and sale of Diagnostic Products and/or Diagnostic Instruments in accordance with the Collaboration Agreements.

9.3 Content.

(a) Ownership of New Content. Pursuant to this Agreement, as set forth in

any Project Plan, the Parties may agree to develop Content, and thereby create New Content. Unless otherwise expressly agreed in writing with respect to a specific Project Plan, any New Content developed by either Party (whether alone or with any Third Party) pursuant to this Agreement shall be (i) the exclusive property of Roche if it was developed (whether by Roche, Affymetrix or a Third Party) pursuant to a Project Plan funded by Roche; (ii) the exclusive property of Affymetrix if it was developed (whether by Roche, Affymetrix or a Third Party) pursuant to a Project Plan funded by Affymetrix; and (iii) if not so developed, the property of the Party that actually discovered, developed, obtained, licensed or derived such New Content. If any such New Content is developed on a collaborative basis (with both Parties funding and actively participating in the research and development of such New Content), then such New Content shall be owned jointly by the Parties (the “Jointly-Owned IP”), each Party having an undivided and equal co-ownership interest therein, and each Party hereby agrees to assign and transfer, and hereby assigns and transfers, to the other Party an undivided and equal co-ownership interest therein. As co-owners of such Jointly-Owned IP, each of the Parties may make, have made, use, import, offer for sale, sell and otherwise exploit such Jointly-Owned IP, without paying royalties or accounting to the other Party with respect to royalties or other revenue received.

(b) Interests in Content. Except as otherwise provided in any Collaboration Agreement, in the event that any New Content owned by Affymetrix or Roche in accordance with the terms of Section 9.3(a) above embodies or uses inventions claimed by the Existing Technology, existing Content (as of the Effective Date) or other previously existing patents held by the other Party, the Party who holds such rights shall offer the other Party a non-exclusive license (without any right to sublicense) under such rights on reasonable terms, including reasonable compensation, to make, have made, use, import, offer to sell and sell products or to practice processes and methods embodying or using such inventions as necessary to make, have made, use, import, offer to sell and sell such New Content. Subject to any such rights of the other Party as contemplated herein, and subject to Section 9.3(c) below, each Party shall have the right to assign its interests and grant non-exclusive licenses on any terms and conditions that it desires under such Party’s exclusively-owned New Content and all associated IPR’s therein and appurtenant thereto, and such Party may retain any consideration that it may receive therefor without having to account to the other Party.

(c) Licenses Relating to New Content. During the term of this Agreement, each Party agrees to grant, and hereby does grant, to the other Party under such Party’s respective right, title and interest in and to its New Content a limited, non-exclusive, non-sublicensable, non-transferable (except as provided in Section V(i) of the Common Terms Agreement), fully paid, royalty-free license to use and develop New Content, and Improvements thereof, solely as necessary for purposes of the research and development activities under this Agreement.

9.4 Patent Applications. In respect of each Party’s separately owned Collaboration IP, New Content and other IPR’s, the owner thereof shall have the right, in its sole discretion, to determine if, when and where to file patent applications thereon and shall be solely responsible, in its discretion, for preparing, filing, maintaining and prosecuting the same worldwide and shall

bear all related costs. In the case of Jointly-Owned IP, the Party whose Existing Technology most predominantly and closely relates to such Jointly-Owned IP shall have the first right of election to file patent applications thereon in the United States and other countries in the Parties’ names as joint owners. The filing Party shall give prompt notice of its election to file such patent applications to the non-filing Party. In each instance, the non-filing Party will indicate in writing whether it will agree to pay one-half of the reasonable expenses for preparing, filing, maintaining and prosecuting each joint application, the issuance of the patent, and such taxes or annuities as may become due on the issued patent. The non-filing Party must indicate its decision in writing within fifteen (15) days of such notice. If the non-filing Party does not agree to assume its share of such expenses, such Party will relinquish its right, title and interest in and to such application and whatever patent may issue in the jurisdiction in question subject, however, to retention of a perpetual, paid-up, nonexclusive, nontransferable option, in favor of the relinquishing Party and its Affiliates, to obtain a covenant not to sue from the filing party with respect to any patent that may issue upon payment of a reasonable arm’s length fee. In the event that the filing Party shall determine to abandon, or otherwise not to prosecute, any jointly owned patent application, or not to maintain, defend or otherwise renew any jointly owned patent, it shall notify the non-filing Party thereof, in writing, and such Party shall have the right, at its expense, to prosecute such application or to take up such maintenance or defense or prosecute such renewal, as the case may be. In such event, the Party exercising its right according to the preceding sentence shall be deemed the filing Party. The process and rights set out in this paragraph shall apply for each invention constituting Jointly-Owned IP hereunder, and in each country for which a patent is sought covering such Jointly-Owned IP.

9.5 Technology Disclosures and Treatment of Disclosed Information. It is anticipated that the Parties may, at various times during the term of this Agreement, engage in candid and on-going exchanges of information and technology. The classification and treatment of such information and technology shall be as set forth in the Common Terms Agreement.

Section 10 Warranty Disclaimers

10.1 As Is. All Confidential Information, Existing Technology, Content, Collaboration IP and New Content, and all associated IPR’s therein and appurtenant thereto, are provided AS IS, WITH ALL FAULTS and without warranty of any kind.

10.2 Disclaimer. EACH PARTY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO TECHNOLOGY, IPR’s OR GOODS AND SERVICES PROVIDED UNDER THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF DESIGN, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ARISING FROM A COURSE OF DEALING.

Section 11 Infringement, Indemnity, Etc.

11.1 Notification of Infringement. Each Party shall notify the other Party promptly upon discovery of any material potential or actual infringement by a Third Party of any IPR’s or proprietary rights in or appurtenant to any technology, materials or products delivered or developed pursuant to this Agreement or any unauthorizeddisclosure or use of any Confidential Information and shall provide any available evidence of such infringement or such unauthorized

disclosure or use.

11.2 Roche Actions. Subject to any expressly contrary provisions in any Project Plan or as set forth in the Collaboration Agreements, Roche shall have the exclusive right at its own cost to bring, defend and maintain any appropriate suit, action or proceeding involving the infringement of any Roche Technology and to keep and retain for itself any and all compensation awarded in connection therewith.

11.3 Affymetrix Actions. Subject to any expressly contrary provisions in any Project Plan or as set forth in the Collaboration Agreements, Affymetrix shall have the exclusive right at its own cost to bring, defend and maintain any appropriate suit, action or proceeding involving the infringement of any Affymetrix Technology and to keep and retain for itself any and all compensation awarded in connection therewith.

11.4 Jointly-Owned IP. In the event of any material potential or actual infringement by a Third Party of any Jointly-Owned IP, the Parties will confer and agree as to which Party shall bring, defend and maintain any appropriate suit, action or proceeding in connection therewith and the other Party shall join in such suit, action or proceeding to the extent necessary to maintain and prosecute it. In the event that the Parties are unable to agree as to which Party shall bring such suit, action or proceeding, either Party shall be free to pursue such suit, action or proceeding, and the other Party shall join therein to the extent necessary to maintain and prosecute it. In either event, any and all judgments, recoveries or compensation (e.g., payments on account of past infringement or future royalties) with respect to Jointly-Owned IP shall be shared equally by the Parties, after deduction of all litigation expenses incurred by the prosecuting Party. In addition, during the pendency of any such suit, action or proceeding, neither Party shall release or license the Third Party infringer or assign any ownership interest in Jointly-Owned IP to such Third Party infringer, without the prior written consent of the other Party, which consent may be withheld in the sole discretion of the other Party.

11.5 Indemnification. In order to help ensure the free flow of information between the Parties, the Parties agree that, except for any express obligations set forth in the Collaboration Agreements or in any Project Plan(s), neither Party shall have any obligation to defend, indemnify or hold the other harmless from or against any claim of (i) patent, copyright or trade secret infringement or any other claim of infringement of an intellectual property right of any third Party, or (ii) any claim of product liability with respect to any product distributed by either Party.

Section 12 Term and Termination

12.1 Term. This Agreement shall commence on the Effective Date and shall terminate automatically upon and simultaneously with termination of the License Agreement.

12.2 Rights and Obligations on Termination. Upon termination or expiration of this Agreement, all rights and obligations of the Parties hereunder shall terminate except as specified in this Section 12.2. The Parties further agree that in the event of a termination of this Agreement for any reason, (i) all obligations to pay money accrued prior to such termination shall remain in effect and shall be paid on the earlier of the due date or thirty (30) days after

termination, (ii) all obligations arising or resulting from (a) any breach of this Agreement, (b) the Common Terms Agreement (including Section II (Confidentiality)), (c) Section 8.5 through Section 14 herein, (d) any corollary provisions of a Project Plan, and (e) any other provision of this Agreement or a Project Plan necessary to implement the foregoing and the termination, shall survive, and neither Party shall have any further obligation to the other Party under any non-surviving provisions hereof.

Section 13 Limitation of Liability

NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, MULTIPLE OR EXEMPLARY DAMAGES, OR LOST PROFITS.

Section 14 No Implied Obligations

Nothing in this Agreement shall impose any implied obligation on any Party not expressly set forth herein. Without limiting the generality of the foregoing, neither Party shall have an obligation to initiate, proceed with or continue any particular Project Plan or any Project Plan at all. Without expanding the scope of any license or right with respect to Intellectual Property under this Agreement or any of the other Collaboration Agreements, each Party and its Affiliates may pursue independent research and development activities provided such Party does not violate the Intellectual Property rights of the other Party.

IN WITNESS HEREOF the Parties have caused this Agreement to be signed by their duly authorized representatives effective as of the Effective Date.

AFFYMETRIX:		ROCHE:


Affymetrix, Inc.		F. Hoffmann-La Roche Ltd.



By:	/s/ Barbara A. Caulfield	By:	/s/ Heino von Prondzynski
	Name: Barbara A. Caulfield		Name: Heino von Prondzynski
	Title: Executive Vice President and General Counsel		Title: Head, Diagnostic Division



		By:	/s/ Gregory F. Heath
			Name: Gregory F. Heath
			Title: Head, Business Development and
				Licensing

EX-10.61 9 a2111472zex-10_61.htm EXHIBIT 10.61

EXHIBIT 10.61

Diagnostic Product and Instrument Agency Agreement

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

CONTENTS

I.	Common Terms and Definitions
II.	Appointment; Licenses
III.	Payments
IV.	Supply of Diagnostic Products and Roche Instruments
V.	Covenants
VI.	Term and Termination
VII.	Warranty and Warranty Disclaimers
VIII.	Limited Liability
IX.	Indemnity

DIAGNOSTIC PRODUCT AND INSTRUMENT AGENCY AGREEMENT

January 29, 2003

This DIAGNOSTIC PRODUCT AND INSTRUMENT AGENCY AGREEMENT (the “Agreement”) is effective as of the date first written above (“Effective Date”) between Affymetrix, Inc., a Delaware corporation (“Affymetrix”), and F. Hoffmann-La Roche Ltd. (“Roche”).

I. Common Terms and Definitions.

(a) Common Terms.

(ii) This Agreement shall be governed by and subject to the provisions contained in the Common Terms Agreement, in accordance with its terms.

(b) Definitions.

(i) “Agency Net Sales” shall mean the gross amount invoiced by Roche or Roche’s Affiliates to end-users, distributors, agents or the like, for sales of a Diagnostic Product and Roche Instrument, less:

(1) Commissions thereon; and then

(2) volume discounts, sales rebates, allowances, returns and sales taxes (to the extent such sales taxes are, in all cases, invoiced separately by end-users’ distributors or agents) in all cases, other than as included in Sales Expenses; and then

(3) [***]% of the remaining amount after the deduction in (i) above for Sales Expenses; and then

(4) if a Reagent Agreement Plan is utilized for a Diagnostic Product or Roche Instrument, [***]% of the remaining amount, after the deductions in (1), (2) and (3) above, as an agreed deduction for Reagent Rental Expenses; and then

(5) to the extent PCR Technology is included as a necessary component of a Diagnostic Product, one of the following deductions (reflecting the agreed upon value attributable to Roche’s PCR Technology from time to time):

a. for Diagnostic Product sales through December 31, 2005, [***]% of the remaining amount from the sale of such Diagnostic Product;

b. for Diagnostic Product sales after December 31, 2005 through December 31, 2010, [***]% of the remaining amount from the sale of such Diagnostic Product;

c. for Diagnostic Product sales after December 31, 2010 through December 31, 2015, [***]% of the remaining amount from the sale of such Diagnostic Product; or

d. for Diagnostic Product sales after December 31, 2015, [***].

Notwithstanding the foregoing, in the case of internal use by Roche or its Affiliate of Diagnostic Products in connection with providing diagnostic services to customers on a commercial basis, Agency Net Sales for such Diagnostic Products will be (i) if such Diagnostic Product is then sold or furnished to Third Parties, the then current average Agency Net Sales per such Diagnostic Product so sold or furnished, and (ii) if not then so sold or furnished, a reasonable Agency Net Sales amount that would apply between Roche and its arm’s length customers, taking into account the Agency Net Sales amount of any comparable Diagnostic Products and all other relevant factors.

(ii) “Affymetrix Customer” shall have the meaning set forth in Section II(c)(ii).

(iii) “Affymetrix Instrument Distribution Right” shall have the meaning set forth in Section II(b)(i).

(iv) “Affymetrix Product Distribution Right” shall have the meaning set forth in Section II(a)(i).

(v) “Commission” shall have the meaning set forth in Section III(a).

(vi) “Termination Date” shall have the meaning set forth in Section VI(a).

II. Appointment; Licenses.

(a) Diagnostic Product Distribution Rights.

(i) Subject to the terms and conditions of this Agreement and, specifically, the limitations set forth in Section II(a)(ii) below, during the term of this Agreement, Roche hereby appoints Affymetrix as its exclusive agent for distribution of Diagnostic Products, together with the documentation and other materials therefor (whether developed by Roche, Roche’s Affiliates or Third Parties on behalf of Roche or its Affiliates) to [***] for internal development purposes (as opposed to, for example, use

by a CRO as an independent contractor for a [***]) (the “Affymetrix Product Distribution Right”).

(ii) Roche may request that Affymetrix allow Roche or its Affiliates to sell a particular Diagnostic Product, together with the documentation and other materials therefor, to a particular [***] for its use, on a case-by-case basis, by providing a written request, giving details of the specific Affymetrix customer (an “Affymetrix Customer”) and the reasons for and purposes of the proposed sale. Affymetrix shall respond to Roche’s request within fifteen (15) business days of receipt of such request and agrees to not unreasonably withhold its consent to such sale. If Affymetrix does not respond within such period, its lack of or delay in response shall be deemed its consent to such sale. If Affymetrix notifies Roche in writing prior to expiration of the fifteen (15) business-day period that it does not consent to such sale, Roche may elect to escalate the decision through the meet and confer and dispute resolution provisions provided in Section IV of the Common Terms Agreement. Affymetrix’ consent to any particular sale pursuant to this provision shall not further alter the Affymetrix Product Distribution Right for future Diagnostic Product sales to any Affymetrix Customer.

(b) Roche Instrument Distribution Rights.

(i) Subject to the terms and conditions of this Agreement, during the term of this Agreement, Roche hereby appoints Affymetrix as its exclusive agent for the distribution of Roche Instruments, together with the documentation and other materials for such Roche Instruments, to [***] for internal development purposes (as opposed to, for example, use by a CRO as an independent contractor for a [***]) (the “Affymetrix Instrument Distribution Right”).

(ii) To the extent Affymetrix permits Roche to sell one or more Diagnostic Products to a [***] pursuant to Section II(a)(ii) above, Affymetrix shall continue to be entitled to sell to such [***] any Roche Instruments, together with the documentation, software and other materials therefore, that are required to use the Diagnostic Products so sold by Roche pursuant to Section II(a)(ii) for the purpose(s) identified to Affymetrix in Roche’s request under such section.

(i) Except to the extent expressly and unambiguously set forth herein, Roche retains all rights and licenses with respect to the Diagnostic Products and Roche Instruments, and Affymetrix has no right to use any Diagnostic Product or Roche Instrument for its own purposes except to solicit orders and otherwise exercise its rights and fulfill its obligations hereunder. Subject to the terms and conditions of this Agreement, Roche hereby grants to Affymetrix and its Affiliates a [***], [***], [***], [***], [***] license to solicit orders of Diagnostic Products, Roche Instruments, and the documentation, software and other materials therefor, and otherwise fulfill its obligations hereunder, in accordance with the provisions of Section II(a) and (b) above.

(ii) Roche agrees to provide all post-sale training, installation, technical support and service for Diagnostic Products and Roche Instruments to Affymetrix Customers on substantially similar terms and conditions as Roche or its Affiliates offer such support and services to their respective customers of Diagnostic Products and Roche Instruments. To the extent that Affymetrix Customers desire post-sale training, installation, technical support or services for Diagnostic Products and Roche Instruments, Affymetrix Customers shall enter into the required agreements with Roche or its Affiliates directly to obtain such services.

(d) Labeling. All Diagnostic Products and Roche Instruments, the documentation, software and other materials therefor and any related promotional or instructional materials shall be branded and carry the same Designations as required for Diagnostic Products and Diagnostic Instruments sold under the License Agreement. In addition, all Diagnostic Products and Roche Instruments, the documentation, software and other materials therefor and any related promotional or instructional materials shall be labeled in accordance with the provisions of the License Agreement and in compliance with applicable regulatory requirements. Such labeling shall not be altered by Affymetrix in any manner without Roche’s prior written consent. Notwithstanding the foregoing, Roche shall label Diagnostic Products and Roche Instruments, and the documentation, software and other materials therefor, appropriately under applicable regulations in order to permit Affymetrix’ marketing of such products and instruments to Affymetrix Customers in accordance with this Agreement.

(e) Method of Marketing. Affymetrix (and its Affiliates’) marketing of Diagnostic Products and Roche Instruments must be at Roche’s then-current prices to its customers (without additional markup) and shall be sold pursuant to and be accompanied by Roche’s standard terms and conditions (as provided by Roche to Affymetrix and which may be amended from time to time by Roche in Roche’s sole and absolute discretion). Notwithstanding the foregoing, Roche and its Affiliates agree to grant to any Affymetrix Customer who purchases Diagnostic Products and/or Roche Instruments (and in each case, the documentation, software and other materials therefor) the normal implied use license and/or software license associated with such sale. To the extent Affymetrix becomes aware that any Affymetrix Customer is violating Roche’s terms and conditions of sale (as agreed by such Affymetrix Customer), Affymetrix shall use its commercially reasonable efforts to notify Roche of such conduct, but in any event Affymetrix shall have no liability for such Affymetrix Customer conduct absent Affymetrix inducement to cause such violation or Affymetrix’ participation in such violation.

(f) Product Modification or Discontinuation. Roche reserves the right to materially modify or discontinue any Diagnostic Product or Roche Instrument at any time with 90 days prior written notice to Affymetrix after (i) fulfilling any orders already submitted to Roche under this Agreement for such discontinued Diagnostic Product or Roche Instrument and (ii) agreeing to continue to supply any ongoing clinical trial or development program then in progress utilizing a Diagnostic Product or Roche Instrument sold under this Agreement (for the stated duration of such clinical trial or development program), provided, however, that Roche shall only be obligated to continue supplying ongoing clinical trials or development programs lasting longer than 12 months from the date of first sale of Diagnostic Products under this Agreement for which Roche has given its prior written consent, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, Roche may materially modify or

discontinue the supply of any Diagnostic Product or Roche Instrument if the discontinuation is as a result of a legal requirement or due to potential harm or detriment to an end-user of the discontinued Diagnostic Product or Roche Instrument.

III. Payments.

(a) Commission. Affymetrix shall receive a [***] percent ([***]%) commission on [***] less [***], [***] (to the extent such [***] are invoiced separately by end-users’ distributors or agents) and [***] (the “Commission”) of Diagnostic Products and Roche Instruments distributed pursuant to Section II above. Payment for Diagnostic Products and Roche Instruments sold by Affymetrix or its Affiliates pursuant to this Agreement shall be made by Affymetrix Customers directly to Roche or its Affiliate. Roche shall make quarterly payments for the relevant quarter to Affymetrix equal to the aggregate amount of Commissions on Diagnostic Products and Roche Instruments sold under this Agreement. Such payment and a payment report in form reasonably satisfactory to Affymetrix detailing the computation of the preceding quarter’s Gross Sales and the Commission for that quarter, including the Diagnostic Products and Roche Instruments sold, the Gross Sales associated therewith, Commissions earned and payments made (and any credits or offsets taken), shall be remitted to Affymetrix within 60 days following the end of such quarter. Commissions shall be earned by Affymetrix upon Roche’s (or its Affiliate’s) invoicing of Affymetrix Customers hereunder for sales of Diagnostic Products and Roche Instruments. Payment shall be made for the preceding quarter at the time payment is made. If Affymetrix receives any payment for Diagnostic Products and/or Roche Instruments distributed under this Agreement, Affymetrix shall remit promptly the full amount of such payment to Roche in full so that Roche may properly account for payment of such sale.

(b) Royalties. Roche shall owe Affymetrix royalties on Agency Net Sales from Diagnostic Products and Roche Instruments sold by Affymetrix or its Affiliate pursuant to this Agreement according to Section III(c) of the License Agreement. Such royalty payments are fully creditable to the extent permitted under Section III(c)(i) of the License Agreement. Royalties shall be earned by Affymetrix in accordance with the foregoing upon Roche’s (or its Affiliate’s) invoicing of Affymetrix Customers hereunder for sales of Diagnostic Products and/or Diagnostic Instruments.

(c) Interest. Late payments shall bear interest at the lower of: (i) the Bank of America prime rate or (ii) the maximum rate allowed by law.

(d) Records and Audit Rights. Each Party shall, on behalf of itself and its Affiliates, keep, in the English language, sufficiently detailed records to document and confirm amounts payable under this Agreement, and shall maintain such records for at least three years. Each Party shall have the right to hire an independent certified public accountant to inspect all records of the other Party required to be kept or submitted by the other Party pursuant to this Agreement (which accountant shall be reasonably acceptable to the other Party and shall keep all information confidential, except to disclose the fact and amount of any discrepancies); provided: (i) such audit is conducted during normal business hours, (ii) such audit is conducted no more often then once per year, (iii) such audit is conducted only after the auditing Party has given 30 days prior written notice and (iv) the audited Party has the ability to review the accountant’s report on any discrepancies to confirm the report does not contain any other Confidential

Information. The audited Party shall, at its own expense, make such records (or copies thereof) available to the accountant at a single location in the U.S. The auditing Party shall bear the full cost and expense of such audit, unless a discrepancy in excess of 5% 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 at the rate set forth in Section III(b)) shall be immediately due and payable.

IV. Supply of Diagnostic Products and Roche Instruments .

(a) Diagnostic Products, Roche Instruments and Related Materials. Affymetrix shall provide notice of potential orders of (i) Diagnostic Products, (ii) Roche Instruments, and (iii) software and printed materials relating to the foregoing from Roche to be distributed pursuant to Sections II(a)(i) and (b)(i) hereof. Such Diagnostic Products, Roche Instruments and related materials shall be purchased pursuant to order notices provided to Roche on Roche’s then-current terms and conditions, and Roche will fill such orders with not less than the priority afforded any other purchaser. Affymetrix may only market such Diagnostic Products and Roche Instruments that Roche or its Affiliates have made available for commercial sale. All order notices shall specify the name and delivery address of the Affymetrix customer purchasing such Diagnostic Products, Roche Instruments and related materials. Upon receipt of such order notice, Roche shall provide Roche’s standard documentation for Diagnostic Products and Roche Instruments (including, without limitation, Roche’s customary terms and conditions) directly to the purchaser. All contracts for Diagnostic Products and Roche Instruments purchased shall be entered into between Roche and the purchaser directly, except that payment for Diagnostic Products and Roche Instruments sold by Affymetrix or its Affiliates pursuant to this Agreement shall be made to Roche or its Affiliate. Affymetrix shall assist Roche in collecting payment for sales made by Affymetrix hereunder. Roche shall provide to recipients of the Roche Instruments distributed pursuant to this Agreement the option to trade such Roche Instruments or components thereof for replacement products newly developed by Roche, its Affiliates or Third Parties on Roche’s behalf from time to time if, and on the same terms as are, offered to Roche’s end-users of such Roche Instruments generally from time to time.

(b) Confirmation. Within five (5) business days of receipt of each order notice from Affymetrix, Roche will send Affymetrix a confirmation setting forth the quantity of each Diagnostic Product and Roche Instrument that will be supplied and Roche’s estimated delivery date. Except for terms related to the specific order notice (such as quantity and delivery dates), no order notice or confirmation or other documentation shall vary the terms and conditions of this Agreement unless agreed to in writing signed by both Parties. Roche shall have no liability for delays in filling any order notice filled pursuant to Section IV(a).

(c) Packing and Shipping. Sales of Diagnostic Products and Roche Instruments shall only be permitted as packaged by Roche (with no portion of the package obscured). Roche will deliver the Diagnostic Products and Roche Instruments directly to Affymetrix Customers at the address supplied by Affymetrix in its order notice. Diagnostic Products and Roche Instruments will be packed in Roche’s standard shipping packages and shipped to the address specified by Affymetrix in its order notice in accordance with quality assurance and packaging procedures determined by Roche from time to time. If a particular Diagnostic Product and Roche Instrument requires any packaging, process or procedure other than those Roche utilizes for its

catalog, non-custom designed Diagnostic Products and Roche Instruments, Roche shall perform such packaging, processes or procedures at Affymetrix’ request, so long as Roche determines such packaging, process or procedures to be commercially reasonable. Any such requests shall be provided at an additional charge to Affymetrix on a Fully Loaded Cost basis plus a reasonable markup (provided, however, that modifications to labeling done primarily for regulatory purposes shall not be deemed a packaging change or process that would trigger any additional charge by Roche to Affymetrix pursuant to this provision).

Deliveries of Diagnostic Products or Roche Instruments will be F.O.B. Roche’s facility or the facility of its sales representative. Roche will ship via a carrier selected by Affymetrix. Title and risk of loss or damage for deliveries will pass to the Affymetrix Customer upon actual delivery of the Diagnostic Products and Roche Instruments to the carrier for shipment to the Affymetrix Customer. Affymetrix or the Affymetrix Customer will advise Roche in writing if an Affymetrix Customer desires insurance on any shipments of Diagnostic Products or Roche Instruments. Roche will pay all shipping costs, duties, insurance and sales taxes and will invoice Affymetrix Customers directly for such amounts requesting payment to be remitted to Roche.

(d) Order Modifications. Affymetrix may increase, decrease, cancel, re-schedule or otherwise modify any order accepted by Roche only with the written approval of Roche. Affymetrix acknowledges that Roche may impose a reasonable and customary charge for any modification of an order that it approves.

(e) Literature. Roche shall provide to Affymetrix the quantities of marketing literature for Diagnostic Products and Roche Instruments reasonably requested by Affymetrix at [***] for such marketing literature. Roche will also endeavor to provide at specified prices a limited number of service notes, special jigs or tools or test equipment, and service documentation and periodic service bulletins specific to the Diagnostic Products and/or Roche Instruments currently offered by Roche. Roche shall identify specific technical support and service engineering points of contact at Roche.

(f) Software Maintenance and Upgrades. To the extent software is provided with any Diagnostic Product or Roche Instrument, Roche’s standard software maintenance and upgrade terms and conditions shall apply, including the customer fees charged therefor.

V. Covenants. Roche and Affymetrix covenant to one another as follows:

(a) Training of Personnel by Roche. Affymetrix will ensure that its sales personnel, support personnel and other representatives are knowledgeable with respect to the Diagnostic Products and Roche Instruments. Affymetrix shall, at its own expense, send representatives as Affymetrix determines necessary to Roche’s facilities for up to thirty (30) days of training and proficiency certification including without limitation general product overviews, product positioning and customary terms and conditions, provided that Affymetrix shall pay all travel related expenses of its representatives who participate in such training. Roche shall provide additional training to Affymetrix personnel at Roche’s then-current rates (not to exceed thirty (30) working-days per year). Diagnostic Product and Roche Instrument applications support training shall be provided at no charge, provided that Affymetrix shall pay all travel related expenses.

(b) Competitors. Each Party will advise the other Party periodically with respect to competitors and the introductions and/or success of products that are competitive with the Diagnostic Products or Roche Instruments, so long as such disclosures do not violate confidentiality obligations that the advising Party has to any Third Party.

(c) Compliance. Each Party will maintain compliance with all laws, rules, codes, regulations and other legal requirements applicable to the Diagnostic Products and Roche Instruments distributed under this Agreement, in accordance with the regulatory approach and requirements determined by Roche for such products and instruments. Affymetrix agrees to only distribute Diagnostic Products and Roche Instruments in accordance with applicable regulatory requirements.

(d) Communications with Authorities. Each Party will immediately notify the other Party of any adverse or unexpected results with or before an Authority or any actual or potential action of an Authority relevant to a Diagnostic Product or Roche Instrument of which the first Party becomes aware. In the event an Authority raises issues regarding this Agreement, the Parties will use their reasonable commercial efforts to satisfy the Authority’s concerns without any change to this Agreement. If an Authority cannot be satisfied without any change to this Agreement, each Party will work with the other Party, reasonably and in good faith, to attempt to achieve mutually acceptable resolution that does not materially compromise either Party’s rights and that changes this Agreement to the minimum extent necessary. Each Party agrees promptly to provide the other Party with copies of all correspondence to or from an Authority and summaries of oral dealings with such Authority.

(f) Assignment of Modification By Affymetrix to Roche. Affymetrix will assign to Roche, without the payment of any additional consideration to Affymetrix, any and all modifications, design changes, or improvements of the Diagnostic Products (excluding Arrays) and Roche Instruments, such that Roche will have all rights to use, incorporate and otherwise exploit such modifications, design changes, or improvements in connection with the Diagnostic Products and Roche Instruments.

(g) Significant Problems. Each Party will keep the other Party informed as to any significant problems encountered with the Diagnostic Products and Roche Instruments that relate to components or products supplied by the other Party and any solutions arrived at for those problems, and will communicate promptly to the other Party any and all material modifications, design changes or improvements of the Diagnostic Products and Roche Instruments suggested by any customer or by any employee or agent of such Party, as long as such disclosures do not violate any existing confidentiality obligations that such Party has to any Third Party, and such Party shall use reasonable efforts to obtain the right to disclose such information; and the receiving Party will, within a reasonable time after receiving any

information about problems with the Diagnostic Products and Roche Instruments, inform the other Party of the steps (if any) that the receiving Party intends to take with respect to such problems.

(h) Potential Infringement. Each Party will notify the other Party of: (i) any potential infringement of any of such other Party’s Intellectual Property of which it becomes aware; (ii) any potential infringement by any Third Party of any of the Intellectual Property incorporated in, embodied by or relied upon to manufacture a Diagnostic Product or Roche Instrument; or (iii) any potential infringement by a Diagnostic Product or Roche Instrument of any Intellectual Property owned or asserted to be owned by a Third Party of which it becomes aware. Either Party’s notice under this Section V(h) shall be Confidential Information and shall not be disclosed to the alleged infringer or any other party without the other Party’s prior written consent.

VI. Term and Termination.

(a) Term. Unless terminated earlier as provided herein, this Agreement shall commence on the Effective Date and shall terminate on December 31, 2020 (the “Termination Date”).

(c) Termination for Cause. 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;

(d) Effect of Termination. Sections III (Payments), VI (Term and Termination), VII (Warranty), VIII (Limited Liability) and IX (Indemnity), all rights to payment in effect through the final termination date of this Agreement pursuant to Section VI (Term and Termination), the Common Terms Agreement, remedies for breaches or any other provision that, by its terms, survives termination shall survive termination of this Agreement. Obligations of the Parties under firm orders for purchase and delivery of Diagnostic Products and Roche Instruments at the time of such termination shall remain in effect, except that in the case of termination under Section VI(c), the terminating Party may elect whether obligations under firm orders will remain in effect; provided, however, that Roche will not be obligated with respect to any delivery dates (for firm orders or otherwise) more than thirty (30) days after the effective date of termination if the reason for termination is due to a breach by Affymetrix, or more than one hundred eighty (180) days after such termination. Each Party will promptly return or destroy all Confidential Information of the other in accordance with Section II(f) of the Common Terms Agreement. Termination is not the sole remedy under this Agreement and, whether or not termination is effected, all other remedies will remain available.

VII. Warranty and Warranty Disclaimers.

Roche warrants only to Affymetrix that the Diagnostic Products and Roche Instruments will conform in all material respects to Roche’s then-current standard customer warranty included in Roche’s applicable customer sales agreement. Such warranty does not apply to Affymetrix components of Diagnostic Products or to units that have been mishandled, mistreated or used or maintained or stored other than in conformity with Roche’s instructions. The warranties to Affymetrix Customers for Diagnostic Products and Roche Instruments distributed shall be as set forth in the terms and conditions of such sales agreement.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ROCHE DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE DIAGNOSTIC PRODUCTS OR COMPONENTS OF DIAGNOSTIC PRODUCTS, DIAGNOSTIC INSTRUMENTS OR PERFORMANCE OR NON-INFRINGEMENT THEREOF, DOES NOT MAKE ANY WARRANTY, EXPRESS, IMPLIED OR OTHERWISE, WITH RESPECT TO DIAGNOSTIC PRODUCTS OR COMPONENTS OF DIAGNOSTIC PRODUCTS, DIAGNOSTIC INSTRUMENTS, SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE, AND DOES NOT MAKE ANY WARRANTY OF ANY KIND TO AFFYMETRIX CUSTOMERS OR AFFYMETRIX’S AGENTS. ROCHE HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

VIII. Limited Liability.

EXCEPT IN CONNECTION WITH SECTION II (CONFIDENTIALITY) OF THE COMMON TERMS AGREEMENT OR AMOUNTS PAYABLE UNDER SECTION VII (WARRANTY) OR SECTION IX (INDEMNIFICATION) OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, MULTIPLE OR EXEMPLARY DAMAGES, OR LOST PROFITS.

IX. Indemnity.

(a) Indemnification by Roche from Infringement. Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against liability resulting from any Third Party Claim of infringement of any patent (other than Affymetrix patents, patents of any Affymetrix Affiliate or patents of Perlegen) by Roche Technology incorporated into Diagnostic Products or Roche Instruments, provided Roche is promptly notified of any and all threats, Claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; provided, however, that Roche will consult with Affymetrix if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Affymetrix receives under this Agreement in a materially negative manner; and, provided further, that Roche will not be responsible for any settlement it does not approve in writing. The foregoing obligation of Roche does not apply with respect to Roche Technology used in Diagnostic Products: (W) not supplied by Roche; (X) made in whole or in part in accordance to Affymetrix specifications or requests, to the extent the infringement was caused thereby; (Y) which are modified by Affymetrix or any Third Party after shipment by Roche, if the alleged infringement relates to such modification; or (Z) combined, processed or used with other products, processes or materials, including Affymetrix Technology, where the alleged infringement relates to such combination, process or use. Affymetrix shall also indemnify Roche Indemnitees from all damages, settlements, attorneys’ fees and expenses related to a Claim of infringement or misappropriation excluded from Roche’s indemnity obligation by the immediately preceding sentence.

(b) Indemnity Relating to Products. Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against any and all Damages based upon or arising out of the market, sale or use of Diagnostic Products, including product liability, other than Damages caused by the marketing activities of Affymetrix, including changing labeling, or resulting from a breach of this Agreement. Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against all Damages based upon or arising out of Damages caused by the marketing activities of Affymetrix, including changing labeling, or resulting from a breach of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

AFFYMETRIX:			ROCHE:


Affymetrix, Inc.			F. Hoffmann-La Roche Ltd.


By:	/s/ Barbara A. Caulfield		By:	/s/ Heino von Prondzynski
	Name:	Barbara A. Caulfield		Name:	Heino von Prondzynski
	Title:	Executive Vice President and General Counsel		Title:	Head, Diagnostic Division


			By:	/s/ Gregory F. Heath
				Name:	Gregory F. Heath
				Title:	Head, Business Development and Licensing

EX-10.62 10 a2111472zex-10_62.htm EXHIBIT 10.62

EXHIBIT 10.62

Affymetrix Instrument Agency Agreement

F. Hoffmann-La Roche Ltd.

and

Affymetrix, Inc.

dated

January 29, 2003

CONTENTS

I.	Introduction.
II.	Common Terms and Definitions
III.	Appointment; Licenses.
IV.	Payments.
V.	Supply of Affymetrix Instruments.
VI.	Covenants
VII.	Term and Termination.
VIII.	Warranty and Warranty Disclaimers.
IX.	Limited Liability.
X.	Indemnity.

Annex 1:	Form of Customer Service Provider Addendum
Annex 2:	Current Affymetrix Instrument Service Level Packages
Annex 3:	Software Maintenance Terms and Conditions

AFFYMETRIX INSTRUMENT AGENCY AGREEMENT

January 29, 2003

This AFFYMETRIX INSTRUMENT AGENCY AGREEMENT (the “Agreement”) is effective as of the date first written above (“Effective Date”) between Affymetrix, Inc., a Delaware corporation (“Affymetrix”), and F. Hoffmann-La Roche Ltd. ( “Roche”).

I. Introduction.

(a) As part of the Collaboration, Affymetrix and Roche desire to enter into an agreement whereby Affymetrix will appoint Roche as its nonexclusive distributor of Affymetrix Instruments, together with the documentation, software and other materials therefore, to purchasers of Diagnostic Products sold by Roche or its Affiliates in the Unserved Territory.

(b) In consideration of the mutual covenants and promises contained in this Agreement, Affymetrix and Roche agree as follows:

II. Common Terms and Definitions.

(a) Common Terms.

(ii) This Agreement shall be governed by and subject to the provisions contained in the Common Terms Agreement, in accordance with its terms.

(b) Definitions.

(i) “Commission” shall have the meaning set forth in Section IV(a).

(ii) “Termination Date” shall have the meaning set forth in Section VII(a).

III. Appointment; Licenses.

(a) Affymetrix Instrument Distribution Rights. Subject to the terms and conditions of this Agreement, during the term of this Agreement, Affymetrix hereby appoints Roche as its nonexclusive agent for distribution of Affymetrix Instruments, together with the documentation, software and other materials therefore (whether developed by Affymetrix, Affymetrix’ Affiliates or Third Parties on behalf of Affymetrix or its Affiliates) to Roche Customers. Notwithstanding the foregoing, Roche shall only have the right to distribute Affymetrix Instruments to Roche Customers located in and taking delivery in an Unserved Territory.

(b) Technology Licenses.

(i) Except to the extent expressly and unambiguously set forth herein, Affymetrix retains all rights and licenses with respect to the Affymetrix Instruments and software, and Roche has no right to use any Affymetrix Instrument or related software for its own purposes except to solicit orders and otherwise exercise its rights and fulfill its obligations hereunder. Subject to the terms and conditions of this Agreement, Affymetrix hereby grants to Roche and its Affiliates a limited, [***] license to solicit orders of Affymetrix Instruments and software within an [***], and otherwise fulfill its obligations hereunder, in accordance with the provisions of Section III(a) above (including the normal implied license to end-users associated with the sale of such Affymetrix Instruments and software). Notwithstanding the foregoing, Roche shall have no right to, and will not (i) import, Sell, distribute, have Sold or otherwise transfer or dispose of Affymetrix Instruments or software alone or bundled with any products or services except with any Diagnostic Products or other Affymetrix Instruments developed to accompany Diagnostic Products, (ii) make or have made Affymetrix Instruments or components thereof, (iii) distribute Affymetrix Instruments or software to Roche Customers located in or taking delivery in any Affymetrix Territory or (v) reverse engineer any Affymetrix Instrument or software. Affymetrix and its Affiliates agree to grant to Roche Customers purchasing Affymetrix Instruments and software the normal implied license thereon associated with such purchase.

(ii) Affymetrix agrees to provide all post-sale training, installation, technical support and service for Affymetrix Instruments to Roche Customers located in an Unserved Territory on substantially similar terms and conditions as Affymetrix or its Affiliates offer such support and services to their respective customers of Affymetrix Instruments, provided that (a) to the extent that Roche Customers desire post-sale training, installation, technical support or services for Affymetrix Instruments, Roche Customers shall enter into the required agreements with Affymetrix or its Affiliates directly to obtain such services, (b) the prices of such services will be increased on commercially reasonable terms on a case-by-case basis to reflect the fact that Affymetrix does not have distribution channels or personnel located in any of the Unserved Territories and (c) response times will be lengthened on a case-by-case basis to account for the time it will take Affymetrix to get support personnel to an Unserved Territory. Affymetrix shall have no obligation to provide any direct sales, training, installation, contract negotiation or support services to Roche or any Roche Affiliate.

(c) Labeling. All Affymetrix Instruments, software and related promotional or instructional materials shall not be altered by Roche or its Affiliates in any manner without Affymetrix’ prior written consent and shall bear the Designations and regulatory labels and markings required by Affymetrix and/or its suppliers. Notwithstanding the foregoing, Affymetrix shall label Affymetrix Instruments, software, documentation and other materials therefor, appropriately under applicable regulations in order to permit Roche’s sale of such products and instruments to Roche Customers in accordance with this Agreement.

(d) Method of Marketing. Roche (and its Affiliates’) marketing of Affymetrix Instruments must be at Affymetrix’ then-current prices to its customers (without additional markup) and shall be sold pursuant to and be accompanied by Affymetrix’ standard terms and conditions (as provided by Affymetrix to Roche and which may be amended from time to time by Affymetrix in Affymetrix’ sole and absolute discretion). Notwithstanding the foregoing, Affymetrix and its Affiliates agree to grant to any Roche Customer who purchases Affymetrix

Instruments, software and related materials the normal implied license thereon associated with such sale. To the extent Roche becomes aware that any Roche Customer is violating Affymetrix’ terms and conditions of sale (as agreed by such Roche Customer), including but not limited to, the terms and conditions set forth on Annex 1 and Annex 2 hereof, Roche shall use its commercially reasonable efforts to notify Affymetrix of such Roche Customer conduct, but in any event Roche shall have no liability for such Roche Customer conduct absent Roche inducement to cause such violation or Roche’s participation in such violation.

(e) Product Modification or Discontinuation. Affymetrix shall add Affymetrix Instruments from time to time to the list of Affymetrix Instruments attached as Exhibit C to the Common Terms Agreement as Affymetrix introduces new Affymetrix Instruments. Affymetrix reserves the right to materially modify or discontinue any Affymetrix Instrument at any time with 90 days prior written notice to Roche after (i) fulfilling any orders already submitted to Affymetrix under this Agreement for such discontinued Affymetrix Instrument and (ii) agreeing to continue to supply any ongoing clinical trial or development program then in progress utilizing an Affymetrix Instrument sold under this Agreement (for the stated duration of such clinical trial or development program), provided, however that Affymetrix shall only be obligated to continue supplying ongoing clinical trials or development programs lasting longer than 12 months from the date of first sale of Affymetrix Instruments under this Agreement for which Roche has given its prior written consent, such consent not to be unreasonable withheld. Notwithstanding the foregoing, Affymetrix may materially modify or discontinue the supply of any Affymetrix Instrument if the discontinuation is as a result of a legal requirement or due to potential harm or detriment to an end-user of the discontinued Affymetrix Instrument.

IV. Payments.

(a) Commission. Roche shall receive a [***] percent ([***]%) commission on [***] less [***], [***] (to the extent such [***] are invoiced separately by end-users’ distributors or agents) and [***] (the “Commission”) of Affymetrix Instruments distributed pursuant to Section III above. Payment for Affymetrix Instruments sold by Roche or its Affiliates pursuant to this Agreement shall be made by Roche’s Customers directly to Affymetrix or its Affiliate. Affymetrix shall make quarterly payments for the relevant quarter equal to the aggregate amount of Commissions on Affymetrix Instruments sold under this Agreement. Such payment and a payment report in form reasonably satisfactory to Roche detailing the computation of the preceding quarter’s Gross Sales and the Commission for that quarter, including the Affymetrix Instruments sold, the Gross Sales associated therewith, Commissions earned and payments made (and any credits or offsets taken), shall be remitted to Roche within 60 days following the end of such quarter. Commissions shall be earned by Roche upon Affymetrix’ (or its Affiliate’s) invoicing of Roche Customers hereunder for sales of Affymetrix Instruments and software. Payment shall be made for the preceding quarter at the time the payment report is made. If Roche receives any payment for Affymetrix Instruments distributed under this Agreement, Roche shall remit promptly the full amount of such payment to Affymetrix in full so that Affymetrix may properly account for payment of such sale.

(b) Interest. Late payments shall bear interest at the lower of: (i) the Bank of America prime rate or (ii) the maximum rate allowed by law.

(c) Records and Audit Rights. Each Party shall, on behalf of itself and its Affiliates, keep, in the English language, complete and accurate records, sufficiently detailed to document and confirm amounts payable under this Agreement, and shall maintain such records for at least three years. Each Party shall have the right to hire an independent certified public accountant to inspect all records of the other Party required to be kept or submitted by the other Party pursuant to this Agreement (which accountant shall be reasonably acceptable to the other Party and shall keep all information confidential, except to disclose the fact and amount of any discrepancies); provided: (i) such audit is conducted during normal business hours, (ii) such audit is conducted no more often then once per year, (iii) such audit is conducted only after the auditing Party has given 30 days prior written notice and (iv) the audited Party has the ability to review the accountant’s report on any discrepancies to confirm the report does not contain any other Confidential Information. The audited Party shall, at its own expense, make such records (or copies thereof) available to the accountant at a single location in the U.S. The auditing Party shall bear the full cost and expense of such audit, unless a discrepancy in excess of 5% 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 at the rate set forth in Section IV(b)) shall be immediately due and payable.

V. Supply of Affymetrix Instruments.

(a) Affymetrix Instruments. Roche shall provide notice of potential orders of Affymetrix Instruments from Affymetrix to be distributed pursuant to Section III(a) hereof. Such Affymetrix Instruments shall be purchased pursuant to order notices provided to Affymetrix on Affymetrix’ then-current terms and conditions, and Affymetrix will fill such orders with not less than the priority afforded any other purchaser. Roche may only market such Affymetrix Instruments that Affymetrix or its Affiliates have made available for commercial sale. All order notices shall specify the name and delivery address of the Roche Customer purchasing such Affymetrix Instruments. Upon receipt of such order notice, Affymetrix shall provide Affymetrix’ standard documentation for Affymetrix Instruments (including, without limitation, Affymetrix’ customary terms and conditions) directly to the purchaser. All contracts for Affymetrix Instruments purchased shall be entered into between Affymetrix and the purchaser directly, except that payment for Affymetrix Instruments sold by Roche or its Affiliates pursuant to this Agreement shall be made to Affymetrix or its Affiliates. Roche shall assist Affymetrix in collecting payment for sales made by Roche hereunder. Affymetrix shall provide to recipients of the Affymetrix Instruments distributed pursuant to this Agreement the option to trade such Affymetrix Instruments or components thereof for replacement instruments newly developed by Affymetrix, its Affiliates or Third Parties on Affymetrix’ behalf from time to time if, and on the same terms as are, offered to Affymetrix’ end-users of such Affymetrix Instruments generally from time to time.

(b) Confirmation. Within five (5) business days of receipt of each order notice from Roche, Affymetrix will send Roche a confirmation setting forth the quantity of each Affymetrix Instrument that will be supplied and Affymetrix’ estimated delivery date. Except for terms related to the specific order notice (such as quantity and delivery dates), no order notice or confirmation or other documentation shall vary the terms and conditions of this Agreement unless agreed to in writing signed by both Parties. Affymetrix shall have no liability for delays in filling any order notice filled pursuant to Section V(a).

(c) Packing and Shipping. Sales of Affymetrix Instruments shall only be permitted as packaged by Affymetrix (with no portion of the package obscured). Affymetrix will deliver the Affymetrix Instruments directly to Roche Customers at the address supplied by Roche in its order notice. Affymetrix Instruments will be packed in Affymetrix’ standard shipping packages and shipped to the address specified by Roche in its order notice in accordance with quality assurance and packaging procedures determined by Affymetrix from time to time. If a particular Affymetrix Instrument requires any packaging, process or procedure other than those Affymetrix utilizes for its catalog, non-custom designed Affymetrix Instruments, Affymetrix shall perform such packaging, processes or procedures at Roche’s request, so long as Affymetrix determines such packaging, process or procedures to be commercially reasonable. Any such requests shall be provided at [***] on a [***] plus [***] (provided, however, that modifications to labeling done primarily for regulatory purposes shall not be deemed a packaging change or process that would trigger any [***] pursuant to this provision).

Deliveries of Affymetrix Instruments will be F.O.B. Affymetrix’ facility or the facility of its sales representative. Affymetrix will ship via a carrier selected by Roche. Title and risk of loss or damage for deliveries will pass to the Roche Customer upon actual delivery of the Affymetrix Instruments to the carrier for shipment to the Roche Customer. Roche or the Roche Customer will advise Affymetrix in writing if Roche’s Customer desires insurance on any shipments of Affymetrix Instruments. Affymetrix will pay all shipping costs, duties, insurance and sales taxes and will invoice Roche Customers directly for such amounts, requesting payment to be remitted to Affymetrix.

(d) Order Modifications. Roche may increase, decrease, cancel, re-schedule or otherwise modify any order accepted by Affymetrix only with the written approval of Affymetrix. Roche acknowledges that Affymetrix may impose a reasonable and customary charge for any modification of an order that it approves.

(e) Literature. Affymetrix shall provide to Roche the quantities of marketing literature for Affymetrix Instruments reasonably requested by Roche at [***] for such marketing literature. Affymetrix will also endeavor to provide at specified prices a limited number of service notes, special jigs or tools or test equipment, and service documentation and periodic service bulletins specific to the Affymetrix Instruments currently offered by Affymetrix. Affymetrix shall identify specific technical support and service engineering points of contact at Affymetrix.

(f) Software Maintenance and Upgrades. Notwithstanding anything to the contrary in this Agreement, Annex 3 hereto shall govern the terms of all software maintenance and upgrades.

VI. Covenants. Roche and Affymetrix covenant to one another as follows:

(a) Training of Personnel by Roche. Roche will ensure that its sales personnel, support personnel and other representatives are knowledgeable with respect to the Affymetrix Instruments. Roche shall, at its own expense, send representatives as Roche determines necessary to Affymetrix’ facility in Santa Clara, California, or another Affymetrix-designated

location, for up to thirty (30) days of training and proficiency certification including without limitation general product overviews, product positioning and customary terms and conditions, provided that Roche shall pay all travel related expenses of its representatives who participate in such training. Affymetrix shall provide additional training to Roche personnel at Affymetrix’ then-current rates (not to exceed thirty (30) working-days per year). Affymetrix Instrument applications support training shall be provided at no charge, provided that Roche shall pay all travel related expenses.

(b) Compliance. Each Party will maintain compliance with all laws, rules, codes, regulations and other legal requirements applicable to the Affymetrix Instruments distributed under this Agreement, in accordance with the regulatory approach and requirements determined by Affymetrix for such instruments. Roche agrees to only distribute Affymetrix Instruments in accordance with applicable regulatory requirements.

(c) Communications with Authorities. Each Party will immediately notify the other Party of any adverse or unexpected results with or before an Authority or any actual or potential action of an Authority relevant to an Affymetrix Instrument of which the first Party becomes aware. In the event an Authority raises issues regarding this Agreement, the Parties will use their reasonable commercial efforts to satisfy the Authority’s concerns without any change to this Agreement. If an Authority cannot be satisfied without any change to this Agreement, each Party will work with the other Party, reasonably and in good faith, to attempt to achieve mutually acceptable resolution that does not materially compromise either Party’s rights and that changes this Agreement to the minimum extent necessary. Each Party agrees promptly to provide the other Party with copies of all correspondence to or from an Authority and summaries of oral dealings with such Authority.

(d) Export Control. Each Party agrees that distribution of the Diagnostic Products and Roche Instruments under this Agreement shall comply with applicable U.S. export control laws, rules and regulations, including but not limited to, the U.S. Export Administration Act, the U.S. International Emergency Economic Powers Act, the U.S. Trading with the Enemy Act or any other similar law, rule or regulation imposing restrictions on U.S. trade with foreign countries.

(e) Assignment of Modification By Roche to Affymetrix. Roche will assign to Affymetrix, without the payment of any additional consideration to Roche, any and all modifications, design changes, or improvements of the Affymetrix Instruments, such that Affymetrix will have all rights to use, incorporate and otherwise exploit such modifications, design changes, or improvements in connection with the Affymetrix Instruments.

(f) Significant Problems. Each Party will keep the other Party informed as to any significant problems encountered with the Affymetrix Instruments that relate to components or products supplied by the other Party and any solutions arrived at for those problems, and will communicate promptly to the other Party any and all material modifications, design changes or improvements of the Affymetrix Instruments suggested by any customer or by any employee or agent of such Party, as long as such disclosures do not violate any existing confidentiality obligations that such Party has to any Third Party, and such Party shall use reasonable efforts to obtain the right to disclose such information; and the receiving Party will, within a reasonable

time after receiving any information about problems with the Affymetrix Instruments, inform the other Party of the steps (if any) that the receiving Party intends to take with respect to such problems.

(g) Potential Infringement. Each Party will notify the other Party of: (i) any potential infringement of any of such other Party’s Intellectual Property of which it becomes aware; (ii) any potential infringement by any Third Party of any of the Intellectual Property incorporated in, embodied by or relied upon to manufacture a Affymetrix Instrument; or (iii) any potential infringement by an Affymetrix Instrument of any Intellectual Property owned or asserted to be owned by a Third Party of which it becomes aware. Either Party’s notice under this Section V(g) shall be Confidential Information and shall not be disclosed to the alleged infringer or any other party without the other Party’s prior written consent.

VII. Term and Termination.

(a) Term. Unless terminated earlier as provided herein, this Agreement shall commence on the Effective Date and shall terminate on December 31, 2020 (the “Termination Date”).

(c) Termination for Cause. 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;

(d) Effect of Termination. Sections IV (Payments), VII (Term and Termination), VIII (Warranty), IX (Limited Liability) and X (Indemnity), all rights to payment in effect through the final termination date of this Agreement pursuant to Section VII (Term and

Termination), the Common Terms Agreement, remedies for breaches or any other provision that, by its terms, survives termination shall survive termination of this Agreement. Obligations of the Parties under firm orders for purchase and delivery of Affymetrix Instruments at the time of such termination shall remain in effect, except that in the case of termination under Section VII(c), the terminating Party may elect whether obligations under firm orders will remain in effect; provided, however, that Affymetrix will not be obligated with respect to any delivery dates (for firm orders or otherwise) more than thirty (30) days after the effective date of termination if the reason for termination is due to a breach by Roche, or more than one hundred eighty (180) days after such termination. Each Party will promptly return or destroy all Confidential Information of the other in accordance with Section II(f) of the Common Terms Agreement. Termination is not the sole remedy under this Agreement and, whether or not termination is effected, all other remedies will remain available.

VIII. Warranty and Warranty Disclaimers.

Affymetrix warrants only to Roche that the Affymetrix Instruments will conform in all material respects to Affymetrix’ then-current standard customer warranty included in Affymetrix’ applicable customer sales agreement. Such warranty does not apply to units that have been mishandled, mistreated or used or maintained or stored other than in conformity with Affymetrix’ instructions. The warranties to Roche Customers for Affymetrix Instruments distributed shall be as set forth in the terms and conditions of such sales agreement.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, AFFYMETRIX DOES NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE AFFYMETRIX INSTRUMENTS OR PERFORMANCE OR NON-INFRINGEMENT THEREOF, DOES NOT MAKE ANY WARRANTY, EXPRESS, IMPLIED OR OTHERWISE, WITH RESPECT TO AN AFFYMETRIX INSTRUMENT, OR ITS SPECIFICATIONS, SUPPORT, SERVICE OR ANYTHING ELSE, AND DOES NOT MAKE ANY WARRANTY OF ANY KIND TO ROCHE’S CUSTOMERS OR AGENTS. AFFYMETRIX HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

IX. Limited Liability.

EXCEPT IN CONNECTION WITH SECTION II (CONFIDENTIALITY) OF THE COMMON TERMS AGREEMENT OR AMOUNTS PAYABLE UNDER SECTION VIII (WARRANTY) OR SECTION IX (INDEMNIFICATION) OF THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY PUNITIVE, MULTIPLE OR EXEMPLARY DAMAGES, OR LOST PROFITS.

X. Indemnity.

(a) Indemnification by Affymetrix from Infringement. Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against liability resulting from any Third Party Claim of infringement of any patent (other than Roche patents, patents of any Roche

Affiliate or patents of Genentech or Chugai) by Affymetrix Technology incorporated into Affymetrix Instruments, provided Affymetrix is promptly notified of any and all threats, Claims and proceedings related thereto and given reasonable assistance and the opportunity to assume sole control over the defense and all negotiations for a settlement or compromise; provided, however, that Affymetrix will consult with Roche if a proposed settlement or compromise could reasonably be interpreted to impact the benefits that Roche receives under this Agreement in a materially negative manner; and, provided further, that Affymetrix will not be responsible for any settlement it does not approve in writing. The foregoing obligation of Affymetrix does not apply with respect to Affymetrix Technology used in Affymetrix Instruments: (W) not supplied by Affymetrix; (X) made in whole or part in accordance to Roche specifications or requests, to the extent the infringement was caused thereby; (Y) which are modified by Roche or any Third Party after shipment by Affymetrix, if the alleged infringement relates to such modification; or (Z) combined, processed or used with other products, processes or materials including Roche Technology, where the alleged infringement relates to such combination, process or use. Roche shall indemnify Affymetrix Indemnitees and its officers, directors, agents and employees from all damages, settlements, attorneys’ fees and expenses related to a Claim of infringement or misappropriation excluded from Affymetrix’ indemnity obligation by the immediately preceding sentence.

(b) Indemnity Relating to Products. Affymetrix shall indemnify, defend and hold harmless the Roche Indemnitees from and against any and all Damages based upon or arising out of the marketing, sale or use of Affymetrix Instruments, including product liability, other than Damages caused by the marketing activities of Roche, including changing labeling, or resulting from breach of this Agreement. Roche shall indemnify, defend and hold harmless the Affymetrix Indemnitees from and against all Damages based upon or arising out of the import, sale or use of Affymetrix Instruments other than as pertains to Affymetrix Technology as set forth above.

(c) Conditions of Indemnification. If either Party proposes to seek indemnification from the other under the provisions of this Section X, it shall notify the other Party within 15 days of receipt of notice of any Claim and shall cooperate fully with the other Party in the defense of such claims or suits. The indemnified Party shall cooperate with the indemnifying Party (at the indemnifying Party’s expense) in all respects in connection with the defense of any such Claim. The indemnifying Party shall, upon written notice from the indemnified Party of a Claim, undertake to conduct all proceedings or negotiations in connection with the Claim, assume the defense thereof, and all other required steps or proceedings to settle or defend any such Claim, including the selection of counsel that shall be approved by the indemnified Party, which approval shall not be unreasonably withheld, and payment of all reasonable expenses. The indemnified Party shall have the right to employ separate counsel and participate in the defense at the indemnified Party’s sole expense. If the indemnifying Party fails to defend or settle in good faith any Claim as provided above, then the indemnified Party shall have the right to take over sole control of the defense of the Claim and all negotiations for its settlement or

compromise, provided that the indemnifying Party shall be liable for (and shall pay as they become due) all costs and expenses (including attorneys’ fees) reasonably incurred by the indemnified Party in its defending or negotiating settlement of the Claim. Notwithstanding the foregoing, the Party primarily responsible for handling the Claim (as determined above) will first obtain the prior written consent of the other Party for any settlement of a Claim that (i) does not include a complete release of the other Party from all liability with respect thereto, (ii) compromises the rights of the other Party, or (iii) imposes any restrictions on the other Party.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

AFFYMETRIX:		ROCHE:

Affymetrix, Inc.		F. Hoffmann-La Roche Ltd.


By:	/s/ Barbara A. Caulfield	By:	/s/ Heino von Prondzynski
	Name: Barbara A. Caulfield		Name: Heino von Prondzynski
	Title: Executive Vice President and General Counsel		Title: Head, Diagnostic Division

		By:	/s/ Gregory F. Heath
			Name: Gregory F. Heath
			Title: Head, Business Development and Licensing

ANNEX 1

FORM OF CUSTOMER SERVICE PROVIDER ADDENDUM

[See attached]

Affymetrix Instrument Service Terms and Conditions

1. General. This agreement (“Service Contract”) is made and entered into by and between [Affymetrix] (“Affymetrix”) and the customer (“Customer”) identified on the related purchase order for the provision of the services described on the related Affymetrix quote pertaining to Affymetrix Affymetrix Instruments, probe arrays, applications, software, and/or services which have been sold or leased by Affymetrix to Customer (the “Affymetrix Instrument(s)”), and any Affymetrix software installed on the workstation, which software is owned and licensed by Affymetrix to Customer (the “Applications”). Any part or subassembly of an Affymetrix Instrument that is sold or provided to Customer by Affymetrix shall be deemed “Covered Parts.” The Applications and Affymetrix Instruments are collectively referred to herein as the “System.”

(a) Repair. Affymetrix or its designee shall repair or otherwise correct any material reproducible failure or malfunction. A failure or malfunction shall be “material” if it represents a substantial nonconformity with Affymetrix’ current published specifications for the Affymetrix Instrument and Customer determines (and notifies Affymetrix) that such error or malfunction substantially interferes with Customer’s normal use of the Affymetrix Instrument. All Affymetrix Affymetrix Instruments require a consistent and reliable power source in order to perform optimally. The GeneArray Scanner also requires a significant amount of current, 13-15A on a 110V line, or 6-8A on a 220V line. Whichever system configuration is chosen, both systems require a dedicated circuit or line in order to allow for peaks in power required and the headroom that entails. Affymetrix assumes no responsibility for damage caused by any power supply circuit or related units.

(b) Preventative Maintenance and Performance Checks. Affymetrix or its designee will perform on-site preventative maintenance and performance checks on the Affymetrix Instruments as set forth in Affymetrix’ current published preventative maintenance procedures and Affymetrix Instrument service specifications.