Sample Business Contracts

Immunity Agreement - Roche Molecular Systems Inc. and ViroLogic Inc.

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     This Agreement is made by and between Roche Molecular Systems, Inc.
("RMS"), having an office at 1080 U.S. Highway 202, Branchburg Township,
Somerville, New Jersey 08876-3771 and Virologic, Inc. ("VLI"), South San
Francisco, California, hereafter collectively referred to as "The Parties".


     A.   RMS has the right to grant immunities from suit under certain United
States Patents describing and claiming, inter alia, a nucleic acid
amplification process known as the polymerase chain reaction ("PCR") technology.

     B.   VLI has attained substantial expertise in developing, validating,
documenting and performing sophisticated in vitro susceptibility/resistance
diagnostic procedures.

     C.   VLI desires to obtain an immunity from suit from RMS to practice PCR
Technology to perform human in vitro clinical laboratory services, and RMS is
willing to grant such an immunity, on the terms and subject to the conditions
provided exclusively in this Agreement.

     NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein, RMS and VLI agree as follows:

     1.   Definitions

          For the purpose of this Agreement, and solely for that purpose, the
terms set forth hereinafter shall be defined as follows:

          1.1  The term "Affiliate" of a designated party to this Agreement
          shall mean:

               a)   an organization of which fifty percent (50%) or more of the
                    voting stock is controlled or owned directly or indirectly
                    by either party to this Agreement;

               b)   an organization which directly or indirectly owns or
                    controls fifty percent (50%) or more of the voting stock of
                    either party to this Agreement;

               c)   an organization, the majority ownership of which is directly
                    or indirectly common to the majority ownership of either
                    party to this Agreement; and

<PAGE>   2
               d)   an organization under (a), (b), or (c) above in which the
                    amount of said ownership is less than fifty percent (50%)
                    and that amount is the maximum amount permitted pursuant to
                    the law governing the ownership of said organization.

     It is understood and agreed, however, that the term "AFFILIATE" shall  not
include Genentech Inc., a Delaware Corporation.

     1.2 "COMBINATION SERVICE" shall mean a LICENSED SERVICE offered in
combination with [***] as part of a package, where the LICENSED SERVICE is not
separately billed.

     1.3 "DIAGNOSTIC PRODUCT" shall mean an assemblage of reagents, including
but not limited to reagents packaged in the form of a kit, useful in
performing a LICENSED SERVICE.

     1.4 "EFFECTIVE DATE" shall mean the date on which the last signatory to
this Agreement signs the Agreement.

     1.5 "LICENSED FIELD" shall mean the field of human in vitro diagnostics
solely for the detection of genetic diseases, genetic pre-disposition to
disease, cancer, tissue transplant typing, Parentage, and microorganisms
associated with infectious diseases.

     1.6 "LICENSED SERVICES" shall mean the performance by VLI of an in vitro
diagnostic procedure utilizing PCR TECHNOLOGY to detect the presence, absence
or quantity of a nucleic acid sequence associated with a specific human disease
or condition within the LICENSED FIELD. LICENSED SERVICES include but are not
limited to, any combination of the steps of collecting a sample for analysis,
isolating nucleic acid sequences therein, amplifying one or more desired
sequences, analyzing the amplified material and reporting the results.

     1.7 "NET SERVICE REVENUES" shall mean gross invoice price for the
LICENSED SERVICES performed by VLI (or the fair market value for any
nonmonetary  consideration which VLI agree to receive in exchange for LICENSED
SERVICES), less the following deductions where they are factually applicable
and are not already reflected in the gross invoice price:

               i)   discounts allowed and taken, in amounts customary in the
                    trade (which shall include the difference between the dollar
                    amount charged by VLI for a LICENSED SERVICE and the
                    Medicare and/or Medicaid Limits of Allowance  and/or
                    reimbursement limitations of a THIRD PARTY insurance
                    program); and


<PAGE>   3
               ii)  government imposed transportation taxes, sales taxes and
                    other taxes to the extent they are separately identified on
                    the invoice; and

              iii)  actual bad debt, up to 2% of gross invoice price for
                    LICENSED SERVICES, which bad debt VLI can prove and document
                    that it was reasonable and diligent in its efforts to
                    collect payment.

     No allowance or deduction shall be made for commissions or collections, by
whatever name known.

     It is hereby understood and agreed that LICENSED SERVICES and COMBINATION
SERVICES shall at all times be invoiced, listed and billed by VLI as a separate
item in VLI's invoices, bills and reports to customers. NET SERVICE REVENUES for
determining royalties on a LICENSED SERVICE which is part of a COMBINATION
SERVICE shall be determined by [***] in Attachment I hereto. The [***] specified
in Attachment I for a particular LICENSED SERVICE shall be set my RMS after
consultation with VLI, [***] by the LICENSED SERVICE to the [***] of the
COMBINATION SERVICE as offered by VLI. Attachment I hereto shall be modified as
new COMBINATION SERVICES are identified and new royalty-bearing fractions set.

          The NET SERVICE REVENUES of the LICENSED SERVICES that are performed
by VLI for any person, firm or corporation controlling, controlled by, or under
common control with VLI, or enjoying a special course of dealing with VLI,
shall be determined by reference to the NET SERVICE REVENUES which would be
applicable under this Section in an arm's length transaction by VLI to a THIRD
PARTY other than such person, firm or corporation.

          1.8  "PARENTAGE" shall mean analysis of human genetic material to
ascertain whether two or more individuals are biologically related, but
specifically excludes analysis of forensic evidence for a sexual assault

          1.9  "PCR TECHNOLOGY" shall mean polymerase chain reaction technology
covered by United States Patent Nos. B2 4,683,195, B1 4,683,202 and 4,965,188
and any reissue or reexamination patents thereof.

          1.10 "THIRD PARTY" shall mean a party other than an AFFILIATE of The
Parties to this Agreement.

     2.   Grant

          2.1  Upon the terms and subject to the conditions of this Agreement,
RMS hereby grants to VLI, and VLI hereby accepts from RMS, a royalty-bearing,
non-exclusive immunity from suit under PCR TECHNOLOGY solely to perform LICENSED
SERVICES within the United States and its possessions and the Commonwealth of
Puerto Rico.


<PAGE>   4

          2.2  PCR Technology hereunder may be practiced solely for the
performance of Licensed Services and for no other purpose whatsoever, and no
other right, immunity or license is granted expressly, impliedly or by estoppel.

          2.3  VLI expressly acknowledges and agrees that the immunity from
suit pursuant to this Agreement is personal to VLI alone and VLI shall have no
right to sublicense, assign or otherwise transfer or share its rights under the
foregoing immunity from suit and further agrees that LICENSED SERVICES will be
performed, offered, marketed and sold only by VLI and VLI shall not authorize
any other party, including AFFILIATES, to practice the PCR TECHNOLOGY, nor
shall it practice the PCR TECHNOLOGY in conjunction with any other party.

          2.4  For each COMBINATION SERVICE that VLI offers pursuant to this
immunity from suit, VLI agrees that it will notify RMS at least sixty (60) days
before it commences offering said COMBINATION SERVICE. COMBINATION SERVICES
claimed by VLI on royalty reports which have not met the sixty (60) day notice
requirement and for which RMS has not set an appropriate royalty bearing
fraction, shall be royalty bearing at one hundred percent (100%) of the package
price, less applicable deductions. As to all other LICENSED SERVICES offered by
VLI which are not part of a COMBINATION SERVICE, VLI agrees to inform RMS of the
availability from VLI of each such LICENSED SERVICE within 30 days after VLI
commences offering the LICENSED SERVICE.

          2.5  RMS hereby grants to VLI the right and VLI accepts and agrees to
credit RMS as the source of PCR TECHNOLOGY rights in VLI's promotional
materials and any other materials intended for distribution to THIRD PARTIES as

  "This PCR portion of this test is performed pursuant to a license agreement
                       with Roche Molecular Systems, Inc."

     3.   Acknowledgement and Agreement on Diagnostic Products

          3.1  VLI acknowledges and agrees that the immunity from suit granted
hereunder is for the performance of LICENSED SERVICES only and does not include
any right to make, have made, import, offer or sell any products, including
devices, PCR reagents, kits or DIAGNOSTIC PRODUCTS. VLI specifically
acknowledges that it does not by virtue of this agreement acquire any rights
under RMS' U.S. Patent Nos. 4,889,818, 5,079,352 or any other polymerase
patent. VLI further acknowledges and agrees that RMS Affiliates are in the
business of providing clinical laboratory testing services and the commercial
sale of diagnostic testing systems and therefore may compete directly with
VLI's business.

     4.   Royalties, Records and Reports

          4.1  Royalties. For the rights and privileges granted under this
Agreement, VLI shall pay to RMS earned royalties equal to [***] percent [***] of



<PAGE>   5
     4.2  VLI shall keep full, true and accurate books of account containing all
particulars which may be necessary for the purpose of showing the amount
payable to RMS by way of royalty or by way of any other provision under this
Agreement. Such books and the supporting data shall be open at all reasonable
times, for three (3) years following the end of the calendar year to which they
pertain (and access shall not be denied thereafter, if reasonably available),
to the inspection of RMS or an independent certified public accountant retained
by RMS for the purpose of verifying VLI's royalty statements or VLI's
compliance in other respects with this Agreement. If in dispute, such records
shall be kept until the dispute is settled. The inspection of records shall be
at RMS' sole cost and expense, unless the inspector concludes that royalties
reported by VLI for the period being audited are understated by five percent
(5%) or more from actual royalties, in which case the costs and expenses of
such inspection shall be paid by VLI.

     4.3  VLI shall within sixty (60) days after the first day of January and
July of each year deliver to RMS a true and accurate royalty report. Such
report shall cover the preceding six (6) calendar months; and shall be
submitted either i) on the "Summary Royalty Report", a copy of which is
attached hereto as Attachment II, or ii) on a form generated by VLI which
duplicates the format of the Summary Royalty Report; and shall include at least
the following:

          a)  the name of each LICENSED SERVICE and COMBINATION SERVICE and the
              number performed during those six (6) months;

          b)  compilation of billings thereon and the allowable deductions

          c)  NET SERVICE REVENUES and the calculation of total royalties
              thereon; and

          d)  the calculation of the net royalty payable to RMS. If no royalties
              are due, its shall be so reported.

     The correctness and completeness of each such report shall be attested to
in writing by the responsible financial officer of VLI's organization or by
VLI's external auditor or by the chair or other head of VLI's internal audit

     Simultaneously with the delivery of each such report, VLI shall pay to RMS
the royalty due under this Agreement for the period covered by such report. All
payments due RMS hereunder shall be sent together with the royalty report by the
due date to the following address:

                    Roche Molecular Systems, Inc.
                    P.O. Box 18139
                    Newark, New Jersey 07191

or to any address that RMS may advise in writing.


<PAGE>   6

                4.4     All amounts payable hereunder by VLI to RMS shall be
payable in United States currency.

                4.5     VLI's obligation to pay royalties pursuant to this
Agreement shall terminate upon a final holding of invalidity or
unenforceability of all of the patents identified in Section 1.9, supra, by a
court of appellate jurisdiction or by a trial court from which no appeal is or
can be taken.

                4.6     If VLI shall fail to pay any amount specified under this
Agreement after the due date thereof, the amount owed shall bear interest at the
Citibank NA base lending rate ("prime rate") plus [***] % from the due date
until paid, provided, however, that if this interest rate is held to be
unenforceable for any reason, the interest rate shall be the maximum rate
allowed by law at the time the payment is due.

        5.      Performance of Licensed Services

                5.1     The Parties agree that quality assurance is of utmost
importance in the performance of LICENSED SERVICES. To that end, VLI agrees
that it will:

                a)      participate in at least one independent proficiency
                        testing program for each LICENSED SERVICE when such
                        program(s) becomes available; and

                b)      comply with all Medicare, Medicaid and/or CLIA standards
                        for diagnostic testing as well as all other applicable
                        federal, state and local regulations applicable to human
                        diagnostic testing.

        6.      Technology Notification

                6.1     With respect to any invention, improvement or discovery
(hereinafter referred to as "Discoveries" in this Article) of VLI made after
entering into this Agreement, resulting from work conducted under this
Agreement and being applicable to PCR, if VLI decides to license that Discovery
to THIRD PARTIES, then VLI agrees to provide to RMS, unless not possible due to
VLI's previous commitments to THIRD PARTIES relating to said Discoveries, a
reasonable opportunity to negotiate a license to use said Discoveries in
PCR-based DIAGNOSTIC PRODUCTS and services. Such Discoveries include, but are
not limited to, improvements of the PCR process or in the performance of
LICENSED SERVICES, modifications to or new methods of performing the LICENSED
SERVICES, including the automation of the PCR process or of the LICENSED

                6.2     Any agreement reached between The Parties as a result
of VLI's notification to RMS of a Discovery pursuant to Section 6.1 hereto
shall be upon terms and conditions negotiated in good faith by The Parties.


<PAGE>   7
     7.   Diligence

          VLI shall exercise reasonable diligence in developing, testing,
validating, documenting, promoting and selling the LICENSED SERVICES. In the
course of such diligence, VLI shall take appropriate steps including, upon
reasonable written request of RMS, furnish RMS with representative copies of
all promotional material relating to the LICENSED SERVICES.


          8.1  The immunity from suit granted to VLI herein shall commence on
the EFFECTIVE DATE and terminate on the date of expiration of the last to expire
of the patents included within the PCR TECHNOLOGY, which patent contains at
least one claim covering the performance of LICENSED SERVICES.

          8.2  If in the course of performing and offering LICENSED SERVICES,
VLI fails to comply with the quality assurance provisions of Article 5, VLI
shall so notify RMS immediately upon such failure and shall have thirty (30)
days from receipt of such notice to cure all defects of which it is notified.
If VLI does not cure all such defects within the designated thirty (30) days,
RMS may then in its sole discretion terminate this Agreement in its entirety,
or any portion thereof immediately. For the purposes of this Section and this
Agreement, VLI's failure to provide an accurate and correct test result when
participating in an independent proficiency testing program pursuant to Section
5.1 (a), on two consecutive evaluations, shall automatically be deemed a
failure to comply with Article 5 and shall be a material breach of this

          8.3  Notwithstanding any other Section of this Agreement, VLI may
terminate this Agreement for any reason on thirty (30) days' written notice to

          8.4  The decision of a court or administrative body finding RMS
liable for culpable due to VLI's performance of LICENSED SERVICES shall give
RMS the right to terminate this Agreement immediately upon notification to RMS
of said decision.

          8.5  The immunity granted hereunder to VLI shall automatically
terminate upon (i) adjudication of VLI as bankrupt or insolvent, or VLI's
admission in writing of its inability to pay its obligations as they mature;
(ii) or an assignment by VLI for the benefit of creditors; (iii) or VLI's
applying for or consenting to the appointment of a receiver, trustee or similar
officer for any substantial part of its property; (iv) such receiver, trustee
or similar officers appointment without the application or consent of VLI, if
such appointment shall continue undischarged for a period of ninety (90) days;
or VLI's instituting (by petition, application, answer, consent or otherwise)
any bankruptcy, insolvency arrangement, or similar proceeding relating to VLI
under the laws of any jurisdiction; (v) or the institution of any such
proceeding (by petition, application or otherwise) against VLI, if such
proceeding shall remain undismissed for a period of ninety (90) days or the
issuance or levy of any judgment, writ, warrant of attachment or execution or
similar process against a substantial part of the property of VLI, if such
judgment, writ, or similar process shall not

<PAGE>   8
be released, vacated or fully bonded within ninety (90) days after its issue or
levy; (vi) loss of VLI's federal or state licenses permits or accreditation
necessary for operation of VLI as a health care institution.

     8.6  RMS shall have the right to terminate this Agreement by written
notice to VLI upon any change in the ownership or control of VLI or of its
assets. Termination under this Section shall be effective immediately upon
receipt by VLI of RMS' notice of termination. For such purposes, a "change in
ownership or control" shall mean that 30% or more of the voting stock of VLI
become subject to the control of a person or entity, or any related group of
persons or entities acting in concert, which person(s) or entity(ies) did not
control such proportion of voting stock as of the EFFECTIVE DATE of the
Agreement. Analogously, RMS shall have the right to terminate this Agreement
upon any transfer or sale of 30% or more of the assets of VLI to another party.

     8.7  BREACH. Upon any breach of or default of a material term under this
Agreement by VLI, RMS may terminate this Agreement upon thirty (30) days'
written notice to VLI. Said notice shall become effective at the end of the
thirty-day (30) period, unless during said period VLI fully cures such breach
or default and notifies RMS of such a cure.

     8.8  Upon termination of this Agreement as provided herein, all immunities
and rights granted to VLI hereunder shall revert to or be retained by RMS. To
the extent RMS has LICENSED TECHNOLOGY or know-how of VLI pursuant to Article 6
hereto, those licenses shall remain in force according to their terms.

     8.9  VLI's obligations to report to RMS and to pay royalties to RMS as to
the LICENSED SERVICES performed under the Agreement prior to termination or
expiration of the Agreement shall survive such termination or expiration.

  9. Confidentiality-Publicity

     9.1  Except as otherwise specifically provided in Section 2.5, VLI agrees
to obtain RMS' approval before distributing any written information, including
but not limited to promotional and sales materials, to THIRD PARTIES  which
contains references to RMS or this Agreement. RMS' approval shall not be
unreasonably withheld or delayed and, in any event, RMS' decision shall be
rendered within three (3) weeks of receipt of the written information. Once
approved, such materials, or abstracts of such materials, which do not
materially alter the context of the material originally approved may be
reprinted during the term of the Agreement without further approval by RMS
unless RMS has notified VLI in writing of its decision to withdraw permission
for such use.

     9.2  Each Party agrees that any financial, legal or business information
or any technical information disclosed to it (the "Receiving Party") by the
other (the "Disclosing Party") in connection with this Agreement shall be
considered confidential and proprietary and the Receiving

<PAGE>   9

Party shall not disclose same to any THIRD PARTY and shall hold it in
confidence for a period of five (5) years and will not use it other than as
permitted under this Agreement provided, however, that any information,
know-how or data which is orally disclosed to the Receiving Party shall not be
considered confidential and proprietary unless such oral disclosure is reduced
to writing and given to the Receiving Party in written form within thirty (30)
days after oral disclosure thereof. Such confidential and proprietary
information shall include, without limitation, marketing and sales information,
commercialization plans and strategies, research and development work plans,
and technical information such as patent applications, inventions, trade
secrets, systems, methods, apparatus, designs, tangible material, organisms and
products and derivatives thereof.

        9.3     The above obligations of confidentiality shall not be applicable
                to the extent:

                a.      such information is general public knowledge or, after
                        disclosure hereunder, becomes general or public
                        knowledge through no fault of the Receiving Party; or

                b)      such information can be shown by the Receiving Party by
                        its written records to have been in its possession prior
                        to receipt thereof hereunder; or

                c)      such information is received by the Receiving Party from
                        any THIRD PARTY for use or disclosure by the Receiving
                        Party without any obligation to the Disclosing Party
                        provided, however, that information received by the
                        Receiving Party from any THIRD PARTY funded by the
                        Disclosing Party (e.g. consultants, subcontractors,
                        etc.) shall not be released from confidentiality under
                        this exception; or

                d)      the disclosure of such information is reasonably needed
                        for use in connection with performing, offering and
                        selling LICENSED SERVICES; or

                e)      the disclosure of such information is required or
                        desirable to comply with or fulfill governmental
                        requirements, submissions to governmental bodies, or the
                        securing of regulatory approvals.

        9.4     With the exception of Section 2.5, each party shall, to the
extent reasonably practicable, maintain the confidentiality of the provisions
of this Agreement and shall refrain from making any public announcement or
disclosure of the terms of this Agreement without the prior consent of the
other party, except to the extent a party concludes in good faith that such
disclosure is required under applicable law or regulations, in which case the
other party shall be notified in advance.

<PAGE>   10
     10.  Compliance

          In exercising any and all rights and in performing its obligations
hereunder, VLI shall comply fully with any and all applicable laws, regulations
and ordinances and shall obtain and keep in effect licenses, permits and other
governmental approvals, whether at the federal, state or local levels, necessary
or appropriate to carry on its activities hereunder. VLI further agrees to
refrain from any activities that would have an adverse effect on the business
reputation of RMS. RMS will advise VLI of any such activities and VLI will have
thirty (30) days to correct such activity.

     11.  Assignment

          This Agreement shall not be assigned or transfered by VLI (including
without limitation any purported assignment or transfer that would arise from a
sale or transfer of VLI's business) without the express written consent of RMS.
RMS may assign all or any part of its rights and obligations under this
Agreement at any time without the consent of VLI. VLI agrees to execute such
further acknowledgements or other instruments as RMS may reasonably request in
connection with such assignment.

     12.  Negation of Warranties and Indemnity

          12.1 Nothing in this Agreement shall be construed as:

               a)   a warranty or representation by RMS as to the validity or
                    scope of any PCR TECHNOLOGY;

               b)   a warranty or representation that the practice of the PCR
                    TECHNOLOGY is or will be free from infringement of patents
                    of THIRD PARTIES;

               c)   an obligation to bring or prosecute actions or suits against
                    THIRD PARTIES for infringement;

               d)   except as expressly set forth herein, conferring the right
                    to use in advertising, publicity or otherwise any trademark,
                    trade name, or names, or any contraction, abbreviation,
                    simulation or adaptation thereof, of RMS;

               e)   conferring by implication, estoppel or otherwise any
                    license, right or immunity under any patents or patent
                    applications of RMS other than those specified in PCR
                    TECHNOLOGY, regardless of whether

<PAGE>   11
                    such patents and patent applications are dominant or
                    subordinate to those in PCR TECHNOLOGY;

               f)   an obligation to furnish any know-how not provided in PCR
                    TECHNOLOGY; or

               g)   creating any agency, partnership, joint venture or similar
                    relationship between RMS and VLI.


          12.3 VLI acknowledges that the technology licensed hereby is newly
developed, and agrees to take all reasonable precautions to prevent death,
personal injury, illness and property damage from the use of such technology.
VLI shall assume full responsibility for its use of the PCR TECHNOLOGY and shall
defend, indemnify and hold RMS harmless from and against all liability,
demands, damages, expenses (including attorneys' fees) and losses for death,
personal injury, illness, property damage or any other injury or damage,
including any damages or expenses arising in connection with state or federal
regulatory action (collectively "Damages"), resulting from the use by VLI,
including its officers, directors, agents and employees, of the PCR TECHNOLOGY
except, and to the extent that such Damages are caused by the negligence or
willful misconduct of RMS.

     13.  GENERAL

          13.1 This Agreement constitutes the entire agreement between The
Parties as to the subject matter hereof, and all prior negotiations,
representations, agreements and understandings are merged into, extinguished by
and completely expressed by it. This Agreement may be modified or amended only
by a writing executed by authorized officers of each of The Parties.

          13.2 Any notice required or permitted to be given by this Agreement
shall be given by postpaid, first class, registered or certified mail, or by
courier, properly addressed to the other party at the respective address as
shown below:

If to RMS:           Roche Molecular Systems, Inc.
                     340 Kingsland Street
                     Nutley, New Jersey 07110
                     Attn: Corporate Secretary

with a copy to:      Roche Molecular Systems, Inc.
                     1145 Atlantic Avenue, Suite 100
                     Alameda, California 94501
                     Attn: Licensing Manager


<PAGE>   12
If to VLI:          ViroLogic, Inc.
                    270 East Grand Avenue
                    South San Francisco, CA 94080
                    Attn: Martin H. Goldstein, President & COO

     Either party may change its address by providing notice to the other
party. Unless otherwise specified herein, any notice given in accordance with
the foregoing shall be deemed given within four (4) full business days after
the day of mailing, or one full day after the date of delivery to the courier,
as the case will be.

     13.3 Governing Law and Venue. This Agreement and its effect are subject to
and shall be construed and enforced in accordance with the law of the State of
New Jersey, U.S.A., except as to any issue which by the law of New Jersey
depends upon the validity, scope or enforceability of any patent within the PCR
TECHNOLOGY, which issue shall be determined in accordance with the applicable
patent laws of the United States. The Parties agree that the exclusive
jurisdiction and venue for any dispute or controversy arising from this
Agreement shall be in the United States District Court for the District of New
Jersey if federal jurisdiction exists, and if no federal jurisdiction exists,
then in the Superior Court of New Jersey.

     13.4 Arbitration. Notwithstanding the provisions of Section 13.3 above, any
dispute concerning solely the determination of facts such as, but not limited
to, (i) the value of a COMBINATION SERVICE and a LICENSED SERVICE pursuant to
Section 1.7; (ii) a determination of royalty rate payments owed pursuant to
Section 4.1; (iii) compliance with quality assurance pursuant to Article 5; or
(iv) good faith compliance with Article 6; and which dispute does not involve a
question of law, shall be settled by final and binding arbitration at a mutually
convenient location in the State of New Jersey pursuant to the commercial
arbitration rules of the American Arbitration Association, in accordance with
the following procedural process:

          a)   The arbitration tribunal shall consist of three arbitrators. In
               the request for arbitration and the answer thereto, each party
               shall nominate one arbitrator and the two arbitrators so named
               will then jointly appoint the third arbitrator as chairman of the
               arbitration tribunal.

          b)   The decision of the arbitration tribunal shall be final and
               judgment upon such decision may be entered in any competent court
               for juridical acceptance of such an award and order of
               enforcement. Each party hereby submits itself to the jurisdiction
               of the courts of the place of arbitration, but only for the entry
               of judgment with respect to the decision of the arbitrators

<PAGE>   13
          13.5 Nothing in this Agreement shall be construed so as to require
the commission of any act contrary to law, and wherever there is any conflict
between any provision of this Agreement or concerning the legal right of The
Parties to enter into this contract and any statute, law, ordinance or treaty,
the latter shall prevail, but in such event the affected provisions of the
Agreement shall be curtailed and limited only to the extent necessary to bring
it within the applicable legal requirements.

          13.6 If any provision of this Agreement is held to be unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the parties to the extent possible. In any event, all
other provisions of this Agreement shall be deemed valid and enforceable to the
full extent possible.

     IN WITNESS WHEREOF, The Parties hereto have set their hands and seals and
duly executed this Agreement on the date(s) indicated below, to be effective on
EFFECTIVE DATE as defined herein.


By: /s/ KATHY ORDONEZ                        By: /s/ MARTIN H. GOLDSTEIN
   --------------------------------             --------------------------------

Name:  Kathy Ordonez                         Name:  Martin H. Goldstein

Title: President                             Title: President & CEO

Date:  July 21, 1997                         Date:  Aug. 4, 1997
     ------------------------------               ------------------------------

                               Apprv'd As To Form
                                   LAW DEPT.

                                 By [initials]

<PAGE>   14

                              COMBINATION SERVICES

                                                  PERCENT OF NET SERVICE
                                                  REVENUES FOR COMBINATION
                                                  SERVICES WHICH IS
                                                  ATTRIBUTABLE TO LICENSED
LICENSED SERVICES                                 SERVICES
-----------------                                 ------------------------
<S>                                               <C>
Drug Susceptibility and Resistance Test                      [***]

                               [TO BE DETERMINED]

<PAGE>   15

                                 ATTACHMENT II

                             SUMMARY ROYALTY REPORT
                     for the Period _________ to __________

Licensee: Virologic, Inc.      Field of Use: In Vitro Human Diagnostic Services
Effective Date:                Royalty Rate: 18%

                           AMOUNT         NUMBER OF       COMPILATION               COMBINATION
                         BILLED PER     Lic. SERVICES          OF       DEDUCTION    SERVICE %    NEW SERVICE      EARNED
<S>                     <C>             <C>                 <C>         <C>         <C>           <C>              <C>






                                          ROYALTY PAYMENT DUE

*  Please attach, to this form, documentation or supplemental data for
   "Deductions Allowed."

** Combination Service %'s must be previously agreed upon. To confirm that a
   Combination Service % has been established or to propose this status, please
   contact Roche Licensing Dept. @ (510) 814-2984.

PERIOD: ____

I hereby certify the information set forth above is correct and complete with
respect to the amounts due under the applicable license agreement.

By:____________________________ Title: _____________________ Date: _____________
   (authorized signature)

Name (please print):__________________________________

Mail completed form to: Roche Molecular Systems, Inc., P.O. Box 18139, Newark,
New Jersey 07191

<PAGE>   16
                         DIAGNOSTIC SERVICES AGREEMENT

The purpose of this rider is to set forth the agreement of Virologic, Inc.
("VLI") and Roche Molecular Systems, Inc. ("RMS") concerning the supplemental
rights to additional patents relating to PCR technology which RMS offers and
the parties agree to add the rights granted to VLI by the Agreement between the
parties, dated ________________ (the "Diagnostic Services Agreement").

1.   It is understood by the parties that RMS may, from time to time, come into
     possession or control of additional patents or claims of patents relating
     to PCR technology rights to which RMS may decide to offer to add to the
     Diagnostic Services Agreement and which VLI may desire to accept.
     Accordingly, appended hereto as APPENDIX A is a list of such additional
     patents or claims of patents as RMS is currently offering to which VLI, by
     its authorized representative, has indicated its acceptance thereof in
     accordance with the rights of use and all other pertinent obligations,
     restrictions and limitations as set forth in the Diagnostic Services

2.   APPENDIX A may be amended by mutual agreement of the parties in writing so
     as to add additional patent rights being offered by RMS. Accordingly, a new
     APPENDIX A signed and dated by both parties shall supersede any prior
     APPENDIX A and shall become a part of this rider.

3.   It is expressly understood and agreed by the parties that the grant of
     additional patent rights herein does not in any way otherwise modify the
     Diagnostic Services Agreement and that all provisions of that Agreement
     shall remain in full force and effect as originally set forth therein. The
     term of the Diagnostic Services Agreement shall control the enjoyment of
     rights hereunder and is not extended by the rights granted hereby nor shall
     there be any additional royalty obligation to RMS beyond that set forth in
     said Agreement.

4.   In consideration of the further rights being granted hereunder, VLI agrees
     to remain in good faith compliance with the applicable terms of the
     Diagnostic Services Agreement, including reporting and payment of royalties
     and the limitation on use of PCR technology strictly for the performance of
     licensed services and not to make products.

5.   In the event that VLI's obligation to pay royalties under the Diagnostic
     Services Agreement for its rights to use the PCR technology shall cease for
     any reason, whether by termination, expiry, invalidation or otherwise, then
     the parties agree that this rider shall become null and void and the rights
     granted hereunder terminated without notice and the parties shall be free
     to negotiate a new agreement with respect to the patent rights listed on

                                             Accepted and Agreed,

By: /s/ KATHY ORDONEZ                        By: /s/ MARTIN H. GOLDSTEIN
   --------------------------------             --------------------------------
   Kathy Ordonez                                Martin H. Goldstein

Title: President                             Title: President & CEO

Date:  July 21, 1997                         Date:  Aug. 4, 1997
     ------------------------------               ------------------------------

                               Apprv'd As To Form
                                    LAW DEPT.

                                 By: [initials]
<PAGE>   17
                              APPENDIX A TO RIDER

Additional Patents

U.S. Patent Number 5,008,182
U.S. Patent Number 5,176,995
U.S. Patent Number 5,219,727
U.S. Patent Number 5,110,920


By:  /s/ KATHY ORDONEZ                       By:  /s/ MARTIN H. GOLDSTEIN
   -------------------------                    -------------------------

Name: Kathy Ordonez                          Name: Martin H. Goldstein

Title: President                             Title: President and CFO

Date: July 21, 1997                          Date: Aug. 4, 1997
     -----------------------                      -----------------------

                               Apprv'd As To Form
                                   LAW DEPT.
                                 By [INITIALS]