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EXHIBIT 10.27
DISTRIBUTION AGREEMENT
between
CALYPTE BIOMEDICAL CORPORATION
and
OTSUKA PHARMACEUTICAL CO., LTD.
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TABLE OF CONTENTS
Page No.
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1. DEFINITIONS .................................................... 1
2. GRANT OF RIGHTS ................................................ 5
2.1 Distribution Rights ....................................... 5
2.2 Affiliates and Subdistributors ............................ 6
2.3 Additional Products ....................................... 6
2.3.1 Rights to Additional Products .................. 6
2.3.2 Development Agreement for New Products ......... 9
2.3.3 Product Deletions .............................. 10
2.4 GMP Procedures License .................................... 10
2.5 Option to Sublicense ...................................... 15
3. SUPPLY; PRICE; SHIPMENT; ACCEPTANCE ............................ 15
3.1 Product ................................................... 15
3.2 Price ..................................................... 16
3.2.1 Commercial Test ................................ 16
3.2.2 Development Samples ............................ 17
3.2.3 Promotional Samples ............................ 17
3.2.4 Per Test Pricing ............................... 17
3.2.5 Price Changes .................................. 18
3.2.6 Taxes .......................................... 18
3.3 Forecasts, Orders and Acceptance .......................... 19
3.4 Capacity Commitment ...................................... 21
3.5 Allocation ................................................ 22
3.6 Payment Terms ............................................. 22
3.7 Credit for Previous Payment ............................... 23
3.8 Most Favored Customer ..................................... 24
3.9 Delivery .................................................. 25
3.10 Shipment .................................................. 25
3.11 Acceptance ................................................ 26
3.12 Reservation of Title ...................................... 28
3.13 Packaging ................................................. 28
4. SPECIAL OBLIGATIONS OF EXCLUSIVE DISTRIBUTOR ................... 29
4.1 Minimum Annual Payments/Purchases ......................... 29
4.2 Promotion of the Products ................................. 32
4.3 Competing Products ........................................ 32
4.4 Customer Support .......................................... 32
4.5 Commercially Reasonable Efforts ........................... 33
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S. ENFORCEMENT OF CERTAIN RIGHTS .................................. 33
5.1 Sale of EL System .......................................... 33
5.2 Third-Party Intellectual Property Rights ................... 34
5.3 Enforcement of Calypte Patent Rights and Calypte
Technology in the Otsuka Territory ......................... 35
5.4 Reduction of Payments ...................................... 36
6. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION ................ 38
6.1 Representations and warranties ............................. 38
6.2 Product Limited Warranty ................................... 41
6.3 Limitation ................................................. 42
6.4 Indemnification ............................................ 43
6.5 Intellectual Property Infringement Indemnity ............... 44
6.6 Products Liability Indemnity ............................... 47
7. CONFIDENTIALITY ................................................ 47
7.1 Confidential Information ................................... 47
7.2 Confidentiality of Agreement ............................... 49
7.3 Exceptions ................................................. 49
7.4 Remedies ................................................... 50
8. LIMITATION OF LIABILITY ........................................ 51
9. TRADEMARKS AND TRADE NAMES ..................................... 51
9.1 Use . . . .................................................. 51
9.2 Approval Representations ................................... 52
10. REGULATORY APPROVALS ........................................... 52
10.1 Obtainment of Approvals ................................... 52
10.2 Reasonable Diligence ...................................... 53
10.3 PLA Countries ............................................. 54
10.4 Separate Filing Countries ................................. 55
10.5 Extension of Time Periods ................................. 56
10.6 Assignment Upon Termination ............................... 56
11. TERM AND TERMINATION ............................................. 57
11.1 Term ...................................................... 57
11.2 Termination for Convenience ............................... 57
11.3 Termination for Cause ..................................... 58
11.4 Termination for Bankruptcy ................................ 59
11.5 Effect of Termination ..................................... 59
11.6 No Liability For Expiration or Termination ................ 59
11.7 Survival .................................................. 60
11.8 Abandonment ............................................... 60
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12. GENERAL PROVISIONS ............................................. 61
12.1 Currency ................................................ 61
12.2 Language ................................................ 61
12.3 Governing Law ........................................... 62
12.4 Jurisdiction ............................................ 62
12.5 Arbitration ............................................. 62
12.6 Force Majeure ........................................... 63
12.7 Assignment .............................................. 64
12.8 No Third-Party Beneficiaries ............................ 64
12.9 Bankruptcy Code ......................................... 64
12.10 Modifications ........................................... 65
12.11 Notices ................................................. 65
12.12 Descriptive Headings .................................... 66
12.13 Entire Agreement ........................................ 66
12.14 Severability ............................................ 66
12.15 Legal Expenses .......................................... 66
12.16 Counterparts ............................................ 67
12.17 Import & Export Controls ................................ 67
12.18 Independent Contractors ................................. 68
12.19 Manufacture in Japan .................................... 68
Exhibit A Patents and Patent Applications
Exhibit B El System
Exhibit C GMP Procedures
Exhibit D Escrow Agreement
Exhibit E Specifications
Exhibit F Manufacturing Capacity
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DISTRIBUTION AGREEMENT
THIS AGREEMENT, including the attached Exhibits ("Agreement"), executed as of
August 7, 1994 ("Effective Date"), is made and entered into by and between
CALYPTE BIOMEDICAL CORPORATION, a California corporation with principal offices
at 1440 Fourth Street, Berkeley, California Section 94710, United States of
America, ("Calypte") and OTSUKA PHARMACEUTICAL CO., LTD., a corporation
organized under the laws of Japan with principal offices at 2-9, Kanda
Tsukasa-cho, Chiyoda-ku, Tokyo, Japan ("Otsuka").
WHEREAS, Calypte has developed and holds certain rights relating to the Products
(as defined below), and continues to develop new products, which may become
Products within the scope of this Agreement; and
WHEREAS, Otsuka desires to be appointed as Calypte's exclusive distributor for
the Products in the Otsuka Territory, and Calypte is willing to grant Otsuka
such appointment pursuant to the terms and conditions set forth in this
Agreement; and
WHEREAS, Otsuka desires to purchase, and Calypte desires to supply, Otsuka's
requirements for the Products under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, and subject to the
terms and conditions contained herein, the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean any person, firm or corporation which controls,
is controlled by or is under common control with Otsuka. For purposes
of this Section 1.1,
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"control" shall mean ownership, directly or indirectly, of fifty
percent (50%) or more of the voting stock of the subject party.
1.2 "Calypte Patent Rights" shall mean all United States and foreign
letters patent and applications for letters patent, industrial models,
industrial designs, utility models, certificates of invention, and
other indicia of invention ownership, including any such rights granted
upon any reissue, division, continuation or continuation-in-part
applications now or hereafter filed, which are reasonably necessary for
the design, development, manufacture, sale or use of diagnostic test
kits for the detection of antibodies to HIV in any bodily fluids, and
other Products hereunder, which are owned or controlled by or licensed
to Calypte during the term of this Agreement, including, without
limitation, the patents and patent applications listed in Exhibit A.
1.3 "Calypte Technology" shall mean all technologies, technical knowledge,
procedures, processes, designs, inventions, discoveries, know-how,
show-how, documentation and other works of authorship and any other
information which is reasonably necessary for the design, development,
manufacture, use and sale of the Products, together with all
copyrights, trade secret rights and other intellectual property rights,
other than Calypte Patent Rights.
1.4 "Competing Product" shall mean any product which tests for the presence
of antibodies to HIV in any non-blood bodily fluid, and which directly
competes in the same market niche with, and is a functional substitute
for, a Product, other than tests used for confirmation purposes (as an
example, a product would be a Competing Product with the initial test
Kit, described in Section 1.9(a), if it
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tested for the presence of HIV in urine or any other nonblood bodily
fluid and used multi-test plate and the E1A method and was functionally
equivalent to the initial test Kit competing in the same market niche).
1.5 "E1 System" shall mean the E1 System and procedures for use as further
described in Exhibit B attached hereto.
1.6 "GMP Procedures" shall mean the proprietary good manufacturing
practices and procedures relating to the manufacture of the Products as
specified by document title or number in Exhibit C, and such other
information, including names and addresses of suppliers, as shall be
necessary to permit and enable Otsuka or Affiliates, without need for
additional information, to manufacture the Products. As used throughout
this Agreement, GMP Procedures shall mean the then-most current
procedures and other information relating to the manufacture of the
Products at any given time.
1.7 "HIV Urine Kit" shall mean any product which includes tests for the
presence of antibodies to HIV in urine (including products combining
tests for HIV with tests for other diseases or conditions as well.)
1.8 "0tsuka Territory" shall mean Japan, North Korea, South Korea,
Republic of China, People's Republic of China, Hong Kong, Thailand,
Philippines, Indonesia, New Zealand, Australia, Singapore, Malaysia,
India, Pakistan, Bangladesh, Sri Lanka, Myanmar, Kampuchea, Vietnam,
Laos, Nepal, Bhutan and Mongolia. "Country" shall mean each Country
within the Otsuka Territory.
1.9 "Product(s)" shall mean (a) the test kits for the detection of
antibodies to HIV-1 in urine manufactured and
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sold by or on behalf of Calypte known, as of the Effective Date, as the
Urine HIV-1 EIA Kit or the HIV-1 EIA 96-Well Kit, as further described
in the SPECIFICATIONS set forth in Exhibit E attached hereto; (b)
similar test kits for the detection of antibodies to HIV-1, HIV-2 and
all other strains of HIV in any bodily fluid(s), including combination
kits testing multiple bodily fluids for multiple strains of HIV (as
used throughout this Agreement, the term "bodily fluid" includes,
without limitation, urine, serum, saliva and vaginal washes); (c) all
improvements and modifications to the kits described in (a) and (b)
above and new configurations thereof, during the term of this
Agreement; (d) any products that can reasonably be deemed replacements
for or successors to such kits which Calypte (including its successors
and assigns) may introduce during the term of this Agreement; and (e)
additional products eligible to be included within the definition of
"Products" in accordance with Section 2.3, and all improvements and
modifications thereto, new configurations thereof, and replacements for
or successors to such additional products during the term of this
Agreement. As tests are added within the definition of "Products"
during the term of this Agreement, the parties shall discuss in good
faith and agree upon SPECIFICATIONS therefor, which shall govern the
additional products as the initial SPECIFICATIONS in Exhibit E govern
the initial test kit.
1.10 "Service(s)" shall mean the conducting of diagnostic testing utilizing
a Product.
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2. GRANT OF RIGHTS
2.1 Distribution Rights.
Subject to the terms and conditions of this Agreement, Calypte hereby
appoints Otsuka as its exclusive distributor for the Products in the
Otsuka Territory and grants to Otsuka the exclusive right, under
Calypte Patent Rights and/or Calypte Technology, to promote, market,
use and sell and otherwise distribute the Products (including
additional products eligible to be included within the definition of
"Products" in accordance with Section 2.3) and perform Services in
every Country in the Otsuka Territory (collectively, in this Section
2.1, "sell and distribute the Products"). For so long as Otsuka's
rights to a given Product or Products remain exclusive in a given
country or countries in the Otsuka Territory, Otsuka shall have the
exclusive right to sell and distribute such Products in such
country(ies) in the Otsuka Territory, and Calypte will not, nor will it
grant any third party the right to, promote, market, use, sell or
distribute any Products (including additional products eligible to be
included within the definition of "Products" in accordance with Section
2.3), or perform Services utilizing any such Products, in any such
country in the Otsuka Territory; provided that, with respect to any
additional product eligible to be included within the definition of
"Products" in accordance with Section 2.3, if Otsuka elects not to
obtain the rights to such additional product in accordance with Section
2.3, and if Otsuka's rights of negotiation and refusal with respect to
an additional product under Section 2.3 are exhausted, then this
section's prohibition of Calypte selling and distributing such specific
additional product shall terminate.
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2.2 Affiliates and Subdistributors.
Subject to the terms and conditions of this Agreement, Otsuka may
exercise its right to sell and distribute the Products in the Otsuka
Territory itself or, in its discretion, through Affiliates and through
non-Affiliate subdistributors, resellers and other third-party
distributors (such non-Affiliates being collectively defined as
"Subdistributors"), and Otsuka may exercise its right to perform
Services in the Otsuka Territory itself or, in its discretion, through
Affiliates. Otsuka shall be responsible for the due and punctual
performance of any and all responsibilities under this Agreement as
applicable to such Affiliates and Subdistributors.
2.3 Additional Products.
2.3.1 Rights to Additional Products.
In addition to the Product(s) defined in Clauses (a)-(d) of
Section 1.9 above, to which Otsuka acquires rights in
accordance with this Agreement without further negotiation or
change in the terms and conditions of this Agreement, Calypte
hereby grants to Otsuka -- so long as Otsuka's rights
hereunder remain exclusive in Japan -- a right of first
refusal and negotiation, as described here, to obtain the
exclusive right to promote, market, use, sell and otherwise
distribute (collectively, "sell and distribute") in the
Otsuka Territory any and all other test product(s) which
Calypte may introduce during the term of this Agreement
which: (i) are a test of any bodily fluid(s) and which
combine a test for HIV with a test for any disease or
condition other than HIV (a combination test for different
strains of HIV is
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already included at the outset under Section 1.9(a)-(d)); or
(ii) include any test of any bodily fluid for any strain of
HIV in any format other than those included within the
definition of Product(s) in Section 1.9 (a)-(d) (e.g., a
single test kit available for home use); and/or (iii) test
any bodily fluid for any human endogenous retrovirus.
In accordance with the right granted to Otsuka pursuant to
this Section 2.3.1, Calypte agrees to offer to Otsuka in
writing, and discuss and negotiate in good faith the terms
and conditions of, such rights to sell and distribute such
additional products in the Otsuka Territory prior to any
discussion relating to such rights with a third party. The
initial negotiation period with Otsuka shall be a six (6)
month period commencing after all of the following have
occurred, upon the later to occur of the following: (a)
Calypte's development of, or obtaining the rights to, a
viable new product as described above; (b) Calypte's
provision to Otsuka of sample of such product and related
information and data sufficient to enable Otsuka to evaluate
the product; and (c) receipt by Otsuka of a written offer
from Calypte proposing specific terms and conditions under
which Calypte would agree to Otsuka's exclusive distribution
of such product in the Otsuka Territory. In the event
that Calypte and Otsuka do not reach agreement within such
six (6) month period, Calypte shall then have six (6) months
beginning on the expiration of such period to enter into an
agreement with any third party on
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terms and conditions that are the same as those previously
offered to Otsuka or that are more favorable to Calypte than
those previously offered to Otsuka. Should Calypte modify the
terms and conditions of its offer such that they are more
favorable to a distributor (Otsuka or a third party) than
those previously rejected by Otsuka, Calypte must first offer
such modified terms and conditions to Otsuka in writing, and
discuss and negotiate in good faith such modified terms and
conditions, prior to offering such modified terms and
conditions to a third party. In the event that Calypte and
Otsuka do not reach agreement within sixty (60) days after
receipt by Otsuka of such proposed modified terms and
conditions, Calypte may, during the subsequent sixty (60) day
period, offer such modified terms and conditions of agreement
to any third party as provided herein and conclude an
agreement on such terms and conditions with a third party
during such period. If at the end of this cycle, Calypte has
reached agreement with no one for the distribution of the new
product in the Otsuka Territory, the cycle of procedures in
this Section 2.3.1 shall be repeated, beginning with a
proposal to Otsuka.
If Calypte and Otsuka reach agreement with respect to the
right of Otsuka to sell and distribute an additional product
in the Otsuka Territory, such additional product shall be
included as a "Product" within the scope of this Agreement
and all of the parties' rights and obligations under this
Agreement with regard to the Product shall also apply to such
additional
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Product except to the extent the parties mutually agree
otherwise.
2.3.2 Development Agreement for New Products.
Prior to development of a viable new product, if Calypte,has
an idea for development of a new product of the type
described in Section 2.3.1 (i), (ii) or (iii) above, it shall
first offer a proposed development agreement to Otsuka for
consideration and shall negotiate the terms and conditions of
such development agreement in good faith with Otsuka for up
to six (6) months beginning on the date Otsuka receives such
proposed agreement. If the parties do not reach agreement on
the terms of a development agreement within such six (6)
month period, Calypte can enter into a development agreement
with a third party during the subsequent six (6) month period
on terms and conditions that are the same as those offered to
Otsuka or more favorable to Calypte than those offered to
Otsuka. If Calypte enters into such an agreement with a third
party, and if such agreement grants the third party the
rights in the Otsuka Territory to the new product being
developed with the third party's funding, Otsuka shall have
no further rights of first refusal/negotiation under this
Agreement to such new product once it is developed unless the
third party waives or does not pursue its rights to such new
product. If the third party waives its rights to the new
product and Calypte retains the right to distribute such
product to 0tsuka, the parties shall follow the cycle of
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proposal and negotiation procedures outlined above in Section
2.3.1.
2.3.3 Product Deletions.
If Calypte intends to modify a Product, to introduce a
replacement Product or to cease manufacture of a Product
hereunder due to a planned replacement thereof, Calypte shall
inform Otsuka in writing of such intention at least sixty
(60). days prior to Calypte's filing of a submission to the
appropriate government authority seeking governmental
approval of its manufacture of the modified or replacement
Product, and the parties shall discuss in good faith a
transition plan for the discontinuance of the Product being
modified or replaced; notwithstanding the above, Calypte
hereby commits to continue manufacturing and supplying to
Otsuka the Product (as improved from time to time through
modifications and reconfigurations) unless Calypte introduces
a replacement Product reasonably acceptable to Otsuka.
2.4 GMP Procedures License.
2.4.1 Subject to the terms and conditions of this Agreement and
conditioned upon the occurrence of a Releasing Event (as
defined in Section 2.4.3 below), Calypte hereby grants to
Otsuka a non-exclusive, non-transferable (except to the
extent transfer or assignment is permitted under Section
12.7) license, with right to sublicense only to Affiliates,
to use the GMP Procedures to manufacture or have manufactured
the Products and the exclusive right (subject to such right
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becoming non-exclusive as provided elsewhere in this
Agreement) to promote, market, use, sell and otherwise
distribute such Products in those countries in the Otsuka
Territory on the date Otsuka exercises this license.
Independent of and in addition to the escrow obligations set
forth in Section 2.4.2, Calypte shall, upon the occurrence of
a Release Event, immediately provide the then-current version
of the GMP Procedures to Otsuka. The entity that actually
manufactures the Products may be, in Otsuka's discretion,
Otsuka, an Affiliate or a third party acting under contract.
The location of the manufacturing facility need not be in the
Otsuka Territory, provided the facility is owned by Otsuka or
an Affiliate or is approved by Calypte.
2.4.2 Calypte assures Otsuka that where Calypte is unable or
otherwise fails to provide the Products to Otsuka in
accordance with the terms of this Agreement, Otsuka may
manufacture or have manufactured the Products for use, sale
and distribution consistent with Otsuka's rights pursuant to
this Agreement. Calypte agrees to place the GMP Procedures
into escrow with a third-party escrow agent, and upon terms
and conditions reasonably acceptable to both parties as set
forth in the Escrow Agreement attached hereto as Exhibit D.
Such escrow shall provide for Calypte to place the
then-current version of the GMP Procedures into escrow upon
the effective date of such escrow, to update such material
within sixty (60) days following the earlier of (i) receipt
of FDA approval for the
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Product, (ii) receipt of approval to market the Product in
Japan from the appropriate Japanese regulatory agencies or
(iii) six (6) months following the Effective Date of this
Agreement, and then to continue to update such materials at
least every three (3) months thereafter. Such escrow shall
also provide for the release of the GMP Procedures to Otsuka
upon the occurrence of a Releasing Event, and the escrow
agent shall promptly and fully release the GMP Procedures to
Otsuka upon such occurrence. Otsuka shall be entitled to
retain, at Otsuka's expense, a person reasonably acceptable
to Calypte to conduct one (1) inspection per calendar year of
the deposited GMP Procedures to verify the deposit of the GMP
Procedures in accordance with this Agreement and the Escrow
Agreement. Otsuka agrees that, prior to inspection of the
deposited GMP Procedures, such person shall execute an
appropriate confidentiality agreement. Such person shall be
given access to the deposited GMP Procedures in the presence
of a Calypte representative only and adequate time to review
such GMP Procedures; provided, however, that no notes may be
taken during such person's inspection of the GMP Procedures.
2.4.3 For purposes of this Agreement, a "Releasing Event" shall
mean that Calypte fails to, or becomes unable to, supply the
Products to Otsuka as provided hereunder for any reason,
including without limitation, a Force Majeure event, and
Calypte has failed to cure such failure within ninety (90)
days of the delivery date (as provided in Section 3.3.3).
Recognizing that
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the time period between exercise of this license and the
beginning of commercial manufacture of the Products could be
long, and that continued manufacture of the Products by
Calypte would be preferable to licensing new manufacturing
facilities and exercising its license under this Section 2.4,
Otsuka agrees, in its discretion, to use its reasonable
efforts to assist Calypte, at Calypte's expense, in solving
the problem that is causing Calypte to be unable to supply
the Products to Otsuka hereunder.
2.4.4 Calypte agrees that -- unless Otsuka elects in writing not to
exercise its rights hereunder -- in the event a Releasing
Event does occur, Calypte shall immediately release the GMP
Procedures to Otsuka and shall not impede the escrow agent's
release of same to Otsuka. To the full extent of its right,
power and authority, and conditioned only upon the occurrence
of a Releasing Event, Calypte hereby grants Otsuka a
non-exclusive license and sublicense, with a right to
sublicense to its Affiliates, under licenses from Calypte,
New York University, Cambridge Biotech and such other
licenses as may be necessary or appropriate, to manufacture
or have manufactured the Products for use, sale and
distribution in the Otsuka Territory. In the event Calypte
does not, on the Effective Date of this Agreement, possess
the right, power and authority to grant Otsuka all
sublicenses from third parties necessary for Otsuka to make
the Products upon the occurrence of a Releasing Event,
Calypte shall immediately and diligently pursue such
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right, power and authority from such third parties, shall
notify Otsuka upon obtaining such right, power and authority,
and shall provide Otsuka written verification thereof. This
section shall be deemed a present and ongoing grant by
Calypte to Otsuka, conditioned upon the occurrence of a
Releasing Event, of all licenses and sublicenses necessary
for Otsuka, Affiliates and third-party manufacturers to
manufacture the Products. Once Otsuka or an Affiliate (or a
third-party manufacturer with whom they may contract)
commences preparations for the manufacture of the Products,
Otsuka and its Affiliates shall not be required by Calypte to
give up the rights granted by Calypte to manufacture the
Products, even if the Releasing Event shall thereafter be
resolved.
2.4.5 If Otsuka chooses to manufacture or have manufactured the
Products under the license and sublicenses granted under
Sections 2.4.1 and 2.4.4 above after the occurrence of a
Releasing Event, to the extent that such license includes the
sublicenses of certain third-party intellectual property
rights to Otsuka requiring the payment of royalties to third
parties not affiliated with Calypte, Otsuka agrees that it
shall pay, directly to such third parties, all royalties due
to such third parties related specifically to Otsuka's
manufacture, use and sale of the Products. Amounts paid to
such third parties shall be deducted from any amounts
otherwise payable to Calypte. In addition, if Otsuka chooses
to manufacture or have manufactured the Products under the
license and
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sublicenses granted under Section 2.4.1 and 2.4.4 after the
occurrence of a Releasing Event, and Otsuka elects not to
continue purchasing Products manufactured by Calypte, the
minimum annual payment/purchase provisions of Section 4.1
shall be deemed terminated, though Otsuka's exclusive rights
in the Otsuka Territory shall continue.
2.5 Option to Sublicense.
In addition to the sublicenses from New York University and others
described in Section 2.4 above relating to the manufacture of Products
upon the occurrence of a Releasing Event, Calypte agrees that at such
time as Calypte is obligated, under the terms of its patent license
with New York University, to negotiate the grant of sublicenses under
the patents ("NYU Patents") covered by such agreement, Calypte shall
notify Otsuka and shall, at the request of Otsuka, negotiate in good
faith the terms under which it would grant Otsuka such sublicense under
such NYU Patents and use its reasonable and diligent efforts to involve
New York University in such discussions in an effort to obtain for
Otsuka exclusive rights under such NYU Patents coequal with the
exclusivity granted by Calypte to Otsuka hereunder.
3. SUPPLY; PRICE; SHIPMENT; ACCEPTANCE.
3.1 Product.
Subject to the terms and conditions of this Agreement, Otsuka shall
purchase from Calypte, and Calypte shall supply to Otsuka, either
directly or through a third-party supplier designated by Calypte,
Otsuka's requirements of the Products. Such supply shall conform to the
description and specifications of the Products and
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material, workmanship, packaging and labeling of the Products as set
forth in Exhibit E ("SPECIFICATIONS"), as modified from time to time by
mutual agreement of the parties and as supplemented from time to time
to add SPECIFICATIONS for additional products that become "Products"
within the scope of this Agreement during the term hereof. The
Products supplied by Calypte shall be, manufactured, handled and
packaged by Calypte or its designee in accordance with all applicable
laws and regulations. The Products supplied to Otsuka hereunder are for
Otsuka's (and, in Otsuka's discretion, Affiliates' and
Subdistributors') promotion, marketing, use, sale and distribution in
accordance with the terms of this Agreement, and may not be otherwise
promoted, marketed, used, sold or distributed without Calypte's prior
written consent.
3.2 Price.
3.2.1 Commercial Test.
The parties hereby agree that the price to be paid by Otsuka
for the Products described in Clauses (a), (b), (c) and (d)
of Section 1.9 shall be per test,
subject to: a volume discount to be discussed in good faith
between the parties; lower prices for development and
promotional samples as provided in Sections 3.2.2 and 3.2.3
below; the "Most Favored Customer" clause of Section 3.8; and
price changes as agreed upon in accordance with Section
3.2.5.
Confidential portion has been omitted and filed separately with the Commission
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3.2.2 Development Samples.
At Otsuka's request Calypte shall supply Otsuka with up to
two hundred thousand (200,000) tests for development samples
of each Product at a price of per
test. Development samples must be labeled in accordance with
applicable regulations. As of the Effective Date of this
Agreement Calypte had already provided Otsuka with
approximately one hundred thousand (100,000) sample tests of
the kit described in Section 1.9(a).
3.2.3 Promotional Samples.
Calypte also agrees to supply Otsuka with promotional samples
of the Products, on a country-by-country basis, at a price of
per test. Amounts to be provided
by Calypte will be twenty percent (20%) of the first year's
sales in respective Countries of the Otsuka Territory and ten
percent (10%) of the sales for the second year. At the end of
each such year with respect to each Country of the Otsuka
Territory, Otsuka shall return all unused promotional samples
or, in the case of the first year, credit unused promotional
samples against the second year's sales.
3.2.4 Per Test Pricing.
The pricing provided above is quoted on a "per test" basis. A
test refers to a single well on multi-well plate together
with the associated reagents required to perform a single
test.
Confidential portion has been omitted and filed separately with the Commission
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3.2.5 Price Changes.
The parties agree to renegotiate a higher or lower price in
good faith at reasonable intervals upon request when a party
believes that market conditions require, but no more often
than once per year unless the parties mutually agree
otherwise. Such price renegotiations may include reasonable
adjustments for inflation, increases or decreases in costs of
components or reduction of the NHI price of the Products.
3.2.6 Taxes.
All prices are F.O.B. delivery to the international carrier
in California, unless the parties mutually agree otherwise.
Prices are exclusive of all sales, use or other similar
transaction taxes or duties, if any, imposed directly on the
purchase of the Products by Otsuka where applicable law
imposes such tax or duty. Any such tax or duty shall be borne
by Otsuka. Any tax imposed on the manufacture of the Products
by or on behalf of Calypte, and any tax imposed on sales of
the Products by Calypte prior to F.O.B. delivery to the
international carrier shall be borne by Calypte. When Calypte
has the legal obligation to collect taxes or duties on the
purchase of the Products by Otsuka, the amount of such taxes
and duties shall be added to Calypte's invoice and paid by
Otsuka unless Otsuka provides Calypte with a valid tax
exemption certificate authorized by the appropriate taxing
authority.
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All payments by Otsuka to Calypte shall be subject to any
applicable withholding taxes imposed upon such payments.
Otsuka agrees to provide to Calypte any and all information
relating to such withholding taxes reasonably requested by
Calypte in connection with Calypte's obligations to taxing
authorities in the United States of America, such information
to include, without limitation, official receipts issued to
Otsuka by appropriate taxing authorities.
3.3 Forecasts, Orders and Acceptance.
3.3.1 During the term of this Agreement, on or before the first day
of each calendar quarter, Otsuka shall submit to Calypte a
rolling forecast showing Otsuka's expected requirements for
the Products over the next twelve (12) months.
3.3.2 The parties agree that in order to protect Calypte's
production scheduling and to ensure a smooth source of supply
to Otsuka, purchase orders submitted by Otsuka to Calypte for
a Product for delivery during the second quarter of any
forecast (i.e. months 4, 5 & 6) (i) shall not, unless Calypte
agrees otherwise in writing, be for less than eighty percent
(80%) of the quantity of such Product forecast for such
quarter in the forecast submitted at the beginning of the
prior calendar quarter ("Minimum Purchase Commitment"), and
(ii) shall be binding upon Calypte, but only to the extent
that they do not exceed either (x) one hundred fifty percent
(150%) of the quantity of such
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Product forecast for such quarter in the forecast submitted
at the beginning of the prior calendar quarter or (y) the
Calypte Capacity Commitment (as defined in Section 3.4
below). In the event that Otsuka submits purchase orders with
respect to a calendar quarter for the purchase of less than
the Minimum Purchase Commitment (absent Calypte's agreement
to such lesser volume), Otsuka shall be obligated to pay
Calypte the purchase price for the number of units by which
its orders fall short of such required total. Where Otsuka
submits purchase orders for more than one hundred fifty
percent (150%) of the quantity forecasted or more than the
Calypte Capacity Commitment, Calypte shall use its reasonable
efforts to provide the Products in excess of such quantities
if requested by Otsuka, but Calypte shall have no obligation
to provide such excess quantities and its failure to so
provide shall not be a breach of this Agreement.
3.3.3 All purchases and sales between Calypte and Otsuka will be
initiated by Otsuka's issuance of written purchase orders
sent via airmail or facsimile. Additionally, Otsuka may
initiate purchase orders verbally, provided that it confirms
such orders in writing within seven (7) days. Such orders
will state unit quantities, unit descriptions, requested
delivery dates and shipping instructions, including ship-to
locations (which may be to Affiliates or Subdistributors).
Calypte shall accept all purchase orders from Otsuka, subject
to the limitations of Section 3.3.2. Within ten (10)
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days after its receipt of Otsuka's purchase order, Calypte
will send Otsuka its written acknowledgement and acceptance
(subject to Section 3.3.2) of such order. Calypte's written
acceptance shall include, without limitation, the delivery
date. Such delivery date shall be as requested by Otsuka, if
reasonably possible, provided that Calypte shall not be in
breach of this Agreement if it delivers the ordered Products
within the earlier of ninety (90) days after Calypte's
written acceptance of Otsuka's purchase order or one hundred
(100) days after Calypte's receipt of Otsuka's written
purchase order, unless Otsuka and Calypte otherwise agree in
writing. The terms and conditions of this Agreement will
control all sales of the Products hereunder, and any
additional or different terms or conditions in either party's
purchase order, acknowledgement or similar document will be
of no effect.
3.4 Capacity Commitment.
For purposes of this Agreement, the "Calypte Capacity Commitment" for a
Product shall mean one-half (1/2) of Calypte's total manufacturing
capacity (both Calypte's own manufacturing capacity and the third party
manufacturing capacity for which Calypte contracts) for each Product
until the first commercial sale of such Product in Europe, at which
time the Calypte Capacity Commitment shall be reduced to one-third
(1/3) of Calypte's total manufacturing capacity. The parties understand
and acknowledge that Calypte's manufacturing capacity at the time of
execution of the Agreement, and its future increased capacity, is as
set forth in Exhibit F attached hereto. Should the parties come to the
understanding that
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the demand for the Products in the Otsuka Territory will come to exceed
the Calypte Capacity Commitment within a foreseeable period of time,
they shall meet to discuss in good faith reasonable ways to increase
Calypte's manufacturing capacity, and Calypte shall use reasonable and
diligent efforts to increase its manufacturing capacity for the
Products.
3.5 Allocation.
In the event that demand for a Product exceeds Calypte's manufacturing
capacity, Calypte will have the right, at its sole discretion, to
allocate its capacity between Otsuka and Calypte's other distribution
channels; provided that in the event of any such allocation, Otsuka
will receive at least a pro-rata share of available units based upon
its pro-rata share of the total orders submitted by all of Calypte's
distribution channels; provided further that in no event will Otsuka
receive less than the Calypte Capacity Commitment for such Product (as
provided in Section 3.4 above) if Otsuka orders such amount.
3.6 Payment Terms.
Upon receipt of Calypte's written acceptance of each and every purchase
order pursuant to Section 3.3, Otsuka shall pay to Calypte thirty
percent (30%) of the purchase price due for each such purchase
order, such payment amount to be (i) paid within ten (10) days of
Otsuka's receipt of Calypte's written acceptance of Otsuka's purchase
order and (ii) non-refundable unless Calypte fails to deliver such
order or except as otherwise provided in Section 3.11. Upon shipment of
the Products, Calypte will submit an invoice to Otsuka requesting
payment of the remaining balance due for such shipment. Provided Otsuka
accepts the shipment in accordance with Section 3.11, Otsuka will make
payment to Calypte of such balance due
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within sixty (60) days from the date on which Otsuka receives the
invoice or receives the shipment at its facilities or at the
facilities of the Affiliate or Subdistributor to which Otsuka
directed the Products to be shipped, whichever is later, unless
another payment date is agreed to in writing by Calypte and Otsuka.
In the event the Products are properly manufactured, packaged and
shipped and in satisfactory condition when Calypte transfers them to
the international shipper, but are damaged in the course of shipment
to Otsuka or its designees, Otsuka will nevertheless pay the balance
due Calypte. All payments shall be made by wire transfer, check or
other instrument approved by Calypte in United States of America
Dollars in the requisite amount to a bank account as Calypte may from
time to time designate. In the event that any payment due Calypte is
delinquent, interest shall accrue on any overdue amount and be
charged against Otsuka at the rate of one and one-half percent (1.5%)
per month or the maximum rate permitted by law, whichever is less.
Calypte reserves the right to withhold any shipments or its
performance if Calypte has not been paid in accordance with the terms
set forth herein; provided that, due to Otsuka's projected need for a
stable supply of the Products, Calypte shall withhold no shipments or
other performances if Otsuka disputes whether a payment is due, in
which case the parties shall resolve such dispute voluntarily or, if
necessary, through prompt arbitration in accordance with Section
12.5. Otsuka agrees that after it has accepted shipment in accordance
with Section 3.11, it shall not dispute that payment is due on such
shipment.
3.7 Credit for Previous Payment.
Otsuka has already paid Calypte
pursuant to the
Confidential portion has been omitted and filed separately with the Commission
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License and Supply Agreement of May 10, 1991 (the "License and
Supply Agreement") between the parties hereto, which amount is
creditable against other future payments due Calypte pursuant to
Section 3.1 of the License and Supply Agreement. In exchange for
Otsuka's agreement here to waive its right to the future
creditability of such sum, Calypte hereby agrees to discount by fifty
percent (50%) the price of Product(s) supplied to Otsuka under this
Agreement until, but only until, Otsuka has received a total discount
of under
this section. At such time as Otsuka has received a discount in such
amount, there shall be no further discount due under this section.
Pursuant to Section 11.10 of the License and Supply Agreement, which
prohibits any modification of its terms or conditions without the
written consent of the party to be charged, Otsuka hereby agrees, in
exchange for this discount to be granted by Calypte under this
Section 3.7, to waive its right to have the
paid under the License and Supply
Agreement creditable against other future payments and does hereby
forgive this sum of Calypte.
3.8 Most Favored Customer.
Calypte agrees that the financial terms of this Agreement are at
least as favorable to Otsuka as those provided by Calypte to any
other distributor for similar or lower volumes under similar
circumstances, and that in the event that Calypte offers better terms
to a distributor for similar or lower volumes of the Products under
similar circumstances, Calypte will promptly offer Otsuka the
opportunity to substitute such prices and terms for those contained
in this Agreement (as a whole), effective as of the date such prices
or terms were first granted to such third party.
Confidential portion has been omitted and filed separately with the Commission
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3.9 Delivery.
Calypte will deliver the Products on or before the Delivery date
specified in Calypte's written acceptance of Otsuka's order, provided
such date shall be no later than the earlier of ninety (90) days
after Calypte's written acceptance of Otsuka's order or one hundred
(100) days after Calypte's receipt of Otsuka's order. Calypte will
deliver the Products to Otsuka in containers to be selected by
Calypte, provided that such containers are reasonably acceptance to
Otsuka.
3.10 Shipment.
All the Product shipments shall be F.O.B. delivery to the
international carrier in California (unless the parties mutually
agree otherwise) and will be by air to the destinations selected by
Otsuka in its purchase orders, provided U.S. export laws do not
prohibit Calypte from shipping to such locations. All shipments shall
be on or before the dates as specified in accordance with Sections
3.3.3 and 3.9, unless otherwise agreed. Risk of loss will pass to
Otsuka upon delivery to the international carrier. Unless otherwise
requested by Otsuka, Calypte shall make all international shipping
arrangements, including procuring freight insurance, on behalf of
Otsuka. All international freight insurance and other international
shipping expenses shall be borne by Otsuka. All international freight
charges prepaid by Calypte will be reimbursed by Otsuka.
Notwithstanding the above, in the event that Calypte ships the
Products to Otsuka from a location other than Calypte's facility in
Northern California, United States of America, Calypte will bear the
expense of any shipping and insurance expenses in excess of shipping
and insurance expenses from Northern California, United States of
America. Otsuka shall also bear any and all applicable duties,
customs
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brokerage fees and other similar charges that may be assessed against
the Product shipments to Otsuka upon or after delivery to the
international carrier in California. Otsuka will be responsible for
filing freight claims. Calypte will advise Otsuka in advance of all
necessary information relating to shipment of the Products including,
without limitation, the identity of the carrier, flight number,
scheduled arrival time, package identification number, insurance
information and similar information. Calypte will also provide to
Otsuka copies of results of Calypte's quality control and product
release test data for each lot of the Products from which the
Products were shipped to Otsuka hereunder.
3.11 Acceptance.
Acceptance by Otsuka of the Products delivered by Calypte hereunder
shall be subject to inspection and testing by Otsuka or, in Otsuka's
discretion, by the Affiliate or Subdistributor to which a shipment is
delivered. In the event that any Product shipment fails to conform
with the SPECIFICATIONS or is otherwise defective in materials,
workmanship or packaging, Otsuka (or its designee) shall have the
right to reject such shipment, provided that (i) rejection is made
within thirty (30) days after receipt out of customs by Otsuka (or
its designee) of such Product shipment, and (ii) such Product
shipment has not been used by Otsuka (or its designee) other than for
acceptance testing and quality control. The sole criteria
for rejection by Otsuka of the Product shipments shall be failure of
the Product shipments to conform with the SPECIFICATIONS or the
determination that such shipment is otherwise defective in material,
workmanship or packaging. Calypte and Otsuka acknowledge that the
SPECIFICATIONS may be modified during the term of this Agreement,
provided, however that any such modification shall be agreed to in
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writing by the parties. Calypte shall provide its then-current test
protocol used by Calypte to conduct out-going quality assurance
testing for each Product (which test protocol Calypte and Otsuka
shall discuss and agree upon) to Otsuka for use by Otsuka and its
designees in performing their incoming inspection; a copy of such
test method, current as of the Effective Date of this Agreement, is
attached hereto as Exhibit E. At Otsuka's reasonable request and
expense, Calypte will assist Otsuka in developing additional
acceptance tests for the Products, though Otsuka shall be free to
develop any acceptance tests it deems appropriate. The Product
shipments may be rejected by Otsuka only upon written notice by
Otsuka or its designee to Calypte stating the reason or reasons for
rejection. Upon confirmation by Calypte that the Products are
defective, Otsuka shall return or destroy, at Calypte's request, all
or part of the rejected shipment as the parties shall reasonably
agree, with all costs of such return to be deducted from the purchase
price of the Products in that shipment to be paid under Section 3.6.
If there is any dispute between the parties on the conformity to the
SPECIFICATIONS or whether a shipment is otherwise defective, then
such dispute shall be arbitrated in accordance with Section 12.5. At
no cost to Otsuka (including freight, tax, insurance and duties),
Calypte shall replace defective Products and redeliver to Otsuka the
Products within forty-five (45) days after Calypte's receipt of
Otsuka's (or its designee's) written notice of rejection. In the
event that Calypte does not replace defective Products with
acceptable Products within forty-five (45) days of Calypte's receipt
of Otsuka's written notice of rejection, Calypte shall, at Otsuka's
option, promptly (i) refund all portions of the purchase price paid
by Otsuka therefor and reimburse Otsuka for all of Otsuka's
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costs incurred in returning the rejected Products to Calypte and for
the insurance and other shipping expenses paid by Otsuka in
connection with the initial delivery of the rejected shipment to
Otsuka, or (ii) credit all such amounts paid by Otsuka against future
shipments of the Products. The procedures described in this Section
3.11 in the event of a rejected shipment shall not be deemed to
constitute a waiver of Otsuka's rights or a postponement of Calypte's
performance obligations or -- provided Calypte replaces defective
Product within forty-five (45) days of Otsuka's (or its designee's)
written notice of rejection -- a Releasing Event.
3.12 Reservation of Title.
Transfer of title for any and all the Products shipped to Otsuka
shall be subject to full payment of the purchase price therefor.
Until such full payment, such Products shall remain the property of
Calypte. For all the Products delivered to Otsuka (or its designees)
to which Calypte retains title, Otsuka shall (i) carry full insurance
and (ii) segregate such Products from other products in Otsuka's
inventory.
3.13 Packaging.
All Products supplied by Calypte to Otsuka hereunder will be in the
form of labeled, standard unit packages utilizing standard labeling
format and graphics and in a form consistent with the labeling
requirements for each Country in the Otsuka Territory as agreed upon
by the parties in writing on a country-by-country basis. Cost of
normal packaging and labeling of the Product for shipment to Otsuka
is included in the price of the Product and will be paid by Calypte;
provided, however, the cost of special packaging and labeling agreed
to by the parties will be paid by Otsuka.
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4. SPECIAL OBLIGATIONS OF EXCLUSIVE DISTRIBUTOR
So long as Otsuka is the exclusive distributor of the Products in the
Otsuka Territory:
4.1 Minimum Annual Payments/Purchases.
Provided Otsuka's rights to distribute the Products in the Otsuka
Territory remain exclusive during the period described below, and as
consideration for such exclusive rights, the parties hereby agree to
the following amounts as minimum annual amounts to be paid or tests
to be purchased by Otsuka:
Minimum Number
Contract Year Minimum Payment or of Tests
------------- ------------------ --------------
1
2 U.S.
3
4
5
6
7
8
9
10
The applicable minimum amount in a given year shall be the lesser of
(i) the specified minimum number of tests (in the aggregate) of
Products purchased by Otsuka, purchased at the then-applicable
purchase price-per-test-per-Product, or (ii) the dollar amount
specified above as the minimum payment. Under Section 3.7, the price
of the first worth of Products purchased by Otsuka shall
be discounted by until a total discount of
has been granted. For purposes of this Section 4.1, such
discounted amount shall be counted towards satisfying the minimum
payment amounts specified above (thus, the purchase of products worth
, discounted to , shall be deemed a payment of
. In the event Otsuka should lose its
Confidential portion has been omitted and filed separately with the Commission
29
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exclusive right to distribute Products in Japan but retain such
exclusive rights in other Countries of the Otsuka Territory, the
minimum annual payments/purchases specified above shall be reduced by
fifty percent (50%).
The first Contract Year shall commence on the Date of First Sale (as
defined below) and end on December 31 immediately thereafter,
provided that if the Date of First Sale is on or after July 1 of a
calendar year, the first Contract Year shall end on December 31 of
the next calendar year. Thereafter, each Contract Year shall consist
of twelve (12) calendar months beginning on January 1 of each
calendar year. As used here, the "Date of First Sale" shall be the
date of Otsuka's first receipt of revenues from the first commercial
sale of the Products or from the first commercial sale of any Service
using or incorporating the Products. If the actual amounts paid or
tests purchased by Otsuka with respect to a given Contract Year are
less than the lesser of the stipulated minimum amount thereof for
such Contract Year, Otsuka shall have the option either to pay or
purchase the balance necessary to bring the amount of payments made
or tests purchased up to the stipulated minimum amount for such
Contract Year, thereby maintaining Otsuka's exclusive rights in the
Otsuka Territory, or not to pay or purchase such additional amount,
in which case Calypte shall have the right, with written notice to
Otsuka within the first sixty (60) days of the beginning of the next
Contract Year, to reduce Otsuka's distributorship to non-exclusive if
Otsuka does not pay the aforesaid balance within sixty (60) days from
the receipt by Otsuka of such notice from Calypte. Beyond such
remedy, however, Otsuka's failure to pay or purchase the minimum
amounts stipulated in this section shall not constitute in any way
whatsoever a breach of this Agreement and, further, Otsuka shall not
be
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required in any way whatsoever to pay a minimum annual amount or
purchase a minimum number of tests in the event the distributorship
right granted to Otsuka hereunder becomes non-exclusive. In addition,
should Otsuka's obligation to make payments to Calypte terminate or
become suspended under this Agreement, these minimum payment/ purchase
provisions shall similarly be terminated or suspended.
The following example illustrates the above provisions: Assume that in
Contract Year 3 the price-per-test of the Product being distributed by
Otsuka is per test, and that Otsuka purchases
tests from Calypte that year and pays Calypte
therefor (such payment amount includes any remaining discount to which
Otsuka may then be entitled under Section 3.7 above). As specified
above, in Contract Year 3 the minimum payment amount is and
the minimum number of tests to be purchased is . Within sixty
(60) days after the end of the Contract Year 3, Calypte may, in its
discretion, send Otsuka a notice of Calypte's intention to reduce
Otsuka's distribution rights in the Otsuka Territory to non-exclusive
unless, within sixty (60) days following Otsuka's receipt of such
notice, Otsuka purchases an additional tests (for a cost of
at the then-prevailing price-per-test). If Otsuka elects to
make such an additional purchase, its exclusive distributorship shall
be preserved, but the purchase of those additional tests shall
not apply toward the minimum tests to be purchased in Contract Year 4.
If Otsuka elects not to make such additional purchase, Calypte may (in
its discretion) reduce Otsuka's distributorship to non-exclusive.
Confidential portion has been omitted and filed separately with the Commission
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4.2 Promotion of the Products.
Otsuka will, at its own expense, use its commercially reasonable
efforts to promote the distribution of the Products and the
performance of Services in the Otsuka Territory, consistent with the
level of effort it uses to promote its own products of a similar
nature. Otsuka agrees that it will not sell the Products to, or
perform Services utilizing the Products for, customers located
outside the Otsuka Territory without the written approval of Calypte,
which Calypte may give or withhold, and if given, may revoke in its
sole and absolute discretion.
4.3 Competing Products.
Otsuka shall notify Calypte in writing not less than forty-five (45)
days prior to marketing or distributing a Competing Product in the
Otsuka Territory. If Otsuka commences to market and distribute a
Competing Product in any Country in the Otsuka Territory, Otsuka's
marketing and distribution of a Competing Product shall not be deemed
a breach of this Agreement, but Calypte shall have the right, upon at
least ninety (90) day's prior written notice to Otsuka, to terminate
Otsuka's rights to distribute in such Country the Product with which
such Competing Product competes. If at such time Otsuka is
distributing more than one Product in such country, Calypte may only
terminate Otsuka's rights to distribute the Product with which the
Competing Product competes. If Japan is removed from the Otsuka
Territory, minimum annual payments/purchases as stipulated in Section
4.1 shall immediately be reduced by fifty percent (50%).
4.4 Customer Support.
Otsuka agrees that Otsuka is responsible for supporting all Products
it distributes and all Services it performs in the Otsuka Territory.
Otsuka's support for the
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Products shall be consistent with the level of support it provides
for its own products of similar nature. Otsuka shall maintain
personnel sufficiently knowledgeable with respect to the Products to
answer Subdistributor and other customer questions regarding the use
and operation of the Products marketed by Otsuka.
4.5 Commercially Reasonable Efforts.
Calypte acknowledges and agrees that the provisions of this Section 4
and the provisions of Section 10 (Regulatory Approvals) are in lieu
of any other requirements or promises, express or implied, of
diligent, reasonable or best efforts in the marketing, sale,
distribution or use of the Products, or that in marketing the
Products in the Otsuka Territory Otsuka will achieve any level of
success. In addition, the reasonable efforts and reasonable diligence
to be put forth by Otsuka in accordance with this Section 4 and
Section 10 shall take into account such factors (without limitation)
as the competitiveness of alternative products in the marketplace,
the proprietary position of the Products, the likelihood of
regulatory approval given the regulatory structure of a given County,
the profitability of the Products and alternative products and other
relevant factors. Reasonable efforts shall be determined on a
country-by-country basis, and it is anticipated that the level of
effort will change over time reflecting changes in the status of the
Product and the market involved.
5. ENFORCEMENT OF CERTAIN RIGHTS
5.1 Sale of E1 System.
Calypte shall not knowingly sell or distribute the E1 System to any
third party, or license or otherwise permit any third party to
manufacture or use the
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E1 System, for resale, use in or manufacture of a product that (i)
tests (in whole or in part) for the presence of antibodies to any
strain(s) of HIV or that tests for any human endogenous retrovirus
and (ii) utilizes the technology embodied in the E1 System (defined
here as an "E1 System Product") for sale in, or providing any
services using or incorporating an E1 System Product in, a Country in
which Otsuka has the exclusive right to sell the Products and provide
Services. In the event that Calypte, either through its own efforts
or by being informed by Otsuka, learns that any third party is using
the E1 System in the manufacture of E1 System Products, or is
incorporating technology embodied in the E1 System in any product
that tests for the presence of antibodies to HIV or for a human
endogenous retrovirus, for sale or distribution in or the performance
of services in a Country, or is reselling E1 System to someone who is
doing so, Calypte shall use its reasonable and diligent efforts to
cause such party to discontinue such activities.
5.2 Third-Party Intellectual Property Rights.
So long as Otsuka's rights to the Products remain exclusive in the
Otsuka Territory, Otsuka agrees to use its reasonable efforts to keep
abreast of filings for patents or other intellectual property rights
in the Otsuka Territory that may impinge upon Otsuka's exclusive use
or sale of the Products or provision of Services in the Otsuka
Territory. Where Otsuka becomes aware of any such filings, Otsuka
shall, at its own expense, but only to the extent it deems
commercially appropriate and legally permissible, use its reasonable
efforts (with no obligation to commence or pursue litigation or
formal administrative proceedings) to assist Calypte (which shall
bear its own expenses) in avoiding or preventing the issuance of such
patents or other intellectual property
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rights. Where Otsuka has used its reasonable efforts with regard to
such filings, but a patent or other intellectual property right is
issued, Otsuka shall have those rights specified in Section 6.5
below. In addition, Otsuka will assist Calypte with any registrations
or filings required to obtain copyright, trademark or other
intellectual property rights protection, in Calypte's name, for the
Products in the Otsuka Territory under applicable law. Calypte will
be responsible for all fees or expenses incurred in connection with
such intellectual property rights registrations or filings.
5.3 Enforcement of Calypte Patent Rights and Calypte Technology
in the Otsuka Territory.
In the event that either party discovers that a third party is
promoting, marketing, using, selling or otherwise distributing (i) an
HIV Urine Kit or (ii) an E1 System Product (as defined in Section
5.1) in any Country of the Otsuka Territory, such party shall notify
the other promptly in writing. Calypte and Otsuka shall then consult
with each other as to the best manner to proceed. Calypte shall use
its reasonable and diligent efforts, including by bringing, defending
and maintaining an appropriate suit or action, to obtain the
discontinuance of the promotion, marketing, use, sale or other
distribution of any such product in the Otsuka Territory. If, within
six (6) months of becoming aware of the introduction of any such
product, Calypte fails to obtain a discontinuance of the promotion,
marketing, use, sale or other distribution of such product in such
Country, and elects not to bring suit against such third party, or at
any time after bringing suit chooses to abandon such suit, then
Calypte shall give Otsuka written notice of its decision not to bring
or to abandon suit within ten (10) days of such decision, which
notice shall include the
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40
circumstances surrounding the sale of such product in such Country,
including evidence of the infringement of any Calypte Patent Rights
or Calypte Technology. Upon receipt of such notice, Otsuka or its
designee may, at its option and expense, bring suit or take other
action against such third party. Any suit or other action by Otsuka
shall be either in the name of Otsuka or in the name of Calypte, or
jointly in the name of both Otsuka and Calypte, as may be required by
the law of the forum. For this purpose Calypte shall, at Calypte's
expense, execute such legal papers necessary for the prosecution of
such suit and provide such reasonable assistance in such suit as
Otsuka may reasonably request. Any amounts recovered by Otsuka from
third parties in bringing action against a party using, selling or
otherwise distributing such products in the Otsuka Territory shall be
applied first to reimburse the expenses incurred by the parties in
connection with such action, and the balance shall be retained by
Otsuka.
5.4 Reduction of Payments.
5.4.1 In addition to the rights specified in Section 5.3, in the
event that anyone other than Otsuka or its designee
introduces any E1 System Products or HIV Urine Kit into any
Country in the Otsuka Territory in which Otsuka has the
exclusive right to sell the Products and provide Services,
then, upon written notice to Calypte, which notice shall
include reasonable evidence of the foregoing, Otsuka shall
have the right either: (i) to maintain its exclusive right
to distribute the Products in such Country but (a) reduce
the amounts payable per test to Calypte by twenty percent
(20%) with respect to the Products to be purchased by Otsuka
for
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distribution in that Country of the Otsuka Territory and (b)
if the Country in which such HIV Urine Kit and/or E1 System
Products are introduced is Japan, reduce the minimum annual
payments/purchases stipulated in Section 4.1 by fifty
percent (50%), in which case Calypte shall thereafter
continue to supply the Products exclusively to Otsuka; or
(ii) to reduce its rights to distribute the Products in such
Country to non-exclusive, in which case Calypte shall
continue to supply the Products ordered by Otsuka in
accordance with Section 3.3, but need not do so exclusively.
5.4.2 Notwithstanding the foregoing, where (i) Otsuka chooses to
maintain its exclusive rights with respect to such Country
and (ii) Calypte commences and diligently pursues legal
action against the party or parties selling HIV Urine Kits
or E1 System Products in such Country, then Otsuka shall pay
an amount equal to the twenty percent (20%) price reduction
under Section 5.4.1(i)(a) applicable to all purchases by
Otsuka from Calypte subject to such reduction in the first
six (6) months of such reduction into an interest-bearing
escrow account with a recognized bank not affiliated with
either party but reasonably acceptable to both parties
("Escrow"). If Calypte succeeds in getting such third
parties to discontinue the sale, use and other distribution
of HIV Urine Kits and E1 System Products in such Country
within two (2) years, the amount payable per test to Calypte
shall thereafter, upon the discontinuance of the sale, use
and other distribution by third
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parties of HIV Urine Kits and E1 System Products in such
Country, revert to the full amount payable with no 20%
reduction and the amounts placed in Escrow during the
initial six-month period shall be paid to Calypte. If
Calypte fails to obtain such a discontinuance within such
two (2) year period, or if Otsuka had exercised its right to
reduce its rights in the Country to non-exclusive and
Calypte sells Products or performs Services in such Country,
or grants a third party the right to do so, then the Escrow
shall be terminated and all amounts placed in Escrow shall
be returned to Otsuka.
6. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
6.1 Representations and Warranties.
6.1.1 Calypte represents and warrants that:
(i) Calypte has the full power, right and authority to
grant the rights and licenses contained in this
Agreement and to enter into and carry out its
obligations under this Agreement;
(ii) The Products, and all components thereof, will be
manufactured and handled in compliance with United
States Food and Drug Administration laws and
regulations and all other applicable laws and
regulations of the United States of America, as well
as all applicable laws and regulations of the country
of manufacture, if other than the United States of
America. Any Products
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manufactured outside the United States of America
shall be of equivalent quality to Products
manufactured in the United States of America. Calypte
will manufacture in the United States of America all
Products designated by Otsuka to be used or
distributed in Japan, unless Otsuka (in its sole
discretion) agrees otherwise;
(iii) Prior to manufacturing and exporting the Products,
Calypte will obtain all necessary governmental
approvals for manufacture and export of the Products;
(iv) Calypte has the lawful right to grant the rights
contained in this Agreement under the Calypte Patent
Rights, which are owned and/or controlled by Calypte;
(v) Otsuka's exercise of rights granted by Calypte to
Otsuka herein does not and will not infringe or
otherwise conflict with patent rights, trade secret
rights or other intellectual property rights of any
third party; provided that Calypte's sole obligations
and Otsuka's sole remedies with regard to breach of
this representation and warranty shall be as set
forth in Section 6.5 below;
(vi) Neither Calypte nor any affiliate (including a parent
or subsidiary) of Calypte has previously granted, nor
will grant, any rights to any third party that are
inconsistent with the rights granted to
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Otsuka herein, nor do or will the rights granted
herein conflict with any other agreement or license
to which Calypte or an affiliate of Calypte is or
becomes a party; and
(vii) Calypte will not make any false or misleading
representations to its customers or others relating
to Otsuka, the Products or the rights granted to
Otsuka herein.
6.1.2 Otsuka represents and warrants that:
(i) Otsuka has full power, right and authority to enter
into and carry out its obligations under this
Agreement;
(ii) Otsuka will not make any false or misleading
representations to its customers or others relating
to Calypte, the Products or the rights granted to
Otsuka herein, and will not make any representations,
warranties or guarantees with respect to the
specifications, features or capabilities of the
Products that conflict with Calypte's documentation
relating to the Products; provided that where the
appropriate governmental authority in a Country in
the Otsuka Territory permits different claims with
respect to a Product from those permitted by the FDA
in the United States of America, Otsuka may establish
the permitted scope of claims consistent with the
approvals of such governmental authority;
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(iii) If Otsuka exports Products from Japan to other
Countries in the Otsuka Territory, Otsuka will use
reasonable diligence to obtain necessary export
licenses and permits required to accomplish Otsuka's
lawful export from Japan to other Countries in the
Otsuka Territory, if any, of the Products purchased
by Otsuka hereunder; and
(iv) Otsuka has obtained, or will use its reasonable and
diligent efforts to obtain, any and all consent,
approval, license and/or authorization of any
governmental authority of Japan required in
connection with the valid execution of this
Agreement.
6.2 Product Limited Warranty.
6.2.1 Calypte warrants (i) that all Products, when delivered, will
have a remaining usable shelf life (as measured against the
"use before" date stamped on such Products) of at least the
lesser of (x), twelve (12) months or (y) the expiration date
authorized in applicable approval licenses issued with
respect to such Product by the relevant governmental
authorities ("Shelf Life"), and (ii) that each Product will
conform to the then-current SPECIFICATIONS for such Product
and will be free of defects in material, workmanship and
packaging.
6.2.2 The express warranties set forth in Section 6.2.1 above will
not apply to defects in a Product: (a) caused through no
fault of Calypte (or a third-party supplier of the
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Product designated by Calypte) during shipment to Otsuka by
the international carrier, (b) caused by the storage of the
Products outside of the designated environmental
specifications after receipt by Otsuka, (c) caused by
modifications or alterations made to the Products by any
party other than Calypte after shipment by Calypte, or (d)
caused by the unauthorized use of the Products by Otsuka or
any third party, or use inconsistent with the protocol
accompanying such Product.
6.2.3 Calypte's sole obligation, and Otsuka's sole remedies (in
addition to Calypte's obligations and Otsuka's remedies
under Section 6.4 and Section 6.6) for any breach of this
warranty will be for Calypte to promptly replace at
Calypte's expense any Product which does not conform to this
warranty, or where replacement is impractical, to refund
Otsuka's purchase price therefor and insurance and shipping
expenses incurred in connection therewith. Products returned
under this warranty will be returned and replaced according
to the same procedures established for rejected Products
under Section 3.11 above.
6.3 Limitation.
EXCEPT FOR THE EXPRESS WARRANTIES IN THIS AGREEMENT, CALYPTE PROVIDES
NO WARRANTIES FOR THE PRODUCTS, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, STATUTORY OR OTHERWISE, AND CALYPTE AND OTSUKA
SPECIFICALLY DISCLAIM ANY IMPLIED WARRANTY OR MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE BEYOND THE EXPRESS WARRANTIES IN
THIS AGREEMENT.
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6.4 Indemnification.
6.4.1 Calypte hereby agrees to defend and indemnify Otsuka,
Affiliates and Subdistributors against, and hold Otsuka,
Affiliates and Subdistributors harmless from, any loss,
cost, liability or expense (including court costs,
arbitration expenses and reasonable fees of attorneys and
other professionals) arising out of or in connection with a
breach of Calypte's representations and warranties in
Sections 6.1.1 and 6.2, provided that, in the case of a
claim, lawsuit or arbitration: (i) Calypte shall have sole
control of such defense, though Otsuka, in its discretion,
may participate in such defense through attorneys of its
choice; (ii) Otsuka does not settle any claim without
Calypte's prior written consent; and (iii) Otsuka shall
provide notice promptly to Calypte of any actual or
threatened claim of which Otsuka becomes aware. Calypte
agrees to procure insurance coverage for the obligations
described in this Section 6.4.1. In the event of any such
claim, Otsuka shall provide Calypte, at Calypte's expense,
information and assistance as Calypte may reasonably request
for purposes of defense of such claim.
6.4.2 Otsuka hereby agrees to defend and indemnify Calypte
against, and hold Calypte harmless from, any loss, cost,
liability or expense (including court costs, arbitration
expenses and reasonable fees of attorneys and other
professionals) arising out of or in connection with any
action or claim, brought or threatened, arising from a
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breach of Otsuka's representations and warranties
and the use or sale of the Products by Otsuka, its
Affiliates and Subdistributors, excluding any
loss, cost, liability or expense covered by
Sections 6.4.1, 6.5 or 6.6 or resulting from a
breach of this Agreement by Calypte, and
specifically (without limitation) excluding any
obligation on the part of Otsuka to enforce or
defend the Calypte Patent Rights or to defend,
indemnify or hold Calypte harmless from any action
or claim alleging that Otsuka's use or sale of the
Products infringes a third party's patent or other
intellectual property rights. Otsuka's obligations
hereunder are contingent upon (i) Otsuka having
sole control of such defense, though Calypte, in
its discretion, may participate in such defense
through attorneys of its choice; (ii) Calypte
providing notice promptly to Otsuka of any actual
or threatened claim of which Calypte becomes
aware; and (iii) Calypte not settling any claim
without Otsuka's prior written consent. In the
event of any such claim, Calypte shall provide
Otsuka, at Otsuka's expense, information and
assistance as Otsuka may reasonably request for
purposes of defense of such claim.
6.5 Intellectual Property Infringement Indemnity.
6.5.1 Calypte agrees to defend and indemnify Otsuka,
Affiliates and Subdistributors against, and hold
Otsuka, Affiliates and Subdistributors harmless from,
any loss, cost, liability or expense (including court
costs, arbitration expenses and
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reasonable attorney's fees) arising out of or in connection with any action or
claim brought or threatened against Otsuka, an Affiliate or Subdistributor
alleging that the Products under normal use infringe any third party's patent,
copyright, trademark, trade secret or other intellectual property right;
provided that Calypte will be released from its obligations under this Section
6.5 unless Otsuka provides Calypte with (i) prompt written notice of such claim
or action of which Otsuka becomes aware, (ii) sole control and authority over
the defense or settlement of such claim or action, though Otsuka, the Affiliate
or Subdistributor, in Otsuka's discretion, may participate in such defense and
settlement discussions, and (iii) information and reasonable assistance, at
Calypte's expense, to defend and/or settle any such claim or action.
In addition, without limiting the above remedies and obligations, in the event
that, and only for so long as, Otsuka is reasonably required to pay to a third
party royalties or license fees to avoid infringement of patent rights or other
intellectual property rights of such third party by use or sale of the Products
or related Services, Otsuka shall be entitled to deduct (as a credit) from any
amounts otherwise payable to Calypte the full amount of such royalties and
license fees actually paid to such third party, at a rate of twenty percent
(20%) of the amounts otherwise payable to Calypte until Otsuka is fully
reimbursed or compensated for such third party payments; provided that Otsuka
shall be
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entitled to such deduction or credit if the cause of such
infringement is the use or sale of the Product or Service, as
opposed to such infringement stemming from the combination of
Products with other infringing products not provided by
Calypte.
6.5.2 In the event that any Product is held or, in Calypte's sole
opinion, may be held to constitute such an infringement,
Calypte shall, at its option and expense, either: (i) obtain
for Otsuka the right to continue to use such Product as
intended, or (ii) modify such Product so that it becomes
non-infringing, but without materially altering the use or
functionality of the Product, or (iii) replace such Product
with a functionally equivalent non-infringing Product or, if
none of the remedies in (i), (ii) or (iii) is reasonably
available despite Calypte's best efforts to achieve them, (iv)
accept return of the infringing Products and immediately
refund to Otsuka the purchase price paid therefor, and
thereafter the Country in which such infringement action arose
shall be removed from the Otsuka Territory with respect to
such Product.
6.5.3 Notwithstanding the provisions of Section 6.5.1 above,
Calypte assumes no liability for infringement claims
arising from (i) combination of Products with other
products not provided by Calypte, but not applicable to
or covering such Products standing alone, (ii) the
modification of Products unless such modification was
made or authorized by Calypte, where such infringement
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claims would not have occurred but for such modifications, or
(iii) any marking or branding placed on the Products by, or at
the request of, Otsuka.
6.5.4 THE FOREGOING, INCLUDING SECTIONS 5 AND 6, STATES THE ENTIRE
LIABILITY AND OBLIGATIONS OF CALYPTE AND THE EXCLUSIVE REMEDY
OF OTSUKA, WITH RESPECT TO ANY ALLEGED OR ACTUAL INFRINGEMENT
OF PATENTS, COPYRIGHTS, TRADE SECRETS, TRADEMARKS OR OTHER
INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS.
6.6 Products Liability Indemnity.
Calypte agrees to defend and indemnify Otsuka, Affiliates and
Subdistributors against, and hold Otsuka, Affiliates and
Subdistributors harmless from, any loss, cost, liability or expense
(including court costs, arbitration expenses and reasonable
attorney's fees) arising out of or in connection with any action or
claim brought or threatened against Otsuka, Affiliates or
Subdistributors alleging that a Product caused personal injury, death
or property damage; provided that (i) Calypte shall have sole control
of such defense, though Otsuka, in its discretion, may participate in
such defense through attorneys of its choice; (ii) Otsuka does not
settle any claim without Calypte's prior written consent; and (iii)
Otsuka shall provide notice promptly to Calypte of any actual or
threatened claim of which Otsuka becomes aware.
7. CONFIDENTIALITY
7.1 Confidential Information.
Otsuka and Calypte acknowledge that during the term of this
Agreement each party will be exposed to certain
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information concerning the other party's business (including, without
limitation, customer lists), technology, products, proposed new
products, product costs, product prices, finances, marketing plans,
business opportunities, research, development or know-how which is
confidential and proprietary to the other party and is not generally
known to the public ("Confidential Information"). Otsuka and Calypte
agree that during and after the term of this Agreement, Otsuka and
its Affiliates and Calypte and its Affiliates will not use and will
not disclose any Confidential Information of the other party except
in accordance with the provisions and for the purposes of this
Agreement (which include and permit Otsuka's promotion, use, sale and
other distribution of the Products). Without limiting the foregoing,
all information pertaining to the Products and/or Calypte Patent
Rights conspicuously marked by Calypte as confidential shall be
deemed Confidential Information of Calypte, and Otsuka agrees that
Otsuka and Affiliates will take reasonable steps not to disclose any
such conspicuously marked Confidential Information of Calypte to any
third party (not including Subdistributors as reasonably necessary,
or counsel or consultants of Otsuka and Affiliates, or third-party
manufacturers in the event Otsuka becomes entitled to manufacture or
have manufactured the Products in accordance with this Agreement)
without the prior written consent of Calypte, except as permitted in
this Agreement. Also, without limiting the foregoing, Calypte agrees
that it will take reasonable steps not to disclose to any third party
(not including counsel and consultants of Calypte) without the prior
written consent of Otsuka any other Confidential Information
conspicuously marked as such by Otsuka, except as permitted in this
Agreement. Otsuka further agrees that Otsuka, including, without
limitation, Affiliates and
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Subdistributors, will not reverse engineer the Products in order to
enable Otsuka, Affiliates, or any third parties to manufacture the
Products in violation of this Agreement. The provisions of this
Section 7 shall survive any termination of this Agreement.
7.2 Confidentiality of Agreement.
Each party agrees that the terms and conditions of this Agreement
shall be treated as Confidential Information and that no reference to
this Agreement or to the terms hereof can be made in any form of
public or commercial advertising without the prior written consent of
the other party. All publicity regarding the announcement of this
Agreement shall be coordinated by both parties. Notwithstanding the
foregoing, each party may disclose the terms and conditions of this
Agreement: (a) as required by any court or other governmental body;
(b) as otherwise required by law; (c) to legal counsel and
consultants of the parties; (d) to accountants, banks and financing
sources and their advisors; (e) in connection with the enforcement of
this Agreement or rights under this Agreement; or (f) in connection
with a merger or acquisition or proposed merger or acquisition, or
the like.
7.3 Exceptions.
The restrictions of Sections 7.1 and 7.2 will not apply to
Confidential Information that (i) is already known to the receiving
party at the time of disclosure to the receiving party; (ii) has
become publicly known through no wrongful act or omission of the
receiving party; (iii) has been rightfully received by the receiving
party from a third party without restriction on disclosure and
without breach of an obligation of confidentiality running directly
or indirectly to the disclosing party; (iv) has been approved
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for release by written authorization of the disclosing party; (v) is
independently developed by the receiving party without use, directly
or indirectly, of the Confidential Information; or (vi) is furnished
to a third party by the disclosing party without restrictions on the
third party's right to disclose the information. The parties agree
that in the event of a dispute with respect to (v) above, the alleged
breaching party shall bear the burden of proof by a preponderance of
the evidence that it developed such information without use, directly
or indirectly, of Confidential Information. In addition, Calypte and
Otsuka may use Confidential Information as reasonably necessary in
(a) filing or prosecuting patent applications, (b) prosecuting or
defending litigation, (c) dispute resolution under Section 12.5, (d)
complying with applicable governmental regulations or conducting
preclinical or clinical trials, and (e) responding to a lawful
governmental demand, all with prior notice to the other party and
with safeguards as appropriate.
7.4 Remedies.
A breach of the restrictions contained in this Section 7 is a breach
of this Agreement which may cause irreparable harm to the
non-breaching party and may, under applicable laws, entitle the
non-breaching party, in addition to any other right or remedy
available, to obtain from any court of competent jurisdiction an
injunction (temporary, preliminary or permanent), or other interim,
ancillary or conservatory remedy or relief, restraining such breach
or threatened breach and specific performance of any such provision.
The parties agree that no bond or other security shall be required in
obtaining such equitable relief.
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8. LIMITATION OF LIABILITY
IN NO EVENT, EXCEPT AS PROVIDED BELOW, WILL EITHER PARTY BE LIABLE TO
THE OTHER FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR INDIRECT
DAMAGES ARISING IN ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND
ON ANY THEORY OF LIABILITY; THIS LIMITATION WILL APPLY EVEN IF THE
OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE,
PROVIDED, HOWEVER, THAT THIS LIMITATION SHALL NOT APPLY TO A BREACH
OF THE CONFIDENTIALITY PROVISION SET FORTH IN SECTION 7 ABOVE WITH
RESPECT TO ANY GMP PROCEDURES DISCLOSED TO OTSUKA PURSUANT TO SECTION
2.4; PROVIDED FURTHER THAT THIS LIMITATION SHALL NOT APPLY TO OR
LIMIT A PARTY'S OBLIGATIONS TO INDEMNIFY, DEFEND AND HOLD THE OTHER
PARTY HARMLESS UNDER CIRCUMSTANCES EXPRESSED IN THIS AGREEMENT.
9. TRADEMARKS AND TRADE NAMES.
9.1 Use.
So long as Otsuka purchases Products from Calypte during the term of
this Agreement, Otsuka shall indicate to the public that the Products
incorporate and/or use El System under the trademarks, marks, and
trade names that Calypte may adopt from time to time with respect to
El System and the Products ("Calypte's Marks"); provided that this
obligation is contingent upon Calypte registering Calypte's Marks in
the Otsuka Territory and obtaining authorization from the relevant
governmental authorities to use Calypte's Marks (Calypte shall give
Otsuka written notice of such registration and authorization). Otsuka
shall not alter or remove any such approved Calypte's Marks applied
to the packaging of the Products by Calypte, where such packaging is
as mutually agreed by Otsuka and Calypte. Except as set forth in this
Section 9.1 and as otherwise permitted under this Agreement, nothing
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contained in this Agreement shall grant to Otsuka any right, title or
interest in any of Calypte's Marks. At no time during the term of
this Agreement shall Otsuka challenge or assist others in challenging
any lawfully approved Calypte's Marks used in conjunction with the El
System or the Products or the registration thereof or attempt to
register any trademarks, marks or trade names confusingly similar to
those used by Calypte. In the event a Releasing Event occurs whereby
Otsuka manufactures, or has manufactured, the Product under the GMP
Procedures, Otsuka shall have no right to sell or distribute such
Products under Calypte's Marks, except to the extent required by law,
and any use in violation thereof shall constitute an infringement of
Calypte's rights.
9.2 Approval of Representations
All representations of Calypte's Marks that Otsuka intends to use
shall first be submitted to Calypte for approval (which shall not be
unreasonably withheld) of design, color, size and other details or
shall be exact copies of those used by Calypte, subject to variation
only as reasonably agreed by Calypte. If any of Calypte's Marks are
to be used in conjunction with another trademark on or in relation to
the Products, then Calypte's Marks shall be presented as reasonably
agreed by Calypte and Otsuka, separated from the other so that each
appears to be a mark in its own right, distinct from the other mark.
10. REGULATORY APPROVALS.
10.1 Obtainment of Approvals.
Subject to Calypte's fulfilling its obligations under Section
6.1.1(iii), and so long as Otsuka is the exclusive distributor of the
Products in the Otsuka Territory,
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Otsuka shall use its reasonable diligence in obtaining necessary
governmental approvals or licenses for the distribution and sale of
the Products, which approvals and licenses shall be in Otsuka's name
and owned by Otsuka, subject to Section 10.6; provided, that Calypte
shall provide assistance and support as is reasonably necessary, at
Otsuka's cost and expense, in obtaining any such approval or
licenses. Otsuka shall promptly provide to Calypte (or directly to
the governmental agency, at Otsuka's option) all information relating
to Otsuka's use, sale and distribution of the Products that Calypte
is required to provide to the Food and Drug Administration of the
United States of America or any other governmental agency. Calypte
and Otsuka agree to disclose promptly to the other all reports and
any information which they have available or which become available
to them relating to the safety and efficacy caused by or related to
the Products.
10.2 Reasonable Diligence.
Otsuka's aforesaid reasonable due diligence to obtain governmental
approvals in the Otsuka Territory shall be satisfied as follows with
respect, separately, to: (a) Countries in which registration of the
Products with governmental authorities can be done on the basis of
the approved United States PLA ("PLA Countries") and (b) Countries
which require the filing of a separate application for marketing
approval to local governmental authorities ("Separate Filing
Countries"). Each Country of the Otsuka Territory shall be classified
into one of these groups based upon its governmental requirements.
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10.3 PLA Countries.
Within six (6) months after the later to occur of (a) Otsuka's
receipt from Calypte of the approved U.S. PLA materials necessary for
submitting a complete application package to governmental authorities
in PLA Countries, or (b) the execution of this Agreement, Otsuka
shall undertake to submit an application for governmental approval to
market the Products in such Countries of the Otsuka Territory.
Further, Otsuka shall undertake to commercially launch the Products
in PLA Countries within six (6) months of receiving approval of its
application to market the Products from the appropriate governmental
authority in such Countries.
In the event Otsuka does not submit an application package within the
specified period in a PLA Country, the parties shall discuss the
reasons for the delay, and Calypte shall not unreasonably withhold
its consent to a ninety (90) day extension. If Otsuka does not submit
its application package within the extended period, Calypte shall, at
the end of that extended period, have an option for ninety (90) days
to convert Otsuka's distribution rights from an exclusive to a
non-exclusive basis in that Country of the Otsuka Territory.
In the event Otsuka does not commercially launch the Products in a
PLA Country within the specified period, the parties shall discuss
the reasons for the delay, and Calypte shall not unreasonably
withhold its consent to a ninety (90) day extension for that Country.
If Otsuka does not commercially launch the Products within the
extended period, Calypte shall, at the end of that extended period,
have an option for ninety (90) days to convert Otsuka's distribution
rights from an exclusive to
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a non-exclusive basis in that Country of the Otsuka Territory.
10.4 Separate Filing Countries.
Within twelve (12) months after the later of (a) Otsuka's receipt
from Calypte of all data (in Calypte's possession or available to
Calypte) necessary to initiate clinical studies, or (b) the execution
of this Agreement, Otsuka shall initiate clinical trials in those
Countries of the Otsuka Territory that require them. Further, Otsuka
shall use its best efforts to submit its application package (for
marketing approval) to governmental authorities within twelve (12)
months of initiating clinical trials, provided that Calypte provides
in a timely fashion all data necessary to complete the application
package either through Otsuka or directly to the appropriate
governmental authorities.
In the event Otsuka does not initiate clinical studies within the
specified period in a Separate Filing Country, the parties shall
discuss the reasons for the delay, and Calypte shall not unreasonably
withhold its content to a ninety (90) day extension. If Otsuka does
not initiate clinical studies within the extended period, Calypte
shall, at the end of that extended period, have an option for ninety
(90) days to convert Otsuka's distribution rights from an exclusive
to a non-exclusive basis in that Country of the Otsuka Territory.
In the event Otsuka does not submit its application package to
governmental authorities in a Separate Filing Country within the
specified period, the parties shall discuss the reasons for the
delay, and Calypte shall not unreasonably withhold its consent to a
ninety (90) day extension. If Otsuka does not submit its application
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package to governmental authorities within the extended period, and
if the failure to submit such application package is reasonably
within Otsuka's control, Calypte shall, at the end of that extended
period, have an option for ninety (90) days to convert Otsuka's
distribution rights from an exclusive to a non-exclusive basis in
that Country of the Otsuka Territory.
10.5 Extension of Time Periods.
The time periods specified above for Otsuka's reasonable diligence in
introducing the Products in any Country of the Otsuka Territory shall
be extended in that Country by (a) the duration of Force Majeure
circumstances which delay Otsuka's performance; (b) unanticipated
governmental requests or requirements which delay Otsuka's
performance; and (c) actions or inactions by Calypte which delay
Otsuka's performance.
In addition, the time period for the commercial launch of the
Products in a Country of the Otsuka Territory shall be automatically
extended for an additional two (2) week period for each month less
than six (6) months taken to submit the application package for that
Country. In the case of Separate Filing Countries, the time period
for submitting the marketing approval application package in a
given Country shall be automatically extended for an additional two
(2) week period for each month less than twelve (12) months taken to
initiate clinical trials in that Country.
10.6 Assignment Upon Termination.
Except in the event of abandonment as per Section 11.8 or in the
event of termination of this Agreement by Otsuka due to breach of
this Agreement by Calypte, immediately upon termination of Otsuka's
right to distribute the
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Products in any Country of the Otsuka Territory, Otsuka shall use
reasonable efforts to assign to Calypte, and subject to the
occurrence of such an event, does hereby assign to Calypte, all
regulatory approvals, licenses, etc. then in Otsuka's possession
required for the use, marketing and sale of the Products in such
Country, all to the extent permitted under applicable law. In the
event of such an assignment, Otsuka shall, at Calypte's request and
expense, deliver execute and/or deliver or cause to be delivered, all
such assignments, consents, documents or further instruments of
transfer or license, and take or cause to be taken all such actions
as may be reasonably necessary to effectuate such transfer.
11. TERM AND TERMINATION
11.1 Term.
Unless earlier terminated pursuant to the provisions of this
Agreement, this Agreement shall have an initial term extending from
Effective Date until the end of tenth (10th) Contract Year, and may
be renewed by mutual agreement.
11.2 Termination for Convenience.
At any time and for any reason or for no reason, Otsuka, at Otsuka's
sole option, may terminate this Agreement in its entirety. Such
termination shall be effective one hundred twenty (120) days after
receipt by Calypte of Otsuka's written notice of termination. In the
event of any termination for convenience, Otsuka shall (a) use
reasonable efforts to transfer government approvals to Calypte as
provided in Section 10.6 above; (b) provide Calypte with the name,
addresses, phone, fax and telex numbers and contact person at each of
Otsuka's non-Affiliate Subdistributors of the Products, to the extent
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available to Otsuka; and (iii) Otsuka shall not interfere with or
prevent any such non-Affiliate Subdistributor of Products from
entering into a relationship directly with Calypte or sharing such
Subdistributor's Product customer lists with Calypte. The one hundred
and twenty (120) day notice period shall be reduced if Otsuka
completes the transfer of all necessary government approvals and
delivers the Subdistributor information in less than one hundred
twenty (120) days.
11.3 Termination for Cause.
Without limiting Otsuka's rights in Section 11.2 above, this
Agreement may be terminated by either party upon any material breach
or default by the other party at any time after sixty (60) days'
prior written notice to the breaching party specifying the nature of
the breach or default; provided that, if during said sixty (60) days
the party so notified cures the breach or default complained of, then
this Agreement shall continue in full force and effect; provided
further that if the alleged breaching party disputes having committed
a material beach or default or claims to have cured such breach or
default prior to or within the sixty (60) day period, such dispute
shall be resolved by prompt arbitration in accordance with Section
12.5, and this Agreement shall not terminate under this Section
11.3 until the conclusion of such arbitration, and then only if the
arbitrators decide in favor of the non-breaching party seeking
termination.
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11.4 Termination for Bankruptcy.
This Agreement may be terminated by either party upon written notice
immediately without opportunity to cure if the other party becomes
the subject of a voluntary or involuntary petition in bankruptcy or
any proceeding relating to insolvency, receivership, liquidation, or
composition for the benefit of creditors, if that petition or
proceeding is not dismissed with prejudice within sixty (60) days
after filing.
11.5 Effect of Termination.
11.5.1 Termination of this Agreement pursuant to either Section
11.2, 11.3 or 11.4 shall not relieve the parties of any
obligation accruing prior to such termination.
11.5.2 Upon termination of this Agreement by Otsuka pursuant to
Section 11.2 or by either party pursuant to Section 11.3
or 11.4, Otsuka shall provide Calypte with a written
notice stating the inventory of all the Products in
Otsuka's stock.
11.5.3 Upon termination of this Agreement pursuant to Section
11.2, 11.3 or 11.4, Otsuka may use and sell or otherwise
distribute and dispose of the Products within one (1) year
after termination of this Agreement.
11.6 No Liability For Expiration or Termination.
Without limiting party's rights, obligations and remedies under this
Agreement, neither Calypte nor Otsuka will, solely by reason of the
expiration or termination of this Agreement, be liable to the other
for compensation,
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reimbursement or damages on account of any loss of prospective
profits or anticipated sales or on account of expenditures,
investments, leases, or commitments made in connection with this
Agreement or the anticipation of extended performance hereunder.
11.7 Survival.
The following provisions shall survive expiration or termination of
this Agreement: Sections 6, 7, 8, 11.6 and 12.
11.8 Abandonment.
Whether or not Otsuka's rights in the Otsuka Territory remain
exclusive, Otsuka shall be free, in its discretion, to abandon its
rights and obligations (either all of its rights and obligations or
on a Product-by-Product basis) in a given Country of the Otsuka
Territory for any or no reason. In such case, Otsuka shall give
Calypte at least sixty (60) days prior written notice of such
decision, after which Calypte shall then be free to grant exclusive
distribution rights to the abandoned Products in such Country to a
third party or undertake such distribution itself. If Otsuka has
exclusive rights in the Otsuka Territory at the time it abandons such
rights in a given Country, the minimum payments/purchases described
in Section 4.1 shall continue without reduction with respect to the
rest of the Otsuka Territory; provided that, if Otsuka abandons its
rights in Japan, such minimum amounts shall be reduced by fifty
percent (50%). Otsuka may manifest its lack of intention to market
the Products in a Country by complete inaction during the specified
time periods with respect to seeking governmental approval for the
marketing of the Products or with respect to the commercial launch of
the Products in such Country. Such inaction shall be deemed
constructive abandonment by
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Otsuka of its distribution rights in such Country; provided that such
constructive abandonment shall only be effective if Calypte gives
Otsuka written notice of same, describing the circumstances on which
it bases its conclusion of constructive abandonment, and Otsuka fails
to remedy such circumstances within sixty (60) days of its receipt of
such notice.
In the event Otsuka abandons its distribution rights in any Country
of the Otsuka Territory, Otsuka shall cooperate with Calypte to
transfer its application for marketing approval (if any) in that
Country to Calypte (or its licensee) to the extent local regulations
permit, provided that Calypte shall reimburse Otsuka for its
reasonable direct expenses incurred in making the application.
12. GENERAL PROVISIONS
12.1 Currency.
All payment amounts set forth herein, and all obligations of Calypte
and Otsuka relating to the payment or receipt of money, shall be paid
in United States of America Dollars, except as otherwise provided in
this Agreement.
12.2 Language.
This Agreement is in the English language, which language shall be
controlling in all respects, and all versions hereof in any other
language shall be for accommodation only and shall not be binding
upon the parties hereto. All communications and notices to be made or
given pursuant to this Agreement shall be in the English language.
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12.3 Governing Law.
This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California, United States
of America, without reference to conflict of laws principles, except
that (i) patent rights in connection with the rights granted by
Calypte to Otsuka hereunder shall be governed by the laws of the
country in which such patent rights were obtained and (ii) perfection
of title reserved by Calypte pursuant to Section 3.12 shall be
governed by the laws of Japan.
12.4 Jurisdiction.
Subject to Section 12.5, the parties to this Agreement consent to
personal and exclusive jurisdiction of and exclusive venue in the
state and federal courts located within the Northern District of
California. Otsuka and Calypte hereby expressly consent to (i) the
personal jurisdiction of the federal and state courts within
California, (ii) service of process being effected upon it by
registered mail sent to the address set forth in Section 12.11, and
(iii) the enforcement of a final judgment from such court, following
the conclusion of any appeal of such judgment or expiration of the
time to file such an appeal, whichever is later, in any other
jurisdiction wherein the party against whom enforcement is sought or
any of its assets are present, provided that such enforcement is
conducted in accordance with the laws and procedures of the
jurisdiction in which enforcement is sought.
12.5 Arbitration.
Otsuka and Calypte agree that any dispute or controversy arising out
of, in relation to, or in connection with this Agreement, or the
making, interpretation, construction, performance or breach thereof,
shall be finally settled by
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binding arbitration in San Francisco, California, United States of
America, under the then-current Rules of Arbitration of the
International Chamber of Commerce by three (3) arbitrators appointed
in accordance with such Rules. The arbitral proceedings and all
written evidence shall be in the English language. Any written
evidence originally in a language other than English shall be
submitted in English translation accompanied by the original or a
true copy thereof. The arbitrators may grant injunctive or other
relief in such dispute or controversy. The decision of the
arbitrators shall be final, conclusive and binding on the parties to
the arbitration. After the decision of the arbitrators, judgment may
be entered on that decision in any court of competent jurisdiction.
The parties agree that, any provision of applicable law
notwithstanding, they will not request, and the arbitrators and
courts shall have no authority to award, punitive or exemplary
damages against any party. The costs of the arbitration, including
administrative fees and fees of the arbitrators, shall be shared
equally by the parties. Each party shall bear the cost of its own
attorney's fees and expert witness fees. Notwithstanding the
foregoing, either party shall have the right to apply to any court of
competent jurisdiction for injunctive relief without breach of this
arbitration provision.
12.6 Force Majeure.
Except for obligations relating to the payment of money, neither
party shall be liable for any loss, damage or penalty resulting from
delays or failures in performance of its obligations resulting from
acts of God or other causes beyond its control, including
governmental restrictions and prohibitions; provided that, in the
event of such delay or failure, the affected party will use its
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68
best efforts, consonant with bound business judgment and to the
extent permitted by law, to correct such delay or failure as
expeditiously as possible; provided further that this Section 12.6
will not extend or delay the time period or periods during which
Calypte is to ship supplies of the Products in accordance with
Section 3 nor affect Otsuka's right to obtain and use the GMP
Procedures under the terms and conditions of this Agreement and the
Escrow Agreement. Each party agrees to notify the other promptly of
any circumstance delaying its performance and to resume performance
as soon thereafter as is reasonably practicable.
12.7 Assignment.
Except as expressly provided in this Agreement with respect to
specified rights and obligations, neither party may assign or
otherwise transfer its rights or obligations under this Agreement to
a third party without the prior written consent of the other party,
which shall not be unreasonably withheld. Any such approved
third-party transferee or assignee must agree to be bound by the
terms and conditions of this Agreement.
12.8 No Third-Party Beneficiaries.
Calypte and Otsuka intend that only Calypte and Otsuka, and Otsuka's
Affiliates and Subdistributors, will benefit from, and are entitled
to enforce the provisions of, this Agreement and that no other
third-party beneficiary is intended under this Agreement.
12.9 Bankruptcy Code.
Calypte and Otsuka acknowledge and agree that this Agreement is
subject to Section 365(n) of Title 11, United States Code (the
"Bankruptcy Code"). If Calypte is a debtor in possession or if a
trustee in bankruptcy is
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appointed for Calypte in a case under the Bankruptcy Code and such
debtor in possession or trustee rejects this Agreement, Otsuka may
elect to treat this Agreement as terminated or to retain its rights
under this Agreement as provided in Section 365(n) of the Bankruptcy
Code. If Otsuka elects to retain its rights under this Agreement, then
upon written request to Calypte or the bankruptcy trustee, Calypte or
such bankruptcy trustee shall not interfere with the rights of Otsuka
as provided in this Agreement.
12.10 Modifications.
No modification to this Agreement, nor any waiver of any rights, shall
be effective unless assented to in writing by the party to be charged,
and the waiver of any breach or default shall not constitute a waiver
of any other right hereunder or any subsequent breach or default.
12.11 Notices.
Any required notices hereunder shall be in writing and shall be deemed
given if delivered (i) in person, or (ii) by prepaid express courier,
or (iii) by registered or certified mail (return receipt requested), at
the address of each party set forth below, or to such other address as
either party may substitute by written notice to the other in the
manner contemplated herein, and shall be deemed served upon receipt or,
if receipt is not accomplished by reason of some fault of the
addressee, when tendered.
If to Calypte: William A. Boeger
President
Calypte Biomedical Corporation
1440 Fourth Street
Berkeley, California 94710 U.S.A.
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If to Otsuka: Hideji Nonomura
Director of Overseas Affairs
Diagnostic Division
Otsuka Pharmaceutical Co., Ltd.
463-10 Kagasuno
Kawauchi-cho, Tokushima Japan
12.12 Descriptive Headings.
The headings of the several sections of this Agreement are intended for
convenience of reference only and are not intended to be a part of or
to affect the meaning or interpretation of this Agreement.
12.13 Entire Agreement.
This Agreement, including the exhibits hereto, constitutes the entire
and exclusive Agreement between the parties hereto with respect to the
subject matter hereof, and supersedes and cancels all previous
registrations, agreements, commitments and writings in respect thereof.
12.14 Severability.
In the event that any provision of this Agreement becomes or is
declared by arbitrators or a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided that no such
severability shall be effective if it materially changes the economic
benefit of this Agreement to either Calypte or Otsuka.
12.15 Legal Expenses.
Except as otherwise expressly provided herein, the prevailing party in
any legal action brought by one party against the other and arising out
of or in connection with this Agreement shall be entitled, in addition
to any other rights and remedies it may have, to reimbursement from the
other party for its expenses, including court costs,
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arbitration expenses and reasonable fees and expenses for attorneys and
other professionals.
12.16 Counterparts.
This Agreement may be executed in counterpart, each of which shall be
deemed an original, but both of which together shall constitute one and
the same instrument.
12.17 Import & Export Controls.
Otsuka understands that Calypte is subject to export regulation by
agencies of the U.S. government, including the U.S. Department of
Commerce, which prohibit export or diversion of certain products and
technology to certain countries ("U.S. Export Regulations"). Calypte
warrants that it is unaware of any U.S. Export Regulations that would
prevent or inhibit it from fulfilling all of its obligations under this
Agreement. Any and all obligations of Calypte to provide the Products,
as well as any technical assistance, and any and all obligations of
Otsuka with respect to obtaining governmental approval or
commercialization of the Products, to the extent affected by U.S.
Export Regulations, will be subject in all respects to such U.S. Export
Regulations, which may from time to time govern the license and
delivery of technology and products abroad by persons subject to the
jurisdiction of the United States, including the Export Administration
Act of 1979, as amended, any successor legislation, and the Export
Administration Regulations issued by the Department of Commerce,
International Trade Administration, or Office of Export Licensing.
Calypte shall notify Otsuka of any export and reexport restrictions set
forth in the export license (if necessary) for every Product shipped to
Otsuka, and Otsuka will comply with such restrictions to the extent
applicable. Without in any way limiting the provisions of
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this Agreement, Otsuka agrees that unless prior authorization is
obtained from the Office of Export Licensing (if necessary), it will
not export, reexport, or transship, directly or indirectly, to country
groups Q, S, W, Y, or Z (as defined in the Export Administration
Regulations), or Afghanistan or the People's Republic of China (which
does not include Taiwan) any of the technical data disclosed to Otsuka
or the direct product of such technical data, if the Export
Administration Regulations prohibit such export, reexport or
transshipment, or otherwise contravene the U.S. Export Regulations in
effect from time to time, to the extent applicable to Otsuka. To the
extent the U.S. Export Regulation described here affect any Countries
in the Otsuka Territory, Otsuka shall be excused from any obligation to
seek regulatory approval for the Products in such Countries and to
commercialize the Products in such Countries.
12.18 Independent Contractors.
The relationship of the parties established by this Agreement is that
of independent contractors, and nothing contained in this Agreement
will be construed (i) to give either party the power to direct or
control the day to day activities of the other or (ii) to constitute
the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking. Without limiting
Calypte's obligations hereunder, all sales and other agreements between
Otsuka and its customers are Otsuka's exclusive responsibility and will
not affect Calypte's obligations under this Agreement.
12.19 Manufacture in Japan.
Calypte will consider, and discuss in good faith with Otsuka,
permitting Otsuka to manufacture Product(s) on
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behalf of Calypte on mutually agreeable terms and conditions.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of Calypte and Otsuka as applicable.
CALYPTE BIOMEDICAL CORPORATION OTSUKA PHARMACEUTICAL CO., LTD.
By: /s/ BILL BOEGER By: /s/ AKIHIKO OTSUKA
-------------------------- ---------------------------
Name: BILL BOEGER Name: AKIHIKO OTSUKA
-------------------------- ---------------------------
Tit1e: PRESIDENT AND CEO Title: PRESIDENT
-------------------------- ---------------------------
Date: AUGUST 4, 1994 Date: AUGUST 7, 1994
-------------------------- ---------------------------
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Exhibit A
List of Calypte Patent Rights
Foreign Patents Issued
Self Contained Multi-Immunoassay Diagnostic Systems- Patent No. 225 771
Self Contained Multi-Immunoassay Diagnostic Systems- Patent No. 88/5777
U.S. Patents Pending
Self Contained Multi-Immunoassay Diagnostic Systems-Serial No. 07/307,361
License Agreements
New York University-Patents Nos. 4,865,966 and 5,122,446
Detection of antibodies to human immunodeficiency virus (HIV) in urine
Repligen Corporation-Patent Application Nos. 836,196; 091,481; and 941,111
HIV-1 gp 160
Cambridge Biotech- Patent No. 4,725,669
"Assay for Detecting Infection by Human T-Cell Lymphotrophic Virus-III"
Stanford University- Patent Nos. 4,237,224; 4,486,464; and 4,740,470
Recombinant DNA
Texas A&M University System- Patents Nos. 4,745,051 and 4,879,236
Recombinant baculovirus expression vector system (BEVS)
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EXHIBIT B
E-1 SYSTEM
The Calypte E-1 System and procedures for use are further described in U.S.
Patent Application SELF CONTAINED MULTI-IMMUNOASSAY DIAGNOSTIC SYSTEMS, the
relevant portion of which is attached below.
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E-I SYSTEM - PENDING CLAIMS AS OF MAY 12,1994
29. (Thrice amended) A kit f or detecting the presence of a target
human antibody to human immunodeficiency virus (HIV) in a urine sample
comprising
a) a treatment buffer comprising non-immune sera and about 0. 01%
to about 0.5% (w/v) of a plurality of solid phase particles from about 0.5
microns to about 10 microns in diameter, each particle coated with goat,
bovine, or horse immunoglobulin antibodies, the non-immune sera comprising 3%
bovine serum, 3% goat serum, and 3% horse serum;
b) a labelled reagent comprising an enzyme label conjugated to an
anti-human immunoglobulin antibody;
c) a substrate specific for the enzyme label; and
d) a reagent HIV antigen.
34. (Twice amended) A buffer comprising non-immune sera and about 0.01%
to about 0.5% (w/v) of a plurality of solid phase particles from about 0.5
microns to about 10 microns in diameter, each particle coated with goat, bovine,
or horse immunoglobulin antibodies, the non-immune sera comprising 3% bovine
serum, 3% goat serum, and 3% horse serum.
37. (Thrice amended) A method for detecting the presence of a target
human antibody to HIV in a urine sample, said method comprising:
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a) adding a treatment buffer to the sample, which buffer
comprises non-immune sera and 0.01% to 0.5% (w/v) of a plurality of solid phase
particles from about O.5 microns to about 10 microns in diameter, each
particle coated with goat, bovine, or horse immunoglobulin antibodies, the
non-immune sera comprising 3% bovine serum, 3% goat serum, and 3% horse serum;
and
b) contacting the sample with a reagent HIV antigen to form an
antigen-antibody complex containing the target human antibody and the HIV
antigen;
c) contacting the antigen-antibody complex with an enzyme labeled
anti-human immunoglobulin antibody that specifically binds to the target human
antibody; and
d) detecting the presence of the bound label as an indication of
the presence of the target antibody in the urine sample.
40. (Thrice amended) The method of claim 37 wherein the antibody to HIV
specifically binds glycoprotein gp160, gp120 or gp41, or protein p24.
42. (Thrice amended) A method of detecting an HIV antibody in a saliva,
urine, or whole or fractionated blood sample from a human subject, said method
comprising:
a) contacting the sample with a recombinant HIV glycoprotein under
conditions such that the glycoprotein specifically binds to any HIV antibody
present in the sample to form a complex;
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b) contacting the complex with an enzyme labeled anti-human
immunoglobulin antibody which specifically binds and labels the complex to form
a labeled complex; and
c) detecting the presence of labeled complex and thereby the
presence of HIV antibody in the sample wherein a treatment buffer is added to
the sample before, or simultaneous with, contacting the sample with the
glycoprotein, said treatment buffer comprising non-immune sera and about 0.01%
to O.5% (w/v) of a plurality of solid phase particles from about 0.5 microns to
about 10 microns in diameter, each particle coated with goat, bovine, or horse
immunoglobulin antibodies, the non-immune sera comprising 3% bovine serum, 3%
goat serum, and 3% horse serum.
48. (Twice amended) A method for detecting in a sample from a human
subject the presence of a target human antibody to HIV which specifically binds
an HIV viral antigen, said method comprising:
a) adding to the sample a treatment buffer comprising non-immune
sera and about 0.01% to about 0.5% (w/v) of a plurality of solid phase particles
from about 0.5 microns to about 10 microns in diameter, each particle coated
with goat, bovine, or horse immunoglobulin antibodies, the non-immune sera
comprising 3% bovine serum, 3% goat serum, and 3% horse serum;
b) using a test strip comprising:
i) a solid support;
ii) said HIV viral antigen bound to a first discrete area on
the solid support;
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iii) a non-target human antibody bound to a second discrete
area on the solid support as a positive control; and
iv) a negative control which will not specifically bind
target human antibody or antihuman antibody bound to a third discrete area on
the solid support;
c) contacting the treated sample with the test strip under
conditions such that the HIV viral antigen bound to the test strip specifically
binds with any target human antibody present in the treated sample;
d) washing the test strip to remove unbound treated sample;
e) contacting the resulting test strip with enzyme labeled
antihuman antibodies which specifically bind to any target human antibodies
bound to, or on, the test strip;
f) detecting the presence of labeled antibodies and thereby the
presence of target human antibodies in the sample; and
g) verifying the correctness of the detection by determining that
the positive control is labeled and the negative control is not labeled.
54. (Twice amended) The method of claim 48 wherein the coated solid
phase particles are prepared using particles individually coated with the
non-immune sera from either goat, bovine, or horse.
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55. (Twice amended) A method for detecting in a sample from a human
subject the presence of a target human antibody to HIV which specifically binds
an HIV viral antigen, said method comprising:
a) adding to the sample a treatment buffer comprising non-immune
sera and about 0.01% to about 0.5% (w/v) of a plurality of solid phase particles
from about 0.5 microns to about 10 microns in diameter, each particle coated
with goat, bovine, or horse immunoglobulin antibodies, the non-immune sera
comprising 3% bovine serum, 3% goat serum, and 3% horse serum;
b) using a test strip comprising:
i) wells used as a solid support;
ii) said HIV viral antigen bound to discrete areas on the
solid support;
c) contacting the treated sample with the test strip under
conditions such that the HIV viral antigen bound to the test strip specifically
binds with any target human antibody present in the treated sample;
d) washing the test strip to remove unbound treated sample;
e) contacting the resulting test strip with enzyme labeled
antihuman antibodies which specifically bind to any target human antibodies
bound to, or on, the test strip; and
f) detecting the presence of labeled antibodies and thereby the
presence of target human antibodies in the sample
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58. The method of claim 55 wherein the HIV viral antigen is
recombinant gp 160.
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EXHIBIT C
PART NUMBER MASTER LIST
--------------------------------------------------------------------------------
PART NUMBER TITLE OF DOCUMENT
================================================================================
180000 Preparation of the Master Cell Seed Bank (MCSB)
--------------------------------------------------------------------------------
180001 Preparation of the Working Cell Seed Bank (WCSB)
--------------------------------------------------------------------------------
180002 Preparation of the Master Virus Seed Bank (MVSB)
--------------------------------------------------------------------------------
180003 Preparation of the Working Virus Seed Bank (WVSB)
--------------------------------------------------------------------------------
200000 Preparation of 1OX TBS, 1% azide
--------------------------------------------------------------------------------
200002 Preparation of 1% Bovine lgG Coated Beads
--------------------------------------------------------------------------------
200003 Preparation of 1 % Equine lgG Coated Beads
--------------------------------------------------------------------------------
200004 Preparation of 1% Goat IgG Coated Beads
--------------------------------------------------------------------------------
200005 Preparation of BSA-TBS, 0.1% azide
--------------------------------------------------------------------------------
200006 Preparation of Positive Pool Stock
--------------------------------------------------------------------------------
200007 Preparation of Grace's Complete Media with 10% FBS
--------------------------------------------------------------------------------
200008 Preparation of Deionized 8M Urea
--------------------------------------------------------------------------------
200009 Preparation of Lysis Buffer
--------------------------------------------------------------------------------
200010 Preparation of Extraction Buffer
--------------------------------------------------------------------------------
200011 Preparation of Lentil Lectin Buffer
--------------------------------------------------------------------------------
200013 Preparation of Gel Filtration Buffer
--------------------------------------------------------------------------------
200015 Preparation of Lentil Lectin Regeneration Buffer A
--------------------------------------------------------------------------------
200016 Preparation of Lentil Lectin Regeration Buffer B
--------------------------------------------------------------------------------
200017 Preparation of Lentil Lectin Storage Buffer
--------------------------------------------------------------------------------
200018 Preparation of Sartocon Cleaning Solution
--------------------------------------------------------------------------------
200020 Preparation of Buffer Exchanged gp160 Urea Extract
--------------------------------------------------------------------------------
200021 Preparation of Dialyzed gp16O Lentil Lectin Pool
--------------------------------------------------------------------------------
200022 Preparation of gp160 Fraction Pool
--------------------------------------------------------------------------------
200023 Preparation of gp160 Cell Paste
--------------------------------------------------------------------------------
200024 Preparation of Phosphate-EDTA Buffer
--------------------------------------------------------------------------------
200025 Preparation of 2 mg/ml chymostatin
--------------------------------------------------------------------------------
200026 Expansion of Sf9 Cells for the production of gp160
--------------------------------------------------------------------------------
200027 Heat Inactivation of Fetal Bovine Serum
--------------------------------------------------------------------------------
200028 Preparation of Wash Buffer
--------------------------------------------------------------------------------
3/28/94
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PART NUMBER MASTER LIST
--------------------------------------------------------------------------------
PART NUMBER TITLE OF DOCUMENT
================================================================================
200029 Preparation of 0.15M NaCl
--------------------------------------------------------------------------------
200030 Preparation of 0.5M EDTA
--------------------------------------------------------------------------------
200031 Preparation of Phosphate Flushing Buffer
--------------------------------------------------------------------------------
300001 Preparation of Conjugate Diluent
--------------------------------------------------------------------------------
300002 Preparation of Negative Control
--------------------------------------------------------------------------------
300003 Preparation of Positive Control
--------------------------------------------------------------------------------
300004 Preparation of Sample Buffer
--------------------------------------------------------------------------------
300005 Preparation of Substrate Diluent
--------------------------------------------------------------------------------
300006 Preparation of Stop Solution
--------------------------------------------------------------------------------
300007 Preparation of Wash Solution
--------------------------------------------------------------------------------
300009 Preparation of Conjugate Concentrate
--------------------------------------------------------------------------------
300010 Final Processing of gp16O
--------------------------------------------------------------------------------
300011 Combining of gp160 Lots
--------------------------------------------------------------------------------
400001 Filling of Conjugate Concentrate
--------------------------------------------------------------------------------
400002 Fillinq of Conjugate Diluent
--------------------------------------------------------------------------------
400003 Filling of Negative Control
--------------------------------------------------------------------------------
400004 Filling of Positive Control
--------------------------------------------------------------------------------
400005 Filling of Sample Buffer
--------------------------------------------------------------------------------
400007 Filling of Substrate Diluent
--------------------------------------------------------------------------------
400008 Filling of Stop Solution
--------------------------------------------------------------------------------
400009 Fillinq of Wash Solution
--------------------------------------------------------------------------------
500000 Coating, Packaging and Labeling of Microwell Strips
--------------------------------------------------------------------------------
500001 Labeling of Conjugate Concentrate
--------------------------------------------------------------------------------
500002 Labeling of Conjugate Diluent
--------------------------------------------------------------------------------
500003 Labeling of Negative Control
--------------------------------------------------------------------------------
500004 Labeling of Positive Control
--------------------------------------------------------------------------------
3/28/94
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PART NUMBER MASTER LIST
--------------------------------------------------------------------------------
PART NUMBER TITLE OF DOCUMENT
================================================================================
500005 Labeling of Sample Buffer
--------------------------------------------------------------------------------
500006 Packaging and Labeling of Substrate tablets (25)
--------------------------------------------------------------------------------
500007 Labeling of Substrate Diluent
--------------------------------------------------------------------------------
500008 Labeling of Stop Solution
--------------------------------------------------------------------------------
500009 Labeling of Wash Solution
--------------------------------------------------------------------------------
500013 Packaging and Labeling of Substrate tablets (15)
--------------------------------------------------------------------------------
600000 Final Product Packaging (5 plate), HIV-1 Urine EIA
--------------------------------------------------------------------------------
600001 Final Product Packaging (2 plate), HIV-1 Urine EIA
--------------------------------------------------------------------------------
3/28/94
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EXHIBIT D
ESCROW AGREEMENT
(To be supplied at a later date)
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EXHIBIT E
SPECIFICATIONS
When performed to the manufacturer's instructions, the Product will meet or
exceed the assay validity criteria and the expected performance claims which are
printed in the then current Package Insert for the duration of the Product's
life as indicated by the expiration date on the Product labels.
Calypte will provide to Otsuka the Package Insert as approved by the FDA and any
subsequent replacements within 30 days of its approval by the FDA.
In addition, the Product will meet the following criteria:
O.D.
Negative Control: The average O.D. (n=5) tested has to be less than
0.18.
Positive Control: The average O.D. (n=5) tested has to be within the
range of the mean +/- 20% (1.546-2.319).
Normal Urine: The average O.D. (n=5) tested has to be less than
cutoff point (negative control O.D. + 0.18).
P-Control: The average O.D. (n=5) tested has to be within the
range of the mean +/- 30% (0.914-1.699).
Both Otsuka and Calypte must use the same supply of the Normal Urine and
P-Control in order to verify the specification.
C.V.%
Positive Control: The C.V.(%) of the O.D. (n=5) tested has to be less
than 15.0%
P-Control: The C.V.(%) of the O.D. (n=5) tested has to be less
than 15.0%.
SAMPLING FREQUENCY
Kits corresponding to 2-5% of the total number of kits (each lot)
received by or on behalf of Otsuka every time will be selected randomly
and tested. All the test results of each kit selected have to clear the
specifications.
87
-2-
APPEARANCE OF KIT
The appearance of all the kit contents such as vials and labels including kit
boxes must show no evidence of leakage, damage or obvious cosmetic defects.
COMPONENTS
Components will be tested and evaluated according to the performance criteria
described above.
CALYPTE BIOMEDICAL OTSUKA PHARMACEUTICAL CO.
By: By:
/s/ Bill Beager /s/ Hideji Nononura
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Date: Date:
8-4-94 8-7-94
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88
EXHIBIT F
CALYPTE MANUFACTURING CAPACITY
1. Berkeley Manufacturing Facility
Maximum capacity is plates or tests per month
2. Harbor Bay Manufacturing Facility
Maximum capacity is plates or tests per month
Confidential portion has been omitted and filed separately with the Commission