-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DY1rqjeROAoRDQih/WrU+pEmDv8SQbcETeDvWYefXmKlTLEFRMb7oM6ZkHHucFgc 9pKjHmR86H9LWakU58b8Cw== 0001012870-98-001413.txt : 19980525 0001012870-98-001413.hdr.sgml : 19980525 ACCESSION NUMBER: 0001012870-98-001413 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19980522 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHEMTRAK INC/DE CENTRAL INDEX KEY: 0000882242 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 770295388 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19749 FILM NUMBER: 98630343 BUSINESS ADDRESS: STREET 1: 929 E ARQUES AVE CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4087738156 MAIL ADDRESS: STREET 1: 929 E ARQUES AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94086 10-K/A 1 FORM 10-K AMD#4 FOR PERIOD ENDING 12/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-K/A AMENDMENT NO. 4 X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _______________ Commission file number 0-19749 CHEMTRAK INCORPORATED (Exact name of Registrant as specified in its charter) DELAWARE 77-0295388 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 929 EAST ARQUES AVENUE, SUNNYVALE, CA 94086 (Address of principal executive offices) (zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 773-8156 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.001 PAR VALUE SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this amendment to its report on Form 10-K for the year ended December 31, 1996 to be signed on its behalf by the undersigned, thereunto duly authorized on the 21st day of May, 1998. CHEMTRAK INCORPORATED By: /s/ Donald V. Fluken --------------------------------- Donald V. Fluken Vice President, Finance Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Prithipal Singh, Ph.D. - ----------------------------- Chairman of the Board May 20, 1998 Prithipal Singh, Ph.D. /s/ Edward F. Covell President, Chief Executive - ----------------------------- Officer and Director May 21, 1998 Edward F. Covell (Principal executive officer) Vice President Finance, /s/ Donald V. Fluken Chief Financial Officer and May 21, 1998 - ----------------------------- Secretary (Principal financial Donald V. Fluken and accounting officer) /s/ Malcolm Jozoff* - ----------------------------- Director May 20, 1998 Malcolm Jozoff /s/ Robert P. Kiley* - ----------------------------- Director May 20, 1998 Robert P. Kiley /s/ David Rubinstein* - ----------------------------- Director David Rubinstein /s/ Gordon W. Russell* - ----------------------------- Director May 20, 1998 Gordon W. Russell *By: /s/ Prithipal Singh, Ph.D. Vice President Finance, - -------------------------------- Chief Financial Officer May 20, 1998 Prithipal Singh, Ph.D. and Secretary
PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (c) 10.36** Distribution Agreement between ChemTrak and Helena Laboratories (Canada) Ltd. dated April 25, 1996. 10.37 Agreement between ChemTrak and Organon Teknika B.V., dated December 1, 1996. 10.38 Development and Distribution Agreement between ChemTrak and Selfcare, Inc., dated December 31, 1996. ______________ ** Confidential treatment has been requested for portions of this document. INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 10.36** Distribution Agreement between ChemTrak and Helena Laboratories (Canada) Ltd. dated April 25, 1996. 10.37 Agreement between ChemTrak and Organon Teknika B.V., dated December 1, 1996. 10.38 Development and Distribution Agreement between ChemTrak and Selfcare, Inc., dated December 31, 1996. _____________ ** Confidential treatment has been requested for portions of this document. EX-10.36 2 DISTRIBUTION AGREEMENT Exhibit 10.36 DISTRIBUTION AGREEMENT THIS DISTRIBUTION AGREEMENT (the "Agreement") is effective as of the 25th day of April, 1996, by and between HELENA LABORATORIES (CANADA) LTD., ("Distributor"), with its principal place of business at Unit #2., 6725 Milcreek Drive, Mississauga, Ontario, L5N 5V3 Canada, and CHEMTRAK INCORPORATED, a Delaware corporation ("ChemTrak") with its principal place of business at 929 E. Arques Avenue, Sunnyvale, California 94086, USA for the purpose of defining the rights and duties of the parties in connection with the distribution by Distributor of ChemTrak's CholesTrak Total Cholesterol Test. NOW, THEREFORE, for good and valuable consideration, the parties hereby agree as follows: AGREEMENT 1. DEFINITIONS. Capitalized terms shall have the meanings set forth in Exhibit A hereto. 2. APPOINTMENT AND ACCEPTANCE. a. GRANT OF DISTRIBUTORSHIP RIGHTS. (i) ChemTrak appoints Distributor, and Distributor accepts such appointment, as the sole distributor for the Product in the Exclusive Markets in the Territory. ChemTrak shall not appoint any other distributor for the Product in the Exclusive Markets in the Territory and shall not itself Sell the Product in the Exclusive Markets in the Territory. (ii) ChemTrak agrees to refer all bona fide inquiries regarding the Sale of the Product in the Exclusive Markets in the Territory received by it to Distributor. Distributor shall refer to ChemTrak any inquiry which Distributor may receive from outside of the Exclusive Markets or the Territory for the purchase of Products or any other ChemTrak products. b. SALE OF COMPETING PRODUCTS BY DISTRIBUTOR. In consideration for the rights granted to Distributor pursuant to Section 2(a) above, Distributor agrees that during the term of this Agreement, it will not develop or contract to develop using ChemTrak's Proprietary Information (as defined in Section 8(b) of this agreement), manufacture, sell, license, lease or otherwise distribute any product that is directly competitive with the Product in the Exclusive Markets in the Territory. 1. 3. ORDERING, FORECASTS, DELIVERY AND ACCEPTANCE a. ORDERS. Within one month of the date of the signing of this Agreement, Distributor will provide to ChemTrak a purchase order covering the purchase of the Product for the first three months. Thereafter, beginning on month four and on the first day of each fiscal quarter thereafter, Distributor will provide ChemTrak with an order for the next fiscal quarter (such that on January 1 an order is submitted for the quarter beginning April 1, etc.). ChemTrak will accept or reject an order from Distributor within 15 days after receipt of the order. Accepted orders will be noncancellable. Once the order is accepted, Distributor will have the right to request an up to 10% increase or decrease in the size of the order by providing 30 days written notice to ChemTrak. Distributor may use its standard purchase order form to order products; however, any such form shall reference this Agreement and the terms and conditions of this Agreement will supersede any different or additional terms on such order. b. DELIVERY. ChemTrak will use its best efforts, consistent with its obligations to other customers, to process and ship all orders in accordance with requested delivery dates. ChemTrak guarantees that the Product delivered to Distributor will have a minimum shelf life of eighteen (18) months. All orders will be shipped freight collect F.Q.B. ChemTrak's facility, Sunnyvale, California (as defined in Incoterms, Publ. No. 350 of the International Chamber of Commerce); risk of loss for the Product passes to the Distributor upon delivery to a carrier for shipment. If required, ChemTrak will insure the shipments against damage to, or loss of, Products. Such insurance shall be at Distributor's expense and shall be paid for by Distributor at the time of shipment. Distributor shall make any claims for damage or loss in transit through the carrier and any insurance proceeds payable in respect of any loss incurred shall be paid to Distributor. c. INSPECTION AND REJECTION. Distributor shall promptly upon receipt visually inspect all Products for obvious defects and for any damage done during shipment and may reject any Products which fail substantially to meet the Product Specifications. If Distributor does not reject a shipment of Products within 30 days of receipt, such shipment will be deemed to have been accepted, except for latent defects which are not reasonably detectable at the time of acceptance. Rejected shipments shall be returned freight collect to ChemTrak via a carrier designated by ChemTrak within 15 days of rejection. As promptly as possible after receipt by ChemTrak of properly rejected goods, ChemTrak shall repair or replace the rejected goods at ChemTrak's expense. d. MINIMUMS. In consideration for the appointment as Distributor, Distributor will purchase the following minimum quantity of Products in the following periods; provided, however, that any excess amount purchased in a period may be applied to the required minimum amount in the next subsequent period: 2.
TERM PRODUCT QUANTITY ---- ---------------- Date of Agreement to 12/31/96 [*] 12 months ending 12/31/97 [*] 12 months ending 12/31/98 [*]
Failure by Distributor to present purchase orders equal to any required minimum for the periods defined above shall be cause for termination by ChemTrak pursuant to Section 10(b) hereof or, alternatively, ChemTrak, at its sole option, may deem any such shortfall to have been ordered by Distributor. e. FORECASTS; REPORTS. Distributor will provide 12 month rolling nonbinding forecasts of sales 90 days in advance of each quarter period, or any shorter remaining period of the Agreement, and shall update these forecasts on a quarterly basis. Distributor will also provide quarterly reports of actual sales within 20 days of the end of each quarter. Names of customers, addresses, telephone numbers and purchase history, excluding individual retail customers, will be provided to ChemTrak upon termination of this Agreement. 4. PRICES AND PAYMENT TERMS. a. PRICE. Distributor agrees to pay ChemTrak [*] per Bulk Unit and [*] per Bulk Unit for a bilingual Bulk Unit with Distributor supplied artwork. b. PAYMENT TERMS. (i) For the first six (6) months from the effective date of this Agreement, all payments for Product shall be made by wire transfer and must be received by ChemTrak at least three (3) weeks prior to shipment. (ii) After the expiration of the initial six-months period, all payments for Product shall be due within 30 days after the date of invoice of such Product by ChemTrak. ChemTrak shall notify Distributor of the actual date of each shipment of Product at least 5 days in advance of such shipment. (iii) Distributor will pay all non-U.S. export charges, import duties, any and all sales, use, excise, value added or other taxes or assessments imposed by any governmental authority upon or applicable to any sale to Distributor under this Agreement, and all costs and charges for transportation, brokerage, handling and insurance of the Products from the point of shipment. - - ------- [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 3. 5. MARKETING, REDISTRIBUTION. a. PROMOTION AND MARKETING. (i) Distributor agrees to use diligent efforts to Sell the Product and to include in all related advertising materials all reasonably applicable proprietary rights' notices and any other notices of ChemTrak as they appear on or in the Product. (ii) For the first six (6) months from the effective date of this Agreement, ChemTrak will provide, at Distributor's expense, packaging for the Product to be sold by Distributor in the Exclusive Markets in the Territory. After the expiration of such period, Distributor will be responsible for packaging the Product for resale in the Exclusive Markets in the Territory, including, without limitation, designing and producing all packaging materials and product inserts all in forms to be approved in writing by ChemTrak prior to first use of such materials by Distributor. ChemTrak will furnish Distributor with a reasonable supply of its sales literature, books, catalogues and the like in English in order to aid Distributor in effectively carrying out its activities under this Agreement. All such material so provided shall remain the property of ChemTrak and, upon request, Distributor will return same to ChemTrak. Distributor will translate all such materials used by Distributor to market the Product in the Territory into the language or languages necessary for proper marketing. Any such translations will be solely owned by ChemTrak and Distributor will use such translations solely in connection with the Sale of the Product in the Exclusive Markets in the Territory. Distributor will furnish a copy of each such translation to ChemTrak. (iii) Distributor will maintain an inventory of Product sufficient to provide replacement Product to its customers for any defective Product. Distributor will replace all defective Product returned to it by its customers, and return all such defective Product to ChemTrak. If the Product was returned by a customer because of some latent defect which was not reasonably detectable at the time of acceptance of the Product by Distributor, Distributor shall be entitled to the remedies provided in Section 3(c). In all other cases, Distributor shall replace the Product at its own expense. (iv) Distributor will comply with all health registration laws, regulations and orders of any government within the Territory and with all other governmental requirements applicable to its sales activities in the Territory with respect to the Product. Distributor will provide ChemTrak with all information it shall reasonably request, including copies of any filings made in connection therewith and any available Territory clinical data, in connection with Distributor's compliance with this paragraph. ChemTrak will, [AT DISTRIBUTOR'S EXPENSE], furnish Distributor with such assistance and cooperation as may reasonably be requested in connection with compliance with such governmental requirements, including without limitation providing to Distributor all available United States data for clinical trials performed by ChemTrak in connection with the Product. (v) All expenses incurred by Distributor in connection with the performance of its obligations hereunder will be borne solely by Distributor. Distributor will be 4. responsible for appointing its own employees, agents and representatives, who will be compensated by Distributor. (vi) Distributor may provide promotional Products to its customers free of charge. b. TRADEMARKS. To the extent reasonably required by Distributor to perform its obligations pursuant to this Agreement, ChemTrak grants to Distributor a non-transferable, non-sublicensable, royalty-free license to use during the term of this Agreement the trademarks and trade names in listed in Exhibit D hereto (collectively the "ChemTrak Trademarks") with respect to the Product, solely in connection with Distributor's marketing and distribution of the Product in the Exclusive Markets in the Territory under this Agreement. Distributor acknowledges the validity of the ChemTrak Trademarks and ChemTrak's ownership thereof. Distributor may use its own brand name and logo on the Products in addition to or instead of the ChemTrak Trademarks in any manner approved by ChemTrak, such approval not to be unreasonably withheld. 6. PRODUCT WARRANTY. a. ChemTrak warrants that the Product supplied by ChemTrak under this Agreement will be of merchantable quality, free from defects in materials and workmanship and will substantially conform to the Product Specifications for a period of time from shipment of Product to Distributor as is applicable to such Product Specifications. In no event shall ChemTrak be liable under this Agreement for any failure of any Product to meet the Product Specifications due to improper use, storage or shipment by Distributor or by anyone receiving the Product directly or indirectly from Distributor. b. EXCEPT AS SET FORTH IN SECTION 6(a) ABOVE, CHEMTRAK MAKES NO WARRANTIES WITH RESPECT TO THE PRODUCT, EXPRESS OR IMPLIED, AND SPECIFICALLY, WITHOUT LIMITATION, CHEMTRAK DISCLAIMS ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS SET FORTH ABOVE, CHEMTRAK NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME ANY LIABILITY OR WARRANTY IN CONNECTION WITH THE PRODUCT. IN THE EVENT OF ANY BREACH BY CHEMTRAK OF THE WARRANTY SET FORTH IN SECTION 6(a) ABOVE, DISTRIBUTOR'S SOLE REMEDY WILL BE TO RETURN THE AFFECTED PRODUCTS FOR REPAIR, REPLACEMENT OR CREDIT OF THE PURCHASE PRICE, AT CHEMTRAK'S OPTION. IN THE EVENT ANY LIABILITY IS IMPOSED ON CHEMTRAK [BY DISTRIBUTOR] FOR ANY REASON WHATSOEVER IN CONNECTION WITH ITS SUPPLY OF PRODUCT HEREUNDER, THE AGGREGATE AMOUNTS PAYABLE BY CHEMTRAK BY REASON THEREOF WILL NOT EXCEED THE AMOUNT ACTUALLY PAID BY DISTRIBUTOR TO CHEMTRAK FOR THE PRODUCT TO WHICH SUCH LIABILITY RELATES. DURING THE TWELVE (12) MONTH PERIOD PRECEDING THE OCCURRENCE OF THE EVENT GIVING RISE TO SUCH LIABILITY. 5. c. If Distributor makes any warranty or representation inconsistent with or in addition to the warranties stated in this Section 6, Distributor will, at its own expense, defend and hold ChemTrak harmless from any claim to the extent it is based upon such inconsistent or additional warranty or representation. 7. INDEMNITY. Each party hereby agrees to indemnify, defend and hold the other party harmless from any third party claim, lawsuit, legal proceeding, settlement or judgement, including, without limitation, reasonable attorneys' fees and costs incurred in the defense of the same, resulting from or arising out of any death of or personal injury to any person due to the negligence, recklessness, or wilful misconduct of the other party or such other party's officers, employees or agents. 8. PROPRIETARY RIGHTS. a. OWNERSHIP OF PROPRIETARY RIGHTS. ChemTrak will retain all of its fights or title to and ownership of all copyrights, trademarks, trade secrets, patents, and all other intellectual property embodied in the Product. Except as otherwise expressly provided in this Agreement, Distributor will have no right, rifle or interest in the intellectual property embodied in the Product. b. CONFIDENTIAL INFORMATION. Each party agrees that it will treat accordingly all verbal and written communications from the other party which are designated, or which should reasonably be regarded in the normal commercial view, as constituting business secrets or proprietary information ("Proprietary Information"). Each party agrees to refrain from disclosing or making available to any third party any of the other party's Proprietary Information without the other party's written consent and to impose upon its employees and agents the same obligations with respect to the other party's proprietary information as it employs with respect to its own confidential information. No such obligations of confidence will extend to information which (a) is publicly available; (b) is independently developed by the receiving party; (c) is already in the receiving party's possession; or (d) is rightfully received from a third party. The provisions of this Section 8 will survive the termination of this Agreement. 9. COMPLIANCE WITH LAWS. a. EXPORT LAW COMPLIANCE. Distributor understands and recognizes that the Product and other materials made available to it hereunder may be subject to the export administration regulations of the United States Department of Commerce and other United States government regulations, as amended from time to time, related to the export of technical data and equipment and products produced therefrom. Distributor agrees to comply with all such regulations in connection with the distribution of the Product. Distributor agrees to cooperate with ChemTrak and to provide ChemTrak with such reasonable assistance, at no charge to ChemTrak, as is required in order to comply with the export administration regulations of the United States. 6. b. FOREIGN CORRUPT PRACTICES ACT. Distributor hereby agrees that it will comply with the requirements of the U.S. Foreign Corrupt Practices Act, as amended from time to time, (the "Act") and will refrain from any payments to third parties which would cause Distributor or ChemTrak to violate the Act. Distributor hereby further agrees to indemnify and hold ChemTrak harmless from any breach of this Section . c. LICENSES AND PERMITS. Distributor and ChemTrak will take all actions (including the preparation and filing of all requisite applications, certificates and the like) required by law with respect to, and will use their best efforts to obtain, any and all required non-U.S. governmental authorizations, including without limitation any import licenses and foreign exchange permits. Each party will provide reasonable evidence of compliance with required non-U.S. governmental authorization, registrations and the like to the other party upon request. As among the parties, ChemTrak will not be liable if any authorization is delayed, denied, revoked, restricted or not renewed; Distributor will bear all such risks and costs caused thereby. 10. TERM, TERMINATION, AND EFFECT OF TERMINATION. a. TERM. Except as provided in Section 10(b), this Agreement and the licenses and rights granted hereunder will be effective for a term of 3 years, and shall be automatically renewed thereafter for additional 1 year periods provided that (i) Distributor has fulfilled its minimum purchase obligation agreed upon with ChemTrak on or before September 30 of each year and (ii) the parties mutually agree to minimums for each extension year. b. EARLY TERMINATION BY EITHER PARTY. Either party may terminate this Agreement upon written notice to the other party (i) if the other party commits any material breach of this Agreement which the other party fails to cure within 60 days following written notice from the non-breaching party specifying such breach; (ii) (A) all or a substantial portion of the assets of the other party are transferred to an assignee for the benefit of creditors or to a receiver or to a trustee in bankruptcy, (B) a proceeding is commenced by or against the other party for relief under bankruptcy or similar laws and such proceeding is not dismissed within 60 days, or (C) the other party is adjudged bankrupt; or (iii) the other party permanently ceases to conduct business. c. EARLY TERMINATION BY DISTRIBUTOR. Distributor may terminate this Agreement, upon 60 days written notice to ChemTrak, if ChemTrak consistently fails to meet requested delivery dates as specified on accepted purchase orders. Consistent failure to meet requested delivery dates shall be defined for the purposes of this Agreement as three (3) or more consecutive occurrences of deliveries that take place thirty (30) or more days past the requested and approved delivery date. d. SURVIVING OBLIGATIONS. Termination or expiration of this Agreement will not (i) affect any other rights of either party which may have accrued up to the date of such termination or expiration, (ii) relieve either party of its obligations under Section 8(b) (Confidential Information) or Section 7 (Indemnity), (iii) relieve Distributor of its obligation to pay to ChemTrak sums due prior to termination or expiration of this Agreement. 7. e. EFFECT OF TERMINATION. Upon the effective date of termination of this Agreement for whatever reason: (i) the right of Distributor to act as a sales representative and distributor of the Product in the Exclusive Markets and in the Territory will cease and Distributor will immediately discontinue all use in the Exclusive Markets and in the Territory of ChemTrak's trade names and trademarks in connection with the Product. Distributor will return to ChemTrak all price lists, catalogs, sales literature, operating and service manuals, advertising literature and other materials relating to the Product originally provided by ChemTrak to Distributor. However, for materials produced by Distributor, Distributor will destroy such materials which relate solely to the Product. Notwithstanding the foregoing, Distributor will have the right, for a period not to exceed 180 days, to sell any Product remaining in inventory to the extent the same are not repurchased by ChemTrak pursuant to clause (ii) below or, in the event that this Agreement is terminated by Distributor pursuant to Section 10(b) for an additional 270 days solely with respect to the fulfillment of firm standing orders as proven by documentation presented to ChemTrak; (ii) in the event the Agreement either terminates at the end of 3 years (or any extension term) or is terminated by ChemTrak pursuant to Section 10(b), if desired by ChemTrak, ChemTrak may repurchase from Distributor all of the Product (to the extent that the same are in new and original condition) then in Distributor's inventory, F.O.B. Distributor's facilities, and ChemTrak will repay to Distributor the actual price paid by Distributor to ChemTrak for such returned products less any and all amounts then owing and uncontested, for whatever reason, from Distributor to ChemTrak; (iii) except to the extent of selling its remaining inventory of Product as permitted by clause (i) above, after termination Distributor will not represent or hold itself out as being any authorized distributor or sales representative for the Product in the Exclusive Markets or in the Territory or engage in any practices which might make it appear that Distributor is still such an authorized distributor or sales representative; (iv) Distributor will promptly assign or cause to be assigned to ChemTrak, or its designee, every health registration or permit obtained pursuant to Section 5 (a)(iv). In the event such assignment is not permitted by law, Distributor will cooperate in the cancellation of such registrations and permits standing in its names and the reissuance of such registrations and permits to ChemTrak or its nominee; (v) Distributor will transfer to ChemTrak at Distributor's cost any rights it may have to any trademarks or trade names of ChemTrak; and (vi) Distributor will provide to ChemTrak a copy of its customer list for the Product including names, addresses, telephone numbers and purchase history excluding individual retail customers. 8. f. ChemTrak will have no obligation to Distributor by reason of the termination of this Agreement. Distributor hereby agrees not to assert any claim by reason of such termination of this Agreement. Neither party, by reason of the termination of this Agreement, will be liable to the other because of any damages, expenditure, loss of profits, or prospective profits of any kind or nature, sustained or arising out of such termination or for any investments related to the performance of this Agreement or the goodwill created in the course of the performance under this Agreement. g. No termination of this Agreement will in any manner whatsoever release, or be construed as releasing, any party from any liability to the other arising out of or in connection with a party's breach of, or failure to perform any covenant, agreement duty or obligation contained in this Agreement. Neither party will be relieved from any obligations vested prior to the date of termination of this Agreement. 11. GOVERNING LAW, DISPUTE RESOLUTION, VENUE AND OFFICIAL LANGUAGE. a. DISPUTE RESOLUTION. In the event of any dispute between the parties arising under or related to this Agreement (a "Dispute"), the presidents (or a direct assignee of each of the presidents reporting to the president) of the parties hereto will negotiate in good faith in an effort to resolve such Dispute for a period of 60 days following written notification from the other party describing in reasonable detail the matter in dispute. Upon the expiration of the sixty (60) day period with the Dispute remaining unsolved, either party may proceed under Subsection (b) below. b. ARBITRATION. Any Dispute not resolved pursuant to Section 11(a) and which involves only ChemTrak and Distributor and no third party shall be settled by binding arbitration in the manner described in this Subsection. The arbitration shall be conducted pursuant to Commercial Arbitration Rules of the American Arbitration Association (the "ASSOCIATION"). Notwithstanding those rules, the following provisions shall apply to any arbitration hereunder. (i) ARBITRATOR. The arbitration shall be conducted by a panel of three arbitrators (the "PANEL"). The Panel shall be selected from a pool of retired independent U.S. federal judges to be presented to the parties by the Association. (ii) PROCEEDINGS. The parties (i) acknowledge that the issues that may arise in any Dispute may involve a number of complex matters and (ii) confirm their intention that each party will have the opportunity to conduct complete discovery with respect to all material issues involved in a Dispute. The Panel shall not award punitive damages to either party and the parties shall be deemed to have waived any right to such damages. The Panel shall, in rendering its decision, apply the substantive law of the State of California, without regard to its conflict of laws provisions, except that the interpretation of and enforcement of this Section 11 shall be governed by the Federal Arbitration Act. The Panel shall apply the Federal Rules of Evidence to the hearing. The proceeding shall take place in San Jose, California. (iii) AWARD. The Panel is empowered to award any remedy allowed by law, including money damages, multiple damages, prejudgment interest and attorneys' fees, and to 9. grant final, complete, interim, or interlocutory relief, including injunctive relief but excluding punitive damages. (iv) COSTS. Each party shall bear its own legal fees. The Panel shall assess its costs, fees and expenses against the party losing the arbitration unless it believes that neither party is the clear loser, in which case the Panel shall divide its fees, costs and expenses according to its sole discretion. (v) SURVIVABILITY. Any duty to arbitrate under this Agreement shall remain in effect and enforceable after termination of the contract for any reason. c. APPLICABLE LAW; ENGLISH LANGUAGE. This Agreement is made in accordance with and shall be governed and construed under the laws of the State of California, as applied to agreements executed and performed entirely in California by California residents and in no event shall this Agreement be governed by the United Nations Convention on Contracts for the International Sale of Goods. The official text of this Agreement and any Exhibit or any notice given or accounts or statements required by this Agreement shall be in English. In the event of any dispute concerning the construction or meaning of this Agreement, reference shall be made only to this Agreement as written in English and no to any other translation into any other language. 12. LIMITATION OF LIABILITY. EACH PARTY WILL ONLY BE LIABLE TO THE OTHER PARTY FOR DAMAGES THAT ARE DIRECTLY ATTRIBUTABLE TO ITS MATERIAL BREACH OF THIS AGREEMENT, OR ITS GROSSLY NEGLIGENT OR INTENTIONAL ACT OR OMISSION. NOTWITHSTANDING THE FOREGOING, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR INDIRECT DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS OR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY GOODS SOLD OR DELIVERED TO DISTRIBUTOR. NOTHING IN THIS AGREEMENT WILL CREATE ANY LIABILITY OF EITHER OR BOTH PARTIES TO ANY THIRD PARTY OR PARTIES. 13. MISCELLANEOUS. a. NO AGENCY, NO JOINT VENTURE - INDEPENDENT CONTRACTOR. Distributor will act as independent contractor under the terms of this Agreement. Distributor is not, and will not be deemed to be, employee, agent, co-venturer or legal representative of ChemTrak for any purpose. Distributor will not be entitled to enter into any contracts in the name of, or on behalf of ChemTrak, nor will Distributor be entitled to pledge the credit of ChemTrak in any way or hold itself out as having authority to do so. b. ASSIGNMENT. Neither this Agreement nor any right or obligation arising hereunder may be assigned, in whole or in part, by Distributor without the prior written consent of ChemTrak; provided, however, that Distributor may assign to an Affiliate without such consent but with written notice to ChemTrak, and, additionally, ChemTrak's consent to an assignment by 10. Distributor to any successor by merger or sale of substantially all of its business units to which this Agreement relates shall not be unreasonably withheld. Any assignment or purported assignment in contravention of this Section 13(b) will be void and of no effect. c. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the Exhibits hereto, set forth and constitute the final, complete and entire agreement between the parties hereto with respect to the subject matter hereof, supersede any and all prior agreements, understandings, promises and representations made by either party to the other concerning the subject matter hereof and the terms applicable hereto and are intended as a complete and exclusive statement of the terms of the agreement between the parties. This Agreement may not be released, discharged, amended or modified in any manner except by an instrument in writing signed by duly authorized officers of both parties. d. SEVERABILITY. If any provision of this Agreement is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, such provision will be construed or deemed amended to conform to applicable laws so as to be valid, legal and enforceable and to conform to the maximum extent possible to the intention of the parties including, without limitation, by deleting such provision. e. BENEFITS OF THIS AGREEMENT. Except as expressly provided for herein, nothing in this Agreement will be construed to give to any person or entity other than Distributor and ChemTrak any legal or equitable right, remedy or claim under this Agreement. This Agreement will be for the sole and exclusive benefit of Distributor and ChemTrak. f. WAIVER. No waiver of any right under this Agreement will be deemed effective unless contained in a writing signed by the party charged with such waiver, and no waiver of any right arising from any breach or failure to perform will be deemed to be a waiver of any future such right or of any other right arising under this Agreement. g. HEADINGS. Section headings contained in this Agreement are included for convenience only and form no part of the agreement between the parties. h. NOTICES. Notices, consents and the like required or permitted hereunder will be in writing and will be sent to the addresses set forth below or to such other addresses as the parties may hereafter specify, and will be deemed given on the earlier of: (i) physical delivery to a party, including confirmed delivery by facsimile or telex; or (ii) upon delivery after sending by expedited courier. Copies of notices will be sent to the appropriate address as set forth below: 11. To ChemTrak: ChemTrak Incorporated 929 E. Arques Avenue Sunnyvale, CA U.S.A. 94086 Attention: President With a copy to: Cooley Godward Castro Huddleson & Tatum Five Palo Alto Square, Suite 400 Palo Alto, CA 94306 U.S.A. Attention: Barbara Kosacz To Distributor: Helena Laboratories (Canada) Ltd. Unit #2 6725 Millcreek Drive Mississauga, Ontario L5N 5V3 Canada Attention: Mark Thomson, President i. FORCE MAJEURE. Each of the parties hereto will not be liable for any failure or delay in performance hereunder where such failure or delay is due, in whole or in pan, to any cause beyond its reasonable control, including but not limited to Acts of God, fire, flood, warfare, labor disputes or other similar catastrophic events. j. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which will be an original and all of which will constitute together but one and the same document. k. AUTHORITY TO ENTER INTO AND EXECUTE AGREEMENT. Each party represents and warrants to the other that they have the right and lawful authority to enter into this Agreement for the purposes herein and that there are no other outstanding agreements or obligations inconsistent with the terms and provisions hereof. l. PATENT MARKING. Distributor agrees to include on the Products and on all packaging materials and Product labelling patent marking as reasonably requested by ChemTrak. IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above mentioned. CHEMTRAK INCORPORATED HELENA LABORATORIES (CANADA) LTD. By: /s/ Alene Holztman By: /s/ Mark Thomson -------------------------- ------------------------------- Title: Vice President Title: President -------------------------- ------------------------------- 12. EXHIBIT A DEFINITIONS a. "Territory" shall mean Canada. b. "Product" shall mean ChemTrak's CholesTrak Total Cholesterol Test as described on Exhibit B. c. "Product Specifications" shall mean the specifications pertaining to the Product included in Exhibit B. ChemTrak may from time to time, by written notice to Distributor, make modifications to the Product which do not materially adversely affect the performance or functionality of the Product without otherwise affecting the terms of this Agreement and without incurring any responsibility or liability to Distributor. d. "Sell", "Sale" or "Sold" shall mean to sell, lease, distribute, market or otherwise dispose including giveaway, and to use in connection with those activities. e. "Exclusive Markets" shall mean, collectively, distribution of the Product for sale to any and all brokers and wholesalers that serve chain drug and mass merchandisers, and natural and health food stores. "Exclusive Markets" expressly does not include sales to hospitals, physicians, catalogs, computer software companies, pharmaceutical companies, and Canadian government or military. f. "Bulk Unit" shall mean one (1) Product cassette in a sealed foil pouch with desiccant and one (1) conversion (result) card in mmols per cassette, either in English only or in both English and French, as appropriate. g. "Affiliate" shall mean any entity that directly or indirectly Owns, is Owned by or is under common Ownership with, a party to this Agreement, where "Own" or "Ownership" means direct or indirect possession of greater than fifty (50%) of the outstanding voting securities of a corporation or a comparable equity interest in any other type of entity. 13. 14 EXHIBIT B PRODUCT DESCRIPTION AND SPECIFICATIONS "Product" referred to includes one CholesTrak test cassette for total cholesterol (with result chart printed in English) in an individual foil pouch, or: One CholesTrak test cassette for total cholesterol in bilingual package (with result chart printed bilingual). Artwork for package and result chart to be supplied by buyer, subject to Section 5(a)(ii). The Product shall meet the description and be consistent with ChemTrak's Premarket Notification 510(k)s received by the FDA on February 19, 1991 and October 4, 1991, with the following performance characteristics, which will be included in a ChemTrak Certificate of Analysis accompanying each lot of Bulk Units supplied to Distributor:
TEST SPECIFICATIONS RESULTS - ---- -------------- ------- Conversion Chart Assay Range 125 mg/dL - 400 mg/dL Correlation with Reference Method Slope 0.95 - 1.05 Correlation Coefficient (r(2)) 0.95 - 1.00 Whole Blood Accuracy and Precision Test Accuracy (Estimated % Bias in mg/dL based on NCCLS Document EP9-T) at Low Level (190+/-15 mg/dL) within plus minus 5% bias at Medium Level (250+/-15 mg/dL) within plus minus 5% bias at High Level (350+/-15 mg/dL) within plus minus 5% bias Precision at Low Level (190+/-15 mg/dL) Not more than 8% CV at Medium Level (250+/-15 mg/dL) Not more than 8% CV at High Level (350+/-15 mg/dL) Not more than 7% CV Reliability (After 5 - 7 days at 37(degree)C/95%RH) The mean migration height of the test cassettes is within equal to 1.5 mm of the control cassettes using whole blood at 200 plus minus 15 mg/dL.
14.
TEST SPECIFICATIONS RESULTS - ---- -------------- ------- Microbial Wicking Buffer shows no growth after 6 - 8 days. Pull Force Not more than 9 lbs Functional Failures Not more than 2%
15. EXHIBIT C ORDER FORECAST (IN '000S OF UNITS) Month 1 [*] Month 2 Month 3 Month 4 [*] Month 5 Month 6 Month 7 [*] Month 8 Month 9 Month 10 [*] Month 11 Month 12 - - ------- [*] Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. 16. EXHIBIT D CHEMTRAK TRADEMARKS CholesTrak(TM) 17. EX-10.37 3 ORGANON TEKNIKA BV AGREEMENT EXHIBIT 10.37 AGREEMENT This Agreement is entered into this 1st day of December 1996, by and between ORGANON TEKNIKA BV (hereinafter referred to as "Teknika"), a corporation of the Netherlands having its principal place of business at Boseind 15, 5281 RM Boxtel, the Netherlands, represented by Dr. R. Salsmans, and CHEMTRAK (hereinafter referred to as "Licensee"), a corporation of the USA, having its registered offices at 929 E. Arques Avenue, Sunnyvale, CA 94086-4520, USA, represented by Dr. Prithipal Singh, WHEREAS, Teknika is the equitable owner of all the right, title and interest in and to certain interest in and to certain Sol Particle Immuno Assay Patent Rights (as hereinafter defined) owned by its ultimate holding company Akzo Nobel NV (a corporation organized under the laws of the Netherlands) including the exclusive right to grant licenses under such PATENT RIGHTS. WHEREAS, LICENSEE desires to obtain a license from Teknika under the Patent Rights, for the purposes stated herein below. NOW THEREFORE, the parties agree as follows: 1.0 Definitions 1.1. The term "SPIA" means gold sol particle immuno assay. 1.2 The term "SPIA Technology" means a technology employing the SPIA principle, including, but not limited to, the information contained in the patents and patent applications included in the Patent Rights. 1.3 The term "Licensed Products" shall mean tests as specified in Addendum A, the manufacture, use or sale of which would, in the absence of the license granted hereunder infringe, contribute to the infringement of, or induce the infringement of any claim of the Patent Rights which has neither expired nor been declared invalid by a court of competent jurisdiction from which no appeal has been or may be taken. 1.4 The term "Patent Rights" shall mean the patents and patent applications relating to SPIA Technology as are specified in Addendum B. 1.5 The term "Net Sales" means the gross amount actually charged by LICENSEE, on sales, or other dispositions for value, of Licensed Products, less value added taxes and less a lumpsum to cover all usual deductions such as discounts, allowances or credits for returned products actually allowed and taken, custom duties, etc. which shall be 5% of the invoice amount for the Licensed Products. Sales or other transfers of Licensed Products to Affiliated Companies or between Affiliated Companies and resold to third parties, shall not constitute Net Sales of Licensed Products until the Licensed Products are sold to parties who are not Affiliated Companies. In the event that Licensed Products are sold as part of an individualized kit consisting of up to two tests, lancets, swabs, disinfectant and user instructions, the gross amount invoiced on the sale of Licensed Products in such individualized kit format shall be calculated either by multiplying the gross amount received from such individualized kit sale by the fraction A/A+B (where A is the selling price of the Licensed Product in non- individualized non-combined kit format and B is the selling price of the Licensed Product in the individualized combined kit format,) or by deducting two dollars (USD 2.00) from the gross amount invoiced, whichever results in the higher Net Sales price. 1.6 The term "Territory" shall mean worldwide. 1.7 The term "Affiliated Company" means any company which, by means of ownership of a majority of share or at lest 50% interest in income or otherwise, directly or indirectly controls, is controlled by or is under common control with either party. 2. Licensing of Patent Rights 2.1 Teknika hereby grants to LICENSEE a non-transferable, non-exclusive license under the Patent Rights, without the right to sublicense, for the sole purpose of manufacturing, using and/or selling Licensed Products under its own label in the Territory for the life of this Agreement. 2.2 Notwithstanding the foregoing, Teknika herewith specifically agrees that LICENSEE will have the right, by way of exception, to manufacture a specific Licensed Product in the form of an H. Pylori test, under the trademark HpChek and under the label of the third party defined in Addendum C hereto (OEM manufacture). Such OEM manufacture shall be permitted only and exclusively for the aforesaid H. Pylori test utilizing the trademark HpChek, for and on behalf of the third party defined in Addendum C and for no other party. The Licensed Product so manufactured will be marketed and distributed by the third party referred to in Appendix C. 2.3 LICENSEE hereby agrees to take and accept the aforesaid license as embodied in this Agreement. 3.0 Royalties, Records and Accounting 3.1 In consideration of the rights granted and under Article 2., LICENSEE shall pay Teknika upon execution of this Agreement a non- refundable, non deductible lump sum payment of USD 150,000.- to be paid in two equal installments: USD 75,000.- upon signature, and USD 75,000.- on the first anniversary of the signature date, which payment shall not act as prepaid royalties creditable toward any running royalties due under this Paragraph as and when such royalties are due and payable. 3.2 Furthermore, LICENSEE shall pay Teknika as from the first day of commercial sale, a running royalty as follows. (i) 4 % of the Net sales of Licensed Products other than the Licensed Product referred to in this Article under (ii) here below; (ii) 5.5 % of Net Sales of Licensed Product referred to in Article 2.2 above. 3.3 LICENSEE agrees to keep or cause to be kept accurate records and books of account in accordance with good accounting practice, showing the information required to permit calculation of Net Sales and the royalties under this Article. These books and records shall be preserved for at least four (4) years from the date of the royalty payments to which they pertain. 3.4 On or before the 45th day of each calendar quarter during the term hereof, LICENSEE shall prepare and send to Teknika royalty reports for the previous quarter. Said Net Sales and reports shall indicate total sales and Net Sales per country under this Agreement for the previous calendar quarter, per Licensed Product, and shall show the amount of royalty due with sufficient information to enable confirmation by Teknika, and LICENSEE shall include payment of the amount of royalties shown to be due with such report. 3.5 Upon ten (10) days written notice and not more than once per calendar year, LICENSEE agrees to permit one or more Certified Public Accountant(s) appointed by Teknika (except one to whom LICENSEE has a reasonable objection), to enter upon the premises or LICENSEE during all usual business hours of LICENSEE at any time following the 60th day of any calendar quarter in order to inspect files records pertaining to Net Sales and royalties under this Agreement, and to make on LICENSEE's premises and retain copies of any and all parts of the records and accounts kept by LICENSEE pursuant to this Article, including invoices which are relevant to any report required to be rendered by LICENSEE. Said copies shall be provided to the Certified Public Accountant(s) at no expense to Teknika. Said Certified Public Accountant(s) shall keep all information received from LICENSEE confidential; however, it will provide Teknika with the Net Sales, per country, for each type of Licensed Product, specifying the sales and the application of the appropriate royalty rate so that royalties due Teknika may be calculated. The information obtained by the Certified Public Accountant(s) shall be retained for a period of four (4) years from date of the royalty payment to which it relates, or 2 years from the date of receipt by the Certified Public Accountant(s), whichever is longer. In the event any audit results in a change upward in any royalty payment of as much a five percent (5%) for any annual period, LICENSEE shall pay the costs of such audit for such annual period, otherwise such audit shall be at Teknika's expenses. 3.6 Payment of all royalties hereunder shall be made in Dutch Guilders at the mean rate of exchange existing on the last day of the quarter to which the payment applies as published in the Wall Street Journal (European Edition). 4. Duration 4.1 This Agreement shall become effective as of the date of signing by both parties to this Agreement and shall remain in effect until the last to expire of the Patent Rights. 4.2 In the event either party breaches this Agreement, in addition to all other rights and remedies which either party may have the party not in default may terminate this Agreement by written notice. Such termination shall become effective on the date set forth in the notice of termination, but in no event shall it be earlier than sixty (60) days from the date of mailing thereof and shall have no effect if the breach has been cured within the said period of notice. 4.3 The termination of this Agreement shall not relieve LICENSEE from its obligation to pay Teknika all royalties that shall have accrued up to the effective date of termination. 5. Assignment Teknika shall have the right to assign this Agreement to, or delegate its obligations hereunder to be performed by any successor or Affiliated Company of Teknika, provided that Teknika warrants that the terms and conditions for LICENSEE remain unchanged. This Agreement is not assignable by LICENSEE without the prior written consent of Teknika. 6. Entirety Clause As of the date hereof, this agreement supersedes all previous oral and written agreements between the parties, and constitutes the only and entire understanding to exist between the parties with respect to the subject matter of this Agreement, and no amendment shall be implied or proven from or evidenced by negotiations between the parties heretofore or hereinafter conducted or agreements of the parties heretofore or hereafter executed, unless in writing and signed by the parties hereto. 7. Warranty 7.1 Teknika represents and warrants to LICENSEE that it has the full right and power to grant the license to LICENSEE to set forth in this Agreement. Teknika further warrants and represents that there are no other colloidal gold patents owned or controlled by Teknika which cover the Licensed Products. 7.2 Except as specifically set forth in paragraph 7.1 herein, Teknika makes no representations or warranties, either express or implied, arising by law or otherwise, including, but not limited to, implied warranties of merchantability or fitness for a particular purpose. In no event will Teknika have any obligation or liability arising from tort, or for loss of revenue or profit, or for incidental or consequential damages. In particular, with no limitation, nothing in this Agreement will be construed as: (i) A warranty or representation by Teknika as to the validity or scope of any Patent Rights. (ii) A warranty or representation that anything made, used, sold or otherwise disposed of under the license granted in this Agreement is or will be free from infringement of patents of third parties. (iii) Conferring the right to use in advertising, publicity, or otherwise any trademark, trade name, or any contraction, abbreviation, simulation, or adaptation thereof, of Teknika; or (iv) Conferring by implication, estoppel, or otherwise any license or rights under any patents of Teknika other than the Patent Rights, regardless of whether the patents are dominant or subordinate to the Patent Rights. 7.3 In the event LICENSEE becomes aware of infringement of the Licensed Patents by a third party, it will immediately notify Teknika thereof. Teknika intends to use such reasonable efforts, as it in its sole discretion determines, to pursue infringers and enforce its rights under its Licensed Patents. LICENSEE, at Teknika's request, shall render all reasonable assistance and cooperation in that regard. Any reasonable out of pocket expenses incurred at the request of Teknika with regard to furnishing such assistance and cooperation (e.g., travel and lodging expenses) shall be reimbursed by Teknika. Any recoveries resulting from such action by Teknika shall be Teknika's property. 8. Applicable Law: Severability 8.1 This Agreement shall be deemed to have been made in and shall be construed in accordance with the laws of the Kingdom of the Netherlands, for all matters other than scope and validity of the PATENT RIGHTS, as to which the laws of the particular country where the Patent Rights are in dispute shall apply. 8.2 All disputes arising in connection with the present Agreement shall be finally settled at the competent court of "s-Hertogenbosch, The Netherlands. 9 Miscellaneous Provisions 9.1 All notices which shall or may be given hereunder shall be in writing in English and shall be prepared registered mail addressed to the recipient at the addresses herein stated, or at such other address as a party may from time to time designate: Organon Teknika B.V. c/o Organon Teknika N.V. Veedijk 58 2300 Turnhout Belgium Attn: President and ChemTrak 929 E. Arques Avenue Sunnyvale, CA 94086-4520 USA Attn: President 9.2 Payment of lump sum fees and royalties, due under this Agreement are to be made to Organon Teknika B.V., Boxtel, the Netherlands, to its account with ABN Amro Bank, Nijmegen, the Netherlands, account no. 45.30.40.152. 9.3 Confidentiality Each party to this Agreement agrees that any information obtained by it form the other party pursuant to this Agreement shall be kept in the strictest confidence and shall only be used for the proper performance of this Agreement, except that this obligation shall not apply to: a) information which is in or becomes part of the public domain otherwise than by breach of this Agreement, or b) information which the recipient can show was in its possession at the date of signing of this Agreement; or c) information which was received by the recipient on a nonconfidential basis from a third party having the legal right to transmit the same. The foregoing obligation shall cease five (5) years after termination or expiration of this Agreement. As agreed at Boxtel, As agreed at Sunnyvale, ORGANON TEKNIKA, B.V. CHEMTRAK Dr. R. Salsmans Dr. Prithipal Singh President Chairman and CEO A.J.F. Stap Executive Vice President Corporate Development & Program Management ADDENDUM A LICENSED FIELD OF USE: Rapid testing, utilizing colloidal gold markers, in the field of diagnostics. ADDENDUM B SPIA PATENT SERIES ------------------
Country Patent No. Expiration Date - ------- --------- --------------- Australia 530,217 10.07.99 Austria 7,654 28.06.99 Belgium 7,654 28.06.99 Canada 1,135,183 09.11.99 Denmark 159,799 13.07.99 Finland 77,120 11.07.99 France 7,654 28.06.99 Germany 7,654 28.06.99 Greece 73,524 11.07.94 Hungary 181,659 12.07.99 Ireland 48,467 08.08.99 Israel 57,722 03.07.99 Italy 7,654 28.06.99 Luxembourg 7,654 28.06.99 Mexico 164,526 12.07.99 Philippines 16,420 02.10.2000 Portugal 69,900 28.10.95 South Africa 3276/79 01.07.99 Spain 482,488 15.08.2000 Sweden 7,654 28.06.99 U.S.A. 4,313,734 01.02.99 Switzerland 7,654 28.06.99 The Netherlands 7,654 28.06.99 U.K. 7,654 28.06.99
ADDENDUM C LICENSEE'S marketing partner in the United States for the H. Pylori test ("HpChek") is: Astra Merck, Inc. Wayne, PA EX-10.38 4 DEVELOPMENT AND DISTRIBUTION AGREEMENT Exhibit 10.38 DEVELOPMENT AND DISTRIBUTION AGREEMENT between CHEMTRAK INCORPORATED and SELFCARE, INC. TABLE OF CONTENTS
PAGE ARTICLE 1. DEFINITIONS ................................................ 1 1.1 "Affiliate" ................................................ 1 1.2 "ChemTrak Technology" ...................................... 1 1.3 "Commercialization Costs" .................................. 2 1.4 "Confidential Information" ................................. 2 1.5 "Counseling Service" ....................................... 2 1.6 "HIV Product" .............................................. 2 1.7 "Net Sales" ................................................ 3 1.8 "Purchase Price" ........................................... 3 1.9 "Royalty" .................................................. 3 1.10 "Sample Collection Kit" .................................... 3 1.11 "Software" ................................................. 3 1.12 "Standard Cost of Goods" ................................... 3 1.13 "Territory" ................................................ 3 1.14 "Testing Facility" ......................................... 3 1.15 "True Home HIV Test" ....................................... 3 ARTICLE 2. GRANT OF RIGHTS; EXCLUSIVITY ............................... 4 2.1 License Grants to Selfcare ................................. 4 2.2 Covenant Not to Sell Competitive Products .................. 5 2.3 Loss of Exclusivity ........................................ 5 2.4 Selfcare Affiliates ........................................ 6 ARTICLE 3. DEVELOPMENT OF THE HIV PRODUCT ............................. 7 3.1 General Responsibilities ................................... 7 3.2 Testing Facilities; Counseling Service ..................... 8 3.3 Clinical Trials Supply ..................................... 8 3.4 Plan; Reports .............................................. 9 3.5 Publications ............................................... 9 ARTICLE 4. SUPPLY OF SAMPLE COLLECTION KITS ........................... 9 4.1 Purchases of Sample Collection Kits ........................ 9 4.2 Orders ..................................................... 9 4.3 Purchase Price; Payment .................................... 10 4.4 Delivery ................................................... 10 4.5 Acceptance ................................................. 11 ARTICLE 5. MARKETING, SALE AND DISTRIBUTION OF HIV PRODUCTS ........... 11
i. TABLE OF CONTENTS (CONTINUED)
PAGE 5.1 Marketing Efforts .......................................... 11 5.2 Sales and Advertising Activities ........................... 12 5.3 Pricing .................................................... 12 5.4 Packaging .................................................. 12 5.5 General Conduct ............................................ 12 ARTICLE 6. REPORTS; FORECASTS; MARKETING PLANS ........................ 13 6.1 Reports .................................................... 13 6.2 Forecasts .................................................. 13 6.3 Marketing Plans and Reports ................................ 13 6.4 Confidential Information ................................... 14 ARTICLE 7. PAYMENTS ................................................... 14 7.1 Expenses ................................................... 14 7.2 License Fee ................................................ 14 7.3 Sales Milestone Payments ................................... 14 7.4 Royalties .................................................. 14 7.5 Manner and Place of Payment ................................ 15 7.6 Records and Audit of Sales and Expenses .................... 15 ARTICLE 8. CONFIDENTIALITY ............................................ 16 8.1 Nondisclosure Obligations .................................. 16 8.2 Exceptions ................................................. 16 8.3 Authorized Disclosure ...................................... 16 8.4 Terms of this Agreement .................................... 17 ARTICLE 9. INTELLECTUAL PROPERTY ...................................... 17 9.1 Ownership of Intellectual Property ......................... 17 9.2 Defense of Intellectual Property Suits ..................... 17 9.3 Expenses and Remedies ...................................... 18 9.4 Disclaimer ................................................. 18 9.5 Prosecution of Intellectual Property Suits ................. 19 ARTICLE 10.TERM AND TERMINATION; CHANGE OF CONTROL .................... 19 10.1 Term ....................................................... 19 10.2 Change of Control .......................................... 19 10.3 Termination for Material Breach ............................ 20 10.4 Consequences of Termination ................................ 20
ii. TABLE OF CONTENTS (CONTINUED)
PAGE 10.5 No Other Rights Upon Termination ........................... 22 10.6 Surviving Obligations ...................................... 22 ARTICLE 11. WARRANTIES; INDEMNIFICATION ................................ 22 11.1 Sample Collection Kit Warranty ............................. 22 11.3 Warranty Disclaimers and Limitations ....................... 23 11.4 Indemnification ............................................ 23 11.5 Insurance .................................................. 24 ARTICLE 12. REPRESENTATIONS AND WARRANTIES ............................. 24 12.1 Representation and Warranties of ChemTrak .................. 24 12.2 Representations and Warranties of Selfcare ................. 25 ARTICLE 13. MISCELLANEOUS .............................................. 25 13.1 Assignment ................................................. 25 13.2 Export Law Compliance ...................................... 25 13.3 Foreign Corrupt Practices Act .............................. 26 13.4 Benefits and Binding Nature of Agreement ................... 26 13.5 Entire Agreement; Amendments ............................... 26 13.6 No Other Terms and Conditions .............................. 26 13.7 Force Majeure .............................................. 26 13.8 Notice ..................................................... 26 13.9 English Language; Governing Law ............................ 27 13.10 Waiver ..................................................... 27 13.11 Severability ............................................... 27 13.12 Rights and Remedies Cumulative ............................. 28 13.13 Independent Contractors .................................... 28 13.14 Counterparts ............................................... 28
iii. DEVELOPMENT AND DISTRIBUTION AGREEMENT THIS DEVELOPMENT AND DISTRIBUTION AGREEMENT (the "Agreement") is made as of December 31, 1996 (the "Effective Date") by and between CHEMTRAK INCORPORATED, a Delaware corporation ("ChemTrak"), and SELFCARE, INC. ("Selfcare"), a Delaware corporation. ChemTrak and Selfcare are sometimes referred to herein as a "Party" or the "Parties." RECITALS WHEREAS, ChemTrak has developed a mail-in HIV test (the "HIV PRODUCT," as further defined in Article 1 below) and has conducted certain trials directed toward obtaining regulatory approval to commercially sell the HIV Product in the United States shortly following the Effective Date; and WHEREAS, Selfcare has substantial experience in the distribution, marketing and sale of health care products in the Territory (as defined below) and is willing to conduct activities necessary to obtain applicable regulatory approvals for the HIV Product in the Territory and to establish one or more central laboratory testing facilities and a counseling service in connection with the HIV Product; and WHEREAS, ChemTrak wishes to designate Selfcare, and Selfcare wishes to be designated, as ChemTrak's exclusive distributor for the HIV Product in the Territory, on the terms and conditions set forth in this Agreement. NOW THEREFORE, in consideration of the foregoing premises and the covenants set forth below, the Parties hereby agree as follows: ARTICLE 1 DEFINITIONS As used herein, the following terms shall have the following meanings: 1.1 "AFFILIATE" shall mean an entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with ChemTrak or Selfcare. 1.2 "CHEMTRAK TECHNOLOGY" shall mean all inventions, patent applications, patents, know-how, technology, trade secrets, processes, data, methods or other information, the Software, and any physical, chemical or biological material, in each case which ChemTrak owns, controls or has a license to (with a right to sublicense) and which is useful in the use, sale or distribution of the HIV Product in the Territory, as listed in Exhibit B. 1. 1.3 "COMMERCIALIZATION COSTS" shall mean expenses identifiable to marketing, promoting, selling and distributing the HIV Product in the Territory and performing testing, reporting and counseling services incident to the sale of HIV Products, specifically including expenses of advertising the HIV Product, specialized training of the sales force with respect to the HIV Product in particular, salaries and commissions of the sales force to the extent time is dedicated to the HIV Product, costs of financing receivables and inventories of the HIV Product, costs of shipping and insuring Sample Collection Kits from ChemTrak to Selfcare, reasonable allocation of overhead identifiable to such activities, all recurring and annual regulatory fees and expenses, costs of pursuing and maintaining trademark protection in the Territory pursuant to Section 9.1, and such other expenses as the Parties may agree in writing to include as Commercialization Costs. All such costs shall be determined in accordance with generally accepted accounting principles consistently applied. "Commercialization Costs" shall specifically exclude expenses deducted from gross invoices under the definition of "Net Sales," the Purchase Price paid to ChemTrak for Sample Collection Kits, the license fee and milestone payments made by Selfcare to ChemTrak under this Agreement, and costs of establishing Regulatory Approvals for the HIV Product and the Testing Facilities and Counseling Service in advance of commercial sales. 1.4 "CONFIDENTIAL INFORMATION" shall mean, subject to the exceptions set forth in Section 8.2, any information or materials received by one Party from the other Party. In particular, Confidential Information shall be deemed to include, but not be limited to, the ChemTrak Technology, any know-how, data, process, technique, formula or biological or physical material relating to the HIV Product and any research project, work in process, future development, scientific, engineering, manufacturing, marketing, business plan, financial or personnel matter relating to either Party, its present or future products, sales, suppliers, customers, employees, investors or business, whether in oral, written, graphic or electronic form, to the extent provided by one Party to the other. 1.5 "COUNSELING SERVICE" shall have the meaning assigned in Section 1.6. 1.6 "HIV PRODUCT" shall mean that Aware(TM) brand mail-in HIV test which has been developed by ChemTrak, consisting of a blood sample home preparation kit (the "SAMPLE COLLECTION KIT"), procedures for analysis of the blood sample at a mail-in central laboratory (a "TESTING FACILITY," as further described in Section 3.2) and reporting of results to customers, and a counseling service (the "COUNSELING SERVICE," as further described in Section 3.2) for discussion of results with customers, as further described in regulatory materials submitted by ChemTrak to the U.S. Food and Drug Administration ("FDA") prior to the Effective Date. "HIV Product" shall also include any future modification, line extension or improved version of such product developed by ChemTrak during the term of this Agreement, but excluding any mail-in HIV urine or saliva test, and any True Home HIV Test. 2. 1.7 "NET SALES" shall mean the gross invoices delivered by Selfcare and its Affiliates for the sale of HIV Products to independent third parties who are not Affiliates of either Selfcare or any Selfcare Affiliate, less the following deductions: (1) Prompt payment or other trade or quantity discounts actually allowed and taken in such amounts as are customary in the trade; and (2) Taxes, tariffs and duties levied on shipments or sales of the HIV Product (other than franchise or income taxes on the income of Selfcare and withholding taxes, if any, on Royalty payments made hereunder) actually paid or withheld. 1.8 "PURCHASE PRICE" shall have the meaning assigned in Section 4.4. 1.9 "ROYALTY" shall mean fifty percent (50%) of the following: Net Sales, plus any other compensation invoiced, earned or received in respect of the offer, sale or distribution of HIV Products, less Commercialization Costs and aggregate Purchase Prices paid to ChemTrak. 1.10 "SAMPLE COLLECTION KIT" shall have the meaning assigned in Section 1.6. 1.11 "SOFTWARE" shall mean ChemTrak's proprietary software, in machine executable object code form only, for tracking blood samples received from customers, the results of all tests performed to determine the presence of HIV and the disclosure of results to customers, as used in ChemTrak's studies performed in pursuit of U.S. regulatory approval for the HIV Product. 1.12 "STANDARD COST OF GOODS" shall mean the costs to produce the Sample Collection Kit as set forth on Exhibit A. Such costs shall be consistent with generally accepted accounting principles, as applied by ChemTrak in its financial statements. 1.13 "TERRITORY" shall mean Europe, including all European countries, all Scandinavian countries, all the countries of Eastern Europe and the Commonwealth of Independent States (all previous USSR territories). 1.14 "TESTING FACILITY" shall have the meaning assigned in Section 1.6. 1.15 "TRUE HOME HIV TEST" shall mean any product which permits an end user to prepare a bodily fluid sample and conduct a test to determine the presence of HIV in such sample, in each case without the assistance of a laboratory facility. 3. ARTICLE 2 GRANT OF RIGHTS; EXCLUSIVITY 2.1 LICENSE GRANTS TO SELFCARE. (a) Subject to the terms and conditions of this Agreement, ChemTrak hereby grants to Selfcare a license under the ChemTrak Technology to offer and sell the HIV Product in the Territory, including but not limited to the right to perform HIV testing, and to use the Software solely for the purpose of performing such testing, at a Testing Facility for purchasers of the HIV Product, for the term of this Agreement. This license shall be exclusive except as otherwise provided in Section 2.3 below. Selfcare may sublicense or otherwise transfer such rights (without the right to grant further sublicenses or otherwise transfer such rights) to third parties only with ChemTrak's prior written consent, which shall not be unreasonably withheld. Selfcare will provide ChemTrak with a complete copy of the proposed sublicense agreement at the time Selfcare solicits ChemTrak's consent to the sublicense. (b) As a condition of the license rights set forth in this Agreement, Selfcare shall use the Software in connection with all HIV testing in the Territory unless the parties mutually agree that a modified version of the Software will be used. Selfcare shall not copy the Software in any manner, except that Selfcare may make one working copy, and one copy for back-up purposes, for each Testing Facility. Selfcare shall not distribute or provide the Software or any copy thereof to any third party without the prior written consent of ChemTrak. Further, Selfcare shall not modify the Software in any way, including without limitation by making any localizations, without the prior written consent of ChemTrak, which consent shall not be unreasonably withheld. Selfcare shall not reverse engineer or reverse compile the Software and shall not use the Software in any manner other than pursuant to the license granted above in this Section 2.1(b). Immediately upon the expiration or any termination of this Agreement or at a later time specified by ChemTrak, Selfcare shall return all copies of the Software to ChemTrak and make no further use of the Software. (c) Subject to the terms and conditions of this Agreement, ChemTrak hereby grants to Selfcare an exclusive license to use the mark Aware(TM) in connection with the offer, sale and distribution of the HIV Product in the Territory for the term of this Agreement. As a condition of the license rights set forth in this Agreement, Selfcare agrees that the Aware(TM) mark shall be used in connection with such activities and no other marks, including the ChemTrak(R) mark, shall be used unless the parties mutually agree on such use in advance. ChemTrak shall retain ownership of and all rights in the Aware(TM) mark and shall own and retain all rights in any alternative or additional brand name(s) which the parties may agree to use (collectively, the "MARKS"). In order to assure the quality of goods marketed under the Marks, ChemTrak shall have the right to 4. inspect Selfcare's facilities during normal business hours, after giving reasonable notice of such intent. Selfcare shall conduct its business in a manner which will enhance the reputation and goodwill attached to the Marks, and all goodwill shall inure to the benefit of ChemTrak as owner of the Marks. (d) Selfcare agrees to use the ChemTrak Technology and the Marks only to offer, sell and distribute the HIV Product in the Territory for the term of this Agreement and not for any other purpose. 2.2 COVENANT NOT TO SELL COMPETITIVE PRODUCTS. Selfcare hereby covenants not to market, sell or distribute, directly or indirectly through one or more third parties, any mail-in HIV blood test product other than the HIV Product in any country in the Territory where Selfcare has an exclusive license during the term of this Agreement or for twelve (12) months following any expiration or termination of this Agreement; provided, however, that this covenant will not apply in the event that this Agreement is terminated by Selfcare pursuant to Section 10.3 for ChemTrak's material breach of this Agreement. The restriction on the sale of mail-in HIV blood tests does not apply to mail-in urine or saliva tests. Selfcare hereby acknowledges that the ChemTrak Technology, particularly ChemTrak's proprietary Software and the data and regulatory strategy reflected in ChemTrak's filings with the U.S. FDA regarding the HIV Product, has been maintained by ChemTrak as highly confidential and constitutes ChemTrak's proprietary and extremely valuable trade secret information. Selfcare further acknowledges that it has not previously engaged in development or marketing of any mail-in HIV test product, and the ChemTrak Technology confers upon Selfcare a substantial competitive advantage in obtaining regulatory approval and market acceptance of a mail-in HIV test product in the Territory. Accordingly, Selfcare and ChemTrak each acknowledge and agree that the twelve month post-termination restriction described above is reasonable and necessary to protect the commercial value of ChemTrak's proprietary trade secrets provided to Selfcare under this Agreement. 2.3 LOSS OF EXCLUSIVITY. ChemTrak will have the option, upon ninety (90) days advance written notice, to convert Selfcare's exclusive rights to offer, sell and distribute the HIV Product in each country in the Territory into non-exclusive rights in any of the following events: (a) Selfcare fails to file for Regulatory Approval in such country by a date determined as follows. Set forth on Exhibit C are projected dates by which the parties expect Selfcare will file for regulatory approval to commercially sell the HIV Product in the major European countries listed on Exhibit C. If at any time Selfcare believes that it will likely not be able to make such a filing by such date, then Selfcare shall immediately notify ChemTrak and the parties shall meet and confer regarding the reasons for such delay and available means to expedite such filings. The parties will seek to mutually 5. agree on a plan and new timetable for making such filing. If the parties are unable to agree on such a plan and timetable, then ChemTrak will have the option to convert Selfcare's rights in such country to non-exclusive effective six (6) months after the date set forth on Exhibit C if Selfcare has not made the required regulatory filing by the end of such 6-month period. (b) Selfcare fails to launch a commercially reasonable marketing campaign designed to generate substantial demand for HIV Products and commence commercial sales of the HIV Product in such country within six (6) months after receiving Regulatory Approval in such country. (c) Selfcare's market share for the HIV Product in such country, as measured on the second and each subsequent anniversary of the date of Selfcare's first commercial sale of an HIV Product in such country, is less than sixty percent (60%) of the percentage of the market that each competitor would have if all had equal market share. For example, if as of such anniversary there are three competitors in the market, then ChemTrak may convert the license to non-exclusive if Selfcare's market share is less than twenty percent (20%) as of such date (100% of the market; divided equally by 3 competitors for a market share of 33.33%; 60% of 33.33% equals 20%). For purposes of this paragraph, the relevant market shall consist of all mail-in HIV blood tests, and each separate brand shall constitute one competitor in the market. In order to enable ChemTrak to calculate market share, Selfcare shall provide ChemTrak upon request with all relevant information available to Selfcare. 2.4 SELFCARE AFFILIATES. (a) All costs, expenses, revenues and proceeds incurred or received by any Selfcare Affiliate shall be deemed to be incurred or received by Selfcare for purposes of all financial calculations and obligations under this Agreement. Notwithstanding any other terms of this Agreement, the Parties agree that all payments due from Selfcare to ChemTrak hereunder shall be made by Selfcare and not any Selfcare Affiliate. (b) The Parties agree that the goals with respect to non-U.S. income or withholding tax liability shall be to minimize the aggregate amount of non-U.S. income and withholding tax liabilities incurred by the Parties collectively with respect to commercialization of the HIV Product in the Territory, and to allocate such tax burdens equally between the Parties as provided herein. In that regard: (i) If any non-U.S. income or withholding tax liability is incurred by either Party with respect to operations conducted pursuant to this Agreement (e.g., such Party could not avoid the tax liability by applying current operating losses or net operating loss carryforwards resulting from operations related to the sale of the HIV 6. Product pursuant to the Agreement), then (A) when Selfcare incurs the non-U.S. tax liability, the full amount of such liability shall be added to Commercialization Costs, and (B) when ChemTrak incurs the non-U.S. tax liability, the full amount of such liability shall be deducted from Commercialization Costs. The Parties acknowledge that any tax credit related to the HIV Product will automatically be shared by the Parties through the reduction in Commercialization Costs if the tax credit is used by Selfcare to avoid paying taxes in any jurisdiction for operations related to the sale of HIV Products pursuant to this Agreement. (ii) The Parties also agree that each may either (A) avoid potential non-U.S. income or withholding tax liability by applying current operating losses and net operating loss carry forwards that result from its operations with respect to the HIV Product, and/or (B) avoid paying non-U.S. income or withholding taxes by applying tax credits resulting from operations with respect to the HIV Product. (iii) If either Party could apply any tax credits arising in any jurisdication other than the United States related to the HIV Product against income in any jurisdiction that is not related to the sale of HIV Products pursuant to this Agreement, then it shall promptly notify the other Party. The Parties agree to meet with each other along with their tax advisors and to take all commercially reasonable steps to permit such credit to be used by one Party and to permit the other Party to obtain one-half the benefit of such credit. ARTICLE 3 DEVELOPMENT OF THE HIV PRODUCT 3.1 GENERAL RESPONSIBILITIES. Selfcare shall have sole responsibility for diligently pursuing Regulatory Approval of the HIV Product throughout the Territory as soon as practicable, and for bearing all costs associated therewith. Selfcare shall prepare, file and pursue diligently all regulatory applications necessary to obtain such Regulatory Approvals. ChemTrak will provide Selfcare with a copy of all documentation required by the U.S. FDA in connection with its review of the HIV Product, including a right to reference all applications, registrations, and supporting documents submitted and received by ChemTrak, and will provide assistance in connection with the pursuit of Regulatory Approvals in the Territory according to a plan to be mutually agreed upon. Such assistance will be provided without charge to Selfcare. Selfcare shall have the right to use such information solely for the purpose of pursuing Regulatory Approvals and commercializing HIV Products in the Territory during the term of this Agreement; provided, however, that ChemTrak will provide Selfcare access to this information after the termination or expiration of this Agreement to permit Selfcare to comply with regulatory requirements applicable to HIV Products sold by Selfcare during the term of this Agreement and to defend against product liability and other suits pertaining to such 7. HIV Products. Selfcare shall copy ChemTrak on all correspondence with regulatory authorities in the Territory, and ChemTrak shall have an irrevocable right to reference all applications, registrations and supporting documentation submitted and received by Selfcare. (a) U.S. REGULATORY APPROVAL. ChemTrak shall keep Selfcare informed of the progress of efforts to obtain Regulatory Approval from the U.S. FDA. ChemTrak will notify Selfcare promptly of any delays in obtaining approval and consult with Selfcare on the resolution of any outstanding issues. At the sole option of Selfcare, Selfcare may terminate the Agreement upon sixty (60) days notice if ChemTrak fails to obtain Regulatory Approval in the United States within one year of the Effective Date. 3.2 TESTING FACILITIES; COUNSELING SERVICE. Prior to obtaining the first Regulatory Approval in the Territory, Selfcare shall establish or contract for a single central laboratory (or more as Selfcare determines is reasonable or necessary) to conduct HIV testing in accordance with the protocols and procedures described in ChemTrak's submissions to the U.S. FDA or amended, as required by a country's regulatory authorities, (a "TESTING FACILITY"). ChemTrak shall provide Selfcare with a copy of the Software for use at each such facility for the processing of HIV Tests during the term of this Agreement. At such time Selfcare shall also establish a counseling service to report results to customers and provide appropriate counseling regarding the results, again as provided in ChemTrak's submissions to FDA or amended, as required by a country's regulatory authorities, (the "COUNSELING SERVICE"). Selfcare shall bear all costs associated with establishing the Testing Facilities and the Counseling Service, including any additional requirements of the countries in the Territory. ChemTrak shall have the right to inspect the Testing Facilities and Counseling Service during normal business hours (after giving reasonable notice) in order to ensure that each is operating in the manner described in ChemTrak's FDA documentation or amended, as required by a country's regulatory authorities, and in accordance with all applicable regulatory standards. 3.3 CLINICAL TRIALS SUPPLY. Subject to the terms of this Agreement, ChemTrak shall use diligent efforts to supply or cause to be supplied to Selfcare, and Selfcare shall purchase from ChemTrak, Selfcare's requirements of Sample Collection Kits for use in Territory Development activities, including clinical studies. ChemTrak will provide such product units to Selfcare for a purchase price equal to one hundred percent (100%) of ChemTrak's out-of-pocket costs paid to third parties for production of Sample Collection Kits; provided that such product units are made available to study subjects for no compensation or for compensation that does not exceed Selfcare's actual cost of providing such material (including the Standard Cost of Goods paid to ChemTrak). If the compensation paid exceeds such amount, the Parties shall mutually determine an appropriate purchase price for such product units. 8. 3.4 PLAN; REPORTS. (a) Within 90 days following the Effective Date, Selfcare shall prepare a detailed plan describing activities to be undertaken to pursue Regulatory Approvals for the HIV Product in the Territory and to establish the Testing Facilities and Counseling Service. ChemTrak shall have the right to review and comment on such plan before Selfcare makes any contact with any regulatory agency pertaining to the HIV Product in the Territory. Once agreed between the parties, Selfcare shall conduct its regulatory activities regarding the HIV Product as provided in the plan. However, Selfcare reserves the right to modify the plan, as required by regulatory circumstances, following consultation with ChemTrak. (b) Selfcare shall report to ChemTrak at least once each calendar quarter, but not later than thirty (30) days following the end of such calendar quarter, on the progress of such activities. Selfcare will notify ChemTrak as soon as practicable in the event of any substantial changes in the development activities described in the plan and in the event any Regulatory Approval is received for any country in the Territory. 3.5 PUBLICATIONS. Selfcare and ChemTrak shall cooperate in the preparation and publication of papers in support of development and marketing activities in the Territory. Neither Party shall present, publish or otherwise disclose any information regarding the HIV Product in the Territory except with the prior written consent of the other. Each party shall make available to the other at no cost a copy of any publications or other marketing support materials which such Party produces for its purposes. ARTICLE 4 SUPPLY OF SAMPLE COLLECTION KITS 4.1 PURCHASES OF SAMPLE COLLECTION KITS. Subject to the terms of this Agreement, ChemTrak shall use diligent efforts to supply Selfcare, and Selfcare shall purchase from ChemTrak, Selfcare's requirements of Sample Collection Kits in such quantities as Selfcare shall order pursuant to this Article 4. All Sample Collection Kits supplied by ChemTrak shall conform to specifications to be agreed upon by the parties in accordance with applicable Regulatory Approvals. ChemTrak will provide the blood collection card and its proprietary finger stick device for inclusion in each Sample Collection Kit; Selfcare shall be responsible for including instruction leaflets and for final packaging and labeling, including any text not in English. 4.2 ORDERS. Within thirty (30) days after the receipt of the first Regulatory Approval for HIV Product in a country in the Territory, Selfcare shall submit to ChemTrak an initial purchase order for a mutually agreed upon number of Sample Collection Kits based on the predicted number necessary to launch the product. 9. ChemTrak shall use diligent efforts to deliver such Sample Collection Kits as soon as practicable thereafter, but in no event longer than 60 days after the date of such purchase order. Beginning on the first day of each calendar quarter thereafter, Selfcare shall provide ChemTrak with a firm purchase order specifying the number of Sample Collection Kits desired, on a monthly basis, for the following quarter and a proposed shipment date for such units of no less than 60 days from the date of such purchase order (each, a "Purchase Order"). ChemTrak will accept any such Purchase Order from Selfcare within five (5) days after receipt of such Purchase Order at its principal place of business. 4.3 PURCHASE PRICE; PAYMENT. Selfcare shall pay to ChemTrak a price (the "PURCHASE PRICE") for purchase of Sample Collection Kits equal to ChemTrak's Standard Cost of Goods for Sample Collection Kits. ChemTrak shall invoice Selfcare for such amount as of the date of shipment. All payments for Sample Collection Kits shall be due within forty-five (45) days after the date of Selfcare's receipt of a confirmed faxed copy of ChemTrak's invoice and confirmed shipment for such Sample Collection Kits. 4.4 DELIVERY. (a) ChemTrak shall use diligent efforts, consistent with its other shipment obligations and manufacturing capacity, to ship all Sample Collection Kits ordered by Selfcare on or before the requested shipment date, to the extent such date is at least fifteen (15) days after the date ChemTrak accepts the Purchase Order for such shipment. The shipping and packaging method used will be at the discretion of ChemTrak, subject to written approval of Selfcare. Deliveries shall be made F.O.B. ChemTrak's facility (ICC Incoterms 1990) and shall be shipped to Selfcare's address as set forth in this Agreement, or as otherwise directed by Selfcare in writing. All Sample Collection Kits will be shipped by ChemTrak freight collect, or if prepaid, such freight will be subsequently billed to Selfcare. If requested by Selfcare, ChemTrak will insure the shipments against damage to or loss of Sample Collection Kits and will subsequently bill Selfcare for such shipping insurance. Selfcare will reimburse ChemTrak for shipping and insurance expenses, if any, within forty-five (45) days after the date of such invoices. ChemTrak reserves the right to deliver in advance of estimated delivery dates. Selfcare shall make any claims for damage or loss in transit through the carrier and any insurance proceeds payable in respect of any loss incurred shall be paid to Selfcare. (b) If at any time ChemTrak is unable to supply total worldwide demand for Sample Collection Kits, ChemTrak shall allocate available Sample Collection Kits (or components thereof) to the Territory pro rata with other markets outside the Territory based upon relative market share, as measured by the most recent quarterly or annual sales figures for which data is reasonably available. 10. (c) In the event that ChemTrak, whether by reason of Force Majeure or otherwise, either (1) fails in any quarter to deliver to Selfcare at least fifty percent (50%) of the amount of Sample Collection Kits ordered by Selfcare or (2) fails in each of two consecutive quarters to deliver to Selfcare at least eighty percent (80%) of the amounts ordered by Selfcare for each of such quarters, notwithstanding the obligation of Selfcare to purchase from ChemTrak all Sample Collection Kits, Selfcare shall be entitled for the duration of the term of this Agreement to seek alternate sources of supply for the Sample Collection Kits (or components thereof) to be used, sold or otherwise distributed in the Territory pursuant to the license granted herein, and such license shall be deemed to include such right. In particular, if Selfcare seeks alternate sources for ChemTrak's proprietary finger stick device, Selfcare will have a non-exclusive, worldwide license to make such devices or have them made by a third party. In the event that Selfcare exercises its right to use alternate sources of supply, the cost of securing Sample Collection Kits (or components thereof) from alternate sources of supply shall be deemed to be a Commercialization Cost. 4.5 ACCEPTANCE. Selfcare shall inspect all Sample Collection Kit shipments received from ChemTrak for visible damage promptly upon receipt thereof at the shipping destination and may reject any Sample Collection Kit Units which are damaged or fail to comply with the specification agreed by the parties. Sample Collection Kits not rejected by written notification to ChemTrak within sixty (60) days after receipt by Selfcare shall be deemed to have been accepted. Rejected goods shall be returned freight prepaid to ChemTrak within fifteen (15) days after rejection. As promptly as possible after receipt by ChemTrak of properly rejected goods, ChemTrak shall, at ChemTrak's option, (i) replace the rejected goods at ChemTrak's expense, or (ii) grant Selfcare a credit for such rejected goods equal to the price paid therefor. Such replacement or credit shall be ChemTrak's sole responsibility and obligation to Selfcare for nonconforming Sample Collection Kits. The party shipping the goods pursuant to this section shall bear the entire risk of loss for goods during shipment. Any insurance proceeds payable in respect of any loss incurred shall be paid to the party bearing the risk of loss for such goods to the extent of the loss incurred. For properly rejected goods, ChemTrak will prepay transportation charges back to Selfcare and shall reimburse Selfcare for any reasonable costs of transportation for returning such goods; for all other goods, Selfcare shall pay transportation charges in both directions. ARTICLE 5 MARKETING, SALE AND DISTRIBUTION OF HIV PRODUCTS 5.1 MARKETING EFFORTS. Selfcare agrees to use diligent efforts to promote the sale, marketing and distribution of the HIV Products in the Territory, including undertaking a commercially reasonable advertising campaign in connection with the launch and sale of HIV Products. Selfcare shall provide ChemTrak with a copy of its 11. marketing plan as provided in Section 6.3 for ChemTrak's review and comment. Selfcare agrees to consider in good faith ChemTrak's comments regarding advertising, marketing promotion and sales efforts. 5.2 SALES AND ADVERTISING ACTIVITIES. Selfcare shall provide ChemTrak with written copies of all advertising claims which Selfcare intends to make in connection with HIV Products prior to making any such claim to any third party. The parties shall mutually agree upon all claims, and either party shall have the right to prohibit the making of any particular claim for regulatory, ethical or marketing reasons. Selfcare agrees that no claims prohibited by applicable law or regulation will be made in connection with HIV Products. 5.3 PRICING. Selfcare shall notify ChemTrak of the price(s) it intends to charge third parties for HIV Product at least ninety (90) days prior to commencing commercial sales in any country. To the extent required under applicable European Union regulations, Selfcare shall charge the same price for HIV Product in countries in the Territory that are members of the European Union. The parties shall discuss optimal pricing strategies and Selfcare shall consider any comments ChemTrak may have in good faith, provided that Selfcare shall remain ultimately responsible for determining the price. 5.4 PACKAGING. Selfcare will be responsible for packaging Sample Collection Kits for resale under this Agreement, including, without limitation, designing and producing all packaging materials and product inserts, all in forms to be approved in writing by ChemTrak prior to first use by Selfcare, such approval not to be unreasonably withheld. Copyright and other proprietary rights related to amended packaging, labeling, and inserts shall remain the exclusive property of Selfcare and may not be used by ChemTrak without the express written consent of Selfcare; provided, however, that ChemTrak shall own the brand name under which the product is sold, as provided in Section 2.1(c). Notwithstanding the foregoing, ChemTrak shall provide Selfcare with copies of all packaging materials and product inserts which ChemTrak uses in connection with the HIV Product outside the Territory. 5.5 GENERAL CONDUCT. Selfcare covenants that it shall not solicit sale of HIV Products, or advertise or keep a stock of HIV Products, outside of the Territory. Selfcare shall not, directly or indirectly, without the prior written authorization of ChemTrak, (i) contact any of ChemTrak's suppliers or vendors of HIV Product components, or (ii) initiate any contact with any federal, state or local regulatory agency or entity outside the Territory about the HIV Product. Selfcare shall conduct its efforts under this Agreement in compliance with all regulatory requirements applicable to the offer, distribution and sale of HIV Product. Selfcare shall comply with all health registration laws, regulations and orders of any government entity within the Territory and with all other governmental requirements relating to the promotion, marketing and sale of the HIV Product in the 12. Territory. The parties agree to cooperate in all respects, including providing all information and documents in each party's possession, to assure compliance with adverse event reporting requirements and similar regulations applicable to the HIV Product, on a worldwide basis, including but not limited post-approval requirements imposed by the U.S. FDA by PMA approval order or regulation pursuant to 21 CFR Part 814, Subpart E, and medical device reporting obligations under 21 CFR Part 803. Each party shall notify the other within 20 days of becoming aware of any reportable adverse events or device malfunctions associated with the HIV Products, or sooner to the extent applicable regulatory requirements require reporting to government officials in a time less than 20 days. In addition, each party will assist the other in investigating any such reportable events, as reasonably requested, in order to comply with the applicable regulatory requirements. ARTICLE 6 REPORTS; FORECASTS; MARKETING PLANS 6.1 REPORTS. Each party shall keep the other fully informed of all governmental activities and plans which potentially or actually affect the sale of the HIV Products in the Territory. Selfcare shall provide to ChemTrak from time to time, but no less than annually, written reports of any known third party activities relating to the manufacture, sale or distribution of products that are competitive with HIV Products in the Territory, including all available information relating to pricing, new products and product promotions. At a minimum, such reports shall be submitted to ChemTrak by confirmed facsimile within thirty (30) days after the end of each calendar year. 6.2 FORECASTS. Beginning thirty (30) days after receipt of the first Regulatory Approval for HIV Products in the Territory, and on the first day of each calendar quarter thereafter, Selfcare shall furnish to ChemTrak a nonbinding rolling twelve (12)-month forecast of its anticipated purchases of Sample Collection Kits and sales of HIV Products for each country in the Territory. 6.3 MARKETING PLANS AND REPORTS. Prior to First Commercial Sale and at the beginning of each calendar year thereafter, Selfcare shall submit to ChemTrak in writing whatever annual marketing plan detailing Selfcare's proposed marketing and pricing strategy and tactics for the HIV Product during the following year has been developed by Selfcare for its internal use. In addition, Selfcare shall submit to ChemTrak (a) quarterly sales reports detailing Selfcare's sales of the HIV Product in the preceding quarter, which reports shall be submitted to ChemTrak within thirty (30) days after the end of each quarter; and (b) copies of any market research reports relating to HIV Product sales and HIV Product competition which Selfcare commissions or otherwise obtains, which reports shall be submitted to ChemTrak promptly after receipt thereof by Selfcare. 13. 6.4 CONFIDENTIAL INFORMATION. All reports, forecasts and plans generated by or for Selfcare with respect to the HIV Product and provided to ChemTrak under this Article 6 (collectively, the "Marketing Data") shall constitute Confidential Information of Selfcare, as defined under Article 8 hereof. Such Marketing Data shall be kept confidential in accordance with Article 8 but may be used by ChemTrak, only with express written consent from Selfcare, not to be unreasonably withheld, in connection with the commercialization of HIV Products. ARTICLE 7 PAYMENTS 7.1 EXPENSES. All expenses incurred by Selfcare in connection with its obligations under this Agreement will be borne solely by Selfcare, subject to recovery of certain expenses out of Net Sales of HIV Product as provided in Section 7.4. Selfcare will be responsible for appointing its own employees, agents and representatives, who will be compensated by Selfcare. ChemTrak shall only be obliged to incur expenses under Section 3.1 (Regulatory Assistance), Section 3.3, Article 4 (Supply of Sample Collection Kits) and Article 9 (Intellectual Property), subject to reimbursement of certain expenses by Selfcare as provided in such sections. 7.2 LICENSE FEE. Selfcare shall pay to ChemTrak a license fee of [*] upon execution of this Agreement. This license fee shall be non-refundable and shall not be creditable against any future payments due to ChemTrak. 7.3 SALES MILESTONE PAYMENTS. In addition to the Royalty payments provided for in Section 7.4, Selfcare shall, upon the achievement of the events set forth below, make the following payments to ChemTrak: (a) $333,000 upon obtaining Regulatory Approval in the first of the U.K., Germany or France; and (b) $333,000 upon achieving the first $1,000,000 in Net Sales from the sale of HIV Products in the Territory. Payments made pursuant to this Section 7.3 shall be non-refundable and shall not be creditable against any future payments. 7.4 ROYALTIES. Within thirty (30) days after the end of each calendar quarter, Selfcare shall deliver a report to ChemTrak detailing Selfcare's Net Sales made in such quarter and all other compensation invoiced, earned or received in respect of the offer, sale or distribution of HIV Products in such quarter, and Commercialization Costs incurred during such quarter and aggregate Purchase Prices paid to ChemTrak during such quarter, with line items for each of the deductions described in the definition of 14. "Net Sales" and for each of the categories of costs specifically referenced in the definition of "Commercialization Costs." For purposes of calculating quarterly Royalty payments, all receipts and deductions included in Net Sales shall be recognized as of the date of invoice and Commercialization Costs and Purchase Prices shall be recognized as of the date Selfcare tenders payment. Together with Selfcare's report due 30 days after the end of each quarter, Selfcare shall pay the Royalty for such quarter to ChemTrak. If Commercialization Costs exceed Net Sales, the loss shall be carried forward to the next quarter and set off against future Royalty payments. 7.5 MANNER AND PLACE OF PAYMENT. Any payments to ChemTrak shall be made in U.S. Dollars by wire transfer at such bank in the United States as ChemTrak shall specify from time to time. Payments shall be made for the amount of U.S. Dollars reported by ChemTrak (in the case of expense reimbursement) or agreed by the Parties (in the case of a Purchase Price). Exchange conversion of foreign currencies will be the responsibility of Selfcare; provided that for purposes of calculating U.S. Dollar payments to be made by Selfcare to ChemTrak hereunder all revenues received and costs paid in foreign currencies shall be deemed converted to U.S. Dollars at the exchange rate for each currency that is the average of the daily spot rate reported by the U.S. edition of the Wall Street Journal for each trading day during the reporting period. 7.6 RECORDS AND AUDIT OF SALES AND EXPENSES. Each Party will maintain complete and accurate records regarding sales, costs, expenses and payments applicable to HIV Products, in sufficient detail to enable the other Party to confirm the accuracy of payments due under this Agreement. In particular, Selfcare shall keep separate records of each of the categories of costs specifically referenced in the definition of Commercialization Costs. Such records shall be open, during reasonable business hours for a period of three (3) years from creation of the record, for examination at the other Party's expense and not more often than once each year by a certified public accountant from a major recognized accounting firm selected by the other Party for the sole purpose of verifying the correctness of calculations made under this Agreement. The accounting expense shall be paid by the Party requesting the audit. If material discrepancies (in excess of 5%) are identified in such audit, the audited Party shall bear the accounting expense. Any records or accounting information received from the other Party shall be Confidential Information. The terms of this section shall survive any termination or expiration of this Agreement for a period of three (3) years. 15. ARTICLE 8 CONFIDENTIALITY 8.1 NONDISCLOSURE OBLIGATIONS. During the term of this Agreement, and for a period of three (3) years after termination hereof, each Party will maintain all Confidential Information in trust and confidence and will not disclose any Confidential Information to any third party or use any Confidential Information for any unauthorized purpose. Each Party may use such Confidential Information only to the extent required to accomplish the purposes of this Agreement. Confidential Information shall not be used for any purpose or in any manner that would constitute a violation of any laws or regulations, including without limitation the export control laws of the United States. Confidential Information shall not be reproduced in any form except as required to accomplish the intent of this Agreement. No Confidential Information shall be disclosed to any employee, agent, consultant, sublicensee or supplier who does not have a need for such information. To the extent that disclosure is authorized by this Agreement, the disclosing Party will obtain prior agreement from its employees, agents, consultants, sublicensees or suppliers to whom disclosure is to be made to hold in confidence and not make use of such information for any purpose other than those permitted by this Agreement. Each Party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information. 8.2 EXCEPTIONS. Confidential Information shall not include any information which: (a) is now, or hereafter becomes, through no act or failure to act on the part of the receiving Party, generally known or available; (b) is known by the receiving Party at the time of receiving such information, as evidenced by its written records; (c) is hereafter furnished to the receiving Party by a third party, as a matter of right and without restriction on disclosure; or (d) is the subject of a written permission to disclose provided by the disclosing Party. 8.3 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this Agreement, each Party may disclose Confidential Information if such disclosure: (a) is in response to a valid order of a court or other governmental body of the United States or any political subdivision thereof; provided, however, that the responding Party shall first have given notice to the other Party hereto and shall have 16. made a reasonable effort to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued; (b) is otherwise required by law, provided that the Disclosing Party take all available steps to designate the information as confidential and to prevent further disclosure by the recipient; or (c) is otherwise necessary to file or prosecute patent applications, prosecute or defend litigation or comply with applicable governmental regulations or otherwise establish rights or enforce obligations under this Agreement, but only to the extent that any such disclosure is necessary, provided that the Disclosing Party take all available steps to designate the information as confidential and to prevent further disclosure by the recipient. 8.4 TERMS OF THIS AGREEMENT. The Parties agree that the material financial terms of this Agreement will be considered Confidential Information of both Parties. However, each Party shall have the right to disclose the material financial terms of this Agreement to any potential acquirer, merger partner, or other bona fide potential financial or strategic partner, subject to a requirement of best efforts to secure confidential treatment of such information. ARTICLE 9 INTELLECTUAL PROPERTY 9.1 OWNERSHIP OF INTELLECTUAL PROPERTY. ChemTrak shall retain all of its rights, title and interest in and to all ChemTrak Technology, including but not limited to the Software, and all modifications and improvements to the foregoing. ChemTrak shall also own all right, title and interest in all copyrights, trademarks, including but not limited to the Aware(TM) trademark, and trade names and all other industrial and intellectual property embodied in or related to the HIV Product, except as otherwise expressly provided in this Agreement. ChemTrak shall file for and pursue trademark protection for the Aware(TM) mark in countries in the Territory where HIV Products are sold, at Selfcare's expense, subject to recovery as a Commercialization Cost. ChemTrak shall also file for and pursue patent protection for the finger stick device in countries in the Territory where the Parties agree patent protection would be advantageous. Selfcare shall bear the initial costs of obtaining and maintaining such patent prosecution, and such costs shall be Commercialization Costs. 9.2 DEFENSE OF INTELLECTUAL PROPERTY SUITS. If a third party asserts that a patent, trademark or other proprietary right owned by it is infringed or otherwise violated by the offer, distribution or sale of the HIV Product in the Territory, the Party against whom such a claim was asserted shall immediately provide the other Party notice of such 17. claim and the related facts in reasonable detail. ChemTrak shall have the first right, but not the obligation, to act to resolve the issue through negotiation and to control the defense of any legal proceeding. If ChemTrak assumes the defense, Selfcare shall cooperate with ChemTrak and shall have the right to be represented separately by counsel of its own choice. If ChemTrak fails to notify Selfcare, within thirty (30) days after receiving notice that a complaint has been filed with a court of competent jurisdiction (but in any event reasonably in advance of any deadline for responding to the complaint), that ChemTrak will assume control of the defense, then Selfcare shall have the right, but not the obligation, to so control the defense by counsel of its own choice. If Selfcare assumes the defense, ChemTrak shall cooperate with Selfcare and shall have the right to be represented separately by counsel of its own choice. 9.3 EXPENSES AND REMEDIES. ChemTrak shall bear all reasonable expenses incurred by ChemTrak or Selfcare in the defense of suits described in Section 9.2, including but not limited to attorneys' fees and expenses. If Selfcare assumes the defense pursuant to Section 9.2, Selfcare shall not enter into any settlement that may adversely affect the HIV Product outside the Territory, or require ChemTrak to make any payment to a third party or Selfcare, without the prior written consent of ChemTrak. If ChemTrak assumes the defense, ChemTrak may settle any such suit at any time in any manner that does not materially adversely affect Selfcare. ChemTrak shall notify Selfcare in writing in the event it proposes to resolve the matter in any other manner, and the Parties shall discuss available options in good faith and each shall use all commercially reasonable efforts to reach a mutually agreed upon resolution within forty five (45) days after the date of ChemTrak's notice. Such actions may include (i) procuring the right from such third party to sell or use the HIV Product, with any running royalty obligations to be subject to approval by both Parties (not to be unreasonably withheld) and, if approved, to be included in Commercialization Costs, (ii) replacing the HIV Product with a functionally equivalent product that does not violate the third party's rights, or (iii) modifying the HIV Product to make it functionally equivalent and not violate such rights. If the Parties are unable to reach agreement on how to resolve such matter after the above discussion period, and either Party reasonably determines that continued sale of the HIV Product in the Territory would infringe or violate the third party's rights, then such Party may cease performance under this Agreement immediately upon written notice to the other Party and this Agreement shall terminate thirty (30) days after the date of such notice. 9.4 DISCLAIMER. THE FOREGOING PROVISIONS OF THIS ARTICLE 9 STATE THE ENTIRE LIABILITY AND EXCLUSIVE REMEDY OF THE PARTIES AND THEIR CUSTOMERS WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY THE HIV PRODUCTS OR ANY PART THEREOF. 18. 9.5 PROSECUTION OF INTELLECTUAL PROPERTY SUITS. If either party believes that a third Party is infringing any patent, copyright, trademark or other intellectual property right belonging to the parties and applicable to the HIV Product in the Territory, it shall promptly notify the other Party. The Parties shall meet and discuss whether to take action to abate the infringement and, if so, what actions to take, which Party will take such actions and how related expenses will be borne between the Parties. If either Party elects to initiate such a suit, the other Party shall cooperate in the action and have the right but not the obligation to bear up to one-half the expenses of the suit, provided that such Party undertakes in writing within ninety (90) days after the suit is initiated to bear a stated percentage of such costs. Any recovery or settlement obtained in such an action shall be used first to reimburse each Party pro rata for litigation expenses. Any remaining recovery will be allocated between the parties in proportion to the share of litigation expenses they bore. ARTICLE 10 TERM AND TERMINATION; CHANGE OF CONTROL 10.1 TERM. This Agreement shall become effective on the Effective Date and shall remain in effect for a period of five (5) years from the date of Selfcare's first commercial sale of HIV Product in any country listed on Exhibit C (the "Fifth Anniversary"), unless it is renewed by agreement of the parties or automatically as provided below. The Agreement will automatically renew for a period of two (2) years if, as of the date sixty (60) days prior to the Fifth Anniversary, Selfcare's market share for the HIV Product throughout the five (5) countries listed on Exhibit C, in the aggregate, is at least equal to thirty percent (30%), determined by dividing Selfcare's net sales (as reported for financial purposes) of HIV Products in such countries over the previous twelve (12) month period by the total net sales (as reported for financial purposes) of all sellers of mail-in HIV blood tests in such countries. The same test will be applied as of the date sixty (60) days before the two-year renewal term expires. If the test is met, the Agreement will renew for subsequent two-year terms in the same manner. 10.2 CHANGE OF CONTROL. (a) If Selfcare undergoes an Acquisition Transaction (as defined below), ChemTrak shall have the right to terminate this Agreement upon six (6) months prior written notice to Selfcare. (b) If ChemTrak undergoes an Acquisition Transaction, ChemTrak (or the surviving entity in the Acquisition Transaction) shall have the right to assume from Selfcare all rights licensed to Selfcare under this Agreement, as follows. If ChemTrak elects to assume such role, it shall so notify Selfcare in writing within six (6) months of the closing of ChemTrak's Acquisition Transaction. Promptly following delivery of such 19. notice, the parties shall meet to mutually select a recognized investment banking firm with substantial relevant industry expertise to (i) select three (3) reasonable methods of determining the value of this Agreement to Selfcare as of the date of ChemTrak's election notice to Selfcare and (ii) to calculate such valuation using each of the three (3) methods and provide a report to each Party. For the purposes of this valuation, Selfcare is deemed to have met the requirements for maintaining an exclusive license in each country in the Territory, without regard to whether Selfcare has actually sought Regulatory Approval or marketed a product in each country in the Territory. ChemTrak shall have the option to terminate this Agreement and obtain all licenses, rights, information, materials, contract rights and assistance from Selfcare as may be necessary or useful to enable ChemTrak to take over Selfcare's position of exclusive distributor and seller of HIV Products in the Territory (to "Assume the Business"), at the average of the three (3) valuations calculated by the investment banker. If ChemTrak is interested in exercising such option, it shall so notify Selfcare within thirty (30) days of receiving the three valuation figures from the investment banker. Promptly following delivery of such a notice, the parties shall negotiate in good faith the details of a transaction for ChemTrak to assume the business at such a valuation. If the parties are unable or unwilling to close such a transaction within ninety (90) days of ChemTrak's notice, then ChemTrak may submit the matter to binding mediation to resolve the terms of such transaction. (c) An "ACQUISITION TRANSACTION" shall mean a merger or consolidation of a Party with or into any other entity, including a reverse triangular merger involving such Party, a sale of all or substantially all of the assets or business of such Party, or a similar transaction, or a sale of the business unit to which this Agreement relates, whereby the controlling shareholders of a Party before the transaction own less than 50% of the shares of the Party after the transaction. 10.3 TERMINATION FOR MATERIAL BREACH. If either Party is in material breach of this Agreement, the non-breaching Party may give written notice to the breaching Party of its intention to terminate this Agreement, and this Agreement shall terminate sixty (60) days after the giving of such notice unless during the 60-day period the breach has been cured. If the allegedly breaching Party files a court action or initiates an arbitration proceeding denying the breach, then both Parties shall continue to perform this Agreement pending resolution of such action. 10.4 CONSEQUENCES OF TERMINATION. Upon the effective date of expiration or early termination of this Agreement, the following shall occur: (a) TERMINATION OF LICENSES. The licenses set forth in Section 2.1 shall terminate and Selfcare shall immediately discontinue all marketing, sales and distribution of the HIV Product in the Territory. Selfcare shall discontinue all use in the Territory of ChemTrak's trade name and trademarks, and the ChemTrak Technology, including the 20. Software. Selfcare shall return all copies of the Software in any form to ChemTrak. Notwithstanding the foregoing, Selfcare shall have the right, for a period not to exceed ninety (90) days, to sell any HIV Products remaining in inventory to the extent the same are not repurchased by ChemTrak pursuant to Section 10.3(c) below. Selfcare shall also have the obligation to complete testing, report results and provide counseling services for any customers to whom Selfcare has sold Sample Collection Kits. Except to the extent of selling its remaining inventory as permitted by Section 10.3(c) below, after termination Selfcare shall not represent or hold itself out as being an authorized distributor or sales representative for the HIV Product in the Territory or engage in any practices which might make it appear that Selfcare is such an authorized distributor or sales representative. (b) ACCRUED RIGHTS AND OBLIGATIONS. The rights of either party which may have accrued up to the date of such termination shall not be affected, and Selfcare shall not be relieved of (i) any obligation for any sums due to ChemTrak for HIV Products covered by Purchase Orders accepted prior to expiration or termination and due to be delivered within the ninety (90) day period following the effective date of such expiration or termination (including any amount due but not yet paid, with all such amounts being nonrefundable and not subject to any setoff or similar right) or (ii) any confidentiality obligation under Article 8 hereof. The due date of all outstanding invoices to Selfcare for HIV Products shall automatically be accelerated to become due and payable by immediate wire transfer on the effective date of termination, even if longer terms have been previously agreed to. ChemTrak may, at its sole option, (i) cancel all orders or portions thereof remaining unshipped as of the effective date of termination and (ii) repurchase Selfcare's remaining inventory of HIV Products in accordance with Section 10.4(c) below. (c) REPURCHASE OF INVENTORY. ChemTrak shall have the right, but not the obligation, to repurchase from Selfcare all of the HIV Product (to the extent that the same are in new and original condition) then in Selfcare's inventory, F.O.B. Selfcare's facilities, whereupon ChemTrak shall repay to Selfcare the actual price paid by Selfcare to ChemTrak for such returned HIV Products less any and all amounts owing and uncontested, for whatever reason, from Selfcare to ChemTrak. (d) CONFIDENTIAL INFORMATION. Each party shall return to the other or destroy, at the other party's instruction, all Confidential Information of the other party, with the exception of records required to be maintained to be in compliance with U.S. FDA regulations and other regulations applicable to the Territory, including advertising matter; provided, however, that in the event of early termination for any reason other than material breach by ChemTrak, ChemTrak shall have the right to retain copies of, and use for its own internal marketing purposes, any Marketing Data (as defined under Section 6.3), provided Selfcare has given prior written consent. 21. (e) INSPECTION RIGHT. Each party shall make available for copying and inspection by a third party auditor all books and records of such party required to be kept pursuant to Section 7.6 for a period of one (1) year following the effective date of termination. 10.5 NO OTHER RIGHTS UPON TERMINATION. Neither party hereto shall be responsible to the other for compensation, damages, or otherwise by reason of termination of this Agreement, except for termination due to material breach pursuant to Section 10.3, at any time, except as provided herein. Selfcare understands and acknowledges that any contracts or other arrangements it enters into with any third parties with respect to the HIV Products will be subject and subordinate to the rights of termination set forth in this Agreement. 10.6 SURVIVING OBLIGATIONS. Termination or expiration of this Agreement shall not relieve either party of its obligations under Sections 2.2, 7.6, 10.4, 10.5, 10.6 and Articles 8, 11 and 13 hereof. ARTICLE 11 WARRANTIES; INDEMNIFICATION 11.1 SAMPLE COLLECTION KIT WARRANTY. ChemTrak warrants that the Sample Collection Kits supplied by ChemTrak under this Agreement will be of merchantable quality and will strictly conform to the Sample Collection Kit specifications mutually agreed to by the parties. In no event shall ChemTrak be liable under this Agreement for any failure of any Sample Collection Kit to meet the specifications due to improper use, storage or shipment by Selfcare or anyone receiving the Sample Collection Kit directly or indirectly from Selfcare. (a) INTELLECTUAL PROPERTY WARRANTY. ChemTrak warrants that it has the authority and right to grant the rights licensed to Selfcare, with respect to any of the intellectual property defined in Section 9.1. 11.2 SELFCARE WARRANTIES. Selfcare warrants that all testing of blood samples conducted under this Agreement will be carried out strictly in accordance with the procedures described in the PMA submitted by ChemTrak to the U.S. FDA for the HIV Product (or amended, as required by a country's regulatory authorities) and in accordance with all applicable requirements of regulatory authorities in the Territory. Selfcare further warrants that all reporting of results to customers and counseling services provided under this Agreement will be carried out in a professional manner in accordance with applicable regulatory requirements and professional standards prevalent in the Territory, including all requirements and standards concerning confidentiality of results. 22. 11.3 WARRANTY DISCLAIMERS AND LIMITATIONS. EXCEPT AS SET FORTH IN SECTION 11.1 ABOVE, CHEMTRAK MAKES NO WARRANTIES WITH RESPECT TO THE HIV PRODUCT, EXPRESS OR IMPLIED, AND SPECIFICALLY WITHOUT LIMITATION, CHEMTRAK DISCLAIMS ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR FREEDOM FROM INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS. EXCEPT AS SET FORTH ABOVE, CHEMTRAK NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME ANY LIABILITY OR WARRANTY IN CONNECTION WITH THE HIV PRODUCTS. IN THE EVENT OF A BREACH BY CHEMTRAK OF THE WARRANTY SET FORTH IN THE FIRST PARAGRAPH OF SECTION 11.1 ABOVE, SELFCARE'S SOLE REMEDY WILL BE TO RETURN THE AFFECTED HIV PRODUCTS FOR REPAIR, REPLACEMENT OR CREDIT OF THE PURCHASE PRICE, AT CHEMTRAK'S OPTION. 11.4 INDEMNIFICATION. (a) ChemTrak hereby agrees to defend, indemnify and hold Selfcare and its agents and employees harmless from and against any and all liabilities, expenses and/or loss, including reasonable attorneys' fees ("Losses") resulting directly or indirectly from third party suits, claims, actions or demands, to the extent such suits, claims actions or demands result from (i) the failure of Sample Collection Kits supplied by ChemTrak to meet the warranty set forth in the first paragraph of Section 11.1, (ii) breach of the intellectual property warranty set forth in Section 11.1(a), except to the extent that Sections 9.2 and 9.3 apply to any such third party action, (iii) the application of HIV Product testing procedures carried out as described in the PMA submitted by ChemTrak to the U.S. FDA for the HIV Product, or (iv) the recklessness, gross negligence, or willful misconduct of ChemTrak or its officers, employees or agents, and in each case do not result from the recklessness, negligence or wrongdoing of Selfcare or its officers, employees or agents. (b) Selfcare hereby agrees to defend, indemnify and hold ChemTrak and its agents and employees harmless from and against any and all liabilities, expenses and/or loss, including reasonable attorneys' fees ("Losses") resulting directly or indirectly from third party suits, claims, actions or demands, to the extent such suits, claims actions or demands result from (i) the sale or distribution of HIV Products by Selfcare (other than losses provided for in Section 9.3) or use by any purchasers, including any improper sales by Selfcare to customers who are located in any territory outside the Territory, (ii) the breach of any representation made or warranty given by Selfcare with respect to the HIV Product to customers (other than the labeling for the HIV Product as approved by applicable regulatory authorities in the Territory) or to ChemTrak under this Agreement, including the warranties made in Section 11.2, (iii) services rendered by Selfcare in connection with the HIV Product, including but not limited to counseling services, or (iv) 23. the recklessness, gross negligence, or willful misconduct of Selfcare or its officers, employees or agents, and do not result from matters subject to indemnification by ChemTrak under Section 11.4(a) above. (c) If a Party intends to seek indemnification under this Section 11.4, it shall so notify the other Party. The Party seeking indemnification under this Article 11 (the "Indemnified Party") shall (i) give the other Party (the "Indemnifying Party") notice of the relevant claim, (ii) cooperate with the Indemnifying Party, at the Indemnifying Party's expense, in the defense of such claim, and (iii) give the Indemnifying Party the right to control the defense and settlement of any such claim, except that the Indemnifying Party shall not enter into any settlement that adversely affects the Indemnified Party's rights or interest without the Indemnified Party's prior written approval. The Indemnified Party shall have no authority to settle any claim on behalf of the Indemnifying Party. 11.5 INSURANCE. Prior to any distribution of HIV Products, Selfcare shall obtain and maintain in effect insurance policies providing general liability, product liability and contractual liability coverage. Each such insurance policy shall provide coverage sufficient to cover all claims with respect to any HIV Products sold under this Agreement and to cover Selfcare's indemnification obligation under this Agreement and shall name ChemTrak, its directors, officers, employees and agents as additional insureds. At the request of ChemTrak, Selfcare will provide ChemTrak with complete copies of such policies in order for ChemTrak to confirm that such policies provide sufficient coverage. Selfcare shall notify ChemTrak at least thirty (30) days prior to any expiration or termination of any such policy. ARTICLE 12 REPRESENTATIONS AND WARRANTIES 12.1 REPRESENTATION AND WARRANTIES OF CHEMTRAK. ChemTrak hereby represents and warrants as follows: (a) CORPORATE POWER. ChemTrak is duly organized and validly existing under the laws of the state of Delaware and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof. (b) DUE AUTHORIZATION. ChemTrak is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. (c) BINDING AGREEMENT. This Agreement is a legal and valid obligation binding upon ChemTrak and is enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by ChemTrak does not conflict with any agreement, instrument or understanding, oral or written, to which it is a Party or by which 24. it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over it. 12.2 REPRESENTATIONS AND WARRANTIES OF SELFCARE. Selfcare hereby represents and warrants as follows: (a) CORPORATE POWER. Selfcare is duly organized and validly existing under the laws of Delaware and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof. (b) DUE AUTHORIZATION. Selfcare is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder. (c) BINDING AGREEMENT. This Agreement is a legal and valid obligation binding upon Selfcare and is enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by Selfcare does not conflict with any agreement, instrument or understanding, oral or written, to which it is a Party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over it. ARTICLE 13 MISCELLANEOUS 13.1 ASSIGNMENT. Neither Party shall assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other, except that either Party may assign this Agreement without such consent to any Affiliate or successor by merger or sale of substantially all of its business unit to which this Agreement relates. Section 10.2 sets forth additional provisions regarding a change of control of either party. Any attempted assignment or delegation in contravention of this Article shall be void and of no effect. 13.2 EXPORT LAW COMPLIANCE. Selfcare understands and recognizes that the HIV Products and other materials made available to it hereunder may be subject to the export administration regulations of the United States Department of Commerce and other United States government regulations related to the export of medical HIV Products. Selfcare represents that it is familiar with and agrees to comply with all such regulations, including any future modifications thereof, in connection with the distribution of the HIV Product. Selfcare agrees that it will not sell or distribute the HIV Product or clinical data relating to the HIV Product without complying with all applicable regulations. Selfcare hereby agrees to indemnify and hold ChemTrak harmless from any breach of this Section 13.2. 25. 13.3 FOREIGN CORRUPT PRACTICES ACT. Selfcare hereby agrees that it shall comply with the requirements of the United States Foreign Corrupt Practices Act and shall refrain from any payments to third parties which would cause ChemTrak or Selfcare to violate such Act. Selfcare hereby agrees to indemnify and hold harmless ChemTrak from any breach of this Section 13.3. 13.4 BENEFITS AND BINDING NATURE OF AGREEMENT. This Agreement shall be binding upon, and inure to the benefit of, the successors, executors, heirs, representatives, administrators and permitted assigns of the Parties hereto. 13.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with all exhibits attached and referenced herein, embodies the final, complete and exclusive understanding between the Parties, and replaces and supersedes all previous agreements, understandings or arrangements between the Parties with respect to its subject matter, including but not limited to the Confidentiality Agreement between the parties dated June 26, 1996 and the non-binding Letter of Intent between the parties dated as of August 28, 1996, as amended. All information exchanged by the parties prior to the Effective Date pursuant to the Confidentiality Agreement shall be deemed to be Confidential Information subject to the terms of this Agreement, including but not limited to Article 8. No modification or waiver of any terms or conditions hereof, nor any representations or warranties shall be of any force or effect unless such modification or waiver is in writing and signed by an authorized officer of each Party hereto. 13.6 NO OTHER TERMS AND CONDITIONS. The Parties intend that this Agreement set forth all of the terms and conditions applicable to the sale of the HIV Product and accordingly agree that all provisions, terms and conditions of any purchase order, sales or order acknowledgment, invoice or other business form or document (a "Form"), unless an amendment to this Agreement in accordance with Section 13.5 hereof, shall be superseded hereby and therefore shall be disregarded and have no force and effect. If a Form purports to be conditioned in any manner on agreement to and/or acceptance of any provisions, terms and conditions other than those set forth herein, then such condition is hereby waived. In no event shall either Party be bound by any provisions, terms or conditions relating to the subject matter of this Agreement not set out herein. 13.7 FORCE MAJEURE. Neither Party shall be liable to the other for its failure to perform any of its obligations under this Agreement, except for payment obligations, during any period in which such performance is delayed because of, or rendered impracticable or impossible due to, unforeseen circumstances beyond its reasonable control, including without limitation, acts of God, fire, flood, war or labor unrest. 13.8 NOTICE. All notices concerning this Agreement shall be written in the English language and shall be deemed to have been received (a) two (2) days after being 26. properly sent by commercial overnight courier, or (b) one (1) day after being transmitted by confirmed facsimile, in each case addressed to the address below: If to ChemTrak: ChemTrak Incorporated 929 E. Arques Avenue Sunnyvale, California 94086-4520 Attention: President Telephone: (408) 773-8156 Facsimile: (408) 524-9464 If to Selfcare: Selfcare, Inc. 200 Prospect Street Waltham, Massachusetts 02154 Attention: President Telephone: (617) 647-3900 Facsimile: (617) 647-3939 13.9 ENGLISH LANGUAGE; GOVERNING LAW. This Agreement has been prepared in the English language and the English language shall control its interpretation. All information to be provided by the parties to each other shall be in English, and Selfcare shall be responsible for all necessary translation. This Agreement shall be governed by the laws of the State of California as applied to agreements executed and performed entirely in California by California residents. 13.10 WAIVER. Any waiver (express or implied) by either Party of any default or breach of this Agreement shall not constitute a waiver of any other or subsequent default or breach. 13.11 SEVERABILITY. Each Party hereby agrees and acknowledges that this Agreement fairly sets forth the business understanding of the Parties. In the event that any provision of this Agreement shall be unenforceable or invalid under any applicable law or be so held by applicable court decision, the Parties shall change such provision or this Agreement so as to best accomplish the overall allocation of economic and other benefits between the Parties reflected in this Agreement, within the limits of applicable law or applicable court decisions. 27. 13.12 RIGHTS AND REMEDIES CUMULATIVE. Except as expressly provided herein, the rights and remedies provided in this Agreement shall be cumulative and not exclusive of any other rights and remedies provided by law or otherwise. 13.13 INDEPENDENT CONTRACTORS. Each Party shall act as an independent contractor under the terms of this Agreement. Neither Party is, nor shall it be deemed to be, an employee, agent, co-venturer, franchisee or legal representative of the other for any purpose. Neither Party shall be entitled to enter into any contracts in the name of, or on behalf of the other, nor shall either Party be entitled to pledge the credit of the other in any way or hold itself out as having authority to do so. 13.14 COUNTERPARTS. This Agreement may be executed in counterparts with the same force and effect as if each of the signatories had executed the same instrument. IN WITNESS WHEREOF, the Parties have each caused this Agreement to be signed and delivered by their duly authorized representatives as of the date first written above. CHEMTRAK INCORPORATED SELFCARE, INC. By: /s/ Edward F. Covell By: /s/ Anthony H. Hall ----------------------------- ------------------------------ Name: Edward F. Covell Name: Anthony H. Hall ----------------------------- ------------------------------ Title: President Title: Chief Financial Officer ----------------------------- ------------------------------ 28. EXHIBIT A STANDARD COST OF GOODS Standard Cost of Goods: a. Direct and Indirect Materials b. Direct and Indirect Labor c. Payments made to Third Parties d. Overhead (Indirect Production Costs) - expenses incurred in support of the manufacturing operation as well as those caused by the process of converting raw materials into HIV Product units. Items to be included in overhead shall be consistent with Generally Accepted Accounting Principles consistently applied, and shall include but not be limited to: Operations administration, purchasing, engineering, maintenance, utilities, building and grounds, quality assurance (including samples), receiving and stores department expenses, shipping department expenses, freight, depreciation (building and equipment). Also included are some labor related overhead expenses such as: Retirement Plan Costs, Payroll Taxes, Vacation Pay, Sick Leave, Holiday Pay, Separation Pay, Shift Premium (incentive for other than the day shift work), Overtime Premium (i.e. - incremental portion over straight time pay). EXHIBIT B CHEMTRAK TECHNOLOGY U.S. Patent Application Serial No. 08/670,513 Filing Date: June 27, 1996 Applicant: Douglas E. Rife Title: Re-Armable Single-User Safety Finger Stick Device Having Reset for Multiple Use by a Single Patient Foreign counterparts of the foregoing U.S. patent applicatiom, to be filed in the Territory the "Software," as defined in the Agreement PMA # BP950003, together with three supplements filed to date with FDA Physical Elements of the complete Sample Collection Kit: Finger Stick Device Blood Collection Card, with bar code Directions for Use Information About AIDS insert Tyvek Bag for Collection Card Return package EXHIBIT C REGULATORY FORECASTS France: Eighteen (18) months after U.S. FDA Approval. Germany: Twenty-four (24) months after U.S. FDA Approval. Italy: Eighteen (18) months after U.S. FDA Approval. Spain: Eighteen (18) months after U.S. FDA Approval. United Kingdom: Twelve (12) months after U.S. FSA Approval. -----END PRIVACY-ENHANCED MESSAGE-----