<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 19, 1999
REGISTRATION NO. 333-72665
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANSYS DIAGNOSTICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 2835 33-0316510
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
25200 COMMERCENTRE DRIVE
LAKE FOREST, CALIFORNIA 92630
(949) 770-9381
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN K. SCHULTHEIS
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ANSYS DIAGNOSTICS, INC.
25200 COMMERCENTRE DRIVE
LAKE FOREST, CALIFORNIA 92630
(949) 770-9381
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
PATRICK ARRINGTON, ESQ. RODD M. SCHREIBER, ESQ.
ELLEN S. BANCROFT, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
MATTHEW L. STEIMEL, ESQ. 333 W. WACKER DRIVE, SUITE 2100
MARRIE K. STONE, ESQ. CHICAGO, ILLINOIS 60606
BROBECK, PHLEGER & HARRISON LLP (312) 407-0700
38 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 790-6300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimated
except the Securities and Exchange Commission and NASD registration fees. All of
the expenses below will be paid by ANSYS.
<TABLE>
<CAPTION>
ITEM
----
<S> <C>
Registration fee............................................ $ 9,591
NASD filing fee............................................. 3,950
Nasdaq National Market listing fee.......................... 70,000
Blue sky fees and expenses.................................. 10,000
Printing and engraving expenses............................. 125,000
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 100,000
Transfer Agent and Registrar fees........................... 30,000
Miscellaneous............................................... 51,459
--------
Total............................................. $550,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law, we can indemnify
our directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Our bylaws provide that we will indemnify our directors
and officers to the fullest extent permitted by law and require us to advance
litigation expenses upon our receipt of an undertaking by the director or
officer to repay such advances if it is ultimately determined that the director
or officer is not entitled to indemnification. Our bylaws further provide that
rights conferred under such bylaws do not exclude any other right such persons
may have or acquire under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Our certificate of incorporation provides that, pursuant to Delaware law,
our directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty of care to ANSYS and our stockholders. This provision
in the certificate of incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Company or our stockholders, for acts or
omissions not in good faith or involving intentional misconduct or knowing
violations of law, for actions leading to improper personal benefit to the
director, and for payment of dividends or approval of stock repurchases or
redemption's that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
In addition, our certificate of incorporation (Exhibit 3.1 to this
registration statement) provides that we shall indemnify our directors and
officers if such persons acted: (1) in good
II-1
<PAGE> 3
faith; (2) in a manner reasonably believed to be in or not opposed to our best
interests; and (3) with respect to any criminal action or proceeding, with
reasonable cause to believe such conduct was lawful. The certificate of
incorporation also provides that, pursuant to Delaware law, our directors shall
not be liable for monetary damages for breach of the directors' fiduciary duty
of care to our company and our stockholders. This provision in the certificate
of incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to ANSYS for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemption's that are unlawful under Delaware
law. The provision also does not affect a director's responsibilities under any
other law, such as the federal securities laws or state or federal environmental
laws. The certificate of incorporation further provides that we are authorized
to indemnify our directors and officers to the fullest extent permitted by law
through the bylaws, agreement, vote of stockholders or disinterested directors,
or otherwise. We intend to obtain directors' and officers' liability insurance
in connection with this offering.
In addition, we have has entered or, concurrently with this offering, will
enter, into agreements to indemnify our directors and certain of our officers in
addition to the indemnification provided for in the certificate of incorporation
and bylaws. These agreements will, among other things, indemnify our directors
and certain of our officers for certain expenses (including attorneys fees),
judgments, fines and settlement amounts incurred by such person in any action or
proceeding, including any action by or in our right, on account of services by
that person as a director or officer of ANSYS or as a director or officer of any
subsidiary of ANSYS, or as a director or officer of any other company or
enterprise that the person provides services to at the request of ANSYS.
The Underwriting Agreement (Exhibit 1.1 hereto) provides for
indemnification by the underwriters of ANSYS and its officers and directors, and
by ANSYS of the underwriters, for certain liabilities arising under the
Securities Act or otherwise.
II-2
<PAGE> 4
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following is a summary of transactions by ANSYS since January 1, 1996
involving sales of our securities that were not registered under the Securities
Act of 1933, as amended.
Since January 1, 1996, the Registrant has issued stock options under its
1990 Plan and 1997 Plan to certain eligible officers, directors and employees to
purchase an aggregate of 566,400 shares of Common Stock (after giving effect to
the 1.2 for 1 stock split). In addition, on December 12, 1996 the Registrant
issued options to purchase 90,000 shares of Common Stock to Stephen K.
Schultheis, then its President and Chief Executive Officer, which options were
not granted pursuant to any plan.
None of the optionees paid any cash consideration for such options. Such
options did not involve a "sale" of securities; and, accordingly, registration
was not required. The following table sets forth the grant date, number of
options, current exercise price and class of optionees for all of such options.
All data gives effect to the 1.2 for 1 stock split.
<TABLE>
<CAPTION>
GRANT DATE NO. OF OPTIONS EXERCISE PRICE CLASS OF OPTIONEES
---------- -------------- -------------- ------------------
<S> <C> <C> <C>
01/01/96 to 05/31/96 72,000 $1.04 Employee
03/01/96 to 12/31/96 172,800 $1.07 Employee
12/18/97 54,000 $2.13 Employee
04/08/98 108,000 $3.83 Employee
07/01/98 67,300 $3.83 Officer
10/16/98 18,000 $4.64 Director
11/16/98 18,000 $4.64 Director
01/22/99 56,400 $4.97 Employee
</TABLE>
In addition, in April 1998 the Registrant issued 18,400 shares (after
giving effect to the 1.2 for 1 stock split) to a former employee upon exercise
of his vested options.
The sale and issuance of securities in the above transactions were deemed
to be exempt from registration under the Securities Act by virtue of Section
4(2) or Rule 701 thereof, or Regulation D, as transactions by an issuer not
involving a public offering. Appropriate legends are affixed to the stock
certificates issued in such transactions. Similar legends were imposed in
connection with any subsequent sales of any such securities. All recipients
either received adequate information about the Company or had access, through
employment or other relationships, to such information.
II-3
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<C> <S>
1.1** Form of Underwriting Agreement
3.1** Certificate of Incorporation of ANSYS to be filed with the
Delaware Secretary of State in March 1999
3.2** Bylaws of ANSYS
4.1** Specimen certificate representing shares of common stock of
the Company
5.1** Form of Opinion of Brobeck Phleger & Harrison LLP
10.1** Form of Indemnification Agreement
10.2* Stock Option Plan for Employees of ANSYS, together with form
of Stock Option Agreement (and related Notice of Grant of
Option), Stock Purchase Agreement and Stock Issuance
Agreement
10.3* 1997 Stock Incentive Plan, together with form of Stock
Option Agreement (and related Notice of Grant of Option),
Stock Purchase Agreement and Stock Issuance Agreement
10.4+ Commercial Agreement dated as of April 1, 1993 by and
between Roche Diagnostic Systems, Inc. and ANSYS
10.5 Amendment to Commercial Agreement between Roche Diagnostic
Systems, Inc. and ANSYS dated May 1, 1998
10.6+ Development and Manufacturing Agreement dated as of
September 1, 1996 by and between Roche Diagnostic Systems,
Inc. and ANSYS
10.7+ First Amendment to Development and Manufacturing Agreement
between Roche Diagnostic Systems, Inc. and ANSYS dated as of
September 25, 1998
10.8* Standard Industrial Commercial Single-Tenant Lease -- Net
dated November 1, 1996 between Makena Properties and ANSYS
10.9* Form of International Distributorship Agreement for ANSYS
10.10* Form of Distributorship Agreement for ANSYS
10.11* Registration Rights Agreement dated December 12, 1988
between ANSYS and certain stockholders of ANSYS
10.12* Management Subscription Agreement dated December 12, 1988
between ANSYS and certain stockholders of ANSYS
10.13 $2,000,000 Promissory Note Change in Terms Agreement dated
June 1, 1998 between ANSYS and Southern California Bank
10.14 $1,000,000 Promissory Note Change in Terms Agreement dated
May 28, 1998 between ANSYS and Southern California Bank
21.1* List of Subsidiaries
23.1* Consent of McGladrey & Pullen, LLP, Independent Auditors
23.2** Consent of Brobeck Phleger & Harrison LLP (contained in
Exhibit 5.1)
24.1* Power of Attorney
27.1* Financial Data Schedule
</TABLE>
- -------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
II-4
<PAGE> 6
(b) FINANCIAL STATEMENT SCHEDULES
Schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus as filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and this offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Lake
Forest, State of California, on the 12th day of March, 1999.
ANSYS DIAGNOSTICS, INC.
By: /s/ STEPHEN K. SCHULTHEIS
-----------------------------------
Stephen K. Schultheis,
Chairman of the Board, President
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEPHEN K. SCHULTHEIS Chairman of the Board, March 12, 1999
- ------------------------------------------ President and Chief Executive
Stephen K. Schultheis Officer (principal executive
officer)
/s/ SUZANNE M. DAVID Chief Financial Officer March 12, 1999
- ------------------------------------------ (principal financial and
Suzanne M. David accounting officer)
* Director March 12, 1999
- ------------------------------------------
Ronald J. Hall
* Director March 12, 1999
- ------------------------------------------
George D. Holmes
* Director March 12, 1999
- ------------------------------------------
John M. Morris
* Director March 12, 1999
- ------------------------------------------
C. Michael O'Donnell, Ph.D.
* Director March 12, 1999
- ------------------------------------------
William C. Shepherd
</TABLE>
*By: /s/ STEPHEN K. SCHULTHEIS
- --------------------------------
Stephen K. Schultheis,
Attorney-in-fact
II-6
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
1.1** Form of Underwriting Agreement..............................
3.1** Certificate of Incorporation of ANSYS to be filed with the
Delaware Secretary of State in March 1999...................
3.2** Bylaws of ANSYS.............................................
4.1** Specimen certificate representing shares of common stock of
the Company.................................................
5.1** Form of Opinion of Brobeck Phleger & Harrison LLP...........
10.1** Form of Indemnification Agreement...........................
10.2* Stock Option Plan for Employees of ANSYS, together with form
of Stock Option Agreement (and related Notice of Grant of
Option), Stock Purchase Agreement and Stock Issuance
Agreement...................................................
10.3* 1997 Stock Incentive Plan, together with form of Stock
Option Agreement (and related Notice of Grant of Option),
Stock Purchase Agreement and Stock Issuance Agreement.......
10.4+ Commercial Agreement dated as of April 1, 1993 by and
between Roche Diagnostic Systems, Inc. and ANSYS............
10.5 Amendment to Commercial Agreement between Roche Diagnostic
Systems, Inc. and ANSYS dated May 1, 1998...................
10.6+ Development and Manufacturing Agreement dated as of
September 1, 1996 by and between Roche Diagnostic Systems,
Inc. and ANSYS..............................................
10.7+ First Amendment to Development and Manufacturing Agreement
between Roche Diagnostic Systems, Inc. and ANSYS dated as of
September 25, 1998..........................................
10.8* Standard Industrial Commercial Single-Tenant Lease -- Net
dated November 1, 1996 between Makena Properties and
ANSYS.......................................................
10.9* Form of International Distributorship Agreement for ANSYS...
10.10* Form of Distributorship Agreement for ANSYS ................
10.11* Registration Rights Agreement dated December 12, 1988
between ANSYS and certain stockholders of ANSYS.............
10.12* Management Subscription Agreement dated December 12, 1988
between ANSYS and certain stockholders of ANSYS.............
10.13 $2,000,000 Promissory Note Change in Terms Agreement dated
June 1, 1998 between ANSYS and Southern California Bank.....
10.14 $1,000,000 Promissory Note Change in Terms Agreement dated
May 28, 1998 between ANSYS and Southern California Bank.....
21.1* List of Subsidiaries........................................
23.1* Consent of McGladrey & Pullen, LLP, Independent Auditors....
23.2** Consent of Brobeck Phleger & Harrison LLP (contained in
Exhibit 5.1)................................................
24.1* Power of Attorney...........................................
27.1* Financial Data Schedule.....................................
</TABLE>
- -------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
<PAGE> 1
EXHIBIT 10.4
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
- --------------------------------------------------------------------------------
COMMERCIAL AGREEMENT
BY AND BETWEEN
ANSYS DIAGNOSTICS, INC.
AND
ROCHE DIAGNOSTIC SYSTEMS, INC.
DATED
APRIL 1, 1993
- --------------------------------------------------------------------------------
<PAGE> 2
COMMERCIAL AGREEMENT
This Agreement, effective as of April 1, 1993 by and between Roche Diagnostic
Systems, Inc. ("RDS"), a corporation organized and existing under the laws of
the State of New Jersey with offices at 1080 Highway 202 Branchburg, New Jersey,
08876, and ANSYS, Inc. ("ANSYS") (formerly known as Toxi-Lab, Inc.), a
corporation organized and existing under the laws of the State of California
with offices at 2 Goodyear, Irvine, California, 92718.
WHEREAS, RDS is engaged in the business of research, development,
marketing and sales of various products used in the field of in vitro
immunoassay and chromatography diagnostics; and
WHEREAS, RDS owns certain proprietary information, materials,
intellectual property, technology and products relating to drugs of abuse
testing; and
WHEREAS, ANSYS owns certain proprietary information and technology
relating to the design, manufacturing and packaging of, in vitro diagnostic
products; and
WHEREAS, RDS and Toxi-Lab, Inc. entered into a Design and Feasibility
Agreement, dated November 15, 1992, under which RDS and Toxi-Lab, Inc.
collaborated in research activities to determine the feasibility of developing
new diagnostic products utilizing Toxi-Lab's and RDS's technology; and
WHEREAS, under the Design and Feasibility Agreement, RDS and Toxi-Lab,
Inc. developed a new device that can hold, transport, sample and test various
fluids for chemical and biological analytes, including drugs of abuse utilizing
RDS's technology; and
WHEREAS, Toxi-Lab, Inc. caused its corporate name to be changed to
ANSYS, Inc. effective March 5, 1993;
WHEREAS, RDS has agreed to pay ANSYS a fee as provided herein to
further develop and optimize the new device for RDS; and
WHEREAS, RDS has agreed to make ANSYS its exclusive manufacturer and
supplier for the new device; and
WHEREAS, in consideration of RDS paying ANSYS a developmental fee,
making ANSYS its exclusive manufacturer and supplier of the new device, and
giving ANSYS certain licensing rights to the new device, ANSYS has agreed to
assign to RDS all its rights to such new device.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties set forth herein, the parties agree as follows:
2
<PAGE> 3
1.0 DEFINITIONS
1.1 "Affiliate" shall mean:
(a) a business entity which owns, directly or indirectly,
a controlling interest in RDS, by stock ownership or
otherwise; or,
(b) a business entity which is owned by RDS, either
directly or indirectly, by stock ownership or
otherwise; or,
(c) a business entity, the majority ownership of which is
directly or indirectly common to the majority
ownership of RDS.
Anything to contrary in this paragraph notwithstanding, Genentech, Inc., a
Delaware corporation, shall not be deemed an Affiliate of RDS.
1.2 "Confidential Information" shall mean a party's technology,
data, know-how, or information whether technical or
non-technical, financial statements and reports, pricing,
trade secrets, secret processes, formulas and customer data
(including customer lists), and the like, that is disclosed to
the other party and which at the time of disclosure is clearly
marked as "Confidential." Oral communications shall be
considered Confidential Information provided that such
communication is reduced to writing, marked as "Confidential"
and provided by the disclosing party to the other party within
thirty (30) days after such oral disclosure.
1.3 "No-Step Kit" shall mean the device developed by RDS and ANSYS
under the Design and Feasibility Agreement dated November 15,
1992, that can hold, transport, sample and test various fluids
for biological and chemical analytes, including, without
limitation, certain drugs of abuse through the utilization of
RDS's Reagent Technology. The product specifications for the
No-Step Kit are set forth on Exhibit A, which RDS may, at its
sole option, modify from time to time. A copy of Exhibit A is
attached hereto and made a part hereof.
1.4 "RDS Reagent Technology" shall mean the products, reagents,
patents, patent rights, technology, manufacturing methods and
processes, formulas, designs, technical data, product
development and research data, know-how, secret processes,
trade secrets, intellectual property rights, quality control
and quality assurance protocols, and the like, owned or
controlled by RDS that can be used to test for certain drugs
of abuse through the use of immunoassay and chromatography
technology.
1.5 "RDS" shall mean Roche Diagnostic Systems, Inc. and its
Affiliates.
3
<PAGE> 4
2.0 OWNERSHIP AND PATENT RIGHTS
2.1 Ownership. (a) RDS shall own the entire right, title and
interest in and to the RDS Reagent Technology and ANSYS shall
have no right, title or interest therein.
(b) RDS shall own the entire right, title and
interest in and to the No-Step Kit, and ANSYS shall have no
right, title or interest therein, except as provided in
Article 6 of this Agreement.
2.2 Patent Applications. (a) ANSYS shall prepare and file the
necessary patent applications to protect any and all
patentable inventions relating to the No-Step Kit. ANSYS shall
assign to RDS, in such patent applications, any and all of its
rights to such inventions.
(b) ANSYS shall not file any such patent applications
without RDS's prior written approval, and ANSYS shall make any
changes requested by RDS to the applications before the filing
thereof.
2.3 Additional Patent Rights to the No-Step Kit. In the event that
during the term of this Agreement, or any renewal thereof, an
invention is made relating to the No-Step Kit that results in
additional patentable rights to such product, then the
following provisions shall apply.
(a) All such additional patent rights shall belong to RDS
regardless of whether it was developed by (i) RDS,
(ii) ANSYS, or (iii) jointly by RDS and ANSYS.
(b) In the event that the additional patent rights are
developed (i) jointly by ANSYS and RDS, or (ii)
solely by ANSYS, then ANSYS shall prepare and file
the necessary patent applications to protect such
additional patent rights. ANSYS shall assign to RDS,
in such patent applications, all of its rights to
such inventions.
(c) ANSYS shall not file any such patent applications
without RDS's prior written approval, and ANSYS shall
make any changes requested by RDS to the applications
before the filing thereof.
(d) RDS shall (i) pay for all reasonable expenses
associated with the preparation and filing of any
patent application provided for in this Section 2.3
and Section 2.2, (ii) pay for the maintenance of any
patents issued, and (iii) reimburse ANSYS for any
reasonable expenses incurred by ANSYS in connection
with the preparation and filing of the application.
Such reimbursement shall be in addition to the fees
that RDS shall pay ANSYS under Section 3.1(c).
4
<PAGE> 5
2.4 Other Patent Rights. If a patent application is filed or
issues in connection with activities performed under this
Agreement or any renewal thereof, that does not cover the
No-Step Kit and thus is not covered by the Section 2.3, but
that relates to inventions arising from or relating to the
development or manufacture of the No-Step Kit then this
Section shall apply.
(a) Patent rights to such invention resulting solely from
the efforts of RDS shall be owned solely by RDS and
any such invention shall be promptly disclosed in
writing by RDS to ANSYS.
(b) Patent rights to an invention resulting solely from
the efforts of ANSYS shall be owned solely by ANSYS
and any such invention shall be promptly disclosed in
writing by ANSYS to RDS.
(c) Patent rights to an invention resulting from the
collaborative efforts of both parties shall be
jointly owned by the parties.
3.0 DEVELOPMENT, MANUFACTURE AND SUPPLY OF THE NO-STEP KITS
3.1 Development. (a) ANSYS shall work in collaboration with RDS to
further develop and optimize the No-Step Kit for RDS which
shall include optimizing the design of the No Step Kit,
completing product development, initiating production
activities, and manufacturing and supplying RDS with various
prototypes of the kit for preclinical and clinical studies and
other applications.
(b) ANSYS shall use its best efforts to complete, to
the satisfaction of RDS, any activities that RDS requests
ANSYS perform under this Section. ANSYS shall not on its own
initiate any activities hereunder without receiving prior
written approval from RDS.
(c) In consideration of the services that ANSYS will
provided under this Section 3.1, RDS shall pay ANSYS a monthly
fee of $[***], for each month that ANSYS is performing
services hereunder, or a pro rata portion thereof, but in no
event shall RDS pay ANSYS more than $[***] to further develop
and optimize the No-Step Kit for RDS. Notwithstanding that
ANSYS will receive a maximum of $[***] for performing services
under this Section, ANSYS shall continue to work on and
complete the development and optimization of the No-Step Kit
until it meets the product specifications listed on Exhibit A,
even if it takes more than eight (8) months to accomplish.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
5
<PAGE> 6
(d) In the event that RDS makes substantial changes
to the product specifications listed on Exhibit A, after
August 1, 1993 but before the first commercial manufacturing
of the product pursuant to Section 3.6, the fees and time
schedule stated herein shall be renegotiated in good faith by
the parties.
(e) ANSYS shall not start manufacturing the No-Step
Kit for RDS pursuant to Section 3.6 until: (i) all the
services requested herein by RDS have been completed by ANSYS,
to the satisfaction of RDS; (ii) pricing for the No-Step Kit
has been finalized by the parties pursuant to Section 3.5; and
(iii) ANSYS receives written notice from RDS to proceed with
such manufacturing and supply.
3.2 Government Approvals. (a) RDS shall have the responsibility
for securing and maintaining governmental approvals to market
and sell the No-Step Kit. RDS shall, in its sole discretion,
determine in which countries it will pursue, and discontinue
the pursuit of, such governmental approval.
(b) ANSYS shall assist RDS, as requested by RDS, in
securing and maintaining such governmental approvals for the
No-Step Kit. ANSYS's assistance may include conducting studies
and providing to RDS data or other information required or
requested by the governmental authorities and assisting in the
completion and filing of applications and other forms
necessary for such governmental approvals.
(c) RDS shall be responsible for paying all costs
associated with obtaining such governmental approvals and
shall reimburse ANSYS for any costs incurred by ANSYS in
connection with such activities.
3.3 Manufacturing Equipment. (a) ANSYS shall be responsible for
selecting and purchasing the equipment and materials,
including product designs, necessary to manufacture the
No-Step Kits. ANSYS shall not purchase any equipment or
materials without RDS's prior written approval.
(b) RDS shall pay for all equipment and materials,
including product designs, that it approves the purchase
thereof under Section 3.3(a). Upon such payment, RDS shall own
the entire right, title and interest to such equipment and
materials, and ANSYS shall have no right, title or interest
therein, except to use such equipment and materials to
manufacture and supply the No-Step Kit to RDS pursuant to the
terms of this Agreement. Such, equipment and materials shall
be delivered by ANSYS to RDS upon the expiration or
termination of this Agreement.
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3.4 Reagents. RDS shall supply ANSYS with the reagents necessary
to manufacture the No-Step Kit.
3.5 Price. (a) The parties shall negotiate in good faith pricing
for the No-Step Kits. Within a reasonable time from the
execution date of this Agreement, but in no event later than
one hundred and twenty (120) days prior to the scheduled date
of the product launch by RDS of the No-Step Kits, the parties
shall finalize the pricing for such kits and attach a copy
hereto as Exhibit B. In the event that the parties are unable
to reach an agreement on pricing within this 120 day time
frame, either party may terminate the Agreement.
3.6 Exclusivity. ANSYS shall manufacture the No-Step Kits at its
facilities in Irvine California and shall supply such products
to RDS on an exclusive basis, even as to ANSYS, worldwide;
provided however, that in the event ANSYS receives a license
under Article 6, ANSYS may manufacture and supply the No-Step
Kits in those markets or market segments covered by such
license.
3.7 Packaging. ANSYS shall label the No-Step Kit with language to
be supplied by RDS and shall package the product with a
package insert, the language of which shall also be supplied
by RDS. RDS shall have the right, in its sole discretion, to
make changes to the label, package insert and other labeling
for the No-Step Kits, which changes shall be submitted by RDS
to the applicable governmental authorities, if required.
ANSYS's name may, at RDS's sole discretion, appear on the
label, package insert and other labeling for the No-Step Kits.
3.8 Quality Control and Assurance. (a) ANSYS shall manufacture the
No-Step Kits in accordance with the then current product
specifications as set forth on Exhibit A, as well as with the
then current quality control specifications, which, at RDS's
sole discretion, it may modify from time to time. A copy of
the quality control specifications will be provided by RDS
within a reasonable period after execution of this Agreement
and shall be attached hereto as Exhibit C.
(b) ANSYS shall manufacture the NO-Step Kits so that
they comply with all federal, state and local laws and
regulations.
(c) ANSYS shall perform quality control and quality
assurance testing and verification to ensure that the No-Step
Kits comply with the requirements set forth in Sections 3.8(a)
and (b).
(d) Each time ANSYS ships the No-Step Kits to RDS,
ANSYS shall provide RDS with a Certificate of Analysis at the
time of shipment, certifying that the products have been
evaluated by ANSYS's Quality Control and Quality Assurance
departments and that the product complies with the
requirements set forth in Sections 3.8(a) and (b). Within a
reasonable period after execution of this Agreement RDS shall
provide ANSYS with a sample Certificate of Analysis which
ANSYS shall use pursuant to this Section.
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4.0 ORDERS, DELIVERY, INVOICING AND PAYMENT
4.1 Forecasts. Within a reasonable time from the date of this
Agreement, but in no event later than sixty (60) days prior to
the scheduled date of the product launch by RDS of the No-Step
Kit, RDS shall supply ANSYS with its current estimates for the
No-Step Kits for each of the four (4) three-calendar-month
periods following the product launch date. Each such estimate
for four (4) three-calendar-months periods hereinafter is
called a "Rolling Forecast." RDS shall thereafter provide
ANSYS with Rolling Forecasts on a quarterly basis. No minimum
units for any three-calendar-month period of any Rolling
Forecast are required to be forecasted by RDS; provided
however, that the quantity of No-Step Kits for the initial
three-calendar month period of any Rolling Forecast may,
without the consent of ANSYS, vary upward or downward from
RDS's prior estimate for such three calendar month period by
an amount not to exceed twenty percent (20%). RDS and ANSYS
shall be bound by RDS's estimates, if any, for the first
three-calendar month period of each such Rolling Forecast.
ANSYS's obligations to manufacture the No-Step Kits for RDS
under this Agreement shall be subject to its maximum
production capacity.
4.2 Orders. RDS will order products by providing ANSYS with
written Purchase Orders, which shall contain the purchase
order number, product numbers, names and quantities, unit and
total purchase price and shipping instructions. No additional
terms or conditions shall be permitted to be added by ANSYS to
any Purchase order, whether by way of altering same or
providing a document that purports to contain additional
terms, and any such additional terms and conditions shall be
void and of no force or effect, notwithstanding that RDS may
accept and perform its obligations hereunder with respect to
any such allegedly modified Purchase Order without rejecting
specifically such additional terms and conditions.
4.3 Shipments. ANSYS shall ship and deliver the No-Step Kits
F.O.B. ANSYS's shipping point to such RDS locations as
requested by RDS. RDS may select the freight carrier used by
ANSYS to ship the products and may monitor ANSYS's
shipping/freight practices as they pertain to this Agreement.
ANSYS shall ship the No-Step Kits within thirty (30) days of
receipt of a Purchase Order from RDS.
4.4 Invoices and Payment. ANSYS shall submit to RDS, with each
shipment of the No-Step Kits, an invoice covering such
shipment. Each such invoice shall identify the RDS Purchase
Order number, product numbers, names and quantities, unit
price, freight charges and total amount to be remitted by RDS.
RDS shall pay for all such invoices within thirty (30) days
after its receipt of such invoices.
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4.5 Lot Numbering/Expiration Dates. ANSYS shall make arrangements
for and implement the imprinting of lot numbers and expiration
dates for each No-Step Kit shipped. Such lot numbers and
expiration dates shall be affixed on the product and on the
shipping carton of each product as is required under good
commercial practice.
5.0 COOPERATION
5.1 Technical Support. ANSYS shall provide reasonable technical
support and training relating to the No-Step Kits to RDS as
requested by RDS.
5.2 Records and Accounting by ANSYS. ANSYS shall keep records of
the manufacture, testing and shipping of the products supplied
hereunder by ANSYS, and retain samples of such products that
are necessary to assist with, and support, good manufacturing
practices, product complaints, investigations and other
regulatory requirements. Such records and samples shall be
made available to RDS upon its request, and shall be retained
by ANSYS and be available to RDS for a period of three (3)
years following termination of this Agreement, or longer if
required by law.
5.3 Product Recalls. ANSYS and RDS shall each maintain records as
may be necessary to permit a recall or a field correction of
any No-Step Kit delivered to RDS or customers of RDS, effected
voluntarily or under a threat of, or a directive by, any
governmental agency. Each party shall give immediate notice by
telephone (to be confirmed in writing) to the General Counsel
of the other party upon discovery that any No-Step Kit should
be recalled or corrected, or may be required to be recalled or
corrected, and, each party upon receiving any such notice or
upon any such discovery, shall cease and desist from further
shipments of No-Step Kits in its possession or control until a
decision has been made whether a recall or some other
corrective action is necessary. The decision to initiate a
recall or to take some other corrective action shall be made
by RDS after conferring with ANSYS. Each party shall cooperate
with the other in developing any necessary recall plan, and
the manner and extent of such plan shall be subject to prior
consultation, which consultation shall not delay such plan by
more than forty-eight (48) hours from the time of initial
notice. Any such recall or corrective action shall be made at
ANSYS's cost and expense if, and to the extent that, such
recall or corrective action results from, or arises out of,
any breach by ANSYS of its warranties or covenants hereunder.
5.4 Product Returns. RDS shall have the responsibility for
handling customer returns of the No-Step Kits. ANSYS shall
provide RDS with such assistance as RDS may need to handle
such returns. Any such return shall be made at ANSYS's cost
and expense if, and to the extent that, such return results
from, or arises out of, any breach by ANSYS of its warranties
or covenants hereunder.
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5.5 Governmental Agencies. Each party may communicate with any
Governmental agency, including but not limited to the United
States Food and Drug Administration, regarding the No-Step
Kits if in the opinion of that party's counsel, such
communication is necessary to comply with the terms of this
Agreement or the requirements of any law, governmental order
or regulation; provided however, that unless in the reasonable
opinion of its counsel there is a legal prohibition against
doing so, such party shall permit the other party to accompany
and take part in any communications with the agency, and to
receive copies of all such communications from the agency.
5.6 Customer Questions And Complaints. (a) RDS shall have the
responsibility for responding to questions and complaints
regarding the No-Step Kits. Questions or complaints received
by ANSYS shall be promptly referred to RDS. RDS shall provide
ANSYS with reports summarizing such complaints and customer
questions, as requested by ANSYS, but in no event shall RDS
have to provide such reports more frequently than on a
quarterly basis.
(b) Within a reasonable time from the date of this
Agreement, but in no event later than the sixty (60) days
prior to the scheduled date of the product launch by RDS of
the No-Step Kit, ANSYS shall provide RDS with all necessary
information that will enable RDS to respond properly and
promptly to questions or complaints relating to the No-Step
Kits. ANSYS shall use its best efforts to keep such
information current.
(c) ANSYS shall provide RDS with such other
assistance as RDS may need to investigate and respond to
customer questions or complaints.
5.7 Product Modifications. (a) ANSYS shall only make alterations,
modifications or improvements to the product specifications or
performance characteristics for the No-Step Kits supplied by
ANSYS to RDS under this Agreement if (i) prior written
approval is given by RDS, and (ii) new pricing for the No-Step
Kits, if necessary because such alteration, modification or
improvement changes the cost to manufacture the kits, is
agreed upon by the parties.
6.0 LICENSE
6.1 RDS shall offer in writing to license the No-Step Kit to ANSYS
in those markets or market segments that RDS has determined it
will not sell the product.
6.2 (a) In the event that RDS offers in writing to license the
No-Step Kit to ANSYS pursuant to Section 6.1, ANSYS shall have
ninety (90) days from the receipt of such written offer to
inform RDS in writing that it desires to obtain such a license
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from RDS. Thereafter, the parties agree to negotiate in good
faith a licensing agreement that shall include a licensing fee
not to exceed three percent (3%) of net sales of the product.
Agreement by the parties on all the terms of the licensing
agreement shall be a precondition before any such license can
become effective.
(b) In the event that ANSYS does not notify RDS
within the 90 day period set forth in Section 6.2(a) informing
RDS that it desires to obtain the license offered by RDS, then
RDS shall be free to offer such license to third parties
without any further obligations to ANSYS.
6.3 ANSYS expressly acknowledges and agrees that in the event that
it receives a license from RDS to the No-Step Kit under this
Article 6 it shall have no right to sublicense, assign or
otherwise transfer its rights under such license, without
prior written approval of RDS.
6.4 The terms and conditions of this Article 6 shall survive
termination or expiration of this Agreement and shall extend
until all of RDS's patent rights in No-step Kit expire.
7.0 TERM, RENEWAL AND TERMINATION
7.1 Term. This Agreement, effective as of April 1, 1993, shall end
on December 31, 1999 unless terminated by one of the parties
in accordance with this Agreement.
7.2 Renewal. RDS shall have the option, in its sole discretion, to
extend this Agreement for additional three (3) year terms, or
a portion thereof, upon written notice, subject to the same
terms and conditions of this Agreement. In the event that RDS
renews this Agreement, the parties agree to negotiate in good
faith a mutually acceptable price for the No-Step Kits. In the
event that the parties fail to agree upon new prices, the
pricing structure as set forth in Exhibit B shall remain
effective.
7.3 Non-Renewal. In the event that RDS elects not to renew this
Agreement pursuant to Section 7.2, and provided that ANSYS is
not in breach of the Agreement, then and only then RDS shall
pay ANSYS a fee, to be negotiated in good faith by the
parties, for each No-Step Kit sold by RDS after the expiration
of this Agreement. Such fee shall not exceed three percent
(3%) of net sales of the No-Step Kits. RDS shall have no
obligation to pay ANSYS such fee in the event that the
Agreement is terminated by either party under Section 7.4.
7.4 Termination. (a) Upon failure of either party to remedy its
breach of any of the obligations or provisions of this
Agreement within thirty (30) days following receipt of written
notice of said breach, the aggrieved party shall have the
right to
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terminate this Agreement immediately by written notice;
provided however, that if the breach is due to a product
failure or defect in the No-Step Kit and the parties agree
that the actions needed to cure such problem requires more
than 30 days, then the cure period may be extended, upon
mutual agreement of the parties, for a reasonable period of
time.
(b) Either party at its sole option may immediately
terminate this Agreement upon written notice, but without
prior advance notice, to the other party in the event that (i)
the other party is declared insolvent or bankrupt by a court
of competent jurisdiction; (ii) a voluntary petition of
bankruptcy is filed in any court of competent jurisdiction by
such other party; or (iii) this Agreement is assigned by such
other party for the benefit of creditors.
(c) RDS may terminate this Agreement upon thirty (30)
days' written notice in the event that the Food Drug
Administration takes any action, or raises any objection, that
prevents RDS from importing, exporting, purchasing or selling
the No-Step Kits to customers.
(d) Any termination or expiration of this Agreement
shall not affect any outstanding obligations or payments due
hereunder prior to such termination or expiration, nor shall
it prejudice any other remedies that the parties may have
under this Agreement.
8.0 REPRESENTATIONS AND WARRANTIES
8.1 Product Specifications. ANSYS represents and warrants that the
No-Step Kits shall comply with the then current product
specifications and then current quality control specifications
and with all federal, state and local laws and regulations.
8.2 Good Manufacturing Practices. ANSYS represents and warrants
that the No-step Kits shall comply with and will be
manufactured in accordance with all applicable Good
Manufacturing Practices ("GMPs").
8.3 Warranty of Purpose. ANSYS represents and warrants that the
No-Step Kits supplied under this Agreement are suitable and
may be used for the purposes for which RDS is selling such
kits.
8.4 Product Defects. ANSYS represents and warrants that the
No-Step Kits supplied under this Agreement are free from all
defects and that the work performed by ANSYS under this
Agreement is of recognized standard quality or better.
8.5 Product Development. ANSYS represents and warrants that the
No-Step Kits will be manufactured by ANSYS, or by third
parties for ANSYS free and clear of any claims by such third
parties.
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8.6 Authority. Each party represents and warrants to the other
party that it has the full right and authority to enter into
this Agreement, and that it is not aware of any impediment
that would inhibit its ability to perform its obligations
hereunder.
8.7 Consequential Damages. In the event of a breach of any
representation or warranty, express or implied, in addition to
other rights RDS may have, it may withhold payment and/or
cause such breach to be corrected and charge ANSYS; therefore
ANSYS shall be liable for all consequential damages. Except as
specifically provided herein, ANSYS makes no other
representations or warranties express or implied.
9.0 INDEMNITY
9.1 (a) RDS agrees to defend, indemnify and hold ANSYS, its
officers, directors, employees and agents harmless against any
and all losses, damages, costs, claims, demands, judgments and
liability resulting from, or relating to RDS's performance
under this Agreement, except to the extent that any such
losses, damages, costs, demands, costs, claims, judgments and
liability are due to the negligence or wrongful act(s) of
ANSYS, its employees or agents.
(b) If by reason of manufacturing or selling the
No-Step Kit to RDS under this Agreement ANSYS is sued or
threatened with suit for alleged patent infringement covering
(i) the No-Step Kit, or (ii) the process for producing the
No-Step Kit, RDS shall, at its own expense, defend such suit
and indemnify ANSYS against all losses and expenses incurred
in connection with such suit or threatened suit including
judgments, decrees, court costs and attorney fees, except to
the extent that the claim relates to, or results from ANSYS's
noncompliance with the terms of this Agreement.
9.2 ANSYS agrees to defend, indemnify and hold RDS, its officers,
directors, employees and agents harmless against any and all
losses, damages, costs, claims, demands, judgments and
liability resulting from, or relating to ANSYS's performance
under this Agreement, except to the extent that any such
losses, damages, costs, demands, costs, claims, judgments and
liability are due to (i) the negligence or wrongful act(s) of
RDS, its employees or agents, or (ii) patent infringement
suits or threatened suits that, pursuant to Section 9.1(b),
RDS has agreed to defend and provide indemnification to ANSYS.
10.0 CONFIDENTIALITY
10.1 During and in furtherance this Agreement, each party may
disclose certain of its Confidential Information to the other
party.
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10.2 During the Term of this Agreement, and for a period of five
(5) years from the termination thereof, RDS and ANSYS each
agree (i) to use the Confidential Information only in
connection with the terms of this Agreement, (ii) to treat the
Confidential Information as it would its own proprietary
information, and (iii) to take all reasonable precautions to
prevent the disclosure of the Confidential Information to any
third party, other than an Affiliate, without the prior
written consent of the other party.
10.3 A party shall be relieved of any and all of the obligations
under Section 10.2 regarding Confidential Information which
(i) was known to the party receiving the Confidential
Information (the "receiving Party") prior to receipt
hereunder, (ii) at the time of disclosure to by the disclosing
party to the Receiving Party, was generally available to the
public, or which after disclosure hereunder becomes generally
available to the public through no fault attributable to the
Receiving Party; or (iii) is hereafter made available to the
Receiving Party for use or disclosure by the Receiving Party
from any third party having a right to do so.
11.0 MISCELLANEOUS
11.1 Independent Contractors. The parties shall be deemed to be
independent contractors, and this Agreement shall not be
construed to create between ANSYS and RDS any other
relationship such as, by way of example only, that of
employer-employee, principal agent, joint-venturer, copartners
or any similar relationship, the existence of which is
expressly denied by the parties hereto.
11.2 Inspection. RDS may inspect ANSYS reports and records relating
to the performance under this Agreement during normal business
hours and with reasonable advance notice.
11.3 Access. ANSYS shall provide RDS access to any of its
facilities, during normal business hours and with reasonable
advance notice, in which the No-Step Kits are manufactured,
stored, handled, shipped or used in order to permit RDS
verification of ANSYS's compliance with this Agreement and
applicable laws.
11.4 Insurance. ANSYS shall maintain liability and other insurance
coverage satisfactory to RDS, during the term of this
Agreement and for five (5) years thereafter, which insurance
shall name RDS as an additional insured. Such insurance shall
include comprehensive general, liability contractual
liability, and product liability and have limits no less than
$2,000,000.00 per occurrence. ANSYS shall provide to RDS a
Certificate of Insurance evidencing such coverage and shall
provide RDS with notice of any change or modification thereto.
11.5 Taxes. ANSYS shall be liable for any and all local, state and
federal taxes and license fees, arising out of the sale of
No-Step Kits to RDS pursuant to this Agreement.
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11.6 New Drugs of Abuse Products. (a) RDS shall have the right of
first refusal to market exclusively any and all new
immunoassay drugs of abuse products developed by ANSYS.
(b) In the event that ANSYS manufactures or develops
such a product, ANSYS shall so immediately, notify RDS in
writing and shall provide RDS with sufficient information,
data, and samples, for RDS to evaluate the product and
determine its interest, if any, in the product. RDS shall have
ninety (90) days from receipt of such information, data and
samples to evaluate the product and if interested shall notify
ANSYS in, writing within ten (10) business days of the
conclusion, of this evaluation period.
(c) In the event that RDS expresses such an interest,
the parties shall negotiate in good faith to enter into an
exclusive marketing agreement upon terms and conditions that
are commercially reasonable. In the event that the parties
fail to reach a negotiated agreement within seventy (70) days
from RDS's completion of the evaluation, ANSYS may then offer
such product to other potential companies, provided that such
offer shall not be more favorable to such company than
previously offered to RDS.
11.7 Choice of Law. This Agreement shall be construed under, and
the rights of the parties hereto shall be governed by the laws
of the state of New Jersey, without giving effect to New
Jersey's choice of law principles. The parties agree that the
Superior Court of New Jersey and the United States District
Court for the District of New Jersey shall have exclusive
jurisdiction to hear and determine any and all disputes
pertaining directly or indirectly to this Agreement. The
parties expressly consent to venue and to the exercise of
personal jurisdiction by the aforesaid courts. Additionally,
each party expressly waives any and all right to commence and
maintain any lawsuit against the other party, whether at law
or in equity, in any other court or jurisdiction.
11.8 Disputes. In the event of any law suit between ANSYS and RDS
in connection with this Agreement, the unsuccessful party
shall pay to the prevailing party all costs and expenses,
including reasonable attorneys' fees, incurred in such action
or proceeding and in any appeal in connection therewith by
such prevailing party, and any such costs, expenses and
reasonable attorneys' fees shall be included as a part of any
such judgment entered in favor of such prevailing party.
11.9 Other Products. Nothing in the Agreement shall be, construed
to prevent or limit either party from selling any of its other
products in any market.
11.10 No Waiver. Either party's failure to require the other party
to comply with any provision of this Agreement shall not be
deemed a waiver of such provision or any other provision of
this Agreement.
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11.11 Severability. In the event that one or more of the provisions
of this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any of the other provisions of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained
herein.
11.12 Assignment. This Agreement shall not be assignable nor its
rights hereunder transferred in any way by either party hereto
other than to an Affiliate, except with the written consent of
the other party, which consent shall not be unreasonable
withheld.
11.13 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
11.14 Force Majeure. Neither party shall be liable for the failure
to perform its obligations under this Agreement if such
failure is occasioned by a contingency beyond such party's
reasonable control, including, but not limited to, strikes or
other labor disturbances, lockouts, riots, wars, fires, floods
or storms. A party claiming a right to excused performance
under this Section shall immediately notify the other party
writing of the extent of its inability to perform, which
notice shall specify the occurrence beyond its reasonable
control that prevents such performance.
11.15 Notices. Any notice, or other written communication, required
or permitted hereunder shall be sufficiently made or given to
the other party by personal in-ha delivery, by telecopier
communication or by sending t same by first class mail,
postage prepaid to the mail address, or telecopier numbers set
forth below:
If to RDS:
Roche Diagnostic Systems, Inc.
1080 Highway 202
Branchburg, New Jersey 08876-1760
Attention: Vice President, International
Drug Monitoring Business Unit
Telecopier No: (908) 253-7645
with a copy to
Jordan D. Cooper, Esq.
Roche Diagnostics Systems, Inc.
340 Kingsland Street
Nutley, N.J..07110
Telecopier No: (201) 235-3500
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If to ANSYS:
ANSYS, Inc.
2 Goodyear
Irvine, California 92718
Attention: President
Telecopier (714) 768-0311
or to such other addresses or telecopier numbers provided to
the other party in accordance with the terms of this Section.
Notices or written communications made or given by personal
in-hand delivery or by telecopier shall be deemed to have been
sufficiently made or given when sent, or if mailed, three (3)
days after being deposited in the United States Mail, postage
prepaid or upon receipt, whichever is sooner.
11.16 Entire Agreement. This Agreement constitutes the full,
complete, final and integrated agreement between the parties
hereto relating to the subject matter hereof and supersedes
all previous written or oral negotiations, commitments,
agreements, transactions or understandings with respect to the
subject matter hereof. Except for Exhibit A (Product
Specifications) and Exhibit C (Quality Control Specifications)
which RDS may modify, at its sole option, from time to time,
any modification, amendment or supplement to this Agreement
must be in writing and signed by authorized representatives of
both parties.
11.17 Headings. The titles and headings herein are for convenience
only and shall not be used to interpret or construe the terms
and conditions of this Agreement.
11.18 Singular Terms. Except as otherwise expressly provided herein
or unless the context otherwise requires, all references to
the singular shall include the plural as well.
11.19 Execution in Counterparts. This Agreement may be executed in
two (2) counterparts, each of which shall be deemed an
original, but all of which together shal1 constitute one and
the same instrument.
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IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed this Agreement as of the dates set forth below.
ANSYS, INC. ROCHE DIAGNOSTIC SYSTEMS, INC.
By: /s/ C. Michael O'Donnell, Ph.D By: /s/ Adrienne Choma
Name: ___________________________ Name: __________________________
Title: __________________________ Title: Vice President
Date: ___________________________ Date: 7/26/93
EXHIBIT A
PRODUCT SPECIFICATION SHEET
ONTRAK GENERATION II
July 1993
I. PRODUCT DESCRIPTION
ONTRAK Generation II for the on-site testing market meeting the
following general requirements:
* No step assay with no reagent addition or urine handling
* Clear endpoint interpretation by non-technical operator
* Multi-drug format to accommodate three to five analytes
II. PERFORMANCE
1. Clinical Claims - Qualitative detection of abused drug or drug
metabolite at specified cut-off level.
2. Linearity - Standard curve should be as steep as possible at
cut-off.
3. Accuracy and Precision - [***]
4. Sensitivity - Comparable to ONTRAK at cut-off.
5. Specificity - Comparable to ONTRAK.
6. Interference's - Comparable to ONTRAK.
7. Cross Reactivities - Comparable to ONTRAK.
8. Stability - [***]
9. Storage Conditions - RT storage with shipment at ambient
temperature via ground transportation. Container with sample
may be stored refrigerated.
10. Controls - Positive and negative controls specimens
commercially available with test incorporating a "test
complete" indication.
11. Cut-off - Consistent with NIDA Guidelines or as established.
III. PROCEDURE 1. Sample Type - Urine 2. Sample Volume - :5 250 /uL.
3. Reagent Volume - Preloaded dose.
4. Number of Off-Line Steps - Zero.
5. Analysis Time - Approximately 3 minutes, no timing steps.
6. Analysis Temperature - 2-450C.
[***] Confidential treatment has been requested for the redacted portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
18
<PAGE> 19
IV. PRODUCT EMBODIMENT
1. No urine handling.
2. Test embodied in specimen container requiring no specimen or
reagent handling and guards against potential contact or
splashing on operator by contact with lid or cup.
3. Test cannot be inadvertently run, read or adulterated by
client.
4. Positive/Negative and Test Complete read required as part of
mold.
5. Test with specimen must with shippable, leak-proof,
identifiable and allow for recovery of specimen for
confirmation testing.
6. Test must comply with chain of custody requirements.
7. Test must be able to be stored stacked.
8. Assembly of test must be automatable/manufacturable with
capacity to manufacture 100,000 tests per week.
9. No sample overload or constriction of flow tolerable.
10. Test cannot be compatible with generic specimen containers or
lids.
11. Proprietary configuration to discourage competitive offerings.
12. Test results should be able to be photocopied.
13. QC testing of random sampling aggressive enough to assure
product integrity with respect to physical and performance
characteristics. These cycles should be agreed upon mutually
by TLIw and RIDS and will diminish as assurance of quality
increases.
V. LABELING
1. Label must include information regarding client
identification, date, tester, and testers signature. (A lid
label may be incorporated to provide additional labeling
space.)
2. Each test must be color coded consistent with current ONTRAK
product and reflect the Roche identity and product codes and a
pictorial procedure guide.
3. Label must provide Positive/Negative and Test Complete
indication in a limited viewing area, consistent with mold.
4. Label to incorporate Positive/Negative identification "key".
5. A milliliters scale should be present to identify approximate
amount of specimen.
6. The capacity to add bar coding and a temperature strip should
be designed in the label.
19
<PAGE> 20
VI. PACKAGING
1. Number of test cups per kit to be defined. Kit to include
individually sealed test cups with drying agent and five
language package insert and any other supplies necessary to
perform the test.
2. Box to serve has outer shipping carton. 3. Kit components to
meet recycling requirements where possible.
3. Kit components to meet recycling requirements where possible.
20
<PAGE> 21
EXHIBIT B
PRICING FOR NO-STEP KITS
PRICE TO ROCHE FOR FIRST FULL YEAR OF PRODUCTION: $[***].
[***]
PRICE MAY BE ADJUSTED BY MUTUAL CONSENT AT ANY TIME
ANSYS, INC. ROCHE DIAGNOSTIC SYSTEMS
/S/ STEPHEN K. SCHULTHEIS /S/ ADRIENNE CHOMA
President Vice President
International Drug Monitoring Unit
[***] Confidential treatment has been requested for the redacted portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
21
<PAGE> 1
EXHIBIT 10.5
FIRST AMENDMENT TO
COMMERCIAL AGREEMENT
This First Amendment to Commercial Agreement is entered into to be
effective as of the 1st day of May 1998, by and between Roche Diagnostic
Systems, Inc. ("RDS"), a corporation organized and existing under the laws
of the State of New Jersey with offices at 1080 U.S. Highway 202,
Somerville, New Jersey 08876, and ANSYS Diagnostics, Inc. ("ANSYS"), a
corporation organized and existing under the laws of the State of
California, with offices at 25200 Commercentre Drive, Lake Forest
California 92630.
WHEREAS, RDS and ANSYS entered into a Commercial Agreement effective as of
April 1, 1993 (the "Agreement"), whereby RDS and; ANSYS agreed to jointly
develop a test kit for biological and chemical analytes including, without
limitation, certain drugs of abuse, which kit ft parties commonly refer to
as "TesTcup;"
WHEREAS, each of RDS and ANSYS desire to amend the Agreement in
certain respects;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties set forth herein, the parties agree as follows:
1. The Agreement is hereby amended to reflect that ANSYS has amended
its Articles of Incorporation to change its name from ANSYS, Inc. to
ANSYS Diagnostics, Inc.
2. Section 7.1 of the Agreement is hereby amended to read as follows:
"7.1 Term. This Agreement, effective as of April 1, 1993, shal1 end
on January 1, 2003, unless terminated sooner by one of the parties
in accordance with this Agreement.
3. Section 11.15 of the Agreement is hereby amended to provide that
the address for notice to ANSYS is:
ANSYS Diagnostics, Inc.
25200 Commercentre Drive
Lake Forest, California 92630
Attn: President Telecopier No. (949) 768-0311
4. Except as expressly modified hereby, the parties hereby ratify and
confirm the Agreement in all respects, including without limitation,
the representation and
<PAGE> 2
warranty set forth in Section 8.6, of the Agreement regarding
authority to enter into this First Amendment.
5. This First Amendment may be executed in two (2) counterparts, each
of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed this First Amendment to be effective as of the dates first
set forth above.
ANSYS DIAGNOSTICS, Inc. ROCHE, DIAGNOSTIC SYSTEMS, INC.,
A California corporation a New Jersey corporation
By: /s/ STEPHEN K. SCHULTHEIS By: /s/ ROBERT L. AROMANDO, JR.
------------------------------ -----------------------------------
Stephen K. Schultheis Robert L. Aromando, Jr.
President and Director, Global Marketing
Chief Executive Officer Point of Care DAT
<PAGE> 1
EXHIBIT 10.6
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
- --------------------------------------------------------------------------------
DEVELOPMENT AND MANUFACTURING AGREEMENT
by and between
ANSYS DIAGNOSTICS, INC.
and
ROCHE DIAGNOSTIC SYSTEMS, INC.
Dated
September 1, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
DEVELOPMENT AND MANUFACTURING AGREEMENT
This Agreement, effective as of September 1, 1996, by and between Roche
Diagnostic Systems, in ("RDS"), a corporation organized and existing under the
laws of the State of New Jersey with offices at 1080 Highway 202, Somerville,
New Jersey 08876, and ANSYS, Inc. ("ANSYS"), a corporation organized and
existing under the laws of the State of California with offices at 2 Goodyear,
Irvine, California 92718.
WHEREAS, RDS and ANSYS entered into a Commercial Agreement for the exclusive
manufacture and supply of a "No-Step Kit" (TesTcup); and
WHEREAS, RDS desires to appoint ANSYS as exclusive manufacturer of a new device
tentatively to be called TestStick (the "Device") based upon the same
technology; and
WHEREAS, RDS has agreed to pay ANSYS a developmental fee for the Device
packaging; and
WHEREAS RDS has agreed to provide capital sufficient to purchase certain
equipment in support of the manufacture of the Device; and
WHEREAS, in consideration of the above, ANSYS has agreed to assign to RDS all
rights and exclusive ownership to the Device.
NOW THEREFORE, in consideration of the premises and of the mutual covenants of
the parties set forth herein, the parties agree as follows:
1.0 DEFINITIONS
1.1 "Affiliate" shall mean:
(a) a business entity which owns, directly or indirectly,
a controlling interest in RDS, by stock ownership or
otherwise; or,
(b) a business entity which is owned by RDS, either
directly or indirectly, by stock ownership or
otherwise; or,
(c) a business entity, the majority ownership of which is
directly or indirectly common to the majority
ownership of RDS.
Anything to contrary in this paragraph notwithstanding, Genentech,
Inc., a Delaware corporation, shall not be deemed an Affiliate of RDS.
1.2 "Confidential Information" shall a party's technology, data,
know-how, or information whether technical or non-technical,
financial statements and reports, pricing, trade secrets,
secret processes, formulas and customer data (including
2
<PAGE> 3
customer lists), and the like, that is disclosed to the other
Party and which at the time of disclosure is clearly marked as
"Confidential." Oral communication shall be considered
Confidential Information provided that such communication is
reduced to writing, marked as "Confidential" and provided by
the disclosing party to the other party within thirty (30)
days after such oral disclosure.
1.3 "Device" shall mean the device (tentatively to be called
TestStick) developed by RDS and ANSYS to test various fluids
for biological and chemical analysis including, without
limitation, certain drugs of abuse through the utilization of
RDS's Regent Technology. The product specifications' for the
Device are set forth on Exhibit A, which RDS may, subject to
ANSYS's reasonable approval, modify from time to time. A copy
of Exhibit A is attached hereto and made a part hereof.
1.4 "RDS Reagent Technology" shall mean the products, reagents,
patents, patent rights, technology, manufacturing methods and
processes, formulas, designs, technical data, product
development and research data, know how, secret processes,
trade secrets, intellectual property rights, quality control
and quality assurance protocols, and the like, owned or
controlled by RDS that can be used to test for biological and
chemical analyses including, without limitation, certain drugs
of abuse through the use of immunoassay and chromatography
technology.
1.5 "RDS" shall mean Roche Diagnostic Systems and its Affiliates.
2.0 OWNERSHIP AND PATENT RIGHTS
2.1 Ownership.
(a) RDS shall own the entire proprietary right, title and
interest in and to the RDS Reagent Technology and
ANSYS shall have no right, title or interest therein.
(b) RDS shall own the entire proprietary right, title and
interest in and to the Device, and ANSYS shall have
no right, title or interest therein, except as
provided in Article 6 of this Agreement.
2.2 Patent Application.
(a) ANSYS shall prepare and file the necessary patent
applications to protect any and all patentable
inventions relating to the Device (excluding
reagents). ANSYS shall assign to RDS, in such patent
applications, any and all of its proprietary rights
to such inventions.
3
<PAGE> 4
(b) ANSYS shall not file any such patent applications
without RDS's prior written approval, and ANSYS shall
make any changes reasonably requested by RDS to the
applications before the filing thereof.
2.3 Additional Patent Rights to the Device. In the event that
during the term of this Agreement, or any renewal thereof, an
invention is made based upon the Device that results in
additional patentable rights to such product, then the
following provisions shall apply.
(a) All such additional patent rights shall belong to RDS
regardless of whether it was developed by (i) RDS,
(ii) ANSYS, or (iii) jointly by RDS and ANSYS.
(b) In the event that the additional patent rights are
developed (1) jointly by ANSYS and RDS, or (ii)
solely by ANSYS, then ANSYS shall prepare and file
the necessary patent applications to protect such
additional patent rights. ANSYS shall assign to RDS,
in such patent applications, all of its rights to
such inventions.
(c) ANSYS shall not file any such patent applications
without RDS's prior written approval, and ANSYS shall
make any changes reasonably requested by RDS to the
applications before the filing thereof.
(d) RDS shall (i) pay for all reasonable expenses
associated with the preparation and filing of any
patent application provided for in this Section 2.3
and Section 2.2. (ii) pay for the maintenance of any
patents issued, and (iii) reimburse ANSYS for any
reasonable expenses incurred by ANSYS in connection
with the preparation and filing of the application.
Such reimbursement shall be in addition to the fees
that RDS shall pay ANSYS under Section 3.1(c).
2.4 Other Patent Rights. If a patent application is filed or
issued in connection with activities performed under this
Agreement or any renewal thereof, that does not cover the
Device and thus is not covered by Section 2.3 resulting in
inventions arising from or relating to the development or
manufacture of the Device, then this Section shall apply.
(a) Patent rights to such invention resulting solely from
the efforts of RDS shall be owned solely by RDS and
any such invention shall; be promptly disclosed in
writing by RDS to ANSYS.
(b) Patent rights to an invention resulting solely from
the efforts of ANSYS shall be owned solely by ANSYS
and any such invention shall be promptly disclosed in
writing by ANSYS to RDS.
4
<PAGE> 5
(c) Patent rights to an invention resulting from the
collaborative efforts of both parties shall be
jointly owned by the parties.
3.0 DEVELOPMENT, MANUFACTURE AND SUPPLY OF DEVICES
3.1 Development.
(a) ANSYS shall work in collaboration with RDS to further
develop and optimize the Device for RDS which shall
include optimizing the design of the Device,
completing product development, initiating production
activities, and manufacturing and supplying RDS with
various prototypes of the Device for preclinical and
clinical studies and other applications.
(b) ANSYS shall use its best efforts to complete, to the
satisfaction of RDS, any activities that RDS
reasonably requests ANSYS perform under this Section.
ANSYS shall not on its own initiate any activities
hereunder without receiving prior written approval
from RDS.
(c) In consideration of the services that ANSYS will
provide under this section 3.1, RDS shall pay ANSYS a
monthly fee of $[***], for each month that ANSYS is
performing services hereunder, or a pro rata portion
thereof, but in no event shall RDS pay ANSYS more
than $[***] to further develop and optimize the
Device for RDS. Notwithstanding that ANSYS will
receive a maximum of $[***] for performing services
under this Section, ANSYS shall continue to work on
and complete the development and optimization of the
Device until it meets the product specifications
listed on Exhibit A, even if it takes more than four
(4) months to accomplish.
(d) In the event that RDS makes changes to the product
specifications listed on Exhibit A, after the date of
this Agreement, but before the first commercial
manufacturing of the product pursuant to Section 3.6,
the fees and time schedule stated herein shall be
renegotiated in good faith by the parties.
(e) ANSYS shall not start manufacturing the Device for
RDS pursuant to section 3.6 until all the services
requested herein by RDS have been completed by ANSYS
to the satisfaction of RDS.
(f) ANSYS shall provide RDS with quarterly reports which
shall include estimates on completion time and
budgets, along with such other information as may be
reasonably requested by RDS.
[***] Confidential treatment has been requested for redacted portion. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
5
<PAGE> 6
3.2 Governmental Approvals.
(a) RDS shall secure and maintain governmental approvals
to market and sell the Device. RDS shall, in its sole
discretion, determine in which countries it will
pursue, and discontinue the pursuit of, such
governmental approval.
(b) ANSYS shall assist RDS, as requested by RDS, in
securing and maintaining such governmental approvals
for the Device. ANSYS's assistance may include
conducting studies and providing to RDS data or other
information required or requested by the governmental
authorities and assisting in the completion and
filing of applications and other forms necessary for
such governmental approvals.
(c) RDS is responsible for such governmental approvals
and shall reimburse ANSYS for any reasonable expenses
incurred by ANSYS in connection with such activities.
3.3 Manufacturing Equipment.
(a) ANSYS shall be responsible for selecting and
purchasing the equipment and materials, including
product designs, necessary to manufacture the Device,
all as set forth in the capital budget, Exhibit B
attached hereto and incorporated herein by this
reference. Other than as set forth on Exhibit B,
ANSYS shall not purchase any equipment or materials
without RDS's prior written approval. ANSYS shall
invoice RDS for expenditures under this Section
3.3(a). The invoices shall be sufficiently detailed
to describe the equipment or materials purchased and
the cost incurred therefor. In the event that RDS
modifies the product specifications set forth in
Exhibit A as provided herein, then ANSYS shall
provide RDS with a revised capital budget for
approval, which revised budget shall replace and
supersede Exhibit B for all purposes.
(b) RDS shall pay for all equipment and materials,
including product designs, that it approves the
purchase thereof under Section 3.3(a). Upon such
payment, RDS shall own the entire right, title and
interest to such equipment and materials, and ANSYS
shall have no right, title or interest therein,
except to use such equipment and materials to
manufacture and
6
<PAGE> 7
supply the Device to RDS pursuant to the terms of
this Agreement. Notwithstanding the foregoing, ANSYS
shall pay for capital expenditures in the excess of
one hundred fifteen percent (115 %) of the aggregate
amount set forth in Exhibit B, as Exhibit B may be
revised from time to time in accordance herewith.
Such equipment and materials shall be delivered by
ANSYS to RDS upon the expiration or termination of
this Agreement.
(c) During the term of this Agreement, RDS shall have the
right, upon reasonable notice to ANSYS, to audit the
books and records of ANSYS related to the equipment
and materials acquired pursuant to this Section 3,
and to identify and physically "tag" all such
equipment and materials at ANSYS's premises. RDS
shall bear its own cost or expense associated with
any such audit or identifying.
ANSYS shall be solely responsible for obtaining and
maintaining casualty insurance covering the full
replacement cost of the equipment and materials
purchased by RDS under the terms hereof.
3.4 Reagents. RDS shall supply ANSYS with the reagents necessary
to manufacture the Device.
3.5 Price. Pricing for the Device shall be as set forth in Exhibit
C, attached hereto. In the event RDS changes the Product
Specifications as set forth in Exhibit A, then the parties
agree to negotiate in good faith to modify Exhibit C if the
parties are unable to agree to a modification of Exhibit C
within 120 days from the change to Exhibit A, the parties
shall submit the matter to binding arbitration.
3.6 Exclusivity. During the term hereof, RDS appoints ANSYS as the
exclusive manufacturer of the Device and ANSYS shall
manufacture the Device at its facilities in Irvine,
California, or such other facility as may be mutually agreed
upon by both parties, and shall supply such products to RDS on
an exclusive basis, even as to ANSYS, worldwide; provided
however, that in the event ANSYS receives a license under
Article 6, ANSYS may manufacture and supply the Device in
those markets or market segments covered by such license.
Notwithstanding the foregoing, if, through no fault of RDS,
ANSYS becomes unable to manufacture the Device in accordance
with the terms of this Agreement, RDS may use another vendor
to manufacture the Device, provided, that RDS shall notify
ANSYS in writing of the basis for RDS determination that ANSYS
is unable to manufacture the Device, and ANSYS shall have
thirty (30) days after the date of such notice to cure the
condition. If ANSYS is unable to cure the condition within
such 30-day period, then RDS may use another vendor to
manufacture the Device.
7
<PAGE> 8
3.7 Packaging. ANSYS shall label the Device with language to be
supplied by RDS and shall package the product with a package
insert, the language of which shall also be supplied by RDS.
RDS shall have the right, in its sole discretion, to make
changes to the label, package insert and other labeling for
the Device, subsequent to the reasonable approval of ANSYS,
which changes shall be submitted by RDS to the applicable
governmental authorities, if required. ANSYS's name may, at
RDS's sole discretion, appear on the label, package insert and
other labeling for the Device.
3.8 Launch Date. The target launch date for the Device is twelve
(12) months after the execution date of this Agreement, but in
no event shall the launch date be delayed without mutual
consent of both parties with documented cause.
3.9 Quality Control and Assurance.
(a) ANSYS shall manufacture the Device in accordance with
the then current product specifications as set forth
on Exhibit A, as may be modified from time to time in
accordance with Section 1.3 above, as well as with
the then current quality control specifications,
which, at RDS's discretion, it may modify from time
to time, subject to the reasonable approval of ANSYS.
A copy of the quality control specifications will be
provided by RDS within a reasonable period after
execution of this Agreement and shall be attached
hereto as Exhibit D.
(b) ANSYS shall manufacture the Device in compliance with
all federal, state and local laws and regulations.
(c) ANSYS shall perform quality control and quality
assurance testing and verification to ensure that the
Device complies with the requirements set forth in
Section 3.9(a) and (b).
(d) Each time ANSYS ships the Device to RDS, ANSYS shall
provide RDS with a Certificate of Analysis at the
time of shipment, certifying that the products have
been evaluated by ANSYS's Quality Control and Quality
Assurance departments and that the product complies
with the requirements set forth in Sections 3.9(a)
and (b). Within a reasonable period after execution
of this Agreement RDS shall provide ANSYS with a
sample Certificate of Analysis which ANSYS shall use
pursuant to this Section.
4.O ORDERS, DELIVERY, INVOICING AND PAYMENT
4.1 Forecasts. Within a reasonable time from the date of this
Agreement, but in no event later than sixty (60) days prior to
the scheduled date of the product launch
8
<PAGE> 9
by RDS of the Device, RDS shall supply ANSYS with its current
estimates for the Device for each of the four (4)
three-calendar-month periods following the product launch
date. Each such estimate for four (4) three-calendar-month
periods hereinafter is called a "Rolling Forecast." RDS shall
thereafter provide ANSYS with Rolling Forecasts on a quarterly
basis. No minimum units for any three-calendar-month period of
any Rolling Forecast are required to be forecasted by RDS;
provided however, that the quantity of the Device for the
initial three-calendar-month period of any Rolling Forecast
may, without the consent of ANSYS, vary upward or downward
from RDS's prior estimate from such three-calendar-month
period by an amount not to exceed twenty percent (20%). RDS
and ANSYS shall be bound by RDS's estimates, if any, for the
first three-calendar-month period of each such Rolling
Forecast. ANSYS's obligations to manufacture the Device for
RDS under this Agreement shall be subject to its maximum
production capacity.
4.2 Orders. RDS will order products by providing ANSYS with
written Purchase Orders, which shall contain the purchase
order number, product numbers, names and quantities, unit and
total purchase price and shipping instructions. No additional
terms or conditions shall be permitted to be added by ANSYS to
any Purchase Order, whether by way of altering same or
providing a document that purports to contain additional
terms, and any such additional terms and conditions shall be
void and of no force or effect, notwithstanding that RDS may
accept and perform its obligations hereunder with respect to
any such allegedly modified Purchase Order without rejecting
specifically such additional terms and conditions.
4.3 Shipments. ANSYS shall ship and deliver the Device F.O.B.
ANSYS shipping point to such RDS locations as requested by
RDS. ANSYS shall, is requested by RDS, ship and deliver the
Device to customers of RDS, at the sole cost and expense of
RDS. RDS may select the freight carrier used by ANSYS to ship
the products and may monitor ANSYS's shipping/freight
practices as they pertain to this Agreement. ANSYS shall ship
the Device within thirty (30) days of receipt of a Purchase
Order from RDS.
4.4 Invoices and Payment. ANSYS shall submit to RDS, with each
shipment of the Device, an invoice covering such shipment.
Each such invoice shall identify the RDS Purchase Order
number, product numbers, names and quantities, unit price,
freight charges and total amount to be remitted by RDS. RDS
shall pay for all such invoices within thirty (30) days after
its receipt of such invoices.
4.5 Lot Numbering/Expiration Dates. ANSYS shall make arrangements
for and implement the imprinting of lot numbers and expiration
dates for each Device shipped. Such lot numbers and expiration
dates shall be affixed on the product and on the shipping
carton of each product as is required under good commercial
practice.
9
<PAGE> 10
5.0 COOPERATION
5.1 Technical Support. ANSYS shall provide reasonable technical
support and training relating to the Device to RDS as
requested by RDS.
5.2 Records and Accounting by ANSYS. ANSYS shall keep records of
the manufacture, testing and shipping of the products supplied
hereunder by ANSYS, and retain samples of such products that
are necessary to assist with, and support, good manufacturing
practices, product complaints, investigations and other
regulatory requirements. Such records and samples shall be
made available to RDS upon its request, and shall be retained
by ANSYS and be available to RDS for a period of three (3)
years following termination of this Agreement, or longer if
required by law.
5.3 Product Recal1s. ANSYS and RDS shall each maintain records as
may be necessary to permit a recall or a field correction of
any Device delivered to RDS or customers of RDS, effected by
voluntarily or under a threat of, or a directive by, any
governmental agency. Each party shall give immediate notice by
telephone (to be confirmed in writing) to the General Counsel
of the other party upon discovery that any Device should be
recalled or corrected, and each party upon receiving any such
notice or upon any such discovery, shall cease and desist from
further shipments of Device in its possession or control until
a decision has been made whether a recall or some other
corrective action is necessary. The decision to initiate a
recall or to take some other corrective action shall be made
by RDS after conferring with ANSYS. Each party shall cooperate
with the other in developing any necessary recall plan, and
the manner and extent of such plan shall be subject to prior
consultation, which consultation shall not delay such plan by
more than forty-eight (48) hours from the time of initial
notice. Any such recall or corrective action shall be made at
ANSYS's cost and expense if, and to the extent that, such
recall or corrective action results from, or arises out of,
any breach by ANSYS of its warranties or covenants hereunder.
All other product recalls or corrective action shall be made
at RDS's cost and expense.
5.4 Product Returns. RDS shall have the responsibility for
handling customer returns of the Device. ANSYS shall provide
RDS with such assistance as RDS may need to handle such
returns. Any such return shall be made at ANSYS's cost and
expense if, and to the extent that, such return results from,
or arise out of, any breach by ANSYS of its warranties or
covenants hereunder. All other product returns shall be made
at RDS's cost and expense.
5.5 Governmental Agencies. Each party may communicate with any
governmental agency, including but not limited to the United
States Food and Drug
10
<PAGE> 11
Administration, regarding the Device if in the opinion of that
party's counsel, such communication is necessary to comply
with the terms of this Agreement or the requirements of any
law, governmental order or regulation; provided however, that
unless in the reasonable opinion of its counsel there is a
legal prohibition against doing so, such party shall permit
the other party to accompany and take part in any
communications with the agency, and to receive copies of all
such communications from the agency.
5.6 Customer Questions and Complaints. (a) RDS shall have the
responsibility for responding to questions and complaints
regarding the Device. Questions or complaints received by
ANSYS shall be promptly referred to RDS. RDS shall provide
ANSYS with reports summarizing such complaints and customer
questions, as requested by ANSYS, but in no event shall RDS
have to provide such reports more frequently than on a
quarterly basis.
(b) Within a reasonable time from the date of this
Agreement, but in no event later than the sixty (60)
days prior to the scheduled date of the product
launch by RDS of the Device, ANSYS shall provide RDS
with all necessary information that will enable RDS
to respond properly and promptly to questions or
complaints relating to the Device. ANSYS shall use
its best efforts to keep such information current.
(c) ANSYS shall provide RDS with such other assistance as
RDS may need to investigate and respond to customer
questions or complaints.
5.7 Product Modifications. (a) ANSYS shall only make alterations,
modifications or improvements to the product specifications or
performance characteristics for the Device supplied by ANSYS
to RDS under this Agreement if (i) prior written approval is
given by RDS, and (ii) new pricing for the Device, if
necessary because such alteration, modification or improvement
changes the cost to manufacture the Devices, is agreed upon by
the parties utilizing the methodology set forth in Exhibit C.
6.0 LICENSE
6.1 RDS may offer in writing to license the Device to ANSYS in
those markets or market segments that RDS has determined it
will not sell the product.
6.2 (a) In the event that RDS offers in writing to license the
Device to ANSYS pursuant to Section 6. 1, ANSYS shall have
ninety (90) days from the receipt of such written offer to
inform RDS in writing that it desires to obtain such a license
from RDS. Thereafter, the parties agree to negotiate in good
faith a licensing agreement that shall include a licensing fee
not to exceed ten percent (10%) of gross sales, less returns
and allowances, of the product. Agreement by the parties
11
<PAGE> 12
on all the terms of the licensing agreement shall be a
precondition before any such license can become effective.
(b) In the event that ANSYS does not notify RDS
within the 90-day period set forth in Section 6.2(a) informing
RDS that it desires to obtain the license offered by RDS, then
RDS shall be free to offer such license to third parties
without any further obligation to ANSYS.
6.3 ANSYS expressly acknowledges and agrees that in the event that
it receives a license from RDS to the Device under this
Article 6 it shall have no right to sublicense, assign or
otherwise transfer its rights under such license, without
prior written approval of RDS, except to a successor in
interest to substantially all of the assets of ANSYS, whether
by purchase, merger, or operation of law.
6.4 The terms and conditions of this Article 6 shall survive
termination or expiration of this Agreement and shall extend
until all of RDS's patent rights in the Device expire,
including any renewals, extensions or modifications thereof.
7.O TERM, RENEWAL AND TERMINATION
7.1 Term. This Agreement, effective as of the execution date,
shall expire five (5) years from the date of the product
launch by RDS, unless terminated by one of the parties in
accordance with this Agreement. RDS and ANSYS agree to
memorialize in writing the date of the product launch and
initial expiration date of this Agreement within thirty (30)
days after the product launch.
7.2 Renewal. RDS shall have the option, in its sole discretion,
to, extend this Agreement for additional three-year terms upon
written notice to ANSYS no later than 180 days prior to the
expiration of this Agreement, subject to the same terms and
conditions of this Agreement. In the event that RDS renews
this Agreement, the parties agree to negotiate in good faith a
mutually acceptable price for the Devices in the manner set
forth in Exhibit C.
7.3 Termination. (a) Upon failure of either party to remedy its
breach of any of the obligations or provisions of this
Agreement within thirty (30) days following receipt of written
notice of said breach, the aggrieved party shall have the
right to terminate this Agreement immediately by written
notice; provided however, that if the breach is due to a
product failure or defect in the Device and the actions needed
to cure such problem requires more than 30 days, then the cure
period shall be extended for a reasonable period of time.
(b) Either party at its sole option may immediately
terminate this Agreement upon written notice, but
without prior advance notice, to the other party in
the event that (i) the other party is declared
insolvent or bankrupt by a
12
<PAGE> 13
court of competent Jurisdiction; (ii) a voluntary
petition of bankruptcy is filed in any court of
competent jurisdiction by such other party; or (iii)
this Agreement is assigned by such other party for
the benefit of creditors.
(c) Either party may terminate this Agreement upon thirty
(30) days written notice in the event that the Food
and Drug Administration takes any action, or raises
any objection, that permanently prevents RDS from
importing, exporting, purchasing or selling the
Devices to customers.
(d) Any termination or expiration of this Agreement shall
not affect any outstanding obligations or payments
due hereunder prior to such termination or
expiration, nor shall it prejudice any other remedies
that the parties may have under this Agreement.
8.0 REPRESENTATIONS AND WARRANTIES
8.1 Product Specifications. ANSYS represents and warrants that the
Devices shall comply with the then current product
specifications and then current quality control specifications
and with all federal, state and local laws and regulations.
8.2 Good Manufacturing Practices. ANSYS represents and warrants
that the Devices shall comply with and will be manufactured in
accordance with all applicable Good Manufacturing Practices
("GMPs").
8.3 Warranty of Purpose. ANSYS represents and warrants that the
Devices supplied under this Agreement are suitable and may be
used for the purpose set forth in the product specification.
8.4 Product Development. ANSYS represents and warrants that the
Devices will be manufactured by ANSYS, or by third parties for
ANSYS free and clear of any claims by such third parties.
ANSYS may contract with third parties for certain sub-assembly
of the Device but all final assembly and packaging shall be
performed by ANSYS directly.
8.5 Authority. Each party represents and warrants to the other
party that it has the full right and authority to enter into
this Agreement, and that it is not aware of any impediment
that would inhibit its ability to perform its obligations
hereunder.
8.6 Damages. In the event of a breach of any representation or
warranty, express or implied, in addition to other rights RDS
may have, it may withhold payment and/or cause such breach to
be corrected and charge ANSYS. Notwithstanding the following,
ANSYS's financial liability for damages hereunder is limited
to the price paid to ANSYS by RDS for the Devices. Except as
specifically provided herein, ANSYS makes no other
representations or warranties express or implied.
13
<PAGE> 14
8.7 Equitable Release. The parties agree that in the event of a
breach of any provisions of this Agreement, the aggrieved
party shall have, in addition to all other rights and remedies
available to it hereunder and under the law, the right to
specifically enforce this Agreement and/or enjoin the breach
by the breaching party.
9.0 INDEMNITY
9.1 (a) RDS agrees to defend, indemnify and hold ANSYS, its
officers, directors, employees and agents harmless
against any and all losses, damages, costs, claims,
demands, judgments and liability resulting from, or
relating to RDS's performance under this Agreement,
or RDS's instructions or product specifications to
ANSYS under the terms hereof, except to the extent
that any such losses, damages, costs, demands,
claims, judgments and liability are due to the
negligence or wrongful act(s) of ANSYS, its employees
or agents.
(b) If by reason of manufacturing or selling the Devices
to RDS under this Agreement ANSYS is sued or
threatened with suit for alleged patent infringement
covering (i) the Device, or (ii) the process for
producing the Device, RDS shall, at its own expense,
defend such suit and indemnify ANSYS against all
losses and expenses incurred in connection with such
suit or threatened suit including judgments decrees,
court costs and attorney fees, except to the extent
that the claim relates to, or results from ANSYS's
noncompliance with the terms of this Agreement.
9.2 ANSYS agrees to defend, indemnify and hold RDS, its officers,
directors, employees and agents harmless against any and all
losses, damages, costs, demands, claims, judgments and
liability resulting from, or relating to ANSYS's performance
under this Agreement, except to the extent that any such
losses, damages, costs, demands, costs, claims, judgments and
liability are due to (i) the negligence or wrongful act(s) of
RDS, its employees or agents, or (ii) patent infringement
suits or threatened suits that, pursuant to Section 9.1 RDS
has agreed to defend and provide indemnification to ANSYS.
10.0 CONFIDENTIALITY
10.1 During the term and in furtherance of this Agreement, each
party may disclose certain of its Confidential Information to
the other party.
14
<PAGE> 15
10.2 During the Term of this Agreement, and for a period of five
(5) years from the termination thereof, RDS and ANSYS each
agree (i) to use the Confidential Information only in
connection with the terms of this Agreement, (ii) to treat the
Confidential Information as it would its own proprietary
information, and (iii) to take all reasonable precautions to
prevent the disclosure of the Confidential information to any
third party, other than an Affiliate without the prior written
consent of the other party.
10.3 A party shall be relieved of any and all of the obligations
under Section 10.2 regarding Confidential Information which
(i) was known to the party receiving the Confidential
Information (the "Receiving Party") prior to receipt
hereunder, (ii) at the time of disclosure by the disclosing
party to the Receiving Party, was generally available to the
public, or which after disclosure hereunder becomes generally
available to the public through no fault attributable to the,
Receiving Party; or (iii) is hereafter made available to the
Receiving Party for use or disclosure by the Receiving Party
from any third party having a right to do so.
11.0 MISCELLANEOUS
11.1 Independent Contractors. The parties shall be deemed to be
independent contractors, and this Agreement shall not be
construed to create between ANSYS and RDS any other
relationship such as, by way of example only, that of
employer-employee, principal-agent, joint-venturers, partners
or any similar relationship, the existence of which is
expressly denied by the parties hereto.
11.2 Inspection. RDS may inspect ANSYS reports and records relating
to its performance under this Agreement during normal business
hours and with reasonable advance notice.
11.3 Access. ANSYS shall provide RDS access to any of its
facilities, during normal business hours and with reasonable
advance notice, in which the Devices are manufactured, stored,
handled, shipped or used in order to permit RDS verification
of ANSYS's compliance with this Agreement and applicable laws.
11.4 Insurance. ANSYS and RDS shall each maintain liability and
other insurance coverage satisfactory to the other party,
during the term of this Agreement and for five (5) years
thereafter, which insurance shall name the other Party as an
additional insured. Such insurance shall include comprehensive
general, liability contractual liability, and product
liability and have limits no less than $2,000,000 per
occurrence. Each party shall provide to the other a
Certificate of Insurance evidencing such coverage and shall
provide proper written notice of any change or modification
thereto.
15
<PAGE> 16
11.5 Taxes. ANSYS shall be liable for any and all local, state and
federal taxes and license fees, arising out of the sale of the
Devices to RDS pursuant to this Agreement. RDS shall be liable
for any and all taxes and fees arising from the sale of the
Device to any third party.
11.6 New Products. (a) During the term of this Agreement, RDS shall
have the right of first refusal to market exclusively any and
all new products developed by ANSYS using RDS reagent
technology.
(b) In the event that ANSYS manufactures or develops such
a product, ANSYS shall so immediately notify RDS in
writing and shall provide RDS with sufficient
information, data and samples for RDS to evaluate the
product and determine its interest, if any, in the
product. RDS shall have thirty (30) days from the
receipt of such information, data and samples to
evaluate the product and if interested, shall notify
ANSYS in writing within ten (10) business days of the
conclusion of this evaluation period.
(c) In the event that RDS expresses such an interest, the
Parties shall negotiate in good faith to enter into
an exclusive marketing agreement upon terms and
conditions that are commercially reasonable. In the
event that the parties fail to reach a negotiated
agreement within forty (40) days from RDS's
completion of the evaluation, ANSYS may then offer
such product to other potential companies, provided
that such offer shall not be more favorable to such
company than previously offered to RDS.
11.7 Choice of Law. This Agreement shall be construed under, and
the rights of the parties hereto shall be governed by the laws
of the suite of California.
11.8 Disputes. In the event of any dispute between ANSYS and RDS in
connection with this Agreement, the unsuccessful party shall
pay to the prevailing party all costs and expenses, including
reasonable attorney fees, incurred in enforcing this Agreement
or redressing a breach of this Agreement, whether by
agreement, arbitration, or any action or proceeding and in any
appeal in connection therewith by such prevailing party, and
any such costs, expenses and reasonable attorney fees shall be
included as a part of any such judgment entered in favor of
such prevailing party.
11.9 Other Products. Nothing in the Agreement shall be construed to
prevent or limit either party from selling any of its other
products in any market.
11.10 No Waiver. Either party's failure to require the other party
to comply with any provision of this Agreement shall not be
deemed a waiver of such provision or any other provision of
this Agreement.
16
<PAGE> 17
11.11 Severability. In the event that one or more of the provisions
of this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect
any of the other provisions of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been herein
contained.
11.12 Assignment. This Agreement shall not be assignable nor its
rights hereunder transferred in any way by either party
hereto other than to an Affiliate, except to a successor in
interest to substantially all of the assets of either party,
whether by purchase, merger, or operation of law, or except
with the written consent of the other party, which consent
shall not be unreasonably withheld.
11.13 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
11.14 Force Majeure. Neither party shall be liable for the failure
to perform its obligations under this Agreement if such
failure is occasioned by a contingency beyond such party's
reasonable control, including, but not limited to, strikes
or other labor disturbances, unavailability of supplies or
raw materials, boycotts, lockouts, riots, wars, fires,
floods or storms. A party claiming a right to excused
performance under this Section shall immediately notify the
other party in writing of the extent of its inability to
perform, which notice shall specify the occurrence beyond
its reasonable control that prevents such performance.
11.15 Notices. Any notice, or other written communication required
or permitted hereunder shall be sufficient if made or given
to the other party by personal in hand delivery, by
telecopier communication or by sending the same by first
class mail, postage prepaid, to the mailing address or
telecopier numbers set forth below:
If to RDS: Roche Diagnostic Systems, Inc.
1080 Highway 202
Branchburg, New Jersey 08876-1760
Attention: Sr. Director, Diagnostic
Research Development and
Manufacturing Support
Telecopier No.: (908) 253-7645
with a copy to: Jordan D. Cooper, Esq.
Roche Diagnostics, Systems, Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Telecopier No.: (210) 235-3500
17
<PAGE> 18
If to ANSYS ANSYS, Inc.
2 Goodyear
Irvine, California 92718-2002
Attention: President/C.E.O.
Telecopier No.: (714) 768-0311
with a copy to: Smith, Silbar, Parker & Woffinden
19100 Von Karman Avenue, Suite 400
Irvine, CA 92612
Telecopier No.: (949)263-8073
Attention: Lisa Silbar
or to such other addresses or telecopier numbers provided to
the other party in accordance with the terms of this Section.
Notices or written communications made or given by personal
in-hand delivery or by telecopier shall be deemed to have
been sufficiently made or given when confirmed as received,
or if mailed, three (3) days after being deposited in the
United States Mail, postage prepaid or upon receipt,
whichever is sooner.
11.16 Entire Agreement. This Agreement constitutes the full,
complete, final and integrated agreement between the parties
hereto relating to the subject matter hereof and supersedes
all previous written or oral negotiations, commitments,
agreements, transactions or understandings with respect to
the subject matter hereof. Except for Exhibit A (Product
Specifications) and Exhibit D (Quality Control
Specifications) which RDS may modify, under the terms hereof,
from time to time, any modification, amendment or supplement
to this Agreement must be in writing and signed by authorized
representatives of both parties.
11.17 Headings. The titles and headings herein are for convenience
only and shall not be used to interpret or construe the terms
and conditions of this Agreement.
11.18 Singular Terms. Except as otherwise expressly provided herein
or unless the context otherwise requires, all references to
the singular shall include the plural as well.
11.19 Execution in Counterparts. This Agreement may be executed in
two (2) counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
18
<PAGE> 19
IN WITNESS WHEREOF, the duly authorized representatives of the parties have
executed this Agreement as of the dates set forth below:
ANSYS, Inc. ROCHE DIAGNOSTIC SYSTEMS, INC.
By: /s/ Stephen K. Schultheis By: /s/ Carlo Medici
----------------------------- -----------------------------
Name: Stephen K. Schultheis Name: Carlo Medici
Title: President/CEO Title: President
Date: September 5, 1996 Date: September 5, 1996
19
<PAGE> 20
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT A
PRODUCT SPECIFICATIONS
I. REAGENT STRIPS (Strips)
A. FORMAT: Size of strips:
4.83 mm wide [***]
49.76 mm long [***]
Reagents shall be positioned as follows:
Latex Stripe: [***]
Result Line: [***]
Test Valid Line: [***]
B. MATERIALS: Mylar-backed nitrocellulose with laminate
Nitrocellulose: [***]
Mylar backing: [***]
Latex laminate: [***]
Mylar adhesive to hold latex: [***]
II. TESTSTICK ("Device")
A. The Device assembly shall consist of one Strip retained inside
a plastic Housing assembly with a Wick protruding from one end
and an adsorbent pad at the other end. A sliding Cover shall
protect the Wick from contact with objects prior to use and
after use and shall prevent drips from the Wick.
B. The Device Wick must require not more than a five second
immersion into urine in order to operate properly. The target
range of immersion time shall be 3 - 5 seconds.
C. Results of the assay should be interpretable within 3 minutes
after dipping the wick into the urine sample and in no case
longer than 5 minutes.
D. Device and reagents must work with samples ranging in
temperature from 18 to 37 C.
[***] Confidential treatment has been requested for redacted portion. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
20
<PAGE> 21
E. Sample must not drip or leak from the Device or Wick after
Wick is immersed and removed from the urine sample.
F. Reagents contained within the Device shall not enter the
sample when the Wick is immersed into the sample, and shall
not cause interference or destabilizing effect on the sample.
G. Plastic Housing of the Device shall be designed such that it
may snap into a holder clip with multiple Devices for
simultaneous dipping into samples.
H. Device must have a retractable Sleeve which covers the Wick
bef6re and after the Wick has been dipped into a sample.
I. Device must have an area designated ID/DATE with room to enter
a sample identification name or number and date. Area must be
able to be written upon with marker pen.
J. Device must have a "plus sign" result window and a round "Test
Valid" window.
K. Result window is to be covered until the Test Valid window is
developed, at which time whatever is covering the result
window can be moved or removed to allow interpretation of the
test result.
L. Storage must be at room temperature.
III. PACKAGING
A. Each Device shall be individually packaged in a foil-lined
pouch with desiccant.
B. Lot number and expiration date shall be printed on each
individual pouch and on the Kit label.
C. Each Device and its pouch shall be color-coded to reflect
assay type, Device shall have one color printed on one side of
the Housing.
D. A Kit shall consist of 50 Devices packaged in a box with one
box label and one multi-language package insert. Box label
shall be color coded to reflect assay type, consistent with
color of Device and its pouch.
21
<PAGE> 22
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT B
CAPITAL BUDGET
Prototype Development $ [***]
Research and Process Lot Devices $ [***]
Production Equipment (includes tax) $ [***]
Final assembly lines $ [***]
Production molds $ [***]
Reel-to-Reel Strip Processing Equip. $ [***]
Laminating Equipment $ [***]
Contingency $ [***]
Total Capital Budget $ [***]
[***] Confidential treatment has been requested for redacted portion. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
22
<PAGE> 23
EXHIBIT C
PRICING
TestStick Devices shall be priced as follows:
Prototype Devices up to quantity of 100: no charge (included under Prototype
Development.)
Research Lot Devices manufactured with prototype molds: $[***]
Process Lot Devices manufactured with production molds: $[***]
NOTE: Above Devices will be billed under the Capital Budget (Research, and
Process Lot Devices).
Production Devices manufactured prior to setup of automated lines:
Annual production rate below 2 million Devices: $ [***]
Annual production rate at or above 2 million Devices: $ [***]
Production Devices manufactured with automated lines @ 4 million annual rate:
$ [***]
Production Devices manufactured with automated lines @ 8 million annual rate:
$ [***]
Production Devices manufactured with automated lines @ 12 million annual rate:
$ [***]
Notes:
Full automation is estimated to be available within 6 months after product
launch.
Prices are subject to annual CPI adjustment.
Prices are subject to adjustment due to change in cost of high-impact
polystyrene.
[***] Confidential treatment has been requested for redacted portions. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
23
<PAGE> 1
EXHIBIT 10.7
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
- --------------------------------------------------------------------------------
FIRST AMENDMENT TO
DEVELOPMENT AND MANUFACTURING AGREEMENT
BY AND BETWEEN
ANSYS DIAGNOSTICS, INC.
AND
ROCHE DIAGNOSTIC SYSTEMS, INC.
DATED
SEPTEMBER 25, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
FIRST AMENDMENT TO
DEVELOPMENT AND MANUFACTURING AGREEMENT
This First Amendment to Development and Manufacturing Agreement is
entered into to be effective as of the September 25, 1998, by and between Roche
Diagnostic Systems, Inc. ("RDS"), a corporation organized and existing under the
laws of the State of New Jersey with offices at 9115 Hague Road, Indianapolis,
Indiana 42650, and ANSYS Diagnostics, Inc., formerly ANSYS, Inc. ("ANSYS"), a
corporation organized and existing under the laws of the State of California,
with offices at 25200 Commercentre Drive, Lake Forest, California 92630.
WHEREAS, RDS and ANSYS entered into a Development and Manufacturing
Agreement effective as of September 1, 1996 (the "Agreement"), whereby RDS and
ANSYS agreed to jointly develop a single test kit for biological and chemical
analytes including, without limitation, certain drugs of abuse, which kit the
parties commonly refer to in the Agreement as the "Device" and otherwise as
"TesTstik;"
WHEREAS, RDS and ANSYS have jointly developed a two-test kit and a
four-test kit for biological and chemical analytes based upon the same
technology and dipstick design, which the parties commonly refer to as "TesTstik
2" and "TesTstik 3," respectively;
WHEREAS, each of RDS and ANSYS desire to amend the Agreement in certain
respects to provide for the further development and manufacturing of TesTstik 2
and TestTstik 3;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties set forth herein, the parties agree as follows:
1. The Agreement is hereby amended to reflect that ANSYS has amended
its Articles of Incorporation to change its name from ANSYS, Inc. to ANSYS
Diagnostics, Inc.
2. The Agreement is hereby amended to add new Sections 1.6 and 1.7 as
follows:
2
<PAGE> 3
1.6 "TesTstik 2" shall mean the two-test dipstick device
developed by RDS and ANSYS to test various fluids for biological and chemical
analytes including, without limitation, certain drugs of abuse through the
utilization of RDS's Reagent Technology. The product specifications for TesTstik
2 are set forth on Exhibit A-1, which RDS may, subject to ANSYS's reasonable
approval, modify from time to time.
1.7 "TesTstik 3" shall mean the three-test dipstick device
developed by RDS and ANSYS to test various fluids for biological and chemical
analytes including, without limitation, certain drugs of abuse through the
utilization of RDS's Reagent Technology. The product specifications for TesTstik
3 are set forth on Exhibit A-2, which RDS may, subject to ANSYS's reasonable
approval, modify from time to time.
3. References in the Agreement to "the Device" at Sections 2.1(b),
2.2(a), 2.3, 2.4, 3.1(a), 3.1(e), 3.2(a), 3.2(b), 3.4, 3.6, 3.7, 3.9, 4.0, 5.0,
6.0, 7.0, 8.0, 9.1(b), 11.3, and 11.5 are hereby amended to read "the Device,
TesTstik 2 and TesTstik 3" and all such provisions shall apply equally to each
of the Device, TesTstik 2 and TesTstik 3.
4. A new Section 3.10 is hereby added to the Agreement as follows:
"3.10. ANSYS shall be responsible for selecting and purchasing
the equipment and materials, including without limitation, product
tooling and hardware, necessary to manufacture TesTstik 2 and TesTstik
3, all as set forth in the capital budget attached hereto as Exhibit E
and incorporated herein by this reference. Other than as set forth on
Exhibit E, ANSYS shall not purchase any equipment or materials without
RDS's prior written approval. In lieu of direct and immediate
reimbursement of ANSYS' capital expenditures under this Section 3.10,
the parties agree that ANSYS shall recoup the total documented
expenditures plus [***], not to exceed $[***], in respect of such
capital expenditures from an increase in the per unit price of the
TesTstik device equal to $[***] per unit for TesTstik units shipped on
or after the effective date of this Agreement. As and when ANSYS has
fully recouped the total documented expenditures plus [***] through
such price increase, RDS shall own the entire right, title and interest
to such equipment and materials, and ANSYS shall have no right, title
or interest therein,
[***] Confidential treatment has been requested for redacted portions. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
3
<PAGE> 4
except the right to use such equipment and materials to manufacture and
supply TesTstik 2 and TesTstik 3 to RDS pursuant to the terms of this
Agreement. Such equipment shall, upon the request of RDS, be delivered
by ANSYS to RDS upon the expiration or termination of this Agreement.
In the event that RDS ceases to purchase TesTstik product from
ANSYS, any unrecouped portion of the capital expenditure charge shall
become immediately due and payable, and RDS shall remit payment of such
sum within ten (10) days of ANSYS written request therefor.
3.11 Pricing. Pricing for TesTstik 2 and TesTstik 3 is as set
forth on Exhibit F and incorporated herein by this reference. In the
event that RDS modifies the product specifications set forth in Exhibit
A-1 or A-2 or that the assumptions set forth in Exhibit F are not
implemented, then the parties shall negotiate appropriate modifications
to Exhibit F.
3.12 TesTstik 2 and TesTstik 3 Launch Date. The target launch
date for TesTstik 2 and TesTstik 3 is [***] after the date this First
Amendment is executed."
5. Section 11.15 of the Agreement is hereby amended to provide that the
address for notice to ANSYS is:
ANSYS Diagnostics, Inc.
25200 Commercentre Drive
Lake Forest, California 92630
Attn: President
Telecopier No.: (949) 768-0311
[***] Confidential treatment has been requested for the redacted portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
4
<PAGE> 5
6. Except as expressly modified hereby, the parties hereby ratify and
confirm the Agreement in all respects.
7. This First Amendment may be executed in two (2) counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the duly authorized representatives of the
parties have executed this First Amendment to be effective as of the dates first
set forth above.
ANSYS DIAGNOSTICS, INC., ROCHE DIAGNOSTIC SYSTEMS, INC.,
a California corporation a New Jersey corporation
By: /s/ Stephen K. Schultheis By: /s/ Robert L. Aromando, Jr.
--------------------------------- --------------------------------
Stephen K. Schultheis Robert L. Aromando, Jr.
President and C.E.O. Director, Global Marketing
Point of Care, DAT
5
<PAGE> 6
EXHIBIT A-1
PRODUCT SPECIFICATIONS FOR TESTSTIK 2
PAGE 1 OF 2
GENERAL PRODUCT APPEARANCE
[THREE PICTURES OF THE TESTSTIK 2 PRODUCT]
[***]
[***] Confidential treatment has been requested for the redacted portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
6
<PAGE> 7
EXHIBIT A-2
PRODUCT SPECIFICATIONS FOR TESTSTIK 3
PAGE 2 OF 2
FUNCTIONAL REQUIREMENTS
o The overall functionality of the device will be similar to the current
TesTstik.
o There are [***] per device. The strips are identical to those used in
the TesTstik product.
o The length of the device will be the same as TesTstik. The width of the
slide will be approximately 0.09 inches. The overall thickness will be
approximately the same as the current TesTstik.
o The sample window, test valid and result windows, will be approximately
the same size as the current TesTstik.
o The device will require a maximum of 10 seconds immersion into the
urine sample. The results of the particular drug assay shall be
interpretable within 3 minutes.
o The drug type will be pad printed next to the appropriate result
window. All other printing will be similar to that of TesTstik. Only 1
color will be printed. The protective slide will have the text:
"TesTstik 2", this will be pad printed with the same blue ink as the
device housing. The artwork will be supplied by Roche.
o A tab will be torn off the slide component to expose the result window
at the appropriate time. This feature is similar to the current
TesTstik product.
o The device will be sealed with a desiccant material inside a foil
pouch. Lot number and expiration date will be printed on each foil
pouch.
o The component materials will be the same as TesTstik.
[***] Confidential treatment has been requested for the redacted portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
7
<PAGE> 8
EXHIBIT E
CAPITAL EXPENDITURES IN CONNECTION WITH
PRODUCT DEVELOPMENT AND MANUFACTURING FOR
TESTSTIK 2 AND TESTSTIK 3
Prototype molds (single-cavity) $ [***]
Production molds (four-cavity) [***]
Pad printing equipment [***]
Sealing equipment [***]
Assembly fixtures [***]
Gluing equipment [***]
Miscellaneous [***]
TOTAL $ [***]
[***] Confidential treatment has been requested for the redacted portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
8
<PAGE> 9
EXHIBIT F
PRODUCT PRICING FOR TESTSTIK 2 AND TESTSTIK 3
TesTstik 2 $ [***]*
TesTstik 3 $ [***]*
(*) Based upon manual assembly, manual packaging, and RDS supplying
nitrocellulose and reagents. If ANSYS purchases nitrocellulose and performs all
quality control of the membrane and other assumptions remain constant, prices
are as follows:
TesTstik 2 $ [***]
TesTstik 3 $ [***]
[***] Confidential treatment has been requested for redacted portions. The
confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
9
<PAGE> 1
SOUTHERN EXHIBIT 10.13
CALIFORNIA
BANK
CHANGE IN TERMS AGREEMENT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,000,000.00 06-30-2005 407169774 5015 385
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<S> <C>
BORROWER:ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE ORANGE COUNTY CORPORATE BANKING
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637
- ------------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL AMOUNT: $2,000,000.00 DATE OF AGREEMENT: JUNE 1, 1998
DESCRIPTION OF EXISTING INDEBTEDNESS. Original promissory note dated September
24,1997 in the amount of $1,500,000.00.
DESCRIPTION OF COLLATERAL. All Inventory, Chattel Paper, Accounts, Equipment and
General Intangibles.
DESCRIPTION OF CHANGE IN TERMS. Upon execution of these documents and the
payment of interest due to June 1, 1998 In the amount of $11,140.62:
(1) Loan amount is increased to $2,000,000.00.
(2) Facility will be a revolving line through June 30, 1998, at the Variable
Interest Rate defined below, at which time it will convert to a seven year term
loan with a maturity date of June 30, 2005.
(3) Borrower's name is changed to Ansys Diagnostics, Inc.
PROMISE TO PAY. ANSYS DIAGNOSTICS, INC. ("BORROWER") PROMISES TO PAY TO SOUTHERN
CALIFORNIA BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF TWO MILLION & 00/100 DOLLARS ($2,000,000.00) OR
SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING
PRINCIPAL BALANCE OF EACH ADVANCE. INTEREST SHALL BE CALCULATED FROM THE DATE OF
EACH ADVANCE UNTIL REPAYMENT OF EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN
ACCORDANCE WITH THE FOLLOWING PAYMENT SCHEDULE:
BORROWER SHALL PAY ALL ACCRUED UNPAID INTEREST ON JULY 1, 1998. ON JULY
1, 1998, THE LOAN WILL BE CONVERTED TO A SEVEN (7) YEAR TERM LOAN. UPON
CONVERSION, BORROWER WILL HAVE THE OPTION OF A FIXED OR FLOATING RATE.
REPAYMENT TERMS WILL BE DETERMINED BY THE INTEREST RATE OPTION CHOSEN.
SEE INTEREST RATE AND REPAYMENT OPTION ATTACHED TO THE CHANGE IN TERMS
AGREEMENT DATED JUNE 1, 1998.
The annual interest rate for this Agreement is computed on a 365/360 basis; that
is, by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The Interest rate on this Agreement is subject to change
from time to time based on changes in an independent index which is the WALL
STREET JOURNAL PRIME RATE (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notice to
Borrower. Lender will tell Borrower the current Index rate upon
<PAGE> 2
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each DAY. THE INDEX CURRENTLY IS 8.500%. THE INTEREST RATE TO BE APPLIED TO THE
UNPAID PRINCIPAL BALANCE OF THIS AGREEMENT WILL BE AT A RATE OF 0.125 PERCENTAGE
POINTS OVER THE INDEX, RESULTING IN AN INITIAL RATE OF 8.625%. NOTICE: Under no
circumstances will the interest rate on this Agreement be more than the maximum
rate allowed by applicable law.
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of
this Agreement, Borrower understands that Lender is entitled to a MINIMUM
INTEREST CHARGE OF $250.00. Other than Borrower's obligation to pay any minimum
interest charge, Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by Lender
in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, they will reduce the principal
balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $5.00, WHICHEVER IS GREATER.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this
Agreement or any agreement related to this Agreement, or in any other agreement
or loan Borrower has with Lender. (c) Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note of any of the Related Documents.
(d) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either now
or at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Agreement. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Agreement and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that amount. Upon Borrower's failure
to pay all amounts declared due pursuant to this section, including failure to
pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Agreement to 5.125
percentage points over the Index. Lender may hire or pay someone else to help
collect this Agreement if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
will pay any court costs, in addition to all other sums provided by law. THIS
AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF
CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF ORANGE COUNTY, THE STATE OF
CALIFORNIA. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $16.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Agreement against and such accounts.
<PAGE> 3
LINE OF CREDIT. This Agreement evidences a revolving line of credit. Advances
under this Agreement may be requested only in writing by Borrower or by an
authorized person. All communications, instructions, or directions by telephone
or otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: STEPHEN K. SCHULTHEIS,
PRESIDENT. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Agreement at any time may be evidenced by endorsements on this Agreement or by
Lender's internal records, including daily computer print-outs. Lender will have
no obligation to advance funds under this Agreement if: (a) Borrower or any
guarantor is in default under the terms of this Agreement or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Agreement; (b) Borrower or an guarantor
ceases doing business or is insolvent; (c) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of this
Agreement or any other loan with Lender; (d) Borrower has applied funds provided
pursuant to this Agreement for purposes other than those authorized by Lender;
or (e) Lender in good faith deems itself insecure under this Agreement or any
other agreement between Lender and Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or dispose
of any collateral securing this Agreement shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness any act, or exercise of any right, concerning any
collateral securing this Agreement, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing this
Agreement, shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Agreement shall
preclude a party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s) including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
ADDITIONAL TERMS, CONDITIONS AND COVENANTS. An exhibit, titled "ADDITIONAL
TERMS, CONDITIONS AND COVENANTS," is attached to this Agreement and by this
reference is made a part of this Agreement just as if all the provisions, terms
and conditions of the Exhibit had been fully set forth in this Agreement.
MISCELLANEOUS PROVISIONS. This Agreement is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Agreement on its demand. Lender may delay or
forgo enforcing any of its rights or remedies under this Agreement without
losing them. Borrower and any other person who signs, guarantees or endorses
this Agreement, to the extent allowed by law, waive any applicable statute of
limitations,
<PAGE> 4
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of the Agreement, and unless otherwise expressly stated in writing,
no party who signs this Agreement, whether as maker, guarantor, accommodation
maker or endorser, shall be released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; or impair, fail to realize
upon or perfect Lender's security interest in the collateral; and take any other
action deemed necessary by Lender without the consent of or notice to anyone.
All such parties also agree that Lender may modify this loan without the consent
of or notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE AGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE AGREEMENT.
BORROWER:
ANSYS, DIAGNOSTICS, INC.
BY:
-------------------------------------------
STEPHEN K. SCHULTHEIS, PRESIDENT
- --------------------------------------------------------------------------------
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.
3.25(c) 1998 CFI ProServices, Inc. All
rights reserved. [CA- D20 ANSYS2.LN]
<PAGE> 5
INTEREST, RATE AND REPAYMENT OPTIONS
<TABLE>
-------------------------------------------------------------------------------
<S> <C>
BORROWER: ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE LAGUNA HILLS OFFICE
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637-0588
-------------------------------------------------------------------------------
</TABLE>
THIS INTEREST RATE AND REPAYMENT OPTIONS IS ATTACHED TO AND BY THIS REFERENCE IS
MADE A PART OF EACH CHANGE IN TERMS AGREEMENT, DATED JUNE 1, 1998, AND EXECUTED
IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN SOUTHERN
CALIFORNIA BANK AND ANSYS DIAGNOSTICS, INC.
Upon conversion to a Term Loan, Borrower may choose either a floating or fixed
rate as follows:
FLOATING RATE:
The loan balance will accrue interest at the Wall Street Journal Prime Rate Plus
.125%. Any changes in the Wall Street Journal prime Rate will take effect
immediately.
FIXED RATE:
The fixed rate will be based on a seven year Treasury Note Rate (August, 2005),
plus a 285 basis point total spread. If the loan had converted May 19, 1998,
with a seven year Treasury Note Rate of 5.76%, the interest rate would be fixed
at 8.61 %.
REPAYMENT TERMS: Repayment terms will be determined by the Interest Rate chosen
as follows:
FLOATING RATE:
84 Level principal payments plus accrued interest shall be due on a monthly
basis.
FIXED RATE:
Fixed monthly payments of principal and interest shall be payable over a seven
year period. Assuming a loan amount of $2,000,000.00 and a rate of 8.61 %,
monthly principal and interest payments would be fixed at $31,783.71.
THIS INTEREST RATE AND REPAYMENT OPTIONS IS EXECUTED ON JUNE 1, 1998.
BORROWER:
ANSYS DIAGNOSTIC INC.
BY:
--------------------------------------------
STEPHEN K. SCHULTHIES, PRESIDENT
LENDER:
SOUTHERN CALIFORNIA BANK
BY:
--------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.25 (c) 1998 CFI ProServices, Inc.
All rights reserved. [CA-G60 ANSYS774.LN C3.OVL]
<PAGE> 6
SOUTHERN
CALIFORNIA
BANK
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,000,000.00 06-30-2005 407169774 5015 385
- -------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<S> <C>
BORROWER:ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE ORANGE COUNTY CORPORATE BANKING
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637
- ------------------------------------------------------------------------------------------------
</TABLE>
LOAN TYPE. This is a Variable Rate (0.125% over WALL STREET JOURNAL PRIME RATE,
making an initial rate of 8.625%), Revolving Line of Credit Loan to a
Corporation for $2,000,000.00 due on June 30, 2005.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
Personal, Family, or Household Purposes or Personal Investment.
X Business (including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is: Tenant Improvements.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $2,000,000.00 as follows:
<TABLE>
<S> <C>
UNDISBURSED FUNDS: $500,000.00
AMOUNT PAID ON BORROWER'S ACCOUNT: $1,500,000.00
$1,500,000.00 Payment on Loan # 407169774-Modify
-------------
NOTE PRINCIPAL: $2,000,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
PREPAID FINANCE CHARGES PAID IN CASH: $0.00
OTHER CHARGES PAID IN CASH: $11,140.62
$11,140.62 Interest to 6/1/98
-------------
TOTAL CHARGES PAID IN CASH: $11,140.62
</TABLE>
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED JUNE 1,1998.
BORROWER:
ANSYS DIAGNOSTICS, INC.
BY:
-------------------------------------------
<PAGE> 7
STEPHEN K. SCHULTHEIS, PRESIDENT
- --------------------------------------------------------------------------------
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.25
(c) 1998 CFI ProServices, Inc. All rights reserved. [CA-120ANSYS774.LN C3.OVL]
<PAGE> 8
ADDITIONAL TERMS, CONDITIONS AND COVENANTS
<TABLE>
-------------------------------------------------------------------------------
<S> <C>
BORROWER: ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE LAGUNA HILLS OFFICE
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637-0588
-------------------------------------------------------------------------------
</TABLE>
THIS ADDITIONAL TERMS, CONDITIONS AND COVENANTS IS ATTACHED TO AND BY THIS
REFERENCE IS MADE A PART OF EACH CHANGE IN TERMS AGREEMENT, DATED MAY 28,1998,
AND EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
SOUTHERN CALIFORNIA BANK AND ANSYS DIAGNOSTICS, INC.
AFFIRMATIVE COVENANTS-OTHER: Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will provide the following financial
information and statements and additional information as requested by the Lender
from time to time:
(a) Quarterly Financial Statements, prepared by Borrower, due within 30 days of
quarter end.
(b) Quarterly Covenant Compliance Certificate due within 30 days of the quarter
end, to be submitted with the quarterly financial statements.
(c) Promptly upon Lender's request, such other statements, lists, budgets,
forecasts projections, or reports as to the Borrower and as to each guarantor of
the Borrower's obligations to the Lender, as the Lender may request.
ADDITIONAL COVENANTS AND RATIOS. Borrower agrees to comply with the following
covenants and ratios:
(1) Borrower to maintain minimum Tangible Net Worth of $5,250,000.00, defined as
all of Borrower's assets, excluding intangible assets, less total debt. In the
event working capital revolver no longer exists, Tangible Net Worth shall be
stepped up annually by 50% of the annual profits.
(2) Borrower to maintain a maximum Leverage Ratio of 1.25: 1.00 measured
quarterly.
(3) Borrower to maintain minimum Cash Flow Coverage of 1.5x's, measured
quarterly.
ADDITIONAL DEFINITIONS:
(i) For the purpose of calculating tangible net worth and debt to tangible net
worth, intangible assets shall include amount due from Officers, Stockholders
and Affiliates.
(ii) Tangible Net Worth is defined as all of Borrower's assets, excluding
intangible assets, but including leaseholds and leasehold improvements, less
total debt.
(iii) Leverage is defined as total debt divided by Tangible Net Worth.
(iv) Cash Flow Coverage is defined as net profit + depreciation + amortization +
interest expense divided by CPLTD + interest expense. The numerator (Cash Flow)
shall be calculated on a rolling four quarter basis.
THIS ADDITIONAL TERMS, CONDITIONS AND COVENANTS IS EXECUTED ON MAY 28, 1998.
BORROWER:
ANSYS DIAGNOSTICS, INC.
BY:
-------------------------------------------
STEPHEN K. SCHULTHEIS, PRESIDENT
LENDER:
SOUTHERN CALIFORNIA BANK
BY:
-------------------------------------------
<PAGE> 9
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat & T.M. Off., Ver. 3.25 (c) 1998 CFI ProServices, Inc.
All rights reserved. [CA-G60 ANSYS2.LN]
<PAGE> 10
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$2,000,000.00 06-30-2005 407169774 5015 385
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<S> <C>
BORROWER:ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE ORANGE COUNTY CORPORATE BANKING
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637
- ------------------------------------------------------------------------------------------------
</TABLE>
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF ANSYS DIAGNOSTICS, INC.
(THE "CORPORATION"), HEREBY CERTIFY THAT the Corporation is organized and
existing under and by virtue of the laws of the State of California as a
corporation for profit, with its principal office at 25200 Commercentre Drive,
Lake Forest, CA 92630-8810, and is duly authorized to transact business in the
State of California.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held ON APRIL 8, 1998, at which a quorum was present and voting, or
by other duly authorized corporate action in lieu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
<TABLE>
<CAPTION>
NAME POSITION ACTUAL SIGNATURE
<S> <C> <C>
Stephen K. Schultheis President X
---------------------------
</TABLE>
acting for and on behalf of the Corporation and as its act and deed be, and he
or she hereby is, authorized and empowered:
BORROW MONEY. To borrow from time to time from SOUTHERN CALIFORNIA BANK
("Lender"), on such terms as may be agreed upon between the Corporation
and Lender, such sum or sums of money as in his or her judgment should
be borrowed; however, not exceeding at any one time the amount of THREE
MILLION ONE HUNDRED TEN THOUSAND & 00/100 DOLLARS ($3,110,000.00), in
addition to such sum or sums of money as may be currently borrowed by
the Corporation from Lender.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accomodations and/or revision
agreement or other evidence of obligation of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any
indebtedness of the Corporation to Lender, and also to execute and
deliver to Lender one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for one or more of the
notes, any portion of the notes, or any other evidence of credit
accomodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accomodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further
indebtedness of the Corporation to Lender at any time owing, however the
same may be evidenced, any property now or hereafter belonging to the
Corporation or in which the Corporation now or hereafter may have an
interest, including without limitation all real property and all
personal property (tangible or intangible) of the Corporation. Such
property may be mortgaged, pledged, transferred, endorsed, hypothecated,
or encumbered at the time such loans are obtained or such indebtedness
is incurred, or at any other time or times, and may be either in
addition to or in lieu of any property theretofore mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered.
<PAGE> 11
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms
of mortgage, deed of trust, pledge agreement, hypothecation agreement,
and other security agreements and financing statements which may be
required by Lender, and which shall evidence the terms and conditions
under and pursuant to which such liens and encumbrances, or any of them,
are given; and also to execute and deliver to Lender any other written
instruments, any chattel paper, or any other collateral, of any kind or
nature, which Lender may deem necessary or proper in connection with or
pertaining to the giving of the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause
such proceeds to be credited to the account of the Corporation with
Lender, or to cause such other disposition of the proceeds derived
therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver
such other documents and agreements, INCLUDING AGREEMENTS REQUIRING
DISPUTES WITH LENDER TO BE SUBMITTED TO BINDING ARBITRATION FOR FINAL
RESOLUTION AND WAIVING THE RIGHT TO A TRIAL BY JURY, as he or she may in
his or her discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions. The following
person or persons currently are authorized, except as provided below, to
request advances and authorize payments under the line of credit until
Lender receives written notice of revocation of their authority: Stephen
K. Schultheis, President. Effective June 30, 1998, this line of credit
shall be terminated and no further advances will be allowed.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of his or
her revocation shall have been delivered to and received by Lender. Any such
notice shall not affect any of the Corporation's agreements or commitments in
effect at the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation, (d) change in the authorized signer(s), (e)
conversion of the Corporation to a new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officer, employee, or agent named above is duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupies the position set opposite the name; that the foregoing Resolutions
now stand of record on the books of the Corporation; and that the Resolutions
are in full force and effect and have not been modified or revoked in any manner
whatsoever. The Corporation has no corporate seal, and therefore, no seal is
affixed to this certificate.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON JUNE 1, 1998 AND ATTEST
THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR GENUINE
SIGNATURES.
CERTIFIED AND ATTESTED BY:
X
---------------------------------------
X
---------------------------------------
NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officer, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
- --------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat & T.M. Off., Ver. 3.25 (c) 1998 CFI ProServices, Inc.
All rights reserved. [CA-C10 ANSYS744.LN C3.OVL]
<PAGE> 1
EXHIBIT 10.14
SOUTHERN
CALIFORNIA
BANK
CHANGE IN TERMS AGREEMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,000,000.00 05-31-1999 407169335 5015 438 385
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<S> <C>
BORROWER:ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE LAGUNA HILLS OFFICE
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637-0588
- ---------------------------------------------------------------------------------------------
</TABLE>
PRINCIPAL AMOUNT: $1,000,000.00 DATE OF AGREEMENT: MAY 28, 1998
DESCRIPTION OF EXISTING INDEBTEDNESS. Promissory Note dated May 14,1997 in the
principal amount of $1,000,000.00.
DESCRIPTION OF COLLATERAL. All Inventory, Chattel Paper, Accounts, Equipment and
General Intangibles.
DESCRIPTION OF CHANGE IN TERMS. Upon execution of these documents and the
payment of interest to May 31, 1998 in the amount of $826.56:
(1) The maturity date shall be extended to May 31, 1999.
(2) Borrower's name is changed to Ansys Diagnostics, Inc.
PROMISE TO PAY. ANSYS DIAGNOSTICS, INC. ("BORROWER") PROMISES TO PAY TO SOUTHERN
CALIFORNIA BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF ONE MILLION & 00/100 DOLLARS ($1,000,000.00) OR
SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING
PRINCIPAL BALANCE OF EACH ADVANCE. INTEREST SHALL BE CALCULATED FROM THE DATE OF
EACH ADVANCE UNTIL REPAYMENT OF EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON MAY 31,
1999. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED UNPAID
INTEREST BEGINNING JUNE 30, 1998, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE
ON THE SAME DAY OF EACH MONTH AFTER THAT. The annual interest rate for this
Agreement is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. The Interest rate on this Agreement is subject to change
from time to time based on changes in an independent index which is the WALL
STREET JOURNAL PRIME RATE (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans. If the Index becomes unavailable during the
term of this loan, Lender may designate a substitute index after notice to
Borrower. Lender will tell Borrower the current Index rate upon Borrower's
request. Borrower understands that Lender may make loans based on other rates as
well. The interest rate change will not occur more often than each DAY. THE
INDEX CURRENTLY IS 8.500%. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS AGREEMENT WILL BE AT A RATE OF 0.125 PERCENTAGE POINTS
OVER THE INDEX, RESULTING IN AN INITIAL RATE OF 8.625%. NOTICE: Under no
circumstances will the interest rate on this Agreement be more than the maximum
rate allowed by applicable law.
<PAGE> 2
PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment of
this Agreement, Borrower understands that Lender is entitled to a MINIMUM
INTEREST CHARGE OF $250.00. Other than Borrower's obligation to pay any minimum
interest charge, Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by Lender
in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, they will reduce the principal
balance due.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $5.00, WHICHEVER IS GREATER.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this
Agreement or any agreement related to this Agreement, or in any other agreement
or loan Borrower has with Lender. (c) Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower's property or Borrower's ability to repay this Note or
perform Borrower's obligations under this Note of any of the Related Documents.
(d) Any representation or statement made or furnished to Lender by Borrower or
on Borrower's behalf is false or misleading in any material respect either now
or at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Agreement. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired. (i) Lender
in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Agreement and all accrued unpaid interest immediately due,
without notice, and then Borrower will pay that amount. Upon Borrower's failure
to pay all amounts declared due pursuant to this section, including failure to
pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Agreement to 5.125
percentage points over the Index. Lender may hire or pay someone else to help
collect this Agreement if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
will pay any court costs, in addition to all other sums provided by law. THIS
AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF
CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF ORANGE COUNTY, THE STATE OF
CALIFORNIA. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST
THE OTHER. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $16.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Agreement against and such accounts.
LINE OF CREDIT. This Agreement evidences a revolving line of credit. Advances
under this Agreement may be requested only in writing by Borrower or by an
authorized person. All communications, instructions, or directions by telephone
or otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: STEPHEN K. SCHULTHEIS,
PRESIDENT. Borrower agrees to be liable for all sums either: (a) advanced in
accordance with the instructions of an authorized person or (b) credited to any
of Borrower's accounts with Lender. The unpaid principal balance owing on this
Agreement at any time may be evidenced by endorsements on this
<PAGE> 3
Agreement or by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Agreement if: (a)
Borrower or any guarantor is in default under the terms of this Agreement or any
agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of this Agreement; (b) Borrower or
an guarantor ceases doing business or is insolvent; (c) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Agreement or any other loan with Lender; (d) Borrower has
applied funds provided pursuant to this Agreement for purposes other than those
authorized by Lender; or (e) Lender in good faith deems itself insecure under
this Agreement or any other agreement between Lender and Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or dispose
of any collateral securing this Agreement shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness any act, or exercise of any right, concerning any
collateral securing this Agreement, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing this
Agreement, shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Agreement shall
preclude a party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s) including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
ADDITIONAL TERMS, CONDITIONS AND COVENANTS. An exhibit, titled "ADDITIONAL
TERMS, CONDITIONS AND COVENANTS," is attached to this Agreement and by this
reference is made a part of this Agreement just as if all the provisions, terms
and conditions of the Exhibit had been fully set forth in this Agreement.
MISCELLANEOUS PROVISIONS. This Agreement is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Agreement on its demand. Lender may delay or
forgo enforcing any of its rights or remedies under this Agreement without
losing them. Borrower and any other person who signs, guarantees or endorses
this Agreement, to the extent allowed by law, waive any applicable statute of
limitations, presentment, demand for payment, protest and notice of dishonor.
Upon any change in the terms of the Agreement, and unless otherwise expressly
stated in writing, no party who signs this Agreement, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; or impair, fail to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such
<PAGE> 4
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE AGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE AGREEMENT.
BORROWER:
ANSYS, DIAGNOSTICS, INC.
BY:
------------------------------------------
STEPHEN K. SCHULTHEIS, PRESIDENT
- --------------------------------------------------------------------------------
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.
3.25(c) 1998 CFI ProServices, Inc. All
rights reserved. [CA- D20 ANSYS2.LN]
<PAGE> 5
ADDITIONAL TERMS, CONDITIONS AND COVENANTS
<TABLE>
-----------------------------------------------------------------------------------
<S> <C>
BORROWER: ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE LAGUNA HILLS OFFICE
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637-0588
-----------------------------------------------------------------------------------
</TABLE>
THIS ADDITIONAL TERMS, CONDITIONS AND COVENANTS IS ATTACHED TO AND BY THIS
REFERENCE IS MADE A PART OF EACH CHANGE IN TERMS AGREEMENT, DATED MAY 28,1998,
AND EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
SOUTHERN CALIFORNIA BANK AND ANSYS DIAGNOSTICS, INC.
AFFIRMATIVE COVENANTS-OTHER: Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will provide the following financial
information and statements and additional information as requested by the Lender
from time to time:
(a) Quarterly Financial Statements, prepared by Borrower, due within 30 days of
quarter end.
(b) Quarterly Covenant Compliance Certificate due within 30 days of
the quarter end, to be submitted with the quarterly financial statements.
(c) Promptly upon Lender's request, such other statements, lists, budgets,
forecasts projections, or reports as to the Borrower and as to each guarantor of
the Borrower's obligations to the Lender , as the Lender may request.
ADDITIONAL COVENANTS AND RATIOS. Borrower agrees to comply with the following
covenants and ratios:
(1) Borrower to maintain minimum Tangible Net Worth of $5,250,000.00, defined as
all of Borrower's assets, excluding intangible assets, less total debt. In the
event working capital revolver no longer exists, Tangible Net Worth shall be
stepped up annually by 50% of the annual profits.
(2) Borrower to maintain a maximum Leverage Ratio of 1.25: 1.00 measured
quarterly.
(3) Borrower to maintain minimum Cash Flow Coverage of 1.5x's, measured
quarterly.
ADDITIONAL DEFINITIONS:
(i) For the purpose of calculating tangible net worth and debt to tangible net
worth, intangible assets shall include amount due from Officers, Stockholders
and Affiliates.
(ii) Tangible Net Worth is defined as all of Borrower's assets, excluding
intangible assets, but including leaseholds and leasehold improvements, less
total debt.
(iii) Leverage is defined as total debt divided by Tangible Net Worth.
(iv) Cash Flow Coverage is defined as net profit + depreciation + amortization +
interest expense divided by CPLTD + interest expense. The numerator (Cash Flow)
shall be calculated on a rolling four quarter basis.
THIS ADDITIONAL TERMS, CONDITIONS AND COVENANTS IS EXECUTED ON MAY 28, 1998.
BORROWER:
ANSYS DIAGNOSTICS, INC.
BY:
-------------------------------------------
STEPHEN K. SCHULTHEIS, PRESIDENT
LENDER:
SOUTHERN CALIFORNIA BANK
BY:
-------------------------------------------
<PAGE> 6
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat & T.M. Off., Ver. 3.25 (c) 1998 CFI ProServices, Inc.
All rights reserved. [CA-G60 ANSYS2.LN]
<PAGE> 7
SOUTHERN
CALIFORNIA
BANK
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,000,000.00 05-31-1999 407169335 5015 438 385
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
<TABLE>
<S> <C>
BORROWER:ANSYS DIAGNOSTICS, INC. (TIN: 33-0316510) LENDER:SOUTHERN CALIFORNIA BANK
26200 COMMERCENTRE DRIVE LAGUNA HILLS OFFICE
LAKE FOREST, CA 92630-8810 P.O. BOX 588
LA MIRADA, CA 90637-0588
- -----------------------------------------------------------------------------------------------
</TABLE>
LOAN TYPE. This is a Variable Rate (0.125% over WALL STREET JOURNAL PRIME RATE,
making an initial rate of 8.625%), Revolving Line of Credit Loan to a
Corporation for $1,000,000.00 due on May 31, 1999. This is a secured renewal
loan.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
Personal, Family, or Household Purposes or Personal Investment.
X Business (including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is: Working Capital.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $1,000,000.00 as follows:
<TABLE>
<S> <C>
UNDISBURSED FUNDS: $850,000.00
AMOUNT PAID ON BORROWER'S ACCOUNT: $150,000.00
$150,000.00 Payment on Loan # 407168348 - Renew
-------------
NOTE PRINCIPAL: $1,000,000.00
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
PREPAID FINANCE CHARGES PAID IN CASH: $0.00
OTHER CHARGES PAID IN CASH: $826.56
$826.56 Interest to 5/31/98
-------------
TOTAL CHARGES PAID IN CASH: $826.56
</TABLE>
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED MAY 28,1998.
BORROWER:
ANSYS DIAGNOSTICS, INC.
BY:
-----------------------------------------
<PAGE> 8
STEPHEN K. SCHULTHEIS, PRESIDENT
- --------------------------------------------------------------------------------
Variable Rate. Line of Credit. LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.25
(c) 1998 CFI ProServices, Inc. All rights reserved. [CA-120 ANSYS2.LN]
