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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 2
to
Quarterly Report Pursuant to Section 13
or 15(d) of the Securities Exchnage Act of 1934
For the second quarter ended March 31, 1995
Commission File Number 1-10492
EPITOPE, INC.
Incorporated in the IRS Employer Identification No.
State of Oregon 93-0779127
8505 S.W. Creekside Place
Beaverton, Oregon 97008-7108
(503) 641-6115
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The undersigned registrant hereby amends Item 6 of its Quarterly
Report on Form 10-Q for the second quarter ended March 31, 1995, as follows:
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The exhibits herewith are listed on the accompanying exhibit
index.
(b) Reports on Form 8-K
The registrant filed a current report on Form 8-K dated March
29, 1995, reporting under Item 5 the modification of certain
terms of its series of warrants scheduled to expire on April
22, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
EPITOPE, INC.
(Registrant)
Dated: August 8, 1995 By: /s/ Gilbert N. Miller
Gilbert N. Miller
Executive Vice President, Chief
Financial Officer
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Exhibit Index
Exhibit Description
10.1 Development, License and Supply Agreement between Epitope,
Inc., and SmithKline Beecham plc dated February 24, 1995, as
amended. Portions of this agreement have been granted
confidential treatment.
27 Financial Data Schedule (previously filed).
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EXHIBIT 10.1
DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT
THIS DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT (hereinafter referred to
as "AGREEMENT"), made as of the 24th day of February, 1995, between Epitope,
Inc., a corporation of the state of Oregon, having a place of business at 8505
SW Creekside Place, Beaverton, Oregon 97008, U.S.A. and SmithKline Beecham
plc, a company organized under English law and having its registered office at
New Horizons Court, Brentford, Middlesex TW8 9EP, England,
WITNESSETH THAT:
WHEREAS, EPITOPE (as hereinafter defined) has developed the OraSure HIV-1
Oral Specimen Collection Device, and such device has received FDA (as
hereinafter defined) approval for certain use by properly trained personnel
under a physician's supervision, and EPITOPE has plans to seek FDA permission
to market such device as an Over-the-Counter product for use in home
collection of HIV-1 antibodies;
WHEREAS, EPITOPE is the owner of all right, title and interest in certain
patents and patent applications identified in Appendix A hereto and know-how
which relate to the collection of antibodies and other substances from mucosal
transudate and to other BODILY FLUID-based diagnostic, screening and/or
detection technologies; further, such know-how includes, without limitation,
techniques for the use of such BODILY FLUID as a matrix from which to detect
the presence of such antibodies or other substances, such as, but not limited
to, the OraSure HIV-1 Oral Specimen Collection Device and applications of the
OraSure Oral Specimen Collection Device outside of the field of HIV-1 antibody
detection, as well as all applications of EPITOPE's proprietary BODILY FLUID-
based diagnostic, screening and/or detection technologies including, but not
limited to, EPITOPE's OraQuick technology; and EPITOPE is seeking a partner to
collaborate on the development and commercialization of products which are
embraced by such patents and know-how throughout the world to the extent
EPITOPE is legally permitted to do so in view of pre-existing contractual
obligations between EPITOPE and third parties; and
WHEREAS, SB (as hereinafter defined) is interested in collaborating on
the development and commercialization of products which are embraced by such
patents and know-how throughout the world to the extent EPITOPE is legally
permitted to do so in view of pre-existing contractual obligations between
EPITOPE and third parties, including commercializing the OraSure HIV-1 Oral
Specimen Collection Device to all legally available market segments and
geographic locations, to the full extent of the marketing and regulatory
approvals received, now and in the future from the FDA and other domestic and
foreign regulatory agencies, and in obtaining certain licenses from EPITOPE
under the aforesaid patents and know-how, and EPITOPE is willing to grant to
SB such licenses;
NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, and otherwise to be bound
by proper and reasonable conduct, the parties agree as follows:
1. DEFINITIONS
1.01 "AFFILIATES" shall mean any corporation, firm, partnership, or
other entity, whether de jure or de facto, which directly or indirectly owns,
is owned by or is under common ownership with a party to this AGREEMENT where
"owns" or "ownership" means possession of at least fifty percent (50%) of the
equity (or such lesser percentage which is the maximum allowed to be owned by
a foreign corporation in a particular jurisdiction) having the power to vote
on or direct the affairs of the entity and any person, firm, partnership,
corporation or other entity actually controlled by, controlling or under
common control with a party to this AGREEMENT.
1.02 "APPROVED PRODUCT" shall mean a PRODUCT for a SPECIFIED APPLICATION
for which a DEVELOPMENT PLAN is approved in accordance with Paragraph 2.02.
Notwithstanding the foregoing, the ORASURE HIV-1 ORAL SPECIMEN COLLECTION
DEVICE shall constitute an APPROVED PRODUCT for the SPECIFIED APPLICATION of
screening, detection and/or diagnosis of Human Immunodeficiency Virus-1 (HIV-
1) antibodies.
1.03 "BODILY FLUID" shall mean all [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION].
1.04 "BUNDLED PRODUCT" shall mean a collection device that is an
APPROVED PRODUCT marketed to the professional MARKET SEGMENT as a unit with a
testing service provided by SmithKline Beecham Clinical Laboratories and/or
any AFFILIATES that are operating as a clinical laboratory.
1.05 "COLLECTION DEVICE" shall mean a device for the collection of
BODILY FLUID specimens for the purpose of detecting and/or screening for
substances and/or indications and/or diagnosing conditions in BODILY FLUID for
which the presence of the collected substances, indications or conditions is
determined with a validated BODILY FLUID detection test which is independent
of the device used for the collection of the substances, indications or
conditions.
1.06 "COMBINATION PRODUCT" shall mean a product, in finished pack form,
that includes two or more PRODUCTS, or any PRODUCT which tests and/or screens
for the detection and/or diagnosis of two or more substances or conditions.
1.07 "COST OF GOODS" shall mean all direct costs related to the cost of
raw materials, packaging, direct labor and associated fringe benefits directly
attributable to manufacturing of an APPROVED PRODUCT. EPITOPE's methods for
allocating direct costs shall be in accordance with U.S. Generally Accepted
Accounting Principles (GAAP) consistently applied over time and consistent
with methods applied by EPITOPE to products which have similar requirements to
such APPROVED PRODUCT with respect to manufacturing, testing and storage in
finished form.
1.08 "DEVELOPMENT PLAN" shall mean each collaborative development
project between EPITOPE and SB which shall be drafted, amended, and approved
by the DEVELOPMENT STEERING COMMITTEE in accordance with Paragraph 2.02, and
which shall thereafter be fully incorporated into this AGREEMENT as though
fully set forth herein.
1.09 "DEVELOPMENT STEERING COMMITTEE" shall mean a committee containing
senior members from both parties which the parties shall establish in
accordance with Paragraph 2.02. The responsibilities of the DEVELOPMENT
STEERING COMMITTEE are set forth in Paragraph 2.02.
1.10 "E.C." shall mean the countries which are members of the European
Community as of the EFFECTIVE DATE.
1.11 "EFFECTIVE DATE" shall mean February 21, 1995.
1.12 "EPITOPE" shall mean Epitope, Inc., a corporation of the state of
Oregon, having a place of business at 8505 SW Creekside Place, Beaverton,
Oregon 97008, U.S.A.
1.13 "EPITOPE MARKET SEGMENT(S)" shall mean all MARKET SEGMENTS in the
EXCLUDED TERRITORY and the LIFE INSURANCE MARKET SEGMENT in the U.S.A., Japan
and Canada.
1.14 "EPITOPE NET SALES" shall mean the gross receipts received from
sales of EXCLUDED PRODUCT by EPITOPE and/or its sublicensees and/or
AFFILIATES, other than sales in the EPITOPE MARKET SEGMENTS and EXCLUDED
TERRITORY, less deductions taken for (i) transportation charges, including
insurance; (ii) sales and excise taxes and duties paid or allowed by a selling
party and any other governmental charges imposed upon the production,
importation, use or sale of such EXCLUDED PRODUCT; (iii) trade, quantity, and
cash discounts allowed; (iv) allowances or credits to customers on account of
rejection or return of EXCLUDED PRODUCT subject to royalty under this
AGREEMENT or on account of retroactive price reduction affecting such EXCLUDED
PRODUCT; and (v) rebates and chargebacks. Sales between or among EPITOPE and
its sublicensees and/or AFFILIATES shall be excluded from the computation of
EPITOPE NET SALES except where such sublicensees and/or AFFILIATES are end
users, but EPITOPE NET SALES shall include the subsequent final sales to THIRD
PARTIES by such sublicensees and/or AFFILIATES.
1.15 "EXCLUDED PRODUCT(S)" shall mean any and all present and future
PRODUCTS designated as EXCLUDED PRODUCTS in accordance with this AGREEMENT.
1.16 "EXCLUDED COMBINATION PRODUCT" shall mean a product, in finished
pack form, that includes two or more EXCLUDED PRODUCTS, or any EXCLUDED
PRODUCT for detecting, screening or diagnosing two or more substances,
indications or conditions.
1.17 "EXCLUDED PRODUCT KNOW-HOW" shall mean all KNOW-HOW as well as all
SB KNOW-HOW, to the extent that SB is free to disclose such as provided by
this AGREEMENT, which relates to EXCLUDED PRODUCT and shall include, without
limitation, all chemical, pharmacological, toxicological, clinical, assay,
regulatory, control and manufacturing data and any other information and
reagents relating to EXCLUDED PRODUCT and useful or required for the
development and commercialization of EXCLUDED PRODUCT or the products which
are the subject of the written notice given to SB in accordance with Paragraph
7.02(b).
1.18 "EXCLUDED PRODUCT PATENT(S)" shall mean all PATENTS and SB PATENTS
which generically or specifically claim EXCLUDED PRODUCT, a process for
manufacturing EXCLUDED PRODUCT, an intermediate used in such process or a use
of EXCLUDED PRODUCT. In addition, included within the definition of EXCLUDED
PRODUCT PATENTS are any continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals or extensions thereof and all SPCs
covering an EXCLUDED PRODUCT. Also included within the definition of EXCLUDED
PRODUCT PATENTS are any patents or patent applications which generically or
specifically claim any improvements on EXCLUDED PRODUCT or intermediates or
manufacturing processes required or useful for production of EXCLUDED PRODUCT.
1.19 "EXCLUDED PRODUCT SPC(S)" shall mean a right which is not an
EXCLUDED PRODUCT PATENT but which is based upon an EXCLUDED PRODUCT PATENT to
exclude others from making, using or selling EXCLUDED PRODUCT, such as a
Supplementary Protection Certificate.
1.20 "EXCLUDED TERRITORY" shall mean Singapore, Malaysia, Argentina,
Brazil, Paraguay, South Africa, Thailand, Uruguay, and the People's Republic
of China.
1.21 "FDA" shall mean the United States Food and Drug Administration.
1.22 "LAUNCH" shall mean, with respect to a PRODUCT and/or APPROVED
PRODUCT in a country, the first sales of the PRODUCT and/or APPROVED PRODUCT
for commercial use in that country, but shall not be deemed to have occurred
until PRODUCT APPROVAL in that country.
1.23 "KNOW-HOW" shall mean all present and confidential future
information and know-how owned by EPITOPE, or for which EPITOPE otherwise has,
now or in the future, the right to grant licenses during the term of this
AGREEMENT, which relates to PRODUCT and shall include, without limitation, all
chemical, pharmacological, toxicological, clinical, assay, regulatory, control
and manufacturing data and any other information and reagents relating to
PRODUCT and useful or required for the development and commercialization of
PRODUCT, to the extent that EPITOPE is free to disclose such as provided by
this AGREEMENT.
1.24 "LIFE INSURANCE MARKET SEGMENT" shall mean sales of a PRODUCT for
the purpose of risk assessment of applicants in connection with underwriting
of insurance.
1.25 "MARKET SEGMENTS" shall mean, depending on the particular PRODUCT,
any or all of the customer business segments for PRODUCTS in any country of
the world, exemplified by, but not limited to:
(a) the entire Over-the-Counter market segment, including retail
and direct mail;
(b) the managed care market segment;
(c) the office-based physician/dentist market segments (e.g.,
general practice physicians, family practice physicians, internal
medicine physicians, osteopathic physicians);
(d) the LIFE INSURANCE MARKET SEGMENT; and
(e) the government, hospital and institutional market segments.
1.26 "NET SALES" shall mean the gross receipts received from sales of
APPROVED PRODUCT in the TERRITORY by SB and/or its AFFILIATES and/or
sublicensees to THIRD PARTIES under this AGREEMENT less deductions for (i)
transportation charges, including insurance; (ii) sales and excise taxes and
duties paid or allowed by a selling party and any other governmental charges
imposed upon the production, importation, use or sale of such APPROVED
PRODUCT; (iii) trade, quantity and cash discounts allowed; (iv) allowances or
credits to customers on account of rejection or return of APPROVED PRODUCT
subject to royalty under this AGREEMENT or on account of retroactive price
reductions affecting such APPROVED PRODUCT; and (v) rebates and chargebacks.
Sales between or among SB and its AFFILIATES or sublicensees shall be excluded
from the computation of NET SALES except where such AFFILIATES or sublicensees
are end users, but NET SALES shall include the subsequent final sales to THIRD
PARTIES by such AFFILIATES or sublicensees.
1.27 "NON INVASIVE" when applied to a diagnostic device, means one that
does not by design or intention penetrate or pierce the skin or mucous
membranes of the body, the ocular cavity, or the urethra.
1.28 "ORASURE HIV-1 ORAL SPECIMEN COLLECTION DEVICE" shall mean a device
for the collection of oral fluid specimens for the purpose of screening,
detecting and/or diagnosing antibodies to Human Immunodeficiency Virus Type I
(HIV-1) in oral mucosal transudate fluid for which the presence of the
collected antibodies is determined with a validated test which is independent
of the device used for the collection of the antibodies.
1.29 "OTC APPROVAL" shall mean the date when FDA approval for OTC sales
("Over-the-Counter" direct to consumer), or other such approval as pertinent,
is final.
1.30 "OTC LAUNCH" shall mean, with respect to a PRODUCT and/or APPROVED
PRODUCT in a country, the first sale direct to the consumer, "Over-the-
Counter" where such regulatory distinction exists.
1.31 "OTC LAUNCH YEAR" means the 12 month period after OTC LAUNCH in
each country.
1.32 "PATENT(S)" shall mean all patents and patent applications which
are or become owned in whole or in part by EPITOPE, or in which EPITOPE
otherwise has, now or in the future, the right to grant licenses during the
term of this AGREEMENT, which generically or specifically claim APPROVED
PRODUCT, a process for manufacturing APPROVED PRODUCT, an intermediate used in
such process, or a use of APPROVED PRODUCT. In addition, included within the
definition of PATENTS are any continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals or extensions thereof and all SPC's.
Also included within the definition of PATENTS are any patents or patent
applications which generically or specifically claim any improvements on
APPROVED PRODUCT or intermediates or manufacturing processes required or
useful for production of APPROVED PRODUCT which are developed by EPITOPE, or
for which EPITOPE otherwise has the right to grant licenses, now or in the
future, during the term of this AGREEMENT. The current list of patent
applications and patents as of the EFFECTIVE DATE is set forth in APPENDIX A
attached hereto. APPENDIX A shall be updated by EPITOPE on a semi-annual
basis.
1.33 "PRODUCT(S)" shall mean any and all present and future tests and/or
devices, including, but not limited to, the ORASURE HIV-1 ORAL SPECIMEN
COLLECTION DEVICE and tests and/or devices based upon OraQuick technology,
and/or improvements of such tests and/or devices, and/or any combination
thereof, which are based on BODILY FLUID diagnostic screening and/or detection
technology and any underlying technology which are owned or controlled in
whole or in part by EPITOPE as of the EFFECTIVE DATE or are acquired or
developed by EPITOPE during the term of this AGREEMENT or which EPITOPE
otherwise has the right to grant licenses, now or in the future, during the
term of this AGREEMENT. Notwithstanding the foregoing, PRODUCT shall not
include any ELISA, screening, or detection assay which is sold separately from
a BODILY FLUID collection device except for such assays which become APPROVED
PRODUCTS in accordance with Paragraph 2.02.
1.34 "PRODUCT APPROVAL" shall mean, with respect to a PRODUCT and/or
APPROVED PRODUCT to be sold for a specific use in a country, the issuance of
all governmental approvals, permits, licenses, or other authorization required
for sale of the PRODUCT and/or APPROVED PRODUCT for the SPECIFIED APPLICATION.
If no such authorizations are required in a country, PRODUCT APPROVAL shall be
deemed to have occurred in that country when the PRODUCT and/or APPROVED
PRODUCT is first launched for the specific use in that country.
1.35 "SB" shall mean SmithKline Beecham plc, a company organized under
English law and having its registered office at New Horizons Court, Brentford,
Middlesex TW8 9EP, England and only such of its AFFILIATES and subsidiaries to
which it may assign all or part of its rights and obligations in accordance
with Paragraph 4.03 or Paragraph 26.01.
1.36 "SB KNOW-HOW" shall mean all information and know-how owned in
whole or in part by SB which is developed in the course of and during the term
of this AGREEMENT, to the extent that SB is free to disclose such as provided
by this AGREEMENT, which relates to APPROVED PRODUCT and shall include,
without limitation, all chemical, pharmacological, toxicological, clinical,
assay, regulatory, control and manufacturing data and any other information
and reagents relating to APPROVED PRODUCT and useful or required for the
development and commercialization of APPROVED PRODUCT.
1.37 "SB MARKET SEGMENT(S)" shall mean all MARKET SEGMENTS other than
the EPITOPE MARKET SEGMENTS.
1.38 "SB PATENT(S)" shall mean all patents and applications which are
owned in whole or in part by SB which claim inventions which are invented in
the course of and during the term of the AGREEMENT, which generically or
specifically claim APPROVED PRODUCT, a process for manufacturing APPROVED
PRODUCT, an intermediate used in such process, or a use of APPROVED PRODUCT.
In addition, included within the definition of SB PATENTS are any
continuations, continuations-in-part, divisions, patents of addition,
reissues, renewals or extensions thereof and all SPCS covering APPROVED
PRODUCT. Also included within the definition of SB PATENTS are any patents or
patent applications which generically or specifically claim any improvements
on APPROVED PRODUCT or intermediates or manufacturing processes required or
useful for production of APPROVED PRODUCT.
1.39 "SPC(S)" shall mean a right which is not a PATENT or SB PATENT but
which is based upon a PATENT or SB PATENT to exclude others from making, using
or selling APPROVED PRODUCT, such as a Supplementary Protection Certificate.
1.40 "SPECIFICATIONS" means the specifications for manufacturing for
each APPROVED PRODUCT required by applicable governmental regulatory
authorities.
1.41 "SPECIFIED APPLICATION" shall mean the use of an APPROVED PRODUCT
with its accompanying assay, requiring separate regulatory approval or
development costs, for the screening, detection and/or diagnosis of a
particular substance, indication or condition, and each use of an APPROVED
PRODUCT with different assays to the extent additional regulatory approvals or
development costs are required.
1.42 "TERRITORY" shall mean all the countries and territories of the
world except Singapore, Malaysia, Argentina, Brazil, Paraguay, South Africa,
Thailand, Uruguay and the People's Republic of China, except as otherwise
provided by Paragraph 8.01. In the event that EPITOPE reacquires the right to
grant the license outlined in Article 4 with respect to any or all of
Singapore, Malaysia, Argentina, Brazil, Paraguay, South Africa, Thailand,
Uruguay, and the People's Republic of China, EPITOPE shall so notify SB, in
writing to be sent within thirty (30) days, and the TERRITORY shall
automatically be expanded to include such country and, in such event, with
respect to each country added to the TERRITORY, SB must provide EPITOPE, no
later than six (6) months after SB's receipt of EPITOPE's notice, with a
written business plan outlining SB's envisioned approach to the registration
and commercialization of PRODUCT and/or APPROVED PRODUCT in each added country
selected by SB. Any country not selected by SB in accordance with this
Paragraph 1.43 shall then be subject to the procedures described in Paragraph
8.01(b).
1.43 "THIRD PARTY(IES)" shall mean any party other than a party to this
AGREEMENT, AFFILIATE, or sublicensee.
1.44 "U.S.A." shall mean the United States of America and all of its
territories and possessions.
2. DEVELOPMENT
2.01 As of the EFFECTIVE DATE, it is envisioned that the principles
guiding the development of PRODUCT during the term of the AGREEMENT shall
include:
(a) continuously improving the underlying technology of BODILY
FLUID-based screening, detection and/or diagnostic testing, including a
laboratory ELISA assay, and confirmatory testing required therefor; and
(b) applying this technology to an array of professional and
Over-the-Counter screening and/or diagnostic testing applications.
2.02 (a) Promptly after the EFFECTIVE DATE, the parties shall
establish a DEVELOPMENT STEERING COMMITTEE. The DEVELOPMENT STEERING
COMMITTEE shall consist of six (6) members, three (3) of whom shall be
appointed by SB and three (3) of whom shall be appointed by EPITOPE, and shall
be chaired by a member appointed by SB. The purpose of the DEVELOPMENT
STEERING COMMITTEE shall be to agree, in good faith, on the development of
each PRODUCT for a SPECIFIED APPLICATION, to set forth such agreement in a
DEVELOPMENT PLAN to be drafted by the DEVELOPMENT STEERING COMMITTEE for each
such PRODUCT for such SPECIFIED APPLICATION, to determine the respective
activities and responsibilities of the parties for such development, to audit
the actual costs incurred by EPITOPE in conducting its specified activities
and responsibilities outlined in the DEVELOPMENT PLAN and utilize such audit
to determine when such costs are equal to the Estimated Development Costs as
defined in Paragraph 3.02, to determine the technical feasibility criteria
required by Paragraph 2.06, to determine the development costs funded by SB
for purposes of Paragraph 7.03, and to determine the necessity for the
additional funding contemplated by Paragraph 3.01. Once a DEVELOPMENT PLAN is
approved for a particular PRODUCT, such PRODUCT shall thereafter become an
APPROVED PRODUCT. Each such DEVELOPMENT PLAN shall be amended by the
DEVELOPMENT STEERING COMMITTEE as necessary. Each such DEVELOPMENT PLAN shall
include, for each individual target APPROVED PRODUCT, at least the following:
(1) projected timelines to commercialization;
(2) resource requirements;
(3) the respective activities and responsibilities of the
parties for such development;
(4) technology to be developed (e.g., OraSure versus
OraQuick);
(5) Estimated Development Costs outlined in Paragraph 3.02;
and
(6) the milestones to be achieved for the payments outlined
in Paragraph 3.02.
(b) All decisions for which the DEVELOPMENT STEERING COMMITTEE cannot
reach consensus shall be submitted for resolution by senior EPITOPE and SB
management if such decisions relate to issues concerning the milestones to be
achieved for the payments outlined in Paragraph 3.02, determination of actual
achievement of any such milestone, or auditing of actual costs incurred by
EPITOPE in carrying out its development responsibilities in accordance with a
particular APPROVED PRODUCT's DEVELOPMENT PLAN. If the parties cannot reach
agreement within 30 days, the matter will be submitted to arbitration in
accordance with Article 21. All other decisions for which the DEVELOPMENT
STEERING COMMITTEE cannot reach consensus shall be submitted for resolution to
senior SB management.
(c) The DEVELOPMENT STEERING COMMITTEE shall schedule periodic meetings
to be held at least quarterly provided that the first such meeting shall be
held no later than forty-five (45) days, after the EFFECTIVE DATE. At its
first meeting, the DEVELOPMENT STEERING COMMITTEE shall establish the
procedure, including deadlines from the date of submission, for deciding
whether to fund, defer, or reject a PRODUCT proposed for development by
EPITOPE, and shall establish the period during which projects may be deferred.
Such procedure may be amended from time to time.
2.03 The parties shall use reasonable efforts to carry out their
respective responsibilities in the development of APPROVED PRODUCT(S),
substantially in accordance with the DEVELOPMENT PLAN for each PRODUCT.
2.04 Except as provided in Paragraph 2.02 with respect to EPITOPE's
responsibility for performing development work as provided in the DEVELOPMENT
PLAN, SB shall have full control, authority and responsibility for the
development of each PRODUCT and/or APPROVED PRODUCT within the TERRITORY,
including, but not limited to, the selection of any PRODUCT for development or
the termination of any APPROVED PRODUCT's development and, subject only to
Paragraph 4.02, Article 7 or as otherwise expressly provided in this
AGREEMENT, commercialization thereof, provided that any decision to
discontinue an APPROVED PRODUCT's development shall not be made without SB's
prior full disclosure to EPITOPE concerning the rationale and consequences of
such discontinuance. Attainment and maintenance of regulatory approvals and
price registrations for APPROVED PRODUCT within the TERRITORY shall also be
the sole responsibility of SB, except that such shall also be EPITOPE's
responsibility, to the extent, if any, it is necessary to enable EPITOPE to
promote and sell APPROVED PRODUCT to the EPITOPE MARKET SEGMENTS in accordance
with Paragraph 8.02 or sell EXCLUDED PRODUCTS as provided in this AGREEMENT.
2.05 In addition to EPITOPE's development responsibilities outlined in
the DEVELOPMENT PLAN, EPITOPE shall provide to SB, at SB's request, reasonable
technical assistance within its area of expertise concerning development,
registration and commercialization of APPROVED PRODUCT.
2.06 (a) EPITOPE shall agree to undertake the development of any
PRODUCT including any accompanying assets at the DEVELOPMENT STEERING
COMMITTEE's request, provided such development is in accordance with Articles
2 and 3 of this AGREEMENT.
(b) EPITOPE agrees to present any concepts, proposals, and projects
concerning the continuous improvement and/or development of APPROVED PRODUCT,
PRODUCT, and /or any underlying technology to the DEVELOPMENT STEERING
COMMITTEE. The obligation of the DEVELOPMENT STEERING COMMITTEE to evaluate
any such PRODUCT shall be performed in accordance with subparagraph (c)
herein.
(c) SB shall have the option to fund development of and market any
PRODUCT and/or underlying technology which EPITOPE desires to develop,
provided that EPITOPE has demonstrated that such PRODUCT is technically
feasible. Such development shall be in accordance with Article 2 and 3 of
this AGREEMENT.
(i) If development funding on an annual budgeted basis is
equal to or greater than [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] then:
(A) SB may defer funding PRODUCT development within
the context of its strategic planning process without the loss
of any SB rights. If SB defers funding development for a
given PRODUCT, then Epitope may request and DEVELOPMENT
STEERING COMMITTEE may approve EPITOPE's request to fund the
PRODUCT development itself. SB shall have the right at any
time during the development process to assume responsibility
for funding such development upon reimbursement of EPITOPE's
direct cost already incurred in connection with such
development; or
(B) SB may decline to fund PRODUCT development and
through completion of its next internal budgetary cycle shall
have the option with respect to such PRODUCT development. If
SB then elects to develop such PRODUCT, SB shall reimburse
EPITOPE for any direct costs in connection with such
development already incurred by EPITOPE; or
(C) In the event SB elects not to exercise such option
with respect to funding PRODUCT development, EPITOPE may elect
to continue funding such development on its own and shall be
permitted to commercialize such PRODUCT to any MARKET SEGMENT
provided EPITOPE does not utilize a THIRD PARTY sales force
and/or marketing organization (other than an independent,
locally-based sales force and/or marketing organization
without significant internationally based affiliations) for
such commercialization.
(D) EPITOPE may elect to fund development of a PRODUCT
deferred by the DEVELOPMENT STEERING COMMITTEE without
approval of the DEVELOPMENT STEERING COMMITTEE provided it had
not exercised such right within the preceding two years.
(ii) If development funding on an annual budgeted basis is
less than [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION], then SB may exercise or not exercise, but may not defer its
option to fund development. If SB elects not to exercise its option with
respect to a particular PRODUCT, then:
(A) EPITOPE may elect to fund such development on its
own. However, SB shall have the option through completion of
its next internal budgetary cycle to assume the PRODUCT
development. If SB then elects to assume such PRODUCT
development, SB shall reimburse EPITOPE for any direct costs
in connection with such development already incurred by
EPITOPE;
(B) If at the end of SB's next internal budgeting
cycle SB elects not to exercise such option with respect to
funding a particular PRODUCT, EPITOPE shall be permitted to
commercialize such PRODUCT to any MARKET SEGMENT, provided
EPITOPE does not utilize a THIRD PARTY sales force and/or
marketing organization (other than an independent, locally-
based sales force and/or marketing organization without
significant, internationally-based affiliations for such
commercialization).
(iii) In the event SB elects not to exercise its option under
either Paragraph 2.06(c)(i)(C) or Paragraph 2.06(c)(ii)(B), above, then
EPITOPE shall have the right to offer such product and/or underlying
technology to a THIRD PARTY provided that SB shall have a right of first
refusal on terms as favorable as those last offered to such THIRD PARTY.
In the event EPITOPE shall elect not to commercialize such PRODUCT to one
or more MARKET SEGMENTS in one or more countries of the world, SB shall
have the first right to such commercialization upon terms to be mutually
negotiated by the parties in good faith. EPITOPE shall be reimbursed for
the direct costs already incurred in developing such PRODUCT, provided
that in the event SB elects not to exercise such first right, EPITOPE
shall not offer such commercialization rights to any THIRD PARTY upon
terms any more favorable than those which were offered to SB.
(d) In the event [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] the development of a PRODUCT for EPITOPE, SB shall have a
right of first refusal to develop such PRODUCT [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] provided that SB does not
have to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] until such time as such PRODUCT is determined to be technically
feasible, and further provided that any such development shall be in
accordance with Articles 2 and 3 of this AGREEMENT.
(e) All SB [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] as set forth in this paragraph shall [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of establishing technical
feasibility or notification of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] whichever is later. In the event SB elects
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
with respect to a particular PRODUCT, EPITOPE shall not enter into any
agreement with such [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] to SB.
(f) "Technically feasible" as used in this Paragraph 2.06 shall mean
that a PRODUCT has demonstrable ability to perform its intended function as
determined by criteria set up by the DEVELOPMENT STEERING COMMITTEE.
(g) Any SB option set forth in this Paragraph 2.06 shall expire within
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
after SB receives notice of a situation that gives rise to its right to
exercise its option. Such time frame shall not affect any other rights
reserved to SB in this Paragraph 2.06.
3. DEVELOPMENT FUNDING
3.01 EPITOPE shall perform and fund all clinical trials and regulatory
work required in the U.S.A. after the EFFECTIVE DATE for obtaining approval
from the FDA for marketing the ORASURE HIV-1 ORAL SPECIMEN COLLECTION DEVICE
to the non-professional, Over-the-Counter market segments for the screening,
diagnosis and/or detection of Human Immunodeficiency Virus-I (HIV-1), up to a
maximum of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]. In the event the costs of such clinical trials and other
regulatory work exceeds [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION], the DEVELOPMENT STEERING COMMITTEE shall meet to
determine if additional funding of such clinical trials and other regulatory
work is likely to achieve the desired FDA approval, and if the DEVELOPMENT
STEERING COMMITTEE determines that additional funding is warranted, SB will
fully fund the remaining clinical trials and other regulatory work, provided
that fifty percent (50%) of all such funding shall be fully creditable against
any future royalties SB may owe to EPITOPE under Article 5.
3.02 (a) SB shall provide funding to EPITOPE to assist EPITOPE in
carrying out EPITOPE's responsibilities outlined in each DEVELOPMENT PLAN.
Prior to initiating development (including clinical trials in any country of
the TERRITORY) of any PRODUCT (other than the ORASURE HIV-1 ORAL SPECIMEN
COLLECTION DEVICE in the U.S.A.), the DEVELOPMENT STEERING COMMITTEE shall
estimate the total development costs for such PRODUCT ("Estimated Development
Costs"). It is understood that, with respect to any ORASURE COLLECTION
DEVICE, including the ORASURE HIV-1 ORAL SPECIMEN COLLECTION DEVICE, SB shall
not be responsible for reimbursing to EPITOPE any costs incurred by EPITOPE
prior to the EFFECTIVE DATE with the exception of the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] COLLECTION
DEVICES whose development expense to date shall be reimbursed as a condition
of SB designating these items as APPROVED PRODUCTS.
(b) Estimated Development Costs shall include a reasonable estimated
budget of all direct expenses, including salaries, which will be incurred by
EPITOPE for the development of a particular PRODUCT and SB shall pay EPITOPE
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of
such Estimated Development Costs within sixty (60) days after the DEVELOPMENT
PLAN for such PRODUCT has been accepted by the DEVELOPMENT STEERING COMMITTEE,
minus any portion of such payment which is satisfied by the escrow account
provided for in Paragraph 3.03. The remaining [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of the Estimated Development
Costs shall be paid to EPITOPE, on an incremental basis, within thirty (30)
days after the achievement of relevant milestones for the particular PRODUCT
as set forth in the DEVELOPMENT PLAN for such PRODUCT provided:
(i) each payment which is owed in accordance with this
Paragraph 3.02 shall be made only once for each APPROVED PRODUCT;
(ii) such payments shall be non-refundable to SB for any
reason; and
(iii) such payments shall be the remainder of any portion of
such payment which is satisfied by the escrow account provided for
in Paragraph 3.03.
3.03 SB shall pay one million U.S. dollars (U.S. $1,000,000) into an
interest bearing escrow account within forty-five (45) days of the EFFECTIVE
DATE if the AGREEMENT has not been terminated by SB prior to such date,
provided that the transfer of such money to EPITOPE shall be only in
accordance with the Estimated Development Cost procedure outlined in Paragraph
3.02, and further provided that the parties agree that there shall be at least
one DEVELOPMENT PLAN approved in accordance with Paragraph 2.02 no later than
six (6) months after the EFFECTIVE DATE, involving Estimated Development Costs
of at least [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] to be spent within [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of the EFFECTIVE DATE.
3.04 The funding to be provided by SB to EPITOPE under Paragraphs 3.01
and 3.02 is the full extent of SB's responsibility for paying the direct costs
to EPITOPE associated with EPITOPE's development responsibilities outlined in
the DEVELOPMENT PLAN. EPITOPE may halt its development activities for any
APPROVED PRODUCT after the DEVELOPMENT STEERING COMMITTEE has determined that
the Estimated Development Costs for such APPROVED PRODUCT have been reached or
that further support is not warranted. If the DEVELOPMENT STEERING COMMITTEE
determines that additional funding is warranted, and SB determines that it
will fully fund the additional amount, EPITOPE shall continue the development
activities for the APPROVED PRODUCT in accordance with such APPROVED PRODUCT's
DEVELOPMENT PLAN. If SB determines that it is unwilling to fund any APPROVED
PRODUCT's development either after the Estimated Development Cost for such
APPROVED PRODUCT have been reached or the DEVELOPMENT STEERING COMMITTEE has
determined that further support is not warranted, then such APPROVED PRODUCT
shall thereafter become an EXCLUDED PRODUCT and written notice of the
determination shall be provided to EPITOPE.
3.05 SB shall have full responsibility, at its expense, for the
attainment and maintenance of regulatory and price registrations for APPROVED
PRODUCT throughout the TERRITORY, except for the ORASURE HIV-1 ORAL SPECIMEN
COLLECTION DEVICE in the U.S.A., provided that [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of all such expense shall be
fully creditable against any future royalties SB may owe to EPITOPE under
Article 5.
4. GRANT
4.01 EPITOPE hereby grants to SB an exclusive license under all of
EPITOPE's interests and rights in PATENTS and KNOW-HOW to use and sell
APPROVED PRODUCT to the SB MARKET SEGMENTS in the TERRITORY subject to the
terms and conditions of this AGREEMENT.
4.02 SB hereby grants to EPITOPE an exclusive license under all of SB's
interests and rights in SB PATENTS and SB KNOW-HOW, to the extent necessary to
enable EPITOPE to make, have made, use and sell APPROVED PRODUCT to the
EPITOPE MARKET SEGMENTS subject to Paragraph 8.02 and the other terms and
conditions of this AGREEMENT.
4.03 The license granted to SB under Paragraph 4.01 includes the right
to grant sublicenses, provided that such right shall mean that SB shall have
the unqualified right to sublicense any or all of its rights and obligations
under this AGREEMENT to any of its AFFILIATES, and SB's right to grant any
such sublicense to any THIRD PARTY is subject to the prior written consent of
EPITOPE which consent shall not be unreasonably withheld.
4.04 SB's obligations under this AGREEMENT are subject to satisfaction,
or waiver by SB, of each of the following conditions:
(a) EPITOPE shall have entered into amendments to existing Supply
Agreements with [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION].
(b) EPITOPE shall have entered into the option agreement with
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
described in Paragraph 9.13;
(c) [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION], a joint venture company established under the laws of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION],
shall have been dissolved, or steps satisfactory to SB to effect dissolution
shall have been taken; and
(d) SB's due diligence review of EPITOPE's quality assurance procedures
and records, patents, regulatory affairs, and legal proceedings, which shall
be completed within forty-five (45) days of the EFFECTIVE DATE, shall not have
revealed materially adverse information, condition or issues which could be
material to SB's decision to enter into this AGREEMENT and to undertake the
commitments and obligations set forth herein.
4.05 EPITOPE shall exercise its best efforts to ensure the removal of
the conditions set forth in Paragraph 4.04.
5. PAYMENTS AND ROYALTIES
5.01 As consideration for the license under PATENTS and KNOW-HOW granted
to SB under this AGREEMENT, SB shall pay to EPITOPE one million U.S. dollars
(U.S. $1,000,000) within forty-five (45) days after the EFFECTIVE DATE if the
AGREEMENT has not been terminated by SB prior to such date. Furthermore, SB
shall pay an additional four million U.S. dollars (U.S. $4,000,000) into an
interest bearing escrow account within forty-five (45) days of the EFFECTIVE
DATE if the AGREEMENT has not been terminated by SB prior to such date,
provided that the transfer of such money to EPITOPE shall occur upon, and only
upon the occurrence of one of the following conditions:
(a) EPITOPE is able to get FDA-approved expiration dating of at least
two (2) years for the ORASURE HIV-1 ORAL SPECIMEN COLLECTION DEVICE; or
(b) SB is able to achieve $[CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] in annual NET SALES of the ORASURE HIV-1 ORAL
SPECIMEN COLLECTION DEVICE in the TERRITORY.
5.02 In the event that the present nine (9) month expiration dating
approved by the FDA is reduced to six (6) months, or less, as a result of
stability testing currently under consideration or as a result of other FDA
mandate, the Development Steering Committee shall meet to assess the problem
and reach a mutually acceptable solution. If no agreement is reached within a
reasonable period of time, but no longer than 30 days, then the issue shall be
referred to senior SB management for disposition which may include immediate
termination of this agreement. In the event this agreement is terminated,
then Epitope shall return to SB the one million U.S. dollars (U.S. $1,000,000)
that was paid pursuant to Paragraph 5.01, less any direct out-of-pocket costs
expended by Epitope for clinical trials pursuant to Paragraph 3.01 and for any
additional stability/expiry testing expressly requested by SB.
In addition, if EPITOPE is unable to get FDA-approved expiration dating
of at least two (2) years for the ORASURE HIV-1 ORAL SPECIMEN COLLECTION
DEVICE within one (1) year after the EFFECTIVE DATE, the one million U.S.
dollar payment made by SB to EPITOPE within forty-five days after the
EFFECTIVE DATE shall be fully creditable against any future royalties SB may
owe EPITOPE under this AGREEMENT. If, however, EPITOPE subsequently obtains
such FDA approved expiration dating, no part of the one million dollar payment
shall thereafter be credited against royalties.
5.03 As consideration for the license under PATENTS granted to SB under
this AGREEMENT, and subject to Paragraphs 5.04, 5.05 and 11.02, SB shall pay
to EPITOPE a royalty of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] on NET SALES in all countries of the TERRITORY in which
there is an issued and enforceable PATENT which claims the APPROVED PRODUCT
sold. After all such patents have expired royalties shall be payable for the
applicable APPROVED PRODUCT under Paragraph 5.07(a).
5.04 Royalties on a BUNDLED PRODUCT shall consist of the royalty set in
Paragraph 5.03 or 5.07(a), as appropriate, plus a royalty for the testing
service as set forth in APPENDIX B, attached and made a part hereto. Should
NET SALES of a particular BUNDLED PRODUCT exceed [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION]% of total NET SALES on a
corresponding APPROVED PRODUCT, then EPITOPE shall be entitled to extend the
exclusive manufacturing period as set forth in Paragraph 9.03(d) by up to two
years as set forth in Appendix B attached hereto. Such extension shall only
be adjusted on December 31 of each year. In no event shall the cumulative
extension of Paragraph 9.03(d) and this Paragraph exceed five (5) years. In
no way shall this Paragraph limit the rights of SB as set forth in Paragraph
9.06.
Within [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] of the EFFECTIVE DATE, SB will provide EPITOPE with a transfer
price for the sale of the COLLECTION DEVICE to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. Such price shall be
reasonable and in accordance with [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION].
5.05 Notwithstanding Paragraph 5.03, for each [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] reduction of an APPROVED
PRODUCT's market share in a particular country of the TERRITORY due to
substantial competition, the royalty outlined in Paragraph 5.03 for NET SALES
of such APPROVED PRODUCT in such country shall be reduced by [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. No reduction
shall occur until SB's market share is reduced at least [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]% for a
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
period because of any third party's competitive product; the aforementioned
royalty reduction shall be applied retroactively to the date on which
substantial competition (as defined in this Paragraph) is first established in
such country and shall continue only for so long as such substantial
competition continues. Notwithstanding Paragraph 5.07(a), the royalty
outlined in Paragraph 5.07(a) shall be reduced to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in any country of the
TERRITORY in which there is competition with an APPROVED PRODUCT based on the
technology, know-how, and proprietary information described herein. The term
"competition" as used in this Paragraph 5.05 means all THIRD PARTY, same
BODILY FLUID-based diagnostic and/or detection technology which tests and/or
screens for the same substance, indication or condition as an APPROVED PRODUCT
and which has been launched in a country of the TERRITORY.
5.06 Notwithstanding Paragraphs 5.03, 5.04 and 5.07(a), in the event
that NON-INVASIVE diagnostic technology based on a different BODILY FLUID from
that used in the applicable APPROVED PRODUCT is commercially launched in any
country of the TERRITORY which competes with an APPROVED PRODUCT during the
royalty term provided in Paragraph 11.02, the parties shall promptly meet to
negotiate, in good faith, a mutually acceptable downward adjustment to (a) the
payments and royalties owed to EPITOPE for such APPROVED PRODUCT under
Paragraph 5.03 or 5.07(a), whichever is applicable; and (b) the forecasts for
such country provided to EPITOPE in accordance with Paragraph 5.09.
5.07 (a) For NET SALES which are not subject to the royalty
obligations in Paragraph 5.03, as consideration for the license under KNOW-HOW
granted to SB under this AGREEMENT, SB shall pay to EPITOPE [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of NET SALES,
subject to Paragraphs 5.04, 5.05 and 11.02(b).
(b) Royalties for the sale of COMBINATION PRODUCT by SB shall be
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
those set forth in this AGREEMENT for [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION]. There shall be [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] paid on the sale
of any combination product. SB shall pay the [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] applicable.
5.08 SB's royalty obligations under Paragraphs 5.03 shall become
effective in each country in the TERRITORY at such time as APPROVED PRODUCT is
LAUNCHED in such country. In the event that any person or party [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] and APPROVED
PRODUCT in any country in the TERRITORY, such as by [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION], then such royalty
obligation on NET SALES in such country shall continue [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. If the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
APPROVED PRODUCT are [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] by a [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] from which [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] can be taken, then SB's royalty
obligation [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]. If the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] APPROVED PRODUCT are [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] by a [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] from which [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] can be taken,
then the royalties to be paid by SB shall be [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] the levels set out in [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. If any person
or party shall thereafter LAUNCH the APPROVED PRODUCT in such country SB shall
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
and SB shall [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] granted herein.
5.09 SB will exercise its reasonable efforts and diligence in
development, registration and commercialization of APPROVED PRODUCT to the SB
MARKET SEGMENTS in the TERRITORY in accordance with SB's business, legal,
medical and scientific judgment and SB's normal practices and procedures for
products having similar technical and commercial potential. In the event
that, the annual aggregate NET SALES in the TERRITORY for a particular
APPROVED PRODUCT are less than [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of the annual forecasted NET SALES in the
TERRITORY for such APPROVED PRODUCT, then EPITOPE shall meet with SB to review
the reasons for the shortfall and to agree on a plan of action to address such
reasons. In addition, SB shall elect one of the following:
(a) SB can pay EPITOPE the [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] which EPITOPE has [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] SB for the NET SALES of such
APPROVED PRODUCT in the TERRITORY [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] and the [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] for such APPROVED PRODUCT had it
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of
the annual aggregate NET SALES in the TERRITORY for such APPROVED PRODUCT as
forecasted by SB for such year, provided such payment is made by SB within
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
after the close of the relevant forecast year;
(b) The annual aggregate forecast of NET SALES in the TERRITORY for
such APPROVED PRODUCT shall be [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] by [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] the actual annual NET SALES of APPROVED
PRODUCT in such country [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION], and [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of the forecasted annual NET SALES of APPROVED
PRODUCT. SB may elect this option [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] during any [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] year period; or
(c) SB's exclusive license to APPROVED PRODUCT shall be [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in each country
of the TERRITORY in which [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of the annual aggregate NET SALES for such
APPROVED PRODUCT in such country as forecasted by SB for such year. Further
under this subparagraph (c) during any year after the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of the LAUNCH of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
APPROVED PRODUCT in which SB is [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] the sales forecast [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] APPROVED PRODUCTS, in any
country of the TERRITORY in which [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of the annual aggregate NET SALES for the
particular APPROVED PRODUCT, SB's license to [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] APPROVED PRODUCT shall [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in that country.
It is also understood that, for purposes of this Paragraph 5.09:
(1) Such forecasts shall be produced by SB as part of its
normal budgetary process, on a per country basis, once every year
for the subsequent year, and such forecasts shall take into account
phased-in launches of APPROVED PRODUCT in those countries of the
TERRITORY in which SB (itself or through its AFFILIATES or
sublicensees) chooses to launch APPROVED PRODUCT as well as the
level of market exclusivity APPROVED PRODUCT can be expected to
achieve in such countries.
(2) Such forecasts shall not take into account sales of a
particular APPROVED PRODUCT in any country of the TERRITORY in which
SB (itself or through its AFFILIATES or sublicensees) chooses not to
launch such APPROVED PRODUCT.
(3) If EPITOPE believes, in good faith, that any such
forecast does not represent a reasonable assessment of the likely
future sales, the parties shall endeavor to find a mutually
acceptable revision of the forecast. If the parties cannot
determine such a mutually acceptable resolution, the parties shall
submit the dispute to a mutually acceptable third party expert for a
final and binding forecast, and the cost of such expert shall be
equally shared by the parties.
(4) In addition, after consultation with EPITOPE, SB shall
be permitted to reasonably alter the forecast, as necessary, in any
country in which:
(a) launch of the APPROVED PRODUCT is delayed for
reasons beyond SB's, its AFFILIATES' and sublicensees'
reasonable direct control, including, but not limited to,
pricing and/or reimbursement delays imposed by the relevant
governmental authorities;
(b) SB had forecasted for market exclusivity, but such
exclusivity has diminished; or
(c) a royalty reduction has occurred in accordance
with Paragraph 5.05 or a governmental agency in any country of
the TERRITORY compels EPITOPE to grant a license to any THIRD
PARTY to make, have made, use or sell APPROVED PRODUCT.
6. COMPULSORY LICENSES AND THIRD PARTY LICENSES
6.01 In the event that a governmental agency in any country or territory
grants or compels EPITOPE to grant a license to any THIRD PARTY to make, have
made, use or sell an APPROVED PRODUCT, SB shall have the benefit in such
country or territory of the terms granted to such THIRD PARTY to the extent
that such terms are more favorable to the THIRD PARTY than those of this
AGREEMENT, and the parties shall promptly meet to discuss an appropriate
downward adjustment to the forecasts for such country provided to EPITOPE in
accordance with Paragraph 5.09. In addition, if EPITOPE is required to supply
APPROVED PRODUCT to the THIRD PARTY at lower prices than those at which
EPITOPE sells the APPROVED PRODUCT to SB:
(a) EPITOPE shall [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] for use or sale in the relevant country or
territory on the same terms it [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] provided, however, that EPITOPE shall not be
required to sell the APPROVED PRODUCT [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION];
(b) However, if [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION], the APPROVED PRODUCT [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] for use or sale
in the relevant country or territory [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] that is at [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] SB shall so notify EPITOPE,
and EPITOPE shall immediately [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION], with the [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION], as well as [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] all required
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
such APPROVED PRODUCT in the relevant country or territory.
6.02 If, during the term of this AGREEMENT SB, in its sole discretion,
deems it necessary to seek a license from any THIRD PARTY in order to avoid
infringement during the exercise of the license herein granted, [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of any royalties
or other fees paid to such THIRD PARTY under such license may be deducted from
royalties otherwise due EPITOPE under this AGREEMENT.
7. EXCLUDED PRODUCTS
7.01 (a) All sales by EPITOPE of any product designated as an EXCLUDED
PRODUCT in accordance with this AGREEMENT in any country of the world,
including all sales resulting from EPITOPE's use of a THIRD PARTY sales force
or other marketing organization for such commercialization, shall be subject
to the provisions of this Article 7, and shall be considered as sales by
EPITOPE for the purpose of the calculation of EPITOPE NET SALES.
(b) Any PRODUCT which utilizes underlying technology (technology
applied to both EXCLUDED and APPROVED PRODUCT) which was funded by SB shall
entitle SB to the royalty for an EXCLUDED PRODUCT, and shall be subject to the
provisions of this Article 7. There shall be no sale of any such product by
EPITOPE or any THIRD PARTY until EPITOPE has provided written notification to
SB in accordance with Paragraph 7.02(b).
7.02 (a) With respect to those products which become designated as
EXCLUDED PRODUCTS in accordance with this AGREEMENT, EPITOPE shall
automatically have an exclusive license, with the right to grant sublicenses,
under all of SB's interests and rights in the EXCLUDED PRODUCT PATENTS and
EXCLUDED PRODUCT KNOW-HOW to make, have made, use and sell EXCLUDED PRODUCT in
the world for the particular SPECIFIED APPLICATION for which it was developed
by EPITOPE with funding from SB; and SB shall promptly disclose to EPITOPE
and/or supply EPITOPE with all relevant EXCLUDED PRODUCT KNOW-HOW owned by SB
or under which SB has a right to grant such license in accordance with this
AGREEMENT.
(b) With respect to those products described in Paragraph 7.01(b),
EPITOPE shall notify SB, in writing, of each such product and its SPECIFIED
APPLICATION, and EPITOPE shall thereafter have an exclusive license, with the
right to grant sublicenses, under all of SB's interests and rights in the
EXCLUDED PRODUCT PATENTS and EXCLUDED PRODUCT KNOW-HOW to make, have made, use
and sell such product in the world for the particular SPECIFIED APPLICATION.
7.03 (a) As consideration for the license of SB's interests and rights
under Paragraph 7.02, EPITOPE shall either (1) reimburse SB for all
development funds paid by SB for the EXCLUDED PRODUCT or the underlying
technology, or (2) pay SB a royalty at the rates stated below. SB shall
decide whether the consideration shall be reimbursement of development costs
or payment of a royalty, if SB funded at least one-half of the development
costs (as determined by the DEVELOPMENT STEERING COMMITTEE). EPITOPE shall
otherwise decide whether to reimburse SB for development costs or pay a
royalty.
(b) If SB funded at least one-half of the development costs, the
royalty described in Paragraph 7.03(a): (i) shall be [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]% of EPITOPE NET
SALES in those countries in which there is an issued and enforceable EXCLUDED
PRODUCT PATENT which claims the EXCLUDED PRODUCT or product described in
Paragraph 7.01(b) and (ii) shall be [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION]% as to all other EPITOPE NET SALES of
the EXCLUDED PRODUCT or product described in Paragraph 7.01(b). In each case,
the royalty shall be subject to reduction using the same principles described
in Paragraph 5.05 in case of competition.
(c) If SB funded less than one-half of the development costs, the
royalty (i) shall be [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION]% of EPITOPE NET SALES in those countries in which there
is an issued and enforceable EXCLUDED PRODUCT PATENT which claims EXCLUDED
PRODUCT or PRODUCT described in Paragraph 7.01(b) and (ii) shall be
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]%
as to all other EPITOPE NET SALES of the EXCLUDED PRODUCT or product described
in Paragraph 7.01(b). The royalty rate shall be subject to reduction using
the same principles described in Paragraph 5.05 in case of competition.
7.04 Royalties for the sale of EXCLUDED COMBINATION PRODUCT containing
an EXCLUDED PRODUCT shall be [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION].
7.05 EPITOPE's royalty obligations under Paragraphs 7.03 and 7.04 shall
become effective in each country in the TERRITORY at such time EXCLUDED
PRODUCT is LAUNCHED in such country.
7.06 EPITOPE's royalty obligations for a particular EXCLUDED PRODUCT or
product due to SB under Paragraph 7.03(b)(i) and 7.03(c)(i) shall expire in
each country upon the expiration, or invalidation by a court or other legal or
administrative tribunal from which no appeal is or can be taken of the last
EXCLUDED PRODUCT PATENT in such country which claims such EXCLUDED PRODUCT or
product described in Paragraph 7.01(b).
7.07 Royalty obligations due to SB under Paragraph 7.03(b)(ii) and
7.03(c)(ii) shall expire in each such country upon the earlier of (a) fifteen
(15) years from the date of first marketing of such EXCLUDED PRODUCT or
product in such country by EPITOPE or a permitted sublicensee, or (b) in any
country which is a member state of the E.C. when all EXCLUDED PRODUCT KNOW-HOW
used by EPITOPE in the making, using or selling of such EXCLUDED PRODUCT or
product has become publicly known other than by the action of SB or an
undertaking connected with SB.
7.08 Expiration of royalty obligations for a particular EXCLUDED PRODUCT
due to SB under both Paragraphs 7.03 and 7.04 in any country of the TERRITORY
shall not preclude EPITOPE from continuing to make, have made, use and sell
such EXCLUDED PRODUCT in such country and to use EXCLUDED PRODUCT KNOW-HOW
without any further royalty obligation or other compensation to SB.
7.09 Royalty payments due to SB under this Article 7 shall be made in
accordance with Article 17.
7.10 SB shall have no scientific, development, regulatory,
commercialization, or financial responsibility or authority, or any other form
of responsibility or authority for any EXCLUDED PRODUCT. Thus, SB shall have
no responsibility or authority, financially or otherwise, for the attainment
and maintenance of regulatory approvals and price registrations for any
EXCLUDED PRODUCT.
7.11 EPITOPE will exercise its reasonable efforts and diligence in
development, registration and commercialization of any EXCLUDED PRODUCT or
product described in 7.01(b) in accordance with EPITOPE's normal practices and
procedures for devices having similar technical and commercial potential,
provided, however, that EPITOPE may terminate its rights with respect to any
EXCLUDED PRODUCT in any country in the TERRITORY by giving SB at least thirty
(30) days written notice thereof based on a reasonable determination by
EPITOPE, using the same standards EPITOPE would use in assessing whether or
not to continue development and marketing of a product of its own making, that
the patent, medical/scientific, technical, regulatory or commercial profile of
such EXCLUDED PRODUCT does not justify continued development or marketing of
such EXCLUDED PRODUCT. Termination of EPITOPE's rights with respect to an
EXCLUDED PRODUCT in any country in the TERRITORY under this provision shall
terminate all licenses granted to EPITOPE in such country related to such
EXCLUDED PRODUCT under Article 7 with full reversion to SB of all SB's
interest and rights in EXCLUDED PRODUCT PATENTS and EXCLUDED PRODUCT KNOW-HOW
in such country related to such EXCLUDED PRODUCT.
7.12 All EXCLUDED PRODUCT sold by EPITOPE or its sublicensees shall have
product design and trade dress which will be clearly distinguishable from all
APPROVED PRODUCTS, and EPITOPE and its sublicensees shall be strictly
prohibited from promoting any EXCLUDED PRODUCT for any off-label purpose. If
off-label use can be documented, then the injured party may require the other
party to take all necessary and legally available steps to prevent such off-
label use, including but not limited to legal action and cancellation of
relevant agreements with any party responsible for such off-label use. The
injured party shall also be reimbursed in full by the other party for any lost
profit which the injured party can document.
7.13 If, during the term of the AGREEMENT, EPITOPE, in marketing
EXCLUDED PRODUCT which relies exclusively on an SB PATENT, deems it in its
sole discretion necessary to seek a license from any third party in order to
avoid infringement during the exercise of the license granted herein,
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of
any royalties or any other fees paid to such third party under such license
may be deducted from the royalties otherwise due SB for the sale of such
EXCLUDED PRODUCT.
8. APPROVED PRODUCT PROMOTION AND MARKETING BY THE PARTIES
8.01 (a) No later than [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] months from the EFFECTIVE DATE, SB shall
provide EPITOPE with a written list of countries of the TERRITORY in which SB
intends to market APPROVED PRODUCTS. At the same time, SB will provide
EPITOPE with a written business plan outlining SB's envisioned approach to the
registration and commercialization of APPROVED PRODUCT in each selected
country. Notwithstanding the above, SB may extend the time period provided in
this Paragraph 8.01, on a monthly basis, for up to [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION], by paying EPITOPE
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
for each month, provided such payment is made no later than fifteen (15) days
after the first day of the relevant month;
(b) Any country not selected by SB in accordance with this Paragraph
8.01 shall automatically be deleted from the scope of the TERRITORY, provided
that, in the event that EPITOPE has not LAUNCHED any APPROVED PRODUCT in any
deleted country within two (2) years after the date SB provided the written
list to EPITOPE contemplated by this Paragraph 8.01, such deleted country
shall automatically become within the scope of the TERRITORY. Once such
deleted country has returned within the scope of the TERRITORY, SB shall have
six (6) months to provide EPITOPE with a written business plan outlining SB's
envisioned approach to the registration and commercialization of APPROVED
PRODUCT in such country or else such country shall automatically become
deleted from the scope of the TERRITORY. Once so deleted from the TERRITORY,
it shall be available for commercialization to either party on a non-exclusive
basis without remuneration to the other party. EPITOPE shall promptly
reimburse SB for all out-of-pocket expenses connected with EPITOPE's use, if
any, of SB's market analysis of each country elected by EPITOPE.
8.02 During the term of this AGREEMENT, EPITOPE shall have the option to
exclusively promote APPROVED PRODUCT(S) to the EPITOPE MARKET SEGMENTS and to
all MARKET SEGMENTS in those countries that are not part of the TERRITORY on a
product-by-product basis. In the event EPITOPE shall elect not to promote a
particular APPROVED PRODUCT to a particular EPITOPE MARKET SEGMENT in a
particular country, EPITOPE shall notify SB, in writing, and such market
segment in such country shall thereafter be within the scope of the term SB
MARKET SEGMENTS, and SB (and its sublicensees) shall be entitled thereafter to
exclusively promote such APPROVED PRODUCT to such market segment in such
country.
8.03 The following principles shall apply to the promotion and
commercialization of each APPROVED PRODUCT to the SB MARKET SEGMENTS and the
EPITOPE MARKET SEGMENTS in the TERRITORY by SB and EPITOPE:
(a) SB shall be solely responsible for the preparation of a marketing
plan to include plans related to the prelaunch, launch, promotion and sale of
APPROVED PRODUCT to the SB MARKET SEGMENTS. SB shall be permitted to review
EPITOPE's marketing plan related to the prelaunch, launch, promotion and sale
of the APPROVED PRODUCTS to the EPITOPE MARKET SEGMENTS (except with respect
to any EPITOPE pricing strategy), to ensure that there is no conflict with
SB's marketing strategy with respect to such APPROVED PRODUCT, and EPITOPE
shall incorporate all of SB's reasonable comments related thereto.
(b) Each party shall use its own promotional materials, advertising and
literature items with respect to its promotion and sale of APPROVED PRODUCT,
provided that each party shall have the right to receive copies of the other
party's promotional materials, advertising and literature items. EPITOPE
shall incorporate all of SB's reasonable comments related thereto. Each party
shall bear the financial responsibility for its own promotional materials,
advertising and literature items with respect to its promotion and sale of
APPROVED PRODUCT.
(c) All other costs and expenses incurred by a party in the promotion
and detailing of APPROVED PRODUCT in accordance with this AGREEMENT, such as,
but not limited to, expenses related to a party's sales force or marketing
support, shall be at the incurring party's sole expense.
(d) SB shall book all sales of APPROVED PRODUCT by SB. EPITOPE shall
book all sales of APPROVED PRODUCT by EPITOPE.
(e) Each party shall promote and sell APPROVED PRODUCT strictly in
accordance with all administrative, federal, state and local laws and
regulations governing such promotion and sale.
8.04 EPITOPE shall prevent, to the extent legally possible, the
unauthorized trans-shipment of APPROVED PRODUCT and EXCLUDED PRODUCTS from
outside the TERRITORY into the TERRITORY. Likewise, SB shall prevent, to the
extent legally possible, the trans-shipment of APPROVED PRODUCT from inside
the TERRITORY to outside of the TERRITORY. If unauthorized trans-shipment can
be documented, then the injured party may require the other party to take all
necessary and legally available steps to prevent any further unauthorized
trans-shipment, including, but not limited to, legal action and cancellation
of relevant agreements with any party responsible for the unauthorized trans-
shipment. The injured party shall also be reimbursed, in full, by the other
party, for any lost profit which the injured party can document.
9. APPROVED PRODUCT SUPPLY AND DISTRIBUTION
9.01 During the term of the AGREEMENT, EPITOPE shall supply SB with all
SB's and its sublicensee's promotional and commercial requirements for
APPROVED PRODUCT, and SB shall exclusively purchase all such commercial
requirements from EPITOPE, except as otherwise provided in Paragraph 9.06.
All such APPROVED PRODUCT shall be supplied in the form of a finished pack,
i.e., a fully labeled package ready for sale to the appropriate ultimate
customer, in an appropriate shipping container. Promptly after the EFFECTIVE
DATE, the parties shall establish a Manufacturing Capacity Team consisting of
six (6) members, three (3) of whom shall be appointed by SB and three (3) of
whom shall be appointed by EPITOPE. The purpose of the Manufacturing Capacity
Team shall be to determine the capability of EPITOPE to supply SB's and its
sublicensee's promotional and commercial requirements for APPROVED PRODUCT.
9.02 EPITOPE shall maintain [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] for the purpose of satisfying the supply
requirements of APPROVED PRODUCT of SB and its sublicensees under this
AGREEMENT. In addition, not later than [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] after the EFFECTIVE DATE, EPITOPE shall
qualify [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] for the purpose of satisfying the supply requirements of APPROVED
PRODUCT of SB and its sublicensees under this AGREEMENT which EPITOPE is
unable to supply on its own. All such facilities shall each (i) have an
approved Device Master File for APPROVED PRODUCT, (ii) be a GMP facility; and
(iii) be approved by the Manufacturing Capacity Team, such approval not to be
unreasonably withheld or delayed. Furthermore, immediately after the
EFFECTIVE DATE, EPITOPE shall transfer all KNOW-HOW and other technical
information to SB necessary to enable SB to qualify [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] for the purpose of
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of
APPROVED PRODUCT of SB and its sublicensees under this AGREEMENT which EPITOPE
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
its own [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] in accordance with [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION].
9.03 SB shall pay EPITOPE for supplying APPROVED PRODUCT as set forth
below in Paragraph 9.03 (a), (b), (c) and (f). In addition, SB shall pay
EPITOPE for supplying its commercial requirements for APPROVED PRODUCT at a
cost to be mutually negotiated by the parties in good faith. In no case,
however, shall SB pay more than [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION].
(a) SB shall pay EPITOPE [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] /unit for each ORASURE HIV-1 ORAL SPECIMEN
COLLECTION DEVICE supplied to SB for its requirements in the TERRITORY. It is
understood that EPITOPE may [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] by an amount equal to any [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION], provided such
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] is
subject to an audit by SB, and further provided such [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] is capped on an annual basis
to the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] for the year prior to the year in question. Further, in the event
EPITOPE enters into [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] then [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] may be taken on [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] provided that the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
cannot be greater than the [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] for the same time period.
(b) SB shall pay EPITOPE for SB's reasonable promotional requirements
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
/unit for each ORASURE HIV-1 ORAL SPECIMEN COLLECTION DEVICE. It is
understood that EPITOPE may [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] by an amount equal to any [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION], provided such
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] is
subject to an audit by SB, and further provided such increase is capped on an
annual basis to the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] for the year prior to the year in question. Further, in
the event EPITOPE enters into [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] then, [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] may be taken on contract expiration
provided that the [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] cannot be greater than the [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] for the same time period.
(c) For Over-the-Counter products, the packaging cost will be
determined by the Manufacturing Capacity Team. SB will reimburse EPITOPE for
any excess of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] on a per unit basis. If [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION], EPITOPE will reimburse SB for any
excess of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION]on a per unit basis.
(d) In addition, notwithstanding Paragraph 9.01, it is understood that
if SB can [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] after the APPROVED PRODUCT's LAUNCH date obtain such APPROVED
PRODUCT more economically (i.e., at a charge to SB at least [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] less than
EPITOPE's charge to SB for the same quantity of APPROVED PRODUCT) from a
legitimate THIRD PARTY supplier, SB may do so provided SB provides reasonable
documentation to EPITOPE regarding the THIRD PARTY supplier's price, and
EPITOPE does not match such price within [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION]. In such event, EPITOPE shall
immediately grant SB a co-exclusive license, with the right to grant a
sublicenses to such THIRD PARTY supplier, under relevant PATENTS and KNOW-HOW,
as well as transfer all required KNOW-HOW and other technical information to
SB and the THIRD PARTY supplier to permit the THIRD PARTY supplier to make
APPROVED PRODUCT.
(e) Furthermore, it is understood that, for so long as EPITOPE is
supplying APPROVED PRODUCT to SB, the parties shall work together, in good
faith, to reduce the COST OF GOODS. [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] of any reduction in COSTS OF GOODS,
regardless of how they are achieved, including those cost savings achieved due
to large scale production, shall be credited to the price charged to SB by
EPITOPE for APPROVED PRODUCT supply.
(f) Notwithstanding Paragraphs 9.03(a) and (b) EPITOPE shall not
increase its price to SB above $[CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION]/unit or $[CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION]/unit, as appropriate, for the ORASURE
HIV-1 ORAL SPECIMEN COLLECTION DEVICE for [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] after the EFFECTIVE DATE.
9.04 EPITOPE shall be responsible for supplying its own clinical,
promotional and commercial requirements of APPROVED PRODUCT and EXCLUDED
PRODUCT during the term of this AGREEMENT at its own expense.
9.05 EPITOPE will use its best efforts to supply or have supplied a
sufficient quantity of the APPROVED PRODUCT to meet SB's requirements.
(a) Within six months of the EFFECTIVE DATE SB will develop a rolling
annualized manufacturing forecast, updated quarterly, setting forth
anticipated volumes on a country by country and APPROVED PRODUCT by APPROVED
PRODUCT basis. SB shall submit written purchase orders setting forth
quantities, delivery dates, and shipping instructions for delivery of APPROVED
PRODUCT. Shipment of APPROVED PRODUCT will normally take place no earlier
than two (2) months after receipt of a purchase order from SB; provided,
however, if EPITOPE receives a purchase order for a quantity of APPROVED
PRODUCT that is outside the parameters expressed in 9.05(b), shipment of such
APPROVED PRODUCT will take place no earlier than three (3) months after
receipt of such purchase order.
(b) SB agrees to purchase and EPITOPE agrees to supply [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of the
forecasted volume for the first quarter and between [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] and up to [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of the amount
estimated for the second quarter of any forecast. Further, SB will be solely
responsible for the inventory of the APPROVED PRODUCT other than EPITOPE stock
awaiting shipment, and EPITOPE will not be required to carry any additional
inventory.
(c) The parties will jointly endeavor to determine when an OTC APPROVAL
will occur in each country in the TERRITORY. SB will determine initial
estimates of volume in OTC LAUNCH YEAR. In anticipation of such OTC Approval,
SB will place its initial firm order covering purchases of the APPROVED
PRODUCT. Such initial orders shall allow a three (3) month lead time
subsequent to EPITOPE's receipt of all approved packaging and labeling text
and illustrations from SB. [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] months prior to the anticipated OTC LAUNCH
DATE, SB shall furnish EPITOPE with a written estimate of the quantity of
APPROVED PRODUCT which SB expects to purchase during the next [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] calendar
quarters beginning [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] months after the furnishing of such estimate. All SB
forecasts will be updated on a quarterly basis thereafter.
(d) EPITOPE and SB will work to develop a plan to manage inventories
during the OTC LAUNCH YEAR. This plan will include a provision whereby
EPITOPE will maintain an additional inventory of the APPROVED PRODUCT equal to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of
SB's requirements for the current quarter. Further, this requirement will be
reduced to a [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] supply of additional inventory during the third quarter following
the OTC LAUNCH DATE. This requirement will be reduced to a [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] supply of
additional inventory during the fourth quarter following the OTC LAUNCH DATE.
EPITOPE retains the right to invoice SB for any and all such additional
inventory of the APPROVED PRODUCT up to a maximum limit of [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of additional
inventory at the end of the OTC LAUNCH YEAR. [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of such inventory will be
invoiced with payment terms at net thirty (30) days. The [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of additional
inventory will be invoiced on net sixty (60) days' terms and the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of additional
inventory will be invoiced at net ninety (90) days. This inventory will be
available to SB for immediate shipment if sales exceed SB's forecast. At no
time during the OTC LAUNCH YEAR will EPITOPE be required to carry more than
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
supply of additional inventory.
(e) EPITOPE and SB will work together to determine reasonable
requirements of inventory to account for expansion into other countries in
the TERRITORY and for increases in the number of indications, substances,
and/or diseases encompassed by the APPROVED PRODUCT.
9.06 EPITOPE shall give SB immediate written notice if EPITOPE becomes
aware that it will not be able to satisfy SB's or its sublicensee's entire
requirements of APPROVED PRODUCT for any quarter on a country-by-country and
APPROVED PRODUCT-by-APPROVED PRODUCT basis.
(a) If EPITOPE is unable to meet SB's forecast demands for APPROVED
PRODUCT by failing to ship at least [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] of SB's firm orders for [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in any calendar
quarter then at SB's request, EPITOPE shall immediately [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] with the
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] as
well as [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] all required [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] APPROVED PRODUCT. EPITOPE will continue to
use its best efforts to supply SB's and its sublicensee's requirements for
APPROVED PRODUCT. Further, EPITOPE will cooperate with SB including
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] if
necessary to secure [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] SB or an outside supplier as a secondary manufacturing
site. SB shall have such right until EPITOPE provides SB with written
assurances that EPITOPE is able to meet such demands in the next calendar
quarter.
(b) If EPITOPE fails to meet SB's forecast demands for APPROVED PRODUCT
by failing to ship at least [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] of SB's firm orders for [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in any calendar
year then EPITOPE shall immediately [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] with a [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] APPROVED PRODUCT. The Manufacturing
Capacity Team shall meet to determine revised EPITOPE manufacturing forecast.
If the Manufacturing Capacity Team cannot agree then the matter shall be
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
for resolution. If EPITOPE's failure to meet SB's forecasted demand resulted
from circumstances set forth in Article 19, then the Manufacturing Capacity
Team shall set forth a timetable when EPITOPE will be able to resume supplying
SB requirements for APPROVED PRODUCT.
(c) If EPITOPE fails to meet SB's forecast demand for an APPROVED
PRODUCT in a particular country by failing to ship at least [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of SB's firm
orders for that APPROVED PRODUCT in a particular country for [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in any calendar
quarter then SB shall have the rights enumerated in [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] for that particular country;
further, if EPITOPE fails to meet SB's forecast demand for an APPROVED PRODUCT
in a particular country by failing to ship at least [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of SB's firm orders for that
APPROVED PRODUCT in a particular country for [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE COMMISSION] in any calendar year, then the
parties shall follow the procedure set forth above in [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] for that
particular country.
(d) SB's payment obligation set forth in Article 5 on NET SALES of any
APPROVED PRODUCT that EPITOPE is unable to supply shall be reduced by
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
such requirements [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] EPITOPE under Article 9 [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION].
(e) If SB's unanticipated demand exceeds EPITOPE's manufacturing
capacity, SB can [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH
THE COMMISSION] the services of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION]. However, SB shall reimburse EPITOPE for
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
If such unanticipated demand is still not met, SB shall have the right to
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
but it shall pay EPITOPE [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] the APPROVED PRODUCT.
9.07 With respect to any APPROVED PRODUCT supplied to SB in accordance
with Article 9, SB shall pay EPITOPE for all APPROVED PRODUCT accepted by SB
no later than thirty (30) days after its delivery to SB. Amounts past due
shall bear a late fee of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] or, if lower, the maximum amount allowed by
law, from the invoice date, provided such invoice is sent no earlier than the
date of the delivery of the APPROVED PRODUCT for which such invoice is being
generated.
9.08 Notwithstanding anything stated in this AGREEMENT to the contrary,
and subject to Paragraph 9.02, it is understood and agreed that EPITOPE shall
have the right at any time to satisfy its supply obligations to SB hereunder
either in whole or in part through arrangements with THIRD PARTIES engaged to
perform services or supply facilities or goods in connection with the
manufacture, testing, and/or packaging of APPROVED PRODUCT, provided such
APPROVED PRODUCT is produced in accordance with Paragraph 9.12.
9.09 Upon expiration of the AGREEMENT in each country of the TERRITORY
in accordance with Paragraph 11.01, in the event that SB requires a continued
supply of APPROVED PRODUCT EPITOPE shall continue to supply SB at the same
cost as negotiated by the parties under Paragraph 9.03 and in accordance with
the provisions of this Article 9. However, if SB can obtain the manufacture of
an APPROVED PRODUCT more economically (i.e. less than [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]% of EPITOPE's
charge to SB) then EPITOPE shall have [CONFIDENTIAL INFORMATION OMITTED AND
FILED SEPARATELY WITH THE COMMISSION] to agree to supply such product at an
equivalent cost. If EPITOPE fails to meet the lower quote SB is free to use
such third party manufacturer.
9.10 SB shall be solely responsible for the distribution in the
TERRITORY of all APPROVED PRODUCT, whether or not such APPROVED PRODUCT is
supplied to SB by EPITOPE, subject to EPITOPE's right to promote and
commercialize APPROVED PRODUCT to the EPITOPE MARKET SEGMENTS as provided in
this AGREEMENT.
9.11 Delivery of APPROVED PRODUCT supplied by EPITOPE to SB shall be
"F.O.B." (as such term is defined by Incoterms 1990), Portland, Oregon,
U.S.A., by whatever means SB instructs and EPITOPE determines is reasonable,
provided that such shipment is made in accordance with all relevant statutory
requirements.
9.12 EPITOPE represents and warrants, without limitation to any other
warranties, express or implied, that all APPROVED PRODUCT shall be supplied to
SB free and clear of any liens or encumbrances. EPITOPE further represents
and warrants that in the event that EPITOPE breaches its duty to supply SB
under this Article 9 and Article 10, such would cause SB irreparable harm for
which money damages may not be adequate. Therefore, EPITOPE agrees that, in
addition to other remedies, SB shall be entitled to injunctive or other
equitable relief to restrain EPITOPE's breach.
9.13 Within 30 days of the EFFECTIVE DATE, EPITOPE shall enter into an
AGREEMENT with [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION], in form and substance satisfactory to SB, under which EPITOPE
will have an option to [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION].
10. MANUFACTURING STANDARDS AND QUALITY ASSURANCE
10.01 EPITOPE guarantees that each APPROVED PRODUCT(s) made and shipped
by it hereunder will not on the date of shipment be adulterated or misbranded
within the meaning of the Food, Drug, and Cosmetic Act ("Act") and any other
applicable laws and regulations of the TERRITORY. EPITOPE further agrees to
manufacture the APPROVED PRODUCT(s) and maintain its facilities in accordance
with GMP's (as defined in the Act). The parties therefore agree that
EPITOPE's representations and warranties set forth in this Article 10 do not
apply to any text and non-text materials for the labeling and packaging of
APPROVED PRODUCT(s) which are supplied to EPITOPE by SB nor do they apply to
the advertising and promotional activities and materials produced or conducted
by or on behalf of SB in respect of the APPROVED PRODUCT(s). SB accepts full
responsibility for the design, content, and use of all such packaging
labeling, advertising, and promotional activities and materials. SB further
agrees that EPITOPE shall not be responsible if an APPROVED PRODUCT(s) becomes
adulterated or misbranded as described above as a result of any packaging,
labeling, advertising, or promotional activities or materials supplied by SB
to EPITOPE regarding the APPROVED PRODUCT(S) that are not in accordance with
the SPECIFICATIONS. EPITOPE will assume responsibility if an APPROVED PRODUCT
becomes adulterated or misbranded as described above as a result of any
packaging, labeling, advertising or promotional activities or materials in
respect of the APPROVED PRODUCT that are not in accordance with
SPECIFICATIONS, where such error results from the negligence of EPITOPE.
10.02 EPITOPE shall test according to its internal standard operating
procedures the APPROVED PRODUCT(s) against the SPECIFICATIONS prior to
shipment to SB. SB shall test in the APPROVED PRODUCT(s) after receipt as SB
deems appropriate. Further, as part of the audit function, SB reserves the
right to review Certificates of Analysis, batch records, and perform facility
inspection. If, within thirty (30) days after receipt of the APPROVED
PRODUCT(s) by SB at either SB's facility or a facility designated by SB, SB
notifies EPITOPE in writing that the APPROVED PRODUCT(S) does not meet the
SPECIFICATIONS as determined by SB's or a third party's testing of the
APPROVED PRODUCT(s), then EPITOPE shall, subject to paragraphs 10.04, 10.05,
and 10.06 below, promptly replace all such nonconforming APPROVED PRODUCT(s)
with APPROVED PRODUCT(s) meeting the SPECIFICATIONS. Nonconforming APPROVED
PRODUCT(s) shall be destroyed by SB at EPITOPE's sole discretion. EPITOPE
shall issue a credit to SB in the amount representing EPITOPE's selling price
of the nonconforming APPROVED PRODUCT(s) to SB plus freight charges, for the
shipment to SB, within thirty (30) days from SB's notice of its determination
that the APPROVED PRODUCT(s) is nonconforming or from such notice given by the
independent testing laboratory under Paragraph 10.04. EPITOPE's credit to SB
for the nonconforming APPROVED PRODUCT(s) shall not be due until sixty (60)
days after receipt of SB's request for replacement APPROVED PRODUCT(s), or
final determination whether the APPROVED PRODUCT(s) in question was
nonconforming, if later. If there is outstanding credit to SB upon
termination of this AGREEMENT, EPITOPE will reimburse to SB by check the
amount of such credit within thirty (30) days after this AGREEMENT is
terminated.
10.03 SB's failure to notify EPITOPE in accordance with Paragraph 10.02
of a failure to meet SPECIFICATIONS shall constitute acceptance of such
APPROVED PRODUCT(s).
10.04 If EPITOPE and SB do not agree on whether APPROVED PRODUCT(s) meets
the SPECIFICATIONS the matter will be submitted for testing to an independent
testing laboratory acceptable to both parties. The determination of such
independent laboratory will be binding on both parties. The cost of the
independent testing laboratory shall be borne by the party whose testing
results were in error.
10.05 EPITOPE and SB will each promptly send to the other a copy of each
customer complaint received in connection with the APPROVED PRODUCT(s). Each
party will give the other immediate notice of any contemplated recall. Any
recall of APPROVED PRODUCT(s) other than that PRODUCT sold by EPITOPE in the
EPITOPE MARKET SEGMENTS will be handled by SB in accordance with its recall
procedures. EPITOPE and SB will cooperate in any recall. In the event
APPROVED PRODUCT(s) is recalled for medical or safety reasons due to the
negligence or willful misconduct of EPITOPE, EPITOPE shall take back any trade
inventory and/or APPROVED PRODUCT(s) in consumers possession so affected and
refund SB's purchase price of such APPROVED PRODUCT(s). EPITOPE will pay any
(including SB's) recall costs, as well as damages and settlements, to the
extent they result from EPITOPE's negligence or willful misconduct. In the
event an APPROVED PRODUCT(s) is recalled for any reasons due to the negligence
or willful misconduct of SB, SB shall take back any trade inventory and/or
APPROVED PRODUCT(s) in consumer's possession so affected, and pay any
royalties due EPITOPE on the sale of all recall APPROVED PRODUCT(s) previously
sold to SB. SB will pay any (including EPITOPE's) recall costs, as well as
damages and settlements to the extent they result from SB's negligence or
willful misconduct. For any recall due to reasons other than the negligence
of willful misconduct of either party, each party shall be responsible for its
costs, damages and settlements related to such recalls provided, however,
EPITOPE, at SB's request, will replace all trade inventory taken back or
destroyed by SB as a result of such recall at no profit, charging SB only the
costs of materials and direct labor associated with such replacement APPROVED
PRODUCT(s). Further, EPITOPE agrees that no royalties shall be due to EPITOPE
on the sale of such replacement APPROVED PRODUCT(S) by SB. Under no
circumstances shall either party enter into an agreement or settlement with a
third party regarding recall which binds or purports to bind the other party
without the other party's prior written consent, which shall not be
unreasonably withheld.
10.06 If EPITOPE fails to supply acceptable replacement APPROVED
PRODUCT(s) within sixty (60) days of receipt from SB of its written notice
pursuant to Paragraph 10.02 that such APPROVED PRODUCT(s) has not met the
written SPECIFICATIONS in effect at the time of shipment to SB, or notice
given by the independent testing laboratory under Paragraph 10.04, SB shall
have the right to manufacture or have manufactured such quantities of APPROVED
PRODUCT(s) as to meet its requirements until such time as EPITOPE gives SB
written assurances that EPITOPE is able to supply replacement conforming
APPROVED PRODUCT(s). Any APPROVED PRODUCT(s) that is manufactured by SB in
accordance with this Paragraph will not be subject to any royalty otherwise
due EPITOPE. EPITOPE shall reimburse SB for all reasonable incremental costs
incurred by SB if it manufactures APPROVED PRODUCT(s). SB shall keep
complete and accurate records of all such costs incurred by SB in the
manufacture of the APPROVED PRODUCT(s) for a minimum of two (2) years. Said
records shall be open during reasonable business hours to a certified public
accountant selected by EPITOPE, who shall at EPITOPE's expense have access to
all records deemed by such accountant as reasonably necessary in verifying for
EPITOPE not more often than once each calendar year (unless errors are found)
such costs incurred by SB.
10.07 Upon reasonable prior written notice outlining the scope of the
inspection and personnel involved, SB shall have the right to inspect
EPITOPE's manufacturing facilities used in the production of APPROVED
PRODUCT(s) on an annual basis, during normal business hours, to determine
compliance with the Act and GMP's.
10.08 EXCEPT AS EXPRESSLY PROVIDED HEREIN, EPITOPE MAKES NO EXPRESS OR
IMPLIED WARRANTIES OF ANY KIND, AND FURTHER EXPRESSLY DISCLAIMS THE WARRANTY
OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
EPITOPE HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY OTHER
THAN AS PROVIDED HEREIN. THE WARRANTY REFERRED TO IN PARAGRAPH 10.01 DOES NOT
EXTEND TO ANY PRODUCT(S) THAT IS (A) DAMAGED, MODIFIED, OR ALTERED ONCE
OUTSIDE EPITOPE'S POSSESSION, (B) NOT STORED IN ACCORDANCE WITH THE APPROVED
PACKAGING AND LABELING OR (C) TREATED WITH ABUSE, NEGLIGENCE OR IN ANY
IMPROPER MANNER. EXCEPT AS STATED IN PARAGRAPH 10.05 AND ARTICLE 18, IF SO
TREATED BY EPITOPE, SB'S RIGHT TO REPLACEMENT OF NON-CONFORMING PRODUCT(S)
PURSUANT TO PARAGRAPH 10.02 SHALL BE ITS EXCLUSIVE REMEDY FOR BREACH OF THE
FOREGOING WARRANTY. EPITOPE SHALL NOT, IN ANY EVENT, BE LIABLE TO SB FOR ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES UNDER ANY LEGAL OR
EQUITABLE THEORY WITH RESPECT TO THE BREACH OF ANY WARRANTY MADE TO SB
REGARDING THE PRODUCT(S).
11. TERM AND TERMINATION
11.01 Unless otherwise terminated, this AGREEMENT shall expire in each
country of the TERRITORY upon the later of (a) the expiration, lapse or
invalidation of the last remaining PATENT in such country; or (b) fifteen (15)
years from the date of LAUNCH in such country of the last APPROVED PRODUCT
marketed by SB. The AGREEMENT shall expire in its entirety upon its
expiration in all of the countries of the TERRITORY under this provision.
11.02 (a) SB's royalty obligations for a particular APPROVED PRODUCT
under Paragraph 5.03 in each country of the TERRITORY shall expire upon the
expiration or invalidation of the last remaining PATENT in such country which
claims the APPROVED PRODUCT. Expiration of SB's royalty obligations for a
particular APPROVED PRODUCT under this provision shall not preclude SB from
continuing to market such APPROVED PRODUCT and to use KNOW-HOW in such country
without further royalty payments to EPITOPE, except as otherwise provided by
Paragraph 5.07(a) and 11.02(b).
(b) Except as otherwise provided by Paragraph 5.05, SB's royalty
obligations for a particular APPROVED PRODUCT under Paragraph 5.07(a) in each
country of the TERRITORY shall commence upon the date of LAUNCH of such
APPROVED PRODUCT in such country and shall expire upon the expiration of the
earlier of (i) fifteen (15) years from the date of LAUNCH of such APPROVED
PRODUCT in such country, or (ii) in any country which is a member state of the
EC when all KNOW-HOW used by SB in the making, using or selling of such
APPROVED PRODUCT has become publicly known other than by the action of SB or
an undertaking connected with SB. Expiration of SB's royalty obligations for
a particular APPROVED PRODUCT under this provision shall not preclude SB from
continuing to market such APPROVED PRODUCT and to use KNOW-HOW in such country
without further royalty payments to EPITOPE.
(c) EPITOPE shall have no right to market a particular APPROVED PRODUCT
or to use such associated KNOW-HOW in a particular country of the TERRITORY
until such time as SB has no further royalty obligations to EPITOPE under
Article 5 with respect to such APPROVED PRODUCT in such country except as
otherwise specifically provided in this AGREEMENT.
11.03 If either party materially fails or neglects to perform its
obligations set forth in this AGREEMENT and if such default is not corrected
within sixty (60) days after receiving written notice from the other party
with respect to such default, such other party shall have the right to
terminate this AGREEMENT by giving written notice to the party in default
provided the notice of termination is given within six (6) months of the
notification of the default and prior to correction of the default.
11.04 SB may terminate this AGREEMENT with respect to any APPROVED
PRODUCT in any country in the TERRITORY by giving EPITOPE at least thirty (30)
days written notice thereof based on a reasonable determination by SB, using
the same standards SB would use in assessing whether or not to continue
development and marketing of a product of its own making, that the patent,
medical/scientific, technical, regulatory or commercial profile of such
APPROVED PRODUCT does not justify continued development or marketing of such
APPROVED PRODUCT in such country, and such APPROVED PRODUCT shall thereafter
be designated as an EXCLUDED PRODUCT with respect to that particular country.
Termination of this AGREEMENT with respect to any APPROVED PRODUCT in any
country in the TERRITORY under this provision shall terminate all licenses
granted to SB in such country under Article 4 with respect to such APPROVED
PRODUCT with full reversion to EPITOPE of all EPITOPE's interest and rights in
PATENTS and KNOW-HOW in such country to such APPROVED PRODUCT, except as
otherwise provided in Article 7. Termination of this AGREEMENT with respect
to all APPROVED PRODUCTS in all countries of the TERRITORY shall effectively
terminate this AGREEMENT. In the event SB terminates this AGREEMENT with
respect to a particular APPROVED PRODUCT in a particular country in the
TERRITORY in accordance with this Paragraph 11.04, EPITOPE shall make a
reasonable effort to sell, use or otherwise dispose of any inventory held by
EPITOPE for such APPROVED PRODUCT for such country as a result of EPITOPE's
obligations under Paragraph 9.05, provided that, after EPITOPE has exhausted
such efforts, SB shall purchase at current prices any such remaining
forecasted inventory of such APPROVED PRODUCT for such country which had at
least [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] of the then current expiration dating at the time SB gave EPITOPE
notice in accordance with this Paragraph 11.04.
11.05 Either party may terminate this AGREEMENT if, at any time, the
other party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver
or trustee of the party or of its assets, or if the other party proposes a
written agreement of composition or extension of its debts, or if the other
party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, or if the other party shall propose or be
a party to any dissolution or liquidation, or if the other party shall make an
assignment for the benefit of creditors.
11.06 Notwithstanding the bankruptcy of EPITOPE, or the impairment of
performance by EPITOPE of its obligations under this AGREEMENT as a result of
bankruptcy or insolvency of EPITOPE, SB shall be entitled to retain the
licenses granted herein, subject to EPITOPE's rights to terminate this
AGREEMENT for reasons other than bankruptcy or insolvency as expressly
provided in this AGREEMENT, and subject to performance by SB of its
preexisting obligations under this AGREEMENT. Notwithstanding the bankruptcy
of SB, or the impairment of performance by SB of its obligations under this
AGREEMENT as a result of bankruptcy or insolvency of SB, EPITOPE shall be
entitled to retain the licenses granted herein, subject to SB's rights to
terminate this AGREEMENT for reasons other than bankruptcy or insolvency as
expressly provided in this AGREEMENT, and subject to performance by EPITOPE of
its preexisting obligations under this AGREEMENT.
11.07 All rights and licenses granted under or pursuant to this AGREEMENT
by EPITOPE to SB, and by SB to EPITOPE, are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to "intellectual property" as defined under Section 101(52) of the U.S.
Bankruptcy Code. The parties agree that each party, as a licensee of such
rights under this AGREEMENT, shall retain and may fully exercise all of its
rights and elections under the U.S. Bankruptcy Code, subject to performance by
the licensee of its preexisting obligations under this AGREEMENT. The parties
further agree that, in the event of the commencement of a bankruptcy
proceeding by or against the licenser under the U.S. Bankruptcy Code, the
licensee shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to the licensee (a) upon any such commencement of a
bankruptcy proceeding upon written request therefor by the licensee, unless
the licenser elects to continue to perform all of its obligations under this
AGREEMENT, or (b) if not delivered under (a) above, upon the rejection of this
AGREEMENT by or on behalf of the licenser upon written request therefor by the
licensee, provided, however, that upon the licenser's (or its successor's)
written notification to the licensee that it is again willing and able to
perform all of its obligations under this AGREEMENT, the licensee shall
promptly return all such tangible materials to the licenser, but only to the
extent that the licensee does not require continued access to such materials
to enable the licensee to perform its obligations under this AGREEMENT.
12. RIGHTS AND DUTIES UPON TERMINATION
12.01 Upon termination of this AGREEMENT, EPITOPE shall have the right to
retain any sums already paid by SB hereunder, and SB shall pay all sums
accrued hereunder which are then due.
12.02 Upon termination of this AGREEMENT in its entirety or with respect
to any country under Article 11, SB shall notify EPITOPE of the amount of
APPROVED PRODUCT SB and its sublicensees and distributors then have on hand,
the sale of which would, but for the termination, be subject to royalty, and
SB and its sublicensees and distributors shall thereupon be permitted to sell
that amount of APPROVED PRODUCT provided that SB shall pay the royalty thereon
at the time herein provided for. In addition, EPITOPE shall make a reasonable
effort to sell, use or otherwise dispose of any inventory held by EPITOPE for
APPROVED PRODUCT for such country as a result of EPITOPE's obligations under
Paragraph 9.05(a), provided that, after EPITOPE has exhausted such efforts, SB
shall purchase at current prices any such remaining forecasted inventory of
APPROVED PRODUCT for such country which had at least [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of the then current
expiration dating at the time of termination.
12.03 Termination or expiration of this AGREEMENT shall terminate all
obligations, licenses and rights between the parties arising from this
AGREEMENT except those described in Articles 11, 12, 13, and 20 through 23 and
Paragraphs 14.02, 14.04, 18.06, 18.07, 18.08, and 18.09, as well as any other
provision which, by its terms, is stated to survive the termination or
expiration of this AGREEMENT. In addition, any other provision required to
interpret and enforce the parties' rights and obligations under this AGREEMENT
also shall survive to the extent required for the full observation and
performance of this AGREEMENT by the parties hereto.
12.04 Termination of this AGREEMENT under Paragraph 11.03 for a default
by EPITOPE shall terminate SB's obligation to make any remaining payments
required by Article 5 for the period effective as of the date EPITOPE received
written notice from SB with respect to such default if after the elapse of
sixty (60) days from receipt of such notice such default is not corrected.
Termination of this AGREEMENT with respect to all countries of the TERRITORY
under Paragraph 11.04 shall terminate SB's obligation to make any remaining
payments required by Article 5 for periods after the effective date of
termination.
12.05 If, as a result of the happening of any event described in
Paragraph 11.05 above, any tangible or intangible asset owned by EPITOPE
relating to APPROVED PRODUCT (e.g., intellectual property, machinery) is
offered for sale or license, in addition to other remedies in law or equity
which may be available to SB, SB shall have a right of first refusal with
respect to the asset, with the proviso that, to the extent the asset also
relates to subject matter other than APPROVED PRODUCT, SB's right of first
refusal shall extend only to so much of the asset as relates to APPROVED
PRODUCT. If, as a result of the happening of any event described in Paragraph
11.05 above, any tangible or intangible asset owned by SB relating to
EXCLUDED PRODUCT (e.g., intellectual property, machinery) is offered for sale
or license, in addition to other remedies in law or equity which may be
available to EPITOPE, EPITOPE shall have a right of first refusal with respect
to the asset, with the proviso that, to the extent the asset also relates to
subject matter other than EXCLUDED PRODUCT, EPITOPE's right of first refusal
shall extend only to so much of the asset as relates to EXCLUDED PRODUCT.
12.06 All rights to terminate, and rights upon termination, provided for
either party in this AGREEMENT are in addition to other remedies in law or
equity which may be available to either party.
13. EXCHANGE OF INFORMATION AND CONFIDENTIALITY
13.01 Promptly after the EFFECTIVE DATE, each party shall disclose to the
other and/or supply the other with KNOW-HOW and SB KNOW-HOW.
13.02 During the term of this AGREEMENT and for [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] thereafter, irrespective of
any termination earlier than the expiration of the term of this AGREEMENT,
EPITOPE and SB shall not use or reveal or disclose to THIRD PARTIES any
confidential information received from the other party or otherwise developed
by either party in the performance of activities in furtherance of this
AGREEMENT without first obtaining the written consent of the other party,
except as may be otherwise provided herein, or as may be required for purposes
of investigating, developing, manufacturing or marketing APPROVED PRODUCT or
EXCLUDED PRODUCT or for securing essential or desirable authorizations,
privileges or rights from governmental agencies, or as required to be
disclosed to a governmental agency or is necessary to file or prosecute patent
applications concerning APPROVED PRODUCT or EXCLUDED PRODUCT or to carry out
any litigation concerning APPROVED PRODUCT or EXCLUDED PRODUCT. This
confidentiality obligation shall not apply to such information which is or
becomes a matter of public knowledge, or is already in the possession of the
receiving party, or is disclosed to the receiving party by a THIRD PARTY
having the right to do so, or is subsequently and independently developed by
employees of the receiving party or AFFILIATES thereof who had no knowledge of
the confidential information disclosed. The parties shall take reasonable
measures to assure that no unauthorized use or disclosure is made by others to
whom access to such information is granted.
13.03 Nothing herein shall be construed as preventing a receiving party
from disclosing any information received from the other party to an AFFILIATE,
sublicensee or distributor of the receiving party, provided such AFFILIATE,
sublicensee or distributor has undertaken, in writing, a similar obligation of
confidentiality with respect to the confidential information.
13.04 All confidential information disclosed by one party to the other
shall remain the intellectual property of the disclosing party. In the event
that a court or other legal or administrative tribunal, directly or through an
appointed master, trustee or receiver, assumes partial or complete control
over the assets of a party to this AGREEMENT based on the insolvency or
bankruptcy of such party, the bankrupt or insolvent party shall promptly
notify the court or other tribunal (a) that confidential information received
from the other party under this AGREEMENT remains the property of the other
party and (b) of the confidentiality obligations under this AGREEMENT. In
addition, the bankrupt or insolvent party shall, to the extent permitted by
law, take all steps necessary or desirable to maintain the confidentiality of
the other party's confidential information and to insure that the court, other
tribunal or appointee maintains such information in confidence in accordance
with the terms of this AGREEMENT.
13.05 No public announcement or other disclosure to THIRD PARTIES
concerning the existence of or terms of this AGREEMENT shall be made, either
directly or indirectly, by any party to this AGREEMENT, except as may be
legally required or as may be required for recording purposes, without first
obtaining the approval of the other party and agreement upon the nature and
text of such announcement or disclosure. The party desiring to make any such
public announcement or other disclosure shall inform the other party of the
proposed announcement or disclosure in reasonably sufficient time prior to
public release, and shall provide the other party with a written copy thereof,
in order to allow such other party to comment upon such announcement or
disclosure. Each party agrees that it shall cooperate fully with the other
with respect to all disclosures regarding this AGREEMENT to the Securities and
Exchange Commission and any other governmental or regulatory agencies,
including requests for confidential treatment of proprietary information of
either party included in any such disclosure.
13.06 Neither SB nor EPITOPE shall submit for written publication or oral
presentation any manuscript, abstract or the like which includes data or other
information generated and provided by the other party or developed by either
party during the term of the AGREEMENT without first obtaining the prior
written consent of the other party, which consent shall not be unreasonably
withheld. The contribution of each party shall be noted in all publications
or presentations by acknowledgment or coauthorship, whichever is appropriate.
13.07 Nothing in this AGREEMENT shall be construed as preventing or in
any way inhibiting SB or EPITOPE from complying with statutory and regulatory
requirements governing the development, manufacture, use and sale or other
distribution of APPROVED PRODUCT in any manner which it reasonably deems
appropriate, including, for example, by disclosing to regulatory authorities
confidential or other information received from the other party or THIRD
PARTIES.
14. INVENTIONS, PATENTS AND PATENT PROSECUTION
14.01 During the term of the AGREEMENT, SB shall have the right to review
all such PATENTS and all proceedings related thereto and make recommendations
to EPITOPE concerning them and their conduct. EPITOPE agrees to keep SB
promptly and fully informed of the course of patent prosecution or other
proceedings involving such PATENTS including, without limitation, providing SB
with copies of substantive communications, search reports and third party
observations submitted to or received from patent offices within the
TERRITORY. SB shall provide such patent consultation to EPITOPE related to
such PATENTS at no cost to EPITOPE. SB shall hold all information disclosed
to it under this Paragraph as confidential subject to the provisions of
Article 13. SB shall have the right to assume responsibility for any such
PATENT or any part of any such PATENT which EPITOPE intends to abandon or
otherwise cause or allow to be forfeited provided that the claim of such
PATENT claims APPROVED PRODUCT.
14.02 Each party shall have and retain sole and exclusive title to all
inventions and discoveries which are made, conceived, reduced to practice and
generated solely by its employees or agents in the course of or as a result of
activities performed in furtherance of this AGREEMENT. Each party shall own a
fifty percent (50%) undivided interest in all inventions and discoveries made,
conceived, reduced to practice or generated jointly by employees or agents of
both parties in the course of or as a result of activities performed in
furtherance of this AGREEMENT. Each party shall own, and may fully exploit,
all of its rights and interests in PATENTS, SB PATENTS, EXCLUDED PRODUCT
PATENTS, KNOW-HOW, SB KNOW-HOW and EXCLUDED PRODUCT KNOW-HOW, without any
encumbrances to each other or any THIRD PARTY, except as otherwise
specifically set forth in this AGREEMENT.
14.03 Each party shall promptly notify the other upon the making,
conceiving or reducing to practice of any invention or discovery referred to
in Paragraph 14.02. With respect to any such invention,
(a) SB shall have the first right, using in-house or outside legal
counsel selected at SB's sole discretion, to prepare, file, prosecute,
maintain and extend patent applications and patents concerning all such
inventions and discoveries owned in whole by SB or jointly by SB and EPITOPE
in countries of SB's choice throughout the world with appropriate credit to
EPITOPE representatives, including the naming of such parties as inventors
where appropriate and in accordance with the relevant legal requirements, for
which SB shall bear the costs relating to such activities which occur at SB's
request or direction. SB shall solicit EPITOPE's advice and review of the
nature and text of such patent applications and important prosecution matters
related thereto in reasonably sufficient time prior to filing thereof, and SB
shall take into account EPITOPE's reasonable comments related thereto.
(b) EPITOPE shall have the first right, using in-house or outside legal
counsel selected at EPITOPE's sole discretion, to prepare, file, prosecute,
maintain and extend patent applications and patents concerning all such
inventions and discoveries owned in whole by EPITOPE in countries of EPITOPE's
choice throughout the world, for which EPITOPE shall bear the costs relating
to such activities which occur at EPITOPE's request or direction. EPITOPE
shall solicit SB's advice and review of the nature and text of such patent
applications and important prosecution matters related thereto in reasonably
sufficient time prior to filing thereof, and EPITOPE shall take into account
SB's reasonable comments related thereto.
(c) If SB, prior or subsequent to filing certain patent applications on
any inventions or discoveries which are owned in whole or in part by EPITOPE,
elects not to file, prosecute or maintain such patent applications or ensuing
patents or certain claims encompassed by such patent applications or ensuing
patents in any country of the TERRITORY, SB shall give EPITOPE notice thereof
within a reasonable period prior to allowing such patent applications or
patents or such certain claims encompassed by such patent applications or
patents to lapse or become abandoned or unenforceable, and EPITOPE shall
thereafter have the right, at its sole expense, to prepare, file, prosecute
and maintain patent applications and patents or divisional applications
related to such certain claims encompassed by such patent applications or
patents concerning all such inventions and discoveries in countries of its
choice throughout the world.
(d) If EPITOPE, prior or subsequent to filing certain patent
applications on any inventions or discoveries which are owned in whole by SB,
elects not to file, prosecute or maintain such patent applications or ensuing
patents or certain claims encompassed by such patent applications or ensuing
patents in any country of the TERRITORY, EPITOPE shall give SB notice thereof
within a reasonable period prior to allowing such patent applications or
patents or such certain claims encompassed by such patent applications or
patents to lapse or become abandoned or unenforceable, and SB shall thereafter
have the right, at its sole expense, to prepare, file, prosecute and maintain
patent applications and patents or divisional applications related to such
certain claims encompassed by such patent applications or patents concerning
all such inventions and discoveries in countries of its choice throughout the
world.
(e) The party filing patent applications for jointly owned inventions
and discoveries shall do so in the name of and on behalf of both SB and
EPITOPE. Each of EPITOPE and SB shall hold all information it presently knows
or acquires under this Paragraph 14.03 which is related to all such patents
and patent applications as confidential subject to the provisions of Article
13.
14.04 Each party on behalf of itself and its AFFILIATES, and the
directors, employees, officers, shareholders, agents, successors and assigns
of any of them, hereby waives any and all actions and causes of action, claims
and demands whatsoever, in law or equity of any kind it or they may have
against the other party and its AFFILIATES, and their officers, directors,
employees, shareholders, agents, successors and assigns, which may arise in
any way in the course of performance of its rights under Paragraph 14.03
except as a result of the other party's gross negligence, recklessness, or
willful misconduct.
14.05 Notwithstanding the provisions of Paragraph 14.03, each party
shall, at its own expense, provide reasonable assistance to the other party to
facilitate filing of all patent applications covering inventions referred to
in Paragraph 14.02 and shall execute all documents deemed necessary or
desirable therefor.
14.06 SB shall have the right but not the obligation to seek extensions
of the terms of PATENTS. At SB's request, EPITOPE shall either authorize SB
to act as EPITOPE's agent for the purpose of making any application for any
extensions of the term of PATENTS and provide reasonable assistance therefor
to SB or shall diligently seek to obtain such extensions or SPC's in either
event, at EPITOPE's expense.
14.07 At SB's request, EPITOPE shall seek to obtain SPC's or authorize SB
to obtain SPC's on EPITOPE's behalf. Where SB holds a relevant Marketing
Authorization, SB shall at its sole discretion provide to EPITOPE a copy of
said Marketing Authorization and any information necessary for the purpose of
obtaining an SPC.
15. PATENT LITIGATION
15.01 In the event of the institution of any suit by a THIRD PARTY
against EPITOPE, SB and/or their sublicensees for patent infringement
involving the manufacture, use, sale, distribution or marketing of APPROVED
PRODUCT or EXCLUDED PRODUCT anywhere in the TERRITORY, the party sued shall
promptly notify the other party in writing. SB shall have the right but not
the obligation to defend such suit at its own expense. If SB does not
commence a defense of such suit within ninety (90) days after it received such
written notice, EPITOPE, after notifying SB in writing, shall be entitled to
defend such suit at EPITOPE's expense. EPITOPE and SB shall assist one
another and cooperate in any such litigation at the other's reasonable request
without expense to the requesting party. This paragraph shall not prevent
Epitope from timely filing a response to avoid a default in such suit. The
party which is not defending a suit may retain counsel to participate in the
defense at its own expense.
15.02 In the event that EPITOPE or SB becomes aware of actual or
threatened infringement of a PATENT and/or SB PATENT related to APPROVED
PRODUCT or EXCLUDED PRODUCT, anywhere in the TERRITORY, that party shall
promptly notify the other party in writing. SB shall have the first right but
not the obligation to bring, at its own expense, an infringement action or
file any other appropriate action or claim directly related to infringement of
a PATENT and/or SB PATENT, wherein such infringement relates to APPROVED
PRODUCT or EXCLUDED PRODUCT, against any THIRD PARTY and to use EPITOPE's name
in connection therewith and to include EPITOPE's name as a party thereto. If
SB does not commence a particular infringement action within ninety (90) days
after it received such written notice, EPITOPE after notifying SB in writing,
shall be entitled to bring such infringement action or any other appropriate
action or claim at its own expense and to use SB's name in connection
therewith and to include SB's name as a party thereto. The party conducting
such action shall have full control over its conduct, including settlement
thereof. In any event, EPITOPE and SB shall assist one another and cooperate
in any such litigation at the other's request without expense to the
requesting party.
15.03 EPITOPE and SB shall recover their respective actual out-of-pocket
expenses, or equitable proportions thereof, associated with any litigation or
settlement thereof from any recovery made by any party. [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
15.04 The parties shall keep one another informed of the status of their
respective activities regarding any litigation or settlement thereof
concerning APPROVED PRODUCT.
16. TRADEMARKS AND TRADE NAMES
16.01 Except as otherwise provided in Paragraph 16.04, SB shall be
responsible for the selection of all trademarks and trade names which are
employed in connection with any APPROVED PRODUCT promoted and sold to the SB
MARKET SEGMENTS. SB shall be responsible for registration and maintenance of
all such trademarks and trade names, and, in those countries where recordation
is required, SB shall be recorded as the registered user of such trademarks.
Nothing in this AGREEMENT shall be construed as a grant of rights, by license
or otherwise, to EPITOPE to use such trademarks and trade names or any other
trademarks and trade names owned by SB for any purpose. SB shall own such
trade names and trademarks and shall retain such ownership upon termination of
this AGREEMENT.
16.02 EPITOPE shall be responsible for the selection of all trademarks
and trade names which are employed in connection with any APPROVED PRODUCT
promoted and sold to the EPITOPE MARKET SEGMENTS. EPITOPE shall be
responsible for registration and maintenance of all such trademarks and trade
names, and, in those countries where recordation is required, EPITOPE shall be
recorded as the registered user of such trademarks. Nothing in this AGREEMENT
shall be construed as a grant of rights, by license or otherwise, to SB to use
such trademarks and trade names or any other trademarks and trade names owned
by EPITOPE for any purpose. EPITOPE shall own such trade names and trademarks
and shall retain such ownership upon termination of this AGREEMENT.
16.03 Nothing in this AGREEMENT shall be construed as a grant of rights,
by license or otherwise, to either party, to use the name of the other party
or any entity affiliated therewith for any purpose whatsoever except as may
otherwise be expressly provided for in this AGREEMENT.
16.04 (a) SB shall have an option to a license to use EPITOPE's
proprietary trademark OraSure in connection with APPROVED PRODUCT in its
MARKET SEGMENTS in the TERRITORY, provided that SB exercises the option by
giving written notice to EPITOPE thereof no later than four (4) months after
the EFFECTIVE DATE, and in such case SB shall enter into an appropriate
exclusive license and right to use the OraSure trademark in each country of
the TERRITORY for the term of this AGREEMENT and after its expiration in
accordance with Paragraph 11.01, in connection with the marketing and
promotion of APPROVED PRODUCT as contemplated by this AGREEMENT, provided
that:
(i) In consideration for such exclusive license, SB agrees
to obtain and/or maintain registration of the OraSure trademark at
SB's sole expense in the name of EPITOPE in each country of the
TERRITORY in which such trademark is legally available, is not
subject to actual confusion in the market with any other trademark,
and does not infringe another's trademark. SB shall not be
obligated to use such trademark in any such country in which such
trademark is not legally available, is subject to actual confusion
in the market with any other trademark, or infringes another's
trademark. The consideration outlined in this Paragraph 16.04 shall
be SB's total financial remuneration obligation to EPITOPE for the
exclusive license.
(ii) SB shall submit representative APPROVED PRODUCT
promotional materials employing the OraSure trademark to EPITOPE for
EPITOPE's reasonable approval upon their first use and thereafter
upon any change or addition to the previously approved promotional
materials and as may be required under applicable law to maintain
the validity of such trademark.
(iii) Except in the event of the expiration of the AGREEMENT
in a country of the TERRITORY in accordance with Paragraph 11.01,
SB's right to use the OraSure trademark will continue on a per
country basis as long as SB shall market any product(s) in that
country of the TERRITORY in which SB's license rights to APPROVED
PRODUCT are terminated in accordance with this AGREEMENT.
(b) In the event that SB shall elect to use the OraSure trademark in
the manner provided in Paragraph 16.04(a), the following shall apply:
(i) The ownership and all goodwill from the use of the
OraSure trademark in each country of the TERRITORY shall vest in and
inure to the benefit of EPITOPE.
(ii) For as long as SB is permitted to use the OraSure
trademark in connection with APPROVED PRODUCT in any country of the
TERRITORY in accordance with this AGREEMENT, EPITOPE shall not
permit the OraSure trademark to be used by any THIRD PARTY in
connection with APPROVED PRODUCT in any country outside of the
TERRITORY, in order to avoid potential liability issues, except to
the extent that regulatory requirements or local laws may require a
uniform trademark to be used in such territory. Notwithstanding the
foregoing, EPITOPE shall be permitted to use, and may permit THIRD
PARTIES to use, its ORASURE trademark in the EXCLUDED TERRITORY and
EPITOPE MARKET SEGMENTS that exist on the EFFECTIVE DATE.
(iii) Nothing in this AGREEMENT shall be construed as a grant
of rights, by license or otherwise, to SB to use the OraSure
trademark or any other trademarks owned by EPITOPE for any purpose
except as otherwise specifically provided in this AGREEMENT.
16.05 The parties shall meet within six months to discuss the feasibility
of transferring the ORASURE trademark in EPITOPE MARKET SEGMENTS in the U.S.
and Canada to SB.
17. STATEMENTS AND REMITTANCES
17.01 SB shall keep, and shall require its AFFILIATES and sublicensees to
keep, complete and accurate records of all sales and manufacturing costs, if
any, of APPROVED PRODUCT under the licenses granted herein. EPITOPE shall
have the right, at EPITOPE's expense, through a certified public accountant or
like person reasonably acceptable to SB, to examine such records during
regular business hours during the life of this AGREEMENT and for twelve (12)
months after the earlier of its termination or the last sale of APPROVED
PRODUCT by SB subject to the royalty obligations outlined in Article 5;
provided, however, that such examination shall not take place more often than
once a year, except such examination may occur more frequently only when the
immediate previous examination has revealed material errors, and shall not
cover such records for more than the preceding two (2) years and provided
further that such accountant shall report to EPITOPE only as to the accuracy
of the royalty statements and payments.
17.02 Within sixty (60) days after the close of each calendar quarter, SB
shall deliver to EPITOPE a true accounting of all APPROVED PRODUCT sold by SB,
its AFFILIATES and its sublicensees during such quarter and shall, at the same
time, pay all royalties due. Such accounting shall show sales on a country-
by-country and APPROVED PRODUCT-by-APPROVED PRODUCT basis, and such accounting
shall state the NET SALES subject to royalty under Article 5, the calculation
of royalties with respect thereto, and shall separately show the calculation
of all adjustments thereto.
17.03 Any tax paid or required to be withheld by SB on account of
royalties payable to EPITOPE under this AGREEMENT shall be deducted from the
amount of royalties otherwise due. SB shall secure and send to EPITOPE
written proof of any such taxes withheld and paid by SB or its sublicensees
for the benefit of EPITOPE in a form sufficient to satisfy the United States
Internal Revenue Service.
17.04 All royalties due under this AGREEMENT shall be payable in U.S.
dollars. If governmental regulations prevent remittances from a country of
the TERRITORY to any other country with respect to sales made in that country,
the obligation of SB to pay royalties on sales in that country shall be
suspended until such remittances are possible, and once they are possible, SB
shall pay EPITOPE any back royalties which may be owed. Alternatively,
EPITOPE shall have the right, upon giving written notice to SB, to receive
payment in that country in local currency.
17.05 Monetary conversions from the currency of a foreign country, in
which APPROVED PRODUCT is sold, into United States currency shall be
calculated at the actual average rates of exchange for the year as used by SB
in producing its annual accounts, as confirmed by SB's auditors.
17.06 (a) EPITOPE shall keep and require its licensees to keep complete
and accurate records of all sales of EXCLUDED PRODUCT under Article 7. SB
shall have the right, at SB's expense, through a certified public accountant
or like person reasonably acceptable to EPITOPE, to examine such records
during regular business hours during the duration of EPITOPE's royalty
obligation to SB under Article 7 and for twelve (12) months after its
termination; provided, however, that such examination shall not take place
more often than once a year, except such examination may occur more frequently
only when the immediate previous examination has revealed material errors, and
shall not cover such records for more than the preceding two (2) years and
provided further that such accountant shall report to SB only as to the
accuracy of the royalty statements and payments.
(b) Within sixty (60) days after the close of each calendar quarter,
EPITOPE shall deliver to SB a true accounting of all EXCLUDED PRODUCT sold by
EPITOPE and its licensees under Article 7 during such quarter and shall at the
same time pay all royalties due. Such accounting shall show sales on a
country-by-country and EXCLUDED PRODUCT-by-EXCLUDED PRODUCT basis, and such
accounting shall state the EPITOPE NET SALES subject to royalty under Article
7, the calculation of royalties with respect thereto, and shall separately
show the calculation of all adjustments thereto.
(c) Any tax paid or required to be withheld by EPITOPE on account of
royalties payable to SB under Article 7 shall be deducted from the amount of
royalties otherwise due. EPITOPE shall secure and send to SB written proof of
any such taxes withheld and paid by EPITOPE or its sublicensees for the
benefit of SB in a form sufficient to satisfy the United States Internal
Revenue Service.
(d) All royalties due under Article 7 shall be payable in U.S. dollars.
If governmental regulations prevent remittances from a country of the
TERRITORY to any other country with respect to sales made in that country, the
obligation of EPITOPE to pay royalties on sales in that country shall be
suspended until such remittances are possible, and once they are possible,
EPITOPE shall pay SB any back royalties which may be owed. Alternatively, SB
shall have the right, upon giving written notice to EPITOPE, to receive
payment in that country in local currency for APPROVED PRODUCT.
(e) Monetary conversions from the currency of a foreign country in
which APPROVED PRODUCT is sold, into United States currency, shall be made at
the foreign exchange selling rates for trading among banks in amounts of one
million ($1,000,000) or more as shown in the Wall Street Journal or comparable
source for the last business day of the calendar quarter for which the
royalties are being paid. If there is no such rate, the conversion shall be
made at the rate for such remittances on that date as certified by Citibank,
N.A., New York, New York, U.S.A.
18. WARRANTIES, REPRESENTATIONS, INDEMNIFICATIONS AND INSURANCE
18.01 As of the EFFECTIVE DATE, EPITOPE warrants that, to the best of its
belief and knowledge, it owns the entire right and title to the extent of its
ownership interest in PATENTS and KNOW-HOW, or has the right to grant the
license outlined in Article 4 with respect to PATENTS and KNOW-HOW, and has
the right to enter into this AGREEMENT. EPITOPE further warrants that there
is nothing in any THIRD PARTY agreement EPITOPE has entered into as of the
EFFECTIVE DATE which, in any way, will limit EPITOPE's ability to perform all
of the obligations undertaken by EPITOPE hereunder, including, but not limited
to the legal cause of action known as Epitope, Inc. Securities Litigation,
Civ. No. 92-759-RE, or which grants any ownership interest to any THIRD PARTY
to any APPROVED PRODUCTS, PATENTS or KNOW-HOW. Furthermore, with respect to
all of the countries of the TERRITORY, including, but not limited to, the
countries of [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION], in the event any such countries shall be part of the written list
to be provided to EPITOPE by SB under Paragraph 8.01, EPITOPE warrants and
represents that EPITOPE is able to grant the license to SB outlined in
Paragraph 4.01 in each such country. EPITOPE warrants that its distribution
agreement with [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] covering [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE COMMISSION] is terminated.
18.02 As of the EFFECTIVE DATE, EPITOPE represents and warrants that:
(a) There are no actions, suits, or proceedings pending, or, to the
knowledge of EPITOPE, threatened against EPITOPE or any subsidiary, EPITOPE's
properties, or its patents, in any court or before any governmental or
administrative agency, which could have a material adverse effect on the
ability of EPITOPE to perform its obligations under this Agreement.
(b) EPITOPE has never been a party to a proceeding in any court or
before any governmental or administrative agency involving a product liability
or other claim for damages asserting a defect in any EPITOPE product.
18.03 EPITOPE warrants that it has disclosed to SB the complete texts of
all PATENTS, as well as all information received concerning the institution or
possible institution of any interference, opposition, re-examination, reissue,
revocation, nullification or any official proceeding involving a PATENT
anywhere in the TERRITORY as of the EFFECTIVE DATE. Nothing in this AGREEMENT
shall be construed as a warranty that PATENTS are valid or enforceable or that
their exercise does not infringe any valid patent rights of THIRD PARTIES.
EPITOPE hereby represents that it has no present knowledge from which it can
be inferred that PATENTS are invalid or that their exercise would infringe
valid patent rights of THIRD PARTIES. A holding of invalidity or
unenforceability of any PATENT, from which no further appeal is or can be
taken, shall not affect any obligation already accrued hereunder.
18.04 EPITOPE acknowledges that, in entering into this AGREEMENT, SB has
relied upon information supplied by EPITOPE and information which EPITOPE has
caused to be supplied to SB by EPITOPE's agents and/or representatives,
pursuant to the existing Confidentiality Agreement between the parties (all of
such information being hereinafter referred to collectively as "Product
Information"), and EPITOPE warrants and represents that, to the best of its
belief and knowledge, based on the exercise of reasonable care, skill and
diligence, the Product Information is timely and accurate in all material
respects. EPITOPE further warrants and represents that, to the best of its
knowledge, based on the exercise of reasonable care, skill and diligence under
the circumstances, it has not, up through and including the EFFECTIVE DATE,
omitted to furnish SB with any information available to EPITOPE concerning
APPROVED PRODUCT or the transactions contemplated by this AGREEMENT, which
could be material to SB's decision to enter into this AGREEMENT and to
undertake the commitments and obligations set forth herein.
18.05 EPITOPE warrants and represents that, based on the exercise of
reasonable care, skill and diligence under the circumstances, it has no
present knowledge of the existence of any pre-clinical or clinical data or
information concerning APPROVED PRODUCT which EPITOPE has not disclosed to SB
as of the EFFECTIVE DATE which could materially influence SB's decision to
enter into this AGREEMENT.
18.06 Except as otherwise set forth in Paragraphs 18.07 and 18.08, SB
shall indemnify and hold harmless EPITOPE, its officers, directors,
shareholders, employees, subsidiaries, affiliates, partners, successors and
assigns from any loss, damage, or liability, including reasonable attorney's
fees, resulting from any THIRD PARTY claim, complaint, suit, proceeding or
cause of action against any of them arising out of or relating to (i) the
administration, utilization and/or ingestion of APPROVED PRODUCT distributed,
sold or otherwise provided by SB (or its permitted sublicensee), to the extent
the loss, damage, or liability is attributable to SB's conduct or omission,
and/or (ii) breach by SB of any of its representations, warranties or
covenants in this AGREEMENT, provided:
(a) SB shall not be obligated under this Paragraph if it is shown by
evidence acceptable in a court of law having jurisdiction over the subject
matter and meeting the appropriate degree of proof for such action, that the
injury was the result of the negligence or willful misconduct of any employee
or agent of EPITOPE;
(b) SB shall have no obligation under this Paragraph unless EPITOPE (i)
gives SB prompt written notice of any claim or lawsuit or other action for
which it seeks to be indemnified under this AGREEMENT, (ii) SB shall have full
authority and control over the defense, including settlement, of such claim or
lawsuit or other action, and (iii) EPITOPE cooperates fully with SB and its
agents in defense of the claims or lawsuit or other action; and
(c) EPITOPE shall have the right to participate in the defense of any
such claim, complaint, suit, proceeding or cause of action referred to in this
Paragraph at its own expense utilizing attorneys of its choice, provided,
however, that SB shall have full authority and control to handle any such
claim, complaint, suit, proceeding or cause of action, including any
settlement or other disposition thereof, for which EPITOPE seeks
indemnification under this Paragraph.
18.07 Except as otherwise set forth in Paragraphs 18.06 and 18.08,
EPITOPE shall indemnify and hold harmless SB, its officers, directors,
shareholders, employees, subsidiaries, affiliates, partners, successors and
assigns from any loss, damage, or liability, including reasonable attorney's
fees, resulting from any THIRD PARTY claim, complaint, suit, proceeding or
cause of action against any of them arising out of or relating to (i) the
administration, utilization and/or ingestion of APPROVED PRODUCT distributed,
sold or otherwise provided by EPITOPE (or its permitted sublicensee) to the
extent the loss, damage, or liability is attributable to EPITOPE's conduct or
omission, and/ or (ii) a breach by EPITOPE of any of its warranties,
representations or covenants in this AGREEMENT, provided:
(a) EPITOPE shall not be obligated under this Paragraph if it is shown
by evidence acceptable in a court of law having jurisdiction over the subject
matter and meeting the appropriate degree of proof for such action, that the
injury was the result of the negligence or willful misconduct of any employee
or agent of SB;
(b) EPITOPE shall have no obligation under this Paragraph unless (i) SB
gives EPITOPE prompt written notice of any claim or lawsuit or other action
for which it seeks to be indemnified under this AGREEMENT, (ii) EPITOPE shall
have full authority and control over the defense, including settlement, of
such claim or lawsuit or other action, and (iii) SB cooperates fully with
EPITOPE and its agents in defense of the claims or lawsuit or other action;
and
(c) SB shall have the right to participate in the defense of any such
claim, complaint, suit, proceeding or cause of action referred to in this
Paragraph at its own expense utilizing attorneys of its choice, provided,
however, that EPITOPE shall have full authority and control to handle any such
claim, complaint, suit, proceeding or cause of action, including any
settlement or other disposition thereof, for which SB seeks indemnification
under this Paragraph.
18.08 Notwithstanding the foregoing, SB and EPITOPE agree and understand
that, in the event of a claim, complaint, suit, proceeding or cause of action
arising out of or relating to the administration, utilization and/or ingestion
of APPROVED PRODUCT that was distributed or sold by one party and manufactured
by the other party or that otherwise involves both activities for which SB was
responsible and activities for which EPITOPE was responsible, unless one party
agrees to defend the other, each party shall bear costs of and may control its
own defense so long as allegations relating to that party's activities remain
unresolved, and the indemnification obligations of the parties set forth in
Paragraphs 18.06 and 18.07 shall depend upon the proof.
18.09 Immediately upon the first commercialization of the first APPROVED
PRODUCT in accordance with this AGREEMENT, and for a period of five (5) years
after the expiration of this AGREEMENT or earlier termination, each party
shall obtain and/or maintain, respectively, at its sole cost and expense,
product liability insurance in amounts, respectively, which are reasonable and
customary in the U.S. medical device industry for companies of comparable size
and activities, except that SB may satisfy this requirement through self-
insurance. Such product liability insurance shall insure against all
liability, including product liability, personal liability, physical injury or
property damage. Each party shall provide written proof of the existence of
such insurance or self-insurance to the other party upon request therefor.
Notwithstanding this Paragraph 18.09 or any other provision of this AGREEMENT,
EPITOPE shall maintain products liability insurance, including coverage of
indemnification obligation for THIRD PARTY claims pursuant to contract, with a
minimum limit of liability of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] per occurrence and in the aggregate annually.
If such products liability insurance is written on a 'claims made' basis,
EPITOPE shall maintain 'run-off coverage' for [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] years after the date of
expiration or termination of the AGREEMENT.
19. FORCE MAJEURE
19.01 If the performance of any part of this AGREEMENT by either party,
or of any obligation under this AGREEMENT, is prevented, restricted,
interfered with or delayed by reason of any cause beyond the reasonable
control of the party liable to perform, unless conclusive evidence to the
contrary is provided, the party so affected shall, upon giving written notice
to the other party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected
party shall use its reasonable best efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch
whenever such causes are removed. When such circumstances arise, the parties
shall discuss what, if any, modification of the terms of this AGREEMENT may be
required in order to arrive at an equitable solution.
20. GOVERNING LAW
20.01 This AGREEMENT shall be deemed to have been made in the state of
New York and its form, execution, validity, construction and effect shall be
determined in accordance with the laws of the state of New York, U.S.A.
21. DISPUTE RESOLUTION
21.01 Any dispute, controversy or claim arising out of or relating to
this AGREEMENT (hereinafter collectively referred to as "Dispute") shall be
attempted to be settled by the parties, in good faith, by submitting each such
Dispute to appropriate senior management representatives of each party in an
effort to effect a mutually acceptable resolution thereof.
21.02 Any significant controversy, claim, or dispute arising out of or
relating to this AGREEMENT or significant breach thereof not settled in
accordance with Paragraph 21.01 shall be resolved by binding arbitration.
Such arbitration shall take place in New York, New York and it shall proceed
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Within ten (10) days from the filing of the Demand
or Submission, or longer if the parties mutually agree, EPITOPE and SB shall
each select one arbitrator; the two arbitrators so appointed shall select and
appoint the third neutral arbitrator. Judgment upon the award rendered by
arbitrators may be entered in any court having jurisdiction thereof. Costs of
arbitration are to be divided by the parties in the following manner: EPITOPE
shall pay for the arbitrator it chooses, SB shall pay for the arbitrator it
chooses, and the costs of the third neutral arbitrator shall be divided
equally. All other costs shall be divided equally.
21.03 This paragraph shall not prevent a party from resort to a court of
competent jurisdiction solely for the purpose of seeking injunctive relief.
22. SEPARABILITY
22.01 In the event any portion of this AGREEMENT shall be held illegal,
void or ineffective, the remaining portions shall remain in full force and
effect.
22.02 If any of the terms or provisions of this AGREEMENT are in conflict
with any applicable statute or rule of law, then such terms or provisions
shall be deemed inoperative to the extent that they may conflict therewith and
shall be deemed to be modified to conform with such statute or rule of law.
22.03 In the event that the terms and conditions of this AGREEMENT are
materially altered as a result of Paragraphs 22.01 or 22.02, the parties will
renegotiate the terms and conditions of this AGREEMENT to resolve any
inequities.
23. WAIVER OF BREACH
23.01 The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect its rights at a
later time to enforce the same. No waiver by either party of any condition or
term in any one or more instances shall be construed as a further or
continuing waiver of such condition or term or of another condition or term.
24. ENTIRE AGREEMENT
24.01 This AGREEMENT, entered into as of the date written above,
constitutes the entire agreement between the parties relating to the subject
matter and supersedes all previous writings and understandings, including the
existing confidentiality agreement between the parties. All KNOW-HOW, other
confidential information or PATENTS disclosed under such confidentiality
agreement are deemed disclosed to the receiving party hereunder and are
governed by the terms hereof. No terms or provisions of this AGREEMENT shall
be varied or modified by any prior or subsequent statement, conduct or act of
either of the parties, except that the parties may amend this AGREEMENT by
written instruments specifically referring to and executed in the same manner
as this AGREEMENT.
24.02 This AGREEMENT restates, amends, and supersedes the DEVELOPMENT,
LICENSE, AND SUPPLY AGREEMENT dated as of February 21, 1995.
25. NOTICES
25.01 Any notice required or permitted under this AGREEMENT shall be sent
by air mail, postage pre-paid, to the following addresses of the parties:
EPITOPE
EPITOPE, INC.
8505 SW Creekside Place
Beaverton, Oregon 97008, U.S.A.
Attention: President
SB
SMITHKLINE BEECHAM CONSUMER HEALTHCARE
100 Beecham Drive
Pittsburgh, Pennsylvania 15205
U.S.A.
Attention: Vice President, Business Development
copy to:
SMITHKLINE BEECHAM CORPORATION
One Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101
U.S.A.
Attention: Corporate Law-U.S. (FP2225)
SMITHKLINE BEECHAM CONSUMER HEALTHCARE
100 Beecham Drive
Pittsburgh, Pennsylvania 15205
U.S.A.
Attention: Legal Department
25.02 Any notice required or permitted to be given concerning this
AGREEMENT shall be effective upon receipt by the party to whom it is
addressed.
26. ASSIGNMENT
26.01 This AGREEMENT, including all of its covenants and obligations, and
the licenses herein granted shall be binding upon and inure to the benefit of
the successors in interest of the respective parties. Neither this AGREEMENT
nor any interest hereunder shall be assignable by either party without the
written consent of the other provided, however, that (a) SB may assign this
AGREEMENT or any SB PATENT or EXCLUDED PRODUCT PATENT owned by it to any
AFFILIATE, or to any corporation with which it may merge or consolidate or to
which it may transfer all or substantially all of its assets to which this
AGREEMENT relates, without obtaining the consent of EPITOPE; and (b) EPITOPE
may assign this AGREEMENT or any PATENT owned by it to any AFFILIATE, or to
any corporation with which it may merge or consolidate or to which it may
transfer all or substantially all of its assets to which this AGREEMENT
relates, without obtaining the consent of SB.
27. RECORDING
27.01 SB shall have the right, at any time, to record, register, or
otherwise notify this AGREEMENT in appropriate governmental or regulatory
offices anywhere in the TERRITORY, and EPITOPE shall provide reasonable
assistance to SB in effecting such recording, registering or notifying.
28. EXECUTION IN COUNTERPARTS
28.01 This AGREEMENT may be executed in any number of 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 parties, through their authorized officers, have
executed this AGREEMENT as of the date first written above.
SMITHKLINE BEECHAM plc
BY:
TITLE:
EPITOPE, INC.
BY:
TITLE:
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<CAPTION>
DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT
SMITHKLINE BEECHAM plc, L.P.--EPITOPE, INC.
APPENDIX A
PATENTS
ORAL DIAGNOSTIC TECHNOLOGY
Name of Patient/Applic. App. No. Country Status Description
----------------------- -------- ------- ------ -----------
<S> <C> <C> <C> <C>
Detection of Antibodies 640635 Australia Issued Column assay device
in Body Fluids for Diagnostic (foreign: Australia).
Testing (Nat. name: Foreign filing of U.S.
Avidin-Biotin Assisted Pat. App. 07/302,877
Immunoassay)
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Detection of Antibodies 90903466.2 EPO Issued Column assay device
in Body Fluids for Diagnostic 11/14/94 foreign: EPO). Foreign
Testing filing of U.S.
Pat. App. 07/302,877.
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Method of Treating Body Fluids
Testing Body Fluids for 07/192,015 U.S. Issued Method of treating
Diagnostic Testing 05/12/92 fluids for diagnostic
as 5.112,758. Testing (U.S.)
Maintenance
fee due
12/19/95.
Oral Rinse
Oral Immunoglobulin 69963/91 Australia Issued Oral rinse (foreign:
Collection for 08/02/93 Australia). Foreign
Immunoassay as 635997. filing of U.S. Pat.
Expires App. 07/486,415.
01/25/07
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Oral Rinse Immunoglobulin 07/410,401 U.S. Issued Oral rinse (U.S.).
Collection Kit for 06/11/91 Filed 09/21/89.
Immunoassay and Method Thereof as 5,022,409
OraQuick Oral Specimen Testing Device
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Oral Collection Device 07/935,845 U.S. Issued OraQuick device:
and Kit 08/23/94 treated pad (U.S.)
as 5,339,829.
</TABLE>
<TABLE>
<CAPTION>
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Name of Patient/Applic. App. No. Country Status Description
----------------------- -------- ------- ------ -----------
<S> <C> <C> <C> <C>
OraSure Oral Specimen Collection Device
Container for Immunoassay 07/863,756 U.S. Issued OraSure device:
with Frangible Nipple 08/10/93 container. Filed
as 5,234,001. 04/06/92 as a CIP of
U.S. Pat. App.
07/641,739.
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Oral Collection Device 07/641,739 U.S. Issued OraSure device:
and Kit or Immunoassay 04/14/92 as treated pad (U.S.)
5,103,836. Filed 01/15/91 as a
Maintenance CIP of U.S. Pat. App.
fee due 07/486,415.
10/14/95.
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
Oral Collection Device 08/026,217 U.S. Issued OraSure device:
and Kit for Immunoassay 08/08/94 untreated pad (U.S.).
as 5,335,673. Filed 04/08/92 as a
Filed 03/01/93. CIP of U.S. Pat. App.
07/865,054.
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT
SMITHKLINE BEECHAM plc, EPITOPE, INC.
APPENDIX B
BUNDLED PRODUCT ROYALTY CHART
<S> <C> <C>
SmithKline Beecham Clinical Royalty on Testing
Laboratories Customer Price to Service Total Exclusive
Prof. Market Segment Component of Customer Manufacturing Period
Price
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
</TABLE>
