<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
METRA BIOSYSTEMS, INC.
----------------------
(Exact Name of Registrant as specified in its charter)
0-26234
----------------------
Commission File Number
CALIFORNIA 33-0408436
- -------------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
265 NORTH WHISMAN ROAD, MOUNTAIN VIEW, CA 94043-3911
----------------------------------------------------
(Address of Registrant's principal executive offices)
(415) 903-9100
--------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
[ X ]Yes [ ] No.
The number of shares of the Registrant's common stock outstanding as of
April 30, 1997 was 12,611,938.
<PAGE>
METRA BIOSYSTEMS, INC. AND SUBSIDIARIES
INDEX
-----
PAGE NO.
--------
PART I. FINANCIAL INFORMATION 3
ITEM 1. FINANCIAL STATEMENTS 3
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997 AND JUNE 30, 1996 3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996 4
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1997 AND 1996 5
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND FACTORS THAT MAY AFFECT FUTURE RESULTS 9-11
PART II. OTHER INFORMATION 12
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURE 13
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
METRA BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
MARCH 31, JUNE 30,
1997 1996
----------- --------
(Unaudited) (A)
Current assets:
Cash and cash equivalents $ 15,916 $ 19,217
Securities available-for-sale, at market 13,386 26,283
Accounts receivable, net 1,342 1,266
Interest receivable 275 578
Inventories 1,052 1,040
Prepaid expenses and other current assets 200 249
-------- --------
Total current assets 32,171 48,633
Property and equipment, net 4,265 4,314
Securities available-for-sale, at market 12,027 6,747
Other assets, net 243 499
-------- --------
$ 48,706 $ 60,193
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 552 $ 407
Accounts payable 737 2,185
Accrued expenses 2,069 1,810
-------- --------
Total current liabilities 3,358 4,402
Capital lease obligations 1,721 1,367
-------- --------
Total liabilities 5,079 5,769
Shareholders Equity:
Preferred stock - -
Common stock 13 13
Capital in excess of par value of common stock 94,609 94,539
Notes receivable from shareholders (40) (90)
Deferred compensation (50) (79)
Foreign currency translation adjustment (12) 13
Unrealized loss on securities available-for-sale (93) (83)
Accumulated deficit (50,800) (39,889)
-------- --------
Total shareholders' equity 43,627 54,424
-------- --------
$ 48,706 $ 60,193
-------- --------
-------- --------
(A) Derived from audited financial statements at June 30, 1996
See accompanying notes to consolidated condensed financial statements.
3
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METRA BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- ---------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 1,710 $ 1,062 $ 4,392 $ 2,836
Partner revenues 62 178 274 1,854
---------- ---------- --------- ---------
Total revenues 1,772 1,240 4,666 4,690
Operating expenses:
Cost of product sales 741 764 3,023 2,152
Research and development 945 1,047 4,341 2,794
Sales and marketing 1,738 2,039 7,147 4,685
General and administrative 687 859 2,771 2,061
Acquired in-process research
and development -- 11,291 -- 11,291
---------- ---------- --------- ---------
Total operating expenses 4,111 16,000 17,282 22,983
---------- ---------- --------- ---------
Loss from operations (2,339) (14,760) (12,616) (18,293)
Interest income, net 500 342 1,705 1,202
---------- ---------- --------- ---------
Net loss $ (1,839) $ (14,418) $ (10,911) $ (17,091)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
Net loss per share $ (0.15) $ (1.40) $ (0.87) $ (1.73)
---------- ---------- --------- ---------
---------- ---------- --------- ---------
Weighted average shares used to compute
net loss per share 12,614,513 10,264,400 12,607,177 9,862,216
---------- ---------- --------- ---------
---------- ---------- --------- ---------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
METRA BIOSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Increase (decrease) in Cash and Cash Equivalents:
Net cash used in operating activities $ (10,644) $ (7,372)
Cash flows from investing activities:
Purchases of investment securities (18,284) (30,430)
Maturities and sales of investment securities 25,891 9,851
Purchases of property and equipment (883) (3,085)
Repayment of notes receivable from shareholders 50 59
--------- ---------
Net cash (used in) provided by investing activities 6,774 (23,605)
Cash flows from financing activities:
Proceeds from capital leases 848 1,922
Repayments of capital leases (349) (146)
Proceeds from issuance of common stock 70 32,222
--------- ---------
Net cash provided by financing activities 569 33,998
--------- ---------
Net increase (decrease) in cash and cash equivalents (3,301) 3,021
Cash and cash equivalents at beginning of period 19,217 2,317
--------- ---------
Cash and cash equivalents at end of period $ 15,916 $ 5,338
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Cash paid for interest $ 154 $ 56
Supplemental disclosure of noncash investing and
financing activities - conversion of mandatorily
redeemable preferred stock and common stock
warrant to common stock $ -- $ 23,260
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
METRA BIOSYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Metra Biosystems, Inc. ("Metra" or the "Company") was incorporated on
March 21, 1990. Since the commencement of operations the Company has been
engaged in the development and commercialization of diagnostic products for
the detection and management of metabolic bone diseases and disorders.
In December 1993, the Company incorporated a wholly-owned subsidiary,
Metra Biosystems (U.K.) Ltd., that is responsible for the commercialization
of Metra's products in Europe. In October 1995, a branch office of Metra
Biosystems (U.K.) Ltd. was opened in Milan, Italy. In January 1997, the
Company received a registration number to do business as Metra Biosystems
GmbH, a wholly-owned subsidiary located in Germany.
In January 1996, the Company acquired Osteo Sciences Corporation, now a
wholly-owned subsidiary, which is responsible for research and development of
the Company's ultrasound technology.
The accompanying unaudited consolidated condensed financial statements
have been prepared by the Company, pursuant to the rules and regulations of
the Securities and Exchange Commission, and reflect all adjustments,
consisting only of normal recurring adjustments, which, in the opinion of
management, are necessary for a fair statement of the results for the interim
periods presented. Operating results for the three and nine months ended
March 31, 1997 are not necessarily indicative of the results to be expected
for the year.
Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted pursuant to such rules
and regulations. It is suggested that these consolidated financial statements
be read in conjunction with the consolidated financial statements and the
notes thereto contained in the Company's Annual Report on Form 10-K, as
amended on Form 10-K/A, for the year ended June 30, 1996, previously filed
with the Securities and Exchange Commission.
NET LOSS PER SHARE
Net loss per share has been calculated based on the weighted average
number of shares outstanding. Common equivalent shares from stock options and
warrants have been excluded as their effect is anti-dilutive. In February
1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share, which is required to be adopted on December 31, 1997. At
that time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. There will be no impact on the Company
from the adoption of Statement No. 128.
6
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2. INVESTMENT SECURITIES
Investment securities which are classified as available-for-sale at
March 31, 1997 and June 30, 1996 include the following:
March 31, June 30,
1997 1996
-------- --------
(in thousands)
Fair Value
U.S. Government securities $ 7,496 $ 8,516
Mortgage-backed securities 6,208 12,132
Corporate bonds 11,506 12,174
-------- --------
25,210 32,822
Marketable equity securities 203 208
-------- --------
$ 25,413 $ 33,030
-------- --------
-------- --------
Cost
U.S. Government securities $ 7,499 $ 8,527
Mortgage-backed securities 6,219 12,148
Corporate bonds 11,538 12,188
-------- --------
25,256 32,863
Marketable equity securities 250 250
-------- --------
$ 25,506 $ 33,113
-------- --------
-------- --------
The cost and estimated fair value of securities available-for-sale as of
March 31, 1997 by contractual maturity, consisted of the following:
Adjusted Fair
Cost Value
-------- --------
Due in one year or less $ 8,476 $ 8,470
Due in one to four years 10,811 10,735
-------- --------
19,287 19,205
Mortgage-backed securities 6,219 6,208
-------- --------
$ 25,506 $ 25,413
-------- --------
-------- --------
3. INVENTORIES
Inventories consist of the following:
March 31, June 30,
1997 1996
--------- ---------
(in thousands)
Raw materials $ 290 $ 216
Work-in-process 187 --
Finished goods 575 824
------- -------
$ 1,052 $ 1,040
------- -------
------- -------
4. LEASE COMMITMENTS
In December 1996, the Company entered into a leasing arrangement to
finance $848,000 of equipment. As of March 31, 1997, all of the lease line
had been utilized. The lease is classified as a capital lease and payments
on the capital lease obligation extend to fiscal year 2001. The leasing
agreement includes negative covenants which require an irrevocable letter of
credit in the event of non-compliance with the covenants.
7
<PAGE>
5. ACQUISITION - OSTEO SCIENCES CORPORATION
On January 31, 1996, the Company purchased Osteo Sciences Corporation
("Osteo") for 541,072 shares of Metra Common Stock valued at approximately
$9,672,000 and options to purchase 19,343 shares of Metra Common Stock valued
at approximately $345,000. Additional costs associated with the transaction
along with net liabilities assumed were approximately $1,274,000. The
transaction was recorded using the purchase method of accounting and resulted
in a one-time write-off of $11,291,000 for acquired in-process research and
development during the quarter ended March 31, 1996.
6. SUBSEQUENT EVENT
In April 1997 the Company entered into a Co-Promotion Agreement with
Berlex Laboratories, Inc. ("Berlex") pursuant to which the Company will
compensate Berlex to conduct certain promotional activities and will pay
Berlex commissions based upon increased sales of the Company's products. The
Company also issued Berlex a warrant to purchase 413,233 shares of the
Company's Common Stock at a purchase price of $4.84 per share.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND FACTORS THAT MAY AFFECT FUTURE
RESULTS
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996
REVENUES
Product sales increased to $1,710,000 and $4,392,000 for the three and nine
months ended March 31,1997 as compared to $1,062,000 and $2,836,000, an
increase of 61% and 55%, respectively, for the corresponding periods of
fiscal 1996. The growth of product sales in the third quarter and first nine
months of fiscal 1997 over the comparable prior periods of fiscal 1996 was
principally due to an increased awareness and market acceptance of the
Company's products. The primary factors related to this was the establishment
of the Company's Italian sales office in October 1995, and increased market
awareness in the U.S. from the promotion of the Company's key products
following the U.S. Food and Drug Administration's clearance of these products
for clinical use in late 1995.
Partner revenues were $62,000 for the third quarter and $274,000 for the
first nine months of fiscal 1997, compared to $178,000 and $1,854,000 for the
corresponding periods of fiscal 1996, representing decreases of 65% and 85%,
respectively. The decrease in partner revenues for the quarter and nine month
period is primarily due to non-recurring milestone payments from corporate
partners which were included in partner revenue in the prior fiscal year.
PRODUCT COSTS AND EXPENSES
Cost of product sales were $741,000 for the third quarter and $3,023,000 for
the first nine months of fiscal 1997, as compared to $764,000 and $2,152,000
from the corresponding periods in the prior fiscal year. The decrease in the
third quarter from the prior year was primarily related to improved product
margins resulting from economies of scale and process improvements. For the
nine month period, the increases in product costs are primarily the result of
the product sales increases that have been realized over the corresponding
periods in the prior years. Costs of product sales for the nine months of
fiscal 1997 were 69% of product sales compared with 76% in fiscal 1996. The
Company believes that the historical fluctuations in the cost of product
sales were due to the initial production stages of several complex products
and the subsequent investments in process improvements. Management believes
that these investments will stabilize the quarterly fluctuations in the cost
of product sales and may yield slight improvements in the product margin.
Additional improvements can be realized but will be driven by the sales
volume and mix that the Company is able to achieve. However, there can be no
assurance that actual results will not be unfavorable in the foreseeable
future.
Research and development expenses for the third quarter and first nine months
of fiscal 1997 were $945,000 and $4,341,000, respectively, compared to
$1,047,000 and $2,794,000 from the corresponding periods in the prior fiscal
year. The third quarter decrease of 10% from the prior year was a direct
result of the cost containment efforts initiated late in the second quarter
of fiscal year 1997. The year-to-year spending increases for the nine month
period were related to increased product development and collaborative
programs as well as the on-going research costs of the Company's ultrasound
program which was initiated in January 1996 through the acquisition of Osteo
Sciences Corporation. The Company believes that research and development
expenses will show slight increases in the upcoming quarters.
Sales and marketing expenses were $1,738,000 and $7,147,000 for the third
quarter and first nine months of fiscal 1997, respectively, as compared to
$2,039,000 and $4,685,000 from the corresponding periods in the prior fiscal
year. The third quarter of fiscal 1996 marked the launch of broad based
marketing promotional programs for the Company's clinical use of
Pyrilinks-Registered Trademark--D. This included one-time expenses for
programs such as literature development and advertising, which is the primary
factor for the higher expenses in the third quarter of fiscal 1996 as
compared to fiscal 1997. The increases for the nine month period are
primarily attributable to increased
9
<PAGE>
personnel costs, sales expenses associated with physician education programs,
and spending increases in the international sales locations. The Company
believes that sales and marketing expenses will increase in subsequent
periods due to fees and potential commissions payable to Berlex Laboratories,
Inc. ("Berlex") in connection with the Co-Promotion Agreement entered into
between the Company and Berlex in April 1997.
General and administrative expenses were $687,000 and $2,771,000 for the
third quarter and first nine months of fiscal 1997, respectively, compared to
$859,000 and $2,061,000 from the corresponding periods in the prior fiscal
year. The decrease in the third quarter of fiscal 1997 is primarily due to
recruiting expenses and expenses associated with the acquisition of Osteo
incurred in the third quarter of fiscal 1996 that were not incurred in fiscal
1997. The increase for the nine month period is primarily due to increased
personnel costs as well as additional legal and consulting expenses necessary
to support the Company's expanded operations as compared with the same period
in the prior fiscal year.
NET INTEREST INCOME
Net interest income was $500,000 and $1,705,000 for the third quarter and the
first nine months of fiscal 1997, as compared to $342,000 and $1,202,000 from
the corresponding periods in the prior fiscal year. The increase is
primarily the result of increased cash resources available for investment
resulting from the Company's follow-on offering in April 1996.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and investment securities of $41.3
million at March 31, 1997. The Company's use of cash in operating activities
was $10.6 million for the nine months ended March 31, 1997 compared to $7.4
million for the corresponding period ended March 31, 1996. The increase in
cash usage was primarily due to the increased net operating loss for the
corresponding periods and, to a lesser extent, fluctuations in working
capital. Net cash received from financing activities for the first nine
months of fiscal 1997 was $569,000, which was primarily comprised of $848,000
of proceeds from a capital lease that was executed in December 1996 offset by
$349,000 of repayments of existing capital leases.
Net capital expenditures for the first nine months of fiscal 1997 were
$883,000, compared to $3,085,000 for the corresponding period in fiscal 1996.
This higher amount in 1996 was primarily due to leasehold improvements to a
new facility in support of the Company's expanded operations in Mountain
View, California.
In April 1997 the Company entered into a Co-Promotion Agreement with Berlex
under which the Company is obligated to pay Berlex a fee of $3,000,000 on
December 31, 1997 in consideration of promotional services rendered by Berlex
with respect to certain of the Company's products. In addition, future
commitment fees in fiscal year 1999 and fiscal year 2000 will be paid to
Berlex if specified minimum sales targets are achieved. The Company will use
a portion of its existing cash resources to make such fee payments when and
if they come due.
The Company's future capital requirements depend upon, among other things,
the pace of market acceptance of the Company's products, the costs of
research and development programs, the funding of clinical and regulatory
related studies, the expansion of marketing and selling activities, costs
involved in filing, prosecuting, enforcing, and defending patent claims, and
the time and costs associated with obtaining regulatory approvals for future
products. Funds may also be used for investments in, or acquisitions of,
complementary businesses, products or technologies, in expanding the
Company's manufacturing capacity or in improving its existing facilities.
Although the Company believes its current cash, cash equivalents and
investment securities will be sufficient to meet the Company's operating
expenses and capital requirements into fiscal 1999, the Company's future
liquidity and capital requirements will depend on the factors noted above,
among others. The Company may, however, seek additional equity or debt
financing to fund further expansion of its manufacturing capacity, or to fund
other projects or acquisitions. There can be no assurance that if it becomes
necessary to raise additional capital, that such capital will be available on
acceptable terms, if at all.
10
<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company commenced its marketing efforts in the United States upon
receiving 510(k) clearance for its key products in late 1995, and does not
anticipate significant revenues from clinical sales of its products in the
United States unless and until the results of its medical education efforts
are realized. Achieving increased sales growth and improved product margins
depends upon increased awareness and acceptance of the Company's products
among clinicians, the success of the Company's Co-Promotion Agreement with
Berlex Laboratories, Inc., adequate levels of third-party reimbursement for
clinical use of its diagnostic tests, the Company's ability to successfully
launch new products, continued sales growth of the Company's manual test
formats and successful market penetration of automated test formats by the
Company's corporate partners to the extent that this substantially increases
market demand versus conversion of existing manual kit business. There can be
no assurance the Company can successfully achieve any of the above items in a
timely manner or at all, and failure to do so could have a material adverse
effect on the Company's business, financial condition and results of
operations.
DISCLOSURE PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
THE STATEMENTS CONTAINED IN THE REPORT ON FORM 10-Q THAT ARE NOT PURELY
HISTORICAL ARE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACTION OF 1934, AS AMENDED INCLUDING, WITHOUT LIMITATION, STATEMENTS
REGARDING THE COMPANY'S FUTURE PRODUCT DEVELOPMENT AND COMMERCIALIZATION,
PRODUCT SALES AND OTHER REVENUES, MARKET OPPORTUNITIES AND ACCEPTANCE,
BELIEFS, EXPECTATIONS, GOALS, FINANCIAL PERFORMANCE, AND FUTURE STRATEGIES,
ALL OF WHICH ARE DEPENDENT ON CERTAIN RISKS AND UNCERTAINTIES THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THESE OR ANY
OTHER FORWARD LOOKING STATEMENTS MADE BY OR ON BEHALF OF THE COMPANY. THESE
RISKS AND UNCERTAINTIES INCLUDE THE UNCERTAINTY OF REALIZING INCREASED MARKET
AWARENESS AND ACCEPTANCE FOR THE COMPANY'S PRODUCTS, THE SUCCESS OF THE
COMPANY'S COLLABORATIVE RELATIONSHIPS, THE UNCERTAINTY OF OBTAINING ADEQUATE
LEVELS OF THIRD-PARTY REIMBURSEMENT FOR CLINICAL USE OF THE COMPANY'S
PRODUCTS, AND THE UNCERTAINTY AND VARIABILITY OF CONTINUING SALES GROWTH OF
THE COMPANY'S PRODUCTS. FOR A MORE DETAILED DISCUSSION OF THESE RISKS, SEE
THE RISK FACTORS LISTED IN THE COMPANY'S PROSPECTUS DATED APRIL 23, 1996 AND
IN THE COMPANY'S ANNUAL REPORT ON FORM-10K FOR THE YEAR ENDED JUNE 30, 1996.
11
<PAGE>
PART II. - OTHER INFORMATION
Item 1. - Legal Proceedings
None
Item 2. - Changes In Securities
With respect to the Company's currently outstanding Preferred Share
Purchase Rights, on January 17, 1997, the Board of Directors of the Company
approved an amendment of the Company's Preferred Shares Rights Agreement
dated as of August 21, 1996 between the Company and The First National Bank
of Boston (the "Rights Agreement") to increase the ownership threshold
required to trigger the Rights Agreement from 15% to 20%, as more fully set
forth in the Rights Agreement, and as amended on January 17, 1997. The
rights, privileges and preferences of the Company's Preferred Share Purchase
Rights are described in the Company's Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on August 22, 1996, as
amended on January 24, 1997.
Item 3. - Defaults Upon Senior Securities
None
Item 4. - Submission of Matters to a Vote of Securities Holders
None
Item 5. - Other Information
None
Item 6. - Exhibits and Reports on Form 8-K
a. Exhibits
* 10.16 Product Research and Development Agreement between the
Company and Sumitomo Pharmaceuticals Co., Ltd., dated
as of June 29, 1994.
* 10.20 International Distributor Agreement between the Company and
Amersham K.K., dated as of April 8, 1993.
27.1 Financial Data Schedule
b. Forms 8-K
The Company filed a Report on Form 8-K, dated January 23, 1997,
reporting the approval of an amendment to the Rights Agreement to
increase the ownership threshold required to trigger the Rights
Agreement from 15% to 20%.
------------------
* Refiled herewith in unredacted form following expiration of the period
for which confidential treatment had been granted by the Securities and
Exchange Commission.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Kurt E. Amundson May 14, 1997
- ------------------------------------- ------------
Kurt E. Amundson
Vice President and Chief Financial Officer
(duly authorized and principal financial and
principal accounting officer)
13
<PAGE>
EXHIBIT 10.16
PRODUCT RESEARCH AND DEVELOPMENT
AGREEMENT BETWEEN METRA BIOSYSTEMS, INC.
AND SUMITOMO PHARMACEUTICALS CO., LTD.
This Agreement is made as of June 29, 1994 between Metra Biosystems, Inc.,
265 N. Whisman Road, Mountain View, California 94043, U.S.A, ("METRA") and
Sumitomo Pharmaceuticals Co., Ltd., 2-8 Doshomachi 2-chome, Chuo-ku, Osaka, 541,
Japan ("SUMITOMO").
1. PRODUCTS COVERED BY AGREEMENT:
"TESTS" means diagnostic assay kits (including updates) in manual
microtiter plate format and automated instrument formats to be developed by
Metra for clinical (non-research) applications based on levels of insulin-like
growth factor binding protein-3 ("IGF-BP3") in serum and other bodily fluids.
Preliminary specifications for IGF-BP3 to be developed by Metra and marketed by
Sumitomo ("SPECIFICATIONS") are attached to this Agreement as EXHIBIT A and may
be modified by written agreement of Metra and Sumitomo.
2. DISTRIBUTION RIGHTS:
(a) Sumitomo will have the exclusive right to distribute (including the
right to appoint subdistributors) and market the Tests in Japan for use as
diagnostic assays.
(b) Metra is willing to discuss with Sumitomo non-exclusive distribution
and marketing rights for the Tests in the Republic of China (Taiwan), the
People's Republic of China and the Republic of Korea if and to the extent Metra
is permitted to do so contractually. Such distribution rights, if entered into
would be pursuant to the distribution agreements set forth in Section 13 below.
If granted, it is not intended that Sumitomo will make any additional payments
to Metra to acquire distribution and marketing rights for the Tests for these
three countries, but Sumitomo will make good effort to match marketing
commitments and transfer prices applicable to other distributors of the Tests in
these countries.
(c) If Sumitomo at any time declines interest in collaborating with Metra
to exert its best efforts to obtain regulatory approval and to market a Test,
then Sumitomo's rights to the such product shall revert to Metra. Sumitomo
shall have six months from date of completion of such product to inform Metra
whether or not it has interest.
3. DUTIES OF SUMITOMO:
Sumitomo will use reasonable diligence consistent with efforts related to
its own products to (i) perform necessary clinical trials for the Tests at
leading hospitals, (ii) apply for approval and registration of the Tests with
the Japan Ministry of Health and Welfare (the "MHW"), (iii) obtain insurance
reimbursement prices for the Tests, (iv) market and distribute the Tests once
approved, (v) not market or distribute competing tests that measure IGF-BP3
developed by Sumitomo or
<PAGE>
third parties (other than Metra); except the RIA kits of IGF-BP3 provided by
Mediagnost GmbH which Sumitomo has already developed and will distribute and
sell jointly with SRL Inc. in Japan under the existing contract between
Sumitomo and Mediagnost, provided, however that following launch by Sumitomo
of the Tests in Japan, Sumitomo will not advertise or promote any competing
tests that measure IGF-BP3, (vi) provide information to Metra on the
regulatory testing procedures (stability and others) which Metra needs to
perform to satisfy regulatory requirements and standard industry practice for
the Tests in Japan, and (vii) provide a copy of each complete registration
package, including supporting data, to Metra at the time of submission to the
MHW.
4. DUTIES OF METRA:
Metra will use reasonable diligence consistent with efforts related to its
own products to (a) keep Sumitomo informed on a regular basis (through written
progress reports and visits in the United States and Japan) of Metra's progress
in developing the Tests, (b) perform (and supply at no charge reasonable
quantities of sample Tests necessary to perform) all tests (such as stability
testing and performance testing) necessary for Sumitomo to obtain regulatory
approval to market the Tests in Japan based on Sumitomo's instructions,
(c) supply sample Tests for the initial evaluation by Sumitomo free of charge,
and (d) supply sample Tests for the clinical trials performed by Sumitomo at
the price of $200 per Test.
5. RESEARCH AND DEVELOPMENT PLANS:
Metra will prepare the research and development plan for the Tests and
Sumitomo will prepare the development plan for the Tests for the Japanese market
promptly after signing this Agreement. Preliminary version of such a plan for
IGF-BP3 is attached to this Agreement as Exhibits B and C. Both companies will
use reasonable diligence to accomplish such a plan. The plan may be modified at
any time by Sumitomo and Metra. Both companies will meet at least semi-annually
to discuss such plans and to exchange information.
6. PAYMENTS TO METRA:
As part of the costs of the ongoing and future research, product
development and performance testing of the Tests by Metra, Sumitomo will make
the following payments to Metra based upon the following milestones promptly
after their accomplishment. These payments will be compensation for a part of
actual cost spent by Metra for the purpose of the research and development of
the Tests.
Payment
Date or Event Amount
------------------------------------------------- ------------
Signing of Agreement $100,000
Evaluation Tests sent to Sumitomo meet the
Specifications, excluding lot-to-lot precision
for three separate lots $100,000
-2-
<PAGE>
All payment will be in U.S. dollars. The maximum payment to be made by
Sumitomo pursuant to this Section 6 is US $200,000. If the Japanese Government
requires a withholding tax, Sumitomo may withhold such tax from such payments.
Metra shall invoice Sumitomo for the above payment within 30 days after the Date
or the Event. Sumitomo shall pay the amount within 30 days after the receipt of
the invoice.
7. TERM AND TERMINATION OF AGREEMENT:
(a) This Agreement will be effective from the date first above written and
will continue in effect 3 years from that date. After such 3 year period, this
Agreement will be automatically extended for every succeeding 1 year unless
either party notifies the other party of its desire to terminate this Agreement
at least six (6) months before each anniversary date.
(b) Sumitomo may terminate the Agreement at any time upon six months'
prior notice to Metra and payment of all amounts due to Metra in such six month
period. Upon such termination, all rights to the Tests (including product
registrations and trademarks) shall revert to Metra.
(c) Each party may terminate this Agreement without payment of any
compensation by giving a written notice of termination;
(i) if one party files a petition in bankruptcy or a petition to take
advantage of any insolvency or reorganization act or, if one
party be adjudicated a bankruptcy, or a court of competent
jurisdiction shall enter an order or decree appointing a receiver
of property of the party, and such adjudication, order or decree
shall not be vacated or set aside or stayed within 30 days from
its entry.
(ii) if one party has failed to perform a material provision of this
Agreement and has not corrected such failure within sixty days
after receipt of notice describing such failure.
8. SUPPLY OF TESTS AND REAGENTS.
Metra will stably supply Tests to Sumitomo meeting agreed labeling and
product specifications and with remaining kit shelf life of at least six (6)
months. The parties shall in good faith discuss Metra's production plan and
Sumitomo's delivery schedule and discuss the period of remaining shelf life of
Tests and whether any adjustment is necessary or possible. The transfer price
for the Tests will be determined by one price formula which will be chosen by
Sumitomo from the two options set forth below. Such transfer price per Test
shall be effective for the first calendar year after the Tests are launched by
Sumitomo in Japan and thereafter will be reviewed annually and if appropriate,
adjusted based upon mutual agreement. The transfer price will be FCA
(Incoterms) the international airport nearest to Metra's place of business in
Mountain View, California. All payments for the Tests purchased by Sumitomo
under this Agreement shall be made within sixty (60) days after the date of
shipment of Tests.
-3-
<PAGE>
(i) OPTION A: The transfer price will be based on the number of
Tests purchased during a given calendar year by Sumitomo. Sumitomo shall keep
Metra informed on a semi-annual basis of its projected requirements for Tests by
providing a rolling twelve (12) month forecast.
The transfer price of Option A is as follows:
Tests Purchased Price Per
Per Calendar Year Test
-------------------------------------------------------
First 400 Tests $300
Next 400 Tests $275
Test over 800 $250
OR
(ii) OPTION B: The transfer price will be based on the number of
Tests ordered pursuant to a binding purchase order which Sumitomo shall declare
for the one (1) year period following the month of such declaration. To obtain
the special pricing based on this Option B, Sumitomo must purchase and take
delivery of the binding purchase order within twelve (12) months of the purchase
order date. In the event that Metra fails to supply any quantities ordered
pursuant to this Option B, Sumitomo will pay for the Tests actually delivered at
the price which would have been applied to the originally declared quantity.
Sumitomo shall keep Metra informed on a semi-annual basis of its projected
requirements for Tests by providing a rolling twelve (12) month forecast. The
transfer price of this Option B is as follows:
Number of Tests Ordered Price per Test
--------------------------------------------------------
1-400 Tests $300 for every Test
401-800 Tests $275 for every Test
Any order over 800 Tests $250 for every Test
Metra shall use reasonable efforts to meet delivery dates set forth in accepted
purchase orders, but in any event will deliver Tests within ninety (90) days of
the requested delivery date. Metra will warrant that the Tests will meet the
Specifications and will promptly replace any Tests which do not meet the
Specifications at Metra's expense. Such warranty is the only warranty made by
Metra and is in place of any warranty of merchantability or fitness for a
particular purpose.
-4-
<PAGE>
9. PATENT MATTERS:
(a) Metra shall own all rights (including US and Japanese patent rights)
to the Tests and any improvements made pursuant to this Agreement. Metra shall
supply Sumitomo with improved versions of the Tests as provided in Section 8
above.
(b) In case the Tests infringe or may infringe the patents or other rights
of any third parties, both parties shall, in good faith, discuss the steps to be
taken to resolve such problem.
10. PUBLICITY:
Neither party will disclose the financial terms of the Agreement without
the written permission of the other party, except as required by law.
11. TRADEMARKS:
Trademarks for the Tests to be distributed by Sumitomo will be decided
separately by both parties.
12. LABELING:
All Tests will be labeled (including package inserts) to indicate that
Metra is the manufacturer of the Tests for Sumitomo.
13. DISTRIBUTION AGREEMENT:
Concerning the Tests, both parties will start a discussion about a
distribution agreement after Sumitomo's NDA in Japan is submitted and conclude
the agreement upon the registration of the Tests. This distribution agreement
will include the provisions of this Agreement and will extend to cover such
items as product liability, packaging, claims, returns and warranty among
others.
14. CONFIDENTIALITY:
Each party shall for the period of this Agreement and, for the longer of
(i) 5 years from the date of disclosure or (ii) 10 years from the date first
above written, thereafter keep secret and confidential all research, commercial
and business information received from the other party and shall not use such
information except for the purposes of this Agreement nor disclose such
information to any third party provided that the obligations contained in this
Clause shall not apply to information which:
(a) at the time of disclosure is in the public domain or which, after
disclosure, becomes in the public domain;
(b) at the time of disclosure is already in the possession of recipient;
(c) is disclosed to recipient by a third party which is entitled to make
such disclosure and is not itself under obligations of confidentiality;
-5-
<PAGE>
(d) either party discloses to government authorities for the purposes of
Registration of Tests.
15. NOTICE
Any notice given under, amendments made to or agreements reached in
pursuance of this Agreement shall be sent by facsimile followed
by registered letter and shall, in the case of Metra, be made by:
Metra Biosystems, Inc.,
265 N. Whisman Road
Mountain View, California 94043, U.S.A.
and, in the case of Sumitomo, be made by:
Manager, Corporate Planning Department
Sumitomo Pharmaceuticals Co., Ltd.
2-8 Doshomachi 2-chome
Chuo-ku Osaka 541,
Japan
or such other persons or addresses as either party may designate. The language
of this Agreement is English and all communications between the parties in
respect of this Agreement shall be in English.
16. ASSIGNMENT
Neither Metra nor Sumitomo shall transfer or in any way make over the
benefits or obligations of this Agreement in whole or in part to any third party
without prior written consent of the other except for the assignment to the
successor or assignee of all of its business or all of its diagnostic business
subject to a prior notice to the other party.
17. ENTIRE AGREEMENT
This Agreement set forth the entire agreement and understanding between the
parties regarding the subject matter hereof and supersede all prior discussions
and agreement. No amendment shall be effective unless made in writing by an
authorized signatory of the parties.
18. VALIDITY/SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision which shall
remain in full force and effect. The parties shall use their best efforts to
achieve the purpose of the invalid provision by a new, legally valid
stipulation.
-6-
<PAGE>
19. FORCE MAJEURE
Neither party shall be responsible for failure or delay in the performance
of any of its obligations hereunder due to Force Majeure. Force Majeure shall
mean any circumstance which, due to an event or a legal position beyond the
parties' reasonable control, renders impossible the fulfillment of any of the
parties' obligations hereunder, such as but not limited to, acts of God, acts,
regulations and laws of any government, wars, civil commotions, destruction of
production facilities or materials by fires, earthquakes or storms, labor
disturbances, shortages of public utilities, common carriers or raw materials or
any other causes of similar effects. The obligations hereunder which are
rendered impossible by any case of Force Majeure shall not be discharged, but
only be suspended and the party so affected shall continue to perform its
obligations as soon as such case of Force Majeure is removed or alleviated.
20. LAW OF AGREEMENT
This Agreement shall be governed by the laws of the State of California,
U.S.A. Any and all disputes, controversies or differences which may arise
between the parties hereto in relation to the interpretation or
administration of this Agreement shall finally be settled by arbitration in
accordance with the rules of the International Chamber of Commerce, by which
each party hereto is bound. The arbitration shall be held in Tokyo, Japan, if
demanded by Metra, in San Francisco, U.S.A., if demanded by Sumitomo.
In witness whereof the parties have executed two copies of this Agreement in
English.
Signed for and on behalf of Metra Biosystems Inc.
By: /s/ George W. Dunbar Jr.
------------------------------------
George W. Dunbar Jr.
President and CEO
Date: 06-29-94
----------------------------------
signed for and on behalf of Sumitomo Pharmaceuticals Co., Ltd.
By: /s/ Hiroshi Ishimoda
------------------------------------
Hiroshi Ishimoda
Managing Director
Date: 13 July 94
----------------------------------
-7-
<PAGE>
EXHIBIT A
IGFBP-3 PRODUCT SPECIFICATIONS
Sample Serum
Sample Volume 50-100uL
sample dilution probably 1:100
Dye added to assay buffer
Total Assay Time/Temperature total time LESS THAN OR EQUAL TO 4 hours,
room temp.
Type of Assay Sandwich type
Format microtiter strip wells, 6 2x8 strips/kit
Standards 6 including 0
Controls 2, high and low
Minimum Detection Limit 2.5 ng/mL
Standard Range To be determined
(Current range 2.5-200 ng/mL
Enzyme conjugate Direct conjugate of Peroxidase, lyophilized
Dye Added
Substrate TMB
Stop Solution 0.3M H PO , 0.2M H SO , or 0.2M HCl
3 4 2 4
Kit Shelf Life 12 months at 2-8 degrees C
Specificity/Cross reactivity BP3 100%
BP1, 2, and 4 LESS THAN 2.5%
Within-run precision LESS THAN OR EQUAL TO 10% average
Between-run precision LESS THAN OR EQUAL TO 15% average
Lot-to-lot precision LESS THAN OR EQUAL TO 15% average
Spike Recovery Average 100 PLUS OR MINUS 10%
90% of individuals 100 PLUS OR MINUS 15%
10% of individuals 100 PLUS OR MINUS 25%
Linearity Average 100 PLUS OR MINUS 10%
90% of individuals 100 PLUS OR MINUS 15%
10% of individuals 100 PLUS OR MINUS 25%
Correlation to Mediagnost Kit r = 0.90
R. Hesley
June 24, 1994
<PAGE>
EXHIBIT B
IGF-BP3 DEVELOPMENT TIMELINE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
APR MAY JUN JUL AUG SEP OCT NOV DEC
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M Standard Stability & Feas.
O value-assignment Study R&D-1
V Timing issues R&D-2
E Finalize Format R&D-3
Pilot-1
Pilot-2
Pilot-3
* * ^ *
P P | P
A A Initiate A
R R Real Time R
* * Stability *
</TABLE>
<PAGE>
EXHIBIT C
IGF-BP3 SUMITOMO DEVELOPMENT PLAN
<TABLE>
<S> <C> <C>
'94 95' 96'
6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
____________________________________________________________________________________________________
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Clinical Evaluation ^
Approval
^
Evaluation of Performance Using R & D Lot
^
Application ^
Metra; Stability Tests Launch
</TABLE>
<PAGE>
MEMORANDUM
With reference to the Product Research and Development Agreement dated
June 29, 1994, ("Agreement") both parties hereby agree to make this
MEMORANDUM related to the patent issue as follows;
In the event Sumitomo desires and requests that Metra should get
Genentech's license covering the manufacturing of IGFBP-3 diagnostics, Metra
shall make commercially reasonable efforts to obtain said license and to
obtain, as part of said license, a provision indemnifying Metra against
intellectual property claims. In that case, Sumitomo agrees that Metra shall
act solely to negotiate with Genentech, provided, however, that Metra shall
keep Sumitomo informed of the progress of such negotiation and of the
contents of Genentech's proposals. Metra shall not agree with Genentech
without prior consent of Sumitomo.
In case Metra shall be required to make a lump-sum payment and running
royalty to Genentech in consideration of all rights and licenses granted to
Metra, Sumitomo shall bear the same amount as such payments. The above
lump-sum payment will be paid to Metra by Sumitomo as an additional milestone
of the Agreement within 30 days of execution of the above referenced license
agreement with Genentech and the above running royalty will be paid to Metra
by Sumitomo by adding to the transfer price set forth in the Agreement of
IGFBP-3.
In Witness Whereof, the parties hereto have caused this MEMORANDUM to be
effective as of June 29, 1994 by their respective duly authorized
representatives.
Metra Biosystems Inc. Sumitomo Pharmaceuticals Co., Ltd
By: /s/ George W. Dunbar Jr. By: /s/ Hiroshi Ishimoda
-------------------------------- ---------------------------------
George W. Dunbar Jr. Hiroshi Ishimoda
President and CEO Managing Director
<PAGE>
EXHIBIT 10.20
[METRA
BIOSYSTEMS LOGO]
INTERNATIONAL DISTRIBUTOR AGREEMENT
This International Distributor Agreement (the "Agreement") is entered
into in Palo Alto, California, as of April 8, 1993, between METRA BIOSYSTEMS,
INC., a corporation organized under the laws of California, United States of
America, with principal offices at 3181 Porter Drive, Palo Alto, California
94304, United States of America, ("Manufacturer") and Amersham K.K., an
organization organized under the laws of Japan with offices at Tokyo Toyama
Kaikan, 1-3, Kakusan 5-Chome, Bunkyo-ku, Tokyo 112, Japan ("Distributor").
In consideration of the mutual promises contained herein, the parties
agree as follows:
1. DEFINITIONS
(a) "Products" shall mean those products listed in EXHIBIT A
attached hereto to be distributed solely for research purposes. Metra
Biosystems may appoint other parties to develop and commercialize products
for clinical use. Products may be changed, abandoned or added by
Manufacturer, at Manufacturer's sole discretion, provided that Manufacturer
gives ninety (90) days' prior written notice to Distributor. Manufacturer
shall be under no obligation to continue the production of any Product,
except as provided herein.
(b) "Territory" shall mean that geographic area identified in
EXHIBIT B attached hereto.
2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR
(a) APPOINTMENT. Subject to the terms and conditions set forth
herein, Manufacturer hereby appoints Distributor as Manufacturer's
distributor for the Products in the Territory, and Distributor hereby accepts
such appointment. For so long as Distributor is performing in compliance with
this Agreement, Manufacturer shall not appoint any other distributor with
responsibility for sale of the Products in the Territory.
(b) TERRITORIAL RESPONSIBILITY. Distributor shall not promote the
Products outside the Territory or establish a facility for purposes relating
to the Products outside the Territory. Distributor shall forward to
Manufacturer all unsolicited inquiries relating to the Products from
customers or potential customers outside the Territory.
(c) OTHER DISTRIBUTORS. In the event that Manufacturer receives
requests for information relating to, or purchase orders for, the Products
from customers or potential customers within the Territory, Manufacturer
shall forward such requests or orders to Distributor. Notwithstanding the
above, nothing in this
<PAGE>
Agreement shall prevent Manufacturer's other distributors from selling
Products in the Territory, so long as such sales are not solicited in the
Territory. In the event that Distributor becomes aware that other
distributors of Manufacturer are selling Products in the Territory, and
provides Manufacturer written notice thereof, Manufacturer will use
Manufacturer's commercially reasonable efforts to limit such sales of Products.
(d) CONFLICT OF INTEREST. Distributor warrants to Manufacturer that
Distributor does not currently represent or promote any lines or products
that compete with the Products. During the term of this Agreement,
Distributor shall not, without Manufacturer's prior written consent,
represent, promote or otherwise try to sell within the Territory any lines or
products that, in Manufacturer's judgment, compete with the Products covered
by this Agreement.
(e) INDEPENDENT CONTRACTORS. The relationship of Manufacturer and
Distributor established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be construed to
give either party the power to direct and control the day-to-day activities
of the other or allow one party to create or assume any obligation on behalf
of the other for any purpose whatsoever. All financial obligations associated
with Distributor's business are the sole responsibility of Distributor. All
sales and other agreements between Distributor and Distributor's
customers are Distributor's exclusive responsibility and shall have no effect
on Distributor's obligations under this Agreement.
3. TERMS OF PURCHASE OF PRODUCTS BY DISTRIBUTOR
(a) TERMS AND CONDITIONS. All purchases of Products by Distributor
from Manufacturer during the term of this Agreement shall be subject to the
terms and conditions of this agreement.
(b) PRICES. All prices of Products are F.O.B. Manufacturer's
Distribution Site at the address listed for Manufacturer at the beginning of
this Agreement or as provided by written notice to Distributor. The purchase
price to Distributor for each of the Products ("Purchase Price") shall be as
set forth in EXHIBIT A attached hereto. The difference between Distributor's
Purchase Price and Distributor's selling price to Distributor's customers
shall be Distributor's sole remuneration for sale of the Products.
Manufacturer has the right at any time to revise the prices in EXHIBIT A with
sixty (60) days' advance written notice to Distributor; PROVIDED, that
Manufacturer shall not revise such prices more than once each calendar year.
Such revisions shall apply to all orders received after the effective date of
revision. Price changes shall not affect unfulfilled purchase orders accepted
by Manufacturer prior to the effective date of the price change.
(c) TAXES. Distributor's Purchase Price does not include any
federal, state or local taxes that may be applicable to the Products. In the
event that such taxes are applicable and Manufacturer has the legal
obligation to collect such taxes, Manufacturer shall be entitled to add to
Distributor's invoice the amount of such taxes and Distributor shall pay such
amount unless Distributor provides
-2-
<PAGE>
Manufacturer with a valid tax exemption certificate authorized by the
appropriate taxing authority.
(d) ORDER AND ACCEPTANCE. All orders for Products submitted by
Distributor shall be initiated by written purchase orders sent to
Manufacturer and requesting a delivery date during the term of this
Agreement; PROVIDED, HOWEVER, that an order may initially be placed orally or
by telecopy if a confirmational written purchase order is received by
Manufacturer within five (5) days after said oral or telecopy order. To
facilitate Manufacturer's production scheduling, Distributor shall submit
purchase orders to Manufacturer at least sixty (60) days prior to the first
day of the requested month of delivery. No order shall be binding upon
Manufacturer until accepted by Manufacturer in writing, and Manufacturer
shall have no liability to Distributor with respect to purchase orders that
are not accepted. No partial shipment of an order shall constitute the
acceptance of the entire order, absent the written acceptance of such entire
order. Manufacturer shall use Manufacturer's reasonable best efforts to
deliver Products at the times specified either in Manufacturer's quotation or
in Manufacturer's written acceptance of Distributor's purchase orders.
Notwithstanding the foregoing, Manufacturer shall have no obligation to
supply Products to Distributor during any period for which Distributor's
payments to Manufacturer hereunder are thirty (30) days or more past due.
(e) TERMS OF PURCHASE ORDERS. Distributor's purchase orders
submitted to Manufacturer from time to time with respect to Products to be
purchased hereunder shall be governed by the terms of this Agreement and
Manufacturer's published Standard Terms and Conditions of Sale as in effect
at the time of such purchase, PROVIDED that, in the event of any conflict
between the terms of this Agreement and the Standard Terms and Conditions of
Sale of Manufacturer then in effect, this Agreement shall be controlling.
Nothing contained in any purchase order of Distributor shall in any way
modify such terms of purchase of Manufacturer or add any additional terms or
conditions.
(f) PAYMENT. Full payment of Distributor's Purchase Price for the
Products (including any freight, taxes or other applicable costs initially
paid by Manufacturer but to be borne by Distributor) shall be in United States
of America dollars. All exchange, interest, banking, collection, and other
charges shall be at Distributor's expense. Payment terms shall be
[net forty-five] ([45]) days, and payment shall be made by wire transfer,
check or other instrument approved by Manufacturer. Any invoiced amount not
paid when due shall be subject to a service charge at the lower of the rate
of [one and one-half] percent ([1.5]%) per month or the maximum rate
permitted by law. If Distributor fails to make any payment to Manufacturer
when due, Manufacturer may, without affecting its rights under this
Agreement, cancel or delay any future shipments of the Products to
Distributor.
(g) SHIPPING. All Products delivered pursuant to the terms of this
Agreement shall be suitably packed for air freight shipment in Manufacturer's
standard shipping cartons, marked for shipment at Manufacturer's manufacturing
plant to Distributor's address set forth above, and delivered to Distributor
or Distributor's carrier agent F.O.B. Manufacturer's Distribution Site, at
which time title to such Products and risk of loss shall pass to Distributor.
All shipments of
-3-
<PAGE>
Products shall include a Certificate of Analysis for each lot. Manufacturer
shall deliver Products to the carrier selected by Distributor. In the event
that Distributor does not provide written notice of such carrier,
Manufacturer shall select the carrier. All freight, insurance, and other
shipping expenses, as well as any special packing expense, shall be paid by
Distributor. Distributor shall also bear all applicable taxes, duties,
and similar charges that may be assessed against the Products after delivery
to the carrier at Manufacturer's Distribution Site.
(h) REJECTION OF PRODUCTS. Distributor shall inspect all Products
promptly upon receipt thereof, such inspection to include, without
limitation, a quality control analysis to determine whether Products and,
where applicable, components thereof meet the specifications set forth in
then-current package inserts for such Products and components and the
Certificate of Analysis accompanying each shipment of Products. Distributor
may reject any Product or component thereof that fails in any material way to
meet such specifications. In the event that Distributor is not able to
conduct a quality control analysis, Distributor, at Distributor's expense,
may utilize contract facilities to conduct such analysis. Manufacturer will
maintain samples of each production lot of Product, and Distributor will
maintain samples of each shipment lot of Product, for archival purposes. Any
Product or component thereof not properly rejected within four (4) weeks
after receipt of that Product by Distributor ("Rejection Period") shall be
deemed accepted. If any Product is shipped by Distributor to Distributor's
customer prior to expiration of the Rejection Period, such unit shall be
deemed accepted upon shipment by Distributor. To reject a Product or a
component thereof, Distributor shall, within the Rejection Period, notify
Manufacturer in writing or by telecopy of Distributor's rejection of such
Product or component, stating the reason for such rejection. In the event
that Manufacturer, in Manufacturer's sole discretion, desires that
Distributor return a rejected Product or component thereof to Manufacturer,
Distributor shall return to Manufacturer the rejected Product or component
thereof, freight prepaid. Manufacturer will provide Distributor a credit to
be applied against Distributor's future Product orders equal to the freight
charges prepaid by Distributor for properly rejected Products or components
thereof. As promptly as possible but no later than thirty (30) working days
after receipt by Manufacturer of properly rejected Products or components
thereof, Manufacturer shall replace such Products or components. Manufacturer
shall pay shipping charges in connection with shipment of replaced Products
or components thereof to Distributor for properly rejected Products;
otherwise, Distributor shall be responsible for shipping charges. In the
event that such replaced Products or components are shipped to Distributor
together with Products corresponding to a purchase order pursuant to this
Agreement, shipping charges in connection with such shipment shall be
pro-rated between Manufacturer and Distributor. After the Rejection Period,
Distributor may not return any Products or, if applicable, components thereof
to Manufacturer for any reason without Manufacturer's prior written consent.
4. TRAINING AND SERVICE
(a) SERVICES BY DISTRIBUTOR. Distributor shall have the
responsibility to deliver the Products and train the customers with respect
to the Products sold.
-4-
<PAGE>
The services shall (i) be performed only by specially and properly trained
personnel of Distributor, (ii) be of the highest quality, and (iii) be
performed promptly.
(b) TRAINING BY MANUFACTURER. Manufacturer shall provide sales and
technical training, and technical support, to Distributor's personnel at
periodic intervals, with the frequency and content of the training to be
determined by agreement between Distributor and Manufacturer. Manufacturer
and Distributor shall each pay their own costs for travel, food, and lodging
during the training period. In addition to sales and technical training,
Manufacturer shall cooperate with Distributor in establishing efficient
promotional procedures and policies. Manufacturer shall promptly respond to
Distributor's reasonable technical questions relating to Product.
5. WARRANTY TO DISTRIBUTOR'S CUSTOMERS
(a) STANDARD LIMITED WARRANTY. Manufacturer warrants that the
Products sold to Distributor will comply at the time of shipment to
Distributor with the requirements of the U.S. Federal Food, Drug and Cosmetic
Act, if applicable. This warranty is contingent upon proper use of a Product
in the application for which such Product was intended and does not cover
Products that were modified without Manufacturer's approval, that have
expired or that were subjected by the customer to unusual physical, chemical
or electrical stress.
(b) NO OTHER WARRANTY. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET
FORTH IN SUBSECTION 5(a) ABOVE, MANUFACTURER GRANTS NO WARRANTIES FOR THE
PRODUCTS, (EXCEPT FOR THE IMPLIED WARRANTY OF TITLE) EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND
MANUFACTURER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF QUALITY, WARRANTY
OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY
OF NONINFRINGEMENT.
(c) LIMITATION OF LIABILITY. MANUFACTURER'S LIABILITY UNDER THE
WARRANTY SHALL BE LIMITED TO A REFUND OF THE CUSTOMER'S PURCHASE PRICE. IN NO
EVENT SHALL MANUFACTURER BE LIABLE FOR THE COST OF PROCUREMENT OF SUBSTITUTE
GOODS BY THE CUSTOMER OR FOR ANY DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES FOR BREACH OF WARRANTY, EXCEPT INSOFAR AS SUCH DAMAGES
RELATE TO DEATH OR PERSONAL INJURY RESULTING FROM MANUFACTURER'S GROSS
NEGLIGENCE.
(d) NO VERBAL REPRESENTATIONS OR WARRANTIES. Manufacturer shall not
be bound by any representations or statements on the part of its employees or
agents whether oral or in writing and including those made in catalogues and
other promotional material (excluding technical details and specifications)
except where such representations or statements are expressly made part of
this Agreement.
-5-
<PAGE>
6. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR
(a) HEALTH AND SAFETY LAWS AND REGULATIONS. Distributor shall
comply fully, at its expense, with any and all applicable health and
safety laws and regulations of the Territory.
(b) REGISTRATIONS, LICENSES AND PERMITS. Distributor agrees to use
its best efforts to investigate, obtain government approval for, promote and
distribute the Products, (solely for research purposes) at its own expense,
in the Territory as soon as feasible after the date of this Agreement, using
generally the same channels and methods, exercising the same diligence and
adhering to the same standards which it employs with respect to other
research products sold by Distributor, as well as Distributor's own products,
if any. Unless prohibited by local law, all such registrations and approvals
obtained by Distributor shall be in the name of Manufacturer. In particular,
Distributor shall, at its own expense:
(i) Exercise due diligence to promptly obtain and maintain
government approvals to import, register and market the Products in each
jurisdiction in the Territory and to diligently proceed to secure and
maintain, as may be required from time to time, government importing,
registration and marketing approvals, customs clearances and currency
authorizations and any permits necessary in each jurisdiction in the
Territory. Distributor shall keep Manufacturer generally informed of the
regulatory requirements in each jurisdiction in the Territory and shall
submit to the government health authorities in each jurisdiction in the
Territory where sale of the Products is planned a complete application
for registration and marketing approval of the Products by the date set
forth in any marketing plan required by Manufacturer below. Distributor
shall file for regulatory approval for the sale of Products in the
Territory by Amersham K.K. If Manufacturer so requests, Distributor
shall notify Manufacturer each time it submits an application for
government registration and marketing approval for the Products and
shall, at Manufacturer's request, supply Manufacturer with copies of or
access to Distributor's filings and clinical data and shall keep
Manufacturer fully informed of the progress of each such application.
Manufacturer and Distributor agree to disclose promptly to the other all
reports and any information which they have available or which become
available to them relating to performance of, or any deleterious
physiological effects caused by or related to, the Products.
-6-
<PAGE>
(ii) Within thirty (30) days after the date of this Agreement,
submit to Manufacturer a complete marketing plan, prepared by
Distributor in good faith, which shall be subject to approval by
Manufacturer, for the Products in each jurisdiction in the Territory.
Such plan shall be updated and delivered to Manufacturer annually and
shall include, at a minimum, information on competitive products;
proposed labeling (including label, package insert, introductory folder
and advertising); estimated sales volume; anticipated quantities of the
Products to be purchased from Manufacturer; distribution and promotional
plans; schedule for submission of applications for government
registration and marketing approval; and marketing program. All Product
labels, package inserts and claims, which are prepared for or by
Distributor, shall meet all legal requirements of the jurisdiction in
which the Products are marketed and shall be subject to Manufacturer's
prior review and approval.
(iii) Commence marketing of the Products throughout the
Territory immediately after receipt of government health registration
approvals, if applicable. Distributor shall be deemed to have commenced
the marketing of the Products only when it shall have offered the
Products regularly for sale.
(iv) Use its best efforts to distribute and sell the Products
for research purposes only and for use only by qualified individuals, as
appropriate in the Territory, in compliance with local laws and
regulations and good commercial practice and for uses and applications
reasonably approved by Manufacturer for the Products.
In the event that all necessary registrations, licenses and permits required
to sell and distribute the Products in the Territory for clinical use (if
applicable) are not obtained within nine (9) months after the effective date
of this Agreement, Manufacturer may, in its sole discretion, terminate this
Agreement upon written notice to Distributor.
(c) QUARTERLY PURCHASE COMMITMENT. Distributor hereby agrees to
purchase from Manufacturer during the first eight (8) calendar quarter
periods commencing June 1, 1993 ("Quarterly Purchase Commitment") the number
of Products set forth on EXHIBIT C. Annually thereafter, Distributor and
Manufacturer shall mutually agree in writing on the Quarterly Purchase
Commitment for the next four calendar quarter periods. Throughout the term of
this Agreement, if (i) the parties cannot agree on Quarterly Purchase
Commitments, or (ii) Distributor fails to purchase Distributor's Quarterly
Purchase Commitment in any given calendar quarter and Distributor's Quarterly
Purchase Commitment in the next calendar quarter plus the deficit in
Distributor's Quarterly Purchase Commitment from the preceding calendar
quarter, then, without prejudice to Manufacturer's other rights under this
Agreement (including the right to terminate this Agreement upon written
notice to Distributor), Manufacturer may appoint one or more additional
distributors for sale of the Products in the Territory. Products returned to
Manufacturer under the provisions of Subsection 3(h) above shall not count
towards the fulfillment of Distributor's relevant Quarterly Purchase
Commitment.
-7-
<PAGE>
(d) FORECASTS. Within the first five (5) days of every month,
Distributor shall provide Manufacturer with a ninety (90) day rolling
forecast showing prospective orders by Product and Distributor's anticipated
Products purchase order submission date. Such rolling forecasts shall be
non-binding and shall be used by Manufacturer for information purposes only.
(e) PROMOTION OF THE PRODUCTS. Distributor shall, solely at
Distributor's own expense, vigorously promote the sale of the Products within
the Territory. Such promotion shall include, but not be limited to, preparing
all promotional materials intended specifically for use in the Territory in
appropriate languages for the Territory, advertising the Products in trade
publications within the Territory, participating in appropriate trade shows,
and directly soliciting orders from customers within the Territory for the
Products. Distributor and its employees and agents shall not promote the
Products for any indications not approved for such Products by applicable
regulatory authorities. All promotional materials prepared by Distributor
relating to the Products must be consistent with applicable law and
promotional materials used by Manufacturer or other distributors of
Manufacturer in connection with the Products. Distributor shall provide to
Manufacturer for purposes of review and comment by Manufacturer any and all
promotional, advertising, and educational materials and programs (in the
English language and the actual language of labeling) relating to the
Products at least thirty (30) days prior to the release of such materials or
commencement of such programs. Manufacturer shall make its best efforts to
provide to Distributor, within ten (10) business days after receipt of such
materials and/or programs, any and all comments and suggestions relating to
such materials and/or programs. In addition, Manufacturer shall be entitled,
on Manufacturer's written request, to receive copies of any promotional
materials used by Distributor and inspect such materials for purposes of
determining that such materials are consistent with promotional materials
used by Manufacturer or other distributors of Manufacturer. Distributor shall
provide Manufacturer, within ten (10) days after the end of each calendar
quarter, a description of Distributor's activities in promoting the Products
within the Territory. Distributor agrees to not promote, or solicit orders
for, the Products outside the Territory. Distributor shall use its best
efforts to locate and introduce to Manufacturer appropriate pharmaceutical
and bone densitometry companies in the Territory with which Manufacturer may
want to establish education programs with respect to Products.
(f) REPRESENTATIONS. Distributor shall make any false or
misleading representations to customers or others regarding Manufacturer or
the Products. Distributor and its employees and agents shall not make any
representations, warranties or guarantees with respect to the specifications,
features or capabilities of the Products that are not consistent with
Manufacturer's documentation accompanying the Products or Manufacturer's
literature describing the Products, including Manufacturer's standard
limited warranty and disclaimers.
(g) INVENTORY. Distributor shall, at Distributor's own expense,
maintain a sufficient inventory of the Products at all times during the term
of this Agreement as necessary in order to meet the requirements of any
customer or potential customer within the Territory.
-8-
<PAGE>
(h) FINANCES AND PERSONNEL. Distributor shall maintain a net worth
and working capital sufficient, in Manufacturer's reasonable judgment, to
allow Distributor to perform fully and faithfully Distributor's obligations
under this Agreement. Distributor shall devote sufficient financial resources
and technically qualified sales and training personnel to the Products to
fulfill Distributor's responsibilities under this Agreement.
(i) CUSTOMER AND SALES REPORTING. Distributor shall, at
Distributor's own expense and consistent with the sale policies of
Manufacturer: (i) place the Products in Distributor's literature as soon as
possible; (ii) provide adequate contact with existing and potential customers
within the Territory on a regular basis, consistent with good business
practice; (iii) assist Manufacturer in assessing customer requirements for
the Products, including modifications and improvements thereto, in terms of
quality, design, functional capability, and other features; and (iv) provide
Manufacturer on a quarterly basis: (1) a summary of all purchase orders
received by Distributor for Products, (2) market research information, as
reasonably requested by Manufacturer for purposes of Manufacturer's market
research, regarding competition and changes in the market within the
Territory and (3) a summary of the number of Products held by Distributor at
the end of such quarter.
(j) AUDITS. Manufacturer reserves the right to authorize a
representative of Manufacturer, at Manufacturer's expense, to audit
Distributor's records relating to the Products, including, without
limitation, records relating to preclinical and clinical trials, interactions
between Distributor and principal investigators in such preclinical and
clinical trials, inventories and sales. Upon prior written notice,
Distributor shall provide reasonable access to such records during normal
business hours at Distributor's business locations. Distributor shall maintain
all records at Distributor's location for a minimum of two (2) years after
termination of this Agreement.
(k) IMPORT AND EXPORT REQUIREMENTS. Distributor shall, at
Distributor's own expense, obtain and pay for import and export licenses and
permits, pay customs charges and duty fees, and take all other actions
required to accomplish the export and import of the Products purchased by
Distributor. Distributor understands that Manufacturer is subject to
regulation by agencies of the United States of America government, including
the United States of America Department of Commerce, which prohibit export or
diversion of certain technical products to certain countries. Distributor
warrants that Distributor will comply in all respects with the export and
re-export restrictions set forth in the export license for every Product
shipped to Distributor.
(l) LIMITATION ON DISTRIBUTOR'S RIGHTS TO THE PRODUCTS. Distributor
shall have no right to copy, modify or remanufacture any Product or part
thereof. Distributor shall not make any changes, alterations, modifications
or additions to the Products without prior written approval of Manufacturer.
(m) PRODUCT SPECIFICATIONS. Distributor shall ensure that the
specification of the Products ordered is suitable and safe for the intended
use or
-9-
<PAGE>
environment of use, except where it makes known details of such use to
Manufacturer in writing prior to conclusion of the Agreement in such a way as
clearly to place reliance on Manufacturer's special skills.
(n) PRODUCT HANDLING. Distributor shall handle the Products in a
suitable and safe manner and shall comply with any instructions supplied to
it by Manufacturer. Distributor shall also pass on to users (including
purchasers and users of other goods and equipment into which the Products are
incorporated) all relevant safety information.
(o) INTELLECTUAL PROPERTY. Where Distributor supplies designs,
drawings and specifications to Manufacturer to enable Manufacturer to
manufacture non-standard or custom made Products, Distributor warrants that
such manufacture will not infringe the intellectual property rights of any
third party.
7. ADDITIONAL OBLIGATIONS OF MANUFACTURER. Manufacturer shall
promptly provide Distributor with Manufacturer's core materials relating to
promotion of the Products. Such core materials shall be provided primarily in
the English language. Manufacturer shall promptly respond to all reasonable
inquiries from Distributor concerning matters pertaining to this Agreement.
Manufacturer shall refrain from giving quotations to exporters for Products
to be shipped to the Territory. Manufacturer shall inform Distributor of new
product developments relating to the Products. Manufacturer shall forward to
Distributor copies of all approval letters received from the U.S. Food and
Drug Administration with respect to Products.
8. TERM AND TERMINATION
(a) TERM. This Agreement shall commence on the date hereof and
continue in full force and effect for a fixed term of two (2) years from such
date, unless terminated earlier under the provisions of this Section 8. At
the end of such fixed term, this Agreement may be renewed for a fixed term of
two (2) years; PROVIDED, that Manufacturer and Distributor agree in writing
prior to the end of such fixed term upon the terms and conditions of such
renewal, including, without limitation, minimum quantities of Products to be
purchased by Distributor during such two (2) year fixed term. Manufacturer
shall also have the right to terminate this Agreement upon written notice to
Distributor as provided in Section 6 hereof.
(b) TERMINATION FOR CAUSE. If either party defaults in the
performance of any provision of this Agreement, then the non-defaulting party
may given written notice to the defaulting party that if the default is not
cured within thirty (30) days the Agreement will be terminated. If the
non-defaulting party gives such notice and the default is not cured during
such thirty (30) day period, then the Agreement shall automatically terminate
at the end of that period.
(c) TERMINATION FOR INSOLVENCY. This Agreement shall terminate,
without notice, (i) upon the institution by or against Distributor of
insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement
-10-
<PAGE>
of Distributor's debts, (ii) upon Distributor's making an assignment for the
benefit of creditors, or (iii) upon Distributor's dissolution or ceasing to
do business.
(d) CLINICAL USE REGULATORY APPROVAL; TECHNICAL DIFFICULTIES. The
rights of Distributor hereunder with respect any one Product may be
terminated by Manufacturer, upon thirty (30) days' prior written notice, at
any time following approval from appropriate Japanese governmental
authorities to distribute such Product for clinical use. Where Manufacturer
experiences technical difficulties in the production of non-standard or
custom made Products, it may cancel this Agreement without being liable to
Distributor in any way.
(e) RETURN OF MATERIALS. All trademarks, trade names, patents,
copyrights, designs, drawings, formulas or other data, photographs, samples,
literature, and sales aids of every kind shall remain the property of
Manufacturer. Within thirty (30) days after the termination of this
Agreement, Distributor shall prepare all such items in Distributor's
possession for shipment, as Manufacturer may direct, at Manufacturer's
expense. Distributor shall not make, use, dispose of or retain any copies of
any confidential items or information which may have been entrusted to
Distributor. Effective upon the termination of this Agreement, Distributor
shall cease to use all trademarks, marks, and trade names of Manufacturer.
(f) LIMITATION ON LIABILITY. In the event of termination by either
party in accordance with any of the provisions of this Agreement, neither
party shall be liable to the other, because of such termination, for
compensation, reimbursement or damages on account of the loss of prospective
profits or anticipated sales or on account of expenditures, inventory,
investments, leases or commitments in connection with the business or goodwill
of Manufacturer or Distributor. Termination shall not, however, relieve
either party of obligations incurred prior to the termination.
(g) SURVIVAL OF CERTAIN TERMS. The provisions of Sections 3(h), 5,
6(g), 6(k), 6(l), 6(m), 8, 9, 10, 11, 12, 13 and 14 shall survive the
termination of this Agreement for any reason. All other rights and
obligations of the parties shall cease upon termination of this Agreement.
9. LIMITATION ON LIABILITY. MANUFACTURER'S LIABILITY ARISING OUT OF
THIS AGREEMENT AND/OR SALE OF THE PRODUCTS SHALL BE LIMITED TO THE AMOUNT
PAID BY THE CUSTOMER FOR THE PRODUCTS. IN NO EVENT SHALL MANUFACTURER BE
LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE, EXCEPT IN THE
CASE OF DEATH OR PERSONAL INJURY RESULTING FROM MANUFACTURER'S GROSS
NEGLIGENCE. IN NO EVENT SHALL MANUFACTURER BE LIABLE TO DISTRIBUTOR OR ANY
OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES,
HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, WHETHER OR NOT MANUFACTURER HAS
BEEN ADVISED ON THE POSSIBILITY OF SUCH DAMAGE.
-11-
<PAGE>
10. PROPERTY RIGHTS AND CONFIDENTIALITY
(a) PROPERTY RIGHTS. Distributor agrees that Manufacturer owns
all right, title, and interest in the product lines that include the Products
and in all of Manufacturer's patents, trademarks, trade names, inventions,
copyrights, know-how, and trade secrets relating to the design, manufacture,
operation or service of the Products. The use by Distributor of any of these
property rights is authorized only for the purposes herein set forth, and
upon termination of this Agreement for any reason such authorization shall
cease.
(b) SALE CONVEYS NO RIGHT TO MANUFACTURE OR COPY. The Products
are offered for sale and are sold by Manufacturer subject in every case to
the condition that such sale does not convey any license, expressly or by
implication, to manufacture, duplicate or otherwise copy or reproduce any
of the Products. Distributor shall take appropriate steps with Distributor's
customers, as Manufacturer may request, to inform them of and assure
compliance with the restrictions contained in this Subsection 10(b).
(c) CONFIDENTIALITY.
(i) Distributor acknowledges that by reason of Distributor's
relationship to Manufacturer hereunder, Distributor will have access to
certain information and materials concerning Manufacturer's business, plans,
customers, technology, and products that are confidential and of substantial
value to Manufacturer, which value would be impaired if such information were
disclosed to third parties. Distributor agrees that Distributor will not use
in any way for Distributor's own account or the account of any third party,
nor disclose to any third party, any such confidential information revealed
to Distributor by Manufacturer. Distributor shall take every reasonable
precaution to protect the confidentiality of such information. Upon request
by Distributor, Manufacturer shall advise whether or not Manufacturer
considers any particular information or materials to be confidential.
Distributor shall not publish any technical description of the Products
beyond the description published by Manufacturer (except to translate that
description into appropriate languages for the Territory). In the event of
termination of this Agreement, there shall be no use or disclosure by
Distributor of any confidential information of Manufacturer, and Distributor
shall not manufacture or have manufactured any compositions, devices,
components or assemblies utilizing any of Manufacturer's confidential
information.
(ii) Manufacturer acknowledges that by reason of
Manufacturer's relationship to Distributor hereunder, Manufacturer will have
access to certain information and materials concerning Distributor's
business, plans, customers, technology, and products that are confidential
and of substantial value to Distributor, which value would be impaired if
such information were disclosed to third parties. Manufacturer agrees that
Manufacturer will not use in any way for Manufacturer's own account or the
account of any third party, nor disclose to any third party, any such
confidential information revealed to Manufacturer by Distributor.
Manufacturer shall take every reasonable precaution to protect the
confidentiality of such information. Upon request by Manufacturer,
Distributor
-12-
<PAGE>
shall advise whether or not Distributor considers any particular information
or materials to be confidential. In the event of termination of this
Agreement, there shall be no use or disclosure by Manufacturer of any
confidential information of Distributor.
11. TRADEMARKS AND TRADE NAMES
(a) USE. During the term of this Agreement, Distributor shall
have the right to indicate to the public that Distributor is an authorized
distributor of Manufacturer's Products and to advertise within the Territory
such Products under the trademarks, marks, and trade names that Manufacturer
may adopt from time to time ("Manufacturer's Trademarks"). Distributor shall
not alter or remove any Manufacturer's Trademark applied to the Products at
the factory. Except as set forth in this Section 11, nothing contained in
this Agreement shall grant to Distributor any right, title or interest in
Manufacturer's Trademarks. At no time during or after the term of this
Agreement shall Distributor challenge or assist others to challenge
Manufacturer's Trademarks or the registration thereof or attempt to register
any trademarks, marks or trade names confusingly similar to those of
Manufacturer.
(b) APPROVAL OF REPRESENTATIONS. All representations of
Manufacturer's Trademarks that Distributor intends to use shall first be
submitted to Manufacturer for approval, which shall not be unreasonably
withheld, of design, color, and other details or shall be exact copies of
those used by Manufacturer. If any of Manufacturer's Trademarks are to be
used in conjunction with another trademark on or in relation to the Products,
then Manufacturer's mark shall be presented equally legibly, equally
prominently, and of greater size than the other but nevertheless separated
from the other so that each appears to be a mark in its own right, distinct
from the other mark.
12. PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY
(a) INDEMNIFICATION. Distributor agrees that Manufacturer has the
right to defend, or at Manufacturer's option to settle, and Manufacturer
agrees, at Manufacturer's own expense, to defend or at Manufacturer's option
to settle, any claim, suit or proceeding brought against Distributor or
Distributor's customers on the issue of infringement of any United States of
America or foreign patent, copyright or trademark by the Products sold
hereunder or the use thereof, subject to the limitations hereinafter set
forth. Manufacturer shall have sole control of any such action or settlement
negotiations, and Manufacturer agrees to pay, subject to the limitations
hereinafter set forth, any final judgment entered against Distributor or
Distributor's customer on such issue in any such suit or proceeding defended
by Manufacturer. Distributor agrees that Manufacturer at Manufacturer's sole
option shall be relieved of the foregoing obligations unless Distributor or
Distributor's customer notifies Manufacturer promptly in writing of such
claim, suit or proceeding and gives Manufacturer authority to proceed as
contemplated herein, and, at Manufacturer's expense, gives Manufacturer
proper and full information and assistance to settle and/or defend any such
claim, suit or proceeding. Manufacturer shall not be liable for any costs or
expenses incurred without Manufacturer's prior written authorization.
-13-
<PAGE>
(b) LIMITATION. Notwithstanding the provisions of Subsection
12(a) above, Manufacturer assumes no liability for (i) infringements covering
completed equipment or any composition, assembly, circuit, combination,
method or process in which any of the Products may be used but not covering
the Products when used alone; (ii) trademark infringements involving any
marking or branding not applied by Manufacturer or involving any marking or
branding applied at the request of Distributor; or (iii) infringements
involving the modification or servicing of the Products, or any part thereof,
unless such modification or servicing was done by Manufacturer.
(c) ENTIRE LIABILITY. THE FOREGOING PROVISIONS OF THIS SECTION 12
STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF MANUFACTURER AND THE EXCLUSIVE
REMEDY OF DISTRIBUTOR AND DISTRIBUTOR'S CUSTOMERS, WITH RESPECT TO ANY
ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER
INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS OR ANY PART THEREOF.
13. INDEMNIFICATION.
(a) Manufacturer and Distributor each agree to indemnify and hold
the other party harmless from and against any and all claims made by any
person or entity arising out of the processing, marketing, distribution and
sale of the Products, where and to the extent such damages have been caused
by the fault of such party or its employees or agents. The indemnifying party
shall have the right to defend or, at its option, to settle such claims, and
if it chooses to exercise such right, it shall have control over any such
claim or settlement negotiations. The indemnifying party shall be relieved of
the foregoing obligations unless the indemnified party gives prompt notice in
writing of any such claim, suit or proceeding and, at the indemnifying
party's expense, gives the indemnifying party proper and full information and
assistance to settle and/or defend any such claim, suit or proceeding.
(b) Distributor shall indemnify Manufacturer in respect of any
claim which may be made against the Manufacturer.
(i) that the use to which the Products are put constitutes a
breach of Section 6 of The Health and Safety at Work Act 1974 or any
other relevant United Kingdom or overseas safety legislation; and/or
(ii) arising out of the failure by the Distributor to observe
the terms of the Agreement.
The provisions of this Section 13(b) shall not apply where the claim arises
as a result of the negligence of Manufacturer or use of the Products in
accordance with Manufacturer's written instructions.
-14-
<PAGE>
14. GENERAL PROVISIONS
(a) GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of
the State of California, United States of America, without reference to
conflict of laws principles or statutory rules of arbitration. The federal
and state courts within the State of California, United States of America
shall have exclusive jurisdiction to adjudicate any dispute arising out of
this Agreement. Distributor hereby expressly consents to (i) the personal
jurisdiction of the federal and state courts within California, (ii) service
of process being effected upon Distributor by registered mail sent to the
address set forth at the beginning of this Agreement, and (iii) the
uncontested enforcement of a final judgement from such court in any other
jurisdiction wherein Distributor or any of Distributor's assets are present.
(b) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
herein and merges all prior discussions between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by the party to be
charged.
(c) NOTICES. Any notice required or permitted by this Agreement
shall be in writing (in the English language) and shall be sent by telex,
telecopier or telegram or by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address shown at the
beginning of this Agreement or at such other address for which such party
gives notice hereunder. Such notice shall be deemed to have been given upon
the earlier of receipt by the party to whom notice was sent or three (3) days
after deposit in the mail.
(d) FORCE MAJEURE. Nonperformance of either party shall be
excused to the extent that performance is rendered impossible by strike,
fire, flood, governmental acts or orders or restrictions, failure of
suppliers, or any other reason where failure to perform is beyond the
reasonable control of and is not caused by the negligence of the
non-performing party.
(e) NON-ASSIGNABILITY AND BINDING EFFECT. A mutually agreed
consideration for Manufacturer's entering into this Agreement is the
reputation, business standing, and goodwill already honored and enjoyed by
Distributor under Distributor's present ownership, and, accordingly,
Distributor agrees that Distributor's rights and obligations under this
Agreement may not be transferred or assigned directly or indirectly without
the prior written consent of Manufacturer. Subject to the foregoing sentence,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns.
(f) LEGAL EXPENSES. The prevailing party in any legal action
brought by one party against the other and arising out of this Agreement
shall be entitled, in addition to any other rights and remedies that such
prevailing party may have, to reimbursement for expenses incurred by such
prevailing party, including court costs and reasonable attorneys' fees.
-15-
<PAGE>
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(h) PARTIAL INVALIDITY. If any provision of this Agreement is
held to be invalid, then the remaining provisions shall nevertheless remain
in full force and effect. The parties agree to renegotiate in good faith any
term held invalid and to be bound by the mutually agreed substitute
provision.
IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement on behalf of Manufacturer and Distributor, as applicable.
METRA BIOSYSTEMS, INC. AMERSHAM K.K.
("Manufacturer") ("Distributor")
By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers
--------------------------------- -------------------------------
Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers
------------------------- -----------------------
Title: President & CEO Title: President
------------------------------ ----------------------------
-16-
<PAGE>
EXHIBIT A
PRODUCT DESCRIPTION AND PURCHASE PRICE
For Research Products Only
Distributor's
Purchase Price
Product(1) (U.S. dollars)
- ----------------------------------------- --------------
Collagen Crosslinks Immunoassay in
microtiter plate enzyme-linked
immunosorbent assay (ELISA)
format, including packaging,
labeling and product inserts $[500.00]
Prolagen-C-TM- Immunoassay in
microtiter plate sandwich-assay
format, including packaging, labeling [to be determined]
and product inserts
NovoCalcin-TM- Immunoassay in
microtiter plate enzyme-linked
immunosorbent assay (ELISA) [to be determined]
format, including packaging, labeling
and product inserts
(1) Products to be sold by Distributor solely for research purposes.
METRA BIOSYSTEMS, INC. AMERSHAM K.K.
("Manufacturer") ("Distributor")
By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers
--------------------------------- -------------------------------
Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers
------------------------- -----------------------
Title: President & CEO Title: President
------------------------------ ----------------------------
-17-
<PAGE>
EXHIBIT B
TERRITORY
Distributor's Territory shall be all portions of the following:
[Japan]
METRA BIOSYSTEMS, INC. AMERSHAM K.K.
("Manufacturer") ("Distributor")
By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers
--------------------------------- ----------------------------
Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers
------------------------- ---------------------
Title: President & CEO Title: President
------------------------------ --------------------------
-18-
<PAGE>
EXHIBIT C
QUARTERLY PURCHASE COMMITMENTS
For Research Products Only
First Year Second Year
Number of Kits Number of Kits
-------------- --------------
[Crosslinks] [to be agreed] [to be agreed]
[Prolagen-C-TM] [to be agreed] [to be agreed]
[NovoCalcin-TM] [to be agreed] [to be agreed]
METRA BIOSYSTEMS, INC. AMERSHAM K.K.
("Manufacturer") ("Distributor")
By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers
--------------------------------- -------------------------------
Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers
------------------------- -----------------------
Title: President & CEO Title: President
------------------------------ ----------------------------
1 May 1993
-19-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE METRA
BIOSYSTEMS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,916
<SECURITIES> 13,386
<RECEIVABLES> 1,342
<ALLOWANCES> 0
<INVENTORY> 1,052
<CURRENT-ASSETS> 32,171
<PP&E> 4,265
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,706
<CURRENT-LIABILITIES> 3,358
<BONDS> 0
0
0
<COMMON> 13
<OTHER-SE> 43,614
<TOTAL-LIABILITY-AND-EQUITY> 48,706
<SALES> 4,392
<TOTAL-REVENUES> 274
<CGS> 3,023
<TOTAL-COSTS> 17,282
<OTHER-EXPENSES> 0
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</TABLE>
