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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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X ANNUAL REPORT
----- FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
-- or --
-----
TRANSITION REPORT
----- FOR THE TRANSITION PERIOD FROM ____ TO ____
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OSTEX INTERNATIONAL, INC.
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
0-25250
COMMISSION FILE NUMBER
STATE OF WASHINGTON
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
91-1450247
I.R.S. EMPLOYER IDENTIFICATION NUMBER
2203 AIRPORT WAY SOUTH, SUITE 400, SEATTLE, WASHINGTON 98134
206-292-8082
ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
Securities registered pursuant to Section 12(b) of the Act:
(none) (none)
Title of Class Each Exchange on Which Registered
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
Title of Class
Indicate by checkmark 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.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
X
----
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $53,089,576 on March 18, 1997, based on the
per-share closing price of $5.31 on the Nasdaq National Market tier of the
Nasdaq Stock Market, as reported by the Wall Street Journal.
The number of shares of Common Stock outstanding as of March 18,
1997 was 12,447,617.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to stockholders for the fiscal year ended December 31,
1996. Incorporated in Part I and Part II.
(2) Proxy Statement for Shareholders Meeting to be held Monday, June 2,
1997 to be filed pursuant to Regulation 14A and incorporated herein pursuant to
general instruction G(3) to Form 10-K. Incorporated in Part I, Part II and Part
III.
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For the purpose of this Form 10-K, the following capitalized terms shall be
ascribed the following meanings:
"Company" or "Ostex" shall mean Ostex International, Inc., a Washington
corporation;
"Annual Report to shareholders" shall mean the annual report to
shareholders of Ostex International, Inc. for the year ended December 31, 1996;
and
"Proxy Statement" shall mean the proxy statement for the 1997
shareholders meeting of Ostex International, Inc. to be held Monday, June 2,
1997 to be filed with the Commission pursuant to Regulation 14A.
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PART I
ITEM 1. BUSINESS
Ostex was incorporated in the State of Washington in 1989. The Company is
engaged in the discovery, development and commercialization of diagnostics and
therapeutics for diseases of the skeleton and connective tissues. The Company
believes that its lead product, the OSTEOMARK-registered trademark- assay,
incorporates innovative new technologY in the area of bone resorption
measurement. The Company is the exclusive licensee of this technology, known
clinically as the NTx assay, which is a simple urine test that can aid in
healthcare decision-making at early menopause and beyond. Ostex has formed
collaborative relationships with a number of leading diagnostic and
pharmaceutical companies to aid in the commercialization of the Osteomark assay.
As of December 31, 1996, the Company had 74 employees.
On May 8, 1995, the Company's Osteomark assay became commercially
available in the United States as a urinary assay that provides a quantitative
measure of the excretion of cross-linked N-telopeptides of type I collagen (NTx)
as an indicator of human bone resorption and in July 1996 the Company received
expanded claims for the assay. The new claims form a basis of important new
messages to help physicians better manage diseases of the aging skeleton. First
and foremost, the new claims allow that an Osteomark test measurement, if taken
prior to the initiation of hormonal anti-resorptive therapy, can be utilized to
predict a patient's response to that therapy, in terms of its effect on skeletal
bone mineral density. Additionally, the claims allow that the test can be used
for therapeutic monitoring of anti-resorptive therapies in postmenopausal women,
as well as individuals diagnosed with osteoporosis and Padget's disease, and
therapeutic monitoring of estrogen-suppressing therapies. Prior to becoming
commercially available, the Osteomark test was available domestically only for
research purposes. The Osteomark test is now marketed in over 22 countries
around the world.
The Osteomark assay is a non-invasive diagnostic test which
quantitatively measures bone resorption. Individuals who are losing bone
collagen at accelerated rates may indicate a condition which typically results
in osteoporosis. The Company believes that early identification of high levels
of bone resorption provides the opportunity to predict skeletal response (bone
mineral density) to hormonal resorptive therapy in postmenopausal women and help
prevent the onset of osteoporosis. The Company also believes that the Osteomark
assay aids clinicians in monitoring the effects of anti-resorptive therapies in
postmenopausal women, as well as in older patients who have already lost
significant bone mass.
The Company is manufacturing and marketing the Osteomark assay initially
in an ELISA format for testing urine samples. Worldwide promotion of the
Osteomark test kits is supported by Johnson & Johnson Clinical Diagnostics, Inc.
("Johnson & Johnson"). In 1995 the Company entered into research, development,
license and supply agreements with Johnson & Johnson. These agreements grant
Johnson & Johnson a license to manufacture, sell and distribute certain products
using Ostex's bone resorption technology. Currently, Johnson & Johnson
distributes in the United States and certain foreign countries the Osteomark
assay in the existing microtiter plate format and is adapting the urine assay
for use with its automated analyzer. The companies intend to adapt the serum
assay for use on high-speed, high volume, automated instruments typically used
in large clinical laboratories. Ostex will receive royalties on Johnson &
Johnson sales of products incorporating the Ostex technology.
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Ostex has also entered into research, development and license agreements
with Mochida Pharmaceutical Co., Ltd. ("Mochida"), a Japanese pharmaceutical
company for the commercialization of the Osteomark assay in Japan. Under the
research and development agreement Mochida has an option to license the NTx
serum assay and has paid Ostex $3,350,000 to date. Future payments of $750,000
under the agreement are contingent upon Mochida's decision to exercise its
option.. Under the license agreement, the Company granted exclusive
manufacturing, marketing and distribution rights to certain of the Company's
products in Japan. Mochida has agreed to pay Ostex $2,500,000 in licensing fees
for the Osteomark assay of which $2,000,000 has been earned to date.
Additionally, Ostex will receive royalties on Mochida sales of products
incorporating the Ostex technology.
Ostex is evaluating other potential collaborators to also adapt the
Osteomark assay to other high speed automated instruments. The Company also
plans to develop the Osteomark assay in other formats, including formats
suitable for use in the physician's office and the home. Toward that end, the
Company has established agreements with Hologic, Inc. ("Hologic"), a worldwide
leader in x-ray and ultrasound bone densitometers used to measure bone density
to assist in the diagnosis and monitoring of osteoporosis and other bone
diseases, and Metrika Laboratories, Inc. ("Metrika") to develop physician office
"point-of-care" Osteomark assay devices.
The Company has two agreements with Hologic. Under the first agreement
the companies will co-promote to physicians a package of products that
incorporates both companies' bone assessment products. The goal of the
co-promotion with Hologic is to advance the companies' mutual products and
technologies as complementary approaches for the diagnosis and management of
bone disorders. Certain of the disease indications that Ostex has chosen for its
initial research and development activities can be diagnosed using existing
x-ray and related technologies. However, Ostex believes that traditional x-ray
is generally regarded as a poor diagnostic tool to screen for risk of fracture
and severe bone loss because, according to industry sources, bone loss must
exceed 30% of bone mass before it can be detected by x-ray. Ostex believes that
the most accepted tool for conducting bone mineral density measurements is
dual-energy x-ray absorptiometry ("DEXA") because it has demonstrated that
it can accurately record bone densities. Hologic is a worldwide leader in DEXA
and untrasound bone densitometers. The agreement calls for the creation and
marketing of an integrated offering to physicians, in which a fee-per-study
leasing agreement will include both Hologic's QDR-4500C bone densitometer and a
specified number of OstIn utilizing the companies' sales forces an eomark tests.
customer bases, Ostex hopes to accelerate the physician education process, as
well as increase the awareness of both companies' diagnostic technologies.
The companies have also agreed to work together to develop a low-cost
point-of-care NTx test for bone resorption based on the Osteomark assay under a
joint development agreement. Under this agreement, the companies, working with
Serex, Inc. ("Serex"), will develop and market a point-of-care Osteomark test,
utilizing a strip-test technology of Serex. The joint product is expected to
reduce the cost and simplify the process of obtaining patient results.
Additionally, the Company has entered into agreements with several
leading clinical laboratories in the U.S. including Corning Clinical
Laboratories ("Corning"), SmithKline Beecham Clinical Laboratories
("SmithKline"), and Labcorp of America ("Labcorp"). Under these agreements, the
laboratories will perform the Osteomark test for their physician clients. These
relationships enable patients and doctors to conveniently access the Osteomark
assay for diagnosis and monitoring of osteoporosis.
Osteoporosis is a significant health problem worldwide. The Company
estimates that approximately 70 million women and 21 million men are at risk of
osteoporotic fracture, and that an additional 35 million people are at risk of
skeletal degradation associated with Paget's disease of bone, cancer that
metastasizes to bone, hyperparathyroidism and renal osteodystrophy. In spite of
the serious human and economic consequences of these diseases (according to the
National Osteoporosis Foundation, the direct healthcare and indirect lost
productivity costs of osteoporosis exceed $10 billion annually in the U.S.
alone), medical intervention usually commences only after pain, immobility,
fractures or other symptoms have appeared. The Company expects the osteoporosis
therapeutic market, which industry sources currently approximate at $2 billion
per year worldwide, will increase dramatically. The Company believes that over
50 new therapeutic products are under development for osteoporosis, many of
which are in late-stage clinical trials. The Company believes that the use of
the Osteomark assay can be used to effectively monitor existing therapies and
other therapies which may be developed.
Outside the field of osteoporosis, the Company is investigating the use
of its Osteomark assay in staging patients diagnosed with breast or prostate
cancer and is developing an assay to identify the degradation of cartilage, with
potential application in the field of arthritis The Company is also developing
an assay to measure the breakdown of vascular tissues with potential
applications in the area of cardiovascular disease. In addition, Ostex is
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investigating a novel polypeptide, O-CSF, which has therapeutic implications for
osteoporosis and other bone disorders. Ostex has obtained all rights to its core
technology and to the O-CSF technology through exclusive license agreements with
the University of Washington (the "University") and its non-profit technology
licensing agency, the Washington Research Foundation (the "WRF").
OSTEOMARK and OSTEX are registered United States trademarks of Ostex
International, Inc. The Company has also registered its OSTEOMARK trademark in
31 other countries. Additional trademark applications are pending.
Competition from other biotechnology companies, pharmaceutical companies
and research and academic institutions continues to be intense. Subsequent to
the Osteomark assay becoming commercially available in the United States,
product sales have increased. However, the Company anticipates that it will face
intense competition in attempting to establish market share. Several immunoassay
tests for bone resorption as well as procedures for detection of osteoporosis
and other bone disorders currently exist and others are in development, and the
manufacturers of these tests will continue to improve them. In addition, the
diagnostic industry is subject to rapid technological change and it is likely
that new procedures and technologies will continue to be developed.
The Company's bone resorption assay technology is covered by seven United
States patents, two European patents, two Australian patents, and patents in
Ireland, Spain, Hong Kong, and Singapore. The two European patents are in
opposition proceedings before the European Patent Office. Additional patent
applications are pending in Japan and elsewhere. The Company's cartilage and
vascular connective tissue diagnostics are covered by two U.S. patents and
patents in Australia and Ireland. Additional patent applications are pending.
The Company's Research and Development expenditures, all of which was
funded by the Company, totaled $3,163,000, $3,200,000, and $3,308,000, in 1996,
1995, and 1994, respectively.
The Company's foreign kit sales, all to non-affiliates, totaled
$299,000, $530,000, and $215,000, in 1996, 1995 and 1994, respectively.
ITEM 1A. RISK FACTORS
THE FOLLOWING RISK FACTORS, AMONG OTHERS, COULD CAUSE THE COMPANY'S
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE COMPANY'S
FORWARD-LOOKING STATEMENTS IN THIS REPORT AND PRESENTED ELSEWHERE BY MANAGEMENT
FROM TIME TO TIME.
UNCERTAINTY OF MARKET ACCEPTANCE
The Company's lead product, the Osteomark assay, became commercially
available in May 1995 in the United States and sales of this product have
increased over time. However, there can be no assurance that the Company's
Osteomark assay or any of its other diagnostic or therapeutic products will gain
acceptance from the medical community, clinical or hospital laboratories,
physicians or patients as readily as other forms of diagnosis or any newly
developed diagnostic. There can be no assurance that the Company will be able to
develop significant market share for its products, or at all. The inability of
the Company to achieve market acceptance for its products could have a material
adverse effect on the Company's business, financial condition and results of
operation.
DEPENDENCE ON CORE TECHNOLOGY; UNCERTAINTY OF ADAPTATION TO DIFFERENT FORMATS
The Company currently relies exclusively upon its core technology for the
development of diagnostic products for bone, cartilage and connective tissue
disorders. There can be no assurance that competitors of the Company will not be
successful in developing new or more efficient or cost-effective diagnostics
that are more readily accepted than the Company's products. The Company is in
the process of undertaking ongoing and significant additional, research and
development to adapt the core technology for serum testing and for different
formats, instruments and other delivery platforms that currently exist or may be
developed. In particular, additional research and development will be required
to adapt its core technology to high-speed, high-volume automated instruments
typically used in large clinical laboratories or companies through which the
Company may seek to expand the market for its products. There can be no
assurance that the Company will be successful in adapting and developing its
core technology to meet such needs. The Company has not developed physician
office and home-use adaptations of its core technology, and there can be no
assurance that the Company or any of its actual or prospective collaborators
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will either develop or obtain any required regulatory approval for a
cost-effective instrument for such use. In addition, technological changes or
medical advancements could diminish or eliminate the commercial viability of the
Osteomark assay or future products based upon the Company's core technology. The
failure to adapt the Company's core technology to different formats, instruments
and other delivery platforms, or otherwise to commercialize such core
technology, could have a material adverse effect on the Company's business,
financial condition and results of operation.
RELIANCE ON COLLABORATIVE AGREEMENTS
The Company has entered into collaborative or co-promotional agreements
with several partners, including, among others, Hologic, Johnson & Johnson and
Mochida. The level of each of such partner's involvement and support and the
amount and timing of resources that these collaborators devote to these
activities, are not within the control of the Company and can significantly
impact the Company's ability to achieve its objectives. There can be no
assurance that these collaborators will perform their contractual obligations as
expected or that the Company will derive any additional revenue from such
arrangements. Moreover, the agreements may be terminated under certain
circumstances. The Company expects to rely on these and additional agreements to
develop and commercialize its research and the development of future products.
There can be no assurance that the Company will be able to negotiate acceptable
collaborative agreements in the future, or that such new agreements or existing
agreements will be successful. In addition, there can be no assurance that the
parties to agreements will not pursue alternative technologies.
LIMITED SALES AND MARKETING EXPERIENCE
The Company has limited experience in sales, marketing and distribution.
To market any of its products directly, the Company must develop and implement a
substantial marketing and sales effort with technical expertise and supporting
distribution capability. The Company intends to continue to market and sell its
products in the U.S. through a national distributor and its own limited sales
force and to market and sell its products in other markets through distributors
or collaborative arrangements. There can be no assurance that the Company will
be able to establish effective sales and distribution capabilities or that it or
its collaborators will be successful in gaining market acceptance for the
Company's products or that the Company will achieve or maintain significant
market share for its products.
DEPENDENCE ON LICENSED PATENTS AND PROPRIETARY RIGHTS
The Company depends on its current and future patent position relating to
its core technology and its O-CSF technology. The Company's patent position
involves complex legal and factual questions. The Company is the exclusive
licensee of certain patents within and outside of the U.S. relating to the
Company's core technology, as well as the O-CSF technology. The Company is
dependent upon the WRF for the filing and prosecution of patents and patent
applications licensed to the Company. Claims made under patent applications may
be denied or significantly narrowed, and issued patents may not provide
significant commercial protection to the Company. There is no assurance that the
Company's patents will not be challenged or designed around by others. The
Company could incur substantial costs in proceedings before the U.S. Patent
Office, including interference proceedings. These proceedings could also result
in adverse decisions as to the patentability of the Company's licensed or
assigned inventions. There can be no assurance that the Company's products do
not or will not infringe on the patent or proprietary rights of others. The
Company may be required to obtain additional licenses to the patents or other
proprietary rights of others. The Company may also require licenses from the
inventors of certain processes, technologies and delivery formats in order to
successfully market certain products. There can be no assurance that any such
licenses would be made available on terms acceptable to the Company, if at all.
If the Company needs and cannot or does not obtain such licenses, it could
encounter delays in product introductions while it attempts to design around
such patents, or the development, manufacture or sale of products requiring such
licenses could be precluded. The Company believes there will continue to be
significant litigation in the industry regarding patent and other intellectual
property rights.
The Company is aware of competitors that are developing products that may
be covered by claims made in patents or patent applications of the Company.
Because certain foreign patents are subject to third-party opposition following
the date of grant of such patents, there can be no assurance that claims of the
Company's foreign patents, once granted, will survive such opposition without
cancellation or significant modification. Because U.S. applications are
confidential until a patent issues, the Company cannot be assured that its
patent claims have priority in the U.S. or will be entitled to patent
protection.
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The Company also relies on trade secrets and other unpatented proprietary
technology. No assurance can be given that the Company can meaningfully protect
its rights in such unpatented technology or that others will not independently
develop substantially equivalent products and processes or otherwise gain access
to the Company's technology. The Company seeks to protect its trade secrets and
proprietary know-how, in part, with confidentiality agreements with its
employees and consultants. There can be no assurance that these agreements will
not be breached, that the Company will have adequate remedies for any breach, or
that the Company's trade secrets will not otherwise become known or be
independently developed by competitors. In addition, protracted and costly
litigation may be necessary to enforce and determine the scope and validity of
the Company's proprietary rights.
UNCERTAINTY OF REGULATORY APPROVALS FOR DIAGNOSTIC OR THERAPEUTIC PRODUCTS
The process of obtaining FDA and other required regulatory approvals can
be lengthy and expensive. The time required for FDA approvals is uncertain, and
often depends on the type, complexity and novelty of the product. There can be
no assurance that the FDA will act favorably or quickly in its review of any
submission by the Company, and significant difficulties or costs may be
encountered by the Company in its efforts to obtain FDA approvals that could
delay or preclude the Company from marketing its products. Furthermore, there
can be no assurance that the FDA will not request the development of additional
data following original submissions, causing the Company to incur further cost
and delay. Nor can there be any assurance that the FDA will not restrict the
intended use of a submitted product as a condition for clearance.
If the FDA concludes that a device is not substantially equivalent to
another legally marketed device, submission of a pre-market approval application
("PMA") will be required. If the FDA indicates that a PMA is required for any
product of the Company, the application will require submission of results of
clinical studies and manufacturing information, and likely review by a panel of
experts outside of the FDA. Clinical studies would need to be conducted in
accordance with FDA requirements. The failure to comply would result in the
FDA's refusal to accept the data or the imposition of regulatory sanctions. FDA
review of a PMA application can take significantly longer than that for a 510(k)
notification. Further, if a company wishes to propose modifications to a product
subsequent to FDA approval of a PMA application, including changes in
indications or other significant modifications to labeling, or modifications to
the manufacturing process, or if a company wishes to change its manufacturing
facility, a PMA supplement must first be submitted to the FDA for its review and
approval.
EARLY STAGE DEVELOPMENT OF O-CSF TECHNOLOGY AND UNCERTAINTY OF REGULATORY
APPROVALS
Research on the Company's O-CSF technology is at an early stage. There
can be no assurance that the Company's O-CSF research and development activities
will result in any commercially viable therapeutic or diagnostic products. Even
if the Company develops therapeutic products from such technology, the process
of obtaining FDA approval for therapeutic products is substantially more costly
and time consuming than for diagnostic products. There can be no assurance that
any potential therapeutic or diagnostic product based on O-CSF technology will
obtain approval by the FDA for any indication.
EXTENSIVE CONTINUING GOVERNMENT REGULATION
The research, development, manufacturing and marketing of the Company's
products are subject to extensive continuing regulation by numerous governmental
authorities in the U.S. and certain other countries and the Company, its
products, and its manufacturing facilities are subject to continual review and
periodic inspection. The regulatory standards for manufacturing are applied
stringently by the FDA. Discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions on such product or
manufacturer or facility, including warning letters, fines, suspensions of
regulatory approvals, product recalls, operating restrictions, delays in
obtaining new product approvals, withdrawal of the product from the market, and
criminal prosecution. Other violations of FDA requirements can result in similar
penalties. The Company is also subject to numerous environmental, health and
workplace safety laws and regulations, including those governing laboratory
procedures, exposure to blood-borne pathogens, and the handling of biohazardous
materials. Any violation of, and the cost of compliance with, these laws and
regulations could adversely impact the Company's operations. The Company is
unable to predict the extent or likelihood of adverse government regulation that
might arise from future U.S. or foreign government action.
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LIMITED MANUFACTURING EXPERIENCE
The Company plans to develop adaptations of its core technology for the
home-use market and for use in physicians offices and may depend upon the
efforts of collaborators for this development. Such adaptations have not been
developed and there can be no assurance that, if developed, such adaptations
could be manufactured in a commercially viable manner. Unless the Company
develops additional in-house manufacturing capability for such products it will
be dependent upon outside sources for the manufacture of its products. There can
be no assurance that the Company's reliance on others for the manufacture of its
products will not result in problems with product supply. Interruptions in the
availability of products could delay or prevent the development and commercial
marketing of the Company's products.
HISTORY OF LOSSES AND LIMITED OPERATING HISTORY
The Company has a limited operating history and had a retained deficit at
December 31, 1996 of approximately $21,864,000. At December 31, 1996, the
Company had a net loss of approximately $8,070,000. The Company expects to incur
additional substantial costs as it continues with its operations, marketing
efforts, research and development activities, and clinical trials. The Company
expects to continue to incur losses in future periods and the Company is unable
to predict when, if at all, it will achieve profitability.
FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FINANCING
The Company will continue to require substantial funds for research and
development, commercial-scale manufacturing facilities, and the marketing of its
products. The amount of the Company's future capital requirements will depend on
many factors, including the status of the development of its products, the time
and costs involved in obtaining regulatory approvals, the costs involved in
filing, prosecuting and enforcing patent claims, competing technological and
market developments, the ability of the Company to maintain existing
collaborative and licensing arrangements, and the ability of the Company to
establish new collaborative and licensing arrangements. The Company will require
substantial additional funds to complete the development of its therapeutic
products. The Company expects that its existing capital resources will be
sufficient to fund the Company's activities through 1998. However, the Company
may be required to seek additional financing before the end of 1998. There can
be no assurance that additional funds, whether through additional financings,
collaborative arrangements with corporate sponsors or other sources, will be
available, if at all, in a timely manner or on acceptable terms. If adequate
funds are not available, the Company may be required to delay, scale back or
eliminate one or more of its programs or obtain funds through arrangements that
are unfavorable to the Company.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the principal members of its
scientific and management staff, particularly Dr. David Eyre. The loss of Dr.
Eyre's services may have a material adverse effect on the Company's efforts to
develop additional diagnostic products from its core technology and to develop
products from its O-CSF technology. Recruiting and retaining qualified
scientific personnel to perform research and development work in the future will
also be critical to the Company's operations. There can be no assurance that the
Company will be able to attract and retain such personnel given the competition
for experienced scientists among numerous diagnostic and biotechnology companies
and research and academic institutions.
The Company's continued expansion of its operations, manufacturing and
marketing efforts, research and development activities, and clinical trials is
expected to place increased demands on the Company's resources, and necessitate
the retention and addition of management personnel and the development of
additional expertise by existing management personnel. The failure to retain or
acquire needed personnel or to develop needed expertise could have a material
adverse effect on the Company's operations. In addition, the Company expects to
continue to engage consultants and advisors to assist in formulating its
research and development strategy. All of the Company's consultants and advisors
are employed by entities other than the Company and may have commitments to or
consulting or advisory contracts with other entities that may affect their
ability to contribute to the Company.
<PAGE>
INTENSE COMPETITIVE ENVIRONMENT
Competition from biotechnology companies, pharmaceutical companies and
research and academic institutions is intense and is expected to increase. A
number of diagnostic tests and procedures for osteoporosis and other bone
disorders currently exist and others are in development, and the manufacturers
of these tests will continue to improve them. In addition, the diagnostic
industry is subject to rapid technological change. There can be no assurance
that the Company's competitors will not succeed in developing products that are
more effective than those which have been or are being developed by the Company
or which would render the Company's core technology obsolete or non-competitive.
Many of the Company's competitors have substantially greater financial,
technical and human resources than the Company. In addition, many of these
competitors have significantly greater experience and resources than the Company
in undertaking clinical trials and other regulatory approval procedures as well
as in marketing and achieving manufacturing efficiencies. There are also small
companies, academic institutions, governmental agencies and other research
organizations that are conducting research in the area of bone, cartilage and
connective tissue disease, diagnosis and treatment. These entities may also
market commercial products either on their own or through collaborative efforts.
The Company's competitors may develop technologies and products that are
available for sale prior to the Company's products, or at a lower cost, or with
better technical characteristics, rendering the Company's products less
competitive.
DEPENDENCE ON THERAPEUTICS DEVELOPED BY OTHERS
Acceptance of and demand for the diagnostic products that the Company is
developing will be affected by the need perceived by physicians to diagnose
bone, cartilage and connective tissue disorders for the purposes of treatment.
There are currently a limited number of therapies that are effective in
preventing osteoporosis or other bone, cartilage or connective tissue disorders,
or in treating these disorders once diagnosed. In the event new therapies do not
receive regulatory approval or experience delayed market acceptance, the Company
could be adversely affected. Unfavorable publicity concerning a product of the
Company or therapeutic products for osteoporosis could also have an adverse
effect on the Company's ability to obtain regulatory approvals or to achieve
market acceptance.
UNCERTAINTY OF HEALTHCARE REIMBURSEMENT
The Company's ability to commercialize diagnostic or therapeutic products
will depend in part on the extent to which reimbursement for the cost of such
products and related treatment will be available from third-party payors, such
as government health administration authorities, private health coverage
insurers and other organizations. The status of the scope of healthcare programs
worldwide is uncertain and there can be no assurance that adequate third-party
coverage will be available for the Company to maintain price levels sufficient
for realization of an appropriate return on its investment in product
development. Third-party payors are increasingly challenging the price and cost
effectiveness of medical products and services. If the Company succeeds in
bringing one or more products to the market, there can be no assurance that
these products will be considered cost effective and that reimbursement to the
consumer will be available or sufficient to allow the Company to sell its
products on a competitive basis.
POTENTIAL VOLATILITY OF STOCK PRICE
The stock market may experience significant price and volume fluctuations
unrelated to the operating performance of particular companies. Factors such as
any loss of key management, the result of the Company's clinical trials or those
of its competitors, adverse regulatory actions or decisions, evidence regarding
the safety or efficacy of the Company's products or those of its competitors,
announcements of technological innovations or new products by the Company or its
competition, governmental regulation, developments with respect to patents or
other proprietary rights, product or patent litigation or public concern as to
the safety of products developed by the Company, may have a volatile effect on
the market price of the Company's Common Stock.
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ITEM 1B. EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their ages are as follows:
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NAME AGE POSITION
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H. Raymond Cairncross, J.D. 55 Chairman of the Board of Directors and Chief
Executive Officer
Robert J. Glaser, M.B.A. 45 Director, President and Chief Operating Officer
Robert M. Littauer, M.B.A., C.P.A. 48 Senior Vice President, Finance and Administration
Jeffrey J. Miller, Ph.D., J.D. 49 Senior Vice President, Corporate Development and
Secretary
Thomas F. Broderick, M.A., J.D. 48 Vice President, Intellectual Property
Nancy J.S. Mallinak 35 Vice President, Regulatory and Clinical Affairs
William K. Strelke, M.S. 43 Vice President, Sales and Marketing
John Wynne 44 Vice President, European Operations
</TABLE>
H. RAYMOND CAIRNCROSS, J.D. is a founder of the Company and has been
Chairman of the Board of Directors since 1989 and Chief Executive Officer since
1991. From 1991 to April 1996, Mr. Cairncross also served as President of the
Company. In 1987, Mr. Cairncross founded Cairncross & Hempelmann, PS., a Seattle
law firm of which he previously served as Managing Partner and currently is
inactive as a shareholder and a director. Mr. Cairncross is a member of the
Board of Directors of Information Optics Corporation, a company developing high
speed computer memory systems, and Omeros Medical Systems, Inc., a company
developing orthopedic surgical devices and products.
ROBERT J. GLASER, M.B.A. has been with the Company as the President and
Chief Operating Officer since April 1996 and as a Director of the Company since
May 1995. Prior to joining Ostex, Mr. Glaser has held a variety of U.S. and
International positions at Merck & Co., Inc., a pharmaceutical company,
including positions as Senior Vice President, Marketing, U.S. Human Health from
January 1994 to April 1996, as Vice President, Marketing, Merck Human Health
Division from June 1993 to January 1994, as Vice President, Merck Vaccine
Division, from March 1993 to June 1993, as Vice President, Sales & Marketing,
Merck Vaccine Division, from 1991 to 1993, and as Executive Director of
Marketing, Merck, Sharp & Dohme, from 1989 to 1991.
ROBERT M. LITTAUER, M.B.A., C.P.A. joined the Company in September 1996
as Senior Vice President, Finance and Administration. Before joining Ostex, Mr.
Littauer was Senior Vice President, Chief Financial Officer and Treasurer of
NeoRx Corporation, a biotechnology company developing therapeutic products for
cancer and cardiovascular diseases ("NeoRx"), from 1987 to September 1996. From
1982 to 1987 Mr. Littauer was Vice President, Chief Financial Officer at
Concept, Inc., a manufacturer of surgical products subsequently acquired by
Bristol Myers-Squibb, and from 1977 to 1982 was Corporate Controller of
Instrumentation Laboratory, Inc. a manufacturer of medical and analytical
testing instruments.
JEFFREY J. MILLER, PH.D., J.D. joined the Company in September 1996 as
Senior Vice President, Corporate Development. Prior to joining Ostex, Dr. Miller
was Senior Vice President of Business Development and Legal Affairs for NeoRx
from 1987 to September 1996. From 1985 to 1987 Dr. Miller was a partner at the
Seattle law firm of Seed and Berry.
<PAGE>
THOMAS F. BRODERICK, M.A., J.D. joined the Company in April 1996 as
Patent Counsel and in March 1997 became Vice President, Intellectual Property.
From 1989 to April 1996 Mr. Broderick was a partner at the patent law firm of
Christensen, O'Connor, Johnson & Kindness in Seattle, Washington.
NANCY J.S. MALLINAK was named Vice President, Regulatory and Clinical
Affairs of the Company in February 1997. Ms. Mallinak was Director, Regulatory
and Clinical Affairs for the Company from June 1995 to February 1997 and was
Manager, Regulatory and Clinical Affairs for the Company from December 1992 to
June 1995. From June 1989 to December 1992, Ms. Mallinak was Manager, Clinical
Product Development in the Diagnostics Group of Baxter International, Inc., a
general healthcare company. From September 1985 to June 1989, Ms. Mallinak was a
supervisor for research and development at Bio Control Systems, Inc., a
diagnostics company.
WILLIAM K. STRELKE, M.S. joined the Company in January 1994 as Director,
Sales and Marketing and in October 1994 became Vice President, Sales and
Marketing. Prior to joining Ostex, Mr. Strelke served from March 1993 to January
1994 at Mitchell International, Inc., a health-care facility design and
construction consulting company, where he was Vice President and Regional
Director. From 1983 to March 1993, Mr. Strelke was responsible for sales and
distribution management with the Scientific Products Division of Baxter
International (previously American Hospital Supply Corporation), a general
healthcare company.
JOHN WYNNE joined the Company in December 1996. From 1992 to 1996 Mr.
Wynne held various positions at IMR... Corporation, a biotechnology company,
including Vice President, Marketing and Business Development from 1993 to 1996,
and Managing Director of their European Subsidiary from 1992 to 1993. From 1988
to 1991 Mr. Wynne was Business Manager of Fresenius Ltd, a German based national
healthcare company.
ITEM 2. PROPERTIES
The Company's research laboratories, manufacturing operations, and
administrative offices are located in Seattle, Washington. The Company leases
approximately 39,000 square feet of space in Seattle under a lease that will
expire in 2005 and a laboratory facility and antibody manufacturing operation in
Portland, Oregon occupying 1,500 square feet under a lease that will expire in
1997. The Company expects to relocate its Portland activities to the Seattle
facility at the expiration of the Portland facility lease. Ostex is currently
utilizing 80% of its leased space.
ITEM 3. LEGAL PROCEEDINGS
Information regarding Legal Proceedings is incorporated herein by
reference to note 11 in the "Notes to Financial Statements" on pages 21-22 of
the Annual Report to shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of shareholders during the fourth
quarter ended December 31, 1996.
---------------------
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information regarding the Common Stock trading activity for 1996 and 1995
is incorporated herein by reference to the "Shareholder Information" on page 25
of the Annual Report to shareholders.
As of March 18, 1997 there were 12,447,617 shares of Common Stock
outstanding held of record by approximately 170 shareholders. The Company
believes there are a significant number of additional owners of the Common
Stock, who own shares held in street name.
<PAGE>
The Company has never paid cash dividends and has no present intention of
paying dividends in the foreseeable future.
TRANSFER AGENT AND REGISTRAR - The transfer agent and registrar for the
Common Stock is ChaseMellon Shareholder Services, L.L.C., Seattle, Washington.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference
to "Selected Financial Data" on page 10 of the Annual Report to shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference
to pages 11-12 of the Annual Report to shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference
to the "Financial Statements," and " Notes to Financial Statements," on pages
13-22 and "Report of Independent Public Accountants" on page 23 of the Annual
Report to shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
--------------------
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Directors
The information contained in the section entitled "Election of Directors
and Director Information" of the Proxy Statement is incorporated herein by
reference in response to this item.
b. Executive Officers of the Registrant
Information required by this item is contained in Part I of this Annual
Report on Form 10-K in the section entitled "Executive Officers of the
Registrant".
c. Compliance With Section 16(a)
Information contained in the section entitled "Compliance with Section
16(a) of the Exchange Act" of the Proxy Statement is incorporated herein by
reference in response to this item.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the section entitled "Executive
Compensation" of the Proxy Statement is incorporated herein by reference in
response to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the sections entitled " Management" and
"Security Ownership of Certain Beneficial Owners and Management" of the Proxy
Statement is incorporated herein by reference in response to this item.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the section entitled "Notes to Financial
Statements" on pages 18-22 of the Annual Report to shareholders and the section
entitled "Certain Transactions" of the Proxy Statement is incorporated by
reference in response to this item.
--------------------
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS
The information contained in the Financial Statements and Notes to
Financial Statements are located on pages 13-22 of the Annual Report to
shareholders and are listed below.
Page within
FINANCIAL STATEMENTS Annual Report
-------------------- -------------
Balance Sheets 13
Statements of Operations 14
Statements of Cash Flows 15
Statements of Shareholders' Equity 16
Notes to Financial Statements 18
Report of Independent Public Accountants 23
(B) REPORTS ON FORM 8-K
None
<PAGE>
(C) EXHIBIT INDEX (7)
Exhibit
Number Description
------- ---------------------------------------------------
3.1 Articles of Incorporation, as amended, dated January 1997.
(1)3.2 Bylaws, as amended
(1)4.1 Specimen Common Stock Certificate
Stock Purchase Agreements ("Terms and Provisions" included
in Exhibit 3.1)
(1)4.2A Series A Stock Purchase Agreement dated September 1989
(1)4.2B Series B Stock Purchase Agreement dated June 1992
(1)4.2C Series C Stock Purchase Agreement dated August 1993
(1)4.3 Form of CS First Boston Corporation Warrant
(1)4.4 Form of Invemed Associates, Inc. Warrant
(2)4.5 Shareholder Rights Agreement dated January 21, 1997
(1)10.1A Amended and Restated Stock Option Plan
(1)10.1B Form of Employee Stock Option Agreement
(1)10.1C Form of Director's Stock Option Agreement
(1)10.2 Directors' Nonqualified Stock Option Plan
(1)10.3 1994 Stock Option Plan
Agreements with Hologic, Inc.
(3)10.4A Co-Promotion and Sales Representation Agreement dated
January 14, 1997
(3)10.4B Joint Development, License and Supply Agreement dated
January 14, 1997
(1)10.5 Form of Indemnification Agreement with officers and
directors
(1)10.6 Form of Employee Confidentiality and Invention Agreement
Agreements with H. Raymond Cairncross
(1)10.7A Employment Agreement dated April 15, 1994
(1)10.7B Stock Option Agreements dated June 6, 1991, July 1, 1993,
July 1, 1994, April 15, 1994
(1)10.9 Asset Purchase and Sale Agreement dated May 31, 1994 with
Hybrilogic Corporation
(1)10.10 Cooperation Agreement dated August 11, 1993 with
Merck & Co., Inc.
Agreements with Mochida Pharmaceutical Co., Inc.
(1)10.12A Research and Development Agreement dated August 1992
(1)10.12B Osteomark License Agreement Dated August 1992
(1)10.12C Stock Purchase Agreement dated November 22, 1994
Agreements with The Washington Research Foundation
(1)10.13A Restated Exclusive License Agreement effective June 19,
1992 (Urinary Assay for Measuring Bone Resorption)
(1)10.13B Amendment to Restated Exclusive License Agreement effective
January 1, 1993
(1)10.13C Second Amendment effective June 2, 1994
(1)10.14 Exclusive License Agreement dated February 10, 1994 (O-CSF)
<PAGE>
Exhibit
Number Description
------- ---------------------------------------------------
Agreements with the University of Washington
(3)10.15A Research Agreement dated July 26, 1989 (Molecular Markers
of Connective Tissue Degradation)
10.15B Research Agreement dated July 1, 1996 (Molecular Markers of
Connective Tissue Degradation)
(3)10.15C Research Agreement dated October 1, 1996 (Role of O-CSF in
Osteoclast Regulation)
(1)10.16A Know-How Transfer and Consulting Agreement dated
September 18, 1989 with David R. Eyre, Ph.D.
(1)10.16B Extension and Amendment dated May 1, 1992
(1)10.17 Amended and Restated Know-How Transfer and Consulting
Agreement dated February 22, 1993 with Minako Y. Lee, M.D.
(1)10.19 Osteomark EIA Exclusive Distribution License Agreement dated
March 28, 1994 with Technogenetics S.R.L. (division of
Recordati Pharmaceutical)
(1)10.20 Osteomark EIA Distribution License Agreement dated July 12,
1994 with BRAHMS Diagnostic (formerly Henning Berlin GMBH)
(1)10.21 Osteomark EIA Exclusive Distribution License Agreement dated
May 4, 1994 with Shield Diagnostics (Limited)
(1)10.22 Osteomark EIA Exclusive Distribution License Agreement dated
July 1, 1994 with DSL Diagnostic Products, Inc.
(dba INTER Medico)
(1)10.23 Osteomark Agreement dated February 12, 1993, as amended
May 10, 1994, with Nichols Institute Reference Laboratory
(1)10.24 Osteomark EIA Exclusive Distribution License Agreement dated
September 1, 1994 with Immuno Diagnostics
(1)10.25 License Agreement dated July 8, 1994 with Endrocrine
Sciences
(1)10.26 License Agreement dated August 1994 with Pacific Biometrics,
Inc.
Lease Agreements
(4)10.27A Lease Agreement dated October 2, 1995, with David A. Sabey
and Sandra L. Sabey
10.27B First Amendment of Lease dated October 15, 1996, with the
City of Seattle, successor-in-interest to David A. Sabey
and Sandra L. Sabey
Agreements with Johnson & Johnson Clinical Diagnostics, Inc.
(5)10.28A Distribution Agreement dated June 7, 1995
(5)10.28B Research, Development, License and Supply Agreement dated
June 7, 1995
(4)10.29 Clinical Laboratory Services License and Supply Agreement
dated October 25, 1995, with SmithKline Beecham Clinical
Laboratories, Inc.
<PAGE>
Exhibit
Number Description
------- ---------------------------------------------------
(4)10.30 Promotion Agreement dated September 20, 1995 with
Wyeth-Ayerst Laboratories
(6)10.31 Agreement with Laboratory Corporation of Americao Holdings
(LabCorp), dated January 11, 1996
13.0 Annual Report to stockholders for the year-ended
December 31, 1996
27.1 Financial Data Schedule
Notes to the Exhibits.
(1) Incorporated herein by reference from Item 16(a) of Registrant's Form S-1
Registration Statement as declared effective January 24, 1995 (No. 33-86118).
(2) Incorporated herein by reference from Form 8-A filed with the S.E.C.
in January 1997.
(3) Confidential treatment requested.
(4) Incorporated herein by reference from Form 10-K filed with the S.E.C
for the year ended December 31,1995.
(5) Incorporated herein by reference from Form 10-Q filed with the S.E.C
for the quarter ended June 30, 1995.
(6) Incorporated herein by reference from Form 10-Q filed with the S.E.C.
for the quarter ended March 31, 1996.
(7) Copies of exhibits may be obtained at prescribed rates from the Public
Reference Section of the Securities and Exchange Commission at 450 5th Street
NW, Room 1024, Washington, D.C., 20549.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on March 25, 1997.
OSTEX INTERNATIONAL, INC.
By /S/ H. RAYMOND CAIRNCROSS
----------------------------
H. Raymond Cairncross
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITIES DATE
--------- ---------- ----
/S/ H. RAYMOND CAIRNCROSS Chairman of the Board of Directors,
- ------------------------- and Chief Executive Officer March 25, 1997
H. Raymond Cairncross (principal executive officer)
/S/ ROBER J. GLASER Director, President and March 25, 1997
- ------------------------- Chief Operating Officer
Robert J. Glaser
/S/ Robert M. Littauer Senior Vice President, March 25, 1997
- ------------------------- Finance and Administration
Robert M. Littauer (principal financial and
principal accounting officer)
Director March 25, 1997
- -------------------------
Thomas J. Cable
/S/ DAVID R. EYRE Director March 25, 1997
- -------------------------
David R. Eyre
/S/ GREGORY D. PHELPS Director March 25, 1997
- -------------------------
Gregory D. Phelps
/S/ GILBERT S. OMENN Director March 25, 1997
- -------------------------
Gilbert S. Omenn
Amended and Restated
Articles of Incorporation
ARTICLES OF INCORPORATION
OF
OSTEX INTERNATIONAL, INC.
Pursuant to the Washington Business Corporation Act, Ostex
International, Inc., a Washington corporation, hereby amends and restates its
Articles of Incorporation as follows:
ARTICLE 1. NAME
The name of this corporation is "Ostex International, Inc."
ARTICLE 2. SHARES
2.1 AUTHORIZED SHARES. The total number of shares which the corporation
is authorized to issue is sixty million (60,000,000), consisting of fifty
million (50,000,000) shares of common stock having a par value of $.01 and ten
million (10,000,000) shares of preferred stock having a par value of $.01.
2.2 ISSUANCE OF PREFERRED STOCK IN SERIES. The preferred stock may be
issued from time to time in one or more series in any manner permitted by law
and the provisions of these Articles of Incorporation of the corporation, as
determined from time to time by the board of directors and stated in the
resolution or resolutions providing for the issuance thereof, prior to the
issuance of any shares thereof. The board of directors shall have the authority
to fix and determine and to amend, subject to the provisions hereof, the rights
and preferences of the shares of any series that is wholly unissued or to be
established. Unless otherwise specifically provided in the resolution
establishing any series, the board of directors shall further have the
authority, after the issuance of shares of a series whose number it has
designated, to amend the resolution establishing such series to decrease the
number of shares of that series, but not below the number of shares of such
series then outstanding.
2.3 DIVIDENDS. The holders of shares of the preferred stock shall be
entitled to receive dividends, out of the funds of the corporation legally
available therefor, at the rate and at the time or times, whether cumulative or
noncumulative, as may be provided by the board of directors in designating a
particular series of preferred stock. If such dividends on the preferred stock
shall be cumulative, then if dividends shall not have been paid, the deficiency
shall be fully paid or the dividends declared and set apart for payment at such
rate, but without interest on cumulative dividends, before any dividends on the
common stock shall be paid or declared and set apart for payment. The holders of
the preferred stock shall not be entitled to receive any dividends thereon other
than the dividends referred to in this section.
2.4 REDEMPTION. The preferred stock may be redeemable at such price, in
such amount, and at such time or times as may be provided by the board of
directors in designating a particular series of preferred stock. In any event,
such preferred stock may be repurchased by the corporation to the extent legally
permissible.
2.5 LIQUIDATION. In the event of any liquidation, dissolution, or
winding up of the affairs of the corporation, whether voluntary or involuntary,
then, before any distributions shall be made to the holders of the common stock,
the holders of the preferred stock at the time outstanding shall be entitled to
be paid the preferential amount or amounts per share as may be provided by the
board of directors in designating a particular series of preferred stock and
dividends accrued thereon to the date of such payment. The holders of the
preferred stock shall not be entitled to receive any distributive amounts upon
the liquidation, dissolution or winding up of the affairs of the corporation
other than the distributive amounts referred to in this section, unless
otherwise provided by the board of directors in designating a particular series
of preferred stock.
<PAGE>
2.6 CONVERSION. Shares of preferred stock may be convertible to common
stock of the corporation upon such terms and conditions, at such rate and
subject to such adjustments as may be provided by the board of directors in
designating a particular series of preferred stock.
2.7 VOTING RIGHTS. Holders of preferred stock shall have such voting
rights as may be provided by the
board of directors in designating a particular series of preferred stock.
2.8 SERIES A JUNIOR PARTICIPATING PREFERRED STOCK. The Corporation
hereby designates 500,000 shares of its Preferred Stock as "Series A Junior
Participating Preferred Stock." The rights, preferences, and limitations of such
shares are as set forth herein.
2.8.1 DESIGNATION OF SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK AND AMOUNT. The shares of such series shall be designated as "Series A
Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting the Series A Preferred Stock shall be 500,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; PROVIDED, HOWEVER, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of Rights (the "Rights") issued pursuant to the Rights Agreement dated
as of January 21, 1997 between the Corporation and ChaseMellon Shareholder
Services (the "Rights Agreement"); provided, further, that if more than a total
of 500,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of the Rights, the Board of Directors, pursuant to Section 23B.06.020
of the Washington Business Corporation Act, shall direct by resolution that
Articles of Amendment be properly executed and filed, in accordance with the
provisions thereof, providing for an increase in the authorized shares of Series
A Preferred Stock to the largest number of whole shares issuable upon exercise
of the Rights.
2.8.2 DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $.01 per share (the "Common Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $1 and (ii) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all noncash dividends
or other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
<PAGE>
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (ii)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this Section
2.8.2 immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); PROVIDED,
HOWEVER, that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1
per share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
2.8.3 VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
<PAGE>
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any similar
stock or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
2.8.4 CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section
2.8.2 are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
<PAGE>
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 2.8.4, purchase or otherwise acquire such shares at such time and
in such manner.
2.8.5 REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set forth
herein, in the Certificate of Incorporation of the Corporation (the "Certificate
of Incorporation"), or in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock or as otherwise required by law.
2.8.6 LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (b) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2.8.7 CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
<PAGE>
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
2.8.8 NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
2.8.9 RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Preferred Stock.
2.8.10 AMENDMENT. The Corporation's Articles of Incorporation
shall not be amended in any manner that would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
ARTICLE 3. NO PREEMPTIVE RIGHTS
Except as may otherwise be provided by the board of directors, no
preemptive rights shall exist with respect to shares of stock or securities
convertible into shares of stock of this corporation.
ARTICLE 4. NO CUMULATIVE VOTING
At each election for directors, every shareholder entitled to vote at
such election has the right to vote in person or by proxy the number of shares
held by such shareholder for as many persons as there are directors to be
elected. No cumulative voting for directors shall be permitted.
ARTICLE 5. BYLAWS
The board of directors shall have the power to adopt, amend or repeal
the Bylaws or adopt new Bylaws. Nothing herein shall deny the concurrent power
of the shareholders to adopt, alter, amend or repeal the Bylaws.
ARTICLE 6. REGISTERED AGENT AND OFFICE
The name of the current registered agent of this corporation and the
address of such registered office are as follows:
H. Raymond Cairncross
2203 Airport Way S., Suite 400
Seattle, WA 98134
<PAGE>
ARTICLE 7. DIRECTORS
The number of Directors of this corporation shall be determined in the
manner provided by the Bylaws and may be increased or decreased from time to
time in the manner provided therein, and may be removed only for cause in the
manner provided by the Bylaws. Prior to the 1994 annual election of Directors,
unless a director dies, resigns, or is removed, his or her term of office shall
expire at the next annual meeting of shareholders. At the 1994 annual election
of Directors, the Board of Directors shall be divided into three classes (said
classes to be as equal in number as may be possible) with the following classes
being elected for the terms set forth below:
CLASSES TERM
Class 1 1 year
Class 2 2 years
Class 3 3 years
Subsequent to the 1994 annual election of Directors, a Director's term shall be
three years, and each Director shall serve for the term for which he or she was
elected, or until his or her successor shall have been elected and qualified, or
until his or her death, resignation or removal from office; provided, however,
that despite the expiration of a Director's term, a Director shall continue to
serve until his or her successor is elected or until there is a decrease in the
authorized number of Directors. Directors need not be shareholders of the
corporation or residents of the State of Washington and need not meet any other
qualifications.
ARTICLE 8. LIMITATION OF DIRECTORS' LIABILITY
A director shall have no liability to the corporation or its
shareholders for monetary damages for conduct as a director, except for acts or
omissions that involve intentional misconduct by the director, or a knowing
violation of law by the director, or for conduct violating RCW 23B.08.310 (as
may hereafter be amended or supplemented), or for any transaction from which the
director will personally receive a benefit in money, property or services to
which the director is not legally entitled. If the Washington Business
Corporation Act is hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director shall be eliminated or limited to the full extent permitted by the
Washington Business Corporation Act, as so amended. Any repeal or modification
of this Article shall not adversely affect any right or protection of a director
of the corporation existing at the time of such repeal or modification for or
with respect to an act or omission of such director occurring prior to such
repeal or modification.
ARTICLE 9. INDEMNIFICATION OF DIRECTORS AND OFFICERS
9.1 RIGHT TO INDEMNIFICATION. Any individual who is, was, or is
threatened to be made a party to or is otherwise involved in (including without
limitation as a witness) any threatened, pending, or completed action, suit, or
other proceeding, whether civil, criminal, administrative or investigative, and
whether formal or informal, by reason of the fact that he or she is or was a
director or officer of the corporation or that, while a director or officer, he
or she is or was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another corporation or of a
partnership, joint venture, trust, employee benefit plan, or other enterprise,
<PAGE>
shall be indemnified and held harmless by the corporation, to the full extent
permissible by applicable law as then in effect, against all expenses and
liabilities (including without limitation any obligation to pay any judgment,
settlement, penalty, fine, including an excise tax assessed with respect to an
employee benefit plan, or expense incurred with respect to the proceeding,
including attorneys' fees) actually and reasonably incurred or suffered by such
individual in connection therewith; provided, however, that the corporation
shall not indemnify any director from or on account of: (a) any act or omission
of the director finally adjudged to be intentional misconduct or a knowing
violation of law, (b) any conduct of the director finally adjudged to be in
violation of RCW 23B.08.310 (as may hereafter be amended or supplemented), or
(c) any transaction with respect to which it is finally adjudged that the
director personally received a benefit in money, property, or services, to which
the director was not legally entitled; and further provided that except as
provided in the following paragraph with respect to proceedings seeking to
enforce rights to indemnification, the corporation shall indemnify any such
individual seeking indemnification in connection with a proceeding (or part
thereof) initiated by such individual only if such proceeding (or part thereof)
was, prior to its initiation, authorized by the board of directors of the
corporation. The right to indemnification conferred in this paragraph shall be a
contract right and shall include the right to be paid by the corporation for the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that the payment of such expenses in advance of
the final disposition of a proceeding shall be made only upon delivery to the
corporation of a written undertaking, by or on behalf of the director or
officer, in the form of a general unlimited obligation to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is
not entitled to be indemnified under this paragraph or otherwise. The right to
indemnification as provided herein shall continue as to an individual who has
ceased to be a director or officer and shall inure to the benefit of his or her
heirs, executors and administrators.
9.2 RIGHT OF CLAIMANT TO APPLY FOR COURT ORDER. If a claim made on the
corporation for indemnification under the preceding paragraph of this Article is
not paid in full by the corporation within sixty (60) days after a written claim
has been received by the corporation, except in the case of a claim for expenses
incurred in defending a proceeding in advance of its final disposition, in which
case the applicable period shall be twenty (20) days, the claimant may at any
time thereafter commence an action or otherwise petition a court to order the
corporation to pay the unpaid amount of such claim and, to the extent successful
in whole or in part, the claimant shall be entitled to be paid also the expense
of obtaining such a court order. A claimant shall be presumed to be entitled to
indemnification under this Article upon submission of a written claim to the
corporation or, in an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking has been tendered to the corporation; and thereafter the corporation
shall have the burden of proof to overcome the presumption that the claimant is
not so entitled. Neither the failure of the corporation (including its board of
directors, independent legal counsel or its shareholders) to have made a
determination prior to the filing of such petition that indemnification or
reimbursement or advancement of expenses to the claimant is proper in the
circumstances, nor an actual determination by the corporation (including its
board of directors, independent legal counsel or its shareholders) that the
claimant is not entitled to indemnification or to the reimbursement or
advancement of expenses, shall be a defense to the action or create a
presumption that the claimant is not so entitled.
<PAGE>
9.3 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article shall not be exclusive of any other right
which any individual may have or hereafter acquire under any statute, provision
of the Articles of Incorporation, Bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
9.4 INSURANCE, CONTRACTS AND FUNDING. The corporation may maintain
insurance, at its expense, to protect itself and any director, trustee, officer,
employee or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such individual
against such expense, liability or loss under the Washington Business
Corporation Act. Without further shareholder action, the corporation may enter
into contracts with any director or officer of the corporation in furtherance of
the provisions of this Article and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article.
9.5 INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION. From
time to time by action of its board of directors, the corporation may provide to
employees and agents of the corporation indemnification and payment of expenses
in advance of the final disposition of a proceeding to the same extent provided
to officers of the corporation by the provisions of this Article or pursuant to
rights granted in or provided by the Washington Business Corporation Act.
EXECUTED as of the 16th day of January, 1997.
OSTEX INTERNATIONAL, INC.
By: /S/ JEFFREY J. MILLER, PH.D.
Jeffrey J. Miller, Ph.D., J.D.
Secretary
<PAGE>
OSTEX INTERNATIONAL, INC.
CERTIFICATE RE AMENDED AND RESTATED
ARTICLES OF INCORPORATION
Pursuant to the Washington Business Corporation Act, Ostex
International, Inc., a Washington corporation (the "Corporation"), hereby
delivers to the Secretary of State of the State of Washington for filing Amended
and Restated Articles of Incorporation.
1._______The name of the Corporation is "Ostex International, Inc."
2._______The Articles of Incorporation have been amended and restated
in their entirety.
3._______The amendments were adopted on January 16, 1997 by the
directors. No such amendment required shareholder approval.
EXECUTED as of the 16th day of January, 1997.
OSTEX INTERNATIONAL, INC.
By:_/S/ JEFFREY J. MILLER, PH.D.
Jeffrey J. Miller, Ph.D., J.D.
Secretary
holcopro.rtf
Printed 3/31/97
-1-
CO-PROMOTION AND SALES REPRESENTATION AGREEMENT
This Co-Promotion and Sales Representation Agreement (this "Agreement") is
entered into as of the 14th day of January, 1997 ("Effective Date"), by and
between
HOLOGIC, INC., a Delaware corporation having its principal place of business at
590 Lincoln Street, Waltham, MA 02154 ("Hologic" or "Company"), and
OSTEX INTERNATIONAL, INC., a Washington corporation having its principal place
of business at 2203 Airport Way South, Suite 400, Seattle, Washington 98134
("Ostex" or Representative).
1. FACTS
A. Hologic engages in the research, development, manufacture, sale, and
lease of diagnostic equipment and other products in the field of bone
metabolism, including its line of QDR bone densitometers. Hologic sells this
line of bone densitometers to physician offices, clinics, hospitals and other
medical settings to measure the density and strength of the subject's bones as
an aid in the diagnosis of osteoporosis and other bone diseases.
B. Ostex has developed its proprietary immunoassay Osteomark(R) to
determine the levels of the NTx epitope collagen metabolite resulting from bone
resorption ("NTx Assay"), which it has implemented and sells in a microtiter
format. ("Osteomark(R) Laboratory Test"). Ostex sells its Osteomark(R)
Laboratory Test to clinical laboratories, physician offices, clinics, hospitals
and other medical settings for the purpose of measuring the rate of bone
resorption or breakdown of the subject's bones as an aid in the management of
osteoporosis and other bone diseases.
C. The parties believe that their products are complementary to each
other, and wish to enter into this Co-Promotion and Sales Agency Agreement under
which (1) Ostex will act, in the Territory, as the sales agent for a package of
products consisting of a Strategic Alliance ("Fee Per Scan") Leasing Contract
for Hologic's QDR 4500 product and a certificate redeemable for performance of a
defined number of Osteomark(R) Laboratory Tests; and (2) the parties will
jointly promote their QDR and Osteomark(R) products in the Territory as an
integrated approach to the diagnosis and management of osteoporosis, will
establish a committee to coordinate their joint activities, and will take
certain other steps; all as described herein.
D. The parties have entered into simultaneously with this Agreement
that certain Joint Development, License and Supply Agreement providing for the
development and sale of an NTx Meter System for point of care use in accord with
the terms set out therein (the "Development Agreement").
<PAGE>
2. DEFINITIONS
(a) "Promotional Package," as used in this Agreement, means a package
consisting of a Strategic Alliance ("Fee Per Scan") Leasing Contract for the
Hologic QDR product and an Osteomark(R) Laboratory Certificate, as described in
Attachment A which is attached hereto and incorporated herein.
(b) "QDR Component" as used in this Agreement, means a Strategic
Alliance ("Fee Per Scan") Leasing Contract for the Hologic QDR product specified
in Attachment A hereto.
(c) "Osteomark(R) Laboratory Test" as used in this Agreement, means an
immunoassay to determine levels of the NTx epitope collagen metabolite resulting
from bone resorption ("NTx Assay"), as marketed and sold by Ostex in a
microtiter format to centralized laboratories ("Osteomark(R) Laboratory Test").
(d) "Osteomark(R) Laboratory Certificate" as used in this Agreement,
means a certificate redeemable for performance of a number of Osteomark(R)
Laboratory Tests, as described in Attachment A hereto.
(e) "Territory," as used in this Agreement means the United States
of America.
(f) "First Commercial Sale" means the first Sale of a NTx Meter System
pursuant to the Development Agreement for value in an arms length transaction
with an independent third party following approval for sale by the United States
Food and Drug Administration of the NTx Meter System.
(g) "Confidential Information" means (a) any and all normally
non-public information communicated or disclosed by one party ("Discloser") to
the other party ("Recipient") describing or relating to the Disclosing Party's
business and marketing plans and strategies, financial information, or customer
information, and (b) any and all information communicated or disclosed by the
Discloser to Recipient describing or relating to the Disclosing Party's research
and development, Know-How, inventions, trade secrets, technical data, formulae,
drawings, designs, software, models, samples, kits, processes, product
development data and information and other data and information related to the
business of Discloser, labeled or specified in writing as "Confidential" or the
equivalent, or if orally disclosed, labeled "Confidential" or the equivalent,
and reduced to writing within thirty (30) days of such oral disclosure;
provided, however, that "Confidential Information" shall not be deemed to
include information which the Recipient can demonstrate by written proof: (i) is
now, or hereafter becomes, through no fault on the part of the Recipient,
generally known or available; (ii) is known by the Recipient at the time of
receiving such information; (iii) is furnished to others by Discloser without
restriction on disclosure; (iv) is hereafter furnished to the Recipient by a
third party unrelated to Discloser, as a matter of right and without any breach
of any duty of non-disclosure; (v) is independently developed by the Recipient
without use of or reference to any Confidential Information; or (vi) is the
subject of express written permission to disclose provided by Discloser. Without
limiting the generality of the foregoing, Confidential Information may include
information developed during the course of this Agreement.
<PAGE>
3. MARKETING COMMITTEE AND OTHER JOINT ACTIVITIES
(a) Immediately upon execution of this Agreement, the parties shall
form a marketing committee ("Marketing Committee") with two (2) named
representatives each from Hologic and Ostex, to oversee and coordinate the joint
marketing, promotional, sales, and other activities required or authorized by
this agreement. The Marketing Committee shall meet at least quarterly, and shall
attempt to operate by consensus, but failing consensus shall operate by majority
vote. All tie votes shall be finally resolved by a committee chairman. The
chairmanship shall alternate annually between representatives of the parties.
One of Hologic's representatives shall serve as chairman during the first year
of this Agreement, one of Ostex's the second year and so on. The Marketing
Committee may delegate certain of its functions to subcommittees or individual
members. Each party shall each cause its representatives on the Marketing
Committee to attempt to work to promote the goals of this Agreement, and most
particularly to advance the parties' mutual products and technologies as
complementary approaches for the diagnosis, management and treatment of
osteoporosis (the "Goals").
(b) Within thirty (30) days after the Effective Date, the Marketing
Committee shall prepare a written plan for the first year period of this
Agreement under which the parties shall undertake specified activities to
jointly promote the Goals and to support sales of the Promotional Package,
together with a proposed annual budget therefor, and an allocation of tasks
between the parties ("Marketing Plan"). At least sixty (60) days prior to the
end of the first year period of this Agreement, and each subsequent year period,
the Marketing Committee shall prepare a follow-on Marketing Plan to cover such
upcoming year. It is anticipated that said Marketing Plan shall include but not
be limited to (i) development and distribution of one or more joint brochures,
and possibly other materials, (ii) a program of joint advertising and public
relations, and (iii) a plan to promote the Goals with opinion leaders, and
generally, in the medical and managed care communities.
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
(c) Within sixty (60) days after the Effective Date, the Marketing
Committee shall also establish a plan and a budget under which the parties shall
collaborate to establish a database supporting the Goals, with the pre-approved
costs thereof to be shared equally by the parties and which database the parties
anticipate shall be owned jointly by the parties.
(d) Except as specified in Section 3(c) above, the parties shall share
the costs of all joint activities undertaken pursuant to the Marketing Plan (to
the extent approved in writing in advance by the Marketing Committee)
XXXXXXXXXXXXXXXXXXXXXXXX Hologic. The Marketing Committee shall establish an
appropriate mechanism to implement such cost sharing, under which each party
shall be responsible for payment of specific costs for specific joint activities
and shall report such costs to the other party on a periodic basis, and the
parties shall reconcile and remit amounts payable to each other on a quarterly
basis, or on such other basis as the Marketing Committee may determine. The
parties specifically acknowledge that this cost sharing arrangement is not
intended to apply to either party's individual marketing efforts relating to its
own products, or to limit (or expand) either party's rights to promote its
technology or its approach to the diagnosis, management and treatment of
<PAGE>
osteoporosis. For the purposes of this paragraph, costs to be shared exclude
employee compensation, fringe benefits and division or corporate overhead.
Sharable costs include but are not limited to agency fees relating to designing
and printing literature, payment to public relations firms, and spokesman
honoraria.
4. APPOINTMENT.
Hologic hereby appoints Ostex and Ostex hereby agrees to act as
Hologic's non-exclusive sales representative in the Territory for the purpose of
promoting, and soliciting orders for, the Promotional Package for the account of
Hologic at such prices and upon such terms and conditions as may be from time to
time specified by Hologic. Except as provided herein, Ostex shall have no other
right to promote or solicit orders for the Promotional Package for installation
outside of the Territory, or for any other Hologic product.
5. OBLIGATIONS OF OSTEX.
Ostex shall:
(a) Use reasonable efforts to promote sales of and to secure and
present to Hologic orders for the Promotional Package in the Territory, in
accord with the directions of the Marketing Committee described below. It is
anticipated that Ostex will inform and assign all of its sales people in the
Territory to represent the Promotional Package, will provide appropriate
training in conjunction with Hologic, will use its usual marketing efforts to
promote the Promotional Package, and will inform and involve Hologic's sales
force as reasonably necessary and appropriate to obtain such orders.
(b) Meet the performance goals set out in Exhibit B hereto.
(c) Provide to the Marketing Committee on or before the fifteenth
calendar day of each calendar quarter, a written Business Report containing (i)
a summary of marketing and promotional activities related to the Promotional
Package undertaken during the prior quarter (ii) an order forecast listing
prospective customers, products, quantity, and dollar volume of orders under
consideration, and indicating timing and probability of each prospect; and (iii)
an identification of any actions required to obtain such orders. The Marketing
Committee will agree on a format and reporting form for said information and
forward such to Ostex at least 30 days prior to the first reporting date.
(d) Not incur any liability on behalf of Hologic, nor in any way pledge
or purport to pledge Hologic's credit; nor describe or hold itself out as an
employee of Hologic, nor describe itself other than as a representative for
Hologic for the performance of functions specified in, and pursuant to, this
Agreement; nor make any claims, warranties or representations with respect to
the QDR Component except as previously approved in writing by Hologic; and
<PAGE>
(e) Not advertise the Promotional Packages or distribute any printed
matter referring to the Promotional Package or to the QDR Component without the
Marketing Committee's specific prior approval in writing. All advertising by
Ostex shall be without recourse to Hologic for any expense incurred unless such
expense shall have been specifically authorized in writing by the Marketing
Committee.
6. OBLIGATIONS OF HOLOGIC.
Hologic shall:
(a) Be solely responsible for the actual sales of the Promotional
Package, as well as all installation, in-service application customer training,
support, warranty, and after-warranty service of all units of the QDR Component
ordered by reason of this Agreement. Hologic reserves the right, in its absolute
and sole discretion, at any time and from time to time, to decline the
acceptance of any order transmitted to it by Ostex or through Ostex's efforts.
All credit appraisal of potential customers, risk of credit extended to such
customers and collections pursuant to such credit extensions shall be the sole
responsibility of Hologic. In no event shall Ostex accept any order or otherwise
attempt to bind Hologic for the sale of any Promotional Package(s) unless
specifically asked by Hologic, in writing, to do so. All remittances by the
customer shall be made directly to the order of Hologic and transmitted by the
customer directly to Hologic.
(b) Provide to the Marketing Committee on or before the fifteenth
calendar day of each calendar quarter, a written Business Report containing (i)
a summary of marketing and promotional activities related to the Promotional
Package undertaken during the prior quarter (ii) an order forecast listing
prospective customers, products, quantity, and dollar volume of orders under
consideration, and indicating timing and probability of each prospect; and (iii)
an identification of any actions required to obtain such orders.
(c) Upon request, provide reasonable training to Ostex's sales force
respecting the QDR Component and the Promotional Package, and participate with
Ostex in training for Ostex's sales force respecting the Goals. Hologic shall
also invite and permit Ostex to provide reasonable similar training to Hologic's
sales force respecting the Osteomark(R) Laboratory Test and the Goals.
(d) Upon request, provide reasonable sales and account support to
Ostex's sales force as appropriate to promote the Promotional Package and the
Goals, and to obtain orders therefor. Said sales and account support shall
include but not be limited to maintenance of one or more telephone help lines to
answer Ostex sales questions about the QDR Component, development with Ostex of
appropriate instructional handouts, proforma financial statements and other
promotional materials, and direct assistance with any slow-moving sales; all as
agreed by the parties through the Marketing Committee.
<PAGE>
(e) Reserve the right, in its absolute and sole discretion, at any time
and from time to time to recommend to the Marketing Committee, to discontinue,
modify, alter or improve the Promotional Package, always providing Ostex with
reasonable notice thereof.
(f) Notify Ostex of current prices relating to Promotional Packages,
and any changes in the prices therefor. At no time shall the title to any
Promotional Packages be transferred to or vested in Ostex, but shall remain in
Hologic at all times until transferred to a customer.
7. COMMISSIONS.
(a) Hologic shall pay to Ostex, in full compensation for its services
performed pursuant hereto, the commissions provided for in Attachment B hereto.
Commissions shall be payable upon Hologic receipt of the associated lease
installment or price due. Payment shall be made on or before the forty fifth
(45th) day following the end of the first three month period of the term of the
Fee Per Scan Lease Contract described in Exhibit A hereto.
8. INDEPENDENT CONTRACTOR - EXPENSES.
(a) Each party is engaged in business as an independent sales
representative, and the parties acknowledge and agree that each party, in the
performance of its duties and obligations pursuant to this Agreement, shall be
acting as an independent contractor and not as an employee of the other.
(b) Except as otherwise specifically provided in this Agreement, each
party shall bear all expenses incurred by it in acting hereunder, including
(without limiting the generality of the foregoing) all office expenses,
traveling and entertainment expenses, postage and salaries of salesmen and other
personnel, as well as all advertising and promotional expenses.
9. TERM AND TERMINATION.
(a) This Agreement shall be effective as of the date hereof and shall
extend for a period extending until First Commercial Sale of an Ntx Meter System
pursuant to the Joint Development, License and Supply Agreement simultaneously
entered into between the parties. The parties may extend this Agreement by
mutual consent in writing at any time prior to its expiration, and will
negotiate in good faith to extend this co-promotion effort to cover the NTx
Meter Test which is the subject of the associated Development Agreement.
(b) Either party may terminate this Agreement, entirely in its
discretion and without liability therefor, by giving to the other party ninety
(90) days advance written notice, or upon written notice if the Joint
Development, License, and Supply Agreement is terminated for any reason.
<PAGE>
(c) Either party may terminate this Agreement for material defaults of
the other party, effective thirty (30) days following written notice to the
defaulting party, unless within said thirty (30) days, the party receiving the
notice remedies the default.
(d) Hologic may terminate this Agreement, effective on sixty (60) days
notice (and opportunity to cure), in the event that Ostex has not presented
orders for an average of three (3) Promotional Packages (or QDR Systems) per
month during each month of the Agreement, beginning after the first three months
thereof.
(e) Notwithstanding the foregoing, either party may terminate this
Agreement upon notice, effective immediately, in the event of the bankruptcy or
insolvency of the other party, or if the other party enters into a composition
with its creditors.
(f) In the event of the termination of this Agreement by Hologic, Ostex
shall be entitled to receive commissions for Promotional Packages sold within
thirty (30) days following the termination of this Agreement.
(g) Upon termination of this Agreement, each party shall promptly
return all technical information and literature relating to the other party's
component of the Promotional Packages, including price lists, samples, documents
and papers.
(h) At any time following ninety (90) days after the Effective Date,
either party may notify the other that this Agreement is not fulfilling the
notifying party's business goals, and ask that this Agreement be modified to
meet these goals. In this case, the parties shall meet and negotiate in good
faith to modify this agreement appropriately. At this time the parties may agree
to convert this Agreement to provide that Ostex will provide lead generation
services rather than act as a sales representative providing orders, with
appropriate adjustments to fees and the program as a whole.
10. WARRANTIES AND LIABILITIES; INDEMNITY
(a) Except as expressly set forth in each party's warranty and sales
literature accompanying its component of the Promotional Packages (and
accordingly subject to all conditions and limitations set forth therein), EACH
PARTY MAKES, AND THE OTHER PARTY AND ITS CUSTOMERS RECEIVE, NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION NO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR AGAINST INFRINGEMENT.
(b) Ostex hereby agrees to indemnify, defend and hold harmless Hologic
from and against all liability, damages or loss and from any claims,
proceedings, suits, demands, recoveries or expenses arising out of, based on, or
allegedly caused by, or in connection with any product manufactured by Ostex and
distributed pursuant to this Agreement (other than the QDR Product), including
<PAGE>
but not limited to performance of an Ostex Laboratory Test upon redemption of a
Osteomark(R) Laboratory Certificate ("Ostex Product"), or any product claim made
or allegedly made in connection therewith. This indemnity shall not apply to any
product claim made by Hologic with respect to an Ostex Product , which claim is
not contemporaneously made by Ostex, or approved in writing by the Marketing
Committee or Ostex.
(c) Hologic hereby agrees to indemnify, defend and hold harmless Ostex
from and against all liability, damages or loss and from any claims,
proceedings, suits, demands, recoveries or expenses arising out of, based on, or
allegedly caused by, or in connection with any product manufactured by Hologic
and distributed pursuant to this Agreement (other than an Ostex Product),
including but not limited to the QDR Component and Hologic's line of QDR bone
densitometers ("Hologic Product"), or any product claim made or allegedly made
in connection therewith. This indemnity shall not apply to any product claim
made by Ostex with respect to an Hologic Product , which claim was not
contemporaneously made by Hologic, or approved in writing by the Marketing
Committee or Hologic. Hologic further indemnifies and holds Ostex harmless from
any third-party claims arising from or relating to any financial default by a
customer of a Hologic Product.
11. LIMITATION OF LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR THE
OTHER PARTY'S DIRECTORS, OFFICERS, CONSULTANTS, EMPLOYEES, AGENTS,
REPRESENTATIVES OR CUSTOMERS FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL LOSSES
OR DAMAGES, IRRESPECTIVE OF THE CAUSE THEREOF.
12. DEFENSE OF THIRD-PARTY CLAIMS AND INDEMNITY.
(a) HOLOGIC DEFENSE OF THIRD-PARTY CLAIMS AND INDEMNITY. In the event
that any claim, suit, or other legal proceeding is threatened or commenced
against Ostex that is founded, in whole or in part, on an allegation that the
Hologic Product infringes any trade secret, patent, or copyright belonging to a
third party, Ostex will give Hologic prompt written notice of such legal
proceeding and Hologic may elect to assume sole control of the defense to or
settlement of such dispute. Ostex shall cooperate fully with Hologic in any
defense, settlement or compromise made by Hologic. Ostex shall not enter into
any settlement agreement or other voluntary resolution of any such claim, suit,
or other legal proceeding without obtaining Hologic's prior written consent
thereto. If Ostex has complied fully with the procedures set forth in this
Section 12, Hologic will indemnify and hold Ostex harmless from and against any
loss, cost, damage, or other expenses incurred by Ostex as a result of such
claim, suit or legal proceeding. This indemnification provision shall be null
and void and Hologic shall have no liability to the extent that any claim is
based on any use of the Ostex Product, or if Ostex or WRF, or their Affiliates
have any interest in the claim, suit or other legal proceeding, or any license
to any right so asserted.
<PAGE>
(b) OSTEX DEFENSE OF THIRD-PARTY CLAIMS AND INDEMNITY. In the event
that any claim, suit, or other legal proceeding is threatened or commenced
against Hologic that is founded, in whole or in part, on an allegation that the
Ostex Product infringes any trade secret, patent, or copyright belonging to a
third party, Hologic will give Ostex prompt written notice of such legal
proceeding and Ostex may elect to assume sole control of the defense to or
settlement of such dispute. Hologic shall cooperate fully with Ostex in any
defense, settlement or compromise made by Ostex. Hologic shall not enter into
any settlement agreement or other voluntary resolution of any such claim, suit,
or other legal proceeding without obtaining Ostex's prior written consent
thereto. If Hologic has complied fully with the procedures set forth in this
Section 12, Ostex will indemnify and hold Hologic harmless from and against any
loss, cost, damage, or other expenses incurred by Hologic as a result of such
claim, suit or legal proceeding. If a final injunction is obtained against
Hologic's use of the Ostex Product, or if in the opinion of Ostex the Ostex
Product is likely to become the subject of a successful claim of infringement,
Ostex may, at its option and expense, (i) procure for Hologic the right to
continue distributing and/or using the Ostex Product, (ii) replace or modify the
Ostex Product so that it becomes non-infringing, or (iii) if neither (i) or (ii)
are reasonably available, accept return of the Ostex Product held in inventory
by Hologic and those laboratories which have entered into agreements to accept
Osteomark(R) Laboratory Certificates, and terminate this Agreement without
further obligation or liability. This indemnification provision shall be null
and void and Ostex shall have no liability to the extent that any claim is based
on any use of the Hologic Product, or if Hologic, or its Affiliates have any
interest in the claim, suit or other legal proceeding, or any license to any
right so asserted.
13. NON ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; provided that
any assignment or transfer of this Agreement or any of the rights or obligations
hereunder by either party without the written consent of the other shall be void
and of no effect. Such written consent shall not be unreasonably withheld.
14. CONFIDENTIALITY PROVISIONS.
(a) Recipient shall not at any time, during and for a period of three
(3) years following the termination of this Agreement, disclose or otherwise
make known or available to any person, firm, corporation, or other entity other
than Discloser any Confidential Information received from the other party
without the express prior written consent of that other party. With respect to
Confidential Information developed under this Agreement and which is not
Confidential Information of one party only, neither party shall disclose or
otherwise make such Confidential Information known or available to any person,
firm, corporation, or other entity without the express prior written consent of
the other party, not to be unreasonably withheld or delayed. Recipient shall
<PAGE>
utilize reasonable procedures to safeguard Confidential Information, including
releasing Confidential Information only to its employees on a "need to know"
basis. Nothing in this Agreement shall prevent Recipient from disclosing
Confidential Information to government agencies for regulatory purposes.
(b) Recipient shall not make any use, directly or indirectly, of any
Confidential Information of the other party except in the ordinary course of
business pursuant to this Agreement or any other specific, written agreement
entered into between Ostex and Hologic.
(c) The parties acknowledge that: (a) the covenants set forth in this
Section 14 are essential to the activities contemplated by this Agreement; (b)
but for the agreement of each party to comply with such covenants, neither party
would have entered into such activities; (c) each party has consulted with or
has had the opportunity to consult with counsel and has been advised in all
respects concerning the reasonableness of such covenants as to time and scope;
(d) Discloser may have no adequate remedy at law if Recipient violates or fails
to perform under this Section 14; and (e) Discloser shall have the right, in
addition to any other rights it may have, to seek from a court of competent
jurisdiction preliminary and permanent injunctive relief to restrain any breach
or threatened breach or otherwise to specifically enforce Recipient's
obligations under this Section 14 if Recipient fails to perform in accordance
herewith.
15. NOTICES.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be sufficiently given when delivered in person or
deposited in the United States mail (registered or certified) postage prepaid,
addressed as follows:
If to Hologic, addressed to:
HOLOGIC, Inc.
590 Lincoln Street
Waltham, MA 02154 (USA)
Attention Mark Duerst, Vice-President - Sales & Marketing
Copy to Steven L. Nakashige, President and COO
If to Ostex, addressed to:
Ostex, International, Inc.
2203 Airport Way South, Suite 400,
Seattle, Washington 98134
Attention: Jeffrey J. Miller, Ph.D., Senior Vice President,
Corporate Development
Copy to: Robert Glaser, President and COO
or to such other addresses as may be specified from time to time in a written
notice given by such party. Both parties agree to acknowledge receipt of any
notice delivered in person.
<PAGE>
16. TRADEMARKS AND TRADE NAMES.
(a) No provision of this Agreement shall be interpreted or construed as
conferring upon any party any right to use in labeling, advertising, marketing,
publicizing or otherwise promoting the Promotional Package, any name, trade
name, trademark, or other designation (or derivation thereof) of any other party
hereto or WRF or the University of Washington, respectively, except as expressly
provided under this Section 16.
(b) Hologic shall incorporate into the packaging of each and every
Osteomark(R) Laboratory Certificate marketed, promoted, sold, and/or distributed
under this Agreement, and in addition to its own trademarks and names, such
Ostex trademarks or statements as Ostex shall reasonably request. Ostex hereby
grants Hologic a non-transferable, non-exclusive license, concurrent with the
term of this Agreement, to use such statement and/or trademark accordingly and
in substantially the same manner as used by Ostex; provided, however, that each
such use of such statement and/or trademark be accompanied by a printed notice
identifying Ostex as the owner thereof. Hologic furthermore shall have the right
to display its own name, trade names, and/or trademarks. Hologic shall not use
any Ostex trademark with respect to products not covered by this Agreement.
(c) Ostex and Hologic shall each be responsible for the registration,
maintenance and enforcement of their respective names, trade names, and
trademarks; provided, however, that each party shall aid the other in the
enforcement of that party's rights by monitoring for, and notifying said party
of, any unauthorized use of any of said party's trademarks. Each party shall
from time to time, and in any event upon the issuance of additional
registrations, modify its use of trademarks to incorporate proper notice of
registration and other claims of right, in accordance with the laws and customs
of the various countries in which it operates pursuant to this Agreement.
(d) Ostex represents and warrants, as of the date of this Agreement,
that: (a) Ostex is the owner and registrant of the trademarks issued
registrations as indicated by Exhibit C; (b) Ostex is named as applicant in
those applications indicated by Exhibit C as pending; and (c) to the best of its
knowledge, none of the Ostex trademarks infringes upon the trademark, trade
name, or other proprietary rights of an third party.
(e) Ostex acknowledges that Hologic is the sole owner of the trademarks
and trade names which designate and identify the QDR Component of the
Promotional Package and business (the "Marks").
(f) Ostex agrees that it may only use those Marks which identify the
Promotional Packages it is authorized to sell and then only to further the
promotion and sale of the Promotional Packages such Marks identify. Ostex may
only use such Marks in their standard form and style as they appear upon the
<PAGE>
Promotional Packages or as instructed in writing by Hologic. No other letter(s),
word(s), design(s), symbol(s), or other matter of any kind shall be superimposed
upon, associated with or shown in such proximity to the Marks so as to tend to
alter or dilute them.
(g) In all advertisement, sales and promotional literature or other
printed matter in which any of such Marks appear, Ostex must identify itself by
full name and address and state its relationship to Hologic. Every such Mark
used or displayed by Ostex must be identified as a Mark owned by Hologic, in a
form and manner approved by Hologic. Each party shall have the right to review
and approve any promotional literature or other printed matter in which such
party's trademarks appear.
(h) Upon expiration or in the event of any termination of this
Agreement, each party shall promptly discontinue every use of the trademarks or
any other confusingly similar word or symbol of the other.
(i) No public announcements or similar publicity with respect to this
Agreement shall be made by either party without the other party's prior written
approval and neither party may make any announcements regarding any of the other
party's products without the prior written consent of the other party. Such
prior written approval and prior written consent shall not be unreasonably
withheld. Nothing in this Section 16(i), however, shall prevent either party
from making such public announcements as such party's legal obligations require.
In such event, the party who is required to make the public announcement will
allow the other party to review the announcement sufficiently in advance in
order to provide suggestions on the form and substance of the announcement.
17. MISCELLANEOUS.
(a) Section headings as to the contents of particular paragraphs are
for convenience only and are in no way to be construed as part of this
Agreement, or as a limitation of the scope of the particular paragraph to which
they refer.
(b) Any waiver by either party of any provision of this Agreement shall
not be construed or deemed to be a waiver of any other provision of this
Agreement nor a waiver of a subsequent breach of the same provision.
(c) This Agreement, in conjunction with the Joint Development, License
and Supply Agreement, constitutes the entire understanding and agreement between
the parties and supersedes all prior negotiations, understandings and agreements
between Hologic and Ostex. There are no understandings, representations or
warranties of any kind, express or implied, oral or written, not expressly set
forth herein or in the Joint Development, License and Supply Agreement. No
amendment or modification of any provision of this Agreement shall be valid or
of any force or effect, unless made by written instrument signed by the
respective duly authorized representatives of Hologic and Ostex, specifying the
exact nature of such amendment or modification.
<PAGE>
(d) All claims or controversies asserted by Ostex against Hologic or
Serex shall be construed and enforced in accordance with the laws of the
Commonwealth of Massachusetts. Any judicial action by Ostex relating to the
relationship between the parties pursuant to this Agreement, or goods purchased
or licensed hereunder (together with any counterclaims asserted by Hologic or
Serex), shall be brought and tried in the State or Federal Courts located in
Massachusetts. All claims or controversies asserted by Hologic against Ostex or
WRF shall be construed and enforced in accordance with the laws of the State of
Washington. Any judicial action by Hologic relating to the relationship between
the parties pursuant to this Agreement, or goods purchased or licensed hereunder
(together with any counterclaims asserted by Ostex or WRF), shall be brought and
tried in the State or Federal Courts located in the State of Washington.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written by their respective authorized
officials.
OSTEX INTERNATIONAL, INC.
By /S/ JEFFREY J. MILLER PH.D.
Jeffrey J. Miller, Ph.D.,
Senior Vice President,
Corporate Development
HOLOGIC, INC.
By /S/ S. DAVID ELENBOGEN
S. David Ellenbogen
Chairman and CEO
<PAGE>
EXHIBIT A
PROMOTIONAL PACKAGE DESCRIPTION
QDR 4500C System Strategic Alliance ("Fee Per Scan") Leasing Contract as
described in the attached Attachment A-1. (No modifications to this lease
contract can be accepted.)
Osteomark(R) Laboratory Certificate, comprising a certificate for a specified
number of free tests at a specified laboratory or laboratories ( to be mutually
agreed by Hologic and Ostex) XXXXX XXXXXXXXXXXXX.
<PAGE>
Attachment A-1
- -16-
HOLOGIC STRATEGIC ALLIANCE PROGRAM
EXHIBIT A-1
LEASING CONTRACT
Owner: Hologic, Inc. Customer (Name): __________________
590 Lincoln Street Street Address: ________________
Waltham, MA 02154 City/State/Zip: ______________________
(617) 890-2300 Phone: ______________________
Contact: ______________________
________ QDRAE 4500C Hologic QDR "ACCLAIM' Series" Bone Densitometer
________ QDR-1000plus Hologic QDR Bone Densitometer
Tax Exempt# ______ Customer P.O. #__________________ Date: ____________
<TABLE>
<CAPTION>
STRATEGIC ALLIANCE PROGRAM SUMMARY
<S> <C> <C> <C>
Line Definitions QDR 4500C QDR-1000plus
1. Usage Fee: $50 per study $50 per study
2. Trial period (no minimums): Six months Six months
3. Deposit (credited against usage): $5,000 $3,000
4. Deferred Billing Credit for first 100 scans Credit for first 60 scans
5. Minimums after six months: 30 scans per month 25 scans per month
6. Minimums after 12 months: 35 scans per month 30 scans per month
7. Conversion to own: Anytime Anytime
8. Conversion to lease: Anytime Anytime
9. Upgrade options: Available to any ACCLAIM Available to any ACCLAIM
</TABLE>
Customer Acceptance Hologic, Inc. Acceptance
Customer: _____________________ Signature: _____________________________
Signature: __________________ Name/Title: ____________________________
Name/Title: __________________ Date: _____________________________
Date: _____________________________
Equipment Location:
The equipment is to be delivered and installed at the following location:
Address: _____________________________
City: _____________________________
State _____________________________
Zip _____________________________
Installation Contact Person/phone: __________________________________________
- --------------------------------------------------------------------------------
<PAGE>
HOLOGIC, INC.
590 Lincoln Street, Waltham, MA 02154
Tel: 617.890.2300
Fax: 617.890.0008
TERMS AND CONDITIONS
1. Lease of Equipment. Upon execution of this Equipment Lease Agreement (the
"Agreement"), Customer agrees to lease from Hologic, Inc. ("Hologic") the
equipment set forth above (the "Equipment"), subject to the terms and conditions
set forth in this Agreement, for a term commencing upon installation of the
Equipment and, unless such lease (the "Lease") is sooner terminated as provided
herein, terminating sixty (60) months from the date of installation.
2. Deposit. In consideration of Hologic entering into this Agreement, Customer
has paid to Hologic a non-refundable deposit plus applicable taxes, if any.
During the first six months of this Agreement ('Trial Period"), this deposit is
creditable against the Patient Studies performed by the Customer (the first 100
scans for a QDR 4500C and 60 scans for a QDR-1000plus).
3. Lease Payments. Subject to the credits granted in Section 2, Customer shall
pay Hologic as Lease payments hereunder, an amount xxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxx
using a bone densitometer plus taxes and, to the extent applic- ble, service
fees and other charges as provided herein. A "Patient Study" means a sequence of
one or more scans performed on a patient on the Equipment or any other bone
densitometer owned, leased or operated by Customer or any of its affiliates.
Technically unacceptable scans may be credited if Customer provides Hologic with
copies of such studies on diskette accompanied by a brief description of the
nature of the deficiency.
Customer agrees to provide to Hologic, not later than the eighth (8th) day of
each month, a copy of the count report, produced by the software included within
each system, of the Patient Studies performed by the Equipment during the
preceding month and a count report of the number of any other Patient Studies
performed during the preceding month. xxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxx
(payments received by Hologic after the thirtieth (30th) day of the month).
In the first 12 months, the lease payments due are based on the assumption that
the Customer will perform at least the Minimum Monthly Scans (30 Patient Studies
per month for a QDR 4500C and 25 for a QDR-1000plus) for
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxx. The Monthly Minimum will be waived for the first six
months. After 12 months, the lease payments due are based upon the assumption
that Customer will perform at least (I) for a QDR 4500C-35 Patient Studies per
month (the "Minimum Monthly Scans") xxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx per month (the
"Minimum Monthly Scans") xxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx "Monthly) Minimum). If
Customer has not conducted the Minimum Monthly scans in any month, beginning
after the first six months of usage (the "Trial Period"), Customer may
nevertheless elect to pay the Monthly Minimum. If Customer (a) has not paid the
Monthly Minimum commencing with the seventh full month after the date of
installation, or (b) fails to perform any of it obligations hereunder and such
failure shall continue for ten days after written notice, it is agreed that
Hologic shall be entitled without notice to Customer and with or without legal
process, take immediate poss- session of such Equipment without liability to
Hologic by reason of such entry or taking possession, and terminate the Lease.
4. Conversion of Agreement. At any time, Customer may convert this Lease into an
Operating Lease or a Full Payout Lease, provided that Customer is then in full
compliance with the terms and conditions hereof. This right of conversion only
applies to Hologic administered or authorized lease programs. If the Customer
converts to one of the following lease options within the first six months from
the date of installation, Hologic will defer the commencement of payments
required under the Lease for 90
PERSONAL GUARANTY
In order to induce Hologic to enter into this Lease with Customer, the
undersigned, jointly and severally, hereby irrevocably and unconditionally,
guaranty without deduction or diminution by reason of counterclaim, offset, or
defense, the prompt and complete payment under, whenever due, and performance of
this Lease to Hologic or its assigns, including any and all modifications,
additions, supplements and amendments thereof, as will as all of Customer other
leases with Hologic that have commencement dates not later than ten (10) days
after Hologic receives written notice from the undersigned of their desire not
to guaranty any additional leases. The undersigned warrant and guaranty that
this Lease has been properly executed by Customer, and agree. that this guaranty
shall be of full force and effect irrespective of any invalidity or
unenforceability of the Lease or any provisions thereof, or the existence,
validity or value of any security. The undersigned hereby waive presentment
notice of acceptance hereof, all notices of any kind to which we may be
entitled, and all defenses of guarantor or surety. The undersigned consent that
from time to time, without notice to or further consent from the undersigned and
without releasing or affecting the undersigned's liability thereunder, the time
for payment or performance under this lease may be extended or accelerated in
whole or part, any security therefore may be exchanged, released, enforced sold,
leased or otherwise dealt with, the provision of any documents may be canceled,
modified or waived, any other guarantors may be released, and any indulgence may
be granted to Customer, as Hologic may in its sole discretion determine. The
obligation and liability of each undersigned is direct, continuing and
unconditional, shall not be diminished or affected whether or not the Equipment
is repossessed, and Hologic shall not be required to proceed against Customer or
resort to any other right or remedy before proceeding against the undersigned
under this guaranty. No payment by the undersigned, except payment in full of
all liabilities hereunder shall entitle the undersigned to be subrogated to any
of the rights or remedies of Hologic under this Lease. The undersigned warrant
they have read this Lease and hereby waive any and all rights to a trial by
jury, and agree to the venue and jurisdiction contained therein, and agree that
only full payment and performance of the Lease can discharge the undersigned's
liability. This guaranty shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned, in favor of Hologic
and Lessor's successors and assigns. This guaranty cannot be terminated or
changed orally and no provision hereof may be modified or waived except in
;writing.
x________________________________
(GUARANTOR'S SIGNATURE) AN INDIVIDUAL
- -----------------------
DATE
X________________________________
(GUARANTOR'S SIGNATURE) AN INDIVIDUAL
- -----------------------
DATE
HOLOGIC, INC.
590 Lincoln Street, Waltham, MA 02154
Tel: 617.890.2300
Fax: 617.890.0008
days.
<PAGE>
An "Operating Lease means a fixed rent lease with 60 monthly payments in the
fixed amount of the initial Monthly Minimum xxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx, beginning on the date of conversion, with an
option for Customer to acquire the Equipment at the end of such term for its
fair market value, as determined by Hologic.
A "Full Payout Lease" means a new lease whereby Customer would finance a deemed
unamortized contract price for the Equipment plus the residual value of the
Equipment, as determined by Hologic based upon Hologic's amortization schedule
for this Agreement, over a five (5) year term at then current interest rates,
with an option for Customer to acquire
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. During the first 12
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxx
In connection with any such conversion, Hologic may require Customer to enter
into a new lease with standard terms and conditions. Conversion of the Lease is
conditioned upon a then current approval of Customer by Hologic.
5. Purchase Option. At any time, during the first 12 months from the date of
installation, Customer shall have the right, upon written notice to Hologic,
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxhave the right, upon
written notice to Hologic, to purchase the Equipment at a purchase price equal
to the sum of (a) the present value of the total lease payments to be due to
Hologic over the term of this Agreement, assuming that Customer had converted
the Agreement into an Operating Lease, plus (b) the present value of the
estimated residual value of the Equipment at the end of the five year lease
term. The present value of the lease payments, the estimated residual value and
the present value of such residual value shall be determined by Hologic based
upon its amortization schedule for this Agreement. Customer shall have the
further right, at the end of the term of the Agreement, upon written notice to
Hologic, to purchase the Equipment at its fair market value, as determined by
Hologic.
6. Training. Hologic shall be responsible for the initial installation of the
Equipment at Customer's premises and for training Customer's designated
equipment operator in use of the Equipment.
7. Equipment Service and Maintenance. Subject to Section 8, costs and expenses
relating to service and maintenance of the Equipment will be the responsibility
of Hologic, provided that Customer has not defaulted on any of its obligations
under this Agreement. Following the conversion of this Agreement to an Operating
Lease, a Full Payout Lease or purchase, all costs and expenses associated with
equipment service and maintenance shall be the responsibility of Customer. A
full year of equipment service and maintenance will be provided free of charge
from the date of conversion to a lease or purchase, for all conversions within
six months of the date of installation.
8. Use and Alteration. Customer shall use the Equipment solely in the conduct of
its business, in the manner and for the use contemplated by the manufacturer
thereof, and in compliance with all laws, rules and regulations of every
governmental authority having jurisdiction over the Equipment and with the
provisions of all policies of insurance carried by Customer. Customer will not
make any alterations or additions to the Equipment or move the Equipment from
the installation site. During the term of the Lease, Customer shall be entirely
responsible for daily maintenance and cleaning of the Equipment and for any loss
or damage to the Equipment except for ordinary wear and tear. Customer agrees to
cause the Equipment to be operated in accordance with all manufacturer's manuals
or instruc- dons. While the Equipment is in Customer's possession, Customer
shall bear the entire risk of loss, theft, destruction or damage to the
Equipment. Upon Hologic's request, Customer will permit Hologic to have access
to the Equipment at all reasonable times for the purpose of inspection and
examination.
9. Customer Representations. Customer hereby represents, warrants and covenants
that with respect to this Agreement hereunder: (a) The execution, delivery and
performance thereof by the Customer have been duly authorized by all necessary
corporate action; (b) The individual executing such was duly authorized to do
so; and (c) This Agreement constitutes the legal, valid and binding obligations
of the Customer enforceable in accordance with their respective terms.
10. Events of Default. Customer shall be in default under @ Agreement upon the
happening of any of the following events or conditions (herein called "Events of
Default"): (a) Customer shall find to make any payment due hereunder within
thirty (30) days after the same is due and payable; (b) Customer shall fail to
perform any other covenant or agreement to be performed by it under this
Agreement, and such failure shall continue for ten (10) days after written
notice thereof by Hologic to Customer; (c) any representation, warranty,
certification or statement made or furnished to Hologic herein, or in connection
herewith, by or on behalf of Customer proves to have been false in any material
respect when made or furnished; or (d) Customer shall make an assignment for the
benefit of creditors, or bankruptcy, arrangement, reorganization, liquidation,
insolvency, receivership or dissolution proceeding shall be instituted by or
against Customer and shall be consented to or be pending and not dismissed for a
period of thirty (30) days.
11. Remedies of Hologic. Upon the occurrence of any Event of Default, and at any
time thereafter so long as the same shall be continuing and shall not have been
remedied, Hologic may, at its option, declare this Agreement to be in default
and, at any time thereafter, may exercise one or more of the following remedies,
as Hologic in its sole discretion shall elect: (a) accelerate and cause to
become immediately due and payable all amounts payable hereunder and, including
if the Agreement has been converted to an Operating Lease or a Full Payout
Lease, all payments due thereunder; (b) terminate this Agreement as to any and
all Equipment upon written notice to Customer, without prejudice to any other
remedies hereunder; (c) enter upon the premises where any Equipment is located,
and, without notice to Customer and with or without legal process, take
immediate possession of such Equipment without liability to Hologic by reason of
such entry or taking possession, and without such action constituting a
termination of this Agreement unless Hologic notifies Customer in writing to
such effect; and (d) proceed by appropriate action either at law or in equity to
enforce performance by Customer of the applicable covenants of this Agreement or
to recover damages for the breach thereof. Hologic shall also be entitled to
recover as damages for the loss of the bargain and not as a penalty, an amount
equal to the sum of the following amounts: (i) all unpaid monthly payments owing
for the Equipment through the last day of the month in which such Equipment is
either sold, released or otherwise disposed of, and (ii) expenses paid or
incurred by Hologic in connection with the repossession, attempted repossession,
holding, repair and subsequent sale, release or other disposition of any
Equipment, including commissions and attorneys' fees. None of Hologic's remedies
under this Agreement are intended to be exclusive, but each shall be cumulative
and in addition to
HOLOGIC, INC.
590 Lincoln Street, Waltham, MA 02154
Tel: 617.890.2300 Fax: 617.890.0008
any other remedy referred to herein or otherwise available to Customer in law or
in equity. Customer waives any and all rights to notice and to a judicial
hearing with respect to the repossession of the equipment by Hologic in the
event of a default hereunder by Customer.
12. Title. Tide to the Equipment leased to Customer pursuant to the
terms hereof is and will remain at all times vested in Hologic or its
designee, unless and until Customer exercises its option to purchase the
Equipment pursuant to Section 5.
13. Assignment. Without Hologic's prior written consent, Customer will not
assign any of Customer's rights hereunder or sublet or transfer the Equipment.
Hologic may, at any time, mortgage, grant a security interest in, transfer, sell
or assign this Agreement or any Equipment or any payments due or to become due
hereunder, without notice to Lessee. Customer agrees that in the event of any
such assignment and written notice thereof to Customer, Customer will accept and
comply with the directions and demands of Hologic's assignee. THE RIGHTS OF ANY
SUCH ASSIGNEE SHALL NOT BE SUBJECT TO ANY DEFENSE, COUNTERCLAIM OR SET-OFF WHICH
CUSTOMER MAY HAVE AGAINST HOLOGIC.
14. Insurance; Taxes. Customer agrees that it shall obtain and maintain property
damage and liability insurance and keep the Equipment insured for its full
replacement value, name Hologic as an additional insured with respect thereto
and, upon the request of Hologic, will provide a certificate of insurance
acceptable to Hologic evidencing such insurance coverage. Customer agrees to pay
for, or reimburse Hologic for payment of, all sales, use, privilege, excise,
personal property or other taxes imposed or levied with respect to the Equipment
or by reason of the furnishing of the Equipment hereunder.
15. Termination. The lease may be terminated by Customer, prior to purchase of
the Equipment or conversion into an Operating Lease or a Full Payout Lease upon
ninety (90) days prior written notice to Hologic. In the event of such
termination, Customer agrees to pay for all Patient Studies performed up to the
date of termination, including any applicable taxes thereon. In consideration of
the financial accommodations made by Hologic to Customer under the leasing
program set forth in this Agreement, in the event of such a termination by
Customer or a termination of the Lease by Hologic, as a result of Customer
default or failure of Customer to pay the Monthly Minimum, Customer agrees that
for a period of twelve (12) months after such termination, or the fifth
anniversary of the date of this Agreement, whichever occurs first,
xxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (or any of its affiliates)
performed Patient Studies during such period; provided however no termination
fee shall be due if neither Customer nor any of its affiliates perform Patient
Studies during the termination period.
16. Indemnification. Customer agrees to defend, indemnify and hold Hologic
harmless from and against any and all claims, damages, costs, expenses
(including attorney's fees), losses and liabilities of every kind and nature in
any way arising out of or in connection with (i) the failure of any of
Customer's representations or warranties contained herein to be true, complete
and correct as of the date hereof and at all times during the term of the
Agreement, or (ii) the breach by Customer of any provision of Agreement, or
(iii) the figure of Customer to pay any amounts owed under this Agreement as and
when the same shall become due or (iv) failure to maintain the Equipment as
provided in Section 8 or (v) the use of the Equipment other than, in accordance
with Hologic's instructions for use.
17. Further Assurances. Customer will promptly execute and deliver to Hologic
such further documents and assurances and take such further action as Hologic
may from time to time reasonably request in order to more effectively carry out
the purpose of this Agreement and to protect the rights and remedies of Hologic
hereunder, including, without limitation, the execution and delivery of
financing, statements under the Uniform Commercial Code.
18. Proprietary Software. It is recognized that during the term of this
Agreement, computer software will be delivered to Customer on a licensed basis
in printed form, or in any of several possible machine-readable forms. Such
computer software is and shall remain the sole property of Hologic. The grant to
Customer of rights to the software extends solely a non-exclu- sive, single-use
royalty-free license to use software for the sole purpose of performing and
analyzing scans acquired in the normal course of its business, using the
Equipment and for no other purpose. Such software is valuable to Hologic and
shall be treated as confidential and proprietary information subject to the
confidentiality provisions hereof. Customer will have no right to sell, assign,
transfer, copy or sublicense the software, without the prior written consent of
Hologic.
19. Confidential Information. All drawings, diagrams, specifications, devices
and other materials furnished by Hologic and identified as confidential relating
to use and service of the Equipment and the information therein, including, but
not limited to, Customer Manual provided to it by Hologic in connection with the
Equipment, is proprietary and confidential to Hologic. Such materials have been
developed at great expense and they contain trade secrets of Hologic. Customer
may not reproduce or distribute such materials except to Customer's employees
who may use the articles as part of their duties. Customer agrees that it will
keep confidential and not disclose or divulge any of such materials or the
information therein to any unauthorized person for any purpose whatsoever
without the prior written consent of Hologic.
20. Disclaimers; Warranties. CUSTOMER ACKNOWLEDGES AND AGREES THAT HOLOGIC MAKES
NO EXPRESS OR IMPLIED WAR- RANTIES ARISING OUT OF OR RELATED TO CUSTOMER'S USE
OR OPERATION OF THE EQUIPMENT. IN NO EVENT SHALL HOLOGIC BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR
ASSOCIATED WITH THE EQUIPMENT OR THE LEASE THEREOF EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
21. Entire Agreement; Governing Law. This Agreement constitutes the entire
agreement between the parties. This Agreement shall be deemed a contract made
under the laws of the Commonwealth of Massachusetts shall be construed under and
governed by the laws thereof. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision hereof. Customer waives any right to a trial by jury in any
action to enforce or defend any matter arising from or related to this
Agreement.
22. Amendment; Waiver. No term or provision of this Agreement may
be changed, waived, amended, discharged or terminated except by a written
instrument executed by the parties hereto.
HOLOGIC
590 Lincoln Street, Waltham, MA 02154
Tel: 617.890.2300 Fax: 617.890.0008
<PAGE>
EXHIBIT B
COMMISSION
An amount equal to the Patient Study or other lease payment XXXXXXXXXXXXXXXXX
payable to Hologic or credited to deposits held by Hologic pursuant to the
Strategic Alliance Leasing Contract during the XXXXXXXXXXX period commencing
with the beginning of the term of said Contract, not including deposits paid or
due, or taxes and to the extent applicable, service fees and other charges
provided for in said contract, and provided that if the Lease Contract is
converted to a sales contract during said period Hologic XXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX.
Note: During the term of this Agreement, Hologic will also provide finders fees
and sales assistance fees pursuant to its then-current Policy for Non-Exclusive
Distribution and Finder's Fees (current version attached) for sales of all QDR
4500 model Systems in the Territory as a result of qualified leads provided by
Ostex.
PERFORMANCE GOALS
Three (3) Promotional Packages per month.
<PAGE>
HOLOGIC, INC.
POLICY FOR FINDER'S FEE ELIGIBILITY
January 13, 1997
ENTIRE POLICY REDACTED
<PAGE>
PROSPECT REGISTRATION FORM
Prospect Name ____________________
Address ____________________
--------------------
City ____________________
State ____________________
Zip ____________________
Phone ____________________
FAX ____________________
OTHER CONTACTS AT ACCOUNT: (examples: partners, secretaries, business managers,
administrators, purchasing agents)
Name / Phone:
ACCOUNT BACKGROUND AND INTEREST
(Supply a short summary of account activity to date)
COMPETITION
BUDGET INFORMATION
<PAGE>
SAMPLE CUSTOMER LETTER
Dear Customer:
Thank you for inquiring about bone densitometry equipment with our firm. I have
taken the liberty of investigating these products for you and would like to
share some information with you that may assist in your selection. As you know,
our firm has a sales agency relationship with Hologic, and can introduce you to
this company.
The bone densitometry business is dominated by only a couple of companies.
Hologic, Inc. of Waltham, MA (800-343-9729) is the leader in this field (60%
market share). Their equipment is considered to be the most technically advanced
and easiest to use. Their equipment has been selected by nearly all of the
pharmaceutical companies for development of the new osteoporosis drugs including
Merck's Fosamax trials. Hologic equipment has also been used in the NIH
sponsored Study of Osteoporotic Fractures (SOF), the largest osteoporosis trial
in the world, and in the NHANES study which has established the reference data
that the industry is using in its standardization efforts.
Hologic offers a full product line of both pencil and fan beam scanners
available at most price points. We would highly recommend that you consider the
fan beam products which are of the latest design. The pencil beam units are
inexpensive but are based on 8 year old technology that is incapable of
providing many of the new advances. Although Hologic equipment is typically
slightly higher in price than their competitors, we believe it is money well
spent and easily justified through savings in tech time, marketing advantages
offered and long term costs of ownership. The latest developments in the field
are available on the Hologic equipment including:
Fan Beam Technology - Offers faster scan times (30 sec. on all patients), high
resolution images, enhanced precision, significant operational conveniences and
modular product design.
Internal Reference System - The system constantly calibrates itself on a pixel
by pixel basis. No operator calibration (or mistakes) are possible. This assures
consistency in data upon upgrade or repair.
Supine Lateral Scanning - Many luminaries now suggest lateral spine scans in
patients over age 65 where artifacts lead to false negative findings with
traditional AP scans in as many as 30-40% of patients. Lateral scans may also
provide earlier diagnostic capability and earlier information concerning
response to treatment since they focus on trabecular regions of the spine. If
you decide that you want laterals, do not settle for the decubitis options which
suffer from substantial precision problems. Note too that with the modular
design of the 4500 family, laterals can always be added at a later date.
Single Energy Imaging - This is brand new to low end densitometers. High end fan
beam system have offered imaging / morphometry options in the past but Hologic
has recently made this available on all fan beam systems. The 7 second full
spine scan gives a nice image at very low dose and may be useful in spotting
artifacts (wedge fractures) that could artificially elevate spine density.
Although these images will not replace films, they do provide quantitative
morphometry capability and could be used to "screen" candidates for further
evaluation through use of films. Imaging will probably be expanded to other
applications soon and fan beam systems are required for this capability.
Modular Product Design - This is one of the best features of the Hologic
products. The field is changing very rapidly and Hologic has made a point of not
forcing decisions upon buyers nor making their equipment obsolete. Their
philosophy is to allow you to buy only what you need now and to add to that as
needs dictate. They have eliminated the financial penalty associated with
upgrades using other manufacturer's equipment and the significant data concerns
if equipment is to be exchanged.
We have also found Hologic's service to be reputable. The DXA equipment seems
quite reliable but 800 "HELP " lines and next day on site service is available.
Hologic is the only company that does all of their own service using factory
- -direct Hologic personnel.
We hope that this information is useful. [ADD APPROPRIATE FOLLOW-UP LANGUAGE]
Sincerely,
<PAGE>
1
JOINT DEVELOPMENT, LICENSE
AND SUPPLY AGREEMENT
This Joint Development, License and Supply Agreement (this "Agreement")
is entered into as of the 14TH day of January, 1997 ("Effective Date"), by and
between OSTEX INTERNATIONAL, INC., a Washington corporation having its principal
place of business at 2203 Airport Way South, Suite 400, Seattle, Washington
98134 ("Ostex"), and HOLOGIC, INC., a Delaware corporation having its principal
place of business at 590 Lincoln Street, Waltham, MA 02154 ("Hologic").
RECITALS
A. The Washington Research Foundation, a nonprofit Washington
corporation ("WRF"), is the owner, by way of assignment from the University of
Washington, of all right, title, and interest in certain technology developed
out of research conducted by Dr. David Eyre and generally described as the
"Urinary Assay for Bone Resorption" (as more particularly defined herein, the
"WRF Bone Resorption Technology").
B. Pursuant to that certain Restated Exclusive License Agreement
between Ostex and WRF, effective June 29, 1992 as amended, the ("WRF/Ostex
Exclusive License Agreement"), WRF granted Ostex an exclusive, worldwide license
to make, have made, assign, sublicense, lease, develop, enhance, modify,
produce, reproduce, demonstrate, market, promote, sell, distribute, use, exploit
and otherwise commercialize and prepare derivations of the WRF Bone Resorption
Technology.
C. Ostex engages in the research, development, manufacture, and sale of
diagnostic and therapeutic products in the field of bone and mineral metabolism
in applications related to bone resorption and collagen and connective tissue
degradation, and has developed a proprietary immunoassay to determine the levels
of NTx epitope collagen metabolite resulting from bone resorption ("NTx Assay
Technology" as further defined in SECTION 1.15 hereof), which it has implemented
in a microtiter format suitable for use in centralized laboratories
("OsteomarkAE Laboratory Test").
D. Serex, Inc., a New Jersey Corporation with its principal place of
business at 230 West Passaic Street, Mayfield, New Jersey 07607 ("Serex") also
engages in research and development of diagnostic products in various fields,
including the field of bone and mineral metabolism, and applications related to
bone resorption and collagen and connective tissue degradation; and has
developed a proprietary immunodiagnostic format for detection of analytes
associated with various disease states and conditions (including without
<PAGE>
limitation the technology embodied in the patents and patent applications listed
in ATTACHMENT D hereto (the "Serex Patent Rights")), together known as the Serex
Antibody Release Assay ("SARA Format"). Serex has also developed and is
continuing to develop an immunoassay to determine the levels of metabolites
resulting from bone resorption (targeted to a peptide linked pyridinoline
epitope collagen and potentially to other metabolites) suitable for various
uses, including point of care and home or other over-the-counter ("OTC") use
("PLP Assay").
E. Hologic engages in the research, development, manufacture, sale, and
lease of diagnostic equipment and other products in the field of bone
metabolism, including its lines of QDR x-ray bone densitometers, Sahara
ultrasound bone sonometers and associated systems for analysis of bone
metabolism data. Pursuant to an agreement dated September 30, 1994 as amended,
(as amended, the "Hologic/Serex Agreement"), Hologic has entered into a
cooperation with Serex under which Hologic has funded Serex's development of the
PLP Assay for use with the SARA Format, and has obtained certain exclusive
rights and licenses to distribute the products resulting from this cooperation.
In an associated undertaking, Hologic has undertaken to develop a meter suitable
for point of care use to read assays in the SARA Format.
F. Ostex and Hologic desire to engage in a development project under
which Hologic will cause Serex to implement the NTx Assay Technology to work
with the SARA Format in a strip format (the "NTx Meter Strip") and with a
Hologic-developed stand-alone meter for point of care use (the "NTx Meter"),
which NTx Meter Strip and NTx Meter are collectively referred to herein as the
"NTx Meter System". Hologic will arrange for manufacture of said NTx Meter
Strips and NTx Meters.
G. Ostex desires to contribute to this development project by granting
to Hologic a license to use the NTx Assay Technology in connection with this
development project, by providing "Critical Reagents" (as this term is defined
in SECTION 1.15 hereof) needed for this development project at no charge, by
contributing to the costs of said project, and by selling Critical Reagents
needed for manufacture of the NTx Meter Strips at its manufacturing cost, all as
more specifically described in this Agreement.
H. In return, Hologic and Ostex will each sell said NTx Meter Strips
and Meters, and shall share the profits thereof through the mechanism of
reciprocal royalties, all as more specifically described in this Agreement.
Hologic may also integrate its meter technology with and into other Hologic
products, and may sell such products without royalty.
I. Simultaneously with this Agreement, Ostex and Hologic have entered
into that certain Co-Promotion Agreement providing for the co-promotion of
Hologic products and Ostex's OsteomarkAE Laboratory Test in its microtiter
format in accord with the terms set out therein (the "Co-promotion Agreement").
TERMS OF AGREEMENT
In consideration of the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
<PAGE>
1. DEFINITIONS. The following definitions shall apply throughout
this Agreement.
1.1 "Affiliate" means, with respect to any person or entity,
any individual, corporation, company, firm, partnership or other entity
controlled by, in control of, or under common control with, such person or
entity, where "control" means direct or indirect legal or beneficial ownership
of fifty percent (50%) or more of the shares, business interests, or voting
securities of another corporation, company, firm, partnership or other entity,
or the right to fifty percent (50%) or more of the income of such corporation,
company, firm, partnership or other entity. Notwithstanding the foregoing, Serex
shall be considered an affiliate of Hologic.
1.2 "WRF Bone Resorption Technology" means all technology to
which Ostex has rights relating to assays, methods, and materials, including
Critical Reagents, for measuring bone collagen metabolites; having first been
developed from research conducted by Dr. David Eyre, owned by the Washington
Research Foundation, and licensed exclusively to Ostex. The WRF Bone Resorption
Technology includes, without limitation, the urinary diagnostic assay known as
the Osteomark immunoassay.
1.3 "Confidential Information" means (a) any and all normally
non-public information communicated or disclosed by one party ("Discloser") to
the other party ("Recipient") describing or relating to the Disclosing Party's
business and marketing plans and strategies, financial information, or customer
information, and (b) any and all information communicated or disclosed by the
Discloser to Recipient describing or relating to the Disclosing Party's research
and development, Know-How, inventions, trade secrets, technical data, formulae,
drawings, designs, software, models, samples, kits, processes, product
development data and information and other data and information related to the
business of Discloser, labeled or specified in writing as "Confidential" or the
equivalent, or if orally disclosed, labeled "Confidential" or the equivalent,
and reduced to writing within thirty (30) days of such oral disclosure;
provided, however, that "Confidential Information" shall not be deemed to
include information which the Recipient can demonstrate by written proof: (i) is
now, or hereafter becomes, through no fault on the part of the Recipient,
generally known or available; (ii) is known by the Recipient at the time of
receiving such information; (iii) is furnished to others by Discloser without
restriction on disclosure; (iv) is hereafter furnished to the Recipient by a
third party unrelated to Discloser, as a matter of right and without any breach
of any duty of non-disclosure; (v) is independently developed by the Recipient
without use of or reference to any Confidential Information; or (vi) is the
subject of express written permission to disclose provided by Discloser. Without
limiting the generality of the foregoing, Confidential Information may include
information developed during the course of this Agreement.
1.4 "COGS" means all costs of materials and components
(including purchase costs and royalties) and personnel expended on fabrication,
quality control, and regulatory documentation, plus a portion of overhead based
on the portion of resources allocated to manufacturing and shipping, calculated
in accord with generally accepted accounting principles.
<PAGE>
1.5 "Critical Reagents" means the set of reagents supplied by
Ostex for use in the development of the NTx Meter Strips, currently consisting
of: monoclonal antibodies or fragments thereof, for example the monoclonal
antibody produced by hybridoma 1H11, that shows specific immunoaffinity for the
NTx Epitope (at concentrations to be agreed on, appropriate for use in the NTx
Meter Test) antibody diluent; analyte (NTx Epitope)-containing controls; and
other reagents. Reagents will be supplied by Ostex "in bulk," provided that
Ostex shall also supply a reasonable number of Osteomark(R) Laboratory Test Kits
in a microtiter plate format for Serex use for comparison and control purposes.
As of the effective date of this Agreement, Critical Reagents include the 1H11
monoclonal antibody, diluent, calibrators and controls. These reagents may be
changed upon mutual agreement of the parties and upon reasonable notice to scale
up to commercial quantities. The term "Critical Reagents" shall also include any
improvement to or successor antibody(ies) with immunoaffinity to the NTx Epitope
or similar epitopes resulting from bone resorption which may be developed or
marketed by Ostex in any form during the term of this Agreement.
1.6 "Discovery" means any scientific, technological, or
commercial invention, discovery, development, improvement, Know-How, or product
resulting from the activities contemplated by the parties under this Agreement,
whether or not the same is patentable.
1.7 "Distribution Network" shall mean a party to this
Agreement acting as a seller together with its authorized resellers and
sublicensees.
1.8 "Field of Use" means use with the SARA Format, and the
associated NTx Meter or other Hologic meter technology for use as a point of
care device.
1.9 "First Commercial Sale" means the first Sale of a NTx
Meter System by the Distribution Network for a value in an arms length
transaction with an independent third party following approval for Sale by the
United States Food and Drug Administration of the NTx Meter System.
1.10 "Gross Profit" means Net Sales less COGS.
1.11 "Gross Sales" means gross receipts, royalties, fees and
other valuable consideration of any kind received directly or indirectly by, or
credited to the benefit of the seller and permitted Affiliates in connection
with all Sales to end-users and third-party distributors. Without limiting the
generality of the foregoing, Gross Sales include without limitation, interest,
late charges, time-price differentials and other receipts or credits of a
similar nature.
1.12 "Know-How" means any method, information, procedure,
process, composition of matter, biological material, or other subject matter.
1.12.1 "Hologic Know-How" means Know-How that
has been developed or acquired by Hologic, prior to or during the term of
this Agreement.
<PAGE>
1.12.2 "Ostex Know-How" means Know-How that has
been developed or acquired by Ostex, prior to or during the term of this
Agreement.
1.12.3 "Serex Know-How" means Know-How that has
been developed or acquired by Serex, prior to or during the term of this
Agreement.
1.13 "Hologic Intellectual Property Rights" means all Hologic
Know-How, trade secrets, Confidential Information, Hologic patent rights and
other intellectual property rights owned or controlled by Hologic individually
or in conjunction with others and related to the field of bone and mineral
metabolism, meter technology, biochemical markers, or medical practice,
including but not limited to Hologic's rights to Serex Intellectual Property
Rights pursuant to the Hologic/Serex Agreement.
1.14 "Serex Intellectual Property Rights" means all Serex
Know-How, trade secrets, Confidential Information, Serex Patent Rights, and
other intellectual property rights owned or controlled by Serex and individually
or in conjunction with others and related to the field of bone and mineral
metabolism, meter technology, biochemical markers, diagnostic products and
methods, or medical practice, including but not limited to the PLP Assay and the
SARA Format.
1.15 "NTx Assay Technology" means a urine- or serum-based
immunoassay for bone collagen metabolites comprising an NTx Epitope, and any
successor immunoassay utilizing WRF Bone Resorption Technology, together with
associated controls and other products, the manufacture, use, offer for sale or
Sale of which would, but for the licenses granted herein, infringe a Valid
Claim.
1.16 "Net Sales" means Gross Sales, less normal and customary
trade, quantity, and cash discounts allowed and actually taken, allowances for
credits granted or returns, and commissions paid or allowed to third-party
distributors.
1.17 "NTx Epitope" means a conformational structure included
within the natural crosslinked telopeptides from type I collagen, to which the
monoclonal antibody (mAb) produced from the hybridoma 1H11 binds specifically by
immunoaffinity.
1.18 "Ostex Intellectual Property Rights" means all Ostex
Patent Rights, Ostex Know-How, trade secrets, Confidential Information statutory
and common-law trademark rights, and other intellectual property rights owned,
licensed or controlled by Ostex during the term of this Agreement and related to
the WRF Bone Resorption Technology.
1.19 "Ostex Patent Rights" means all rights of Ostex,
as licensee under the WRF/Ostex Exclusive License Agreement, in and
to any and all subject matter claimedin or disclosed by U.S. patents and
patent applications referred to in the WRF/Ostex Exclusive License
Agreement, including without limitation U.S. Patent Application Serial No.
<PAGE>
118,234 filed November 6, 1987, and any divisions, continuations,
continuations-in-part or reissues arising therefrom or issuing thereon, U.S.
Patent No. 4,973,666 issued November 27, 1990, U.S. Patent No. 5,140,103 issued
August 18, 1992, U.S. Patent No. 5,300,434 issued April 5, 1994, U.S. Patent No.
5,320,970 issued June 14, 1994, U.S. Patent No. 5,532,169 issued July 2, 1996,
U.S. Patent No. 5,455,179 issued October 3, 1995, U.S. Patent No. 5,473,052
issued December 5, 1995, U.S. Patent No. 5,576,189 issued November 19, 1996,
U.S. Patent No. 5,472,884 issued December 5, 1995 along with any and all other
patent rights applicable, owned by WRF and licensed to Ostex, and related to,
derived from, or claiming priority from any such U.S. patent applications,
including without limitation International Application No. PCT/US88/03722,
International Application No. PCT/US90/7015, International Application No.
PCT/US92/04104.
1.19A "Hologic Patent Rights" means all rights of Hologic in
and to any and all subject matter claimed in or disclosed by U.S. patents and
patent applications owned or assigned to Hologic relating to the subject matter
of the Hologic/Serex Agreement.
1.20 "Sale" means any and all transactions whereby a party or
its Affiliates sell, lease, rent, or otherwise transfer or dispose of to (i) any
end-user, including without limitation any physician's office or clinical
laboratory purchaser, or (ii) any third-party distributor, any right of
ownership, or any other right to possession.
1.21 "Valid Claim" means a claim in any unexpired Ostex Patent
Right which has not been held invalid by a non-appealed or unappealable decision
by a court or other appropriate body of competent jurisdiction.
2. LICENSE GRANTS.
2.1 NTX METER STRIP. Ostex hereby grants to Hologic and to
Hologic's "permitted assigns" for the term of this Agreement, and Hologic hereby
accepts, a nonexclusive, worldwide, nontransferable license in and under the
Ostex Patent Rights and Ostex Know-How, to develop, manufacture and have
manufactured, and to market, promote, offer to sell, sell, distribute and have
marketed, promoted, sold and distributed in any country in the World except
Japan, the NTx Meter System (incorporating the NTx Assay Technology and
utilizing the Critical Reagents) within the Field of Use, all in return for the
Ostex rights set out herein.
2.2 HOLOGIC OPTION TO MANUFACTURE.
2.2.1 CRITICAL REAGENTS FOR NTX METER STRIP(S).
Ostex hereby grants Hologic an option, exercisable by Hologic pursuant to
the terms of SECTION 6.3.3 below, to a temporary, non-exclusive,
nontransferable, royalty-bearing license under the Ostex Patent Rights and Ostex
Know-How to manufacture or have manufactured, purify or have purified, Critical
Reagents at a manufacturing facility in the United States (or such other country
as the parties may agree), for the sole purpose of manufacturing NTx Meter
Strips for distribution within the Field of Use pursuant to the terms of this
Agreement.
<PAGE>
2.2.2 The terms of any license granted pursuant
to SECTION 2.2.1 shall be subject to payment to Ostex of a royalty equal to
the transfer price for such Critical Reagents had such Reagents been
manufactured and delivered by Ostex, less a deduction equal to Hologic's COGS
therefor, provided that if such COGS exceeds the transfer price and the
resultant number is a negative number, Hologic shall take a credit against any
amounts due to Ostex pursuant to SECTION 7.4 of this Agreement.
2.2.3 Any license granted pursuant to the
option of this SECTION 2.2 shall be revocable by Ostex upon ninety (90)
days prior notice accompanied by demonstration by Ostex that it has recovered
the manufacturing capacity to resume supply of Hologic's anticipated needs as
forecasted pursuant to SECTION 6.3.1 hereof (provided, however, that such
license may be revoked no sooner than six (6) months following Hologic's
exercise of the option, and upon reasonable agreement as to appropriate
phase-out of Hologic production, phase-in of Ostex production, and coverage of
any Hologic start-up and termination costs, whereupon Hologic will again have
available to it, in the event of subsequent default by Ostex as described in
SECTION 6.3.3, a license option under this SECTION 2.2.
2.3 EXPRESS RESERVATION OF RIGHTS. The scope of
license granted by Ostex to Hologic hereunder is limited by the scope of
the express grants set forth in this SECTION 2. Without limiting the generality
of the foregoing:
2.3.1 RIGHTS SPECIFICALLY EXCLUDED FROM SCOPE
OF GRANT TO HOLOGIC. Ostex retains all rights in the WRF Bone Resorption
Technology and Ostex Intellectual Property Rights, including without limitation
all rights with respect to all products, applications, fields of use, markets
and uses, that are not expressly included within the scope of the grant of
rights to Hologic as set forth in this Agreement. This Agreement shall not under
any circumstances be construed or interpreted to provide for the grant, license,
or any other transfer to Hologic or Serex of any rights in the WRF Bone
Resorption Technology, other than the right to use Critical Reagents supplied by
Ostex hereunder within the scope of the license as granted in this SECTION 2.
2.3.2 HOLOGIC AND SEREX. Hologic and Serex shall
retain their respective ownership and control of all Hologic and Serex
Intellectual Property Rights and other proprietary rights and interests in and
relating to the SARA Format, meter technology, and PLP Assay.
2.3.3 ACTIONS REQUIRING OSTEX'S PRIOR WRITTEN
CONSENT. Hologic shall not, without Ostex's prior written consent, which
consent may be withheld at Ostex's sole discretion, manufacture or use any
Critical Reagent other than as provided for within the scope of the license
grants as set forth in this SECTION 2.
2.3.4 COMPULSORY LICENSES. Ostex and Hologic
acknowledge that the Ostex Patent Rights are subject to the rights and
limitations of United States Code, Title 35, Chapter 18, and administrative
regulations thereunder, and equivalents thereof in other jurisdictions, and that
the grants of licenses under SECTION 2 above are subject to such rights and
limitations. In the event that Ostex receives notice that any governmental
agency in any country or territory having valid authority and jurisdiction has
<PAGE>
granted, or intends to grant or to cause to be granted, a compulsory license
with respect to all or any portion of the Ostex Patent Rights, Ostex shall so
notify Hologic and shall grant that third party a license to exercise the Ostex
Patent Rights to the extent required by the governmental agency. The grant of
such license to a third party or the taking of rights by or on behalf of any
government shall under no circumstances be considered a breach of this Agreement
by Ostex, provided that Hologic shall be deemed to have received an equivalent
license under the same terms and conditions.
2.4 OSTEX RIGHT TO DISTRIBUTE NTX METER SYSTEM. Hologic hereby
grants to Ostex and its Affiliates for the term of this Agreement, and Ostex
hereby accepts, a nonexclusive, nontransferable license in and under Hologic
Intellectual Property Rights, to market, promote, sell, distribute and have
marketed, promoted, sold and distributed under Ostex's trademarks in any country
in the World, the NTx Meter System all in return for the Hologic rights set out
herein.
3. SUPPLY OF CRITICAL REAGENTS.
3.1. CRITICAL REAGENTS FOR DEVELOPMENT OF NTX METER STRIP(S).
Ostex shall supply to Hologic and to its designee, Serex, without charge, such
reasonable quantities of Critical Reagents as shall be necessary or useful for
the purpose of developing NTx Meter Strip(s) pursuant to the terms and
conditions of this Agreement, together with such reasonable consulting advice as
Hologic or Serex may request.
3.2 CRITICAL REAGENTS FOR MANUFACTURING NTX METER STRIP(S).
Ostex shall sell to Hologic (or such manufacturer(s) as Hologic shall
designate), and Hologic (or said manufacturer(s)) shall purchase from Ostex,
Critical Reagents for the purpose of manufacturing NTx Meter Strip(s) pursuant
to the terms and conditions of this Agreement.
3.2.1 Hologic or its designated manufacturer(s)
shall pay Ostex a non-royalty transfer price for Critical Reagents sold
pursuant to this SECTION 3 equal to Ostex' COGS therefor.
3.2.2 Payment for each shipment of Critical
Reagents shall be made by Hologic or its designated manufacturer(s) within
30 days of the date of invoice, it being agreed that such invoice shall not be
dated prior to shipment of the Critical Reagents to which such invoice relates.
In the event that Hologic or its designated manufacturer(s) fails to comply with
the payment terms of this SECTION 3, Ostex shall have the right, in addition to
all other rights available under this Agreement, to suspend further shipment of
Critical Reagents until such breach is cured.
3.3 THIRD-PARTY MANUFACTURING ON BEHALF OF OSTEX. In the event
that Ostex licenses a third party to manufacture Critical Reagents to be
supplied under this Agreement, Ostex shall ensure and provide evidence to
Hologic demonstrating that such third-party manufacturer complies with good
manufacturing practices (GMP) and all applicable governmental regulations
<PAGE>
relating thereto and is either in compliance with or working toward compliance
with the quality standards established by the International Standards
Organization, Rules 9000 et seq. and amendments or successors thereto ("ISO
9000").
3.4 PRODUCT WARRANTY; QUALITY CONTROL. Ostex warrants to
Hologic and its designated manufacturer(s) that all Critical Reagents sold by
Ostex hereunder shall (i) comply with the specifications set out in ATTACHMENT
3.4 hereof when used in accord with Ostex instructions for use, and amendments
thereto as mutually agreed upon by the parties, (ii) be free from defects in
material, workmanship and design, and (iii) comply with all applicable laws,
rules and regulations related to the manufacture and distribution of such
product (to the extent applicable to a manufacturer). Without limiting the
generality of the foregoing, Ostex warrants that all Critical Reagents
manufactured and supplied for the United States market under this Agreement
shall be manufactured, tested, documented, packaged, and transported in
compliance with GMP requirements of the FDA including, without limitation, 21
CFR Part 820 and any amendments or successors thereto; and that all Critical
Reagents manufactured and supplied under this Agreement, regardless of intended
market, shall be manufactured, tested, documented, packaged and transported in
compliance with Hologic's reasonable quality assurance requirements. Hologic
shall have the right to audit and inspect Ostex facilities, books, and records
to confirm such compliance. Ostex further represents that it is working toward
compliance with the quality standards established by ISO 9000 and warrants that
it will comply with such standards when legally required to do so. In the event
that Hologic or its designated manufacturer(s) demonstrates within one year of
receipt that any Critical Reagent supplied pursuant to this Agreement fails to
meet these specifications and warranties, Ostex shall, as Hologic's sole remedy
for such failure, immediately replace said product (demonstrated by Hologic or
its designated manufacturer(s) as non-conforming in accord with Ostex's
reasonable standard procedures) with product which conforms to the above
specifications and warranties. These warranties shall not apply to any item that
is subjected to abuse, stress, or misuse; or used in any manner inconsistent
with applicable Ostex instructions.
3.5 DELIVERY. All Critical Reagents purchased
under this Agreement shall be shipped F.O.B. Origin.
3.6 INVENTORY. At all times during the distribution term of
this Agreement, Ostex shall supply and Hologic or its designated manufacturer(s)
shall keep sufficient inventory of Critical Reagents to carry out reasonable
demand or orders for NTx Meter Strip(s) without undue delay.
3.7 FACILITIES STANDARDS. At all times during the term of this
Agreement, Hologic and its designated manufacturer(s) shall provide or cause to
be provided such warehousing and transport facilities as are both commercially
reasonable and adequate under the applicable regulations, product requirements,
and industry standards of all relevant jurisdictions under this Agreement.
4. PRODUCT MANAGEMENT COMMITTEE. Within thirty (30) day of the
Effective Date, the parties shall form a Product Management Committee consisting
<PAGE>
of two (2) named representatives each from Hologic and Ostex respectively, and
one (1) named representative (non-voting) from Serex, which committee shall have
the responsibility to oversee and coordinate development, marketing,
promotional, Sales, and distribution efforts and other activities required or
permitted by this Agreement respecting the NTx Meter System. The committee shall
meet at least once per quarter, at locations and at times to be agreed, and
shall undertake the responsibilities set out in this Agreement, as well as the
obligation to regularly review development status, marketing and sales
forecasts, actual sales performance, competitive activities, and promotional
plans. The committee shall attempt to operate by consensus, and shall take no
action without approval of a majority of voting members. The committee may
delegate certain of its functions to subcommittees or individual members. Each
party shall cause its members to work diligently to promote the commercial
success of the NTx Meter System. Either party may change its representatives
assigned to said committee by fifteen (15) days advance written notice provided
pursuant to SECTION 21 of this Agreement.
5. ROLE OF THE PARTIES IN THE DEVELOPMENT AND REGULATORY APPROVAL
OF THE NTX METER SYSTEM.
5.1 GOALS. The parties have established the development goals
set out herein, which goals are anticipated to be accomplished within the
general time periods set out therein, as said development goals may be specified
in more detail or amended from time to time, provided that Hologic shall use and
shall cause Serex to use its best commercial efforts to complete development of
the NTx Meter System and to obtain regulatory approval
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
5.2 CONSULTATION AND AVAILABILITY OF OSTEX KNOW-HOW. Each
party shall perform the activities assigned to it, and shall make available key
employees to provide consultation, advice, assistance, and scientific direction
in furtherance of the objectives of this Agreement. Without limiting the
generality of the foregoing, Ostex shall make available to Hologic and to Serex
personnel trained in and knowledgeable of the WRF Bone Resorption Technology and
performance characteristics of the NTx Assay Technology. Except as otherwise
specifically provided in this Agreement, each party shall bear its own costs and
expenses associated with all facilities, materials, and employee time devoted to
this effort. Neither party shall be obligated to disclose their Confidential
Information to the other, except to the extent necessary for the performance of
each party's obligations under this Agreement.
5.3 SEREX ROLE. Hologic shall cause Serex to use its best
commercial efforts, pursuant to the Hologic/Serex Agreement, to (a) integrate
the Ostex NTx Assay Technology to work with the SARA Format to create the NTx
Meter Strip; (b) cooperate with Hologic to develop the NTx Meter; and (c)
cooperate with Hologic and Ostex in the conduct of clinical trials and the
obtaining of regulatory approvals for the NTx Meter System as a whole.
5.4 HOLOGIC ROLE. Pursuant to the Hologic/Serex
Agreement, Hologic shall (a) cooperate with Serex in connection with, and
continue to fund, development of the NTx Meter Strip
<PAGE>
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX;
(b) arrange, manage and fund development of the NTx Meter
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX; and (c)
arrange, manage, and fund conduct of clinical trials and the obtaining of
regulatory approvals for the NTx Meter System XXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
5.5. OSTEX ROLE.
5.5.1 GENERALLY. Pursuant to SECTIONS 2.1 and
3.1 of this Agreement, Ostex shall
--------- -------------
(a) provide the license and Critical Reagents specified therein; (b) cooperate
with Hologic to develop the NTx Meter and (c) cooperate with Hologic and Serex
in the conduct of clinical trials and the obtaining of regulatory approvals for
the NTx Meter System.
5.5.2 OSTEX FUNDING. In addition, Ostex shall
reimburse Hologic XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
in support of Serex's development efforts, Meter
development, support of clinical trials and regulatory approval, upon
receipt of Hologic's invoice to Ostex for the previous calendar quarter's
expenses, to a maximum
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX which
is one-hundred ten percent (110%) of the total of the amounts set out in SECTION
5.4 above. If at any time, it appears that the cost of the Serex development
effort for the NTx Meter System will exceed said Maximum Cost, the parties will
meet and use their best efforts to negotiate, in good faith, an appropriate
agreement to allocate any such excess. Failing agreement, either party may
terminate this Agreement without penalty upon thirty (30) days advance written
notice to either party, provided that the other party may agree during such
notice period to reimburse the entire excess, in which case royalties payable
pursuant to SECTIONS 7.3 and 7.4 shall be adjusted to reflect the overall
percentage of funding paid by each party during the period beginning January 1,
1997.
5.5.3 ACCESS TO CLINICAL DATA. Ostex shall
provide Hologic and Serex with full access to all clinical trial data and
regulatory submissions, and make available all urine samples, collected by Ostex
that pertain to the NTx Assay Technology and to the activities of Hologic and
Serex under this Agreement. It is acknowledged that such information will be
subject to the confidentiality provisions set out in this Agreement as well as
confidentiality provisions necessary to protect patient privacy; provided,
however, that such information may, as necessary and appropriate, be transmitted
to proper regulatory authorities in connection with the seeking of regulatory
product approvals.
5.5.4. TECHNICAL SUPPORT. Ostex shall assist
Hologic and Serex, at either's
reasonable request, in the technical training of a mutually determined number of
<PAGE>
Hologic and/or Serex's employees, such training to include provision of
information as to the nature, use and proper care of Critical Reagents. Any such
training shall be provided at Ostex's principal place of business, and Hologic
shall be solely responsible for all costs of transportation, lodging, and other
expenses of trainees incidental to such training. During the term hereof, Ostex
shall use its commercially reasonable efforts to respond to technical questions
or problems which may arise from time to time in connection with the Critical
Reagents, WRF Bone Resorption Technology and Ostex Intellectual Property.
6. ROLE OF THE PARTIES IN MANUFACTURE AND COMMERCIALIZATION
OF NTX METER TEST.
6.1 MANUFACTURING. Pursuant to the Hologic/Serex Agreement,
Hologic shall, within a reasonable time period following FDA approval, develop
the capacity to manufacture or have manufactured reasonable commercial
quantities of the NTx Meter and NTx Meter Strips. Hologic may have Serex and/or
third parties manufacture and package the NTx Meter Strips (provided that they
have agreed to be bound by the terms of this Agreement, including its provisions
relating to confidentiality), and may manufacture the NTx Meter itself or
utilize third parties to do so, provided that Hologic shall first furnish Ostex
with evidence demonstrating any such third party's capability to manufacture
such NTx Meter Strips or NTx Meters pursuant to GMP and all applicable
regulatory requirements.
6.2 COMMERCIALIZATION. Six months prior to the anticipated
First Commercial Sale of NTx Meter Systems under this Agreement, but in no event
longer than 24 months from the effective date of this Agreement, Hologic and
Ostex, acting through the Product Management Committee, shall agree on a
marketing plan for said NTx Meter Systems for the following twelve months (a
"Marketing Year") that will be appended to this Agreement as ATTACHMENT 6.2. The
parties anticipate that such Attachment will cover marketing activities and will
require each party to spend, individually, XXXXXXXXXXXXXXXXXXXXXX of anticipated
total Gross Sales by both parties together of NTx Meter Strips and NTx Meters
for such year (as this number is determined by the Product Management Committee)
on marketing activities therefor. The Product Management Committee shall agree
on a new marketing plan for each subsequent Marketing Year during the term of
this Agreement; provided that such marketing plan shall not require either party
XXXXXXXXXXXXXXXXXXXXXXXXX of that party's individual Gross Profit received from
its Sales of NTx Meter Systems during the immediately preceding Marketing Year
(not including royalties received from the other party pursuant to SECTIONS 7.3
or 7.4 hereof), provided further that if the Product Management Committee is not
able to agree on a marketing plan for any such subsequent Marketing Year, the
marketing plan (including budgetary allocations) for the immediately preceding
Marketing Year shall be repeated with expenditures equivalent to the dollar
expenditures of such preceding Marketing Year. If either party does not spend
the amount so designated pursuant to the marketing plan for any Marketing Year
of this Agreement, the other party shall, in addition to any other remedy
provided under this Agreement, be entitled to take a credit against royalties
payable by it for the subsequent Marketing Year equal to the shortfall. Said
<PAGE>
Product Management Committee will also establish for each Marketing Year of the
term a designated quantity of NTx Meter Strips to be purchased by each party
pursuant to this Agreement, and distributed as "promotional samples" without
customer charge, and without royalty to either party. For the first Marketing
Year, the parties expect to designateXXXXXXXXXXXXX of the anticipated production
of NTx Meter Strips as such "promotional samples" provided that this percentage
may be revised by the Product Management Committee in light of market conditions
and strategy,XXXXXXXXXXXXXXX to each party or as otherwise agreed.
6.3 Supply of Critical Reagents. Ostex shall use its best
commercial efforts to supply the need of Hologic and its designated
manufacturer(s) for Critical Reagents as necessary to meet the demand for NTx
Meter Systems, in accordance with purchase orders received by Ostex from Hologic
and its designated manufacturer(s), and in SECTIONS 6.3.1 AND 6.3.2 below.
6.3.1 FORECAST OF DEMAND. Within sixty days of
the start of each calendar quarter, Hologic or its designated
manufacturer(s) shall deliver to Ostex a "rolling" forecast of quantities of
Critical Reagents to be purchased by Hologic and its designated manufacturer(s)
and supplied by Ostex during each month of the following quarter, and each of
the subsequent three quarters (the "Rolling Forecast"). Each Rolling Forecast
shall be considered a purchase order with respect to the forecasted demand for
Critical Reagents over the first three months thereof. The forecasted demand for
the first subsequent quarter shall be relied on by Ostex for purposes of its
manufacturing and supply obligations hereunder, but Hologic and its designated
manufacturer(s) may vary from its initial forecast for such quarter by no more
than twenty-five percent (25%). The forecasted demand for the final two quarters
of each Rolling Forecast shall be used by Ostex for planning purposes, but
Hologic and its designated manufacturer(s) shall not be bound by its initial
forecast(s), nor shall Hologic or its designated manufacturer(s) be liable to
Ostex with respect to any changes thereto.
6.3.2 ALLOCATION OF PRODUCTION. In the event
that Ostex does not meet the demand for Critical Reagents ordered pursuant
to SECTION 6.3.1, Ostex shall allocate overall production of Critical Reagents
(whether manufactured or purchased, and whether for Ostex's internal
manufacturing or for Sale) such that Hologic and its designated manufacturer(s)
receives the same proportion of the amount of the Critical Reagents it has
ordered (pursuant to SECTION 6.3.1 hereto) as Ostex allocates to its own
manufacture of products utilizing the NTx Assay Technology, or to its otherwise
most favored non-end-user customer, whichever proportion is greater (measured as
a proportion of total units of production), provided that Ostex shall not be
required to sell to Hologic and its designated manufacturer(s) any more than
thirty percent (30%) of its total production of any Critical Reagent during any
quarter.
6.3.3 EXERCISE OF MANUFACTURING OPTION. In
the event that Ostex does not for any
reason, for a period of thirty (30) days, meet (through internal or third-party
manufacture), Hologic's demand for Critical Reagents which comply with SECTION
3.4 hereof, ordered pursuant to SECTION 6.3.1 hereof, Hologic shall be entitled,
upon fifteen (15) days written notice, to exercise the option to manufacture
such Critical Reagents described in SECTION 2.2 hereof. Any Hologic exercise of
said option shall not relieve Ostex of its obligations pursuant to this SECTION
6.3. Upon any Hologic exercise of said option, Ostex shall provide to Hologic
subject to the provisions of SECTION 10 of this Agreement, all information
<PAGE>
necessary to so manufacture such Critical Reagents, provided that Hologic shall
not disclose to Serex any Confidential Information so disclosed without the
prior written approval of Ostex which approval may be conditioned or withheld at
Ostex's sole discretion.
6.4 PUBLICATIONS. Each party shall, throughout the term of
this Agreement, use its continuing commercially reasonable efforts to develop
documentation and publish scientific articles directly or indirectly supporting
the clinical utility of the NTx Meter System. Such publications will be
submitted to the other party for review and approval prior to publication, and
shall be subject to the requirements of SECTION 16.2 hereof regarding the use of
trademarks.
7. ROLE OF THE PARTIES IN THE SALES OF THE NTX METER TEST.
7.1 The parties' general agreement is that Hologic and Ostex
shall each sell NTx Meter Strips and NTx Meters as they see fit, and shall share
the profits associated therewith in accord with the reciprocal royalty
mechanisms more specifically described in this Section.
7.2 OSTEX PURCHASE OF NTX METER STRIPS AND METERS Hologic
shall use its commercially reasonable efforts to supply the need of Ostex to
meet the demand for NTx Meter Strips and NTx Meters, in accordance with purchase
orders received by Hologic from Ostex, and in accordance with the rolling
forecast and allocation provisions specified in Sections 7.2.10 and 7.2.11
below.
7.2.1 Ostex shall pay Hologic a non-royalty
transfer price for NTx Meter Strips and
NTx Meters sold pursuant to this Section equal XXXXXXXXXXXXXXX therefor
(including any extra charge for Ostex-requested modifications to standard
packaging as may be agreed).
7.2.2 Payment for each shipment of NTx Meter
Strips and NTx Meters shall be made by
Ostex within 30 days of the date of invoice, it being agreed that such invoice
shall not be dated prior to shipment of the NTx Meter Strips and NTx Meters to
which such invoice relates.
7.2.3 THIRD-PARTY MANUFACTURING ON BEHALF OF
HOLOGIC. In the event that Hologic
licenses a third party to manufacture NTx Meter Strips or NTx Meters to be
supplied to Ostex under this Agreement, Hologic shall ensure and provide
evidence to Ostex demonstrating that such third-party manufacturer complies with
good manufacturing practices (GMP) and all applicable governmental regulations
relating thereto and is either in compliance with or working toward compliance
with the quality standards established by the International Standards
Organization, Rules 9000 et seq. and amendments or successors thereto ("ISO
9000").
7.2.4 PRODUCT WARRANTY; QUALITY CONTROL. Hologic
warrants to Ostex that all NTx
Meter Strips and NTx Meters sold by Hologic to Ostex hereunder shall (i) comply
with the product specifications attached hereto as ATTACHMENT 7.2.4 when used in
accord with applicable Hologic instructions, as modified by mutual agreement of
the parties, (ii) be free from defects in material, workmanship and design, and
(iii) comply with all applicable laws, rules and regulations related to the
<PAGE>
manufacture and distribution of such product (to the extent applicable to a
manufacturer). Without limiting the generality of the foregoing, Hologic
warrants that all NTx Meter Strips and NTx Meters manufactured and supplied for
the United States market under this Agreement shall be manufactured, tested,
documented, packaged, and transported in compliance with GMP requirements of the
FDA including, without limitation, 21 CFR Part 820 and any amendments or
successors thereto; and that all NTx Meter Strips and NTx Meters manufactured
and supplied under this Agreement, regardless of intended market, shall be
manufactured, tested, documented, packaged and transported in compliance with
appropriate quality assurance requirements agreed to by the parties. Ostex shall
have the right to audit and inspect Hologic facilities, books, and records to
confirm such compliance. Hologic further represents that is working toward
compliance with the quality standards established by ISO 9000 and warrants that
it will comply with such standards when legally required to do so. In the event
that Ostex demonstrates within one year of receipt that any product supplied
pursuant to this Agreement fails to meet these specifications and warranties,
Hologic shall, as Ostex's sole remedy for such failure, replace said product
(returned by Ostex to the factory pursuant to Hologic's reasonable standard
return procedures) with product which conforms to the above specifications and
warranties, provided that Hologic shall not be obligated to replace NTx Meter
Strips distributed as "Promotional Samples" which pass Hologic quality assurance
tests and comply with all FDA and other governmental regulations relating to
such Promotional Samples. These warranties shall not apply to any item that is
subjected to abuse, stress, or misuse; or used in any manner inconsistent with
applicable Hologic instructions; or insofar as any such warranty violation is
caused by Ostex's violation of its warranties set out in SECTION 3.4 hereof.
7.2.5 CUSTOMS AND TAXES. With respect to
international shipments of any goods
purchased, sold, distributed, or otherwise transferred hereunder, including the
Critical Reagents, the purchasing party shall be responsible for clearing all
such goods through customs and shall pay any and all taxes and/or duties imposed
by any governmental authority in connection therewith.
7.2.6 DELIVERY. All NTx Meter Strips and NTx
Meters purchased by Ostex under this
Agreement shall be shipped FOB manufacturer's dock.
7.2.7 INVENTORY. At all times during the
distribution term of this Agreement,
Hologic shall supply and Ostex shall keep sufficient inventory of NTx Meter
Strips and NTx Meters to carry out reasonable demand for orders therefor without
undue delay.
7.2.8 FAILURE OF PAYMENT. In the event that
Ostex fails to comply with the payment
terms of this Section, Hologic shall have the right, in addition to all other
rights available under this Agreement, to suspend further shipment of NTx Meter
Strips and NTx Meters until such breach is cured.
7.2.9 FACILITIES STANDARDS. At all times
during the term of this Agreement, Ostex
shall provide or cause to be provided such warehousing and transport facilities
as are both commercially reasonable and adequate under the applicable
regulations, product requirements, and industry standards of all relevant
jurisdictions under this Agreement.
<PAGE>
7.2.10 FORECAST OF DEMAND. Within thirty days of
the start of each calendar quarter,
Ostex shall deliver to Hologic a "rolling" forecast of the quantities of NTx
Meter Strips and NTx Meters to be purchased by Ostex and supplied by Hologic
during each month of the following quarter,. and each of the subsequent three
quarters (the `Rolling Forecast"). Each Rolling Forecast shall be considered a
purchase order with respect to the forecasted demand for NTx Meter Strips and
NTx Meters over the first three months thereof. The forecasted demand for the
first subsequent quarter shall be relied on by Hologic for purposes of its
manufacturing and supply obligations hereunder, but Ostex may vary from its
initial forecast for such quarter by no more than twenty-five percent (25%). The
forecasted demand for the final two quarters of each Rolling Forecast shall be
used by Hologic for planning purposes, but Ostex shall not be bound by its
initial forecast(s), nor shall Ostex be liable to Hologic with respect to any
changes thereto.
7.2.11 ALLOCATION OF PRODUCTION. In the event
that Hologic does not meet the demand
for NTx Meters or NTx Meter Strips ordered pursuant to SECTION 7.2.10, Hologic
shall allocate overall production thereof such that Ostex receives the same
proportion of the amount of the NTx Meters and NTx Meter Strips it has ordered
(pursuant to SECTION 7.2.10 hereto) as Hologic allocates for its direct sale, or
to its otherwise most favored non-end-user customer, whichever proportion is
greater (measured as a proportion of total units of production), provided that
Hologic shall not be required to sell to Ostex and any more than fifty percent
(50%) of its total production during any quarter.
7.3 OSTEX ROYALTY ON SALES OF NTX METER STRIPS AND NTX METERS.
Subject to the terms of SECTION 7.5 hereof, Ostex shall pay
XXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
Ostex shall make the royalty payments required by this Section not later than
forty-five (45) calendar days following the end of each calendar quarter. At
such time, Ostex shall also provide Hologic with a full accounting of units
disposed of, Gross Sales, Net Sales, COGS, and Gross Profits attributable
thereto for said quarter.
7.4 HOLOGIC ROYALTY ON SALES OF NTX METER STRIPS AND NTX
METERS. Subject to the terms of SECTION 7.5 hereof, Hologic shall pay
XXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.,
provided that Hologic shall not be required to make any royalty payment with
respect to dispositions of NTx meter technology incorporated into or sold as a
package with or part of, other Hologic equipment,
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. Hologic shall make the royalty payments
required by this Section not later than forty-five (45) calendar days following
the end of each calendar quarter. At such time, Hologic shall also provide Ostex
with a full accounting of units disposed of, Gross Sales, Net Sales, COGS, and
Gross Profits attributable to its Sales of NTx Meter Strips, NTx Meters, and NTx
meter technology (but not other Hologic equipment into which said technology may
be incorporated or packaged) for said quarter.
7.5 ADJUSTMENT TO ROYALTIES. Following the end of the first
year period beginning with the First Commercial Sale, and each subsequent year
<PAGE>
period, if either party's Gross Sales of NTx Meter Strips for the prior year
period XXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX parties of such NTx Meter
Strips, the royalty payable on said NTx Meter Strips for the following year
period by "the party with the larger Sales" shall be adjusted downward by
XXXXXXXXXXXXXXXXXXXX that the total Sales of NTx Meter Strips by
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX NTx Meter Strips, unless "the party
with the larger Sales" waives this adjustment.
7.6 SERIOUS INJURY. Each party shall within twenty-four hours
advise the other by telephone, (with follow-up hard copy, receipt confirmed) of
any adverse effect or malfunction related to the NTx Meter Strips or the NTx
Meter or the Critical Reagents (whether incorporated in NTx Meter Strips or in
any other product, including but not limited to the OsteomarkAE Laboratory Test)
of which the notifying party gains knowledge during the term of this Agreement
that may have caused or contributed to, or should it reoccur is likely to cause
or contribute to, serious injury, illness, or death. The notifying party shall
include in the notification the name, address, and telephone number of the
person or entity purchasing the product in question, the name, address, and
telephone of the patient (if different), and the lot or serial number of the NTx
Meter Strip or NTx Meter involved in the incident, as appropriate.
7.7 PRODUCT RECALL. If either party believes that a product
recall is necessary or appropriate, it will promptly notify the other, and the
parties will (unless such recall is required by law) discuss whether such recall
is necessary or appropriate, and shall discuss the manner in which any agreed or
required recall shall be conducted. If a recall is not required by law and the
parties cannot agree whether the recall is necessary or appropriate, either
party may elect to conduct the recall in question The parties shall cooperate
with each other in conducting any such recall. All out of pocket costs of a
required or agreed recall insofar as such recall relates to Critical Reagents
(except printing and mailing costs incurred to notify customers of such recall),
shall be borne by Ostex. All out of pocket costs of a required or agreed recall
except insofar as such recall relates to Critical Reagents or the NTx Assay
Technology ( except printing and mailing costs incurred to notify customers of
such recall), shall be borne by Hologic. All costs of a recall to which the
parties have not agreed shall be borne by the party that elects to conduct the
recall, provided that if a court of competent jurisdiction determines that said
recall was caused by (i) the fact that any Critical Reagents or the NTx Assay
Technology were in violation of applicable law or the terms of this contract,
Hologic may obtain reimbursement by Ostex of all reasonable out of pocket costs
and expenses of such recall (except for printing and mailing costs incurred to
notify customers of such recall), or (ii) the fact that any NTx Meter or NTx
Meter Strip(s) were otherwise in violation of applicable law or the terms of
this contract, Ostex may obtain reimbursement by Hologic of all reasonable out
of pocket costs and expenses of such recall (except for printing and mailing
costs incurred to notify customers of such recall. Each party shall maintain
complete and accurate records of all product sold by it for such periods as
required by law. Nothing in this Section shall be construed to modify or limit
any legal obligation of either party with respect to any recall.
7.8 CORRECTIVE ACTION. If any government agency with
jurisdiction shall request or order any corrective action with respect to any
Critical Reagent, or NTx Meter or NTx Meter Strips, including but not limited to
<PAGE>
any recall, customer notice, restriction, change, market action, or modification
of the product in question, and the cause or basis for such corrective action is
primarily attributable to a condition, fact, or action that (i) constitutes a
breach by a party of any of its warranties, representations or covenants
contained herein, or (ii) a party knew or should have known would require such
corrective action; then such party shall be liable for and shall reimburse the
other party for all costs incurred as a result of such action, including
replacement cost of any product affected thereby.
8. BOOKS AND RECORDS; AUDITS. Each party to this Agreement shall
maintain accurate books and records with respect to all Critical Reagents and
NTx Meters and NTx Meter Strips. Upon the request of the other party, each party
will provide the requesting party or its independent public accountant with
access, but no more than once per calendar year, during regular business hours
and upon reasonable advance prior notice, to all accounting records necessary or
appropriate to verify amounts owed. Any adjustment determined appropriate by
such audit shall be due and payable within thirty (30) days following completion
of such audit, together with interest calculated at a rate equal to the prime
lending rate reported in the Wall Street Journal for the last day of the audited
period plus two percent (+2%), or the maximum interest rate then permitted under
the laws of Massachusetts, whichever rate is lower. All fees for such audits
shall be borne by the requesting party unless the audit shows an under reporting
of amounts due of five percent (5%) or more, in which case the costs of said
audit shall be borne by the party being audited.
9. OWNERSHIP OF DISCOVERIES. It is the intent of the parties that the
ownership of any and all Discoveries resulting from this Agreement, regardless
of inventorship, shall: (a) vest solely in Ostex to the extent that such rights
relate exclusively to the NTx Assay Technology; and (b) vest solely in Serex to
the extent that such rights relate exclusively to the SARA Format or adaptation
of the NTx Assay Technology for use with the SARA Format; and (c) vest solely in
Hologic to the extent that such rights relate exclusively to the NTx Meter or
use of NTx Meter Strips with the NTx Meter; and (d) in all other cases vest in
the party or parties of the inventor.
10. OBLIGATION NOT TO DISCLOSE CONFIDENTIAL INFORMATION. Recipient
shall not at any time, and shall cause Serex (in the case of Hologic) and its
permitted assigns and sublicensees (in the case of either party) to commit not
to at any time for a period of seven (7) years following the termination of this
Agreement, disclose or otherwise make known or available to any person, firm,
corporation, or other entity other than Discloser any Confidential Information
received from the other party without the express prior written consent of that
other party. With respect to Confidential Information developed under this
Agreement and which is not Confidential Information of one party only, neither
party shall disclose or otherwise make such Confidential Information known or
available to any person, firm, corporation, or other entity without the express
prior written consent of the other party, not to be unreasonably withheld or
delayed. Recipient shall utilize reasonable procedures to safeguard Confidential
Information, including releasing Confidential Information only to those
employees to whom disclosure is necessary or appropriate for the Recipient to
<PAGE>
undertake its responsibility pursuant to this Agreement. Nothing in this
Agreement shall prevent Recipient from disclosing Confidential Information to
government agencies for regulatory purposes.
10.1 RECIPIENT'S OWN USE OF CONFIDENTIAL INFORMATION.
Recipient shall not make any use, directly or indirectly, of any Confidential
Information of the other party except in the ordinary course of business
pursuant to this Agreement or any other specific, written agreement entered into
between Ostex and Hologic.
10.2 SPECIFIC PERFORMANCE. The parties acknowledge that: (a)
the covenants set forth in this SECTION 10 are essential to the activities
contemplated by this Agreement; (b) but for the agreement of each party to
comply with such covenants, neither party would have entered into such
activities; (c) each party has consulted with or has had the opportunity to
consult with counsel and has been advised in all respects concerning the
reasonableness of such covenants as to time and scope; (d) Discloser may have no
adequate remedy at law if Recipient violates or fails to perform under this
SECTION 10; and (e) Discloser shall have the right, in addition to any other
rights it may have, to seek from a court of competent jurisdiction preliminary
and permanent injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce Recipient's obligations under this SECTION 10
if Recipient fails to perform in accordance herewith.
11. SEREX DEVELOPMENT OF PLP TEST. Both parties acknowledge that Serex
has developed the PLP Assay, which determines the levels of a peptide linked
pyridinoline resulting from bone resorption, under the Hologic/Serex Agreement.
Notwithstanding any other provision of this Agreement, nothing shall prevent
Serex and/or Hologic from continuing this development or commercializing or
selling any results thereof, or from using any information provided or gained as
a result of this Agreement, or any derivative thereof, including Ostex Know-How
and Confidential Information, in the course of these activities, provided that
Hologic and Serex otherwise comply with the requirements of SECTION 10 hereof,
and provided always that Serex and Hologic shall not be entitled to use for said
purposes any intellectual property received pursuant to Hologic's election to
manufacture of Critical Reagents pursuant to SECTION 2.2 hereof. This provision
shall not be construed to provide Hologic or Serex with any right to use any
Ostex Patent Rights for any purpose not specifically permitted by this
Agreement, or to extend any Ostex Intellectual Property to cover the PLP Assay.
12. TERM AND TERMINATION.
12.1 INITIAL LICENSE TERM, AUTOMATIC RENEWAL. This Agreement
shall be in full force and effect as of the date first written above and
XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX. On the
XXXXXX and subsequent anniversaries of the date hereof, the term of this
Agreement shall (subject to SECTION 12.5 below) be automatically continued
XXXXXXXXXXXXXXXXXXX, unless either Hologic delivers to Ostex, or Ostex delivers
to Hologic, at least ninety (90) days prior to such anniversary date, a written
<PAGE>
notice of its intent to disengage for cause based upon failure of such other
party to use commercially reasonable efforts toward the achievement of market
objectives for NTx Meter Systems, in light of factors to include, without
limitation, profits, sales volume, market development, and the capture of market
share. In such event, if the parties are unable through good-faith negotiations
to agree to terms and conditions for further extension of the term hereof, this
Agreement and all license rights granted hereunder shall terminate as of the
anniversary date to which the notice of intent to disengage applies, without
liability of either party to the other in consequence of such termination.
12.2 TERMINATION BY OSTEX. Ostex shall have the right to
terminate this Agreement immediately upon notice in the event that: (a) Hologic
fails to complete development of the NTx Meter or to cause Serex to complete
development of the NTx Meter Strip in accord with the specifications set out in
ATTACHMENT 7.2.4 XXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXX, or to obtain regulatory
approval therefor for the United States within
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX; or (b) Hologic materially breaches or fails
to perform in a timely manner any of its material duties or obligations
hereunder, and such breach shall remain uncured, or the failure to perform shall
continue, for at least sixty (60) days after Ostex has given notice of such
breach or failure. Without limiting the generality of the foregoing, a "material
breach" or "failure to perform" shall include without limitation, any failure to
remit payments, or failure to comply with any financial reporting requirement,
or failure to maintain Hologic's rights pursuant to the Hologic/Serex
Agreement..
12.3 TERMINATION BY HOLOGIC. Hologic shall have the right to
terminate this Agreement immediately upon notice in the event that (a) Hologic
fails to complete development of the NTx Meter or to cause Serex to complete
development of the NTx Meter Strip in accord with the specifications set out in
ATTACHMENT 7.2.4 XXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX, or to obtain regulatory
approval therefor for the United States within XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX for any reason other than as a result of
Hologic's material breach of its obligations under this Agreement; or (b) Ostex
has materially breached or failed to perform in a timely manner any of its
material duties or obligations hereunder, and such breach shall remain uncured,
or the failure to perform shall continue, for at least sixty (60) days after
Hologic has given notice of such breach or failure to Ostex. Without limiting
the generality of the foregoing, a "material breach" or "failure to perform"
shall include without limitation, any failure to remit payments, or failure to
comply with any financial reporting requirement, or failure to maintain Ostex's
rights pursuant to the WRF/Ostex Exclusive License Agreement.
12.4 TERMINATION FOR TECHNICAL DEFECT.
12.4.1 BY OSTEX. If within ninety (90) days of
the Effective Date, Ostex determines
that a material technical deficiency exists in the SARA Format which is likely
to prevent Serex or Hologic from completing development of an NTx Meter Strip
which meets the Product Specifications described in ATTACHMENT 7.2.4 within the
time period set out in SECTION 12.2(A) above, Ostex shall provide a notice
thereof to Hologic which describes in detail said purported deficiency and the
<PAGE>
impact thereof on the specifications and/or time frame for development. Upon
receipt of such notice, Hologic shall conduct a though review of the subject
matter of said notice, provide to Ostex a detailed report of how Hologic or
Serex plan to resolve the issues raised and to meet the relevant specifications
and/or time frame, and meet with Ostex to review said report. If Hologic fails
to provide said report within fifteen (15) business days following receipt of
such notice, Ostex may within ten business days following the final due date of
such report, terminate this Agreement upon written notice without liability of
any sort.
12.4.2 BY HOLOGIC. If within ninety (90)
days of the Effective Date, Hologic
determines that a material technical deficiency exists in the NTx Assay
Technology or Critical Reagents which is likely to prevent Serex or Hologic from
completing development of an NTx Meter Strip which meets the Product
Specifications described in ATTACHMENT 7.2.4 within the time period set out in
SECTION 12.2(A) above, Hologic shall provide a notice thereof to Ostex which
describes in detail said purported deficiency and the impact thereof on the
specifications and/or time frame for development. Upon receipt of such notice,
Ostex shall conduct a though review of the subject matter of said notice,
provide to Hologic a detailed report of how Ostex plans to resolve the issues
raised and to meet the relevant specifications and/or time frame, and meet with
Hologic to review said report. If Ostex fails to provide said report within
fifteen (15) business days following receipt of such notice, Hologic may within
ten business days following the final due date of such report, terminate this
Agreement upon written notice without liability of any sort.
12.4 BANKRUPTCY OF A PARTY.
12.4.1 OSTEX BANKRUPTCY. All rights and licenses
granted under or pursuant to this
Agreement by Ostex to Hologic are, and shall otherwise be deemed to be, for
purpose of Section 365(n) of Title 11, U.S. Code (the "Bankruptcy Code"),
licenses of rights to "intellectual property" as defined under Section 101(60)
of the Bankruptcy Code. The parties agree that Hologic, as a licensee of such
rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code.
12.4.2 HOLOGIC BANKRUPTCY. All rights and
licenses granted under or pursuant to this
Agreement by Hologic to Ostex are, and shall otherwise be deemed to be, for
purpose of Section 365(n) of Title 11, U.S. Code (the "Bankruptcy Code"),
licenses of rights to "intellectual property" as defined under Section 101(60)
of the Bankruptcy Code. The parties agree that Ostex, as a licensee of such
rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code.
12.5 RESERVED
12.6 MAXIMUM TERM. Notwithstanding any provision of this
Agreement to the contrary, the license granted with respect to the Ostex Patent
Rights under SECTION 2 above shall terminate upon expiration of the last
remaining Ostex Patent Right. Upon such expiration, Hologic shall be deemed to
have a perpetual, worldwide, royalty free license to manufacture, make, have
manufactured or made, use, market, sell, and distribute NTx Meter Strips
worldwide except Japan for any application.
<PAGE>
12.7 RIGHTS AND DUTIES UPON TERMINATION.
12.7.1 PAYMENTS. Upon termination of this
agreement, each party shall pay to the other all payments that are due
and have accrued and are outstanding as of the date of termination.
12.7.2 RETURN OF MATERIALS. Within thirty (30)
days following termination of this
Agreement, each party having possession of or control over any Confidential
Information of the other party shall return to such other party all written and
otherwise recorded or stored matter containing such Confidential Information,
including all original matter and all copies thereof; provided, however, that
each party's legal department or outside counsel may retain one copy of the
Confidential Information in its confidentially maintained files, solely for the
purpose of identifying information to be protected pursuant to any applicable
non-disclosure obligation.
12.7.3 NTX METER STRIPS REMAINING. Upon
termination of this Agreement, Hologic shall
have the right to sell NTx Meter Strips then remaining in its possession or to
be manufactured using Critical Reagents then held in inventory, and Ostex may
sell NTx Meter Strips then remaining in its possession, within a reasonable time
after termination hereof; provided, however, that all such Sales shall be
subject to the royalty provisions of this Agreement, notwithstanding
termination. Alternatively, Hologic may return Critical Reagents remaining in
inventory and in good condition to Ostex for a refund of the original transfer
price (or for credit toward any amounts due).
12.7.4 SURVIVAL OF TERMS. Notwithstanding
any other provision herein to the
contrary, SECTIONS 3.4, 7.2.4, 7.3, 7.4, 7.6-7.8, 8-13, 16.4, 16.5, and 18-28 of
this Agreement shall survive any termination or expiration hereof.
13. REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
13.1 BY OSTEX. Ostex represents and warrants to Hologic
as follows:
13.1.1 ORGANIZATION AND AUTHORITY. As of the
Effective Date of the Agreement, Ostex
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Washington, USA, has all requisite corporate power and
authority to carry on its business and perform its obligations hereunder, and is
duly qualified to do business in any of those jurisdictions in the United States
of America where failure to qualify could have a material adverse effect on its
ability to perform its obligations hereunder. The execution and delivery of this
Agreement by Ostex, and the performance of the obligations of Ostex contemplated
hereby, have been duly and validly authorized by all necessary legal action on
its part, and this Agreement is legal, valid and binding against Ostex in
accordance with its terms. Except as have been or will be obtained by Ostex, no
permit, consent, approval or authorization of, or declaration to or filing with,
any person, party or governmental or regulatory authority of the United States
is required in connection with the delivery, consummation and/or performance by
<PAGE>
Ostex of this Agreement. As of the Effective Date of the Agreement, Ostex is in
full compliance with the WRF/Ostex Exclusive License Agreement and has not been
notified of any assertion that it is in default of said WRF/Ostex Exclusive
License Agreement or that WRF plans to terminate any Ostex rights thereunder.
Ostex shall immediately notify Hologic if it receives any notice that it is in
default of said WRF/Ostex Exclusive License Agreement or that WRF plans to
terminate any Ostex right thereunder.
13.1.2 OSTEX PATENT RIGHTS AND OSTEX KNOW-HOW.
As of the Effective Date of the
Agreement, and except as described in ATTACHMENT 13.1.2 to this Agreement, (a)
Ostex has sole and exclusive rights to the Ostex Patent Rights and all rights
necessary to convey Ostex Know-How to Hologic and Serex; (b) the Ostex Patent
Rights, to the best knowledge of Ostex are valid and enforceable, and do not
infringe on the proprietary rights of any third party: (c) Ostex is not aware of
any "prior art" or other claim which would invalidate any part or all of the
Ostex Patent Rights; or any claim that Ostex does not have all rights to use and
permit Hologic and Serex to use the Ostex Know-How for all purposes permitted by
this Agreement; (d) Ostex is not aware of any unexpired patent or pending patent
application of a party not a party to this agreement which has claims which
cover any part of the Ostex Know-How or Ostex Patent Rights; and (e) Ostex has
taken all necessary actions to maintain all Ostex Patent Rights in full force
and effect.
13.1.3 NO DEFAULT. The execution, delivery and
performance of this Agreement by
Ostex does not and shall not conflict with, result in a breach of, or constitute
a default under (with or without the giving of notice, or the passage of time,
or both), any agreement or instrument to which Ostex is a party or by which it
is bound.
13.1.4 OSTEX'S DISCLAIMER OF OTHER
WARRANTIES. Ostex disclaims all implied
warranties, including without limitation any warranty of merchantability or
fitness for a particular purpose.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, OSTEX MAKES NO REPRESENTATIONS
AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING NO
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
13.2 BY HOLOGIC. Hologic represents and warrants to Ostex
as follows:
13.2.1 ORGANIZATION AND AUTHORITY. As of the
Effective Date of the Agreement,
Hologic is duly organized, validly existing and in good standing under the laws
of Delaware, USA has all requisite power and authority to carry on its business
and the performance of its obligations hereunder, and is duly qualified to do
business in any of those jurisdictions where failure to qualify could have a
material adverse effect on its ability to perform its obligations hereunder. The
execution and delivery of this Agreement by Hologic, and the performance of the
obligations contemplated hereby, have been duly and validly authorized by all
necessary legal action on its part, and this Agreement is legal, valid and
binding against Hologic in accordance with its terms. Except as have been or
will be obtained by Hologic, no permit, consent, approval or authorization of,
<PAGE>
or declaration to or filing with, any person, party or governmental or
regulatory authority having jurisdiction is required in connection with the
delivery, consummation and/or performance of this Agreement As of the Effective
Date of the Agreement, Hologic is in full compliance with the Hologic/Serex
Agreement and has not been notified of any assertion that it is in default of
said Hologic/Serex Agreement or that Serex plans to terminate any Hologic rights
thereunder. Hologic shall immediately notify Ostex if it receives any notice
that it is in default of said Hologic/Serex Agreement or that Serex plans to
terminate any Hologic right thereunder.
13.2.2 SEREX PATENT RIGHTS. As of the Effective
Date of the Agreement, (a) Hologic
is not aware of any "prior art" which would invalidate any part or all of the
SARA patents; and (b) Hologic is not aware of any unexpired patent or pending
patent application of a party not a party to this agreement which has claims
which cover any part of the SARA patents.
13.2.2.1HOLOGIC PATENT RIGHTS AND HOLOGIC
KNOW-HOW. As of the Effective Date
of the Agreement, (a) Hologic has sole and exclusive rights to the Hologic
Patent Rights and all rights necessary to convey Hologic Know-How to Ostex; (b)
the Hologic Patent Rights, to the best knowledge of Hologic are valid and
enforceable, and do not infringe on the proprietary rights of any third party;
(c) Hologic is not aware of any "prior art" or other claim which would
invalidate any part or all of the Hologic Patent Rights; or any claim that
Hologic does not have all rights to use and permit Ostex to use the Hologic
Know-How for all purposes permitted by this Agreement; (d) Hologic is not aware
of any unexpired patent or pending patent application of a party not a party to
this Agreement which has claims which cover any part of the Hologic Know-How or
Hologic Patent Rights; and (e) Hologic has taken all necessary actions to
maintain all Hologic Patent Rights in full force and effect.
13.2.3 NO DEFAULT. The execution, delivery and
performance of this Agreement by
Hologic does not and shall not conflict with, result in a breach of, or
constitute a default under (with or without the giving of notice, or the passage
of time, or both), any agreement or instrument to which Hologic is a party or by
which it is bound.
13.2.4 HOLOGIC'S DISCLAIMER OF OTHER
WARRANTIES. Hologic disclaims all implied
warranties, including without limitation any warranty of merchantability or
fitness for a particular purpose.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, HOLOGIC MAKES NO
REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING NO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE
13.3 U.S. FOREIGN CORRUPT PRACTICES ACT. Each party shall
indemnify, defend and hold the other party, its subsidiaries and Affiliates, and
the directors, officers, employees and agents of any of them, harmless from and
against all and any claims, proceedings, losses, fines, expenses (including
without limitation reasonable attorneys fees and expenses) and penalties
<PAGE>
incurred by said party arising out of any Prohibited Practice committed by said
party or any of its officers, directors, shareholders, employees, or agents.
For purposes of this SECTION 13, the following shall be deemed a "Prohibited
Practice": the offer, payment, promise to pay, or authorization of the paying of
any money, or the offer, giving, promise to give or authorization of the giving
of anything of value to any officer or employee of any government or any
department, agency or instrumentality thereof, or any person acting in an
official capacity for or on behalf of any such government, department, agency or
instrumentality, or any political party or official thereof, or any candidate
for political office, or any intermediary for any such persons or party, in each
case for purposes of (a) influencing any act or decision of any such persons or
party in their or its official capacity, or (b) inducing any such person or
party to do or omit to do any act in violation of the lawful duty of such person
or party, or (c) inducing any such person or party to use their or its influence
with any government or instrumentality thereof to affect or influence any act or
decision of any such government or instrumentality, in each case (a), (b) and
(c) in order to assist the applicable party hereto in obtaining or retaining
business for, or with, or directing business to, any person or entity
13.4 GOVERNMENTAL COMPLIANCE. Each party shall obtain and
maintain all required licenses, permits, certificates and authorizations needed
to perform its obligations under this Agreement, including without limitation
those required for said party's appointment as sublicensee, for the
effectiveness of this Agreement in all jurisdictions where said party operates,
for the import and for the export of NTx Meter Systems, and for the marketing,
distribution and Sale of NTx Meter Systems. Each party shall be solely
responsible for compliance with any foreign exchange controls affecting its
activities.
14. THIRD-PARTY INFRINGEMENT.
14.1 NOTICE OF THIRD-PARTY INFRINGEMENT. If, during the term
of this Agreement, either party becomes aware that one or more third parties are
infringing or are threatening to infringe the Patent Rights of a party licensed
hereunder relating to the Field of Use, said party (the "Notifying Party") shall
immediately report such information to the other party to this Agreement and
shall provide in such report all details in said party's knowledge or possession
concerning the kind and character of the infringement and any other pertinent
information that said party may have. At such time as the party owning or
controlling the infringed patents ("Aggrieved Party") shall, in its sole
judgment, be satisfied that there exists a reasonable likelihood of
infringement, Aggrieved Party shall take such steps, including notification, to
place the putative infringer on notice of Aggrieved Party's claims. The form of
the notification and the manner and nature of any communications between
Aggrieved Party and the alleged infringer shall be within the sole discretion of
Aggrieved Party.
14.2 RIGHT TO SUE. If, sixty (60) days after receipt of notice
of a perceived third-party infringement, such third party infringement continues
and the Aggrieved Party has not commenced legal action or presented to the
<PAGE>
Notifying Party a plan acceptable to the Notifying Party to enjoin or otherwise
to resolve such infringement, then the Notifying Party shall be entitled, at its
own expense and for its own benefit, to commence an action in its own name. In
the event that the Aggrieved Party initiates such action, the Aggrieved Party
shall be entitled to retain all damages awarded therein. In the event that the
Notifying Party initiates such action, the Notifying Party shall be entitled to
retain one half of all damages awarded therein attributable to the Field of Use,
after payment of all reasonable legal expenses of such litigation. In the event
that the rules then obtaining shall require the naming of the owner of said
Patent Rights for purposes of such infringement action, the Notifying Party
shall be entitled to name the Aggrieved Party, or to cause the Aggrieved Party
to consent to be named, as a party plaintiff in such action; and failing such
cooperation the Notifying Party shall be entitled to reduce royalties payable to
the Aggrieved Party by fifty percent (50%). Each party shall assist the other
party and reasonably cooperate in any such action at said party's request.
15. DEFENSE OF THIRD-PARTY CLAIMS.
15.1 HOLOGIC DEFENSE OF THIRD-PARTY CLAIMS AND INDEMNITY. In
the event that any claim, suit, or other legal proceeding is threatened or
commenced against Ostex or WRF that is founded, in whole or in part, on an
allegation that the NTx Meter or NTx Meter Strip infringes any trade secret,
patent, or copyright belonging to a third party (other than WRF), Ostex will
give Hologic prompt written notice of such legal proceeding and Hologic may
elect to assume sole control of the defense to or settlement of such dispute.
Ostex shall cooperate fully with Hologic in any defense, settlement or
compromise made by Hologic. Ostex shall not enter into any settlement agreement
or other voluntary resolution of any such claim, suit, or other legal proceeding
without obtaining Hologic's prior written consent thereto. If Ostex has complied
fully with the procedures set forth in this SECTION 15.1, Hologic will indemnify
and hold Ostex harmless from and against any loss, cost, damage, or other
expenses incurred by Ostex as a result of such claim, suit or legal proceeding.
If a final injunction is obtained against Ostex's use of the NTx Meter or NTx
Meter Strips, or if in the opinion of Hologic the subject NTx Meter or NTx Meter
Strips are likely to become the subject of a successful claim of infringement,
Hologic may, at its option and expense, (i) procure for Ostex the right to
continue distributing and/or using the NTx Meter or NTx Meter Strips, (ii)
replace or modify the NTx Meter or NTx Meter Strips so that it (they) become
non-infringing, or (iii) if neither (i) or (ii) are reasonably available, accept
return of the NTx Meter or NTx Meter Strips held by Ostex and its distributors
in inventory, and terminate this Agreement without further obligation or
liability. This indemnification provision shall be null and void and Hologic
shall have no liability to the extent that any claim is based on any use of the
NTx Assay Technology, Critical Reagents or Ostex Intellectual Property or if the
NTx Meter or NTx Meter Strips have been modified or tampered with in any way
without the express written consent of Hologic, or if Ostex has any interest in
the claim, suit or other legal proceeding, or any license to any right so
asserted.
15.2 OSTEX DEFENSE OF THIRD-PARTY CLAIMS AND INDEMNITY. In the
event that any claim, suit, or other legal proceeding is threatened or commenced
against Hologic or Serex that is founded, in whole or in part, on an allegation
that the NTx Assay Technology, Critical Reagents or Ostex Intellectual Property
as used in the NTx Meter System infringes any trade secret, patent, or copyright
<PAGE>
belonging to a third party (other than Serex), Hologic will give Ostex prompt
written notice of such legal proceeding and Ostex may elect to assume sole
control of the defense to or settlement of such dispute. Hologic shall cooperate
fully with Ostex in any defense, settlement or compromise made by Ostex. Hologic
shall not enter into any settlement agreement or other voluntary resolution of
any such claim, suit, or other legal proceeding without obtaining Ostex's prior
written consent thereto. If Hologic has complied fully with the procedures set
forth in this SECTION 15.2, Ostex will indemnify and hold Hologic harmless from
and against any loss, cost, damage, or other expenses incurred by Hologic as a
result of such claim, suit or legal proceeding. If a final injunction is
obtained against Hologic's use of the NTx Assay Technology, Critical Reagents or
Ostex Intellectual Property as used in the NTx Meter Systems, or if in the
opinion of Ostex the NTx Assay Technology, Critical Reagents or Ostex
Intellectual Property are likely to become the subject of a successful claim of
infringement, Ostex may, at its option and expense, (i) procure for Hologic the
right to continue distributing and/or using the NTx Assay Technology, Critical
Reagents or Ostex Intellectual Property in the NTx Meter System, (ii) replace or
modify the NTx Assay Technology, Critical Reagents or Ostex Intellectual
Property so that it (they) become non-infringing, or (iii) if neither (i) or
(ii) are reasonably available, accept return of the NTx Assay Technology,
Critical Reagents or Ostex Intellectual Property used in the NTx Meter Systems
held by Hologic and its distributors in inventory, and terminate this Agreement
without further obligation or liability. This indemnification provision shall be
null and void and Ostex shall have no liability to the extent that NTx Assay
Technology, Critical Reagents or Ostex Intellectual Property have been modified
or tampered with in any way without the express written consent of Ostex, or if
Hologic or Serex have any interest in the claim, suit or other legal proceeding,
or any license to any right so asserted.
15.3 ROYALTY PAYMENTS. Except as provided above, any
entitlement to terminate royalties shall occur only upon a final adjudication of
the invalidity or non-enforceability of the patents, copyrights or trade secrets
in question. For such purposes, final adjudication shall mean an adjudication or
determination by a trial court or a court of appeal, which adjudication or
determination shall be final, binding and not further appealable, whether by its
terms or by the passage of time.
16. USE OF TRADEMARKS AND TRADE NAMES.
16.1 RESTRICTED RIGHTS TO USE. No provision of this Agreement
shall be interpreted or construed as conferring upon either party any right to
use in labeling, advertising, marketing, publicizing or otherwise promoting NTx
Meter Systems, any name, trade name, trademark, or other designation (or
derivation thereof) of the other party hereto or WRF or the University of
Washington, or Serex, except as expressly provided under this SECTION 16.
16.2 USE OF NAMES AND MARKS IN LABELING. As a part of the
marketing plan prepared pursuant to SECTION 6.2 hereof, the parties shall agree
upon appropriate trademark(s) to be used in connection with NTx Meter Strips
marketed, promoted, sold, and/or distributed under this Agreement. In the
<PAGE>
absence of such agreement, the parties agree that Hologic shall affix to the
outer packaging of, and shall include on the package insert for, any NTx Meter
Strips marketed, promoted, sold, and/or distributed by Hologic under this
Agreement, and in addition to its own trademarks and names, one or more labels
displaying with equal prominence to said Hologic trademarks or names, the
statement "An OsteomarkAE Assay" or such other trademark or statement as Ostex
shall reasonably request, and Ostex shall affix to the outer packaging of, and
shall include on the package insert for, any NTx Meter Strips marketed,
promoted, sold, and/or distributed by Ostex under this Agreement, and in
addition to its own trademarks and names, displaying with equal prominence to
said Ostex trademarks or names such other trademark or statement as Hologic
shall reasonably request. Ostex shall also have the right to review and approve
all claims relating to the intended use of NTx Meter Strips contained in package
inserts and other promotional materials, which approval shall not be
unreasonably withheld. Each party hereby grants to the other party a
non-transferable, non-exclusive license, concurrent with the term of this
Agreement, to use such statement and/or trademark accordingly and in
substantially the same manner as used by its owner; provided, however, that each
such use of such statement and/or trademark be accompanied by a printed notice
identifying the owner as the owner thereof. Neither party shall use any
trademark of the other party with respect to products not covered by this
Agreement. In the event that particular NTx Meter Strips do not meet the
specifications or quality standards required under SECTIONS 3.4 or 7.2.4 above,
either party may cause the other party to remove all trademarks of said party
from such NTx Meter Strips and shall have the right to cancel the foregoing
grant of license to use such trademarks, unless the other party promptly meets
such specifications or quality standards. Each party shall have the right to
receive and approve the use of its marks in any proposed product literature,
advertising material or material for publication. In all such materials unless
otherwise specifically agreed in advance in writing, the immunoassay performed
by the NTx Meter Strips shall be identified as "An OsteomarkAE Assay."
16.3 TRADEMARK REGISTRATION. Ostex and Hologic shall each be
responsible for the registration, maintenance and enforcement of their
respective names, trade names, and trademarks; provided, however, that each
party shall aid the other in the enforcement of that party's rights by
monitoring for, and notifying said party of, any unauthorized use of any of said
party's trademarks. Each party shall from time to time, and in any event upon
the issuance of additional registrations, modify its use of trademarks to
incorporate proper notice of registration and other claims of right, in
accordance with the laws and customs of the various countries in which it
operates pursuant to this Agreement.
16.4 OSTEX REPRESENTATIONS AND WARRANTIES. Ostex represents
and warrants, as of the date of this Agreement, that: (a) Ostex is the owner and
registrant of the trademarks issued registrations as indicated by ATTACHMENT
16.4; (b) Ostex is named as applicant in those applications indicated by
ATTACHMENT 16.4 as pending; and (c) to the best of its knowledge, none of the
Ostex trademarks infringes upon the trademark, trade name, or other proprietary
rights of a third party. In the event that any action or proceeding is initiated
against Ostex, Hologic, or any other licensee or distributor of Ostex in any
country alleging that the trademark "Osteomark" infringes the trademark rights
of the third party initiating such action or proceeding, Hologic may continue to
market NTx Meter Strips within such country without the trademark "Osteomark"
affixed thereto (but with such other trademark as Ostex may reasonably specify)
pending resolution of the dispute as to trademark rights.
<PAGE>
16.5 HOLOGIC REPRESENTATIONS AND WARRANTIES. Hologic
represents and warrants, as of the date of this Agreement, that: (a) Hologic is
the owner and registrant of the trademarks issued registrations as indicated by
ATTACHMENT 16.5; (b) Hologic is named as applicant in those applications
indicated by ATTACHMENT 16.5 as pending; and (c) to the best of its knowledge,
none of the Hologic trademarks infringes upon the trademark, trade name, or
other proprietary rights of an third party. In the event that any action or
proceeding is initiated against Hologic, Ostex, or any other licensee or
distributor of Hologic in any country alleging that any Hologic trademark
infringes the trademark rights of the third party initiating such action or
proceeding, Ostex may continue to market NTx Meter Strips within such country
without said Hologic trademark affixed thereto (but with such other trademark as
Hologic may reasonably specify) pending resolution of the dispute as to
trademark rights.
17. ASSIGNMENT AND SUBLICENSE.
17.1 BY HOLOGIC. Except as specifically permitted by this
Agreement, Hologic shall not assign, sublicense, delegate, or in any other
manner transfer any of its rights, privileges, obligations or duties under this
Agreement to any non-Affiliate third party without the prior written consent of
Ostex, which consent may be withheld in Ostex's sole and absolute discretion,
provided that this provision shall not apply to any merger, consolidation, or
sale of substantially all of the assets of Hologic, or any third-party
acquisition of a majority of the business interests or voting shares of Hologic,
provided that the surviving party shall within a reasonable period following the
final closing of such transaction, expressly agree in writing to be bound by
this agreement. Any attempt by Hologic to assign, sublicense, delegate or
otherwise transfer any right, privilege, obligation or duty under this Agreement
other than in accordance with this SECTION 17 shall be void and shall, at the
option of Ostex, be cause for immediate termination of this Agreement and all
licenses granted hereunder. Transfers of any rights hereunder by Hologic to an
Affiliate shall be permitted only after the delivery to Ostex of reasonable
evidence that such Affiliate has agreed in writing to be bound by the terms of
this Agreement.
17.2 BY OSTEX. Except as specifically permitted by this
Agreement, Ostex shall not assign, sublicense, delegate, or in any other manner
transfer any of its rights, privileges, obligations or duties under this
Agreement to any non-Affiliate third party without the prior written consent of
Hologic, which consent may be withheld in Hologic's sole and absolute
discretion, provided that this provision shall not apply to any merger,
consolidation, or sale of substantially all of the assets of Ostex, or any
third-party acquisition of a majority of the business interests or voting shares
of Ostex, provided that the surviving party shall within a reasonable period
following the final closing of such transaction, expressly agree in writing to
be bound by this agreement. Any attempt by Ostex to assign, sublicense, delegate
or otherwise transfer any right, privilege, obligation or duty under this
Agreement other than in accordance with this SECTION 17 shall be void and shall,
at the option of Hologic, be cause for immediate termination of this Agreement
and all licenses granted hereunder. Transfers of any rights hereunder by Ostex
to an Affiliate shall be permitted only after the delivery to Hologic of
reasonable evidence that such Affiliate has agreed in writing to be bound by the
terms of this Agreement.
<PAGE>
18. ARBITRATION.
18.1 AGREEMENT TO SETTLE DISPUTES BY ARBITRATION. At the
request through notice of either Ostex or Hologic, any controversy or claim
arising between the parties and related to or arising out of the construction,
interpretation, or enforcement of any term or condition of this Agreement or any
transaction hereunder (including the decision to enter into this Agreement),
which controversy or claim cannot first be settled amicably between the parties
(including without limitation through utilization of third-party mediation
agreed to by both parties), shall be submitted to arbitration. Such arbitration
shall be conducted in Seattle, Washington, if initiated by Hologic, or in
Boston, Massachusetts, if initiated by Ostex, and in either case shall be
conducted in accordance with the applicable Rules of the American Arbitration
Association in effect on the date of such controversy or claim.
18.2 APPOINTMENT OF ARBITRATORS. Within thirty (30) days after
the delivery pursuant to SECTION 18.1 above of a notice of request for
arbitration, Hologic and Ostex shall each appoint one person as an arbitrator to
hear and determine the dispute. The two persons so chosen shall by agreement
select a third, impartial arbitrator, which selection shall be final and
conclusive upon both parties. Each arbitrator shall be experienced in
international and domestic manufacturing and distribution of products similar to
NTx Meter Systems. If either party fails to designate its arbitrator within
sixty (60) days after the notice of arbitration is received, then the arbitrator
designated by the one party shall act as the sole arbitrator and shall be deemed
to be the single, mutually approved arbitrator to resolve the dispute.
18.3 ARBITRATORS' POWERS. The arbitrators shall have all the
powers of a State or Federal Court located at the site of the arbitration,
including the power to order specific enforcement of this Agreement and to order
the production of relevant and non-privileged documents by one party for
inspection and duplication by the other party prior to the arbitration hearing;
provided, however, that the arbitrators shall be bound by this Agreement with
regard to the restriction on consequential, incidental, and punitive damages as
set forth in SECTION 19.3 below.
18.4 DISCOVERY. The arbitrators prior to the hearing shall
grant discovery pursuant to the intendment of the Federal Rules of Civil
Procedure, and as the arbitrators determine to be appropriate under the
circumstances.
18.5 PROTECTIVE ORDER. In the event of arbitration and at the
request of either Ostex or Hologic, in order to protect Confidential Information
and any other matter that either party would normally not reveal to third
parties, the arbitrators shall enter a protective order in such form as the
parties shall stipulate or as the arbitrators shall determine is suitable. Among
other things, the protective order shall stipulate that the arbitrators
themselves shall receive any information designated by either party as
"confidential" solely for purposes of assessing the facts and law for purposes
of the arbitration, and shall not otherwise use or disclose such matter. At the
request of either party, the protective order shall be entered as an award of
<PAGE>
the arbitration panel and shall enable either party to obtain the assistance of
a court of competent jurisdiction to enter equitable decrees or other relief to
enforce the provisions of the order as if it had been entered by that court.
18.6 EFFECT OF DECISION. The decision of the arbitrators shall
state the reason for the award and shall be final, binding and conclusive upon
the parties. The parties shall comply with such decision in good faith as if it
were a final decision of a court. Judgment upon the award shall be entered in
any court of competent jurisdiction. Any award made in connection with any
arbitration shall be made in U.S. Dollars.
18.7 RIGHTS OF THIRD PARTIES. Notwithstanding the agreement to
arbitrate any dispute between Ostex and Hologic, in the event that a controversy
or claim between Ostex and Hologic involves an adjudication of the rights of a
third party, and that third party does not agree to submit to arbitration and
would under Rule 19(a) of the Federal Rules of Civil Procedure, if feasible, be
joined as an indispensable party, then the dispute shall be brought to, and
determined by, a court of the competent jurisdiction.
18.8 INTERIM RELIEF. Upon the application of either party to
this Agreement, and whether or not an arbitration, mediation or attempt to
settle amicably has yet been initiated, all courts having jurisdiction over one
or more of the parties are authorized to: (i) issue and enforce in any lawful
manner such temporary restraining orders, preliminary injunctions and other
interim measures of relief as may be necessary to prevent harm to a party's
interests or as otherwise may be appropriate pending the conclusion of
arbitration proceedings pursuant to this Agreement; and (ii) enter and enforce
in any lawful manner such judgments for permanent equitable relief as may be
necessary to prevent harm to a party's interests or as otherwise may be
appropriate following the issuance of arbitral awards pursuant to this
Agreement.
19. ATTACHMENTS. The Attachments listed below are incorporated
by reference into this Agreement
and shall for all purposes be deemed part hereof:
Attachment D Serex Patent Rights
Attachment 3.4 Ostex Critical Reagent Specifications
Attachment 6.2 Marketing Plan (To be Appended per SECTION 6.2)
Attachment 7.2.4 Product Specifications - NTx Meter Strips and NTx
Meters
Attachment 13.1.2 Ostex Patent Rights and Know-How - Exceptions to
Warranty
Attachment 16.4 Ostex Trademark Filings
Attachment 16.5 Hologic Trademark Filings
20. PUBLICITY. No party shall announce or publicize this
Agreement or any terms thereof without the advance written consent of the
others (which approval shall not be unreasonably withheld).
<PAGE>
21. RESPONSIBILITY FOR CLAIMS. In order to distribute between
themselves the responsibility for the handling and expense of claims
arising out of the manufacture, distribution, Sale or use of NTx Meter
Systems, the parties agree as follows:
21.1 OSTEX LIABILITY. Ostex shall be liable for and shall
indemnify and hold Hologic harmless against any liability, damages or loss and
from any claims, suits, proceedings, demands, recoveries or expenses in
connection with (i) any Critical Reagents or NTx Assay Technology licensed or
sold by Ostex to Hologic or its designated manufacturers pursuant to this
Agreement arising out of, based on, or caused by product claims whether written
or oral, made or alleged to be made, by Ostex in its advertising, publicity,
promotion, or Sale of the Critical Reagents or NTx Assay Technology where such
product claims were not approved by Hologic, including without limitation
expenses of total or partial product recalls as described in SECTION 7.7 hereof,
or (ii) any breach by Ostex of any of its representations or warranties
contained herein or (iii) any of its negligent or willful acts or omissions.
Hologic shall promptly notify Ostex of any such demand or claim which comes to
its attention.
21.2 HOLOGIC LIABILITY. Hologic shall be liable for and shall
indemnify and hold Ostex harmless against any liability, damages or loss and
from any claims, suits, proceedings, demands, recoveries or expenses in
connection with (i) any NTx Meters or NTx Meter Strips sold by Hologic to Ostex
pursuant to this Agreement arising out of, based on, or caused by product claims
whether written or oral, made or alleged to be made, by Hologic in its
advertising, publicity, promotion, or Sale of the NTx Meters or NTx Meter Strips
where such product claims were not approved by Ostex, including without
limitation expenses of total or partial product recalls as described in SECTION
7.7 hereof, or (ii) any breach by Hologic of any of its representations or
warranties contained herein or (iii) any of its negligent or willful acts or
omissions. Ostex shall promptly notify Hologic of any such demand or claim which
comes to its attention.
21.3 CONSEQUENTIAL, INCIDENTAL, AND PUNITIVE DAMAGES.
Notwithstanding any other provision of this Agreement, neither party shall be
liable to the other party for any special, consequential, incidental or punitive
damages that may arise out of this Agreement (including but not limited to
damages for loss of sales, potential sales, profits or business), regardless of
whether such other party has been informed of the possibility that such damages
may occur.
<PAGE>
22. NOTICE. Any notice given in regard to this Agreement
shall be given in writing and shall be
delivered personally, or shall be sent by first class mail or registered
certified mail, postage, and charges
prepaid, to:
if to Ostex:
Ostex International, Inc.
2203 Airport Way South
Suite 400
Seattle, Washington 98134
Attention: Jeffrey J. Miller, Ph.D.,
Senior Vice President, Corporate Development
Copy to: Robert Glaser, President and COO
if to Hologic:
Hologic, Inc.
590 Lincoln Street,
Waltham, MA 02154
Attention: Joel Weinstein, Vice President -
Business Development
Copy to: S. David Ellenbogen, Chairman and CEO
Any notice so given shall be effective upon the date of actual receipt by the
addressee as evidenced by return receipt or other written confirmation. Either
party may by advance notice given pursuant to this SECTION 21 designate a
substitute address for receipt of future notices.
23. GOVERNING LAW. All claims or controversies asserted by Ostex
against Hologic or Serex shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts. Any judicial action by Ostex relating
to the relationship between the parties pursuant to this Agreement, or goods
purchased or licensed hereunder (together with any counterclaims asserted by
Hologic or Serex), shall be brought and tried in the State or Federal Courts
located in Massachusetts. All claims or controversies asserted by Hologic
against Ostex or WRF shall be construed and enforced in accordance with the laws
of the State of Washington. Any judicial action by Hologic relating to the
relationship between the parties pursuant to this Agreement, or goods purchased
or licensed hereunder (together with any counterclaims asserted by Ostex or
WRF), shall be brought and tried in the State or Federal Courts located in the
State of Washington. Notwithstanding the foregoing, interpretation and
enforcement of the provisions of SECTION 18 shall be governed by and construed
in accordance with the Federal Arbitration Act.
24. INTEGRATION. It is the desire and intent of the parties to provide
certainty as to their future rights and undertakings herein. The parties in this
Agreement have incorporated all representations, warranties, covenants,
commitments and understandings on which they have relied in entering into this
Agreement, and, neither party makes any covenant or other commitment to the
other concerning its future action. Accordingly, this Agreement, in conjunction
with the Co-Promotion Agreement:- (i) constitutes the entire agreement and
<PAGE>
understanding between the parties and there are no promises, representations,
conditions, provisions or terms related thereto other than those forth in this
Agreement and (ii) supersedes all previous undertakings, agreements and
representation between the parties, written or oral, with respect to the subject
matter hereof. No modification of, addition to, or waiver of any provisions of
this Agreement shall be binding upon either party hereto unless the same shall
be in writing duly executed by a duly authorized representative of both parties
hereto.
25. MODIFICATION. No modification to this Agreement shall be
enforceable unless made in writing
and signed by an authorized representative of each party.
26. SEVERABILITY. In the event that any provision of this Agreement is
determined to be invalid or unenforceable for any reason, such provision shall
be deemed inoperative only to the extent that it violates or conflicts with law
or public policy and shall be deemed modified to the extent necessary to conform
thereto, and all other provisions hereof shall remain in full force and effect.
27. WAIVER. No express or implied waiver by either party of any right
or remedy with respect to a default by the other party under any provision of
this Agreement shall be deemed, interpreted or construed as a waiver of any
right or remedy with respect to any other default under the same or any other
provision hereof.
28. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties' respective successors
and assigns, subject to the restrictions on assignment set forth in SECTION 17
above.
29. NONCOMPETITION. During the term of this Agreement, Hologic shall
not enter into or maintain any marketing, licensing, or development agreement or
relationship (whether directly or by reason of any merger, acquisition,
consolidation or otherwise) with any company (other than Serex) which competes
with Ostex to develop biochemical markers of bone resorption, and Ostex shall
not enter into or maintain any marketing, licensing, or development agreement or
relationship (whether directly or by reason of any merger, acquisition,
consolidation or otherwise) with any company which competes with Hologic to
develop devices to measure bone mass or other structural characteristics. If
Hologic violates this provision, Ostex as its sole remedy for such violation may
at its option and upon 30 days notice, terminate this Agreement. If Ostex
violates this provision, Hologic as its sole remedy for such violation may at
its option and upon 30 days notice, terminate this Agreement.
30. STANDSTILL PROVISION. During the term of this Agreement, Hologic
shall not make any offer for, and shall not actually acquire any legal or
<PAGE>
beneficial interest in the common stock or other securities of Ostex without the
prior written consent of Ostex's Board of Directors; and Ostex shall not make
any offer for, and shall not actually acquire any legal or beneficial interest
in the common stock or other securities of Hologic or Serex, respectively,
without the prior written consent of Hologic's Board of Directors. The parties
each agree that any violation of this provision would cause irreparable harm to
the other party. The parties each agree that the other party shall be entitled
to all equitable remedies available to it to prevent violation of this
provision, as well as all other legal remedies, and if successful in any claim,
may recover from the violating party all reasonable costs and attorneys fees
expended by it in seeking such remedy.
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement the day and year last written below.
DATED AND EFFECTIVE as of the date first written above.
OSTEX INTERNATIONAL, INC.
By /S/ JEFFREY J. MILLER, PH.D.
Jeffrey J. Miller, Ph.D.,
Senior Vice President,
Corporate Development
HOLOGIC, INC.
By /S/ S. DAVID ELLENBOGEN
S. David Ellenbogen
Chairman and CEO
<PAGE>
ATTACHMENT D
SEREX PATENT RIGHTS
See Attached List as of 12/26/95 which represents Hologic's current knowledge
(to be updated and confirmed)
<PAGE>
PATENTS
(a list to be updated to the date of this Amendment)
1. US Patent No. 5,451,504 (Serial No. 07/737,091).
Method and Device for Detecting the Presence of an Analyte in a Sample
2. US Serial No. 08/047,156
An Integrated Packaging Holder Device for Immunochromatographic Assays in
Flow-Through or Dipstick Formats and foreign counterparts thereof and continuing
application US Serial No. 08/539,170 (continuation of 08/047,156)
3. US Serial No. 08/196,092 and foreign Counterparts
4. US Serial No. 08/493.420 and foreign counterparts
5. US Serial No. 08/192,778
<PAGE>
ATTACHMENT 3.4
XXXXXXXXXXXXXXXXXXXXXXXXX
ALL REDACTED
<PAGE>
ATTACHMENT 6.2
MARKETING PLAN (TO BE APPENDED PER SECTION 6.2)
<PAGE>
ATTACHMENT 7.2.4
Product Specifications - NTx Meter Strips and NTx Meters
See Attached - Subject to Modification
<PAGE>
Product Specifications - NTx Meter Strips and NTx Meters
Hologic Point-of-Care Bone Resorption Test
DRAFT Specifications (Goals)
ALL REDACTED
<PAGE>
ATTACHMENT 13.1.2
OSTEX PATENT RIGHTS AND KNOW-HOW - EXCEPTIONS TO WARRANTY
Pursuant to paragraph 14.1, the WRF and Ostex on June 12, 1996, filed a civil
action for patent infringement against Osteometer Biotech A/S and Diagnostic
Systems Laboratories, Inc. in the U.S. District Court of the Western District of
Washington at Seattle (Civil Action No. C96-0910WD). The patent in suit, U.S.
Patent No. 5,455,179, claims a method of monitoring degradation of type I
collagen using an antibody that binds to carboxy-terminal telopeptide
metabolites of type I collagen in urine and other body fluids. Plaintiffs claim
that the CrossLaps ELISA Kit manufactured and distributed by the defendants
infringes the `179 patent. Defendants have counterclaimed that the `179 patent
is invalid, not infringed, and unenforceable. Osteometer has also denied
jurisdiction. The case is set for trial commencing 12/2/97.
Ostex is also defending two of its European patents in opposition
proceedings in the European Patent Office. European Patent No. 394,296 has been
opposed by Osteometer Biotech A/S, F.Hoffman-LaRoche AG, and Metra Biosystems,
Inc. European Patent No. 502,928 has been opposed by Osteometer Biotech A/S,
Metra Biosystems, Inc., and Boehringer Mannheim GMBH.
<PAGE>
ATTACHMENT 16.5
HOLOGIC TRADEMARK FILINGS
MARK REGISTRATION NO. ISSUE DATE NOTES
- ---- ---------------- ---------- -----
ACCLAIM 1,70,513 4/23/96 X-Ray Technology, Inc.
CER 1,751,849 2/9/93 _
HOLOGIC 1,652,292 7/30/91 _
XXXXXXX XXXXXXXXXXXX XXXXX XXXXXXXXX.
XXXXXXX XXXXXXXXXXXX XXXXX XXXXXXXXX
QDR 1,510,840 11/1/88 Assigned to X-Ray Technology,
QDR-1000 1,506,996 10/4/88 Assigned to X-Ray Technology,
Inc. 11/4/91
SAHARA 2,008,809 10/15/96 _
XXXXXXX XXXXXXXXXXX XXXXXX XXXXXXXXXX
UBA 1,529,557 3/14/89 _
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
<PAGE>
RESEARCH AGREEMENT
THIS RESEARCH AGREEMENT is effective this 1st day of July, 1996, by and
between OSTEX INTERNATIONAL, INC., a Washington corporation, having its
principal place of business at 2203 Airport Way South, Suite 400, Seattle,
Washington 98134 ("Ostex"), and the UNIVERSITY OF WASHINGTON, having its
principal office at Seattle, Washington 98195 ("University").
RECITALS
A. Ostex has an ongoing interest in research technology (including
inventions, processes, formulae and the like, whether or not patentable, and
property eligible for copyright protection) for measuring the rate of human
tissue resorption based on the quantitation of specific marker peptides derived
from cross-linking sequences in collagen, entitled "Molecular Markers of
Connective Tissue Degradation," as more particularly described in that certain
proposal attached as EXHIBIT A (the "Technology");
B. The Technology has been assigned by the University to the Washington
Research Foundation ("WRF") pursuant to Section 3.3 of that certain Technology
Administration Agreement, dated January 1, 1985, between the University and WRF,
as amended (the "UW Agreement"). Pursuant to that certain Restated Exclusive
License Agreement between Ostex and WRF, effective June 29, 1992, as amended
(the "Exclusive License Agreement"), WRF granted Ostex an exclusive, worldwide
license to make, have made, assign, sublicense, lease, develop, enhance, modify,
produce, reproduce, demonstrate, market, promote, sell, distribute, use, exploit
and otherwise commercialize and prepare derivations of the Technology;
C. Ostex entered into a Research Agreement dated July 26,
1989 and amended November 1, 1992 pursuant to which initial funding was
provided by Ostex for research with respect to the Technology;
D. It is in the mutual interest of Ostex and University
that research be continued with respect to the Technology, in accordance
with a research program to be conducted and funded pursuant to this Agreement
(the "Research Program"); and
E. Ostex is willing to fund the conduct of the Research Program, at and
through the University of Washington, Department of Biological Structure, and
the University desires to obtain such funding, all subject to and in accordance
with the terms of conditions set forth in this Agreement.
AGREEMENTS
In consideration of the covenants and promises contained herein and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. SCOPE/SCHEDULE
The Research Program shall be conducted in accordance with the Research
Proposal attached hereto as EXHIBIT A and made a part hereof, or mutually
agreeable written modifications thereof. The Research Program shall be carried
out during the Program Period (as defined below), unless sooner terminated or
extended as herein provided.
2. PROGRAM PERIOD
The Program Period shall be XXXXXXXXXXXXXXXXX, and it may be extended
by mutual written consent of the parties not less than thirty (30) days prior to
the termination of the then current Program Period.
3. OSTEX'S PRINCIPAL OBLIGATIONS
Ostex shall pay University a total XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXX to cover all direct and indirect costs of the Research Program as
set forth in the Budget included in the Research Proposal attached hereto as
EXHIBIT A and incorporated herein.
4. PAYMENT
Ostex will provide University funds for the costs of the research
performed under this Agreement as specified in the Budget. Ostex shall pay
University as follows upon receipt of invoices from University:
PAYMENT DATE AMOUNT
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
XXX XXXX XXXX
Total XXXX
<PAGE>
University will submit its customary statement of expenses incurred under this
Agreement within thirty (30) days after the end of each six-month period.
5. PRINCIPAL INVESTIGATOR
For the purpose of this Agreement and pursuant to University policy,
David R. Eyre is designated the Principal Investigator ("Principal
Investigator") who shall be responsible for direction and content of the
Research Program, including budgeting and revisions to the Budget necessary to
accomplish the Research Program. Should the Principal Investigator leave the
University or otherwise become unavailable during the Program Period, University
may nominate a replacement. If Ostex does not accept the replacement, the
Research Program and Budget may be modified to reflect a reduced scope of work
or terminated on sixty (60) days' notice at the option of Ostex unless an
arrangement acceptable to Ostex can be made to subcontract with the departed
Principal Investigator or his new institution to continue the work on the
Research Program.
6. CONFIDENTIALITY
Neither party shall furnish any confidential and/or proprietary
information of a third party to the other party in connection with this
Agreement. Any such information which either party wishes to furnish to the
other party shall be the subject of a separate confidentiality agreement between
the parties.
7. DATA REPORTS AND FACILITIES
7.1 University shall, in accordance with established
University practice, keep complete, accurate, and authentic accounts, notes,
data, and records of the work performed under this Agreement and shall provide
Ostex with semi-annual reports within thirty (30) days following the end of each
six-month period commencing on the date of this Agreement. University shall also
submit to Ostex a written comprehensive final report within ninety (90) days of
termination of the Research Program.
7.2 At the discretion and convenience of the Principal
Investigator, during the course of the Research Program, Ostex's representatives
and others designated by Ostex may be present as observers while various tests,
inspections and other aspects of the Research Program are being conducted.
Ostex's representatives may consult informally with the Principal Investigator
regarding the Research Program both personally and by telephone. Further, Ostex,
at its expense, shall have the right to send one Ostex employee to work and be
trained at the Department of Orthopedics at the University. University
acknowledges and agrees that the Principal Investigator may serve as a member of
the board of directors and/or as a consultant (but not an officer) of Ostex
during the term of this Agreement.
7.3 From its own resources and those provided under this
Agreement, University agrees to make available laboratory facilities and
equipment for the Research Program.
8. INVENTION RIGHTS
8.1 University acknowledges and agrees that (i) all Technology
made, developed or conceived on or before the date of this Agreement has been
assigned to WRF pursuant to Section 3.3 of the UW Agreement, and no commitments
have been made with respect to such Technology pursuant to Section 3.2 of the UW
Agreement, (ii) all Technology made, developed or conceived after the date of
this Agreement will be submitted to WRF pursuant to Section 3.1 of the UW
Agreement, (iii) no commitment will be made pursuant to Section 3.1 of the UW
Agreement with respect to Technology made, developed or conceived after the date
of this Agreement unless Ostex agrees to such commitment in writing, and (iv)
University shall not terminate, amend, waive or enforce the UW Agreement (or any
rights or obligations thereunder) in any manner that could adversely affect
Ostex's rights under this Agreement unless Ostex agrees in writing to such
termination, amendment, waiver or enforcement.
8.2 University shall have no right, title or interest in any
Technology made, developed or conceived by employees or consultants of Ostex
entirely without use of University facilities.
9. PUBLICATION
University will be free to publish the results of research conducted
under this Agreement within a reasonable period of time. University will provide
copies of manuscripts to Ostex prior to their submission for publication or
their presentation. In order to full protect the rights of University and Ostex,
any contemplated publication or other dissemination containing details of an
invention, whether or not patentable, will be withheld until a patent
application is filed or other appropriate steps to protect commercial value have
been completed. Such withholding shall be kept to a minimum and will not exceed
six (6) months, except by mutual agreement between Ostex and University.
10. INDEMNIFICATION
University and Ostex each agree to indemnify and to hold harmless the
other party from damage to persons or property resulting from any act or
omission on the part of itself, its employees, its agents, or its officers.
11. NOTICES
Whenever any notice is to be given hereunder, it shall be in writing
and shall be deemed received, if delivered by courier on a business day, on the
day delivered, or on the fifth business day following mailing, if sent by
first-class, certified or registered mail, postage prepaid, to the following
addresses:
University: Director, Grant and Contract Services
3935 University Way N.E., JM-24
Seattle, Washington 98195
Ostex: Ostex International, Inc.
2203 Airport Way South, Suite 301
Seattle, Washington 98134
12. TERMINATION
12.1 This Agreement may be terminated by University at any
time or by Ostex at any time XXXXXXXXXXXXXXXX. Sixty (60) days' prior written
notice is needed from one party to the other if either party determines, in its
discretion, that the Research Program is no longer academically, technically or
commercially feasible. Upon receipt or delivery of such notice of termination,
University shall exert its best efforts to limit or terminate any outstanding
financial commitments for which Ostex is to be liable, and Ostex shall reimburse
University (to the extent not previously paid) for all costs incurred by it for
the Research Program, including, without limitation, all uncancellable
obligations. University shall furnish, within sixty (60) days of the effective
date of termination, a final report of all costs incurred and all funds received
and shall reimburse Ostex for payments which may have been advanced in excess of
total costs incurred with no further obligations to Ostex.
12.2 Notwithstanding paragraph 12.1, in the event that either
party shall be in default of any of its obligations under this Agreement and
shall fail to remedy such default within thirty (30) days after written notice
thereof, the party not in default shall have the option of terminating this
Agreement by giving written notice of termination to the defaulting party.
12.3 Termination of this Agreement shall not affect the rights
and obligations of the parties accrued prior to termination or the rights and
obligations set forth in Article 8.
13. WARRANTS AND COVENANTS BY UNIVERSITY
13.1 University hereby warrants that it has the right and
authority to enter into this Agreement and that the representatives whose
signatures appear hereunder are duly authorized by University to enter into this
Agreement on behalf of University.
13.2 University covenants that it will not knowingly enter
into agreements with any industrial and/or commercial funding source other than
Ostex inconsistent with its obligations under this Agreement.
14. APPLICABLE LAW
This Agreement shall be governed by the laws of the State of
Washington.
15. ARBITRATION AND JURISDICTION
15.1 At the request of either party, any controversy, claim,
or dispute arising out of or relating to any provision of this Agreement shall
be settled by arbitration to be conducted in Seattle, Washington. Such
arbitration shall be in accordance with the rules applied by the American
Arbitration Association. Judgment upon any award rendered through arbitration
may be entered into any court of competent jurisdiction.
15.2 Ostex and University agree to submit to jurisdiction
in Seattle, Washington.
16. PARTIES BOUND
This Agreement, including the indemnification provisions, shall be
binding upon and inure to the benefit of the parties hereto, their respective
successors, assigns, legal representatives and heirs. Ostex may assign this
Agreement to any successor to all or substantially all of the assets and
business of Ostex. This Agreement shall not otherwise be assignable by either
party without the prior written consent of the other party.
17. NO ORAL MODIFICATION
No change, modification, extension, termination or waiver of this
Agreement, or any of the provisions herein contained, shall be valid unless made
in writing and signed by duly authorized representatives of the parties hereto.
18. SURVIVORSHIP
Sections 8 and 9 of this Agreement shall survive any expiration or
termination of this Agreement.
19. USE OF NAMES
Neither party will use the name of the other party or its employees in
any advertisement, press release or publicity with respect to the Technology
without the prior written approval of the other party. University shall have the
right to acknowledge Osteonix's support of the research performed under this
Agreement in scientific publications and other scientific communications.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first set forth above.
UNIVERSITY: OSTEX:
By /S/ DONALD W. ALLEN By ROBERT J. GLASER
------------------------------- ----------------
Donald W. Allen, Director Robert J. Glaser, COO
Grant and Contract Services
Date: 11/21/96 Date: 10/23/96
University of Washington
Seattle, Washington 98105
To: Ostex International, Inc.
Type of Support Requested: Research Grant (continuation)
Title of Project: XXXXXXXXXXXXXXXXXX
Principal Investigator: David R. Eyre
Amount Requested: XXXXXXXXXX
Funding Period; XXXXXXXXXX
University office to be Grant & Contract Services
contacted regarding 3935 University Way NE, Box 355754
negotiation of award: Seattle, Wa 98195
Tel: 206-543-4043
Official authorized to
give University approval: /S/ DONALD W. ALLEN
-------------------------
Donald W. Allen, Director
Grant & Contract Services
RESEARCH PROPOSAL
Title: molecular Markers of Connective Tissue Degradation
Funding Period: XXXXXXXXXXXXXXXXXX
PI: David R. Eyre
Orthopaedic Research Laboratories
University of Washington
Box 356500
Seattle, WA 98195-6500
Sponsor: Ostex International, Inc.
H. Raymond Cairncross
Chairman and CEO
2203 Airport Way South
Seattle, WA 98134
ENTIRE SUMMARY, BUDGET AND AIMS REDACTED
<PAGE>
D. Publications
The following papers and abstracts of meeting presentations from the Orthopedic
Research Laboratories have resulted from or are related to this project.
Articles
1. Niyibizi C, Bonadio J, Byers PH, Eyre DR. Incorporation of type I collagen
molecules that contain a mutant a2(l) chain (Gly580->Asp) into bone matrix in a
lethal case of osteogenesis imperfecta. J ' Bioi. Chem. 267:23108-23112,1992.
2. Bogaert R, Tiller GE, Weis MA, Gruber HE, Rimoin DL, Cohn DH, Eyre DR.
Substitution of glutamate for glycine 853 of the triple helical domain of type
11 collagen produces hypochondrogenesis. J. Biol. Chem. 267:22522-22526, 1992.
3. Harris ST, Gertz BJ, Eyre DR, Genant HK, Chesnut CH Ill. The effect of
short-term treatment with alendronate upon vertebral density and biochemical
markers of bone remodeling. J. Clin. Endocrinol. Meth. 76:1399-1407, 1993.
4. Ezzat S, Melmed S, Endrew D, Eyre DR, Singer FR. Biochemical assessment of
bone formation and resorption in acromegaly. J. Clin. Endocrinol. Metab.
76:1452- 1457, 1993.
5. Bolien AM, Eyre DR. Direct extraction of gelatinases
from rat bone. Connect. Tiss. Res. 29:223-230, 1993.
6. Gerstenfeld LC, Riva A, Hodgens K, Eyre DR, Landis WJ. Post-translational
control of collagen fibrillogenesis in a mineralizing chick osteoblast culture
system. Bone Miner. Res. 8:1031-1043, 1993.
7. Gertz BJ, Shao P, Hanson DA, Quan H, Harris ST, Genant HK, Chesnut CH 111,
Eyre DR. Monitoring bone resorption in early postmenopausal women by an
immunoassay for cross-linked collagen peptides in urine. J. Bone Miner Res.
9:135- 142, 1994.
8. Eyre, DR. New Molecular Markers of Bone Metabolism. Ther. Res. 15:1 00-1 1 1,
1994.
9. Bollen A-M, Eyre DR. Bone resorption rates in children monitored by the
urinary assay of collagen type I cross-linked peptides. Bone 15:31-34, 1994.
10. Bell NH, Hollis BW, Shary J, Eyre DR, Eastell R, Colwell A, Russell GRG.
Diclofenac sodium is as effective as premarin in inhibiting bone r@lsorption in
postmenopausal women. Am. J. Med. 96:349-353, 1994.
11. Brenner RE, Vetter U, Bollen A-M, M6rike M, Eyre DR. Bone resorption
assessed by immunoassay of urinary cross-linked collagen peptides in patients
with osteogenesis imperfecta. J. Bone Miner. Res. 9:933-937, 1994.
12. Blumsohn A, Herrington K, Hannon RA, Shao P, Eyre DR, Eastell R. The effect
of calcium supplementation on the circadian rhythm of bone collagen degradation.
J. Clin. Endocrinol. Metab. 79:730-735, 1994.
13. Niyibizi C, Eyre DR. Structural characteristics of cross-linking sites in
type V collagen of bone: Chain specificities and heterotypic links to type I
collagen. Eur. J. Biochem. 224:934-950, 1994.
14. Bogaert R, Wilkin D, Wilcox WR, Lachman R, Rimoin D, Cohn DH, Eyre DR.
Expression in cartilage of a 7-amino acid deletion in type 11 collagen from two
unrelated individuals with Kniest dysplasia. Am. J. Hum. Genet. 55:1128-1136,
1994.
15. Bockman RS, Wilhelm F, Siris E, Singer F, Chausmer A, Sitton R, Kotier J,
Bosco BJ, Eyre DR, Levenson D. A multicenter trial of low-dose gallium nitrate
in patients with advanced Paget's disease of bone. J. Clin. Endocrincl. Metab-
80:595-602, 1995.
16. Eyre DR, Wu J-J. Collagen structure and cartilage matrix integrity. J.
Rheumatol. 22(Suppl. 43):82-85, 1995.
17. Eyre DR. The specificity of collagen cross-links as markers of bone and
connective tissue degradation. Acta Orthop. Scand. 66(Suppi. 266):166-170, 1995.
18. Key Jr. LL, Rodriguez RM, Willi SM, Wright NM, Hatcher HC, Eyre DR, Cure JK,
Griffin PP, Ries WL. Long term treatment of osteopetrosis with recombinant human
interferon gamma: An 18 month clinical trial. N. Engl. J. Med.
332(24):1594-1599, 1995.
19. Wu J-J, Eyre DR. Structural analysis of cross-linking domains in cartilage
type Xi collagen: Insights on polymeric assembly. J. Biol. Chem.
270(32):18865-18870, 1995.
20. Tiller GE, Polumbo PA, Weis MA, Lachman RS, Cohn DH, Rimoin DL, Eyre DR.
Dominant mutations in the type 11 collagen gene (COL2Al) produce
spondyloepimetaphyseal dysplasia (SEMD), Strudwick type. Nature Genet.
11(l):87-89, 1995.
21. Steinmann B, Eyre DR, Shao P. Urinary pyridincline cross-links in
Ehlers-Danlos Syndrome type VI. Am. J. Hum. Genet. 1995; 57:1505-1508.
22. Bolien A-M, Martin MD, Leroux BG, Eyre DR. Circadian variation in urinary
excretion of bone collagen cross-links. J. Bone Miner. Res. 1995; 10(12):1885-
1890.
23. Diab M, Wu J-J, Eyre DR. Collagen type IX from human cartilage: A structural
profile of intermolecular cross-linking sites. Biochem. J. 3 14:327-332, 1996.
Abstracts
1 . Diab M, Shapiro F, Eyre DR. Abnormality of type IX collagen in diastrophic
dysplasia. Trans. Ortho. Res. Cos. (San Francisco (1 8)S 1): 1 20, 1993.
2. Caulfield MP, Morgan C, Carlton E, Brickman AS, Clemens JD, Eyre DR, Pandian
MR. Comparison of an immunoassay for cross-linked N-telopeptide of bone collagen
with HPLC detection of pyridinolines. The Endocrine Society, 1993.
3. Dickson IR, Arora MK, Coombes RC, Shao P, Eyre D. Pyridinolines and cross-
linked type 1 collagen N-telopeptides as markers of bone metastases in breast
cancer. J. Bone Miner. Res. 8(Sl):S288, 1993.
4. Lee MY, Woods PE, Lottsfeldt JL, Ramesh N, Osborne WRA, Eyre DR. Isolation
and molecular characterization of a murine osteoclast colony stimulating factor
(0- CSF). J. Bone Miner. Res. 8(Sl):Sl44, 1993.
5. Blumsohn A, Al-Dehaimi AW, Herrington K, Shao P, Eyre DR, Eastell R. Effect
of timing of calcium supplementation on the circadian rhythm of bone collagen
degradation. J. Bone Miner. Res. 8(Sl):Sl58, 1993.
6. Rodriguez RR, Ries WL, Eyre DR, Key LL. Type I collagen cross-linked N-
telopeptide excretion by osteopetrotic patients during interferon gamma therapy:
A correlation with bone biochemical and densitometric markers. J. Bone Miner.
Res. 8(Sl):S291, 1993.
7. Ebeling PR, Atley LM, Eyre DR, Guthrie J, Dennerstein L, Wark JD. Sensitivity
of type I collagen N-telopeptide cross-links in detecting early menopausal
changes in bone tumover. Proc. ANZ Bone Miner. Soc. A2, 1993.
8. Ebeling PR, Atley LM, Eyre DR, Shao P, Guthrie J, Dennerstein L, Wark JD.
Sensitivity of collagen N-telopeptide cross-links and osteocalcin in detecting
early menopausal changes in bone tumover. Abstract presented at the 4th
lntemational symposoium on Osteoporosis in Hong Kong, March 1993.
9. Fiedelius C, Eyre DR, Christiansen C. Urinary type I collagen cross-linked N-
telopetides: A new marker for bone resorption. Poster presented at the 4th
International Symposium on Osteoporosis in Hong Kong, March 1993.
10. Eyre DR, Bogaert R, Diab M, Hanson D, Knigge P, Niyibizi C, Weis MA, Wu ii.
Studies on the molecular structure of collagen heteropolymers in bone and
cartilage. Presented at the 5th International Conference on Osteogenesis
Imperfecta, September 27-30, 1993, Oxford, England.
11. Kanthawatana S, Eyre DR, Hendeles L. The effect of short course of oral
prednisone on a biochemical marker of bone resorption. Xllth Intemational
Congress of Pharmacology. Montr6al, Qu6bec, July 1994.
12. Apone S, Fevold K, Lee M, Eyre D. A rapid method for quantifying osteoclast
activity in vitro. J. Bone Miner. Res. 9(Sl):Al2O, p. S178, 1994.
13. Clemens JD, Herrick- M, Singer FR, Rosen HN, Shao P, Eyre DR. Cross-linked
N- telopeptides of type I collagen in human serum as a biochemical marker of
bone resorption. J. Bone Miner. Res. 9(Sl):A5-72, p. S228, 1994.
14. Prior JC, Eyre Dr, Ebeling PR, Wark, JD. Trabecular bone loss after
premenopausal oophorectomy is not prevented by con'ugated estrogen or
medroxyprogesterone--a double-blind, randomized 1-year study. J. Bone Miner.
Res. 9(Sl):C294, p. S394, 1994.
15. Key LL, Rodriguez RM, Hatcher H, Eyre DR, Ries WL. Long term treatment of
osteopetrotic patients with interferon gamma. J. Bone Miner. Res. 9(Sl):72, p.
S138, 1994.
16. Sowers M-F, Eyre, D, Hollis, BW. Changes in bone tumover markers and bone
density with lactation. J. Bone Miner. Res. g(Sl):A512, p. S2p7, 1994.
17. Jackson G, Hollis BW, Eyre DR, Baylink DJ, Bell NH. Effects of race and
calcium intake on bone markers and calcium metabolism in young adult men. J.
Bone Miner. Res. 9(S 1):Al 78, p. S 1 85, 1994.
18. Ebeling PR, Eyre DR, Gurthrie J, Dennerstein L, Wark JDF. Prediction of
early menopausal bone loss by biochemical markers of bone turnover. Amer. Soc.
Bone Miner. Res., Kansas City, MO, September 1994.
19. Wu JJ, Murray J, Eyre DR. Evidence foi copolymeric cross-linking between
types 11 and Ill collagens in human articular cartilage. ORS, Atlanta, 1996.
20. lchimura S, Wu JJ, Eyre DR. A sensitive method for collagen type IX peptide-
mapping in human cartilage. ORS, Atlanta, 1996.
21. Wang C, Eyre DR, Clark R, Kleinberg D, lranmanesh A, Dudley RE, Berman N,
Swerdloff RS. Sublingual testosterone replacement decreases bone resorption and
increase bone formation markers in hypogonadal men. Int. Congress of
Endocrinol., 1996.
<PAGE>
University of Washington Hazardous Materials Use
Complete and Return to
Environmental Health and Safety GS-05
A. Principal Investigator: David R. Eyre. Ph.D.
B. Department: Orthopaedics
C. Building: Health Sciences Room #: BB1052
D. Phone No.: 543-4700
E. Mail Stop: Box 356500
F. Co-investigator(s) _________________________ ______________________
========================= ======================
G Title of Project or Proposal.
Molecular Markers of Connective Tissue Degradation
<TABLE>
<CAPTION>
Yes No
<S> <C> <C>
1. Will Hazardous Materials be used or stored in your laboratory? x
2. Have you and your employees received Hazard Communication training? x
3. Will your research include the use of substances of high acute toxicity, x
reproductive toxins, carcinogens, mutagens, or teratogens?
4. Is there a chemical inventory available for your laboratory? x
5. Do you have access to a computer that is in or near your laboratory for the
purpose of accessing networked safety information? x
6. Are you familiar with the UW's Hazardous Waste Disposal Guidelines? x
7. Doe your laboratory contain the following?
</TABLE>
A. X FIRE EXTINGUISHERS?
B. X FLAMMABLE LIQUID STORAGE CABINETS?
C. X BIOLOGICAL SAFETY CABINETS?
D. X FUME HOODS (ANY TYPE)?
E. _ RESPIRATORS AND REPLACEMENT CARTRIDGES?
F. X PROTECTIVE GLOVES (LATEX, NITRILE, VINYL, ETC.)?
G. X COMPRESSED GASES?
H. X EYE WASHES?
I. X EMERGENCY SHOWER WITHIN 100 FT. OF THE LAB?
J. X ROOM WINDOWS THAT OPEN?
8. Please list on the back of this form any special hazards or precautions
associated with the use of chemicals in your research?
<PAGE>
University of Washington Biohazard Activity Review
Complete and Return to
Environmental Heath and Safety Box 354400
A. Principal Investigator: David R. Eyre. Ph.D.
B. Department: Orthopaedics
C. Building: Health Sciences LAB Room #: BB1052, 1054, 1032
D. Phone No.: 543-4700
E. Box: 356500 E-Mail: [email protected]
F. Co-investigator(s) _________________________ ______________________
========================= ======================
G Title of Project or Proposal.
Molecular Markers of Connective Tissue Degradation
__ Check here if project is non-competitive renewal and skip to Section M
Yes No
H. Is your lab engaged in the following areas of biohazard activity?
1. Activities involving non-human primates, including blood, tissues and/or
body fluids from non-human primates. __ x
2. Activities involving other animals or animal blood and tissues:
Animal Type: Guinea Pig
a. Commercially raised laboratory animals. x __
b. Feral (wild caught) animals. __ x
3. Activities involving human blood, tissues, body fluids and excreta.
a. Have all personnel received Hepatitis B vaccinations?
(See UW Exposure Control Plan or call 543-7278 for
more information.) x __
b. Does the laboratory have an exposure control plan?
(if yes, answer Section I. below.) x __
4. Activities involving contact with cultures or specimens which may contain
microorganisms (including viruses). Culture Type: ___________ __ x
5. Activities involving recombinant DNA. (All projects involving recombinant
DNA must be registered with the UW Recombinant DNA Committee,
regardless of containment level. See Section III., pages 2-5 of the
"University
Biohazard Safety Manual" or call EH&S at 543-7278 regarding non-competitive
grant renewals.) __ x
I. Does your laboratory exposure control plan cover:
1. Procedures on use of personal protective equipment and
clothing? x __
2. Procedures for handling hypodermic needles, glass, pipettes
and biological wastes? x __
3. Immunization and medical surveillance program(s)? x __
4. Personnel training? x __
If the answer to any or part of section H. is "Yes" , please complete the next
page.
<PAGE>
University of Washington
Biohazard Activity Review
Page 2 of 2
Another
J. Does this project require the use of? In Lab* Location
1. Laminar flow biological safety cabinets. x __
2. Centrifuge x __
3. Autoclave x __
4. Sonication Equipment x __
*equipment located in rooms listed on first page.
K. Submit the following with this form.
1 . A copy of the GC-1 form.
2. An assessment of the possible risks from biohazards and a
brief summary of the biosafety
precautions followed.
3. Any comments received from departmental review of the project.
4. A summary of the proposed project written in lay terms and/or
a copy of the application
being submitted for grant support
L. If Class III agents* are involved submit the following additional information
with this form:
1. A resume of the training and experience of each person who
will participate in the project
2. A description of laboratory facilities available including
containment equipment such as biological safety cabinets, etc.
Include a statement by Environmental Heath and Safety
assessing the adequacy of containment facilities.
+ Consult UW Biosafety Manual for classification of agents.
Note: Work with Class IV agents will not be approved at the
University of Washington as appropriate facilities are not
available.
M. If this is a non-competitive renewal of funded grant and there are no
significant changes in the project from
the original submittal, submit the following:
a. A copy of the new GC-1 form.
b. a brief summary of the new year's proposed activity.
For more information contact
EH&S Biosafety Specialist at 543-7278
<PAGE>
APPLICATION AND PROTOCOL
ENTIRELY REDACTED
<PAGE>
Research Agreement
Dr. Minako Y. Lee
RESEARCH AGREEMENT
This RESEARCH AGREEMENT is entered into as of the 1st day of September,
1996, by and between OSTEX INTERNATIONAL, INC., a Washington corporation, having
its principal place of business at 2203 Airport Way South, Suite 400, Seattle,
Washington 98134 ("Ostex"), and the UNIVERSITY OF WASHINGTON, having its
principal office at Seattle, Washington 98195 (the "University").
RECITALS
A. Ostex has an ongoing interest in certain research technology
(including inventions, processes, formulae and the like, whether or not
patentable, and property eligible for copyright protection) entitled "Role of
O-CSF in Osteoclast Regulation," as more particularly described in "Exhibit A"
attached hereto (the "Technology").
B. The Technology has been assigned by the University to the Washington
Research Foundation ("WRF") pursuant to Section 3.3 of that certain Technology
Administration Agreement, dated January 1, 1985, between the University and WRF,
as amended (the "UW Agreement"). Pursuant to that certain Exclusive License
Agreement between Ostex and WRF, dated October 20, 1989 (the "Exclusive License
Agreement"), WRF granted Ostex an exclusive, worldwide license to make, have
made, assign, sublicense, lease, develop, enhance, modify, produce, reproduce,
demonstrate, market, promote, sell, distribute, use, exploit and otherwise
commercialize and prepare derivations of the Technology.
C. Ostex and the University entered into a Research Agreement dated
November 1, 1992, pursuant to which Ostex funded the first two years of a
research program to be conducted by the University relating to the Technology
(the "Research Program").
D. It is in the mutual interest of Ostex and the University that the
Research Program be continued pursuant to this Agreement.
E. Ostex is willing to fund XXXXXXXXXXX of the Research Program at and
through the University of Washington, Department of Biological Structure, and
the University desires to obtain such funding, all subject to and in accordance
with the terms and conditions set forth in this Agreement.
<PAGE>
AGREEMENTS
In consideration of the covenants and promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. SCOPE AND SCHEDULE
The Research Program shall be conducted in accordance with the research
proposal attached hereto as "Exhibit A" and incorporated herein by this
reference (the "Research Proposal"), and in accordance with mutually agreeable
written modifications thereof. The Research Program shall be carried out during
the Program Period (as defined below), unless sooner terminated or extended as
herein provided.
2. PROGRAM PERIOD
The Program Period XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX; provided,
however, that the parties may by mutual agreement reached no less than thirty
(30) days prior to expiration XXXXXXX, extend the Program Period
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
3. OSTEX'S PRINCIPAL OBLIGATIONS
3.1 During XXXXXXXXX of the Program Period, Ostex shall pay
the University the sum of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to cover all
direct and indirect costs of the corresponding portion of the Research Program,
as set forth in the budget section of the Research Proposal.
3.2 In the event that the Program Period is extended beyond
XXXXXXX in accordance with Section 2 above, Ostex shall during XXXXXXX pay the
University the sum of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX to cover all
direct and indirect costs of the corresponding portion of the Research Program,
as set forth in the budget section of the Research Proposal.
4. PAYMENT TERMS
4.1 During XXXXXXX of the Program Period, Ostex shall, upon
receipt of invoices from the University, pay the University the amount specified
in Section 3.1 above, in accordance with the following schedule:
PAYMENT DATE PAYMENT AMOUNT
-XXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXXXX
<PAGE>
4.2 In the event that the Program Period is extended beyond
XXXXXXX, Ostex shall, upon receipt of invoices from the University, pay the
University during XXXXXXX the amount set forth in Section 3.2 above, in
accordance with the following schedule:
PAYMENT DATE PAYMENT AMOUNT
- XXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXX
- XXXXXXXXXXXXXXXXXXXXXXXXX
4.3 The University shall submit its customary statement of
expenses incurred under this Agreement within thirty (30) days after the end of
each six-month interval of the Program Period.
5. PRINCIPAL INVESTIGATOR
For purposes of this Agreement, and pursuant to University policy, Dr.
Minako Y. Lee is designated the principal investigator of the Research Program
("Principal Investigator"). The Principal Investigator shall be responsible for
the direction and content of the Research Program, including budgeting and
budget revisions necessary to accomplish the objectives of the Research Program.
Should the Principal Investigator leave the employ of the University or
otherwise become unavailable to fulfill her obligations as Principal
Investigator during the Program Period, the University may nominate a
replacement for the position of Principal Investigator. If such replacement is
not acceptable to Ostex, the Research Program and budget contained in the
Research Proposal may be modified to reflect a reduced scope of work, or, at the
option of Ostex, may be terminated upon sixty (60) days' notice, unless
arrangements acceptable to Ostex can be made to subcontract with the departed
Principal Investigator, or the institution at which she is then employed, to
continue the work described in the Research Proposal.
6. CONFIDENTIALITY
Neither party shall furnish to the other any confidential or
proprietary information of any third party in connection with this Agreement.
Any such information which one party wishes to furnish to the other shall be the
subject of a separate confidentiality agreement between the parties.
7. DATA REPORTS AND FACILITIES
7.1 The University shall, in accordance with established
University practice, keep complete, accurate, and authentic accounts, notes,
<PAGE>
data, and records of the work performed under this Agreement and shall provide
Ostex with reports within thirty (30) days following the end of each six-month
interval of the Program Period. The University shall furthermore submit to Ostex
a written and comprehensive final report within ninety (90) days after
termination of the Research Program.
7.2 At the discretion and convenience of the Principal
Investigator during the course of the Research Program, Ostex's representatives
and others designated by Ostex may be present as observers while various tests,
inspections and other aspects of the Research Program are being conducted.
Ostex's representatives may consult informally with the Principal Investigator
regarding the Research Program both personally and by telephone. The University
acknowledges and agrees that the Principal Investigator may serve as a
consultant to Ostex during the term of this Agreement.
7.3 From its own resources and those provided under this
Agreement, the University agrees to make available laboratory facilities and
equipment for the Research Program.
8. INVENTION RIGHTS
8.1 The University acknowledges and agrees that: (i) all
Technology made, developed or conceived on or before the date of this Agreement
has been assigned to WRF pursuant to Section 3.3 of the UW Agreement, and no
commitments have been made with respect to such Technology pursuant to Section
3.2 of the UW Agreement; (ii) all Technology made, developed or conceived after
the date of this Agreement will be submitted to WRF pursuant to Section 3.1 of
the UW Agreement; (iii) no commitment will be made pursuant to Section 3.1 of
the UW Agreement with respect to Technology made, developed or conceived after
the date of this Agreement unless Ostex agrees to such commitment in writing;
and (iv) the University shall not terminate, amend, waive or enforce the UW
Agreement, or any rights or obligations thereunder, in any manner that could
adversely affect Ostex's rights under this Agreement unless Ostex agrees in
writing to such termination, amendment, waiver or enforcement.
8.2 The University shall have no right, title or interest in
any Technology made, developed or conceived by employees or consultants of Ostex
entirely without the use of University facilities.
9. PUBLICATION
The University will not be restricted hereunder from publishing the
results of research conducted under this Agreement within a reasonable period of
time following their availability. The University will provide a copy of all
manuscripts to Ostex prior to their presentation or submission for publication.
In order to protect fully the rights of the University and of Ostex, any
contemplated publication or other dissemination containing details of an
invention, whether or not patentable, will be withheld until a patent
<PAGE>
application is filed or other appropriate steps to protect commercial value have
been completed. Such withholding shall be kept to a minimum and will not exceed
six (6) months, except by mutual agreement between Ostex and the University.
10. INDEMNIFICATION
The University and Ostex each agree to indemnify and hold the other
party harmless from damage to persons or property resulting from any act or
omission on the part of itself, its employees, its agents, or its officers.
11. NOTICES
Any notice to be given hereunder shall be in writing and shall be
deemed received by the addressee on the day delivered if delivered by courier on
a business day, or on the fifth business day following mailing if sent by
first-class, certified or registered U.S. mail, postage prepaid, to the
following address:
if to the University: Director, Grant and Contract Services
3935 University Way, N.E., JM-24
Seattle, Washington 98195
if to Ostex: Ostex International, Inc.
2203 Airport Way South, Suite 301
Seattle, Washington 98134
Attention: President
12. TERMINATION
12.1 This Agreement shall terminate upon the expiration of the
Program Period as defined in Section 2 above; provided, however, that this
Agreement may be terminated by either party prior to expiration of the Program
Period upon sixty (60) days' prior written notice, if such party determines, in
its discretion, that the Research Program is no longer feasible or desirable
academically, technically, or commercially. Upon receipt or delivery of such
notice of termination, the University shall exert its best efforts to limit or
terminate any outstanding financial commitments for which Ostex is responsible
hereunder, and Ostex shall reimburse the University, to the extent not
previously reimbursed, for all costs incurred by the University for the Research
Program, including, without limitation, all obligations not cancelable. The
University shall furnish, within sixty (60) days of the effective date of
termination, a final report of all costs incurred and all funds received and
shall reimburse Ostex for payments which may have been advanced in excess of
total costs incurred, with no further obligations to Ostex.
12.2 Notwithstanding paragraph 12.1 above, in the event that
either party shall be in default of any of its obligations under this Agreement
<PAGE>
and shall fail to cure such default within thirty (30) days after receiving
written notice thereof, the party not in default shall have the option of
terminating this Agreement by giving written notice of termination to the
defaulting party, which shall be effective thirty (30) days after delivery.
12.3 Termination of this Agreement shall not affect the rights
and obligations of the parties accrued prior to termination, or the rights and
obligations set forth in Section 8 above.
13. WARRANTS AND COVENANTS BY UNIVERSITY
13.1 The University hereby warrants that it has the right and
authority to enter into this Agreement and that the representatives whose
signatures appear hereunder are duly authorized by the University to enter into
this Agreement on behalf of the University.
13.2 The University covenants that it will not knowingly enter
into any agreement with any industrial or commercial funding source other than
Ostex if such agreement would be inconsistent with the University's obligations
hereunder.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Washington.
15. ARBITRATION AND JURISDICTION
15.1 At the request of either party, any controversy, claim,
or dispute arising out of or relating to any provision of this Agreement shall
be settled by arbitration to be conducted in Seattle, Washington. Such
arbitration shall be conducted in accordance with the rules applied by the
American Arbitration Association. Judgment upon any award rendered through
arbitration may be entered into any court of competent jurisdiction.
15.2 Ostex and the University agree to submit to
jurisdiction in Seattle, Washington.
16. SUCCESSORS AND ASSIGNS
This Agreement, including the indemnification provisions hereof, shall
be binding upon and inure to the benefit of the parties hereto, their respective
successors, assigns, and legal representatives. Ostex may assign this Agreement
to any successor to all or substantially all of its business and assets. This
Agreement shall not otherwise be assignable by either party without the prior
written consent of the other.
<PAGE>
17. NO ORAL MODIFICATION
No change, modification, extension, termination or waiver of this
Agreement, or any provision herein contained, shall be valid unless made in
writing and signed by duly authorized representatives of the parties hereto.
18. SURVIVAL
Sections 8 and 9 of this Agreement shall survive any expiration or
other termination of this Agreement.
19. USE OF NAMES
Neither party will use the name of the other party or its employees in
any advertisement, press release or publicity with respect to the Technology
without the prior written approval of the other party. The University shall have
the right to acknowledge Ostex's support of the research performed under this
Agreement in scientific publications and other scientific communications.
EFFECTIVE as of the day and year first set forth above.
UNIVERSITY: OSTEX:
By /S/ DANALD A. ALLEN By /S/ JOHN M. BRENNEMAN
Donald W. Allen, Director, John M. Brenneman, Director of Finance
Grant and Contract Services
11/21/96 10/22/96
Date of signature Date of signature
<PAGE>
EXHIBIT A
Continuation of Research proposal:
Role of O-CSF in Osteoclast Regulation
XXXXXXXXXXXXXXXXXXXXXXXXXXX
Submitted to:
OSTEX International Inc.
2203 Airport Way, S., Suite 301
Seattle, WA. 98l34
Tel: (206) 292-8082
Fax: (206) 292-8625
Principal Investigator:
Minako Y. Lee, ,M.D.
Research Associate Professor
Department of Biological Structure
SM-20
University of Washington
Seattle, WA. 98195
Tel: (206) 685-1514
Fax:(206) 543-1524
1
Lee, Minako Y.
<PAGE>
Budget Request XXX XXXX X XXXXXXXXXXXXXXXXXX
Detailed budget for the first 12 months.
Personnel:
Name Role % Salary Fringe Total
xxxxxxx xxxx xxx xxxxxx xxxxx xxxxxx
xxxxxxxxxx xxxxxxxxxxxxx xxx xxxxxx xxxxx xxxxxx
xxxxxxxxxxxx xxxxxxxxxxx xxxx xxxxx xxxxx xxxxxx
xxxxxxx xxxxxx xxxxx xxx xxxxx
Subtotal personnel: xxxxxx
Equipments:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx) xxxxxx
Supplies:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx: xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxx: xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
Subtotal for supplies: xxxxxx
Total direct costs: xxxxxx xxxxxx Indirect Costs: xxxxxx
xxxxxx xxxxxx Indirect Costs: xxxxxx
Total direct costs xxx xxx xxxxxx xxxx xxxxxx xxxxxx Indirect Costs: xxxxxx
Total direct and indirect for xxxx x-xxxx xxxxx xxxxxx
<PAGE>
Lee, Minako Y.
xxxxxx xxxxxx
Personnel xxxxxx xxxxxx xxxxxx
xxxxxx xxxxxx xxxxxx
xxxxxx xxxxxx xxxxxx
Equipment xxxxxx xxxxxx
Supplies xxxxxx xxxxxx
Total xxxxxx xxxxxx
Budget justification:
We are requesting salaries for personnel who will be working on the
proposed project at a % effort as indicated. Dr. Lee will spend xxx of her time
as P.I. A proposed salary is commensurate with her experience and academic
level.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Indirect cost rate is as per current agreement between University of Washington
and OSTEX International Inc.
3
<PAGE>
Lee, Minako Y.
Research Proposal: Role of O-CSF in Osteoclast Regulation
A) Specific aims
ALL AIMS REDACTED
<PAGE>
Publications:
M.Y.Lee, P.E.Woods, J.L.Lottsfeldt, N.Ramesh, W.R.A.Osborne, D.R.Eyre: Isolation
and molecular characterization of a murine osteoclast colony stimulating factor
(O-CSF). J Bone Mineral Research 8: S144, 1993.
T.H.Lee, K.L.Fevold, Y.Muguruma, J.L.Lottsfeldt, M.Y.Lee. Relative roles of
osteoclast colony-stimulating factor and macrophage colony stimulating factor in
the course of osteoclast development. Exp Hematol 22:66-73, 1994.
Stephen Apone, Karen Fevold, Minako Lee, David Eyre: A rapid method for
quantifying osteoclast activity in vitro. J Bone Mineral Research 9:S178, 1994.
Y.Hayase, M.Y.Lee: Osteoclast progenitors develop from primitive hematopoietic
stem cells. Exp Hematol 22:(8), 755, 1994.
Y.Mugururna, M.Y.Lee: Osteoclast progenitors express c-Kit, but their
differentiation appears independent of stem cell factor. Abstract submitted to
the annual meeting for the American Society of Hematology, 1995.
L.E.Purton, M.Y.Lee,B.Torok-Storb. Normal human peripheral blood mononuclear
cells mobilized with granulocyte colony-stimulating factor contain osteoclast
progenitors. Abstract submitted to the annual meeting for the American Society
of Hematology, 1995.
<PAGE>
Lee, Minako Y.
D) Research plan:
ALL REDACTED
<PAGE>
References:
1. SudaT. et al., Modulation of osteoclast differentiation. Endocrine
Reviews. 13:66-80,1992
2. Nijweide,PJ. and GroothR. Ontogeny of the osteoclast. In Biology and
Physiology of the Osteoclast. Rifkin, BR and Gay CV eds. p82-97. CRC press,
Boca Raton, Florida 1992
3. Chambers,TJ. Regulation of osteoclast development and function. ibd.
p 106-128.
4. Tamura, T. et al., Soluble interleukin-6 receptor triggers osteoclast
formation by interleukin 6. Proc. Natl Acad. Sci. 90:11924-1928, 1993
5. Lee, MY., Eyre, DR., Osborne, WRA. Isolation of a murine osteoclast
colony stimulating factor. Proc. Natl. Acad. Sci. 88:8500-8504,1991
6. Lee, MY.,
Lottsfeldt, JL. Fevold, KL. Identification and characterization of osteoclast
progenitors by clonal analysis of hematopoietic cells. Blood 80:1710-1716, 1992
7. Metcalf,D. Hematopoietic regulators. Redundancy or Subtlety? Blood
82:35l5-3523, 1993
8. Kaushansky, K., Lin,N. and Adamson,J: Interleukin 1 stimulates
fibroblasts to synthesize granulocyte-macrophage and granulocyte colony
stimulating factors. Mechanisms for the hematopoietic response to inflammation.
J Clin Invest 81: 92-97, 1988
9. Thomson, B.M., Saklatvala, J. and Chambers,
T.J: Osteoblasts mediate interleukin 1 stimulation of bone resorption by rat
osteoclasts. J Exp Med 164: 104-112, 1986
10. Lee,TH., Fevold,KL., Muguruma,Y.,
Lottsfeldt,JL., Lee,MY. Relative roles of osteoclast colony-stimulating factor
and macrophage colony-stimulating, factor in the course of osteoclast
development. Exp Hematol 22:66-73. 1994
11. de-la-Mata,J., et al., Interleukin-6
enhances hypercalcemia and bone resorption mediated by parathyroid
hormone-related protein in vivo. J.Clin Invest. 95:2846-2852, 1995
12. KodamaH., et al., Congenital osteoclast deficiency in osteopetrotic
(op/op) mice is cured by injections of macrophage colony-stimulating
factor. J. Exp. Med. 173:269-272, 1991
13. Jilka,R., et al., Increased osteoclast development after
estrogen loss: mediation by interleukin-6. Science 257:88-91, 1992
14.Horowits,MC. Cytokines and estrogen in bone: Anti-osteoporotic effects.
Science 260:626-627, 1993
15. Rifkin,DB and Moscatelli, D. Recent developments in the
cell biology of basic fibroblast growth factor. J.Cell Biol 109: 1-6, 1989
16.Apone,S., Fevold,K., Lee,M., Eyre,D. A rapid method for quantifying
osteoclastactivity in vitro. J Bone Min Res 9:S178, 1994
17. Muguruma,Y. and Lee, MY.Osteoclast progenitors express c-Kit, but
their differentiation appears independent of SCF. (submitted) 15
FIRST AMENDMENT OF LEASE
This First Amendment of Lease ("Amendment") is entered into by and
between The City of Seattle, a Washington municipal corporation,
successor-in-interest- to David A. Sabey and Sandra L. Sabey ("Landlord"), as
Landlord and Ostex International, Inc., a Washington corporation ("Tenant"), as
Tenant, under that certain Lease ("Lease"), dated October 2, 1995, between the
parties hereto.
R E C I T A L S
A. Landlord and Tenant desire to relocate the third (3rd) floor
Building A Premises to the fourth (4th) floor and to provide for certain other
modifications to the Lease, on the terms and conditions contained in this
Amendment.
B. Except as may be expressly provided otherwise in this
Amendment, capitalized terms in this Amendment shall have the
meaning given such terms in the Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
1. Amendments.
1.1 Section 1.3 of the Lease regarding the Building A
Space is amended to add the following at the end of such
Section:
Notwithstanding the foregoing, commencing the earlier of: (i) January 1, 1997 or
(ii) the date on which Tenant occupies any of the fourth floor relocation space
depicted on Exhibit B-2 attached hereto ("Fourth Floor Relocation Space"),
Tenant's Building A Space shall automatically be increased by an additional
12,307 net rentable square feet. Commencing January 1, 1997, Tenant may return
all or any portion of its Premises on the third floor to Landlord and Tenant's
obligation to occupy and pay Rent for that portion of the third floor Premises
so returned to Landlord shall then terminate. Landlord and Tenant shall document
any return of Tenant's third floor Premises to Landlord in a letter agreement
which shall state the Base Rent payable by Tenant and Tenant's Share adjustment
due to the return of such portion of the third floor Premises. Tenant shall have
completed its Tenant improvements to the Fourth Floor Relocation Space and have
completely vacated its Premises on the third floor to Landlord's satisfaction no
later than December 31, 1997, at which time Tenant's Premises on Building A
shall consist of approximately 24,832 net rentable square feet, which includes
the Phone Room, described below. All square footages herein described are
subject to recalculation upon the finalization of Tenant's space plans for the
Fourth Floor
<PAGE>
Relocation Space. Tenant acknowledges that it accepts the Fourth Floor
Relocation Space in its "AS-IS" condition. Notwithstanding the foregoing, Tenant
shall retain the approximately 70 net rentable square feet of space located on
the third floor of the Building for its telephone and data room identified on
Exhibit B-1 attached hereto ("Phone Room") on the same terms and conditions
contained in the Lease. Tenant shall have reasonable access to the Phone Room at
all times. If Landlord later determines that the Phone Room must be relocated
due to restricted access or another tenant's lease, the cost of such relocation
shall be borne equally by Tenant and Landlord.
1.2 Section 1.4 of the Lease is amended to add the
following to the end of such Section:
1.4 Tenant's Share. Notwithstanding the foregoing, effective on the
date that Tenant occupies any of the Fourth Floor Relocation Space and/or
vacates any of its Premises on the third floor in accordance with Section 1.3
above, "Tenant's Share of the Building" and "Tenant's Share of the Property" for
the Building A Premises shall be increased or decreased accordingly. Upon
Tenant's occupancy of the Fourth Floor Relocation Space and Tenant's complete
vacation of its Premises on the third floor, then "Tenant's Share of the
Building" for the Building A Premises shall mean twenty-five and fifty-two
one-hundredths percent (25.52%) and "Tenant's Share of the Property" for the
Building A Premises shall mean eight and seventy-one one-hundredths percent
(8.71%). All square footages and Tenant's Share amounts are subject to
recalculation upon the finalization of Tenant's Fourth Floor Relocation space
plans.
1.3 Section 1.7 of the lease is amended and restated
in its entirety to read as follows:
1.7 Expiration Date. "Expiration Date" shall mean October
1, 2005, unless sooner terminated pursuant to the terms of this
Lease or extended pursuant to Section 3.1 of the Lease.
1.4 The first paragraph of Section 2.3.1 of the Lease is amended and
restated as follows and the remainder of Section 2.3.1 remains as stated in the
Lease:
2.3.1. Tenant's Right of First Refusal. Provided Landlord does not
require the third floor space described below in this Section for its own use
now or in the Future, and subject to the terms and conditions of this Section
2.3.1, Landlord grants Tenant a right of first refusal during the Term to lease
all or any portion of the remaining space on the third floor of Building A and
that space in Building D depicted as Suite 802 on Exhibit B-1 and Exhibit B-3,
respectively ("First Refusal Space").
<PAGE>
1.5 Section 2.3.2 of the Lease is amended to delete all references to
the Building A Option Space from the Option for Tenant's expansion into Suites
300 and 310.
1.6 Section 4.1.2 of the Lease is amended to add the
following at the end of such Section:
Notwithstanding the foregoing, commencing the earlier of: (i) January 1, 1997 or
(ii) the date on which Tenant first occupies any of the Fourth Floor Relocation
Space, the monthly Base Rent for the Building A Space shall automatically be
increased to reflect the inclusion of the Fourth Floor Relocation Space at an
annual per square foot net charge of Twelve and 50/100 Dollars ($12.50) and
reduced to reflect the return of the third floor Premises pursuant to Amendment
1.1. Upon Tenant's vacation of all of the third floor Premises, Tenant's monthly
installment of Base Rent shall be further adjusted to reflect such vacation.
Commencing October 1, 2000 through October 1, 2005, the Base Monthly Rent for
the Building A Space shall be increased to reflect an annual per square foot net
charge of Fourteen and No/100 Dollars ($14.00). All square footages and Tenant's
Base Rent amounts are subject to recalculation upon the finalization of Tenant's
Fourth Floor Relocation space plans.
2. Entire Amendment. This Amendment sets forth the
entire agreement of the parties with respect to the subject
matter set forth herein and may not be modified other than by an
agreement in writing signed by the parties hereto or their
respective successors and interests.
3. Exhibits. Exhibits B-1 and B-2 attached hereto are
incorporated herein by this reference and supersede and replace
the prior Exhibits B-1 and B-2.
4. Acknowledgement. The parties hereto each acknowledge that except as
expressly modified by this Amendment, all the terms and conditions of the Lease
remain unchanged and are in full force and effect and enforceable in accordance
with their terms. In the event of a conflict between the Lease and this
Amendment, the terms and provisions of this Amendment shall control.
DATED this _____ day of ___________, 1996.
LANDLORD: TENANT:
THE CITY OF SEATTLE OSTEX INTERNATIONAL, INC.
By: ___________________ By: /S/ JOHN BRENNEMAN
Its: ___________________ Its: SECRETARY
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this ________ day of ______________, 1996, before me, the
undersigned, a Notary Public in and for the State of Washington, duly
commissioned and sworn as such, personally appeared
_____________________________, to me known to be the __________________ of THE
CITY OF SEATTLE, the municipal corporation that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that he/she was authorized to execute said
instrument.
WITNESS my hand and official seal the day and year in this certificate
first above written.
------------------------------
Printed Name: __________________
NOTARY PUBLIC in and for the State
of Washington, residing at
------------------------------
My commission expires: _________
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 15th day of October, 1996, before me, the
undersigned, a Notary Public in and for the State of Washington, duly
commissioned and sworn as such, personally appeared
John M. Brenneman, to me known to be the Director of Finance of OSTEX
INTERNATIONAL, INC., corporation that executed the within and foregoing
instrument, and acknowledged the said instrument to be the free and voluntary
act and deed of said corporation for the uses and purposes therein mentioned,
and on oath stated that he/she was authorized to execute said instrument, and
that the seal affixed is the corporate seal of said corporation.
WITNESS my hand and official seal the day and year in this certificate
first above written.
/s/ Mary J. Fabrizio
Printed Name: Mary J. Fabrizio
NOTARY PUBLIC in and for the State
of Washington, residing at
Seattle, WA
My commission expires: 1/15/99
<TABLE>
<CAPTION>
Selected Financial Highlights
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended December 31, 1996 1995 1994 1993 1992
Statement of Operations Data:
Revenues:
Product sales and research
testing services $ 2,860 $ 1,830 $ 1,152 $ 417 $ -
Research and development fees 1,087 1,495 630 585 675
Licensing fees - - - 900 900
-------- -------- -------- -------- -------
Total revenues 3,947 3,325 1,782 1,902 1,575
Operating expenses:
Costs of products sold 926 603 517 226 -
Research and development 3,163 3,200 3,308 1,940 1,279
Selling, general and -------- -------- -------- -------- -------
administrative 9,201 6,583 2,222 1,754 1,160
Total operating expenses 13,290 10,386 6,047 3,920 2,439
Loss from operations (9,343) (7,061) (4,265) (2,018) (864)
Other income (expense):
Interest income 1,317 1,684 194 128 75
Interest expense (44) - - - -
-------- -------- -------- -------- -------
Net loss $ (8,070) $ (5,377) $ (4,071) $ (1,890) $ (789)
======== ======== ======== ======== =======
Net loss per common and
common equivalent share $ (.65) $ (.45) $ (.47) - -
-------- -------- -------- -------- -------
Weighted average number of
common and common
equivalent shares outstanding 12,441 11,929 8,737 - -
-------- -------- -------- -------- -------
(In thousands)
December 31, 1996 1995 1994 1993 1992
Balance Sheet Data:
Cash, cash equivalents and
short-term investments $ 21,229 $ 27,794 $ 3,668 $ 7,916 $ 2,688
Working capital 20,901 28,361 3,172 7,890 2,988
Total assets 25,691 32,841 5,590 8,807 3,495
Accumulated deficit (21,864) (13,794) (8,417) (4,346) (2,456)
Total shareholders' equity 23,526 31,518 4,698 8,460 3,348
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Ostex International, Inc. (the "Company") is engaged in the discovery,
development and commercialization of diagnostics and therapeutics for diseases
of the skeleton and connective tissues. The Company believes its lead product,
the Osteomark(R) assay, incorporates breakthrough technology in the area of bone
resorption measurement. Ostex has formed collaborative relationships with a
number of leading diagnostic and pharmaceutical companies to aid in the
commercialization of the Osteomark test.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including those discussed below, that could cause actual results to differ
materially from historical results or those anticipated. Words used herein such
as "believes," "anticipates," "expects," "intends," and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying such statements. In addition, the disclosures on page 12 under
the caption "Other Factors that May Affect Operating Results," consist
principally of a brief discussion of risks which may affect future results and
are thus, in their entirety, forward-looking in nature. Readers are urged to
carefully review and consider the various disclosures made by the Company in
this report and in the Company's other reports filed with the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K for
fiscal year ended December 31, 1996, that attempt to advise interested parties
of the risks and factors that may affect the company's business.
On May 8, 1995, the Osteomark test first became commercially available in the
United States as a urinary assay that provides a quantitative measure of the
excretion of cross-linked N-telopeptides of type I collagen ("NTx") as an
indicator of human bone resorption. Prior to becoming commercially available,
the Osteomark test was available domestically only for research purposes.
To date, the Company's revenues have consisted primarily of product sales and
fees for research testing services, as well as licensing, research and
development fees from Mochida Pharmaceutical, Co., Ltd. ("Mochida"), Johnson &
Johnson Clinical Diagnostics, Inc. ("Johnson & Johnson") and Boehringer Mannheim
Diagnostics ("Boehringer Mannheim"). Mochida has agreed to pay Ostex up to
approximately $6,600,000 in a combination of licensing fees and research and
development milestone payments, of which $5,350,000 has been earned to date.
Pursuant to the research and development agreement, Mochida has an option to
license the NTx serum assay under development. Future payments totaling
$1,250,000 are contingent upon Mochida's decision to exercise its option to
license the NTx serum assay and achievement of certain milestones.
Expenses incurred have been primarily for selling, administrative, research and
development activities and have exceeded revenues in each year since the
Company's inception. As of December 31, 1996, the Company had an accumulated
deficit of $21,864,000. Successful future operations depend upon the Company's
ability to effectively commercialize and market its products. The Company will
require a substantial amount of additional funds to develop new products and to
fund the level of selling, general and administrative expenses that the Company
expects to incur in connection with its product commercialization efforts in the
next several years.
RESULTS OF OPERATIONS
Years Ended December 31, 1996, 1995 and 1994. The Company had revenues of
$3,947,000 for the year ended December 31, 1996, compared to $3,325,000 and
$1,782,000in the years ended December 31, 1995 and 1994, respectively. Research
and development fees received during 1996 totaled $1,087,000, almost all from
Mochida. Research and development fees in 1995 amounted to $1,495,000 and
consisted of $1,000,000 from Johnson & Johnson and $495,000 from Mochida. This
is compared to $630,000 in 1994, consisting of $450,000 from Boehringer Mannheim
and $180,000 from Mochida.
Revenue from product sales and research testing services for the year ended
December 31, 1996 was $2,860,000, compared to $1,830,000 and $1,152,000 in the
years ended December 31, 1995 and 1994, respectively. The increase of $1,030,000
in 1996 revenue is attributable to higher volumes of Osteomark kits sold to
laboratories and distributors worldwide during the year. The increase of
$678,000 in 1995 is attributable to higher billings for research testing
services sold to companies conducting drug development trials and higher volumes
of kits sold in the U.S. for investigation and research use. The Company's cost
of products sold totaled $926,000 for the year ended December 31, 1996, compared
to $603,000 and $517,000 for the same periods in 1995 and 1994, respectively.
The gross profit rate on product sales for the year ended 1996 was 68%, compared
to 67% for 1995 and 55% for 1994. The change in gross profit rate from 1994 to
1995 was a function of increased volume and overall efficiency gains made in
part by improvements in the production process.
The Company's research and development expenditures totaled $3,163,000,
$3,200,000, and $3,308,000, in 1996, 1995, and 1994, respectively. Research and
development expenditures have remained steady from 1995 to 1996 due to an
increase in research and development grants and royalties paid to the Washington
Research Foundation ("WRF") offset by decreased clinical trial expenditures due
to the completion of one of its clinical trial in November 1995. The decrease in
1995 compared to 1994 is due primarily to the completion of the Company's first
clinical trial.
<PAGE>
Selling, general and administrative expenses totaled $9,201,000, $6,583,000, and
$2,222,000, in 1996, 1995 and 1994, respectively. The 40% increase from 1995 to
1996 is due primarily to the implementation of marketing programs to support the
Osteomark assay in the United States, the addition of sales personnel to support
these efforts, increased legal costs involved with the Boehringer Mannheim
arbitration and patent litigation costs. The 196% increase from 1994 to 1995 is
due to the implementation of marketing programs, including national newspaper
and magazine advertising campaigns, test market initiatives and other efforts to
support the launch of the Osteomark test domestically. The addition of sales
personnel to support the field selling effort, legal fees associated with
pursuing patent infringement cases and increased costs associated with becoming
a public company at the beginning of 1995 also contributed to the significantly
higher levels of selling, general and administrative expenses in 1995.
Interest income totaled $1,317,000, $1,684,000, and $194,000 for the years ended
December 31, 1996, 1995, and 1994, respectively. The decrease in 1996 was
primarily due to lower average invested balances resulting from financing the
Company's operations. The increase from 1994 to 1995 was due to higher invested
balances resulting from investment of the proceeds from the public offering of
Company common stock in February 1995.
At December 31, 1996, the Company had tax net operating loss carryforwards of
$26,994,000, which will begin to expire in 2004. Income taxes are provided in
the Statements of Operations as required by Statement of Financial Accounting
Standards No. 109, "Accounting For Income Taxes" ("SFAS No. 109"). Under SFAS
No. 109, deferred taxes are determined using an asset and liability approach.
The Company has determined that the tax assets do not satisfy the recognition
criteria set forth in SFAS No. 109. Accordingly, a valuation adjustment has been
recorded against the applicable deferred tax assets, and therefore no tax
benefit has been recorded.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations from inception primarily through three
private placements of preferred stock that provided approximately $12,800,000
aggregate proceeds, and its initial public offering of 3,645,642 shares of
common stock that provided net proceeds of approximately $32,000,000. Additional
funds of approximately $12,500,000 have been generated through sales of
Osteomark assay kits and fees for research testing services, and collaborative
research and licensing agreements. As of December 31, 1996, the Company had
$21,229,000 in cash and cash equivalents and short-term investments, working
capital of $20,901,000 and total shareholders' equity of $23,526,000. During
1996, cash, cash equivalents and short-term investments decreased by $6,565,000,
working capital decreased by $7,460,000 and shareholders' equity decreased by
$7,992,000.
During 1996, the Company used $6,787,000 of cash for operating activities and
approximately $495,000 for the purchase of laboratory, manufacturing and office
equipment. The Company entered into a note agreement that provides up to
$1,500,000 for expansion of manufacturing and administrative facilities and has
borrowed $746,000 against the note. The note is repayable in 48 equal monthly
installments of principal and interest of $19,784. As of December 31, 1996,
outstanding borrowings under this agreement amounted to $672,000. The Company is
committed to spend approximately $1,000,000 during 1997 for relocation (and
expansion) of its laboratory facilities, $500,000 of which will be financed with
proceeds from the note agreement.
The Company's future capital requirements depend upon many factors, including
effectiveness of Osteomark assay commercialization activities and arrangements;
continued scientific progress in its research and development programs; progress
toward development of the O-CSF technology, which potentially has therapeutic
uses; the costs involved in filing, prosecuting and enforcing patent claims; the
costs involved in legal efforts to enforce patent rights and distribution
contracts; and the time and costs involved in obtaining regulatory approvals.
Additional funds from equity or debt financing may be required. There can be no
assurance that such additional funds will be available on favorable terms, if at
all. Because of the Company's significant long-term cash requirements, it may
seek to raise additional capital if conditions in the public equity markets are
favorable, even if the Company does not have an immediate need for additional
cash at that time. If additional financing is not available, the Company
anticipates that its existing available cash, its future license and research
revenues from existing collaboration agreements, product sales and interest
income from short-term investments will be adequate to satisfy its capital
requirements and to fund operations through at least 1998. In addition, the
Company was awarded $6,400,000 as a result of the arbitration of a dispute with
Boehringer Mannheim. Boehringer Mannheim has indicated in post-arbitration
motions that it plans to appeal the award.
OTHER FACTORS THAT MAY AFFECT OPERATING RESULTS
The Company's operating results may fluctuate due to a number of factors
including, but not limited to, volume and timing of product sales, pricing,
market acceptance of the Company's products, changing economic conditions in the
healthcare industry, delays and increased costs of product and technology
development, the Company's ability to develop and maintain collaborative
arrangements, the outcome of litigation, and the effect of the Company's
accounting policies and other risk factors detailed in the Company's 1996 Form
10-K and other SEC filings. All of the foregoing factors are difficult for the
Company to predict and can materially adversely affect the Company's business
and operating results.
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands, except share amounts)
December 31, 1996 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 1,289 $ 6,241
Short-term investments 19,940 21,553
Trade receivables, net of allowance
of $25 in 1996 640 1,077
Interest receivable 365 482
Inventory, at cost 153 236
Other 156 95
--------- ---------
Total current assets 22,543 29,684
--------- ---------
Property, Plant and Equipment, at cost 3,573 3,078
Less-- accumulated depreciation and amortization (1,099) (597)
--------- ---------
Property, plant and equipment, net 2,474 2,481
--------- ---------
Other Assets, net 674 676
--------- ---------
Total assets $ 25,691 $ 32,841
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,259 $ 1,155
Accrued expenses 234 168
Note payable 149 -
--------- ---------
Total current liabilities 1,642 1,323
--------- ---------
Non-Current Liabilities:
Note payable, net of current portion 523 -
--------- ---------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.01 par value, 50,000,000
shares authorized; 12,441,617 and 12,432,667
issued and outstanding, respectively 125 125
Additional paid-in capital 45,195 45,121
Unrealized gain on short-term investments 70 66
Accumulated deficit (21,864) (13,794)
--------- ---------
Total shareholders' equity 23,526 31,518
--------- ---------
Total liabilities and shareholders' equity $ 25,691 $ 32,841
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(In thousands, except per share amounts)
Year Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Revenue:
Product sales and research testing services $ 2,860 $ 1,830 $ 1,152
Research and development fees 1,087 1,495 630
-----------------------------------
Total revenues 3,947 3,325 1,782
-----------------------------------
Operating Expenses:
Costs of products sold 926 603 517
Research and development 3,163 3,200 3,308
Selling, general and administrative 9,201 6,583 2,222
-----------------------------------
Total operating expenses 13,290 10,386 6,047
-----------------------------------
Loss from operations (9,343) (7,061) (4,265)
Other Income (Expense):
Interest income 1,317 1,684 194
Interest expense (44) - -
-----------------------------------
Net loss $ (8,070) $ (5,377) $ (4,071)
===================================
Net loss per common and common equivalent share $ (.65) $ (.45) $ (.47)
-----------------------------------
Weighted average number of common and common
equivalent shares outstanding 12,441 11,929 8,737
-----------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In thousands)
Year Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (8,070) $ (5,377) $ (4,071)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 504 295 153
Compensation expense from stock awards and grants 33 40 84
Decrease (increase) in receivables 554 (1,318) (37)
Decrease (increase) in inventory 83 (161) 19
Increase in other current assets (61) (15) (45)
Increase in accounts payable and accrued expenses 170 511 465
Loss on disposal of property, plant and equipment - - 5
------------------------------------
Net cash used in operating activities (6,787) (6,025) (3,427)
------------------------------------
Cash Flows from Investing Activities:
Purchases of short-term investments (22,958) (52,521) (7,249)
Proceeds from sales and maturities of short-term investments 24,575 32,996 10,288
Purchases of property, plant and equipment (495) (1,746) (574)
Long-term investments - (500) (232)
------------------------------------
Net cash provided by (used in) investing activities 1,122 (21,771) 2,233
------------------------------------
Cash Flows from Financing Activities:
Net proceeds from issuance of common stock
and exercise of stock options 41 32,166 225
Deferred offering costs - - (240)
Proceeds from borrowings on note payable 746 - -
Payments on note payable (74) - -
Proceeds from stock subscription payment - 165 -
------------------------------------
Net cash provided by (used in) financing activities 713 32,331 (15)
------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (4,952) 4,535 (1,209)
Cash and Cash Equivalents, beginning of period 6,241 1,706 2,915
------------------------------------
Cash and Cash Equivalents, end of period $ 1,289 $ 6,241 $ 1,706
====================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Unrealized
Preferred Stock Common Stock Additional Gain on Stock Total
Paid-In Short-term Subscriptions Accumulated Shareholders'
Shares Amount Shares Amount Capital Investments Receivable Deficit Equity
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $1,059 $ 10 $2,720 $ 27 $ 12,934 $ - $(165) $ (4,346) $ 8,460
Issuance of common stock
in exchange for license
granted - February 10,
1994 ($5.00 per share) - - 5 - 25 - - - 25
Compensation expense
for stock option grants - - - - 59 - - - 59
Stock options and
warrants exercised - - 286 3 222 - - - 225
Net loss - - - - - - - (4,071) (4,071)
----------------------------------------------------------------------------------------------------
Balance, December 31, 1994 1,059 10 3,011 30 13,240 - (165) (8,417) 4,698
Sale of common stock
in initial public
offering and conversion
of preferred stock (1,059) (10) 9,153 92 31,468 - - - 31,550
Compensation expense
for stock option
grants - - - - 40 - - - 40
Stock options and
warrants exercised - - 269 3 373 - - - 376
Payment for subscription
receivable - - - - - - 165 - 165
Unrealized gain on
short-term investments - - - - - 66 - - 66
Net loss - - - - - - - (5,377) (5,377)
----------------------------------------------------------------------------------------------------
Balance, December 31, 1995 - - 12,433 125 45,121 66 - (13,794) 31,518
Compensation expense
for stock option grants - - - - 33 - - - 33
Stock options exercised - - 9 - 41 - - - 41
Unrealized gain on
short-term investments - - - - - 4 - - 4
Net loss - - - - - - - (8,070) (8,070)
----------------------------------------------------------------------------------------------------
Balance, December 31, 1996 - $ - $12,442 $125 $ 45,195 $ 70 $ - $ (21,864) $ 23,526
====================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Ostex International, Inc. (the "Company") is engaged in the discovery,
development and commercialization of diagnostics and therapeutics for diseases
of the skeleton and connective tissues. The Company believes its lead product,
the Osteomark assay, incorporates breakthrough technology in the area of bone
resorption measurement. Ostex has formed collaborative relationships with a
number of leading diagnostic and pharmaceutical companies to aid in the
commercialization of the Osteomark test.
The Company markets the Osteomark assay through distributors and its own sales
force. While the United States has been the Company's principal market, an
increasing percentage of the Company's sales are overseas, primarily in Europe.
The Company was incorporated in the state of Washington on May 11, 1989 and
completed its initial public offering ("IPO") of common stock in February 1995.
Prior to the year ended December 31, 1995, the Company was considered to be in
the development stage for financial reporting purposes.
ESTIMATES AND UNCERTAINTIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities. Actual results could
differ from those estimates.
REVENUE RECOGNITION
License and research and development fees are recognized when the related
contract is signed and upon attainment of the agreed-upon milestones. Research
testing fees are recognized when the services are substantially complete.
Product sales are recognized upon shipment.
<PAGE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and
depreciated on the straight-line method over the estimated useful life of the
asset. Estimated lives range from five to 10 years. Depreciation expense charged
to operations during 1996, 1995 and 1994 was $502,000, $294,000 and $153,000,
respectively.
SHORT-TERM INVESTMENTS
The Company considers all of its investments as "available
for sale," reporting them at fair market value with unrealized gains and losses
included in Shareholders' Equity. Realized gains and losses and declines in
value of securities judged to be other-than-temporary are included in income.
INVENTORY
Inventory consists principally of raw materials and finished goods. Inventories
are stated at the lower of cost (first-in, first-out) or market.
STATEMENTS OF CASH FLOWS
For the purpose of the statements of cash flows, the Company considers all
highly liquid debt instruments with a maturity of three months or less when
purchased to be cash equivalents. The carrying amount approximates fair value
due to the short maturity of these instruments.
NET LOSS PER COMMON AND COMMON
EQUIVALENT SHARE
For the years ended December 31, 1996 and 1995, net loss per common and common
equivalent share was based on the weighted average number of common shares
outstanding during each period. The 1994 net loss per share computation assumes
all series of convertible preferred stock outstanding at December 31, 1994 had
been converted to common stock as of January 1, 1994. The actual conversion
occurred in 1995 in connection with the completion of the Company's IPO. Common
stock equivalents in 1994 include shares issuable upon the exercise of
outstanding stock options or warrants granted within one year of the IPO.
ADVERTISING
The production costs of advertising are expensed as incurred.
<PAGE>
NOTE 2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1996 and 1995, consisted of the
following (in thousands):
1996 1995
Leasehold improvements $ 1,463 $ 1,346
Laboratory and manufacturing
equipment 1,198 1,045
Computers and office equipment 912 687
-----------------
3,573 3,078
Accumulated depreciation (1,099) (597)
-----------------
Net property, plant and equipment $ 2,474 $ 2,481
=================
NOTE 3. SHORT-TERM INVESTMENTS
The Company's short-term investments at December 31, 1996 and 1995, consisted of
the following (in thousands):
1996 1995
United States treasury obligations $ 8,807 $ 15,082
Federal agency obligations and
discount notes 7,636 2,626
Corporate and municipal bonds 3,427 1,815
Commercial paper - 1,964
Unrealized gain on short-term
investments 70 66
------------------
$ 19,940 $ 21,553
==================
The maturity of all classes of the Company's short-term investments was less
than two years at December 31, 1996 and 1995.
NOTE 4. OTHER ASSETS
Other assets include investments totaling $637,000 in preferred stock of Metrika
Laboratories, Inc., a privately held medical device company in the development
stage. The investment represents an ownership interest of less than 10% and is
recorded in the accompanying financial statements at cost.
<PAGE>
NOTE 5. ACCRUED EXPENSES
Accrued expenses at December 31, 1996 and 1995, consisted of the following (in
thousands):
1996 1995
Business taxes payable $ 127 $ 19
Accrued wages, benefits
and payroll taxes 107 149
---------------
$ 234 $ 168
===============
NOTE 6. NOTE PAYABLE
In July 1996, the Company borrowed $746,000 under a secured promissory note
agreement. The note agreement allows the Company to make additional borrowings
up to a maximum of $1,500,000 for future capital needs. The note is secured by
real property and equipment and is payable in equal monthly installments of
principal and interest of $19,784. The interest rate is fixed at 12.5% for
amounts owed as of December 31, 1996. Interest on any future borrowings will be
based on the three-year U.S. Treasury Note at the time of securing the loan,
plus a margin of 5.80%. During 1996, the Company made $44,000 in payments for
interest.
Minimum principal payments are as follows (in thousands):
1997 $ 149
1998 183
1999 207
2000 133
-----
$ 672
=====
NOTE 7. SHAREHOLDERS' EQUITY
INITIAL PUBLIC OFFERING
On January 25, 1995, the Company completed its initial public offering of
3,645,642 shares of common stock at
$9.50 per share for proceeds of $34,634,000 less underwriting discounts,
commissions and other offering costs approximating $3,085,000. Convertible
preferred stock outstanding immediately prior to the closing was converted into
5,506,464 shares of common stock.
<PAGE>
NOTE 7. SHAREHOLDERS' EQUITY (continued)
STOCK OPTION PLANS
The Company has an Amended and Restated Stock Option Plan, which was originally
adopted in 1989 (the "Old Plan"), under which a total of 1,653,000 shares of
common stock are reserved for issuance. As of December 31, 1996, 479,000 shares
have been exercised, and 1,174,000 shares are subject to outstanding options at
exercise prices ranging from $.08 to $5.00 per share with a remaining
weighted-average contractual life of six years. No further options may be
granted by the Company under the Old Plan, which is administered by the
Compensation Committee of the Board of Directors. These options vest over
periods of three to four years. Total options vested under the Old Plan were
856,000, 603,000 and 707,500 shares, respectively, as of December 31, 1996, 1995
and 1994. The weighted-average exercise price of these vested options was $3.68
as of December 31, 1996. All options granted under the Old Plan expire either 90
days after termination of employment or 10 years from the date of grant,
whichever occurs first.
Prior to the Company's IPO, the Company granted nonqualified options whose
exercise price was below the estimated fair market value of the Company's common
stock on the dates of grant. The difference between the grant price and the
estimated fair market value on the dates of grant was recognized as compensation
expense over the vesting period of the option. Total compensation expense
recognized was approximately $33,000, $40,000 and $59,000 in 1996, 1995 and
1994, respectively. Compensation expense to be recognized in future periods
related to these grants was approximately $6,000 as of December 31, 1996.
In June 1994, the Company adopted its 1994 Stock Option Plan (the "1994 Plan")
and its Directors' Nonqualified Stock Option Plan (the "Directors' Plan"). An
aggregate of 1,000,000 shares of common stock were collectively reserved for
issuance under these plans. As of December 31, 1996, options for 1,000 shares
had been exercised, and 654,000 shares are subject to outstanding options at
exercise prices ranging from $8.75 to $17.13 per share with a remaining
weighted-average contractual life of nine years.
All options granted under the 1994 Plan and Directors' Plan expire either 90
days after termination of employment or 10 years from the date of grant,
whichever occurs first. All options have been granted at the market value of the
common stock on the date of grant and vest over three to four years. Total
options vested under the 1994 Plan and Directors' Plan were 58,000 at December
31, 1996 and none in prior years. The weighted-average exercise price of vested
options was $9.23 as of December 31, 1996.
Information relating to activity under the Company's stock option plans is as
follows:
Weighted
Shares Average
Subject to Exercise
Option Price
Balance, December 31, 1993 973,750 $ 1.26
Granted 776,750 5.00
Exercised (192,185) .80
Canceled (13,125) 4.33
------------------------
Balance, December 31, 1994 1,545,190 3.19
Granted 245,500 9.09
Exercised (268,786) 1.38
Canceled (90,625) 3.56
------------------------
Balance, December 31, 1995 1,431,279 4.51
Granted 446,000 12.30
Exercised (8,950) 4.56
Canceled (40,703) 9.64
------------------------
Balance, December 31, 1996 1,827,626 $ 6.61
========================
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). Accordingly, no compensation cost has been recognized for stock
options issued at market value on the date of grant. Had compensation cost for
the Company's stock option plans been determined based on the fair value of the
options at the grant date for awards in 1996 and 1995 consistent with the
provisions of SFAS No. 123, the Company's net loss and net loss per common
equivalent share would have been increased to the pro forma amounts indicated
below (in thousands):
1996 1995
Net loss - as reported $ (8,070) $ (5,377)
Net loss - pro forma $ (8,729) $ (5,528)
Net loss per common and common
equivalent share - as reported $ (.65) $ (.45)
Net loss per common and common
equivalent share - pro forma $ (.70) $ (.46)
The fair value of each option grant is established on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995: zero dividend yield; expected
volatility of 59%; risk-free interest rates varying by grant date between 5.8%
and 6.5%; and expected lives of five years. Because the SFAS No. 123 method of
accounting has not been applied to options granted prior to January 1, 1995, the
resulting pro forma compensation cost may not be representative of that to be
expected in future years. The weighted-average grant date fair value of options
granted during 1996 and 1995 according to the Black-Scholes option pricing model
was $7.00 and $5.11.
<PAGE>
NOTE 8. LICENSING AGREEMENTS
Under the Company's worldwide exclusive license agreements with the Washington
Research Foundation ("WRF") for the Urinary Assay for Measuring Bone Resorption
and Osteoclast Colony Stimulating Factor ("O-CSF") technologies, the Company has
the right to manufacture and market these technologies developed from certain
research by the Univer-sity of Washington ("UW"). As consideration for the
licenses acquired and for the attainment of certain milestones, the Company paid
WRF certain nonrefundable fees and issued common stock to the WRF and UW. In
addition, future cash payments and common stock grants may be due upon
attainment of certain other milestones. Under the O-CSF license, both cash
consideration paid and the market value of shares issued shall not exceed
$500,000 for each therapeutic licensed product and $150,000 for each diagnostic
licensed product. All legal costs incurred by WRF in connection with the filing,
prosecution and maintenance of certain defined patent rights, will be paid by
the Company. During 1996, 1995 and 1994, the Company incurred approximately
$154,000, $379,000 and $220,000 of license fees, including the value of stock
grants, and patent legal expenses. All license and legal fees and stock grants
have been expensed as research and development costs. The Company is obligated
to pay WRF royalties on net sales of any licensed products.
NOTE 9. REVENUES
The Company has a license agreement and a research and development agreement
with Mochida. Under the license agreement, the Company granted exclusive
manufacturing, marketing and distribution rights to certain of the Company's
products in Japan, and through December 31, 1996 had earned $2,000,000 in
connection with this agreement. Under the research and development agreement,
the Company earned fees of $1,080,000, $550,000 and $200,000 during 1996, 1995
and 1994, respectively. As of December 31, 1996, the Company had received all
milestone payments contemplated by the research and development agreement.
Mochida has an option to license the Company's NTx serum assay under
development.
During 1995, the Company entered into research, development, license and supply
agreements with Johnson & Johnson under which Ostex earned $1,000,000 during
1995. These agreements grant Johnson & Johnson a license to manufacture, sell
and distribute certain products utilizing Ostex's bone resorption technology.
Ostex will also receive royalties on Johnson & Johnson sales of products
incorporating the Ostex technology.
NOTE 10. RELATED PARTY TRANSACTIONS
LEGAL AND CONSULTING SERVICES
The Company's chairman and chief executive officer is a nonpracticing director
and shareholder in a law firm that provides legal services to the Company.
During 1996, 1995 and 1994, the Company paid approximately $215,000, $386,000
and $516,000, respectively, for these services. The 1995 and 1994 amounts
include cost of services rendered in connection with raising equity capital and,
accordingly, have been recorded as a charge to shareholders' equity.
RESEARCH AGREEMENTS
The Company has entered into two research agreements with the University of
Washington which extend through March 31, 1999. Total expense was $304,000,
$185,000 and $316,000 during 1996, 1995 and 1994, respectively. Future minimum
payments under these agreements as of December 31, 1996 are as follows (in
thousands):
1997 $ 535
1998 469
1999 200
-------
$ 1,204
=======
NOTE 11. COMMITMENTS AND CONTINGENCIES
LEASES
The Company has entered into certain noncancelable operating leases for office
space and equipment. Future minimum payments as of December 31, 1996 under these
leases are as follows (in thousands):
1997 $ 564
1998 490
1999 490
2000 484
2001 491
-------
$ 2,519
=======
Total rent expense was approximately $538,000, $374,000 and $251,000 in 1996,
1995 and 1994, respectively.
<PAGE>
NOTE 11. COMMITMENTS AND CONTINGENCIES (continued)
LITIGATION
On August 25, 1995, the Company commenced an arbitration proceeding against
Boehringer Mannheim for breach of contract. The hearing before a panel of the
American Arbitration Association (the "Panel") was held in Seattle on September
3-11, 1996. On January 28, 1997, Ostex received a final award from the Panel.
The Panel's award instructs Boehringer Mannheim to pay Ostex $5,720,000 in
damages for lost profits, and $700,000 to reimburse Ostex for part of its
attorneys' fees and expenses. The award provides that interest will be paid on
such amounts, at the rate of 8% per annum, to the extent that such amounts
remain unpaid 30 days from the January 28, 1997 date of the award. The Panel
determined that Boehringer Mannheim breached a license agreement by failing to
use its best efforts to effectively promote the Osteomark MTP kits. Boehringer
Mannheim's counterclaims against Ostex were denied by the Panel. Boehringer
Mannheim has indicated in post-arbitration motions that it plans to appeal the
award. Accordingly, the award has not been reflected in the Company's financial
statements as of December 31, 1996.
In June 1996, the Company filed an action in the United States District Court
for the Western District of Washington against Osteometer Biotech A/S, a
biotechnology company based in Denmark, and Diagnostic Systems Laboratories,
Inc., for patent infringement. The Company believes Osteometer's bone resorption
immunoassay incorporates technology which infringes on patented Ostex
technology. In September 1996, the defendants filed a response denying
infringement and counterclaimed that Ostex's patent is invalid and
unenforceable. The lawsuit is scheduled for trial commencing December 2, 1997.
At the present time management cannot estimate the outcome of the infringement
action.
NOTE 12. FEDERAL INCOME TAXES
Deferred taxes are determined using an asset and liability approach. The Company
has incurred operating losses |since inception and accordingly has determined
that the net deferred tax assets do not satisfy recognition criteria. Therefore,
a valuation allowance has been recorded against the net deferred tax assets and
no tax benefit has been recorded in the accompanying statements of operations.
The change in the valuation allowance during 1996 and 1995 was $2,755,000 and
$3,475,000, respectively. The Company's deferred tax assets (liabilities) at
December 31, 1996 and 1995 are as follows (in thousands):
1996 1995
Net operating loss carryforward $ 9,448 $ 6,576
Research and experimentation
credits 62 135
Excess of market value over the
exercise price of common
stock options 77 65
Section 195 start-up expenses 52 151
Amortization and depreciation (44) (64)
Other 68 45
--------------------
Gross deferred tax asset 9,663 6,908
Valuation allowance (9,663) (6,908)
--------------------
Net deferred tax asset $ - $ -
====================
At December 31, 1996, the Company had tax net operating loss carryforwards of
$26,994,000, which will begin to expire in 2004.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Ostex International, Inc.:
We have audited the accompanying balance sheets of Ostex International, Inc. (a
Washington corporation) as of December 31, 1996 and 1995, and the related
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ostex International, Inc. as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
/S/ Athur Andersen L.L.P.
Seattle, Washington,
February 12, 1997
<PAGE>
CORPORATE DIRECTORY
EXECUTIVE OFFICERS AND DIRECTORS
H. RAYMOND CAIRNCROSS
Chairman of the Board of Directors, Co-Founder, and Chief Executive Officer
ROBERT J. GLASER
Director, President, and Chief Operating Officer
ROBERT M. LITTAUER
Senior Vice President, Finance and Administration
JEFFREY J. MILLER, PH.D., J.D.
Senior Vice President, Corporate Development,Secretary
THOMAS F. BRODERICK
Vice President, Intellectual Property
NANCY J.S. MALLINAK
Vice President, Regulatory and Clinical Affairs
WILLIAM K. STRELKE
Vice President, Sales and Marketing
JOHN WYNNE
Vice President, European Operation
THOMAS J. CABLE
Director;
Partner and Co-Founder,
Cable & Howse Ventures, Inc.
DAVID R. EYRE, PH.D.
Director and Co-Founder;
Burgess Chair of Orthopedic Research,
University of Washington
GILBERT S. OMENN, M.D., PH.D.
Director;
Dean, School of Public Health, University of Washington
GREGORY D. PHELPS
Director;
Senior Vice President,
Genzyme Corporation
SCIENTIFIC ADVISORY BOARD
CHARLES H. CHESNUT III, M.D.
Chair, Ostex Scientific Advisory Board;
Professor of Medicine and Radiology,
Professor of Nutritional Sciences,
Adjunct Professor of Orthopedics,
University of Washington
ELIZABETH BARRETT-CONNOR, M.D.
Professor and Chair,
Family and Preventive Medicine,
Director, Division of Epidemiology,
University of California, San Diego
DAVID R. EYRE, PH.D.
Burgess Chair of Orthopedic Research, Adjunct Professor of Biochemistry and
Oral Biology, Director, Osteoporosis Research Laboratories, University of
Washington
HERBERT A. FLEISCH, PH.D.
Professor and Chairman, Department of Pathophysiology, University of Berne,
Berne, Switzerland
C. CONRAD JOHNSTON, JR. M.D.
Professor of Medicine, Indiana School of Medicine, Director, Division of
Endocrinology and Metabolism, Indiana University Medical Center
HOWARD JUDD, M.D.
Chairman, Department of Obstetrics and Gynecology, Olive View/UCLA Medical
Center; Professor, Department of Obstetrics and Gynecology, Chief, Division of
Reproductive Endocrinology, UCLA Clinical Center for Women's Health Initiative
ROBERT LINDSAY, M.D., PH.D.
Chief of Internal Medicine, Helen Hayes Hospital, New York; President,
National Osteoporosis Foundation
ALLAN LIPTON
Professor, Departments of Medicine; Chief, Division of Oncology, The Milton
S. Hershey Medical Center, The Pennsylvania State University
SOCRATES PAPAPOULOS, M.D.
Associate Professor of Medicine, Director of Bone and Mineral Research,
Department of Endocrinology and Metabolism, University of Leiden Medical School,
Leiden, The Netherlands
VERONICA RAVNIKAR, M.D.
Professor of Obstetrics and Gynecology, Director of Reproductive
Endocrinology and Infertility, University of Massachusetts Medical Center
FREDERICK R. SINGER, M.D.
Medical Director, Osteoporosis/Metabolic Bone Disease Program, St. Johns
Hospital and Health Center; Professor of Medicine in Residence, UCLA
<PAGE>
CORPORATE HEADQUARTERS
OSTEX INTERNATIONAL, INC.
2203 Airport Way South, Suite 400
Seattle, WA 98134-9967
Tel: (206) 292-8082
Fax: (206) 292-8625
INDEPENDENT ACCOUNTANTS
ARTHUR ANDERSEN LLP
801 Second Avenue, Suite 800
Seattle, WA 98104
LEGAL COUNSEL
CAIRNCROSS & HEMPELMANN
701 Fifth Avenue, 70th Floor
Seattle, WA 98104
TRANSFER AGENT AND REGISTRAR
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
520 Pike Street, Suite 1220
Seattle, WA 98101
INVESTOR RELATIONS
LIPPERT/HEILSHORN & ASSOCIATES 300 Montgomery Street, Suite 1140 San Francisco,
CA 94104
SEC FORM 10-K
A copy of the Company's annual report to the Securities and Exchange Commission
on Form 10-K is available without charge upon written request to Investor
Relations at the Company's headquarters.
SHAREHOLDERS OF RECORD
As of December 31, 1996, the Company had 156 registered shareholders of record
of its common stock.
SHAREHOLDER INQUIRIES
Communications concerning transfer requirements, lost certificates and changes
of address should be directed to the Transfer Agent. For general information
about the Company and its activities, contact the Investor Relations Department
at Company headquarters.
INFORMATION SERVICE
For timely information about Ostex, news releases are available via facsimile on
the Company's News-on-Demand service by calling (800) 356-8061 or on the World
Wide Web at http://www.hnt.com/bizwire/cnn/451.htm.
PRICE RANGE OF COMMON STOCK
The following table lists the high and low trading places for the Company's
common stock as reported on the Nasdaq National Market System.
1996 High Low
1st quarter $ 20.00 $ 12.25
2nd quarter 16.25 9.125
3rd quarter 11.50 6.625
4th quarter 8.75 5.25
------------------------------------
1995 High Low
1st quarter $ 10.88 $ 9.375
(from January 25)
2nd quarter 23.50 8.00
3rd quarter 23.50 16.75
4th quarter 25.00 16.00
The Company's common stock is traded on the Nasdaq National Market System under
the symbol OSTX. No dividends have been paid on the common stock.
ANNUAL MEETING
The Annual Meeting of Shareholders will be held Monday, June 2, 1997 at 9:00 am
at the Bellevue Athletic Club, Bellevue, WA.
OSTEX WEBSITE
The Ostex Website is currently under development. For more information about
Ostex, visit us at http://www.ostex.com.
Osteomark and Ostex are registered trademarks of Ostex International, Inc.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-k into the Company's previously filed
Registration Statement No. 333-4802.
/S/ Arthur Andersen L.L.P
March 26, 1997
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