-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qsthqi988JZXEhKOMBq2DqS90ODT3oM4aDZGZLZ4LjC5bTwJcNQq0mS/5dDAlsn9 GQAqyjgMZbZWggBg6GoT+A== 0000912057-97-017705.txt : 19970515 0000912057-97-017705.hdr.sgml : 19970515 ACCESSION NUMBER: 0000912057-97-017705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: METRA BIOSYSTEMS INC CENTRAL INDEX KEY: 0000888999 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 330408436 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26234 FILM NUMBER: 97605732 BUSINESS ADDRESS: STREET 1: 265 N WHISMAN RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 4159039100 MAIL ADDRESS: STREET 1: 265 NORTH WHISMAN RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 940433911 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 METRA BIOSYSTEMS, INC. ---------------------- (Exact Name of Registrant as specified in its charter) 0-26234 ---------------------- Commission File Number CALIFORNIA 33-0408436 - -------------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 265 NORTH WHISMAN ROAD, MOUNTAIN VIEW, CA 94043-3911 ---------------------------------------------------- (Address of Registrant's principal executive offices) (415) 903-9100 -------------------------------------------------- (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [ X ]Yes [ ] No. The number of shares of the Registrant's common stock outstanding as of April 30, 1997 was 12,611,938. METRA BIOSYSTEMS, INC. AND SUBSIDIARIES INDEX ----- PAGE NO. -------- PART I. FINANCIAL INFORMATION 3 ITEM 1. FINANCIAL STATEMENTS 3 CONSOLIDATED CONDENSED BALANCE SHEETS MARCH 31, 1997 AND JUNE 30, 1996 3 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996 4 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED MARCH 31, 1997 AND 1996 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6-8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF OPERATIONS AND FACTORS THAT MAY AFFECT FUTURE RESULTS 9-11 PART II. OTHER INFORMATION 12 ITEM 1. LEGAL PROCEEDINGS 12 ITEM 2. CHANGES IN SECURITIES 12 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS 12 ITEM 5. OTHER INFORMATION 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURE 13 2 PART I. FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS METRA BIOSYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS) ASSETS MARCH 31, JUNE 30, 1997 1996 ----------- -------- (Unaudited) (A) Current assets: Cash and cash equivalents $ 15,916 $ 19,217 Securities available-for-sale, at market 13,386 26,283 Accounts receivable, net 1,342 1,266 Interest receivable 275 578 Inventories 1,052 1,040 Prepaid expenses and other current assets 200 249 -------- -------- Total current assets 32,171 48,633 Property and equipment, net 4,265 4,314 Securities available-for-sale, at market 12,027 6,747 Other assets, net 243 499 -------- -------- $ 48,706 $ 60,193 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of capital lease obligations $ 552 $ 407 Accounts payable 737 2,185 Accrued expenses 2,069 1,810 -------- -------- Total current liabilities 3,358 4,402 Capital lease obligations 1,721 1,367 -------- -------- Total liabilities 5,079 5,769 Shareholders Equity: Preferred stock - - Common stock 13 13 Capital in excess of par value of common stock 94,609 94,539 Notes receivable from shareholders (40) (90) Deferred compensation (50) (79) Foreign currency translation adjustment (12) 13 Unrealized loss on securities available-for-sale (93) (83) Accumulated deficit (50,800) (39,889) -------- -------- Total shareholders' equity 43,627 54,424 -------- -------- $ 48,706 $ 60,193 -------- -------- -------- -------- (A) Derived from audited financial statements at June 30, 1996 See accompanying notes to consolidated condensed financial statements. 3 METRA BIOSYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ----------------------- --------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Product sales $ 1,710 $ 1,062 $ 4,392 $ 2,836 Partner revenues 62 178 274 1,854 ---------- ---------- --------- --------- Total revenues 1,772 1,240 4,666 4,690 Operating expenses: Cost of product sales 741 764 3,023 2,152 Research and development 945 1,047 4,341 2,794 Sales and marketing 1,738 2,039 7,147 4,685 General and administrative 687 859 2,771 2,061 Acquired in-process research and development -- 11,291 -- 11,291 ---------- ---------- --------- --------- Total operating expenses 4,111 16,000 17,282 22,983 ---------- ---------- --------- --------- Loss from operations (2,339) (14,760) (12,616) (18,293) Interest income, net 500 342 1,705 1,202 ---------- ---------- --------- --------- Net loss $ (1,839) $ (14,418) $ (10,911) $ (17,091) ---------- ---------- --------- --------- ---------- ---------- --------- --------- Net loss per share $ (0.15) $ (1.40) $ (0.87) $ (1.73) ---------- ---------- --------- --------- ---------- ---------- --------- --------- Weighted average shares used to compute net loss per share 12,614,513 10,264,400 12,607,177 9,862,216 ---------- ---------- --------- --------- ---------- ---------- --------- ---------
See accompanying notes to consolidated condensed financial statements. 4 METRA BIOSYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED MARCH 31, ------------------------- 1997 1996 ---- ---- Increase (decrease) in Cash and Cash Equivalents: Net cash used in operating activities $ (10,644) $ (7,372) Cash flows from investing activities: Purchases of investment securities (18,284) (30,430) Maturities and sales of investment securities 25,891 9,851 Purchases of property and equipment (883) (3,085) Repayment of notes receivable from shareholders 50 59 --------- --------- Net cash (used in) provided by investing activities 6,774 (23,605) Cash flows from financing activities: Proceeds from capital leases 848 1,922 Repayments of capital leases (349) (146) Proceeds from issuance of common stock 70 32,222 --------- --------- Net cash provided by financing activities 569 33,998 --------- --------- Net increase (decrease) in cash and cash equivalents (3,301) 3,021 Cash and cash equivalents at beginning of period 19,217 2,317 --------- --------- Cash and cash equivalents at end of period $ 15,916 $ 5,338 --------- --------- --------- --------- Supplemental disclosure of cash flow information: Cash paid for interest $ 154 $ 56 Supplemental disclosure of noncash investing and financing activities - conversion of mandatorily redeemable preferred stock and common stock warrant to common stock $ -- $ 23,260
See accompanying notes to consolidated condensed financial statements. 5 METRA BIOSYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 AND 1996 (UNAUDITED) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE COMPANY Metra Biosystems, Inc. ("Metra" or the "Company") was incorporated on March 21, 1990. Since the commencement of operations the Company has been engaged in the development and commercialization of diagnostic products for the detection and management of metabolic bone diseases and disorders. In December 1993, the Company incorporated a wholly-owned subsidiary, Metra Biosystems (U.K.) Ltd., that is responsible for the commercialization of Metra's products in Europe. In October 1995, a branch office of Metra Biosystems (U.K.) Ltd. was opened in Milan, Italy. In January 1997, the Company received a registration number to do business as Metra Biosystems GmbH, a wholly-owned subsidiary located in Germany. In January 1996, the Company acquired Osteo Sciences Corporation, now a wholly-owned subsidiary, which is responsible for research and development of the Company's ultrasound technology. The accompanying unaudited consolidated condensed financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. Operating results for the three and nine months ended March 31, 1997 are not necessarily indicative of the results to be expected for the year. Certain information in footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to such rules and regulations. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto contained in the Company's Annual Report on Form 10-K, as amended on Form 10-K/A, for the year ended June 30, 1996, previously filed with the Securities and Exchange Commission. NET LOSS PER SHARE Net loss per share has been calculated based on the weighted average number of shares outstanding. Common equivalent shares from stock options and warrants have been excluded as their effect is anti-dilutive. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. There will be no impact on the Company from the adoption of Statement No. 128. 6 2. INVESTMENT SECURITIES Investment securities which are classified as available-for-sale at March 31, 1997 and June 30, 1996 include the following: March 31, June 30, 1997 1996 -------- -------- (in thousands) Fair Value U.S. Government securities $ 7,496 $ 8,516 Mortgage-backed securities 6,208 12,132 Corporate bonds 11,506 12,174 -------- -------- 25,210 32,822 Marketable equity securities 203 208 -------- -------- $ 25,413 $ 33,030 -------- -------- -------- -------- Cost U.S. Government securities $ 7,499 $ 8,527 Mortgage-backed securities 6,219 12,148 Corporate bonds 11,538 12,188 -------- -------- 25,256 32,863 Marketable equity securities 250 250 -------- -------- $ 25,506 $ 33,113 -------- -------- -------- -------- The cost and estimated fair value of securities available-for-sale as of March 31, 1997 by contractual maturity, consisted of the following: Adjusted Fair Cost Value -------- -------- Due in one year or less $ 8,476 $ 8,470 Due in one to four years 10,811 10,735 -------- -------- 19,287 19,205 Mortgage-backed securities 6,219 6,208 -------- -------- $ 25,506 $ 25,413 -------- -------- -------- -------- 3. INVENTORIES Inventories consist of the following: March 31, June 30, 1997 1996 --------- --------- (in thousands) Raw materials $ 290 $ 216 Work-in-process 187 -- Finished goods 575 824 ------- ------- $ 1,052 $ 1,040 ------- ------- ------- ------- 4. LEASE COMMITMENTS In December 1996, the Company entered into a leasing arrangement to finance $848,000 of equipment. As of March 31, 1997, all of the lease line had been utilized. The lease is classified as a capital lease and payments on the capital lease obligation extend to fiscal year 2001. The leasing agreement includes negative covenants which require an irrevocable letter of credit in the event of non-compliance with the covenants. 7 5. ACQUISITION - OSTEO SCIENCES CORPORATION On January 31, 1996, the Company purchased Osteo Sciences Corporation ("Osteo") for 541,072 shares of Metra Common Stock valued at approximately $9,672,000 and options to purchase 19,343 shares of Metra Common Stock valued at approximately $345,000. Additional costs associated with the transaction along with net liabilities assumed were approximately $1,274,000. The transaction was recorded using the purchase method of accounting and resulted in a one-time write-off of $11,291,000 for acquired in-process research and development during the quarter ended March 31, 1996. 6. SUBSEQUENT EVENT In April 1997 the Company entered into a Co-Promotion Agreement with Berlex Laboratories, Inc. ("Berlex") pursuant to which the Company will compensate Berlex to conduct certain promotional activities and will pay Berlex commissions based upon increased sales of the Company's products. The Company also issued Berlex a warrant to purchase 413,233 shares of the Company's Common Stock at a purchase price of $4.84 per share. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND FACTORS THAT MAY AFFECT FUTURE RESULTS RESULTS OF OPERATIONS THREE AND NINE MONTHS ENDED MARCH 31, 1997 AND 1996 REVENUES Product sales increased to $1,710,000 and $4,392,000 for the three and nine months ended March 31,1997 as compared to $1,062,000 and $2,836,000, an increase of 61% and 55%, respectively, for the corresponding periods of fiscal 1996. The growth of product sales in the third quarter and first nine months of fiscal 1997 over the comparable prior periods of fiscal 1996 was principally due to an increased awareness and market acceptance of the Company's products. The primary factors related to this was the establishment of the Company's Italian sales office in October 1995, and increased market awareness in the U.S. from the promotion of the Company's key products following the U.S. Food and Drug Administration's clearance of these products for clinical use in late 1995. Partner revenues were $62,000 for the third quarter and $274,000 for the first nine months of fiscal 1997, compared to $178,000 and $1,854,000 for the corresponding periods of fiscal 1996, representing decreases of 65% and 85%, respectively. The decrease in partner revenues for the quarter and nine month period is primarily due to non-recurring milestone payments from corporate partners which were included in partner revenue in the prior fiscal year. PRODUCT COSTS AND EXPENSES Cost of product sales were $741,000 for the third quarter and $3,023,000 for the first nine months of fiscal 1997, as compared to $764,000 and $2,152,000 from the corresponding periods in the prior fiscal year. The decrease in the third quarter from the prior year was primarily related to improved product margins resulting from economies of scale and process improvements. For the nine month period, the increases in product costs are primarily the result of the product sales increases that have been realized over the corresponding periods in the prior years. Costs of product sales for the nine months of fiscal 1997 were 69% of product sales compared with 76% in fiscal 1996. The Company believes that the historical fluctuations in the cost of product sales were due to the initial production stages of several complex products and the subsequent investments in process improvements. Management believes that these investments will stabilize the quarterly fluctuations in the cost of product sales and may yield slight improvements in the product margin. Additional improvements can be realized but will be driven by the sales volume and mix that the Company is able to achieve. However, there can be no assurance that actual results will not be unfavorable in the foreseeable future. Research and development expenses for the third quarter and first nine months of fiscal 1997 were $945,000 and $4,341,000, respectively, compared to $1,047,000 and $2,794,000 from the corresponding periods in the prior fiscal year. The third quarter decrease of 10% from the prior year was a direct result of the cost containment efforts initiated late in the second quarter of fiscal year 1997. The year-to-year spending increases for the nine month period were related to increased product development and collaborative programs as well as the on-going research costs of the Company's ultrasound program which was initiated in January 1996 through the acquisition of Osteo Sciences Corporation. The Company believes that research and development expenses will show slight increases in the upcoming quarters. Sales and marketing expenses were $1,738,000 and $7,147,000 for the third quarter and first nine months of fiscal 1997, respectively, as compared to $2,039,000 and $4,685,000 from the corresponding periods in the prior fiscal year. The third quarter of fiscal 1996 marked the launch of broad based marketing promotional programs for the Company's clinical use of Pyrilinks-Registered Trademark--D. This included one-time expenses for programs such as literature development and advertising, which is the primary factor for the higher expenses in the third quarter of fiscal 1996 as compared to fiscal 1997. The increases for the nine month period are primarily attributable to increased 9 personnel costs, sales expenses associated with physician education programs, and spending increases in the international sales locations. The Company believes that sales and marketing expenses will increase in subsequent periods due to fees and potential commissions payable to Berlex Laboratories, Inc. ("Berlex") in connection with the Co-Promotion Agreement entered into between the Company and Berlex in April 1997. General and administrative expenses were $687,000 and $2,771,000 for the third quarter and first nine months of fiscal 1997, respectively, compared to $859,000 and $2,061,000 from the corresponding periods in the prior fiscal year. The decrease in the third quarter of fiscal 1997 is primarily due to recruiting expenses and expenses associated with the acquisition of Osteo incurred in the third quarter of fiscal 1996 that were not incurred in fiscal 1997. The increase for the nine month period is primarily due to increased personnel costs as well as additional legal and consulting expenses necessary to support the Company's expanded operations as compared with the same period in the prior fiscal year. NET INTEREST INCOME Net interest income was $500,000 and $1,705,000 for the third quarter and the first nine months of fiscal 1997, as compared to $342,000 and $1,202,000 from the corresponding periods in the prior fiscal year. The increase is primarily the result of increased cash resources available for investment resulting from the Company's follow-on offering in April 1996. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES The Company had cash, cash equivalents and investment securities of $41.3 million at March 31, 1997. The Company's use of cash in operating activities was $10.6 million for the nine months ended March 31, 1997 compared to $7.4 million for the corresponding period ended March 31, 1996. The increase in cash usage was primarily due to the increased net operating loss for the corresponding periods and, to a lesser extent, fluctuations in working capital. Net cash received from financing activities for the first nine months of fiscal 1997 was $569,000, which was primarily comprised of $848,000 of proceeds from a capital lease that was executed in December 1996 offset by $349,000 of repayments of existing capital leases. Net capital expenditures for the first nine months of fiscal 1997 were $883,000, compared to $3,085,000 for the corresponding period in fiscal 1996. This higher amount in 1996 was primarily due to leasehold improvements to a new facility in support of the Company's expanded operations in Mountain View, California. In April 1997 the Company entered into a Co-Promotion Agreement with Berlex under which the Company is obligated to pay Berlex a fee of $3,000,000 on December 31, 1997 in consideration of promotional services rendered by Berlex with respect to certain of the Company's products. In addition, future commitment fees in fiscal year 1999 and fiscal year 2000 will be paid to Berlex if specified minimum sales targets are achieved. The Company will use a portion of its existing cash resources to make such fee payments when and if they come due. The Company's future capital requirements depend upon, among other things, the pace of market acceptance of the Company's products, the costs of research and development programs, the funding of clinical and regulatory related studies, the expansion of marketing and selling activities, costs involved in filing, prosecuting, enforcing, and defending patent claims, and the time and costs associated with obtaining regulatory approvals for future products. Funds may also be used for investments in, or acquisitions of, complementary businesses, products or technologies, in expanding the Company's manufacturing capacity or in improving its existing facilities. Although the Company believes its current cash, cash equivalents and investment securities will be sufficient to meet the Company's operating expenses and capital requirements into fiscal 1999, the Company's future liquidity and capital requirements will depend on the factors noted above, among others. The Company may, however, seek additional equity or debt financing to fund further expansion of its manufacturing capacity, or to fund other projects or acquisitions. There can be no assurance that if it becomes necessary to raise additional capital, that such capital will be available on acceptable terms, if at all. 10 FACTORS THAT MAY AFFECT FUTURE RESULTS The Company commenced its marketing efforts in the United States upon receiving 510(k) clearance for its key products in late 1995, and does not anticipate significant revenues from clinical sales of its products in the United States unless and until the results of its medical education efforts are realized. Achieving increased sales growth and improved product margins depends upon increased awareness and acceptance of the Company's products among clinicians, the success of the Company's Co-Promotion Agreement with Berlex Laboratories, Inc., adequate levels of third-party reimbursement for clinical use of its diagnostic tests, the Company's ability to successfully launch new products, continued sales growth of the Company's manual test formats and successful market penetration of automated test formats by the Company's corporate partners to the extent that this substantially increases market demand versus conversion of existing manual kit business. There can be no assurance the Company can successfully achieve any of the above items in a timely manner or at all, and failure to do so could have a material adverse effect on the Company's business, financial condition and results of operations. DISCLOSURE PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 THE STATEMENTS CONTAINED IN THE REPORT ON FORM 10-Q THAT ARE NOT PURELY HISTORICAL ARE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACTION OF 1934, AS AMENDED INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S FUTURE PRODUCT DEVELOPMENT AND COMMERCIALIZATION, PRODUCT SALES AND OTHER REVENUES, MARKET OPPORTUNITIES AND ACCEPTANCE, BELIEFS, EXPECTATIONS, GOALS, FINANCIAL PERFORMANCE, AND FUTURE STRATEGIES, ALL OF WHICH ARE DEPENDENT ON CERTAIN RISKS AND UNCERTAINTIES THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THESE OR ANY OTHER FORWARD LOOKING STATEMENTS MADE BY OR ON BEHALF OF THE COMPANY. THESE RISKS AND UNCERTAINTIES INCLUDE THE UNCERTAINTY OF REALIZING INCREASED MARKET AWARENESS AND ACCEPTANCE FOR THE COMPANY'S PRODUCTS, THE SUCCESS OF THE COMPANY'S COLLABORATIVE RELATIONSHIPS, THE UNCERTAINTY OF OBTAINING ADEQUATE LEVELS OF THIRD-PARTY REIMBURSEMENT FOR CLINICAL USE OF THE COMPANY'S PRODUCTS, AND THE UNCERTAINTY AND VARIABILITY OF CONTINUING SALES GROWTH OF THE COMPANY'S PRODUCTS. FOR A MORE DETAILED DISCUSSION OF THESE RISKS, SEE THE RISK FACTORS LISTED IN THE COMPANY'S PROSPECTUS DATED APRIL 23, 1996 AND IN THE COMPANY'S ANNUAL REPORT ON FORM-10K FOR THE YEAR ENDED JUNE 30, 1996. 11 PART II. - OTHER INFORMATION Item 1. - Legal Proceedings None Item 2. - Changes In Securities With respect to the Company's currently outstanding Preferred Share Purchase Rights, on January 17, 1997, the Board of Directors of the Company approved an amendment of the Company's Preferred Shares Rights Agreement dated as of August 21, 1996 between the Company and The First National Bank of Boston (the "Rights Agreement") to increase the ownership threshold required to trigger the Rights Agreement from 15% to 20%, as more fully set forth in the Rights Agreement, and as amended on January 17, 1997. The rights, privileges and preferences of the Company's Preferred Share Purchase Rights are described in the Company's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on August 22, 1996, as amended on January 24, 1997. Item 3. - Defaults Upon Senior Securities None Item 4. - Submission of Matters to a Vote of Securities Holders None Item 5. - Other Information None Item 6. - Exhibits and Reports on Form 8-K a. Exhibits * 10.16 Product Research and Development Agreement between the Company and Sumitomo Pharmaceuticals Co., Ltd., dated as of June 29, 1994. * 10.20 International Distributor Agreement between the Company and Amersham K.K., dated as of April 8, 1993. 27.1 Financial Data Schedule b. Forms 8-K The Company filed a Report on Form 8-K, dated January 23, 1997, reporting the approval of an amendment to the Rights Agreement to increase the ownership threshold required to trigger the Rights Agreement from 15% to 20%. ------------------ * Refiled herewith in unredacted form following expiration of the period for which confidential treatment had been granted by the Securities and Exchange Commission. 12 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. /s/ Kurt E. Amundson May 14, 1997 - ------------------------------------- ------------ Kurt E. Amundson Vice President and Chief Financial Officer (duly authorized and principal financial and principal accounting officer) 13 EX-10.16 2 EXHIBIT 10.16(PRODUCT RESEARCH & DEVELOPMENT AGMT EXHIBIT 10.16 PRODUCT RESEARCH AND DEVELOPMENT AGREEMENT BETWEEN METRA BIOSYSTEMS, INC. AND SUMITOMO PHARMACEUTICALS CO., LTD. This Agreement is made as of June 29, 1994 between Metra Biosystems, Inc., 265 N. Whisman Road, Mountain View, California 94043, U.S.A, ("METRA") and Sumitomo Pharmaceuticals Co., Ltd., 2-8 Doshomachi 2-chome, Chuo-ku, Osaka, 541, Japan ("SUMITOMO"). 1. PRODUCTS COVERED BY AGREEMENT: "TESTS" means diagnostic assay kits (including updates) in manual microtiter plate format and automated instrument formats to be developed by Metra for clinical (non-research) applications based on levels of insulin-like growth factor binding protein-3 ("IGF-BP3") in serum and other bodily fluids. Preliminary specifications for IGF-BP3 to be developed by Metra and marketed by Sumitomo ("SPECIFICATIONS") are attached to this Agreement as EXHIBIT A and may be modified by written agreement of Metra and Sumitomo. 2. DISTRIBUTION RIGHTS: (a) Sumitomo will have the exclusive right to distribute (including the right to appoint subdistributors) and market the Tests in Japan for use as diagnostic assays. (b) Metra is willing to discuss with Sumitomo non-exclusive distribution and marketing rights for the Tests in the Republic of China (Taiwan), the People's Republic of China and the Republic of Korea if and to the extent Metra is permitted to do so contractually. Such distribution rights, if entered into would be pursuant to the distribution agreements set forth in Section 13 below. If granted, it is not intended that Sumitomo will make any additional payments to Metra to acquire distribution and marketing rights for the Tests for these three countries, but Sumitomo will make good effort to match marketing commitments and transfer prices applicable to other distributors of the Tests in these countries. (c) If Sumitomo at any time declines interest in collaborating with Metra to exert its best efforts to obtain regulatory approval and to market a Test, then Sumitomo's rights to the such product shall revert to Metra. Sumitomo shall have six months from date of completion of such product to inform Metra whether or not it has interest. 3. DUTIES OF SUMITOMO: Sumitomo will use reasonable diligence consistent with efforts related to its own products to (i) perform necessary clinical trials for the Tests at leading hospitals, (ii) apply for approval and registration of the Tests with the Japan Ministry of Health and Welfare (the "MHW"), (iii) obtain insurance reimbursement prices for the Tests, (iv) market and distribute the Tests once approved, (v) not market or distribute competing tests that measure IGF-BP3 developed by Sumitomo or third parties (other than Metra); except the RIA kits of IGF-BP3 provided by Mediagnost GmbH which Sumitomo has already developed and will distribute and sell jointly with SRL Inc. in Japan under the existing contract between Sumitomo and Mediagnost, provided, however that following launch by Sumitomo of the Tests in Japan, Sumitomo will not advertise or promote any competing tests that measure IGF-BP3, (vi) provide information to Metra on the regulatory testing procedures (stability and others) which Metra needs to perform to satisfy regulatory requirements and standard industry practice for the Tests in Japan, and (vii) provide a copy of each complete registration package, including supporting data, to Metra at the time of submission to the MHW. 4. DUTIES OF METRA: Metra will use reasonable diligence consistent with efforts related to its own products to (a) keep Sumitomo informed on a regular basis (through written progress reports and visits in the United States and Japan) of Metra's progress in developing the Tests, (b) perform (and supply at no charge reasonable quantities of sample Tests necessary to perform) all tests (such as stability testing and performance testing) necessary for Sumitomo to obtain regulatory approval to market the Tests in Japan based on Sumitomo's instructions, (c) supply sample Tests for the initial evaluation by Sumitomo free of charge, and (d) supply sample Tests for the clinical trials performed by Sumitomo at the price of $200 per Test. 5. RESEARCH AND DEVELOPMENT PLANS: Metra will prepare the research and development plan for the Tests and Sumitomo will prepare the development plan for the Tests for the Japanese market promptly after signing this Agreement. Preliminary version of such a plan for IGF-BP3 is attached to this Agreement as Exhibits B and C. Both companies will use reasonable diligence to accomplish such a plan. The plan may be modified at any time by Sumitomo and Metra. Both companies will meet at least semi-annually to discuss such plans and to exchange information. 6. PAYMENTS TO METRA: As part of the costs of the ongoing and future research, product development and performance testing of the Tests by Metra, Sumitomo will make the following payments to Metra based upon the following milestones promptly after their accomplishment. These payments will be compensation for a part of actual cost spent by Metra for the purpose of the research and development of the Tests. Payment Date or Event Amount ------------------------------------------------- ------------ Signing of Agreement $100,000 Evaluation Tests sent to Sumitomo meet the Specifications, excluding lot-to-lot precision for three separate lots $100,000 -2- All payment will be in U.S. dollars. The maximum payment to be made by Sumitomo pursuant to this Section 6 is US $200,000. If the Japanese Government requires a withholding tax, Sumitomo may withhold such tax from such payments. Metra shall invoice Sumitomo for the above payment within 30 days after the Date or the Event. Sumitomo shall pay the amount within 30 days after the receipt of the invoice. 7. TERM AND TERMINATION OF AGREEMENT: (a) This Agreement will be effective from the date first above written and will continue in effect 3 years from that date. After such 3 year period, this Agreement will be automatically extended for every succeeding 1 year unless either party notifies the other party of its desire to terminate this Agreement at least six (6) months before each anniversary date. (b) Sumitomo may terminate the Agreement at any time upon six months' prior notice to Metra and payment of all amounts due to Metra in such six month period. Upon such termination, all rights to the Tests (including product registrations and trademarks) shall revert to Metra. (c) Each party may terminate this Agreement without payment of any compensation by giving a written notice of termination; (i) if one party files a petition in bankruptcy or a petition to take advantage of any insolvency or reorganization act or, if one party be adjudicated a bankruptcy, or a court of competent jurisdiction shall enter an order or decree appointing a receiver of property of the party, and such adjudication, order or decree shall not be vacated or set aside or stayed within 30 days from its entry. (ii) if one party has failed to perform a material provision of this Agreement and has not corrected such failure within sixty days after receipt of notice describing such failure. 8. SUPPLY OF TESTS AND REAGENTS. Metra will stably supply Tests to Sumitomo meeting agreed labeling and product specifications and with remaining kit shelf life of at least six (6) months. The parties shall in good faith discuss Metra's production plan and Sumitomo's delivery schedule and discuss the period of remaining shelf life of Tests and whether any adjustment is necessary or possible. The transfer price for the Tests will be determined by one price formula which will be chosen by Sumitomo from the two options set forth below. Such transfer price per Test shall be effective for the first calendar year after the Tests are launched by Sumitomo in Japan and thereafter will be reviewed annually and if appropriate, adjusted based upon mutual agreement. The transfer price will be FCA (Incoterms) the international airport nearest to Metra's place of business in Mountain View, California. All payments for the Tests purchased by Sumitomo under this Agreement shall be made within sixty (60) days after the date of shipment of Tests. -3- (i) OPTION A: The transfer price will be based on the number of Tests purchased during a given calendar year by Sumitomo. Sumitomo shall keep Metra informed on a semi-annual basis of its projected requirements for Tests by providing a rolling twelve (12) month forecast. The transfer price of Option A is as follows: Tests Purchased Price Per Per Calendar Year Test ------------------------------------------------------- First 400 Tests $300 Next 400 Tests $275 Test over 800 $250 OR (ii) OPTION B: The transfer price will be based on the number of Tests ordered pursuant to a binding purchase order which Sumitomo shall declare for the one (1) year period following the month of such declaration. To obtain the special pricing based on this Option B, Sumitomo must purchase and take delivery of the binding purchase order within twelve (12) months of the purchase order date. In the event that Metra fails to supply any quantities ordered pursuant to this Option B, Sumitomo will pay for the Tests actually delivered at the price which would have been applied to the originally declared quantity. Sumitomo shall keep Metra informed on a semi-annual basis of its projected requirements for Tests by providing a rolling twelve (12) month forecast. The transfer price of this Option B is as follows: Number of Tests Ordered Price per Test -------------------------------------------------------- 1-400 Tests $300 for every Test 401-800 Tests $275 for every Test Any order over 800 Tests $250 for every Test Metra shall use reasonable efforts to meet delivery dates set forth in accepted purchase orders, but in any event will deliver Tests within ninety (90) days of the requested delivery date. Metra will warrant that the Tests will meet the Specifications and will promptly replace any Tests which do not meet the Specifications at Metra's expense. Such warranty is the only warranty made by Metra and is in place of any warranty of merchantability or fitness for a particular purpose. -4- 9. PATENT MATTERS: (a) Metra shall own all rights (including US and Japanese patent rights) to the Tests and any improvements made pursuant to this Agreement. Metra shall supply Sumitomo with improved versions of the Tests as provided in Section 8 above. (b) In case the Tests infringe or may infringe the patents or other rights of any third parties, both parties shall, in good faith, discuss the steps to be taken to resolve such problem. 10. PUBLICITY: Neither party will disclose the financial terms of the Agreement without the written permission of the other party, except as required by law. 11. TRADEMARKS: Trademarks for the Tests to be distributed by Sumitomo will be decided separately by both parties. 12. LABELING: All Tests will be labeled (including package inserts) to indicate that Metra is the manufacturer of the Tests for Sumitomo. 13. DISTRIBUTION AGREEMENT: Concerning the Tests, both parties will start a discussion about a distribution agreement after Sumitomo's NDA in Japan is submitted and conclude the agreement upon the registration of the Tests. This distribution agreement will include the provisions of this Agreement and will extend to cover such items as product liability, packaging, claims, returns and warranty among others. 14. CONFIDENTIALITY: Each party shall for the period of this Agreement and, for the longer of (i) 5 years from the date of disclosure or (ii) 10 years from the date first above written, thereafter keep secret and confidential all research, commercial and business information received from the other party and shall not use such information except for the purposes of this Agreement nor disclose such information to any third party provided that the obligations contained in this Clause shall not apply to information which: (a) at the time of disclosure is in the public domain or which, after disclosure, becomes in the public domain; (b) at the time of disclosure is already in the possession of recipient; (c) is disclosed to recipient by a third party which is entitled to make such disclosure and is not itself under obligations of confidentiality; -5- (d) either party discloses to government authorities for the purposes of Registration of Tests. 15. NOTICE Any notice given under, amendments made to or agreements reached in pursuance of this Agreement shall be sent by facsimile followed by registered letter and shall, in the case of Metra, be made by: Metra Biosystems, Inc., 265 N. Whisman Road Mountain View, California 94043, U.S.A. and, in the case of Sumitomo, be made by: Manager, Corporate Planning Department Sumitomo Pharmaceuticals Co., Ltd. 2-8 Doshomachi 2-chome Chuo-ku Osaka 541, Japan or such other persons or addresses as either party may designate. The language of this Agreement is English and all communications between the parties in respect of this Agreement shall be in English. 16. ASSIGNMENT Neither Metra nor Sumitomo shall transfer or in any way make over the benefits or obligations of this Agreement in whole or in part to any third party without prior written consent of the other except for the assignment to the successor or assignee of all of its business or all of its diagnostic business subject to a prior notice to the other party. 17. ENTIRE AGREEMENT This Agreement set forth the entire agreement and understanding between the parties regarding the subject matter hereof and supersede all prior discussions and agreement. No amendment shall be effective unless made in writing by an authorized signatory of the parties. 18. VALIDITY/SEVERABILITY The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision which shall remain in full force and effect. The parties shall use their best efforts to achieve the purpose of the invalid provision by a new, legally valid stipulation. -6- 19. FORCE MAJEURE Neither party shall be responsible for failure or delay in the performance of any of its obligations hereunder due to Force Majeure. Force Majeure shall mean any circumstance which, due to an event or a legal position beyond the parties' reasonable control, renders impossible the fulfillment of any of the parties' obligations hereunder, such as but not limited to, acts of God, acts, regulations and laws of any government, wars, civil commotions, destruction of production facilities or materials by fires, earthquakes or storms, labor disturbances, shortages of public utilities, common carriers or raw materials or any other causes of similar effects. The obligations hereunder which are rendered impossible by any case of Force Majeure shall not be discharged, but only be suspended and the party so affected shall continue to perform its obligations as soon as such case of Force Majeure is removed or alleviated. 20. LAW OF AGREEMENT This Agreement shall be governed by the laws of the State of California, U.S.A. Any and all disputes, controversies or differences which may arise between the parties hereto in relation to the interpretation or administration of this Agreement shall finally be settled by arbitration in accordance with the rules of the International Chamber of Commerce, by which each party hereto is bound. The arbitration shall be held in Tokyo, Japan, if demanded by Metra, in San Francisco, U.S.A., if demanded by Sumitomo. In witness whereof the parties have executed two copies of this Agreement in English. Signed for and on behalf of Metra Biosystems Inc. By: /s/ George W. Dunbar Jr. ------------------------------------ George W. Dunbar Jr. President and CEO Date: 06-29-94 ---------------------------------- signed for and on behalf of Sumitomo Pharmaceuticals Co., Ltd. By: /s/ Hiroshi Ishimoda ------------------------------------ Hiroshi Ishimoda Managing Director Date: 13 July 94 ---------------------------------- -7- EXHIBIT A IGFBP-3 PRODUCT SPECIFICATIONS Sample Serum Sample Volume 50-100uL sample dilution probably 1:100 Dye added to assay buffer Total Assay Time/Temperature total time LESS THAN OR EQUAL TO 4 hours, room temp. Type of Assay Sandwich type Format microtiter strip wells, 6 2x8 strips/kit Standards 6 including 0 Controls 2, high and low Minimum Detection Limit 2.5 ng/mL Standard Range To be determined (Current range 2.5-200 ng/mL Enzyme conjugate Direct conjugate of Peroxidase, lyophilized Dye Added Substrate TMB Stop Solution 0.3M H PO , 0.2M H SO , or 0.2M HCl 3 4 2 4 Kit Shelf Life 12 months at 2-8 degrees C Specificity/Cross reactivity BP3 100% BP1, 2, and 4 LESS THAN 2.5% Within-run precision LESS THAN OR EQUAL TO 10% average Between-run precision LESS THAN OR EQUAL TO 15% average Lot-to-lot precision LESS THAN OR EQUAL TO 15% average Spike Recovery Average 100 PLUS OR MINUS 10% 90% of individuals 100 PLUS OR MINUS 15% 10% of individuals 100 PLUS OR MINUS 25% Linearity Average 100 PLUS OR MINUS 10% 90% of individuals 100 PLUS OR MINUS 15% 10% of individuals 100 PLUS OR MINUS 25% Correlation to Mediagnost Kit r = 0.90 R. Hesley June 24, 1994 EXHIBIT B IGF-BP3 DEVELOPMENT TIMELINE
- -------------------------------------------------------------------------------------------- APR MAY JUN JUL AUG SEP OCT NOV DEC - -------------------------------------------------------------------------------------------- M Standard Stability & Feas. O value-assignment Study R&D-1 V Timing issues R&D-2 E Finalize Format R&D-3 Pilot-1 Pilot-2 Pilot-3 * * ^ * P P | P A A Initiate A R R Real Time R * * Stability *
EXHIBIT C IGF-BP3 SUMITOMO DEVELOPMENT PLAN '94 95' 96' 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 ____________________________________________________________________________________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Clinical Evaluation ^ Approval ^ Evaluation of Performance Using R & D Lot ^ Application ^ Metra; Stability Tests Launch
MEMORANDUM With reference to the Product Research and Development Agreement dated June 29, 1994, ("Agreement") both parties hereby agree to make this MEMORANDUM related to the patent issue as follows; In the event Sumitomo desires and requests that Metra should get Genentech's license covering the manufacturing of IGFBP-3 diagnostics, Metra shall make commercially reasonable efforts to obtain said license and to obtain, as part of said license, a provision indemnifying Metra against intellectual property claims. In that case, Sumitomo agrees that Metra shall act solely to negotiate with Genentech, provided, however, that Metra shall keep Sumitomo informed of the progress of such negotiation and of the contents of Genentech's proposals. Metra shall not agree with Genentech without prior consent of Sumitomo. In case Metra shall be required to make a lump-sum payment and running royalty to Genentech in consideration of all rights and licenses granted to Metra, Sumitomo shall bear the same amount as such payments. The above lump-sum payment will be paid to Metra by Sumitomo as an additional milestone of the Agreement within 30 days of execution of the above referenced license agreement with Genentech and the above running royalty will be paid to Metra by Sumitomo by adding to the transfer price set forth in the Agreement of IGFBP-3. In Witness Whereof, the parties hereto have caused this MEMORANDUM to be effective as of June 29, 1994 by their respective duly authorized representatives. Metra Biosystems Inc. Sumitomo Pharmaceuticals Co., Ltd By: /s/ George W. Dunbar Jr. By: /s/ Hiroshi Ishimoda -------------------------------- --------------------------------- George W. Dunbar Jr. Hiroshi Ishimoda President and CEO Managing Director EX-10.20 3 EXHIBIT 10.20(INTERNATIONAL DISTRIBUTOR AGREEMENT EXHIBIT 10.20 [METRA BIOSYSTEMS LOGO] INTERNATIONAL DISTRIBUTOR AGREEMENT This International Distributor Agreement (the "Agreement") is entered into in Palo Alto, California, as of April 8, 1993, between METRA BIOSYSTEMS, INC., a corporation organized under the laws of California, United States of America, with principal offices at 3181 Porter Drive, Palo Alto, California 94304, United States of America, ("Manufacturer") and Amersham K.K., an organization organized under the laws of Japan with offices at Tokyo Toyama Kaikan, 1-3, Kakusan 5-Chome, Bunkyo-ku, Tokyo 112, Japan ("Distributor"). In consideration of the mutual promises contained herein, the parties agree as follows: 1. DEFINITIONS (a) "Products" shall mean those products listed in EXHIBIT A attached hereto to be distributed solely for research purposes. Metra Biosystems may appoint other parties to develop and commercialize products for clinical use. Products may be changed, abandoned or added by Manufacturer, at Manufacturer's sole discretion, provided that Manufacturer gives ninety (90) days' prior written notice to Distributor. Manufacturer shall be under no obligation to continue the production of any Product, except as provided herein. (b) "Territory" shall mean that geographic area identified in EXHIBIT B attached hereto. 2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR (a) APPOINTMENT. Subject to the terms and conditions set forth herein, Manufacturer hereby appoints Distributor as Manufacturer's distributor for the Products in the Territory, and Distributor hereby accepts such appointment. For so long as Distributor is performing in compliance with this Agreement, Manufacturer shall not appoint any other distributor with responsibility for sale of the Products in the Territory. (b) TERRITORIAL RESPONSIBILITY. Distributor shall not promote the Products outside the Territory or establish a facility for purposes relating to the Products outside the Territory. Distributor shall forward to Manufacturer all unsolicited inquiries relating to the Products from customers or potential customers outside the Territory. (c) OTHER DISTRIBUTORS. In the event that Manufacturer receives requests for information relating to, or purchase orders for, the Products from customers or potential customers within the Territory, Manufacturer shall forward such requests or orders to Distributor. Notwithstanding the above, nothing in this Agreement shall prevent Manufacturer's other distributors from selling Products in the Territory, so long as such sales are not solicited in the Territory. In the event that Distributor becomes aware that other distributors of Manufacturer are selling Products in the Territory, and provides Manufacturer written notice thereof, Manufacturer will use Manufacturer's commercially reasonable efforts to limit such sales of Products. (d) CONFLICT OF INTEREST. Distributor warrants to Manufacturer that Distributor does not currently represent or promote any lines or products that compete with the Products. During the term of this Agreement, Distributor shall not, without Manufacturer's prior written consent, represent, promote or otherwise try to sell within the Territory any lines or products that, in Manufacturer's judgment, compete with the Products covered by this Agreement. (e) INDEPENDENT CONTRACTORS. The relationship of Manufacturer and Distributor established by this Agreement is that of independent contractors, and nothing contained in this Agreement shall be construed to give either party the power to direct and control the day-to-day activities of the other or allow one party to create or assume any obligation on behalf of the other for any purpose whatsoever. All financial obligations associated with Distributor's business are the sole responsibility of Distributor. All sales and other agreements between Distributor and Distributor's customers are Distributor's exclusive responsibility and shall have no effect on Distributor's obligations under this Agreement. 3. TERMS OF PURCHASE OF PRODUCTS BY DISTRIBUTOR (a) TERMS AND CONDITIONS. All purchases of Products by Distributor from Manufacturer during the term of this Agreement shall be subject to the terms and conditions of this agreement. (b) PRICES. All prices of Products are F.O.B. Manufacturer's Distribution Site at the address listed for Manufacturer at the beginning of this Agreement or as provided by written notice to Distributor. The purchase price to Distributor for each of the Products ("Purchase Price") shall be as set forth in EXHIBIT A attached hereto. The difference between Distributor's Purchase Price and Distributor's selling price to Distributor's customers shall be Distributor's sole remuneration for sale of the Products. Manufacturer has the right at any time to revise the prices in EXHIBIT A with sixty (60) days' advance written notice to Distributor; PROVIDED, that Manufacturer shall not revise such prices more than once each calendar year. Such revisions shall apply to all orders received after the effective date of revision. Price changes shall not affect unfulfilled purchase orders accepted by Manufacturer prior to the effective date of the price change. (c) TAXES. Distributor's Purchase Price does not include any federal, state or local taxes that may be applicable to the Products. In the event that such taxes are applicable and Manufacturer has the legal obligation to collect such taxes, Manufacturer shall be entitled to add to Distributor's invoice the amount of such taxes and Distributor shall pay such amount unless Distributor provides -2- Manufacturer with a valid tax exemption certificate authorized by the appropriate taxing authority. (d) ORDER AND ACCEPTANCE. All orders for Products submitted by Distributor shall be initiated by written purchase orders sent to Manufacturer and requesting a delivery date during the term of this Agreement; PROVIDED, HOWEVER, that an order may initially be placed orally or by telecopy if a confirmational written purchase order is received by Manufacturer within five (5) days after said oral or telecopy order. To facilitate Manufacturer's production scheduling, Distributor shall submit purchase orders to Manufacturer at least sixty (60) days prior to the first day of the requested month of delivery. No order shall be binding upon Manufacturer until accepted by Manufacturer in writing, and Manufacturer shall have no liability to Distributor with respect to purchase orders that are not accepted. No partial shipment of an order shall constitute the acceptance of the entire order, absent the written acceptance of such entire order. Manufacturer shall use Manufacturer's reasonable best efforts to deliver Products at the times specified either in Manufacturer's quotation or in Manufacturer's written acceptance of Distributor's purchase orders. Notwithstanding the foregoing, Manufacturer shall have no obligation to supply Products to Distributor during any period for which Distributor's payments to Manufacturer hereunder are thirty (30) days or more past due. (e) TERMS OF PURCHASE ORDERS. Distributor's purchase orders submitted to Manufacturer from time to time with respect to Products to be purchased hereunder shall be governed by the terms of this Agreement and Manufacturer's published Standard Terms and Conditions of Sale as in effect at the time of such purchase, PROVIDED that, in the event of any conflict between the terms of this Agreement and the Standard Terms and Conditions of Sale of Manufacturer then in effect, this Agreement shall be controlling. Nothing contained in any purchase order of Distributor shall in any way modify such terms of purchase of Manufacturer or add any additional terms or conditions. (f) PAYMENT. Full payment of Distributor's Purchase Price for the Products (including any freight, taxes or other applicable costs initially paid by Manufacturer but to be borne by Distributor) shall be in United States of America dollars. All exchange, interest, banking, collection, and other charges shall be at Distributor's expense. Payment terms shall be [net forty-five] ([45]) days, and payment shall be made by wire transfer, check or other instrument approved by Manufacturer. Any invoiced amount not paid when due shall be subject to a service charge at the lower of the rate of [one and one-half] percent ([1.5]%) per month or the maximum rate permitted by law. If Distributor fails to make any payment to Manufacturer when due, Manufacturer may, without affecting its rights under this Agreement, cancel or delay any future shipments of the Products to Distributor. (g) SHIPPING. All Products delivered pursuant to the terms of this Agreement shall be suitably packed for air freight shipment in Manufacturer's standard shipping cartons, marked for shipment at Manufacturer's manufacturing plant to Distributor's address set forth above, and delivered to Distributor or Distributor's carrier agent F.O.B. Manufacturer's Distribution Site, at which time title to such Products and risk of loss shall pass to Distributor. All shipments of -3- Products shall include a Certificate of Analysis for each lot. Manufacturer shall deliver Products to the carrier selected by Distributor. In the event that Distributor does not provide written notice of such carrier, Manufacturer shall select the carrier. All freight, insurance, and other shipping expenses, as well as any special packing expense, shall be paid by Distributor. Distributor shall also bear all applicable taxes, duties, and similar charges that may be assessed against the Products after delivery to the carrier at Manufacturer's Distribution Site. (h) REJECTION OF PRODUCTS. Distributor shall inspect all Products promptly upon receipt thereof, such inspection to include, without limitation, a quality control analysis to determine whether Products and, where applicable, components thereof meet the specifications set forth in then-current package inserts for such Products and components and the Certificate of Analysis accompanying each shipment of Products. Distributor may reject any Product or component thereof that fails in any material way to meet such specifications. In the event that Distributor is not able to conduct a quality control analysis, Distributor, at Distributor's expense, may utilize contract facilities to conduct such analysis. Manufacturer will maintain samples of each production lot of Product, and Distributor will maintain samples of each shipment lot of Product, for archival purposes. Any Product or component thereof not properly rejected within four (4) weeks after receipt of that Product by Distributor ("Rejection Period") shall be deemed accepted. If any Product is shipped by Distributor to Distributor's customer prior to expiration of the Rejection Period, such unit shall be deemed accepted upon shipment by Distributor. To reject a Product or a component thereof, Distributor shall, within the Rejection Period, notify Manufacturer in writing or by telecopy of Distributor's rejection of such Product or component, stating the reason for such rejection. In the event that Manufacturer, in Manufacturer's sole discretion, desires that Distributor return a rejected Product or component thereof to Manufacturer, Distributor shall return to Manufacturer the rejected Product or component thereof, freight prepaid. Manufacturer will provide Distributor a credit to be applied against Distributor's future Product orders equal to the freight charges prepaid by Distributor for properly rejected Products or components thereof. As promptly as possible but no later than thirty (30) working days after receipt by Manufacturer of properly rejected Products or components thereof, Manufacturer shall replace such Products or components. Manufacturer shall pay shipping charges in connection with shipment of replaced Products or components thereof to Distributor for properly rejected Products; otherwise, Distributor shall be responsible for shipping charges. In the event that such replaced Products or components are shipped to Distributor together with Products corresponding to a purchase order pursuant to this Agreement, shipping charges in connection with such shipment shall be pro-rated between Manufacturer and Distributor. After the Rejection Period, Distributor may not return any Products or, if applicable, components thereof to Manufacturer for any reason without Manufacturer's prior written consent. 4. TRAINING AND SERVICE (a) SERVICES BY DISTRIBUTOR. Distributor shall have the responsibility to deliver the Products and train the customers with respect to the Products sold. -4- The services shall (i) be performed only by specially and properly trained personnel of Distributor, (ii) be of the highest quality, and (iii) be performed promptly. (b) TRAINING BY MANUFACTURER. Manufacturer shall provide sales and technical training, and technical support, to Distributor's personnel at periodic intervals, with the frequency and content of the training to be determined by agreement between Distributor and Manufacturer. Manufacturer and Distributor shall each pay their own costs for travel, food, and lodging during the training period. In addition to sales and technical training, Manufacturer shall cooperate with Distributor in establishing efficient promotional procedures and policies. Manufacturer shall promptly respond to Distributor's reasonable technical questions relating to Product. 5. WARRANTY TO DISTRIBUTOR'S CUSTOMERS (a) STANDARD LIMITED WARRANTY. Manufacturer warrants that the Products sold to Distributor will comply at the time of shipment to Distributor with the requirements of the U.S. Federal Food, Drug and Cosmetic Act, if applicable. This warranty is contingent upon proper use of a Product in the application for which such Product was intended and does not cover Products that were modified without Manufacturer's approval, that have expired or that were subjected by the customer to unusual physical, chemical or electrical stress. (b) NO OTHER WARRANTY. EXCEPT FOR THE EXPRESS LIMITED WARRANTY SET FORTH IN SUBSECTION 5(a) ABOVE, MANUFACTURER GRANTS NO WARRANTIES FOR THE PRODUCTS, (EXCEPT FOR THE IMPLIED WARRANTY OF TITLE) EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND MANUFACTURER SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF QUALITY, WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF NONINFRINGEMENT. (c) LIMITATION OF LIABILITY. MANUFACTURER'S LIABILITY UNDER THE WARRANTY SHALL BE LIMITED TO A REFUND OF THE CUSTOMER'S PURCHASE PRICE. IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS BY THE CUSTOMER OR FOR ANY DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES FOR BREACH OF WARRANTY, EXCEPT INSOFAR AS SUCH DAMAGES RELATE TO DEATH OR PERSONAL INJURY RESULTING FROM MANUFACTURER'S GROSS NEGLIGENCE. (d) NO VERBAL REPRESENTATIONS OR WARRANTIES. Manufacturer shall not be bound by any representations or statements on the part of its employees or agents whether oral or in writing and including those made in catalogues and other promotional material (excluding technical details and specifications) except where such representations or statements are expressly made part of this Agreement. -5- 6. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR (a) HEALTH AND SAFETY LAWS AND REGULATIONS. Distributor shall comply fully, at its expense, with any and all applicable health and safety laws and regulations of the Territory. (b) REGISTRATIONS, LICENSES AND PERMITS. Distributor agrees to use its best efforts to investigate, obtain government approval for, promote and distribute the Products, (solely for research purposes) at its own expense, in the Territory as soon as feasible after the date of this Agreement, using generally the same channels and methods, exercising the same diligence and adhering to the same standards which it employs with respect to other research products sold by Distributor, as well as Distributor's own products, if any. Unless prohibited by local law, all such registrations and approvals obtained by Distributor shall be in the name of Manufacturer. In particular, Distributor shall, at its own expense: (i) Exercise due diligence to promptly obtain and maintain government approvals to import, register and market the Products in each jurisdiction in the Territory and to diligently proceed to secure and maintain, as may be required from time to time, government importing, registration and marketing approvals, customs clearances and currency authorizations and any permits necessary in each jurisdiction in the Territory. Distributor shall keep Manufacturer generally informed of the regulatory requirements in each jurisdiction in the Territory and shall submit to the government health authorities in each jurisdiction in the Territory where sale of the Products is planned a complete application for registration and marketing approval of the Products by the date set forth in any marketing plan required by Manufacturer below. Distributor shall file for regulatory approval for the sale of Products in the Territory by Amersham K.K. If Manufacturer so requests, Distributor shall notify Manufacturer each time it submits an application for government registration and marketing approval for the Products and shall, at Manufacturer's request, supply Manufacturer with copies of or access to Distributor's filings and clinical data and shall keep Manufacturer fully informed of the progress of each such application. Manufacturer and Distributor agree to disclose promptly to the other all reports and any information which they have available or which become available to them relating to performance of, or any deleterious physiological effects caused by or related to, the Products. -6- (ii) Within thirty (30) days after the date of this Agreement, submit to Manufacturer a complete marketing plan, prepared by Distributor in good faith, which shall be subject to approval by Manufacturer, for the Products in each jurisdiction in the Territory. Such plan shall be updated and delivered to Manufacturer annually and shall include, at a minimum, information on competitive products; proposed labeling (including label, package insert, introductory folder and advertising); estimated sales volume; anticipated quantities of the Products to be purchased from Manufacturer; distribution and promotional plans; schedule for submission of applications for government registration and marketing approval; and marketing program. All Product labels, package inserts and claims, which are prepared for or by Distributor, shall meet all legal requirements of the jurisdiction in which the Products are marketed and shall be subject to Manufacturer's prior review and approval. (iii) Commence marketing of the Products throughout the Territory immediately after receipt of government health registration approvals, if applicable. Distributor shall be deemed to have commenced the marketing of the Products only when it shall have offered the Products regularly for sale. (iv) Use its best efforts to distribute and sell the Products for research purposes only and for use only by qualified individuals, as appropriate in the Territory, in compliance with local laws and regulations and good commercial practice and for uses and applications reasonably approved by Manufacturer for the Products. In the event that all necessary registrations, licenses and permits required to sell and distribute the Products in the Territory for clinical use (if applicable) are not obtained within nine (9) months after the effective date of this Agreement, Manufacturer may, in its sole discretion, terminate this Agreement upon written notice to Distributor. (c) QUARTERLY PURCHASE COMMITMENT. Distributor hereby agrees to purchase from Manufacturer during the first eight (8) calendar quarter periods commencing June 1, 1993 ("Quarterly Purchase Commitment") the number of Products set forth on EXHIBIT C. Annually thereafter, Distributor and Manufacturer shall mutually agree in writing on the Quarterly Purchase Commitment for the next four calendar quarter periods. Throughout the term of this Agreement, if (i) the parties cannot agree on Quarterly Purchase Commitments, or (ii) Distributor fails to purchase Distributor's Quarterly Purchase Commitment in any given calendar quarter and Distributor's Quarterly Purchase Commitment in the next calendar quarter plus the deficit in Distributor's Quarterly Purchase Commitment from the preceding calendar quarter, then, without prejudice to Manufacturer's other rights under this Agreement (including the right to terminate this Agreement upon written notice to Distributor), Manufacturer may appoint one or more additional distributors for sale of the Products in the Territory. Products returned to Manufacturer under the provisions of Subsection 3(h) above shall not count towards the fulfillment of Distributor's relevant Quarterly Purchase Commitment. -7- (d) FORECASTS. Within the first five (5) days of every month, Distributor shall provide Manufacturer with a ninety (90) day rolling forecast showing prospective orders by Product and Distributor's anticipated Products purchase order submission date. Such rolling forecasts shall be non-binding and shall be used by Manufacturer for information purposes only. (e) PROMOTION OF THE PRODUCTS. Distributor shall, solely at Distributor's own expense, vigorously promote the sale of the Products within the Territory. Such promotion shall include, but not be limited to, preparing all promotional materials intended specifically for use in the Territory in appropriate languages for the Territory, advertising the Products in trade publications within the Territory, participating in appropriate trade shows, and directly soliciting orders from customers within the Territory for the Products. Distributor and its employees and agents shall not promote the Products for any indications not approved for such Products by applicable regulatory authorities. All promotional materials prepared by Distributor relating to the Products must be consistent with applicable law and promotional materials used by Manufacturer or other distributors of Manufacturer in connection with the Products. Distributor shall provide to Manufacturer for purposes of review and comment by Manufacturer any and all promotional, advertising, and educational materials and programs (in the English language and the actual language of labeling) relating to the Products at least thirty (30) days prior to the release of such materials or commencement of such programs. Manufacturer shall make its best efforts to provide to Distributor, within ten (10) business days after receipt of such materials and/or programs, any and all comments and suggestions relating to such materials and/or programs. In addition, Manufacturer shall be entitled, on Manufacturer's written request, to receive copies of any promotional materials used by Distributor and inspect such materials for purposes of determining that such materials are consistent with promotional materials used by Manufacturer or other distributors of Manufacturer. Distributor shall provide Manufacturer, within ten (10) days after the end of each calendar quarter, a description of Distributor's activities in promoting the Products within the Territory. Distributor agrees to not promote, or solicit orders for, the Products outside the Territory. Distributor shall use its best efforts to locate and introduce to Manufacturer appropriate pharmaceutical and bone densitometry companies in the Territory with which Manufacturer may want to establish education programs with respect to Products. (f) REPRESENTATIONS. Distributor shall make any false or misleading representations to customers or others regarding Manufacturer or the Products. Distributor and its employees and agents shall not make any representations, warranties or guarantees with respect to the specifications, features or capabilities of the Products that are not consistent with Manufacturer's documentation accompanying the Products or Manufacturer's literature describing the Products, including Manufacturer's standard limited warranty and disclaimers. (g) INVENTORY. Distributor shall, at Distributor's own expense, maintain a sufficient inventory of the Products at all times during the term of this Agreement as necessary in order to meet the requirements of any customer or potential customer within the Territory. -8- (h) FINANCES AND PERSONNEL. Distributor shall maintain a net worth and working capital sufficient, in Manufacturer's reasonable judgment, to allow Distributor to perform fully and faithfully Distributor's obligations under this Agreement. Distributor shall devote sufficient financial resources and technically qualified sales and training personnel to the Products to fulfill Distributor's responsibilities under this Agreement. (i) CUSTOMER AND SALES REPORTING. Distributor shall, at Distributor's own expense and consistent with the sale policies of Manufacturer: (i) place the Products in Distributor's literature as soon as possible; (ii) provide adequate contact with existing and potential customers within the Territory on a regular basis, consistent with good business practice; (iii) assist Manufacturer in assessing customer requirements for the Products, including modifications and improvements thereto, in terms of quality, design, functional capability, and other features; and (iv) provide Manufacturer on a quarterly basis: (1) a summary of all purchase orders received by Distributor for Products, (2) market research information, as reasonably requested by Manufacturer for purposes of Manufacturer's market research, regarding competition and changes in the market within the Territory and (3) a summary of the number of Products held by Distributor at the end of such quarter. (j) AUDITS. Manufacturer reserves the right to authorize a representative of Manufacturer, at Manufacturer's expense, to audit Distributor's records relating to the Products, including, without limitation, records relating to preclinical and clinical trials, interactions between Distributor and principal investigators in such preclinical and clinical trials, inventories and sales. Upon prior written notice, Distributor shall provide reasonable access to such records during normal business hours at Distributor's business locations. Distributor shall maintain all records at Distributor's location for a minimum of two (2) years after termination of this Agreement. (k) IMPORT AND EXPORT REQUIREMENTS. Distributor shall, at Distributor's own expense, obtain and pay for import and export licenses and permits, pay customs charges and duty fees, and take all other actions required to accomplish the export and import of the Products purchased by Distributor. Distributor understands that Manufacturer is subject to regulation by agencies of the United States of America government, including the United States of America Department of Commerce, which prohibit export or diversion of certain technical products to certain countries. Distributor warrants that Distributor will comply in all respects with the export and re-export restrictions set forth in the export license for every Product shipped to Distributor. (l) LIMITATION ON DISTRIBUTOR'S RIGHTS TO THE PRODUCTS. Distributor shall have no right to copy, modify or remanufacture any Product or part thereof. Distributor shall not make any changes, alterations, modifications or additions to the Products without prior written approval of Manufacturer. (m) PRODUCT SPECIFICATIONS. Distributor shall ensure that the specification of the Products ordered is suitable and safe for the intended use or -9- environment of use, except where it makes known details of such use to Manufacturer in writing prior to conclusion of the Agreement in such a way as clearly to place reliance on Manufacturer's special skills. (n) PRODUCT HANDLING. Distributor shall handle the Products in a suitable and safe manner and shall comply with any instructions supplied to it by Manufacturer. Distributor shall also pass on to users (including purchasers and users of other goods and equipment into which the Products are incorporated) all relevant safety information. (o) INTELLECTUAL PROPERTY. Where Distributor supplies designs, drawings and specifications to Manufacturer to enable Manufacturer to manufacture non-standard or custom made Products, Distributor warrants that such manufacture will not infringe the intellectual property rights of any third party. 7. ADDITIONAL OBLIGATIONS OF MANUFACTURER. Manufacturer shall promptly provide Distributor with Manufacturer's core materials relating to promotion of the Products. Such core materials shall be provided primarily in the English language. Manufacturer shall promptly respond to all reasonable inquiries from Distributor concerning matters pertaining to this Agreement. Manufacturer shall refrain from giving quotations to exporters for Products to be shipped to the Territory. Manufacturer shall inform Distributor of new product developments relating to the Products. Manufacturer shall forward to Distributor copies of all approval letters received from the U.S. Food and Drug Administration with respect to Products. 8. TERM AND TERMINATION (a) TERM. This Agreement shall commence on the date hereof and continue in full force and effect for a fixed term of two (2) years from such date, unless terminated earlier under the provisions of this Section 8. At the end of such fixed term, this Agreement may be renewed for a fixed term of two (2) years; PROVIDED, that Manufacturer and Distributor agree in writing prior to the end of such fixed term upon the terms and conditions of such renewal, including, without limitation, minimum quantities of Products to be purchased by Distributor during such two (2) year fixed term. Manufacturer shall also have the right to terminate this Agreement upon written notice to Distributor as provided in Section 6 hereof. (b) TERMINATION FOR CAUSE. If either party defaults in the performance of any provision of this Agreement, then the non-defaulting party may given written notice to the defaulting party that if the default is not cured within thirty (30) days the Agreement will be terminated. If the non-defaulting party gives such notice and the default is not cured during such thirty (30) day period, then the Agreement shall automatically terminate at the end of that period. (c) TERMINATION FOR INSOLVENCY. This Agreement shall terminate, without notice, (i) upon the institution by or against Distributor of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement -10- of Distributor's debts, (ii) upon Distributor's making an assignment for the benefit of creditors, or (iii) upon Distributor's dissolution or ceasing to do business. (d) CLINICAL USE REGULATORY APPROVAL; TECHNICAL DIFFICULTIES. The rights of Distributor hereunder with respect any one Product may be terminated by Manufacturer, upon thirty (30) days' prior written notice, at any time following approval from appropriate Japanese governmental authorities to distribute such Product for clinical use. Where Manufacturer experiences technical difficulties in the production of non-standard or custom made Products, it may cancel this Agreement without being liable to Distributor in any way. (e) RETURN OF MATERIALS. All trademarks, trade names, patents, copyrights, designs, drawings, formulas or other data, photographs, samples, literature, and sales aids of every kind shall remain the property of Manufacturer. Within thirty (30) days after the termination of this Agreement, Distributor shall prepare all such items in Distributor's possession for shipment, as Manufacturer may direct, at Manufacturer's expense. Distributor shall not make, use, dispose of or retain any copies of any confidential items or information which may have been entrusted to Distributor. Effective upon the termination of this Agreement, Distributor shall cease to use all trademarks, marks, and trade names of Manufacturer. (f) LIMITATION ON LIABILITY. In the event of termination by either party in accordance with any of the provisions of this Agreement, neither party shall be liable to the other, because of such termination, for compensation, reimbursement or damages on account of the loss of prospective profits or anticipated sales or on account of expenditures, inventory, investments, leases or commitments in connection with the business or goodwill of Manufacturer or Distributor. Termination shall not, however, relieve either party of obligations incurred prior to the termination. (g) SURVIVAL OF CERTAIN TERMS. The provisions of Sections 3(h), 5, 6(g), 6(k), 6(l), 6(m), 8, 9, 10, 11, 12, 13 and 14 shall survive the termination of this Agreement for any reason. All other rights and obligations of the parties shall cease upon termination of this Agreement. 9. LIMITATION ON LIABILITY. MANUFACTURER'S LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR SALE OF THE PRODUCTS SHALL BE LIMITED TO THE AMOUNT PAID BY THE CUSTOMER FOR THE PRODUCTS. IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE, EXCEPT IN THE CASE OF DEATH OR PERSONAL INJURY RESULTING FROM MANUFACTURER'S GROSS NEGLIGENCE. IN NO EVENT SHALL MANUFACTURER BE LIABLE TO DISTRIBUTOR OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, WHETHER OR NOT MANUFACTURER HAS BEEN ADVISED ON THE POSSIBILITY OF SUCH DAMAGE. -11- 10. PROPERTY RIGHTS AND CONFIDENTIALITY (a) PROPERTY RIGHTS. Distributor agrees that Manufacturer owns all right, title, and interest in the product lines that include the Products and in all of Manufacturer's patents, trademarks, trade names, inventions, copyrights, know-how, and trade secrets relating to the design, manufacture, operation or service of the Products. The use by Distributor of any of these property rights is authorized only for the purposes herein set forth, and upon termination of this Agreement for any reason such authorization shall cease. (b) SALE CONVEYS NO RIGHT TO MANUFACTURE OR COPY. The Products are offered for sale and are sold by Manufacturer subject in every case to the condition that such sale does not convey any license, expressly or by implication, to manufacture, duplicate or otherwise copy or reproduce any of the Products. Distributor shall take appropriate steps with Distributor's customers, as Manufacturer may request, to inform them of and assure compliance with the restrictions contained in this Subsection 10(b). (c) CONFIDENTIALITY. (i) Distributor acknowledges that by reason of Distributor's relationship to Manufacturer hereunder, Distributor will have access to certain information and materials concerning Manufacturer's business, plans, customers, technology, and products that are confidential and of substantial value to Manufacturer, which value would be impaired if such information were disclosed to third parties. Distributor agrees that Distributor will not use in any way for Distributor's own account or the account of any third party, nor disclose to any third party, any such confidential information revealed to Distributor by Manufacturer. Distributor shall take every reasonable precaution to protect the confidentiality of such information. Upon request by Distributor, Manufacturer shall advise whether or not Manufacturer considers any particular information or materials to be confidential. Distributor shall not publish any technical description of the Products beyond the description published by Manufacturer (except to translate that description into appropriate languages for the Territory). In the event of termination of this Agreement, there shall be no use or disclosure by Distributor of any confidential information of Manufacturer, and Distributor shall not manufacture or have manufactured any compositions, devices, components or assemblies utilizing any of Manufacturer's confidential information. (ii) Manufacturer acknowledges that by reason of Manufacturer's relationship to Distributor hereunder, Manufacturer will have access to certain information and materials concerning Distributor's business, plans, customers, technology, and products that are confidential and of substantial value to Distributor, which value would be impaired if such information were disclosed to third parties. Manufacturer agrees that Manufacturer will not use in any way for Manufacturer's own account or the account of any third party, nor disclose to any third party, any such confidential information revealed to Manufacturer by Distributor. Manufacturer shall take every reasonable precaution to protect the confidentiality of such information. Upon request by Manufacturer, Distributor -12- shall advise whether or not Distributor considers any particular information or materials to be confidential. In the event of termination of this Agreement, there shall be no use or disclosure by Manufacturer of any confidential information of Distributor. 11. TRADEMARKS AND TRADE NAMES (a) USE. During the term of this Agreement, Distributor shall have the right to indicate to the public that Distributor is an authorized distributor of Manufacturer's Products and to advertise within the Territory such Products under the trademarks, marks, and trade names that Manufacturer may adopt from time to time ("Manufacturer's Trademarks"). Distributor shall not alter or remove any Manufacturer's Trademark applied to the Products at the factory. Except as set forth in this Section 11, nothing contained in this Agreement shall grant to Distributor any right, title or interest in Manufacturer's Trademarks. At no time during or after the term of this Agreement shall Distributor challenge or assist others to challenge Manufacturer's Trademarks or the registration thereof or attempt to register any trademarks, marks or trade names confusingly similar to those of Manufacturer. (b) APPROVAL OF REPRESENTATIONS. All representations of Manufacturer's Trademarks that Distributor intends to use shall first be submitted to Manufacturer for approval, which shall not be unreasonably withheld, of design, color, and other details or shall be exact copies of those used by Manufacturer. If any of Manufacturer's Trademarks are to be used in conjunction with another trademark on or in relation to the Products, then Manufacturer's mark shall be presented equally legibly, equally prominently, and of greater size than the other but nevertheless separated from the other so that each appears to be a mark in its own right, distinct from the other mark. 12. PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY (a) INDEMNIFICATION. Distributor agrees that Manufacturer has the right to defend, or at Manufacturer's option to settle, and Manufacturer agrees, at Manufacturer's own expense, to defend or at Manufacturer's option to settle, any claim, suit or proceeding brought against Distributor or Distributor's customers on the issue of infringement of any United States of America or foreign patent, copyright or trademark by the Products sold hereunder or the use thereof, subject to the limitations hereinafter set forth. Manufacturer shall have sole control of any such action or settlement negotiations, and Manufacturer agrees to pay, subject to the limitations hereinafter set forth, any final judgment entered against Distributor or Distributor's customer on such issue in any such suit or proceeding defended by Manufacturer. Distributor agrees that Manufacturer at Manufacturer's sole option shall be relieved of the foregoing obligations unless Distributor or Distributor's customer notifies Manufacturer promptly in writing of such claim, suit or proceeding and gives Manufacturer authority to proceed as contemplated herein, and, at Manufacturer's expense, gives Manufacturer proper and full information and assistance to settle and/or defend any such claim, suit or proceeding. Manufacturer shall not be liable for any costs or expenses incurred without Manufacturer's prior written authorization. -13- (b) LIMITATION. Notwithstanding the provisions of Subsection 12(a) above, Manufacturer assumes no liability for (i) infringements covering completed equipment or any composition, assembly, circuit, combination, method or process in which any of the Products may be used but not covering the Products when used alone; (ii) trademark infringements involving any marking or branding not applied by Manufacturer or involving any marking or branding applied at the request of Distributor; or (iii) infringements involving the modification or servicing of the Products, or any part thereof, unless such modification or servicing was done by Manufacturer. (c) ENTIRE LIABILITY. THE FOREGOING PROVISIONS OF THIS SECTION 12 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF MANUFACTURER AND THE EXCLUSIVE REMEDY OF DISTRIBUTOR AND DISTRIBUTOR'S CUSTOMERS, WITH RESPECT TO ANY ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR OTHER INTELLECTUAL PROPERTY RIGHTS BY THE PRODUCTS OR ANY PART THEREOF. 13. INDEMNIFICATION. (a) Manufacturer and Distributor each agree to indemnify and hold the other party harmless from and against any and all claims made by any person or entity arising out of the processing, marketing, distribution and sale of the Products, where and to the extent such damages have been caused by the fault of such party or its employees or agents. The indemnifying party shall have the right to defend or, at its option, to settle such claims, and if it chooses to exercise such right, it shall have control over any such claim or settlement negotiations. The indemnifying party shall be relieved of the foregoing obligations unless the indemnified party gives prompt notice in writing of any such claim, suit or proceeding and, at the indemnifying party's expense, gives the indemnifying party proper and full information and assistance to settle and/or defend any such claim, suit or proceeding. (b) Distributor shall indemnify Manufacturer in respect of any claim which may be made against the Manufacturer. (i) that the use to which the Products are put constitutes a breach of Section 6 of The Health and Safety at Work Act 1974 or any other relevant United Kingdom or overseas safety legislation; and/or (ii) arising out of the failure by the Distributor to observe the terms of the Agreement. The provisions of this Section 13(b) shall not apply where the claim arises as a result of the negligence of Manufacturer or use of the Products in accordance with Manufacturer's written instructions. -14- 14. GENERAL PROVISIONS (a) GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of California, United States of America, without reference to conflict of laws principles or statutory rules of arbitration. The federal and state courts within the State of California, United States of America shall have exclusive jurisdiction to adjudicate any dispute arising out of this Agreement. Distributor hereby expressly consents to (i) the personal jurisdiction of the federal and state courts within California, (ii) service of process being effected upon Distributor by registered mail sent to the address set forth at the beginning of this Agreement, and (iii) the uncontested enforcement of a final judgement from such court in any other jurisdiction wherein Distributor or any of Distributor's assets are present. (b) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions between them. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the party to be charged. (c) NOTICES. Any notice required or permitted by this Agreement shall be in writing (in the English language) and shall be sent by telex, telecopier or telegram or by prepaid registered or certified mail, return receipt requested, addressed to the other party at the address shown at the beginning of this Agreement or at such other address for which such party gives notice hereunder. Such notice shall be deemed to have been given upon the earlier of receipt by the party to whom notice was sent or three (3) days after deposit in the mail. (d) FORCE MAJEURE. Nonperformance of either party shall be excused to the extent that performance is rendered impossible by strike, fire, flood, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control of and is not caused by the negligence of the non-performing party. (e) NON-ASSIGNABILITY AND BINDING EFFECT. A mutually agreed consideration for Manufacturer's entering into this Agreement is the reputation, business standing, and goodwill already honored and enjoyed by Distributor under Distributor's present ownership, and, accordingly, Distributor agrees that Distributor's rights and obligations under this Agreement may not be transferred or assigned directly or indirectly without the prior written consent of Manufacturer. Subject to the foregoing sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. (f) LEGAL EXPENSES. The prevailing party in any legal action brought by one party against the other and arising out of this Agreement shall be entitled, in addition to any other rights and remedies that such prevailing party may have, to reimbursement for expenses incurred by such prevailing party, including court costs and reasonable attorneys' fees. -15- (g) COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. (h) PARTIAL INVALIDITY. If any provision of this Agreement is held to be invalid, then the remaining provisions shall nevertheless remain in full force and effect. The parties agree to renegotiate in good faith any term held invalid and to be bound by the mutually agreed substitute provision. IN WITNESS WHEREOF, the undersigned are duly authorized to execute this Agreement on behalf of Manufacturer and Distributor, as applicable. METRA BIOSYSTEMS, INC. AMERSHAM K.K. ("Manufacturer") ("Distributor") By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers --------------------------------- ------------------------------- Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers ------------------------- ----------------------- Title: President & CEO Title: President ------------------------------ ---------------------------- -16- EXHIBIT A PRODUCT DESCRIPTION AND PURCHASE PRICE For Research Products Only Distributor's Purchase Price Product(1) (U.S. dollars) - ----------------------------------------- -------------- Collagen Crosslinks Immunoassay in microtiter plate enzyme-linked immunosorbent assay (ELISA) format, including packaging, labeling and product inserts $[500.00] Prolagen-C-TM- Immunoassay in microtiter plate sandwich-assay format, including packaging, labeling [to be determined] and product inserts NovoCalcin-TM- Immunoassay in microtiter plate enzyme-linked immunosorbent assay (ELISA) [to be determined] format, including packaging, labeling and product inserts (1) Products to be sold by Distributor solely for research purposes. METRA BIOSYSTEMS, INC. AMERSHAM K.K. ("Manufacturer") ("Distributor") By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers --------------------------------- ------------------------------- Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers ------------------------- ----------------------- Title: President & CEO Title: President ------------------------------ ---------------------------- -17- EXHIBIT B TERRITORY Distributor's Territory shall be all portions of the following: [Japan] METRA BIOSYSTEMS, INC. AMERSHAM K.K. ("Manufacturer") ("Distributor") By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers --------------------------------- ---------------------------- Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers ------------------------- --------------------- Title: President & CEO Title: President ------------------------------ -------------------------- -18- EXHIBIT C QUARTERLY PURCHASE COMMITMENTS For Research Products Only First Year Second Year Number of Kits Number of Kits -------------- -------------- [Crosslinks] [to be agreed] [to be agreed] [Prolagen-C-TM] [to be agreed] [to be agreed] [NovoCalcin-TM] [to be agreed] [to be agreed] METRA BIOSYSTEMS, INC. AMERSHAM K.K. ("Manufacturer") ("Distributor") By: /s/ George W. Dunbar, Jr. By: /s/ V. Chambers --------------------------------- ------------------------------- Print Name: George W. Dunbar, Jr. Print Name: V.M.A. Chambers ------------------------- ----------------------- Title: President & CEO Title: President ------------------------------ ---------------------------- 1 May 1993 -19- EX-27.1 4 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE METRA BIOSYSTEMS, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JUN-30-1997 JUL-01-1996 MAR-31-1996 15,916 13,386 1,342 0 1,052 32,171 4,265 0 48,706 3,358 0 0 0 13 43,614 48,706 4,392 274 3,023 17,282 0 0 0 (10,911) 0 (10,911) 0 0 0 (10,911) (.87) (.87)
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