MFG-PACKING AGREEMENT-ADI DIAGNOSTICS 9-27-94

MANUFACTURING/PACKING AGREEMENT



AGREEMENT executed this 27TH day of SEPTEMBER, 1994, between CALYPTE BIOMEDICAL CORPORATION, a California corporation having a principal place of business at 1440 Fourth Street, Berkeley, California, U.S.A. (hereinafter referred to as the "Company"), and ADI DIAGNOSTICS INC., an Ontario corporation having a principal place of business at 30 Meridian Road, Rexdale, Ontario, Canada, (hereinafter referred to as "ADI"). This Manufacturing/Packing Agreement and the exhibits attached hereto are collectively referred to as the "Agreement".



WHEREAS, The Company has obtained certain formulae, know-how, technologies and other trade secrets relating to the manufacture and production of the products described in Exhibit A hereto (hereinafter referred to as "Products"); and



WHEREAS, The Company desires to disclose such formulae, know-how, technologies and trade secrets to ADI and to have the Products manufactured, processed, packed and/or produced by ADI from ingredients and other materials supplied by the Company and/or ADI on a non-exclusive basis; and



WHEREAS, ADI desires to handle, store and/or process the materials necessary to produce the Products, and to manufacture, process, handle and/or store the Products in accordance with the terms and conditions hereof.





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NOW, THEREFORE, in reliance on the foregoing, and in consideration of the mutual covenants set forth herein and other good and valuable consideration, the Company and ADI hereby agree as follows:





1. PRODUCTS



This Agreement covers the HIV Products set forth in Exhibit A. The Products shall conform to the Company and Government Specifications pursuant to Section 5 ("Specifications") of this Agreement. In the future, Products of similar design and technology may be added to the Agreement after good faith negotiation, by written amendment to this Agreement signed by both the Company and ADI.



2. PRODUCTION



Subject to the Company's obligations in Sections 6 ("Packing Supplies") and 8 ("Ingredients") of this Agreement, ADI agrees to perform all necessary services at its facility in Rexdale (hereinafter referred to as "Plant") and to provide all necessary facilities, equipment and production materials not supplied by the Company to manufacture, test, pack, store and ship the Products for the Company. ADI further agrees not to subcontract any aspect of its obligations as described herein, except the movement of Product by common carrier, without the express written permission of the Company, which permission shall not be unreasonably withheld.





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3. QUANTUY



a) Subject to the Company's obligations in Sections 6 ("Packing Supplies") and 8 ('Ingredients") of this Agreement and to availability, ADI shall maintain sufficient capacity and quantities of supplies to manufacture, assemble, test, and pack, pursuant to the terms and conditions of this Agreement, the projected requirements set forth in Exhibit B hereto for each type of Product.



b) The parties shall mutually ensure that the manufacturing processes used at ADI can be practically implemented and reasonably expected to meet the anticipated demand. The parties understand that of necessity such processes may differ somewhat from those currently in use by the Company.



4. PRICE



The Company shall pay ADI in accordance with Exhibit A-1.



5. SPECIFICATIONS



(a) The Government Spgcifications.



ADI shall provide all services pertaining to the manufacturing of the Products in strict accordance with the instructions and specifications established and provided by the Company, as amended from time to time in accordance with this Subsection 5(a) and Subsection 3(b) above (hereinafter referred to as the "Company Specifications"), including but not limited to good manufacturing practice guidelines and industry standards of quality





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and packaging. The Company represents, covenants and warrants that the Company Specifications and all amendments thereto shall, to the best of the Company's knowledge, be in compliance with all applicable laws and regulations of government regulatory agencies and authorities in countries in which the Company distributes the Product, and shall provide ADI with written assurance of such compliance, signed by a duly authorized officer of the Company upon execution of this Agreement. ADI agrees to inform the Company promptly of any action taken in relation to the Plant and/or the Products by any such government agencies or authorities. The Company Specifications may be amended in writing from time to time by the Company, upon written consent of ADI, which consent shall not be unreasonably withheld, to reflect changes in the Products or in the containers or labels of the Products. The Company shall endeavour to provide to ADI as much advance notice as possible of such changes, and the parties shall agree in writing to a schedule to implement such changes as soon as possible. Inventory purchased by ADI and rendered obsolete by such amendments shall be compensated by the Company at cost plus 15 %, provided however that such inventory was not purchased by ADI after notice from the Company that such inventory would be obsolete. Under no circumstances will ADI be required to purchase new equipment or additional resources as a result of such amendments without reasonable compensation from the Company, which compensation shall be discussed and mutually agreed upon between the parties.





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(b) Company Specifications.



All Products manufactured, packaged, and assembled by ADI and the vials, bottles and other containers in which they are packaged shall be in compliance with Company Specifications.



6. PACKING SUPPLIES



Subject to the provisions of this Section 6, the Company shall supply to ADI the supplies, including but not limited to kit boxes, plate pouches, package inserts, spacers and desiccants (hereinafter collectively referred to as "Packing Supplies") necessary to pack the quantities of the Products specified in this Agreement. If, with the Company's prior permission, ADI uses alternate materials, such supplies shall be invoiced to the Company as part of the "per kit" fee charged to the Company for ADI's manufacturing, assembly, storage and shipping activities, as specified in Exhibit A-1. In any event, ADI shall demonstrate the reliability of such packing materials to the satisfaction of the Company, prior to their use.



7. MANUFACTURING PACKING FEES AND INVOICING



a) ADI shall invoice the Company as specified in this Agreement for all fees due and payable to ADI by the Company pursuant to this Agreement. Packing supplies provided by ADI at the Company's request shall not be billed separately by ADI, but rather, as part of the manufacturing/packing fees. Each invoice shall also include such information as the Company may request to permit cross-reference to other information submitted by ADI





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pursuant to Section 9 (Reports). Upon its written acceptance of a batch of Products, the Company shall pay such invoices in accordance with the terms specified in Exhibit A-1 of this Agreement. The Company shall determine the acceptability of a batch of Products in no more than ten (10) working days following receipt of sample material and documents from ADI. The Ingredients (as defined in Section 8 hereof) shall be in compliance with all applicable laws and regulations as referenced in Section 5, subsection (a).





b) All shipping and handling expenses incurred by ADI on the Company's behalf will be billed to the Company on a monthly basis at ADI's cost plus 15 %, but not to exceed cost plus US$500.00 per shipment, in addition to, and separately from the prices per kit billed for manufacturing, assembly, and storage specified in Exhibit A-1. Title to the Product and all risks associated therewith, including shipment, passes to the Company upon written acceptance by the Company of the batch of Product, as set out in Subsection 7(a) hereof. At the Company's request, ADI shall process all shipping claims for shipments made by ADI, on behalf of the Company.



c) In anticipation of the need for ADI to purchase certain equipment which will enable it to fulfil the obligations described in this Agreement, the Company agrees to pay to ADI upon execution of this Agreement the sum of

, which is one third of the total estimated capital expenditure. The Company waives any and all claims to ownership of said equipment. In the event that capital expenses are less than , then ADI shall reimburse the Company one third of the difference between the actual expenditure and





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the estimate. In the event that capital expenditures exceed

, and the Company provides its written acceptance of the proposed. purchases, then the Company will pay to ADI one third of the difference between the actual costs and the estimate.





d) In anticipation of the need for ADI to undertake special start-up activities to fulfil the obligations described in this Agreement, the Company agrees to pay to ADI the sum of , in five consecutive monthly instalments of , beginning in the month of July, 1994.



e) At the time that this Agreement is signed, the Company has not made specific commitments to distributors on the minimum remaining shelf-life acceptable for the Product, nor has the Company articulated a policy of its own in this regard. As such policies and commitments are made, the Company shall advise ADI of same immediately and in writing. ADI shall notify the Company in its routine reports of Product or components which are approaching minimum shelf-life, and the Company in turn shall advise ADI on its wishes for disposition of such Product or components. In the event that the Company requests destruction of short-dated Product or components, ADI shall be entitled to bill the Company for all costs associated with the disposition of such short-dated Products at cost plus 15%





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8. INGREDEFNTS



Unless otherwise specified, the Company agrees, at its expense, to supply ADI at the Plant with the ingredients set forth in Exhibit F of this Agreement (referred to herein as "Ingredients') necessary for the production of the Products and to deliver such Ingredients to ADI in time to enable ADI to meet its commitments under this Agreement. All Ingredients shall be held by ADI on consignment and at the Company's expense and risk. The Company agrees to maintain at ADI a minimum of two (2) months' anticipated requirement of Company-provided Ingredients. The Company represents, covenants and warrants that to the best of the Company's knowledge, all Ingredients shall be in compliance with all applicable requirements, laws and regulations as r ...