Manufacturing, Packaging And Supply Agreement

CONFIDENTIAL TREATMENT REQUESTED AS TO CERTAIN INFORMATION CONTAINED IN THIS EXHIBIT 10.45 AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


EXECUTION COPY


MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT


AMONG


INVERNESS MEDICAL INNOVATIONS, INC.,


INVERNESS MEDICAL SWITZERLAND GmbH,


UNIPATH, LTD.


AND


WARNER-LAMBERT COMPANY LLC


dated as of


JUNE 6, 2003


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MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT


This MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT dated as of June 6, 2003, by and among INVERNESS MEDICAL INNOVATIONS, INC., a Delaware corporation having its principal office at 51 Sawyer Road, Suite 200, Waltham, MA 02453, ("Innovations") for purposes of Sections 6.3, 8, 11 and 12 of this Agreement only, INVERNESS MEDICAL SWITZERLAND GMBH, a Swiss corporation, having its principal office at Bundesplatz 10, 6300 Zug, Switzerland ("Inverness") for purposes of Sections 6.2, 11 and 12 of this Agreement only, Unipath, Ltd., a United Kingdom company with its principal office at Priory Business Park, Bedford, MK 44 3UP ("Unipath") and WARNER-LAMBERT COMPANY LLC, a Delaware limited liability company, having its principal office at 201 Tabor Road, Morris Plains, New Jersey 07950 ("Warner-Lambert").


WITNESSETH:


WHEREAS, Warner-Lambert desires to have Unipath manufacture, package and supply to Warner-Lambert, Warner-Lambert's requirements of early pregnancy test kits complying with the Specifications ("EPT Product") for resale in the Territory (defined below) under the terms and conditions hereinafter set forth, and


WHEREAS, Unipath is willing to do so under the terms and conditions hereinafter set forth, and


WHEREAS, each of Innovations and Inverness are direct or indirect parents of Unipath and expect to derive substantial benefit from Unipath's execution of and performance under this Agreement.


NOW, THEREFORE, in consideration of these premises and the mutual covenants, agreements, representations and warranties herein contained, the parties hereby agree as follows:


1. DEFINITIONS


1.1. "AFFILIATE" shall mean, with respect to any Person, any other Person controlling, controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation (or other entity) if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity), whether through the ownership of voting securities, by contract or otherwise.


1.2. "AGREEMENT" shall mean this Manufacturing, Packaging and Supply Agreement and all Exhibits and Schedules attached hereto, as the same may be amended or otherwise modified from time to time pursuant to the terms set forth herein.


1.3. "ANNUAL MINIMUM" shall have the meaning set forth in Section 2.13.


1.4. "BUSINESS DAY" shall mean any day other than Saturday, Sunday or any day on which the banks located in New York are authorized or obligated to be closed.


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1.5. "CGMP" shall mean all applicable standards and Laws relating to manufacturing practices for products (including ingredients, intermediates, bulk and finished products) formulated by any Governmental Authority having jurisdiction in the form of Laws, regulations, guidelines, advisory opinions and compliance policy guides and current interpretations of the authority agency, as the same may be updated, supplemented or amended from time to time.


1.6. "CONTRACT YEAR" shall have the meaning set forth in Section 2.13.


1.7. "ENVIRONMENTAL LAWS" shall mean all laws, rules, ordinances, codes, regulations, governmental, administrative or judicial orders or decrees or other legal requirements of any kind, whether currently in existence or hereafter promulgated, enacted, adopted or amended, relating to pollution, contamination of the environment, safety or protection of human health and environment (including ambient air, surface water, groundwater, land or subsurface strata) and the handling, treatment, transportation or disposal of Waste, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 ET SEQ.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C. 1251 ET SEQ.; the Clean Air Act, 42 U.S.C. 7401 ET SEQ.; Occupational Safety and Health Act, 29 U.S.C. 651 ET SEQ.; any state counterparts of the foregoing; any rules, regulations, or guidances promulgated under the foregoing; and any other laws and regulations related to emissions, spills, leaks, discharges, releases and threatened releases of substances subject to regulation thereunder.


1.8. "ENVIRONMENTAL LOSSES" shall mean any and all fines, penalties, costs, liabilities, damages, losses or expenses (including sampling, monitoring or remediation costs, liabilities based on a finding of "successor" liability, reasonable attorneys', consultants' or engineering fees and disbursements, costs of defense and interest expense) incurred by Warner-Lambert or an Affiliate of Warner-Lambert or for which Warner-Lambert or an Affiliate of Warner-Lambert is liable or obligated pursuant to any Environmental Law (a) arising out of the operation, ownership or control of Unipath's facilities, the facilities of any Affiliates of Unipath, or the facilities of any subcontractors of Unipath or its Affiliates or (b) arising from the manufacturing, generation, processing, storage, transportation, distribution, treatment, disposal or other handling of Product or materials used in the manufacture and packaging of the Product, or associated by-product, raw materials, intermediates, Wastes, Hazardous Materials, emissions, releases, spills, leaks or discharges, or returned Product, by Unipath, Affiliates of Unipath, or subcontractors of Unipath or its Affiliates, or their officers, directors, employees, agents or contractors.


1.9. "EPT PRODUCT" shall have the meaning set forth in the recitals hereto.


1.10. "FACILITY" shall mean Unipath's manufacturing facility located at Priory Business Park, Bedford, MK 44 3UP, and, subject to Warner-Lambert's prior qualification and written approval, approval not to be unreasonably withheld, such other facilities to be used by Unipath or its Affiliates in the manufacture, packaging and storage of Product or materials utilized in the manufacture and packaging of Product hereunder.


1.11. "FIRM ORDER" shall have the meaning set forth in Section 2.4.3.


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1.12. "FIRM ORDER PERIOD" shall have the meaning set forth in Section 2.4.3.


1.13. "GOVERNMENTAL AUTHORITY" shall mean any duly authorized court, tribunal, arbitrator, agency, commission, official or other instrumentality of any federal, state, province, county, city or other political sub-division, domestic or foreign.


1.14. "HAZARDOUS MATERIALS" shall mean any pollutant, contaminant, hazardous or toxic substance, constituent or material and other wastes or other substances regulated under any Environmental Law and may include Product properly rejected pursuant to Section 4.12 hereof, but shall not include any other returned Product.


1.15. "HAZARDOUS WASTE" shall mean waste arising from the manufacture and packaging of the Product that is defined as "Hazardous" by applicable federal, state, provincial or local laws, rules or regulations and may include Product properly rejected pursuant to Section 4.12 hereof, but shall not include any other returned Product.


1.16. "IMPROVEMENTS" shall mean (a) any new or modified product that performs the same function as the Product in a better or more economical way or (b) any new or modified product that performs the same function as the Product and costs less to manufacture than the Product.


1.17. "INNOVATIONS" shall have the meaning set forth in the preamble hereto.


1.18. "INTELLECTUAL PROPERTY" means the Patents and Know-How.


1.19. "INVERNESS" shall have the meaning set forth in the preamble hereto.


1.20. "KNOW-HOW" means any current or future manufacturing processes and information related thereto (including, without limitation, manufacturing, and inventory ordering lead-times, and procedures and vendor and other records), trade secrets, designs, industrial models, technology, technical information or data, manufacturing, engineering, and technical drawings, know-how, methodologies, formulae, concepts, inventions, improvements, copyrights, clinical data and FDA 510(k) filings related to the registration, supply marketing, use or sale of the Product.


1.21. "LAWS" shall mean any law, statute, rule, regulation, guideline (including cGMP), ordinance or other pronouncement of any Governmental Authority having the effect of law in the United States, any foreign country or territory, or any domestic or foreign state, province, county, city or other political sub-division, including any Environmental Law.


1.22. "PATENTS" means the patents and patent applications (and the related resulting patents) listed on Exhibit B to this Agreement and any addition, continuation, continuation-in-part, division, reissue, extension, or patent term extension of, and any substitute application for, any such patent or patent application and any other current or future patents, patent applications or patent rights related to the Product or the registration, supply, marketing, issue or sale of the Product.


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1.23. "PERSON" shall mean any individual or corporation, company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.


1.24. "PRICE" shall mean the price to be charged by Unipath for Product supplied hereunder, as set forth on Exhibit C, as the same may be amended or otherwise modified from time to time pursuant to the terms set forth herein.


1.25. "PRODUCT" shall mean the EPT Product in finished and packaged form.


1.26. "PRODUCT SUPPLY DATE" shall have the meaning specified in Section 2.4.1.


1.27. "PRODUCT UNIT" shall mean each e.p.t(R) brand early pregnancy test stick purchased by Warner - Lambert from Unipath.


1.28. "PRODUCT WRITINGS" shall mean text, writings, artwork and documents, including without limitation, text and artwork for the Product, Product packaging and Product inserts, created by or on behalf of Warner-Lambert for the Product.


1.29. "QUALITY AGREEMENT" shall have the meaning set forth in Section 4.14.


1.30. "RECALL", with respect to any Product, shall mean a "recall", "correction" or "market" withdrawal, as those terms are defined in 21 CFR 7.3, as the same may be amended from time to time, and shall include any post-sale warning or mailing of information regarding such Product, including those warnings or mailings described in 21 CFR 200.5.


1.31. "RECEIVING POINT" shall have the meaning set forth in Section 3.2.


1.32. "RELEASE" shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through the ambient air, soil, subsurface water, groundwater, wetlands, lands or subsurface strata.


1.33. "SPECIAL WASTE" shall mean waste arising from the manufacture and packaging of the Product hereunder, including labeling that contains, or has come into contact with, the Product or raw materials, including Product properly rejected pursuant to Section 4.12 of this Agreement, rejected or unusable raw materials, disposable manufacturing equipment (including filters used in manufacturing and packaging), wash rinse and previously used or discarded protective clothing. Special Waste does not include Hazardous Waste or wastewater which is discharged under a National Pollutant Discharge Elimination System Permit or discharged to a publicly owned treatment works or returned Product not properly rejected pursuant to Section 4.12 hereof.


1.34. "SPECIFICATIONS" shall mean the specifications for the raw materials and packaging materials used in the manufacture and/or packaging of the Product and the specifications for the manufacture, processing and packaging of the Product, including all formulae, Know-How, materials requirements, standards of quality control, quality assurance and sanitation, as mutually agreed upon in writing by Warner-Lambert and Unipath. Final


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Specifications for the Product, as mutually agreed upon in writing by Warner-Lambert and Unipath, are referenced in Exhibit D. If Specifications have not yet been finalized as of the date hereof, as noted on such Exhibit, the parties shall finalize such Specifications by written agreement as soon as reasonably practicable after the date hereof.


1.35. "START-UP ACTIVITIES" shall have the meaning set forth in Section 2.1 and Exhibit A hereof.


1.36. "TERM" shall have the meaning set forth in Section 12.1 hereof.


1.37. "TERM MINIMUM" shall have the meaning set forth in Section 2.13.


1.38. "TERRITORY" means the United States, its territories and possessions.


1.39. "UNIPATH" shall have the meaning set forth in the preamble hereto.


1.40. "WARNER-LAMBERT" shall have the meaning set forth in preamble hereto.


1.41. "WASTE" shall mean all wastes which arise from the manufacture and packaging of Product hereunder including Hazardous Waste and Special Waste.


The definitions in this Section 1 shall apply equally to both the singular and plural forms of the terms defined. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Sections and Exhibits shall be deemed references to Sections of this Agreement and Exhibits to this Agreement unless the context shall otherwise require.


2. START-UP ACTIVITIES; SUPPLY OF PRODUCT; FIRM ORDERS AND REPORTS.


2.1. START-UP ACTIVITIES. Unipath hereby represents, warrants and agrees that:


(a) Unipath shall comply with and complete all manufacturing and packaging start-up activities with respect to the Product, including the manufacture or ordering of all Product materials, the Product manufacturing and packaging trials, validation protocols, validation activities, written validation reports, the activities listed in Exhibit A hereto on the dates listed therein and any other activities agreed to be performed by Unipath..


(b) Any protocols and reports prepared by Unipath relating to the Product (including any validation reports) shall be subject to Warner-Lambert's prior review and approval, such approval not to be unreasonably withheld.


(c) Unipath shall permit a reasonable number of Warner-Lambert employees (such number to be mutually agreed by Unipath and Warner-Lambert) to observe and review the Start-Up Activities at the Facility during normal business hours and on reasonable notice subject to Warner-Lambert employees' compliance with Facility rules and regulations regarding security, health and safety. Unipath and Warner-Lambert have jointly developed or shall jointly develop a project plan to determine the timeline for the ordering and receipt of Product packaging materials


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for the Product. The validation reports produced hereunder shall be deemed confidential information of Unipath and Warner-Lambert hereunder and shall not be disclosed by either party to any third party, except as permitted under Section 11 hereof.


(d) The activities described in this Section 2.1 are collectively referred to herein as the "Start-Up Activities".


2.2. PURCHASE AND INSTALLATION OF EQUIPMENT, MOLDS AND TOOLING. Unipath shall be responsible for purchasing, installing, qualifying and maintaining at its Facility any and all new or used equipment, molds, tooling and/or modifications to existing equipment, molds and/or tooling necessary for the manufacturing, packaging, labeling and shipment of Product hereunder. All costs and expenses associated with such purchase, installation, qualification and maintenance shall be borne by Unipath. To the extent Warner-Lambert purchases or otherwise pays for any equipment, molds or tooling for the manufacture or packaging of Product, all such equipment, molds and tooling shall be the property of Warner-Lambert. Unipath shall use such tooling only in connection with the manufacture and packaging of the Product under this Agreement and shall not modify such tooling without the consent of Warner-Lambert. The installation, qualification and maintenance of all equipment, molds and tooling shall be conducted in accordance with all applicable Laws, and any relevant Specifications.


2.3. AGREEMENT TO SUPPLY. During the Term of this Agreement Unipath shall manufacture, package and supply the Product to Warner-Lambert in accordance with terms of this Agreement.


2.4. FORECAST ; FIRM ORDERS; CHANGES TO FIRM ORDERS.


2.4.1 Unipath will first deliver Product to Warner-Lambert, on June 6, 2004
(the "Product Supply Date").


2.4.2 Beginning six (6) months after the date of this Agreement and
continuing on each calendar month during the term of this Agreement,
Warner-Lambert shall provide Unipath with written forecast of its
estimated monthly purchases of the Product for the twelve (12) month
period commencing with the calendar month following the month in
which such forecast is delivered to Unipath (except that in the case
of forecasts delivered prior to May 2004, such forecasts shall be for
the twelve (12) month period beginning on the Product Supply Date).
Such forecasts shall represent Warner-Lambert's commercially
reasonable, good-faith estimate of its Product requirements from
Unipath for such twelve (12) month period in light of then existing
conditions. Except as provided in Section 2.4.3, such forecasts are
for the convenience of Unipath only, shall not constitute firm
purchase or shipping orders and shall not be binding upon, or create
any obligation or liability with respect to, Warner-Lambert or
Unipath.


2.4.3 Beginning with the forecast delivered in May 2004, at the time each
written forecast is delivered by Warner-Lambert to Unipath pursuant
to Section 2.4.2, the first three (3) months of such forecast (the
"Firm Order Period") shall be deemed


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a firm order (a "Firm Order") for the Product, which Firm Order shall
specify actual quantities and delivery dates for the Product for the
Firm Order Period. Quantities of Product delivered pursuant to a Firm
Order shall not vary more than plus or minus five percent (+/- 5%) of
such Firm Order. Unipath shall deliver the Product on the delivery
date specified by Warner-Lambert in the relevant Firm Order or up to
fifteen (15) Business Days prior to such delivery date.
Warner-Lambert shall be obligated to pay Unipath in accordance with
Section 3.1, for quantities of Product produced and delivered by
Unipath in accordance with the instructions contained in
Warner-Lambert's Firm Orders, subject to any exceptions to
Warner-Lambert's obligation to pay for such Product contained in this
Agreement.


2.4.4 Once a Firm Order is submitted to Unipath with respect to any given
Firm Order Period, Warner-Lambert may reasonably vary that Firm Order
by providing at least five (5) days' written notice to Unipath prior
to the beginning of the month for which such Firm Order is to be
varied during such Firm Order Period; PROVIDED, HOWEVER, that Unipath
shall have thirty (30) days from the day of such variance notice to
deliver the amount of Product that is in excess of the amount ordered
by Warner-Lambert pursuant to the original Firm Order.
Notwithstanding the immediately preceding sentence, in the event
Warner-Lambert wishes to increase a Firm Order by greater than
twenty-five percent (25%), Unipath is only required to make
reasonable commercial efforts to produce such additional volume of
Product for Warner-Lambert.


2.4.5 If Warner-Lambert decreases the production volumes set forth in
Warner-Lambert's Firm Orders, Warner-Lambert shall be responsible for
the reasonable cost of materials for the Product purchased by Unipath
and in accordance with Warner-Lambert's Firm Orders; PROVIDED,
HOWEVER, that Warner-Lambert shall not be responsible for the
reasonable cost of materials for (i) any materials in excess of a
ninety (90) day supply unless such excess supply was specifically
authorized in writing by Warner-Lambert or (ii) any materials that
are or will be subsequently used by Unipath. At Warner-Lambert's
option, Warner-Lambert may instruct Unipath to utilize such materials
in the future supply of Product. In addition, Unipath shall use
reasonable efforts to utilize such materials in the supply of Product
so as to minimize the amount of such materials that remain unused.


2.5. STANDARD FORMS. In ordering and delivering Product, Warner-Lambert and Unipath may employ their standard forms, but nothing in those forms shall be construed to modify or amend the terms of this Agreement, and, in the case of any conflict herewith, the terms of this Agreement shall control.


2.6. QUANTITATIVE DEFECTS. Warner-Lambert shall inform Unipath in writing of any claim relating to quantitative defects in shipments of Product within thirty (30) days following actual receipt of such shipments by Warner-Lambert, and Warner-Lambert shall provide to Unipath copies of any appropriate documents relating to such defects that Warner-Lambert may


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have in its possession. Unipath shall, at its own expense, provide Warner-Lambert with any missing quantities of such Product as soon as reasonably possible after receipt of notice from Warner-Lambert. Warner-Lambert shall only be obligated to pay for actual quantities of Product received by Warner-Lambert. Any claim for a quantitative defect which is not made within such thirty (30) day period shall be deemed to have been waived by Warner-Lambert.


2.7. INVENTORY; CARRYING CHARGES. Unipath will keep adequate inventories of Product materials on hand or with suppliers to accommodate variations in quantities and packaging that may be reasonably required by Warner-Lambert hereunder, consistent with Section 2.4 above. In the event Unipath is required, pursuant to this Agreement, to hold inventory of non-active raw materials and/or Product for more than 180 days, Unipath shall have the right to charge Warner-Lambert for reasonable inventory carrying charges (not to exceed 9% of Unipath's cost of non-active raw materials in the held inventory) to compensate Unipath for the carrying cost of such inventory, if the existence of such inventory arose as a result of a change in sales forecast by Warner-Lambert. Such inventory carrying charges shall be periodically invoiced to Warner-Lambert, as incurred, together with suitable back up information evidencing the carrying charges and Warner-Lambert shall pay such invoices within thirty (30) days after receipt.


2.8. NO THIRD PARTY CONFLICTS. Unipath shall not manufacture or process goods for itself or a third party where to do so will, as a consequence, delay delivery of Warner-Lambert's identified requirements of Product (including any reasonable increases in Warner-Lambert's delivery requirements thereof pursuant to the terms of Section 2.4 hereof).


2.9. PRODUCT SAMPLES. Unipath shall provide Warner-Lambert with samples of the Product (other than retention samples) promptly upon request. Such Product samples shall be shipped to Warner-Lambert in accordance with the provisions set forth in Section 3.2 hereof, and Warner-Lambert shall pay the Price for such Product in the manner described in Section 3.3.


2.10. ALTERNATIVE SUPPLY. Notwithstanding the provisions of Section 2.11, if at any time during the Term of this Agreement Unipath does not for a period of thirty (30) days or more, or anticipates that it will not, fill the total monthly Product volume required by Warner-Lambert's forecasts, or the Product supplied by Unipath does not meet or comply with the Specifications for a period of thirty (30) days or more, Unipath must (a) procure from a third party quantities of Product sufficient to replace any quantities of Product which Unipath cannot or will not supply, or (b) otherwise provide for an alternative source of Product. Unipath shall promptly notify Warner-Lambert in the event that it cannot or will not meet forecasted volumes, or in the event Product does not meet or comply with Specifications. Unipath shall use its best efforts with Warner-Lambert to resolve such problems during the thirty (30) day period. Unipath and its Afiliates shall cooperate with, and supply all reasonable technical assistance, including, without limitation, technical personnel, at Unipath's expense, to any alternate supplier, and shall assist in the disclosure of Intellectual Property to such supplier and such supplier shall have complete access to and use of such Intellectual Property during the period Unipath shall be unable or unwilling to supply Product, or the Period during which the Product fails to meet Specifications; PROVIDED THAT any alternate supplier to whom Unipath or its Affiliates must disclose Intellectual Property in accordance with this Section 2.10, shall be required to execute a


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confidentiality agreement prior to disclosure. If Unipath does not provide an acceptable alternative source of supply within 60 days of the first date (x) Unipath was unable or unwilling to supply Product, or (y) the Product failed to meet Specifications, in addition to any other rights it may have hereunder or at law, Warner-Lambert may terminate this agreement in accordance with Section 12.2. Each of Inverness and Unipath shall indemnify Warner-Lambert, its Affiliates and their directors, officers, agents, consultants and employees for the aggregate losses, including an increase in the price paid by Warner-Lambert to a third-party supplier of the substitute product in connection with the exercise of its rights under this SECTION 2.10. The parties agree that the indemnification procedures set forth in Section 8.4 shall be followed by the parties with respect to the foregoing indemnification.


2.11. COMMITMENT TO EXCLUSIVE PURCHASE. Beginning on the Product Supply Date, Warner-Lambert shall, and shall cause its Affiliates, and any other person which Warner-Lambert authorizes to sell pregnancy tests under the e.p.t.(R) brand or any other brand owned by Warner-Lambert (collectively, the "AFFILIATED ENTITIES") to purchase exclusively from Unipath, one hundred percent (100%) of their requirements of all Product for sale in the Territory, and Warner-Lambert shall not purchase or permit any ...