Execution Copy
EXHIBIT E
SERVICES AGREEMENT
This SERVICES AGREEMENT (the "Agreement"), effective as of June 30, 1999
(the "Effective Date"), is made by and between OPUS DIAGNOSTICS, INC., a
Delaware corporation ("OPUS"), and OXIS HEALTH PRODUCTS, INC., a Delaware
corporation ("OXIS").
RECITALS
1. Contemporaneously with the execution of this Agreement, OPUS is
purchasing from OXIS, and OXIS is selling to OPUS, OXIS' therapeutic drug
monitoring assays business (the "TDM Business") as described in that
certain Asset Purchase Agreement (the "Purchase Agreement") entered into by
the parties and dated the date hereof.
2. In connection with the purchase and sale of the TDM Business, OPUS
and OXIS wish to provide for certain covenants and agreements relating to
manufacturing and other services to be provided by OXIS to OPUS with
respect to the TDM Business.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
PROVISION OF SERVICES
1.1 Manufacturing Services to be Provided by OXIS. During the term of this
Agreement, or for such shorter period as is specified on Article V, OXIS shall
provide to OPUS, the OXIS manufacturing services described herein and in Exhibit
A hereto (the "Manufacturing Services"); provided, however, that (a) OPUS
provides a reasonable advance notice of its requirements for such Manufacturing
Services specifying the type and amount of products OPUS requests OXIS to
manufacture, and (b) OXIS shall have the right to designate and select its
employees and facilities which will be used to provide such Manufacturing
Services. Set forth on Exhibit C hereto is a list of the products which OXIS
will manufacture for OPUS (the "Products"). OPUS shall provide the notice set
forth in this Section 1.1 for each calendar quarter (commencing with the quarter
starting on October 1, 1999) and shall deliver such notice to OXIS no later than
thirty (30) days prior to the commencement of the calendar quarter to which such
notice relates. Upon confirmation of such order (which shall be given within ten
(10) business days of receipt thereof or the order shall not be deemed
confirmed), OXIS will provide OPUS with information concerning the manufacturing
and delivery schedule. Prior to the quarter starting on October 1, 1999, the
parties shall endeavor to agree on the amounts, types and timing of the products
to be manufactured hereunder.
1.2 Administrative Services to be Provided by OXIS. During the term of this
Agreement, or for such shorter period as is specified on Exhibit B hereto, OXIS
shall provide to OPUS the administrative services described in Exhibit B hereto
(the "Administrative Services" and, collectively with the Manufacturing
Services, the "Services"); provided, however, that OXIS shall have the right to
designate and select its employees and facilities which will be used to provide
such Administrative Services. All OPUS' requests for Administrative Services
shall be made in a reasonably detailed writing to OXIS. OXIS shall notify OPUS
within thirty (30) days whether it accepts or rejects OPUS' request for such
Services.
1.3 Charges for Manufacturing Services. During the first year of the term
of this Agreement, OPUS shall pay to OXIS a manufacturing fee per Product
manufactured as set forth on Exhibit C hereto. It is intended that the fees set
forth on Exhibit C will equal 115% of (i) all salary and benefits (excluding
bonuses and other incentive payments) incurred by OXIS for personnel (which
shall not include purchasing managers or persons occupying similar positions who
are paid $50,000 or more in annual salary) time spent in providing Manufacturing
Services to OPUS that are reasonably attributable to the Manufacturing Services,
and (ii) all materials and other costs and expenses, (including but not limited
to third-party charges, occupancy costs, supplies, insurance, equipment repairs
and maintenance and depreciation of existing (and OPUS approved future acquired)
equipment and leasehold improvements, but excluding any of OXIS' corporate
overhead) incurred by OXIS in providing the Manufacturing Services to OPUS that
are reasonably attributable to the Manufacturing Services, based on such
methodologies consistent with generally accepted accounting principles and
consistent with OXIS' past practices (the methodologies of calculating such
costs and expenses are set forth on Exhibit D hereto). If during each of the
first two six-month periods of the Agreement the total fees paid hereunder to
OXIS (i) do not equal the amount set forth in the immediately preceding sentence
calculated for such period (the "Period Shortfall"), then OPUS shall within
thirty (30) days of conclusion of the applicable period pay to OXIS an amount
equal to the Period Shortfall; or (ii) exceed the amount set forth in the
immediately preceding sentence calculated for such period ("Period Excess"),
then OXIS shall within thirty (30) days of conclusion of the applicable period
pay to OPUS an amount equal to the Period Excess for the applicable six-month
period. If there is a Period Shortfall or Period Excess for the first six-month
period, the parties agree that they shall adjust the fee schedule set forth on
Exhibit C for the second six-month period so that the total fees paid for the
second six-month period shall be consistent with the intent set forth in the
second preceding sentence. After the first year of this Agreement, the process
set forth above shall be repeated (with the fee schedule being adjusted to
reflect necessary changes) and at the conclusion of this Agreement or the
delivery of Products ordered under Section 5.4, the parties shall calculate a
Period Shortfall or Excess, as the case may be, and payments shall be made
accordingly. OXIS agrees that it shall, during the term of this Agreement,
continue to manufacture research assays at its Portland facility. Title and risk
of loss shall pass to OPUS upon the completion and release of Products to OPUS'
finished goods inventory (which OXIS may hold on behalf of OPUS). OXIS will, on
behalf of OPUS, ensure that such Products held in OPUS' finished goods inventory
are insured by third party insurers in amounts equal to the value of such
Products with Opus named as a loss payee. Upon the request of OPUS, OXIS shall
provide OPUS a copy of the endorsement of such insurance policy.
1.4 Charges for Administrative Services. During the term of this Agreement,
OPUS shall pay to OXIS an amount equal to 115% of (i) all salary and benefits
(less bonuses and other incentive payments), incurred by OXIS for personnel time
spent in providing Administrative Services to OPUS that are separately
identifiable, (ii) all salary and benefits (less bonuses and other incentive
payments), incurred by OXIS for personnel time spent in providing Administrative
Services to OPUS that are not separately identifiable, but are reasonably
attributable to the Administrative Services, based on such methodology
(consistent with generally accepted accounting principles and consistent with
OXIS' past practices) as OXIS determines to be appropriate, and (iii) all other
costs and expenses (including, but not limited to, third-party charges,
occupancy costs, supplies, insurance, equipment repairs, and maintenance and
depreciation of equipment and leasehold improvements, but excluding any of OXIS'
corporate overhead) incurred by OXIS in providing Administrative Services to
OPUS that are separately identifiable or are reasonably attributable to the
Administrative Services, based on such methodology (consistent with generally
accepted accounting principles and, OXIS' past practices) as OXIS determines to
be appropriate.
1.5 Independent Contractor. OXIS will provide Services to OPUS under this
Agreement as an independent contractor and not as an agent or employee.
Employees of OXIS providing Services shall at all times remain employees of
OXIS. OXIS shall have the exclusive right to determine and shall be solely
responsible for the salaries, wages and benefits of its employees providing
Services under this Agreement.
1.6 Limitation on Costs. For purposes of Sections 1.3 and 1.4 above, any
increases in salary rates incurred by OXIS from one billing period to the next
will be limited to the actual increase in such costs experienced by OXIS,
provided OPUS was given notice of such increases.
ARTICLE II
PAYMENTS
2.1 Invoices and Payment. OXIS shall submit to OPUS monthly an invoice for
all charges associated with Services for the preceding month and any adjustments
for prior months. All invoices shall describe in reasonable detail (a) the
Services provided during the preceding month and the charges (including
third-party charges) associated therewith and (b) any prior months' adjustments.
OPUS shall remit payment to OXIS in full within thirty (30) days after the date
on which the invoice is received. OPUS shall pay to OXIS a penalty of one and
one-half percent (1-1/2%) per month, or any part thereof, for which a payment is
past due. Any payment that is sixty (60) days or more past due will be
considered a breach of this Agreement, and such breach will give OXIS the right
to terminate or suspend its services pursuant to this Agreement.
2.2 Method of Payment. Transfer of funds pursuant to this Agreement shall
be made in U.S. dollars by wire transfer of immediately available funds to an
account or accounts specified by the party receiving such payment.
2.3 Books and Records. OXIS shall keep complete and accurate books, records
and accounts of all transactions pertaining to Services provided to OPUS
pursuant to this Agreement, including the identity of employees providing
Services, the amount of time devoted by such employees in performing such
services, directly assignable expenses incurred in providing such Services and
other matters reasonably necessary to calculate amounts to be paid for such
Services pursuant to this Agreement, and OPUS shall have the right to inspect at
OXIS' facilities such books, records and accounts relating to the provision of
the Services upon reasonable notice and during reasonable business hours.
ARTICLE III
PERFORMANCE OF SERVICES
3.1 Degree of Care. OXIS shall perform the Services hereunder with the same
degree of care, skill and prudence customarily exercised by it in respect of its
own business, operations and affairs. All manufacturing services provided
hereunder shall be performed in material conformance with all applicable
regulations of the U.S. Food and Drug Administration (the "FDA") and other
regulatory agencies covering Good Manufacturing Practices and Exhibit A.
3.2 Certain Information. OPUS shall provide any information, and access to
such facilities, reasonably needed by OXIS to perform the Services pursuant
hereto. If the failure to provide such information renders the performance of
any requested Service impossible or unreasonably difficult, OXIS may, upon
reasonable notice to OPUS, refuse to provide such Services. 3.3 Proprietary
Information.
(a) "Proprietary Information" means any and all information and
material disclosed by either OPUS or OXIS (each a "Discloser," if disclosing) to
the other party (each a "Recipient," if receiving) (whether in writing, or in
oral, graphic, electronic or any other form) that is marked as (or provided
under circumstances reasonably indicating it is) confidential or proprietary, or
if disclosed orally or in other intangible form or in any form that is not so
marked, that is identified as confidential at the time of such disclosure and
summarized in writing and transmitted to the Recipient within thirty (30) days
of such disclosure. Proprietary Information, includes, without limitation, any
trade secret, know-how, idea, invention, process, technique, algorithm, program,
design, schematic, drawing, formula, data, plan, strategy, forecast, and any
technical, engineering, manufacturing, product, marketing, servicing, financial,
personnel and other information and materials of Discloser and its employees,
consultants, investors, affiliates, licensors, suppliers, vendors, customers,
clients and other third parties.
(b) Recipient shall hold all Proprietary Information in strict
confidence and shall not disclose any Proprietary Information to any third
party. Recipient shall disclose the Proprietary Information only to its
employees and agents who need to know such information and who are bound in
writing by restrictions regarding disclosure and use comparable to those set
forth herein. Recipient shall not use any Proprietary Information for the
benefit of itself or any third party or for any purpose other than the purposes
contemplated by this Agreement or related hereto. Recipient shall take the same
degree of care that it uses to protect its own confidential and proprietary
information and materials of similar nature and importance (but in no event less
than reasonable care) to protect the confidentiality and avoid the unauthorized
use, disclosure, publication, or dissemination of the Proprietary Information.
The obligations of this Section 3.3 with respect to any item of Proprietary
Information shall survive and continue for five (5) years from the date of
Recipient's receipt of such Proprietary Information.
(c) The foregoing restrictions on disclosure and use shall not apply
with respect to any Proprietary Information to the extent such Proprietary
Information: (i) was known by Recipient before receipt from Discloser; (ii)
becomes known to Recipient without confidential or proprietary restriction from
a source other than Discloser that does not owe a duty of confidentiality to
Discloser with respect to such Proprietary Information; or (iii) is
independently developed by Recipient without the use of the Proprietary
Information of Discloser. In addition, Recipient may use or disclose Proprietary
Information to the extent (a) approved by Discloser or (b) Recipient is legally
compelled to disclose such Proprietary Information, provided, however, that
prior to any such compelled disclosure, Recipient will give Discloser reasonable
advance notice of any such disclosure and shall cooperate with Discloser in
protecting against any such disclosure and/or obtaining a protective order
narrowing the scope of such disclosure and/or use of the Proprietary
Information. This Section 3.3 will survive any termination or expiration of this
Agreement.
3.4 Certain Representations. OXIS represents and warrants to OPUS, which
representations and warranties shall remain in effect during the term of this
Agreement, that:
(a) The Products to be supplied to OPUS, including the containerization
and packaging therefor, shall at the time of delivery be of merchantable
quality, free from material manufacturing defects and conform with the Product
Specifications and the Manufacturing Specifications set forth in Exhibit A
annexed hereto, and the requirements of the FDA and other regulatory agencies,
in force at that time.
(b) OXIS shall notify OPUS on OXIS becoming aware of any intellectual
property rights relevant to the manufacture and sale of the Products owned by
OXIS which were inadvertently not included as part of the intellectual property
included in the sale of the TDM Business under the Purchase Agreement.
(c) The Products to be supplied to OPUS and its customers shall,
subject to any damage to the Products subsequent to delivery of the Products to
OPUS' customers (including, without limitation, damage by reason of improper
storage), conform in all material respects with the Product Specifications.
(d) OXIS shall not change the manufacturing process with respect to any
Product if such change could affect the performance or registration of such
Product, without the prior written consent of OPUS given after prompt notice to
OPUS and consultation between the parties.
(e) The manufacturing of the Products by OXIS shall be performed in its
facility which is an FDA approved facility.
(f) At the time finished Products are transferred to OPUS, such
Products shall have a minimum shelf life (i.e., expiration date) of six months.
ARTICLE IV
LIMITATIONS ON LIABILITY
4.1 Limitations on Liability. OXIS shall not have any liability under this
Agreement (including any liability for its own negligence) for damages, losses
or expenses suffered by OPUS or its subsidiaries as a result of the performance
or non-performance of OXIS' obligations hereunder, unless such damages, losses
or expenses are caused by or arise out of the willful misconduct or gross
negligence of OXIS or a breach by OXIS of any of the express provisions hereof;
notwithstanding the foregoing to the extent OXIS has delivered non-conforming
goods, or failed to deliver goods properly ordered hereunder, OXIS shall be
responsible for promptly delivering conforming goods. Notwithstanding the
foregoing, neither party shall be liable for, or considered to be in breach or
default hereunder on account of, any delay or failure to perform as required by
this Agreement as a result of any causes or conditions which are beyond such
party's reasonable control (including acts of God, earthquakes, labor strife,
and the ability to obtain necessary raw materials from suppliers). IN NO EVENT
SHALL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES THAT SUCH OTHER PARTY OR ITS SUBSIDIARIES OR
ANY THIRD PARTY MAY INCUR OR EXPERIENCE ON ACCOUNT OF THE PERFORMANCE OR
NON-PERFORMANCE OF SUCH PARTY'S OBLIGATIONS HEREUNDER. Furthermore, neither
party shall be liable to the other party or to any third party with respect to
obligations or liabilities incurred by either party in connection with their
separate businesses unrelated to the matters related to this Agreement.
4.2 Product Recalls. In the event that any Product must be recalled from
customers because of any error in manufacturing or quality control by OXIS, then
OXIS will replace the Product and carry out the entire recall at OXIS' expense.
In the event that any Product must be recalled from customers for any other
reason, then the cost of carrying out the recall and replacing the Product shall
be borne by OPUS.
ARTICLE V
TERM AND TERMINATION
5.1 Terms of Agreement. This Agreement shall become effective on the
Effective Date and shall terminate on September 30, 2000; provided, however,
that the term of this Agreement may be extended with respect to one or more
Services with the mutual written agreement of the parties. During the term of
this Agreement, OXIS shall be the exclusive provider of the Services hereunder
to OPUS and OPUS shall not engage any other party to perform such Services
subject to Exhibit A.
5.2 Termination for Default. Either party may terminate this Agreement and
its obligations hereunder if the other party has failed to perform a material
obligation under this Agreement and has not corrected such failure within ninety
(90) days after receipt of written notice from the non-defaulting party
describing such failure.
5.3 Termination for Bankruptcy. Either party may terminate this Agreement
upon written notice to the other party if the other party becomes involved in
any voluntary or involuntary bankruptcy or other insolvency proceeding
(including an assignment for the benefit of creditors) and such proceeding is
not dismissed within sixty (60) days following its commencement.
5.4 Effect of Termination. Any termination of this Agreement shall not
affect or discharge the obligation of any party to pay amounts owed to the other
party prior to such termination. Nothing in this Agreement shall limit any
remedies which either party may have concerning the default of the other, except
in no event shall either party be liable to the other for any incidental or
consequential damages or lost profits with respect to any failure to perform
obligations pursuant to this Agreement. Upon termination, provided, that OPUS is
not in default or breach of the terms of this Services Agreement, OXIS shall
continue to provide OPUS with sufficient Products to honor all Product orders
for up to one hundred twenty (120) days after the effective date of termination.
5.5 Survival or Provisions. The rights and obligations of the parties
pursuant to Article IV and Section 3.3 shall survive termination of this
Agreement.
ARTICLE VI
MISCELLANEOUS
This Agreement shall be subject to the terms and provisions of Article 12
of the Purchase Agreement, which are hereby incorporated into this Agreement to
the extent applicable; provided, however, that OXIS' obligations with regard to
the Manufacturing Services may not be assigned.
IN WITNESS WHEREOF, the parties hereto have caused this Services Agreement
to be executed by their duly authorized representatives.
OXIS HEALTH PRODUCTS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
OPUS DIAGNOSTICS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Exhibit A
Manufacturing Specifications
OXIS will procure materials, assemble, manufacture, test and release
fully-assembled (or as otherwise directed) therapeutic monitoring assays,
calibrators and controls (the "Products") as described in Exhibit C in
accordance with the specifications set forth herein to fulfill OPUS'
requirements.
OXIS will ship the Products to OPUS' customers in accordance with orders
received from OPUS. Each Product will be in finished and packaged form in
containers suitable for shipping as OPUS requires for marketing and will bear a
label designed or approved by OPUS. OPUS will provide to OXIS on a quarterly
basis, a twelve-month rolling unit forecast by Product and by month. The first
three months of each quarterly forecast will be a firm purchase commitment from
OPUS to OXIS. Quarterly forecasts will be submitted to OXIS as set forth in
Section 1.1 of the Services Agreement to assure adequate time for production
scheduling. In addition to the direct manufacturing activity, OXIS will perform
the following direct support functions:
- Supervision of Manufacturing and Support Functions
OPUS and its representatives shall have reasonable access, during
normal business hours, to the OXIS facilities to review and audit OXIS's
manufacturing and quality control practices and procedures as they relate to the
Products. OXIS shall cooperate with OPUS and its representatives in conducting
the foregoing reviews and audits. OXIS agrees to consider all reasonable
recommendations made by OPUS with respect to such practices and procedures.
- Materials Planning
- Purchasing
- Production Scheduling
OXIS shall notify OPUS as soon as possible if OXIS is unable or
anticipates it will be unable to provide a sufficient quantity of Products as
specified in the notice of Product requirements given by OPUS or of Products
complying in all respects to the representations and warranties set forth in
this Agreement because of problems encountered by OXIS in the manufacturing of
such Products. Upon receipt of such notification, OPUS shall work with OXIS to
resolve such manufacturing problems. If such manufacturing problems have not
been resolved in the reasonable good faith judgment of OPUS within thirty (30)
days from the date OPUS receives notice under this item, then OPUS shall
automatically have the right to manufacture or have manufactured for it such
Products, without liability of OPUS to OXIS hereunder.
- Receiving
- Material Storage
The Products and ingredients therein shall be placed, as necessary, in
cold storage.
- Shipping
With respect to each lot of any Product, OXIS shall notify OPUS in
advance of such delivery. Accompanying the notification shall be a Certificate
of Analysis in a form agreed upon by the parties and in which OXIS certifies
that the Products to be delivered have been analyzed and meet the applicable
Product Specifications and Manufacturing Specifications. Such Certificate of
Analysis shall also set forth the batch number of the Products, the date of
manufacture, the date on which the shelf-life for such Products expires, and the
finished product lot-to-lot test data.
- In-process quality testing
- Final product release testing
- Document control
OXIS shall also provide OPUS all current technical documentation, data
and information pertaining to use of the Products, handling instructions or
manuals, that are used by OXIS in connection with the use of the Products.
- Quality Assurance and Regulatory Affairs
(a) OXIS shall reasonably comply with GMP and other regulatory
compliance.
(b) Each party shall inform the other party of any material complaints
it receives from customers or from any government or regulatory authority in
respect of the Products, their manufacture or constituents, and any findings in
respect thereof. Such data, information and copies of any relevant
correspondence in relation thereto shall be supplied to the other party as soon
as practicable after receipt or issuance by the party receiving such complaint.
(c) OPUS shall promptly notify OXIS of the discovery and nature of any
material non-conformance of any Product to the Product Specifications or to any
claims contained in authorized package inserts. OXIS shall keep OPUS informed of
the progress of corrective actions undertaken by OXIS, with OPUS' prior consent.
- Insurance
OXIS will maintain comprehensive insurance from carriers with policies
and in amounts customary in the industry with respect to its manufacture of the
Products, and upon the request of OPUS to furnish to OPUS a summary of such
policies.
- Improvements
If OPUS requests OXIS to make any improvements to any of the Products
during the term of this Agreement, OXIS shall, once such improvements are
completed, include such improvements in the Products.
Product Specifications
Product specifications will be delivered by OXIS on or before sixty
(60) days following the date of this Agreement.
Exhibit B
Administrative Services
Certain functions that are not directly linked to product manufacturing
will be provided by OXIS to support the production process and related
activities. These functions include, but are not limited to, the following
activities:
- Cost Accounting, to the extent requested by OPUS
- Inventory control and costing, including lot tracking of raw materials
and finished goods
- Customer Service: Processing orders; responding to customer inquiries,
etc.
- Regulatory Affairs: Complying with GMP's and other regulatory
requirements. In addition, OXIS shall render all assistance reasonably
requested by OPUS, including provision of all technical and other data
developed by OXIS, to enable OPUS to obtain any necessary or desirable
regulatory approvals. (Services required to maintain any regulatory
approvals shall be provided pursuant to Exhibit A.) All technical and
other data disclosed by OXIS to OPUS on or after the date hereof shall
be subject to the confidentiality provisions set forth in Section 3.3
of this Agreement and shall be so treated by OPUS. OPUS agrees that if
any regulatory submission contains manufacturing or technical
information relating to Product manufacturing, know-how or process
valuation studies, OPUS will obtain OXIS's consent to such submission
prior to submitting it to the appropriate regulatory authority, and
OXIS shall not unreasonably withhold such consent.
- Research & Development: Provision of technical support to manufacturing
and in response to customer inquiries.
- General Administration: Management direction and support for the
manufacturing and administrative support functions.
- Training: OXIS shall train the OPUS technical Product and customer
support force in the service and use of the Products. The first such
training session shall take place as mutually agreed, but no more than
thirty (30) days after the Closing Date of the Purchase Agreement.
There shall be additional training sessions available to OPUS personnel
or its customers' personnel at reasonable intervals thereafter.
- Telemarketing: OXIS shall provide telemarketing services to market and
sell the Products. Initially, the telemarketing staff shall consist of
two persons. Additional telemarketing staff may be added, or
telemarketing staff may be reduced at the request of OPUS, but any such
reductions will require one month's notice to OXIS. Telemarketing staff
will be under the direct supervision of OXIS' President or his
designee. OPUS will be responsible for the direction of the
telemarketing effort, such direction to be given to OXIS' President or
his designee. As requested by OPUS, OXIS will provide marketing
materials, attend trade shows and perform other marketing functions
customary in the industry.
Exhibit C
Transfer Prices
Initial
OXIS Transfer
Product No. Description Price
REAGENTS KITS:
11012 Gentamicin Reagent $ 40.05
11013 Phenobarbital Reagent 40.05
11014 Phenytoin Reagent 40.05
11015 Theophylline Reagent 40.05
11016 Tobramycin Reagent 40.05
11017 Vancomycin Reagent 53.81
11018 Digoxin Reagent 40.05
11019 Amikacin Reagent 40.05
11026 Quinidine Reagent 40.05
11027 Carbamazepine Reagent 40.05
11037 Teicoplanin Reagent 223.31
11050 Valproic Acid Reagent 40.05
11051 Digitoxin Reagent 40.05
11055 Topiramate Reagent 197.02
CALIBRATOR SETS:
41017 Gentamicin Calibrator 35.00
41018 Phenobarbital Calibrator 35.00
41019 Phenytoin Calibrator 35.00
41020 Theophylline Calibrator 35.00
41021 Tobramycin Calibrator 35.00
41022 Vancomycin Calibrator 35.00
41023 Digoxin Calibrator 35.00
41024 Amikacin Calibrator 35.00
41027 Teicoplanin Calibrator 35.00
41029 Quinidine Calibrator 35.00
41030 Carbamazepine Calibrator 35.00
41050 Valproic Acid Calibrator 35.00
41051 Digitoxin Calibrator 35.00
41055 Topiramate Calibrator 35.00
CONTROL SETS:
41032 Teicoplanin Control 35.00
41056 Topiramate Control 35.00
Exhibit D
Charges for Manufacturing Services
Pursuant to Section 1.3 of the Services Agreement, charges for
manufacturing services are to equal 115% of OXIS' costs. Those costs (the
"Costs") are comprised of costs of three OXIS departments - Manufacturing,
Quality Control ("QC"), and Quality Assurance/Regulatory Affairs ("QA/RA"). The
costs of OXIS' Manufacturing, QC and QA/RA departments are to be allocated to
the TDM Products using a methodology consistent with that used for 1998 and
previously presented to OPUS. This memorandum specifies more precisely how the
Costs shall be determined.
MANUFACTURING
The cost of raw materials used in the manufacture of the TDM Products (the
"Products") is specifically identified by OXIS and will be included in the
Costs.
The cost of raw materials for other products manufactured by OXIS will be
excluded from the Costs. No portion of OXIS' amortization of intangible
technology assets resulting from previous business acquisitions will be included
in the Costs. No depreciation of equipment or leasehold improvements will be
included except for depreciation of assets already owned by OXIS or for
purchases approved by OPUS. Bonuses and other incentive payments will not be
included in the Costs.
Costs reported in OXIS' manufacturing department include salaries and
benefits, occupancy costs, supplies, insurance, repairs and maintenance,
freight, other third-party charges, depreciation and amortization. Occupancy
costs and depreciation are allocated to OXIS' departments based on the relative
portion of OXIS' facility occupied by each department. Costs and expenses of
OXIS' manufacturing department other than raw materials and those costs
identified in the immediately preceding paragraph will be allocated to the
Products and other products manufactured by OXIS' manufacturing department based
on the relative sales of the Products and other products manufactured by OXIS in
its Portland facility. The sales value to be used for the Products will be the
sales to OPUS' customers.
QC AND QA/RA DEPARTMENTS
Costs and expenses of OXIS' QC and QA/RA departments will be allocated to
the Products based on estimated percentage of the time of QC personnel relating
to the Products. Bonuses and other incentive payments will not be included in
the Costs. For 1998 OXIS estimated that 52.5% of the QC and QA/RA personnel time
was devoted to the Products.
