Filed by sedaredgar.com - Response Biomedical Corporation - Exhibit 4.9






Certain information in this exhibit has been omitted as
confidential, as indicated by [***]. This information
has been filed separately with the Commission. 

MASTER MANUFACTURING AND SUPPLY AGREEMENT 

                THIS
MASTER MANUFACTURING AND SUPPLY AGREEMENT (“Master Agreement”) dated
November 30, 2006 (“Effective Date”) is between 3M Company acting through its
Medical Division (“3M”) and Response Biomedical Corporation, 100-8900 Glenlyon
Parkway, Burnaby, B.C., Canada (“RBC”). 3M and RBC are referred to jointly as
“Parties” and individually as a “Party”. 

1.            
SCOPE; EXCLUSIVITY; DEFINITIONS. 

1.1          
Concurrently with the execution of this Agreement, 3M and RBC are
entering into an Amended and Restated Joint Development Agreement (the “JDA”)
pursuant to which 3M and RBC will jointly develop Products (as defined in the
JDA) and an Equity Agreement under which 3M has agreed to purchase from RBC, and
RBC has agreed to sell 3M, Shares at agreed upon terms and conditions as
described therein The Parties also wish to establish a business relationship in
which 3M may request that RBC produce certain products. When the Parties
identify product(s) that 3M will purchase from RBC on a recurring basis, they
will sign a sub-agreement to this Master Agreement (a “Subcontract”) describing
those products (the "Products"), such Product prices, and any variations from
this Master Agreement. All Products will be made or processed in accordance with
the packaging and product specifications referenced in the applicable
Subcontract (as more fully defined below, the “Specifications”). This Master
Agreement and all Subcontracts are collectively referred to as "the Agreement."
3M’s global affiliates may purchase under the Agreement and RBC will sell
Products and/or Product Services (as the same may be defined in an applicable
Subcontract) to them under the Agreement's terms. On 3M's request, RBC will sell
any Product and/or Product Service under the Agreement's terms to the next
supplier in 3M's supply chain, who will use such Products and/or Product
Services to manufacture or process products for 3M. 

1.2          
Unless the applicable Subcontract provides otherwise:

         
  (a) During the Term, 3M and its affiliates shall purchase exclusively
  from RBC all of their commercial requirements of Products for Targets. 

         
(b) During the Term, RBC will supply all Products for Targets
exclusively to 3M and its affiliates (other than the Product described in
Exhibit A-1 hereto which shall be supplied non-exclusively).

         
(c) “Target” means a causative agent of a human infectious
disease that causes (i) hospital-acquired infections or (ii) community-acquired
infections [***]

 

 

 

 

1.3          
In addition to other terms defined throughout this Agreement, the
following initially capitalized terms in this Agreement, whether used in the
singular or plural, shall have the

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	1.4 	
      respective meanings set forth below:

	 	 
		
      “Deliver ” or “Delivery”
      means the transfer of possession of a tangible item, including the
      Product, to 3M FCA (Incoterms 2000) RBC’s Site or such other Incoterm
      which the Parties may agree to in writing.

	 	 
		
      “Escrow Material” means the information and data
      described in Section 23(d) hereof. “Firm Order” means a Purchase Order
      that cannot be cancelled or amended by 3M without RBC’s consent
..

	 	 
		
      “Forecast” means 3M’s written forecast of its monthly
      purchase requirements of Product for a rolling twelve (12) month
      period.

	 	 
		
      “Purchase Order” means a written request submitted by 3M
      to RBC for a specific quantity of Product by a specific Delivery date to a
      specific location.

	 	 
		
      “RBC’s Site” means RBC’s manufacturing facility at
      100-8900 Glenlyon Parkway, Burnaby, BC Canada, or such other site at which
      Product is manufactured as designated in a Subcontract .

	 	 
		
      “Specifications” means all written specifications for
      measurable and verifiable qualities, characteristics and attributes of a
      Product and all other written requirements, standards, specifications,
      quality assurance/quality control testing and other attributes pertaining
      to a Product or manufacturing or packaging of a Product that are agreed
      upon in writing by the Parties and set forth in the applicable
      Subcontract, as the same may be amended in writing from time to time by
      the Parties.

	 	 
		
      “Subcontract” means each written agreement signed by the
      Parties for the manufacture and supply of a Product, which may include the
      identification of Product, Specifications, pricing and payment terms,
      schedules, manufacturing plans, and any special conditions/requirements
      with respect to a Product, as the same may be amended from time to time in
      writing by the Parties. The Parties intend for this Agreement to be a
      master agreement governing multiple Products and agreed-upon Subcontracts
      governing each separate Product. Each fully executed Subcontract shall be
      incorporated herein by reference, made a part of this Agreement, and
      attached hereto as an exhibit .



2.          
TERM AND TERMINATION:

(a)         This
Agreement begins on the Effective Date and continues for [***] years,
unless terminated earlier as provided for herein (the “Term”). The Term may be
renewed for additional [***] year periods upon the mutual written
agreement of the Parties. 3M shall have the right to terminate this Agreement in
whole or in part upon  days prior written notice to[***] RBC at any
time after the first  [***] years of the Term. The termination of this
Agreement for any reason shall automatically terminate any and all Subcontracts,
unless the Parties otherwise agree in writing.

	(b) 	
      Either Party may terminate this Agreement or any
      Subcontract as follows:

	 	 
		
      (i) if a Party has materially breached any of its
      obligations under this Agreement or becomes unable to pay its bills and
      debts in the ordinary course of business, and such material breach (in the
      case of a breach capable of remedy) has continued for [***] days
      (or [***] days in the case of a breach resulting from
      non-payment of any



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amounts due) after written notice of
such breach was provided to the breaching Party by the nonbreaching Party, the
nonbreaching Party shall have the right at its option to terminate this
Agreement or any Subcontract effective upon giving written notice of such
termination to the breaching Party at the end of such [***] (or
)[***] day period. 

(ii) notwithstanding the foregoing, if
a Party materially breaches Section 21 (Confidentiality), the nonbreaching Party
may immediately terminate this Agreement or any Subcontract upon giving written
notice of such termination to the breaching Party. 

(iii) 3M shall have the right
  to terminate an applicable Subcontract following a Supply Failure as provided in
  Section 4. 

(c)        
Termination of this Agreement for any reason will not relieve the Parties of any
obligation accruing prior thereto and will be without prejudice to the rights
and remedies of either Party with respect to any antecedent breach of the
provisions of this Agreement. Sections 14 (Warranties), 15 (3M Materials), 16
(3M Equipment), 17 (Tooling), 18 (Indemnification), 20 (Limitation of
Liability), 21 (Confidentiality), 22 (Intellectual Property and Developments)
and Section 23 (Technology Transfer and License) survive termination of this
Agreement or any Subcontract.

(d)        
In the event the initial Term of this Agreement is not renewed despite
good faith negotiations between the Parties for at least  days, 3M
or[***] its designated affiliate shall have the right to receive the license
contemplated in Section 23. During the negotiation period and during the
transition time contemplated by the license, the Parties will work together to
ensure a continued supply of Products. 

(e)        [***]

 

 

 

 

 

 

 

3.          
FORECASTS; FIRM ORDER: 3M will provide RBC with a written, rolling
twelvemonth forecast of 3M’s Product purchases that 3M may revise up or down on
a monthly basis (a "Forecast") and which is not binding on 3M, except as may
otherwise be specified in the applicable Subcontract. If RBC believes it cannot
meet a Forecast, it must notify 3M within five (5) business days of receipt of
such Forecast. 

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4.          
ORDERS:

(a)         3M
shall submit to RBC Purchase Orders from time to time. 3M shall be obligated to
place Purchase Orders for the full amount of Product in the Firm Order.

(b)        
Each Purchase Order shall specify a Delivery date that is no earlier
than the lead-time specified in the applicable Subcontract for the Product. The
only function of 3M's Purchase Order shall be to communicate the desired
quantities of Product, shipment instructions and Delivery dates. All other terms
of the Purchase Order and all terms of any acknowledgment form or invoice of RBC
shall be void and of no effect, and the terms of this Agreement shall control
over such forms, or any other forms, unless otherwise specifically agreed to in
writing by both Parties.

(c)        
RBC shall supply 3M with Product pursuant to the Purchase Orders
submitted by 3M in accordance with the Firm Orders. RBC will accept all Purchase
Orders within  of the[***] Forecast. TIME AND RATE OF DELIVERY ARE OF
THE ESSENCE FOR ALL PRODUCTS. If RBC receives a Purchase Order in excess of
 of Forecast, RBC will[***] make all commercially reasonable efforts
to manufacture and Deliver on time that amount exceeding  of the
Forecast. [***] 3M may request in writing a modification of the Delivery date,
shipping instructions or quantity of Product in a Purchase Order. Such written
request shall be effective and binding on RBC only upon the written approval of
RBC. 

(d)        
If RBC is unable, at any time, to meet its obligation to supply 3M on a
timely basis with the quantity of Product reflected in Firm Orders for any
reason, including an event of excused performance under Section 27, RBC shall
immediately notify 3M of such inability to supply and the estimated extent of
the supply failure (including delay time and the quantity of Product involved),
and shall use commercially reasonable efforts to cure the supply problem as soon
as possible. If RBC fails, during any [***] period, to supply on a
timely basis and in accordance with the applicable Purchase Order that RBC is
required to accept pursuant to Section 4(c), at least  of the quantity
of Product set forth in such Purchase Order or if[***] RBC fails, during any
 period, to supply on a timely basis and in accordance with the[***]
applicable Purchase Order that RBC is required to accept pursuant to Section
4(c), at least  of the quantity of Product set forth in such Purchase
Order (either such occurrence, a[***] “Supply Failure”), 3M shall have, as its
sole and exclusive remedy, the right to terminate the Subcontract applicable to
the Product that is the subject of a Supply Failure upon giving written notice
to RBC of such termination and the right to exercise the license contemplated in
Section 23 through its designated affiliate.

5.          
PRICES:

(a)        
All prices of Products shall be set forth in the Subcontracts. Unless
the applicable Subcontract provides otherwise, Product prices stated in a
Subcontract include all amounts payable by 3M, other than amounts that are
payable by 3M in accordance with Incoterms 2000 (FCA, RBC’s Site). RBC will
absorb all overhead and labor cost increases without adjusting Product pricing
unless otherwise stated in this Agreement or a Subcontract. All cost savings
from the use of 3M Materials will be passed through to 3M in the form of a lower
price. 

(b)        
During the Term of this Agreement, both Parties agree they will make efforts to
reduce costs. The price for Products may be adjusted by RBC if a significant
price increase (5% or greater) to a raw material or any other bought-in
component is received. RBC agrees to provide 

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documentation, which may be redacted, which indicates the
percent of increase in the price of raw material or other bought-in component,
along with documentation which indicates the effect on the final Product
pricing. If the event giving rise to the price increase ceases to exist, RBC
will reduce the price back to its original price in effect prior to the price
increase. Pricing for increases in RBC’s cost of raw materials and other Product
components purchased by RBC will be adjusted no more than once per calendar
year.

(c) [***] 

6.          
PAYMENT: Payment terms are Net [***]  days. Invoices must
reference the Purchase Order number, match the Purchase Order and be issued on
or after the Delivery date. Payment of an invoice is not acceptance of any
Products. 3M may, at its discretion, on 60 days’ advance written notice require
implementation of Electronic Data Interchange, Electronic Funds Transfer, or
other electronic data communication or payment procedures. RBC will provide at
its cost the necessary technical interfaces to complete this implementation.

7.          
SHIPMENT: (a) Shipments must comply with Purchase Order instructions. All
shipments are FCA (Incoterms 2000) RBC’s Site. 3M will select transportation
modes and carriers. RBC will pay any excess freight costs caused by RBC’s
non-compliance with 3M’s reasonable instructions set forth in Purchase Orders or
in the event that RBC chooses to air freight Product in order to meet its
obligations in this Agreement, including those set forth in Section 7(b) below.
RBC will provide all shipment information to 3M within 24 hours after
Products are Delivered to 3M’s carrier.

(b)        
RBC will secure its facilities and all of its shipments made to a 3M-designated
site in accordance with the then-current U.S. Customs-Trade Partnership Against
Terrorism ("C-TPAT") security guidelines available at the U.S. Customs
website (www.cbp.gov). 

8.          
PACKAGING AND TRADEMARKS: (a) Unless a Subcontract provides otherwise,
RBC must package Products in accordance with the Specifications, as the same may
be modified from time to time by written agreement of the Parties. Product
packaging, labeling and inserts, product literature, and other advertising and
promotional materials will make reference to RAMP® and/or RBC as agreed upon by
the Parties subject to the applicable laws in a given country where Product is
marketed and sold. Each Party will comply with the other Party’s instructions
for use of the other Party’s trademarks (“Trademarks”) and disposal of Product
bearing Trademarks. A Party may only use the other Party’s Trademarks for
Product packaging and in accordance with the other Party’s written instructions.
Neither Party is licensed to use the other Party’s Trademarks for any other
purpose. Neither Party will claim any rights to the other Party’s Trademarks and
or do anything to lessen the significance of the other Party’s Trademarks.
Except as may be required (i) in order to respond to an inquiry by any
regulatory authority, (ii) in connection with any legal proceeding or (iii) as
approved in writing by the other Party, neither Party shall use the other
Party’s name in any promotional activity or suggest any affiliation with the
other Party. Neither Party will adopt, use or register any marks, businesses or
domain names confusingly similar to Trademarks of the other Party or any marks
for the Product owned or licensed by the other Party or the other Party’s
affiliates, or the other Party’s name.

(b)         RBC
will provide all information necessary for labels, packaging and package inserts
for Products, provided, however, 3M shall be finally responsible for the content
of all labels, 

5 




packaging and package inserts for Product, except to the extent
that RBC supplied inaccurate or incomplete information. 3M shall be responsible
for ensuring that the content of the label, package and package insert for each
country where the Product is marketed complies with the regulatory requirements
for that country. All artwork will be provided by 3M and will be used by RBC
only as authorized by 3M in this Agreement or as otherwise authorized by 3M in
writing. 3M shall reimburse RBC for RBC’s reasonable out-of-pocket costs and
expenses incurred in connection with labeling or packaging that becomes obsolete
for any reason other than RBC’s error or negligence, provided that in no event
shall 3M be responsible for any such costs or expenses in excess of the amount
of packaging required to fulfill 3M's then-current Firm Orders. 

9.          
SAFETY: RBC is solely responsible for safely performing its obligations
under this Agreement and for the safety of anyone working at or visiting RBC’s
facilities. 

10.         QUALITY:
RBC will comply with all terms of any quality agreement, quality plan or
other quality requirements relating to the Products referenced in the applicable
Subcontract or otherwise agreed in writing by the Parties (“Quality Agreement").
If this Agreement's terms conflict in any manner with a Quality Agreement’s
terms, this Agreement's terms will govern. RBC shall permit 3M’s personnel and
representatives, upon at least five (5) business days advance written notice and
for reasonable duration during regular business hours, to enter RBC’s Site to
inspect and audit RBC’s processes and documentation pertaining to manufacture of
Product and RBC’s compliance with this Agreement; provided, however, that such
audits shall be conducted not more than once in any twelve (12) month period,
other than "for cause" audits. “For cause” audits do not include any audit
relating to 3M Material, issues relating to quality of Product or otherwise to
confirm RBC’s compliance with this Agreement, including RBC’s obligations under
Section 23. All information obtained by 3M in any such audit which is RBC’s
Confidential Information under Section 21 shall be maintained as RBC’s
Confidential Information in accordance with Section 21. None of these
inspections or audits will relieve RBC of its obligations under this Agreement.
RBC will maintain quality assurance and quality controls as appropriate. For
Products classified as medical devices by the FDA, RBC will maintain a quality
system compliant with International Organization for Standardization standard
ISO 13485 and Quality Systems Requirements, 21 CFR Part 820 (“QSR”). 

11.         RECORDS:
RBC will, at its cost, take samples, perform inspections and issue
certificates as required by a Subcontract, Quality Plan or Specifications. RBC
will provide 3M with current Materials Safety Data Sheets for Products,
certificates of analysis, identification of materials covered by California
Proposition 65, and other related information, such as toxicological data, that
3M may reasonably request to enable 3M to comply with all applicable federal,
state, and municipal statutes, regulations, rules, and ordinances relating to
3M’s use of Products. RBC will maintain, and will make available to 3M during
any inspection and audit performed in accordance with Section 10, each Product's
design history file, device history record, and device master record, including
all documents required by Laws or reasonably requested by 3M, which may include,
but are not limited to: (a) Specifications, including all control test
specifications and release specifications; (b) in-process controls; (c) quality
audits; (d) production schedules; (e) environmental controls; (f) material
history records for each lot; (g) equipment maintenance and calibration records;
(h) process validation procedures and data; (i) defect analysis and corrective
action; (j) management reviews; (k) complaint history; (l) change histories for
documents generated by RBC; and (m) copies of all notices or correspondence
regarding any regulatory actions or filings relating to that Product, including,
without limitation, 

6 




recalls, safety alerts, medical device reports, adverse event
reports, and warning letters. RBC will promptly notify 3M of corrective actions
involving Products or any RBC’s Site.

12.        
REGULATORY COMPLIANCE: (a) RBC will cooperate with 3M to enable 3M to
meet regulatory requirements and international standards governing the
manufacture, sale and use of Products. Each Party will comply with all
applicable laws, regulations and ordinances, including, but not limited to,
laws, regulations, ordinances and rules governing environmental, hazardous waste
disposal, employee safety and health, and labor matters (collectively the
“Laws”), in performing its obligations under this Agreement. Such Laws may
include but are not limited to, as applicable, FDA regulations, Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601, et
seq., as amended, the Resource Conservation and Recovery Act, 42 U.S.C. § 6901,
et seq., as amended, the Toxic Substances Control Act, 15 U.S.C. § 2601, et
seq., as amended, the Clean Water Act, 33 U.S.C. § 1251, et seq., as amended,
and the Occupational Safety and Health Act, 29 U.S.C. § 651, et seq., as
amended. RBC will also properly handle, store, transport and dispose of all
waste generated in the manufacture of Products in compliance with applicable
federal, state and local statutes, regulations, rules and ordinances and sound
environmental, health and safety practices. 3M is not, and has no
responsibilities of, a generator, handler, arranger for disposal, or disposer of
hazardous or toxic substances generated at RBC’s facilities. RBC certifies that
Products have not been produced using forced, indentured or convict labor or
using labor of persons in violation of the minimum working age law in the
country of manufacture. 

(b)        
Products, or the 3M products into which they are incorporated, may need
to comply with Laws that restrict product content, including, but not limited
to, the European Union's Directive on the Restriction of the Use of Certain
Hazardous Substances in Electrical and Electronic Equipment, known as "RoHS". If
3M notifies RBC in writing that a Product must comply with the RoHS or if a
Subcontract requires compliance with RoHS, then (i) RBC warrants to 3M that such
Product (exclusive of any 3M Materials) is either exempt from such regulation or
that such Product will not contain any the following substances in excess of the
following maximum concentration values in any homogeneous material (“Restricted
Values") unless the applicable Specifications specifically permit that substance
in a higher concentration value: (y) 0.1% (by weight) for each of lead, mercury,
hexavalent chromium, polybrominated biphenyls or polybrominated diphenyl ethers;
or (z) 75 parts per million for cadmium and (ii) for Product that is not exempt
from such regulation, RBC will provide to 3M: (1) documentation that all non-3M
Materials in such Product do not exceed the Restricted Values; (2) certification
of the exact concentration of each substance subject to the Restricted Values in
all non-3M Materials in such Product so 3M can determine if 3M Materials
combined with non-3M Materials do not exceed the Restricted Values; and (3)
completed supplier questionnaires provided by 3M for reporting on the occurrence
of other substances that may require disclosure to governmental bodies,
customers and/or recyclers. If 3M gives RBC written notice that the Restricted
Values are changed in a manner that may negatively affect RBC's obligations
("Revised Restricted Values"), then RBC warrants that Product (exclusive of 3M
Material) will be exempt from or will meet the Revised Restricted Values and,
for any Product that is not exempt from such regulation, RBC will provide to 3M
the foregoing documentation as it pertains to the Revised Restricted Values. If
any Product that is not exempt from the RoHS fails to meet the initial or
Revised Restricted Values, then 3M may, in addition to other available remedies
and at its discretion, immediately on written notice to RBC, discontinue
purchasing that Product and any 3M purchase commitment, Forecast, or Purchase
Order relating to that Product will be 

7 




automatically revised to reflect 3M's discontinuation of that
purchase; provided, however, that RBC may thereafter terminate the Subcontract
pertaining to the Product that 3M discontinues purchasing, upon giving written
notice to 3M of such termination.

(c)         RBC
certifies that, as of the Effective Date and throughout the Term, RBC has not
been and will not be, and, to the knowledge of RBC, no RBC employee, affiliate,
agent, or subcontractor performing services in any way relating to this
Agreement has been or will be, suspended or debarred or proposed to be suspended
or debarred by any federal agency for any purpose including but not limited to:
(a) participation in any U.S. federal health care program; or (b) by the U.S.
Food and Drug Administration ("FDA") under 21 U.S.C. 335. Within three business
days after the occurrence of any change affecting this certification, RBC will
give 3M written notice of the change and its impact on this certification. 

(d)        
3M shall be responsible for obtaining regulatory approval of Products
in its own name. RBC shall provide 3M with any and all information regarding the
manufacturing of Product that is reasonably necessary to enable 3M to make
regulatory submissions for regulatory approval of the Product (the “RBC
Technology Information”) for inclusion in 3M’s regulatory filings. At 3M’s
expense, RBC shall assist 3M in answering questions from regulatory authorities
concerning 3M’s regulatory submissions, insofar as such questions relate to
RBC’s activities hereunder or the RBC Technology Information.

13.         ENGINEERING
  CHANGES: Any change to a Product in any way, including but not limited to,
  raw materials, sources of supply of raw materials, equipment, tooling, contact
  materials (including but not limited to lubricants, or process aids), the manufacturing
  process or the manufacturing site is referred to as “Engineering Changes”.
  If (i) either Party seeks any Engineering Changes, or (ii) there is a material
  change in Laws that would necessitate a change in Specifications or the means
  or methods of performance under this Agreement by RBC, the Parties will meet
  and confer in good faith to determine whether and what changes, if any, should
  be made to the Specifications and the respective responsibilities of the Parties
  therefor. All Specifications and any changes thereto and other Engineering Changes
  agreed to by the Parties from time to time shall be in writing, dated and signed
  by the Parties. No change in the Specifications shall be implemented by RBC,
  whether initiated by RBC or requested by 3M, until the Parties have agreed in
  writing to such change, the implementation date of such change, and any increase
  to the price of Products to reflect additional costs, expenses or fees associated
  with such change. In the event of (i) a change to the Specifications requested
  by 3M, a governmental authority or as necessary or required to meet a change
  in the Laws or (ii) obsolescence of the Products or components needed to make
  the Products that are rendered obsolete by Engineering Changes, 3M shall bear
  RBC’s actual out-of-pocket cost of obsolete Products and components needed
  to make such Products, but not exceeding the quantity of Products and components
  needed to make such Products indicated in the then-current Firm Order. 

14.        
WARRANTIES: (a) RBC warrants at the time of Delivery and for the duration of
the warranty period stated in the applicable Subcontract (the “Warranty Period”)
that (i) all Products will strictly conform to the Specifications; (ii) all
Products will be free from any encumbrance or any defect in design (to the
extent the design was provided by RBC), materials, manufacture and workmanship;
(iii) all Products will have been manufactured and packaged (to the extent
packaged by RBC and not 3M) in accordance with all applicable Laws, all QSRs,
and the Quality Agreement; (iv) no Products will be misbranded or adulterated as
defined by the FDA or 

8 




similar regulatory bodies and all labelling information
provided by RBC to 3M is complete, accurate and in compliance with applicable
Laws. The foregoing warranties shall be void to the extent the Products are:
abused, damaged or adulterated after Delivery, whether by fault, negligence or
otherwise; or used or stored in a manner for which the Products were not
specifically labeled.

(b)        
In addition to 3M’s other remedies, 3M may reject any Products that fail to meet
the foregoing warranties (referred to herein as “Allegedly Non-Conforming
Products”), subject to the following: In the event 3M rejects Allegedly
Non-Conforming Products, RBC shall promptly replace such Allegedly
Non-Conforming Products. Even though RBC has replaced such Allegedly
Non-Conforming Products, RBC shall still have the right to inspect and test the
Allegedly Non-Conforming Products. In the event of a discrepancy between 3M’s
and RBC’s test results such that one Party’s results meet the warranties and the
other Party’s test results fail to meet the warranties, or there exists a
dispute over whether such failure is due (in whole or in part) to any warranty
voiding circumstance set forth in Section 14(a), the Parties shall cause an
independent testing laboratory agreeable to both RBC and 3M to perform
comparative tests and/or analyses of the Allegedly Non-Conforming Products. The
testing laboratory’s results shall be in writing and shall be final and binding
save for manifest error on the face of its report. Unless otherwise agreed to by
the Parties in writing, the costs associated with such testing and review shall
be borne by the Party against whom the testing laboratory rules. The testing
laboratory shall be required to enter into written undertakings of
confidentiality no less burdensome than set forth herein. If RBC or the testing
laboratory confirms the nonconformity of the Allegedly Non-Conforming Products,
3M will have paid or will pay for the Allegedly Non-Conforming Products in
accordance with the terms of this Agreement and 3M will have already received
replacement Product free of any additional charge. RBC shall have no further
obligations or liability (whether in contract, tort (including negligence,
strict liability in tort and breach of statutory duty), statute or otherwise) to
3M, other than its obligations of indemnification pursuant to Section 18(a), in
relation to such Allegedly Non-Conforming Products. Allegedly Non-Conforming
Products shall, at RBC’s option, be returned to RBC or disposed of by 3M. In the
event of any disposal of Allegedly Non-Conforming Products, 3M shall, if
requested by RBC, deliver to RBC an appropriate written confirmation of
disposal. The cost of return or disposal of Allegedly Non-Conforming Products
shall be borne by RBC. If the testing laboratory confirms that the Allegedly
Non-Conforming Products do in fact meet the warranties and are conforming, 3M
will have paid or will pay for such conforming Products, and will also pay for
the replacement Products that 3M will have already received, in accordance with
the terms of this Agreement.

(c)         RBC
further represents and warrants that as of the Effective Date RBC has not
received a written notice of infringement from a third Party. 

(d)         RBC
will use commercially reasonable efforts to obtain for 3M the benefit of all
warranties from RBC’s suppliers. RBC will use commercially reasonable efforts to
assist 3M in the prompt investigation of, and corrective action for, Product
complaints by 3M customers. 3M’s acceptance of Delivery, inspection, or payment
for any Products does not waive any of RBC’s warranties.

(e)         Each
Party hereby represents and warrants to the other Party that it has full
authority to enter into this Agreement, and there is no provision contained in
any other agreement to which it is a party that prohibits or restricts it from
entering into or performing under this Agreement. 

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OTHER THAN AS SPECIFICALLY SET FORTH IN THIS SECTION, NO
EXPRESS OR IMPLIED WARRANTIES ARE GIVEN BY EITHER PARTY UNDER THIS AGREEMENT,
INCLUDING WITH RESPECT TO (1) PRODUCT SOLD BY RBC AND PURCHASED BY 3M AND/OR ITS
AFFILIATES PURSUANT TO THIS AGREEMENT; (2) THE PERFORMANCE OR NONPERFORMANCE OF
THE PRODUCTS, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE; OR (3) NONINGRINGEMENT OF
ANY THIRD PARTY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS. 

15.         3M
MATERIALS: 3M may provide materials to be used in making Products (“3M
Materials”). 3M owns all 3M Materials and will only be used by RBC to make
Products for 3M unless consented to in writing by 3M in each instance. RBC will
inspect all 3M Materials and promptly inform 3M of any non-compliance with
Specifications. RBC authorizes 3M to file any and all appropriate documentation
(including UCC financing statements) without RBC's signature to acknowledge 3M's
ownership interest in 3M Materials. RBC will also provide on request inventory
and other reports to account for 3M Materials. RBC (i) will keep all 3M
Materials, semi-finished and finished Products in a secure area and will use
commercially reasonable efforts to prevent them from being lost, destroyed or
damaged. Loss allowances for 3M Materials may be established by mutual written
agreement of the Parties. RBC will reimburse 3M for any losses by RBC of 3M
Materials in excess of those allowances. RBC shall not remove 3M Materials from
RBC’s facility prior to use of 3M Materials for making Products and RBC shall
return 3M Materials on 3M’s request or upon termination of this Agreement. If
this occurs, 3M will pay shipping costs and RBC will be responsible for all
other expenses.

16.         3M
EQUIPMENT: 3M may provide equipment for use in making Products (“3M
Equipment”). All 3M Equipment belongs to 3M, shall not be removed from RBC’s
facility other than by 3M and, unless consented to in writing by 3M, will only
be used by RBC to make Products for 3M. RBC authorizes 3M to file any and all
appropriate documentation (including UCC financing statements) without RBC's
signature to acknowledge 3M's ownership interest in 3M Equipment. RBC uses 3M
Equipment at its own risk and must make certain that 3M Equipment is in safe and
proper condition for the intended use. RBC shall not alter 3M Equipment without
3M’s written consent. RBC will keep all 3M Equipment in good condition,
reasonable wear excepted, and will use 3M Equipment only to provide Products to
3M. RBC assumes all risk of loss or damage to 3M Equipment. RBC will indemnify
and defend 3M against all claims arising out of RBC’s use of 3M Equipment. 3M
DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTIES REGARDING 3M EQUIPMENT, INCLUDING
BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
PURPOSE. 3M is not a “merchant” of 3M Equipment under UCC 2-104(1). All
3M Equipment must be returned on 3M’s request or upon termination of this
Agreement, with 3M paying crating and shipping costs and RBC responsible for
other expenses. 

17.       TOOLING:
RBC may acquire tools exclusively to make Products for 3M pursuant to one or
more Subcontracts (“Tooling”). If 3M reimburses RBC for any Tooling, such
Tooling becomes 3M Equipment. Otherwise, RBC continues to own the Tooling but,
unless consented to in writing by 3M, RBC shall not use the Tooling for any
purpose other than the manufacture of Products for 3M. RBC will maintain Tooling
in good condition and will keep all Tooling for its lifetime or until it reaches
design cycle limits. 

10 




18.         INDEMNIFICATION:

(a)         RBC
Indemnification: RBC agrees to indemnify, defend and hold harmless 3M, its
affiliates and their respective directors, officers, employees, subcontractors
and agents (“Indemnitees”) from any and all claims, actions, demands, losses,
costs, expenses, damages and liabilities, including but not limited to
reasonable attorneys fees and other expenses of litigation, (hereinafter
“Indemnifiable Losses”) brought, asserted, commenced or pursued by any Third
Party (hereinafter “Third Party Claims”) to the extent such Third Party Claims
are based on property damage or sickness, bodily injury, personal injury or
death of any person relating to or arising from (a) the manufacture of any
Products or components thereof by or for RBC, its affiliates or its Indemnitees;
or (b) breach by RBC or its Indemnitees of the express warranties under this
Agreement; or (c) the design, manufacture or use of the Reader by RBC or its
Indemnitees; or (d) the handling, packaging, labeling, storage, treatment,
removal, transportation, and disposal by RBC or its Indemnitees of any waste
material generated in the manufacture of Products under any environmental laws,
including the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Sections 9601 et seq. as amended (“CERCLA”)), the Hazardous
Materials Transportation Act (49 U.S.C. Sections 5101 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq. (“RCRA”)), or any
other current or future federal, state or local environmental laws of similar
effect; or (e) gross negligence or willful misconduct of RBC in its performance
or the performance of its affiliates under this Agreement or failure of RBC to
perform any of its obligations under this Agreement. RBC’s obligations to
indemnify 3M hereunder shall not apply to the extent any such Indemnifiable
Losses arise out of or are based on the inactions or actions of 3M, its
affiliates or its Indemnitees for which 3M is obligated to indemnify RBC under
Section 18(b). 

In the case of a third party claim of patent infringement or
misappropriation of a third party’s intellectual property rights based on the
manufacture, use, sale, offer for sale or importation of Products, in addition
to 3M’s other rights and remedies, the terms of Section 2(e) shall apply. In
addition, the Parties shall bear responsibility for, and shall cooperate with
each with respect to, handling such third party claim in accordance with Article
8.8 of the JDA.

(b) 3M Indemnification: 3M agrees to indemnify, defend and hold
harmless RBC, its affiliates and their respective Indemnitees from any and all
Third Party Claims for Indemnifiable Losses against RBC or any of its
Indemnitees to the extent such Third Party Claims are based on property damage
or sickness, bodily injury, personal injury or death of any person relating to
or arising from (a) the marketing, sale, distribution or disposal of any
Products or components thereof by or for 3M, its affiliates or its Indemnitees;
or (b) breach by 3M or its affiliates or Indemnitees of the express warranties
under this Agreement; or (c) gross negligence or willful misconduct of 3M in its
performance or the performance of its affiliates under this Agreement or failure
of 3M to perform any of its obligations under this Agreement. 3M’s obligations
to indemnify RBC hereunder shall not apply to the extent any such Indemnifiable
Losses arise out of or are based on the inactions or actions of RBC or its
Indemnitees for which RBC is obligated to indemnify 3M under Section 18(a).

(c) Scope of Indemnification: The parties agree that the
indemnities stated in this section should be construed and applied in favor of
indemnification. The Parties agree that the indemnities (a) apply only to
Indemnifiable Losses brought, asserted, commenced or pursued by any 

11 




Third Party, and (b) will not apply to claims between the
Parties or their affiliates arising out of or connected to this Agreement.


(d) Procedure for Indemnification: The following subparagraphs
of this paragraph 18(d) lay out the procedure for indemnification. 

(i) Notice of Claim: If either 3M or
RBC shall receive notice of any Third Party Claim, with respect to which the
other Party is or may be obligated to make a payment in accordance with this
Article 18 (hereinafter an “Indemnity Payment”), it (the “Indemnified Party”)
shall give such other Party (the “Indemnifying Party”) prompt notice thereof
(including any pleadings relating thereto) after becoming aware of such Third
Party Claim, specifying in such reasonable detail as is known to it, the nature
of such Third Party Claim and the amount or estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final amount
of such claim); provided, however, that the failure of the Indemnified Party to
give notice as provided in this paragraph shall not relieve the Indemnifying
Party of its indemnification obligations under this Article, except to the
extent that the Indemnifying Party is actually prejudiced by such failure to
give notice. 

(ii) Defense of Claims. For any Third
Party Claim concerning which notice is required to be given, and, in fact,
given, under paragraph 18(d)(i) of this Article, the Indemnifying Party shall
defend in a timely manner, to the extent permitted by law, such Third Party
Claim through counsel appointed by the Indemnifying Party and reasonably
acceptable to the Indemnified Party. The Indemnified Party shall have the right
to participate in the defense of the Third Party Claim by employing separate
counsel at its own expense, provided that the Parties enter into a Joint Defense
Agreement or Joint Representation and Defense Agreement, as appropriate. 

(iii) Denial of Obligation or Failure
to Defend: If a Party responds to a notice of a Third Party Claim by denying its
obligation to indemnify the person or entity claiming a right of defense and
indemnification under this Agreement (“Indemnification Claimant”), or if the
Indemnifying Party fails to defend in a timely manner, the Indemnified Party
shall be entitled to defend such Third Party Claim through counsel appointed by
it. In addition, if it is later determined, through procedures referenced in
Article 25 of this Agreement, or agreement of the Parties, that said Party
wrongfully denied such claim, or the Indemnifying Party failed to timely defend,
then the Indemnifying Party shall (a) reimburse the Indemnified Party for all
costs and expenses (other than salaries of officers and employees) incurred
reasonably by the Indemnified Party in connection with its defense of such Third
Party Claim, and (b) be estopped from challenging a judgment, order, settlement,
compromise, or consent judgment resolving the Third Party Claim entered into in
good faith by the Indemnified Party (if such claim has been resolved prior to
the conclusion of the proceeding between the Indemnified Party and Indemnifying
Party). An Indemnifying Party, after initially rejecting a claim for defense or
indemnification by an Indemnification Claimant, may defend and indemnify the
Indemnification Claimant, at any time prior to the resolution of said Third
Party Claim, for such claim, provided that (a) the Indemnifying Party reimburses
the Indemnified 

12 




Party for all costs and expenses (other
than salaries of officers and employees) incurred reasonably by the Indemnified
Party in connection with its defense of such Third Party Claim up to the time
the Indemnifying Party assumes control of the defense of such claim (including
costs incurred in the transition of the defense from the Indemnified Party to
the Indemnifying Party) and (b) the assumption of the defense of the Third Party
Claim will not prejudice or cause harm to the Indemnified Party. 

(iv) Release: With respect to any Third
Party Claim relating to any matter subject to a claim for indemnification
hereunder, no Party shall enter into any compromise or settlement or consent to
the entry of any judgment which (a) does not include as a term thereof the
giving by the third party of a release to the Indemnified Party from all further
liability concerning such Third Party Claim on terms no less favorable than
those obtained by the party entering into such compromise, settlement or consent
or (b) imposes any obligation on the Indemnified Party without said Indemnified
Party’s written consent (such consent not to be unreasonably withheld), except
an obligation to pay money which the Indemnifying Party has agreed to pay on
behalf of the Indemnified Party. In the event that an Indemnified Party enters
into any such compromise, settlement or consent without the written consent of
the Indemnifying Party (other than as contemplated by this paragraph 18(d)(iv)
the entry of such compromise, settlement or consent shall relieve the
Indemnifying Party of its indemnification obligation related to the claims
underlying such compromise, settlement or consent. 

(v) Payments: Upon final judgment,
determination, settlement or compromise of any Third Party Claim, and unless
otherwise agreed by the Parties in writing, the Indemnifying Party shall pay
promptly on behalf of the Indemnified Party, or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by final judgment, determination, settlement or compromise. Upon the
payment in full by the Indemnifying Party of such amount, the Indemnifying Party
shall succeed to the rights of such Indemnified Party to the extent not waived
in settlement, against the third party who made such Third Party Claim and any
other person who may have been liable to the Indemnified Party with respect to
the indemnified matter. 

(vi) Cooperation: In connection with
defending against Third Party Claims, the Parties shall cooperate with and
assist each other by making available all employees, books, records,
communications, documents, items and matters within their knowledge, possession
or control that are necessary, appropriate or reasonably deemed relevant with
respect to defense of such claims; provided, however, that nothing in this
Article 12 shall be deemed to require the waiver of any privilege, including the
attorney-client privilege, or protection afforded by the attorney work product
doctrine. In addition, regardless of the Party actually defending a Third Party
Claim for which there is an indemnity obligation under Sections 18(a) or 18(b)
of this Article, the Parties shall give each other regular status reports
relating to such action with detail sufficient to permit the other Party to
assert and protect its rights and obligations under this Agreement. 

13 




(vii) Survival: The provisions of this
Section 18(d) shall survive in perpetuity and shall be the exclusive procedures
for any claims subject to the provisions of Sections 18(a) or 18(b) above. 

19.         INSURANCE:
3M and RBC shall maintain liability insurance in an amount and for a time
period which is reasonable and customary in the medical device industry for
companies of comparable size and activities at the respective place of business
of each Party, intended to cover the liability assumed by that Party under this
Agreement, provided that each Party may be self-insured for at least a portion
of such amount. During the Term, RBC will obtain and maintain comprehensive
general liability (“CGL”) insurance (including premises - operations, products,
completed operations and contractual liability) with coverage of [***]
 per occurrence, employer’s liability coverage of [***] per
occurrence and worker’s compensation as required by applicable Laws. The CGL
policy must name 3M as an additional insured, with all coverage primary for 3M
regardless of other 3M insurance. 3M does not represent that this is sufficient
coverage for RBC. Each Party will provide the other certificates of insurance
within ten (10) days of a written request from the other Party showing
compliance with the insurance specifications. Each Party must keep the
certificates current and must in any event file a new certificate each year
while this Agreement is in effect. Neither Party’s failure to require or to
insist upon certificates or other evidence of insurance, nor either Party’s
acceptance of a certificate or other evidence of insurance showing a variance
from the specified coverage changes each Party’s obligation to maintain the
required insurance. 

20.        
LIMITATION OF LIABILITY: NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM OR IN
ANY WAY RELATED TO PRODUCT, THIS AGREEMENT OR THE TERMINATION OF THIS AGREEMENT.
THIS LIMITATION APPLIES REGARDLESS OF LEGAL OR EQUITABLE THEORY.

21.         CONFIDENTIAL
INFORMATION: 

(a) During the Term, either Party may receive information, in
whatever form, that, subject to Section 21(b), the disclosing Party considers to
be confidential and that is not generally known to the public relating to: (1)
the development and design of Products, including but not limited to Product
formulations, Product composition, research and development and Product
specifications; (2) the manufacturing and production of Products, including but
not limited to manufacturing techniques, production equipment, and rates and
quantities of production; (3) other aspects of either Party’s business relating
to Products including, without limitation, marketing, sales, customer
information and non-public financial information (all collectively referred to
as “Confidential Information”). Confidential Information also includes the
existence of this Agreement and all of this Agreement’s terms. During the Term,
except as provided under Section 23 or as otherwise consented to in writing by
the disclosing Party, each Party will keep secret all Confidential Information
of the other Party, using such care as each Party uses in maintaining the
confidentiality of its own secret information, but no less than a reasonable
degree of care, and will use Confidential Information of the other Party only as
is necessary to perform its obligations under this Agreement. Both Parties will
assure that its employees, agents and contractors abide by these confidentiality
obligations. Upon written request of the disclosing Party or at the expiration
or earlier termination of this Agreement, each Party will, at the discretion of
the disclosing Party, either destroy or return to the disclosing Party all
tangible 

14 




materials that are or contain the disclosing Party’s
Confidential Information. Any destruction of Confidential Information of the
disclosing Party pursuant to the foregoing shall be promptly confirmed by a
written certificate executed by an authorized officer of the receiving Party.
The foregoing obligations shall remain in force until five (5) years following
expiration or termination of this Agreement, unless disclosed pursuant to
Section 23(d).

(b) Confidential Information does not include information that
is: (1) published in any publication or otherwise is or becomes generally
available to the public, other than as a result of a breach of this Agreement;
(2) known to the receiving Party prior to its receipt from the other Party as
evidenced by the receiving Party’s contemporaneous written records; (3)
available to the receiving Party from another source without any breach of any
agreement or violation of any law; or (4) is independently developed by the
receiving Party without access to or use of the Confidential Information of the
disclosing Party, as evidenced by the receiving Party’s contemporaneous written
records. 

(c) If a Party is required by judicial or administrative
process or by governmental laws or regulations or other legal requirements,
including filings with the U.S. Securities Exchange Commission and comparable
governmental agencies applicable to the Parties, to disclose Confidential
Information of the other Party, the Party that is so required to disclose the
Confidential Information will: (1) promptly notify the other Party with
sufficient advance notice to allow the other Party the opportunity to oppose
such process; and (2) seek to have the third party treat the information
confidentially, including seeking confidential treatment of such Confidential
Information, to the extent legally permissible.

22.         INTELLECTUAL
PROPERTY AND DEVELOPMENTS: The following shall apply to RBC Developments
that are conceived after expiration or termination of, or are otherwise not
covered by, the JDA:

 (a) “RBC Developments” are all analyses, specifications,
  proposals, reports or other information, data or documents (in raw, preliminary
  or final form) and all inventions, discoveries and improvements, whether or not
  patentable, conceived by RBC, its employees and agents and resulting from the
  performance of RBC's obligations under this Agreement. RBC will promptly notify
  3M of all RBC Developments and will (at 3M’s request) pursue protection of RBC
  Developments with patent or other intellectual property filings for RBC
  Developments throughout the world.

(b) Nothing in this Agreement grants 3M or any of its
affiliates rights to RBC Developments, except as follows: (i) if RBC, its
employees or agents conceive of a RBC Development using 3M Confidential
Information (which Confidential Information, if written, has been marked as
confidential or proprietary, or, if disclosed orally or visually has been
confirmed in writing as confidential or proprietary within thirty (30) days
after the first disclosure), as shown by contemporaneous written records, RBC
hereby grants to 3M or its designated affiliate a non-exclusive, fully paid-up,
permanent, transferable, royalty-free license, with the right to sublicense, to
make, have made, import, use, offer for sale and sell any product using that RBC
Development; and (ii) if 3M provides payment or other consideration to RBC to
create a RBC Development and the Parties acknowledge that consideration and its
purpose in writing, RBC hereby agrees to grant to 3M or its designated affiliate
a license as provided under article 23 to all rights and interests in that RBC
Development.

15 




23.         TECHNOLOGY
TRANSFER AND LICENSE:

(a) Subject to the terms and conditions of the Agreement, RBC
hereby grants 3M or its designated affiliate an exclusive license solely to
make, have made, use, sell, offer to sell, import, buy, or transfer the Products
other than the Products defined in Exhibit A-1 hereto, and a non-exclusive
license solely to make, have made, use, sell, offer to sell, import, buy or
transfer the Product defined in Exhibit A-1 hereto, for the detection of Targets
(“License”). Notwithstanding the foregoing, the License to make or have made
Products shall not be effective except upon termination of this Agreement by 3M
pursuant to Section 2(b) for RBC’s breach, or 4(d) for Supply Failure, or upon
non-renewal of this Agreement as provided in Section 2(d). In the event the
License to make or have made Products becomes effective, RBC shall thereupon
provide (i) to 3M a copy of all data, or information generated during RBC’s
performance of this Agreement that is reasonably necessary to make and have made
Product, including but not limited to the Escrow Materials, and (ii) reasonable
assistance required to enable 3M to manufacture Product for itself or through a
third party manufacturer; provided, however, that any such data, know-how,
technology, or information that is Confidential Information shall continue to be
the Confidential Information of RBC, but may be disclosed by 3M to bona fide
third party manufacturers pursuant to a written agreement containing
confidentiality and non-use provisions no less restrictive than those set forth
herein. 3M shall indemnify RBC under the same terms as paragraph 18(b) for any
Indemnifiable Losses arising from the manufacture of any Products by or for 3M
under the License granted in this paragraph 23. 

(b) The License is a worldwide, royalty bearing license, including
  a right to sublicense to 3M or its designated affiliate, to all intellectual
  property owned by RBC (e.g., patents, patent applications, manufacturing know-how)
  necessary or useful for the manufacture of the Products. The earned royalty
  rate payable to RBC and additional minimum terms of the License will be set
  forth in the applicable Subcontract, provided that such terms may be modified
  or other terms may be added as mutually agreed upon in writing by 3M and RBC
  and provided further that no such royalty shall be payable by 3M or its designated
  affiliate so long as RBC is manufacturing the Product to which the royalty would
  otherwise apply. In the event the parties fail to negotiate a Subcontract for
  Product for detection of a specified Target, the terms of Articles 7 and 9 of
  the JDA shall apply. The License shall terminate upon: termination of this Agreement
  by RBC pursuant to Section 2(b) for 3M’s breach; termination of this Agreement
  by 3M after the first three years of the Term pursuant to Section 2(a); or expiration
  of the Term or any renewal thereof. If the License to make or have made becomes
  effective as provided in Section 23(a), the License shall terminate in accordance
  with the terms of the applicable Subcontract. 

(c) In the event the License to make or have made becomes
effective as provided in Section 23(a) (i.e., 3M becomes the manufacturer of
Products or elects to move the manufacture of Products to a third party
following termination of this Agreement by 3M pursuant to Section 2(b) or 4(d)
or upon non-renewal of this Agreement as provided in Section 2(d)), the Parties
will cooperate in the transition of manufacturing, including the transfer of
Escrow Materials sufficient to enable 3M or another supplier to manufacture the
Products. RBC also agrees to assist in a seamless transition of supply chain
requirements, including the continuation of manufacturing until either 3M or the
designated third party are capable of manufacturing demanded volumes, or to
build no less than 3-months of inventory to assist in the transition in
manufacturing. 3M will pay for all reasonable costs incurred by RBC in the
one-time transfer of manufacturing technology and ongoing support for a
reasonable time, not longer than six (6) 

16 




months. If 3M requests additional assistance in connection with
the transferred manufacturing technology beyond that set forth above, 3M will
request the assistance in writing and pay RBC for all such assistance. 

(d) RBC shall enter into an escrow agreement ("Escrow
Agreement") with a mutually agreeable escrow agent ("Escrow Agent"), such Escrow
Agreement providing for the deposit of one complete copy of all materials
relating to the manufacture of Products, including all relevant written
materials (e.g., operating manuals, written processes, process conditions,
information relating to RBC’s sources of component or raw materials and related
information) and all machine-readable materials (e.g., software) sufficient to
enable 3M to manufacture Product or to have Product manufactured for 3M (“Escrow
Materials”). Once every year following the deposit of the Escrow Materials, 3M
shall have the right, but not the obligation, to audit such Escrow Materials
through an independent third party auditor reasonably agreeable to both Parties,
upon prior written notice to RBC. The scope of such audit shall be limited to
ensuring that the obligations of this Section 23(d) have been met. Any such
audit shall take place at the premises of the Escrow Agent. RBC shall be
entitled to have at least one employee of its choosing present at all times
during any said audit. If the Escrow Materials are found to be inaccurate or
incomplete, RBC shall supplement the Escrow Material within ten (10) business
days to restore accuracy and completeness, and RBC shall bear the cost and
expense of supplementing the Escrow Material. Otherwise, 3M shall bear the
expense of any such audit. RBC represents and warrants to 3M that the Escrow
Materials shall be kept current and complete, and shall be updated by or on
behalf of RBC from time to time and in no event more than sixty (60) days after
RBC has made one or more material modifications to any of the Escrow Materials.
Upon termination of this Agreement by 3M pursuant to Section 2(b) or 4(d) or
upon non-renewal of this Agreement as provided in Section 2(d) (the “Triggering
Event”), RBC agrees that (i) 3M or its designated affiliate is entitled to
possession of the Escrow Materials unless RBC is disputing the basis for the
occurrence of the Triggering Event, and (ii) 3M may give written notice to both
RBC and the Escrow Agent requesting release of the Escrow Materials. The Escrow
Agent shall release and make the Escrow Materials available to 3M or its
designated affiliate on the earlier of (1) the Escrow Agent’s receipt of written
notice from RBC agreeing to and authorizing the release or (2) the date that is
thirty (30) days after the Escrow Agent’s receipt of the written notice from 3M
under clause (ii) above, unless, during such 30-day period, the Escrow Agent
receives written notice from RBC disputing the basis for the occurrence of the
Triggering Event. If RBC disputes that a Triggering Event has rightfully
occurred, RBC may initiate the Dispute Resolution procedures set forth in
Section 26 and RBC shall give written notice of such dispute to both the Escrow
Agent and 3M within thirty (30) days after 3M gives written notice under clause
(ii) above. If the Escrow Agent receives such notice of dispute from RBC within
such 30-day period, the Escrow Agent shall release and make the Escrow Materials
available to 3M on the date that is sixty (60) days after the Escrow Agent’s
receipt of the written notice from 3M under clause (ii) above; provided,
however, that the Escrow Agent shall not release or make the Escrow Materials
available to 3M if, prior to the expiration of such 60-day period, the Parties
jointly give written notice to the Escrow Agent that the Escrow Materials should
not be released. If RBC disputes the release of the Escrow Materials and it is
finally determined that the Escrow Materials should not have been released to 3M
hereunder, 3M’s sole responsibility shall be to cease any further use of the
Escrow Materials (and cause any third party to cease further use of the Escrow
Materials) and to return all copies of the Escrow Materials to the Escrow Agent.
All Escrow Materials shall be the Confidential Information of RBC and use and
disclosure of the 

17 




Escrow Materials shall be subject to the provisions of Section
21. For the sake of clarity, 3M or its designated affiliate shall have the right
to use or disclose the Escrow Materials solely to make or have made Products
pursuant to the License under Section 23(a) and shall only disclose the Escrow
Materials to third party manufacturers that are bound by obligations of
confidentiality at least as stringent as those set forth herein. The agreement
with the Escrow Agent shall provide that all Escrow Materials shall be returned
to RBC and the escrow agreement shall be terminated within thirty (30) days
after termination of this Agreement for any reason other than a Triggering
Event, as certified in writing jointly by both Parties. Except as otherwise
stated herein, all costs and expenses associated with the escrow of the Escrow
Materials, including the costs of the Escrow Agent, shall be paid by RBC. 

24.         NOTICES:
Any notice permitted or required under this Agreement must be in writing and
personally delivered, including via any internationally recognized overnight
service: (a) to 3M at: 3M Sourcing Operations, Building 0216-02N-007, 3M Center,
St. Paul, Minnesota USA 55144-1000, Attention: Vice President, with a copy to 3M
Medical Division, 3M Center Building 275-5E-01, St. Paul MN 55144 Attention:
Supply Director, and (b) to RBC at: 100-8900 Glenlyon Parkway, Burnaby, B.C.,
Canada, Attention: Vice President, Business Development,. Notice of any change
in a Party's address will be given as stated above. 

25.         GOVERNING
  LAW: DISPUTE RESOLUTION: Disputes arising between the Parties relating to
  the making or performance of this Agreement shall be resolved in the following
  order of preference: (a) by good faith negotiation between executives of 3M
  and RBC who have authority to fully and finally resolve the dispute; and then
  (b) by non-binding mediation at a location acceptable to the Parties using a
  neutral mediator having experience with the industry (with the costs therefore
  shared equally). All negotiations pursuant to this clause shall be treated as
  Confidential Information in accordance with the provisions of Article 21 of
  this Agreement. Finally, as a last resort, either Party may commence litigation.
  Each Party consents to the New York courts' personal jurisdiction. Any questions,
  claims, disputes, remedies or procedural matters shall be governed exclusively
  by the laws of the State New York and of the United States of America, without
  regard to its principles of conflicts of law. The exclusive venue for any and
  all litigation relating to this Agreement shall be in the city of New York in
  the state or federal court having subject matter jurisdiction. The foregoing
  notwithstanding, nothing in this Agreement shall preclude a Party from taking
  whatever actions are necessary to prevent irreparable harm to its interests.

26.         GENERAL:
Neither this Agreement nor any right or obligation hereunder shall be
assignable by a Party without the prior written consent of the other Party and
any purported assignment without such consent shall be void; provided that 3M or
RBC may assign this Agreement without consent of the other Party to a successor
of all or substantially all of 3M’s or RBC’s (as the case may be) assets, stock
or business to which this Agreement relates (whether by sale, acquisition,
merger, reorganization, recapitalization, operation of law or otherwise). No
assignment shall relieve any Party of responsibility for the performance of any
accrued obligation which such Party then has hereunder. The Parties are
independent contractors and neither can make any commitments for the other. The
employees of a Party are not employees of the other. Either Party may waive a
breach without waiving performance later. This Agreement supersedes all prior
agreements concerning Subcontracts, except for any prior confidentiality
agreement between the parties. This Agreement may be executed in any number of
counterparts, each of which when delivered, either in original or facsimile
form, shall be deemed to be an 

18 




original and all of which together shall constitute one and the
same document. 

27.         EVENTS
OF EXCUSED PERFORMANCE: Neither 3M nor RBC shall be considered in default or
be liable to the other Party for any delay in performance or non-performance
caused by circumstances beyond the reasonable control of such Party and not
related to its fault or negligence, including but not limited to acts of God,
explosion, fire, flood, earthquake, war whether declared or not, accident,
sabotage, transportation, strike, labor disturbance or interference, order or
decrees of any court or action of governmental authority or shortages in or an
inability to procure materials; provided, however, that diligent efforts are
made to resume performance as quickly as possible. Delays involving governmental
authorities shall include but are not limited to, withdrawal, suspension or
delays in regulatory approval of a Product by a competent authority or other
causes, whether similar or dissimilar to those specified. 

28.         GOVERNMENT
CONTRACTS: To the extent required by applicable U.S. federal Laws, the
following Federal Acquisition Regulation clauses (“FARs”) and Department of
Defense FAR Supplement clauses (“DFARs”), as in effect on an Order’s date, are
hereby incorporated: (a) FAR 52.219 -8, Utilization of Small Business Concerns;
(b) FAR 52.219 -9, Small Business Subcontracting Plan; (c) FAR 52.222 -26, Equal
Opportunity; (d) FAR 52.222-35, Equal Opportunity for Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible Veterans; (e) FAR 52.222 -36,
Affirmative Action for Workers with Disabilities; (f) FAR 52.222 -39,
Notification of Employee Rights Concerning Payment of Union Dues or Fees; (g)
FAR 52.222 -41, Service Contract Act of 1965, as amended; (h) FAR 52.247 -64,
Preference for Privately Owned U.S.-Flag Commercial Vessels; (i) DFARS 252.225
-7014, Preference for Domestic Specialty Metals, Alternate I; (j) DFARS 252.247
-7023, Transportation of Supplies by Sea; and (k) DFARS 252.247 -7024,
Notification of Transportation of Supplies by Sea. Prior to RBC filling any
Purchase Order under any Subcontract, RBC certifies that, to the extent
applicable and required: (i) it will comply with FAR 52.203 -12, Limitation on
Payments to Influence Certain Federal Transactions, and FAR 52.222 -21,
Prohibition of Segregated Facilities; (ii) if RBC participated in a previous
contract or subcontract subject to the Equal Opportunity clause referenced
above, it will have filed all required compliance reports; (iii) before any
subcontracts are awarded, it will obtain representations signed by proposed
subcontractors indicating submission of required compliance reports; (iv) it
will have developed and have on file at each establishment, affirmative action
compliance programs required by the rules and regulations of the Secretary of
Labor (41 CFR 60-1 and 60-2); and (v) neither RBC nor any of its principals will
have been debarred, suspended, or proposed for debarment, from the award of
contracts by the U.S. government. If RBC cannot provide any of these
certifications, or subsequently becomes aware that any certification is
incorrect for any reason, RBC must immediately notify 3M in writing.

	ACCEPTED AND AGREED TO: 	  
	 	 
	3M COMPANY 	RESPONSE BIOMEDICAL CORPORATION 
	 	 
	  	  
	By: /s/ [Authorized
      Signatory]                                           
       	By: /s/ Bill
      Radvak                                                   
       
	 	 
	Title: ______________________________________	Title: “President &
      CEO”                                       
       


19 




EXHIBIT A- 1 

SUBCONTRACT TO 

MANUFACTURING AND SUPPLY AGREEMENT 

MEDICAL DIVISION

(Reader and Accessories) 

This Subcontract dated November 30, 2006 (“Subcontract
Effective Date”) is between 3M Company, acting through its Medical Division
(“3M”) and Response Biomedical Corp. (“RBC”) and is made pursuant to the
Manufacturing and Supply Agreement dated November 30, 2006 (“Agreement”) between
3M and RBC. All capitalized terms used but not defined in this Subcontract have
the meanings given in the Agreement. 

1.          
SCOPE: The Agreement governs this Subcontract except for any amendments
described below. If any term or condition in this Subcontract conflicts with the
Agreement, this Subcontract shall govern. The Products covered by this
Subcontract, including their Specifications, are listed in Schedule 1.

2.          
SUBCONTRACT TERM: This Subcontract begins on the Subcontract Effective Date
and continues for [***] years, unless terminated earlier as provided
for herein (the “Subcontract Term”). The Subcontract Term may be renewed for
additional [***]  year periods upon the mutual written agreement of
RBC and 3M. 3M shall have the right to terminate this Agreement in whole or in
part upon  days prior written notice to RBC at any time[***] after the
first  years of the Term.[***]

3.          
PRODUCT; EXCLUSIVITY: “Product” means the Reader and accessories listed on
and further defined by the Specifications referenced in Schedule 1 hereto.
During the Subcontract Term, (a) 3M and its affiliates shall purchase
exclusively from RBC all of their commercial sale requirements for the
3MTM Rapid Detect Reader Products listed on Schedule 1 and shall
purchase non-exclusively from RBC the Accessory Products listed on Schedule 1;
and (b) RBC will supply all Products listed on Schedule 1 non-exclusively to 3M
and its affiliates. 

4.          
  FORECAST; LEAD TIME: The first three (3) months of each Forecast shall be
  binding on 3M and shall constitute a Firm Order. 3M shall be entitled to revise
  the Forecast for the second three (3) months of each Forecast, but the quantity
  of Products may not be increased by more than . [***] The Forecast
  for the last six (6) months may be revised by 3M without restriction. The lead-time
  for product shall be ninety (90) days.

5.          
CAPACITY COMMITMENT: RBC will provide capacity information regarding the
Product to the JSC so that the JSC can discuss it on a quarterly basis. This
capacity information is shared with 3M for 3M’s planning purposes only.

6.          
PRICES: Product prices are listed in Schedule One. Section 5 of the
Agreement shall apply to the pricing in this Subcontract.

7.          
WARRANTY PERIOD: The warranty period for Products shall be as stated in
the Service Plan to be attached as Schedule 3.

8.          
PARTS; SERVICE PLAN; TECHNICAL SUPPORT: RBC will provide to 3M technical
support for Products as set forth on Schedule Two to this Subcontract. 

1 




9.          
LICENSE: In the event the license to make or have made Products contemplated
in Section 23 of the Agreement goes into effect under the terms of Section 23(a)
of the Agreement, the earned royalty rate and other minimum terms for such
license to Products covered by this Subcontract will be as set out in Schedule 2
hereto, provided that such terms may be modified or other terms may be added as
mutually agreed upon in writing by 3M and RBC.

10.         COUNTERPARTS:
This Subcontract may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document. 

	ACCEPTED AND AGREED TO: 	 
	 	 
	3M COMPANY 	RESPONSE BIOMEDICAL CORPORATION 
	  	 
	 	 
	By: /s/ [Authorized Signatory]                                           
       	By: /s/ Bill Radvak                                                   
       
	 	 
	Title: ______________________________________	Title: “President & CEO”                                       
       


2 




Schedule One 

To 

Exhibit A-1 

Products, Specifications and Prices

I. Products and Specifications: Products shall mean the Reader
Product and the Accessory Products as further defined by the below referenced
Specifications.


	Product 	Specification 
	3MTM
      Rapid Detect Reader: 	 
    
	Accessories: 	 
    
	         
      1. Dot Matrix Printer, 120VAC 	 
    
	         
      2. Dot Matrix Printer, CE, 230VAC 	 
    
	         
      3. Bar Code Wand Scanner 	 
    
	         
      4. Reader to Reader Serial Cable 	 
    



II. Prices: The following Prices shall apply to Products:


	Product 	Part/Catalogue # 	Price 
	3MTM Rapid Detect Reader: 	91001 	 [***] 
	Accessories: 	 	 
    
	         
      1. Dot Matrix Printer, 120VAC 	RA 3030 	 [***] 
	         
      2. Dot Matrix Printer, CE, 230VAC 	RA 3047 	 [***] 
	         
      3. Bar Code Wand Scanner 	RA 3035 	 [***] 
	         
      4. Reader to Reader Serial Cable 	RA 3046 	 [***] 



3 




Schedule Two 

To 

Exhibit A-1 

License Terms 

1.          
Royalty 

3M or its designee shall pay a royalty of  per Net
Unit Sale of the 3M [***] TM Rapid Detect Reader, the manufacture or
sale of which infringes a claim in an unexpired patent [***] within
Sponsored Rights or Background Rights owned or controlled by RBC (as those terms
are defined in the JDA) in the country where 3MTM Rapid Detect Reader
is made or sold.

“Net Unit Sale” means a Reader manufactured and shipped
for commercial use by a non-affiliated third party. Se1ling, leasing, lending,
consigning, or an other activity by means of which a third party acquires the
right to possession or use of a Reader shall be included in Net Unit
Sales. 

2.          
Sublicenses 

3M or its designee shall have the right to sublicense to its
affiliates. 3M will unconditionally guarantee the performance of any such
Affiliates hereunder as if they were signatories to the license to the extent
the performance or lack of performance is a breach of the license. A breach by
any such affiliate of any such obligation shall constitute a breach by 3M of the
license.

The license grant also includes the right for any customers
(ultimate or in privity or other) of 3M, its designee, or its Affiliates to use
and/or sell (for further use or resale) the 3MTM Rapid Detect Reader
so made. 

3.          
Reports and Payment 

3M shall deliver to RBC within sixty (60) days after the end of
each calendar quarter a written report showing its computation of royalties due
under the license based on the number of units sold by 3M and its affiliates and
its sublicensees during such calendar quarter.

4.          
Records, Audit 

3M shall keep, and shall require all affiliates and
sublicensees to keep, full, true and accurate books of accounts and other
records containing all information and data which may be necessary to ascertain
and verify the royalties payable hereunder for a period of three (3) years after
the date such royalties became payable. During the term of this Agreement after
the first commercial sale of Subject Product and for a period of one year
following termination of this Agreement, RBC shall have the right from time to
time (not to exceed once during each calendar year) to have an independent firm
of accountants (i.e., a certified public accountant or like person 

4 




reasonably acceptable to 3M) inspect such books, records and
supporting data, provided such shall not cover such records for more than the
preceding three (3) years. Such independent firm of accountants shall perform
these audits at RBC’s expense upon reasonable prior notice and during 3M’s
regular business hours, and shall agree as a condition to such audit to maintain
the confidentiality of all information of 3M disclosed or observed in connection
with such audit and to disclose to RBC only whether 3M has complied with its
obligations under this Agreement with respect to the accuracy of the royalty
statements and payments. If the result of such audit demonstrates an
underpayment to RBC of 5% or more, 3M shall pay the full amount of the
underpayment and for the reasonable costs of such audit. 

5.          
Assignment 

The license granted shall be binding upon and inure to the
benefit of the successors in interest of the respective parties. Except as
otherwise provided in the license, neither the license nor any of the rights or
obligations thereunder may be assigned by either Party without the prior written
consent of the other Party, except either Party may assign the license or any of
the rights or obligations hereunder to an affiliate or to a Third Party with
which a Party may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which the license relates, without obtaining
the prior written consent of the other Party. 

6.          
Competitive Activity 

The license shall provide for the enforcement by either Party
of Intellectual Property Rights granted under the license. 

The license shall provide a mechanism for reduction of royalty
in at least the following circumstances: 

	 	(a) 	
      During any period wherein 3M or its designee is
      prosecuting any legal action to enforce Intellectual Property Rights
      granted under the license,  [***] with respect to any country in which the legal action is
  being prosecuted.

	 	 	 


	 	
      (b) 
	
      If any third party shall make, use, sell, offer for sale
      or import 3MTM Rapid DetectReader in any country in which RBC
      has an actionable right against such third party, and
    [***]

	 	 	 
	 		
      with respect to such country until any such activity in
      such country has ceased.



7.          
Termination 

The license shall terminate on the happening of one of the
following events: 

5 





	 	(a) 	
      If not terminated sooner, the Agreement shall terminate
      with the expiration of the last to expire of an issued patent in the
      Intellectual Property Rights;

	 	(b) 	
      3M or its designee shall have the right to terminate the
      license agreement in its entirety or with respect to any country or with
      respect to any patent application or patent in any country by giving three
      (3) months prior written notice,

	 	(c) 	
      default by either Party.



 

 

 

 

6 




Schedule Three 

To 

Exhibit A-1 

Service Plan 

[To be added by amendment] 

 

 

 

 

 

7 




EXHIBIT A- 2 

SUBCONTRACT TO 

MANUFACTURING AND SUPPLY AGREEMENT 

MEDICAL DIVISION

(Cartridge for Staph aureus) 

This Subcontract dated November 30, 2006 (“Subcontract
Effective Date”) is between 3M Company acting through its Medical Division
(“3M”) and Response Biomedical Corp. (“RBC”) and is made pursuant to the
Manufacturing and Supply Agreement dated November 30, 2006 (“Agreement”) between
3M and RBC. All capitalized terms used but not defined in this Subcontract have
the meanings given in the Agreement. 

1.          
SCOPE: The Agreement governs this Subcontract except for any amendments
described below. If any term or condition in this Subcontract conflicts with the
Agreement, this Subcontract shall govern. The Products covered by this
Subcontract are defined below in section 3. The Specifications for Products are
listed in Schedule 1.

2.          
SUBCONTRACT TERM: This Subcontract begins on the Subcontract Effective Date
and continues for [***]  years, unless terminated earlier as provided
for herein (the “Subcontract Term”). The Subcontract Term may be renewed for
additional [***] year periods upon the mutual written agreement of RBC
and 3M. 3M shall have the right to terminate this Agreement in whole or in part
upon  days prior written notice to RBC at any time[***] after the
first  years of the Term. [***] 

3.          
DEFINITIONS: 

(a)          
“Product” means the disposable, single-use immunoassay test kit
and components thereof (e.g., sample handling device, reagents, lot card), as
listed on and further defined by the Specifications referenced in Schedule 1
hereto, and used in conjunction with the Reader (defined in Exhibit A-1 to the
Agreement) for detection of the Target.

(b)          
“Target” means the microorganism Staphylococcus aureus in anterior
nares swab specimens.

4.          
FORECAST; LEAD TIME: The first three (3) months of each Forecast shall be
binding on 3M and shall constitute a Firm Order. 3M shall be entitled to revise
the Forecast for the second three (3) months of each Forecast, but the quantity
of Products may not be increased by more than . [***] The Forecast for
the last six (6) months may be revised by 3M without restriction. The lead-time
for product shall be  days. [***] 

5.          
CAPACITY COMMITMENT: RBC will provide capacity information regarding the
Product to the JSC so that the JSC can discuss it on a quarterly basis. This
capacity information is shared with 3M for 3M’s planning purposes only.

6.          
  PRICES: Product prices are listed in Schedule One. Section 5(b) and 5(c)
  of the Agreement shall not apply to this Subcontract. 

7.          
INSPECTION: 3M shall conduct inspections of each shipment of Product for
patent defects and may reject all or any portion of such shipment that 3M
reasonably believes do not conform to the Specifications (such Product
quantities are hereinafter referred to as the 

1 




“Allegedly Non-Conforming Products”) by giving written notice
to RBC within thirty (30) days after receipt of shipment of the Allegedly
Non-Conforming Products at the Delivery destination set forth in the applicable
Purchase Order. Such notice shall identify in reasonable detail the nature of
the nonconformity. If 3M fails to provide RBC with written notice of Allegedly
NonConforming Products within such thirty (30) day period, 3M will be deemed to
have accepted the Products, but no such acceptance shall limit RBC’s warranties
or other obligations with respect to such Products.

8.          
WARRANTY PERIOD: The warranty period for the Product shall be from the
date of delivery of the Product until the Product expiry date as stated in the
Product labeling.

9.          
LICENSE: In the event the license to make or have made Products contemplated
in Section 23 of the Agreement goes into effect under the terms of Section 23(a)
of the Agreement, the earned royalty rate and other minimum terms for such
license to Products covered by this Subcontract will be as set out in Schedule 2
hereto, provided that such terms may be modified or other terms may be added as
mutually agreed upon in writing by 3M and RBC.

10.         COUNTERPARTS:
This Subcontract may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document. 

	ACCEPTED AND AGREED TO: 	 
	 	 
	3M COMPANY 	RESPONSE BIOMEDICAL CORP. 
	 	 
	 	 
	By: /s/ [Authorized Signatory]                                           
       	By: /s/ Bill Radvak                                                   
       
	 	 
	Title: ______________________________________	Title: “President & CEO”                                       
       


2 




Schedule One 

To 

Exhibit A-2 

Products, Specifications, and Prices 

I. Products and Specifications: The Specification for
Products to be supplied under this Subcontract are referenced below:


	Product 	Specification 
	3MTM Rapid Detect Staph aureus Test Kit, which
      includes a Cartridge, reagent, conjugated latex and a lot card. 	[Reference to Spec] 



II. Prices: 

A. Defined Terms. For purposes of this
Schedule One, the terms defined in this Section 1 shall have the
respective meanings set forth below. Other capitalized terms used in this
Schedule One without definition shall have the meanings assigned to them
in the Agreement. 

“Market Price” means the average price per unit of an
finished product or kit that incorporates Product (“Finished 3M Product”)
invoiced by 3M and its affiliates for all units of Finished 3M Product that is
commercially sold by 3M or its affiliates in the Representative Countries during
a 6-Month Period, that is equal to the quotient of: (i) the total amount
invoiced from the commercial sale of all units of the Finished 3M Product in the
Representative Countries during such 6-Month Period (including all units deemed
commercially sold under Section 4 of this Schedule One), less (x) charges
included in such invoiced amount for sales taxes, value added taxes and/or use
taxes, and/or duties in connection with import or export, (y) amounts repaid by
reason of rebates, rejections, credits or returns directly related to the
Finished 3M Product during the 6-Month Period and (z) charges included in such
invoiced amount for freight and/or insurance, each as determined in accordance
with 3M’s standard accounting practices for products it commercially sells,
which accounting practices shall be consistent with general practices in its
industry; divided by (ii) the number of units of such Finished 3M Product
commercially sold in the Representative Countries during such 6-Month Period.
Market Price shall be denominated in U.S. Dollars. For purposes of establishing
Market Price, all commercial sales of Finished 3M Products made in other
currencies shall be translated to U.S. Dollars in accordance with 3M’s standard
currency translation practices, which practices shall be consistent with general
practices in its industry. In the event that any commercial sale by 3M or its
affiliates during any year is made at a preferential price to any Third Party as
a result of an understanding or arrangement unrelated to the commercialization
of a Finished 3M Product (including a revenue-sharing arrangement) or for
compensation other than cash, such Finished 3M Product shall be deemed to have
been commercially sold to the Third Party at the Market Price otherwise in
effect for such Finished 3M Product (excluding the preferential transfers)
during such 6-Month Period. 

3 




“Initial Transfer Price” shall be calculated in
accordance with paragraph B of this Schedule One. 

“Representative Countries” means the following countries
and their respective territories and possessions: . [***]

“Transfer Price” shall be calculated in accordance with
paragraph C of this Schedule One, but in no event shall be less than
..[***]

“6-Month Period” shall mean the calendar six (6) month
periods starting with commercial launch and each successive calendar six (6)
month period. 

B. Initial Transfer Price and Reconciliation.
The Initial Transfer Price for the first 6-Month Period following launch
of any Finished 3M Product shall be calculated based upon the calculations
outlined in paragraph C below utilizing 3M’s estimated sales and volume amounts
for the first 6-Month Period following launch. Thirty (30) days following the
expiration of the first 6-Month Period following such launch of a Finished 3M
Product, the Parties will calculate the Transfer Price based on the formula
given below in paragraph C of Schedule One and determine whether a difference
between that Transfer Price and the Initial Transfer Price exists. If the
Transfer Price is greater than the Initial Transfer Price, 3M shall make a
reconciliation payment to the RBC in the amount of the difference. If the
Transfer Price is lesser than the Initial Transfer Price, RBC shall make a
reconciliation payment to 3M in the amount of the difference. 

C. On-going Calculation of Transfer
Price. At the same time as the Reconciliation payment referenced
in Paragraph B of Schedule One is calculated and thereafter thirty (30) calendar
days following each 6-Month Period the Parties will recalculate Transfer Price.
This recalculated Transfer Price, using actual sales and volume data from the
previous 6-Month Period will govern orders of Collaboration Assays placed during
the subsequent 6-Month Period. For example, utilizing sales and volume data from
January through June the Parties will calculate a Transfer Price on July
31st that will govern orders placed in from August 1st –
January 31st. The Transfer Price shall be calculated based on the
Market Price which is set solely by 3M and such calculation shall be in
accordance with the following table: 


	 
[***] 	 
[***] 	 
[***] 	 
[***] 
	 
[***] 	 
[***] 	 
[***] 	 
[***] 



For clarity, the following two examples of Transfer Price are
given: 

[***] 

[***]

4 




D.          
Payment of Transfer Price.

RBC’s sales of Product to 3M hereunder shall be at a price per
unit equal to the Transfer Price in effect at the time the Product is ordered by
3M from RBC.

 

 

 

 

5 




Schedule Two 

To 

Exhibit A-2 

License Terms 

1.          
Royalty 


	Royalty based on annual net sales of 	Rate 
	3MTM
      Rapid Detect Staph aureus Test 	 
    
	Kit 	 
    
	Net sales
      Million [***] 	[***] 
	 	  
	Net sales 
      Million [***] - 	 [***] 
	                 
      Million [***]	 
    
	Net sales  Million [***] 	 [***] 



“Net Sales Price” means the total price for a
3MTM Rapid Detect Staph aureus Test Kit invoiced by 3M or any
Affiliate, sublicensee or permitted assign for sale to a third party, less:

	 	(a) 	
      applicable taxes (e .g., sales, excise or use taxes) or
      duties;

	 	(b) 	
      separately stated charges for transportation or customs
      clearance;

	 	(c) 	
      credits for defective or returned 3MTM Rapid
      Detect Staph aureus Test Kit; and

	 	(d) 	
      discounts, rebates, refunds, marketing allowances or
      other promotional fees.



3M or its designee shall pay the royalty on the Net Sales Price
  of 3MTM Rapid Detect Staph aureus Test Kit, the manufacture or sale
  of which infringes a claim in an unexpired patent [***] within Sponsored
  Rights or Background Rights owned or controlled by RBC (as those terms are defined
  in the JDA) in the country where 3MTM Rapid Detect Staph aureus Test
  Kit is made or sold.

	2. 	
      Sublicenses

	 	 
		
      3M or its designee shall have the right to sublicense to
      its affiliates. 3M will unconditionally guarantee the performance of any
      such affiliates hereunder as if they were signatories to the license to
      the extent the performance or lack of performance is a breach of the
      license . A breach by any such affiliate of any such obligation shall
      constitute a breach by 3M of the license.



The license grant also includes the right for any customers
(ultimate or in privity or other) of 3M, its designee, or its affiliates to use
and/or sell (for further use or resale) the 3MTM Rapid Detect Staph
aureus Test Kit so made. 

3.          
Reports and Payment 

6 




3M shall deliver to RBC within sixty (60) days after the end of
each calendar quarter a written report showing its computation of royalties due
under the license upon net sales by 3M and its affiliates and its sublicensees
during such calendar quarter. All net sales shall be segmented in each such
report according to sales by 3M, each affiliate and each sublicensee, as well as
on a country-by-country basis, including the rates of exchange used to convert
such royalties to United States dollars from the currency in which such sales
were made. The rates of exchange to be used for converting royalties to United
States dollars shall be those in effect for the purchase of dollars as certified
by CitiBank, N.A., New York, New York, U.S.A., on the last business day of the
quarter with respect to which the payment is due. 3M, simultaneously with the
delivery of each such report, shall tender payment in United States dollars of
all royalties shown to be due thereon. 

4.          
Records, Audit 

3M shall keep, and shall require all affiliates and
sublicensees to keep, full, true and accurate books of accounts and other
records containing all information and data which may be necessary to ascertain
and verify the royalties payable hereunder for a period of three (3) years after
the date such royalties became payable. During the term of this Agreement after
the first commercial sale of Subject Product and for a period of one year
following termination of this Agreement, RBC shall have the right from time to
time (not to exceed once during each calendar year) to have an independent firm
of accountants (i.e., a certified public accountant or like person reasonably
acceptable to 3M) inspect such books, records and supporting data, provided such
shall not cover such records for more than the preceding three (3) years. Such
independent firm of accountants shall perform these audits at RBC’s expense upon
reasonable prior notice and during 3M’s regular business hours, and shall agree
as a condition to such audit to maintain the confidentiality of all information
of 3M disclosed or observed in connection with such audit and to disclose to RBC
only whether 3M has complied with its obligations under this Agreement with
respect to the accuracy of the royalty statements and payments. If the result of
such audit demonstrates an underpayment to RBC of 5% or more, 3M shall pay the
full amount of the underpayment and for the reasonable costs of such audit. 

5.          
Assignment 

The license granted shall be binding upon and inure to the
benefit of the successors in interest of the respective parties. Except as
otherwise provided in the license, neither the license nor any of the rights or
obligations thereunder may be assigned by either Party without the prior written
consent of the other Party, except either Party may assign the license or any of
the rights or obligations hereunder to an affiliate or to a Third Party with
which a Party may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which the license relates, without obtaining
the prior written consent of the other Party. 

6.          
Competitive Activity 

The license shall provide for the enforcement by either Party
of Intellectual Property Rights granted under the license. 

7 




The license shall provide a mechanism for reduction of royalty
in at least the following circumstances: 

	 	(d) 	
      During any period wherein  [***] with respect to any country in which the legal action is
  being prosecuted.

	 	 	 
	 	(b) 	
      If any third party shall make, use, sell, offer for sale
      or import 3MTM Rapid Detect Staph aureus Test Kit in any
      country in which RBC has an actionable right against such third party, and
      [***] with respect to such country until any such activity in
      such country has ceased.



7.          
Termination 

The license shall terminate on the happening of one of the
following events: 

	 	(a) 	
      If not terminated sooner, the Agreement shall terminate
      with the expiration of the last to expire of an issued patent within the
      Intellectual Property Rights;

	 	(e) 	
      3M or its designee shall have the right to terminate the
      license agreement in its entirety or with respect to any country or with
      respect to any patent application or patent in any country by giving three
      (3) months prior written notice,

	 	(f) 	
      default by either Party.



8 




EXHIBIT A- 3 

SUBCONTRACT TO 

MANUFACTURING AND SUPPLY AGREEMENT 

MEDICAL DIVISION 

(Cartridges for Flu A/B) 

This Subcontract dated November 30, 2006 is between 3M Company,
acting through its Medical Division (“3M”) and Response Biomedical Corp. (“RBC”)
and is made pursuant to the Manufacturing and Supply Agreement dated November
30, 2006 (“Agreement”) between 3M and RBC. All capitalized terms used but not
defined in this Subcontract have the meanings given in the Agreement. 

1.          
SCOPE: The Agreement governs this Subcontract except for any amendments
described below. The Products covered by this Subcontract are defined below in
section 3. The Specifications for Products are listed in Schedule 1.

2.          
SUBCONTRACT TERM: This Subcontract begins on the Subcontract Effective Date
and continues for  years, unless terminated earlier as provided for
herein (the “Subcontract[***] Term”). The Subcontract Term may be renewed for
additional  year periods upon the[***] mutual written agreement of RBC
and 3M. 3M shall have the right to terminate this Agreement in whole or in part
upon ninety (90) days prior written notice to RBC at any time after the first
 years of the Term.[***]

3.          
DEFINITIONS: 

(a)          
“Product” means the disposable, single-use immunoassay test kit and
components thereof (e.g., sample handling device, reagents, lot card), as listed
on and further defined by the Specifications referenced in Schedule 1 hereto,
and used in conjunction with the Reader (defined in Exhibit A-1 to the
Agreement) for detection of the Target. 

(b)          
“Target” means the microorganisms influenza A and influenza B.

4.          
FORECAST; LEAD TIME: The first three (3) months of each Forecast shall be
binding on 3M and shall constitute a Firm Order. 3M shall be entitled to revise
the Forecast for the second three (3) months of each Forecast, but the quantity
of Products may not be increased by more than . [***] The Forecast for
the last six (6) months shall be non-binding on 3M. The lead-time for product
shall be ninety (90) days.

5.          
CAPACITY COMMITMENT: RBC will provide capacity information regarding the
Product to the JSC so that the JSC can discuss it on a quarterly basis. This
capacity information is shared with 3M for 3M’s planning purposes only.

6.          
PRICES: Product prices are listed in Schedule One. Section 5(b) and 5(c) of
the Agreement shall not apply to this Subcontract.

7.          
  WARRANTY PERIOD: The warranty period for the Product shall be from
  the date of delivery of the Product until the Product expiry date as stated
  in the Product labeling. 

8.          
Regulatory Filings. RBC shall be responsible for obtaining regulatory
approval, in its own name, to market Products and allow 3M to market such
Products in the United States, Canada and Japan. RBC agrees to provide to 3M
such information as it may deem reasonably 

1 




necessary to seek regulatory approval, marketing
authorizations, or similar approval to sell Products in any other countries in
accordance with paragraph 13.6 of the JDA. Further, RBC agrees to maintain such
regulatory filings in the United States, Canada and Japan for the Term of this
Agreement and to inform 3M of any changes to those filings or any correspondence
with the relevant regulatory agency regarding those filings.

9.          
LICENSE: In the event the license to make or have made Products contemplated
in Section 23 of the Agreement goes into effect under the terms of Section 23(a)
of the Agreement, the earned royalty rate and other minimum terms for such
license to Products covered by this Subcontract will be as set out in Schedule 2
hereto, provided that such terms may be modified or other terms may be added as
mutually agreed upon in writing by 3M and RBC.

10.       
 COUNTERPARTS: This Subcontract may be executed in any number of
counterparts, each of which when delivered, either in original or facsimile
form, shall be deemed to be an original and all of which together shall
constitute one and the same document. 

	ACCEPTED AND AGREED TO: 	 
	 	 
	3M COMPANY 	RESPONSE BIOMEDICAL CORP. 
	 	 
	 	 
	By: /s/ [Authorized Signatory]                                           
       	By: /s/ Bill Radvak                                                   
       
	 	 
	Title: ______________________________________	Title: “President & CEO”                                       
       


2 




Schedule One 

To 

Exhibit A-3 

Products, Specifications and Prices 

 

I. Products and Specifications: The Specification for Products
to be supplied under this Subcontract are referenced below:


	Product 	Specification 
	3MTM Rapid Detect Flu A/B Test Kit, which
      includes a Cartridge, reagent, conjugated latex and a lot card. 	[Reference to Spec] 



II. Prices: 

A. Defined Terms. For purposes of this
Schedule One, the terms defined in this Section 1 shall have the
respective meanings set forth below. Other capitalized terms used in this
Schedule One without definition shall have the meanings assigned to them
in the Agreement. 

“Market Price” means the average price per unit of an
finished product or kit that incorporates Product (“Finished 3M Product”)
invoiced by 3M and its affiliates for all units of Finished 3M Product that is
commercially sold by 3M or its affiliates in the Representative Countries during
a 6-Month Period, that is equal to the quotient of: (i) the total amount
invoiced from the commercial sale of all units of the Finished 3M Product in the
Representative Countries during such 6-Month Period (including all units deemed
commercially sold under Section 4 of this Schedule One), less (x) charges
included in such invoiced amount for sales taxes, value added taxes and/or use
taxes, and/or duties in connection with import or export, (y) amounts repaid by
reason of rebates, rejections, credits or returns directly related to the
Finished 3M Product during the 6-Month Period and (z) charges included in such
invoiced amount for freight and/or insurance, each as determined in accordance
with 3M’s standard accounting practices for products it commercially sells,
which accounting practices shall be consistent with general practices in its
industry; divided by (ii) the number of units of such Finished 3M Product
commercially sold in the Representative Countries during such 6-Month Period.
Market Price shall be denominated in U.S. Dollars. For purposes of establishing
Market Price, all commercial sales of Finished 3M Products made in other
currencies shall be translated to U.S. Dollars in accordance with 3M’s standard
currency translation practices, which practices shall be consistent with general
practices in its industry. In the event that any commercial sale by 3M or its
affiliates during any year is made at a preferential price to any Third Party as
a result of an understanding or arrangement unrelated to the commercialization
of a Finished 3M Product (including a revenue-sharing arrangement) or for
compensation other than cash, such Finished 3M Product shall be deemed to have
been commercially sold to the Third Party at the Market Price otherwise in
effect for such Finished 3M Product (excluding the preferential transfers)
during such 6-Month Period. 

3 




“Initial Transfer Price” shall be calculated in
accordance with paragraph B of this Schedule One. 

“Representative Countries” means the following countries
and their respective territories and possessions: . [***]

“Transfer Price” shall be calculated in accordance with
paragraph C of this Schedule One, but in no event shall be less than
..[***]

 “6-Month Period” shall mean the calendar six (6)
month periods starting with commercial launch and each successive calendar six
(6) month period. 

B. Initial Transfer Price and Reconciliation.
The Initial Transfer Price for the first 6-Month Period following launch
of any Finished 3M Product shall be calculated based upon the calculations
outlined in paragraph C below utilizing 3M’s estimated sales and volume amounts
for the first 6-Month Period following launch. Thirty (30) days following the
expiration of the first 6-Month Period following such launch of a Finished 3M
Product, the Parties will calculate the Transfer Price based on the formula
given below in paragraph C of Schedule One and determine whether a difference
between that Transfer Price and the Initial Transfer Price exists. If the
Transfer Price is greater than the Initial Transfer Price, 3M shall make a
reconciliation payment to the RBC in the amount of the difference. If the
Transfer Price is lesser than the Initial Transfer Price, RBC shall make a
reconciliation payment to 3M in the amount of the difference. 

C. On-going Calculation of Transfer
Price. At the same time as the Reconciliation payment referenced
in Paragraph B of Schedule One is calculated and thereafter thirty (30) calendar
days following each 6-Month Period the Parties will recalculate Transfer Price.
This recalculated Transfer Price, using actual sales and volume data from the
previous 6-Month Period will govern orders of Collaboration Assays placed during
the subsequent 6-Month Period. For example, utilizing sales and volume data from
January through June the Parties will calculate a Transfer Price on July
31st that will govern orders placed in from August 1st –
January 31st. The Transfer Price shall be calculated based on the
Market Price which is set solely by 3M and such calculation shall be in
accordance with the following table: 


	 
[***] 	 
[***] 	 
[***] 	 
[***] 
	 
[***] 	 
[***] 	 
[***] 	 
[***] 



For clarity, the following two examples of Transfer Price are
given: 

[***] 

[***]

4 




D.        Payment
of Transfer Price.

RBC’s sales of Product to 3M hereunder shall be at a price per
unit equal to the Transfer Price in effect at the time the Product is ordered by
3M from RBC. 

 

 

 

 

 

5 




Schedule Two 
To 
Exhibit A-3 
License Terms


1.        Royalty



	Royalty based on annual net sales of 	Rate 
	3MTM
      Rapid Detect Flu A/B Test Kit 	 
    
	Net sales
      Million 	[***] 
	 	  
	Net sales
      Million     [***] - 	[***]
       
	                
      Million     [***] 	 
    
	Net sales Million     [***] 	[***]  



“Net Sales Price” means the total price for a
3MTM Rapid Detect Flu A/B Test Kit invoiced by 3M or any Affiliate,
sublicensee or permitted assign for sale to a third party, less:

	 	(a) 	
      applicable taxes (e .g., sales, excise or use taxes) or
      duties;

	 	(b) 	
      separately stated charges for transportation or customs
      clearance;

	 	(c) 	
      credits for defective or returned 3MTM Rapid
      Detect Flu A/B Test Kit; and

	 	(d) 	
      discounts, rebates, refunds, marketing allowances or
      other promotional fees.



3M or its designee shall pay the royalty on the Net Sales Price
  of 3MTM Rapid Detect Flu A/B Test Kit, the manufacture or sale of
  which infringes a claim in an unexpired patent [***] within Sponsored
  Rights or Background Rights owned or controlled by Response (as those terms
  are defined in the JDA) in the country where 3MTM Rapid Detect Flu
  A/B Test Kit is made or sold. 

	2. 	
      Sublicenses

	 	 
		
      3M or its designee shall have the right to sublicense to
      its affiliates. 3M will unconditionally guarantee the performance of any
      such affiliates hereunder as if they were signatories to the license to
      the extent the performance or lack of performance is a breach of the
      license . A breach by any such affiliate of any such obligation shall
      constitute a breach by 3M of the license.



The license grant also includes the right for any customers
(ultimate or in privity or other) of 3M, its designee, or its affiliates to use
and/or sell (for further use or resale) the 3MTM Rapid Detect Flu A/B
Test Kit so made. 

6 




B 

3.        Reports and
Payment 

3M shall deliver to RBC within sixty (60) days after the end of
each calendar quarter a written report showing its computation of royalties due
under the license upon net sales by 3M and its affiliates and its sublicensees
during such calendar quarter. All net sales shall be segmented in each such
report according to sales by 3M, each affiliate and each sublicensee, as well as
on a country-by-country basis, including the rates of exchange used to convert
such royalties to United States dollars from the currency in which such sales
were made. The rates of exchange to be used for converting royalties to United
States dollars shall be those in effect for the purchase of dollars as certified
by CitiBank, N.A., New York, New York, U.S.A., on the last business day of the
quarter with respect to which the payment is due. 3M, simultaneously with the
delivery of each such report, shall tender payment in United States dollars of
all royalties shown to be due thereon. 

4.        Records,
Audit 

3M shall keep, and shall require all affiliates and
sublicensees to keep, full, true and accurate books of accounts and other
records containing all information and data which may be necessary to ascertain
and verify the royalties payable hereunder for a period of three (3) years after
the date such royalties became payable. During the term of this Agreement after
the first commercial sale of Subject Product and for a period of one year
following termination of this Agreement, RBC shall have the right from time to
time (not to exceed once during each calendar year) to have an independent firm
of accountants (i.e., a certified public accountant or like person reasonably
acceptable to 3M) inspect such books, records and supporting data, provided such
shall not cover such records for more than the preceding three (3) years. Such
independent firm of accountants shall perform these audits at RBC’s expense upon
reasonable prior notice and during 3M’s regular business hours, and shall agree
as a condition to such audit to maintain the confidentiality of all information
of 3M disclosed or observed in connection with such audit and to disclose to RBC
only whether 3M has complied with its obligations under this Agreement with
respect to the accuracy of the royalty statements and payments. If the result of
such audit demonstrates an underpayment to RBC of 5% or more, 3M shall pay the
full amount of the underpayment and for the reasonable costs of such audit. 

5.        Assignment


The license granted shall be binding upon and inure to the
benefit of the successors in interest of the respective parties. Except as
otherwise provided in the license, neither the license nor any of the rights or
obligations thereunder may be assigned by either Party without the prior written
consent of the other Party, except either Party may assign the license or any of
the rights or obligations hereunder to an affiliate or to a Third Party with
which a Party may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which the license relates, without obtaining
the prior written consent of the other Party. 

7 




6.        Competitive
Activity 

The license shall provide for the enforcement by either Party
of Intellectual Property Rights granted under the license. 

The license shall provide a mechanism for reduction of royalty
in at least the following circumstances: 

	 	(g) 	
      During any period wherein [***] for such period with respect to any country in which the
  legal action is being prosecuted.

	 	 	 
	 	(b) 	
      If any third party shall make, use, sell, offer for sale
      or import 3MTM Rapid Detect Flu A/B Test Kit in any country in
      which RBC has an actionable right against such third party, and
      [***] with respect to such country until any such activity in
      such country has ceased.



7.        Termination


The license shall terminate on the happening of one of the
following events: 

	 	(a) 	
      If not terminated sooner, the Agreement shall terminate
      with the expiration of the last to expire of any issued patent in the
      Intellectual Property Rights;

	 	(h) 	
      3M or its designee shall have the right to terminate the
      license agreement in its entirety or with respect to any country or with
      respect to any patent application or patent in any country by giving three
      (3) months prior written notice,

	 	(i) 	
      default by either Party.



8