EXHIBIT 10.17
DISTRIBUTION AGREEMENT
BY AND BETWEEN
DEPUY ACROMED, INC.
AND
ORATEC INTERVENTIONS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is between Oratec Interventions, Inc., a California corporation,
with its principal place of business at 0000 Xxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000, hereinafter referred to a "Oratec" and DePuy AcroMed, Inc., an Ohio
corporation with offices at 0000 Xxxxxxxx Xxx., Xxxxxxxxx, Xxxx 00000
hereinafter referred to as "DePuy," effective as of the 30 day of March, 1999
(the "Effective Date").
WHEREAS, Oratec has developed, prototyped, and/or manufactured and verified
clinically products used to apply heat to the spine to denervate and shrink
spinal disc tissue, as further described herein; and
WHEREAS, DePuy has developed an extensive worldwide distribution capability and
desires to distribute the Products to surgeons worldwide, with the exception of
the United States; and
WHEREAS, Oratec desires to contract with DePuy to assist Oratec in conducting
selected clinical evaluations with surgeons outside the United States and in
obtaining regulatory approval for the Products outside the United States, and to
exclusively market, distribute and sell the Products, as further described
herein; and
WHEREAS, DePuy is willing to contract with Oratec to assist Oratec in conducting
such selected clinical evaluations, obtaining regulatory approval outside the
United States and to exclusively market, distribute and sell the Products;
NOW, THEREFORE, in consideration of the mutual covenants set forth below, the
parties agree as follows:
1. DEFINITIONS
1.1 "Products" shall mean all Oratec products developed, designed, intended
or sold for the spine or neurosurgery markets for use by any medical
practitioner, including any improvements or variations thereto. The
SpineCATH Intradiscal Catheter Product including any modification
thereto, may not be sold into any other medical or surgical specialty
without the prior written consent of DePuy. All such Products currently
in existence are listed on Appendix A. Appendix A shall be modified in
writing as additional Products, including improvements and variations
thereto, become available.
1.2 "New Products" means those Oratec products developed, designed, intended
or sold for the spine or neurosurgery markets for use by any medical
practitioner which perform a significantly different function or
perform in a significantly different manner from Products.
1.3 "Specifications" shall mean the detailed written specifications for a
Product in such form as Oratec shall provide and DePuy shall accept.
1.4 "Territory" shall mean the entire world, excluding the United States.
2. APPOINTMENT OF DEPUY AS EXCLUSIVE DISTRIBUTOR
2.1 Oratec hereby grants DePuy the exclusive right to market, sell and
distribute the Products in the Territory.
2.2 Provided Oratec has first offered the New Products to DePuy and DePuy
has declined the opportunity to market the New Products, Oratec may
freely negotiate with other parties to market the New Products. DePuy
shall have ninety (90) days within which to accept or reject any such
opportunity to market New Products. In the case in which Oratec had
first offered the New Products to DePuy and the parties were unable to
negotiate mutually acceptable terms, Oratec is free to contact with
other parties provided Oratec does not accept terms inferior to DePuy's
last offer. In the case in which the third party's offered terms are
equal to or inferior to DePuy's last offer, Oratec will contract with
DePuy under the terms of DePuy's last offer.
2.3 If a third party appointed by Oratec to sell Oratec products for non-
spine applications sells such products for spine applications within
the Territory, Oratec shall take all reasonable steps to prevent such
occurrences by said third party. Sales by third parties resulting form
such occurrences shall be applied toward DePuy's minimum purchase
requirements. DePuy shall not sell the Products for non-spine
applications. If a Distributor appointed by DePuy to sell the Products
sells such Products for non-spine applications within the Territory,
DePuy shall take all reasonable steps to prevent such occurrences by
said Distributor.
3. MUTUAL COOPERATION
3.1 It is the parties intention to cooperate and communicate regarding the
development and marketing of the Products. The parties agree to make
reasonable efforts to share general information received by either
party on the Products and competitive activities.
4. INTELLECTUAL PROPERTY
4.1 Any and all technology and intellectual property developed by Oratec
used in development or manufacture of a Product shall be the property
of Oratec. Oratec shall have sole responsibility for filing and
maintaining any and all patents and patent applications which address
or cover its Products.
5. ORATEC'S COVENANTS
5.1 Oratec hereby agrees to supply the Products to DePuy in accordance with
the terms set forth in this Agreement.
5.2 Oratec will work actively to make available in sufficient quantities
Products that meet mutually agreed upon specifications to meet DePuy's
requirements; provided that, shipment of all orders by Oratec shall be
on a "first in, first out" inventory basis, and may be subject to
delays due to transportation difficulties, government regulations,
inability to obtain new materials, and other circumstances beyond
Oratec's control.
5.3 Oratec will extend technical assistance to DePuy as DesPuy may
reasonably request to assist in the marketing and sale of the Products
at periodic intervals to be agreed upon by Oratec and DePuy. The
parties will agree upon a mutually acceptable technical training
program.
5.4 Oratec will provide training to the DePuy sales force on the proper use
of the Products at times and places mutually agreed upon by the parties
throughout the duration of this Agreement.
5.5 Oratec will use commercially reasonable efforts to obtain FDA approval,
including 510(k) approval, ISO 9000 Certification and obtain CE
marking(s) for each Product prior to the sale to DePuy of such Product.
5.6 Oratec agrees to cooperate with DePuy and supply DePuy with any
information required by DePuy to allow DePuy to respond to or comply
with any inquiry or regulation from any foreign government agency
regarding the use, marketing, sales or distribution of Products.
5.7 Oratec will as soon as possible after receipt of notice advise DePuy of
any claim, complaint, suit or action involving any Product sold by
DePuy or involving DePuy's marketing, sale or distribution of the
Products if such claim, complaint, suit or action relates to a Product
performance issue or could have a potential adverse impact on DePuy.
5.8 Oratec shall sell DePuy a reasonable number of demonstration samples of
Products at the cost specified in Appendix B, for use by the DePuy
sales force for customer presentations, for presentations at seminars,
meetings, conventions and the like. The samples will be marked "For
demonstration only, not for human use."
6. ORATEC'S REPRESENTATIONS AND WARRANTIES
6.1 Oratec shall have full title and full right to manufacture all Products
sold to DePuy hereunder.
6.2 Oratec represents and warrants that to the best of Oratec's knowledge,
as of the date of this Agreement, the distribution, marketing,
promotion and sale of Products by DePuy will not infringe any patents
held by persons who are not parties to this Agreement.
6.3 To Oratec's knowledge, there are no licenses or other agreements
relating to the Products that would affect Oratec's ability to
manufacture and deliver the Products or substantially equivalent
products and none are contemplated or anticipated by Oratec, except for
an agreement now in place with Oratec's vendor for generators.
6.4 All necessary governmental approvals required by the federal, state
and/or local governments of the United States for the Products will
have been obtained by Oratec prior to the sale of the Products to or by
DePuy, and will be obtained by Oratec should the need arise in the
future.
6.5 To Oratec's knowledge, all Products comprising each shipment or other
delivery made to DePuy are and, at all times, will be as of the date of
such shipment or delivery, in compliance with all applicable United
States laws, as well as all regulations, rules, declarations,
interpretations and orders issued thereunder.
6.6 To Oratec's knowledge, no Product is in violation of any United States
law, statute, executive order or regulation regarding packaging,
labeling, manufacturing, distribution, or sale. Oratec shall use
commercially reasonable efforts to comply with any applicable foreign
law, statute, executive order or regulation regarding, packaging,
labeling, manufacturing, distribution, or sale made known to Oratec.
6.7 Oratec has no pre-existing distribution or other arrangements
concerning the Products in any country located within the Territory
that would affect DePuy's ability to sell the Products in the Territory
or DePuy's right to select and appoint Distributors or affiliates to
sell the Products in the Territory.
7. PACKAGING AND LABELING
7.1 DePuy will use the Oratec trademark in marketing the Products unless
prohibited by law or regulation. DePuy will acknowledge Oratec and its
patent pending or patented technology in Product promotional materials.
DePuy shall not modify any Oratec trademark in any way without Oratec's
prior written approval or use any Oratec trademark with any goods or
services other than the Products.
7.2 During the term of this Agreement, the parties may, at their option,
indicate on signs, advertising, publicity, or other sales, marketing,
or promotional media or materials that DePuy is the authorized dealer
or distributor of the Products for spine applications. Neither party
shall otherwise use the other party's name,
trademarks, service marks, trade names, commercial symbols or logos
without having received the other party's prior written approval.
7.3 Upon termination of this Agreement, each party's license in or right to
use the other party's name, trademarks, services marks, trade names,
commercial symbols or logos shall terminate, except that DePuy shall
have the right to continue such use with respect to any inventory of
Products not purchased by Oratec as provided by Section 20.1.
7.4 Oratec will provide the Products to DePuy sterile and in standard
packaging. In the event that Oratec's sterilization processes or
standard product packaging is unacceptable to any regulatory or
government agency, Oratec shall modify its sterilization processes
and/or standard product packaging to comply with the requirements of
such regulatory or government agency. The parties shall evaluate the
costs associated with any such required modifications by country,
comparing the country sales forecast with extraordinary costs that
Oratec would have to incur.
8. DEPUY'S COVENANTS
8.1 DePuy hereby agrees to sell the Products through its marketing and
sales distribution network comprised of independent sales
representatives (the "Distributors"), through employees who specialize
in geographical regions or in designated professional fields, or
through affiliated companies, provided that any such affiliated company
is not a competitor of Oratec. DePuy shall have the right to select and
appoint all Distributors and affiliates to market and sell the Products
in the Territory. While DePuy has exclusive distribution rights in the
Territory under this Agreement, DePuy will obtain the Products for sale
in the Territory only from Oratec.
8.2 Depuy will actively promote the Products and will provide its
Distributors and employees with the following:
1. Product samples
2. Appropriate training related to Products
3. Exposure of Products at appropriate training courses and
conventions
8.3 Provided the Products are available in adequate quantities, DePuy will
work to market the Products by including them as important promotional
Products for its Distributors in 1999 and 2000. For purposes of this
Section 8.3, adequate quantities shall mean Product quantities
necessary to support DePuy's sales forecasts for the Products. DePuy
will provide to Oratec an initial forecast of sales for a one year
period for such Products. When the parties agree to develop and market
a Product not included in the original list of Products in Appendix A,
DePuy will provide Oratec with a sales forecast for that Product within
30 days of the date a Product is available for sale and marketing. All
such forecasts will be
updated on a quarterly basis. Thereafter, DePuy will provide Oratec on
the last day of October of each year during the duration of this
Agreement, with a forecast for each forthcoming contract year for all
Products sold by DePuy at that time in order to properly provide for
all accounts, insure prompt service to customers and avoid out-of-stock
conditions. Forecasts shall be provided on a country basis when it may
be necessary to reduce minimums due to late regulatory approvals and/or
mutual decisions not to market in a particular country.
8.4 DePuy will show the Products at major meetings in 1999 and 2000 and
will be responsible for all costs of exhibiting at such major meetings
as well as local conventions and trade shows unless otherwise agreed by
Oratec prior to such meeting, convention or trade show.
8.5 DePuy will take reasonable and necessary steps to provide that DePuy's
marketing, sale and distribution of the Products complies with
applicable government regulations throughout the Territory and will
provide reasonable assistance to Oratec as Oratec may reasonably
request to allow Oratec to comply with regulatory requirements of
government agencies throughout the Territory regarding the use, sale
and distribution of the Products.
8.6 DePuy shall, as soon as possible after receipt of notice, advise Oratec
of any claim, suit, or other action regarding any of the Products sold
by DePuy.
8.7 DePuy will prepare and submit import licenses, registrations or other
listings and regulatory approvals for the sale and import of the
Products in countries within the Territory. DePuy may use its system of
independent companies and Distributors throughout the Territory to
assist in obtaining import licenses and/or approvals. DePuy will obtain
necessary certifications for the Products where required. Upon any
termination of this Agreement other than for a material breach by
Oratec which remains uncured by Oratec for more than forty-five (45)
days after receipt of written notice from DePuy, DePuy shall transfer
all import licenses, registrations, listings and regulatory approvals
for the sale and import of the Products to Oratec, provided that Oratec
reimburses DePuy at the time of transfer for the cost to DePuy to
obtain and maintain all such import licenses, registrations, listings
and regulatory approvals. Any such transfer shall take place
immediately upon receipt of the foregoing payment and Oratec's
contractual commitment to buy back all inventory of Products maintained
by DePuy, its affiliates or its Distributors. DePuy makes no
representation or warranty regarding the transferability of any of the
foregoing licenses, registrations, listings, and approvals.
8.8 DePuy will provide proposed Product literature to Oratec for approval
of the content of Product marketing claims. Oratec will respond to
DePuy's request for Product literature approval within ten (10) working
days.
8.9 DePuy will provide required multilingual labeling to Oratec for
placement on the Product packaging during manufacture.
9. PRICES
9.1 Initial Prices for the Products shall be as set forth on Appendix B.
Prices for all Products will be based on a transfer price (as
hereinafter defined) that allows DePuy, for the duration of this
Agreement and any extension thereof, to receive a gross margin of at
least ***, as exemplified in Appendix B. Transfer price shall mean
the price charged to DePuy by Oratec for the Products. Oratec shall
give DePuy at least six (6) months prior written notice of any price
increase. During the first nine (9) months that this Agreement is in
effect, Oratec shall provide probes to DePuy at *** for each probe
and catheters to DePuy at *** for each catheter. The transfer price
will then be revised to reflect a *** gross margin if the average end
user selling price equals or exceeds *** per probe and *** per spine
catheter. The limit on the probe and spine catheter transfer prices
will be set at *** and ***, respectively.
9.2 DePuy retains the right to select its customers and to sell the
Products at such prices and on such terms and conditions as it may
elect. DePuy intends to market the Products at competitive pricing that
produces maximum revenues, but DePuy shall retain the right to sell the
Products at a discount where DePuy, in its sole discretion, deems it
necessary.
10. CLINICAL TRIALS
10.1 In the event that a limited clinical trial or similar testing of any
Product is required to obtain governmental approval outside the Untied
States before sale and use of the Product, the parties will conduct
such trial(s) jointly. DePuy will coordinate the trials through
surgeons and other medical personnel and health care providers.
Oratec will provide reusable and disposable products for such trials
at no costs to DePuy. However, any reuseable and disposable products
such as generators, needle benders, cables, etc. will remain the
property of Oratec and will be returned to Oratec when the need for
the products has ended. Should extensive clinical trials be required
for a Product outside the United States, the parties will determine a
mutually acceptable plan which will include financial incentives to
DePuy regarding such extensive clinical trials.
11. ORDERING
11.1 All forecasts shall be non-binding. Notwithstanding any forecast
made by DePuy, DePuy shall place firm written purchase orders
identifying the Products ordered and requested delivery date(s) with
Oratec on DePuy purchase order forms with at least 90 days lead time
to allow Oratec to optimize inventory and production
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patterns. Oratec will ship Product pursuant to such purchase orders
within ninety (90) days of the receipt by Oratec of such purchase
order.
11.2 DePuy will have *** purchase requirements in 1999 ***. Oratec and
DePuy will agree upon minimum purchase requirements for the year 2000
by October 31, 1999. If annual minimum purchase requirements for the
year 2000 are not agreed to by October 31, 1999, the parties shall
engage a mutually acceptable third party to consult with them to
develop an acceptable compromise. Should the parties be unable to
select a mutually acceptable third party to develop an acceptable
compromise, the parties shall engage in arbitration as provided in
Section 11.4. Minimum purchase requirements for subsequent years that
the Agreement is in effect will be established in the same manner.
DePuy shall have no obligation to purchase the minimum purchase
requirements, provided that failure to do so shall trigger the rights
provided to Oratec in Section 11.3. DePuy will generate a purchase
order for samples and demo equipment within 30 days of the effective
date of this Agreement. In the event that regulatory approvals
required to market and sell the Products in any country located within
the Territory are not secured or are delayed, minimum purchase
requirements for the Products shall be appropriately reduced.
11.3 Beginning with the year 2000 and for any subsequent year this
Agreement is in effect, provided that Oratec has supplied adequate
quantities of Products that meet Specifications, if less than *** of
the mutually agreed upon annual minimum purchase requirement for all
Products is not achieved by DePuy by the end of any applicable year,
DePuy's exclusive distribution rights under this Agreement may become
non-exclusive at Oratec's option, written notice of which must be
received by DePuy prior to November 1st of such year. Upon receipt of
such written notice, DePuy may make up any shortfall in the minimum
purchase requirement through a purchase of Products (the "Shortfall
Purchase") by issuing a purchase order by December 1st of such year,
specifying delivery by December 31st or as soon as possible
thereafter. If DePuy makes this Shortfall Purchase, DePuy shall retain
its exclusive distribution rights. If DePuy does not make the
Shortfall Purchase, DePuy's exclusive distribution rights, may, at
Oratec's option, become non-exclusive. If the Shortfall Purchase is
not made, and if at least *** of the mutually agreed upon annual
minimum purchase requirement for all Products is not achieved by DePuy
in the next consecutive year this Agreement is in effect, and DePuy
does not make a Shortfall Purchase in that next consecutive year,
Oratec may, upon written notice to DePuy received within sixty (60)
days after the end of such year, terminate this Agreement. In any
event, the mutually agreed upon annual minimum purchase requirement
for any year this Agreement is in effect will be considered to be met
if at least *** of such minimum purchase requirement has been met by
DePuy.
*** Confidential treatment requested.
11.4 All disputes, controversies, or differences arising between the
parties hereto, out of, or in relation to, or in connection with,
minimum purchase requirements which cannot be settled amicably by the
parties shall be resolved by arbitration under the Rules of Procedure
of the American Arbitration Association (the "Rules") then prevailing
arbitration shall be by a single arbitrator chosen by the parties,
provided that if the parties fail to agree and to appoint such single
arbitrator within thirty (30) days after demand for arbitration, the
arbitrator shall be chosen in accordance with the Rules. The decision
of the arbitrator shall be final and binding on the parties with
respect to minimum purchase requirements.
12. PAYMENT
12.1 Depuy shall be responsible for the collection of all amounts due
from customers for the Products. DePuy shall pay for its purchases
of Products (except for those Products returned pursuant to Section
15) within *** days of its receipt of the specific Products. A
late penalty of *** or the maximum rate permitted by law shall be
levied on outstanding balances for every month extending beyond the
*** day payment period beginning with the *** day. DePuy shall
be responsible for the payment of all taxes arising from the
purchase and sale of the Products by DePuy except for taxes on the
income of Oratec. These taxes include import duties, forwarding
taxes, value added taxes and any similar taxes imposed by the
jurisdictions in which the Products are sold.
13. SHIPPING
13.1 Oratec shall deliver Products directly to DePuy via common or contract
carrier. All costs of transportation and shipping to DePuy's
facilities in Cleveland, Ohio, Warsaw, Indiana, Raynham,
Massachusetts, or Leeds, England will be paid by DePuy. Title to shall
transfer and risk of loss of the Products shall pass to DePuy upon
DePuy's receipt of the Products. Notwithstanding the foregoing, any
fees to expedite shipments to DePuy at DePuy's request will be borne
by DePuy, unless the need for expedited shipment was due to Oratec's
failure to deliver promised quantities on time.
14. WARRANTY
14.1 Oratec represents and warrants to DePuy that all Products supplied in
connection with this Agreement shall be of merchantable quality, free
from defects in material and workmanship and shall be manufactured and
provided in accordance and conformity with the Specifications and in
compliance with this Agreement.
14.2 DePuy may return non-conforming and/or defective Products, including
Products which malfunction or fail to operate, or bear a sterilization
date at the time of
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receipt by DePuy that is more than sixty (60) days old, to Oratec.
Oratec shall replace or repair such nonconforming and/or defective
Products at no cost to DePuy or the customer. Replacement of such
non-conforming and/or defective Products includes payment of DePuy's
reasonable shipping costs, both from and to Oratec. Oratec shall
replace or repair such non-conforming and/or defective Products
promptly provided that the non-conformance or defect was caused by
Oratec. Oratec shall have no obligation to replace or repair Product
adulterated, misused or repackaged by another party without the
previous written approval of Oratec.
14.3 NEITHER PARTY SHALL HAVE ANY LIABILITY TO EACH OTHER OR TO ANY THIRD
PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR THE
MANUFACTURE, SALE SUPPLY, DISTRIBUTION, MARKETING, ORDERING OR
DELIVERY OF THE PRODUCTS, INCLUDING BY WAY OF EXAMPLE AND NOT BY WAY
OF LIMITATION, ANY DAMAGES, EXPENSES OR LOSSES INCURRED BY REASON OF
LOST REVENUES, LOST PROFITS, COSTS OF SUBSTITUTE PRODUCTS, AND ANY
SIMILAR AND DISSIMILAR DAMAGES, EXPENSES OR LOSSES EVEN IF THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXPENSES OR
LOSSES. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED TO LIMIT EITHER OF THE PARTIES' LIABILITY FOR DAMAGES OR
PERSONAL INJURIES, INCLUDING PROPERTY DAMAGE AND DEATH, SUFFERED BY
ANY THIRD PARTY AS A RESULT OF ACTIONS OR OMISSIONS OF SUCH PARTY.
LEGAL RELATIONSHIP AND INDEMNIFICATION
15.1 DePuy is an independent contractor and the relationship between Oratec
and DePuy is that of Vendor and Vendee. Nothing herein is intended or
shall be construed, either express or implied, to authorize either
party to create or assume any liability or obligation of any kind for
or on behalf of the other party. Neither party will be considered or
will represent itself as the agent or legal representative of the
other party for any purpose whatsoever.
15.2 The parties hereto are each responsible for their own acts, alleged
acts or omissions and respectively agree to protect, indemnify, defend
and hold harmless each other and any affiliate from and against any
and all claims, losses, demands and liabilities, including attorneys'
fees and court costs, which may arise therefrom.
15.3 Notwithstanding anything in this Agreement to the contrary, Oratec
agrees to indemnify and hold harmless DePuy from any loss, claim or
judgment, including reasonable costs and expenses of defending same,
arising out of bodily injury,
property damage or any other damage or injury which is caused by any
defect in the design, material, or manufacture of a Product, but
excluding any oral or written statements or representations by DePuy
or its distributors or employees concerning the Products inconsistent
with Oratec's training or literature. Oratec shall have control of the
defense of any litigation arising out of alleged defect in the design,
material or manufacture of a Product and DePuy agrees to cooperate
with Oratec in such defense.
15.4 DePuy agrees to indemnify and hold harmless Oratec from any loss,
claim or judgment, including reasonable costs and expenses of
defending same, arising out of any bodily injury caused by any
negligent or intentional misrepresentation concerning the Products by
DePuy or its sales employees inconsistent with Oratec's training or
literature, to the extent that Oratec is damaged due to such negligent
or intentional misrepresentation.
15.5 Should any person assert a claim against DePuy based on the alleged
infringement of a patent or other protected intellectual property
right related to a Product, Oratec agrees to indemnify and hold
harmless DePuy from and against any and all losses, claims, or
judgments, including reasonable costs and expenses of defending same,
arising directly or indirectly from any such claims of infringement of
patents or other protected intellectual property rights.
15.6 Oratec has or will have prior to the sale of the Products by DePuy
and will maintain at all times while this Agreement is in effect, a
product liability insurance policy providing at least *** dollars
(***) coverage per occurrence and *** dollars (***) aggregate
coverage per policy year, which policy shall either name DePuy as
insured or shall, by endorsement or otherwise, provide such coverage
to DePuy for any claim arising out of the sale of any Product by
DePuy. Oratec shall furnish DePuy with acceptable certificates
evidencing such insurance coverage prior to the release of any
Products for clinical studies or evaluation. Such insurance
certificates shall contain a provision that a thirty (30) day
advance written notice will be given to DePuy prior to any material
change or cancellation of such insurance.
16. ASSIGNMENT AND SALE OF INTERESTS
16.1 Neither party shall have the right to assign this Agreement without
the other's prior written consent, except that either party may assign
its obligations hereunder to an entity under common control with,
controlled by or which controls the assigning party. Notwithstanding
the foregoing, DePuy agrees that it will not assign its obligations
hereunder to any such entity that competes with Oratec.
16.2 In the event that Oratec should desire to sell all or any part of its
interests
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in the Products or any one of them or a majority of or all of the
stock and/or assets of Oratec, Oratec shall notify DePuy in writing of
such desire. DePuy will have thirty (30) days after receipt of such
written notice to make an offer for such interests, stock or assets or
any part thereof. During such thirty (30) day period, Oratec will not
sell any interests, stock or assets without seriously considering an
offer from DePuy. This thirty (30) day period does not constitute a
right of first refusal but rather an equal opportunity to purchase
such interests in the Products, a majority of Oratec's stock and/or
assets. The foregoing provision shall not apply if, at the time of
such sale, Oratec's securities are publicly traded.
16.3 If the sale of Oratec's interests in any Products and/or a majority
of it stock and/or assets would result in this Agreement being
assigned to a competitor of DePuy, DePuy may, at its sole option,
continue under the terms of this Agreement for a period of *** after
such assignment or sale. If the sale of Oratec's interests in any
Products and/or a majority of its stock and/or assets would result in
this Agreement being assigned to a third party other than a competitor
of DePuy, DePuy may, at its sole option, continue under the terms of
this Agreement for a period of *** after such assignment or sale.
Following the expiration of such *** or *** month period, the
Agreement shall terminate.
17. CONFIDENTIALITY
17.1 Each party will keep confidential and not disclose to any third party,
without the prior written consent of the disclosing party, any
information received from the other party, including, without
limitation, the technology, capabilities, business plans, operations,
and personnel of the other party (the "Confidential Information").
Confidential Information shall not include: (a) information which is
or later becomes generally available to the public by use, publication
or the like, by a party other than the party receiving the
Confidential Information pursuant to the Agreement; (b) is obtained by
a party on a non-confidential basis from a third party; (c) is in the
possession of the receiving party prior to its disclosure, as is
evidenced by written record; or (d) is required by law to be
disclosed. The obligation of this Section 17 shall continue for a
period of three (3) years from the date of termination of this
Agreement.
18. APPLICABLE LAW
18.1 Any controversy or claim relating to this Agreement, or its breach, or
to the relationship created by this Agreement, shall be resolved
through legal proceedings initiated in the United States District
Court for the Northern District of California. The laws of the State
of California shall control as to all such matters. The parties waive
the right to trial by jury, the right to seek or collect
*** Confidential treatment requested.
punitive or exemplary damages, and any claim of consequential damages.
If any portion of this Agreement itself is contrary to law, or
declared invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions shall remain valid and
enforceable. The parties shall consult and use reasonable efforts to
agree upon a valid and enforceable provision as a reasonable
substitute for such provision in the light of the intent of this
Agreement.
19. TERMINATION OF AGREEMENT
19.1 The initial term of this Agreement shall be five years from the date
first written above. Thereafter, this Agreement will renew for
successive periods of one (1) year each. This Agreement may be
terminated during either the initial term or the renewal term in
accord with the provisions of Sections 19.2, 19.3, 19.4 or 19.5.
19.2 This Agreement will be automatically terminated if a party files a
voluntary petition for bankruptcy or reorganization, is the subject of
an involuntary petition for bankruptcy, has its affairs placed in the
hands of a receiver, enters into a composition for the benefit of
creditors, or is deemed insolvent by a court of competent
jurisdiction.
19.3 This Agreement may also be terminated if a party is in material breach
of this Agreement provided the non-breaching party has provided at
least forty-five (45) days prior written notice and such breach has
not been cured within said forty-five (45) days.
19.4 This Agreement may be terminated by DePuy upon 180 days' prior written
notice to Oratec. Should DePuy provide such written notice of
termination to Oratec, DePuy's distribution rights hereunder shall
become non-exclusive during such 180 day period.
19.5 This Agreement may also be terminated in accordance with the
provisions of Article 11.3.
19.6 This Agreement may be terminated by Oratec at the end of the initial
term upon 180 days' prior written notice to DePuy, which termination
shall take effect at the end of such 180 day period.
20 OBLIGATIONS UPON TERMINATION
20.1 Upon termination or non-renewal of this Agreement by Oratec, DePuy
will return all unsold saleable Products in its possession and will
use commercially reasonable efforts to retrieve unsold saleable
Products from its distributors. DePuy agrees not to market Oratec
Products beyond *** days following
*** Confidential treatment requested.
termination of this Agreement. Oratec will reimburse DePuy for such
inventory in the following manner:
Sealed, sterile disposable Product: DePuy cost
Unused generators and equipment: DePuy cost
Demo generators and equipment: Not reimbursable
Oratec will pay inventory-shipping costs unless DePuy
initiates Agreement termination.
20.2 In the event of termination, DePuy may, at its sole option, decide to
make its customer listing available to Oratec.
21. COMPLETE AGREEMENT
21.1 This Agreement constitutes the entire agreement between DePuy and
Oratec. No modifications of this Agreement shall be binding on either
party unless made in writing and signed by both parties, and this
Agreement supersedes and cancels any and all previous contracts,
arrangements or understandings that may have existed or may exist
between the parties, whether written or verbal. There are no
understandings, representations or warranties of any such kind,
expressed or implied, that are not expressly set forth herein. The
language of this Agreement shall for all purposes be construed as a
whole, according to its fair meaning, not strictly for or against
either party, and without regard to identity or status of any person
who drafted all or any part of it.
22. NOTICES
22.1 All notices required under this Agreement shall be sent registered
mail, return receipt requested, or by other means of verified
delivery, or by personal delivery, as follows:
If to Oratec: Oratec Interventions, Inc.
0000 Xxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: President
If to DePuy: DePuy AcroMed, Inc.
0000 Xxxxxxxx Xxx.
Xxxxxxxxx, XX 00000
Attn: President
With a copy to: DePuy AcroMed, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: President
Either party may change its address for notice purposes by notifying
the other party of such change of address, such notice to be as
required herein. Notice is effective when actually received by the
addressee or when the addressee refuses delivery, or is sent by
Registered Mail, Return Receipt Requested, on the fifteen (15th) day
following deposit. If sent by facsimile, notice shall be deemed
effective when sender receives confirmation of receipt.
23. MISCELLANEOUS
23.1 Notwithstanding any other provision in this Agreement, the parties
agree that Sections 4.1, 5.6, 5.7, 7.3, 8.6, 12, 14, 15, 16, 17, 18,
19, and 20 shall survive the termination of this Agreement.
23.2 DePuy may not customize, modify or have customized or modified any
Product. In the event that DePuy should receive a request from a
customer or other party for a customized or modified Product, such
request shall be forwarded to Oratec who will solely be responsible
for response and/or customization or modification of the Product.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date and year first written.
Oratec Interventions, Inc. DePuy AcroMed, Inc.
Date: March 30, 1999 Date: April 1, 1999
------------------------ -----------------------
Appendix A.
Item Number Name / Description
---------------------------------------------- -----------------------------------------------
902002 SpineCATH Intradiscal Catheter
Flexible Intradiscal Catheter specifically
designed to provide precise hearing over a
broad intradiscal surface. (IDET Procedure)
902003 ORAflex ElectroThermal Probe
Unique RF probe featuring a deflectable rip
for improved posterior access in thermal
endoscopic herniated disk treatment.
805017 ORA 50 S ElectroThermal Spine System Generator
Designed specifically for spinal procedures,
the ORA 50 S provides the needed RF output for
the SpineCATH and ORAflex products. Includes
foot pedal and power cord.
902004 Needle Introducer (Box of 5)
For use with the SpineCATH Intradiscal
Catheter, the 17 gauge needle provides
minimally invasive access to the internal disc.
802004 Needle Xxxxxx
Instrument designed for contouring of the
Introducer Needle.
805016 ElectroThermal System Extension Cable
Featuring a universal 4 pin connector, the
Extension cable links either the ORAflex probe
or the Intradiscal Catheter to the generator.
805012/19 Indifferent Electrode Pad
Grounding pad for monopolar applications
(ORAflex).
805011/13 Indifferent Electrode Adapter
Plug adapter to facilitate attachment of
various indifferent electrodes.
DePuy Transfer Spine Products Pricing Schedule
Initial Pricing Transfer Price Demo Price
---------------------------------------------------- -------------- ----------
SpineCATH(TM) *** ***
ORAflex(TM) *** ***
SpineCATH Needles *** ***
(box of 5)
Electro Thermal Spine *** ***
Generator
Probe Cable *** ***
*** Confidential treatment requested.
