[CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTIONS OF THIS AGREEMENT
HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]
Exhibit 10.15
INTERNATIONAL DISTRIBUTOR AGREEMENT
This INTERNATIONAL DISTRIBUTOR AGREEMENT (the "Agreement") is entered into
effective September 13, 2000 (the "Effective Date") by and between TheraSense,
Inc, a California corporation with a principal place of business at 0000 Xxxxx
Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000, XXX ("TheraSense") and Disetronic Handels
AG, a corporation organized under the laws of Switzerland, with a principal
place of business at Xxxxxxxxxxxxxxxx 0, XX-0000 Xxxxxxxx, Xxxxxxxxxxx
("Disetronic").
BACKGROUND
----------
A. TheraSense is the owner of the FreeStyle Products (as defined below)
useful in monitoring blood glucose levels and desires to engage a marketing and
distribution partner which can (i) assist it in obtaining regulatory approvals
to market the FreeStyle Product, and (ii) market and distribute the FreeStyle
Products.
B. Disetronic desires to purchase from TheraSense, and TheraSense desires
to sell to Disetronic, the FreeStyle Products for resale in the FreeStyle
Territory (as defined below); and
C. Disetronic desires to distribute and sell, through certain Affiliates
and/or Subdistributors, the FreeStyle Products to Customers (as defined below)
in the FreeStyle Territory; and
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean any corporation or other entity which is
---------
directly or indirectly controlling, controlled by or under common control with
TheraSense or Disetronic. For the purpose of this Agreement, "control" shall
mean the direct or indirect ownership of fifty percent (50%) or more of the
outstanding shares or other voting rights of the subject entity to elect
directors, or if not meeting the preceding, any entity owned or controlled by or
owning or controlling at the maximum control or ownership right permitted in the
country where such entity exists.
1.2 "Binding Forecasts" shall mean the amount of each FreeStyle Product
-----------------
estimated in each *** Forecast for the *** appearing in each Forecast.
1.3 "CGMS" shall mean a continuous glucose monitoring system.
----
1.4 "Confidential Information" shall mean, subject to the provisions of
------------------------
Article 11 hereof, (i) any proprietary or confidential information or material
in tangible form disclosed hereunder that is marked as "Confidential" at the
time it is delivered to the receiving party, or (ii) proprietary or confidential
information disclosed orally hereunder which is identified as confidential or
proprietary when disclosed and such disclosure of confidential information is
confirmed in writing within thirty (30) days by the disclosing party.
1.5 "Customers" shall mean end-user customers of Disetronic, its
---------
Affiliates or its Subdistributors within the European Territory, and Pump
Customers within the US Territory.
-1- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
1.6 "Disetronic Trademarks" shall mean any trademarks of Disetronic and/or
---------------------
its Affiliates, including without limitation, any trade names and service marks
of Disetronic and/or its Affiliates.
1.7 "Dispute" shall mean any dispute, controversy or claim between
-------
TheraSense and Disetronic arising out of or relating to the validity,
construction, enforceability or performance of this Agreement, including
disputes relating to alleged breach or to termination of this Agreement
1.8 "FDA" shall mean the U.S. Food and Drug Administration.
---
1.9 "Field of Use" shall mean single use, disposable, in vitro glucose
------------
monitoring strips utilizing a sample volume of less than 0.4 microliters. It is
understood that Field of Use does not include Strips intended for use with a
continuous glucose monitoring system.
1.10 "Forecasts" shall mean a written forecast of the number of units of
---------
FreeStyle Products that Disetronic expects to purchase in each *** over the
following *** ("Forecasts"), which Forecasts shall indicate on a *** basis the
number of units of each Freestyle Product identified by its stock keeping unit
("SKU") and its number associated with such product for inventory purposes.
1.11 "FreeStyle Product(s)" shall mean those products listed in Exhibit A
--------------------
attached hereto. TheraSense shall notify Disetronic as soon as reasonably
feasible of any intended material change, discontinuation or addition to the
Products listed on Exhibit A.
(i) The features, function and appearance of the FreeStyle
Products listed in Exhibit A may be materially technically improved by
TheraSense with *** prior written notice to Disetronic so long as the improved
products meet or exceed the Product Specifications. TheraSense may make non-
material changes in the FreeStyle products, such as changing components, without
written notice to Disetronic.
(ii) The Freestyle Products listed in Exhibit A may be
discontinued by TheraSense only with Disetronic's prior written consent, such
consent not to be unreasonably withheld. If the parties agree to discontinue a
FreeStyle Product listed on Exhibit A, and TheraSense does not replace such
FreeStyle Product with a product that meets or exceeds the Product
Specifications, then TheraSense and Disetronic shall engage in good faith
discussions regarding an amendment to this Agreement, such amendment potentially
including changes to the Minimum Purchase Obligations in Exhibit C or
termination of the Agreement.
(iii) Additional products may be added by TheraSense to the
FreeStyle Products listed in Exhibit A only with Disetronic's prior written
consent, such consent not to be unreasonably withheld.
1.12 "FreeStyle Territory" shall mean, as of the Effective Date, the
-------------------
European Territory and the U.S. Territory.
1.12.1 "European Territory" shall mean Switzerland, Germany, Austria,
------------------
The Netherlands, Denmark, Sweden, Norway, and Finland.
1.12.2 "U.S. Territory" shall mean the United States, Canada and
--------------
Mexico.
-2- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
1.13 "Minimum Purchase Obligations" shall mean the amount of Strips listed
----------------------------
on Exhibit C.
1.14 "National Registration(s)" shall mean national registration(s) for
------------------------
the FreeStyle Products, on a country-by-country basis, for countries selected by
Disetronic within the European Territory.
1.15 "Net Revenues" shall mean the net sales derived by Disetronic from
------------
the sale of the FreeStyle Products in the European Territory, less the following
amounts incurred in the sale of such FreeStyle Products: (i) trade, standard, or
quantity discounts given; (ii) any rebates and retroactive price reductions
given; (iii) the cost of any packaging, shipping and handling, (iv) any sales,
use, and/or other excise taxes or duties actually paid, including without
limitation VAT, (v) any amounts actually allowed or credited due to product
rejections or returns, and (vi) any write-offs or allowances for bad debt.
1.16 "Other Distributor" shall mean a third party with whom TheraSense has
-----------------
entered into a written agreement granting such third party the right to
distribute one or more FreeStyle Products in any country within the European
Union (such agreement to not include distribution rights in any country within
the European Territory, other than passive sales rights as required by European
Union laws and regulations).
1.17 "Other Distribution Agreement" shall mean a written agreement between
----------------------------
TheraSense and an Other Distributor granting the Other Distributor the right to
distribute one or more FreeStyle Products in any country within the European
Union (such countries to not include any country within the European Territory).
1.18 "Package" shall mean the System Kit package or the Strip package, as
-------
applicable.
1.19 "Payment" shall mean the lesser of (i) *** or (ii) *** of
-------
Disetronic's *** over the last *** immediately preceding termination of this
Agreement.
1.20 "Product Specifications" shall mean the specifications set forth in
----------------------
Exhibit E.
1.21 "Promotional Materials and Programs" shall mean any and all
----------------------------------
promotional, advertising and educational materials and programs, package data
sheets, and other literature relating to the FreeStyle Products.
1.22 "Pump Customers" shall mean Disetronic's end user customers to whom
--------------
Disetronic, its Affiliates or Subdistributors have sold or otherwise transferred
a Disetronic insulin pump, an infusion set, an insulin pen system, insulin pen-
needles or infusion port systems.
1.23 "Receiving Party" shall mean the recipient of a shipment of FreeStyle
---------------
Product sent directly from TheraSense. The Receiving Party shall be Disetronic,
an Affiliate or a Subdistributor.
1.24 "Sales and Inventory Records" shall mean a point-of-sale and
---------------------------
inventory record showing, at a minimum, date sold, quantity, price, serial
number, shipment information, and the buyers' names and addresses of each of the
FreeStyle Products sold, as well as the quarter-end inventory position on hand
for each of the FreeStyle Products.
-3- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
1.25 "Shipping Location" shall mean TheraSense's facility currently
-----------------
located at the address listed for TheraSense in Section 15.4 of this Agreement
or such other location as TheraSense may designate.
1.26 "Subdistributor" shall mean a third party whom Disetronic has granted
--------------
the right to distribute the FreeStyle Products under Section 2.2 hereto. Unless
expressly provided otherwise herein, such Subdistributors shall include
wholesalers and retailers.
1.27 "Subdistributor Agreement" shall mean a written agreement between
------------------------
Disetronic and a Subdistributor binding the Subdistributor to terms and
conditions substantially similar to those terms and conditions agreed upon by
Disetronic in this Agreement
1.28 "TheraSense Trademarks" shall mean the TheraSense trademarks, marks,
---------------------
logos and trade names listed on Exhibit D hereto, as modified by TheraSense
pursuant to Article 10.
1.29 "Transfer Price" shall mean the transfer prices set forth in Exhibit
--------------
B. All prices are in U.S. Dollars.
2. FREESTYLE APPOINTMENT AND AUTHORITY OF DISETRONIC
2.1 Appointment and Authority.
2.1.1 Exclusive Distributor. Subject to the terms and conditions
---------------------
herein, TheraSense hereby appoints Disetronic as TheraSense's exclusive
distributor for the FreeStyle Products in the European Territory in the Field of
Use, and Disetronic hereby accepts such appointment.
2.1.2 Non-Exclusive Distributor. Subject to the terms and conditions
-------------------------
herein, TheraSense hereby appoints Disetronic as TheraSense's non-exclusive
distributor for the FreeStyle Products to Disetronic's Pump Customers in the
U.S. Territory in the Field of Use, and Disetronic hereby accepts such
appointment.
2.1.3 Disetronic's sole authority shall be to purchase FreeStyle
Products from TheraSense and to promote, market and resell such FreeStyle
Products for delivery to Customers in the FreeStyle Territory in the Field of
Use in accordance with the terms of this Agreement. Disetronic may promote,
market and resell such FreeStyle products in the European Territory for delivery
to Customers in the Field of Use directly and through Subdistributors.
Disetronic may promote, market and resell such FreeStyle products in the U.S.
Territory for delivery to Customers in the Field of Use directly and through
Subdistributors, but not through wholesalers and retailers.
2.1.4 Notwithstanding the rights granted to Disetronic to distribute
the FreeStyle Products hereunder, Disetronic shall have no right to directly:
(a) solicit sales or sell the FreeStyle Products to end users
in the U.S. Territory other than to Pump Customers;
(b) advertise, solicit sales, promote market or sell
TheraSense products, other than the FreeStyle Products in the Field of Use, in
the FreeStyle Territory;
-4- Initials: ____ ____
(c) solicit orders from persons or entities located outside the
FreeStyle Territory for Freestyle Products or other TheraSense products;
(d) sell in the U.S. Territory FreeStyle Products that were
purchased for the European Territory.
It is understood and agreed by Disetronic that failure to comply with the terms
of this Section 2.1.4 shall be deemed a material breach of this Agreement
subject to the provisions of Sections 13.2 and 13.5 herein.
2.1.5 It is understood and agreed that Disetronic may appoint one
or more of its Affiliates to perform any of its obligations under this
Agreement, except as provided in Sections 3.2 and 7.4, provided such Affiliate
enters into a Subdistributor Agreement as set forth in Section 2.2. below.
2.2 Subdistributors. Subject to the provisions of Section 2.1.3 and this
---------------
Section 2.2, Disetronic may appoint one or more third parties within any portion
of the FreeStyle Territory to distribute the FreeStyle Products in the Field of
Use to Customers. Within ten (10) days after the appointment of such
Subdistributor, Disetronic shall notify TheraSense of the identity of such
Subdistributor. Except for the case where a Subdistributor is a wholesaler or
retailer (provided, such exception shall not apply where such wholesaler or
retailer is a Disetronic Affiliate), Disetronic shall not sell or otherwise
transfer the FreeStyle Products to any Subdistributor until such Subdistributor
enters into a Subdistributor Agreement. Notwithstanding the preceding ***.
Disetronic shall only grant Subdistributors the right to make sales of the
FreeStyle Products to Customers in the FreeStyle Territory in the Field of Use.
Disetronic hereby guarantees the performance of each Subdistributor with the
provisions set forth in this Section 2.2. When Disetronic receives a purchase
order from a wholesaler or retailer, Disetronic shall include in its
acknowledgement of such purchase order a statement that the FreeStyle Products
are not to be repackaged, relabeled, or reshipped outside of the European
Territory . In the event Disetronic becomes aware, or has reason to believe,
that a Subdistributor (including a wholesaler or retailer) is relabeling,
repackaging or reshipping product outside of the European Territory (except
reshipping to any country within the European Union as part of a passive sale),
Disetronic shall promptly notify TheraSense and shall take corrective action to
halt such impermissible practice, including without limitation terminating such
retailer's right to sell FreeStyle Products.
2.3 Reservation of Rights. Except as expressly provided in this Agreement,
---------------------
no right, title, or interest is granted, whether express or implied, by
TheraSense to Disetronic. Nothing in this Agreement shall be deemed to grant to
Disetronic rights in any products or technology other than the FreeStyle
Products, nor shall any provision of this Agreement be deemed to restrict
TheraSense's right to exploit technology, know-how, patents, or any other
intellectual property rights relating to the FreeStyle Products in products
other than the FreeStyle Products. Subject to Section 3.5, TheraSense reserves
the right to appoint other authorized distributors or resellers of the FreeStyle
Products outside the European Territory and other authorized non-exclusive
distributors or resellers of the FreeStyle Products in the U.S. Territory.
TheraSense also reserves the right to appoint third parties to distribute the
FreeStyle Products inside the FreeStyle Territory in fields of use other than
the Field of Use; for example, TheraSense reserves the right to sell Strips,
either directly or through third parties, solely for use in calibrating a CGMS,
provided TheraSense will only market and sell or otherwise transfer such Strips
for use with such CGMS and in no event shall TheraSense sell and otherwise
transfer more than five (5)
-5- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
Strips per CGMS sensor sold or otherwise transferred. Disetronic and TheraSense
acknowledge that this Agreement does not prohibit passive sales of FreeStyle
Products by either party to Customers within the FreeStyle Territory. It is
further understood and agreed that TheraSense may distribute products, other
than the FreeStyle Product, in the European Territory, either directly or
indirectly, for any and all uses. TheraSense agrees that it will not by itself,
or through a third party, actively promote, market or solicit the sale of
FreeStyle Products in the Field of Use in the European Territory, unless
TheraSense acknowledges Disetronic as TheraSense's exclusive distributor in
conjunction with such promotion and/or marketing.
2.4 Conflict of Interest. Disetronic shall pursue reasonable sales
--------------------
policies and procedures to realize the maximum sales potential for the FreeStyle
Products in the FreeStyle Territory. Disetronic agrees that if Disetronic
Trademarks should appear on any in vitro disposable glucose monitoring product
or associated meter product in the FreeStyle Territory, this would constitute a
conflict of interest with respect to Disetronic's obligations to market and
promote the FreeStyle Product, and Disetronic warrants to TheraSense that no
Disetronic Trademarks currently appear on any glucose monitoring product. During
the term of this Agreement, Disetronic and its Affiliates shall not place any
Disetronic Trademarks on any in vitro disposable glucose monitoring product or
associated meter product, other than FreeStyle Products, within the FreeStyle
Territory. Notwithstanding the foregoing, Disetronic Trademarks may appear on
a ***, where such *** is not *** as a *** for regular patient *** using *** and
*** but it *** only for *** use in improving *** profiles. If TheraSense does
not obtain the IVD-CE xxxx for the FreeStyle Product by ***, the parties shall
discuss in good faith amending the terms of this Article 2 provided that
TheraSense's failure to obtain such IVD-CE xxxx is not due to Disetronic's
failure to meet its obligations.
2.5 Independent Contractors. The relationship of TheraSense and Disetronic
-----------------------
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint venture or common undertaking, and (iii) allow either
party to create or assume any obligation on behalf of the other for any purpose
whatsoever.
3. CONSIDERATION
3.1 Signature Payments. In partial consideration of the rights granted
------------------
herein, ten (10) days after the Effective Date, Disetronic shall pay to
TheraSense a nonrefundable pre-payment for FreeStyle Product stock to be
ordered, of One Million Five Hundred Thousand U.S. Dollars (U.S. $1,500,000)
("Prepayment"). As Disetronic orders Freestyle Product stock under this
Agreement, the payments for such stock shall be credited against the Prepayment
until the Prepayment has been exhausted.
3.2 Equity Investment. It is understood and agreed by the parties that
-----------------
within ten (10) days of the Effective Date of this Agreement Disetronic Holding
AG, the parent Company of Disetronic, shall pay to TheraSense Two Million Five
Hundred Thousand U.S. dollars (U.S. $2,500,000) and (i) TheraSense shall enter
into, and deliver to Disetronic Holding AG, the convertible promissory note
attached hereto as Exhibit G; and (ii) Disetronic Holding AG and TheraSense
shall sign the note purchase agreement attached hereto as Exhibit F. Disetronic
hereby guarantees that Disetronic Holding AG will perform according to the terms
of such convertible promissory note and such note purchase agreement.
-6- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
3.3 FreeStyle Product Prices.
------------------------
3.3.1 FreeStyle Products. For each FreeStyle Product purchased from
------------------
TheraSense, Disetronic shall pay to TheraSense an amount equal to the Transfer
Price. The difference between the Transfer Price and Disetronic's price to its
Customers shall be Disetronic's sole remuneration for distribution of the
FreeStyle Products. The Transfer Prices set forth in Exhibit B shall remain in
effect from the Effective Date until the first year anniversary of the Effective
Date. Thereafter, Disetronic and TheraSense agree to renegotiate in good faith
the Transfer Prices if inflation as measured by the U.S. producer price index
increases by more than *** during any one year period, which
renegotiated Transfer Prices shall reflect the intent of the parties as set
forth herein.
3.3.2 Transfer Price Adjustments. By October 31 of each calendar
--------------------------
year Disetronic shall provide to TheraSense a non-binding written estimate of
its sales of FreeStyle Products for the upcoming calendar year. These estimates
shall be used to establish the Transfer Price for the upcoming year. In the
event that Strip (as defined in Exhibit A) purchases in the first six (6) months
of any calendar year for the European Territory are less than *** of the level
required to achieve the Transfer Price established for that year in the European
Territory, then (i) TheraSense may raise the Transfer Price for additional
purchases by Disetronic of Strips in such calendar year to a level consistent
with purchases equal to twice the actual Strip quantities purchased in the first
half, and (ii) Disetronic shall immediately pay TheraSense the amount
corresponding to the underpayment accrued in the first half of the calendar
year. Within 30 (thirty) days after the end of each calendar year, Disetronic or
TheraSense shall pay to the other any amounts due relating to underpayments
accrued or overpayments made in such calendar year.
3.3.3 Payment for FreeStyle Products. TheraSense shall submit an
------------------------------
invoice to Disetronic upon each shipment of FreeStyle Products ordered by
Disetronic and as set forth below in Section 4.5. The invoice shall cover the
Transfer Price for the FreeStyle Product in a given shipment plus any freight,
taxes or other costs incident to the purchase or shipment initially paid by
TheraSense but to be borne by Disetronic. The invoiced amounts for FreeStyle
Products shipped shall be due in full net thirty (30) days upon the later of
receipt by Disetronic of the FreeStyle Products or the invoice. For FreeStyle
Product repaired or replaced under Section 4.6, the invoiced amounts for such
FreeStyle Products shall be due in full net thirty (30) days upon receipt by
Disetronic of such repaired or replaced FreeStyle Products.
3.4 Payment Method. Disetronic shall make payments to TheraSense under
--------------
this Agreement in immediately available funds to a bank account designated by
TheraSense. All payments due hereunder shall be paid in U.S. dollars. Any
payments due hereunder which are not paid within five (5) days of the date such
payments are due shall be subject to a service charge of one per cent (1.0%) per
month, calculated on the number of days such payment is delinquent. This Section
3.4 shall in no way limit any other remedies available to TheraSense. Disetronic
shall pay all of TheraSense's costs and expenses (including reasonable
attorneys' fees) to enforce and preserve TheraSense's rights under this Section
3.4.
3.5 Other Distributor Transfer Prices. In the event that TheraSense enters
---------------------------------
in to an Other Distribution Agreement with an Other Distributor, the transfer
price for such FreeStyle Products to such Other Distributor shall be as follows:
-7- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
(a) in the event that the Strips to be distributed by an Other
Distributor are *** the Meters distributed by Disetronic in the European
Territory, the prices in the volume-based transfer price schedule for such
Strips to such Other Distributor shall be *** than the prices for *** sales
volumes in then current *** as of the effective date of such Other Distribution
Agreement; or
(b) in the event that the Strips to be distributed by an Other
Distributor are *** the Meters distributed by Disetronic in the European
Territory, the transfer price for such Strips to such Other Distributor shall
be determined *** and may, ***, be set ***.
3.6 Taxes.
-----
(a) Any and all amounts payable hereunder by Disetronic do not
include any government taxes (including without limitation sales, use, excise,
withholding, and value-added taxes) or duties imposed by any governmental agency
that are applicable to the export, import, or purchase of the a Products
(other than taxes on the net income of TheraSense), and Disetronic shall bear
all such government taxes and duties (including, without limitation, sales,
withholding, value-added and similar taxes). When TheraSense has the legal
obligation to collect and/or pay such taxes, the appropriate amount shall be
added to Disetronic's invoice and paid by Disetronic, unless Disetronic provides
TheraSense with a valid tax exemption certificate authorized by the appropriate
taxing authority.
(b) All payments by Disetronic specified hereunder (including
those under this Article 3) are expressed as net amounts and shall be made free
and clear of, and without reduction for, any withholding taxes. Any such taxes
which are otherwise imposed on payments to TheraSense or Disetronic shall be the
sole responsibility of Disetronic.
4. TERMS OF PURCHASE OF FREESTYLE PRODUCTS BY DISETRONIC
4.1 Solicitation and Placement of Orders from Customers. Disetronic shall
---------------------------------------------------
be responsible for marketing and soliciting orders for FreeStyle Products from
Customers in the FreeStyle Territory.
4.2 Terms and Conditions. All orders of FreeStyle Products by Disetronic
--------------------
from TheraSense during the term of this Agreement shall be subject to the terms
of this Agreement. Nothing contained in any purchase order or the like document
submitted by Disetronic to TheraSense shall in any way modify or add to the
terms and conditions in this Agreement.
4.3 Forecasts. Beginning on the Effective Date and thereafter by the end
---------
of each ***, Disetronic shall provide to TheraSense a Forecast.
4.4 Order and Acceptance.
--------------------
4.4.1 Disetronic shall submit orders for units of FreeStyle Products
so that such orders are received by TheraSense at least *** prior to the
requested shipment date of such units of FreeStyle Products. Disetronic shall be
obligated to purchase no less than *** of the Binding Forecasts. TheraSense is
obligated to accept Disetronic's purchase orders within five (5) working days
after receipt thereof provided that the quantities of FreeStyle Products ordered
by Disetronic in a calendar quarter are not greater than *** above the full
amount requested
-8- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
by Disetronic in the Binding Forecasts for such calendar quarter ("Accepted
Quantity") and such order is received by TheraSense at least *** prior to the
requested shipment date. Subject to the foregoing, no order for quantities
greater than a given Accepted Quantity shall be binding upon TheraSense unless
and until accepted by TheraSense in writing, and TheraSense shall have no
liability to Disetronic with respect to purchase orders that are not accepted.
For example: if Disetronic delivers a Forecast on April 1, 2001, requesting
1000 units of Freestyle Product with SKU Number XYZ for the calendar quarter
beginning July 1, 2001, then Disetronic shall be obligated to purchase no less
than *** of such FreeStyle Product with SKU Number XYZ in the calendar quarter
beginning July 1, 2001; and, TheraSense shall accept Disetronic's purchase order
in such calendar quarter, provided that TheraSense received the purchase order
*** in advance of the requested shipment date, and further provided that the
quantity of such FreeStyle Products with SKU Number XYZ ordered by Disetronic
for the calendar quarter beginning July 1, 2001 is not greater than ***.
4.4.2 Once accepted by TheraSense, Disetronic may cancel or reschedule
purchase orders for FreeStyle Products only with TheraSense's prior written
approval. Disetronic will use commercially reasonable efforts to place orders
for FreeStyle Products in an even and regular fashion so as to allow for
efficient scheduling of FreeStyle Product production and warehousing. In the
event TheraSense receives a purchase order less than *** in advance of the
requested shipment date or for a quantity that is greater than *** above the
Binding Forecasts, TheraSense will use commercially reasonable efforts to ship
such FreeStyle Products to Disetronic on the date and in the quantity requested
by Disetronic.
4.4.3 TheraSense shall promptly inform Disetronic when it expects a
shipment of an Accepted Quantity to Disetronic to be delayed. In the event that
TheraSense fails to have available for shipment to Disetronic substantially all
quantities of FreeStyle Products specified in an Accepted Quantity within ***
after the requested shipment date specified in such Accepted Quantity,
TheraSense agrees to credit to Disetronic *** of the aggregate *** of the
ordered but undelivered FreeStyle Products in such Accepted Quantity.
4.5 Shipping. For all shipments of FreeStyle Products to Disetronic,
--------
TheraSense may choose the mode of shipment and carrier unless Disetronic
specifies a carrier in the purchase order. All FreeStyle Products delivered
pursuant to the terms of this Agreement shall be suitably packed in TheraSense's
standard shipping cartons, and marked for shipment at the address of Disetronic,
its Affiliate, or its Subdistributor, as applicable, as provided in Disetronic's
purchase order, for delivery within ten (10) days (excluding weekends) to
Disetronic, its Affiliate, or its Subdistributor, as applicable, EXW (Incoterms
2000) the Shipping Location, at which time risk of loss shall pass to
Disetronic. TheraSense shall promptly notify Disetronic of any changes to the
Shipping Location. All customs, freight, insurance, and other shipping expenses,
as well as any special packing expense, shall be paid by Disetronic.
4.6 Acceptance of FreeStyle Products. FreeStyle Product shipped by
--------------------------------
TheraSense to Disetronic shall conform with the Product Specifications. Upon
receipt of a FreeStyle Product shipment, the Receiving Party shall have the
right to inspect such FreeStyle Products promptly upon receipt thereof for
conformance with the Product Performance Criteria and the Lot Acceptance
Criteria in set forth in Exhibit E. Any FreeStyle Products not rejected within
thirty (30) days will be deemed accepted. TheraSense will, at its election,
either repair or replace defective FreeStyle Products within thirty (30)
-9- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
days of receipt thereof. In the event Disetronic, its Affiliate or
Subdistributor rejects any FreeStyle Products, Disetronic shall be required to
demonstrate that such FreeStyle Product does not meet a specification set forth
in the Product Performance Criteria or the Lot Acceptance Criteria set forth in
Exhibit E.
4.7 Product Packaging and Labeling.
------------------------------
4.7.1 Product, Packaging and Labeling. TheraSense shall deliver each
-------------------------------
FreeStyle Product to Disetronic, its Affiliate, or its Subdistributor, as
instructed by Disetronic in each in purchase order. Each FreeStyle Product shall
be delivered in a Package containing the FreeStyle Product together with a Strip
package insert and/or a System Kit owners booklet.
(a) For FreeStyle Product sold to Disetronic for the European
Territory, the Package, System Kit owners booklet, Strip packages and Strip
package insert shall be labeled to indicate that the product is manufactured by
TheraSense and distributed by Disetronic, and shall carry both the TheraSense
and Disetronic Trademarks. With respect to the FreeStyle Product Meter, the
front will contain the TheraSense Trademarks and the trademark "Disetronic",
with TheraSense's Trademarks (combined, if more than one) in equal prominence to
"Disetronic". The back of the FreeStyle Product Meter shall be labeled to
indicate that the product is manufactured by TheraSense and distributed by
Disetronic, and shall indicate Disetronic's customer service telephone number.
(b) For FreeStyle Product sold to Disetronic for the U.S.
Territory, the Package and the System Kit owners booklet shall carry both the
TheraSense and Disetronic Trademarks. With respect to the FreeStyle Product
Meter, the front will contain the TheraSense Trademarks and the name
"Disetronic", with T heraSense's Trademarks (combined, if more than one) in
equal prominence to the trademark "Disetronic". The back of the FreeStyle
Product Meter shall be labeled with TheraSense's name and shall indicate
TheraSense's customer service telephone number.
(c) For the FreeStyle Territory, unless otherwise instructed by
TheraSense, Disetronic shall deliver all FreeStyle Products to its Customers
only as part of an unopened Package. Disetronic shall not repackage FreeStyle
Products supplied to Disetronic by TheraSense hereunder without the prior
written consent of TheraSense. In addition, except for the addition of
information required by applicable laws and regulations, Disetronic shall not
re-label FreeStyle Products supplied to Disetronic by TheraSense hereunder
without the prior written consent of TheraSense. Subject to Section 7.4,
TheraSense shall be responsible for ensuring that all FreeStyle Products are
packaged and labeled in accordance with the requirements set forth by the FDA or
comparable regulatory authorities for each country within the European
Territory.
(d) Restriction of Rights. TheraSense agrees that TheraSense's
---------------------
use of the Disetronic trademarks shall be in conformance with Disetronic
guidelines for its trademarks; provided, Disetronic has provided such guidelines
to TheraSense within a reasonable time prior to TheraSense marking the FreeStyle
Products with such Disetronic trademarks. In addition, TheraSense acknowledges
that except as expressly provided in this Agreement, Disetronic grants no other
rights, title, or interest with respect to Disetronic's trademarks.
4.7.2 Proprietary Notices. Disetronic, its Affiliates and its
-------------------
Subdistributors shall not remove, alter, cover or obfuscate any logo, trademark
notice or other proprietary rights notices placed or embedded by TheraSense on
or in any Package or any of the items contained therein.
-10- Initials: ____ ____
4.7.3 Authorized Representative. To the extent permitted by law, labeling
-------------------------
concerning the Authorized Representative shall be placed at the end of product
documentation, such as the owners booklet and Strip package insert, rather than
on the Meter or packaging.
5. WARRANTY
5.1 Warranty to Customer. Any warranty set forth in this Section 5.1
--------------------
shall run directly from TheraSense to the Customer.
5.1.1 Disetronic Obligations. Disetronic shall have responsibility
----------------------
for handling Customer returns for allegedly non-conforming FreeStyle Products.
Disetronic shall make no warranties with respect to any of the FreeStyle
Products that exceed the warranty made by TheraSense to its customers. The
warranty made by TheraSense to its customers may be changed by TheraSense at its
sole discretion; as of the Effective Date, TheraSense warrants the Meters for
five years. Disetronic shall receive an initial pool of warranty Meters *** for
use solely to replace allegedly faulty Meters. Thereafter, Disetronic will
forecast and order warranty Meters and Strips at no charge. In the event
TheraSense is unable to replace an allegedly faulty product, TheraSense's sole
and exclusive liability and Disetronic's exclusive remedy shall be to credit
Disetronic's account for the net amount actually paid for any such FreeStyle
Product. Disetronic shall dispose of returned FreeStyle Product as instructed by
TheraSense. In the event the parties should not agree as to whether a certain
Freestyle Product is faulty, then the parties shall select an independent
laboratory which shall test such Product for conformance to the applicable
Product Specification. The party whose position does not prevail upon such
laboratory testing shall pay the costs associated with such testing.
5.1.2 Limited Warranty by TheraSense. TheraSense warrants that upon
------------------------------
delivery, EXW the Shipping Location, and during the warranty period for the
FreeStyle Products, as set forth on the product label and/or insert for such
FreeStyle Products, the FreeStyle Products (i) will meet the agreed upon Product
Specifications as set forth in Exhibit E, (ii) will be free from defects in
manufacturing, materials and workmanship, (iii) will be of merchantable quality
and fit for the purpose for which they are intended, and (iv) will comply with
all applicable laws for the U.S. and for each country within the European
Territory.
5.1.3 Warranty Limitations. The warranties in Section 5.1.1 and 5.1.2
--------------------
shall not apply to FreeStyle Products that have been modified or altered in any
manner by anyone other than TheraSense, or to defects caused (i) through no
fault of TheraSense during shipment to or from Disetronic; (ii) by the use or
operation in an application or environment other than that intended or
recommended by TheraSense in the owners booklet provided by TheraSense to
Disetronic for translation; (iii) by service by anyone other than employees of,
or persons approved in writing by, TheraSense; (iv) by accident, negligence,
misuse, other than normal electrical stress, or other causes other than normal
use as described in the owners booklet provided by TheraSense to Disetronic for
translation; or (v) by storage, usage or handling in any manner inconsistent
with the FreeStyle Product label. Replacement FreeStyle Products supplied under
this warranty shall carry only the unexpired portion of the original warranty.
TheraSense shall not be liable for misbranding with respect to any product
labeling or package insert text provided or used by Disetronic, or any
translation thereof and TheraSense shall not be liable for any adulteration or
failure to meet the FreeStyle Product Specifications due to handling or
packaging of the FreeStyle Products by Disetronic, its Affiliates, its
Subdistributors or agents.
-11- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
5.1.4 Exclusion of Other Customer Warranties. EXCEPT FOR THE LIMITED
--------------------------------------
WARRANTY PROVIDED IN SECTION 5.1 ABOVE, THERASENSE GRANTS NO OTHER WARRANTIES OR
CONDITIONS, EXPRESS OR IMPLIED, BY STATUTE, IN ANY COMMUNICATION WITH DISETRONIC
OR ITS CUSTOMERS, OR OTHERWISE, REGARDING THE FREESTYLE PRODUCTS, AND THERASENSE
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE, MERCHANTABILITY, AND NONINFRINGEMENT. THERASENSE DOES NOT WARRANT THAT
OPERATION OF THE FREESTYLE PRODUCTS WILL BE UNINTERRUPTED OR ERROR-FREE.
THERASENSE NEITHER ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME ANY OTHER
LIABILITIES ARISING OUT OF OR IN CONNECTION WITH THE SALE OR USE OF ANY
FREESTYLE PRODUCT. ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ANY PERSON OR
ENTITY, INCLUDING EMPLOYEES OR REPRESENTATIVES OF THERASENSE, THAT ARE
INCONSISTENT HEREWITH SHALL BE DISREGARDED AND SHALL NOT BE BINDING UPON
THERASENSE OR ITS THIRD PARTY SUPPLIERS.
5.1.5 Limitation of Liability. THERASENSE'S LIABILITY UNDER THE
-----------------------
WARRANTY SHALL BE LIMITED TO A REFUND OF THE CUSTOMER'S PURCHASE PRICE. IN NO
EVENT SHALL THERASENSE BE LIABLE TO DISET RONIC OR ANY THIRD PARTY FOR LOST
PROFITS, THE COST OF PROCUREMENT OF SUBSTITUTE GOODS BY THE CUSTOMER, OR FOR ANY
SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES FOR BREACH OF WARRANTY.
THIS LIMITATION SHALL APPLY EVEN WHERE THERASENSE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY STATED HEREIN.
5.2 Representations and Warranties by and between Disetronic and
TheraSense.
5.2.1 Warranty to TheraSense. Disetronic represents and warrants to
----------------------
TheraSense that: (i) it is a corporation duly organized validly existing and in
good standing under the laws of Switzerland; (ii) the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Disetronic.
5.2.2 Warranty to Disetronic. TheraSense represents and warrants to
----------------------
Disetronic that: (i) it is a company duly organized validly existing and in good
standing under the laws of the State of California; (ii) the execution, delivery
and performance of this Agreement have been duly authorized by all necessary
corporate action on the part of TheraSense; (iii) to the best of its knowledge
it has the right to grant the rights and licenses granted herein; (iv) it has
obtained consent from Asulab for TheraSense and Disetronic to cobrand the
FreeStyle Products as set forth in this Agreement; (v) it will obtain and
maintain all facility licenses necessary to manufacture the FreeStyle Products;
and (vi) subject to Section 5.1.3 and 5.1.4, upon delivery, EXW the Shipping
Location, the Freestyle Products will (a) meet the agreed upon Product
Specifications as set forth in Exhibit E, (b) will be free from defects in
manufacturing, materials and workmanship, (c) will be of merchantable quality
and fit for the purpose for which they are intended, and (d) will comply with
all applicable laws for the U.S. and for each country within the European
Territory.
6. ADVERTISING, MARKETING AND PROMOTION
-12- Initials: ____ ____
6.1 Advertising and Promotions. Disetronic shall, at its own expense, (i)
--------------------------
use commercially reasonable efforts to promote the sale and distribution of the
FreeStyle Products to Customers in the FreeStyle Territory, and (ii) use
commercially reasonable efforts to realize the maximum sales potential for the
FreeStyle Products to Customers in the FreeStyle Territory. Such commercially
reasonable efforts by Disetronic shall include without limitation the following:
6.1.1 maintenance of an adequate and experienced sales force for such
purposes, such as Disetronic's existing insulin pump sales force, in the
respective countries in the Freestyle Territory;
6.1.2 dedication of sufficient product and project management,
marketing and financial resources to pursue the market opportunities for the
product in the FreeStyle Territory;
6.1.3 provide adequate contact with existing and potential Customers
within the European Territory and with Pump Customers within the U.S. Territory
on a regular basis, consistent with good business practice;
6.1.4 assessment of Customers' requirements for Freestyle Products,
including modifications and improvements thereto, in terms of quality, design,
functional capability, and other features;
6.1.5 the preparation of promotional materials in the primary
languages within the European Territory;
6.1.6 the translation of all user and technical manuals into the
primary languages within the European Territory;
6.1.7 advertising the FreeStyle Products in trade and other relevant
publications;
6.1.8 participating in appropriate trade shows at which FreeStyle
Products are displayed by Disetronic; provided that if such trade shows are
outside of the FreeStyle Territory, Disetronic shall obtain prior written
approval from TheraSense, such approval not to be unreasonably withheld; and
6.1.9 making sales calls on physicians within the FreeStyle
Territory.
In addition to the foregoing, Disetronic shall (i) within *** of the
Effective Date in the European Territory, offer a System Kit (as defined in
Exhibit A hereto) at a *** price to Customers in the European Territory (but in
no event greater than *** per System Kit); (ii) within *** of the Effective Date
in the U.S. Territory, offer a System Kit (as defined in Exhibit A hereto) at a
*** price (but in no event greater than *** per System Kit) to Pump Customers
in the U.S. Territory using offer materials agreed to by TheraSense in writing;
and (iii) use reasonable efforts, at its own expense, to maintain a
sufficient inventory of FreeStyle Products and to fulfill forecast demand for
FreeStyle Products within the FreeStyle Territory.
6.2 Disetronic Materials. Disetronic shall provide to TheraSense for
--------------------
purposes of review, comment and approval by TheraSense any and all Promotional
Materials and Programs at least *** prior to the commercial release of such
Promotional Materials and Programs; provided that
-13- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
once a particular Promotional Material and Program has been approved in writing
by TheraSense, no further approval from TheraSense shall be required for such
Promotional Material and Program, and Disetronic may make as many publications
of such particular approved Promotional Material and Program as Disetronic
elects. The parties agree and acknowledge that such review by TheraSense shall
be targeted at ensuring (i) TheraSense's ability to comply with any regulations
applicable to Promotional Materials, and (ii) that the Promotional Materials and
Programs correspond with TheraSense's marketing activities. Within ten (10)
working days after receipt of any such proposed Promotional Materials and
Programs from Disetronic, TheraSense shall provide comment and/or notice of
approval or non-approval to Disetronic.
6.3 TheraSense Collaboration. TheraSense will collaborate with Disetronic
------------------------
in the development of all Disetronic's marketing and promotional materials for
FreeStyle Product. TheraSense shall acknowledge Disetronic's exclusive
distributorship in all marketing and promotional materials prepared by
TheraSense for use in the European Territory in the Field of Use. All such
materials shall be submitted to Disetronic for its approval. In addition,
TheraSense will, at its own expense, provide Disetronic with:
6.3.1 such marketing and technical assistance and promotional
materials (in English) as TheraSense may in its reasonable discretion consider
necessary to assist with the promotion of the FreeStyle Product;
6.3.2 training in the U.S. for Disetronic's personnel in connection
with the marketing, sale, installation, maintenance and support of the FreeStyle
product; provided, however, that during the six (6) month period following the
Effective Date TheraSense's personnel spend no more than *** providing such
training;
6.3.3 reasonable access to TheraSense maintenance and support
personnel to assist Disetronic's support personnel in providing maintenance and
support centers.
7. ADDITIONAL OBLIGATIONS OF DISETRONIC
7.1 Standard Sales Report. Disetronic and TheraSense shall mutually agree
---------------------
on a standard sales report to be provided to TheraSense on a monthly basis
during the term of the Agreement; provided that such standard sales report shall
consist only of aggregate data identifying by distributor, country and product,
the quantities of particular FreeStyle Products sold in such prior month. In no
event shall such standard sales report be required to disclose any information
which would cause or allow any particular individual to be personally
identifiable.
7.2 Sales and Inventory Records. Disetronic agrees to maintain Sales and
---------------------------
Inventory Records. Such Sales and Inventory Records shall be kept at
Disetronic's principal place of business for at least three (3) years following
the end of the calendar quarter to which they pertain.
7.3 Minimum Purchase Obligations
----------------------------
7.3.1 Disetronic shall purchase no less than the Minimum Purchase
Obligations for sale in the European Territory in each calendar year; provided,
Disetronic's obligation to purchase such amounts shall not commence until the
earlier of (a) Disetronic obtaining National Registrations in ***. In the event
Disetronic does not obtain such
-14- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
National Registrations until *** Disetronic's Minimum Purchase Obligations for
year 2001 shall be *** (e.g. if such National Registrations are not obtained
until ***, Disetronic shall only be obligated to purchase *** in 2001). *** of
the Minimum Purchase Obligations shall be purchased in the first six months of
the calendar year.
7.3.2 Disetronic and TheraSense agree to renegotiate the Minimum
Purchase Obligations in the event that (i) Disetronic sells less than *** of the
amount of *** in the European Territory in any year, and (ii) such sales
shortfall is primarily attributable to TheraSense alone (e.g., inability to
deliver FreeStyle Product to Disetronic for more than 30 days with no fault
attributable to Disetronic, or a product recall due to a product defect) or due
to a fundamental technological, regulatory or economic change in market
conditions beyond the reasonable control of Disetronic (e.g., cessation of
reimbursement by appropriate agencies in countries within the European
Territory).
7.3.3 Disetronic and TheraSense agree that in the event that IVD-CE
xxxx for FreeStyle Products is not obtained by *** the time period for achieving
the Minimum Purchase Obligations set forth in Exhibit C for 2001 will be
extended by the number of days between June 30, 2001 and the date on which
TheraSense obtains the IVD-CE xxxx for FreeStyle Products, and that the dates
for meeting the Minimum Purchase Obligations set forth in Exhibit C for years
2002 - 2005 shall be extended accordingly. For example, in the event that
TheraSense obtains the IVD-CE xxxx on *** then Disetronic shall be obligated to
purchase *** strips during the period between *** and ***; *** strips during the
period between *** and ***; *** strips during the period between *** and ***;
etc. In the event that IVD-CE xxxx for FreeStyle Products is not obtained by ***
then Disetronic and TheraSence agree to ***.
7.3.4 Without limiting the foregoing, within *** from the end of a
calendar year, TheraSense shall give Disetronic notice of any failure by
Disetronic to meet Minimum Purchase Obligations in such prior calendar year.
Subject to the foregoing, if Disetronic fails to meet the Minimum Purchase
Obligations during the *** of the *** or in any *** thereafter of the Initial
Term (as defined in Section 13.1 below), TheraSense shall have the right, at its
option, to terminate this Agreement for cause pursuant to Section 13.2 hereof.
7.4 Registrations, Licenses and Permits.
-----------------------------------
7.4.1 National Registrations and IVD Registration. The parties agree
-------------------------------------------
and understand that (i) in December 2003, the IVD (98/79/EC) will become
mandatory; (ii) until December 2003, National Registrations can be obtained and
used; and (iii) Products already in the distribution chain in December 2003 can
continue to be sold until December 2005.
(a) Before CE-Marking according to IVD (98/79/EC).
---------------------------------------------
(i) Disetronic, shall use its best efforts to obtain
National Registrations in TheraSense's name (unless national regulations require
the Registration to be in Disetronic's name) by December 31, 2000. It is
understood and agreed by the parties that Disetronic's Affiliate, Disetronic
Medical Systems AG, and/or Disetronic shall be the exclusive entity or entities
responsible for obtaining such National Registrations; provided that if a
National Registration must by
-15- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
law be obtained by an entity other than Disetronic or Disetronic Medical Systems
AG, then (i) Disetronic shall guarantee and hereby guarantees the performance of
such other entity, and (ii) such other entity shall enter into a written
agreement, binding such other party to terms and conditions substantially
similar to the terms and conditions of this Agreement. If required by a
regulatory agency to accomplish National Registration in a particular country in
the European Territory, for each such country, TheraSense shall send to
Disetronic within fourteen (14) days after Disetronic's request, those FreeStyle
Products and copies of documents including but not limited to development files,
production files, study protocols and results that are necessary to obtain such
National Registration. It is understood and agreed by the parties that any such
FreeStyle Products, documents, files, protocols and/or results are Confidential
Information of TheraSense and subject to the terms of Article 11 herein. If and
as required from time to time under the laws of any country or other
jurisdiction within the European Territory, Disetronic, *** shall perform
clinical trials and obtain all additional registrations, licenses and permits
required to comply with the laws and regulations of each country in the European
Territory for importation, sale and distribution of the FreeStyle Product;
provided, however, that no activities in connection with obtaining such
registrations, licenses or permits shall be initiated by Disetronic without
TheraSense's prior written approval. Disetronic shall provide to TheraSense
complete copies of all clinical trial protocols, data, analyses and other
information, as well as applications, and all registrations, licenses and
permits obtained therefrom relating to the FreeStyle Products. To the extent
permitted by law, all registrations, approvals, and government authorizations
obtained by Disetronic in the European Territory with respect to the FreeStyle
Products shall be in the name of TheraSense.
(ii) Upon (i) Disetronic obtaining a registration,
approval, license, permit or authorization in the European Territory, and/or
(ii) upon the expiration, cancellation, or termination of this Agreement, all
registrations, approvals, and government authorizations shall be transferred and
delivered to, and shall inure to the benefit of TheraSense or its designee, to
the extent that this is permissible under applicable law, at no cost to
TheraSense other than lawfully imposed transfer fees. Where any National
Registration, registration, license, permit, approval and/or government
authorization must by law be obtained in Disetronic, its Affiliate's, or
Subdistributor's name, Disetronic shall (and shall ensure that its Affiliates
and Subdistributors shall): (i) assign to TheraSense all right, title and
interest to such National Registration, registration, license, permit, approval
and/or government authorizations, and/or (ii) execute those documents, as
requested by TheraSense, necessary to document and/or perfect the assignment of
such National Registration, registration, license, approval and/or government
authorization. TheraSense shall have the exclusive right to use all such
National Registrations, registrations, licenses, permits, and/or governmental
authorizations if this Agreement is terminated for any reason other than
TheraSense's material breach of this Agreement.
(iii) TheraSense warrants that the FreeStyle Meters are,
at the time they are delivered to Disetronic, in Conformity with the provisions
of the EMC Directive (89/336/EEC) and shall establish a corresponding Conformity
declaration with the first shipment of such Meters.
(iv) TheraSense shall sell and deliver to Disetronic by
September 30, 2000 or as soon thereafter as reasonably possible approximately
100 FreeStyle Meters calibrated to a whole blood reference, for use by
Disetronic in obtaining national registrations for the FreeStyle Products. Such
Meters are not required to carry the Disetronic trademark specified in Section
4.7.
(b) After CE-Marking according to IVD (98/79/EC).
--------------------------------------------
-16- Initials _____ _____
*** CONFIDENTIAL TREATMENT REQUESTED
(i) TheraSense shall appoint an Authorized
Representative for FreeStyle Products.
(ii) TheraSense shall be responsible for obtaining the
IVD-CE Xxxx for the applicable FreeStyle Products. TheraSense shall use
commercially reasonable efforts to obtain such CE xxxx by June 30, 2001. At
TheraSense's request, Disetronic shall provide reasonable assistance to
TheraSense in obtaining the CE xxxx. Disetronic will be considered as
TheraSense's exclusive distributor of the FreeStyle Products in the Field of Use
in the European Territory.
(c) TNO Guidelines. TheraSense will use its commercially
--------------
reasonable efforts to meet TNO Guidelines as required and necessary, by June 30,
2001 based on tests conducted by TheraSense or by a third party authorized in
writing by TheraSense to conduct the tests. If TheraSense is unable to meet the
required and necessary TNO Guidelines and is unable to obtain the IVD-CE xxxx by
June 30, 2001 then TheraSense and Disetronic shall engage in good faith
discussions regarding an amendment to the Minimum Purchase Obligations in
Exhibit C.
(d) Registrations, Licenses and Permits in the US Territory.
-------------------------------------------------------
Disetronic will be considered as TheraSense's non-exclusive distributor of the
FreeStyle Products in the Field of Use in the U.S. Territory.
7.4.2 EMC Conformity. The parties agree and understand that
--------------
FreeStyle Products must be in compliance with the EMC Directive (89/336/EEC) as
of the date FreeStyle Products are first shipped from TheraSense to Disetronic
for purposes of commercial sale under this Agreement.
7.5 Health and Safety Laws and Regulations. Disetronic shall comply
--------------------------------------
fully with any and all laws and regulations of the FreeStyle Territory
applicable to distributors, as such laws relate to the FreeStyle Products.
Notwithstanding the foregoing, for any country in which a national European
registration for Freestyle Products is in Disetronic's name, Disetronic shall
comply fully with any and all laws and regulations applicable to such registrant
in such country. In addition, until such time as TheraSense obtains a CE Xxxx
for FreeStyle Products, Disetronic shall monitor the appropriate information
sources closely for changes in such laws and regulations, and other requirements
in the European Territory relating to the distribution of the FreeStyle Products
in the European Territory, and shall use its best efforts to notify TheraSense
promptly in writing of any and all such changes.
7.6 Feedback. Disetronic, its Affiliates and its Subdistributors shall
--------
timely provide in writing to TheraSense feedback it receives from Customers in
the FreeStyle Territory relating to how the FreeStyle Products could be improved
to meet the needs of various market segments. TheraSense may, at its option, use
such feedback to implement changes in the Freestyle Products. If TheraSense
elects not to implement changes based on such feedback, TheraSense and
Disetronic agree to discuss in good faith the terms under which Disetronic may
be permitted to implement such changes to the FreeStyle Products. In the event
Disetronic conceives of or reduces to practice an invention relating to
FreeStyle Products and any Confidential Information disclosed by TheraSense to
Disetronic under this Agreement during the Term, inventorship and ownership of
such invention shall be determined ***. Where Disetronic is the sole owner of
such invention, ***. Subject to the foregoing, TheraSense shall own all right,
title and interest to
-17- Initials: ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
any changes *** to the FreeStyle Products, where such change is based on ***.
7.7 Semi-Annual Business Plans. TheraSense and Disetronic shall meet, in
--------------------------
person, no less frequently than once every six months to review Disetronic's
business plan for marketing and distributing the FreeStyle Products in the
FreeStyle Territory. Such business plan shall include, without limitation,
promotion strategy and tactics, and sales and other marketing plans. TheraSense
shall have the right to review and comment on such business plan.
7.8 Quarterly Meetings. TheraSense and Disetronic shall meet, in
------------------
person, or by telephone, no less frequently than once every calendar quarter to
review and discuss, as necessary: (i) FreeStyle Products (including any changes,
discontinuations, and additions thereto); (ii) Forecasts of the FreeStyle
Products; (iii) Product Specifications (including any changes thereto); (iv)
FreeStyle Product warranties (including any changes thereof); (v) patent and
intellectual property rights relating to the feedback provided under Section 7.5
(vi) each party's trademarks, trade names and service marks relating to
FreeStyle Products, (vii) each party's promotional, marketing and advertising
materials relating to the FreeStyle Products in the FreeStyle Territory, and
(viii) changes in reimbursement policies and requirements in the European
Territory relating to the distribution of the FreeStyle Products that have come
to the attention of Disetronic.
7.9 Customer Support. Disetronic shall maintain knowledgeable
----------------
sales, marketing, and support personnel to provide instructions to Customers in
the European Territory in the use of the FreeStyle Products. Upon Disetronic's
request, at agreed times, TheraSense shall provide a reasonable level of
assistance with technical information and training of Disetronic employees for
the FreeStyle Products. Any expenses related to such activities shall be borne
by Disetronic. Upon TheraSense's request and with Disetronic's consent,
TheraSense may provide direct support to Disetronic's Customers and Disetronic
will provide TheraSense with such Customers' names and information as TheraSense
may reasonably request in order for TheraSense to provide such support to such
Customers.
7.10 Medical Device Reporting. Pursuant to governmental medical device
------------------------
reporting regulations (e.g. the FDA's Medical Device Reporting (MDR)
Regulations, the European Medical Device Vigilance Guidelines, and any other
applicable medical device reporting regulations), TheraSense is required to
report to the applicable agency information that reasonably suggests that a
FreeStyle Product may have caused or contributed to the death or serious injury
or has malfunctioned and that the device would be likely to cause or contribute
to a death or serious injury if the malfunction were to recur. Each of
TheraSense and Disetronic agree to supply to the other any such information
promptly after becoming aware of it so that each of TheraSense and Disetronic
can comply with governmental reporting requirements. It is understood and agreed
that reporting to TheraSense shall be within twenty-four (24) hours to enable
TheraSense to comply with FDA reporting requirements. Disetronic agrees to use
its best efforts to promptly retrieve and return to TheraSense any individual
FreeStyle Product which Disetronic has reported to TheraSense or a governmental
agency. In the event that TheraSense is required by any regulatory agency to
recall a FreeStyle Product, or if TheraSense or a regulatory authority initiates
a FreeStyle Product recall, Disetronic shall cooperate with and assist
TheraSense and its Authorized Representative in locating, and retrieving if
necessary, recalled FreeStyle Products from Customers. Recalls shall be at
Disetronic's cost and expense in the European Territory and at TheraSense's cost
and expense in the U.S. Territory. Notwithstanding the foregoing, in the event
that a recall is primarily due to a FreeStyle Product manufacturing defect then
TheraSense shall provide to Disetronic replacement FreeStyle Product at no
charge. Disetronic shall maintain records of sales of
-18- Initials ____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
FreeStyle Products by lot number and by end user to whom such product was sold
or otherwise transferred. Upon TheraSense's request, Disetronic shall provide
TheraSense with access to such records in the event of a FreeStyle Product
recall or other quality related issue. Disetronic shall be responsible for
obtaining all records of its sales to end users in the event of a FreeStyle
Product recall or other quality related issue. Disetronic shall make available
to TheraSense for inspection Disetronic's process and records for adverse event
and other regulatory reporting purposes at mutually agreed upon times and
further shall ensure that Disetronic's processes comply with all applicable laws
and regulations in the FreeStyle Territory.
7.11 Product Complaints. Disetronic shall promptly investigate and monitor
------------------
all Customer and/or regulatory complaints and/or correspondence concerning the
use of the FreeStyle Products in the FreeStyle Territory. Disetronic shall
advise TheraSense of all complaints alleging patient injury within twenty four
(24) hours, and of all other complaints relating to the FreeStyle Products as
promptly as possible but not more than five (5) business day following the date
Disetronic receives such complaint. In addition, within fifteen (15) calendar
days following the date Disetronic receives such complaint, Disetronic shall
also provide TheraSense with a materially complete written report relating
thereto. Any notice to TheraSense under this Section 7.11 shall be sent via
facsimile and email to the attention of TheraSense's Vice President of
Regulatory Affairs or to such other address or person as TheraSense may
designate by notice. Receipt of both (i) a legible facsimile and (ii) an email
shall constitute legal notice under this Section 7.11, and such notice shall be
deemed given upon the latter of (i) or (ii) if not simultaneously dated. Without
limiting the effectiveness of legal notice by facsimile and email as set forth
above, if requested by the notified party, the notifying party shall also send
such notice via overnight delivery. If Disetronic fails to submit timely any
report pursuant to this Section 7.11, TheraSense may require that Disetronic pay
in full prior to shipment of any orders by TheraSense until such report is
submitted.
7.12 Notification of Unauthorized Use. Disetronic shall promptly notify
--------------------------------
TheraSense in writing upon its discovery of any unauthorized use or infringement
of the FreeStyle Products and/or TheraSense's patent, copyright, trademark or
other intellectual property rights with respect thereto. TheraSense shall have
the sole and exclusive right to bring an infringement action or proceeding
against a third party, and, in the event that TheraSense brings such an action
or proceeding, Disetronic shall cooperate and provide full information and
assistance to TheraSense and its counsel in connection with any such action or
proceeding; provided that TheraSense shall reimburse Disetronic for any expenses
(including but not limited to reasonable attorney's fees) incurred by
Disetronic.
7.13 Audits. TheraSense shall have the right to audit Disetronic solely
------
for the purpose of enabling TheraSense to comply with legal or regulatory
requirements, including ISO requirements.
8. ADDITIONAL OBLIGATIONS OF THERASENSE
8.1 Supply of Products. TheraSense shall be responsible for the
------------------
manufacture of FreeStyle Products for sale to Disetronic.
8.2 New Versions of FreeStyle Products. TheraSense shall provide
----------------------------------
Disetronic with new versions of FreeStyle Products. Disetronic and TheraSense
shall use their best efforts to agree on transfer prices for such new versions
of FreeStyle Products. If the parties cannot agree on transfer prices then such
new versions shall not be included on Exhibit A. For purposes of clarity, the
parties understand that new versions of FreeStyle Products do not include any
TheraSense products falling
-19- Initials: ____ ____
outside of the scope of the FreeStyle Products as defined in Exhibit A,
including without limitation implantable glucose sensors and glucose sensors
coupled to insulin delivery devices.
8.3 Telephone Marketing and Technical Support. During TheraSense's normal
-----------------------------------------
business hours, and in order to answer Disetronic's questions related to
FreeStyle Products, TheraSense shall provide a reasonable level of telephone
marketing and technical support to employees of Disetronic who have been trained
by TheraSense or by Disetronic, provided that where the training was provided by
Disetronic, such training received prior approval from TheraSense.
8.4 Intellectual Property Rights Maintenance-Patent and Trademark
-------------------------------------------------------------
Prosecution. TheraSense will be responsible for maintaining all patents,
-----------
TheraSense Trademarks and trade names and/or diligently prosecuting all patent
applications covering the FreeStyle Products in the FreeStyle Territory.
TheraSense shall use its reasonable commercial judgment in determining the level
and extent of patent protection to pursue in the FreeStyle Territory. In the
event TheraSense elects to abandon a particular issued patent or trademark
registration covering a Freestyle Product in a particular country in the
European Territory, TheraSense will notify Disetronic of such election.
Disetronic shall have the right, within thirty (30) days of such notice, to
elect to pay the on-going fees and costs associated with maintaining such patent
or trademark registration. Notwithstanding the foregoing, any such patent or
trademark registration shall be maintained in TheraSense's name.
8.5 Quality Systems Regulations. TheraSense will manufacture, design and
---------------------------
label FreeStyle Products for the U.S. Territory in accordance with the then
governing U.S. FDA Quality Systems Regulations, and for the European Territory
in accordance with the then governing European Union Quality Systems
Regulations.
8.6 Audits. Disetronic shall have the right to audit TheraSense solely for
------
the purpose of enabling Disetronic to comply with legal or regulatory
requirements, including ISO requirements.
9. LIMITED LIABILITY TO DISETRONIC AND OTHERS. EXCEPT AS PROVIDED IN SECTION
13.7.7, THERASENSE'S LIABILITY ARISING OUT OF THIS AGREEMENT, THE TERMINATION
THEREOF, AND/OR SALE OF THE FREESTYLE PRODUCTS SHALL BE LIMITED TO THE GREATER
OF (1) ONE MILLION U.S. DOLLARS ($U.S. 1,000,000), OR (2) THE AMOUNT PAID BY
DISETRONIC FOR FREESTYLE PRODUCTS UNDER THIS AGREEMENT. IN NO EVENT SHALL
THERASENSE BE LIABLE TO DISETRONIC, ITS AFFILIATES, ITS DISTRIBUTORS AND/OR ANY
OTHER ENTITY FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS, LOST PROFITS, OR ANY
OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ("INDIRECT DAMAGES"),
INCLUDING ANY "INDIRECT DAMAGES" THAT DISETRONIC HAS AGREED TO INDEMNIFY, DEFEND
AND/OR HOLD HARMLESS OF ITS AFFILIATES, SUBDISTRIBUTORS AND/OR ANY OTHER ENTITY,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT
WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHERWISE. THESE
LIMITATIONS SHALL APPLY WHETHER OR NOT THERASENSE HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE
OF ANY LIMITED REMEDY PROVIDED HEREIN OR IN THE WARRANTY FOUND IN THE FREESTYLE
PRODUCTS.
10. TRADEMARKS
-20- Initials:____ ____
10.1 License. In conjunction with the distribution and sale of each
-------
FreeStyle Product, TheraSense hereby grants Disetronic a non-exclusive license
in the U.S. Territory and an exclusive license in the European Territory to use
the relevant TheraSense Trademarks, identified on Exhibit D as modified by
TheraSense pursuant to this Article 10, in the FreeStyle Territory during the
Term. Notwithstanding the foregoing, TheraSense reserves the right to use such
TheraSense Trademarks (a) outside the European Territory, (b) inside the
European Territory with respect to passive sales and CGMS products pursuant to
Section 2.3 (including any promoting, marketing, and/or selling such CGMS
product), and (c) to promote, market, and/or sell any products, other than
FreeStyle Products in the European Territory. Such license(s) shall terminate at
the earlier of (i) the end of the term of this Agreement, or (ii) the
termination of Disetronic's right to distribute the FreeStyle Products.
TheraSense reserves the right to modify TheraSense Trademarks or substitute
alternative marks for any or all of the TheraSense Trademarks at any time upon
ninety (90) days prior written notice where such notice is commercially
reasonable, and in no event upon less than thirty (30) days prior written
notice. In addition, Disetronic agrees to use those TheraSense Trademarks in
connection with FreeStyle Products as may be designated in writing by
TheraSense. TheraSense shall retain the worldwide right to use such TheraSense
Trademarks for its own co-marketing efforts and for the distribution/sale of
other products. Disetronic acknowledges that except as expressly provided
herein, TheraSense grants Disetronic no other rights, title, or interest under
or relating to TheraSense's trademarks, trade names or service marks.
10.2 Use. During the term of this Agreement, Disetronic shall have the
---
right to indicate to the public that it is an authorized distributor of the
FreeStyle Products and to advertise and promote to Customers (within the
FreeStyle Territory) the FreeStyle Products under the TheraSense Trademarks.
Disetronic shall not alter or remove any Trademark applied to the FreeStyle
Products. Except as set forth in this Article 10, nothing contained in this
Agreement shall grant to Disetronic any right, title or interest in the
TheraSense Trademarks, whether or not specifically recognized or perfected under
applicable laws, and Disetronic irrevocably assigns to TheraSense all such
right, title, and interest, if any, in any TheraSense Trademarks. At no time
during or after the term of this Agreement shall Disetronic challenge or assist
others to challenge the TheraSense Trademarks or the registration thereof or
attempt to register any trademarks, marks or trade names confusingly similar to
those of TheraSense.
10.3 Approval of Representations. All representations of the TheraSense
---------------------------
Trademarks that Disetronic intends to use (1) shall first be submitted to
TheraSense for approval (which shall not be unreasonably withheld) of design,
color, and other details, or (2) shall be exact copies of those used by
TheraSense. Disetronic agrees to fully comply with all reasonable guidelines, if
any, communicated by TheraSense concerning use of the TheraSense Trademarks.
Disetronic may not xxxx the FreeStyle Products packaging materials with the
trademarks of any third party without the prior written consent of TheraSense;
which consent may be withheld at TheraSense's sole discretion. If any of
TheraSense's Trademarks are to be used in conjunction with another trademark on
or in relation to the FreeStyle Products, then the TheraSense Trademarks shall
be presented at least equally legibly, equally prominently, and of equal or
greater size than the other but nevertheless separated from the other so that
each appears to be a xxxx in its own right, distinct from the other xxxx.
10.4 TheraSense use of Trademarks. During the term of this Agreement,
----------------------------
TheraSense shall not use a TheraSense Trademark on any in vitro glucose
monitoring product distributed for sale in the European Territory, other than a
FreeStyle Product, except as provided in Section 2.3. TheraSense reserves the
right to use all other TheraSense marks, trademarks, trade names and service
marks on any and all TheraSense product.
-21- Initials:____ ____
11. CONFIDENTIALITY
11.1 Except as expressly provided herein, the parties agree that for
five (5) years after the disclosure of any Confidential Information by one (1)
of the parties to the other hereto pursuant to this Agreement, the receiving
party shall keep completely confidential and shall not publish or otherwise
disclose and shall not use for any purpose except for the purposes contemplated
by this Agreement such Confidential Information, except that to the extent that
it can be established by the receiving party by competent proof that such
Confidential Information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was independently developed by the receiving party as
demonstrated by documented evidence prepared contemporaneously with such
independent development; or
(e) was subsequently lawfully disclosed to the receiving party by a
person other than a party hereto.
11.2 Permitted Use and Disclosures. Each party hereto may use or
-----------------------------
disclose information disclosed to it by the other party to the extent such use
or disclosure is reasonably necessary in complying with applicable governmental
regulations or otherwise submitting information to tax or other governmental
authorities, conducting clinical trials, or otherwise exercising its rights
hereunder, provided that if a party is required to make any such disclosure of
another party's confidential information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the latter
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its best efforts to secure confidential treatment
of such information prior to its disclosure (whether through protective orders
or otherwise).
11.3 Public Disclosure. Except as otherwise required by law, neither
-----------------
party shall issue a press release or make any other public disclosure of the
terms of this Agreement without the prior approval of such press release or
public disclosure. Each party shall submit any such press release or public
disclosure to the other party, and the receiving party shall have ten (10)
business days to review and approve any such press release or public disclosure,
which approval shall not be unreasonably withheld. If the receiving party does
not respond in writing within such ten (10) business day period, the press
release or public disclosure shall be retransmitted by the issuing party to the
attention of the President of the receiving party. If the receiving party does
not respond to such retransmission within five (5) business days the press
release or public disclosure shall be deemed approved.
11.4 Confidential Terms. Except as expressly provided herein, each
------------------
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party; provided, disclosures may be made as
required by securities or other applicable laws, or on a strict need to know
-22- Initials:____ ____
basis to actual or prospective investors, or to a party's accountants, attorneys
and other professional advisors; provided further, however, prior to making any
disclosure regarding securities or other applicable laws, the terms of this
Agreement shall be redacted by mutual agreement of the parties.
12. INDEMNITY
12.1 Indemnification of Disetronic.
-----------------------------
12.1.1 TheraSense shall indemnify, defend, and hold harmless
Disetronic, its Affiliates and Subdistributors, and their directors, officers
and employees (each an "Disetronic Indemnitee") from and against any and all
liabilities, damages, losses, costs or expenses (including attorneys' fees and
other expenses of litigation and/or arbitration) (a "Liability") resulting from
a claim, suit or proceeding made or brought by a third party against a
Disetronic Indemnitee arising from (i) defects in materials, workmanship,
manufacturing, labeling or packaging of the FreeStyle Products by TheraSense if
such defects can be attributed to TheraSense's responsibility and could not be
detected by Disetronic through use of due diligence in the tests or inspection
of the FreeStyle Products before its delivery to Customers or end users, and/or
(ii) any claim of noncompliance by TheraSense with the U.S. or foreign laws and
regulations in the FreeStyle Territory, except to the extent caused by a
Disetronic Indemnitee.
12.1.2 TheraSense shall defend, or at its option settle, any
claims brought against Disetronic by third parties as a result of any
infringement by the FreeStyle Products of any U.S. or foreign patent, trademark,
trade name, service xxxx, or copyright existing under the laws of the FreeStyle
Territory, and shall reimburse Disetronic for any judgments, damages, cost or
expenses payable by Disetronic to a party bringing such action together with
reasonable attorneys' fees relating thereto. Disetronic agrees that TheraSense
shall be relieved of its obligations under this Section 12.1.2 unless Disetronic
notifies TheraSense promptly in writing of and gives TheraSense proper and full
information and assistance to settle or defend any such claims. If the FreeStyle
Products, or any part thereof, are, or in the opinion of TheraSense become, the
subject of any claim for infringement of such third party patent, trademark,
trade name, service xxxx, or copyrights, or if it is adjudicatively determined
that the FreeStyle Products, or any part thereof, infringe any such third party
patent, or copyright, then TheraSense may, at its option and expense, either (i)
procure for Disetronic the right under such third party patent, trademark, trade
name, service xxxx or copyright to sell or use, as appropriate, the FreeStyle
Products (or in the case of trademark infringement, substitute a different
trademark, trade name or service xxxx), or (ii) replace or modify the FreeStyle
Products or parts thereof in Disetronic's possession, with other suitable and
reasonably equivalent technology or parts so that the FreeStyle Products become
non-infringing or (iii) if it is not commercially reasonable to take the actions
specified in items (i) or (ii) immediately preceding, terminate this Agreement
with ninety (90) days written notice.
12.1.3 Notwithstanding the provisions of Section 12.1.2 above,
TheraSense assumes no liability for (i) infringements relating to any assembly,
circuit, combination, method or process in which any of the FreeStyle Products
may be used where the FreeStyle Products when used alone would not result in
such an infringement; (ii) infringements involving the modification or servicing
of the FreeStyle Products, or any part thereof, unless such modification or
servicing was done by TheraSense; (iii) any trademark infringements involving
any marking or branding of the FreeStyle Products not applied by TheraSense or
involving any marking or branding applied at the request of Disetronic or any
marking or branding with the Disetronic trademarks; or (iv) the modification of
any FreeStyle Products other than with TheraSense's written consent.
-23- Initials:____ ____
12.1.4 The foregoing provisions of this Section 12.1 state the
entire liability and obligations of TheraSense, and the exclusive remedy of
Disetronic and its Customers, with respect to any alleged product liability
claim related to the FreeStyle Products, or any alleged infringement of any
patents, copyrights, trademarks or other intellectual property rights by the
FreeStyle Products or any part thereof.
12.2 Indemnification of TheraSense.
-----------------------------
12.2.1 Disetronic shall indemnify, defend and hold harmless
TheraSense and its directors, officers, employees and agents and the successors
and assigns of any of the foregoing (each a "TheraSense Indemnitee") from any
and all damages, losses, costs, liabilities or expenses (including, without
limitation, attorneys' fees and other expenses of litigation and/or arbitration)
(a "Liability") resulting from a claim, suit or proceeding made or brought by a
third party against a TheraSense Indemnitee arising out of (a) defects in the
FreeStyle Products sold by Disetronic except those defects which can be
attributed to TheraSense, (b) FreeStyle Product claims, whether written or oral,
made by Disetronic in its advertising, promotion, sale, or distribution of any
of the FreeStyle Products, (c) the labeling, packaging, storage or other
handling of the FreeStyle Products by Disetronic, or (d) any claim of
noncompliance by Disetronic with the U.S. or foreign laws and regulations in the
FreeStyle Territory, except to the extent caused by a TheraSense Indemnitee.
12.2.2 Disetronic shall defend, or at its option settle, any
claims brought against TheraSense by third parties as a result of any
infringement by the FreeStyle Products of any U.S. or foreign trademark, trade
name, or service xxxx existing under the laws of the FreeStyle Territory, and
shall reimburse TheraSense for any judgments, damages, cost or expenses payable
by TheraSense to a party bringing such action together with reasonable
attorneys' fees relating thereto as a result of marking or branding the
FreeStyle Products with Disetronic trademarks. TheraSense agrees that Disetronic
shall be relieved of its obligations under this Section 12.2.2 unless TheraSense
notifies Disetronic promptly in writing of and gives Disetronic proper and full
information and assistance to settle or defend any such claims. If the FreeStyle
Products, or any part thereof, are, or in the opinion of Disetronic become, the
subject of any claim for infringement of such third party trademarks, trade
names or service marks, or if it is adjudicatively determined that the FreeStyle
Products, or any part thereof, infringe any such third party trademarks, trade
names or service marks, Disetronic may substitute a new Disetronic trademark,
trade name or service xxxx to be used to sell or use, as appropriate, the
FreeStyle Products.
12.2.3 The foregoing provisions of this Section 12.2 state the
entire liability and obligations of Disetronic, and the exclusive remedy of
TheraSense and its Customers, with respect to any alleged infringement of any
trademarks, trade names or service marks by the FreeStyle Products or any part
thereof.
13. TERM AND TERMINATION
13.1 Initial Term. The initial term of this Agreement shall commence on
------------
the Effective Date and shall continue in force until five (5) years from the
Effective Date, unless terminated earlier under the provisions of this Article
13 (the "Initial Term"). At the end of the Initial Term, this Agreement shall
automatically renew for subsequent three-year terms unless written notice of
termination is given by either party to the other party at least one (1) year
prior to the Agreement's then-current expiration date.
-24- Initials:____ ____
13.2 Termination for Cause. If either party defaults in the performance
---------------------
of any provision of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not cured within
ninety (90) days the Agreement will be terminated. If the non-defaulting party
gives such notice and the default is not cured during the ninety (90) day
period, then the Agreement shall automatically terminate at the end of that
period. In addition, this Agreement shall automatically terminate if Disetronic
fails to pay TheraSense in accordance with Sections 3.1, 3.2 and/or 3.3 and such
failure shall have continued for thirty (30) days after written notice thereof
was provided to Disetronic by TheraSense.
13.3 Termination for Disetronic and TheraSense Insolvency. This
----------------------------------------------------
Agreement may be terminated by TheraSense or Disetronic effective immediately
upon written notice to the other party (i) upon the institution by or against
the other party of insolvency, receivership or bankruptcy proceedings or any
other proceedings for the settlement of the other party's debts under United
States, California or Swiss law, unless such other party timely contests such
proceedings, (ii) upon the other party's making an assignment for the benefit of
creditors, or (iii) upon the other party's dissolution or ceasing to do
business.
13.4 Termination Relating to ***. TheraSense may, at its sole
---------------------------
discretion, terminate this Agreement with *** notice if *** should appear or any
***.
13.5 Termination Relating to Sales Outside FreeStyle Territory. In
---------------------------------------------------------
addition to any other rights or remedies available to TheraSense, TheraSense
shall have the right to terminate this Agreement upon thirty (30) days written
notice to Disetronic if TheraSense has reasonable belief as established by
contemporaneous written documentation that (i) Disetronic has directly or
indirectly resold or reshipped any of the FreeStyle Products outside the
FreeStyle Territory in commercial quantities, provided that Disetronic knew or
should have known that such FreeStyle Products were ultimately being resold or
reshipped outside the FreeStyle Territory; or (ii) Disetronic has sold FreeStyle
Product in the U.S. Territory that was purchased by Disetronic for sale in the
European Territory. During such thirty (30) day notice period, Disetronic shall
have the opportunity to dispute such claim and the parties agree to discuss in
good faith the resolution thereof.
13.6 Termination Relating to Acquisition. The parties agree that
-----------------------------------
notwithstanding Section 15.3 below: (a) Disetronic may, upon three (3) months
prior written notice to TheraSense, terminate this Agreement if an entity
acquires all or substantially all of TheraSense's business assets to which this
Agreement pertains, whether by merger, acquisition, sale or otherwise and such
entity sells or offers for sale insulin pumps, infusion sets or pens; and (b)
TheraSense may, upon three months prior written notice to Disetronic, terminate
this Agreement if an entity acquires all or substantially all of Disetronic's
business assets to which this Agreement pertains, whether by merger,
acquisition, sale or otherwise and such entity sells or offers for sale products
designed for glucose monitoring. Without limiting the foregoing, each party
shall provide prompt written notice to the other party in the event that such
party has been acquired. Within ninety (90) days of such notice, the notified
party shall elect whether to terminate this Agreement as set forth above.
13.7 Effect of Termination.
---------------------
-25- Initials:____ ____
*** CONFIDENTIAL TREATMENT REQUESTED
13.7.1 Accrued Obligations. Expiration or termination of this
-------------------
Agreement for any reason shall not release any party hereto from any liability
which, at the time of such termination, has already accrued to the other party
or which is attributable to a period prior to such termination nor preclude
either party from pursuing any rights and remedies it may have hereunder or at
law or in equity with respect to any breach of this Agreement. It is understood
and agreed that monetary damages may not be a sufficient remedy for any breach
of this Agreement and that the non-breaching party may be entitled to injunctive
relief as a remedy for any such breach. Such remedy shall not be deemed to be
the exclusive remedy for any such breach of this Agreement, but shall be in
addition to all other remedies available at law or in equity.
13.7.2 Inventory. Within thirty (30) days after the effective date
---------
of termination of this Agreement, Disetronic shall use its reasonable efforts to
provide TheraSense with a complete inventory of FreeStyle Products in
Disetronic's possession, in transit to Disetronic from TheraSense or otherwise
in Disetronic's control. Upon any expiration or other termination of this
Agreement, TheraSense may inspect Disetronic's FreeStyle Product inventory and
audit Disetronic's records.
13.7.3 Return of Materials. All trademarks, marks, trade names,
-------------------
patents, copyrights, designs, drawings, formulas or other data, photographs,
samples, literature, and sales and promotional aids of every kind related to the
FreeStyle Products or provided by TheraSense shall remain the property of
TheraSense. Within thirty (30) days after the effective date of termination of
this Agreement, Disetronic shall destroy all tangible items bearing, containing,
or contained in, any of the foregoing, in its possession or control and provide
written certification of such destruction, or prepare such tangible items for
shipment to TheraSense, as TheraSense may direct, at TheraSense's expense.
Disetronic shall not make or retain any copies of any confidential items or
information which may have been entrusted to it. Notwithstanding the foregoing,
Disetronic may retain only those samples and documents required for Disetronic
to comply with legal, regulatory and product liability requirements then in
effect. Disetronic shall provide to TheraSense a list of all such materials
required to be kept in Disetronic's possession. Effective upon the termination
of this Agreement, Disetronic shall cease to use all trademarks and trade names
of TheraSense. During the term of this Agreement and after any termination or
expiration of this Agreement, TheraSense shall have the right to continue to use
and disclose for any purpose any and all clinical trial results and other data
relating to the FreeStyle Products.
13.7.4 Products. In the event of breach by Disetronic of this
--------
Agreement, Disetronic shall cease selling any FreeStyle Products and shall
destroy all remaining inventory at the time of such breach. Subject to the
foregoing, upon expiration of this Agreement, or termination wholly unrelated to
any breach of this Agreement by Disetronic, Disetronic may continue selling in
the FreeStyle Territory any FreeStyle Products which were in Disetronic's
inventory at the time of such expiration or termination of the Agreement.
13.7.5 Limitation on Liability. Subject to Section 13.7.7, in the
-----------------------
event of termination by either party in accordance with any of the provisions of
this Agreement, neither party shall be liable to the other because of such
termination, for compensation, reimbursement or damages on account of the loss
of prospective profits or anticipated sales or on account of expenditures,
investments, leases, inventory or commitments in connection with the business or
goodwill of TheraSense or Disetronic.
13.7.6 Transition. Upon termination of this Agreement, Disetronic
----------
shall (i) diligently cooperate with TheraSense to effect a smooth and orderly
transition in the sale of FreeStyle Products in
-26- Initials:____ ____
the FreeStyle Territory, and (ii) refer all FreeStyle Product Customer support
inquiries to TheraSense, or to TheraSense's then-authorized customer support
provider.
13.7.7 Payment Upon Termination. Within thirty (30) days of the
------------------------
effective date of termination of this Agreement, TheraSense shall pay to
Disetronic the Payment. It is understood and agreed that such Payment shall only
be due in the event this Agreement is permissively terminated by TheraSense (by
providing written notice to Disetronic) pursuant to Section 13.1, or terminated
by Disetronic pursuant to Section 13.2 due to TheraSense's breach or pursuant to
Section 13.3 due to TheraSense's insolvency. In addition, within thirty (30)
days of termination or expiration of this Agreement, Disetronic shall deliver to
TheraSense all Sales and Inventory Records (as described in Section 7.1) and a
report which shall identify all outstanding leads for sales of Products and a
description of the status of any other sales activities regarding the FreeStyle
Products. Disetronic and TheraSense agree to observe the applicable privacy laws
relating to the data provided. TheraSense agrees that it shall not provide such
data to any company producing and distributing insulin pumps and/or infusion
sets. In the event TheraSense elects to develop and/or commercialize an insulin
pump and/or infusion set, TheraSense also agrees that is shall not use such data
in conjunction with such development and/or commercialization.
13.7.8 No Renewal, Extension or Waiver. Acceptance of any order
-------------------------------
from, or sale of, any FreeStyle Products to Disetronic after the date of
termination of this Agreement shall not be construed as a renewal or extension
hereof, or as a waiver of termination by TheraSense.
13.8 Survival. The provisions of Sections 2.5, 3.2, 3.3.3, 3.4, 4.6,
--------
4.7.2, 7.2, 7.4.1(a)(ii), 7.10, 7.11, 10.2, 13.7 and 13.8, Articles 5, 9, 11, 12
(to the extent such claims arise from acts or omissions that occurred out of
Products supplied to Disetronic prior to expiration or termination of this
Agreement), 14 and 15, and Exhibits F and G shall survive the expiration or
termination of this Agreement for any reason. All other rights and obligations
of the parties shall cease upon termination of this Agreement.
14. DISPUTE RESOLUTION
14.1 Mediation. If a dispute arises out of or relates to this contract,
---------
or the breach thereof, including a dispute noticed under Sections 13.2 through
13.5, the parties agree that before filing any claim in arbitration as set forth
below, the parties shall first to try in good faith to settle the dispute by
engaging in a meeting in Minneapolis, Minnesota, for a minimum of forty-eight
(48) hours, where including without limitation, the CEO's (or the equivalent
thereof) of both parties shall be present. Such meeting shall take place within
twenty (20) days of any notice of dispute under this Agreement.
14.2 Arbitration. Subject to Section 14.1, if the parties are unable to
-----------
resolve a Dispute, the Dispute shall be settled by binding arbitration conducted
in Minneapolis, Minnesota pursuant to the Commercial Arbitration Rules of the
American Arbitration Association then in effect by one (1) arbitrator appointed
in accordance with such rules. The decision and/or award rendered by the
arbitrator shall be written (specifically stating the arbitrator's findings of
facts as well as the reasons upon which the arbitrator's decision is based),
final and nonappealable (except for an alleged act of corruption or fraud on the
part of the arbitrator) and may be entered in any court of competent
jurisdiction. The parties agree that, any provision of applicable law
notwithstanding, they will not request, and the arbitrator shall have no
authority to award, punitive or exemplary damages against any party. The
arbitrator shall have the authority to grant injunctive relief and order
specific performance. The arbitrator shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties
-27- Initials:____ ____
must expend for discovery; provided the arbitrator shall permit such discovery
as they deem necessary to permit an equitable resolution of the dispute.
Evidence need not be obtained in the presence of the arbitrator. At the
arbitration hearing, each party may make written and oral presentations to the
arbitrator, present testimony and written evidence, and examine witnesses. The
costs of any arbitration, including administrative fees and fees of the
arbitrator, shall be shared equally by the parties. Each party shall bear the
cost of its own attorneys' fees and expert fees. The parties and the arbitrator
shall use their best efforts to complete any such arbitration within one (1)
year after the appointment of the Panel, unless a party can demonstrate to the
arbitrator that the complexity of the issues or other reasons warrant the
extension of the time table. In such case, the Panel may extend such time table
as reasonably required. The arbitrator shall, in rendering its decision, apply
the substantive law of the State of California, without regard to its conflict
of laws provisions, except that the interpretation of and enforcement of this
Section 14.2 shall be governed by the U.S. Federal Arbitration Act. Pending the
establishment of the arbitral tribunal or pending the arbitral tribunal's
determination of the merits of the controversy, either party may seek from a
court of competent jurisdiction any interim or provisional relief that may be
necessary to protect the rights or property of that party.
15. MISCELLANEOUS
15.1 Governing Law. This Agreement, any dispute arising therefrom, and
-------------
any proceeding subject to Article 14, shall be governed by and construed in
accordance with the laws of the State of California, without reference to
principles of conflicts of laws.
15.2 Independent Contractors. The relationship of the parties hereto is
-----------------------
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint venturers of the other for any purpose as a result of this
Agreement or the transactions contemplated thereby.
15.3 Assignment. Subject to Section 13.6, the parties agree that their
----------
rights and obligations under this Agreement shall not be delegated, transferred
or assigned to a third party without prior written consent of the other party
hereto; provided TheraSense may assign this Agreement, without Disetronic's
consent (a) to its Affiliates, and (b) to an entity that acquires all or
substantially all of the business of assets of TheraSense to which this
Agreement pertains, whether by merger, reorganization, acquisition, sale or
otherwise. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns.
15.4 Notices. Any required notices hereunder shall be given in writing
-------
by email and by facsimile at the address of each party below, or to such other
address as either party may substitute by written notice. Notice shall be deemed
served when delivered or, if delivery is not accomplished by reason or some
fault of the addressee, when tendered.
If to Disetronic: Disetronic Handels AG
Xxxxxxxxxxxxxxxx 0
XX-0000 Xxxxxxxx
Xxxxxxxxxxx
Attention: Senior Corporate Attorney
Swiss Telephone Number: (x00) 00 000-0000
Website: xxx.xxxxxxxxxx.xxx
If to TheraSense: TheraSense, Inc.
-28- Initials:____ ____
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
XXX
Attention: Vice President, Business Development
U.S. Telephone Number: (000) 000-0000
Website: xxx.xxxxxxxxxx.xxx
15.5 Force Majeure. Neither party shall lose any rights hereunder or
-------------
be liable to the other party for damages or losses (except for payment
obligations) on account of failure of performance by the defaulting party if the
failure is occasioned by war, strike, fire, Act of God, earthquake, flood,
lockout, embargo, governmental acts or orders or restrictions, or any other
reason where failure to perform is beyond the reasonable control and not caused
by the negligence, intentional conduct or misconduct of the nonperforming party
and such party has exerted all reasonable efforts to avoid or remedy such force
majeure; provided, however, that in no event shall a party be required to settle
any labor dispute or disturbance.
15.6 Insurance. Each party shall, at all times during the term of this
---------
Agreement, maintain a product liability insurance policy with commercially
reasonable amounts of insurance in annual amounts of no less than Five Million
U.S. Dollars (U.S. $5,000,000) per occurrence, and each party shall list the
other and its Affiliates as named insureds.
15.7 Advice of Counsel. TheraSense and Disetronic have each consulted
-----------------
counsel of their choice regarding this Agreement, and each acknowledges and
agrees that this Agreement shall not be deemed to have been drafted by one party
or another and will be construed accordingly.
15.8 Compliance with Laws. Each party shall furnish to the other party
--------------------
any information requested or required by that party during the term of this
Agreement or any extensions hereof to enable that party to comply with the
requirements of any U.S. or foreign, state and/or government agency.
15.9 Further Assurances. At any time or from time to time on and after
------------------
the date of this Agreement, Disetronic shall at the request of TheraSense (i)
deliver to TheraSense such records, data or other documents consistent with the
provisions of this Agreement, (ii) execute, and deliver or cause to be
delivered, all such consents, documents or further instruments of transfer or
license, and (iii) take or cause to be taken all such actions, as TheraSense may
reasonably deem necessary or desirable in order for TheraSense to obtain the
full benefits of this Agreement and the transactions contemplated hereby.
15.10 Severability; Waiver. In the event that any provisions of this
--------------------
Agreement are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the parties in entering this
Agreement. The failure of a party to enforce any provision of the Agreement
shall not be construed to be a waiver of the right of such party to thereafter
enforce that provision or any other provision or right.
15.11 Entire Agreement; Modification. This Agreement sets forth the
------------------------------
entire agreement and understanding of the parties with respect to the subject
matter hereof, and supersedes all prior discussions, agreements and writings in
relating thereto. This Agreement may not be altered, amended or modified in any
way except by a writing signed by both parties.
-29- Initials:____ ____
15.12 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be deemed an original and which together shall constitute
one instrument.
15.13 Future Cooperation. The parties agree to discuss development of a
------------------
broader relationship between them, potentially including other products not
covered by this Agreement, such as implantable glucose sensors and glucose
monitoring devices coupled with insulin delivery devices. The terms of such
broader relationship, if any, shall be subject to the negotiation of a separate
agreement.
IN WITNESS WHEREOF, Disetronic and TheraSense have executed this Agreement by
their respective duly authorized representatives.
DISETRONIC HANDELS AG THERASENSE, INC.
/s/ Signature /s/ Signature
By:____________________________ By: __________________________
Print Name:____________________ Print Name:___________________
Title:_________________________ Title: _______________________
-30- Initials:____ ____
CONFIDENTIAL 13 September 2000
EXHIBIT A
FREESTYLE PRODUCTS
As of the Effective Date, The FreeStyle Products include the following six
(6) products:
1. "System Kit" shall mean a product that consists of 1 Meter, 10 Strips, 1
----------
Lancing Device, 1 Finger Cap, 10 Lancets, 1 Carrying Case, 1 Log Book, 1 Quick
Reference Card, 1 Owners Booklet; where "Finger Cap" shall mean cap for the
----------
Lancing Device designed for lancing the finger rather than the arm.
2. "Lancer" shall mean a disposable head placed in a lancing device for use
------
in piercing the patient's skin.
3. "Control Solution" shall mean a glucose solution for testing the
----------------
operation of the FreeStyle Meter and Strips.
4. "Lancing Device" shall mean a lancing device which is used to bring
--------------
blood to the surface of a patient's skin and which is physically separate from
the Meter.
5. "Meter" shall mean a meter whose sole function is to coulometrically
-----
measure blood glucose levels.
6. "Strips" shall mean a package of strips which are located into the Meter
and used to acquire a blood sample of less than 0.4 microliters from the surface
of a patient's skin. (The Strips are currently offered in packages of 50 and
100; such quantities are subject to change).
CONFIDENTIAL 13 September 2000
EXHIBIT B
TRANSFER PRICE
Pricing Details
System Kit
----------
The price of a System Kit for sale in the FreeStyle Territory is ***
(includes 1 Meter, 10 Strips, 1 Lancing Device, 1 Finger Cap, 10 Lancets, 1
Carrying Case, 1 Log Book, 1 Quick reference Card, 1 Owners Booklet).
Strips
------
The price of Strips ordered for the US Territory is ***.
The price of Strips ordered for the European Territory is:
Annual Sales Volume Price
(number of Strips) Per Strip
------------------- ---------
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
Lancing Devices, Lancets and Control Solution
---------------------------------------------
The following prices are valid for the following products for sale in the
FreeStyle Territory when not purchased as part of a System Kit:
Lancing Devices *** per lancing device
Lancets *** per box if 100 lancets
Control Solution *** per bottle of control solution
*** Confidential treatment requested
Initials:
--------
CONFIDENTIAL 13 September 2000
EXHIBIT C
ANNUAL MINIMUM PURCHASE OBLIGATION FOR THE EUROPEAN TERRITORY
Minimum
Calendar Year Purchase Obligation
------------- -------------------
***
*** Confidential treatment requested.
CONFIDENTIAL 13 September 2000
EXHIBIT D
THERASENSE TRADEMARKS
TheraSense
. EU Registration #00960120 filed October 19, 1998
. US serial number 75/542,727 filed August 25, 1998
. Canada serial number 894,025 filed October 22, 1998
FreeStyle (registrations pending)
. US serial number 75/697,764 filed May 4, 1999
The Technology of Caring (registration pending)
. U.S. serial number 75/793,921 filed September 7, 1999
NanoSample
. Not filed
TheraSense agrees to provide Disetronic with the registration numbers and
the countries and the countries to which they correspond as such information
becomes available. TheraSense will use commercially reasonable efforts to
register the above trademarks in the European territory.
TheraSense and Disetronic shall agree by October 31, 2000 on the TheraSense
brand name under which the FreeStyle Products will be marketed in the European
Territory. TheraSense shall promptly apply to register the TheraSense brand name
or secure the necessary rights to use the TheraSense brand name. Disetronic
agrees to assign all of its right, title and interest, if any, in such
TheraSense brand name to TheraSense. Such brand name shall be added to Exhibit
D.
In the event that TheraSense is precluded from using the selected
TheraSense brand name then TheraSense and Disetronic shall select a new
TheraSense brand name under which the FreeStyle Products will be marketed in the
European Territory. If TheraSense notifies Disetronic of such new TheraSense
brand name on or before January 31, 2001 then Disetronic shall bear all of its
own costs associated with the change to the new TheraSense brand name. If
TheraSense notifies Disetronic of such new TheraSense brand name after January
31, 2001 then TheraSense shall reimburse Disetronic for Disetronic's direct
costs associated with necessary changes in the Promotional Materials and
Programs, up to a limit of one hundred and fifty thousand U.S. dollars
($150,000).
-4- Initials:
----- -----
CONFIDENTIAL 13 September 2000
EXHIBIT E
PRODUCT SPECIFICATIONS
Product Performance Criteria
The FreeStyle Products shall meet the following specification when tested
using the test procedures in the attached TheraSense document #DOC00482
"FreeStyle Strip Verification report", as this document may be updated by
TheraSense.
Hematocrit range ***
Operating temperature range ***
Acetaminophen error ***
Ascorbate error ***
User error ***
Glucose range ***
Accuracy ***
Lot Acceptance Criteria
The Strips shall meet the following specifications when tested by the
Receiving Party using the test procedures in the attached TheraSense document
$DOC00345 "FreeStyle Strip Calibration Procedure", as this document may be
updated by TheraSense.
RMS standard deviation at low glucose level ***
RMS coefficient of variation at medium glucose level ***
RMS coefficient of variation at high glucose level ***
TNO Precision Guidelines
Until such time as TheraSense obtains the IVD-CE xxxx for the FreeStyle
Products, all Strips shipped by TheraSense to Disetronic for sale in the
European Territory shall conform (in TheraSense's release testing) with the
guideline on permissible coefficient of variation specified in paragraph 5.2.2
(b) of the TNO Centre for Medical Technology's publication entitled "Quality
Guideline, Non-Implantable Portable Blood Glucose Monitors for Self Monitoring"
dated February 1991. After TheraSense obtains the IVD-CE xxxx for the FreeStyle
products, TheraSense will comply with the relevant, applicable IVD-CE xxxx
criteria as required.
*** Confidential treatment requested
