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EXHIBIT 10.19
OEM DEVELOPMENT,
MANUFACTURE AND SUPPLY AGREEMENT
THIS OEM DEVELOPMENT, MANUFACTURE AND SUPPLY AGREEMENT (the
"Agreement") is made as of this 23nd day of May, 2001 (the "Effective Date"), by
and between Diametrics Medical Incorporated, a Minnesota corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Diametrics") and Quantech Ltd. a Minnesota corporation, having its principal
place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Quantech").
RECITALS
WHEREAS, Diametrics develops, manufactures (or has manufactured), sells
and distributes certain point of care medical diagnostic products for
measurement of electrolytes marketed as ▇▇▇▇ SL Blood Analysis System (the "▇▇▇▇
System"), principally for use in hospital intensive and critical care units; as
well as related hardware and accessories;
WHEREAS, Quantech is developing a proprietary instrument known as the
FasTraQ(TM) Hospital Emergency Department Patient Treatment Information
Platform, which is intended to perform rapid blood analyses through the use of
proprietary surface plasmon resonance ("SPR") biosensor technology, principally
for use in hospital emergency departments;
WHEREAS, Quantech seeks to incorporate an electrolyte panel into its
FasTraQ Product using proprietary ▇▇▇▇ components manufactured and supplied by
Diametrics; and Diametrics desires to manufacture and supply such components for
use with the FasTraQ Product;
WHEREAS, the parties desire to modify certain of the ▇▇▇▇ components to
work with the FasTraQ Product as provided herein;
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and subject to the terms and conditions set forth herein below,
Quantech and Diametrics agree as follows:
ARTICLE 1. DEFINITIONS
The following terms, when used herein with initial capital letters,
shall have the following respective meanings:
1.1 Boards. Circuit boards incorporating the ▇▇▇▇ Software as modified
hereunder, for use in electrolyte testing and incorporated into the FasTraQ
Product, the specifications for which will be mutually agreed by the parties.
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1.2 Cards. Temperature verification cartridges for use in performing
quality control checks of the Boards, the specifications for which will be
mutually agreed by the parties.
1.3 Cartridges. Single use cartridges, designed to measure sodium,
potassium and chloride, to be incorporated into the FasTraQ Disposables and for
use with the Board, the specifications for which will be mutually agreed by the
parties.
1.4 Commercialization Date. The earlier of (a) the shipment and invoice
date of the first commercial sale by Quantech of the FasTraQ Product or (b) *.
1.5 Component. A Board, Card, Cartridge, Connector or Fluid
(collectively, "Components").
1.6 Confidential Information. Information of any kind and form, whether
technical or business, that a party hereto holds in confidence and regards as
valuable, but only when treated by the parties as set forth in Section 12.2.
1.7 Connectors. Edge type connector assemblies for use with the
Cartridges and Boards and incorporated into the FasTraQ Product, the
specifications for which will be mutually agreed by the parties.
1.8 Development Program. The program for the development of the
Components hereunder, as mutually agreed to by the parties, the estimated
timelines, tasks and deliverables of which are set forth in Exhibit A.
1.9 Diametrics Technology.
(a) Any United States and foreign patents (including all
reissues, extensions, substitutions, re-examinations, supplementary protection
certificates and the like, and patents of addition) and/or patent applications
(including, without limitation, all continuations, continuations-in-part and
divisions thereof) owned or controlled by Diametrics during the term of this
Agreement that cover the manufacture, use or sale of any of the Components, the
▇▇▇▇ Software or any other Diametrics product;
(b) any copyrightable works owned or controlled by Diametrics
that are incorporated into any of the Components, the ▇▇▇▇ Software or any other
Diametrics product; and
(c) any and all know-how, including, without limitation, tangible
materials, proprietary information and trade secrets, that is relevant to the
design, manufacture or use of the Components, the ▇▇▇▇ Software or any other
Diametrics product.
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* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
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1.10 FasTraQ Disposables. Single use disposable cartridges that
integrate the Cartridges such that the sodium, potassium and chloride
measurements may be made on the FasTraQ Product.
1.11 FasTraQ Product. The product to be marketed as the FasTraQ(R)
Hospital Emergency Department Patient Treatment Information System that is
modified to include the Board, Card and Connector, and to use the FasTraQ
Disposables as contemplated herein. Specifications for the FasTraQ Product will
be defined by Quantech and reviewed by Diametrics.
1.12 FasTraQ Software. That proprietary Quantech software incorporated
into the FasTraQ Product. The FasTraq Software does not include the ▇▇▇▇
Software.
1.13 Field. Intermittent point of care measurement of sodium, potassium
and chloride in human whole blood in hospital emergency departments or in STAT
or central laboratories for use in support of hospital emergency departments.
1.14 Fluids. Calibration fluids for use in the FasTraQ Disposable, the
specifications for which will be mutually agreed by the parties.
1.15 ▇▇▇▇ Software. That proprietary software incorporated into the
Boards, the specifications for which will be mutually agreed by the parties.
1.16 Quantech Technology.
(a) Any United States and foreign patents (including all
reissues, extensions, substitutions, re-examinations, supplementary protection
certificates and the like, and patents of addition) and/or patent applications
(including, without limitation, all continuations, continuations-in-part and
divisions thereof) owned or controlled by Quantech during the term of this
Agreement that relate to the FasTraQ Product or FasTraQ Disposables (excluding
the Components and the ▇▇▇▇ Software);
(b) any copyrightable works owned or controlled by Quantech that
are incorporated into the FasTraQ Product or FasTraQ Disposables (excluding the
Components and the ▇▇▇▇ Software); and
(c) any and all know-how, including, without limitation, tangible
materials, proprietary information and trade secrets, that is relevant to the
design, manufacture or use of the FasTraQ Product or the FasTraQ Disposables
(excluding the Components and the ▇▇▇▇ Software).
1.17 Regulatory Approvals. Applications for permission and permissions
or approvals from local and national governments, if required in any country or
jurisdiction, to market, use, and dispose of FasTraQ Product and FasTraQ
Disposables.
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ARTICLE 2. DEVELOPMENT
2.1 Development of Components. The parties acknowledge that certain of
the Components will need to be modified as provided herein, in order to be
incorporated into the FasTraQ Product. The parties covenant and agree to
exercise commercially reasonable and diligent efforts to modify and develop the
Components in accordance with the Development Program set forth in Exhibit A.
The parties acknowledge that the timelines, tasks and deliverables set forth on
Exhibit A are subject to change and agree that each party's representative under
Section 2.6 shall have the necessary authority to make such changes on behalf of
such party, provided that nothing in this sentence shall relieve the parties
from their obligations in the immediately preceding sentence. Quantech's
development obligations under such Development Program shall include, without
limitation, (i) modifying all FasTraQ hardware, and all FasTraQ and ▇▇▇▇
Software, as necessary to cause the Components to function properly as
integrated components of FasTraQ, and (ii) incorporating the Cartridges and
Fluids into a design compatible with the FasTraQ Product. Diametrics'
development obligations under such Development Program shall include, without
limitation, designing (i) the Connectors, (ii) manufacturing processes for all
of the Components, and (iii) a revised replacement for the current ▇▇▇▇
microprocessor that, when available, will be integrated into the Boards.
2.2 Development Costs. Each party shall bear its own costs incurred in
connection with the performance of its development obligations under this
Article 2; provided, however, that Quantech shall pay Diametrics * for certain
development activities that are set forth in Exhibit A. Payment of such amount
will be as follows: * on the Effective Date, * upon completion of the design
validation to specifications of the FasTraQ Product and the FasTraQ Disposables,
and * upon completion of the design validation to specifications of the revised
replacement for the current ▇▇▇▇ microprocessor that, when available, will be
integrated into the Boards.
2.3 Modification of ▇▇▇▇ Software.
(a) Pursuant to the Development Program, Quantech shall provide
and manage the programming resources for modifying the ▇▇▇▇ Software with the
technical direction, support and approval of Diametrics personnel to the extent
necessary to make such Software interface properly with the FasTraQ Software.
Diametrics hereby grants to Quantech a limited, non-exclusive, non-transferable
and non-sublicenseable license to use the source code version of the ▇▇▇▇
Software for the sole purpose of modifying such Software to be compatible with
the FasTraQ Software. Quantech shall not disclose or provide the source code
version to any person except for those persons having a need to access the ▇▇▇▇
Software for the purposes of modifying it as contemplated herein. In no event
shall Diametrics be required to disclose to Quantech its proprietary algorithms
for the ▇▇▇▇ Software, except as set forth in Section 2.3(c).
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* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
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(b) Diametrics shall reasonably assist Quantech in the
performance of its software development obligations hereunder, including,
without limitation, providing to Quantech technical assistance, access to
Diametrics' development tools, and office space located near Diametrics'
software development personnel.
(c) If Quantech desires to provide a longer shelf life for the
Cartridges, which shelf life requires a change to the proprietary algorithms for
the ▇▇▇▇ Software, the parties shall exercise good faith efforts to agree on
terms on which Diametrics will facilitate such algorithm changes which may
include, at Diametrics' option, making such changes itself or licensing Quantech
the algorithms for such purposes, on terms to be mutually agreed.
2.4 Integration of Cartridges.
(a) Pursuant to the Development Program, Quantech shall be
responsible for integrating the Cartridges into the FasTraQ Disposable to make
such Cartridges function in the FasTraQ Product. The parties acknowledge that
the goal of such integration shall be that the performance of the sodium,
potassium and chloride analytes in the FasTraQ Product and FasTraQ Disposables
shall be substantially equivalent to the published product performance claims
for these parameters in the ▇▇▇▇ System.
(b) In connection with the integration of the Cartridges prior to
the Commercialization Date, Quantech shall purchase, and Diametrics shall
manufacture and sell, the quantities of Cartridges set forth on Exhibit B. Such
Cartridges will be supplied in accordance with Section 4.5 and the schedule set
forth in Exhibit B, at the prices set forth in Exhibit C. Quantech shall notify
Diametrics in writing at the time of placing an order hereunder whether the
Cartridges and Fluids will be used as development or production parts. All
Cartridges purchased under this Section 2.4(b) shall be credited against the
first year minimum purchase requirements set forth in Exhibit D.
(c) Diametrics also shall reasonably assist Quantech in the
performance of its Cartridge development obligations hereunder, including,
without limitation, providing to Quantech reasonable technical assistance.
2.5 Integration of Boards.
(a) Pursuant to the Development Program, Quantech shall be
responsible for integrating the Boards, Connectors and Cards into the FasTraQ
Product.
(b) In connection with the integration of the Boards, Quantech
shall purchase, and Diametrics shall manufacture and sell, the quantities of
Boards, Connectors and Cards set forth on Exhibit B. Such Components will be
supplied in accordance with Section 4.5 and the schedule set forth in Exhibit B,
at the prices set forth in Exhibit C. Quantech shall notify Diametrics in
writing at the time of placing an order hereunder whether such Components will
be used as development or production parts.
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(c) Diametrics also shall reasonably assist Quantech in the
performance of its development obligations relating to the Boards, Connectors
and Cards hereunder, including, without limitation, providing to Quantech
reasonable technical assistance.
2.6 Development Assistance, Meetings; Reports. To the extent necessary
to permit each party to meet its development obligations hereunder, the other
party promptly shall (a) respond to such party's inquiries and requests for
advice, and (b) subject to the terms of this Agreement, make available to such
other party its proprietary information. Within thirty (30) days after the
Effective Date, each party shall appoint an individual, reasonably acceptable to
the other party, to facilitate communications between the parties relating to
the development of the Components, FasTraQ Product and FasTraQ Disposables and
the relationship contemplated herein. The parties shall use good faith efforts
to meet monthly during the first year of this Agreement and quarterly thereafter
to discuss the development, manufacture and supply of the Components
contemplated hereunder. In addition, each party shall use good faith efforts to
provide the other party, within thirty (30) days after the end of each calendar
month, a summary report of its activities under the Development Program during
such calendar month, with the content of such report to be mutually agreed.
2.7 Development of Other Custom Cartridges. If Quantech notifies
Diametrics that it desires to develop, using Diametrics Technology, a custom
single use analyte cartridge other than the Cartridge for commercialization in
the Field, Diametrics shall, subject to the consent of any third parties that
may have superior rights with respect to such development, including, without
limitation, Agilent Technologies (or its assignees), enter into good faith
negotiations of an agreement for the development and supply or license of such
custom cartridge provided that it does not compete with Diametrics' then
existing or proposed fields of application. With respect to any such request by
Quantech, Diametrics may elect either to develop and supply such custom
cartridge to Quantech or to license the relevant rights to Quantech for a
license fee or royalty. Diametrics shall have no obligation to develop any
cartridges for, or license any of the Diametrics Technology to, Quantech for any
purpose other than distribution or use in the Field.
2.8 Cross License of FasTraQ Technology to Diametrics. Quantech and
Diametrics acknowledge that Diametrics may desire to utilize Quantech Technology
for use in connection with ▇▇▇▇ System or other Diametrics products. If
Diametrics notifies Quantech that it desires to so utilize the Quantech
Technology, Quantech shall enter into good faith negotiations with Diametrics of
an agreement for the products to be developed, manufactured and distributed by
Diametrics in specific fields of application that do not compete with Quantech's
then existing or proposed fields of application. With respect to any such
request by Diametrics, Quantech may elect to develop the products for sale to
Diametrics or license it to Diametrics for a license fee or royalty.
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ARTICLE 3. OEM LICENSE
3.1 OEM License to Quantech. Subject to the terms and conditions of this
Agreement, Diametrics hereby grants to Quantech a non-exclusive,
non-transferable license (a) to use and incorporate the Boards, Cards and
Connectors into the FasTraQ Product and to market and distribute such FasTraQ
Product in the Field, and (b) to incorporate the Cartridges and Fluids into the
FasTraQ Disposable and to market and distribute such FasTraQ Disposable in the
Field. Quantech shall not market, distribute or sell (a) the Boards, Cards or
Connectors separately (except as replacement parts) or as a component of any
other products; (b) the Cartridges or Fluids except as incorporated into the
FasTraQ Disposable or (c) the FasTraQ Product or FasTraQ Disposables outside the
Field. Quantech shall be entitled to distribute the FasTraQ Product and FasTraQ
Disposables under such trademarks as it may deem appropriate.
3.2 Sublicenses. The rights granted to Quantech under Section 3.1 may
not be sublicensed, transferred or assigned to any third party except with the
prior written consent of Diametrics, provided that Quantech may sublicense,
transfer or assign such rights to Quantech's distribution partners for the
purpose of marketing, distributing and selling the FasTraQ Product and the
FasTraQ Disposables in accordance with the terms, covenants, conditions and
limitations set forth in this Agreement.
3.3 Software Licenses. Notwithstanding any other provisions of this
Agreement, the parties agree that any software portion of the Components
(including without limitation the ▇▇▇▇ Software) may be sublicensed by Quantech
to its end user customers for use in the FasTraQ Product, pursuant to Quantech's
customary software license terms, reasonably acceptable to Diametrics, and that
such sublicense shall in no way constitute a sale of such ▇▇▇▇ Software.
ARTICLE 4. COMPONENT MANUFACTURE AND SUPPLY
4.1 Manufacture and Supply. Diametrics shall manufacture and supply the
Components to Quantech in accordance with the specifications and the terms of
this Agreement.
4.2 Minimum Purchase Requirements. During each quarter of the twelve
month period commencing on the Commercialization Date and during such twelve
month period, Quantech shall purchase, and Diametrics shall manufacture and
sell, (a) at least sixty percent (60%) of the minimum quantity of Components for
the applicable quarter, and (b) one hundred percent of the aggregate minimum
quantity of Components for such twelve month period, respectively, as set forth
in Exhibit D. During the two subsequent twelve (12) month periods hereunder,
Quantech shall purchase, and Diametrics shall manufacture and sell, a minimum
quantity of Components having an aggregate purchase price equal to * of the
aggregate purchase price of the actual purchases of Components during the
preceding twelve (12) month period, provided, however, that in any event, the
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* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
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minimum purchase requirement for a subsequent twelve (12) month period will be
no less than * of the previous twelve (12) month's minimum purchase requirement
(measured in terms of aggregate purchase price). During such subsequent twelve
month periods, Quantech shall purchase, and Diametrics shall manufacture and
sell, Components with an aggregate purchase price of at least * of the minimum
purchase requirement for any such twelve month period in each quarter of such 12
month period, and * of the minimum purchase requirement for such twelve month
period. All such purchases shall be at the pricing set forth on Exhibit C. If
Quantech fails to meet any of the minimum purchase requirements established
pursuant to this Agreement in any such quarter or 12 month period, Diametrics
shall have the right (a) with respect to finished Components or
work-in-progress, to recover from Quantech, and Quantech shall pay to Diametrics
within twenty (20) days of receipt of written notice from Diametrics, cash
payments equal to the total purchase price of the Components constituting such
shortfall, whereupon Diametrics shall finish and deliver such Components to
Quantech, and (b) with respect to any portion of such shortfall not then
represented by finished Components or work-in-progress, to recover from Quantech
a sum equal to fifty percent (50%) of the total purchase price of such portion
of the shortfall. The foregoing rights shall be in addition to Diametrics'
rights to terminate this Agreement pursuant to Section 11.2.
4.3 Forecasts and Subsequent Purchase Orders.
(a) With respect to the time period commencing on the
Commercialization Date, at least sixty (60) days before the beginning of each
calendar quarter, Quantech shall issue to Diametrics a written twelve (12) month
forecast of its purchases of each of the Components, (i) the first quarter
forecast of which shall be binding on both parties as a purchase and sale
agreement (subject to Section 13.4), (ii) the second quarter forecast of which
shall be partially binding on both parties to the extent that actual purchases
and sales which the parties are required to transact during such second quarter
shall not deviate from the quantities, on a Component by Component basis,
forecasted for such second quarter by more than plus or minus ten percent (10%)
in the case of Boards, Cards and Connectors and by more than plus or minus the
following percentages in the case of Cartridges and Fluids: twenty percent (20%)
for the first twelve months after the Commercialization Date and ten percent
(10%) thereafter, and (iii) the last two (2) quarters of which shall be for
Diametrics' planning purposes and shall be Quantech's non-binding good faith
estimate of its purchases during such period. Forecasts submitted pursuant to
the foregoing provisions of this Section 4.3 shall state the overall quantities
of each Component to be purchased by Quantech during each calendar month. In
addition, the requirements of this Section 4.3(a) shall not alter Quantech's
obligation to meet the minimum purchase requirements set forth in Section 4.2.
Quantech's binding forecast of purchases for the development phase prior to the
Commercialization Date is set forth in Exhibit B. For planning and informational
purposes only, Quantech's long-term forecasts as of the Effective Date are set
forth in Exhibit E.
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* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
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(b) Quantech shall issue written purchase orders for the
Components at least sixty (60) days prior to the proposed shipping date.
Quantech may, from time to time, issue additional purchase orders for amounts in
excess of its binding forecast submitted pursuant to Section 4.3(a), but any
such additional purchase orders shall be subject to Diametrics' acceptance;
provided, however, that Diametrics will use commercially reasonable efforts to
meet such requests.
4.4 Allocation of Components. Diametrics will use commercially
reasonable and diligent efforts to fulfill Quantech's properly forecasted orders
for Components in a timely fashion. If Diametrics fails to fulfill a properly
forecasted and timely placed order within thirty (30) days of the designated
shipping date, which failure is not excused pursuant to Section 13.4, Quantech
may, at its option, elect to (a) receive shipment of the delayed quantities, in
which case the purchase price for such delayed quantities shall be discounted by
five percent (5%) from the applicable purchase price, or (b) decline to receive
shipment of such delayed quantities, in which case the delayed quantities shall
be deducted from the binding forecast and minimum purchase requirements for the
then-current quarter and the then current twelve month period. In the event of a
shortage of any of components of the Components, Diametrics shall allocate
available units of such Component on a pro rata basis among its other customers
and Quantech. The parties hereby stipulate and agree that the remedy of specific
performance is an appropriate remedy for a breach of Diametrics' obligation to
allocate components on a pro rata basis in the event of such a shortage in
accordance with the foregoing provision of this Section 4.4, it being
acknowledged that the Components are essential to the operation of the FasTraQ
Product and are unique, non-fungible goods which are not available from any
source other than Diametrics.
4.5 Purchase Order Forms. Quantech shall be entitled to use its standard
purchase order for purchases of the Components hereunder. In the event of a
conflict between the terms of any such purchase order and the terms of this
Agreement, the terms of this Agreement shall govern. Additional or contrary
terms will be subject to mutual prior written agreement.
4.6 Delivery. All Component deliveries shall be made by Diametrics
F.O.B. Diametrics' manufacturing facility. Title and risk of loss shall pass to
Quantech at the time of tender by Diametrics at Diametrics' facility to the
carrier designated by Quantech. Upon delivery to Quantech's designated carrier,
Quantech shall assume title and risk of loss and shall be responsible to export
Components from the country of manufacture. The pricing for the Components set
forth in Exhibit C excludes, and Quantech shall pay, all shipping costs for the
Components after delivery to the F.O.B. point.
4.7 Process Testing.
(a) Initially, Diametrics shall be responsible for performing a
final test process on the FasTraQ Disposables after Quantech has packaged them.
The final test process will test performance and determine the parameters
similar to the calibration code that is used on current cartridges for the ▇▇▇▇
System. Diametrics will train Quantech
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personnel to perform the final test process so that it may be transitioned to
Quantech as soon as reasonably possible but no later than one year after the
first commercial sale of the FasTraQ Product. Quantech and Diametrics shall
coordinate the delivery of the Cartridges and Fluids to Quantech and the
delivery of a sample of packaged FasTraQ Disposables back to Diametrics for
execution of the final test process. After this process is performed, Diametrics
will transfer to Quantech the parameters and Quantech will include these
parameters with the FasTraQ Disposables prior to shipment to customers.
Diametrics shall also provide a certificate of conformance to specifications for
the Cartridges at the time of shipment and for the FasTraQ Disposables at the
time of transfer to Quantech of the parameters.
(b) Prior to shipment to Quantech, Diametrics shall calibrate the
analog electronics and the temperature control incorporated on the Boards.
Quantech is responsible for performing a verification process to assure that it
has properly installed the Boards into the FasTraQ Product. Diametrics will
provide this verification process to Quantech. Diametrics shall also provide a
certificate of conformance to specifications for the Boards, Connectors, Cards
and Fluids at the time of shipment.
4.8 QSR. Diametrics will comply with the quality system requirements of
the FDA and the EU as applicable to the manufacture and supply of the Components
hereunder.
ARTICLE 5. COMPONENT PURCHASES AND PAYMENTS
5.1 Component Prices. The prices of the Components are set forth in
Exhibit C. Diametrics represents and covenants that the prices set forth in
Exhibit C are and shall be no less favorable than those offered by Diametrics to
other similarly situated customers for similar products being purchased at
similar volumes. The parties acknowledge and agree that, except as otherwise
expressly provided herein (e.g., Section 2.2) and subject to Quantech's minimum
purchase obligations under Section 4.2, the sole consideration to be received by
Diametrics for the license set forth in Section 3.1 shall be embodied in
purchase price of the Components supplied by Diametrics to Quantech hereunder
and that no additional licensing fees or royalties shall be payable by Quantech
to Diametrics hereunder.
5.2 Terms of Payment. All payments for Components shall be due and
payable within (30) days of the invoice date; provided that the parties may
mutually agree in writing to other payment terms. Quantech shall make all
payments by standard payment methods (e.g., electronic or wire transfer, or
check) in available funds at the location designated by Diametrics from time to
time. A late fee shall be paid by Quantech on any amount not received by
Diametrics when due at a rate of one and one half percent (1.5%) per month on
all unpaid amounts, or the maximum rate permitted by law, whichever is less. As
between the parties, Quantech shall be responsible for all taxes relating to
Components (except for taxes on Diametrics' net income).
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ARTICLE 6. REGULATORY MATTERS
6.1 Regulatory Approvals. Quantech will be responsible for obtaining all
Regulatory Approvals for the FasTraQ Product and FasTraQ Disposables; provided
that Diametrics will grant Quantech a right of reference to its regulatory
submissions and technical files relating to the Components. Upon request from
Quantech, Diametrics will provide Quantech with reasonable assistance relating
to such regulatory approvals.
6.2 Component Labeling. Quantech shall develop, and be responsible for
the text and regulatory compliance of, all package labels and inserts used in
connection with the FasTraQ Product and FasTraQ Disposables, including without
limitation, all sales and promotional literature, subject to compliance with
approved claims. Diametrics shall have the opportunity to review and comment on
labeling relating to the Components. For purposes of this Agreement, the terms
"label" and "labeling" shall have the meanings set forth in Sections 201(k) and
201(m) respectively of the. Federal Food, Drug and Cosmetics Act.
6.3 Component Tracking. Diametrics and Quantech shall each maintain
their own quality systems for handling complaints, failure investigations and
MDR and vigilance reporting requirements as required by law. Quantech shall
cooperate with Diametrics in connection with its obligations under this Section
6.3 and provide to Diametrics, on a timely basis to permit Diametrics to fulfill
its regulatory obligations, the necessary reports relating to complaints and
product performance issues relating to the Components. Likewise, Diametrics
shall provide to Quantech, on a timely basis to permit Quantech to fulfill its
regulatory obligations, reports relating to complaints and product performance
issues relating to the ▇▇▇▇ System to the extent that such complaints or issues
may be relevant to the Components. In addition, Quantech shall maintain a
tracking system for the Components to enable Quantech to identify the specific
FasTraQ Product in which a Board or Connector has been installed, and Quantech
shall provide such information to Diametrics upon reasonable request. In
addition, at least thirty (30) days prior to the Commercialization Date, the
parties shall establish an appropriate notification, consultation and escalation
procedure for adverse events (e.g., patient death) relating to the Components,
which procedure will permit either party to take actions consistent with its own
regulatory guidelines and criteria, if the parties can not mutually agree on a
course of action or if the notifying party is unable to contact the appropriate
senior management of the other party through the notification process within
seventy-two (72) hours of its initial attempt to notify the other party.
Quantech and Diametrics shall each be responsible for bearing their own costs
associated with all product tracking, complaint analyses and related
evaluations.
6.4 Recalls. At least thirty (30) days prior to the Commercialization
Date, the parties shall establish a mutually agreeable procedure for
communicating and consulting with each other with respect to any recall issues
with respect to the FasTraQ Product or FasTraQ Disposables. If either party
believes that a recall of the FasTraQ Product or FasTraQ Disposables caused by
any of the Components is desirable or required by law, it shall promptly notify
the other party. The parties shall then discuss reasonably and in
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good faith whether such recall is appropriate or required and the manner in
which any mutually agreed recall will be handled. This Section 6.4 shall not
limit the obligations of either party under law with respect to recall of
FasTraQ Product, FasTraQ Disposables or Components required by law or properly
mandated by governmental authority. Voluntary recalls shall be conducted by
mutual agreement (with such agreement not to be unreasonably withheld). The
parties shall cooperate fully with each other in effecting any recall of the
FasTraQ Product or FasTraQ Disposables caused by any of the Components pursuant
to this Section 6.4, including communications with any customers or to the
public. Diametrics shall bear the substantiated, incremental, out-of-pocket
costs (e.g., employee overtime costs, the salary costs of additional employees
hired to implement the recall) of any recall of the FasTraQ Product or FasTraQ
Disposables to the extent caused by manufacturing defects in the Components or
failure of the Components to conform to specifications. Quantech shall exercise
commercially reasonable efforts to mitigate the costs associated with any recall
for which Diametrics may be responsible hereunder, taking into account the need
to maintain Quantech's good will and reputation for service excellence.
ARTICLE 7. COMPONENT WARRANTY
7.1 Component Warranty. Diametrics warrants the Components to Quantech
at the time of their shipment by Diametrics to Quantech in accordance with the
applicable warranty set forth in Exhibit F. If a Component does not meet the
applicable warranty, Diametrics shall promptly, at Diametrics' option, replace,
repair or make a purchase price (as was paid by Quantech to Diametrics) refund
for any of such Components which are non-conforming, provided that written
notice and reasonable documented evidence of each warranty claim and the fact
that the failure occurred during the warranty period is received by Diametrics
within thirty (30) days after the expiration thereof. Diametrics shall have the
right to verify such non-conformance. Such replacement, repair or refund shall
be Quantech's sole remedy hereunder. Unless otherwise agreed by the parties, the
warranty period under this Section 7.1 for (a) any Cartridge shall be a mutually
agreed shelf life, but not less than twelve (12) weeks from shipment to
Quantech; and (b) any Board, Card or Connector shall expire on the date fifteen
(15) months after the date of shipment of such Component to Quantech. Diametrics
shall exercise commercially reasonable efforts to achieve up to a twenty (20)
week shelf life warranty for the Cartridges within one (1) year of the Effective
Date, and shall issue quarterly reports to Quantech concerning Diametrics'
progress with respect to such endeavor. The ▇▇▇▇ Software is provided to
Quantech hereunder on an AS IS basis, without warranties of any kind. If
requested by Diametrics, Quantech shall return the non-conforming Component(s)
to Diametrics at the time of submission of the warranty claim therefor.
7.2 Warranty Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 7.1
and 8.1, Diametrics MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR
IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.
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7.3 Customer Warranties. Quantech shall be entitled to warrant the
Components to its customers on terms it deems appropriate; provided that
Quantech shall bear any expenses it may incur with respect to such warranties,
to the extent that such warranties exceed the scope or term of the express
warranties made by Diametrics hereunder.
7.4 Warranty and Repair Service. Diametrics shall provide warranty and
out of warranty repair service for the Components on the terms set forth in
Exhibit F, which terms shall be substantially the same as those offered to other
similarly situated customers for similar products.
ARTICLE 8: REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties. Each party represents and warrants
that: (a) it is a company duly organized, validly existing and in good standing
under the laws of Minnesota; (b) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of such party, do not violate its Articles of Incorporation or By-laws or
applicable law and do not, and with the passage of time will not, materially
conflict with or constitute a breach under any other agreement, judgment or
instrument to which it is a party or by which it is bound, including in the case
of Diametrics, that certain Distribution Agreement by and between Diametrics and
Agilent Technologies, dated as of June 6, 1999; and (c) it will not enter into
an agreement that is inconsistent with the performance of its obligations
hereunder.
ARTICLE 9: INTELLECTUAL PROPERTY
9.1 Ownership of Pre-Existing Intellectual Property. Each party shall
retain all rights to any technology existing on the Effective Date or developed
or acquired by such party outside the scope of this Agreement.
9.2 Ownership of Diametrics Technology. Except as provided in Section
9.5, the Diametrics Technology and any and all inventions made, conceived or
acquired by Diametrics during the course of its performance hereunder, and all
intellectual property related thereto, shall be the exclusive property of
Diametrics. Diametrics shall pay all expenses relating to the securing and
maintaining of appropriate intellectual property protection with respect to such
inventions.
9.3 Ownership of Quantech Technology. Except as provided in Section 9.5,
the Quantech Technology and any and all inventions made, conceived or acquired
by Quantech during the course of its performance hereunder, and all intellectual
property related thereto, shall be the exclusive property of Quantech. Quantech
shall pay all expenses relating to the securing and maintaining of appropriate
intellectual property protection with respect to such inventions.
9.4 Ownership of Joint Technology. Except as provided in Section 9.5, in
the event that personnel of Diametrics and Quantech jointly participate in an
invention, such
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invention, and the intellectual property related thereto shall be owned jointly
by the parties. Determination of inventorship shall be made in accordance with
U.S. patent laws. The parties shall jointly share in the expenses of obtaining
intellectual property protection of any joint invention.
9.5 Ownership of Technology Relating to Components, ▇▇▇▇ Software,
FasTraQ Product and FasTraQ Disposables. Sections 9.2 through 9.4
notwithstanding, (i) any and all inventions made, conceived or acquired by
Quantech during the course of its performance hereunder, or jointly by Quantech
and Diametrics during the course of their performance hereunder, shall be the
exclusive property of Diametrics to the extent that such inventions relate to
the Components or the ▇▇▇▇ Software, including without limitation any software
or hardware improvements to the Diametrics Technology, and (ii) any and all
inventions made, conceived or acquired by Diametrics during the course of its
performance hereunder, or jointly by Diametrics and Quantech during the course
of their performance hereunder, shall be the exclusive property of Quantech to
the extent that such inventions relate to FasTraQ Product and FasTraQ
Disposables (excluding the Components and ▇▇▇▇ Software), including without
limitation any software or hardware improvements to the Quantech Technology. The
party owning any invention described in this Section 9.5 shall pay all expenses
relating to the securing and maintaining of appropriate intellectual property
protection with respect to such invention.
9.6 Sales of Components. Quantech agrees that Diametrics may market,
distribute or sell any of the Components to any customer other than Quantech.
The parties agree, however, to develop and implement a method to prevent another
party from developing a disposable, utilizing the Cartridge, that can be used in
the FasTraQ Product.
9.7 Further Actions. Each party agrees to cooperate reasonably and in
good faith to protect and preserve the other party's intellectual property
rights and to take whatever steps are reasonably necessary, including, without
limitation, execution of assignments, to secure and enforce such rights on the
behalf of the other party.
ARTICLE 10: INDEMNIFICATION
10.1 Indemnification by Diametrics. Diametrics shall defend, indemnify
and hold Quantech harmless from liability to the extent it is based upon a third
party claim that any of the Components, in the form supplied by Diametrics to
Quantech and used as intended by Diametrics (excluding the ▇▇▇▇ Software as
modified by Quantech hereunder), infringes any patent or other intellectual
property right of any third party. In the event that a Component is held to so
infringe any patent or other intellectual property right of any third party,
Diametrics shall either (i) obtain for Quantech a license to such right, (ii)
modify such Component so that it no longer infringes, or (iii) replace such
Component with a non-infringing Component that performs the same functions as
the infringing Component, or, if Diametrics is unable to effect any of the
foregoing remedies, Diametrics shall refund to Quantech the relevant purchase
price actually paid by Quantech for such Component. This Section 10.1 states
Diametrics' entire liability for infringement of intellectual property rights
and is in lieu of all other warranties, express
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or implied. Quantech shall cease distribution of any Component in any country in
which Diametrics reasonably requests Quantech to do so due to a challenge in
that country based upon the patent rights of a third party with respect to such
Component (provided that if Diametrics is selling the same Component in such
country, such request shall be deemed to be reasonable if Diametrics also ceases
distribution of such Component in such country and the then applicable minimum
purchase requirements under this Agreement shall be adjusted accordingly).
Diametrics shall have no obligation under this Section 10.1 if and to the extent
that such claim arises from, (i) modification of a Component other than by
Diametrics or as expressly authorized by Diametrics or (ii) combination of a
Component with components other than those supplied by Diametrics, and the
alleged infringement or misappropriation relates to such compliance,
modification or combination. Diametrics shall not have any obligation with
respect to a claim if it has provided Quantech with changes that would have
avoided the problem and the changes are not fully implemented (at Diametrics'
cost) within a reasonable time frame, provided that the changes do not
materially adversely affect functionality or performance and that Quantech is
notified of the problem the changes avoid.
10.2 Indemnification by Quantech. Quantech shall defend, indemnify and
hold Diametrics harmless from liability to the extent it is based upon a third
party claim that (a) results from the sale or other distribution of FasTraQ
Product and FasTraQ Disposables by Quantech (other than claims covered by
Section 10.1); (b) results from any representation made or warranty given by
Quantech with respect to the FasTraQ Product and FasTraQ Disposables (other than
the warranty provided in Section 7.1), or (c) results from any action or
omission of its distributors with respect to the Components or this Agreement.
In addition, Quantech shall defend, indemnify and hold Diametrics harmless from
liability to the extent it is based upon a third party claim that the FasTraQ
Product, FasTraQ Disposables, or the modifications to ▇▇▇▇ Software (excluding
the Components in the form supplied by Diametrics to Quantech and used as
intended by Diametrics) infringe any patent or other intellectual property right
of any third party.
10.3 Indemnification Procedures. The party seeking indemnification under
this Article 10 shall promptly notify the other party (the "indemnifying party")
in writing of the pendency of such claim within fifteen (15) days of becoming
aware of such claim, shall thereafter reasonably cooperate with the indemnifying
party in the defense of such claim, but at the expense of indemnifying party,
and shall permit the indemnifying party to assume control over the defense
and/or settlement of such claim.
ARTICLE 11. TERM AND TERMINATION
11.1 Term. This Agreement shall become effective upon the Effective Date
hereof and, unless terminated earlier pursuant to this Article 11, shall expire
on the third anniversary of the Commercialization Date (the "Term").
11.2 Termination. Subject to the terms of Sections 11.3 and 11.4 below,
this Agreement and all rights granted hereunder may be terminated by either
party (i) in the event of a material default by the other party of a material
obligation hereunder to which
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such party was entitled, including, without limitation, failure to meet the
minimum purchase requirements in accordance with this Agreement for two (2)
consecutive quarters or any twelve month period, failure to pay any material
moneys due from one party to the other party (including failure to pay moneys
due under Section 4.2 but excepting amounts as to which there is a legitimate
dispute), and failure to deliver Components in accordance with the conforming
purchase orders as provided herein (excepting purchase orders as to which there
is a legitimate dispute), upon written notice to the defaulting party, which
termination shall be effective ninety (90) days (except that with respect to any
payment amount that is not subject to a good faith dispute, termination shall be
effective if such amount is not paid within ten (10) days of notice thereof
given after the payment due date) after such notice of default is given, unless
the default shall be cured by the defaulting party within such ninety (90) day
period, or (ii) if the other party is unable to pay its debts generally as they
come due, becomes insolvent, makes an assignment for the benefit of creditors,
goes into liquidation or receivership, has a receiver or custodian appointed for
such other party, is declared bankrupt, files or has filed against it a petition
of any type as to its bankruptcy (which petition, if involuntary, is not
dismissed within sixty (60) days) or ceases to function as a going concern.
11.3 Effect of Termination or Expiration. Termination or expiration of
this Agreement for any reason shall be without prejudice to Diametrics' right to
receive all payments accrued and unpaid on the effective date of termination and
shall not release either party hereto from any liability which at such time has
already accrued or which thereafter accrues from a breach or default prior to
such expiration or termination. In addition, Quantech shall pay Diametrics for
all inventory, work-in-progress and any other non-cancelable commitments for the
Components reasonably ordered in reliance on Quantech's quarterly and annual
purchase obligations, the first three quarters of a twelve month forecast for
Boards and Connectors, the first two quarters of a twelve month forecast for all
other Components, and orders under Sections 4.2 and 4.3(a), and other purchases
or commitments mutually agreed to in writing by both parties. Upon receipt of
such payment, Diametrics shall deliver to Quantech the inventory,
work-in-progress, and other goods covered by non-cancelable commitments made by
Diametrics, for which payment was made. Except as expressly provided herein, all
of the parties' rights and remedies hereunder are cumulative and non-exclusive.
11.4 Surviving Obligations. No termination or expiration of this
Agreement shall affect or discharge any obligations, rights, disclaimers,
conditions or limitations of either party that arose prior to the effective date
of such termination. In addition, Sections 5.2, 6.3, 6.4, 7.1, 7.2, 7.3, 11.3
and 11.4 and Articles 9 (Intellectual Property), 10 (Indemnification), 12
(Confidentiality) and 13 (Miscellaneous) and any Sections necessary to give
effect to this Section 11.4 shall survive any termination or expiration of this
Agreement.
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ARTICLE 12: CONFIDENTIALITY
12.1 Non-Use and Non-Disclosure. Each party acknowledges and agrees that
all the other party's Confidential Information is confidential and proprietary
to such other party. Each party shall not use or disclose to any third party the
other party's Confidential Information without the other party's prior written
consent for any purpose other than as permitted or required hereunder. Each
party shall take the same reasonable measures necessary to prevent any
disclosure by its employees, agents, contractors, or consultants of the other
party's Confidential Information as it applies to the protection of its own
Confidential Information.
12.2 Marking. To be entitled to protection as Confidential Information,
all Diametrics or Quantech documents containing that party's Confidential
Information shall be appropriately and clearly marked as "Proprietary,"
"Secret," "Confidential," or other words to similar effect. If disclosure of
information is made orally, as in a meeting, such information shall be presumed
to be Confidential Information and such information shall not be used or
disclosed by the receiving party without the other party's written permission.
12.3 Exclusions. Information shall not be considered Confidential
Information hereunder if it:
(a) was already in the possession of the receiving party prior to
its receipt from the disclosing party, as shown by the receiving party's books
and records;
(b) is, or becomes, part of the public knowledge or literature
through no fault, act or omission of the receiving party; provided, however,
that information shall not be deemed to have entered the public domain by reason
of its having been filed with any regulatory authority;
(c) is, or becomes, available to the receiving party from a
source other than the disclosing party, which source has rightfully obtained the
same information and has no obligation of confidentiality to the disclosing
party with respect to it; or
(d) is required to be revealed pursuant to law, provided,
however, the receiving party which is under any such requirement of law shall
give reasonable notice to the disclosing party of such requirement and shall
cooperate with the disclosing party, at the disclosing party's expense in
reasonable legal efforts to limit or mitigate any such revelation so as to
preserve the proprietary nature of any Confidential Information contained
therein.
12.4 Duration; Surviving Obligation. Each party's obligations of non-use
and non-disclosure of the other party's Confidential Information shall apply
during the term of this Agreement and survive after its termination for any
reason.
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12.5 Confidentiality of this Agreement. The terms of this Agreement
itself shall be deemed to be Confidential Information hereunder. In the event
that a party is required to disclose the content of this Agreement pursuant SEC
requirements, such party shall use its reasonable efforts to obtain confidential
treatment of at least the following portions of the Agreement: (i) financial
terms (such as all dollar amounts and price terms), (ii) quantities (such as
minimum purchase requirements) and (iii) time periods (such as times relating to
term).
ARTICLE 13. MISCELLANEOUS
13.1 Compliance with Laws. The parties agree to comply with all
applicable statutes, laws, ordinances, rules and regulations relating to their
respective obligations hereunder, including without limitation, the Foreign
Corrupt Practices Act and export control laws.
13.2 Disclaimer of Consequential Damages. EXCEPT AS OTHERWISE PROVIDED
BELOW, AND NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE, NEITHER
PARTY SHALL BE LIABLE OR OBLIGATED UNDER ANY SECTION OF THIS AGREEMENT OR UNDER
CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR
ANY INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES. THE
LIMITATIONS IN THIS SECTION 13.2 SHALL NOT APPLY TO BREACHES OF ARTICLE 11
(CONFIDENTIALITY).
13.3 Status. No agency, partnership or joint venture is hereby
established. Neither Diametrics nor Quantech shall enter into, or incur, or hold
itself out to third parties as having authority to enter into or to incur on
behalf of any other party any contractual obligations, expenses or liabilities
whatsoever.
13.4 Excused Delay. The untimely performance of any obligations arising
hereunder by any party will be excused, and such delay of performance shall not
constitute breach, or grounds for termination or prejudice of any rights
hereunder, if the delay of performance is a result of circumstances or
occurrences beyond the reasonable control of the party whose performance is
excused hereunder ("Force Majeure"), provided that such party (i) shall
immediately notify the other of any such anticipated delay and its expected
duration and (ii) shall immediately resume performance after the cause of delay
is removed, and (iii) shall during such delay be reasonably diligent in avoiding
further delay. Without limiting the generality of circumstances or occurrences
beyond the reasonable control of a party, examples of such circumstances or
occurrences are strikes, shortages of power, materials or transportation, acts
of government or of God, sabotage or insurrection. Notwithstanding the above,
any actual and material delay greater than one hundred eighty (180) days (or any
material delay which is reasonably expected to exceed two hundred seventy (270)
days) shall be grounds for termination (without cause or penalty) by the other
party.
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13.5 Notices. All notices, reports or demands to be given by either
party to the other under the provision of this Agreement shall be forwarded,
charges prepaid, by express mail or reputable overnight courier service, or may
be transmitted by facsimile, properly addressed to the respective parties as
follows:
If to Quantech:
Quantech Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With copies to:
▇▇▇▇▇, ▇▇▇▇▇▇, MacKay & ▇▇▇▇▇▇▇▇▇▇, P.C.
Attorneys at Law
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Diametrics:
Diametrics Medical Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board and CEO
With copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
or to such address or addresses the parties hereto may designate for such
purposes during the term hereof. Notices given hereunder if actually received
shall be deemed given upon the tenth day after mailing and on the day after
dispatch if given by facsimile transmission.
13.6 Binding Effect and Assignment. During the term of this Agreement,
the rights of either party under this Agreement shall not be assigned nor shall
the performance of either party's duties hereunder be delegated, without the
other party's written consent (which shall not be unreasonably withheld) except
that, without the other party's consent, either party may assign this Agreement
in connection with a merger, consolidation, reorganization or sale of (i)
substantially all of its assets or (ii) those assets
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that are related to the subject matter of this Agreement; provided the surviving
or purchasing entity in such transaction agrees to assume and be bound by such
party's obligations hereunder following such transaction.
13.7 Dispute Resolution.
(a) For any dispute or claim arising out of or relating to this
Agreement, of breach hereof, the parties, prior to filing any action as provided
herein, shall in good faith first negotiate towards a written resolution of such
dispute or claim for a period not to exceed twenty (20) days from the date of
receipt of a party's request for such negotiation. Such negotiations shall be
conducted by managers of each party who have full authorization to finally
resolve any such dispute or claim.
(b) Notwithstanding Section 13.7(a), each party expressly
reserves the right to seek immediate judicial relief from a court of competent
jurisdiction if the other party is or appears to be in violation of such other
party's obligations of non-use and non-disclosure under Article 11 above,
including, without limitation, any injunction or other preliminary relief.
(c) All actions arising as a result or consequence of this
Agreement shall be instituted and litigated only in courts having their situs in
the City of Minneapolis, Minnesota, and the parties hereby consent to the
exclusive jurisdiction and venue of any state or federal court having its situs
in said city, and waive any objection based on forum non conveniens.
13.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, excluding its choice of law
rules.
13.9 Severability. If any provision or provisions of this Agreement
shall be determined to be unenforceable, then the parties shall in good faith
negotiate for a substitute provision addressing the same subject matter as the
unenforceable provision(s) as may then be considered to be enforceable,
provided, however, if no substitute provision can be formulated which shall be
accepted by the parties as enforceable, this Agreement shall nonetheless
continue in full force and effect with the unenforceable provision(s) stricken
here from. In such case the applicable law shall apply with regard to
unenforceable and / or void provisions.
13.10 Headings. The Article headings set forth in this Agreement are
intended only as a convenience and shall not be given any effect to interpret
the provisions of this Agreement.
13.11 Waiver. The failure of delay of either party to enforce at any
time any provision hereof shall not be construed to be a waiver of such
provision or of the right thereafter to enforce each and every provision. No
waiver by either party to this Agreement, either express or implied, of any
breach of any term, condition, or obligation of this Agreement, shall be
construed as a waiver of any subsequent term, condition, or
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obligation of this Agreement. Nor shall the performance of any act of
mitigation, such as allocation of Components, or adjustment of milestones be
deemed a waiver of any prior or subsequent breach of this Agreement. In the
event of a breach of any provision of this Agreement, the facts and
circumstances of said breach shall be considered in determining whether said
breach and provision are material. No waiver shall be effective unless it is
made in writing, executed by both parties, and refers expressly to this section.
13.12 Dollar Denomination. Unless otherwise specified all amounts stated
in this Agreement as payable in U.S. Dollars shall not be subject to currency
exchange adjustments.
13.13 Entire Agreement and Modification. This Agreement, including all
Exhibits hereto, sets forth the entire agreement between parties with respect to
the subject matter hereof and as such, supersedes all prior and contemporaneous
negotiations, agreements, representations, understandings and commitments with
respect thereto and shall take precedence over all terms, conditions and
provisions on any purchase order form, or order acknowledgment, or order release
purporting to address the same subject matter. This Agreement shall not be
released, discharged, changed or modified in any manner except by a writing
signed by the duly authorized officers of each party hereto, which writing shall
make specific reference to this Agreement and shall express the plan or
intention to modify same.
13.14 Authority. Each of the signatories below expressly represents that
he has the authority to sign this Agreement on behalf of his company and to bind
his company to all of the terms and conditions of this Agreement.
13.15 Publicity. Neither party hereto shall originate any publicity,
news release, or other announcement, written or oral, whether to the public
press, the trade, Quantech's or Diametrics' customers or otherwise, relating to
this Agreement, or to performance hereunder or the existence of an arrangement
between the parties without the prior written approval of the other party
hereto, not to be unreasonably withheld, or as provided in Sections 12.3(d ) and
12.5.
IN WITNESS WHEREOF, Quantech and Diametrics have executed this Agreement
by their respective duly authorized officers or representatives as of the day
first above written.
Diametrics MEDICAL INCORPORATEDQuantech LTD.
By: By:
------------------------------------ -----------------------------------
Title: Title:
--------------------------------- ---------------------------------
Date: Date:
---------------------------------- ---------------------------------
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Schedule of Exhibits:
Exhibit A: Development Program
Exhibit B: Initial Forecast
Exhibit C: Prices
Exhibit D: Minimum Annual Purchases
Exhibit E: Long-Term Forecasts
Exhibit F: Product Warranty and Repair Services
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------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A: DEVELOPMENT PROGRAM
------------------------------------------------------------------------------------------------------------------------------------
*
ID Task Name Resource Names
-- --------- --------------
1 Agreement of Heads Case, Giddlings [Graphical depiction of the start and completion dates for the listed
------ ----------------------------------- ------------------- tasks. A request for confidential treatment with respect to such
2 Form Project Team Q,DMI information has been filed with the SEC, and the information has
------ ----------------------------------- ------------------- been omitted pursuant thereto.]
▇ ▇▇▇ ▇,▇▇▇
------ ----------------------------------- -------------------
4 Order * Board Sets Q
------ ----------------------------------- -------------------
5 Final Agreement Q,DMI
------ ----------------------------------- -------------------
6 Deliver * Board Sets DMI
------ ----------------------------------- -------------------
7 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
8 Select New CPU DMI
------ ----------------------------------- -------------------
9 Design/Layout New CPU Board DMI
------ ----------------------------------- -------------------
10 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
11 Molded Cartridge Q
------ ----------------------------------- -------------------
12 Purchase * IRMA's Q
------ ----------------------------------- -------------------
13 Redesign Connector Q,DMI
------ ----------------------------------- -------------------
14 Obtain modified connector Q
------ ----------------------------------- -------------------
▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇,▇▇▇
------ ----------------------------------- -------------------
16 Modify SW Q
------ ----------------------------------- -------------------
17 Layout for FasTraQ Q
------ ----------------------------------- -------------------
18 Design CHU Q
------ ----------------------------------- -------------------
19 Build * CHU's Q
------ ----------------------------------- -------------------
20 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
21 Instruments Assembled (*) Q,Oak River
------ ----------------------------------- -------------------
22 Instrument Functional Q
------ ----------------------------------- -------------------
23 Deliver * Board Sets DMI
------ ----------------------------------- -------------------
24 Build * Instruments Oak River
------ ----------------------------------- -------------------
25 Order Old CPUs for 2002 DMI
------ ----------------------------------- -------------------
26 Forecast 1&2Q 2002 Q
------ ----------------------------------- -------------------
27 Install FasTraQ at DMI Q
------ ----------------------------------- -------------------
28 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
29 Hard Molded Cartridges Q
------ ----------------------------------- -------------------
▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇,▇
------ ----------------------------------- -------------------
--------------------------------------------------------------------------------
Page 1
--------------------------------------------------------------------------------
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
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24
------------------------------------------------------------------------------------------------------------------------------------
EXHIBIT A: DEVELOPMENT PROGRAM
------------------------------------------------------------------------------------------------------------------------------------
*
ID Task Name Resource Names
31 Deliver * E3 Cart DMI [Graphical depiction of the start and completion dates for the listed
------ ----------------------------------- ------------------- tasks. A request for confidential treatment with respect to such
32 Validate System Q information has been filed with the SEC, and the information has
------ ----------------------------------- ------------------- been omitted pursuant thereto.]
33 2nd Development Milestone Payment Q
------ ----------------------------------- -------------------
34 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
35 Complete QSR DMI
------ ----------------------------------- -------------------
36 Submit 510(k) Q
------ ----------------------------------- -------------------
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇,▇
------ ----------------------------------- -------------------
38 Deliver New CPU Board DMI
------ ----------------------------------- -------------------
39 Final Development Milestone Q
Payment
------ ----------------------------------- -------------------
40 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
41 Product Launch (ACEP) Q
------ ----------------------------------- -------------------
42 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
43 Deliver * Board Sets DMI
------ ----------------------------------- -------------------
44 Build * Instruments Oak River
------ ----------------------------------- -------------------
45 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
46 Marketing Evaluation Q
------ ----------------------------------- -------------------
47 Deliver * Board Sets DMI
------ ----------------------------------- -------------------
48 Build * Instruments Oak River
------ ----------------------------------- -------------------
49 FDA Clearance Q
------ ----------------------------------- -------------------
50 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
51 Product Availability Q
------ ----------------------------------- -------------------
52 Opinion Leader Evaluations Q
------ ----------------------------------- -------------------
53 Deliver * E3 Cart DMI
------ ----------------------------------- -------------------
54 Deliver * board sets DMI
------ ----------------------------------- -------------------
55 Full Commercialization Q
------ ----------------------------------- -------------------
Page 2
--------------------------------------------------------------------------------
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
24
25
Exhibit B
Initial Forecast for Development Period
Boards, Connectors and Cards
------------------- -----------------------------------------------
Quantity Date Needed
------------------- -----------------------------------------------
------------------- -----------------------------------------------
* 2nd Quarter 2001
------------------- -----------------------------------------------
* 3rd Quarter 2001
------------------- -----------------------------------------------
* 4th Quarter 2001
------------------- -----------------------------------------------
* 1st Quarter 2002
------------------- -----------------------------------------------
Delivery of any specific order shall be within 45 days of the shipment dates
designated in that order.
Cartridges (Fluids shall be purchased in quantities appropriate for number of
Cartridges purchased.)
------------------- -----------------------------------------------
Quantity** Date Needed
------------------- -----------------------------------------------
* May 2001
------------------- -----------------------------------------------
* June 2001
------------------- -----------------------------------------------
* July 2001
------------------- -----------------------------------------------
* August 2001
------------------- -----------------------------------------------
* September 2001
------------------- -----------------------------------------------
* October 2001
------------------- -----------------------------------------------
* November 2001
------------------- -----------------------------------------------
* December 2001
------------------- -----------------------------------------------
* January 2002
------------------- -----------------------------------------------
* February 2002
------------------- -----------------------------------------------
* March 2002
------------------- -----------------------------------------------
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
25
26
Exhibit C
Prices
Prices for Cartridges
The pricing for the Cartridges will be established at the beginning of an
applicable 12 month period (with the first 12 month period commencing on the
Commercialization Date) based on Quantech's initial forecast for such 12 month
period. If, after six months of such 12 month period, Quantech's actual
purchases during such 12 month period exceed or are substantially less than the
forecasted amount, Diametrics shall be entitled to apply a revised price on a
retroactive and prospective basis. At the end of the 12 month period, Diametrics
shall calculate the applicable pricing based on actual purchases during the
period, and shall either invoice or credit Quantech for the difference between
the amount actually paid and the amount payable during such period.
------------------------------ ----------------------
Annual Volume Price per
Cartridge
------------------------------ ----------------------
< 1 million *
------------------------------ ----------------------
1-3 million *
------------------------------ ----------------------
3-5 million *
------------------------------ ----------------------
5-10 million *
------------------------------ ----------------------
10-15 million *
------------------------------ ----------------------
Price of Boards, Connectors and Cards
* per unit. A unit is defined as a Board, a Connector and a Card.
Price of Fluid
------------------------------ ----------------------
4 liters *
------------------------------ ----------------------
8 liters *
------------------------------ ----------------------
20 liters *
------------------------------ ----------------------
All of the above prices shall be subject to increase on each of the first and
second anniversaries of the Commercialization Date, by an amount not to exceed
any percentage increase in the U.S. Medical Care Component of the Consumer Price
Index over the applicable period.
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
26
27
Exhibit D
Minimum Purchases
Minimum Purchases for the 12 month period following Commercialization Date (the
earlier of the date of the first commercial sale of the FasTraQ Products or *):
Cartridges
1st 12 Months *
Q1 *
Q2 *
Q3 *
Q4 *
Boards, Connectors and Cards
A unit is defined as a Board, a Connector and a Card.
1st 12 Months *
Q1 *
Q2 *
Q3 *
Q4 *
Minimum annual purchases for subsequent 12 month periods hereunder shall be
determined in accordance with Section 4.2 of the Agreement. Quantech will make
reasonable efforts to order Components in a manner that will provide Diametrics
an orderly production flow and ramp during the calendar quarters within 12 month
periods.
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
27
28
Exhibit E
Long Term Forecasts
Quantech Cartridge Forecast
2nd 12 months after *
Commercialization Date
3rd 12 months *
Quantech Boards, Connectors and Cards Forecast
* units during 2nd 12 months after Commercialization Date.
* units during 3rd 12 months.
A unit is defined as a Board, a Connector and a Card.
----------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
28
29
Exhibit F
WARRANTY AND OUT OF WARRANTY SERVICE
TERMS AND CONDITIONS
1. WARRANTY
Diametrics warrants that each Component will be free from defects in material
and workmanship under normal use and service and will perform within established
performance specifications for the periods set forth in Section 7.1 of the
Agreement. Diametrics will at its cost repair, replace or refund Quantech in
accordance with Section 7.1 of the Agreement for those Components that do not
meet performance specifications, provided that such Component was used and
serviced in accordance with Diametrics' instructions, and inspection by
Diametrics verifies that the Component is not functioning within performance
specifications. Service shall be considered complete when Diametrics
demonstrates, by an appropriate test procedure, that the Component is operating
in accordance with its performance specifications. If service performed is not
satisfactory, service will be repeated until satisfactory Component performance
per specifications is achieved. Diametrics will provide to Quantech a copy of a
Service Report detailing the work performed by Diametrics. Diametrics shall be
released from all warranty obligations under this Agreement in the event repairs
or modifications are made to Components by persons other than its own service
personnel, unless such repairs by others are made with the written consent of
Diametrics.
2. EXCLUSIONS
Component malfunctions resulting from operating conditions other than as
recommended by Diametrics are excluded from this Agreement. In addition,
malfunctions resulting from the following are excluded:
a) Damage caused by customer misuse or abuse or operation outside
of conditions prescribed by the Component's user instructions.
b) Acts of God including flood, earthquake, tornado, hurricanes,
and other natural or man made disasters,
c) Acts of war, vandalism, sabotage, arson and civil commotion;
d) Electrical surge and sprinkler damage.
Service made by Diametrics to correct Component malfunctions resulting from
causes excluded as provided above shall be invoiced by Diametrics to Quantech at
Out of Warranty Repair Service rates.
3. COMPONENTS RETROFIT
Diametrics may make changes in the design or construction of Diametrics'
Components without incurring any obligation hereunder to make such changes to
the customer's Components covered by this Agreement. However, Quantech shall
allow Diametrics, at Diametrics' option and expense, to retrofit Components or
make design changes which improve Components reliability, but that do not
adversely affect Components performance characteristics.
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30
4. OUT OF WARRANTY REPAIR SERVICE
Diametrics shall provide out of warranty repair service for Components that are
not covered under warranty at the expense of Quantech. Prices for such service
are per the following table and are subject to change upon 90 days written
notice.
Out of Warranty Repair Prices
Part Number Item Description Unit Price
----------- ---------------- ----------
465400 Temp Test Card *
465100 Edge Connector Assembly (External) *
465500 Edge Connector Flex Assembly (Internal) *
424900 CPU Microprocessor Module *
446900 PCB Assembly CPU *
410701 IR Probe Thermocouple Assembly *
501800 Clip, Cardio *
416900 PCB, Assembly *
422001 Lithium Battery *
Labor Rates:
Out of Warranty Labor Rates are * per hour with a minimum charge of one hour.
--------
* Indicates that material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the SEC.
30