PRODUCT SUPPLY AGREEMENT
This Agreement dated as of August 29th, 2001, by and between LIFESTREAM
TECHNOLOGIES INC., a Nevada corporation, having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Lifestream") and LRE TECHNOLOGY PARTNER
GmbH, a German corporation, having an office at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("LRE");
WHEREAS:
A. LRE (i) is engaged in the business of developing and manufacturing
electronic equipment according to specifications developed by others, developed
by itself, or developed jointly with others, (ii) together with Roche
Diagnostics GmbH, Mannheim, Germany, has developed the ***** System (as
hereinafter defined), and (iii) together with Lifestream had developed and
adapted parts of the ***** System, including, without limitation, the Product
(as hereinafter defined) as part of the Lifestream Product (as hereinafter
defined) and is producing the Product exclusively for Lifestream;
B. Lifestream has determined that its business interests would best be
served by having LRE manufacture the Product for Lifestream to be included in
the Lifestream Product and for Lifestream to buy its requirements for the
Product from LRE; and C. LRE desires to manufacture and supply the Product to
Lifestream:
NOW, THEREFORE, the parties agree as follows:
1.0 DEFINITIONS
"***** System" shall mean the technology to determine *****, *****,
cholesterol, ***** developed jointly by Roche and LRE.
"Affiliate(s)" shall mean a party to this Agreement and any other
corporation controlling, controlled by or under common control with such party
during the Initial Term and any extension thereof. An entity shall be regarded
as being in control of another entity if the former entity has the direct or
indirect power to order or cause the direction of the policies of the other
entity through the ownership of more than fifty percent (50%) (thirty percent
(30%) in the case of an entity whose shares are publicly traded) of the
outstanding voting securities (or other ownership interest for a business
organization other than a corporation) of that entity.
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"Claims" shall mean against any and all claims, suits, proceedings,
recoveries, settlements and damages, including, but not limited to, reasonable
attorney and paralegal fees, interest and penalties.
"Initial Term" shall have the meaning given it in Paragraph 7.1.
"Lifestream Product" shall mean Lifestream's hand-held device (a) which
measures blood lipid levels and utilizes a proprietary "Smart Card Internet
Uplink Technology" and which has originally been named the "Cholestron" and is
currently sold as "Lifestream Cholesterol Monitor", which device is used for
measurement of rapid blood Test Strips for analysis of cholesterol levels in
human capillary blood and is continuously improved by Lifestream and / or its
partners or suppliers, (b) which consists of a meter which has electronic
components such as the Product, a reader for the SMART card and consumables such
as Test Strips and ***** Lancets and accessories such as the ***** Lancet
Device, and (c) for which Roche is supplying a lot-specific ROM Key Code which
is put on specific lots of ROM Keys supplied with each pack of Test Strips.
"Manufacturing Documentation" shall mean a package of specifications,
drawings, and manufacturing instructions which enable LRE or a third party to
manufacture the Product or parts of it, including, as applicable, validated
product Software, manufacturing specifications for the Product, service and
training information and a set of quality control parameters suitable for use in
acceptance testing of the Product, as well as all preliminary or working drafts
of all such materials, and documentation developed by LRE in order to produce
such materials.
" Product" shall mean the module of an integrated system that accepts
Test Strips for the analysis of cholesterol, which shall include the application
of specific integrated circuit (ASIC chip), a micro-controller with software,
and opto-electronic components which are used in the ***** System, and which are
configured to the Products according to specifications in Exhibit A, as amended
from time to time.
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"Roche" shall mean Roche Diagnostics GmbH, a company incorporated under
the laws of Germany with an office at ▇▇▇▇▇▇▇▇▇▇▇▇▇(▇▇▇▇)▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇.
"Roche Contract" shall mean the License and Supply Agreement between
Roche and Lifestream from December 18, 2000 relating to the Lifestream Product,
as such contract may from time to time be amended.
"Roche Technology" shall mean the patents owned by or licensed to
Roche, including all patent applications, divisions, continuations,
continuations-in-part or reissues thereof, and all know-how, technology, trade
secrets, processes, data, methods and any physical, electronic, chemical or
biological material or other information which Roche owns, controls or has a
license to (with a right to sub-license) relating to the development and
manufacture of the Test Strips and or the ROM-Key including software, the
Product, *****-devices and lancets for *****.
"ROM Key" shall mean a plastic housing containing an integrated EPROM
bearing the lot-specific calibration data regarding the Test Strips or others,
to be plugged into the Product or other parts of the system or future
developments thereof for the calibration of the Lifestream Product.
"ROM Key Code" shall mean an electronic file with ***** which enables
LRE or others to code a ROM key for Lifestream with calibration data for the
Test Strips as originally delivered in vials by Roche.
"Software" shall mean all software, software source codes in
electronic, print-out or magnetic media form, and all software assembly,
linkage, verification and validation protocols for the Product.
"Specifications" shall mean the drawings and detailed specifications
for the Product in the form attached hereto as Exhibit A
"Test Strip" shall mean integrated units containing whole blood
chemistries for total cholesterol or other substrate testing for analyzing those
components in human capillary blood based on the technology and quality used in
connection with the ***** System.
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2.0 MANUFACTURE AND SUPPLY SERVICES
2.1. LRE shall be Lifestream's sole and exclusive source for the
Product for the Initial Term and any extension thereof, providing that (a) LRE
provides an adequate and timely supply of the Product to Lifestream in
accordance with paragraph 2.4 hereof, (b) LRE maintains the quality assurance
level agreed upon by the parties, and (c) LRE otherwise complies with all of its
material obligations under this Agreement.
2.2. LRE shall manufacture and sell the Product exclusively to
Lifestream at prices established by the parties pursuant to paragraph 3.1.
2.3. LRE represents that it will maintain sufficient manufacturing
capacity to produce the number of Product forecasted by Lifestream in its
forecasts submitted pursuant to paragraph 2.4 hereof. The minimum lead-time for
the Product shall be four (4) weeks from the date of receipt by LRE of the
corresponding Purchase Order (as hereinafter defined). The minimum order shall
not be less than *** units per delivery .
2.4. In order to facilitate LRE's planning of production, Lifestream
shall submit not later than the 15th day of each month to LRE an estimate of its
requirements for the Product covering a forward period of not less than twelve
(12) months. The first three (3) months of said estimate shall be binding on
both parties on a rolling basis advancing month-by-month and may not be canceled
or rescheduled without the prior written agreement of LRE. The next three (3)
months shall constitute firm orders, which may not be canceled but may be
rescheduled up to three (3) months beyond the then current delivery schedule.
The remaining six (6) months forecast is to be used by LRE for planning purposes
only and shall not be considered to be firm orders, Lifestream's only obligation
with respect thereto being for the cost of the unique material content of the
Product listed in Schedule 2.4 hereto, having a lead time of more than three (3)
months on a rolling basis advancing month by month and the cost of LRE in
maintaining said long lead time items in inventory. In the event LRE purchases
such long lead time items in accordance with the preceding sentence, it shall
purchase said items in accordance with its normal purchasing policies and
practices and shall invoice Lifestream for the cost thereof as set forth in the
preceding sentence. Lifestream shall submit the initial estimate to LRE promptly
after the execution and delivery of this Agreement.
2.5. Lifestream shall place monthly purchase orders ("Purchase Orders")
setting forth the delivery date against the forecasts under Section 2.4 above
for the supply of the Product. LRE shall evidence its receipt of each Purchase
Order by signing an acknowledgment copy thereof and returning it to Lifestream
within fifteen (15) days after receipt of such Purchase Order from Lifestream.
In case of conflict between the general terms and conditions of a Purchase Order
issued by Lifestream and this Agreement, the terms and conditions of this
Agreement shall take precedence.
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2.6. If Lifestream desires to accelerate or reduce any of the
deliveries ordered under a Purchase Order or set forth in a binding forecast, it
shall so notify LRE and LRE shall make reasonable efforts to meet the request,
subject to material and capacity availability. Lifestream shall bear and pay any
extra costs incurred by LRE to meet an accelerated or a reduced schedule,
including, without limitation, the cost to LRE of holding inventory, provided
that LRE has notified Lifestream in writing in advance of the amount of such
extra costs and Lifestream has authorized LRE in writing to proceed with the
accelerated or reduced schedule notwithstanding such extra costs. In the event
that Lifestream instructs LRE to commence purchasing inventory based upon a
forecast (whether binding or not) and prior to the submission of a Purchase
Order, and the delivery date(s) foreseen in such forecast slip by more than four
(4) weeks not due to the fault of LRE, LRE shall invoice Lifestream and
Lifestream shall bear and pay the costs incurred by LRE in purchasing said
material and the costs of holding said materials in inventory during said delay.
In the event Lifestream is responsible for providing to LRE packaging material
or other material without which LRE can not deliver the Product to Lifestream,
and LRE is unable to effect timely delivery of the Products because it has not
received said necessary materials in time, LRE shall be entitled to invoice
Lifestream for the Product on the originally scheduled delivery date plus the
costs of LRE holding said Product in inventory during said delay.
2.7. Lifestream agrees to reimburse LRE for any and all materials
purchased in accordance with the binding forecasts submitted by Lifestream
pursuant to Section 2.4 that become obsolete due to changes in the design
requested by Lifestream and not resulting from defects in the design provided by
LRE; it being agreed and understood that in the event that Lifestream and LRE
should develop a new version of the Product or a substitute for the Product the
parties shall negotiate in good faith the method whereby obsolescence of the
Product as a result of such development shall be kept to a minimum.
2.8. LRE agrees to maintain an ISO 900 1/EN 46001 certified facility.
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2.9. Lifestream shall be responsible for obtaining and keeping in
effect, at its cost, all approvals or clearances from the FDA in the United
States of America and all other relevant regulatory authorities in any countries
in which Lifestream sells the Product.
3.0 COST OF THE PRODUCT AND PAYMENT
3.1. The price for the Product, which shall be in Euros, shall be as
set forth in Exhibit 3.1. The price for the Product shall be fixed for a period
of one year from the date of this Agreement. Not later than ninety (90) days
before the first anniversary of the date of this Agreement and annually
thereafter the parties shall meet and negotiate in good faith the price for the
Products for the ensuing year.
3.2. The price for the Product shall be F.O.B. LRE's facility in
Noerdlingen, Germany.
3.3. Within fifteen (15) days after the execution and delivery of this
Agreement, Lifestream shall provide to LRE an irrevocable letter of credit for
the benefit of LRE, in the amount of *** U. S. Dollars (U. S. $***) (the "Letter
of Credit"), drawn on a first class U. S. bank in New York, N. Y., allowing for
partial drawings, and having such other terms and conditions as may be
acceptable to LRE. The Letter of Credit shall allow for drawings for any and all
amounts due to LRE under this Agreement and that certain Product Development and
Supply Agreement to be entered into between the parties for the successor
instruments to the Product; shall expire thirty (30) days from the date on which
Lifestream shall have had a positive cash flow for six (6) continuous months as
evidenced by its financial statements filed with the United States Securities
and Exchange Commission (the "Expiration Date"); and shall be automatically
extended annually without further action for additional one year periods from
the date of issuance until the Expiration Date. Upon agreement in writing
between the parties (such agreement, if any, to be evidenced by and attached
hereto as Exhibit B), the Letter of Credit may be replaced by a cash deposit.
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3.4. Invoices shall be due and payable within thirty (30) days after
receipt thereof by Lifestream. A late fee of **% per month will be assessed by
LRE on invoices due but not paid within thirty (30) days other than on amounts
being contested in good faith.
4.0 INSPECTION AND QUALITY CONTROL
4.1. Each shipment of Products to Lifestream shall be accompanied by a
certificate of LRE's quality control department indicating that the Products
identified by their serial numbers contained in the shipment have passed the
quality control parameters developed by LRE and agreed to in writing by
Lifestream. LRE shall keep complete written records of such inspections for a
period of ten (10) years, and shall, upon request, at Lifestream's expense,
furnish Lifestream with inspection reports for Products delivered to Lifestream.
LRE shall notify Lifestream in writing prior to the destruction of the written
records referred to herein. Lifestream shall, immediately after receipt of any
such notice, notify LRE if Lifestream has any objections to such written records
being destroyed.
4.2 Within one (1) month after receipt of Product(s), Lifestream shall
conduct its own acceptance inspection thereof in which random samples of
Products shall be compared with the Specifications and quality control
parameters agreed to by the parties, and shall inform LRE of the results of such
inspection. Such inspection shall, upon mutual agreement between the parties, be
undertaken either at the facilities of Lifestream or at LRE's manufacturing
facilities. If inspection occurs as LRE's plant, LRE shall provide Lifestream
with such access to the facilities, as Lifestream shall reasonably require. In
the event such inspection by Lifestream reveals unacceptable variances from the
acceptance inspection procedure agreed to by the parties, Lifestream shall
notify LRE (which notice shall specify the manner in which the defective
Products fail to meet the Specifications), and LRE shall have fifteen (15) days
in which to verify the variances. Upon the earlier of (a) verification by LRE or
(b) the expiration of thirty (30) days from the date of said notice, Lifestream
shall have the right to refuse acceptance of the defective or deficient
shipments and to require, at the option of LRE, that said Product(s) be replaced
or corrected free of charge and that LRE at its own expense make a 100%
inspection of said Product(s) with respect to the defective function. If LRE's
inspection results in a finding that said Product(s) are not defective or
deficient, LRE shall immediately notify Lifestream of the same and shall
resubmit said Product(s) for acceptance. In the event that LRE and Lifestream do
not agree on the acceptability of an Product, both parties agree to conduct
joint testing and/or inspection. If Lifestream does not complete the
above-mentioned acceptance inspection with respect to a shipment of Product(s)
within said one (1) month period, Lifestream shall be deemed to have accepted
said Product(s). If LRE does not verify the variances within said fifteen (15)
day period, LRE shall be deemed to have accepted the Product as defective and
shall replace the defective Product with new ones free of charge as soon as
possible.
4.3. LRE and Lifestream shall jointly develop an acceptance test
protocol based on the Manufacturing Documentation so that Lifestream can test
the Products in accordance with Section 4.2.
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5.0 CONFIDENTIAL INFORMATION
5.1. Throughout the term of the Agreement and for a period of five
years following the termination thereof, each party hereto agrees to hold in
strict confidence and not disclose to any third party any and all information
received by one party from the other pursuant to this Agreement including, but
not limited to any technology, know-how, processes or patent application
disclosed by the other or derived from information thus disclosed, trade
secrets, inventions, ideas, data, manufacturing or finance matters. Each party
furthermore agrees that it may only use such information received from the other
to the extent required to accomplish the purposes of this Agreement and to
restrict access to such information to persons entrusted to carry out the
activities provided for hereunder who are subject to an analogous
confidentiality obligation. Each party agrees to clearly ▇▇▇▇ as confidential
any and all information which it makes available to the other party which the
disposing party considers to be confidential. Each party furthermore agrees to
reduce to writing any such confidential information which it discloses orally
and to provide the receiving party with a copy thereof within thirty (30) days
of the date of the oral disclosure.
5.2. The confidentiality obligations pursuant to Section 5.1 shall not
apply to information that:
(a) is in the public domain at the time of its disclosure;
(b) is published or otherwise becomes part of the public domain through
no fault of the receiving party or becomes available from a third party who has
the right to disclose it;
(c) was in the possession of the receiving party at the time of its
disclosure as shown by prior written records;
(d) was or will be independently developed by employees of the
receiving party who had no access to the information disclosed; or
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(e) must be disclosed in accordance with applicable laws or in order to
obtain government approval in accordance with the terms of this Agreement.
5.3 Neither party shall make any press release or other similar public
announcement concerning the executed Agreement without the prior written consent
of the other party hereto, such approval not to be unreasonably withheld, except
as required by law. Approval will be deemed granted if no response is received
by the proposing party within ten (10) working days of its delivery of a request
for approval to the other.
5.4. Each party represents to the other that its employees are governed
by regulations, which prohibit the disclosure of confidential and proprietary
information, which may belong to the other party, and that such internal
regulations will enable it to comply with all of the items of this Agreement.
6.0 WARRANTIES AND INDEMNIFICATION
6.1. (a) LRE warrants to Lifestream that all Product to be supplied
hereunder will upon shipment meet the Specifications and will be free from
defects in materials and workmanship, and will be properly packed. LRE further
warrants to Lifestream that all Product supplied hereunder will be free from
defects in any design contributions or manufacturing techniques made by LRE.
This warranty shall apply for a period equal to the shorter of (i) twelve (12)
months after the date of shipment by Lifestream, and (ii) eighteen (18) months
after the date of shipment by LRE to Lifestream. LRE shall satisfy this warranty
requirement by repairing or replacing at LRE's option, each defective Product
returned to it prior to the expiration of the warranty period.
(b) Notwithstanding Clause (a) of this Section 6.1, LRE may at
its option elect to over ship Product to Lifestream with respect to each
Purchase Order submitted by Lifestream hereunder by 2%, in which event, LRE
shall have no obligation under Clause (a) of this Section 6.1 to repair or
replace defective Product; provided, however, (y) in the event that systemic
faults result in warranty claims against Lifestream in any period of three (3)
months exceeding 5% of the Product sold to Lifestream, the obligations of LRE
under said Clause (a) shall be reinstated, and (x) the parties shall meet
promptly to review and negotiate in good faith the application and efficacy of
this Clause (b).
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6.2. LRE shall be liable for and shall indemnify, defend and hold
Lifestream, its shareholders, directors, officers, employees, representatives
and agents ("Lifestream Indemnified Parties") harmless against any and all
Claims arising out of, based on, or caused by defects in material, workmanship
or design contributed by LRE of the Product, but in no event shall LRE be liable
for or be required to indemnify Lifestream Indemnified Parties for or hold them
harmless from any Claims arising in whole or in part from or based on, or caused
by defects or deficiencies in the Test Strip or Roche Technology used in the
Product or the design of any features of the Product designed or contributed by
Lifestream or literature supplied by Lifestream for use with the Product.
6.3. Except for items designed according to Lifestream's instructions
or directions and the literature supplied by Lifestream for use with the
Product, LRE represents and warrants the originality of the Manufacturing
Documentation and represents that no portion of the Manufacturing Documentation,
or use thereof, or Lifestream's distribution thereof violates or is protected by
any copyrights or similar right of any third party in Germany other than Roche.
6.4. LRE will indemnify and hold Lifestream harmless from and against
any Claims (other than Claims of Roche) based upon the alleged infringement of
any patent (including utility models and registered designs), copyrights, or
other intellectual property rights now or hereafter existing in Germany relating
to the Product or its components, provided, however LRE shall have no such
obligation with respect to Claims arising with respect to the Lifestream Product
or the ***** System or any features of the Product designed or contributed by
Lifestream or for any omissions or misstatements in the literature supplied by
Lifestream or Roche for use with the Product or the Lifestream Product.
6.5. Lifestream will indemnify and hold LRE, its shareholders,
directors, officers, employees, representatives and agents ("LRE Indemnified
Parties"), harmless from and against any Claims (including, without limitation,
Claims of Roche) based upon the alleged infringement of any patent (including
utility models and registered designs), copyrights or other intellectual
property rights relating to the Lifestream Product, the Test Strips, the Roche
Technology as it applies to the Lifestream Product, any features of the Product
the design of which is conceived by or contributed by Lifestream and any
literature supplied by Lifestream or Roche for use with the Product or the
Lifestream Product.
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6.6. Lifestream shall be liable for and shall indemnify, defend and
save the LRE Indemnified Parties harmless from and against any and all Claims,
whether groundless or not, in connection with any and all injuries, losses,
damages, or liability of any kind whatsoever directly or indirectly attributable
to the Test Strips, the Roche Technology as it applies to the Lifestream
Product, or any feature of the Product the design of which is conceived by or
contributed by Lifestream or any omission or misstatement in the literature
supplied by Lifestream for use with the Product, but not for any feature of the
Product the design of which is conceived or contributed by LRE.
6.7. In the event any LRE Indemnified Party or Lifestream Indemnified
Party seeking indemnification hereunder ("Indemnified Party") should have a
Claim hereunder against Lifestream or LRE, as the case may be, hereto
("Indemnifying Party"), which Claim does not involve a Claim being asserted
against or sought to be collected from such Indemnified Party by a third party,
the Indemnified Party shall as promptly as practical send a notice ("Claim
Notice") with respect to such Claim to the Indemnifying Party. Any failure to
give or delay in giving the Claim Notice will not waive any rights of the
Indemnified Party, except to the extent the rights of the Indemnifying Party are
actually prejudiced by such failure or delay. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days of receipt of a Claim
Notice (and any clarification requested with respect thereto) that it disputes a
Claim, the amount of such Claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder and shall be paid to the Indemnified Party
immediately. If the Indemnifying Party has timely disputed its liability with
respect to such Claim, the Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of such dispute.
6.8. In the event of any Claim by an Indemnified Party involving a
third party, the Indemnified Party shall promptly notify the Indemnifying Party
in writing of said Claim, and, if then determinable, a reasonable estimate of
the amount thereof, which in such party's good faith opinion, might be sustained
in connection with such Claim. In such event, the Indemnifying Party shall have
the right, exercisable by giving written notice to the Indemnified Party within
thirty (30) days after the giving of such notice by the Indemnified Party, to
assume and control the contest and defense or settlement of such Claim, at its
own expense, with counsel of its own choice, which counsel shall be reasonably
satisfactory to the Indemnified Party; provided that the Indemnifying Party will
not agree to any settlement without the written consent of the Indemnified Party
(which consent will not be unreasonably withheld) unless such settlement (i)
requires no more than a monetary payment for which the Indemnifying Party has
irrevocably agreed to indemnify such Indemnified Party hereunder, and (ii)
includes a full, unconditional and complete release of such Indemnified Party.
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6.9. If the Indemnifying Party agrees to defend such Claim, the
Indemnifying Party will have full control of such defense, including any
settlement thereof (subject to the rights of the Indemnified Party as set forth
in the immediately preceding paragraph), and if requested by the Indemnifying
Party, the Indemnified Party agrees to cooperate fully with the Indemnifying
Party and its attorneys with respect to such contest and defense at the expense
of the Indemnifying Party. The Indemnified Party shall have the right to engage
its own counsel and to participate in, but not control, such defense, but the
Indemnified Party shall be solely responsible for all fees and expenses of its
own counsel.
6.10. If the Indemnifying Party does not agree to defend such Claim or
fails to notify the Indemnified Party of its election as herein provided, the
Indemnifying Party agrees to pay the reasonable costs and expenses of the
Indemnified Party, including, without limitation, reasonable attorneys' and
paralegals' fees, interest and penalties incurred in connection with such
contest and defense, monthly, against the receipt of invoices with supporting
documentation and will promptly pay any judgment rendered against or settlement
reached by such Indemnified Party with respect to any such Claim; provided,
however, that the Indemnifying Party will not be liable hereunder for any
settlement made by any Indemnified Party without its prior written consent,
which consent will not be unreasonably withheld. If the Indemnifying Party has
timely disputed its liability with respect to such third party claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute. Failing such resolution, either party
may elect to commence arbitration as set forth in Paragraph 8.6.
6.11. During the term of this Agreement and for a period of ten years
thereafter if on a claims made basis, each party will maintain comprehensive
general liability insurance in an amount normally carried by entities engaged in
this type of business covering the indemnification, defense, hold harmless, and
other obligations of that party under this Agreement.
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7.0 TERM, TERMINATION AND CANCELLATION
7.1. The term of this Agreement shall begin on the date hereof and,
unless terminated earlier in accordance with paragraph 7.2, 7.3 or 7.4, shall
end on December 31, 2004 (the "Initial Term"). Thereafter the term shall
automatically be extended for successive one (1) year periods unless LRE or
Lifestream shall have given written notice to the other of the termination of
this Agreement at least one hundred eighty (180) days prior to the end of the
Initial Term or one of the one year periods, as the case may be.
7.2. Lifestream shall have the right to terminate this Agreement upon
thirty (30) days prior notice in writing in the event that Roche terminates the
Roche Contract.
7.3. Either LRE or Lifestream may terminate this Agreement for cause.
Cause shall be defined as a material breach or repeated non-material breaches of
this Agreement which are not cured by the breaching party as quickly as
reasonably possible, but in no event longer than sixty (60) days after receipt
of written notice demanding such breaches be cured.
7.4. LRE shall have the right from and after the date two (2) years
from the date of this Agreement (the "Grace Period") to terminate this Agreement
upon at least one hundred eighty (180) days prior notice in writing if (a)
during said two year period Lifestream did not order and pay for at least ***
(***) units of the Product, or (b) during a period of three (3) consecutive
months after the end of the Grace Period the average number of the Product
ordered by Lifestream during said three (3) months period drops below an average
rate of *** (***) units of the Product per month.
7.5. Within sixty (60) days after termination of this Agreement, LRE
shall, if so requested by Lifestream, provide Lifestream in writing with a list
of all Confidential Information in LRE's possession, custody or control. Company
shall notify LRE within thirty (30) days of receipt of said list of the
documents, records and data that it desires to have LRE return to it. Promptly
after receipt by it of said list, LRE shall, return to Company all the
documents, records and data requested by Company. Any and all Confidential
Information not to be delivered and returned to Company by LRE in accordance
with the foregoing, whether written, typed or printed, and whether stored
electronically, magnetically or otherwise in machine readable form, and all
summaries and derivations thereof, shall be destroyed by LRE and LRE shall
promptly confirm such destruction in writing to Company.
7.6. Lifestream agrees to pay LRE, at the time of termination, an
amount equal to LRE's actual purchase price for any and all materials in
inventory, or on order, purchased by LRE under this Agreement (net of any
returns thereof which LRE is entitled to make) plus ***** to cover the material
overhead costs of purchasing, receiving, inspecting and warehousing the
materials.
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7.6. Upon termination of this Agreement (other than by LRE for Cause),
all tooling being used by LRE, which has been paid for by Lifestream, if any,
shall be transferred to Lifestream or its nominee. LRE shall provide Lifestream
with a listing of such tooling within thirty (30) days of termination, and
Lifestream shall advise LRE within thirty (30) days of receipt of such listing
the disposition of all such tooling. All costs directly related to the transfer
of such tooling shall be borne by Lifestream.
7.7. In the event that LRE elects to cease manufacturing the Product
(other than as a result of the termination by LRE of this Agreement for Cause
under Paragraph 7.3), (a) LRE shall at the request of Lifestream (i) grant
Lifestream the right to manufacture the Product, (ii) deliver the Manufacturing
Documentation to Lifestream, and (iii) at Lifestream's expense, provide the
necessary training to Lifestream's personnel or the personnel of its nominee to
enable it to manufacture the Product; and (b) Lifestream shall pay LRE annually
in arrears within thirty (30) days after the end of each such yearly period a
royalty in an amount equal to the product of (X) the net sales of Products sold
by Company during said year, times (Y) ***** for sales during the balance of the
Initial Term, and 1% thereafter.
8.0 GENERAL PROVISIONS
8.1. The rights and obligations of Sections 5 (Confidential
Information), 6 (Warranties and Indemnification), 7 (Term, Termination and
Cancellation), and 8 (General Provisions) shall survive any termination of this
Agreement and shall bind the parties and their legal representatives, successors
and assigns.
8.2. Each of the parties hereto shall be excused from the
performance of its obligations hereunder in the event such performance is
prevented by force majeure and such excuse shall continue as long as the
condition constituting such force majeure continues, plus thirty (30) days after
the termination of such condition. For purposes of this Agreement, force majeure
is defined as follows:
Causes reasonably beyond the control of LRE or Lifestream, including,
without limitation, regulations, laws or acts of any government,
destruction of production facilities or material by fire, flood or
storms, or failure of public utilities or common carriers or embargo.
14
* CONFIDENTIAL TREATMENT REQUESTED
8.3. This Agreement and its appendices embody the entire understanding
and agreement among the parties and supersedes all previous negotiations,
representations, writings and agreements, written or oral, with respect to the
development, manufacture and sale of the Product.
8.4. All notices, demands and communications provided for in this
Agreement shall be in writing and shall be deemed effective by a party upon hand
delivery or when mailed, postage prepaid, by registered or certified mail or
sent by facsimile, to the other party or its copy designee at the respective
addresses listed below, unless and until such address is changed by giving
written notice thereof in like manner.
To Lifestream:
Lifestream Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
Fax: ***
With a copy to:
Elaesser ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Marks & ▇▇▇▇▇▇▇
Chartered Attorneys-At-Law
▇▇. ▇▇▇▇ Elaesser
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
***
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ***
15
* CONFIDENTIAL TREATMENT REQUESTED
To LRE:
LRE Technology Partner GmbH
***
***
Germany
Attn: Geschaeftsfuehrer
Fax: ***
8.5. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, U.S.A. not including its choice of law
rules. The invalidity or unenforceability of any provision of this Agreement
shall not affect or limit the validity or enforceability of any other provision
hereof. The United Nations Convention on the International Sales of Goods shall
not apply to this Agreement.
8.6. Both parties agree to use their best efforts in a good faith
attempt to settle as promptly as possible any and all disputes arising from this
Agreement or a transaction conducted pursuant to this Agreement; but failing an
amicable settlement, the parties agree that (a) any controversy or claim arising
out of or relating to this Agreement shall be submitted to arbitration in
accordance with the Rules of Conciliation and Arbitration rules then obtaining
of the International Chamber of Commerce before one arbitrator chosen in
accordance with said rules; (b) such arbitration shall be held in the English
language in New York, New York, USA; (c) the award in any such arbitration shall
be final, binding and conclusive; and (d) judgment on any award of any such
arbitrator may be entered in any court having jurisdiction thereof. Notice of
any such arbitration shall be sufficient if given in accordance with Paragraph
8.4 hereof.
8.7. No modification, amendment, extension or waiver of this Agreement
or any provision hereof shall be binding or effective unless in writing and
signed by an authorized person or persons of each of the parties.
8.8. In no event shall either party be liable for any consequential
damages under this Agreement.
16
* CONFIDENTIAL TREATMENT REQUESTED
8.9. The parties hereto warrant and covenant that, upon the expiration
or termination of this Agreement, neither party will take any action to impair
or diminish the good will or business of the other party.
8.10. The failure of either party to enforce any provision of this
Agreement shall not be construed to be a waiver of such provision or of such
party's respective rights to thereafter enforce the same, and no waiver of any
breach shall be construed as an agreement to waive any subsequent breach of the
same or other provisions.
8.11. All provisions contained in this Agreement shall extend to and be
binding upon the parties and their respective successors and assigns. Without
the prior written consent of the other party, neither party may assign, transfer
or convey any of its rights, duties or interest under this Agreement, nor shall
it delegate any of the obligations or duties required to be kept or performed by
it hereunder; provided, however, provided, however, that (a) either party may,
without such consent, assign this Agreement to (i) any Affiliate of such party
(provided, however, such assignment shall not relieve such party of any of its
obligations hereunder) or (ii) a successor in interest of such party by merger
or operation of law or (iii) a purchaser of all of the assets of such party
provided such purchaser shall have agreed in writing to perform all of such
party's obligations under this Agreement; and (b) LRE may, without such consent,
(i) purchase services typically purchased by it from third parties, (ii) use
third parties to design and manufacture tools and fixtures, and (iii) use
contract personnel to perform services working at LRE's premises.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LIFESTREAM TECHNOLOGIES, INC. LRE TECHNOLOGY PARTNER GMBH
By: /s/ ▇▇▇▇▇▇ ▇. Siemens By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------- --------------------
Name: ▇▇▇▇▇▇ ▇. Siemens Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: COO Title: Geschaeftsfuehrer
Exhibit A to Product Supply Agreement
Specification of the Product
Product Delivery Description
That In-vitro opto-electric Test Instrument Module (▇▇▇) for use in the
Lifestream Cholesterol Monitor as purchased from LRE under Lifestream Assembly
number: ▇▇▇▇-▇▇▇-▇▇ "▇▇▇ with flex-tail, bezel assembly" and described in LRE
▇▇▇▇ of Lading: "Cholestron ▇▇▇▇, LRE-ID-No. ▇▇-▇▇▇-▇▇.
The product is provided within anti-static bags, in bulk corrugated containers
of 168 units. The product consists of: ▇▇▇ w/ flex-tails (flex-tails packaged
separately) enclosure front bezels with the ▇▇▇ attached, the LRE molded test
strip holder in place and a CD ROM of the device History record for the
respective shipment. The front bezels are to be supplied by Lifestream without
any cost for LRE.
The ▇▇▇ is built, tested and calibrated according to those LRE production
standards. Production is supported by special test fixture(s) permitting the
calibration of the ▇▇▇ while in the front bezel with the strip holder in place.
* CONFIDENTIAL TREATMENT REQUESTED
Schedule 2.4 to Product Supply Agreement
Long Lead Time Items
Long Lead Time Items: Asic, microcontroller, PCB
* CONFIDENTIAL TREATMENT REQUESTED
Schedule 3.1 to Product Supply Agreement
Initial Pricing Depending on Quantity Purchased
Yearly volume of 10,000 to 50,000 purchased meters *** Euro Yearly volume of
50,000 to 100,000 purchased meters *** Euro Yearly volume of 100,000 to 200,000
purchased meters *** Euro
* CONFIDENTIAL TREATMENT REQUESTED
