Exhibit 10.17
DISTRIBUTION AGREEMENT
THIS AGREEMENT is between Oratec Interventions, Inc., a California corporation,
with its principal place of business at 3700 Haven Court, Menlo Park, California
94025, hereinafter referred to a "Oratec" and DePuy AcroMed, Inc., an Ohio
corportion with offices at 3303 Carnegie Ave., Cleveland, Ohio 44115 hereinafter
referred to as "DePuy," effective as of the 30 day of March, 1999 (the
"Effective Date").
WHEREAS, Oratec has developed, prototyped, and/or manufactured and verified
clinically products used to apply heat to the spine to denervate and shrink
spinal disc tissue, as further described herein; and
WHEREAS, DePuy has developed an extensive worldwide distribution capability and
desires to distribute the Products to surgeons worldwide, with the exception of
the united States; and
WHEREAS, Oratec desires to contract with DePuy to assist Oratec in conducting
selected clinical evaluations with surgeons outside the United States and in
obtaining regulatory approval for the Products outside the United States, and to
exclusively market, distribute and sell the Products, as further described
herein; and
WHEREAS, DePuy is willing to contract with Oratec to assist Oratec in conducting
such selected clinical evaluations, obtaining regulatory approval outside the
Untied States and to exclusively market, distribute and sell the Products;
NOW, THEREFORE, in consideration of the mutual covenants set forth below, the
parties agree as follows:
1. DEFINITIONS
1.1 "Products" shall mean all Oratec products developed, designed,
intended or sold for the spine or neurosurgery markets for use by any
medical practitioner, including any improvements or variations
thereto. The SpineCATH Intradiscal Catheter Product including any
modification thereto, may not be sold into any other medical or
surgical specialty without the prior written consent of DePuy. All
such Products currently in existence are listed on Appendix A.
Appendix A shall be modified in writing as additional Products,
including improvements and variations thereto, become available.
1.2 "New Products" means those Oratec products developed, designed,
intended or sold for the spine or neurosurgery markets for use by any
medical practitioner which perform a significantly different function
or perform in a significantly different manner from Products.
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*** Certain information in this document has been omitted and filed separately
with the Securities Exchange Commission. Confidential Treatment has been
requested with respect to the omitted portions.
1.3 "Specifications" shall mean the detailed written specifications for a
Product in such form as Oratec shall provide and DePuy shall accept.
1.4 "Territory" shall mean the entire world, excluding the United States.
2. APPOINTMENT OF DEPUY AS EXCLUSIVE DISTRIBUTOR
2.1 Oratec hereby grants DePuy the exclusive right to market, sell and
distribute the Products in the Territory.
2.2 Provided Oratec has first offered the New Products to DePuy and DePuy
has declined the opportunity to market the New Products, Oratec may
freely negotiate with other parties to market the New Products. DePuy
shall have ninety (90) days within which to accept or reject any such
opportunity to market New Products. In the case in which Oratec had
first offered the New Products to DePuy and the parties were unable to
negotiate mutually acceptable terms, Oratec is free to contact with
other parties provided Oratec does not accept terms inferior to
DePuy's last offer. In the case in which the third party's offered
terms are equal to or inferior to DePuy's last offer, Oratec will
contract with DePuy under the terms of DePuy's last offer.
2.3 If a third party appointed by Oratec to sell Oratec products for non-
spine applications sells such products for spine applications within
the Territory, Oratec shall take all reasonable steps to prevent such
occurrences by said third party. Sales by third parties resulting
form such occurrences shall be applied toward DePuy's minimum purchase
requirements. DePuy shall not sell the Products for non-spine
applications. If a Distributor appointed by DePuy to sell the
Products sells such Products for non-spine applications within the
Territory, DePuy shall take all reasonable steps to prevent such
occurrences by said Distributor.
3. MUTUAL COOPERATION
3.1 It is the parties intention to cooperate and communicate regarding the
development and marketing of the Products. The parties agree to make
reasonable efforts to share general information received by either
party on the Products and competitive activities.
4. INTELLECTUAL PROPERTY
4.1 Any and all technology and intellectual property developed by Oratec
used in development or manufacture of a Product shall be the property
of Oratec. Oratec shall have sole responsibility for filing and
maintaining any and all patents and patent applications which address
or cover its Products.
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5. ORATEC'S COVENANTS
5.1 Oratec hereby agrees to supply the Products to DePuy in accordance
with the terms set forth in this Agreement.
5.2 Oratec will work actively to make available in sufficient quantities
Products that meet mutually agreed upon specifications to meet DePuy's
requirements; provided that, shipment of all orders by Oratec shall be
on a "first in, first out" inventory basis, and may be subject to
delays due to transportation difficulties, government regulations,
inability to obtain new materials, and other circumstances beyond
Oratec's control.
5.3 Oratec will extend technical assistance to DePuy as DePuy may
reasonably request to assist in the marketing and sale of the Products
at periodic intervals to be agreed upon by Oratec and DePuy. The
parties will agree upon a mutually acceptable technical training
program.
5.4 Oratec will provide training to the DePuy sales force on the proper
use of the Products at times and places mutually agreed upon by the
parties throughout the duration of this Agreement.
5.5 Oratec will use commercially reasonable efforts to obtain FDA
approval, including 510(k) approval, ISO 9000 Certification and obtain
CE marking(s) for each Product prior to the sale to DePuy of such
Product.
5.6 Oratec agrees to cooperate with DePuy and supply DePuy with any
information required by DePuy to allow DePuy to respond to or comply
with any inquiry or regulation from any foreign government agency
regarding the use, marketing, sales or distribution of Products.
5.7 Oratec will as soon as possible after receipt of notice advise DePuy
of any claim, complaint, suit or action involving any Product sold by
DePuy or involving DePuy's marketing, sale or distribution of the
Products if such claim, complaint, suit or action relates to a Product
performance issue or could have a potential adverse impact on DePuy.
5.8 Oratec shall sell DePuy a reasonable number of demonstration samples
of Products at the cost specified in Appendix B, for use by the DePuy
sales force for customer presentations, for presentations at seminars,
meetings, conventions and the like. The samples will be marked "For
demonstration only, not for human use."
6. ORATEC'S REPRESENTATIONS AND WARRANTIES
6.1 Oratec shall have full title and full right to manufacture all
Products sold to DePuy hereunder.
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6.2 Oratec represents and warrants that to the best of Oratec's knowledge,
as of the date of this Agreement, the distribution, marketing,
promotion and sale of Products by DePuy will not infringe any patents
held by persons who are not parties to this Agreement.
6.3 To Oratec's knowledge, there are no licenses or other agreements
relating to the Products that would affect Oratec's ability to
manufacture and deliver the Products or substantially equivalent
products and none are contemplated or anticipated by Oratec, except
for an agreement now in place with Oratec's vendor for generators.
6.4 All necessary governmental approvals required by the federal, state
and/or local governments of the United States for the Products will
have been obtained by Oratec prior to the sale of the Products to or
by DePuy, and will be obtained by Oratec should the need arise in the
future.
6.5 To Oratec's knowledge, all Products comprising each shipment or other
delivery made to DePuy are and, at all times, will be as of the date
of such shipment or delivery, in compliance with all applicable United
States laws, as well as all regulations, rules, declarations,
interpretations and orders issued thereunder.
6.6 To Oratec's knowledge, no Product is in violation of any United States
law, statute, executive order or regulation regarding packaging,
labeling, manufacturing, distribution, or sale. Oratec shall use
commercially reasonable efforts to comply with any applicable foreign
law, statute, executive order or regulation regarding, packaging,
labeling, manufacturing, distribution, or sale made known to Oratec.
6.7 Oratec has no pre-existing distribution or other arrangements
concerning the Products in any country located within the Territory
that would affect DePuy's ability to sell the Products in the
Territory or DePuy's right to select and appoint Distributors or
affiliates to sell the Products in the Territory.
7. PACKAGING AND LABELING
7.1 DePuy will use the Oratec trademark in marketing the Products unless
prohibited by law or regulation. DePuy will acknowledge Oratec and
its patent pending or patented technology in Product promotional
materials. DePuy shall not modify any Oratec trademark in any way
without Oratec's prior written approval or use any Oratec trademark
with any goods or services other than the Products.
7.2 During the term of this Agreement, the parties may, at their option,
indicate on signs, advertising, publicity, or other sales, marketing,
or promotional media or materials that DePuy is the authorized dealer
or distributor of the Products for spine applications. Neither party
shall otherwise use the other party's name,
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trademarks, service marks, trade names, commercial symbols or logos
without having received the other party's prior written approval.
7.3 Upon termination of this Agreement, each party's license in or right
to use the other party's name, trademarks, services marks, trade
names, commercial symbols or logos shall terminate, except that DePuy
shall have the right to continue such use with respect to any
inventory of Products not purchased by Oratec as provided by Section
20.1.
7.4 Oratec will provide the Products to DePuy sterile and in standard
packaging. In the event that Oratec's sterilization processes or
standard product packaging is unacceptable to any regulatory or
government agency, Oratec shall modify its sterilization processes
and/or standard product packaging to comply with the requirements of
such regulatory or government agency. The parties shall evaluate the
costs associated with any such required modifications by country,
comparing the country sales forecast with extraordinary costs that
Oratec would have to incur.
8. DEPUY'S COVENANTS
8.1 DePuy hereby agrees to sell the Products through its marketing and
sales distribution network comprised of independent sales
representatives (the "Distributors"), through employees who specialize
in geographical regions or in designated professional fields, or
through affiliated companies, provided that any such affiliated
company is not a competitor of Oratec. DePuy shall have the right to
select and appoint all Distributors and affiliates to market and sell
the Products in the Territory. While DePuy has exclusive distribution
rights in the Territory under this Agreement, DePuy will obtain the
Products for sale in the Territory only from Oratec.
8.2 Depuy will actively promote the Products and will provide its
Distributors and employees with the following:
1. Product samples
2. Appropriate training related to Products
3. Exposure of Products at appropriate training courses and
conventions
8.3 Provided the Products are available in adequate quantities, DePuy will
work to market the Products by including them as important promotional
Products for its Distributors in 1999 and 2000. For purposes of this
Section 8.3, adequate quantities shall mean Product quantities
necessary to support DePuy's sales forecasts for the Products. DePuy
will provide to Oratec an initial forecast of sales for a one year
period for such Products. When the parties agree to develop and
market a Product not included in the original list of Products in
Appendix A, DePuy will provide Oratec with a sales forecast for that
Product within 30 days of the date a Product is available for sale and
marketing. All such forecasts will be
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updated on a quarterly basis. Thereafter, DePuy will provide Oratec
on the last day of October of each year during the duration of this
Agreement, with a forecast for each forthcoming contract year for
all Products sold by DePuy at that time in order to properly provide
for all accounts, insure prompt service to customers and avoid out-
of-stock conditions. Forecasts shall be provided on a country basis
when it may be necessary to reduce minimums due to late regulatory
approvals and/or mutual decisions not to market in a particular
country.
8.4 DePuy will show the Products at major meetings in 1999 and 2000 and
will be responsible for all costs of exhibiting at such major meetings
as well as local conventions and trade shows unless otherwise agreed
by Oratec prior to such meeting, convention or trade show.
8.5 DePuy will take reasonable and necessary steps to provide that DePuy's
marketing, sale and distribution of the Products complies with
applicable government regulations throughout the Territory and will
provide reasonable assistance to Oratec as Oratec may reasonably
request to allow Oratec to comply with regulatory requirements of
government agencies throughout the Territory regarding the use, sale
and distribution of the Products.
8.6 DePuy shall, as soon as possible after receipt of notice, advise
Oratec of any claim, suit, or other action regarding any of the
Products sold by DePuy.
8.7 DePuy will prepare and submit import licenses, registrations or other
listings and regulatory approvals for the sale and import of the
Products in countries within the Territory. DePuy may use its system
of independent companies and Distributors throughout the Territory to
assist in obtaining import licenses and/or approvals. DePuy will
obtain necessary certifications for the Products where required. Upon
any termination of this Agreement other than for a material breach by
Oratec which remains uncured by Oratec for more than forty-five (45)
days after receipt of written notice from DePuy, DePuy shall transfer
all import licenses, registrations, listings and regulatory approvals
for the sale and import of the Products to Oratec, provided that
Oratec reimburses DePuy at the time of transfer for the cost to DePuy
to obtain and maintain all such import licenses, registrations,
listings and regulatory approvals. Any such transfer shall take place
immediately upon receipt of the foregoing payment and Oratec's
contractual commitment to buy back all inventory of Products
maintained by DePuy, its affiliates or its Distributors. DePuy makes
no representation or warranty regarding the transferability of any of
the foregoing licenses, registrations, listings, and approvals.
8.8 DePuy will provide proposed Product literature to Oratec for approval
of the content of Product marketing claims. Oratec will respond to
DePuy's request for Product literature approval within ten (10)
working days.
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8.9 DePuy will provide required multilingual labeling to Oratec for
placement on the Product packaging during manufacture.
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9. PRICES
9.1 Initial Prices for the Products shall be as set forth on Appendix B.
Prices for all Products will be based on a transfer price (as
hereinafter defined) that allows DePuy, for the duration of this
Agreement and any extension thereof, to receive a gross margin of at
least ***, as exemplified in Appendix B. Transfer price
shall mean the price charged to DePuy by Oratec for the Products.
Oratec shall give DePuy at least six (6) months prior written notice
of any price increase. During the first nine (9) months that this
Agreement is in effect, Oratec shall provide probes to DePuy at ***
for each probe and catheters to DePuy at *** for each catheter. The
transfer price will then be revised to reflect a *** gross margin if
the average end user selling price equals or exceeds *** per probe
and *** per spine catheter. The limit on the probe and spine
catheter transfer prices will be set at *** and ***, respectively.
9.2 DePuy retains the right to select its customers and to sell the
Products at such prices and on such terms and conditions as it may
elect. DePuy intends to market the Products at competitive pricing
that produces maximum revenues, but DePuy shall retain the right to
sell the Products at a discount where DePuy, in its sole discretion,
deems it necessary.
10. CLINICAL TRIALS
10.1 In the event that a limited clinical trial or similar testing of any
Product is required to obtain governmental approval outside the Untied
States before sale and use of the Product, the parties will conduct
such trial(s) jointly. DePuy will coordinate the trials through
surgeons and other medical personnel and health care providers.
Oratec will provide reusable and disposable products for such trials
at no costs to DePuy. However, any reuseable and disposable products
such as generators, needle benders, cables, etc. will remain the
property of Oratec and will be returned to Oratec when the need for
the products has ended. Should extensive clinical trials be required
for a Product outside the United States, the parties will determine a
mutually acceptable plan which will include financial incentives to
DePuy regarding such extensive clinical trials.
11. ORDERING
11.1 All forecasts shall be non-binding. Notwithstanding any forecast
made by DePuy, DePuy shall place firm written purchase orders
identifying the Products ordered and requested delivery date(s) with
Oratec on DePuy purchase order forms with at least 90 days lead time
to allow Oratec to optimize inventory and production patterns. Oratec
will ship Product pursuant to such purchase orders within ninety (90)
days of the receipt by Oratec of such purchase order.
*** CONFIDENTIAL TREATMENT REQUESTED
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11.2 DePuy will have *** purchase requirements in 1999 ***. Oratec and
DePuy will agree upon minimum purchase requirements for the year 2000
by October 31, 1999. If annual minimum purchase requirements for the
year 2000 are not agreed to by October 31, 1999, the parties shall
engage a mutually acceptable third party to consult with them to
develop an acceptable compromise. Should the parties be unable to
select a mutually acceptable third party to develop an acceptable
compromise, the parties shall engage in arbitration as provided in
Section 11.4. Minimum purchase requirements for subsequent years that
the Agreement is in effect will be established in the same manner.
DePuy shall have no obligation to purchase the minimum purchase
requirements, provided that failure to do so shall trigger the rights
provided to Oratec in Section 11.3. DePuy will generate a purchase
order for samples and demo equipment within 30 days of the effective
date of this Agreement. In the event that regulatory approvals
required to market and sell the Products in any country located within
the Territory are not secured or are delayed, minimum purchase
requirements for the Products shall be appropriately reduced.
11.3 Beginning with the year 2000 and for any subsequent year this
Agreement is in effect, provided that Oratec has supplied adequate
quantities of Products that meet Specifications, if less than
*** of the mutually agreed upon annual minimum purchase
requirement for all Products is not achieved by DePuy by the end of
any applicable year, DePuy's exclusive distribution rights under
this Agreement may become non-exclusive at Oratec's option, written
notice of which must be received by DePuy prior to November 1st of
such year. Upon receipt of such written notice, DePuy may make up
any shortfall in the minimum purchase requirement through a purchase
of Products (the "Shortfall Purchase") by issuing a purchase order
by December 1st of such year, specifying delivery by December 31st
or as soon as possible thereafter. If DePuy makes this Shortfall
Purchase, DePuy shall retain its exclusive distribution rights. If
DePuy does not make the Shortfall Purchase, DePuy's exclusive
distribution rights, may, at Oratec's option, become non-exclusive. If
the Shortfall Purchase is not made, and if at least *** of the
mutually agreed upon annual minimum purchase requirement for all
Products is not achieved by DePuy in the next consecutive year this
Agreement is in effect, and DePuy does not make a Shortfall Purchase
in that next consecutive year, Oratec may, upon written notice to
DePuy received within sixty (60) days after the end of such year,
terminate this Agreement. In any event, the mutually agreed upon
annual minimum purchase requirement for any year this Agreement is in
effect will be considered to be met if at least *** of such minimum
purchase requirement has been met by DePuy.
11.4 All disputes, controversies, or differences arising between the
parties hereto, out
*** CONFIDENTIAL TREATMENT REQUESTED
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of, or in relation to, or in connection with, minimum purchase
requirements which cannot be settled amicably by the parties shall be
resolved by arbitration under the Rules of Procedure of the American
Arbitration Association (the "Rules") then prevailing arbitration
shall be by a single arbitrator chosen by the parties, provided that
if the parties fail to agree and to appoint such single arbitrator
within thirty (30) days after demand for arbitration, the arbitrator
shall be chosen in accordance with the Rules. The decision of the
arbitrator shall be final and binding on the parties with respect to
minimum purchase requirements.
12. PAYMENT
12.1 Depuy shall be responsible for the collection of all amounts due from
customers for the Products. DePuy shall pay for its purchases of
Products (except for those Products returned pursuant to Section 15)
within *** days of its receipt of the specific Products. A
late penalty of *** or the maximum rate permitted by law shall be
levied on outstanding balances for every month extending beyond the
*** day payment period beginning with the *** day. DePuy shall be
responsible for the payment of all taxes arising from the purchase and
sale of the Products by DePuy except for taxes on the income of
Oratec. These taxes include import duties, forwarding taxes, value
added taxes and any similar taxes imposed by the jurisdictions in
which the Products are sold.
13. SHIPPING
13.1 Oratec shall deliver Products directly to DePuy via common or
contract carrier. All costs of transportation and shipping to DePuy's
facilities in Cleveland, Ohio, Warsaw, Indiana, Raynham,
Massachusetts, or Leeds, England will be paid by DePuy. Title to
shall transfer and risk of loss of the Products shall pass to DePuy
upon DePuy's receipt of the Products. Notwithstanding the foregoing,
any fees to expedite shipments to DePuy at DePuy's request will be
borne by DePuy, unless the need for expedited shipment was due to
Oratec's failure to deliver promised quantities on time.
14. WARRANTY
14.1 Oratec represents and warrants to DePuy that all Products supplied in
connection with this Agreement shall be of merchantable quality, free
from defects in material and workmanship and shall be manufactured and
provided in accordance and conformity with the Specifications and in
compliance with this Agreement.
14.2 DePuy may return non-conforming and/or defective Products, including
Products which malfunction or fail to operate, or bear a sterilization
date at the time of receipt by DePuy that is more than sixty (60) days
old, to Oratec. Oratec shall
*** CONFIDENTIAL TREATMENT REQUESTED
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replace or repair such nonconforming and/or defective Products at no
cost to DePuy or the customer. Replacement of such non-conforming
and/or defective Products includes payment of DePuy's reasonable
shipping costs, both from and to Oratec. Oratec shall replace or
repair such non-conforming and/or defective Products promptly provided
that the non-conformance or defect was caused by Oratec. Oratec shall
have no obligation to replace or repair Product adulterated, misused
or repackaged by another party without the previous written approval
of Oratec.
14.3 NEITHER PARTY SHALL HAVE ANY LIABILITY TO EACH OTHER OR TO ANY THIRD
PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, OR THE
MANUFACTURE, SALE SUPPLY, DISTRIBUTION, MARKETING, ORDERING OR
DELIVERY OF THE PRODUCTS, INCLUDING BY WAY OF EXAMPLE AND NOT BY WAY
OF LIMITATION, ANY DAMAGES, EXPENSES OR LOSSES INCURRED BY REASON OF
LOST REVENUES, LOST PROFITS, COSTS OF SUBSTITUTE PRODUCTS, AND ANY
SIMILAR AND DISSIMILAR DAMAGES, EXPENSES OR LOSSES EVEN IF THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXPENSES OR
LOSSES. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED TO LIMIT EITHER OF THE PARTIES' LIABILITY FOR DAMAGES OR
PERSONAL INJURIES, INCLUDING PROPERTY DAMAGE AND DEATH, SUFFERED BY
ANY THIRD PARTY AS A RESULT OF ACTIONS OR OMISSIONS OF SUCH PARTY.
LEGAL RELATIONSHIP AND INDEMNIFICATION
15.1 DePuy is an independent contractor and the relationship between
Oratec and DePuy is that of Vendor and Vendee. Nothing herein is
intended or shall be construed, either express or implied, to
authorize either party to create or assume any liability or obligation
of any kind for or on behalf of the other party. Neither party will
be considered or will represent itself as the agent or legal
representative of the other party for any purpose whatsoever.
15.2 The parties hereto are each responsible for their own acts, alleged
acts or omissions and respectively agree to protect, indemnify, defend
and hold harmless each other and any affiliate from and against any
and all claims, losses, demands and liabilities, including attorneys'
fees and court costs, which may arise therefrom.
15.3 Notwithstanding anything in this Agreement to the contrary, Oratec
agrees to indemnify and hold harmless DePuy from any loss, claim or
judgment, including reasonable costs and expenses of defending same,
arising out of bodily injury, property damage or any other damage or
injury which is caused by any defect in
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the design, material, or manufacture of a Product, but excluding any
oral or written statements or representations by DePuy or its
distributors or employees concerning the Products inconsistent with
Oratec's training or literature. Oratec shall have control of the
defense of any litigation arising out of alleged defect in the
design, material or manufacture of a Product and DePuy agrees to
cooperate with Oratec in such defense.
15.4 DePuy agrees to indemnify and hold harmless Oratec from any loss,
claim or judgment, including reasonable costs and expenses of
defending same, arising out of any bodily injury caused by any
negligent or intentional misrepresentation concerning the Products by
DePuy or its sales employees inconsistent with Oratec's training or
literature, to the extent that Oratec is damaged due to such negligent
or intentional misrepresentation.
15.5 Should any person assert a claim against DePuy based on the alleged
infringement of a patent or other protected intellectual property
right related to a Product, Oratec agrees to indemnify and hold
harmless DePuy from and against any and all losses, claims, or
judgments, including reasonable costs and expenses of defending same,
arising directly or indirectly from any such claims of infringement of
patents or other protected intellectual property rights.
15.6 Oratec has or will have prior to the sale of the Products by DePuy
and will maintain at all times while this Agreement is in effect, a
product liability insurance policy providing at least *** dollars
(***) coverage per occurrence and *** dollars (***) aggregate coverage
per policy year, which policy shall either name DePuy as insured or
shall, by endorsement or otherwise, provide such coverage to DePuy for
any claim arising out of the sale of any Product by DePuy. Oratec
shall furnish DePuy with acceptable certificates evidencing such
insurance coverage prior to the release of any Products for clinical
studies or evaluation. Such insurance certificates shall contain a
provision that a thirty (30) day advance written notice will be given
to DePuy prior to any material change or cancellation of such
insurance.
16. ASSIGNMENT AND ***
16.1 Neither party shall have the right to assign this Agreement without
the other's prior written consent, except that either party may assign
its obligations hereunder to an entity under common control with,
controlled by or which controls the assigning party. Notwithstanding
the foregoing, DePuy agrees that it will not assign its obligations
hereunder to any such entity that competes with Oratec.
16.2 In the event that Oratec should desire to ***, Oratec shall notify
DePuy in writing of such desire. DePuy will have *** days after
receipt of such written notice to ***
*** CONFIDENTIAL TREATMENT REQUESTED
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During such *** day period, *** will not ***. This *** day period does
not constitute ***. The foregoing provision shall not apply if, at the
time of such ***, Oratec's securities are publicly traded.
16.3 If the sale of Oratec's interests in any Products and/or a majority
of it stock and/or assets would result in this Agreement being
assigned to a competitor of DePuy, DePuy may, at its sole option,
continue under the terms of this Agreement for a period of *** after
such assignment or sale. If the sale of Oratec's interests in any
Products and/or a majority of its stock and/or assets would result in
this Agreement being assigned to a third party other than a competitor
of DePuy, DePuy may, at its sole option, continue under the terms of
this Agreement for a period of *** after such assignment or sale.
Following the expiration of such *** or *** month period, the
Agreement shall terminate.
17. CONFIDENTIALITY
17.1 Each party will keep confidential and not disclose to any third
party, without the prior written consent of the disclosing party, any
information received from the other party, including, without
limitation, the technology, capabilities, business plans, operations,
and personnel of the other party (the "Confidential Information").
Confidential Information shall not include: (a) information which is
or later becomes generally available to the public by use, publication
or the like, by a party other than the party receiving the
Confidential Information pursuant to the Agreement; (b) is obtained by
a party on a non-confidential basis from a third party; (c) is in the
possession of the receiving party prior to its disclosure, as is
evidenced by written record; or (d) is required by law to be
disclosed. The obligation of this Section 17 shall continue for a
period of three (3) years from the date of termination of this
Agreement.
18. APPLICABLE LAW
18.1 Any controversy or claim relating to this Agreement, or its breach,
or to the relationship created by this Agreement, shall be resolved
through legal proceedings initiated in the United States District
Court for the Northern District of California. The laws of the State
of California shall control as to all such matters. The parties waive
the right to trial by jury, the right to seek or collect punitive or
exemplary damages, and any claim of consequential damages. If any
portion of this Agreement itself is contrary to law, or declared
invalid or unenforceable by a court of competent jurisdiction, the
remaining provisions shall remain valid and enforceable. The parties
shall consult and use reasonable efforts to agree upon a valid and
enforceable provision as a reasonable substitute for such provision in
the light of the intent of this Agreement.
*** CONFIDENTIAL TREATMENT REQUESTED
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19. TERMINATION OF AGREEMENT
19.1 The initial term of this Agreement shall be [five] years from the
date first written above. Thereafter, this Agreement will renew for
successive periods of one (1) year each. This Agreement may be
terminated during either the initial term or the renewal term in
accord with the provisions of Sections 19.2, 19.3, 19.4 or 19.5.
19.2 This Agreement will be automatically terminated if a party files a
voluntary petition for bankruptcy or reorganization, is the subject of
an involuntary petition for bankruptcy, has its affairs placed in the
hands of a receiver, enters into a composition for the benefit of
creditors, or is deemed insolvent by a court of competent
jurisdiction.
19.3 This Agreement may also be terminated if a party is in material
breach of this Agreement provided the non-breaching party has provided
at least forty-five (45) days prior written notice and such breach has
not been cured within said forty-five (45) days.
19.4 This Agreement may be terminated by DePuy upon 180 days' prior
written notice to Oratec. Should DePuy provide such written notice of
termination to Oratec, DePuy's distribution rights hereunder shall
become non-exclusive during such 180 day period.
19.5 This Agreement may also be terminated in accordance with the
provisions of Article 11.3.
19.6 This Agreement may be terminated by Oratec at the end of the initial
term upon 180 days' prior written notice to DePuy, which termination
shall take effect at the end of such 180 day period.
20 OBLIGATIONS UPON TERMINATION
20.1 Upon termination or non-renewal of this Agreement by Oratec, DePuy
will return all unsold saleable Products in its possession and will
use commercially reasonable efforts to retrieve unsold saleable
Products from its distributors. DePuy agrees not to market Oratec
Products beyond *** days following termination of this Agreement.
Oratec will reimburse DePuy for such inventory in the following
manner:
Sealed, sterile disposable Product: DePuy cost
Unused generators and equipment: DePuy cost
Demo generators and equipment: Not reimbursable
Oratec will pay inventory-shipping costs unless DePuy initiates
Agreement termination.
20.2 In the event of termination, DePuy may, at its sole option, decide to
make its customer listing available to Oratec.
21. COMPLETE AGREEMENT
21.1 This Agreement constitutes the entire agreement between DePuy and
Oratec. No modifications of this Agreement shall be binding on either
party unless made in writing and signed by both parties, and this
Agreement supersedes and cancels any and all previous contracts,
arrangements or understandings that may have existed or may exist
between the parties, whether written or verbal. There are no
understandings, representations or warranties of any such kind,
expressed or implied, that are not expressly set forth herein. The
language of this Agreement shall for all purposes be construed as a
whole, according to its fair meaning, not strictly for or against
either party, and without regard to identity or status of any person
who drafted all or any part of it.
22. NOTICES
22.1 All notices required under this Agreement shall be sent registered
mail, return receipt requested, or by other means of verified
delivery, or by personal delivery, as follows:
If to Oratec: Oratec Interventions, Inc.
3700 Haven Court
Menlo Park, CA 94025
Attn: President
If to DePuy: DePuy AcroMed, Inc.
3303 Carnegie Ave.
Cleveland, OH 44115
Attn: President
With a copy to: DePuy AcroMed, Inc.
325 Paramount Drive
Raynham, MA 02767
Attn: President
Either party may change its address for notice purposes by notifying
the other party of such change of address, such notice to be as
required herein. Notice is effective when actually received by the
addressee or when the addressee refuses delivery, or is sent by
Registered Mail, Return Receipt Requested, on the fifteen (15th) day
following deposit. If sent by facsimile, notice shall be deemed
effective when sender receives confirmation of receipt.
*** CONFIDENTIAL TREATMENT REQUESTED
-14-
23. MISCELLANEOUS
23.1 Notwithstanding any other provision in this Agreement, the parties
agree that Sections 4.1, 5.6, 5.7, 7.3, 8.6, 12, 14, 15, 16, 17, 18,
19, and 20 shall survive the termination of this Agreement.
23.2 DePuy may not customize, modify or have customized or modified any
Product. In the event that DePuy should receive a request from a
customer or other party for a customized or modified Product, such
request shall be forwarded to Oratec who will solely be responsible
for response and/or customization or modification of the Product.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the date and year first written.
Oratec Interventions, Inc. DePuy AcroMed, Inc.
Date: March 30, 1999 Date: April 1, 1999
-15-
Appendix A.
Item Number Name / Description
- ----------- ------------------
902002 SpineCATH Intradiscal Catheter
Flexible Intradiscal Catheter specifically designed to provide
precise hearing over a broad intradiscal surface. (IDET
Procedure)
902003 ORAflex ElectroThermal Probe
Unique RF probe featuring a deflectable rip for improved
posterior access in thermal endoscopic herniated disk
treatment.
805017 ORA 50 S ElectroThermal Spine System Generator
Designed specifically for spinal procedures, the ORA 50 S
provides the needed RF output for the SpineCATH and ORAflex
products. Includes foot pedal and power cord.
902004 Needle Introducer (Box of 5)
For use with the SpineCATH Intradiscal Catheter, the 17 gauge
needle provides minimally invasive access to the internal
disc.
802004 Needle Bender
Instrument designed for contouring of the Introducer Needle.
805016 ElectroThermal System Extension Cable
Featuring a universal 4 pin connector, the Extension cable
links either the ORAflex probe or the Intradiscal Catheter to
the generator.
805012/19 Indifferent Electrode Pad
Grounding pad for monopolar applications (ORAflex).
805011/13 Indifferent Electrode Adapter
Plug adapter to facilitate attachment of various indifferent
electrodes.
DePuy Transfer Spine Products Pricing Schedule
Initial Pricing Transfer Price Demo Price
- --------------- -------------- ----------
SpineCATH(TM) *** ***
ORAflex(TM) *** ***
SpineCATH Needles *** ***
(box of 5)
Electro Thermal Spine *** ***
Generator
Probe Cable *** ***
*** CONFIDENTIAL TREATMENT REQUESTED