International Distributor Agreement W/ Disetronics

CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTIONS OF THIS AGREEMENT
HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]


Exhibit 10.15


INTERNATIONAL DISTRIBUTOR AGREEMENT


This INTERNATIONAL DISTRIBUTOR AGREEMENT (the "Agreement") is entered into effective September 13, 2000 (the "Effective Date") by and between TheraSense, Inc, a California corporation with a principal place of business at 1360 South Loop Road, Alameda, California 94502, USA ("TheraSense") and Disetronic Handels AG, a corporation organized under the laws of Switzerland, with a principal place of business at Brunnmattstrasse 6, CH-3401 Burgdorf, Switzerland ("Disetronic").


BACKGROUND
----------


A. TheraSense is the owner of the FreeStyle Products (as defined below) useful in monitoring blood glucose levels and desires to engage a marketing and distribution partner which can (i) assist it in obtaining regulatory approvals to market the FreeStyle Product, and (ii) market and distribute the FreeStyle Products.


B. Disetronic desires to purchase from TheraSense, and TheraSense desires to sell to Disetronic, the FreeStyle Products for resale in the FreeStyle Territory (as defined below); and


C. Disetronic desires to distribute and sell, through certain Affiliates and/or Subdistributors, the FreeStyle Products to Customers (as defined below) in the FreeStyle Territory; and


NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree as follows:


1. DEFINITIONS


1.1 "Affiliate" shall mean any corporation or other entity which is
--------- directly or indirectly controlling, controlled by or under common control with TheraSense or Disetronic. For the purpose of this Agreement, "control" shall mean the direct or indirect ownership of fifty percent (50%) or more of the outstanding shares or other voting rights of the subject entity to elect directors, or if not meeting the preceding, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists.


1.2 "Binding Forecasts" shall mean the amount of each FreeStyle Product
----------------- estimated in each*** appearing in each Forecast.


1.3 "CGMS" shall mean a continuous glucose monitoring system.
----


1.4 "Confidential Information" shall mean, subject to the provisions of
------------------------ Article 11 hereof, (i) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as "Confidential" at the time it is delivered to the receiving party, or (ii) proprietary or confidential information disclosed orally hereunder which is identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in writing within thirty (30) days by the disclosing party.


1.5 "Customers" shall mean end-user customers of Disetronic, its
--------- Affiliates or its Subdistributors within the European Territory, and Pump Customers within the US Territory.


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1.6 "Disetronic Trademarks" shall mean any trademarks of Disetronic and/or
--------------------- its Affiliates, including without limitation, any trade names and service marks of Disetronic and/or its Affiliates.


1.7 "Dispute" shall mean any dispute, controversy or claim between
------- TheraSense and Disetronic arising out of or relating to the validity, construction, enforceability or performance of this Agreement, including disputes relating to alleged breach or to termination of this Agreement


1.8 "FDA" shall mean the U.S. Food and Drug Administration.
---


1.9 "Field of Use" shall mean single use, disposable, in vitro glucose
------------ monitoring strips utilizing a sample volume ***. It is understood that Field of Use does not include Strips intended for use with a continuous glucose monitoring system.


1.10 "Forecasts" shall mean a written forecast of the number of units of
--------- FreeStyle Products that Disetronic expects to purchase *** the number of units of each Freestyle Product identified by its stock keeping unit ("SKU") and its number associated with such product for inventory purposes.


1.11 "FreeStyle Product(s)" shall mean those products listed in Exhibit A
-------------------- attached hereto. TheraSense shall notify Disetronic as soon as reasonably feasible of any intended material change, discontinuation or addition to the Products listed on Exhibit A.


(i) The features, function and appearance of the FreeStyle Products listed in Exhibit A may be materially technically improved by TheraSense with *** prior written notice to Disetronic so long as the improved products meet or exceed the Product Specifications. TheraSense may make non- material changes in the FreeStyle products, such as changing components, without written notice to Disetronic.


(ii) The Freestyle Products listed in Exhibit A may be discontinued by TheraSense only with Disetronic's prior written consent, such consent not to be unreasonably withheld. If the parties agree to discontinue a FreeStyle Product listed on Exhibit A, and TheraSense does not replace such FreeStyle Product with a product that meets or exceeds the Product Specifications, then TheraSense and Disetronic shall engage in good faith discussions regarding an amendment to this Agreement, such amendment potentially including changes to the Minimum Purchase Obligations in Exhibit C or termination of the Agreement.


(iii) Additional products may be added by TheraSense to the FreeStyle Products listed in Exhibit A only with Disetronic's prior written consent, such consent not to be unreasonably withheld.


1.12 "FreeStyle Territory" shall mean, as of the Effective Date, the
------------------- European Territory and the U.S. Territory.


1.12.1 "European Territory" shall mean Switzerland, Germany, Austria,
------------------ The Netherlands, Denmark, Sweden, Norway, and Finland.


1.12.2 "U.S. Territory" shall mean the United States, Canada and
-------------- Mexico.


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1.13 "Minimum Purchase Obligations" shall mean the amount of Strips listed
---------------------------- on Exhibit C.


1.14 "National Registration(s)" shall mean national registration(s) for
------------------------ the FreeStyle Products, on a country-by-country basis, for countries selected by Disetronic within the European Territory.


1.15 "Net Revenues" shall mean the net sales derived by Disetronic from
------------ the sale of the FreeStyle Products in the European Territory, less the following amounts incurred in the sale of such FreeStyle Products: (i) trade, standard, or quantity discounts given; (ii) any rebates and retroactive price reductions given; (iii) the cost of any packaging, shipping and handling, (iv) any sales, use, and/or other excise taxes or duties actually paid, including without limitation VAT, (v) any amounts actually allowed or credited due to product rejections or returns, and (vi) any write-offs or allowances for bad debt.


1.16 "Other Distributor" shall mean a third party with whom TheraSense has
----------------- entered into a written agreement granting such third party the right to distribute one or more FreeStyle Products in any country within the European Union (such agreement to not include distribution rights in any country within the European Territory, other than passive sales rights as required by European Union laws and regulations).


1.17 "Other Distribution Agreement" shall mean a written agreement between
---------------------------- TheraSense and an Other Distributor granting the Other Distributor the right to distribute one or more FreeStyle Products in any country within the European Union (such countries to not include any country within the European Territory).


1.18 "Package" shall mean the System Kit package or the Strip package, as
------- applicable.


1.19 "Payment" shall mean*** termination of this Agreement.
-------


1.20 "Product Specifications" shall mean the specifications set forth in
---------------------- Exhibit E.


1.21 "Promotional Materials and Programs" shall mean any and all
---------------------------------- promotional, advertising and educational materials and programs, package data sheets, and other literature relating to the FreeStyle Products.


1.22 "Pump Customers" shall mean Disetronic's end user customers to whom
-------------- Disetronic, its Affiliates or Subdistributors have sold or otherwise transferred a Disetronic insulin pump, an infusion set, an insulin pen system, insulin pen- needles or infusion port systems.


1.23 "Receiving Party" shall mean the recipient of a shipment of FreeStyle
--------------- Product sent directly from TheraSense. The Receiving Party shall be Disetronic, an Affiliate or a Subdistributor.


1.24 "Sales and Inventory Records" shall mean a point-of-sale and
--------------------------- inventory record showing, at a minimum, date sold, quantity, price, serial number, shipment information, and the buyers' names and addresses of each of the FreeStyle Products sold, as well as the quarter-end inventory position on hand for each of the FreeStyle Products.


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1.25 "Shipping Location" shall mean TheraSense's facility currently
----------------- located at the address listed for TheraSense in Section 15.4 of this Agreement or such other location as TheraSense may designate.


1.26 "Subdistributor" shall mean a third party whom Disetronic has granted
-------------- the right to distribute the FreeStyle Products under Section 2.2 hereto. Unless expressly provided otherwise herein, such Subdistributors shall include wholesalers and retailers.


1.27 "Subdistributor Agreement" shall mean a written agreement between
------------------------ Disetronic and a Subdistributor binding the Subdistributor to terms and conditions substantially similar to those terms and conditions agreed upon by Disetronic in this Agreement


1.28 "TheraSense Trademarks" shall mean the TheraSense trademarks, marks,
--------------------- logos and trade names listed on Exhibit D hereto, as modified by TheraSense pursuant to Article 10.


1.29 "Transfer Price" shall mean the transfer prices set forth in Exhibit
-------------- B. All prices are in U.S. Dollars.


2. FREESTYLE APPOINTMENT AND AUTHORITY OF DISETRONIC


2.1 Appointment and Authority.


2.1.1 Exclusive Distributor. Subject to the terms and conditions
--------------------- herein, TheraSense hereby appoints Disetronic as TheraSense's exclusive distributor for the FreeStyle Products in the European Territory in the Field of Use, and Disetronic hereby accepts such appointment.


2.1.2 Non-Exclusive Distributor. Subject to the terms and conditions
------------------------- herein, TheraSense hereby appoints Disetronic as TheraSense's non-exclusive distributor for the FreeStyle Products to Disetronic's Pump Customers in the U.S. Territory in the Field of Use, and Disetronic hereby accepts such appointment.


2.1.3 Disetronic's sole authority shall be to purchase FreeStyle Products from TheraSense and to promote, market and resell such FreeStyle Products for delivery to Customers in the FreeStyle Territory in the Field of Use in accordance with the terms of this Agreement. Disetronic may promote, market and resell such FreeStyle products in the European Territory for delivery to Customers in the Field of Use directly and through Subdistributors. Disetronic may promote, market and resell such FreeStyle products in the U.S. Territory for delivery to Customers in the Field of Use directly and through Subdistributors, but not through wholesalers and retailers.


2.1.4 Notwithstanding the rights granted to Disetronic to distribute the FreeStyle Products hereunder, Disetronic shall have no right to directly:


(a) solicit sales or sell the FreeStyle Products to end users in the U.S. Territory other than to Pump Customers;


(b) advertise, solicit sales, promote market or sell TheraSense products, other than the FreeStyle Products in the Field of Use, in the FreeStyle Territory;


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(c) solicit orders from persons or entities located outside the FreeStyle Territory for Freestyle Products or other TheraSense products;


(d) sell in the U.S. Territory FreeStyle Products that were purchased for the European Territory.


It is understood and agreed by Disetronic that failure to comply with the terms of this Section 2.1.4 shall be deemed a material breach of this Agreement subject to the provisions of Sections 13.2 and 13.5 herein.


2.1.5 It is understood and agreed that Disetronic may appoint one or more of its Affiliates to perform any of its obligations under this Agreement, except as provided in Sections 3.2 and 7.4, provided such Affiliate enters into a Subdistributor Agreement as set forth in Section 2.2. below.


2.2 Subdistributors. Subject to the provisions of Section 2.1.3 and this
--------------- Section 2.2, Disetronic may appoint one or more third parties within any portion of the FreeStyle Territory to distribute the FreeStyle Products in the Field of Use to Customers. *** the appointment of such Subdistributor, Disetronic shall notify TheraSense of the identity of such Subdistributor. Except for the case where a Subdistributor is a wholesaler or retailer (provided, such exception shall not apply where such wholesaler or retailer is a Disetronic Affiliate), Disetronic shall not sell or otherwise transfer the FreeStyle Products to any Subdistributor until such Subdistributor enters into a Subdistributor Agreement. Notwithstanding the preceding ***. Disetronic shall only grant Subdistributors the right to make sales of the FreeStyle Products to Customers in the FreeStyle Territory in the Field of Use. Disetronic hereby guarantees the performance of each Subdistributor with the provisions set forth in this Section 2.2. When Disetronic receives a purchase order from a wholesaler or retailer, Disetronic shall include in its acknowledgement of such purchase order a statement that the FreeStyle Products are not to be repackaged, relabeled, or reshipped outside of the European Territory . In the event Disetronic becomes aware, or has reason to believe, that a Subdistributor (including a wholesaler or retailer) is relabeling, repackaging or reshipping product outside of the European Territory (except reshipping to any country within the European Union as part of a passive sale), Disetronic shall promptly notify TheraSense and shall take corrective action to halt such impermissible practice, including without limitation terminating such retailer's right to sell FreeStyle Products.


2.3 Reservation of Rights. Except as expressly provided in this Agreement,
--------------------- no right, title, or interest is granted, whether express or implied, by TheraSense to Disetronic. Nothing in this Agreement shall be deemed to grant to Disetronic rights in any products or technology other than the FreeStyle Products, nor shall any provision of this Agreement be deemed to restrict TheraSense's right to exploit technology, know-how, patents, or any other intellectual property rights relating to the FreeStyle Products in products other than the FreeStyle Products. Subject to Section 3.5, TheraSense reserves the right to appoint other authorized distributors or resellers of the FreeStyle Products outside the European Territory and other authorized non-exclusive distributors or resellers of the FreeStyle Products in the U.S. Territory. TheraSense also reserves the right to appoint third parties to distribute the FreeStyle Products inside the FreeStyle Territory in fields of use other than the Field of Use; for example, TheraSense reserves the right to sell Strips, either directly or through third parties, solely for use in calibrating a CGMS, provided TheraSense will only market and sell or otherwise transfer such Strips for use with such CGMS and in no event shall TheraSense sell and otherwise transfer more than five (5)


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Strips per CGMS sensor sold or otherwise transferred. Disetronic and TheraSense acknowledge that this Agreement does not prohibit passive sales of FreeStyle Products by either party to Customers within the FreeStyle Territory. It is further understood and agreed that TheraSense may distribute products, other than the FreeStyle Product, in the European Territory, either directly or indirectly, for any and all uses. TheraSense agrees that it will not by itself, or through a third party, actively promote, market or solicit the sale of FreeStyle Products in the Field of Use in the European Territory, unless TheraSense acknowledges Disetronic as TheraSense's exclusive distributor in conjunction with such promotion and/or marketing.


2.4 Conflict of Interest. Disetronic shall pursue reasonable sales
-------------------- policies and procedures to realize the maximum sales potential for the FreeStyle Products in the FreeStyle Territory. Disetronic agrees that if Disetronic Trademarks should appear on any in vitro disposable glucose monitoring product or associated meter product in the FreeStyle Territory, this would constitute a conflict of interest with respect to Disetronic's obligations to market and promote the FreeStyle Product, and Disetronic warrants to TheraSense that no Disetronic Trademarks currently appear on any glucose monitoring product. During the term of this Agreement, Disetronic and its Affiliates shall not place any Disetronic Trademarks on any in vitro disposable glucose monitoring product or associated meter product, other than FreeStyle Products, within the FreeStyle Territory. Notwithstanding the foregoing, Disetronic Trademarks may appear on ***. If TheraSense does not obtain the IVD-CE mark for the FreeStyle Product by ***, the parties shall discuss in good faith amending the terms of this Article 2 provided that TheraSense's failure to obtain such IVD-CE mark is not due to Disetronic's failure to meet its obligations.


2.5 Independent Contractors. The relationship of TheraSense and Disetronic
----------------------- established by this Agreement is that of independent contractors, and nothing contained in this Agreement shall be construed to (i) give either party the power to direct and control the day-to-day activities of the other, (ii) constitute the parties as partners, joint venturers, co-owners or otherwise as participants in a joint venture or common undertaking, and (iii) allow either party to create or assume any obligation on behalf of the other for any purpose whatsoever.


3. CONSIDERATION


3.1 Signature Payments. In partial consideration of the rights granted
------------------ herein, ten (10) days after the Effective Date, Disetronic shall pay to TheraSense a nonrefundable pre-payment for FreeStyle Product stock to be ordered, of One Million Five Hundred Thousand U.S. Dollars (U.S. $1,500,000) ("Prepayment"). As Disetronic orders Freestyle Product stock under this Agreement, the payments for such stock shall be credited against the Prepayment until the Prepayment has been exhausted.


3.2 Equity Investment. It is understood and agreed by the parties that
----------------- within ten (10) days of the Effective Date of this Agreement Disetronic Holding AG, the parent Company of Disetronic, shall pay to TheraSense Two Million Five Hundred Thousand U.S. dollars (U.S. $2,500,000) and (i) TheraSense shall enter into, and deliver to Disetronic Holding AG, the convertible promissory note attached hereto as Exhibit G; and (ii) Disetronic Holding AG and TheraSense shall sign the note purchase agreement attached hereto as Exhibit F. Disetronic hereby guarantees that Disetronic Holding AG will perform according to the terms of such convertible promissory note and such note purchase agreement.


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3.3 FreeStyle Product Prices.
------------------------


3.3.1 FreeStyle Products. For each FreeStyle Product purchased from
------------------ TheraSense, Disetronic shall pay to TheraSense an amount equal to the Transfer Price. The difference between the Transfer Price and Disetronic's price to its Customers shall be Disetronic's sole remuneration for distribution of the FreeStyle Products. The Transfer Prices set forth in Exhibit B shall remain in effect from the Effective Date until the first year anniversary of the Effective Date. Thereafter, Disetronic and TheraSense agree to renegotiate in good faith the Transfer Prices if inflation as measured by the U.S. producer price index increases by more than *** during any one year period, which renegotiated Transfer Prices shall reflect the intent of the parties as set forth herein.


3.3.2 Transfer Price Adjustments. By October 31 of each calendar
-------------------------- year Disetronic shall provide to TheraSense a non-binding written estimate of its sales of FreeStyle Products for the upcoming calendar year. These estimates shall be used to establish the Transfer Price for the upcoming year. In the event that Strip (as defined in Exhibit A) purchases in the first six (6) months of any calendar year for the European Territory are less than *** the level required to achieve the Transfer Price established for that year in the European Territory, then (i) TheraSense may raise the Transfer Price for additional purchases by Disetronic of Strips in such calendar year to a level consistent with purchases equal to twice the actual Strip quantities purchased in the first half, and (ii) Disetronic shall immediately pay TheraSense the amount corresponding to the underpayment accrued in the first half of the calendar year. Within 30 (thirty) days after the end of each calendar year, Disetronic or TheraSense shall pay to the other any amounts due relating to underpayments accrued or overpayments made in such calendar year.


3.3.3 Payment for FreeStyle Products. TheraSense shall submit an
------------------------------ invoice to Disetronic upon each shipment of FreeStyle Products ordered by Disetronic and as set forth below in Section 4.5. The invoice shall cover the Transfer Price for the FreeStyle Product in a given shipment plus any freight, taxes or other costs incident to the purchase or shipment initially paid by TheraSense but to be borne by Disetronic. The invoiced amounts for FreeStyle Products shipped shall be due in full net thirty (30) days upon the later of receipt by Disetronic of the FreeStyle Products or the invoice. For FreeStyle Product repaired or replaced under Section 4.6, the invoiced amounts for such FreeStyle Products shall be due in full net thirty (30) days upon receipt by Disetronic of such repaired or replaced FreeStyle Products.


3.4 Payment Method. Disetronic shall make payments to TheraSense under
-------------- this Agreement in immediately available funds to a bank account designated by TheraSense. All payments due hereunder shall be paid in U.S. dollars. Any payments due hereunder which are not paid within five (5) days of the date such payments are due shall be subject to a service charge of one per cent (1.0%) per month, calculated on the number of days such payment is delinquent. This Section 3.4 shall in no way limit any other remedies available to TheraSense. Disetronic shall pay all of TheraSense's costs and expenses (including reasonable attorneys' fees) to enforce and preserve TheraSense's rights under this Section 3.4.


3.5 Other Distributor Transfer Prices. In the event that TheraSense enters
--------------------------------- in to an Other Distribution Agreement with an Other Distributor, the transfer price for such FreeStyle Products to such Other Distributor shall be as follows:


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(a) in the event that the Strips to be distributed by an Other Distributor are *** distributed by Disetronic in the European Territory, the prices in the volume-based transfer price schedule for such Strips to such Other Distributor shall be ***; or


(b) in the event that the Strips to be distributed by an Other Distributor are *** distributed by Disetronic in the European Territory, the transfer price for such Strips to such Other Distributor shall be ***.


3.6 Taxes.
-----


(a) Any and all amounts payable hereunder by Disetronic do not include any government taxes (including without limitation sales, use, excise, withholding, and value-added taxes) or duties imposed by any governmental agency that are applicable to the export, import, or purchase of the FreeStyle Products (other than taxes on the net income of TheraSense), and Disetronic shall bear all such government taxes and duties (including, without limitation, sales, withholding, value-added and similar taxes). When TheraSense has the legal obligation to collect and/or pay such taxes, the appropriate amount shall be added to Disetronic's invoice and paid by Disetronic, unless Disetronic provides TheraSense with a valid tax exemption certificate authorized by the appropriate taxing authority.


(b) All payments by Disetronic specified hereunder (including those under this Article 3) are expressed as net amounts and shall be made free and clear of, and without reduction for, any withholding taxes. Any such taxes which are otherwise imposed on payments to TheraSense or Disetronic shall be the sole responsibility of Disetronic.


4. TERMS OF PURCHASE OF FREESTYLE PRODUCTS BY DISETRONIC


4.1 Solicitation and Placement of Orders from Customers. Disetronic shall
--------------------------------------------------- be responsible for marketing and soliciting orders for FreeStyle Products from Customers in the FreeStyle Territory.


4.2 Terms and Conditions. All orders of FreeStyle Products by Disetronic
-------------------- from TheraSense during the term of this Agreement shall be subject to the terms of this Agreement. Nothing contained in any purchase order or the like document submitted by Disetronic to TheraSense shall in any way modify or add to the terms and conditions in this Agreement.


4.3 Forecasts. Beginning on the Effective Date and thereafter ***,
--------- Disetronic shall provide to TheraSense a Forecast.


4.4 Order and Acceptance.
--------------------


4.4.1 Disetronic shall submit orders for units of FreeStyle Products so that such orders are receiv ...