Exhibit 10.1
EXECUTION COPY
Date: 29 October 2007
LifeScan, Inc.
Universal Biosensors Pty Ltd
Universal Biosensors, Inc.
Master Services and Supply Agreement

 

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Table of Contents

         
Agreed terms
    7  
 
       
1 Interpretation
    7  
 
       
1.1 Definitions
    7  
1.2 Construction
    12  
1.3 Headings
    13  
 
       
2 Action Taken after Effective Date
    13  
 
       
3 License
    13  
 
       
3.1 Grant of License
    13  
3.2 LifeScan rights
    13  
 
       
4 Joint Steering Committee
    13  
 
       
4.1 Establishment
    13  
4.2 Composition
    14  
4.3 Decision making
    14  
 
       
5 Supply of Products
    14  
 
       
5.1 Supply of Initial Products
    14  
5.2 Supply of Other Products
    15  
 
       
6 Purchase Price of Initial Products
    15  
 
       
6.1 Interim Costing Period
    15  
6.2 Post-Interim Costing Period
    16  
 
       
7 Orders, Inventory and Delivery
    18  
 
       
7.1 Forecasts and orders
    18  
7.2 Inventory
    19  
7.3 Lead Time
    19  
7.4 Past Due Orders
    19  
7.5 Delivery
    19  
7.6 Sub-Tier Component Supply Chain
    19  
7.7 Packaging for Shipment
    20  
7.8 Quarterly Business Reviews
    20  
7.9 Capacity
    20  
7.10 Supply Risk
    20  
 
       
8 Defective Products
    20  
 
       
8.1 Disposition of defective Products
    20  
8.2 Independent testing
    21  
8.3 Corrective action
    22  
 
       
9 Inspection
    22  
 
       
9.1 Rights of Inspection
    22  
9.2 Obligations to rectify
    22  
9.3 Acknowledgment
    22  

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10 Provision of Services
    23  
 
       
10.1 Supply of Initial Services
    23  
10.2 Supply of other Services
    23  
10.3 Manner of performing the Services
    23  
 
       
11 Fees
    24  
 
       
11.1 Quarterly Service Fee
    24  
11.2 Milestones
    25  
11.3 Lump Sum Service Fee
    25  
11.4 Audit Rights
    26  
 
       
12 Manufacturing Process Information and Other Intellectual Property
    26  
 
       
13 Sundry Obligations of UBS
    27  
 
       
13.1 Records
    27  
13.2 Reports
    27  
13.3 Equipment
    27  
13.4 Insurance
    28  
 
       
14 Restrictions on UBS and UBI activities
    28  
 
       
15 Representations and warranties
    28  
 
       
15.1 UBS Warranties
    28  
15.2 Execution and performance of agreement
    29  
15.3 EXCLUSION OF OTHER WARRANTIES
    29  
 
       
16 Compliance
    30  
 
       
16.1 Compliance with certain laws
    30  
16.2 Compliance with Policy on the Employment of Young Persons
    30  
16.3 Standards for Responsible External Manufacturing
    30  
16.4 Files and Work papers
    31  
16.5 Compliance with Environment, Safety And Industrial Hygiene
    31  
 
       
17 Quality Agreement
    32  
 
       
18 Indemnities
    32  
 
       
18.1 UBS indemnity
    32  
18.2 Indemnification by LifeScan
    32  
18.3 Indemnification procedures
    33  
18.4 Other Product Liability Claims
    33  
18.5 Limitation of Liability
    33  
 
       
19 Term and Termination
    34  
 
       
19.1 Term
    34  
19.2 Termination for breach
    34  
19.3 Termination for insolvency and bankruptcy
    34  
19.4 Termination for change of control
    34  
19.5 Regulatory termination
    34  
19.6 Additional LifeScan termination rights
    34  
19.7 Additional UBS termination rights
    35  
19.8 Consequences of termination
    35  

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20 Dispute Resolution
    36  
 
       
20.1 Mediation
    36  
20.2 Arbitration
    37  
 
       
21 Confidentiality and public announcements
    40  
 
       
21.1 Non-disclosure
    40  
21.2 Exceptions
    40  
21.3 Public Announcements
    40  
 
       
22 Notices
    41  
 
       
22.1 General
    41  
22.2 How to give a communication
    41  
22.3 Particulars for delivery of notices
    41  
22.4 Communications by post or international courier
    43  
22.5 Communications by fax
    43  
22.6 After hours communications
    43  
22.7 Process service
    43  
 
       
23 Force Majeure
    43  
 
       
23.1 Force Majeure Event
    43  
23.2 Failure to supply
    44  
 
       
24 Guarantee
    44  
 
       
24.1 Guarantee and Indemnity
    44  
24.2 Survival
    45  
24.3 Continuing Guarantee
    45  
24.4 Remedy
    45  
24.5 Reinstatement
    46  
24.6 Warranties
    46  
 
       
25 GST
    46  
 
       
25.1 Construction
    46  
25.2 Consideration GST exclusive
    46  
25.3 Payment of GST
    46  
25.4 Timing of GST payment
    47  
25.5 Tax invoice
    47  
25.6 Adjustment event
    47  
25.7 Reimbursements
    47  
 
       
26 General
    47  
 
       
26.1 Duty
    47  
26.2 Legal costs
    48  
26.3 Amendment
    48  
26.4 Waiver and exercise of rights
    48  
26.5 Rights cumulative
    48  
26.6 Consents
    48  
26.7 Governing law and jurisdiction
    48  
26.8 Assignment
    48  

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26.9 Counterparts
    49  
26.10 Entire understanding
    49  
26.11 Severability
    49  
26.12 Survival
    49  
26.13 Relationship of parties
    49  
26.14 LifeScan Affiliates
    50  
 
       
Schedule 1 — Initial Product Addendum
    51  
 
       
Schedule 2 — Initial Services Addendum
    55  
 
       
Schedule 3 — LifeScan Relevant Patents
    58  
 
       
Appendix A — Form of Product Addendum
    60  
 
       
Appendix B — Form of Services Addendum
    62  
 
       
Appendix C — Initial Joint Steering Committee Members
    64  
 
       
Appendix D — Policy on the Employment of Young Persons
    65  
 
       
Appendix E — Quality Agreement
    66  
 
       
Appendix F — Financial Years
    78  
 
       
Appendix G — UBS’ Insurance Requirements
    89  
 
       
Appendix H — Termination Matters
    91  
 
       
Appendix I — Action Taken after Effective Date
    92  
 
       
Appendix J — Standards for Responsible External Manufacturing
    93  

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Effective Date: 29 October 2007
Parties
LifeScan, Inc. a California corporation of 1000 Gibraltar Drive, Milpitas, CA
95035-6312, USA (LifeScan)
Universal Biosensors Pty Ltd ACN 098 234 309, a company incorporated in
Victoria, Australia of 1 Corporate Avenue, Rowville, Victoria 3178, Australia
(UBS)
Universal Biosensors, Inc., a Delaware corporation of having its registered
office at c/o Corporation Service Company 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808, USA (UBI)
Background
A. LifeScan carries on the business of marketing and selling blood glucose
monitoring systems for home, clinic and hospital use.
B. UBS carries on the business of researching, developing, manufacturing and
commercialising a range of in vitro diagnostic tests for point of care use.
C. LifeScan holds certain patents and other intellectual property rights
relating to innovative blood glucose testing devices and wishes to distribute
strips and meters as part of a new range of its blood glucose monitoring
systems.
D. LifeScan and UBI are parties to a Development Agreement, under which UBS has
been developing certain strips, meters and manufacturing methodology for
LifeScan.
E. UBS has developed the capability and established a facility to manufacture
and supply such strips to LifeScan.
F. UBS further has the expertise and information to provide a range of services
of interest to LifeScan, including services relating to the development and
testing of strips, the development and establishment of manufacturing facilities
for strips and the development of variants and future generations of strips and
meters.
G. The parties wish to enter into an agreement in relation to the provision by
UBS to LifeScan of Initial Product and Initial Services, and other Product and
other Services which LifeScan in the future may require from time to time.
H Whereas UBS is entitled to various payment streams under this Agreement which
are intended to enable UBS to recover its sunk costs and make a reasonable
return.
I To facilitate an efficient and effective business and contractual relationship
between the parties, they have agreed to establish a Joint Steering Committee.

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J For these purposes the parties have agreed to enter into this Master Services
and Supply Agreement to regulate, on the terms and subject to the conditions set
out in this agreement, the relationship between the parties and the provision by
UBS of all such products and services to LifeScan.
K. UBI has agreed to guarantee UBS’ obligations under this Agreement.
In consideration of the mutual promises, covenants and agreements below, the
parties agree as follows:
Agreed terms
Part 1: Preliminary Provisions

1   Interpretation   1.1   Definitions       In this Agreement:       Affiliate
means any corporation, firm, limited liability company, partnership, or other
entity that directly or indirectly controls, or is controlled by, or is under
common control with a party to this agreement but only for so long as that
control remains, whereafter that entity shall cease to be an Affiliate. For the
purpose of this definition, control means ownership, directly or through one or
more Affiliates, of fifty percent (50%) or more of the shares of stock entitled
to vote for the election of directors in the case of a corporation, or fifty
percent (50%) or more of the equity interests in the case of any other type of
legal entity, or status as a general partner in any partnership, or any other
arrangement whereby a party controls or has the right to control the board of
directors or equivalent governing body of a corporation or other entity.      
Agreed Standard Cost has the meaning given in clause 6.2(b)(i) of this
Agreement.       Agreement Intellectual Property Rights has the meaning given in
clause 12(c) of this Agreement.       Bankruptcy Event means in respect of
LifeScan or UBI: (i) it applies for or consents to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) it makes a general
assignment for the benefit of its creditors, or (iii) it takes any action to
take advantage of, or have any action taken against it under, any U.S. law
relating to bankruptcy, insolvency or reorganization.       Base Year has the
meaning given in clause 6.2(a) of this agreement.       Base Year Standard Cost
has the meaning given in the Initial Product Addendum.

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Business Day means a day which is not a Saturday, Sunday or bank or public
holiday in New York City, New York, U.S.A.
Change of Control means (a) the liquidation or dissolution of an entity or the
sale or other transfer by an entity (excluding transfers to Affiliates) of all
or substantially all of its assets; or (b) the occurrence of a tender offer,
stock purchase, other stock acquisition, merger, consolidation,
recapitalization, reverse split, sale or transfer of assets or other
transaction, as a result of which any person, entity or group (other than an
Affiliate of such entity prior to such transaction) (i) becomes the beneficial
owner, directly or indirectly, of securities of an entity representing more than
50% of the ordinary shares such entity or representing more than 50% of the
combined voting power with respect to the election of directors (or members of
any other governing body) of such entity’s then outstanding securities,
(ii) obtains the ability to appoint a majority of the Board of Directors (or
other governing body) of the entity, or (iii) obtains the ability to direct the
operations or management of the entity or any successor to the entity’s
business.
Confidential Information means:

  (a)   the terms and existence of this Agreement; and     (b)   all
confidential and proprietary information in whatever form or manner presented
which is disclosed pursuant to this Agreement or any Product Addendum or
Services Addendum and which relates to a disclosing party’s business or business
plans.

Corporations Act means the Corporations Act 2001 (Cth).
Cost Savings Amount has the meaning given in clause 6.2(b)(ii) of this
Agreement.
Covered Product means any Product covered by at least one valid claim of the
LifeScan Relevant Patents.
Development Agreement means the development and research agreement between UBI
and LifeScan, effective as of April 1, 2002, and any and all amendments thereto.
Effective Date means the date on the first page of this Agreement.
Fee Conversion Reference Date means the end of the Quarter following the receipt
by UBS of an aggregate of
*[REDACTED] in Quarterly Service Fees.
Financial Year means LifeScan’s fiscal year, as defined in Johnson & Johnson’s
internal accounting policies and procedures, which ends on the last Sunday of
any given Calendar Year. Appendix F sets forth the applicable Financial Years
through 2013.
Force Majeure Event means any cause which is beyond the reasonable control of a
party, including fire, explosion, flood, or other acts of God; acts,
regulations, or laws of any government; war or civil commotion; strike, lock-out
or labour disturbances, failure of public utilities or common carriers.
 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Government Authority means any relevant federal, state, territory, municipality
or other political subdivision, administrative or judicial body, court,
ministry, department, commission, authority, instrumentality, tribunal or agency
or other governmental, quasi-governmental or regulatory authority or any
self-regulatory organisation (including any relevant tax administrator) of any
applicable country and includes any person deriving a power directly or
indirectly from any other person or body referred to in this definition.
Initial Meter means a blood glucose meter adapted to use the Initial Product and
conforming to the specifications set out in the Initial Product Addendum
Initial Product means a blood testing strip which conforms with the Product
Specifications set out in the Initial Product Addendum.
Initial Product Addendum means the Addendum set out in Schedule 1.
Initial Services means the services described in Schedule 2.
Initial System means the blood glucose monitoring system consisting of the
Initial Meter, Initial Product, control solution, lancets and all other
applicable components.
Insolvency Event means in respect of UBS:

  (a)   it is (or states that it is) an insolvent under administration or
insolvent (each as defined in the Corporations Act);     (b)   it has had a
controller (as defined in the Corporations Act) appointed or is in liquidation,
in provisional liquidation, under administration or wound up or has had a
receiver or a receiver and manager appointed to any part of its property;    
(c)   it is subject to any arrangement, assignment, moratorium or composition,
protected from creditors under any statute or dissolved (in each case, other
than to carry out a reconstruction or amalgamation while solvent on terms
approved by the other parties to this Agreement);     (d)   an application or
order has been made (and in the case of an application, it is not stayed,
withdrawn or dismissed within 30 days), resolution passed, proposal put forward,
or any other action taken, in each case in connection with that person, which is
preparatory to or could result in any of (a), (b) or (c) above;     (e)   it is
taken (under section 459F(1) of the Corporations Act) to have failed to comply
with a statutory demand;     (f)   it is the subject of an event described in
section 459C(2)(b) or section 585 of the Corporations Act;     (g)   it is
otherwise unable to pay its debts when they fall due; or     (h)   something
having a substantially similar effect to (a) to (g) happens in connection with
UBS under the laws of Australia.

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Interim Costing Period means the period beginning upon the commencement of
manufacturing following the submission of LifeScan’s first order for commercial
launch of the Initial Product until the earlier of (i) the beginning of the
first Quarter in which LifeScan places an order in excess of fifty million
(50,000,000) Initial Products or (ii) the end of the Quarter during which the
third anniversary of the achievement of a Milestone occurs.
Joint Steering Committee has the meaning given in clause 4.1 of this Agreement.
Joint Steering Committee Member has the meaning given in clause 4.2 of this
Agreement.
Labour and Overhead Costs means actual labour and overhead costs assignable to
the manufacturing of Initial Product.
License Agreement means the license agreement between UBS and LifeScan,
effective as of 1 April 2002, and any and all amendments thereto.
Licensed Intellectual Property Rights means any and all LifeScan Intellectual
Property Rights required by, or reasonably necessary for, UBS to fulfil its
obligations under this Agreement.
LifeScan Files and Work Papers has the meaning given in clause 16.4 of this
Agreement.
LifeScan Intellectual Property Rights means any and all intellectual property
rights throughout the world, including:

  (a)   any patent, copyright, trade secret, know-how, technology, trade mark or
domain name (whether registered or unregistered), software, design, circuit
layout right, trade, business or company name or other proprietary right or any
right to registration of such rights; and     (b)   all present and future
rights in an invention, discovery, trade secret, know-how, concept, idea, data
or formula and rights in information, including any serendipitous discoveries,
granted by law or equity from time to time under the law of any jurisdiction
which LifeScan owns or is empowered to grant a license prior to or during the
Term of this Agreement. LifeScan Intellectual Property Rights shall further
include any foreign counterparts thereof, as well as all continuations,
continuation-in-part, divisions and renewals thereof, patent applications, all
patents which may be granted thereof, and all reissues, re-examinations and
extensions.

LifeScan Manufacturing Line Date means the date that LifeScan, a LifeScan
Affiliate or a contract manufacturer of LifeScan shall have qualified a
manufacturing line that is actually capable of producing the Initial Product in
a place other than Rowville, Victoria.
LifeScan Relevant Patents means those patents and patent applications identified
on Schedule 3, as well as any United States patent application, foreign
counterpart, division, continuation, continuation-in-part, reissue, renewal, and
re-examination thereof and patents issuing therefrom, patent extensions,
certificates of invention and applications for certificates of invention.

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Losses means any losses, liabilities, damages, claims, costs, charges and
expenses and includes any taxes, duties, levies, legal fees (on a full indemnity
basis) and other related expenses.
Lump Sum Service Fee — A has the meaning given in clause 11.3(a) of this
Agreement.
Lump Sum Services Fee — B has the meaning given in clause 11.3(c) of this
Agreement.
Material Costs means the cost of material comprising the Initial Product that is
consumed during the manufacturing of the Initial Product (e.g. substrates and
spacer), excluding the cost of the vials and enzymes.
Maximum Transfer Price means the cost per Initial Product set forth in the
Initial Product Addendum.
Milestone means the grant to LifeScan or its nominated Affiliate of regulatory
approval to market the Initial System in (a) Canada; (b) the United States; and
(c) Germany or the first other European country where LifeScan chooses to market
the Initial Product, each such approval constituting a separate Milestone.
Milestone Amount has the meaning given in clause 11.2(a) of this Agreement.
Policy has the meaning given in clause 16.2 of this Agreement.
Process has the meaning given in clause 12 of this Agreement.
Product means a strip which conforms with the relevant Product Specification,
and includes the Initial Product and any additional products that the parties
agree to include in a Product Addendum.
Product Addendum means a document executed by the parties for Product to be
manufactured pursuant to the terms of this Agreement substantially in the form
set out in Appendix A.
Product Specifications means:

  (a)   in the case of the Initial Product, the specifications set out in
Schedule 1;     (b)   in the case of any other Product, the specifications set
out in the relevant Product Addendum.

QSR means the quality system regulations applicable to a Product.
Quality Agreement means the quality agreement attached as Appendix E of this
Agreement.
Quarter means in respect of any Financial Year, the quarter end designated by a
circle on Appendix F for such Financial Year.
Quarterly Service Fee has the meaning given in clause 11.1(a)(i) of this
Agreement.

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    Raw Materials means the materials, components and packaging required to
manufacture and package the Products in accordance with the Product
Specifications.       Restricted Purposes has the meaning given in clause 14(a)
of this Agreement.       Services means the services described in Schedule 2 and
any other services identified in a Services Addendum.       Services Addendum
means a document executed by the parties for services to be provided by UBS to
LifeScan pursuant to the terms of this Agreement, substantially in the form set
out in Appendix B.       Sold means the sale or other transfer of Product by
LifeScan or any of its Affiliates to an unaffiliated third party that generates
direct sales revenue to LifeScan or any of its Affiliates.       Standards has
the meaning given in clause 16.3 of this Agreement.       Term has the meaning
given in clause 19.1 of this Agreement.       Territory means the entire world.
      UBS Capacity Limitation has the meaning given in clause 7.1(a).   1.2  
Construction       Unless expressed to the contrary, in this Agreement:

  (a)   words in the singular include the plural and vice versa;     (b)   any
gender includes the other genders;     (c)   if a word or phrase is defined its
other grammatical forms have corresponding meanings;     (d)   “includes” (and
its variants, i.e., “include” and “including”) means includes without
limitation;     (e)   no rule of construction will apply to a clause to the
disadvantage of a party merely because that party put forward the clause or
would otherwise benefit from it; and     (f)   a reference to:

  (i)   a person includes a partnership, joint venture, unincorporated
association, corporation and a government or statutory body or authority;    
(ii)   a person includes the person’s legal personal representatives,
successors, assigns and persons substituted by novation;     (iii)   any
legislation includes subordinate legislation under it and includes that
legislation and subordinate legislation as modified or replaced; and

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  (iv)   an obligation includes a warranty or representation and a reference to
a failure to comply with an obligation includes a breach of warranty or
representation.

  (g)   “$” or “dollar” means the lawful currency of the United States unless
otherwise expressly stated.

1.3   Headings       Headings do not affect the interpretation of this
Agreement.   2   Action Taken after Effective Date       After the Effective
Date but on or before January 15, 2008, and in consideration of the grant of
rights in clause 12, LifeScan shall take the action prescribed in Appendix I.  
3   License   3.1   Grant of License       LifeScan grants to UBS during the
Term of this Agreement a worldwide, royalty free, non-exclusive license to use
Licensed Intellectual Property Rights for the sole purpose of fulfilling its
obligations under this Agreement.   3.2   LifeScan rights

  (a)   Nothing in this Agreement shall be construed to restrict the right of
LifeScan or LifeScan’s Affiliates to engage in any business activity, investment
or other opportunity anywhere in the world. UBS acknowledges LifeScan shall have
sole discretion where and how to market and sell the Products.     (b)   UBS
acknowledges and agrees that LifeScan and its Affiliates are, and will continue
to be, actively involved in the design, development, acquisition, marketing,
manufacturing, promotion and sale of blood glucose monitoring products,
including products that directly and indirectly compete with the Products
hereunder.

4   Joint Steering Committee

4.1   Establishment       Within 30 Business Days of the Effective Date, a joint
committee (Joint Steering Committee) shall be established to manage the
relationship between the parties and the operation of this Agreement. The Joint
Steering Committee shall provide strategic oversight of the performance of the
parties’ obligations and the progress of the Products and Services provided
under this Agreement. The Joint Steering Committee shall have the power to
create and delegate responsibility to various working groups compromised of
members from the parties to carry out its obligations under this Agreement.

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4.2   Composition       The Joint Steering Committee shall consist of members
(Joint Steering Committee Members) from each of UBS and LifeScan. The Joint
Steering Committee Members shall be comprised of senior management from each
party (and the initial Joint Steering Committee members are set out in
Appendix C). Each party may change their nominated Joint Steering Committee
Member by written notice to the other party. The Joint Steering Committee shall
convene on a quarterly basis, to review and approve work plans and progress.
Additionally, the Joint Steering Committee shall be available on a more frequent
basis to address key issues that may arise. All meetings of the Joint Steering
Committee may be by teleconference, videoconference or any other means of
communication agreed to by the parties.   4.3   Decision making

  (a)   Each of UBS and LifeScan shall have one vote on the Joint Steering
Committee. If more than one representative of a party is present at a meeting,
such representatives shall agree upon how that party’s vote shall be cast. If
only one representative is present, that party shall be deemed authorized to
vote on the matters raised at the meeting. All decisions of the Joint Steering
Committee shall be unanimous.     (b)   No decision may be made by the Joint
Steering Committee unless a quorum is present, such quorum constituted by at
least one member present from each of LifeScan and UBS.     (c)   If the Joint
Steering Committee is unable to reach Agreement on any significant matter, then
within ten Business Days it shall be referred to the Company Group Chairperson
of LifeScan and the Chairperson of UBS and they shall endeavour to resolve such
matter in good faith within twenty Business Days of notification by the Joint
Steering Committee of the disagreement. If the Chairpersons are unable to reach
an Agreement on the matter: (i) with respect to any matter involving the quality
of the Products, regulatory affairs relating to the Products or any matter that
could require expenditures of funds by LifeScan in addition to those already
contemplated by this Agreement, LifeScan shall have the right to make the
decision; and (ii) with respect to all matters not covered by clause (i), the
matter shall be resolved pursuant to the provisions of clause 20 of this
Agreement.

    Part 2: Products   5   Supply of Products   5.1   Supply of Initial Products

  (a)   UBS will supply LifeScan or its designates with Initial Products in
accordance with and subject to the terms of this Agreement.

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  (b)   Except for binding orders placed in accordance with clause 7.1(c),
LifeScan is not obligated to obtain supply of the Initial Products or any other
Products exclusively, or at all, from UBS. Further, LifeScan shall have the
right to obtain supply of the Initial Products or any other Products solely from
its own manufacturing facilities or from any Affiliate or third party supplier
at any time.

5.2   Supply of Other Products

  (a)   From time to time the parties may agree that UBS will develop and / or
manufacture and supply additional Products to LifeScan. For purposes of
clarification, the Joint Steering Committee would agree on additional products,
cost recovery and success fees based on milestones achieved. In each such event,
the parties shall enter into a Product Addendum.     (b)   Each Product
Addendum, when executed will be attached to this Agreement and form part of and
be subject to the terms of this Agreement.     (c)   During the term of each
Product Addendum, UBS will manufacture and supply to LifeScan the Products
specified in that Product Addendum in accordance with and subject to the terms
of this Agreement.     (d)   In the event of a conflict between the terms of
this Agreement and the terms of any Product Addendum, the terms of this
Agreement will prevail, except to the extent that the applicable Product
Addendum expressly and specifically states an intention to supersede this
Agreement on a specific matter.     (e)   If a Product Addendum provides for the
amendment of a term of this Agreement, that amendment will be effective only in
relation to that Product Addendum and, unless expressly specified to the
contrary in the Product Addendum, will not otherwise amend this Agreement or
operate in relation to any other Product Addendum or Services Addendum.

6   Purchase Price of Initial Products   6.1   Interim Costing Period      
During the Interim Costing Period, LifeScan must pay to UBS in respect of each
Initial Product supplied by UBS to LifeScan or any of its designates:

  (a)   * [REDACTED]; and     (b)   * [REDACTED]

    UBS shall use its best efforts to minimize the amount of * [REDACTED] during
the Interim Costing Period. In no event shall the aggregate amount due under
clause 6.1(a) above for all Initial Products supplied in a given Quarter exceed
*[REDACTED]. LifeScan acknowledges and agrees that it has requested UBS to
obtain raw materials components known as enzymes and vials at its expense and
they shall not be included in the above cap and further provided that UBS is
permitted to include the cost of any enzyme and vials consumed in the
manufacturing process in any invoice for Initial Product.

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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6.2   Post-Interim Costing Period

  (a)   From the period beginning upon the end of the Interim Costing Period
through the end of the then current Financial Year (Base Year), the standard
cost of manufacturing an Initial Product to LifeScan shall be equal to the Base
Year Standard Cost. For the avoidance of doubt, such Base Year Standard Cost
excludes the cost of the enzymes and vials.     (b)   In June of each year,
commencing with the Base Year the parties will meet and by July 1st (provided,
that if the Base Year commences after June, then the parties shall meet as soon
as reasonably possible):

  (i)   agree upon the standard cost of Initial Product to apply for the
following Financial Year (Agreed Standard Cost) taking into account: (A) all
relevant costing and manufacturing information, which shall be supplied by UBS
along with reasonable supporting data, (B) assuming a volume of Initial Products
equal to LifeScan’s forecasted volume for such Financial Year; and (C) excluding
the cost of the enzyme and vials; and     (ii)   compare the Agreed Standard
Cost against the Base Year Standard Cost for the purposes of determining whether
the Agreed Standard Cost is less than the Base Year Standard Cost, in which case
the amount of the relevant difference is the Cost Savings Amount.

  (c)   Subject to clauses 6.2(d) and 6.2(e), in respect of each Financial Year
commencing with the Base Year, LifeScan must pay to UBS in respect of each
Initial Product supplied by UBS to LifeScan an amount equal to:

  (i)   the standard cost applicable for that year as determined in accordance
with clause 6.2(a) or clause 6.2(b);     (ii)   plus an amount equal to *
[REDACTED] of the portion of the standard cost of an Initial Product which is
not attributable to the cost of Material Costs; and     (iii)   plus *
[REDACTED] of the Cost Savings Amount if applicable.

      LifeScan shall in addition pay to UBS an amount for enzymes and vials in
accordance with clause 6.2(f).     (d)   The amount that LifeScan shall be
obligated to pay UBS in aggregate for each Initial Product shall in no event
exceed the Maximum Transfer Price plus the cost of enzyme and vials, provided,
that if in any Quarter following the end of the Interim Costing Period, LifeScan
orders less than 50 million Initial Products from UBS, clause 6.2(c) will not
apply in respect of that Quarter and LifeScan will pay UBS for the relevant
Initial Products in accordance with the costing methodology set out in clause
6.1.

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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  (e)   If there are factors outside the reasonable control of UBS that
adversely affect UBS’ ability to provide the Initial Product at a total cost
that does not exceed the Maximum Transfer Price plus the cost of the enzyme and
vials, the Joint Steering Committee will meet to consider a suspension or
ongoing change to the Maximum Transfer Price. If the parties cannot reach
Agreement then the provisions of clause 6.2(d) will apply and UBS may terminate
this Agreement in accordance with clause 19.7(b) or such shorter period as may
be agreed by the parties.     (f)   LifeScan acknowledges and agrees that it has
requested UBS to obtain raw materials components known as enzymes and vials at
its expense and that UBS is permitted to include the actual cost paid by UBS of
any enzyme and vials consumed in the manufacturing process in any invoice for
Initial Product. Such costs shall be excluded from the calculations of the Base
Year Standard Cost, the Agreed Standard Cost and the Cost Savings Amount.    
(g)   UBS shall invoice LifeScan for all payments due under this clause 6 with
such frequency as is mutually acceptable to the parties. All payments under this
clause 6 shall be payable by LifeScan within 45 days of receipt of an undisputed
invoice in immediately available funds. LifeScan shall notify UBS promptly of
any portion of an invoice it disputes and, subject to the then current
capability of the Accounts Payable system of LifeScan, LifeScan shall pay the
undisputed portion of such invoice while the dispute is being resolved.     (h)
  In order to support timely invoice processing UBS shall use commercially
reasonable efforts to ensure that: (i) the quantity of Products(s) shipped does
not exceed the quantity of Products ordered pursuant to the relevant purchase
order, (ii) the invoice sent by UBS to LifeScan reflects the correct LifeScan
purchase order number to which it relates, (iii) the unit pricing on the
invoices matches the unit pricing reflected on the purchase order to which it
relates, and (iv) each invoice shall reflect no more than one purchase order
number.     (i)   During the term of this Agreement, the parties agree to make
all commercially reasonable efforts to achieve cost reductions in cooperation
with one another through the continuous improvement of either party’s
production, procurement and supply processes in addition to any other general
improved efficiencies achieved by such party such as those based on labor
efficiencies and volume provided to the extent LifeScan is utilizing the
services of a third party vendor or contract manufacturer and is prohibited from
sharing those cost reductions with UBS, then it shall not be required to do so.
The foregoing notwithstanding, UBS shall in no event modify or substitute any
materials, components or processes used in the production, procurement or supply
of any Product without the prior written consent of LifeScan, which shall not be
unreasonably withheld. No such change shall in any way affect the safety or
quality of any Product, and all such changes shall conform to a QSR compliant
change control process mutually agreed to by UBS and LifeScan.

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  (j)   UBS shall keep complete and accurate records in sufficient detail to
evidence its costs and support for its invoices provided to LifeScan (the
“Financial Records”). For the sole purpose of verifying amounts owed under such
invoices, LifeScan (or its designated audit expert) shall have the right no more
than one time each calendar year, at its own expense, to review the Financial
Records for the preceding Quarters during the Term (other than those already
reviewed in a prior audit) at the location(s) where the Financial Records are
maintained by UBS upon thirty (30) days notice and during regular business
hours. Results of such review shall be made available to UBS. Further, if the
review reflects an overpayment to UBS, such overpayment shall be credited
against the next payment due UBS. If the overpayment is greater than five
percent (5%) of the amount that was otherwise due for a Quarter, UBS shall
reimburse LifeScan for the costs of such review. If no further payments are due
to UBS (e.g. due to termination of this Agreement), then UBS shall pay to
LifeScan the amount of such overpayment within forty-five (45) days of
LifeScan’s provision to UBS of the results of LifeScan’s review. If the review
reflects an underpayment to UBS, such underpayment shall be remitted by LifeScan
to UBS within forty-five (45) days.

7   Orders, Inventory and Delivery   7.1   Forecasts and orders

  (a)   On a monthly basis during the Term, LifeScan will provide UBS with a
rolling written forecast of LifeScan’s expected requirement for Products during
the following 12 months; provided, the first month of such forecast shall be
deemed binding on LifeScan and the balance of such written forecast shall be non
binding. On a quarterly basis, UBS will provide LifeScan with details of its
capacity limitations (the “UBS Capacity Limitation”). LifeScan agrees not to
order quantities of Product greater than the UBS Capacity Limitation. For
clarification purposes only, if there is a reduction in the UBS Capacity
Limitation which LifeScan considers arbitrary and capricious, it shall be
referred to the Joint Steering Committee for resolution.     (b)   LifeScan is
permitted to change the second month of its next forecast by plus or minus 25%
and change the third and fourth month of such forecast by plus or minus 50%
subject to the UBS Capacity Limitation.     (c)   LifeScan will place any orders
for the binding portion of any forecast given in accordance with clause 7.1(a)
by written or electronic purchase order (or by such other means agreed to by the
parties) to UBS, which will be placed in accordance with the lead-time
requirements set out in clause 7.3. UBS acknowledges that LifeScan is not
obligated to buy any specific amount of Products under this Agreement.

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  (d)   To the extent of any conflict or inconsistency between this Agreement
and any purchase order, purchase order release, confirmation, acceptance or any
similar document, the terms of this Agreement will prevail.

7.2   Inventory

  (a)   UBS will maintain inventories of Raw Materials sufficient for one month
of LifeScan’s forecasted requirements. These quantities may be adjusted as
agreed to by the Joint Steering Committee.     (b)   UBS will maintain inventory
of the Products on a first-in, first-out basis.

7.3   Lead Time       UBS shall develop a supply chain system (e.g. KanBan
levels, efficient processes) in cooperation with LifeScan and LifeScan
authorized third parties that will allow, within the UBS Capacity Limitation,
for a 30 day lead-time from a binding order until delivery.

7.4   Past Due Orders       UBS shall notify LifeScan immediately in the event
that any delivery date with respect to any Products shall not be met. In the
event of any such delay in the delivery of Products, UBS shall, at its own
expense, use its commercially reasonable efforts to expedite the delivery of any
past due order, including but not limited to approving overtime, premiums to
component suppliers, the difference between regular freight and premium freight
or air freight and any other measures which may be necessary or useful in timely
fulfilling LifeScan’s orders for Products hereunder.   7.5   Delivery

  (a)   Delivery and shipping terms for the Products will be FCA (Rowville,
Victoria) (IncoTerms 2000), unless otherwise agreed to by the parties.     (b)  
All shipments must be accompanied by a packing slip which describes the
articles, states the purchase order number and shows the shipment’s destination.
As required, UBS agrees to promptly forward the original bill of lading or other
shipping receipt for each shipment in accordance with LifeScan’s instructions.

7.6   Sub-Tier Component Supply Chain       UBS shall be responsible for
management of sub-tier suppliers for the Products and the performance of their
obligations.

  (a)   Additionally, UBS shall provide a supply continuity plan for the
Products manufactured by UBS to the Joint Steering Committee at least one
hundred and eighty (180) days prior to the commercial launch of the Products or
as soon as practicable prior to commercial launch.     (b)   Upon reasonable
notice, UBS shall provide LifeScan with access to supplier specifications,
documentation, quality process audit records, supplier contracts, scorecards and
costing information.

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  (c)   UBS shall work with the key sub-tier suppliers for the products to put
in place written supply agreements. Among other customary terms, UBS shall
negotiate to include in such supply agreements:

  (i)   No volume purchase commitments;     (ii)   Provisions to allow
assignment of the supply Agreement and all attendant rights to LifeScan or its
designee without supplier’s consent;     (iii)   Not less than 45 day payment
terms; and     (iv)   Rights to terminate the contract at UBS’ (or its
assignee’s) discretion upon no more than 6 months’ notice.

      In the event UBS is unable to obtain the Agreement of a sub-tier supplier
to (i)-(iv) above, then it shall notify LifeScan prior to signing the agreement
with such supplier in order to permit LifeScan the ability to obtain the
agreement of the supplier to such provision.

7.7   Packaging for Shipment       UBS will pack all Products ordered under this
Agreement in a manner agreed by LifeScan as being suitable for shipment to the
final destination and sufficient to enable the Products to withstand the effects
of shipping, including handling during loading and unloading.   7.8   Quarterly
Business Reviews       The operations teams of UBS and LifeScan will have
Quarterly business reviews to discuss quality performance, delivery performance,
cost and other elements as needed.   7.9   Capacity       UBS shall endeavour to
provide, qualify, maintain and allocate to LifeScan sufficient capacity on a
reasonable work and maintenance schedule to support at least 125% of LifeScan’s
forecasted requirements. UBS shall review capacity versus total demand on at
least a Quarterly basis and report findings to LifeScan’s management. UBS shall
promptly notify LifeScan at any time the forecasted volume during the succeeding
twelve (12) month period exceeds 75 percent of the manufacturing capacity.  
7.10   Supply Risk       In consultation with LifeScan, UBS shall develop and
execute a second sourcing strategy for key raw materials.   8   Defective
Products   8.1   Disposition of defective Products       LifeScan shall within a
reasonable time upon receipt of Product undertake a visual inspection for
evidence of any damage to any shipping containers, vials or Product caused
during transportation. Without prejudice to any other

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    remedy which LifeScan may have, UBS will replace at its own cost and
expense, including reimbursement of freight and disposition costs incurred by
LifeScan, the Products that fail to comply with the Products Specifications at
the time of delivery FCA Rowville or have any defects that were in existence at
the time of delivery FCA Rowville. LifeScan will notify UBS of the existence and
nature of any non-compliance or defect within a reasonable time and UBS (or its
nominee) will have a reasonable opportunity, not to exceed 10 Business Days from
receipt of notification, to inspect such defective Products and provide LifeScan
with detailed written instructions to return or dispose of such defective
Products. The Joint Steering Committee shall agree on a returned goods
authorization process. LifeScan shall have no obligation to pay for any of the
Products that are subject to such a claim of non-compliance or defect provided
if there is any dispute regarding the claim it shall be handled in accordance
with Section 8.2. If UBS fails to so inspect and instructs LifeScan as to the
disposition of such defective Products, LifeScan may dispose of such defective
Products as it sees fit and UBS shall:

  (a)   reimburse LifeScan for all direct, out-of-pocket costs incurred by
LifeScan in such disposition; and     (b)   replace such defective Products at
its own cost and expense,

    within 45 days of any disposal of Product or resolution of a LifeScan claim.
  8.2   Independent testing

  (a)   If the parties disagree as to the Products’ conformance to the Products
Specifications or whether the Products have such a defect, either party may
deliver the Products to an independent third-party laboratory, mutually and
reasonably acceptable to both parties, for analytical testing to determine
whether the Products fail to comply with the Products Specifications at the time
of delivery FCA Rowville or have any defects that were in existence at the time
of delivery FCA Rowville. The parties agree to accept the results of such
independent testing.     (b)   All costs associated with such third-party
testing shall be at LifeScan’s expense unless the tested Products are deemed by
such third-party to fail to comply with the Products Specifications at the time
of delivery FCA Rowville or have any defects that were in existence at the time
of delivery FCA Rowville, in which case all such costs, including reimbursement
of freight and disposition costs, shall be promptly paid by UBS.     (c)   No
inspection or testing of or payment for the Products by LifeScan or any
third-party agent of LifeScan shall constitute acceptance by LifeScan thereof,
nor shall any such inspection or testing be in lieu or substitution of any
obligation of UBS for testing, inspection and quality control as provided in the
Products Specifications or under applicable local, state, or federal laws,
rules, regulations, standards, codes or statutes.

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8.3   Corrective action

  (a)   In the event any Governmental Authority having jurisdiction shall
request or order, or if LifeScan shall determine that it is required to
undertake, any corrective action with respect to any of the Products, including
any recall, corrective action or field action, and the cause or basis of such
recall or action to the extent it is attributable to:

  (i)   a breach by UBS of any of its warranties, representations, obligations
or covenants contained in this Agreement; or     (ii)   the negligence or wilful
misconduct of UBS,

      then UBS shall be liable, and will reimburse LifeScan for the reasonable
costs of such action.     (b)   For the avoidance of doubt, the costs of such
recall or action payable by UBS shall only include the reasonable direct costs
actually expended by LifeScan in connection with such recall or action of
Products manufactured by UBS and shall not include any consequential, punitive,
exemplary, or multiplied damages. To the extent more than one party is
manufacturing Product and it is difficult to identify the specific Product
manufactured by UBS, then UBS shall only be responsible for the proportion of
Product it manufactured out of the total amount of Product Sold by LifeScan in
the prior Financial Year.

9   Inspection   9.1   Rights of Inspection       LifeScan will have the right
(directly or through an agent), upon reasonable notice to UBS and during regular
business hours, to inspect and audit the facilities being used by UBS for
production and storage of the Products to assure compliance by UBS (and will use
reasonable efforts to cause its suppliers) with all applicable rules and
regulations and with other provisions of this Agreement.   9.2   Obligations to
rectify       UBS will within 30 days remedy or cause the remedy of any
deficiencies which may be noted in any such audit of UBS by LifeScan under
clause 9.1 or, if any such deficiencies can not reasonably be remedied within
such 30 day period, present to LifeScan a written plan to remedy such
deficiencies as soon as possible. The failure by UBS to remedy or cause the
remedy of any such deficiencies within such 30 day period or to present such a
plan within such 30 day period and then use its best efforts to remedy or cause
the remedy of such deficiencies in accordance with such written plan, as the
case may be, shall be deemed a material breach of this Agreement.   9.3  
Acknowledgment       UBS acknowledges that the provisions of this clause 9
granting LifeScan certain audit rights shall in no way relieve UBS of any of its
obligations under this Agreement, nor shall such provisions require LifeScan to
conduct any such audits.

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    Part 3: Services   10   Provision of Services   10.1   Supply of Initial
Services       UBS has been supplying the Initial Services. After the Effective
Date, UBS will continue to supply the Initial Services to LifeScan in accordance
with Schedule  2 and in accordance with and subject to the terms of this
Agreement.   10.2   Supply of other Services

  (a)   From time to time the parties may agree that UBS will provide Services
to LifeScan. For purposes of clarification, the Joint Steering Committee would
agree on other Services, cost recovery and success fees based on milestones
achieved. An example of further Services would be a request from LifeScan to
create an additional manufacturing line in a LifeScan Manufacturing facility
including payment of the reasonable costs of UBS and a reasonable success fee
for qualification of the line. In each such event, the parties shall enter into
a Services Addendum.     (b)   During the term of each Services Addendum, UBS
will supply the Services specified in the applicable Services Addendum to
LifeScan.     (c)   Each Services Addendum, when executed will be attached to
this Agreement and form part of and be subject to the terms of this Agreement.  
  (d)   In the event of a conflict between the terms of this Agreement and the
terms of any Services Addendum, the terms of this Agreement will prevail, except
to the extent that the applicable Services Addendum expressly and specifically
states an intention to supersede this Agreement on a specific matter.     (e)  
If a Services Addendum provides for the amendment of a term of this Agreement,
that amendment will be effective only in relation to that Services Addendum and,
unless expressly specified to the contrary in the Services Addendum, will not
otherwise amend this Agreement or operate in relation to any other Services
Addendum or Product Addendum.

10.3   Manner of performing the Services       UBS must provide the Services:

  (a)   with due care and skill and in a timely manner;

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  (b)   in a proper and efficient manner using that standard of skill,
diligence, and prudence that would reasonably be expected from a prudent and
experienced provider of services similar to the Services;     (c)   in
compliance with all laws, regulations and standards with which UBS is legally
required to comply; and     (d)   in compliance with all policies of LifeScan
applicable to its business partners, of which it has been advised ahead of time
in this Agreement or the Services Addendum.

11   Fees   11.1   Quarterly Service Fee

  (a)   In consideration of the provision by UBS of Initial Services, LifeScan
or its designee will pay to UBS:

  (i)   a service fee each Quarter (the “Quarterly Service Fee”) calculated in
accordance with the remainder of this clause 11.1; and     (ii)   upon
achievement of a Milestone described in clause 11.2, the corresponding Milestone
Amount.

  (b)   The Quarterly Service Fee will be calculated as follows:

  (i)   for the first * [REDACTED] Covered Products Sold by LifeScan or its
Affiliates to third parties during any Financial Year: * [REDACTED] per Covered
Product;     (ii)   for any Covered Products Sold by LifeScan and its Affiliates
to third parties in excess of * [REDACTED] per Covered Product.

      For the avoidance of doubt, it is acknowledged the value of the initial
service to LifeScan is not easily quantifiable and will fluctuate during the
Term and the parties consider it best handled by a Quarterly Services Fee.
Therefore, the Quarterly Service Fee will be payable regardless of who
manufactures the Covered Products provided any Covered Products that have been
provided to third parties as free samples or for testing purposes (including
clinical trials) shall not be counted as “Sold” for purposes of calculating the
Quarterly Service Fee.         For the further avoidance of doubt, the
calculation of the amount of Covered Products Sold shall begin at zero each
Financial Year. The Quarterly Service Fee shall apply during the Interim Costing
Period.     (c)   Within 30 Business Days, of the end of each Quarter (or such
lesser time subject to the then current capabilities of LifeScan), LifeScan will
deliver to UBS a written statement setting forth:

  (i)   the number of Covered Products Sold during the previous Quarter; and

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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  (ii)   the calculation of the Quarterly Service Fee owed in respect of such
Quarter.

  (d)   Following receipt of the written statement from LifeScan pursuant to
clause 11.1(c), UBS will provide to LifeScan an invoice for the Quarterly
Service Fee amount reflected on LifeScan’s statement. LifeScan shall pay such
invoice within forty-five (45) days of receipt.

11.2   Milestones

  (a)   LifeScan shall pay to UBS an amount corresponding to the relevant
Milestone below (the “Milestone Amount”) within 45 days of the relevant
Milestone being achieved in each of the following countries:

  (i)   * [REDACTED];     (ii)   * [REDACTED]; and     (iii)   * [REDACTED].

      Each Milestone Amount shall only be paid once.

11.3   Lump Sum Service Fee

  (a)   At any time before the Fee Conversion Reference Date, if LifeScan has
not Sold Covered Products within two years from the Effective Date or ceases
selling all Covered Products for eighteen months, LifeScan may, at its option,
give notice of conversion of the Quarterly Service Fee to a one time lump sum
fee of * [REDACTED] (Lump Sum Service Fee — A).     (b)   If such Notice is
given pursuant to clause 11.3(a):

  (i)   LifeScan’s obligations to pay Quarterly Service Fees will permanently
cease at the end of the Quarter in which such notice was given; and     (ii)  
the Lump Sum Service Fee — A must be paid by LifeScan within thirty (30) days of
the end of the Quarter in which such notice was given.

  (c)   At any time after the Fee Conversion Reference Date, LifeScan may, at
its option, give notice of conversion of the Quarterly Service Fee to UBS. After
delivery of the notice of conversion to UBS, LifeScan shall only be required to
pay the Quarterly Service Fee for the remainder of the Financial Year in which
the notice of conversion was delivered to UBS. Promptly after the end of that
Financial Year, LifeScan will calculate and pay within forty-five (45) days a
one time lump sum fee (Lump Sum Service Fee — B) to be calculated by multiplying
the total of the Quarterly Service Fee for the relevant Financial Year in which
notice of conversion is given by the multiplier for such Financial Year as
identified below:

  (i)   * [REDACTED];     (ii)   * [REDACTED];     (iii)   * [REDACTED];

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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  (iv)   * [REDACTED];     (v)   * [REDACTED];     (vi)   * [REDACTED]; and    
(vii)   * [REDACTED].

11.4   Audit Rights       For the sole purpose of verifying amounts owed under
this clause 11, UBS (or its designated audit expert) shall have the right no
more than one time each Financial Year, at its own expense, to review the
Financial Records for the preceding Quarters during the Term (other than those
already reviewed in a prior audit) at the location(s) where the Financial
Records are maintained by LifeScan upon thirty (30) days notice and during
regular business hours. Results of such review shall be made available to
LifeScan. Further, if the review reflects an overpayment to UBS, such
overpayment shall be deducted from the next payment due to UBS. If the review
reflects an underpayment to UBS, such underpayment shall be remitted by LifeScan
to UBS within forty-five (45) days. If the underpayment is greater than five
percent (5%) of the amount that was otherwise due for a Quarter, LifeScan shall
reimburse UBS for the costs of such review. If no further payments are due to
UBS (e.g. due to termination of this Agreement), then LifeScan shall pay to UBS
the amount of such underpayment within forty-five (45) days of UBS’ provision to
LifeScan of the results of UBS’ review.

12   Manufacturing Process Information and Other Intellectual Property       As
part of the Services to be provided by UBS to LifeScan, UBS undertakes to comply
with the following provisions:

  (a)   Upon LifeScan’s request, UBS will provide LifeScan with a detailed
written description of UBS’ process for the manufacture of the Products,
including all underlying know-how relevant to the process and improvements
thereto (collectively the Process), in sufficiently clear and detailed terms in
a format mutually agreed by the parties so it can be readily followed to make
the Products in the manner UBS considers most efficient.     (b)   If UBS
alters, modifies or changes the Process, UBS will promptly amend the description
to include such alteration, modification or change.     (c)   In addition to all
the rights and licenses granted under the Development Agreement and License
Agreement, UBS acknowledges and agrees that all rights to all inventions,
improvements, discovery, trade secret, know-how, concept, idea and copyrightable
works (including derivatives of UBS’ pre-existing copyrighted works) and the
like created by UBS, its Affiliates or their officers, employers, and agents in
and to the Process, Products, Initial Meters and improvements thereto (Agreement
Intellectual Property Rights) will be owned by LifeScan and, if created

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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      under this Agreement, will vest in LifeScan immediately upon creation. UBS
will, and will procure that its Affiliates, officers, employees and agents who
have created any Agreement Intellectual Property Rights, execute an assignment
in favour of LifeScan and any other documents reasonably requested by LifeScan.
LifeScan hereby grants to UBS a non-revocable, worldwide, royalty-free,
exclusive license, with the right to sub-license to make, have made, use and
sell under and exploit in any way all rights in and to the Agreement
Intellectual Property Rights outside LifeScan’s Field (as defined in the License
Agreement).     (d)   UBS will allow LifeScan (or its designee) access to UBS’
premises to observe and understand the Process.     (e)   At LifeScan’s request,
UBS agrees to assist LifeScan in the implementation of manufacturing capacity at
a location of LifeScan’s choosing by entering into a Services Addendum.
Assistance may include but not be limited to: procurement and commissioning of
manufacturing equipment and processes, training for engineers, operators and
other production support personnel and other activities required to produce
Product. LifeScan agrees to pay UBS for its reasonable costs (approved in
advance by LifeScan) incurred in connection with the implementation of this
capacity and may include a success fee payable upon an agreed milestone.

    Part 4: Further Provisions   13   Sundry Obligations of UBS   13.1   Records
      UBS will keep and maintain proper records of the Products and Services
provided to LifeScan. LifeScan may, upon reasonable prior notice, inspect such
records at any time.   13.2   Reports       The Joint Steering Committee will
agree on any reports and the format they should be in. For example only, such
reports may include monthly report setting out details of:

  (a)   all Products and Services supplied during the preceding month; and    
(b)   all Raw Materials, work-in-progress and finished goods held by UBS.

13.3   Equipment

  (a)   UBS will provide equipment for the manufacture of strips to go into
vials with a minimum capacity of * [REDACTED] strips per year (the “Original
Line”) in Rowville, Victoria.

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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  (b)   The Joint Steering Committee will determine whether additional equipment
is required for the Original Line or for additional lines and which party is
responsible for paying for such equipment.

13.4   Insurance       UBS must use reasonable commercial efforts to obtain and
maintain for the duration of this Agreement the insurances set forth in
Appendix G:   14   Restrictions on UBS and UBI activities

  (a)   During the Term of this Agreement, neither UBS nor UBI will, directly or
indirectly, provide consultancy, advisory or other services to any third party
in relation to:

  (i)   the measurement of analytes for purposes of diagnosing, managing,
monitoring, prognosticating, treating or curing diabetes;     (ii)   the
collection and/or analysis of data for the purpose of diabetes management; or  
  (iii)   the delivery of one or more therapeutic agents for the purpose of
treating or managing abnormal glucose metabolism, including, without limitation,
the delivery of insulin, insulin analogs, Glucagon-like proteins/peptides
(GLPs), analogs of GLPs or GLP like hormones; or     (iv)   the measurement of
glucose in humans for any purpose, including, without limitation, tight glycemic
control, (clauses (i)-(iv) being collectively, Restricted Purposes).

  (b)   UBS and UBI acknowledge and agree that, other than the licenses
expressly granted under this Agreement, the Development Agreement and the
License Agreement, neither UBS nor UBI has any rights in any intellectual
property owned by LifeScan or its Affiliates, including, without limitation, any
intellectual property assigned to LifeScan under this Agreement, the Development
Agreement or the License Agreement.

15   Representations and warranties   15.1   UBS Warranties       UBS
represents, warrants and covenants to LifeScan that:

  (a)   all Products supplied in connection with this Agreement will be:

  (i)   of merchantable quality;     (ii)   fit for the purpose intended by this
Agreement;     (iii)   free from defects in material and workmanship; and    
(iv)   manufactured and provided in accordance with the relevant Product
Specifications and in compliance with this Agreement;

Notwithstanding the above, UBS shall not be responsible for any breach of these
warranties arising as a result of acts or omissions after delivery FCA Rowville.

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  (b)   it will comply with all applicable present and future laws, statutes,
ordinances and regulations and requirements of any applicable Government
Authority relating to:

  (i)   the design, manufacture and supply of the Products provided under this
Agreement; and     (ii)   the Services provided under this Agreement;

  (c)   the provision of the Products and Services to LifeScan by UBS will not
involve the misappropriation of confidential information or trade secrets of any
third party by UBS or its agents; and     (d)   it and its Affiliates and each
of their respective directors, officers, employees, agents and contractors who
will provide the Products and or the Services have the requisite skill,
knowledge and expertise to provide the Products and the Services in accordance
with the provisions of this Agreement.

15.2   Execution and performance of agreement       UBS and LifeScan each
represents and warrants to the other that:

  (a)   it is a corporation or company duly organised, validly existing and
registered under the laws of its place of incorporation;     (b)   it has full
right, power and authority to enter into and perform its obligations under this
Agreement; and     (c)   the performance of its obligations under this Agreement
will not result in a violation or breach of, and will not conflict with or
constitute a default under any agreement, contract, commitment or obligation to
which such party or any of its Affiliates is a party or by which it is bound.

15.3   EXCLUSION OF OTHER WARRANTIES       EXCEPT AS SET FORTH ABOVE, THE
PARTIES TO THIS AGREEMENT MAKE NO OTHER REPRESENTATIONS AND WARRANTIES, WHETHER
EXPRESSED OR IMPLIED, WRITTEN OR ORAL, STATUTORY OR OTHERWISE, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN
RESPECT OF THE PRODUCTS OR ANY WARRANTIES ARISING FROM COUSE OF DEALING OR USAGE
OF TRADE AND THE PARTIES FURTHER AGREE THAT TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAWS, ANY CONDITIONS OR WARRANTIES IMPOSED BY LEGISLATION OR STATUTE
ARE HEREBY EXCLUDED.

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16   Compliance   16.1   Compliance with certain laws       In the performance
of its obligations under this Agreement, UBS agrees to comply with, and to cause
its officers, employees, agents and contractors to comply with, the applicable
provisions of all applicable laws, rules and regulations in force from time to
time including all such legal requirements:

  (a)   prohibiting discrimination against any employee or applicant for
employment because of race, colour, religion, sex or national origin;     (b)  
prohibiting discrimination against any employee or applicant for employment
because of physical or mental handicap;     (c)   establishing fair or minimum
standards for workers; and     (d)   the Trade Practices Act (Cth) 1974, the
Therapeutic Goods Act (Cth) 1989, the Therapeutic Goods (Charges) Act 1989 and
the Therapeutic Goods Amendment (Medical Devices) Act (Cth) 2002.

16.2   Compliance with Policy on the Employment of Young Persons

  (a)   UBS warrants that it and each of its officers have read and understand
the Johnson & Johnson Policy on the Employment of Young Persons attached hereto
as Appendix D (Policy).     (b)   In the manufacture and supply of all the
Products hereunder, UBS will employ young persons only as permitted by the
Policy.     (c)   UBS will permit representatives of LifeScan to enter UBS’
premises at any reasonable time, and UBS will ensure that representatives of
LifeScan will be permitted to enter the premises of any subcontractor involved
in the manufacture or supply of any of the Products at any reasonable time, in
order to inspect relevant employment, health and safety records and to observe
the manufacturing process.     (d)   UBS will maintain the records necessary to
demonstrate compliance with the Policy and will provide to LifeScan, upon
LifeScan’s request, a written certification of such compliance annually during
the term of this Agreement.     (e)   If UBS fails to comply with this
clause 16.2, then it shall be deemed a material breach of this Agreement by UBS.

16.3   Standards for Responsible External Manufacturing

  (a)   UBS and its officers have read and understand the Johnson & Johnson
Standards for Responsible External Manufacturing (Standards) in effect as of the
Effective Date and set out in Appendix J.     (b)   LifeScan will have the right
to audit UBS to determine compliance with the Standards in accordance with the
provisions of clause 9.     (c)   UBS will maintain the records necessary to
demonstrate compliance with the Standards and shall provide to LifeScan, upon
LifeScan’s request, a written certification of such compliance annually during
the Term of this Agreement.

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  (d)   If UBS fails to comply with this clause 16.3, then it shall be deemed a
material breach of this Agreement by UBS.

16.4   Files and Work papers

  (a)   All papers or electronic records, files, documents, work papers and
other information in any form, whether marked “confidential” or not, provided by
LifeScan, its employees, agents or affiliates pursuant to this Agreement
(LifeScan Files and Work Papers) will remain the exclusive property of LifeScan.
    (b)   UBS and its subcontractors and agents will use LifeScan Files and Work
Papers only for purposes of performing UBS’ obligations under this Agreement.  
  (c)   LifeScan Files and Work Papers must be maintained in a manner that
prevents their intentional or accidental disclosure to other clients of UBS.    
(d)   LifeScan Files and Work Papers will be kept in UBS’ possession only so
long as it serves a necessary business purpose, the Services are ongoing and, in
no case, longer than 30 days after the termination of this Agreement, unless
otherwise agreed to in writing by an authorised agent of LifeScan.     (e)  
Upon 30 days after the termination of this Agreement, all LifeScan Files and
Work Papers in the possession, custody or control of UBS, or its subcontractors
and agents, will be returned to LifeScan unless directed otherwise by LifeScan.
Thereafter, no copies are to be made or retained by UBS.     (f)   UBS must
promptly notify LifeScan prior to the production of subpoenaed LifeScan Files
and Work Papers.     (g)   Notwithstanding the above requirements, UBS may
maintain records to the extent required by applicable statute, regulation or
other law and UBS’ counsel may retain one copy of LifeScan Files and Work Papers
for its records.

16.5   Compliance with Environment, Safety And Industrial Hygiene       With
respect to all environmental, safety and industrial hygiene matters related to
UBS’ activities under this Agreement, UBS will:

  (a)   inform LifeScan promptly of any significant adverse event (e.g., fires,
explosions, accidental discharges);     (b)   inform LifeScan promptly of any
allegations or findings of violations of applicable laws or regulations;     (c)
  allow LifeScan to inspect UBS’ facilities, such inspections to be at
reasonable times and upon reasonable notice; and

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  (d)   implement promptly any corrective action which may be reasonably
requested by LifeScan, including (without limitation) adhering to reasonable and
significant elements of the environmental, safety and industrial hygiene program
adhered to by LifeScan in its own operations.

17   Quality Agreement       The parties shall enter into the Quality Agreement
attached hereto as Appendix E.   18   Indemnities   18.1   UBS indemnity      
UBS shall indemnify and hold harmless LifeScan, its Affiliates and each of their
respective officers, directors, employees and agents from and against any and
all Losses that may be sustained, suffered or incurred by such indemnified
parties in connection with a third party claim arising from or related to:

  (a)   a material breach by UBS or UBI of any warranty, representation,
covenant or agreement made by UBS or UBI in this Agreement;     (b)   the
failure of any Product supplied by UBS to comply with the relevant Product
Specifications;     (c)   the negligence or wilful misconduct of UBS, UBI or
their Affiliates pursuant to this Agreement; or     (d)   the: (i) design;
(ii) validation; or (iii) manufacture of the Products by UBS, including the
presence of any defects or hidden defects in the Products except where UBS was
acting at the express written direction of LifeScan;

    provided that UBS will not be liable for any Losses to the extent that they
arise from (i) the negligence or wilful misconduct of LifeScan or its Affiliates
or (ii) any breach by LifeScan of any warranty, representation, covenant or
agreement made by LifeScan in this Agreement; and further provided
notwithstanding any other provision of this Agreement, the obligation of UBS to
indemnify LifeScan under this clause 18.1 shall terminate immediately upon
termination of this Agreement other than with respect to matters where prior to
the date of termination the indemnification procedures in clause 18.3 had
already commenced.   18.2   Indemnification by LifeScan       LifeScan shall
indemnify and hold harmless UBS and its Affiliates and each of their respective
officers, directors, employees and agents from and against any and all Losses
that may be sustained, suffered or incurred by such indemnified parties in
connection with a third party claim arising from or related to:

  (a)   a material breach by LifeScan of any warranty, representation, covenant
or agreement made by LifeScan in this Agreement;

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  (b)   the negligence or wilful misconduct of LifeScan or its Affiliates
pursuant to the Agreement;     (c)   the (i) design of any meter (ii) validation
of any meter (iii) manufacture of any meter or (iv) sale of any meter, including
any defects or hidden defects resulting therefrom; or     (d)   any claims that
the Products and/or meter infringes or violates the intellectual property rights
of any third party in the Territory;

    provided, that LifeScan will not be liable for any Losses to the extent that
they arise from (i) the negligence or wilful misconduct of UBS or its Affiliates
or (ii) any breach by UBS or UBI of any warranty, representation, covenant or
agreement made by UBS or UBI in this agreement.   18.3   Indemnification
procedures       Each indemnified party agrees to give the indemnifying party
prompt written notice of any matter upon which such indemnified party intends to
base a claim for indemnification (an Indemnity Claim) under this clause 18. With
respect to any Indemnity Claim relating solely to the payment of money damages
and which could not result in the indemnified party becoming subject to
injunctive or other equitable relief or otherwise adversely affect the business
of the indemnified party in any manner, and as to which the indemnifying party
shall have acknowledged in writing the obligation to indemnify the indemnified
party hereunder, the indemnifying party shall have the right to control the
defense of such claim, subject to the indemnified party’s ability to participate
in the defense at its own expense with its own counsel or to control the
proceedings if the indemnifying party is unable or unwilling to do so. The
indemnifying party shall not have the right to settle any claim without the
indemnified party’s written consent; provided, that the indemnifying party shall
have the right to settle such a claim without consent if (i) the settlement
involves only the payment of money damages and does not involve any equitable
relief or any conditions that could adversely affect the business of the
indemnified party in any manner and (ii) the settlement includes a complete
release of the indemnified party from such claim.   18.4   Other Product
Liability Claims       In the case of any claim received by UBS from a third
party for Losses related to personal injury or damage to property due to the use
of any Product that is not subject to an indemnification obligation by UBS under
clause 18.1, then UBS shall promptly notify LifeScan. LifeScan shall have the
right to control the defense of such claim and have the right to settle any
claim without UBS’ written consent.   18.5   Limitation of Liability      
NOTWITHSTANDING ANY OTHER TERM OF THIS AGREEMENT, THE PARTIES AGREE THAT TO THE
MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NO PARTY WILL BE LIABLE TO THE OTHER
FOR ANY SPECIAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING IN
CONNECTION WITH THIS AGREEMENT OR IN RESPECT OF ANY OF THE APPLICABLE PRODUCTS
OR SERVICES.

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19   Term and Termination   19.1   Term       This Agreement commences on the
Effective Date of signing and continues until terminated in accordance with this
clause 19.   19.2   Termination for breach       Either party may terminate this
Agreement (without payment of any penalty or fee) with immediate effect by
written notice to the other party if the other party is in material breach of a
term of this Agreement and the material breach is not remedied within 90 days of
written notice requiring it to do so.   19.3   Termination for insolvency and
bankruptcy       LifeScan may terminate this Agreement (without payment of any
penalty or fee) with immediate effect by written notice to UBS if UBS undergoes
an Insolvency Event or UBI undergoes a Bankruptcy Event. UBS may terminate this
Agreement (without payment of any penalty or fee) with immediate effect by
written notice to LifeScan if LifeScan undergoes a Bankruptcy Event.   19.4  
Termination for change of control       LifeScan may terminate this Agreement
(without payment of any penalty or fee) upon thirty (30) days prior written
notice if UBS or UBI undergoes a Change of Control. Notwithstanding the above,
LifeScan shall not have a right to terminate this Agreement in accordance with
the preceding sentence if (i) the LifeScan Manufacturing Line Date has occurred
and (ii) UBS or UBI, as the case may be, are not being acquired by a third party
that makes products that compete with the Initial Product.   19.5   Regulatory
termination       LifeScan may terminate this Agreement (without payment of any
penalty or fee) on thirty (30) days prior written notice if LifeScan is
prohibited from selling all Covered Products by a competent regulatory authority
or is otherwise unable to sell Product(s) due to regulatory or legal constraints
in the major markets in the Territory.   19.6   Additional LifeScan termination
rights

  (a)   LifeScan may terminate this Agreement (without payment of any penalty or
fee) upon thirty (30) days prior written notice of its reasonable determination
that the Initial Product is not an approvable product.     (b)   Prior to the
Fee Conversion Reference Date, LifeScan may terminate this Agreement without
cause upon prior written notice after payment of Lump Sum Service Fee — A to UBS
in accordance with clause 11.3(a).     (c)   After the Fee Conversion Reference
Date, LifeScan may terminate this Agreement without cause upon 12 months prior
written notice to UBS and in addition pay the Lump Sum Service Fee — B to UBS in
accordance with clause 11.3(c).

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19.7   Additional UBS termination rights       UBS may terminate this Agreement
by providing two years prior written notice to LifeScan (or such other period as
may be agreed between the parties) if:

  (a)   the Lump Sum Services Fee — A or the Lump Sum Services Fee — B has been
paid to UBS in which case LifeScan and UBS will negotiate a new transfer price
for the relevant Covered Products provided any failure to reach agreement will
be handled in accordance with clause 20; or     (b)   the parties fail to reach
agreement in relation to any suspension or change to the Maximum Transfer Price
as contemplated by clause 6.2(e).

    For the avoidance of doubt, UBS agrees that during the pendency of such
two-year notice period prior to termination, it shall fully perform its
obligations under this Agreement.   19.8   Consequences of termination

  (a)   If LifeScan terminates this Agreement under clause 19.6(b) or (c), it
will pay the amount specified in Appendix H:     (b)   In the event of
termination of this Agreement due to UBS’ breach pursuant to clause 19.2 UBS
acknowledges and agrees LifeScan shall have the option to require UBS to provide
all the manufacturing assistance services listed in clause 12(e) to enable
LifeScan promptly to put in place LifeScan’s own qualified manufacturing line it
being understood (i) LifeScan shall at its expense acquire any equipment it
requires for such line and (ii) such assistance shall be at the reasonable
expense of UBS.     (c)   In the event of termination of this Agreement by
LifeScan (other than for UBS’ breach pursuant to clause 19.2), LifeScan shall
purchase at book value all inventory of Products or components of Products, in
each case relating solely to Products that have been ordered by LifeScan and
solely to the extent that such inventory is saleable and in compliance with the
applicable Product Specifications (Qualified Inventory); provided that, LifeScan
shall not be obligated to pay for more than a six month supply (determined on
the basis of orders submitted by LifeScan in the course of the six months
preceding termination) of such inventory and components.     (d)   In the event
of termination of this Agreement by LifeScan for UBS’ breach pursuant to clause
19.2 or termination of this Agreement by UBS, LifeScan shall have the option to
purchase at book value all or any portion of the Qualified Inventory.     (e)  
Termination of this Agreement for any reason shall not release either party
hereto from any liability which at such time has already accrued or which
thereafter accrues from a breach or default prior to such expiration or
termination, nor affect in any way the survival of any other right, duty or
obligation of either party hereto which is expressly stated elsewhere in this
Agreement to survive such termination.

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  (f)   Upon termination of this Agreement, UBS shall transfer to LifeScan in an
orderly and prompt fashion all records and data relating to the Products,
including the device master record, device history record, design history file
and all product inquiry records, and such records and data shall be the property
of LifeScan. UBS shall also cooperate with LifeScan to achieve an orderly
transition of the manufacturing operations for the Products to LifeScan or its
designee.

20   Dispute Resolution   20.1   Mediation

  (a)   Any dispute, controversy or claim arising out of or related to this
Agreement, or the interpretation, application, breach, termination or validity
thereof, including any claim of inducement by fraud or otherwise, shall, before
submission to mediation or arbitration, first be submitted for resolution to the
Joint Steering Committee in accordance with clause 4.3(c). If the dispute is not
resolved in accordance with that clause, it will then be mediated through
non-binding mediation in accordance with The CPR Mediation Procedure then in
effect of the International Institute for Conflict Prevention and Resolution
(CPR) available at www.cpradr.org/m_proced.htm, except where that procedure
conflicts with these provisions, in which case these provisions control. The
mediation shall be conducted in New York City, Borough of Manhattan and shall be
attended by a senior executive with authority to resolve the dispute from each
of the parties.     (b)   The mediator shall be neutral, independent,
disinterested and shall be selected from a professional mediation firm such as
JAMS or CPR.     (c)   The parties shall promptly confer in an effort to select
a mediator by agreement. In the absence of such an agreement within 10 days of
initiation of the mediation, the mediator shall be selected by CPR as follows:
CPR shall provide the parties with a list of at least 15 names from the CPR
Panels of Distinguished Neutrals. Each party shall exercise challenges for
cause, two peremptory challenges, and rank the remaining candidates within 5
working days of receiving the CPR list. The parties may together interview the
three top-ranked candidates for no more than one hour each and, after the
interviews, may each exercise one peremptory challenge. The mediator shall be
the remaining candidate with the highest aggregate ranking.     (d)   The
mediator shall confer with the parties to design procedures to conclude the
mediation within no more than 45 days after initiation. Under no circumstances
may the commencement of arbitration under clause 20.2 be delayed more than
45 days by the mediation process specified herein absent contrary agreement of
the parties.

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  (e)   Each party agrees not to use the period or pendency of the mediation to
disadvantage the other party procedurally or otherwise. No statements made by
either side during the mediation may be used by the other or referred to during
any subsequent proceedings.     (f)   Each party has the right to pursue
provisional relief from any court, such as attachment, preliminary injunction,
replevin, etc., to avoid irreparable harm, maintain the status quo, or preserve
the subject matter of the arbitration, even though mediation has not been
commenced or completed.

20.2   Arbitration

  (a)   Any dispute, claim or controversy not resolved in accordance with Clause
20.1, will be submitted for resolution to arbitration pursuant to the rules then
pertaining of the International Institute for Conflict Prevention and Resolution
for Non-Administered Arbitration (available at
http://www.cpradr.org/arb-intro.asp?M=9.3), or successor (CPR), except where
those rules conflict with these provisions, in which case these provisions
control. The arbitration will be held in New York City, Borough of Manhattan.  
  (b)   The panel shall consist of three arbitrators chosen from the CPR Panels
of Distinguished Neutrals (or, by agreement, from another provider of
arbitrators) each of whom is a lawyer with at least 15 years experience with a
law firm or corporate law department of over 25 lawyers or who was a judge of a
court of general jurisdiction. In the event the aggregate damages sought by the
claimant are stated to be less than $5 million, and the aggregate damages sought
by the counterclaimant are stated to be less than $5 million, and neither side
seeks equitable relief, then a single arbitrator shall be chosen, having the
same qualifications and experience specified above. Each arbitrator shall be
impartial and independent of the parties and shall abide by the Code of Ethics
for Arbitrators in Commercial Disputes (available
at http://www.adr.org/EthicsAndStandards).     (c)   The parties agree to
cooperate (1) to attempt to select the arbitrator(s) by agreement within 45 days
of initiation of the arbitration, including jointly interviewing the final
candidates, (2) to meet with the arbitrator(s) within 45 days of selection and
(3) to agree at that meeting or before upon procedures for discovery and as to
the conduct of the hearing which will result in the hearing being concluded
within no more than nine (9) months after selection of the arbitrator(s) and in
the award being rendered within 60 days of the conclusion of the hearings, or of
any post-hearing briefing, which briefing will be completed by both sides within
45 days after the conclusion of the hearings.

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  (d)   In the event the parties cannot agree upon selection of the
arbitrator(s), the CPR will select arbitrator(s) as follows: CPR shall provide
the parties with a list of no less than 25 proposed arbitrators (15 if a single
arbitrator is to be selected) having the credentials referenced above. Within
25 days of receiving such list, the parties shall rank at least 65% of the
proposed arbitrators on the initial CPR list, after exercising cause challenges.
The parties may then interview the five candidates (three if a single arbitrator
is to be selected) with the highest combined rankings for no more than one hour
each and, following the interviews, may exercise one peremptory challenge each.
The panel will consist of the remaining three candidates (or one, if one
arbitrator is to be selected) with the highest combined rankings. In the event
these procedures fail to result in selection of the required number of
arbitrators, CPR shall select the appropriate number of arbitrators from among
the members of the various CPR Panels of Distinguished Neutrals, allowing each
side challenges for cause and three peremptory challenges each.     (e)   In the
event the parties cannot agree upon procedures for discovery and conduct of the
hearing meeting the schedule set forth in paragraph c above, then the
arbitrator(s) shall set dates for the hearing, any post-hearing briefing, and
the issuance of the award in accord with the paragraph c schedule. The
arbitrator(s) shall provide for discovery according to those time limits, giving
recognition to the understanding of the parties that they contemplate reasonable
discovery, including document demands and depositions, but that such discovery
be limited so that the paragraph c schedule may be met without difficulty. In no
event will the arbitrator(s), absent agreement of the parties, allow more than a
total of ten days for the hearing or permit either side to obtain more than a
total of 40 hours of deposition testimony from all witnesses, including both
fact and expert witnesses, or serve more than 20 individual requests for
documents, including subparts, or 20 individual requests for admission or
interrogatories, including subparts. Multiple hearing days will be scheduled
consecutively to the greatest extent possible.     (f)   The arbitrator(s) must
render their award by application of the substantive law of the State of New
York and are not free to apply “amiable compositeur” or “natural justice and
equity.” The arbitrator(s) shall render a written opinion setting forth findings
of fact and conclusions of law with the reasons therefor stated. A transcript of
the evidence adduced at the hearing shall be made and shall, upon request, be
made available to either party. The arbitrator(s) shall have power to exclude
evidence on grounds of hearsay, prejudice beyond its probative value,
redundancy, or irrelevance and no award shall be overturned by reason of such
ruling on evidence. To the extent possible, the arbitration hearings and award
will be maintained in confidence.     (g)   In the event the panel’s award
exceeds $5 million in monetary damages or includes or consists of equitable
relief, or rejects a claim in excess of that amount or for that relief, then the
losing party may obtain review of the arbitrators’ award or decision by a single
appellate arbitrator (the Appeal Arbitrator) selected from the CPR Panels of
Distinguished Neutrals by agreement or, failing agreement within seven working
days, pursuant to the selection procedures specified in paragraph d above. If
CPR cannot provide such services, the parties will together select another
provider of arbitration services that can. No Appeal Arbitrator shall be
selected unless he or she can commit to rendering a decision within forty-five
days following oral argument as provided in paragraph h. Any such review must be
initiated within thirty (30) days following the rendering of the award
referenced in f above.

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  (h)   The Appeal Arbitrator will make the same review of the arbitration
panel’s ruling and its bases that the U.S. Court of Appeals of the Circuit where
the arbitration hearings are held would make of findings of fact and conclusions
of law rendered by a district court after a bench trial and then modify, vacate
or affirm the arbitration panel’s award or decision accordingly, or remand to
the panel for further proceedings. The Appeal Arbitrator will consider only the
arbitration panel’s findings of fact and conclusions of law, pertinent portions
of the hearing transcript and evidentiary record as submitted by the parties,
opening and reply briefs of the party pursuing the review, and the answering
brief of the opposing party, plus a total of no more than four (4) hours of oral
argument evenly divided between the parties. The party seeking review must
submit its opening brief and any reply brief within seventy-five (75) and one
hundred thirty (130) days, respectively, following the date of the award under
review, whereas the opposing party must submit its responsive brief within one
hundred ten (110) days of that date. Oral argument shall take place within five
(5) months after the date of the award under review, and the Appeal Arbitrator
shall render a decision within forty-five (45) days following oral argument.
That decision will be final and not subject to further review, except pursuant
to the Federal Arbitration Act.     (i)   The parties consent to the
jurisdiction of the Federal District Court for the district in which the
arbitration is held for the enforcement of these provisions and the entry of
judgment on any award rendered hereunder (including after review by the Appeal
Arbitrator where such an appeal is pursued). Should such court for any reason
lack jurisdiction, any court with jurisdiction shall act in the same fashion.  
  (j)   Each party has the right before or, if the arbitrator(s) cannot hear the
matter within an acceptable period, during the arbitration to seek from the
appropriate court provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain the status quo,
or preserve the subject matter of the arbitration.     (k)   Each party hereto
waives its right to trial of any issue by jury.     (l)   Each party hereto
waives any claim to punitive, exemplary or multiplied damages from the other.  
  (m)   Each party hereto waives any claim of consequential damages from the
other.     (n)   Each party hereto waives any claim for attorneys’ fees and
costs and prejudgment interest from the other.

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21   Confidentiality and public announcements   21.1   Non-disclosure       Each
party must keep all Confidential Information of the other party confidential in
the same manner that it applies to its own confidential information and must not
use that Confidential Information except as necessary for the purposes of this
Agreement or to exercise rights and obligations under this Agreement, the
License Agreement or the Development Agreement. Confidential Information
received by a party may also be disclosed or revealed to employees of that party
or employees of its Affiliates who are under an obligation to keep confidential
proprietary information, or to a party’s contractors, suppliers, consultants,
advisors or customers under a similar obligation of confidentiality. Nothing
herein is intended to prevent a party using confidential Information for
purposes of seeking a patent application, or seeking or maintaining regulatory
approvals of a Product or for regulatory compliance.   21.2   Exceptions      
Each party’s obligations under clause 21.1 do not apply to any information
which:

  (a)   is known to the receiving party prior to being received from the
disclosing party, as established by its written records;     (b)   is or,
without fault of the receiving party becomes, publicly known;     (c)   is
received by either party from a third party without an obligation of confidence
and having a right to disclose the same;     (d)   is developed by the receiving
party independent of any disclosure of Information hereunder, as established by
its written records; or     (e)   is required to comply with a court or
administrative subpoena or order, provided the receiving party, where reasonably
practicable, gives the other timely notice of the contemplated disclosure and
provides the disclosing party the opportunity to intervene to preserve the
confidentiality of the Confidential Information.     (f)   is required to be
disclosed by law or the listing rules of a recognized stock exchange, provided
the party using this exception shall have given, to the extent reasonably
possible, not less than two calendar days prior notice to the other party to
seek confidential treatment for any required disclosure.

21.3   Public Announcements       The parties hereto covenant and agree that,
except as provided for herein below, each will not from and after the date
hereof make, issue or release any public announcement, press release, statement
or acknowledgment of the existence of, or reveal publicly the terms, conditions
and status of, the

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    transactions contemplated herein, without the prior written consent of the
other party as to the content and time of release of and the media in which such
statement or announcement is to be made; provided, however, that in the case of
announcements, statements, acknowledgments or revelations which either party is
required by law or the listing rules of a recognised stock exchange by which it
is bound, to make, issue or release, the making, issuing or releasing of any
such announcement, statement, acknowledgment or revelation by the party so
required to do so by law shall not constitute a breach of this Agreement if such
party shall have given, to the extent reasonably possible, not less than two
(2) calendar days prior notice to the other party, and shall have attempted, to
the extent reasonably possible, to clear such announcement, statement,
acknowledgment or revelation with the other party. UBS shall not use the name of
LifeScan or the name of any of LifeScan’s Affiliates for advertising or
promotional purposes without the prior written consent of LifeScan. In
furtherance of the foregoing, UBS shall not originate any publicity or other
announcement, written or oral, whether to the public, the press, the trade,
LifeScan’s or UBS’ customers or otherwise, relating to this Agreement or the
existence of an arrangement between the parties, without the prior written
approval of LifeScan. Notwithstanding the above, it is contemplated by the
parties that UBS may issue an announcement on or after the Effective Date and a
redacted form of the Agreement will be filed by UBI with the United States
Securities and Exchange Commission.   22   Notices   22.1   General       A
notice, demand, certification, process or other communication relating to this
Agreement must be in writing in English and may be given by an agent of the
sender.   22.2   How to give a communication       In addition to any other
lawful means, a communication may be given by being:

  (a)   personally delivered;     (b)   left at the party’s current address for
notices;     (c)   sent to the party’s current address for notices by pre-paid
international courier, ordinary mail or pre-paid airmail, as applicable; or    
(d)   sent by fax to the party’s current fax number for notices.

    Notwithstanding the above, any written notice actually received by a party
shall be deemed sufficient for purposes of this clause.   22.3   Particulars for
delivery of notices

  (a)   The particulars for delivery of notices are initially:

         
 
  LifeScan    
 
       
 
  Address:   1000 Gibraltar Drive, Milpitas, CA 95035-6312, USA

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  Fax:   1 408-942-3555
 
       
 
  Attention:   Worldwide Vice President, Business Development
 
       
 
  With a copy to:    
 
       
 
  Address:   Johnson & Johnson,
 
      One Johnson & Johnson Plaza, New Brunswick, NJ
08933, USA
 
       
 
  Fax:   1 732-524-2788
 
       
 
  Attention:   Associate General Counsel, Medical Device & Diagnostics
 
       
 
  UBI    
 
       
 
  Address:   1 Corporate Avenue,
 
      Rowville, Victoria 3178
 
       
 
  Fax:   61 3 9213 9099
 
       
 
  Attention:   Chief Executive Officer
 
       
 
  With a copy to:    
 
       
 
  Address:   Venable LLP,
 
      8010 Towers Crescent Drive, Suite 300, Vienna, Virginia
22182, USA
 
       
 
  Fax:   1 703-821-8949
 
       
 
  Attention:   Elizabeth Hughes, Esq.

  (b)   Each party may change its particulars for delivery of notices by notice
to each other party.

         
 
  UBS    
 
       
 
  Address:   1 Corporate Avenue,
 
      Rowville, Victoria 3178
 
      Australia
 
       
 
  Fax:   61 3 9213 9099
 
       
 
  Attention:   Chief Executive Officer
 
       
 
  With a copy to:    
 
       
 
  Address:   PFM Legal,
 
      Level 12, 117 York Street,
 
      Sydney NSW 2000
 
       
 
  Fax:   61 2 9267-8196
 
       
 
  Attention:   Cameron Billingsley

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  (c)   Each party may change its particulars for delivery of notices by notice
to each other party.

22.4   Communications by post or international courier       Subject to
clause 22.6, a communication is given if posted or couriered:

  (a)   within Australia to an Australian address, three Business Days after
posting; or     (b)   in any other case using the post, ten Business Days after
posting; or.     (c)   three business days after delivery to a recognized
international courier.

22.5   Communications by fax       Subject to clause 22.6, a communication is
given if sent by fax, when the sender’s fax machine produces a report that the
fax was sent in full to the addressee. That report is conclusive evidence that
the addressee received the fax in full at the time indicated on that report.  
22.6   After hours communications       If a communication is given:

  (a)   after 5.00 pm in the place of receipt; or     (b)   on a day which is a
Saturday, Sunday or bank or public holiday in the place of receipt,

    it is taken as having been given at 9.00 am on the next day which is not a
Saturday, Sunday or bank or public holiday in that place.   22.7   Process
service       Any process or other document relating to litigation,
administrative or arbitral proceedings relating to this Agreement may be served
by any method contemplated by this clause 22 or in accordance with any
applicable law.   23   Force Majeure   23.1   Force Majeure Event

  (a)   If either party is prevented from performing any of its obligations
under this Agreement due to a Force Majeure Event, such non-performing party
will not be liable for breach of this Agreement with respect to such
non-performance to the extent any such non-performance is due to a Force Majeure
Event.     (b)   Such non-performance will be excused for three months or as
long as such event shall be continuing (whichever occurs sooner), provided that
the non-performing party gives immediate written notice to the other party of
the Force Majeure Event.     (c)   Such non-performing party must use all
reasonable endeavours to remedy the Force Majeure Event and to resume
performance of its affected obligations as soon as practicable.

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23.2   Failure to supply

  (a)   Notwithstanding the provisions of clause 23.1, in the event that UBS is
unable or unwilling or fails to supply any of the Products in such quantities as
LifeScan requests and in compliance with the required delivery periods and
subject to the UBS Capacity Limitation (whether due to the occurrence of a Force
Majeure Event or otherwise), then:

  (i)   UBS will make available to LifeScan or its designee access to any
technical and proprietary materials, information and techniques necessary or
helpful for LifeScan to procure required raw materials or produce or arrange an
alternative supplier of the Products; and     (ii)   UBS will provide advice and
consultation at its facilities or the facilities of any alternate supplier of
the Products.

  (b)   Notwithstanding anything to the contrary contained in this Agreement, in
the event that LifeScan shall make or have made the Products, pursuant to this
clause 23.2, LifeScan will be permitted to disclose to any third party any
Confidential Information as is reasonably necessary in connection with such
activities (subject to such third party agreeing in writing to be bound by the
terms of clause 21)     (c)   If LifeScan gives an order within the UBS Capacity
Limitation and UBS has an inability, unwillingness or failure to supply Product
which conforms with the applicable Product Specifications within the relevant
delivery periods and this occurs more than three times in any Quarter (unless
due to a Force Majeure Event), such inability, unwillingness or failure shall be
deemed a material breach of this Agreement.

24   Guarantee   24.1   Guarantee and Indemnity       In consideration of
LifeScan entering into this Agreement at the request of UBI (the receipt and
good value of which is acknowledged by UBI), UBI irrevocably and
unconditionally:

  (a)   guarantees to LifeScan the due and punctual observance and performance
of all the obligations of UBS under this Agreement (including any warranties,
covenants and indemnities given in favour of LifeScan); provided that in the
event this guarantee is enforced and UBI is obligated to performance such
obligations, then in such event LifeScan hereby grants to UBI all of the same
rights granted to UBS under this Agreement solely to enable UBI to perform its
obligations in this Agreement;     (b)   without limiting clause 24.1(a),
guarantees the due and punctual payment to LifeScan of all money due or which
becomes due from UBS under this Agreement or arising out of breach by UBS of the
terms, obligations, warranties and conditions contained in or implied in this
Agreement; and

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  (c)   as a separate and independent principal obligation, indemnifies LifeScan
against any Losses incurred or suffered by LifeScan which arise from any default
by UBS in the performance of any obligations under this Agreement or from any
express or implied obligations of UBS in this Agreement being unenforceable.

24.2   Survival       The liability of UBI under clause 24.1 will not be
released or discharged (in whole or in part) by:

  (a)   any time, concession, waiver or other indulgence being given by LifeScan
to UBS (or any surety) for or in relation to the observance or performance of
UBS’ obligations under this Agreement provided UBI shall have the benefit of any
time, concession, waiver or other indulgence actually granted by LifeScan to
UBS;     (b)   any other security or contractual obligations to secure the
performance of UBS’ obligations under this Agreement being or not being taken,
held, renewed, varied or enforced by LifeScan or such security being void,
defective, informal or unenforceable;     (c)   all or any of UBS’ obligations
under this Agreement being discharged otherwise than by their due performance or
by this Agreement being terminated by LifeScan by due exercise of its rights
under this Agreement;     (d)   an Insolvency Event affecting UBS;     (e)   the
sale or other disposal of some or all of the shares in UBS which are owned by
UBI; or     (f)   anything done or omitted to be done by LifeScan or by anything
else which, but for this clause 24.2, might operate to release wholly or
partially or discharge or otherwise exonerate UBI from its liability under this
guarantee and indemnity.

24.3   Continuing Guarantee       The guarantee and indemnity given under this
clause 24:

  (a)   is a continuing guarantee and indemnity and will remain in force until
the whole of the obligations of UBS have been duly performed and satisfied in
full;     (b)   is irrevocable; and     (c)   constitutes a separate and
independent obligation of UBI.

24.4   Remedy       LifeScan may enforce the guarantee and indemnity given under
this clause 24 without first making any demand or taking any action or
proceedings to enforce its rights or remedies against UBS.

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24.5   Reinstatement       The obligations of UBI under this clause 24 will
continue to be effective or will be reinstated if, at any time any amount under
this Agreement is avoided or any payment must be replaced or restored, either in
whole or in part, by UBS for any reason whatsoever and the liability of UBI will
extend to any such payment as if that payment had not been made.   24.6  
Warranties       UBI represents and warrants that:

  (a)   it has full power and authority to enter into this Agreement and has
taken all necessary action to authorise the execution, delivery and performance
of this Agreement in accordance with its terms;     (b)   this Agreement
constitutes a legally valid and binding obligation of UBI enforceable in
accordance with its terms; and the execution, delivery and performance of this
Agreement by UBI will not violate any provision of:

  (i)   any law or any order or decree of any applicable Government Authority;  
  (ii)   the certificate of incorporation or bylaws of UBI; or     (iii)   any
encumbrance or other agreement which is binding on UBI.

25   GST   25.1   Construction       In this clause 25:

  (a)   words and expressions which are not defined in this Agreement but which
have a defined meaning in GST Law have the same meaning as in the GST Law; and  
  (b)   GST Law has the same meaning given to that expression in the A New Tax
System (Goods and Services Tax) Act 1999.

25.2   Consideration GST exclusive       Unless otherwise expressly stated, all
prices or other sums payable or consideration to be provided under this
Agreement are exclusive of GST.   25.3   Payment of GST       If GST is payable
by a supplier or by the representative member for a GST group of which the
supplier is a member, on any supply made under this Agreement, the recipient
will pay to the supplier an additional amount equal to the GST payable on the
supply. Notwithstanding the above, Section 38-185 of the GST Law provides a
supply of goods exported from Australia within 60 days of invoice or payment is
not required to pay GST. The parties will cooperate to export any Products
within 60 days of invoice or payment for such Products.

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25.4   Timing of GST payment       The recipient will pay the amount referred to
in clause 25.3 in addition to and at the same time that the consideration for
the supply is to be provided under this Agreement.   25.5   Tax invoice      
The supplier must deliver a tax invoice or an adjustment note to the recipient
before the supplier is entitled to payment of an amount under clause 25.3. The
recipient can withhold payment of the amount until the supplier provides a tax
invoice or an adjustment note, as appropriate.   25.6   Adjustment event      
If an adjustment event arises in respect of a taxable supply made by a supplier
under this Agreement, the amount payable by the recipient under clause 25.3 will
be recalculated to reflect the adjustment event and a payment will be made by
the recipient to the supplier or by the supplier to the recipient as the case
requires.   25.7   Reimbursements       Where a party is required under this
Agreement to pay or reimburse an expense or outgoing of another party, the
amount to be paid or reimbursed by the first party will be the sum of:

  (a)   the amount of the expense or outgoing less any input tax credits in
respect of the expense or outgoing to which the other party, or to which the
representative member for a GST group of which the other party is a member, is
entitled; and     (b)   if the payment or reimbursement is subject to GST, an
amount equal to that GST.

26   General   26.1   Duty

  (a)   UBS as between the parties is liable for and must pay all Victorian
stamp duty (including any fine or penalty except where it arises from default by
the other party) on or relating to the execution of this Agreement, or any
document executed under it.     (b)   If a party other than UBS pays any
Victorian duty (including any fine or penalty) on or relating to the execution
of this Agreement, or any document executed under it, UBS must pay that amount
to the paying party on demand.     (c)   It is acknowledged by the parties that
none of the payments provided for under this Agreement are intended to be or are
in fact in the nature of royalties, but rather are in the nature of payments for
products and services.

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  (d)   LifeScan shall be entitled to deduct or withhold taxes where required by
applicable law. UBS shall provide LifeScan as reasonably requested thereafter
any tax documentation required to reduce or eliminate such deduction or
withholding. LifeScan shall provide UBS with proof of payment of any taxes
withheld or deducted pursuant to this clause.

26.2   Legal costs       Except as expressly stated otherwise in this Agreement,
each party must pay its own legal and other costs and expenses of negotiating,
preparing, executing and performing its obligations under this Agreement.   26.3
  Amendment       No modification, change or amendment to this Agreement shall
be effective unless in writing signed by each of the parties hereto.   26.4  
Waiver and exercise of rights

  (a)   A single or partial exercise or waiver by a party of a right relating to
this Agreement does not prevent any other exercise of that right or the exercise
of any other right.     (b)   A party is not liable for any loss, cost or
expense of any other party caused or contributed to by the waiver, exercise,
attempted exercise, failure to exercise or delay in the exercise of a right.

26.5   Rights cumulative       Except as expressly stated otherwise in this
Agreement, the rights of a party under this Agreement are cumulative and are in
addition to any other rights of that party.   26.6   Consents       Except as
expressly stated otherwise in this Agreement, a party may conditionally or
unconditionally give or withhold any consent to be given under this Agreement
and is not obliged to give its reasons for doing so.   26.7   Governing law and
jurisdiction       This Agreement is governed by and is to be construed in
accordance with the laws applicable in the State of New York, USA, without
giving effect to any provisions thereof that would cause the application of the
laws of any other jurisdiction.   26.8   Assignment       This Agreement may not
be assigned by LifeScan without the prior written consent of UBS, except that
LifeScan may with prior written notice to UBS assign all or a portion of its
rights and/or obligations hereunder to any of its Affiliates or to a successor,
acquirer or licensee to the portion of its business to which this Agreement
pertains without consent. UBS acknowledges that LifeScan has entered into this
Agreement after consideration of the unique talent, experience and particular
attributes of UBS to supply the Products. Therefore, this Agreement and all
rights and obligations hereunder are

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    personal to UBS and may not be assigned by UBS without the express written
consent of LifeScan, which consent may be withheld or given in LifeScan’s sole
discretion. Any such assignment or any attempted assignment in the absence of
the prior written consent of LifeScan, shall be void and without effect at the
option of LifeScan. Subject to the foregoing terms of this clause 26.8, this
Agreement shall bind and inure to the benefit of the parties hereto and their
respective permitted successors and assigns.   26.9   Counterparts       This
Agreement may consist of a number of counterparts and, if so, the counterparts
can be executed separately by each party but taken together shall constitute one
document.   26.10   Entire understanding

  (a)   This Agreement contains the entire understanding between the parties as
to the subject matter of this Agreement.     (b)   All previous negotiations,
understandings, representations, warranties, memoranda or commitments concerning
the subject matter of this Agreement are merged in and superseded by this
Agreement and are of no effect. No party is liable to any other party in respect
of those matters.     (c)   No oral explanation or information provided by any
party to another:

  (i)   affects the meaning or interpretation of this Agreement; or     (ii)  
constitutes any collateral agreement, warranty or understanding between any of
the parties.

26.11   Severability       In the event that any one or more of the provisions
(or any part thereof) contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Any term or provision of this
Agreement which is invalid, illegal or unenforceable in any jurisdiction shall,
to the extent the economic benefits conferred by this Agreement to both parties
remain substantially unimpaired, not affect the validity, legality or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction.   26.12   Survival       Clauses 9.1, 12, 13.4, 17, 18, 19, 20,
21, 22, 24, 25 and 26 shall survive the termination of this Agreement in
accordance with the respective terms thereof. In addition, any other clauses of
this Agreement that are expressly stated to survive by their terms shall survive
termination of this Agreement.   26.13   Relationship of parties       The
relationship of LifeScan and UBS established by this Agreement is that of
independent contractors, and nothing contained herein shall be construed to

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(a) give either party any right or authority to create or assume any obligation
of any kind on behalf of the other or (b) constitute the parties as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking.

26.14   LifeScan Affiliates       LifeScan, its successors or assigns may
delegate to any of its Affiliates the right to exercise any rights or
obligations of LifeScan under this Agreement in which case LifeScan shall give
prior notice to UBS, it being acknowledged and agreed that LifeScan, its
successors or assigns shall be the sole party looked to by UBS for all intents
and purposes under this Agreement.       [The remainder of this Page left blank]

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Schedule 1 — Initial Product Addendum
This Product Addendum (Product Addendum) to the Master Services and Supply
Agreement dated [insert date of Master Agreement] between LifeScan, Inc.,
Universal Biosensors Pty Ltd and Universal Biosensors, Inc (Master Agreement) is
entered into by and between LifeScan, Inc., a Californian corporation of 1000
Gibraltar Drive, Milpitas, CA 95035-6312, USA (LifeScan), Universal Biosensors
Pty Ltd ACN 098 234 309, a company incorporated in Victoria, Australia of 1
Corporate Avenue, Rowville, Victoria 3178 Australia (UBS) and Universal
Biosensors, Inc., a Delaware corporation of having its registered office at c/o
Corporation Service Company 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808 USA (UBI).
The parties agree that this Product Addendum is to be attached to, and form part
of the Master Agreement. In relation to the matters addressed in this Product
Addendum, each of LifeScan and UBS agrees to be bound by all of the terms and
conditions of the Master Agreement and makes the representations and warranties
set forth in the Master Agreement expressed to be made by LifeScan or UBS, as
the case may be. All capitalised terms used in this Product Addendum and not
otherwise defined in this agreement shall have the meaning ascribed to such
terms in the Master Agreement.
The parties further agree as follows:

1.   Price

  (i)   Base Year Standard Cost = * [REDACTED].     (ii)   Maximum Transfer
Price = * [REDACTED]

2.   Specifications below

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Initial Product Specification
* [REDACTED]
REFERENCE DOCUMENTS
CE low voltage directive (EU): 73/23/EEC OJ C 284 of 2005-11-16
Modification: Directive 93/68/EEC [CE Marking]
APPLICABLE STANDARDS / GUIDANCE
[1] ISO15197:2003 In vitro diagnostic test systems — Requirements for
blood-glucose monitoring systems for self-testing in managing diabetes mellitus.
[2] FDA 21 CFR §820.30 Design Control requirements.
[3] FDA Guidance for the Content of Pre-market Submissions for Software
Contained in Medical Devices. May 11, 2005:
http://www.fda.gov/cdrh/ode/guidance/337.pdf
[4] General Principles of Software Validation; Final Guidance for Industry and
FDA Staff: http://www.fda.gov/cdrh/comp/guidance/938.pdf
[5] FDA Draft Guidance – Total Product Life Cycle for Portable Invasive Blood
Glucose Monitoring Systems. October 24, 2006:
http://www.fda.gov/cdrh/oivd/guidance/1603.pdf
[6] IEC60601-1-8:2006. Medical Electrical Equipment – Part 1-8: General
requirements for basic safety and essential performance – Collateral Standard:
General requirements, tests and guidance for alarm systems in medical electrical
equipment and medical electrical systems.
[7] IEC 60068-2-64:1993, Environmental testing — Part 2: Test methods — Test Fh:
Vibration, broad-band random (digital control) and guidance
[8] IEC 60068-2-27:1987, Basic Environmental Testing Procedures — Part 2: Test
Methods — Test Ea and guidance: Shock.
[9] IEC 60721-3-7:2002, Classification of Environmental Conditions — Part 3-7:
Classification of Groups of Environmental Parameters and Their Severities —
Portable and Non-stationary Use.
[10] IEC 61010-1:2001, Safety requirements for electrical equipment for
measurement, control, and laboratory use — Part 1: General requirements
 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Initial System Specification
* [REDACTED]
 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Executed as an Addendum to the Agreement by the duly authorized representative
of each Party as of the date first above written.

                 
 
               
Executed by LifeScan, Inc.
    )          
 
               
 
               
 
          Name    
 
               
 
               
 
          Title    

                 
 
               
Executed by Universal Biosensors
Pty Ltd
    )
)          
 
               
 
               
 
               
Company Secretary/Director
          Director    
 
               
 
               
Name of Company Secretary/Director (print)
          Name of Director (print)    

                 
 
               
Executed by Universal Biosensors, Inc.
    )          
 
               
 
               
 
          Name    
 
               
 
               
 
          Title    

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Schedule 2 — Initial Services Addendum
For the purposes of regulatory approvals, LifeScan will be the legal
manufacturer of the Initial System. UBS will facilitate the regulatory approvals
of the Initial System by providing the following initial services to LifeScan.
In addition, after approval of the Initial System, UBS will provide certain
ongoing services in connection with the Initial System as set out below (the
initial services and ongoing services for the Initial System shall be defined as
the “Initial Services” for purposes of this addendum).

  1.   Design verification testing of the Initial System in accordance with all
regulatory requirements necessary to market the Initial System in * [REDACTED].
    2.   Complete a Design History File for the Initial Product in accordance
with all regulatory requirements necessary to market the Initial System in *
[REDACTED]. LifeScan will review the Design History File to satisfy themselves
that it complies with LifeScan internal pre-launch prerequisites.     3.  
Assist in the preparation and completion of the Initial Meter Design History
File in conjunction with *[REDACTED] and LifeScan for the benefit of LifeScan.
It is anticipated that specific items to be included in the DHF will include
Initial Meter Design Input, Design Output (3-D mechanical drawings, Gerber
files, firmware, and component specifications), Design Verification on
production units (or documented production equivalent), Design Validation on
production units (or documented production equivalent), and Design Transfer
Summary. Design verification to include documented test methods and sample
rationale and Design Transfer Summary to include documented rationale of meter
design translated to production specification.     4.   Assist in the
preparation and completion of the Initial Control Solution Design History File
in conjunction with
*[REDACTED] and LifeScan for the benefit of LifeScan . It is anticipated that
specific items to be included in the DHF will include Design Input, Design
Output, Design Verification and Design Validation.     5.   Work with LifeScan
on a mutually agreed basis to provide documentation to assist LifeScan to
prepare and perform clinical trials and regulatory submissions.     6.   Work
with LifeScan on a mutually agreed basis to provide documentation necessary to
assist LifeScan to prepare product labelling for the Initial System.     7.  
Design and manage the procurement of the initial custom-designed process
equipment.

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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  8.   Work together with LifeScan to assess data from the field and use the
data to decide methods for adapting process and control methodology to improve
product performance.     9.   Manage the specification(s) and all engineering
change processes to Initial Product production equipment at UBS’ facility.    
10.   Specify and control Initial Product component performance and
requirements. Manage or assist in the qualification and approval of all changes
to suppliers and materials for the Initial Product.     11.   Support
manufacturing to ensure all work instructions are appropriate.     12.  
Evaluate the appropriate scope of manufacturing the Initial Product and help
manage any change in scope, i.e. outsource or bring in-house certain process
steps.     13.   Identify, validate and implement cost reductions and process
improvement in manufacturing the Initial Product.     14.   Work with LFS on a
mutually agreed basis so that LFS may enter into supply agreements with
suppliers of components comprising the Initial System.     15.   Investigate
causes of customer complaints with the Initial Product referred to UBS by
LifeScan.     16.   Work with LFS on a mutually agreed basis to implement design
changes to the Initial Meter, Initial Control Solution, Initial System and
Initial Product.     17.   * [REDACTED]

 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

page 56

 

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Executed as an Addendum to the Agreement by the duly authorized representative
of each Party as of the date first above written.

                 
 
               
Executed by LifeScan, Inc.
    )          
 
    )          
 
               
 
               
 
          Name    
 
               
 
               
 
          Title    

                 
 
               
Executed by Universal Biosensors Pty Ltd
    )
)          
 
               
 
               
 
               
Company Secretary/Director
          Director    
 
               
 
               
Name of Company Secretary/Director (print)
          Name of Director (print)    

             
 
           
Executed by Universal
Biosensors, Inc
  )
)        
 
           
 
           
 
      Name    
 
           
 
           
 
      Title    

page 57

 

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Schedule 3 — LifeScan Relevant Patents
*[REDACTED]
*Confidential portions has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Executed as an agreement by the duly authorized representative of each Party as
of the date first above written.

                 
Executed by LifeScan, Inc.
    )          
 
    )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

                 
Executed by Universal Biosensors
    )          
Pty Ltd
    )          
 
               
 
 
Company Secretary/Director
           
 
Director    
 
               
 
 
Name of Company Secretary/Director (print)
           
 
Name of Director (print)    

                 
Executed by Universal Biosensors, Inc
    )          
 
    )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

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Appendix A — Form of Product Addendum
Date
This Product Addendum (Product Addendum) to the Master Services and Supply
Agreement dated [insert date of Master Agreement] October 2007 between LifeScan,
Inc., Universal Biosensors Pty Ltd and Universal Biosensors, Inc. (Master
Agreement) is entered into by and between LifeScan, Inc., a Californian
corporation of 1000 Gibraltar Drive, Milpitas, CA 95035-6312, USA (LifeScan),
Universal Biosensors Pty Ltd ACN 098 234 309, a company incorporated in
Victoria, Australia of 103 Ricketts Road, Mount Waverley, Victoria 3149,
Australia (UBS) and Universal Biosensors, Inc., a Delaware corporation of having
its registered office at c/o Corporation Service Company 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808 USA (UBI).
The parties agree that this Product Addendum is to be attached to, and form part
of the Master Agreement. In relation to the matters addressed in this Product
Addendum, each of LifeScan, UBS and UBI agree to be bound by all of the terms
and conditions of the Master Agreement and makes the representations and
warranties set forth in the Master Agreement expressed to be made by LifeScan,
UBS or UBI, as the case may be. All capitalised terms used in this Product
Addendum and not otherwise defined in this agreement shall have the meaning
ascribed to such terms in the Master Agreement.
The parties further agree as follows:
3. [Products]
[insert Product description]
4. [Price]
[insert price and payment terms]
5. [Specifications]
6. [Minimum Shelf Life]
7. [Product Materials]
8. Term of Product Addendum

1.   This Product Addendum shall commence on [insert date] and shall continue
for a period of [insert duration] from such date (Term).

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Executed by LifeScan, Inc.
    )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

                 
Executed by Universal Biosensors
    )          
Pty Ltd
    )          
 
               
 
 
Company Secretary/Director
           
 
Director    
 
               
 
 
Name of Company Secretary/Director (print)
           
 
Name of Director (print)    

                 
Executed by Universal Biosensors, Inc
    )          
 
     )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

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Appendix B — Form of Services Addendum
Date
This Services Addendum (Services Addendum) to the Master Services and Supply
Agreement dated [insert date of Master Agreement] October 2007 between LifeScan,
Inc., Universal Biosensors Pty Ltd and Universal Biosensors, Inc. (Master
Agreement) is entered into by and between [LifeScan, Inc, a Californian
corporation of 1000 Gibraltar Drive, Milpitas, CA 95035-6312, USA (LifeScan)]
and [Universal Biosensors Pty Ltd ACN 098 234 309, a company incorporated in
Victoria, Australia of 1 Corporate Avenue, Rowville, Victoria 3178, Australia
(UBS) and Universal Biosensors, Inc., a Delaware corporation of having its
registered office at c/o Corporation Service Company 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808 USA (UBI).
The parties agree that this Services Addendum is to be attached to, and form
part of the Master Agreement. In relation to the matters addressed in this
Services Addendum, each of LifeScan, UBS and UBI agree to be bound by all of the
terms and conditions of the Master Agreement and makes the representations and
warranties set forth in the Master Agreement expressed to be made by LifeScan,
UBS or UBI, as the case may be. All capitalised terms used in this Product
Addendum and not otherwise defined in this agreement shall have the meaning
ascribed to such terms in the Master Agreement.
The parties further agree as follows:

1.   Services

[insert description of Services]

2.   Consideration       UBS acknowledges that it will be remunerated for the
Services to be provided under this Services Addendum by means of the fees to
which it will be entitled pursuant to clause 11 of the Master Agreement.   3.  
Term of Services Addendum       This Services Addendum shall commence on [insert
date] and shall continue for a period of [insert duration] from such date
(Term).

                 
Executed by LifeScan, Inc.
    )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

page 62

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Executed by Universal Biosensors
    )          
Pty Ltd
    )          
 
               
 
 
Company Secretary/Director
           
 
Director    
 
               
 
 
Name of Company Secretary/Director (print)
           
 
Name of Director (print)    

                 
Executed by Universal Biosensors, Inc
    )          
 
    )          
 
               
 
           
 
Name    
 
               
 
           
 
Title    

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Appendix C — Initial Joint Steering Committee Members
Universal Biosensors Pty Ltd:
     *[REDACTED] and
     *[REDACTED]
LifeScan, Inc.
     *[REDACTED] and
     *[REDACTED]
*Confidential portions has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Appendix D — Policy on the Employment of Young Persons
Child Labor Employment Practices: In connection with the performance of its
obligations under this Agreement, UBS agrees to comply with the following
LifeScan Corporate Policy relating to the Employment of Child Labor:
(a) No person under the age of 16 shall be employed. No person between the ages
of 16 and 18 shall be employed unless such employment is in compliance with the
health, safety and morals provisions of the International Labor Organizations
Convention 138 Concerning Minimum Age.
(b) No young person (under age 18) shall be required to work more than 48
regular hours and 12 hours overtime per week nor more than six (6) days per
week.
(c) No young person (under age 18) shall be employed unless such employment is
in compliance with all applicable laws and regulations concerning, age, hours,
compensation, health and safety.

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Appendix E – Quality Agreement
     This Quality Agreement is made and entered into as of the effective date of
the Master Services and Supply Agreement (“the Agreement”) by and among
LifeScan, Inc. (LifeScan), Universal Biosensors Pty Ltd. (UBS) and Universal
Biosensors, Inc. The terms of this Quality Agreement are expressly incorporated
into, and are a part of, the Agreement.
     Below are the primary site locations of LifeScan and UBS:

     
LifeScan, Inc.
  LifeScan
 
  1000 Gibraltar Drive
 
  Milpitas, CA 95035 USA
 
   
Universal Biosensors Pty Ltd
  Universal Biosensors
 
  1 Corporate Ave
 
  Rowville, VIC 3178
 
  Australia

WITNESSETH:
WHEREAS, LifeScan desires to engage UBS to manufacture and supply Product and
perform Services (as those terms are defined below as well as in the Agreement)
on the terms and conditions set forth in the Agreement and as set forth below,
and
WHEREAS, UBS desires to manufacture and supply Product and perform Services for
LifeScan on the terms and conditions set forth in the Agreement and as set forth
below:
NOW, THEREFORE, in consideration of the foregoing premises and of the mutual
covenants of the Parties hereinafter set forth, the Parties hereto agree as
follows:

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1.0 Definitions.
     Unless this Quality Agreement shall expressly provide to the contrary, the
following terms herein, whether used in the singular or plural, shall have the
respective meanings set forth below:

  1.1.   “Applicable Law” means all applicable ordinances, rules, regulations,
laws, guidelines, guidance, requirements and court orders of any kind whatsoever
of any Authority as amended from time to time.     1.2.   “Authority” means any
government regulatory authority responsible for granting approvals for the
performance of Services under this Quality Agreement or for the Manufacturing,
use, marketing, sale, pricing and/or other disposition of Product(s).     1.3.  
“Design History File (DHF)” means a compilation of records containing the
development history of the Product(s).     1.4.   “Device History Record (DHR)”
means a compilation of records containing the production history of the
Product(s).     1.5.   “Device Master Record (DMR)” means a compilation of
records containing the procedures and specifications for the Product(s)     1.6.
  “FDA” means the United States Food and Drug Administration, and any successor
agency having substantially the same functions.     1.7.   “FDCA” means the
Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§321 et seq., as amended from
time to time.     1.8.   “ISO 13485” means the “ISO Quality Management Systems —
Medical Devices — System Requirements for Regulatory Purposes” standard.    
1.9.   “Manufacture” and “Manufacturing” means all steps, processes and
activities necessary to produce Product(s), including without limitation, the
design, manufacturing, processing, quality control testing, release and storage
of Product(s) in accordance with the terms and conditions hereof.     1.10.  
“Manufacturing Process” means any and all processes (or any step in any process)
used or planned to be used by UBS to Manufacture Product(s).     1.11.  
“Parties” means UBS and LifeScan together, and “Party” means any of them, as the
context requires.     1.12.   “Product(s)” means the products, current and
future, described in the Agreement to which this Quality Agreement is attached
and into which this Quality Agreement is expressly incorporated by reference.

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  1.13.   “Quality Audit” means a systematic independent examination of a
manufacturer’s quality system to ensure it complies with applicable law.    
1.14.   “Quality Control Plan” means written descriptions of the systems for
controlling the manufacturing of parts and/or manufacturing processes. It
provides a written summary description of the system used in minimizing process
and finished device variation.     1.15.   “Quality Management System” means the
regulatory requirements for the methods used in, and the facilities and controls
used for, the design, manufacture, packing, labeling, storage, installation and
servicing of finished devices, as codified in 21C.F.R. Part 820 or embodied in
ISO 13485.     1.16.   “Quality Plan” a written plan demonstrating how the
requirements set forth in this agreement will be fulfilled     1.17.   “Records”
means written or electronic accounts, notes, data, record of, and information
and results obtained from performance of Services and all work done under this
Quality Agreement.     1.18.   “Services” means the Manufacturing and other
services and activities that UBS is engaged to provide to LifeScan under the
Agreement.     1.19.   “Specifications” means the written specifications
established for the Manufacture of Product(s) approved by LifeScan, as amended
or supplemented from time to time by agreement in writing between the Parties.  
  1.20.   “Use As Is (UAI)” is associated with a nonconformance that does not
impact form, fit, or function of the product. It implies that the nonconformance
will not be remedied for that specific batch.

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2.0. Compliance with Laws Generally.

  2.1.   Each Party shall comply in all material respects with all applicable
statutes, regulations, rules, and ordinances that relate to the performance of
such Party’s obligations under the Agreement and this Quality Agreement and,
except as provided for herein, shall bear their own cost and expense of
complying therewith.     2.2.   The termination or expiration of this Quality
Agreement shall not relieve either Party of its responsibility to comply in all
material respects with any statutory or regulatory requirements associated with
the Product(s).

3.0. Compliance with Applicable Quality Management System Requirements.

  3.1.   Generally. UBS shall develop and manufacture the Product(s) in
accordance with the approved specifications set forth in the Agreement and in
substantial compliance with relevant Quality Management System requirements
including 21 CFR PART 820, ISO 13485 and any other applicable laws appropriate
to the geography in which the product will be manufactured, whether or not
specifically identified in this Quality Agreement. Where there are other
regulatory requirements not specifically required by the Quality Management
System requirements, LifeScan will expect compliance. Without limiting the
generality of the foregoing:

  3.1.1.   Quality Management System Requirements. Each Party shall establish
and maintain a quality system that is appropriate for the activities for which
the Party is responsible under this Quality Agreement and that is in substantial
compliance with Quality Management System requirements.     3.1.2.   Quality
Plan. UBS shall establish a Quality Plan being a controlled document defining
Quality System Requirements set-forth in this agreement and the details of how
UBS shall fulfill these requirements. This shall be accomplished in the form of
references to the procedures, documents, or other controls in place to ensure
the requirements are consistently met. LifeScan shall review this document as a
part of their audit and inspection process (refer to section 10.)

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  3.1.3   Quality Control Plan. For the production lines, UBS shall establish
quality control plans. These control plans shall be controlled documents located
at the manufacturing facility. These plans shall ensure that there is a
consistent, validated process used to manufacture the Products. It may contain
specific requirements and reference to UBS procedures and methods to ensure
these requirements are consistently met. It shall also define how UBS verifies
these activities, detects deviations or non-conformances and reacts to those
deviations or non-conformances.

  3.2   Validation

  3.2.1   Validation responsibilities, consisting of a Validation Master Plan,
Validation protocols and their execution/testing, and completion reports, will
be created by UBS and available for review by LifeScan. UBS shall provide copies
of validation documents (for example, protocols, completion reports) to LifeScan
upon request.     3.2.2   All process validations must be completed prior to the
release of the product batches for commercial use. Equipment
qualification/validation shall be completed prior to the process validations.
Successful process validation batches may be considered as fit for release with
LifeScan approval.     3.2.3   Post validation changes such as described in
Section 7.0 shall be communicated to LifeScan, prior to their implementation.

  3.3   Control of Nonconforming Product. UBS shall establish and maintain
procedures to control product that does not conform to specified requirements.
LifeScan is to be notified promptly in writing of any non-conformances that may
potentially affect product safety, efficacy, quality or stability should product
have been released from UBS. LifeScan must approve Use As Is
(UAI) non-conformances and their associated investigation/justification/impact
analysis.     3.4.   Corrective and Preventive Actions. Both Parties shall
establish and maintain procedures for implementing corrective and preventive
actions. The Parties shall collaborate to determine the division of
responsibility for implementation of quality solutions depending upon the nature
of the quality problem and the proposed solution. Where necessary, LifeScan
shall cooperate with UBS to determine the root cause of quality problems,
identifying corrective actions, and assuring their implementation and
effectiveness.

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  3.5   Statistical Techniques. UBS shall, where appropriate, establish and
maintain procedures for identifying valid statistical techniques required for
establishing, controlling, and verifying the acceptability of validations,
process capability and product testing and other appropriate activities.     3.6
  Finished Controls.

  3.6.1   UBS may be qualified to release product after a certain number of
batch records have been reviewed and approved by LifeScan. The number and form
of the records to be reviewed prior to UBS being qualified to release product
will be defined in the Quality Plan. The Quality Plan will also define the
turnaround time that LifeScan shall meet in reviewing and approving/not
approving the records.     3.6.2   The test methods deployed in qualifying
product shall be validated. Retained samples of the Product(s) will be held by
UBS. Expiry dating of Product(s) shall be determined from stability studies
undertaken by UBS and agreed upon by LifeScan.     3.6.3   UBS and its external
contract manufacturers shall maintain manufacturing DHRs of the Product(s)
produced under the Agreement. Copies of DHRs are to be available within 3
business days of a routine request by LifeScan and within 24 hours of an urgent
request by LifeScan.

  3.7   Labelling and Packaging. LifeScan shall be responsible for the
development of Labelling and Packaging. UBS shall provide the necessary
documentation required to support this development.

4.0. Complaint Handling and Adverse Event Reporting.

  4.1.   Each Party shall cooperate fully with the other party in dealing with
customer and third-party complaints concerning the Product(s) and shall take
such action to promptly resolve such complaints as may be reasonably requested
by the other party.     4.2.   UBS shall be responsible for investigating, in a
timely manner, returned Product(s), if any, and providing LifeScan with reports
detailing the investigation results.     4.3.   UBS shall be responsible for
allocating the proper resources to investigate post launch design and
manufacturing issues that have resulted in interruptions of supply or customer
complaints.     4.4.   UBS shall be responsible for implementing appropriate
effective corrective actions with respect to Product(s) in order to
prevent/reduce customer complaints. Records of investigations and corrective
actions shall be maintained in connection with related complaints or notable
trends.

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  4.5.   LifeScan shall be responsible for complying with all FDA and applicable
foreign regulatory requirements pertaining to the reporting of malfunctions,
near incidents and adverse events, including the Medical Device Reporting
requirements, codified at 21 C.F.R Part 803, MEDDEV and CMDCAS. UBS shall
reasonably cooperate with LifeScan to enable LifeScan to fulfill such
requirements. Without limiting the generality of the foregoing, LifeScan shall:

  4.5.1   Maintain a record of all customer and third-party complaints received
by LifeScan relating to the Product(s).     4.5.2   Make determinations as to
whether the complaint information about Product(s) is required to be reported to
the FDA in a Medical Device Report or to foreign governments in accordance with
applicable adverse event, malfunction or near incident reporting requirements.  
  4.5.3   Make all necessary correspondence with all applicable regulatory
authorities with respect to complaints about the Product(s).     4.5.4  
Maintain files in accordance with FDA and international adverse event reporting
requirements.

  4.6.   Customer Service Scripts. Both parties shall provide input in order to
develop appropriate customer service call scripts specific to the Product(s) in
order to comply with reporting requirements.     4.7   LifeScan Complaint
Management shall provide summaries of complaint statistics to UBS, and this
information will be an input to Management Reviews as outlined in section 11.0.

5.0 Device Removals and Corrections.

  5.1.   Subject to compliance with applicable laws and regulations, either
Party who becomes aware of any serious defect, problem or adverse condition in
any Product(s) shall notify the other of such defect, problem or adverse
condition as soon as is practical and within five (5) business days.     5.2.  
If it is determined that a field removal, correction or other action is
appropriate, LifeScan shall initiate such correction or removal and shall track
the Product(s) in accordance with applicable laws and regulation.     5.3.  
LifeScan shall make any necessary reports of removals, corrections and other
actions to appropriate regulatory authorities. LifeScan and UBS shall maintain
records for the activities each performs related to all removals, corrections
and other actions conducted for Product(s) as required by law.

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6.0. Product Clearances and Approvals.

  6.1   LifeScan shall obtain and maintain all necessary regulatory approvals
and clearances necessary for the manufacturing, marketing, sale and distribution
of the Product(s). UBS shall be responsible for providing LifeScan the necessary
information required for submission filing. LifeScan shall be responsible for
filing and obtaining any required approvals and/or clearances related to Product
modifications after initial regulatory approval/clearance.     6.2   UBS shall
provide the required support activities to LifeScan in support of LifeScan
obtaining all necessary regulatory clearances / approvals. This includes but is
not limited to registering the UBS facility (ies) with regulatory authorities as
required (e.g., US FDA Establishment Registration, Japan Foreign Manufacturer
Authorization, etc.).     6.3   As part of this approval process, LifeScan shall
perform the necessary clinical trails with UBS’s collaboration.     6.4   The
parties shall determine who will construct and maintain DHFs for the Products
and other components of the Initial System. LifeScan shall conduct a compliance
audit of UBS constructed DHFs, identify gaps, and have these gaps mitigated
prior to approval of product launch. LifeScan shall maintain current copies of
all DHFs.

7.0 Product Modifications.

  7.1.   Either party may propose a product design or manufacturing
modification.     7.2.   UBS is not permitted to make any modification or
manufacturing change that affects the Product(s) without LifeScan’s approval.
Examples of such changes but not inclusive are:

  Ø   Changes that may impact regulatory clearances and approvals, such as
Intended Use     Ø   Product performance specifications     Ø   Design input
requirements     Ø   Critical to Quality (CTQ) Process Parameters     Ø  
Redesign of an existing Quality System

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8.0. Record Production and Retention.

  8.1.   The Parties shall comply with any regulatory record keeping
requirements that apply to the performance of such Party’s obligations under the
Quality Agreement.     8.2   UBS shall create and maintain DHFs and DHRs that
demonstrate that the Product(s) was designed and manufactured in accordance with
Quality Management System requirements, the DMR, and meets the design
specifications established by LifeScan. These records shall be retained in
accordance with LifeScan’s record retention requirements.     8.3   Each party
will be responsible for creating and maintaining their part of the DMR.     8.4
  Records and other documents required to be maintained pursuant to this Quality
Agreement shall be available at reasonable times for inspection, examination and
copying by or on behalf of LifeScan, or for inspection by third parties,
including FDA, for so long as any of them are in UBS’s possession.     8.5  
Records and other documents pursuant to this Quality Agreement shall be
maintained at UBS or other location that is reasonably accessible. Such records
shall be stored to minimize deterioration and to prevent loss. Upon LifeScan’s
request, UBS shall promptly provide LifeScan with copies of these Records and
other documents maintained pursuant to this Quality Agreement.     8.6   Upon
contract termination, UBS is required to continue to provide copies of DHRs
within 3 days of a request by LifeScan or transfer ownership of the DHR to
LifeScan, including the physical transfer of records to LifeScan.     8.7   Upon
contract termination, UBS is required to transfer ownership of the product DHFs,
including the physical transfer of records to LifeScan.     8.8   UBS shall not
transfer, deliver or otherwise provide to any third parties original Records or
other documents maintained pursuant to this Quality Agreement without prior
written consent of LifeScan except as required by Applicable Law. If UBS is
required by Applicable Law to provide to third parties copies of such Records or
other documents, UBS shall notify LifeScan within five (5) business days of any
such request.

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9.0 U.S. FDA Establishment Registration and Listing.

  9.1   LifeScan shall be responsible for listing the Product(s) with U.S. FDA
in accordance with 21 C.F.R. Section 807.25.     9.2   If required by any
international regulatory authority to support product Clearances and Approvals:

  9.2.1   UBS shall be responsible for compliance with U.S. FDA’s applicable
establishment registration requirements set forth in 21 C.F.R. Section 807.25.  
  9.2.2   UBS shall be responsible for listing the Product(s) with U.S. FDA in
accordance with 21 C.F.R. Section 807.25.

10.0. Regulatory Audits and Inspections.

  10.1   UBS shall provide LifeScan reasonable access upon prior notice to
inspect, review and audit DHFs, the manufacturing facilities of UBS and its
suppliers and contractors where the Product(s) is designed and developed,
tested, handled, stored, distributed, and/or manufactured to determine if the
Product(s) is tested, handled, stored, distributed and/or manufactured in
accordance with Applicable Laws and any Quality Agreement.     10.2   UBS shall,
within fifteen (15) business days of receipt of the written audit report, remedy
any deficiencies which may be noted in any such audit or, if any such
deficiencies cannot reasonably be remedied within such fifteen (15) business day
period, present to LifeScan a written plan to remedy such deficiencies as soon
as possible.     10.3   LifeScan may conduct no more than one routine audits in
any one three hundred sixty-five (365) day period. Notwithstanding the
immediately preceding sentence, LifeScan shall have the right to conduct a
compliance audit (a) in the event that LifeScan reasonably believes that any
such inspection or audit is necessary or prudent with respect to ensuring the
safety, efficacy and quality of the Product(s), or (b) subsequent to identifying
any safety, efficacy and quality deficiency in connection with any audit(s)
conducted.     10.4   All information of UBS (or its contractor’s) that LifeScan
shall gain access to through such an audit shall be governed by the terms of the
Agreement.

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  10.5   UBS shall promptly notify LifeScan when an Authority inspection of its
facilities (or an inspection by third parties in accordance with FDA regulations
or inspection by a Notified Body) pertaining to the Product(s) is expected
and/or underway, and shall promptly provide LifeScan with copies of all
regulatory correspondence, including without limitation Forms FDA 483 and
Warning Letters and any related correspondence with FDA or any other regulatory
authority or notified body.

11.0 Management Quality Review.

    LifeScan and UBS shall conduct routine Quality Reviews. These reviews shall
be prearranged and have an agenda to address: CAPAs, reportable incidents,
complaints, critical manufacturing data, non-conformance reports, deviations,
process trending, relevant changes to Products, Processes, Quality Management
System, and/or personnel and facilities or similar topics.

[Remainder of this Page left Blank]

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     IN WITNESS WHEREOF, the Parties hereto have caused this Quality Agreement
to be executed by their duly authorized representatives as of the date first
above written.

          LIFESCAN, INC.    
 
       
By:
   
 
   
Name:
   
 
   
Title:
   
 
   
 
        UNIVERSAL BIOSENSORS PTY. LTD.    
 
       
By:
   
 
   
Name:
   
 
   
Title:
   
 
   

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Appendix F – Financial Years
Circled dates indicate the designated end of Quarter.
2007 UNIVERSAL CALENDAR
(UNIVERSAL CALENDAR) [w42294w4229402.gif]

2007 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M  
          T            W            T            F            S            S -
-— -— -— -— -— -— -— — -— -— -— -— -— -— — JAN 1 2 3 4 5 6 7 JUL 2 3 4 5 6 7 8
(4 Weeks) 8 9 10 11 12 13 14 (4 Weeks) 9 10 11 12 13 14 15   15 16 17 18 19 20
21   16 17 18 19 20 21 22   22 23 24 25 26 27 28   23 24 25 26 27 28 29 - — — —
— — — — — — — — — — — - FEB 29 30 31 AUG 30 31 (4 Weeks) 1 2 3 4 (4 Weeks) 1 2 3
4 5 5 6 7 8 9 10 11   6 7 8 9 10 11 12   12 13 14 15 16 17 18   13 14 15 16 17
18 19   19 20 21 22 23 24 25   20 21 22 23 24 25 26 - — — — — — — — — — — — — —
— - MAR 26 27 28 SEP 27 28 29 30 31 (5 Weeks) 1 2 3 4 (5 Weeks) 1 2 5 6 7 8 9 10
11   3 4 5 6 7 8 9   12 13 14 15 16 17 18   10 11 12 13 14 15 16   19 20 21 22
23 24 25   17 18 19 20 21 22 23   26 27 28 29 30 31   24 25 26 27 28 29 30   1  
- — — — — — — — — — — — — — — - APR 2 3 4 5 6 7 8 OCT 1 2 3 4 5 6 7 (4 Weeks) 9
10 11 12 13 14 15 (4 Weeks) 8 9 10 11 12 13 14   16 17 18 19 20 21 22   15 16 17
18 19 20 21   23 24 25 26 27 28 29   22 23 24 25 26 27 28

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(UNIVERSAL CALENDAR) [w42294w4229403.gif]

- — — — — — — — — — — — — — — - MAY 30 NOV 29 30 31 (4 Weeks) 1 2 3 4 5 6 (4
Weeks) 1 2 3 4   7 8 9 10 11 12 13   5 6 7 8 9 10 11   14 15 16 17 18 19 20   12
13 14 15 16 17 18   21 22 23 24 25 26 27   19 20 21 22 23 24 25 - — — — — — — —
— — — — — — — - JUN 28 29 30 31 DEC 26 27 28 29 30 (5 Weeks) 1 2 3 (5 Weeks) 1 2
  4 5 6 7 8 9 10   3 4 5 6 7 8 9   11 12 13 14 15 16 17   10 11 12 13 14 15 16  
18 19 20 21 22 23 24   17 18 19 20 21 22 23   25 26 27 28 29 30   24 25 26 27 28
29 30   1   - — — — — — — — — — — — — — — - 2008 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M   
         T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— —   31   30 JAN 1 2 3 4 5 6 JUL 1 2 3 4 5
6 (4 Weeks) 7 8 9 10 11 12 13 (4 Weeks) 7 8 9 10 11 12 13   14 15 16 17 18 19 20
  14 15 16 17 18 19 20   21 22 23 24 25 26 27   21 22 23 24 25 26 27 - — — — — —
— — — — — — — — — - FEB 28 29 30 31 AUG 28 29 30 31 (4 Weeks) 1 2 3 (4 Weeks) 1
2 3   4 5 6 7 8 9 10   4 5 6 7 8 9 10   11 12 13 14 15 16 17   11 12 13 14 15 16
17

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(UNIVERSAL CALENDAR) [w42294w4229404.gif]

  18 19 20 21 22 23 24   18 19 20 21 22 23 24 - — — — — — — — — — — — — — — -
MAR 25 26 27 28 29 SEP 25 26 27 28 29 30 31 (5 Weeks) 1 2 (5 Weeks)   3 4 5 6 7
8 9   1 2 3 4 5 6 7   10 11 12 13 14 15 16   8 9 10 11 12 13 14   17 18 19 20 21
22 23   15 16 17 18 19 20 21   24 25 26 27 28 29 30   22 23 24 25 26 27 28 - — —
— — — — — — — — — — — — -   31   29 30 APR 1 2 3 4 5 6 OCT 1 2 3 4 5 (4 Weeks) 7
8 9 10 11 12 13 (4 Weeks) 6 7 8 9 10 11 12   14 15 16 17 18 19 20   13 14 15 16
17 18 19   21 22 23 24 25 26 27   20 21 22 23 24 25 26 - — — — — — — — — — — — —
— — - MAY 28 29 30 NOV 27 28 29 30 31 (4 Weeks) 1 2 3 4 (4 Weeks) 1 2   5 6 7 8
9 10 11   3 4 5 6 7 8 9   12 13 14 15 16 17 18   10 11 12 13 14 15 16   19 20 21
22 23 24 25   17 18 19 20 21 22 23 - — — — — — — — — — — — — — — - JUN 26 27 28
29 30 31 DEC 24 25 26 27 28 29 30 (5 Weeks) 1 (5 Weeks) 2 3 4 5 6 7 8   1 2 3 4
5 6 7   9 10 11 12 13 14 15   8 9 10 11 12 13 14   16 17 18 19 20 21 22   15 16
17 18 19 20 21   23 24 25 26 27 28 29   22 23 24 25 26 27 28 - — — — — — — — — —
— — — — — -

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2009 UNIVERSAL CALENDAR
(UNIVERSAL CALENDAR) [w42294w4229405.gif]

2009 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M   
         T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— —   29 30 31   29 30 JAN 1 2 3 4 JUL 1 2 3
4 5 (4 Weeks) 5 6 7 8 9 10 11 (4 Weeks) 6 7 8 9 10 11 12   12 13 14 15 16 17 18
  13 14 15 16 17 18 19   19 20 21 22 23 24 25   20 21 22 23 24 25 26 - — — — — —
— — — — — — — — — - FEB 26 27 28 29 30 31 AUG 27 28 29 30 31 (4 Weeks) 1 (4
Weeks) 1 2   2 3 4 5 6 7 8   3 4 5 6 7 8 9   9 10 11 12 13 14 15   10 11 12 13
14 15 16   16 17 18 19 20 21 22   17 18 19 20 21 22 23 - — — — — — — — — — — — —
— — - MAR 23 24 25 26 27 28 SEP 24 25 26 27 28 29 30 (5 Weeks) 1 (5 Weeks) 31  
2 3 4 5 6 7 8   1 2 3 4 5 6   9 10 11 12 13 14 15   7 8 9 10 11 12 13   16 17 18
19 20 21 22   14 15 16 17 18 19 20   23 24 25 26 27 28 29   21 22 23 24 25 26 27
- — — — — — — — — — — — — — — -   30 31   28 29 30 APR 1 2 3 4 5 OCT 1 2 3 4 (4
Weeks) 6 7 8 9 10 11 12 (4 Weeks) 5 6 7 8 9 10 11   13 14 15 16 17 18 19   12 13
14 15 16 17 18   20 21 22 23 24 25 26   19 20 21 22 23 24 25 - — — — — — — — — —
— — — — — -

   

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(UNIVERSAL CALENDAR) [w42294w4229406.gif]

MAY 27 28 29 30 NOV 26 27 28 29 30 31 (4 Weeks) 1 2 3 (4 Weeks) 1   4 5 6 7 8 9
10   2 3 4 5 6 7 8   11 12 13 14 15 16 17   9 10 11 12 13 14 15   18 19 20 21 22
23 24   16 17 18 19 20 21 22 - — — — — — — — — — — — — — — - JUN 25 26 27 28 29
30 31 DEC 23 24 25 26 27 28 29 (5 Weeks) (6 Weeks) 30   1 2 3 4 5 6 7   1 2 3 4
5 6   8 9 10 11 12 13 14   7 8 9 10 11 12 13   15 16 17 18 19 20 21   14 15 16
17 18 19 20   22 23 24 25 26 27 28   21 22 23 24 25 26 27     28 29 30 31      
                    1 2 3 - — — — — — — — — — — — — -— -— — 2010 UNIVERSAL
CALENDAR  
M            T            W            T            F            S            S
  M    
        T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— — JAN 4 5 6 7 8 9 10 JUL 5 6 7 8 9 10 11
(4 Weeks) 11 12 13 14 15 16 17 (4 Weeks) 12 13 14 15 16 17 18   18 19 20 21 22
23 24   19 20 21 22 23 24 25   25 26 27 28 29 30 31   26 27 28 29 30 31 - — — —
— — — — — — — — — — — — FEB            AUG (4 Weeks) 1 2 3 4 5 6 7 (4 Weeks) 2 3
4 5 6 7 8   8 9 10 11 12 13 14   9 10 11 12 13 14 15   15 16 17 18 19 20 21   16
17 18 19 20 21 22   22 23 24 25 26 27 28   23 24 25 26 27 28 29 - — — — — — — —
— — — — — — — -

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(UNIVERSAL CALENDAR) [w42294w4229407.gif]

MAR            SEP 30 31 (5 Weeks) 1 2 3 4 5 6 7 (5 Weeks) 1 2 3 4 5   8 9 10 11
12 13 14   6 7 8 9 10 11 12   15 16 17 18 19 20 21   13 14 15 16 17 18 19   22
23 24 25 26 27 28   20 21 22 23 24 25 26   29 30 31   27 28 29 30   1 2 3 4   1
2 3 APR 5 6 7 8 9 10 11 OCT 4 5 6 7 8 9 10 (4 Weeks) 12 13 14 15 16 17 18 (4
Weeks) 11 12 13 14 15 16 17   19 20 21 22 23 24 25   18 19 20 21 22 23 24   26
27 28 29 30   25 26 27 28 29 30 31             1 2                 - — — — — —
-— -— — — — — — — — - MAY            NOV (4 Weeks) 3 4 5 6 7 8 9 (4 Weeks) 1 2 3
4 5 6 7   10 11 12 13 14 15 16   8 9 10 11 12 13 14   17 18 19 20 21 22 23   15
16 17 18 19 20 21   24 25 26 27 28 29 30   22 23 24 25 26 27 28 - — — — — — — —
— — — — — — — - JUN 31 DEC 29 30 (5 Weeks) 1 2 3 4 5 6 (5 Weeks) 1 2 3 4 5   7 8
9 10 11 12 13   6 7 8 9 10 11 12   14 15 16 17 18 19 20   13 14 15 16 17 18 19
21 22 23 24 25 26 27   20 21 22 23 24 25 26   28 29 30   27 28 29 30 31   1 2 3
4   1 2 - — — — — — — — — — — — — — — -

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2011 UNIVERSAL CALENDAR
(UNIVERSAL CALENDAR) [w42294w4229408.gif]

2011 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M    
        T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— —   3 4 5 6 7 8 9   4 5 6 7 8 9 10 JAN 10
11 12 13 14 15 16 JUL 11 12 13 14 15 16 17 (4 Weeks) 17 18 19 20 21 22 23 (4
Weeks) 18 19 20 21 22 23 24   24 25 26 27 28 29 30   25 26 27 28 29 30 31 - — —
— — — — — — — — — — — — - FEB 31 AUG 1 2 3 4 5 6 7 (4 Weeks) 1 2 3 4 5 6 (4
Weeks) 8 9 10 11 12 13 14   7 8 9 10 11 12 13   15 16 17 18 19 20 21   14 15 16
17 18 19 20   22 23 24 25 26 27 28   21 22 23 24 25 26 27   - — — — — — — — — —
— — — — — - MAR 28 SEP 29 30 31 (5 Weeks) 1 2 3 4 5 6 (5 Weeks) 1 2 3 4   7 8 9
10 11 12 13   5 6 7 8 9 10 11   14 15 16 17 18 19 20   12 13 14 15 16 17 18   21
22 23 24 25 26 27   19 20 21 22 23 24 25   28 29 30 31   26 27 28 29 30        
  1 2 3             1 2 - — — — — -— -— -— — — — — — — -— —   4 5 6 7 8 9 10   3
4 5 6 7 8 9 APR 11 12 13 14 15 16 17 OCT 10 11 12 13 14 15 16 (4 Weeks) 18 19 20
21 22 23 24 (4 Weeks) 17 18 19 20 21 22 23   25 26 27 28 29 30   24 25 26 27 28
29 30

  1      

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(UNIVERSAL CALENDAR) [w42294w4229409.gif]

MAY 2 3 4 5 6 7 8 NOV 31 (4 Weeks) 9 10 11 12 13 14 15 (4 Weeks) 1 2 3 4 5 6  
16 17 18 19 20 21 22   7 8 9 10 11 12 13   23 24 25 26 27 28 29   14 15 16 17 18
19 20     21 22 23 24 25 26 27 - — — — — — — — — — — — — — — - JUN 30 31 DEC 28
29 30 (5 Weeks) 1 2 3 4 5 (5 Weeks) 1 2 3 4   6 7 8 9 10 11 12   5 6 7 8 9 10 11
  13 14 15 16 17 18 19   12 13 14 15 16 17 18   20 21 22 23 24 25 26   19 20 21
22 23 24 25   27 28 29 30   26 27 28 29 30 31   1 2 3   1 - — — — — — — — — — —
— — — — - 2012 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M   
         T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— —   2 3 4 5 6 7 8   2 3 4 5 6 7 8 JAN 9 10
11 12 13 14 15 JUL 9 10 11 12 13 14 15 (4 Weeks) 16 17 18 19 20 21 22 (4 Weeks)
16 17 18 19 20 21 22   23 24 25 26 27 28 29   23 24 25 26 27 28 29 - — — — — — —
— — — — — — — — - FEB 30 31 AUG 30 31 (4 Weeks) 1 2 3 4 5 (4 Weeks) 1 2 3 4 5  
6 7 8 9 10 11 12   6 7 8 9 10 11 12   13 14 15 16 17 18 19   13 14 15 16 17 18
19   20 21 22 23 24 25 26   20 21 22 23 24 25 26

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(UNIVERSAL CALENDAR) [w42294w4229410.gif]

    MAR 27 28 29 SEP 27 28 29 30 31 (5 Weeks) 1 2 3 4 (5 Weeks) 1 2   5 6 7 8 9
10 11   3 4 5 6 7 8 9 12 13 14 15 16 17 18   10 11 12 13 14 15 16   19 20 21 22
23 24 25   17 18 19 20 21 22 23   26 27 28 29 30 31   24 25 26 27 28 29 30      
        1                 - — — — — — — -— — — — — — — — -   2 3 4 5 6 7 8   1 2
3 4 5 6 7 APR 9 10 11 12 13 14 15 OCT 8 9 10 11 12 13 14 (4 Weeks) 16 17 18 19
20 21 22 (4 Weeks) 15 16 17 18 19 20 21   23 24 25 26 27 28 29   22 23 24 25 26
27 28 - — — — — — — — — — — — — — — - MAY 30 NOV 29 30 31 (4 Weeks) 1 2 3 4 5 6
(4 Weeks) 1 2 3 4   7 8 9 10 11 12 13   5 6 7 8 9 10 11   14 15 16 17 18 19 20  
12 13 14 15 16 17 18   21 22 23 24 25 26 27   19 20 21 22 23 24 25 - — — — — — —
— — — — — — — — - JUN 28 29 30 31 DEC 26 27 28 29 30 (5 Weeks) 1 2 3 (5 Weeks) 1
2   4 5 6 7 8 9 10   3 4 5 6 7 8 9   11 12 13 14 15 16 17   10 11 12 13 14 15 16
  18 19 20 21 22 23 24   17 18 19 20 21 22 23   25 26 27 28 29 30   24 25 26 27
28 29 30   1   - — — — — — — — — — — — — — — -

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2013 UNIVERSAL CALENDAR
(UNIVERSAL CALENDAR) [w42294w4229411.gif]

2013 UNIVERSAL CALENDAR  
M            T            W            T            F            S            S
  M    
        T            W            T            F            S            S - -—
-— -— -— -— -— -— — -— -— -— -— -— -— —   31   1 2 3 4 5 6 7 JAN 1 2 3 4 5 6 JUL
8 9 10 11 12 13 14 (4 Weeks) 7 8 9 10 11 12 13 (4 Weeks) 15 16 17 18 19 20 21  
14 15 16 17 18 19 20   22 23 24 25 26 27 28   21 22 23 24 25 26 27   - — — — — —
— — — — — — — — — - FEB 28 29 30 31 AUG 29 30 31 (4 Weeks) 1 2 3 (4 Weeks) 1 2 3
4   4 5 6 7 8 9 10   5 6 7 8 9 10 11   11 12 13 14 15 16 17   12 13 14 15 16 17
18   18 19 20 21 22 23 24   19 20 21 22 23 24 25 - — — — — — — — — — — — — — — -
MAR 25 26 27 28 SEP 26 27 28 29 30 31 (5 Weeks) 1 2 3 (5 Weeks) 1   4 5 6 7 8 9
10   2 3 4 5 6 7 8   11 12 13 14 15 16 17   9 10 11 12 13 14 15   18 19 20 21 22
23 24   16 17 18 19 20 21 22   25 26 27 28 29 30 31   23 24 25 26 27 28 29 - — —
— — — — — — — — — — — — -   1 2 3 4 5 6 7   30 APR 8 9 10 11 12 13 14 OCT 1 2 3
4 5 6 (4 Weeks) 15 16 17 18 19 20 21 (4 Weeks) 7 8 9 10 11 12 13   22 23 24 25
26 27 28   14 15 16 17 18 19 20     21 22 23 24 25 26 27                        
      - — — — — — — — — — — — — — — -

   

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(UNIVERSAL CALENDAR) [w42294w4229412.gif]

MAY 29 30 NOV 28 29 30 31 (4 Weeks) 1 2 3 4 5 (4 Weeks) 1 2 3   6 7 8 9 10 11 12
  4 5 6 7 8 9 10   13 14 15 16 17 18 19   11 12 13 14 15 16 17   20 21 22 23 24
25 26   18 19 20 21 22 23 24 - — — — — — — — — — — — — — — - JUN 27 28 29 30 31
DEC 25 26 27 28 29 30 (5 Weeks) 1 2 (5 Weeks) 1   3 4 5 6 7 8 9   2 3 4 5 6 7 8
  10 11 12 13 14 15 16   9 10 11 12 13 14 15   17 18 19 20 21 22 23   16 17 18
19 20 21 22   24 25 26 27 28 29 30   23 24 25 26 27 28 29     - -

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Appendix G – UBS’ Insurance Requirements
1.0 Insurance Requirements
UBS shall use reasonable commercial efforts to procure and maintain, at all
times, and at its own expense, during the Term the types of insurance(s)
specified below. For product liability/completed operations, insurance and
product recall insurance, coverage (or appropriate run off insurance) will
remain in effect for at least two (2) years after termination of the Agreement.
A. Public Liability
Public Liability Occurrence Coverage Form with limits of not less than
*[REDACTED] each occurrence and *[REDACTED] annual aggregate. Such insurance
shall include worldwide coverage including coverage for USA and Canada
jurisdiction claims and occurrences. UBS’ policy shall specifically include
LifeScan, its subsidiaries, and its directors, officers and employees, as
Additional Insureds. UBS’ policy shall also specifically waive any rights of
subrogation against LifeScan, its subsidiaries, and its directors, officers and
employees. UBS shall supply LifeScan with the above proof of insurance and forms
as required upon the signing of this Agreement, but LifeScan’s failure to demand
such proof or forms shall not waive LifeScan’s rights to such coverage as
specified herein.
B. Workers’ Compensation
Workers’ Compensation Form in accordance with local regulations.
C. All Risk Property Insurance/Industrial Special Risk Insurance
All Risk Property Insurance/ Industrial Special Risk Insurance in an amount not
less than the full replacement cost of UBS’ property.
D. Product Liability Insurance
Product Liability/Completed Operations Insurance on an occurrence form basis
with limits of not less than *[REDACTED] each occurrence and *[REDACTED] annual
aggregate. Such insurance shall include worldwide coverage including coverage
for USA and Canada jurisdiction claims and occurrences. UBS’ policy shall
specifically include LifeScan, its subsidiaries, and its directors, officers and
employees, as Additional Insureds. Such Additional Insured coverage is only to
the extent of the distribution or sale of Products manufactured by UBS or its
agents. UBS’ policy shall also specifically waive any rights of subrogation
against LifeScan, its subsidiaries, and its directors, officers and employees.
UBS shall supply LifeScan with the above proof of insurance and forms as
required upon the signing of this Agreement, but LifeScan’s failure to demand
such proof or forms shall not waive LifeScan’s rights to such coverage as
specified herein.
*Confidential portions has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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E. Product Recall Insurance
Product Recall Insurance an occurrence form basis with limits of not less than
*[REDACTED] each occurrence and
*[REDACTED] annual aggregate. Such insurance shall include worldwide coverage
including coverage for USA and Canada jurisdiction claims and occurrences. UBS’
policy shall also specifically waive any rights of subrogation against LifeScan,
its subsidiaries, and its directors, officers and employees. UBS shall supply
LifeScan with the above proof of insurance and forms as required upon the
signing of this Agreement, but LifeScan’s failure to demand such proof or forms
shall not waive LifeScan’s rights to such coverage as specified herein.
2.0. Miscellaneous
A. Authorization to do Business; Rating Requirement
All insurance companies must be authorized to do business in the States where
business is being transacted covering all operations under this Agreement. All
insurance companies must be rated A or better with a financial rating of VII or
better in the most recent A. M. Best’s Rating Guide.
B. Prior Notice of Cancellation or Nonrenewal
All insurance policies shall provide for thirty days (30) days’ prior written
notice to LifeScan of cancellation or nonrenewal.
C. Certificates
Certificates of insurance for all required coverage shall be provided to
LifeScan prior to commencement of any work on the project. Copies of the
required endorsements to the policies shall also be provided to LifeScan at that
time or when appropriate. Failure by LifeScan to request such copies or
documents shall not waive LifeScan’s rights to coverage under this agreement.
*Confidential portions has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Appendix H – Termination Matters
* [REDACTED]
 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Appendix I – Action Taken after Effective Date
LifeScan shall pay * [REDACTED] to UBS in accordance with clause 2 of the
Agreement.
 

*   Confidential portion has been omitted and has been filed separately with the
Securities Exchange Commission pursuant to a request for confidential treatment.

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Appendix J – Standards for Responsible External Manufacturing
Guiding Principles
The Johnson & Johnson Family of Companies (J&J) holds itself to high standards
of ethical behavior, product quality and social responsibility. These standards
reflect our internal values and the expectations of external stakeholders, such
as customers, regulators, investors and the public. Furthermore, we find
business relationships are more productive and effective when they are built on
trust, mutual respect and common values. As such, J&J seeks relationships with
external manufacturers of finished goods and active pharmaceutical ingredients
(herein referred to as external manufacturing partners) who share a common
commitment to:

  1)   Comply with applicable legal requirements,     2)   Behave ethically and
with integrity,     3)   Integrate quality into business processes,     4)  
Treat people with dignity and respect,     5)   Promote the safety, health and
well-being of employees,     6)   Operate in an environmentally responsible
manner and,     7)   Implement management systems to ensure ongoing performance
and continual improvement.

We believe when these seven guiding principles are followed, business and
communities realize economic, social and environmental benefits. We developed
the standards set out below to assist us with selecting partners who operate in
a manner consistent with these guiding principles and to assist our external
manufacturing partners with understanding our expectations. We developed these
standards mindful of the different legal and cultural environments in which our
external manufacturing partners operate and internationally recognized
expectations for business ethics, product quality, labor and employment, health
and safety and the environment. J&J assesses conformance to these standards and,
when necessary, works with its external manufacturing partners to identify
agreed upon actions and schedules in order to achieve improvement. J&J considers
progress in meeting these standards and ongoing performance in its sourcing
decisions.

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Standards
     1.) Legal Compliance
J&J’s external manufacturing partners are expected to operate in compliance with
all applicable legal requirements related to business conduct, product quality,
labor and employment practices, health and safety and environmental protection.
They are expected to obtain all applicable permits and to operate in accordance
with permit limitations and requirements at all times.
2.) Ethics & Business Conduct
J&J’s external manufacturing partners are expected to behave ethically and with
integrity in all business transactions. As such, they shall:

  Ø   Uphold standards for fair business practices including accurate and
truthful advertising, fair competition, and antitrust.     Ø   Prohibit the
exchange of privileges, waiver of penalties or fines, or special benefits
through payment of bribes, illegal political contributions, or other illicit
payments or methods.     Ø   Safeguard against improper use and disclosure of
confidential or sensitive information including intellectual property, pricing,
employee and patient information.     Ø   Maintain an environment of
transparency, collaboration and innovation.     Ø   Treat any animals used in
its activities in an ethical and humane manner and follow the principles of
replacement, refinement, and reduction of laboratory research animal testing.

3.) Product Quality
J&J’s external manufacturing partners are expected to meet agreed upon quality
requirements in order to provide goods and services that consistently meet
required specifications and customers’ needs, perform as intended and are safe
for their intended use. These requirements shall be defined in a Quality
Agreement and product specifications agreed to by J&J and its external
manufacturing partner.
4.) Labor & Employment
J&J’s external manufacturing partners are expected to treat people with dignity
and respect. As such, they shall:

  Ø   Not use forced, bonded, indentured or involuntary prison labor.     Ø  
Not discriminate against or harass an individual on the basis of race, color,
religion, gender, pregnancy, HIV status, sexual orientation, national origin,
age, disability, veteran’s status, marital status, or political affiliation.

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  Ø   Not treat or threaten to treat an individual harshly or inhumanely. Harsh
or inhumane treatment includes sexual harassment or abuse, corporal punishment,
coercion or verbal abuse.     Ø   Avoid unsafe working conditions by providing
sufficient rest periods during the workday and honor agreed upon days off from
work and maximum working hours.     Ø   Pay wages for all hours worked and
clearly communicate the wages that employees are to be paid to them in advance
of commencing work. Communicate to all employees if overtime is required and the
wages to be paid for such overtime.     Ø   Comply with J&J’s Employment of
Young Persons Policy and not employ anyone under the age of 16 and not employ
anyone under the age of 18 to perform hazardous work.     Ø   Respect workers’
rights to make informed decisions free of coercion, threat of reprisal or
unlawful interference regarding their desire to join or not join organizations.
    Ø   Respect worker’s rights to bargain collectively without unlawful
interference.

5.) Employee Health & Safety
J&J’s external manufacturing partners are expected to maintain the workplace and
any living quarters used to house employees in a clean, orderly and safe manner.
As such they shall:

  Ø   Implement programs to prevent employee exposures to workplace hazards
including chemical, biological, and physical hazards.     Ø   Implement programs
to manage processes safely and prevent catastrophic events.     Ø   Identify
potential emergency situations, implement preventative measures and be prepared
to execute emergency response procedures.

6.) Environmental Protection
J&J’s external manufacturing partners are expected to operate in an
environmentally responsible manner. As such, they shall:

  Ø   Work to reduce the environmental impacts of their operations including
natural resource consumption, materials sourcing, waste generation, wastewater
discharges and air emissions.     Ø   Prevent accidental releases of hazardous
materials into the environment and adverse environmental impacts on the local
community.     Ø   Implement programs to ensure products do not contain
restricted or banned materials.

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7.) Management Systems
J&J’s external manufacturing partners are expected to manage their activities
systematically in order to meet the standards set forth in this document and to
improve their operations continually. As such, they shall:

  Ø   Demonstrate top management commitment through policies, objectives, and
formal processes for management review.     Ø   Implement processes to control
documents and records.     Ø   Provide resources, including competent personnel
and appropriate infrastructure, to ensure conformance to these standards.     Ø
  Implement processes to control the production of J&J products, manage change
effectively and ensure customer requirements are satisfied.     Ø   Implement
processes to manage nonconformity and emergency situations related to products,
processes and these standards, including the reporting of such events to
applicable regulatory authorities and J&J as appropriate.     Ø   Identify and
implement improvement actions, including effective complaint investigation,
internal audit and corrective action processes.

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