of termination. In the event Distributor exercises its right
to terminate its obligations under Section 3.1.5(a) as provided above, OSUR may,
either (i) terminate this Agreement or (ii) convert Distributor's rights
hereunder to the Product from exclusive to non-exclusive rights, in each case
effective as of the date Distributor's obligations under Section 3.1.5(a) are
terminated. In order to exercise its right to terminate this Agreement or
convert Distributor's rights, OSUR shall provide Distributor with written notice
of such election within
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sixty (60) days after receipt of Distributor's notice to terminate its
obligations under Section 3.5.1(a). Notwithstanding anything to the contrary in
this Agreement, if OSUR elects to terminate or convert Distributor's rights
hereunder pursuant to this Section 3.1.5(b), nothing in this Agreement shall
preclude OSUR from preparing to sell the Product, either directly or indirectly,
into the OTC Market after this Agreement is terminated or Distributor's rights
are converted, including without limitation conducting negotiations with new
distributors and preparing marketing and promotional materials and plans. If
OSUR elects to terminate this Agreement pursuant to this Section 3.1.5(b),
Distributor shall pay OSUR a royalty which shall start at *** per unit of
Competing Product sold by Distributor in the OTC Market in the Territory during
the *** after the termination and shall be reduced by *** per unit for Competing
Product sold during *** thereafter (i.e. the royalty rate shall be *** per unit
during the *** period, *** per unit during the *** period, etc.); provided that
Distributor shall no longer have any royalty obligation hereunder for any
Competing Product sold after ***.
3.1.6. Marketing Plan. Distributor shall develop for each Contract Year a
written annual plan for the marketing and sale of the Product in the OTC Market
in each Country in the Territory. Distributor shall deliver such plan to OSUR
for the first Contract Year within thirty (30) days after the Effective Date.
Thereafter, Distributor shall deliver such a plan to OSUR for each subsequent
Contract Year by September 1 of the preceding Contract Year. Additionally,
Distributor shall provide OSUR with monthly updates of Distributor's sales of
Product by Country and all marketing and promotional activities for each month.
Distributor shall consult with OSUR in the preparation of each annual sales and
marketing plan. In addition, Distributor shall provide OSUR with access to all
market, sales and customer research and data obtained by Distributor which
relates to the Product or the OTC Market.
3.1.7. Training. Distributor shall establish reasonable procedures to ensure
that all new customers and sub-distributors or agents authorized hereunder in
the OTC Market in the Territory are shown how to make proper use of the Product,
in accordance with Product labeling, package inserts and instructions and
applicable regulatory approvals in the Territory.
3.1.8. Technical Agreement. Distributor shall enter into and comply with a
Technical Agreement with OSUR substantially in the form of attached Exhibit E,
which is incorporated herein by reference.
3.2. By OSUR.
3.2.1. Compliance with Laws. OSUR shall comply