CONFIDENTIAL
MANUFACTURING SERVICES AGREEMENT
DATE: May 14, 1998
PARTIES: Hypertension Diagnostics, Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000-0000
Telephone: 000-000-0000
TeleFax: 000-000-0000
"COMPANY"
Apollo Research Corporation
0000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Telephone: 000-000-0000
TeleFax: 000-000-0000
"CONTRACTOR"
RECITALS:
A. The Company designed, developed and intends to market a
CardioVascular Profiling Instrument (the "PRODUCT") which has several
components, including the Model 7013 Arterial Pulse Pressure Sensor (the
"SENSOR"), which was designed and developed with the assistance of the
Contractor.
B. The Contractor is in the business of manufacturing various medical
components, including the Sensor.
C. The Sensor is a component that is critical to the functionality of
the Product.
D. In consideration of the terms and conditions set forth in this
Agreement, the parties desire to enter into this Agreement whereby Contractor
agrees to manufacture and supply Sensors to the Company, and the Company
agrees to purchase the Sensors from the Contractor.
AGREEMENT:
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, it
is agreed as follows:
ARTICLE I
MANUFACTURING SERVICES
SECTION 1.1 SUPPLY. During the term of this Agreement, the
Contractor shall manufacture Sensors and shall supply such Sensors to the
Company, and the Company shall purchase from the Contractor Sensors ordered
by the Company which conform to the requirements of this Agreement, all as
more particularly provided herein. The Contractor will manufacture the
Sensors under the U.S. Food and Drug Administration's (the "FDA") good
manufacturing practices ("GMP") and quality system requirements ("QSR")
applicable to the manufacture of the Sensors. Any additional requirements
applicable to the manufacture of the Sensors are as set forth herein. Any
deviation from these requirements must be approved by the Company and the
Contractor in writing and in advance of manufacture.
SECTION 1.2 FACILITY INSPECTION. The Company shall have the right,
upon reasonable notice to the Contractor, during normal business hours, to
inspect all phases of the manufacturing activities of the Sensors at the
Contractor's or any subcontractor's facilities in order to verify the
Contractor's compliance with the requirements of this Agreement. The
Contractor agrees to give the Company access or arrange for the Company to
have access during normal business hours to such records as are reasonably
necessary to any such inspection including, but not limited to, quality
control records, test records, manufacturing records and design records. The
Contractor further agrees to permit or arrange for the Company to review and
copy such records for purposes of conducting any such inspection, provided
the Company agrees to maintain the confidentiality of any such records.
ARTICLE II
PLACEMENT OF ORDERS
SECTION 2.1 REQUEST FOR QUOTATIONS. Prior to the issuance of a
purchase order, the Company shall provide to the Contractor a request for a
written quotation from the Contractor as to the price for the number of
Sensors requested and the time to manufacture such Sensors, attach such
Sensors to cables ("SENSOR CABLES") supplied by the Company and ship such
completed assemblies ("SENSOR ASSEMBLIES") to the Company. The Contractor
will deliver such written quotation to the Company within twenty (20)
calendar days of the Contractor's receipt of the request for a quotation.
SECTION 2.2 PURCHASE ORDERS. The Company's purchase of the Sensors
shall be governed by purchase orders issued from time-to-time by the Company
and accepted by the Contractor (the "AUTHORIZATION LETTERS"). If the Company
sends an Authorization Letter to the Contractor, the Contractor will promptly
accept or reject the Authorization Letter in writing. If the Contractor
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accepts the Authorization Letter, the Contractor will begin the manufacture
of the Sensors no later than the date specified in the Authorization Letter
and will otherwise adhere to the other terms and conditions specified therein.
SECTION 2.3 COMPANY COORDINATOR. In each Authorization Letter, the
Company shall appoint a Manufacturing Coordinator. The Manufacturing
Coordinator shall establish standards for the quality and acceptability of
the manufacture of the Sensors and of the services to be performed by the
Contractor under the applicable Authorization Letter, provided that such
standards shall not materially affect the profitability to the Contractor
attributable to the manufacture and assembly of the Sensors and Sensor
Assemblies contemplated by such Authorization Letter.
SECTION 2.4 SUPERVISION BY THE CONTRACTOR. The Contractor shall
inform the Company of the name of the primary employee, employees or
subcontractors responsible for the work to be performed under each
Authorization Letter. The Contractor shall be responsible for supervision
and direction of the work of its employees and subcontractors, and if work is
done on the Company's premises, the Contractor shall, at all times, provide
supervision acceptable to the Company of its personnel working on the
Company's premises. The Contractor shall require its employees and, if
applicable, its subcontractors, to comply with the Company's plant
regulations and policies.
SECTION 2.5 ACCEPTABILITY OF PERSONNEL. The Contractor agrees not to
assign to work on the Company's premises any of its employees not acceptable
to the Company. The Contractor agrees to remove from the Company's premises,
immediately in the case of misconduct, any of its employees at the Company's
request. The Company agrees not to assign to work on the Contractor's
premises any of its employees not acceptable to the Contractor. The Company
agrees to remove from the Contractor's premises, immediately in the case of
misconduct, any of its employees at the Contractor's request.
SECTION 2.6 AUTHORIZATION LETTERS. Each Authorization Letter shall
contain, at a minimum, the following information:
(a) The incorporation, by reference, of this Agreement, and
the Contractor's quotation.
(b) A brief description of the Sensors to be manufactured
pursuant to the Authorization Letter (including the
quantity, necessary modifications to the Sensors,
special requests, if any, etc.).
(c) An enumeration of any items of special or unusual
expense authorized for reimbursement of the Contractor,
as well as the basis for such reimbursement.
(d) The maximum total expenditure authorized pursuant to
the Authorization Letter, subject to additional work
notices resulting in additional cost as approved by the
Company in advance.
(e) The dates by which:
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(1) The Company, in accord with the Contractor,
desires the services under the Authorization
Letter to commence.
(2) The Company, in accord with the Contractor,
desires to have the Sensor Assemblies completed
and delivered to the Company.
(f) Any other information pertinent to the work covered by
the Authorization Letter, including the content and
schedule for status reports from the Contractor, if
any.
(g) The agreed-upon amount and payment terms for Sensor
Assemblies to be delivered and services to be completed
under the Authorization Letter, based upon the
Contractor's quotation.
(h) A description of any special or unusual services to be
rendered by the Company as part of the Contractor's
manufacture and delivery of the Sensors and Sensor
Assemblies and the Company's review and approval of
same, including reasonable time frames for the
performance of said services.
(i) Signature(s) of authorized representatives of both the
Company and the Contractor.
SECTION 2.7 INVENTORY. The Contractor agrees to maintain a stock of
components and materials in quantities sufficient to cover the current and
reasonably anticipated production of Sensors for the Company.
SECTION 2.8 PREFERENCE TO DO BUSINESS WITH THE CONTRACTOR. The
Company shall place all orders for Sensors or Sensor Assemblies with the
Contractor provided that the Contractor is able and willing to, and does in
fact, comply with all of its material obligations under this Agreement. If
the Company concludes that the Contractor is unable and/or unwilling so to
comply with any of its material obligations under this Agreement, and
actually fails to comply with any of its material obligations under this
Agreement, then the Company shall have the right, upon notice to the
Contractor, to place orders for Sensors or Sensor Assemblies with a third
party, provided that the notice to the Contractor shall specify the reasons
for and nature of the order with such third party.
SECTION 2.9 DELIVERY. The Contractor shall ship the Sensor
Assemblies at the Company's expense in accordance with the Company's
instructions for method of shipment as designated by the Company in the
Authorization Letter. Upon shipment, the Contractor shall inform the Company
of the Company's pick number, SKU number, serial number, quantity shipped,
product destination, carrier, bill-to and ship-to address, package weight and
freight cost.
SECTION 2.10 SENSOR CABLES. The Company agrees to supply to the
Contractor, at the Company's expense, such number of Sensor Cables as are
necessary to fulfill the Contractor's obligations under each Authorization
Letter, plus an allowance of ten percent (10%). Upon receipt of any Sensor
Cable, the Contractor shall immediately inspect such Sensor Cable, and shall
accept or reject the same. In the event that the Contractor rejects any
Sensor Cable, the Contractor shall promptly return such Sensor Cable to the
Company, and the Company shall promptly replace such
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Sensor Cable at its expense. Any Sensor Cables delivered by the Company in
respect of the Sensors described in any given Authorization Letter that are
not required by the Contractor shall be returned to the Company upon
completion of such Authorization Letter. Any Sensor Cables required by the
Contractor in respect of the Sensors described in any given Authorization
Letter in excess of the number supplied by the Company and accepted by the
Contractor in respect of such Authorization Letter as hereinbefore provided
shall be at the Contractor's sole cost and expense.
ARTICLE III
BILLING, PAYMENT AND PRICING
SECTION 3.1 PRICE. The per-Sensor price charged to the Company by
the Contractor for the Sensors delivered and accepted by the Company under
this Agreement will be as set forth in the applicable Authorization Letter.
The Company agrees that per-Sensor pricing under this Agreement will reflect
an entitlement on the part of the Contractor to make a reasonable profit in
connection with its activities hereunder.
SECTION 3.2 INVOICES. Upon delivery of the Sensor Assemblies by the
Contractor to the possession of the carrier designated in the Authorization
Letter, the Contractor shall xxxx the Company for the Sensors shipped
pursuant to the Authorization Letter. Such invoices shall state the number
of Sensors shipped, the per-Sensor price, and the total price. The Company
shall make payment to the Contractor for the Sensors shipped to and accepted
by the Company within thirty (30) days following receipt of the Contractor's
invoice. The Company agrees to pay the Contractor a late penalty of one and
one-half percent (1 1/2 %) per month on any unpaid balance.
ARTICLE IV
WARRANTIES, QUALITY STANDARDS AND INSPECTION
SECTION 4.1 CONTRACTOR WARRANTIES. (a) The Contractor warrants that
all Sensors manufactured by the Contractor pursuant to this Agreement shall
conform strictly to the Specifications of the Company described in Section
4.3 hereof. In addition, the Contractor warrants that all Sensors
manufactured by the Contractor shall be free from defects in materials and
workmanship for a period of one (1) year from the date of shipment. Any
Sensor in breach of this warranty will be returned to the Contractor at the
Company's expense and will promptly be repaired by a member of the
Contractor's authorized service staff at the Contractor's expense. Any
defective Sensor which, for any reason, cannot be repaired by the Contractor
when returned to the Contractor, will be replaced at the Contractor's expense
(including transportation). All replaced Sensors will be warranted for a
period of one (1) year from the date of shipment thereof as required by this
Section 4.1. Returned Sensors will be processed as defined in Section 4.1(c).
(b) SERVICES. The services provided by the Contractor or any
subcontractor employed by the Contractor will be rendered by qualified
personnel employed by the Contractor or any such subcontractor who will
perform the tasks assigned in a manner that is consistent with good
professional practice and standards, and, where applicable, in accordance
with the FDA's GMP, QSR
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and/or other such regulations as appropriate. Should the Company's
Manufacturing Coordinator determine that any Contractor or any subcontractor
personnel assigned to manufacture of the Sensors (or services relating
thereto) is not performing satisfactorily, the Contractor will replace such
personnel or cause any applicable subcontractor to replace any such personnel
upon receiving written notice thereof from the Company. The Contractor
reserves the right to make staffing changes in Senior Staff, Manufacturing
Personnel, and/or other personnel upon reasonable notice to the Company's
Manufacturing Coordinator at logical breakpoints of the work. In the event
of such staffing change, the Company shall not be charged for the time
required to train the replacement(s). The amount of non-compensatory
training time, if any, shall be mutually determined and agreed to by the
Contractor's and the Company's management and/or Manufacturing Coordinator.
(c) SERVICE DEPOT. The Contractor will provide Service Depot functions
for the Sensors. The program will be structured as follows:
- The Contractor, in cooperation with the Company, will establish a
mutually-acceptable inventory of functioning, complete and packaged
Sensors.
- The Company's customer will send in failed Sensors to the Company,
upon receipt of which the Company will ship a functioning permanent
replacement to the customer.
- The failed Sensors will be cleaned and disinfected, if necessary, by
the Company prior to being repaired.
- Repair instructions from the Company will accompany the failed
Sensors describing failure-mode and any additional
refurbishment services required. The Contractor and the Company
will jointly develop a minimum set of standards for repair of the
Sensors.
- The Contractor will determine classification of all failed Sensors as
follows: warranty repair, normal repair (outside warranty), misuse
or damage repair, or some combination thereof.
- All non-warranty work will be performed on a time-and-materials basis
at the current Contractor rates at the time the work is performed.
- Standard lead-time for all warranty work and repair work will be a
maximum of ten (10) business days from receipt of the Sensors by the
Contractor or, if the Sensor in question is not repairable, it shall
be replaced within ten (10) business days.
- The Contractor will return all Sensors to the Company and provide the
Company with a description of work performed. All warranty shipments
are F.O.B., the Company's facilities. All non-warranty shipments are
F.O.B., the Contractor's manufacturing and Service Depot facilities.
All repaired Sensors will be warranted for a period of one (1) year
from the date of repair thereof as required by Section 4.1.
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The above-described Service Depot program will be jointly established in
detail by the Company and the Contractor, resulting in a documented and
mutually-approved process and procedure.
SECTION 4.2 EXCLUSION OF OTHER WARRANTIES. EXCEPT AS SET FORTH IN
THIS AGREEMENT, THE CONTRACTOR MAKES NO OTHER GUARANTEES OR WARRANTIES
WHATSOEVER, AND THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
SECTION 4.3 QUALITY STANDARDS. The Sensors manufactured and supplied
by the Contractor hereunder shall be manufactured in strict compliance with
product and performance specifications promulgated by the Company from time
to time ("SPECIFICATIONS"), which Specifications shall include, but not be
limited to, manufacturing, design, inspection, governmental compliance,
testing, quality control, assurance, record retention and other
requirements, as applicable, and any documents, drawings, and billing
materials incorporated thereby. It is understood that such Specifications
may be amended as reasonably necessary from time to time during the term of
this Agreement by the Company effective upon receipt by the Contractor of
reasonable advance notice, provided that such amendments shall be applicable
only to subsequent orders of Sensors or Sensor Assemblies.
SECTION 4.4 ACCEPTANCE PERIOD.
(a) When, in the Contractor's opinion, it has completed the services
described in an Authorization Letter, including submission of a final report,
if required, the Contractor shall provide written notification of such
completion to the Company. The Company shall have an acceptance period of
thirty (30) days, unless otherwise agreed to by the Company and the
Contractor, from the date of the Contractor's written notice in which to
inspect the Sensors including conducting tests to determine if the services,
computer software and/or related materials and components have been completed
and manufactured in an acceptable manner. On or prior to the expiration of
this acceptance period, the Company shall provide to the Contractor written
notice of either (a) satisfactory performance and the Company's acceptance of
the Sensors, or (b) notice of unsatisfactory performance of services and the
Company's rejection of the Sensors. The Company's right to reject the
Sensors is limited to this thirty (30) day period unless a latent defect, not
capable of being discovered by reasonable testing, is not discovered until a
later date. "INSPECTION" shall mean the right of the Company, including its
agents, affiliates and dealers, to inspect and analyze finished goods at any
time during normal business hours to determine compliance with the
Specifications and to determine whether any manufacturing deficiency exists,
and shall include the right to reject any Sensor at any time upon discovery
of any manufacturing defect.
(b) The Contractor shall supply appropriate personnel to investigate
any reported deficiencies found by the Company during the acceptance period.
Deficiencies found to be the responsibility of the Contractor will be
corrected by the Contractor at its expense. Such corrective activities will
commence immediately and will be completed as quickly as is reasonably
possible. If the deficiencies are found to be not the responsibility of the
Contractor, the Company shall reimburse the Contractor for the time and
material charges of (1) the Contractor's investigation, and (2) such
corrective activities as the Contractor agrees to perform, if requested by
the Company. If corrections
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are required, the period from the time the Contractor is notified of the
Company's rejection of Sensors to the time until the Contractor completes its
investigative and corrective activities shall not be counted as part of the
acceptance period; upon receipt of the Contractor's notice that the
deficiencies have been remedied, the Company shall have a new acceptance
period of thirty (30) days, unless otherwise agreed to in writing by the
parties.
SECTION 4.5 REJECTED GOODS. The Contractor shall promptly rework,
repair or replace, at the Company's discretion and at no cost to the Company,
any Sensor that is defective in workmanship or materials, or which fails to
meet the Specifications and is rejected by the Company upon inspection. The
Company will comply with the Contractor's reasonable return procedures. The
Contractor shall not be responsible for Sensors damaged in shipment, unless
such Sensors are not packaged in accordance with Section 5.1.
SECTION 4.6 CONFIGURATION AND PROCESS CONTROL. The Contractor will
immediately advise the Company's Manufacturing Coordinator at the address set
forth in Section 10.1, of all known changes in or to the design,
configuration or performance characteristics of the Sensor (regardless of
whether such changes affect the Specifications), and of all known changes in
or to the materials or manufacturing processes utilized in production. No
change in process or design will be made by the Contractor unless expressly
agreed to in writing by the Company in advance of such change. The Company
may, at any time in its discretion and by written order, make additional
changes to designs, provided that such changes shall be applicable only to
Sensors covered by future Authorization Letters. If said changes cause
either an increase or decrease in the engineering or manufacturing costs or
the time required to manufacture the Sensors, a mutually-agreeable adjustment
shall be made to the Sensor price or delivery schedule or both. Where
inventory and/or materials have been made obsolete or excess as a result of
said change, the Company shall have the right to determine the disposition of
such property, but the Company shall, in any event, be responsible to
purchase said obsolete inventory and materials at the incurred cost thereof.
SECTION 4.7 CONTRACTOR'S STATUS REPORTS. All work performed by the
Contractor under an Authorization Letter will be monitored through the use of
oral and/or written status reports, as reasonably requested by the Company
from time to time. The Contractor will prepare a written status report,
appropriate and as specified in the applicable Authorization Letter, for
submission to the Company's Manufacturing Coordinator. The general content
of the status reports shall be specified by the Company's Manufacturing
Coordinator, provided that the requirement to render such reports shall not
materially affect the profitability to the Contractor attributable to the
manufacture and assembly of the Sensors and Sensor Assemblies contemplated by
the applicable Authorization Letter.
SECTION 4.8 COMPUTER AND SUPPORT SERVICES. All computer time and
other necessary support services will be provided as generally specified in
the applicable Authorization Letter. All creation of software and related
material done by the Contractor for the Company will be programmed and
documented in keeping with the Company's standards as promulgated by the
Company's Manufacturing Coordinator pursuant to Section 2.3 hereof and as
generally specified in the applicable Authorization Letter.
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ARTICLE V
PRODUCT PACKAGING
SECTION 5.1 PACKAGING. Unless otherwise specified in the applicable
Authorization Letter, all Sensor Assemblies and other items to be delivered
hereunder shall be boxed, crated or stored without additional charge and
shall be placed and packaged:
(a) To ensure safe arrival at their ultimate destination;
(b) To secure the most expeditious and cost-effective
transportation approach; and
(c) To comply with the requirements of common carriers.
Reference to the applicable Authorization Letter and date must be plainly
marked on all invoices, packages, bills of lading, and shipping orders.
Shipping memos or packing lists must accompany materials. The Contractor
shall identify Sensors and items delivered to the Company by revision,
description, and quantity per carton, as appropriate. The Company's count or
weight shall be final and conclusive on shipments not accompanied with a
packing list. Sensors must be routed in accordance with the Company's
instructions for method of shipment. The Company reserves the right to
designate a specific carrier and, in such case, will advise the Contractor in
writing.
SECTION 5.2 TRANSPORTATION. Transportation insurance (in an amount
sufficient to cover the replacement cost of the Sensors) for loss and damage
will be purchased by the Contractor and the cost thereof will be reimbursed
by the Company, unless specifically directed to the contrary by the Company.
Excess transportation costs resulting from failure to comply with the
provisions of this Article V will be paid by the Contractor.
SECTION 5.3 CONSOLIDATION OF SHIPMENTS. Shipments made on the same
day and consigned to one destination via the same carrier must (unless
otherwise agreed to by the Company) be consolidated on one xxxx of lading.
Failure to comply will result in a credit by the Contractor to the Company's
related invoice for any excess cost incurred.
SECTION 5.4 COSTS. All prices are F.O.B., Contractor's manufacturing
facility and Service Depot, unless otherwise provided in this Agreement or
agreed to in writing by the parties.
SECTION 5.5 RISK OF LOSS. Risk of loss of or damage to the Sensors
shall pass to the Company upon delivery thereof by the Contractor to the
appropriate carrier, unless otherwise agreed upon in writing by the parties.
Any claims for loss or damage after risk of loss of or damage to the Sensors
has passed to the Company shall be filed by the Company with the carrier.
ARTICLE VI
PATENTS, INVENTIONS, RIGHTS
SECTION 6.1 GRANT OF RIGHTS. Subject to Article VII hereof, each
party grants to the other a non-exclusive license, during the term of this
Agreement, to use its respective confidential
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information and its respective patent rights and patent applications covering
the Sensor and components thereof as necessary in order to carry out the
intent and purpose of this Agreement and for no other purpose.
SECTION 6.2 DESIGN OWNERSHIP. Subject to the terms and conditions of
this Agreement the parties agree that title to goods, inventions and
copyrights in works developed by the Contractor pursuant to and during the
term of this Agreement, including, but not limited to, goods, patentable
inventions reduced to practice under this Agreement, copyrights in works that
are created under this Agreement, designs, drawings, software and
documentation, are owned by the Company. It is understood that know-how,
techniques and other technology utilized and owned exclusively by the
Contractor prior to the date of this Agreement will not become the property
of the Company, although the Company shall have the right to use such items
as necessary to utilize and enjoy the items to which the Company has title as
described in this Section 6.2.
SECTION 6.3 MASTER FILE. The Contractor acknowledges and agrees that
the Sensor is a component that is critical to the functionality and thereby
the marketing and sale of the Product. Accordingly, the Contractor agrees to
assemble a master file (the "MASTER FILE") of all information necessary to
manufacture the Sensors and to assemble the Sensor Assemblies, including,
without limitation, the following: (a) technical specifications; (b)
information about materials relating thereto; (c) engineering drawings;
(d) assembly procedures; (e) specialized technical know-how; (f) xxxx of
materials and preferred vendor contacts, addresses and phone numbers;
(g) testing, verification and validation procedures; and (h) any other relevant
information relating to the foregoing. Within thirty (30) days of the date
of this Agreement, the Contractor will supply a copy of the Master File to
the Company, and thereafter the Contractor shall update and maintain (and
shall supply the Company with a copy of any such updates to or maintenance
of) the Master File to the extent necessary to keep the Master File
absolutely current at all times.
SECTION 6.4 INFRINGEMENT OF PATENTS, TRADEMARKS OR COPYRIGHTS.
Except with respect to matters described in the second sentence of this
Section 6.4, the Contractor shall indemnify the Company for any loss, damage,
expense or liability that may result by reason of any infringement, or claim
of infringement, of any United States patent, trademark or copyright based on
the Company's use of the items described in Section 6.2 or the services
furnished to the Company hereunder. Notwithstanding the provisions contained
in the first sentence of this Section 6.4, the Company shall indemnify the
Contractor for any loss, damage, expense or liability that may result by
reason of any infringement, or claim of infringement, of any United States
patent, trademark or copyright based on the Contractor's manufacture, repair
or modification at the Company's request, of any Sensor which was
manufactured, repaired or modified on the basis of any patent, trademark or
copyright owned or applied for by the Company. Each party shall notify the
other party promptly, in writing, of any such claim for infringement and
shall cooperate with the other party in every reasonable way to facilitate
the defense of any such claim.
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ARTICLE VII
CONFIDENTIALITY
SECTION 7.1 DEFINITIONS. For purposes of this Article VII, the
following terms shall have the following meanings:
(a) "TRADE SECRETS" shall mean any and all Company
knowledge and information not generally known in the industry and not
readily disclosed by inspection of physical materials or documents
generally available to the public which relate to the following: (i) the
Product or the Sensor; (ii) products related to the Product or the
Sensor and/or advertising, promotion or display of the Product or the
Sensor, developed or otherwise employed by the Company; (iii)
procedures, methods, techniques, computer software, algorithms, computer
hardware designs, plans, specifications or schematics, compositions,
formulas, specifications, plans and designs relating to design,
production, or manufacture of the Product or the Sensor, or advertising,
promotion or display of the Product or the Sensor; (iv) designers,
distributors, customers, customer contacts, distributor and customer
lists, and designer, distributor and customer arrangements; (v) business
relationships, including existence of, or proposed relationships with,
designers, manufacturers, distributors, licensors and licensees,
franchisors and franchisees; and (vi) programs, systems, information,
files, materials and other confidential information, proprietary
knowledge and "trade secrets" (as that term is defined in the Uniform
Trade Secrets Act, Minnesota Statutes Section 325C.01, Subd. 5) of
Company's business. Trade Secrets shall also mean any and all
Contractor knowledge and information not generally known in the industry
and not readily disclosed by inspection of physical materials or
documents generally available to the public which relate to matters
comparable to those described in clauses (iv),(v) and (vi) of this
Subsection (a), including but not limited to any Contractor knowledge
and information contained in the Master File.
(b) "BUSINESS SECRETS" shall mean any and all information pertaining
to the current or proposed organization or operation of the Company or
the Contractor including, but not limited to, organizational documents,
current or proposed shareholders, current or proposed customers,
capitalization, current or proposed employee relationships or
compensation, financing and banking arrangements, office, retail, and
manufacturing facilities, manufacturing plans, and marketing plans and
market segment identification.
(c) "CONFIDENTIAL INFORMATION" of each party shall mean,
collectively, the Trade Secrets and the Business Secrets of such party.
(d) "DOCUMENTS" shall mean any and all physical material received
by the Contractor from the Company, including, but not limited to,
designs, proposed advertising and/or promotional materials, letters,
studies, writings, diagrams, plans, drawings, charts, xxxx-ups,
sketches, samples and prototypes relating to the Product or the Sensor.
(e) "PURPOSE" shall mean the manufacturing of the Sensor and/or
the performance of the services associated therewith, all pursuant to
this Agreement.
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SECTION 7.2 NONDISCLOSURE. Each party hereby warrants, covenants and
agrees that any and all Confidential Information of the other party, whether
oral or written, which is received by or disclosed to such party, shall be
and remain strictly confidential. Any party that receives Confidential
Information of the other party shall not, at any time, in any manner,
directly or indirectly, divulge or in any manner whatsoever disclose to any
person, firm or entity whomsoever all or any portion of such Confidential
Information, except in connection with the furtherance of the Purpose and
then only upon prior notice to and written consent by the owner of the
Confidential Information in question.
SECTION 7.3 NON-USE. Each party hereby warrants, covenants and
agrees that it will not, in any manner, directly or indirectly, use or
otherwise employ all or any portion of any Confidential Information belonging
to the other party except in furtherance of the Purpose.
SECTION 7.4 RETURN OF DOCUMENTS. Except as otherwise provided herein
the Contractor hereby warrants, covenants and agrees that no copies of the
Documents shall be made except as may be necessary to manufacture the Sensor.
The Documents shall be returned to the Company and any notes abstracting the
contents of Documents shall be destroyed, if so requested by the Company.
SECTION 7.5 SPECIFIC ENFORCEMENT. Each party acknowledges and agrees
that the other party's remedies at law are inadequate in the event of any
breach or threatened breach of this Agreement. Consequently, in the event of
a breach or threatened breach of this Agreement, the non-breaching party
shall be entitled to petition for injunctive relief restraining the breaching
party or any of its agents or employees, from breaching or acting in any
manner inconsistent with the conduct or performance required by this
Agreement. The Contractor hereby consents to personal jurisdiction in the
courts of the State of Minnesota, County of Hennepin, or the Federal District
Court, District of Minnesota, Fourth Division, with respect to any matter
arising out of or in connection with this Agreement. In the event any court
of competent jurisdiction determines that any portion of this Agreement is
unreasonably broad or unenforceable, such court is hereby authorized and
empowered to narrow the provisions of this Agreement to such reasonable
parameters and limits as such court shall determine to be necessary to
accomplish the intent of the parties and to protect the Company.
SECTION 7.6 LEGAL EXPENSES. In the event of any litigation to
enforce the provisions of this Agreement, the prevailing party shall be
entitled to recover its legal expenses (including reasonable attorneys'
fees), as assessed by the court.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1 TERM. The term of this Agreement shall be for ten (10)
years from the date first written above unless sooner terminated as provided
hereinafter or by operation of law. Upon expiration of such term, this
Agreement shall terminate unless the parties agree otherwise in writing.
SECTION 8.2 TERMINATION WITHOUT CAUSE. This Agreement may be
terminated by either party upon 270 days' prior written notice to the other
party; PROVIDED, HOWEVER, that such termination will not become effective
until completion of, or cancellation by the Company in accordance with
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Section 8.5 of, any work specified in any Authorization Letter either in
effect at the time of said notice of termination or submitted by the Company
prior to the time of said notice of termination.
SECTION 8.3 TERMINATION FOR FAILURE TO PERFORM, ETC. If either party
(i) fails to remedy a breach by such party of any material obligation
hereunder within thirty (30) days after receipt of written notice thereof
from the other party, or (ii) fails to give reasonably adequate assurances of
continued performance within thirty (30) days after a request therefor is
made by the other party, the other party may, in addition to any other remedy
it may have at law or in equity, immediately terminate this Agreement for
failure to perform, specifying the act or omission upon which such notice is
based.
SECTION 8.4 TERMINATION FOR BANKRUPTCY. If either party is adjudged
bankrupt, or becomes insolvent, or makes an assignment for the benefit of
creditors, or if its business is placed in the hands of a trustee, whether by
voluntary action or otherwise, the other party may immediately terminate this
Agreement upon delivery of written notice of its intention to do so to the
other party.
SECTION 8.5 CANCELLATION OF AUTHORIZATION LETTERS. The Company,
without prejudice to any right or remedy on account of any failure of the
Contractor to perform its obligations under this Agreement, may, at any time,
terminate the performance of the work under any Authorization Letter, in
whole or in part, by written notice to the Contractor specifying the extent
to which the performance of the work is terminated and the date upon which
such termination becomes effective. In the event of any such termination,
the Contractor shall be entitled to payment for satisfactory services
rendered prior to the effective date of termination at the rates specified in
the Authorization Letter and for any other reasonable costs or fees the
Contractor may incur, including but not limited to any cost of component
parts or inventory incurred by the Contractor to fill a Sensor order which
the Contractor cannot reasonably avoid (which parts and/or inventory shall,
upon receipt of payment therefor by the Contractor, be delivered to the
Company) in curtailing or terminating such services; PROVIDED, HOWEVER, that
payment of any such amounts shall be subject to any provision for the limit
of expenditures set forth in the Authorization Letter. The payment of such
amounts shall be in full settlement of any and all claims of the Contractor
of every description, including profit.
SECTION 8.6 RETURN OF MATERIALS BY THE CONTRACTOR UPON TERMINATION.
In the event of any termination or expiration of this Agreement, the
Contractor will forward to the Company all of the Company's property, Sensor
and Product manufacturing information, written information and related
materials, all work in the Contractor's possession (except duplicate copies
required to be maintained by law) and a complete copy of the Master File
(including any updates thereto or any maintenance thereof through the date of
termination or expiration).
SECTION 8.7 PERSONNEL EMPLOYMENT. Each party agrees not to solicit
employment of employees of the other during the term of this Agreement and
for a period of one (1) year subsequent to the termination of this Agreement
unless otherwise mutually agreed in writing by the parties.
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ARTICLE IX
GOVERNMENT REGULATION
SECTION 9.1 COMPLIANCE WITH REGULATIONS. Both the Company and the
Contractor shall conduct their respective business under this Agreement in
accordance and in compliance with applicable government regulations. In this
connection, the manufacturing activities by the Contractor shall be, as a
minimum, in accordance with any applicable GMPs and QSRs. The parties shall
cooperate in providing, as required, information to governmental agencies in
order to obtain and maintain necessary approvals. Documentation retention of
manufacturing quality records will be in accordance with GMP and QSR
regulations. At the end of the retention period, all copies of all records
will be returned to the Company. The Company is responsible for initiating
interaction with the FDA on issues regarding the Sensor. The Contractor will
make the Company aware of any known issues believed to require regulatory
attention on the Company's part. With the exception of complaint
investigation, the cost incurred by each of the parties with respect to their
obligations under this Section 9.1 shall be borne by the incurring party. The
Company will supply the Contractor with any complaints from its customers
relating to compliance with GMP and QSR requirements. The Company will bear
the cost of any complaint investigation that is not caused by the
Contractor's workmanship. The Contractor will supply the Company with copies
of all complaint investigations for the Company's files. Documentation
retention of the Sensor History Records and Sensor Master Record and other
Quality Records will be maintained by the Contractor. Any records of the
Company relating to regulatory compliance under this Section 9.1 shall be
available for review and reproduction by the Contractor upon request, but
only to the extent necessary to permit the Contractor to investigate a
complaint involving the Contractor that relates to the Sensors and/or the
Sensor Assemblies.
SECTION 9.2 COMPLIANCE WITH LAWS. To the extent applicable to each
of them, both the Contractor and the Company shall be responsible for
complying with all federal, state and local laws, rules, regulations,
guidelines and the like in the United States and in other countries as they
may pertain to the Sensor and to the obligations on the parties to perform
under this Agreement including, without limitation, requirements in the
United States with respect to registration of establishments, listing of
medical devices, reporting of deaths, serious injuries and certain
malfunctions under 21 CFR Part 803 and the potential therefor, tracking of
medical devices, recalls, safety alerts and process controls. In no event
shall either party assume any risk arising out of the other party's failure
to comply with such laws, rules, regulations, guidelines and the like, and
each party shall cooperate with the other in all respects to facilitate and
promote strict compliance with the provision of this Section 9.2; provided
that if such cooperation subjects the cooperating party to unreasonable
costs, then such party shall be reimbursed by the other party for such actual
out-of-pocket expenses as are substantiated by original receipts. Any
changes in Sensor design or manufacture (and associated costs) required by
law or regulation or component availability shall be negotiated by the
parties and agreed to in good faith.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 NOTICES. Any notice given under this Agreement shall be
mailed by first class registered or certified airmail, postage prepaid, and
return receipt requested, via a national overnight courier service, or sent
by telefax, to the receiving party at the address set forth on the first page
hereof, or at such other address as the party may from time to time
designate. Notices shall be considered given on the date mailed or sent, if
mailed or sent in accordance with the provisions of this Section 10.1,
subject to proof of receipt by overnight courier, telefax confirmation or
return receipt of a certified mail transmission.
SECTION 10.2 GOVERNING LAW. This Agreement shall be deemed to have
been executed and delivered in the State of Minnesota, and all questions
arising out of or under this Agreement shall be governed by the laws of the
State of Minnesota.
SECTION 10.3 ENTIRE AGREEMENT. This is the final and entire Agreement
and understanding between the parties and supersedes and merges all prior
agreements and understandings, oral or written, as to the subject matter
described herein. No modifications, representation, promise or agreement in
connection with the subject matter of this Agreement shall be binding on the
Company or the Contractor unless made in writing and signed by an officer or
authorized representative of the party to be bound, such as the issuance by
the Company of a change to an Authorization Letter.
SECTION 10.4 WAIVER. No term, covenant, or written condition of this
Agreement shall be deemed waived except by the written agreement of the
parties. Forbearance or indulgence by either party in any regard whatsoever
shall not constitute a waiver of the term, covenant or condition to be
performed by the other to which the same may apply, and until complete
performance by the other party of such term, covenant and condition, the
performing party shall be entitled to invoke any remedy available to it under
this Agreement or otherwise available to it at law or in equity despite such
forbearance or indulgence.
SECTION 10.5 SAVINGS CLAUSE. If any provision of this Agreement shall
be held by a court of competent jurisdiction to be contrary to law, such
provision shall be deemed to be null and void, and the remainder of this
Agreement shall be in full force and effect. The parties specifically
declare that they would have entered into this Agreement if such void
provision (or provisions), if any, had been entirely omitted.
SECTION 10.6 REMEDIES. No right or remedy conferred or reserved by
the Agreement shall be exclusive of any other right or remedy herein or
provided at law or in equity. To the extent any provision of this Agreement
may be inconsistent with any remedy provided at law or in equity, this
Agreement shall be controlling.
SECTION 10.7 ASSIGNMENT, ETC. Neither party may assign its rights,
delegate its duties or otherwise transfer any interest it may have in this
Agreement without the prior written consent of the other party (which consent
may not be unreasonably withheld or delayed), and any purported assignment,
delegation or other transfer without such consent shall be void. The
foregoing restriction
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on delegation of duties shall include, without limitation, any use by the
Contractor of subcontractors to perform any service in connection with the
final assembly of the Sensors. For purposes of this Agreement, the
Contractor shall be deemed to "transfer" its interest in this Agreement if
the Contractor ceases at any time during the term of this Agreement to have
available to it on substantially a full-time basis the services of either of
the principals of the Contractor, Xxxx X. Xxxxxxxx and M. Xxxxx Xxxxx.
Subject to the foregoing, this Agreement shall be binding on the parties
hereto and their respective successors and permitted assigns.
SECTION 10.8 SURVIVAL OF RIGHTS AND OBLIGATIONS. The rights and
obligations contained in Article IV, Section 6.3 and Section 6.4 shall
survive and continue for a period of three (3) years after the expiration or
termination of this Agreement, and shall bind the parties and their
successors and assigns for such period. The rights and obligations contained
in Article VII (except with respect to any knowledge or information
contained in the Master File) shall survive and continue for a period of six
(6) years after the expiration or termination of this Agreement, and shall
bind the parties and their successors and assigns for such period. The
rights and obligations contained in Article VII with respect to any
knowledge or information contained in the Master File shall survive until the
expiration or termination of this Agreement; provided, however, that subject
to Section 2.8 hereof, the Company shall have the right at any time prior to
the expiration or termination of this Agreement to divulge, disclose and/or
use such knowledge and information solely for the limited purpose of seeking
alternate vendors as potential manufacturing sources for the Sensors and
Sensor Assemblies, provided that the Company has signed an enforceable
nondisclosure and non-use agreement with any third party to which any Master
File knowledge and information is divulged or disclosed (of which agreement
the Contractor shall be a beneficiary).
SECTION 10.9 FORCE MAJEURE. Neither party shall be liable for failure
to perform or for any delay in performing any of its obligations hereunder
other than as provided for herein, when such failure or delay is caused,
directly or indirectly, by fire, flood, earthquake, riot, accident,
explosion, strike or other labor disturbances (regardless of the
unreasonableness of the degree of the demand of labor), war, seizure under
legal process orders or acts of any government or branch or agency thereof,
or acts of God.
SECTION 10.10 INDEPENDENT CONTRACTORS. During the term thereof, the
relationship of each party hereto to the other party, is that of an
independent contractor. Nothing herein contained shall be deemed to
authorize or empower either party, its agents or employees to act as agent
for the other party or conduct business in the name, or for the account of,
the other party or any of the other party's affiliates or otherwise bind it
or them in any manner, and neither party shall make any representation to the
contrary to any third party.
SECTION 10.11 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement binding on each of the parties.
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IN WITNESS WHEREOF, the parties have executed this AGREEMENT
as of the date above written.
HYPERTENSION DIAGNOSTICS, INC.
BY_________________________________________
Xxxxxxx X. Xxxxxxx, D.V.M., PH.D., R.A.C.
Executive Vice President and C.T.O.
"COMPANY"
APOLLO RESEARCH CORPORATION
BY_________________________________________
Its______________________________________
"CONTRACTOR"
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