EXHIBIT 10.5
AGREEMENT
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THIS AGREEMENT effective as of the 21st day of December, 1992, by and
between TECH MEDICAL INC., a company with its principal offices at A 000 Xxxxx
Xxxxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000-0000 (hereafter called "T-M"), and XXXXXX-
XXXXXX CORPORATION, a Delaware corporation with its principal offices at 000 X.
Xxxxxxxx Xx., Xxxxxxx, Xxxxxxxx 00000 (hereafter called "X-X").
PURPOSE
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X-X is engaged in the development and manufacture of contact lenses
and desires to engage the facilities and services of T-M for the manufacture,
testing and packaging of certain injection molded plastic Casting Cups (the
"Casting Cups") to be used by X-X in its manufacturing process to produce
contact lens products ("Contact Lens Products"), and T-M agrees to provide all
materials, services, equipment, facilities, labor, supervision and quality
assurance to manufacture such Casting Cups in accordance with the terms and
conditions set forth as follows:
1 TERM AND RENEWAL
1.1 The initial term of this Agreement shall be for seven (7) years from the
effective date herein (the "Initial Term"). Thereafter the Agreement may be
renewed as mutually agreed by the parties, such renewal discussions shall be
concluded by the last month of the fifth (5th) year of the Initial Term of this
Agreement.
2 PRODUCTS
2.1 During the Initial Term and all subsequent terms, T-M shall manufacture
the Casting Cups exclusively for X-X and not to/for any other party, and X-X
shall purchase Casting Cups exclusively from T-M, subject to the conditions set
forth in the Articles 2.4, 2.6 and 2.7.
2.2 Upon execution of this Agreement, T-M agrees at its sole cost and
expense, to purchase the injection molding machines and standard auxiliary
equipment required to test, manufacture and package the Casting Cups as such
requirements are set forth in Exhibit A entitled "Capital/Facility Obligations."
At the end of the sixth (6th) month of each calendar year and for the duration
of the Initial Term of this Agreement X-X will provide T-M with a three (3) year
Purchase Plan of Casting Cups, in the format set forth in "Exhibit C," with tho
first (lst) year firm
commitments and the second (2nd) and third (3rd) year tentative to be utilized
by T-M to plan and develop the Capital and Facility Obligations necessary to
support X-X xxxx term Casting Cups needs. The T-M and X-X Capital and Facility
Obligations as set forth in Exhibit A (including but not limited to injection
molding machines, auxiliary equipment, building leases, tenant improvements and
labor needs) will be mutually agreed to by X-X and T-M by the end of the eighth
(8th) month of each calendar year of this Initial Term. T-M will not invest in
any capital or facility obligation without the prior written approval of X-X
during the first five (5) years of the Initial Term.
2.3 On the first (1st) day of each calendar month, X-x shall provide T-M
with a twelve (12; month rolling Purchase Plan of its Casting Cups requirements.
This plan may be updated; provided, however, that Purchase Plan changes shall
not be made less than fifteen (15) days prior to scheduled Production unless
mutually agreed upon by X-X and T-M. In addition, by the end of the sixth (6th)
month of each calendar year for the duration of this Initial Term, X-X will
provide T-M with a mutually agreed upon Purchase Plan as set forth in Exhibit C
for all Casting Cups requirements of the following calendar year, to be used as
the basis for establishing T-M's Casting Cups price structure. The price
structure shall be agreed to by T-M and X-X by the end of the eighth (8th) month
of each calendar year of this Initial Term. T-M must notify X-X of all
improvements developed with respect to the manufacture of casting cups to ensure
that pricing levels for the Casting Cups remain commercially competitive.
Consistent with Article 2.2, X-X shall thereafter determine if such process
improvements are to be employed by T-M in the manufacture of the Casting Cups.
2.4 X-X agrees that it will purchase. on a quarterly basis, a minimum of
eighty percent (80%) of the mutually agreed Purchase Plan. This percentage will
be subject to annual revision and agreement by T-M and X-X. In the event X-X
fails to purchase sufficient amounts of Casting Cups to satisfy this
requirement, T-M shall use reasonable efforts to reallocate its resulting idle
capacity to other parties until such time as X-X can again meet the minimum
quantity of the Purchase Plan. In the event that T-M fails after reasonable
efforts to reallocate the idle capacity, X-X agrees to compensate T-M for the
actual, documented difference between the actual quantity purchased and the
minimum quantity. The unit price for such compensation will be determined as
the per unit price less material cost.
2.5 No charges will be imposed by T-M upon X-X if X-X requests T-M to stop a
scheduled production run provided such request is made for good cause through no
fault of X-X (good
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cause includes T-M's failure to comply, or its inability to assure compliance
with any FDA regulation, including CGMPS).
2.6 X-X is not precluded during the Initial Term or any subsequent term of
this Agreement from developing alternate sources of supply of the Casting Cups.
In the event that T-M is unable to supply the Casting Cups in amounts which X-X
xxxxx necessary and for which X-X has provided a Purchase Plan pursuant to
Article 2.4, Tech CBI, Cidra, Puerto Rico, will have the first opportunity to
supply the shortfall requirements.
[2.7] In the event T-M notifies X-X that it is unable to furnish,
because of scarcity, the materials or supplies necessary to furnish the Casting
Cups, including, but not limited to the required resin, then X-X may furnish the
same to T-M. A credit shall be issued to X-X in the amount of its actual cost,
including, but not limited to, packaging, shipping and other incidental expenses
to W-,l incurred in the furnishing of any materials or supplies pursuant to this
Article 2.7.
3 PRICE/PAYMENT
3.1 X-X will pay the unit price for each Casting Cup meeting product
specifications as set forth in the T-M Price Schedule, attached hereto and made
a part hereof ("Exhibit D"). Terms of payment are 1% Discount Net 10 days, but,
in the event that X-X fails to make payment within such ten (10) lay period the
terms shall be Net 30 days from date of invoice and payment will be made
promptly, through the use of wire transfer or Electronic Data Interchange of
funds. A packing list shall accompany the Casting Cups with each shipment and
the invoice shall be mailed to X-X Accounts Payable, Attn: Accounts Payable
Supervisor.
3.2 The prices listed in Exhibit D incorporate all costs with respect to
manufacturing, packaging, as well is such quality control measures as are
satisfactory to X-X and mutually agreed with T-M (collectively "Costs"). These
costs include but are not limited to all process improvements made by T-M or X-X
to the Casting Cups manufacturing, packaging and/or quality control testing
processes.
3.3 The Costs set forth in Exhibit D shall not change for a period of
twelve (12) months following the effective date hereto. The price structure
shall be agreed to by T-M and X-X by the end of the eighth (8th) month of each
calendar year of this Initial Term ("Target Dates"). In the event that a price
agreement cannot be reached within the established time limits, the current
price will remain in effect until an agreement is
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reached by both parties. The new price will be retroactive to the applicable
Target Date and will include interest on the differential at prime rate plus
3.5%.
3.4 T-M shall provide to X-X on an annual basis fully audited financial
statements for T-M as well as the parent, its affiliates and/or subsidiaries
during the Initial Term and any subsequent renewals of this Agreement. Subject
to Article 13.4, X-X shall retain the foregoing information in confidence.
4 DELIVERY
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4.1 Delivery shall be F.O.B. shipping point. X-X shall arrange insured
common carrier transportation of the Casting Cups to X-X's specified plant or
other designated destination, with a carrier acceptable to X-X. Title to and
risk of loss of the Casting Cups shall pass to X-X at the time of delivery to
the carrier. T-M shall promptly invoice X-X for all Casting Cups tendered and
packing lists shall be accompanied by the commercial bills of lading.
4.2 T-M shall schedule the timely shipment of the Casting Cups pursuant to W-
J's requirements as established by X-X's written purchase order releases.
4.3 T-M will ensure that quantities shipped are in accordance with those
requests on X-X's specific purchase orders. T-M will endeavor to ship all orders
complete. Purchase orders will be considered complete upon receipt of quantity
ordered plus or minus five (5%) percent.
5 QUALITY CONTROL
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5.1 T-M is to manufacture the Casting Cups in accordance with the
specifications set forth in Exhibit B. Any changes to specifications will
require the mutual written agreement of X-X and T-M.
5.2 T-M shall maintain a quality control and manufacturing program consistent
with Current Good Manufacturing Practices (CGMPs), as found at 21 CFR Part 820,
and all subsequent additions and revisions thereto. T-M shall make good faith
efforts with respect to compliance with any international quality/regulatory
standard with which X-X must comply.
5.3 Subject to the prior written approval of X-X, T-M may make those changes
in manufacturing procedures permitted by the regulations found in 21 CFR Part
820 or otherwise published as a policy change by FDA. T-M shall properly
document in writing all
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such changes, and forward a copy of such documentation to X-X pursuant to
Article 14.1. along with the implementation date and first Casting Cups lot
number manufactured with any changed procedures.
5.4 All Casting Cups supplied hereunder shall be manufactured in accordance
with the procedures described in any applicable Pre Market Approval ("PMA"),
supplemental PMAs for the medical device products and all CGMPs or other
applicable federal or state regulations in effect at the time of manufacture.
5.5 T-M, shall provide X-X's Quality Assurance Department with production
samples of the Casting Cups as requested by X-X.
5.6 T-M agrees to notify X-X Quality Assurance within forty-eight (48) hours
of learning of the failure of any batch of Casting Cups to meet standards found
in said Casting Cups' PMA.
5.7 All the Casting Cups manufactured hereunder are subject to X-X's
inspection and approval prior to acceptance. T-M shall provide a Certificate of
Compliance for each lot of Casting Cups furnished in accordance with this
Agreement. Certificates of Compliance must list appropriate Resin
identification, suppliers manufacturing lot number. T-M's manufacturing lot
number and test results according to current Casting Cups specifications. In
the event that. T-M fails to comply with the agreed upon X-X Casting Cups
specifications. X-X will return the Casting Cups for full credit at T-M's
expense including the freight cost.
5.8 X-X shall have the right to visit at any time T-M's facility for the
purpose of observing production, quality control, and compliance with CGMPS.
5.9 T-M shall provide timely failure and complaint investigations to X-X,
with respect to quality issues.
5.10 X-X and Schering-Plough Corporation have the right at any time to
audit T-M facilities for compliance with CGMPS.
6 TERMINATION
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6.1 Either party shall have the right to terminate this Agreement:
6.1.1 if the other party fails to remedy and make good any default in
the performance of any condition or obligation under this Agreement within
sixty (60) days written notice thereof ("Cure Period") or, in the event that
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such Cure Period is unreasonable, then if such default is not remedied or
made good within a reasonable period of time;
6.1.2 immediately if the other party files a petition in bankruptcy, or
enters into an arrangement with its creditors, or applies for or consents to
the appointment of a receiver or trustee, or makes an assignment for the
benefit of creditors. or suffers or permits the entry of an order
adjudicating it to be bankrupt or insolvent.
6.1.3 upon non-payment by X-X subject to the conditions set forth in
Article 6.1.1 or its improper failure to accept goods within product
specifications.
6.2 X-X may, upon ninety (90) days prior written notice to T-M, permanently
discontinue the purchase or use of all or any of the Casting Cups for the
following reasons:
6.2.1 Casting Cups consistently fail to meet previously agreed quality
standards as set forth in Exhibit 8 for forty-five (45) days or more during
which period T-M is unable to correct such deficiencies.
6.2.2 T-M fails to meet at least eighty-five percent (85%) of the
"Purchase Plan" requirements for a period of sixty (60) days or more unless
such failure is caused by X-X.
6.2.3 T-M either ceases to function as a going concern and/or fails to
comply with or retain its FDA site certification and as a result is forced
to cease operations, for any period of time.
6.3 In the event T-M fails to perform in accordance with the conditions of
Articles 6.1 or 6.2, T-M will release X-X of any obligations as set forth in
Articles 2.2. 2.4 and 6.5.
6.4 The failure of either party to terminate this Agreement by reason of
the breach of any of its provisions by the other party shall not be construed as
a waiver of the rights or remedies available for any subsequent breach of the
terms and provisions of this Agreement.
6.5 In the event that (i) T-M terminates this Agreement pursuant to Article
6.1.3, (ii) X-X determines that the Contact Lens Product has proved to be
nonviable in the market place or (iii) X-X ceases marketing of such Contact Lens
Product, X-X shall receive and pay for all finished Casting Cups actually
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ordered from T-M up to and including the day written notice of termination or
product discontinuation is effective. With respect to unfinished Casting Cups,
X-X shall purchase from T-M at actual cost, all raw materials and supplies
purchased by T-M to be used in the production of Casting Cups and shall pay the
actual cost of processing up to the time of any such notification specified
herein.
6.5.1 During the first five (5) years of the Initial Term of this
Agreement, X-X agrees to purchase, at T-M's book value, all injection molding
machines and auxiliary equipment. X-X also agrees to purchase, at T-M's book
value, depreciated straight line over seven (7 years as set forth in Exhibit
A.3, the leasehold improvements made to the T-M facility as set forth in Exhibit
A.3, to the extent that such facility is dedicated exclusively to the
manufacture of the Casting Cups.
6.5.2 X-X also agrees, with respect to Article 6.5, to reimburse T-M for
severance costs defined as the documented payout of a maximum of three (3)
months salary for any permanent layoff of a T-M employee whose responsibilities
were dedicated exclusively to the manufacture. testing and packaging of the
Casting Cups. The severance costs shall not exceed One Million dollars
($1,000,000). In the event that T-M is not able to sublease the facility
dedicated exclusively to the manufacture of the Casting Cups as set forth in
Exhibit A.3. after reasonable efforts for a period of four (4) months, X-X
agrees to assume remaining building lease obligations.
6.5.3 In the event of a Contact Lens Product discontinuance, and/or X-X's
exercise of any of its options set forth in this Article 6.5, T-M shall have the
first option to re-purchase the injection molding machines, auxiliary equipment
and leasehold improvements from X-X purchased them from T-M.
7 FORCE MAJEURE
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7.1 Neither party shall be responsible for any failure to comply with the
terms of this Agreement where such failure is due to force majeure, which shall
include, without limitation, fire, flood, explosion, strike, labor disputes.
labor shortages, picketing, lockout, transportation embargo or failures or
delays in transportation, strikes or labor disputes affecting supplies, or acts
of God, civil riot or insurrection, acts of the Federal Government or any agency
thereof, or judicial action. Specifically excluded from this definition are
those acts of the
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Federal Government or any agency thereof, or judicial action which could have
been avoided by compliance with such laws or regulations, publicly available and
reasonably expected to be known by T-M or X-X. In the event that either party
hereto invokes its rights hereunder, to the extent that such party has invoked
its rights for a period of time exceeding ninety (90) days, the other party may
terminate this Agreement without penalty to the party claiming hereunder.
8 RECORDS AND INSPECTION AND SAMPLE RETENTION
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8.1 T-M shall maintain accurate and complete records of all contracts,
papers, correspondence. copybooks, accounts, invoices and other information in
T-M's possession relating to its obligations and performance under this
Agreement ("Records"). All such Records shall be available for X-X's or its
representatives' inspection and/or reproduction upon reasonable request during
normal business hours.
8.2 The records shall be maintained by T-14 in accordance with recognized
commercial accounting practices during the term of this Agreement and thereafter
for a period of not less than two (2) years after which time T-M shall transfer
them to X-X. All records relating to the manufacture, stability and quality
control of all Casting Cups shall be retained for a period of not less than four
(4) years from the date of expiration of each batch of Casting Cups to which
said records pertain.
8.3 T-M shall retain one repository sample per shift, per lot, unless
otherwise instructed by X-X for a period of not less than nine (9) months from
the date of manufacture of each of the Casting Cups. All such samples shall be
available for inspection and testing by X-X upon reasonable notice.
9 LAWS
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9.1 T-M and all Casting Cups manufactured for X-X shall be subject to and/or
in compliance with all applicable Federal, State and local laws, including, but
not limited to the Fair Labor Standards Act of 1938, as amended and. unless T-M
is exempted, the President's Executive Order No. 11246, Section 202, relating to
equal employment opportunities and all subsequent additions or amendments
thereto.
10 INDEMNIFICATION
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10.1 T-14 agrees to indemnify and hold harmless X-X and its affiliates,
officers, directors and employees from and against all liabilities, costs,
damages, losses, judgments for
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damages or expenses (including attorney's fees) caused by, arising out of, or
resulting from any willful misconduct or negligent act or omission of T-M's or
its failure to comply with all laws and regulations applicable to such
performance or product seizures or recalls due to said negligent performance or
failure to comply.
10.2 X-X agrees to indemnify and hold harmless T-M and its affiliates,
officers, directors and employees from and against all liabilities, costs,
damages, losses, judgments for damages or expenses caused by, arising out of, or
resulting from X-X's specifications or formulation for the Casting Cups; X-X' s
failure to comply with all laws or regulations applicable to its performance
under this Agreement, or Casting Cups seizures or recalls due to said
specifications, formulations, or failure to comply and all patent infringement
claims arising out of the manufacture use or sale of the Casting Cups.
10.3 X-X agrees to indemnify and hold T-M harmless against all claims
that any X-X trademark appearing on the labels or packaging materials specified
by X-X infringes trademark rights of others, and X-X will defend, at its
expense, any and all suits which might be brought against T-M based on such a
claim of infringement.
10.4 T-M agrees to give X-X prompt notice in writing of the institution
of any suit, and to permit X-X to have control and conduct of the defense of
such suit, and give X-X all needed information in T-M's possession and all
authority and assistance necessary to enable X-X to carry on a meaningful
defense of such suit and any appeal from a judgment or decree rendered therein.
10.5 Each party agrees to give the other prompt written notice of any
claims made. including any claims asserted or made by any governmental authority
having jurisdiction for which the other might be liable under the foregoing
indemnification together with the opportunity to defend, negotiate and settle
such claims.
11 INSURANCE
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11.1 During the term of this Agreement, T-M agrees to procure and
thereafter maintain, at its sole cost and expense, product liability insurance,
which insurance shall include (i) X-X as an additional insured and contractual
liability covering T-M's obligations to indemnify X-X pursuant to Article 10.1.
Such insurance shall be for an amount not less than Five Million Dollars
($5,000,000) each occurrence and in the aggregate. T-M shall, within fifteen
(15) days of execution of this Agreement,
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furnish to x-X a Certificate of Insurance as evidence of the foregoing insurance
which Certificate shall specify X-X as an additional insured as well as provide
for thirty (30) days' prior written notice to X-X in the event of cancellation
or any material change in such insurance.
12 TRADE NAMES AND TRADEMARKS
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12.1 Each of the parties hereby acknowledge that it does not have, and
shall not acquire. any interest in any of the other party's trademarks, trade
dress or trade names appearing on the labels or packaging materials for either
the Casting Cups or the Contact Lens unless otherwise expressly agreed by the
parties hereto.
13 CONFIDENTIALITY
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13.1 The parties hereby acknowledge that any and all information,
knowledge, technology and trade secrets relating to the production, processing
and testing of Casting Cups may be used by T-M only in the production of Casting
Cups under this Agreement.
13.2 T-M shall maintain in confidence all information, knowledge,
technology and trade secrets exclusive of molding technology relating to the
Casting Cups as found in the PMA for each Product, as purchased by X-X or
developed solely by X-X after the date of this Agreement and disclosed to T-M
and T-M shall not use such X-X information, knowledge, technology and trade
secrets for itself or for any third party nor disclose the same to any third
party without the express written consent of X-X. T-H can use learned
technology to enter into markets that do not directly or indirectly compete with
X-X Casting Cups.
13.3 X-X shall maintain in confidence all information, knowledge,
technology and trade secrets relating to the Casting Cups and not contained in
the PMAs for the Casting Cups. or developed by T-M after the date of this
Agreement and disclosed to X-X or discovered by X-X's representatives while oft
T-M's property, and X-X shall not use such T-M information, knowledge,
technology or trade secrets for itself or for any third party nor disclose the
same to any third party without the express written consent of T-M.
13.4 The obligations set forth in 13.1, 13.2 and 13.3 above shall not
apply to any information, data. technology, financial or trade secret disclosed
by one party to the other, either in anticipation of or pursuant to this
Agreement or any other agreement between the parties, if it is already known to
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the receiving party as of the date such disclosure is made; available to the
receiving party from printed publications as of the date such disclosure is made
or becomes available from printed publications through no fault of the receiving
party; or disclosed to said receiving party by an independent third party
through no fault of the receiving party.
14 NOTICES
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14.1 Any and all notices permitted or required to be given hereunder
shall be sent by registered or certified mail, postage and fees paid, with
return receipt requested. addressed as follows:
TECH MEDICAL INC.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attn: President
XXXXXX-XXXXXX CORPORATION
000 Xxxx Xxxxxxxx Xx.
Xxxxxxx, XX 00000
Attn: V.P. Operations
Notice shall be deemed given as of the date of mailing.
15 ASSIGNMENT
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15.1 Neither party shall assign this Agreement in whole or in part
without prior written consent of the other. Once lawfully assigned, all of the
provisions of this Agreement and all rights and obligations of the parties
hereunder shall be binding upon and endure to the benefit of and be enforceable
by the successors and assigns of T-M and X-X.
16 ENTIRE AGREEMENT
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16.1 This Agreement, including any Exhibits attached hereto, constitutes
the entire Agreement between the parties. Any and all amendments, or releases
from any provisions hereof must be in writing, signed by both parties and
specifically state that it is an amendment or release.
17 INDEPENDENT CONTRACTOR
----------------------
17.1 In all activities under this Agreement, T-M shall act as and be
deemed an independent contractor with no authorization to in any way represent,
act on X-X's behalf, obligate and/or bind X-X without its prior written consent.
This Agreement shall
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not be deemed held or construed as creating a copartnership joint venture or any
other form of association between X-X and T-M for any purpose whatsoever.
18 GOVERNING LAW
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18.1 The rights and obligations of the parties to this Agreement shall be
construed in accordance with the laws of the State of Illinois. It is
understood and agreed that the parties hereto submit to the jurisdiction of
Illinois State and Federal Courts.
19 SEVERABILITY
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19.1 If any term or provision of this Agreement shall be held invalid or
unenforceable, the remaining terms hereof shall not be affected, but shall be
valid and enforced to the fullest extent permitted by law.
20 DISPUTE RESOLUTION
20.1 In the event any dispute arises with respect to the implementation
of this Agreement, including but not limited to the manufacturing processes
detailed either herein or in the Exhibits, T-M and X-X agree to use best efforts
to resolve such dispute(s) in a reasonable period of tin, reasonable being
measured by the nature of such dispute(s). To the extent that such dispute(s)
is/are not resolved within such reasonable period of time, tho parties agree to
escalate such dispute(s) to either their respective next level of management, or
to the level of management required, for such dispute(s) resolution.
21 HEADINGS
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21.1 The headings used in this Agreement are intended for guidance
only and shall not be considered part of the written understanding between the
parties hereto.
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IN WITNESS WHEREOF, XXXXXX-XXXXXX and TECH MEDICAL have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
TECH MEDICAL, INC.
By: E. Xxxxx Xxxx
-----------------------------------
E. Xxxxx Xxxx
Title:President
--------------------------------
XXXXXX-XXXXXX CORPORATION
By: Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx
Title:Vice President, Operations
--------------------------------
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Exhibit 10.5
AMENDMENT OF AGREEMENT
This Amendment, effective as of September 22, 1995 ("Amendment"), amends
the Agreement between Xxxxxx-Xxxxxx Corporation, a Delaware Corporation
("Xxxxxx-Xxxxxx" or "X-X") as assignee, and Tech Medical Inc., an Arizona
Corporation ("Tech Medical" or "T-M") dated December 21, 1992 ("Agreement") and
settles all disputes between the parties.
RECITALS
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A. Tech Medical and X-X's predecessor entered into an Agreement dated as
of December 21, 1992 ("Agreement"), subsequently assigned to X-X, under which
Tech Medical agreed to manufacturer and X-X agreed to purchase certain
quantities of molded plastic casting cups (the "Casting Cups") used by X-X in
its contact lens manufacturing business.
B. The parties desire to resolve all existing claims and disputes
involving shortfalls of purchases and other matters occurring prior to the date
hereof and to amend the Agreement in light of their experiences and changed
circumstances.
X. Xxxxxx-Xxxxxx wishes to purchase and Tech Medical wishes to supply
Casting Cups to Xxxxxx-Xxxxxx under the terms and condition of the Agreement as
modified herein.
NOW THEREFORE, in consideration of the mutual consents herein contained,
the parties agree as follows:
I. AMENDMENT TO AGREEMENT
----------------------
The parties agree that, effective on the date of this Amendment, the
Agreement is hereby modified as follows:
A. Paragraph 1.0 "Term and Renewal" is deleted in its entirety and
replaced by the following:
1.0 Term effective: 9-22-95 - 12-31-97 (27 mos)
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1.1 The initial term of this Agreement shall commence on the effective
date hereof and shall terminate on December 31, 1997 (the "Initial
Term").
B. Paragraph 2.0 "Products" of the Agreement is deleted in its entirety
and replaced by the following:
2.0 PRODUCTS
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2.1 During the Initial Term and all subsequent terms, T- M shall
manufacture the Casting Cups exclusively for X-X and not to/for any other
party, and X-X shall purchase such quantities of Casting Cups from T-M as
X-X may order from time to time subject to the
conditions set forth in the Article 2.4. Xxxxxx-Xxxxxx has ordered or will
order a minimum of 5,000,000 Casting Cups in minimum release quantities of
100,000 units at a price of $0.24 per unit for delivery during the period
from July 1, 1995 through December 31, 1995. As a condition for
continuation of this Agreement, X-X agrees to order from T-M a minimum of
350,000 Casting Cups per month commencing on January 1, 1996.
2.2 X-X shall order Casting Cups from time to time by specifying the
quantities and delivery schedule. orders may be placed by telephone, fax,
letter, telex or similar means at least one (1) month in advance of the
scheduled delivery dates, T-M shall supply the Casting Cups in accordance
with each order submitted by X-X. All orders shall be placed in accordance
with and subject to the terms and conditions of the Agreement as amended
and any other terms and conditions which the parties may agree to from time
to time.
2.3 On the first (1st) day of each calendar month commencing December
1, 1995, X-X shall provide T-M with a six (6) month rolling non-binding
forecast of its Casting Cups purchase requirements. This forecast may be
updated; provided, however, that forecast changes shall not be made less
than fifteen (15) days prior to scheduled production unless mutually agreed
upon by X-X and T-M.
2.4 Commencing with calendar year 1996, X-X agrees, as a condition
for retaining exclusivity from Tech Medical after March 31, 1996, to order
from T-M for delivery during each calendar year during the Initial Term not
less than a minimum of 10,000,000 Casting Cups. In the event X-X fails to
order sufficient amounts of Casting Cups to satisfy this requirement, T-M
as its sole and exclusive remedy may terminate exclusivity hereunder. For
purposes of this paragraph only, X-X will provide to T-M on or prior to
March 1st of each calendar year a non-binding forecast of its Casting Cups
purchase requirements for such calendar year and T-M is authorized to
determine X-X's satisfaction of this purchase condition prior to the end of
the applicable calendar year based on such forecast as well as on the sum
of X-X's actual orders and forecasts of orders pursuant to paragraph 2.3
for such calendar year.
2.5 No charges will be imposed by T-M upon X-X if X-X requests T-M to
stop a scheduled production run provided such request is made for good
cause through no fault of X-X (good cause includes T-M is failure to
comply, or its inability to assure compliance with any FDA regulation,
including CGMPs).
2.6 X-X is not precluded during the Initial Term or any subsequent
term of this Agreement from developing alternate sources of supply of the
Casting Cups or from manufacturing Casting Cups for its own use.
C. Paragraph 3.0 "Price/Payment" is amended by deletion of Paragraph 3.3
and replacement by the following:
3.3 The prices for Casting Cups ordered shall be based on the
cumulative quantity of orders placed by X-X for delivery during a calendar
year. However, X-X will order and
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T-M will xxxx X-X at tentative prices based on annual purchase volumes
forecasted by X-X quarterly with adjustments of tentative prices to be made
quarterly. The final adjustment of prices based on cumulative orders will
be made at the end of the calendar year and the resulting credits or
payments will be made within thirty (30) days thereafter. The prices listed
in Exhibit D shall remain in effect for the Initial Term, unless T-M
achieves a reduction in Costs due to increased manufacturing efficiencies
or utilization of Presses, in which event such prices will be adjusted
lower to pass the Costs reductions through to X-X. T-M represents and
warrants that such prices are and will be no greater than the prices
charged by T-M to others (if any) for production of casting cups at
comparable volumes.
D. Paragraph 5.0 "Quality Control" is amended by addition of the words "
in accordance with Exhibit B.1." to the end of the first sentence of paragraph
5.7 and by deletion of the words "and Schering-Plough Corporation have" from
paragraph 5.10 and insertion of the word "has" in such paragraph.
E. Paragraph 6 "Termination" is amended by deletion of the number "2.2"
from paragraph 6.3 and by deletion of paragraphs 6.5.1, 6.5.2, and 6.5.3.
F. Paragraph 14 "Notices" is amended by insertion of the new address for
Xxxxxx-Xxxxxx:
Xxxxxx-Xxxxxx Corporation
000 Xxxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attn: V.P. Operations
G. The Agreement is amended by addition of paragraph 22 "Fixed Assets" as
follows:
22. FIXED ASSETS
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22.1 GENERAL. Tech Medical acknowledges that the assets listed on
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Exhibit E (the "Fixed Assets") are owned by Xxxxxx-Xxxxxx. Tech Medical
will maintain these Fixed Assets in good working condition as long as it is
producing Casting Cups for Xxxxxx-Xxxxxx. The Fixed Assets remain the
property of Xxxxxx-Xxxxxx even if affixed to Tech Medical's real property,
and may not be removed from Tech Medical's premises without the written
consent of Xxxxxx-Xxxxxx, except in accordance with the terms of this
Supply Agreement. Upon completion or termination of this Supply Agreement,
and as long as no amounts are owed to Tech Medical, Xxxxxx-Xxxxxx may elect
to remove the Fixed Assets from Tech Medical's premises, and will provide
Tech Medical with 30 days written notice of this election. In the event of
termination of this Agreement, or receipt by Tech Medical of the notice,
Tech Medical will hold the Fixed Assets for pick-up by Xxxxxx-Xxxxxx at
Tech Medical's premises for 60 days. If Xxxxxx-Xxxxxx does not remove the
Fixed Assets within this period, Tech Medical may ship the Fixed Assets
freight collect to the Xxxxxx-Xxxxxx Des Plaines facility.
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22.2 FIXED ASSETS MAINTENANCE COSTS. Tech Medical will, at its sole
------------------------------
expense, provide the labor and consumable and non-durable replacement parts, and
Xxxxxx-Xxxxxx will pay for all durable replacement parts, to keep and maintain
the Fixed Assets in good working order and repair during their useful life,
normal wear and tear excepted. Tech Medical will pay all taxes and other
governmental charges or assessments associated with use or possession of the
Fixed Assets, except for any state or federal personal property taxes that will
be paid by Xxxxxx-Xxxxxx within 14 days of receipt of invoice from Tech Medical.
H. The Agreement is amended by addition of paragraph 23, "Presses" as
follows:
23.0 PRESSES
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23.1 Tech Medical agrees to maintain in good working order and
condition during the Initial Term all twelve 75 ton presses (the "Presses")
for the purpose of producing Casting Cups for Xxxxxx-Xxxxxx at a production
volume capacity of up to 30,000,000 units per year. If T-M notifies X-X
that the Presses are not required by Tech Medical for use in the production
of casting Cups in the amounts forecasted by X-X and as long as Xxxxxx-
Xxxxxx is current in its obligations to Tech Medical and not in default of
this Agreement, Xxxxxx-Xxxxxx shall have the option to purchase one or more
of the excess Presses (including control hardware and software) from Tech
Medical at a price equal to the fair market value of such Press(es)
estimated by Cincinnati Milacron.
I. The Agreement is amended by deletion of Exhibits A, B, C and D of the
--------
Agreement and by addition of Exhibit B, consisting of Exhibit B.1 (Casting Cups
for Molded Lenses Acceptance Specification) Exhibit B.2 (Resin Specifications)
and Exhibit B.3 (Casting Cup Packaging Specifications), and Exhibit D (Amended
Pricing Schedule) annexed hereto.
II. PAYMENT. Xxxxxx-Xxxxxx will pay Tech Medical the amount of $996,000,
-------
in cash, payable as follows: $332,000 on execution of this Agreement and the
balance in 4 equal monthly installments of $166,000 each payable on the last day
of September, October, November and December, 1995.
III. ROBOTS. Xxxxxx-Xxxxxx shall transfer to Tech Medical all rights,
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title and interest to the eight (8) side entry robots (for the 150 ton machines)
owned by it and acquired from X-X in their existing condition "as is" and will
execute a Xxxx of Sale documenting this transfer in a form acceptable to both
parties. Tech Medical agrees for a period of three (3) years after such
transfer not to transfer such robots to a competitor of Xxxxxx- Xxxxxx or to use
such robots to produce products for a competitor of Xxxxxx-Xxxxxx.
IV. SETTLEMENT AND RELEASE. Each party hereby releases, waives and
----------------------
discharges any -and all claims that were or could have been brought against the
other party, its affiliates, related companies predecessors, assignors,
officers, directors, employees, agents and/or representatives with respect to
the Agreement or any alleged breach or default thereof occurring prior to the
date of this Amendment, including, without limiting the foregoing, claims
related to severance of T-M employees, compensation pursuant to Paragraph 2.4 of
the Agreement, and lost profits.
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V. MISCELLANEOUS.
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A. DEFINITIONS. Any capitalized term used in this Amendment but not
-----------
defined herein shall have the meaning not forth in the Agreement.
B. REFERENCE TO AND EFFECT OF AGREEMENT. Except as amended herein,
------------------------------------
the Agreement shall remain and continue to be in full force and effect in
accordance with its terms.
C. RELEASE/WAIVER BY LENDER. The parties acknowledge that certain
------------------------
terms herein relating to the transfer by X-X of robots and cash payment by
X-X may require the approval of X-X's secured lender or the waiver or
release of certain provisions of the loan agreements, including security
interests in the robots. Accordingly, if X-X attorneys determine that such
approval is required, this Amendment shall not be effective unless and
until the lender grants such approvals, waivers and releases; and X-X
agrees to use best efforts to secure such approvals, waivers, etc.
D. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
-------------------------
counterparts all of which when taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers as of the date first above written.
TECH MEDICAL, INC., XXXXXX-XXXXXX CORPORATION,
an Arizona corporation a Delaware corporation
By: X.X. Xxxx By: Xxxxxx X. Xxxxxx
---------------------- -----------------------
Name: X.X. Xxxx Name: Xxxxxx X. Xxxxxx
--------------------- ----------------------
Title: President Title: V.P. & CFO
--------------------- ----------------------
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