Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit 10.28
NxSTAGE/MEDISYSTEMS DISPOSABLES SUPPLY AGREEMENT
This agreement ("Agreement"), dated as of January 1, 2007 (the "Effective
Date"), is between NxStage Medical, Inc., a Delaware corporation with offices at
000 X. Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxx, XX 00000 together with its affiliates,
successors and assigns ("NxStage"), and Medisystems Corporation, a Washington
corporation with offices at 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000
together with its affiliates, successors and assigns ("MDS").
In consideration of the mutual promises made herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1.0 BACKGROUND
1.1 NxStage is in the business of designing, creating Intellectual Property
(as defined in Section 7.3), specifying, out-sourcing, manufacturing,
assembling, distributing, selling and competing with products that perform
extracorporeal blood treatments for patients having chronic or acute renal
insufficiency and/or fluid overload, such treatments incorporating a membrane
blood filter, dialytic or replacement fluids that are approximately isotonic and
a durable electro-mechanical hardware (the "Products"). Such Products include
extracorporeal sets having a substantially plastic blood pathway attachable to
but removable from such durable electro-mechanical hardware ("Sets"). By way of
examples only, blood tubing sets for Fresenius 2008, 3008 and K@Home hardware
are Sets. Sets that also comprise one or more of the following are referred to
herein as "Main Sets":
a. Fluid pathways for such isotonic dialytic or replacement fluid
attached to but removable from such durable electro-mechanical
hardware (by way of examples only, CAR-160 blood tubing/dialysate sets
and Gambro Prismaflex sets are Main Sets) and/or,
b. FDA-compliant indications for use of such blood and/or isotonic fluid
pathway(s) for extended use over multiple patient treatments wherein
such pathway(s) are not removed from such electro-mechanical device
during such extended use (by way of example only, an Aksys blood
tubing set is a Main Set) and/or
c. FDA-compliant indications for use with batched isotonic fluid sources
such as bagged dialysate or prepared batches (by way of example only,
an Aksys blood tubing set/dialysate set and a Gambro Prismaflex set
are Main Sets).
1.2 MDS is in the business of designing, creating Intellectual Property,
specifying, out-sourcing, manufacturing, assembling, distributing, importing,
selling and competing with products for: extracorporeal blood management for
patients having chronic or acute renal insufficiency, all of which are Sets;
peritoneal fluid management; extracorporeal pheresis or apheresis for
therapeutic removal or collection of plasma and/or cellular components; IV
therapy; vascular access; port access; topical and device disinfection;
hemostasis; medical access safety; medical connectors; external securement
devices; and any component or assembly of a Set (a "Component" or if controlled
by MDS specifications and/or MDS Intellectual Property, an "MDS Component") as
well as contract assembling and/or manufacturing Sets or Components to
specifications of OEM purchasers. These products consist of disposable and/or
extended use tube sets, Sets, Main Sets, needle sets, substantially empty bags,
disinfection devices, hemostasis devices, medical kits, connector devices;
securement devices and MDS Components thereof. MDS currently manufactures
certain Products to NxStage Specifications, as defined in Section 2.2 (the
"NxStage Products") for NxStage [**].
1.3 NxStage designs, manufactures, assembles, licenses, out-sources,
purchases, sells and/or sets Specifications, as defined in Section 2.2, for
certain Main Sets labeled for use with NxStage durable electro-mechanical
hardware (the "NxStage Main Sets"). Components thereof comprise sterile and
unsterile filters ("Filters"), unsterile assemblies ("Assemblies") and unsterile
parts ("Parts") specified by NxStage (together the "Componentry" or if such
Componentry is controlled by NxStage specifications and/or NxStage Intellectual
Property, the "NxStage Componentry"). Some Codes (as defined in Section 2.1) of
NxStage Componentry NxStage currently manufactures itself or purchases from
third party vendors and supplies to MDS without charge, as further detailed in
Section 6.2, for MDS' assembly together with other third party-supplied NxStage
Componentry, MDS-manufactured Componentry and third party sterilization, all
under NxStage Specifications into Codes of NxStage Main Sets on an
order-by-order basis. NxStage and MDS wish to have a substantial portion of
NxStage's total requirements for all NxStage Main Sets in the Territory (as
defined in Section 3.1) supplied by MDS to NxStage or its licensees, designees,
contractees, distributors, customers, agents, etc. during the Term (as defined
in Section 12.1) of this Agreement.
1.4 This Agreement relates only to orders issued by NxStage and accepted by
MDS during the Term of this Agreement. Each three (3) consecutive calendar month
period commencing on January 1 constitutes a "Contract Quarter" and each four
(4) consecutive Contract Quarters constitute a "Contract Year".
2.0 CODES AND SPECIFICATIONS
2.1 The individual codes of NxStage Products, including NxStage Main Sets
and Componentry that NxStage intends to purchase initially under this Agreement
from MDS are listed in Exhibit A, as such exhibit may be amended from time to
time pursuant to Section 5 hereof throughout the Term of this Agreement
(together, the "Codes").
2.2 Each Code of NxStage Products, including each sterile Code of NxStage
Main Sets and unsterile Code of Componentry is controlled by NxStage
specifications as completely documented in NxStage's product data management
software ("PDM" - currently the Agile software application) and the QC Standards
(the "Specifications"). A partial summary of such Specifications is listed in
Exhibit B, as such Specifications with relevant revision control numbers may be
modified pursuant to Section 5.0 (with relevant revision control numbers
indicated for each such modification). Each NxStage Product shall include
Labeling, instructions-for-use, trade names and/or trademarks of NxStage (the
"Labeling") as set forth in such Specifications. In order for NxStage and MDS to
meet their respective obligations under this Agreement, MDS and its affiliated
manufacturer(s) will have access to all NxStage Specifications directly related
to the Codes as documented in NxStage's PDM. NxStage hereby grants MDS a
nonexclusive license to copy and internally use the PDM for the sole purpose of
complying with its obligations under this Agreement.
2.3 Within fifteen (15) days of the Effective Date of this Agreement, MDS
shall provide to NxStage certain MDS specifications that are MDS' Confidential
Information (as defined in Section 16.1) regarding the Codes in order for
NxStage to fully define and control NxStage's Specifications for MDS' assembly,
packaging and sterilization of the Codes and for any MDS Component NxStage
specifies as NxStage Componentry (as controlled herein and by Section 5.4)
including: MDS' top level Xxxx of Materials for each Code; Master Part
Specifications for NxStage Componentry sourced from third party vendors of MDS;
top level Master Part Specifications for MDS-manufactured Components; and
Inspection SOPs and validations for the Codes and NxStage Componentry whether an
MDS Component or third party vendor-sourced Component. NxStage shall review such
MDS Component and/or third party vendor-sourced specifications and accept or
reject them as NxStage Componentry and Specifications or, according to Section
5.4 propose alternate Specifications.
3.0 PURCHASES AND DELIVERY
3.1 MDS shall have the Codes produced from one or more manufacturing sites,
at least one of which shall be affiliated with MDS, [**] and MDS shall sell such
Codes to NxStage, and NxStage shall purchase and take delivery of the Codes
within the United States for sale, inventory or use by NxStage within North
America (the "Territory"). NxStage may also ship such purchased Codes for,
inventory, sale and use anywhere outside of the Territory.
3.2 During the Term of this Agreement, any NxStage requirements for sales,
use and inventory within the Territory of Main Sets, including any such
requirements of any NxStage licensee, contractee, agent, or distributor within
the Territory are defined as NxStage's "Net Requirements". Except for the first
(1st) Contract Quarter during the Term of this Agreement, NxStage hereby agrees
to purchase from MDS a quantity and value of NxStage Main Sets equal to no less
than ninety percent (90%) of NxStage's Net Requirements during each Contract
Quarter during the Term of this Agreement, each such ninety percent (90%) of
NxStage's Contract Quarter Net Requirements throughout the Term being NxStage's
"Main Set Commitment".
3.3 During the Term of this Agreement, MDS hereby agrees not to
manufacture, distribute, inventory or sell to or for any party other than
NxStage:
a) outside the Territory, any NxStage Main Set;
b) inside the Territory, any Main Set;
c) worldwide, any NxStage Componentry which is not also an MDS Component;
d) worldwide, any NxStage Componentry which includes any NxStage patentable
intellectual property, even if such NxStage Componentry is also an MDS
Component; and
e) inside the Territory, any MDS Component sold for use with any Main Set
or NxStage Main Set provided such MDS Component is also NxStage Componentry
by action of NxStage's right-of-first-refusal provision in Section 7.1.
Notwithstanding the foregoing, MDS may manufacture, distribute, inventory,
use or sell
or continue to make, distribute, use or sell to or for any party:
i) worldwide, any product or Set that is not a Main Set;
ii) worldwide, any Main Set MDS currently manufactures as of the Effective
Date other than a NxStage Main Set;
iii) outside the Territory any Main Set that is not a NxStage Main Set;
iv) inside the Territory, any MDS Component not covered by Section 3.3e)
and
v) outside the Territory, any MDS Component whether or not it is also
NxStage Componentry, except as limited by 3.3d) above.
3.4 On the 8th day of each month within the Term (said 8th or the closest
following business day being the "Order Date") NxStage shall submit by email to
MDS firm written purchase orders obligating NxStage to purchase and take
delivery of a quantity and value of NxStage Main Sets during a [**] day period
commencing no earlier than [**] days from such Order Date and no later than [**]
days from such Order Date ("a Monthly Period") consistent both with NxStage's
Main Set Commitment and with Section 3.7 for such Monthly Period, as well as
orders for any other Code, each purchase order comprising no more than [**] CIF
Location (as hereinafter defined) (together, a "Delivery Order"). Each Delivery
Order will contain an express reference to this Agreement and will state: (i)
the requested quantity, value and Code(s) of Main Sets and/or Componentry to be
produced under such Delivery Order; (ii) the desired [**] day delivery period(s)
within such Monthly Period (a "Delivery Period") and (iii) CIF Location(s) and
shipment instructions for such Delivery Order. In the event of a discrepancy
between a Delivery Order and this Agreement, the terms of this Agreement shall
take precedence. MDS shall deliver the ordered quantity of Codes within the
stated Delivery Period of each Delivery Order. Absent unusual and necessary
situations to the contrary which MDS shall not unreasonably object to, NxStage
shall place [**] Delivery Order per CIF Location, and the totality of Delivery
Orders for any Monthly Period shall be shipped in approximately equally-spaced
container shipments from MDS to NxStage's Delivery Locations over the Monthly
Period. Such Delivery Periods shall also be scheduled such that all such
Delivery Orders can be delivered through the month, up to the last day of the
Monthly Period but no later.
MDS shall accept all Delivery Orders made by NxStage for NxStage Main Sets
that are consistent with the requirements of this Agreement, and will provide
written acknowledgement of such acceptance to NxStage within [**] business days
of MDS' receipt of such Delivery Order. If MDS fails to respond to NxStage
within said [**] business days, such Delivery Order shall be deemed accepted by
MDS as issued by NxStage. The Codes produced according to each Delivery Order
shall be controlled by the Specifications then in effect at the time such
Delivery Order was accepted.
Notwithstanding the above, should NxStage, pursuant to Section 5,
change the Specifications of a Code or establish a new Code then NxStage shall,
no sooner than the next Order Date, place an initial Delivery Order for such
modified or new Code specifying a Delivery Period no less than [**] and no more
than [**] from the Order Date after such new or modified Specification has been
validated and approved by MDS and NxStage, as controlled by Section 5, unless
the parties mutually agree in writing on an order-by-order basis to a shorter
Delivery Period.
3.5 NxStage shall, in good faith, provide prompt written notice to MDS if
NxStage determines it failed or will fail to place Delivery Orders to MDS in
accordance with Section 3 necessary to meet NxStage's Main Set Commitment for
any Contract Quarter throughout the Term. MDS may audit NxStage's compliance
with the Main Set Commitment using a national accounting firm not affiliated
with any party hereto. Any such audit shall be done with appropriate protection
of both parties' Confidential Information (as defined in Section 16.0). If MDS
elects to audit NxStage's Main Set Commitment compliance, NxStage shall
cooperate with the designated auditor to assist in such audit. In the event that
any such audit reveals NxStage's compliance with the Main Set Commitment, the
cost of such audit shall be born solely by MDS, otherwise such cost shall be
borne solely by NxStage. If, during any Contract Quarter throughout the Term
NxStage fails to place Delivery Orders in accordance with Section 3 sufficient
to meet the Main Set Commitment, NxStage shall in good faith provide prompt
written notice to MDS of the failure of such Delivery Orders to meet the Main
Set Commitment or if NxStage is found by MDS not to comply with the Main Set
Commitment, for example, by audit or by NxStage notice, NxStage shall, within
[**] of each such event, pay to MDS liquidated damages equal to the value of
such Contract Quarter's Main Set Commitment minus the value of all Delivery
Orders placed during such Contract Quarter, such net value multiplied by [**]
percent ([**]%) (a "Shortfall Payment").
3.6 Within [**] days of the Effective Date of this Agreement and on the 8th
day of each calendar month thereafter, NxStage shall provide to MDS a good faith
rolling forecast of its anticipated Delivery Orders ("Forecasted Delivery
Orders") to be placed by the Order Dates for each subsequent [**] calendar
months (the "Delivery Order Forecast"). Each such Delivery Order Forecast shall
comprise Forecasted Delivery Orders each in a quantity and value of Main Sets
that shall be equal to or exceed the Main Set Commitment. By the Order Date of
each calendar month during the Term, NxStage shall also submit to MDS, with
appropriate protection of its Confidential Information, NxStage's actual
disbursements from its inventory and prior month's ending inventory for each
NxStage Main Set Code for the previous calendar month and MDS shall disclose to
NxStage by such Order Date MDS' prior month's ending NxStage Componentry
inventory.
3.7 The first [**] months of Forecasted Delivery Orders of each Delivery
Order Forecast shall constitute a maximum quantity of Codes during each of such
[**] months above which MDS will not be required to accept relevant Delivery
Orders as described below in this Section (the "Support Level"). Notwithstanding
the above, MDS shall use reasonable commercial efforts to accept NxStage
Delivery Orders for NxStage Main Sets in excess of such Support Level to the
degree said Delivery Order Forecast was insufficient due to no fault of NxStage.
NxStage shall be able to manufacture for itself, or obtain from third parties,
any Delivery Orders not accepted by MDS, and such Delivery Orders will be
credited on a unit basis toward the relevant Main Set Commitment, provided that
NxStage supplies MDS with copies of
such Delivery Orders and the invoices related thereto or sufficient
documentation evidencing NxStage's manufacture of such Codes.
The first [**] months of Forecasted Delivery Orders of each rolling
Delivery Order Forecast shall constitute a firm commitment by MDS for acceptance
of and on-time delivery of the relevant Delivery Orders placed by the relevant
Order Date of the specified forecasted total quantity of Codes related to such
first [**] months' Forecasted Delivery Orders according to the following
formulae: a) the [**] month's Forecasted Delivery Order of each Delivery Order
Forecast shall constitute a firm commitment by NxStage to place a Delivery Order
by the next Order Date that is equal in value to such [**] month's Forecasted
Delivery Order, and b) the [**] months' Forecasted Delivery Orders shall
constitute a firm commitment by NxStage to place Delivery Orders by the Order
Date in the next [**] following calendar months that (i) for Main Set volumes
between Tiers 1 and 3 of Exhibit C, are not greater than [**] per cent ([**]%)
nor less than [**] per cent ([**]%) of the value of such [**] months' Forecasted
Delivery Orders, (ii) for Main Set volumes between Tiers 4 and 7 of Exhibit C,
are not greater than [**] percent ([**]%) nor less than [**] percent ([**]%) of
the value of such [**] months' Forecasted Delivery Orders, and (iii) for Main
Set volumes between Tiers 8 through 11, are not greater than [**] percent
([**]%) nor less than [**] percent ([**]%) of the value of such [**] months'
Forecasted Delivery Orders. Except as otherwise provided hereunder, the
remainder of the good faith Delivery Order Forecast shall be non-binding on
NxStage.
3.8 For each rolling Delivery Order Forecast, the [**] such month's
Forecasted Delivery Order referenced in Section 3.7 shall constitute
authorization by NxStage for MDS to order relevant quantities of any NxStage
Componentry and necessary materials from the relevant third party vendors as
well as to begin production of any relevant MDS-manufactured Componentry
sufficient to produce the related Delivery Order. And each such [**] month's
Forecasted Delivery Order shall authorize MDS to order from NxStage relevant
quantities of any NxStage-supplied NxStage Componentry necessary to produce the
related Delivery Order and such NxStage Componentry order shall obligate NxStage
to deliver all such ordered NxStage-supplied NxStage Componentry to MDS at MDS'
designated location within [**] days of MDS' placement of such order (a "NxStage
Componentry Delivery Order"). In addition, such [**] month's Forecasted Delivery
Order constitutes a firm commitment by NxStage to reimburse MDS for all such
materials, Componentry or completed Codes if NxStage does not place Delivery
Orders sufficient to consume such materials, Componentry or completed Codes
within the rolling [**]-month period following the forecast delivery date;
provided that the amount of such reimbursement shall be credited against any
Shortfall Payments made by NxStage during such rolling [**]-month period.
3.9 If MDS experiences an interruption or significant slow-down in its
assembly of Main Sets then, to the degree such interruption or slow-down is the
fault of NxStage, examples of which are listed in Exhibit E, MDS shall charge
and NxStage shall pay to MDS an hourly production interruption charge
("Interruption Charge") according to the rates listed in Exhibit C, as such
Exhibit may change from time to time according to Section 5. MDS will apply
reasonable commercial efforts to avoid and/or minimize Interruption Charges. MDS
may not claim any Interruption Charge for any interruption or significant
slow-down in assembly caused by any (i) MDS-manufactured Component, except for
reasons listed specifically in the MDS-supplied Componentry section of Exhibit E
or (ii) failure by NxStage to timely fulfill NxStage Componentry Delivery Orders
due to an event of force majeure on NxStage as set forth in
Section 3.16. To the degree any such interruption or significant slow-down is
the fault of NxStage and delays the delivery of any Delivery Order beyond the
relevant Delivery Period, such Delivery Period shall be extended by such delay.
Any disputes between MDS and NxStage related to Interruption Charges shall be
adjudicated by the Quality Dispute Resolution process defined in Section 9.8.
3.10 If, due to an NNC (as defined in Section 5.4) NxStage changes a
Specification or NxStage makes a temporary deviation order to a Specification of
an in-process Delivery Order (a "Temporary Deviation") and such change or
Temporary Deviation results in an interruption or significant slow-down of
supply of MDS-manufactured Components or third party-sourced Componentry or
assembly of NxStage Main Sets, then MDS may invoice NxStage an Interruption
Charge according to the rates listed in Exhibit C, as such Exhibit may change
from time to time according to Section 5, provided MDS will apply reasonable
commercial efforts to avoid and/or minimize such Interruption Charges.
3.11 Within [**] of the Effective Date of this Agreement, the parties will
cooperate with each other to complete a plan to address contingency supply
arrangements which are to be made to assure continuity of supply of NxStage Main
Sets from MDS to NxStage through unforeseeable events (the "Disaster Recovery
Plan"). The Disaster Recovery Plan shall be reviewed by both parties at least
[**] times per Contract Year, at which time both parties may agree to commission
a redundant operation such as an additional manufacturing and/or assembly
facility to MDM, second sub-contractor, etc. as part of the Disaster Recovery
Plan to better assure NxStage Main Set supply. NxStage acknowledges that MDS'
costs of NxStage Main Sets from such redundant operation(s) may differ from
those costs from MDM, and as such MDS is entitled to adjust pricing for NxStage
Main Sets to recover increased costs to the degree they are produced by the
redundant operation(s). Such MDS Code price adjustment shall be controlled by
the terms of Section 5.4.
3.12 In the event NxStage and MDS do not renew this Agreement in accordance
with Section 12.2 hereof, then for the final four (4) consecutive Contract
Quarters of the Term the Main Set Commitment shall be reduced for such Contract
Quarters to: [**] percent ([**]%), [**] percent ([**]%), [**] percent ([**]%)
and [**] percent ([**]%) of NxStage's Net Requirements during such Contract
Quarter.
3.13 Except as set forth in Section 3.9, 3.10 and 3.15, if MDS is unable to
deliver Codes during the Delivery Period applicable to any Delivery Order, or
MDS replaces Codes pursuant to Sections 9.3, 9.4, 11.2 or 15.6, MDS will deliver
or replace the Codes as soon as possible, on an expedited basis at MDS' expense.
With respect to Codes which MDS is unable to deliver against a Delivery Order
within [**] days of the Delivery Period (a "Late Shipment") and where NxStage
manufactured for itself or purchased NxStage Main Set Codes from other suppliers
to meet its immediate needs ("Fill-In Codes"), such Fill-In Codes orders will be
credited on a unit basis toward the relevant Main Set Commitment, provided that
NxStage supplies MDS with copies of such orders and the invoices related thereto
or sufficient documentation evidencing NxStage's manufacture of the Fill-In
Codes. In addition, to the extent that the cost of Fill-In Codes manufactured by
NxStage or purchased from unaffiliated third party suppliers collectively
exceeds the then applicable prices of the Codes that were filled-in,
MDS will credit NxStage for such excess cost toward the price of the relevant
Delivery Order, provided however, that such credit shall not exceed [**]%) of
the then applicable prices of the Codes which were filled-in. NxStage's purchase
of Fill-In Codes does not relieve NxStage of its obligations to take delivery
and pay for Late Shipments, to the degree such delivery is no later than within
sixty (60) days of the Delivery Period.
3.14 Notwithstanding Sections 3.2 and 3.4, NxStage may be relieved of its
Main Set Commitment, in whole or in part, at NxStage's option, should MDS be in
material breach of this Agreement, if such breach is uncured (i) within one
hundred twenty (120) days after MDS receives written notice from NxStage
adequately documenting such breach, or (ii) should MDS be in material breach of
this Agreement for more than 120 days, whether or not consecutive, during any 12
month rolling period within the term of this Agreement. Specifically to delivery
obligations not subject to force majeure, if MDS does not completely deliver any
Delivery Order within sixty (60) days of the Delivery Period, NxStage shall be
relieved of its Main Set Commitment.
3.15 MDS assumes no liability and shall not be liable to NxStage for any
failure to fill or delay in filling Delivery Orders to NxStage where such
failure or delay is caused by events beyond the reasonable control of MDS,
including, without limitation, strikes, lockouts, floods, fires or accidents. In
the event of any such failure or delay, MDS shall use reasonable commercial
efforts to fulfill NxStage's Delivery Orders in a timely fashion. MDS shall
notify NxStage promptly if it anticipates any potential delay in the filling of
any of NxStage's Delivery Orders caused by any of the above. Notwithstanding the
above, if any Set manufacturer competitive to MDS such as Fresenius, Gambro,
Nipro and/or JMS suffers a force majeure event or FDA action that substantially
reduces the ability of any such manufacturer to supply the U.S. market with any
Set, MDS may allocate increases above NxStage's Support Level as defined in
section 3.7, in its manufacturing and/or assembly output to NxStage and to
others at MDS' sole discretion or as ordered by the FDA.
3.16 NxStage assumes no liability and shall not be liable to MDS for any
failure to fill or delay in filling any NxStage Componentry Delivery Order to
MDS or failure to place or delay in placing any NxStage Delivery Order where
such failure or delay is caused by events beyond the reasonable control of
NxStage, including, without limitation, strikes, lockouts, floods, fires,
accidents. In the event of any such failure or delay, NxStage shall use
reasonable commercial efforts to fulfill Componentry Delivery Order requirements
to MDS in a timely fashion and to place NxStage's Delivery Orders in a timely
fashion. NxStage shall notify MDS promptly if it anticipates any potential delay
in Delivery Order placement or the filling of any of MDS' requirements caused by
any of the above.
4.0 SHIPMENT OF CODES
4.1 MDS will ship the Codes C.I.F. to [**] as more completely listed in
Exhibit C and as such C.I.F. location(s) may be changed from time to time.
NxStage agrees to pay [**] for the freight charge from [**]. NxStage will ship
the NxStage Componentry C.I.F. to [**], or other U.S. address as MDS may
instruct from time to time during the Term. Title to and risk of loss for the
Codes shall pass from MDS to NxStage upon delivery of the Codes by MDS to [**]
or such other C.I.F. Location agreed to by both parties.
4.2 MDS and NxStage, as the case may be, shall prepare and send by
facsimile or email transmission to the other a packing list for each shipment of
the Codes or NxStage Componentry. Each party shall notify the other party if any
shipment will not be delivered during the Delivery Period applicable to a
Delivery Order.
4.3 Each party will notify the other party by facsimile or email
transmission of any receiving discrepancy (over, short or damaged), within [**]
days of receipt of such discrepant delivery. Each party hereby agrees to hold
the entire shipment (or such relevant part) intact pending timely resolution by
the other party. Each such party hereby agrees, within [**] business days from
receipt of such notice, to arrange for verification of and provide a schedule of
cure of such receiving discrepancy. In the event of a receiving discrepancy, for
the purpose of Section 6.1, each Party's invoice will be deemed to have been
dated on the date the other party effects such cure.
5.0 PRICING, SPECIFICATION CHANGES AND PRODUCT CHANGES
5.1 As of the Effective Date and throughout the Term of this Agreement MDS
agrees to sell to NxStage the initial NxStage Main Set Code at the prices for
all volume tiers (the "Tiers") listed in Exhibit C (the "Baseline Prices").
NxStage represents that such initial NxStage Main Set Code is defined by the
NxStage Specifications as summarized in Exhibit B and completely documented in
NxStage's PDM, and are the complete Specifications for such initial NxStage Main
Set Code as of the Effective Date. Baseline Prices and Specifications for such
NxStage Main Set Code shall only be adjusted pursuant to the procedures set
forth in Section 5.
Within fifteen (15) days of the Effective Date, MDS shall disclose to
NxStage in a format similar to and to the degree of detail defined in Exhibit L,
the unit dollar ($) standard costs of direct material, direct labor, and fixed
and variable overhead for MDS at MDM which together with MDS' unit dollar ($)
gross profit total the Baseline Prices for all Tiers of the initial NxStage Main
Set Code at MDM (the initial "Open Book Accounting"). MDS represents that such
initial Open Book Accounting shall be made according to standard accounting
practices for the Tier One mid-point volume of NxStage Main Set production MDS
produces at MDM as of the Effective Date (the "Tier One Open Book Accounting")
and such standard costs have been determined based on actual production results
during 2006. Notwithstanding the above, the cost of any MDS Component accepted
by NxStage as a NxStage Componentry has been incorporated into such Open Book
Accounting totally under the direct material category at such MDS Component's
arm's length negotiated price between MDS and NxStage, and such cost has not
been further broken down into the direct material, direct labor, fixed and
variable overhead cost or profit elements required by MDS to manufacture or
supply such MDS Component as a NxStage Componentry. By way of example only, as
of the Effective Date such MDS Components accepted by NxStage as NxStage
Componentry comprises extruded tubing, [**] and molding services for NxStage
spike assembly parts. The Baseline Prices at all Tiers have been negotiated at
arm's length between NxStage and MDS, however MDS represents that such Tier One
Open Book Accounting reflects the same labor and overhead absorption rates as
MDS uses for its own Set production at MDM. MDS represents that the Baseline
Prices for Tiers Two through Eleven in Exhibit C are MDS' good faith estimates
of such Open Book Accounting
resulting from timing and volumes of Tiers Two through Eleven and experience
gained as well as from certain predicted targeted cost reduction projects
("Reserved Cost Downs") listed in Exhibit M. NxStage accepts that in order for
MDS to agree to the Baseline Prices in Tiers Two through Eleven that MDS
requires the relevant Reserved Cost Downs accepted by NxStage and instituted no
later than for the Tier disclosed in Exhibit M. MDS must inform NxStage in
advance of investing capital to implement a Reserved Cost Down, and NxStage must
approve such investment in order to assure that future NNCs will not obsolete
such investment prior to full depreciation. Reserved Cost Downs shall be part of
Open Book Accounting.
MDS agrees throughout the Term of this Agreement to continue to offer
to NxStage the MDS Component known as [**] specifically bearing MDS code and
specification revision [**], for incorporation as NxStage Componentry into any
NxStage Main Set or NxStage Componentry used in any NxStage Main Set at the
relevant prices for such [**] listed for all Tiers in Exhibit C. No subsequent
or different MDS specification of any [**] introduced by MDS shall relieve MDS
of the above obligation; provided however, except to the degree provisions of
Section 7.1 are applicable, MDS is under no obligation to offer NxStage any [**]
with such subsequent or different MDS specification.
Initial prices for Codes other than NxStage Main Sets and Componentry
thereof ("Non-Main Set Prices") are listed in Exhibit C, and such prices may be
modified only by mutual agreement of the parties during the initial [**]
Contract Years. Non-Main Set Prices are not guaranteed beyond the initial [**]
Contract Years and are not subject to open book accounting.
5.2 If any Assembly ordered by NxStage from MDS for further assembly by
NxStage has Specifications identical to those of an Assembly of a currently
produced NxStage Main Set Code, whether or not such Assembly comprises
Intellectual Property controlled by MDS or its affiliates, then MDS agrees that
pricing to NxStage throughout the Term for such Assembly shall exclude any
lot-specific charges and comprise only the relevant Open Book Accounting
elements consistent with Section 5.1 attributable to such Assembly, if disclosed
in Exhibit L to such detail, of such related Assembly provided that such
Assembly is ordered and produced with the same production run as such related
NxStage Main Set. If there is any dispute, such pricing shall be subject to
audit by a third party reasonably acceptable to and with Confidential
Information requirements of MDS, whose decision in conformance with this
Agreement shall be accepted by both parties. Notwithstanding the above, MDS will
have no obligation to accept any Assembly or Componentry order from NxStage that
is inconsistent with NxStage's Main Set Commitment; provided that for orders
placed within the last [**] years of this Agreement, MDS will have no obligation
to accept any Assembly or Componentry comprising more than [**] percent ([**]%)
of NxStage's Net Requirements, unless NxStage provides reasonably sufficient
documentation with such orders demonstrating that such quantities are reasonably
forecasted by NxStage as needed to fulfill NxStage Main Set orders outside of
the Territory.
5.3 No less than [**] each Contract Year on each anniversary of the
Effective Date, but no more frequently than every [**] months of such Contract
Year, MDS or NxStage may obtain price adjustments to the Baseline Prices or
Accepted Revised Prices (as hereinafter defined), as calculated using Exhibit D
in the event of changes above a thresh-hold rate (as set forth in Exhibit D) in
MDS' relevant cost elements listed in Exhibit D, such changes determined
from the later of i) the Effective Date of this Agreement; ii) the last previous
periodic price adjustment or iii) the last previous approved NxStage Notice of
Change (as hereinafter defined) which resulted in an Accepted Revised Price as
defined in Section 5.4.
5.4 NxStage or MDS may at any time propose to add to, reduce or modify the
existing Specifications of any Code including any related QC Standards (as
defined in Section 9.1), or either party may propose to replace or add a Code at
any time. Any proposals by MDS to add to, reduce or modify the existing
Specification of any Code, including any related QC Standards, or to replace or
add a Code, must expressly indicate whether such proposal involves the
incorporation of any MDS Component and stipulate whether or not such MDS
Component comprises an MDS-controlled patent or pending patent at the time of
such MDS proposal. Such MDS proposal in MDS' sole judgment, subject only to
Section 7.1, shall describe whether and on what price, temporal and quality
terms NxStage would have access to such MDS Component for use in NxStage
Products during the Term and/or following the termination of this Agreement. The
price of any proposed MDS Component shall be incorporated into such proposal and
any subsequent Open Book Accounting totally under the direct material category
at such MDS Component's arm's length negotiated price between MDS and NxStage
and such cost shall not be further broken down into the direct material, direct
labor, fixed and variable overhead cost or profit elements required by MDS to
manufacture or supply such MDS Component. If such proposal is acceptable to
NxStage in NxStage's sole judgment or NxStage makes its own proposal, NxStage
shall fully define such proposal to MDS in writing, signed by a Vice President,
Senior Vice President or the President of NxStage, using a form substantially
equivalent to Exhibit F ("NxStage Notice of Change" or "NNC") including the
relevant NxStage PDM changes necessary to effect such NNC. Such NNC shall
include a proposed implementation schedule which both parties acknowledge may be
a major determinant of pricing of such NNC. Within [**] days after receipt of
the NNC, MDS shall be obligated to respond to NxStage with MDS' assessment of
the NNC in technical terms and an estimated implementation schedule including
MDS' new proposed price(s) for such NNC for such Code, including without
limitation, any fees relating to the incorporation of MDS Intellectual Property
into such Code, and any other costs estimated to be reasonably incurred by MDS
made necessary by such NNC, which include, but are not limited to, costs of
obsolete inventory, vendor cancellation charges (including restocking fees) and
the impact of production costs on the price of NxStage Codes not affected by
such NNC. MDS shall use commercially reasonable efforts to mitigate all such
other costs.
In the case of a NxStage Main Set Code NNC, such new proposed price(s)
shall include a revised Open Book Accounting ("Revised Open Book Accounting")
comprising the new direct material, direct labor and variable overhead unit
standard costs of MDS at MDM, or the manufacturing site at which applicable
Codes are then manufactured, which together with MDS' unit fixed overhead and
gross profit, shall total the proposed price for such Main Set Code NNC (A
"Proposed Revised Price") at all Tiers. In addition, MDS shall propose the costs
of any required tooling, factory modifications or any other relevant
non-recurring engineering costs, such as the above-listed costs ("NR Costs")
necessary to effect such NNC.
If an NNC, Proposed Revised Price or relevant proposed price and
related costs for a Code are acceptable to NxStage, in its sole judgment, such
proposed price or Proposed Revised Price(s) shall become an accepted revised
price ("Accepted Revised Price") that will be entered in Exhibit C. Such
acceptance may only be given to MDS in a written document signed by a Vice
President, Senior Vice President or the President of NxStage. Receipt of this
written acceptance shall cause the Specifications of such Code to be changed in
compliance with the MDS and NxStage Specification documentation change control
processes and no change shall be effected without adherence to such change
control processes.
Notwithstanding the above, no NNC shall result in a new or modified
Specification until both NxStage and MDS have approved an implementation
schedule to implement such NNC, which approval each party shall not unreasonably
withhold or delay. A Temporary Deviation Notice for any Code is agreed by both
parties to be a Specification change and both parties shall follow all
procedures regarding Specification changes, though to the degree possible, on an
expedited basis. The parties agree that applicable FDA design control and
quality system regulations shall be interpreted as allowing no Temporary
Deviation to remain in effect for more than [**] without agreement of MDS or
without effecting the formulaic sharing of the Net Cost Change (as herein
defined) according to this Section 5.4. Notwithstanding this, the parties
further agree that if a Temporary Deviation is implemented for no more than [**]
then the cost effect of such Temporary Deviation will be determined by MDS in
arrears and in good faith to include only costs MDS incurred without application
of the formulaic sharing of any Net Cost Change according to this Section 5.4
and such costs shall be promptly paid to MDS by NxStage. If any Temporary
Deviation or any immediately subsequent Temporary Deviation substantially
equivalent to such prior Temporary Deviation, are in effect for no more than
such [**], then the lifting of such Temporary Deviation(s) shall also result in
no application of the formulaic sharing of any Net Cost Change according to this
Section 5.4 at the return to the Specification in effect prior to such Temporary
Deviation(s).
Notwithstanding which party proposed such Main Set Code NNC, NxStage
and MDS agree to share the Net Cost Change resulting directly from such NxStage
Main Set Code NNC. Such Net Cost Change is defined as the net change in MDS and
MDM's unit dollar ($) standard costs directly and solely related to the proposed
Main Set Code NNC, of direct labor, direct material (including any MDS Component
at its arms' length negotiated price), variable overhead and, only to the degree
relevant at other Tiers, fixed overhead. NxStage shall accept as an Accepted
Revised Price any Proposed Revised Price for a relevant NxStage Main Set Code
NNC according to the following formulae and representing:
a) a price reduction equal to [**] percent ([**]%) of any estimated
Net Cost Change savings, and
b) a price increase equal to [**]%) of any estimated Net Cost Change
increase divided by (one minus gross profit margin percentage) where the gross
profit margin percentage equals the gross profit margin percentage at the
relevant volume tier from the initial version of Exhibit L, the Open Book
Accounting.
Notwithstanding the above, no NNC shall result in any Net Cost Change
reduction or its formulaic sharing to the degree any relevant cost reduction
element is a Reserved Cost Down listed in Exhibit M at the relevant Tier. To the
degree NR Costs are charged to and paid by NxStage and not added to MDS'
depreciation, no NR Cost shall be included in the Net Cost Change sharing
calculation. To the degree tooling, fixtures, etc. of any NNC are to be
depreciated by MDS, then such depreciation shall be included in Variable
Overhead.
By way of examples only, a number of scenarios involving Revised
Baseline Prices, Reserved Cost Down, NR Costs, Accepted Revised Prices, arms'
length negotiated MDS Components, Net Cost Change sharing and the operation of
this Section 5 are listed in Exhibit O.
MDS shall maintain the Revised Open Book Accounting records for all
Codes of NxStage Main Sets through the Term of the Agreement and for two (2)
years thereafter which reconcile the impact of all NNCs and their relevant
Accepted Revised Price changes back to the initial Baseline Pricing for each
Tier.
5.5 NxStage at its discretion and expense and with reasonable notice may
have the Open Book Accounting audited no more than once per year by a third
party reasonably acceptable to and with Confidential Information requirements to
MDS. Such third party's decision shall be accepted by both parties. MDS has an
obligation during the Term of this Agreement to maintain detailed histories of
cost and pricing changes of the Main Sets during the Term of this Agreement and
for two (2) years thereafter to facilitate such audit.
5.6 Notwithstanding the above, if any government authority makes any demand
on MDS for payment of any monies related to the manufacture, transport,
inventory, sale or use of the Codes, including Componentry thereof, other than
taxes relating to the income of MDS, such payment not reasonably foreseen by
MDS, NxStage shall reimburse MDS for such payments. MDS shall use reasonable
commercial efforts to determine the legality of such government demand and to
legally avoid such payments wherever possible.
6.0 PAYMENT
6.1 The terms of payment for the Codes invoiced by MDS to NxStage under
this Agreement shall be [**] percent ([**]%), [**] days, net [**] days from
MDS's invoice date, as determined by the wire transfer date of NxStage's
relevant wired payments. MDS may invoice for Codes on the date they arrive at
the CIF Location. Any undisputed outstanding MDS invoice amounts, including
service charges, not received by MDS within [**] days from such invoice date
shall be subject to a service charge until paid, in an amount equal to the
lesser of [**] percent ([**]%) per month or the maximum rate allowed by law. In
addition, if full payment for each MDS undisputed invoice is not received by MDS
within [**] days from MDS' invoice date, MDS may restrict weekly sales and
shipments to NxStage to a dollar amount equal to the payments received from
NxStage in the previous week. Such restriction will not put MDS in breach of
this Agreement. If full payment is not received by MDS within [**] days from
MDS'
undisputed invoice date, NxStage shall be considered to be in material breach of
this Agreement and subject to Section 13.1. Any NxStage dispute of an MDS
invoice shall be made in good faith and be related only to an error in such
invoice and NxStage must notify MDS within [**] days of NxStage's receipt
thereof, and the parties shall work together in good faith to resolve any
disputes. If the parties are unable to resolve the invoice dispute within [**],
the parties shall each appoint an expert consultant, with expertise in the
relevant area, to resolve the dispute. The two appointed expert consultants
shall endeavor in good faith to resolve the dispute within a subsequent [**]. If
the consultants can not reach agreement within this period of time, the parties
agree to submit the dispute to binding arbitration in accordance with JAMS
rules.
6.2 The terms of payment for any NxStage Componentry Delivery Order
supplied by NxStage and purchased by MDS shall be [**] percent ([**]%), [**]
days, net [**] days from NxStage's invoice date, as determined by the credit
date or wire transfer date of MDS' wired payments. Notwithstanding the above,
NxStage shall not charge for any [**], but shall supply such Filter, FMP and
Tray without charge to MDS. Such [**] shall remain the property of NxStage and
shall be preserved and safe-guarded by MDS with at least the same degree of care
that MDS preserves and safeguards its own property. MDS agrees that it shall be
responsible for any damage to such NxStage-supplied NxStage Componentry while in
its possession other than any damage incurred by following the Specifications,
and that it shall return within [**] of any NxStage written request any such
NxStage Componentry to NxStage not required by MDS to fulfill any accepted
Delivery Order. MDS shall reimburse NxStage for all damage to Filters, FMP
Assemblies or Trays while such NxStage-supplied NxStage Componentry is in MDS'
physical possession and up to and including until the related NxStage Main Sets
are delivered to NxStage. Notwithstanding the above, MDS shall not be
responsible for damage to Filters, FMP Assemblies or Trays up to [**] percent
([**]%) of the value of such NxStage-supplied NxStage Componentry, as measured
on an aggregate dollar basis by month. Further notwithstanding the above and
except for gross negligence, willful misconduct by MDS or failure by MDS to
exercise the same degree of care in manufacturing NxStage Codes that it takes
with MDS' own sets, MDS shall not be liable for loss of or damage to such
NxStage-supplied NxStage Componentry by reason of any recall, scrap or failure
to release NxStage Main Sets until and unless NxStage adopts Specifications
allowing for [**] sterilizations of NxStage Main Sets and a labeled "shelf life"
of at least [**] years from sterilization date. NxStage may invoice MDS for any
NxStage Componentry Delivery Order after arrival of the relevant goods at the
C.I.F. Location. Any undisputed NxStage Componentry Delivery Order invoice
amounts, including service charges, not received by NxStage within [**] days
from such invoice date shall be subject to a service charge until paid, in an
amount equal to the lesser of [**] percent ([**]%) per month or the maximum rate
allowed by law. If full payment of any undisputed invoice is not received by
NxStage within one hundred (120) days of NxStage's invoice date, MDS shall be
considered to be in material breach of this Agreement and subject to Section
13.1. Disputed invoices shall be governed by the same terms as Section 6.1.
6.3 All NxStage or MDS payments are to be remitted by wire transfer to the
specific bank or financial institution designated respectively by MDS and
NxStage to receive such payments.
7. MDS COMPONENTRY AND INTELLECTUAL PROPERTY
7.1 During the Term of this Agreement, NxStage shall have a
right-of-first-refusal to pre-empt any MDS offer to sell to any third party
within the Territory any MDS Component for incorporation into any Main Set
provided, however, that such MDS Component is covered by at least one
MDS-controlled patent in the United States or patent-pending and further
provided that NxStage's use of such MDS Component is limited to incorporation
into NxStage Main Sets or NxStage Componentry manufactured by MDS for NxStage
during the term of this Agreement. MDS shall make no such third party offer
without advising such third party in writing of NxStage's right-of-first-refusal
and MDS shall provide NxStage with a true copy of all terms of such third party
offer within [**] business days of such third party offer. Such NxStage
right-of-first-refusal shall exist for [**] days from the issue date of any such
MDS offer and NxStage's pre-emption shall be limited to NxStage's acceptance of
the specific terms of such offer in its entirety.
If NxStage does not exercise such right-of-first-refusal during such
[**] days, then MDS may sell such MDS Component to such third party including
for use in any Main Set. Any change in any term of any such MDS offer creates a
new NxStage right-of-first-refusal for a further [**] days.
If NxStage does exercise such right, Section 5.4 shall control
NxStage's acceptance of any such MDS Component as NxStage Componentry and
incorporation into a NxStage Main Set. For any such MDS Component so
incorporated by NxStage into a NxStage Main Set, any subsequent sale or license
by MDS to any third party for such MDS Component shall obligate MDS to require
that such third party may not incorporate such MDS Component into any Main Set
or NxStage Main Set for sale or use inside the Territory during the Term of this
Agreement.
7.2 As of the date hereof, the designs of all Codes are the Intellectual
Property of NxStage, except for the MDS Components which have been accepted by
NxStage as NxStage Componentry as set forth in Exhibit A, the design(s) of
which are the Intellectual Property of MDS.
7.3 "Intellectual Property" means all inventions, processes, discoveries,
other novel or valuable information, patents, trademarks, copyrights, and any
applications or registration thereof and trade secrets whether owned, used or
licensed by or to either party or employees and/or agents (the "NxStage
Intellectual Property" or the "MDS Intellectual Property" as the case may be).
Inventor-ship of Intellectual Property will be determined according to U.S
patent law.
7.4 Nothing in this Agreement affects the ownership by any party or their
employees and/or agents of any Intellectual Property owned or in the possession
of such party or their employees and/or agents as of the Effective Date of this
Agreement. During the Term of this Agreement, all Intellectual Property
developed by either party or their employees and/or agents that is independent
of the specific operation of this Agreement shall remain the property of such
developing party or their employees and/or agents.
7.5 Intellectual Property, whether or not patentable, that is developed in
performance
of this Agreement but is made solely by employees and/or agents of NxStage and
does not comprise any MDS Confidential Information or MDS Intellectual Property
disclosed by MDS, will be assigned by such employees and/or agents to NxStage
and shall be defined for purposes of this Agreement as NxStage Intellectual
Property. By way of example only and without limiting the foregoing, any NxStage
customer's or vendor's identity is the Intellectual Property of NxStage even if
such customer or vendor was developed solely in performance of this Agreement;
provided that any such NxStage customer's or vendor's identity shall cease to be
NxStage Intellectual Property if the same ceases to be NxStage Confidential
Information, as defined in the Confidentiality Agreement as set forth in Exhibit
J.
7.6 Intellectual Property, whether or not patentable, that is developed in
performance of this Agreement but is made solely by employees and/or agents of
MDS and does not comprise any NxStage Confidential Information or NxStage
Intellectual Property disclosed by NxStage, will be assigned by such employees
and/or agents to DSU Medical Corporation, an affiliate of MDS, and shall be
defined for purposes of this Agreement as MDS Intellectual Property. By way of
example only and without limiting the foregoing, any MDS customer's or vendor's
identity is the Intellectual Property of MDS even if such customer or vendor was
developed solely in performance of this Agreement; provided that any such MDS
customer's or vendor's identity shall cease to be MDS Intellectual Property if
the same ceases to be MDS Confidential Information, as defined in the
Confidentiality Agreement as set forth in Exhibit J.
7.7 Intellectual Property, whether or not patentable, that is developed in
performance of this Agreement and is made jointly by an employee(s) and/or
agent(s) of both parties, or is made by one party's employee(s) and/or agent(s)
and comprises the Confidential Information or Intellectual Property of the other
party will be assigned by such employee(s) and/or agent(s) according to the
employment agreement of such employee(s) and/or agent(s) and the parties shall
assign to the other party, rights in such Intellectual Property so that such
Intellectual Property is jointly owned (the "Joint Inventions"). Such Joint
Inventions shall remain as trade secrets unless a decision to apply for a patent
is made with the express written joint consent of MDS and NxStage, which shall
share equally the reasonable costs of prosecuting, maintaining and defending
such Joint Inventions. Such Joint Inventions may not be used by MDS or NxStage,
or licensed or disclosed by MDS or NxStage to any third party without the
express written joint consent of MDS and NxStage during the term of any patent
or in accordance with the terms of the confidentiality agreement of Exhibit J
herein regarding any trade secret.
8.0 REGULATORY RESPONSIBILITY; LABELING;
TRADE NAMES
8.1 NxStage shall be responsible, at its expense, for complying with all
applicable regulatory requirements of the U.S. Food and Drug Administration
("FDA") relating to the sale or use of the Codes including, but not limited to,
obtaining authorization under Section 510(k) of the United States Federal Food,
Drug and Cosmetic Acts, as amended (the "Acts"). MDS shall be responsible, at
its expense, for complying with applicable regulatory requirements of the FDA
relating to its supply of the Codes, including, but not limited to, maintaining
proper registration with the FDA of all MDS manufacturing facilities used in the
supply of the Codes. NxStage shall immediately notify MDS of any change in the
regulatory status of any Code. MDS shall
immediately notify NxStage of any change in regulatory status of, or regulatory
inspection involving, any of the MDS manufacturing facilities involved in the
supply of any Code, and shall use its best efforts to promptly address any
deficiencies or other concerns raised in connection with such a regulatory
inspection.
NxStage shall be responsible also for compliance with the Code of
Federal Regulations, Title 21, Part 803, Medical Device Reporting ("MDR"), with
regard to any end-user complaint received by either party involving the Codes
supplied to NxStage by MDS. NxStage shall have sole and exclusive responsibility
for handling complaints relating to the Codes, for making MDR determinations
with respect to such complaints and for filing MDR reports relating to the
Codes. NxStage, within [**] of its determination that a NxStage complaint may by
related to an area(s) of MDS responsibility, shall provide to MDS documentation
sufficient for MDS to investigate such complaint according to the Act. MDS has
no responsibilities with respect to complaint handling other than for such
documented complaints provided to MDS. For all such written complaints MDS shall
(i) provide assistance to NxStage in connection with compliant investigations,
(ii) notify NxStage in writing within [**] of any complaints or MDRs received by
MDS relating to the Codes, (iii) notify NxStage in writing within [**] of any
FDA 483 or warning letter reports involving the same MDS manufacturing
facilities or processes used by MDS in supplying the Codes hereunder, (iv) and
notify NxStage within [**] of MDS' issuance of any Corrective and Preventive
Action ("CAPA") to correct a defect in a component or process used in a NxStage
Product. Without limiting the foregoing, MDS may not file MDR reports relating
to the Codes unless required by any applicable Federal Regulation, and unless
NxStage is notified thereof prior to such report being filed. If requested to
provide assistance in a complaint investigation, MDS shall diligently evaluate
all information supplied by NxStage or already in the possession of MDS relating
to such complaint within [**] of receipt of information and/or samples from
NxStage and shall promptly submit to NxStage a completed complaint communication
form which form shall be substantially in the form of Exhibit H.
MDS shall have no obligation or liability to ensure that, and makes no
representation or warranty that, any Code complies with any applicable product
standards, regulations or laws, but agrees to give to NxStage any reasonable
assistance requested in order to demonstrate that the Codes supplied by MDS do
so comply.
8.2 NxStage shall, at its expense, provide the Labeling including all
camera-ready artwork necessary for MDS to produce the Codes.
8.3 Each use on the Codes of any NxStage trademarks, trade names or logos
shall inure to the benefit of NxStage. Should any such use vest in MDS any
rights in any NxStage trade xxxx, trade name or logo, MDS shall transfer such
rights to NxStage or its designee upon request of NxStage. Each use on the Codes
of any MDS trademarks, trade names or logos shall inure to the benefit of MDS.
Should any such use vest in NxStage any rights in any MDS trade xxxx, trade name
or logo, NxStage shall transfer such rights to MDS or its designee upon request
of MDS.
8.4 Except as provided in this Agreement, MDS and NxStage will not use any
trade xxxx, trade name or logo of the other party, or any trademark, trade name
or logo confusingly
similar therewith, during or after the Term of this Agreement.
8.5 NxStage shall maintain the device master record ("DMR") and final
release device history record ("Final DHR") for all NxStage Codes and shall be
responsible for final release of NxStage Codes under 21 CFR Part 820 for
commercial sale to third parties or clinical use.
9.0 QUALITY CONTROL
9. 1 The term "Lot" shall mean all Codes bearing the same sterilization or
production lot number. Each Lot of Codes made by MDS and sold by MDS to NxStage
shall be subject to in-coming and in-process quality control inspections and
release testing by MDS in accordance with NxStage's quality standards for
NxStage Codes sufficient to meet the relevant Specifications as determined by
NxStage-specified AQLs subject to NxStage-determined inspection levels and
sampling plans, as such terms are defined by [**] as listed for the Codes in
Exhibit G (the "QC Standards").
MDS shall inform NxStage of any Specifications that MDS reasonably
believes will not be controlled by the QC Standards. Not withstanding this, the
Specifications are owned and controlled by NxStage. NxStage shall have the
option to amend the Specifications. MDS shall also apply reasonable commercial
efforts to manage MDM manufacturing operations to effect continuous product
quality improvements for the NxStage Products.
9.2 MDS warrants that each Lot of the Codes at the time title to such Lot
is transferred to NxStage will comply with the Specifications as controlled by
the requirements of the QC Standards then in effect at the time the Delivery
Order relevant to such Lot was accepted by MDS.
9.3 At its discretion, NxStage may inspect or audit the Lots of Codes or
MDS-manufactured Componentry sold to NxStage for adherence to the Specifications
as controlled by the requirements of the QC Standards then in effect at the time
the Delivery Order relevant to such Lot was accepted by MDS. NxStage shall
conduct such inspection or audit within [**] of receipt by it of each shipment.
If as a result of this timely inspection any Lot fails to conform to the
Specifications as controlled by the requirements of the QC Standards, NxStage,
in addition to any other remedies it may have hereunder, may, at its option,
obtain from MDS credit for or refund for all Codes or such Componentry in such
Lot, plus the cost of all NxStage-supplied Componentry not paid for by MDS
incorporated in such Lot, except as otherwise provided in Section 6.2, or, if
mutually agreed by NxStage and MDS, NxStage shall receive replacement of all
Codes or such Componentry in such Lot, and be reimbursed for the cost of all
NxStage-supplied Componetry not paid for by MDS incorporated in such Lot, except
as otherwise provided in Section 6.2. However, if MDS requests, NxStage will
allow MDS to have an independent laboratory, to be previously consented to by
NxStage, which consent shall not be unreasonably withheld, audit any suspect
Lot. The decision of such independent laboratory as to whether such Lot complies
with the Specifications as controlled by the requirements of the QC Standards
will be final.
9.4 If any customer of NxStage rejects or returns Codes to NxStage as a
result of any alleged failure of any Lot of Codes to meet the Specifications as
controlled by the requirements of the QC Standards then in effect at the time of
MDS' acceptance of the Delivery Order related to such Lot, MDS shall be notified
in writing by NxStage within [**] of each such rejection or return comprising a
good faith description of MDS' alleged relationship to such alleged failure. If
NxStage in good faith alleges such failure such rejected or returned Lot units
may be returned to MDS, at MDS' expense, provided that such Lot units are
returned within [**] days of MDS' receipt from NxStage of the customer complaint
regarding such Lot. However, if MDS requests, NxStage will allow MDS to have an
independent laboratory, to be previously consented to by NxStage, which consent
shall not be unreasonably withheld, audit compliance with such Specifications of
any such rejected or returned Lot units as well as sufficient other units from
the same Lot in order to create a valid sample size for such audit of such Lot
to such Specifications as controlled by the requirements of such QC Standards.
The decision of such independent laboratory as to whether such Lots comply with
the Specifications as controlled by the requirements of the QC Standards will be
final, but only if a sufficient sample size has been so tested. At MDS' expense,
NxStage shall receive, at NxStage's option, a credit or refund for such Lot
units found to not meet such Specifications, plus the cost of all
NxStage-supplied Componentry not paid for by MDS incorporated in such Lot,
except as otherwise provided in Section 6.2, or by mutual agreement of NxStage
and MDS, NxStage shall receive replacements for such Lot units, and be
reimbursed for the cost of all NxStage-supplied Componentry not paid for by MDS
incorporated in such Lot, except as otherwise provided in Section 6.2. If such
returned Lots or Lot Units are not found to not meet Specifications as
controlled by the QC Standards as of the time title transfers to NxStage, of
which the AQLs, sampling plans and inspection levels are an integral part,
NxStage shall reimburse MDS for MDS' costs of such returns. NxStage shall use
all commercially reasonable efforts to mitigate damages to MDS resulting from
the requirement of this Article 9 and Article 11 to pay for the cost of all
NxStage-supplied NxStage Componentry not paid for by MDS and incorporated into
Lots not meeting Specifications.
9.5 NxStage warrants that the Componentry specified by NxStage is deemed to
meet the NxStage Specifications of such Componentry, as controlled by the
requirements of the QC Standards then in effect at the time such Componentry
passes inspection at MDS according to such QC Standards. In addition, at its
option, NxStage may ask MDS to perform tests on each Lot of such Componentry
before it is released for subsequent operations by MDS, to assure compliance
with NxStage Specifications, as controlled by the requirements of the QC
Standards then in effect. If NxStage elects the latter, NxStage shall pay to MDS
such testing costs as are listed on Exhibit C.
If MDS reasonably determines by subsequent operations that, despite
MDS' testing to the QC Standards and/or NxStage's warranty to the QC Standards,
any Componentry or Code does not meet NxStage's Specifications or QC Standards
on either a Unit basis or Lot basis, MDS shall attempt to secure authorization
from NxStage to proceed with heightened testing of such Componentry or Code Lot
Units or Lots, scrapping of such Componentry or Code Lot Units or Lots, rework
or other disposition of such Componentry or Code Lot Units or Lots believed to
be so affected. MDS shall not be liable for errors or omissions in this regard
as long
as such errors or omissions are not negligent and MDS exhibits reasonable good
faith in its efforts. MDS shall invoice NxStage for all of MDS' costs involved
in such heightened testing, rework, scrap, downtime and other items previously
authorized by NxStage, and NxStage shall pay such invoices within [**] days of
receipt.
9.6 NxStage warrants that the design, xxxx-of-materials, schematics,
assembly drawings, test specifications, sampling protocols and procedures called
for in the Specifications and QC Standards are such that the Codes when
manufactured by MDS to the Specifications as controlled by the requirements of
the QC Standards then in effect at the time of MDS' acceptance of the Delivery
Order related to such Lot, and subsequently stored and handled by NxStage in
accordance with the Labeling meet the Specifications as controlled by the
requirements of the QC Standards through the expiration date for the Codes
indicated in the Labeling.
9.7 NxStage shall have the right to hire an independent third party quality
auditor, not affiliated with NxStage or MDS, and reasonably acceptable to MDS,
who shall, at reasonable times, upon prior notice in writing and with
representatives of MDS present, visit MDS' facilities or MDS vendor facilities
periodically to review the production and quality control standards, systems,
procedures and records of MDS or its vendors directly related to the Codes for
the purpose of reporting to NxStage any deficiencies in MDS' or vendor
facilities' quality control systems in meeting the relevant sections of [**] or
the QC Standards. NxStage personnel shall have the right with sufficient notice
to MDS to review the documentation and records of production, quality control
standards, systems, procedures and production areas of MDS directly related to
the Codes.
MDS shall have the right to hire an independent third party quality
auditor, not affiliated with NxStage or MDS, and reasonably acceptable to
NxStage, who shall, at reasonable times, upon prior notice in writing and with
representatives of NxStage present, visit NxStage facilities or NxStage vendor
facilities periodically to review the production and quality control standards,
systems, procedures and records of NxStage or its vendors directly related to
the Componentry supplied to MDS by NxStage for the purpose of reporting to MDS
any deficiencies in such facilities' quality control systems.
9.8 MDS and NxStage agree to work in good faith to resolve all disputes
relating to the QC Standards under this Agreement, including without limitation,
disputes relating to product warranty, incoming component quality, continuous
product quality improvement, and interruption charges relating to alleged
quality issues. Without limiting the foregoing, if these or other quality
related issues can not be solved in the routine course of business, the parties
agree to meet within [**] upon the request of either party to resolve any such
quality disputes. If the parties are unable to reach agreement in good faith
within this [**] period, the parties shall each appoint an expert quality
consultant, recognized in the medical device field, to resolve the dispute. The
two appointed expert consultants shall endeavor in good faith to resolve the
dispute within [**]. If the consultants can not reach agreement within this
period of time, the parties agree to submit the dispute to binding arbitration
in accordance with JAMS rules.
10.0 VENDOR CONTROL
10.1 MDS, as assembler of the Codes, shall be responsible for control over
each vendor (including MDS and NxStage) of Componentry listed on the Xxxx of
Materials of each Code according to the following terms:
a. to the degree a vendor discloses to and agrees with MDS to terms
and conditions of trade, such disclosure and agreement to be fully disclosed by
MDS to NxStage and agreed to by NxStage and MDS, MDS shall be responsible for
reasonable commercial control of such vendor to such agreed-upon-terms and
conditions and
b. to the degree a vendor discloses to and agrees with MDS regarding
specifications as controlled by the requirements of vendor's quality control
standards, such disclosure and agreement to be fully disclosed by MDS to NxStage
and agreed to by NxStage and MDS, MDS shall be responsible for reasonable
commercial control of such vendor's componentry supply or sterilization services
to such vendor agreed-upon specifications as controlled by such quality
standards.
10.2 NxStage shall have the right to supercede any vendor's agreed-upon
componentry specification and/or vendor's relevant quality standard with a more
restrictive Componentry Specification as controlled by a relevant QC Standard
for MDS, as assembler, to use in the assembly of a relevant Code. However, if
such more stringent Specification and/or relevant QC Standard is not agreed to
by such vendor, then MDS cannot be held responsible for control of such vendor
to such more stringent Specification or QC Standard. Further, to the degree such
Specification is more stringent than the relevant vendor's agreed upon
Specification then MDS' responsibility as assembler of the Codes is only to
diligently apply the relevant QC Standard to accept or reject such Componentry
for further assembly into Codes. In such an event, the parties agree that the
relevant Code Specifications MDS is required to meet shall be no more
restrictive than the relevant agreed-upon specifications of such relevant
vendor's componentry used in such Code, except that MDS shall diligently apply
the relevant QC Standard whether to accept each lot of vendor's componentry as
Componentry in the further assembly of any Code.
11.0 WARRANTIES AND INDEMNIFICATIONS
11.1 Subject to Sections 9.6 and 10.2, MDS warrants for the labeled
shelf-life of all Codes that Codes sold to NxStage under this Agreement will be
in compliance with the Specifications as controlled by the requirements of the
QC Standards then in effect at the time of MDS' acceptance of the Delivery Order
related to such Lot. EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, MDS MAKES NO
REPRESENTATION OR WARRANTY WHATSOEVER, WRITTEN OR ORAL, EXPRESS OR IMPLIED, AS
TO ANY OF THE CODES, OR THEIR MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND MDS HEREBY EXPRESSLY DISCLAIMS ANY SUCH REPRESENTATION AND
WARRANTY. ALL OF THE WARRANTIES SET FORTH IN THIS SECTION 11.1 ARE VOID AND OF
NO EFFECT IF THE CODES ARE NOT STORED IN ACCORDANCE WITH THE DIRECTIONS ON THE
LABELING ON OR ACCOMPANYING THE CODE.
11.2 NxSTAGE ACKNOWLEDGES AND AGREES THAT, EXCEPT AS TO ACTIONS OF MDS
WHICH CONSTITUTE NEGLIGENT, RECKLESS, OR WILLFUL MISCONDUCT, AND EXCEPT AS IS
OTHERWISE PROVIDED FOR IN ARTICLES 3, 8, 9
AND 15 HEREOF, MDS' SOLE RESPONSIBILITY TO NxSTAGE IN THE CASE OF BREACH OF THE
FOREGOING WARRANTY SHALL BE FOR MDS, BY MUTUAL AGREEMENT OF NxSTAGE AND MDS, TO
REPAIR OR REPLACE THE CODES WITH RESPECT TO WHICH SUCH WARRANTY IS BREACHED, AND
TO REIMBURSE NxSTAGE FOR THE COST OF ALL NxSTAGE-SUPPLIED COMPONENTRY NOT PAID
FOR BY MDS INCORPORATED INTO SUCH CODES, EXCEPT AS OTHERWISE PROVIDED IN SECTION
6.2, OR, AT NxSTAGE'S ELECTION, TO RETURN ALL PAYMENTS MADE BY NxSTAGE TO MDS
WITH RESPECT TO SUCH CODES AND TO REIMBURSE NxSTAGE FOR THE COST OF ALL
NxSTAGE-SUPPLIED COMPONENTRY NOT PAID FOR BY MDS INCORPORATED INTO SUCH CODES,
EXCEPT AS OTHERWISE PROVIDED IN SECTION 6.2, OR TO CREDIT NxSTAGE IN THE AMOUNT
OF ALL PAYMENTS MADE BY NxSTAGE TO MDS WITH RESPECT TO SUCH CODES PLUS THE COST
OF ALL NxSTAGE-SUPPLIED COMPONENTRY NOT PAID FOR BY MDS INCORPORATED INTO SUCH
CODES, EXCEPT AS OTHERWISE PROVIDED IN SECTION 6.2. IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR THE OTHER'S LOSS OF PROFITS, LOSS OF USE, OR INCIDENTAL,
CONSEQUENTIAL, SPECIAL OR OTHER INDIRECT DAMAGES OF ANY KIND.
11.3 MDS shall indemnify and hold NxStage and its affiliates harmless from
and against all claims, liability, damage, loss, cost or expense of NxStage,
including its reasonable attorneys' fees arising out of, or in connection with,
or as a result of the (i) failure of any of the Codes to meet the warranty set
forth in Section 11.1 or (ii) infringement of a third party intellectual
property right if the infringement did not result from the compliance by MDS
with the Specifications supplied by NxStage. In order to discharge its
obligations under this Section 11, MDS shall obtain and keep in force during the
Term of this Agreement, product liability insurance with a limit of liability of
not less than $10,000,000. The insurance policy evidencing such insurance shall
be endorsed to name NxStage as an additional insured and provide for written
notification to NxStage by the insurer not less than thirty (30) days prior to
cancellation, expiration, or modification of such insurance. A certificate of
insurance from MDS' insurer evidencing compliance with the insurance
requirements of this Section 11.3 shall be given to NxStage by MDS within thirty
(30) days after the signing of this Agreement.
11.4 Each party shall communicate to the other party all charges of alleged
infringement of any third party intellectual property right within a reasonable
time after their receipt. The parties will cooperate fully with each other in
defending or otherwise resolving any charges of infringement.
11.5 NxStage shall indemnify and hold MDS and its affiliates harmless from
any and all claims, liability, damages, loss, cost, or expense (including
reasonable attorneys' fees) arising out of, based on, or caused by: (a) any
product claims, representations, descriptions or other statements, whether oral
or written, made or alleged to be made by NxStage or its representatives in any
Labeling, instructions, advertising, publicity, promotion or sale of any of the
Codes; (b) any product claim arising out of, based on, or caused by negligent
handling of the Codes by NxStage or its agents; (c) any product claim arising
out of defects in the design of the Codes or Specifications or QC Standards
supplied by NxStage or failure of the Codes to be fit for any particular
purpose, or (d) a third party infringement claim not covered under Section 11.3,
except
in each instance to the extent such claim, liability, loss, cost or expense
arises out of, or is based on, or caused by (i) the negligence or willful
misconduct of MDS, or (ii) any failure of the Codes to meet applicable
Specifications or other breach by MDS of the terms of this Agreement. In order
to discharge its obligations under this Section 11, NxStage shall obtain and
keep in force during the Term of this Agreement, product liability insurance
with a limit of liability of not less than $10,000,000 within one (1) year from
the Effective Date and no less than $5,000,000 during the first Contract Year.
The insurance policy evidencing such insurance shall be endorsed to name MDS as
an additional insured and provide for written notification to MDS by the insurer
not less than thirty (30) days prior to cancellation, expiration, or
modification of such insurance. A certificate of insurance from NxStage's
insurer evidencing compliance with the insurance requirements of this Section
11.5 shall be given to MDS by NxStage within thirty (30) days after the signing
of this Agreement.
12.0 TERM OF AGREEMENT
12.1 The term ("Term") of this Agreement shall be for the period beginning
on the Effective Date of this Agreement and ending after seven (7) consecutive
Contract Years.
12.2 Unless the parties mutually agree in writing twelve (12) months prior
to the end of the Term, this Agreement shall not be renewed, in which case
section 3.12 shall take effect.
13.0 TERMINATION
13.1 Subject to Section 3.14 hereof, either party may terminate this
Agreement for any material breach by the other party, by giving one-hundred
twenty (120) day written notice to the other party, if such breach shall, as of
the expiration of said one-hundred twenty (120) day period remain uncured.
13.2 Either party may terminate this Agreement effective immediately upon
the giving of notice, if the other party shall file a petition in bankruptcy, or
shall be adjudicated a bankrupt, or shall take advantage of the insolvency laws
of any state, or shall make an assignment for the benefit of creditors, shall be
voluntarily or involuntarily dissolved, or shall have a receiver, trustee or
other court officer appointed for its property.
13.3 All Confidential Information and Intellectual Property not
specifically allowed by written contract to be used post-Agreement shall be
returned to the relevant party upon termination of this Agreement for any
reason. Any post-Agreement use by either party of such other party's
Confidential Information disclosed during the Agreement shall be governed by the
terms of the Confidentiality Agreement detailed in Exhibit J.
14.0 EFFECT OF TERMINATION
14.1 No termination of this Agreement, other than by reason of breach of
this Agreement by NxStage, will relieve MDS from its obligation to deliver all
Codes ordered by any Delivery Order of NxStage received by MDS prior to the date
of written notice of such termination, nor will any termination, other than by
reason of breach of this Agreement by MDS
or except as otherwise provided herein, relieve NxStage from accepting and
paying for all Codes ordered by NxStage under any Delivery Order issued by
NxStage prior to the date of such written notice of termination or relieve
NxStage of its obligation pursuant to Sections 3.2 and 3.4. Upon any termination
of this Agreement, MDS shall promptly return to NxStage all NxStage-supplied
Componentry not paid for by MDS or tooling, fixtures, etc. for NxStage
production not paid for by MDS.
15.0 PRODUCT RECALL
15.1 NxStage shall have the sole right and responsibility for electing to
recall worldwide any Lot or partial Lot of the Codes distributed or caused to be
distributed by NxStage. NxStage shall administer such recall. NxStage shall
consult with MDS in good faith regarding any recommendations made by MDS
relating to whether NxStage may institute a recall. Subject to Section 15.4
below, NxStage shall initially bear all out-of-pocket costs and expenses of such
recall, including, without limitation, refunds to customers for recalled Lots,
the cost of notifying customers, and costs associated with the shipment of
recalled Codes from customers to NxStage or MDS. NxStage shall maintain complete
and accurate records, for such periods as may be required by applicable law, of
all the Lots sold by NxStage.
15.2 In the event of a recall of any Lot or partial Lot of the Codes
distributed or caused to be distributed by NxStage, the parties will cooperate
fully with each other in effecting such a recall, including without limitation
promptly contacting any purchasers and communicating to such purchasers any
information or instructions that NxStage elects to communicate to such
purchasers.
15.3 In the event of a recall of any Lot or partial Lot of the Codes
distributed or caused to be distributed by NxStage where MDS and NxStage cannot
agree on the responsible party, MDS and NxStage will have an independent
laboratory, previously consented to by NxStage and MDS, which consent shall not
be unreasonably withheld, audit sufficient recalled Lot units to determine if
such Lot is in compliance with the Specifications, including all QC Standards.
If the recalled Lots meet the Specifications, including all QC Standards then in
effect at the time of MDS' acceptance of the Delivery Order related to such Lot
then, subject to Section 15.4 below, NxStage shall bear all costs and expenses
of the recall, including the cost of the audit. If the recalled Lots do not meet
the Specifications, including all QC Standards, subject to Section 15.4 below,
MDS shall bear all costs and expenses of the recall including the cost of the
audit. Notwithstanding the above, if sufficient Lot units are not available to
comprise a statistically significant sample size, yet a statistically
significant increase in reported field failures attributable to the Product over
prior Lots is recorded, the parties agree to use the Quality Dispute Resolution
process as outlined in Section 9.8 to determine responsibility for the recall.
Notwithstanding the outcome of the Quality Dispute Resolution process, MDS and
NxStage shall cooperate on proposed manufacturing, design, or testing to address
the field failures.
15.4 In the event of a recall of any Lot of Codes or partial Lot of Codes,
MDS or NxStage may, once the recall has been substantially completed, invoke the
Quality Dispute Resolution process as defined in Section 9.8, which outcome
shall determine whether NxStage's initiation of recall was necessary and
reasonable. The Quality Dispute Resolution process may
result in arbitration which may require that NxStage or MDS bear all costs,
damages and expenses, including reasonable attorney's fees of such recall or may
apportion such costs and expenses between the parties as the arbitrator deems
just. Notwithstanding the above, the obligations of either party to the other
shall be subject to the limitations set forth in the last sentence of 11.2.
15.5 NxStage shall bear all costs and expenses of a recall to the degree
caused by the negligence of NxStage or its agents or customers, improper or
incorrect Specifications, inadequate QC Standards, defective Componentry
supplied by NxStage or its vendors, or by breach of NxStage's regulatory
responsibility as set forth in Section 8.0. MDS shall bear all costs and
expenses of a recall to the degree caused by the negligence of MDS or its agents
or vendors, or by breach of MDS' regulatory responsibility as set forth in
Section 8.
15.6 If, and to the extent MDS is required by operation of this Agreement
to bear the costs of a recall, and as a result of such recall NxStage orders and
purchases from another supplier, or manufactures for itself, replacement product
codes for recalled Codes, such replacement code orders shall be credited on a
unit basis toward the applicable Main Set Commitment, provided, however, that
NxStage shall supply MDS with copies of such orders and the invoices related
thereto or appropriate documentation of its manufacturing costs. In addition, to
the extent that the cost of such replacement products purchased from an
unaffiliated third party supplier, or manufactured by NxStage, exceeds the then
applicable prices of the Codes that were replaced, MDS will credit NxStage for
such excess cost, provided however, such credit shall not exceed [**] percent
([**]%) of the then applicable MDS prices of the Codes which were replaced.
16.0 CONFIDENTIAL INFORMATION
16.1 The terms relating to confidential information ("Confidential
Information") mutually agreed to by NxStage, MDS and their respective employees
and agents are contained in Exhibit J.
17.0 OTHER PROVISIONS
17.1 This Agreement contains the entire agreement between the parties
relating to the subject matter herein and all prior proposals, discussions, and
writings by and between the parties and relating to the subject matter herein
are superseded by this Agreement. None of the terms of this Agreement shall be
deemed to be waived by either party or amended unless such a waiver or amendment
is in writing and is signed by the party to be charged with such waiver or
amendment, and such writing recites specifically that it is a waiver of, or
amendment to, the terms of this Agreement.
17.2 Except for Delivery Orders, forecasts, NNCs and the like, which may be
sent by email, all notices and demands required or permitted to be given or made
pursuant to this Agreement shall be addressed as follows:
If to NxStage:
President
NxStage Medical, Inc.
000 X. Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
xxxxx@xxxxxxx.xxx
Fax: 000-000-0000
With a copy to NxStage's General Counsel at the same
address
If to MDS:
President
Medisystems Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
x.xxxxxxxxx@xxxxxxxxxxx.xxx
Fax: (000) 000-0000
or to such other address as to which either party may properly notify the other.
All notices, requests and other communications hereunder shall be in writing and
shall be deemed to have been duly given at the time of receipt if delivered by
hand, by a nationally recognized overnight delivery service or by facsimile
transmission or three (3) days after being mailed, registered or certified mail,
return receipt requested, with postage prepaid, to the address or facsimile
number (as the case may be) listed for each such party or, if any party shall
have designated a different address or facsimile number by notice to the other
parties given as provided above, then to the last address or facsimile number so
designated.
17.3 This Agreement shall be binding upon and inure to the benefit of the
parties, their successors and permitted assigns and shall survive a Change of
Control of either party, as defined in Exhibit I. This Agreement shall be
assignable by either party with the written consent of the other; provided,
however, that either party may assign this Agreement to any entity controlled by
or under common control with such party and in such event the assigning party
shall provide the other party with written notice of such assignment. Without
limiting the foregoing, this Agreement and the Main Set Commitment of NxStage
shall be the obligation and responsibility of any third party that acquires,
through sale, license or other transfer, NxStage Intellectual Property
sufficient to make, use or sell any NxStage Main Set (a "NxStage IP Control
Change") and NxStage agrees that as a condition of any such NxStage IP Control
Change such third party shall execute an instrument, in form and substance
reasonably satisfactory for MDS, confirming such obligation and responsibility.
Following such Change of Control and/or NxStage IP Control Change, such Main Set
Commitment shall only apply to NxStage Main Sets incorporating NxStage
Intellectual Property and shall not apply to other Main Sets then made, or
subsequently made, by such successor, assignee or new owner of such sufficient
NxStage Intellectual Property.
Should any Change of Control of MDS be to a successor, purchaser or under
common control of an entity that manufactures, or sells products and provides
in-center dialysis within the Territory (for example at present, Fresenius
Medical Care North America, Inc.), then if such successor or purchaser fails to
completely deliver any Delivery Order within [**] of the end of
the relevant Delivery Period, except due to an event of force majeure, then such
successor or purchaser shall pay to NxStage damages equal to [**]% of the then
relevant Baseline Prices or Accepted Revised Prices (whichever the case may be)
times the current Net Requirements times the number of Monthly Periods remaining
in the Term of the Agreement.
17.4 This Agreement is deemed to have been entered into in the State of
Washington and its interpretation, construction, and the remedies for its
enforcement or breach are to be applied pursuant to and in accordance with the
laws of the State of Washington.
17.5 In the event that a court of competent jurisdiction holds that
particular provisions or requirements of this Agreement are in violation of any
law, such provisions or requirements shall be enforced and shall remain in full
force and effect to the extent they are not in violation of any such law or are
not otherwise unenforceable, and all other provisions and requirements of this
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their authorized representatives as of the date first set forth above.
NxSTAGE MEDICAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
President
Jan. 4, 2007
MEDISYSTEMS CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
President
Jan. 3, 2007
LIST OF EXHIBITS
A Codes
B Specifications and Labeling
C Prices and Interruption Charges
D Price Adjustment Formulae for Supply Cost Changes
E Examples of Causes for Assessment of Interruption Charges
F NxStage Notice of Change
G Intentionally Left Blank
H Intentionally Left Blank
I Definition of Change of Control
J Confidential Information Agreement
K Intentionally Left Blank
L Open Book Accounting and Revised Open Book Accounting
M Reserved Cost Downs
N Complete costed Xxxx of Materials
O Examples of Revised Baseline Prices, etc.
EXHIBIT A - CODES
CODES
PART# DESCRIPTION REVISION MDS IP INCLUDED?
----- ----------- -------- ----------------
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
EXHIBIT B
Specifications and Labeling
[**]
EXHIBIT C - PRICES AND INTERRUPTION CHARGES
Draft NxStage Quotation based on: __________
NxStage Requirements Forecast_[**]
[**]
[**]
VOLUME RANGE
-----------------------
TIER FORECASTED TIER MIN. MID-POINT MAX CAR-160 CAR-170
---- ---------------- ---- --------- ---- ------- -------
Timing
TIER ONE [**] [**] [**] [**] [**] [**] [**]
TIER TWO [**] [**] [**] [**] [**] [**] [**]
TIER THREE [**] [**] [**] [**] [**] [**] [**]
TIER FOUR [**] [**] [**] [**] [**] [**] [**]
TIER FIVE [**] [**] [**] [**] [**] [**] [**]
TIER SIX [**] [**] [**] [**] [**] [**] [**]
TIER SEVEN [**] [**] [**] [**] [**] [**] [**]
TIER EIGHT [**] [**] [**] [**] [**] [**] [**]
TIER NINE [**] [**] [**] [**] [**] [**] [**]
TIER TEN [**] [**] [**] [**] [**] [**] [**]
TIER ELEVEN [**] [**] [**] [**] [**] [**] [**]
INTERRUPTON CHARGES PAID BY NXSTAGE TO MDS SHALL BE EQUAL TO:
[**]
[**]
[**]
EXHIBIT D
PRICE ADJUSTMENT FORMULAE COVERING CHANGES IN MDS' SUPPLY COSTS
Item Trigger Application Factor Source Document
------------------------------ --------------------------------- -------------------------------- ---------------------------
1. Cost of Purchased Materials [**]% or more in material Relevant Cost prior to Trigger Actual invoices
Point + change in cost
2. Cost of Shipping and Import [**]% or more in shipping costs Relevant Cost prior to Trigger Actual invoices
Clearance or clearance costs Point +/- change in cost
3. Exchange Rates. [**]% or more in exchange rates Relevant Costs prior to Trigger Wall Street Journal or
Point +/- change in cost similar publication
4. Duty and other Governmental [**]% or more in exchange rates Duty and other governmental Government gazette or other
Import related charges import related charges prior to official promulgation
Trigger Point +/- change in cost
EXHIBIT E
EXAMPLES OF CAUSES FOR ASSESSMENT OF INTERRUPTION CHARGES
[**]
EXHIBIT F - NXSTAGE NOTICE OF CHANGE
(NXSTAGE LOGO) NXSTAGE NOTICE OF CHANGE (NNC) NNC NUMBER _____
NNC ORIGINATED BY: DATE ORIGINATED:
----------------------------- ----------
Signature not required
Complete section A and subsequent applicable sections. This form may be expanded
to multiple pages as necessary.
A. DESCRIPTION OF CHANGE
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
B. REASON/EXPLANATION \ FOR CHANGE
[ ] PART OBSOLESCENCE [ ] IMPROVED COST [ ] IMPROVED QUALITY
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
C. AFFECTED ITEMS (ATTACH SCANNED REDLINES)
ITEM NUMBER DESCRIPTION OLD REV. PROPOSED REV.
----------- --------------------------------------- -------- -------------
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
___________ _______________________________________ ________ _____________
CONFIDENTIAL
THIS DOCUMENT IS THE PROPERTY OF NXSTAGE MEDICAL, INC. AND MAY FORM227
NOT BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE Draft 1, Rev 1
MANAGEMENT OF NXSTAGE MEDICAL, INC. Page 1 of 4
(NXSTAGE LOGO) NXSTAGE NOTICE OF CHANGE (NNC) NNC NUMBER _____
D. PROPOSED VALIDATION PLAN
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
E. PROPOSED IMPLEMENTATION PLAN AND SCHEDULE
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
F. ESTIMATED COST IMPLICATIONS
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
G. NXSTAGE APPROVAL OF THE NNC
--------------------------------------------
VP OF MANUFUCTURING OR VP OF DISPOSABLE R&D: DATE:
Signature required ----------
CONFIDENTIAL
THIS DOCUMENT IS THE PROPERTY OF NXSTAGE MEDICAL, INC. AND MAY FORM227
NOT BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE Draft 1, Rev 1
MANAGEMENT OF NXSTAGE MEDICAL, INC. Page 2 of 4
(NXSTAGE LOGO) NXSTAGE NOTICE OF CHANGE (NNC) NNC NUMBER _____
--------------------------------------------
DISPOSABLES QA: DATE:
Signature required ----------
H. MEDISYSTEMS RESPONSE: Complete section H and applicable sections. This form
may be expanded to multiple pages as necessary.
1. ASSESSMENT OF CHANGE:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. PROPOSED IMPLEMENTATION PLAN & SCHEDULE:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. COST IMPLICATIONS - ATTACH "OPEN BOOK" DOCUMENTATION
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
4. PROPOSED REVISED PRICING:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
5. MEDISYSTEMS APPROVAL OF THE NNC
--------------------------------------------
VP OF OPERATIONS: DATE:
Signature required ----------
CONFIDENTIAL
THIS DOCUMENT IS THE PROPERTY OF NXSTAGE MEDICAL, INC. AND MAY FORM227
NOT BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE Draft 1, Rev 1
MANAGEMENT OF NXSTAGE MEDICAL, INC. Page 3 of 4
(NXSTAGE LOGO) NXSTAGE NOTICE OF CHANGE (NNC) NNC NUMBER _____
--------------------------------------------
DISPOSABLES QA: DATE:
Signature required ----------
CONFIDENTIAL
THIS DOCUMENT IS THE PROPERTY OF NXSTAGE MEDICAL, INC. AND MAY FORM227
NOT BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE Draft 1, Rev 1
MANAGEMENT OF NXSTAGE MEDICAL, INC. Page 4 of 4
EXHIBIT I - DEFINITION OF CHANGE OF CONTROL
"CHANGE OF CONTROL" of the Company means and includes, consistent with
Section 409A of the Code, each and all of the following occurrences:
(i) The stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its parent company) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity, or
its parent company, outstanding immediately after such merger or consolidation,
or the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(ii) The acquisition by any Person as Beneficial Owner, directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities.
(iii) A change in the composition of the Board of Directors of the Company
as a result of which fewer than a majority of the directors are "Incumbent
Directors." "Incumbent Directors" shall mean directors who either (A) are
directors of the Company as of the date hereof or (B) are elected, or nominated
for election, to the Board of Directors with the affirmative votes (either by a
specific vote or by approval of the proxy statement of the Company in which such
person is named as a nominee for election as a director without objection to
such nomination) of at least three-quarters of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors of the Company).
Any other provision of this Section notwithstanding, the term Change in
Control shall not include either of the following events undertaken at the
election of the Company:
(x) Any transaction, the sole purpose of which is to change the state of
the Company's incorporation;
(y) A transaction, the result of which is to sell all or substantially all
of the assets of the Company to another corporation (the "surviving
corporation"); provided that the surviving corporation is owned directly or
indirectly by the stockholders of the Company immediately following such
transaction in substantially the same proportions as their ownership of the
Company's Common Stock immediately preceding such transaction; and provided,
further, that the surviving corporation expressly assumes this Agreement.
EXHIBIT J
MDS is willing to provide NxStage with MDS' Confidential Information, and
NxStage is willing to provide MDS with NxStage's Confidential Information,
subject to the following provisions.
1. NxStage agrees that it will treat all of MDS' Confidential Information as
confidential and the property of MDS. NxStage agrees that it will not
divulge any of MDS' Confidential Information to any third party without
MDS' prior written consent. NxStage agrees that it will not use any of MDS'
Confidential Information for its own benefit, except for the purpose of
this Agreement. Additionally, NxStage agrees that it will not analyze any
samples included in MDS' Confidential Information to determine the
composition thereof, and agrees to return undestroyed samples at the
request of MDS.
MDS agrees that it will treat all of NxStage's Confidential Information as
confidential. MDS agrees that it will not divulge any of NxStage's
Confidential Information to any third party without NxStage's prior written
consent. MDS agrees that it will not use any of NxStage's Confidential
Information for its own benefit, except for the purpose of this Agreement.
Additionally, MDS agrees that it will not analyze any samples included in
NxStage's Confidential Information to determine the composition thereof,
and agrees to return undestroyed samples at the request of NxStage.
As used in this Agreement, the term "Confidential Information" means any
technical or business information furnished by one party to the other party
regardless of whether such information is specifically designated initially
as confidential and regardless of whether such information is in written,
oral, electronic, or other form. Such Confidential Information may include,
without limitation, trade secrets, know-how, inventions, technical data,
specifications, computer files, documentation control systems and contents,
MRP systems and contents, computer programs, testing methods, business
models, financial information, research and development activities, product
designs, marketing plans, factory layouts, equipment, processes, customer
lists, customer assessments, vendor lists and vendor assessments.
MDS agrees that all of MDS' Confidential Information that is disclosed to
NxStage by MDS and NxStage agrees that all of NxStage's Confidential
Information that is disclosed to MDS by NxStage will be either:
(a) in tangible form, where such tangible form is marked to indicate that
it is confidential within one month of disclosure; or
(b) in intangible form, where the substance of such intangible form of
Confidential Information is documented in tangible form within one (1)
month of such disclosure, and where such tangible form is marked to
indicate that it is confidential. Notwithstanding the above but subject to
Section 3 herein, the entire contents of and
processes conducted within each party's facilities are presumed to be the
Confidential Information of such party and require no specific
documentation by such party of each and every item of Confidential
Information laid open to view by the other party. Facilities comprise the
offices, factories, research and development facilities, etc. of the owning
party as well as its vendors, to the degree such vendors are covered by
appropriate confidentiality agreements of the relevant party.
2. NxStage agrees that each of its officers, employees, consultants, vendors,
etc. (hereafter "NxStage Personnel") that receives any of MDS' Confidential
Information will be informed of and bound by the terms of this Agreement.
Such NxStage Personnel will not be given access to any MDS Confidential
Information until and unless they have entered into a separate written
agreement with NxStage safeguarding NxStage's Confidential Information,
where such separate agreement is applicable to MDS' Confidential
Information, and binds such NxStage Personnel to the provisions of this
Agreement in the same manner as NxStage is bound herein.
MDS agrees that each of its officers, employees, consultants, vendors, etc.
(hereafter "MDS Personnel") that receives any of NxStage's Confidential
Information will be informed of and bound by the terms of this Agreement.
Such MDS Personnel will not be given access to any NxStage Confidential
Information until and unless they have entered into a separate written
agreement with MDS safeguarding MDS' Confidential Information, where such
separate agreement is applicable to NxStage's Confidential Information, and
binds such MDS Personnel to the provisions of this Agreement in the same
manner as MDS is bound herein.
3. MDS agrees that any of MDS' Confidential Information that NxStage can show,
by tangible evidence was in NxStage's possession prior to its disclosure
will be released from the provisions of this Agreement. MDS agrees that any
of MDS' Confidential Information that is, or which becomes, available to
the public from a source other than from NxStage or NxStage Personnel,
either directly or indirectly, will be released from the provisions of this
Agreement. MDS agrees that any of MDS' Confidential Information that
becomes available to NxStage legitimately and lawfully from a third party
will be released from the provisions of this Agreement to the extent
necessary to permit such use and disclosure as are permitted by such third
party. MDS agrees that any of MDS' Confidential Information that is
independently developed by NxStage Personnel that have no access to any
relevant MDS Confidential Information, will be released from the provisions
of this Agreement. NxStage agrees that MDS' Confidential Information shall
not be deemed to be within one of the above exceptions merely because it is
encompassed by a more general disclosure included within, or can be
assembled by a selection of disclosures from, information within one of the
above exceptions.
NxStage agrees that any of NxStage's Confidential Information that MDS can
show, by tangible evidence, was in MDS' possession prior to its disclosure
will be released from the provisions of this Agreement. NxStage agrees that
any of NxStage's Confidential Information that is, or which becomes,
available to the public from a
source other than MDS or MDS Personnel, either directly or indirectly, will
be released from the provisions of this Agreement. NxStage agrees that any
of NxStage's Confidential Information that becomes available to MDS
legitimately and lawfully from a third party will be released from the
provisions of this Agreement to the extent necessary to permit such use and
disclosure as are permitted by such third party. NxStage agrees that any of
NxStage's Confidential Information that is independently developed by MDS'
Personnel that have had no access to any relevant NxStage Confidential
Information, will be released from the provision of this Agreement. MDS
agrees that NxStage's Confidential Information shall not be deemed to be
within one of the above exceptions merely because it is encompassed by a
more general disclosure included within, or can be assembled by a selection
of disclosures from, information within one of the above exceptions.
4. NxStage agrees that nothing contained herein shall be construed as granting
a right under any of MDS' intellectual property rights, except to the
extent necessary for NxStage to accomplish the purpose of this Agreement.
MDS agrees that nothing contained herein shall be construed as granting a
right under any of NxStage's intellectual property rights, except to the
extent necessary for MDS to accomplish the purpose of this Agreement.
5. NXSTAGE AND MDS AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED ACCORDING TO, THE LAWS OF THE STATE OF WASHINGTON, UNITED STATES
OF AMERICA
6. NxStage and MDS agree that NxStage's obligation to protect MDS'
Confidential Information shall terminate [**] years after disclosure of the
Confidential Information in question, except in the instance of MDS trade
secrets, which shall be defined to mean patentable inventions or processes,
which shall remain confidential information hereunder in perpetuity until
such trade secrets cease to be confidential information of MDS.
MDS and NxStage agree that MDS' obligation to protect NxStage Confidential
Information shall terminate [**] years after disclosure of the Confidential
Information in question, except in the instance of NxStage trade secrets,
which shall be defined to mean patentable inventions or processes, which
shall remain confidential information hereunder in perpetuity until such
trade secrets cease to be confidential information of NxStage.
7. In the event that any party to whom Confidential Information is furnished
becomes legally compelled to disclose such Confidential Information, such
compelled party shall provide prompt notice thereof to the other party and
the parties shall cooperate so that a protective order or other appropriate
remedy may be sought and/or the other party may waive compliance with the
provisions of this Agreement. In the event such protective order or other
appropriate remedy is not obtained or that a waiver of the provisions
hereof is not obtained, the party compelled to disclose shall
furnish only that portion of the Confidential Information that such
compelled party is required to disclose, based on written opinion of
counsel, and will exercise such party's best efforts to obtain reasonable
assurance that confidential treatment will be accorded to such Confidential
Information.
ACCEPTED AND AGREED TO THIS 4th DAY OF January, 2007
NXSTAGE MEDICAL, INC. MEDISYSTEMS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------- ------------------------------------
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxxx
President & CEO President
Exhibit L
Nov. 14, 2006 Open Book Accounting
[**] Q-3 Q-3 ADJUSTED Q-1 T1 Q-2 T1-2 Q-3 T2 Q-4 T2 Q-1 T3 Q-2 T3 Q-3 T3 Q-4 T4 Q-1 T4 Q-2 T4 Q-3 T5 Q-4 T5
---- ---- ------------ ------ -------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
[**]
[**] [**] [**] [**] [**] [**]
[**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
Exhibit L
Open Book Accounting
Q-1 T6 Q-2 T6 Q-3 T6-7 Q-4 T7 Q-1 T7 Q-2 T7-8 Q-3T8 Q-1 T9 Q-1 T9 Q-2 T9 Q-3 T10 Q-4 T10 Q-1 T10 Q-2 T10-11 Q-3 T11
------ ------ -------- ------ ------ -------- ----- ------ ------ ------ ------- ------- ------- ---------- -------
[**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**]
EXHIBIT M - RESERVED COST DOWNS
[**]
[**]
TIER 1 TIER 2 TIER 3 TIER 4 TIER 5 TIER 6 TIER 7 TIER 8 TIER 9 TIER 10 TIER 11
COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN
[**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
SUBASSEMBLIES:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
MATERIAL :
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
EXTRUSION :
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
DIRECT LABOR:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
STERILIZATION:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
EXHIBIT M - RESERVED COST DOWNS - PAGE 2
[**]
[**]
TIER 1 TIER 2 TIER 3 TIER 4 TIER 5 TIER 6 TIER 7 TIER 8 TIER 9 TIER 10 TIER 11
COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN COST DOWN
[**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO [**]/MO
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
SUBASSEMBLIES:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
MATERIAL :
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
EXTRUSION :
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
DIRECT LABOR:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
STERILIZATION:
[**] _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL
========= ========= ========= ========= ========= ========= ========= ========= ========= ========= =========
EXHIBIT N
Complete costed Xxxx of Materials
Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
[**]
EXHIBIT O
Examples of Revised Baseline Prices, etc.
Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
[**]
