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EXHIBIT 10.24
ASPECT MEDICAL SYSTEMS, INC.
has requested that the marked portions of this agreements be granted
confidential treatment pursuant to Rule 406 under the Securities
Act of 1933
FOR PURCHASES DIRECT FROM SUPPLIER
NOT SUBJECT TO COMPETITIVE BID PROCESS
SUPPLIER AGREEMENT
BETWEEN
NOVATION, LLC
AND
ASPECT MEDICAL
--------------
("SUPPLIER")
MS90690
--------
(CONTRACT NUMBER GOES HERE)
---------------------------
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TABLE OF CONTENTS
PAGE
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1. INTRODUCTION............................................................................................1
a. Purchasing Opportunities for Members....................................................................1
b. Supplier................................................................................................1
c. Contract Prices; Non-Price Specifications; Committed Programs...........................................1
2. BASIC TERMS.............................................................................................1
a. Purchase of Products....................................................................................1
b. Optional Purchasing Arrangement.........................................................................1
c. Market Competitive Terms................................................................................2
d. Changes in Contract Prices..............................................................................2
e. Notification of Changes in Pricing Terms................................................................2
f. Underutilized Businesses................................................................................2
3. TERM AND TERMINATION....................................................................................2
a. Term....................................................................................................2
b. Termination by Novation.................................................................................3
c. Termination by Supplier.................................................................................3
4. PRODUCT SUPPLY..........................................................................................3
a. Delivery and Invoicing..................................................................................3
b. Product Fill Rates; Confirmation and Delivery Times.....................................................3
c. Bundled Terms...........................................................................................3
d. Discontinuation of Products; Changes in Packaging.......................................................4
e. Replacement or New Products.............................................................................4
f. Member Services.........................................................................................4
g. Product Deletion........................................................................................4
h. Return of Products......................................................................................5
i. Failure to Supply.......................................................................................5
5. PRODUCT QUALITY.........................................................................................5
a. Free From Defects.......................................................................................5
b. Product Compliance......................................................................................5
c. Patent Infringement.....................................................................................6
d. Product Condition.......................................................................................6
e. Recall of Products......................................................................................6
f. Shelf Life..............................................................................................6
6. CENTURY COMPLIANCE......................................................................................6
a. Definitions.............................................................................................6
b. Representations.........................................................................................7
c. Remedies................................................................................................7
d. Noncompliance Notice....................................................................................7
e. Survival................................................................................................8
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7. REPORTS AND OTHER INFORMATION REQUIREMENTS...............................................................8
a. Report Content..........................................................................................8
b. Report Format and Delivery..............................................................................8
c. Other Information Requirements..........................................................................9
8. OBLIGATIONS OF NOVATION..................................................................................9
a. Information to Members..................................................................................9
b. Marketing Services......................................................................................9
9. MARKETING FEES...........................................................................................9
a. Calculation.............................................................................................9
b. Payment.................................................................................................9
10. ADMINISTRATIVE DAMAGES..................................................................................10
11 NONPAYMENT OR INSOLVENCY OF A MEMBER....................................................................11
12. INSURANCE...............................................................................................11
a. Policy Requirements....................................................................................11
b. Self-Insurance.........................................................................................11
c. Amendments, Notices and Endorsements...................................................................11
13. COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION................................................11
a. Compliance With Law....................................................................................11
b. Government Program Participation.......................................................................12
14. RELEASE AND INDEMNITY...................................................................................12
15. BOOKS AND RECORDS; FACILITIES INSPECTIONS...............................................................12
16 USE OF NAMES, ETC.......................................................................................13
17. CONFIDENTIAL INFORMATION................................................................................13
a. Nondisclosure..........................................................................................13
b. Definition.............................................................................................13
18 MISCELLANEOUS...........................................................................................13
a. Choice of Law..........................................................................................13
b. Not Responsible........................................................................................14
c. Third Party Beneficiaries..............................................................................14
d. Notices................................................................................................14
e. No Assignment..........................................................................................14
f. Severability...........................................................................................14
g. Entire Agreement.......................................................................................15
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INDEX OF DEFINED TERMS
PAGE
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Agreed Percentage......................................................................................10
Calendar-Related........................................................................................7
Century Noncompliance...................................................................................7
Clients.................................................................................................1
Confidential Information...............................................................................14
Contract Prices.........................................................................................1
Effective Date..........................................................................................2
FDA....................................................................................................12
Federal health care program............................................................................12
Gregorian calendar......................................................................................7
Guidebook...............................................................................................9
Indemnitees............................................................................................12
Legal Requirements.....................................................................................12
Marketing Fees..........................................................................................9
Members.................................................................................................1
Non-Price Specifications................................................................................1
Novation................................................................................................1
Novation Database.......................................................................................1
Products................................................................................................1
Reporting Month.........................................................................................8
Special Conditions......................................................................................1
Supplier................................................................................................i
Systems.................................................................................................7
Term....................................................................................................3
timely..................................................................................................8
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NOVATION, LLC
SUPPLIER AGREEMENT
1. INTRODUCTION.
a. PURCHASING OPPORTUNITIES FOR MEMBERS. Novation, LLC ("Novation") is
engaged in providing purchasing opportunities with respect to high quality
products and services to participating health care providers ("Members").
Members are entitled to participate in Novation's programs through their
membership or other participatory status in any of the following client
organizations: VHA Inc., University HealthSystem Consortium, and HealthCare
Purchasing Partners International, LLC (collectively, "Clients"). Novation is
acting as the exclusive agent for each of the Clients and certain of each
Client's subsidiaries and affiliates, respectively (and not collectively), with
respect to this Agreement. A current listing of Members is maintained by
Novation in the electronic database described in the Guidebook referred to in
Subsection 7.c below ("Novation Database"). A provider will become a "Member"
for purposes of this Agreement at the time Novation adds the provider to the
Novation Database and will cease to be a "Member" for such purposes at the time
Novation deletes the provider from the Novation Database.
b. SUPPLIER. Supplier is the manufacturer of products listed on Exhibit
A, the provider of installation, training and maintenance services for such
products, and the provider of any other services listed on Exhibit A (such
products and/or services are collectively referred to herein as "Products").
c. CONTRACT PRICES; NON-PRICE SPECIFICATIONS; COMMITTED PROGRAMS. A
description of the Products and pricing therefor ("Contract Prices") is attached
hereto as Exhibit A, the other specifications are attached hereto as Exhibit B
("Non-Price Specifications"), and the Special Conditions are attached hereto as
Exhibit C ("Special Conditions").
2. BASIC TERMS.
a. PURCHASE OF PRODUCTS. Novation and Supplier hereby agree that Supplier
will make the Products available for purchase by the Authorized Distributors at
the Contract Prices for resale to the Members in accordance with the terms of
this Agreement; provided, however, that this Agreement will not constitute a
commitment by any person to purchase any of the Products.
b. OPTIONAL PURCHASING ARRANGEMENT. Novation and Supplier agree that each
Member will have the option of purchasing the Products under the terms of this
Agreement or under the terms of any other purchasing or pricing arrangement that
may exist between such Member and Supplier at any time during the Term;
provided, however, that, regardless of the arrangement, Supplier will comply
with Sections 7 and 9 below. If any Member uses any other purchasing or pricing
arrangement with Supplier when ordering products covered by any contract between
Supplier and Novation, Supplier will notify such Member of the pricing and other
significant terms of the applicable Novation contract.
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c. MARKET COMPETITIVE TERMS. Supplier agrees that the prices, quality,
value and technology of all Products purchased under this Agreement will remain
market competitive at all times during the Term. Supplier agrees to provide
prompt written notice to Novation of all offers for the sale of the Products
made by Supplier during the Term on terms that are more favorable to the offeree
than the terms of this Agreement. Supplier will lower the Contract Prices or
increase any discount applicable to the purchase of the Products as necessary to
assure market competitiveness. If at any time during the Term Novation receives
information from any source suggesting that Supplier's prices, quality, value or
technology are not market competitive, Novation may provide written notice of
such information to Supplier, and Supplier will, within five (5) business days
for Novation's private label Products and within ten (10) business days for all
other Products, advise Novation in writing of and fully implement all
adjustments necessary to assure market competitiveness.
d. CHANGES IN CONTRACT PRICES. Unless otherwise expressly agreed in any
exhibit to this Agreement, the Contract Prices will not be increased and any
discount will not be eliminated or reduced during the Term. In addition to any
changes made to assure market competitiveness, Supplier may lower the Contract
Prices or increase any discount applicable to the purchase of the Products at
any time.
e. NOTIFICATION OF CHANGES IN PRICING TERMS. Supplier will provide not
less than sixty (60) days' prior written notice to Novation and not less than
forty-five (45) days' prior written notice to all Members of any change in
pricing terms permitted or required by this Agreement. For purposes of the
foregoing notification requirements, a change in pricing terms will mean any
change that affects the delivered price to the Member, including, without
limitation, changes in list prices, discounts or pricing tiers or schedules.
Such prior written notice will be provided in such format and in such detail as
may be required by Novation from time to time, and will include, at a minimum,
sufficient information to determine line item pricing of the Products for all
affected Members.
f. UNDERUTILIZED BUSINESSES. Certain Members may be required by law,
regulation and/or internal policy to do business with underutilized businesses
such as Minority Business Enterprises (MBE), Disadvantaged Business Enterprises
(DBE), Small Business Enterprises (SBE), Historically Underutilized Businesses
(HUB) and/or Women-owned Business Enterprises (WBE). To assist Novation in
helping Members meet these requirements, Supplier will comply with all Novation
policies and programs with respect to such businesses and will provide, on
request, Novation or any Member with statistical or other information with
respect to Supplier's utilization of such businesses as a vendor, distributor,
contractor or subcontractor.
3. TERM AND TERMINATION.
a. TERM. This Agreement will be effective as of the effective date set
forth in Exhibit D attached hereto ("Effective Date"), and, unless sooner
terminated, will continue in full force and effect for the initial term set
forth in the Non-Price Specifications and for any renewal terms set forth in the
Non-Price Specifications by Novation's delivery of written notice of renewal to
Supplier not less than ten (10) days prior to the end of the initial term or any
renewal term, as
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
applicable. The initial term, together with the renewal terms, if any, are
collectively referred to herein as the "Term."
b. TERMINATION BY NOVATION. Novation may terminate this Agreement at any
time for any reason whatsoever by delivering not less than [**] prior written
notice thereof to Supplier. In addition, Novation may terminate this Agreement
immediately by delivering written notice thereof to Supplier upon the occurrence
of either of the following events:
(1) Supplier breaches this Agreement; or
(2) Supplier becomes bankrupt or insolvent or makes an unauthorized assignment
or goes into liquidation or proceedings are initiated for the purpose of having
a receiving order or winding up order made against Supplier, or Supplier applies
to the courts for protection from its creditors.
Novation's right to terminate this Agreement due to Supplier's breach in
accordance with this Subsection is in addition to any other rights and remedies
Novation, the Clients or the Members may have resulting from such breach,
including, but not limited to, Novation's and the Clients' right to recover all
loss of Marketing Fees resulting from such breach through the date of
termination and for [**] thereafter.
c. TERMINATION BY SUPPLIER. Supplier may terminate this Agreement at any
time for any reason whatsoever by delivering not less than [**] prior written
notice thereof to Novation.
4. PRODUCT SUPPLY.
a. DELIVERY AND INVOICING. On and after the Effective Date, Supplier
agrees to deliver Products ordered by the Members to the Members, FOB
destination, and will direct its invoices to the Members in accordance with this
Agreement. Supplier agrees to prepay and absorb charges, if any, for
transporting Products to the Members. Payment terms are [**]. Supplier will make
whatever arrangements are reasonably necessary with the Members to implement the
terms of this Agreement; provided, however, Supplier will not impose any
purchasing commitment on any Member as a condition to the Member's purchase of
any Products pursuant to this Agreement.
b. PRODUCT FILL RATES; CONFIRMATION AND DELIVERY TIMES. Supplier agrees
to provide product fill rates to the Members of greater than [**], calculated as
line item orders. Supplier will provide confirmation of orders from Members via
the electronic data interchange described in the Guidebook referred to in
Subsection 7.c below within two (2) business days after placement of the order
and will deliver the Products to the Members within ten (10) business days after
placement of the order.
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
c. BUNDLED TERMS. Supplier agrees to give Novation prior written notice
of any offer Supplier makes to any Member to sell products that are not covered
by this Agreement in conjunction with Products covered by this Agreement under
circumstances where the Member has no real economic choice other than to accept
such bundled terms.
d. DISCONTINUATION OF PRODUCTS; CHANGES IN PACKAGING. Supplier will have
no unilateral right to discontinue any of the Products or to make any changes in
packaging which render any of the Products substantially different in use,
function or distribution. Supplier may request Novation in writing to agree to a
proposed discontinuation of any Products or a proposed change in packaging for
any Products at least [**] prior to the proposed implementation of the
discontinuation or change. Under no circumstances will any Product
discontinuation or packaging changes be permitted under this Agreement without
Novation's agreement to the discontinuation or change. In the event Supplier
implements such proposed discontinuation or change without Novation's agreement
thereto in writing, in addition to any other rights and remedies Novation or the
Members may have by reason of such discontinuation or change, (i) Novation will
have the right to terminate any or all of the Product(s) subject to such
discontinuation or change or to terminate this Agreement in its entirety
immediately upon becoming aware of the discontinuation or change or any time
thereafter by delivering written notice thereof to Supplier; (ii) the Members
may purchase products equivalent to the discontinued or changed Products from
other sources and Supplier will be liable to the Members for all reasonable
costs in excess of the Contract Prices plus any other damages which they may
incur; and (iii) Supplier will be liable to Novation and the Clients for any
loss of Marketing Fees resulting from such unacceptable discontinuation or
change plus any other damages which they may incur.
e. REPLACEMENT OR NEW PRODUCTS. Supplier will have no unilateral right to
replace any of the Products listed in Exhibit A with other products or to add
new products to this Agreement. Supplier may request Novation in writing to
agree to a replacement of any of the Products or the addition of a new product
that is closely related by function or use to an existing Product at least [**]
prior to the proposed implementation of the replacement or to the new product
introduction. Under no circumstances will any Product replacement or new product
addition to this Agreement be permitted without Novation's agreement to the
replacement or new product.
f. MEMBER SERVICES. Supplier will consult with each Member to identify
the Member's policies relating to access to facilities and personnel. Supplier
will comply with such policies and will establish a specific timetable for sales
calls by sales representatives to satisfy the needs of the Member. Supplier will
promptly respond to Members' reasonable requests for verification of purchase
history. If requested by Novation or any Members, Supplier will provide, at
Supplier's cost, on-site inservice training to Members' personnel for pertinent
Products.
g. PRODUCT DELETION. Notwithstanding anything to the contrary contained
in this Agreement, Novation may delete any one or more of the Products from this
Agreement at any time, at will and without cause, upon not less than [**] prior
written notice to Supplier.
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
h. RETURN OF PRODUCTS. Any Member, in addition to and not in limitation
of any other rights and remedies, will have the right to return Products to
Supplier under any of the following circumstances: (1) the Product is ordered or
shipped in error; (2) the Product is no longer needed by the Member due to
deletion from its standard supply list or changes in usage patterns, provided
the Product is returned at least [**] prior to its expiration date and is in a
re-salable condition; (3) the Product is received outdated or is otherwise
unusable; (4) the Product is received damaged, or is defective or nonconforming;
(5) the Product is one which a product manufacturer or supplier specifically
authorizes for return; and (6) the Product is recalled. Xxxxxxxx agrees to
accept the return of Products under these circumstances without charge and for
full credit.
i. FAILURE TO SUPPLY. In the event of Supplier's failure to perform its
supply obligations in accordance with the terms of this Section 4, the Member
may purchase products equivalent to the Products from other sources and Supplier
will be liable to the Member for all reasonable costs in excess of the Contract
Prices plus any other damages which they may incur. In such event, Supplier will
also be liable to Novation and the Clients for any loss of Marketing Fees
resulting from such failure plus any other damages which they may incur. The
remedies set forth in this Subsection are in addition to any other rights and
remedies Novation, the Clients or the Members may have resulting from such
failure.
5. PRODUCT QUALITY.
a. FREE FROM DEFECTS. Supplier warrants the Products against defects in
material, workmanship, design and manufacturing. Supplier will make all
necessary arrangements to assign such warranty to the Members. Supplier further
represents and warrants that the Products will conform to the specifications,
drawings, and samples furnished by Supplier or contained in the Non-Price
Specifications and will be safe for their intended use. If any Products are
defective and a claim is made by a Member on account of such defect, Supplier
will, at the option of the Member, either replace the defective Products or
credit the Member. Supplier will bear all costs of returning and replacing the
defective Products, as well as all risk of loss or damage to the defective
Products from and after the time they leave the physical possession of the
Member. The warranties contained in this Subsection will survive any inspection,
delivery, acceptance or payment by a Member. In addition, if there is at any
time wide-spread failure of the Products, the Member may return all said
Products for credit or replacement, at its option. This Subsection and the
obligations contained herein will survive the expiration or earlier termination
of this Agreement. The remedies set forth in this Subsection are in addition to
and not a limitation on any other rights or remedies that may be available
against Supplier.
b. PRODUCT COMPLIANCE. Supplier represents and warrants to Novation, the
Clients and the Members that the Products are, if required, registered, and will
not be distributed, sold or priced by Supplier in violation of any federal,
state or local law. Supplier represents and warrants that as of the date of
delivery to the Members all Products will not be adulterated or misbranded
within the meaning of the Federal Food, Drug and Cosmetic Act and will not
violate or cause
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a violation of any applicable law, ordinance, rule, regulation or order.
Supplier agrees it will comply with all applicable Good Manufacturing Practices
and Standards contained in 21 C.F.R. Parts 210, 211, 225, 226, 600, 606, 610,
640, 660, 680 and 820. Supplier represents and warrants that it will provide
adequate warnings and instructions to inform users of the Products of the risks,
if any, associated with the use of the Products. Supplier's representations;
warranties and agreements in this Subsection will survive the expiration or
earlier termination of this Agreement.
c. PATENT INFRINGEMENT. Supplier represents and warrants that sale or use
of the Products will not infringe any United States patent. Supplier will, at
its own expense, defend every suit which will be brought against Novation or a
Member for any alleged infringement of any patent by reason of the sale or use
of the Products and will pay all costs, damages and profits recoverable in any
such suit. This Subsection and the obligations contained herein will survive the
expiration or earlier termination of this Agreement. The remedies set forth in
this Subsection are in addition to and not a limitation on any other rights or
remedies that may be available against Supplier.
d. PRODUCT CONDITION. Unless otherwise stated in the Non-Price
Specifications or unless agreed upon by a Member in connection with Products it
may order, all Products will be new. Products which are demonstrators, used,
obsolete, seconds, or which have been discontinued are unacceptable unless
otherwise specified in the Non-Price Specifications or the Member accepts
delivery after receiving notice of the condition of the Products.
e. RECALL OF PRODUCTS. Supplier will reimburse Members for any cost
associated with any Product corrective action, withdrawal or recall requested by
Supplier or required by any governmental entity. In the event a product recall
or a court action impacting supply occurs, Supplier will notify Novation in
writing within twenty-four (24) hours of any such recall or action. Supplier's
obligations in this Subsection will survive the expiration or earlier
termination of this Agreement.
f. SHELF LIFE. Sterile Products and other Products with a limited shelf
life sold under this Agreement will have the longest possible shelf life and the
latest possible expiration dates. Unless required by stability considerations,
there will not be less than an eighteen (18) month interval between a Product's
date of delivery by Supplier to the Member and its expiration date.
6. CENTURY COMPLIANCE.
a. DEFINITIONS. For purposes of this Section, the following terms have
the respective meanings given below:
(1) "Systems" means any of the Products, systems of distribution for
Products and Product manufacturing systems that consist of or include any
computer software, computer firmware, computer hardware (whether general or
special purpose), documentation, data, and other similar or related items of the
automated, computerized, and/or software systems that are provided by or through
Supplier or utilized to manufacture or distribute the Products provided by or
through Supplier pursuant to this Agreement, or any component part thereof, and
any services provided by or through Supplier in connection therewith.
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(2) "Calendar-Related" refers to date values based on the "Gregorian
calendar" (as defined in the Encyclopedia Britannica, 15th edition, 1982, page
602) and to all uses in any manner of those date values, including without
limitation manipulations, calculations, conversions, comparisons, and
presentations.
(3) "Century Noncompliance" means any aspects of the Systems that fail to
satisfy the requirements set forth in Subsection 6.b below.
b. REPRESENTATIONS. Supplier warrants, represents and agrees that the
Systems satisfy the following requirements:
(1) In connection with the use and processing of Calendar-Related data,
the Systems will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results.
(2) In connection with providing Calendar-Related data to and accepting
Calendar-Related data from other automated, computerized, and/or software
systems and users via user interfaces, electronic interfaces, and data storage,
the Systems represent dates without ambiguity as to century.
(3) The year component of Calendar-Related data that is provided by the
Systems to or that is accepted by the Systems from other automated,
computerized, and/or software systems and user interfaces, electronic
interfaces, and data storage is represented in a four-digit CCYY format, where
CC represents the two digits expressing the century and YY represents the two
digits expressing the year within that century (e.g., 1996 or 2003).
(4) Supplier has verified through testing that the Systems satisfy the
requirements of this Subsection including, without limitation, testing of each
of the following specific dates and the transition to and from each such date:
September 9, 1999; September 10, 1999; December 31, 1999; January 1, 2000;
February 28, 2000; February 29, 2000; March 1, 2000; December 31, 2000; January
1, 2001; December 31, 2004; and January 1, 2005.
c. REMEDIES. In the event of any Century Noncompliance in the Systems in
any respect, in addition to any other remedies that may be available to Novation
or the Members, Supplier will, at no cost to the Members, promptly under the
circumstances (but, in all cases, within thirty (30) days after receipt of a
written request from any Member, unless otherwise agreed by the Member in
writing) eliminate the Century Noncompliance from the Systems.
d. NONCOMPLIANCE NOTICE. In the event Supplier becomes aware of (i) any
possible or actual Century Noncompliance in the Systems or (ii) any
international, governmental, industrial, or other standard (proposed or adopted)
regarding Calendar-Related data and/or processing, or Supplier begins any
significant effort to conform the Systems to any such standard, Supplier will
promptly provide the Members with all relevant information in writing and will
timely provide the Members with updates to such information. Supplier will
respond promptly and fully to inquiries by the Members, and timely provide
updates to any responses provided to the Members,
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
with respect to (i) any possible or actual Century Noncompliance in the Systems
or (ii) any international, governmental, industrial, or other standards. In the
foregoing, the use of "timely" means promptly after the relevant information
becomes known to or is developed by or for Supplier.
e. SURVIVAL. Supplier's representations, warranties and agreements in
this Section will continue in effect throughout the Term and will survive the
expiration or earlier termination of this Agreement.
7. REPORTS AND OTHER INFORMATION REQUIREMENTS.
a. REPORT CONTENT. Within [**] after the end of each full and partial
month during the Term ("Reporting Month"), Supplier will submit to Novation a
report in the form of a diskette containing the following information in form
and content reasonably satisfactory to Novation:
(1) the name of Supplier, the Reporting Month and year and the Agreement
number (as provided to Supplier by Novation);
(2) with respect to each Member (described by LIC number (as provided to
Supplier by Novation), health industry number (if applicable), full name, street
address, city, state, zip code and, if applicable, tier and committed status),
the number of units sold and the amount of net sales for each Product on a line
item basis, and the sum of net sales and the associated Marketing Fees for all
Products purchased by such Member directly or indirectly from Supplier during
the Reporting Month, whether under the pricing and other terms of this Agreement
or under the terms of any other purchasing or pricing arrangements that may
exist between the Member and Supplier;
(3) the sum of the net sales and the associated Marketing Fees for all
Products sold to all Members during the Reporting Month; and
b. REPORT FORMAT AND DELIVERY. The reports required by this Section will
be submitted electronically in Excel Version 7 or Access Version 7 and in
accordance with other specifications established by Novation from time to time
and will be delivered to:
Novation
Attn: SRIS Operations
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
c. OTHER INFORMATION REQUIREMENTS. In addition to the reporting
requirements set forth in Subsections 7.a and 7.b above, the parties agree to
facilitate the administration of this Agreement by transmitting and receiving
information electronically and by complying with the information requirements
set forth in Exhibit E attached hereto. Supplier further agrees that,
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except to the extent of any inconsistency with the provisions of this Agreement,
it will comply with all information requirements set forth in the Novation
Information Requirements Guidebook ("Guidebook"). On or about the Effective
Date, Novation will provide Supplier with a current copy of the Guidebook and
will thereafter provide Supplier with updates and/or revisions to the Guidebook
from time to time.
8. OBLIGATIONS OF NOVATION.
a. INFORMATION TO MEMBERS. After the execution of this Agreement,
Novation, in conjunction with the Clients, will deliver a summary of the
purchasing arrangements covered by this Agreement to each Member and will, from
time to time, at the request of Supplier, deliver to each Member reasonable and
appropriate amounts and types of materials supplied by Supplier to Novation
which relate to the purchase of the Products.
b. MARKETING SERVICES. Novation, in conjunction with the Clients, will
market the purchasing arrangements covered by this Agreement to the Members.
Such promotional services may include, as appropriate, the use of direct mail,
contact by Novation's field service delivery team, member support services, and
regional and national meetings and conferences. As appropriate, Novation, in
conjunction with the Clients, will involve Supplier in these promotional
activities by inviting Supplier to participate in meetings and other reasonable
networking activities with Members.
9. MARKETING FEES.
a. CALCULATION. Supplier will pay to Novation, as the authorized
collection agent for each of the Clients and certain of each Client's
subsidiaries and affiliates, respectively (and not collectively), marketing fees
("Marketing Fees") belonging to any of the Clients or certain of their
subsidiaries or affiliates equal to the Agreed Percentage of the aggregate gross
charges of all net sales of the Products to the Members directly or indirectly
from Supplier, whether under the pricing and other terms of this Agreement or
under the terms of any other purchasing or pricing arrangements that may exist
between the Members and Supplier. Such gross charges will be determined without
any deduction for uncollected accounts or for costs incurred in the manufacture,
provision, sale or distribution of the Products, and will include, but not be
limited to, charges for the sale of products, the provision of installation,
training and maintenance services, and the provision of any other services
listed on Exhibit A. The "Agreed Percentage" will be defined in the Non-Price
Specifications.
b. PAYMENT. On or about the Effective Date, Novation will advise Supplier
in writing of the amount determined by Novation to be Supplier's monthly
estimated Marketing Fees. Thereafter, Supplier's monthly estimated Marketing
Fees may be adjusted from time to time upon written notice from Novation based
on actual purchase data. No later than the tenth (10th) day of each month,
Supplier will remit the monthly estimated Marketing Fees for such month to
Novation. Such payment will be adjusted to reflect the reconciliation between
the actual Marketing Fees payable for the second month prior to such month with
the estimated Marketing Fees actually paid during such prior month. Supplier
will pay all estimated and adjusted Marketing Fees by check made payable to
"Novation, LLC." All checks should reference the
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
Agreement number. Supplier will include with its check the reconciliation
calculation used by Supplier to determine the payment adjustment, with separate
amounts shown for each Client's component thereof. Checks sent by first class
mail will be mailed to the following address:
Novation
00 Xxxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, XX 00000-1420
Checks sent by courier (Federal Express, United Parcel Service or messenger)
will be addressed as follows:
The Northern Trust Company
000 X. Xxxxx Xx.
4th Floor Receipt & Dispatch
Chicago, IL 60607
Attn: Novation, Suite 1420
Telephone: (000) 000-0000, #9
10. ADMINISTRATIVE DAMAGES. Novation and Supplier agree that Novation would
incur additional administrative costs if Supplier fails to provide notice of
change in pricing terms as required in Subsection 2.e above, fails to provide
reports as required in Section 7 above, or fails to pay Marketing Fees as
required in Section 9 above, in each case within the time and manner required by
this Agreement. Novation and Supplier further agree that the additional
administrative costs incurred by Novation by reason of any such failure to
Supplier is uncertain, and they therefore agree that the following schedule of
administrative damages constitutes a reasonable estimation of such costs and
were determined according to the principles of just compensation:
1st failure................................................................[**]
2nd failure:...............................................................[**]
3rd failure:...............................................................[**]
4th failure:...............................................................[**]
5th failure:...............................................................[**]
6th & each subsequent failure:.............................................[**]
Novation's right to recover administrative damages in accordance with this
Section is in addition to any other rights and remedies Novation or the Clients
may have by reason of Supplier's failure to pay the Marketing Fees or provide
the reports or notices within the time and manner required by this Agreement.
11. NONPAYMENT OR INSOLVENCY OF A MEMBER. If a Member fails to pay Supplier for
Products, or if a Member becomes bankrupt or insolvent or makes an assignment
for the benefit of creditors or goes into liquidation, or if proceedings are
initiated for the purpose of having a
15
Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote omissions.
receiving order or winding up order made against a Member, or if a Member
applies to the court for protection from its creditors, then, in any such case,
this Agreement will not terminate, but Supplier will have the right, upon prior
written notice to Novation and the Member, to discontinue selling Products to
that Member.
12. INSURANCE.
a. POLICY REQUIREMENTS. Supplier will maintain and keep in force during
the Term product liability, general public liability and property damage
insurance against any insurable claim or claims which might or could arise
regarding Products purchased from Supplier. Such insurance will contain a
minimum combined single limit of liability for bodily injury and property damage
in the amounts of not less than 2,000,000 per occurrence and [**] in the
aggregate; will name Novation, the Clients and the Members, as their interests
may appear, as additional insureds, and will contain an endorsement providing
that the carrier will provide directly to all named insured copies of all
notices and endorsements. Supplier will provide to Novation, within fifteen (15)
days after Novation's request, an insurance certificate indicating the foregoing
coverage, issued by an insurance company licensed to do business in the relevant
states and signed by an authorized agent.
b. SELF-INSURANCE. Notwithstanding anything to the contrary in Subsection
12.a above, Supplier may maintain a self-insurance program for all or any part
of the foregoing liability risks, provided such self-insurance policy in all
material respects complies with the requirements applicable to the product
liability, general public liability and property damage insurance set forth in
Subsection 12.a. Supplier will provide Novation, within fifteen (15) days after
Novation's request: (1) the self-insurance policy; (2) the name of the company
managing the self-insurance program and providing reinsurance, if any; (3) the
most recent annual reports on claims and reserves for the program; and (4) the
most recent annual actuarial report on such program.
c. AMENDMENTS, NOTICES AND ENDORSEMENTS. Supplier will not amend, in any
material respect that affects the interests of Novation, the Clients or the
Members, or terminate said liability insurance or self-insurance program except
after thirty (30) days' prior written notice to Novation and will provide to
Novation copies of all notices and endorsements as soon as practicable after it
receives or gives them.
13. COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION.
a. COMPLIANCE WITH LAW. Supplier represents and warrants that to the best
of its knowledge, after due inquiry, it is in compliance with all federal, state
and local statutes, laws, ordinances and regulations applicable to it ("Legal
Requirements") which are material to the operation of its business and the
conduct of its affairs, including Legal Requirements pertaining to the safety of
the Products, occupational health and safety, environmental protection,
nondiscrimination, antitrust, and equal employment opportunity. During the Term,
Supplier will: (1) promptly notify Novation of any lawsuits, claims,
administrative actions or other proceedings
16
asserted or commenced against it which assert in whole or in part that Supplier
is in noncompliance with any Legal Requirement which is material to the
operation of its business and the conduct of its affairs and (2) promptly
provide Novation with true and correct copies of all written notices of adverse
findings from the U.S. Food and Drug Administration ("FDA") and all written
results of FDA inspections which pertain to the Products.
b. GOVERNMENT PROGRAM PARTICIPATION. Supplier represents and warrants
that it is not excluded from participation, and is not otherwise ineligible to
participate, in a "Federal health care program" as defined in 42 U.S.C. ss.
1320a-7b(f) or in any other government payment program. In the event Supplier is
excluded from participation, or becomes otherwise ineligible to participate in
any such program during the Term, Supplier will notify Novation in writing
within three (3) days after such event, and upon the occurrence of such event,
whether or not such notice is given to Novation, Novation may immediately
terminate this Agreement upon written notice to Supplier.
14. RELEASE AND INDEMNITY. SUPPLIER WILL RELEASE, INDEMNIFY, HOLD HARMLESS,
AND, IF REQUESTED, DEFEND NOVATION, THE CLIENTS AND THE MEMBERS, AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, REGENTS, AGENTS, SUBSIDIARIES, AFFILIATES AND
EMPLOYEES (COLLECTIVELY, THE "INDEMNITEES"), FROM AND AGAINST ANY CLAIMS,
LIABILITIES, DAMAGES, ACTIONS, COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES, EXPERT FEES AND COURT COSTS) OF ANY KIND
OR NATURE, WHETHER AT LAW OR IN EQUITY, INCLUDING CLAIMS ASSERTING STRICT
LIABILITY, ARISING FROM OR CAUSED IN ANY PART BY (1) THE BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUPPLIER CONTAINED IN THIS
AGREEMENT; (2) THE CONDITION OF ANY PRODUCT, INCLUDING A DEFECT IN MATERIAL,
WORKMANSHIP, DESIGN OR MANUFACTURING; OR (3) THE WARNINGS AND INSTRUCTIONS
ASSOCIATED WITH ANY PRODUCT. SUCH OBLIGATION TO RELEASE, INDEMNIFY, HOLD
HARMLESS AND DEFEND WILL APPLY EVEN IF THE CLAIMS, LIABILITIES, DAMAGES,
ACTIONS, COSTS AND EXPENSES ARE CAUSED BY THE NEGLIGENCE, GROSS NEGLIGENCE OR
OTHER CULPABLE CONDUCT OF INDEMNITEES; PROVIDED, HOWEVER, THAT SUCH
INDEMNIFICATION, HOLD HARMLESS AND RIGHT TO DEFENSE WILL NOT BE APPLICABLE WHERE
THE CLAIM, LIABILITY, DAMAGE, ACTION, COST OR EXPENSE ARISES SOLELY AS A RESULT
OF AN ACT OR FAILURE TO ACT OF INDEMNITEES. THIS SECTION AND THE OBLIGATIONS
CONTAINED HEREIN WILL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS
AGREEMENT. THE REMEDIES SET FORTH IN THIS SECTION ARE IN ADDITION TO AND NOT A
LIMITATION ON ANY OTHER RIGHTS OR REMEDIES THAT MAY BE AVAILABLE AGAINST
SUPPLIER.
15. BOOKS AND RECORDS; FACILITIES INSPECTIONS.. Supplier agrees to keep,
maintain and preserve complete, current and accurate books, records and accounts
of the transactions contemplated by this Agreement and such additional books,
records and accounts as are necessary to establish and verify Supplier's
compliance with this Agreement. All such books, records and accounts will be
available for inspection and audit by Novation representatives at any time
during the Term and for two (2) years thereafter, but only during reasonable
business hours and upon reasonable notice. Novation agrees that its routine
audits will not be conducted more frequently than twice in any consecutive
twelve (12) month period, subject to Novation's right to conduct
17
special audits whenever it deems it to be necessary. In addition, Supplier will
make its manufacturing and packaging facilities available for inspection from
time to time during the Term by Novation representatives, but only during
reasonable business hours and upon reasonable notice. The exercise by Novation
of the right to inspect and audit is without prejudice to any other or
additional rights or remedies of either party.
16. USE OF NAMES, ETC. Supplier agrees that it will not use in any way in its
promotional, informational or marketing activities or materials (i) the names,
trademarks, logos, symbols or a description of the business or activities of
Novation or any Client or Member without in each instance obtaining the prior
written consent of the person owning the rights thereto; or (ii) the existence
or content of this Agreement without in each instance obtaining the prior
written consent of Novation.
17. CONFIDENTIAL INFORMATION.
a. NONDISCLOSURE. Supplier agrees that it will:
(1) keep strictly confidential and hold in trust all Confidential
Information, as defined in Subsection 17.b below, of Novation, the Clients and
the Members;
(2) not use the Confidential Information for any purpose other than the
performance of its obligations under this Agreement, without the prior written
consent of Novation;
(3) not disclose the Confidential Information to any third party (unless
required by law) without the prior written consent of Novation; and
(4) not later than thirty (30) days after the expiration or earlier
termination of this Agreement, return to Novation, the Client or the Member, as
the case may be, the Confidential Information.
b. DEFINITION. "Confidential Information," as used in Subsection 17.a
above, will consist of all information relating to the prices and usage of the
Products (including all information contained in the reports produced by
Supplier pursuant to Section 7 above) and all documents and other materials of
Novation, the Clients and the Members containing information relating to the
programs of Novation, the Clients or the Members of a proprietary or sensitive
nature not readily available through sources in the public domain. In no event
will Supplier provide to any person any information relating to the prices it
charges the Members for Products ordered pursuant to this Agreement without the
prior written consent of Novation.
18. MISCELLANEOUS.
a. CHOICE OF LAW. This Agreement will be governed by and construed in
accordance with the internal substantive laws of the State of Texas and the
Texas courts will have jurisdiction over all matters relating to this Agreement;
provided, however, the terms of any agreement between Supplier and a Member will
be governed by and construed in accordance with the choice of law and venue
provisions set forth in such agreement.
18
b. NOT RESPONSIBLE. Novation and the Clients and their subsidiaries and
affiliates will not be responsible or liable for any Member's breach of any
purchasing commitment or for any other actions of any Member. In addition, none
of the Clients will be responsible or liable for the obligations of another
Client or its subsidiaries or affiliates or the obligations of Novation or
Supplier under this Agreement.
c. THIRD PARTY BENEFICIARIES. All Clients and Members are intended third
party beneficiaries of this Agreement. All terms and conditions of this
Agreement which are applicable to the Clients will inure to the benefit of and
be enforceable by the Clients and their respective successors and assigns. All
terms and conditions of this Agreement which are applicable to the Members will
inure to the benefit of and be enforceable by the Members and their respective
successors and assigns.
d. NOTICES. Except as otherwise expressly provided herein, all notices or
other communications required or permitted under this Agreement will be in
writing and will be deemed sufficient when mailed by United States mail, or
delivered in person to the party to which it is to be given, at the address of
such party set forth below:
If to Supplier:
To the address set forth by Supplier on the signature page of this Agreement
If to Novation:
Novation
Attn: General Counsel
000 Xxxx Xxx Xxxxxxx Xxxx.
Irving, TX 75039
or such other address as the party will have furnished in writing in accordance
with the provisions of this Subsection.
e. NO ASSIGNMENT. No assignment of all or any part of this Agreement may
be made without the prior written consent of the other party; except that
Novation may assign its rights and obligations to any affiliate of Novation. Any
assignment of all or any part of this Agreement by either party will not relieve
that party of the responsibility of performing its obligations hereunder to the
extent that such obligations are not satisfied in full by the assignee. This
Agreement will be binding upon and inure to the benefit of the parties'
respective successors and assigns.
f. SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement will be prohibited by or invalid
under applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement. Each party will, at its own
19
expense, take such action as is reasonably necessary to defend the validity and
enforceability of this Agreement and will cooperate with the other party as is
reasonably necessary in such defense.
g. ENTIRE AGREEMENT. This Agreement, together with the exhibits listed
below, will constitute the entire agreement between Novation and Supplier. This
Agreement, together with the exhibits listed below and each Member's purchase
order will constitute the entire agreement between each Member and Supplier. In
the event of any inconsistency between this Agreement and a Member's purchase
order, the terms of this Agreement will control, except that the Member's
purchase order will supersede Sections 4 and 5 of this Agreement in the event of
any inconsistency with such Sections. No other terms and conditions in any
document, acceptance, or acknowledgment will be effective or binding unless
expressly agreed to in writing. The following exhibits are incorporated by
reference in this Agreement:
Exhibit A Product and Service Description and Pricing
Exhibit B Non-Price Specifications
Exhibit C Special Conditions
Exhibit D Effective Date
Exhibit E Other Information Requirements
[Other Exhibits Listed, if any] EXHIBIT F
SUPPLIER: Aspect Medical Systems, Inc.
ADDRESS: 0 Xxxxxx Xx
Xxxxxx, XX 00000
SIGNATURE: /s/ X. Xxxx Xxxxxxxxx
TITLE: VP & CFO DATE: 8/13/99
NOVATION, LLC
SIGNATURE: /s/ Xxxxxx Xxxxxxxx
TITLE: Group Sr. Vice President DATE: 8/10/99
20
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A
ASPECT
MEDICAL SYSTEMS, INC.
1999 Sales Options A-2000
Revenue Units Only
Novation
A-2000 Monitor $[**]
Sensors $[**] per case
(case of [**] at $[**] each)
-------------------------------- ------------------------------------------------------------------------------
Price Per Monitor Sensor Contract Pricing Schedule*
-------------------------------- Annual Volume Unit
Total Cost Per per Monitor Price
Number of OR's Monitor ------------- -----
-------------- -------------- Pricing Without Sensor Purchase Agreement 1 - 251 $[**]
------------------------------------------------------------------------------
1 OR $[**]
2-5 OR's $[**] Pricing With Sensor Purchase Agreement 252 - 299 $[**]
6-12 OR's $[**] 300 - 359 $[**]
13-29 OR's $[**] 360 - 407 $[**]
20" OR's $[**] 408 - 455 $[**]
-------------------------------- 456 - 503 $[**]
> 504 $[**]
------------------------------------------------------------------------------
1. SENSOR CONTRACT PRICING SCHEDULE
* Customers must issue a P.O. which commits to a 12 month minimum purchase
volume of a minimum of [**].
Sensor shipments must be rounded up to the nearest multiple of 25.
Customers who use more sensors than contracted for during the 12 month period,
which begins and has its anniversary on the date of the contract, will receive a
year-end rebate from Aspect. For example: Customer who signs an agreement to
purchase 300 sensors per year at $[**] but uses 456 sensors for the year will
receive a rebate equal to $[**] (i.e. the difference Between $[**] and $[**] per
sensor times the total sensors used).
[Illegible Text]
2. RENTAL AGREEMENT OPTION:
(a) $[**] per month monitor rental
(b) $[**] per Sensor
(c) [**] Months minimum rental
21
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1999 Fee For Use Pricing Schedule
Assumes Monthly Purchases
FOR INTERNAL USE ONLY
LIST PRICING A-2000 Monitor $[**]
Sensors @ $[**] per case of [**] ($[**]/sensor)
------------------------------------------------------------------------------
Total Value Per Monitor: $[**]
Number of Monitors: [**]
Number of Sensor Purchases/Year: [**]
----------------------------------------------------------------
12 Months 24 Months 36 Months 48 Months 60 Months
Annual Sensor --------- --------- --------- --------- ---------
Usage
Per Monitor Unit Price Unit Price Unit Price Unit Price Unit Price
------------- ---------- ---------- ---------- ---------- ----------
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
-------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Value Per Monitor: $[**]
Number of Monitors: $[**]
Number of Sensor Purchases/Year: $[**]
----------------------------------------------------------------
12 Months 24 Months 36 Months 48 Months 60 Months
Annual Sensor --------- --------- --------- --------- ---------
Usage
Per Monitor Unit Price Unit Price Unit Price Unit Price Unit Price
------------- ---------- ---------- ---------- ---------- ----------
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
-------------------------------------------------------------------------------
22
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1999 Fee For Use Pricing Schedule
Assumes Monthly Purchases
FOR INTERNAL USE ONLY
LIST PRICING A-2000 Monitor $[**]
Sensors @ $[**] per case of [**] ($[**]/sensor)
------------------------------------------------------------------------------
Total Value Per Monitor: $[**]
Number of Monitors: [**]
Number of Sensor Purchases/Year: [**]
----------------------------------------------------------------
12 Months 24 Months 36 Months 48 Months 60 Months
Annual Sensor --------- --------- --------- --------- ---------
Usage
Per Monitor Unit Price Unit Price Unit Price Unit Price Unit Price
------------- ---------- ---------- ---------- ---------- ----------
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
-------------------------------------------------------------------------------
------------------------------------------------------------------------------
Total Value Per Monitor: $[**]
Number of Monitors: [**]
Number of Sensor Purchases/Year: [**]
----------------------------------------------------------------
12 Months 24 Months 36 Months 48 Months 60 Months
Annual Sensor --------- --------- --------- --------- ---------
Usage
Per Monitor Unit Price Unit Price Unit Price Unit Price Unit Price
------------- ---------- ---------- ---------- ---------- ----------
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
[**] $[**] $[**] $[**] $[**] $[**]
-------------------------------------------------------------------------------
23
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1999 Fee For Use Pricing Schedule
Assumes Monthly Purchases
FOR INTERNAL USE ONLY
LIST PRICING A-2000 Monitor $[**]
Sensors @ $[**] per case of [**] ($[**]/sensor)
USAGE AGREEMENTS:
- Customer will be invoiced for [**] sensors per month per monitor to meet
minimum commitment of [**] sensors per monitor per year. Sensor shipments
must be rounded up to the nearest multiple of [**].
- Warranty and software upgrades are included with each usage agreement for
the life of the agreement.
- After the minimum commitment is met, pricing reverts to the then current
Sensor Pricing Schedule.
24
Confidential materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
Non-Price Specifications
The term of the contract is three (3) years, commencing on September 01,
1999 through August 30, 2002, with [**] one-year renewals. Pricing will be firm
from [**].
Aspect Medical agrees to pay Novation a marketing fee to be defined as [**}
on all Novation contracted sales.
Warranty as expressed in 5(a) is valid from one [**] from the date
purchase.
25
EXHIBIT C
SPECIAL CONDITIONS
N/A
26
EXHIBIT D
EFFECTIVE DATE
This Agreement will be effective on September 01, 1999 Through August 30, 2002.
27
EXHIBIT E
OTHER INFORMATION REQUIREMENTS
Novation and Supplier desire to facilitate contract administration
transactions ("Transactions") by electronically transmitting and receiving data
in agreed formats in substitution for conventional paper-based documents and to
assure that such Transactions are not legally invalid or unenforceable as a
result of the use of available electronic technologies for the mutual benefit of
the parties.
The parties agree as follows:
1. PREREQUISITES.
a.a DOCUMENTS; STANDARDS. Each party will electronically communicate to
or receive from the other party all of the required documents listed in the
Novation Electronic Communication Requirements Schedule attached hereto
(collectively "Documents"). All Documents will be communicated in accordance
with the standards set forth in the applicable sections of the Novation
Information Requirements Guidebook ("Guidebook"). Supplier agrees that the
Guidebook is the Confidential Information of Novation and will not disclose
information contained therein to any other party.
a.b. THIRD PARTY SERVICE PROVIDERS. Document swill be communicated
electronically to each party, as specified in the Guidebook, through any third
party service provider ("Provider") with which either party may contract or
XXXxxXxxx.xxx(TM). Either party may modify its election to use, not use or
change a Provider upon thirty (30) days' prior written notice. Each party will
be responsible for the costs of any Provider with which it contracts, unless the
parties otherwise mutually agree in writing.
a.c. SIGNATURES. Each party will adopt as its signature an electronic
identification consisting of symbol(s) or code(s) which are to be affixed to or
contained in each Document transmitted by such Party ("Signatures"). Each party
agrees that any Signature of such party affixed to or contained in any
transmitted Document will be sufficient to verify such party originated and
intends to be bound by such Document. Neither party will disclose to any
unauthorized person the Signatures of the other party.
2. TRANSMISSIONS.
b.a. VERIFICATION. Upon proper receipt of any Document, the receiving
party will promptly and properly transmit a functional acknowledgement in
return, unless otherwise specified in the Guidebook.
b.b. ACCEPTANCE. If acceptance of a Document is required by the
Guidebook, any such Document which has been properly received will not give
rise to any obligation unless and until the party initially transmitting such
Document has properly received in return an Acceptance Document (as specified
in the Guidebook).
28
b.c. GARBLED TRANSMISSION. If any properly transmitted Document is
received in an unintelligible or garbled form, the receiving party will
promptly notify the originating party (if identifiable from the received
Document) in a reasonable manner. In the absence of such a notice, the
originating party's records of the contents of such Document will control.
3. TRANSACTION TERMS.
c.a. CONFIDENTIALITY. No information contained in any Document or
otherwise exchanged between the parties will be considered confidential, except
to the extent provided by written agreement between the parties, or by
applicable law.
c.b. VALIDITY; ENFORCEABILITY. Any Document properly transmitted pursuant
to this Agreement will be considered, in connection with any Transaction, to be
a "writing" or "in writing" and any such Document when containing, or to which
there is affixed, a Signature ("Signed Documents") will be deemed for all
purposes to have been "signed" and to constitute an "original" when printed from
electronic files or records established and maintained in the normal course of
business.
4. STANDARDS.
ASC x 12 - Novation Information Requirements Guidebook
5. THIRD PARTY SERVICE PROVIDERS.
(If the parties will be transmitting Documents directly, insert "NONE")
COMPANY VAN NAME ADDRESS TELEPHONE
------- -------- ------- ---------
NUMBER
------
Novation AT&T 00000 Xxxxxxxxx Xxxxx 800/624-0000
Xxxxxxxxx, XX 00000
6. CONTRACT PRICING (PHARMACY).
Supplier will transmit contract pricing information electronically, to include
new contracts, contract renewals and any changes to a current contract. This
will be sent in a timely manner and in compliance with ANSI ASC X12-845 (Price
Authorization) and Novation Contract Pricing Guidelines. Contract pricing
information will include the following:
-2-
29
Supplier Identification Number
HIN (Health Industry Number if Supplier is a HIN subscriber)
DEA Number (if HIN is not available)
Supplier Assigned Number (if HIN and DEA are not available)
Supplier Name
Supplier Contract Number
MFG Contract Number
Contract Effective Date
Contract Expiration Date
Member(s) (Member name, HIN or DEA number, Member start/stop dates)
Product Identifier
NDC
UPC (if NDC is not available)
Trade Name
Package Count
Package UOM
Selling Unit Price
Item Contract Effective Date
Item Contract Expiration Date
7. CONTRACT PRICING (MEDICAL/SURGICAL).
Supplier will communicate contract pricing information electronically, to
include new contracts, contract renewals and any changes to the current
contract. This will be sent in a timely manner and in compliance with the
Guidebook.
-3-
30
NOVATION ELECTRONIC COMMUNICATION REQUIREMENTS SCHEDULE
This form is being completed by: Date:
-------------------------------- ----------------
(Your Name)
Your Company Name: Your Title:
-------------------------------- ----------------
Phone: E-mail:
---------------------- -----------------
Fax:
------------------------
Please complete the following questionnaire. Your answers to the following will
be used for planning purposes by the Novation Information Services staff. If
your company can already send the listed electronic information, please note
this in the date field.
WHEN WILL YOUR COMPANY
MEET THIS REQUIREMENT
NOVATION REQUIREMENT NOVATION EXPECTATION (MM/DD/YY)
--------------------- ---------------------------------- -----------------------------
REQUIREMENT 1: This only applies to new contracts, Your Novation product manager
New Contract Launch unless your company never provided will address this as new
this information. If needed, your contracts are negotiated.
See Section 4.2 Novation product manager will
contact you.
DUE AT CONTRACT SIGNING
-----------------------------------------------------------------------------------------------
REQUIREMENT 2: Novation must receive contract item Date: ____/____/____
Ongoing Contract and pricing updates as prices change,
Maintenance and when items are added or deleted Will send information via
from contract. (check one):
See Section 4.3 DUE 60 DAYS PRIOR TO THE EFFECTIVE ( ) EDI 832
DATE OF THE LINE ITEM ( ) Novation Interim File
ADD/DELETE/CHANGE Format
-----------------------------------------------------------------------------------------------
REQUIREMENT 3A: Current paper reports must be Date: ____/____/____
Summary Sales converted to electronic reporting
Reporting IMMEDIATELY. This will not be needed You will report sales by
once your company can report line ( ) LIC or ( ) HIN
See Section 4.4.2 item sales. See Requirement 3B. One or the other MUST BE USED
Due at the first contract reporting
period.
-----------------------------------------------------------------------------------------------
REQUIREMENT 3B: Instead of monthly summary reports, Date: ____/____/____
Detailed Line Item detailed line item reports will be You will report sales by
Sales Reporting sent electronically. Plan for a 90- ( ) LIC Number or ( ) HIN
day testing period before stopping ( ) Interim File or
See Section 4.4.3 Requirement 3A. ( ) EDI 867
BEGIN TESTING WITHIN 120 DAYS OF If using Interim file,
CONTRACT EFFECTIVE DATE proposed date for converting
to EDI. Date:
____/____/____
One or the other MUST BE USED
-----------------------------------------------------------------------------------------------
REQUIREMENT 4: You must be able to receive and Date: ____/____/____
Membership process periodic membership updates.
DUE IMMEDIATELY
See Section 4.5
-----------------------------------------------------------------------------------------------
REQUIREMENT 5: Details which members have and have Date: ____/____/____
Commitment Forms not signed your contract enrollment
forms, if needed.
DUE IMMEDIATELY, IF APPLICABLE
See Section 4.6
-----------------------------------------------------------------------------------------------
REQUIREMENT 6: Able to update Sale Representative Date: ____/____/____
31
--------------------- ---------------------------------- -----------------------------
Sales Representative information from a Business Partner
Contact Information Repository System download.
DUE WITHIN 30 DAYS OF CONTRACT
See Section 4.7 SIGNING
-----------------------------------------------------------------------------------------------
REQUIREMENT 7: Able to update the items on contract Date: ____/____/____
Product Cross- with competitive cross-reference
referencing information
DUE WITHIN 90 DAYS OF CONTRACT
See Section 4.8 SIGNING
-----------------------------------------------------------------------------------------------
Business Partner Able to connect to Novation BPRS Date: ____/____/____
Repository System via the VHAseCURE.xxxx. How many of your company
(BPRS) Access DUE WITHIN 60 DAYS OF CONTRACT employees need access to your
SIGNING Novation BPRS site? ______
See Section 3.0
-----------------------------------------------------------------------------------------------
RETURN WITHIN 30 DAYS TO:
Xxxx Xxxx, Manager, Supply Partner Operations, Novation LLC,
000 Xxxx Xxx Xxxxxxx Xxxx., Xxxxxx, XX 00000
Telephone: (000) 000-0000, Fax: (000) 000-0000, E-mail: xxxxx@xxxxxxxxxx.xxx
32
Exhibit F
Exceptions
SUPPLIER NAME: ASPECT MEDICAL SYSTEMS, INC.
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PRINTED NAME: X. Xxxx Xxxxxxxxx
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AUTHORIZED SIGNATURE: /s/ X. Xxxx Xxxxxxxxx
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TITLE: Vice President and Chief Financial Officer
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DATE: 6/15/99
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Page Paragraph Exception
No. No.
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1 2. a. Is changed to read as follows:
PURCHASE OF PRODUCTS. Novation and Supplier hereby agree that Supplier will make the
Products available for purchase by the Members at the Contract Prices in accordance
with the terms of this Agreement; provided, however, that this Agreement will not
constitute a commitment by any person to purchase any of the Products.
1 2.b. Is changed to read as follows:
OPTIONAL PURCHASING ARRANGEMENT. Novation and Supplier agree that each Member will
have the option of purchasing the Products under the terms of this Agreement or
under the terms of any other purchasing or pricing arrangement that may exist
between such Member and Supplier at any time during the Term; Supplier will use its
best efforts to report to Novation sales of Products to Members in accordance
with Sections 7 and 9 below. If any Member uses any other purchasing or pricing
arrangement with Supplier when ordering products covered by any contract between
Supplier and Novation, Supplier will notify any such Member included in the most
recent database supplied by Novation of the pricing and other significant terms of
the applicable Novation contract.
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Page 1 of 7 Pages
33
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
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2 2.c. Is changed to read as follows:
MARKET COMPETITIVE TERMS. Supplier agrees that the prices, quality, value and
technology of all Products purchased under this Agreement will remain market
competitive at all times during the Term. Supplier will [**] applicable to the
purchase of the Products as necessary to assure market competitiveness. During the
term of this Agreement, Supplier agrees to offer Products under this Agreement [**].
If at any time during the Term Novation receives information from any source
suggesting that Supplier's prices, quality, value or technology are not market
competitive, Novation may provide written notice of such information to Supplier,
and Supplier will, within [**] advise Novation in writing of and fully implement
all adjustments necessary to assure market competitiveness.
------------------------------------------------------------------------------------------------------------------------
2 2.d. Is changed to read as follows:
CHANGES IN CONTRACT PRICES. Subject to Subsection 2.e. below, unless otherwise
expressly agreed in any exhibit to this Agreement, the Contract Prices will not be
increased and any discount will not be eliminated or reduced during the Term. In
addition to any changes made to assure market competitiveness, Supplier may lower
the Contract Prices or increase any discount applicable to the purchase of the
Products at any time.
------------------------------------------------------------------------------------------------------------------------
2 2.f. Is changed to read as follows:
UNDERUTILIZED BUSINESSES. Certain Members may be required by law, regulation and/or
internal policy to do business with underutilized businesses such as Minority
Business Enterprises (MBE), Disadvantaged Business Enterprises (DBE), Small Business
Enterprises (SBE), Historically Underutilized Businesses (HUB) and/or
Women-owned Business Enterprises (WBE). To assist Novation in helping Members meet
these requirements, Supplier will use its best efforts to comply with all Novation
policies and programs with respect to such businesses and will use its best efforts
to provide, on request, Novation or any Member with statistical or other information
with respect to Supplier's utilization of such businesses as a vendor, distributor,
contractor or subcontractor.
------------------------------------------------------------------------------------------------------------------------
3 3.b. Is changed to read as follows:
TERMINATION BY NOVATION. Novation may terminate this Agreement at any time for any
reason whatsoever by delivering not less than [**] prior written notice thereof to
Supplier. In addition, Novation may terminate this Agreement immediately by
delivering written notice thereof to Supplier upon the occurrence of either of the
following events:
(0)1 Supplier breaches this Agreement and any such breach, except for a monetary
breach or breach of Section 13, which will warrant immediate termination, is not
cured within [**] after written notice from Novation to Supplier; or
(0)2 Supplier becomes insolvent or goes into liquidation or proceedings are
initiated by Supplier or against Supplier for the purpose of having a receiving
order or winding up order made against Supplier, or Supplier applies to the courts
for protection from its creditors.
Novation's right to terminate this Agreement due to Supplier's breach in accordance
with this Subsection is in addition to any other rights and remedies Novation, the
Clients or the Members may have resulting from such breach, including, but not
limited to, Novation's and the Clients' right to recover all loss of Marketing
Fees resulting from such breach through the date of termination.
------------------------------------------------------------------------------------------------------------------------
3 3.c. Is changed to read as follows:
TERMINATION BY SUPPLIER. Supplier may terminate this Agreement at any time
for any reason whatsoever by delivering not less than [**] prior written notice thereof
to Novation. In addition, Supplier may terminate this agreement immediately by
delivering written notice thereof to Novation upon the occurrence of either of the
following events:
(1) Novation breaches this Agreement and any such breach, except for a breach
of Section 13, which will warrant immediate termination, is not cured within [**]
after written notice from Supplier to Novation; or
(2) Novation becomes insolvent or goes into liquidation or proceedings are
initiated by Novation or against Novation for the purpose of having a receiving
order or winding up order made against Novation, or Novation applies to the courts
for protection from its creditors.
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Page 2 of 7 Pages
34
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
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3 4.a. Is changed to read as follows:
DELIVERY AND INVOICING. On and after the Effective Date, Supplier agrees to deliver
Products ordered by the Members to the Members, FOB destination, and will direct its
invoices to the Members in accordance with this Agreement. Supplier agrees to prepay
and add to the invoice charges, if any, for transporting Products to the Members.
Payment terms are Net 30 days. Supplier will make whatever arrangements are reasonably
necessary with the Members to implement the terms of this Agreement; provided, however,
Supplier will not impose any purchasing commitment on any Member as a condition to
the Member's purchase of any Products pursuant to this Agreement, unless Member enters
into an Agreement with Supplier that requires minimum purchases.
------------------------------------------------------------------------------------------------------------------------
3 4.b. Is changed to read as follows:
PRODUCT FILL RATES; CONFIRMATION AND DELIVERY TIMES. Supplier agrees to provide
product fill rates to the Members of greater than ninety-five percent (95%),
calculated as line item orders. All products shall be ordered in writing, specifying
the product type, number of units, desired delivery date and means of shipment.
Purchase orders may be sent by fascimile machine. Such orders shall be considered to
have been accepted by Supplier unless Supplier otherwise notifies Member. Supplier's
notification may be verbal or sent by fascimile machine.
------------------------------------------------------------------------------------------------------------------------
4 4.d. Is changed to read as follows:
DISCONTINUATION OF PRODUCTS; CHANGES IN PACKAGING. Supplier will have no unilateral
right to discontinue any of the Products or to make any changes in packaging which
render any of the Products substantially different in use, function or distribution.
Supplier shall [**] any Products which may [**] any of the Products [**] to the [**].
In the event Supplier [**] in addition to any other rights and remedies Novation or
the Members may have by reason of such [**], (i) Novation will have the [**] any or
all of the Product(s) subject to such [**] any of the products [**] this Agreement
[**] of the [**] which may [**] any of the Products [**] or any time thereafter
[**] to Supplier.
------------------------------------------------------------------------------------------------------------------------
4 4.e. Is changed to read as follows:
REPLACEMENT OR NEW PRODUCTS. Supplier will have no unilateral right to replace any
of the Products listed in Exhibit A with other products or to add new products to
this Agreement. Supplier may [**], and such agreement shall [**] of any of the
Products or the [**] product that is [**] to the [**] of the [**] or to the [**]any
Product [**] product [**] to this Agreement be [**] agreement, and such agreement
shall [**] to the [**] product.
------------------------------------------------------------------------------------------------------------------------
5 4.g. This subsection is deleted in its entirety.
------------------------------------------------------------------------------------------------------------------------
5 4.h. Is changed to read as follows:
RETURN OF PRODUCTS. Any Member, in addition to and not in limitation of any other
rights and remedies, will have the right to return Products to Supplier under any of
the following circumstances: (1) the Product is [**]; (2) the Product is
[**] or is [**]; (3) the Product is [**], or is [**]; (4) the Product is [**] or the
[**]; and (5) the Product is [**]. Xxxxxxxx agrees to accept the return of Products
under these circumstances without charge and for full credit.
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
5 4.i. Is changed to read as follows:
FAILURE TO SUPPLY. In the event of Supplier's failure to perform its supply
obligations in accordance with the terms of this Section 4, Novation may terminate
this Agreement in accordance with the terms of Subsection 3.b. The remedies set
forth in this Subsection are in addition to any other rights and remedies Novation,
the Clients or the Members may have resulting from such failure.
------------------------------------------------------------------------------------------------------------------------
5 5.a. This subsection is deleted in its entirety and replaced with the following:
WARRANTY. Subject to the limitations set forth in this Section 5, Supplier warrants
to the Members that all Products purchased from Supplier shall be free from defects
in materials and workmanship, when given normal, proper and intended usage and
maintenance, for a period of one year from the date of shipment to Member. Supplier
agrees during the warranty period to replace or repair all defective Products to
proper operating condition in accordance with Supplier's published specifications
for such Products. All defective parts must be returned, transportation prepaid, to
Supplier's offices in Natick, MA. All replaced parts shall become Supplier's
property on an exchange basis. Replacement parts may be new or refurbished, at the
election of Supplier.
The foregoing warranties shall not apply to expendable components, nor shall Supplier
have any obligation under this Agreement to make repairs or replacements which are
required by normal wear and tear, or which result, in whole or in part, from catastrophe,
fault or negligence, or from improper or unauthorized use or repair of the Products,
or use of the Products in a manner for which they were not designed, or by causes external
to the Products such as, but not limited to, power or air conditioning failure.
EXCEPT AS STATED ABOVE, SUPPLIER DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED,
WRITTEN OR ORAL, WITH RESPECT TO THE PRODUCTS, INCLUDING WITHOUT LIMITATION ALL
IMPLIED WARRANTIES OF FITNESS FOR ANY PARTICULAR PURPOSE.
SUPPLIER'S LIABILITY FOR DAMAGES TO MEMBER FOR ANY CAUSE WHATSOEVER, REGARDLESS OF
THE FORM OF ANY CLAIM OR ACTION, SHALL NOT EXCEED THE AGGREGATE PRICE PAID FOR
PRODUCTS UNDER THIS AGREEMENT. SUPPLIER SHALL IN NO EVENT BE LIABLE FOR ANY LOSS OF
DATA, PROFITS OR USE OF THE PRODUCTS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING HEREUNDER.
IN NO EVENT WILL SUPPLIER BE LIABLE TO MEMBERS OR OTHER THIRD PARTIES FOR ANY DAMAGES,
INCLUDING BUT NOT LIMITED TO: (i) DAMAGES CAUSED BY MEMBER'S FAILURE TO PERFORM ITS
COVENANTS AND RESPONSIBILITIES; (ii) DAMAGES CAUSED BY REPAIRS OR ALTERATIONS DONE
WITHOUT SUPPLIER'S WRITTEN APPROVAL; (iii) DAMAGES DUE TO DETERIORATION DURING PERIODS
OF STORAGE BY MEMBER OR ITS CUSTOMERS; OR (iv) LOSS OF DATA, PROFITS OR USE OF THE
PRODUCTS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE
USE OR PERFORMANCE OF THE PRODUCTS.
NOVATION WARRANTIES. Novation acting on its own behalf only, shall extend a written
warranty at least as favorable to its customers as the warranty extended to it by
Supplier above, in connection with each sale or license of Products. Novation shall
perform and fulfill all of the terms and conditions of each such warranty. All labor
costs for warranty work shall be borne by Novation and shall not be passed on to
customers. Novation shall promptly notify Supplier of all warranty claims.
INDEMNIFICATION BY NOVATION. To the extent a claim or action is brought against
Supplier based on or related to Novation's failure to observe or perform its
obligations under this Agreement, including its obligation to notity customers of
limitations and disclaimers of warranties and liabilities, Novation shall defend and
hold Supplier harmless from and against any and all damages, costs and expenses,
including reasonable attorneys' fees, suffered by or awarded against Supplier.
------------------------------------------------------------------------------------------------------------------------
6 5.c. This subsection is deleted in its entirety and replaced with the following:
INFRINGEMENT INDEMNIFICATION BY SUPPLIER. Upon prompt notification in writing of any
action (and all prior related claims) brought against Novation based on a claim that
the Products infringe any valid United States patent, trademark, copyright or trade
secret, Supplier shall defend such action at its expense and pay all costs and
damages finally awarded in such action or settlement which are attributable to such
claim, provided that the failure to so notify the Supplier shall not relieve it from
any obligation which it may have hereunder or otherwise, except to the extent such
failure prejudices the Supplier's rights in any way. Supplier shall have sole
control of the defense of any such action and all negotiations for its settlement or
compromise. Novation shall cooperate fully with Supplier in the defense, settlement
or compromise of any such action. In the event that a final injunction is obtained
against Novation's use of the Product by reason of infringement of a valid United
States patent, copyright or trade secret, or if in the opinion of Supplier the
Product is likely to become the subject of a successful claim of such infringement,
Supplier may, at its option and expense, (i) procure for Novation the right to
continue using the Product, (ii) replace or modify the Product so that it becomes
non-infringing (so long as its functionality is essentially unchanged), or (iii) if
neither (i) or (ii) are reasonably available to Supplier, terminate the AGREEMENT
FOR THE PRODUCT.
Notwithstanding the foregoing, Supplier shall have no liability to Novation to the
extent that any infringement or claim thereof is based upon (i) use of any Product
in combination with equipment or software not supplied by Supplier where the Product
would not itself be infringing, (ii) compliance with designs, specifications or
instructions of Novation or any or its Members (while it is understood by the parties
that Novation does not currently and does not intend to provide designs, specifications
or instructions), (iii) use of any Product in an application or environment for
which it was not designed or not contemplated hereunder, (iv) modifications of the
Products by anyone other than Supplier, or (v) any claims of infringement of any
patent, copyright or trade secret in which Novation or any affiliate or customer of
Novation has an interest or license.
THE FOREGOING INDEMNIFICATION PROVISIONS STATE THE ENTIRE LIABILITY OF SUPPLIER
WITH RESPECT TO INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
TRADEMARKS, TRADE SECRETS AND OTHER INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS
BY THE PRODUCTS.
INFRINGEMENT INDEMNIFICATION BY NOVATION. Novation shall indemnify, defend and hold
harmless Supplier against all claims, liabilities, damages, expenses, judgments
and losses (including reasonable attorneys' fees) arising from (i) infringement or
alleged infringement of any patent, copyright, trade secret, trademark or other
intellectual property or proprietary right as a result of compliance by Supplier with
the designs, specifications or instructions of Novation or any of its Members (while it
is understood by the parties that Novation does not currently and does not intend to
provide designs, specifications or instructions), (ii) Novation's breach of any
of its obligations hereunder, and (iii) Novation's use and/or misuse of the Products
(while it is understood by the parties that Novation does not currently and does not
intend to use the Product).
OWNERSHIP OF PATENT AND TRADEMARKS. All patents, trademarks, trade names, copyrights
and designs in relation to the Products and the literature supplied in connection
therewith shall be and remain the property of Supplier and no rights to duplicate
such property shall accrue to Novation, the Clients or Members as a result of this
Agreement unless expressly provided herein or unless written permission is granted
by Supplier.
Supplier represents and warrants that, to the best of its knowledge, the products do
not infringe any United States patent, trademark, copyright or trade secret of any
third party.
------------------------------------------------------------------------------------------------------------------------
6 5.f. Is changed to read as follows:
SHELF LIFE. Sterile Products and other Products with a limited shelf life sold under
this Agreement will have the longest possible shelf life and the latest possible
expiration dates. Unless required by stability considerations, there will not be
less than a [**] interval between a Product's date of delivery by Supplier to the
Member and its expiration date.
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Page 3 of 7 Pages
35
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
------------------------------------------------------------------------------------------------------------------------
6 6.a. through e. Is changed to read as follows:
a. DEFINITIONS. FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS HAVE THE
RESPECTIVE MEANINGS GIVEN BELOW:
(1) "SYSTEMS" MEANS ANY OF THE PRODUCTS, SYSTEMS OF DISTRIBUTION FOR PRODUCTS
[**] THAT CONSIST OF OR INCLUDE ANY [**] (WHETHER GENERAL OR SPECIAL PURPOSE),
THAT ARE PROVIDED BY OR THROUGH SUPPLIER PURSUANT TO THIS AGREEMENT, OR ANY [**]
PROVIDED BY OR THROUGH SUPPLIER IN CONNECTION THEREWITH.
(2) "CALENDAR-RELATED" REFERS TO DATE VALUES BASED ON THE "GREGORIAN CALENDAR"
(AS DEFINED IN THE ENCYCLOPEDIA BRITANNICA, 15TH EDITION, 1982, PAGE 602) AND TO ALL
USES IN ANY MANNER OF THOSE DATE VALUES, INCLUDING WITHOUT LIMITATION MANIPULATIONS,
CALCULATIONS, CONVERSIONS, COMPARISONS, AND PRESENTATIONS.
(3) "CENTURY NONCOMPLIANCE" MEANS ANY ASPECTS OF THE SYSTEMS THAT FAIL TO
SATISFY THE REQUIREMENTS SET FORTH IN SUBSECTION 6.B BELOW.
b. REPRESENTATIONS. SUPPLIER WARRANTS, REPRESENTS AND AGREES THAT THE SYSTEMS
SATISFY THE FOLLOWING REQUIREMENTS:
(1) IN CONNECTION WITH THE USE AND PROCESSING OF CORRECTLY ENTERED AND FORMATTED
CALENDAR-RELATED DATA, THE SYSTEMS WILL NOT MALFUNCTION, WILL NOT CEASE TO FUNCTION,
WILL NOT GENERATE INCORRECT DATA, AND WILL NOT PRODUCE INCORRECT RESULTS.
(2) IN CONNECTION WITH PROVIDING CALENDAR-RELATED DATA TO AND ACCEPTING
CORRECTLY ENTERED AND FORMATTED CALENDAR-RELATED DATA FROM OTHER AUTOMATED, COMPUTERIZED,
AND/OR SOFTWARE SYSTEMS AND USERS VIA USER INTERFACES, ELECTRONIC INTERFACES, AND DATA
STORAGE, THE SYSTEMS REPRESENT DATES WITHOUT AMBIGUITY AS TO CENTURY.
(3) THE YEAR COMPONENT OF CALENDAR-RELATED DATA THAT IS PROVIDED BY THE SYSTEMS
TO OR THAT IS ACCEPTED BY THE SYSTEMS FROM OTHER AUTOMATED, COMPUTERIZED, AND/OR
SOFTWARE SYSTEMS AND USER INTERFACES, ELECTRONIC INTERFACES, AND DATA STORAGE IS
REPRESENTED IN A FOUR-DIGIT CCYY FORMAT, WHERE CC REPRESENTS THE TWO DIGITS
EXPRESSING THE CENTURY AND YY REPRESENTS THE TWO DIGITS EXPRESSING THE YEAR WITHIN
THAT CENTURY (E.G., 1996 OR 2003).
(0)3 SUPPLIER HAS VERIFIED THROUGH TESTING THAT THE SYSTEMS SATISFY THE
REQUIREMENTS OF THIS SUBSECTION INCLUDING, WITHOUT LIMITATION, TESTING OF EACH OF
THE FOLLOWING SPECIFIC DATES AND THE TRANSITION TO AND FROM EACH SUCH DATE:
SEPTEMBER 9, 1999; SEPTEMBER 10, 1999; DECEMBER 31, 1999; JANUARY 1, 2000; FEBRUARY
28, 2000; FEBRUARY 29, 2000; MARCH 1, 2000; DECEMBER 31, 2000; JANUARY 1, 2001;
DECEMBER 31, 2004; AND JANUARY 1, 2005.
c. REMEDIES. IN THE EVENT OF ANY CENTURY NONCOMPLIANCE IN THE SYSTEMS IN ANY
RESPECT, IN ADDITION TO ANY OTHER REMEDIES THAT MAY BE AVAILABLE TO NOVATION OR THE
MEMBERS, SUPPLIER WILL, AT NO COST TO THE MEMBERS, PROMPTLY UNDER THE CIRCUMSTANCES
(BUT, IN ALL CASES, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM
ANY MEMBER, UNLESS OTHERWISE AGREED BY THE MEMBER IN WRITING) ELIMINATE THE CENTURY
NONCOMPLIANCE FROM THE SYSTEMS.
d. NONCOMPLIANCE NOTICE. IN THE EVENT SUPPLIER BECOMES AWARE OF (i) ANY
POSSIBLE OR ACTUAL CENTURY NONCOMPLIANCE IN THE SYSTEMS OR (ii) ANY INTERNATIONAL,
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Page 4 of 7 Pages
36
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
------------------------------------------------------------------------------------------------------------------------
9 7.b. IS CHANGED TO READ AS FOLLOWS:
REPORT FORMAT AND DELIVERY. THE REPORTS REQUIRED BY THIS SECTION WILL BE SUBMITTED
ELECTRONICALLY IN EXCEL 97 OR ACCESS 97 AND IN ACCORDANCE WITH OTHER SPECIFICATIONS
ESTABLISHED BY NOVATION FROM TIME TO TIME AND WILL BE DELIVERED TO:
NOVATION
ATTN: SRIS OPERATIONS
000 XXXX XXX XXXXXXX XXXXXXXXX
XXXXXX, XX 00000
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9 7.c. IS CHANGED TO READ AS FOLLOWS:
OTHER INFORMATION REQUIREMENTS. IN ADDITION TO THE REPORTING REQUIREMENTS SET FORTH
IN SUBSECTIONS 7.a AND 7.b ABOVE, THE PARTIES AGREE, TO THE EXTENT PRACTICAL, TO
FACILITATE THE ADMINISTRATION OF THIS AGREEMENT BY TRANSMITTING AND RECEIVING
INFORMATION ELECTRONICALLY.
------------------------------------------------------------------------------------------------------------------------
9 9.a. IS CHANGED TO READ AS FOLLOWS:
CALCULATION. SUPPLIER WILL PAY TO NOVATION, AS THE AUTHORIZED COLLECTION AGENT FOR
EACH OF THE CLIENTS AND CERTAIN OF EACH CLIENT'S SUBSIDIARIES AND AFFILIATES,
RESPECTIVELY (AND NOT COLLECTIVELY), MARKETING FEES ("MARKETING FEES") BELONGING TO
ANY OF THE CLIENTS OR CERTAIN OF THEIR SUBSIDIARIES OR AFFILIATES EQUAL TO THE
AGREED PERCENTAGE OF THE AGGREGATE GROSS CHARGES OF ALL NET SALES OF THE PRODUCTS TO
THE MEMBERS DIRECTLY OR INDIRECTLY FROM SUPPLIER, WHETHER UNDER THE PRICING AND
OTHER TERMS OF THIS AGREEMENT OR UNDER THE TERMS OF ANY OTHER PURCHASING OR PRICING
ARRANGEMENTS THAT MAY EXIST BETWEEN THE MEMBERS AND SUPPLIER.[**] WILL BE DETERMINED
[**] OF THE PRODUCTS [**] AND THE PROVISION OF ANY OTHER SERVICES LISTED ON EXHIBIT
A. [**] THE DUE DATE OF THE INVOICE. THESE [**] WILL BE MADE [**] WILL BE [**]. THE
"AGREED PERCENTAGE" WILL BE DEFINED IN THE NON-PRICE SPECIFICATIONS.
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
10 10 IS CHANGED TO READ AS FOLLOWS:
ADMINISTRATIVE DAMAGES. NOVATION AND SUPPLIER AGREE THAT NOVATION WOULD INCUR
ADDITIONAL ADMINISTRATIVE COSTS IF SUPPLIER FAILS TO PROVIDE NOTICE OF CHANGE IN
PRICING TERMS AS REQUIRED IN SUBSECTION 2.e ABOVE, FAILS TO PROVIDE REPORTS AS
REQUIRED IN SECTION 7 ABOVE, OR FAILS TO PAY MARKETING FEES AS REQUIRED IN SECTION 9
ABOVE, IN EACH CASE WITHIN THE TIME AND MANNER REQUIRED BY THIS AGREEMENT. NOVATION
AND SUPPLIER FURTHER AGREE THAT THE ADDITIONAL ADMINISTRATIVE COSTS INCURRED BY
NOVATION BY REASON OF ANY SUCH FAILURE TO SUPPLIER IS UNCERTAIN, AND THEY THEREFORE
AGREE THAT THE FOLLOWING SCHEDULE OF ADMINISTRATIVE DAMAGES CONSTITUTES A REASONABLE
ESTIMATION OF SUCH COSTS AND WERE DETERMINED ACCORDING TO THE PRINCIPLES OF JUST
COMPENSATION:
1ST FAILURE: [**]
2ND FAILURE: [**]
3RD FAILURE: [**]
4TH FAILURE: [**]
5TH FAILURE: [**]
6TH & EACH SUBSEQUENT FAILURE: [**]
NOVATION'S RIGHT TO RECOVER ADMINISTRATIVE DAMAGES IN ACCORDANCE WITH THIS SECTION
IS IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES NOVATION OR THE CLIENTS MAY HAVE BY
REASON OF SUPPLIER'S FAILURE TO PAY THE MARKETING FEES OR PROVIDE THE REPORTS OR
NOTICES WITHIN THE TIME AND MANNER REQUIRED BY THIS AGREEMENT.
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Page 5 of 7 Pages
37
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
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11 12.a. IS CHANGED TO READ AS FOLLOWS:
POLICY REQUIREMENTS. SUPPLIER WILL MAINTAIN AND KEEP IN FORCE DURING THE TERM
PRODUCT LIABILITY, GENERAL PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE AGAINST
ANY INSURABLE CLAIM OR CLAIMS WHICH MIGHT OR COULD ARISE REGARDING PRODUCTS
PURCHASED FROM SUPPLIER. SUCH INSURANCE WILL CONTAIN A MINIMUM COMBINED SINGLE LIMIT
OF LIABILITY FOR BODILY INJURY AND PROPERTY DAMAGE IN THE AMOUNTS OF [**]. SUPPLIER
WILL PROVIDE TO NOVATION, WITHIN FIFTEEN (15) DAYS AFTER NOVATION'S REQUEST, AN
INSURANCE CERTIFICATE INDICATING THE FOREGOING COVERAGE, ISSUED BY AN INSURANCE
COMPANY LICENSED TO DO BUSINESS IN THE RELEVANT STATES AND SIGNED BY AN AUTHORIZED
AGENT.
------------------------------------------------------------------------------------------------------------------------
12 12.c. IS CHANGED TO READ AS FOLLOWS:
AMENDMENT, NOTICES AND ENDORSEMENTS. SUPPLER WILL NOT AMEND, IN ANY MATERIAL RESPECT
THAT AFFECTS THE INTERESTS OF NOVATION, THE CLIENTS OR THE MEMBERS, OR TERMINATE SAID
LIABILITY INSURANCE OR SELF-INSURANCE PROGRAM EXCEPT AFTER THIRTY (30) DAYS' PRIOR
WRITTEN NOTICE TO NOVATION.
------------------------------------------------------------------------------------------------------------------------
12 14 Is changed to read as follows:
RELEASE AND INDEMNITY. SUPPLIER WILL RELEASE, INDEMNIFY, HOLD HARMLESS, AND, IF
REQUESTED, DEFEND NOVATION AND THE CLIENTS AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
REGENTS, AGENTS, SUBSIDIARIES, AFFILIATES AND EMPLOYEES (COLLECTIVELY, THE
"INDEMNITEES"), FROM AND AGAINST ANY CLAIMS, LIABILITIES, DAMAGES, ACTIONS, COSTS
AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES, EXPERT FEES
AND COURT COSTS) OF ANY KIND OR NATURE, WHETHER AT LAW OR IN EQUITY, INCLUDING
CLAIMS ASSERTING STRICT LIABILITY, ARISING FROM OR CAUSED IN ANY PART BY (1) THE
BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUPPLIER CONTAINED
IN THIS AGREEMENT; (2) THE CONDITION OF ANY PRODUCT, INCLUDING A DEFECT IN MATERIAL,
WORKMANSHIP, DESIGN OR MANUFACTURING; OR (3) THE INSTRUCTIONS ACCOMPANYING ANY PRODUCT.
SUCH OBLIGATION TO RELEASE, INDEMNIFY, HOLD HARMLESS AND DEFEND WILL APPLY UNLESS
SUCH INDEMNIFICATION, HOLD HARMLESS AND RIGHT TO DEFENSE WILL NOT BE APPLICABLE
TO THE EXTENT THE CLAIM, LIABILITY, DAMAGE, ACTION, COST OR EXPENSE ARISES AS A
RESULT OF AN ACT OR FAILURE TO ACT OF INDEMNITEES. THIS SECTION AND THE OBLIGATIONS
CONTAINED HEREIN WILL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS
AGREEMENT. THE REMEDIES SET FORTH IN THIS SECTION ARE IN ADDITION TO AND NOT A LIMITATION
ON ANY OTHER RIGHTS OR REMEDIES THAT MAY BE AVAILABLE AGAINST SUPPLIER. SUPPLIER SHALL
HAVE THE SOLE CONTROL AND AUTHORITY WITH RESPECT TO THE DEFENSE, SETTLEMENT OR
COMPROMISE THEREOF.
NOVATION WILL PROMPTLY NOTIFY SUPPLIER OF ANY CLAIM UNDER THIS SECTION 14, PROVIDED
THAT THE FAILURE TO SO NOTIFY THE SUPPLIER SHALL NOT RELIEVE IT FROM ANY OBLIGATION
IT MAY HAVE UNDER THIS SECTION 14 OR OTHERWISE, EXCEPT TO THE EXTENT SUCH FAILURE
PREJUDICES THE SUPPLIER'S RIGHTS IN ANY WAY.
------------------------------------------------------------------------------------------------------------------------
13 17.a. THROUGH THIS SECTION IS DELETED IN ITS ENTIRETY AND REPLACED WITH THE FOLLOWING:
b. CONFIDENTIALITY.
a. PROPRIETARY INFORMATION. EACH PARTY AGREES AND ACKNOWLEDGES THAT IN ORDER TO
FURTHER THE PERFORMANCE OF THIS AGREEMENT, THEY WILL BE REQUIRED TO DISCLOSE TO EACH
OTHER CERTAIN CONFIDENTIAL INFORMATION WHICH WILL BE IDENTIFIED AS SUCH IN WRITING
("CONFIDENTIAL INFORMATION"), INCLUDING BUT NOT LIMITED TO THE PRICES AND USAGE OF
THE PRODUCTS. IN NO EVENT WILL SUPPLIER PROVIDE TO ANY PERSON ANY INFORMATION
RELATING TO THE PRICES IT CHARGES THE MEMBERS FOR PRODUCTS ORDERED PURSUANT TO THIS
AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF NOVATION.
b. PROTECTION OF PROPRIETARY INFORMATION. THE RECEIVING PARTY AGREES TO PROTECT
THE CONFIDENTIALITY OF THE DISCLOSING PARTY'S CONFIDENTIAL INFORMATION WITH AT LEAST
THE SAME DEGREE OF CARE THAT IT UTILIZES WITH RESPECT TO ITS OWN SIMILAR PROPRIETARY
INFORMATION, INCLUDING WITHOUT LIMITATION AGREEING:
(i) NOT TO DISCLOSE OR OTHERWISE PERMIT ANY OTHER PERSON OR ENTITY ACCESS TO, IN
ANY MANNER, THE CONFIDENTIAL INFORMATION, OR ANY PART THEREOF IN ANY FORM
WHATSOEVER, EXCEPT THAT SUCH DISCLOSURE OR ACCESS SHALL BE PERMITTED TO AN EMPLOYEE
OF THE RECEIVING PARTY REQUIRING ACCESS TO THE CONFIDENTIAL INFORMATION IN THE
COURSE OF HIS OR HER EMPLOYMENT IN CONNECTION WITH THIS AGREEMENT AND WHO HAS SIGNED
AN AGREEMENT OBLIGATING THE EMPLOYEE TO MAINTAIN THE CONFIDENTIALITY OF THE
CONFIDENTIAL INFORMATION OF THIRD PARTIES IN THE RECEIVING PARTY'S POSSESSION;
(ii) TO NOTIFY THE DISCLOSING PARTY PROMPTLY AND IN WRITING OF THE CIRCUMSTANCES
SURROUNDING ANY SUSPECTED POSSESSION, USE OR KNOWLEDGE OF THE CONFIDENTIAL
INFORMATION OR ANY PART THEREOF AT ANY LOCATION OR BY ANY PERSON OR ENTITY OTHER
THAN THOSE AUTHORIZED BY THIS AGREEMENT; AND
(iii) NOT TO USE THE CONFIDENTIAL INFORMATION FOR ANY PURPOSE OTHER THAN AS
EXPLICITLY SET FORTH HEREIN.
c. EXCEPTIONS. NOTHING IN THIS SECTION 17 SHALL RESTRICT THE RECEIVING PARTY
WITH RESPECT TO INFORMATION OR DATA, WHETHER OR NOT IDENTICAL OR SIMILAR TO THAT
CONTAINED IN THE CONFIDENTIAL INFORMATION, IF SUCH INFORMATION OR DATA: (i) WAS
RIGHTFULLY POSSESSED BY THE RECEIVING PARTY BEFORE IT WAS RECEIVED FROM THE
DISCLOSING PARTY; (ii) IS INDEPENDENTLY DEVELOPED BY THE RECEIVING PARTY WITHOUT
REFERENCE TO THE DISCLOSING PARTY'S INFORMATION OR DATA; (iii) IS SUBSEQUENTLY
FURNISHED TO THE RECEIVING PARTY BY A THIRD PARTY NOT UNDER ANY OBLIGATION OF
CONFIDENTIALITY WITH RESPECT TO SUCH INFORMATION OR DATA, AND WITHOUT RESTRICTIONS
ON USE OR DISCLOSURE; OR (iv) IS OR BECOMES PUBLIC OR AVAILABLE TO THE GENERAL
PUBLIC OTHERWISE THAN THROUGH ANY ACT OR DEFAULT OF THE RECEIVING PARTY.
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14 18.a. IS CHANGED TO READ AS FOLLOWS: CHOICE OF LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE.
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38
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14 18.c. IS CHANGED TO READ AS FOLLOWS:
THIRD PARTY BENEFICIARIES. SUBJECT TO THE PROVISION OF THIS AGREEMENT ALL CLIENTS AND
MEMBERS ARE INTENDED THIRD PARTY BENEFICIARIES OF THIS AGREEMENT. ALL SECTIONS OF THIS
AGREEMENT WHICH BY THEIR TERMS SPECIFICALLY APPLY TO CLIENTS WILL INURE TO THE
BENEFIT OF AND BE ENFORCEABLE BY THE CLIENTS AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS. ALL SECTIONS OF THIS AGREEMENT WHICH BY THEIR TERMS SPECIFICALLY APPLY TO
MEMBERS WILL INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE MEMBERS AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
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15 18.e. IS CHANGED TO READ AS FOLLOWS:
NO ASSIGNMENT. IN THE EVENT OF ANY ASSIGNMENT OR PROPOSED ASSIGNMENT OF THIS
AGREEMENT BY SUPPLIER, OR ANY SUCCESSOR OF SUPPLIER, SUPPLIER SHALL NOTIFY NOVATION
IN WRITING (THE "NOTICE") AND REQUEST THAT NOVATION NOTIFY SUPPLIER, OR ANY
SUCCESSOR OF SUPPLIER, IN WRITING WITHIN 20 DAYS OF RECEIPT OF THE NOTICE THAT
NOVATION DOES NOT CONSENT TO THE ASSIGNMENT. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, THE SOLE REMEDY OF NOVATION FOR ANY ASSIGNMENT OR PROPOSED
ASSIGNMENT OF THIS AGREEMENT WITHOUT THE CONSENT OR APPROVAL OF NOVATION SHALL BE TO
TERMINATE THIS AGREEMENT, WITHOUT PENALTY OR PREJUDICE TO SUPPLIER OF ANY KIND. ANY
ASSIGNMENT OF ALL OR ANY PART OF THIS AGREEMENT BY EITHER PARTY WILL NOT RELIEVE
THAT PARTY OF THE RESPONSIBILITY OF PERFORMING ITS OBLIGATIONS HEREUNDER TO THE EXTENT
THAT SUCH OBLIGATIONS ARE NOT SATISFIED IN FULL BY THE ASSIGNEE. THIS AGREEMENT WILL
BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES' RESPECTIVE SUCCESSORS AND
ASSIGNS.
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15 18.g. IS CHANGED TO READ AS FOLLOWS:
ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE EXHIBITS LISTED BELOW, WILL
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN NOVATION, MEMBERS AND SUPPLIER. THIS
AGREEMENT, TOGETHER WITH THE EXHIBITS LISTED BELOW AND EACH MEMBER'S PURCHASE ORDER
WILL CONSTITUTE THE ENTIRE AGREEMENT BETWEEN EACH MEMBER AND SUPPLIER. IN THE EVENT
OF ANY INCONSISTENCY BETWEEN THIS AGREEMENT AND A MEMBER'S PURCHASE ORDER, THE TERMS
OF THIS AGREEMENT WILL CONTROL UNLESS AGREED UPON IN WRITING BY SUPPLIER. NO
OTHER TERMS AND CONDITIONS IN ANY DOCUMENT, ACCEPTANCE, OR ACKNOWLEDGMENT WILL BE
EFFECTIVE OR BINDING UNLESS EXPRESSLY AGREED TO IN WRITING. THE FOLLOWING EXHIBITS
ARE INCORPORATED BY REFERENCE IN THIS AGREEMENT:
EXHIBIT A PRODUCT AND SERVICE DESCRIPTION AND PRICING
EXHIBIT B NON-PRICE SPECIFICATIONS
EXHIBIT C SPECIAL CONDITIONS
EXHIBIT D EFFECTIVE DATE
EXHIBIT E OTHER INFORMATION REQUIREMENTS
EXHIBIT F EXCEPTIONS
[OTHER EXHIBITS LISTED, IF ANY]
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Page 7 of 7 Pages
