EXHIBIT 10.1
DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT
THIS AGREEMENT ("Agreement") is made this 21st day of April, 2006, by
and between Specialized Health Products International, Inc., having an address
at 000 Xxxx 000 Xxxxx, Xxxxxxxxx, Xxxx 00000 (hereinafter referred to as
"SHPI"), and Bard Access Systems, Inc., a Utah corporation having a place of
business at 0000 Xxxx Xxxxxx Xxxxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000
(hereinafter referred to as "BAS").
RECITALS
WHEREAS, SHPI owns intellectual property related to safety percutaneous
endoscopic gastronomy ("PEG") introducer needles,
WHEREAS, BAS desires to fund SHPI's efforts to develop a safety PEG
introducer needle that meets BAS's requirements,
WHEREAS, BAS further desires to obtain the right to distribute such
safety PEG introducer needle worldwide for use in the Field (as such term is
hereinafter defined),
WHEREAS, SHPI is willing to grant such distribution rights to BAS, all
on the terms and conditions hereinafter set forth,
WHEREAS, BAS also desires to have SHPI manufacture, package and supply
BAS with the aforementioned safety PEG introducer needle,
WHEREAS, SHPI desires to manufacture, package and supply BAS with the
aforementioned safety PEG introducer needle, and
WHEREAS, the parties are willing to carry out the foregoing pursuant to
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the execution hereof, SHPI and BAS
hereby agree as follows:
I. DEFINITIONS. The following terms are defined for purposes of this
Agreement.
1.1. "Effective Date" shall mean the date and year first written above.
1.2. "Affiliate" shall mean any person or corporation or other business
entity controlled by, controlling, or under common control with a party to this
Agreement.
1.3. "Act" shall mean the United States Food, Drug and Cosmetic Act of
1938, as amended and all regulations promulgated pursuant thereto, and any state
and local laws and regulations thereunder promulgated and all similar laws and
regulations of any other country or relevant jurisdiction related to the
development, manufacture, sale or distribution of Products.
1.4. "Products" shall mean the 18 gauge safety PEG introducer needle
used for percutaneous endoscopic gastronomy and developed by SHPI pursuant to
this Agreement as described in Exhibit A attached hereto and any improvements
thereto. The safety device shall be for the stylett. The tubular outer wall
shall be blunt.
1.5. "Specifications" shall mean the raw material, manufacturing,
quality assurance, packaging and finished product specifications and protocols
relating to the Products as set forth in Exhibit A, as the same may be modified
or supplemented pursuant to the provisions hereof.
1.6. "Field" shall mean percutaneous endoscopic gastronomy.
1.7. "Territory" shall mean worldwide.
1.8. "Confidential Information" shall mean any information of a
confidential or proprietary nature as to which BAS or an Affiliate of BAS or
SHPI or an Affiliate of SHPI, as the disclosing party, prior to or during the
Term, develops or acquires any interest, including, all discoveries, inventions,
improvements, and ideas relating to any process, formula, machine, device,
manufacture, composition of matter, plan or design, whether patentable or not,
or relating to the conduct of business by the disclosing party (including the
existence and subject matter of this Agreement) which, prior to or during the
Term, was or is disclosed to the other party, as the receiving party, exclusive
of data or information: (i) which, at the time of disclosure hereunder, was in
the public domain or which, subsequent to disclosure hereunder, becomes part of
the public domain by any means other than the breach by the receiving party of
its obligations hereunder; (ii) which was known to the receiving party, at the
time of disclosure hereunder, as evidenced by the receiving party's business
records maintained in the ordinary course of business; (iii) which is, at any
time, disclosed to the receiving party by any person or entity not a party
hereto whom the receiving party believes, after reasonable inquiry, has the
right to disclose the same; (iv) which is developed by an employee of the
receiving party who is shown, by competent proof and by clear and convincing
evidence, not to have been privy to information disclosed by the disclosing
party; or (v) which is disclosed verbally, except where the disclosing party
reduces the verbal disclosure to writing, marks the same as confidential and
proprietary and furnishes the receiving party with the reduction to writing
within thirty (30) days of the verbal disclosure.
1.9. "Contract Year" shall mean the twelve (12) month period commencing
on the date of the first Commercial Sale and each successive twelve (12) month
period thereafter.
1.10. "Commercial Sale" shall mean the first arms-length sale of a
Product, other than for clinical use required to obtain Regulatory Approval, in
any country of the world by BAS or a BAS Affiliate to a non-affiliated third
party.
1.11. "Development Program" shall mean those research, development and
other services or activities relating to the development, testing,
manufacturing, production and evaluation of the Product(s), all as contained in
and as more fully described in Exhibit A.
1.12. "Regulatory Approval" shall mean the notification to or
concurrence, acknowledgment, or approval of any governmental or
quasi-governmental agency or regulatory body, which notification, concurrence,
acknowledgment or approval is necessary for or useful to the manufacturing,
processing, marketing or sale of Products anywhere in the world, and which is
made in the name of SHPI or has been given/granted on behalf of SHPI.
2
1.13 "Trademarks" shall mean U.S. Trademark Application No. 76/520,721
for SecureLoc(TM), and all international and common law trademark rights to
SecureLoc(TM).
1.14 "510(k)" shall mean a pre-market approval notification, as defined
in Section 510(k) of the Act.
1.15 "CE xxxx" shall mean the Communite de European xxxx commonly known
as the CE Xxxx.
1.16 "Development Program Funding" shall mean the amount of ** Dollars
($**) to be paid by BAS to SHPI to fund the Development Program which amount
shall include any amounts paid by BAS to SHPI prior to the date hereof pursuant
to purchase order numbers 51674, 51675, 60016, 60019, 60020, and 60022.
1.17. "Manufacturing Sub-Contract Triggering Event" shall have the
meaning set forth in Section 9.5. "Term" shall have the meaning set
forth in Section 7.1.
1.18 "Losses" shall have the meaning set forth in Section 10.1.
1.19 "BAS IP" shall have the meaning set forth in Section 9.2.
1.20 "Equipment" shall have the meaning set forth in Section 3.4.
II. REPRESENTATIONS AND WARRANTIES
2.1. SHPI Representations and Warranties. SHPI hereby represents and
warrants to BAS:
(a) that SHPI is not currently a party to any agreement, oral
or written, which would, in any manner, be inconsistent with the rights
herein granted to BAS, and shall not enter into any such agreement or
understanding, oral or written, during the Term, nor, during the Term,
directly or indirectly, will engage in any activity which would, in any
manner, be inconsistent with the rights herein granted to BAS;
(b) that SHPI is a corporation organized, validly existing and
in good standing under the laws of Utah, has all requisite corporate
power and authority to own and operate its property and to carry on its
business as now being conducted and is duly qualified and in good
standing to do business in any of those jurisdictions where it is
required to be qualified;
(c) that the execution and delivery of this Agreement by SHPI
has been duly and validly authorized by all necessary corporate action
on the part of SHPI and that (assuming valid execution by BAS where
applicable and subject to federal bankruptcy law) this Agreement is a
valid and binding obligation of SHPI enforceable against it; and
(d) all Products will have 510(k) approval. SHPI will submit a
CE xxxx application for the Products upon its completion of the
manufacturing startup phase in accordance with its SOP04-001.
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
3
(e) that SHPI is not, nor will it be, as a result of the
execution and delivery of this Agreement, or the performance of its
obligations under this Agreement, in breach of any license or other
agreement relating to the Products, and
(f) that to the best of its knowledge all patents, registered
trademarks, know-how, service marks and copyrights, if any, included in
the Products are valid and subsisting. To the best of its knowledge,
SHPI does not infringe upon or unlawfully or wrongfully use any patent,
trademark, trade name, service xxxx, copyright or trade secret owned or
claimed by another, and
(g) that, on the Effective Date, SHPI is not a party to any
lawsuit, nor is there any outstanding or threatened claim against SHPI
alleging that use of the Products infringes or otherwise
misappropriates the proprietary rights of any third party.
2.2. BAS Representations and Warranties. BAS hereby represents and
warrants to SHPI:
(a) that BAS is a corporation organized, validly existing and
in good standing under the laws of Utah, has all requisite corporate
power and authority to own and operate its property and to carry on its
business as now being conducted and is duly qualified and in good
standing to do business in any of those jurisdictions where it is
required to be qualified as a result of ownership of property or
residence of any of its employees or agents, and
(b) that the execution and delivery of this Agreement by BAS
has been duly and validly authorized by all necessary corporate action
on the part of BAS and that (assuming valid execution by SHPI and
subject to federal bankruptcy law) this Agreement is a valid and
binding obligation of BAS enforceable against it, and
(c) that BAS is not currently a party to any agreement or
understanding, oral or written, which would, in any manner, be
inconsistent with its obligations described herein and shall not enter
into any such agreement or understanding, oral or written, during the
Term, nor, during the Term, directly or indirectly, engage in any
activity which would, in any manner, be inconsistent with its
obligations described herein, and
(d) that it is registered with the Food and Drug
Administration and authorized to sell the Products.
4
III. DEVELOPMENT PROGRAM.
3.1 Funding. In consideration for the distribution rights granted in
this Agreement, BAS hereby covenants to fund the Development Program to the
extent of the Development Program Funding. The parties specifically acknowledge
that SHPI shall remain solely liable for all costs and expenses related to the
Development Program that exceed the Development Program Funding, unless the
parties make changes to the Development Program or the Specifications. Within
ten (10) days of the close of each month in which SHPI incurs any out-of-pocket
expenses in conjunction with the Development Program, SHPI will furnish BAS with
a written statement documenting such expenses incurred during that month, in a
form, and accompanied by such documentation or receipts, as may be reasonably
satisfactory to BAS. BAS shall pay from the Development Program Funding the
amount of the expenses covered by each such statement within thirty (30) days of
its receipt thereof. Any portion of the Development Program Funding that remains
unpaid at the time of SHPI's delivery of the first Product to BAS after
Regulatory Approval by the United States Food and Drug Administration ("FDA")
shall become immediately payable. If a party proposes to make a change to the
Development Program or the Specifications, the parties shall follow the
procedure set forth in Section 6.4 (relating to modifications in
Specifications). To the extent that the proposed modification results in a delay
or greater expense in concluding the Development Program, the parties shall
jointly examine and mutually agree upon the consequences and the proportion to
which each party will be responsible for the additional time and expenses. Costs
associated with product changes initiated by BAS, or due to changes made by BAS
after the mold is initiated, shall be borne by BAS.
3.2 Diligence. The parties agree that the milestones shall be as set
forth in the Development Program and that both parties shall use all
commercially reasonable efforts to achieve such milestones in the Development
Program unless otherwise agreed in writing by the parties. If the Development
Program is not completed within twelve (12) months of the Effective Date, BAS
may, upon written notice to SHPI, terminate this Agreement without any liability
to SHPI, unless such delay is attributable to BAS. Such early termination may be
affected only if design inputs (BAS DRS) are established within one month from
the Effective Date and final design and product specifications are mutually
established within two months from the Effective Date.
3.3 Intellectual Property. As between the parties, each party shall
retain sole ownership of all ideas, inventions, processes, compounds and
methods, whether patentable or unpatentable, which have or potentially have,
utility in the Development Program and which prior to the date of this Agreement
or during the Term, are conceived, developed, reduced to practice or acquired by
it alone or jointly with a third party. All ideas, inventions, processes,
compounds and methods, whether patentable or unpatentable that are conceived,
developed, reduced to practice or acquired, in each case, jointly by the parties
prior to or during the Term shall be jointly owned by the parties.
3.4 Equipment. (a) Any equipment purchased using Development Program
Funding including the equipment set forth in Exhibit B shall be the sole and
exclusive property of BAS and shall be conspicuously marked "Property of BAS"
(the "Equipment"). SHPI shall at all times keep the Equipment free and clear of
5
all liens, claims or encumbrances and shall provide BAS prompt written notice of
any judicial process affecting the Equipment. SHPI shall not use the Equipment
for any purpose other than fulfilling its obligations under this Agreement. Upon
termination of the Agreement, SHPI shall make the Equipment available for pickup
by BAS and shall provide BAS reasonable access to its facilities during normal
business hours for Equipment retrieval.
(b) SHPI shall bear the risk of loss for the Equipment while in its
possession and shall maintain adequate insurance for the replacement value of
the Equipment in the event of loss. Risk of loss for the Equipment shall return
to BAS upon BAS's retrieval of the Equipment.
IV. DISTRIBUTION OF PRODUCTS
4.1. Appointment of BAS as Distributor. Subject to the terms and
conditions hereof, SHPI hereby appoints BAS, and BAS hereby agrees to act, as
the exclusive distributor of Products in the Field throughout the Territory, for
the Term.
4.2. BAS's Responsibilities. BAS will use reasonable efforts to promote
sales and use of the Products in the Territory. SHPI hereby expressly
acknowledges and agrees that the grants set forth in Section 4.1 shall be deemed
to include a grant to BAS of the right to sell through any Affiliate of BAS and
through distributors of BAS or any Affiliate of BAS. Upon written request by
SHPI no more than once per Contract Year, BAS shall provide SHPI with a list of
all BAS Affiliates.
4.3. Device Complaints. BAS shall maintain a system of product
complaint recording and reporting wherein it will record the details of product
complaints it receives. BAS agrees to send copies of the complaint reports
relating to substantial design, technical or quality issues to SHPI. SHPI shall
be responsible for supporting BAS's investigation of such complaint reports.
SHPI shall, within thirty (30) days after SHPI receives the initial complaint
reports from BAS, forward the findings of the investigation to BAS.
4.4. Recall. If BAS or SHPI are required by any competent governmental
authority to conduct a recall of any Product or either party determines in its
reasonable business judgment that a voluntary recall of any Product is required
(and in the instance of a voluntary recall with the consent of the other party
hereto, which neither SHPI nor BAS will unreasonably withhold), then SHPI shall
bear all expenses of SHPI and all reasonable expenses of BAS related to the
recall as it pertains to the Products. The parties will cooperate in good faith
on all aspects of a recall. Only BAS shall communicate with end-users. Reporting
to regulatory authorities in order to satisfy legal requirements with respect to
recalls shall be initiated by SHPI. Both parties shall comply with applicable
law in initiating and administering recalls and shall cooperate fully with the
governmental authorities during all recall investigations and follow-up actions.
Each party shall immediately notify and provide copies to the other party of any
communications, whether relating to recalls or otherwise, with any governmental
authority.
4.5 Traceability Reporting in Canada. SHPI shall have the right, up to
four times per year, to request and receive from BAS a traceability report of
Products shipped into Canada, such report to include a current status of
specified lot(s), an identification of customers receiving shipments and a
report of any Product remaining in BAS's inventory. Health Canada Medical Device
6
Regulations also require that BAS's maintain records sufficient to facilitate
withdrawal of the Products from the market should a recall be necessary. Such
records must be kept for the longer of (i) the projected useful life of the
Product or (b) two years from shipment of the Product by BAS to its customer.
V. TERMS OF PURCHASE AND SALE
5.1. Purchase Orders. All sales and purchases of Products shall be
initiated pursuant to BAS's purchase order for the same placed with SHPI. All
such sales and purchases shall be governed by the terms and provisions of this
Agreement and any such purchase order, provided that in the event there is a
conflict between the terms of this Agreement and any of the terms of such
purchase order, the terms of this Agreement shall prevail. Purchase orders shall
be issued by BAS at the beginning of the preceding quarter and shall set forth
the quantity of each item ordered and the required delivery dates. Each purchase
order issued by BAS hereunder shall be accompanied by a non-binding forecast of
BAS's anticipated orders during each of the succeeding three (3) quarters.
Insomuch as these requirements are met, delivery of Products shall be made
within forty-five (45) days from receipt of purchase order, or on a later date
specified by BAS. All purchase orders issued by BAS hereunder shall be firm and
non-cancelable unless BAS has exercised its rights pursuant to Sections 9.3
through 9.5 of this Agreement.
5.2. Selling Price. (a) SHPI and BAS hereby agree that the selling
prices by SHPI to BAS shall be $** for each bulk, non-sterile unit Product in a
fully-finished form in accordance with applicable Specifications and the
assumptions/comments set forth in Exhibit C, which is attached hereto and
incorporated herein, which selling prices shall be firm for purchase orders
placed through the end of the first complete Contract Year. After the first
Contract Year, and thereafter, the selling price shall be reduced to $** for
each bulk, non-sterile unit Product, with the proviso that on or about the
completion of each succeeding Contract Year the parties shall jointly discuss
any necessary adjustments to the selling prices of the Products. Any such
adjustments to the selling prices shall not exceed the documented increases or
decreases in contract manufacturing costs or raw materials costs of the Products
since SHPI's initial delivery of the Products to BAS or the last such increase,
as the case may be, provided, however, that: (1) no adjustments shall be made
unless the cost of manufacturing or raw materials has increased or decreased by
more than **% in the aggregate during each succeeding Contract Year; and (2)
SHPI has negotiated in good faith with its contract manufacturers and suppliers
to obtain a fair market price for such manufacturing or raw materials. All
documentation of increased or decreased costs provided by SHPI to BAS pursuant
to this Section 5.2 shall be accompanied by a certification of the chief
financial officer of SHPI as to its accuracy. Upon reasonable prior notice, BAS
shall have the right during normal business hours to audit SHPI's records to
verify any such increase or decrease.
(b) **
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
7
5.3. Delivery. SHPI shall use commercially reasonable efforts to
manufacture and deliver Products to BAS, but in no case will SHPI be obligated
to deliver more than 30% over the forecasted volumes for a quarter, as such
forecast is determined in accordance with Section 5.1. BAS shall provide up to
six (6) months notice for changes to the forecast as described in Section 5.1 if
the increase in volume is more than 30% of the amount forecasted.
5.4. Payment and Shipment. Shipment shall be in accordance with BAS's
instructions. SHPI shall invoice BAS for Products at the time of shipment. All
payments shall be due net thirty (30) days after shipment. All shipments of
sterile, single packaged Products shall be F.O.B. destination to BAS's facility
in Salt Lake City, Utah. All shipments of bulk, non-sterile Products shall be
F.O.B. destination to a BAS Affiliate facility in Renosa, Mexico. SHPI will
provide freight prepaid by common carrier. All other locations and means of
delivery will be specified at the time of purchase order and all associated
shipping costs will be paid by BAS.
5.5. Minimum Purchase Requirements. Subject to the provisions of
Sections 9.3 through 9.5, BAS agrees to place purchase orders with SHPI under
this Agreement in the following cumulative quantities (hereinafter referred to
as the "Minimum Purchase Requirement"): ** units in the first Contract Year, **
units in the second Contract Year, ** units in the third Contract Year, and **
units in each Contract Year thereafter. **.
5.6 Minimum Order Quantity. The minimum order quantity for any order
shall be ten thousand (10,000) units for each SKU.
5.7 Competitive Products. The parties agree that nothing in this
Agreement shall restrict BAS's right to manufacture, market, sell, distribute or
license products or technologies competitive with Products.
VI. MANUFACTURE OF PRODUCTS
6.1. Representations and Warranties. SHPI hereby represents and
warrants to BAS:
(a) that each of the Products sold to BAS hereunder shall be
manufactured in accordance with the requirements of the FDA, including
the requirements of the Quality Systems Regulations set forth in 21CFR,
Parts 808, 812 and 820; and
(b) that each of the Products sold to BAS hereunder shall be
new, free from defects in material and workmanship, and shall comply in
all respects with the applicable Specifications therefor; and
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
8
(c) that each of the Products sold to BAS hereunder will not,
at the time of delivery to BAS, be adulterated or misbranded within the
meaning of the Act or within the meaning of any jurisdiction in which
the definitions of misbranding and adulterating are substantially the
same as in the Act, nor, following FDA approval of Products, will any
Product at the time of delivery to BAS be an article which may not,
under the Act, be introduced into interstate commerce, and
(d) that SHPI holds good and marketable title to all Products,
and
(e) that all Products shall, at the time of delivery to BAS,
have an expiration date of not less than 24 months from the date of
manufacture. Products will be shipped to BAS having a remaining
shelf-life of at least 12 months.
6.2. Warranty Limitations. Except as otherwise set forth in this
Agreement, there are no other express or implied warranties, including any
warranty of merchantability or fitness for a particular purpose. In the event of
any breach of the warranties set forth in Section 6.1 hereof, SHPI shall, at
SHPI's sole cost and expense, at BAS's option, repair or replace the Products
which are defective or do not conform to the Specifications, within thirty (30)
days of the return of such item(s) to SHPI or shall credit BAS's account for the
purchase price paid for such item(s) by BAS upon the return thereof by BAS. All
shipping costs incurred incident to any such breach shall be borne by SHPI.
6.3. Labeling. Product labeling shall have bar coding on the primary
and secondary packaging in compliance with the Health Industry Bar Coding
standards. No changes may be made to any Product labeling or packaging without
the prior written consent of BAS.
6.4 Changes to Specifications. In the event that the Specifications are
proposed to be modified, the party seeking to make such modification shall
notify the other party as far in advance as is practicable prior to the proposed
effectiveness of such modification and the parties shall jointly agree on
whether and when to implement such modification. To the extent that such
modification results in an increase or decrease in the cost of manufacturing or
packaging the Products, the parties shall jointly examine and mutually agree
upon the consequences thereof and appropriate adjustments to the then current
price in effect pursuant to Section 5.2.
VII. TERM AND TERMINATION
7.1. Term. This Agreement shall commence as of the date first above
written and shall remain in full force and effect (a) through the end of the
fourth Contract Year, and (b) thereafter, shall be automatically renewed for
successive one-year terms unless terminated by BAS by providing written notice
to SHPI at least one hundred eighty (180) days prior to the expiration of the
initial or any renewal term (the "Term").
7.2. Breach. Except as otherwise provided in this Agreement, in the
event of a material breach or default by either of the parties hereto of any
term or provision of this Agreement on their respective parts to be observed or
performed, the party who is not in breach or default shall have the right to
9
give the other party notice thereof, whereupon the party receiving such notice
shall have thirty (30) days to cure or cause the cure of such breach or default,
or if the same cannot reasonably be cured within such thirty (30) days, the
party receiving such notice shall, within said period, commence or have caused
the commencement of such cure and thereafter continue to diligently prosecute or
cause the prosecution of cure of the same. If such breach or default is so
cured, this Agreement shall remain in full force and effect. If such breach or
default is not so cured, this Agreement shall immediately terminate upon notice
of termination given to the party which failed to so cure such breach or
default. A material breach or default of this Agreement shall include the
following occurrences:
(i) after the placement by BAS of a purchase order,
SHPI delivers Product volumes in an amount that is less than 80% of the forecast
volumes (as required in Section 5.1) for three (3) consecutive months or three
(3) times within any six (6) month period; or
(ii) more than 20% of the Products delivered by SHPI
in two (2) consecutive months or in three (3) Products deliveries in any six (6)
month period, fail to conform to the Specifications.
7.3. Effect of Termination or Expiration. Expiration or prior
termination of this Agreement, for any reason, will not release either party
from any liability which at said time it has already incurred to the other
party, nor affect in any way the survival of any rights, duties or obligations
of either party which are expressly stated elsewhere in this Agreement to
survive said expiration or prior termination. Nothing in the immediately
preceding sentence will affect, be construed or operate as a waiver of the right
of the party aggrieved by any breach of this Agreement to be compensated for any
injury or damage resulting therefrom which is incurred before or after such
expiration or termination.
7.4 Disposition of Inventory. BAS will be entitled to sell its stock of
the Products, if any, for a twelve-month period following the termination or
expiration of this Agreement, or if such date is later, the date of delivery of
any Products to BAS.
VIII. REGULATORY MATTERS
8.1. United States and European Union. SHPI shall obtain and comply
with all licenses, consents, permits and applicable laws and regulations,
including the Act, which may from time to time be required by appropriate
governmental authorities with respect to its manufacturing and packaging
processes at its facility and otherwise to permit the performance of its
obligations hereunder as well as the sale of the Products in the United States
and the European Union, including the filing of a 510(k) application with the
United States Food and Drug Administration and the filing of a CE Xxxx
application with the European Union. SHPI agrees to provide BAS with copies of
all papers, concurrence and office actions pertaining to regulatory
communications with the United States Food and Drug Administration. SHPI shall
promptly transfer ownership of the aforementioned 510(k) and CE Xxxx
applications to BAS at no cost. BAS shall not have the right to further transfer
the 510(k) other than to a BAS Affiliate. BAS shall register as the
specification developer and shall list the Products with the FDA.
10
8.2. Other. SHPI shall provide BAS with whatever reasonable assistance
BAS may request, including providing its technical files and data, in
conjunction with BAS's initiating the registration or approval process for the
Products outside of the United States and the European Union. BAS agrees to
cover the reasonable costs associated with any unanticipated and extraordinary
data requests by governmental authorities. SHPI agrees to support all required
facility audits by regulatory bodies from those non-FDA geographies where BAS or
SHPI has initiated the registration or approval process.
IX. INTELLECTUAL PROPERTY MATTERS and MANUFACTURING SUB-CONTRACT
9.1 Infringement. In the event suit is filed against BAS or any
Affiliate of BAS by a third party alleging that the manufacture, import, use,
offer for sale or sale of any Product alone and not based upon its combination
with any other article, infringes or misappropriates the proprietary rights of
such third party, BAS shall promptly notify SHPI and shall include in its notice
all facts in BAS's possession relating to the same. In said event, SHPI hereby
agrees to indemnify, save and hold BAS harmless from and against all Losses (as
defined below) incident to any such suit in accordance with the procedure set
forth in Section 10.3.
9.2 Trademarks. In connection with SHPI's performance of this
Agreement, BAS hereby grants SHPI the right to reproduce and print on the
Products or Product packaging such trademarks, trade names, brand names,
slogans, logos, copyrights and trade dress of BAS that BAS may designate in
writing from time to time (collectively together with any goodwill associated
therewith, the "BAS IP"), strictly in accordance with trademark usage and
packaging guidelines set forth in the Specifications or otherwise provided by
BAS. Samples of all such uses of BAS IP on the Products or Product packaging
shall be submitted to BAS for its written approval prior to production. The
permission granted to SHPI to the BAS IP is restricted to usage in connection
with the Products supplied under this Agreement, and such permission extends
only for the Term or such shorter period as may be designated or required by
BAS.
Any BAS IP, patent or other proprietary technology owned by or licensed
to BAS or any of its Affiliates associated with the Products shall be the sole
and exclusive property of BAS and it Affiliates and nothing set forth in this
Agreement shall be construed to grant to SHPI any title, right or interest
thereto. SHPI's use of such BAS IP, patents or other proprietary technology
shall be limited exclusively to its performance of this Agreement. Any other use
of said BAS IP, patents or other proprietary technology (unless otherwise
specified herein) shall constitute an infringement thereof or violation of BAS's
rights.
BAS shall be entitled to use the Trademarks in connection with the
marketing, promotion and sale of the Products in the Territory as approved by
SHPI, which approval shall not be unreasonably withheld. In connection with such
use, SHPI hereby grants to BAS, to the extent necessary, a royalty-free,
non-exclusive license for the Term to use and employ the Trademarks and to affix
the Trademarks to the Products.
9.3 Manufacturing Sub-Contract. Whenever a Manufacturing Sub-Contract
Triggering Event (as such term is defined in Section 9.5) shall have occurred,
SHPI agrees, at it's option, that either:
11
(i) SHPI shall enter into a manufacturing sub-contract with a
third party acceptable to BAS, under terms and conditions acceptable to BAS,
granting such third party the right to manufacture the Products for supply to
BAS in accordance with this Agreement, or
(ii) BAS shall have the right to exercise its rights under the
sub-contract granted in Section 9.4. BAS shall provide to SHPI written notice
specifying the Manufacturing Sub-Contract Triggering Event which has occurred.
9.4. Grant of Manufacturing Sub-Contract. Should a Manufacturing
Sub-Contract Triggering Event (as such term is defined in Section 9.5) occur,
BAS will make reasonable efforts to resolve the manufacturing deficiencies with
SHPI. If after reasonable efforts the manufacturing deficiencies continue, SHPI
will grant to BAS, or a third party acceptable to BAS, a non-exclusive
manufacturing sub-contract ("Sub-Contract") for the manufacture of the Products
in accordance with SHPI's obligations under this Agreement. The Sub-Contract
shall expire upon the expiration of this Agreement and shall be subject to the
terms and conditions of this Agreement.
9.5. Manufacturing Sub-Contract Triggering Event. The following shall
individually and collectively constitute a "Manufacturing Sub-Contract
Triggering Event" for purposes of this Agreement:
(i) SHPI discontinues the manufacture of the Products;
(ii) SHPI voluntarily liquidates its assets or dissolves its
business;
(iii) SHPI delivers Product volumes, after the placement by
BAS of a purchase order, in an amount less than 80% of the purchase order
volumes, so long as such purchase order volumes are within the forecast volumes
(as determined in accordance with Section 5.1) for three (3) consecutive months
or three (3) times within any six (6) month period; or
(iv) more than 20% of the Products delivered in two (2)
consecutive months or in three (3) Products deliveries in any six (6) month
period fail to conform to the Specifications.
X. INDEMNIFICATION/INSURANCE.
10.1. Product Liability. SHPI and its Affiliates (collectively referred
to as "SHPI" for the purpose of this Section 10.1) hereby agree to indemnify,
save and hold BAS and its Affiliates harmless from and against all suits,
actions, claims, demands, judgments, liabilities and expenses (including
reasonable attorneys' fees and expenses) (collectively, "Losses") which arise or
result from (a) alleged injury (including death) incident to the use of any of
the Products and not based solely on the combination of such Products with other
products manufactured or sold by BAS, and (b) misrepresentations of any
representation contained herein, or default in the observance or performance of
any term or provision hereof. Notwithstanding the foregoing, it is understood
and agreed that SHPI shall have no obligations under this Section 10.1 for any
Losses to the extent caused by the negligence, recklessness, willful misconduct
or breach of any of the terms of this Agreement by BAS, its Affiliates or
agents.
12
10.2. BAS Indemnity. BAS and its Affiliates (collectively referred to
as "BAS" for the purpose of this Section 10.2) hereby agree to indemnify, save
and hold SHPI and its Affiliates harmless from and against all Losses which
arise or result from BAS's labeling or claims on Products inconsistent with the
Specifications, misrepresentations of any representation contained herein, or
default in the observance or performance of any term or provision hereof.
Notwithstanding the foregoing, it is understood and agreed that BAS shall have
no obligations under this Section 10.2 for any Losses to the extent caused by
(i) the negligence, recklessness, willful misconduct or breach of any of the
terms of this Agreement by SHPI, its Affiliates or agents or (ii) Products that
do not conform in all respects to the Specifications or warranties.
10.3. Procedure. In the event of a claim subject to the indemnification
provisions stated above, the indemnified party shall give prompt notice to
indemnifying party, provided that the failure to give such notice shall not
affect any indemnified party's rights to indemnification under this Agreement
unless such failure shall materially prejudice the indemnifying party's ability
to defend such claim. The indemnifying party (at its expense) shall have the
right to assume the defense of any such claim against the indemnified party. If
the indemnifying party shall elect not to assume the defense of any such claim
or fails to make such an election within twenty (20) days after it receives the
above notice, the indemnified party may assume such defense with counsel of its
choice and at the expense of the indemnifying party. The indemnified party shall
have the right to participate in (but not control) the defense of any such claim
defended by the indemnifying party hereunder and to retain its own counsel in
connection with such claim, but the fees and expenses of such counsel shall be
at the indemnified party's expense; provided, however, that the indemnifying
party shall bear the reasonable fees and expenses as incurred of counsel to the
indemnified party if representation of the indemnifying party and the
indemnified party by the same counsel would reasonably be likely to create a
conflict. No party shall be liable for any settlement by which it is affected
without its written consent, which consent shall not be unreasonably withheld or
delayed. The indemnified party shall fully cooperate with the indemnifying party
in the defense of any matter subject to indemnification.
10.4. Insurance. SHPI hereby covenants to obtain and maintain, during
the Term, a comprehensive general liability insurance policy, with products
liability endorsement, for the Products which policy shall be a minimum amount
of two million dollars ($2,000,000) per occurrence. Said policy shall either
name BAS and its Affiliates as additional insureds or shall provide coverage via
a broad form vendor's endorsement. Additionally, said policy shall provide for
not less than thirty (30) days prior written notice to BAS in the event of any
change in coverage or policy cancellation. SHPI hereby covenants to deliver to
BAS a certificate evidencing such coverage within ten (10) days of the Effective
Date.
XI. MISCELLANEOUS
11.1. Confidential Information. Each party shall hold in confidence any
Confidential Information disclosed by the other or otherwise obtained by such
party as a result of activities contemplated by this Agreement, and each party
shall protect the confidentiality thereof with the same degree of care that it
exercises with respect to its own information of a like nature, but in no event
13
less than reasonable care. Access to Confidential Information must be restricted
to the receiving party's employees, who, in each case, need to have access to
carry out a permitted use and are bound in writing to maintain the
confidentiality of such Confidential Information. The Confidential Information
and all copies of part or all thereof, shall be and remain the exclusive
property of the disclosing party, and the receiving party shall acquire only
such rights as are expressly set forth under the terms and conditions of this
Agreement and only for so long as such rights are in effect.
11.2. Survival. The following Articles or Sections shall continue in
effect notwithstanding any termination of this Agreement: 3.1, 3.3, 3.4, 6.1,
6.2, 7.3, 9.1, 9.3 through 9.5, 10.1 through 10.3, and Articles XI and XII, and
no termination of this Agreement shall relieve any party of liability for a
breach or violation of this Agreement occurring before such termination.
11.3. No Agency. This Agreement shall not constitute BAS the agent or
legal representative of SHPI for any purpose whatsoever and BAS shall not hold
itself out as an agent of SHPI. This Agreement creates no relationship of joint
venturers, partners, associates, employment or principal and agent between the
parties, and both parties are acting as independent contractors. Neither party
is granted herein any right or authority assume or create any obligation or
responsibility for or on behalf of the other party. Neither party shall have any
authority to bind the other party to any contract, whether of employment or
otherwise, and each party shall bear all of its own expenses for its operations,
including the compensation of its own employees and salespeople and the
maintenance of its own offices, service and warehouse facilities. Each party
shall be solely responsible for its own employees and salespeople and for their
acts and the things done by them.
11.4. Amendments. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties hereto.
11.5. Waivers. No waiver of any provision of this Agreement, or consent
to any departure from the terms hereof, shall be effective unless the same shall
be in writing and signed by the party waiving or consenting thereto. No failure
on the part of any party to exercise and no delay in exercising, any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or remedy by such party preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate as a waiver of any subsequent breach. All rights and remedies
hereunder are cumulative and are in addition to and not exclusive of any other
rights and remedies provided by law.
11.6. Performance. Each party hereto acknowledges that money damages
alone will not adequately compensate such party for breach of such party's
obligations under Section 11.1 and, therefore, agrees that in the event of the
breach or threatened breach of any such obligation, in addition to all other
remedies available to the other party, at law, in equity or otherwise, such
other party shall be entitled to seek injunctive relief compelling specific
performance of, or other compliance with, the terms of such Section.
14
11.7. Notices. Any notice or communication given pursuant to this
Agreement by any party to any other party shall be in writing and shall be
sufficiently given if personally delivered, sent by facsimile or other means of
confirmed electronic transmission or sent by a recognized next-day courier
service or by mail, postage prepaid to the parties at the following addresses or
to such other address as either party may hereafter designate to the others by
like notice:
(a) if to SHPI, to:
Specialized Health Products International, Inc.
000 Xxxx 000 Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
(b) if to BAS, to:
Bard Access Systems, Inc.
0000 Xxxx Xxxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: President
FAX Number: 000-000-0000
with a copy to:
X. X. Xxxx, Inc. 730 Central Avenue Xxxxxx
Hill, New Jersey 00000 (000) 000-0000 FAX
Number: (000) 000-0000
ATTENTION: Office of General Counsel
11.8. Expenses. Each party hereto shall pay its own expenses in
connection with the transactions contemplated hereby, whether or not they are
completed.
11.9. Publicity. Except as required by applicable law or regulations,
neither party shall use the name of the other party in any publicity or
advertising without the prior written approval of the other party. Neither party
shall disclose any terms or conditions of this Agreement without the prior
written consent of the other party, provided, however, that either party, an
Affiliate of either party, or the corporate parent of either party may make such
disclosure to the extent that it reasonably believes such disclosure is
advisable or necessary for it to comply with the Federal Securities Laws or
other applicable law.
11.10. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, warranties, commitments, offers,
contracts and writings prior to the date hereof.
11.11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with, the substantive laws of Utah, without giving
effect to its conflicts of law rules.
11.12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
15
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. In the event that
any provision of this Agreement shall be determined to be unenforceable by
reason of its extension for too great a period of time or over too large a
geographic area or over too great a range of activities, it shall be interpreted
to extend only over the maximum period of time, geographic area or range of
activities as to which it may be enforceable.
11.13. Exhibits and Schedules. All Exhibits and Schedules mentioned in
this Agreement shall be attached to this Agreement and shall form an integral
part hereof. All capitalized terms defined in this Agreement which are used in
any Exhibit or Schedule shall, unless the context otherwise requires, have the
same meaning therein as given herein.
11.14. Counterparts. This Agreement may be executed in two (2) or more
counterparts, including facsimile counterparts, all of which shall be considered
one and the same agreement and shall become effective when two (2) or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
11.15. Assignments; Successors and Assigns. Neither party shall
transfer or assign (by operation of law or otherwise) its rights or obligations
under this Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, either party may assign this Agreement in
connection with a sale or transfer of substantially all of the assets of, or a
majority interest in the voting shares of, that party to, or the merger or
consolidation of that party with or into, any other person or company.
11.16. Force Majeure. Either party shall be excused from delay in
performing or from its failure to perform hereunder to the extent that such
delay or failure results from any cause or causes beyond such party's reasonable
control, including: delay by any supplier in providing materials, parts or
services; delay by any carrier; fire; flood; acts of God; acts of war or
terrorism; labor dispute; riot; compliance with any applicable governmental act,
regulation or request; and shortage of labor, materials or manufacturing
facilities.
11.17. Construction. Unless the context of this Agreement clearly
indicates otherwise: (a) the singular shall include the plural, the plural shall
include the singular, and the part shall include the whole; (b) references to
one gender shall include all genders; (c) "or" has the inclusive meaning
frequently identified with the phrase "and/or"; (d) "including" or "includes"
has the inclusive meaning frequently identified with the phrase "including but
not limited to"; and (e) references to "hereunder," "herein" and "hereof" relate
to this Agreement as a whole; articles, sections, subsection, exhibit and
schedule references are to this Agreement unless otherwise specified. Any
reference herein to any law or agreement, including this Agreement, shall be
deemed to include such law or agreement as it may be modified, varied, amended
or supplemented from time to time. The headings contained in this Agreement are
solely for reference purposes and shall not affect the meaning or interpretation
of this Agreement.
16
XII. ARBITRATION
12.1. In the event of a dispute of whatever nature arising between the
parties, including, those arising out of or relating to this Agreement or the
construction, interpretation, performance, breach, termination, enforceability
or validity of this Agreement, the parties shall exercise good faith efforts to
resolve such dispute within a reasonable period of time. Should the parties fail
to reach agreement after thirty (30) days of good faith negotiations, the
parties agree to submit said dispute to binding arbitration. Said arbitration
shall take place in Salt Lake City, Utah, in accordance with the rules of the
American Arbitration Association. The arbitration panel shall consist of one
arbitrator selected by the American Arbitration Association
12.2. The arbitration proceedings conducted pursuant hereto shall be
confidential. Neither party shall disclose or permit the disclosure of any
information about the evidence adduced or the documents produced by the other
party in the arbitration proceedings or about the existence, contents or results
of the arbitration award without the prior written consent of such other party
except in the course of judicial, regulatory or arbitration proceeding or as may
be required by a governmental authority. Before making any disclosure permitted
by the preceding sentence, the party intending to make such disclosure shall
give the other party reasonable written notice of the intended disclosure and
afford the other party reasonable opportunity to protect its interests.
12.3. The arbitrators shall set forth in writing their findings of fact
and conclusions of law and shall render their award based thereon. Said award
shall be a final and binding judgment enforceable by a court of competent
jurisdiction.
12.4. The parties shall each be responsible for its own expenses
related to any such proceeding (including the fees and expenses of counsel).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President & CEO
BARD ACCESS SYSTEMS, INC.
By: /s/ Xxx Xxxxxxx
Name: Xxx Xxxxxxx
Title: President
17
EXHIBIT A
**
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
18
EXHIBIT B
Equipment
**
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
19
EXHIBIT C
1.1 Assumptions and Notes
**
---------------
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
20
