SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT ("Agreement") is dated as of June 30, 2000 (the
"Effective Date"), between Xxxxxxx Lifesciences LLC, a Delaware limited
liability company ("Xxxxxxx"), and Valentine Acquisition Corp., a Delaware
corporation ("Newco") and Xxxxxxx Novacor LLC, a Delaware limited liability
company ("Purchaser").
RECITALS
X. Xxxxxxx is capable of manufacturing certain devices more
particularly described in the specifications set forth in the attached Exhibit A
(the "Specifications") and which are referred to in this Agreement as
"Products."
B. Purchaser desires to purchase the Products for use as components in
the manufacture of its heart assist and replacement devices and Xxxxxxx desires
to sell the Products to Purchaser upon the terms and conditions set forth in
this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and other
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Delivery. Xxxxxxx agrees to manufacture and sell the
Products to Purchaser, and Purchaser agrees to purchase the Products from
Xxxxxxx upon the following terms:
(a) Purchaser shall provide Xxxxxxx with a rolling twelve (12) month
forecast of its purchase requirements for the Products, updated
on a quarterly basis. The initial forecast is attached hereto as
Exhibit B. In conjunction with the quarterly twelve-month
forecast, Purchaser will provide Xxxxxxx with a binding purchase
order equal to the first three (3) months of the forecast on a
form of purchase order mutually agreed to by the parties. Xxxxxxx
will use commercially reasonable efforts to deliver the Products
according to the schedule set forth in each of the purchase
orders, provided that such schedules will not require delivery
earlier than 45 days from the date of the purchase order.
(b) All sales of Products shall be subject to the terms and
conditions of this Agreement. If there is any conflict or
difference in interpretation between any Purchaser purchase order
and this Agreement, the terms and conditions of this Agreement
shall supersede those of such purchase order.
2. Payment and Shipping. The price paid by Purchaser to Xxxxxxx for
the Products shall be as set forth on Exhibit D hereto, which Xxxxxxx represents
and warrants are the prices which are currently in effect with respect to such
Products, and shall remain unchanged through 12/31/2001. As of 1/1/2002 the
prices set forth on Exhibit D shall be adjusted to the lesser of (a) an increase
of 25%; (b) the average selling prices for such Products in the United States
(when sold by Victoria) reduced by a discount of 25% or (c) the most favorable
price provided to any other customer in the United States. Xxxxxxx may further
adjust the prices by up to 5% per year during any year following the expiration
of the Initial Term. Terms of payment are net 45 days from receipt of Product.
Xxxxxxx shall ship the Products F.O.B. Xxxxxxx' manufacturing facility via
mutually agreed upon carriers. Purchaser shall pay all normal freight charges
and the Products are tendered to Purchaser upon receipt by the carrier.
3. Materials Provided by Purchaser. The components listed on Exhibit C
("Components") shall be provided to Xxxxxxx by Purchaser at the prices set forth
on Exhibit C for inclusion in the Products. Purchaser shall be solely
responsible for determining the suitability of each of the Components for
inclusion in Purchaser's device and for inspecting such Components to insure
that there are no manufacturing or other defects in the Components. Purchaser
warrants that all products sold to Xxxxxxx under this Agreement are free from
defects in materials, workmanship and good and marketable title.
4. Term. This Agreement will come into effect on the Effective Date
and will continue for an initial term ("Initial Term") of five (5) years.
Thereafter, this Agreement will be automatically renewed for one-year terms on
each anniversary of the Effective Date unless terminated pursuant to Section 5
below.
5. Termination. This Agreement may be terminated by:
(a) Either party (i) upon any anniversary of the Effective Date after
the Initial Term, if the terminating party provides the other
party with 180 days prior written notice of such termination,
(ii) if any material breach by the other party remains uncured 30
days after written notice containing details of the breach has
been delivered to the other party; or (iii) if the other party
shall file for protection from its creditors under any applicable
bankruptcy or insolvency laws, shall make an assignment for the
benefit of creditors, or shall have a receiver appointed for its
property;
(b) Xxxxxxx upon 180 days written notice after the Initial Term if it
elects not to continue to manufacture any of the Products.
6. Confidentiality. During discussions leading up to the execution of
this Agreement, and during the course of performing each of their obligations
under this Agreement, it is anticipated that Xxxxxxx and Purchaser will each
learn confidential and proprietary information ("Confidential Information") that
is the property of the other. The party supplying such Confidential Information
("Disclosing Party") shall xxxx all written materials deemed to contain
confidential or proprietary information "Confidential Information," and shall
provide a written representation of any orally or visually presented
Confidential Information, which shall also be marked "Confidential Information"
within thirty (30) days of disclosure of such information to the other party.
Any samples or equipment provided by either Purchaser or Xxxxxxx pursuant to
this Agreement, including, without limitation, instructions or other materials
provided therewith, shall be considered Confidential Information whether or not
so marked.
A party which receives Confidential Information ("Receiving Party")
shall make reasonable efforts to ensure that neither it nor any of its
subsidiaries, divisions, directors, officers, employees, agents, independent
contractors or other organizations or persons over which it has control or
acting on its behalf, will: (i) directly or indirectly use any Confidential
Information for any purpose which is not directly related to (A) its obligations
under this Agreement, or, (B) if the Receiving Party is Purchaser, the further
handling, processing, marketing and sale of the Products and items in which the
Products become components; or (ii) disseminate or disclose any of the
Confidential Information to any person or persons who do not need to have
knowledge of the Confidential Information in the course of their employment with
Receiving Party, without the express written consent of the Disclosing Party for
a period of three (3) years from the receipt thereof.
(a) The parties' obligations under this Agreement shall not apply to
any Confidential Information which:
(i) Is or becomes publicly known without the wrongful act or
breach of this Agreement by the Receiving Party;
(ii) Is independently developed by the Receiving Party without
the benefit of the disclosed Confidential Information, or is
already known to the Receiving Party at the time of
disclosure;
(iii) Is rightfully received by the Receiving Party from a third
party who is not under any obligation of confidentiality to
the Disclosing Party; or
(iv) Is disclosed by the Receiving Party with the written
approval of the Disclosing Party.
(b) Confidential Information shall not be deemed to be available to
the public or in Xxxxxxx' prior possession merely because it was
embraced by more general information available to the public or
in the prior possession of Xxxxxxx.
(c) The obligation to keep Confidential Information confidential and
the obligation for non-use of such information set forth herein
shall survive the termination of this Agreement. Upon termination
of this Agreement, Purchaser and Xxxxxxx will (i) return or (ii)
certify in writing the destruction of all Confidential
Information to the Disclosing Party with respect to such
information, including, without limitation, all drawings,
specifications, manuals and other printed or reproduced material
(including information stored on machine readable media) and all
copies of such information made by the Receiving Party.
7. Warranty. Xxxxxxx warrants that all products sold to Purchaser
under this Agreement are free from defects caused by Xxxxxxx' manufacturing
process and that Xxxxxxx has manufactured the Products in accordance with the
Specifications. Xxxxxxx EXPRESSLY DISCLAIMS AND PURCHASER EXPRESSLY WAIVES ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING THE
FOREGOING, Xxxxxxx SHALL NOT BE RESPONSIBLE FOR ANY DEFECTS OR FAILURE TO MEET
THE SPECIFICATIONS CAUSED BY DEFECTS OR LIMITATIONS IN THE MATERIALS SUPPLIED TO
Xxxxxxx BY PURCHASER.
8. Damages Limitation. Purchaser's remedies under the express limited
warranty set forth above shall be limited to the repair or replacement of the
Products, at Xxxxxxx' discretion.
9. Indemnification.
(a) Xxxxxxx hereby indemnifies and agrees to defend and to hold
Purchaser, its affiliates, shareholders, directors, officers,
employees, successors, and assigns harmless from and against all
third-party claims including, without limitation, personal
injury, intellectual property and regulatory losses, attorney's
fees and expenses, arising from or related to the use of any
Product or allegedly caused by any Product (collectively,
"Losses") to the extent such Losses result from the Product's
failure to meet the Specifications and such failure is not a
result of Purchaser's negligence or defects in the Components
supplied by Purchaser to Xxxxxxx.
(b) Purchaser hereby indemnifies and agrees to defend and to hold
Xxxxxxx, its affiliates, shareholders, directors, officers,
employees, successors, and assigns harmless from and against all
Losses, including, without limitation, personal injury,
intellectual property and regulatory losses, attorney's fees and
expenses, arising from or related to the use of any Product or
allegedly caused by any Product except to the extent such Losses
result from a Product's failure to meet the Specifications and
such failure is not a result of Purchaser's negligence or defects
in the Components supplied by Purchaser to Xxxxxxx. Purchaser
will maintain appropriate insurance protections in support of
this indemnification obligation.
(c) The party seeking indemnification (the "Indemnified Party") shall
notify the indemnifying party (the "Indemnifying Party") of all
claims that may be subject to indemnification under this Article
within a reasonable time after their receipt. The Indemnified
Party will cooperate fully with Indemnifying Party in defending
or otherwise resolving each such claim. The Indemnifying Party
will have full control of the defense of all such claims. The
Indemnified Party, at its expense, shall be entitled to be
represented by its own counsel in any such claim. The
Indemnifying Party agrees to bear all costs and expenses of
defense, including its own attorney's fees in connection with
such claim, and the Indemnifying Party will reimburse the
Indemnified Party for each disbursement made by the Indemnified
Party in satisfaction of a final judgment issued in such claim.
10. Entire Agreement; No Waiver. This Agreement contains the entire
agreement between the parties relating to Purchaser's purchase of the Products
from Xxxxxxx and all prior understandings between the parties relating thereto
are superseded by this Agreement. None of the terms of this Agreement shall be
deemed to be waived or amended by either party unless such waiver or amendment
specifically references this Agreement and is in writing signed by the party to
be bound. Waiver by either party of any default by the other will not be deemed
a waiver by such party of any default by the other that may thereafter occur.
11. Notices. All notices given under this Agreement shall be in
writing and may be delivered (i) by hand, (ii) by United States mail, certified
or registered, return receipt requested, (iii) by overnight courier service, or
(iv) by facsimile transmission. Notices shall be deemed to have been received:
if hand delivered, when so delivered; if mailed, five days after deposit as
certified or registered mail; if by courier, on the date scheduled for delivery;
and if by facsimile transmission, on the date shown on the confirmation of the
transmission generated by the sending machine. All notices shall be sent to the
addresses and facsimile numbers set forth below (or at such address or facsimile
number as the receiving party may specify from time to time in accordance with
this Section):
If to Xxxxxxx: If to Purchaser:
Xxxxxxx Lifesciences World Heart Corporation
Xxx Xxxxxxx Xxx 0 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000 Xxxxxx, Xxxxxxx X0X 0X0
Attn: Supplier Relations Attn: Chief Financial Officer
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
12. Dispute Resolution. Any claim or controversy relating to or
arising from this Agreement that is not fully resolved by negotiation or
mediation between the parties within thirty (30) days after a party first
notifies the other party of such claim or controversy shall be solely and
finally settled by arbitration in accordance with the CPR Rules for
Non-Administered Arbitration of Business Disputes ("CPR Rules"). The arbitration
shall be conducted in the Irvine, California by a sole arbitrator, who shall be
a former judge, appointed jointly by the parties ("Arbitrator"). If the parties
cannot agree on the appointment of an Arbitrator, they shall each propose one
individual from CPR's Regional Panel of Distinguished Neutrals for the State of
California. The two proposed individuals shall mutually appoint a third
individual, who is a former judge, from the same panel, to be the Arbitrator.
Any court having jurisdiction thereof may enter judgment upon the award rendered
by the Arbitrator. To the extent permissible under applicable law, the parties
agree that the award of the Arbitrator shall be final and shall be subject only
to the judicial review permitted by the CPR Rules.
13. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties, their successors and assigns. This Agreement shall be
assignable by Xxxxxxx, in whole or in part, without the consent of Purchaser to
any Xxxxxxx affiliate and by either party with the written consent of the other.
Any attempt to assign that does not comply with the terms of this Section shall
be void.
14. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California.
If any portion of this Agreement is found by a court of competent jurisdiction
to be illegal, invalid or unenforceable, such portion shall be deleted and all
other terms and conditions of this Agreement shall remain in full force and
effect and shall be interpreted to achieve, to the greatest extent possible, the
objectives of this Agreement taken as a whole, including the illegal, invalid or
unenforceable provision.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same instrument.
16. No Third Party Beneficiaries. Nothing in this Agreement is
intended to create any rights by persons not a party to this Agreement and no
other party will be construed to be a third party beneficiary of this Agreement
or otherwise have any legal or equitable rights as a result of this Agreement.
IN WITNESS WHEREOF, authorized representatives of the parties have
executed this Agreement as of the Effective Date.
XXXXXXX: Xxxxxxx Lifesciences LLC,
a Delaware limited liability company,
By: /s/ Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
NEWCO: Valentine Acquisition Corp.,
a Delaware Corporation
By: /s/ Xxxxxxxx X. Xxxxxx
Title: President
PURCHASER: Xxxxxxx Novacor LLC,
a Delaware limited liability company,
By: /s/ Xxxxxxx X. Xxxxxxxxx
Title: President
EXHIBIT A
SPECIFICATIONS
PRODUCTS PURCHASED FROM XXXXXXX (EW)
EW Part # Novacor Part # Description
--------- -------------- -----------
640052001 0000-0000-00 Valves-Inflow (Sterile)
640053001 0000-0000-00 Valves-Outflow (Sterile)
640051001 0901-0048 Conduits-Inflow (Non-Sterile)
600178021 8575-0001 Apical Rings-Inflow (Non-Sterile)
640054001 8575-0002 Apical Rings-Inflow (Non-Sterile)
640172002 0901-0052 Ptfe-Conduit 9 CM (Non-Sterile)
640172001 0901-0056 Ptfe-Conduit 6 CM (Non-Sterile)
Per Drawings Attached
This exhibit contains technical drawings and schematics of the above parts and
components which are available from the Registrant upon request.
EXHIBIT B
FORECAST
[TO BE PROVIDED]
EXHIBIT C
PRODUCTS/COMPONENTS SOLD TO XXXXXXX (EW)
EW Purchase
EW Part # Novacor Part # Description Price ($US)
--------- -------------- ----------- -----------
141373801 0902-0114 Fab. Screw 3.730
141369801 0902-0105 Wave Washer 16.670
141460801 0902-0103 Finger Washer 16.360
141367801 0000-0000-00 Male Nut Inflow 54.900
141367802 0000-0000-00 Male Nut Outflow 54.900
141365801 0902-0102 Fab. Nipple Inflow 48.600
141364801 0902-0100 Fab. Body Inflow 96.300
141366801 0902-0101 Fab. Guide Inflow 47.700
141346801 0804-0001 Inflow Sinus 130.700
141346811 0804-0004 Inflow Adapter 42.440
141345801 0902-0091 Stent Washer 20.440
141372801 0902-0113 Fab. Cage Outflow 90.900
141370801 0902-0107 Fab. Guide Outflow 48.600
141371801 0902-0106 Fab. Body Inflow 64.800
141346802 0804-0002 Outflow Sinus 130.700
141346822 0804-0005 Outflow Adapter 72.440
141362801 0902-0110 Wave Washer 23.840
141360801 0902-0115 Coupling Nut 43.200
141361802 0902-0121 Flex Rein. Animal-Inflow 765.150
0902-0122 Flex Rein. Animal-Outflow 663.400
141358801 0810-1126 LV Stent 72.620
115371801 0810-0323 Ptfe Stent 77.052
115397801 0810-0324 Ptfe Support 109.773
115837801 0902-0092 Ptfe Wave Washer 36.700
115835801 0902-0134 Ptfe Coupling Nut 401.304
115836801 0902-0135 Ptfe Connector Ring 178.227
EXHIBIT D
PRODUCTS PURCHASED FROM XXXXXXX (EW)
Novacor
Novacor Purchase
EW Part # Part # Description Price ($US)
--------- ------------ ----------- -----------
640052001 0000-0000-00 Valves-Inflow (Sterile) 1,753.60
640053001 0000-0000-00 Valves-Outflow (Sterile) 1,791.09
640051001 0901-0048 Conduits-Inflow (Non-Sterile) 1,314.90
600178021 8575-0001 Apical Rings-Inflow (Non-Sterile) 65.27
640054001 8575-0002 Apical Rings-Inflow (Non-Sterile) 65.27
640172002 0901-0052 Ptfe-Conduit 9 CM (Non-Sterile) 1,297.77
640172001 0901-0056 Ptfe-Conduit 6 CM (Non-Sterile) 1,297.77
One Xxxxxxx Way 800-424-3278 Customer Name World Heart Corporation
Xxxxxx, XX 00000-0000 XXX Fax: 000-000-0000 Account No.
Group
Contract No.
This Agreement is between Xxxxxxx Lifesciences LLC ("Xxxxxxx") and World Heart
Corporation, a Canadian corporation with an address of 0 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxx, Xxxxxx X0X0X0 ("Purchaser").
Xxxxxxx agrees to supply Purchaser with the products described or listed in
Schedule A ("Products"), and Purchaser agrees to buy these Products for its own
use from Xxxxxxx subject to the following:
1. This Agreement shall be for a term of five (5) years commencing on June 30,
2000 ("Effective Date"). For purposes of this Agreement, a year shall mean
the twelve (12) consecutive months immediately following the Effective Date
or any anniversary of such date.
2. The prices which Purchaser shall pay to Xxxxxxx for the Products covered by
this Agreement shall be as shown on Schedule A, and orders shall be shipped
FOB Xxxxxxx'x shipping point. Purchaser shall purchase the Minimum Annual
Quantities stated on Exhibit A during each year of this Agreement. The
price for the Product shall be as set forth on Schedule A for Products used
in testing and clinical trials of the World Heart Heart Saver device which
Xxxxxxx represents and warrants is the price which is in effect with regard
to such product. For Products used in devices which will be sold
commercially, the price for the Product shall be the lower of (1) the most
favorable price offered any other U.S. customer of Xxxxxxx or (2) the
average selling price of the Product in the U.S. discounted by twenty-five
percent (25%).
3. Payment terms are net 45 days from invoice date. A service charge of 1-1/2%
per 30 days or fraction thereof (or the highest amount allowed by law, if
lower) will be added to all amounts past due. All payments by Purchaser
shall be applied first to any service charges due and then to the most
recent purchase by Purchaser from Xxxxxxx. Purchases shall be made in
accordance with such further terms (including returned goods policies and
minimum order quantities) as set forth in the Xxxxxxx Product Price List in
effect on the date of shipment.
4. Xxxxxxx will use commercially reasonable efforts to fill orders, but
Xxxxxxx shall not be liable for nonperformance or delays caused by a
shortage of raw materials, manufacturing problems, labor problems, acts of
regulatory agencies, discontinuation of a product line, acts of God, or
other causes beyond Xxxxxxx'x control. Purchaser agrees that in such events
Xxxxxxx may allocate products among all purchasers, without liability.
5. If Xxxxxxx and Purchaser are parties to any other agreements covering the
sale of the same Products covered by this Agreement, then, with regard to
such Products, this Agreement shall supersede such other agreements. No
changes in this Agreement, including any conflicting or additional terms
contained in any purchase or other document submitted by Purchaser, shall
be valid unless approved in writing by Xxxxxxx at its home office. This
agreement shall not be assigned by Purchaser without the prior written
consent of Xxxxxxx. Purchaser's obligations under this Agreement, including
any minimum quantity commitments, shall remain binding on Purchaser even if
Xxxxxxx consents to Purchaser's assignment of this Agreement to a
distributor. This agreement shall be governed and construed in accordance
with the laws of the State of California.
6. In the event Purchaser is delinquent in payments of any amounts to Xxxxxxx,
whether or not related to this Agreement, Xxxxxxx shall have the right to
terminate this Agreement and any other agreements with Purchaser, and all
amounts owed to Xxxxxxx under all agreements will become immediately due
and payable and Purchaser agrees to pay all reasonable attorney fees,
expenses, and court costs associated with the collection of the unpaid
balance.
7. The dollar value of any products and services NOT paid for by Purchaser but
received by Purchaser from Xxxxxxx under this Agreement are "discounts or
other reductions in price" to Purchaser under section 1128(b)(3)(A) of the
Social Security Act, 42 U.S.C. 1320a-7b(b)(3)(A), and Purchaser shall
disclose the discount or reduction in price under any state or federal
program which provides cost or charge based reimbursement to Purchaser for
the products or services covered by this Agreement.
PURCHASER World Heart Corporation
-----------------------
Customer Name
By: /s/ Xxxxxxx X. Xxxxxxxxx By:/s/ Xxxxxxxx X. Xxxxxx
---------------------------- --------------------------------------------
Xxxxxxx Representative Purchaser Representative
Name: Xxxxxxx X. Xxxxxxxxx Name: Xxxxxxxx X. Xxxxxx
-------------------------- --------------------------------------
(Type or Printed) (Typed or Printed)
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
------------------------- -------------------------------------
Date: Date:
-------------------------- -------------------------------------
