EXHIBIT 10(a)
Supply Agreement dated as of October 15, 1996, between Healthtech Products,
Inc., Invacare Corporation and Everest & Xxxxxxxx, Inc.
AMENDED AND RESTATED
SUPPLY AGREEMENT
Dated as of October 15, 1996
Between
HEALTHTECH PRODUCTS, INC.,
INVACARE CORPORATION
and
EVEREST & XXXXXXXX, INC.
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. MANUFACTURE AND SUPPLY............................................... 1
2. DELIVERY, CLAIMS, DELAYS, RETURNS.................................... 3
3. PRICES AND PAYMENT................................................... 4
4. TAXES AND OTHER GOVERNMENTAL CHARGES................................. 6
5. TERM AND TERMINATION................................................. 6
6. WARRANTIES........................................................... 6
7. RELATIONSHIP OF THE PARTIES.......................................... 7
8. TOOLING.............................................................. 7
9. OPERATIONS AT THE FACILITY........................................... 8
10. INSPECTION AND REPORTS CONCERNING THE FACILITY....................... 8
11. SUBMISSIONS TO REGULATORY AGENCIES................................... 9
12. EVENTS OF CUSTOMER DEFAULT........................................... 10
13. EVENTS OF MANUFACTURER DEFAULT....................................... 11
14. PATENT INFRINGEMENT.................................................. 12
15. FORCE MAJEURE........................................................ 13
16. NONDISCLOSURE OF INFORMATION......................................... 13
17. HEADINGS............................................................. 14
18. FAILURE TO ENFORCE................................................... 14
19. SEVERABILITY......................................................... 14
20. ENTIRE AGREEMENT..................................................... 15
i
21. NOTICES.............................................................. 15
22. CHOICE OF LAW........................................................ 16
23. RESOLUTION BY NEGOTIATION; ARBITRATION............................... 16
24. BINDING AGREEMENT.................................................... 18
Appendix A - Products and Specifications
Appendix B - Standard Costs
Appendix C - Warranty Terms
Appendix D - List of Tooling
Appendix E - Manufacturer's Insurance Coverages
Appendix F - Customer's Insurance Coverages
DEFINED TERMS
The meanings of the following terms as used in this Exclusive Supply Agreement
can be found in the Paragraph, Recital and Sections referenced below:
Affiliate.................................................. Section 7
Answer..................................................... Section 23.3(i)
Assignment................................................. Section 24
Customer................................................... First Paragraph
Demand..................................................... Section 23.3(i)
E&J....................................................... First Paragraph
Events of Customer Default................................. Section 12.1
Events of Manufacturer Default............................. Section 13.1
Existing Supply Agreement.................................. Recital A
Facility................................................... Section 9.1
FDA........................................................ Section 2.5
Instituting Party.......................................... Section 23.3(i)
Invacare................................................... First Paragraph
Manufacturer............................................... First Paragraph
Other Party................................................ Section 23.3(i)
Products................................................... Section 1.1
Specifications............................................. Section 1.1
Tooling.................................................... Section 8.1
UL......................................................... Section 2.5
Xxxxxx City Facility....................................... Section 2.1
ii
AMENDED AND RESTATED SUPPLY AGREEMENT
THIS AMENDED AND RESTATED SUPPLY AGREEMENT is made and entered into
as of October 15, 1996 ("Agreement") by and between HEALTHTECH PRODUCTS, INC., a
Missouri corporation ("Manufacturer"), a wholly-owned subsidiary of Invacare
Corp., a Delaware Corporation ("Invacare"), Invacare and EVEREST & XXXXXXXX,
INC., a California corporation ("Customer"), a wholly-owned subsidiary of
Everest & Xxxxxxxx International, Ltd., a Delaware corporation ("E&J").
RECITALS
X. Xxxxx & Xxxxx Manufacturing Company, a wholly-owned Missouri
subsidiary of E&J ("Xxxxx & Xxxxx"), and Manufacturer entered into a Supply
Agreement dated as of April 3, 1995, which was amended and restated as of March
15, 1996 (the "Existing Supply Agreement") and assigned as of March 15, 1996 by
Xxxxx & Xxxxx to Customer, pursuant to which Manufacturer has agreed to
manufacture and supply to Customer, utilizing tooling provided by Customer, and
Customer has agreed to purchase from Manufacturer, home healthcare beds and
replacement parts for home healthcare beds, on the terms and conditions set
forth therein.
B. Customer and Manufacturer have agreed that, notwithstanding the
provisions of the Existing Supply Agreement, it will terminate on October 15,
1997 and the parties have agreed to the revisions to the Existing Supply
Agreement embodied in this Agreement.
C. This Agreement, amends and restates the Existing Supply Agreement
in its entirety.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as follows:
1. MANUFACTURE AND SUPPLY.
1.1. Manufacturer shall, subject to the terms and conditions of this
Agreement, manufacture and sell exclusively to Customer certain products
comprising Customer's home healthcare bed product line and parts and accessories
related thereto, as described more fully in Appendix "A" hereto (the "Products")
conforming in all material respects to the specifications referenced in Appendix
"A" hereto, as the same may be revised from time to time as provided herein (the
"Specifications").
1.2. On or prior to the last day of each calendar month of the term
of this Agreement, Customer will place firm orders for beds it desires to
purchase during the next two (2) calendar months of the term of this Agreement
and Customer will provide an
1
estimate of its purchase requirements for beds during the next three (3)
calendar months of the term of this Agreement. Except with the Manufacturer's
consent, which shall not be unreasonably withheld, firm orders for beds for any
calendar month will not differ from the estimate for that month by more than
twenty percent (20%). Customer's firm orders will specify a mix of bed Products
reasonably acceptable to Manufacturer.
1.3. If Manufacturer fails to supply beds in quantities ordered by
Customer up to 22,000 beds during the twelve month period ending October 15,
1997, Manufacturer shall pay Customer, as liquidated damages, an amount equal to
the product of (i) $40.00 and (ii) the difference between 44,000 beds and the
number of beds supplied by Manufacturer during such applicable period. If
Manufacturer supplies at least 5,500 beds, or the number of beds ordered by
Customer pursuant to Section 1.2, whichever is less, to Customer during each
three month period ending January 15, April 15, July 15, and October 15 during
the term of this Agreement, Manufacturer will have no obligation under this
Section 1.3 to pay Customer liquidated damages for any failure to supply any
quantity of beds in excess of 5,500 beds during such three month period which
may be ordered by Customer, provided Manufacturer uses its best efforts to
supply Customer's requirements for such excess quantity of beds ordered in
accordance with the provisions of Section 1.2. Any amount payable under this
Section 1.3 shall be payable quarterly on or prior to the 25th day of January,
April and July following any three month period in which Manufacturer falls to
supply beds in quantities ordered by Customer up to 5,500 beds, and the balance,
if any, shall be paid on October 25, 1997.
1.4. New Products may be added to Appendix A from time to time upon
such terms, including pricing and quantities, as Manufacturer and Customer shall
agree in writing. Customer shall supply Manufacturer with specifications for any
new Products. After a new bed Product is added to Appendix "A" orders therefor
shall be used to satisfy the minimum purchase requirements for all subsequent
periods.
1.5. Manufacturer represents that it has filed all required
documentation, and obtained all required authorizations, approvals and consents
under any and all applicable laws, regulations, directives and/or requirements
in order for Manufacturer to be able to manufacture and sell the Products to
Customer pursuant to the terms of this Agreement. Manufacturer further covenants
that it will at all times during the term of this Agreement continue to obtain
and maintain in full force and effect any and all such required filings,
authorizations, approvals and consents, and will comply in all material respects
with any and all such applicable laws, regulations, directives and/or
requirements in connection with the manufacture and sale of the Products to
Customer pursuant to this Agreement.
1.6. Manufacturer may not unreasonably decline any purchase order for
Products from Customer under and in accordance with the terms of this Agreement
and it will be deemed accepted unless declined within fifteen (I 5) days of
receipt.
1.7. Manufacturer agrees to procure and maintain the product
liability insurance coverages described on Appendix E to this Agreement, and
Customer agrees to maintain the product liability insurance coverages described
on Appendix F to this
2
Agreement, or, in each case substantially similar coverages, covering all
Products manufactured and sold under this Agreement, and each party shall cause
the other party to be named as loss payee and an additional insured under each
of its policies. Each party shall furnish to the other party a copy of each of
its policies or a certificate from the insurance company or companies attesting
such coverage. Each such policy shall contain provisions that the issuing
company will not cancel or change such policy except upon thirty (30) days'
prior written notice to the party so named as loss payee and additional insured.
2. DELIVERY, CLAIMS, DELAYS, RETURNS.
2.1. All Products will be sold and delivered F.O.B. Manufacturer's
plant and facilities in Xxxxxx City, Missouri (the "Xxxxxx City Facility") or
other location reasonably specified by Manufacturer upon prior written notice to
Customer. Manufacturer shall be responsible for all costs of shipment in excess
of those that would have been incurred if the Products were delivered F.O.B. the
Xxxxxx City Facility. Customer shall be responsible for all other costs of
shipping Products. Partial shipments are allowed under this Agreement, provided
that no shipment of beds (other than a shipment out of warehouse storage) shall
be in less than a truckload quantity without Customer's prior approval.
2.2. Delivery of any order for Products shall be in accordance with
the agreed upon schedule for the period in question. Manufacturer will make all
reasonable efforts to accommodate schedule changes when requested by Customer.
2.3. Upon Customer's request, Manufacturer will warehouse at the
Xxxxxx City Facility or any other location specified pursuant to Section 2.1
which provides the same level of service, reasonable quantities of beds,
replacement parts, accessory Products and Customer owned inventories of
mattresses and side rails, to be shipped to designated accounts of Customer from
time to time at Customer's direction. Customer shall be responsible for
obtaining liability and casualty insurance on all such items so warehoused
(Customer shall furnish Manufacturer a copy of each such policy or a certificate
from the insurance company or companies attesting such coverage and each such
policy shall contain provisions that the issuing company will not cancel or
change such policy except upon thirty (30) days' prior written notice to
Manufacturer). Beds shall be deemed intended for warehouse storage when
requested by Customer or three (3) business days after delivery by Manufacturer
to Customer in the event Customer has not given Manufacturer other shipment
instructions with respect to such delivered beds. The fee for such warehousing
shall be Six Thousand Two Hundred Fifty Dollars ($6,250) per month for up to
four thousand (4,000) square feet of storage space and the personnel necessary
to move items in and out of warehouse space as requested by Customer.
2.4. The parties hereby acknowledge that time is of the essence with
respect to the delivery dates specified in individual orders. Customer reserves
the right to cancel, without liability, part or all of any order not shipped
within fifteen (15) days from the period specified in the order (or twenty (20)
days in the case of replacement shipments for previously shipped nonconforming
goods), provided that Customer shall have given Manufacturer written notice, in
accordance with the terms of this Agreement for giving
3
notice, of Customer's intent to cancel and Manufacturer has not shipped the
Products within five (5) days after the date of such notice; notwithstanding the
foregoing, Customer shall not be obligated to give Manufacturer such opportunity
to cure prior to cancellation more than three (3) times in any calendar quarter.
2.5. All Products shall conform to the Specifications, all applicable
generally recognized industry standards (including Underwriters' Laboratories
("UL") requirements and standards) and all applicable U.S. Food and Drug
Administration ("FDA") requirements. Manufacturer acknowledges that Customer
will acquire Products for resale to Customer's customers and, accordingly, the
ultimate purchaser will not be in a position to inspect the same for any
nonconformance, defect, damage or shortage until delivery thereof to said
purchaser; Customer will notify Manufacturer within two (2) business days
following receipt by Customer of any notice from the ultimate purchaser of any
Product of any claim that the Product does not conform with the Specifications
or any defect, damage or shortage therein (and will promptly notify Manufacturer
of any such nonconformance, defect, damage or shortage observed by Customer).
Any disputes that arise regarding the nature or existence of any nonconformance,
defect, damage or shortage shall be resolved pursuant to Section 23 hereof.
3. PRICES AND PAYMENT.
3.1. The unit prices to be paid for the beds listed on Appendix "A"
hereto ordered pursuant to this Agreement in quantities up to the first 22,000
beds ordered during the twelve months ending October 15, 1997 shall be the
prices specified on Appendix "B" hereto; the addition of new bed Products to
Appendix "A" shall be subject to agreement by Customer and Manufacturer on
appropriate pricing for such new bed Products, which will be specified in an
addendum to Appendix "B". The unit price to be paid for quantities of beds in
excess of the first 22,000 beds ordered during the twelve months ending October
15, 1997 shall be as agreed upon by the parties when the firm order for any such
excess quantity of beds is placed by Customer and accepted by Manufacturer. The
unit prices to be paid for replacement parts and accessories ordered pursuant to
this Agreement shall be an amount determined as specified on Appendix "B"
hereto. In no event shall the unit prices on Appendix A and B be increased.
3.2. Payment terms for bed Products shall be net thirty (30) days
from delivery by Manufacturer to Customer and issuance of Manufacturer's weekly
invoice confirming such delivery; invoices shall be issued on Friday of each
week (or on the following business day if Friday is a holiday) for all
uninvoiced deliveries through the close of business on the previous business
day. Each weekly invoice for bed Products issued under this Agreement shall
identify, at a minimum, the dates of delivery, Customer's applicable purchase
order numbers, a full description of the bed Products included, and the purchase
prices. Manufacturer reserves the right to cease shipments of part or all of any
order(s) for bed Products, without liability, in the event Customer falls to pay
any weekly invoice within five (5) business days after Manufacturer has given
written notice to Customer, in accordance with the terms of this Agreement for
giving notice, that such payment is five (5) or more days past due, provided
that Manufacturer shall not be obligated
4
to give Customer such opportunity to cure prior to ceasing shipment more than
three (3) times in any calendar quarter. Manufacturer shall resume shipments of
bed Products following any such cessation upon payment by Customer of all past
due invoices. During the term of this Agreement, Customer shall provide and
maintain for the benefit of Manufacturer a $500,000 letter of credit in form
reasonably satisfactory to Manufacturer to secure payment of Manufacturer's
outstanding invoices hereunder. Notwithstanding the foregoing, Manufacturer
shall have no obligation to ship Products hereunder to Customer at any time when
(1) such letter of credit is not so provided and maintained or (2) the aggregate
amount of Manufacturer's outstanding unpaid weekly invoices hereunder are more
than $500,000 unless Customer provides Manufacturer with an additional letter of
credit in the amount of the excess over $500,000 in form reasonably satisfactory
to Manufacturer, to secure payment for such Products.
3.3. Replacement parts and accessories will be shipped directly to
Customer's purchaser pursuant to Customer's directions. Upon each such shipment,
Manufacturer will issue a shipment conformation to Customer. For replacement
parts and accessories shipped pursuant to this Agreement, Manufacturer shall
issue weekly invoices to Customer on Friday of each week (or on the following
business day if Friday is a holiday) which shall cover Manufacturer's costs for
all replacement parts and accessories shipped during the previous week. Within
five (5) business days after the end of each month, Manufacturer shall invoice
Customer for the excess of (i) the unit prices of all replacement parts and
accessories shipped by Manufacturer pursuant to Customer's directions during the
previous month over (ii) the aggregate amount of the weekly invoices issued
during the previous month for said replacement parts and accessories. Payment
terms for all invoices for replacement parts and accessories shall be net thirty
(30) days from issuance of Manufacturer's shipment confirmation and delivery of
Manufacturer's invoice to Customer.
4. TAXES AND OTHER GOVERNMENTAL CHARGES.
Any and all use, sales and other taxes, fees or charges of any nature
whatsoever imposed by any governmental authority on or with respect to the sale
of the Products to Customer shall be paid by and invoiced to Customer as an
addition to the purchase price of Products (unless a sale for resale or other
exemption is available which is supported by documentation reasonably
satisfactory to Manufacturer).
5. TERM AND TERMINATION.
5.1. This Agreement shall become effective upon execution by both
parties and its term shall expire on October 15, 1997 unless sooner terminated
(i) by Customer, in its sole discretion, upon at least six (6) months prior
written notice from Customer to Manufacturer at any time, (ii) by Customer upon
written notice to Manufacturer at any time following the occurrence and during
the continuance of an Event of Manufacturer Default (as hereinafter defined) or
(ill) by Manufacturer upon written notice to Customer at any time following the
occurrence and during the continuance of an Event of Customer Default (as
hereinafter defined).
5
5.2. All payment obligations of Customer for Products theretofore
ordered and delivered prior to termination and all obligations of Manufacturer
and rights of Customer in Sections 6, 8, 14, 15, 16, 22 and 23 shall survive the
termination or expiration of this Agreement.
6. WARRANTIES.
All Products delivered by Manufacturer to Customer pursuant to this
Agreement shall be warranted by Manufacturer to be free from defects in
materials and workmanship and to be manufactured in accordance with the
Specifications, all applicable generally recognized industry standards
(including UL requirements and standards, if applicable) and all applicable FDA
requirements in accordance with the terms specified in Appendix "C" hereto;
provided, however, it is understood and agreed that Manufacturer may not affix
the Listing Xxxx of any industry standards group to any Product until the
standards group has satisfied itself that such Product meets its requirements
and has authorized Manufacturer to affix 'is Listing Xxxx to such Product; as of
the date hereof, UL has not completed its engineering investigation of the
following bed Products and has not authorized Manufacturer to affix the UL
Listing Xxxx thereto: 5522; 5523; 5622; and 5623. Any claim for breach of such
warranty must be submitted within the specified warranty period. During said
warranty period, Manufacturer shall, at Manufacturer's option, either replace or
repair, at no charge to Customer, any Products (or parts of Products) that are
found to be defective by Manufacturer. Customer shall return such defective
Products or parts or dispose of them as Manufacturer requests. In no event shall
Manufacturer's liability under this warranty provision exceed the replacement
cost of any defective Product.
7. RELATIONSHIP OF THE PARTIES.
This Agreement shall not be construed to make either party (or its
Affiliates, principals, officers, employees or agents) an Affiliate, agent,
partner or joint venturer with the other party. Neither party shall have any
right or authority whatsoever to incur any liability, obligation (express or
implied), or to otherwise act in any manner in the name or on behalf of the
other, or to make any promise, warranty or representation binding on the other.
For purposes of this Agreement, the term "Affiliate" means any entity in which
Manufacturer or Customer, as the case may be, controls at least twenty percent
(20%) of the indicia of ownership or control, or which controls or is under
common control by a third party controlling such indicia of ownership or control
with Manufacturer or Customer, as the case may be.
8. TOOLING.
8.1. Manufacturer shall have the right to use Customer's tooling
described on Appendix "D" hereto (the "Tooling"), free of charge, exclusively
for purpose of manufacturing the Products for Customer hereunder. As part of the
Standard Cost of Products, Manufacturer shall provide normal maintenance to the
Tooling provided, however, that, in the event Manufacturer reasonably determines
that any major repair or replacement of any Tooling is required to manufacture
Products hereunder (other than as a result of
6
Manufacturer's failure to provide normal maintenance or operator negligence),
Manufacturer shall advise Customer of such requirement and Manufacturer shall be
responsible for effecting such repair or replacement and Customer shall
reimburse Manufacturer for the reasonable costs of such major repair or
replacement. Customer shall be responsible for the cost of all additional
Tooling purchased by Manufacturer at the request of Customer. All Tooling
provided to Manufacturer under this Agreement shall be returned to or for the
account of Customer upon the earlier to occur of (1) the Customer's request and
direction for the return of such Tooling or (ii) within fifteen (I 5) days
following the termination or expiration of this Agreement.
8.2. Manufacturer agrees to procure and maintain in full force and
effect throughout the term of this Agreement a policy of general insurance in
favor of Customer (as loss payee and additional insured) covering the
replacement value of the Tooling against loss or damage and any claims,
liabilities or expenses asserted by any person arising o ut of the use of such
Tooling. Manufacturer shall furnish to Customer a copy of such policy or
policies or a certificate from the insurance company or companies attesting to
such coverage. Such policy or policies shall contain provisions that the issuing
companies will not cancel or change such policy or policies except upon thirty
(3 0) days' prior written notice to Customer.
8.3. Manufacturer agrees that the Tooling provided by Customer will
be used solely for the production of the Products sold to Customer and that
neither Manufacturer nor any of its Affiliates will use the Tooling to produce
products of any kind for Invacare or any other party.
9. OPERATIONS AT THE FACILITY.
9.1. Manufacturer shall manufacture, package and test the Products at
the Xxxxxx City Facility or other location which complies with the requirements
of Sections 1.5 and 11.3 hereof (the "Facility"). During the course of this
Agreement, Manufacturer and Customer will closely cooperate with each other in
order to assure satisfactory compliance by Manufacturer with Customer's
manufacturing, packaging and testing standards and requirements. Each party
shall share with the other such party's manufacturing, packaging and testing
know-how relating to the procedures used for the manufacture of Products subject
to the confidentiality provisions set forth herein.
9.2. Prior to full scale manufacturing, packaging and testing by
Manufacturer of any Product that it has not previously manufactured (upon
agreement by Manufacturer and Customer to engage in such activities as
contemplated by Section 1.4), Customer's employees shall be permitted to
instruct, advise and inform the employees of Manufacturer with respect to such
of Customer's manufacturing, packaging, testing and other production processes
as may be necessary for Manufacturer to perform its obligations hereunder (and
shall do so at Manufacturer's request).
9.3. Customer's employees and representatives shall at all times
adhere to the safety regulations and practices and work schedules established by
Manufacturer.
7
10. INSPECTION AND REPORTS CONCERNING THE FACILITY.
10.1. Manufacturer shall keep appropriate records regarding its
manufacture of the Products at the Facility, in such form as Customer may
reasonably request, including monthly inventory and production reports
indicating quantities of raw materials, work-in-process and finished Products
(1) on hand at the beginning of each month, (ii) produced during the month, and
(iii) on hand at the end the month. All such records shall be made available to
Customer for inspection at any time during regular business hours upon
reasonable prior notice.
10.2. Upon prior request, Manufacturer shall provide Customer or its
designees access at all reasonable times to the Facility to observe and inspect
all phases of the work performed by Manufacturer under this Agreement. Without
limiting the generality of the foregoing, Manufacturer shall permit Customer or
its designees:
(i) to inspect the Facility; and
(ii) to review the compliance of Manufacturer with applicable
regulations and good manufacturing practices and procedures.
10.3. Manufacturer shall permit Customer or its designees to meet and
confer with the General Manager (or equivalent) of the Facility and such other
executives of Manufacturer or key managerial personnel employed at the Facility
as Customer may reasonably request. Manufacturer shall also cause such personnel
to provide Customer and its designees such regular and special reports and other
information as may be reasonably requested by Customer to protect the interests
of Customer under this Agreement.
11. SUBMISSIONS TO REGULATORY AGENCIES.
11.1. Customer shall prepare and submit all documents required by the
FDA, UL and any other applicable regulatory agencies for approval to market the
Products, except as set forth herein. Manufacturer shall cooperate fully with
Customer and such regulatory agencies in the effort to obtain approval to market
the Products, including without limitation providing a right of reference to any
plant files of Manufacturer as may be required or providing such information and
other cooperation as may be necessary for approval. The parties recognize that
approval may be delayed or postponed by a regulatory agency through no fault of
the parties, and it is agreed that any such delay or postponement shall not
constitute a default under this Agreement. Subject to the confidentiality
provisions set forth herein, Customer shall allow Manufacturer access to such
parts of the documents submitted by it to regulatory authorities as may be
necessary for Manufacturer to satisfy its obligations under this Agreement.
11.2. Customer shall advise Manufacturer from time to time of the
status of regulatory review of the submitted documents and any consequential
revision of any expected approval date. Customer shall notify Manufacturer of
any submission to any regulatory agency of any supplement, amendment or revision
to submitted documents which has an
8
impact on manufacturing, packaging or testing procedures used by Manufacturer,
or on Customer's estimates of the quantity of Products that Manufacturer will be
required to manufacture, package and test hereunder.
11.3. Manufacturer shall prepare and submit all documents required by
the FDA, UL and any other applicable regulatory agencies for approval of any
Facility utilized for manufacturing, packaging and testing the Products,
including without limitation any master file and any "Standard Operating
Procedures" required to comply with applicable good manufacturing practices
(GMP). Manufacturer shall not make any amendment to such file or other documents
without notification to, and prior approval by, Customer. Manufacturer and
Customer shall jointly perform all process and equipment validation required by
the FDA, UL and other applicable regulatory agencies for approval. Customer
hereby represents that, as of April 3, 1995 and prior to the transfer of title
to the Xxxxxx City Facility to Manufacturer, the Xxxxxx City Facility was in
compliance with such requirements.
11.4. Each party shall maintain all appropriate regulatory documents
and records relating to its responsibilities with respect to the Products. Each
party shall promptly forward to the other party all notices of adverse findings
with respect to Products that it receives, and shall cooperate fully with the
other party in investigating each such incident.
12. EVENTS OF CUSTOMER DEFAULT.
12.1. Each of the following shall constitute an "Event of Customer
Default":
(i) the failure by Customer to make any payment due to
Manufacturer hereunder within ten (10) business days after Manufacturer has
given written notice to Customer, in accordance with the terms of this Agreement
for giving notice, that such payment is ninety (90)or more days past due;
(ii) the commencement by Customer of a voluntary proceeding
under the federal bankruptcy laws or any similar state bankruptcy or insolvency
law; or the consent by Customer to the institution of such proceedings against
it or to the appointment of or the taking possession by a receiver, liquidator,
assignee, trustee, custodian or sequestrator (or similar official) of Customer
or of all or substantially all of its properties; or the making by Customer of a
general assignment for the benefit of creditors;
(iii) the entry of a decree or order for relief by a court
having jurisdiction in respect of Customer: adjudging Customer a bankrupt or
insolvent; or approving as properly filed a petition seeking a reorganization,
arrangement, adjustment or composition of or in respect of Customer in any
involuntary proceeding or case under the federal bankruptcy laws or any similar
state bankruptcy or insolvency law; or appointing a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of Customer
or of all or substantially all of its properties; or ordering the winding-up or
liquidation of its affairs; and the continuation of such decree or order
unstayed and in effect for a period of thirty (30) days; or
9
(iv) the dissolution or liquidation of Customer, other than in
connection with a merger, consolidation or reorganization under the terms of
which the surviving corporation remains liable for all obligations of Customer
to Manufacturer hereunder.
12.2. Upon the occurrence of an Event of Customer Default,
Manufacturer shall have the right by written notice to Customer, in accordance
with the terms hereof for giving notice, to (i) terminate this Agreement, (ii)
retain possession of the Tooling for purposes of manufacturing and selling any
products to any person and (iii) pursue any and all other legal and equitable
remedies available to Manufacturer as a result thereof
13. EVENTS OF MANUFACTURER DEFAULT.
13.1. Each of the following shall constitute an "Event of
Manufacturer Default":
(i) following the cancellations by Customer in any calendar
year of more than three (3) orders, in whole or in part, pursuant to Section
2.4, the failure by Manufacturer to deliver the required quantities of Products
timely, or any delivery of any significant quantity of nonconforming Products,
which failure is not remedied within five (5) business days (twenty (20)
business days in the case of non-conforming Products) after Customer has given
written notice to Manufacturer, in accordance with the terms of this Agreement
for giving notice, of such failure;
(ii) the commencement by Manufacturer of a voluntary
proceeding under the federal bankruptcy laws or any similar state bankruptcy or
insolvency law; or the consent by Manufacturer to the institution of such
proceedings against it or to the appointment of or the taking possession by a
receiver, liquidator, assignee, trustee, custodian or sequestrator (or similar
official) of Manufacturer or of all or substantially all of its properties; or
the making by Manufacturer of a general assignment for the benefit of creditors;
(iii) the entry of a decree or order for relief by a court
having jurisdiction in respect of Manufacturer: adjudging Manufacturer a
bankrupt or insolvent; or approving as properly filed a petition seeking a
reorganization, arrangement, adjustment or composition of or in respect of
Manufacturer in any involuntary proceeding or case under the federal bankruptcy
laws or any similar state bankruptcy or insolvency law; or appointing a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar
official) of Manufacturer, or of all or substantially all of its properties; or
ordering the winding-up or liquidation of its affairs; and the continuation of
such decree or order unstayed and in effect for a period of thirty (30) days; or
(iv) the dissolution or liquidation of Manufacturer, other
than in connection with a merger, consolidation or reorganization under the
terms of which the surviving corporation remains liable for all obligations of
Manufacturer to Customer hereunder.
10
13.2. Upon the occurrence of an Event of Manufacturer Default,
Customer shall have the right by written notice to Manufacturer, in accordance
with the terms hereof for the giving of notice, to (i) terminate this Agreement,
(ii) repossess the Tooling, (iii) obtain liquidated damages equal to the product
of (A) $40.00 and (B) the difference between 44,000 beds and the number of beds
supplied by Manufacturer between October 15, 1996 and the date of the occurrence
of such Event of Manufacturer Default and (iv) pursue any and all other legal
and equitable remedies available to Customer as a result thereof. Manufacturer
hereby acknowledges that Customer and its Affiliates will suffer irreparable and
continuing harm upon the occurrence of an Event of Manufacturer Default and that
legal remedies would be inadequate in the event of such occurrence. Accordingly,
Manufacturer agrees that, upon the occurrence of an Event of Manufacturer
Default, Customer and its Affiliates shall, in addition to any other rights and
remedies available under law and in equity, have the right and remedy to obtain
an injunction and to have the provisions of this Agreement specifically enforced
by any court having equity jurisdiction. Manufacturer and Customer hereby confer
non-exclusive jurisdiction to enforce the provisions of this Agreement upon the
federal courts located in the City of St. Louis or the state courts in St. Louis
County, Missouri, and each consents to service of process by means of delivery
in the same manner required for notices under this Agreement as provided in
Section 21 of this Agreement.
14. PATENT INFRINGEMENT.
14.1. Customer agrees, at its own expense, to defend any action or
suit brought against Manufacturer alleging that any Product or any part thereof
manufactured in accordance with the Specifications infringes any enforceable
patent issued to any other person or any valid trade secret, proprietary
information or other intellectual property right of any other person. Customer
will pay all costs and damages, including any judgment awarded against
Manufacturer in any such suit, provided, however, that Customer is promptly
notified in writing of such action or suit and is given full authority and full
and proper information and assistance available to Manufacturer for the defense
of said action or suit. Customer shall not be responsible for any compromise or
settlement of such suit or action made by Manufacturer without Customer's
consent.
14.2. If the use or sale of any Product becomes (or in the opinion
of Customer is likely to become) the subject of an infringement claim, Customer
may, at its option and expense, secure a right to use or sell the Product or
(ii) make modifications to the Specifications that would render the use or sale
of the Product non-infringing.
14.3. The foregoing indemnification shall not apply if the
infringement arises from Products not manufactured by Manufacturer pursuant to
this Agreement in accordance with the Specifications.
11
15. FORCE MAJEURE.
Neither party shall be liable for any loss, damage or penalty as a
result of any delay in or failure to manufacture, deliver or otherwise perform
hereunder due to any cause demonstrably beyond that party's reasonable control,
including without limitation: embargo; governmental act, order, ruling,
regulation or request; fire; explosion; accident; theft; vandalism; riot;
shortages; strike or other work stoppage; lightning, flood, windstorm or other
act of God; delay in transportation; equipment or tooling failure; or inability
to obtain necessary fuel, materials, supplies or power. The party suspending
performance in whole or in part as a result of any such delay or failure shall
give prompt written notice thereof to the other party, stating therein the
nature thereof, the specific reasons therefor, and the expected duration thereof
and any alternatives thereto which such party believes may reasonably be
pursued, and shall resume performance as soon as reasonably possible. Following
any occurrence that causes any party to suspend performance in whole or in part,
such party shall promptly initiate such reasonable measures as will, if
reasonably possible, remove or relieve such suspension so as to enable it to
resume performance of its obligations as soon as reasonably possible. During the
continuance of such delay or failure which prevents the delivery or ordering of
Products hereunder for a period of twenty (20) or more business days, the
quantities of beds for which liquidated damages would otherwise be payable under
Section 1.3 of this Agreement shall be reduced by the quantity of beds affected
by such delay or failure (i.e. if Manufacturer fails to supply beds in
quantities ordered by Customer up to 22,000 beds during the twelve month period
ending October 15, 1997 solely as a result of such delay or failure, no
liquidated damages would be payable).
16. NONDISCLOSURE OF INFORMATION.
16.1. Each party hereby agrees that all information relating to this
Agreement disclosed to it by the other party, which information is in fact
confidential or proprietary when disclosed to the other party or is then claimed
and marked by the disclosing party to be confidential or proprietary, will be
held and safeguarded by the receiving party as confidential information of the
disclosing party, and the receiving party shall exert reasonable efforts in a
manner consistent with the efforts which the receiving party uses to protect its
own information to prevent any publication or other disclosure of such
confidential information received from the disclosing party without the express
authorization of the disclosing party. Customer's Specifications and designs are
trade secrets of Customer and shall be treated as confidential and proprietary
under this clause. Manufacturer agrees that only employees at the Xxxxxx City
Facility with a need to know for purposes of performance of this Agreement may
have access to Customer's Specifications and designs and other confidential and
proprietary data. The restrictions of this Section 16 shall not apply to
information which becomes generally available to the public through no fault of
the receiving party.
16.2. Neither Invacare nor any Affiliate of Invacare (other than
Manufacturer in accordance with and pursuant to the terms of this Agreement)
shall manufacture or sell any home healthcare bed products, parts or accessories
utilizing any of Customer's Specifications and designs. To Customer's knowledge
as of the date hereof, none of the
12
home healthcare bed products, parts and accessories currently manufactured by
Invacare utilize Customer's Specifications or designs.
17. HEADINGS.
The section headings herein are for convenience only and shall not
be deemed to affect in any way the language of the provisions to which they
refer.
18. FAILURE TO ENFORCE.
The failure of either party to enforce any of the terms of this
Agreement shall not be construed as a waiver of rights hereunder preventing the
subsequent enforcement of such provisions or the recovery of damages for breach
thereof.
19. SEVERABILITY.
In the event that any one or more provisions contained in this
Agreement or any application thereof shall be held to be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions of this Agreement and any other application thereof shall
not in any way be affected or impaired thereby; provided, however, that to the
extent permitted by applicable law, any invalid, illegal or unenforceable
provision may be considered for the purpose of determining the intent of the
parties in connection with the other provisions of this Agreement.
20. ENTIRE AGREEMENT.
20.1. This Agreement constitutes the entire Agreement between
Manufacturer and Invacare, on the one hand, and Customer, on the other hand,
superseding any prior agreement between the parties. No modification of this
Agreement shall be binding unless in writing and signed by authorized
representatives of both parties.
20.2. This Agreement is intended to cover all sales of Products by
Manufacturer to Customer hereunder. Except as agreed to herein and unless
otherwise expressly agreed to in writing, no written or printed terms or
conditions in any purchase order, order confirmation, invoice or other document
forwarded by either party to the other shall have the effect of varying any of
the xxxxxx hereof, and the provisions of this Agreement shall be controlling.
21. NOTICES.
All notices, communications and demands under this Agreement shall
be in English and shall be made in writing by hand delivery, telefax, courier,
registered or certified mail, return receipt requested, or by any other means of
delivery which enables the sending party to verify receipt thereof. Such notice
shall conclusively be presumed to be given or made: (1) at the time it is
personally given or made in the case of personal delivery or transmission by
telefax (with receipt confirmed); (ii) on the next business day after being
13
sent by reputable overnight courier; or (iii) five (5) business days after
mailing with sufficient postage or cost prepaid in the case of mail. All notices
sent by means other than those made by hand delivery or registered or certified
mail, return receipt requested, shall be promptly confirmed by registered or
certified 'I, return receipt requested. Any notices shall be addressed as
follows:
If to Manufacturer
and Invacare: Healthtech Products, Inc.
Xxxxx Xxxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: General Manager
Fax: 314/000-0000
If to Customer: Everest & Xxxxxxxx, Inc.
Earth City Expressway
Xxxxx Xxxx, XX 00000
Attn: President and
Chief Executive Officer
Fax: 314/000-0000
or to such other person or address as either party may, by like notice, specify
to the other.
22. CHOICE OF LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Missouri, without regard to its
principles of conflicts of laws.
23. RESOLUTION BY NEGOTIATION; ARBITRATION.
23.1. Except in the event of any litigation or proceeding commenced
by any third party against either Manufacturer or Customer in which the other
party is an indispensable party or potential third party defendant, and except
for any action seeking enforcement of this Agreement pursuant to Section 13.2 of
this Agreement, any dispute or controversy between the parties involving the
interpretation, construction or application of any terms, covenants or
conditions of this Agreement, or transactions under it, or any claim arising out
of or relating to this Agreement, or transactions under it, shall, on the
request of one party served on the other, be submitted for resolution by senior
executives designated by each party, who shall attempt to resolve such dispute
or controversy in good faith and, in the event such resolution is not achieved
within fifteen (I 5) business days of such request, shall be submitted to
binding arbitration in accordance with provisions of this Section 23.
23.2. Any such dispute, controversy or claim shall be resolved by
binding arbitration conducted in St. Louis, Missouri (except as otherwise may be
agreed by the parties in their discretion) in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except
as herein specifically otherwise stated
14
or amplified, and judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction over the party against whom the award
is sought to be entered.
23.3. Notwithstanding anything to the contrary which may now or
hereafter be contained in the Commercial Arbitration Rules of the American
Arbitration Association, the procedures set out in this Section 23.3 shall
apply.
(i) A notice of arbitration shall set out a clear and plain
statement of the matter that the party sending the notice (the "Instituting
Party") believes to be a breach or is in dispute. The demand (the "Demand")
shall reference principal provisions of this Agreement that the Instituting
Party views as controlling or out of the interpretation of which the dispute
arises, and shall attach, if practicable, or, if not practicable, shall make
available, copies of all pertinent documents and other things then in its
possession which the Instituting Party views as having direct bearing on the
relief sought under the Demand. The receiving party (the "Other Party") shall,
within twenty (20) days of receipt of the Demand, provide to the Instituting
Party and to the arbitrators a response (the "Answer"), referencing provisions
of this Agreement that the Other Party views as controlling, and shall attach,
if practicable, or, if not practicable, shall make available, copies of all
pertinent documents and other things (other than those attached to the Demand)
then in its possession which it views as having direct bearing to support the
contentions of the Answer. Each party shall appoint one person to hear and
determine the dispute within ten (10) days after the Other Party's receipt of
the Demand. If a party fails to so designate its arbitrator within said ten (10)
days, then the arbitrator designated by the party designating an arbitrator
shall act as the sole arbitrator and shall be deemed to be the single,
mutually-approved arbitrator to resolve the controversy. If two persons are
chosen, they shall, within twenty (20) days, select an additional, impartial
arbitrator. If they fall to do so within said twenty (20) days, either party may
petition any court of competent jurisdiction to appoint the third arbitrator.
The majority decision of the arbitrator panel (or the decision of the single
arbitrator) shall be final.
(ii) If two persons are chosen, each party shall pay the
arbitrator it designates and the parties shall share the cost of the third
arbitrator; the parties shall share the costs of a sole arbitrator. In the event
that the parties are unable to agree upon a rate of compensation for the third
(or sole) arbitrator, such arbitrator shall be compensated for his or her
services at a rate to be determined by the American Arbitration Association.
(iii) Discovery shall be liberally allowed by the arbitrators
as contemplated by the U.S. Federal Rules of Civil Procedure, subject, however,
to such limitations as the arbitrators determine to be appropriate under the
circumstances, it being the parties mutual desire to have a prompt and efficient
arbitration.
(iv) The arbitrators shall endeavor to promptly schedule and
hold hearings (on consecutive days if practicable), and shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief. Nothing in this Section 23.3 shall impair the right of a
party to seek interim or preliminary relief in a court of competent Jurisdiction
before the arbitration panel is constituted and convened.
15
(v) Other than attorneys' fees and expenses (which shall be
home by the party incurring the same), the costs of the arbitration shall be
home by the losing party or shall be allocated between the parties in such
proportions as the arbitrators decide.
(vi) The arbitrators shall, upon the request of either party,
promptly (and in all events within thirty (30) days of the conclusion of the
hearing) issue a proposed written opinion of their findings of fact and
conclusions of law which shall become final and binding in accordance with the
terms thereof unless either or both parties seek reconsideration in accordance
with Subsection 23.3(vii). In making their decision, the arbitrators shall be
bound by the terms of this Agreement.
(vii) Either party shall have the right, within twenty (20)
days of receipt of the arbitrators' proposed opinion, to file with the
arbitrators a motion to reconsider (accompanied by a reasoned memorandum), and
the other party shall have twenty (20) days to respond to that memorandum. After
receipt of such memorandum and response, if any, the arbitrators thereupon shall
reconsider the issues raised by said motion and, promptly, either confirm or
change their majority decision which shall then be final and conclusive upon
both parties. The costs of such a motion for reconsideration and written opinion
of the arbitrators shall be home by the moving party, or shared equally by both
parties if both parties request such reconsideration.
24. BINDING AGREEMENT.
This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns. This Agreement
shall be assignable by either party only with the written consent of the other
party, which shall not be unreasonably withheld, except that Customer may assign
this Agreement without Manufacturer's consent (1) to E&J or any of its
Affiliates and (ii) to a purchaser of Customer's home healthcare bed Product
line who agrees in writing to assume Customer's obligations to Manufacturer
hereunder (provided, however, that Customer shall not be released from any such
obligations arising after assignment to any such purchaser unless the assignee
has a Standard & Poor's credit rating of BB for long-term debt or B for
commercial paper, or the equivalent thereto). Any assignee of Customer or
Manufacturer must agree by written instrument to be bound by and to perform and
discharge the obligations hereunder of Customer or Manufacturer, as the case may
be. Upon any such assignment, the assigning party shall be released from all
accrued and unaccrued obligations thereafter arising hereunder of Customer or
Manufacturer, as the case may be, but shall remain liable for all accrued and
unaccrued obligations hereunder of Customer or Manufacturer, as the case may be,
arising prior to such assignment.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
16
IN WITNESS WHEREOF, an authorized representative of each party has
signed this Agreement below.
"MANUFACTURER":
HEALTHTECH PRODUCTS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
INVACARE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
"CUSTOMER":
EVEREST & XXXXXXXX, INC.
By:________________________________
Name:______________________________
Title:_____________________________
17
