Exhibit 10.29
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
NXSTAGE MEDICAL, INC.
DAVITA INC.
NATIONAL SERVICE PROVIDER AGREEMENT
Date of Agreement: February 7, 2007 ("Effective Date")
National Service Provider: DaVita Inc. ("Customer")
Street Address of Customer: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇, Zip of Customer: ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Customer Contact and Phone No.: ▇▇▇ ▇▇▇▇▇▇▇▇, President, DVA@Home
NxStage Customer Service Phone No.: 1-866-NxStage (1-866-697-8243)
Contract No.: To be assigned
Contract Term: From the Effective Date through December
31, 2009, which term may be extended in
six (6) month increments for up to two
additional years; provided that, as a
condition to such contract extension,
Customer shall have at least [**] NxStage
Patients (as hereafter defined) at
December 31, 2009, and as a continuing
condition to such up to additional two (2)
year period, Customer must meet each of
the Minimum Percentage Increases set forth
in Schedule E for the three subsequent six
months periods following December 31,
2009. If such Minimum Percentage Increases
are not met as a result of Customer's
failure to submit adequate purchase orders
for Monthly Dialysis Supplies for named
patients for which NxStage has received
Patient Prescription Monthly Standing
Orders by the expiration of each six (6)
month extension period, this Agreement may
be terminated by NxStage upon thirty (30)
days prior written notice to Customer,
except as otherwise provided in Schedule E
hereto (the "Term")
Attached Schedules: Schedule A: General Terms and Conditions
Schedule B: Program and Pricing
Schedule C: Warranty/Service
Schedule D: Authorized Customer Locations
(Schedule listing the Customer
locations authorized to order
under, and covered by, this
Agreement.)
NxStage Medical, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: 866-NXSTAGE (▇▇▇-▇▇▇▇)
Page 2 of 45
Such locations may include
home hemodialysis program
sites of (i) Customer, (ii)
wholly-owned Customer
subsidiaries, (iii)
independent dialysis clinics
that have entered into
management contracts with
Customer covering the purchase
of products, including the
NxStage System One, and (iv)
dialysis clinics held by
Customer in a joint venture
structure.
Schedule E: Preferred Relationship
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 3 of 45
ALL TERMS (INCLUDING THOSE CONTAINED IN THE SCHEDULES ATTACHED HERETO) ARE
ACCEPTED AND AGREED TO ON BEHALF OF:
DAVITA INC.
By:
----------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
(authorized signature)
▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
(printed name)
Chief Financial Officer
--------------------------------------
(title)
2/7/07
--------------------------------------
(date)
NXSTAGE MEDICAL, INC.
By:
----------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
(authorized signature)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
(printed name)
President & CEO
--------------------------------------
(title)
2-7-07
--------------------------------------
(date)
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 4 of 45
SCHEDULE A
CHRONIC OUTPATIENT THERAPY
GENERAL TERMS AND CONDITIONS
The following general terms and conditions apply to the purchase and rental of
NxStage Medical, Inc. ("NxStage") Products for use in chronic patient therapy.
1. PURCHASES AND RENTALS
The purchase or rental, as the case may be, of the NxStage System One
(consisting of either a System One Cycler (hereinafter "Cycler"), Warmer
(hereinafter "Warmer"), and Stand (hereinafter "Stand"), or a Cycler and System
One PureFlow SL (hereinafter "PureFlow SL") as the case may be (such equipment
hereinafter collectively referred to as the "System One" or "System"), and
related System One disposables for chronic home and in-center self care use
("Products", which may or may not be manufactured by NxStage) under this
Agreement shall be initiated by purchase orders covering one month of Monthly
Dialysis Supplies (as hereafter defined) consistent with then-current Patient
Prescription Monthly Standing Orders received by NxStage. For purposes hereof,
"Patient Prescription Monthly Standing Orders" shall mean NxStage's standard
patient prescription form for the System One and Monthly Dialysis Supplies for
named patients signed by the treating physician. If the terms and provisions of
the purchase order conflict with or are in addition to the terms of this
Agreement, the terms of this Agreement shall control.
To purchase or rent Products, Customer must provide NxStage with a valid Patient
Prescription Monthly Standing Order for the named NxStage patient(s) who will
receive chronic therapy.
2. PRICING
Pricing for goods/services purchased or rented during the term of this Agreement
are outlined in Schedule B.
3. LIMITATIONS ON SALE AND USE
All Products are to be used by Customer in the Continental United States at
Authorized Customer Locations and are not to be resold, transferred or
remarketed. Notwithstanding the foregoing, Customer may transfer Products to a
third party in connection with the sale of an outpatient dialysis clinic by
Customer which includes Products then in use by such clinic's patients in the
assets that are sold, subject to NxStage's prior written consent, which shall
not be unreasonably withheld. Products are to be used only for chronic home and
in-center self-care patient therapy for treatment of named NxStage patients.
4. SHIPPING
All prices contained in Schedule B include shipping costs to Customer's
designated destination in the 48 continental states via common carrier unless
otherwise stated. NxStage shall use reasonable diligence to ensure that Products
are shipped according to Customer's delivery requirements. Any extra charges for
inside delivery, or other type of special delivery requested by Customer shall
be prepaid by NxStage and added to the Customer's invoice. If an expedited
shipment (requiring delivery in less than [**] business days) must be made at
Customer's request, Customer agrees to pay for all incremental Product shipping
charges in excess of what standard shipping costs would be for unexpedited
shipment. Shipping for Products purchased hereunder is F.O.B. Customer's
designated destination as provided above.
Customer must notify NxStage Customer Service in writing of any irregularity in
a Product shipment within the later of [**] days of receipt of the shipment or
[**] days of discovery of a concealed defect in such shipment. All evidence of
shipping damage or over- or under shipment should be noted on the carrier's
freight ▇▇▇▇ and the carrier should countersign the document. In the absence of
timely written
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 5 of 45
notice, acceptance will be conclusively presumed. NxStage shall use all
commercially reasonable efforts to replace goods damaged in transit and remedy
Product delivery shortages within [**] days of receiving notice thereof from
Customer.
Travel Delivery for Customer's Patients: Contract prices for cartridges and
fluids are extended to Customer's traveling patients when traveling within the
48 continental states as long as NxStage is given reasonable notice of the
change in delivery site, NxStage receives a prescription from the patient's
physician requesting travel delivery, and NxStage is not required to alter
standard case shipping volumes to satisfy special travel/vacation delivery
requirements. This benefit may be used for no more than [**] trips per patient;
for a maximum of [**] weeks per patient in total annually. Requests for
travel/vacation delivery in excess of [**] trips or [**] weeks annually, to
locations outside of the 48 continental states, in non-standard shipping
volumes, or which are made with insufficient notice, shall be subject to
approval from NxStage and additional shipping charges. At Customer's request,
NxStage will ▇▇▇▇ the patients directly for any such additional charges and such
charges must be prepaid. Customer's patients' standard monthly shipments shall
be adjusted to account for all travel supplies delivered. NxStage will not
arrange for delivery of Cyclers or Warmers. Customer (and its patients) is
responsible for transporting the Cyclers and Warmers according to the shipping
directions provided by NxStage in the device Operator's Manuals and other
supplements as required. Customer shall be responsible for any damages to such
equipment as a result of any improper shipping by Customer (or its patients).
5. PAYMENT
Payments shall be due and payable on a net [**] day basis. Payments made within
[**] days of invoicing shall be subject to a [**] percent ([**]%) discount on
the total amount due. Payments made more than [**] days after the stated term
will be subject to a past due service charge of [**] percent ([**]%) per month
(or the highest rate permitted by applicable law, whichever is less), except for
any portion of an invoice disputed by Customer in good faith.
If Customer fails to pay any portion of its undisputed balance within sixty (60)
days of the date of the invoice, NxStage may, at its option, terminate this
Agreement and any other agreements between NxStage and Customer upon [**] days
written notice and Customer's failure to cure within such [**] days.
Any invoice dispute must be made by Customer in good faith. Customer must notify
NxStage of any invoice disputes in writing within [**] days of its receipt of an
invoice, and the parties shall take all commercially reasonable efforts to
resolve any billing disputes within [**] days.
6. DISCOUNTS AND REBATES
Discounts and rebates earned under this Agreement are "Discounts or Other
Reductions in Price" to Customer under 42 U.S.C. Section 1320a-7b(b)(3)(A) of
the Social Security Act, and shall be properly reported by Customer on
applicable Medicare and Medicaid claims and cost reports. Customer will retain a
copy of this Agreement and all related notices and communications from NxStage,
together with invoices hereunder (which will indicate that a discount or end of
period rebate may apply) and permit agents of the U.S. Department of Health and
Human Services or any state Medicaid agency access to such records upon request.
In order to assist Customer's compliance with any such obligations, NxStage
shall fully and accurately report all discounts on the invoices or statements
submitted to Customer; or where the value of a discount is not known at the time
of sale, NxStage shall fully and accurately report the existence of the discount
program on the invoices or statements submitted to Customer and when the value
of the discount becomes known, provide Customer with documentation of the
calculation of the discount identifying the
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 6 of 45
specific goods or services purchased to which the discount will be applied. At
Customer's reasonable request, NxStage shall also use commercially reasonable
efforts to provide to Customer any other information that Customer may request
that is necessary for Customer to obtain in order to comply with any such
obligations.
7. TAXES
Quoted prices do not include sales, use, excise or similar taxes. Customer
agrees to pay promptly any and all applicable taxes, assessments, or other
charges levied or assessed on or with respect to the acquisition, possession, or
use of any Products, and shall reimburse NxStage if NxStage has paid such taxes,
excluding, however, any taxes on or measured by NxStage's net income.
8. RETURNED GOODS
This returned goods policy is intended to address shipment errors and
over-ordering of Products. Returns of purchased damaged or defective Product are
handled as set forth under Schedule C - Warranty; Service; and Recalls. Returns
of Monthly Dialysis Supplies caused by a discontinuation of patient therapy are
covered in Section 9, Discontinuation of Therapy and Missed Treatments. Returns
of rented Systems, at the end of their applicable rental period are covered in
this Section below.
No credit will be issued for unauthorized returns. Goods, not damaged or
defective, may only be returned in the following circumstances, and only after
Customer has obtained a return authorization number from NxStage Customer
Service.
Customers may receive FULL CREDIT, and NxStage shall pay for all returned goods
shipping charges, for items shipped in error by NxStage, so long as items a) are
returned in their original carton with original labels within [**] days of
shipment (no partial cases), b) are in a condition for restocking and resale,
and c) are accompanied by a copy of the NxStage packing list.
Customers may receive [**]% CREDIT ([**]% RESTOCKING FEE) for other items (other
than items listed below), so long as items a) are returned in their unopened
carton with original labels within [**] days of shipment (no resealed or partial
cases), b) are in condition for restocking and resale, and c) have at least [**]
months remaining shelf life. Customer shall pay for all shipping charges
associated with such returns.
The following Products may not be returned:
- Products which are currently not in production
- Special Customer specification Products.
- Merchandise not shipped and billed to the returning customer by
NxStage.
If requested by NxStage, rented System Ones shall be returned to NxStage within
[**] days after the end of the agreed upon rental term, or upon permanent
discontinuation of patient therapy. If rented Systems are requested to be
returned, but are not returned within such [**] day period, Customer shall be
charged an additional fee of $[**] per System per month until each such System
is returned to NxStage. If a System is rented for more than [**] months, NxStage
shall bear all related shipping charges to return rented Systems. Otherwise,
Customer shall bear all related shipping charges to return rented Systems.
Customer shall be responsible for any damage to returned rented Systems, as set
forth in Section 12 below. If NxStage does not request return of a rented System
One, the additional fee shall be waived and Customer shall renew the rental of
the System as soon as a patient in the service area where the System is stored
is in need of such System. NxStage's failure to request return of any rented
System at the end of the agreed upon rental term, or upon permanent
discontinuation of patient therapy, shall not preclude NxStage from later
requesting such return.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 7 of 45
9. DISCONTINUATION OF THERAPY AND MISSED TREATMENTS
Monthly Dialysis Supplies are billed on a monthly basis, by calendar month at
the start of each month. The monthly billing amount will be adjusted only a)
during the first month of therapy (to account for the portion of the month prior
to a patient's therapy start date), or b) in the event of documented
hospitalization leading to missed NxStage therapy treatments. Except as provided
below, with respect to retrieved Monthly Dialysis Supplies, no credit shall be
given for permanent discontinuation of therapy or for missed treatments, other
than documented hospitalizations, for any reason, including missed treatments
due to patient noncompliance with prescribed treatment schedules. NxStage shall
use reasonable efforts to notify Customer sites/facilities in the event NxStage
becomes aware of specific patient noncompliance issues (meaning, for purposes
hereof, the apparent missing of [**] percent ([**]%) or more of prescribed
treatment frequencies or fluid volumes) through monthly customer service
inventory calls with patients. Notwithstanding any of the foregoing, Customer
understands and agrees that NxStage does not represent to the completeness or
the accuracy of the information so provided regarding noncompliance at any time
hereunder.
In the event of a documented hospitalization, NxStage will allow a pro-rated
credit ([**] of the applicable Monthly Dialysis Supplies price per documented
missed treatment day per patient during the month of hospitalization, it being
understood that the amount of the pro-rated credit shall be adjusted in good
faith by NxStage if patient is treated under a different treatment schedule)
against future payments. Any subsequent monthly shipments from NxStage shall be
adjusted appropriately to account for these missed days of therapy.
Documentation of hospitalizations must be provided to NxStage within [**] days
of the hospitalization in order to be eligible for such a pro-rated credit.
All purchased NxStage Monthly Dialysis Supplies are the property of Customer. It
is Customer's responsibility to retrieve such unused Supplies in the event of a
permanent discontinuation of patient therapy. No credit will be issued for any
Monthly Dialysis Supplies retrieved by Customer that have not been invoiced.
Supplies retrieved that have not yet been invoiced must either be returned to
NxStage, at NxStage's expense or used by Customer. Once such supplies are
assigned for use, NxStage shall invoice Customer for such supplies, and adjust
subsequent deliveries. If retrieved supplies were invoiced, NxStage will apply,
at Customer's request, a credit against future Monthly Dialysis Supplies orders,
as set forth in Patient Prescription Monthly Standing Orders, if the retrieved
Supplies are used for a future patient, are unexpired, and are consistent with
the future patient's prescription. The amount of the credit applied shall be
based upon the number of treatments that can be fully performed with such
retrieved Supplies. To assist NxStage in documenting such credits, Customer
shall notify NxStage of all permanent patient discontinuations from NxStage
therapy within [**] calendar days of such discontinuations, and shall also
confirm with NxStage the quantity of all Monthly Dialysis Supplies retrieved
following any such discontinuations. In the event NxStage ships a monthly
standing order of Monthly Dialysis Supplies to a patient following a permanent
discontinuation of NxStage therapy due solely to reasons of death or transplant,
and before NxStage receives notice of such discontinuation due to death or
transplant, NxStage shall retrieve such supplies, at its own expense, provided
NxStage is notified of the discontinuation due to death or transplant within
such [**] day period.
If, during the term of this Agreement, NxStage contractually agrees with any
other customer purchasing NxStage home hemodialysis products to either (i)
provide credits for missed treatments due to home patients' noncompliance with
prescribed treatment frequency and/or discontinuation of therapy, or (i) allow
for the purchase of disposable cartridges and related supplies for use with the
System One or successor product on a non-monthly or non-bundled basis, NxStage
shall promptly offer such credit or non-bundled purchase terms, on a prospective
basis, to Customer on terms consistent with those credit or
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 8 of 45
non-bundled purchase terms then offered to other NxStage customers; provided
that such terms, if accepted by Customer, shall in no way alter the other
provisions hereof.
10. TITLE TO GOODS
NxStage will retain title to the NxStage System One (s) and any other equipment
that are rented to Customer hereunder. Upon the expiration or termination of
this Agreement, Customer shall contact NxStage Customer Service to arrange for
the return of all System Ones (Cyclers, Warmers, and Stands or Cyclers and
PureFlow SLs) rented under this Agreement, according to NxStage product return
procedures. If a System has been rented by Customer for at least [**] months,
NxStage shall bear all related shipping charges. Otherwise, Customer shall bear
all related shipping charges. Customer shall be responsible for any damage to
returned rented Systems, as set forth in Section 12 below. Customer shall pay
NxStage $[**] per week per System One in the event System One(s) rented
hereunder are not returned to NxStage within [**] days of the expiration or
termination of this Agreement. Upon NxStage's request, Customer will execute a
financing statement as provided under the Uniform Commercial Code to permit
NxStage to perfect a security interest in such equipment. Customer shall have
title to all Monthly Dialysis Supplies and purchased NxStage System One(s) or
other purchased equipment shipped to Customer under this Agreement, except for
any Warmers, Stands or other equipment rented to Customer as part of such
Monthly Dialysis Supplies, the title to which shall remain with NxStage.
11. WARRANTY/SERVICE
NxStage warrants purchased equipment and supplies according to the terms
outlined in Schedule C. THESE WARRANTIES CONTAIN PURCHASER'S SOLE REMEDIES AND
ARE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES.
12. RISK OF LOSS (ONLY FOR ITEMS TO WHICH NXSTAGE RETAINS TITLE)
Customer is entirely responsible for any loss of or damage to the NxStage System
One (s) rented or loaned hereunder from whatever causes, except for normal wear
and tear and defects in materials and workmanship (an "uncovered loss").
Customer will promptly notify NxStage of any loss or damage to these device(s).
If NxStage determines that a NxStage System One which has an uncovered loss is
repairable, Customer will pay NxStage's cost of repair or replacement and
NxStage will either repair the damaged device or replace it with another device
in good working order, which may or may not be new. If NxStage determines that a
device, which has an uncovered loss, is not repairable, Customer will pay
NxStage the price of such device as set forth in Section 2(a) of Schedule B,
less appropriate adjustments to be reasonably agreed upon by the parties to
reflect the period of time such device has been in use by Customer, return the
device to NxStage, and NxStage will provide a replacement device in good working
order so that treatments may be continued under this Agreement. If a device is
lost or stolen, Customer shall pay NxStage the price of such device as set forth
in Section 2(a) of Schedule B, less appropriate adjustments to be reasonably
agreed upon by the parties to reflect the period of time such device has been in
use by Customer, and NxStage shall provide Customer with a replacement device.
13. TRAINING
Customer agrees to:
- Select [**] and use reasonable efforts to select at least [**] staff
members at each new center to serve as Customer's expert users of the
Products and trainers of subsequent staff. Notwithstanding the
foregoing, NxStage understands that in some of Customer's centers, it
may be necessary or desirable to select [**] or more than [**] staff
members for training, in which case NxStage will use reasonable
efforts to accommodate Customer's business determination regarding the
number of staff that will receive training.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 9 of 45
- Make reasonable efforts to schedule these appointed staff so that they
are available for the initial NxStage training and in-servicing at
center startup.
- Make reasonable efforts to have at least [**] available for treatment
on each of days [**] and [**] of center start-up.
NxStage agrees to:
- Provide initial in-service and training at each center start-up for
appointed staff during sessions provided over [**] consecutive days;
provided the center has made reasonable efforts to start at least [**]
patients during these days and, subject to the preceding, NxStage has
received at least [**] Patient Prescription Monthly Standing Orders
from that center before training starts. Notwithstanding the
foregoing, NxStage understands that in limited circumstances it may be
necessary or desirable for Customer to initiate a new center start-up
with [**] initial patient. NxStage will use reasonable efforts to
accommodate Customer in these limited circumstances.
- Schedule a NxStage clinical specialist to be reasonably available,
whether in person or on-call by telephone (as determined by NxStage),
for [**] subsequent days while treatments are being provided to
provide additional training support and assistance.
- Thereafter, provide 24/7 clinical and technical assistance by
telephone.
- Provide additional on-site NxStage clinical specialist days at the
Customer's request for $[**]/day, plus reasonable travel and lodging
expenses.
- Provide a "Training Package" of [**] cartridges to be used during
center start-up to familiarize Customer with the NxStage System and
its operation during the initial in-service and training.
In lieu of such in-service and training from NxStage, Customer may elect to
train its own staff at Authorized Customer Locations, subject to the
provisions of Section 6 of Schedule B hereof.
14. CUSTOMER SERVICE
NxStage Customer Service is available from 8am through 5pm EST, Monday through
Friday to support its customers' product ordering needs. NxStage provides 24/7
technical support for its customers' equipment servicing needs. Clinical and
technical questions raised by Customer's users with NxStage Customer Service
will be referred, if possible, to Customer's facility, to ensure consistency in
patient care and adherence with Customer's policies and procedures. NxStage
understands that Customer may, in the future, elect to staff its own call center
to directly handle patient inquiries. Customer understands that nothing herein
shall prevent NxStage from making communications directly to Customer's NxStage
patients regarding matters related to its Products.
15. ACCESS TO EQUIPMENT DATA
The NxStage System One may have an internal computer that records all System
operations, such as alarms and Cycler control panel touches (such computer
records hereinafter referred to as "Cycler Log Files"). Customer agrees that,
even with purchased Cyclers, the Cycler log files and the computer containing
them, are the property of NxStage (so long as such computer is not necessary for
the normal operations of the System One), agrees not to tamper with or destroy
Cycler Log Files or the computer, and to use reasonable efforts to make
available such Cycler Log Files and computer to NxStage at reasonable times
within [**] hours of NxStage's request. NxStage shall keep this information
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 10 of 45
confidential and shall use it for continued product improvement and service. For
so long as Systems are in use by Customer for the treatment of chronic home
hemodialysis patients, NxStage hereby grants Customer an irrevocable license to
access and use the treatment specific data (e.g., flow rates, treatment times,
alarms) contained in all Cycler Log Files created in connection with Customer's
patient treatments using System One Cyclers rented or owned by Customer;
provided that NxStage shall have no obligation to summarize such data or
otherwise manipulate such data on Customer's behalf, except as set forth in
Schedule E hereof; and provided further that NxStage shall have no obligation to
service the computer generating such Cycler Log Files beyond [**] years after
the original System purchase date. Customer understands that such data is not
automatically transmitted from Cyclers to NxStage and that Customer is
responsible for ensuring the transmittal of such data to NxStage. Customer
further understands that NxStage can not guarantee the completeness of such
data, as the same may be impacted by power outages, improper connections between
the Cycler and the computer that records the Cycler Log Files, or other
disruptions in Cycler or computer operations. Customer acknowledges and agrees
that it has no expectation that the Cycler Log File information will be analyzed
by NxStage.
Customer understands that Cycler Log Files do not presently capture patient
clinical data (defined to mean patient physiologic parameters such as blood
pressures, heart rates, URRs, and Kt/Vs) ("Patient Clinical Data"). NxStage
agrees that all of Customer's Patient Clinical Data shall be the property of
Customer but that NxStage may continue to use such data learned by NxStage in
the ordinary course of its business for complaint investigations, product
improvements and service.
16. FORCE MAJEURE
NxStage or Customer will not be liable for any failure to perform under this
Agreement, including any failure or delay in delivering Products, that is caused
by any event or condition not within the control of either party which prevents,
in whole or in material part, the performance by one of the parties of its
obligations hereunder, such as an act of government, war or related actions, raw
materials shortages, interruptions in transportation, civil insurrection, riot,
sabotage, strike, epidemic, fire, flood, windstorm, or similar event
(hereinafter referred to as an event of "Force Majeure"). If an event of Force
Majeure occurs, (a) the Volume Commitment amounts and dates set forth in
Schedule E shall be adjusted as mutually agreed upon by NxStage and Customer so
as to reflect the impact of such Force Majeure on Customer's patient volumes,
and (b) NxStage shall allocate Products and training capacity to Customer on a
first-priority basis consistent with Customer's then-current share of NxStage's
equipment field base that has either been purchased or is under extended (e.g.
two years or more) lease arrangements, and consistent with the then-effected
prescription items included in Customer's Monthly Dialysis Supplies orders;
provided that Customer's purchase orders for System One equipment and requests
for training capacity shall be allocated to Customer on a first priority basis,
so long as such purchase orders and requests for training capacity are
consistent with the other requirements set forth herein, including without
limitation those set forth in Schedule E, Paragraph 7.
17. CONFIDENTIALITY
Prior to entering into this Agreement, NxStage and Customer entered into a
Confidential Disclosure Agreement effective February 4, 2004, as amended
effective October 19, 2004, and as may be revised from time to time upon written
agreement between the Parties (collectively referred to as the "CDA"). NxStage
and Customer represent and warrant that the CDA shall be effective throughout
the Term of this Agreement, and that the obligations of the Parties to protect
the confidentiality of the Confidential Information (as defined therein) shall
survive for a period of [**] years from the date of termination of this
Agreement or the date of the last disclosure of Confidential Information,
whichever is later. Each Party also represents and warrants that throughout the
Term of this Agreement said Party shall be and shall remain in compliance with
all provisions of the CDA. Customer agrees that the ongoing operations
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 11 of 45
involved in consummating purchases and deliveries under the Agreement shall not
be covered by the CDA.
18. USE OF NAME
Notwithstanding the provisions of Section 17, NxStage may refer to Customer as a
"customer" without Customer's prior written consent and Customer may refer to
NxStage as a "supplier" without NxStage's prior written consent. Both parties
must obtain the other's prior written consent to use the other party's name in
promotional materials. Notwithstanding the above, the parties' public
communications and marketing/ promotional materials shall be further governed by
the applicable provisions of Schedule E Preferred Relationship.
19. COMPLIANCE WITH LAWS
Each Party represents and warrants that throughout the Term of this Agreement
said Party shall be and shall remain in compliance with all applicable federal,
state, and local laws, except to the extent that any noncompliance would not
have a material adverse effect on such party's ability to perform under this
Agreement.
20. INSURANCE
NxStage shall, during the term of this Agreement and for a period of six (6)
years following the termination or expiration of this Agreement, maintain
product liability insurance for the Products. The insurance must have minimum
limits of at least five million dollars ($5,000,000) per occurrence.
NxStage shall, during the term of this Agreement and for a period of three (3)
years following the termination or expiration of this Agreement, maintain
comprehensive general liability insurance and broad form contractual liability
insurance to cover claims related to its premises and operations, personal
injuries, property damage and independent contractors. The insurance must have
minimum limits of at least one million dollars ($1,000,000) per occurrence.
Simultaneously with the execution of this Agreement, NxStage shall provide to
Customer certificates of insurance, issued by a company or companies reasonably
acceptable to Customer, evidencing the existence of the insurance required to be
maintained pursuant to this Section 20 and providing that Customer is an
additional insured under such policies. NxStage agrees to provide at least
thirty (30) days notice of the expiration or cancellation of any insurance
required by this Section 20.
21. INDEMNIFICATION
NxStage agrees to indemnify, defend and hold harmless Customer, its officers,
directors, employees, agents, successors and assigns (each, a "Customer
Indemnity") from any and all third party claims, demands, actions, losses,
proceedings, expenses, damages, liabilities, costs, expenses (including
reasonable attorney's fees and costs) and judgments ("Loss") arising out of (a)
injury or damage caused by any design or manufacturing defect of the Products
covered under this Agreement when such Products are used in accordance with
NxStage User's Guides and package inserts, (b) the negligent acts or omissions
of NxStage or its employees or agents, (c) any claim or allegation that the use
of the Products in accordance with the terms of this Agreement and with
then-current Product user's guides or instructions for use infringes upon any
United States intellectual property right of any third party, and (d) any breach
by NxStage of its representations, warranties and covenants hereunder; provided
in each case that such indemnity shall not apply to the extent any Loss arises
out of the negligence or willful misconduct of any Customer Indemnity or its
patients.
Customer agrees to indemnify, defend and hold harmless NxStage, its officers,
directors, employees, agents, successors and assigns (each, a "NxStage
Indemnity") from any and all Loss arising out of (a) the
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 12 of 45
negligent acts or omissions of Customer or its employees or agents, or patients,
or (b) any breach by Customer of its representations, warranties and covenants
hereunder; provided in each case that such indemnity shall not apply to the
extent any Loss arises out of the negligence or willful misconduct of any
NxStage Indemnity.
22. NOTICES
All notices required or permitted to be given hereunder shall, unless expressly
provided otherwise, be in writing, properly addressed, postage pre-paid and
delivered by hand, certified or registered mail, postage prepaid, or overnight
courier with instructions for overnight delivery, to the parties at their notice
address set forth in this Agreement. A notice will be deemed effective as
indicated: (i) if in writing and delivered in person, on the date it is
delivered, or one day following delivery to an overnight courier with
instructions for overnight delivery; or (ii) if sent by certified or registered
mail (airmail if overseas) (return receipt requested) five days after deposit in
the US mails. NxStage or Customer may change its notice address by providing
notice thereof in accordance with this Section.
Notices should be sent to the following addresses:
DaVita
Vice President, Finance and Purchasing
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to DaVita General Counsel at the same address
and a further copy to DaVita At Home President.
NxStage Medical, Inc.
Senior Vice President, Commercial Operations
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to NxStage's General Counsel at the same address
and a further copy to NxStage's Senior Vice President, Commercial
Operations.
23. OPEN RECORDS
To the extent required by Section 1861(v)(1)(I) of the Social Security Act, as
amended, the Parties will allow (and will ensure that their agents and
contractors allow) the U.S. Department of Health and Human Services, the U.S.
Comptroller General and their duly authorized representatives, access to this
Agreement and related invoices necessary to verify the nature and extent of
costs incurred.
24. TERMINATION
If one of the parties hereto becomes the subject of bankruptcy proceedings,
becomes operated by a receiver, makes an assignment for the benefit of
creditors, or loses its eligibility to ▇▇▇▇ for services under the Medicare or
Medicaid programs, then the other party hereto, may, at its option, terminate
this Agreement and any other agreements between NxStage and Customer. Upon
termination, NxStage shall be obligated to continue to sell Customer Monthly
Dialysis Supplies at pricing and on terms consistent with those provided to its
other customers buying similar quantities, for so long as Customer has patients
using the System One for chronic home hemodialysis therapy, up to a maximum of
[**] years from the original purchase date of each System.
25. LIMITATION OF LIABILITY
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 13 of 45
IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY UNDER THIS
AGREEMENT FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, PUNITIVE, OR OTHER
INDIRECT DAMAGES. In addition, in no event will NxStage's total liability to
Customer under this Agreement, including without limitation all Schedules
hereto, exceed Customer's then-current net book value for purchased Systems
(measured at the time the payment owed by NxStage to Customer hereunder is
definitively ascertained); provided such net book value is calculated in good
faith and in accordance with generally accepted accounting standards.
26. ENTIRE AGREEMENT, AMENDMENT, ASSIGNMENT AND GOVERNING LAW
This Agreement contains the entire agreement between NxStage and Customer
relating to the subject matter hereof. All prior negotiations, correspondence
and covenants of the parties not set forth in this Agreement are not binding on
either Customer or NxStage. Any conflicting or additional terms contained in any
purchase order or other document submitted by Customer shall not be valid unless
signed by the Chief Financial Officer or Chief Executive Officer of NxStage. Any
amendment to this Agreement shall only be effective if agreed to in writing by a
duly authorized officer of both parties and referencing an intent to amend this
Agreement, and in the case of NxStage, if signed by the Chief Financial Officer
or Chief Executive Officer of NxStage, except as otherwise provided in Schedule
B, Section 6 with respect to Authorized Customer Locations. This Agreement will
be governed by the laws of the State of Delaware and may not be assigned in
whole or in part by either party without prior written consent of the other,
except that if NxStage consents to any transfer of Products by Customer to a
third party pursuant to the terms of Paragraph 3 above, such third party shall
have the right (a) to continue to receive service for the System One(s)
transferred by Customer on terms consistent with the terms set forth in Schedule
C hereof, and (b) to continue to purchase Monthly Dialysis Supplies at pricing
and on terms consistent with those provided to other NxStage customers buying
similar quantities, for so long as such third party has patients using the
transferred System One(s) for chronic home hemodialysis therapy. Except with
respect to such rights, such third party shall have no other rights hereunder.
Notwithstanding the above, this Agreement shall survive a change-in-control of
either party, or the sale of substantially all of the business related to this
Agreement by either party, and may be assigned by Customer or NxStage to any of
its Affiliates; provided that as a condition to such an assignment, the
Agreement shall be guaranteed by DaVita Inc. or NxStage Medical, Inc.,
respectively. Those provisions which are intended to survive the termination of
this Agreement, including without limitation Sections 3, 5, 6, 7, 8, 10, 11, 12,
and 15 through Section 31 shall survive termination.
27. NO AGENCY OR PARTNERSHIP
Nothing contained in this Agreement, including any Schedule or Exhibit hereto,
shall be construed to permit any party hereto or any employee of a party hereto
to act as an agent or employee of the other. This Agreement does not create a
joint venture or partnership between NxStage and Customer, instead such parties
shall be construed as independent contractors.
28. SEVERABILITY
In the event any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby, provided however if any such term is an
essential element of this Agreement without which either Party would not have
entered into this Agreement, the Parties shall promptly negotiate in good faith
a replacement therefor, failing which the Agreement may be terminated by either
Party.
29. NO WAIVER
No failure or delay on the part of either Party in exercising any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 14 of 45
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
30. PUBLICITY.
No publicity release or announcement concerning this Agreement or the
transactions contemplated hereby shall be made without advance written approval
thereof by NxStage and Customer. NxStage and Customer agree to cooperate in
issuing any press release or other public announcement concerning this Agreement
or the transactions contemplated hereby. NxStage and Customer shall each furnish
to the other drafts of all such press releases or announcements prior to their
release. Nothing contained in this paragraph shall prevent any party from making
any disclosures required under the Securities Exchange Act of 1934, as amended,
or under the rules and regulations of any national securities exchange on which
such party's shares of capital stock are listed; provided however, that if this
Agreement is required to be publicly filed, the party obligated to file shall
endeavor in good faith to obtain the consent of the other party hereto with
respect to the form of the document to be filed and a request for confidential
treatment of all sensitive business terms contained herein.
31. ARBITRATION.
Any dispute arising out of or relating to this Agreement, including the breach,
termination or validity thereof, shall be finally resolved by confidential
binding arbitration. The parties hereto shall mutually select one arbitrator, or
if the parties are unable to agree, the American Arbitration Association (the
"AAA") shall select such arbitrator. The arbitration shall be governed by the
Commercial Arbitration Rules of the AAA then in effect. The place of arbitration
shall be New Castle County, Delaware.
The arbitrators' authority to grant relief shall be subject to the United States
Arbitration Act at 9 U.S.C. 1-16 et seq., or any amendments thereof or successor
Law (the "Arbitration Act"), the provisions of this Agreement, and the ABA-AAA
Code of Ethics for Arbitrators in Commercial Disputes.
The arbitrator shall determine the rights and obligations of the parties
according to the substantive and procedural laws of the State of Delaware. The
arbitrator shall have no power or authority to make awards or issue orders of
any kind or amount other than as expressly permitted by this Agreement. The
decision of the arbitrator shall follow the plain meaning of the relevant
documents. The decision of and award by the arbitrator shall be final, binding
and conclusive upon such parties. Judgment upon any award rendered by the
arbitrator may be entered in any court having jurisdiction. All post award
proceedings shall by governed by the Arbitration Act.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 15 of 45
SCHEDULE B
CHRONIC OUTPATIENT THERAPY
PROGRAM AND PRICING
Unless otherwise noted, Product availability and pricing described in Schedule B
are only valid for chronic renal failure patients for which NxStage has received
a Patient Prescription Monthly Standing Order signed by a physician during the
term of this Agreement. This Agreement covers the purchase and/or rental of
NxStage System Ones (including Cycler and PureFlow SL, or Cycler, Warmer and
Stand, as the case may be) and related supplies as set forth herein.
1. INITIAL EQUIPMENT PURCHASE AND DISCOUNT
Customer will purchase the number of System Ones equal to the number of System
One Cyclers in use by Customer on the Effective Date of the Agreement at a price
of $[**] per System (if Customer elects to purchase a System One Cycler and
PureFlow SL) or $[**] per System (if Customer elects to purchase a System One
Cycler only), minus a discount of $[**] on the aggregate purchase amount. No
fewer than [**] Systems must be purchased by Customer on the Effective Date (the
"Initial Equipment Purchase") to qualify for this discount. System purchases
shall not include any Warmers or Stands rented to Customer as of the Effective
Date, and NxStage shall continue to hold title to such Warmers and Stands and be
able to recover them upon [**] days prior notice. Customer shall continue to be
able to use such Warmers and Stands for patients using PureFlow Express (Bags)
Monthly Dialysis Supplies following the Effective Date and the rental fees for
such Warmers and Stands shall continue to be included in the Monthly Dialysis
Supplies prices set forth in Paragraph 4 of this Schedule B.
2. EQUIPMENT PURCHASE AND RENTAL OPTIONS
During the term of this Agreement, Customer may purchase and/or rent System One
hardware (including Cycler and, as requested, the PureFlow SL, or the PureFlow
SL separately) according to the options and at the pricing set forth below.
Purchases and rentals must be initiated by a valid purchase order. Pricing is on
a per System or PureFlow SL basis, as the case may be. Systems or PureFlow SL's
sold or rented to Customer will be in good working order. They may or may not be
new, but shall be entitled to the same equipment warranty and service plan
provided for in Schedule C. The purchase price for System Cyclers, with or
without PureFlow SL, does not include the NxStage Warmer or Stand.
A. OUTRIGHT PURCHASE
PRICE PER SYSTEM - PRICE PER SYSTEM - PRICE PER
YEAR CYCLER AND PUREFLOW SL CYCLER ONLY PUREFLOW SL ONLY
---- ---------------------- ------------------ ----------------
2007 purchases [**] [**] [**]
2008 purchases [**] [**] [**]
2009 purchases [**] [**] [**]
In the event Customer elects to purchase System One Cyclers without a
PureFlow SL, Customer may purchase, within [**] months of the date of such
Cycler purchase, a PureFlow SL at a price equal to the difference between
the Price per System - Cycler and PureFlow SL referenced in the table above
and applicable to the year in which the Cycler Only purchase was made and
the Price per System - Cycler Only paid by Customer and referenced in the
table above. Following such [**] month period, PureFlow SL only pricing
shall be as set forth in the table above; provided that, for the Initial
Equipment Purchase, such [**] month period shall be extended by that period
of time during which Customer is [**] from converting its patients from
PureFlow Express (Bags) to PureFlow SL Supplies due to [**] associated with
the PureFlow SL equipment; it
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 16 of 45
being understood that NxStage shall not be obligated to extend such period
beyond the first date on which [**] percent ([**]%) of NxStage's Active
NxStage Customers' patients are on PureFlow SL.
Each System or PureFlow SL purchased hereunder, including all Systems
included in the Initial Equipment Purchase, will include an equipment
service plan, as set forth in Schedule C, for [**] years from the date of
System or PureFlow SL purchase.
B. MONTHLY RENTAL
During the Term of this Agreement, including any extension term, Customer
may rent System One equipment for up to [**] percent ([**]%) of its total
NxStage home hemodialysis patients with then-current Patient Prescription
Monthly Standing Orders. All other System One equipment must be purchased
as set forth above. During the term of this Agreement, Customer may choose
to rent Systems at a monthly rental rate equal to the average purchase
price paid by Customer for its then-current installed System One equipment
base (less any discounts provided) multiplied by [**] per month. The
minimum rental period must be for [**] full calendar month. Rentals will be
billed at the start of the calendar month, with the first period prorated
for rentals started on other than the first day of a calendar month. Rental
will be automatically extended on a month-to-month basis until [**] days
advance written cancellation notice is provided by Customer to NxStage.
3. MONTHLY DIALYSIS SUPPLIES PRICING - PUREFLOW SL
"Monthly Dialysis Supplies" for PureFlow SL shall mean System One cartridges
with preattached filter and PureFlow SL disposable cartridges and sets required
to prepare PureFlow dialysate for the prescribed therapy frequency/fluid
volume). Pricing is per patient month at physician prescribed frequency/fluid
volume according to the choices outlined below. Other treatment schedules and
volumes are available upon request.
A. 6X WEEKLY THERAPY (26 TREATMENTS PER MONTH)
PREFERRED
PROVIDER
FLUID VOLUME PRICE
------------ ---------
17 liters [**]
20 liters [**]
25 liters [**]
30 liters [**]
B. 5X WEEKLY THERAPY (21 TREATMENTS PER MONTH)
PREFERRED
PROVIDER
FLUID VOLUME PRICE
------------ ---------
20 liters [**]
25 liters [**]
30 liters [**]
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 17 of 45
C. EVERY OTHER DAY THERAPY (15 TREATMENTS PER MONTH)
PREFERRED
PROVIDER
FLUID VOLUME PRICE
------------ ---------
30 liters [**]
40 liters [**]
50 liters [**]
60 liters [**]
The above pricing is valid only where patient's incoming water quality meets
panel 1 and panel 2 of the EPA Safe Drinking Water Act. Customer shall provide
sufficient evidence of incoming water quality to NxStage, upon NxStage's
request.
Monthly Dialysis Supplies shipments will be based on the prescribed frequency
and the inventory needs of the patient, as reported by the patient to NxStage
customer service.
For each of Customer's NxStage patients that are using PureFlow Express (Bags)
as of November 1, 2006, and who are subsequently converted to PureFlow SL on or
before May 31, 2007, NxStage shall provide Customer a discount of $[**] per
converted patient to be applied against the first PureFlow SL Monthly Dialysis
Supplies order for such patient.
4. MONTHLY DIALYLSIS SUPPLIES PRICING - PUREFLOW EXPRESS (BAGS)
"Monthly Dialysis Supplies" for PureFlow Express (Bags) shall mean System One
cartridges with preattached filter and bagged PureFlow Express dialysate to
deliver prescribed therapy frequency/fluid volume, and the rental of a Warmer
and Stand and related warmer disposable. Pricing is per patient month at
physician prescribed frequency/fluid volume according to the choices outlined
below. Other treatment schedules and volumes are available upon request.
A. 6X WEEKLY THERAPY (26 TREATMENTS PER MONTH)
PREFERRED
PROVIDER
FLUID VOLUME PRICE
------------ ---------
15 liters [**]
20 liters [**]
25 liters [**]
30 liters [**]
Monthly Dialysis Supplies shipments will be based on the prescribed frequency
and the inventory needs of the patient, as reported by the patient to NxStage
customer service.
5. ADDITIONAL SITE/FACILITY VOLUME DISCOUNTS
Authorized Customer Locations may earn volume discounts from the above Monthly
Dialysis Supplies pricing in any particular month based on such Authorized
Customer Location's monthly NxStage patient counts and training activity
measured at the end of the immediately preceding calendar month as follows:
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 18 of 45
- Silver ([**]% discount from Preferred Provider Price): If an
Authorized Customer Location purchases Monthly Dialysis Supplies for
[**] or more patients and its new NxStage patient training activity
has averaged [**] or more patients per month over the previous [**]
months (for the first [**] months following the Effective Date hereof,
NxStage shall include in this calculation an Authorized Customer
Location's monthly NxStage patient training activity prior to the
Effective Date, as appropriate).
- Gold ([**]% discount from Preferred Provider Price): If an Authorized
Customer Location purchases Monthly Dialysis Supplies for [**] or more
patients.
- Platinum ([**]% discount from Preferred Provider Price): If an
Authorized Customer Location purchases Monthly Dialysis Supplies for
[**] or more patients.
An Authorized Customer Location need not qualify for the Silver discount to
qualify for the Gold or Platinum discount.
Both NxStage and Customer recognize that it may, in certain circumstances, be
advantageous to maintain more than one Authorized Customer Location in a
particular Market (as defined in Schedule E). Therefore, if there is more than
one Authorized Customer Location in a Market, the patient census and training
rates of all Authorized Customer Locations in such Market shall be aggregated
for purposes of determining volume discounts.
Subsequent to August 31, 2007, PureFlow Express (Bags) patients representing
more than [**] percent ([**]%) of any Customer site's/facility's patients shall
not count towards the patient count threshold requirements for Silver, Gold, and
Platinum discounts set forth above.
Notwithstanding the foregoing, the maximum discount to which Customer shall be
entitled for PureFlow Express (Bags) shall be [**]%; provided the other
requirements of "Silver" level discounts are met.
Monthly Dialysis Supplies (cartridges with preattached filter and dialysate for
prescribed treatment frequencies/fluid volumes) will be invoiced at the prices
set forth in Sections 3 and 4 above, less any applicable volume discounts
earned, as measured at the end of the immediately preceding calendar month.
Discounts earned shall be indicated on invoices provided to Authorized Customer
Locations. All Authorized Customer Locations must be current in their payment
terms for Customer to be eligible for any level of volume pricing discounts;
provided that discounts may be earned if Customer's past due undisputed invoices
are less than $[**] in total. Amounts disputed in good faith by Customer
pursuant to the provisions of Section 5 of Schedule A shall not impact
Customer's eligibility for volume discounts hereunder.
For purposes of calculating volume discounts under this Section 5, only patients
trained and billed for at that specific Authorized Customer Location (or Market,
if applicable) shall be included in that Authorized Customer Location's (or
Market's, if applicable) patient numbers.
6. SITE STARTUP/ADDITIONAL SITES
Customer must notify NxStage when it desires to add a new site/facility as an
Authorized Customer Location to Schedule D hereof. Customer shall not be
restricted from adding new sites/facilities to Schedule D in any continental
U.S. location; provided (a) NxStage in-service and training has been scheduled
for each such new site/facility (NxStage shall use commercially reasonable
efforts to promptly provide requested in-service and training), or (b) Customer
provides written certification to NxStage that at least [**] staff member at
such new site/facility has been trained on the proper use and operation of the
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 19 of 45
System One by other trained Customer personnel, and that the site/facility has
developed appropriate policies and procedures and patient training materials
relating to the System One.
7. RESERVE QUANTITY INVENTORY
Customer may place orders for up to [**] weeks of Monthly Dialysis Supplies at
the time of the initial Patient Prescription Monthly Standing Order placement
for [**]% of the above Monthly Dialysis Supplies pricing amounts per week
ordered.
8. ADDITIONAL SUPPLIES
CONTRACT PRICE
---------------------
Waste Line Extension - 20 ft (24/case) $[**]/case
NxStage System One Cycler (See Section 2 above)
PureFlow SL (See Section 2 above)
Warmer $[**]
Wheeled Base/Cycler Stand (Express) $[**]
Wheeled Base (SL) $[**]
Soft-Sided Travel Case (1) $[**]
Hard Travel Case $[**]
(1) Not for use on airlines or other forms of public/commercial transportation.
Customer may purchase additional supplies at the Contract Prices set forth
above.
9. TRAINING MATERIALS AND SUPPORT
CONTRACT PRICE
--------------
Additional User's Guides (one provided with each
system purchased or rented)* [**]
Sample Policies and Procedures CD-ROM* [**]
Customer may purchase additional training materials at the Contract Prices set
forth above.
* Purchase of the above materials requires approval of a NxStage Sales
Manager.
10. OTHER
NxStage will on occasion supply Products sourced from other suppliers as part of
Customer's Monthly Dialysis Supplies Package. NxStage reserves the right to
supply its own Products, once the same are commercially available, or to change
the supplier of these Products from time to time.
NxStage expects to make additional Products available for purchase by Customer
from time to time. NxStage, therefore, reserves the right to amend this Schedule
to include additional Product offerings.
Except as provided above, the pricing for all System One Products, other than
Monthly Dialysis Supplies, will remain fixed during the Term, including any
extensions thereto. Monthly Dialysis Supplies pricing shall remain fixed for
three (3) years hereunder. At the expiration of such three (3) year period, and
in the event the Agreement is extended pursuant to the requirements of this
Agreement, NxStage may increase Monthly Dialysis Supplies prices by an amount
equal to the cumulative percentage increase in the Medicare composite rate for
end stage renal disease therapy from the Effective Date through the expiration
of such three (3) year period, up to a maximum of [**] percent ([**]%).
Thereafter, prices
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 20 of 45
may increase, on an annual basis, by a percentage equal to the percentage
increase in the Medicare composite rate for end stage renal disease therapy over
the preceding [**] month period.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 21 of 45
SCHEDULE C
CHRONIC OUTPATIENT THERAPY
WARRANTY; SERVICE; AND RECALLS
1. REPRESENTATIONS AND WARRANTIES
Except as provided below, all Products are provided "AS IS". NO EXPRESS OR
IMPLIED WARRANTY EXISTS FOR ANY PRODUCTS, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO
EVENT SHALL NxSTAGE BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL,
PUNITIVE OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
PERFORMANCE OF SERVICES AND/OR SUPPLY OF PRODUCTS HEREUNDER.
For a period of [**] year following the date of delivery, NxStage warrants that
Products (i) shall be free from defects in material and workmanship when
delivered, and (ii) are fit for the purposes and indications described in their
Operator's Manuals and package inserts when used in accordance with the
instructions for use provided in such Operator's Manuals and package inserts.
Unless such Products are used in accordance with such instructions and
indications, this warranty is void and of no force or effect. The warranties set
forth herein shall extend only to the original purchaser. These warranties are
not assignable or transferable.
EXCEPT AS PROVIDED BELOW, NxSTAGE'S SOLE OBLIGATION AND CUSTOMER'S SOLE REMEDY
FOR BREACH OF THE FOREGOING WARRANTY SHALL BE LIMITED TO PRODUCT REPAIR OR
REPLACEMENT, AT NxSTAGE'S OPTION AND EXPENSE, CONSISTENT WITH THE TERMS SET
FORTH UNDER SECTION 2 "SERVICE" OF THIS SCHEDULE C. ALL WARRANTIES SHALL BE
VOIDED IF (i) the Product has been repaired by persons other than NxStage
personnel or its authorized representatives, (ii) the replacement or repair is
required due to the misuse or abuse of the Product, as determined by NxStage,
(iii) the Cycler or Warmer is used with non-NxStage sets, (iv) the replacement
or repair is required for reasons other than defects in materials and
workmanship or, in the case of equipment, normal wear and tear, as determined by
NxStage, or (v) the Product is not used in accordance with its instructions for
use, as determined by NxStage.
Notwithstanding the foregoing, if Customer is enjoined by an order of a court of
law from using purchased System One Cyclers or PureFlow SLs in the United States
for their intended use and consistent with their then-current user's guides for
a period of [**] consecutive months (for purposes hereof, purchased Cyclers and
PureFlow SLs shall not be unusable if they can be used with other non-NxStage
products, consistent with then-current product labeling), due to the
infringement by such purchased Cyclers or PureFlow SLs of third party
intellectual property rights, and NxStage is unable by the expiration of such
[**] month period to obtain a valid license to use such intellectual property or
reengineer the purchased Cyclers or PureFlow SLs to eliminate any such
infringement, NxStage shall be obligated to pay Customer actual damages within
[**] days of the expiration of such [**] month period (with the amount of such
damages to be mutually agreed to by the parties in good faith, up to the amount
of Customer's then-current net book value for the purchased Cyclers or PureFlow
SLs which Customer has been enjoined from using for [**] consecutive months
(measured as of the date of such injunction); provided such net book value is
calculated in good faith and in accordance with generally accepted accounting
standards); provided that NxStage's obligation to make such a payment may be
accelerated to the date of filing of a voluntary or involuntary bankruptcy
proceeding for NxStage or the date NxStage refunds, all or any significant
portion of, the purchase price of any Cyclers or PureFlow SLs that have
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 22 of 45
been the subject of such an injunction (and where such refund is specifically
provided solely in connection with, and due to, such an injunction) to any other
customer, or group of customers that has purchased such Cyclers or PureFlow SLs
for the treatment of chronic home hemodialysis patients (it being understood
that Customer's right to damages hereunder shall not be so accelerated if such
refund involves no more than [**] Cyclers or PureFlow SLs, in aggregate across
all other chronic NxStage customers). No other remedy shall be provided to
Customer in connection with intellectual property claims hereunder, except as
set forth in Section 21 of Schedule A.
Further, NxStage warrants that at the time of transfer of title to Customer, it
shall possess good and marketable title to the Products, free and clear of any
and all liens and encumbrances, except those created by this Agreement and, will
convey to Customer good and marketable title to the Products. In addition,
NxStage expressly warrants that it will not ship to Customer expired Product or
Product with less than [**] months' remaining shelf life; provided that NxStage
may from time to time request that Customer accept delivery of Products with
fewer months of remaining shelf life, and Customer agrees to not unreasonably
withhold its consent to accept such deliveries.
2. SERVICE
During the Term, including any extensions thereto, NxStage shall service all
Products supplied to Customer hereunder (whether leased or purchased), including
the NxStage System One, so the same shall be in good working order and fit for
the indications described in their User's Guides and package inserts when used
in accordance with the instructions for use provided in such User's Guides and
package inserts. Fees for such services shall be included in the Monthly
Dialysis Supplies pricing set forth herein; provided that if a purchased System
is not in use (i.e. no monthly purchase volume of Monthly Dialysis Supplies is
associated with the System) for [**] months, a service reinstatement fee of
$[**] will be charged when the System is returned for service. Further,
NxStage's obligation to provide service as set forth herein shall survive the
termination of this Agreement and shall continue for all purchased System One
(s) for [**] years following the purchase date of each such purchased System One
("Service Term"). Customer agrees that fees for such service may be charged
above then-current Monthly Dialysis Supplies pricing following the termination
of this Agreement; provided that such fees shall be the lower of (i) $[**] per
System One per annum, or (ii) [**] percent ([**]%) of the average System One
service fees then charged by NxStage to other customers who have purchased the
System One for chronic renal replacement therapy.
The System One may only be serviced by NxStage at this time. Additional service
charges for both rented and purchased Systems shall apply in the event (i) the
System has been repaired by persons other than NxStage personnel or its
authorized representatives, (ii) the replacement or repair is required due to
the misuse or abuse of the System, as reasonably determined by NxStage, (iii)
the System is used with non-NxStage sets, (iv) the replacement or repair is
required for reasons other than defects in materials and workmanship or, in the
case of equipment, normal wear and tear, as reasonably determined by NxStage, or
(v) the System is not used in accordance with its instructions for use, as
reasonably determined by NxStage.
As part of its ongoing service of rented Systems and purchased Systems then in
use by Customer, NxStage, at its option, may conduct routine maintenance on
Systems and any other equipment shipped to Customer under this Agreement.
Customer shall make all Systems available to NxStage, at NxStage's request, to
conduct such maintenance; provided maintenance is conducted at mutually agreed
upon times and upon prior notice. As part of an ongoing maintenance program,
NxStage may elect to install reasonable Product upgrades, at no cost to
Customer. Any upgrades that NxStage provides to a leased System One (s) of
Customer or others will also be provided to all Customer's purchased System One
(s) within a reasonable timeframe during the term of this Agreement.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 23 of 45
To obtain service, Customer must contact NxStage Customer Service. Prior
authorization from NxStage must be obtained before any Product is returned for
service. NxStage System One (s) and other equipment supplied hereunder requiring
service must be cleaned, according to the directions on the labeling. If
Products are not cleaned, as instructed, NxStage shall charge Customer a $[**]
cleaning fee. NxStage will arrange for the shipment of all Products to be
returned for service. NxStage will not be responsible for servicing Products
that have not been shipped according to this procedure. NxStage shall use
commercially reasonable efforts to repair or replace serviced Product within
[**] hours of giving authorization for service. Replaced equipment Products
shall be in good working order; they may or may not be new, and they may or may
not be the same Products originally shipped to Customer hereunder. For this
purpose, good working order shall mean that the Product shall perform in
accordance with its specifications and manuals, and be in physical condition and
functionality equal to or better than that of the Product being replaced. In
addition, NxStage shall use all commercially reasonable efforts to ensure that
replacement Systems provided to Customer in connection with a service swap shall
have an average days in service approximately equal to or less than the
estimated days in service of the Product returned by Customer in connection with
a service swap hereunder.
Periodically, NxStage may elect to diagnose equipment servicing issues remotely,
through data analysis or phone interviews. If equipment is returned at the
insistence of Customer, or its patients, contrary to the recommendation of
NxStage, and it is subsequently determined in the reasonable discretion of
NxStage that such equipment was in good working order, Customer shall reimburse
NxStage for the related costs of such return. NxStage shall use reasonable
efforts to notify a designated Customer representative before accepting the
return of equipment under such circumstances.
3. RECALLS
In the event that any governmental agency or authority requests a recall, a
field corrective action, Product withdrawal or takes similar action in
connection with any Product (each a "Product recall"), or in the event NxStage
determines an event, incident or circumstance has occurred that results in the
need for a Product recall, NxStage shall promptly notify Customer within [**] of
such governmental agency or authority request or action or of NxStage's decision
to voluntarily institute a Product recall. In the event of a Product recall of
any Product, NxStage shall (a) reimburse Customer for reasonable handling
expenses incurred in returning units of the Product to NxStage or otherwise
implementing the Product recall; and (b) use all commercially reasonable efforts
to promptly repair or replace the recalled Product with another NxStage Product
performing the same function in good working order. If a Product recall
materially and negatively impacts Customer's ability to perform under this
Agreement, the Volume Commitment amounts and dates and other requirements for
maintaining Exclusivity that are set forth in Schedule E shall be adjusted as
mutually agreed by NxStage and Customer so as to reflect the impact of such
Product recall on Customer's patient volumes, and NxStage shall allocate
replacement Products to Customer on a first-priority basis consistent with
Customer's then-current share of NxStage's equipment field base that has either
been purchased or is under extended (e.g. two years or more) lease arrangements,
and consistent with the then-effected prescription items included in Customer's
Monthly Dialysis Supplies orders; provided that Customer's purchase orders for
System One equipment shall be allocated to Customer on a first priority basis,
so long as such purchase orders are consistent with the other requirements set
forth herein, including without limitation those set forth in Schedule E,
Paragraph 7. In addition to the foregoing, if NxStage is unable to repair or
replace recalled System One Cyclers or PureFlow SLs purchased by Customer, such
that such purchased Cyclers or PureFlow SLs are therefore rendered unusable and
continue to be unusable for a period of [**] consecutive months (for purposes
hereof, purchased Cyclers and PureFlow SLs shall not be unusable if they can be
used with other non-NxStage products, consistent with then-current product
labeling), NxStage shall be obligated to pay Customer actual damages within [**]
days of the expiration of such [**] month period (with the amount
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 24 of 45
of such damages to be mutually agreed upon by the parties in good faith, up to
the amount of Customer's then-current net book value for the purchased Cyclers
or PureFlow SLs which Customer has been prevented from using for [**]
consecutive months (measured as of the date of such recall); provided such net
book value is calculated in good faith and in accordance with generally accepted
accounting standards); provided that NxStage's obligation to make such a payment
may be accelerated to the date of filing of a voluntary or involuntary
bankruptcy proceeding for NxStage or the date NxStage refunds, all or any
significant portion of, the purchase price of any Cyclers or PureFlow SLs that
have been the subject of such a recall (and where such refund is specifically
provided solely in connection with, and due to, such recall) to any other
customer or group of customers that has purchased such Cyclers or PureFlow SLs
for the treatment of chronic home hemodialysis patients (it being understood
that Customer's right to damages hereunder shall not be so accelerated if such
refund involves no more than [**] Cyclers or PureFlow SLs, in aggregate across
all other NxStage chronic customers). No other remedy shall be provided to
Customer in connection with Product recalls, except as set forth in Section 21
of Schedule A.
In the event NxStage elects to obtain recall insurance covering the recall of
purchased System One Cyclers and/or PureFlow SLs, Customer and NxStage agree
that the parties shall share the cost of such insurance coverage, up to a
maximum amount of $200,000 per party per annum; provided that Customer shall
consider in good faith requests made by NxStage to share insurance costs in
excess of these amounts. Recall insurance, if obtained by NxStage, shall name
Customer (but no other customer of NxStage) as an additional insured. Any
insurance payment to Customer under such policy shall offset any damages
determined to be owed to Customer hereunder pursuant to the foregoing terms,
with NxStage obligated to pay any remainder pursuant to the terms hereof.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 25 of 45
SCHEDULE D
CHRONIC OUTPATIENT THERAPY
AUTHORIZED CUSTOMER LOCATIONS
(IF MORE THAN ONE LOCATION IS COVERED BY THIS AGREEMENT)
List name of location, address, provider number, and phone number.
[**]
Page 26 of 45
SCHEDULE E
PREFERRED RELATIONSHIP
1. MARKET RIGHTS
In recognition of a Preferred Relationship between NxStage and Customer, NxStage
agrees to limit the number of Active NxStage Customers (as defined below) in
specified geographic Markets (as defined below) in the Continental United States
for the duration of the Term to the levels defined in Attachment A, as the same
may be adjusted pursuant to the terms hereof. For purposes of this Agreement,
Markets are as defined by geographical county, group of counties, or
subdivisions of a county (for [**] and [**]), as set forth in
Attachment A hereto.
As detailed in Attachment A, and subject to the terms set forth below, NxStage
agrees to provide Customer "Full Exclusivity" (Customer Only, and No Active
NxStage Customer) access in [**] markets, "Customer + 1 Active NxStage Customer
Exclusivity" (hereinafter "Customer + 1 Exclusivity") access in [**] markets,
and "Customer + 2 Active NxStage Customer Exclusivity" (hereinafter "Customer +
2 Exclusivity") access in remaining markets at the Effective Date, (hereinafter,
in addition to all other exclusivity rights set forth in this Paragraph 1,
collectively referred to as "Exclusivity, or Exclusivity Rights").
Markets not presently qualifying for Full Exclusivity, Customer +1 or Customer
+2 Exclusivity ("Exception Markets") are [**] other Active NxStage Customers),
[**] other Active NxStage Customers), [**] other Active NxStage Customers), [**]
other Active NxStage Customers), [**] other Active NxStage Customers), [**]
other Active NxStage Customers), [**] other Active NxStage Customers), [**]
other Active NxStage Customers), and [**] other Active NxStage Customers).
NxStage agrees to limit the number of Active NxStage Customers in the Exception
Markets to these stated levels. NxStage agrees that if any Active NxStage
Customer's agreement with NxStage is terminated in the Exception Markets during
the Term, or any extension thereof, and such Market is not otherwise a "filled
Market" (as defined below), NxStage shall not enter into a new agreement to
establish a new Active NxStage Customer in such Exception Market for a period of
[**] months following the relevant agreement termination date. The parties
understand that the foregoing list of Markets are the only "Exception Markets",
and that Customer + 2, +3 or other Markets that lose one or more levels of
Exclusivity rights pursuant to the terms set forth herein, shall not thereafter
convert to Exception Markets.
For purposes hereof, the term "Active NxStage Customer" shall mean any
organization, other than Customer, with one or more sites/facilities located in
the specific Market (as defined in Attachment A) that a) then has [**] or more
patients trained and billed for through such one or more sites/facilities, which
sites/facilities are located in the specific Market, using the System One or
related NxStage home hemodialysis products for chronic patient home hemodialysis
therapy or b) who then has the right to increase the number of their home
hemodialysis patients that are using the System One or related NxStage home
hemodialysis products in that Market. Customer understands that the list of
Active NxStage Customers may change during the Term, and any extension thereof,
so long as (i) the number of Active NxStage Customers with facilities/sites in
any Market, at any given time during the term hereof, does not exceed stated
levels herein; or (ii) is otherwise inconsistent with any provision of this
Agreement. For purposes of this Agreement, Customer expressly understands that
each Active NxStage Customer may have one or more sites/facilities in a specific
Market, and that such Active NxStage Customer shall still count as only one
Active NxStage Customer for purposes of Exclusivity calculations hereunder.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 27 of 45
NxStage agrees to endeavor in good faith to limit all other chronic home
hemodialysis customers of NxStage ("Non-Active NxStage Customers") to no more
than one (1) in each Customer + 1 Exclusivity Market or two (2) in each Customer
+ 2 Exclusivity Markets or Exception Market. In the event the number of
Non-Active NxStage Customers exceed these levels in any Market, NxStage shall
notify Customer thereof and shall meet with Customer to discuss a reasonable
resolution, including without limitation, potential adjustments to Market
Specific Training Thresholds.
NxStage further agrees in all Continental United States Markets to not sell or
rent the NxStage System One and related home hemodialysis products for chronic
patient home hemodialysis therapy, directly or indirectly, (A) to any Major
Dialysis Provider clinic (defined as any affiliate of or clinic or joint venture
under common control or management of a parent entity that (i) collectively
provides dialysis services to more than 25% of U.S. chronic dialysis patients,
and (ii) supplies dialysis products), or (B) to any entity, in which at least
[**] percent ([**]%) of the equity or other ownership interest is owned,
directly or indirectly, by any physician or physician group (including all
physicians affiliated therewith) that has entered into a medical director
agreement with Customer ( hereinafter, individually and collectively referred to
as a "Customer Medical Director") that prohibits the Customer Medical Director
from being involved in a business that provides chronic patient home
hemodialysis therapy in the location in which such entity is located
(hereinafter collectively referred to as a "Customer Medical Director
Agreement") until the expiration of noncompetition obligations contained therein
relating to home hemodialysis in such location; provided that the obligations
set forth in subsection (B) shall not apply unless, (a) NxStage is notified in
writing of the name of the Customer Medical Director with a then-current
Customer Medical Director Agreement at least [**] days prior to the initiation
of discussions between NxStage and the entity (provided that if NxStage, after
reasonable inquiry, is unaware of any relationship between such a Customer
Medical Director and such entity, NxStage shall not be restricted from selling
or renting Products to such entity; and provided further that in no event shall
NxStage be prohibited from selling or renting Products to any such entity's
dialysis clinic or facility in a location where such Customer Medical Director
that has at least the above-referenced ownership interest in such entity is not
prohibited from being involved in a business that provides chronic patient home
hemodialysis therapy); (b) the entity is one with which NxStage does not have
any existing agreement as of the Effective Date (it being understood that the
foregoing restrictions set forth in subsection (B) shall not impact any
agreements executed by NxStage with other customers prior to the Effective Date
or any customer relationships in active negotiations with NxStage prior to the
Effective Date); and (c) Customer does not otherwise interfere with the ability
of the Customer Medical Director to prescribe NxStage home hemodialysis therapy
either by not having a center offering the NxStage System One to potential
patients in the applicable Market where the entity owned, in whole or in part,
by a Customer Medical Director is establishing a home hemodialysis program or by
interfering with the clinical discretion of the Customer Medical Director.
Notwithstanding the foregoing, Customer agrees that NxStage may continue to
supply products to any Major Dialysis Providers' existing sites in Markets in
which NxStage products/therapy are currently offered at the Effective Date (such
Markets are listed in Attachment B to this Agreement), and [**]. A list of such
sites shall be added at the time of any such acquisition to Attachment B.
NxStage further agrees that it shall adjust the Variable Market Specific
Training
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 28 of 45
Thresholds so that the same shall be calculated using one hundred percent (100%)
of the mean training rate of Active NxStage Customers (as described under
"Maintaining Market Levels Exclusivity" below) in each of those Markets where
Major Dialysis Provider acquires the contractual right to purchase NxStage
products through acquired sites/facilities.
NxStage further agrees not to sell or rent the NxStage System One, and related
home hemodialysis products for chronic patient home hemodialysis therapy,
directly or indirectly, to (A) any provider under the ownership, management or
control of an entity whose main business is the provision of homecare services
(e.g. IV infusion or oxygen therapies), other than the provision of home
hemodialysis, unless such provider purchases an existing provider other than
Major Dialysis Provider that has a primary business unit that provides dialysis
services to more than [**] chronic outpatient dialysis patients in the United
States; provided that if such an acquisition would occur, NxStage shall remain
subject to the Exclusivity Rights and other provisions set forth herein, or (B)
any provider that does not have, or is not in the process of obtaining,
certification from the Centers for Medicare and Medicaid Services to furnish
home hemodialysis services.
Customer understands that all of the foregoing Exclusivity restrictions apply
exclusively to chronic patient home hemodialysis therapy, and that NxStage shall
not be restricted in any way from making sales or rentals/leases of its
products, including the System One, to other customers pursuant to the terms
hereof for any other use, including without limitation, for the treatment of
kidney failure in the acute setting or for in-center use.
As a condition to maintaining such Exclusivity, in addition to the requirements
set forth in Section 2 below, (i) on or after [**], the number of Customer's
home hemodialysis patients using Major Dialysis Provider products and other
non-NxStage products, viewed in the aggregate, excluding those owned or leased
by Customer as of the Effective Date, must never be greater than the greater of
(A) [**] or (B) [**] percent ([**]%) of Customer's home hemodialysis patient
population (additionally, for Full Exclusivity Markets with at least [**] home
hemodialysis patients, the percentage of Customer's home hemodialysis patients
using Major Dialysis Provider products and other non-NxStage products, excluding
those owned or leased by Customer in such Market as of the Effective Date,
viewed in the aggregate, must never be greater than [**] percent ([**]%) on a
Market-by-Market basis; provided that during 2007, home hemodialysis patients
participating in [**] Investigational Device Exemption study in support of FDA
clearance shall be excluded from this calculation; (ii) Customer's share of home
hemodialysis patients using the NxStage System One or any successor NxStage
hemodialysis product must never decline by [**] percent ([**]%) or more over any
[**] month period during the Term of this Agreement, or any extension term, or
by more than [**] percent ([**]%) over the Term of this Agreement, or any
extension term, and (iii) on or after September 1, 2007, the percentage of
Customer's NxStage Patients using PureFlow Express (Bags) Monthly Dialysis
Supplies must never be greater than [**] percent ([**]%) (provided that NxStage
shall either delay this requirement or temporarily increase this percentage in
the event Customer is materially impaired from achieving a higher percentage of
its patients on PureFlow SL due to product reliability issues associated with
the PureFlow SL; and provided further that in no event shall such date extend
beyond the earlier of (A) the first date on which at least [**] percent ([**]%)
of all Active NxStage Customers' NxStage patients are on PureFlow SL, or (B)
December 31, 2007); and if by December 31, 2007 at least [**] percent ([**]%) of
all Active NxStage Customers' NxStage patients are not on PureFlow SL, NxStage
shall have the option to either further extend such requirement until such [**]
percent ([**]%) target has been achieved or adjust this requirement to reflect
the then-current percentage of Active NxStage Customers' NxStage patients on
PureFlow Express (Bags). For purposes of any of the foregoing calculations, home
hemodialysis patients shall include home hemodialysis as well as home
hemofiltration and home hemodiafiltration patients.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 29 of 45
If any of the preceding obligations are not met, NxStage may terminate any and
all Exclusivity rights hereunder (unless such failure is Customer's obligation
to maintain a [**] percent ([**]%) limit in Full Exclusivity Markets, in which
case only the Exclusivity related to the Market in which the failure occurred
may be terminated) upon ninety (90) days notice (provided Customer does not cure
within such 90 day period); provided however, no such termination shall be
permitted and Customer shall not lose any Exclusivity if any of the foregoing
requirements are not met due to NxStage's failure to (i) supply a sufficient
number of Products for any reason, (ii) make adequate resources available to
timely train new Authorized Customer Locations, or, in the case of PureFlow
introductions, existing Authorized Customer Locations, or (iii) provide Reliable
Products (as defined in Section 2 below). Customer may elect to waive its
Exclusivity Rights in any Market, at any time or from time to time by notifying
NxStage in writing of such waiver. Once Exclusivity Rights hereunder are waived
by Customer they shall be perpetually terminated, and all of Customer's other
obligations under this Schedule E shall remain unchanged.
On or after [**], if the percentage of Customer's home hemodialysis
patients using Major Dialysis Provider products and other non-NxStage products,
excluding those owned or leased by Customer as of the Effective Date, viewed in
the aggregate, in any specific Market (other than a Full Exclusivity Market)
with [**] or more home hemodialysis patients is greater than [**] percent
([**]%), [**] level of Exclusivity shall be lost for that Market, upon ninety
(90) days notice (provided Customer does not cure within such ninety (90) day
period); provided, however, no such termination shall be permitted and Customer
shall not lose any Exclusivity if any of the foregoing requirements are not met
due to NxStage's failure to (i) supply a sufficient number of Products for any
reason, (ii) make adequate resources available to timely train new Authorized
Customer Locations, or, in the case of PureFlow introductions, existing
Authorized Customer Locations, or (iii) provide Reliable Products (as defined in
Section 2 below).
For purposes of this Agreement, home hemodialysis at Nursing Homes/Skilled
Nursing Facilities and through Pediatric programs shall not contribute to
Exclusivity calculations, so long as the Pediatric programs are not providing
NxStage home hemodialysis services to adult patients, and so long as programs
providing dialysis to Nursing Homes/Skilled Nursing Facilities (or the Nursing
Homes themselves) are not providing NxStage home hemodialysis services to
patients not residing in such facilities. Further, in recognition of Customer's
status as NxStage's preferred national service provider, if a Nursing
Home/Skilled Nursing Facility in a Full Exclusivity Market or Customer + 1
Exclusivity Market approaches NxStage seeking to purchase or rent NxStage home
hemodialysis products for its patients, NxStage shall promptly notify Customer
thereof in writing and Customer shall have [**] days to notify NxStage regarding
whether it wishes to provide such services to such patients and an additional
[**] days to initiate such services. If at the conclusion of such [**] day
period Customer has not initiated service at such Nursing Home/Skilled Nursing
Facility, NxStage shall thereafter be free to enter into an agreement regarding
the provision of NxStage products with such Nursing Home/Skilled Nursing
Facility, subject to the limitations set forth in this Schedule E, including
without limitation in the first sentence of this paragraph hereof.
NxStage agrees that in the event an Active NxStage Customer provides chronic
home hemodialysis therapy with the NxStage System One to [**] or more patients
that reside in a Market, other than the Market through which such patients are
trained and billed for, and provided that all such [**] or more patients shall
reside in the same Market ("Out-of-Market Patients"), then NxStage agrees, [**]
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 30 of 45
This requirement shall only apply after Customer provides NxStage written notice
that it suspects that such a number of patients are so treated through an Active
NxStage Customer and NxStage confirms through its own investigation that such a
situation exists.
Customer acknowledges the importance of NxStage's earlier partnership and
relationship with certain providers ("Early Partners"), and agrees to provide
such Early Partners the following Market entry rights. After January 1, 2008,
Customer agrees that Early Partners, in aggregate, may enter any and all
Customer + 2 or +3 or higher Exclusivity filled Markets (as hereafter defined),
pursuant to the terms set forth below, and that NxStage shall have [**] months
from the date the first Early Partner schedules a patient training in such
Market, to restore the number of permitted Active NxStage Customers in any such
filled Market to then-required levels hereunder (for the purposes hereof,
"filled Markets" shall mean Markets with the maximum number of Active NxStage
Customers then permitted). This right to restore the number of permitted Active
NxStage Customers in any given Market to then-required levels hereunder shall
not be invoked by NxStage more than [**] times during each calendar year under
the Term; provided that such right may not be exercised at any time during the
first calendar year of this Agreement. Additionally, NxStage agrees that
following such entry into a filled Market by an Early Partner, Customer's
then-current Exclusivity Rights for that filled Market shall not thereafter be
reduced due to any failure by Customer to achieve Market Specific Training
Thresholds. If NxStage fails to cure a given Market as required above, upon
expiration of the [**] month cure period, NxStage shall not sell or lease the
Early Partner any additional System Ones for use in the filled Market, until
such Market has been restored to the required number of permitted Active NxStage
Customers in such Market. Notwithstanding the foregoing, after January 1, 2008,
Early Partners shall be permitted to enter, in aggregate, up to [**] filled
Markets (no more than [**] Customer + 1 Markets and [**] Customer + 2 or + 3 or
higher Markets) over the [**] calendar years of this Agreement; provided that
Early Partners, in aggregate, subject to all restrictions set forth herein,
shall not enter more than [**] Customer + 1 filled Market during [**] calendar
years of this Agreement and more than [**] Customer + 2 filled Markets during
[**] calendar years of this Agreement, in each case without triggering an
obligation of NxStage to restore the number of permitted Active NxStage
Customers in any given Market to then-required levels hereunder (hereinafter,
such Markets shall be referred to as "Non-Cured Markets").
In the event Early Partners enter a Non-Cured Market, Customer's Market Specific
Training Thresholds for that Market and 100% and Minimum Volume Commitments and
Required and Minimum Percentage Increases will be ratably reduced using a "fair
share" concept.
2. VOLUME COMMITMENTS AND MARKET SPECIFIC TRAINING THRESHOLDS
As a further condition to maintaining the Exclusivity rights set forth in
Section 1 of this Schedule E above, Customer agrees to have the following number
of NxStage Patients at its clinics by the dates ("Target Dates") indicated below
(hereinafter referred to as "Volume Commitments").
For purposes hereof, "NxStage Patients" shall mean Customer's (i) home
hemodialysis patients, and (ii) in-center self-care hemodialysis patients, in
each case using the NxStage System One or a NxStage successor product to the
System One with then-current Patient Prescription Monthly Standing Orders and
ordering Monthly Dialysis Supplies; provided that Customer's NxStage self-care
patients representing more than [**] percent ([**]%) of Customer's chronic
hemodialysis patient population using the NxStage System One or a NxStage
successor product shall not count as "NxStage Patients"; and provided further
that all such self-care patients must be at the pricing set forth in Schedule B.
VOLUME COMMITMENTS FOR FIRST THREE YEARS
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 31 of 45
NUMBER OF NXSTAGE PATIENTS REQUIRED NUMBER OF NXSTAGE PATIENTS REQUIRED
TARGET DATE BY WHICH VOLUME TO MEET 100% VOLUME COMMITMENT TO MEET MINIMUM VOLUME COMMITMENT
COMMITMENT MUST BE MET OR EXCEEDED ("100% VOLUME COMMITMENT") ("MINIMUM VOLUME COMMITMENT"
---------------------------------- ----------------------------------- -----------------------------------
June 30, 2007 [**] [**]
December 31, 2007 [**] [**]
June 30, 2008 [**] [**]
December 31, 2008 [**] [**]
June 30, 2009 [**] [**]
December 31, 2009 [**] [**]
During this initial three year period:
a. Customer must achieve a NxStage Patient census at least equal to
the applicable 100% Volume Commitment by each Target Date
(subject to applicable cure periods), in addition to satisfying
the other obligations set forth in Section 1 of this Schedule E
above, in order to preserve all of its Exclusivity rights as then
in effect hereunder.
b. If at any time during the first three years hereof Customer
achieves a NxStage Patient census less than the applicable 100%
Volume Commitment and equal to or above the applicable Minimum
Volume Commitment by the applicable Target Date (subject to
applicable cure periods), and otherwise satisfies each of the
requirements set forth in Section 1 of this Schedule E above,
Customer may retain Exclusivity on a Market-by-Market basis in
those markets where Market Specific Training Thresholds (as
defined below) are met or exceeded.
c. If at any time during the first three years hereof Customer
achieves a NxStage Patient census less than the applicable
Minimum Volume Commitment by the applicable Target Date, Customer
shall lose, subject to cure periods discussed below, all rights
of Exclusivity and Preferred Provider Rights set forth in this
Schedule E.
VOLUME COMMITMENTS FOR YEARS FOUR AND FIVE, IF AGREEMENT IS EXTENDED
In the event this Agreement is extended for up to two (2) additional years,
as set forth on the front page hereof, Customer must achieve the following
Volume Commitments by the dates indicated:
a. Customer must have at least [**] NxStage Patients at December 31,
2009.
b. At the expiration of each of the first three (3) additional six
(6) month increments of such additional two (2) year period,
starting with June 30, 2010, Customer must have increased the
number of its NxStage Patients by at least the percentage set
forth in the table immediately below above the number of NxStage
Patients that it had at the end of the preceding six (6) month
period:
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 32 of 45
NUMBER OF CUSTOMER'S
NXSTAGE PATIENTS AT
START OF EACH SIX(6) REQUIRED SEMI-ANNUAL
MONTH PERIOD PERCENTAGE INCREASE (1)
-------------------- -----------------------
[**] [**]%
[**] [**]%
[**] [**]%
(1) The required semi-annual percentage increase shall be determined based upon
the number of Customer's NxStage Patients as of the start of each such
period.
(2) Compliance with required semi-annual percentage increases shall be measured
at June 30, 2010, December 31, 2010 and June 30, 2011, and shall be
calculated by determining the percentage increase between the number of
Customer's NxStage Patients at the date six (6) months immediately
preceding the aforementioned calculation date and the number of Customer's
NxStage Patients at such calculation date.
During any extended term of this Agreement:
a. Customer must achieve at least one hundred percent (100%) of
these required semi-annual percentage increases in patient
volumes ("Required Percentage Increase"), subject to applicable
cure periods, in addition to satisfying the other obligations set
forth in Paragraph 1 of this Schedule E above, in order to
preserve all of its Exclusivity rights, as then in effect
hereunder (any losses in Exclusivity rights during the initial
three (3) year term hereunder shall be carried over through any
extended term of this Agreement).
b. If at any time after June 30, 2010, Customer achieves less than
one hundred percent (100%) but more than [**] percent ([**]%) of
these required semi-annual percentage increases in patient
volumes ("Minimum Percentage Increase"), subject to applicable
cure periods, and otherwise satisfies the requirements set forth
in Paragraph 1 of this Schedule E above, Customer may retain
Exclusivity, as then in effect hereunder, on a Market-by-Market
basis in those Markets where Market Specific Training Thresholds
are met or exceeded.
c. Customer shall lose all Exclusivity and Preferred Provider Rights
set forth in this Schedule E, and NxStage may, at its option,
immediately terminate this Agreement, in the event Customer, at
any time during any extended term, achieves less than the
applicable Minimum Percentage Increase, subject to applicable
cure periods.
MAINTAINING MARKET-LEVEL EXCLUSIVITY
Subject to the foregoing terms, if (A) at any time during the initial three
year term Customer does not meet the 100% Volume Commitment, but does meet
or exceed the Minimum Volume Commitment, or (B) during the extended term,
Customer does not meet or exceed 100% of the Required Percentage Increase,
but does meet or exceed the Minimum Percentage Increase; then Customer may
retain Exclusivity on a Market-by-Market basis in those Markets where
Market Specific Training Thresholds are met or exceeded.
a. For purposes hereof, "Market Specific Training Thresholds" shall
equal the lower of (i) the fixed Market Specific Training
Thresholds set forth in Attachment A (the
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 33 of 45
"Fixed Market Specific Training Threshold), or (ii) [**] percent
([**]%) of the Mean Training Rate (as defined below) of Active
NxStage Customers nationwide over the preceding six (6) month
period, and adjusted to represent Customer's "fair share" of the
ESRD Market population given Customer's Market specific
Exclusivity rights, and adjusted for the specific Market ESRD
patient population (the "Variable Market Specific Training
Threshold). For example, in calculating the Variable Market
Specific Training Threshold, in Customer + 1 Exclusivity Markets,
Customer's "fair share" of a given [**] ESRD patient Market
population shall be half; in Customer + 2 Exclusivity Markets,
Customer's "fair share" of a given [**] ESRD patient Market
population shall be one-third; in Full Exclusivity Markets,
Customer's "fair share" shall be one hundred percent (100%) of
the given [**] ESRD patient Market population; and in Exception
Markets, Customer's "fair share" shall be appropriately adjusted
to reflect Customer's proportionate share of the Market based on
the number of Active NxStage Customers in such Market . All
Authorized Customer Locations within the applicable Market shall
be aggregated for determining whether Market Specific Training
Thresholds are met or exceeded for such Market. For purposes
hereof, the parties agree that the "Mean Training Rate" shall
equal the weighted average of each ANC Market Training Rate (as
hereafter defined), with such weighted average calculated on an
ESRD Market population basis over the preceding six (6) month
period. "ANC Market Training Rate" shall equal the sum of all
Active NxStage Customers' patient training rates in each Market,
with each of such rates adjusted to assume a [**] ESRD patient
Market population and further adjusted to reflect each such
Active NxStage Customer's "fair share" of the Market during such
six (6) month period, it being understood that only the training
rates of Active NxStage Customers with at least six (6) months of
operations shall be included in such calculation, and that only
Markets with Active NxStage Customers with at least six (6)
months of NxStage operations shall be included in such Mean
Training Rate. An illustrative example of this calculation is
attached in Exhibits B-1 and B-2 attached hereto.
b. Beginning on June 30, 2007 and at the end of every six month
period thereafter, a prospective Variable Market Specific
Training Threshold will be established for each Market. Except as
otherwise provided below, and only in the event that 100% of the
Volume Commitments have not been met by the required date and any
applicable cure period, Customer must meet or exceed the lower of
this rate, or the Fixed Market Specific Training Threshold rates
set forth in Attachment A, in each Market in order to maintain
Market level Exclusivity.
i. NxStage shall provide Customer written notice of the
Variable Market Specific Training Thresholds within
[**] days of the end of each six month period
hereunder. Such Variable Market Specific Training Rate
shall apply to the subsequent six month period
ii. Customer shall have the right to audit NxStage's
calculation of such Variable Market Specific Training
Thresholds through an independent public accounting
firm that, within the preceding [**] years has not had
any relationship with either of the parties, so long as
such accounting firm keeps the results of its
investigation strictly confidential and does not
disclose the same to Customer, other than its final
determination of the Variable Market Specific Training
Threshold.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 34 of 45
iii. To contribute to either Fixed or Variable Market
Specific Training Thresholds for any given period, (A)
a completed Patient Prescription Monthly Standing Order
must be received by NxStage by the end of such period,
and (B) the NxStage Patient must complete at least [**]
NxStage treatment/training sessions prior to
discontinuation of therapy, if applicable.
iv. Fixed and Variable Market Specific Training Thresholds
will each be adjusted according to the following table:
STATUS OF
CUSTOMER
FACILITY AS OF
12/31/06 JAN/JUN 07 (1) JUL/DEC 07 (1) JAN/JUN 08 JUL/DEC 08 (2)
-------------- -------------- -------------- ---------- --------------
Active home HD [**] [**] [**] [**]
program, Active
NxStage patients
Active home HD [**] [**] [**] [**]
program, no
NxStage Patients
Home HD [**] [**] [**] [**]
Certification,
No Active Home
HD/NxStage
Patients
No [**] [**] [**] [**]
Certification
and No Home HD
Program (2)
(1) During the first two six (6) month periods hereof, Market-by-Market reviews
will only take place for Markets that are either a) Full Exclusivity, b)
Customer+1 Exclusivity, or c) other Markets with patient populations [**]
(see Attachment A). For the third six (6) month period and thereafter,
Market-by-Market reviews will take place for all Markets with patient
populations [**] (see Attachment A).
(2) Following December 2008, all Market Specific Training Thresholds must be
met in all Markets hereunder.
v. Variable Market Specific Training Thresholds shall be
further adjusted to account for expected seasonality in
patient training rates.
A. Variable Market Specific Training Thresholds for
July to December shall be calculated based upon
[**]%) of the Mean Training Rate.
B. Variable Market Specific Training Thresholds for
January to June shall be calculated based upon
[**] percent ([**]%) of the Mean Training Rate.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 35 of 45
LOSS OF EXCLUSIVITY RIGHTS
In the event Customer loses any Exclusivity Rights or Preferred Provider Rights,
as set forth herein and after any applicable failure to cure, such rights shall
be permanently lost hereunder, unless otherwise agreed by the parties and such
termination of Exclusivity Rights and Preferred Provider Rights shall be
NxStage's sole remedy for Customer's failure to cure.
CUSTOMER'S RIGHT TO CURE
CURING FOR FAILURE TO ACHIEVE 100% VOLUME COMMITMENTS OR REQUIRED PERCENTAGE
INCREASES
Customer shall have the right to cure any failure to meet 100% Volume
Commitments or Required Percentage Increases, based upon the following:
a. If applicable 100% Volume Commitments are not achieved by the
applicable Target Dates at any time beginning on June 30, 2007 through
the expiration of the initial three (3) year Term of this Agreement,
or if the Required Percentage Increase is not achieved within any
applicable semi-annual period at any time during any extension term
hereof, Customer shall have [**] days to make up [**] percent ([**]%)
of any shortfall plus [**] percent ([**]%) of the volume of NxStage
Patients required to achieve the applicable 100% Volume Commitment or
Required Percentage Increase for the next six (6) month period as set
forth in Paragraph 2 of Schedule E above. If Customer fails to achieve
these patient volumes within the [**] day cure period, NxStage may
reduce one level of Exclusivity in each of those Markets that have not
achieved applicable Market Specific Training Thresholds, even if
Customer subsequently cures one hundred percent (100%) of the
shortfall and achieves the next applicable 100% Volume Commitment or
Required Percentage Increase within the next [**] days. If Customer
achieves these patient volumes within the [**] day cure period,
Customer shall have an additional [**] days to completely cure any
shortfall from the prior period and to achieve one hundred percent
(100%) of the 100% Volume Commitment or Required Percentage Increase
applicable hereunder at the expiration of such [**] day period.
b. Except as otherwise set forth herein, in the event Customer
successfully cures its failure to achieve applicable 100% Volume
Commitments or Required Percentage Increases, Customer shall avoid
Market-by-Market reviews and may maintain all of its then-current
Exclusivity Rights hereunder.
CURING FOR FAILURE TO ACHIEVE MINIMUM VOLUME COMMITMENTS OR MINIMUM PERCENTAGE
INCREASES
Customer shall have the right to cure any failure to meet Minimum Volume
Commitments or Minimum Percentage Increases, based upon the following:
a. If the first applicable Minimum Volume Commitment is not achieved on
June 30, 2007, the Presidents of NxStage and Customer shall meet to
establish in good faith mutually agreed curing targets; provided that
in no event shall such mutually agreed upon targets eliminate
Customer's obligation to meet all Volume Commitments commencing on and
after December 31, 2007. If Minimum Volume Commitments are not
achieved on June 30, 2007 and December 31, 2007, all Exclusivity and
Preferred Provider Rights shall be terminated effective upon thirty
(30) days notice to Customer.
b. If applicable Minimum Volume Commitments are not achieved by the
applicable Target Dates at any time after June 30, 2007, through the
expiration of the initial three year term of this Agreement, or if the
Minimum Percentage Increase is not achieved within any applicable
semi-annual period at any time during any extension term hereof,
Customer
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 36 of 45
shall have [**] days to make up [**] percent ([**]%) of any shortfall
plus [**] percent ([**]%) of the volume of NxStage Patients required
to achieve the applicable Minimum Volume Commitment or Minimum
Percentage Increase for the next six (6) month period as set forth in
Paragraph 2 of this Schedule E. If Customer fails to achieve these
patient volumes within the [**] day cure period, NxStage may terminate
all of Customer's Exclusivity Rights and Preferred Provider Rights
hereunder. If Customer achieves these patient volumes within the [**]
day cure period, Customer shall have an additional [**] days to
completely cure any shortfall from the prior period and to achieve one
hundred percent (100%) of the Minimum Volume Commitment or Minimum
Percentage Increase applicable hereunder at the expiration of such
[**] day cure period. This right to cure may only be exercised [**] by
Customer during the Term, including any extension term, of this
Agreement.
CURING FOR FAILURES TO ACHIEVE MARKET SPECIFIC TRAINING THRESHOLDS
Customer shall have the right to cure any failure to meet Market Specific
Training Thresholds, based upon the following:
a. CURING A FAILURE TO SUBMIT APPROPRIATE DOCUMENTATION. If appropriate
documentation is not timely submitted, one level of Exclusivity shall
be lost for that Market, e.g., Markets with Full Exclusivity shall go
to Customer + 1 Exclusivity, Markets with Customer + 2 Exclusivity
shall go to Customer + 3 Exclusivity, unless such failure to submit
appropriate documentation is cured by Customer within the next [**]
days. If the failure to submit appropriate documentation is timely
cured, and the then-current period's requirements as set forth in the
above table are not met (i.e., initiating 2 NxStage Patients),
Customer shall have an additional [**] days to cure the failure to
achieve the milestone before a level of Exclusivity is lost. If
Customer's failure to initiate [**] NxStage Patients is caused by
regulatory delays in evaluating properly submitted documentation or
conducting any needed surveys, and the same are outside of the
reasonable control of Customer, Customer shall have a maximum of an
additional [**] consecutive days to achieve such milestone. If the
failure to submit appropriate documentation is not timely cured, a
level of Exclusivity shall be lost, even if the next period's
requirements as set forth in the above table are met (i.e. initiating
[**] NxStage Patients).
b. CURING A FAILURE TO INITIATE NXSTAGE PATIENTS. If Customer fails to
timely initiate [**] NxStage Patients, one level of Exclusivity shall
be lost for that Market, unless such failure to timely initiate
patients is cured by Customer within the next [**] days. If this
failure is timely cured, and the next period's requirements as set
forth in the above table are not met (e.g. exceeding Market Specific
Training Thresholds), Customer shall have an additional [**] days to
cure the failure to achieve the milestone before a level of
Exclusivity is lost. If the failure to initiate NxStage Patients is
not timely cured, a level of Exclusivity shall be lost, even if the
next period's requirements as set forth in the above table are met
(e.g. Market Specific Training Thresholds are exceeded).
c. CURING A FAILURE TO ACHIEVE TRAINING THRESHOLDS ([**]% OR FULL SHARE,
DEPENDING UPON THE REQUIREMENTS SET FORTH IN THE TABLE ABOVE). If
Customer fails to achieve Market Specific Training Thresholds
according to the targets set forth in the table above, Customer shall
have [**] days to resume training at the Market Specific Training
Threshold for that six-month period and to make up [**] percent
([**]%) of the shortfall in NxStage Patients (calculated based upon
the number of NxStage Patients Customer would have in that Market had
Market Specific Training Thresholds been met). If Customer fails to
achieve
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 37 of 45
either of these targets, one level of Exclusivity shall be lost for
that Market. If Customer achieves each of these targets, Customer
shall have an additional [**] days to continue training at the Market
Specific Training Threshold for that six-month period and to make up
one hundred percent (100%) of any shortfall. If these requirements are
not met at the end of this additional [**] day period, Customer shall
lose one level of Exclusivity for that Market.
An illustrative example of the determination of curing rates is set forth
in Exhibit C.
Notwithstanding the foregoing, if Customer's failure to achieve any of the
obligations set forth in Sections 1 and 2 of this Schedule E is directly
attributable to NxStage's failure to (i) deliver ordered Products (defined to
mean for purposes of this Section 2, failure to supply Customer's orders
hereunder within [**] days of NxStage's receipt of properly completed Patient
Prescription Monthly Standing Orders, provided such orders are consistent with
the requirements of Section 7 of this Schedule E hereof, (ii) maintain
reasonably adequate training capacity (defined to mean for purposes of this
Section 2, failure to provide initial in-service and training for new Authorized
Customer Locations, as contemplated by Section 13 of Schedule A hereof, and
subject to the limitations of Section 7 of this Schedule E hereof, within [**]
days of Customer's request; provided Customer has otherwise complied with the
terms hereof relating to site/facility starts), or (iii) provide Reliable
Products (as hereinafter defined) then, in each case, NxStage will not have the
right to terminate the specific Exclusivity rights impacted by NxStage's failure
to deliver Product, maintain appropriate training capacity or provide Reliable
Products. In such an event, Customer and NxStage shall mutually agree upon
appropriate adjustments to such requirements, giving due consideration to the
extent and duration of any failure to supply properly ordered Product, maintain
reasonably adequate training capacity, or provide Reliable Products. For
purposes hereof, NxStage shall be deemed to provide "Reliable Products" to
Customer, unless Customer (i) experiences a material adverse change, viewed from
the perspective of all of Customer's Authorized Customer Locations, on an
aggregate basis, over any calendar quarter from the preceding calendar quarter
in either of the following: (a) NxStage patient training rates or (b) NxStage
patient drop rates; in each case provided that such a material adverse change in
rates is directly attributable to equipment reliability issues rather than other
factors (including, without limitation, in the case of patient training rates
seasonality factors); and provided further that Active NxStage Customers, when
viewed in the aggregate, are experiencing substantially similar material adverse
changes in such one or more rates due to equipment reliability issues. For
purposes hereof, the parties understand that the facts and circumstances of all
situations are different, but agree that a material adverse change in rates
shall, in general, be considered to be equal to or greater than [**] percent
([**]%).
MARKET BY MARKET REVIEWS
Every [**] months during the term of this Agreement, commencing in July, 2007,
Customer and NxStage shall meet, at a mutually agreed upon time, to review
Customer's performance hereunder. Such discussions shall include, without
limitation, [**] shall also be discussed. NxStage and Customer each agree to use
commercially reasonable efforts to assemble the information reasonably requested
by the parties in connection with such meetings, including the information
referenced above. To assist NxStage in conducting this analysis, Customer agrees
to make commercially reasonable efforts to complete information on NxStage's
standard Patient Prescription Monthly Standing Order (including age, weight,
height, gender, access type, presence of diabetes and ethnicity) and its Therapy
Discontinuation Form.
3. FINANCIAL COMMITMENT
On the Effective Date, Customer shall execute that certain Stock Purchase
Agreement attached hereto as Exhibit A.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 38 of 45
4. THERAPY INFORMATION
As long as any Exclusivity Rights are maintained hereunder, NxStage will use
commercially reasonable efforts and work collaboratively with Customer to give
Customer access to its patients' therapy delivery information (e.g., treatment
times, flow rates, and alarms) recorded by the System Ones purchased or rented
by Customer hereunder ("Therapy Information") according to Customer's reasonable
specifications. NxStage shall initiate a pilot program to provide such Therapy
Information to Customer within [**] months of the Effective Date, with Customer
or its patients using USB drives to retrieve such information from System One
Cyclers, and NxStage providing Customer access to a secure server maintained by
NxStage to retrieve such Therapy Information, to the extent the same has been
transmitted to NxStage. Within [**] months of the Effective Date, NxStage and
Customer shall meet to discuss software enhancements to the pilot program to
better enable Customer to access the Therapy Information, e.g. more real time
access to Therapy Information and smoother integration of such information into
Customer's clinical information system ("Therapy Information Software") as well
as overall Customer feedback and suggestions relating to the transmission and
utilization of Therapy Information. At such meeting, NxStage and Customer shall
mutually agree upon the scope of such development project and the related
timeline and budget. NxStage understands that Customer would like such project
to have a [**] month timeline, and NxStage agrees that it shall endeavor in good
faith to execute such a development plan within this timeframe provided the
scope of such development activities is reasonably achievable within such time
period. NxStage shall use commercially reasonable efforts to develop such
Therapy Information Software; provided that (i) NxStage shall have no obligation
to pursue development efforts that rely upon (A) different or additional
hardware, (B) different or additional communications technology, or (C) costlier
supplies, (ii) Customer shall bear all reasonable development costs (in excess
of [**] hours of engineering time, so long as such engineering hours are devoted
to developing Customer's specific interface to its clinical information system
and such costs are consistent with the agreed upon budget), including reasonable
materials and prototype costs, at NxStage's standard materials rates and $[**]
per hour for engineering time, and (iii) Customer shall bear all reasonable
direct out-of-pocket Product costs associated with the Therapy Information
Software. In consideration for Customer's feedback in connection with the pilot
program and future Therapy Information development activities and for Customer's
investment in NxStage pursuant to the terms of Section 3 of this Schedule E,
NxStage shall bear the cost of the first [**] hours of engineering time devoted
to developing Customer's specific interface to its clinical information system.
All intellectual property developed relating to such development efforts,
including without limitation the Therapy Information Software, whether or not
patentable, developed solely by NxStage, or jointly by NxStage and Customer,
will, in each case, be owned exclusively by NxStage. NxStage hereby grants
Customer a perpetual, royalty-free license to use all intellectual property
developed hereunder relating to such Therapy Information Software, so long as
such intellectual property is used solely by Customer in connection with
accessing and using Therapy Information. NxStage agrees that any unique
Customer-specific data transfer interface developed by NxStage for Customer
hereunder to enable Therapy Information to be imported into Customer's unique
clinical information system shall be used exclusively for Customer, and shall
not be used in NxStage software used by any other NxStage customers.
NxStage shall work with Customer to develop Therapy Information Software which
allows for the direct transfer of Therapy Information from Customer's System
Ones to a portion of Customer's clinical information system, as well as
NxStage's web server. As a further benefit to Customer, NxStage agrees, during
the term if this Agreement, and so long as any level of Exclusivity is
maintained hereunder, that any Therapy Information Software developed and used
for other customers shall not have this additional functionality and shall
instead be processed only at a NxStage web server.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 39 of 45
5. COLLABORATIONS
As long as any level of Exclusivity is maintained by Customer hereunder, NxStage
and Customer shall work collaboratively to advance market awareness of NxStage
therapies and home and more frequent dialysis. Such activities shall include,
without limitation, lobbying activities, therapy marketing and clinical studies.
NxStage will devote a minimum of $[**] annually to be matched by Customer in
support of collaborative efforts. These activities supported by such funds shall
be co-branded, if appropriate, and both parties must work together to approve
all content, authors, messaging and forums for such joint activities. Further,
the parties agree to evaluate all such activities hereunder on a case by case
basis for compliance with all applicable laws, including without limitations
those contained in the Social Security Act.
A. PUBLIC POLICY
NxStage and Customer may work together to promote the clinical and economic
advantages of home and daily hemodialysis to the Centers for Medicare and
Medicaid Services, fiscal intermediaries, commercial insurers, and state
and federal legislators with the objective of achieving appropriate
reimbursement rates and policies. Notwithstanding the foregoing, NxStage
and Customer shall each be free to work independently to promote such
matters and, further, each party hereto acknowledges and understands that
the other has multiple policy priorities at any given time of which
home/daily dialysis will only be one. In no case shall either party be
required to act in a manner that may be detrimental to its current or
future business. Upon NxStage's request, Customer shall assist NxStage in
becoming a member of the [**], and upon Customer's request, NxStage shall
assist Customer in becoming a member of the [**].
B. COLLABORATION
- On the Effective Date, NxStage will grant to Customer a prominent link
on the NxStage website including acknowledgment that DaVita At Home is
NxStage's Preferred National Service Provider (as defined below) of
NxStage Home Therapy, and Customer shall grant to NxStage a prominent
link on the DaVita @ Home website including acknowledgment of NxStage
as its preferred home hemodialysis [technology/system]. NxStage shall
limit the number of links to other chronic dialysis service providers
and, as long as Customer continues to be NxStage's "Preferred National
Service Provider", agrees that any link provided to another service
provider shall be less prominent than that provided to Customer.
Customer shall limit the number of links to other home hemodialysis
products or home hemodialysis product manufacturers and agrees that,
as long as Customer continues to be NxStage's "Preferred National
Service Provider", any link provided to another home hemodialysis
product or home hemodialysis product manufacturer shall be less
prominent than that provided to NxStage. For so long as Customer
continues to meet the requirements for maintaining its status as
NxStage's Preferred National Service Provider, (i) NxStage shall, in
addition to the other requirements set forth in this paragraph,
continue to acknowledge in such link that Customer is NxStage's
Preferred National Service Provider, (ii) NxStage shall have the right
to reference on its website an acknowledgement that Customer has
selected NxStage as its preferred home hemodialysis technology/system,
and (iii) Customer shall have the right to reference on its website an
acknowledgement that NxStage has selected Customer as its "Preferred
National Service Provider. For purposes of the foregoing, the parties
understand that Customer's obligations with respect to the DaVita @
Home website shall apply to any successor Customer home-specific
division/subsidiary website.
- Customer shall maintain its status as NxStage's Preferred
National Service Provider hereunder provided:
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 40 of 45
- Customer timely achieves each of the Minimum Volume
Commitments or Minimum Percentage Increases set forth
above (including any applicable cure periods and
deferrals related to failure to provide Reliable
Products);
- Customer achieves mortality and patient retention rates
for its NxStage home hemodialysis patients that are
similar to or better than those observed by NxStage's
other customers, on average, as measured over each
semi-annual calendar period during the Term; and
- Customer is actively training NxStage Patients in more
Markets across the Continental United States than any
other Active NxStage Customer, and, as of December 31,
2007, Customer has NxStage Patients in Markets that
collectively represent more than [**] percent ([**]%),
and as of December 31, 2008 more than [**] percent
([**]%) of the United States chronic outpatient ESRD
patient population, as reported by in Attachment A.
- Customer shall have the right to audit NxStage's mortality
and patient retention rate calculations, upon which the
foregoing determination is made, through an independent
accounting firm that, within the preceding [**] years has
not had any relationship with either of the parties, so long
as such accounting firm keeps the results of its
investigation strictly confidential and does not disclose
the same to Customer, other than its final determination
regarding comparative mortality and patient retention rates.
- Customer agrees that every reference to Customer as
NxStage's National Preferred Service Provider, whether on a
website, in press releases or elsewhere, including without
limitation any reference made by Customer on its own
website, shall contain footnote, or similar, disclosure
indicating the criteria required to achieve National
Preferred Service Provider status. For press releases, such
disclosure may, within the discretion of NxStage, include
reference to NxStage's website.
- Additionally, NxStage will establish a "Find a Provider" feature on
the NxStage website that will list all locations offering NxStage home
hemodialysis therapy (provided such customers' have provided their
consent to be so listed), with NxStage's website listing DaVita At
Home centers first, for each location, with appropriate contact
information. In addition, NxStage shall forward direct patient
inquiries regarding centers offering NxStage therapy to Customer (by
internet or phone) according to the following process: (i) NxStage
shall ask patients (through the web or by phone) to select one of the
following three criteria for defining the center(s) he/she wishes to
have his/her inquiry forwarded to: (A) the closest center (if Customer
has the closest center to the patient, the inquiry will be forwarded
to Customer, otherwise the patient inquiry shall be forwarded to
another site/facility with the closest location to the patient), (B)
the largest NxStage home program in the Market (if Customer has the
largest NxStage home program in the Market, the inquiry will be
forwarded to Customer, otherwise the patient inquiry shall be
forwarded to another site/facility with the largest NxStage home
program in the Market), or (C) all centers within the Market (in which
case the patient inquiry shall be forwarded to all centers within the
Market), (ii) after selecting one of these three criteria, the patient
will be provided a list of one or more centers that meet the selected
criteria, (iii) the patient will then be asked to select those centers
to which he/she wishes to have his/her inquiry forwarded to, by
checking a box or providing his/her verbal consent. Further, in the
event a patient affirmatively asks that his/her inquiry be forwarded
specifically to any Active NxStage Customer center or any Customer
center, NxStage shall forward such patient inquiry as requested;
provided that such requests shall not be solicited by NxStage by the
web or by phone.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 41 of 45
- NxStage and Customer will develop press materials, events and possibly
additional marketing materials specifically for use in the promotion
of NxStage home hemodialysis therapies in markets where Customer has
any level of Exclusivity.
- NxStage and Customer will develop joint sales plans for specified
markets to ensure cooperation between the organizations' sales forces.
As part of this effort, a joint national sales meeting will be held
within [**] days of the signing of this Agreement to launch these
efforts to both sales organizations. Additionally, Customer and
NxStage will hold annual joint national sales planning meetings.
- Upon Customer's timely achievement of the 100% Volume Commitment for
December 31, 2007 as set forth above, and provided Customer continues
to satisfy the requirements for Preferred National Service Provider
status, NxStage will add a disclosure to its company description on
its website and at the bottom of its press releases that will refer to
Customer as NxStage's "Preferred National Service Provider for Home
Dialysis". At the same time, Customer shall also add disclosure to its
"DaVita @ Home" or successor Customer home-specific
division/subsidiary "company description" on its website and at the
bottom of DaVita @ Home (or successor Customer home-specific
division/subsidiary) press releases that will refer to NxStage as
Customer's "Preferred Home Dialysis System". In the event Customer
accomplishes this Volume Commitment target prior to December 31, 2007
and the other requirements of maintaining National Preferred Service
Provider status, NxStage and Customer shall each add this disclosure
at that earlier date. If at any time subsequent thereto Customer fails
to achieve the 100% Volume Commitment by the applicable Target Date,
subject to applicable cure periods, or fails to satisfy the other
requirements set forth in this paragraph, the parties hereto shall no
longer be obligated to include such disclosure.
C. RESEARCH
Consistent with NxStage's patient and site enrollment targets, and standard
site qualification requirements, Customer and NxStage are mutually desirous
to collaborate on the FREEDOM study conducted by NxStage under separate
agreement. In addition, the parties will work together to develop and
prioritize research projects that demonstrate the clinical and economic
efficacy of home and more frequent hemodialysis and/or support expanded
indications for the NxStage System One or NxStage therapy.
6. ACCESS TO FUTURE NXSTAGE PRODUCTS AND FUTURE U.S. MARKETS
So long as any level of Exclusivity is maintained by Customer hereunder,
throughout the Term and any extension term of the Agreement, NxStage shall
provide to Customer the right to purchase and/or lease all products, software
and services sold or distributed by NxStage or any of its affiliates that are or
that become commercially available in the United States and which are not
already covered by this Agreement or by any other written agreement between the
parties (such products, software and services are collectively referred to
"Additional Products" and individually as an "Additional Product"). For purposes
of this Agreement, any product that is approved by the United States Food and
Drug Administration (if applicable), and sold or distributed anywhere in the
United States by NxStage and/or any of its affiliates shall be deemed to be
"commercially available" in the United States; provided that Additional Products
under clinical evaluation or pre-commercial limited release, even if FDA
cleared, shall not be deemed "commercially available" (provided that NxStage
shall consider in good faith including Customer in such clinical evaluations or
pre-commercial limited releases); and provided further that this clause shall
not impose any obligations on NxStage with respect to products not specific for
home hemodialysis which NxStage manufactures for other parties and does not
directly sell itself in the continental United States. NxStage agrees to include
Customer in distributions of general customer announcements regarding
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 42 of 45
NxStage or any of its affiliate's current, new or forthcoming Additional
Products. To the extent that Customer does not already have a purchase
arrangement covering such Additional Products, NxStage shall offer Customer such
Additional Products on reasonable commercial terms.
Customer agrees that, as a condition to obtaining access to any Additional
Products for use in markets other than the home hemodialysis market, it must
represent in writing to NxStage that there is nothing in its existing contracts,
including without limitation its contract with Gambro, that would limit in any
way the full and unlimited expansion of NxStage technology by Customer in such
markets.
This provision shall survive a change of control of NxStage, but only with
respect to products incorporating NxStage intellectual property prior to such
change of control, and shall not apply to other products which do not include
such NxStage intellectual property then made or in the future made by such
successor to NxStage following a change of control.
Additionally, so long as any level of Exclusivity is maintained by Customer
hereunder, NxStage agrees throughout the Term and any extension term of the
Agreement, to provide Customer the right to purchase and/or lease NxStage home
hemodialysis Products in Alaska, Hawaii, or any of the United States
Territories, to the extent NxStage offers such Products to any other customer in
such locations. Customer understands and agrees that Product pricing may be
higher than that offered to Customer hereunder, and that NxStage shall have no
obligation to offer such Products to Customer at pricing consistent with the
terms hereof, unless the same is offered to another NxStage customer.
7. MANUFACTURING/SERVICE/NURSE TRAINING PREFERENCES
So long as any level of Exclusivity is maintained by Customer hereunder, NxStage
will grant Customer a preferred position in obtaining equipment, supplies, and
service consistent with the obligations outlined in this Schedule E. In order to
secure this preferred position, Customer must provide NxStage with a [**] month
rolling forecast at the [**] during the Term and any extension term of this
Agreement. Such forecast will set forth estimated Product needs, as well as
Customer's anticipated new site initiations. Customer will be committed to take
delivery of [**] percent ([**]%) of month [**], and [**] percent ([**]%) of
months [**], and [**] percent ([**]%) of months [**] of this forecast
respectively. Following the first [**] months of this Agreement and through the
first [**] years following the Effective Date, NxStage will work in good faith
to ensure sufficient resources to deliver [**] percent ([**]%) of months [**]
percent ([**]%) of months [**], and [**] percent ([**]%) of months [**] of this
forecast, respectively; provided that NxStage's obligation to supply Products
(including, without limitation, System One Cyclers and PureFlow SLs) in any
given month to Customer shall not exceed more than [**] percent ([**]%) of its
NxStage Patient census and Product orders, measured on a product by product
basis, in the then-preceding month. After the first [**] years following the
Effective Date, NxStage will use all commercially reasonable efforts to ensure
sufficient resources to deliver [**] percent ([**]%) of all forecasted demand
over such [**] month period; and NxStage's obligation to supply Products in any
given month to Customer shall not exceed more than [**] percent ([**]%) of
Customer's NxStage Patient census and Product orders in the then-preceding
month. NxStage shall use all commercially reasonable efforts to meet Customer's
purchase orders during the Term and any extension term of this Agreement,
consistent with its forecasts.
NxStage will maintain sufficient nursing capacity to initiate Customer home
training/support programs consistent with Customer's forecast, provided those
programs are identified in writing to NxStage by the first calendar day of the
preceding month, up to a cap of [**] Customer home training/support programs in
any month, or up to a cap of [**] Customer home training/ support programs in
any month, if those programs are identified in writing to NxStage at least [**]
days prior to the requested start date of such up to [**] home training/support
programs. Customer shall work in good faith to minimize the variation in
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 43 of 45
the number of programs requiring home/training support at site initiation on a
monthly basis. NxStage agrees that it shall work in good faith with Customer to
meet Customer's training requirements in excess of these limits, including
without limitation the [**] Customer home training/support program per month
limit.
Notwithstanding any of the foregoing, NxStage shall not be liable for any
failure to supply hereunder for any reason whatsoever, including Product recall
or Force Majeure ("Inability to Supply"), so long as such failure to supply is
not caused by NxStage's willful breach of its obligations hereunder. Customer's
sole remedy in the event of an Inability to Supply shall be to terminate this
Agreement, if such Inability to Supply is directly responsible for Customer's
inability to materially meet the requirements set forth in Sections 1 and 2 of
this Schedule E and such period of Inability to Supply continues for six (6)
consecutive months. NxStage shall promptly notify Customer of any Inability to
Supply in writing and during any such Inability to Supply shall allocate all
Products and training capacity to Customer on a first-priority basis consistent
with Customer's then-current share of NxStage's equipment field base that have
either been purchased or are under lease arrangements, and consistent with the
then-effected prescription items included in Customer's Monthly Dialysis
Supplies orders; provided that Customer's purchase orders for System One
equipment and requests for training capacity shall be allocated to Customer on a
first priority basis, so long as the purchase orders and requests for training
capacity are consistent with the other requirements set forth herein. NxStage
shall use all commercially reasonable efforts to promptly cure any Inability to
Supply. During the period of any Inability to Supply, Customer shall be relieved
of its obligations under Paragraphs 1 and 2 of this Schedule E, to the extent
such Inability to Supply directly prevents Customer from satisfying such
obligations. Such obligations shall be reinstated upon the conclusion of an
Inability to Supply, with such adjustments thereto as mutually agreed to by
NxStage and Customer so as to reflect the impact of such Inability to Supply on
Customer's patient volumes.
8. MOST FAVORED NATIONS PRICING
So long as Customer maintains any level of Exclusivity Rights hereunder, NxStage
agrees that Customer's Average Monthly Treatment Cost (as hereinafter defined)
for each Treatment Bundle (as hereinafter defined) used for chronic home and
in-center self care hemodialysis shall, subject to the limitations set forth
below, be at all times no less favorable than any other Active NxStage
Customer's Average Monthly Treatment Cost for such Treatment Bundles, less the
applicable percentage set forth in the table below ("MFN Percentage"); provided
that the foregoing calculation shall exclude (i) through January 1, 2008, Active
NxStage Customers' Average Monthly Treatment Costs derived pursuant to
agreements executed prior to the Effective Date.
RANGE OF VOLUME COMMITMENTS OR
PERCENTAGE INCREASES ACHIEVED
FOR THE APPLICABLE QUARTERLY
PERIOD (1)(2) MFN PERCENTAGE
------------------------------ --------------
Minimum Volume Commitment or Minimum [**]%
Percentage Increase to [**]% Volume
Commitment or [**]% Required
Percentage Increase
> [**]% Volume Commitment or > [**]% [**]%
Required Percentage Increase
(1) Applicable Volume Commitments or Percentage Increases must be achieved
without including an ability to cure.
(2) For quarterly periods ending on March 31 or September 30, NxStage shall
look to the range of Volume Commitments or Required Percentage Increases
Achieved at the end of the preceding semi-annual measurement period under
Paragraph 2 of this Schedule E hereunder.
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 44 of 45
For purposes hereof, "Average Monthly Treatment Cost" shall mean Customer's or
any other Active NxStage Customer's average monthly bundled purchase or
rental/lease price for System One Products for chronic home hemodialysis or
in-center self care (assuming for purposes hereof [**] System One per in-center
self care patient) [**] (hereinafter referred to as a "Treatment Bundle"), less
any discounts provided to Customer or such Active NxStage Customer, as the case
may be, including any discounts associated with prepayment or early payment
(within [**] days) for such Products, whether or not such discounts are taken.
For purposes hereof, Customer's Average Monthly Treatment Costs for each
Treatment Bundle shall be calculated on a [**] basis [**] across all Customer
Authorized Customer Locations on a nationwide basis. Similarly, for purposes
hereof, each Active NxStage Customer's Average Monthly Treatment Costs for each
Treatment Bundle shall be calculated on a [**] basis [**] across all locations
at which such Active NxStage Customer is presently offering NxStage chronic home
hemodialysis therapy and which are owned, directly or indirectly, by such Active
NxStage Customer, on a nationwide basis. In calculating Average Monthly
Treatment Costs for Customer or other Active NxStage Customers with purchased
System Ones, NxStage shall include in such monthly amount for each Treatment
Bundle a fee equivalent to the [**], plus any monthly share of equipment service
fees, if separately charged. In calculating Average Monthly Treatment Costs for
Active NxStage Customers with prepaid leases, NxStage shall include in such
Active NxStage Customers' monthly amounts for each Treatment Bundle a fee
equivalent to the [**]. In calculating Average Monthly Treatment Costs for
Active NxStage Customers with rentals or leases (other than prepaid leases),
NxStage shall include in such Active NxStage Customers' monthly amounts for each
Treatment Bundle the monthly rental or lease rate paid by such Active NxStage
Customer, if such rental or lease rate is separately charged from disposables
Product pricing.
NxStage agrees to calculate Customer's and other Active NxStage Customers'
Average Monthly Treatment Cost for each Treatment Bundle every calendar quarter
during the term of this Agreement, commencing on June 30, 2007 (for the period
between April 1, 2007 and June 30, 2007), and to promptly notify Customer in the
event a rebate is owed to Customer hereunder for such quarterly period pursuant
to the terms of this Paragraph 8. Simultaneous with such notice, NxStage shall
provide Customer a quarterly rebate, in the form of a credit to be applied
against future purchases hereunder, in an amount equal to the total amount
invoiced to Customer for each Treatment Bundle for which another Active NxStage
Customer has been charged a lower price than that charged to Customer hereunder
less the applicable MFN Percentage (assuming all discounts associated with
prepayment or early payment were applied against such invoiced amount, whether
or not such discounts were actually earned by Customer, and excluding any
Excluded Pricing), multiplied by the percentage difference between (x)
Customer's Average Monthly Treatment Cost for such Treatment Bundle and (y) the
Average Monthly Treatment Cost charged to such other Active NxStage Customer for
such Treatment Bundle less the applicable MFN Percentage set forth in the table
above; provided that no rebate shall be owed in the event (i) the Average
Monthly Treatment Costs for any Treatment Bundle of other Active NxStage
Customers less the applicable MFN Percentage are lower than Customer's Average
Monthly Treatment Costs for such Treatment Bundle due to (A) philanthropic
reasons, (B) Product evaluations or Product sampling, or (C) credits provided
for Product returns or missed treatments or discontinuations of patient therapy,
or (ii) only [**] Active NxStage Customer has an Average Monthly Treatment Cost
per Treatment Bundle, less the applicable MFN Percentage, lower than Customer
during any quarterly period hereunder, and such
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
Page 45 of 45
Active NxStage Customer's purchases from NxStage represent less than [**]
percent ([**]%) of NxStage's chronic market sales in 2007 or less than [**]
percent ([**]%) of NxStage's chronic market sales in 2008 (in such event, no
rebate shall be owed hereunder, except that NxStage shall provide a rebate equal
to the difference in such Active NxStage Customer's Average Monthly Treatment
Cost per Treatment Bundle and Customer's Average Monthly Treatment Cost per
Treatment Bundle multiplied by [**] times the number of patients covered by such
lower pricing at such Active NxStage Customer during such period; and provided
further that Customer has at least that number of patients receiving NxStage
therapy under such Treatment Bundle).
Rebates pursuant to this Paragraph 8 will not be owed in the event that
discounts for which Customer is eligible are not earned due to Customer's
failure to timely pay hereunder (according to the terms of Section 5 of Schedule
B).
An illustrative example of how such rights are calculated hereunder is set forth
in Exhibit D.
9. TRAINING
For so long as any level of Exclusivity is maintained hereunder, Customer agrees
to work in good faith to develop useful patient modality education tools
including home hemodialysis and, in particular, reference to NxStage products as
a home hemodialysis treatment alternative. Customer shall use commercially
reasonable efforts to introduce all patients of Customer that are considering
home therapy to NxStage products.
10. OTHER
Customer shall confirm in writing that there is nothing in its existing
contracts that would limit in any way the full and unlimited expansion of
NxStage technology in Customer's dialysis centers for home hemodialysis therapy
and to not enter into any such contracts during the Term of this Agreement.
Customer represents and warrants that it has not entered into any agreement
which conflicts with the terms of this Agreement and that it will not do so
during the term of this Agreement.
NxStage represents and warrants that it has not entered into any agreement which
conflicts with the terms of this Agreement and that it will not do so during the
term of this Agreement. Without limiting the foregoing, NxStage agrees that it
shall not enter into any distributorship agreements covering sales of the System
One for chronic home hemodialysis in the Continental United States, except where
such agreements are consistent with Customer's Preferred Relationship, as set
forth in Schedule E hereto.
For purposes of this Schedule E, those rights set forth in Sections 4 through 8
hereof are hereinafter referred to as "Preferred Provider Rights". All of such
rights shall be terminated if all of Customer's Exclusivity Rights set forth
above are terminated.
Attachment A - MARKETS AND EXCLUSIVITY LEVELS
Attachment B - MAJOR DIALYSIS PROVIDER SITES
Exhibit A - STOCK PURCHASE AGREEMENT
Exhibit B-1 and B-2 - TRAINING RATE EXAMPLES
Exhibit C - CURING EXAMPLE
Exhibit D - MFN EXAMPLE
Chronic Outpatient Therapy
Purchase and Rental Agreement DaVita, Inc.
ATTACHMENT A
MARKETS AND EXCLUSIVITY LEVELS
[**]
ATTACHMENT B
MAJOR DIALYSIS PROVIDER LOCATIONS
[**]
EXHIBIT A
STOCK PURCHASE AGREEMENT
The Stock Purchase Agreement is attached to NxStage Medical, Inc.'s Form 10-K
for the fiscal year ended December 31, 2006 as Exhibit 10.31.
EXHIBIT B-1
MARKET SPECIFIC TRAINING RATE CALCULATION EXAMPLE
[**]
EXHIBIT B-2
DAVITA MARKET SPECIFIC TRAINING RATE THRESHOLDS
[**]
EXHIBIT C
CURING EXAMPLES
100% VOLUME COMMITMENT CURE EXAMPLE
June 2008 100% Volume Commitment: [**]
June 2008 Actual: [**] (shortfall of [**])
December 2008 100% Volume Commitment: [**] required)
Patient count required for [**] day interim cure: [**]
- [**], plus
- [**]% of [**] patient shortfall ([**]), plus
- [**]% of [**] patients required for subsequent milestone [**]
Patient count required for full cure at [**] days: [**]
MINIMUM VOLUME COMMITMENT CURE EXAMPLE
June 2008 Minimum Volume Commitment: [**]
June 2008 Actual: [**] (shortfall of [**])
December 2008 Minimum Volume Commitment Cure: [**] required)
Patient count required for [**] day interim cure: [**]
- [**], plus
- [**]% of [**] patient shortfall [**], plus
- [**]% of [**] patients required for subsequent milestone [**]
Patient count required for full cure at [**] days: [**]
MARKET BY MARKET CURE EXAMPLE
Market: [**]
July-December 2008 Target: Lower of [**] (Fixed Market Specific Training
Threshold from Attachment A) or [**] (example only, would be calculated Variable
Market Specific Training Threshold adjusted for seasonality and market
population as described) per month, or the lower of [**] or [**] patients,
respectively.
July-December 2008 Actual: [**] patients trained in [**] (also assume failure to
meet 100% Volume Commitment initiates Market-by-Market test)
Shortfall: [**] patients
January-June 2009 Target: Lower of [**] (Fixed Market Specific Training
Threshold from Attachment A) or [**] (example only, would be calculated Variable
Market Specific Training Threshold adjusted for seasonality and market
population as described) per month, or the lower of [**] or [**] patients,
respectively.
Patients trained in Philadelphia required for [**] day interim cure: [**]
- [**]% of [**] patient shortfall, plus
- [**]% of [**] patient [**] month training volume (at [**]
patients/month training rate)
Patients trained in Philadelphia for full cure at [**] days: [**]
- [**]% of [**] patient shortfall, plus
- [**]% of [**] patient [**] month training volume (at [**]
patients/month training rate)
EXHIBIT D
MFN CALCULATION EXAMPLE
[**]
