EXHIBIT 10.28
* Portions of this document have been omitted pursuant to a request for
confidential information.
AMENDED AND RESTATED SUPPLY AGREEMENT
THIS AMENDED AND RESTATED SUPPLY AGREEMENT (this "Agreement") is entered
into as of the 30th day of December, 1997 by and between SUDORMED, INC., a
California corporation ("Sudormed"), and PACIFIC BIOMETRICS, INC., a Delaware
corporation ("Customer").
R E C I T A L S:
A. Sudormed and Customer are concurrently entering into an Amended and
Restated License Agreement dated the date hereof (the "License Agreement"); and
B. Sudormed and BioQuant, Inc. (a wholly-owned subsidiary of Customer, as
successor-in-interest to CEO Advisors, Inc.) are parties to a Supply Agreement
dated August 6, 1993; and
C. Sudormed and Customer desire to amend and restate the previous Supply
Agreement to provide that Customer be a party thereto, and to modify the terms
thereof, all as set forth herein; and
D. The License Agreement provides that the Customer shall purchase from
Sudormed the "Licensed Products", as defined in the License Agreement, pursuant
to a "Supply Agreement".
E. Sudormed and Customer desire to enter into this Agreement and
acknowledge that this Agreement constitutes the "Supply Agreement" referred to
in Recital D above.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
1. PRODUCT DEFINITION.
For purposes of this Agreement, "Product" shall mean an adhesive patch
meeting the specifications set forth on Exhibit A. The parties may, by mutual
agreement, modify such specifications, or add additional specifications for
other variants, all of which shall be deemed "Product" for the purposes of this
Agreement.
2. TERM AND TERMINATION.
2.1 TERM. The term of this Agreement shall commence on the date
hereof and shall continue for a period terminating on the earlier to occur of
(i) the termination of the License Agreement or (ii) as otherwise provided in
this Agreement.
2.2 TERMINATION DUE TO MONETARY DEFAULT. If Customer fails to
make payment of any monetary amount within fifteen (15) days after the date due
under this Agreement, Sudormed may, at its sole discretion, terminate this
Agreement by providing notice of termination to Customer, and, if such monetary
amount is not paid in full within five (5) days of such notice, such termination
shall take effect immediately upon the expiration of such five (5) day period.
2.3 TERMINATION DUE TO OTHER DEFAULTS. Except as provided in
paragraph 2.2, upon a default by a party of any material obligation of such
party in this Agreement, the non-defaulting party may give notice in writing to
the party in default and the defaulting party shall have sixty (60) days from
such notice to cure the default. If the defaulting party does not cure the
default within such sixty (60) days, the non-defaulting party may terminate this
Agreement by providing notice of termination which shall take effect ten (10)
days from the giving of such notice by the defaulting party.
2.4 NO WAIVER. Termination under this Section 2 shall not
relieve either party of any obligation existing upon the date of termination
or relieve the defaulting party from liability for breach of this Agreement.
Waiver by either party of a single default or a succession of defaults
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shall not deprive such party of any right to terminate this Agreement arising
by reason of any subsequent default.
2.5 CONTINUING PROVISIONS. The termination of this Agreement
shall not relieve Sudormed and Customer of their respective obligations set
forth in Sections 4, 8, 9, 10 and 11, and obligations under then existing
Quarterly Purchase Orders (as defined in paragraph 5.2) for purchase and
delivery of Product, except that the terminating party may elect whether such
Quarterly Purchase Orders will remain in effect.
3. REQUIREMENTS.
3.1 PURCHASE AND SALE. Customer agrees, for itself, its
sublicensees, and any entity controlled by or in control of Customer, to
purchase all the Product requirements of each of the foregoing from Sudormed
and Sudormed shall use its best efforts to supply all such Product, subject
to the terms and provisions of this Agreement. Notwithstanding anything in
this Agreement to the contrary, if Sudormed is unable to correct a recurring
problem in delivering non-defective Product timely, then Customer shall not
be obligated to purchase all of its requirements from Sudormed (in so doing,
Customer shall not be waiving any claims for breaches which may have
occurred). A recurring problem in delivering non-defective Product shall be
deemed to occur if, and only if, Sudormed has failed to supply non-defective
Products equal to at least [ * ] of the Product ordered by
Customer, averaged over three (3) consecutive quarters, and the amounts so
ordered have not exceeded the forecasted amounts in accordance with Section
5.1 below. A Product shall be defective only if it fails to meet the
specifications set forth on Exhibit A. The use and sale by Customer of all
Product so purchased shall be subject to the restrictions, terms and
provisions contained in the License Agreement, and the sale of Product to
Customer is conditioned upon Customer complying fully with such restrictions,
terms and provisions. It is understood that Sudormed shall have the right to
contract with respect to the manufacture of the Product with such third
parties as Sudormed deems advisable.
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*Omitted pursuant to a request for confidential treatment.
3.2 MINIMUM PURCHASE ORDERS. Notwithstanding anything in this
Agreement to the contrary, if Customer does not order the minimum number of
units of Product during each period set forth on Exhibit B (the "Minimum
Quantity"), then commencing on the first day after the end of such period, and
thereafter IRRESPECTIVE of the quantity of Product ordered, the license grant in
paragraph 2.a. of the License Agreement shall become and remain nonexclusive in
accordance with the terms of the License Agreement.
4. PRICE AND TERMS OF PAYMENT.
4.1 PURCHASE PRICE. The purchase price of the Product shall be as
set forth on Exhibit C. The Customer agrees that Sudormed may change the price
at any time and from time to time, provided, however, that any price change
shall be due to changes in Sudormed's direct Product costs. Sudormed shall
provide to the Customer such documents confirming any cost increases as shall
reasonably be requested from time to time by the Customer. In the event that
any such price change is such that the business relationship between the parties
is not beneficial economically, then the parties agree to negotiate the price
and, if a new price cannot be mutually agreed upon, the Customer may either
accept such price change as announced by Sudormed or terminate the relationship
by giving Sudormed written notice of such termination within thirty (30) days of
the announcement of such change, which termination shall be effective upon the
expiration of such thirty (30) day period. In addition, in the event any
Product is approved for use as an over-the-counter ("OTC") product, Customer and
Sudormed shall mutually evaluate appropriate modifications to the Minimum
Quantities set forth on Exhibit B and the prices set forth on Exhibit C. In the
event Sudormed's supplier of Product reduces its price charged to Sudormed, then
Sudormed shall equally reduce the price payable by Customer to Sudormed. In
addition, should Customer request any changes to the Product, including without
limitation, any changes required for new indications or regulatory compliance,
Sudormed shall inform Customer of (i) any non-recurring costs in implementing
such change, and (ii) any recurring incremental change in Sudormed's direct
Product costs. If Customer elects to proceed with such change, Customer shall
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reimburse Sudormed the non-recurring costs, as invoiced by Sudormed, and the
Product price, as set forth on Exhibit C, shall be amended to reflect such
incremental cost changes. In addition to the foregoing price, Customer shall be
responsible for and pay or reimburse Sudormed for any sales or use tax which may
be imposed on any sale of Product under this Agreement.
4.2 TERMS OF PAYMENT. Sudormed will submit after each shipment an
invoice for the purchase price of the Product so shipped. The Customer shall
make payment to Sudormed in the amount of such invoice within thirty (30) days
of the date of such invoice.
5. FORECASTS, QUARTERLY ORDERS, MINIMUMS AND ACCEPTANCE.
5.1 FORECASTS. For each calendar quarter during the term of this
Agreement, the Customer shall provide Sudormed a written forecast of the
Customer's anticipated maximum and minimum requirements of the Product for such
quarter and the succeeding three (3) calendar quarters. Such forecast shall be
provided within ten (10) days of the date hereof with respect to the quarters
commencing January 1, 1998 and April 1, 1998 and at least one hundred eighty
(180) days prior to the beginning of each quarter thereafter.
5.2 QUARTERLY ORDERS; MINIMUMS. For each calendar quarter during
the term of this Agreement, the Customer shall provide a written purchase order
for Product for such calendar quarter (the "Quarterly Purchase Order"). Such
purchase order shall be provided within ten (10) days of the date hereof with
respect to the quarter commencing January 1, 1998 and at least one hundred
twenty (120) days prior to the beginning of each quarter thereafter. Each
Quarterly Purchase Order will include without limitation the shipment
destination and a requested delivery date or, in the event that the Customer
desires that Product be shipped in more than one shipment, a shipment
destination and a requested delivery date for each such shipment. The Quarterly
Purchase Order shall be for Product within the estimated maximum and minimum
requirements last provided to Sudormed by the Customer pursuant to paragraph 5.1
above.
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5.3 ACCEPTANCE. Within thirty (30) days after receipt of any Quarterly
Purchase Order, Sudormed shall accept such Quarterly Purchase Order in writing;
provided, however, that the Customer delivered such Quarterly Purchase Order to
Sudormed in accordance with Section 5.2. Acceptance of any order placed by
Customer does not constitute acceptance by Sudormed of any of the terms and
conditions of those orders, except as to quantity of Product involved. All
orders are governed by the provisions of this Agreement.
6. SHIPMENT.
6.1 REASONABLE EFFORTS. Sudormed shall use reasonable efforts to
ship all orders according to any reasonable shipping schedule and method of
shipment specified by the Customer, but Sudormed shall not be liable for failure
to meet shipping schedules.
6.2 RISK OF LOSS. All shipments of Product will be F.O.B.
delivery to the carrier at Sudormed's facilities or other domestic place of
shipment to a shipment destination selected by the Customer. Title and risk of
loss or damage shall pass to the Customer at the time of delivery of the Product
to the carrier.
6.3 CONTAINERS. Sudormed shall ship the Product to the Customer
in containers to be selected by Sudormed, provided that such containers are
reasonably acceptable to the Customer.
6.4 COSTS OF SHIPMENT. All freight, insurance, and other shipping
expenses shall be borne by the Customer. The Customer shall also bear any and
all applicable taxes, duties, customs, brokerage fees and other similar charges
that may be assessed against shipments of the Product. The Customer shall be
responsible for filing all freight claims.
6.5 RISK OF LOSS AND COSTS - SPECIAL ARRANGEMENTS.
Notwithstanding the foregoing, if Sudormed has the Product manufactured by a
third party and such third party has agreed to retain title and bear the risk of
loss until the Product is delivered and has agreed to drop
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ship the Product directly to Customer at such party's cost, then Customer
shall be entitled to the same terms as Sudormed with respect to such shipment.
7. MANUFACTURING STANDARDS AND QUALITY ASSURANCE.
7.1 SPECIFICATIONS. Sudormed will manufacture Product for
Customer in accordance with the manufacturing specifications set forth in the
attached Exhibit A, and any further specifications as shall be furnished by
Customer and agreed to in writing by Sudormed which will not be unreasonably
withheld (the "Specifications"), subject to reimbursement for costs and
adjustments in price, as set forth in Section 4.1.
7.2 ACCEPTANCE OF PRODUCT. Customer may reject any Product which
does not conform to the Specifications within sixty (60) days after receipt of
such Product and, if not so rejected, shall be deemed to have been accepted.
Any such rejection must be accompanied by a detailed explanation of the
nonconformance. IF ANY PRODUCT IS NOT IN COMPLIANCE WITH THE SPECIFICATIONS,
SUDORMED'S SOLE OBLIGATION SHALL BE TO PROMPTLY REPLACE THE DEFECTIVE PRODUCT OR
TO CREDIT CUSTOMER'S ACCOUNT.
7.3 MANUFACTURING PRACTICES. Sudormed will manufacture Product in
accordance with Good Manufacturing Practices and Quality System Regulations as
defined under the United States Food, Drug and Cosmetic Act, and regulations
thereunder, and maintain records and files, as legally required.
8. INDEMNITIES, PRODUCT WARRANTY, LIABILITY LIMITATION.
8.1 CUSTOMER'S INDEMNITY. Customer shall defend, indemnify and
hold harmless Sudormed from any and all loss or liability for any and all
claims, causes of action, suits, proceedings, losses, damages, demands, fees,
expenses, fines, penalties and costs (including without limitation attorney's
fees, costs and disbursements) arising from any injury or alleged
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injury to any person or business for property damage, personal injury or
incidental, special or consequential damages arising out of or based upon the
Product or its use unless any such loss or liability was due to Sudormed's
failure to manufacture the Product in accordance with the specifications set
forth in Exhibit A.
8.2 SUDORMED'S INDEMNITY. Sudormed shall defend, indemnify and
hold harmless Customer from any and all loss or liability for any and all
claims, causes of action, suits, proceedings, losses, damages, demands, fees,
expenses, fines, penalties or costs (including without limitation attorney's
fees, costs and disbursements) arising from any injury or alleged injury to any
person or business for property damage, personal injury or incidental, special
or consequential damages to the extent that it results from Sudormed's failure
to manufacture the Product in accordance with the specifications set forth in
Exhibit A as determined at the time the Product is delivered to the carrier as
provided in paragraph 6.2 above; provided, however, Sudormed shall be liable
only to the extent its failure to meet specifications at the time of delivery
resulted in the harm or injury for which Customer seeks indemnification.
Sudormed shall also not be obligated to indemnify Customer for any loss or
liability which results from or is caused by or is based upon any loss or
liability referred to above in paragraph 8.1 for which Sudormed is entitled to
indemnification.
8.3 DEFENSE. Customer and Sudormed shall promptly notify each
other of any claims under paragraphs 8.1 and 8.2 of this Agreement. Each party
shall be entitled to control its own legal defense of any claim. To the extent
that one party is indemnifying the other party pursuant to paragraph 8.1 or 8.2
of this Agreement, the indemnifying party shall have the sole control of the
defense and, in such event, to the extent that the indemnified party incurs its
own legal costs, such legal costs shall be borne by the indemnified party.
Furthermore, the indemnified party shall provide, at the indemnifying party's
expense, information and assistance as the indemnifying party may reasonably
request for the purpose of defense. In no event shall the
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indemnified party be entitled to settle any claim without the consent of the
indemnifying party, which consent shall not be unreasonably withheld.
8.4 PRODUCT WARRANTY. Sudormed warrants only that the Product
will meet the applicable physical product specifications set forth in Exhibit A
at the time of delivery to the carrier for shipment. Sudormed specifically does
not warrant the Product for any unintended uses (whether or not foreseeable),
for incompatibility or unsuitability with other product components or with
pharmaceutical compounds, for noninfringement (other than to the same extent as
warranted by Sudor Partners under the License Agreement), for intolerance to
methods of sterilization, handling or storage, or for the suitability or
acceptability of the product specifications, nor does Sudormed make any warranty
on whether the Product will perform as anticipated. Customer shall make its own
independent determination of the Product's suitability and acceptability. THIS
WARRANTY IS MADE IN PLACE OF ANY OTHER WARRANTIES. SUDORMED NEITHER EXPRESSES
NOR IMPLIES ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
8.5 EXCLUSIVE REMEDY. CUSTOMER'S SOLE AND EXCLUSIVE REMEDY FOR
ANY DEFECTIVE PRODUCTS OTHER THAN AS SPECIFIED IN PARAGRAPHS 8.1 THROUGH 8.4 IS,
AT SUDORMED'S OPTION, TO SEEK REPLACEMENT OR TO SEEK A CREDIT TO ITS ACCOUNT FOR
THE DEFECTIVE PRODUCTS.
8.6 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, SUDORMED WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGEND OR
EQUITABLE THEORY (i) FOR ANY LOST PROFITS, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
EVEN IF SUDORMED HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR (ii)
FOR COST OF PROCUREMENT OF SUBSTITUTE GOODS.
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9. INSURANCE.
Customer will maintain liability insurance covering such risks as are
appropriate in accordance with sound business practice and its obligations under
this Agreement including, but not limited to, at least the following liability
coverages and limits:
Annual Product Amount of Insurance
Sales Revenue Coverage
------------- -----------------
Under $1,000,000 $2,000,000
$1,000,000 to $5,000,000 $5,000,000
$5,000,001 to $10,000,000 $10,000,000
Over $10,000,000 $20,000,000
Customer shall provide Sudormed with a certificate of insurance evidencing
the existence of these coverages.
10. PRODUCT APPROVALS; REGULATORY COMPLIANCE.
Sudormed does not represent that the Product has been approved for
marketing by the FDA or is covered by any application for approval for marketing
filed with the FDA, or any comparable regulatory authority in the world.
Customer shall, with respect to the use, sale or promotion of the Product, (i)
comply with all applicable laws, regulations and standards of industry
(including the maintenance and retention of records regarding sales and
customers), and (ii) obtain and maintain all applicable approvals, registrations
or notifications. Customer shall immediately notify Sudormed of any adverse or
unexpected result or any actual or potential government action with respect to
the Product.
11. TRADEMARKS; CONFIDENTIAL INFORMATION.
11.1 TRADEMARKS; APPROVAL OF CERTAIN MATERIALS, ETC. The parties
agree that Sudormed is to use Customer's own trademark(s) on the packaging of
the Products. It is agreed that Customer is not authorized or licensed to use
Sudormed's trademark(s) for any purpose, except as permitted by Sudormed, either
during the term of this Agreement or thereafter.
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Customer agrees that all labels and any other written material mentioning
either the Product or Sudormed's name shall not be used or distributed
without the prior written consent of Sudormed.
11.2 CONFIDENTIAL INFORMATION. Customer and Sudormed acknowledge
that each will receive confidential information from the other party. Both
parties agree that during the term of this Agreement each shall only use
confidential information to carry out the purposes of this Agreement, shall keep
secret all such confidential information and shall use such care as each uses in
maintaining the confidentiality of its own secret information. The obligations
under this Section 11.2 shall survive termination of the Agreement.
11.3 EXCEPTIONS. The obligation of confidentiality under
paragraph 11.2 shall not apply:
(a) to information known, as shown by written record, at
the time of receipt thereof from the other party; or
(b) to information which is lawfully received from a third
party under no obligation of confidentiality; or
(c) to information which at the time of disclosure was in
the public domain or thereafter becomes part of the public domain through no
breach of this Agreement.
12. MISCELLANEOUS.
12.1 EXCUSED PERFORMANCE. Neither Customer nor Sudormed shall be
considered in default or be liable to the other party for any delay in
performance or non-performance caused by circumstances beyond the reasonable
control of such party, including but not limited to acts of God, explosion,
fire, flood, war (whether declared or not), accident, labor strike or labor
disturbances, inability of third party vendors to provide supplies, sabotage,
order or decree of any court or action of government authority.
12.2 NO ASSIGNMENT. Customer may not assign this Agreement or the
rights herein granted or obligations undertaken to any other party without the
express written consent of
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Sudormed. Notwithstanding the foregoing, Customer shall be entitled to assign
its rights and delegate its duties under this Agreement as provided in
Section 12.c. of the License Agreement.
12.3 GOVERNING LAW. This Agreement shall be interpreted under and
governed by the laws of the State of California notwithstanding any choice of
law provision to the contrary. The courts in Orange County, California (with
the Federal court being the first choice) shall have exclusive jurisdiction over
and venue to hear any and all disputes arising under or concerning this
Agreement, and each of the parties hereby submits itself to the exclusive
jurisdiction and venue of such courts for the purpose of such actions.
12.4 SEVERABILITY. The provisions of this Agreement shall be
deemed severable. If any part of this Agreement is rendered void, invalid or
unenforceable, such rendering shall not affect the validity and enforceability
of the remainder of this Agreement unless the part or parts which are void,
invalid or unenforceable as aforesaid shall substantially impair the value of
the whole Agreement to either party.
12.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement and
Exhibits A, B and C attached to this Agreement set forth the entire agreement
between the parties relating to the subject matter contained in this Agreement.
This Agreement may not be modified, amended or discharged except as expressly
stated in this Agreement or by a written agreement signed by the parties hereto.
12.6 NOTICES. Any and all communications provided for in this
Agreement shall be in writing and sent by first class mail, postage prepaid and
addressed to the last known address of the parties to be served therewith.
Communications sent by Certified Mail - Return Receipt Requested, shall be
deemed to have been duly given upon the mailing thereof. Any communication to
be given to Sudormed shall be addressed to:
Sudormed, Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx X000
Xxxxx Xxx, Xxxxxxxxxx 00000
Any communication to be given to Customer shall be addressed to:
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Pacific Biometrics, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Any change in address shall be promptly communicated in writing from either
party to the other party.
12.7 BINDING EFFECT. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns.
12.8 ATTORNEYS' FEES. If legal action is instituted on this
Agreement, the prevailing party shall be entitled to recover all costs of suit,
including reasonable attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SUDORMED, INC., PACIFIC BIOMETRICS, INC.,
a California corporation a Delaware corporation
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
By: Xxxxxxx X. Xxxxxx By: Xxxx X. Xxxxx
--------------------- ---------------------
Its: President Its: President and CEO
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