SUPPLY AGREEMENT BETWEEN PHILIPS AND INTERMAGNETICS
CONFIDENTIAL EXECUTION COPY - 30 MARCH, 2004
C O N F I D E N T I A L
AMENDED AND RESTATED
SUPPLY AGREEMENT BETWEEN
PHILIPS MEDICAL SYSTEMS NEDERLAND B.V.
(PHILIPS)
AND
INTERMAGNETICS GENERAL CORPORATION
(INTERMAGNETICS)
REGARDING
ACTIVE SHIELDED
SUPERCONDUCTING MRI MAGNETS
Initials INTERMAGNETICS: Initials PHILIPS:
SUPPLY AGREEMENT BETWEEN PHILIPS AND INTERMAGNETICS
CONFIDENTIAL EXECUTION COPY - 30 MARCH, 2004
Content: Page:
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1 Scope 1
2 Definitions 2
3 Products 2
4 Change Control 3
5 Prices 3
6 Purchase Orders 3
7 Forecast and Ordering Procedures 4
8 Production 4
9 Delivery 5
10 Warranty 6
11 Service 11
12 Branding, Trademarks and Tradenames 12
13 Term and Termination 12
14 Purchase Orders placed prior to termination effectivity 13
15 Prevailing Agreement 13
16 Surviving Terms 13
18 List of Schedules 13
19 Effectiveness 14
Schedules
A Specifications for Products
B Branding instructions
C Price schedule
D Supply Chain Agreement
E Change request form
F Configuration management
G Service data and procedures
H Accounting data and procedures
I Forwarding instructions
J Customs instructions
K Amendments to this Supply Agreement
Initials INTERMAGNETICS: Initials PHILIPS:
SUPPLY AGREEMENT BETWEEN PHILIPS AND INTERMAGNETICS
CONFIDENTIAL
This SUPPLY AGREEMENT is
BETWEEN
PHILIPS MEDICAL SYSTEMS NEDERLAND B.V., of Best, The Netherlands (hereinafter
referred to as "PHILIPS") on the one part
and
INTERMAGNETICS GENERAL CORPORATION acting through its Magnet Business Group of
Latham, New York, the United States of America (hereinafter referred to as
"INTERMAGNETICS") on the other part.
WHEREAS:
o PHILIPS and INTERMAGNETICS entered into an Umbrella Agreement dated 29
April, 1999 setting forth the terms and conditions applicable to their
relationship, which agreement was amended and restated with an effective
date of 1 January 2003 (the "Umbrella Agreement"); and
o under the Umbrella Agreement, the Parties may enter into Supply Agreements
for the supply of certain magnet systems from INTERMAGNETICS to PHILIPS;
and
o the Parties now desire to amend and restate their Supply Agreement to cover
the supply of existing and future products from INTERMAGNETICS to PHILIPS;
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. Scope
This Supply Agreement is an integral part of the Parties' UMBRELLA AGREEMENT, as
amended 1 January 2003. Except as expressly stated otherwise herein, all terms
and conditions of the Umbrella Agreement, including definitions, are
incorporated as if fully set forth in this Supply Agreement. This Supply
Agreement will encompass the supply of Products that meet Specifications
contained in Schedule A and, except as otherwise expressly set forth herein,
shall take effect on 1 January 2003 (the Effective Date).
Initials INTERMAGNETICS: Initials PHILIPS:
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2. Definitions
Accepted Products A Product for which Philips has placed a
Purchase Order and that has successfully met the
requirements for acceptance as defined in Article 8.3
(or 8.4 if applicable).
Delivery Delivery shall have the meaning contained in Article 9.2
and shall occur when Intermagnetics has made an Accepted
Product available for delivery on a call off date
specified by Philips in accordance with Schedule D.
Product(s) In addition to the definition of Product in the Umbrella
Agreement, Product shall mean, in this Supply Agreement,
the products which are specified in Schedule A. Products
may be added or deleted to Schedule A by mutual
agreement of the Parties in writing.
Spare Parts shall mean replaceable Parts of the Products
classified by INTERMAGNETICS as spare parts
Specifications shall mean the requirements for the Products as set
forth in Schedule A.
Supply Agreement: shall mean this document and all the Schedules that are
presently attached thereto and all Appendixes and
amendments that will be attached thereto provided they
are signed and/or initialed by the individuals
authorized to bind the Parties.
Tools shall mean components supplied by INTERMAGNETICS
specifically for the purpose of installation or service
of the Product(s)
3. Product(s)
3.1. INTERMAGNETICS shall only supply Product(s) which have successfully
passed the agreed upon tests to ensure meeting the Specifications and
which have been subject to the issuance by PHILIPS of a NORD.
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3.2. INTERMAGNETICS shall be under no obligation to accept orders for any
Product until a NORD has been issued for that type of Product. PHILIPS
shall be under no obligation to accept deliveries until a NORD has been
issued.
4. Change Control
4.1. INTERMAGNETICS shall inform PHILIPS in writing by means of the standard
form for change request as laid out in Schedule E to this Supply
Agreement of any and all changes affecting form, fit or function to the
Product(s) and/or Spare Parts that result from its continuing
engineering activities as they occur. Any changes proposed by
INTERMAGNETICS such as change in design, material, manufacturing
process and other aspects which affect form, fit or function and/or the
Specifications will be subject to the prior written consent of PHILIPS.
The objective of Parties is to conclude the authorization, cancellation
or rejection of any change request within sixty (60) days from its
initiation.
4.2. In the event PHILIPS desires a change in the Product(s) and/or Spare
Parts, or desires a change in the MRI System that could affect form,
fit or function of the Product (s) and/or Spare Parts, the provision of
Article 4.1 hereof shall apply mutatis mutandis.
5. Prices
5.1. INTERMAGNETICS shall supply the Product(s) and Spare Parts to PHILIPS
at prices which are set forth in Schedule C to this Supply Agreement.
5.2. The Parties shall negotiate multi-year fixed price agreements for each
Product, unless otherwise agreed in writing. Fixed price agreements
shall be renegotiated in the penultimate year of the applicable fixed
price term, or sooner by agreement of the Parties as the market
situation may require. Such negotiations shall include consideration of
the expected total annual quantities upon which prices for the next
fixed term period will be based and consideration of indices of major
cost drivers common to all MRI magnet system manufacturers including,
superconductor, cyrocoolers, helium, stainless steel, labor and cost of
quality, competition factors and market trends for MRI Systems.
5.3. The payment term is net forty five (45) days after date of invoice. A
penalty of prime plus 2% per annum may be added from the due date on
any payment received more than fifteen days after it is due.
6. Purchase Orders
6.1. Product(s) and/or Spare Part(s) shall be ordered by PHILIPS through the
written or electronic release of a Purchase Order which shall be
subject to and governed by this Supply Agreement.
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6.2. Each Purchase Order shall at least specify the type of Product(s)
and/or Spare Part(s), the quantity(ies), the price(s) and the requested
delivery date(s).
6.3. Purchase Order(s) may include additional terms relating to the
purchase, shipment and other conditions if previously agreed upon
between PHILIPS and INTERMAGNETICS.
6.4. Purchase Order(s) so placed by PHILIPS shall be acknowledged by
INTERMAGNETICS within five (5) working days after receipt provided that
such Purchase Order(s) comply with the requirements of Schedule D.
7. Forecast and Ordering Procedures
7.1 Parties have agreed to the forecast and order lead time provisions as
specified in Schedule D to this Supply Agreement.
8. Production, Acceptance of Product
8.1 Subject to the confidentiality provisions of the Umbrella Agreement
between Parties, PHILIPS' technical, purchasing, quality, logistic and
service experts are entitled to visit INTERMAGNETICS' factory in order
to assess all relevant aspects of the progress of the manufacture of
the Products, such as without limitation with respect to
Specifications, quality, serviceability and delivery times, provided
that in accordance with INTERMAGNETICS' confidentiality needs, PHILIPS'
experts will not have access to certain, to be agreed upon in advance,
aspects of the manufacturing process. PHILIPS' experts are entitled to
make suggestions and proposals, but same shall be binding and valid on
INTERMAGNETICS and PHILIPS only if confirmed in a document signed by
authorized representatives of all relevant Parties.
8.2. Each Product shall be tested by INTERMAGNETICS prior to acceptance by
PHILIPS. Products may be ordered by PHILIPS to be delivered cold,
filled with liquid cryogens ("Cold Products"), or warm, with no liquid
cryogens ("Warm Products"). Test requirements and procedures for Cold
Products and Warm Products have been defined in the Specifications and
are designed to enable INTERMAGNETICS and PHILIPS to verify that the
Products comply with the Specifications.
8.3. Except for the acceptance of Products as required under Article 8.4 the
following procedure for acceptance of Products applies:
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Upon satisfactory completion of the relevant tests (the Product fully
complies to the Specifications) INTERMAGNETICS' responsible quality
officer shall transmit a confirmation of such to PHILIPS, which
transmittal shall be deemed the acceptance by PHILIPS of the Product.
If the test results reveal one or more reportable non-conformances a
copy of the test results per Product authorized by INTERMAGNETICS'
responsible quality officer shall be transmitted to PHILIPS with a
request to authorize acceptance thereof. PHILIPS will react to this
request within five (5) working days following receipt of the
information. If PHILIPS does not respond within said five working days
the Product shall be deemed to be accepted by PHILIPS and
INTERMAGNETICS shall be entitled to make Delivery of the Product to
PHILIPS. In case the Product appears not to comply with the
Specifications PHILIPS shall be entitled to reject the Product in which
case INTERMAGNETICS shall repair or replace the Product.
8.4. For certain Products or major Product modifications as may be agreed
from time to time in a side letter pursuant to article 4 of this Supply
Agreement the following procedure for acceptance of Products applies:
No later than seven (7) working days prior to the start of the test,
INTERMAGNETICS shall inform PHILIPS thereof in writing and PHILIPS is
entitled to be represented at these tests. Upon satisfactory completion
of the tests a copy of the test results per Product authorized by
INTERMAGNETICS' responsible quality officer shall be transmitted to
PHILIPS with a request to authorize acceptance thereof. PHILIPS will
react to this request within five (5) working days following receipt of
the information. If PHILIPS does not respond within said five working
days the Product shall be deemed to be accepted by PHILIPS and
INTERMAGNETICS shall be entitled to invoice the Product to PHILIPS.
Notwithstanding PHILIPS being so represented, Article 9.7 will remain
applicable. In case the Product appears not to comply with the
Specifications PHILIPS shall be entitled to reject the Product in which
case INTERMAGNETICS shall repair or replace the Product.
8.5 INTERMAGNETICS shall archive the test results for 15 years, and provide
to PHILIPS test results for Products when so requested. INTERMAGNETICS
shall maintain a database with condensed Product acceptance and
delivery information as specified in Schedule L to this Supply
Agreement. At agreed regular intervals INTERMAGNETICS will transmit to
PHILIPS updates of this database.
9. Delivery
9.1. Unless specifically otherwise agreed in writing the Product(s) and
Spare Part(s) shall be delivered in accordance with the terms of the
pertaining Purchase Order and this Article 9.
Initials INTERMAGNETICS: Initials PHILIPS:
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9.2. Product(s) and Spare Part(s) shall be delivered EXW LATHAM, NEW YORK,
USA, as that term is defined in the Incoterms 2000, issued by the
International Chamber of Commerce. Title and risk of loss shall
transfer to Philips upon Delivery and Intermagnetics will be entitled
to issue an invoice for the delivered Product.
9.3. Products shall be delivered by INTERMAGNETICS upon call off by PHILIPS,
as defined in Schedule D to this Agreement, and in a packing suitable
for transport to the destination indicated by PHILIPS. For
transportation by air, packing shall include specific materials or
components such as breathing bellows or pressure relief valves supplied
by PHILIPS. INTERMAGNETICS shall label each Product and packing with a
PHILIPS' trademark in accordance with the instructions provided for by
PHILIPS in Schedule B to this Supply Agreement.
9.4. The Product(s) and Spare Part(s) shall be forwarded according the
instructions of INTERMAGNETICS and PHILIPS as set forth in Schedule I
to this Supply Agreement.
9.5. PHILIPS can delay the Delivery of an Accepted Product from
INTERMAGNETICS, but only to the extent expressly provided in Schedule
D, or to the extent agreed in writing pursuant to Article 9.5 of this
Supply Agreement. The invoice price and financial obligations of the
Parties with respect to Products subject to this Article 9.5 are set
forth in Schedule C to this Supply Agreement.
9.6. The Parties may agree, from time to time, to the delivery of Products
destined for international shipment to PHILIPS on consignment. Such
consignment may be implemented only by mutual agreement of the Parties
with the period and other specific terms of consignment to be
negotiated on a case-by-case basis. This consignment inventory will
remain IGC property but PHILIPS will be responsible for risk of loss
during the consignment period when the Product is stored on PHILIPS
property.
9.7. Upon receipt, PHILIPS is entitled to retest (incoming inspection) at
PHILIPS location the Product(s) and Spare Part(s) in accordance with
the agreed upon tests, set forth in Schedule A to this Supply
Agreement. In the event a Product does not comply with the agreed
Specifications and acceptance test requirements, or subsequent
change(s) agreed upon in accordance with Article 4 PHILIPS shall inform
INTERMAGNETICS thereof in writing with an indication of the
deficiencies as they appear to PHILIPS. Subject to the provisions of
Article 10, INTERMAGNETICS shall, at its option, either repair or
replace the non conforming Product(s) and Spare Part(s) within a
reasonable time taking into account PHILIPS' interests but at the
latest within 90 (ninety) days after PHILIPS' notice of
non-conformance. All costs related to such repair or replacement shall
be borne by INTERMAGNETICS unless caused by damage due to the
performance of PHILIPS. Products subject to this Article that are
agreed to be returned to INTERMAGNETICS via the RMA process will be
either on a free of charge replacement delivery or on a credit basis.
Initials INTERMAGNETICS: Initials PHILIPS:
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10. Warranty
10.1. To the extent provided in Article 10.3, INTERMAGNETICS warrants solely
to PHILIPS the good quality of each Product and Spare Part sold by it
to PHILIPS and that such Product and Spare Part complies with and
performs in accordance with the Specifications - except non
conformities accepted by PHILIPS in writing - and will be free from
defects in materials or workmanship.
10.2 The Parties shall have the obligation to provide an open, timely (at
least monthly) and complete exchange of all relevant data related to
magnet quality and reliability of operation in the imaging environment.
For Intermagnetics this will include magnet factory test data and
analyses to indicate performance trends. For Philips this will include
configuration, service data, performance and field failure data
traceable to magnet installation data. The Parties will engage in
individual and joint analyses and periodic reviews of the data to
determine significant trends and corrective actions required, if any.
10.3. During a period of eighteen (18) months from the date of delivery to
PHILIPS, INTERMAGNETICS shall supply to PHILIPS, free of charge,
replacements of such Part(s), sub-assemblies, or Products as have
proved to have such defects as set out above or, at INTERMAGNETICS'
option, repair such Parts, sub-assemblies, or Product(s) at
INTERMAGNETICS' cost, or have them repaired at INTERMAGNETICS' order
and expenses and after mutual agreement with PHILIPS through PHILIPS'
service personnel at INTERMAGNETICS' cost, it being understood that all
reasonable costs connected with the forwarding of such Parts,
sub-assemblies and/or Product(s) to INTERMAGNETICS for replacement or
repair and from INTERMAGNETICS of the new or repaired Parts,
sub-assemblies and/or Products shall be for the account of
INTERMAGNETICS. Replaced Products, sub-assemblies and Parts shall
become the property of INTERMAGNETICS and shall on INTERMAGNETICS'
request be returned to it at its cost. With respect to electronic
components, the warranty period shall be twelve (12) months from the
date of delivery to PHILIPS. With respect to Spare Part(s), the
warranty period shall be one hundred eighty (180) days from the date of
delivery to PHILIPS, which may be reduced for certain parts if the
shelf life, useful life or design life is demonstrated by
INTERMAGNETICS based upon objective criteria to be less than such one
hundred eighty (180) day period.
10.3.1. For any Product delivered on or after 1 July, 2003, the warranty shall
also cover certain direct helium replacement costs, but only to the
extent expressly provided below:
Initials INTERMAGNETICS: Initials PHILIPS:
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10.3.1.1 Persistent Mode Quenches: INTERMAGNETICS will be
liable for Direct Cryogen Costs associated with quenches from
persistent mode operation, not caused by external influence
including but not limited to those defined in article 10.3.1.2
, in excess of 0.8 % per month for F2K 1.5T or 2.5% per month
for Titan 3.0T, of new installed Products in any rolling 12
month period provided, however, that a quench from persistent
mode operation within twenty four (24) hours of a service
action shall be deemed a "Service Related Quench" not subject
to this Article 10.3.1.1. Such events shall be reported to
INTERMAGNETICS within five (5) business day after PHILIPS is
notified of the event by its end customer, as a condition for
any claim on recovery of Direct Cryogen Costs. For purposes of
this Agreement, "Direct Cryogen Costs" shall be based on a
typical cryogen replenishment volume for a quench on the
particular Magnet System, and on the actual price for helium
where the quench occurs or $8.00 per liter whichever is less.
Settlement of compensation for cryogen costs shall occur in
June and December of each calendar year taking into account
the rolling 12 month average. Credits, if any, from a prior
settlement period will be applied to the current settlement
period. The Parties will review the target quench rates
annually with a view to continuous improvement and resetting
by agreement of the Parties. For Titan 3T the eventual target
rate is to be equal to the target rate of 0.8% per month for
F2K 1.5T. Based on field information and implementation of
improvement activities Parties will agree an adjustment of the
mentioned rate towards the target.
10.3.1.2 Limitation on Scope of Quench Liability. In no case
shall INTERMAGNETICS be liable for cryogen losses associated
with failures which are caused by any site-related problems,
non-validated system interactions, incorrect operation,
operation by unauthorized personnel of PHILIPS or its
customers, or other situations outside INTERMAGNETICS'
control.
10.3.1.3. Subject to the change control provisions of this
Supply Agreement, the Parties will cooperate to reduce the
sensitivity of the magnet to system interactions and service
actions by increasing noise immunity and operating margins and
improving validation procedures for changes including system
upgrades and service procedures.
10.3.2. For any Product delivered on or after 1 July, 2003,
INTERMAGNETICS shall cover PHILIPS' direct costs associated
with having to re-shim a magnet to PHILIPS' applicable
specifications within the warranty period set forth in 10.3
and10.4, when it is determined by mutual agreement of PHILIPS
and INTERMAGNETICS that a magnet quench, or other magnet root
cause, has resulted in a change in homogeneity to the extent
that it affects clinical imaging as measured by end customer
complaint. This warranty specifically excludes changes in
homogeneity caused by changes in the environment
10.3.3 If first ramp quenches without obvious cause occur in more
than five percent (5%) of the new installed Products in any
rolling 12 month period, then INTERMAGNETICS and PHILIPS agree
to cooperate on root cause analysis, corrective actions and
mitigations.
Initials INTERMAGNETICS: Initials PHILIPS:
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10.4. INTERMAGNETICS further guarantees to PHILIPS the vacuum integrity and
the windings of the superconductive magnet for a period of five (5)
years from the date of delivery of each Product. This extended
guarantee for the windings is limited to the cost of replacement of
superconductive wire. INTERMAGNETICS shall as required under this
warranty also at its cost provide all cryogens and bear the cost of
reinstallation of the Product. Necessary reinstallation time in excess
of two (2) working days will be at PHILIPS costs provided such excess
is not attributable to INTERMAGNETICS.
10.5. For Products delivered prior to 1 July, 2003, as used in Article 10.4,
reinstallation is defined as follows:
- inspection of PHILIPS' placement of the Product including
electronics rack at the installation site and interconnection of the
electronics rack to building power outlet provided by PHILIPS;
- inspection of PHILIPS' interconnection of the electronics rack to
the Product;
- ramping the Product to PHILIPS' customer's specified field.
10.6. For Products delivered prior to 1 July, 2003, INTERMAGNETICS shall
provide at its costs all equipment necessary for measurement of
magnetic field (excluding shimming) during re-installation and testing.
INTERMAGNETICS will have no responsibility for rigging and drayage. In
the event the Product is specified by PHILIPS to be shipped warm,
PHILIPS agrees to provide or pay for additional cryogenic materials
used and other support necessary during the reinstallation, likewise
for the cooldown of the magnet which takes place immediately prior to
completion of the installation.
10.7. For any Product delivered on or after 1 July, 2003, INTERMAGNETICS'
liability for direct costs of magnet replacement shall be negotiated in
good faith based on actual costs incurred by PHILIPS directly resulting
from a magnet failure that is covered by a warranty claim.
INTERMAGNETICS will reimburse PHILIPS for approximately fifty percent
(50%) of any required site construction and de-installation costs, but
reimbursement is not to exceed the original purchase price of the
magnet system involved in the warranty claim. If PHILIPS decides to
replace a Product that INTERMAGNETICS is able to otherwise repair on
site, INTERMAGNETICS' liability shall be limited to the cost of repair.
10.8. This Product warranty, and INTERMAGNETICS liability herein, is subject
to:
- PHILIPS promptly notifying INTERMAGNETICS in writing of the failure
as it appears to PHILIPS, making available within a reasonable
interval a written report of the defect or failure including
description of the circumstances where under the defect or failure
appeared, (to the extent PHILIPS is capable of providing such
information), responding to INTERMAGNETICS' questions regarding the
report, the direct costs that are expected to be incurred with
respect to the failure and provide access to the Product.
INTERMAGNETICS must be given a reasonable opportunity to consult
with PHILIPS regarding the repair or replacement and an opportunity
to mitigate warranty costs.
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10.9. THE FOREGOING WARRANTIES AND THOSE IN ARTICLES 10.9 AND 10.10 ARE IN
LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Such warranties
shall not apply in the following circumstances: (a) PHILIPS' customer
has not maintained and operated the Product in accordance with
INTERMAGNETICS' manuals (b) the Product is improperly stored, (c) the
Product is misused or abused, (d) Product is modified or repaired by a
party other than INTERMAGNETICS or INTERMAGNETICS' authorized
representative, (e) the failure is caused by transportation after title
passes to PHILIPS (f) if the Product is a mobile magnet, the Product is
relocated from one mobile trailer to another mobile trailer after its
original installation without approval by INTERMAGNETICS, or the
vehicle in which the magnet subsystem is housed (van) is transported or
driven to exceed INTERMAGNETICS' vehicle stress loading specifications,
(g) the site of the Product is modified in such a manner as to render
it no longer suitable for operating the Product or (h) the Product is
removed from its original site unless approved by INTERMAGNETICS,
provided always that INTERMAGNETICS can reasonably provide evidence
that the malfunctioning or damage is caused by non observance of any of
the provisions under a-h, and would otherwise not have occurred. In the
event that INTERMAGNETICS repairs a Product which is not covered by
warranty due to operation of this Article 10.9, INTERMAGNETICS may at
its discretion, offer a warranty on the Product so repaired.
INTERMAGNETICS makes no warranties, express or implied, with respect to
any manuals or documentation supplied under this Supply Agreement.
INTERMAGNETICS undertakes to have qualified personnel on the site to
investigate and if reasonably possible solve in-warranty defects or
failures as soon as possible but at the latest within 2 (two) working
days after receipt of PHILIPS' written request for U.S. and
West-European installations and within two working days plus traveling
time and time to obtain visas for all other installations.
THE ABOVE UNDERTAKINGS AND THOSE SET FORTH IN ARTICLES 10.10 AND 10.11
STATE INTERMAGNETICS' ENTIRE LIABILITY WITH RESPECT TO WARRANTY DEFECTS
OR FAILURES, AND INTERMAGNETICS SHALL NOT BE LIABLE FOR ANY SPECIAL OR
CONSEQUENTIAL DAMAGES IN CONNECTION THEREWITH.
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10.10. Under this warranty INTERMAGNETICS warrants to PHILIPS that Products
and Spare Parts shall be free of epidemic faults (class failures).
Epidemic faults are for the purpose of this Supply Agreement defined as
defects which are the same or have the same origin with a class failure
quantity of at least five (5) in ten (10) consecutively delivered
Products within a maximum period of three years from the delivery date
of the last of the ten (10) consecutively delivered Products. In case
of such epidemic faults, INTERMAGNETICS, after the initial warranty
period in accordance with Article 10.3, warrants solely that the
Products or relevant Parts not yet delivered will be upgraded, and for
all Products and Parts already delivered upgraded components or
Products and Parts will be available from INTERMAGNETICS free of charge
and PHILIPS will be responsible for the building in and building out of
said components, as far as reasonably may be expected. In the event
INTERMAGNETICS will execute these activities on PHILIPS' behalf, this
will be done at cost-price. In case said faults compromise the
certification of the Product to safety standards in effect at the time
the Product was delivered or in case said faults endanger persons,
INTERMAGNETICS shall be responsible for the building in and building
out of said components as well.
10.11. INTERMAGNETICS warrants for a three (3) month period, or balance of the
original Product warranty period which ever is the longest, starting
from the date of repair or replacement that the Part after repair or
replacement will meet all the applicable agreed Specifications.
10.11.1 Repair of Defective Magnets
For magnets replaced under Article 10 of this Agreement on or
after 1 July, 2003, the repair policy shall be:
10.11.1.1 Magnet still in INTERMAGNETICS' Current Production
If a magnet of which version is still in production,
has to be replaced, the failed magnet will be
re-manufactured by INTERMAGNETICS for subsequent use
in the INTERMAGNETICS' warranty supply or current
production. Any magnet re-manufactured by
INTERMAGNETICS within this Section will be of current
configuration, considered new Product, be assigned a
current serial number and supplied to PHILIPS with
full new Product warranty coverage.
10.11.1.2 Magnet not in INTERMAGNETICS' Current Production but
still under warranty If a magnet not in current
production has to be replaced, the replacement magnet
will be provided with a warranty of six (6) months
from installation at Installation Site or twelve (12)
months from shipment, whichever is less. PHILIPS has
the right to refuse a repair option of a failed
magnet under this paragraph if INTERMAGNETICS has no
magnet available for timely replacement. If this is
the case, INTERMAGNETICS will give PHILIPS full
credit for the failed magnet.
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10.12 Accuracy of Information.
PHILIPS shall indemnify INTERMAGNETICS against direct cost including
lost time, travel and living expenses if information provided by
PHILIPS is substantially incorrect.
11. Service
11.1. INTERMAGNETICS undertakes that it will have available Spare Part(s),
make the same available to PHILIPS at PHILIPS' request at prices as set
forth in Schedule C (to be reviewed annually) to this Supply Agreement
and will continue to enhance software, if applicable, for the Products
during a period of ten (10) years after the last dispatch of Products
by INTERMAGNETICS.
11.2. INTERMAGNETICS may, at its discretion, substitute functionally
equivalent Spare Parts, subject to informing PHILIPS previously in
writing and making available free of charge a number of such equivalent
Spare Parts for PHILIPS to test and provided PHILIPS approves these
Spare Parts in writing. After completion of such tests, PHILIPS will
either purchase or return such Spare Parts to INTERMAGNETICS.
11.3. Together with each Product, INTERMAGNETICS will supply to PHILIPS one
copy of the necessary updated operating and technical/maintenance
manual, both for hardware and software in the English language and will
forward same separately to PHILIPS' attention to the address PHILIPS
will specify per case.
11.4. Other Service aspects are as set forth in Schedule G to this Supply
Agreement.
12. Branding Trademarks and Trade Names
12.1. The Products and packing supplied under this Supply Agreement will be
branded with PHILIPS' and INTERMAGNETICS' trademarks and trade names in
accordance with each Party's instructions as set forth in Schedule B to
this Supply Agreement. INTERMAGNETICS recognizes PHILIPS' rights in and
to PHILIPS' trademarks and trade names. In this respect it is
understood that PHILIPS may require a separate letter of acknowledgment
from INTERMAGNETICS of PHILIPS' rights in and to the said trademarks
and trade names.
12.2. The arrangements of Article 12.1 are not to be understood as a
restriction of INTERMAGNETICS' rights and title in the design and
programming applied in the Products, pursuant to the Umbrella
Agreement.
13. Term and Termination
13.1 Term of Supply Agreement
The Term as defined in the Umbrella Agreement applies to this Supply
Agreement.
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13.2 Termination by mutual agreement
The Parties may, by mutual agreement, decide to discontinue the supply
of certain Products supplied under this Supply Agreement with a minimum
of twelve (12) months advance written notice.
13.3 Termination for breach
The provision for termination for breach from the Umbrella Agreement
shall apply as if fully set forth herein, provided, however, that as an
additional remedy for breach, the non-breaching Party may terminate the
supply of a particular Product or Product(s) under this Supply
Agreement (rather than the entire Supply Agreement) by notice in
writing.
14. Purchase Orders placed prior to termination effectivity
In the event of termination of a particular Product pursuant to Article
13.2 of this Supply Agreement, PHILIPS shall be entitled until the
actual date the supply of the affected Product(s) terminates, to place
Purchase Orders for the affected Product(s) in accordance with the
terms and conditions of this Supply Agreement and INTERMAGNETICS agrees
to honor such Purchase Orders, provided always that the delivery times
for such Purchase Orders do not exceed the prevailing lead time and
comply with Article 6 and Schedule D.
After the notice of termination coming into effect, PHILIPS shall not
be entitled to change, modify or cancel any Purchase order placed by it
for any reason other than INTERMAGNETICS' inability to honor such
Purchase Order nor to place any additional Purchase Orders.
15. Prevailing Agreement
If there is any conflict between any provision of this Supply Agreement
with any provision of a Schedule to this Supply Agreement or a Purchase
Order the provisions of this Agreement shall prevail.
16. Surviving Terms
In the event of termination of this Supply Agreement, the provisions of
Articles 10, 11 and 15 shall survive.
17. INTERMAGNETICS will assess and enhance its supply chain security
process in such a way that it will adhere to the Customs Trade
Partnerships Against Terrorism (C-TPAT) security recommendations of the
US Customs.
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18. List of Schedules to this Supply Agreement
A Specifications for Products
B Branding instructions
C Prices
D Supply Chain Agreement
E Change request form
F Configuration management
G Service data and procedures
H Accounting data and procedures
I Forwarding instructions
J Customs instructions
K Amendments to this Supply Agreement
19. Effectiveness
This Supply Agreement becomes binding when signed by duly authorized
officers of each party and will come into effect on 1 January 2003.
IN WITNESS WHEREOF the Parties have caused this Supply Agreement to be signed by
their duly appointed representatives.
INTERMAGNETICS GENERAL CORPORATION PHILIPS MEDICAL SYSTEMS NEDERLAND B.V.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ X. Xxxxxxx
------------------------------- -----------------
Xxxxx X. Xxxxxxx Xx X. Xxxxxxx
Chairman and CEO of Business Group DIS
Chief Executive Officer
Date:5 April 2004 Date: 27 April 2004
------------ -------------
By: /s/ Xxx Xxxxxxx By: /s/ Xx. X.X. xxx Xxxxx
-------------------------------- ------------------------
Xxx Xxxxxxx Xx X.X. xxx Xxxxx
President Senior VP
MRI Sector BU Magnetic Resonance
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By: /s/ Xxxxx Xxxxxx By: /s/ Xxxx Xxxxx
------------------------------- ------------------
Xxxxx Xxxxxx Xxxx Xxxxx
Director of Marketing Purchasing Manager
MRI Sector PMG Magnetic Resonance
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AMENDED
UMBRELLA AGREEMENT BETWEEN
PHILIPS MEDICAL SYSTEMS NEDERLAND B.V.
AND
INTERMAGNETICS GENERAL CORPORATION
REGARDING
SUPERCONDUCTING MAGNET SYSTEMS
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Content: Page:
1 Scope 2
2 Definitions 2
3 Quality System 5
4 Environmental 5
5 Strategic Consultation 8
6 Exclusivity and Exclusive Source of Supply 10
7 (reserved) 12
8 Development Project Agreements 12
9 Continuity of Supply 13
10 Intellectual Property Rights 14
11 IPR Licenses 17
12 Ownership of Information and licenses 18
13 Confidentiality 19
14 Product Liability 20
15 Patent Indemnity 22
16 Duration and Termination 23
17 Surviving Terms 24
18 Force Majeure 25
19 Miscellaneous 25
Schedules
A Environmental
B Products not subject to exclusivity
C Contingency plans
D Prototype(s)
E Applicable regulatory codes
F Amendments
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Underlying Agreements
Development Project Agreement
Supply Agreement
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This Amended and Restated Agreement first made the 29th day of April, 1999, is
amended and restated this 1st day of January, 2003 (hereinafter the Effective
Date) by and between:
PHILIPS MEDICAL SYSTEMS NEDERLAND B.V., of Best, The Netherlands ("PHILIPS") on
the one part
and
INTERMAGNETICS GENERAL CORPORATION, through its MAGNET BUSINESS GROUP of Latham,
New York, the United States of America ("INTERMAGNETICS") on the other part
WHEREAS:
o PHILIPS is engaged amongst others, in the development, design, engineering,
manufacture and marketing of magnetic resonance imaging systems (MRI
systems); and
o INTERMAGNETICS is engaged, amongst others, in the development, design,
engineering, manufacture and marketing of magnet systems (Magnet systems)
and certain components for use in MRI systems; and
o INTERMAGNETICS manufactures and supplies certain actively shielded
superconducting Magnet systems and associated components to PHILIPS under
the terms and conditions of a Supply Agreement dated 29 April 1999, as
amended; and
o Parties have restated and revised this Agreement in order to strengthen and
expand their current relationship into a multi-year strategic relationship
to obtain a competitive position in development, design, engineering,
manufacture, supply and after sales service of Magnet systems for
incorporation into MRI systems; and
o PHILIPS appoints INTERMAGNETICS as its exclusive supplier for
superconducting Magnet systems under certain terms and conditions; and
o INTERMAGNETICS shall on an exclusive basis develop, design, engineer,
manufacture and supply certain superconducting Magnet systems to PHILIPS
under certain terms and conditions;
NOW, THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:
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ARTICLE 1
SCOPE
This Agreement sets forth the principles for a mutually beneficial relationship
governing Agreements between Parties regarding Magnet Systems.
ARTICLE 2
DEFINITIONS
The below mentioned terms shall have the following meaning in this Agreement:
Agreement shall mean this document and all underlying
agreements, the Schedules and amendments thereto.
Associated Companies shall mean any and all companies, firms
and persons with respect to which now or hereafter
Koninklijke Philips Electronics N.V., PHILIPS or
INTERMAGNETICS respectively (i) directly or
indirectly holds 50% or more of the nominal value of
the issued share capital, (ii) has 50% or more of
the voting power at general meetings, (iii) has the
power to appoint a majority of the directors or (iv)
otherwise directs the activities of such company,
firm or person but any such company, firm or person
shall be deemed an Associated Company only as long
as such control exists.
Background Information shall mean such Information (other than Foreground
Information) which at the date hereof is or during
the continuance of the activities set out in this
Agreement comes into the ownership or control of a
Party and which such Party is free to disclose
without the consent of or need to account to any
third party.
Background Intellectual shall mean such Intellectual Property (not being
Property Rights Foreground Intellectual Property Rights) which at
(Background IPRs) the date hereof are or during the continuance of the
activities set out in this Agreement come into the
ownership or control of a Party and which such Party
is free to disclose without the consent of or need
to account to any third party.
Contract Manager shall have the meaning set forth in Article 5.7.
Development Funding shall mean direct material, material overhead,
direct labor, labor overhead and General and
Administrative Expenses (G&AE) without profit.
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Development Project shall mean an agreement to govern the development of
Agreement new Products as agreed from time to time by the
Parties.
First Articles shall mean an initial delivery of a Product intended
to be used for type approval tests for compliance
with the Specifications, leading to NORD of the
Product.
Foreground Information shall mean such Information (other than Background
Information) as is generated solely by either Party
or both Parties hereto from the activities set out
in this Agreement.
Foreground Intellectual shall mean such Intellectual Property as is
Property Rights generated solely by either Party or both Parties
(Foreground IPRs) hereto from the activities set out in this
Agreement.
IGC-MBG shall mean the Magnet Business Group of
Intermagnetics General Corporation.
Information shall mean valuable technical information, software,
industrial secrets, trade secrets, descriptions of
manufacturing processes, technical information
inherent in Prototypes or First Articles, know-how,
product specifications, or other proprietary
information used by either Party in carrying on its
business, which are not considered IPRs as defined
above.
Intellectual Property (IPR) shall mean inventions, whether patented or not
including the conception or reduction to practice
of an invention, patents, xxxxx patents, utility
models, design patents, (both registered and
unregistered), copyrights, industrial designs, trade
secrets and any other form of intellectual property
right protection afforded by law to inventions,
designs or technical information, and applications
therefor.
INTERMAGNETICS shall mean Intermagnetics General Corporation and,
for purposes of Articles 5, 6, 10, 11 and 12 its
Associated Companies.
Magnet System shall mean magnet windings, cryostat, cryogenic
refrigerator and electronic monitor for MRI systems
and other elements that may be added as the scope of
supply expands by agreement of the parties.
Milestone(s) shall mean one or more achievements of the
development works to be performed by INTERMAGNETICS
or PHILIPS under a Development Project Agreement.
MRI system shall mean a magnetic resonance imaging system for
medical imaging including components such as
gradient, radio frequency, spectrometer, processing,
physiology, patient handling and user interface
sub-systems, but for purposes of this Agreement,
shall not include Magnet systems.
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Notification Of Release shall mean the document issued by PHILIPS after
For Delivery (NORD) approval of the results of a quality assurance plan
under a Development Project Agreement.
Party(ies) shall mean PHILIPS and/or INTERMAGNETICS and, for
purposes of Articles 5, 6, 10, 11 and 12
INTERMAGNETICS' Associated Companies.
PHILIPS shall mean Philips Medical Systems Nederland B.V.
and its Associated Companies.
Product(s) shall mean those Magnet Systems PHILIPS shall have
developed and/or purchase from time to time from
INTERMAGNETICS pursuant to the terms of, and as more
fully described in Development Project Agreement(s)
and Supply Agreement(s).
Program Schedule shall mean the time schedule for the Development
Project Agreement including the Milestones set forth
therein.
Program Manager shall have the meaning set forth in Article 8.3.
Prototype(s) shall mean the development versions of Products
developed under a Development Project Agreement.
Purchase Order Shall mean a written or electronic purchase order
issued to INTERMAGNETICS by PHILIPS.
Quality Assurance Plan shall mean a plan to be appended to each Development
Project Agreement that describes the procedures
agreed to by the Parties to assure that the
developed Product meets all requirements.
Spare Part(s) shall mean replaceable part(s) of the Products
classified by the Parties in Development Project
Agreements or Supply Agreements as field replaceable
units (FRU).
Specifications shall mean the requirements for a Product in
Development Project Agreement(s) or Supply
Agreement(s).
Substantially Similar shall be defined in a Schedule to each Development
Product(s) Project Agreement and subsequent Supply Agreement,
for defining the scope of any exclusivity.
Supply Agreement shall mean an agreement to govern all aspects of
supply, warranty and service of Products and Spare
Parts.
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Term shall mean the duration of this Agreement as set
forth in Article 16.1.
ARTICLE 3
QUALITY SYSTEM
3.1 INTERMAGNETICS shall establish, document and maintain an effective
quality system to ensure and demonstrate that all processes, in
particular the development, design, engineering and manufacture of
Products, are in conformance with the specified requirements and
standards contained in the Specifications.
3.2 INTERMAGNETICS will use its best efforts to ensure that its quality
system will continue to meet the requirements of ISO 9001.
3.3 INTERMAGNETICS shall verify by means of planned and periodic audits,
conformance to the requirements and standards of the quality system.
The results of these audits will be documented and will be available
for review by PHILIPS upon request.
3.4 INTERMAGNETICS agrees that audits with respect to the quality system
may be performed at INTERMAGNETICS' facilities by certain qualified
employees of PHILIPS, governmental bodies and official test houses to
the extent necessary for compliance to the requirements and standards.
ARTICLE 4
ENVIRONMENTAL
4.1 INTERMAGNETICS represents and warrants that on the Effective Date, the
Products, Service Parts and packaging, do not contain banned substances
as specified in the PHILIPS list of banned substances set forth in
Schedule A, except for substances for which dispensation has been
requested by INTERMAGNETICS on the form of Part C of Schedule A to this
Agreement, and are in compliance with additional legislation, as
mentioned in Part B of Schedule A to this Agreement.
For future deliveries, INTERMAGNETICS is responsible for the
implementation of effective controls to assure continuous compliance
with the above requirements.
In case INTERMAGNETICS cannot meet above requirements, PHILIPS'
approval is required prior to delivery, using the "Request for
Dispensation", Part C of Schedule A to this Agreement.
4.2 INTERMAGNETICS represents that on the Effective Date the Products,
Service Parts and packaging, are not manufactured with the ozone
depleting substances as specified in 40 CFR Part 82.
If INTERMAGNETICS cannot meet above requirements, PHILIPS' approval is
required prior to delivery, using the "Request for Dispensation", Part
C of Schedule A to this Agreement.
INTERMAGNETICS must label such Products in compliance with PHILIPS'
written instructions.
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4.3 INTERMAGNETICS will inform PHILIPS, from the Effective Date onwards, of
the presence of relevant substances in the Products, Service Parts and
packaging, as specified in PHILIPS list of relevant substances (Part D
of Schedule A to this Agreement).INTERMAGNETICS is responsible for the
implementation of effective controls on the use of these substances.
INTERMAGNETICS will inform PHILIPS on the use of these relevant
substances, using the "Declaration of Relevant Substances", Part D of
Schedule A to this Agreement.
4.4 INTERMAGNETICS will actively search for possibilities to replace banned
and relevant substances, including those for which a waiver has been
granted, which substances are specified in the PHILIPS list of banned
and relevant substances, Part B and Part D of Schedule A to this
Agreement.
4.5 INTERMAGNETICS shall comply with all applicable environmental E.U.,
U.S. Federal or International environmental laws, rules, regulations,
ordinances, covenants, standards and the like, and PHILIPS'
implementation thereof (collectively "Environmental Regulations")
concerning the Products, Service Parts and packaging as well as all
applicable US Federal and State environmental laws for plant
operations, enabling PHILIPS to distribute on a world-wide basis
Products, Service Parts and packaging as of the Effective Date.
Environmental Regulations can also include issues such as labeling
(e.g. in connection with the US Clean Air Act or US Department of
Transportation regulations), information requirements, and take-back
regulations relating to Products, Service Parts and packaging.
4.6 INTERMAGNETICS' obligation to take back Products, Spare Parts and
packaging as a result of one or more Environmental Regulations shall be
limited to those cases in which the reason for such return is based
solely on the failure of INTERMAGNETICS' Products, Spare Parts and
packaging to meet the requirements of such Environmental Regulation(s)
in effect at the time they were delivered, unless agreed otherwise.
4.7 In the event any new Environmental Regulation will be promulgated after
the Effective Date of this Agreement, the Parties will negotiate to
establish within a reasonable period of time equitable terms to prevent
or remedy any non-compliance by INTERMAGNETICS of this Article 4 as a
consequence of such promulgation to include such new Environmental
Regulation in the obligations of INTERMAGNETICS under this Article 4.
4.8 INTERMAGNETICS will use its best efforts to ensure that Products,
Service Parts and packaging are designed and manufactured in such a way
that these can be recycled or recovered at the end of their life cycle
without special precautions and that no hazardous residues will remain.
4.9 INTERMAGNETICS shall provide PHILIPS with the following information:
(a) prior to acceptance of the Products, Service Parts and
packaging, all Material Safety Data Sheets, in accordance with
the ISO 11014-1 Standard or 91/155/EC Directive for
components, materials and substances which during all phases
of the Product life-cycle, except relating to the
manufacturing as such, may be hazardous for human health;
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(b) upon request, and at PHILIPS' expense, all necessary
information for disassembling and recycling of the Products,
Service Parts and packaging;
(c) an "Environmental Declaration for Products", Part A of
Schedule A to this Agreement, to confirm that the delivered
Products comply with all Environmental Requirements set forth
in this Agreement;
(d) prior to first delivery of a Product, a "Request for
Dispensation", Part C of Schedule A to this Agreement, if the
Product is not in compliance with Part B of Schedule A to this
Agreement;
(e) prior to first delivery of a Product a "Declaration of
Relevant Substances", Part D of Schedule A to this Agreement,
if one of the substances as specified in Part D is present in
the Product;
(f) prior to acceptance of the Product, all labeling information
as required by the Environmental Regulations.
4.10 INTERMAGNETICS shall control the environmental aspects of the design
and manufacturing through an adequate and effective environmental
management system complying with ISO 14001, including certification by
an accredited certification body.
4.11 INTERMAGNETICS undertakes on a best efforts basis to participate in
PHILIPS' environmental programs, such as:
(a) Reduction and elimination of Environmental banned and relevant
substances in Products. (b) Reduction of Packaging weight. (c)
ECO-design.
(d) Re-usability of Products. (Design for recycling, less waste by End
of Life.)
INTERMAGNETICS will apply (within reasonable limits) the results of
such environmental programs in its implementation of this Agreement.
4.12 PHILIPS shall have the right to audit the implementation and adherence
to this Article 4, to assure continuous compliance with Environmental
Regulations.
ARTICLE 5
STRATEGIC CONSULTATION
5.1 Meetings
During the Term, senior representatives of the Parties shall meet
(either in person, video conference or by telephone) on a regular basis
as their relationship requires, but in any case not less than once
every calendar quarter, to confer on and review strategic issues
including, but not limited to:
5.1.1 Competitiveness
To the extent not limited by third party non-disclosure
agreements, and not prohibited by law, INTERMAGNETICS and
PHILIPS shall share market information such as market prices,
competitive threats, competitive innovations, substitution
threats and other business parameters for the purpose of
benchmarking the Parties' competitiveness as well as
discussion and determination of joint strategic direction and
product policy.
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5.1.2 Continuity
PHILIPS shall share with INTERMAGNETICS its expectations of
its future sales of MRI systems in which Products are
incorporated; and
INTERMAGNETICS shall share with PHILIPS its expectations of
total sales of Products to PHILIPS and, if applicable and not
prohibited by law or a third party non-disclosure agreement,
total sales of Substantially Similar Products to
INTERMAGNETICS' other customers.
5.1.3 Continuity of supply
The Parties shall review the items covered in Article 9
(contingency plans, impending strike, regulatory compliance)
of this Agreement when deemed appropriate by either one of the
Parties.
5.1.4 Scope of supply
Beginning no later than September 30, 2003, INTERMAGNETICS and
PHILIPS will explore extensions to the scope of their
cooperation to optimize the field generating unit (coils and
how they interface to amplifiers, and mechanics which are
directly interfacing and/or linked to coils; coils can be
magnet, gradients or RF) of the MRI system, to include Product
cost, logistics, reliability, installation time and feature
based market advantage. A joint PHILIPS/INTERMAGNETICS field
generating unit integration team shall be formed that will
share all necessary information (as far as not restricted by
third party confidentiality agreements) for optimization
taking into account the total business picture. This new way
of working will be applied to all activities on products and
the supply chain. As a consequence of cooperation this Article
5.1.4, optimization opportunities will be identified by both
Parties and may become subject of joint (R&D) projects between
the Parties. These projects will be staged and priorities will
be agreed between the Parties. Cost benefits resulting from
these activities will be shared between the Parties, details
of sharing to be agreed on a case-by-case basis (i.e. what is
included, % sharing, phase-in, phase-out).
5.1.5 Opportunities for expansion of supply
The Parties will jointly investigate opportunities for
extending the scope of activities of INTERMAGNETICS in the
supply chain of Magnet systems including service thereof.
Based on the outcomes of these continued joint investigations
Parties may jointly define projects to extend the scope of
INTERMAGNETICS' activities
5.1.6 Information/Data
The Parties will also discuss any other information, data,
etc. required to be provided from time to time under the terms
of this Agreement.
5.2 Third parties
Except for those Products and Substantially Similar Products set forth
in Schedule B:
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5.2.1 Each Party shall confer with the other Party if it enters into
negotiations with a third party and determines that this third
party is a potential customer for a Product or Substantially
Similar Product.
5.2.2 INTERMAGNETICS shall not enter into any agreement with a third
party for the development, design, engineering and/or supply
of any Product or Substantially Similar Product without first
notifying PHILIPS of the identity of the third party and
complying with: (a) Article 6.1 , if applicable, or (b) the
third party provision negotiated pursuant to Article 6.2 of
this Agreement.
5.3 New concepts
5.3.1 New Concepts of the Parties
In the event PHILIPS envisages, considers to initiate or
initiates the development of a new MRI system or Magnet system
concept (that is not brought to it by a third party), it shall
provide INTERMAGNETICS a first right of refusal to pursue said
concept. Vice versa, in the event INTERMAGNETICS envisages,
considers to initiate or initiates the development of a new
Magnet system or MRI system concept (that is not brought to it
by a third party), it shall provide PHILIPS a first right of
refusal to pursue said concept. Each Party must exercise its
right of first refusal within a reasonable time, but a right
of first refusal shall expire if a Party fails to notify the
other Party that it is interested in pursuing the new concept
(the "Notice of Interest") within not more than thirty (30)
days of receiving notice of a new concept from the other
party, and if a Notice of Interest is received, a right of
first refusal shall expire if, within sixty (60) days after
the date of the Notice of Interest, the Parties fail to agree
to the essential terms and conditions for a Development
Project Agreement and to a deadline for execution of the
Development Project Agreement. A right of first refusal shall
also expire if the Parties ultimately agree not to enter into
a definitive Development Project Agreement for the new
concept. Notwithstanding the foregoing, INTERMAGNETICS shall
not be obligated to provide PHILIPS with a right of first
refusal for (a) non-superconducting magnet systems, (b) iron
core superconducting 0.6T open magnet systems and 7T (nominal)
magnet systems.
5.3.2 New Concepts of third parties
INTERMAGNETICS shall confer with PHILIPS in accordance with
Article 5.2 if a third party presents INTERMAGNETICS with a
new MRI system concept, and INTERMAGNETICS determines that the
appropriate Magnet system for such MRI system is a Product or
Substantially Similar Product. Likewise, PHILIPS shall confer
with INTERMAGNETICS if a third party presents PHILIPS with a
new Magnet system concept that could be incorporated into
PHILIPS existing MRI systems. Neither Party shall be prevented
from pursuing a third party's new concept provided such new
concept does not constitute a Product or Substantially Similar
Product under this Agreement, or, in the case of PHILIPS does
not involve a Magnet system that could be incorporated into
PHILIPS existing MRI systems.
5.4 Technology Roadmaps
The Parties will share technology roadmaps in their field of expertise
to jointly explore their strategic technology direction and to guide
the appropriate level of development activity to ensure continuous
innovation as required by the market, and to facilitate discussion and
determination of joint strategic direction and product policy.
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5.5 Other Products
From time to time the Parties may explore the expansion of their
business relationship to include products other than Magnet systems.
5.6 Changes in Management
As they are foreseen and/or occur, the Parties shall discuss major
changes to their management and staffing critical to the mutual success
of their business relationship with the objective of preventing
disruptions to Product supply and/or the relationship of the Parties.
5.7 Contract Managers
PHILIPS and INTERMAGNETICS shall appoint a Contract Manager in their
respective organizations who shall be responsible for the organization
and implementation of strategic consultation and review meetings and
who shall be responsible for the implementation of all business and
supply related issues, including delegation of work within each
organization. The respective Contract Managers also shall meet (either
in person or by telephone) at least every 2 weeks to discuss day-to-day
business operations and keep minutes of the subject(s) discussed. The
Parties respective Contract Managers will be appointed by the
management of the Parties.
ARTICLE 6
EXCLUSIVITY AND EXCLUSIVE SOURCE OF SUPPLY
6.1 Full Funding of Product Development by PHILIPS
If, under a Development Project Agreement, PHILIPS agrees to provide
one hundred percent (100%) of the Development Funding for
INTERMAGNETICS' Product development costs, including the manufacture of
Prototypes and/or First Articles as the case may be, then:
6.1.1 Exclusivity
INTERMAGNETICS agrees not to offer the Product (or
Substantially Similar Product) that is the subject of such
Development Project Agreement, to any third party other than
PHILIPS for a period of five (5) years after NORD as long as
PHILIPS enters into a Supply Agreement for such Product. The
duration of this exclusivity may be expanded by mutual
agreement as the Parties continue to invest in the
development, design and (value) engineering of the Product,
resulting in bringing improved versions of the Product to
market, provided such improved Product is subject to a Supply
Agreement between the Parties.
6.1.2 Additional Customers
Notwithstanding the foregoing Article 6.1.1, upon
INTERMAGNETICS' request, PHILIPS will confer with
INTERMAGNETICS regarding sales of such a Product (or
Substantially Similar Product) to third parties. Any agreement
between the Parties for the addition of this third party:
(a) must be a mutual benefit for PHILIPS and
INTERMAGNETICS, and
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(b) must include agreement on the implications for their
relationship as well as the timing of development,
design, engineering and/or supply to such third
party.
PHILIPS' consent to the addition of a third party shall not be
unreasonably withheld.
6.2 Less than Full Funding of Product Development by PHILIPS
--------------------------------------------------------
If, under a proposed Development Project Agreement, PHILIPS provides
less than one hundred percent (100%) of the Development Funding for
INTERMAGNETICS' Product development costs, including the manufacture of
Prototypes and/or First Articles as the case may be, then:
6.2.1 Exclusivity
Parties may agree not to offer the Product (or Substantially
Similar Product) that is the subject of such Development
Project Agreement, to any third party other than PHILIPS for a
period of less than five (5) years after NORD (e.g. three
years for 50% funding of the Development) as long as PHILIPS
enters into a Supply Agreement for such Product. The duration
of this exclusivity may be expanded by mutual agreement as the
Parties continue to invest in the development, design and
(value) engineering of the Product, resulting in bringing
improved versions of the Product to market, provided such
improved Product is subject to a Supply Agreement between the
Parties.
.
6.2.2 Any agreement permitting the sale of a Product or
Substantially Similar Product to a third party shall reflect
and protect the respective investments of the Parties in
bringing the Product to market.
6.2.3 The terms for favorable Conditions as stipulated in Article
6.4 will apply incase INTERMAGNETICS sells such a Product (or
Substantially Similar Product) to a third party subject to the
condition in Article 6.2.2..
6.3 Exclusive Supplier
6.3.1 INTERMAGNETICS will be the exclusive supplier to PHILIPS of
any Product (or Substantially Similar Product) developed for
PHILIPS during or prior to the Term of this Agreement. PHILIPS
will give INTERMAGNETICS the first right to develop and supply
any Magnet System to be developed and/or used, marketed, sold,
leased, serviced or otherwise disposed of by PHILIPS during
the Term of this Agreement, except for (a) non-superconducting
magnet systems, (b) PHILIPS' existing iron core
superconducting 0.6T open magnet system and its successors
that are based on iron core technologies and (c) PHILIPS'
superconducting 7T (nominal) magnet system, unless the Parties
otherwise agree in writing to include any or all of such
magnet systems in this Agreement.
6.3.2 For purposes of this Article 6.3.2, a "new MRI business" shall
mean a business that participates in the MRI industry, which,
at the time of acquisition, (a) produces commercial quantities
of Magnet Systems or (b) purchases commercial quantities of
Magnet Systems from a party other than INTERMAGNETICS for use
in such business's MRI systems. If PHILIPS or Koninklijke
Philips Electronics N.V. or its Associated Companies shall
acquire a new MRI business, and such business becomes and
Associated Company, then PHILIPS:
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6.3.2.1 shall not be required to discontinue the purchase or
production of Magnet systems incorporated into the
MRI Systems of the new MRI business and shall be
permitted to continue operating the new MRI business
based on such Magnet systems.
6.3.2.2 shall be required to comply with Article 5.3.1 of
this Agreement with respect to successors of such
Magnet Systems or MRI Systems, subject to the
provisions of Article 6.3.3 of this Agreement.
6.3.3 The exclusivity commitment of PHILIPS to INTERMAGNETICS is
subject to INTERMAGNETICS ability to provide Products that are
competitive in pricing, quality, supply chain flexibility and
delivery conditions. If PHILIPS determines that an
INTERMAGNETICS' Product is not competitive, PHILIPS shall
provide INTERMAGNETICS with written notice setting forth the
basis for its determination and the Product(s) that is
non-competitive. INTERMAGNETICS shall have the right to
correct the point(s) of non-competitiveness within six (6)
months from receipt of PHILIPS' written notice, or within a
program schedule that is mutually agreed upon by the Parties
in writing. If INTERMAGNETICS fails to correct the point(s) of
non-competitiveness within the applicable time period, PHILIPS
shall have the right to buy elsewhere MRI Magnet Systems which
are substantially comparable to the Products for which
INTERMAGNETICS' offering is not competitive (provided such
alternative offering is purchased on terms not more favorable
than those requirements placed on INTERMAGNETICS) and
integrate, sell, service maintain and use such as part of its
MRI System Notwithstanding the provisions of this Article
6.3.3, the Parties agree that:
6.3.3.1 the pricing agreements for Products set forth in
Appendix C to the Parties' Supply Agreement for
calendar years 2003 through 2006 are deemed
competitive and shall not be subject to challenge
under Article 6.3.3. In addition, INTERMAGNETICS has
agreed to contribute up to 50% of the non-recurrent
expenses relating to the development and supply of
the successor Magnet System for the 1.5T F2K magnet
systems series, as specified under the Supply
Agreement.
6.3.3.2 INTERMAGNETICS' [actual and full] implementation of
the quality requirements, supply chain flexibility
requirements and delivery conditions for its Products
and services to PHILIPS, according to the schedule
and conditions as expressly stated and agreed in
Article 10 and Appendix D of the Parties' Supply
Agreement is deemed to be competitive;
6.3.3.3 PHILIPS defers any rights it would otherwise have
under Article 6.3.3 of this Agreement until 31
December 2006, provided INTERMAGNETICS has fully
complied with Articles 6.3.3.1 and 6.3.3.2.
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6.4 Preferred Customer
With respect to any third party for a Product or Substantially Similar
Product:
(a) INTERMAGNETICS will not reduce deliveries of the Product to
PHILIPS in order to supply this third party;
(b) In case INTERMAGNETICS offers to any third party Products or Substantially
Similar Products, at prices, discounts, delivery terms, payment terms,
guarantees and/or maintenance fees (hereinafter "Conditions") more favorable
than those offered to PHILIPS for substantially the same quantities,
INTERMAGNETICS undertakes to inform PHILIPS of such terms and to offer similar
Conditions for the supply of Products to PHILIPS.
These more favorable Conditions shall prevail over the Conditions applicable
under this Agreement and shall retroactively apply to all Purchase Orders issued
by PHILIPS and to all Products unshipped as of the date of the first offer to
the third party of such more favorable prices.
Upon request, PHILIPS may conduct an audit of INTERMAGNETICS's records to ensure
compliance with this article.
6.5 Non-clinical MRI Systems
Notwithstanding anything to the contrary set forth in Articles 5 and 6,
INTERMAGNETICS shall not be restricted in any way from developing,
manufacturing, using, leasing and/or selling Products or Substantially
Similar Products for applications other than clinical medical
diagnostic imaging (e.g. Industrial MR).
ARTICLE 7
(Reserved)
ARTICLE 8
DEVELOPMENT PROJECT AGREEMENTS
8.1 Inception
The Parties will, from time to time, enter into a Development Project
Agreement for the development of each new Product to be supplied to
PHILIPS during the Term of this Agreement.
8.2 Content
The Parties shall negotiate in good faith the following aspects of each
Development Project Agreement:
(a) Specifications
(b) Program Schedule and Statement of Work
(c) Quality Assurance Plan
(d) Development Funding
(e) Number of Prototypes and/or First Articles
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8.3 Development Project Management
For every Development Project Agreement, each Party shall appoint a
Program Manager who shall have first line responsibility in each
respective organization for cooperation, communication and work
delegation. The Program Managers shall carry out review meetings with
appropriate personnel regarding progress under the Development Project
Agreement.
8.4 Termination of a Development Project Agreement
For each Development Project Agreement, the Parties will negotiate a
termination provision which may include but is not limited to
termination based on (a) a determination that the Product is not
feasible, (b) the inability of a Party to perform its obligations under
the Development Project Agreement, or (c) any other reason mutually
agreed to by the Parties.
8.5 Prototype(s)
If a Development Project Agreement calls for a delivery and testing of
Prototype(s), then the attached Schedule D shall apply to such
Development Project Agreement.
8.6 Notification of Release for Delivery
Notification of Release for Delivery (NORD) shall be based upon type
approval of the First Articles or Prototype(s) of the Product delivered
by INTERMAGNETICS under a Development Project Agreement. Type approval
shall be carried out in accordance with a Quality Assurance Plan for
the Development Project Agreement.
The Parties shall, at their own expense, make available and exchange
all relevant information, and assistance which reasonably may be
expected from each Party in order to integrate the First Articles of
the Product delivered by INTERMAGNETICS under a Development Project
Agreement into PHILIPS' MRI systems.
8.7 Transition of Product to Supply Agreement
Upon INTERMAGNETICS acquiring NORD for a Product, the Supply Agreement
shall be amended to incorporate that Product. The Parties shall
negotiate in good faith any amendments to the Supply Agreement which
may be necessary for the Product, including, but not limited to, price,
delivery schedule and warranty. Alternatively, Parties may negotiate a
new Supply Agreement for the Product.
ARTICLE 9
CONTINUITY OF SUPPLY
9.1 Contingency plans
To ensure continuity of purchase and supply, each Party shall prepare
contingency plans for the following events:
(a) A catastrophe, e.g., fire or explosion, which interferes with
the Party continuing its manufacturing operation;
(b) Major disruption of a critical process in a Party's
manufacturing operation;
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(c) Major disruption in the Party's supply chain;
(d) Major disruption of transportation.
9.2 Strike
If it appears a strike will cause a disruption in INTERMAGNETICS'
continuity of supply of Magnet systems or PHILIPS' continuity of supply
of MRI systems, INTERMAGNETICS or PHILIPS, as the case may be, will
take reasonable steps to prevent the strike and will inform the other
Party of the impending strike. If a strike significantly disrupts
continuity of supply, INTERMAGNETICS or PHILIPS, as the case may be,
will, as a last resort, confer with the other Party to seek a solution
in a cooperative manner.
9.3 Regulatory Compliance
Each Party will inform the other, through the Parties' strategic
consultations, of the status of its compliance with all significant
applicable governmental regulations that could interfere with
continuity of supply (e.g., Food and Drug Administration, Occupational
Safety and Health Administration, Environmental Protection Agency,
etc.).
ARTICLE 10
INTELLECTUAL PROPERTY RIGHTS
10.1 Each Party shall retain exclusive ownership of its Background IPRs.
10.2 Foreground IPRs based on work performed solely by one or more
employee(s) of a Party under this Agreement shall be solely owned by
that Party.
10.3 In the event that during the term of this Agreement an invention is
made jointly (as defined under U.S. or E.U. patent law) by one or more
employees of INTERMAGNETICS and/or its Associated Companies and one or
more employees of PHILIPS and/or its Associated Companies, the
invention shall be jointly owned by the Parties and each joint owner
shall have an equal, undivided interest in and to such joint invention,
as well as in and to Foreground IPRs thereon in all countries, subject
to the terms and conditions set forth below.
10.3.1 In case of joint inventions, each Party concerned shall
promptly inform in writing the other Party whose employee is
or employees are involved in such joint invention.
10.3.2 For non-patented joint Foreground IPRs, control and use of
such joint Foreground IPRs shall be as follows:
(a) Control over the potential filing of a patent application
is construed as follows:
o all joint Foreground IPRs regarding MRI systems
will be controlled solely by PHILIPS;
o all joint Foreground IPRs regarding the
interface between the Magnet system and the MRI
System will be subject to Article 10.5 below;
o all joint Foreground IPRs regarding Magnet
systems will be controlled solely by
INTERMAGNETICS.
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(b) Subject to Articles 11.2, 11.3, 11.4 and 11.5:
o PHILIPS will retain control over the use of
non-patented joint Foreground IPRs regarding MRI
systems;
o INTERMAGNETICS will retain control over the use
of non-patented joint Foreground IPRs regarding
Magnet systems.
10.4 The Party controlling the patent application process as described above
in Article 10.3.2 may decide at its sole discretion if it will prepare,
file and prosecute a patent application for joint Foreground IPRs under
its control, upon prior written approval of the other Party, which
approval will not be unreasonably withheld. The Parties will confer in
a timely manner regarding the patent application and countries in which
to file such application. All out of pocket costs related to
applications for joint Foreground IPRs shall be shared equally between
the Parties. The same applies for the maintenance fees and other costs
- but not including litigation - for such joint Foreground IPRs on
patents granted. If, however, the non-controlling Party is not
interested in filing an application for the joint Foreground IPRs, the
controlling Party may file or have filed such application at its own
expense and shall be the sole owner of any resulting Foreground IPRs
subject to a free, fully paid-up, non-exclusive, unrestricted license
for the lifetime of the Foreground IPRs concerned for the own use of
the non-controlling Party but the rights of third parties under already
existing licenses and agreements shall not be prejudiced. The
non-filing Party shall assign all other rights in such joint invention
to the filing Party at no charge.
10.4.1 The controlling Party shall be designated to maintain
applications for joint Foreground IPRs. The other Party shall
at its own cost furnish the filing Party with all documents,
or other assistance, that may be necessary for the filing and
prosecution of each such application.
10.4.2 If a patent is allowed for any joint Foreground IPRs, each
Party shall have the right to exercise its ownership of such
joint Foreground IPRs, including the non-assignable right to
grant non-exclusive licenses, under the Foreground IPRs on
such a joint invention without the consent of and without
accounting to the other owner, so long as the owner granting
such license fulfills its obligation, if any, to pay its
proportionate share of the costs related to such Foreground
IPRs on a joint invention.
10.5 Foreground IPRs on a joint invention regarding the interface between
the Magnet system and the MRI system will be treated as follows
("Interface Foreground IPRs"):
10.5.1 The filing of applications for Interface Foreground IPRs shall
be subject to mutual agreement between the Parties. The
Parties will agree within a reasonable period of time after
notification provided under Article 10.3.1, on an appropriate
course of action for filing such applications, including which
Party is to be designated with the preparation, filing and
prosecution of such applications and in which countries of the
world to file such applications for Interface Foreground IPRs.
All out of pocket costs related to applications for Interface
Foreground IPRs or IPRs resulting from such applications shall
be shared equally between the Parties. One of the Parties
shall be designated to file or have filed, prosecute and
maintain applications for Interface Foreground IPRs and any
IPRs resulting therefrom on joint inventions. The other Party
shall at its own cost furnish the filing Party with all
documents, or other assistance, that may be necessary for the
filing and prosecution of each such application.
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10.5.2 If, however, one Party is not interested in filing an
application for Interface Foreground IPRs on a joint
invention, the other Party may file or have filed such
application at its own expense and shall be the sole owner of
any resulting Interface Foreground IPRs subject to a free,
fully paid-up, non-exclusive, unrestricted license for the
lifetime of the Interface Foreground IPRs concerned for the
own use of the Party who was not interested in filing such
application. The non-filing Party shall assign its rights in
such joint invention to the filing Party.
10.6 In the event that one of the joint owners of Foreground IPRs or a Party
filing an application for Foreground IPRs on a joint invention wants to
stop the payment of its share of the maintenance fees or other costs in
any particular country, the other owner may take over the payment of
such share. The Party discontinuing to pay its proportionate share for
one or more countries shall forthwith relinquish to the other Party
which continues such payments, its title to and interest in such
jointly owned Foreground IPRs for the countries concerned, subject,
however, to the retention of a free, fully paid-up, non-exclusive,
non-assignable and unrestricted license under the Foreground IPRs in
the countries concerned in favor of the relinquishing Party for the own
use of the relinquishing Party. However, the relinquishing owner shall
no longer have the right to grant licenses thereunder to third parties,
but the rights of third parties under already existing licenses and
agreements shall not be prejudiced. The rights of the relinquishing
Party in other (i.e., continued) countries shall not be affected.
10.7 A joint owner shall have the right to bring an action for infringement
of a jointly-owned Foreground IPR only with the consent of the other
owner. This consent may only be withheld if such action would be
prejudicial to the other owner's commercial interests as can be
demonstrated to the reasonable satisfaction of the joint owner
interested to bring such infringement action.
ARTICLE 11
IPR LICENSES
11.1 Each Party hereby grants the other Party, subject to prior commitments,
a free, non-exclusive license, without the right to grant sublicenses,
under its Background IPRs and/or Foreground IPRs to the extent such IPR
is required by the other Party solely for performing the development
work allocated to it under a Project Development Agreement.
11.2 PHILIPS shall cause Koninklijke Philips Electronics N.V. to grant
hereby to INTERMAGNETICS a world-wide, irrevocable, fully paid up,
non-exclusive license, without the right to grant sublicenses, under
PHILIPS' Foreground IPRs to make, have made - according to
INTERMAGNETICS' design -, use, sell, service, and practice any method
of Products and Substantially Similar Products taking into account the
exclusivity arrangement in Article 6 above.
11.3 INTERMAGNETICS hereby grants to PHILIPS and to PHILIPS' Associated
Companies a world-wide, irrevocable, fully paid up, non-exclusive
license, without the right to grant sublicenses, under INTERMAGNETICS'
Foreground IPRs to use, sell, lease, service, practice any method or
otherwise dispose of Products taking into account the exclusivity
arrangement in Article 6 above.
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11.4 If INTERMAGNETICS willfully and with the intent to force termination of
this Agreement, fails to perform a material obligation hereunder
resulting in termination by PHILIPS pursuant Article 16.2(a), then the
license provided in Article 11.3 above, shall include the right, under
INTERMAGNETICS' Foreground IPRs to make, or have made by a third party,
the Products or natural commercial successors of the Products resulting
from the normal evolution of the design (but not to include material
reconfiguration that would result in the development of new products).
11.5 The licenses granted under Articles 11.2, 11.3 and 11.4 shall be for
the lifetime of the Foreground IPRs concerned.
11.6 PHILIPS is prepared to cause Koninklijke Philips Electronics N.V. to
grant to INTERMAGNETICS at its request, subject to prior commitments, a
non-exclusive license under its Background IPRs against reasonable
terms and conditions to be agreed upon, provided that such license,
which shall be limited to the field of Products and Substantially
Similar Products, is demonstrated to the reasonable satisfaction of
PHILIPS to be technically indispensable for INTERMAGNETICS in order to
operate under the licenses granted by PHILIPS under Article 11.2
hereof.
11.7 INTERMAGNETICS is prepared to grant to PHILIPS at its request, subject
to prior commitments, a non-exclusive license under its Background IPRs
against reasonable terms and conditions to be agreed upon, provided
that such license, which shall be limited to the field of Products, is
demonstrated to the reasonable satisfaction of INTERMAGNETICS to be
technically indispensable for PHILIPS in order to operate under the
licenses granted by INTERMAGNETICS under Article 11.3, and Article 11.4
hereof, but only if such Article becomes applicable.
11.8 The licenses granted by PHILIPS to INTERMAGNETICS under the Parties'
Amended and Restated Supply Agreement (dated November 13, 1998) shall
remain in full force and effect and are not intended in any way to be
limited by the terms and conditions of this Agreement.
11.9 Except for the licenses granted under this Agreement, PHILIPS shall
have no rights to, or ownership of, the specific design of the
Prototype and/or First Articles or the Product(s) or INTERMAGNETICS'
engineering or production technologies, to the extent such design
and/or technologies are proprietary to INTERMAGNETICS.
ARTICLE 12
OWNERSHIP OF INFORMATION AND LICENSES
12.1 Each Party shall retain exclusive ownership of its Background
Information and the Foreground Information solely developed by one or
more employee(s) of that Party.
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12.2 In the event that during the term of this Agreement and as a result of
and in the course of a Project Development Agreement any Foreground
Information is jointly developed by one or more employees of PHILIPS
and/or its Associated Companies and one or more employees of
INTERMAGNETICS and/or its Associated Companies and the contributions of
both Parties are undividable, then both Parties will jointly own such
jointly developed Foreground Information and each joint owner shall
have an equal, undivided interest in and to such jointly developed
Foreground Information.
12.3 Each joint owner in accordance with Article 12.2, shall have the
non-assignable, non-exclusive and unrestricted right, including the
right to grant sublicenses to third parties, to use jointly developed
Foreground Information without the consent of and without accounting to
the other owner for the duration and within the scope of this Agreement
only. In case only one of the Parties upon termination of this
Agreement wishes to use such jointly owned Foreground Information the
Parties shall treat as Confidential Information the other Party's
interest or lack thereof in such jointly owned Foreground Information
until such other Party's interest or lack thereof, in such jointly
owned Foreground Information is, or otherwise becomes, generally known
or available through no act or disclosure of the other Party or its
personnel.
12.4 Each Party hereby grants the other Party, subject to prior commitments,
a free, non-exclusive license, without the right to grant sublicenses,
under its Background Information and/or Foreground Information to the
extent such Information is required by the other Party solely for
performing the work allocated to it under a Project Development
Agreement.
12.5 PHILIPS shall cause Koninklijke Philips Electronics N.V. hereby to
grant to INTERMAGNETICS and its Associated Companies a world-wide,
fully paid up, perpetual and non-exclusive license, without the right
to grant sublicenses, to use its Foreground Information to make, have
made, use, sell or otherwise dispose of Products or Substantially
Similar Products.
12.6 INTERMAGNETICS and its Associated Companies hereby grant PHILIPS and
its Associated Companies a world-wide, fully paid up, perpetual and
non-exclusive license, without the right to grant sublicenses, to use
its Foreground Information to use, sell, lease, service or otherwise
dispose of Products.
12.7 PHILIPS and its Associated Companies are prepared to grant and to cause
Koninklijke Philips Electronics N.V. to grant to INTERMAGNETICS and its
Associated Companies at their request, subject to prior commitments, a
non-exclusive license under its Background Information against
reasonable terms and conditions to be agreed upon, provided that such
license, which shall be limited to the field of Products and
Substantially Similar Products, is demonstrated to the reasonable
satisfaction of PHILIPS to be technically indispensable for
INTERMAGNETICS in order to exercise the licenses granted by PHILIPS to
INTERMAGNETICS under Article 12.5.
12.8 INTERMAGNETICS and its Associated Companies are prepared to grant to
PHILIPS and its Associated Companies at their request, subject to prior
commitments, a non-exclusive license under its Background Information
against reasonable terms and conditions to be agreed upon, provided
that such license, which shall be limited to the field of Products, is
demonstrated to the reasonable satisfaction of INTERMAGNETICS to be
technically indispensable for PHILIPS in order to exercise the licenses
granted by INTERMAGNETICS to PHILIPS under Article 12.6.
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ARTICLE 13
CONFIDENTIALITY
13.1 Confidential Information
All specifications, including the Specifications, drawings, industrial
designs, samples, marketing plans, software and all other information
disclosed in writing by either Party to the other and being marked as
"Confidential", "Proprietary" or similar indications or disclosed
visually or orally and confirmed in writing within fourteen (14) days
after such oral or visual disclosure, as well as the contents of this
Agreement, any Development Project Agreement and any Supply Agreement,
including Purchase Orders placed pursuant to those agreements
("Confidential Information"), shall be kept in strictest confidence by
the receiving Party, shall remain the disclosing Party's property, may
be divulged only to such of the receiving Party's personnel as has need
to know and as has undertaken to keep Confidential Information secret,
and shall be returned to the disclosing Party upon its request.
Confidential Information shall not be reproduced, disclosed or used by
the receiving Party except to the extent required for due performance
of this Agreement and the receiving Party shall protect Confidential
Information from further disclosure by itself and by its personnel in
the same manner as it would do with regard to its own Confidential
Information. Exceptions are allowed only after prior mutual agreement
or where required by law.
13.2 Duration
The Parties' obligations under this Article 13 shall continue for a
period of five (5) years after termination of this Agreement.
13.3 Exceptions
This Article 13 shall not apply to Confidential Information that the
receiving Party can demonstrate:
(a) is or becomes generally known or available through no act or
disclosure of the receiving Party or its personnel; or
(b) was available to the receiving Party prior to disclosure or
has been furnished to it by a third party entitled to disclose
same without restrictions as to disclosure or use or by the
other Party; or
(c) was, subsequent to disclosure, independently developed by the
receiving Party without use of Confidential Information; or
(d) is required to be disclosed under applicable law.
13.4 Confidential disclosure agreements with third parties
Neither Party shall enter into a confidential disclosure agreement with
a third party which would prohibit strategic consultation between
Parties as provided for in Article 5.2 and 5.3.
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ARTICLE 14
PRODUCT LIABILITY
14.1 In no event will INTERMAGNETICS' Product liability be greater for any
Prototype and/or First Article than for any Product purchased by
PHILIPS.
14.2 INTERMAGNETICS shall indemnify PHILIPS and all PHILIPS' Associated
Companies and assume the defense of, any and all claims for bodily
injury and/or death arising solely as a direct result of (i) design or
manufacturing defects in the Products, (ii) failure by INTERMAGNETICS
to provide PHILIPS with reasonable warnings with respect to known risks
(or risks which should have been known to INTERMAGNETICS) of bodily
injury or harm caused by the Product, except risks relating to magnetic
fields in general, or (iii) installation performed by INTERMAGNETICS of
Products sold to PHILIPS. If PHILIPS has actual notice that such a
claim shall be or has been made against it involving INTERMAGNETICS,
PHILIPS shall immediately inform INTERMAGNETICS in writing and allow
INTERMAGNETICS and its insurers the opportunity to conduct the defense
of such claim including possible negotiations for settlement. PHILIPS
shall cooperate fully with INTERMAGNETICS and its insurers in the
disposition of any such matters whenever reasonably requested to do so.
The obligations of INTERMAGNETICS to indemnify and defend shall not
extend to claims solely attributable to the negligence or intentional
malfeasance of PHILIPS or PHILIPS' Associated Companies, their agents,
distributors and/or their customers or other users of the MRI systems
nor to any claims attributable solely to or arising out of actions
solely by them which are outside the scope of or inconsistent with
INTERMAGNETICS' operating instructions and/or technical/maintenance
manuals.
14.3 PHILIPS shall indemnify INTERMAGNETICS against, and assume the defense
of, any and all product liability and other third party claims for
bodily injury and/or death arising or attributable (i) solely to the
use of those parts of the Products sold or provided free of charge by
PHILIPS to INTERMAGNETICS for incorporation in the Products, (ii) to
the effect of magnetic fields (iii) solely to the negligence or
intentional malfeasance of PHILIPS or PHILIPS' Associated Companies,
their agents or distributors or (iv) solely to parts of the MRI system
other than the Products supplied by INTERMAGNETICS. If INTERMAGNETICS
has actual notice that such a claim shall be or has been made against
INTERMAGNETICS involving PHILIPS, INTERMAGNETICS shall immediately
inform PHILIPS in writing and allow PHILIPS and its insurers the
opportunity to conduct the defense of such claim, including possible
negotiations for settlement. INTERMAGNETICS shall cooperate fully with
PHILIPS and its insurers in the disposition of any such matters,
whenever reasonably requested to do so. To this end, INTERMAGNETICS
shall keep records of all relevant design and test documentation which
INTERMAGNETICS normally keeps in order to defend product liability
claims at least thirteen (13) years after delivery of each Product and
on request provide PHILIPS' insurers with copies thereof under relevant
confidentiality obligations, solely for the purpose of defending such
third party claims. The obligation of PHILIPS to indemnify and defend
shall not extend to claims attributable solely to the negligence or
intentional malfeasance of INTERMAGNETICS or INTERMAGNETICS' vendors or
agents.
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14.4 Each Party shall maintain such insurance as it may deem necessary to
cover its Product liability, and upon the other Parties' request shall
produce for inspection these insurance policies and premium payment
receipts.
ARTICLE 15
PATENT INDEMNITY
15.1 INTERMAGNETICS shall fully indemnify to the limit of the total invoice
value of any allegedly infringing Products, PHILIPS, PHILIPS'
Associated Companies, their distributors, agents and/or customers,
against all reasonable fines, losses, damages, costs and expenses
including attorney fees, arising from any valid claim brought by a
third party claiming that a Product (or any part thereof) infringes on
the third party's patent rights or other industrial or intellectual
property right; provided PHILIPS gives INTERMAGNETICS full authority,
at the option of INTERMAGNETICS, either to settle or to defend such
claim, suit or proceeding and - at INTERMAGNETICS' request and expense
- full cooperation, assistance and information as needed by
INTERMAGNETICS to address the claim. PHILIPS shall promptly notify
INTERMAGNETICS in writing of any allegation of infringement and shall
not make any admission without INTERMAGNETICS' prior consent. If the
use of any Product or Spare Part is enjoined, INTERMAGNETICS shall, at
its own expense and at its option, either procure for PHILIPS, the
PHILIPS' Associated Companies and their customers the right to continue
using Product and/or Spare Part, or replace same with a non-infringing
Product or Spare Part or modify it so that it becomes non-infringing,
always without substantially affecting the Product or Spare Part's
compatibility with PHILIPS' MRI system device in conjunction with which
it is to be used and without substantially affecting conformance to the
Specifications. INTERMAGNETICS' indemnification does not cover any
claim in respect of any patent or patent application of PHILIPS or
others of which PHILIPS or PHILIPS' Associated Companies is presently
aware that is to be used in Products to be supplied by INTERMAGNETICS
to PHILIPS under this Agreement and which it does not bring to
INTERMAGNETICS' attention before execution of this Agreement.
15.2 If and to the extent that the infringement is the result of (a) parts
supplied by PHILIPS, or (b) modifications or enhancements of Products
or Parts as specifically designed by PHILIPS or specifically requested
by PHILIPS to be implemented in the Products or Parts, INTERMAGNETICS
shall not be liable under this Article 15. INTERMAGNETICS shall not be
required to meet any design requests by PHILIPS if INTERMAGNETICS
advises PHILIPS that it would infringe patents of a third party in
order to meet such requests. INTERMAGNETICS' indemnification does not
extend to any suit based upon any infringement or alleged infringement
of any industrial or intellectual property rights on the basis of
combining, incorporating and/or inserting Products furnished by
INTERMAGNETICS into MRI systems if the infringement would be avoided by
the use of the Products alone.
PHILIPS shall similarly indemnify INTERMAGNETICS to the limit of the
total invoice value of the allegedly infringing Products for suits and
proceedings and all reasonable damages and costs awarded, including
attorneys fees, with respect to all these occurrences covered by this
paragraph.
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15.3 PHILIPS shall indemnify INTERMAGNETICS, to the limit of the total
invoice value of the Products, for alleged infringement of:
(a) OMT active shielded magnet patent US4587504 and its
corresponding patents/applications in any country;
(b) Siemens B-zero field compensation patent EP0299325 and its
corresponding patents/applications in any country; and
(c) any patent of any third party which cannot be avoided if
PHILIPS' active shielded magnet patent EP0138270 and/or its
corresponding patents/applications in any country are used.
PHILIPS' indemnification to INTERMAGNETICS for suits and proceedings
shall cover all reasonable damages, expenses and costs, including
attorney fees as provided above with respect to such Products using
such patents and supplied to PHILIPS.
15.4 The foregoing states the entire liability of INTERMAGNETICS and PHILIPS
respectively for infringement of the said rights by Products or any
Spare Parts.
ARTICLE 16
DURATION AND TERMINATION
16.1 Term
The initial term of this Agreement with exception of Articles
6.3 and 6.4 shall commence on the Effective Date through and up to 31
December 2009. Starting calendar year 2004, at the end of each calendar
year of this Agreement, the term shall be extended automatically for an
additional twelve (12) month period, unless either Party provides a
written notice to the other prior to the end of the calendar year of
its intent to terminate at the end of the then applicable term. The
term for the exclusivity arrangement as stipulated in Articles 6.3 and
6.4 shall commence on the Effective Date through and up to 31 December
2007. At the end of calendar years 2003 and 2004 of this Agreement, the
term shall be extended automatically for an additional twelve (12)
month period, unless PHILIPS provides a written notice to
INTERMAGNETICS, pursuant to Article 6.3.3, of its intent to terminate
at the end of the then applicable term. For the calendar years 2005 and
after, the term of the exclusivity arrangement as stipulated in
Articles 6.3 and 6.4 will be according the term of this Umbrella
Agreement.
16.2 Termination
In addition to termination in accordance with Article 18, this
Agreement may be terminated as follows:
(a) If a Party is in material breach of this Agreement, the
non-breaching Party is entitled to give written notice to the
breaching Party. The notice must specify the breach and
provide a reasonable opportunity to remedy the breach to the
reasonable satisfaction of the non-breaching Party as quickly
as commercially reasonable but in any event no longer than six
(6) months.
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If the breaching Party fails to remedy the breach, the
non-breaching Party is entitled to take any action open to it
under this Agreement and in law, including immediate
termination of this Agreement by notice in writing; provided,
however, that (i) neither Party shall be liable to the other
for any special or consequential damages at any time, and (ii)
any action is subject to the arbitration procedure set forth
in Article 19.8. In addition, if INTERMAGNETICS' breach is the
result of its repeated failure to supply Products on a
prolonged basis, the Parties will negotiate for a second
source of supply.
(b) Either Party may terminate this Agreement immediately by
written notice to the other Party in the event the latter
Party becomes insolvent, files or is the subject of a
bankruptcy action which is not dismissed within sixty (60)
days, has a receiver appointed, or makes an assignment for the
benefit of creditors.
(c) PHILIPS may terminate this Agreement upon two (2) years
written notice to INTERMAGNETICS if more than 50% of the
voting shares of INTERMAGNETICS are acquired by, or more than
a majority of INTERMAGNETICS' directors have been nominated
by, a principal competitor of PHILIPS in MR imaging.
(d) INTERMAGNETICS may terminate this Agreement upon two (2) years
written notice to PHILIPS if PHILIPS or its Associated
Companies acquire control over, or become controlled by, an
entity engaged in the manufacture of superconductive magnets
for MR imaging systems.
(e) In the event a principle (at least 20% market share) MR
competitor of PHILIPS acquires the following percentage of
outstanding shares of common stock of INTERMAGNETICS, then
within a period of 180 days after such transaction has
officially been made public or has been closed (i.e., after
both of these events have occurred) PHILIPS shall have the
right, in its sole discretion, to notify INTERMAGNETICS of
earlier and unilateral termination of the Umbrella Agreement,
with a lead time to be chosen solely by PHILIPS, but which
shall not be less than the minimum lead times set forth below:
In case the percentage is equal to or greater than 10% and
less than 20%, the minimum termination period is five (5)
years.
In case the percentage is equal to or greater than 20% and
less than 35%, the minimum termination period is four (4)
years.
In case the percentage is equal to or greater than 35% and
less than a controlling interest as defined in Article
16.2(c), the minimum termination period is three (3) years.
16.3 Effect of Termination
Any notice of termination given under this Agreement shall be deemed to
be a notice of termination under any Development Project Agreement
and/or Supply Agreement. Termination of an individual Development
Project Agreement and/or Supply Agreement will not affect the Term of
this Agreement, any (other) Supply Agreement or any (other) Development
Project Agreement entered into by the Parties, unless such termination
constitutes a material breach under the terms of this Agreement.
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ARTICLE 17
SURVIVING TERMS
17.1 In the event of termination of this Agreement, the provisions of
Articles 2, 4.6, 10, 11, 12, 13, 14, 15, 17, 19.1, 19.5, 19.7, 19.8,
19.9, 19.10, 19.11, and 19.12 of this Agreement shall survive.
17.2 Upon termination of this Agreement neither Party shall be liable to the
other Party except if otherwise stated in this Agreement.
ARTICLE 18
FORCE MAJEURE
18.1 Effect of Force Majeure
If either Party is prevented from or delayed in the performance of this
Agreement due to the occurrence of force majeure either Party shall be
entitled to suspend performance of its obligation for the duration of
the prevention or delay caused by such force majeure, without being
responsible for any damages resulting therefrom to the other Party.
18.2 Force Majeure Exceeding Three Months
If the period of prevention or delay caused by force majeure exceeds
three (3) consecutive months, then either Party shall be entitled to
terminate this Agreement upon thirty (30) days written notice without
being liable for any damages whatsoever towards the other Party.
This does not affect however commitments which remain applicable upon
termination of this Agreement as stated elsewhere in this Agreement.
18.3 Information and Action by Affected Party
The Party affected by force majeure shall inform the other Party
promptly in writing specifying the force majeure as well as its
expected duration. The Party so affected shall take all reasonable
steps to limit the period of prevention or delay as much as possible.
18.4 Definition
The expression "force majeure" shall mean and include a happening or
event beyond a Party's reasonable control in consequence of which it
cannot execute or cannot reasonably be required to execute its
obligations. Such circumstances include but are not restricted to: acts
of God, war, civil war, insurrection, flood, strikes, epidemics,
governmental regulations, freight embargoes, non-availability of any
permits, licenses and/or authorizations required unless such
non-availability is attributable to the Party claiming the force
majeure.
Local strikes in facilities controlled by the Parties shall not be
considered force majeure.
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ARTICLE 19
MISCELLANEOUS
19.1 Entire Agreement
It is understood and agreed that this Agreement and the attached
Schedules contain the entire understanding between the Parties relating
to the subject matter and that any representation, promise, or
condition not contained in this Agreement shall not be binding on
either Party, unless otherwise agreed and confirmed in writing;
provided, however, that this Agreement shall not in any way affect or
supersede the Parties' obligations under the Amended and Restated
Supply Agreement dated November 6, 1998 and the Termination Agreement
dated April 29, 1999.
19.2 Non-applicability of Standard Terms and Conditions
The terms and conditions contained in this Agreement and the attached
Schedules shall take precedence over any standard terms and conditions
which appear on any documents previously or subsequently issued by
PHILIPS or INTERMAGNETICS under or with reference to this Agreement
inclusive of any Purchase Order or any documents incorporated by
reference, unless such document is signed by both Parties and
explicitly states that it is a modification of this Agreement.
19.3 Assignment
This Agreement shall be binding on the Parties hereto and their
successors and assigns, provided, however, that this Agreement may not
be assigned, transferred or hypothecated by either Party, in whole or
in part, directly or indirectly, without the prior written consent of
the other Party and provided further that either Party is entitled to
assign its rights (but not its obligations) under this Agreement in
part or in whole to any of its Associated Companies without the other
Party's consent.
19.4 Waiver
No failure by either Party to insist upon strict compliance by the
other Party with any of the terms, provisions or conditions of this
Agreement in any instance shall be construed as a waiver or
relinquishment by either Party of the other Party's rights to insist
upon strict compliance in the future.
19.5 Notices
Notices, consents, approvals and other communications from one Party to
the other pursuant to this Agreement shall be deemed to have been
sufficiently given if sent by registered airmail, or, by telefax or
telex confirmed the same day by registered airmail, and addressed as
specified below, or, addressed in such other manner as previously
notified in writing by the addressee. All communications shall be
deemed to have arrived, in the case of a communication by registered
airmail only as of the 6th (sixth) day following posting, and, in the
case of a communication by telefax or telex confirmed by registered
airmail, as of the business day following the day the telefax or telex
is dispatched.
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Communications to PHILIPS shall be addressed as follows:
(by mail) : PHILIPS Medical Systems Nederland B.V.
f.a.o. General Counsel PMS
Veenpluis 6
P.O. Box 10000
5680 DA Best
The Netherlands
(by telefax) : x00-00-0000000
with a copy to Purchasing Department MR
Communications to INTERMAGNETICS shall be addressed as follows to:
(by mail) : V.P. and General Manager, Magnet Business Group
Intermagnetics General Corporation
000 Xxx Xxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, Xxx Xxxx 00000-0000
X.X.X.
(by telefax) : + 0-000-000-0000
with a copy to Intermagnetics' Finance Department
19.6 Modification of Agreement
This Agreement may not be modified or amended except by a writing
signed by the authorized representatives of the Parties which shall be
attached to this Agreement.
19.7 Consent
Whenever under this Agreement a Party's consent, permission, agreement,
acceptance, satisfaction or approval is required, it shall not be
unreasonably or arbitrarily withheld or delayed.
19.8 Applicable Law and Settlement of Disputes
This Agreement shall be governed by, and the rights of the Parties
shall be determined under, the laws of the State of New York, not
including New York rules of conflicts of laws or private international
law that may refer to the law of another jurisdiction as the applicable
governing law.
The Parties agree to endeavor to identify in advance issues that could
generate controversies or disputes, in order to permit their early
resolution by friendly negotiations, and to use their best efforts to
negotiate in good faith, for a period of sixty (60) days or such other
period as shall be mutually agreed upon by them, to resolve all such
controversies or disputes in an amicable manner. All disputes arising
out of or in connection with the interpretation or execution of this
Agreement during its life or thereafter shall be finally settled by
arbitration in New York City, New York, USA, accordingly to the Rules
of Conciliation and Arbitration of the International Chamber of
Commerce by three (3) arbitrators in accordance with the Rules. The
language of the arbitration shall be English. The award of the Court of
Arbitration shall be final and binding and may be enforced in any court
of competent jurisdiction.
19.9 Headings
Headings in this Agreement are included for convenience of reference
only and shall not constitute a part of this Agreement for any other
purpose.
19.10 Publicity
Neither INTERMAGNETICS nor PHILIPS shall, without the prior written
consent of the other Party, (a) make any news release or public
announcement or communication, relating to this Agreement or its
subject matter, nor (b) in any manner advertise or publish the fact
that Parties entered into this Agreement, except as required by law.
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The written consent of the other Party is requested in cases (a) and
(b) not only as regards the content of any public announcement,
communication, advertisement or publication ("the Communication"), but
also as regards the medium used for each Communication, the frequency
of each Communication and the context in which each Communication is
used.
For the disclosure of information subject to the provisions of Article
13 (Confidentiality), the Parties shall coordinate their respective
public communication. For this purpose, each party shall be provided
with any proposed public communication of such confidential information
by the other party and the chief executive officer of the receiving
party shall agree or reject such proposal within ten (10) days from
such provision.
In case such public communication is required by law, each party (i)
shall use its best efforts to maintain the confidentiality of the
information referred to in this Article 19.10 and of any other
Confidential Information, e.g. by asserting any applicable privileges,
and shall, immediately after gaining knowledge of or receiving an
official requirement or request by any regulatory agency (e.g., the
Securities and Exchange Commission) or a notice of an administrative or
judicial action, notify the other party thereof and give it the
opportunity to seek any other legal remedies so as to maintain in
confidence the information referred to in this Article 19.10 and any
other Confidential Information, and (ii) shall in any way limit the
public communication required under (i) to the information strictly
required.
19.11 Trademarks
PHILIPS herewith grants INTERMAGNETICS the right to use the following
trademarks: (a) the word xxxx "Philips" and Philips' Shield Emblem and
(b) such other trademark(s) as may be designated at any time by PHILIPS
on the Products during the Term, if INTERMAGNETICS strictly adheres to
the instructions of PHILIPS laid down in a Schedule to a Supply
Agreement.
INTERMAGNETICS acknowledges all rights of PHILIPS in and to the said
trademarks and further agrees that the design, development, manufacture
and supply of Product(s), Spare Part(s), and packing, if any, bearing
such trademarks shall not be construed as a grant of any rights in such
trademarks or as the use of such trademarks, either on or relating to
INTERMAGNETICS' products, in INTERMAGNETICS' sales literature or other
publications, or otherwise, by or for the benefit of INTERMAGNETICS
without PHILIPS' prior written consent.
19.12 Severability
If any of the provisions of this Agreement are held to be void or
unenforceable by or as a result of a determination of an arbitrator or
judicial authority having competent jurisdiction, the decision of which
is binding upon the Parties with respect to one or more of the
countries to which this Agreement applies, the Parties agree that such
determination shall not result in the nullity or unenforceability of
the remaining portions of this Agreement in such country(ies). The
Parties further agree to replace such void or unenforceable provisions
of this Agreement with respect such country(ies) by valid and
enforceable provisions which will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable
provisions. The provisions so determined to be void or unenforceable
shall, however, remain in full force and effect with respect to all
other countries to which this Agreement applies.
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IN WITNESS WHEREOF the parties have caused this Agreement to be signed by their
authorized representatives:
INTERMAGNETICS GENERAL PHILIPS MEDICAL SYSTEMS
CORPORATION NEDERLAND B.V.
Signature /s/ Xxxxx X. Xxxxxxx Signature /s/ Xxxxxxx Xxxxxx
------------------------------------- ----------------------
Xxxxx X. Xxxxxxx Xx Xxxxxxx Xxxxxxx
Chairman and Chief Executive Officer CEO Business Group DIS
Date: 5 April 2004
Date: _____
INTERMAGNETICS GENERAL PHILIPS MEDICAL SYSTEMS
CORPORATION NEDERLAND B.V.
Signature: /s/ Xxx Xxxxxxx Signature: /s/ Xx. X.X. xxx Xxxxx
------------------------------------- -------------------------
Xxx Xxxxxxx Xx X.X. xxx Xxxxx
President, MRI Sector Senior V.P.
BU Magnetic Resonance
Date: 5 April 2004 Date: 27 April 2004
------------ -------------
INTERMAGNETICS GENERAL PHILIPS MEDICAL SYSTEMS
CORPORATION NEDERLAND B.V.
Signature: /s/ Xxxxx Xxxxxx Signature: /s/ Xxxx Xxxxx
------------------------------------- -----------------
Xxxxx Xxxxxx Xxxx Xxxxx
Marketing Director, MRI Sector Purchasing Manager
PMG Magnetic Resonance
Date: 5 April 2004 Date: 26 April 2004
------------ -------------
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