Exhibit 10.31
Revision: 11/2/98
HSM AFTER-MARKET SUPPLY AGREEMENT
THIS HSM AFTER-MARKET SUPPLY AGREEMENT, effective this _____ day of __________,
1998, by and between BAYER CORPORATION, an Indiana corporation, acting through
its Diagnostics Division, having its principal place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as "Bayer"); and
INTELLIGENT MEDICAL IMAGING INC., a Delaware corporation having its principal
place of business at 0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 000, Xxxx Xxxxx Xxxxxxx,
Xxxxxxx 00000 (hereinafter referred to as "IMI").
WITNESSETH
WHEREAS, IMI possesses certain know-how, expertise and technology relating to
the design, development, construction, manufacture and operation of automated
slide maker and slide stainer instruments, accessories and After-market Supplies
for use in or with automated slidemaker and slide stainer instruments
(hereinafter referred to as "IMI HSM Technology");
WHEREAS, pursuant to that certain License Agreement dated ___________ 1998 (the
"License Agreement") IMI authorized Bayer, utilizing IMI HSM Technology, to
make, have made, use, sell and service the HSM Automated Slide Maker/Stainer
with or without the IMI small sample handler incorporating certain future
modifications and improvements by IMI and/or Bayer (hereafter the "HSM
Instrument") for sale, lease or rent to third parties including end-users;
WHEREAS Bayer is a world wide manufacturer and supplier of hematology,
immunology and clinical chemistry analyzers, diagnostics, consumables and spare
part therefor;
WHEREAS, IMI and Bayer have entered into a separate HSM Instrument Supply
Agreement (the "HSM Instrument Supply Agreement") on the date hereof, pursuant
to which, among other things, Bayer has granted certain rights to IMI for the
purchase from Bayer and marketing of the HSM Instrument and the Bayer Auto
Sampler, and IMI has granted certain rights to Bayer for the purchase from IMI
and marketing of the IMI Small Sample Handler;
WHEREAS, Bayer wishes and has agreed to purchase, and Bayer wishes and has
agreed to offer and recommend to its customers who purchase HSM Instruments the
opportunity to purchase, from Bayer IMI's After-market Supplies to be used in
connection with the use and operation of HSM Instruments, including without
limitation reagents and disposables such as slides, labels, needles, tube caps,
rinse solutions, smearing blades, wiping gauze, as set forth in Appendix A.
("IMI After-market Supplies");
NOW THEREFORE, in consideration of the mutual undertakings contained herein and
other good and valuable consideration, as set forth below, the receipt and
sufficiency of which are hereby acknowledged, IMI and Bayer agree as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean, with respect to a party, an entity which,
directly or indirectly, majority owned by, or is under common majority
ownership with, that party. For purposes hereof, a partnership shall
be deemed an affiliate if Bayer is the managing partner or is a
general partner and has an active and significant economic interest
therein.
1.2 With respect to IMI After-market Supplies manufactured by IMI or its
designees, the "Manufacturing Party" shall mean either IMI or its
designated third party contractor who shall be bound by the
responsibilities contained herein by separate agreement, but IMI shall
have overall responsibility for compliance with the terms and
conditions hereto applicable to any such Manufacturing Party.
It is understood that IMI may acquire IMI After-market Supplies from
third party manufacturers, wholesalers, or distributors other than
such third party contractors or Manufacturing Parties.
1.3 The "Purchasing Party" shall mean Bayer and/or its worldwide
Affiliates with respect to the IMI After-market Supplies purchased
under the terms of this Agreement.
2. Grant of Supply and Purchasing Rights and Obligations
2.1 IMI Supply Rights and Bayer Purchase Obligations.
2.1.1 In connection with the manufacture and sale of HSM Instruments
by Bayer to IMI or to any other party including end user
customers of Bayer, Bayer and IMI hereby agree to the following
covenants and grant certain supply rights to IMI for sourcing the
IMI After-market Supplies as follows:
(a) IMI shall have the right to source all IMI After-market
Supplies set forth in Appendix A, and as amended from time
to time by mutual agreement, required for use and operation
of the HSM Instrument, Bayer Auto Sampler (collectively the
"HSM Products"). IMI will source IMI After-market Supplies
for the HSM Products purchased by IMI from Bayer and for HSM
Instruments manufactured and used, sold, leased or rented
and serviced by Bayer;
(b) Bayer hereby agrees to purchase all of such IMI After-market
Supplies set forth in Appendix A, as same may be amended by
mutual written agreement, from IMI with respect to supplies
Bayer needs to operate HSM Products which Bayer uses,
After-market Supplies and to recommend them to its end-user
customers or distributors provided same are, and continue to
be, competitively priced in accordance with the stipulations
set forth in Appendix C, utilize technology as to
performance, specificity, shelf life stability and other
demands of the then current marketplace and are available as
per this Agreement.
(c) Bayer will apply the same policies (including without
limitation, policies limiting warranties) to its customers
who purchase the HSM Products relating to the purchase and
use of IMI After-market Supplies, which policies Bayer would
apply with respect to an instrument manufactured and sold by
Bayer (other than the HSM Instrument or Bayer Auto Sampler)
for which Bayer sourced the consumable and disposable
After-market Supplies needed in the operation and use of
such instruments manufactured and sold by Bayer.
2.1.2 IMI will source HSM IMI After-market Supplies for the HSM
Instruments purchased by IMI from Bayer and for HSM
Instruments manufactured and used, sold, leased or rented
and serviced by Bayer.
2.2 Bayer Non-exclusive Purchasing and Marketing Rights
2.2.1 IMI hereby grants Bayer and its worldwide Affiliates the
right to purchase and market IMI sourced After-market
Supplies, the specifications for which are set forth in
Xxxxxxxx X-0, attached hereto and made a part hereof.
2.2.2 IMI agrees to price the IMI After-market Supplies in
accordance with Appendix C
2.3.Additional Bayer Purchase Rights
2.3.1 It is understood and agreed that purchases under this
Agreement, and in furtherance thereof, may be made directly
from IMI by Bayer's parent, Affiliate and subsidiary
companies and the provisions contained herein shall be
equally applicable to said purchases.
2.3.2 It is understood and agreed that Bayer, its parent,
affiliate and subsidiary companies may purchase non-IMI
After-market Supplies (those supplies that do not appear on
Appendix A) sought by Bayer's end-user customers from
whomsoever it or they may choose, however, Bayer agrees to
negotiate to enable IMI to purchase same from such parties
at the same price Bayer pays for IMI's own use.
3. Manufacturing Responsibilities
3.1 Manufactured Products.
IMI will manufacture the IMI After-market Supplies not purchased from
third parties, if any, or have manufactured by third parties to the
manufacturing specification of IMI and Bayer, as have jointly been
agreed, as set forth in Xxxxxxxx X-0, as amended by mutual agreement
from time to time, attached hereto and made a part hereof. If
applicable, IMI also agrees to have compliance with these
specifications monitored by Bayer's manufacturing group. The IMI
After-market Supplies purchased by Bayer or its customers will be
manufactured by IMI or its designee from said party's raw materials
and shall include thereon a Bayer label, part number and outer design
and color in the form of Appendix B, to be attached hereto and made a
part hereof within sixty (60) days of the effective date hereof.
3.2 IMI's Right to Grant Rights to Third Parties
Bayer acknowledges and agrees that IMI may, at any time, grant
purchase, sale, lease, rental, servicing and distribution rights with
respect to the IMI After-market Supplies to any other party, including
Xxxxxxx-Xxxxxxx Corporation.
4. Purchase and Supply of Products
4.1 During the term of this Agreement, IMI will supply to Bayer and/or to
its customers and Bayer or its customers will purchase from IMI the
quantities of products, as applicable, as set forth in confirmed
purchase orders pursuant to Section 5, meeting the specifications set
forth in Appendix A, for such product in accordance with pricing set
as per Appendix C.
4.2 Bayer will provide to IMI one (1) year non-binding rolling forecasts
to be updated on a quarterly basis. Attached as Appendix D is Bayer's
forecast covering the first year of this Agreement. IMI will use its
best efforts to meet the Purchasing Party's forecasted requirements.
If IMI at any time after receipt of a forecast, or of a purchase order
sent by a Purchasing Party pursuant to Section 4.4 below, becomes
aware of any potential difficulties in supplying the quantities of
products stated, IMI will immediately advise the Purchasing Party in
writing.
4.3 IMI will retain its rights to source the IMI After-market Supplies for
all HSM Products made, used, sold, rented, leased, or serviced by
Bayer provided IMI continues to provide such After-market Supplies to
paying customers in reasonable quantities and within a reasonable
period of time after receipt of purchase orders, as required for the
continued normal operation of the HSM Products by end-user customers,
and the conditions of Appendix C are adhered to. If particular
after-market supplies are contained on Appendix A but a documented
better product is available, i.e. a better stain, IMI shall have a
period of no greater than ninety (90) days, unless otherwise mutually
agreed upon, from written notice from Bayer, to add same to Appendix A
or Bayer may source, and will use its reasonable best efforts to
obtain the right for IMI to use or distribute, such supplies, as well,
for its own customers.
4.4 Shipments
IMI's shipments of products to Bayer or its customers will be based on
the following:
(i) Binding purchase orders for the products required in accordance
with the Manufacturing Party's stated lead time of ninety (90)
days. Purchase orders faxed to a Manufacturing Party shall
promptly be confirmed by such Manufacturing Party in accordance
with Article 5 hereof.
(ii) In the event of an unforecasted increase in demand, a
Manufacturing Party will use its best efforts to meet these
increased requirements.
(iii)All products purchased by the Purchasing Party shall be shipped
by the Manufacturing Party F.O.B. the Manufacturing Party's
manufacturing facility to any Purchasing Party facility, not to
exceed four (4) worldwide locations, or to any Bayer customer
location, and in such manner as specified by the Purchasing Party
or customer in each purchase order.
4.5 Prior to any change by IMI or any IMI designated third party
contractor in raw material specifications, in formulating and/or in
manufacturing of the IMI After-market Supplies, IMI will notify Bayer
in writing at least ninety (90) days in advance, except in cases of
emergency, which will be as soon as practical, of any such changes
with supporting data demonstrating no change in the performance,
reliability or safety of the products. IMI reserves the right to make
changes in vendors or suppliers of raw material or actual After-market
Supplies provided such changes do not alter performance, reliability,
or safety of the products determined by the specification or
compliance with governmental regulations including but not limited to
Ozone Depleting Chemicals (ODCs) pollutants, etc. IMI will notify
Bayer in writing at least thirty (30) days in advance, except in cases
of emergency, which will be as soon as practical, of any and all such
changes in vendors or suppliers of raw materials, and will provide
with such notification written data disclosing the suggested changes
and their effects on the products or any reagents incorporating the
same and Bayer shall have thirty (30) days to provide written consent
thereto, otherwise Bayer may continue to order the prior configuration
for a period not to exceed one (1) year.
4.6 The Purchasing Party may conduct periodic on site Quality Assurance
audits of the Manufacturing Party's or its designee's facilities
normally used in the production of the products in each case during
normal business hours, provided the Purchasing Party gives the
Manufacturing Party written advance notice not less than forty-eight
(48) hours before the beginning of any such audit.
4.7 Packing
All products shall be packed by the Manufacturing Party in suitable
containers for protection in shipment and storage. Packaging shall
conform to the requirements of the Packaging Specification attached
hereto as Appendix E and made a part hereof. Loss or damage discovered
within twenty (20) days of delivery which is determined to be due to
non-compliance with the Packaging Specification shall be for the
Manufacturing Party's account.
4.8 IMI After-market Supplies, Including Reagents and Stains
(i) IMI represents that it has or will obtain the production and
delivery capability by itself and/or through other vendors to
supply Bayer and its customers with appropriate kinds and amounts
of After-market Supplies, including reagents and stains to permit
continued operation of the HSM Product instruments provided
purchase orders with reasonable delivery dates and agreed prices
are presented to IMI. The Purchasing Party shall have the right
to make inspections of IMI suppliers to insure the foregoing on
reasonable notice and during reasonable business hours.
(ii) IMI further agrees that After-market Supplies, including reagents
and stains will continue to be furnished to Bayer and its
customers, in accordance with the pricing provisions of this
Agreement, for a period of seven (7) years following the sale of
the last HSM Instrument sold by Bayer. If at any time during the
term of this Agreement, any extension thereof or during the seven
(7) year period following the sale of the last HSM Instrument
sold by Bayer, IMI fails to deliver IMI After-market Supplies
(owned or manufactured by IMI), including reagents and stains as
agreed herein, Bayer shall automatically be licensed to
manufacture the same or have such IMI After-market Supplies
(owned or manufactured by IMI) made for it. IMI shall furnish
Bayer pursuant to Section 8 with all formulas, vendors' lists,
know-how and any other information and documentation required to
permit Bayer or its subcontractor to manufacture said IMI
After-market Supplies, including reagents and/or stains for the
period during which IMI was obligated but was unable to supply
such IMI After-market Supplies hereunder.
5. Purchase Orders
The Purchasing Party and its customers may place their order for IMI
After-market supplies on purchase order forms which are substantially the
same as the respective purchase orders attached hereto as Appendix F. The
terms and conditions printed on the reverse of such purchase orders are
incorporated herein by reference except where they are in conflict with the
terms of this Agreement, in which case the terms of this Agreement shall
prevail; provided that if the parties agree in writing to modified terms of
a purchase order, the modified terms shall prevail. The Manufacturing Party
shall acknowledge and confirm within seven (7) days of receipt all purchase
orders in a signed writing or by facsimile transmission back to the
Purchasing Party or its customers, as applicable.
6. Warranty
6.1 Title
The Manufacturing Party warrants that all products delivered hereunder
shall be free and clear of any and all liens, encumbrances or defects
in title, and the Manufacturing Party has no actual knowledge or
information indicating that any of the products to be supplied
hereunder infringes or may infringe in any respect upon patents, trade
secrets, intellectual property or other proprietary right owned by
other persons or entities. The Manufacturing Party has made a complete
disclosure to the Purchasing Party of all information relevant to this
issue and agrees, during the life of this Agreement, to bring any such
information to the Purchasing Party's attention promptly after first
becoming known to the Manufacturing Party.
6.2 Specifications, Defects and Product Recalls
The Manufacturing Party warrants that the products delivered hereunder
will (1) be free of defects in materials, design and workmanship, (2)
meet the specifications referred to in Appendix A, and (3) will comply
with all applicable warranties contained in the Appendices hereto.
Time periods of such warranties are governed by date of receipt. The
Manufacturing Party's sole responsibility shall be to repair or
replace at the Manufacturing Party's sole option.
As to any such defect, about which the Purchasing Party shall promptly
provide the Manufacturing Party with written notice, the Manufacturing
Party shall be relieved of all obligations of liability under this
warranty if the product is operated or used not in accordance with the
approved final specifications, or is operated with any fluid or
material not jointly approved by the Manufacturing Party and the
Purchasing Party, or is not operated or maintained in accordance with
the instructions furnished under this Agreement, or if the product is
altered or modified by an unauthorized person, provided that any of
the foregoing is the cause of the defect.
The Purchasing Party will promptly (within forty-eight (48) hours)
forward to the Manufacturing Party any and all verified complaints
received from its customers regarding the products. The Manufacturing
Party will promptly provide the Purchasing Party with copies of all
complaints received by it regarding the products. The Manufacturing
Party will promptly provide the Purchasing Party with copies of all
complaints received by it regarding the IMI After-market Supplies or
substantially identical products the Manufacturing Party sells. The
Manufacturing Party and the Purchasing Party will cooperate in
investigating all customer complaints in accordance with FDA
regulations as prescribed in 21 CFR 820 (cGMP), Quality System
Regulations (QSRs), and with applicable international standards such
as ISO 9000 (EN 46000). The Manufacturing Party at its expense shall
cooperate fully with the Purchasing Party concerning Product recalls
and Medical Device Reporting (MDR) requirements in accordance with
this Section 6.2.
In the event of a recall products withdrawal, market withdrawal or any
such products corrective action caused by any of the products to be
delivered to the Purchasing Party hereunder, the Manufacturing Party
shall provide replacement products at its expense for those products
being recalled or withdrawn.
The Manufacturing Party shall provide the Purchasing Party with
written notice as soon as possible after the discovery by it of any
matter affecting either the products being delivered to the Purchasing
Party hereunder or a similar product that might be construed as a
safety or performance problem, might cause any FDA or similar
governmental action, or might adversely affect the marketing of any of
the products to be delivered by the Manufacturing Party to the
Purchasing Party hereunder. The Purchasing Party shall provide the
Manufacturing Party notice of any recall affecting any product to
enable the Manufacturing Party to consider any corrective actions for
any of the products being delivered to the Purchasing Party hereunder.
6.3 Controlled Substances.
The Manufacturing Party warrants that none of the IMI After-market
Supplies provided to the Purchasing Party under this Agreement, will
contain or be manufactured with a controlled substance (i.e., a Class
I or Class II ozone-depleting substance as such terms are defined by
the Environmental Protection Agency in 40 CFR Part 82).
6.4 THE EXPRESSED WARRANTIES STATED OR PROVIDED FOR ABOVE (INCLUDING THEIR
LIMITATIONS) ARE THE ONLY WARRANTIES MADE BY THE MANUFACTURING PARTY
AND ARE IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED.
THE MANUFACTURING PARTY MAKES NO OTHER EXPRESS OF IMPLIED WARRANTIES
WHATSOEVER WITH RESPECT TO THE PRODUCTS, INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
7. Prices
The prices for the HSM IMI After-market Supplies indicated in Attachment C
shall continue in effect for one (1) year from the effective date of this
Agreement, except to the extent prices are increased during that time by
vendors and suppliers of the IMI After-market Supplies to IMI which affect
IMI's ASP and IMI shall provide Bayer at least ninety (90) days prior
written notice of any such increase and proof thereof.
Prices during the term of the Agreement and any renewals thereof shall be
those in effect as of the date of a firm purchase order from the Purchasing
Party and not the date of delivery.
8. Inability to Supply
If at anytime and for any reason the Manufacturing Party is unable for
three successive months to produce and supply products of the quantity and
quality required herein, the Purchasing Party and the Manufacturing party
will cooperate in good faith to resolve the difficulty to both parties'
mutual satisfaction or if unable; to use documentation in order to make or
have made by a third party (selected by the Manufacturing Party and
approved by the Purchasing Party) the product involved. All costs to
establish alternative manufacturing will be borne by the Manufacturing
Party.
9. Term of Agreement
This Agreement shall be effective for a term of the earlier of five (5)
years from the first commercial sale of the Bayer manufactured and labeled
version of the HSM Instrument or three (3) years from the commercial sale
of 200 HSM Instruments manufactured by Bayer and shall continue in effect
thereafter for a maximum of five (5) successive one (1) year terms unless
terminated by either party on written notice to the other at least one
hundred and eighty (180) days prior to the expiration of the initial term
or one hundred and eighty (180) days prior to any renewal termination date
subsequent to the expiration of the initial term of this Agreement.
10. Product Liability Insurance
IMI shall maintain, for the term of this Agreement, policies of general
liability insurance with contractual and product liability coverages, with
aggregate minimum limits of One Million Dollars ($1,000,000) per occurrence
with Bayer named as an additional insured thereunder with respect only to
those products IMI manufactures or has manufactured for it and sells to
Bayer under this Agreement. IMI will furnish to Bayer a certificate of
insurance, which certificate shall evidence the foregoing coverage and
limits and the insurer's agreement to notify Bayer in writing of any
proposed cancellation of such policies at least thirty (30) days before any
such cancellation is to be effective.
11. Limitation of Damages
Except as provided in Article 15, "Patent Indemnification" below in no
other event, whether as a result of a breach of this Agreement, breach of
warranty, alleged negligence or otherwise, shall either party be liable for
special, indirect, punitive or consequential damages. In the event of a
patent infringement suit, in no event shall IMI be liable for the lost
profits of Bayer.
12. Governmental Requirements
The Manufacturing Party shall make its reasonable best efforts (a) to
obtain in cooperation with the Purchasing Party all necessary United States
governmental approvals and (b) to meet all United States governmental
requirements in order to market the products. The Manufacturing Party will
provide the Purchasing Party with such information and performance data
concerning the products as is necessary to obtain such approvals and meet
such requirements. The Purchasing Party may audit the manufacturing and
quality control procedures and records of the Manufacturing Party
pertaining to the products at any time during normal business hours and as
often as necessary during the initial term of this Agreement, and any
extension thereof, to determine the Manufacturing Party's compliance with
provisions of the Federal Food, Drug and Cosmetic Act (FDA), Department of
Transportation (DOT), Environmental Protection Agency (EPA) and Clean Air
Act of 1990, and the regulations issued thereunder, or any future
regulations thereunder, pertaining to the product.
The Manufacturing Party will cooperate with the Purchasing Party to obtain
any necessary foreign governmental approvals needed to market the products
in foreign countries, if applicable. The expense of obtaining any and all
such approvals shall be borne by the Purchasing Party.
13. Regulatory Requirements and laboratory Certifications
The Manufacturing Party shall be in compliance with United States' current
Good Manufacturing Practices (cGMP) and the Manufacturing Party shall use
its best efforts to meet the guidelines of the IVD Directive, Waste
Management Directive (Packaging) and Recyclable Material Directive of the
European Community and, if applicable, will obtain CE Xxxx approval, but in
any event will meet regulatory requirements to legally export products to
the European community, and agrees to supply FDA and cGMP as supplemented
by the Quality System Regulation ("QSR") and, if applicable, International
Organization for Standardization (ISO) 9000 Series compliance information
to the Purchasing Party and to answer the Purchasing Party's specific
quality assurance questions as soon as reasonably possible. The
Manufacturing Party represents that it is in compliance with all applicable
current FDA, and QSR requirements and agrees to make such adjustments as
may be reasonably required to maintain such compliance. The Manufacturing
Party will also provide the Purchasing Party with any information which it
has and which is not otherwise available to the Purchasing Party that may
be reasonable required by the FDA or any other U.S. or non-U.S.
governmental regulatory agency.
The Manufacturing Party represents that, if necessary, its products are or
will be approved by Canadian CSA and European Community ("EC") authorities.
The Manufacturing Party, if necessary, at its expense, shall maintain such
approvals and will implement such changes as necessary to meet or continue
to meet the requirements of XXX, XX, (XXX 0000 and IEC 1010) standards.
14. Proprietary Information
14.1 Definition
During the term of this Agreement and for three (3) years thereafter,
all technical, manufacturing, maintenance, installation, marketing or
other information of IMI or Bayer or its Affiliates which is marked
proprietary or confidential and made available by one party to the
other pursuant to this Agreement shall be held in confidence by the
other party and shall not be disclosed by it to third parties, or used
by it, except pursuant to this Agreement. The parties agree to take
all steps reasonably appropriate under the circumstances to protect
such information. The protection afforded hereunder to information
disclosed pursuant to this Agreement shall be in addition to, and
shall not act as a waiver of, the rights and protection afforded under
applicable patent, copyright and trademark laws and each party shall
continue to enjoy the protection thereunder, both during and after the
expiration of the three (3) year period provided above.
14.2 Nothing in this Article 14 shall be construed to impose a
confidentiality obligation on a party or its Affiliates in connection
with any information to the extent such information (i) is at the time
of disclosure already known to the receiving party (as clearly
established by such party's records); (ii) is at the time of
disclosure or subsequently becomes part of the public domain through
no fault or act of omission by the receiving party; is subsequently
disclosed to the receiving party by a third party whose receipt and
disclosure of such information does not constitute a violation of any
confidentiality obligation; or (iv) is independently developed by the
receiving party.
14.3 Continuing Rights for Service
In the event of expiration or termination of this Agreement by either
party for any reason, the Purchasing Party may retain and use in
perpetuity any confidential or proprietary information necessary in
order to service the products which the Purchasing Party has in
inventory or has sold, leased or rented.
15. Patent Indemnification.
15.1 The Manufacturing Party shall defend, indemnify and save wholly
harmless, the Purchasing Party, its Affiliates, along with its
successors, assigns and customers, from any losses, claims, suits,
including, but not limited to, costs, legal fees, disbursements,
reasonable out-of-pocket expenses and damages finally awarded arising
from or related to any claims alleging infringement of any claim or
claims of any United States Letters Patent of a third party, and which
suit or claim arises out of the use, sale, rental and/or leasing of
any of the products, in the form and for use in the manner originally
intended, by the Purchasing Party or any of its customers.
In the event that such suit or claim is filed by a third party against
the Purchasing Party, its Affiliates or any of its customers, as
described above, the Purchasing party shall notify the Manufacturing
Party within ten (10) days of being advised of the filing of such suit
or claim. Within ten (10) days of being advised of the filing of such
suit or claim, the Manufacturing Party will elect whether to defend
such suit or claim itself or to transfer the defense to the Purchasing
Party, and shall promptly notify the Purchasing Party of its election.
The Manufacturing Party shall have the primary responsibility, at its
costs and expenses, to defend the Purchasing Party and any of its
customers against such suit or claim. If the Manufacturing Party
elects to defend the suit or claim itself, the Purchasing Party may be
represented by advisory counsel, at its own expense, but all decisions
regarding the defense of the suit or claim shall be at the sole
discretion of the Manufacturing Party. If the Manufacturing Party
elects not to defend the suit or claim itself, the Purchasing Party
may undertake its own defense or the defense of any of its customers,
as the case may be, and all decisions regarding any such defense shall
be at the sole discretion of the Purchasing Party and, further, any
and all reasonable costs, legal fees, disbursements and expenses
incurred by the Purchasing Party shall be reimbursed by the
Manufacturing Party, who shall also be liable in any judgment or
damages levied against the Purchasing Party or any of its customers.
Furthermore, the Manufacturing Party shall provide all reasonable
assistance requested by the Purchasing Party for the defense of any
such suit or claim.
Any settlement of such suit or claim brought by a third party, whether
being defended by the Manufacturing Party or the Purchasing Party
shall be mutually agreed upon by the Manufacturing Party and the
Purchasing Party, which agreement shall not be unreasonably withheld.
The Manufacturing Party will be liable for all costs and expenses
incurred by the Purchasing Party, as well as its own costs and
expenses, in respect of any such settlement and, also, for any given
to the third party in consideration of settlement.
In the event that manufacture, use or selling of any products provided
hereunder is enjoined, or in the Manufacturing Party's opinion, is
likely to become the subject of such claim of infringement, the
Manufacturing Party will, at its sole expense, either procure for the
Purchasing Party the right to continue manufacture, if applicable, use
and marketing of the products, or will replace or modify the same so
that it is comparable and non-infringing. If the foregoing has not
been effected during the filing of any infringement suit by a third
party against the Purchasing Party or any of its customers, (i) the
obligations of either party under this Agreement with respect to such
enjoined products may, in either party's sole discretion, be suspended
and the Agreement will be extended for a like period following either
conclusion or settlement of the third party suit or removal of the
impediments as provided above; and (ii) in the event of a permanent
injunction against the Purchasing Party for making, using or selling
and the Manufacturing Party cannot cure such situation as provided
above, the Purchasing Party in its sole discretion, may terminate this
Agreement with respect to such enjoined products, along with any and
all obligations it then has to purchase such enjoined products
hereunder and may cancel any outstanding purchase orders placed with
the Manufacturing Party with respect to such enjoined products.
In the event of (ii), the Manufacturing Party will repurchase from the
Purchasing Party all of such enjoined products which the Purchasing
Party has in its inventory and which were purchased from the
Manufacturing Party under this Agreement, and the Manufacturing Party
shall pay to the Purchasing Party the same purchase price as was paid
by the Purchasing Party to the Manufacturing Party for such enjoined
products, plus cost of freight.
The obligations of the Manufacturing Party under this Article shall
expire eighteen (18) months from the date of termination of this
Agreement.
15.2 The Purchasing Party will defend, indemnify and hold harmless the
Manufacturing Party, and its Affiliates from any and all claims,
liabilities, damages and out-of-pocket expenses arising out of any and
all claims, and will pay all costs or damages finally awarded in,
and/or any settlements of, any proceedings with respect to any claims
arising from the use and operation of its other products, except to
the extent that the claim arises with respect to products manufactured
by the Manufacturing Party.
16. Quality Control
16.1 Procedures.
The Manufacturing Party has thirty (30) calendar days, after
acceptance of this Agreement, to assure the Purchasing Party, in its
sole judgment, that the Manufacturing Party's Quality Control, Process
Control, Material Control and Design and Manufacturing Documentation
Control systems, procedures and policies are in conformance with the,
QSR requirements of the U.S. Government Food and Drug Administration,
of November, 1996, effective June 1, 1997 and 1998,, as amended. The
Purchasing Party will not accept any products or spares not provided
in accordance with those requirements. The Manufacturing Party's
conformance to such QSRs shall be subjected to the review and
reasonable acceptance of the Purchasing Party prior to the acceptance
of any material for delivery to these system procedures and policies
to assure continuous product integrity and conformance to QSRs.
16.2 Source Inspection.
The Purchasing Party may, at its option, inspect on an annual basis on
thirty (30) days notice any and all products at the Manufacturing
Party's site prior to shipment by the Manufacturing Party to insure
conformity with Appendix A. The Manufacturing Party shall provide the
Purchasing Party with at least five (5) work days prior notification
as to the availability of material to be inspected. Such inspection
shall include the right of access to the Manufacturing Party's
design/manufacturing documentation, process records, inspection
records, test records, etc. The Purchasing Party's source inspection
activities shall include the right to require the Manufacturing Party
to rerun product tests using ANSI accepted sampling techniques to
demonstrate acceptability to product specifications or the
Manufacturing Party's test procedures. All products delivered in
accordance with this Agreement shall conform and be tested in
accordance with the Manufacturing Party's test documents.
Upon the Purchasing Party's source inspection acceptance of any
product, as provided above, the Purchasing Party inspector shall affix
his acceptance stamp, signature and date to the final test data
documentation and to the shipping documentation. Copies thereof shall
be given to the Purchasing Party's source inspector and the
Manufacturing Party may use its copies for invoice purposes.
If after notice as aforesaid, the Purchasing Party elects not to
conduct a source inspection at the Manufacturing Party's site, the
Manufacturing Party shall, prior to shipment and invoicing, insure
that all products conform with the Manufacturing Party's test
documents and Attachment "A". Upon certification to the Purchasing
Party of such conformance and shipment, the Manufacturing Party may
invoice the Purchasing Party for such products shipped and certified.
16.3 Form, Fit or Function
The Manufacturing Party shall make no design, test or manufacturing
changes, subsequent to acceptance of this Agreement, which affect the
form, fit or function of any deliverable product without first
notifying the Purchasing Party in writing at least ninety (90) days in
advance and receiving written approval for the implementing of such
changes.
17. Payments
The Purchasing Party shall remit payment against the Manufacturing Party's
invoices under this Agreement within thirty-five (35) days after the date
of the invoice and delivery of the product.
18. Documentation
18.1 Documentation
The Manufacturing Party, without charge, will furnish the Purchasing
Party with a complete set of drawings, documents and any revisions
thereof which are necessary for the quality control, testing and
servicing of any of the products hereto.
18.2 Service Manuals
The Purchasing Party will prepare and incorporate a section dealing
with the IMI After-market Supplies into its service, operating and
maintenance manuals at its expense. The Manufacturing Party will
provide all reasonable and necessary assistance to the Purchasing
Party to enable the Purchasing Party to prepare such manuals.
19. Force Majeure
19.1 Failure of either party to perform the terms of this Agreement in
whole or in part shall be excused if such failure is the result of
force majeure and acts of God, including, but not limited to, flood,
wind and lightning, insurrections, riots, war warlike operations,
civil commotion, fires, explosions, accidents, the acts or orders of
any governmental agency, acts of the public enemy, epidemics, and laws
or regulations or restrictions of the governmental entity or of any
agency or instrumentality thereof.
19.2 If performance of this Agreement is excused pursuant to the foregoing
section, the party thus excused shall use reasonable efforts to avoid,
remove and correct the circumstances which caused the failure to
perform, and the party excused from performance shall resume
performance with the utmost dispatch when such circumstances are
avoided, removed or corrected.
19.3 If the circumstances of force majeure last longer than sixty (60)
days, the party which has not declared the force majeure shall have
the right to cancel this Agreement upon thirty (30) days prior written
notice to the other party.
20. Disputes.
The parties covenant and agree in good faith to attempt, for a period of
sixty (60) days, to resolve any disputes which may arise in connection with
this Agreement through negotiation and settlement prior to giving notice of
termination for cause or bringing any legal action against the other party
in connection with this Agreement. The provisions of this Article shall not
apply if the other side refuses to negotiate the dispute in good faith or
if more prompt legal action is required is avoid material loss or damage.
Failure to resolve a dispute by negotiated settlement shall not prejudice
any subsequent legal action with respect thereto.
21. Termination
21.1 After the earlier of the fifth year from the first commercial
availability for sale of the Bayer manufactured and labeled version of
the HSM Instrument or the third year following the sale of 200 HSMs
manufactured by Bayer, either party may terminate this Agreement, for
any reason and without cause, on one hundred eighty (180) days written
notice to the Manufacturing Party. In the event of termination under
this Section, the Purchasing Party shall pay the Manufacturing Party
for any non-cancelable costs actually incurred by the Manufacturing
Party with respect to its manufacture and/or production of that
quantity of products which is the subject of a binding purchase order
placed pursuant to Article 5 but not yet shipped.
21.2 This Agreement may be terminated at any time by Bayer upon sixty (60)
days written notice in the event IMI is to be sold or acquired by a
party which, in Bayer's sole judgment, is unacceptable to Bayer.
21.3 Either party may terminate this Agreement for material breach of any
of its provisions upon sixty (60) days prior written notice to the
other, if during such sixty day notice period the default is not
corrected to the reasonable satisfaction of the non-defaulting party.
In addition, either party may terminate this Agreement by giving the
other party at least thirty (30) days written notice if such other
party has entered into or committed any act of liquidation,
bankruptcy, insolvency, receivership or assignment for the benefit of
creditors, to the extent such act is permitted by law.
21.4 Accrued Rights
Unless as otherwise provided elsewhere in this Agreement, termination
of this Agreement shall be without prejudice to all accrued rights and
remedies and shall not affect the continuing rights and obligations of
the parties under this Agreement. The manufacturing rights granted
under Section 4.8 and Article "8" shall continue during the seven (7)
year period following delivery of the last product or accessory under
this Agreement.
22. Waiver of Performance
A failure of a party hereto at any time to require performance by the other
party hereto of any provision hereof required to be performed by such other
party, will in no way affect the right of the first party to require such
performance at any time thereafter. The waiver of any breach of any
provision hereof will in no way be construed as a waiver of any succeeding
breach of such provision or a waiver of the provision itself.
23. Relationship of the Parties
The relationship of Bayer to IMI under this Agreement is intended to be
that of independent contractors. Nothing contained in this Agreement is
intended or is to be construed so as to constitute Bayer and IMI as
partners or as employer/employee or principal/agent, or the employees or
the agents of any other party hereto. Neither party hereto has any express
or implied right or authority under this Agreement to assume or create any
obligations on behalf of or in the name of the other party hereto or to
bind the other party hereto to any contract, agreement or undertaking with
any third party, other than the successors and permitted assigns of the
respective parties hereto.
24. New York State Law
This Agreement has been made in the State of New York and shall be governed
in all respects by the laws of that State, except to the extent to which
the laws of the United States may be applicable.
25. Assignment
Neither party may directly or indirectly assign or transfer this Agreement,
in whole or in part to any third party without the other party's prior
written consent, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the above, Bayer may assign its rights and
obligations hereunder to a subsidiary or Affiliate or to a purchaser of its
business relating to the products to be manufactured by Bayer without the
prior written consent of IMI. Notwithstanding the above, IMI may assign its
rights and obligations hereunder to a subsidiary or Affiliate or, subject
to Section 21.2, to a purchaser of its business relating to the products to
be manufactured by IMI without the prior written consent of Bayer.
26. Severability
In the event any provision of this Agreement shall be invalid, void,
illegal, or unenforceable, the remaining provisions hereof nevertheless
will continue in full force and effect without being impaired or
invalidated in any way.
27. Further Assurances.
Each party hereto agrees to promptly execute, acknowledge and deliver such
other and further instruments, writings, and documents as may reasonably be
requested in writing by any other party or are necessary (i) to carry out
this Agreement and/or (ii) to its obligations under this Agreement. Each
party agrees to use its reasonable best efforts and to exercise good faith
in fulfilling its obligations under this Agreement.
28. Remedies
In the event of a breach of this Agreement by any party hereto, the
aggrieved party or parties may exercise any legal, equitable or other
rights or remedies to which it is or they are entitled including, without
limitation, the right to obtain injunctive relief or specific performance
with respect to the violation of any provision hereof
29. Notices.
Any notice or other communication required or permitted to be made or to be
given to either party under this Agreement shall be sufficiently made or
given on the date of facsimile transmission or mailing if sent to such
party by certified first class U.S. mail, postage prepaid, or courier
service, addressed to it at its address set forth below, or to such other
address as shall be designed by written notice give to the other party.
If to IMI:
Intelligent Medical Imaging, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: President
Fax: 000-000-0000
With a copy to Xxxxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx Xxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, P.A.
Fax: 000-000-0000
If to Bayer:
Bayer Corporation
Diagnostics Division
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: Head, Laboratory Testing Segment
Fax: 000-000-0000,
With a copy to the Legal Department at that address
Fax: 000-000-0000
30. Compliance with Laws
In the event that compliance with the provisions of this Agreement would
result in a violation of the laws, regulations, or directives of any
country in which the products are, or are to be, made, used or sold, then
the provisions of this Agreement shall be deemed amended to the extent
necessary to comply with the provisions of such laws, regulations or
directives.
31. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
32. Entire Agreement; Modification
This Agreement and the Appendices attached hereto constitute the full and
entire understanding and agreement of the parties hereto with regard to the
subjects hereof, and supersede all prior agreements or understandings,
written or oral, between the parties with respect to the subject hereto.
This Agreement may not be amended except by a written instrument signed by
all of the parties hereto or as provided by Article 26.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the date first above
written.
BAYER CORPORATION, DIAGNOSTICS DIVISION
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Its: Sr. VP, Laboratory Testing
------------------------------------------
INTELLIGENT MEDICAL IMAGING INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------------
Its: President
------------------------------------------
LIST OF APPENDICES and EXHIBITS
APPENDIX A :
A-1 List of IMI After-market Supplies
A-2 Specs for IMI After-market Supplies
APPENDIX B :
Label, Part Number and Outer Design and Color Specifications
To be supplied within 60 days
APPENDIX C :
Pricing Schedule
APPENDIX D :
Bayer's One Year Non-Binding Forecast
APPENDIX E :
Packaging Specifications
APPENDIX F :
Purchase Order Forms of Bayer
IMI Warranties
