Exhibit 10.12
(Certain information has been omitted from this exhibit and filed seperately
with the SEC pursuant to a request for confidential treatment under Rule 24b-2)
SUPPLY AGREEMENT
1. PARTIES: This Agreement is between the Medical Specialties
Department of Minnesota Mining and Manufacturing Company ("3M") and CNS, Inc.
("CNS"). This Agreement only applies to Medical Specialties Department of 3M and
does not bind any other part of 3M unless otherwise agreed to in writing by 3M.
2. PURPOSE: This Agreement authorizes CNS to (a) purchase the 3M
products listed in Exhibit A ("Products") or (b) exclusively specify the
components for assigned converters for the purposes set forth therein.
Notwithstanding the foregoing language, this exclusivity requirement will not
apply to the product application set forth on Exhibit A-1 until such time as 3M
can provide said product or a comparable product. CNS shall have the right to
deplete the inventory of the product application set forth on Exhibit A-1 before
using the 3M product. Products will meet the product specifications attached
thereto as Exhibit A-2.
3. EXCLUSIVITY; RIGHT OF FIRST REFUSAL: CNS agrees that during the term
of this Agreement it will purchase all of its requirements of Product from 3M
provided, however, that:
a) If CNS is offered a product of substantially higher performance
under similar terms and conditions and gives 3M written notice of the offer,
then 3M shall notify CNS in writing within ninety (90) calendar days after
receipt of the notice as follows:
1) 3M agrees to sell CNS a product of equal performance
to the competitive product under similar terms and
conditions; or
2) 3M will permit CNS to purchase the product from the
third party while the substantially higher
performance product is available.
If 3M informs CNS that 3M is willing to sell Product or a product of equal
performance to the competitive product offered to CNS, then CNS will agree to
purchase Product or the new product from 3M.
b) As long as CNS is purchasing Product exclusively from 3M, then 3M
will not supply Product to any other company in the external nasal dilation
market. Notwithstanding the foregoing language, 3M's obligation as set forth in
the preceding sentence shall cease if 3M is presented with a product opportunity
with a third party offering higher performance and greater value to the
consumer. If 3M is offered said product opportunity, then CNS will be given the
opportunity to respond to the product opportunity within ninety (90) days.
Except as set forth herein, 3M reserves the right to sell the Products in any
other lawful manner.
c) If CNS is offered a substantially lower price, 3M will be given the
opportunity to respond to the comparative value of 3M and the competitive
offering within ninety (90) days.
4. TERM, NO AUTOMATIC RENEWAL: The term of this Agreement begins on the
date 3M signs this Agreement and ends on December 31st of 2000. This Agreement
can be renewed only if both parties agree in writing to the renewal. Both CNS
and 3M understand that each party has the right, in its sole discretion, to
decide whether to renew this Agreement. Both 3M and CNS will plan accordingly.
5. ORDER AFTER EXPIRATION: Any order placed and filled after the
expiration of this Agreement is governed by the provisions of this Agreement,
but the placing or filling of postexpiration orders does not otherwise extend
the term of this Agreement.
6. PRODUCT IMPROVEMENT DEVELOPMENT: 3M will work with CNS to
investigate and develop mutually agreed upon product component improvements in
an effort to enhance performance, aesthetics, and/or cost reductions.
7. OTHER TERMS AND CONDITIONS: Other terms and conditions of sale
(including prices, payment terms, F.O.B. Point, and return goods policy) are
stated on Exhibit B. CNS acknowledges that it has received a copy of Exhibit B
as of the date CNS signs this Agreement. 3M may change any part of Exhibit B by
written notice at any time, but the change will not affect any order properly
placed before the effective date of the change. Exhibit B is based upon
forecasted volumes and quantity purchases as provided by CNS. 3M agrees to keep
the price schedule, forecasted volumes and quantity purchases set forth in
Exhibit B confidential during the term of the Agreement.
8. FORECASTS: CNS shall provide 3M monthly a "rolling" forecasted
volume of Products for a six-month period into the future. Each month CNS will
be providing specific purchase order releases detailing product/size breakdown
and ship dates for requirements for the upcoming month. In the rolling forecast,
the first three (3) months shall be considered as FIRM requirements and the
subsequent three (3) months shall be viewed as forecasted quantities. Based on
such firm forecasted requirements, CNS' purchase history and 3M's experience, 3M
shall maintain an inventory of the Products which will be sufficient to meet the
reasonably anticipated needs of CNS not to exceed five percent (5%) overage of
the firm forecasted requirements. If 3M is unable to produce the forecasted
volumes of Product in a timely manner, then CNS shall be free to seek an
alternative source until such time as 3M shall be capable of meeting CNS's
needs. 3M shall be given thirty (30) days to respond to any such Product
concerns before CNS seeks the alternative source.
9. SHIPMENT DEADLINES; RISK OF LOSS; TITLE: 3M will make reasonable
efforts to meet any shipping dates specified in CNS' purchase orders, but 3M
does not guarantee to meet any particular shipping deadlines. Risk of loss
passes to CNS at the point of shipment. For all Products contained in any single
shipment, title passes to CNS only when CNS has fully paid for the shipment.
10. EXCUSABLE DELAY: 3M is not responsible for delays in production,
shipping or delivery due to any cause beyond 3M's reasonable control.
11. WARRANTIES LIMITED: 3M warrants only that the Products will meet
the specification set forth in Exhibit A-1 at the time of shipment to CNS. THIS
WARRANTY IS MADE IN PLACE OF ANY OTHER WARRANTIES. 3M NEITHER EXPRESSES NOR
IMPLIES ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.
12. LIMITATION OF REMEDIES: If properly and promptly notified (see
Paragraph 13), 3M will, at its option, either replace any product which 3M
determines was defective at the time of shipment or refund the purchase price
paid by CNS and/or its assignee. THIS REPLACEMENT REMEDY IS CNS' AND/OR ITS
ASSIGNEE'S EXCLUSIVE REMEDY AGAINST 3M FOR ANY DEFECT OR OTHER FAILURE IN THE
PRODUCTS OR IN 3M'S PERFORMANCE. UNDER NO CIRCUMSTANCES IS 3M LIABLE FOR ANY
DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES IN ANY WAY
RELATED TO THE PRODUCTS OR TO THIS AGREEMENT.
13. CNS' AND/OR ITS ASSIGNEE'S DUTY TO INSPECT; RETURNS: CNS and/or its
assignees will promptly inspect any shipment of Products received from 3M and
will promptly notify 3M in writing to any defects. The notice must specify the
defects in detail; any defect not specified is waived. Any goods not rejected
within thirty (30) days of delivery are accepted. After sending the notice, CNS
and/or its assignee will follow 3M's return goods policy then in effect, or any
specific and reasonable instructions which 3M may issue. CNS and/or its assignee
will allow 3M to inspect any allegedly defective goods at CNS' and/or its
assignee's site. For any goods which 3M determines are defective, CNS and/or its
assignee will follow 3M's instructions and either return the goods to 3M, with
3M responsible for the return freight, or dispose of the goods in a safe manner
approved by 3M and at no charge to 3M.
14. PROPER USE OF PRODUCTS: CNS will not process or package the
Products in any way which might compromise the Products' efficacy or safety. CNS
will not misuse the Products or treat or deal with Products in any way which
might prejudice 3M's reputation.
15. USE OF 3M NAME AND TRADEMARKS: CNS will not make use whatsoever of
3M's name without 3M's written permission. The decision to grant or withhold
permission is within 3M's sole discretion. CNS will not use or reproduce any of
3M's trademarks in any manner without 3M's prior written approval. To request
this approval CNS must forward to 3M a complete and accurate specimen copy of
the proposed use. If in its sole discretion 3M chooses to approve the use, the
use is subject to any revision which 3M may choose to make on the specimen. Any
permitted use extends only to the identification of 3M materials included in
CNS' composite product and not to the identification of the CNS composite
product itself.
16. PRODUCT DISCONTINUANCE: 3M may discontinue its production or sale
of any Products at any time during the term of this Agreement. 3M will give CNS
at least ninety (90) days notice of discontinuing the sale of a Product, unless
the discontinuance is due to an alleged health, safety or environmental risk. To
the extent possible, 3M will exercise reasonable efforts to present a comparable
substitute product; provided that such efforts will not require 3M to
manufacture or develop a comparable substitute product.
17. TERMINATION FOR CAUSE: If CNS fails to fulfill any of the
representations, promises or terms stated in this Agreement, 3M may terminate
this Agreement on thirty (30) days written notice. If 3M fails to fulfill any of
the representations, promises or terms stated in this Agreement, CNS may
terminate this Agreement on thirty (30) days written notice. Either of the
parties intending to terminate the Agreement under this section shall give
written notice of its intention to do so to the other party stating its
rationale and giving detailed description of the cause. The party giving notice
shall grant the other party a reasonable period of time (but in no event more
than thirty (30) days) to remedy the cause for termination. During this grace
period, the parties shall make a good-faith effort to assist one another in the
remedying of any problems surrounding this Agreement. Termination of this
Agreement shall not terminate any obligation set forth in the Agreement which
are incurred prior to such termination.
18. FORCE MAJEURE: Neither of the parties shall be responsible for any
delay or failure of performance hereunder due to, including, but not limited to,
strikes, lockout, shortage of labor or other labor disturbances, riots,
invasion, war, fire, explosion, sabotage, storm, flood, earthquake, inability to
obtain suitable material, fuel, power, or transportation, or any other causes
whatsoever beyond the reasonable control of the parties.
19. NO ASSIGNMENT OR DELEGATION: CNS may not assign any of its rights
or delegate any of its duties under this Agreement.
20. NOTICES: Any notice, order or other communication required by this
Agreement must be in writing, sent by first class mail or faster written means,
and addressed to the address listed on the signature page. A party may designate
in writing a substitute address.
21. ENTIRE AGREEMENT; NO WAIVER; GOVERNING LAW: This Agreement and the
exhibits hereto state the complete understanding between 3M and CNS on this
subject and replace any previous statements, communications or understandings,
whether oral or written. CNS may place orders under this Agreement using CNS'
regular purchase order form. However, any provision of that form, or of any
other CNS document, which conflicts with or differs from the provisions or
intent of this Agreement or the most current issue of Exhibit B is void. This
Agreement cannot be modified except by a writing signed by the party to be
bound, or through 3M's revision of Exhibit B. A course of dealing or of
performance does not effect a waiver or modification unless ratified in writing.
A party's failure to exercise a right in one instance does not waive that
party's right to later exercise that right. Any questions, claims or disputes
concerning or related to this Agreement are governed by the laws of Minnesota.
ACCEPTED AND AGREED TO:
MEDICAL SPECIALTIES DEPARTMENT
MINNESOTA MINING AND CNS, INC.
MANUFACTURING COMPANY 0000 XXXX XXXX
0X XXXXXX XXXXXXXXXX, XXXXXXXXX 00000
XX. XXXX, XXXXXXXXX 00000
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Sales Marketing Manager Title: Vice President of Operations
Date: 4/21/95 Date: 5/17/95
EXHIBIT A
Products and Specifications
(Confidential Treatment Requested)
EXHIBIT B
Other Terms and Conditions of Sale
(Confidential Treatment Requested)
