OEM AGREEMENT
THIS AGREEMENT, effective this 5th day of February, 1998, by and
between MARQUETTE MEDICAL SYSTEMS, INC., a Wisconsin corporation, having a place
of business at 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 (hereinafter
called "Seller") and OPTICAL SENSORS INCORPORATED, a Delaware corporation, with
principal offices located at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx X, Xxxxxxxxxxx,
Xxxxxxxxx 00000 (hereinafter called "Buyer").
W I T N E S S E T H:
WHEREAS, Seller currently manufactures and markets directly to end
users and through the Buyer an optical blood gas module known as OnlineABG (the
"Module").
WHEREAS, Seller and Buyer desire to enter into this Agreement to
supersede and replace the Supply Agreement dated August 22, 1996 between Seller
and Buyer (the "Supply Agreement").
.
WHEREAS, Buyer markets a stand-alone medical monitor and desires to
purchase Modules from Seller pursuant to this Agreement to incorporate the
Module into Buyer's monitor.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt of which is hereby mutually acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS
A. The term "Accessory Items" shall mean service/repair parts or
accessories for use in connection with Modules.
B. The term "Affiliate" shall mean any person, firm or entity
controlling, controlled by or under common control with, a party
to this Agreement.
C. The term "Agreement" shall mean this OEM Agreement.
D. The term "Contract Products" shall mean Modules and Accessory
Items currently manufactured, assembled or sold by Seller. The
Accessory Items being manufactured, assembled, or sold by Seller
as of the date of this Agreement are listed in Schedule C hereto.
E. The term "Contract Year" shall mean each sequential twelve (12)
month period during the term of this Agreement with the first such
period commencing on the effective date.
F. The term "Monitor" shall mean all medical monitors manufactured or
assembled by or on behalf of Buyer during the term of this
Agreement into which Buyer incorporates or includes as an add-on
Modules or Accessory Items. The Monitor being manufactured or
assembled by or on behalf of Buyer, or as to which manufacture or
assembly is contemplated by Buyer, as of the date of this
Agreement is listed in Schedule B hereto.
G. The term "Specifications" shall mean the specifications for the
Module set forth in Schedule A hereto, as may be amended from time
to time upon mutual agreement of the parties.
2. SUPPLY OF CONTRACT PRODUCTS
A. Seller shall manufacture the Modules in accordance with the
Specifications. Seller shall sell to Buyer such quantities of
Contract Products as Buyer orders pursuant to Section 4.B.
Contract Products purchased by Buyer from Seller hereunder shall
be used by Buyer solely in the design, manufacture or assembly of
Monitors or for the replacement of Contract Products so used.
B. Notwithstanding the above, nothing herein shall grant Buyer any
right with respect to any of Seller's trademarks, except as they
may appear on Contract Products.
3. PRICES
A. The unit price for each Module shall be $_________. The Buyer may
elect to purchase Accessory Items from the Seller and the unit
prices for Accessory Items shall be the prices set forth in
Schedule C, plus any sales, use, excise or similar taxes. The
Buyer may elect to purchase Accessory Items directly from original
manufacturers and if the Buyer elects to do so, the Seller shall
supply a letter of authorization to the original manufacturers.
[PORTIONS OF THIS SECTION HAVE BEEN OMITTED PURSUANT TO A REQUEST
FOR CONFIDENTIALITY UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. A COPY OF THIS AGREEMENT WITH THIS
SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.]
B. Prices, billing, and payment hereunder shall be in U.S. Dollars.
4. PURCHASES
A. Commencing on the date of this Agreement and on the first day of
every calendar quarter thereafter while this Agreement is in
effect, Buyer shall deliver to Seller a forecast covering its
estimated requirements for Modules
2
for the next twelve (12) calendar months. Such forecast shall constitute
a non-binding good faith of estimate of Buyer's anticipated purchases
for those months.
B. Buyer will, from time to time, submit written purchase orders for
Modules to Seller specifying a shipment date, which shipment date
shall in no event be less than 90 days from the date of delivery
of such purchase order. Buyer shall also submit purchase orders
for Accessory Items it purchases pursuant to this Agreement. Each
purchase order, without any acceptance by Seller, shall give rise
to a contract for the purchase of Modules under the terms set
forth in this Agreement to the exclusion of any additional or
contrary terms set forth in any purchase order, acceptance,
invoice or other document.
C. Buyer agrees to purchase and take delivery from Seller during each
Contract Year, a minimum of _____ (___) Modules. In the event that
Buyer, as of the end of any Contract Year, shall not have ordered
_____ (___) Modules, Seller may immediately invoice Buyer for the
delivery of the remaining modules, provided that Seller actually
deliver such Modules to Buyer. [PORTIONS OF THIS SECTION HAVE BEEN
OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER RULE 24B-2
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
D. Title and risk of loss or damage to Contract Products shall pass
to Buyer upon delivery at Seller's plant to either Buyer or a
common carrier. Shipping costs and insurance are the sole
obligation of Buyer. Seller will make all arrangements for
shipments of Contract Products in accordance with Buyer's shipping
instructions. Buyer shall insure each shipment of Contract
Products with a reputable insurer for the full invoice value of
such shipment.
5. PAYMENT
Seller will invoice Buyer upon shipment of Contract Products. All
purchases hereunder shall be for cash, with the amount thereof due and
payable within thirty (30) days after delivery of Contract Products.
Interest at a rate of one and one-half (1 1/2%) percent per month shall
be applied to alL accounts delinquent by more than thirty (30) days.
6. CONTRACT ACCESSORY AND SERVICE ITEMS
Seller shall supply Accessory Items to Buyer for the entire duration of
this Agreement and for a period of three (3) years following the last
Module shipment. During each year of said three (3) year period, the
prices for Accessory Items shall be subject to negotiation by the
parties hereto annually.
3
7. WARRANTY
A. Seller warrants that each Module purchased under this Agreement
will conform to the Specifications (or any revised specifications
agreed to by the Buyer) and is free from any defect in design,
workmanship, and materials.
B. Buyer shall inspect the Contract Products within thirty (30) days of
receipt to determine whether the Contract Products conform to the
Purchase Order and whether the Modules function in accordance with the
Specifications. Buyer's inspection for determining whether the Modules
function in accordance with the Specifications shall be approved in
advance by Seller, which approval shall not be unreasonably withheld or
delayed. Buyer's failure to notify Seller, in writing, within 30 days of
delivery by the Seller of the Contract Products to Buyer shall
constitute an irrevocable acceptance of such Contract Products and a
waiver of any claim for breach of any warranty with respect to such
Contract Products. Any Contract Product not passing this inspection may,
at Buyer's option, be returned to Seller for repair or replacement
within 60 days following delivery of the Contract Product to the Buyer,
provided that Buyer has filed notice with the Seller as provided above.
C. Seller's sole obligation under warranty shall be to repair or
replace, without charge, Contract Products or parts of Modules to
Buyer. Seller shall pay shipping costs in both directions for
warranty related activities.
D. For any Module not covered by Seller's warranty, Buyer will have
right either to service the Module directly, or to ask Seller to
provide Buyer with quotation for contract service. Seller's
warranty shall not apply to any Modules that are serviced by
Buyer.
E. THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, SELLER'S LIABILITY ON ANY
CLAIM, WHETHER IN CONTRACT OR OTHERWISE, FOR ANY LOSS OR DAMAGE ARISING
OUT OF, CONNECTED WITH, OR RESULTING FROM THE MANUFACTURE, SALES,
DELIVERY, RESALE, REPAIR, REPLACEMENT OR USE OF ANY CONTRACT PRODUCT OR
ANY PART THEREOF SHALL IN NO CASE EXCEED THE PRICE PAID BY BUYER FOR
SAID CONTRACT PRODUCT WHICH GIVES RISE TO THE CLAIM. IN NO EVENT SHALL
SELLER BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES TO
BUYER EXCEPT WHEN AND TO THE EXTENT THAT SUCH DAMAGES ARE DIRECTLY
CAUSED BY A DEFECT IN CONTRACT PRODUCTS PURCHASED PURSUANT TO
4
THIS AGREEMENT AND RESULT IN BODILY INJURY TO ANY PERSON.
8. INTELLECTUAL PROPERTY
Seller acknowledges that all intellectual property rights relating to the
Contract Products are the sole and exclusive property of Buyer, subject only
the limited license granted by Buyer to Seller pursuant the letter
agreement, dated September 7, 1995, between Buyer and Seller.
9. PRODUCT LIABILITY INDEMNITY
A. Seller will indemnify, protect, and save Buyer harmless from all claims,
demands, suits, or actions for damages to property (excluding losses of
income due to down time of equipment) or person which may be sustained
by any third party, including Buyer's personnel which may be asserted
against Buyer and which are caused or are alleged to be caused by any
defect in design, workmanship or materials of any of the Contract
Products purchased or used under this Agreement. The foregoing covenant
of indemnity shall survive the expiration or termination of this
Agreement, but Seller shall not be responsible for any loss or damage
caused by negligence acts or omission of Buyer or Buyer's personnel nor
shall the covenant be enforceable in the event that such loss or damage
is caused by Buyer's modification to either the hardware or the software
constituting the subject Contract Product. Seller shall have no
liability or responsibility of any kind to Buyer or Buyer personnel
under this Paragraph 9 for any claims, demands, suits, or actions,
unless Seller shall be notified in writing of any such claim, demand,
suit, or action promptly upon Buyer's learning of the event and shall
have had an adequate opportunity to defend, unless such failure to so
notify does not prejudice Seller. The obligations of the parties set
forth in this Paragraph 9 shall continue notwithstanding the termination
or expiration of this Agreement.
B. Buyer will indemnify, protect, and save Seller harmless from all claims,
demands, suits, or actions, for damages to property or person which may
be sustained by any third party, including Seller personnel, arising
from any deficiency in the design or deficiency in the manufacture of
products by Buyer, incorporating or including as an add-on, Contract
Products with the exception of claims, demands, suits, or actions
covered by Paragraphs 8 and 9A above. The foregoing indemnity shall
survive the expiration or termination of this Agreement, but Buyer shall
not be responsible for any loss or damage caused by negligent acts or
omissions of Seller or Seller personnel. Buyer shall have no liability
or responsibility of any kind to Seller, or Seller personnel, under this
Paragraph 8 for any claims, demands, suits, or actions, unless Buyer
shall be notified in writing of any such claim, demand, suit, or
5
action promptly upon Seller's learning of the event, and shall have had
an adequate opportunity to defend, unless such failure to so notify does
not prejudice Buyer. The obligations of the parties set forth in this
Paragraph 9 shall continue notwithstanding the termination or expiration
of this Agreement.
C. Each party hereto shall maintain, at its own expense, with an insurance
company reasonably acceptable to the other party hereto, Bodily Injury
and Property Damage Liability Insurance with limits of at least
$1,000,000 for injuries to one (1) person and $3,000,000 for injuries to
two (2) or more persons, in any one accident, and $300,000 for property
damage in any one accident. Each party has furnished to the other a
certificate or certificates of insurance duly executed by an authorized
representative of the insurance company or companies evidencing the
maintenance of the insurance coverage provided for by this Paragraph and
containing a provision to the effect that in the event any insurance
covered by such certificates is canceled or modified, before the
expiration of such insurance coverage, the insurer will give the other
party hereto ten (10) days prior written notice thereof.
D. Each party agrees to promptly notify the other if a suit or other
legal action is commenced against it or its customers which, if brought
against the other party hereto, would entitle such other party to be
indemnified hereunder by the notifying party, provided that such other
party shall not disclose information concerning such suit or action to
any third party, except to the extent necessary for such other party to
fulfill other obligations it may have under law or by court or
administrative order.
10. PRODUCT ALTERATIONS
A. Seller acknowledges and agrees that Buyer intends to modify the software
incorporated into the Modules, and Buyer may make other modifications to
the Contract Products. Buyer will notify Seller in writing within ten
(10) business days of the part number, description and serial number of
all modified modules and Contract Products. Neither Seller nor Buyer
shall make any modifications to the Specifications to which Seller is
required to manufacture Modules without the other part's prior written
consent. Should any such agreed upon modification to the Specifications
result in increased costs to or expenditures by Seller or result in
either an increase or decrease in Seller's cost of production of the
Contract Products, then the parties shall negotiate in good faith
appropriate adjustments to the pricing of the Contract Products to
reflect such cost changes or expenditures.
B. Seller acknowledges that Buyer intends to modify certain Modules
currently owned and in possession of Buyer. Buyer will notify Seller in
writing of the part number, description, and serial number of all such
Modules being modified. Buyer agrees that Seller's one-year warranty
obligation with respect
6
to such Modules shall expire effective upon notice from Buyer to Seller
of such modification.
11. FORCE MAJEURE
Neither Seller nor Buyer shall be liable for any delay in, or failure of,
performance hereunder due to act of God or similar casualty beyond its
control. When only a part of Seller's or Buyer's capacity to perform is
excused under this Paragraph, Seller or Buyer must fairly allocate
production and deliveries among various customers or suppliers then under
contract for similar goods during the period when Buyer or Seller is
partially unable to perform, subject to any contractual obligations of
Seller to any third party. The allocation must be effected in a commercially
fair and equitable manner.
12. REGULATORY MATTERS AND RECALLS
A. Seller warrants that the Modules will be manufactured in compliance with
all applicable federal, state and local laws and regulations including,
but not limited to, the Food, Drug and Cosmetic Act, as amended, and
U.S. Food and Drug Administration (the "FDA") Good Manufacturing
Practice for Medical Devices regulations ("GMP"). Seller represents and
warrants to Buyer that Seller's manufacturing facility is certified "DIN
EN ISO 9001/EN46001/MDD" and that Seller has all approvals and consents
required to xxxx Modules with the "CE" xxxx. Seller further covenants
with Buyer that Seller will maintain such certification during the term
of this Agreement. Seller will notify Buyer of any audits of Seller's
manufacturing facility to be conducted by TUV Product Services or any
other notified body for such certification, provide Buyer with a written
copy of the results of such audit, to the extent that such audit relates
directly to the manufacture of Modules, and Seller's proposed corrective
response to such audit, if any required.
B. In the event of a governmental regulatory ruling, of standards
promulgated and issued by the government or any product deficiency
affecting patient safety or efficacy that requires the recall or field
modification of the Modules, Seller agrees to "swap" with Buyer or fix
(at Seller's option) all defective Contract Products or parts of
Modules, for acceptable Contract Products or parts of Modules at charges
mutually agreed upon after negotiations in good faith. Except as ordered
by a governmental agency, no recall or field modification action shall
be initiated without the mutual agreement of the parties hereto unless
the initiating party is prepared to solely bear the costs thereof. Each
party shall notify the other in writing if either becomes aware of any
recall or field modification action and both parties shall cooperate in
reaching a consistent response. Neither party shall withhold any
information from the other or from any regulatory agency involving
patient safety or efficacy required by any recall or field modification
action.
7
C. Both parties shall be responsible for maintaining records and
meeting all government laws and regulations as they may pertain to
Contract Products or products incorporating or including as an add-on
Contract Products sold by each party including, but not limited to, U.S.
export and re-export control laws and neither party assumes any risk
arising out of the other party's failure to comply with such laws or
regulations with respect to products sold by such other party. Component
and product serial number/lot number assigned and records shall be
maintained and supplied to either party for purposes of product or
component tracing, recall or field modifications or compliance with
government laws and regulations.
D. Each party will forward to the other copies of customer complaints
and medical device reports ("MDR") relating to events required to
reported by the FDA in accordance with 21 CFR Part 803 relating to the
manufacture and operation of the Module, and each party will cooperate
fully with the other party in investigating and resolving such
complaints, including any necessary testing and analysis of the Module.
E. Seller will at its sole cost and expense, timely register with the FDA
as a Contract Medical Device Manufacturer, or cause to be timely
registered with the FDA, in accordance with 21 CFR Part 807, each
establishment which Seller or a subcontractor of Seller intends to
manufacture and/or repair the Module.
F. Seller will provide Buyer with copies of any FDA Form 483 observations,
follow-up warning letters and/or close-out reports for those portions of
GMP compliance inspection reports relating specifically to the
manufacture of Modules for any facility where Modules are manufactured.
G. Either party may, upon not less than seven (7) days prior written notice
to the other, inspect other's manufacturing facilities for compliance
with quality and regulatory requirements no more than once every three
months.
H. Buyer shall be solely responsible for, and shall indemnify and hold
Seller harmless from and against any and all claims, demands, suits or
actions which may be asserted against Seller arising out of fraudulent
or substantially inaccurate promotional activities, labeling or
materials relating to the sale or promotion of Monitors.
13. TERM AND TERMINATION
A. This Agreement shall become effective as of the date first above written
and, unless previously terminated, shall continue in effect until the
end of the second Contract Year.
8
B. Prior to the end of the second Contract Year, either party may terminate
this Agreement as follows:
1. By giving written notice to the other party in the event the other
party is in material breach of this Agreement and shall have failed
either to cure such material breach within thirty (30) days of
receipt of written notice thereof or, if cure is not possible within
thirty (30) days, to have taken reasonable steps to commence to cure
such material breach within such thirty (30) day period; or
2. By giving written notice if the other party attempts to assign this
Agreement, except incident to a sale of its business, without prior
written consent of the other party; or
3. At any time by giving written notice to the other party, which
notice shall be effective upon dispatch, should the other party file
a bankruptcy petition or have a bankruptcy petition filed against it
which is not discharged within thirty (30) days, be declared
bankrupt, become insolvent, make an assignment for the benefit of
creditors or go into liquidation or receivership.
C. At the end of the second Contract Year, this Agreement shall renew
automatically provided that either party may terminate this Agreement
upon ninety (90) days prior written notice, with or without cause, at
any time after the end of the second Contract Year.
14. OBLIGATIONS UPON TERMINATION
Upon termination by either party, each party shall be obliged to pay all
amounts then owing and, unless Seller has terminated by reason of a material
breach by Buyer, Seller shall fill all purchase orders previously accepted.
Anything herein to the contrary notwithstanding, the parties obligations
under Sections 8, 9, 12, 15 and 16 shall survive such termination.
15. LABELING
Modules will be labeled by Seller as "Manufactured for Optical Sensors
Incorporated by Marquette Medical Systems", with an appropriate traceable
serial number. This label will be in accordance with appropriate FDA and MDD
regulations and the Specifications. Buyer may add its own Module labels,
identifying the Module as Buyer's product. Buyer shall not remove, alter or
conceal Seller's traceable serial number.
9
16. CONFIDENTIALITY
Each party acknowledges and agrees that all the information provided by the
other party that is marked as proprietary or confidential or which from its
nature or the context in which it is given should reasonably be understood
to be confidential shall be deemed "Confidential Information" for purposes
of this Agreement. Without limiting the foregoing, the parties acknowledge
that the Specifications constitute "Confidential Information." Each party
agrees not to use any Confidential Information for any purpose other than as
permitted or required for performance by it under this Agreement and not to
disclose or provide any Confidential Information to any third party and to
take all necessary measures to prevent any such disclosure by its employees,
agents, contractors or consultants. Upon request or termination of this
Agreement, each party will return all such Confidential Information of the
other party to the other party. Each party's obligations under this Section
16 shall survive termination of this Agreement.
17. CUSTOMER'S STATUS
During the term hereof, the relationship of Seller to Buyer is that of an
independent contractor. Nothing herein contained shall be deemed to
authorize or empower either Seller or the Buyer, its agents, or employees,
to act as agent for Seller or the Buyer, or conduct business in the name, or
for the account of, Seller or the Buyer or any of their Affiliates or
otherwise bind it to them in any manner. Amendments hereto shall be made
only in writing referencing this Agreements and executed by both parties.
18. NON-WAIVER
The failure of Buyer and Seller to enforce at any time or for any period of
time any of the provisions of this Agreement shall not constitute a waiver
of such provisions.
19. SEVERABILITY
If any provision of this Agreement should be held unenforceable or illegal,
it shall be deemed severable from the other provisions which shall remain
valid and enforceable.
20. COMPLETE UNDERSTANDING
This Agreement is the complete and exclusive statement of the understandings
between the parties concerning Seller's supply of Modules to the Buyer,
superseding all proposals, oral or written, and all negotiations,
conversations and discussions with respect to the supply relationship,
including, but not limited to the Supply Agreement.
10
21. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
22. GOVERNING LAW; COUNTERPARTS
This Agreement shall be governed by the laws of the State of Wisconsin. This
Agreement may be executed in any number of counterparts, each of which shall
be an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized officials as of the day and year first above written.
MARQUETTE MEDICAL SYSTEMS, INC.
By: /S/ XXXXXX XXXXXXX
----------------------------------------
Its: SENIOR VICE PRESIDENT MONITORING GROUP
---------------------------------------
OPTICAL SENSORS INCORPORATED
By: /S/ XXXXXXX XXXXXXXX
----------------------------------------
Its: VICE PRESIDENT BUSINESS DEVELOPMENT
---------------------------------------
11
SCHEDULE A
MODULE SPECIFICATIONS
[THIS SCHEDULE HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER
RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
12
SCHEDULE B
BUYER MONITOR
[THIS SCHEDULE HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER
RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
13
SCHEDULE C
ACCESSORY ITEMS AND PRICES
[THIS SCHEDULE HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIALITY UNDER
RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. A COPY OF THIS
AGREEMENT WITH THIS SECTION INTACT HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
14
