Exhibit 10.32
Revision: 11/2/98
HSM INSTRUMENT SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT, effective this 17th day of November, 1998, by and between
BAYER CORPORATION, an Indiana corporation, acting through its Diagnostic
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");
WHEREAS Bayer is a world wide manufacturer and supplier of hematology,
immunology and clinical chemistry analyzers, diagnostics, consumables and spare
part therefor;
WHEREAS IMI wishes to purchase on a non-exclusive basis HMS Instruments
manufactured by or for Bayer for resale under the IMI label and/or a third party
label which IMI will designate to Bayer in writing, for worldwide distribution
and Bayer wishes to supply IMI with such HSM Instruments for such purpose;
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 the separate IMI
"After-market Supplies Agreement" to be executed between the parties on the date
hereof.
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 HSM Instruments and the Bayer Auto Sampler
manufactured by Bayer or its designees, the "Manufacturing Party"
shall mean either Bayer or its designated third party contractor who
shall be bound by the responsibilities contained herein by separate
agreement, but Bayer shall have overall responsibility for compliance
with the terms and conditions hereto applicable to any such
Manufacturing Party. With respect to the IMI Small Sample Handler
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.
1.3 The "Purchasing Party" shall mean IMI and/or its worldwide Affiliates
with respect to the HSM Instruments and the Bayer Auto Sampler
purchased under the terms of this Agreement. The "Purchasing Party"
shall mean Bayer and/or its worldwide Affiliates with respect to the
IMI Small Sample Handler purchased under the terms of this Agreement.
2. Grant of Purchasing Rights
2.1 IMI Non-Exclusive Purchasing and Marketing Rights.
2.1.1 Bayer hereby grants to IMI during the term of this Agreement (a)
non-exclusive purchasing and marketing rights to purchase from
Bayer and to use, sell, lease, rent and service the HSM
Instruments which together with the current performance
specification thereof are as described in Xxxxxxxx X-0, attached
hereto and made a part hereof, and (b) non-exclusive purchasing
and marketing rights to purchase from Bayer and to use, sell,
lease, rent and service Bayer's modified auto sampler ("Auto
Sampler") with the performance specification described in
Appendix A-3 and as modified and improved by Bayer or IMI in the
future, attached hereto and made a part hereof.
2.1.2 The purchase price for the HSM Instrument to be charged by Bayer
to IMI shall be 175% of Bayer's documented "Direct Costs" per HSM
Instrument. For purposes of this Agreement and the License
Agreement, Bayer's Direct Costs shall mean direct material
(evidenced by bills of materials) and labor costs attributed to
the manufacture of each HSM Instrument, excluding overhead,
research and development and any other costs relating to the
manufacture of the HSM Instruments.
2.1.3 The purchase price for the Auto Sampler to be charged by Bayer
to IMI shall be at the initial price during the first year of
this Agreement of $10,000.00 U.S. dollars per unit for such Auto
Sampler.
2.1.4 The HSM Instruments sold to IMI will only carry either the IMI
label or an IMI designated third party label which IMI must
advise Bayer in writing at least ninety (90) days in advance of
any issued purchase orders. Notwithstanding the foregoing, all
HSM Instruments manufactured and sold by Bayer to IMI will denote
"Intelligent Medical Imaging, Inc., manufactured by Bayer or its
designee".
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's small sample handler, the
specifications for which are set forth in Xxxxxxxx X-0, attached
hereto and made a part hereof (hereafter "IMI Small Sample
Handler"). The purchase price for the Small Sample Handler shall
be at 175% of IMI's documented "Direct Costs." For purposes of
this Agreement and the License Agreement, IMI's Direct Costs
shall mean direct material (evidenced by bills of materials) and
labor costs attributed to the manufacture of each IMI Small
Sample Handler, excluding overhead, research and development and
any other costs relating to the manufacture of the IMI Small
Sample Handlers.
2.2.2 IMI has granted to Bayer a license from IMI, to manufacture or
have manufactured for it, the IMI Small Sample Handler pursuant
to the License Agreement.
2.3.Additional Bayer Purchase Rights
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.
3. Manufacturing Responsibilities
3.1 Manufactured Products.
Bayer will manufacture the HSM Instruments and Auto Sampler and IMI
will manufacture the IMI Small Sample Handler to the manufacturing
specification of IMI and Bayer, as have jointly been agreed, as set
forth in Appendix A-2 through A-3, attached hereto and made a part
hereof. Each party also agrees to have compliance with these
specifications monitored by each other's manufacturing group. The
products in each instance will be manufactured by such party or its
designee from said party's, or its designee's raw materials, and shall
include thereon either a Bayer or IMI label, respectively, part number
and outer design and color in the form to be provided by the other
party within sixty (60) days after the effective date of this
Agreement and which will then be included herein and made a part
hereof marked Appendix B.
3.2 Outer Design
All products purchased by Bayer shall bear a label, part number and
outer design and color as directed by Bayer. All products purchased by
IMI from Bayer shall bear a label, part number and outer design as
directed by IMI. However, in no event shall the size, shape, and
configuration of any product be altered unless the parties mutually
agree otherwise.
3.3 Year 2000 Issues
The Manufacturing Party represents and warrants to the Purchasing
Party that all products and services licensed or purchased hereunder
by the Purchasing Party from the Manufacturing Party, will not be
adversely affected in any way with the introduction of dates with the
year 2000. This will include on time delivery, all service requests,
date dependent data, computations, output or other functions,
including, but not limited to, calculating, comparing and sequencing,
and all supplied products will create, store, process and output
information, as required, relating to or including millennial dates
without errors or omissions. This representation and warranty
specifically includes, without limitation, any equipment purchased by
the Purchasing Party from the Manufacturing Party the functionality of
which is dependent, in whole or in part, on computer chips which may
be date dependent such that the Manufacturing Party's products sold
hereby will be Year 2000 compliant. At the Purchasing Party's request,
the Manufacturing Party will provide sufficient evidence to
demonstrate the adequate testing of its equipment, products and
services to meet the foregoing minimum requirements. Notwithstanding
the foregoing, with regard to the HSM Instrument, IMI as the developer
of the software and designer of this system shall be responsible for
Year 2000 compliance, as aforesaid, unless Bayer has modified the
software causing the system to be non-compliant.
3.4 IMI's Right to Grant Rights to Third Parties
Bayer acknowledges and agrees that IMI may, at any time, grant sale,
lease, rent, servicing and distribution rights with respect to the HSM
Instrument and IMI Small Sample Handler and, following March 31, 2000,
(or earlier if Bayer does not continue to supply HSM Instruments to
IMI pursuant to this agreement) grant non-exclusive manufacturing
rights with respect to the HSM Instrument and IMI Small Sample Handler
to any other party, including Xxxxxxx Xxxxxxx Corporation.
4. Purchase and Supply of Products
4.1 During the term of this Agreement, each party will supply to the other
and the Purchasing Party will purchase from the Manufacturing Party
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, at prices stated in Section 2.1.
4.2 The prices listed in Appendix C reflect the unit price for orders
placed during the first year of this Agreement. Either party may
request adjustment of the price set forth in Appendix C for any
particular product at twelve (12) month intervals from the date of
this Agreement in accordance with Article 7 below, (based on variance
of Direct Costs as provided in 2.1.2 with respect to the HSM
Instrument). Either party may similarly request price reductions to
reflect economies of scale and cost reductions resulting from value
engineering and manufacturing improvements they have suggested. During
the first year only, adjustment may be made in six (6) month intervals
from the effective date of the Agreement. This six month adjustment
clause shall not apply with regard to the Bayer Auto Sampler.
4.3 Each party will provide to the Manufacturing Party one (1) year
non-binding rolling forecasts to be updated on a quarterly basis.
Attached as Xxxxxxxx X-0 and D-2 is each party's forecast covering the
first year of this Agreement. Each party will use its best efforts to
meet the Purchasing Party's forecasted requirements. If a
Manufacturing Party 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, the Manufacturing Party will
immediately advise the Purchasing Party in writing.
4.4 Shipments
The Manufacturing Party's shipments of products to the Purchasing
Party will be based on the following:
(i) The Forecasts described in 4. 3 above;
(ii) Each Purchasing Party will submit binding purchase orders for the
products it requires 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.
(iii)In the event of an unforecasted increase in demand, a
Manufacturing Party will use its best efforts to meet these
increased requirements.
(iv) 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, and in such manner as
specified by the Purchasing Party in each purchase order
4.5 Prior to any change by either Manufacturing Party in raw material
specifications, in formulating and/or in manufacturing of the
products, including any changes in the software, such Manufacturing
Party will notify the Purchasing Party 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.
The Manufacturing Party reserves the right to make changes in vendors
or suppliers of raw material 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.
The Manufacturing Party will notify the Purchasing Party in writing at
least ninety (90) 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. The Purchasing Party
will have a maximum of forty-five (45) days, except in cases of
emergency, which will require no more than five (5) days, unless
otherwise mutually agreed to, to respond with its decision to continue
this Agreement in the face of any such changes in raw material
specification, formulation and/or manufacture and/or vendor or
suppliers, or cancel the same. The decision to continue this
Agreement, or to cancel the same, is within the Purchasing Party's
sole discretion, and the Purchasing Party's decision on this issue
shall be final. Notwithstanding the foregoing, should the Purchasing
Party decide not to accept such change because of its negative impact
on the operation of its instrument, the Manufacturing Party shall
continue to supply the product in its former configuration (prior to
the change) for a period not to exceed one year.
4.6 The Purchasing Party may conduct periodic on site Quality Assurance
audits of the Manufacturing Party's facilities normally used in the
production of the products and financial audits of applicable Direct
Costs, 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 Spare Parts and Accessories
(i) The Manufacturing Party represents that it has or will obtain the
production and delivery capability to supply the Purchasing Party
with appropriate kinds and amounts of spare parts and accessories
to enable the Purchasing Party to make timely repairs thereof and
permit continued operation of the instruments provided purchase
orders with reasonable delivery dates and agreed prices are
presented to the Manufacturing Party. The Purchasing Party shall
have the right to make inspections of suppliers to insure the
foregoing on reasonable notice and during reasonable business
hours.
(ii) The Manufacturing Party further agrees that spare parts or
accessories will continue to be furnished to the Purchasing Party
for a period of seven (7) years following delivery of the last
instrument product purchased under this Agreement. If at any time
during the term of this Agreement, any extension thereof or
during the seven (7) year period from the date of the delivery of
the last instrument product purchased delivered hereunder, the
Manufacturing Party fails to deliver spare parts or accessories
as agreed herein, the Purchasing Party shall automatically be
licensed to manufacture the same or have such accessories and/or
spare parts made for it for such time as the Manufacturing Party
is unable to supply such items pursuant to this Agreement. The
Manufacturing Party shall furnish the Purchasing Party pursuant
to Section 8 with all drawings, formulas, vendors' lists,
know-how and any other information and documentation required to
permit the Purchasing Party or its subcontractor to manufacture
said accessories and/or and spare parts for the period during
which the Manufacturing Party was obligated but was unable to
supply such products and spare parts hereunder.
5. Purchase Orders
The Purchasing Party may place its order for products or other spare parts
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.
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 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 (within forty-eight (48) hours) 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 Products 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 Service
The Purchasing Party shall perform all warranty service on the
purchased products but the Manufacturing Party shall repair or
replace, at its option, but at its sole expense, all parts required
for warranty service during the warranty period. Outbound shipping
charges in connection with said warranty service shall be paid by the
Manufacturing Party but inbound shipping charges to the Manufacturing
Party shall be paid by the Purchasing Party.
6.4 Parts
The Purchasing Party will keep records of all parts used for repairs
of a product during the warranty period and will provide the
Manufacturing Party with documentary evidence of their use. If the
Purchasing Party uses parts from its spare parts inventory to perform
warranty service on any product during the warranty period, the cost
of the parts so used shall be credited to the Purchasing Party's
account.
6.5 Post Warranty Parts Purchase
After the applicable warranty period on any purchased product has
expired, the Purchasing Party may purchase from the Manufacturing
Party such parts as the Purchasing Party desires at 175% of Direct
Costs for such parts or such other prices as mutually agreed.
6.6 Returns
During the applicable warranty period, the Purchasing Party and the
Manufacturing Party shall jointly agree to the return to the
Manufacturing Party of any product for which the Purchasing Party is
unable to effect repair in the field. The Manufacturing Party shall,
at its option, either replace or repair such unit to the Performance
Specifications as set forth in the applicable Attachment A. This shall
be the total applicable liability for material not conforming to
performance specifications.
6.7 Controlled Substances.
The Manufacturing Party warrants that none of the Products, including
spare parts 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).
6.8 THE EXPRESSED WARRANTIES STATED OR PROVIDED FOR ABOVE AND ON APPENDIX
F (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. Pricing Adjustments
7.1 Subject to Section 4.2, the prices for the HSM Instrument, other
instruments, accessories and other spare parts indicated in Attachment
C shall continue in effect for one (1) year from the effective date of
this Agreement.
7.2 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.
7.3 Upon three (3) months advance written notice at 12 month intervals,
Bayer may increase the prices of the Auto Sampler in proportion to any
demonstrable increase in Direct Costs, employed in the manufacture of
the instruments it is manufacturing or having manufactured for it,
compared with the average cost of those Direct Costs during the
preceding Agreement year, provided that in no event will any price
increase in any year exceed the percentage change identified in the
Producer Price Index published by the United States Department of
Labor, or any such successor index.
7.4 Upon written notice of a price adjustment pursuant to Sections 2.1 or
7.3, at the Purchasing Party's election and expense, or pursuant to
Section 4.2, at the expense of the party objecting to the increase, it
may hire an independent certified accounting firm, selected by it and
approved by the Manufacturing Party (which approval will not be
unreasonably withheld or delayed), to conduct an audit of Direct Costs
associated with the production of the instrument being manufactured,
for the sole purpose of verifying the subject price adjustment. In the
event of such an audit, confidentiality agreements satisfactory to the
Manufacturing Party, and signed by the auditing firm and each
individual conducting such audit, shall be delivered in advance of
such audit. Any discrepancy uncovered shall be promptly adjusted and
paid.
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 two (2) years from the date
of availability of the first HSM Instrument 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. Similarly, Bayer shall maintain under
its self-insurance program for the term of this Agreement the same coverage
and limits with IMI having a right to indemnification by Bayer thereunder
with respect only to those products Bayer manufactures, or has manufactured
for it, and sells to IMI under this Agreement.
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, incidental, punitive, or consequential damages. In the
event of a patent infringement suit, in no event shall either party be
liable for the lost profits of the other party.
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 United States Federal
communication Commission (FCC), the International Electrotechnical
Commission (IEC) particularly IEC 1010, and International Electromagnetic
Compatibility (EMC) standards of EMC Directive passed by the European
Community in May 1989, the IVD Directive, Waste Management Directive
(Packaging) and Recyclable Material Directive of the European Community and
will obtain CE Xxxx approval, and agrees to supply FDA and cGMP as
supplemental by the Quality System Regulation ("QSR") and 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 its products are or will be
approved by Canadian CSA and European Community ("EC") authorities. The
Manufacturing Party, 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) and Radio Frequency
Interference ("RFI") and Electromagnetic Interference ("EMI") and
Electromagnetic Compatibility ("EMC") standards.
The Manufacturing Party at no additional charge will reasonably assist the
Purchasing Party in obtaining Underwriters Laboratory ("UL") certification.
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 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, along with
any and all obligations it then has to purchase hereunder and may
cancel any outstanding purchase orders placed with the Manufacturing
Party.
In the event of (ii), the Manufacturing Party will repurchase from the
Purchasing Party all of the 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 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,
as set forth in Federal Register Volume 43, No. 141 dated July 21,
1978, Part 820, pages 31508-532, 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 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 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 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. Service Manuals and Training
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 product accessories 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.
18.3 Training Session
Without charge the Manufacturing Party shall provide at least a one
week training session at its facility for a reasonable number of the
Purchasing Party's personnel. The individual expenses of such
personnel shall be borne by the Purchasing Party.
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 second year of this Agreement 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 ninety (90) days prior written notice to the
other, if during such ninety 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; provided the provisions held invalid, void,
illegal, or unenforceable will not deprive any party of the benefit of its
bargain.
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, DIAGNOSTIC DIVISION
By: /s/
--------------------------------------------
Its: Senior Vice President, Laboratory Testing
-------------------------------------------
INTELLIGENT MEDICAL IMAGING INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------------
Its: President
------------------------------------------
LIST OF APPENDICES and EXHIBITS
APPENDIX A :
A-1 HSM Instrument Specifications
A-2 Bayer Modified Auto-Sampler Specifications
A-3 IMI Small Sample Handler Specifications
APPENDIX B :
Label, Part Number and Outer Design and Color Specifications
APPENDIX C :
Pricing Schedule
APPENDIX D :
D-1 IMI's One Year Non-Binding Forecast
D-2 Bayer's One Year Non-Binding Forecast
APPENDIX E :
Packaging Specifications
APPENDIX F :
Purchase Order Forms of IMI and Bayer
Bayer Warranties
IMI Warranties
