Exhibit 10.20
DEVELOPMENT AND OEM SUPPLY/DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made this 15 day of June, 2004, by and
between Specialized Health Products International, Inc., having an address at
000 Xxxx 000 Xxxxx, Xxxxxxxxx, Xxxx 00000 (hereinafter referred to as "SHPI"),
and TYCO HEALTHCARE GROUP LP, a Delaware Partnership having an office at 00
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as
"Tyco Healthcare").
RECITALS
WHEREAS, SHPI desires to grant to Tyco Healthcare, and Tyco Healthcare
desires to accept from SHPI, the exclusive right to promote, market, distribute
and sell the "Products" (as hereinafter defined) in the "Field" (as hereinafter
defined) throughout the "Territory" (as hereinafter defined).
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the execution hereof, SHPI and Tyco
Healthcare hereby agree as follows:
I. DEFINITIONS. The following terms are defined for purposes of this
Agreement.
1.1. "Effective Date" shall mean the date and year first written above.
1.2. "Affiliate" shall mean any person or corporation or other business
entity controlled by, controlling, or under common control with a party to this
Agreement.
1.3. "Act" shall mean the United States Food, Drug and Cosmetic Act of
1938, as amended and all regulations promulgated pursuant thereto, and any state
and local laws and regulations thereunder promulgated and all similar laws and
regulations of any other country or relevant jurisdiction related to the
development, manufacture, sale or distribution of Products.
1.4. "Available for Commercial Sale" shall mean the last date on which
each of the following conditions shall have been satisfied with respect to each
of the Products listed on Exhibit B attached hereto: (i) Tyco Healthcare shall
have obtained Regulatory Approval for such Products, (ii) SHPI shall have
manufactured such Products in conformance with the Specifications and delivered
such Products to Tyco Healthcare's manufacturing facility, and (iii) Tyco
Healthcare shall have sterilized and packaged such Products and delivered such
Products to Tyco Healthcare's distribution facility.
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1.5. "Products" shall mean all conventional and safety bone marrow
needles that incorporate the devices or device components disclosed in U.S.
Utility Patent Applications Serial Nos. ** and ** (the "Base Technology"), which
are supplied by SHPI. Conventional J-type and I-Type products will include a
modified handle. The conventional I-Type product will include a slip-release
feature.
1.6. "Specifications" shall mean the raw material, manufacturing,
quality assurance, packaging and finished product specifications and protocols
developed pursuant to this Agreement relating to the Products and mutually
agreed upon by the parties, as the same may be modified and/or supplemented
pursuant to the provisions hereof.
1.7. "Field" shall mean all relevant applications of bone marrow
needles.
1.8. "Territory" shall mean worldwide on an exclusive basis.
1.9. "Confidential Information" shall mean any information of a
confidential and/or proprietary nature as to which Tyco Healthcare or an
Affiliate of Tyco Healthcare or SHPI or an Affiliate of SHPI, as the disclosing
party, prior to or during the term of this Agreement, develops or acquires any
interest, including but not limited to, all sales, marketing, business and
financial information and all discoveries, inventions, improvements, and ideas
relating to any process, formula, machine, device, manufacture, composition of
matter, plan or design, whether patentable or not, or relating to the conduct of
business by the disclosing party (including the existence and subject matter of
this Agreement) which, prior to or during the term of this Agreement, was or is
disclosed to the other party, as the receiving party, exclusive of data or
information: (i) which, at the time of disclosure hereunder, was in the public
domain or which, subsequent to disclosure hereunder, becomes part of the public
domain by any means other than the breach by the receiving party of its
obligations hereunder, or (ii) which was known to the receiving party, at the
time of disclosure hereunder, as evidenced by the receiving party's business
records maintained in the ordinary course of business, or (iii) which is, at any
time, disclosed to the receiving party by any person or entity not a party
hereto whom the receiving party believes, after reasonable inquiry, has the
right to disclose
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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the same, or (iv) which is developed by an employee of the receiving party who
is shown, by competent proof and by clear and convincing evidence, not to have
been privy to information disclosed by the disclosing party, or (v) which is
disclosed verbally, except where the disclosing party reduces the verbal
disclosure to writing, marks the same as confidential and proprietary and
furnishes the receiving party with the reduction to writing within thirty (30)
days of the verbal disclosure.
1.10. "Contract Year" shall mean the twelve-month period commencing on
the earlier of (i) the date all products identified in Exhibit B are Available
for Commercial Sale or (ii) the date that is three (3) months after the
conditions set forth in Section 1.4(i) and (ii) have been satisfied; and each
successive twelve-month period thereafter.
1.11. "Regulatory Approval" shall mean the notification to or
concurrence, acknowledgment, or approval of any governmental or
quasi-governmental agency or regulatory body, which notification, concurrence,
acknowledgment or approval is necessary for or useful to the manufacturing,
processing, marketing or sale of Products anywhere in the United States, and
which is made in the name of Tyco Healthcare or has been given/granted on behalf
of Tyco Healthcare.
1.12. "Commercial Sale" - means, with respect to the Products which
Tyco Healthcare elects to distribute hereunder, the sale by Tyco Healthcare or
any Affiliate of Tyco Healthcare (or their respective distributors) to any
non-Affiliate.
1.13. "Competing Product" - means any product sold or offered for sale
in the Territory which: (i) employs technology which, as of the Effective Date,
was not employed in the healthcare products industry to reduce the risk of
needle sticks and/or transmission of infectious diseases in connection with the
extraction of bone marrow biopsies and was not disclosed in at least one medical
or scientific journal with national circulation in the United States; (ii) is
not any product manufactured or marketed by Tyco Healthcare or any Affiliate of
Tyco Healthcare (or their respective distributors acting on behalf of Tyco
Healthcare or such Affiliate); and (iii) does not infringe the Base Technology.
II. REPRESENTATIONS AND WARRANTIES
2.1. SHPI Representations and Warranties. SHPI hereby represents and
warrants to Tyco Healthcare:
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(a) that SHPI is not currently a party to any agreement, oral
or written, which would, in any manner, be inconsistent with the rights
herein granted to Tyco Healthcare, and shall not enter into any such
agreement or understanding, oral or written, during the term of this
Agreement, nor, during the term of this Agreement, directly or
indirectly, will engage in any activity which would, in any manner, be
inconsistent with the rights herein granted to Tyco Healthcare,
(b) that SHPI is a corporation organized, validly existing and
in good standing under the laws of Delaware, has all requisite
corporate power and authority to own and operate its property and to
carry on its business as now being conducted and is duly qualified and
in good standing to do business in any of those jurisdictions where it
is required to be qualified,
(c) that the execution and delivery of this Agreement by SHPI
has been duly and validly authorized by all necessary corporate action
on the part of SHPI and that (assuming valid execution by Tyco
Healthcare where applicable and subject to federal bankruptcy law) this
Agreement is a valid and binding obligation of SHPI enforceable against
it, and
(d) all Products may be lawfully sold in the Territory under
the appropriate Regulatory Approvals when received by Tyco Healthcare.
2.2. Tyco Healthcare Representations and Warranties. Tyco Healthcare
hereby represents and warrants to SHPI:
(a) that Tyco Healthcare is a limited partnership formed,
validly existing and in good standing under the laws of Delaware, has
all requisite power and authority to own and operate its property and
to carry on its business as now being conducted and is duly qualified
and in good standing to do business in any of those jurisdictions where
it is required to be qualified as a result of ownership of property or
residence of any of its employees or agents,
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(b) that the execution and delivery of this Agreement by Tyco
Healthcare has been duly and validly authorized by all necessary
corporate action on the part of Tyco Healthcare and that (assuming
valid execution by SHPI and subject to federal bankruptcy law) this
Agreement is a valid and binding obligation of Tyco Healthcare
enforceable against it,
(c) that Tyco Healthcare is not currently a party to any
agreement or understanding, oral or written, which would, in any
manner, be inconsistent with its obligations described herein and shall
not enter into any such agreement or understanding, oral or written,
during the term of this Agreement, nor, during the term of this
Agreement, directly or indirectly, engage in any activity which would,
in any manner, be inconsistent with its obligations described herein,
and
(d) that it is registered with the Food and Drug
Administration and authorized to sell the Products.
III. DISTRIBUTION OF PRODUCTS
3.1. Appointment of Tyco Healthcare as Exclusive Distributor. Subject
to the terms and conditions hereof, SHPI hereby appoints Tyco Healthcare, and
Tyco Healthcare hereby agrees to act, as an exclusive distributor of Products in
the Field throughout the Territory, for the term of this Agreement. Subject to
Section 4.5 below, SHPI shall not sell any Products, or cause any Products, to
be sold to any person or entity other than Tyco Healthcare, and SHPI shall not
grant to any person or entity other than Tyco Healthcare any license, sublicense
or other rights to manufacture, or have manufactured, any Products at any time
during the term of this Agreement, with the exception of the grant of the right
to manufacture Products to a third party manufacturer approved by Tyco
Healthcare, provided that such third party may only be permitted to manufacture
Products for delivery to Tyco Healthcare pursuant to this Agreement.
3.2. Tyco Healthcare's Responsibilities. Tyco Healthcare will use
reasonable efforts to promote sales and use of the Products in the Territory.
SHPI hereby expressly acknowledges and agrees that the grant set forth in
Section 3.1 shall be deemed to include a grant to Tyco Healthcare of the right
to sell through any Affiliate of Tyco Healthcare and through distributors of
Tyco Healthcare or any Affiliate of Tyco Healthcare.
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3.3. Device Complaints. Tyco Healthcare shall maintain a system of
product complaint recording and reporting wherein it will record the details of
product complaints it receives. Tyco Healthcare agrees to send copies of the
complaint reports relating to substantial design, technical or quality issues to
SHPI. SHPI shall be responsible for supporting Tyco Healthcare's investigation
of such complaint reports. SHPI shall, within thirty (30) days after SHPI
receives the initial complaint reports from Tyco Healthcare, forward the
findings of any investigations to Tyco Healthcare.
3.4. Recall. If Tyco Healthcare or SHPI are required by any competent
governmental authority to conduct a recall of any of the Products or either
party determines in its reasonable business judgment a voluntary recall of any
Product is required (and in the instance of a voluntary recall with the consent
of the other party hereto, which neither SHPI nor Tyco Healthcare will
unreasonably withhold), then SHPI shall bear the reasonable expenses related to
the cost and return of the Products.
IV. TERMS OF PURCHASE AND SALE
4.1. Purchase Orders. At the beginning of each calendar quarter, Tyco
Healthcare will provide a purchase order for releases during the immediately
succeeding quarter, and a non-binding forecast for each of the further
subsequent three (3) quarters. All purchase orders issued by Tyco Healthcare
hereunder shall be submitted at least 45 days prior to the delivery date. For
purposes of this Agreement, "delivery" shall mean receipt by Tyco Healthcare at
its manufacturing facility. Tyco Healthcare may modify or terminate any purchase
order or release provided that notice is given at least forty-five (45) days
prior to the earliest affected delivery date. All sales and purchases of
Products shall be initiated pursuant to Tyco Healthcare's purchase order for the
same placed with SHPI. All such sales and purchases shall be governed by the
terms and provisions of this Agreement and any such purchase order, provided
that in the event there is a conflict between the terms of this Agreement and
any of the terms of such purchase order, the terms of this Agreement shall
prevail.
4.2. Selling Price.
(a) SHPI and Tyco Healthcare hereby agree that: (i) the
selling prices by SHPI to Tyco Healthcare for each unit of Product
shall be for each unit Product in bulk, non-sterile form in accordance
with applicable Specifications, (ii) the initial selling prices by SHPI
to Tyco Healthcare of each unit of Product shall be as set forth on
Exhibit A, which is attached hereto and incorporated herein. All
payments shall be made in United States dollars.
(b)
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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4.3. Delivery. SHPI shall deliver Products ordered by Tyco Healthcare
in accordance with the terms hereof to Tyco Healthcare's designated facility on
the dates specified by Tyco Healthcare in its purchase orders. SHPI shall use
commercially reasonable efforts to manufacture and deliver all volumes of
Products ordered by Tyco Healthcare, but in no event will SHPI be obligated to
deliver more than 20% over the forecasted volumes for a quarter, as such
forecast is determined in accordance with Section 4.1. Tyco Healthcare shall
provide at least two (2) months notice for increases to the forecast if the
increase in volume is more than 20% of the amount forecasted.
4.4. Payment and Shipment. Shipment shall be in accordance with Tyco
Healthcare's instructions. SHPI shall invoice Tyco Healthcare for Products at
the time of shipment. All payments shall be due net ** days after receipt of
invoice. All orders shall be in full cases and shipped prepaid FOB Destination
to Tyco Healthcare's Nellcor facility in Tijuana Mexico.
4.5 Minimum Purchase Requirements.
(a) During each Contract Year during the term of this
Agreement (or, in the case of the first Contract Year,
including the period beginning from the Effective Date through
the date of the first Commercial Sale), Tyco Healthcare agrees
to place purchase orders with SHPI for a quantity of Products
not less than the quantity applicable to such Contract Year,
as set forth in Exhibit A, which is attached hereto and
incorporated herein (hereinafter referred to as the "Minimum
Purchase Requirements").
(b) **
(c) **
(d) **
4.6 Minimum Order Quantity. The minimum order quantity shall be **
units per SKU of the products identified in Exhibit B.
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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V. DEVELOPMENT OF PRODUCTS
5.1 Custom Tooling. SHPI shall develop the tooling and provide the
Project Deliverables set forth in, and in accordance with, Exhibit C-1. All
molds, fixtures, assembly equipment or capital items funded by Tyco Healthcare
pursuant to this Agreement that are used to fabricate or test Products are
hereinafter referred to as "Custom Tooling." SHPI will develop Custom Tooling
with Tyco Healthcare design input that Tyco Healthcare will own for an estimated
cost of **. Included in the capital cost estimate are Class 101 molds of a
"family" configuration. The Custom Tooling will be built in accordance with Tyco
Healthcare's designated specifications, which shall be based upon the Product
Specifications mutually agreed to by the parties. The cost of Custom Tooling is
subject to mutually acceptable adjustment for specification changes requested by
Tyco Healthcare. The Custom Tooling will only be used for Tyco Healthcare
products. SHPI will be responsible for ordinary maintenance of such Custom
Tooling, and will be liable for any loss or damage to such tooling, except
normal wear and tear. SHPI acknowledges and agrees that title to and ownership
of the Custom Tooling shall remain exclusively with Tyco Healthcare at all
times, and SHPI shall keep such Custom Tooling free from any liens or
encumbrances attributable to SHPI or its subcontractors. Upon the expiration or
termination of this Agreement, SHPI shall promptly return the Custom Tooling to
Tyco Healthcare in good operating condition, reasonable wear and tear excepted.
Payment of the Custom Tooling costs will be made in installments, upon
achievement of the milestones listed in Exhibit C-1.
5.2 Development Project Deliverables. SHPI shall develop the Products
in accordance with Exhibit C-2 attached hereto. Tyco Healthcare shall pay
development costs to SHPI in the total amount of $**, based upon the current
product specifications agreed upon by the parties. If Tyco Healthcare later
materially changes the design or product specifications or requirements, an
increase in the number of R&D hours would result in an additional payment to
SHPI on terms to be mutually agreed upon. SHPI agrees to completely disclose all
relevant
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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Design History Files (DHF). Tyco Healthcare shall pay SHPI for development costs
in quarterly installments of $** and $** for the last quarterly payment,
beginning upon execution of the Agreement. Tyco Healthcare and SHPI shall
conduct quarterly reviews of the project status.
5.3 Reimbursement. Tyco Healthcare shall reimburse SHPI for all
reasonable out-of-pocket expenses for all prototypes provided at the request of
Tyco Healthcare, with the exception of the SLA prototypes referred to in Section
1.2 of Exhibit C-2, which are to be provided by SHPI for focus groups at no cost
to Tyco Healthcare. SHPI will pay for travel and related expenses for one SHPI
employee to attend a design review prior to DID approval and to a design review
after the focus group study is completed. Tyco Healthcare shall reimburse SHPI
for all other travel and related expenses incurred at Tyco Healthcare's request
or approved by Tyco Healthcare.
5.4 Resulting Technology Rights. **
5.5 IFU. Tyco Healthcare will develop an IFU mutually agreed upon by
SHPI and Tyco Healthcare. The IFU will be printed and distributed by Tyco
Healthcare with the Product.
5.6 Right of First Negotiation. In the event that SHPI elects to (i)
offer to sell to any third party any new product that incorporates any
intellectual property solely owned by SHPI pursuant to Section 5.4 and that is
an improvement of, or otherwise related to, the Products ("New Products") in the
Field, or (ii) offer to license to any third party the right to manufacture and
sell any New Product in the Field, SHPI shall notify Tyco Healthcare of its
intent. Tyco Healthcare shall have the option, at its discretion, to purchase
such New Products in the Field, or license the right to manufacture and sell
such New Products in the Field, from SHPI, on an exclusive basis, at a price,
and on other terms, mutually acceptable to SHPI and Tyco Healthcare. If Tyco
Healthcare elects to exercise such option, SHPI and Tyco Healthcare shall
negotiate in good faith appropriate amendments to this Agreement and/or an
appropriate license agreement for a period of ninety (90) days after SHPI's
receipt of Tyco Healthcare's notice exercising such option (the "Negotiation
Period"). If the parties, acting in good faith, are unable to agree upon
mutually acceptable terms and conditions to such amendment or license prior to
the expiration of the Negotiation Period, SHPI shall be permitted to thereafter
offer to sell New Products, or license the right to manufacture New Products in
the Field, to any third party.
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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VI. MANUFACTURE OF PRODUCTS
6.1. SHPI hereby represents and warrants to Tyco Healthcare:
(a) that each of the Products sold to Tyco Healthcare
hereunder shall be manufactured in accordance with the requirements of
the Quality Systems Regulations set forth in 21CFR 820;
(b) that each of the Products sold to Tyco Healthcare
hereunder shall be new, free from defects in material and workmanship,
and shall comply in all respects with the applicable Specifications
therefor;
(c) that each of the Products sold to Tyco Healthcare
hereunder will not, at the time of delivery to Tyco Healthcare, be
adulterated or misbranded within the meaning of the Act or within the
meaning of any jurisdiction in which the definitions of misbranding and
adulterating are substantially the same as in the Act, nor, following
FDA approval of Products, will any Product at the time of delivery to
Tyco Healthcare be an article which may not, under the Act, be
introduced into interstate commerce, and
(d) that SHPI holds good and marketable title to all Products
and they shall comply with their intended use. 6.2. There are no other
express or implied warranties, including any warranty of
merchantability or
fitness for a particular purpose. In the event of any breach of the warranties
set forth in Section 6.1 hereof, SHPI shall, at SHPI's sole cost and expense, at
Tyco Healthcare's option, repair or replace the Products which are
non-conforming or defective within forty-five (45) days of the return of such
item(s) to SHPI or shall credit Tyco Healthcare's account for the purchase price
paid for such item(s) by Tyco Healthcare upon the return thereof by Tyco
Healthcare. All shipping costs incurred incident to any such breach shall be
borne by SHPI.
6.3. Labeling. Product labeling shall have bar coding in compliance
with the Health Industry Bar Coding standards. No changes may be made to any
Product labeling or packaging without the prior written consent of Tyco
Healthcare.
6.4 Quality Specifications and Standards. SHPI (and any
sub-contracting/third party manufacturer) performing hereunder, is required to
meet: 1) Tyco Healthcare's product/vendor quality specifications; and 2) Tyco
Healthcare's vendor quality standards. Tyco Healthcare shall have the right to
qualify and approve any subcontractor or third party manufacturer that SHPI
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proposes to utilize for purposes of manufacturing Product to be sold to Tyco
Healthcare pursuant to this Agreement. SHPI shall not change the manufacturer of
the Products hereunder without the prior written consent of Tyco Healthcare,
which consent shall not be unreasonably withheld.
6.5 Specification Changes. Tyco Healthcare shall maintain and control
all master files of the Specifications on its system, and Tyco Healthcare shall
generate all Specification changes implemented pursuant to this Agreement.
Product or process changes which would cause a Product to deviate from the
Specifications shall not be made without the prior written agreement of both
parties. If either party desires a modification to the Specifications, such
party shall give written notice of such proposed modification to the other party
at least ninety (90) days prior to the desired effective date of such
modification. The parties shall negotiate any such requested modification in
good faith, including any related amendments to this Agreement to provide for
adjustments to prices hereunder to reflect any increased or decreased costs of
manufacturing the Products as a result of such modification. If the parties are
unable to agree upon such requested modification and related amendments to this
Agreement within such ninety (90) day period, this Agreement (and the
Specifications) shall continue in effect without change.
6.6 Inspections. SHPI shall allow Tyco Healthcare to inspect each
facility where the Products are manufactured, during normal business hours and
upon at least ten (10) days' written notice. SHPI shall cause each of its
contracts with its subcontractors or third party manufacturers to expressly
allow Tyco Healthcare to inspect the facilities where the Product are
manufactured.
VII. TERM AND TERMINATION
7.1. Term. This Agreement shall remain in full force and effect through
the completion of the third Contract Year (the "Initial Term"). Thereafter, this
Agreement shall be automatically renewed for successive twelve-month terms
unless terminated by Tyco Healthcare by providing written notice to SHPI not
less than one-hundred eighty (180) days prior the expiration of the initial term
or any renewal term. SHPI shall not be permitted to terminate this Agreement,
except as set forth in Sections 4.5 and 7.2.
7.2. Breach. Except as otherwise provided in this Agreement, in the
event of a material breach or default by either of the parties hereto of any
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term or provision of this Agreement on their respective parts to be observed or
performed, the party who is not in breach or default shall have the right to
give the other party notice thereof, whereupon the party receiving such notice
shall have thirty (30) days to cure or cause the cure of such breach or default,
or if the same cannot reasonably be cured within such thirty (30) days, the
party receiving such notice shall, within said period, commence or have caused
the commencement of such cure and thereafter continue to diligently prosecute or
cause the prosecution of cure of the same. If such breach or default is so
cured, this Agreement shall remain in full force and effect. If such breach or
default is not so cured, this Agreement shall immediately terminate upon notice
of termination given to the party which failed to so cure such breach or
default.
7.3. Effect of Termination or Expiration. Expiration or prior
termination of this Agreement, for any reason, will not release either party
from any liability which at said time it has already incurred to the other
party, nor affect in any way the survival of any rights, duties or obligations
of either party which are expressly stated elsewhere in this Agreement to
survive said expiration or prior termination. Nothing in the immediately
preceding sentence will affect, be construed or operate as a waiver of the right
of the party aggrieved by any breach of this Agreement to be compensated for any
injury or damage resulting therefrom which is incurred before or after such
expiration or termination.
7.4. Disposition of Inventory. In the event of termination or
expiration of this Agreement for any reason, Tyco Healthcare will retain its
inventory and stock of the Products that has been paid for by Tyco Healthcare.
Tyco Healthcare will be entitled to sell its stock of the Products for a
twenty-four month period following the termination or expiration of this
Agreement, or if such date is later, the date of delivery of any Products to
Tyco Healthcare.
7.5 Retention of Intellectual Property. Subsequent to termination of
this Agreement, both SHPI and Tyco Healthcare will retain their respective
intellectual property rights as set forth in this Agreement.
7.6 Manufacture of Products. **
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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VIII. REGULATORY MATTERS
8.1. Tyco Healthcare shall prepare and file all applications for
regulatory clearance.
8.2 SHPI and Tyco Healthcare will mutually agree on a product complaint
protocol.
8.3 The facility at which Products are manufactured hereunder shall at
all times be registered with the U.S. Food and Drug Administration as a medical
device manufacturer.
8.4 SHPI shall cause the Products to be manufactured in accordance with
all applicable laws and regulations.
IX. INDEMNIFICATION
9.1 SHPI will indemnify and hold Tyco Healthcare harmless for matters
relating to the Products from all claims, lawsuits, losses, liabilities and
damages (including reasonable attorneys' fees) arising out of 1) patent
infringement related only to the safety needle device(s) and device handle(s)
disclosed in the Base Technology; 2) product liability; or 3) any other claim
relating to a defect of the Products, except with respect to claims based solely
upon Tyco Healthcare's misrepresentations regarding the Products. As a condition
precedent to SHPI obligations under this clause, the party charged in such suit
shall promptly notify SHPI and shall not settle the same without SHPI's prior
written approval. If, as a result of any third party infringement claim subject
to this Section 9.1, an injunction is issued or a settlement agreement is
entered into pursuant to which Tyco Healthcare is prohibited from reselling any
Products purchased hereunder, Tyco Healthcare may return all such Products to
SHPI for a full refund.
9.2 Tyco Healthcare will indemnify and hold SHPI harmless against all
claims, lawsuits, losses, liabilities and damages (including reasonable
attorneys' fees) arising out of the sale and/or distribution of any Products,
including, but not limited to, any misrepresentations by Tyco Healthcare
regarding the Products, but not including claims for which SHPI will indemnify
Tyco Healthcare as identified in Section 9.1. As a condition precedent to Tyco
Healthcare's obligations under this clause, the party charged in such suit shall
promptly notify Tyco Healthcare and shall not settle the same without Tyco
Healthcare's prior written approval.
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X. INFRINGEMENT BY THIRD PARTIES; ISSUANCE OF PATENT CLAIMS
10.1 SHPI shall use reasonable efforts to prosecute any case of patent
infringement relating to the Base Technology of which SHPI is aware. Tyco
Healthcare shall promptly notify SHPI upon becoming aware of any infringement by
third parties of the Base Technology.
10.2 **
10.3 **
XI. INSURANCE
Throughout the term of this Agreement, SHPI shall carry Commercial
General Liability Insurance in a minimum amount of $5,000,000 Combined Single
Limit, Bodily Injury and Property Damage, naming Tyco Healthcare as an
additional insured. Insurance to be maintained by SHPI pursuant to the
provisions of this Section shall provide for written notice to Tyco Healthcare
thirty (30) days in advance of any termination or cancellation of such
insurance. Upon the request of Tyco Healthcare from time to time, SHPI shall
provide a certificate evidencing such insurance coverage.
XII. MISCELLANEOUS
12.1. Confidential Information. Each party shall hold in confidence any
Confidential Information disclosed by the other or otherwise obtained by such
party as a result of activities contemplated by this Agreement, and each party
shall protect the confidentiality thereof with the same degree of care that it
exercises with respect to its own information of a like nature, but in no event
less than reasonable care. Access to Confidential Information must be restricted
to the receiving party's employees, who, in each case, need to have access to
carry out a permitted use and are bound in writing to maintain the
confidentiality of such Confidential Information. The Confidential Information
and all copies of part or all thereof, shall be and remain the exclusive
property of the disclosing party, and the receiving party shall acquire only
such rights as are expressly set forth under the terms and conditions of this
Agreement and only for so long as such rights are in effect.
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The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
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12.2. Survival. The following Articles or Sections shall continue in
effect notwithstanding any termination of this Agreement: Article II, Section
3.4, Section 5.4, Article VI, Section 7.3, Section 7.4, Section 7.5, Section
7.6, Article VIII, Article IX, Section 12.1, Section 12.5, and Section 12.7, and
no termination of this Agreement shall relieve any party of liability for a
breach or violation of this Agreement occurring before such termination.
12.3. No Agency. This Agreement shall not constitute Tyco Healthcare
the agent or legal representative of SHPI for any purpose whatsoever and Tyco
Healthcare shall not hold itself out as an agent of SHPI. This Agreement creates
no relationship of joint venturers, partners, associates, employment or
principal and agent between the parties, and both parties are acting as
independent contractors. Neither party is granted hereby any right or authority
to and shall not attempt to assume or create any obligation or responsibility
for or on behalf of the other party. Neither party shall have any authority to
bind the other party to any contract, whether of employment or otherwise, and
each party shall bear all of its own expenses for its operations, including,
without limitation, the compensation of its employees and salespeople and the
maintenance of its offices, service and warehouse facilities. Each party shall
be solely responsible for its own employees and salespeople and for their acts
and the things done by them.
12.4. Amendments. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties hereto.
12.5. Waivers. No waiver of any provision of this Agreement, or consent
to any departure from the terms hereof, shall be effective unless the same shall
be in writing and signed by the party waiving or consenting thereto. No failure
on the part of any party to exercise and no delay in exercising, any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or remedy by such party preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate as a waiver of any subsequent breach. All rights and remedies
hereunder are cumulative and are in addition to and not exclusive of any other
rights and remedies provided by law.
12.6. Performance. Each party hereto acknowledges that money damages
alone will not adequately compensate such party for breach of such party's
obligations under Section 12.1 and, therefore, agrees that in the event of the
breach or threatened breach of any such obligation, in addition to all other
15
remedies available to the other party, at law, in equity or otherwise, such
other party shall be entitled to injunctive relief compelling specific
performance of, or other compliance with, the terms of such Section.
12.7. Notices. Any notice or communication given pursuant to this
Agreement by any party to any other party shall be in writing and shall be
sufficiently given if personally delivered, sent by facsimile or other means of
confirmed electronic transmission or sent by a recognized next-day courier
service or by mail, postage prepaid to the parties at the following addresses or
to such other address as either party may hereafter designate to the others by
like notice:
(a) if to SHPI, to:
Specialized Health Products International, Inc.
000 Xxxx 000 Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
(b) if to Tyco Healthcare, to:
Tyco Healthcare Group LP
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Vice President - Marketing -
Critical Care Division
Facsimile Number:
With a copy to:
Tyco Healthcare Group LP
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile Number: (000) 000-0000
12.8. Expenses. Each party hereto shall pay its own expenses in
connection with the transactions contemplated hereby, whether or not they are
completed.
12.9. Publicity. All notices to third parties and all other publicity
relating to the transactions contemplated by this Agreement shall be jointly
planned, coordinated and agreed to by the parties except to the extent
disclosures are required by law.
16
12.10. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, warranties, commitments, offers,
contracts and writings prior to the date hereof.
12.11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with, the substantive laws of the state of Delaware,
without giving effect to its conflicts of law rules.
12.12. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. In the event that
any provision of this Agreement shall be determined to be unenforceable by
reason of its extension for too great a period of time or over too large a
geographic area or over too great a range of activities, it shall be interpreted
to extend only over the maximum period of time, geographic area or range of
activities as to which it may be enforceable.
12.13. Exhibits. All Exhibits mentioned in this Agreement shall be
attached to this Agreement and shall form an integral part hereof. All
capitalized terms defined in this Agreement which are used in any Exhibit shall,
unless the context otherwise requires, have the same meaning therein as given
herein.
12.14. Counterparts. This Agreement may be executed in two (2) or more
counterparts, including facsimile counterparts, all of which shall be considered
one and the same agreement and shall become effective when two (2) or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
12.15. Assignments; Successors and Assigns. Neither party shall
transfer or assign (by operation of law or otherwise) its rights or obligations
under this Agreement without the prior written consent of the other party;
provided, however, that either party may assign this Agreement to an Affiliate
or a successor in ownership of all or substantially all of its business assets
related to the Products whether by sale of assets, merger consolidation or
otherwise. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of each of the parties hereto and their permitted
successors and assigns.
17
12.16. Force Majeure. Either party shall be excused from delay in
performing or from its failure to perform hereunder to the extent that such
delay or failure results from any cause or causes beyond such party's reasonable
control, including: fire; flood; acts of God; acts of war or terrorism; labor
dispute; riot; compliance with any applicable governmental act, regulation or
request; shortage of labor, materials or manufacturing facilities; and delay by
any supplier in providing materials, parts or services and/or delay by any
carrier due to the aforementioned events. **
12.17. Captions. The Article and Section headings contained in this
Agreement have been inserted for convenience of reference only and are not and
shall not be deemed or construed as constituting a part of this Agreement.
_______________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SPECIALIZED HEALTH PRODUCTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
TYCO HEALTHCARE GROUP LP
By: /s/ Xxx Xxxxxxx
----------------------------------------
Name: Xxx Xxxxxxx
Title: Division President
19
EXHIBIT A
Minimum Purchase Requirements for Exclusivity
-------------------- --------------------------- -------------------------------
Year Combined I/J-type Minimum Unit Volume
(Safety and Conventional) of Safety Products
-------------------- --------------------------- -------------------------------
1st Contract Year ** ** safety units
2nd Contract Year ** ** safety units
3rd Contract Year ** ** safety units
and beyond
-------------------- --------------------------- -------------------------------
Pricing(1):
-------------------- ------------------- ---------------
Needle Type Conventional Safety
-------------------- ------------------- ---------------
J-type(2) $** $**
I-Type(2) $** $**
-------------------- ------------------- ---------------
(1) Assumes family molds
(2) Design pending clinical focus groups and/or market research. Changes in
product design that result in increased or decreased raw materials or
manufacturing costs will result in increased or decreased pricing to Tyco
Healthcare.
_______________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT B*
Conventional Trays
**
Conventional Single Needles
**
Safety Trays
**
Safety Single Needles
**
* SKU reference refers only to the I-Type & J-Type bone needles within the
above-listed SKUs. The Agreement does not include the making of kits or
supplying other ancillary components required for the above-identified kits.
_______________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Exhibit C-1
TOOLING SPECIFICATIONS AND REQUIREMENTS
**
_______________
The "**" marks the location of information that has been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
