EXHIBIT 10.3
CERTAIN INFORMATION (INDICATED BY ASTERISKS) IN THIS EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.
EXHIBIT 10.3
AMENDED AND RESTATED SUPPLY AGREEMENT
This Amended and Restated Supply Agreement, is made as of the 10th day of
February, 2006 ("Execution Date"), among Siemens Hearing Instruments, Inc., a
Delaware corporation, with an address at 00 Xxxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000 ("SHI" or "Seller"), certain subsidiaries and affiliates of Siemens
Aktiengesellschaft (collectively, the "Siemens Affiliates") and HearUSA, Inc.
(formerly HEARx, Ltd.), a Delaware corporation, with an address at 0000
Xxxxxxxxxx Xxxxxxx, Xxxx Xxxx Xxxxx, XX 00000 ("HearUSA" or "Buyer").
WHEREAS, Buyer is a retail seller of hearing aids in the United States and
also services hearing healthcare programs sponsored by HMOs and insurance
companies; and
WHEREAS, Seller is a manufacturer of hearing aids and sells such hearing
aids to retail resellers, including Buyer, for resale to consumers; and
WHEREAS, Buyer and Seller determined that it would be in their respective
best interests to assure a steady supply of hearing aids of various styles and
capacities (the "Products") from Seller in order that Buyer may efficiently and
economically distribute such Products through its current and future retail
outlets ("Facilities") and, to that end, entered into a Supply Agreement as of
December 7, 2001 (the "Original Supply Agreement"); and
WHEREAS, the parties have now determined that it would be in their
respective best interests to amend and restate the Original Supply Agreement,
extending their relationship until January 2011, all in accordance with the
terms and conditions contained herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Purchase and Sale. Subject to the provisions contained in this
Agreement, Seller has agreed to sell and Buyer has agreed to buy those Products
listed on Exhibit A to this Agreement during the term of this Agreement. The
Siemens Affiliates manufacture or may manufacture certain of the Products
offered hereunder, and those Products manufactured and supplied by the Siemens
Affiliates and purchased by Buyer will be included within the definition of
Products under this Agreement and included in the calculations set forth in
Section 4 hereof. If any Siemens Affiliate shall sell any of the Products to the
Buyer, such Siemens Affiliate shall execute and deliver a counterpart,
substantially in the form of Exhibit B, to SHI and the Buyer. Upon the execution
of such counterpart, such Siemens Affiliate shall become a party hereto and be
bound by all the terms and conditions hereof as a "Seller" to the same extent as
though such Siemens Affiliate had originally executed this Agreement. The
parties understand and agree that Exhibit A may be amended from time to time,
upon mutual agreement of the Seller and Buyer, to add or delete Products. In
addition, it is specifically understood that Buyer is purchasing the Products
for the purpose of resale in all of Buyer's Facilities, including, without
limitation, any new Facilities which may be or are owned, operated, affiliated
with or managed by Buyer.
2. Term. The term of this Agreement is five (5) years, commencing on the
Execution Date (the "Term").
3. Terms and Conditions of Sale. The Buyer will submit its orders for
Products either on the forms provided therefor or via a website provided by
Seller and payment shall be made by Buyer for products delivered and accepted
within sixty (60) days from the date of statement by Seller.
4. Ordering Process and Pricing. Buyer understands that Seller has offered
special terms and pricing to Buyer as consideration for the purchase compliance
levels committed to by Buyer, and that Seller is willing to continue to provide
Products to Buyer in a manner consistent with the relationship enjoyed to date
by Seller and Buyer. Subject to Section 3 hereof, Buyer agrees to purchase, in
each Fiscal Quarter during the term of this Agreement (which, for the purposes
of this calculation, shall be each of the three month periods ending on the last
Saturday of the months of March, June, September and December), at least ninety
percent (90%) of Buyer's quarterly purchases of hearing aid products; provided
however, that:
(i) if the Buyer has purchased, on a cumulative basis from May 1, 2001
through the applicable Fiscal Quarter, 90% or more of the total number of
hearing aids purchased by the Borrower, net of returns (the "Minimum Purchase
Percentage"), the Buyer shall be deemed to have complied with the minimum
purchase requirements of this Supply Agreement; and
(ii) in the event the Buyer has not complied with the provisions of
4(i) above, if the Borrower has purchased, on a cumulative basis from May 1,
2001 through the applicable Fiscal Quarter, eighty percent (80%) or more of the
total number of hearing aids purchased by the Borrower but less than ninety
percent (90%) of the total number of hearing aids purchased by the Borrower in
each of the two preceding consecutive Fiscal Quarters, the Borrower shall be
deemed to have complied with the minimum purchase requirements of this Supply
Agreement.
For purposes of this Section 4, (A) the Fiscal Quarter in which the
last day of the Term occurs (unless such day is the last day of a Fiscal
Quarter), shall mean the period commencing on the first day of such Fiscal
Quarter and ending on the last day of the Term (such period, the "Final Contract
Fiscal Quarter"), (B) the "quarterly purchases"
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described above shall refer to such purchases made during the applicable Final
Contract Fiscal Quarter, and (C) the 90% requirement shall be reduced to a
number equal to the product of 90% multiplied by a fraction, the numerator of
which is the number of days in the applicable Final Contract Fiscal Quarter and
the denominator of which is the actual number of days in the Fiscal Quarter in
which the last day of the Term occurs.
In exchange for this purchase commitment, Seller has offered to sell
the Products to Buyer at the prices set forth on Exhibit A. During the term of
this Agreement, upon written notice to Buyer not later than sixty (60) days
prior to the effective date thereof, Seller may adjust the list prices for the
Products, such adjustment to take effect on the date set forth on such notice.
Seller may not change the list prices for the Products more often than ****** in
any contract year and the prices shall not be increased more than ****** above
the then-current prices at the time of such change, unless Buyer fails to meet
its purchase requirements set forth in Section 4, at which time the parties
shall meet to discuss the adjustments which need to be made should Buyer
continue not to meet such purchase requirements. In the event Buyer defaults in
its obligation to meet the agreed purchase requirements, Seller, in its sole
discretion, shall have the right to take any or all of the following actions
hereunder: (i) adjust prices or terms and conditions of sale with respect to the
provision of Products for the remaining contract years of the Agreement, (ii)
seek reimbursement from Buyer for the difference between the special pricing
offered in connection with this Agreement and the then-current list prices for
the Products, (iii) obtain injunctive relief compelling Buyer to refrain from
purchasing hearing aids from any vendor other than Seller until the end of the
term of this Agreement, (iv) obtain injunctive relief compelling Buyer to
purchase all its requirements for hearing aids from Seller until the end of the
term of this Agreement, or (v) terminate this Agreement in accordance with
Section 11 hereof.
Further, if Buyer meets the purchase commitments set out in this
Agreement, Buyer is able to liquidate certain loans made by Seller to Buyer
pursuant to that Amended and Restated Credit Agreement entered into of even date
herewith by and between Buyer and Seller (the "Credit Agreement"). In the event
that the Tranche A Loan and all Tranche C Loans (as those terms are defined in
the Credit Agreement) are repaid by Buyer prior to the Maturity Date (as defined
in the Credit Agreement), so long as Buyer meets the Minimum Purchase Percentage
set out above, Seller shall credit to Borrower hereunder substantially
equivalent rebates of ******* annually through the term hereof for so long as
such cumulative Minimum Purchase Percentage is achieved by Buyer.
5. Product Representations. Seller makes the following representations and
warranties with respect to the Products sold hereunder:
(a) Each Product shall be manufactured (i) in conformity with all
applicable requirements of the Food and Drug Administration ("FDA") and (ii) in
accordance with all applicable United States federal, state and local statutes,
ordinances and regulations, including but not limited to the Food, Drug and
Cosmetic Act (21 USC 301 et seq.) (the "Act"), as amended from time to time, and
the regulations thereunder, including Good Manufacturing Practice Regulations,
which are currently in force or which are hereafter
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adopted. At the time of shipment of any Product, it will not be adulterated or
misbranded within the meaning of the Act and will not be a product which would
violate any section of the Act if introduced into interstate commerce in the
United States.
(b) Seller has good and marketable title to, and the right to sell, the
Products.
(c) The manufacture and sale of the Product, and its use in accordance with
all applicable approvals theretofore obtained and Seller's directions for use,
shall not, to the knowledge of Seller, infringe any intellectual property rights
of any third parties.
6. Covenants of Seller. Seller covenants and agrees as follows with respect
to the Products:
(a) Seller shall conduct its manufacturing operations in a safe and prudent
manner, in compliance with all applicable laws and regulations, including, but
not limited to, those dealing with occupational safety and health, those dealing
with public safety and health, those dealing with protection of the environment,
and those dealing with disposal of wastes and in compliance with the applicable
provisions of this Agreement.
(b) Seller shall use commercially reasonable efforts to have the Products
listed on the "pick lists" maintained by each of the Canadian provinces.
(c) Seller shall use commercially reasonable efforts to (i) fill Buyer's
orders for Products on time and (ii) deliver Products that function as per
specifications and that meet the requirements of the orders submitted by Buyer,
in each case consistent with past practices of Buyer and Seller.
(d) Seller shall use commercially reasonable efforts to remain one of the
technology leaders in the field of hearing healthcare; provided that nothing
contained herein shall limit or prohibit Seller from conducting its business in
accordance with the policies and procedures established from time to time by
Seller's Board of Directors or with the overall policies and procedures of
Siemens Aktiengesellschaft.
7. Indemnification by Seller.
(a) Subject to the provisions of subsection 7(b) below, Seller agrees to
indemnify, defend and hold harmless Buyer, its affiliates and their respective
employees, agents and representatives, against any and all claims, losses,
damages and liabilities, including reasonable attorneys' fees, incurred by any
of them arising out of any breach of any representation by Seller, resulting
from the actual adulteration or misbranding of Product, or any defect in
materials or workmanship.
(b) The foregoing indemnify shall not be effective to the extent any such
claim, loss, damage or liability is based upon (i) any act of Buyer or any of
its affiliates, agents or representatives, (ii) any act of Buyer or any of its
affiliates, agents or representatives done jointly with any party other than
Seller, or (iii) any claim arising as a result of any
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unauthorized alteration, modification or change to the Product by any party
other than Seller.
8. Indemnification by Buyer.
(a) Subject to the provisions of subsection 8(b) below, Buyer agrees to
indemnify, defend and hold harmless Seller, its affiliates and their respective
employees, agents and representatives, against any and all claims, losses,
damages and liabilities, including reasonable attorneys' fees, incurred by any
of them arising out of any act of Buyer relative to the marketing, distribution
and sale of Products.
(b) The foregoing indemnity shall not be effective nor shall it be
enforceable in the event any such claim, loss, damage or liability is based upon
(i) any act of Seller or any of its affiliates, agents or representatives, (ii)
any act of Seller or any of its affiliates, agents or representatives done
jointly with any party other than Buyer, or (iii) any claim arising as a result
of any unauthorized alteration, modification or change to the Product by any
party other than Buyer, or any defect in materials or workmanship.
9. Procedures Related to Indemnification.
(a) A party seeking indemnification under the terms of this Agreement shall
be referred to as the "indemnified party" and the person who is to provide such
indemnification shall be referred to as the "indemnifying party." The
indemnified party shall notify in writing the indemnifying party with reasonable
promptness of its discovery of any matter giving rise to a claim of indemnity.
The failure or delay in so notifying the indemnifying party shall not relieve
indemnifying party of its obligations to indemnify unless, and only to the
extent that, the indemnifying party's defense of such claim is materially
prejudiced as a result of such delay. The indemnified party shall provide the
indemnifying party as soon as practicable all information and documentation
related to the matter for which the indemnified party seeks indemnification. The
indemnifying party shall be given access to all books and records in the
possession or under the control of the indemnified party that the indemnifying
party reasonably determines to be related to such claim.
(b) Promptly upon receipt of notice from the indemnified party, the
indemnifying party shall take over control of the defense of any action, claim
or litigation arising out of the indemnification provisions of this Agreement.
The indemnified party shall support and assist the indemnifying party in the
defense, but all costs, expenses and related charges, including but not limited
to attorneys' fees, shall be for the account of the indemnifying party, except
to the extent such independent counsel is representing the indemnified party for
defenses available to it but not available to the indemnifying party. If the
indemnified party wishes to retain its own counsel to advise and assist in the
defense of such claim, it may do so, but the expense of retaining such
independent counsel shall be for the account of the indemnified party and the
indemnifying party shall retain complete control over the defense. If, after
receipt of notice, the indemnifying party does not defend the interests of the
indemnified party or does not take appropriate
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action to defend and hold harmless the indemnified party, then, and in that case
only, the indemnified party shall be entitled to retain counsel, defend the
action, claim or litigation, and seek compensation for all of its costs of
defense from the indemnifying party. The indemnified party shall not, without
the prior consent of the indemnifying party, enter into any settlement the
result of which would materially limit or modify the rights of the indemnifying
party under this Agreement.
10. Recall. In the event of any recall of any Product, whether voluntary or
involuntary, Seller shall replace the recalled Product without charge to Buyer.
In addition, Seller shall pay all of Buyer's reasonable out of pocket expenses
incurred in connection with such recall. In no event shall Seller be liable for
any loss of use, revenue or anticipated profits, loss of stored, transmitted or
recorded data, or for any incidental, unforeseen, special, punitive or
consequential damages arising out of or in connection with this Agreement, or
the sale or use of the Products, or arising out of the actions taken by Seller
in response to a recall or other action required by law, regulation or agency
with oversight over the operations and business of Seller; provided, however,
that nothing in this Section 10 shall limit Seller's indemnification obligations
under Section 7 for losses incurred by Buyer for which Buyer is entitled to
indemnification arising out of a claim by any third party.
11. Termination.
(a) Either party may terminate this Agreement in the event of a material
breach by the other which remains uncured (or where significant steps toward
effecting the cure shall not have been taken) within sixty (60) days after
written notice is given to the breaching party specifying the nature of the
breach. The parties agree that Buyer's failure to meet the purchase requirements
set forth in Section 4 or to make payments as required under this Agreement
shall be material breaches, giving Seller the right subject to the cure period,
but not the obligation, to terminate this Agreement. The remedy of termination
shall be without prejudice to any other rights or remedies available to the
non-breaching party under this Agreement or at law.
(b) Notwithstanding subsection (a) hereinabove, Seller may terminate this
Agreement effective immediately if any proceeding shall be instituted by or
against the Buyer seeking to adjudicate it a bankrupt or insolvent or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a custodian, receiver, trustee or other
similar official for it or for any substantial part of its property and, in the
case of any such proceedings instituted against Buyer (but not instituted by it)
either such proceedings shall remain undismissed or unstayed for a period of
sixty (60) days or any of the actions sought in such proceedings shall occur; or
the Buyer shall take any corporate action to authorize any of the actions set
forth above in this subsection (b). Buyer may terminate this Agreement if Seller
voluntarily or involuntarily becomes bankrupt or is unable to fulfill its
obligations hereunder.
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(c) Buyer may terminate this Agreement if (i) the US Food and Drug
Administration takes any final action the result of which is to ban the
manufacture, sale or introduction into interstate commerce of any Product or to
impose significant restrictions on its use in the hearing field or generally or
(ii) Seller purchases or operates any entity which sells hearing aids through
retail outlets.
(d) Termination or expiration of this Agreement for any reason shall not
(i) release either party from any liability or obligation which has already
accrued as of the effective date of such termination or (ii) constitute a waiver
or release of, or otherwise be deemed to prejudice or adversely affect, any
rights, remedies or claims, whether for damages or otherwise, which a Party may
have hereunder, at law, equity or otherwise.
12. Representations and Warranties.
(a) Seller represents and warrants that:
(i) Seller is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and has
requisite power and authority to own, lease and operate its properties and
to carry on its business as currently conducted, and is qualified to do
business in all jurisdictions where it currently conducts business.
(ii) Seller has the power and authority to enter into this Agreement
and to perform its obligations hereunder, and the execution of this
Agreement has been duly authorized by all necessary corporate or other
action.
(iii) This Agreement constitutes a legal, valid and binding obligation
of Seller, and is enforceable against it in accordance with its terms,
except to the extent such enforceability may be subject to (a) the laws of
bankruptcy, insolvency, fraudulent conveyance or other laws relating to
creditors' rights or (b) general equitable principles.
(iv) The execution and delivery of this Agreement and the performance
by Seller of its obligations hereunder will not violate any laws or
regulations applicable to Seller, conflict with or cause a breach of any
obligations to a third party, or violate, breach or conflict with any of
the terms of Seller's Certificate of Incorporation or By-Laws.
(b) Buyer represents and warrants that:
(i) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of its state of organization and has requisite
power and authority to own, lease and operate its properties and to carry
on its business as currently conducted, and is qualified or will be
qualified to do business in all jurisdictions where it does or will conduct
business.
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(ii) Buyer has the power and authority to enter into this Agreement,
including the power and authority to make payments in respect of purchases
and other transactions arising herefrom, and to perform its obligations
hereunder. The execution of this Agreement has been duly authorized by all
necessary corporate, governmental or other action.
(iii) This Agreement constitutes a legal, valid and binding obligation
of Buyer, and is enforceable against it in accordance with its terms,
except to the extent such enforceability may be subject to (a) the laws of
bankruptcy, insolvency, fraudulent conveyance or other laws relating to
creditors' rights or (b) general equitable principles.
(iv) To the best of Buyer's knowledge, Buyer does not have any
liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise, that would be material to its or their financial
condition or business operations that have not been disclosed to Seller.
(v) The execution and delivery of this Agreement and the performance
by Buyer of its obligations hereunder will not violate any laws or
regulations applicable to Buyer, conflict with or cause a breach of any
obligations of Buyer to a third party, or violate, conflict with or cause a
breach of any of the terms of Buyer's Certificate of Incorporation or
By-Laws.
(c) Product Complaint Procedures. Buyer agrees to provide all complaints
with respect to the Products to Seller, in writing and in the English language,
in a timely manner. Submitted complaints shall contain sufficient detail to
enable Seller to adequately investigate the reported problem. Complaints
pertaining to injury or death shall be reported to Seller in five (5) working
days or less from the date of Buyer's receipt of such complaint in order that
Seller may comply with the requisite FDA Medical Device Reporting requirements.
Seller will take appropriate steps to make all necessary filings and reports to
regulatory agencies in accordance with its obligations. When requested so to do,
Buyer will use its best commercial efforts to provide evaluation and
investigation support to Seller. Seller, as service provider for the Products,
is responsible for analysis of service reports, service repair data, service
trends and telephone support for potential complaints or corrective action
requirements, all as set forth in the Quality Systems Regulation and other FDA
instructions. Buyer agrees to return parts involved in a complaint to Seller
promptly, and in any event within thirty (30) days after notification by Buyer
to Seller of the complaint.
13. Dispute Resolution.
(a) In an effort to effectively and economically manage the resolution of
any disagreement which might arise during the term of this Agreement with
respect to the obligations of the parties, or with respect to actions to be
taken or not taken under the terms of the Agreement, the parties agree to
appoint a representative (at the line manager level or its equivalent) to meet
and discuss the disagreement. If such representatives,
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after a good faith effort, are not able to resolve the disagreement to the
mutual satisfaction of the parties, the disagreement then shall be submitted to
the respective Vice Presidents of the parties for their attention. If the Vice
Presidents are not able to negotiate a mutually acceptable resolution of the
dispute, then the parties agree to submit the disagreement to arbitration and
the provisions of clause (b) of this Section shall apply.
(b) Subject to the provisions of subsection (a) hereinabove, any
disagreement, dispute, controversy or claim arising out of this Agreement,
including without limitation, interpretation thereof, or any alleged breach or
invalidity, which cannot be resolved through the good faith negotiations of the
parties shall be resolved through arbitration. The arbitration shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association (except to the extent such rules conflict with the
provisions of this Agreement, in which event, this Agreement shall control). The
tribunal shall be composed of three arbitrators (one selected by each party and
the third selected by the arbitrators selected by the parties) and shall be
conducted in New York, New York ("Site"). Any arbitration proceedings shall be
conducted in confidence and the award or decision of the tribunal shall be final
and binding upon the parties. The award of the arbitrators shall be enforceable
by any court having jurisdiction thereof.
(c) Nothing contained herein shall prohibit or limit in any way any party
from seeking or obtaining preliminary or interim injunctive or other equitable
relief from a court for a breach or alleged breach of any of the covenants and
agreements of the other party to this Agreement.
14. Notices. When any notice is required or permitted to be given under any
provision of this Agreement, such notice shall be made in writing and signed by
or on behalf of the party giving such notice, mailed certified mail, postage
prepaid, return receipt requested, or sent by nationally recognized overnight
courier, and addressed to the party to whom such notice is to be given at the
addresses set forth below. Notices are considered delivered on the postmarked
date or the date delivered to a courier for next workday delivery. Either party
may change its address for the receipt of any notice in the manner set forth
above.
To Seller: To Buyer:
Siemens Hearing Instruments, Inc.. HearUSA, Inc.
00 Xxxxxxxxxxxx Xxxxxx 0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000 Xxxx Xxxx Xxxxx, XX 00000
Attention: Chief Financial Officer Attention: President
Telecopy No. (000) 000-0000 Telecopy No. (000) 000-0000
Copy to: Copy to:
Associate General Counsel XxXxxx Xxxxxx, Esq.
Siemens Corporation Xxxxx Xxxx LLP
000 Xxxx Xxxxxx Xxxxx 000 00xx Xxxxxx, X.X., Xxxxx 000
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Iselin, NJ 08830 Xxxxxxxxxx, XX 00000
Telecopy No. (000) 000-0000
15. New Products. The parties understand and agree that the development of
new hearing aids is both anticipated and encouraged. Buyer wishes to be able to
sell new and improved Products. As new Products become commercially available
from Seller, Seller will provide notice to Buyer of such availability, and such
Products will be added to this Agreement as soon as they are commercially
available upon the mutual agreement of the parties. Seller shall determine the
prices for such new Products, such prices to be commercially reasonable and
consistent with the quantity discounts provided under this Agreement. Such
Products shall be subject to the same adjustments in price as described above
for the current Products. As a result of the development of new technology,
certain of the current Products may become less valuable in the marketplace. To
the extent practicable, Seller will continue to offer the older Products, but
Buyer agrees to channel its marketing efforts and those of the Facilities
towards the introduction and sale of the new Products added to this Agreement.
As the scope of the Products changes, certain older Products may be deleted from
the Products offered under this Agreement, upon the mutual agreement of the
parties.
16. Miscellaneous Provisions.
(a) No Assignment. Neither this Agreement, nor the rights or duties of any
party thereunder, may be assigned without the written consent of the other
party, which consent shall not be unreasonably withheld or delayed, provided,
however, that Seller shall be permitted to assign this Agreement to a
subsidiary, parent or affiliated entity of Seller. In the event of a Change of
Control (as defined in the Credit Agreement) during the term of this Agreement,
Seller shall have the right to determine whether or not, in its discretion, this
Agreement should be assigned to the third party or the entity which results from
the Change of Control, and, should Seller so request, Buyer will provide or
arrange to have provided to Seller, additional assurance of the abilities and
willingness of the third party or new entity to assume the obligations and
provide the services of Buyer hereunder. If Seller does not consent to an
assignment of this Agreement, Buyer shall have the right to terminate the
Agreement on sixty (60) days prior written notice without any further obligation
or liability hereunder. Seller shall retain all rights which it has or may have
up to the effective date of such termination. This Agreement shall be binding on
Seller and Buyer and their respective successor and permitted assigns.
(b) No Waiver. No waiver of a breach of any provision of this Agreement
shall constitute a waiver of any other breach of such provision, nor shall any
such waiver be construed as a continuing waiver.
(c) Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of New York, without giving effect to such
State's conflict of laws provisions (other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law).
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(d) Force Majeure. No party shall be liable for failure to perform or delay
in performing its obligations under this Agreement, and shall not be deemed to
be in breach of its obligations hereunder, if and to the extent and for so long
as such failure or delay in performance or breach is due to natural disaster,
war, strikes or other labor disputes, any loss or disruption of facilities, or
any other cause beyond the reasonable control of such party. The affected party
shall promptly provide the other party with notice of such occurrence, shall
diligently attempt to restore or continue its performance, and shall advise when
such event of force majeure shall have ended.
(e) Housemark Usage. In connection with the transactions contemplated under
this Agreement, Seller has authorized Buyer to use Seller's housemark 'SIEMENS'
in accordance with Seller's regulations and guidelines for the use of such
housemark. In order to assure proper usage of its housemark, Seller reserves the
right to review all proposed usages of the housemark by Buyer.
(f) Complete Agreement. This Agreement, and the Exhibits hereto, represents
the complete and exclusive statement of the arrangement between the parties with
respect to the matters contained herein and supersedes all prior agreements and
representations, oral or written, on the same subject matter. Amendments to this
Agreement shall not be effective unless made in writing and signed by the
parties hereto. In the event of a conflict between the terms contained in any of
the Exhibits relating to this Agreement and the terms of this Agreement, the
text of this Agreement shall govern. If there are terms in the Exhibits which
govern activities related thereto and which are not addressed in this Agreement,
the terms of the Exhibit shall govern. If the nature of the activities to be
conducted pursuant to this Agreement anticipate the preparation, execution and
use of other agreements ("ancillary documents") in respect of specific
activities, such ancillary documents will be subject to the terms of this
Agreement to the extent the terms therein are not in conflict with this
Agreement, and in an event of conflict, the terms of the ancillary documents
shall control the activities described therein.
(g) No Agency. The relationship established hereby is in all respects a
commercial relationship. Nothing herein shall be construed as imposing any
fiduciary obligations on either party, or as establishing any partnership or
joint venture between the parties, or as rendering one part an agent of the
other. No agent or employee of one party shall be deemed to be an employee or
agent of the other. The parties acknowledge that their relationship is one of
independent buyer and seller and that, as separate entities, they have entered
into this Agreement for their respective business interests.
(h) Confidentiality. Buyer and Seller agree that this Agreement, including
any Exhibits, appendices or ancillary agreements, as well as the nature of the
services to be provided one to the other hereunder, are confidential. The
parties agree to keep this Agreement and the information disclosed in, in
connection with and with respect to this Agreement as confidential and not
reveal such information to any other entity now, during or after the termination
or expiration of this Agreement. The parties may, however, admit to the
existence of a supply agreement between them. This restriction does not apply to
any information that (i) is or becomes public through the process of law,
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or through no fault of either party, or (ii) that was revealed to either party
by a third party not owing an obligation of confidentiality to the party who
owns the information disclosed, (iii) information that is rightfully in the
recipient's possession or part of recipient's general knowledge prior to the
receipt of such confidential information, or (iv) information that is required
to be disclosed by law, the order of a court or regulation of a governmental
agency having jurisdiction over the parties; provided, however, in the event
this Agreement is a "Material Agreement" or Buyer is otherwise required by the
SEC to file this Agreement, Buyer shall provide to Seller for Seller's prior
review: (i) a copy of Buyer's proposed redacted version of the Agreement, and
(ii) Buyer's explanatory cover letter to the SEC. Buyer shall incorporate all
redactions reasonably requested by Seller, provided all redactions are requested
upon the advice of Seller's counsel.
(i) Taxes. Each party shall remain responsible for any taxes assessed
against such party which are to be paid by such party as a result of the
transactions hereunder.
(j) Headings; Counterparts. The headings contained in this Agreement are
for convenience of reference only and shall not constitute a part hereof, or
define, limit or in any was affect the meaning of any of the terms or provisions
hereof. This Agreement may be executed in two or more counterparts and any party
hereto may execute any such counterpart. Each counterpart, when executed and
delivered, shall be deemed to be an original and all of such counterparts taken
together shall be deemed to be one and the same instrument.
(k) Public Announcements. Except as the other party shall authorize in
writing, or as required by law, the parties shall not disclose, and shall cause
their respective officers, directors, employees, affiliates and advisors not to
disclose, any matter or matters relating to this transaction to any person not
an officer, director, employee, affiliate or advisor of such party. In the event
a party is required by law to make a public announcement or disclosure, such
party shall, if practicable, consult with the other as to the timing and content
of such announcement before such announcement is made. The parties shall agree
about the content of any statement or communication to the public or the media
prior to the release thereof.
(l) Rebates. Buyer acknowledges that rebates that are realized by Buyer as
a result of meeting the Minimum Purchase Percentage set out in Section 4 above
may be reportable in connection with Federal and State reimbursement programs in
which Buyer participates pursuant to Section 1128 (B) (b) of the Social Security
Act. In order to comply with any such reporting obligations, Seller agrees to
cooperate with Buyer in identifying total rebate amounts as requested.
(m) Survival of Certain Provisions. Notwithstanding the termination or
expiration of this Agreement, the following provisions shall survive, along with
either party's obligations to pay any payments or fees accrued prior to
termination or expiration: Sections 7, 8, 9, 10, 11(d), 13, 14 and 17.
-12-
[SIGNATURE PAGE FOLLOWS.]
-13-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Execution Date.
HearUSA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive
Officer
SIEMENS HEARING INSTRUMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President & CEO
-14-
CERTAIN INFORMATION (INDICATED BY ASTERISKS) IN THIS EXHIBIT HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTION.
EXHIBIT A
HEARUSA PRICING SCHEDULE FOR CUSTOM AND BTE PRODUCTS
effective February 1, 2006 through December 31, 2006
NEW - EFFECTIVE
2/1/06
HEARUSA HEARUSA
SINGLE UNIT DISCOUNT NET PRICE
----------- -------- ---------
LIFE BTE
ACURIS Life $1,391 ****% $****
ACURIS Life Kits $2,883 ****% $****
XXXXX Life $1,167 ****% $****
CIELO Life $ 833 ****% $****
epocket Remote Control $ 101 ****% $****
ACURIS CUSTOM
ITE $1,525 ****% $****
HS $1,576 ****% $****
ITC / MC $1,677 ****% $****
CIC $1,828 ****% $****
BTE
ACURIS S $1,626 ****% $****
ACURIS P $1,904 ****% $****
XXXXXX CUSTOM
ITE $1,363 ****% $****
HS $1,438 ****% $****
ITC / MC $1,533 ****% $****
CIC $1,682 ****% $****
BTE
XXXXXX S $1,480 ****% $****
XXXXXX XX $1,548 ****% $****
XXXXXX 3 $1,788 ****% $****
XXXXXX 3 P $1,879 ****% $****
XXXXXX XX $1,565 ****% $****
XXXXX WITH E2E CUSTOM
ITE $1,373 ****% $****
HS $1,418 ****% $****
ITC / MC $1,509 ****% $****
CIC $1,645 ****% $****
-1-
BTE
XXXXX e2e S $1,463 ****% $****
XXXXX CUSTOM
ITE $ 996 ****% $****
HS $1,072 ****% $****
ITC / MC $1,147 ****% $****
CIC $1,297 ****% $****
BTE
XXXXX S $1,167 ****% $****
PRISMA 2 CUSTOM
ITE $ 832 ****% $****
HS $ 895 ****% $****
ITC / MC $ 958 ****% $****
CIC $1,084 ****% $****
BTE
PRISMA 2 $ 931 ****% $****
PRISMA 2 K/2 K+ $ 930 ****% $****
PRISMA 2 Power $1,039 ****% $****
PRISMA 2 VC $ 975 ****% $****
PRISMA 2 P VC $1,083 ****% $****
PRISMA 2 D SP $1,102 ****% $****
CIELO CUSTOM
ITE $ 738 ****% $****
HS $ 813 ****% $****
ITC / MC $ 907 ****% $****
CIC $1,055 ****% $****
BTE
CIELO S $ 833 ****% $****
CIELO Dir $ 844 ****% $****
MUSIC PRO CUSTOM
ITE $ 633 ****% $****
HS $ 697 ****% $****
ITC / MC $ 778 ****% $****
CIC $ 905 ****% $****
BTE
MUSIC Pro $ 678 ****% $****
MUSIC Pro S $ 715 ****% $****
MUSIC Pro Dir $ 724 ****% $****
MUSIC Pro SP $ 727 ****% $****
-2-
PHOENIX CUSTOM
ITE $ 417 ****% $****
HS $ 476 ****% $****
ITC / MC $ 553 ****% $****
CIC $ 672 ****% $****
BTE
PHOENIX 104 $ 468 ****% $****
PHOENIX 204 $ 468 ****% $****
PHOENIIX 304 $ 468 ****% $****
INFINITI PRO CUSTOM
ITE $ 422 ****% $****
HS $ 497 ****% $****
ITC / MC $ 595 ****% $****
CIC $ 746 ****% $****
BTE
INFINITI Pro $ 487 ****% $****
INFINITI Pro S $ 513 ****% $****
INFINITI Pro Dir $ 519 ****% $****
INFINITI Pro SP $ 525 ****% $****
PHOENIX ONE CUSTOM
ITE $ 399 ****% $****
HS $ 477 ****% $****
ITC / MC $ 576 ****% $****
CIC $ 732 ****% $****
BTE
PHOENIX 113 $ 383 ****% $****
PHOENIX 213 $ 383 ****% $****
PHOENIIX 313 $ 383 ****% $****
HEARUSA PRICING SCHEDULE FOR OPTIONS
effective February 1, 2006 through December 31, 2006
NEW - EFFECTIVE 2/1/06
SINGLE
UNIT HEAR USA HEAR USA
OPTIONS PRICE DISCOUNT PRICE
------------------------------ ------- -------- --------
AGC-O CONTROL $ 33.00 ****% $****
CLEAR COAT $ 32.00 ****% $****
FILAMENT VC $ 59.00 ****% $****
GAIN CONTROL $ 33.00 ****% $****
-3-
MPO CONTROL $ 33.00 ****% $****
SCREW SET VC $ 32.00 ****% $****
SOFT CANAL $ 32.00 ****% $****
TELECOIL $ 59.00 ****% $****
TELECOIL (SWITCHLESS) $ 73.00 ****% $****
TONE (N-H) SWITCH $ 33.00 ****% $****
TONE (N-L) SWITCH $ 33.00 ****% $****
TONE (N-H) CONTROL $ 33.00 ****% $****
TONE (N-L) CONTROL $ 33.00 ****% $****
TWINMIC SYSTEM $133.00 ****% $****
VOICEMIC $133.00 ****% $****
24 HOUR SERVICE $ 49.00 ****% $****
REMAKE / RECASE $ 61.00 ****% $****
REMAKE/RECASE- NO MODEL CHANGE $ 61.00 ****% $****
CONV BTE >5YR OUT-WARR SERVICE $127.00 ****% $****
CONV BTE OUT OF WARRANTY SVC $ 69.00 ****% $****
CONV ITE >5YR OUT WARR SERVICE $127.00 ****% $****
CONV ITE OUT OF WARR SERVICE $ 69.00 ****% $****
DIG BTE OUT OF WARRANTY $129.00 ****% $****
DIG ITE OUT OF WARRANTY SERV $129.00 ****% $****
ITE 1-2YR DAMAGE SERVICE $181.00 ****% $****
PROG ANALOG BTE OUT OF WARR $108.00 ****% $****
PROG ANALOG ITE OUT OF WARR $108.00 ****% $****
DHL EXPRESS OVERNIGHT/NEXT DAY $ 16.00 ****% $****
DHL EXPRESS OVERNIGHT/NEXT DAY $ 18.00 ****% $****
* The parties agree that the "ship to" addresses determine the level of
pricing charged to the purchasers under the terms of this Agreement.
-4-
EXHIBIT B
AGREEMENT TO BE BOUND BY SUPPLY AGREEMENT
TO: SIEMENS HEARING INSTRUMENTS, INC.
AND TO: HearUSA, INC.
The undersigned hereby acknowledges and confirms that the undersigned
(i) has received a copy of the Supply Agreement, dated as of February 10, 2006
(the "Agreement"), by and among Siemens Hearing Instruments, Inc., certain
Siemens Affiliates and HearUSA, Inc., a copy of which is attached hereto, (ii)
has read and understands fully the provisions of the Agreement and (iii)
proposes to become a party thereto as a "Seller" in accordance with the
provisions of the Agreement.
From and after the date hereof, the undersigned hereby covenants and
agrees to be bound by the Agreement, as such Agreement may be amended, modified,
replaced, restated or supplemented from time to time in accordance with the
provisions thereof, as a party in the same manner and to the same extent as if
the undersigned had been an original party to the Agreement as a "Seller".
Unless otherwise defined in this Counterpart, capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Agreement.
DATED: February 10, 2006
[NAME OF SIEMENS AFFILATE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for Notices:
_____________________________________
_____________________________________
_____________________________________
-5-
