AMENDMENT TO SUPPLY AGREEMENT
AND SUBSEQUENT AGREEMENT ON SPECIFICATIONS AND PRICES
WHEREAS, the parties have entered into a Supply Agreement dated May 19, 1994
("the AGREEMENT") whereby, Biosearch Medical Products, Inc. will supply Sherwood
Medical Company with certain enteral feeding access devices until May 19, 1996
and,
WHEREAS, the parties wish to add to the devices set forth in the AGREEMENT to
include devices suitable for sale in an international market ("INTERNATIONAL
PRODUCTS") and,
WHEREAS, in consideration for such change, Sherwood will increase its second
year minimum purchase from $2,500,000 to $2,700,000 therefor;
IT IS AGREED:
1. Section 2(b) of the AGREEMENT is deleted in its entirety and replaced with:
"2(b) (i) Except as otherwise set forth below, and provided that Biosearch
supplies Sherwood's orders for the Products in a timely manner with Products
meeting the Specifications, Sherwood shall order its total requirements of the
Products from Biosearch and will order for delivery during the first twelve (12)
month period of the term of this Agreement at least Two Million Five Hundred
Thousand Dollars ($2,500,000) worth of the Products and will order for delivery
during the second twelve (12) month period of the term
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-2
--------------------------------------------------------------------------------
of this Agreement at least Two Million Seven Hundred Thousand Dollars
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-3
--------------------------------------------------------------------------------
($2,700,000) worth of the Products and/or International Products each year, to
include any Products purchased by Sherwood pursuant to the J-Tube Supply
Agreement between Sherwood and Biosearch of even date herewith. Quantities of
Products not delivered by Biosearch in a timely manner or failing to meet the
Specifications will be deducted from Sherwood's minimum purchase commitment;
(ii) the parties agree that a breach (after written notice of such breach and
reasonable opportunity to cure) of Sherwood's obligation in the first twelve
month period of the term of this Agreement to order for delivery at least Two
Million Five Hundred Thousand Dollars ($2,500,000) worth of the Products and in
the second twelve month period of the term of this Agreement to order for
delivery at least Two Million Seven Hundred Thousand Dollars ($2,700,000) worth
of the Products and/or International Products each year, to include any Products
purchased by Sherwood pursuant to the J-Tube Supply Agreement between Sherwood
and Biosearch of even date herewith, as detailed in Subsection (i) above shall
also be considered a breach of the Asset Purchase Agreement; (iii) in the event
Sherwood shall order for delivery Three Million Dollars ($3,000,000) or more of
Products in the second twelve month period of the term of this Agreement,
Sherwood shall have no obligation to order 75% of its requirements of Products
from Biosearch for the second twelve month period; (iv) Subject to the
provisions of Subsection (iii) above and the payment obligations set forth in
(v) below, in the second twelve (12) months of the term of this Agreement,
Sherwood shall have the right to manufacture at Sherwood facilities up to
twenty-five percent (25%) of its requirements (as defined below) of the
Products, provided that such self-manufacture of the Products shall not reduce
Sherwood's minimum purchase commitments set forth herein. Twenty-five
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-4
--------------------------------------------------------------------------------
percent (25%) of requirements shall mean 25% of the total aggregate dollar
amount of Products manufactured by both Sherwood and Biosearch. Such total
aggregate dollar amount shall be calculated based on the Product Purchase
Prices; (v) in the event that, during the second twelve month term of this
Agreement, and if the provisions of Subsection (iii) above do not apply,
Sherwood shall self-manufacture an amount greater than 25% of the Products,
Sherwood shall, within 30 days of written notice delivered to Sherwood by
Biosearch, pay to Biosearch an amount equal to the product of the aggregate
Product Purchase Prices in excess of 25% of the Products manufactured in the
second twelve month term, multiplied by 9.09% and (vi) Sherwood's obligation to
purchase its requirements of the Products from Biosearch shall not include the
Silicone Replacement G-Tube Products, provided that, with regard to such
G-Tubes, Sherwood purchases from Biosearch its entire inventory of finished
goods and work in process in existence as of the date of this Agreement, and
G-Tubes or components thereof that Biosearch is committed to purchase from its
vendors as of the date of this Agreement."
2. Exhibit A of the AGREEMENT is hereby amended by the addition of EXHIBIT A1
attached hereto containing the names and order numbers of INTERNATIONAL
PRODUCTS.
3. The parties agree that not all of the Product specifications for the
INTERNATIONAL PRODUCTS are final as of the date of this AMENDMENT. Upon the
receipt of International Product specifications from Sherwood (blueprints and
specifications
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-5
--------------------------------------------------------------------------------
commonly known as SCR's) Biosearch shall price such INTERNATIONAL PRODUCTS at
Biosearch's standard manufacturing cost plus ten percent (10%) pursuant to
Section 4 of the AGREEMENT. Biosearch shall promptly notify Sherwood of such
prices which will then be incorporated into Exhibit A.
4. Sherwood agrees to provide:
a. any SCR's, blueprints, special molds and/or parts needed to produce
parts for the INTERNATIONAL PRODUCTS with sufficient lead time to enable
Biosearch to fulfill the delivery requirements of any Sherwood firm
purchase order.
b. sufficient labels to apply to the INTERNATIONAL PRODUCTS (with the
exception of box labels which will be supplied by Sherwood on a computer
diskette) with sufficient lead time to enable Biosearch to fulfill the
delivery requirements of any Sherwood firm purchase order.
c. the final firm purchase orders which in aggregate with prior firm
purchase orders will comply with Sherwood's obligation under amended
section 2(b) by March 19, 1996, time being of the essence.
5. Sherwood Purchase Orders Nos. 6324 and 5A067 are hereby cancelled. On the
date that this amendment is executed by both parties or shortly thereafter,
Biosearch shall promptly stop work on said Purchase Orders and on March 22, 1996
will provide Sherwood
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-6
--------------------------------------------------------------------------------
with an accounting of finished goods, work-in-process and raw materials
purchased by Biosearch specifically for said Purchase Orders and not otherwise
usable by Biosearch. Said finished goods, work-in-process and raw materials
shall be converted to International Products pursuant to new purchase orders to
be issued by Sherwood on or before before March 19, 1996, time being of the
essence. Any remaining finished goods, work-in-process and raw materials shall
be purchased by Sherwood at Biosearch's cost plus ten percent (10%), such
purchases to be included in determining Sherwood's purchases pursuant to Section
2(b)(i) hereof.
IN WITNESS WHEREOF, the parties hereto have caused this AMENDMENT to be executed
by their authorized representatives.
BIOSEARCH MEDICAL PRODUCTS, INC. SHERWOOD MEDICAL COMPANY
By:____________________________ By:_____________________________________
Xxxxxxx X. Xxxx
President ________________________________________
________________________________________
Date:__________________________ Date:___________________________________
AMENDMENT NUMBER 1 TO SUPPLY AGREEMENT PAGE-7
--------------------------------------------------------------------------------
EXHIBIT A1 Addendum to AGREEMENT EXHIBIT A
Use exhibit A1 attached to Xxxxxx'x letter of 1/17/96.
