EXHIBIT 10.15
SUPPLY AGREEMENT
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Micromed Development Corporation, a Delaware corporation with offices at 0000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("MDC") and Consolidated Polymer
Technologies, a Florida corporation with offices located at 00000 00xx Xxxxxx
Xxxxx, Xxxxx, Xxxxxxx 00000-0000 ("CPT") desire to conduct business with one
another.
CPT is the developer of certain resin Material (defined below) for use in
Devices, and MDC is the manufacturer of certain Devices in the Field (as defined
below) that incorporate the Material. MDC desires to assure itself of an
EXCLUSIVE supply of Material for use in its Devices and CPT wishes to supply the
Materials to MDC on the terms and conditions set forth herein:
The parties agree as follows:
1. CERTAIN DEFINITIONS
(a) "Material" means polymer resin, currently known as C-Flex resin
numbers as listed on Schedule "A"
(b) "Field" means ear ventilation tube Devices
(c) "Exclusive Territory" shall mean all parts of the world except
the countries that are members of the European Community (EC)
(d) "Non-Exclusive Territory" shall mean all countries that are
members of the European Community (EC).
2. SALE AND PURCHASE OF THE MATERIAL
(a) CPT shall supply Material or Devices under this agreement to MDC
for sale and distribution on an EXCLUSIVE basis within the Field and Exclusive
Territory and shall not supply Material or Devices to any other person or entity
during the term of this agreement. CPT shall supply Material or Devices under
this agreement to MDC for sale and distribution on a Non-Exclusive basis within
the Field and Non-Exclusive Territory. CPT SHALL CREATE AN EXCLUSIVE PART
NUMBER FOR MDC TO THE CURRENT SPECIFICATIONS OF THE MATERIAL. THIS MATERIAL, as
described on Schedule "A", SHALL BE SOLD EXCLUSIVELY TO MDC, AND WILL BE
AUTHORIZED SOLELY BY MDC WRITTEN PURCHASE ORDER. AS MANUFACTURED UNDER THE
EXCLUSIVE DEVICE PART NUMBER(S) TO BE ASSIGNED, MDC SHALL RETAIN AN EXCLUSIVE
RIGHT FOR THIS MATERIAL.
(b) All deliveries and sales of the Material or Devices to MDC shall
be initiated pursuant to the standard MDC purchase order, the current version of
which CPT currently has in their possession. If the terms and provisions for
any MDC purchase order or any communication from MDC or communication from CPT
respecting this agreement expressly conflict with the
terms and provisions hereof, then this agreement shall be deemed controlling.
(c) MDC and CPT shall meet at least once annually to review estimated
requirements for the next calendar year, that date to be negotiated between the
Parties to this agreement.
(d) CPT shall notify certain customers and agents that have or may
utilize the Material for Devices that an exclusive agent status has been granted
for ventilation tubes from all C-Flex material formulations. CPT will not
supply or offer for sale any raw material to Xomed after this agreement has been
signed or notice has been given by CPT to Xomed, except on the following terms
and conditions. CPT may offer to Xomed the right to purchase up to Fifty
Percent (50%) of the total amount of purchases from January 1, 1994 thru
September 1, 1994. This offer to purchase such material will expire on January
1, 1995, and no additional material may be purchased during the term of this
agreement.
3. PAYMENT AND MINIMUMS
MDC shall pay to CPT a one-time, non-refundable fee of $10,000 at the
signing of this agreement for the Exclusive right to the Material for Devices in
the Field and Exclusive Territory.
MDC shall purchase the minimum annual (U.S. Dollar) amounts of Devices
covered by this agreement to maintain the exclusivity. CPT's remedy for MDC not
purchasing the annual dollar amounts is to convert MDC'S status under this
agreement to non-exclusive.
Year 1 - $5,000.00
Year 2 - $10,000.00
Year 3 - $20,000.00
Year 4 - $25,000.00
Year 5 - $30,000.00
4. MANUFACTURING OF MATERIAL
(a) CPT shall manufacture the Material and Devices in accordance with
the manufacturing, packaging and quality assurance specifications, processes and
protocols agreed upon by the Parties.
(b) CPT shall NOT make any changes to specifications, processes or
protocols, to the Material. If CPT finds it necessary or desirable to change
the CURRENT SPECIFICATION FOR THE MATERIAL described on Schedule "A", CPT shall
give this notice to MDC and provide them with a sample of the Material, along
with written documentation explaining the specification, process or protocol
changes. This will give MDC the opportunity to review this new Material for
technical and functional acceptability. Should MDC decide to purchase this new
or modified formulation for the Material, MDC shall notify CPT in
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writing of this decision. CPT will create a NEW EXCLUSIVE PART NUMBER FOR THE
REVISED FORMULATION. These new part number(s) will be reflected in all CPT'S
records and in MDC'S Purchase Orders and added to Schedule "A".
(c) CPT agrees that the Material or Devices delivered and sold to MDC
shall not be adulterated or misbranded, or in violation of any federal or state
statute or regulation.
(d) All Material delivered to MDC shall be subject to reasonable
acceptance by MDC quality assurance staff. CPT shall supply a Certificate of
Compliance with each shipment. At a minimum, this Certificate shall contain the
lot number including tensile strength, hardness, elongation results and
conformance to the current specifications.
(e) CPT shall create independent documentation, such as Lot History
Records, to track this Material or Devices throughout the entire manufacturing
process. These records shall include sample(s) of the finished Material or
Device and shall be retained by CPT for a period not less than Five years from
the date of manufacture.
5. CONFIDENTIALITY
For the purpose of this agreement, the parties may be required to
share confidential information, included but not limited to specifications,
samples, business and marketing plans, etc. The parties agree to make no use of
the other party's confidential information other than as reasonably required to
effectuate the purpose of this agreement, and neither party shall divulge the
other party's confidential information with the same degree of care that would
be exercised by a reasonable prudent person in similar circumstances (but in no
event using a lower degree of care than such Party uses to maintain its own
confidential information).
A party's confidential information shall not include any information
that the receiving party can demonstrate by reasonable evidence: (1) was
already in the possession and control of the receiving party; (2) was
independently derived by the receiving party; (3) at the time of the disclosure
or thereafter become public knowledge through no fault or omission of the
receiving party; or (4) was lawfully obtained from a third party under no
obligation of confidentiality to the delivering party.
6. WARRANTIES
(a) CPT DOES NOT IN ANY WAY WARRANT THE MERCHANTABILITY OR FITNESS OF
THE DEVICES FOR ANY PURPOSE. CPT MAKES NO WARRANTY WITH RESPECT TO THE MATERIAL
OR DEVICES, EITHER EXPRESS OR IMPLIED, EXCEPT THAT MATERIAL OR DEVICES DELIVERED
PURSUANT TO THIS AGREEMENT SHALL BE IN ACCORDANCE WITH THE THEN
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CURRENT SPECIFICATIONS, PROCESSES OR PROTOCOLS AGREED TO BY THE PARTIES. CPT
shall be responsible for manufacturing the Material and Devices in accordance
with finished product specifications agreed to by the parties. CPT agrees that
MDC shall not be obligated to accept any Material or Device which fail to meet
the specifications, processes or protocols when tested in accordance with the
quality assurance procedures agreed to by the parties. CPT'S standard return
goods policy shall apply to this agreement. CPT will not issue credit on any
Material or Device which has been altered or defaced in any way or upon which
any additional operations have been performed, unless it can be shown that such
Material or Device failed to meet the specifications prior to the performance of
such operations.
(b) MDC hereby acknowledges that the Material or Device will be
produced under this agreement are specified by CPT for implantation in the human
body for a limited period of twenty-nine (29) days or less. With this
understanding, MDC shall assume the following responsibilities:
(1) MDC shall be responsible for all marketing decisions, including
but not limited to the labeling, packaging, advertising,
promotion and distribution of the Material or Device.
(2) MDC shall be responsible for compliance with present and future
statutes, laws, ordinances and regulations of Federal, State and
local governments relating to the sterilization, labeling,
advertising, promotion, sale or other distribution of Material or
Devices.
(3) MDC shall be responsible for obtaining and maintaining such
regulatory clearances for Material and Devices (with the
exception of clearances related to Good Manufacturing Practices,
defect notifications, and registrations as a device producer, all
of which shall be the responsibility of CPT) as may be required
by the provisions of the Federal Food, Drug and Cosmetic Act, as
amended by the Medical Amendments of 1976 and the Sale Medical
Devices Act of 1990, and as may be amended from time to time.
MDC shall indemnify and hold CPT harmless from any liability,
damages or loss from any claims, suits, proceedings, demands,
recoveries or expenses, including without limitation, expenses of
total or partial product recalls, other than a claim or legal
action out of a negligent act, falsification or omission by CPT,
or a failure to comply with the specifications.
(4) MDC shall be liable for and shall indemnify and hold harmless CPT
against any liability, damages
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or loss (other than loss of potential sales) and from any claims,
suits, proceedings, demands, recoveries or expenses, including
without limitation, expenses of total or partial product recalls,
in connection with any of the Material or Devices sold by MDC
arising out of, based on, or caused by the design of the Device,
including without limitation, the selection of polymers from
which the Devices are produced, statements whether written or
oral, made or alleged to be made, by MDC in its advertising,
publicity, promotion, or sale of any of the Devices or arising
out of, based on, or caused by MDC'S labeling, packaging or
sterilization of the Devices. MDC shall maintain product
liability insurance in such amounts as ordinary good business
practice for the medical Device implant business would require
and shall provide CPT with evidence of this coverage. CPT shall
promptly notify MDC of any such claim or demand which comes to
its attention.
(5) MDC agrees to defend any suit brought against CPT for any claim
that the mechanical design or method of use of any Device
infringes any third party's intellectual property rights
(including patents, trade secrets and the like) and will satisfy
any award of damages for such infringement, provided that CPT
gives MDC prompt written notice of any such suit, the opportunity
to defend same and cooperation in the defense.
7. ABILITY TO SUPPLY
CPT acknowledges that a reliable and continuous source of supply of
Material(s) or Devices is a fundamental prerequisite to MDC's ability to
manufacture and sell Devices. Therefore CPT hereby grants MDC a royalty free
license, for an initial period of five (5) years, under all requisite technology
to manufacture, have manufactured, and use Material or Devices solely in the
Field, only upon the occurrence of (i) an Event in Section 8(d) with respect to
CPT, (ii) CPT's failure to deliver Material or Devices to MDC within sixty (60)
days of the required date, (iii) CPT's delivery to MDC of three (3) batches of
Material or Devices within any calendar year that do not conform to the
Specifications, Processes or Protocols then in effect, or (iv) CPT materially
defects in the observation or performance of, or otherwise materially breaches
any representation, warranty, covenant or other term hereof, and such defect or
breach is not cured within sixty days of CPT's receipt of notice thereof from
MDC. To give effect to the foregoing, CPT agrees to PLACE THE SUPPLIER
TECHNOLOGY, RELATING TO THE FORMULATION AND MANUFACTURE OF THE MATERIAL, IN AN
ENVIRONMENTALLY SECURED CONTAINER, PIECE OF EQUIPMENT OR ELECTRONIC STORAGE
DEVICE (SUCH AS A FIREPROOF VAULT, FIREPROOF FILING CABINET OR COMPUTER DISC
STORAGE) THAT IS
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NOT WITHIN THE CONFINES OF CPT'S MANUFACTURING FACILITY(ICES). The purpose of
the last clause is to assure a continuous supply of Material to MDC.
8. TERM, RENEWAL AND TERMINATION
(a) This agreement shall become effective on the date signed by the
parties and shall remain in effect for five (5) years or until terminated
pursuant to subsection (b), (c) or (d) below.
(b) This agreement may be canceled by MDC upon one (1) year's prior
written notice. At the end of the one (1) year's notice, this agreement shall
convert to a non-exclusive agreement between the Parties regarding the rights to
the Material only.
(c) In addition to (and not in limitation of) any other right that may
arise by reason of any breach of any representation, warranty, covenant, or
other term set forth herein, this agreement may be canceled by either party upon
ninety (90) days' prior written notice, if a material breach of any such
representation, warranty, covenant, or other term hereof occurs and the
breaching party fails to cure such breach within 90 days.
(d) The bankruptcy, insolvency, liquidation, or other business failure
of either party (including any assignment for the benefit of creditors) shall
entitle the other party to terminate this agreement by notice to take effect
immediately.
(e) The provisions of Section 5 of this agreement shall survive any
termination of this agreement and shall remain in full force and effect
thereafter.
(f) After the initial term, this agreement may be renewed under the
same terms and conditions including a minimum annual purchase amount of 85% of
the preceding year's actual purchase amount, to maintain exclusivity.
9. PURCHASE PRICE FOR THE MATERIAL AND DEVICES
CPT and MDC recognize the need for the Material and Device to be sold
at a price consistent with both parties' cost objectives. Prices for the
Material and Devices during the first year from the date of execution of this
agreement shall be held firm for twelve (12) months. Pricing for the components
shall be in accord with the part costing formula agreed to by the parties or
mutually negotiated pricing for devices. Future prices shall be negotiated in
good faith between the Parties commencing 90 days before the beginning of any
new twelve month term.
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10. FORCE MAJEURE
Neither Party shall be liable for failure to perform as required by
the provisions of this agreement where such failure results from a cause beyond
its reasonable control such as acts of god, acts of the other Party, acts of
civil or military authority, fires, strikes, floods, epidemics, quarantine
restrictions or riot, delays in transportation and inability due to causes
beyond the affected Party's reasonable control to obtain the necessary labor,
materials or manufacturing facilities. In the event of any delay attributable
to any of the foregoing causes, the time for performance affected thereby shall
be extended for a period equal to the time lost by reason of the delay. This
does not excuse the Parties from attempting to remedy any of the aforementioned
circumstances.
11. MISCELLANEOUS PROVISIONS
(a) Access to Facilities: CPT agrees upon seven days notice, it will
provide designated MDC representatives access to specified manufacturing areas
for the propose of verifying CPT'S validation of manufacturing processes or
quality control testing procedures specific to MDC'S Material or Devices. Upon
mutual agreement of both Parties, the seven (7) day notice may be waived.
(b) FDA Notices: CPT agrees to notify MDC within five (5) business
days of any FDA inspection of the CPT facilities and will upon receipt promptly
provide MDC copies of any 483 citations/observations or warning letters issued
by the FDA.
(c) Method of Communications: All notices required or permitted to be
given shall be made in writing. Parties may mutually agree to designate an
individual for such communications.
(d) Entire Agreement: This agreement and attachments constitute the
entire agreement between the Parties relating to the supply of Materials and
Devices and supersedes all prior contracts, agreements and understandings
between them.
(e) Severability: If any provisions of this agreement shall be held
or deemed to be invalid, inoperative or unenforceable as applied to any
particular case in any jurisdiction or jurisdictions because of its conflicting
with any constitution or statute or rule of public policy or for any other
reason, such circumstance shall not have the effect of rendering the provision
or provisions in question invalid, inoperative or unenforceable.
(f) CPT will grant MDC worldwide rights to use the C-Flex logo with
promotional activities, literature and product information related to
ventilation tubes of MDC. CPT
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shall have the right to review such promotional materials prior to distribution.
IN WITNESS WHEREOF, MDC and CPT, by their duly authorized officers or agents,
have executed this agreement as of the 9th day of November, 1994.
In evidence of the conclusion of this agreement, this agreement shall be
prepared in two (2) counterparts and the Parties shall retain one (1) copy each.
MICROMED DEV. CORP. CONSOLIDATED POLYMER TECH., INC.
/s/ F. Xxxxx Xxxx /s/ Xxxxx X. Xxxxxxxxx
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By: F. Xxxxx Xxxx By: Xxxxx Xxxxxxxxx
Title: Vice President & COO Title: President
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SCHEDULE "A"
C-Flex Resin Raw Material Numbers
R70-273-000
R70-272-000
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Subsequent to November 9, 1994, Micromed Developement Corporation changed its
name to TreBay Medical Corporation.
TREBAY
MEDICAL CORPORATION
F. XXXXX XXXX
Vice President and
Chief Operating Officer
August 16, 1995
Xxxxx Xxxxxxxxx
President
Consolidated Polymer Technologies
00000 00xx Xxxxxx Xxxxx
Xxxxx, XX 00000
Re: Amendment Letter to Supply Agreement
Dear Xxxxx:
This letter shall serve as an amendment to the supply Agreement executed between
our companies on November 9, 1994.
The parties agree to the following:
1. In section 3 of the Agreement, the minimum annual purchase commitments of
Devices is hereby deleted from the agreement.
2. TreBay shall purchase compounded C-Flex material on an exclusive basis in
accord with the attached pricing schedule of August 15, 1995.
3. Schedule A to the Agreement is modified per the attached.
4. All other provisions of the agreement are unchanged.
IN WITNESS WHEREOF, TreBay Medical Corporation and Consolidated Polymers Inc.,
by their duly authorized officers or agents, have executed this Amendment Letter
as of the 21st day of August, 1995.
This Letter Agreement shall be prepared in two (2) counterparts and each party
shall retain one (1) copy each.
TreBay Medical Corporation Consolidated Polymer
Technologies, Inc.
/s/ F. Xxxxx Xxxx /s/ Xxxxx X. Xxxxxxxxx
-------------------------- ---------------------------
By: F. Xxxxx Xxxx By: Xxxxx X. Xxxxxxxxx
Title: Vice President & COO Title: President
0000 Xxxxxxxxx Xxxxx - Xxxxxxxxxx, Xxxxxxx 00000 Phone: 000-000-0000 -
Fax: 000-000-0000
SCHEDULE "A"
C-Flex Resin Raw Material Numbers
Revised 8/16/95
R70-321-000 Blue, 60A
R70-322-000 Blue, 95A
R70-323-000 Blue, 50A
R70-328-000 White, 60A
R70-329-000 White, 95A
R70-330-000 White, 5A
R70-331-000 White, 90A
TREBAY MEDICAL CORPORATION
C-FLEX(R) PRICING
R70-321-000 R70-322-000 R70-323-000 R700-328-00D R700-329-000 R700-330-000 R70-331-000
BLUE, 60A BLUE, 95A BLUE, 50A WHITE, 60A WHITE, 95A WHITE, 5A WHITE 90A
----------- ----------- ----------- ------------ ------------ ------------ -----------
50 - 99 lbs $40.48 $40.92 $40.64
100 - 199 lbs $33.74 $34.10 $33.87 $11.60 $11.04 $9.72 $10.12
200 - 499 lbs $28.92 $29.23 $29.03 $ 9.67 $ 9.20 $8.10 $ 8.44
500 - 799 lbs $25.30 $25.58 $25.40 $ 7.01 $ 7.89 $5.74 $ 6.37
800 - 999 lbs $22.49 $22.74 $22.58 $ 6.54 $ 6.90 $5.35 $ 5.95
Price quoted is per pound.
Lead times are 4 to 6 weeks
