1
EXHIBIT 10.9
DESIGN, MANUFACTURING AND SUPPLY AGREEMENT
This Design, Manufacturing and Supply Agreement and all attachments
(called the "Agreement") is made by United States Surgical Corporation
("Buyer"), having its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000, and SeaMED Corporation ("Contractor"), having its principal
place of business at 00000 XX 00xx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000. This
Agreement sets forth the mutual understanding by which the Buyer and the
Contractor will conduct business for the life of this Agreement.
Whereas, the Contractor has the facilities and expertise to design,
manufacture, test and supply electronic devices in accordance with GMP and ISO
9000 practices; and
Whereas, Buyer desires to engage the services and the facilities of
Contractor for the design, manufacture and supply of several electronic devices
described in Exhibit B (each hereinafter a "Product" and collectively the
"Products") and other related electronic assemblies as may be specified in the
future;
Therefore, subject to the due execution and delivery of this Agreement
by the parties hereto, in consideration for the below mutual covenants and
agreements, both parties agree as follows:
I. DEFINITIONS
(A) "Qualification Testing" shall be defined as the systematic process
of comparing the actual operation of production units to the functional and
engineering specifications and to the established qualification test procedure.
(B) "Verification Testing" shall be defined as the systematic process
of comparing the actual operation of engineering prototypes of the product to
the functional and engineering specifications.
(C) "Medical Device Reporting" ("MDR") shall be defined as any event
associated with the use of the Product which is required to be reported to the
FDA in accordance with 21 CFR Part 803.
(D) "Device Master Record" shall be defined as the file containing all
pertinent records relative to design, specifications, formulations, complete
manufacturing procedures and quality assurance requirements relative to
production of this medical Product and its subassemblies.
(E) "Device History Record" shall be defined as the compilation of
records containing the complete production / maintenance history of a finished
Product and showing latest revision history, maintenance history and any other
records required by the FDA.
2
(F) "Certificate of Compliance" shall be defined as Contractor's
notification that the Product (including subassemblies for service) conforms to
all established qualification criteria agreed to between both the Contractor and
Buyer.
(G) "Buyer's Equipment" shall be defined as capital equipment such as
production molds, fixtures or testing equipment purchased for and charged to the
Buyer specifically to manufacture and test the Product.
(H) "Product Complaint" shall be defined as failures which occur in use
which lead to events requiring reporting under the MDR or failures which occur
prior to the minimum life expectancy of the component or assemblies, latent
defects or software anomalies.
(I) "Pre-production Product" shall be defined as the fabrication of
products in the manufacturing area under full GMP control using pre-production
released documentation.
(J) "ISO 9000" shall be defined as the standard established and
identified as ISO 9000 by the International Standards Organization.
II. GENERAL TERMS AND CONDITIONS
A. During the term of this Agreement, Contractor shall use its best
efforts to render all services and provide all deliverables specified in Exhibit
B, within the time parameters and cost estimates established therein. Subject to
the terms and conditions contained in this Agreement, Contractor agrees to sell
to Buyer, and Buyer agrees to purchase from Contractor, during the Purchase Term
(as defined in Section IV below), all of Buyers requirements for the Products;
however, the foregoing does not obligate Buyer to purchase any specific quantity
but only establishes the terms and conditions for such purchases if they occur.
All such quantities shall be specified on Buyers Purchase Orders, issued under
the provisions of this Agreement and incorporated herein by reference.
B. If any term of this Agreement conflicts with any term of an issued
Purchase Order, this Agreement shall take precedence. Any terms or conditions
not covered under this Agreement must be specified on the front of purchase
orders and must be mutually agreed to by both the Buyer and Contractor.
C. Buyer may add products to the list of "Products" available for
purchase hereunder by adding such products to a Purchase Order that is accepted
by Contractor. Such added products shall be deemed 'Products" as defined herein
as though listed in Exhibit B at the time of executing this Agreement. The price
for which such added products shall be available for purchase under this
Agreement shall be as stated on such accepted Purchase Orders(s), subject to the
provisions of this Agreement. The Buyer shall amend Exhibit B to reflect the
added Products and relevant pricing.
D. Payment - Payment for design, testing, engineering and other
preproduction services described in Exhibit A, and for any Products purchased by
Buyer hereunder shall be due
-2-
3
[*] calendar days subsequent to the date of invoice, which invoice date, in the
case of invoices relating to the purchase of Products, shall be no earlier than
the date of Contractor's shipment of such Products to Buyer. [*]
III. PURCHASE ORDERS
A. The term "Purchase Order" shall mean Buyer's written Purchase Order
form and any documents incorporated therein by reference.
B. Acceptance by Contractor is limited to the provisions of the
Agreement and the Purchase Order. No additional or different provisions proposed
by Buyer shall apply and are hereby rejected. In addition, the parties agree
that this Agreement and issued Purchase Orders constitute a Contract for the
Sale of Goods and satisfy all statutory and legal formalities of a contract.
IV. PURCHASE TERM
A. The "Purchase Term" as to any Product shall begin upon completion of
all preproduction phases for such Product, and acceptance by Buyer of the
Product to revision "A" drawings for that Product, and end [*] after the date of
the first sale of production units of any Product from Contractor to Buyer.
Production units shall be defined as units which are released and manufactured
to Revision A level drawings by the Contractor. This Agreement governs Purchase
Orders issued by Buyer during the Purchase Term and any mutually agreed
extension so long as Buyer has requested delivery of Product within two (2)
months beyond the end of the Purchase Term or any extension.
B. [*]
C. Notwithstanding the foregoing, the Purchase Term shall terminate
immediately upon the termination, pursuant to Article XlV, of the term of this
Agreement.
V. PRICING
A. DESIGN, ENGINEERING AND TESTING PRICING, and pricing for related
services provided during or prior to Phase IV for any Product (excluding only
pricing for purchase of preproduction units) shall be equal to [*] . Cost of
time shall be [*] for Project Directors, [*] for engineers (other than design
engineers), [*] for design engineers, and [*] for technicians, draftsmen and
others. [*]
-----------
* Information omitted and filed separately with the SEC pursuant to
request for confidential treatment under rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
-3-
4
B. [*]
C. PRODUCTION PRICING
(i) Initial production pricing shall be established within
[*] of completion of the pre-production units. Labor and
material costs determined from pre-production and the pricing
formula (the "Pricing Formula") in Exhibit A-2 shall be used
to establish the initial selling price, and Contractor agrees
to participate with Buyer in ongoing cost reduction efforts.
The selling price shall be subject to adjustment [*]
Contractor agrees to allow Buyer to examine and copy
Contractor's books and records as and when Buyer requests,
during Contractor's normal business day, for verification of
material and labor costs. All copies of such books and records
shall be treated by Buyer as Contractor's confidential
information, to the same manner that Contractor is required to
treat Buyer's information confidentially pursuant to Section
VIII. Rates will be fixed for one (1) year from completion of
pre-production units.
(ii) [*] Buyer shall have no liability for such taxes if it
has complied with statutory resale tax certificate
requirements. If Buyer is liable to pay these taxes, such
taxes shall be specifically listed in Contractor's invoice.
VI. DELIVERY, LEAD-TIME AND FLEXIBILITY
A. Buyer's Purchase Orders shall state Contractor's committed delivery
date for Product. Time and rate of delivery are of the essence for all purchases
made under this agreement. The minimum agreed period between Buyer's issuance of
a Purchase Order and the scheduled delivery date ("Leadtime") shall be
determined at the time orders are placed with the Contractor.
-------------
* Information omitted and filed separately with the SEC pursuant to
request for confidential treatment under Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
-4-
5
B. All shipments shall be F.O.B. [*], with title passing to Buyer at
time of delivery. [*]
C. Buyer may require that shipments of Products under this Agreement be
shipped by Contractor to various destinations. The Purchase Order issued by the
Buyer will clearly specify the "SHIP TO" location for each Product.
D. Buyer may, without cost or liability, increase or decrease the
quantity specified in its Purchase Orders, within the following parameters:
[*] Months Firm PO's, May move up to [*] of scheduled
deliveries on PO's out 30 days without penalty,
or in 30 days depending on material
availability.
[*] Months May move up to [*] of scheduled deliveries on
PO's out 60 days without penalty, or in 60 days
depending on material availability.
[*] Months Delivery slides [*] will require an inventory
deposit.
E. Buyer shall use reasonable efforts to forecast it's intended
purchases on a rolling twelve (12) month basis. Contractor will use the 7-12
month forecast to procure long lead materials which may impact future deliveries
and to determine economic order quantity buys to reduce the recurring pricing to
the Buyer. Contractor will use its best effort to inform Buyer of a need to
authorize procurement of long lead materials beyond firm purchase orders to
protect Buyer's future demand.
F. EXCESS AND OBSOLETE MATERIALS
(i) During the performance of this Agreement, Contractor will purchase
materials to support the purchase requirements of the Buyers program.
Certain materials which Contractor will acquire will be subject to
minimum-buy requirements, scrap and attrition additions, and quantity
price breaks which may result in excess material accumulation.
Additionally, design changes may cause other materials to become
obsolete.
(ii) During the performance of this Agreement, Contractor will provide
Buyer with periodic updates of the status and amount of excess or
obsolete material.
(iii) Contractor will use its best efforts to minimize the quantity and
cost to Buyer of excess and/or obsolete materials relating to the
production of Products, and whenever possible, return the same to
Contractor's supplier or use the same in the manufacture of other
Products for Buyer or other products for Contractor's other customers.
Such effort will be coordinated with Buyer when possible. However,
final costs associated with the
-----------
* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
-5-
6
accumulation of excess and obsolete materials, if any, which cannot be
so returned or used, shall be chargeable to and payable by Buyer in an
amount equal to Contractor's cost plus material burden, but without
profit. In no event shall Buyer be liable for any costs resulting from
design changes, unless, prior to implementation of such changes,
Contractor has advised Buyer in writing of the estimated amount of the
costs. At Buyer's option, any excess and/or obsolete materials for
which Buyer pays associated costs shall become the property of Buyer
upon payment, and shall be held by Contractor, without further charge
to Buyer, for disposition pursuant to Buyer's instructions within 90
days.
VII. WARRANTY
A. LIMITED WARRANTY
(i) Contractor warrants for [*] from date of shipment to Buyer's, its
subsidiary's or its distributor's customer from Buyer's, its
subsidiary's or distributor's facility that all Products shall be free
from defects in material and workmanship, and shall conform to
applicable specifications, drawings, samples and descriptions referred
to in this Agreement (provided, however, such [*] shall be reduced to
the extent, if any, that shipment to such customer from Buyer's, its
subsidiary's or distributor's facility occurs more than [*] from date
of invoice to Buyer and further provided that, other than repackaging
of the Products in kit form or otherwise, the relevant Product has only
been subject to customary receiving and inspection at all such
facilities). Contractor warrants it has the right to convey the
Products and that the Products are, and, upon delivery to Buyer, shall
be free of all liens and encumbrances. These warranties shall survive
any inspection, delivery, payment, and termination of this Agreement,
and shall run to Buyer, its and its subsidiary's and distributor's
customers, and Buyer's successors, and assigns.
(ii) Contractor shall correct defects in Products at its facility. At
Buyer's option, Contractor shall complete an assessment of any returned
Product, (typically within five (5), but in any case, within ten (10),
days of receipt), and repair or replace all defective Product
(typically within fifteen (15), but in any case, within thirty (30),
days of receipt), unless otherwise specified. Turn-around times may
vary depending on the complexity of the Product. Inbound freight will
be the responsibility of Buyer. Contractor agrees to pay return freight
to Buyer or, at Buyer's election, to the customer and method of
shipment shall be consistent with the method of inbound freight to the
Contractor.
(iii) Contractor warrants that all Products shall be produced,
manufactured and assembled - in compliance with all applicable federal
and state laws and rules and regulations, including but not limited to
The Food, Drug and Cosmetic Act of 1938 as amended and all regulations
promulgated thereunder, including without limitation, Good
Manufacturing Practices ("GMP's") for medical devices, and with ISO
9000 requirements.
-----------
* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
-6-
7
B. NON-WARRANTY
Repair services outside the scope of the warranties described in this
Section VII shall be provided by the Contractor and/or the Buyer pursuant to a
Repair and Service Agreement, if any, negotiated in good faith by the parties
and signed following execution of this Agreement.
C. SUPPLY OF REPLACEMENT PARTS
(i) Contractor agrees to provide Buyer, upon request, Buyer's
requirements of replacement parts or a designee of the Buyer to: (a)
provide non-warranty repair services to Buyer's customers, should
Contractor not provide such repairs, and (b) provide warranty repair
services at authorized third-party service centers world-wide selected
by Buyer with Contractor's consent. Buyer shall pay for such
replacement parts, provided pursuant to (a) above, consistent with
Contractor's current spares pricing methodology, plus freight and
shipping charges actually incurred by the Contractor. The cost of
replacement parts required pursuant to (b) above, including freight and
shipping charges, shall be at the Contractor's expense as part of its
warranty services. Contractor shall not provide warranty service
through third-party repairs without the consent of Buyer.
(ii) Contractor warrants that for a period of time beginning on the
date of delivery to the Buyer or the Buyer's designee of any
replacement parts provided pursuant to this Section VII. C, and
continuing thereafter for [*] following delivery of such replacement
parts to the Buyer's, its subsidiary's or distributor's customer (but
in no event more than [*] from the date of delivery of such replacement
parts to the Buyer or its designee or less than the balance of warranty
coverage applicable pursuant to Section VII. A., to the Product for
which such replacement part is provided), each such part shall be free
from defects in material and workmanship. In the event any replacement
part provided pursuant to this Section VII does not conform with the
above, the Buyer or, at the Buyer's option, the Buyer's designee shall
return such replacement part to the Contractor, and the Contractor
shall, within seven (7) days following receipt, promptly repair or
replace such replacement part without charge and refund to the Buyer or
the Buyer's designee freight paid by the Buyer or the Buyer's designee
for the original and return shipment, such freight cost not to exceed
the then current surface rate, freight charge charged by United Postal
Service ("UPS') or, if such UPS freight charge is not readily
available, the rate charged by a shipping company similar to UPS.
VIII. CONFIDENTIAL INFORMATION AND ADVERTISING
A. Contractor shall maintain as confidential any specifications,
drawings, blueprints, data, business information, trade secrets, or other
confidential information (collectively, "Confidential Information") which
Contractor learns or acquires by virtue of this Agreement, except that
Contractor may disclose Confidential Information pursuant to the order or
requirement of a court, administrative agency or other governmental body,
provided that Contractor has given Buyer at least 10 days prior detailed written
notice of the need for such disclosure and Contractor takes all steps possible
to assure that a protective order, acceptable to
-----------
* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
-7-
8
Buyer, exists prior to disclosure. Contractor further agrees to protect the
Confidential Information against disclosure by its employees and subcontractors.
B. Contractor may disclose Confidential Information only to
Contractor's employees and subcontractors who have a need to know and, prior to
such disclosure, have signed and delivered to Contractor and Buyer a
confidentiality agreement satisfactory to Buyer in form and substance. In
accordance with Buyer's written instructions at any time, Contractor agrees to
destroy or otherwise dispose of all Confidential Information.
C. Without Buyer's prior written consent, Contractor shall not in any
manner disclose (except to its banks as required for financing), advertise or
publish the existence of this Agreement nor the terms of transactions under this
Agreement, which shall be considered part of the Confidential Information.
D. The term Confidential Information shall not include information
which is (i) in the public domain at the time of disclosure or afterward, except
where such information becomes public due to a breach by Contractor of its
obligations hereunder, (ii) in Contractor's possession, in dated documentary
form, at the time obtained by Contractor in connection with this Agreement, or
(iii) disclosed to Contractor, without restriction on further disclosure, by a
third party having the right to disclose the same.
IX. OWNERSHIP
A. Inventions and Improvements - Contractor agrees that any and all
inventions, concepts, ideas and the like that are conceived or developed
directly by or for Contractor, whether done by it solely or jointly with Buyer
or any third parties, and that are improvements of, or otherwise relate
specifically to, any Product or the design, engineering, testing, manufacturing
or other services rendered hereunder by Contractor (excluding, however,
manufacturing processes, if the development of such processes was not funded by
Buyer), shall be promptly disclosed by Contractor to Buyer and shall be assigned
to, and be the exclusive property of, Buyer. Contractor warrants that all such
assignments shall be free of any rights of third parties, and agrees to
indemnify and hold Buyer harmless against any loss, damage or expense, including
reasonable attorneys fees, resulting from any breach of this warranty.
Contractor further agrees to assist Buyer, as Buyer may reasonably request and
at Buyer's expense for Contractor's resulting reasonable and necessary
out-of-pocket expenses (excluding attorneys fees insofar as such fees are the
result of legal counsel concerning the scope or nature of Contractor's
obligations hereunder, and provided any other attorneys fees are approved in
advance and in writing by Buyer), in Buyer's prosecution and defending of any
infringement action, and in obtaining patents or other legal instruments to
protect Buyer's proprietary interests. Contractor further agrees to execute and
deliver to Buyer all documents and instruments reasonably requested by Buyer to
evidence Buyer's ownership of inventions, ideas and the like that are or become
Buyer's property pursuant to this paragraph.
B. Specifications and Manuals - Contractor acknowledges that the
specifications and all related writings (including without limitation operating
manuals), drawings, artwork, computer
-8-
9
assisted designs and similar works (collectively, the "Materials"), whether
created by Contractor solely or jointly with Buyer or any third parties, are
and, as and when hereafter created, shall be assigned to, and be the exclusive
property of, Buyer, and Buyer retains and shall have all right, title and
interest, including copyright, relating to the Material. Contractor warrants
that all such assignments shall be free of any rights of third parties, and
agrees to indemnify and hold Buyer harmless against any loss, damage or expense,
including reasonable attorneys fees, resulting from any breach of this warranty.
Contractor further agrees to assist Buyer, as Buyer may reasonably request, in
Buyer's prosecution and defending of any infringement action, and in obtaining
copyrights or other legal instruments to protect Buyer's proprietary interests.
Upon termination of this Agreement for any xxxxx, Contractor agrees to return to
Buyer all copies of the Materials within fourteen (14) days of such termination
and copies of the same at any time within thirty (30) days of written request
from Buyer; this Material shall be complete in every respect, as to permit an
experienced manufacturer to manufacture, assemble, maintain and service the
Products described in this Agreement. If termination occurs prior to building
any particular Product, Contractor shall provide to Buyer a data package
relating to that Product and containing all information updated as of the date
of termination. The Material shall include a full drawing package in
reproducible form and any revisions or updates, including but not limited to;
GSF Autocad files, fabrication drawings, approved supplier list, test
specifications, tooling specifications and drawings, manufacturing assembly
instructions, routings, quality assurance protocols, test equipment, specs and
drawings and engineering change notice history, device master files, and device
history records. Transfer of information will be Product specific, not including
Contractor's proprietary policies and procedures.
C. Buyer's Equipment - Contractor shall install, maintain and account
for Buyer's Equipment at Contractor's facility or Contractor's subcontractor's
facility in accordance with GMP and ISO 9000. Contractor hereby acknowledges
that the Buyer's Equipment is the sole and exclusive property of Buyer. Buyer
shall provide identification and ownership tags (also called asset tags) for the
Buyer's Equipment, and Contractor shall ensure that such tags are properly
placed and maintained on all Buyer's Equipment. Contractor hereby covenants
that, during the term of this Agreement.
(i) Contractor and any subcontractor of Contractor using
Buyer's Equipment shall maintain it in good working condition
and utilize Buyer's Equipment solely for manufacturing Buyer's
requirements of Products as provided hereunder, and
(ii) Contractor shall not encumber any of the Buyer's
Equipment, nor shall Contractor permit the Buyer's Equipment
to become encumbered as a result of any act or omission of
Contractor or a subcontractor of Contractor.
D. Within Twenty (20)days following termination of this Agreement
(whether as a result of expiration or otherwise), and, if sooner, as to any
Buyer's Equipment needed solely for such Product(s), termination of this
Agreement, pursuant to Section XlV, as to any particular Product(s), Contractor
agrees to properly pack and return to Buyer, or cause to be properly packed and
returned to Buyer, F.O.B. point of shipment, all Buyer Equipment, the same to be
shipped to such facility as Buyer directs at Buyer's expense.
-9-
10
X. INDEMNITY
A. Contractor agrees to indemnify and hold Buyer, its affiliated
entities, and their respective officers, directors, shareholders, employees and
agents (hereinafter "lndemnitees") harmless from and against all claims, losses,
damages, liability, costs and expenses (including, without limitation,
attorney's fees and legal costs and disbursements) incurred on account of any
injury to persons or property arising out of Contractor's negligence, reckless
conduct or willful misconduct relating to this Agreement, including but not
limited to (i) any failure of the contractor to manufacture the Product in
conformance with the Design Specifications, (ii) any failure by the Contractor
to comply with FDA GMP regulations, or (iii) the negligent manufacture of the
Product by the Contractor provided, that Contractor's liability hereunder shall
be reduced proportionately by the percentage of fault, if any, that may
ultimately be assigned or imposed on Buyer by a court of law or arbitrator as a
result of the Buyer's own negligence, reckless conduct or willful misconduct. In
the event any claim is asserted or any suit is filed against Buyer for which
Contractor is or may be required to indemnify Buyer under this provision, Buyer
shall give Contractor prompt written notice of same. In the event of any such
claim or suit against the Buyer, Buyer may at its option tender defense of the
claim or suit to Contractor, in which case the Buyer shall cooperate with
Contractor, at Contractor's request and expense, in the defense of such claim or
suit, and Contractor shall have the sole right to defend and/or settle such a
claim or suit, including selecting counsel of its choice. Regardless of whether
or not Buyer tenders defense of the claim or .suit to Contractor, and regardless
of whether or not Contractor chooses to accept or reject such tender, the
requirement of this paragraph that Contractor fully indemnify Buyer remains in
.full force and effect.
B. Buyer agrees to indemnify and hold Contractor, its affiliated
entities, and their respective officers, directors, shareholders, employees and
agents harmless from and against all claims, losses, damages, liability, cost
and expenses ( including, without limitation, attorneys' fees and legal costs
and disbursements) incurred on account of any injury to persons or property
arising out of the Buyer's negligence, reckless conduct or willful misconduct
relating to this agreement, including, with out limitation, (i) the negligent
design of any Product or (ii) furnishing incorrect or negligent design
specifications: provided, however, that this indemnity shall extend only to the
amount of claims, losses, damages, liability, costs and expenses not covered by
insurance under Section (c) hereinbelow.
C. Buyer agrees to add and maintain Contractor as an additional insured
on Buyers product liability insurance policy. Contractor shall have the same
liability protection and coverage under the policy as Buyer. The policy shall
specifically waive any right of subrogation that the insurer may have against
the Contractor. Buyer shall provide Contractor with a certificate of insurance
verifying the foregoing provisions of this paragraph C.
XI. FORCE MAJEURE
Neither party shall be considered to be in default in respect of any
obligation hereunder, if failure of performance shall be due to Force Majeure.
If either party is affected by a Force
-10-
11
Majeure event, such party shall, within ten (10) days of its occurrence, give
notice to the other party stating the nature of the event, its anticipated
duration and any action being taken to avoid or minimize its effect. The
suspension of performance shall be of no greater scope and no longer duration
than is required and the non-performing party shall use reasonable efforts to
remedy its inability to perform. Force Majeure shall mean, without limitation,
explosion, flood, fire, war (whether declared or otherwise), accident, labor
strike, or other labor disturbance, sabotage, acts of God, or acts of regulatory
agencies, including withdrawal or suspension of licenses and consents, which are
unforeseeable or unavoidable and beyond the control and without the fault or
negligence of a party.
XII. REGULATORY MATTERS
A. Complaints - Buyer shall forward to Contractor copies of customer
complaints, user reports and MDR's relating to the any Product and Contractor
shall cooperate fully with the Buyer in investigating such complaints. In the
event that customer complaints or user reports are received by the Contractor
they shall be forwarded to the Buyer. Upon the request of the Buyer, and at a
charge mutually agreed upon between the parties, Contractor shall conduct a
comprehensive analysis and test of any Product subject to a complaint and shall
promptly provide Buyer with a written report on such analysis and testing
period.
B. Registration - Contractor hereby represents to Buyer that it shall,
at its sole cost and expense, timely register with the FDA as a Contract Medical
Device Manufacturer, or cause to be timely registered with the FDA, in
accordance with the Federal Food, Drug and Cosmetic Act 21 CFR Part 807 as
amended, each establishment which Contractor or a subcontractor of Contractor
intends to use to manufacture, and/or make repairs to, any Product.
C. FDA Inspection Reports - Contractor shall provide the Buyer with
copies of any FDA Form 483 observations, follow-up warning letters and/or
close-out reports for those portions of FDA GMP compliance inspection reports
relating specifically to the manufacture of the Product(s) for any
manufacturer's facility where the Product(s)is manufactured.
D. Contacts - Each party shall designate an individual within its
organization to be the primary contact regarding regulatory issues. Such
individual can be changed by giving written notice thereof to the other party.
XIII. NOTICES
A. Any notice given under this Agreement shall be written or sent by
telex or facsimile. Written notice shall be sent by registered mail or by
certified mail, postage prepaid, return receipt requested. Any telex or
facsimile notice must be followed within three (3) days by written notice. All
notices shall be effective when first received at the following addresses:
-11-
12
If to Contractor: If to Buyer:
Contracts Manager Xxxxxx X. Xxxxxx, Senior Vice President
SeaMED Corporation and General Counsel United States Surgical Corporation
00000 XX 00xx Xxxxxx 000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
with copies to: with copies to:
Vice President, Operations Xxxxxx X. Xxx, Senior Vice President,
Manager, Customer Support Operations
Vice President, Regulatory Affairs and
Quality Assurance
XIV. TERMINATION
(A) The term of this Agreement shall commence with the date hereof and
terminate upon expiration of the last-to-expire Purchase Term, but may be sooner
terminated as follows:
(i) by either party, upon at least 45 days prior notice, if the
other party breaches any of its obligations under this Agreement and fails to
cure such breach within the 45 days;
(ii) by either party, upon notice after commencement of any
voluntary or involuntary bankruptcy, liquidation or insolvency proceedings
against the other party or if the other party executes an assignment for the
benefit of creditors; or
(iii) termination by Buyer of this Agreement as to all Products,
pursuant to the immediately succeeding provisions of this Section XIV.A.
Upon notice to Contractor, Buyer may terminate this Agreement as to any
Product or Products for which Contractor fails to meet the estimated dates for
phase completions, or time and material estimated costs, stated in Exhibit B, as
the same may be amended by written agreement of the parties from time to time,
or delivery dates for Products as stated in Buyer's Purchase Orders in
accordance with the provisions of this Agreement, excluding, however, any delays
caused by Buyer or any events of Force Majeure.
(B) In the event that this Agreement is terminated, the parties agree
as follows:
(i) Regardless of which party terminates this Agreement, Buyer
shall buy from Contractor, at cost plus normal xxxx-up, any and all transferable
parts which are in inventory or are on order and non-cancelable by Contractor,
insofar as such were purchased to fill Buyer's purchase orders or were
purchased, with Buyer's written approval, to meet Buyer's production forecasts.
Buyer shall reimburse Contractor for all finished goods that would, but for such
termination, have been subject to delivery to Buyer within 30 days (or any
longer period in any particular instance, insofar as USSC consents in writing to
such longer period) following
-12-
13
termination, as well as work in process and raw materials inventory either on
hand or on order and non-cancelable by Contractor, insofar as such were
purchased or produced to fill Buyer's purchase orders or were purchased or
produced, with Buyer's written approval, to meet Buyer's production forecasts.
Contractor shall complete any work in process if so requested by Buyer as if no
termination notice was given.
(ii) If Buyer terminates this agreement as to any or all
Products, and if Buyer so requests, Contractor shall provide to Buyer design
details and tooling and work in process relating to that Product. Buyer shall be
responsible for all costs associated with establishing an alternate source,
including but not limited to copying records and transferring transferable parts
to an alternate source.. Buyer shall also reimburse Contractor for all
outstanding time and material costs incurred and all non-cancelable committed
time and material costs associated with the pre-production phase of this
Agreement. Regardless of which party terminates this Agreement, Contractor shall
provide to Buyer, upon termination, a complete listing of parts including
traceability records.
XV. SURVIVAL
A. The provisions of Sections VII, VIII, IX, X, XlX, XX, and, as it
relates to any Products purchased by Buyer prior to termination of this
Agreement, Section II D, shall survive termination of this Agreement (whether by
expiration or otherwise) as follows: (i) indefinitely, as to Section X, and (ii)
for the post-termination period stated in the other Sections, or, if no such
period is stated, 5 years.
XVI. GENERAL
A. Only the authorized representatives of the parties may amend or
waive provisions of this Agreement, which amendment shall only be effective if
in writing and signed by such representatives. If either party fails to enforce
any term of this Agreement, failure to enforce on that occasion shall not
prevent enforcement on any other occasion.
B. As used in this Agreement, except where otherwise noted, the term
"days" shall mean calendar days.
C. Contractor, including its agents and employees., is an independent
contractor and not an agent or employee of Buyer. Without limiting the
generality of the foregoing, Contractor is not authorized to, and shall not,
represent or make any commitments on behalf of Buyer, and Buyer expressly
disclaims any liability therefor.
D. All rights and remedies conferred by this Agreement, by any other
instrument, or by law are cumulative and may be exercised singularly or
concurrently. If any provision of this Agreement is held invalid by any law or
regulation of any government or by any court, such invalidity shall not affect
the enforceability of any other provisions hereof. This Agreement and any
Purchase Orders issued hereunder shall be governed by and interpreted in
accordance with the laws of the State of Washington.
-13-
14
XVII. BUSINESS REVIEWS
A. Buyer and Contractor shall, each at their own expense, meet
periodically, at Buyer's .option either by telephone or in person, to review
performance and business transacted, and to identify and resolve those issues
which have arisen since the last business review meeting.
B. Buyer and Contractor shall furnish agenda items not later than one
(1) week prior to scheduled business review meetings. Minutes shall document
action items, open items, and committed dates which may be the result from such
business review meetings, and shall be sent by the drafting party to the other
party within ten (10) days after each meeting.
XVIII. INSURANCE
A. Contractor agrees to carry at all times, and with companies
reasonably acceptable to Buyer, insurance of the kinds and in the amounts listed
below:
(i) Worker's Compensation statutory limits in each state in
which Contractor is required to provide Worker's Compensation coverage.
(ii) Employee's Liability not less than [*] per employee.
(iii) Comprehensive General Liability - including Contractual
Liability, Independent Contractor's Liability, Products and/or Completed
Operations Liability, and Personal Injury / Property Damage Coverage's in a
combined single limit of not less than [*].
(iv) Automobile Liability for owned, non-owned and hired
vehicles in a combined single limit of not less than [*].
(v) Umbrella Liability a combined single limit of not less than
[*].
B. Buyer agrees to carry at all times, and with companies reasonably
acceptable to Contractor, insurance of the kinds and in the amounts listed
below, and, as to its product liability policy as it relates to Products sold by
Buyer, to include Contractor as an additional insured'
(i) Comprehensive General Liability - including Contractual
Liability, Products and/or Completed Operations Liability, and Personal Injury /
Property Damage Coverages in a combined single limit of not less than [*]
(ii) Umbrella Liability a combined single limit of not less than
[*].
Upon request of either party, the other shall provide to such party a
certificate(s) of insurance evidencing the above coverages.
-----------
* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934, as amended.
-14-
15
XIX. LIMITATION OF LIABILITY
A. Except as otherwise provided in this Agreement, neither party shall
be liable for special, indirect, incidental, or consequential damages. The
foregoing limitation shall not limit Contractor's liability for any costs,
expenses, and damages arising out of or in connection with: claims brought by
third parties; Contractor's unauthorized disclosure of Buyer's confidential
information; or any indemnification granted by Contractor in connection with
this Agreement.
B. In no event shall Buyer's liability to Contractor exceed the total
amount to be paid by Buyer to Contractor hereunder.
XX. NO IMPLIED LICENSE
The parties understand that, except as may be otherwise expressly
stated herein, neither the Terms or Conditions of this Agreement, nor the acts
of either party arising out of this Agreement or related to Buyer's purchase,
use, sale, or other distribution of Product may be considered in any way as a
grant of any license whatsoever under any of Buyer's present or future patents,
copyrights, trademarks, trade secrets, or other proprietary rights, nor is any
such license granted by implication, estoppel, or otherwise.
IN WITNESS WHEREOF, the authorized representatives of the parties have
executed this Agreement under seal as of the date(s) set forth below.
SEAMED CORPORATION UNITED STATES SURGICAL CORPORATION
By: /s/ XXXXXX XXXX By: /s/ XXXXXX X. XXX
---------------------------- ----------------------------
Title: Sr. V.P., Operations Title: Sr. V.P., Operations
------------------------- -------------------------
Date: March 25, 1997 Date: April 7, 1997
-------------------------- --------------------------
-15-
