EXHIBIT 10.18
JAPAN DISTRIBUTION AGREEMENT
dated as of April 1, 2000
by and between
BAXTER LIMITED
and
XXXXXXX LIFESCIENCES LLC
Page
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................ 1
ARTICLE II DISTRIBUTION OF PRODUCTS..................................... 7
ARTICLE III RESTRICTIONS ON XXXXXXX; EXCLUSIVITY........................ 7
ARTICLE IV TERM......................................................... 8
ARTICLE V PRICES AND FEES............................................... 8
ARTICLE VI INVOICING AND PAYMENTS....................................... 9
ARTICLE VII XXXXXX'X DUTIES............................................. 11
ARTICLE VIII XXXXXXX' DUTIES............................................ 11
ARTICLE IX STANDARD OF CARE; CONSULTATION............................... 11
ARTICLE X TRANSFER OF TITLE AND RISK OF LOSS............................ 12
ARTICLE XI WARRANTIES................................................... 12
ARTICLE XII TRADEMARKS.................................................. 13
ARTICLE XIII TERMINATION................................................ 14
ARTICLE XIV INDEMNITY................................................... 15
ARTICLE XV COMPLIANCE WITH LAWS......................................... 21
ARTICLE XVI INSURANCE................................................... 23
ARTICLE XVII FORCE MAJEURE.............................................. 23
ARTICLE XVIII CONFIDENTIALITY........................................... 23
ARTICLE XIX LIMITATION OF LIABILITY AND REMEDIES........................ 25
ARTICLE XX DISPUTE RESOLUTION........................................... 26
ARTICLE XXI ASSIGNMENT.................................................. 28
ARTICLE XXII MISCELLANEOUS PROVISIONS................................... 28
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EXHIBITS AND SCHEDULES
Exhibits
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Exhibit A -- Japanese Xxxxxxx Business
Exhibit B - Direct Reporting Positions
Schedules
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Schedule A -- Xxxxxx'x Duties
Schedule B -- Xxxxxxx' Duties
Schedule C -- Products
Schedule D -- Product Prices
Schedule E -- Service Levels
Schedule F - Agreed Accounting Policies and Allocation Methodology
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JAPAN DISTRIBUTION AGREEMENT
THIS JAPAN DISTRIBUTION AGREEMENT (this "Agreement"), dated as of April 1,
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2000 (the "Effective Date"), is by and between Xxxxxx Limited, a Japanese
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corporation with its principal offices at 0, Xxxxxxxxxx, Xxxxxxx-xx, Xxxxx 102-
8468 Japan ("Baxter Japan"), and Xxxxxxx Lifesciences LLC, a Delaware limited
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liability company with its principal offices at 00000 Xxx Xxxx Xxxxxx, Xxxxxx,
XX 00000 XXX ("Xxxxxxx").
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RECITALS
Prior to the Effective Date, Baxter Japan performed certain sales,
marketing, customer service, and distribution functions in connection with
Xxxxxxx' business.
Baxter (as defined below) is willing to continue to perform such functions
without interruption commencing as of the Effective Date, provided that Xxxxxxx
is willing to commit to supplying Xxxxxxx' products to Baxter on a long-term
basis.
Baxter and Xxxxxxx desire that Baxter continue to perform such functions as
Xxxxxxx' distributor pursuant to the terms and conditions set forth in this
Agreement.
AGREEMENT
In consideration of the mutual undertakings contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Baxter and Xxxxxxx agree as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions. As used in this Agreement:
(a) "Action" shall mean any action, claim, suit, arbitration,
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inquiry,subpoena, discovery request, proceeding or investigation by or before
any court or grand jury, any governmental or other regulatory or administrative
entity, agency or commission or any arbitration tribunal.
(b) "Administrative and Legal Requirements" shall mean any applicable
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laws, statues, regulations, rules, codes (including the Fair Competition Code
approved by the Japan Fair Trade Commission), ordinances or orders enacted,
adopted, issued or promulgated by any court or Governmental Body.
(c) "Affiliate" shall mean any Person controlling, controlled by, or
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under common control with another Person. For the purpose of this definition and
Section 13.1(b), the term "control" means the power to direct the management of
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a Person, directly or indirectly, whether solely through the ownership of
voting securities (as in the case of a subsidiary), by contract, or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to
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the foregoing. Xxxxxxx Lifesciences Corporation and Xxxxxx International shall
not be deemed to be Affiliates of each other.
(d) "Agreed Accounting Policies and Allocation Methodology" shall mean
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Japanese generally accepted accounting principles consistently applied, provided
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that, with respect to any matter as to which there is more than one generally
accepted accounting principle, Agreed Accounting Policies and Allocation
Methodology means the generally accepted accounting principles applied in the
preparation of the Valuation Date Balance Sheet attached to the Japan Option
Agreement; provided further that, notwithstanding the foregoing, Agreed
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Accounting Policies and Allocation Methodology shall include the accounting
policies and be subject to the allocation methodology and direct accounts
described in Schedule F; and provided further that, for purposes of the Agreed
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Accounting Policies and Allocation Methodology, no known adjustments for items
or matters, regardless of the amount thereof, shall be deemed to be immaterial.
(e) "Annual Operating Plan" shall mean, with respect to any business
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of Xxxxxx Japan, the operating plan for such business approved pursuant to the
normal annual budgeting process.
(f) "Baxter" shall mean whichever of the following is the party-in-
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interest hereunder at any given time: (i) Xxxxxx Japan, (ii) Baxter Japan's
direct or indirect successor-in-interest, or (iii) Baxter Japan's direct or
indirect assignee pursuant to ARTICLE XXI.
(g) "Xxxxxx International" shall mean Xxxxxx International Inc., a
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Delaware corporation.
(h) "Xxxxxx Japan" shall have the meaning set forth in the preamble to
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this Agreement.
(i) "Xxxxxx Japan Employee" means any employee of Xxxxxx Japan who is
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not an Xxxxxxx Japan Employee.
(j) "Xxxxxx Japan Officer or Director" shall mean any officer or
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director of Xxxxxx Japan who is not an Xxxxxxx Japan Employee.
(k) "Competitor" shall mean, with respect to Xxxxxxx, any Person to
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whom a Transfer of the exclusive distribution rights hereunder would violate the
prohibitions on such relationships set forth in Part 3, Chapter 1 (Sole
Distributorship Contract Between Competitors) of the Japan Antimonopoly Act
Guidelines Concerning Distribution Systems and Business Practices.
(l) "Contract Year" means the period from the Effective Date through
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March 31, 2001, and each twelve-month period commencing upon April 1 of the year
2001 and each year thereafter during the Term.
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(m) "Xxxxxxx Japan Employee" shall mean the employees of Baxter Japan
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who are assigned to the Xxxxxxx Lifesciences division of Baxter Japan, including
those employees of the Xxxxxxx Lifesciences division at the Miyazaki plant.
(n) "Xxxxxxx" shall have the meaning set forth in the preamble to this
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Agreement.
(o) "Xxxxxxx Lifesciences Corporation" shall mean Xxxxxxx Lifesciences
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Corporation, a Delaware corporation.
(p) "Xxxxxxx Optionholder" shall mean Xxxxxxx Lifesciences Limited, a
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Japanese corporation.
(q) "Expenses" shall mean any and all expenses incurred in connection
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with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
(r) "Governmental Body" shall mean any national, prefectural, or other
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governmental authority or regulatory body.
(s) "Harm to Reputation" shall mean a loss in the fair value of the
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goodwill associated with the Japanese Xxxxxxx Business or the Other Japanese
Businesses, as the case may be, but not including any loss in value attributable
to Lost Profits for which indemnification is available pursuant to clause (a) or
(b) of Section 14.1 or clause (i) or (ii) of Section 14.2(a), as the case may
be.
(t) "Insurance Proceeds" shall mean those monies (i) received by an
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insured from an insurance carrier, (ii) paid by an insurance carrier on behalf
of the insured or (iii) received from any third Person in the nature of
insurance, contribution or indemnification in respect of any Liability, in each
such case net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
(u) "Japan Option Agreement" shall mean the Option Agreement dated as
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of March 31, 2000, by and between Xxxxxx Japan and Xxxxxxx Optionholder.
(v) "Liability" shall mean any and all debts, liabilities and
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obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless
otherwise specified in this Agreement), including all costs and expenses
relating thereto, and including those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any Governmental Authority or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.
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(w) "Japanese Xxxxxxx Business" shall mean the business of the
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Cardiovascular Group of Xxxxxx International Inc. in Japan, all as more
specifically described in Exhibit A hereto, together with any additional
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businesses undertaken after the date hereof by the Xxxxxxx Lifesciences division
of Baxter Japan.
(x) "Losses" shall mean any and all losses, costs, obligations,
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liabilities, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges, and shall include (i) for the purpose
of clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of Section
14.2(a) only, Lost Profits for any period during which the sales activities of
Xxxxxx Japan are suspended or restricted by any Governmental Body, and (ii) for
the purpose of clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of
Section 14.2(a) only, Harm to Reputation.
(y) "Lost Profits" shall mean, for any period during which the sales
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activities of the Japanese Xxxxxxx Business or the Other Japanese Businesses are
suspended or restricted by any Governmental Body, the amount by which (i) its
Projected Profit for such period exceeds (ii) its actual Income (Loss) Before
Income Taxes for such period, determined in accordance with the Agreed
Accounting Policies and Allocation Methodology.
(z) "Mutually Approved President" shall mean any person appointed as
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President of the Xxxxxxx Lifesciences division of Baxter Japan and approved in
writing by Xxxxxxx.
(aa) "Notice" shall mean notice given in accordance with Section 22.1.
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(bb) "Other Japanese Businesses" shall mean all businesses of Xxxxxx
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Japan other than the Japanese Xxxxxxx Business.
(cc) "Person" shall mean an individual, corporation, partnership,
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limited liability company, unincorporated syndicate, association or
organization, trust, trustee, executor, administrator or other legal
representative, governmental authority or agency, or any group of Persons acting
in concert.
(dd) "Products" shall mean the products manufactured by or on behalf
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of Xxxxxxx and set forth in Schedule C (as amended from time to time in
accordance with the terms of this Agreement) together with the parts and
components necessary for the repair and replacement thereof.
(ee) "Product Line" shall mean a group of Products in Schedule C
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designated as a product line.
(ff) "Projected Profit" shall mean, for any period and business, the
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projected Income (Loss) Before Income Taxes of such business for such period, as
shown in the most recent Annual Operating Plan for such business (the "Budgeted
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Profit") multiplied by a fraction, the numerator of which shall be the actual
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Income (Loss) Before Income Taxes for such business for the most recent twelve
months ending prior to such period and the denominator of which
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shall be the Budgeted Profit for such twelve months; provided, however, that if,
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as a result of an event (such as a material acquisition or disposition)
occurring after the approval of the Annual Operating Plan for any business, the
projected Income (Loss) Before Income Taxes shown in such Annual Operating Plan
is no longer representative of the expected Income (Loss) Before Income Taxes of
such business, the Projected Profit shall be an amount that fairly represents
the Income (Loss) Before Income Taxes that such business would have earned in
the relevant period if the event or state of facts giving rise to the claim for
Lost Profits had not occurred. If Projected Profit is determined pursuant to
foregoing proviso, all relevant factors, including the Annual Operating Plan,
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any updated forecasts and the actual performance of the relevant business prior
to the relevant period, shall be taken into account. Any dispute will respect
to the calculation of Projected Profits shall be resolved pursuant to the
procedures set forth in ARTICLE XX. For the avoidance of doubt, Projected
Profit shall not take into account any event or state of facts that gives rise
to the claim for which Lost Profits are sought.
(gg) "Tax" shall mean:
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(i) any federal, state, local or foreign net income, gross income,
gross receipts, consumption, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added,
transfer, stamp or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Body; and
(ii) any liability of either party for the payment of amounts with
respect to payments of a type described in clause (i) above as a result of
being a member of an affiliated, consolidated, combined or unitary group,
or as a result of any obligation of either party under a tax sharing
arrangement or tax indemnity arrangement.
(hh) "Term" shall mean the period of time provided in ARTICLE IV
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hereof, including any and all extensions thereof.
(ii) "Territory" shall mean the country of Japan.
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(jj) "Third-Party Claims" shall mean any and all Actions by, and
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liabilities to, third parties.
(kk) "Transfer" shall mean any assignment, transfer, sale or other
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disposition to a Person that is not an Affiliate of the transferor, including
any transfer by way of merger or consolidation or otherwise by operation of law.
1.2 Other Terms. Terms defined in other Sections (or in any Schedule)
will have the meanings therein provided.
1.3 Rules of Construction. In this Agreement, unless a clear, contrary
intention appears:
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(a) the singular number includes the plural number and vice versa;
(b) reference to any Person includes such Person's successors and
assigns that are permitted by this Agreement;
(c) reference to any gender includes the other gender;
(d) reference to any Section or Schedule means such Section of this
Agreement or such Schedule to this Agreement, as the case may be, and reference
in any Section or other provision to any clause means such clause of such
Section or provision;
(e) "herein," "hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular Section or other provision hereof;
(f) "including" (and with correlative meaning "include") means
"including but not limited to";
(g) relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through" means
"through and including";
(h) reference to any law (including statutes and ordinances) means
such law (including all rules and regulations promulgated thereunder) as
amended, modified, codified or reenacted, in whole or in part, and in effect at
the time of determining compliance or applicability;
(i) accounting terms used herein shall have the meanings historically
attributed to them by Xxxxxx International and its subsidiaries based upon
Xxxxxx International's internal financial policies and procedures in effect
prior to the date of this Agreement;
(j) the provisions contained in the Schedules shall control over any
conflicting provisions contained in the body of this Agreement; and
(k) the headings contained in this Agreement are for reference only
and are not to be used in construing this Agreement.
1.4 Construction. The parties acknowledge that they negotiated this
Agreement with the benefit of legal representation, and no rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against either party shall apply. Subject to Section 22.5, this
Agreement shall be interpreted and construed to the maximum extent possible so
as to uphold the enforceability of each of the terms and provisions hereof, it
being understood and acknowledged that this Agreement was entered into by the
parties after substantial negotiations and with full awareness by the parties of
the terms and provisions hereof and the consequences thereof.
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ARTICLE II
DISTRIBUTION OF PRODUCTS
2.1 Grant of Distribution Rights. With respect to sales of all Products in
the Territory, Xxxxxxx hereby grants to Xxxxxx and Xxxxxx hereby accepts the
right (which shall be exclusive except as provided herein) to distribute the
Products to customers in the Territory. In connection therewith, Baxter shall
perform sales support, marketing support, customer service, physical
distribution, and distribution-related activities as set forth in ARTICLE VII.
2.2 Exceptions and Limitations. Xxxxxxx reserves all rights not expressly
granted to Baxter hereunder. Subject to Section 21.3, Baxter may appoint
subagents or subdistributors to fulfill its obligations hereunder, provided that
Baxter shall be responsible for the acts and omissions of such subagents and
subdistributors, if any, as if such subagents and subdistributors were employees
of Baxter.
2.3 Relationship. Baxter shall maintain the principal contractual
relationship with the customer for sales, sales support, credit, collections,
and customer service in connection with the provision of the Products. Xxxxxxx
shall use reasonable efforts to cooperate with Baxter and to facilitate Xxxxxx'x
fulfillment of its obligations hereunder.
ARTICLE III
RESTRICTIONS ON XXXXXXX; EXCLUSIVITY
3.1 Restrictions on Xxxxxxx.
(a) Xxxxxxx and Xxxxxxx Lifesciences shall not, and shall cause their
Affiliates, and any other Person acting on behalf of any of them or their
Affiliates, not to distribute or grant, directly or indirectly, to any Person
other than Baxter the right to distribute the Products to customers in the
Territory, provided that Xxxxxxx shall have the right:
(i) to distribute Products to customers within the Territory other
than through Baxter if and to the extent Baxter is unable to so distribute
the Products due to (A) regulatory requirements; or (B) Baxter being
otherwise prohibited or prevented from selling and/or distributing the
Products to any customer or class of customers other than by customer
decision; and
(ii) to sell and distribute Products to customers within the Territory
other than through Baxter if (A) Xxxxxx'x rights under this Agreement are
assigned to a Competitor, or (B) Baxter becomes a Competitor by selling
products other than the Products.
(iii) except as set forth in Section 3.3, sell and distribute products
that are not Products as defined herein through relationships that do not
include Baxter.
(b) This Agreement shall in no way limit the right of Xxxxxxx and its
Affiliates to market, sell, or otherwise distribute the Products outside the
Territory.
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3.2 Exceptions. Xxxxxxx shall have the right to request exceptions to the
foregoing restrictions on a case-by-case basis in connection with sales to
specific customers. Such exceptions shall require written approval of Xxxxxx'x
President, but such approval shall not be unreasonably withheld.
3.3 Product Exclusivity.
(a) Prior to directly or indirectly selling or distributing to
customers in the Territory any product (other than a Product) developed by
Xxxxxxx or manufactured by or on behalf of Xxxxxxx, Xxxxxxx shall notify
Xxxxxx'x President regarding Xxxxxxx' intent with respect to such product.
Baxter shall have the right, but not the obligation, to add such product to
Schedule C and this Agreement, and if so added, such product shall be deemed to
be one of the Products. Xxxxxxx may delete from Schedule C and this Agreement
any Product, the manufacture and sale of which has been generally discontinued
by Xxxxxxx. On or before November 30 of each Contract Year, Xxxxxxx shall
provide to Baxter an updated version of Schedule C including any Product
additions or deletions expected to occur in the subsequent Contract Year. In
addition, Xxxxxxx shall notify Baxter at least 90 days prior to generally
discontinuing the manufacture and sale of any Product.
(b) If Xxxxxxx or Xxxxxxx Lifesciences is Transferred, then, in
connection with any product of the transferee (or any of its Affiliates) that is
directly or indirectly sold or distributed to customers in the Territory and is
in the same domestic market (as such term is used in the Japan Antimonopoly Act
Guidelines Concerning Sole Distributorship) as the Products (each a "Transferee
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Product"), Baxter shall have the right, but not the obligation, to add such
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Transferee Product to Schedule C and this Agreement, and if so added, such
Transferee Product shall be deemed to be one of the Products. Notwithstanding
the foregoing, if a Transferee Product is subject to sale or distribution to
customers in the Territory pursuant to an agreement between a third-party
distributor and the transferee (or its Affiliate), then the foregoing right of
Baxter shall not apply to such Transferee Product during the term of such
agreement provided that (i) such agreement was entered into by such third-party
distributor and such transferee (or its Affiliate) more than 90 days prior to
such Transfer; (ii) such transferee (or its Affiliate) shall not extend or renew
the term of such agreement during or after the 90-day period immediately prior
to such Transfer; and (iii) such transferee shall exercise any right of
termination or nonrenewal in connection with such agreement to be effective as
soon as possible after such Transfer.
ARTICLE IV
TERM
The term of this Agreement (the "Term") shall commence on the Effective
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Date and, except as otherwise provided herein, expire at the end of the day on
March 31, 2015.
ARTICLE V
PRICES AND FEES
5.1 Product Prices. For each Product ordered by Baxter and supplied by
Xxxxxxx, Xxxxxx shall pay to Xxxxxxx the applicable purchase price set forth in
Schedule D.
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5.2 Price Changes.
(a) The purchase prices that Baxter shall pay to Xxxxxxx for the
Products shall be adjusted effective on January 1 of each Contract Year and
shall apply to all Products purchased by Baxter during such Contract Year. The
purchase price for each Product shall be set using a resale price method
pursuant to which the purchase price to be paid by Baxter to Xxxxxxx shall be
determined by applying a discount (the "Percentage Discount") to an estimate of
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the Average Sales Price ("ASP") charged by Baxter to a third-party customer
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during the Term.
(b) The Percentage Discount shall be calculated for each Contract
Year and shall be set at a level designed to yield to Baxter an overall net
operating profit with respect to such sales of the Products by the Xxxxxxx
Lifesciences division of Baxter Japan that will be equivalent, as a percentage
of sales, to the simple average of the net operating profit of the
cardiovascular division of Xxxxxx Japan for the years 1990 through 1997. The
Percentage Discount may vary from Product to Product, as mutually agreed by the
parties, so long as the overall projected result is consistent with this target.
For each Contract Year, Xxxxxxx, in consultation with Baxter, shall prepare the
estimates of the ASP for each Product and the sales volume for each Product. For
each Contract Year, Baxter, in consultation with Xxxxxxx and based upon Xxxxxxx'
estimates of sales volumes, shall prepare the estimates of Xxxxxx'x Costs to
distribute the Products and the total sales discounts, returns and allowances
for the Products.
(c) The purchase prices paid by Baxter for the Products shall be
subject to a quarterly adjustment to produce a margin to Baxter that is
equivalent to that which would have resulted if the actual ASPs for such quarter
were equal to the estimated ASPs used in determining the Percentage Discount.
5.3 Other Fees. Xxxxxxx shall pay or reimburse Baxter for any other fees,
costs or expenses set forth in this Agreement including paying to Baxter any
agreed-upon amounts in connection with the FCA services described in Section 6.3
of Schedule A.
ARTICLE VI
INVOICING AND PAYMENTS
6.1 Invoicing. Xxxxxxx shall xxxx Xxxxxx by submitting invoices to Baxter
for payment of amounts due under this Agreement. Such invoices will specify the
Products ordered and Xxxxxx'x purchase order number and will be accompanied by
or be followed by such other supporting detail as Baxter may reasonably request.
6.2 Payment. Baxter will pay or cause its Affiliates to pay all amounts
due pursuant to this Agreement within 60 days after the date of each invoice
hereunder.
6.3 Overdue Payments. If any amounts due hereunder have not been received
by the due date, such overdue amounts shall bear interest from the due date at
the rate of 1% per month, or portion thereof, until received.
6.4 Disputed Amounts. Either party shall have the right to withhold any
amounts due hereunder if such party in good faith disputes the amount claimed by
the other party to be due
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hereunder and such party notifies the other party of such dispute on or before
the applicable due date. The foregoing right to withhold payment of disputed
amounts shall be limited to amounts disputed in good faith, and interest will
accrue in accordance with Section 6.3 and be payable on the net amount
determined to be due. Any such dispute shall be resolved in accordance with
ARTICLE XX.
6.5 Suspension of Performance. In addition to any other rights available
to it at law or in equity, upon ten days' prior Notice to Baxter, Xxxxxxx may
cease acceptance of orders and suspend supply of Products hereunder if an
undisputed amount due hereunder has not been paid by Baxter within 30 days after
its due date, and such suspension may continue until such payment has been made.
6.6 No Acknowledgement. Neither payments made by Baxter nor the
acceptance of payments by Xxxxxxx in the amount of or less than the amount shown
on any invoice from Xxxxxxx shall be construed as an acceptance or agreement
with the amount so stated or the amount received. Either party may recover from
the other the amount of any overpayment or underpayment. Without limiting the
generality of the foregoing, Xxxxxxx may supplement any invoice it renders to
Baxter hereunder for less than the full amount to which it is entitled; provided
that such supplement is made within a reasonable time after the date of the
invoice being supplemented.
6.7 Audit. Either party may audit the other party's books and records to
the extent necessary to determine such other party's compliance with the terms
of this Agreement. In addition, Baxter may inspect or review Xxxxxxx' production
and quality control processes and records, and such inspection or review shall
be deemed to be an "audit" subject to the terms of this Section 6.7. The party
performing the audit may use independent auditors who may participate fully in
such audit. If an audit is proposed with respect to information which the party
to be audited wishes not to disclose to the other party ("Restricted
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Information"), then on the written demand of the party to be audited, the
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individuals conducting the audit with respect to Restricted Information will be
limited to the independent auditors of the party requesting the audit. In such
event, the party to be audited shall pay the costs of the independent auditors
conducting such audit, but only with respect to that portion of the audit
relating to the Restricted Information. Such independent auditors shall enter
into an agreement with the parties hereto, on terms that are agreeable to both
parties hereto, under which such independent auditors shall agree to maintain
the confidentiality of the information obtained during the course of such audit
and establishing what information such auditors will be permitted to disclose to
report the results of any audit of Restricted Information to the party
requesting the audit. Any such audit shall be conducted during regular business
hours and in a manner that does not interfere unreasonably with the operations
of the party being audited. Each party may perform such an audit one time in
each twelve-month period during the Term; provided that a party may perform an
additional audit at any time if the preceding audit reveals a failure to conform
to the terms of this Agreement. Each audit shall begin upon the date specified
by the auditing party in a Notice to the other party a minimum of 30 days prior
to the commencement of the audit and shall be performed diligently and in good
faith and shall be completed within a reasonable period of time.
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ARTICLE VII
XXXXXX'X DUTIES
During the Term, Baxter shall maintain the facilities and personnel
necessary to fulfill its obligations and responsibilities hereunder including
the duties set forth in Schedule A.
ARTICLE VIII
XXXXXXX' DUTIES
During the Term, Xxxxxxx shall maintain the facilities and personnel
necessary to fulfill its obligations and responsibilities hereunder including
the duties set forth in Schedule B.
ARTICLE IX
STANDARD OF CARE; CONSULTATION
9.1 General. Each party will use (and will cause its Affiliates to use)
commercially reasonable efforts in the performance of its obligations hereunder
and will do so with the same degree of care, skill and prudence customarily
exercised when engaged in similar activities for itself and its Affiliates.
Subject to the provisions of ARTICLE XIX, if a party's performance is
inaccurate, incomplete, or untimely, such party shall, if practicable, promptly
perform or reperform such obligations. In performing its responsibilities
hereunder, each party shall accord the other party and such other party's
Affiliates the same priority as it provides itself and its Affiliates under
comparable circumstances. Without limiting the generality of the foregoing, in
connection with its performance hereunder, neither party will discriminate
against the other party or any of such other party's Affiliates solely because
the other party or one of such other party's Affiliates is the recipient of such
performance. The parties shall consult with each other with respect to
performance of their obligations hereunder. Each party shall give due
consideration to any suggestion by the other to improve performance.
9.2 Overall Level of Service. Each party will use commercially reasonable
efforts to perform its obligations with the same levels of efficiency, accuracy
and effectiveness as such obligations were performed immediately prior to the
effective date of this Agreement. In addition, Baxter will use commercially
reasonable efforts to perform its obligations in accordance with the service
levels set forth in Schedule E but shall not be liable for damages caused by any
failure to meet the specified service levels in the absence of gross negligence
or willful misconduct. The parties agree to consult with each other with respect
to such service levels and their respective performance in attaining same. Each
party shall consider any suggestion by the other to improve such party's
performance, but such party shall have no obligation to accept or implement any
such suggestion that it does not, in its sole discretion, deem advisable and in
its best interests.
9.3 Annual Meetings. Baxter and Xxxxxxx shall hold an annual meeting to
discuss (a) the performance of the Japanese Xxxxxxx Business as well as product
and market developments relevant to the coming year's operations, and (b) budget
projections affecting the projected price discounts. The annual meeting shall be
held at Xxxxxxx Lifesciences headquarters in Irvine, California, or at such
other location as the parties may agree, and shall be
11
attended by the CEO and General Counsel of each of Xxxxxx International and
Xxxxxxx Lifesciences (or their respective designees) and the Representative
Directors of Baxter Japan. The date of the annual meeting shall be determined by
mutual agreement of the parties.
ARTICLE X
TRANSFER OF TITLE AND RISK OF LOSS
Title to the Products and the risk of loss of such Products shall transfer
from Xxxxxxx to Baxter at the time that Baxter or Xxxxxx'x designee takes
delivery of the Products from Xxxxxxx DDU at the port of entry in Japan.
ARTICLE XI
WARRANTIES
11.1 Product Warranty. The following shall apply to all Products sold or
transferred to Xxxxxx Japan prior to or after the Effective Date. Xxxxxxx
warrants to Baxter that, at the time of delivery to Baxter (or Xxxxxx'x
designee): (a) the Products have been manufactured by Xxxxxxx in accordance with
Good Manufacturing Practices as required by the United States Food and Drug
Administration and Xxxxxxx quality control processes and standards which
processes and standards shall meet the minimum requirements of the Ministry of
Health and Welfare of Japan for medical devices and associated products; (b) the
Products conform to the Product specifications in all material respects; (c) the
Products will be free from defects in materials and workmanship under normal use
and service for a period of twelve months commencing on the date that such
Products are received by Xxxxxx Japan; (d) the Products shall not be subject to
expiration for a minimum of nine months thereafter; (e) the design and material
of product packaging (and the quality systems and procedures governing packaging
and transportation operations) are adequate to prevent damage to the Products
including moisture damage, insect damage, and/or contamination with dust or
dirt; and (f) Xxxxxxx shall have good and marketable title to all Products free
and clear of all liens or encumbrances (other than any created by Baxter).
11.2 Disclaimer. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL
OTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT
LIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL XXXXXXX BE LIABLE TO BAXTER
FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
11.3 Limitation of Liability. ANY LIABILITY OF XXXXXXX TO BAXTER UNDER THE
WARRANTY CONTAINED IN THIS ARTICLE XI SHALL BE LIMITED TO THE TOTAL PRICE PAID
BY BAXTER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH LIABILITY PLUS ALL COSTS
FOR FREIGHT AND OTHER DIRECT EXPENSES INCURRED BY BAXTER WITH RESPECT TO SUCH
PRODUCTS. SUBJECT TO THE FOREGOING, IF, AT THE TIME OF DELIVERY TO BAXTER (OR
XXXXXX'X DESIGNEE), A PRODUCT FAILS TO CONFORM IN ALL MATERIAL RESPECTS TO THE
12
PRODUCT SPECIFICATIONS, THEN XXXXXXX SHALL EITHER (AT XXXXXXX' OPTION) (a)
REPLACE SUCH PRODUCT WITHOUT ANY ADDITIONAL CHARGE TO BAXTER, OR (b) REFUND TO
BAXTER THE PURCHASE PRICE PLUS ALL COSTS FOR FREIGHT AND OTHER DIRECT EXPENSES
INCURRED BY BAXTER.
ARTICLE XII
TRADEMARKS
12.1 Ownership. Baxter acknowledges that Xxxxxxx or its Affiliates are the
owners or licensees of the trademarks and trade names that Xxxxxxx and its
Affiliates use in the promotion and sale of the Products hereunder, and that
Baxter has no right or interest in such trademarks or trade names. Prior to
using any such trademarks or trade names, Baxter shall provide to Xxxxxxx
specimens of the proposed use of such trademarks or trade names, and Baxter
shall not use such trademarks or trade names unless Xxxxxxx approves in writing
of each such proposed use, such approval not to be unreasonably withheld or
delayed. Notwithstanding the foregoing (a) Xxxxxxx hereby grants to Baxter Japan
the limited right during the Term to use the XXXXXXX or XXXXXXX LIFESCIENCES
xxxx in connection with and to refer to the operating division of Baxter Japan
that engages in the Japanese Xxxxxxx Business (i.e., the Xxxxxxx Lifesciences
----
division of Baxter Japan or similar uses); and (b) Xxxxxxx hereby grants to
Baxter during the Term the exclusive, limited right to use the XXXXXXX and
XXXXXXX LIFESCIENCES marks in the Territory in connection with the Japanese
Xxxxxxx Business. Baxter Japan's and Xxxxxx'x rights to use such Xxxxxxx marks
shall be subject to all reasonable usage guidelines communicated by Xxxxxxx to
Xxxxxx Japan and Baxter, respectively. Xxxxxxx shall not grant to any third-
party the right to use such Xxxxxxx marks in the Territory during the Term in
connection with the development, manufacture, marketing, sales or support of
products that are competitive with or otherwise related to the Products
hereunder or any other products or services of the Japanese Xxxxxxx Business.
12.2 Infringement. Baxter shall notify Xxxxxxx promptly of any
infringement or improper use by any third party of the trademarks or trade names
connoting Xxxxxxx if it comes to Xxxxxx'x attention that such infringement or
improper use is taking place. In connection therewith, Baxter shall provide to
Xxxxxxx all related information of which Baxter has knowledge. Xxxxxxx shall
have sole discretion and control with regard to any proceedings related to
infringement or improper use of its trademarks and trade names. Baxter may
choose to be represented by its own counsel in any such proceedings, but such
representation shall be solely at Xxxxxx'x expense.
12.3 Equitable Remedies. Baxter acknowledges that Xxxxxxx may not have an
adequate remedy at law for the breach by Baxter of any covenant contained in
Section 12.1. Accordingly, if Baxter breaches any such covenant, Xxxxxxx may,
in addition to the other remedies that may be available to Xxxxxxx, file a suit
in equity to enjoin Baxter from any further breach of any of the terms of
Section 12.1.
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ARTICLE XIII
TERMINATION
13.1 Change in Control.
(a) General.
-------
(i) In the event of a Change in Control of Xxxxxxx, Xxxxxxx shall
give Notice to Baxter within 30 days after the occurrence of such Change in
Control. Baxter may terminate this Agreement in whole, or solely with
respect to Xxxxxxx' rights set forth in Section 7 of Schedule A, in the
event of any such Change in Control with respect to Xxxxxxx, by giving
Notice of such termination to Xxxxxxx as provided below.
(ii) Baxter may exercise the rights of termination described in the
preceding paragraph (i) by providing to Xxxxxxx a Notice of termination,
specifying the date of termination, at any time within the 60-day period
immediately following the receipt by Baxter of the applicable Notice of
Change in Control given by Xxxxxxx pursuant to the first sentence of
Section 13.1(a)(i).
(iii) The date of termination specified by Baxter in the Notice of
termination for a termination in whole shall be the last day of a calendar
month that is not earlier than the third full calendar month following the
date of the Notice of termination and not later than the sixth full
calendar month following the date of the Notice of termination. The date of
termination specified by Baxter in the Notice of termination for a
termination solely with respect to Xxxxxxx' rights set forth in Section 7
of Schedule A shall be the last day of a calendar month that is not earlier
than the first full calendar month following the date of the Notice of
termination and not later than the third full calendar month following the
date of the Notice of termination.
(b) Definitions. For purposes hereof, "Change in Control" shall mean
-----------
(i) the acquisition, directly or indirectly, by any Person or Persons of more
than 30% of the voting stock of either party to this Agreement or any person
that controls either party, other than such an acquisition by a Person that is
controlled by the Ultimate Parent of such party, (ii) any merger or
consolidation involving the Ultimate Parent of Xxxxxxx or any Affiliate of such
Ultimate Parent that requires a vote of the stockholders of the Ultimate Parent
of Xxxxxxx, (iii) the acquisition by the Ultimate Parent of Xxxxxxx of any
Person that constitutes a "significant subsidiary" of such Ultimate Parent
within the meaning of Rule 1-02(w) of Regulation S-X of the Regulations of the
Securities and Exchange Commission, substituting 50 percent for 10 percent in
the tests used therein to determine significant subsidiary, and (iv) the sale,
assignment, transfer or other disposition (including any disposition through a
merger) of all or substantially all of the business and assets of any Person
that controls Xxxxxxx. "Ultimate Parent" means Xxxxxx International in the case
of Baxter and Xxxxxxx Lifesciences in the case of Xxxxxxx.
(c) Confidential Information. During the period commencing with any
------------------------
such Change in Control and continuing through the end of the Term (and
thereafter, if appropriate), Xxxxxxx shall take any and all action reasonably
requested by Baxter to protect any confidential
14
information of Baxter from disclosure to or use by any Affiliate of Xxxxxxx
other than a Person that, immediately prior to the occurrence of the Change in
Control, was an Affiliate of Xxxxxxx that regularly accessed such confidential
information for a reasonable business purpose.
13.2 Other Terminations. Each party shall have the right to terminate this
Agreement effective upon delivery of Notice to the other party if the other
party materially defaults in the performance of any of its covenants or
obligations contained in this Agreement (including a failure to comply with the
Foreign Corrupt Practices Act (as amended)), and such default is not remedied to
the nondefaulting party's reasonable satisfaction within 30 days after Notice to
the defaulting party of such default, or if such default is not capable of
rectification within 30 days, if the defaulting party has not promptly commenced
to rectify the default within such 30-day period or is not proceeding diligently
to rectify the default.
13.3 Procedures Upon Termination. Upon any termination of this Agreement,
each party shall complete its work in process and otherwise cooperate with the
other party as reasonably necessary to avoid disruption of the normal business
operations of such other party, and such termination shall not affect either
party's rights that arose prior to the effective date of such termination.
Except as otherwise required pursuant to ARTICLE XVIII and Section 22.10, each
party shall destroy or return to the other party all records made or obtained in
the course of performance hereunder that contain information that is protected
from disclosure by such party under ARTICLE XVIII. If either party elects to
destroy any records as permitted above, such party shall provide the other party
with written confirmation of such destruction.
13.4 Continued Service. If this Agreement expires or is terminated pursuant
to this ARTICLE XIII, Baxter and Xxxxxxx shall comply fully with this Agreement
and use reasonable efforts to adequately service existing customers of the
Products until such expiration or termination becomes effective. Xxxxxxx shall
reimburse Baxter for (a) any termination or severance payments actually paid by
Baxter to any Xxxxxxx Japan Employees as a result of the termination or
expiration of this Agreement, and (b) any Losses incurred by Baxter as a result
of Xxxxxx'x inability to terminate the employment of any Xxxxxxx Japan Employees
following such termination or expiration.
13.5 Sell-Off. Notwithstanding any provision of this Agreement or any other
agreement between Baxter, Edwards, and/or their respective Affiliates, the
parties acknowledge that Baxter and its Affiliates shall be entitled to continue
to sell or otherwise dispose of the Products within the Territory from and after
the effective date of the expiration or termination of this Agreement if such
Products were owned by Baxter on the date of such expiration or termination;
provided that Baxter shall not substantially increase its inventory of Products
in anticipation of such expiration or termination.
ARTICLE XIV
INDEMNITY
14.1 Xxxxxx'x Obligation. Except as provided in Section 14.2(a)(v)(B) and
14.4, Baxter shall indemnify and hold harmless Xxxxxxx and each of its
Affiliates, directors, officers, employees, agents and counsel and each of the
heirs, executors, successors and assigns of any of
15
the foregoing (collectively, the "Xxxxxxx Indemnified Parties"), from and
---------------------------
against any and all Expenses or Losses incurred or suffered by Xxxxxxx (and/or
one or more of the Xxxxxxx Indemnified Parties), in connection with, relating
to, arising out of or due to, directly or indirectly, any of the following
items:
(a) any fines, penalties or other sanctions imposed by a Governmental
Body that (i) arise out of the operation of the Other Japanese Businesses at any
time prior to the fifth anniversary of this Agreement and (ii) affect the
Japanese Xxxxxxx Business;
(b) any failure of the Other Japanese Businesses to comply, at any
time prior to the fifth anniversary of this Agreement, with any applicable
Administrative and Legal Requirements;
(c) any exercise of control or influence over the operation of the
Japanese Xxxxxxx Business during the first five years of this Agreement by a
Xxxxxx Japan Officer or Director, without the approval of the Mutually Approved
President; and
(d) any and all Third-Party Claims that arise out of or relate to:
(i) any actual or alleged patent, copyright or trademark
infringement, or misappropriation or violation of any other proprietary
right, arising out of Xxxxxx'x performance pursuant to this Agreement (but
not arising out of or relating to any of the proprietary rights in the
Products as delivered); or
(ii) any tort claim (including any claim for personal injury, wrongful
death or property damage) to the extent such claim arises from any grossly
negligent act or omission or willful misconduct by Baxter (or its employees
or agents) in the course of its performance pursuant to this Agreement,
including any misrepresentation concerning the characteristics or method of
usage of Products or relating to the storage, handling or delivery of
Products.
Expenses shall be reimbursed or advanced when and as incurred promptly upon
submission of statements to Baxter by Xxxxxxx or any Xxxxxxx Indemnified Party.
14.2 Xxxxxxx' Obligation.
(a) Except as provided in Sections 14.2(b) and 14.4, Xxxxxxx shall
indemnify and hold harmless Baxter and each of its Affiliates, directors,
officers, employees, agents and counsel and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Baxter
------
Indemnified Parties"), from and against any and all Expenses or Losses incurred
-------------------
or suffered by Baxter (and/or one or more of the Baxter Indemnified Parties), in
connection with, relating to, arising out of or due to, directly or indirectly,
any of the following items (and to the extent related to Products shall apply to
all Products sold or transferred to Xxxxxx Japan prior to or after the Effective
Date):
16
(i) any fines, penalties or other sanctions imposed by a Governmental
Body that (A) arise out of the operation of the Japanese Xxxxxxx Business at any
time prior to the fifth anniversary of this Agreement and (B) affect the Other
Japanese Businesses;
(ii) any failure of the Xxxxxxx Japanese Business to comply, at any time
prior to the fifth anniversary of this Agreement, with any applicable
Administrative and Legal Requirements;
(iii) any exercise of control or influence over the operation of Other
Japanese Businesses during the first five years of this Agreement by an officer
or director of the Xxxxxxx Lifesciences division of Baxter Japan and without the
approval of Xxxxxx'x President;
(iv) any claim or Action that is brought by a Xxxxxxx Employee against
Xxxxxx Japan and that relates to or arises out of events that occurred at any
time prior to the fifth anniversary of this Agreement, other than a claim or
Action that arises out of (x) an event or action described in Section 14.1(c) or
(y) the gross negligence or willful misconduct of a Xxxxxx Japan Employee; and
(v) any and all Third-Party Claims that arise out of or relate to:
(A) any tort claim (including any claim for personal injury,
wrongful death or property damage) to the extent such claim
arises from any grossly negligent act or omission or willful
misconduct by Xxxxxxx (or its employees or other agents) in
the course of its performance pursuant to this Agreement;
(B) defects in the Products;
(C) any actual or alleged patent, copyright or trademark
infringement, or misappropriation or violation of any other
proprietary right related to a Product;
(D) any actual or alleged breach of any warranty (including
written warranties included within the Product packaging) or
obligation, if any, accompanying the Products, subject to the
limitations in ARTICLE XI to the extent provided therein; and
(E) any claim for personal injury, wrongful death or property
damage arising out of the use of a Product.
Expenses shall be reimbursed or advanced when and as incurred promptly upon
submission of statements to Xxxxxxx by Baxter or any Baxter Indemnified Party.
(b) Notwithstanding the foregoing, none of the Baxter Indemnified
Parties shall be entitled to indemnification under clause (i), (ii) or (iii) of
Section 14.2(a) for (i) any Expenses or Losses that are included in the Profits
and Losses allocated under the TK Agreement
17
or (ii) any period during which Baxter or its Affiliates shall cause (A) the
President of the Xxxxxxx Lifesciences division of Baxter Japan to be someone
other than a person approved by Xxxxxxx or (B) any of the positions listed in
Exhibit B hereto to report directly to anyone other than the Mutually Approved
---------
President.
14.3 Applicability of Indemnification. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, THE INDEMNITY OBLIGATION UNDER THIS ARTICLE XIV SHALL APPLY
NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNIFIED PARTY
AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE,
COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT
LIABILITY, ABSOLUTE LIABILITY OR ARISES AS AN OBLIGATION FOR CONTRIBUTION.
14.4 Adjustment of Indemnifiable Losses.
(a) The amount that any party (an "Indemnifying Party") is required to
------------------
pay to any Person entitled to indemnification hereunder (an "Indemnified Party")
-----------------
shall be reduced (including retroactively) by any Insurance Proceeds and other
amounts actually recovered by or on behalf of such Indemnified Party in
reduction of the related Expense or Loss. If an Indemnified Party receives a
payment (an "Indemnity Payment") required by this Agreement from an Indemnifying
-----------------
Party in respect of any Expense or Loss and subsequently actually receives
Insurance Proceeds or other amounts in respect of such Expense or Loss, then
such Indemnified Party shall pay to the Indemnifying Party a sum equal to the
lesser of (i) the amount of such Insurance Proceeds or other amounts actually
received or (ii) the net amount of Indemnity Payments actually received
previously. The Indemnified Party agrees that the Indemnifying Party shall be
subrogated to such Indemnified Party under any insurance policy.
(b) An insurer who otherwise would be obligated to pay any claim shall
not be relieved of the responsibility with respect thereto, or, solely by virtue
of the indemnification provisions hereof, have any subrogation rights with
respect thereto, it being expressly understood and agreed that no insurer or any
other third party shall be entitled to a "windfall" (i.e., a benefit he or she
----
would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof.
(c) If any Indemnified Party realizes a Tax benefit or detriment in
one or more Tax periods by reason of having incurred a Loss for which such
Indemnified Party receives an Indemnity Payment from an Indemnifying Party (or
by reason of the receipt of any Indemnity Payment), then such Indemnified Party
shall pay to such Indemnifying Party an amount equal to the Tax benefit or such
Indemnifying Party shall pay to such Indemnified Party an additional amount
equal to the Tax detriment (taking into account, without limitation, any Tax
detriment resulting from the receipt of such additional amounts), as the case
may be. The amount of any Tax benefit or any Tax detriment for a Tax period
realized by an Indemnified Party by reason of having incurred a Loss (or by
reason of the receipt of any Indemnity Payment) shall be deemed to equal the
product obtained by multiplying (i) the amount of any deduction or loss or
inclusion in income for such period resulting from such Loss (or the receipt of
any Indemnity Payment or additional amount), as the case may be (without regard
to whether such deduction or loss or such
18
inclusion in income results in any actual decrease or increase in Tax liability
for such period), by (ii) the highest applicable marginal Tax rate for such
period (provided, however, that the amount of any Tax benefit attributable to an
-------- -------
amount that is creditable shall be deemed to equal the amount of such creditable
item). Any payment due under this Section 14.4 with respect to a Tax benefit or
Tax detriment realized by an Indemnified Party in a Tax period shall be due and
payable within 30 days from the time the return for such Tax period is due,
without taking into account any extension of time granted to the Party filing
such return.
(d) All Indemnity Payments under this ARTICLE XIV shall be denominated
in Yen.
14.5 Procedures for Indemnification of Third-Party Claims.
(a) In the event of a Third-Party Claim against any one or more of the
Indemnified Parties with respect to which an Indemnified Party intends to make
any claim for indemnification against Baxter under Section 14.1 or against
Xxxxxxx under Section 14.2, such Indemnified Party shall promptly give written
notice to the Indemnifying Party describing such Third-Party Claim in reasonable
detail, and the following provisions shall apply. Notwithstanding the foregoing,
the failure of any Indemnified Party to provide notice in accordance with this
Section 14.5(a) shall not relieve the related Indemnifying Party of its
obligations under this ARTICLE XIV, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to provide notice.
(b) The Indemnifying Party shall have 20 business days after receipt
of the notice referred to in Section 14.5(a) to notify the Indemnified Party
that it elects to conduct and control the defense of such Third-Party Claim. If
the Indemnifying Party does not give the foregoing notice, the Indemnified Party
shall have the right to defend, contest, settle or compromise such Third-Party
Claim in the exercise of its exclusive discretion subject to the provisions of
Section 14.5(c), and the Indemnifying Party shall, upon request from any of the
Indemnified Parties, promptly pay to such Indemnified Parties in accordance with
the other terms of this Section 14.5(b) the amount of any Expense or Loss
resulting from their liability to the third-party claimant. If the Indemnifying
Party gives the foregoing notice, the Indemnifying Party shall have the right to
undertake, conduct and control, through counsel reasonably acceptable to the
Indemnified Party, and at its sole expense, the conduct and settlement of such
Third-Party Claim, and the Indemnified Party shall cooperate with the
Indemnifying Party in connection therewith, provided that (i) the Indemnifying
--------
Party shall not thereby permit any lien, encumbrance or other adverse charge to
thereafter attach to any asset of any Indemnified Party; (ii) the Indemnifying
Party shall not thereby permit any injunction against any Indemnified Party;
(iii) the Indemnifying Party shall permit the Indemnified Party and counsel
chosen by the Indemnified Party and reasonably acceptable to the Indemnifying
Party to monitor such conduct or settlement and shall provide the Indemnified
Party and such counsel with such information regarding such Third-Party Claim as
either of them may reasonably request (which request may be general or
specific), but the fees and expenses of such counsel (including allocated costs
of in-house counsel and other personnel) shall be borne by the Indemnified Party
unless (A) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (B) the named parties to any such
Third-Party Claim include the Indemnified Party
19
and the Indemnifying Party and in the reasonable opinion of counsel to the
Indemnified Party representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and disbursements of counsel for such
Indemnified Party (including allocated costs of in-house counsel and other
personnel) shall be reimbursed by the Indemnifying Party to the Indemnified
Party; and (iv) the Indemnifying Party shall agree promptly to reimburse to the
extent required under this ARTICLE XIV the Indemnified Party for the full amount
of any Expense or Loss resulting from such Third-Party Claim and all related
expenses incurred by the Indemnified Party. In no event shall the Indemnifying
Party, without the prior written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment that does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all Liability in respect of
such claim. If the Indemnifying Party shall not have undertaken the conduct and
control of the defense of any Third-Party Claim as provided above, the
Indemnifying Party shall nevertheless be entitled through counsel chosen by the
Indemnifying Party and reasonably acceptable to the Indemnified Party to monitor
the conduct or settlement of such claim by the Indemnified Party, and the
Indemnified Party shall provide the Indemnifying Party and such counsel with
such information regarding such Third-Party Claim as either of them may
reasonably request (which request may be general or specific), but all costs and
expenses incurred in connection with such monitoring shall be borne by the
Indemnifying Party.
(c) So long as the Indemnifying Party is contesting any such Third-
Party Claim in good faith, the Indemnified Party shall not pay or settle any
such Third-Party Claim. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such Third-Party Claim, provided that
--------
in such event the Indemnified Party shall waive any right to indemnity therefor
by the Indemnifying Party, and no amount in respect thereof shall be claimed as
an Expense or a Loss under this Section 14.5(c). If the Indemnifying Party shall
have undertaken the conduct and control of the defense of any Third-Party Claim
as provided above, the Indemnified Party, on not less than 30 days prior written
notice to the Indemnifying Party, may make settlement (including payment in
full) of such Third-Party Claim, and such settlement shall be binding upon the
Parties for the purposes hereof, unless within said 30-day period the
Indemnifying Party shall have requested the Indemnified Party to contest such
Third-Party Claim at the expense of the Indemnifying Party. In such event, the
Indemnified Party shall promptly comply with such request and the Indemnifying
Party shall have the right to direct the defense of such claim or any litigation
based thereon subject to all the conditions of Section 14.5(b). Notwithstanding
anything in this Section 14.5(c) to the contrary, if the Indemnified Party, in
the belief that a claim may materially and adversely affect it other than as a
result of money damages or other money payments, advises the Indemnifying Party
that it has determined to settle a claim, the Indemnified Party shall have the
right to do so at its own cost and expense, without any requirement to contest
such claim at the request of the Indemnifying Party, but without any right under
the provisions of this Section 14.5(c)for indemnification by the Indemnifying
Party.
14.6 Procedures for Indemnification of Direct Claims. Any claim for
indemnification on account of an Expense or a Loss made directly by the
Indemnified Party against the Indemnifying Party and that does not result from a
Third-Party Claim shall be asserted by written notice from the Indemnified Party
to the Indemnifying Party specifically
20
claiming indemnification hereunder. Such Indemnifying Party shall have a period
of 30 business days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30 business-day
period, such Indemnifying Party shall be deemed to have accepted responsibility
to make payment and shall have no further right to contest the validity of such
claim. If such Indemnifying Party does respond within such 30 business-day
period and rejects such claim in whole or in part, such Indemnified Party shall
be free to pursue resolution as provided in ARTICLE XX
14.7 No Third-Party Beneficiaries. Except to the extent expressly provided
otherwise in this ARTICLE XIV, the indemnification provided for in this
Agreement shall not inure to the benefit of any third party or parties and shall
not relieve any insurer or other third party who otherwise would be obligated to
pay any claim or assume the responsibility with respect thereto, or, solely by
virtue of the indemnification provisions hereof, provide any subrogation rights
with respect thereto, and each Party agrees to waive such rights against the
other to the fullest extent permitted.
14.8 Remedies Cumulative. The remedies provided in this ARTICLE XIV shall
be cumulative and, subject to the provisions of ARTICLE XIX below, shall not
preclude assertion by an Indemnified Party of any other rights or the seeking of
any and all other remedies against any Indemnifying Party.
ARTICLE XV
COMPLIANCE WITH LAWS
15.1 Xxxxxx Compliance. Baxter shall comply (or cause compliance) in all
material respects with all laws, rules, regulations and directives applicable to
the conduct of Xxxxxx'x business or the possession of Products pursuant to this
Agreement including the following:
(a) giving prompt written notice to Xxxxxxx if Baxter should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation of any applicable law, rule, regulation or directive including any
violation which could require any alteration of the specifications of any
Product, affect the sale of any Product, cause revocation of any regulatory
approval with respect to any Product or its sale hereunder, or give rise to a
claim against Xxxxxxx by any person, and Baxter shall promptly notify Xxxxxxx
upon becoming aware of any changes in any laws, rules, regulations or directives
applicable to the manufacture, sale, packaging, labeling, possession or use of
the Products;
(b) keeping appropriate records of all lot coded Products and serial
numbered Products shipped to customers; and
(c) complying with Xxxxxxx' reasonable instructions regarding the
return or disposal of any Products affected by holds or recalls.
15.2 Xxxxxxx Compliance. Xxxxxxx shall comply (or cause compliance) in all
material respects with all laws, rules, regulations and directives applicable to
the conduct of
21
Xxxxxxx' business or the manufacture, packaging, labeling and sale to Baxter of
Products pursuant to this Agreement including the following:
(a) giving prompt written notice to Baxter if Xxxxxxx should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation of any applicable law or regulation of the Territory, including,
without limitation, any violation which could require any alteration of the
specifications of any Product, affect the sale of any Product, cause revocation
of any federal, state or other regulatory approval with respect to any Product
or its sale hereunder or give rise to a claim against Baxter by any person; and
(b) giving prompt written notice to Baxter of any and all Products
affected by holds or recalls and, if Xxxxxxx requests that Baxter return or
dispose of any of such Products, promptly reimburse Baxter for the price paid by
Baxter for such returned or disposed Products along with any direct costs of
returning or disposing of such Products.
15.3 Specific Federal Requirements.
(a) To the extent applicable to the subject matter of this Agreement,
and pursuant to the requirements of 42 CFR 420.300 et seq., Baxter shall make
-------
available to the Secretary of Health and Human Services ("HHS"), the Comptroller
---
of the General Accounting Office ("GAO"), or their authorized representatives,
---
all contracts, books, documents and records relating to the nature and extent of
costs hereunder for a period of four years after the furnishing of services
hereunder. In addition, if any part of Xxxxxx'x obligations is to be provided
by subcontract, Baxter shall require by contract that such subcontractor make
available to the HHS and GAO, or their authorized representatives, all
contracts, books, documents and records relating to the nature and costs
thereunder for a period of four years after the furnishing of services
thereunder.
(b) The services provided hereunder will be provided in compliance
with applicable Equal Employment Opportunity requirements including, where
applicable, those set forth in Section 202 of Executive Order 11246, as amended.
15.4 Additional Requirements.
(a) Baxter will periodically confirm that the Products to be imported
are produced under and in accordance with appropriate manufacturing and quality
control systems, and such confirmation will include reviewing the current the
United States Food and Drug Administration Certificate to Foreign Government
(CFG) document which certifies that the applicable manufacturing plant is in
compliance with current Good Manufacturing Practice requirements.
(b) Xxxxxxx will promptly communicate to Baxter any proposed change
or changes in the Products having the potential to impact product quality,
safety or efficacy, and such changes may include changes in or to: (i) the
design of the Product; (ii) the composition or source of any raw material; (iii)
the method of producing, processing or testing the Product;
22
(iv) the subcontractors that produce, process or test; (v) the site of
manufacture; (vi) labeling; (vii) the design or material of any packaging
component; and (viii) the sterilization method, condition or site. Such
communications will be directed to Xxxxxx Japan's Regulatory and Scientific
Affairs Director and QA Manager.
(c) Xxxxxxx will promptly communicate to Baxter any decision by
Xxxxxxx to recall or hold any Product if such decision is related to the
Product's quality, safety or efficacy, and such communication shall include: (i)
Product code number of affected Products, (ii) lot or serial number(s) of
affected Products, (iii) the reason for such hold or recall, and (iv)
instructions for the disposition of the Products. Such communications will be
directed to the President of Baxter.
ARTICLE XVI
INSURANCE
Each party is responsible for carrying any insurance desired by it in its
sole discretion, including comprehensive general liability insurance, insurance
to cover its facilities, products liability insurance and business interruption
insurance.
ARTICLE XVII
FORCE MAJEURE
The obligations of either party to perform under this Agreement shall be
excused during each period of delay caused by matters (not including lack of
funds or other financial causes) such as strikes, supplier delays, shortages of
raw materials, government orders or acts of God, that are reasonably beyond the
control of the party obligated to perform; provided that nothing contained in
this Agreement shall affect either party's ability or discretion with respect to
any strike or other employee dispute or disturbance and all such strikes,
disputes or disturbances shall be deemed to be beyond the control of such party.
A condition of force majeure shall be deemed to continue only so long as the
affected party shall be taking all reasonable actions necessary to overcome such
condition. If either party shall be affected by a condition of force majeure,
such party shall give the other party prompt Notice thereof, which Notice shall
contain the affected party's estimate of the duration of such condition and a
description of the steps being taken or proposed to be taken to overcome such
condition of force majeure. Any delay occasioned by any such cause shall not
constitute a default under this Agreement, and the obligations of the parties
shall be suspended during the period of delay so occasioned. During any period
of force majeure, the party that is not directly affected by such condition of
force majeure shall be entitled to take any reasonable action necessary to
mitigate the effects of such condition of force majeure, and the provisions of
Section 3.1 shall be suspended to the extent necessary to permit any such
action, and any financial obligations shall be adjusted in a fair and equitable
manner.
ARTICLE XVIII
CONFIDENTIALITY
18.1 Baxter Information. Xxxxxxx shall hold (and shall use reasonable
efforts to cause its employees and representatives to hold) in confidence (in a
manner consistent with
23
Xxxxxxx' treatment of its own confidential information) all information
concerning Baxter (a) contained in any of the Schedules to this Agreement or
otherwise received by Xxxxxxx from Baxter after the Effective Date relating to
the determination of the fees and charges payable hereunder, (b) obtained from
Baxter using access to Xxxxxx'x information through any interface between
Xxxxxx'x systems and Xxxxxxx' systems maintained in connection with Xxxxxx'x
provision of services hereunder, (c) obtained from Baxter in the course of an
audit pursuant to Section 6.7, or (d) furnished to or obtained by Xxxxxxx after
the Effective Date in the course of its receipt of services hereunder. Xxxxxxx
shall not use such information for any purpose other than as contemplated under
this Agreement or for verifying compliance with this Agreement.
18.2 Xxxxxxx Information. Baxter shall hold (and shall use its reasonable
efforts to cause its employees and representatives to hold) in confidence (in a
manner consistent with Xxxxxx'x treatment of its own confidential information)
all information concerning Xxxxxxx (a) furnished to or obtained by Baxter after
the Effective Date in the course of providing services hereunder, or (b)
obtained from Xxxxxxx using access to Xxxxxxx' information through any interface
between Xxxxxx'x systems and Xxxxxxx' systems maintained in connection with
Xxxxxx'x provision of services hereunder. Baxter shall not use such information
for any purpose other than as contemplated under this Agreement or for verifying
compliance with this Agreement.
18.3 General.
(a) Each party shall be responsible for preventing unauthorized
access by such party's agents and employees to data transferred to or otherwise
made available to the other party under this Agreement.
(b) The obligations of confidentiality and nondisclosure imposed
under this ARTICLE XVIII shall not apply to data and information that the
recipient can demonstrate:
(i) is published or is or otherwise becomes available to the general
public as part of the public domain without breach of this Agreement by the
recipient;
(ii) has been furnished or made known to the recipient by a third
party without any obligation on the recipient to keep it confidential and
under circumstances that are not known to the recipient to involve a breach
of the third party's obligations to the other party;
(iii) was developed independently of information furnished to the
recipient under this Agreement; or
(iv) was known to the recipient at the time of receipt thereof from
the other party, was not improperly obtained from the other party and is
not otherwise subject to (a) the confidentiality restrictions contained in
the Reorganization Agreement dated as of March 15, 2000, between Xxxxxx
International and Xxxxxxx Lifesciences or (b) any other obligation to keep
it confidential.
18.4 Injunctive Relief. Each party (the "first party") acknowledges that
the other party would not have an adequate remedy at law for the breach by the
first party of any one or more of
24
the covenants contained in this ARTICLE XVIII and agrees that, in the event of
such breach, the other party may, in addition to the other remedies which may be
available to it, apply to a court for an injunction to prevent breaches of this
ARTICLE XVIII and to enforce specifically the terms and provisions of this
Article.
18.5 Required Disclosures. The provisions of this Section shall not
preclude disclosures required by law; provided, however, that each party will
use reasonable efforts to notify the other, prior to making any such disclosure,
and permit the other to take such steps as it deems appropriate (including
obtaining a protective order) to minimize any loss of confidentiality.
ARTICLE XIX
LIMITATION OF LIABILITY AND REMEDIES
19.1 Damages.
(a) Except for the right to recover Lost Profits and Harm to
Reputation under clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of
Section 14.2(a) and except for damages asserted by a third party against a party
entitled to indemnification hereunder, in no event, whether based on contract,
indemnity, warranty, tort (including negligence), strict liability or otherwise,
shall either party or any of its directors, officers, employees or agents, be
liable for incidental, consequential, special, exemplary, or punitive damages.
The foregoing limitation and disclaimer shall apply irrespective of whether the
possibility of such incidental, consequential, special, exemplary, or punitive
damages had been disclosed in advance or could have reasonably been foreseen.
(b) The limitations and disclaimers of obligations and liabilities
contained in this ARTICLE XIX are intended to apply to the fullest extent
permitted by law; provided that such limitations and disclaimers shall not limit
amounts payable with respect to any express indemnity provided for in this
Agreement.
19.2 Exclusive Remedies.
(a) Except in the case of the gross negligence or willful misconduct
of Baxter or its Affiliates, Xxxxxxx' exclusive remedies against Baxter for any
breach of, or other act or omission arising out of or relating to, this
Agreement or Xxxxxx'x performance hereunder shall be:
(i) the right to receive refunds of the amount of any payment in
excess of amounts owed under this Agreement;
(ii) the right to require reperformance of any obligation to the
extent required pursuant to ARTICLE IX;
(iii) the right to indemnification as provided in Section 14.1;
(iv) the right to injunction, specific performance or other equitable
nonmonetary relief when available under applicable law;
25
(v) the right to terminate this Agreement for material breach as set
forth in Section 13.2; and
(vi) the right to actual damages for breach of ARTICLE XVIII.
(b) Except in the case of the gross negligence or willful misconduct
of Xxxxxxx or its Affiliates, Xxxxxx'x exclusive remedies against Xxxxxxx for
any breach of, or other act or omission arising out of or relating to, this
Agreement or Xxxxxxx' performance hereunder shall be:
(i) the right to indemnification as provided in Section 14.2;
(ii) the right to require Xxxxxxx to repair or replace (at Xxxxxxx'
option and expense) any Product that proves not to be in conformity with
applicable labeling or specifications, and Xxxxxxx shall pay the
transportation and other costs incurred by Baxter with respect to any
Products returned to Baxter for repair or replacement under this Section
19.2(b)(ii), or, at Xxxxxxx' option, reimburse Baxter for any such costs;
(iii) the right to injunction, specific performance or other equitable
nonmonetary relief when available under applicable law;
(iv) the right to terminate this Agreement for material breach as set
forth in Section 13.2; and
(v) the right to actual damages for breach of ARTICLE XVIII.
ARTICLE XX
DISPUTE RESOLUTION
20.1 General. Any dispute arising out of or relating to this Agreement
shall be resolved in accordance with the procedures specified in this ARTICLE
XX, which shall be the sole and exclusive procedures for the resolution of any
such disputes.
20.2 Escalation. The parties will attempt in good faith to resolve any
claim or controversy arising out of or relating to the execution, interpretation
and performance of this Agreement (including the validity, scope and
enforceability of this mediation and arbitration provision) promptly by
negotiations between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for the administration of this Agreement. Any party may give the
other party written notice of any dispute not resolved in the normal course of
business. Within fifteen days after delivery of the notice, the receiving party
shall submit to the other a written response. The notice and the response shall
include (a) a statement of each party's position and a summary of arguments
supporting that position, and (b) the name and title of the executive who will
represent that party and of any other person who will accompany the executive.
Within 30 days after delivery of the notifying party's notice, the executives of
both parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to attempt to resolve the dispute.
All reasonable requests for information made by one party to the other
26
will be honored. All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
20.3 Arbitration. Any dispute arising out of or relating to this Agreement
or its breach, termination or validity which has not been resolved by the
specified non-binding procedure within 90 days of the initiation of the date of
delivery of notice shall be settled by binding arbitration in accordance with
the CPR Non-Administered Arbitration Rules in effect on the date of this
Agreement, by three independent and impartial arbitrators, none of whom shall be
appointed by either party. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof. The place of the arbitration shall be Lake County, Illinois, or Orange
County, California, and shall be determined by the party that initiated the
dispute resolution process. The arbitrators may award attorneys' fees in their
discretion. Otherwise, the arbitrators are not empowered to award damages in
excess of compensatory damages, and each party hereby irrevocably waives any
right to recover such damages.
20.4 Procedures. The parties may request limited discovery in accordance
with the Federal Rules of Civil Procedure for a period of 120 days after the
initiation of the arbitration process. All issues regarding compliance with
discovery requests shall be decided by the arbitrators pursuant to the Federal
Rules of Civil Procedure. The parties agree that the recipient of a discovery
request shall have ten business days after the receipt of such request to object
to any or all portions of such request and shall respond to any portions of such
request not so objected within 30 business days of the receipt of such request.
All objections shall be in writing and shall indicate the reasons for such
objections. The objecting party shall ensure that all objections and responses
are received by the other party within the above time periods; failure to comply
with the specified time period shall be addressed as set forth in F.R.C.P. 37.
Any party seeking to compel discovery following receipt of an objection shall
file with the other party and the arbitrators a motion to compel, including a
copy of the initial request and the objection. The arbitrators shall allow ten
business days for the responses to the motion to compel before ruling. Claims
of privilege and other objections shall be determined as they would be in United
States federal court in a case applying Illinois law. The arbitrators may grant
or deny the motion to compel, in whole or in part, concluding that the discovery
request is or is not appropriate under the circumstances, taking into account
the needs of the parties and the desirability of making discovery expeditious
and cost-effective. The statute of limitations of the State of Illinois
applicable to the commencement of a lawsuit shall apply to the date of initial
written notification of a dispute and shall be extended until commencement of
arbitration if all interim deadlines have been complied with by the notifying
party.
20.5 Injunctive Relief. Nothing contained in this ARTICLE XX shall prevent
either party from resorting to judicial process if injunctive or other equitable
relief from a court is necessary to prevent serious and irreparable injury to
one party or to others. The use of arbitration procedures will not be construed
under the doctrine of laches, waiver or estoppel to affect adversely either
party's right to assert any claim or defense.
27
ARTICLE XXI
ASSIGNMENT
21.1 General. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, provided, however, that, except as provided below, Xxxxxxx shall not
Transfer its interest in the Agreement, including Transfers by operation of law
such as by way of merger or consolidation, without Xxxxxx'x prior written
consent, which consent may not be unreasonably withheld.
21.2 Transfers by Xxxxxx. Xxxxxx may Transfer its rights and obligations
hereunder to any Person to which Baxter shall Transfer the business and assets
of Baxter related to Xxxxxx'x fulfillment of its obligations hereunder, provided
that any such acquiring Person shall assume in writing the portion of Xxxxxx'x
obligations hereunder relating to the business and assets so Transferred, and
shall deliver a signed copy of such assumption instrument to Xxxxxxx. Xxxxxx
shall have no further liability in connection with any of its obligations so
assumed by such acquiring Person.
21.3 Delegation. Baxter shall have the right to delegate performance of
any of its obligations hereunder to any Person that is not a Competitor of
Xxxxxxx, but no such delegation shall relieve Baxter of any liability therefor
except as otherwise provided in Section 21.2.
ARTICLE XXII
MISCELLANEOUS PROVISIONS
22.1 Notices. All notices and other communications required under this
Agreement shall be in writing and shall be deemed to have been given if
delivered by hand, or sent by courier or facsimile transmission (provided that
in the case of facsimile transmission, a confirmation copy of the notice shall
be delivered by hand or sent by courier within 2 days of transmission),
addressed:
To Xxxxxx:
Xxxxxx Limited
0, Xxxxxxxxxx, Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Attention: President
(facsimile number: 00-0-0000-0000)
28
with a copy to:
Xxxxxx International Inc.
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
XXX
Attention: General Counsel
(facsimile number: 847-948-4634)
To Xxxxxxx:
Xxxxxxx Lifesciences LLC
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
XXX
Attention: International Counsel
(facsimile number: 949-250-6868)
with copies to:
Xxxxxxx Lifesciences Limited
Rokubancho 0-0, Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Attention: Chairman and Representative Director
(facsimile number: 00-0-0000-0000)
and
Xxxxxxx Lifesciences Corporation
00000 Xxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
XXX
Attention: General Counsel
(facsimile number: 949-250-6868)
until notice of a change in address or addressee is given as provided in this
Section 22.1. All notices given in accordance with this Section 22.1 shall be
effective, if delivered by hand or by courier, at the time of delivery, and, if
communicated by facsimile transmission, at the time of transmission.
29
22.2 Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof, there being no prior
written or oral promises or representations not incorporated herein.
22.3 Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois and the federal
laws of the United States of America applicable therein, as though all acts and
omissions related hereto occurred in Illinois. Subject to ARTICLE XX (including
the right to obtain judgment upon the award rendered by the arbitrators in any
court having jurisdiction thereof), any lawsuit arising from or related to this
Agreement shall only be brought in the United States District Court for the
Northern District of Illinois, the Circuit Court of Lake County, Illinois, the
United States District Court for the Central District of California, or the
Superior Court of Orange County, California, and the specific choice from among
the foregoing shall be determined by the party initiating such lawsuit. To the
extent permissible by law, the parties hereby consent to the jurisdiction and
venue of such courts. Each party hereby waives, releases and agrees not to
assert, and agrees to cause its Affiliates to waive, release and not assert, any
rights such party or its Affiliates may have under any foreign law or regulation
that would be inconsistent with the terms of this Agreement as governed by
Illinois law.
22.4 Amendment; Waiver. No amendment or modification of the terms of this
Agreement shall be binding on either party unless reduced to writing and signed
by (a) in the case of Baxter, its President, and (b) in the case of Xxxxxxx, its
President. The waiver by either party of any particular default by the other
party shall not affect or impair the rights of the party so waiving with respect
to any subsequent default of the same or a different kind; nor shall any delay
or omission by either party to exercise any right arising from any default by
the other affect or impair any rights which the nondefaulting party may have
with respect to the same or any future default.
22.5 Severability. If any provision of this Agreement is held to be
invalid, illegal, void or otherwise unenforceable in any jurisdiction by reason
of any rule of law, administrative decision, judicial decision, public policy or
otherwise, such provision shall be ineffective in such jurisdiction to the
extent of such invalidity, illegality, voidness or unenforceability without
affecting, impairing or invalidating any remaining provisions of this Agreement.
Any such invalid, illegal, void or otherwise unenforceable provisions shall be
replaced by valid enforceable substitute provisions that are as similar as
possible to such invalid, illegal, void or otherwise unenforceable provisions
with respect to the economic and other commercial effects upon the parties,
which substitute provisions shall be established pursuant to the dispute
resolution procedure set forth in ARTICLE XX.
22.6 Relationship of the Parties. By virtue of this Agreement, neither
party shall be deemed the other party's agent, partner, joint venturer, or legal
representative, and neither party has express or implied authority to bind the
other in any manner whatsoever.
22.7 Survival. The rights and obligations of the parties under ARTICLE IX,
ARTICLE XI, ARTICLE XIV, ARTICLE XVIII, ARTICLE XIX, and ARTICLE XX and Sections
6.7, 13.1(c), 13.3, 13.4 and 13.5, as well as all rights and obligations with
respect to any
30
amounts that remain unpaid under ARTICLE VI hereof as of the date of termination
or expiration, shall survive any termination or expiration of this Agreement.
22.8 Counterparts. For convenience of the parties hereto, this Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original for all purposes.
22.9 Beneficiaries. Except for the provisions of ARTICLE XIV, which are
also for the benefit of the other Persons indemnified, this Agreement is solely
for the benefit of the parties hereto and their respective Affiliates,
successors and permitted assigns and shall not confer upon any other Person any
remedy, claim, liability, reimbursement or other right in excess of those
existing without reference to this Agreement.
22.10 Records Retention.
(a) Each party will retain all information obtained or created in the
course of performance hereunder in accordance with the records retention
guidelines of the other party existing from time to time. Each party has
advised the other of its respective guidelines as in effect on the Effective
Date and will advise the other party of any subsequent changes therein.
(b) The following provisions of this Section apply only to records
required for tax purposes as identified in Xxxxxxx' record retention guidelines.
In accordance with Xxxxxx'x records retention policy as of the date hereof with
respect to such records, Baxter shall retain (as necessary for a period of up to
10 years or more) all information needed for tax audits which was obtained or
created in the course of performance hereunder with respect to Xxxxxxx. If any
particular hardware or software is necessary to access any information to be
retained by Baxter pursuant to this Section 22.10(b), then Baxter shall ensure
that it has the continuing right to use such hardware and software for as long
as Baxter is obligated to retain such information hereunder. Baxter has advised
Xxxxxxx of Xxxxxx International's records retention policy currently in effect.
Baxter will provide Xxxxxxx (and afford Xxxxxxx full access to, and the right to
inspect and copy at any reasonable time) such information and use of such
equipment and software upon Xxxxxxx' reasonable request, at no cost to Xxxxxxx
(other than reasonable out-of-pocket expenses of Baxter). At the expiration of
the applicable records retention period, Baxter may dispose of the information
upon prior Notice to Xxxxxxx. For a period of 45 days immediately following
such Notice, Xxxxxxx shall have the right to remove and take title to all such
information (in any form including books, records, computer tapes, and computer
disks). Xxxxxxx shall reimburse Baxter for any reasonable out-of-pocket
expenses incurred to retain such information after this Agreement is terminated
or expires.
(c) The foregoing record retention requirements are in addition to
any record retention requirements that are contained in the Reorganization
Agreement between Xxxxxx International and Xxxxxxx Lifesciences dated as of
March 15, 2000. In the event of any conflict in the period for retention of
records between this Agreement and the Reorganization Agreement, the longest
retention period shall be applicable.
* * * * * *
31
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their authorized representatives as of the effective date of this Agreement.
XXXXXX LIMITED XXXXXXX LIFESCIENCES LLC
By: /s/ Xxxxx Xxxxxx Xxxxxx By: /s/ Xxx X. Xxxxxxxx
------------------------- ---------------------
Name: Xxxxx Xxxxxx Xxxxxx Name: Xxx X. Xxxxxxxx
Title: President and Representative Title: Assistant Secretary
Director
For purposes of Sections 3.1 and 3.3(b) only:
XXXXXXX LIFESCIENCES CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Corporate Vice President
32
EXHIBIT A
JAPANESE XXXXXXX BUSINESS
The Cardiovascular Group sells or is engaged in the development of following
product categories in Japan through its three business units (Cardiovascular
Surgery or CVS, Anesthesia and Medication Delivery or AMD, Vascular and
Interventional Cardiology or VIC);
. Tissue and mechanical heart valves and rings, pericardial patches,
oxygenators, and cardiopulmonary bypass circuits including reservoirs and
arterial filters, cardioplegia devices, heart-lung machines, centrifugal
pumps, arterial and venous cannulae, CDI oxygen monitor cells, Novacor left
ventricular assist devices
. Thermo-dilution (Xxxx-Xxxx) catheters, pacing catheters, central venous
catheters, venous introducers, Invos cerebral tissue oxygen monitor
devices, and VIA continuous arterial blood gas monitor devices, Lifespan
PTFE endovascular grafts, Xxxxxxx atraumatic occlusion clips and clamps,
Intramed angioscopy equipment, Thombex PMT clot extraction catheters
. Direct blood pressure monitor kit, disposable pressure transducers,
Embolectomy (Xxxxxxx) catheters, Lifepath abdominal aortic aneurysm
endovascular graft system, Datascope intra-aortic balloon pumps and
catheters, VasoSeal collagen hemostasis devices, UniCath percutaneous
transluminal coronary angioplasty balloon catheters and stents, Medtronic
pacemakers
The Cardiovascular Group in Japan also manufacturers Custom Pac cardiopulmonary
circuits and direct blood pressure monitor kits at Miyazaki plant.
1
EXHIBIT B
DIRECT REPORTING POSITIONS
Name Responsibilities
--------------------------------------------------------------
Xxxxxx Xxxx GM, CVS
Manufacturing
Akihiko Honda GM, AMD
Xxxxx Xxxxxxxx GM, VIC
Logistics
Xxxxxxx Xxxxxxxx Finance
Information Services
Xxxxxxxx Xxxxxxxx Business Development
Communications
Xxxxxx Xxxxxxx Human Resources
General Administrative
Xxxxxxx Xxxxxx Regulatory Affairs
Quality Control
Open Legal
1
SCHEDULE A
XXXXXX'X DUTIES
1. Sales. Baxter shall use commercially reasonable efforts to make sales of
-----
the Products in accordance with the following, and such efforts shall be in
lieu of any standard of performance implied by any applicable statute or
regulation:
1.1 Baxter shall generate sales interest in the Products.
1.2 Baxter shall promote sales of the Products, and such promotion shall
be at a level that is no less than the level of promotion by Baxter
prior to the Effective Date.
1.3 Baxter shall participate with Xxxxxxx in quarterly reviews of Xxxxxx'x
performance relative to applicable service levels.
1.4 Baxter shall permit Xxxxxxx to offer sales incentives directly to
Baxter sales personnel in accordance with Xxxxxx'x marketing plan.
2. Marketing. Baxter shall use commercially reasonable efforts to market the
---------
Products in accordance with the following and such efforts shall be in lieu
of any standard of performance implied by any applicable statute or
regulation:
2.1 Baxter shall provide all appropriate marketing services that are
reasonably commensurate with the Product sales targets agreed upon by
the parties.
2.2 Baxter shall develop and implement a marketing plan for the Territory
and shall use reasonable efforts to ensure that such plan complements
Xxxxxxx' overall marketing strategy.
2.3 Baxter shall maintain its own communications resources and, prior to
publication, shall submit to Xxxxxxx for Xxxxxxx' approval all Baxter
promotional/ communication endeavors specifically referring to the
Products.
3. Materials Management.
--------------------
3.1 Finished Goods Requirements Planning. Baxter will adhere to
------------------------------------
reasonable stocking, storage and delivery levels established by
Xxxxxxx for the Products in the Territory; provided that Baxter shall
not be required to carry more than 60 days inventory on hand in the
Territory based upon either (a) sales targets agreed upon by the
parties, if any; or (b) Xxxxxx'x forecasts provided in accordance with
Section 3.6 of this Schedule.
3.2 Purchasing. Baxter shall submit purchase orders to Xxxxxxx for the
----------
Products in accordance with Xxxxxxx' reasonable procedures therefor.
1
3.3 Inspection. Baxter shall implement inspection procedures to verify
----------
that the Products are free from damage when received.
3.4 Reporting. Baxter shall provide to Xxxxxxx a monthly sales report
---------
detailing Product sales for such month by customer, subdivision and
Product.
3.5 Tracing Reports. In addition, upon Edward's reasonable request,
---------------
Baxter will provide to Xxxxxxx electronically (to the extent that
Baxter is reasonably capable) a sales tracing report. At a minimum,
such report will include for all Products (a) the model number, (b)
the quantity shipped, (c) the average selling price, (d) the lot
number or serial number, and (e) the customer name and address.
3.6 Forecasts. Within seven business days after the end of each calendar
---------
month, Baxter shall provide to Xxxxxxx a rolling twelve-month forecast
(beginning with the then-current month) of Xxxxxx'x requirements for
the Products including such requirements for sales, samples,
promotions, consignment, inventories and backorders. Baxter shall
send each forecast to Irvine, California, or shall load it into
Xxxxxx'x Global Data Exchange system in a manner that will permit
access by Xxxxxxx.
4. Distribution.
------------
4.1 Warehouse Management.
--------------------
4.1.1 Baxter will be responsible for the management of all Baxter
facilities.
4.1.2 Except as otherwise agreed, Baxter will adhere to existing
receiving, storage, and shipping practices including such
practices applicable to time-/ temperature-sensitive Products.
4.2 Order Fulfillment.
-----------------
4.2.1 Baxter shall take and process customer orders for the Products.
4.2.2 Baxter will pick, pack, and ship each customer order in
accordance with the terms of the order or other terms agreed
upon between Baxter and the customer.
4.3 Outbound Shipment.
-----------------
4.3.1 Baxter shall be responsible for the selection and routing
(private fleet or commercial carrier) of each customer order.
4.3.2 Baxter shall pay for freight for all outbound shipments (i.e.,
----
shipments to customers).
2
4.3.3 Baxter will be responsible for freight claims and will be
responsible for resolving with customers any disputes regarding
product deliveries, shortages, and overages.
4.4 Lot Tracing. For each Product shipment, Baxter shall maintain records
-----------
including the model number, lot or serial number, quantity shipped,
and the name and address of the first consignee.
4.5 Returned Goods Management. Except as otherwise provided in connection
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with FCAs, Baxter shall be solely responsible for all dealings with
customers related to Product returns.
4.6 Customer Service. Baxter shall provide customer service and support
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as follows:
4.6.1 Product/Service Specifications. Baxter shall forward to
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Xxxxxxx any requests for Product information that is not
reasonably available to Baxter.
4.6.2 Service Commitment. Baxter shall use commercially reasonable
------------------
efforts to provide high-quality, professional customer service
to customers of the Products.
4.6.3 Order Tracing. Baxter shall maintain the ability to identify
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to customers the location of Products in the order process.
4.7 Post-Sales Service.
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4.7.1 Credit and Collection. Baxter shall be responsible for all
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collection and credit approval processes for all invoices.
Baxter shall have the sole authority to issue credits.
4.7.2 Credits for Shortages, Damages, and Misdeliveries. Baxter
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shall issue credits and resolve customer issues. Baxter shall
communicate with Xxxxxxx regarding same if there are recurring
problems that may affect Xxxxxxx' responsibilities.
4.7.3 Pricing Disputes. Baxter will handle pricing disputes between
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Baxter and its customers.
4.7.4 Back Order Status and Resolution. Baxter will be accountable
--------------------------------
for managing customer communication of back orders to provide
accurate and timely information on resolution. Appropriate
product substitution information will be communicated to
customer. Baxter will transmit back order details in the same
manner as such details were transmitted immediately prior to
the Effective Date.
4.7.5 Product Complaint. Initial customer complaints will be logged
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by Baxter customer service and forwarded to Xxxxxxx' Vice
President of Regulatory
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Affairs (or such person's designee) at a frequency to be agreed
upon by the parties. Such complaints may be escalated for
resolution per applicable regulatory procedures.
4.8 Pricing/Billing.
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4.8.1 Baxter will negotiate the delivered price for the Products.
4.8.2 Baxter shall process all billing to the customer.
4.9 Product Registrations. Baxter shall hold all Product registrations
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and shall be the importer of record for all Products.
5. Communications With Regulatory Agencies.
---------------------------------------
5.1 The parties shall mutually agree upon a strategy for all
communications by Baxter with applicable regulatory authorities in
connection with the Products.
5.2 Baxter shall be responsible for communications with applicable
regulatory authorities in the Territory if such regulatory authorities
require notification in connection with their regulation of the
Products.
6. Product Field Corrective Actions.
--------------------------------
6.1 Baxter shall cooperate with Xxxxxxx in performing any FCA by
identifying affected Products and customers, developing an action-
specific management plan detailing specific responsibilities, and
notifying customers of any such action. Baxter shall encourage
customers to follow instructions related to any hold or recall
situation.
6.2 Baxter shall perform field corrective action ("FCA") services in a
---
manner consistent with the quality systems, procedures and
specifications as of the Effective Date including:
6.2.1 identification of customers who received the Product involved
in the FCA;
6.2.2 notification to customers of the FCA in accordance with the FCA
strategy developed by Xxxxxxx;
6.2.3 retrieval of affected Products from customers and storage of
such Products inside a Baxter facility for up to six months
from the date of initiation of the FCA;
6.2.4 if instructed by Xxxxxxx, shipment of Products affected by the
FCA to Xxxxxxx, freight collect;
6.2.5 minor inspection of Products by Baxter if required by the FCA
strategy developed by Xxxxxxx;
6.2.6 discard and destruction of Products by Baxter utilizing
nonhazardous waste disposal methods;
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6.2.7 preparation of an FCA report for Xxxxxxx that identifies all
customers that received the affected Product, defines the
number of Product units returned to Baxter, specifies the
number of Product units used by the Customer, and specifies any
evidence of harm or injury related to the use of the affected
Product; and storage of Products affected by an FCA for periods
longer than six months or storage of such Products in rented
trailers; an incoming inspection of all Products for open FCAs
for periods longer than 12 months from the date of initiation
of the FCA; and
6.2.8 payment of third-party invoices for any of the services listed
above.
6.3 At Xxxxxxx' request and with Xxxxxxx' approval, Baxter shall perform
FCA services not included above for additional compensation to be
agreed upon. Xxxxxxx will be invoiced separately for such additional
services. Examples of additional FCA services addressed by this
Section include:
6.3.1 payment of all third-party invoices related to expenses
incurred by Baxter that arise out of the need for Xxxxxxx to
issue an FCA for Products;
6.3.2 inspection (if more than minor) or rework of Products by
Baxter;
6.3.3 storage of Products affected by an FCA for periods longer than
six months or storage of such Products in rented trailers; and
6.3.4 incoming inspection of all Products for open FCAs for periods
longer than 12 months from the date of initiation of the
FCA.
6.4 Baxter shall use commercially reasonable efforts to accomplish the FCA
tasks identified within the time periods specified by Xxxxxxx in its
FCA strategy. If extraordinary volume or other circumstances make such
time periods impracticable, Xxxxxxx and Baxter will make reasonable
adjustments by extending time periods, setting priorities or
otherwise.
6.5 Subject to local restrictions regarding disposition of affected
Products, routine dispositions (as designated by Xxxxxxx) shall be
issued to Xxxxxx'x facilities within five business days, and Baxter
shall process such dispositions within five business days thereafter.
6.6 Subject to local restrictions regarding disposition of affected
Products, expedited or extraordinary dispositions (as designated by
Xxxxxxx) shall be issued to Xxxxxx'x facilities within one business
day, and Baxter shall process such dispositions within one business
day.
6.7 Reconciled disposition reports for quantity variance shall be
negotiated between Baxter and Xxxxxxx at the time of disposition.
6.8 The necessity for and content of sampling plans and protocols shall be
negotiated by the parties at the time of the FCA.
5
7. Consultation. Baxter shall consult with Xxxxxxx prior to implementing any
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capital expenditure that could be expected to have a substantial impact
upon pricing under ARTICLE V of this Agreement. Any capital expenditure or
series of related capital expenditures related to the Japanese Xxxxxxx
Business which shall exceed (Yen)26,750,000 shall be deemed to have a
substantial impact on pricing for purposes of this provision.
6
SCHEDULE B
XXXXXXX' DUTIES
1. Sales.
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1.1 Xxxxxxx shall participate with Baxter in quarterly reviews of
performance relative to applicable service levels.
1.2 Xxxxxxx shall develop and provide to Baxter a recommended price list
for the Products.
1.3 Xxxxxxx shall work with Baxter to develop mutually agreed-upon sales
targets.
2. Marketing.
---------
2.1 Xxxxxxx shall develop a marketing plan and shall provide Baxter with
access to Xxxxxxx' global marketing, strategic and other information
that Baxter will need in order to fulfill its duties under this
Agreement and to maintain and expand the Japanese Xxxxxxx Business.
Xxxxxxx shall provide reasonable assistance and advice regarding
clarification and implementation of Xxxxxxx' marketing strategy.
2.2 Xxxxxxx shall maintain its own communications resources and will
coordinate communications messages with Baxter where appropriate. If
Baxter is required to obtain Xxxxxxx approval regarding a
communication, Xxxxxxx shall not unreasonably withhold or delay such
approval.
3. Training. Xxxxxxx shall provide to Baxter a reasonable amount of training
--------
in connection with the sales, marketing and distribution of Products.
Xxxxxxx shall provide a trainer at Xxxxxxx' cost and expense, provided that
Baxter shall pay all costs and expenses of its personnel attending such
training.
4. Product Changes. Xxxxxxx will promptly notify Baxter of any proposed
---------------
change or changes in the Products having the potential to impact product
quality, safety and/or efficacy, and such changes include changes in (a)
product design; (b) composition or source or any raw material; (c) method
of producing, processing or testing; (d) subcontractors for producing,
processing or testing; (e) site of manufacture; (f) labeling, (g) design
and material of any packaging component; and (h) sterilization method,
condition and/or site.
5. Packaging Quality and Load Build Configuration. Xxxxxxx shall be
----------------------------------------------
responsible for ensuring that the quality of packaging and load build
configuration will conform to uniform distribution standards (e.g.,
----
palletized, etc.) as agreed by the parties.
1
6. Returned Goods Processing. Xxxxxxx shall promptly provide instructions to
-------------------------
Baxter regarding the disposal or return to Xxxxxxx of Products returned by
customers.
7. Product FCAs.
------------
7.1 Xxxxxxx shall provide to Baxter in a format to be agreed upon by the
parties all information reasonably required by Baxter to perform
Xxxxxx'x duties in connection with Product FCAs. Such information
shall include, without limitation, product identifiers, reason
priority, and any information related to disposition plans.
7.2 Xxxxxxx shall have sole authority to initiate any FCA. If Xxxxxxx is
required to initiate an FCA for any Product, Xxxxxxx' Vice President,
Quality (or such person's designee) shall notify the senior Baxter
quality or regulatory officer for the Territory (or such person's
designee).
7.3 Xxxxxxx shall cooperate with Baxter in performing any FCA by
identifying affected Products and customers, developing an action-
specific management plan detailing specific responsibilities, and
notifying customers of any such action. Xxxxxxx and Baxter shall
encourage customers to follow instructions related to any FCA
situation.
8. Customer Service Support. Xxxxxxx will use commercially reasonable efforts
------------------------
to provide Product-related technical support to Baxter, including the basic
technical information resident on Xxxxxxx' computer system, technical
letters and clinical information. Xxxxxxx will respond to Product-related
technical questions from or referred by Baxter.
9. Technical Support. Xxxxxxx shall continue to provide technical support
-----------------
services in the same manner as provided in connection with the Japanese
Xxxxxxx Business prior to the Effective Date.
2
