Exhibit 99.1
CONFIDENTIAL TREATMENT
Portions of the attached MANUFACTURE AND SUPPLY AGREEMENT, effective
January 1, 1998 by and between ICU Medical, Inc. and ▇.▇▇▇▇▇ Medical Inc. have
been redacted. The Company has applied to the Securities and Exchange
Commission for confidential treatment of the redacted portions.
MANUFACTURE AND SUPPLY AGREEMENT
THIS MANUFACTURE AND SUPPLY AGREEMENT (the "Agreement") is made
effective January 1, 1998 (the "Effective Date") by and between ICU MEDICAL,
INC., a Delaware corporation, having a principal place of business at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (hereinafter called "ICU"), and ▇. ▇▇▇▇▇
MEDICAL INC., a Pennsylvania corporation, having a principal place of business
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇.
R E C I T A L S
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A. ICU manufactures and distributes certain proprietary connector
devices identified for purposes of this Agreement as "CLAVE(R) Products" for use
in intravenous drug delivery systems;
B. BBM desires to purchase CLAVE Sites for incorporation into IV
Sets, and Pump IV Sets, manufactured by or for BBM and to purchase CLAVE
Accessories for sale in conjunction with IV Sets which incorporate CLAVE Sites;
and
C. BBM desires to obtain rights to sell CLAVE Products to certain
customers, and ICU desires to retain all rights to sell, directly or through
other Resellers, CLAVE Products to other customers.
D. BBM acknowledges that it does not acquire under this Agreement or
as a result of the transactions related to this Agreement any license, expressed
or implied, under any of ICU's patents, patent applications or know-how to make,
have made, use, sell, offer for sale or import Compliant Competing Products,
except for such rights, if any, that BBM may have under those agreements between
BBM and ICU that relate or related to the ▇▇▇▇▇ Protected Needle Products and
the Safeline Products.
TERMS AND CONDITIONS
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NOW, THEREFORE, IN CONSIDERATION OF the premises and the mutual
promises of the parties hereto, and each of them, it is hereby understood and
agreed as follows:
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ARTICLE 1
DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
meanings hereinafter set forth:
1.1 "Affiliate" shall mean a person or entity that directly, or
indirectly through one or more intermediates, controls or is controlled by, or
is under common control with, the person specified.
1.2 "Alternate Site Customers" shall mean all purchasers of medical
products that purchase the products for their own use and not for resale, other
than those who purchase products (i) for in-hospital use or (ii) for sale to
those who purchase products for in-hospital use.
1.3 "Base Capless Percentages" shall have the meaning given to it in
Exhibit 1.3 hereof.
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1.4 "Baxter Full Line IV Contract Account" shall mean any hospital
which has a Full Line IV Contract with ▇▇▇▇▇▇ Healthcare Corporation.
1.5 "BBM" shall mean ▇. ▇▇▇▇▇ Medical Inc., its subsidiaries, and
those Affiliates of BBM that market and sell needle safety IV administration
sets in the United States or Puerto Rico and for purposes of calculating prior
period sales shall include its predecessors: ▇. ▇▇▇▇▇ Medical Inc. and ▇▇▇▇▇,
Inc. and its Affiliates other than BBM.
1.6 "BBM CLAVE Products" shall mean all products sold by BBM that
include one or more CLAVE Sites.
1.7 "BBM Alternate Site Contract Account" shall mean any Alternate
Site Customer that is purchasing, under a contract, at least eighty percent
(80%) of its requirements of Intravenous Solutions and IV Sets (a "Compliant
Contract") from BBM. A current list of the BBM Alternate Site Contract Accounts
is attached hereto as Exhibit 3.1(B). If BBM has a sole source Compliant
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Contract with an Alternate Site Customer that owns other Alternate Site
Customers (collectively, the "Affiliated Group"), each and every Alternate Site
Customer that is a member of the Affiliated Group shall be deemed a BBM
Alternate Site Contract Account for
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purposes of determining exclusivity. In all other cases, the parties will
review the Alternate Site Customers on an account by account basis to determine
whether an Alternate Site Customer constitutes a BBM Alternate Site Contract
Account. For purposes of this definition a "sole source Compliant Contract"
shall mean a contract with an Alternate Site Customer under which the Alternate
Site Customer agrees not to award a Compliant Contract to a party, other than
BBM.
1.8 "BBM Contract Account" shall mean any hospital which has a "Full
Line IV Contract" with BBM.
1.9 "Capless Percentage" shall mean the percentage determined as of
the end of each calendar quarter by dividing the total number of individual ICU
Capless Valves sold or incorporated into products sold by BBM for that quarter,
and the most recent three preceding calendar quarters, by the total number of
Capless Valves sold or incorporated in products sold by BBM for such period.
For purposes of making these calculations, only sales by BBM of Capless Valves
to BBM Contract Accounts and BBM Alternate Site Contract Accounts shall be
included.
1.10 "Capless Valve" shall mean a LAV that does not utilize a cap.
1.11 "CLAVE Accessories" shall mean all sterile finished products
produced by ICU incorporating the CLAVE concept, including those identified in
Exhibit 1.11, excluding bulk unsterile CLAVE Sites, together with any
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improvements, modifications or change thereto.
1.12 "CLAVE Integrated Y-Site" means an ICU CLAVE injection site
integrally built in to a Y shaped connector, which connector is designed to be
bonded to IV tubing, all as more fully described on Exhibit 1.12 hereto,
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together with any improvements, modifications or changes thereto.
1.13 "CLAVE Sites" means any ICU CLAVE injection site, together with
any improvement, modification or change thereto, or CLAVE Integrated Y-Sites.
1.14 "CLAVE Products" shall mean all products identified in Sections
1.11 and 1.13. hereof that are manufactured by ICU and sold to BBM.
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1.15 "CLC Valve" shall mean an ICU positive pressure LAV, all as more
fully described on Exhibit 1.15 hereof, whether sterile or nonsterile, packaged
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individually or in bulk, a form of which is now being sold under ICU catalog
number CLC 2000, together with any improvement, modification or change thereto.
1.16 "Competing Products" shall mean all needle-safety IV
administration set connectors, excluding the CLAVE Products and any future
products from ICU.
1.17 "Compliant Competing Products" shall mean SafeLine, SafSite,
UltraSite, and the ▇▇▇▇▇ Protected Needle and all related accessories (and in
each case, products substantially similar to, or derived from, those products
marketed by BBM at the effective date of this Agreement regardless of product
name), and all future Competing Products sold by BBM that BBM commenced or
funded the development of, licensed, or acquired rights to prior to January 1,
1998, or that BBM develops and manufactures after December 31, 1997.
1.18 "FDA" shall mean the United States Food and Drug Administration.
1.19 "Full Line IV Contract" shall mean a contract between a supplier
and a hospital, under which contract the hospital is purchasing at least eighty
percent (80%) of its requirements of Intravenous Solutions and IV Sets from such
supplier.
1.20 "ICU Capless Valve" shall mean a LAV that has been purchased by
BBM from ICU that does not utilize a cap.
1.21 "Intravenous Solutions" shall mean large volume general purpose
parenteral solutions together with any improvements, modifications or changes
thereto.
1.22 "IV Sets" shall mean either primary or secondary intravenous
therapy lines, excluding dedicated pump I.V. sets.
1.23 "LAV" shall mean luer-activated valve, which is an intravenous
line connector with a female port through which a fluid pathway is activated by
insertion of a male luer.
1.24 "LAV Base Percentage" shall have the meaning given to it in
Exhibit 1.24.
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1.25 "LAV Current Percentage" shall mean the percentage determined as
of the end of each calendar quarter by dividing the Total CLAVE Sites for that
quarter and the most recent three preceding calendar quarters by the total
number of individual LAVs sold, or incorporated in products sold, by BBM for
such period. For purposes of making these calculations, sales by BBM of LAVs to
Original Equipment Manufacturers shall be excluded.
1.26 "Lost Account" shall mean a hospital or Alternate Site Customer
that at any time during the term of this Agreement was purchasing LAVs from BBM
and ceased purchasing LAVs from BBM.
1.27 "Lost Account Percentage" shall mean the percentage that is
calculated by dividing, for the four (4) quarters preceding the quarter in which
a Lost Account was lost, the total number of individual LAVs in the BBM CLAVE
Products for such period by the total number of LAVs sold, or incorporated in
products sold, by BBM for the same period, excluding for purposes of this
calculation the sales to the Lost Account in both the numerator and the
denominator. For purposes of making these calculations, sales by BBM of LAVs to
Original Equipment Manufacturers shall be excluded.
1.28 "▇▇▇▇▇ Protected Needle" shall have the meaning given to such
term in that certain Manufacture and Supply Agreement dated September 13, 1993,
between ICU and BBM relating to a protected needle connector device.
1.29 "Original Equipment Manufacturers" shall mean any person or
entity that manufactures, packages or assembles medical, pharmaceutical or
veterinary products for resale.
1.30 "Pump IV Sets" shall mean BBM dedicated pump IV Sets containing
CLAVE Sites and other components to be used with I.V. pumps calibrated
specifically for use with such I.V. Sets.
1.31 "Purchase Order" shall mean BBM's standard purchase order, as
the same may be amended from time to time by BBM; BBM's current purchase order
form is attached hereto as Exhibit 1.31.
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1.32 "Reseller" shall mean any person, other than BBM, to whom ICU
sells CLAVE Products for resale.
1.33 "Safeline Products" shall have the meaning given to such term in
that certain Safeline Agreement, dated October 1, 1997, between and ICU and BBM.
1.34 "Significant Lost Capless Account" shall mean an individual BBM
Contract Account or BBM Alternate Site Contract Account, or a group of BBM
Contract Accounts or BBM Alternate Site Contract Accounts to the extent such
accounts are members of a single group purchasing organization or members of an
affiliated group of hospitals or Alternative Site Customers, which account or
group of accounts, as the case may be, that represents five percent (5%) or more
of BBM's total sales of Capless Valves based upon total sales of Capless Valves
during the immediately preceding calendar year and that ceased purchasing
Capless Valves from BBM.
1.35 "Significant Lost Capless Account Percentage" shall mean the
percentage that is calculated by dividing, for the four (4) quarters preceding
the quarter in which a Significant Lost Capless Account was lost, the total
number of individual ICU Capless Valves sold or incorporated into products sold
by BBM for such period, by the total number of Capless Valves sold, or
incorporated in products sold, by BBM for the same period, excluding for
purposes of this calculation the sales of Capless Valves to the Significant Lost
Capless Account in both the numerator and the denominator. For purposes of
making these calculations, only sales by BBM of Capless Valves to BBM Contract
Accounts and BBM Alternate Site Contract Accounts shall be included.
1.36 "Specifications" shall mean the specifications for the CLAVE
Products (including design, function, packaging, labeling and testing); the
initial Specifications are set forth on Exhibit 1.36. Any modifications to the
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Specifications shall be made in compliance with Section 2.1(B) hereof and as so
modified shall become the applicable Specifications.
1.37 "Total CLAVE Sites" shall mean the total number of individual
CLAVE Sites that are sold or incorporated in BBM CLAVE Products during the
applicable period.
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ARTICLE 2
MANUFACTURE AND SALE
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2.1 Specifications.
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(A) Manufacture. ICU shall manufacture CLAVE Products for sale to BBM
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in accordance with the Specifications, the applicable 510(k) requirements, FDA
regulations, ISO 9000, and Quality System Regulations as promulgated by the FDA
("QSRs") and deliver such CLAVE Products to BBM in accordance with this
Agreement. CLAVE Sites shall be produced and shipped bulk unsterile. CLAVE
Accessories shall be packaged, labeled and sterilized in accordance with the
Specifications.
(B) Modification. No modification of the CLAVE Products which would
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affect the form, fit, function, appearance, or labeling of the CLAVE Products or
which would alter the manner in which the CLAVE Products perform shall be made
by ICU without the prior written consent of BBM, which consent will not be
unreasonably withheld or delayed. Any proposed modification to the CLAVE
Products shall be submitted to BBM in the form of a change to the
Specifications, and ICU shall provide BBM with prototypes and such other
information and data as BBM may need to evaluate any proposed modification. No
modification shall be made without prior FDA approval of the same, if required
in the reasonable opinion of ICU.
(C) Audits.
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(i) BBM shall have the right, at its sole expense, to perform
periodic audits of the manufacturing and related operations of ICU to
assure BBM that ICU is conforming to the requirements of Section 2.1 (A)
hereof, relative to the CLAVE Products and to review all data prepared by
ICU used to determine that the CLAVE Products meet such requirements.
(ii) ICU shall have the right, at its sole expense, to perform
periodic audits of the manufacturing and related operations of BBM related
to the CLAVE Products to assure ICU that BBM is conforming to QSRs with
respect thereto
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and to review all data prepared by BBM which is used by BBM to assure that
such manufacturing conforms to such regulations and practices.
(D) Vendors. ICU shall obtain and, upon reasonable request of BBM,
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supply BBM with such certifications from all vendors who supply the materials
for CLAVE Products to the effect that they meet the Specifications and all
applicable regulatory and quality assurance standards.
2.2 Orders and Delivery.
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(A) Orders.
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(i) BBM shall place firm written purchase orders, not less than
thirty (30) days prior to the end of each calendar quarter, for the
quantity and dates of CLAVE Products to be sold and delivered by ICU to BBM
for the next calendar quarter. At the same time, BBM shall provide to ICU
a forecast that is BBM's good faith estimate of its expected requirements
for CLAVE Products for the succeeding three calendar quarters. ICU shall
meet the delivery dates contained in any order accepted by ICU.
(ii) Each written purchase order delivered to ICU by BBM pursuant
to this Section 2.2 shall be, except as otherwise provided herein, a firm,
non-cancelable order and shall specify the number of CLAVE Products covered
by such purchase order and delivery dates for the ordered CLAVE Products.
Such purchase order shall be deemed to be accepted by ICU to the extent the
terms of a purchase order are consistent with the provisions of this
Agreement; provided however, that ICU's obligation with respect to excess
quantities under any purchase order shall be as provided in clause (A)(v)
of this Section 2.2.
(iii) Except as provided in Section 2.2 (A) (iv), when so ordered,
ICU shall deliver and sell to BBM the number of individual CLAVE Products
(by SKU's) ordered by BBM up to the greater of: (a) the lesser of: (x) [*]
of the individual CLAVE Products ordered for delivery during the preceding
calendar quarter or (y) [*] of the individual CLAVE Products sold by BBM
during the preceding calendar quarter; or (b) [*] individual CLAVE
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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Products per calendar quarter during calendar year 1998, and for each
calendar quarter thereafter the greater of: (x) [*] individual CLAVE
Products or (y) [*] of individual CLAVE Products purchased by BBM during
the comparable quarter in the preceding calendar year prorated among CLAVE
Products based upon the actual purchases of individual CLAVE Products (by
SKU's) in that quarter.
(iv) Commencing on that date which is no later than the later of:
(a) 150 days after the date hereof or (b) ninety (90) days following
written notice from BBM that it has qualified the CLAVE Integrated Y-Site,
when so ordered, ICU shall deliver and sell to BBM the number of individual
CLAVE Integrated Y-Sites ordered by BBM up to [*] individual CLAVE
Integrated Y-Sites per calendar quarter during calendar year 1998.
Thereafter, ICU shall provide BBM with CLAVE Integrated Y-Sites in
accordance with Section 2.2(A)(iii) above.
(v) If BBM orders quantities in excess of those specified in
clause 2.2(A)(iii) or (iv) above, herein referred to as "excess
quantities", ICU will use commercially reasonable efforts to manufacture
and sell to BBM all such excess quantities ordered and to meet BBM's
reasonable delivery requests contained in any such order; provided,
however, that solely for purposes of excess quantities ordered, ICU shall
not be required to allocate product to BBM in such amounts as would
unreasonably restrict ICU's ability to deliver product to its other
Resellers. ICU shall notify BBM from time to time as promptly as
reasonably practicable of such excess quantities, if any, which ICU
believes it can deliver.
(B) Inability to Deliver
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(i) In the event ICU determines for any reason, other than Force
Majeure, that it cannot deliver all CLAVE Products ordered when due,
pursuant to Section 2.2 (A) (iii) and (iv) of this Agreement, ICU shall so
notify BBM in writing as soon as possible, but in any event within ten (10)
calendar days after receipt of such purchase order, of the CLAVE Products
it can deliver and when. ICU shall use all commercially reasonable efforts
to fulfill as much of BBM's order as possible and in any event, shall
allocate its available supply of CLAVE Products to its customers on a
prorata basis based upon the number of units of CLAVE Products purchased by
its
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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customers, including BBM, over the total amount of CLAVE Products sold
by ICU to its customers, including BBM during the three month period
immediately preceding ICU's inability to completely fill BBM's orders.
This provision shall not be construed in any manner to limit the remedies
available to BBM at law or in equity for failure of ICU to supply BBM with
CLAVE Product in accordance with the terms of this Agreement.
(ii) In the event that ICU is unable to deliver the CLAVE
Products ordered by BBM in accordance with Section 2.2 (A) (iii) or (iv) or
reflected in the initial forecast provided by BBM for an applicable period,
BBM shall have the right to sell, thereafter, Compliant Competing Products
in quantities equal to the undelivered units of CLAVE Product at the end of
each calendar quarter and such quantities of Compliant Competing Products
shall be treated, thereafter, as ICU Capless Valves or CLAVE Products, as
the case may be, for all calculations and purposes used in determining
whether BBM retains exclusivity hereunder.
2.3 Price.
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(A) CLAVE Site Price. See Exhibit 2.3(A) hereof which Exhibit is
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incorporated by reference herein.
(B) Adjustment to Cumulative Unit Purchases. See Exhibit 2.3(B)
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hereof which Exhibit is incorporated by reference herein.
(C) Prices During Extension Periods. See Exhibit 2.3(C) hereof
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which Exhibit is incorporated by reference herein.
(D) Prices of CLAVE Accessories. The prices of CLAVE Accessories are
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set forth in Exhibit 2.3(D) which Exhibit is incorporated by reference herein.
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(E) National/GPO Accounts. If ICU has or obtains a national or Group
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Purchasing Organization ("GPO") type contract for CLAVE Products that includes
an account that is or becomes a BBM Contract Account or a BBM Alternate Site
Contract Account, so long as BBM has the exclusive rights to market and sell the
CLAVE Products, BBM agrees to assume fulfillment of the contract at the pricing
set forth in such ICU national or GPO contract. [*]
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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[*]
(F) Shipping Costs. All prices are F.O.B. ICU's plant and BBM shall
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bear the cost of transportation of CLAVE Products, except for those
transportation charges incurred by BBM resulting from the need to expedite
shipment as a result of ICU's failure to meet the required delivery dates for
CLAVE Products ordered pursuant to Section 2.2 (A) (i) hereof, exclusive of
excess quantities, as defined in Section 2.2(A)(v). BBM shall be solely
responsible for all customs duties, costs, taxes, insurance and other expenses
relating to the transportation or shipment of the CLAVE Products from BBM to BBM
customers.
2.4 Payment Terms. Terms of payment shall be net 30 days following
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the date of ICU's invoice. In no event shall such invoices be dated earlier
than the date of shipment. ICU reserves the right either to terminate this
Agreement or to suspend further deliveries upon failure of BBM to make any
payment hereunder which has not been cured within three (3) calendar days
following written notice from ICU, or BBM's ability to make payments hereunder
is materially impaired and, upon the occurrence of any such event, ICU may
demand immediate payment in full for all CLAVE Products previously delivered
hereunder.
2.5 Reports.
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(A) Sales Reports. BBM will provide ICU monthly reports of all unit
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sales of CLAVE Products broken down by customer name, location and SKU's.
(B) FDA Reports. Both ICU and BBM shall comply with all Medical
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Device Reporting requirements of the Safe Medical Devices Act of 1990 and the
regulations promulgated thereunder. The parties shall consult with each other
prior to the submission of any Medical Device Report and unless restricted by
applicable law, each party shall use its reasonable efforts to provide the other
with a copy of each Medical Device Report related to the CLAVE Product to be
submitted by a party to the FDA at least two business days prior to the
submission.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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(C) Compliance Reports. BBM will report within forty-five (45) days
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of the end of each quarter, the calculation of the Capless Percentage and the
LAV Current Percentage including underlying detail in reasonably sufficient
detail to permit verification of such percentages. No more often than annually,
BBM will permit an outside firm of independent certified public accountants
designated by ICU, reasonably acceptable to BBM, access during reasonable times
to inspect such accounting books and records as are reasonably necessary to
verify the data and calculations provided in such reports. Said independent
accounting firm shall be bound by a confidentiality agreement with BBM whereby
the accounting firm may only verify to ICU that the reports are either accurate
or inaccurate and the amount of the variance, if any. If as a result of such
inspection BBM is found not to have met a Compliance Percentage in Section
3.5(A), BBM shall reimburse ICU for the reasonable costs of such inspection.
(D) Development of Competing Products. During the period in which
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BBM has exclusive rights to market and sell CLAVE Products, BBM shall use its
reasonable commercial efforts to notify ICU at least one year (1) prior to the
release of a Competing Product.
ARTICLE 3
DISTRIBUTION OF CLAVE PRODUCTS
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3.1 Rights Granted to BBM.
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(A) Domestic Marketing Rights. ICU hereby grants to BBM an exclusive
-------------------------
right to market, sell, and distribute in the United States and Puerto Rico in
accordance with the terms of this Agreement:
(i) CLAVE Products to BBM Contract Accounts;
(ii) CLAVE Products contained in any Pump IV Sets for ultimate
sale or resale to hospitals and Alternate Site Customers.
(iii) BBM will not initiate the sale of individual CLAVE Sites
into Baxter Full Line IV Contract Accounts in which at any time during the
term of the Agreement (but prior to the date BBM initiates a sale of
individual CLAVE Sites to such accounts)
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ICU or an ICU authorized Reseller (a) is currently conducting an
evaluation, (b) has currently scheduled a mutually agreeable date with an
account for an evaluation, or (c) is currently selling CLAVE Sites;
provided however, BBM shall have the right to market and sell Pump IV Sets
to such accounts. In addition, BBM shall have the nonexclusive right to
market and sell CLAVE Gravity Administration Sets into all Baxter Full-Line
IV Contract hospital accounts. Nothing herein shall be construed in any
manner to preclude BBM from converting a Baxter Full-Line IV Contract
Account to a BBM Contract Account and thereafter selling, among other
things, individual CLAVE Sites into the then BBM Contract Account; provided
however, that this sentence should not be construed in any matter to permit
BBM to sell individual CLAVE Sites in violation of the first sentence of
this Section 3.1(A) (iii).
(iv) In furtherance of preserving BBM's rights granted hereunder,
ICU will use commercially reasonable efforts to copy BBM on all
correspondence with its Resellers regarding marketing rights that effect
BBM's rights under this Agreement.
(v) BBM shall not sell bulk, non-sterile CLAVE Products to any
person for resale to third parties.
(B) Marketing Rights to BBM Alternate Site Contract Accounts. ICU
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grants BBM an exclusive right to market, sell and distribute all CLAVE Products
to BBM Alternate Site Contract Accounts in the United States and Puerto Rico. A
current list of BBM Alternate Site Contract Accounts is attached hereto as
Exhibit 3.1(B). The parties shall review the list of BBM Alternate Site
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Contract Accounts set forth in Exhibit 3.1 (B) on a quarterly basis and amend
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the schedule to add any additional accounts which the parties mutually agree
meet, or delete any accounts which the parties mutually agree no longer meet,
the definition of a BBM Alternate Site Contract Account. The first review shall
be held on or before July 31, 1998. Any additional accounts, when added to
Exhibit 3.1(B) pursuant to the provisions of this subsection, shall be presumed
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to be BBM Alternate Site Contract Accounts for purposes of this Agreement
and any account deleted from Exhibit 3.1(B) shall no longer be presumed to be a
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BBM Alternate Site Contract Account.
(C) Sales of CLAVE Products in Kits/Trays. Notwithstanding the
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exclusive rights granted to BBM under the terms of this Agreement to market and
sell CLAVE
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Products, ICU shall have the right to sell CLAVE Sites and CLAVE Accessories to
Resellers for, and solely for, inclusion in or on catheters, catheter kits and
trays that may be sold by such Resellers into BBM Contract Accounts and BBM
Alternate Site Contract Accounts.
(D) International Marketing Rights. ICU hereby grants BBM the non-
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exclusive right to market, sell and distribute CLAVE Products directly in Canada
and either directly or through BBM's authorized Resellers in Brazil and New
Zealand.
(E) Marketing Rights to Other Accounts.
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(i) BBM may sell BBM CLAVE Products to any hospital or Alternate
Site Customer in the United States and Puerto Rico, subject to any
exclusive rights which may be granted by ICU to other markets, provided,
however, that ICU shall not grant exclusive rights to another Reseller to
market and sell CLAVE Products to those hospitals and Alternate Site
Customers listed on Exhibit 3.1(E)(i) of this Agreement during the period
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in which BBM has a contract with such hospitals or Alternate Site Customers
to provide CLAVE Products or grant exclusive rights which would conflict
with the exclusive rights granted under this Agreement which BBM has with
any customer at that time. Exhibit 3.1(E) (i) may be amended from time to
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time by mutual agreement of the parties.
(ii) Notwithstanding any other provision of this Agreement, BBM
shall have the right to market, sell and deliver Pump IV Sets to all
Alternate Site Customers that use Sigma, Horizon, Intelligent, Millennium,
AccuPro or Autopod pumps for which BBM tubing is calibrated or any other
future biomedical technology that use Pump IV Sets. BBM shall ▇▇▇▇ any
Sigma pumps it provides in the future with a designation indicating that
the pumps are calibrated for, or may be used only with, BBM tubing.
3.2 Trademark, Trademark Notice and Quality Control.
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(A) ICU hereby grants to BBM a non-exclusive right and license for the
term of this Agreement to use the trademark "CLAVE" on or in connection with the
sale, marketing and distribution of the CLAVE Products. BBM shall not use the
CLAVE mark except
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on goods or services supplied by ICU. BBM will provide ICU at least two (2)
copies of any advertising, promotional piece or packaging proposed to be used
bearing the CLAVE mark before said advertising, promotional piece or packaging
is distributed to the general public. If ICU does not object in writing to said
advertising, promotional piece or packaging within seven (7) days of receiving
same, ICU shall be deemed to approve of said use of the CLAVE mark. BBM's use of
the CLAVE mark will inure to the benefit of ICU. BBM agrees to place an asterisk
adjacent to any use of the CLAVE mark and incorporate the following phrase at
the bottom of the item utilizing the CLAVE mark: "CLAVE is a trademark of ICU
Medical, Inc., San Clemente, California." BBM is entitled to use any other
trademark it is legally entitled to use in connection with the CLAVE Products or
advertising therefor. BBM may also use its company name in connection with the
CLAVE Products. The CLAVE mark shall be used prominently, but may be used less
prominently, than the BBM company name on each CLAVE Product or advertising
therefor.
(B) BBM, for good and valuable consideration, the sufficiency of which
is hereby acknowledged, agrees to assign, and hereby does assign, any right,
title and interest it may acquire in the CLAVE mark to ICU, including, but not
limited to, the right to recover for infringement of the CLAVE mark.
3.3 Agreements with Reseller. ICU shall use its best efforts to
------------------------
obtain agreements with its Resellers to honor the exclusive rights granted to
BBM in this Agreement and to vigorously enforce the same. Such best efforts
shall require that ICU comply with the enforcement and payment obligations set
forth in Exhibit 3.3 hereto, but shall not require ICU to terminate its
-----------
agreements with Resellers that refuse to honor such exclusive rights.
3.4 Rights Retained by ICU. Except for the rights expressly granted
----------------------
to BBM in Section 3.1, ICU retains exclusive rights to market, sell and
distribute all CLAVE Products, either directly or through such other Resellers,
brokers, manufacturer's representatives or other intermediaries as it chooses,
to all customers and in all territories.
3.5 Loss of Exclusive Rights. As ICU's sole and exclusive remedy for
-------------------------
(1) BBM's failure to achieve the compliance percentages set forth in Section
3.5(A), or (2) BBM's material breach of the provisions of Subsections 3.5(B),
(C) and (D) which is not cured within thirty (30) days of written notice from
ICU, BBM's rights under Section 3.1 of the Agreement
15
shall become non-exclusive and the provisions of Section 3.5(E) shall become
effective upon (a) written notice from ICU at any time within ninety (90) days
following the compliance report given to ICU pursuant to Section 2.5 (C), in the
case of a failure to achieve the compliance percentages, or (b) the expiration
of the thirty-day cure period, in the case of a breach of Subsections 3.5(B),
(C) and (D).
(A) Compliance Percentages. See Exhibit 3.5(A) hereof which
---------------------- -------------
Exhibit is incorporated by reference herein.
(B) Competing Products. BBM will not sell Competing Products that
------------------
are not Compliant Competing Products.
(C) Evaluations. BBM will make a good faith effort to provide ICU the
-----------
opportunity to present an ICU connector in all BBM Contract Accounts and BBM
Alternate Site Contract Accounts that are evaluating a change from their
existing or initial use of a connector and in which BBM is selling or attempting
to sell connectors.
(D) National/GPO Type Accounts. If ICU has or obtains a national or
--------------------------
GPO type contract that includes an account that is or becomes a BBM Contract
Account or a BBM Alternate Site Contract Account, subject to Section 2.3 (E)
hereof, BBM will assume fulfillment of the contract and BBM shall not initiate
the sale of any Competing Products to the account during the term of the ICU
contract with the account, except that with respect to such accounts, BBM may
continue selling Compliant Competing Products of the type that were previously
sold to the account and BBM may sell Compliant Competing Products to an account
that elects not to comply with the national or GPO type contract.
(E) BBM's Obligation after Loss of Exclusivity. If exclusivity is
------------------------------------------
lost, BBM agrees to purchase CLAVE Products from ICU for a succeeding period
equal to half the remaining term of the Agreement; provided however, that such
period shall not be less than (i) four calendar quarters or (ii) the remaining
term of the Agreement, which ever is shorter. During such non-exclusive
purchase period, BBM will purchase on a quarterly basis the higher of the number
of units purchased or sold in the four quarters preceding the quarter when the
percentages were not met, divided by four. Such unit volume purchase
requirement will be reduced by the number of unit sales lost by BBM prior to the
loss of exclusivity as a result of
16
sales by ICU, ICU Resellers or other vendors of ICU needle-free products into
BBM Contract Accounts and BBM Alternate Site Contract Accounts. Following the
loss of exclusivity, the duties and obligations of BBM under Sections 3.5 (A),
(B), (C) and (D) shall immediately cease and the provisions of this Section
shall become effective immediately.
3.6 No License. BBM hereby acknowledges that it does not acquire
----------
under this Agreement or as a result of the transactions related to this
Agreement any license, expressed or implied, under any of ICU's patents, patent
applications or know how to make, have made, use, sell, offer for sale or import
Compliant Competing Products, except for such rights, if any, that BBM may have
under those agreements between BBM and ICU that relate or related to the ▇▇▇▇▇
Protected Needle and the Safeline Products. Nothing in this Agreement shall be
construed (i) to preclude ICU from asserting at any time a claim against BBM to
the effect that the manufacture, import, sale, use, offering to sell, making, or
having made of any product by BBM including a Competing Product and a Compliant
Competing Product, but excluding CLAVE Products sold pursuant to the terms of
this Agreement, at any time before, during, or after the term of this Agreement
infringes one or more patents or other proprietary right of ICU, or (ii) as a
grant of a license by ICU under ICU's patents or patent applications to practice
the invention contained in any of ICU patents, patent applications on know-how.
Nothing herein shall be construed in any manner as admission or acknowledgment
on the part of BBM that the Competing Products and Compliant Competing Products
infringe any claims contained in any ICU patent or other proprietary right of
ICU or that any such ICU patent is valid and enforceable.
ARTICLE 4
PRODUCT MODIFICATIONS
4.1 Improvements to CLAVE Products. Improvements to the CLAVE
------------------------------
Products developed by ICU shall be made available for marketing and sale by BBM
pursuant to the terms of this Agreement. During the period in which BBM has
exclusive rights to market and sell CLAVE Products, ICU shall use reasonable
commercial efforts, to notify BBM at least one year prior to release of an
improvement to the CLAVE Products or of a new needle safety IV administration
set connector.
17
4.2 Development of New Products. ICU agrees to make future LAVS
---------------------------
available to BBM on an exclusive basis in accounts in which BBM has exclusivity
on the CLAVE Products on terms competitive with those provided to any other
Reseller of such products and all other products on terms to be negotiated by
the parties. BBM shall have the right to refuse any such products. If BBM
accepts a product for qualification, ICU will promptly furnish BBM with a
complete qualification package. BBM will evaluate and qualify the products
within three months of receipt of the complete qualification package. Until such
time as BBM and ICU complete an agreement under which BBM would purchase and ICU
would sell any such LAV or other products, ICU may sell, or grant to Resellers
rights to sell LAV or other product to, any account, including BBM Contract
Accounts and BBM Alternate Site Contract Accounts.
(A) If a future LAV product (including the CLC Valve) is competitive
with the CLAVE Sites, the calculation of the percentages used to determine
whether BBM has met the compliance percentages set forth in Section 3.5(A)
herein, will be adjusted to treat all sales by ICU or other Resellers into those
accounts in which BBM has the exclusive rights for CLAVE Products as sales by
BBM, effective the first day of the month following the day the product is
qualified by BBM and BBM commences the purchase and sale of such product. For
purposes of making the calculation contained herein, the parties acknowledge
that the CLC Valve is competitive with the CLAVE Sites.
(B) BBM agrees to evaluate and, if deemed acceptable by the
marketplace, qualify the CLC Valve within three months after ICU furnishes BBM
with a complete qualification package. ICU shall use its commercially reasonable
efforts to cause the CLC Valve to be compatible with BBM's tubing and solvent
bonding process.
(C) It is the intention of BBM and ICU that upon qualification of the
CLC Valve, ICU will manufacture and sell the CLC Valve to BBM and that BBM will
purchase and sell the CLC Valve under substantially the same terms and
conditions as apply to CLAVE Products as set forth in this Agreement. Price
provisions shall be negotiated in good faith and the price of the CLC Valve on a
bulk unsterile basis shall be at least thirty percent (30%) below the lowest
price at which ICU is selling the CLC Valve on a sterile packaged basis to any
Reseller exclusive of special pricing arrangements offered by ICU on a limited
basis. The unit sales of CLC Valves by BBM shall be included in the calculation
or determination of the Capless
18
Percentage, LAV Current Percentage, LAV Base Percentage, Lost Account
Percentage, Significant Lost Capless Account Percentage, Total CLAVE Sites,
Capless Valves and LAVs for purposes of determining compliance with Section 3.5
hereof. The failure of the parties to reach agreement for BBM to purchase and
sell the CLC Valve will not constitute a breach of this Agreement.
ARTICLE 5
TERM, TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
----------------------------------------------------------
5.1 Term of Agreement.
-----------------
(A) Term. Unless terminated by either party pursuant to the other
----
provisions of this Article 5, this Agreement shall continue in effect until five
years from the Effective Date.
(B) Extensions. If at the expiration of the initial term of this
----------
Agreement and the initial extension term (if any), BBM is in compliance with the
provisions of Section 3.5 (A), (B) and (D) hereof and is not otherwise in
material breach of this Agreement, BBM shall have the right, in its sole
discretion, to extend the term of the Agreement for one or two additional two
year extension periods. Notice of each extension must be furnished by BBM at
least six (6) months before an applicable expiration date. Otherwise, any
extension shall be by mutual agreement of the parties.
5.2 Termination.
-----------
(A) Insolvency. This Agreement shall immediately terminate in the
----------
event that a party becomes insolvent or is the subject of any proceeding
relating to bankruptcy or the relief of debtors (which proceeding is not
dismissed within 30 days of commencement), or if a receiver or trustee is
appointed for such party or for a substantial portion of its assets (which
receiver or trustee is not removed within 30 days of his appointment), or if any
assignment for the benefit of its creditors is made.
(B) Other Termination Provisions. This Agreement may be terminated,
----------------------------
at option of the party having such right as provided below, by written notice
upon
19
the occurrence of any one or more of the events stated below and the failure of
the party receiving such notice to cure such matter within the period, if any,
provided below:
(i) Order and Delivery. By either party, if the other breaches,
------------------
other than a de minimus breach, any agreement or covenant contained in
Section 2.2 of the Agreement and fails to cure such breach in all material
respects within fifteen (15) days following receipt of written notice of
the same from the non breaching party.
(ii) Quality\Specifications. By BBM, if ICU breaches any
----------------------
representation, warranties, covenant or agreements contained in Sections
2.1 (A) or 6.1 and fails to cure such breach within seventy-five (75) days
following receipt of written notice of the same from BBM.
(iii) Other Covenants. Except for those provisions with
---------------
exclusive remedies stated by such, by either party in the event that the
other shall have failed to perform in any material respect any other
covenant, obligation, representation or warranty made by it or to be
performed hereunder, or shall have violated in any material respect any
covenant, obligation or agreement in this Agreement or set forth in any
purchase order issued hereunder (which default is not cured to the other
party's reasonable satisfaction within 60 days after receipt of notice).
(iv) Reseller Impact. By BBM in the event that (i) BBM
---------------
reasonably determines that sales by a Reseller to an account as to which
BBM has exclusive rights pursuant to Section 3.1 of this Agreement are
substantially and adversely affecting BBM's sales to such account (ii) ICU
is unable to persuade such Reseller to honor BBM's exclusive rights and
does not terminate such Reseller within sixty (60) days after notice from
BBM, and (iii) either (a) the aggregate unit sales by Resellers violating
the exclusive rights granted to BBM pursuant to Section 3.1 of this
Agreement by selling into BBM Contract Accounts during any given six (6)
month period exceeds five percent (5%) of the total unit sales of BBM CLAVE
Products in the BBM Contract Accounts during such period or (b) the
aggregate unit sales by Resellers violating the exclusive rights granted to
BBM pursuant to Section 3.1 of this Agreement by selling into BBM Alternate
Site Contract Accounts exceeds five percent (5%) of the
20
total unit sales of BBM CLAVE Products sold in the BBM Alternate Site
Contract Accounts during such period.
(v) Acquisition of Either Party. By the other party in the event
---------------------------
of the acquisition of a party or substantially all of its assets of a party
by, or a merger of a party into, or the acquisition of sufficient voting
securities of a party to elect a majority of its directors by, a person not
an Affiliate of such party on the Effective Date (an "Acquisition") and
which would result in a material adverse impact on the other party;
provided, that in such event this Agreement shall continue in full force
and effect for 12 months from the date of such event. An Acquisition of
ICU shall not be deemed to have an adverse material impact, if the
acquiring company has assets in excess of $150 million before the
Acquisition and does not sell a product directly competitive with the
products of BBM and its Affiliates. Such an Acquisition of ICU by ▇▇▇▇▇▇
Healthcare Corporation, ▇▇▇▇▇▇ Laboratories, Inc., Fresenius AG, or any
successor or Affiliate of the foregoing shall be deemed to have a material
adverse impact on BBM. Such an Acquisition of BBM shall not be deemed to
have an adverse material impact on ICU if the acquiring company has assets
in excess of one billion dollars before the Acquisition and does not sell a
product directly competitive with the products of ICU.
(C) Effect on Purchase Orders. Further, upon the occurrence of one or
-------------------------
more of the foregoing events, the party having the right to terminate may at its
discretion terminate any purchase order(s) placed hereunder, in whole or in
part, and the exercise of the right of termination shall not impose any
liability by reason of termination nor have the effect of waiving damages to
which it might otherwise be entitled.
5.3 Rights and Obligations Upon Termination. Except to the extent
---------------------------------------
expressly provided to the contrary, this section and the following provisions
shall survive the termination of this Agreement: Sections 2.5(A), 3.2(B),
3.5(E),3.6 and 3.7, and Articles 6 and Article 7. Any rights of ICU or BBM to
payments from the other party which have accrued through the date of termination
shall remain in effect. Obligations of the parties under purchase orders for
delivery of products at the time of such termination shall remain in effect
unless the terminating party, under Section 5.2(C), terminates such purchase
orders. BBM shall have the right to sell any inventory it owns in accordance
with the rights set out in Section 3.1.
21
ARTICLE 6
PRODUCT WARRANTY
----------------
6.1 Limited Product Warranty. ICU warrants all CLAVE Products sold
------------------------
hereunder (i) to be free from defects of design, material or workmanship when
delivered and (ii) to conform strictly to the applicable Specifications. These
warranties shall survive any inspection, delivery, acceptance or payment for the
goods and materials but no later than twenty (20) days after BBM becomes aware
of any defect. If any CLAVE Products sold and delivered by ICU to BBM breach
either of these warranties, ICU in its sole discretion will either replace the
same or credit BBM, within thirty (30) days the invoice price of the same less
any applicable rebates.
6.2 Disclaimer and Limitation. WITH THE EXCEPTION OF THE WARRANTY
-------------------------
PROVIDED UNDER CALIFORNIA COMMERCIAL CODE SECTION 2312, WHICH ICU AND BBM AGREE
IS OPERABLE FOR THE CLAVE PRODUCTS SOLD BY ICU TO BBM, THE WARRANTIES CONTAINED
HEREIN ARE GIVEN IN LIEU OF ALL OTHER PRODUCT WARRANTIES OR GUARANTIES,
EXPRESSED OR IMPLIED, RESPECTING CLAVE PRODUCTS DELIVERED AND SOLD BY ICU TO
BBM, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. EXCEPT AS PROVIDED IN SECTION 6.1 and SECTION 6.3,
NEITHER ICU NOR BBM SHALL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES.
6.3 Infringement Indemnity. ICU shall indemnify, defend and hold BBM
----------------------
harmless from any and all liabilities, losses, damages, penalties, actions,
causes of action, judgments, suits, claims, royalty payments, costs and expenses
of any kind or nature whatsoever (including court costs and actual fees and
disbursements of counsel, allocated fully burdened costs of in-house counsel and
expert witness fees and disbursements) based on any allegation that the CLAVE
Products manufactured by ICU for BBM infringes any third party's U.S. or foreign
patents, trademarks, copyrights or other proprietary information.
22
ARTICLE 7
MISCELLANEOUS
-------------
7.1 Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedules referenced herein which are attached hereto, contains the entire
agreement of the parties regarding the subject matter hereof, and the parties
mutually terminate and supersede all prior agreements, understandings, and
negotiations regarding the same, including, without limitation, that certain
Manufacture and Supply Agreement dated September 13, 1993, as amended on October
6, 1994, May 31, 1995, December 4, 1995, November 22, 1996, and April 17, 1997,
between ICU and BBM related to CLAVE and Safeline Products (the "Prior
Agreement") and that certain letter agreement dated December 30, 1997 and
related term sheet (the "Letter Agreement"). Notwithstanding the foregoing, the
following rights and obligations of the parties shall survive the termination of
the Prior Agreement: (i) any obligation of ICU or BBM under purchase orders
placed pursuant to the Prior Agreement and the Letter Agreement; and (ii) the
parties' respective rights and obligations under Article VII of the Prior
Agreement, including without limitation ICU's warranty and indemnification
obligations under said Article VII and (iii) obligations of BBM to pay for CLAVE
Product shipped to BBM under the Prior Agreement and the Letter Agreement. This
Agreement may not be changed, modified, amended or supplemented except by
written instrument signed by both Parties. Furthermore, it is the intention of
the Parties (i) that this Agreement be controlling over additional or different
terms of any now existing or future purchase order of BBM, or any confirmations,
invoices, or similar documents and (ii) the waivers of and amendments to this
Agreement shall be effective only if made by non preprinted, signed amendments
or waivers to this Agreement clearly denoted as an amendment or waiver.
7.2 Assignability. This Agreement may not be assigned by either
-------------
party without the prior written consent of the other party; provided, however,
(i) unless and until this Agreement is terminated as provided in Section 5.2(B)
(v), either party may assign this Agreement (i) to any entity which acquires
substantially all of its assets and business, or (ii) to any of its Affiliate,
except that the party making such assignment will not be relieved of its
obligations hereunder without the other party's written consent. This Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective successors and assigns.
23
7.3 Reformation/Severability. If any provision of this Agreement is
------------------------
declared invalid by any tribunal, then such provision shall be deemed
automatically adjusted to the minimum extent necessary to conform to the
requirements for validity as declared at such time and, as so adjusted, shall be
deemed a provision of this Agreement as though originally included herein. In
the event that the provision invalidated is of such a nature that it cannot be
so adjusted, the provision shall be deemed deleted from this Agreement as though
such provision had never been included herein. In either case, the remaining
provisions of this Agreement shall remain in effect.
7.4 Use of Party's Name. Except as otherwise provided in this
-------------------
Agreement, no right, express or implied, is granted by this Agreement to either
party to use in any manner the name of the other or any other trade name or
trademark of the other in connection with the performance of this Agreement.
7.5 Notices. Any notice or communication required or permitted by
-------
this Agreement shall be deemed sufficiently given if in writing and, if
delivered personally, when it is delivered or, if delivered in another manner,
the earlier of when it is actually received by the party to whom it is directed,
or when the period set forth below expires (whether or not it is actually
received):
(A) if transmitted by telecopier, telex or facsimile transmission
("fax"), one business day following (a) transmission to the party's telecopier
number set forth below, with the party's name and address set forth below
clearly shown on the page first transmitted, and (b) receipt by the transmitting
party of written confirmation of successful transmission, which confirmation may
be produced by the transmitting party's equipment;
(B) if deposited with the US Postal Service, postage prepaid, and
addressed to the party to receive it as set forth below, (i) five (5) days after
such deposit as registered or certified mail if addressed to a location in the
USA, or (ii) ten days after such deposit as registered or certified airmail if
addressed to a location outside of the USA; or
(C) if accepted by Federal Express or a similar delivery service in
general usage for delivery to the address of the party to receive it as set
forth below, one (1) business day after the delivery time promised by the
delivery service.
24
If to ICU:
ICU Medical, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to BBM:
▇. ▇▇▇▇▇ Medical Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇-▇▇▇▇
Attention: Vice President of Marketing
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇. ▇▇▇▇▇ Medical Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Associate General Counsel
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
A party may change its address or telecopier number or the address or telecopier
number to which copies shall be sent by giving notice of the change to each
other party. The new address and telecopier number shall become effective for
purposes of this Agreement five days after notice of the new address and
telecopier number, as the case may be, is given.
7.6 Rules of Construction. This Agreement has been negotiated by the
---------------------
parties and is to be interpreted according to its fair meaning as if the parties
had prepared it together and not strictly for or against any party. Unless
expressly indicated otherwise, all references in this Agreement to "parties"
refer to parties to this Agreement. Unless expressly indicated otherwise,
references in this Agreement to Articles and Sections are to Articles and
25
Sections of this Agreement, and references in this Agreement to Exhibits are to
Exhibits attached to this Agreement. References in this Agreement to
"provisions" of this Agreement refer to the terms, conditions and promises
contained in this Agreement. As used in this Agreement, the term "person"
includes any individual, corporation, company, partnership, trust or other legal
entity and any group of persons acting in concert to acquire the assets or
voting securities of a person. At each place in this Agreement where the
context so requires, the masculine, feminine or neuter gender includes the
others and the singular or plural number includes the other. "Including" means
"including without limitation." "Or" is inclusive and includes "and." The words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision.
7.7 Relationships of the Parties. Both parties are independent
----------------------------
contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute ICU and BBM as partners or
joint venturers with respect to this Agreement. Neither party hereto shall have
any express or implied right or authority to assume or create any obligations on
behalf of or in the name of the other party or to bind the other party to any
contract, agreement, or undertaking with any third party.
7.8 Parties in Interest. ICU represents that it does not have any
-------------------
Agreement with any Reseller that will be breached by entering into this
Agreement and will indemnify BBM and hold it harmless from any legal action
against BBM by an ICU Reseller arising by reason of BBM's having entered into or
performed this Agreement. Nothing contained in this Agreement, whether express
or implied, is intended to confer upon any person other than the parties hereto
and their respective heirs, representatives, successors and permitted assigns,
any rights or remedies under or by reason of this Agreement, nor is anything in
this Agreement intended to relieve or discharge the liability of any other
party, nor shall any provision hereof give any entity any right of subrogation
against or action over any party.
7.9 Waiver. No waiver of any term, provision, or condition of this
------
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or shall constitute, a waiver of any other provision hereof,
whether or not similar, or a waiver of the
26
provision itself nor shall such waiver constitute a continuing waiver, and no
waiver shall be binding unless executed in writing by the party making the
waiver.
7.10 Specific Performance. If either party should default in any
--------------------
obligation under this Agreement, the parties each acknowledge that it would be
impracticable to measure the resulting damages and it may not be possible to
adequately compensate the injured party by monetary damages. Accordingly,
without prejudice to the right to seek and recover monetary damages, each non-
defaulting party shall be entitled to ▇▇▇ in equity for specific performance of
this Agreement or other injunctive relief, and each party hereby waives any
defense that a remedy in damages would be adequate.
7.11 Applicable Law. The validity, construction and performance of
--------------
this Agreement and any dispute arising with respect to the subject matter of
this Agreement shall be governed by and construed in accordance with the laws,
without regard to the laws as to choice or conflict of laws, of the State of
California.
7.12 Captions. Article and Section captions are inserted for
--------
convenience only and are not to be construed to define, limit or affect the
construction or interpretation of this Agreement.
7.13 Force Majeure. If by reason of Force Majeure, ICU shall be
-------------
delayed in making, or fails to make, any delivery of CLAVE Products, such delay
shall not be deemed a breach of or default under this Agreement during the
period of the Force Majeure event and for a reasonable period of time
thereafter. If as a consequence of any such Force Majeure ICU cannot meet the
total demand of its customers for CLAVE Products, ICU shall allocate its
available supply of CLAVE Products to its customers on a prorata basis based
upon the number of units of CLAVE Product purchased by a customer, including
BBM, over the total amount of CLAVE Products sold by ICU to its customers,
exclusive of "excess quantities" under Section 2.2(A)(v), during the three (3)
month period immediately preceding the Force Majeure event. ICU shall promptly
notify BBM of both the existence and the termination of any Force Majeure.
During the period that the performance of ICU has been suspended by the reason
of a Force Majeure and for a reasonable period of time thereafter, BBM may
likewise suspend the performance of all or part of its obligations (except its
obligation to make payments under Section 2.4 of the Agreement) to the extent
that such suspension is commercially reasonable.
27
In addition, an equitable adjustment shall be made to the compliance percentages
of Section 3.5(A) of the Agreement. Delivery shall be made by ICU as soon as
reasonably possible after the removal of such Force Majeure. In the event BBM
reasonably believes that a Force Majeure event will continue for a period in
excess of twelve (12) months, BBM may, at its sole discretion, terminate this
Agreement without liability at any time following the expiration of three (3)
months after the commencement of the Force Majeure Event. For purposes of this
Agreement, Force Majeure shall mean any of the following events or conditions:
wars, hostilities, revolutions, riots, civil commotion, national emergencies,
epidemics, fire, flood, earthquake, force of nature, explosion, or other Acts of
God, or an embargo, or a shut down of all or a significant part of the CLAVE
Product manufacturing operations as a result of a repair required to be made to
the manufacturing equipment that requires the purchase of parts from a third
party vendor. For purposes of this Section, "significant part of the CLAVE
Manufacturing operation" shall be a shut down that results in a decrease in
ICU's actual production of CLAVE Sites of 500,000 units or more per month.
7.14 Remedies. Unless otherwise expressly provided, the rights and
--------
remedies of a party set forth herein with respect to failure of the other to
comply with the terms of this Agreement (including, without limitation, rights
upon termination of this Agreement) are not exclusive, the exercise thereof
shall not constitute an election of remedies, and the aggrieved party shall in
all events be entitled to seek whatever additional remedies may be available in
law or in equity.
7.15 Publicity and Press Releases. Except to the extent necessary to
----------------------------
comply with applicable laws, the parties agree that no news release or other
written public announcement relating to this Agreement shall be made, or any
information concerning the terms of this Agreement shall be disclosed, without
joint approval of both parties.
7.16. Confidential Information. Except as otherwise provided in this
------------------------
Agreement, during the term of this Agreement and for a period of five (5) years
thereafter, each party shall hold in confidence and not use or disclose to any
third party any product, technical, manufacturing, process, marketing,
financial, business or other information, ideas or know-how ("Proprietary
Information") of or used by the other; provided, however, that Proprietary
Information of a party shall not include:
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(A) items which at the time of disclosure are published or otherwise
generally available to the public;
(B) items which, after disclosure by the other party, are published or
become generally available to the public through no breach of this Agreement by
the other or the other's employees or agents; or
(C) items which the other can document were (a) in its possession at
the time of disclosure and were not acquired directly or indirectly from such
party, or (b) independently developed.
A party may disclose Proprietary Information of the other:
(A) in connection with the order of a court of law or with respect to
disclosing this Agreement or any matter related thereto as required to by
applicable securities or securities exchange laws or rules or regulations
thereunder; provided (a) the other party is notified and given the opportunity
to discuss the issue prior to disclosure and (b) such party takes all
appropriate action to avoid or limit disclosure to the extent consistent with
legal obligations; or
(B) if such Proprietary Information is also rightfully acquired from a
third party who, to the best of such party's knowledge and belief, is entitled
to rightfully make such disclosure but only to the extent such party complies
with any restrictions imposed by the third party.
7.17 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
7.18 Schedules/Exhibits. All schedules and exhibits, attached hereto
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and referred to herein, are an integral part of this Agreement and are
incorporated herein by reference hereby.
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7.19 Mediation.
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(A) Any controversy, claim or dispute between the parties to this
Agreement arising out of, in connection with, or in relation to the
interpretation, validity, performance or breach of this Agreement shall, at the
request of either party, be submitted to face-to-face, amicable negotiation
between the principal executive officers of the parties. If the matter remains
unresolved after thirty (30) days, it shall be submitted to non-binding
mediation in a manner, time, and place agreed upon by the parties.
(B) The mediation will be a non-binding effort to resolve disputes
between the parties. No party will be bound by the suggestion, recommendation,
or award of the mediators. All disputes which are in fact resolved will, if
appropriate, be the subject of a separate settlement agreement. After the
mediation proceeding, both parties will be free to pursue de novo litigation or
other remedies that they would have had absent this mediation provision.
(C) During this dispute resolution and mediation proceeding, the
parties will maintain the status quo that existed before the dispute arose,
including the ongoing supply and sale of the CLAVE Products.
7.20. Prevailing Party. In the event of any litigation or
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arbitration between the parties arising from this Agreement, the prevailing
party shall be entitled to recover, in
(Intentionally left blank)
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addition to any other relief granted or awarded, its reasonable attorney's fees,
costs and expenses incurred in the preceding.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on this
10th day of June 1998.
ICU MEDICAL, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Chief Financial Officer
▇. ▇▇▇▇▇ MEDICAL INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
President and COO of Medical Division
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