SUPPLY & INVENTORY AGREEMENT
Exhibit 10.8
SUPPLY & INVENTORY AGREEMENT
THIS AGREEMENT is entered into by and between St. ▇▇▇▇▇▇▇ Medical Technologies, Inc., a
California Corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“SFMT”) and RMS Company, a Minnesota Corporation, with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“RMS”).
WHEREAS, RMS is a provider of precision machined components (“Products”); and
WHEREAS, SFMT is the manufacturer of medical devices (“Devices”) and wishes to purchase from
RMS, Products for use in its Devices:
NOW THEREFORE, in consideration of the terms and provisions of this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is acknowledged by the
execution and delivery of this Agreement, SFMT and RMS agree as follows:
1. DEFINITIONS
Product. Shall mean any of the Products supplied by RMS as listed in Appendix A.
2. PURCHASE OF PRODUCT
A. Prices. During the term of this Agreement, RMS shall manufacture and sell the Products
only to SFMT at the prices listed in Appendix A. Products may be added to or removed from Appendix
A by mutual agreement of the parties in writing. Prices shown in Appendix A are for specified
production quantities. Purchase Orders for less than a specified quantity will be priced at the
next lower quantity. Any reduction in cost of materials shall be passed onto SFMT. If the
Purchase Order is filled in partial quantities, or if pre-production samples are requested, an
additional charge may apply.
B. Blanket Purchase Orders. At the beginning of each contract year, SFMT shall place a
Blanket Purchase Order by part number to cover the Estimated Annual Usage (EAU) plus the SFMT
desired inventory levels to be held at RMS. SFMT shall authorize Production Releases against the
Blanket Purchase Order to RMS at the first and sixth month of the contract year. For certain part
numbers, and by mutual agreement, SFMT may authorize the entire contract year quantity in the first
month Production Release.
C. Quantities. Unless specifically agreed to the contrary, the quantity specified on a
Production Release is deemed to be approximate and RMS is permitted to produce over or under to the
extent of 10%. Where closer control is required, special arrangements must be made before the
Production Release is accepted.
D. Cancellations. SFMT may terminate all or any part of a Purchase Order without cause.
SFMT’s liability shall be for completed Product at the unit price of the order; for all partially
completed work (computed by multiplying the percentage of completion, by the unit price
***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
of the Product); for raw materials and engineering work computed on the basis of the actual
cost to RMS plus reasonable handling and overhead charges.
E. Taxes. Prices do not include any taxes. All applicable taxes, including, but not limited
to, duty, excise, use or sales taxes, or any other taxes or assessments now or hereafter imposed,
levied, or increased by or under the authority of any federal, state or local law, rule or
regulation concerning the parts or fabrication or sale thereof shall be assumed and paid by SFMT.
3. FINISHED PRODUCT INVENTORY
A. Minimums. RMS shall maintain minimum inventory levels for each part number as defined by
SFMT in Appendix A.
B. Releases. At the beginning of each week, or at other intervals selected by SFMT, SFMT
shall issue Inventory Releases to RMS for shipment during that week. There are no minimum
inventory release quantities for a given part number.
C. Aged Inventory. SFMT agrees to receive and accept any inventory held by RMS for longer
than six months. RMS shall notify SFMT prior to the shipment of any such inventory.
4. DELIVERY
A. Freight. All shipments shall be “F.O.B. RMS plant”. SFMT shall pay the: 1) cost of freight
to SFMT facilities, 2) cost of any premium transport if requested by SFMT and 3) contract carrier
insurance costs if requested by SFMT.
B. Passing of Title. Title and risk of loss or damage to the goods shall pass from RMS to
SFMT upon RMS’ delivery to the common carrier.
C. Early Deliver. SFMT shall not be obliged to accept any deliveries tendered before the
agreed date and may return the Product to RMS at RMS’s sole risk and expense if delivered more than
five (5) days early. Alternatively SFMT may elect to retain such Products and pay the price
thereof in accordance with this Agreement.
D. Failure to Deliver. RMS shall attempt to meet SFMT’s delivery dates. However, if
conditions arise which prevent compliance with delivery schedules, RMS shall not be liable for any
damage or penalty for delay or for failure to give notice of delay. Without limiting the
generality of the foregoing, RMS shall not be liable for delay by reason of inability to obtain the
necessary labor, materials, or manufacturing facilities, shortages, delays in transportation, or
any other causes beyond the control of RMS. SFMT’s sole remedy for delay shall be that SFMT may
terminate the Purchase Order for delays in delivery or other delays thirty (30) days after written
notice of such intention to RMS.
E. Errors. Claims for errors in quantity, weight, number, or shipping damage must be made
within thirty (30) working days after receipt of the parts. RMS will not be responsible for claims
not reported within that period.
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5. REJECTION
SFMT is entitled to inspect the Goods and/or Services (including the performance of tests)
before or after receipt (but prior to disposition) and reject them for failure to conform to the
Purchase Order within thirty (30) days of receipt of such goods, regardless of whether any payment
has been made by SFMT, whether the nonconformity substantially impairs the value of the Goods
and/or Services, or whether the nonconformity may be cured by RMS.
6. PAYMENT
A. Payment Terms. Payment on properly rendered invoices shall be made by SFMT within thirty
(30) days from the date SFMT receives the invoice. If SFMT pays on the invoice within 10 days of
the date of the invoice, SFMT shall be entitled to a 1/2 % discount on such payment.
B. Financial Condition. If the financial condition of SFMT at any time does not justify the
continuance of production or shipment on the terms or payment specified, RMS may require full or
partial payment in advance, or at its option shall be entitled to cancel any order then outstanding
and shall receive reimbursement for its reasonable and proper cancellation charges including
shipments (if any) previously made.
7. SPECIFICATIONS
All goods covered by an order will conform to the specifications (including all technical
data, designs and/or drawings) provided by SFMT. SFMT acknowledges and agrees that RMS is
manufacturing goods to SFMT’s specifications, and warrants their sufficiency. In the event that
orders are for goods previously manufactured by RMS for SFMT and SFMT has never provided
specifications, RMS will manufacture the goods to conform to the same goods previously delivered.
RMS is not providing any design and/or consulting services to SFMT, including, but not limited to,
services relating to the use of the goods or design of any system incorporating such goods.
8. WARRANTY
RMS warrants that all goods will conform to the specifications provided by SFMT and will be
free from defects in workmanship under normal use and maintenance conditions.
RMS warrants that the title conveyed to all goods under this Agreement will be good, and
transfer of title of such goods will be rightful. RMS further warrants that the goods under this
Agreement shall be delivered free from any security interest or other lien or encumbrance.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED
WARRANTIES REGARDING MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, RELATING TO THE USE OR
PERFORMANCE OF THE PARTS. RMS shall not be liable for its failure to conform with any requirements
not adequately identified by SFMT in the specifications, after RMS has requested clarification.
RMS’s express and implied warranties extend to any person who may reasonably be expected to use,
consume or to be affected by the goods and who is injured by breach of the
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warranty(ies). RMS may not exclude or limit the operation of this section with respect to
injury to the person of an individual to whom the warranty extends.
9. PRODUCTS LIABILITY INSURANCE
RMS shall, as a condition to this Agreement, secure and keep in full force and effect product
liability insurance providing coverage for and naming SFMT, in an amount of not less than
$2,000,000 per incident, and in an amount of $2,000,000 in the aggregate, with respect to any
claims that might be made by any third parties in the nature of product liability claims, whether
in the nature of personal or property injury or disability. RMS shall provide to SFMT, within not
more than ten (10) days from the signature of this Agreement, certificates evidencing the existence
of such insurance, together with appropriate riders or other amendments to that insurance,
providing for SFMT’s interest in compliance with this section 9. RMS shall issue irrevocable
instructions to its insurance agent and to the issuing company to notify SFMT of any discontinuance
or lapse of said insurance not less than thirty (30) days prior to the discontinuance becoming
effective.
10. SUBCONTRACTING
RMS must obtain prior written approval from SFMT to subcontract a machining portion of a
Purchase Order. In connection with any such subcontract, RMS may disclose confidential
specifications or other information to the subcontractor, but only if the subcontractor agrees in
writing to maintain such specifications as confidential in accordance with its usual business
practices.
11. CONFIDENTIALITY
Each party agrees to accept the disclosures of the other party made in the course of their
business relationship on a confidential basis, to exercise the same degree of care with respect to
the other party’s confidential information as is exercised in preserving and safeguarding its own
confidential information but no less than a reasonable degree of care, and not to disclose such
confidential information to other parties. This Article shall survive termination of this
Agreement.
12. OWNERSHIP AND USE
All ideas, inventions, copyrightable subject matter (including computer or electronic data
files, drawings, and other materials), and other items prepared by RMS or arising specifically in
connection with Purchase Orders (including only machine processes, fixturing and tooling) shall
remain the property of RMS. All items furnished by SFMT, shall be the property of SFMT and no
reproductions or property interest shall be retained by RMS. To the extent allowed by law,
copyrightable subject matter created by RMS shall be deemed “work made for hire”. Such items shall
only be used for the benefit of SFMT and shall not be disclosed to any other party. Such property
while in RMS’s custody shall be at RMS’s risk and shall be returned to SFMT in the same condition
as received, ordinary wear and tear accepted.
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13. ASSIGNMENT
Neither party may delegate or assign it’s rights, obligations, or duties under this Agreement
without the prior express written consent of the other part, except that SFMT may delegate or
assign this Agreement, in whole or in part, to any entity in which SFMT holds a direct or indirect
interest of at least fifty (50) percent, or to any successor of the business relating to the
Devices and/or Products. All terms and conditions of this Agreement shall apply to any successor
of SMFT.
14. TERM
Unless otherwise specified, this Agreement shall continue in force for each Product specified
in Appendix A for five (5) years from the date of this Agreement. This Agreement may be extended
by mutual agreement of the parties in writing.
15. TERMINATION
Either party shall have the right to terminate this Agreement:
A. Breach of Agreement. For material breach of any provision of this Agreement, provided that
written notice has been given to the party of the alleged breach and the other party has not cured
the breach within thirty (30) days after delivery of such notice.
B. Ceases to function. Automatically, by one party if the other party ceases to function as a
going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a
petition in bankruptcy, permits a petition in bankruptcy to be filed against it, or admits in
writing its inability to pay its debts as they become due or if a receiver is appointed from a
substantial part of its assets.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Minnesota and, in particular, the
Minnesota Statutes Uniform Commercial Code (“UCC”), Chapter 336. SFMT and RMS each hereby consents
to the jurisdiction and venue of any local state or federal court located within the State of
Minnesota upon service of process made in accordance with the statutes of Minnesota and the United
States, and further agree that any and all causes of action whether or not arising under this
Agreement by and between the parties hereto shall only be brought in a local, state or federal
court situated within the State of Minnesota.
17. ENTIRE AGREEMENT
This Agreement is intended to be, and shall be construed as a binding Agreement summarizing
and evidencing the discussions between SFMT and RMS. This Agreement constitutes the entire
agreement between the parties, superseding all previous proposals, oral or written. No
representation or statement not contained on the original copy of this Agreement shall be binding
on the parties as a warrant or otherwise, nor shall this Agreement be modified or amended unless in
writing and signed by an authorized representative of the parties.
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The obligations herein shall be binding once this Agreement is executed and delivered. The
individuals signing this letter represent that they are duly authorized signatories of the party
for which they are signing.
SFMT /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
RMS /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ |
|
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ |
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇ |
|
Name /s/ VP Engineering |
Name /s/ President |
|
Title /s/ 7/16/04 |
Title /s/ 7/12/04 |
|
Date
|
Date |
APPENDIX A
Rev 0
July 1, 2004
| Non- | ||||||||||||
| Sterilized | Sterilized | |||||||||||
| P/N | Rev | Description | Price | Price | ||||||||
100156 |
B | 6mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
100157 |
B | 8mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
100158 |
B | 10mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
100159 |
B | 12mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
100160 |
B | 14mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
100161 |
B | 16mm X STOP Assy, Packaged | $ | [***Redacted] | $ | [***Redacted] | ||||||
| * * | Prices based on combined order quantities totaling [***Redacted] units |
***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.