Reagent Supply Agreement - SurModics Inc. and Cordis Corp.
REAGENT SUPPLY AGREEMENT
THIS AGREEMENT (the "Reagent Supply Agreement") is made as of the 1st
day of January, 2003 Agreement Effective Date") by and between SurModics, Inc.,
a corporation under the laws of the State of Minnesota ("Supplier") and Cordis
Corporation, a corporation under the laws of the State of Florida ("Customer").
RECITALS:
A. Supplier and Customer are parties to a certain Adjusted License
Agreement ("Adjusted License Agreement"), dated January 1, 2003.
B. Supplier has previous sold to Customer commercial quantities of a
product described on Attachment A hereto ("Reagent") which has been tested and
determined by Customer to meet the standards described on Attachment B hereto
("Reagent Specifications"), Reagent meeting the Reagent Specifications
hereinafter referred to as the "Conforming Reagent."
C. Customer desires Supplier to sell to it Conforming Reagent and
Supplier is willing to do so upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties hereto agree as follows:
1. Reagent to be Purchased. Customer agrees to purchase and pay for
whatever amount of Conforming Reagent (and only Conforming Reagent) is delivered
by Supplier up to the greater of the amount Customer orders and the "Aggregate
Amount" as computed from time-to-time. The Aggregate Amount shall equal the sum
of: (i) the amount described on Attachment C for each month (the "Monthly Target
Production"); plus (ii) a reserve amount (the "Reserve Amount") which shall (at
any time) equal **. Customer may prospectively amend the Monthly Target
Production effective as of the first day of the fourth month following the
giving of written notice of such change by Customer, which notice is duly
executed by an authorized officer of Customer; provided, however, that Customer
may not by such amendments increase the Monthly Target Production by more than
**. Customer may request to purchase more than the Aggregate Amount as exists
from time-to-time, and Supplier will make a reasonable business effort to comply
with such request.
2. Price; Payment. The purchase price of Conforming Reagent shall be as
determined on Attachment C-2 hereof. The purchase price shall be paid in full
within forty-five (45) days after delivery **. Delivery shall be made when
Reagent is shipped F.O.B. Supplier's ** Minnesota facility addressed as Customer
shall direct from time-to-time and shipped at Customer's expense via whatever
common carrier Customer may
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direct from time-to-time. Title and risk of loss shall pass to Customer upon
delivery to such common carrier.
3. Conforming Reagent. The parties acknowledge that Customer will
be utilizing the Reagent in a medical product, and that Customer will be
responsible to the purchasers and users of such medical products for the safety
and efficacy of the Reagent in such medical products. While it is the intent
that Supplier will provide Reagent which meets the Reagent Specifications (and
Supplier represents it will exercise reasonable commercial efforts to do so), it
is acknowledged that Supplier does not so warrant and that Customer will itself
inspect all Reagent delivered to it and make an independent and thorough
determination as to whether the Reagent meets the Reagent Specifications.
Customer agrees that it will reject any Reagent which does not meet the Reagent
Specifications. The parties agree to the following protocol as respects
Customer's acceptance of Reagent delivered to it:
a. Customer agrees to exercise ** to determine whether Reagent is
Conforming Reagent within thirty 30 days of delivery. If
Customer has not given written notice that a particular
shipment of Reagent is not Conforming Reagent within 45 days
of delivery thereof, such Reagent shall be deemed to be
Conforming Reagent for all purposes of this Reagent Supply
Agreement.
b. If Customer determines a quantity of Reagent is not Conforming
Reagent, it shall immediately notify Supplier in writing of
its determination and the particularities of non-conformance
with the Reagent Specifications, and promptly, at Supplier's
request, return the subject Reagent, which return shall be
made F.O.B. the site to which Supplier shipped such Reagent,
and which return shall be shipped via the same common carrier
by which the subject Reagent was shipped to Customer.
c. Customer and Supplier acknowledge that the production of
Conforming Reagent is important to their respective
businesses. Therefore, within thirty (30) calendar days after
the issuance of a notice that Reagent does not conform to the
Reagent Specifications, Customer agrees to have present at
Supplier's production site (or at another location mutually
agreed upon by the parties) at least two agents of Customer,
skilled in the subject matter, to consult with Supplier's
personnel with a view to promptly resolving the
non-conformance. Given the importance to each party of
producing Conforming Reagent, each party agrees to provide at
its expense two full-time equivalent personnel at Supplier's
site, dedicated solely to the remedy of any alleged
non-conformance until both parties agree that such dedicated
personnel are no longer required.
d. If Supplier disagrees with Customer's determination of
non-conformance with respect to any Reagent, and if the
personnel described in the preceding subparagraph cannot
resolve the matter within sixty (60) days of the issuance of
the notice referenced in the preceding subparagraph (c), the
parties agree to immediately submit the matter to mandatory,
binding arbitration according to the
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rules set forth in the Adjusted License Agreement between the
parties, executed concurrently herewith.
e. [intentionally omitted]
4. Customer's Right to Produce Reagent. The parties acknowledge
that Customer's obligations in the marketplace require that Customer assure to
its own satisfaction a supply of Conforming Reagent (or an acceptable
alternative) for the purpose of application thereof to Licensed Products (as
defined in the Adjusted License Agreement). The parties acknowledge that
production of Reagent by Supplier involves proprietary information of Supplier,
which Supplier is not required to provide to Customer hereunder or under the
Adjusted License Agreement **.
a. **.
b. **.
c. **.
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5. Disclaimer of Warranties; Indemnification. SUPPLIER HEREBY
DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE REAGENT (OR
OTHER PRODUCTS OR SERVICES SOLD HEREUNDER), MERCHANTABILITY, NON-INFRINGEMENT,
AND FITNESS FOR A PARTICULAR PURPOSE, INCLUDING WITHOUT LIMITATION WARRANTIES
ARISING FROM COURSE OF DEALING AND USAGE OF TRADE. SUPPLIER SHALL NOT BE LIABLE
FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXTRAORDINARY OR PUNITIVE DAMAGES OF ANY
DESCRIPTION, WHETHER FOR DAMAGE TO REPUTATION OR GOODWILL, LOST PROFITS, CLAIMS
OF THIRD PARTIES OR OTHERWISE, RESULTING FROM ANY CAUSE WHATSOEVER (INCLUDING,
WITHOUT LIMITATION, PRODUCT RECALL) WHETHER SUCH ASSERTED DAMAGE PURPORTS TO BE
BASED ON WARRANTY OR GUARANTY, INDEMNITY OR OTHER CONTRACT, CONTRIBUTION,
NEGLIGENCE, OTHER TORT OR OTHERWISE.
a. Subject to the provisions of Paragraph 3 above, Customer
acknowledges that it is purchasing the Reagent from Supplier
strictly on an "AS IS" basis without any warranties or
representations (expressed or implied) of any sort, type or
kind whatsoever.
b. Customer agrees to indemnify, defend and hold harmless
Supplier (and its officers, directors, employees and agents)
from and against any and all losses, costs, expenses
(including all attorneys' fees), damages, liabilities, claims,
suits, cause of action and judgments in any manner incurred,
sustained or asserted against Supplier arising out of or in
any way directly or indirectly related to the Reagent or its
use. The indemnity set forth in the preceding sentence shall
not apply with respect to any particular Reagent which at the
time of shipment
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Supplier had current conscious awareness that Reagent was not
Conforming Reagent and with respect to which Supplier did not
so notify Customer in writing.
5A. Storage of Critical Documentation. Supplier shall arrange for
storage at a location at least ten (10) miles distant from its own manufacturing
facilities, and approved by Customer, copies of all documentation, design
documentation, and manufacturing documentation necessary to permit Supplier to
manufacture Reagent at a separate facility in the event that its existing
facilities and/or documentation are destroyed or rendered inoperable for any
reason and shall update such documentation at least annually. Such documentation
shall be generated and maintained in a medium and process acceptable to
Customer.
6. Miscellaneous.
a. This Reagent Supply Agreement is made in and shall be
interpreted and enforced in accordance with the laws of the
State of Illinois.
b. This Reagent Supply Agreement may be executed in several
counterparts and shall be effective when there are attached
together execution pages containing the signatures of each of
the parties hereto, each of which counterparts shall be deemed
to be an original, but all of which shall constitute one and
the same instrument.
c. This Reagent Supply Agreement and the documents executed
contemporaneously herewith contain the full agreement of the
parties respecting the subject matter and may not be modified,
altered or changed in any way except by written agreement
executed by both parties. There shall be no merger relating to
this Reagent Supply Agreement, and it shall remain fully
enforceable in accordance with its terms, not withstanding the
occurrence of any other events.
cc. This Reagent Supply Agreement may not be terminated except by
joint written agreement of the parties.
d. This Reagent Supply Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns and legal
representatives of the parties hereto.
e. If any amount owing Supplier herein is not paid when due, each
unpaid amount shall bear interest after its due date (which in
the case of Reagent is forty-five (45) days after delivery) at
the rate of three percent (3%) above the so-called Reference
Rate then applicable as quoted by U.S. Bank, National
Association (or if lower, the maximum allowable pursuant to
applicable usury laws) and, in any action to collect amounts
owing, Supplier shall be entitled to recover all of its costs
and expenses incurred, including attorneys' fees. Customer
agrees to pay any amounts owing hereunder without asserting
any defense, counterclaim, off-set or credit (excepting only
the amounts of a claim which has been reduced to final
judgment).
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f. If any one or more of the provisions or portions of this
Reagent Supply Agreement is determined to be illegal or
unenforceable, the remainder of this Reagent Supply Agreement
shall not be affected thereby and shall remain and continue to
be valid and effective.
g. [Intentionally omitted.]
h. Notices or communications by either party to the other shall
be deemed given when either personally served or three days
after deposited in the United States Mail, first class and
certified mail, postage pre-paid, to each party at the
following addresses:
If to Supplier: If to Customer:
SurModics, Inc. Cordis Corporation
9924 West 74th Street 14201 NW 60th Avenue
Eden Prairie, MN 55344 Miami Lakes, FL 33014
Attention: President Attention: President
With a Copy to:
Johnson & Johnson
Office of General Counsel
1 Johnson & Johnson Plaza
New Brunswick, NJ 08933
And With a Copy to:
Vice President, Operations
Cordis Corporation
14201 NW 60th Avenue
Miami Lakes, FL 33014
Either party may change the address to which such notices or
communications will prospectively be sent, by notice given in
the fashion determined above.
i. The relationship between the parties is that of independent
contractors, and neither party is authorized to act as an
agent for the other party as to any matter.
j. No waiver of either party's obligation to perform its duties
under this Reagent Supply Agreement shall be valid unless in
writing and signed by the waiving party.
k. This Reagent Supply Agreement shall be interpreted without
regard to any presumption or rule requiring construction
against the party drafting this Reagent Supply Agreement.
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l. The rights and remedies set forth herein are cumulative and
shall be in addition to any and all other rights, powers and
remedies available under law or in equity. The exercise of any
right to remedy hereunder or under applicable law shall not in
any way constitute a cure or prejudice either party and the
exercise of any other rights available hereunder or under
applicable law.
m. Attached hereto as Attachment E are Approved Supplier
Requirements which Customer desires Supplier to implement.
Supplier acknowledges that if Supplier does not implement the
Approved Supplier Requirements to a degree satisfactory
to Customer, that Customer may choose to purchase less Reagent
from Supplier than Customer might otherwise purchase.
n. Neither Cordis or SurModics will originate any news release,
promotional material or press statements concerning the
existence of this Agreement or the terms herein without the
prior written consent of the other party (excepting as
required by law and in that case with adequate prior notice to
the other party seeking consent and comments).
IN WITNESS WHEREOF, the parties hereto have caused this Reagent Supply
Agreement to be executed as of the date heretofore written.
SURMODICS, INC. CORDIS CORPORATION
By By
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Its Its
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SCHEDULE OF ATTACHMENTS
A. Description of Reagent
B. Reagent Specifications
C. Monthly Target Production
C-2. Reagent Pricing
D. **
E. Approved Supplier Requirements
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ATTACHMENT A
DESCRIPTION OF REAGENT
Reagent shall mean the materials of the same type and nature provided
by Supplier to Customer during the months of October and November, 2002, being
the compounds referred to as CPO1 and CPO2, and sometimes together known as
PEVA/PBMA.
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ATTACHMENT B
REAGENT SPECIFICATIONS
Reagent Specifications shall mean the specifications pursuant to which
Customer accepted Reagent provided by Supplier during the months of October and
November, 2002, except as the parties may otherwise hereinafter agree by written
document executed by authorized personnel of each of Supplier and Customer. Such
Specifications in effect for the Reagent Supply during October and November,
2002 are described as follows:
1. **.
2. **.
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ATTACHMENT C
**
TARGET PRODUCTION
IN KILOGRAMS
** TARGET PRODUCTION (IN KILOGRAMS)
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ATTACHMENT C-2
REAGENT PRICING
The purchase price of Conforming Reagent shall be as follows in respect of
amounts of Conforming Reagent delivered during each such calendar years **:
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ATTACHMENT D
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ATTACHMENT E
APPROVED SUPPLIER REQUIREMENTS
The following requirements must be achieved and maintained as part of the
Supplier Quality approval process for SurModics to become and remain an Approved
Supplier for Reagents
QUALITY SYSTEM REQUIREMENTS
Assessment: Cordis will perform a Quality System Audit of SurModics' quality
systems to determine that the requirements of this Exhibit have been satisfied.
Once the Cordis auditor has performed the audit with satisfactory results, he
shall notify SurModics in writing that the supplier approval process is
complete. Minor deficiencies or non-conformances identified during these audits
that are not indicative of a lack of control will not preclude SurModics from
supplier approval. However, such observations will be brought to the attention
of SurModics and Cordis and SurModics will identify actions that shall be taken
to correct these items and agree upon a time schedule in which these actions
shall be implemented.
1. SurModics shall attain a general state of compliance with the FDA and
international medical device and if applicable, pharmaceutical
requirements.
2. SurModics shall have, or shall develop, quality systems which comply
with current GMP QSR (CFR 820), ISO9000 and EN46001, as determined by
Cordis and or FDA or EC Notified Body assessment. However, the
development of appropriate quality systems shall occur in a timely
fashion so as to permit commercialization of Reagents as soon as other
factors permit.
3. Written requirements, including but not limited to specifications,
drawings, test methods and procedures, shall be utilized by SurModics
for all Reagents manufactured for Cordis. All requirements shall be
mutually agreed upon by SurModics and Cordis.
4. SurModics shall not make any changes to components, processes, systems
(e.g. quality, measurement, testing) or suppliers used to produce, test
and or release Reagents manufactured for Cordis without prior written
approval from Cordis Quality Assurance management.
5. SurModics shall establish and implement a system that ensures Device
History Records (DHR) for each batch, lot, or unit are created to
demonstrate that the Reagent is manufactured in accordance with the
written processes, methods and procedures of SurModics' quality system,
including material/reagent specifications.
a. DHR's shall contain adequate information to provide
traceability of all components and manufacturing aids (if any)
used in the manufacture of a finished Reagent.
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b. DHR's shall contain adequate information to identify the
processing methods and personnel involved in the manufacture
of a finished Reagent.
c. DHR's shall contain adequate information to demonstrate that
the manufactured Reagent was evaluated (tested and/or
inspected) and found to meet the Reagent Specification.
6. SurModics shall establish written specifications for purchased
materials and components and shall implement a system to ensure that
the materials and components supplied meet these specifications.
7. SurModics shall obtain written agreements with suitable suppliers for
all components, materials and services used in the manufacture of
Reagents and that no changes in the goods or services supplied shall be
made without adequate notification to SurModics.
8. SurModics shall have a system for assisting Cordis with handling
customer complaints. In the event SurModics receives a complaint in the
form of a written Claim or a corrective action request:
a. All complaints involving Reagents supplied to Cordis will be
initially reported to Cordis customer service. SurModics will
be promptly informed if the complaint involves a product
supplied by SurModics, and within seven (7) calendar days,
provide a written preliminary investigation report to Cordis
Quality Assurance. This preliminary report will include an
initial assessment of device reporting under MDR or Vigilance
reporting requirements.
b. SurModics shall cooperate fully and promptly in the
investigation of complaints involving supplied Reagents. All
complaints should be investigated and a written response
provided to Cordis Quality Assurance within thirty (30) days
of receipt. All correspondence with the complainant will be
handled by Cordis, unless other arrangements are made by
SurModics with Cordis on a case-by-case basis.
c. Cordis will be responsible for filing any device report under
MDR or Vigilance reporting requirements.
9. If either party reasonably believes a problem exists that affects the
safety, efficacy or reliability of the Reagents, the problem and all
known facts shall be brought to the attention of both company's Quality
Assurance management as soon as possible, but within 48 hours of the
identification of the problem. In the event that a field action is
contemplated, Cordis and SurModics shall work together to determine
whether a field action should take place; however, the final decision
to implement a field action shall be made by the Cordis Quality
Management. Cordis shall be responsible for implementing
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any field action, including informing customers and defining the
logistics of the field action. SurModics shall cooperate fully in the
implementation of any field action.
10. SurModics shall establish a document retention procedure to ensure that
all documents required to meet the quality requirements herein set
forth. Such documents shall be retained for a minimum of five (5) years
from the date of Reagent Manufacture.
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