_______________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A2
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended January 31, 1995
Commission File Number 0-944
POSSIS MEDICAL, INC.
2905 Northwest Boulevard
Minneapolis, Minnesota 55441-2644
(612) 550-1010
A Minnesota Corporation IRS Employer ID No. 41-0783184
_________________________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes_X_ No___
The number of shares outstanding of the Registrant's Common Stock, $.40 par
value, as of March 13, 1995 was 9,917,338.
________________________________
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This amendment contains only PART II, Item 6. Exhibits and Reports on Form 8-K
of the Report on Form 10-Q for the quarterly period ended January 31, 1995,
originally filed March 17, 1995. Only the item being amended is included in
this filing; said item is the Exhibit 10 Supply and Distribution Agreement with
Bard Vascular Systems Division, C.R. Bard, Inc., amended to include Exhibit B
thereto, which was previously subject to registrant's Request for
Confidential Treatment.
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10: Supply and Distribution Agreement with Bard
Vascular Systems Division, C.R. Bard, Inc.
This Exhibit 10 contains information subject
to a Request for Confidential Treatment,
filed with the Commission on March 17, 1995.
(b) Reports on Form 8-K
During the quarter ended January 31, 1995, a report on Form
8-K dated December 6, 1994, reporting under Item 5, the U.S.
Food and Drug Administration approval of expansion of the
Company's Phase I clinical trials of its Perma-Flow Coronary
Bypass Graft was filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POSSIS MEDICAL, INC.
DATE: May 19, 1995 BY: /s/ Robert G. Dutcher
ROBERT G. DUTCHER
President and Chief Executive Officer
DATE: May 19, 1995 BY: /s/ Russel E. Carlson
RUSSEL E. CARLSON
Vice President of Finance
Chief Financial and Accounting Officer
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SUPPLY AND DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 30th day of December, 1994, by
and between Possis Medical Inc., a corporation organized and validly existing
under the laws of the State of Minnesota, having its principal place of
business at 2905 Northwest Boulevard, Minneapolis, Minnesota 55441-2644
(hereinafter referred to as "POSSIS") and Bard Vascular Systems Division,
C.R. Bard, Inc., a corporation organized and validly existing under the laws
of the State of New Jersey, having offices at 129 Concord Road, Billerica,
Massachusetts 01821 (hereinafter referred to as "BARD").
WITNESSETH:
WHEREAS, POSSIS manufactures and sells certain synthetic A-V Access
Grafts and desires to manufacture and sell such grafts to BARD for resale and
distribution; and WHEREAS, POSSIS is desirous of granting to BARD and BARD is
desirous of accepting from POSSIS the exclusive worldwide rights to market,
sell and distribute the PRODUCTS (as hereinafter defined), subject to the terms
and conditions set forth in this Agreement; and
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WHEREAS, POSSIS hereby represents and warrants to BARD that it is the
sole owner, or licensee, of the entire right, title and interest in and to
the PRODUCTS, as such terms are hereinafter defined; and
WHEREAS, POSSIS hereby represents and warrants to BARD that it has not
previously granted, nor shall it exercise or grant to any third party during
the term of this Agreement, any right to manufacture, have manufactured, use
or sell any of the PRODUCTS, as hereinafter defined, except as otherwise
specifically authorized by this Agreement; and
WHEREAS, subject to the terms and conditions hereof, POSSIS, as a
material inducement to BARD's execution of this Agreement is desirous of
granting to BARD a current license to manufacture, have manufactured, use and
sell PRODUCTS, which right BARD will withhold until the happening of any of
the events referred to in Paragraph 10.01 hereof.
NOW THEREFORE, in consideration of the above premises and of the mutual
agreements and undertakings hereinafter set forth, POSSIS and BARD hereby
agree as follows:
I. DEFINITIONS
1.01 EFFECTIVE DATE - shall mean the date and year first above
written.
1.02 PRODUCTS - shall mean and include:
(i) the synthetic A-V Access Grafts I (PRODUCT I) and II (PRODUCT II),
individually and collectively: more particularly described in Schedule A,
which is attached hereto and incorporated by reference herein, and (ii) any
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IMPROVEMENTS to the PRODUCTS accepted by BARD in accordance with the provisions
of Paragraph 2.03 hereof.
1.03 IMPROVEMENTS - shall mean and include, individually and
collectively, any modification, enhancement and/or improvement to the PRODUCTS,
which prior to the EFFECTIVE DATE or during the term of this Agreement, is
conceived, developed, reduced to practice and/or acquired by POSSIS or any
AFFILIATE of POSSIS, alone or jointly with a third party, provided that the
manufacture of the same embodies or employs any of the PROPRIETARY RIGHTS
covering PRODUCTS.
1.04 PROPRIETARY RIGHTS - shall mean and include U.S. Patent
Application No. 07/787,227: Silicone-Dacron Composite Vascular Graft.
1.05 AFFILIATE - shall mean, with respect to each party hereto, any
person or entity, which controls, is controlled by, or is under common control
with such party.
1.06 ACT - shall mean the United States Food, Drug & Cosmetic Act of
1938, as amended, including all regulations promulgated pursuant thereto.
1.07 FDA - shall mean the United States Food and Drug Administration.
1.08 510(k) - shall mean 510(k) premarket notification as defined
in the ACT.
1.09 PMA - shall mean premarket approval as defined in the Act.
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1.10 RESTRICTED INFORMATION - shall mean any information
of a confidential nature as to which POSSIS or a POSSIS AFFILIATE,
on the one hand, or BARD or a BARD AFFILIATE, on the other hand, as
the disclosing party, has developed or acquired, or during the term
of this Agreement, develops or acquires any interest, including,
but not limited to, all discoveries, inventions, improvements and
ideas relating to any process, formulae, machine, device,
manufacture, composition of matter, plan or design, whether
patentable or not, or relating to the conduct of the business by
either of them, which, prior to the date hereof, or during the term
of this Agreement, was or is divulged to or otherwise obtained by
the other party. Notwithstanding the foregoing, the term
RESTRICTED INFORMATION shall not include any information: (i)
which has been published or otherwise becomes a matter of public
knowledge by any means other than the receiving party's default in
the observance or performance of any term or provision of Section
11.01 on its part to be observed and performed, or (ii) which was
known to the receiving party at the time of such disclosure, as
evidenced by its business records maintained in the ordinary course
of business, or (iii) which is, at any time, disclosed to the
receiving party by any person or entity not a party hereto whom the
receiving party believes, after reasonable inquiry, has the right
to disclose the same, or (iv) which is developed by an employee of
the receiving party who is shown, by competent proof, not to have
been privy to the disclosure, or (v) which is disclosed verbally,
except where the disclosing party reduces such verbal disclosure to
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writing, marks the same as confidential or proprietary and
furnishes the recipient of the verbal disclosure with the written
reduction of the verbal disclosure within thirty (30) days of the
verbal disclosure, or (vi) is independently developed by an
employee of the receiving party; provided as to the exceptions
described in subparagraphs (ii), (iv) and (vi) of this Paragraph
1.10, the receiving party provides prompt notice of such claimed
exception to the disclosing party and, as soon as practicable
thereafter, provides proof thereof to the disclosing party by
documentary or physical evidence.
1.11 SPECIFICATIONS - shall mean and include,
individually and collectively, the raw material, manufacturing,
packaging, directions for use ("DFU"), quality assurance and
finished product specifications and protocols as set forth on
Schedule A, which is attached hereto and incorporated by reference
herein, and as set forth in the Device Master Record as may be
amended or supplemented by POSSIS with the consent of BARD, which
consent shall not be unreasonably withheld, and in accordance with
the terms and conditions of the Agreement.
1.12 COMMERCIALIZE OR COMMERCIALIZATION - shall mean the
commencement of any sale of the PRODUCTS to one or more third
parties, other than for use in clinical studies of the PRODUCTS
conducted in the United States pursuant to an approved
Investigational Device Exemption.
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1.13 DISTRIBUTORS - Schedule B, which is attached hereto
and incorporated by reference herein, contains a true and complete
list of all distributors, brokers, agents and other persons or
entities through whom POSSIS has sold and/or marketed PRODUCTS and
for whom Agreements are in full force and effect.
II. GRANT
2.01 POSSIS hereby grants to BARD and BARD hereby accepts
from POSSIS, on and subject to the terms and conditions hereinafter
set forth, the exclusive worldwide rights to market, sell and
distribute the PRODUCTS.
2.02 POSSIS and BARD expressly agree that the grant set
forth in Paragraph 2.01 shall be deemed to include a grant to BARD
of the right to sell directly, through any AFFILIATE of BARD,
through distributors of BARD and/or through distributors of any of
BARD's AFFILIATES.
2.03 IMPROVEMENTS - POSSIS and BARD agree that
development of IMPROVEMENTS to the PRODUCTS may be beneficial to
both POSSIS and BARD. BARD may accept any IMPROVEMENTS under the
following terms and conditions:
(a) POSSIS shall give BARD ninety (90)
days advance written notice of any proposed
IMPROVEMENT, specifying the proposed
IMPROVEMENT in reasonable detail and the
reasonable costs of research, development,
regulatory approval and additional
manufacturing start-up and tooling-up costs,
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incurred and projected in order to
COMMERCIALIZE said IMPROVEMENT
("COMMERCIALIZATION COSTS"), and shall provide
to BARD, during such ninety (90) day period,
such further information and data as it may
reasonably request as to the proposed
IMPROVEMENT and its actual and projected
COMMERCIALIZATION COSTS.
(b) BARD may accept the subject IMPROVEMENT
by giving written notice of such election to
POSSIS within said ninety (90) day period and
agreeing to pay to POSSIS fifty (50%) percent
of said COMMERCIALIZATION COSTS to be incurred
by POSSIS, and thereafter paying fifty (50%)
percent of the actual subsequent
COMMERCIALIZATION COSTS as incurred, whether
more or less than projected under subparagraph
(a) of this Paragraph 2.03, and within thirty
(30) days of receipt of POSSIS' invoice
therefor.
(c) In the event BARD elects not to accept
the subject IMPROVEMENT, BARD shall have no
rights to the subject IMPROVEMENT.
"Confidential material omitted and filed separately with
the Securities and Exchange Commission."
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(e) In the event BARD accepts the subject
IMPROVEMENT, it shall have the right to review
and audit, at its expense, and on a reasonable
basis all COMMERCIALIZATION COSTS.
2.04 POSSIS agrees that upon termination or
expiration of rights currently held by each Distributor listed in
Schedule B herein, POSSIS shall grant to BARD the exclusive right
to market, sell and distribute the PRODUCTS in the territory
previously subject to the rights of such Distributor.
III. PAYMENTS
3.01 BARD shall make the following payments to POSSIS
within ten (10) days of the dates of the milestones set forth
below:
MILESTONE PAYMENT
(a) Execution of Supply and $250,000
Distribution Agreement
(b) COMMERCIALIZE PRODUCT II in at $250,000
least two (2) of the target
European counties below;
provided it meets the
SPECIFICATIONS. Targets:
United Kingdom, France,
Spain, Germany and Italy
(c) Receive FDA concurrence that either $500,000
PRODUCT I or PRODUCT II can receive
market clearance by means of a 510 (k);
or a Pre-Market Approval application
is accepted for filing by the FDA
(d) Receive PMA or 510 (k) approval $750,000
letter from FDA for PRODUCT II
(e) Commercialize PRODUCT II in U.S.A. $750,000
$2,500,000
3.02 In the event POSSIS receives 510 (k) approval of
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PRODUCT I or II on or before the Milestone dates set forth below,
then the corresponding payment shall be made to POSSIS within ten
(10) business days of the date on which BARD receives notice
thereof:
MILESTONE PAYMENT
Received by June 30, 1995, $500,000
OR IF OR
Received by December 31, 1995 $250,000
IV. REPRESENTATIONS AND WARRANTIES
4.01 In addition to the representations and warranties
set forth in the recitals hereinabove, which shall have the same
effect as if set forth herein, POSSIS hereby represents and
warrants to BARD:
(i) that POSSIS is the sole and exclusive owner of all
right, title and interest in and to, or has the sole
right to sublicense the PROPRIETARY RIGHTS, and
(ii) that, on the EFFECTIVE DATE, POSSIS is not a party
to any lawsuit, nor is there any outstanding claim
against POSSIS, alleging that the use of the PROPRIETARY
RIGHTS or the manufacture, use or sale of PRODUCTS
infringes on the proprietary right(s) of any third party,
and
(iii) that, except for the agreements listed on Schedule
B, POSSIS is not currently a party to any agreement or
understanding, oral or written, which would, in any
manner, be inconsistent with the rights herein granted to
BARD and shall not enter into any agreement or
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understanding, oral or written, during the term of this
Agreement, nor, during the term of this Agreement,
directly or indirectly engage in any activity which
would, in any manner, be inconsistent or conflict with
the rights herein granted to BARD except as specifically
authorized herein, and
(iv) that POSSIS is a corporation organized, validly
existing and in corporate good standing under the laws of
the State of Minnesota, has all requisite corporate power
and authority to own and operate its property and carry
on its business as now being conducted and is not
required to qualify to do business in any jurisdiction,
and
(v) that the execution and delivery of this Agreement
has been duly and validly authorized by all necessary
corporate action on the part of POSSIS and that (assuming
valid execution by BARD) this Agreement is a valid and
binding obligation of POSSIS enforceable against it.
4.02 In addition to the representations and warranties
set forth in the recitals hereinabove, which shall have the same
effect as if set forth herein, BARD hereby represents and warrants
to POSSIS:
(i) that BARD is not currently a party to any agreement
or understanding, oral or written, which would, in any
manner, be inconsistent with the rights herein granted
and shall not enter into any agreement or understanding,
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oral or written, during the term of this Agreement, nor
during the term of this Agreement, directly or indirectly
engage in any activity which would, in any manner be
inconsistent or conflict with the terms and provisions of
this Agreement; and
(ii) that BARD is a corporation organized, validly
existing and in good standing under the laws of the State
of New Jersey, has all requisite corporate power and
authority to own and operate its property and to carry on
its business as now being conducted and is duly qualified
in good standing to do business in any of those
jurisdictions where it is required to be qualified; and
(iii) that the execution and delivery of this Agreement
by BARD has been duly and validly authorized by all
necessary corporate action on the part of BARD and that
(assuming valid execution by POSSIS) this Agreement is a
valid and binding obligation of BARD enforceable against
it.
V. REGULATORY MATTERS
5.01 Establishment Registration/Inspections
POSSIS hereby represents to BARD that it shall, at its sole
cost and expense, timely register with the FDA, in accordance with
the ACT, any establishment in which it intends to manufacture or
have manufactured any of the PRODUCTS to be manufactured pursuant
to the provisions of this Agreement. Further, POSSIS hereby
represents that it shall, at its expense, maintain any and all
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establishment registration(s) during the term of this Agreement.
Additionally, POSSIS hereby agrees to permit the FDA (without a
search warrant) and BARD or BARD's designee to inspect each such
establishment for purposes of verifying POSSIS' compliance with the
ACT and for purposes of verifying that PRODUCTS being manufactured
by POSSIS for sale to BARD hereunder are being manufactured in
strict accordance with the applicable SPECIFICATIONS, Good
Manufacturing Practices as defined in the ACT and any other
requirements hereof. Any such inspection by BARD shall be
conducted upon reasonable advance notice to POSSIS during POSSIS'
normal business hours.
5.02 PMA or 510(k) Submissions. At its sole cost and
expense, POSSIS hereby covenants to use its best efforts to prepare
or have prepared, all PMA or 510(k) submissions necessary and to
obtain all necessary approvals or concurrences required by the Act.
The parties agree that as between POSSIS and BARD, BARD will have
reasonably input into the form and content of any such PMA or
510(k) as well as any supplement(s) relating thereto.
5.03 POSSIS hereby covenants, after reasonable input from
BARD, to implement a failure investigation mode that is reasonably
satisfactory to BARD and to establish a formal Complaint System as
required under the ACT including without limitation the time
requirements set forth in the Medical Device Reporting regulations.
Further, POSSIS agrees to assist BARD in analyzing and responding
to complaints. POSSIS also agrees to make all such records readily
accessible to BARD.
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VI. PATENT MATTERS
6.01 In the event POSSIS or BARD knows or has reason to
believe that any patent included in PROPRIETARY RIGHTS is being
infringed, either directly, contributorily or by inducement, by any
third party which is not a licensee under PROPRIETARY RIGHTS, the
party possessing such knowledge or belief shall promptly notify the
other and shall include in its notice all facts in its possession
on which such knowledge or belief is based. POSSIS shall be
obligated to attempt to stop any such infringement and shall take
timely measures, including prosecution of a law suit, if necessary,
to terminate such infringement, at its sole cost and expense.
POSSIS and BARD hereby agree that all recoveries and awards that
may be obtained as a result of any such infringement action brought
by POSSIS, including any settlement thereof, shall belong solely to
POSSIS. In the event POSSIS brings such suit, BARD hereby agrees
to be named as a nominal party to such suit, provided, however,
that any expenses incurred by BARD shall be paid by POSSIS.
6.02 In the event suit is filed against BARD or any
AFFILIATE of BARD by a third party alleging that the manufacture,
use or sale of any PRODUCT, alone and not based upon its
combination with any other article, infringes the proprietary
rights of such third party, BARD shall promptly notify POSSIS and
shall include in its notice all facts in BARD's possession relating
to the same. In the said event, POSSIS hereby agrees to defend
(utilizing counsel reasonably acceptable to BARD), indemnify, save
and hold BARD harmless from and against all costs, liabilities and
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expenses incident to any such suit. It is expressly agreed that
BARD shall not settle or compromise any such suit without the
express prior written consent of POSSIS, which consent shall not be
unreasonably withheld.
VII. TERMS OF PURCHASE AND SALE
7.01 POSSIS and BARD hereby agree that all sales and
purchases of PRODUCTS shall be initiated pursuant to BARD's
purchase order for the same placed with POSSIS, or BARD's revised
form of purchase order if agreed to by the parties. The current
form of BARD's purchase order ("CURRENT PURCHASE ORDER") is set
forth in Schedule C, which is attached hereto and incorporated by
reference herein. All such sales and purchases shall be governed
by the terms and provisions of this Agreement and, with respect to
any particular order, the terms and provisions set fort in BARD
CURRENT PURCHASE ORDER covering the same. If any provision
contained in any BARD CURRENT PURCHASE ORDER conflicts with any
term in this Agreement the inconsistent term of such purchase order
shall be void. If any provision contained in any POSSIS
acknowledgment conflicts with any term of this Agreement or
conflicts with any term of any BARD CURRENT PURCHASE ORDER, which
is not inconsistent with the terms of this Agreement, such
acknowledgment shall be void unless it is executed by an Officer of
BARD.
7.02 POSSIS and BARD hereby agree that the selling price
of POSSIS to BARD for PRODUCTS, F.O.B. POSSIS' manufacturing
facility, shall be set forth in Schedule D.
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7.03 Subject to the provisions of Articles VII and X,
during the term of this Agreement BARD agrees to purchase from
POSSIS, and POSSIS agrees to sell to BARD, BARD's entire
requirements of PRODUCTS.
7.04 Upon the execution of this Agreement, BARD shall
provide POSSIS with a non-binding twelve- (12) month forecast of
its orders for PRODUCTS for the first year of this Agreement. BARD
shall update and revise said non-binding twelve- (12) month
forecast at least once every three (3) months by adding three (3)
months to each then-remaining nine (9) months of the existing
forecast, and shall use reasonable efforts to notify POSSIS of
updates and revisions sooner, if reasonably possible, so as to have
in effect at the end of each three (3) month period under this
Agreement a current updated and revised twelve (12) month forecast.
Sixty (60) days prior to anticipated COMMERCIALIZATION in any
country, as reasonably predicted by POSSIS, pursuant to notice to
BARD, BARD shall issue to POSSIS its initial firm and binding
purchase order and delivery schedule specifying the quantities of
PRODUCTS to be delivered during the first six (6) full months of
commercial sales under this Agreement. Said purchase order shall
not require delivery of the first PRODUCT intended for
COMMERCIALIZATION in any country in less than ten (10) weeks.
After the initial order, on a quarterly basis, BARD shall
issue to POSSIS a final and binding purchase order and schedule
specifying the quantities of PRODUCT ordered and to be delivered
during the next six (6) month period, so as to have in effect at
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the end of each three (3) month period under this Agreement a
current updated and revised binding six (6) month purchase order.
Notwithstanding the foregoing, during any calendar month of
this Agreement, BARD shall have the right to increase or decrease
its delivery requirements in the fourth, fifth or sixth months of
the current six (6) month binding purchase order, respectively,
following the then-current month by up to twenty (20%) percent per
month. No purchase order shall exceed one hundred and five (105%)
percent of the current, updated and revised forecast on a month-by-
month basis, subject only to the right to increase an existing
order by twenty (20%) percent as provided herein.
7.05 POSSIS shall invoice BARD, at the applicable selling
price, for all PRODUCTS ordered by BARD at the time of shipment by
POSSIS and shall include in its invoice any freight, insurance,
taxes or duties actually paid by POSSIS incident to such shipment.
BARD agrees to pay all such invoices within thirty (30) days of the
invoice date.
7.06 Unless a BARD purchase order provides for a longer
period, POSSIS shall deliver all PRODUCTS covered by any BARD
purchase order placed with it within two (2) weeks of the date
specified for delivery in such order, except that, with respect to
the initial BARD purchase order, POSSIS, in addition, shall have a
minimum of ten (10) weeks from POSSIS' receipt from BARD of the
final approved artwork for the PRODUCTS to make its initial
delivery.
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7.07 BARD agrees to purchase the following minimum
quantities of PRODUCTS:
"Confidential material omitted and filed seperately with
the Securities and Exchange Commission"
7.08 Notwithstanding the provisions of 7.07 (a) hereof,
in the event BARD's actual purchases exceed the minimum purchase
requirement in any year, the excess purchase amount, in units,
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shall be applied to and fulfill a like amount of BARD's minimum
purchase requirement, in units, in the next succeeding year.
7.09 Notwithstanding the provisions of 7.07 (a), hereof,
in the event POSSIS' ability to supply as required hereunder is
delayed or prevented by virtue of force majeure as described in
Section 14.04 hereof, the parties hereby agree that the minimum
purchase requirements set forth in Section 7.07 (a) above shall be
reduced proportionately, unless BARD exercises its rights under
Article X. Similarly, in the event of a market withdrawal, or
voluntary or involuntary recall pursuant to action of FDA,in
addition to the provisions of Article XIII and subject to the
provisions of Article X, the minimum purchase requirements shall be
abated during the period of such action and reduced
proportionately.
7.10 In the event BARD fails to purchase the required
minimums for any year during the term hereof, POSSIS, at its
option, shall have the right to terminate this Agreement pursuant
to the notice and cure provisions of Section 12.04. In such event,
said termination shall constitute POSSIS' sole and exclusive
remedy, notwithstanding the provisions of Section 12.04 and BARD's
continuing liability for the minimum quantity purchase deficiency
for said year.
VIII. MANUFACTURE OF PRODUCTS
8.01 POSSIS hereby warrants to BARD that each of the
PRODUCTS sold hereunder shall be manufactured by POSSIS in strict
accordance with and shall, at the time of delivery to BARD or an
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AFFILIATE of BARD, conform to the SPECIFICATIONS in all material
respects, as may be amended pursuant to Section 8.03 hereof.
Further, POSSIS hereby warrants to BARD that all PRODUCTS
manufactured by POSSIS and sold to BARD or an AFFILIATE of BARD
shall be free from defects in materials and workmanship. BARD
shall give or shall cause an AFFILIATE of BARD to give POSSIS
written notice of any claims under the last mentioned warranties
promptly after BARD or any AFFILIATE of BARD becomes aware of the
same and shall reasonably assist POSSIS in any investigations that
it may desire to conduct in connection therewith. In the event of
a breach of any warranty above set forth in this Subparagraph,
POSSIS, at its option, shall: (i) within thirty (30) days of its
receipt from BARD or an AFFILIATE of BARD of a return of PRODUCT(S)
on which any such warranty was breached, issue a credit memorandum
to BARD or the ordering AFFILIATE of BARD for the applicable
PRODUCT(S)' purchase price plus freight and insurance for return
that BARD or the ordering AFFILIATE of BARD may have reasonably
incurred in connection with such returns, or (ii) within thirty
(30) days of its receipt from BARD or an AFFILIATE of BARD of a
return of PRODUCT(S) on which any such warranty was breached,
replace such PRODUCT(S) and issue a credit memorandum to BARD or
the ordering AFFILIATE of BARD for insurance and freight charges
actually incurred by BARD or such BARD AFFILIATE relative to the
return of such PRODUCT(S) TO POSSIS. Notwithstanding the
foregoing, in the event this Agreement has terminated at the time
of POSSIS' receipt of a return pursuant to this section, POSSIS
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shall, in lieu of its options stated above, remit an amount to
BARD, within thirty (30) days of its receipt of the return, which
amount shall be equal to the amount of the credit memorandum which
POSSIS would otherwise be required to issue pursuant to subsection
(i) of this Subparagraph. The warranties contained in this
Paragraph do not include, nor does POSSIS assume responsibility
for: defects or damage caused by misuse, abuse, alterations,
failure to properly maintain any PRODUCT, negligence or intentional
acts attributable to BARD or any AFFILIATE of BARD.
8.02 POSSIS, at its sole cost and expense, shall provide
BARD with such technical and marketing related materials,
assistance and advice respecting the PRODUCTS as BARD or any
AFFILIATE of BARD may reasonably request. Such assistance will
include making available on a reasonable basis the services of
POSSIS personnel knowledgeable as to the technical and marketing
subject matter for purposes of initial training and education of
BARD personnel, provided that BARD shall pay all reasonable and
actual travel expenses of such personnel as approved in advance by
BARD and supported by documentation in such form as BARD may
request.
8.03 If POSSIS finds it necessary or desirable to change
the SPECIFICATIONS, it may do so, at its own cost or savings,
provided POSSIS gives BARD at least ninety (90) days notice of such
intent to change the SPECIFICATIONS and BARD gives POSSIS its
consent to such change, which consent shall not be unreasonably
delayed or withheld. POSSIS agrees to obtain any required
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approvals referred to in Article V and as required by the Act,
subject to the obligations imposed on BARD pursuant to Section 2.03
herein. If BARD similarly finds it necessary or desirable to
change any SPECIFICATIONS, except for IMPROVEMENTS described in
Section 2.03 herein, it shall so notify POSSIS and POSSIS, subject
to the ability of BARD and AFFILIATES of BARD to obtain any
required approvals relative thereto referred to in Article V and
further subject to the ability of POSSIS to manufacture in
accordance with such changed SPECIFICATIONS, will affect such
change, provided BARD shall reimburse POSSIS for its reasonable
expenses incurred with respect to such change.
8.04 POSSIS also warrants to BARD that each of the
PRODUCTS sold to BARD hereunder will not, at the time of delivery
to BARD, be adulterated or misbranded within the meaning of the ACT
or within the meaning of any jurisdiction in which the definitions
of misbranding and adulteration are substantially the same as in
the ACT, nor will any PRODUCT at the time of delivery to BARD be an
article that may not, under the ACT, be introduced into interstate
commerce.
8.05 Labeling - BARD will supply POSSIS with camera-ready
artwork for labeling the packaging of the PRODUCTS. POSSIS hereby
grants BARD an exclusive license to use of the Perma-Seal
trademark during the term of this Agreement. PRODUCT labeling
shall also include the notation, "Manufactured by POSSIS Medical
Inc." BARD shall provide POSSIS with representative samples of all
labeling (other than DFU's), literature and advertising it intends
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to use and when using the Perma-Seal trademark under this
Agreement shall substantially comply with all laws pertaining to
trademarks in force at such time,including, without limitation,
compliance with marking requirements.
IX. INDEMNIFICATION/INSURANCE
9.01 POSSIS and BARD hereby agree to indemnify, save and
hold each other harmless from and against all suits, actions,
claims, demands, judgments and expenses (including court costs and
reasonable attorneys fees) which arise or result from their
respective misrepresentation of any representation contained in
this Agreement, or default in the observance or performance of any
term or provision hereof.
9.02 POSSIS hereby agrees to indemnify, save and hold
BARD and its AFFILIATES harmless from and against all suits,
actions, claims, demands, judgments, liabilities and expenses which
arise or result from alleged injury (including death) incident to
the use of any of the PRODUCTS manufactured by POSSIS. As a
condition precedent to POSSIS' obligations under this Article IX,
the party charged in such suit shall promptly notify POSSIS and
shall not settle same without POSSIS prior to written approval. It
is expressly agreed that POSSIS shall have the duty to defend any
action referred to in this Paragraph 9.02 utilizing counsel
reasonably acceptable to the party charged and shall have the right
to settle same on such terms as it deems appropriate. It is also
agreed that the party charged shall have the right at its own
expense to participate in any such action utilizing counsel
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selected by it. Notwithstanding the above,it is understood and
agreed that in the event a final, nonappealable determination is
made by a court in a proceeding subject to the provisions of this
Section 9.02, that BARD or an AFFILIATE of BARD is responsible
through its acts or omissions, for an injury or other damage
arising from the use of the PRODUCTS, then BARD shall indemnify,
save and hold POSSIS harmless from and against all claims, demands,
judgments, liabilities and expenses (including attorney fees)
arising from said determination, but only to the extent of BARD's
fault as determined in such action. As a condition precedent to
BARD's obligations hereunder, POSSIS shall bear the burden of
defending against any such suit or action subject to the provisions
of this Section 9.02, and shall pay all related attorney fees,
until said final determination of BARD's responsibility is made.
9.03 POSSIS hereby covenants to obtain prior to
COMMERCIALIZATION of PRODUCTS, and further covenants to maintain,
during the term of this Agreement, a comprehensive general
liability insurance policy, with products liability endorsement,
for the PRODUCTS, which policy shall be a minimum amount of
$2,000,000 combined single limit per occurrence. Said policy shall
either name BARD and its AFFILIATES, as their interests may appear,
as additional insureds or shall provide like coverage under a broad
form vendor's endorsement. Such policy shall also provide broad
form contractual liability coverage with respect to POSSIS'
indemnification obligations under Section 9.01. Additionally, said
policy shall provide for not less than thirty (30) days prior
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written notice to BARD in the event of any change in coverage or
policy cancellation. POSSIS hereby covenants to deliver to BARD a
certificate evidencing such coverage within sixty (60) days prior
to COMMERCIALIZATION of PRODUCTS.
X. LICENSE
10.01 POSSIS hereby acknowledges that a reliable and
continuous source of supply of PRODUCTS to BARD is a fundamental
prerequisite to BARD's successful distribution and marketing
efforts. Therefore, as a material inducement to the execution of
this Agreement by BARD, POSSIS hereby grants BARD a current license
to manufacture, have manufactured, use and sell PRODUCTS. BARD
agrees, however, to withhold the exercise of its rights thereunder
until the happening of any one or more of the following events:
(i) in the event POSSIS becomes insolvent, makes a
general assignment for the benefit of its creditors,
files or has filed against it a petition in bankruptcy
which is not dismissed before POSSIS is declared a
bankrupt or files a petition in any state or federal
proceeding seeking relief from its creditors, or (ii) in
the event POSSIS fails on two (2) successive occasions,
to deliver to BARD within thirty (30) days of the
required delivery dates established pursuant to the
provisions of Paragraph 7.04 hereof, all quantities of
PRODUCTS for which BARD issued purchase orders, that are
within the forecast, and does not cure such failure
within the thirty (30) day notice period pursuant to
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Section 12.04 hereof, or (iii) in the event POSSIS in two
(2) consecutive months, delivers to BARD a quantity of
PRODUCTS, ten (10%) percent or more of which do not
conform to the SPECIFICATIONS in material respects,
provided BARD provides prompt notice of such
nonconformity on a monthly basis, or (iv) in the event
POSSIS materially defaults in the observance or
performance of any term or provision on its part to be
observed or performed hereunder or has made a material
misrepresentation hereunder except as described in
subparagraph (ii) and (iii) of this Paragraph 10.01, or
breached any warranty contained herein and such breach or
default is not cured within thirty (30) days of POSSIS'
receipt of notice thereof from BARD pursuant to Section
12.04 hereof, or (v) in the event POSSIS is delayed or
prevented from fulfilling its supply obligations under
this Agreement for a period in excess of sixty (60) days
by reason of force majeure or causes beyond its
reasonable control, including but not limited to those
causes enumerated in Section 14.04.
10.02 In the event BARD elects to utilize the license
granted under Section 10.01, it shall notify POSSIS in writing. In
such event, POSSIS covenants to furnish to BARD, without charge,
within thirty (30) days of POSSIS' receipt of BARD's notice, all
technical information, data, know-how, tooling, molds and such
other materials or information in its possession as may be
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<PAGE>
necessary in order for BARD to manufacture or have manufactured the
PRODUCTS. Also in such event, during the period of BARD's
manufacturing, BARD's obligation to purchase its requirements of
PRODUCTS shall be void and, notwithstanding anything to the
contrary contained in this Agreement, BARD shall have the right,
upon notice to POSSIS to immediately terminate any outstanding
purchase order(s) issued pursuant to this Agreement.
10.03 Notwithstanding any provision of this Article to the
contrary, in the event that BARD elects to exercise its right to
manufacture pursuant to subparagraphs (ii), (iii) or (v) of Section
10.01 hereof, such right to manufacture shall continue for an
agreed-upon period of time ("ALTERNATIVE MANUFACTURING PERIOD"),
but for at least until POSSIS shall notify BARD and provide
reasonable proof that it has sufficient capabilities to meet BARD's
actual requirements, to conform the PRODUCTS to the SPECIFICATIONS
as described in said subparagraph (iii), or that the force majeure
causes beyond its reasonable control no longer prevent POSSIS from
fulfilling its supply obligations.
In the event BARD is required to exercise its right to
manufacture and does so manufacture hereunder on more than one
occasion and during a second or subsequent ALTERNATIVE
MANUFACTURING PERIOD, POSSIS gives to BARD its notice and proof of
sufficient capabilities, POSSIS' right to be restored to its
position as manufacturer of PRODUCTS shall be conditioned upon
POSSIS' payment of BARD'S reasonable costs for manufacturing start-
up, tooling-up and all reasonable costs related to the transfer of
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manufacturing back to POSSIS.
10.04 In the event BARD exercises its right to manufacture
pursuant to Article X, BARD shall pay POSSIS a royalty of ten (10%)
percent on all PRODUCTS manufactured and sold by BARD.
XI. RESTRICTED INFORMATION
11.01 The parties hereby expressly agree that all
RESTRICTED INFORMATION made available by one party to the other,
pursuant to the terms of this Agreement, and including the terms
and provisions of this Agreement, shall be held in strict
confidence by the receiving party during the term of this Agreement
and shall be utilized by the receiving party solely in furtherance
of the objectives of this Agreement.
11.02 Upon the expiration or termination of this
Agreement, each party shall promptly return to the other all
RESTRICTED INFORMATION disclosed to it hereunder, including all
copies thereof, provided, however, each party shall have the right
to retain one (1) copy of all such RESTRICTED INFORMATION for
archival purposes in the event any dispute should arise between the
parties with respect to the same.
XII. TERM/TERMINATION
12.01 Except as otherwise provided herein, this Agreement
shall commence on the EFFECTIVE DATE and shall continue thereafter
as to the PRODUCTS for a period of ten (10) years. In the event of
termination of this Agreement, the parties' rights and obligations
that, by their nature, would continue beyond the termination of
this Agreement shall survive termination.
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12.02 BARD shall have a right to renew this Agreement for
an additional term of seven (7) years or the remaining term of any
of the patents listed under PROPRIETARY RIGHTS, upon one (1) year's
written notice to POSSIS. The terms and provisions during such
renewal shall be as set forth in this Agreement. BARD's right to
renew shall be subject to the following conditions:
(a) Units of PRODUCTS purchased during the five (5) year
period preceding the effective date of such renewal must
be at least 120% percent of the minimum quantity set
forth in Section 7.07 (a) hereof for those years, or
(b) if actual units purchased are less than said 120%,
POSSIS approval to renew the Agreement shall be required.
(c) The right to renew granted herein may be exercised
only during the ninth year of the initial term of this
Agreement.
12.03 BARD shall have the right to terminate this
Agreement at any time upon providing POSSIS with one (1) year's
written notice of its intention to terminate this Agreement.
12.04 In the event of a material breach or default by
either of the parties hereto of any term or provision of this
Agreement on their respective parts to be observed or performed,
the party who is not in breach or default shall have the right to
give the other party notice thereof, whereupon the party receiving
such notice shall have thirty (30) days to cure or cause the cure
of such breach or default, or if the same cannot reasonably be
cured within such thirty (30) days, the party receiving such notice
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shall, within said period, commence or have caused the commencement
of such cure and thereafter continue to diligently prosecute the
cure of the same. If such breach or default is so cured, this
Agreement shall remain in full force and effect. If such breach or
default is not so cured, this Agreement shall immediately terminate
upon notice of termination given to the party which failed to so
cure such breach or default.
XIII. RECALL
13.01 If BARD or POSSIS are required by competent
governmental authority to recall any of the PRODUCTS or they
initiate in their reasonable business judgment a voluntary recall
of any PRODUCT (and neither POSSIS or BARD will unreasonably
withhold its consent to a voluntary recall proposed by the other
party):
(a) to the extent that the cause of such recall is one
for which POSSIS is or would be required to indemnify
BARD under the terms of this Agreement, POSSIS shall
indemnify BARD from all direct costs incurred by BARD
incident to such recall; and
(b) to the extent that the cause of such recall is one
for which BARD is or would be required to indemnify
POSSIS under the terms of this Agreement, BARD shall
indemnify POSSIS from all direct costs incurred by POSSIS
to such recall.
Such costs shall include, without limitation, handling costs and
refund of the original purchase price for recalled units of
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PRODUCTS.
XIV. MISCELLANEOUS
14.01 All notices required or permitted to be given under
this Agreement shall be in writing and shall be deemed effective
and given when delivered in person or sent by certified or
registered mail, postage and certification prepaid, return receipt
requested, addressed to the party to be notified at its address
first above written or to such changed address as the party may
direct by notice given in the aforementioned manner. In the case
of notices to BARD, the same shall be directed to the attention of
BARD's President with a copy to the attention: General Counsel,
C.R. Bard, Inc., 730 Central Avenue, Murray Hill, NJ 07974. In
case of notices to POSSIS, the same shall be directed to the
attention of POSSIS' President, at the address first set forth
above.
14.02 This Agreement may not be assigned by either of the
parties hereto without the express prior written consent of the
non-assigning party, provided however, that BARD or POSSIS may
assign this Agreement, upon notice to but without the consent of
the other party, to any AFFILIATE or any person or entity which
purchases substantially all of the stock or assets of said party,
provided that such person or entity is reasonably capable of
performing all of the obligations of said party under this
Agreement and said party guarantees the performance of such
obligation.
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14.03 This Agreement shall be binding upon and enure to
the benefit of the respective successors of the parties and their
permitted assigns.
14.04 Notwithstanding anything to the contrary contained
in this Agreement, other than the provisions of Section 10.02
hereof, which shall supersede this section, in the event either
party is delayed or prevented from fulfilling any of their
respective obligations under this Agreement for any reason beyond
its reasonable control, including but not limited to, acts of God,
fire, strike, flood, riot, war, delay of transportation, then such
party shall not be liable under this Agreement for any such delay
or failure.
14.05 None of the provisions of this Agreement shall be
deemed to have been modified, amended or waived by an act or
acquiescence on the part of either party, its agents or employees,
except by an instrument in writing signed by an authorized officer
of the waiving party or by officers of both parties in case of an
amendment or modification. No waiver by either party of any breach
or default under this Agreement by the other party shall be
effective as to any other breach or default of the same or any
other provisions of this Agreement.
14.06 In the event any term or provision of this Agreement
is held, by a court of competent jurisdiction from which there is
no appeal, to be invalid, illegal or contrary to public policy,
this Agreement shall be construed as though such term or provision
did not appear herein and the remaining provisions of this
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Agreement shall continue in full force and effect.
14.07 The Article headings of this Agreement are intended
for convenience of reference only and shall not define or limit the
provisions of this Agreement.
14.08 This Agreement shall be governed and construed in
all respects in accordance with the internal laws of the
Commonwealth of Massachusetts.
14.09 The parties shall exercise good faith and reasonable
efforts in assisting one another, advancing the COMMERCIALIZATION
of PRODUCTS and solidifying and strengthening their positive
working relationship during the term of this Agreement.
14.10 If any legal action, arbitration, or other
proceeding is brought for enforcement of this Agreement, or because
of an alleged dispute, breach, default or misrepresentation
connection with any of the provisions of this Agreement, the
prevailing party shall be entitled to recover from the other party
its reasonable legal expenses, including attorneys' fees, incurred
in connection with that action, arbitration or proceeding, in
addition to any other relief to which such party may be entitled.
14.11 This Agreement, the Schedules hereto, and CURRENT
PURCHASE ORDER issued by BARD pursuant to the terms of this
Agreement constitute the entire Agreement and understanding between
the parties with respect to the subject matter hereof and supersede
any and all prior negotiations and understandings between the
parties hereto, oral or written, with respect to the subject matter
hereof.
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14.12 Neither POSSIS nor BARD shall issue any press
release, public announcement or information with respect to this
Agreement without the express prior approval of the other party.
The party asked to rview any announcement agrees to do so with
reasonable diligence and not to unreasonably withhold such
approval.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed in duplicate by their duly authorized officers.
BARD VASCULAR SYSTEMS DIVISION, POSSIS MEDICAL INC.
C.R. BARD, INC.
BY: /s/ Peter F. Murphy BY: /s/ Robert G. Dutcher
Peter F. Murphy Robert G. Dutcher
President President
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SCHEDULE A TO SECTION 1.02 AND 1.11 OF
SUPPLY AND DISTRIBUTION AGREEMENT
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
(1)
<PAGE>
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
(2)
<PAGE>
II. POSSIS PERMA-SEAL II DIALYSIS GRAFT
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
(3)
<PAGE>
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
(4)
<PAGE>
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
(5)
<PAGE>
SCHEDULE B
POSSIS MEDICAL, INC.
DISTRIBUTORS
1. The Netherlands, Belgium & Luxembourg
TD Medical b.v.
Dillenburgstraat 11a
5652 am Eidnhoven
THE NETHERLANDS
2. Germany & Switzerland
LAmed Vertiriebs GmbH
Ludwig-Thoma-Strasse 2
D-82041, Deisenhofen
GERMANY
3. Norway & Denmark
Medi-Stem AS
Sandaker VN110
0483 Oslo
NORWAY
4. Italy
N.G.i.C.srl. Medical Equipment
Centro Direzionale Milano Oltre
C200090 Segrate - Via Cassanese, 224
Milano
ITALY
5. SPAIN
PRIM, S.A.
Avda. del Llano Castellano, 43
28034 Madrid
SPAIN
6. Greece
Omikron Medical SA
29, Tagmatarchou
Plessa & Sokratous Str.
176 74 Kallithea
GREECE
<PAGE>
SCHEDULE C
COPY OF A STANDARD C.R. BARD, INC. PURCHASE ORDER
<PAGE>
SCHEDULE D
TRANSFER PRICE
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
<PAGE>
"Confidential material omitted and filed
separately with the Securities and Exchange
Commission."
<PAGE>
