SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 1996.
POSSIS MEDICAL, INC.
(Exact name of registrant as specified in charter)
MINNESOTA 0-944 41-0783184
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
2905 Northwest Boulevard
Minneapolis, Minnesota 55441-2644
(Address of principal executive offices)
Registrant's telephone number, including area code: 612 550-1010
<PAGE>
Item 5. Other Events.
Possis Medical, Inc., on March 15, 1996, executed a Distributor Agreement
with Baxter Healthcare Corporation, Edwards CVS Division, pursuant to which
Baxter acquied the exclusive right to distribute the Possis Perma-Flow Coronary
Bypass Graft worldwide. The Agreement provides for an initial term of three
years, an initial cash payment and additional cash payments over the life of the
Agreement. This event is further described in the News Release dated March 20,
1995, which is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
Exhibit 10.1: Distributor Agreement dated March 15, 1996
Exhibit 99.1: News Release dated March 20, 1996.
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 undersigned
hereunto duly authorized.
POSSIS MEDICAL, INC.
Date: March 28, 1996 By: /s/ Robert G. Dutcher
Robert G. Dutcher
President and Chief Executive Officer
DISTRIBUTOR AGREEMENT
This Agreement is made effective as of the 15th day of March, 1996
("Effective Date"), by and between Possis Medical, Inc., a corporation organized
and existing under the laws of the State of Minnesota and located at 2905
Northwest Blvd., Minneapolis, Minnesota 55441-2644 ("PMI") and Baxter Healthcare
Corporation, a company organized under the laws of the State of Delaware, acting
through its Edwards CVS Division, with offices located at 17221 Red Hill Avenue,
Irvine, California 92714 ("Distributor" or "Baxter")
WITNESSETH
WHEREAS, PMI is engaged in the business of developing, manufacturing, and
marketing medical devices and desires that the sale and use of its products be
actively promoted worldwide; and
WHEREAS, PMI has developed a coronary bypass graft known as the Perma-Flow
Coronary Bypass Graft ("Perma-Flow Graft" or "Graft"), as further described in
Exhibit A hereto; and
WHEREAS, Baxter is a well-known company in the medical field, with
experience and expertise in the commercialization and distribution of medical
devices; and
WHEREAS, Baxter has an organization capable of commercializing medical
devices such as the Perma-Flow Graft; and
WHEREAS, PMI desires to engage Baxter to purchase, promote and resell the
Perma-Flow Graft worldwide, subject to specified restrictions; and
WHEREAS, Baxter desires to obtain rights to purchase, promote and resell
the Perma-Flow Graft in exchange for assumption of specified obligations,
including payment of cash consideration at the inception of this Agreement;
NOW, THEREFORE, in consideration of the mutual premises, obligations and
covenants contained herein, the parties agree as follows:
I. Appointment
A. Subject to the terms and conditions contained in this Agreement, PMI
hereby appoints Baxter as its exclusive independent distributor of the
Perma-Flow Graft worldwide. PMI shall not appoint any other agents,
representatives, or distributors for the purpose of selling the Perma-Flow
Graft, nor shall it sell or distribute the Perma-Flow Graft directly, by itself
or through any subsidiary or affiliate, except as provided herein.
B. Notwithstanding the appointment of Baxter as its exclusive worldwide
distributor of the Perma-Flow Graft, the parties agree that the right to
distribute the Perma-Flow Graft in Germany, Spain, Switzerland, Norway, Denmark,
Greece, Italy, the United Kingdom, France, The Netherlands, Luxembourg, Belgium,
Canada and Japan shall be granted within 90 days of execution of this Agreement.
<PAGE>
C. Notwithstanding the appointment of Baxter as its exclusive worldwide
distributor of the Perma-Flow Graft, PMI expressly reserves the right to sell
the Perma-Flow Graft directly to clinical study sites in the United States for
the purpose of supporting clinical studies necessary to obtain regulatory
approvals in the United States. In the event that Baxter elects not to sell a
Graft or Grafts to any clinical site outside of the United States for the
purpose of supporting clinical studies necessary for regulatory approvals in the
United States or in countries other than the United States, then such sale may
be made directly by PMI.
D. Baxter's exclusive distribution rights, as defined in this Agreement,
shall extend to improvements to the Perma-Flow Graft developed during the term
of this Agreement and to related products developed by PMI during the term of
this Agreement, as defined in Exhibit A hereto.
E. In addition to the distribution rights granted herein, Baxter shall
retain a right of first refusal on any transfer of PMI ownership of the
Perma-Flow Graft to a third party during the term of this Agreement and for six
(6) months following its termination pursuant to Section XII(C) herein.
II. Cash Consideration
A. As partial consideration for the rights granted in this Agreement,
Baxter agrees to pay clinical research grants to PMI as follows:
(i) $200,000.00 within five (5) business days of execution of this
Agreement.
(ii) $200,000.00 on the first anniversary of the execution of this
Agreement; and
(iii) $200,000.00 on the second anniversary of the execution of this
Agreement.
B. In the event that PMI terminates this Agreement pursuant to Section
XII(C) herein prior to the expiration of the initial three-year term of this
Agreement, PMI shall refund all clinical research grants paid by Baxter up to
the date of termination.
C. In the event that Baxter terminates this Agreement pursuant to Section
XII(C) herein prior to expiration of the initial three-year term of this
Agreement, PMI shall have no obligation to refund any clinical research grants
paid by Baxter and Baxter shall not be obligated to make any further payment to
PMI.
III. Obligations of Distributor
Baxter shall use commercially reasonable efforts to promote the sale and
use of the Perma-Flow Graft worldwide, and shall, among other requirements:
<PAGE>
A. Purchase the Perma-Flow Graft pursuant to the terms contained herein on
a timely basis and in such quantities as to maintain a high level of customer
service and support;
B. Advertise and promote the Perma-Flow Graft by such methods as in
Baxter's judgment are best suited for the sale of such a product, including
without limitation the advertisement and promotion in trade shows;
C. Use commercially reasonable efforts to provide its customers with
training and instruction on the proper use of the Perma-Flow Graft;
D. Respond to customer inquiries and complaints on a timely basis and
provide such assistance and information as are reasonably requested;
E. Return any defective products to PMI for credit or replacement, as
Baxter shall determine;
F. Meet with PMI on a quarterly basis in order to keep PMI informed of
pertinent events and competing products having an impact upon the Perma-Flow
Graft's marketability, including but not limited to, forecasts as to future
sales.
G. Inform PMI promptly upon discovery of any defect, customer problem,
claim or threatened claim regarding the use of the Perma-Flow Graft, and any
violation of the law involving the Perma-Flow Graft;
H. Maintain and provide PMI, on a quarterly basis, with such information as
is reasonably requested by PMI as necessary to track product use and location
and to comply with all applicable governmental regulations;
I. Maintain, at its own expense, such office space and facilities, and hire
and train such personnel, as may be required to carry out its obligations under
this Agreement;
J. At Baxter's option, Baxter may use PMI's current sales materials, or
develop promotional literature, including product brochures and other sales aids
for the Perma-Flow Graft, which shall be subject to prior written approval of
PMI as to the accuracy of the text;
K. Baxter has no authority to appoint any subagent, subdistributor or other
person to promote the sale of the Perma-Flow Graft or to otherwise perform any
of its obligations hereunder without full disclosure to and the consent of PMI,
said consent not to be unreasonably withheld, unless sales through distributors
or subdistributors is customary country practice and Baxter notifies PMI prior
to commencement of sales in that country, in which case consent of PMI shall not
be required;
L. Comply with all requirements in the countries in which the Perma-Flow
Graft is sold relating to the reporting of adverse reactions suffered by end
users of the Perma-Flow Graft, and will promptly report all such instances to
<PAGE>
PMI, specifying the date, time and nature of the occurrence, the customer's name
and address, the product sold (including batch number if available) and any
other relevant information which PMI may reasonably request.
IV. Obligations of PMI
In supplying Baxter with the Perma-Flow Graft, PMI shall:
A. Fulfill Baxter's reasonable purchase requests; provided, however, that
PMI shall not be liable in any way for failure to ship or for any delay in
shipment caused by events or circumstances beyond PMI's control;
B. Keep Baxter informed of new products and policies; and
C. Provide Baxter with product information and product use training as is
reasonably appropriate and mutually agreed to by the parties;
D. Provide finished products (labeled, packaged and sterilized); the
product labeling shall also include the statement, "Manufactured by Possis
Medical, Inc." and "Manufactured for Baxter Healthcare Corporation".
E. Issue a credit or refund to Baxter for, or replace at no charge to
Baxter, all defective or otherwise unmerchantable Grafts returned by Baxter, or
returned by the customers to Baxter and subsequently returned to PMI by Baxter,
within 30 days of return to PMI and provide Baxter with written reports of
evaluation of such Grafts, and bear responsibility for all costs associated with
such Grafts including any regular surface freight charge.
F. Comply with all applicable requirements in the countries in which the
Perma-Flow Graft is sold relating to the reporting of adverse reactions suffered
by end users of the Perma-Flow Graft, and will promptly report all such
instances to Baxter, specifying the date, time, and nature of the occurrence,
the customer's name and address, the Graft (including batch number if available)
and any other relevant information which Baxter may reasonably request.
G. Inspect all Grafts for compliance with Specifications in accordance with
PMI quality control standards and systems.
H. Replace any obsolete inventory resulting from changes made to Grafts by
PMI.
V. Registration of Products; Import and Export Restrictions
A. Baxter shall, at its own expense, pay for all import and export licenses
and permits, pay customs charges and duty fees, and take all other actions
required to accomplish the export and import of the products it purchases.
Baxter understands that PMI is subject to regulation by agencies of the United
States government, including the United States Department of Commerce, which
prohibit export or diversion of certain technical products to certain countries.
Baxter warrants that it will comply in all respects with the export and
re-export restrictions set forth in the export license for every product shipped
to Baxter under this Agreement.
<PAGE>
B. PMI shall retain all rights and obligations associated with governmental
and other regulatory approvals and shall use its best efforts to obtain required
approvals in any country in which PMI and Baxter determine a reasonable
commercial opportunity exists. PMI retains the right to work with clinical sites
outside of the United States for the purpose of conducting clinical trials to
support regulatory submissions, including providing Grafts free of charge for
the limited purpose of conducting clinical trials or completing other regulatory
requirements.
C. In the event of termination of this Agreement, Baxter shall cooperate
with PMI and do whatever is reasonably necessary to ensure that any required
transfer of registration is effectuated as between PMI and a replacement
distributor.
VI. Minimum Purchase Requirements
A. Baxter agrees to purchase annual minimum quantities of Perma-Flow Grafts
reviewed on a quarterly basis during the term of this Agreement as follows:
Year One: A total of 365 Grafts
Year Two: A total of 690 Grafts
Year Three: A total of 1320 Grafts
B. The parties understand that the Perma-Flow Graft is still early in
clinical trials. The parties agree, during the first ninety (90) days of this
Agreement, to establish quarterly minimum quantities such that a twelve (12)
month quarterly purchase forecast is in place at all times, consistent with the
annual minimum quantities provided above. The parties further agree to review
and revise if mutually agreed such minimum purchase quantities on a quarterly
basis.
C. All orders for Products submitted by Baxter shall be initiated by
written purchase orders sent to PMI and requesting a delivery date during the
term of this Agreement; provided, however, that an order may initially be placed
orally or by facsimile if a confirmational written purchase order is received by
PMI within five (5) days after said oral or facsimile order. No order beyond the
minimum purchase requirements imposed herein shall be binding upon PMI until
accepted by PMI in writing, and PMI shall have no liability with respect to
purchase orders that are not accepted. PMI shall use its reasonable best efforts
to notify Baxter of the acceptance or rejection of an order and of the assigned
delivery date for accepted orders within five (5) days after receipt of the
purchase order. No partial shipment of an order shall constitute the acceptance
of the entire order, absent the written acceptance of such entire order. PMI
shall use its reasonable best efforts to deliver products at the times specified
either in its quotation or in its written acceptance of purchase orders.
Baxter's purchase orders submitted to PMI from time to time with respect to
products to be purchased hereunder shall be governed by the terms of this
Agreement, and nothing contained in any such purchase order shall in any way
modify such terms of purchase or add any additional terms or conditions.
<PAGE>
VII. Prices
A. The purchase price to Baxter for each Perma-Flow Graft during the first
year of this Agreement shall be One Thousand Dollars ($1,000.00). Beginning with
Year Two of the Agreement, the purchase price shall be Sixty Percent (60%) of
the Average Sales Price of the Graft during Year One of the Agreement. Beginning
with Year Three of the Agreement, the purchase price shall be Sixty Percent
(60%) of the Average Sales Price of the Graft during Year Two of the Agreement.
Notwithstanding the above, in no event shall the purchase price be below Eight
Hundred Dollars ($800.00) per Graft.
B. All prices are F.O.B. PMI's Minnesota manufacturing facility and do not
include any foreign, federal, state or local sales, use, excise or value added
tax that may be applicable. When PMI has the legal obligation to collect such
taxes, the appropriate amount shall be added to Baxter's invoice and paid by
Baxter unless Baxter provides PMI with a valid tax exemption certificate
authorized by the appropriate taxing authority.
VIII. Payment Terms
Full payment (including any freight, taxes or other applicable costs
initially paid by PMI but to be borne by Baxter pursuant to the terms hereof)
shall be made by Baxter to PMI within sixty (60) days of the date of shipment.
Payment shall be in United States Dollars. Baxter shall pay all of PMI's costs
and expenses (including reasonable attorneys' fees) to enforce and preserve
PMI's rights under this Section VIII.
IX. Shipping Terms, Shipment Date
A. In all cases, title, risk of loss and all responsibility for
transportation, insurance and storage shall pass from PMI to Baxter upon
shipment from PMI's plant.
B. For purposes of this Agreement, "Shipment Date" shall mean the time, in
regard to any Perma-Flow Graft, when the Perma-Flow Graft is first shipped FOB
PMI's plant. Baxter shall specify a method of transportation and a carrier in
writing at the time Baxter submits the purchase order to PMI. If Baxter does not
so specify, PMI will determine the method of transportation and the carrier.
X. Guarantee
A. PMI guarantees that upon obtaining regulatory approval to market and
sell the Perma-Flow Graft in the United States, all Perma-Flow Grafts sold to
Baxter for sale in the United States as of the date of shipment or delivery are,
on such date, not adulterated or misbranded within the meaning of the United
States Federal Food, Drug and Cosmetics Act (the "Act") or amendments thereto,
and any similar federal, state or local laws or regulations, and not an article
which may not, under the provisions of the Act, be introduced into interstate
commerce.
<PAGE>
XI. Product Recalls
A. In the event that PMI recalls any Perma-Flow Graft for any reason, PMI
shall so notify Baxter in writing. Baxter shall, immediately upon receipt of
such notice, give notice of the recall to each customer to which it has sold,
along with the instructions, if any, delivered by PMI relating to the recall.
B. Baxter shall assist PMI in giving effect to the recall. PMI shall bear
all costs and expenses of a recall caused by its manufacturing, design,
packaging, labeling or other issues caused by acts of PMI that potentially
affect the safety, use or efficacy of the Perma-Flow Grafts including, without
limitation, obligations to third parties, costs of notifying customers and costs
associated with the shipment of recalled Perma-Flow Grafts from customers to
Baxter or PMI, and replacement of such products. Baxter shall, however, bear all
costs of any recall caused by its misrepresentations or other acts causing a
recall to occur.
C. In the event that Baxter desires to recall any Perma-Flow Graft for a
reason caused by acts or omissions of Baxter, Baxter shall notify PMI prior to
said recall and shall bear all costs associated with such recall.
XII. Term and Termination
A. This Agreement shall commence on the Effective Date and be valid for a
term of three years. At the end of the fixed term, this Agreement shall
terminate automatically without notice unless prior to that time the term of
this Agreement is extended by mutual written consent of the parties. The parties
expressly agree that it is not their intent that this Agreement shall be of
indefinite duration.
B. This Agreement may be terminated by either party immediately in the
event that: (i) the other party should become insolvent; (ii) the other party is
found guilty of any fraudulent act; or (iii) operation of local law invalidates
this Agreement.
C, This Agreement may be terminated by either party, for any reason, upon
ninety days notice.
D. This Agreement may be terminated by either party in the event the other
party fails to perform any of its obligations hereunder and fails to remedy such
nonperformance within thirty (30) days of receiving written notice of
nonperformance and demand for cure.
E. Upon any termination of this Agreement, Baxter shall immediately cease
using the name, trademark, service mark, logo or any other reference of or to
PMI and shall, at its expense, surrender and deliver to PMI within thirty (30)
days, all documents, papers and records which contain confidential information
of PMI and all undistributed samples, instruments, equipment, pamphlets,
catalogs, booklets, technical information, advertising, demonstration equipment,
consigned inventory, selling data and other papers relating to the business of
PMI (collectively, the "Sales Materials").
<PAGE>
F. Upon termination of this Agreement by PMI prior to expiration of its
three year term, other than pursuant to Section XII(B) or (D) herein, PMI shall
accept the return of Baxter's inventory of Perma-Flow Grafts and refund the
price Baxter paid, subject to the following conditions;
1. The returned products must be new and packaged in their original,
unopened, unmarked, and unbroken sterile containers;
2. The returned products must pass inspection by PMI's Quality Department;
3. Baxter must have complied with all obligations under this Agreement; and
G. Upon termination of this Agreement by Baxter, PMI shall have no
obligation to accept return of Perma-Flow Grafts purchased or ordered by Baxter,
provided, however, that Baxter shall have the right to sell its remaining
inventory to customers until depleted.
H. The parties agree to enter into good faith negotiations to consider an
extension or modification of this Agreement. Such negotiations shall be
initiated no later than six (6) months prior to expiration of the initial three
year term provided herein.
XIII. Warranties and Indemnification
A. PMI warrants that it possesses good and marketable title to Perma-Flow
Grafts sold to Baxter under this Agreement.
B. PMI hereby indemnifies and agrees to defend and to hold harmless Baxter,
its officers, directors, shareholders, employees, parents, successors,
affiliates, assigns, customers and users of the Perma-Flow Graft from and
against any and all claims, demands, actions, causes of action, liabilities,
losses, damages and expenses, including reasonable attorney fees, arising out of
or in connection with the design, manufacture, sale or use of the Perma-Flow
Graft, or any negligent act or omission of PMI; except to the extent of harm
resulting from the mishandling of the Perma-Flow Graft by Baxter, any
misrepresentation by Baxter concerning any of the characteristics of the
Perma-Flow Graft, or the proper manner of usage or the performance of the
Perma-Flow Graft, or any negligent act or omission of Baxter.
C. Baxter hereby indemnifies and agrees to defend and to hold PMI, its
successors, affiliates, assigns, customers and users of the Perma-Flow Graft
harmless from and against all claims, liabilities, losses or expenses, including
reasonable attorney fees, to the extent of harm resulting from mishandling of
the Perma-Flow Graft by Baxter, any misrepresentation by Baxter concerning any
of the characteristics of the Perma-Flow Graft, or the proper manner of usage or
the performance of the Perma-Flow Graft, or any negligent act or omission of
Baxter.
D. PMI shall defend, indemnify and hold Baxter, its officers, directors,
shareholders, employees, parents, successors, affiliates, assigns, customers and
users of the Perma-Flow Graft harmless from and against all loss, damage, cost
<PAGE>
or expense arising out of any claims, demands, actions, causes of action,
liabilities, losses, damages and expenses, including reasonable attorney fees,
arising out of or in connection with any claim of infringement of patents,
trademarks, tradenames, or copyrights, any claim of misappropriation or misuse
of trade secrets or information or any similar claim, by reason of the sale or
use of the Perma-Flow Graft, other than any such claim, loss, damage, or expense
relating to words, symbols, or other material placed on or supplied with the
Perm-Flow Graft by or at the request of Baxter. Baxter shall promptly notify PMI
of any such claim and may either tender its defense of such claim to PMI or may
retain its own counsel without waiving any of its right to indemnification
hereunder.
XIV. Property Rights and Confidentiality
A. Baxter agrees that PMI owns all right, title, and interest in the
Perma-Flow Graft and in all of PMI's patents, trademarks, service marks, trade
names, inventions, copyrights, know-how, and trade secrets relating to the
design, manufacture, operation or service of the Perma-Flow Graft. The use by
Baxter of any of these property rights is authorized only for the purposes
herein set forth, and upon termination of this Agreement for any reason such
authorization shall cease.
B. PMI agrees that (i) Baxter is the owner of the trademarks and trade
names connoting Baxter, Edwards and Edwards CVS; (ii) Baxter may use any of such
trademarks and trade names in the promotion and sale of the Products, and (iii)
PMI has no right, title or interest in such trademarks and trade names. Should
any such use vest in PMI any rights in a trademark, trade name or logo used by
Baxter, PMI shall transfer such rights to Baxter or its designee upon request of
Baxter.
C. The Perma-Flow Graft is offered for sale and sold by PMI subject in
every case to the condition that such sale does not convey any license,
expressly or by implication, to manufacture, duplicate or otherwise copy or
reproduce any product. Baxter shall take such appropriate steps with its
customers as PMI may request to inform them of these restrictions.
D. In order to avoid disclosure of confidential and proprietary information
("Information") to any other person, firm or corporation, the parties agree that
during the term of this Agreement and for a period of five (5) years from the
expiration or termination of this Agreement, each will treat any such
information which is received from one another in writing and clearly market
"Confidential" or if disclosed orally, which is confirmed in writing as
"Confidential" within thirty (30) days of initial disclosure, with the same
degree of care that each employs with respect to its own information which it
does not desire to have published or disseminated. It is understood that each
party shall be liable for any unauthorized disclosure should it fail to
safeguard the disclosed information with such care. This obligation shall
survive the termination of this Agreement. The parties shall not have any
obligation with respect to such information which is:
1. independently developed by the receiving party without the benefit of
the disclosure or is already known to the receiving party at the time of the
disclosure, as evidenced by written documentation;
<PAGE>
2. publicly known or becomes publicly known without the wrongful act or
breach of this Agreement by the receiving party; or
3. rightfully received by the receiving party from a third-party who is not
under any obligation of confidentiality or trade secret obligation to the
originating party.
XV. Trademarks, Service Marks and Trade Names
A. During the term of this Agreement, Baxter will have the right to
indicate to the public that it is an authorized distributor of the Perma-Flow
Graft and to advertise under the trademarks, service marks and trade names that
PMI may adopt from time to time (the "PMI Trademarks"). Except as set forth in
this Section XV, nothing contained in this Agreement shall grant Baxter any
right, title or interest in any PMI Trademark.
B. All Perma-Flow Grafts sold by PMI to Baxter will bear one or more PMI
Trademark and shall bear PMI's labeling. In connection with sales to Baxter's
customers, Baxter may indicate that the Perma-Flow Graft is being distributed by
Baxter as an authorized distributor but shall not alter, remove, or modify any
PMI Trademark, nor affix any other trademark, to any of the products or their
packaging without the prior written consent of PMI.
C. All representations of every PMI Trademark that Baxter intends to use
shall first be submitted to PMI for approval of design, color and other details
or shall be exact copies of those representations previously approved by PMI
hereunder. If any PMI Trademark is to be used in conjunction with another
trademark on or in relation to the Perma-Flow Graft, the PMI Trademark shall be
presented equally legibly, equally prominently and of greater size than the
other, but shall nevertheless be separated from the other trademark so that each
appears to be a mark in its own right, distinct from the other mark. Baxter's
use of any PMI Trademark shall be conditioned upon the use clearly indicating
PMI's ownership of the mark.
D. Baxter shall immediately notify PMI in writing of any infringement,
unauthorized use or challenge to the validity of any PMI Trademark that comes to
its attention. Baxter shall, at PMI's request, provide PMI with all reasonable
assistance in initiating and prosecuting any legal action against any infringer
of any PMI Trademark; provided, however, that all costs incurred in connection
with any such trademark infringement action shall be borne by PMI.
E. Baxter shall obtain PMI's prior written approval for all uses in any
publication, including any advertising mailer, literature, promotional item or
other such material originated by Baxter, its employees, agents, representatives
or associates, which such materials use PMI's name or a PMI Trademark, unless
such use has been previously approved by PMI in exactly the form proposed for
use again.
<PAGE>
XVI. Patent Infringement
PMI warrants that the Perma-Flow Graft Products does not violate or
infringe upon any validly issued United States Patent or associated right. PMI
disclaims all warranties, express or implied, regarding all other intellectual
property rights of PMI and third parties related to the Products, except that,
as of the date of this Agreement, PMI has no knowledge of any right which would
be materially affected by the use of the Perma-Flow Graft.
XVII. Independent Contractors
The relationship of Baxter and PMI established by this Agreement is of
independent contractors and not agents, and nothing in this Agreement shall be
construed:
A. To give either party the power to direct or control the daily activities
of the other party beyond the obligations imposed on Baxter by this Agreement;
B. To constitute the parties as partners, joint ventures, co-owners or
otherwise as participants in joint undertaking; or
C. To allow either party to create or assume any obligation on behalf of
the other party for any purpose whatsoever. The purchase, promotion, and resale
of, or any other legal transactions concerning the Perma-Flow Graft hereunder
shall be carried out in the name of and for the account of Baxter as principal,
and Baxter shall not enter into any agreement with third persons binding in any
way on PMI.
XVIII. No Conflict with Other Contracts
Each party represents and warrants to the other party that it is not
subject to any contractual obligation or restraint which will interfere with its
right and ability to perform pursuant to the terms of this Agreement.
XIX. Compliance with Laws Each party represents and agrees that it is and
will remain in compliance with all applicable federal, state and local laws,
regulations and orders, including laws of the countries in which Baxter sells
products.
XX. Assignments
PMI and Baxter may freely assign this Agreement, subject to reasonable
notice to the other party.
<PAGE>
XXI. Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the
laws of the State of Minnesota. The Federal and State courts within the State of
Minnesota shall have xclusive jurisdiction to adjudicate any dispute arising out
of this Agreement. Baxter hereby expressly consents to the personal jurisdiction
of the Federal and State courts within the State of Minnesota and to service of
process being effective upon it by registered mail sent to the address set forth
at the beginning of this Agreement.
XXII. Legal Expenses
The prevailing party in any legal action brought by one party against the
other party and arising out of this Agreement shall be entitled, in addition to
any other rights and remedies it may have, to reimbursement for its expenses,
including court costs and reasonable attorney's fees.
XXIII. Entire Agreement; Orders
This Agreement, including the Exhibits hereto, sets forth the entire
agreement and understanding of the parties relating to the subject matter herein
and supersedes all prior discussions between them. The acceptance by PMI of any
order from Baxter is made expressly conditioned upon Baxter's assent to, and PMI
agrees to sell the Perma-Flow Graft only on, the terms and conditions contained
herein. Every term and condition of Baxter's order in addition to, or not
identical with, the terms and conditions contained herein is hereby rejected and
shall not be binding on PMI. The terms and conditions contained herein shall be
applicable to all sales by PMI, whether or not any purchase or sale form is
executed for the particular sale.
XXIV. Severability
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement should be prohibited or invalid, in whole or in part
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
XXV. Notices
All notices required or permitted hereunder shall be deemed sufficient if
given in writing and sent by appropriate overnight or second-day courier with
return receipt requested or delivered by hand to the party to whom such notice
is required or permitted to be given. Any such notice shall be considered given
when received or forty-eight (48) hours after deposit with such courier,
whichever is earlier. All notices shall be addressed to party's President at the
address set forth for each party on the first page of this Agreement. Either
party may change the address to which notice to it is to be given by written
notice to the other party.
<PAGE>
XXVI. Amendments and Waivers
No modification of, or amendment to this Agreement nor any waiver of any
rights under this Agreement shall be effective unless in writing and signed by
the party to be charged. Failure by either party at any time to require the
other party's performance of any obligation under this Agreement shall not
affect the right subsequently to require performance of that obligation. Any
waiver of any breach of any provision of this Agreement shall not be construed
as a waiver of any continuing or succeeding breach of such provision or a waiver
or modification of the provision.
XXVII.Subject Headings
The subject headings of the Sections of this Agreement are included for the
purpose of convenience only and shall not affect the construction or
interpretation of any of its provisions.
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the
date first written above, and this Agreement shall only become effective when it
is accepted and executed by PMI at its offices in Minneapolis, Minnesota.
BAXTER HEALTHCARE CORPORATION POSSIS MEDICAL, INC.
By: /s/ Anita B. Bessler By: /s/ Robert G. Dutcher
Title: President Title: President and CEO
Dated: March 14, 1996 Dated: March 12, 1996
<PAGE>
EXHIBIT "A" TO DISTRIBUTION AGREEMENT
Description of Possis Perma-Flow Coronary Bypass Graft
The Possis Perma-Flow Coronary Bypass Graft, for purposes of the
Distribution Agreement between Possis Medical, Inc. and Baxter Healthcare
Corporation of which this Exhibit "A" is a part, shall mean:
1. A vascular graft designed to bypass occluded coronary arteries that is
60cm in length, has a 5mm internal diameter, incorporates an arteriovenous shunt
downstream from the coronary anastomosis and a molded silicone venturi-shaped
constriction, and is made primarily of e PTFE vascular graft material; and
2. Any vascular graft designed by PMI and developed during the term of said
Distribution Agreement that accomplishes the same or similar functions as the
first graft sold to Baxter under said Distribution Agreement and/or is covered
by any patent that covers the first graft sold to Baxter under said Distribution
Agreement.
NEWS RELEASE
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT
Baxter Healthcare Corporation
Mary Thomas,
Media Relations
(847) 948-2815
Jessica Fisher
Investor Relations
(847) 948-4639
Possis Medical, Inc.
Robert G. Dutcher
President and CEO
(612) 550-1010
BAXTER AND POSSIS ENTER INTO ALLIANCE FOR DISTRIBUTION
OF POSSIS SYNTHETIC CORONARY ARTERY BYPASS GRAFT
DEERFIELD, IL and MINNEAPOLIS, MN (March 20, 1996) -- Baxter Healthcare
Corporation and Possis Medical, Inc. (Nasdaq-NNM: POSS) announced today that
they have entered into an exclusive alliance under which Baxter will distribute
worldwide a synthetic graft, which is manufactured by Possis, that is designed
to replace the use of a patient's own vessels in coronary bypass surgery. Baxter
will provide Possis with an initial cash payment and additional cash payments
over the next three years to partially fund ongoing clinical trials.
"There is a significant unmet clinical need for a synthetic coronary artery
graft in the treatment of late-stage cardiovascular disease," said Mike
Mussallem, group vice president of Baxter's cardiovascular business. "More than
500,000 coronary bypass surgeries are performed worldwide each year. Most of
these surgeries involve the replacement of multiple vessels. Unfortunately,
patients who require repeat surgery often lack sufficient native vessels. We
expect the Possis graft, which is called the Perma-Flow Coronary Bypass Graft,
to be particularly useful for these patients and for emergency bypass surgery,"
Mussallem added.
Mussallem said that many synthetic grafts have been developed in the past
with little success. The Perma-Flow Graft, however, incorporates a patented
design that allows blood to flow through the graft more quickly and is believed
to prevent the formation of blood clots and other blockages. Possis noted that
there have been no reports of device-related complications associated with any
of the nearly 100 clinical implants worldwide to date. The Perma-Flow Graft
currently is the only synthetic coronary artery graft in clinical trials in the
<PAGE>
United States, being conducted under an investigation device exemption approved
by the U.S. Food and Drug Administration.
"We believe that the clinical utility and safety of the Perma-Flow Graft
will be clearly demonstrated in the current U.S. study and through its use in
Europe," said Robert Dutcher, president and chief executive officer of Possis
Medical. "Our alliance with Baxter, a recognized leader in the treatment of
late-stage cardiovascular disease, will provide Possis with immediate worldwide
access to an experienced cardiovascular surgery sales and marketing
organization. We also expect to benefit from Baxter's reputation for quality and
clinical excellence in the implantable field," Dutcher added.
Strong interest for the product was generated by Dr. Robert W. Emery of the
Minneapolis Heart Institute when he presented positive North American clinical
findings at the Society of Thoracic Surgeons meeting in January. According to
Dr. Emery, principal investigator and the first surgeon to implant the product,
"The Perma-Flow Graft will be a valuable addition to cardiovascular surgeons as
a tool for maximizing the benefits of coronary bypass surgery."
Both companies noted that use of the Perma-Flow Graft could play an
important role in the development of less invasive coronary artery bypass
surgical procedures. This could allow an off-the-shelf graft for use in these
procedures, and could even further minimize the costly and painful invasive
surgery currently required to remove veins from the patient.
Possis Medical, Inc. develops, manufactures and markets innovative medical
products that assist surgeons and interventionalists in treating cardiovascular
or vascular disease or conditions requiring vascular intervention.
Baxter's CardioVascular Group, based in Irvine, California, develops,
manufactures and markets a complete line of products used in the treatment of
late-stage cardiovascular disease. Baxter Healthcare Corporation is the
principal domestic operating subsidiary of Baxter International Inc. Through its
subsidiaries, Baxter is the leading manufacturer and marketer of health-care
products and services to health-care providers worldwide. The company
concentrates research and development programs in biotechnology, cardiovascular
medicine, renal therapy and related medical fields.
###
