Confidential Materials omitted and
filed separately with the
Securities and Exchange Commission. Asterisk denote
omissions.
EXTRACORPOREAL DISPOSABLES
DISTRIBUTION AGREEMENT
This
Agreement, dated as of June 15, 2009 (the “Effective
Date”), is between Medisystems Corporation, a Washington
corporation with offices at 439 South Union Street, 5
th Floor, Lawrence, Massachusetts 10843 (together
with its affiliates, “MDS”) and Gambro Renal Products,
Inc., a Colorado corporation with offices at 14143 Denver West
Parkway, Lakewood, Colorado 80401 (together with its affiliates,
“Gambro”). MDS and Gambro shall each be referred to
herein as a “ Party ” and collectively as the
“ Parties ”.
In
consideration of the mutual promises made herein and other good and
valuable consideration, the receipt of which is hereby
acknowledged, the Parties hereto agree as follows:
1.1
The following are examples of certain disposable medical devices
useful in dialysis therapies (collectively, the
“Products”):
Non-cartridge
blood tubing sets designed for use with Fresenius dialysis monitors
(“BTL”).
MDS
designs and supplies certain Products under Specifications (as
hereinafter defined) including MDS labeling which MDS controls and
currently has produced by subsidiaries or contract manufacturers as
set forth in Exhibit B (“MDS Products”). Gambro
wishes to purchase certain MDS Products for resale to DaVita (as
defined below) and certain of its other dialysis customers in
certain countries of the world as listed in Exhibit A (the
“Territory”).
2.1
The term (including any extensions, the “Term”) of this
Agreement shall be for a five (5) year period beginning on the
Effective Date of this Agreement. The Agreement shall terminate at
the end of the Term, unless the Parties agree on provisions for an
extension of the Term not less than six (6) months prior to
the date on which this Agreement would otherwise
terminate.
3.1
The MDS Products that Gambro wishes to purchase pursuant to this
Agreement are listed in Exhibit B as “MDS BTL”, as
such Exhibit B may be amended from time to time by mutual
agreement of the Parties. The codes of the MDS Products that are
the subject of this Agreement are hereafter referred to as
“Codes”. The Codes shall meet specifications as set
forth in Exhibit C, or as such specifications, including
labeling, may be modified from time to time pursuant to
Sections 9.1, 9.2 and 9.3 (the “Specifications”),
provided that such modifications are agreed upon in amendments to
Exhibit C signed pursuant to Section 18.2
hereof.
3.2
MDS reserves the right, at its sole discretion, to incorporate
clinical use enhancements or developments in existing Codes of the
MDS Products or to supply existing Codes from alternate
manufacturing sites or manufacturers even if MDS designates them
with a different Code suffix, provided that (i) no price
increase is requested by MDS, (ii) the change does not alter
the Specifications (other than the Code suffix), and (iii) the
change does not, in MDS’ reasonable opinion, materially
change the manufacturing process for the Codes or materially change
the Codes. If any of the preceding clauses are not satisfied,
Gambro shall not be required to accept such change, unless, in the
reasonable opinion of Gambro, the change does not adversely affect
the Code’s conformance to the Code’s material
performance characteristics.
4.1
Subject to the terms and conditions of this Agreement, MDS shall
sell the Codes listed in Exhibit B to Gambro and Gambro shall
purchase the Codes listed in Exhibit B for use or resale by
Gambro only in the Territory.
4.2
“Contract Year” shall mean for the first Contract Year,
that period of time commencing on the Effective Date of this
Agreement and ending on December 31, 2009. Thereafter, each
Contract Year shall be from January 1 through December 31 of
each calendar year during the Term of this Agreement, except that
the last Contract Year
1
shall end on
the termination or expiration date, if different than
December 31.
4.3
During the Exclusive Period (as defined below), Gambro hereby
agrees to sell, directly or indirectly (including without
limitation to include sales through agents, representatives or
distributors) to DaVita Inc., DaVita affiliated entities, DaVita
dialysis clinics, DaVita management contract clinics, and clinics
or entities jointly owned by DaVita or DaVita affiliates
(collectively, “DaVita”) BTL sourced only and
exclusively from among MDS BTL listed in Exhibit B (the
“Exclusive Products”). During the Exclusive Period, MDS
hereby agrees not to sell, directly or indirectly (including
without limitation to include sales through agents, representatives
or distributors) MDS BTL to DaVita; provided, however, that this
obligation shall expire prior to the expiration of the Term or
earlier termination of this Agreement in the event DaVita
(i) ceases to have any material contractual ongoing purchase
obligations with respect to BTL to Gambro which can be satisfied
through the purchase of MDS BTL from Gambro, or (ii) ceases to
purchase at least [**] percent ([**]%) of its BTL requirements
(such requirements including, without limitation, all of
DaVita’s purchase, use, and/or inventory requirements for BTL
(hereinafter, “BTL Requirements”)) from Gambro in the
form of MDS BTL (as measured by Calendar Quarter, or at the
reasonable request of MDS, on a rolling [**] month basis),it being
understood that Gambro shall not be deemed to be in breach of this
requirement, and MDS shall not have the right to immediately
terminate this Agreement, if such failure to satisfy such
requirement is due to (i) DaVita’s purchases of MDS BTL
from MDS, Henry Schein or other third party MDS customers,
(ii) MDS’ failure to deliver conforming MDS BTL pursuant
to accepted Gambro Delivery Orders, or (iii) a material
increase in the percentage of DaVita joint venture or managed
clinics, to the extent such clinics are not obligated to purchase
at least [**]% of their BTL requirements from Gambro under any
agreement with DaVita; provided that during the Term Gambro shall
not enter into any agreement or amendment with DaVita which imposes
a lower purchase requirement for DaVita with respect to BTL to be
purchased from Gambro in aggregate or with respect to any type of
DaVita dialysis clinic or facility, or which would impair in any
way DaVita’s obligation to buy MDS BTL from Gambro hereunder.
Notwithstanding the foregoing, Gambro shall be deemed to be in
breach of this requirement, and MDS shall have the right to
immediately terminate this Agreement, if in any [**] consecutive
Calendar Quarters (or at the reasonable request of MDS, [**]
consecutive rolling [**] month periods) during the Exclusive Period
DaVita purchases less than [**] percent ([**]%) of its BTL
Requirements from Gambro in the form of MDS BTL, except if such
failure occurs due to DaVita’s purchases of MDS BTL from MDS,
Henry Schein or other third party MDS customers, or due to MDS
failure to deliver conforming MDS BTL pursuant to accepted Gambro
Delivery Orders. Gambro agrees that during the Exclusive Period,
MDS shall not be deemed to be in breach of its exclusivity
obligations under this Section 4.3 with respect to MDS BTL
sold to DaVita, and that Gambro shall not have the right to
immediately terminate this Agreement, if (X) sales to DaVita
of MDS BTL made by third party customers of MDS do not in any given
month exceed [**] percent ([**]%) of DaVita’s BTL
Requirements (such sales to be counted as sales by Gambro for
purposes of determining compliance with the [**]% requirement set
forth herein), (Y) MDS agrees to use commercially reasonable
efforts to stop such third party sales promptly upon receiving
notice thereof from Gambro, and (Z) MDS agrees to use
commercially reasonable efforts to ensure that, from and after the
start of the Exclusive Period, MDS’ agreements with third
party customers (including distributors) prohibit sales of MDS BTL
to DaVita. If such sales exceed [**] percent ([**]%) of
DaVita’s BTL Requirements for [**] consecutive months
following the delivery of written notice thereof to MDS, Gambro
shall have the right to terminate this Agreement upon thirty
(30) days notice. For purposes hereof, the “Exclusive
Period” shall mean the period of time commencing on [**] and
continuing through the expiration of the Term, except as provided
herein (it being understood that MDS shall use commercially
reasonable efforts to have the Exclusive Period commence prior to
[**]). In the event [**], Gambro agrees that the Exclusive Period
shall not commence until MDS is [**], it being understood that MDS
shall endeavor in good faith to ensure that the Excusive Period can
commence on [**], and further that in any event that the Exclusive
Period shall start on or before [**]. Gambro further agrees that
the Exclusive Period shall not commence until Gambro has confirmed
to MDS that (i) Gambro has sufficient warehouse space and
inventory of MDS BTL (consistent with the initial Delivery Orders
set forth Section 4.5 below) to support its obligations
hereunder and (ii) DaVita shall purchase MDS BTL from Gambro
pursuant hereto (provided that in any event Gambro warrants that
DaVita shall commence purchasing at least [**] percent ([**]%) of
its BTL Requirements from Gambro in the form of MDS BTL on or
before [**], it being understood that Gambro shall not be deemed to
be in breach of this requirement and that MDS shall not have the
right to immediately terminate this Agreement if the reason for
DaVita’s failure to purchase [**]% of its BTL requirements
from Gambro in the form of MDS BTL is due to
(i) DaVita’s purchases of MDS BTL from MDS, Henry Schein
or other third party MDS customers, or (ii) MDS failure to
deliver conforming MDS BTL pursuant to accepted Gambro Delivery
Orders). MDS agrees that Gambro may commence non-exclusive sales of
MDS BTL to DaVita as soon as practical after receipt of the MDS BTL
deliveries
2
set forth in
Section 4.5. Gambro understands and agrees that Henry Schein
may continue to sell to DaVita during the Exclusive Period any
inventories it may have of MDS BTL supplied by MDS prior to the
start of the Exclusive Period pursuant to Henry Schein’s
contract with DaVita; provided that MDS agrees that it will not
accept purchase orders for MDS BTL from Henry Schein for sale to
DaVita after [**]. Gambro and MDS shall endeavor in good faith to
agree on the most suitable transition to the Exclusive Period,
including but not limited to providing Gambro the option, subject
to Henry Schein’s consent, to purchase any inventory in Henry
Schein’s possession as of [**]. Gambro represents that DaVita
is obligated, during the Term of this Agreement, to purchase at
least [**] percent ([**]%) of its BTL requirements from Gambro, and
that Gambro may satisfy this requirement through the sale to DaVita
of the MDS BTL to be sold hereunder. Gambro further represents that
it shall use all commercially reasonable efforts to ensure that
DaVita satisfies this obligation.
4.4
This Agreement does not confer any additional distribution rights
to Gambro. The Parties agree to evaluate, in good faith, any
opportunity to expand or modify the Territory as such opportunities
materialize, provided (i) that any exclusivity agreed by the
Parties shall be deemed irreversible for the remaining term of the
Agreement, except as otherwise provided herein (including, without
limitation, as provided in Section 4.3 hereof), and
(ii) that both MDS and Gambro will have the right to suggest
such expansion or modification. The Parties further agree to
undertake such evaluation in a manner which is not unreasonably
conditioned or delayed.
4.5
On or before the [**] day of each month (or if the [**] falls on a
non-business day, the day immediately thereafter which is a
business day) during the Term of this Agreement (the “Order
Date”), Gambro will provide MDS with one or more
non-cancellable delivery order(s) (a “Delivery Order”
or “Delivery Orders”) for the MDS Products. All
Delivery Orders provided on or before the [**] day of a month (or
the next succeeding business day) shall be deemed to have the same
Order Date; any Delivery Order provided to MDS after the [**] day
of the month (or the next succeeding business day) shall be deemed
to have an Order Date on the [**] day of the subsequent month (or
the next succeeding business day of that subsequent month). The
requested delivery date (“Due Date”) provided by Gambro
on each Delivery Order having the same Order Date shall be not
earlier than [**] days after such Order Date. Unless MDS has
otherwise notified Gambro within [**] business days of receipt from
Gambro, MDS shall be deemed to have accepted the Delivery Order,
including Due Date. Each Gambro Delivery Order for delivery to each
DDP Location (as hereinafter defined) shall conform to the per Code
or per MDS Product quantity minimums and multiples stated in
Exhibit B. Notwithstanding the foregoing, within [**] business
days of the Effective Date, Gambro shall place Delivery Orders for
[**] MDS BTL for delivery in [**], and [**] MDS BTL for delivery in
[**] (such Delivery Orders collectively hereinafter referred to as
the “Initial Orders”), provided that, in selling these
volumes, Gambro will not be bound by the exclusivity obligations
set forth in Section 4.3 above until the commencement of the
Exclusive Period. MDS agrees that Gambro shall have no obligation
to place Delivery Orders, other than Initial Orders, pursuant to
this Section 4.5 until the commencement of the Exclusive
Period. MDS agrees that the MDS BTL shipped to Gambro under the
Initial Orders shall have at least [**] months remaining shelf life
at the time of delivery to Gambro. MDS shall promptly notify Gambro
in the event it anticipates any delay to the start of the Exclusive
Period beyond [**] due to anticipated ongoing sales of MDS BTL from
Henry Schein to DaVita, and shall discuss in good faith with Gambro
alternatives for reducing Gambro’s carrying costs associated
with the Initial Orders, including, without limitation, delayed
payment terms on the Initial Orders or delayed delivery schedules
on such orders.
4.6
Any Delivery Orders with a common Due Date and DDP Location that
cumulatively comprise less than the number of pallets required to
comprise full container loads or truck loads as indicated in
Exhibit B, shall be subject to freight cost premiums as quoted
to Gambro by MDS at the time the Delivery Order is
accepted.
4.7
During the period commencing [**] months after the commencement of
the Exclusivity Period through the expiration of the Term, and
except as set forth in Section 4.8 below, MDS shall not be
required to accept any Gambro Delivery Orders with a common Order
Date to the extent that the aggregate quantity of Codes in any Code
Group (as defined in Exhibit B) so ordered exceeds [**]
percent ([**]%) of the average monthly quantity ordered of that
Code Group during the immediately preceding [**] months, provided
that MDS will make commercially reasonable efforts to accept such
excess. If accepted, such excess quantities shall, at MDS’
option, be deemed to have an Order Date on the [**] day of the next
subsequent calendar month and shall remain subject to the
provisions of this Section. In such event, however, such excess
amount shall count towards the [**]% limit applicable to such
following Order Date; provided that MDS will make commercially
reasonable efforts to supply such excess. If MDS reallocates any
Gambro Delivery Orders pursuant to this Section 4.7, it shall
consult with Gambro to
3
determine which
orders shall be reallocated to a future Order Date. During the
period commencing on the start date of the Exclusivity Period
through [**] months after the commencement of the Exclusivity
Period, Gambro Delivery Orders with a common Order Date must be for
a minimum of [**] units (it being understood that MDS shall
consider in good faith Gambro Delivery Orders below this unit level
during this [**] month period where such lower unit levels are due
to DaVita’s inventory levels of MDS BTL purchased from Henry
Schein or DaVita’s ongoing purchases of MDS BTL directly from
MDS, out of Henry Schein inventories or out of the inventories of
other third party MDS customers) and no more than [**] units.
During the period commencing on the Effective Date through the
start of the Exclusive Period, MDS shall not be required to accept
any Gambro Delivery Orders other than the Initial Orders; provided
that MDS will make commercially reasonable efforts to accept orders
in excess of the Initial Orders.
4.8
Notwithstanding the foregoing, during the final [**] months of this
Agreement as determined in accordance with Section 2.1 hereof,
MDS have no obligation to accept Gambro Delivery Orders to the
extent that the aggregate quantity of Codes in any Code Group so
ordered for delivery in such final [**] month period exceeds the
aggregate quantities ordered by Gambro during the immediately
preceding [**] months.
4.9
By the [**] business day of each month during the Term of this
Agreement, Gambro shall provide MDS with a non-binding forecast of
the quantity of each Code Gambro estimates it shall place orders
for during the following [**] months. These forecast figures will
be e-mailed to the General Manager, Medisystems.
4.10
By the [**] business day of each [**], Gambro shall provide its
ending inventory by Code and warehouse and aggregate end user sales
information by Code and warehouse for DaVita as well as for all
other customers in aggregate, in each case from the previous [**]
to MDS.
5.0 SHIPMENT OF
MDS PRODUCTS
5.1
MDS will ship the MDS Products, [**] to Gambro’s warehouses
in [**] (the “DDP Locations”) at the prices listed in
Exhibit D. Title for MDS Products shall pass to Gambro upon
delivery at the DDP Locations. MDS and Gambro may agree to add new
DDP Locations in the Territory at any time provided the incremental
cost for delivery to such DDP Locations shall be added to the
delivery price by amendment to Exhibit D, signed pursuant to
Section 18.2 hereof.
5.2
MDS shall prepare and send by facsimile transmission or via e-mail
to Gambro a packing list for each shipment of MDS Products. This
shipping information will include Gambro’s specific purchase
order number, item shipping quantities, and item back order
information. When MDS has the necessary systems and procedures in
place, the packing slip will also accompany the shipment to avoid
loss of missing faxes and to reduce the chance of mismatching the
paper to the shipment.
5.3
MDS shall notify Gambro as soon as MDS becomes aware that any
shipment may not be delivered on or within the period prior to the
Due Date and ending [**] days after the Due Date applicable to a
Delivery Order, such period being hereinafter referred to as the
“Delivery Window”. Except as set forth in
Section 8.1, if MDS is delinquent with Delivery Orders
properly placed by Gambro and accepted by MDS in accordance with
the terms of this Agreement, and as a result, to the degree that
Gambro has insufficient MDS Products to ship to its customer in its
customary manner and at customary prices, MDS will be responsible
for incremental freight costs including all priority and cross
shipping charges associated with MDS delayed order fulfillment
provided that the proper documentation of such incremental charges
is produced, with prior written authorization by MDS, of which such
authorization shall not be unreasonably conditioned, withheld or
delayed.
5.4
Gambro shall notify MDS in writing of any claim relating to:
(i) any MDS Product that is damaged or does not conform to the
MDS Product Specifications at the time title to such MDS Product is
transferred to Gambro, or any MDS Product packaging that is damaged
at the time title to such MDS Product is transferred to Gambro,
within [**] days of Gambro’s receipt of such shipment; or
(ii) any shortage in quantity of any shipment of MDS Product,
within [**] days of Gambro’s receipt of such shipment. In the
event of rejection of such non-conforming or damaged MDS Product,
any such damaged MDS Product packaging, or shortage, MDS, unless it
reasonably
4
disputes
Gambro’s claim, shall, subject to Section 5.5 below,
replace the MDS Product or make up the shortage within [**] days of
receiving such notice, provided that MDS has sufficient conforming
MDS Products in its inventory to do so, at no additional cost to
Gambro, and shall make arrangements with Gambro for the return or
destruction of any rejected MDS Product, such return shipping
charges or costs of destruction to be paid by MDS. If sufficient
conforming MDS Products are not available, MDS shall use
commercially reasonable efforts to replace the nonconforming MDS
Products with conforming MDS Products at no additional cost to
Gambro as soon as possible, but in no event shall the replacement
time exceed [**] days. In addition to the foregoing, in order to
minimize the possibility of any inventory shortages resulting from
the unavailability of sufficient conforming MDS Product, MDS agrees
that it will deliver conforming MDS Product as it becomes available
and will not wait until full replacement quantities are available.
The provisions of this Section 5.4 apply only to claims
relating to MDS Products that have not yet been shipped to
customers. Returns of MDS Products that have been shipped to
customers are governed by the provisions set forth in
Section 11.3.
5.5
In the event of a conflict regarding any nonconforming MDS Product
which Gambro and MDS are unable to timely resolve, samples of the
MDS Products shall be submitted by [**] to an independent
laboratory reasonably acceptable to both Parties for testing
against the Product Specifications and the test results obtained by
such laboratory shall be final and binding upon the Parties. The
fees and expenses of such laboratory testing shall be borne
entirely by the Party against whom such laboratory’s findings
are made. In the event the test results indicate that the MDS
Product in question does not conform to the Product Specifications,
MDS shall replace such MDS Product with conforming MDS Product at
no additional cost to Gambro within [**] days after receipt of such
results, provided that MDS has sufficient conforming MDS Product in
its inventory to do so. If sufficient conforming MDS Product is not
available, MDS shall use commercially reasonable efforts to replace
the nonconforming MDS Product with conforming MDS Product at no
additional cost to Gambro as soon as possible, but in no event
shall the replacement time exceed [**] days. In addition to the
foregoing, in order to minimize the possibility of any inventory
shortages resulting from the unavailability of sufficient
conforming MDS Product, MDS agrees that it will deliver conforming
MDS Product as it becomes available and will not wait until full
replacement quantities are available.
5.6
Gambro accepts MDS’s standard packaging and palletizing
methods as specified in Exhibit B. MDS will examine proposals
to modify the palletizing methods as requested by Gambro, and
provided these modifications are approved by MDS, Gambro agrees to
pay any additional costs and to accept responsibility for any
damage related to the new packaging methods. MDS will use
reasonable best efforts to revisit its pallet size and work to
conform to the Gambro rack height configurations.
6.1
MDS will sell the Codes meeting the Specifications set forth in
Exhibit C to Gambro, and Gambro agrees to buy the Codes from
MDS at the base prices and at DDP Locations listed in
Exhibit D (“Base Prices”). MDS makes no commitment
to provide any Code at these Base Prices beyond [**], provided,
that, any such increases shall be subject to verification by an
independent third party auditor selected and engaged by Gambro, and
reasonably acceptable to MDS, of the underlying cost increases. The
Parties agree that any information provided to such independent
third party auditor shall be treated as strictly confidential by
such auditor, and shall not be disclosed to Gambro; such
independent third party auditor only being authorized to verify or
not verify the requested price increase and the extent to which the
underlying costs are reasonably within MDS’ control. No
information provided to any such independent third party auditor
may be copied, reproduced or removed from MDS’s
premises.
6.2
The quantity prices listed in Exhibit D are set forth on the
basis of the total quantity of Delivery Orders placed during each
Contract Year for Codes. Prices include [**] DDP Gambro’s
warehouse locations specified in Exhibit D.
5
6.3
It is expressly agreed that Base Prices for the Codes include [**],
(“Premiums”) will be invoiced to Gambro.
6.4
Gambro agrees to sell the MDS Products in accordance with the
terms, covenants and conditions contained in this Agreement.
Notwithstanding the foregoing or anything contained in this
Agreement to the contrary, Gambro shall, in its sole and absolute
discretion, determine the resale prices for the MDS
Products.
7.1
The terms of payment for the MDS Products purchased by Gambro under
this Agreement shall be [**] days from MDS’s invoice date;
provided that Gambro shall receive a [**] percent ([**]%) discount
from the invoiced amount in the event payment is received by MDS on
or before [**] days after the invoice date. Any amounts not paid
within [**] days from the invoice date shall be subject to a
service charge until paid, in an amount equal to [**]% per month.
Such service charge shall be computed on the last working day of
the calendar month, on a pro rata basis if applicable, for invoices
[**] days old or more. In addition, if full payment including
service charge is not received by MDS within [**] days from
MDS’s invoice date MDS may restrict weekly sales to Gambro to
a dollar amount equal to the payments received from Gambro in the
previous week. If full payment is not received by MDS within [**]
days of MDS’s invoice date Gambro shall be considered to be
in material breach of this Agreement and subject to
Section 14.1. MDS may invoice Gambro upon email notification
to Gambro that Codes are available for carrier pickup at the DDP
Locations listed in Exhibit D.
7.2
All Gambro payments are to be made by either wire transfer or ACH
transfer and remitted to the financial institution designated by
MDS to receive such payments.
8.0 ADDITIONAL
OBLIGATIONS REGARDING DELAYED AND REPLACEMENT PRODUCTS
8.1
MDS assumes no liability and shall not be liable to Gambro for any
failure to fill or delay in filling Delivery Orders received from
Gambro and accepted by MDS to the extent such failure or delay
results from strikes, lockouts, or any other labor troubles,
floods, fires, accidents, import or shipping delays, delays in the
delivery of raw materials, parts or completed merchandise by the
supplier thereof, or any cause beyond the reasonable control of or
occurring without the fault of MDS. In the event of any delay
caused by any of the above, MDS shall use commercially reasonable
efforts to fulfill Gambro’s Delivery Orders in a timely
fashion, provided, however, that in the event of a shortage of
available MDS Products, whether resulting from market conditions,
manufacturing constraints, FDA action against any company or
otherwise, MDS will use commercially reasonable best efforts to
allocate in reasonable proportion to Gambro’s market share,
as compared to the total market size. MDS shall notify Gambro
promptly if it anticipates any potential delay in the filling of
any of Gambro’s Delivery Orders caused by any of the
above.
8.2
Notwithstanding Section 4.3, Gambro may, at its option, be
relieved of its commitment to purchase the BTL listed in the
Exclusive Products only from MDS and shall have the right to
purchase replacement Products from other suppliers or manufactured
by Gambro, in whole or in part, at Gambro’s option and at its
own expense, should MDS, for the reasons specified in
Section 8.1, be unable to supply Delivery Orders and such
inability continues for [**] days after the first delivery date is
missed; provided that Gambro, prior to exercising its option
hereunder, must provide MDS written notice of its intention to
exercise its option hereunder, and provide MDS the opportunity to
cure such inability to supply within [**] days of receipt of
Gambro’s notice thereof. Gambro agrees to work in good faith
with MDS to resolve any issues associated with any inability to
supply hereunder.
8.3
Notwithstanding Section 4.3, Gambro may, at its option, be
relieved of its obligations with respect to any specific Delivery
Order, in whole or in part, at Gambro’s option, should a
delay caused by an event described in Section 8.1 occur, if
such delay is uncured within [**] days after the Delivery Window of
such Delivery Order. To the extent MDS is unable to deliver within
[**] days after the Delivery Window applicable to any Delivery
Order MDS Products delayed by an event described in
Section 8.1, Gambro may purchase replacement Products
from
6
other suppliers
or manufactured by Gambro, in each case at its own expense,
notwithstanding the obligations of Section 4.3.
8.4
Except as set forth in Sections 4.5, 4.7, 4.8 and 8.1, if MDS
is unable to deliver MDS Products during the Delivery Window
applicable to an accepted Gambro Delivery Order, or MDS replaces
MDS Products pursuant to sections 11.3, 13.2 or 16.1, MDS will
deliver or replace the MDS Products as soon as possible, on an
expedited basis (via air freight, exclusive use truck, overtime
customs clearance or similar means) at MDS’ expense if
requested by Gambro.
8.5
In addition to those rights set forth in Sections 5.4 and 8.4,
and except as set forth in Sections 4.5, 4.7, 4.8 and 8.1, to
the extent MDS is unable to deliver MDS Products within [**] days
of the Delivery Window applicable to an accepted Gambro Delivery
Order (the number of units of MDS Products not delivered within
[**] days of the Delivery Window applicable to an accepted Gambro
Delivery Order hereinafter referred to as the
“Shortfall”), MDS shall promptly notify Gambro thereof
and, in MDS’ sole discretion, deliver to Gambro within [**]
days of the Delivery Window either (i) alternate MDS BTL in
quantities equivalent to the Shortfall, or (ii) alternate
Products at effective pricing no greater than as listed on
Exhibit D for the MDS BTL subject to the Shortfall, provided
such alternate Products are determined to be reasonably suitable
alternatives by Gambro or its customers (such alternate Products
under this Section 8.5 (ii) hereinafter referred to as
“Substitute Product”) for purposes of addressing the
Shortfall. If MDS does not have sufficient quantities of alternate
MDS BTL to deliver to address the Shortfall within such [**] day
window, or Gambro or its customers reasonably determines that no
other alternate Product offered by MDS is a suitable alternative to
the MDS BTL sold hereunder, then Gambro may, at its option,
purchase replacement Products from other suppliers or manufactured
by Gambro to the extent necessary to meet its and its
customers’ immediate needs, up to the amount of the
Shortfall, and [**] and in no event shall [**] hereunder. In the
event MDS remains unable to deliver MDS Products or Substitute
Products in full satisfaction of accepted Gambro Delivery Orders
placed over [**] consecutive months, either Gambro or MDS may
terminate this Agreement upon written notice to the other effective
at the end of such [**] month period. In addition to the foregoing,
Gambro also reserves the right to cancel outstanding accepted
Gambro Delivery Orders if not delivered within [**] days of the
Delivery Window and MDS is not able to provide, within that [**]day
period, assurances reasonably acceptable to Gambro that MDS will be
able to fulfill those outstanding orders.
8.6
In addition to the rights and obligations set forth in
Section 8.5, MDS shall[**], and provided that Gambro will
[**]; and provided further that MDS shall have no obligation to[**]
pursuant hereto over the Term of this Agreement. MDS may
[**]
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