EXHIBIT 10.1
DEVELOPMENT, DISTRIBUTION AND SUPPLY AGREEMENT
THIS AGREEMENT ("Agreement") is made this 22nd day of September,
2005,
by and between Specialized Health Products
International, Inc., having an
address at 585 West 500 South, Bountiful,
Utah 84010 (hereinafter referred to as
"SHPI"), and Bard Access Systems, Inc., a
Utah corporation having a place of
business at 5425 West Amelia Earhart Drive,
Salt Lake City, Utah 84116
(hereinafter referred to as "BAS").
RECITALS
WHEREAS, SHPI owns intellectual property related to safety
infusion
sets,
WHEREAS, BAS desires to fund SHPI's efforts to develop a power
injectable safety winged infusion set that
meets BAS's requirements,
WHEREAS, BAS further desires to obtain the right to distribute
such
power injectable safety winged infusion set
worldwide for use in the Field (as
such term is hereinafter defined),
WHEREAS, SHPI is willing to grant such distribution rights to BAS,
all
on the terms and conditions hereinafter set
forth,
WHEREAS, BAS also desires to have SHPI manufacture, package and
supply
BAS with the aforementioned power
injectable safety winged infusion set,
WHEREAS, SHPI desires to manufacture, package and supply BAS with
the
aforementioned power injectable safety
winged infusion set, and
WHEREAS, the parties are willing to carry out the foregoing
pursuant to
the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the terms and conditions set
forth
in this Agreement and for other good and
valuable consideration, the receipt and
sufficiency of which is acknowledged by the
execution hereof, SHPI and BAS
hereby agree as follows:
I.
DEFINITIONS. The following terms are defined for purposes of
this
Agreement.
1.1. "Effective Date" shall mean the date and year first written
above.
1.2. "Affiliate" shall mean any person or corporation or other
business
entity controlled by, controlling, or under
common control with a party to this
Agreement.
1.3. "Act" shall mean the United States Food, Drug and Cosmetic Act
of
1938, as amended and all regulations
promulgated pursuant thereto, and any state
and local laws and regulations thereunder
promulgated and all similar laws and
regulations of any other country or
relevant jurisdiction related to the
development, manufacture, sale or
distribution of Products.
1.4. "Products" shall mean the power injectable safety winged
infusion
sets developed by SHPI pursuant to this
Agreement as described in Exhibit A
attached hereto and any improvements
thereto.
1.5. "Specifications" shall mean the raw material,
manufacturing,
quality assurance, packaging and finished
product specifications and protocols
relating to the Products as set forth in
Exhibit A, as the same may be modified
and/or supplemented pursuant to the
provisions hereof.
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1.6. "Field" shall mean the accessing of implantable ports.
1.7. "Territory" shall mean hospitals and alternate care sites
throughout the world. "Territory" includes
homecare services, nursing homes,
oncology centers, infusion centers, same
day surgery centers, physician offices
and clinics, non-hospital pharmacies and
pain clinics.
1.8. "Confidential Information" shall mean any information of a
confidential and/or proprietary nature as
to which BAS or an Affiliate of BAS or
SHPI or an Affiliate of SHPI, as the
disclosing party, prior to 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, formula, machine, device,
manufacture, composition of matter, plan or
design, whether patentable or not, or
relating to the conduct of business by the
disclosing party (including the existence
and subject matter of this Agreement)
which, prior to or during the term of this
Agreement, was or is disclosed to the
other party, as the receiving party,
exclusive of data or information: (i)
which, at the time of disclosure hereunder,
was in the public domain or which,
subsequent to disclosure hereunder, becomes
part of the public domain by any
means other than the breach by the
receiving party of its obligations hereunder;
(ii) which was known to the receiving
party, at the time of disclosure
hereunder, as evidenced by the receiving
party's business records maintained in
the ordinary course of business; (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;
(iv) which is developed by an employee of
the receiving party who is shown, by
competent proof and by clear and convincing
evidence, not to have been privy to
information disclosed by the disclosing
party; or (v) which is disclosed
verbally, except where the disclosing party
reduces the verbal disclosure to
writing, marks the same as confidential and
proprietary and furnishes the
receiving party with the reduction to
writing within thirty (30) days of the
verbal disclosure.
1.9. "Contract Year" shall mean the twelve (12) month period
commencing
on the date of the first Commercial Sale
and each successive twelve (12) month
period thereafter.
1.10. "Commercial Sale" shall mean the first arms length sale of
a
Product, other than for clinical use
required to obtain Regulatory Approval, in
any country of the world by BAS or a BAS
Affiliate to a non-affiliated third
party
1.11. "Development Program" shall mean those research, development
and
other services or activities relating to
the development, testing,
manufacturing, production and evaluation of
the Product(s), all as contained in
and as more fully described in Schedule
1.11.
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1.12. "Regulatory Approval" shall mean the notification to or
concurrence, acknowledgment, or approval of
any governmental or
quasi-governmental agency or regulatory
body, which notification, concurrence,
acknowledgment or approval is necessary for
or useful to the manufacturing,
processing, marketing or sale of Products
anywhere in the world, and which is
made in the name of SHPI or has been
given/granted on behalf of SHPI.
1.13 "Trademarks" shall mean U.S. Trademark Application No.
78/630,704
for PowerLoc(TM), and all international and
common law trademark rights to
PowerLoc.
1.14 "510(k)" shall mean a pre-market approval notification, as
defined
in Section 510(k) of the Act.
1.15 "CE mark" shall mean the Communite de European mark commonly
known
as the CE Mark.
1.16 "First Distribution Agreement" shall mean that
Distribution
Agreement between SHPI and BAS dated
September 17, 2001.
1.17 "Development Program Funding" shall mean the amount of ** to
be
paid by BAS to SHPI to fund the Development
Program.
II.
REPRESENTATIONS AND WARRANTIES
2.1. SHPI Representations and Warranties. SHPI hereby represents
and
warrants to BAS:
(a) that SHPI is not currently a party to any agreement, oral
or written, which would, in any manner, be inconsistent with the
rights
herein granted to BAS, and shall not enter into any such agreement
or
understanding, oral or written, during the term of this Agreement,
nor,
during the term of this Agreement, directly or indirectly, will
engage
in any activity which would, in any manner, be inconsistent with
the
rights herein granted to BAS;
(b) that SHPI is a corporation organized, validly existing and
in good standing under the laws of Utah, 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 and in
good
standing to do business in any of those jurisdictions where it
is
required to be qualified;
(c) that the execution and delivery of this Agreement by SHPI
has been duly and validly authorized by all necessary corporate
action
on the part of SHPI and that (assuming valid execution by BAS
where
applicable and subject to federal bankruptcy law) this Agreement is
a
valid and binding obligation of SHPI enforceable against it;
and
(d) all Products will have 510(k) approval. SHPI will submit a
CE mark application for the Products upon its completion of the
manufacturing startup phase in accordance with its SOP04-001.
---------------
The "**" marks the location of information
that has been omitted and filed
separately with the Securities and Exchange
Commission pursuant to a request for
confidential treatment.
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2.2. BAS Representations and Warranties. BAS hereby represents
and
warrants to SHPI:
(a) that BAS is a corporation organized, validly existing and
in good standing under the laws of Utah, 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 and in
good
standing to do business in any of those jurisdictions where it
is
required to be qualified as a result of ownership of property
or
residence of any of its employees or agents, and
(b) that the execution and delivery of this Agreement by BAS
has been duly and validly authorized by all necessary corporate
action
on the part of BAS and that (assuming valid execution by SHPI
and
subject to federal bankruptcy law) this Agreement is a valid
and
binding obligation of BAS enforceable against it, and
(c) that BAS is not currently a party to any agreement or
understanding, oral or written, which would, in any manner, be
inconsistent with its obligations described herein and shall not
enter
into any such agreement or 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 with its obligations described herein,
and
(d) that it is registered with the Food and Drug
Administration and authorized to sell the Products.
III. DEVELOPMENT
PROGRAM.
3.1 Funding. In consideration for the distribution rights granted
in
this Agreement, BAS hereby covenants to
fund the Development Program to the
extent of the Development Program Funding.
The parties specifically acknowledge
that SHPI shall remain solely liable for
all costs and expenses related to the
Development Program that exceed the
Development Program Funding, unless the
parties make changes to the Development
Program or the Specifications. Within
ten (10) days of the close of each month in
which SHPI incurs any out-of-pocket
expenses in conjunction with the
Development Program, SHPI will furnish BAS with
a written statement documenting such
expenses incurred during that month, in a
form, and accompanied by such documentation
or receipts, as may be reasonably
satisfactory to BAS. BAS shall pay from the
Development Program Funding the
amount of the expenses covered by each such
statement within thirty (30) days of
its receipt thereof. Any portion of the
Development Program Funding that remains
unpaid at the time of SHPI's delivery of
the first Product to BAS after
Regulatory Approval by the United States
Food and Drug Administration shall
become immediately payable. If a party
proposes to make a change to the
Development Program or the Specifications,
the parties shall follow the
procedure set forth in Section 6.4
(relating to modifications in
Specifications). To the extent that the
proposed modification results in a delay
or greater expense in concluding the
Development Program, the parties shall
jointly examine and mutually agree upon the
consequences and the proportion to
which each party will be responsible for
the additional time and expenses.
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<PAGE>
3.2 Diligence. The parties agree that the milestones shall be as
set
forth in the Development Program and that
both parties shall use all
commercially reasonable efforts to achieve
such milestones in the Development
Program unless otherwise agreed in writing
by the parties. If the Development
Program is not completed by January 1,
2006, BAS may, upon written notice to
SHPI, terminate this Agreement without any
liability to SHPI, unless such delay
is attributable to BAS.
3.3 Intellectual Property. As between the parties, each party
shall
retain sole ownership of all ideas,
inventions, processes, compounds and
methods, whether patentable or
unpatentable, which have or potentially have,
utility in the Development Program and
which prior to the date of this Agreement
or during the term of this Agreement, are
conceived, developed, reduced to
practice or acquired by it alone or jointly
with a third party. All ideas,
inventions, processes, compounds and
methods, whether patentable or
unpatentable, which during the term of this
Agreement, are jointly conceived,
developed, reduced to practice or acquired
by the parties shall be jointly owned
by the parties.
IV.
DISTRIBUTION OF PRODUCTS
4.1. Appointment of BAS as Distributor. Subject to the terms
and
conditions hereof, SHPI hereby appoints
BAS, and BAS hereby agrees to act, as
the exclusive distributor of Products in
the Field throughout the Territory, for
the term of this Agreement.
4.2. BAS's Responsibilities. BAS will use reasonable efforts to
promote
sales and use of the Products in the
Territory. SHPI hereby expressly
acknowledges and agrees that the grants set
forth in Section 4.1 shall be deemed
to include a grant to BAS of the right to
sell through any Affiliate of BAS and
through distributors of BAS or any
Affiliate of BAS. Upon written request by
SHPI, BAS shall provide SHPI with a list of
all BAS Affiliates and provide an
updated list on an annual basis.
4.3. Device Complaints. BAS shall maintain a system of product
complaint recording and reporting wherein
it will record the details of product
complaints it receives. BAS agrees to send
copies of the complaint reports
relating to substantial design, technical
or quality issues to SHPI. SHPI shall
be responsible for supporting BAS's
investigation of such complaint reports.
SHPI shall, within thirty (30) days after
SHPI receives the initial complaint
reports from BAS, forward the findings of
the investigation to BAS.
4.4. Recall. If BAS or SHPI are required by any competent
governmental
authority to conduct a recall of any of the
Products or either party determines
in its reasonable business judgment that a
voluntary recall of any Product is
required (and in the instance of a
voluntary recall with the consent of the
other party hereto, which neither SHPI nor
BAS will unreasonably withhold), then
SHPI shall bear all expenses of SHPI and
all reasonable expenses of BAS related
to the recall as it pertains to the
Products. The parties will cooperate in good
faith on all aspects of a recall, but BAS
shall have primary responsibility for
communications with end-users. Reporting to
regulatory authorities in order to
satisfy legal requirements with respect to
recalls shall be initiated by SHPI.
Both parties shall comply with applicable
law in initiating and administering
recalls and render the regulatory
authorities full cooperation during all recall
investigations and follow-up actions.
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<PAGE>
4.5 Traceability Reporting in Canada. SHPI shall have the right, up
to
four times per year, to request and receive
from BAS a traceability report of
Products shipped into Canada, such report
to include a current status of
specified lot(s), an identification of
customers receiving shipments and a
report of any Product remaining in BAS's
inventory. Health Canada Medical Device
Regulations also require that BAS's
maintain records sufficient to facilitate
withdrawal of the Products from the market
should a recall be necessary. Such
records must be kept for the longer of (i)
the projected useful life of the
Product or (b) two years from shipment of
the Product by BAS to its customer.
V.
TERMS OF PURCHASE AND SALE
5.1. Purchase Orders. All sales and purchases of Products shall
be
initiated pursuant to BAS's purchase order
for the same placed with SHPI. All
such sales and purchases shall be governed
by the terms and provisions of this
Agreement and any such purchase order,
provided that in the event there is a
conflict between the terms of this
Agreement and any of the terms of such
purchase order, the terms of this Agreement
shall prevail. Purchase orders shall
be issued by BAS at the beginning of the
preceding quarter and shall set forth
the quantity of each item ordered and the
required delivery dates. Each purchase
order issued by BAS hereunder shall be
accompanied by a non-binding forecast of
BAS's anticipated orders during each of the
succeeding three (3) quarters.
Insomuch as these requirements are met,
delivery of Products shall be made
within forty-five (45) days from receipt of
purchase order, or on a later date
specified by BAS. All purchase orders
issued by BAS hereunder shall be firm and
non-cancelable.
5.2. Selling Price. SHPI and BAS hereby agree that: (i) the
selling
prices by SHPI to BAS shall be for each
unit Product in a fully-finished form in
accordance with applicable Specifications;
and (ii) the initial selling prices
by SHPI to BAS of each unit of Product
shall be as set forth on ExhibitB, which
is attached hereto and incorporated herein.
After the first Contract Year, and
thereafter, on or about the completion of
each succeeding Contract Year, the
parties shall jointly discuss any necessary
revisions to the selling prices of
the Products. Any adjustments to the
selling prices shall not exceed the
documented increases or decreases in
manufacturing and/or raw materials costs of
the Products since SHPI's initial delivery
of the Products to BAS or the last
such increase, as the case may be. All
documentation of increased or decreased
costs provided by SHPI to BAS pursuant to
this Section 5.2 shall be accompanied
by a certification of the chief financial
officer of SHPI as to its accuracy.
Upon reasonable prior notice, BAS shall
have the right during normal business
hours to audit SHPI's records to verify any
such increase or decrease.
5.3. Delivery. SHPI shall use commercially reasonable efforts
to
manufacture and deliver Products to BAS,
but in no case will SHPI be obligated
to deliver more than 30% over the
forecasted volumes for a quarter, as such
forecast is determined in accordance with
Section 5.1. BAS shall provide up to
six (6) months notice for changes to the
forecast as described in Section 5.1 if
the increase in volume is more than 30% of
the amount forecasted.
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<PAGE>
5.4. Payment and Shipment. Shipment shall be in accordance with
BAS's
instructions. SHPI shall invoice BAS for
Products at the time of shipment. All
payments shall be due net thirty (30) days
after shipment. All shipments of
sterile, single packaged Products shall
be
