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Exhibit 10.18
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
SUPPLY AGREEMENT
EIR MEDICAL, INC., a company organized and
existing under the laws of
Massachusetts having offices at
Schlachthofstr. 4, 37124 Rosdorf, Germany
(hereinafter referred to as "EIR").
NxStage Medical, Inc., a company organized
and existing under the laws of
Delaware having offices at 439 South Union
Street, Lawrence, MA 01843 (hereafter
referred to as "NxStage").
and
MEMBRANA GMBH, a company organized and
existing under the laws of Germany having
offices at Oehder Str. 28, D-42289
Wuppertal, Germany (hereinafter referred to
as "Membrana").
WHEREAS, Membrana is engaged, inter alia,
in the manufacture and sale of
membranes for medical applications, in
particular capillary membranes for
hemodialysis, and is interested in selling
such membranes to EIR;
WHEREAS, EIR is a medical products company
and is engaged, inter alia, in the
ESRD therapy business and intends to
manufacture, among other things,
hemofilters with capillary membranes and,
therefore, is interested in purchasing
capillary membranes from Membrana for
incorporation into such filters.
NOW, THEREFORE, the parties have agreed
upon the following:
Article 1: Scope of the Agreement
This Agreement shall govern all deliveries
from Membrana to EIR of all blood
contacting capillary membrane types for
renal replacement therapy ("Products"),
including without limitation,
hemofiltration, hemodialysis, ultrafiltration and
hemodiafiltration, that can be made
available to EIR, especially including
SYNPHAN(R) HF 600T and PUREMA(R) H
capillary membranes as specified in the data
sheets attached hereto in ANNEX I, Sheet
no. 080/0105/000 and the "Specification
for Primary Bundles", Sheet no.
080/0000/000 for SYNPHAN (collectively, the
`SYNPHAN Specifications'), Sheet no.
084/0126/000 and the `Specification for
Primary Bundles,' Sheet no. 084/0000/000
for PUREMA (collectively, the "PUREMA
Specifications"). Membrana shall notify EIR
in writing of any change which may
have an effect on the following aspects of
the Products: (i) SYNPHAN
Specifications, (ii) PUREMA Specifications,
or (iii) any material change to the
quality control system or manufacturing
process.
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Article 2: Specification of Bundles
Membrana shall produce SYNPHAN and PUREMA
bundles for EIR according to the
specifications listed below and attached
hereto as ANNEX II:
<TABLE>
<S>
<C>
Specification Fiber Bundle SYNPHAN(R)
HF600T
S-108
Specification Fiber Bundle PUREMA(R) H
S-119
</TABLE>
The parties may agree to modify the above
specifications and/or add additional
specifications, according to EIR's needs
and Membrana's capabilities. In case of
a switch to a new specification, EIR shall
commit to order all bundles that have
been produced by Membrana pursuant to
confirmed and accepted purchase orders.
If other dialysis membrane types in
addition to SYNPHAN HF 600T or PUREMA will
be supplied by Membrana to EIR, then a
signed supplement will be added to this
Agreement before the first shipment of such
membranes, detailing pricing and
membrane specifications. All other terms of
the Agreement will remain unchanged.
Article 3: Prices
3.1 The parties agree on the
following volume discounted price schedule for
SYNPHAN HF
600T and PUREMA bundles.
<TABLE>
<CAPTION>
Annual Volume,
(Calendar Year)
Km of SYNPHAN
HF 600T and/or
Average Price
PUREMA (x 10/\-6)
[euro/km]
-----------------
-------------
<S>
<C>
[**]
[**]
[**]
[**]
[**]
[**]
[**]
[**]
</TABLE>
For
purposes of calculating prices under this table "purchases" will
be
calculated
as the sum of kilometres invoiced during one calendar year less
any
returned material for which a refund has been given.
The final
price for annual volumes is calculated via linear interpolation
[**],
rounding volumes to the closest 1,000 kilometers. The resulting
price will
be rounded to two decimal places (i.e., hundredths of Euro).
In other
words, the adjusted price will be equal to the price associated
with [**]
associated with the [**], by (b) the quantity obtained by
dividing
(i) [**] by (ii) [**].
For
illustration and by way of example only, if actual annual
volume
equals
[**] km, then the average price for purchases will be:
2
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[**] =
actual price
or
[**]At the
conclusion of the calendar year, when all invoices have been
made out,
the cumulative annual volume will be determined and the
foregoing
calculation shall be made by Membrana and communicated in
writing to
EIR by January 31 of the following year. If EIR's total
kilometers
of SYNPHAN(R) and/or PUREMA purchased for the year exceed the
amount
used to set the invoice price for that year, then Membrana
shall
pay EIR a refund so
that EIR's total purchase expenditure is made equal to
the
expenditure that would have occurred if the price for the
actual
volume had
been invoiced all year. Such payment shall be made by February
28 of the
following year. Conversely, if EIR's total kilometers of
SYNPHAN(R)
and/or PUREMA purchased are less than the quantity used to set
the
invoice price, then EIR shall pay Membrane a refund so that
EIR's
total
purchase expenditure is made equal to the expenditure that
would
have
occurred if the price for the actual volume had been invoiced
all
year. Such
payment shall be made by February 28 of the following year.
3.2 Net Invoice Pricing
Each year
in November an agreement will be made on invoice price for the
following
year. The price is set according to the pricing table above
(paragraph
3.1), and the volume reasonably and jointly expected for the
following
year.
At the end
of each calendar quarter (ending March 31, June 30, September
30 and
December 31) the invoice price will be revised under
consideration
of (a) the
actual quantities purchased by EIR and (b) the parties'
estimate
of EIR's purchases over the balance of the year.
Each month
EIR shall provide Membrana with a non-binding forecast
indicating
its demand for the next three months.
The
delivered volume per bundle type may exceed or fall below the
ordered/confirmed amount by [**]%. The quantity actually delivered
will be
invoiced.
If
Membrana cannot meet EIR's requirements for any reason, and EIR
has
placed the
corresponding orders in time as per article 4 and MEMBRANA has
accepted
these orders for production and has informed EIR about the
scheduled
shipping date as per article 4, Membrana will reserve
production
capacity
for EIR according to the ratio between EIR's total annual
purchase
volume and the total annual purchase volume of Membrane's other
customers
for SYNPHAN(R) HF600T and PUREMA.
3
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Article 4: Payment and Delivery Terms
4.1 Products shall, be ordered
by EIR under a purchase order. EIR shall send
the
purchase orders at least [**] before shipment date, indicating
the
membrane
type, bundle specification, number of bundles, and the
requested
shipping
date.
4.2 Membrana will send EIR an
order confirmation accepting the details of the
relevant
order and providing a definite date of shipment. Membrana shall
accept and
timely supply all orders that are within the volumes forecasted
for the
period by EIR. Membrana shall use its best efforts to accept
and
timely
supply all orders in excess of EIR's forecasted amount for the
period or
requesting delivery in less than [**] from the order date, and
shall
notify EIR in writing if Membrana anticipates that it will not
be
able to
satisfy such orders by the delivery dates indicated.
4.3 Accepted purchase orders may
be cancelled by EIR at any time prior to
Product
production for the order. If EIR sends notice of an order
cancellation, Membrana shall use best efforts to ensure that
Product
production
is promptly stopped with respect to that order.
4.4 EIR shall effect the payment
of the purchase price in Euro as follows:
Payment
shall be made within [**] after date of invoice, net. Payment
shall be
made by wire transfer to Membrana's account [**]. Taxes and
duties, if
any, will be borne by EIR in accordance with German Law.
4.5 All deliveries shall be
effected free carrier (as defined in the Incoterms
2000 of
the International Chamber of Commerce) at Membrana's premises
in
Wuppertal.
Packaging shall be included in the price.
4.6 EIR shall duly examine all
deliveries of membrane bundles received for any
apparent
defects. In case there should be any reason for complaints, EIR
shall
notify MEMBRANA of such complaint in writing within [**] after
the
respective
installment of membrane bundles has been received; in case of
hidden
defects notice of complaints shall be given by EIR immediately
after
discovery, but no later than the expiration date of the
finished
dialyzer.
In its notice, EIR shall specify the quantity found defective,
the
corresponding invoice, packing units, fabrication numbers and
production
days of the bundles in question. EIR makes no representation
that it
will inspect all bundles delivered and Membrana understands
that
it is
fully responsible for ensuring that its bundles meet the
Specifications. EIR agrees that Membrana shall not be responsible
for
defects to
membranes caused directly by EIR's manufacturing processes.
4.7 Membrana shall reimburse EIR
for the cost of replacing all finished
products
into which Membrana out-of-Specification fibers have been
incorporated and shall replace all out-of-Specification bundles not
yet
incorporated into finished product. In addition, Membrana shall
reimburse
EIR for
all recall expenses incurred by EIR or its affiliates relating
to
products
incorporating out-of-Specification fibers, up to the amount of
double the
net invoice sum for the delivery(ies) containing
out-of-Specification fibers.
Article 5: Retention of Title
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5.1 Title to the membrane
bundles supplied by Membrana shall remain with
Membrana
until the purchase price for such bundles has been paid in
full.
EIR may
not pledge or give a security interest in bundles supplied by
Membrana
until the purchase price has been paid in full.
5.2 EIR may sell products
incorporating the bundles in the ordinary course of
its business
before payment has been made in full. EIR hereby assigns to
Membrana
all future rights and claims towards EIR's customers resulting
from the
sales of products incorporating Membrana bundles for which the
purchase
price has not yet been paid in full; provided that (a) EIR
shall
have no
obligation to notify its customers of this assignment unless it
is
in payment
default for a period of [**] following written notice from
Membrana,
and (b) Membrana agrees that it shall not exercise any rights
against
such customers until providing EIR [**] prior written notice of
the
payment default and its intent to recover against customers.
Membrana
shall
exercise no rights against such customers in the event payment
is
made
within [**] of this notice.
5.3 EIR is entitled to collect
the proceeds of products sold incorporating
Membrana
bundles, which proceeds shall, to the extent of, and in the
event
the
purchase price therefore has not yet been fully paid by EIR,
become
ipso jure
property of Membrana, and which shall be held by EIR separately
from other
means of payment for Membrana's benefit until payment in full
of the
purchase price has been made. Thereafter, all rights of Membrana
in
such
proceeds shall be void.
5.4 In the event Membrana's
retention of title loses its validity, EIR shall
be
obligated to grant Membrana, without delay, reasonable security for
the
bundles
not yet paid for.
5.5 EIR shall obtain
commercially reasonable insurance for bundles subject to
retention
of title to cover any loss of such bundles, and shall provide
Membrana a
certificate of this insurance coverage upon its request.
5.6 In the event EIR does not
pay for the bundles within [**] of written
notice of
a payment default, or if EIR becomes insolvent, EIR must, at
the
request of
Membrana, surrender the bundles in its possession that are
subject to
retention of title to Membrana. The taking back of goods
subject to
retention of title does not constitute a termination of the
Agreement.
Article 6: Quality Data & Technical
& Scientific Support, Regulatory Matters
6.1 Membrana shall provide EIR
with each shipment of membrane bundles the `QC
Data List'
and the `Attachment to QC-Specification' as shown by example in
ANNEX III.
This shall include, among other things, a certification that
the
membrane bundles meet the Specification, and that the Products
have
been
manufactured in accordance with applicable laws and
regulations.
6.2 Membrana shall provide
reasonable assistance to EIR in connection with all
regulatory
filings made by EIR or its affiliates relating to products
incorporating the membranes supplied by Membrana. Membrana,
however, shall
not be
liable for any damages resulting from the given technical advice
or
the
provided assistance.
5
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6.3 EIR and its representatives
and affiliates shall get the opportunity with
prior
written consent of Membrana, during regular business hours, to
audit
Membrana's
facilities where the membranes are manufactured, packaged and
stored and
to make any further examination reasonably necessary to
ascertain
compliance with the membrane Specifications and this Agreement.
6.4 Membrana shall give EIR
immediate notice if Membrana becomes aware of any
defect or
condition which in any way alters the membrane Specifications
or
the
quality of any of the membranes supplied.
6.5 Membrana shall trace and
maintain records regarding the source and lot
number of
each membrane shipment. These records shall be delivered to EIR
upon EIR's
request or upon the termination of this Agreement.
6.6 Membrana shall promptly
notify EIR of the occurrence of any regulatory
inspections and of any changes in regulatory status.
Article 7: Exclusivity
EIR and NxStage intend to purchase the
majority, and potentially all, of their
blood-contacting ESRD therapy membranes
from Membrana, and agree to work in good
faith with Membrana to preserve Membrane's
position as the primary supplier of
blood-contacting ESRD therapy membranes for
EIR and NxStage. Membrana, however,
acknowledges that EIR and NxStage may need
to maintain alternative sources of
membrane supply in order to protect against
supply shortfalls, membrane failures
or other potential disruptions in membrane
supply, and that EIR and NxStage may
obtain such supply without penalty
hereunder.
Article 8: Confidentiality, Intellectual
Property, Infringement Matters
8.1 EIR and NxStage shall keep
strictly confidential any information disclosed
by
Membrana during the term of this Agreement which is confidential
by
nature or
expressly marked as confidential, and Membrana will
