exv10w43






Exhibit 10.43




Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.




SUPPLY AND DISTRIBUTION AGREEMENT




     This Supply and Distribution Agreement (this “Agreement”), dated as of May 6, 2008, is between
Kawasumi Laboratories, Inc., a Japanese corporation with its offices at 3-28-15, Minami-Ohi,
Shinagawa-ku, Tokyo 140-8555, Japan and Medisystems Corporation, a Washington corporation with its
offices at 439 South Union Street, 5th Floor, Lawrence, Massachusetts 01843, U.S.A.
Reference should be made to Article 27 of this Agreement for definitions of capitalized terms used
herein.



     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:



ARTICLE 1

BACKGROUND




     1.1 KL manufactures disposable medical products and MDS sells and markets the Products in the
Territory (as described in Annex B).



     1.2 MDS manufactures disposable medical products and MDS sells BTL, AVF, BH, VN and NX used in
artificial kidney dialysis, as well as PHE and other products. MDS also manufactures or purchases
and sells Components, some of which are designed by MDS to be used in the Products. Such
Components will be sold or consigned to KL for incorporation into the Products in accordance with
this Agreement, and under some conditions, certain Components may be used or resold by KL for its
own products or markets.



     1.3 Pursuant to long-standing business relations, agreements and understandings, the Products
KL sells to MDS are manufactured by KL to the MDS design specifications and the KL process
specifications. It has been KL’s right and practice to delegate certain responsibilities to its
subsidiary, Kawasumi Laboratories (Thailand) Co., Ltd., and KL may continue to so delegate. Such
delegation shall not relieve KL of its responsibilities to assure each provision of this Agreement
is complied with in full.



     1.4 KL and MDS have entered into a certain Supply and Distribution Agreement dated as of
February 1, 2001, as amended on January 31, 2007, February 9, 2007, June 27, 2007, July 31, 2007,
August 30, 2007, September 26, 2007, October, 30, 2007, November 30, 2007, December 27, 2007,
January 30, 2008, February 29, 2008, March 31, 2008, and April 28, 2008 (collectively, the “2001
Agreement”). KL and MDS agree to have this Agreement supersede the 2001 Agreement with respect to
the supply and distribution of BTL and NX between the parties; provided, however, that the 2001
Agreement shall continue to be in full force and effect with respect to AVF, BH, VN and PHE, and
shall govern the supply and distribution thereof between the parties.



     1.5 In pursuance of this cooperation and in compliance with certain requirements of the FDA,
the parties have entered into the QA Agreement which governs certain aspects of the design and
manufacturing of the Products and the supply of Components.



 









 





ARTICLE 2

SPECIFICATIONS




     2.1 The Products and Components shall meet the Specifications and shall be subject to the
warranties set forth in Section 10.1, as such Specifications may, in accordance with the terms of
the QA Agreement, be amended or modified from time to time. MDS shall have the right to add or
replace the Codes set forth in Annex A hereto; provided that (a) the Product Price applicable to
the Codes to be added or replaced pursuant to the foregoing shall be agreed to by the parties
through good faith discussions prior to the placement of the first Shipment Order for such Codes by
MDS; and (b) MDS agrees that KL shall have no obligation to supply more than [**] Codes of
Streamline BTL at any given time during the Term. For clarification purposes, the aggregate number
of Streamline BTL Codes set forth in Annex A may exceed [**] Codes over the course of the Term, but
shall not exceed [**] Codes at any particular point in time during the Term.



     2.2 MDS shall provide KL with necessary materials for packaging and labeling of the Products
such as artwork, negative films and so on.



ARTICLE 3

PURCHASES AND SHIPMENTS




     3.1 Subject to the terms and conditions of this Agreement, KL shall manufacture the Products,
in quantities up to KL’s Supply Commitment, and all in accordance with the provisions of the QA
Agreement, the Specifications and the KL process specifications, and shall sell the Products to
MDS. MDS shall purchase the Products solely for resale in the Territory, provided that MDS, if it
sources NX from KL, may sell NX anywhere in the World. MDS shall not purchase BTL or
sub-assemblies thereof from any other third party other than KL except as provided in this
Agreement. MDS shall not sell the Products (other than NX) directly or indirectly to distributors
or end-users for use or resale outside of the Territory without KL’s prior written consent. Except
for the sale of Products from KL to MDS pursuant to the terms and conditions of this Agreement, KL
shall not (a) sell BTL or sub-assemblies thereof, directly or indirectly, for use or resale in the
U.S. to any party other than MDS without MDS’ prior written consent, or (b) sell Streamline BTL or
NX worldwide to any party other than MDS.



     3.2 MDS’ purchasing goal and purchasing commitments for BTL and NX during the Term shall be as
set forth in this Section 3.2.




	 	a.	 	MDS’ total purchasing goal for Products during the Initial Term
is [**] units of Products (“Initial Goal”). During the Initial Term, and
subject to the other terms and conditions contained herein, MDS hereby agrees
to purchase from KL a total quantity of Products at least equal to [**] percent
([**]%) of the Initial Goal (i.e., [**] units of Products) (such amount shall
be referred to herein as “Initial Purchase Commitment”).
	 
	 	b.	 	In the event MDS fails to place Shipment Orders for Products
during the Initial Term sufficient to meet its Initial Purchase Commitment,
upon expiration of the Initial Term, (i) KL may ship to MDS the quantity of




 









 






	 	 	 	Products short of the Initial Purchase Commitment (calculated by subtracting
the quantity of Products set forth in the Shipment Orders placed by MDS during
the Initial Term from the Initial Purchase Commitment) (the quantity of
Products of such shortfall shall be referred to herein as “Initial Shortfall”
and the shipments thereof by KL shall be referred to as “Initial Shortfall
Shipments”), and (ii) MDS shall accept and pay for the Products shipped in such
Initial Shortfall Shipments. KL shall notify MDS upon the expiration of the
Initial Term in the event the Initial Purchase Commitment is not met and of the
amount of the Initial Shortfall. In such notice, KL shall also request MDS to
provide KL with the Codes of Products and quantities thereof to be shipped in
the Initial Shortfall Shipment; provided, however, that the aggregate unit of
Products set forth in such notice shall be no less than the Initial Shortfall.
MDS shall have [**] business days following its receipt of such notice to
provide such information to KL, subject to Sections 3.2c and 3.2e. If MDS
fails to provide such information within such [**] business day period, or to
the extent the aggregate quantity of Products set forth in such information
provided by MDS is less than the Initial Shortfall, KL may, at its sole
discretion, select the Codes of Products and the quantities thereof to be
shipped in the Initial Shortfall Shipment up to the Initial Shortfall. The
Initial Shortfall Shipments shall be made in [**] equal monthly installments
during the [**]-month period immediately following the expiration of the
Initial Term, with each shipment constituting [**] of the Initial Shortfall.
For the avoidance of doubt, (x) MDS shall supply KL with the Components
necessary for KL to manufacture the Products to be shipped in the Initial
Shortfall Shipments if KL places Component Orders for such Products in
accordance with the terms and conditions of this Agreement, and (y) any
termination or expiration of this Agreement shall not terminate KL’s right to
make the Initial Shortfall Shipments and receive payment therefor from MDS, or
relieve MDS of its obligation to accept such Initial Shortfall Shipments and
pay KL for such Initial Shortfall Shipments.






	 	c.	 	Notwithstanding the Initial Purchase Commitment, MDS shall
place Shipment Orders for Streamline BTL to KL for an amount at least equal to
the amount calculated pursuant to the following (the “Initial Streamline
Purchase Commitment”): (i) if the aggregate amount of Streamline BTL sold to
[**] during the Initial Term is equal to or more than [**] units, the Initial
Streamline Purchase Commitment shall be [**] units; and (ii) if the aggregate
amount of Streamline BTL sold to [**] during the Initial Term is less than [**]
units, the Initial Streamline Purchase Commitment shall be [**] percent ([**]%)
of the aggregate amount of Streamline BTL sold to [**] during the Initial Term.
For clarification purposes, any Shipment Orders for Streamline BTL units used
for the purposes of confirming
MDS’ compliance with the Initial Streamline Purchase Commitment shall also
be counted towards the Initial Purchase Commitment and the unit 




 









 






	 	 	 	amount of
the Initial Streamline Purchase Commitment is not additive to the unit
amount of the Initial Purchase Commitment.






	 	d.	 	Upon request from KL, MDS shall disclose to KL information
regarding the Codes and respective quantities of Streamline BTL sold to [**]
during the Initial Term. MDS shall keep and maintain complete and accurate
books, records and accounts relating to its sale of Streamline BTL to [**], and
KL shall have the right, from time to time, to have an independent auditor
audit such books, records and accounts of MDS to verify MDS’ compliance with
the terms and conditions of this Section 3.2d. Any such audit shall be
conducted during the regular business hours of MDS, in such a manner so as not
to interfere with the normal business activities of MDS, and shall be at KL’s
expense; provided, however, that, if such audit reveals any material
discrepancies between the actual figures and reported figures of the Streamline
Products sold to [**] during the Initial Term, the cost of such audit shall be
borne by MDS. KL shall cause its independent auditor not to disclose any
information discovered in connection with this audit to any third party
(including KL) other than the information related to MDS’ sales of Products
which may be disclosed to KL hereunder consistent with the terms hereof.
	 
	 	e.	 	In the event (i) MDS fails to place Shipment Orders for
Streamline BTL during the Initial Term (or the Revised Initial Commitment Term,
if the Initial Streamline Purchase Commitment is revised pursuant to Section
3.2f) sufficient to meet its Initial Streamline Purchase Commitment, or (ii)
the audit set forth in Section 3.2d reveals any non-compliance with the Initial
Streamline Purchase Commitment, KL shall have the right to include the quantity
of Streamline BTL short of the Initial Streamline Purchase Commitment
(calculated by subtracting the quantity of Streamline BTL set forth in the
Shipment Orders placed by MDS during the Initial Term (or the Revised Initial
Commitment Term, if the Initial Streamline Purchase Commitment is revised
pursuant to Section 3.2f) from the Initial Streamline Purchase Commitment) in
the Initial Shortfall Shipments set forth in Section 3.2b.
	 
	 	f.	 	Notwithstanding anything set forth herein to the contrary, KL
agrees that, if MDS fails to renew its supply agreement for BTL with [**]
despite good faith efforts to negotiate such renewal, subject to Section 3.2j
and upon written notice to KL, MDS shall have the right, but not the
obligation, to revise its Initial Purchase Commitment and Initial Streamline
Purchase Commitment to an amount equal to the original Initial Purchase
Commitment and the original Initial Streamline Purchase Commitment multiplied
by the ratio of the period from the Effective Date until the end of the [**]
calendar month following the month in which such notice is received by KL (the
“Revised Initial Commitment Term”)
to the Initial Term. MDS shall fulfill such revised Initial Purchase
Commitment and revised Initial Streamline Purchase Commitment, by the




 









 






	 	 	 	expiration of the Revised Initial Commitment Term. In the event MDS fails
to place Shipment Orders for Products during the Revised Initial Commitment
Term sufficient to meet its revised Initial Purchase Commitment and/or its
revised Initial Streamline Purchase Commitment, upon expiration of the
Revised Initial Commitment Term, KL may ship to MDS the quantity of Products
short of the revised Initial Purchase Commitment and/or the revised Initial
Streamline Purchase Commitment in accordance with Sections 3.2b and 3.2e;
provided however, any reference to the Initial Term therein shall be
automatically deemed to be replaced with reference to the Revised Initial
Commitment Term, and any reference to the Initial Purchase Commitment and
the Initial Streamline Purchase Commitment therein shall automatically mean,
respectively, the Initial Purchase Commitment and the Initial Streamline
Purchase Commitment as revised pursuant to this Section 3.2f. In addition,
in the event MDS elects to exercise its rights pursuant to this Section 3.2f
to revise the Initial Purchase Commitment and the Initial Streamline
Purchase Commitment:






	 	1.	 	immediately upon the issuance of the notice by
MDS set forth in this Section 3.2f, any and all references to the
Initial Purchase Commitment and/or the Initial Streamline Purchase
Commitment contained in this Agreement shall mean respectively, the
Initial Purchase Commitment and the Initial Streamline Purchase
Commitment as revised pursuant to this Section 3.2f;
	 
	 	2.	 	all obligations of KL related to the Supply
Commitment shall terminate as of the expiration of the Revised Initial
Commitment Term;
	 
	 	3.	 	notwithstanding Section 3.1, any restriction on
KL regarding the sale of BTL (including subassemblies thereof) in the
U.S., directly or indirectly, for use or resale in the U.S. shall be
terminated as of the expiration of the Revised Initial Commitment Term;
	 
	 	4.	 	for any BTL which is a work-in-progress as of
the date on which KL receives the notice by MDS set forth in this
Section 3.2f, in accordance with the other terms and conditions of this
Agreement, (i) KL shall complete the manufacture of such BTL within
[**] months of such notice and deliver such BTL to MDS, (ii) MDS shall
supply KL with the Components necessary for KL to complete the
manufacture of such BTL, (iii) MDS shall accept and pay for such BTL,
and (iv) any termination or expiration of this Agreement shall not
terminate the rights and obligations of KL and MDS under this Section
3.2f.4, including, without limitation, KL’s right to receive payment
for such BTL from MDS; and




 









 






	 	5.	 	this Agreement shall terminate upon the
expiration of the Initial Term.






	 	g.	 	The parties shall discuss in good faith and agree to MDS’ total
purchasing goal for Products during each Renewal Term (the “Renewal Goal”) no
later than [**] months prior to the expiration of the Term then in effect.
During each Renewal Term, and subject to the other terms and conditions
contained herein, MDS hereby agrees to purchase from KL a total quantity of
Products at least equal to [**] percent ([**]%) of the Renewal Goal (such
amount shall be referred to herein as the “Renewal Purchase Commitment”).
	 
	 	h.	 	In the event MDS fails to place Shipment Orders for Products
during the applicable Renewal Term sufficient to meet its Renewal Purchase
Commitment, upon expiration of the Applicable Renewal Term, (i) KL may ship to
MDS the quantity of Products short of the Renewal Purchase Commitment
(calculated by subtracting the quantity of Products set forth in the Shipment
Orders placed by MDS during such Renewal Term from the Renewal Purchase
Commitment) (the quantity of Products of such shortfall shall be referred to
herein as the “Renewal Shortfall” and the shipments thereof by KL shall be
referred to as the “Renewal Shortfall Shipments”), and (ii) MDS shall accept
and pay for the Products shipped in such Renewal Shortfall Shipments. KL shall
notify MDS upon the expiration of the applicable Renewal Term in the event the
Renewal Purchase Commitment is not met and of the amount of the Renewal
Shortfall. In such notice, KL shall also request MDS to provide KL with the
Codes of Products and quantities thereof to be shipped in the Renewal Shortfall
Shipment; provided, however, that the aggregate unit of Products set forth in
such notice shall be no less than the Renewal Shortfall. MDS shall have [**]
business days following its receipt of such notice to provide such information
to KL. If MDS fails to provide such information within such [**] business day
period, or to the extent the aggregate quantity of Products set forth in such
information provided by MDS is less than the Renewal Shortfall, KL may, at its
sole discretion, select the Codes of Products and the quantities thereof to be
shipped in the Renewal Shortfall Shipment up to the Renewal Shortfall. The
Renewal Shortfall Shipments shall be made in [**] equal monthly installments
during the [**]-months period immediately following the expiration of the
applicable Renewal Term, with each shipment constituting [**] of the Renewal
Shortfall. For the avoidance of doubt, (x) MDS shall supply KL with the
Components necessary for KL to manufacture the Products to be shipped in the
Renewal Shortfall Shipments if KL places Component Orders for such Products in
accordance with the terms and conditions of this Agreement, and (y) any
termination or expiration of this Agreement shall not terminate KL’s right to
make the Renewal Shortfall Shipments and receive payment therefor from MDS, or
relieve MDS of its obligation to




 









 






	 	 	 	accept such Renewal Shortfall Shipments and pay KL for such Renewal
Shortfall Shipments.






	 	i.	 	If the parties cannot agree on a Renewal Goal for the Renewal
Term immediately following the expiration of the Term then in effect (the
“Following Renewal Term”) no later than [**] months prior to the expiration of
the Term then in effect, the Renewal Goal for the Following Renewal Term shall
be determined in accordance with the following terms and conditions of this
Section 3.2i. If MDS agrees to accept a Renewal Goal for the Following Renewal
Term which is equal to or more than (x) [**] percent ([**]%) of the Initial
Goal, if the Following Renewal Term is the first Renewal Term under this
Agreement, or (y) [**] percent ([**]%) of the Renewal Goal of the then current
Renewal Term, if the Following Renewal Term is the second or any subsequent
Renewal Term, such figure shall become the Renewal Goal for the Following
Renewal Term. If MDS does not accept the Renewal Goal set forth in the
foregoing sentence, then the Renewal Goal for the Following Renewal Term shall
be reduced to [**] percent ([**]%) of the Renewal Goal then in effect;
provided, however, in such event, this Agreement shall terminate upon the
expiration of such Following Renewal Term.
	 
	 	j.	 	In any given consecutive [**] month period during the Initial
Term, MDS agrees to place monthly Shipment Orders that, in the aggregate, will
comprise no less than [**] percent ([**]%) and no more than [**] percent
([**]%) of the Initial Goal (the “Initial Maximum Order Quantity”). By way of
example only, if the Initial Goal for Products is [**] units of Products, MDS
shall place [**] consecutive monthly Shipment Orders, in any given [**] month
period during the Initial Term, that, in the aggregate, is no less than [**]
units of Products or more than [**] units of Products. Notwithstanding the
foregoing, KL agrees that, if MDS provides notice of the quantity to be ordered
in a particular calendar month no later than [**] months prior to the beginning
of such calendar month, MDS may exceed the Initial Maximum Order Quantity for
such calendar month, and KL shall use commercially reasonable efforts to supply
the quantity in excess of the Initial Maximum Order Quantity set forth in such
notice.
	 
	 	k.	 	In any given consecutive [**] month period during any Renewal
Term, MDS agrees to place monthly Shipment Orders that, in the aggregate, will
comprise no less than [**] percent ([**]%) and no more than [**] percent
([**]%) of the Renewal Goal for such Renewal Term (the “Renewal Maximum Order
Quantity”). By way of example only, if the Renewal Goal for Products is [**]
units of Products, MDS shall place [**] consecutive monthly Shipment Orders, in
any given [**] month period during the applicable Renewal Term, that, in the
aggregate, is no less than [**] units of Products or more than [**] units of
Products. Notwithstanding the foregoing, KL agrees that, if MDS provides
notice of the quantity to be ordered in a particular calendar month no later
than [**]




 









 






	 	 	 	months prior to the beginning of such calendar month, MDS may exceed the
Renewal Maximum Order Quantity for such calendar month and KL shall use
commercially reasonable efforts to supply the quantity in excess of the
Renewal Maximum Order Quantity set forth in such notice.






	 	l.	 	KL agrees to sell to MDS a total quantity of Products no less
than [**] percent ([**]%) of the Initial Goal and any Renewal Goal (“Supply
Commitment”).





     3.3 In order to facilitate the orderly forecasting of needs and the ordering, manufacturing
and shipping of Products, the parties agree to follow the following procedures:




	 	a.	 	On or prior to the [**] day of each month (“Forecast Date”)
during the Term, MDS shall provide KL with the following:






	 	1.	 	a forecast (the “First MDS Forecast”) of MDS
orders to be placed [**] days from the Forecast Date;
	 
	 	2.	 	a revised forecast of MDS orders to be placed
[**] days from the Forecast Date; and
	 
	 	3.	 	a further revised forecast (the “Final MDS
Forecast”) of MDS orders to be placed by the [**] day of the subsequent
month.






	 	b.	 	Based on the Final MDS Forecast the previous month, on or prior
to the [**] day of each month during the Term, MDS shall provide KL with a
Shipment Order consistent with the Purchase Commitments and Sections 3.2j and
3.2k. The Shipment Order shall set forth requested delivery dates for the
Products of, (i) in the case where the seaport of entry into the U.S. set forth
in the Shipment Order is located on the west coast of the U.S., no earlier than
[**] days after the Shipment Order Date and no later than [**] days after the
Shipment Order Date, and (ii) in the case where the seaport of entry into the
U.S. set forth in the Shipment Order is not located on the west coast of the
U.S., no earlier than [**] days after the Shipment Order Date and no later than
[**] days after the Shipment Order Date (the duration between the earliest and
latest date on which the requested delivery date may be set forth in the
Shipment Order shall be referred to herein as the “Shipment Period”). For
purposes of this Agreement, the “Shipment Order Date” means the date the
applicable Shipment Order is placed by MDS, or the [**] day of the month on
which the Shipment Order is placed, whichever is later.
	 
	 	c.	 	Based on the foregoing, KL shall purchase or produce components
(including the Components) necessary to manufacture and deliver the Products
during the Shipment Period. On or prior to the Forecast Date during the Term,
KL shall provide MDS with the foregoing:




 









 












	 	1.	 	a forecast (the “First KL Forecast”) of KL
orders for Components to be placed [**] days from the Forecast Date;
	 
	 	2.	 	a revised forecast of KL orders to be placed
[**] days from the Forecast Date; and
	 
	 	3.	 	a further revised forecast (the “Final KL
Forecast”) of KL orders to be placed by the [**] day of the subsequent
month.






	 	d.	 	Based on the Final KL Forecast the previous month, on or prior
to the [**] day of each month during the Term, KL shall provide MDS with its
Component Order for such month. The Component Order shall set forth requested
delivery dates for the Components of no earlier than [**] days after the
Component Order Date and no later than [**] days after the Component Order
Date. For purposes of this Agreement, the “Component Order Date” means the
date the applicable Component Order is placed by KL, or the [**] day of the
month on which the Component Order is placed, whichever is later.






The parties recognize that some Components (including packaging and labeling) may
become unusable if not incorporated into Products within a finite period of time
(“Dead Stock”). Accordingly, if KL produces or purchases Components based on the
First MDS Forecast and such Components are not, because the Products ordered in the
Shipment Orders are less than the First MDS Forecast, timely incorporated in the
Products and become Dead Stock, KL shall invoice MDS and MDS shall pay KL for the
cost of such Dead Stock. If KL does not ship Products during the applicable
Shipment Period, and such failure is not excused by an event described in Section
3.5, KL shall ship such Products as soon as possible, by airfreight at KL’s sole
expense, if so requested by MDS. KL and MDS shall discuss and exchange additional
forecasting and production scheduling information in order to minimize variances in
KL’s production and MDS’ inventories throughout the Term. The total quantity of
Products in MDS’ Shipment Orders shall approximately equal the total quantity of
Products in the relevant Final MDS Forecast unless a variance has been accepted by
KL. Similarly, the total quantity of Components in KL’s Component Orders shall
approximately equal the total quantity of Components in the relevant Final KL
Forecast unless a variance has been accepted by MDS.



     3.4 All sales of Products to MDS under this Agreement shall be subject to the provisions of
this Agreement and shall not be subject to the terms and conditions contained in any Shipment Order
of MDS, or confirmation or invoice of KL, except insofar as any such Shipment Order, confirmation
or invoice establishes (a) the quantity of Products ordered for shipment, and (b) the locations in
the U.S. to which such Products shall be delivered (the “Locations”) and the seaport of entry into
the U.S. for such Product shipments.



     3.5 KL assumes no liability and shall not be liable to MDS for any failure to fill or delay in
filling Shipment Orders received from MDS or to fulfill any Supply Commitment to the



 









 







extent of any cause beyond the control of or occurring without the fault of KL including but
not limited to strikes, lockouts (but only if resulting from worker sabotage, vandalism or similar
action), floods, fires, earthquakes, accidents, delays in the delivery of raw materials, parts or
completed merchandise by the supplier thereof. For the purposes of this Section 3.5, FDA actions
caused by the fault of KL are deemed to be within the control of KL. In the event of any delay
caused by any of the foregoing, KL shall use reasonable commercial efforts to fulfill MDS’ orders
in a timely fashion. KL shall notify MDS if it anticipates any potential delay in the filling of
any of MDS’ Shipment Orders caused by any of the foregoing.



     3.6 MDS assumes no liability and shall not be liable to KL for any failure to place Shipment
Orders, deliver Components or to fulfill any Purchase Commitment to the extent of any cause beyond
the control of or occurring without the fault of MDS including but not limited to strikes, lockouts
(but only if resulting from worker sabotage, vandalism or similar action) floods, fires,
earthquakes, accidents, delays in the delivery of raw materials, parts or competed merchandise by
the supplier thereof. In the event of any delay caused by any of the above, MDS shall use
reasonable commercial efforts to fulfill Component Orders and/or to place Shipment Orders in a
timely fashion. MDS shall notify KL if it anticipates any potential delay in the filling of any
Component Order or in placing Shipment Orders caused by any of the foregoing.



     3.7 Notwithstanding Sections 3.2 and 3.3, MDS may be relieved of its obligations with respect
to any specific Shipment Order, Component Order, or Purchase Commitment in whole or in part, at
MDS’ option, should KL be in material breach of this Agreement and if such breach is uncured within
ninety (90) days after KL receives notice from MDS of such breach, or should a delay under Section
3.5 occur and if such delay is uncured within ninety (90) days after MDS receives notice from KL of
such delay.



     3.8 Notwithstanding Sections 3.2 and 3.3 KL may be relieved of its obligations with respect to
any specific Shipment Order, Component Order, or Supply Commitment in whole or in part, at KL’s
option, should MDS be in material breach of this Agreement and if such breach is uncured within
ninety (90) days after MDS receives notice from KL of such breach, or should a delay under Section
3.6 occur and if such delay is uncured within ninety (90) days after KL receives notice from MDS of
such delay.



     3.9 MDS shall maintain and keep MDS inventories of the Products in accordance with then
applicable Purchase Commitment and the Final MDS Forecast provided in Section 3.3.



     3.10 MDS shall submit to KL each calendar quarter a report about the market situation of the
Products in the Territory including the tendency of the market, activities of third parties and
other remarkable changes in the market.



ARTICLE 4

SHIPMENT OF THE PRODUCTS/COMPONENTS




     4.1 KL will ship the Products properly ordered in accordance with Article 3 to the Locations
at the Product Prices. MDS will ship the Components to the location set forth in the applicable
Component Order and at the prices listed in Annex A.



 









 





     4.2 KL shall prepare and send by facsimile to MDS a packing list, invoice and bill of lading
for each shipment of the Products. KL shall notify MDS if any shipment will not be made within the
Shipment Period applicable to a Shipment Order. MDS shall prepare and send to KL a packing list,
invoice and bill of lading for each shipment of the Components.



ARTICLE 5

PRICES




     5.1 Except as otherwise specified herein, KL will sell the Products to MDS and MDS agrees to
purchase the Products from KL, and MDS will sell the Components to KL and KL agrees to purchase the
Components from MDS.



     5.2 The prices of the Products shall be as listed on Annex A, which may be revised from time
to time upon agreement of the parties, and may be adjusted pursuant to Sections 5.3, 5.4 and 5.5
(the “Product Prices”). The Product Prices are quoted as FOB Bangkok. Freight costs for
delivering Products to the Locations, as set forth in the chart for ocean freight cost for 40
feet/20 feet/LCL attached hereto as Annex C (the “Freight Costs”), shall be added to the Product
price. If MDS requests airfreight, and if KL is not obliged to pay for such airfreight under the
provisions of Section 3.3, 10.2 or 14.2, KL shall invoice MDS at the Product Prices, and MDS shall
bear the costs related to such airfreight. If KL is obliged to pay the airfreight under the
provisions of Section 3.3, 10.2 or 14.2, KL shall bear the costs related to such airfreight and
invoice MDS at the Product Prices plus the Freight Costs.



     5.3 Unless otherwise adjusted pursuant to the express provisions of this Agreement, the
Product Prices shall be as listed on Annex A, so long as the inter-bank Thai Baht to US$ exchange
rate as reported by the Bank of Thailand, Average Buying Rates, Telex Transfer on the date such
Shipment Order is placed (the “Baht/US$ Exchange Rate”) is at or above [**] Baht per US$1.00
(“Minimum Exchange Rate”) and at or below [**] Baht per US$1.00 (“Maximum Exchange Rate”). If, at
any time during the Term, the Baht/US$ Exchange Rate is lower (i.e., stronger) than the Minimum
Exchange Rate (e.g., [**] Baht per US$1.00) then the Product Prices for such Shipment Order shall
be increased by [**] ; provided, however, that such ratio shall be applied against the [**]. By
way of example only, [**]/unit. If, however, at any time during the Term, the Baht/US$ Exchange
Rate is higher (i.e., weaker) than the Maximum Exchange Rate (e.g., [**] Baht per US$1.00), then
the Product Prices for such Shipment Order will be decreased by [**]; provided, however, that such
ratio shall be applied against the [**]. By way of example only, [**]/unit. The price of the
Products calculated in accordance with this Section 5.3 shall be rounded up to the nearest ten
thousandth of a U.S. dollar.



     5.4 In addition to Section 5.3, the Product Prices shall be adjusted according to the formula
set forth below in the event there is a [**] percent ([**]%) or greater increase or decrease in the
price charged to KL by KL’s suppliers for unprocessed raw materials of polyvinyl chloride of like
quantity and quality for the main tubes of the Products (excluding any freight, duties or other
costs related to the shipment of such raw materials from the supplier to KL) (the “PVC Price”),
from the PVC Price charged to KL as of September 30, 2007 (the “Base PVC Price”). For purposes of
this Agreement, (i) the PVC Price applicable to the Products to be shipped to MDS in the relevant
Shipment Order shall be referred to as the “Current PVC Price”, (ii) the ratio of increase of the
Current PVC Price to the Base PVC Price shall be referred to as



 









 







the “PVC Price Increase Ratio” (by way of example only, [**] (by way of example only, [**] (by
way of example only, [**]. The price of the Products calculated in accordance with this Section
5.4 shall be rounded up to the nearest ten thousandth of a U.S. dollar.




	 	a.	 	In the event of a [**] percent ([**]%) or greater increase from
the Base PVC Price, the Product Price shall be increased by a ratio calculated
by [**]/unit.
	 
	 	b.	 	In the event of a [**] percent ([**]%) or greater decrease from
the Base PVC Price, the Product Price shall be decreased by a ratio calculated
by [**]/unit.
	 
	 	c.	 	Upon request from MDS, KL shall disclose to MDS information
regarding the then current PVC Price Increase Ratio and the PVC Price Decrease
Ratio. Notwithstanding anything herein to the contrary, in no event shall KL
be obligated to disclose to MDS any information related to the costs of the
Products other than the PVC Price Increase Ratio and the PVC Price Decrease
Ratio, including, without limitation, the PVC Price, Base PVC Price, Current
PVC Price and PVC Cost Ratio.
	 
	 	d.	 	MDS shall have the right, from time to time, to have an
independent auditor audit the books, records and accounts of KL to verify that
the prices set forth in KL’s invoices are consistent with the terms and
conditions of this Section 5.4. Any such audit shall be conducted during the
regular business hours of KL, in such a manner so as not to interfere with the
normal business activities of KL, and shall be at MDS’ expense; provided,
however, that, if such audit reveals material discrepancies between the actual
figures and reported figures for the PVC Price Increase Ratio and/or the PVC
Price Decrease Ratio, the cost of such audit shall be borne by KL. MDS shall
cause its independent auditor not to disclose any information related to the
costs of the Products, including, without limitation, the PVC Price, Base PVC
Price, Current PVC Price and PVC Cost Ratio, to any party (including MDS) other
than the disclosure of the PVC Price Increase Ratio and the PVC Price Decrease
Ratio to MDS.





     5.5 In the event the Product Prices may be adjusted pursuant to both Sections 5.3 and 5.4, the
parties agree that the Product Prices shall be adjusted first by applying the terms and conditions
of Section 5.3, and then shall be further adjusted by applying the terms and conditions of Section
5.4.



     5.6 MDS and KL further agree that the Product Prices for Streamline BTL shall be reduced as
follows and replaced by the price after such reduction amount, in the event the following
modifications to the Specifications of such Products are implemented into the Streamline BTL. All
Components to be pre-assembled in accordance with the changes to the Specifications set forth below
shall be provided by MDS to KL, free of charge, in accordance with the other terms and condition of
this Agreement.



 









 





	 	 	 
	Changes to the Specifications	 	Amount to be Reduced from Product Price
	Locksite and cap for the main tube
pre-assembled by MDE

	 	$[**] per unit
	Locksite and cap for IV set
pre-assembled by MDE

	 	$[**] per unit
	Change P-2 chamber to parts
supplied by MDE, chamber and turbo
cap pre-assembled by MDE

	 	$[**] per unit






ARTICLE 6

PAYMENT




     6.1 The terms of payment for the Products purchased by MDS and for the Components purchased by
KL under this Agreement shall be D/A (Documents against Acceptance) at [**] days from KL’s or MDS’
bill of lading date. With respect to this Section 6.1, each party shall send all necessary
documents for payment to the other party within [**] days from KL’s or MDS’ bill of lading date.
Any amounts not paid within [**] days of the bill of lading date shall be subject to a service
charge until paid equal to the lesser of [**] percent ([**]%) per month or the maximum rate allowed
by law. If full payment is not received by KL or MDS within [**] days of KL’s or MDS’ bill of
lading date, MDS or KL respectively shall be considered to be in material breach of this Agreement
and subject to the provisions of Section 12.1.



ARTICLE 7

MDS SUPPLIED COMPONENTS; PRODUCT CHANGES




     7.1 During the Term, MDS will sell and/or consign to KL the Components to be incorporated by
KL, in accordance with its then current process specifications, into the Products. Except as
expressly provided in Annex B or agreed by the parties, KL shall not incorporate any Components
into any other product nor resell any of the Components for sale or resale by any third party.



     7.2 KL shall maintain and keep KL inventories of the Components in accordance with the First
MDS Forecast provided by MDS in accordance with Section 3.3, but shall not produce or purchase
components with respect to any prospective Shipment Order prior to receiving the First MDS Forecast
in respect to such prospective Shipment Order.



     7.3 During the Term, MDS may require new Product designs to meet the competitive requirements
of its market and/or to meet any of its Purchase Commitments. MDS may design new Components, Codes
and Products and cause changes to be made to the Specifications, in accordance with the provisions
of Section 2.1 of this Agreement and the QA Agreement. KL will have the right, in good faith to
reject such new Specifications based only on lack of capacity to produce such new Specifications.
And, in any event, KL will have the right to adjust the



 









 







Product Prices based on such changed Specifications only to the extent that such changes
increase or decrease KL’s true cost of production. KL will cooperate with MDS in incorporating
such new Components, Codes and Products and changes into the Specifications for the Products. To
assist KL in production planning, MDS will meet at least [**] yearly with KL for the purpose of
describing any current MDS design projects that, within the succeeding twelve months, are likely to
produce a change in the Specifications and the introduction of new Components for the Products.
During the Term, KL may make changes in its process specifications and/or components supplied by
KL, all in accordance with the provisions of the QA Agreement. At least [**] yearly, KL shall
advise MDS, in accordance with Section 5.3 of the QA Agreement, of any prospective KL process
changes that, within the succeeding twelve (12) months, are likely to produce a change in KL’s
process specifications and/or of the components supplied by KL or to affect the quality of the
Products.



     7.4 Whenever MDS adds a new Specifications for Components or Products, KL has a first right
(prior to that of any third party) to bid on the supply of such Components. KL’s bid may be based
on MDS’ design and/or KL’s alternative design, if any, but the content of the Specifications shall
remain within the sole discretion of MDS. KL and MDS may negotiate which party shall supply such
Components by taking into consideration cost, quality, quantity and patent issues. Nothing herein
shall imply any license or obligation to license the patents of one party to the other and no
license shall be granted unless the parties mutually so agree in a separate license agreement.



     7.5 At reasonable intervals, KL may, with prior notice to and with the prior consent of MDS
which consent shall not unreasonably be withheld, send its representatives to MDS to audit the
procedures or processes used in manufacturing the Components. At reasonable intervals, MDS may
with prior notice to and with the prior consent of KL, which consent shall not unreasonably be
withheld, send its representatives (including representatives of its customers) to KL to audit the
procedures or processes used in manufacturing the Products.



ARTICLE 8

REGULATORY RESPONSIBILITY




     8.1 KL shall be responsible, at its expense, for complying with all of its obligations under
the provisions of the QA Agreement. Failure to manufacture the Products in compliance with the QA
Agreement shall be considered a breach of this Agreement by KL as to which MDS’ exclusive remedies
shall be to terminate this Agreement under Section 12.1, to terminate any specified Shipment
Order(s) under Section 3.7 and/or to reduce its outstanding Shipment Orders, any such termination
or reduction to be credited on a unit basis toward the applicable Purchase Commitment.



     8.2 MDS shall be responsible, at its expense, for complying with all of its obligations under
the provisions of the QA Agreement relating to the design, sale or use of the Products, including
but not limited to obtaining authorization under Section 510(k) of the “Act”.



     8.3 Except as provided in this Agreement, MDS shall not use any trade name, trademark or logo
owned or controlled by KL, or any trademark, trade name or logo confusingly similar therewith,
during or after the Term. KL shall not use any trade name, trademark or logo



 









 







of MDS, or any trade name, trademark or logo confusingly similar therewith, without obtaining
MDS’ prior written permission during or after the Term.



ARTICLE 9

GUARANTEE




     9.1 All Products sold to MDS under this Agreement are hereby guaranteed by KL, as of the time
the title to the Products is transferred to MDS, to be not adulterated or misbranded within the
meaning of the Act, and not an article which may not, under the provisions of Section 510(i) of the
Act, be introduced into interstate commerce. If KL breaches this guarantee with respect to any lot
of Product, MDS may immediately return to KL, at KL’s expense, any Products of such lot received by
MDS. At MDS’ option, KL either will credit MDS for such Products, or pay to MDS any monies paid by
MDS for the Products that breach this guarantee. If KL breaches this guarantee, then to the extent
that MDS terminates or reduces Shipment Orders to allow for replacement products, such termination
or reduction will be credited on a unit basis toward the applicable Purchase Commitment. The
foregoing, along with Article 14, represents MDS’ sole and exclusive remedy for a KL breach of this
guarantee. In no event will KL be deemed to be in breach of this guarantee to the extent KL’s
failure to meet the guarantee is caused by KL’s adherence to the Specifications, proper use of the
Components or compliance with MDS instructions regarding the Specifications or the Components.
Notwithstanding the foregoing, KL shall in all events manufacture the Products in accordance with
the KL process specifications.



ARTICLE 10

WARRANTY




     10.1 KL warrants the Products sold to MDS under this Agreement are, as of the time title is
transferred to MDS, in compliance with the Specifications and the QA Agreement and made in
accordance with the then applicable KL process specifications. KL warrants that its parts and
process specifications are reasonably appropriate for the production of Products which insofar was
they relate solely to said parts and process specifications (and not in any way related to the
Specifications and/or the Components supplied by MDS to KL in connection with the production of the
Products) are merchantable and fit for resale in the Territory (subject to the end-users’ proper
usage thereof and assuming that the Products are used in connection with their intended purpose,
e.g., for use in artificial kidney dialysis). MDS warrants that the Components sold to KL under
this Agreement are, as of the time title is transferred to KL, in compliance with the
Specifications and the QA Agreement and further the Components are reasonably appropriate for the
production of the Products which insofar as they relate solely to said Components and the
Specifications (and not in any way related to the process specifications and any parts supplied by
KL in connection with the production of the Products) are merchantable and fit for resale in the
Territory (subject to the end-users’ proper usage thereof and assuming that the Products are used
in connection with their intended purpose, e.g., for use in artificial kidney dialysis).



     10.2 MDS acknowledges and agrees that, except for the provisions of Section 10.3 , KL’s sole
responsibility to MDS in the case of breach of the foregoing warranty shall be for KL, by mutual
agreement of MDS and KL, to repair or replace the Products with respect to which such warranty is
breached, or at MDS’ election for KL to return to MDS all payments made by



 









 







MDS to KL with respect to such Products or to credit MDS in the amount of all payments made by
MDS to KL with respect to such Products. In no event shall KL be liable for MDS’ loss of profits,
loss of use, or incidental, consequential or special damages of any kind even if KL has been
advised by MDS of any possibility thereof.



     10.3 KL hereby indemnifies and agrees to hold MDS harmless from and against all claims,
liability, damage, cost or expense of MDS, including its reasonable attorney’s fees paid to third
parties arising out of, or in connection with, or as a result of, to the extent based upon the
failure of any of the Products to meet the warranty set forth in Section 10.1 at the time of
delivery to MDS and such failure is not due to any failure of a Component to meet the
Specifications, provided MDS promptly notifies KL of any such claim, KL has control over the
defense of such claim and MDS provides reasonable cooperation. In order to discharge KL’s
obligations under this Section 10.3, KL and MDS agree that MDS shall obtain and keep in force
during the Term, product liability insurance with a limit of liability for the Territory of not
less than US$20 million, and shall name KL as an additional insured. KL shall reimburse MDS for
the cost of such insurance at the rate of US$3.66 per US$1,000 of MDS purchases from KL.



     10.4 MDS shall indemnify and hold KL harmless from and against all claims, liability, damage,
cost or expense of KL, including its reasonable attorney’s fees to the extent based upon: (a) any
false or misleading product claims, representations, descriptions or other statements, whether oral
or written, made or alleged to be made by MDS or its representatives in any advertising, publicity,
promotion or sale of any of the Products, and (b) any product claim arising out of, based on, or
caused by negligent handling of the Products by MDS.



     10.5 The KL warranties set forth herein (including without limitation the warranty set forth
in Section 10.1 that the Products sold to MDS under this Agreement are, as of the time title is
transferred to MDS, in compliance with KL’s then applicable process specifications) are exclusive
and in lieu of all other warranties, whether express or implied, including the implied warranties
of merchantability, infringement, and fitness for a particular purpose. The MDS warranties set
forth herein are exclusive and in lieu of all other warranties, whether express or implied,
including the implied warranties of merchantability, infringement, and fitness for a particular
purpose.



ARTICLE 11

TERM OF AGREEMENT




     11.1 The term of this Agreement (the “Term”) shall be from the Effective Date until January
31, 2010 (the “Initial Term”); provided that such Term shall automatically be renewed for
subsequent periods of one (1) year (collectively, the “Renewal Term”) unless either party gives
notice of termination no later than six (6) months prior to the date on which this Agreement would
otherwise terminate.



 









 





ARTICLE 12

TERMINATION




     12.1 Either party may terminate this Agreement for any material breach of it by the other
party, by giving ninety (90) days written notice to the other party, if such breach shall, as of
the expiration of said ninety (90) day period, remain uncured.



     12.2 Either party shall have the right at its option to terminate this Agreement effective
immediately upon giving written notice to the other party in the event of:




	 	a.	 	appointment of a trustee, receiver or other custodian for all
or substantially all of the property of such other party, or for any lesser
portion of such property if the result is materially and adversely to affect
the ability of such other party to fulfill its affirmative or negative
obligations hereunder;
	 
	 	b.	 	a judicial finding that such other party is insolvent or
bankrupt;
	 
	 	c.	 	the filing of a petition in bankruptcy for itself by such other
party or a decision that bankruptcy proceedings will be instituted with respect
to such other party based on a petition filed by a third party;
	 
	 	d.	 	an assignment of a substantial part of the assets of such other
party for the benefit of creditors;
	 
	 	e.	 	an attachment of a substantial part of the assets of such other
party for the benefit of creditors; or
	 
	 	f.	 	the dissolution or liquidation of a party.





     12.3 If either party here suffers any event of the type enumerated in Section 12.2, it shall
immediately notify the other party in writing of the occurrence of such event.



ARTICLE 13

EFFECT OF TERMINATION




     13.1 No termination of this Agreement, other than by reason of breach of this Agreement by MDS
will relieve KL from its obligation to deliver all Products ordered by any properly placed Shipment
Order of MDS, nor will any termination, other than by reason of breach of this Agreement by KL,
relieve MDS from accepting and paying for all Products ordered by MDS under any properly placed
Shipment Order issued by MDS or relieve MDS of its obligations pursuant to Section 3.3. The rights
and obligations related to the Initial Shortfall Shipments under Sections 3.2b and 3.2e, the rights
and obligations related to the work-in-progress BTL under Section 3.2f.4, the rights and
obligations related to the Renewal Shortfall Shipments under 3.2h, and the indemnification
obligations under Article 10 shall survive the termination of this Agreement.



 









 





ARTICLE 14

PRODUCT RECALL




     14.1 In the event that it shall be deemed necessary by KL or MDS to recall any of the Products
sold by MDS because the Products are believed to violate any provision of any law, the guarantees
provided in Section 9.1 or the warranties provided in Section 10.1, and if such Products have
already been delivered to the Location, KL and MDS shall, subject to Section 14.4 below, share
equally all out-of-pocket costs and expenses of such recall, including, without limitation, refunds
to customers for recalled Products but only in an amount not to exceed the sum of the following
items:




	 	a.	 	the purchase price paid by MDS to KL for the recalled Products;
	 
	 	b.	 	the freight paid by MDS associated with the shipment of
affected Products from the Locations;
	 
	 	c.	 	the cost of notifying customers;
	 
	 	d.	 	the costs associated with the shipment of recalled Products
from customers to MDS; and
	 
	 	e.	 	the cost of shipping replacement Products to customers.






MDS may immediately return any recalled Products to KL for rework or credit.



     14.2 If Products have been recalled or placed under import detention by the FDA, MDS may place
replacement Shipment Orders with KL and KL shall ship such Products by air shipment when required
in MDS’ sole discretion, and shall continue air shipments until the effects of such recall or
import detention have been completed or ended. To the extent MDS requires substitute products for
recalled or detained Products, such substitutes will be credited on a unit basis toward the
applicable Purchase Commitment and MDS shall submit KL proof of its substitutes from another
supplier. In the event MDS or any of its distributors are prevented from operating as a result of
a recall or FDA action MDS shall be relieved of its Purchase Commitments to the extent such recall
or FDA action prevents the resale of the Products.



     14.3 In the event of such a recall of any of the Products sold by MDS, the parties will
cooperate fully with each other in effecting such recall.



     14.4 In the event that KL or MDS determines that it will recall any Products sold by either of
them because the Products are believed to violate any provision of any law, the guarantees of
Section 9.1 or the warranties provided in Section 10.1, KL or MDS may, once the recall has been
substantially completed, request an arbitrator, appointed by the American Arbitration Association,
who shall determine whether KL’s or MDS’ determination to recall was necessary and reasonable. The
arbitrator may require that KL or MDS bear all costs, damages and expenses of such recall or may
apportion such costs and expenses between the parties as the arbitrator deems just under all of the
circumstances.



 









 





     14.5 MDS shall bear all costs and expenses of a recall or import detention of the Products
caused by the negligence of MDS. KL shall bear all costs and expenses of a recall or import
detention of the Products caused by the negligence of KL.



     14.6 In the event of a recall or FDA action that restricts the supply in the United States of
products similar or functionally equivalent to the Products, KL will use its reasonable efforts to
increase production as may be required to assure a continued source of supply to affected patients
and in this regard MDS shall maintain and keep MDS inventories in accordance with the Purchase
Commitments and forecasts provided in Sections 3.2 and 3.3.



ARTICLE 15

RIGHT OF FIRST REFUSAL




     15.1 During the first [**] months following the Effective Date (the “Exclusive Negotiation
Period”), KL shall have the exclusive and first right to negotiate an agreement with MDS relating
to the sale and/or distribution of MDS’ Streamline BTL in Asia, including, without limitation,
Japan (an “Asian Streamline Distribution Agreement”). During the Exclusive Negotiation Period, MDS
will not enter into discussions or negotiations with any third party regarding an Asian Streamline
Distribution Agreement, without first obtaining the written consent of KL. Following any written
request by KL to commence discussions or negotiations of an Asian Streamline Distribution
Agreement, KL and MDS each agree to discuss and negotiate in good faith and to make their
respective representatives available at reasonable times and with reasonable frequency to conduct
such negotiations, and shall share information relevant to the discussions and negotiations,
consistent with customary business practices of the industry. If KL does not exercise its
negotiation right or if the parties cannot agree on the terms and conditions of an Asian Streamline
Distribution Agreement, then at the end of the Exclusive Negotiation Period, KL’s rights under this
Section 15.1, with respect thereto will terminate.



ARTICLE 16

NOTICES




     16.1 Even if not expressly so provided, all notices required or permitted to be given pursuant
or in reference to this Agreement shall be in writing and shall be given by registered airmail,
with appropriate postage prepaid or in the form of a telefax, followed immediately by a
confirmation letter by registered airmail. Such notice shall be directed to the following
addresses:


If to KL:



Kawasumi Laboratories, Inc.

3-28-15 Minami-Ohi, Shinagawa-ku

Tokyo, 140-8555, Japan

Facsimile: 81-3-3763-2351



Attention: Managing Director, Leader of Business Units



If to MDS:




 









 







Medisystems Corporation

439 South Union Street, 5th Floor

Lawrence, MA, 10843 U.S.A.

Facsimile: 1-978-687-4805



Attention: President with a copy to General Counsel



or to such other address as to which either party may notify the other. Notice given as herein
provided shall be considered to have been given seven (7) days after the mailing thereof, or if
delivered by telefax, when received.




ARTICLE 17

TERMINATION OF 2001 AGREEMENT FOR BTL AND NX




     17.1 KL and MDS agree to terminate the 2001 Agreement in its entirety solely with respect to
BTL and NX as of January 31, 2008, and have this Agreement supersede the terms and conditions of
the 2001 Agreement with respect to the supply and distribution of the BTL and NX between the
parties. For clarification purposes, the 2001 Agreement shall continue to be in full force and
effect with respect to AVF, BH, VN and PHE, and shall govern the supply and distribution thereof
between the parties.



ARTICLE 18

ENTIRE AGREEMENT




     18.1 This Agreement contains the entire agreement between the parties relating to the Products
and Components and all prior proposals, discussions, and writings by and between the parties and
relating to the subject matter herein are superseded by this Agreement, it being expressly
understood that the 2001 Agreement shall remain in full force and effect with respect to AVF, BH,
VN and PHE.



ARTICLE 19

EFFECT OF HEADINGS




     19.1 The headings to Articles and Sections of this Agreement are to facilitate reference only,
and do not form a part of this Agreement and shall not in any way affect or be considered in the
interpretation hereof.



ARTICLE 20

NON-WAIVER AND MODIFICATION




     20.1 None of the terms of this Agreement shall be deemed to be waived by either party nor
amended unless such waiver is in writing and is signed by the party to be charged with such waiver,
or the amendment is in writing and signed by both parties, and such writing recites specifically
that it is a waiver of, or amendment to, the terms of this Agreement.



 









 





ARTICLE 21

ASSIGNMENT




     21.1 Neither this Agreement, nor any rights and obligations hereunder, shall be assigned by
any of the parties hereto to any other person, firm or corporation other than an affiliate, without
the express prior written consent thereto by the other party. This Agreement shall be binding
upon, and inure to the benefit of, the parties, their successors, and permitted assigns.



ARTICLE 22

DISCLAIMER OF AGENCY




     22.1 This Agreement shall not constitute either of the parties hereto the legal representative
or the agent of the other party hereto for any purpose whatsoever, nor shall either party hereto
have any right or authority to assume, create or incur in any manner any obligation or other
liability or any kind or nature, express or implied, against, or in the name or on behalf of, the
other party hereto.



ARTICLE 23

GOVERNING LANGUAGE




     23.1 This Agreement is in the English language only, which language shall be controlling in
all respects.



ARTICLE 24

APPLICABLE LAW




     24.1 The validity, construction and performance of this Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving effect to any
choice of law rule that would cause application of the laws of any other jurisdiction, and in no
event will this Agreement be governed by, and the parties expressly disclaim application of, the
United Nations Convention on Contracts for the International Sale of Goods.



ARTICLE 25

ARBITRATION




     25.1 All disputes arising in connection with this Agreement shall be finally settled under the
Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more
arbitrators in accordance with the said rules. The arbitration shall take place in Tokyo, Japan if
the dispute is initiated by MDS and in Seattle, Washington, U.S.A., if initiated by KL.



ARTICLE 26

SAVING CLAUSE




     26.1 In the event that any provision or provisions of this Agreement shall be void, unlawful
or unenforceable, such provision or provisions shall be deemed excluded from this



 









 







Agreement, but this Agreement shall not otherwise be affected thereby and the remaining
provisions hereof shall continue in full force and effect.



ARTICLE 27

GLOSSARY OF DEFINED TERMS USED IN THIS AGREEMENT




     Following are the definitions of terms used in and for the purposes of this Agreement.



     27.1 “2001 Agreement” has the meaning set forth in Section 1.4.



     27.2 “Act” means the United States Federal Food, Drug and Cosmetic Act, as amended from time
to time.



     27.3 “Agreement” has the meaning set forth in the Preamble.



     27.4 “Asian Streamline Distribution Agreement” has the meaning set forth in Section 15.1.



     27.5 “AVF” means [**] and larger needle sets, such as AV fistula needle sets used in
artificial kidney dialysis procedures.



     27.6 “Baht/US$Exchange Rate” has the meaning set forth in Section 5.3.



     27.7 “Base PVC Price” has the meaning set forth in Section 5.4.



     27.8 “BH” means buttonhole needles.



     27.9 “BTL” means blood tubing line sets used in artificial kidney dialysis and other similar
extracorporeal procedures.



     27.10 “Codes” means the individual product codes used to identify each product model.



     27.11 “Components” means, collectively, the parts, components, and other materials designed by
MDS to be used in the Products which are listed in Annex A, which may be revised from time to time
pursuant to Section 2.1.



     27.12 “Component Order” means the firm shipment order for the Components.



     27.13 “Component Order Date” has the meaning set forth in Section 3.3d.



     27.14 “Contract Year” means the twelve-month period following the Effective Date and each
subsequent twelve-month period during the Term.



     27.15 “Current PVC Price” has the meaning set forth in Section 5.4.



     27.16 “[**]” means [**].



     27.17 “Dead Stock” means components with a limited useful life that are not incorporated into
sold Products in a timely fashion.



 









 





     27.18 “Effective Date” means February 1, 2008.



     27.19 “Exclusive Negotiation Period” has the meaning set forth in Section 15.1.



     27.20 “FDA” means the United States Food and Drug Administration.



     27.21 “Final KL Forecast” has the meaning set forth in Section 3.3c.3.



     27.22 “Final MDS Forecast” has the meaning set forth in Section 3.3a.3.



     27.23 “First KL Forecast” has the meaning set forth in Section 3.3c.1.



     27.24 “First MDS Forecast” has the meaning set forth in Section 3.3a.1.



     27.25 “Following Renewal Term” has the meaning set forth in Section 3.2i.



     27.26 “Freight Costs” has the meaning set forth in Section 5.2.



     27.27 “Forecast Date” has the meaning set forth in Section 3.3a.



     27.28 “Initial Goal” has the meaning set forth in Section 3.2a.



     27.29 “Initial Maximum Order Quantity” has the meaning set forth in Section 3.2j.



     27.30 “Initial Purchase Commitment” has the meaning set forth in Section 3.2a.



     27.31 “Initial Shortfall” has the meaning set forth in Section 3.2b.



     27.32 “Initial Shortfall Shipments” has the meaning set forth in Section 3.2b.



     27.33 “Initial Streamline Purchase Commitment” has the meaning set forth in Section 3.2c.



     27.34 “Initial Term” has the meaning set forth in Section 11.1.



     27.35 “KL” means Kawasumi Laboratories, Inc., Kawasumi Laboratories America, Inc., Kawasumi
Laboratories Europe GMBH, and Kawasumi Laboratories (Thailand) Co., Ltd., collectively.



     27.36 “Locations” has the meaning set forth in Section 3.4.



     27.37 “Maximum Exchange Rate” has the meaning set forth in Section 5.3.



     27.38 “Minimum Exchange Rate” has the meaning set forth in Section 5.3.



     27.39 “MDS” means Medisystems Corporation, Medisystems Europe. Srl., and Medimexico S. de R.L.
de C.V., collectively.



 









 





     27.40 “NX” means tubing and/or bag sets suitable for use with NxStage Medical, Inc. renal
therapy equipment.



     27.41 “PHE” means [**] and larger needle sets, such as pheresis needles including unsterile
sub-assemblies for pheresis and other similar extracorporeal blood therapies.



     27.42 “Product Prices” has the meaning set forth in Section 5.2.



     27.43 “Products” means, collectively, BTL and NX products which Codes are listed in Annex A,
which may be revised from time to time pursuant to Section 2.1.



     27.44 “Purchase Commitment(s)” means, collectively, the Initial Purchase Commitment, the
Initial Streamline Purchase Commitment, and all Renewal Purchase Commitments.



     27.45 “PVC Cost Ratio” has the meaning set forth in Section 5.4.



     27.46 “PVC Price” has the meaning set forth in Section 5.4.



     27.47 “PVC Price Decrease Ratio” has the meaning set forth in Section 5.4.



     27.48 “PVC Price Increase Ratio” has the meaning set forth in Section 5.4.



     27.49 “QA Agreement” means the Quality Assurance Agreement, dated as of October 25, 1999,
between MDS and KL.



     27.50 “Renewal Goal” has the meaning set forth in Section 3.2g.



     27.51 “Renewal Maximum Order Quantity” has the meaning set forth in Section 3.2k.



     27.52 “Renewal Purchase Commitment” has the meaning set forth in Section 3.2g.



     27.53 “Renewal Shortfall” has the meaning set forth in Section 3.2h.



     27.54 “Renewal Shortfall Shipments” has the meaning set forth in Section 3.2h.



     27.55 “Renewal Term” has the meaning set forth in Section 11.1.



     27.56 “Revised Initial Commitment Term” has the meaning set forth in Section 3.2f.



     27.57 “Shipment Order” means the firm shipment order for the Products.



     27.58 “Shipment Order Date” has the meaning set forth in Section 3.3b.



     27.59 “Shipment Period” has the meaning set forth in Section 3.3b.



     27.60 “Specifications” means the specifications set forth in the QA Agreement.



     27.61 “Streamline BTL” means the BTL products designated as streamline BTL products in Annex
A.



 









 





     27.62 “Supply Commitment” has the meaning set forth in Section 3.2l.



     27.63 “Term” has the meaning set forth in Section 11.1.



     27.64 “Territory” means the different geographical area(s) for sale, resale or use for
different Products described in Annex B.



     27.65 “VN” means sets suitable for subcutaneous access devices such as the VascA, Inc.
LifeSite blood access valve.



 









 




IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their authorized
representatives as of the date set forth in the preamble.




KAWASUMI LABORATORIES, INC.




/s/
Yukihiro
Kawano 





Yukihiro Kawano

President




MEDISYSTEMS CORPORATION




/s/ Jeffrey H. Burbank 





Jeffrey H. Burbank

President