Document:

exv10w9

 

EXHIBIT 10.9

July 31, 2003

Mr. John L. Babitt

168 Morningside Drive

Coral Gables, FL 33133

Dear John,

CABG Medical, Inc. (the “Company”) recognizes that your contribution to the
growth of the Company has been or will be substantial and therefore desires to
compensate you in the event of a change of control under the circumstances
defined below. In this connection, the Board of Directors of the Company (the
“Board”) recognizes that the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders.

The Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the
Company’s management and consulting team, including yourself, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company.

The Company agrees that you will receive the severance benefits set forth in
this letter agreement (“Agreement”) in the event your employment or consulting
arrangement with the Company is terminated subsequent to a “Change in Control”
(as defined in Section 2 hereof) under the circumstances described below:

	1.	 	Term of Agreement. This Agreement shall commence on the date hereof and
shall continue in effect through December 31, 2008; provided, however,
that commencing on January 1, 2004 and each January 1 thereafter, the term
of this Agreement shall automatically be extended for one additional year
unless, not later than November 30 of the preceding year, the Company
shall have given notice that it does not wish to extend this Agreement;
and provided further, that notwithstanding any such notice by the Company
not to extend, this Agreement shall continue in effect for a period of 24
months beyond the term provided herein if a change in control of the
Company (as defined in Section 2 hereof) shall have occurred during such
term.

	2.	 	Change in Control. No benefits shall be payable hereunder unless there
shall have been a Change in Control of the Company, as set forth below,
and your employment by or consulting arrangement with the Company shall
have been terminated in accordance with Section 3 below. For purposes of
this Agreement, “Change of Control” shall mean any of the following events
occurring after the date of this Agreement:
	 
	 	 	
(a) A merger or consolidation to which the Company is a party if the
individuals and entities who were shareholders of the Company immediately
prior to the

 

effective date of such merger or consolidation have, immediately
following the effective date of such merger or consolidation, beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of less than fifty percent (50%) of the total combined voting power
of all classes of securities issued by the surviving corporation for the
election of directors of the surviving corporation;

     (b) The acquisition of direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of the Company by any person or entity or by a group of
associated persons or entities acting in concert in one or a series of
transactions, which causes the aggregate beneficial ownership of such
person, entity or group, excluding Manuel A. Villafana and his
affiliates, to equal or exceed twenty percent (20%) or more of the total
combined voting power of all classes of the Company’s then issued and
outstanding securities;

     (c) The sale of substantially all of the assets of the Company to
any person or entity that is not a wholly-owned subsidiary of the
Company;

     (d) The approval by the shareholders of the Company of any plan or
proposal for the liquidation of the Company;

     (e) After such time as the Company’s Board of Directors has at least
three or more board members, a change in the composition of the Board of
the Company at any time during any consecutive twenty-four (24) month
period such that the “Continuity Directors” no longer constitute at least
a fifty percent (50%) majority of the Board. For purposes of this event,
“Continuity Directors” means those members of the Board who were
directors at the beginning of such consecutive twenty-four (24) month
period or were elected by, or on the nomination or recommendation of, at
least a two thirds (2/3) majority of the then-existing Board of
Directors; or

     (f) The execution by the Company of an agreement in principle or a
definitive agreement relating to an event described in Section 2(a),
2(b), 2(c), 2(d) or 2(e) that ultimately results in such a Change of
Control, or a tender or exchange offer or proxy contest is commenced that
ultimately results in an event described in Section 2(b) or 2(e).

	3.	 	Termination Following a Change in Control. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided in Section 4
hereof upon any termination of your employment or consulting arrangement
within 12 months following the Change in Control unless such termination
is (A) because of your death, (B) by the Company for Cause (as defined
below) or (C) if any employee, by you other than for Good Reason (as
defined below).

     (a) Cause. Termination by the Company of your employment or
consulting arrangement for “Cause” shall mean termination upon:

     (i) Your conviction of or plea of guilty or nolo contendere to
a felony resulting from conduct occurring on or after the date of
the Change of Control;

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     (ii) Your incurable breach of any material element of any
proprietary or confidential information agreement with the Company;

     (iii) Your conduct that is materially detrimental to Company’s
business reputation or goodwill;

     (iv) Any dishonesty in dealing between you and the Company or
between you and Company’s vendors, advisors, other employees, or
customers;

     (v) Your active use of alcohol or controlled substances in a
manner which impairs your ability to perform your duties;

     (vi) Your violation of any material portion of this Agreement;

     (vii) Your failure to substantially perform your material
duties, which failure is not cured within thirty (30) days after
your receipt of written notice from the Company specifying the
non-performance.

     (b) Good Reason. Termination by you of your employment for “Good
Reason” shall mean termination within 12 months following a Change in
Control upon the occurrence of any one or more of the following:

     (i) the assignment to you of any duties inconsistent in any
respect with your position (including status, offices, titles, and
reporting requirements), authorities, duties, or other
responsibilities as in effect immediately prior to the Change in
Control or any other action of the Company which results in a
diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by the Company promptly after receipt of
notice thereof given by you;

     (ii) a reduction by the Company in your base salary as in
effect on the date hereof and as the same shall be increased from
time to time hereafter;

     (iii) the Company’s requiring you to be based at a location in
excess of thirty (30) miles from the location of your principal
office immediately prior to the Change in Control;

     (iv) the failure by the Company to (a) continue in effect any
material compensation or benefit plan, program, policy or practice
in which you were participating at the time of the Change in
Control or (b) provide you with compensation and benefits at least
equal (in terms of benefit levels and/or reward opportunities) to
those provided for under each employee benefit plan, program,
policy and practice as in effect immediately prior to the Change in
Control (or as in effect following the Change in Control, if
greater); and

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     (v) any purported termination by the Company of your
employment that is not effected pursuant to a Notice of Termination
(as defined below).

Your right to terminate your employment pursuant to this Subsection shall not
be affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason hereunder.
Termination by you of your employment for Good Reason as defined in this
Subsection 3(b) shall constitute termination for Good Reason for all purposes
of this Agreement.

     (c) Notice of Termination. Any purported termination of your
employment or consulting arrangement by the Company or by you (other than
by reason of your death) within 12 months following the month in which a
Change in Control occurs, shall be communicated by Notice of Termination
to the other party hereto in accordance with Section 8 hereof. Failure
by you to provide Notice of Termination shall not limit any of your
rights under this Agreement except to the extent the Company can
demonstrate that it suffered actual damages by reason of such failure.
For purposes of this Agreement, a “Notice of Termination” shall mean a
written notice which shall indicate the specific termination provision in
this Agreement relied upon and the Date of Termination (as defined below)
and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of your employment under the
provision so indicated.

     (d) Date of Termination. “Date of Termination” shall mean the date
specified in the Notice of Termination (except in the case of your death,
in which case Date of Termination shall be the date of death); provided,
however, that if your employment or consulting arrangement is terminated
by the Company other than for Cause, the date specified in the Notice of
Termination shall be at least 30 days from the date the Notice of
Termination is given to you and if your employment is terminated by you
for Good Reason, the date specified in the Notice of Termination shall
not be more than 60 days from the date the Notice of Termination is given
to the Company.

     (e) Termination Prior to a Change in Control. Any termination of
your employment or consulting arrangement by the Company without Cause
prior to a Change in Control which occurs at the request or insistence of
any person (other than the Company) related to the Change in Control
shall be deemed to have occurred after the Change in Control for purposes
of this Agreement.

	4.	 	Compensation Upon Termination. Subject to paragraph 5 of this Agreement,
following a Change in Control, upon termination of your employment or
consulting arrangement during the term of this Agreement you shall be
entitled to the following benefits:

     (a) If your employment by the Company shall be terminated (y) by the
Company for any reason other than Cause, or (z) by you for Good Reason,
or if your consulting arrangement shall be terminated by the Company for
any reason other than Cause you shall be entitled to the benefits
provided below:

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     (i) the Company shall pay you your full base salary or
consulting fees through the Date of Termination at the rate in
effect at the time Notice of Termination is given;

     (ii) the Company will pay as severance benefits to you a
severance payment equal to the sum of (i) 24 months of your annual
base salary or annual base consulting fees in effect at the time
Notice of Termination is given or immediately prior to the date of
the Change in Control, and (ii) any annual target bonus potential
available to you at the time Notice of Termination is given, with
such amount payable at the Company’s option in a lump sum or in
installment payments over a period not longer than 36 months; and

     (iii) for a 12-month period after the Date of Termination
(which time period will coincide with the 18-month COBRA period
available to you, if applicable), the Company will arrange to
provide you either with welfare benefits (including life and health
insurance benefits), perquisites and other employee benefits of
substantially similar design and cost (to you) as the welfare
benefits, perquisites and other employee benefits available to you
immediately prior to the Notice of Termination or the Company will
pay you an amount equal to the Company’s share of the cost of such
programs in effect at the time of Termination; but benefits
otherwise receivable by you pursuant to this Subsection (a)(iii)
shall be discontinued if you obtain full time employment providing
welfare benefits during the 12-month period following the Date of
Termination.

     (b) The payment provided for in Section 4(a)(i) and at least the
first payment provided for in Section 4(a)(ii) above shall be made not
later than 60 days following the Date of Termination; provided, however,
that if the amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an estimate as
determined in good faith by the Company of the minimum amount of such
payments and shall pay the remainder of such payments, with the exception
of scheduled installment payments, as soon as the amount thereof can be
determined but in no event later than 75 days after the Date of
Termination.

In the event that the amount of the estimated payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to you payable no later than 30 days after demand by
the Company.

     (c) The Company shall also pay to you any legal fees and expenses
incurred by you (A) as a result of successful litigation against the
Company for nonpayment of any benefit hereunder or (B) in connection with
any dispute with any federal, state or local governmental agency with
respect to benefits claimed under this Agreement. If you utilize
arbitration to resolve any such dispute, the Company will pay any legal
fees and expenses incurred by you in connection therewith.

     (d) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of

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any payment provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer after the
Date of Termination, or otherwise, except as set forth in Section
4(a)(iii) hereof.

	5.	 	(a) Release of Claims. Payment of any severance payments under the terms
of this Agreement are conditioned on you signing a full and final release
of all claims against the Company, prepared at the direction of the
Company.
	 
		 	(b) Limitation on Payments. You shall not be entitled to receive any
Change of Control Payments, as defined below, which would constitute a
“parachute payment” for purposes of Code Section 280G, or any successor
provision, and the regulations thereunder. In the event any Change of
Control Payments payable to you would constitute a “parachute payment,”
you shall have the right to designate those Change of Control Payments
which will be reduced or eliminated so that you will not receive a
“parachute payment.” For purposes of this Section 5(b), a “Change of
Control Payment” shall mean any payment, benefit or transfer of property
in the nature of compensation paid to or for your benefit under any
arrangement which is considered contingent on a Change of Control for
purposes of Code Section 280G, including, without limitation, any and all
of the Company’s salary, bonus, incentive, restricted stock, stock
option, compensation or benefit plans, programs or other arrangements,
and shall include benefits payable under this Agreement.
	 
	6.	 	Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit your continuing or future participation in any benefit, bonus,
incentive, retirement or other plan or program provided by the Company and
for which you may qualify, nor shall anything herein limit or reduce such
rights as you may have under any other agreement with, or plan, program,
policy or practice of, the Company. Amounts which are vested benefits or
which you are otherwise entitled to receive under any agreement with, or
plan, program, policy or practice of, the Company (including, without
limitation, the cash out of unused vacation days upon termination of
employment) shall be payable in accordance with such agreement, plan,
program, policy or practice, except as explicitly modified by this
Agreement.
	 
	7.	 	Successors and Assigns. This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees.
If you should die while any amount would still be payable to you hereunder
if you had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if theme is no such designee,
to your estate or, if no estate, in accordance with applicable law.
	 
	8.	 	Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United
States registered mail, postage prepaid, addressed to the other party as
follows:

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               If to the Company, to:

	 	 	 
	

	 	CABG Medical, Inc.
	

	 	Attention: Corporate Secretary
	

	 	14505 21st Avenue North, Suite 212
	

	 	Minneapolis, Minnesota 55447

               If to you, to:

	 	 	 
	

	 	Mr. John L. Babitt
	

	 	168 Morningside Drive
	

	 	Coral Gables, FL 33133

	 	 	Either party to this Agreement may change its address for purposes of
this Section 8 by giving 15 days’ prior notice to the other party hereto.
	 
	9.	 	Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically
designated by the Board. The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws of the State
of Minnesota.
	 
	10.	 	Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
	 
	11.	 	Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same instrument.
	 
	12.	 	Arbitration. If you so elect, any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by
arbitration in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction; provided, however, that you shall
be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement. If you do not elect
arbitration, you may pursue any and all legal remedies available to you.
	 
	13.	 	Effective Date. This Agreement shall become effective as of the date set
forth above.
	 
	14.	 	Employment. This Agreement does not constitute a contract of employment
or impose on the Company any obligation to retain you as an employee or a
consultant, to continue your current employment status or consultant
status or to change any employment policies of the Company. For
employees, unless otherwise indicated in a separate

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	  	 	    Employment Agreement, you remain at all times an at-will employee as
described in such agreement.

        If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.

Sincerely,

CABG MEDICAL, INC.

	 	 	 
	By

	 	/s/ Manuel A. Villafana
	

	 	
 
	

	 	Name

Title Chairman & CEO

Agreed to this 19 day of August, 2003

	 	 	 
	By

	 	/s/ John L. Babitt
	

	 	
 
	

	 	Name

8exv10w10

 

EXHIBIT 10.10

SUPPLY AGREEMENT

     This Agreement, dated 1/1/04, is made between BARD PERIPHERAL VASCULAR,
Inc., a subsidiary of C. R. Bard, Inc. (“Bard”), having
offices at 1625 W. 3rd
Street, Tempe, AZ 85281 (“BARD PERIPHERAL VASCULAR”) and CABG Medical, Inc.,
having offices at 14505 21st Ave. N., Suite 212, Minneapolis, MN 55447
(“Purchaser”).

RECITALS

     WHEREAS, BARD PERIPHERAL VASCULAR is capable of manufacturing those
components described in the attached Exhibit A (the “Components); and

     WHEREAS, Purchaser desires to purchase the Components from BARD PERIPHERAL
VASCULAR for use in Implanted Devices, as such term is hereinafter defined; and

     WHEREAS, BARD PERIPHERAL VASCULAR wishes to sell Components to Purchaser.

     NOW, THEREFORE, in consideration of the terms and provisions of this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by the execution and delivery thereof,
BARD PERIPHERAL VASCULAR and Purchaser agree as follows:

	I.	 	Definitions

For purposes of this Agreement, the terms hereinafter set forth shall be
defined as follows:

(A) “Confidential Information” means such confidential and/or proprietary
information disclosed by one party to the other prior to the date hereof
or during the term of this Agreement. Such information may include, but
is not limited to, know-how, trade secrets, formulations, product data,
complaint and safety information, and regulatory information.
Information will not be considered Confidential Information if (i) it is
at the time of disclosure or thereafter part of the public domain,
without the fault of the party claiming such information is not
Confidential Information, (ii) the party claiming such information is not
Confidential Information can show through tangible records that it
already knew the information before it was received, (iii) the party
claiming such information is not Confidential Information can show
through tangible records that the information was developed independently
without reliance on such information, or (iv) the party claiming such
information is not Confidential Information obtained such information
from a third party without breach of an obligation of confidentiality or
(v) it is disclosed verbally, except where the disclosure is subsequently
reduced to writing and marked as confidential or proprietary by the
disclosing party and furnished to the receiving party within thirty (30)
days of the verbal disclosure.

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(B) “Implanted Device” means any medical device that (i) is manufactured
by or for Purchaser, (ii) which contains one or more Components, and
(iii) is designed to be permanently or temporarily implanted inside the
human body.

(C) “Effective Date” means the date first above written.

(D) “Affiliate” means a corporation or other business entity that
directly or indirectly through one or more intermediaries, controls, or
is controlled by, or under common control with a party to this Agreement.
For this purpose, “control” means beneficial ownership of more than
fifty percent (50%) of the voting stock or more than fifty percent (50%)
interest in the income of that corporation or other business entity.

	II.	 	Purchaser ‘s Representations

Purchaser represents and warrants to BARD PERIPHERAL VASCULAR that:

(A) Purchaser is a manufacturer of Implanted Devices.

(B) Purchaser has determined that the Components are suitable for the
applications in which it uses the Components in Implanted Devices.

(C) Purchaser has in its employ or has retained consultants who are
experienced and knowledgeable in the properties, processing techniques
and potential hazards of the Components and their use in Implanted
Devices. Purchaser has a regulatory staff properly trained in the
requirements of the United States Federal Food, Drug and Cosmetic Act and
pertinent regulations and similar statutes and regulations of states and
other countries in which Implanted Devices may be sold and qualified
medical staff, consultants and or clinical investigators to conduct such
studies as are needed to evaluate the safety and efficacy of and the
proper labeling for the Implanted Devices.

	III.	 	Purchase and Sale

(A) BARD PERIPHERAL VASCULAR agrees to manufacture and sell the
Components to Purchaser and Purchaser agrees to purchase the Components
solely for integration into Implanted Devices. All sales of Components
shall be subject solely to the terms and conditions of this Agreement.
It is the intention of the parties that this Agreement be controlling
over additional or different terms of any purchase order, confirmation,
invoice or similar document, even if accepted in writing by both parties.

(B) On the Effective Date, Purchaser shall provide BARD PERIPHERAL
VASCULAR with a forecast of its requirements of the Components for
the first twelve (12) months period in addition to a firm purchase
order for the nearest three months of

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that twelve month period. Quarterly thereafter, Purchaser shall provide
BARD PERIPHERAL VASCULAR with updated rolling twelve (12) month forecasts
of its requirements of the Components in addition to a firm purchase
order for the nearest three months of that twelve month period. Each
forecast will include the Component code, unit quantity and requested
delivery date which will include a lead time of at least sixty (60) days.
In the event Purchaser issues a firm purchase order for a quantity of
Components which exceeds one hundred and twenty-five percent (125%) of
the quantity as forecasted by Purchaser, the parties shall promptly
negotiate a mutually acceptable time schedule for delivery of such
product.

(C) The price and minimum purchase requirements for Components are
set forth in Exhibits B and C hereto. Payment terms are 45 days from date
of shipment. During each specified time period in Exhibit B, Purchaser
guarantees that it will purchase and take delivery of the applicable
minimum purchase requirement set forth in Exhibit B. If, at the end of
any such specified time period, Purchaser has not purchased and taken
delivery of such minimum quantity of units, BARD PERIPHERAL VASCULAR
shall have the right to invoice Purchaser for the difference between such
minimum quantity and the lesser quantity of the Components as Purchaser
purchased and took delivery of during such specified time period.
Purchaser will pay any such invoice within forty-five (45) days of its
receipt.

(D) BARD PERIPHERAL VASCULAR shall ship the Components F.O.B. Bard’s
distribution facility at Las Piedras Industrial Park, Lot #5, Las
Piedras, Puerto Rico 00771, or BARD PERIPHERAL VASCULAR’s facility at
1156 West Southern Avenue, Tempe, Arizona 85282. All Components
delivered pursuant to this Agreement will be suitably packed for air
freight shipment in BARD PERIPHERAL VASCULAR’s standard shipping cartons,
marked for shipment to the address specified by Purchaser in its purchase
order, and delivered to Purchaser or its carrier for shipment.

(E) Purchaser will inspect all Components promptly upon receipt thereof
and may reject any Component that fails upon delivery to conform to this
Agreement. Components not rejected within thirty (30) days of their
delivery to Purchaser shall be deemed accepted by Purchaser. Each
shipment must include appropriate QA data, including but not limited to
the certificate of compliance for each lot and the inspection data, if
available.

	IV.	 	Purchaser’s Covenants

Purchaser covenants and agrees to the following:

(A) Purchaser will be responsible for and will perform or has performed
all tests necessary to provide reasonable assurance of the suitability of
the Components for the applications in which Purchaser uses the
Components in Implanted Devices.

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(B) Purchaser will provide its customers with all warnings reasonably
necessary for the appropriate use of the Implanted Devices.

(C) Purchaser will maintain lot traceability records in compliance
with quality system regulations and ISO 9001 standards.

(D) Purchaser will not resell the Components as stand alone items, except
solely as a replacement part for any Components previously incorporated
into Implanted Devices and sold by Purchaser.

	V.	 	BARD PERIPHERAL VASCULAR’s Covenants

BARD PERIPHERAL VASCULAR covenants and agrees to the following:

(A) As may be agreed by BARD PERIPHERAL VASCULAR and Purchaser in writing
with respect to individual Components, BARD PERIPHERAL VASCULAR will
cooperate with Purchaser by providing information reasonably requested by
Purchaser regarding the Components for the purpose of Purchaser obtaining
governmental approvals for Implanted Devices as well as such other
information as may be reasonably requested by Purchaser in writing
relating to health and safety aspects of the Components supplied under
this Agreement. All such information disclosed to Purchaser by BARD
PERIPHERAL VASCULAR shall be deemed Confidential Information of BARD
PERIPHERAL VASCULAR.

(B) BARD PERIPHERAL VASCULAR agrees that it will not make a change in any
specification for the Component which materially affects the
characteristics of a Component without notifying Purchaser in writing
prior to implementing the change, such as: (1) source or composition of
any raw material used in the manufacture of the Component, or (2) method
of producing, processing or testing the Component. If the Purchaser does
not authorize such change, BARD PERIPHERAL VASCULAR may proceed with the
change if the Purchaser is provided with an opportunity to submit a final
purchase order of the Component (according to the specifications in
effect prior to any change) for an amount of product not to exceed the
amount actually purchased by Purchaser in the prior 12 months.

(C) BARD PERIPHERAL VASCULAR agrees, in its sole discretion, to provide
Purchaser with the results of certain tests undertaken on a product of
BARD PERIPHERAL VASCULAR that may be equivalent to the Component, which
may include the dossier relating to such product, which results may
enable the Purchaser to file applications with appropriate regulatory
bodies.

(D) BARD PERIPERAL VASCULAR agrees, in its sole discretion, to allow the
Purchaser access to and copies of certain applicable quality documents as
deemed reasonably necessary to perform vendor audits in accordance with
ISO 9001 or other applicable quality standards.

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	VI.	 	BARD PERIPHERAL VASCULAR’s Warranty/Limitation of BARD PERIPHERAL
VASCULAR’s Liability

(A) BARD PERIPHERAL VASCULAR warrants that the Components sold to
Purchaser hereunder will: (i) be manufactured in accordance with
applicable quality system regulations; (ii) to the extent sold in the
United States, comply at the time of shipment with the requirements of
the U.S. Food, Drug and Cosmetic Act and applicable regulations
promulgated thereunder; and (iii) be free from defects in design,
material and workmanship for a period of one year after shipment to
Purchaser. Subject to Purchaser’s and its customers’ compliance with all
instructions and requirements regarding the use of the Components, BARD
PERIPHERAL VASCULAR agrees in its sole discretion and as Purchaser’s sole
remedy to either repair or replace any Component sold hereunder that is
demonstrated to have a defect in design, material or workmanship and of
which defect BARD PERIPHERAL VASCULAR is notified in writing by Purchaser
within thirty (30) days after Purchaser receives notice from a customer
of the alleged defect in the Component or repay any applicable purchase
price paid to BARD PERIPHERAL VASCULAR for such Component.

(B) EXCEPT FOR THE FOREGOING WARRANTIES, BARD PERIPHERAL VASCULAR MAKES
NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, A
WARRANTY OF MERCHANTABILITY, A WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR A WARRANTY OF INTELLECTUAL PROPERTY NON-INFRINGEMENT,
INCLUDING, BUT NOT LIMITED TO PATENT NON-INFRINGEMENT, ALL OF WHICH ARE
EXPRESSLY DISCLAIMED, WHETHER EXPRESS OR IMPLIED, IN FACT OR BY LAW, AND
BARD PERIPHERAL VASCULAR SHALL HAVE NO FURTHER OBLIGATION OR LIABILITY
WITH RESPECT TO THE COMPONENTS. BARD PERIPHERAL VASCULAR DOES NOT MAKE
ANY WARRANTY TO PURCHASER’S CUSTOMERS OR AGENTS. BARD PERIPHERAL
VASCULAR HAS NOT AUTHORIZED ANYONE TO MAKE ANY REPRESENTATION OR WARRANTY
OTHER THAN AS PROVIDED ABOVE. BARD PERIPHERAL VASCULAR SHALL IN NO EVENT
BE LIABLE FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, INCIDENTAL
OR SIMILAR DAMAGES, INCLUDING WITHOUT LIMITATION, DAMAGES FOR HARM TO
BUSINESS, LOST PROFITS OR LOST SAVINGS, EVEN IF BARD PERIPHERAL VASCULAR
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, REGARDLESS OF THE
FORM OF ACTION.

	VII.	 	Indemnification

(A) Purchaser agrees to indemnify, defend and hold harmless BARD
PERIPHERAL VASCULAR and its Affiliates (including without limitation is
directors, officers, employees, agent, representatives and shareholders)
from and against any and all claims by any third party for personal injury
or property damage, including any claims, actions,

-5-

 

suits, proceedings, liabilities, obligations, losses, damages (including
any fines, penalties or punitive damages), settlement, interests, costs
and expenses (including attorneys’ fees, court costs and other reasonable
out-of-pocket expenses incurred in investigating, preparing or defending
any of the foregoing or in enforcing rights hereunder) resulting therefrom
by reason of or in connection with or arising out of or relating to any
sale, transfer, or use by any person of any Implanted Device sold or
otherwise made available by Purchaser or any related persons or entities
(including without limitation any current or former direct or indirect
parent or subsidiary or any Affiliate or associate thereof) in which a
Component is incorporated or otherwise involved, except to the extent
arising or resulting from (i) a defect in the design, material or
workmanship of a Component and such defect is proved to be the actual and
proximate cause of the claimed personal injury or property damage, or (ii)
the infringement by Component of the patents or other intellectual
property rights of any third party, such patents and other intellectual
property rights limited to compositions and excluding any methods of
manufacture or devices or use thereof.

(B) Any entity seeking indemnification hereunder must notify Purchaser
within ten (10) calendar days of the date of actual notice of any claim
for which it seeks indemnification, provided that any such failure shall
not relieve Purchaser of its obligations hereunder except to the extent
that Purchaser is actually prejudiced by such failure to notify. In the
event that Purchaser shall be called upon to provide the indemnification
set forth herein, Purchaser shall control the defense, litigation and/or
settlement of such claim (except to the extent that any settlement
involves some commitments, responsibilities and/or obligations on the
part of BARD PERIPHERAL VASCULAR, in which case such settlement shall
require the prior written consent of the BARD PERIPHERAL VASCULAR),
action or proceeding with attorneys of its choosing, and the BARD
PERIPHERAL VASCULAR and all other indemnified entities shall cooperate
as may reasonably be required by Purchaser (but at Purchaser’s expense in
such defense, litigation and/or settlement). BARD PERIPHERAL VASCULAR
reserves the right to participate at its own cost in any proceedings with
counsel of its own choosing. BARD PERIPHERAL VASCULAR, Purchaser and
their respective counsel will cooperate fully and make available all
books, records, information and witnesses under their control and
reasonably necessary or useful in connection with the defense of any such
claim. Purchaser shall not, in the defense of any such claim or
proceeding, except with the prior written consent of BARD PERIPHERAL
VASCULAR, consent to the entry of any judgment or enter into any
settlement which would be to the financial or other detriment of BARD
PERIPHERAL VASCULAR.

(C) The provisions of this section shall survive the termination of
this Agreement.

	VIII.	 	Confidentiality

With respect to Confidential Information supplied by BARD PERIPHERAL
VASCULAR to Purchaser or by Purchaser to BARD PERIPHERAL VASCULAR, the
recipient of such Confidential Information agrees: (i) not to use any
such Confidential

-6-

 

Information other than for the purpose of this Agreement; or (ii) not to
disclose any Confidential Information to any third party other than to
its employees, consultants and agents who are under an obligation of
non-disclosure and who have a reasonable need for access to the
Confidential Information. Upon termination of this Agreement, each party
will return the Confidential Information of the other or dispose of such
Confidential Information and all copies of it (except as required by
regulatory authorities) but one copy may be retained for archival
purposes. The parties’ obligations under this section will extend for a
period of three years after termination of this Agreement.

	IX.	 	Term and Termination

(A) This Agreement will commence on the Effective Date and terminate
automatically without notice on the date that is three (3) years from the
Effective Date, unless the term of the Agreement is extended by mutual
written agreement executed and delivered by both parties at least thirty
(30) days prior to the expiration of the initial term or renewal term, as
applicable.

(B) At its sole option, BARD PERIPHERAL VASCULAR may terminate this
Agreement upon thirty (30) days prior written notice if Purchaser does
not achieve any of the minimum purchase requirements in Exhibit B.

(C) If either party materially defaults in the performance of this
Agreement and such default or noncompliance shall not have been remedied
within thirty (30) calendar days after the receipt by the defaulting
party of a written notice thereof from the other party, the party not in
default may terminate this Agreement. It will not be a default under
this Agreement if a party materially defaults in the performance of this
Agreement where such default cannot reasonably be cured within thirty
(30) calendar days after the receipt by the defaulting party of a written
notice thereof from the other party if the defaulting party shall begin
promptly to remedy such default and shall continue diligent efforts to
cure such default as soon as reasonably practicable, as long as such
default is cured within ninety (90) calendar days of receipt of such
written notice.

(D) All representations or warranties made in this Agreement and all
terms and provisions of this Agreement intended to be observed and
performed after the termination hereof, including the provisions in
Sections VII and VIII, shall survive such termination and continue,
thereafter, in full force and effect.

(E) At its sole option, Purchaser may terminate the minimum purchase
requirements in Exhibit B upon thirty (30) days prior written notice if
Purchaser’s clinical trials are placed on clinical hold due to adverse
safety events. In such event, BARD PERIPHERAL VASCULAR may also
terminate this Agreement or elect to change the prices at which the
Components are sold to Purchaser hereunder to equal the full list price
for the Components (or an equivalent product) as set from time to time by
BARD PERIPHERAL VASCULAR.

-7-

 

	X.	 	Governing Law and Dispute Resolution

(A) This Agreement shall be governed by and construed in accordance with
the domestic laws of the State of Arizona without giving effect to any
choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other that the State of
Arizona.

(B) Any dispute between the parties arising out of or related to this
Agreement shall, in the first instance, be the subject of a meeting
between the parties to negotiate a resolution of such dispute. The
meeting shall be conducted by at least one individual from each party who
has full decision making authority with respect to the dispute at issue.
Should the negotiations not lead to a settlement of the dispute within
thirty (30) calendar days of the date of the meeting, either party may
then initiate binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the “Rules”).
In the event that a party refuses to participate in the meeting, then the
other party may immediately initiate binding arbitration as otherwise
provided in this Section. A single arbitrator shall be appointed in
accordance with the Rules. The arbitrator shall be a person experienced
in the area of supply of medical devices. The arbitration shall take
place in Phoenix, Arizona and be based upon Arizona law. No written
opinion shall be prepared by the arbitrator, other than the arbitrator’s
ruling and any award thereon. The party prevailing in the arbitration
proceedings conducted pursuant to this Section shall be immediately
reimbursed by the other party for all reasonable costs, including
reasonable attorney’s fees, incurred relating to such arbitration
proceeding. No party has a right to appeal the arbitrator’s ruling, to
any court or otherwise. Judgment upon the arbitrator’s ruling may be
entered in any Court of competent jurisdiction.

	XI.	 	Other Provisions

(A) Neither party may assign this Agreement without the written consent
of the other party, provided, however, that BARD PERIPHERAL VASCULAR may
assign this Agreement, upon notice to, but without the consent of,
Purchaser to: (a) any BARD PERIPHERAL VASCULAR Affiliate; (b) any person
or entity which purchases substantially all of its stock or substantially
all of its assets relating to its vascular graft business; or (c) any
successor by way of merger or consolidation.

(B) A party shall not be liable for nonperformance or delay in
performance (other than of obligations regarding payment of money or
confidentiality) caused by any event reasonably beyond the control of
such party including, but not limited to, wars, hostilities, revolutions,
riots, civil commotion, national emergency, strikes, lockouts,
unavailability of supplies, epidemics, fire, flood, earthquake, force of
nature, explosion, embargo, or any other Act of God, or any law,
proclamation, regulation, ordinance, or other act or order of any court,
government or governmental agency, provided that the party seeking such
relief from nonperformance makes reasonable efforts to overcome any such
occurrences and promptly notifies the other party in writing of such
circumstances.

-8-

 

(C) This Agreement contains all of the terms and conditions with respect
to the sale and purchase of the Components. These terms and conditions
supercede any prior agreements and no modifications of the Agreement will
be binding on the parties unless separately contracted in writing and
agreed to by duly authorized representatives of the parties. Waiver of
either party of any default by the other shall not be deemed a waiver by
such party of any default by the other that may thereafter occur.

(D) Nothing in this Agreement is intended to create any rights by persons
not a party to this Agreement and no other party will be construed to be
a third party beneficiary of this Agreement or otherwise have any legal
or equitable rights under it. This Agreement does not constitute the
grant of a license to Purchaser.

(E) If any part of this Agreement is held by a court to be illegal,
invalid, or unenforceable, the remainder of this Agreement will remain in
full force and effect and will be interpreted to achieve, to the greatest
extent possible, the objectives of this Agreement taken as a whole,
including the illegal, invalid or unenforceable provision.

(F) All notices required or permitted under this Agreement will be in
writing and will be deemed to be given when delivered personally; or ten
(10) business days after being mailed by registered or certified mail,
postage prepaid; when received if sent by any other method (including air
courier) which provides for a signed receipt upon delivery; and when
received if sent by facsimile transmission, addressed as follows, or to
such other person or address as may be designated by notice to the other
party from time-to-time.

	 	 	 
	If to Purchaser:

	 	Attention: CEO
	

	 	CABG Medical, Inc.
	

	 	14505 21st Avenue North, Suite 212
	

	 	Minneapolis, Minnesota 55447

	 	 	 
	If to BARD PERIPHERAL VASCULAR:
	 
	 	 
	

	 	BARD PERIPHERAL VASCULAR, Inc.
	

	 	Attention: President
	

	 	1625 W. 3rd Street
	

	 	Tempe, Arizona 85281

	 	 	 
	With a copy to:

	 	C. R. Bard, Inc.
	

	 	Attention: General Counsel
	

	 	730 Central Avenue
	

	 	Murray Hill, New Jersey 07974

-9-

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
Effective Date.

	 	 	 	 	 	 	 
	BARD PERIPHERAL VASCULAR, Inc.	 	CABG MEDICAL, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ John H. Weiland
	 	By:
	 	/s/ John L. Babitt
	

	 	
 
	 	 	 	
 
	Title:

	 	President
	 	Title:
	 	President

-10-

 

EXHIBIT A

DESCRIPTION OF COMPONENTS

Tubes of varying dimensions (as agreed upon by the parties) constructed of
expanded polytetrafluoroethelene (ePTFE).

-11-

 

EXHIBIT B

MINIMUM PURCHASE REQUIREMENTS

The follow schedule sets forth the minimum purchasing requirements of the
Purchaser:

	 	 	 	 	 
	***
	 	*** cm
	***
	 	*** cm
	***
	 	*** cm

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EXHIBIT C

PRICING

	The follow schedule sets forth the pricing of the Components for the Purchaser:

	 	 	 	 	 
	*** cm to *** cm
	 	$*/cm
	*** cm to *** cm
	 	$*/cm
	*** cm
	 	$*/cm

The prices paid by Purchaser to BARD PERIPHERAL VASCULAR for Components under
this Agreement will not exceed the prices that BARD PERIPHERAL VASCULAR charges
for products comparable to the Components being purchased by a third party that
purchases from BARD PERIPHERAL VASCULAR substantially the same amount of such
products or Components as purchased by Purchaser.

-13-

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