Attached files
file | filename |
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10-Q - FORM 10-Q - NxStage Medical, Inc. | b81599e10vq.htm |
EX-31.1 - EX-31.1 - NxStage Medical, Inc. | b81599exv31w1.htm |
EX-31.2 - EX-31.2 - NxStage Medical, Inc. | b81599exv31w2.htm |
EX-10.3 - EX-10.3 - NxStage Medical, Inc. | b81599exv10w3.htm |
EX-32.2 - EX-32.2 - NxStage Medical, Inc. | b81599exv32w2.htm |
EX-10.2 - EX-10.2 - NxStage Medical, Inc. | b81599exv10w2.htm |
EX-32.1 - EX-32.1 - NxStage Medical, Inc. | b81599exv32w1.htm |
Exhibit 10.1
EXECUTION COPY
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Securities and Exchange Commission. Asterisks denote omissions.
NxStage Medical, Inc.
DaVita Inc.
First Amended and Restated National Service Provider Agreement
DaVita Inc.
First Amended and Restated National Service Provider Agreement
Information Sheet
Date of Agreement:
|
July 22, 2010 (Effective Date) | |
National Service Provider:
|
DaVita Inc. | |
Street Address of Customer:
|
601 Hawaii Street | |
City, State, Zip of Customer:
|
El Segundo, CA 90245 | |
Customer Contact and Phone No.:
|
Steven J. Priest, 615-341-5852 | |
NxStage Customer Service Phone No.:
|
1-866-NxStage (1-866-697-8243) | |
Contract No.:
|
To be assigned | |
Contract Term:
|
From the Effective Date through June 30, 2013, which term shall be automatically extended on a month-to-month basis until one of the parties provides thirty (30) days prior written notice of termination (the Term). | |
Attached Exhibits:
|
Exhibit A: Cycler Log File Decoding Document | |
Exhibit B: Pricing Covenant Example | ||
Attached Schedules:
|
Schedule A: Authorized Customer Locations | |
Schedule B: Program and Pricing | ||
Schedule C: Warranty; Service; and Recalls | ||
Schedule D: Preferred Relationship | ||
Attachment A to Schedule B:
|
Attachment A to Schedule B: Warrant Agreement | |
Attachment A to Schedule D:
|
Attachment A to Schedule D: Markets |
First Amended and Restated National Service Provider Agreement Chronic Outpatient Therapy
THIS FIRST AMENDED AND RESTATED NATIONAL SERVICE PROVIDER AGREEMENT (this Agreement)
is effective as of the Effective Date, by and between DaVita Inc., a Delaware corporation
(Customer) and NxStage Medical, Inc., a Delaware corporation (NxStage).
Capitalized terms used herein and not otherwise defined herein shall have the meaning set forth in
Section 1 of this Agreement.
RECITALS
A. Customer and NxStage entered into that certain National Service Provider Agreement, dated
as of February 7, 2007, as amended by a letter agreement, dated as of April 19, 2007, a letter
agreement, dated as of June 30, 2007 and a letter agreement, dated as of January 23, 2009
(collectively, the Original Agreement), whereby NxStage agreed to sell certain products
to Customer and Customer agreed to purchase such products from NxStage, subject to all of the terms
and conditions stated therein.
B. NxStage and Customer deem it desirable to enter into this Agreement in order to amend and
restate (and supersede and replace) the Original Agreement effective as of the Effective Date as
provided herein.
In consideration of the foregoing premises and mutual covenants, agreements, representations
and warranties contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. DEFINITIONS
The following definitions as used herein have the following meanings:
(a) Authorized Customer Locations means any home hemodialysis program site in the
Continental United States: (i) of Customer or any majority owned subsidiary of Customer, (ii) in
which Customer has entered into a management contract covering the purchase of products for chronic
home or in-center self-care patient therapy, including the System One, or (iii) held by Customer in
a joint venture structure. Schedule A hereto sets forth all of the Authorized Customer
Locations.
(b) Commercially Available means any product that is approved by the FDA and
manufactured, sold or distributed anywhere in the United States by NxStage and/or any of its
affiliates, and for which NxStage has completed its then-current market release processes.
(c) Express Monthly Dialysis Supplies means System One cartridges with pre-attached
filter and bagged PureFlow Express premixed dialysate for the prescribed therapy frequency and
fluid volume.
(d) FDA means the United States Food and Drug Administration and any successor
thereto.
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(e) Monthly Dialysis Supplies means PureFlow SL Monthly Dialysis Supplies and
Express Monthly Dialysis Supplies.
(f) Patient Noncompliance Event means an event in which any patient of an Authorized
Customer Location misses [**] percent ([**]%) or more of his or her prescribed treatment
frequencies or fluid volumes.
(g) Patient Prescription Monthly Standing Orders means NxStages standard patient
prescription form submitted via NxStages NXRX electronic prescription system, or any successor
thereto, for the System One and Monthly Dialysis Supplies for a named home or in-center self-care
patient signed by such patients treating physician.
(h) PureFlow SL Monthly Dialysis Supplies means System One cartridges with
pre-attached filter and PureFlow SL disposable cartridges and sets required to prepare PureFlow
dialysate for the prescribed therapy frequency and fluid volume.
2. PURCHASES AND RENTALS
All purchases or rentals, as the case may be, of (a) the NxStage System One (consisting of either
(i) a System One Cycler (Cycler), Warmer (Warmer), and Stand (Stand),
or (ii) a Cycler and System One PureFlow SL (PureFlow SL and together with the Cycler,
Warmer and Stand, the System One or System), and (b) System One disposables and
other products for chronic home and in-center self-care use set forth on Schedule B
attached hereto, which may or may not be manufactured by NxStage (the Disposables and
collectively, with the System One and the Monthly Dialysis Supplies, the Products) under
this Agreement shall be initiated by purchase orders covering one month of Monthly Dialysis
Supplies consistent with then-current Patient Prescription Monthly Standing Orders received by
NxStage. If the terms and provisions of any purchase order, sales order or any other document
delivered by the parties hereto conflict with, or are in addition to, the terms of this Agreement,
the terms of this Agreement shall control. To purchase or rent Products, an Authorized Customer
Location must provide NxStage with a valid Patient Prescription Monthly Standing Order for the
named NxStage patient(s) who will receive chronic therapy.
3. PRICING
Pricing for each Product purchased during the Term is set forth next to each such Product on
Schedule B attached hereto (collectively, the Purchase Prices).
4. LIMITATIONS ON SALE AND USE AND [**]ACQUIRED AND MANAGED SITES
(a) Limitations on Sale and Use. All Products are to be used by Customer in the
Continental United States at Authorized Customer Locations and are not to be resold, transferred or
remarketed. Notwithstanding the foregoing, Customer may transfer Products to a third party in
connection with the sale or disposition (whether by sale of assets or stock, merger or
consolidation) of any Authorized Customer Location by Customer which includes Products then in use
by such Authorized Customer Locations patients, subject to NxStages prior written consent, which
consent shall not be unreasonably withheld. The Products are to be used only for
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chronic home and in-center self-care patient therapy for treatment of any Authorized Customer
Locations patients with Patient Prescription Monthly Standing Orders.
(b) [**]Acquired and Managed Sites. If at any time during the Term, Customer, any
Customer affiliate, or any Authorized Customer Location or its affiliates enters into any
transaction or series of transactions pursuant to which Customer, any Customer affiliate, or any
Authorized Customer Location or its affiliates: (i) acquires the equity interests of any dialysis
facility or program of [**] (collectively, [**]), or any of their joint venture or managed
facilities (including any facilities with management contracts with [**] or its affiliates as of or
subsequent to the Effective Date) (a [**]Site) possessing the voting power to elect a
majority of such [**] Sites board of directors, board of managers or members, general partner,
managing member or manager, as the case may be (whether by merger, consolidation, reorganization,
combination, sale or transfer of the equity interests of any such [**] Site, or otherwise acquires
the right to control such [**] Site whether by securityholder or voting agreement, proxy, power of
attorney or otherwise), (ii) acquires all or substantially all of the assets of an [**] Site
(subsection (i), together with this subsection (ii) hereinafter collectively referred to as a
[**]Acquisition), or (iii) enters into a management contract, joint venture or other
similar transaction with any [**] Site relating to the provision of chronic hemodialysis therapy
(an [**]Management Contract), Customer covenants and agrees that: (A) if at the time of
the closing of such [**] Acquisition with respect to a [**] Site pursuant to the terms and
conditions of the acquisition agreement related to such [**] Acquisition (a [**]Acquired Site
Closing) such [**] Site did not have patients prescribed to receive therapy with the System
One at any time during the [**] months prior to the [**] Acquired Site Closing, the parties shall
enter into an amendment to this Agreement to allow such [**] Site to become an Authorized Customer
Location under this Agreement, (B) if at the time of the [**] Acquired Site Closing, such [**]
Site has, or had patients prescribed to receive therapy with the System One at any time during the
[**] months prior to the [**] Acquired Site Closing, Customer and NxStage shall enter into a new
agreement relating to the purchase and/or rental of the Products on the same terms and conditions
as then-exist under any [**] Pre-Existing Agreement (as defined below) applicable to such [**] Site
(the New Agreement), including the term of such New Agreement, which shall in no event
exceed the term of the [**] Pre-Existing Agreement, or (C) as of the effective date of any [**]
Management Contract with an [**] Site, whether or not such [**] Site has, or had, patients
prescribed to receive therapy with the System One at any time during the [**] months prior to the
effective date of such [**] Management Contract, Customer and NxStage shall enter into a New
Agreement. NxStage covenants and agrees that upon the expiration of any New Agreement relating to
a [**] Site acquired by Customer in connection with a [**] Acquisition or to a [**] Site under a
[**] Management Contract, the parties shall enter into an amendment to this Agreement, if
necessary, to allow such [**] Site to become an Authorized Customer Location under this
Agreement. If at the time of a [**] Acquired Site Closing, or upon the effective date of a [**]
Management Contract, as applicable, a [**] Pre-Existing Agreement does not then cover the direct or
indirect sale of one or more of the Products to the acquired [**] Site, or [**] Site subject to a
[**] Management Contract, as the case may be, the parties shall enter into an amendment to this
Agreement to allow such [**] Site to become an Authorized Customer Location under this Agreement.
For purposes hereof, a [**]Pre-Existing Agreement means any agreement(s) between
NxStage or its affiliates and [**] relating to the purchase and/or rental, shipment, or delivery of
some or all of the Products to the applicable [**] Site. NxStage and Customer covenant and agree
that none of the terms and conditions of Section
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4(b)(B) shall apply in any Warrant Year during the Term, until the number of [**]
Sites acquired pursuant to a [**] Acquired Site Closing(s) completed on or before the end of the
applicable Warrant Year exceeds [**] Sites (the [**]Acquisition Threshold).
5. SHIPPING
(a) Shipping Terms. Shipping for the Products is F.O.B. Customers designated
destination. Monthly Dialysis Supplies shipment quantities will be based on the prescribed
frequency (as indicated in the Patient Prescription Monthly Standing Order) and inventory needs of
the patients at each Authorized Customer Location, as reported by each such patient to NxStages
customer service department. All prices for the Monthly Dialysis Supplies include shipping costs
to Authorized Customer Locations patients homes or designated travel destination, in each case,
in the Continental United States via common carrier of NxStage selection unless otherwise stated,
and include one patient delivery each [**] weeks, based on NxStages then-standard delivery
policies for that geographical area; provided that such Monthly Dialysis Supplies
must be a part of either: (i) a patients standard delivery quantities pursuant to such patients
Patient Prescription Monthly Standing Order, or (ii) a patients travel delivery package consistent
with the terms hereof and as documented on a NxStage System One Vacation and Travel Form (copies
of which are available on request)). For all other deliveries, shipping costs will be prepaid by
NxStage and added to Customers invoice. NxStage shall use its commercially reasonable efforts to
ensure that the Products are shipped according to any Authorized Customer Locations delivery
requirements. Any extra charges for special delivery services shall be prepaid by NxStage and
added to Customers invoice. The fees for all special delivery services are set forth on
Schedule B-4 attached hereto.
(b) Expedited Delivery. If an expedited shipment of the Products (i.e. requiring
delivery in less than [**] business days) must be made at any Authorized Customer Locations
request, Customer agrees to pay for all incremental Product-shipping charges in excess of what
standard shipping costs would be for an unexpedited shipment of the Products. Customer agrees that
each of the Authorized Customer Locations patients must use their reasonable efforts to accurately
report the inventory of Monthly Dialysis Supplies that each such patient has on a monthly basis to
NxStages customer service department. If any patient of any Authorized Customer Location fails to
properly report his or her inventory of Monthly Dialysis Supplies to NxStages customer service
department, and as a result of such failure such patient will require expedited shipment of such
patients Monthly Dialysis Supplies to perform dialysis therapy at such patients prescribed
frequencies, Customer agrees to pay for all incremental Product-shipping charges in excess of what
standard shipping costs would be for an unexpedited shipment. NxStage reserves the right to charge
Customer the appropriate fee set forth in Schedule B-1 for any Monthly Dialysis Supplies
consumption by a patient of any Authorized Customer Location that is above such patients
applicable prescribed frequency, as measured on a calendar monthly basis, or if such patients
usage is above standard usage levels.
(c) Product Returns. Customer or an Authorized Customer Location, as applicable, must
notify NxStages customer service department in writing of any irregularity in a Product shipment
within the later of [**] days of receipt of the shipment or [**] days of discovery of a concealed
defect in such shipment. All evidence of shipping damage or over- or under- shipment (other than
concealed defects) should be noted on the carriers freight bill and the carrier should
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countersign the document. In the absence of timely written notice of any irregularity in the
shipment of any Products, acceptance of such shipment will be conclusively presumed. NxStage shall
use its commercially reasonable efforts to replace any Product damaged in transit and to remedy
Product delivery shortages within [**] days of receiving notice thereof from Customer or any
Authorized Customer Location, as applicable.
6. PAYMENT
Payments shall be due and payable on a net [**] day basis. Payments made within [**] days of
invoicing shall be subject to a [**] percent ([**]%) discount on the total amount due. Payments
made more than [**] days after the stated term will be subject to a past due service charge of [**]
percent ([**]%) per month (or the highest rate permitted by applicable law, whichever is less),
except for any portion of an invoice disputed by Customer in good faith. If Customer fails to pay
any portion of its undisputed balance within [**] days of the date of the invoice, NxStage may, at
its option, terminate this Agreement upon [**] days written notice and Customers failure to cure
such payment default within such [**] days. Any invoice dispute must be made by Customer in good
faith. Customer must notify NxStage of any invoice disputes in writing within [**] days of its
receipt of an invoice, and the parties shall use all commercially reasonable efforts to resolve any
billing disputes within [**] days. Any invoice subject to a good faith dispute shall not be
subject to the past due service charge of [**] percent ([**]%) per month (or the highest rate
permitted by applicable law, whichever is less).
7. DISCOUNTS AND REBATES
Discounts and rebates earned under this Agreement are Discounts or Other Reductions in Price to
Customer under 42 U.S.C. §1320a-7b(b)(3)(A) of the Social Security Act, and shall be properly
reported by Customer on applicable Medicare and Medicaid claims and cost reports. Customer will
retain a copy of this Agreement and all related notices and communications from NxStage, together
with invoices hereunder (which will indicate that a discount or end of period rebate may apply) and
permit agents of the U.S. Department of Health and Human Services or any state Medicaid agency
access to such records upon request. In order to assist Customers compliance with any such
obligations, NxStage shall fully and accurately report all discounts, if any, on the invoices or
statements submitted to Customer; or where the value of a discount is not known at the time of
sale, NxStage shall fully and accurately report the existence of the discount program on the
invoices or statements submitted to Customer and when the value of the discount becomes known,
provide Customer with documentation of the calculation of the discount identifying the specific
goods or services purchased to which the discount will be applied. At Customers reasonable
request, NxStage shall also use commercially reasonable efforts to provide to Customer any other
information that Customer may request that is necessary for Customer to obtain in order to comply
with any such obligations.
8. TAXES
The Purchase Price for each Product does not include sales, use, excise or similar taxes. Customer
agrees to pay promptly any and all applicable sales, use, excise or similar taxes, assessments or
other charges levied or assessed on or with respect to the acquisition, possession,
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or use of any of the Products, and shall reimburse NxStage if NxStage has paid such taxes,
excluding, however, any taxes on or measured by NxStages income.
9. RETURNED GOODS
(a) Return Goods Policy. This returned goods policy set forth in this Section
9 is intended to address shipment errors and over-ordering of Products. Returns of damaged or
defective Products are handled as set forth under Schedule C Warranty; Service; and
Recalls. Returns of Monthly Dialysis Supplies caused by a discontinuation of patient therapy
are covered in Section 10 Discontinuation of Therapy and Missed Treatments. Returns of
rented Systems, at the end of their applicable rental period are covered in Section 9(c)
below. No credit will be issued for unauthorized returns. Product which is not damaged or
defective, may only be returned as described in this Section 9, and only after Customer or
the applicable Authorized Customer Location has obtained a return authorization number from
NxStages customer service department.
(b) Return of Purchased Products. Customer shall receive full credit, and NxStage
shall pay for all returned goods shipping charges, for Products shipped in error by NxStage, so
long as such Products (i) are returned in their original carton with original labels within [**]
days of shipment (no resealed or partial cases), (ii) are in a condition for restocking and resale,
and (iii) are accompanied by a copy of the NxStage packing list. Customer shall receive [**]%
credit ([**]% restocking fee) and Customer shall pay for all return shipping charges, for any
returns due to over-ordering of Products (other than Excluded Products (as defined below)), so long
as such Products: (A) are returned in their unopened carton with original labels within [**] days
of shipment (no resealed or partial cases), (B) are in condition for restocking and resale, and (C)
have at least [**] months remaining shelf life. The following Products may not be returned:
| Products which are currently not in production; | ||
| Special Customer specification Products; or | ||
| Products not shipped to an applicable Authorized Customer Location by NxStage and not billed to Customer by NxStage (collectively, the Excluded Products). |
(c) Return of Rented Products during the Term. If requested by NxStage during the
Term, rented System Ones shall be returned to NxStage within [**] days after the end of the agreed
upon rental term, or upon permanent discontinuation of patient therapy. If rented Systems are
requested to be returned during the Term, but are not returned within such [**] day period,
Customer shall be charged an additional fee of $[**] per System per month until each such System is
returned to NxStage. If a System is rented for more than [**] months, NxStage shall bear all
related shipping charges to return such rented Systems, otherwise, Customer shall bear all related
shipping charges to return such rented Systems. Customer shall be responsible for any damage
incurred in connection with the return of rented Systems, as set forth in Section 13 below.
If NxStage does not request return of a rented System One during the Term, the additional fee of
$[**] shall be waived and Customer shall renew the rental of the System as soon as a patient in the
service area where the System is stored is in need of such System during the Term. NxStages
failure to request return of any rented System at the end of the agreed upon rental term, or upon
permanent discontinuation of patient therapy, shall not preclude NxStage from later requesting such
return.
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10. DISCONTINUATION OF THERAPY AND MISSED TREATMENTS
(a) Billing of Monthly Dialysis Supplies. Monthly Dialysis Supplies are billed on a
monthly basis, by calendar month at the start of each month. The monthly billing amount will be
adjusted only (i) during the first month of therapy (to account for the portion of the month prior
to a patients therapy start date) or (ii) in the event of a documented hospitalization leading to
missed NxStage therapy treatments. Except as otherwise provided in this Section 10 with
respect to retrieved Monthly Dialysis Supplies, no credit shall be given for permanent
discontinuation of therapy or for missed treatments, other than documented hospitalizations, for
any reason, including missed treatments due to patient noncompliance with prescribed treatment
schedules. NxStage shall use its reasonable efforts to notify the applicable Authorized Customer
Location in the event NxStage becomes aware of a specific Patient Noncompliance Event through
monthly customer service inventory calls with patients. Notwithstanding any of the foregoing,
Customer understands and agrees that NxStage does not represent to the completeness or the accuracy
of the information so provided regarding any Patient Noncompliance Event at any time hereunder.
(b) Pro-Rated Credits for Documented Hospitalization. In the event of a documented
hospitalization of any Authorized Customer Location patient, NxStage will allow a pro-rated credit
against future payments equal to [**] of the applicable Monthly Dialysis Supplies price per
documented missed treatment day for each such Authorized Customer Location patient during the month
of hospitalization, provided that such pro-rated credit shall be adjusted in good faith by NxStage
for any such Authorized Customer Location patient that is treated under a different treatment
schedule. Any subsequent monthly shipments from NxStage shall be adjusted appropriately to account
for any such missed days of therapy due to a documented hospitalization. Documentation of
hospitalizations must be provided to NxStage within [**] days of the hospitalization in order to be
eligible for such a pro-rated credit.
(c) Discontinuation of Patient Therapy. All purchased NxStage Monthly Dialysis
Supplies are the property of Customer or the applicable Authorized Customer Location. It is
Customers responsibility to retrieve any unused Monthly Dialysis Supplies in the event of a
permanent discontinuation of patient therapy. No credit will be issued for any Monthly Dialysis
Supplies retrieved by Customer that have not been invoiced. Monthly Dialysis Supplies retrieved
that have not yet been invoiced must either: (i) be returned to NxStage, at NxStages expense or
(ii) used by the Authorized Customer Locations. Once retrieved Monthly Dialysis Supplies are
assigned for use, NxStage shall invoice Customer for such Monthly Dialysis Supplies, and adjust
subsequent deliveries of such Monthly Dialysis Supplies. If retrieved Monthly Dialysis Supplies
were invoiced, NxStage will apply, at Customers request, a credit against future Monthly Dialysis
Supplies orders, as set forth in Patient Prescription Monthly Standing Orders, if the retrieved
Monthly Dialysis Supplies are: (A) used for a future patient, (B) unexpired, and (C) consistent
with the future patients prescription. The amount of the credit applied shall be based upon the
number of treatments that can be fully performed with such retrieved Monthly Dialysis Supplies. To
assist NxStage in documenting such credits, Customer shall notify NxStage of all permanent patient
discontinuations from NxStage therapy within [**] calendar days of such discontinuations, and shall
also confirm with NxStage the quantity of all Monthly Dialysis Supplies retrieved following any
such discontinuations. In the event NxStage ships a monthly standing order of Monthly Dialysis
Supplies to a patient following a permanent
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discontinuation of NxStage therapy due solely to reasons of death or transplant, and before
NxStage receives notice of such discontinuation due to death or transplant, NxStage shall retrieve
such Monthly Dialysis Supplies, at its own expense, provided that NxStage is
notified of the discontinuation due to death or transplant within [**] days as set forth in this
Section 10(c).
(d) Alternate Terms. If, during the Term, NxStage contractually agrees with any other
customer purchasing NxStage home hemodialysis products to either (i) provide credits for missed
treatments due to home patients noncompliance with prescribed treatment frequency and/or
discontinuation of therapy, or (ii) allow for the purchase of Monthly Dialysis Supplies for use
with the System One or any successor product on a non-monthly or non-bundled basis for use by home
hemodialysis patients (it being understood that home hemodialysis patients shall not include, for
purposes of this Agreement, patients treated in a self-care setting outside of the home or patients
treated in a nursing home setting), NxStage shall promptly offer such credit, non-monthly, or
non-bundled purchase terms, on a prospective basis, to Customer on terms consistent with those
credit, non-monthly, or non-bundled purchase terms then offered to other NxStage customers;
provided that such terms, if accepted by Customer, shall in no way alter the other
provisions hereof; and provided further that such terms shall only be offered to
Customer in an amount equal to the number of patients of such other NxStage customer then covered
by such credit, non-monthly, or non-bundled purchase terms. In addition, if during the Term,
NxStage contractually agrees with any other customer to allow for the purchase of Monthly Dialysis
Supplies for use with the System One or any successor product on a non-monthly or non-bundled basis
for use by patients treated in a self-care setting outside of the home or to patients treated in a
nursing home setting, NxStage shall promptly offer such non-monthly or non-bundled purchase terms,
on a prospective basis, to Customer on terms consistent with those non-monthly or non-bundled
purchase terms then offered to other NxStage customers; provided that such terms,
if accepted by Customer, shall in no way alter the other provisions hereof; and provided
further that such terms shall only be offered to Customer in an amount equal to the number
of patients treated in a self-care setting outside of the home or in a nursing home setting of such
other NxStage customer then covered by such non-monthly or non-bundled purchase terms.
11. TITLE TO PRODUCTS
(a) Title to Rented/Loaned Products. NxStage will retain title to any Products that
have previously been, or are subsequently provided, on a rental or no charge basis (including
Products previously rented, but for which rental payments are no longer being made by Customer due
to discontinuation of patient therapy) (collectively, Rented/Loaned Products) to Customer
or any Authorized Customer Location, or any of their respective patients. Upon NxStages request,
Customer will execute a financing statement as provided under the Uniform Commercial Code to permit
NxStage to perfect a security interest in any Rented/Loaned Products.
(b) Return of Rented/Loaned Products upon Expiration or Earlier Termination. Upon the
expiration or earlier termination of this Agreement for any reason, Customer will contact NxStage
customer service to arrange for the return of all such Rented/Loaned Products, according to NxStage
product return procedures. If a Rented/Loaned Product has been rented by any Authorized Customer
Location, or loaned to any Authorized Customer Location, for more
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than [**] months, NxStage shall bear all related return shipping charges for the return of
such Rented/Loaned Product, otherwise Customer shall bear all related return shipping charges for
the return of such Rented/Loaned Product. Customer shall be responsible for any damage incurred in
connection with the return of Rented/Loaned Products, as set forth in Section 13 below.
For each Rented/Loaned Product which is not returned to NxStage within [**] days of the expiration
or earlier termination of this Agreement for any reason, Customer shall pay to NxStage each month
following such [**] day period until each piece of such Rented/Loaned Product is returned to, and
received by, NxStage, the applicable rental fee set forth on Schedule B-3 plus [**] percent
([**]%); provided that any Rented/Loaned Product not returned to, and received by,
NxStage within [**] days of the expiration or earlier termination of this Agreement for any reason
must be immediately purchased by Customer at the applicable purchase price set forth on
Schedule B-3 less a [**] credit for each such Rented/Loaned Product equal to [**] percent
([**]%) of all [**].
(c) Return of Loaned Products During the Term. During the Term, Customer or any
Authorized Customer Location, will upon NxStages request, return any Product loaned to Customer or
any Authorized Customer Location (a Loaned Product) (including any Loaned Products
provided to Customer or any Authorized Customer Location prior to the Effective Date), within [**]
days of NxStages request to return such Loaned Product. Any Loaned Product not returned within
[**] days of NxStages request during the Term shall be deemed rented by Customer at the applicable
rental fee set forth on Schedule B-3 each month during the Term until such Loaned Product
is returned to NxStage.
(d) Title to Purchased Products. Customer shall have good and marketable title to all
Products purchased under this Agreement.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NXSTAGE
NxStage hereby represents and warrants to Customer as follows:
(a) No Liability for Indirect/Consequential Damages. Except as provided in this
Section 12, all Products are provided by NxStage to Customer and the Authorized Customer
Locations AS IS AND NO EXPRESS OR IMPLIED WARRANTY EXISTS FOR ANY OF THE PRODUCTS, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT. IN NO EVENT
SHALL NXSTAGE BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, PUNITIVE OR OTHER INDIRECT
DAMAGES ARISING OUT OF THIS AGREEMENT OR THE PERFORMANCE OF SERVICES AND/OR SUPPLY OF ANY PRODUCTS
HEREUNDER.
(b) Product Warranty. For a period of [**] following the date of delivery of any
Product by NxStage to Customer or any Authorized Customer Location, as applicable, NxStage warrants
that each Product (i) shall be free from defects in material and workmanship when
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delivered, and (ii) is fit for the purposes and indications described in each such Products
Operators Manual and package inserts when used in accordance with the instructions for use
provided in such Operators Manual and package inserts. Unless such Products are used in
accordance with such instructions and indications, the warranty in this Section 12(b) shall
be void and of no force and effect. Except as otherwise described at the end of this Section
12, the warranties are not assignable or transferable.
(c) Product Warranty Remedy. EXCEPT AS PROVIDED IN THIS SECTION 12(C),
NXSTAGES SOLE OBLIGATION AND CUSTOMERS SOLE REMEDY FOR BREACH OF THE WARRANTY SET FORTH IN
SECTION 12(B) OF THIS AGREEMENT SHALL BE LIMITED TO PRODUCT REPAIR OR REPLACEMENT, AT
NXSTAGES OPTION AND EXPENSE, CONSISTENT WITH THE TERMS SET FORTH UNDER SECTION 2 SERVICE
OF SCHEDULE C. ALL WARRANTIES UNDER SECTION 12(B) OF THIS AGREEMENT SHALL BE
VOIDED IF (i) the Product has been repaired by persons other than NxStage personnel or its
authorized representatives, (ii) the replacement or repair is required due to the misuse or abuse
of the Product, as determined by NxStage, in its reasonable discretion, (iii) the Cycler or Warmer
is used with non- NxStage sets, (iv) the replacement or repair is required for reasons other than
defects in materials and workmanship or, in the case of equipment, normal wear and tear, as
determined by NxStage, in its reasonable discretion, or (v) the Product is not used in accordance
with its instructions for use, as determined by NxStage, in its reasonable discretion.
(d) Product Infringement. If any Authorized Customer Location is enjoined by an order
of a court of law from using any purchased Cycler or PureFlow SL in the United States for its
intended use and consistent with its then-current users guide for a period of [**] consecutive
months (for purposes hereof, a purchased Cycler or PureFlow SL shall not be unusable if it can be
used with other non-NxStage products, consistent with then-current product labeling), due to the
infringement by such purchased Cycler or PureFlow SL of the intellectual property rights of a third
party, and NxStage is unable prior to the expiration of such [**] month period to obtain a valid
license to use such intellectual property or reengineer such purchased Cycler or PureFlow SL to
eliminate any such infringement, NxStage shall be obligated to pay Customer actual damages within
[**] days of the expiration of such [**] month period (with the amount of such damages to be
mutually agreed to by the parties in good faith, up to the amount of Customers and the Authorized
Customer Locations then-current [**] for the purchased Cycler or PureFlow SL which the Authorized
Customer Locations have been enjoined from using for [**] consecutive months (measured as of the
date of such injunction); provided such [**] is calculated in good faith and in accordance
with generally accepted accounting standards). NxStages obligation to make any payment pursuant
to this Section 12(d) may be accelerated to the date of filing of a voluntary or
involuntary bankruptcy proceeding with respect to NxStage or the date NxStage refunds, all or any
significant portion of, the purchase price of any Cycler or PureFlow SLs that have been the subject
of such an injunction (and where such refund is specifically provided solely in connection with,
and due to, such an injunction) to any other customer, or group of customers that has purchased
such Cycler or PureFlow SLs for the treatment of chronic home hemodialysis patients (it being
understood that Customers right to damages hereunder shall not be so accelerated if such refund
involves no more than [**] Systems in the aggregate across all other chronic NxStage customers).
No other remedy shall be provided to Customer or
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the Authorized Customer Locations in connection with intellectual property claims hereunder,
except as set forth in Section 22 of this Agreement.
(e) Title and Expired Product. NxStage warrants that at the time of transfer of title
to a Product to Customer, Customer shall possess good and marketable title to such Product, free
and clear of any and all liens and encumbrances, except those created by this Agreement and will
convey to Customer good and marketable title to such Product. In addition, NxStage expressly
warrants that it will not ship to any Authorized Customer Location expired Product or Product with
less than [**] months remaining shelf life; provided that NxStage may from time to
time request that an Authorized Customer Location accept delivery of Products with fewer months of
remaining shelf life, and any such Authorized Customer Location agrees to not unreasonably withhold
its consent to accept such deliveries.
All warranties granted or assigned under this Section 12 will continue in full force and
effect notwithstanding transfer of title to any Product to or by Customer or any Authorized
Customer Location to any other Authorized Customer Location. All warranties granted under this
Agreement shall survive inspection, acceptance and payment of the Products.
13. RISK OF LOSS (only for items to which NxStage retains title)
Customer is entirely responsible for any loss of or damage to the System One(s) or any other
equipment rented or loaned hereunder from whatever causes, except for normal wear and tear and
defects in materials and workmanship (an Uncovered Loss). Customer will promptly notify
NxStage of any loss or damage to any such devices. If NxStage determines that a device which has
an Uncovered Loss is repairable, Customer will pay NxStages cost of repair or replacement and
NxStage will either repair the damaged device or replace it with another device in good working
order, which may or may not be new. If NxStage determines that a device, which has an Uncovered
Loss, is not repairable, Customer will pay NxStage the price of such device as set forth in
Schedule B-3, less appropriate adjustments to be reasonably agreed upon by the parties
hereto to reflect the period of time such device has been in use by the applicable Authorized
Customer Location, and return the damaged device to NxStage, and NxStage upon receipt of such
returned device will provide a replacement device in good working order so that treatments may be
continued under this Agreement. If a rented or loaned device is lost or stolen, Customer shall pay
NxStage the price of such device as set forth in Schedule B-3, less appropriate adjustments
to be reasonably agreed upon by the parties to reflect the period of time such device has been in
use by the applicable Authorized Customer Location, and NxStage shall provide Customer with a
replacement device in good working order, which may or may not be new.
14. TRAINING
Customer agrees to:
| Select [**] and use reasonable efforts to select at least [**] staff members at each new Authorized Customer Location to serve as Customers expert users of the Products and trainer of subsequent staff at such new Authorized Customer Location. Notwithstanding the foregoing, NxStage understands that in some of |
11
the Authorized Customer Locations it may be necessary or desirable to select [**] or more than [**] staff members for training, in which case NxStage will use its reasonable efforts to accommodate Customers business determination regarding the number of staff that will receive training; |
| Use reasonable efforts to ensure that the staff members selected at each Authorized Customer Location for training with respect to the use of the Products by NxStage are available for the designated training day mutually agreed to by the parties and in-servicing at the startup of such Authorized Customer Location; and | ||
| Use reasonable efforts to have at least [**] available for treatment on each of days [**] of the start-up of such Authorized Customer Location. |
NxStage agrees to:
| Provide initial in-service and training at each new Authorized Customer Location for certain staff members at such new Authorized Customer Location designated by such new Authorized Customer Location to NxStage, which training shall be provided over a period of [**] consecutive days (the Initial Training); provided that NxStage shall have no obligation to provide such Initial Training unless such Authorized Customer Location has made reasonable efforts to start at least [**] patients during such Initial Training, and NxStage has received at least [**] Patient Prescription Monthly Standing Orders from such Authorized Customer Location before Initial Training starts. Notwithstanding the foregoing, NxStage understands that in limited circumstances it may be necessary or desirable for an Authorized Customer Location to initiate Initial Training with [**] initial patient and NxStage will use reasonable efforts to accommodate such Authorized Customer Location in such limited circumstances; | ||
| Make a NxStage clinical specialist reasonably available, whether in person or on-call by telephone (as determined by NxStage), for [**] additional days while treatments are being provided to provide additional training support and assistance; | ||
| Provide 24/7 clinical and technical assistance by telephone; | ||
| Provide additional training at Customers request for $[**]/day, plus reasonable travel and lodging expenses; and | ||
| Provide a Training Package of [**] cartridges to be used during the start-up of each Authorized Customer Location to familiarize each such Authorized Customer Location with the System and its operation during the Initial Training. |
In lieu of such in-service and training from NxStage, Customer may elect to train its own staff at
Authorized Customer Locations, subject to the provisions of the paragraph headed Site
Startup/Additional Sites on Schedule B-3 attached hereto.
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15. CUSTOMER SERVICE
NxStages customer service department is available from 8am through 5pm EST, Monday through Friday
to support Customers and each Authorized Customer Locations product ordering needs. NxStage will
provide 24/7 technical support for each Authorized Customer Locations Product servicing needs.
Clinical and technical questions raised by any Authorized Customer Locations patients with
NxStages customer service department will be referred, if possible, to the applicable Authorized
Customer Location, to ensure consistency in patient care and adherence with Customers policies and
procedures. NxStage understands that Customer may, in the future, elect to staff its own call
center to directly handle patient inquiries. Customer understands that nothing herein shall
prevent NxStage from making communications directly to any Authorized Customer Locations patients
regarding matters related to the Products.
16. ACCESS TO EQUIPMENT DATA; LICENSE TO CYCLER LOG FILES
(a) NxStage Ownership of Access to Cycler Log Files. The System One may have an
internal computer that records all System operations, such as alarms and Cycler control panel
touches, as such computer may be upgraded, improved or redeveloped from time to time for similar
functional purposes (such computer records hereinafter referred to as the Cycler Log Files).
Customer agrees that, even with purchased Cyclers, the Cycler Log Files and the computer containing
them, are the property of NxStage (so long as such computer is not necessary for the normal
operations of the System One). Customer and the Authorized Customer Locations further agree not to
tamper with or destroy the Cycler Log Files or the computer containing them, and to use reasonable
efforts to make available such Cycler Log Files and the computer containing them to NxStage at
reasonable times within [**] hours of NxStages request. NxStage shall keep all information in the
Cycler Log Files confidential and shall use it for continued product improvement and service.
(b) Additional Covenants Regarding Cycler Log Files. For so long as Systems are in
use by the Authorized Customer Locations for the treatment of chronic home hemodialysis patients,
NxStage hereby grants to Customer an irrevocable license to access and use the treatment specific
data (e.g., flow rates, treatment times, alarms) contained in all Cycler Log Files created in
connection with the treatment of all of the Authorized Customer Locations patients using the
System One; provided that NxStage shall have no obligation to summarize such data
or otherwise manipulate such data on Customers behalf; and provided further that
NxStage shall have no obligation to service the computer generating such Cycler Log Files beyond
[**] years after the original System purchase date. Customer understands that such data is not
automatically transmitted from Cyclers to NxStage and that Customer and the Authorized Customer
Locations are responsible for ensuring the transmittal of such data to NxStage. Customer further
understands that NxStage cannot guarantee the completeness of such data, as the same may be
impacted by power outages, improper connections between the Cycler and the computer that records
the Cycler Log Files, or other disruptions in Cycler or computer operations. Customer acknowledges
and agrees that it has no expectation that the Cycler Log File information will be analyzed by
NxStage. Customer understands that the Cycler Log Files do not presently capture patient clinical
data, which is defined to mean patient physiologic parameters such as blood pressure, heart rate,
URR, and Kt/Vs) (the Patient Clinical Data). NxStage agrees that all of the Patient
Clinical Data shall be the property of Customer but that
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NxStage may continue to use such data learned by NxStage in the ordinary course of its
business for complaint investigations, product improvements and service.
(c) License of Cycler Log Files to Customer. Subject to the terms and conditions of
this Agreement, NxStage hereby grants to Customer a perpetual, non-transferable, non-assignable
license, with the ability to sublicense to a [**] (as defined below), to access the Cycler Log
Files contained in Cyclers purchased or rented by Customer and to use the Cycler Log File Decoding
Document, a copy of which is attached as Exhibit A hereto, and any updates thereto,
provided by NxStage as needed to further Customers [**] of a [**] to be used solely and
exclusively by Customer to electronically aggregate and communicate [**] (as defined below) from
the System One, and upon reasonable written request, selected additional information currently
recorded in such Cycler Log Files (provided that NxStage consents thereto in
writing prior to any use of such selected additional information, which consent shall not be
unreasonably withheld; and provided further that such selected additional
information shall be the confidential information of NxStage (subject to the confidentiality
obligations between the parties)) [**],
and such [**] referred to as the [**]). NxStage further agrees that Customer may provide this
information to any third party [**] contracted by Customer to assist Customer in the
[**] and/or manufacture of a [**] (a [**]) upon completion of the
[**] provided that (i) [**] is contractually obligated to maintain the
confidentiality of any confidential information provided by Customer, (ii) Customer shall designate
the Cycler Log File Decoding Document as confidential information subject to the confidentiality
obligations between the parties, and (iii) to Customers knowledge, [**] has not, otherwise
(A) [**] marketed, or commercialized a renal replacement system or any component thereof, or
(B) collaborated in or performed any part of the [**] of a renal replacement system or any
component thereof on behalf of a third party (except for [**], if any), and shall be precluded from
such [**], marketing, or commercialization during the period any such [**] is assisting
Customer in the [**], manufacture and/or commercialization of the final approved prototype
by Customer of the [**] and for a period of [**] after the [**] of the final approved
prototype by Customer of the [**], if any. NxStage further agrees to promptly provide to Customer
(with the ability to use and sublicense as provided herein), all updates to the Cycler Log File
Decoding Document as the Cycler Log File, file format and corresponding code is updated or
otherwise modified from time to time during the Term. For purposes hereof, [**] under this
Agreement.
(d) Ownership of the[**]. As between the parties, NxStage agrees that the
[**] and the [**] shall be the sole intellectual property of Customer with no limitation on
its use, commercially or otherwise, except as provided in Section 16(c) above.
Notwithstanding the foregoing, Customer agrees, and will cause any [**] to agree, that no
intellectual property arising from the [**] or pertaining to the [**] shall in any way
prevent NxStage or its affiliates, agents or representatives from [**] and commercializing
another [**] and related technology. It is further understood, without limiting the foregoing,
that neither Customer nor any [**] nor any of their respective affiliates, agents or
representatives shall seek to obtain license fees, damages or equitable remedies against NxStage or
its affiliates, customers, manufacturers, distributors, agents or representatives relating to such
intellectual property or any infringement thereof. Likewise, neither NxStage nor any of its
affiliates, agents or representatives, including any [**] or manufacturer working with
14
NxStage on [**] and/or commercializing another [**] and related technology, shall seek
to obtain license fees, damages or equitable remedies against Customer and/or any of its
affiliates, customers, manufacturers, distributors, agents or representatives relating to such
intellectual property or any infringement thereof. Nothing herein shall be construed to prevent
NxStage from asserting or enforcing any of its intellectual property against [**],
manufacturers, and/or distributors of systems and devices that perform extracorporeal blood
treatment.
17. FORCE MAJEURE
Neither NxStage nor Customer will be liable for any failure to perform under this Agreement,
including any failure or delay in delivering Products, that is caused by any event or condition not
within the control of either party which prevents, in whole or in material part, the performance by
one of the parties of its obligations hereunder, such as an act of government, war or related
actions, raw materials shortages, interruptions in transportation, civil insurrection, riot,
sabotage, strike, epidemic, fire, flood, windstorm, or similar event (hereinafter referred to as an
event of Force Majeure). If an event of Force Majeure occurs, NxStage shall allocate
Products and training capacity to the Authorized Customer Locations on a first-priority basis
consistent with Customers and the Authorized Customer Locations then-current share of NxStages
equipment field base that has been purchased, and consistent with the then-effected prescription
items included in Customers and each Authorized Customer Locations Monthly Dialysis Supplies
orders.
18. CONFIDENTIALITY
Prior to entering into this Agreement, NxStage and Customer entered into a Confidential Disclosure
Agreement effective February 4, 2004, as amended effective October 19, 2004, and as may be revised
from time to time upon written agreement between the parties (collectively referred to as the
CDA). NxStage and Customer represent and warrant that the CDA shall be effective
throughout the Term, and that the obligations of the parties to protect the confidentiality of the
Confidential Information (as defined in the CDA) shall survive for a period of [**] years from the
date of termination of this Agreement or the date of the last disclosure of Confidential
Information, whichever is later. Each party also represents and warrants that throughout the Term
said party shall be and shall remain in compliance with all provisions of the CDA. Customer agrees
that the CDA shall not apply to the purchase and delivery of any Products in the ordinary course of
business pursuant to the terms and conditions of this Agreement; provided that to
the extent any Confidential Information is exchanged between the parties in connection with the
purchase and delivery of any Products pursuant to the terms and conditions hereof, the CDA shall
apply to any and all such Confidential Information.
19. USE OF NAME
Notwithstanding the provisions of Section 18, NxStage may refer to Customer as a customer
without Customers prior written consent and Customer may refer to NxStage as a supplier without
NxStages prior written consent. Both parties must obtain the others prior written consent to use
the other partys name in promotional materials.
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20. COMPLIANCE WITH LAWS
Each party represents and warrants that throughout the Term said party shall be and shall remain in
compliance with all applicable federal, state, and local laws, except to the extent that any
noncompliance would not have a material adverse effect on such partys ability to perform under
this Agreement.
21. INSURANCE
NxStage shall, during the Term and for a period of six (6) years following the termination or
expiration of this Agreement, maintain product liability insurance for the Products. The insurance
must have minimum limits of at least five million dollars ($5,000,000) per occurrence.
NxStage shall, during the Term and for a period of three (3) years following the termination or
expiration of this Agreement, maintain comprehensive general liability insurance and broad form
contractual liability insurance to cover claims related to its premises and operations, personal
injuries, property damage and independent contractors. The insurance must have minimum limits of
at least one million dollars ($1,000,000) per occurrence.
Simultaneously with the execution of this Agreement, NxStage shall provide to Customer certificates
of insurance, issued by a company or companies reasonably acceptable to Customer, evidencing the
existence of the insurance required to be maintained pursuant to this Section 21 and
providing that Customer is an additional insured under such policies. NxStage agrees to provide at
least thirty (30) days notice of the expiration or cancellation of any insurance required by this
Section 21. Any limits on NxStages insurance coverage shall not be construed to create a
limit on its liability with respect to any of its obligations hereunder.
22. INDEMNIFICATION
(a) Indemnification of Customer. NxStage agrees to indemnify, defend and hold
harmless Customer and its affiliates and each of their respective officers, directors, employees,
agents, successors and assigns (each, a Customer Indemnity) from any and all third party
claims, demands, actions, losses, proceedings, expenses, damages, liabilities, costs, expenses
(including reasonable attorneys fees and costs) and judgments (collectively, Losses)
arising out of (i) any injury or damage caused by any design or manufacturing defect of the
Products covered under this Agreement when such Products are used in accordance with NxStage Users
Guides and package inserts, (ii) the negligent acts or omissions of NxStage or its employees or
agents, (iii) any claim or allegation that the use of the Products in accordance with the terms of
this Agreement and with then-current Product users guides or instructions for use infringes upon
any United States intellectual property right of any third party, and (iv) any breach by NxStage of
its representations, warranties and covenants hereunder; provided in each case that such indemnity
shall not apply to the extent any Loss arises out of the negligence or willful misconduct of any
Customer Indemnity or its patients.
(b) Indemnification of NxStage. Customer agrees to indemnify, defend and hold
harmless NxStage and its affiliates and each of their respective officers, directors, employees,
agents, successors and assigns (each, a NxStage Indemnity) from any and all third party
Losses arising out of (i) the negligent acts or omissions of Customer or its employees or agents or
(ii)
16
any breach by Customer of its representations, warranties and covenants hereunder; provided in
each case that such indemnity shall not apply to the extent any Loss arises out of the negligence
or willful misconduct of any NxStage Indemnity.
23. NOTICES
All notices required or permitted to be given hereunder shall, unless expressly provided otherwise,
be in writing, properly addressed, and delivered by hand, certified or registered mail, postage
prepaid, or overnight courier with instructions for overnight delivery, to the parties at their
notice address set forth in this Agreement. A notice will be deemed effective as indicated: (a) if
in writing and delivered in person, on the date it is delivered, or one day following delivery to
an overnight courier with instructions for overnight delivery; or (b) if sent by certified or
registered mail (airmail if overseas) (return receipt requested) five (5) days after deposit in the
US mails. NxStage or Customer may change its notice address by providing notice thereof in
accordance with this Section 23.
Notices should be sent to the following addresses:
DaVita Inc.
Vice President Purchasing
15253 Bake Parkway
Irvine, CA 92618
Vice President Purchasing
15253 Bake Parkway
Irvine, CA 92618
With a copy to DaVita General Counsel at the following address:
DaVita Inc.
General Counsel
601 Hawaii Street
El Segundo, CA 90245
General Counsel
601 Hawaii Street
El Segundo, CA 90245
NxStage Medical, Inc.
Senior Vice President, Commercial Operations
439 South Union Street, 5th Floor
Lawrence, MA 01843
Senior Vice President, Commercial Operations
439 South Union Street, 5th Floor
Lawrence, MA 01843
With a copy to NxStages General Counsel at the same address.
24. OPEN RECORDS
To the extent required by §1861(v)(1)(I) of the Social Security Act, the parties will allow (and
will ensure that their agents and contractors allow) the U.S. Department of Health and Human
Services, the U.S. Comptroller General and their duly authorized representatives, access to this
Agreement and related invoices necessary to verify the nature and extent of costs incurred.
25. TERMINATION
If one of the parties hereto becomes the subject of bankruptcy proceedings, becomes operated by a
receiver, makes an assignment for the benefit of creditors, or loses its eligibility to bill for
17
services under the Medicare or Medicaid programs, then the other party hereto, may, at its option,
terminate this Agreement. In addition, except as otherwise provided herein, either party hereto
may terminate this Agreement as follows: (a) [**] in the event of a breach by the other party
hereto of any of its covenants and obligations set forth in Section 18 of this Agreement;
or (b) upon [**] days prior written notice to the other party hereto, in the event of a breach, as
determined by the non-breaching party in its reasonable discretion, by the other party of any
representation, warranty, covenant or obligation of the other party hereto contained in this
Agreement (other than the covenants and obligations set forth in Section 18 of this
Agreement), and the other party hereto fails to cure such breach within [**] days following the
date of such notice. Upon termination, NxStage shall be obligated to continue to sell to Customer
and each Authorized Customer Location Monthly Dialysis Supplies at pricing and on terms consistent
with those provided by NxStage to its other customers buying similar quantities as Customer and the
Authorized Customer Locations in the aggregate, for so long as the Authorized Customer Locations
have patients using the System One for chronic home hemodialysis therapy, up to a maximum of [**]
years from the original purchase date of each System One. Termination of this Agreement will not
release either party hereto from any liability or obligation which, at the time of such
termination, has already accrued or which thereafter may accrue in respect to any act or omission
of any party hereto prior to such termination, nor will any such termination affect in any way the
survival of any right, duty or obligation of any party hereto, which is expressly stated elsewhere
in this Agreement to survive the termination.
26. LIMITATION OF LIABILITY
In no event will NxStages total liability to Customer and the Authorized Customer Locations
collectively under this Agreement, including all Schedules hereto, exceed Customers and the
Authorized Customer Locations then current [**] for purchased Systems (measured at the time the
payment owed by NxStage to Customer and the Authorized Customer Locations hereunder is definitively
ascertained); provided that such [**] is calculated in good faith and in accordance
with generally accepted accounting standards.
27. ENTIRE AGREEMENT, AMENDMENT, ASSIGNMENT AND GOVERNING LAW
This Agreement and the Schedules and Exhibits referred to in this Agreement contain the entire
agreement between NxStage and Customer relating to the subject matter hereof and supersede and
replace all prior negotiations, representations, warranties, correspondence and covenants of the
parties not set forth in this Agreement, including the Original Agreement. Any conflicting or
additional terms contained in any purchase order or other document submitted by Customer shall not
be valid unless signed by the Chief Financial Officer or Chief Executive Officer of NxStage. Any
amendment to this Agreement shall only be effective if agreed to in writing by a duly authorized
officer of both parties and referencing an intent to amend this Agreement, and in the case of
NxStage, if signed by the Chief Financial Officer or Chief Executive Officer of NxStage. This
Agreement will be governed by the laws of the State of Delaware, without regard to its conflicts of
laws principles and may not be assigned in whole or in part by either party without prior written
consent of the other, except that if NxStage consents to any transfer of Products by Customer to a
third party pursuant to the terms of Section 4 above, such third party shall have the right
(a) to continue to receive service for the System One(s) transferred by Customer on terms
18
consistent with the terms set forth in Schedule C hereof, and (b) to continue to purchase
Monthly Dialysis Supplies at pricing and on terms consistent with those provided to other NxStage
customers buying similar quantities, for so long as such third party has patients using the
transferred System One(s) for chronic home hemodialysis therapy. Except with respect to such
rights, such third party shall have no other rights hereunder. Notwithstanding the above, this
Agreement shall survive a change-in-control of either party, or the sale of substantially all of
the business related to this Agreement by either party, and may be assigned by Customer or NxStage
to any of its affiliates; provided that as a condition to such an assignment, this
Agreement shall be guaranteed by Customer or NxStage respectively. Those provisions which are
intended to survive the termination of this Agreement, including Sections 4, 6,
7, 8, 9, 11, 12, 13, and 16 through
36 shall survive termination. Nothing in this Agreement is intended or shall be construed
to confer upon any individual or entity other than NxStage and Customer and their respective
successors and assigns, any remedy or claim under or by reason of this Agreement of any term,
covenant or condition hereof, as a third party beneficiary or otherwise other than any individual
or entity entitled to indemnification under Section 22 of this Agreement, subject in all
cases to the limitation of liability set forth in Section 26 of this Agreement.
28. NO AGENCY OR PARTNERSHIP
Nothing contained in this Agreement, including any Schedule or Exhibit hereto, shall be construed
to permit any party hereto or any employee of a party hereto to act as an agent or employee of the
other. This Agreement does not create a joint venture or partnership between NxStage and Customer,
instead such parties shall be construed as independent contractors.
29. SEVERABILITY
In the event any one or more of the provisions contained in this Agreement shall be invalid,
illegal or unenforceable in any respect, the validity, legality or enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired thereby, provided however
if any such term is an essential element of this Agreement without which either party would not
have entered into this Agreement, the parties shall promptly negotiate in good faith a replacement
therefor, failing which the Agreement may be terminated by either party.
30. NO WAIVER
No failure or delay on the part of either party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
31. PUBLICITY
No publicity release or announcement concerning this Agreement or the transactions contemplated
hereby shall be made without advance written approval thereof by NxStage and Customer. NxStage and
Customer agree to cooperate in issuing any press release or other public announcement concerning
this Agreement or the transactions contemplated hereby. NxStage and Customer shall each furnish to
the other drafts of all such press releases or announcements prior
19
to their release. Nothing contained in this Section 31 shall prevent any party from making
any disclosures required under the Securities Exchange Act of 1934 or under the rules and
regulations of any national securities exchange on which such partys shares of capital stock are
listed; provided however, that if this Agreement is required to be publicly filed,
the party obligated to file shall endeavor in good faith to obtain the consent of the other party
hereto with respect to the form of the document to be filed and a request for confidential
treatment of all sensitive business terms contained herein.
32. INTERPRETATION; COUNTERPARTS; PDF/FACSIMILE SIGNATURES AND JOINT PREPARATION
All section headings contained in this Agreement are for convenience of reference only, do not form
a part of this Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter as the context requires. The words include, includes and
including, and words of similar import, shall be deemed to be followed by the phrase without
limitation. Unless the context expressly by its terms requires otherwise, (a) any reference to
any law herein shall be construed as referring to such law as from time to time enacted, repealed
or amended, (b) any reference herein to any individual or entity shall be construed to include such
individuals or entitys permitted successors and assigns, (c) the words herein, hereof and
hereunder, and words of similar import, shall be conferred to refer to this Agreement in its
entirety and not to any particular provision hereof, and (d) all references herein to Sections or
Exhibits shall be construed to refer to Sections or Exhibits of this Agreement. This Agreement may
be executed in any number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument. This Agreement shall
become binding when one or more counterparts taken together shall have been executed and delivered
by each of the parties hereto. The parties hereto agree that facsimile or PDF transmission of
original signatures shall constitute and be accepted as original signatures. Each party hereto (i)
has participated in the preparation of this Agreement; (ii) has read and understands this
Agreement; and (iii) has been represented by counsel of its own choice in the negotiation and
preparation of this Agreement. Each party hereto represents that this Agreement is executed
voluntarily and should not be construed against any party hereto solely because it drafted all or a
portion hereof. Customer represents that it has the authority to enter into this Agreement on
behalf of all of the Authorized Customer Locations, and that all such Authorized Customer Locations
shall be bound by the terms hereof.
33. REMOVAL/DISCONTINUATION OF PRODUCT EVENT
NxStage may not remove or stop providing any Product(s) listed on Schedule B, unless it (a)
provides Customer with at least [**] days advance written notice of each such Product(s) it intends
on removing from Schedule B or no longer providing, as applicable, and the effective date
of such event and (b) removes such Product(s) from [**] of its agreements with its customers or
stops providing such Product(s) to all of its customers.
20
34. ARBITRATION
Any dispute arising out of or relating to this Agreement, including the breach, termination or
validity thereof, shall be finally resolved by confidential binding arbitration. The parties
hereto shall mutually select one arbitrator, or if the parties are unable to agree, the American
Arbitration Association (the AAA) shall select such arbitrator. The arbitration shall be
governed by the Commercial Arbitration Rules of the AAA then in effect. The place of arbitration
shall be New Castle County, Delaware. The arbitrators authority to grant relief shall be subject
to the United States Arbitration Act at 9 U.S.C. 1-16 et seq. (the Arbitration Act), the
provisions of this Agreement, and the ABA-AAA Code of Ethics for Arbitrators in Commercial
Disputes. The arbitrator shall determine the rights and obligations of the parties according to
the substantive and procedural laws of the State of Delaware. The arbitrator shall have no power
or authority to make awards or issue orders of any kind or amount other than as expressly permitted
by this Agreement. The decision of the arbitrator shall follow the plain meaning of the relevant
documents. The decision of and award by the arbitrator shall be final, binding and conclusive upon
such parties. Judgment upon any award rendered by the arbitrator may be entered in any court
having jurisdiction. All post award proceedings shall be governed by the Arbitration Act.
35. ADDITIONAL PRODUCTS
Commencing on the Effective Date through April 30, 2013, NxStage shall provide to Customer and the
Authorized Customer Locations the right to purchase and/or lease all products manufactured,
licensed, sold or distributed by NxStage or any of its affiliates (including products and product
lines acquired by NxStage or any of its affiliates as a result of an acquisition, merger or other
transaction involving NxStage or any of its affiliates) that: (a) are indicated for the treatment
of chronic renal failure in the home setting, (b) are or that become Commercially Available and
which are not already covered by this Agreement or by any other agreement, whether written or oral,
between the parties, and (c) in the case of products and product lines acquired by NxStage or any
of its affiliates as a result of an acquisition, merger or other transaction involving NxStage or
any of its affiliates, NxStage is not restricted by the terms of any agreement relating to such
acquired products or product lines entered into prior to the acquisition by NxStage or any of its
affiliates of such products or product lines, or pursuant to any regulatory order or consent
decree, from selling such products and product lines to Customer and the Authorized Customer
Locations (such products are collectively referred to as Additional Products and
individually as an Additional Product). NxStage shall endeavor in good faith to include
Customer in NxStages then-current market release processes for FDA cleared products that are not
yet Commercially Available, but which are indicated for the treatment of chronic renal failure in
the home setting. NxStage shall include Customer in all of its and its affiliates distributions
of customer announcements regarding NxStages or its affiliates current, new or forthcoming
Additional Products. NxStage shall offer or cause any of its affiliates to offer any such
Additional Product(s) to Customer and the Authorized Customer Locations at a purchase price and on
such terms and conditions as are negotiated by NxStage and Customer in good faith. NxStage
covenants and agrees that it shall only make an offer for the sale of any Additional Product(s) to
Customers Vice-President of Clinical Operations, Chief Medical Officer, Vice-President of
Purchasing or Vice-President of Home Therapies or equivalent position, and not to any Authorized
Customer Location directly. If NxStage or one of its affiliates acquires any Additional Product(s)
as a result of an acquisition, merger or other transaction involving NxStage or any of its
affiliates with an individual or entity with which Customer or an Authorized Customer Location, as
applicable, already has a written purchase or rebate arrangement (a Prior
21
Agreement), NxStage covenants and agrees that it shall continue to abide by the pricing
and rebate provisions of such Prior Agreement or if Customer requests, such Additional Product(s)
shall be included in this Agreement on terms to be negotiated and determined by the parties as
provided in this Section 35.
36. AUDIT RIGHT
If Customer: (a) disagrees with any computation or statement delivered by NxStage to Customer or
(b) wants to ensure NxStages compliance with the [**] in Section 3 of Schedule D),
Customer may, in the case of the receipt of any computation or statement from NxStage have a
nationally recognized independent accounting firm selected by Customer (the Customer
Firm) audit such computation or statement, at Customers sole cost and expense, within [**]
days after the receipt of such computation or statement or may, in the case of ensuring NxStages
compliance with the [**], have the Customer Firm, audit the [**]; provided that
Customer must provide NxStage at least [**] days advance written notice of any such audit, and
provided further that, Customer shall only have the right to have the
Customer Firm audit: (i) the [**] during the Term, (ii) any computations or statements other than
the Active NxStage Chronic Patient Census, the Active NxStage Home Patient Census and/or the Total
NxStage Home Patient Count [**] during the Term, and (iii) each of the Active NxStage Chronic
Patient Census, the Active NxStage Home Patient Census and/or the Total NxStage Home Patient Count
[**] during the Term. Any audit of NxStages compliance with the [**] (and of the calculation of
any [**] in Section 3 of Schedule D) may cover no more than the [**] period prior
to any such audit. Customer will direct the Customer Firm to render a determination within [**]
days of the commencement of the audit, and NxStage and Customer and each of their respective agents
and employees will cooperate with the Customer Firm during its engagement. The Customer Firm shall
execute a confidentiality agreement in a form reasonably acceptable to NxStage and Customer. The
Customer Firm shall conduct any such audit during NxStages normal business hours or at such other
times as may be mutually agreed to by the parties. In the event the Customer Firms audit in the
case of: (A) any computation or statement results in a number different from that set forth in the
computation or statement delivered by NxStage to Customer or (B) ensuring compliance with the [**]
identifies a failure by NxStage to comply with the [**], Customer shall deliver a written notice
(an Objection Notice) to NxStage setting forth in detail any and all items of
disagreement discovered in connection with any such audit and provide to NxStage a copy of all
written materials received by Customer from the Customer Firm in connection with the audit that do
not include any Confidential Information. If in the case of any audit of any computation or
statement Customer does not deliver an Objection Notice within [**] days of the completion of the
audit, the calculations set forth in any such computation or statement delivered by NxStage to
Customer shall be deemed final, conclusive and binding on the parties. If in the case of any audit
of the [**], Customer does not deliver an Objection Notice within [**] days of the completion of
such audit, the [**] for such audited period shall be deemed to have been satisfied. NxStage and
Customer will use their commercially reasonable efforts to resolve any disagreements relating to
any computation or statement or the [**], but if they do not obtain a final resolution within [**]
days after NxStage has received the Objection Notice, then either NxStage or Customer may refer the
items in dispute to a nationally recognized independent public accounting firm as to which Customer
and NxStage mutually agree (the Firm), to resolve any remaining disagreements. NxStage
and Customer will direct the Firm to render a determination within [**] days of the commencement of
the audit, and
22
NxStage and Customer and each of their respective agents and employees will cooperate with the Firm
during its engagement. The determination of the Firm will be conclusive and binding upon NxStage
and Customer, and NxStage or Customer, as applicable, will make any payment owed or issue any
credit (including the [**]) to the other party pursuant hereto within [**] days of the Firms
determination. The Firm shall execute a confidentiality agreement in a form reasonably acceptable
to NxStage and Customer. NxStage and Customer shall bear that percentage of the fees and expenses
of the Firm equal to the proportion of the dollar value of the unresolved disputed issues
determined in favor of the other party hereto. NxStage covenants and agrees that in the event it
is determined through any audit conducted pursuant to this Section 36 that NxStage is a
party to any agreement or arrangement with a third party which includes any of the Products covered
by this Agreement that is not in compliance with the [**] (a Non-Compliant Agreement)
NxStage shall (x) pay to Customer in the form of a credit to be applied against future purchases
hereunder, an amount equal to the [**]; provided that in the event any amounts
included in the [**] have not been used by Customer within [**] days of the payment of such [**]
(the Credit Balance), NxStage shall deliver a check to Customer in an amount equal to the
Credit Balance within [**] business days of the expiration of such [**] day period; (y) amend any
such Non-Compliant Agreement to bring the pricing in such Non-Compliant Agreement into compliance
with the [**] as soon as it can be amended per its terms, and (z) pay to Customer any [**]
thereafter owed relating to any such Non-Compliant Agreement until such time as such Non-Compliant
Agreement is amended per its terms so as to be in compliance with the [**].
[SIGNATURE PAGE FOLLOWS]
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and
effective as of the Effective Date.
CUSTOMER: DAVITA INC. |
||||
By: | /s/ Dennis L. Kogod | |||
Name: | Dennis L. Kogod | |||
Title: | Chief Operating Officer | |||
NXSTAGE: NXSTAGE MEDICAL, INC. |
||||
By: | /s/ Jeffrey H. Burbank | |||
Name: | Jeffrey H. Burbank | |||
Title: | President & Chief Executive Officer | |||
[SIGNATURE PAGE TO FIRST AMENDED AND RESTATED NATIONAL SERVICE PROVIDER AGREEMENT]
Exhibit A
Cycler Log File Decoding Document
Cycler Log File Decoding Document
Draft: 2
Revision: 1
Revision: 1
[**]
A total of 17 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
A total of 17 pages were omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
CONFIDENTIAL
This document is the property of NxStage Medical, Inc. and may not be reproduced
without the permission of the management of NxStage Medical, Inc.
This document is the property of NxStage Medical, Inc. and may not be reproduced
without the permission of the management of NxStage Medical, Inc.
Exhibit A-1
Exhibit B
Pricing Covenant Calculation
Illustrative Example SAMPLE CALCULATIONS ONLY
Period XQ 20XX
Pricing Covenant Calculation
Illustrative Example SAMPLE CALCULATIONS ONLY
Period XQ 20XX
[**]
A-1
Schedule A
Authorized Customer Locations
[**]
A total of 10 pages have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
A-2
Schedule B
Program and Pricing
Schedule B
(References to Schedule B within the Agreement, include references to
Schedules B-1, B-2, B-3, B-4 and B-5)
(References to Schedule B within the Agreement, include references to
Schedules B-1, B-2, B-3, B-4 and B-5)
Unless otherwise noted in this Schedule B, the pricing for each Product set forth on this
Schedule B is only valid for [**] patients of the Authorized Customer Locations for which
NxStage has received a Patient Prescription Monthly Standing Order signed by a physician during the
Term. This Schedule B sets forth the pricing, discounts, rebates and other payment terms
related to the purchase and/or rental of the System One (including Cycler and PureFlow SL, or
Cycler, Warmer and Stand, as the case may be), the Monthly Dialysis Supplies, and other related
supplies as set forth herein.
Schedule B-1
Chronic Outpatient Therapy
Monthly Dialysis Supplies
Chronic Outpatient Therapy
Monthly Dialysis Supplies
1. Monthly Dialysis Supplies Pricing
The pricing set forth in the table below titled NxStage Price List Monthly Dialysis Supply
Packages applies to the purchase of Monthly Dialysis Supplies each month for System One patients
of each Authorized Customer Location that have a Patient Prescription Monthly Standing Order.
Monthly Dialysis Supplies for each patient of each of the Authorized Customer Locations will be
shipped each month to such patient based on the prescribed frequency and the inventory needs of
such patient, as reported by such patient to NxStages customer service department. As set forth
in the table below titled NxStage Price List Monthly Dialysis Supply Packages, the pricing on
Customers monthly invoice for Monthly Dialysis Supplies will be calculated based on the Active
NxStage Chronic Patient Census (as defined below) for each Authorized Customer Location, on a per
Authorized Customer Location basis, at the end of the immediately preceding month. For purposes of
this Schedule B, Active NxStage Chronic Patient Census shall be defined to mean
for each Authorized Customer Location, as of the end of each calendar month during the Term, the
number of [**] patients at such Authorized Customer Location that have an active Patient
Prescription Monthly Standing Order and are then receiving dialysis with the System One. The
Active NxStage Chronic Patient Census shall not include patients prescribed to receive therapy with
the System One in connection with an evaluation of daily therapy, home therapy or the System One
(such as under NxStages Experience the Difference program). In addition, for purposes of this
Schedule B-1 only, the Active NxStage Chronic Patient Census shall not include patients
subject to a New Agreement.
The PureFlow SL pricing set forth in the table below titled NxStage Price List Monthly Dialysis
Supply Packages is only valid where a patients incoming water quality meets panel 1 and panel 2
of the EPA Safe Drinking Water Act. Customer shall provide reasonable evidence of incoming water
quality to NxStage upon NxStages reasonable request. The PureFlow Express (Bags) pricing set
forth in the table below titled NxStage Price List Monthly Dialysis
B-1
Supply Packages is only valid for patients within [**] miles of the applicable Authorized Customer
Location responsible for that patients care. If a patient is more than [**] miles from the
applicable Authorized Customer Location responsible for that patients care, additional charges to
be mutually agreed to by NxStage and Customer may apply.
B-2
Schedule B-1 (continued)
Chronic Outpatient Therapy Agreement
Monthly Dialysis Supplies
Chronic Outpatient Therapy Agreement
Monthly Dialysis Supplies
The table below sets forth the pricing for the Monthly Dialysis Supplies based on each Authorized
Customer Locations Active NxStage Chronic Patient Census and the prescribed treatment frequency
and fluid volume of each such Authorized Customer Locations patients. For purposes of the table
below, EOD means every other day.
B-3
NxSTAGE PRICE LIST MONTHLY DIALYSIS SUPPLY PACKAGES
# Active Patients in Authorized Customer Location | ||||||||||||
Partner | ||||||||||||
Part # | Tx Freq & Volume | 0 to 10 | 11 to 20 | 21 to 34 | 35 to 50 | 51 and > | ||||||
PureFlow SL |
||||||||||||
PF-20-N-7-SUP
|
7x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-25-N-7-SUP
|
7x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-30-N-7-SUP
|
7x week 30L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-17-N-6-5UP
|
6x week 17L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-20-N-6-SUP
|
6x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-25-N-6-SUP
|
6x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-30-N-6-5UP
|
6x week 30L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-20-N-5-SUP
|
5x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-25-N-5-SUP
|
5x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-30-N-5-5UP
|
5x week 30L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-30-N-E-SUP
|
EOD 30L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-40-N-E-5UP
|
EOD 40L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-50-N-E-5UP
|
EOD 50L | [****] | [****] | [****] | [****] | [****] | ||||||
PF-60-N-E-SUP
|
EOD 60L | [****] | [****] | [****] | [****] | [****] | ||||||
EXPRESS (Bags) |
||||||||||||
EX-15-N-7-5UP
|
7x week 15L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-20-N-7-SUP
|
7x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-15-N-6-SUP
|
6x week 15L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-20-N-6-SUP
|
6x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-25-N-7-SUP
|
7x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-30-N-7-SUP
|
7x weekly 30L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-25-N-6-SUP
|
6x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-30-N-6-SUP
|
6x week 30L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-15-N-5-SUP
|
5x week 15L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-20-N-5-SUP
|
5x week 20L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-25-N-5-SUP
|
5x week 25L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-30-N-5-SUP
|
5x week 30L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-30-N-E-SUP
|
EOD 30L | [****] | [****] | [****] | [****] | [****] | ||||||
EX-40-N-E-SUP
|
EOD 40L | [****] | [****] | [****] | [****] | [****] |
2. Reserve Quantity Inventory Pricing
If at the time of the initial Patient Prescription Monthly Standing Order for each patient, a
reserve of [**] of Monthly Dialysis Supplies is required (the Reserve Quantity
Inventory), the pricing for such Reserve Quantity Inventory shall be determined as set forth
in the table below:
B-4
Reserve Quantity Inventory
(placed at the time of initial patient prescription)
(placed at the time of initial patient prescription)
[**]
|
[**]% of the pricing set forth in the table above titled NxStage Price List Monthly Dialysis Supply Packages based on the Active NxStage Chronic Patient Census achieved by the Authorized Customer Location managing such patient and such patients prescribed treatment frequency and fluid volume | |
[**]
|
[**]% of the pricing set forth in the table above titled NxStage Price List Monthly Dialysis Supply Packages based on the Active NxStage Chronic Patient Census achieved by the Authorized Customer Location managing such patient and such patients prescribed treatment frequency and fluid volume |
3. Pricing Eligibility Requirement.
Customer shall not be eligible for any discounts or rebates under this Schedule B-1 unless
(a) Customer is not in breach of any of the provisions of the Agreement (taking into account any
applicable cure period set forth in the Agreement), and (b) Customer is current in all of its
payment obligations to NxStage, and no payment owed by Customer to NxStage hereunder is past due;
provided that the discounts or rebates set forth in this Schedule B-1 may
be earned if Customers past due undisputed invoices are less than $[**] in total. Amounts
disputed in good faith by Customer pursuant to the provisions of Section 6 of the Agreement or any
other agreement between NxStage and Customer shall not impact Customers eligibility for any of the
discounts or rebates set forth in this Schedule B-1. NxStage covenants and agrees that the
terms and conditions of this Section 3 of Schedule B-1 shall not apply to the
Warrant Shares (as defined in Schedule B-5) that may be issued pursuant to the Warrant (as defined
in Schedule B-5) as further described in detail in Schedule B-5.
4. New Authorized Customer Locations Pricing.
Upon the date on which a new Authorized Customer Location treats its [**] home hemodialysis patient
using the System (the Initiation), such Authorized Customer Location shall be eligible
for pricing on the Monthly Dialysis Supplies based on an Active NxStage Chronic Patient Census of
[**] patients as set forth in the table above titled NxStage Price List Monthly Dialysis Supply
Packages during the first [**] months following Initiation (the Startup Pricing);
provided that such new Authorized Customer Location must satisfy the following two
conditions to obtain such Startup Pricing:
(i) Commencing with [**] month in which Initiation of such new Authorized Customer Location
takes place through month [**] after Initiation of such new Authorized Customer Location, such new
Authorized Customer Location must identify and submit Patient Prescription Monthly Standing Orders
for at least [**] eligible to be included in such Authorized Customer Locations Active NxStage
Chronic Patient Census during such period.
(ii) Such new Authorized Customer Location must have at least [**] patients eligible to be
included in such Authorized Customer Locations Active NxStage Chronic Patient Census
B-5
by the last
day of month [**] following Initiation to obtain the Startup Pricing commencing with month [**]
through month [**] after Initiation of such new Authorized Customer Location.
Commencing with month [**] after the Initiation of such new Authorized Customer Location and each
month thereafter or if the above conditions are not met by such new Authorized Customer Location at
anytime during the time periods set forth above, the pricing for the Monthly Dialysis Supplies for
such new Authorized Customer Location shall be based on the Active NxStage Chronic Patient Census
actually achieved by such new Authorized Customer Location in each such month thereafter as set
forth in the above table titled NxStage Price List Monthly Dialysis Supply Packages. NxStage
shall in good faith extend the Startup Pricing at a new Authorized Customer Location upon written
request from Customer; provided that Customer is and has been pursuing commercially
reasonable efforts to secure Medicare home hemodialysis certification since the treatment of its
first home hemodialysis patient using the System at such new Authorized Customer Location and such
Medicare home hemodialysis certification has not yet been received.
NxStage will combine the Active NxStage Chronic Patient Census of each Authorized Customer Location
that is in any Market (as defined on Schedule D) set forth on Exhibit A to Schedule
D Preferred Relationship for purposes of this Schedule B.
B-6
Schedule B-2
Chronic Outpatient Therapy Agreement
Ancillary/Replacement Supplies
1. ANCILLARY PRODUCTS AND CUSTOMER AUTHORIZATION
The pricing set forth in the table below titled Ancillary/Replacement Supplies applies to all
Ancillary/Replacement Supplies (as defined below) purchased by Customer during the Term. All
purchases of Ancillary/Replacement Supplies must be initiated by a valid purchase order. NxStage
will not ship any Ancillary/Replacement Supplies to any Authorized Customer Location without the
prior consent of such Authorized Customer Location. For purposes hereof,
Ancillary/Replacement Supplies means the individual products set forth in the table below
not explicitly included in Monthly Dialysis Supplies or items the use of which exceeds any
patients applicable prescribed treatment frequency or is above standard usage levels.
ANCILLARY/REPLACEMENT SUPPLIES
Part Number | Category | Description | Quantity | Price | ||||
ANC-101
|
Consumables | Priming spike | 30/Case | [**] | ||||
ANC-200
|
Consumables | Waste Line extension | 24/Case | [**] | ||||
CAR-124
|
Consumables | Cartridge w/o preattached dialyzer | 6/Case | [**] | ||||
CAR-170-B
|
Consumables | Cartridge Express | 6/Case | [**] | ||||
CAR-171
|
Consumables | Cartridge Express with anticoagulation line | 6/Case | [**] | ||||
DTK-001
|
Consumables | DTK Test Kit | 100/Case | [**] | ||||
FWS-206-B
|
Consumables | Comfortmate Warmer Disposable w/ 6 MLA lines | 24/Case | [**] | ||||
FWS-209-B
|
Consumables | Comfortmate Warmer Disposable w/ 9 MLA lines | 24/Case | [**] | ||||
FWS-304
|
Consumables | Express Warmer Disposable w/ 4 MLA lines | 24/Case | [**] | ||||
FWS-308
|
Consumables | Express Warmer Disposable w/ 8 MLA lines | 24/Case | [**] | ||||
PAK-001
|
Consumables | PFSL PAK | Each | [**] | ||||
RFP-204
|
Consumables | Express Premixed Dialysate, 5L, Lactate 40 mEq/L, 1K | 2/Case | [**] | ||||
RFP-205
|
Consumables | Express Premixed Dialysate, 5L, Lactate 35 mEq/L, 3K | 2/Case | [**] | ||||
RFP-207
|
Consumables | Express Premixed Dialysate, 5L, Lactate 45 mEq/L, 1K | 2/Case | [**] | ||||
SAK-001
|
Consumables | PFSL SAK, 60L Lactate 45 mEq/L, 1K | 2/Case | [**] | ||||
SAK-002
|
Consumables | PFSL SAK, 60L Lactate 40 mEq/L, 1K | 2/Case | [**] | ||||
SAK-003
|
Consumables | PFSL SAK 50L Lactate 45 mEq/L, 1K | 2/Case | [**] | ||||
SAK-004
|
Consumables | PFSL SAK 60L Lactate 45 mEq/L, 2K | 2/Case | [**] | ||||
SAK-005
|
Consumables | PFSL SAK 40L Lactate 45 mEq/L, 1K | 2/Case | [**] | ||||
NX1000-1
|
Hardware | Cycler Only | Each | [**] | ||||
FW-200
|
Hardware | Comfortmate Fluid Warmer | Each | [**] | ||||
FW-300
|
Hardware | Express Fluid Warmer | Each | [**] | ||||
NX2000-1
|
Hardware | PFSL Control Unit | Each | [**] | ||||
NX2000-2
|
Hardware | PFSL Cabinet | Each | [**] |
B-7
Part Number | Category | Description | Quantity | Price | ||||
NX0153-P
|
Accessories | Wheeled Base/Cycler Stand | Each | [**] | ||||
NC1012
|
Accessories | Soft-sided Travel Case | Each | [**] | ||||
NC1079
|
Accessories | Hard-sided Travel Case | Each | [**] | ||||
NX2000-3
|
Accessories | PFSL Wheeled Base | Each | [**] | ||||
FW-300-1
|
Accessories | Express Warmer Accessory Kit | Each | [**] | ||||
NX0642
|
Accessories | Cycler Base and Fluid Detection Sensor | Each | [**] | ||||
NX0664
|
Accessories | Fluid Detection Sensor | Each | [**] | ||||
NC1344
|
Accessories | Troubleshooting Rinseback Tool | Each | [**] | ||||
NC1816-1**
|
Packaging | Cycler Packaging | Each | [**] | ||||
NC3219**
|
Packaging | FW-200 Packaging | Each | [**] | ||||
NX0601**
|
Packaging | FW-300 Packaging | Each | [**] | ||||
NX0624**
|
Packaging | FW-300-1 Packaging | Each | [**] | ||||
NC0742**
|
Packaging | Cycler Stand (NX0248-P) box | Each | [**] | ||||
NC0380**
|
Packaging | IV pole shipping tube | Each | [**] | ||||
NC1462**
|
Packaging | PF CU Packaging | Each | [**] | ||||
NX0464**
|
Packaging | PF Chassis Packaging | Each | [**] | ||||
NC1491*
|
Documentation | Cycler Users Guide | Each | [**] | ||||
NC2327*
|
Documentation | PF Users Guide | Each | [**] | ||||
228
|
Replacement Parts Cycler | 4-hanger top for IV pole | Each | [**] | ||||
86557030
|
Replacement Parts Cycler | 0.5 meter Warmer (FW-200) cord | Each | [**] | ||||
NC0384
|
Replacement Parts Cycler | Screws to attach hanger to pole | Each | [**] | ||||
NC0746*
|
Replacement Parts Cycler | USB thumb drive | Each | [**] | ||||
NC1292
|
Replacement Parts Cycler | Screws to attach pole to stand | Each | [**] | ||||
NX0232-P
|
Replacement Parts Cycler | Jewel Box Computer | Each | [**] | ||||
NX0233*
|
Replacement Parts Cycler | Phone line connection kit (splitter, cord, instructions) | Each | [**] | ||||
NX0248-01
|
Replacement Parts Cycler | Table top stand and 4-hanger top for IV pole | Each | [**] | ||||
NX0248-02
|
Replacement Parts Cycler | IV pole | Each | [**] | ||||
NX0424
|
Replacement Parts Cycler | Adapter Foot | Each | [**] | ||||
NX0429-P
|
Replacement Parts Cycler | Saline hook | Each | [**] | ||||
NX0593
|
Replacement Parts Cycler | Filter tilter | Each | [**] | ||||
86557300
|
Replacement Parts PFSL | 1 meter Chassis Interconnect cord | Each | [**] | ||||
09325-F/30*
|
Replacement Parts PFSL | Replacement air filter & guard* | Each | [**] | ||||
NC0985
|
Replacement Parts PFSL | John Guest Check Valve | Each | [**] | ||||
NC1148
|
Replacement Parts PFSL | Aerator Adapter 15/16-27 Male X 55/ | Each | [**] | ||||
NC1176
|
Replacement Parts PFSL | 12 Power cord | Each | [**] | ||||
NC1180
|
Replacement Parts PFSL | Drain Saddle Valve | Each | [**] | ||||
NC1196
|
Replacement Parts PFSL | Diverter Aerator Pull Down | Each | [**] | ||||
NX0305
|
Replacement Parts PFSL | Water connection kit under sink | Each | [**] | ||||
NX0306
|
Replacement Parts PFSL | 20 Drain Line Kit | Each | [**] | ||||
NX0415
|
Replacement Parts PFSL | Water connection kit faucet | Each | [**] | ||||
NX0416
|
Replacement Parts PFSL | Water connection kit washer hook up | Each | [**] | ||||
NX0509
|
Replacement Parts PFSL | USB cable (J1) | Each | [**] | ||||
NX0513
|
Replacement Parts PFSL | Control Unit adapter | 2/Case | [**] | ||||
NX0516
|
Replacement Parts PFSL | PureFlow SL drain line replacement (NC0991 Raw) | Each | [**] | ||||
NX0517
|
Replacement Parts PFSL | Water Supply Line Replacement | Each | [**] | ||||
NX2000-4*
|
Replacement Parts PFSL | Pretreatment Kit (includes hookups, wtr lines, drain) | Each | [**] | ||||
SED-001
|
Replacement Parts PFSL | Sediment filter for pre-treatment kit | Each | [**] |
B-8
* | May be included in a no-charge redeployment kit (NX0729, NX0730, NX0731, NX0732, as needed) for each new patient start. | |
** | Shipping is extra and not included in price for packaging material. |
2. VACATION/TRAVEL SUPPLIES/PUREFLOW EXPRESS BAG ALLOTMENT
The pricing for Monthly Dialysis Supplies set forth in the table in Schedule B-1 titled
NxStage Price List Monthly Dialysis Supply Packages is extended to each patient of each of
the Authorized Customer Locations when traveling within the Continental United States as long as:
(a) NxStage is given at least [**] business days notice of the change in delivery site for each
such patient, (b) NxStage receives a prescription using the NxStage System One Vacation and Travel
Form from each such patients physician requesting travel delivery at least [**] business days in
advance of the requested change in delivery site for each such patient, and (c) NxStage is not
required to alter standard case shipping volumes to satisfy special travel/vacation delivery
requirements (the Travel Delivery Pricing). No patient of any Authorized Customer
Location may receive the Travel Delivery Pricing for more than [**] trips for a maximum of [**]
weeks per calendar year (the Travel Pricing Limitation). Any requests for the Travel
Delivery Pricing (i) in excess the Travel Price Limitation, (ii) to locations outside of the
Continental United States, (iii) in non-standard shipping volumes, or (iv) which are made with less
than [**] business days notice, shall be subject to (x) approval from NxStage and (y) additional
shipping charges. NxStage shall act in good faith to make additional travel/vacation deliveries to
the Authorized Customer Locations patients at no additional charge, and shall give due
consideration to any vacation time unused by the Authorized Customer Locations other patients.
All shipment of Monthly Dialysis Supplies to any patient of any Authorized Customer Location shall
be adjusted to account for any Monthly Dialysis Supplies delivered to any such traveling patient of
any Authorized Customer Location pursuant to Section 2 of this Schedule B-2. In
connection with the delivery of any Monthly Dialysis Supplies pursuant to Section 2 of this
Schedule B-2, NxStage will not arrange for delivery of Cyclers, Cabinets, Control Units or
Warmers. Each patient of the Authorized Customer Locations shall be responsible for transporting
Cyclers, Cabinets, Control Units and Warmers according to the shipping directions provided by
NxStage in the device Operators Manuals and other supplements as required, and Customer shall be
responsible for any damages to such equipment as a result of the transportation of any such
equipment by a patient of any Authorized Customer Location.
3. PUREFLOW EXPRESS PREMIXED DIALYSATE BAGS ALLOTMENT
Moreover, an allotment of PureFlow Express Premixed Dialysate bags will be made available to
Customer for distribution to the Authorized Customer Locations NxStage PureFlow SL patients [**]
charge to allow for vacation, travel, and other usage. Allotments shall be made on an Authorized
Customer Location basis. As of April 30, 2010, Customers aggregate balance was [**] cases.
Thereafter, the balance shall be recalculated at the end of each calendar month per Authorized
Customer Location according to the following formula:
| Add: [**] cases of PureFlow Express Premixed Dialysate bags multiplied by the total number of such Authorized Customer Locations patients then prescribed to receive and |
B-9
receiving PureFlow SL Monthly Dialysis Supplies at home at the start of that calendar month; |
| Add: [**] cases of PureFlow Express Premixed Dialysate bags multiplied by the [**] of such Authorized Customer Locations [**] PureFlow SL [**] that start at home during that [**] (adjusted, as appropriate, for [**]); and |
| Subtract: Actual shipments during that calendar month of cases of PureFlow Express Premixed Dialysate bags to such Authorized Customer Locations patients then prescribed to receive and receiving PureFlow SL Monthly Dialysis Supplies, not including cases of PureFlow Express Premixed Dialysate bags: (a) purchased as part of an initial reserve inventory shipment in any such calendar month, (b) shipped in connection with a Product Recall (as defined in Schedule C) as to any such PureFlow Express Premixed Dialysate bags shipped by NxStage to any Authorized Customer Location for its PureFlow SL patients in any such calendar month, or (c) reshipped to its PureFlow SL patients in connection with any defects or damages in the shipment of any such cases of PureFlow Express Premixed Dialysate bags as further described in Sections 5(c) and 9 of the Agreement. |
If the calculated balance as described above is negative, NxStage shall bill Customer for such
negative balance at the pricing set forth in the table in Section 1 of Schedule B-1
titled NxStage Price List Monthly Dialysis Supply Packages and the balance will be reset to
[**] to start the subsequent calendar month. Any positive balance shall be carried to the
subsequent calendar month, provided such positive balance, in cases, will never exceed the
number of such Authorized Customer Locations patients then prescribed to receive and receiving
PureFlow SL Monthly Dialysis Supplies at the end of that month multiplied by [**]. Balance
information shall be provided to Customer upon Customers request.
4. REDEPLOYMENT PACKAGES
If at any time during the Term, the use of a System by any patient of any Authorized Customer
Location that is no longer on NxStage therapy is transferred to another patient of any Authorized
Customer Location for any reason, NxStage shall at any Authorized Customer Locations request
provide the Products set forth in the table below to such other patient depending on the type of
System transferred to such other patient (a Redeployment Package), [**] to Customer:
Redeployment Packages | ||
Part Number | Description | |
NX0731
|
Pre-Mixed Dialysate Patient Redeployment Kit *1 | |
COMM0055
|
Introductory Letter detailing NX0731 kit contents | |
NX0233
|
Phone line connection kit (splitter, cord, instructions) | |
NC1491
|
Cycler Users Guide | |
NC2323
|
Cycler Base IFU | |
NC2499
|
Quick Start Note: Cartridge Set-up when using the CAR-170-B | |
NC2497
|
Quick Start Note: Resetting the Access Pressure Pod on the CAR-170-B | |
NC2158
|
Quick Start Note: NxStage System One Preventative Maintenance | |
NC1344
|
Rinseback Tool |
B-10
Part Number | Description | |
NX0730
|
PureFlow SL Patient Redeployment Kit *1 | |
COMM0056
|
Introductory Letter detailing NX0730 kit contents | |
NX2000-4
|
Pretreatment Kit (includes hookups, wtr lines, drain) | |
NC2327
|
PF Users Guide | |
NX0233
|
Phone line connection kit (splitter, cord, instructions) | |
NC1491
|
Cycler Users Guide | |
NC2323
|
Cycler Base IFU | |
NC2499
|
Quick Start Note: Cartridge Set-up when using the CAR-170-B | |
NC2497
|
Quick Start Note: Resetting the Access Pressure Pod on the CAR-170-B | |
NC2158
|
Quick Start Note: NxStage System One Preventative Maintenance | |
NC1344
|
Rinseback Tool |
Part Number | Description | |
NX0729
|
PureFlow SL Center Redeployment Kit | |
09325-F/30
|
Replacement air filter & guard | |
CPM-001
|
Conductivity Preventive Maintenance Kit |
Part Number | Description | |
NX0732
|
Express Fluid Warmer Redeployment Kit | |
NC1760
|
Express Fluid Warmer Users Guide |
*1 | NC0746 will be sent to the patients home with first delivery |
5. NEW PATIENT PACKAGES
Each new patient of any Authorized Customer Location using Product NXS-02-PUR (in the case of a
purchase by Customer on behalf of the applicable Authorized Customer Location at the pricing set
forth on Schedule B-3) or Product NXS-02-MTM (in the case of a rental by Customer on behalf
of the applicable Authorized Customer Location at the pricing set forth on Schedule B-3)
shall receive the following Products:
New Patient Packages | ||
Part Number | Description | |
NX0738
|
Pre-Mixed Dialysate Patient Starter Kit *1 | |
NX1000-1
|
System One Cycler with Computer (Jewel Box) | |
NX0642
|
Cycler Base and Fluid Detection Sensor | |
FW-300
|
Express Fluid Warmer | |
FW-300-1
|
Express Warmer Accessory Kit | |
NX0429-P
|
Saline hook | |
NX0233
|
Phone line connection kit (splitter, cord, instructions) | |
NC1491
|
Cycler Users Guide | |
NC2499
|
Quick Start Note: Cartridge Set-up when using the CAR-170-B | |
NC2497
|
Quick Start Note: Resetting the Access Pressure Pod on the CAR-170-B | |
NC2158
|
Quick Start Note: NxStage System One Preventative Maintenance | |
NC1344
|
Rinseback Tool |
*1 | NC0746 will be sent to the patients home with first delivery |
B-11
Each new patient of any Authorized Customer Location using Product NXS-03-PUR (in the case of
a purchase by Customer on behalf the applicable Authorized Customer Location at the pricing set
forth on Schedule B-3) or Product NXS-03-MTM (in the case of a rental by Customer on behalf
of the applicable Authorized Customer Location at the pricing set forth on Schedule B-3)
shall receive the following Products:
Part Number | Description | |
NX0739
|
PureFlow SL Patient Starter Kit *1 | |
NX1000-1
|
System One Cycler with Computer (Jewel Box) | |
NX0642
|
Cycler Base and Fluid Detection Sensor | |
NX2000-1
|
PFSL Control Unit | |
NX2000-4
|
Pretreatment Kit (includes hookups, wtr lines, drain) | |
FW-300
|
Express Fluid Warmer | |
FW-300-1
|
Express Warmer Accessory Kit | |
NX0429-P
|
Saline hook | |
NX0233
|
Phone line connection kit (splitter, cord, instructions) | |
NC1491
|
Cycler Users Guide | |
NC2327
|
PF Users Guide | |
NC2499
|
Quick Start Note: Cartridge Set-up when using the CAR-170-B | |
NC2497
|
Quick Start Note: Resetting the Access Pressure Pod on the CAR-170-B | |
NC2158
|
Quick Start Note: NxStage System One Preventative Maintenance | |
NC1344
|
Rinseback Tool |
*1 | NX2000-2 and NC0746 will be sent to the patients home with first delivery |
B-12
Schedule B-3
Chronic Outpatient Therapy Agreement
Equipment Rental or Purchase
Chronic Outpatient Therapy Agreement
Equipment Rental or Purchase
1. PURCHASE OF SYSTEMS
The pricing set forth in the table below titled Purchased Systems applies to all purchases of
Systems during the Term. All purchases of Systems must be initiated by a valid purchase order.
The pricing set forth in the table below titled Purchased Systems is on a per System basis. All
purchased Systems will be in good working order. Systems purchased may or may not be new. NxStage
represents and warrants to Customer that any purchased Systems that are not new will be in the same
operating condition as a new System.
PURCHASED SYSTEMS
Part Number | Item | Purchase Cost | ||
NXS-03-PUR
|
Cycler (incl. Warmer & Stand), PFSL Control Unit, and Cabinet | [**] | ||
NXS-02-PUR
|
Cycler (Including Warmer and Stand) | [**] | ||
NX2000-1
|
PFSL Control Unit | [**] | ||
NX2000-2
|
PFSL Cabinet | [**] | ||
FW-200
|
Comfortmate Warmer and Stand | [**] | ||
FW-300
|
Express Warmer and Stand | [**] |
2. RENTAL OF SYSTEMS
The pricing set forth in the table below titled Rental Systems applies to all rentals of Systems
during the Term. All rentals of Systems must be initiated by a valid purchase order. The pricing
set forth in the table below titled Rental Systems is on a per System basis. All rental Systems
will be in good working order. Rental Systems may or may not be new.
RENTAL SYSTEMS
Part Number | Item | Cost/Month | Code | Return Charge** | ||||
NXS-03-MTM
|
System for PFSL Patient (Cycler, Warmer, Stand, Control Unit, and Cabinet) | [**] | DSC-018 | [**] | ||||
NXS-02-MTM
|
System for Bag Patient (Cycler, Warmer, Stand) |
[**] | DSC-014 | [**] | ||||
NX2000-1-MTM
|
PFSL Control Unit Only* | [**] | DSC-015 | [**] | ||||
NX2000-2-MTM
|
PFSL Cabinet Only* | [**] | DSC-016 | [**] | ||||
FW-X00-MTM
|
Warmer and Stand Only* | [**] | DSC-017 | [**] |
* | Notwithstanding any other term of the Agreement, including the terms set forth in Sections 9 and 11, rental and return charges shall apply when the number of Warmers or Stands in possession by Customer or any Authorized Customer Location exceeds the number of rented or purchased Cyclers under the Agreement, and when the number of PFSL Control Units or PFSL Cabinets exceed the number of rented or purchased systems for PFSL patients. Such calculation shall be performed on an Authorized Customer Location basis. | |
** | Charged at the time equipment is returned to NxStage. |
B-13
3. RENTAL CAP
During the Term, including any extension thereof, the total number of Systems Ones (i.e.
NXS-03-MTM, NXS-02-MTM, NX2000-1-MTM, NX2000-2-MTM or FW-X00-MTM) that Customer may rent from
NxStage shall not exceed [**] percent ([**]%) (the Rental Cap) of the aggregate number of
System Ones (i.e. NXS-03-PUR or NXS-02-PUR) (less any returns) that Customer purchased from NxStage
from the commencement of the Term through the date of any calculation of the Rental Cap. The
minimum rental period for any System must be for [**] full [**]. All rentals of Systems
will be billed at the start of the calendar month. All rentals of a System will be automatically
extended on a month-to-month basis until [**] days advance written cancellation notice is provided
by Customer to NxStage.
4. ANNUAL EQUIPMENT VOLUME REBATE
If (a) the Authorized Customer Locations have on an aggregate basis met or exceeded the Level [**]
target as set forth in the table in Schedule B-5 titled Warrant Table as of June 30
during any Warrant Year (as defined in Schedule B-5) during the period commencing on the
Effective Date through June 30, 2013, and (b) Customer has purchased (not rented) an aggregate of
at least [**] incremental Cycler/PFSL Systems (i.e. NXS-03-PUR) and/or Cycler Only Systems (i.e.
NXS-02-PUR) during such Warrant Year, NxStage will provide Customer with a rebate of [**] dollars
($[**]) per Cycler/PFSL System (i.e.NXS-03-PUR) and/or Cycler Only Systems (i.e. NXS-02-PUR)
purchased during such Warrant Year (the Equipment Volume Rebate). NxStage shall make any
and all Equipment Volume Rebate payments owed to Customer within [**] days following the end of
each such Warrant Year in which Customer has earned the Equipment Volume Rebate. NxStage shall
make any and all Equipment Volume Rebate payments to Customer via electronic funds transfer
(EFT) using the EFT information provided by Customer. Upon any expiration or earlier
termination of the Agreement, NxStage shall pay to Customer any Equipment Volume Rebate earned by
Customer through the date of such expiration or earlier termination, within [**] days of such
expiration or earlier termination of the Agreement.
5. TECHNOLOGY UPGRADE DISCOUNT
In the event: (a) NxStage commercially releases for rental or sale in the United States any home
hemodialysis system with any improvements to the System One as of the Effective Date (a Next
Generation NxStage Technology), and (b) the Authorized Customer Locations on an aggregate
basis have met or exceeded the Level [**] target as set forth in the table in Schedule B-5
titled Warrant Table in the Warrant Year prior to the release of such Next Generation NxStage
Technology, Customer shall be eligible to receive a trade-in allowance (applied to the outright
purchase price of a Next Generation NxStage Technology) equal to [**] percent ([**]%) of the
purchase price set forth in Section 1 of Schedule B-3 paid by Customer (less any
other applicable discounts and rebates, including any prepayment discounts, whether or not earned,
but excluding any discounts provided in the form of the Warrant for any System Ones previously
purchased by Customer if such System Ones are returned undamaged (normal wear and tear excepted) to
NxStage, at Customers expense, and traded in exchange for such Next Generation NxStage Technology
within the [**] year of such System Ones purchase, [**] percent ([**]%) if traded
B-14
in within the [**] year of purchase, and [**] percent ([**]%) if traded in within the [**] year of
purchase, in each case subject to the following:
| The trade-in allowance shall only be granted for Systems purchased on or after the Effective Date through the remainder of the Term. | ||
| The trade-in allowance for purposes of determining whether the trade in discount, if any, shall be [**] percent ([**]%), [**] percent ([**]%) or [**] percent ([**]%) shall be calculated based on the [**] of the Systems purchased by Customer after the Effective Date through the trade in date, which [**] shall be determined by [**] that have [**] from the date of purchase of all System Ones by Customer from NxStage after the Effective Date through the applicable trade-in date and [**] such number by the number of [**] by Customer after the Effective Date through the applicable trade-in date (e.g., if a trade-in occurs [**] after the Effective Date, and Customer returns for a trade-in allowance only System Ones purchased within the [**] preceding the [**], Customers trade-in allowance shall be calculated based on the average age of all of Customers System Ones purchased after the Effective Date through the applicable trade-in date during the Term, and not based on the [**] of the System Ones actually traded-in at the time of the applicable trade-in date). | ||
| Trade-in quantities per month shall be limited to an amount equal to the [**] of: (i) the [**] of Systems purchased by Customer from the Effective Date through the date of any trade-in of a System One (measured as of the date such System One is returned undamaged to NxStage (normal wear and tear excepted)) [**] by the [**] in the Term as of the date of any trade-in of a [**] by (ii) [**]. | ||
| If Customer elects to trade-in any System One pursuant to this Section 5 of Schedule B-3, NxStage may at its option amortize the trade-in allowance amount as a [**] year monthly discount on [**] (with [**] percent ([**]%) imputed interest per year), rather than provide Customer the applicable trade-in allowance as a discount to the purchase price of a Next Generation NxStage Technology. | ||
| Any Next Generation NxStage Technology received upon a trade-in of a System One(s) pursuant to this Section 5 of Schedule B-3 shall not be counted for purposes of the Equipment Volume Rebate set forth in Section 4 of this Schedule B-3 or for purposes of any patient credit pursuant to Section 2 of Schedule D. |
6. SITE STARTUP/ADDITIONAL SITES
Customer must notify NxStage when it desires to add any new home hemodialysis program site as an
Authorized Customer Location to Schedule A to the Agreement. Customer shall not be
restricted from adding any new home hemodialysis program site as an Authorized Customer Location to
Schedule A in any continental U.S. location; provided that (a) NxStage
in-service and training has been scheduled for each such new home hemodialysis program site (and
NxStage shall use commercially reasonable efforts to promptly provide any such requested in-service
and training), (b) Customer provides written certification to NxStage that at least [**] at
B-15
such new home hemodialysis program site has been trained on the proper use and operation of
the System One by other personnel of Customer or any Authorized Customer Location trained on the
use of the System One, and (c) such new home hemodialysis program site has developed appropriate
policies and procedures and patient training materials relating to the System One.
7. OTHER
NxStage will on occasion supply products sourced from other suppliers as part of any Authorized
Customer Locations Monthly Dialysis Supplies. NxStage reserves the right to supply its own
products, once the same are Commercially Available, or to change the supplier of these products
from time to time. NxStage expects to make additional products available for purchase by Customer
and the Authorized Customer Locations from time to time.
B-16
Schedule B-4
Chronic Outpatient Therapy Agreement
Delivery Services
Chronic Outpatient Therapy Agreement
Delivery Services
The table below sets forth the pricing for any special or expedited delivery services requested by
Customer or any Authorized Customer Location and not included in the Purchase Price for any such
Product for which Customer or any Authorized Customer Location is requesting special or expedited
delivery services. Any such special or expedited delivery charges must be approved by Customer or
the Authorized Customer Location requesting such special or expedited delivery services. The
pricing for the special or expedited delivery services set forth in the tables below may be amended
at NxStages discretion with [**] days advanced written notice to Customer.
PUREFLOW SL
Part Number | Service | Charge | ||
Standard
|
Product ([**] cases) delivered to patients front door and, if patient not home, left in protected area. Delivery is approximately [**] according to delivery schedule NxStage establishes with patient. No appointment. | [**] | ||
DSC-001
|
Inside delivery (over-the-threshold) with an appointment and a [**]-hour delivery window.* | [**] | ||
DSC-002
|
After hours delivery (after 5 PM)* | [**] | ||
DSC-003
|
Weekend/holiday delivery* | [**] | ||
DSC-012
|
Additional deliveries per month ([**] delivery per month is standard) | [**] |
PUREFLOW EXPRESS (BAGS)
Part Number | Service | Charge | ||
Standard
|
Product ([**] cases) delivered to patients home (over-the-threshold) with an appointment and a [**]-hour delivery window according to delivery schedule established with patient. | [**] | ||
DSC-004
|
Redelivery/partial delivery (e.g., patient refusal) | [**] | ||
DSC-002
|
After hours delivery (after 5 PM)* | [**] | ||
DSC-003
|
Weekend/holiday delivery* | [**] | ||
DSC-005
|
Additional deliveries per month (one delivery per month is standard) | [**] |
EQUIPMENT/OTHER
Part Number | Service | Charge | ||
DSC-006
|
Hardware/Supplies pickup return to center | [**] | ||
DSC-007
|
Equipment packaging | [**] |
B-17
Part Number | Service | Charge | ||
DSC-010
|
After hours emergency delivery (after 5 PM)* | [**] | ||
DSC-011
|
Request of shipment in less than normal lead time ([**] business days) | [**] | ||
DSC-009
|
Cleaning of NxStage Equipment is available on a swap basis. Equipment returned for cleaning will be exchanged with like new equipment. Customer is responsible for equipment repairs beyond normal use and wear. | [**] |
OFF SCHEDULE SHIPMENTS
Part Number | Service | Charge | ||
DSC-013
|
Shipping & handling for supplies & boxes | [**] | ||
Freight
|
Equipment replacements (damage, loss) | [**] |
* | Where available not available in all areas |
B-18
Schedule B-5
Chronic Outpatient Therapy Agreement
Additional Product Discount Warrants
Chronic Outpatient Therapy Agreement
Additional Product Discount Warrants
Customer shall receive an additional discount on its purchases of Systems during the period
commencing on the Effective Date through June 30, 2013, payable in the form of a warrant (the
Warrant) to be issued by NxStage to Customer to purchase shares (the Warrant
Shares) of NxStage common stock, par value $0.001 per share (the Common Stock), that
have become vested and exercisable pursuant to the provisions of this Schedule B-5 in the
event: (a) as of the end of any twelve month period commencing on July 1 and ending on June 30
(each a, Warrant Year) during the period commencing on the Effective Date through June
30, 2013 (i.e. June 30, 2011, June 30, 2012 or June 30, 2013); the aggregate Active NxStage Home
Patient Census (as defined below) for all of the Authorized Customer Locations meets or exceeds the
Level 1, Level 2, Level 3, Level 4 and/or Level 5 targets as set forth in the table below
titled Warrant Table (collectively, the Customer Growth Level Targets) or (b) as of the
end of (i) the Warrant Year ending June 30, 2011 the Total NxStage Home Patient Count (as defined
below) has increased by [**] patients from the Total NxStage Home Patient Count as of June 30,
2010, (ii) the Warrant Year ending June 30, 2012 the Total NxStage Home Patient Count has increased
by [**] patients from the Total NxStage Home Patient Count as of June 30, 2010 and/or (iii) the
Warrant Year ending June 30, 2013 the Total NxStage Home Patient Count has increased by [**]
patients from the Total NxStage Home Patient Count as of June 30, 2010 (collectively, the
NxStage Growth Level Targets). The number of Warrant Shares that shall become vested and
exercisable based on the applicable Customer Growth Level Targets and/or NxStage Growth Level
Targets achieved as of the end of each Warrant Year during the period commencing on the Effective
Date through June 30, 2013 are set forth in the table below titled Warrant Table. The total
number of vested and exercisable Warrant Shares that may be issued upon exercise of the Warrant
shall not exceed: (x) four million seven hundred seventy-five thousand (4,775,000) in connection
with the achievement of the Customer Growth Level Targets during the period commencing on the
Effective Date through June 30, 2013 and (y) seven hundred twenty-five thousand (725,000) in
connection with the achievement of the NxStage Growth Level Targets during the period commencing on
the Effective Date through June 30, 2013, in each case as set forth below.
For purposes hereof, Active NxStage Home Patient Census is defined to mean the Authorized
Customer Locations aggregate Active NxStage Chronic Patient Census, less the number of patients of
the Authorized Customer Locations: (A) prescribed to receive therapy with the System One in a
nursing home or an in-center self-care setting (it being understood that patients performing home
care in assisted living facilities or similar facilities shall be counted for purposes of the
Active NxStage Home Patient Census; provided that such patients therapy is not
performed in a facility where such facility staff or Customer or Authorized Customer Location staff
is performing or assisting with the treatment, or where more than [**] patient is receiving therapy
with a [**] System One in such facility or where [**] or more System One patients are in such
facility), (B) that have not completed, as of the end of an applicable Warrant Year during the
period commencing on the Effective Date through June 30, 2013, at least Three Full Months of
Therapy (as defined below) at one or more Authorized Customer Locations, (C) acquired by Customer
or any Authorized Customer Location in connection with a [**] Acquisition or the entry into of a
[**] Management Contract with any [**] Site (the Excluded[**]Transactions,
B-19
and such acquired patients, as set forth in this subsection (C) shall be hereinafter referred to as
the Excluded[**]Transaction Patients), (D) acquired by Customer or any
Authorized Customer Location on or after the Effective Date (1) through the purchase of facilities
(other than [**] Sites) which have, or did have, any type of program with NxStage with respect to
the purchase, sale or rental of the System One for home use during the [**] months prior to the
closing date of the acquisition (an Acquired Non-[**]Site, and the acquisition
of any such Acquired Non-[**] Site hereinafter referred to as a Non-[**]Site
Acquisition), or (2) under any management contract, joint venture or other similar transaction
entered into subsequent to the Effective Date with any facility (other than any [**] Site) (a
Non-[**]Site) which has, or did have, any type of program with NxStage with
respect to the purchase, sale or rental of the System One during the [**] months prior to the
effective date of any such management contract, joint venture or similar transaction (a
Non-[**]Management Contract Site) (the management contract, joint venture or
similar transaction relationship with such Non-[**] Management Contract Sites hereinafter referred
to as Non-[**]Management Contracts, and together with the Non-[**] Site
Acquisitions, collectively the Excluded Non-[**]Transactions) (such acquired
patients, as set forth in subsections (1) and (2) of this subsection (D) shall be hereinafter
referred to as the Excluded Non-[**] Transaction Patients), (E) that are added subsequent to the
Acquisition Date (as defined below) of any Acquired [**] Site, Acquired Non-[**] Site or Non-[**]
Management Contract Site if the number of the net added patients from such sites (with the baseline
number of the Active NxStage Home Patient Census as of the Effective Date equal to the number set
forth in footnote 1 to the Warrant Table below) exceeds more than [**] percent ([**]%) of the
Authorized Customer Locations aggregate net increase in the Active NxStage Chronic Patient Census
at any time on or before June 30, 2013, or (F) that are added by any [**] Site from and after the
effective date of any [**] Management Contract entered into by such [**] Site (the Excluded
New[**]Management Contract Patients, and together with the Excluded [**] Transaction
Patients and the Excluded Non-[**] Transaction Patients, the Excluded Acquired Patients).
The number of Excluded [**] Transaction Patients and Excluded Non-[**] Transaction Patients shall
be measured as of the effective date of the applicable [**] Management Contract or Non-[**]
Management Contract, and as of the closing date of the applicable [**] Site Acquisition or Non-[**]
Site Acquisition (each of such dates referred to herein for purposes of this paragraph as the
Acquisition Date), and shall also include all patients that transfer from the relevant
[**] Site or Non-[**] Site to an Authorized Customer Location during the [**] months prior to the
applicable Acquisition Date (the Excluded Pre-Acquisition Date Patient Transfers). All
Excluded Acquired Patients which transfer to an Authorized Customer Location subsequent to the
Acquisition Date, as well as all Excluded Pre-Acquisition Date Patient Transfers shall also be
excluded from the Active NxStage Chronic Patient Census and the Active NxStage Home Patient Census.
The number of Excluded Acquired Patients shall continue to be deducted at all times during the
Term from the Active NxStage Home Patient Census, irrespective of whether or not such Excluded
Acquired Patients are no longer on therapy with the System One at any time
during the Term. Each
patient falling within the Active NxStage Home Patient Census may be referred to herein as an
Active NxStage Home Patient.
For purposes hereof, the Total NxStage Home Patient Count is defined to mean the
aggregate number of chronic renal failure patients then-prescribed to receive (with an active
Patient Prescription Monthly Standing Order), and receiving, home dialysis with the System One
across all NxStage customer United States locations, including all of the Authorized Customer
B-20
Locations, less the number of patients: (i) prescribed to receive therapy with the System One in
connection with an evaluation of home therapy, daily therapy or the System One (such as under
NxStages experience the difference program), (ii) prescribed to receive therapy with the System
One in a nursing home or an in-center self-care setting (it being understood that patients
performing home care in assisted living facilities or similar facilities shall be counted for
purposes of the Total NxStage Home Patient Count; provided that such patients
therapy is not performed in a facility where such facility staff, Customer or Authorized Customer
Location staff, or other NxStage customer in the United States staff, as applicable, is performing
or assisting with the treatment, or where more than [**] patient is receiving therapy with a
[**]System One in such facility or where [**] or more System One patients are in such facility), or
(iii) that have not completed, as of the end of an applicable Warrant Year during the period
commencing on the Effective Date through June 30, 2013, at least Three Full Months of Therapy at
one or more Authorized Customer Locations, in the case of Customer, on the one hand, and one or
more facilities of another NxStage customer in the United States, in the case of each other NxStage
customer in the United States, on the other hand.
For purposes hereof, Three Full Months of Therapy is defined to mean each patient that
has completed a treatment regimen of at least ninety (90) contiguous days of home therapy with the
System One with the first such day of such ninety (90) contiguous days of home therapy with the
System One commencing on such date that each such patient has his or her first home training
session and treatment with the System One and continuing until each such patient has completed at
least ninety (90) contiguous days of treatment with the System One; provided that:
(i) any documented hospitalization of each such patient shall not be deemed an interruption in each
such patients ninety (90) contiguous days of treatment with the System One as long as Customer has
provided notice to NxStage of any such documented hospitalization as required pursuant to Section
10 of the Agreement and (ii) any interruption in each such patients treatment with the System One
as a result of such patients traveling shall not be deemed an interruption in each such patients
ninety (90) contiguous days of treatment with the System One.
NxStage shall notify Customer in writing if the Authorized Customer Locations have on an aggregate
basis achieved any of the Customer Growth Level Targets and/or NxStage Growth Level Targets, and of
the corresponding number of Warrant Shares that have become vested and exercisable in connection
therewith, if any, within [**] days after the end of each Warrant Year during the period commencing
on the Effective Date through June 30, 2013 (i.e. June 30, 2011, June 30, 2012 or June 30, 2013).
Customer covenants and agrees that it shall promptly report to NxStage each patient that has
discontinued therapy with the System One, and upon request by NxStage, Customer shall confirm to
NxStage, through the provision of documentation reasonably satisfactory to NxStage that any patient
discontinuation of therapy with the System One has been reported to NxStage consistent with prior
practices. In order for any Warrant Shares to become vested and exercisable pursuant to this
Schedule B-5 in any Warrant Year during the period commencing on the Effective Date through
June 30, 2013 (including any Warrant Shares that shall become vested and exercisable based on the
NxStage Growth Level Targets), the Authorized Customer Locations must on an aggregate basis at
least reach the [**] target of the Customer Growth Level Target as set forth in the table below
titled Warrant Table for such applicable Warrant Year (as measured at the end of such Warrant
Year). For purposes of illustration only, if the Active NxStage Home Patient Census as of June 30,
2012 is less than [**] of the Customer Growth Level Targets for the Warrant Year ended as of June
30, 2012, no
B-21
Warrant Shares, whether with respect to the Customer Growth Level Targets or the NxStage Growth
Level Targets for such Warrant Year ended June 30, 2012, shall become vested and exercisable, even
if the Total NxStage Home Patient Count as of June 30, 2012 has increased by [**] patients from the
Total NxStage Patient Count as of June 30, 2010 (i.e., the NxStage Growth Level Target for the
Warrant Year ended June 30, 2012 has otherwise been achieved).
The Warrant shall be issued in the form of the Warrant attached as Attachment A to this
Schedule B-5. All Warrant Shares shall be fully paid, nonassessable and vested when issued
upon exercise of the Warrant, with an exercise price of $14.22 per share, calculated as the
trailing fifteen day volume weighted average price as of the close of the NASDAQ global market as
of July 21, 2010. The purchase right represented by the Warrant with respect to the Warrant Shares
that have become vested and exercisable based on: (a) the applicable Customer Growth Level Targets
and/or NxStage Growth Level Targets actually achieved, in each case, as of June 30, 2011 and June
30, 2012, or (b) the applicable Customer Growth Level Targets for the Warrant Year ended June 30,
2011 deemed to be achieved as of June 30, 2012 pursuant to the Curing Provision (as defined below)
shall be exercisable on or before June 30, 2013 and if not exercised on or before June 30, 2013
such purchase right shall immediately terminate and be of no further force or effect. The purchase
right represented by the Warrant with respect to the Warrant Shares that have become vested and
exercisable based on: (i) the applicable Customer Growth Level Targets and/or NxStage Growth Level
Targets actually achieved, in each case, as of June 30, 2013, or (ii) the applicable Customer
Growth Level Targets for the Warrant Year ended June 30, 2012, deemed to be achieved as of June 30,
2013 pursuant to the Curing Provision, shall be exercisable on or before December 31, 2013 and if
not exercised on or before December 31, 2013 such purchase right shall immediately terminate and be
of no further force or effect. Upon the occurrence of a Termination Event (as defined in
Section 1 of Schedule D) no additional Warrant Shares shall thereafter become
vested and exercisable, even if the Authorized Customer Locations have on an aggregate basis
achieved any of the Customer Growth Level Targets or NxStage Growth Level Targets for the Warrant
Year in which such Termination Event has occurred; provided that for purposes of
clarity NxStage agrees that any Warrant Shares that became vested and exercisable prior to the
occurrence of any such Termination Event shall remain vested and exercisable; and provided
further that for purposes of clarity, Customer agrees that if the Termination Event arises
on July 1 following any Warrant Year ended June 30 due to a failure to increase the aggregate
Active NxStage Chronic Patient Census of all of Customers Authorized Customer Locations by [**]
against the aggregate Active NxStage Chronic Patient Census of all of Customers Authorized
Customer Locations as of the last Measurement Period during such Warrant Year ended June 30 (i.e.
January 1 through June 30), no additional Warrant Shares shall become vested and exercisable, even
if the Authorized Customer Locations have on an aggregate basis achieved any of the Customer Growth
Level Targets or NxStage Growth Level Targets for such Warrant Year ended June 30. The Warrant
must be exercised by Customer in cash only and may not be transferred.
B-22
Warrant Table
6/30/2011 | 6/30/2012 | 6/30/2013 | ||||||||||
Number of Warrant | Number of Warrant | Number of Warrant | ||||||||||
Vesting Dates: | Total Patients | Shares | Total Patients | Shares | Total Patients | Shares | ||||||
Customer Growth
Level Targets (as
measured at the end
of each Warrant
Year ended as of
June 30, 2011, 2012
and 2013)(1) |
||||||||||||
Level 1 |
[**] | 250,000 | [**] | 250,000 | [**] | 250,000 | ||||||
Level 2 |
[**] | 250,000 | [**] | 250,000 | [**] | 250,000 | ||||||
Level 3 |
[**] | 250,000 | [**] | 250,000 | [**] | 250,000 | ||||||
Level 4 |
[**] | 375,000 | [**] | 475,000 | [**] | 550,000 | ||||||
Level 5 |
[**] | 375,000 | [**] | 375,000 | [**] | 375,000 | ||||||
NxStage Growth
Level Targets (as
measured at the end
of each Warrant
Year ended as of
June 30, 2011, 2012
and 2013) |
[**] | 175,000 | [**] | 250,000 | [**] | 300,000 | ||||||
TOTAL AVAILABLE |
1,675,000 | 1,850,000 | 1,975,000 |
Y = Total NxStage Home Patient Count as of June 30, 2010.
(1) As of June 30, 2010, the Authorized Customer Locations aggregate Active NxStage Home Patient
Census was equal to [**] (which number was reduced from [**] based on mutual agreement between
parties). Consistent with the definition of Active NxStage Home Patient, this number excludes [**]
patients with less than Three Full Months of Therapy, [**] patients transferring in to Customer
during the prior 3 months, and [**] on-hold patients (patients that have prescriptions for home
therapy, but which are not thenreceiving home therapy). As of
June 30, 2010, Customer [**]
nursing home patients.
If the Warrant Shares corresponding to any Level of the Customer Growth Level Targets in any
applicable Warrant Year during the period commencing on the Effective Date through June 30, 2013
(i.e., Level 1, Level 2, Level 3, Level 4, and/or Level 5 Targets) do not become vested and
exercisable because the Authorized Customer Locations on an aggregate basis failed to achieve any
Level of the Customer Growth Level Targets in the applicable Warrant Year, such Warrant Shares
may thereafter become vested and exercisable for that Level of the Customer Growth Level Targets
(i.e., Level 1, Level 2, Level 3, Level 4, and/or Level 5 Targets) achieved by the Authorized
Customer Locations on an aggregate basis as of the end of the subsequent Warrant Year during the
Term (the Curing Provision) provided, however, that for the
purposes of clarity Customer shall not have the right to exercise the Curing Provision with respect
to any Customer Growth Level Targets for the Warrant Year ended June 30, 2013. For the avoidance
of doubt, the Curing Provision shall not apply to the vesting, if any, of Warrant Shares based on
the NxStage Growth Level Targets. Additionally, Customer shall not be able to use the Curing
Provision to achieve the vesting of any Warrant Shares based on the Customer Growth Level Targets
for any Warrant Year that does not immediately precede the then-current Warrant Year (i.e.,
Customer may not use the Curing Provision to earn any Level of Warrant Shares for the Warrant
Year ended June 30, 2011 based upon the Authorized Customer Locations achievement
B-23
on an aggregate basis of any Level of the Customer Growth Level Targets in the Warrant Year ended
June 30, 2013). No Warrant Shares issued in connection with the NxStage Growth Level Target for
any Warrant Year during the period commencing on the Effective Date through June 30, 2013 shall
become vested and exercisable unless the Authorized Customer Locations have on an aggregate basis
achieved at least [**] of the Customer Growth Level Target as of the end of the same Warrant Year.
For example, if as of June 30, 2011, the Authorized Customer Locations on an aggregate basis did
not achieve [**] of the Customer Growth Level Target, but achieved the NxStage Growth Level Target
as of June 30, 2011, and as of June 30, 2012, the Authorized Customer Locations on an aggregate
basis do achieve [**] of the Customer Growth Level Target and the NxStage Growth Level Target, an
aggregate of seven hundred fifty-thousand (750,000) Warrant Shares shall become vested and
exercisable, consisting of: (i) two hundred-fifty thousand (250,000) Warrant Shares earned for the
deemed achieving of [**] of the Customer Growth Level Target for the Warrant Year ended as of June
30, 2011 pursuant to the Curing Provision (measured based on the Authorized Customer Locations
achieving on an aggregate basis [**] of the Customer Growth Level Target for the Warrant Year ended
as of June 30, 2012 based on the Active NxStage Home Patient Census as of June 30, 2012), (ii) two
hundred-fifty thousand (250,000) Warrant Shares for the Authorized Customer Locations achieving on
an aggregate basis [**] of the Customer Growth Level Target as of the Warrant Year ended as of June
30, 2012, (iii) zero Warrant Shares based on the Authorized Customer Locations achieving on an
aggregate basis the NxStage Growth Level Target for the Warrant Year ended as of June 30, 2011
(i.e. because the Authorized Customer Locations did not achieve on an aggregate basis [**] of the
Customer Growth Level Target as of the Warrant Year ended as of June 30, 2011), and (iv) two
hundred-fifty thousand (250,000) Warrant Shares based on the Authorized Customer Locations
achieving on an aggregate basis the NxStage Growth Level Target as of the Warrant Year ended as of
June 30, 2012.
All discounts and rebates provided pursuant to this Schedule B, including the Warrant, are
Discounts or Other Reductions in Price to Customer under 42 U.S.C. § 1320a-7b(b)(3)(A) of the
Social Security Act, and shall be properly reported by Customer on applicable Medicare and Medicaid
claims and cost reports in accordance with the terms and conditions of Section 7 of the Agreement.
NxStage shall calculate the amount of the discount provided pursuant to this Schedule B-5
using a Black Scholes valuation methodology applied as of the date any Warrant Shares become vested
and exercisable, and shall promptly notify Customer thereof in writing, and identify the purchases
to which the discount applies.
Attachment A Form of Warrant to Purchase Shares of Common Stock
Filed
separately as Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for the fiscal
period ended June 30, 2010
B-24
Schedule C
Chronic Outpatient Therapy
Warranty; Service; and Recalls
Chronic Outpatient Therapy
Warranty; Service; and Recalls
1. REPRESENTATIONS AND WARRANTIES
EXCEPT AS OTHERWISE PROVIDED IN SECTION 12 OF THE AGREEMENT, NXSTAGE MAKES NO OTHER EXPRESS
OR IMPLIED WARRANTY WITH RESPECT TO ANY OF THE PRODUCTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.
2. SERVICE
During the Term, including any extensions thereto, NxStage shall service all Products supplied to
Customer hereunder (whether leased or purchased), so the same shall be in good working order and
fit for the indications described in their Users Guides and package inserts when used in
accordance with the instructions for use provided in such Users Guides and package inserts. The
fees for such services shall be included in the Monthly Dialysis Supplies pricing set forth on
Schedule B; provided that if a purchased System is not in use (i.e. no monthly
purchase volume of Monthly Dialysis Supplies is associated with the System) for [**] consecutive
months, a service reinstatement fee of $[**] will be charged when the System is returned for
service.
Further, NxStages obligation to provide the repair services as set forth herein shall survive the
termination of this Agreement and shall continue for all purchased System One (s) for [**] years
following the purchase date of each such purchased System One (the Service Term).
Customer agrees that fees for repair services to the System Ones after the Service Term shall be
the lower of (i) $[**] per System One per annum, or (ii) [**] percent ([**]%) of the average System
One service fees then charged by NxStage to other customers who have purchased the System One for
chronic renal replacement therapy.
Customer agrees that the System One may only be serviced by NxStage at this time. Additional
service charges for both rented and purchased Systems may apply in the event: (i) the System has
been repaired by persons other than NxStage personnel or its authorized representatives, (ii) the
replacement or repair is required due to the misuse or abuse of the System, as reasonably
determined by NxStage, (iii) the System is used with non-NxStage sets, (iv) the replacement or
repair is required for reasons other than defects in materials and workmanship or, in the case of
equipment, normal wear and tear, as reasonably determined by NxStage, or (v) the System is not used
in accordance with its instructions for use, as reasonably determined by NxStage.
As part of its ongoing service of Products then in use by Customer and/or the Authorized Customer
Locations, NxStage, at its option, may conduct routine maintenance on the Products shipped to
Customer or any Authorized Customer Location under this Agreement. Customer or the applicable
Authorized Customer Location shall make all Products reasonably available to NxStage, at NxStages
request, to conduct such maintenance; provided that such maintenance is conducted
at mutually agreed upon times and upon prior notice. As part of an ongoing maintenance program,
NxStage may elect to install reasonable Product upgrades, at no cost to
C-1
Customer. Any upgrades that NxStage provides to a leased System One(s) will also be provided to
all of Customers purchased System One(s) within a reasonable timeframe during the Term.
To obtain service of a damaged or defective Product from NxStage, Customer must contact NxStages
customer service department. Prior authorization from NxStage must be obtained before any damaged
or defective Product is returned for service by NxStage. Any damaged or defective Product
requiring service must be cleaned, according to the directions on the labeling. If a damaged or
defective Product is not cleaned, as instructed, NxStage shall charge Customer a $[**] cleaning
fee. NxStage will arrange for the shipment of all damaged or defective Products to be returned for
service by NxStage. NxStage will not be responsible for servicing damaged or defective Products
that have not been shipped according to the procedure set forth in this Schedule C. NxStage shall
use its commercially reasonable efforts to repair or replace serviced Product within [**] hours of
giving authorization for service. Repaired or replaced Products shall be in Good Working Order.
Replaced Products may or may not be new, and they may or may not be the same Products originally
shipped to Customer or the applicable Authorized Customer Location hereunder. For purposes of this
Agreement, Good Working Order shall mean that the Product shall perform in accordance
with its specifications and manuals, and be in physical condition and functionality equal to or
better than that of the Product being replaced. In addition, NxStage shall use all commercially
reasonable efforts to ensure that replacement Products provided to Customer or any Authorized
Customer Location in connection with a service swap shall have an average days in service
approximately equal to or less than the estimated days in service of the Product returned by
Customer in connection with a service swap hereunder.
Periodically, NxStage may elect to diagnose Product servicing issues remotely, through data
analysis or phone interviews. If Product is returned at the insistence of Customer, an Authorized
Customer Location or any of their respective patients, contrary to the recommendation of NxStage,
and it is subsequently determined in the reasonable discretion of NxStage that such Product was in
Good Working Order, Customer shall reimburse NxStage for the related costs of such return.
3. RECALLS
In the event that any governmental agency or authority requests a recall, a field corrective
action, Product withdrawal or takes similar action in connection with any Product or in the event
NxStage determines an event, incident or circumstance with respect to a Product has occurred that
results in the need for a recall (each a Product Recall), NxStage shall promptly notify
Customer within [**] of such governmental agency or authority request or action or of NxStages
decision to voluntarily institute a Product Recall. In the event of a Product Recall of any
Product, NxStage shall (a) reimburse Customer and the Authorized Customer Locations for reasonable
handling expenses incurred in returning units of such Product to NxStage or otherwise implementing
the Product Recall; and (b) use all commercially reasonable efforts to promptly repair or replace
the Product subject to a Product Recall with another NxStage Product performing the same function
in good working order. NxStage shall allocate replacement Products to Customer and the Authorized
Customer Locations on a first-priority basis consistent with Customers and the Authorized Customer
Locations then-current share of NxStages Product base that has been purchased, and consistent
with the then-affected prescription items
C-2
included in Customers and the Authorized Customer Locations Monthly Dialysis Supplies orders.
In addition to the foregoing, if NxStage is unable to repair or replace a recalled Cycler or
PureFlow SL purchased by Customer or any Authorized Customer Location, such that such purchased
Cycler or PureFlow SL is therefore rendered unusable and continues to be unusable for a period of
[**] consecutive months (for purposes hereof, a purchased Cycler or PureFlow SL shall not be
unusable if it can be used with other non-NxStage products, consistent with then-current product
labeling), NxStage shall be obligated to pay Customer and the Authorized Customer Locations actual
damages within [**] days of the expiration of such [**] month period (with the amount of such
damages to be mutually agreed upon by the parties in good faith, up to the amount of Customers and
the Authorized Customer Locations then-current [**] for the purchased Cyclers and/or Pure Flow SLs
which Customer and the Authorized Customer Locations have been prevented from using for [**]
consecutive months (measured as of the date of such Product Recall); provided that
such [**] is calculated in good faith and in accordance with generally accepted accounting
standards). NxStages obligation to make any payment pursuant to this Section 3 of
Schedule C may be accelerated to the date of filing of a voluntary or involuntary
bankruptcy proceeding with respect to NxStage or the date NxStage refunds, all or any significant
portion of, the purchase price of any Cyclers and/or PureFlow SLs that have been the subject of a
Product Recall (and where such refund is specifically provided solely in connection with, and due
to, such Product Recall) to any other customer or group of customers that has purchased such
Cyclers and/or PureFlow SLs for the treatment of chronic home hemodialysis patients (it being
understood that Customers and the Authorized Customer Locations right to damages hereunder shall
not be so accelerated if such refund involves no more than [**] Cyclers and/or PureFlow SLs in the
aggregate across all other NxStage chronic customers). No other remedy shall be provided to
Customer or any Authorized Customer Location in connection with a Product Recall, except as set
forth in Section 22 of the Agreement.
In the event NxStage elects to obtain recall insurance covering a Product Recall of any purchased
Cyclers and/or PureFlow SLs, Customer and NxStage agree that the parties shall share the cost of
such insurance coverage, up to a maximum amount of $200,000 per party per annum; provided
that Customer shall consider in good faith requests made by NxStage to share insurance
costs in excess of $200,000. Any recall insurance obtained by NxStage, shall name Customer and the
Authorized Customer Locations (but no other customer of NxStage) as additional insureds. Any
insurance payment to Customer or any Authorized Customer Location under such policy shall offset
any damages determined to be owed to Customer or any Authorized Customer Location hereunder
pursuant to the foregoing terms, with NxStage obligated to pay any remainder pursuant to the terms
hereof.
If, during the Term, NxStage contractually agrees with one or more other customers purchasing any
of NxStages home hemodialysis products in the continental United States to provide [**] provisions
to such customer(s) that are more favorable to such customer(s) than are set forth in Section [**]
of the Agreement and Sections[**] of this Schedule C, NxStage agrees that it shall
promptly offer such [**] provisions to Customer, on a prospective basis; provided
that such terms shall be offered to Customer to cover only [**] purchased by Customer and
the Authorized Customer Locations which corresponds with the [**] purchased by [**]; and
provided further that such terms, if accepted by Customer, shall in no way
alter the other provisions hereof.
C-3
Schedule D
Preferred Relationship
Schedule D
Chronic Outpatient Therapy Agreement
Preferred Relationship
Chronic Outpatient Therapy Agreement
Preferred Relationship
1. MARKET RIGHTS
NxStage agrees that, subject to the terms hereof, Customer shall be free to initiate
new Authorized Customer Locations in all of the geographical counties, group of
counties, or subdivisions thereof in the continental U.S. set forth on
Attachment A to this Schedule D (the Markets).
Except as otherwise provided herein, NxStage agrees that it shall not initiate a new Active NxStage
Customer (as defined below) in any of the Markets listed below; provided that
nothing herein shall prohibit NxStage from: (a) initiating in the Markets below the Active NxStage
Customer identified in the parentheses below (i.e. [**]) or (b) initiating a new Active NxStage
Customer in such Markets, or replacing a current Active NxStage Customer in such Markets, if in
each case, the new Active NxStage Customer purchases at least [**] percent ([**]%) of its United
States System Ones used in the treatment of chronic kidney patients prescribed to receive home
hemodialysis from NxStage, and such new Active NxStage Customer has purchased [**] or more System
Ones from NxStage, or (c) initiating a new Active NxStage Customer in such Markets if such new
Active NxStage Customer, either directly or through one or more of its affiliates (i) provides
dialysis services to more than [**]%) of the chronic dialysis patients in the United States and
(ii) supplies dialysis products (such restrictions on NxStages ability to initiate Active NxStage
Customers hereinafter referred to collectively as the Market Restrictions). For purposes
hereof, the term Active NxStage Customer shall mean any entity, other than Customer, with
one or more sites/facilities located in a specific Market that has [**] or more patients trained
and billed for through such sites/facilities and is using the System One or any related NxStage
home hemodialysis products for chronic patient home hemodialysis therapy. For purposes of the
Agreement, Customer understands that each Active NxStage Customer may have one or more
sites/facilities in a specific Market, and that such Active NxStage Customer shall still count as
only one Active NxStage Customer for purposes of the Market Restrictions hereunder.
[**]
Subject to the Markets listed above and except as may otherwise be provided herein, nothing shall prohibit NxStage from initiating a new Active NxStage Customer in any of the other Markets. The parties acknowledge and agree that if Customer is not using reasonable efforts to expand patient access to home hemodialysis via the use of the System One in one or more of the Markets set forth above in this Section 1 of Schedule D, Customer agrees, at NxStages request, to in good faith discuss and remove and/or modify the Market Restrictions in any such Markets where Customer has failed to use its reasonable efforts to expand patient access to home hemodialysis via the use of the System One.
Subject to the Markets listed above and except as may otherwise be provided herein, nothing shall prohibit NxStage from initiating a new Active NxStage Customer in any of the other Markets. The parties acknowledge and agree that if Customer is not using reasonable efforts to expand patient access to home hemodialysis via the use of the System One in one or more of the Markets set forth above in this Section 1 of Schedule D, Customer agrees, at NxStages request, to in good faith discuss and remove and/or modify the Market Restrictions in any such Markets where Customer has failed to use its reasonable efforts to expand patient access to home hemodialysis via the use of the System One.
D-1
Any entity that either: (x) is a [**] (as defined below) or (y) provides treatments to patients in
a [**] setting shall be excluded from the Market Restrictions. If in any Market subject to the
Market Restrictions, the [**] contacts NxStage regarding the establishment of a home hemodialysis
program, NxStage shall provide a written notice to Customer that indicates: (1) the [**] has
contacted NxStage regarding the establishment of a home hemodialysis program and (2) the specific
Market in which the [**] would like to establish a home hemodialysis program. Customer shall have
a period of [**] days from the receipt of such notice or such other time period as is mutually
agreed to by NxStage and Customer to establish a home hemodialysis program in the Market set forth
in such notice so as to enable Customer to provide home hemodialysis to the patients of the [**]
using the System One. In the event Customer is not able to establish a home hemodialysis program
in the Market set forth in such notice so as to enable Customer to provide home hemodialysis within
such [**] day period to patients of the [**] using the System One, or such other time period as
mutually agreed to by NxStage and Customer, NxStage shall have the right to offer its home
hemodialysis products and services directly to the [**] in the Market set forth in any such notice.
The provisions of this paragraph shall not apply to any arrangement that NxStage has with the [**]
as of the Effective Date to offer its home hemodialysis products and services to the patients of
the [**]. A [**] is any entity that only treats patients [**]. Notwithstanding the definition
of [**], Customer and NxStage acknowledge and agree that a [**] may treat any patient: (A) [**]
in the event of an emergency or (B) who was a patient of such [**] while [**] and who is now [**]
and has not yet transferred to an entity that treats patients [**], and still be considered a [**]
and excluded from the Market Restrictions.
NxStage further agrees and covenants in all Continental U.S. Markets that it shall not sell or
rent, either directly or indirectly, the System One and/or any of its other home hemodialysis
products related to chronic patient home hemodialysis therapy, to any entity in which at least [**]
percent ([**]%) of the equity or other ownership interest is owned, either directly or indirectly,
by any individual physician or physician group (including all physicians affiliated therewith)
(hereinafter, individually and collectively referred to as a Customer Medical Director)
that has entered into a medical director agreement with Customer (a Customer Medical Director
Agreement) that prohibits any such Customer Medical Director from being involved in a business
that provides chronic dialysis services, including home hemodialysis therapy, in the location in
which any such entity is located (individually and collectively referred to as a Restricted
Entity) for the longer of (x) the remainder of the term of the restrictive covenant included
in such Customer Medical Director Agreement (or, if earlier, the date upon which a court or
arbitrator determines that such restrictive covenant included in the Customer Medical Director
Agreement is not enforceable) and (y) [**] months from the date that such Customer Medical Director
(alone or through a joint venture or other business structure) opens such Restricted Entity or
joins such Restricted Entity, in each case in which such Customer Medical Director holds at least
[**] percent ([**]%) of the equity or ownership interest of such Restricted Entity (the
Customer Medical Director Restriction); provided that: (i) the Customer
Medical Director Restriction shall not apply unless NxStage is notified in writing of the name of
any Customer Medical Director with a then-current Customer Medical Director Agreement at least [**]
days prior to the initiation of discussions between NxStage and any Restricted Entity in which
there is any Customer Medical Director with a Customer Medical Director Agreement (provided that
if NxStage, after reasonable inquiry, is unaware of any relationship between such a Customer
Medical Director and such Restricted Entity, NxStage shall not be restricted from
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selling or renting Products to such Restricted Entity; and provided further that in no event shall
NxStage be prohibited from selling or renting Products to any such Restricted Entitys dialysis
clinic or facility in a location where such Customer Medical Director that has at least the
above-referenced ownership interest in such Restricted Entity is not prohibited from being involved
in a business that provides chronic dialysis services, including home hemodialysis therapy); (ii)
the Customer Medical Director Restriction shall not apply to any entity with which NxStage has an
existing agreement as of the Effective Date (it being understood that the Customer Medical Director
Restriction shall not impact any agreements executed by NxStage with other customers prior to the
Effective Date or any customer relationships in active negotiations with NxStage prior to the
Effective Date); (iii) the Customer Medical Director Restriction shall not apply in any Market in
which Customer or any of the Authorized Customer Locations are not providing home hemodialysis
therapy with the System One; and (iv) Customer and any Authorized Customer Location shall not
refuse referrals from any Customer Medical Director for any such Customer Medical Directors
patients he/she/it desires to prescribe NxStage home therapy.
NxStage agrees to use its good faith efforts to notify Customer within [**] days of NxStages
intent to offer NxStage home hemodialysis products through additional dialysis facilities in the
Continental U.S. (provided such notice does not conflict with any obligations NxStage may have
relating to the confidentiality of the proposed relationship).
Customer understands that the Market Restrictions and the Customer Medical Director Restriction
apply exclusively to chronic patient home hemodialysis therapy, and that NxStage shall not be
restricted in any way from making sales or rentals/leases of its products, including the System
One, to other customers pursuant to the terms hereof for any other use, including for the treatment
of kidney failure in the acute setting or for in-center use.
The Market Restrictions and Customer Medical Director Restrictions set forth in this Section
1 of Schedule D shall remain in effect through June 30, 2013; provided
that the Authorized Customer Locations on an aggregate basis achieve the [**] target set
forth in the table titled Warrant Table in Schedule B-5 as of the end of each Warrant
Year during the period from the Effective Date through June 30, 2013. The Market Restrictions and
the Customer Medical Director Restriction shall immediately terminate if at the end of any Warrant
Year, the Authorized Customer Locations have not on an aggregate basis achieved as of the end of
the same Warrant Year, the applicable [**] target set forth in the table titled Warrant Table in
Schedule B-5. In addition, the Market Restrictions and the Customer Medical Director
Restrictions set forth in this Section 1 of this Schedule D shall [**] terminate in
the event: (i) of a breach by Customer as set forth in Section 25 of the Agreement (it being
understood that in the event a breach by Customer as set forth in Section 25 of the Agreement
occurs prior to the termination of any Warrant Year no Warrants Shares shall become vested and
exercisable for such Warrant Year (or the preceding Warrant Year pursuant to the Curing Provision)
until and if such breach is cured within any applicable cure period, even if Customer has at the
end of such applicable Warrant Year earned certain Warrant Shares based on the Authorized Customer
Locations achieving on an aggregate basis a Customer Growth Level Target and/or the NxStage Growth
Level Target for such Warrant Year; provided that for purposes of clarity NxStage
agrees that any Warrant Shares that became vested and exercisable prior to the occurrence of any
such breach of Section 25 of the Agreement by Customer shall remain vested and exercisable (e.g. if
as of April 30, 2012 Customer breaches the Agreement, and subsequent to such breach
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(but prior to such breach being cured), Customer earns as of the Warrant Year ended June 30, 2012,
the Warrant Shares associated with the Level 3 target of the Customer Growth Level Target and
earns the Warrant Shares associated with the NxStage Growth Level Target for such Warrant Year,
such Warrants Shares shall not become vested and exercisable until and if ever, such breach is
remedied by Customer within any applicable cure period)), or (ii) [**], or (iii) at anytime
commencing on the Effective Date and each six (6) month calendar period thereafter (i.e. July 1 and
January 1) during the Term (a Measurement Period), Customer fails to increase the
aggregate Active NxStage Chronic Patient Census of all of its Authorized Customer Locations by [**]
against the aggregate Active NxStage Chronic Patient Census of all of Customers Authorized
Customer Locations as of the last Measurement Period (i.e., July 1 for any measurement done on
January 1 and January 1 for any measurement done on July 1) (the foregoing termination events
described in this sentence, hereinafter referred to collectively as Termination Events).
2. EQUIPMENT FORECASTING AND MANUFACTURING PREFERENCE
So long as the Market Restrictions and the Customer Medical Director Restrictions set forth in
Section 1 of this Schedule D are in effect, NxStage will grant Customer and the
Authorized Customer Locations a preferred position in obtaining the Products. In order to secure
this preferred position, Customer must provide NxStage with a reasonably detailed forecast by the
[**] business day of each of [**] during the Term of the Authorized Customer Locations anticipated
Cycler and PureFlow SL requirements and NxStage patient census for the upcoming two Warrant
Quarters (as hereinafter defined). In this Section 2 of Schedule D, the
Warrant Quarters are the quarters that commence as of July 1, October 1, January 1, and
April 1, respectively. Notwithstanding the foregoing, the initial forecast to be provided by
Customer pursuant to the terms of this Section 2 of Schedule D must be provided by
Customer to NxStage on or before August 1, 2010. The initial forecast shall set forth the
Authorized Customer Locations anticipated Cycler and PureFlow SL requirements and NxStage patient
census for the Warrant Quarters commencing October 1, 2010 and January 1, 2011. Customers
forecasted Cycler and PureFlow SL requirements for the Warrant Quarter commencing October 1, 2010
may not exceed [**] percent ([**]%) of Customers actual Cycler and PureFlow SL purchases,
respectively, made during the first calendar quarter of 2010. Thereafter, Customers forecasted
Cycler and PureFlow SL requirements may not increase by more than [**] percent ([**]%),
respectively, in sequential Warrant Quarter forecasts, and cumulative forecasted requirements over
any [**] period during the Term may not exceed [**] percent ([**]%) of Customers aggregate actual
Cycler and PureFlow SL purchases, respectively, made over the [**] period immediately preceding the
date of the then-current forecast. Further, forecasts for any Warrant Quarter may not exceed [**]
percent ([**]%) of the forecast for the same Warrant Quarter from the immediately preceding [**]
forecast (e.g., if the forecast submitted in [**] for the Warrant Quarter commencing [**]
anticipates needs for [**] Cyclers, the Warrant Quarter forecast submitted in [**] for the Warrant
Quarter commencing [**] cannot exceed [**] Cyclers).
[**] percent ([**]%) of Customers forecasted Cycler and PureFlow SL requirements, respectively,
(provided such forecasts are consistent with the terms hereof) shall be binding to the extent they
relate to supplies for the Authorized Customer Locations forecasted patient requirements (it being
understood, for purposes of clarity, that Customer may reduce a forecast for a given Warrant
Quarter from one forecast to the next, but [**] percent ([**]%) of the higher
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of the two forecasts for the same Warrant Quarter will be binding). If orders for the binding
portion of Customers Cycler and PureFlow SL forecasts are not placed during an applicable Warrant
Quarter, NxStage shall invoice Customer for the amount of any shortfall (the Purchase
Shortfall) at the end of such Warrant Quarter at the pricing set forth in Section 1 of
Schedule B-3 and the amount paid by Customer shall be credited towards Cycler and PureFlow
SL, as applicable, purchases hereunder that are made in any subsequent Warrant Quarters and that
exceed the then-current binding portion of any forecast. If the Purchase Shortfall exceeds [**]
Cyclers and/or PureFlow SL units, NxStage may, at its option, deliver such Cyclers and/or PureFlow
SL units, as applicable, to an Authorized Customer Location(s) of Customers choice on [**] days
advance written notice to Customer. NxStage shall use commercially reasonable efforts to meet
Customers purchase orders during the Term, consistent with any such forecasts. NxStage shall be
obligated to fulfill and supply the binding portion of each such forecast during the Term,
consistent with the terms hereof. Notwithstanding the foregoing, NxStage shall not be liable for
any failure to supply hereunder for any reason whatsoever, including as a result of a Product
Recall or any Force Majeure event (an Inability to Supply), so long as such Inability to
Supply is not caused by NxStages willful breach of its obligations hereunder.
In the event of an Inability to Supply as to any of the Cyclers included in the binding portion of
any forecasts for a Warrant Year which are not delivered by NxStage on or before the end of such
Warrant Year, each such Cycler not delivered by NxStage on or prior to the end of such Warrant Year
due to such Inability to Supply shall be treated as being purchased by Customer for the purposes of
determining Customers eligibility to receive the Equipment Volume Rebate set forth in Section
4 of Schedule B-3.
In the event of an Inability to Supply as to any Cyclers included in the binding portion of any
forecasts during the period from the Effective Date through March 31, 2011, April 1, 2011 through
March 31, 2012, and/or April 1, 2012 through March 31, 2013, as applicable, which are not delivered
by NxStage on or before the end of the Warrant Year ending immediately following such applicable
twelve month period (or nine (9) month period for the first Warrant Year) (i.e. the Warrant Year
ended as of June 30, 2011 for the period from the Effective Date through March 31, 2011, the
Warrant Year ended as of June 30, 2012 for the period from April 1, 2011 through March 31, 2012,
and the Warrant Year ended as of June 30, 2013 for the period from April 1, 2012 through March 31,
2013) each such Cycler not delivered by NxStage on or prior to the end of the Warrant Year ending
immediately following such applicable twelve month period (or nine (9) month period for the first
Warrant Year), shall be treated as one new patient for the Warrant Year ending immediately
following such applicable twelve month period (or nine (9) month period for the first Warrant Year)
for purposes of the Total NxStage Home Patient Count and the Active NxStage Home Patient Census.
In addition, in the event of an Inability to Supply as to any Cyclers included in the binding
portion of the forecasts during the period from the Effective Date through March 31, 2011, April 1,
2011 through March 31, 2012, and/or April 1, 2012 through March 31, 2013, as applicable, whereby
any of the Cyclers included in the binding portion of such forecasts are not delivered by NxStage
on or before April 1 of the Warrant Year ending immediately
following such applicable twelve month
period (or nine (9) month period for the first Warrant Year) (the Cycler Supply
Shortfall), but such Cyclers are delivered by NxStage during the period of April 1 through
June 30 (the Supply Cure Quarter) of the Warrant Year ending immediately
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following such
applicable twelve month period (or nine (9) month period for the first Warrant Year), each
Authorized Customer Location patient initiating therapy using a Cycler delivered between the first
business day of the Supply Cure Quarter and the date that is the later of: (i) [**] days subsequent
to written notification (the date of such notification hereinafter referred to as the
Notification Date) from NxStage to Customer of its ability to cure the Cycler Supply
Shortfall by delivery of the total quantity of Cyclers that remain in the Cycler Supply Shortfall
as of the Notification Date within [**] days of the Notification Date (the Cycler Supply
Shortfall Cure Notice) and (ii) the number of days after the Notification Date equal to the
quantity of Cyclers remaining in the Cycler Supply Shortfall as of the Notification Date (which for
purposes hereof shall equal the Cycler Supply Shortfall less that number of Cyclers delivered by
NxStage in connection with any Partial Cycler Supply Shortfall Cure (as defined below) divided by
[**] (the Shortfall End Date); will be included in the Total NxStage Home Patient Count
if such patient satisfies the criteria set forth in the definition of Total NxStage Home Patient
Count and the Active NxStage Home Patient Census if such patient satisfies the criteria set forth
in the definition of Active NxStage Home Patient Census; provided that each such
Authorized Customer Location patient shall be deemed to have completed Three Full Months of Therapy
if he or she has completed a contiguous treatment regimen of home therapy with the System One at
one or more Authorized Customer Locations commencing on the Shortfall End Date through the last day
of such Supply Cure Quarter (i.e. June 30) and provided further that: (a) any
documented hospitalization of each such patient shall not be deemed an interruption in each such
patients contiguous days of treatment with the System One as long as Customer has provided notice
to NxStage of any such documented hospitalization as required pursuant to Section 10 of the
Agreement and (b) any interruption in each such patients treatment with the System One as a result
of such patients traveling shall not be deemed an interruption in each such patients contiguous
days of treatment with the System One. NxStage acknowledges and agrees that during a Supply Cure
Quarter it shall have the right on one or more occasions to partially remedy a Cycler Supply
Shortfall by delivering Cyclers to Customer prior to delivering a Cycler Supply Shortfall Cure
Notice (a Partial Cycler Supply Shortfall Cure); provided that no later
than [**] of any such Supply Cure Quarter, NxStage shall deliver a written notice to Customer that
it is conducting its final Partial Cycler Supply Shortfall Cure for such Supply Cure Quarter (the
Final Partial Cycler Supply Shortfall Cure), which Final Partial Cycler Supply Shortfall
Cure for such Supply Cure Quarter may not exceed [**] Cyclers. With respect to each Cycler
delivered by NxStage in connection with a Partial Cycler Supply Shortfall Cure, one or more
Authorized Customer Locations must initiate therapy with a patient on each such Cycler promptly
following delivery thereof, and in any event on or before the end of the applicable Supply Cure
Quarter (i.e. June 30) to be included in the Total NxStage Home Patient Count and the Active
NxStage Home Patient Census (without regard as to whether or
not each such patient has completed
Three Full Months of Therapy but otherwise satisfying all other criteria set forth in the
definition of Total NxStage Home Patient Count and Active NxStage Home Patient Census). For
example, if as of March 31, 2011, there is a Cycler Supply Shortfall equal to [**] Cyclers, and
NxStage delivers [**] of such Cyclers to Authorized Customer Locations between April 1 and April
15, 2011, and NxStage delivers a Cycler Supply Shortfall Cure Notice to Customer on April 15, 2011,
that it can supply the remaining [**] Cyclers included in the Cycler Supply Shortfall on or before
[**], then the Shortfall End Date shall be May 18, 2011 (which is the later of: (A) [**] days
subsequent to the Notification Date) and (B) [**] days after the Notification Date (i.e. [**]
(which is calculated by dividing the number of Cyclers remaining in
D-6
the Cycler Supply Shortfall as of the Notification Date by [**]))). In the same example, the
number of new patients initiating therapy using a Cycler delivered by NxStage during the period
between the Notification Date (i.e. [**]) and the Shortfall End Date (i.e. [**]) plus the [**]
patients of any Authorized Customer Location initiating therapy using a Cycler delivered (which, in
each case, expressly does not include Cyclers delivered to Authorized Customer Locations in
connection with a service swap) by NxStage in connection with a Partial Cycler Supply Shortfall
Cure (i.e. the period between April 1, 2011 up to the Notification Date (i.e. [**])), shall be
included in the Total NxStage Home Patient Count and the Active NxStage Home Patient Census for the
Warrant Year ended June 30, 2011, as long as each such patient meets the criteria set forth in the
definition of Total NxStage Home Patient Count and the Active NxStage Home Patient Census if such
patient satisfies the criteria set forth in the definition of Active NxStage Home Patient Census;
provided that each such patient shall be deemed to have completed Three Full Months
of Therapy if, with respect to the [**] Cyclers, he or she has completed a contiguous treatment
regimen of home therapy with the System One at one or more Authorized Customer Locations commencing
on [**] (i.e. the Shortfall End Date) through the last day of the Supply Cure Quarter (i.e. June
30, 2011), and with respect to the [**] Cyclers, he or she has completed a contiguous treatment
regimen of home therapy with the System One at one or more Authorized Customer Locations from the
first date of therapy promptly following the delivery thereof through the last day of the Supply
Cure Quarter (i.e. June 30, 2011).
NxStage acknowledges and agrees that in the event the Shortfall End Date related to a Cycler Supply
Shortfall extends beyond the end of an applicable Supply Cure Quarter (i.e. June 30), the number of
patients that the Authorized Customer Locations must initiate therapy with on or before the end of
the applicable Supply Cure Quarter (i.e. June 30) using a Cycler delivered between the first
business day of the Supply Cure Quarter and the expiration of the Supply Cure Quarter in order for
such patients to be included in the Total NxStage Home Patient Count and the Active NxStage Home
Patient Census (without regard as to whether or not each such patient has completed Three Full
Months of Therapy but otherwise satisfying all other criteria set forth in the definition of Total
NxStage Home Patient Count and Active NxStage Home Patient Census) will be determined by
multiplying the remaining days left in the Supply Cure Quarter from the date of the Notification
Date through the last day of the Supply Cure Quarter (i.e. June 30) by [**] (the Initiation
Threshold), and in the event the Cyclers included in the remaining Cycler Supply Shortfall as
of the Notification Date (which for purposes hereof shall equal the Cycler Supply Shortfall less
that number of Cyclers delivered by NxStage in connection with a Partial Cycler Supply Shortfall
Cure during an applicable Warrant Year) exceed the Initiation
Threshold, [**] of the Cyclers above
the Initiation Threshold shall automatically be treated as one new patient for the Warrant Year
immediately preceding the Shortfall End Date for purposes of the Total NxStage Home Patient Count
and the Active NxStage Home Patient Census; provided that if the Notification Date
occurs on or after [**] of any Supply Cure Quarter, [**] Cyclers included in the Cycler Supply
Shortfall shall be treated as one new patient for the Warrant Year ending as of the last day of the
Supply Cure Quarter (i.e. June 30) for purposes of the Total NxStage Home Patient Count and the
Active NxStage Home Patient Census. For example, if as of April 16, 2011, there is a Cycler Supply
Shortfall equal to [**] Cyclers and [**] Cyclers are delivered between April 1 and June 1, 2011 in
connection with a Partial Cycler Supply Shortfall Cure, and on [**] (i.e. the Notification Date)
NxStage delivers a Cycler Supply Shortfall Cure Notice to Customer that it can supply all [**] of
the Cyclers remaining in the Cycler Supply Shortfall on or before [**], the Initiation Threshold
shall be [**]
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(which is calculated by multiplying the remaining days left in the Supply Cure Quarter from the date of the Notification
Date by [**]. In the same example, in order for all [**] Cyclers included in the remaining Cycler
Supply Shortfall to be included in the Total NxStage Home Patient Count and the Active NxStage Home
Patient Census for the Warrant Year ending June 30, 2011, [**] Authorized Customer Location
patients will have to initiate therapy on or before the end of the Supply Cure Quarter using a
Cycler delivered between the Notification Date (i.e. [**]) and the last day of the Supply Cure
Quarter (i.e. June 30, 2011) (it being understood that such patients need not complete Three Full
Months of Therapy, but that all such patients must otherwise satisfy all other criteria set forth
in the definition of Total NxStage Home Patient Count and Active NxStage Home Patient Census,
including the requirement that such patients complete a contiguous treatment regimen of home
therapy with the System One at one or more Authorized Customer Locations from their date of therapy
initiation through the expiration of the Supply Cure Quarter; provided that: (i)
any documented hospitalization of each such patient shall not be deemed an interruption in each
such patients contiguous days of treatment with the System One as long as Customer has provided
notice to NxStage of any such documented hospitalization as required pursuant to Section 10 of the
Agreement and (ii) any interruption in each such patients treatment with the System One as a
result of such patients traveling shall not be deemed an interruption in each such patients
contiguous days of treatment with the System One) and the [**] Cyclers included in the difference
between the remaining Cycler Supply Shortfall as of the Notification Date and the Initiation
Threshold [**]shall automatically be treated as [**] new patient for the Warrant Year ending June
30, 2011 for purposes of the Total NxStage Home Patient Count and the Active NxStage Home Patient
Census. In the preceding example, if only [**] Authorized Customer Location patients initiate
therapy using a Cycler purchased between the Notification Date (i.e. [**]) and the last day of the
Supply Cure Quarter (i.e. June 30, 2011) (and such patients, although not completing Three Full
Months of Therapy, otherwise satisfy all other criteria set forth in the definition of Total
NxStage Home Patient Count and Active NxStage Home Patient Census, including the requirement
that such patients complete a contiguous treatment regimen of home therapy with the System One at
one or more Authorized Customer Locations from their date of therapy initiation through the
expiration of the Supply Cure Quarter; provided that: (i) any documented
hospitalization of each such patient shall not be deemed an interruption in each such patients
contiguous days of treatment with the System One as long as Customer has provided notice to NxStage
of any such documented hospitalization as required pursuant to Section 10 of the Agreement and (ii)
any interruption in each such patients treatment with the System One as a result of such patients
traveling shall not be deemed an interruption in each such patients contiguous days of treatment
with the System One), [**] patients will be included in the Total NxStage Home Patient Count and
the Active NxStage Home Patient Census for the Warrant Year ending June 30, 2011 (i.e. the [**]
patients for which the Authorized Customer Locations initiated therapy with a Cycler between [**]
through June 30, 2011 plus the [**] Cyclers included in the difference between the remaining Cycler
Supply Shortfall as of the Notification Date and the Initiation Threshold). In addition, in the
same example, the [**] patients of any Authorized Customer Location initiating ther
apy using a
Cycler delivered (which, in each case, expressly does not include Cyclers delivered to Authorized
Customer Locations in connection with a service swap) by NxStage in connection with a Partial
Cycler Supply Shortfall Cure will be included in the Total NxStage Home Patient Count if such
patient satisfies the criteria
D-8
set forth in the definition of Total NxStage Home Patient Count
and the Active NxStage Home Patient Census if such patient satisfies the criteria set forth in the
definition of Active NxStage Home Patient Census; provided that each such
Authorized Customer Location patient shall be deemed to have completed Three Full Months of Therapy
if he or she has completed a contiguous treatment regimen of home therapy with the System One at
one or more Authorized Customer Locations commencing on the date that each such patient initiated
therapy with a Cycler delivered in connection with a Partial Cycler Supply Shortfall Cure through
the last day of such Supply Cure Quarter (i.e. June 30) and provided further that:
(i) any documented hospitalization of each such patient shall not be deemed an interruption in each
such patients contiguous days of treatment with the System One as long as Customer has provided
notice to NxStage of any such documented hospitalization as required pursuant to Section 10 of the
Agreement and (ii) any interruption in each such patients treatment with the System One as a
result of such patients traveling shall not be deemed an interruption in each such patients
contiguous days of treatment with the System One.
Except as otherwise set forth in this Section 2 of Schedule D, Customers sole
remedy in the event of an Inability to Supply shall be to terminate the Agreement, if such
Inability to Supply is directly responsible for the Authorized Customer Locations inability on an
aggregate basis to meet [**] of the Customer Growth Level Target as set forth in the Warrant
Table in Schedule B-5 and such Inability to Supply continues for [**] consecutive months.
NxStage shall promptly notify Customer in writing of any Inability to Supply and during any such
Inability to Supply shall allocate all Products and training capacity to Customer on a first
priority basis consistent with Customers and the Authorized Customer Locations then current share
of NxStages equipment field base that have been purchased, and consistent with the then affected
prescription items included in Customers Monthly Dialysis Supplies orders. NxStage further
covenants and agrees that Customer shall have no obligation to pay for a System One that NxStage
cannot supply as a result of an Inability to Supply, until the date on which NxStage supplies
Customer or any Authorized Customer Location with the System One(s) that was affected by such
Inability to Supply.
3. MOST FAVORED NATIONS PRICING
NxStage represents and warrants to Customer that, from and after July 1, 2010, Customers Monthly
Composite Pricing (as defined below) in the Continental United States for the Products shall be (a)
no less favorable than that of other Active NxStage Customers for active chronic home hemodialysis
patients using: (i) purchased System Ones and any purchased Monthly Dialysis Supplies or (ii)
rented System Ones and purchased Express Monthly Dialysis Supplies, and (b) at least [**] percent
([**]%) lower than that of other Active NxStage Customers for active chronic home hemodialysis
patients using rented System Ones and purchased PureFlow SL Monthly Dialysis Supplies (the
Pricing Covenant). The Pricing Covenant set forth in this Section 3 of
Schedule D shall remain in effect through June 30, 2013: provided that (x)
the Authorized Customer Locations on an aggregate basis achieve the [**] target set forth in the
table titled Warrant Table in Schedule B-5 as of the end of each Warrant Year during the period
from the Effective Date through June 30, 2013, and (y) a [**] has not occurred. The Pricing
Covenant shall immediately terminate if at the end of any Warrant Year, the Authorized Customer
Locations have not on an aggregate basis achieved as of the end of the same Warrant Year, the
applicable [**] target set forth in the table titled Warrant Table in Schedule B-5. The Pricing
Covenant shall also immediately terminate upon the occurrence of a [**]. For purposes of the
Agreement, Monthly Composite Pricing for the Products will:
D-9
| Be calculated for each treatment frequency and fluid volume (e.g., part #s PF-20-N-6-SUP and PF-30-N-5-SUP) on an a per Active NxStage Customer per market basis (which may include a single location or multiple locations) based on the Active NxStage Customers census of active NxStage [**] patients in that market [**] (specifically excluding patients treated in a [**] setting. | ||
| Be calculated for each treatment frequency and fluid volume (e.g., part #s PF-20-N-6-SUP and PF-30-N-5-SUP) on an a per Authorized Customer Location per market basis (which may include a single Authorized Customer Location or multiple Authorized Customer Locations) based on Customers census of active NxStage [**] patients in that market (specifically excluding patients treated in a [**] setting (it being understood that patients performing [**] facilities or similar facilities shall not be excluded from the Pricing Covenant; provided that such patients therapy is not performed in a facility where such facility staff or Customer or Authorized Customer Location staff is performing or assisting with the treatment, or where more than [**] patient is receiving therapy with a [**] System One in such facility or where [**] or more System One patients are in such facility; and provided further that System One Monthly Dialysis Supplies for such patient are not being billed under a different pricing arrangement as set forth in Section 10(d) of the Agreement)). | ||
| Equal the sum of Monthly Dialysis Supply Supplies pricing plus an imputed System equipment Rental Rate (Rental Rate). For rented Systems, the Rental Rate shall equal the actual monthly System rental cost. A rental rate will be calculated for purchased Systems by multiplying the average purchase price of Systems purchased by an Active NxStage Customer, or purchased by Customer, as applicable, in each case after the Effective Date by [**] (it being understood that the purchase price of a System does not include any rental credit against the purchase price offered by NxStage to an Active NxStage Customer in connection with the purchase of a System; and further that this calculation shall only apply to Systems purchased after the Effective Date). | ||
| Account for all of Customers discounts and rebates, including any discounts associated with prepayment or early payment, whether or not such discounts are taken, but will exclude any discounts provided in the form of the Warrant. |
An illustrative example of the above calculation is set forth in Exhibit B.
Subsequent to July 1, 2010, if NxStage offers another Active NxStage Customer the opportunity to
apply a portion of previous System rental payments (e.g., percentage of rental payments over period
of time) to the purchase of its Systems in the field, Customer will be given the opportunity to do
the same within [**] days of written notification on a like number of Systems on similar terms;
provided that any Systems purchased under such program will be subtracted from the
Rental Cap for the remainder of the Term.
NxStage agrees to calculate Customers Monthly Composite Pricing every calendar quarter during the
Term, commencing on September 30, 2010 (for the period between July 1, 2010 and September 30,
2010), and to promptly notify Customer (within [**] days of the end of any calendar quarter) in the
event any pricing provided by NxStage to any Active NxStage Customer does not comply with the
Pricing Covenant, subject to the terms hereof. If any pricing provided
D-10
by NxStage to another Active NxStage Customer during any calendar quarter does not comply with the
Pricing Covenant, NxStage shall provide a rebate to Customer hereunder pursuant to the terms of
this Section 3 of Schedule D simultaneous with such notice, which rebate shall be
provided in the form of a credit to be applied against future purchases hereunder, in an amount
equal to the difference between [**] (the MFN Rebate); provided that in
the event Customer has a Credit Balance within [**] days of the payment of such MFN Rebate, NxStage
shall deliver a check to Customer in an amount equal to the Credit Balance within [**] business
days of the expiration of such [**] day period.
No MFN Rebate shall be owed due to NxStages non-compliance with the Pricing Covenant due to (A)
philanthropic reasons, (B) Product evaluations, [**], Product sampling, or [**]; provided
that, as soon as is commercially possible, NxStage gives the Authorized Customer Locations
the opportunity to participate in a similar program at a similar scale), (C) credits provided for
Product returns or missed treatments or discontinuations of patient therapy, or (D) [**].
Additionally, Customer and NxStage acknowledge and agree that in the event that NxStage is a party
to agreements or arrangements with [**] or fewer Active NxStage Customers relating to the purchase
and sale of any of the Products that is not in compliance with the Pricing Covenant and such Active
NxStage Customers purchases from NxStage represent less than [**]% of NxStages chronic market
sales during the preceding [**] month period prior to any determination (an Excluded
Arrangement), NxStage shall not be out of compliance with the Pricing Covenant;
provided that NxStage pays to Customer a MFN Rebate which MFN Rebate shall be
limited up to that number of patients of Customer as equal the number of patients of such Active
NxStage Customer(s) under such Excluded Arrangement(s) that are subject to such lower monthly
composite pricing.
Without limiting any of the foregoing, NxStage agrees that it shall not offer discounts or rebates
payable in the form of warrants to purchase NxStage Common Stock or any other NxStage equity to any
other customer that purchases any of NxStages products for the treatment of patients prescribed to
receive chronic home hemodialysis.
4. OTHER
Customer represents and warrants to NxStage that it has not entered into any agreement which
conflicts with the terms and conditions of the Agreement and that it will not do so during the
Term. NxStage understands and acknowledges that neither Customer nor any of the Authorized
Customer Locations have promised or committed to [**].
NxStage represents and warrants to Customer that: (a) it has not entered into any agreement which
conflicts with the terms and conditions of the Agreement and that it will not do so during the
Term, and (b) it shall not enter into any distributorship agreement or other similar agreement with
any third party covering the sale, rental, licensing, leasing or distribution of the System One for
chronic home hemodialysis in the Continental U.S., except where any such agreements are consistent
with the terms and conditions of the Agreement, including the Market Restrictions and the Customer
Medical Director Restriction set forth in Section 1 of this Schedule D.
D-11
ATTACHMENT A MARKET DEFINITIONS
[**]
A total of 16 pages were omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment.
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