PATIENT SECURITY SYSTEMS CAPITAL EQUIPMENT SUPPLIER AGREEMENT between NOVATION, LLC and eXI WIRELESS SYSTEMS, INC. (Supplier Name) CE50122 (Contract Number)

 

e.    Service Response Time.  Supplier guarantees a response time of one (1) hour by phone and for on-site as agreed to by the Member for all warranty, contract or time and materials service calls requested by any Member during the life of the Equipment. The Supplier’s authorized dealer providing local service will provide first-level support.

f.    Uptime Guarantee. For any calendar quarter during the Warranty Period and the term of any service agreement, Supplier guarantees that the Exit infrastructure will maintain a level of uptime equal to or better than 95%. Uptime will be calculated using the following formula:

uptime = (T - TNF) X 100

 

where “T” is the total number of hours that the eXI infrastructure is typically used per quarter (determined by multiplying the number of hours per day that the eXI infrastructure is typically used by the number of days per week that the eXI infrastructure is typically used, and multiplying the result by 13 weeks in a quarter), and “TNF” is the number of hours the eXI infrastructure or any component of the eXI infrastructure is not functional during the quarter (the hours calculated will only include those hours that the eXI infrastructure would typically be in use). If any portion of the total functionality of the eXI infrastructure is unavailable for operational use, the eXI infrastructure will be considered down. Downtime scheduled for preventive maintenance or any other scheduled event, including those for the convenience of Member, will not be included in the downtime calculation. Member will calculate uptime after each calendar quarter. Supplier will extend the Warranty Period or the service agreement without charge by one day for every day the eXI infrastructure or component thereof is not operational beyond the allowable 5%. This uptime guarantees only relates to the performance of the Supplier’s Products. Downtime cause by electrical or mechanical interference cause by other type of equipment such as other radio frequency generating equipment, monitors, microwaves, etc. is not covered by this uptime guarantee.

g.    Preventive Maintenance. During the Warranty Period for fixed equipment, Supplier will perform preventive maintenance according to the manufacturer’s recommendations at no charge to the Member. Supplier will supply the Member with a written procedure that will be followed by Supplier’s representative during the preventive maintenance process. Reasonable additional testing will be performed by Supplier at a charge to the Member, upon request, to meet the requirements of procedures developed by the Member. The frequency of preventive maintenance and tests performed will comply with the manufacturer’s recommendations,

external codes (state, JCAHO, etc.), and all internal policies developed by the Member. During the Warranty Period, Supplier will provide preventive maintenance after hours at a cost agreed to with the Member. This does not include required system operational duties such as system backups and functional testing.

 

h.    Upgrades. A list of optional software available from Supplier, including costs for the software both during the Warranty Period and after the Warranty Period, is attached hereto as Exhibit A. Since software upgrade are sometimes customized to meet a specific need, Members will be given the option of acquiring this software if they elect to upgrade the system at the discounts provide for in this Agreement. If a Software Maintenance Agreement (SMA) is purchased with system, software upgrades will be provided at no charge for the duration of the SMA. Labor charges for installing software upgrades are not included in the SMA.

 

i.    Customization Software. Pricing relating to the customization of software and additional charges that the Member will incur for annual maintenance, training, documentation, backup, etc. is attached hereto as Exhibit A.

 

j.    Operational Software. The form of software licensure agreements available to the Members will be included as part of any quote requested by a Member. All software necessary to operate the Equipment, unless otherwise provided in any exhibit hereto, will be licensed to the Member upon acceptance of the Equipment pursuant to Subsection 3.f. above. If a SMA is purchased with the system, software upgrades will be provided at no charge for the duration of the SMA. Any new operational software that provides additional functionality must be submitted to Novation as an addition to Exhibit A. New software will be installed as scheduled with facility.

 

l.    Data Conversion/Interfaces. Typically, systems to not require conversion of data, they operate on a stand-alone basis. Interfaces to other information systems may be quoted on a custom basis, and will not be part of this agreement.

 

m.    Service Contract Cancellation. Service contracts are provided through Supplier’s authorized dealers. Terms of the service contract with the authorized dealer will apply.

 

n.    Product Compliance. Supplier represents and warrants to Novation, the Clients and the Members that the Products are, if required, registered, and will not be distributed, sold, leased or priced by Supplier in violation of any federal, state or local law. Supplier represents and warrants that as of the date of delivery to the Members all Products will not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act and will not violate or cause a violation of any applicable law, ordinance, rule, regulation or order. Supplier agrees it will comply with all applicable Good Manufacturing Practices and Standards contained in 21 C.F.R. Parts 210, 211, 225, 226, 600, 606, 610, 640, 660, 680 and 820. Supplier represents and warrants that it will provide adequate warnings and instructions to inform users of the Products of the risks, if any, associated with the use of the Products. Supplier’s representations, warranties

 

and agreements in this Subsection will survive the expiration or earlier termination of this Agreement.

5.    Reports and Other Information Requirements. Within twenty (20) days after the end of each full and partial quarter during the Term (“Reporting Quarter”), Supplier will submit to Novation a Sales report in form and content reasonably satisfactory to Novation (“Net Sales Report”) and any other information during the time period required as set forth in the Information Requirements Guidebook. Such Guidebook may be found at the Novation website at www.novationco.com.

a.    Information to Members. After issuing the Award Letter, Novation, in conjunction with the Clients, will deliver a summary of the purchasing and/or leasing arrangements covered by this Agreement to each Member and will, from time to time, at the request of Supplier, deliver to each Member reasonable and appropriate amounts and types of materials supplied by Supplier to Novation which relate to the purchase or lease of the Products.

b.    Marketing Services. Novation, in conjunction with the Clients, will market the purchasing and/or leasing arrangements covered by this Agreement to the Members. Such promotional services may include, as appropriate, the use of direct mail, contact by Novation’s field service delivery team, member support services, and regional and national meetings and conferences. As appropriate, Novation, in conjunction with the Clients, will involve Supplier in these promotional activities by inviting Supplier to participate in meetings and other reasonable networking activities with Members.

 

7.    Fees.

 

a.    Calculation. Supplier will pay to Novation, as the authorized collection agent for each of the Clients and certain of each Client’s subsidiaries and affiliates, respectively (and not collectively), Fees belonging to any of the Clients or certain of their subsidiaries or affiliates equal to the Agreed Percentage of all Net Sales of the Products to the Members directly or indirectly from Supplier, whether under the pricing and other terms of this Agreement or under the terms of any other purchasing or pricing arrangements that may exist between the Members and Supplier. As used herein, Net Sales shall mean invoiced sales of Products less related Product returns. The “Agreed Percentage” will be defined in the Award Letter.

 

b.    Payment. Supplier will submit fees on all net sales within twenty (20) days of the close of any calendar quarter during the term of this agreement.

Fee checks must be made payable to Novation, LLC and sent to:

If Sent By First Class Mail: 

If Sent Via Courier (i.e., Federal Express, United Parcel Service, Messenger):

On the airbill please remember to list the bank’s telephone number, as recipient at this location. You should also include your telephone number as the sender.

IMPORTANT REMINDER: ALL checks for Fees should be made payable to Novation, LLC, regardless of whether they are sent first-class mail or by courier. Under no circumstances should checks be made payable to The Northern Trust Company.

a.    Compliance With Law. Supplier represents and warrants that to the best of its knowledge, after due inquiry, it is, and for the Term shall be, in compliance with all federal, state and local statutes, laws, ordinances and regulations applicable to it (“Legal Requirements”) which are material to the operation of its business and the conduct of its affairs, including Legal Requirements pertaining to the safety of the Products, occupational health and safety, environmental protection, nondiscrimination, antitrust, and equal employment opportunity. In the event of Supplier’s failure to comply with the foregoing, Novation will have the right to immediately terminate any or all of the Product(s) subject to such failure, with notice to Supplier, or to terminate this Agreement in its entirety pursuant to Section 12.a. During the Term, Supplier will: (1) promptly notify Novation of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against it which assert in whole or in part that Supplier is in noncompliance with any Legal Requirement which is material to the operation of its business and the conduct of its affairs and (2) promptly provide Novation with true and correct copies of all written notices of adverse findings from the U.S. Food and Drug Administration (“FDA”) and all written results of FDA inspections which pertain to the Products.

b.    Government Program Participation. Supplier represents and warrants that it is not excluded from participation, and is not otherwise ineligible to participate, in a “Federal health care program” as defined in 42 U.S.C. § 1320a-7b(f) or in any other government payment

program. In the event Supplier is excluded from participation, or becomes otherwise ineligible to participate in any such program during the Term, Supplier will notify Novation in writing within three (3) days after such event, and upon the occurrence of such event, whether or not such notice is given to Novation, Novation may immediately terminate this Agreement upon written notice to Supplier.

  a.    Policy Requirements. Supplier will maintain and keep in force during the Term product liability, general public liability, and property damage insurance against any insurable claim or claims, which might or could arise regarding Products, purchased or leased from Supplier. Such insurance will contain a minimum combined single limit of liability for bodily injury and property damage in the amounts of not less than $1,000,000 per occurrence and $3,000,000 in the aggregate After award of contract, Supplier will provide to Novation within fifteen (15) days after Novation’s request, an insurance certificate indicating the foregoing coverage, issued by an insurance company licensed to do business in the relevant states and signed by an authorized agent.

  b.    Self-Insurance. Notwithstanding anything to the contrary in Subsection a. above, Supplier may maintain a self-insurance program for all or any part of the foregoing liability risks, provided such self-insurance policy in all material respects complies with the requirements applicable to the product liability, general public liability and property damage insurance set forth in Subsection a.

  c.    Amendments, Notices and Endorsements. Supplier will not amend, in any material respect that affects the interests of Novation, the Clients or the Members, or terminate said liability insurance or self-insurance program except after thirty (30) days’ prior written notice to Novation and will provide to Novation copies of all notices and endorsements as soon as practicable after it receives or gives them.

11.    Books and Records; Facilities Inspections. Supplier agrees to keep, maintain and preserve complete, current and accurate books, records and accounts of the transactions contemplated by this Agreement and such additional books, records and accounts as are necessary to establish and verify Supplier’s compliance with this Agreement. All such books, records and accounts will be available for inspection and audit by Novation representatives at any time during the Term and for two (2) years thereafter, but only during reasonable business hours and upon reasonable notice. Novation agrees that its routine audits will not be conducted more frequently than twice in any consecutive twelve (12) month period, subject to Novation’s right to conduct special audits whenever it deems it to be necessary. In addition, Supplier will make its manufacturing and packaging facilities available for inspection from time to time during the Term by Novation representatives, but only during reasonable business hours and upon reasonable notice. The exercise by Novation of the right to inspect and audit is without prejudice to any other or additional rights or remedies of either party.

12.    Termination. Either party may terminate this Agreement at any time for any reason whatsoever by delivering not less than ninety (90) days’ prior written notice thereof to the other. In addition, either party may terminate this Agreement immediately by delivering written notice thereof to the other upon the occurrence of either of the following events:

(a) The other party breaches this Agreement and does not cure such breach within thirty (30) days of receipt of such notice, except for Supplier’s monetary breach or breach of Compliance with Laws, for which a cure period shall not be allowed; or

(b) The other party becomes bankrupt or insolvent or makes an unauthorized assignment or goes into liquidation or proceedings are initiated for the purpose of having a receiving order or winding up order made against it or the other party and applies to the courts for protection from its creditors.

 

  a.    Nondisclosure. Supplier agrees that it will:

 

(1) keep strictly confidential and hold in trust all Confidential Information, as defined in Subsection 13.b. below, of Novation, the Clients and the Members;

 

  b.         Definition. “Confidential Information,” as used in Subsection 13.a. above, will consist of all information relating to the prices and usage of the Products (including all information contained in the reports produced by Supplier pursuant to Section 5 above) and all documents and other materials of Novation, the Clients and the Members containing information relating to the programs of Novation, the Clients or the Members of a proprietary or sensitive nature not readily available through sources in the public domain.

  c.          HIPAA. If a Member determines, in its sole reasonable discretion, that Supplier is a “business associate,” as that term is defined in the privacy rules promulgated pursuant to The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) codified at 42 CFR Parts 160 and 164, Supplier will negotiate with Member a mutually acceptable written agreement which will govern Supplier’s access to “protected health information” as defined under HIPAA (a “Business Associate Contract”).

 

         b.   No Assignment.  No assignment of all or any part of this Agreement may be made without the prior written consent of the other party. As used herein, “assignment” shall mean a transfer by virtue of operation of law, under an order of any court, or pursuant to any plan of merger, consolidation or sale of stock or assets. Any assignment of all or any part of this Agreement by either party will not relieve that party of the responsibility of performing its obligations hereunder to the extent that such obligations are not satisfied in full by the assignee. This Agreement will be binding upon and inure to the benefit of the parties’ respective successors and assigns.

         c.   Notices. Except as otherwise expressly provided herein, all notices or other communications required or permitted under this Agreement will be in writing and will be

deemed sufficient when mailed by United States mail, or delivered in person to the party to which it is to be given, at the address of such party set forth below:

If to Supplier:

eXI Wireless Systems, Inc.

Attn: Daniel Drebnicki

Suite 100-13551 Commerce Parkway

Richmond, BC, Canada V6V 2L1

If to Novation:

Novation

Attn: General Counsel

125 East John Carpenter Freeway

Irving, TX 75062-2324

Or such other address as the party will have furnished in writing in accordance with the provisions of this Subsection.

d.    Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement will be prohibited by or invalid under applicable law, such provision will be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. Each party will, at its own expense, take such action as is reasonably necessary to defend the validity and enforceability of this Agreement and will cooperate with the other party as is reasonably necessary in such defense.

e.    Entire Agreement. This Agreement, together with the exhibits listed below, will constitute the entire agreement between Novation and Supplier. This Agreement, together with the exhibits listed below and each Member’s purchase and/or lease order and/or other applicable Form will constitute the entire agreement between each Member and Supplier. In the event of any inconsistency between this Agreement and a Member’s purchase and/or lease order and/or other applicable Form, the terms of this Agreement will control, except that the Member’s purchase and/or lease order and/or other applicable Form will supersede Sections 3 and 4 of this Agreement in the event of any inconsistency with such Sections. No other terms and conditions in any document, acceptance, or acknowledgment will be effective or binding unless expressly agreed to in writing. The following exhibits are incorporated by reference in this Agreement:

Exhibit A    Product and Service Description and Pricing

Exhibit B    Non-Price Specifications

Exhibit C    Award Letter

Exhibit D    Forms of Purchase, Lease, License, Financing and/or Service Agreements

Exhibit E    Warranty

Exhibit F    Neoforma Master Supplier Agreement

SUPPLIER:     eXI Wireless Systems, Inc.

ADDRESS:      Suite 100 - 13551 Commerce Parkway

                          Richmond, BC V6V 2L1

SIGNATURE: /s/ Alan Foster

TITLE: President    DATE: April 18, 2005