CONFIDENTIAL PORTIONS HAVE BEEN OMITTED BASED UPON A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934 AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION. THIRD AMENDMENT TO OEM PURCHASE AND SUPPLY AGREEMENT
Exhibit
10.2
CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED BASED UPON A REQUEST
FOR
CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 OF THE
SECURITIES
EXCHANGE ACT OF 1934 AND HAVE BEEN SEPARATELY FILED
WITH
THE COMMISSION.
THIRD
AMENDMENT TO OEM PURCHASE AND SUPPLY AGREEMENT
This
Third Amendment (the “Amendment”) is made as of June 10, 2005, by and between
Cardiac Science, Inc., a Delaware corporation (“Supplier” or “Cardiac Science”
or “CSI”), a medical device developer and manufacturer of automated external
defibrillators having its principal place of business at 0000 Xxxx Xxxxxx,
Xxxxxx, XX 00000 and GE Medical Systems Information Technologies, Inc., a
Wisconsin corporation d/b/a GE Healthcare (“GEMS-IT”), having its principal
place of business at 0000 X. Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
W
I T N E
S S E T H:
WHEREAS,
CSI
and
GEMS-IT are
parties to that certain OEM Purchase and Supply Agreement dated July 29,
2003,
an “Addendum 1” to the OEM Purchase and Supply Agreement dated as of March 24,
2004, Amendment One to OEM Purchase and Supply Agreement dated August 10,
2004
(“Amendment One”), and Second Amendment to OEM Purchase and Supply Agreement
dated February 14, 2005 (collectively, the “OEM Purchase and Supply
Agreement”).
WHEREAS,
CSI and GEMS-IT desire to supplement and amend the OEM
Purchase and Supply Agreement as
set
forth herein.
WHEREAS,
CSI and GEMS-IT are simultaneously entering into that certain Exclusive
Distribution Agreement for United States and Canadian Hospitals (“Exclusive
Distribution Agreement”) to provide GEMS-IT with certain exclusive distribution
rights with respect to the OEM Products.
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
is the
parties hereto agree as follows:
1. Construction.
Except
as provided in this Amendment, the terms and conditions set forth in the
OEM
Purchase and Supply Agreement shall
remain unaffected by the execution of this Amendment. To the extent any
provisions or terms set forth in this Amendment conflict with the terms set
forth in the OEM
Purchase and Supply Agreement,
the
terms set forth in this Amendment shall govern and control. Terms not otherwise
defined herein, shall have the meanings set forth in the OEM
Purchase and Supply Agreement.
This
Amendment amends the OEM Purchase and Supply Agreement and not that certain
OEM
Purchase Agreement entered into by the parties on July 29, 2003.
2. Section
1.3
is
hereby amended by inserting the following sentence at the end of that
section:
“For
the
purposes of this Agreement, “GEMS-IT” shall include GEMS-IT and any GEMS-IT
Affiliate or GEMS-IT Subcontractor (including distributors) involved in the
marketing, sale, distribution or servicing of the OEM Products.”
3. Section
1.4 is hereby deleted in its entirety and replaced with the
following:
“Term
of the Agreement.
This
Agreement will commence as of the Effective Date and continue until June
30,
2009 (the
“Term”), unless terminated earlier under the terms of this Agreement. Any
extension beyond the initial term shall be based upon the mutual agreement
of
the parties.
Notwithstanding
the foregoing, this Agreement shall remain in effect and GEMS-IT shall have
the
right to purchase from Supplier, GE-branded Responder® AEDs and AED Pros (in
GEMS-IT specified coloring) and related accessories
and consumables for
sale
on a non-exclusive basis outside the United States and Canada (excluding
the
country of Japan) until December
31, 2010.”
4. Section
2.15 is hereby deleted in its entirety and replaced with the
following:
“Parts
and Accessories”
means
the Service Parts and the Supplies and Accessories, collectively. “Service
Parts” means the replacement parts and components used to service, maintain and
repair the OEM Products. “Supplies and Accessories” means the accessories,
consumables and other products that may be supplied in conjunction with,
used
with, or used as additions to the OEM Products.”
2
5. Section
3.6 is hereby deleted in its entirety and replaced with the
following:
“The
Lead
Time for the OEM Products is one (1) week for
Order(s) of units of OEM Products that are within one hundred and ten percent
(110%) of the volume of purchases in the previous
calendar quarter. Supplier
agrees that it is in the mutual business interest of the parties to ship
the OEM
Products on the next day or as soon as practicable after receipt of an
Order.
If,
during any calendar quarter, Supplier fails to meet three (3) or more Delivery
Dates it has confirmed or that has been deemed accepted in accordance with
Section 3.2, the then current Term of the Agreement shall be extended, and
the
date upon which GEMS-IT must attain minimum purchase levels to achieve
exclusivity under the Exclusive Distribution Agreement shall be deferred,
for an
additional three (3) month period for each calendar quarter in which such
failure occurs.”
6. Section
9.4.1 is hereby deleted in its entirety and replaced with the
following:
“Customer
Service.
Outside
of the United States and Canada, customer service calls will be handled by
GEMS-IT. If a customer calls GEMS-IT with a Product Warranty issue (GEMS-IT
fields the warranty call), GEMS-IT will
inform Supplier of the warranty call and will receive a RMA from Supplier.
GEMS-IT or its customer will return the product for repair or replacement
to
Supplier’s facility in Minnetonka, MN or Supplier’s then current facility.
Supplier will repair or replace the OEM Product and deliver the OEM Product
to a
location requested by GEMS-IT within two (2) weeks of Supplier’s receipt of a
returned OEM Product. Within the United States and Canada, customer service
calls will be handled directly by Cardiac Science, and all repaired or replaced
OEM Products must be delivered within two (2) weeks of Supplier’s receipt of a
returned OEM Product. Supplier and GEMS-IT shall work together to ensure
prompt
communication to the other party of all customer communication.
Loaner
Inventory.
Within
thirty (30) days of this Amendment, Cardiac Science shall provide, at no
cost to
GEMS-IT, up to fifteen (15) additional GE Healthcare-branded Responder®
AEDs and/or
AED Pros to be used by GEMS-IT as loaner inventory and to facilitate warranty
exchanges for end users. These units shall be suitably configured with local
languages as per GEMS-IT instructions.
|
In
all cases, freight charges to and from Supplier’s facility for warranty
service and loaner inventory will be paid by Supplier.
|
3
Out
of
Warranty Service. Outside
the United States and Canada, if GEMS-IT requires out of warranty service
from
Cardiac Science, GEMS-IT will xxxx the customer as appropriate per GEMS-IT
policies. GEMS-IT will inform Supplier of the customer issue and will receive
a
RMA from Supplier. GEMS-IT or its customer will return the product to Supplier’s
facility as outlined above.
Supplier will repair and deliver the product to a location requested by GEMS-IT
within two (2) weeks of Supplier’s receipt of a returned OEM Product. Supplier
will xxxx GEMS-IT at a discount to Supplier’s then current service fee schedule,
which service fee schedule shall not exceed the amount Supplier charges (after
discounts) for providing similar services to its own customers. GEMS-IT will
xxxx the customer for the service provided. Within the United States and
Canada,
out of warranty customer service calls will be handled directly by Cardiac
Science, and all repaired OEM Products must be delivered within two (2) weeks
of
Supplier’s receipt of a returned OEM Product. The parties agree that a list of
out of warranty services, including prices and the discount rate described
above, will be added to this Agreement within sixty (60) days of the effective
date of the third amendment to this Agreement, or such later date as is mutually
agreed upon by the parties.
Service
Parts.
Outside
the United States and Canada, if Parts and Accessories are required by either
GEMS-IT or its customers, GEMS-IT will inform Supplier and request direct
shipment of such Parts and Accessories to GEMS-IT or its customer. Supplier
will
xxxx GEMS-IT at a discount to Supplier’s then current service parts schedule,
which service parts schedule shall not
exceed the amount Supplier charges (after discounts) for providing similar
parts
or accessories to its own customers. The parties agree that a list of Parts
and
Accessories, including prices and the discount rate described above, will
be
added to this Agreement within sixty (60) days of the effective date of the
third amendment to this Agreement, or such later date as is mutually agreed
upon
by the parties. Within the United States and Canada, if Service Parts are
requested by a GEMS-IT customer, Supplier may sell such Service Parts directly
to such customer.
Confidentiality
of Customer Information.
Supplier agrees that any
customer-related information obtained by Supplier as a result of its interaction
with a GEMS-IT customer will be deemed to be GEMS-IT’s “Confidential
Information”, and will not be used by Supplier for any commercial reason other
than to fulfill its obligations under this Agreement. For clarity, this
provision shall not prohibit or restrict Supplier in any way from doing business
with, soliciting, transmitting information to, or otherwise soliciting entities
or organizations that happen to be GEMS-IT customers provided that Supplier
has
not obtained the names, addresses and contact information for such entities
or
organizations by reviewing the GEMS-IT Confidential Information.
Quality
Reports.
Supplier will provide, on a monthly basis, a quality assurance report, which
will include a listing of all product related corrective and preventative
action
reports (CAPAs) issued globally for OEM Products or equivalent CSI-branded
devices, and a detailed description of the root cause analysis of the reason
for
the report; notwithstanding the foregoing, Supplier does not need to provide
any
information concerning Powerheart AED G3 automatic or FirstSave AED G3 or
any
other Cardiac Science products that GEMS-IT does not market. Upon request,
Supplier will provide GEMS-IT with additional information on any item that
appears in the quality assurance report and participate in phone calls with
GEMS-IT regarding the same.
Supplier
will provide, on a monthly basis, a report listing all RMAs issued globally
for
OEM Products that have been sold directly or indirectly by GEMS-IT, and a
detailed description of the root cause analysis of the reason for the return.
Supplier shall promptly respond to GEMS-IT’s inquiries regarding RMAs if they
involve GEMS-IT’s customers and the resolution of such RMAs.”
4
7. Section
9.5 is hereby amended by inserting the following sentence at the end of such
section:
“The
prices for such replacement parts, technical support, repair services and
exchange units shall be calculated by adding a reasonable margin to Supplier’s
cost of procuring or producing such parts, support, services and units, and
shall not exceed the amount Supplier charges (after discounts) for providing
similar parts, support, services and units to its own customers. The
parties agree that a list of such items, including prices, will be added
to this
Agreement within sixty (60) days of the effective date of the third amendment
to
this Agreement, or such later date as may be mutually agreed upon by the
parties.”
8. Exhibit
A
is hereby amended by inserting a new paragraph 4 to read as
follows:
“4. Powerheart®
model G3 Pro automated external defibrillator (AED)
to be
produced in GEMS-IT specified coloring and labeled GE Medical Responder® AED
Pro, is a portable battery operated automated external defibrillator that
analyzes a person’s electrocardiogram and advises an operator to deliver an
electric shock(s) to a patient in order to restore normal heart rhythm; and
includes Cardiac Science’s patented STAR® biphasic technology, RHYTHMx®
algorithms and RescueReady® self-testing technology such as one button
operation, pre-connected disposable electrode pads and status indicator.
It also
features manual-override operation, an ECG display, and infrared data
transmission; a rechargeable battery and ECG cable are both
optional.”
9. Exhibit
B
is amended by inserting the following immediately prior to the last sentence
in
such Exhibit, which reads “All prices are in US Dollars (USD)”:
“The
parties agree that if Supplier’s published list prices for the Powerheart AED
G3, Powerheart AED G3 Pro and/or Powerheart CRM are reduced, then Supplier’s
published price to GEMS-IT shall equal *%, *% and *% of the newly reduced
list
price, respectively, effective on the date such list prices are reduced.”
10. Section
5
of Amendment One is hereby deleted in its entirety and replaced with the
following:
“Exhibit
A of the OEM Purchase and Supply Agreement is amended to provide for the
addition of the OEM Products known as the “Powerheart® AED G3” and
*
CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH
COMMISSION.
5
“Powerheart®
AED G3 Pro”. The specifications for these OEM Products are attached hereto as
Exhibit A.
Non-Exclusive
Marketing Rights.
Supplier hereby grants to GEMS-IT
the right to promote, sell and distribute OEM Products, branded
as GEMS-IT Responder® products (in GEMS-IT specified coloring) in accordance
with GEMS-IT’s instructions,
including Parts and Accessories, on a non-exclusive basis, world-wide (excluding
only the country of Japan). During
the Term, for sale limited to the hospital market in the United States and
Canada, at GEMS-IT’s option, the OEM Products may be branded as CSI Powerheart
products or GEMS-IT Responder®.
Formal
Sales Training.
At
mutually agreed locations and at a frequency mutual agreed to by the parties,
Supplier shall provide formal sales training to GEMS-IT representatives.
Each
party shall bear its own costs for any such training.
Field
Sales Support.
During
the Term for the hospital market in the United States and Canada, upon
reasonable request by GEMS-IT and acceptance by Supplier, for which acceptance
will not be unreasonably withheld, Supplier
agrees to assist GEMS-IT
field sales representatives in selling the OEM Products, Parts and Accessories.
Said field support assistance shall be provided by Supplier’s regional sales
managers (or other such qualified Supplier personnel) and be limited to sales
presentations made alongside GEMS-IT representatives to qualified hospital
personnel who have a expressed bona fide interest in purchasing the OEM
Products.”
11. Branding.
Supplier
agrees that the branding on all of Supplier’s non-OEM defibrillator products
that are sold into the hospital market in the United States and Canada,
including without limitation, the Powerheart AED G3, Powerheart AED G3 Pro
and
Powerheart CRM shall remain branded as “Powerheart”, with the Cardiac Science
name or logo. Supplier has the right to
change
the brand name, provide however, that Supplier receives prior written consent
from GEMS-IT, which shall not be unreasonably withheld.
12. Governing
Law.
The
validity, construction, performance and enforceability of this Amendment
shall
be governed in all respects by the laws of the State of New York, without
reference to the choice-of-law provisions thereof.
6
13. Counterparts;
Facsimile.
This
Amendment may be executed simultaneously in multiple counterparts, each of
which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. Execution and delivery of this Amendment by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Amendment
by
such party. Such facsimile copies shall constitute enforceable original
documents.
14. Severability.
In the
event any provision of this Amendment shall be determined to be invalid or
unenforceable under applicable law, all other provisions of this Amendment
shall
continue in full force and effect unless such invalidity or unenforceability
causes substantial deviation from the underlying intent of the parties expressed
in this Amendment or unless the invalid or unenforceable provisions comprise
an
integral part of, or in inseparable from, the remainder of this Amendment.
If
this Amendment continues in full force and effect as provided above, the
parties
shall replace the invalid provision with a valid provision which corresponds
as
far as possible to the spirit and purpose of the invalid provision.
15. Interpretation.
This
Amendment has been negotiated at arm’s length and between persons sophisticated
and knowledgeable in the matters dealt with in this Amendment. Each party
has
been represented by experienced and knowledgeable legal counsel. Accordingly,
any rule of law or legal decision that would require interpretation of any
ambiguities in this Amendment against the party that has drafted it is not
applicable and is waived. The provisions of this Amendment shall be interpreted
in a reasonable manner to effect the purposes of the parties and this
Amendment.
16. Entire
Agreement.
The
terms of this Amendment are intended by the parties to be the final expression
of their agreement with respect to the subject matter hereof and may not
be
contradicted by evidence of any prior or contemporaneous agreement. The parties
further intend that this Amendment constitute the complete and exclusive
statement of its terms and shall supersede any prior agreement with respect
to
the subject matter hereof.
7
17. Headings.
The
article and section headings contained in this Amendment are for reference
purposes only and will not affect in any way the meaning or interpretation
of
this Amendment.
IN
WITNESS WHEREOF, the parties have caused this Amendment to be signed by their
thereunto duly authorized representatives as of the date first above
written.
| Cardiac Science, Inc. | GE Medical Systems | ||
| Information Technologies, Inc. | |||
| By: /s/ Xxxxxxx X. Xxxxx | /s/ Xxxxxxxx Xxxxx | ||
|
|
|
||
|
Name:
Xxxxxxx X. Xxxxx
Title:
Chairman and CEO
|
Name:
Xxxxxxxx Xxxxx
Title:
Vice President & General Manager
Cardiology
Systems
|
8
