Exhibit 10.1
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
ADDENDUM 3
OEM Development and Purchase Agreement
Addendum 3 to the agreement dated the 6th day of August, 1999 (the "Agreement"),
by and between Aspect Medical Systems, Inc. ("Aspect") and Philips Medizin
Systeme Boeblingen GmbH ("Philips") (formerly Hewlett-Packard GmbH).
Now, therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the undersigned agree as follows:
1. Capitalized terms used herein and otherwise not defined have the
meanings ascribed to such terms in the Agreement.
2. The following definition is added to Section 2. Definitions:
"BIS Ready" means a BIS port standard on all systems ready to accept
a BISx System, with BIS software installed on host monitor. If a
dedicated BIS port is not utilized, then at least one
multi-connector port must be available on a system in order for that
system to qualify as "BIS Ready".
"BISx System" means the integrated product developed and
manufactured by Aspect and combining the functions of the former HP
BIS Engine and the DSC. The BISx System includes a patient interface
cable and a host monitor cable for Philips patient monitors.
3. Section 7 (a), Purchase Prices and 7 (b), Purchase Price Changes,
are replaced with the following:
"7. PRICES.
(a) Purchase Prices. The prices of Aspect Products purchased
by Philips hereunder (the "Purchase Prices") which are
ordered during the term of the Agreement shall be as set
forth in Exhibit A (Aspect Products and Purchase
Prices), dated February 6, 2006, as attached to Addendum
3 to the Agreement."
(b) Purchase Price Changes. In consideration of the market
situation and after consultation with Philips, the
Purchase Prices set forth in Exhibit A (Aspect Products
and Purchase Prices) will be reviewed 12 months after
first delivery of production units and annually
thereafter. Aspect must give Philips written notice of
such increase not less than 90 days prior to the date
upon which the increased Purchase Price is to
PAGE 1/8 ADDENDUM 3, FEBRUARY 3, 2006
become effective. No Purchase Price increase shall apply
to Orders for Aspect Products accepted by Aspect prior
to or during such 90-day period which are to be
delivered within 90 days of the date of such notice.
Any price increase will be subject to the following:
(i) In the event that the materials cost for the Aspect
BIS Module Kit and/or BISx System increases by more than
[**]%, Aspect shall have the right no more than once a
year during the term of this Agreement to increase the
Purchase Price of the Aspect BIS Module Kit and/or BISx
System by an equivalent amount.
(ii) In the event that Philips introduces a directly
competitive product to the BISx System (i.e. any
parameter that Philips claims to be a measure of the
hypnotic effect of anesthesia, and other than through
interfacing a third party standalone device through an
interface port), Aspect shall have the right to increase
the Purchase Price of the BISx System to a level that is
no higher than the prices for similar systems at similar
quantities and based on similar terms and conditions
granted to any other party that has entered into a
similar agreement with Aspect ("Not-To-Exceed Purchase
Price"). If Aspect increases its prices pursuant to this
paragraph (ii) then Philips may cease to market its
patient monitors as BIS Ready.
4. For the purpose of calculating the volume discount for the BISx
System for a given calendar year, all new Aspect BIS Module Kits and
BISx Systems purchased and shipped during that calendar year will be
included in the total volume discount calculation.
The initial pricing for a given calendar year is based on the total
volume of new Aspect BIS Module Kits and BISx Systems purchased in
the prior calendar year (whether for new product sales or as spare
parts or as replacement parts). For example, if total number of new
Aspect BIS Module Kits and BISx Systems were purchased in year 1
equivalent to [**]% of total Philips monitoring systems, the initial
volume pricing level for year 2 will be the [**]% unit level.
If a higher volume level is achieved during a given calendar year,
the price on purchases made after achieving the higher volume level
will reflect the price associated with the appropriate volume level
achieved. All price adjustments are proactive and no credit will
apply retroactively to units purchased prior to achieving the volume
break point. For example, if midway through year 1, total number of
new BIS Module Kits and BISx
PAGE 2/8 ADDENDUM 3, FEBRUARY 3, 2006
Systems purchased exceeded 25% of total Philips monitoring systems
shipped, the price on subsequent units will reflect the next volume
break. Achieving this higher volume level, however, will define the
initial pricing for the following year.
5. For the purpose of calculating the volume discount for the
Disposable BIS Sensors for a given calendar year, all Disposable BIS
Sensors and Semi Reusable Sensors purchased and shipped during that
calendar year will be included in the total volume discount
calculation.
The initial pricing for a given calendar year is based on the total
volume of Disposable BIS Sensors and Semi Reusable Sensors purchased
in the prior calendar year. For example, if the [**] Disposable BIS
Sensors and Semi Reusable Sensors were purchased in year 1, the
initial volume pricing level for year 2 will be the [**] unit level.
If a higher volume level is achieved during a given calendar year,
the price on purchases made after achieving the higher volume level
will reflect the price associated with the appropriate volume level
achieved. All price adjustments are proactive and no credit will
apply retroactively to units purchased prior to achieving the volume
break point. For example, if midway through year 1, total number of
Disposable BIS Sensors and Semi Reusable Sensors purchased
exceeded[**], the price on subsequent units will reflect the next
volume break. Achieving this higher volume level, however, will
define the initial pricing for the following year.
6. All other terms and conditions in Section 7 (Prices) of the
Agreement remain in effect.
Please indicate your acceptance of this Addendum 3 by signing below.
Aspect Medical Systems, Inc. Philips Medizin Systeme Boeblingen GmbH
By: /s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
------------------------------- --------------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxxx Xxxxx
Title: CFO Title: Global Sourcing Manager
By: By: /s/ Xxxxxx Xxxx
_______________________________ _______________________________
Name: Name: Xxxxxx Xxxx
_______________________________
Title: Title: Managing Director
_______________________________
PAGE 3/8 ADDENDUM 3, FEBRUARY 3, 2006
ADDENDUM 3
EXHIBIT A
ASPECT PRODUCTS AND PURCHASE PRICES
EFFECTIVE SEPTEMBER 1, 2004
A) ASPECT BIS MODULE KIT:
PRODUCT ASPECT PART NUMBER PHILIPS PART NUMBER
------------------ ------------------- -------------------
DSC-XP (incl. PIC) 186-0155-PH M1034-60102
BIS Engine 186-0162-PH M1034-60105
Aspect OEM List Price for Aspect BIS Module Kit (US$): $1,500.00 (exclusive of
royalty).
Volume discounts:
HP BIS
DSC-XP ENGINE ASPECT BIS
QUANTITY PURCHASE PURCHASE MODULE KIT
PER YEAR PRICE PRICE PURCHASE PRICE
-------- ------- -------- --------------
[**] $[**] $[**] $ [**]
[**] $[**] $[**] $ [**]
[**] $[**] $[**] $ [**]
Royalties are based on the cumulative number of Aspect BIS Module Kits sold
(US$):
CUMULATIVE QTY ROYALTY
-------------- -------
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
The total purchase price for Aspect BIS Module Kits for new product sales is the
sum of the Aspect BIS Module Kit Purchase Price (based on the number of units
purchased per year) and the royalty (based on the cumulative number of units
purchased).
Philips will be responsible for providing Aspect with documentation, on a
quarterly basis, of the total number of Aspect BIS Module Kits and BISx Systems
sold in each country. In North America, Philips will provide Aspect with the
total number of Aspect BIS Module Kits and BISx Systems installed in the quarter
just ended, the locations of such Aspect Products and the dates of installation.
PAGE 4/8 ADDENDUM 3, FEBRUARY 3, 2006
B) BISX SYSTEM:
PRODUCT ASPECT PART NUMBER PHILIPS PART NUMBER
----------- ------------------ -------------------
BISx System 186-0195-PH M1034-60021
Aspect OEM List Price for BISx System (US$): $[**] (inclusive of royalty).
Volume discounts (total combined Aspect BIS Module Kits and BISx Systems sold
WW):
% OF TOTAL SYSTEMS
% OF TOTAL SHIPPED WITH BIS
SYSTEMS (BIS MODULE KIT OR BISX SYSTEM NOT-TO-EXCEED
BIS READY BISX SYSTEM) PURCHASE PRICE PURCHASE PRICE
---------- ------------------ -------------- --------------
[**]% [**]% $[**] $[**]
[**]% $[**] $[**]
[**]% $[**] $[**]
[**]% [**]% $[**] $[**]
[**]% $[**] $[**]
[**]% $[**] $[**]
[**]% [**]% $[**] $[**]
[**]% $[**] $[**]
[**]% $[**] $[**]
- The percentage of monitors shipped as BIS Ready is with reference to
all patient monitors under control of the Philips Patient Monitoring
organization which are addressing market segments where BIS may be
required, i.e. monitors that are available with BIS as an option as
well. This currently includes in particular the entire IntelliVue
family (low to high end), CMS, and V24/V26. It does not include the
M3/M4 monitors from Patient Monitoring, and the C3, A1, VS1, or
other patient monitors, which are aimed at other market segments
(non-anesthetizing locations, simple xxxxx xxxxx or spot check
monitors) and/or are not controlled by the Philips Patient
Monitoring organization.
- A modular Philips monitor (currently, IntelliVue models MP40, MP50,
MP60, MP70, MP90, CMS, V24, V26) is BIS Ready as is if it doesn't
need a hardware or software upgrade in the monitor when the customer
orders a BISx System. The required BIS software is integral part of
each monitor shipped. Philips will provide one BIS interface module
ordered together with each BISx System at no extra cost compared to
the BISx System alone (if the customer orders additional BIS
interface modules alone, these will be regularly priced)
- A configured monitor (currently, IntelliVue models MP20, MP30) is
BIS Ready as is if it doesn't need a hardware or software upgrade in
the monitor itself in order to measure BIS. In terms of hardware,
the MP20, MP30 just needs a BIS interface card to be put into one of
the monitor's I/O slots. This just requires a
PAGE 5/8 ADDENDUM 3, FEBRUARY 3, 2006
standard screwdriver, and can be easily done by a biomed or
technician without opening the monitor case, and no safety or other
test needs to be done in performance of this task. Installing the
BIS interface card is therefore not considered a hardware upgrade.
Philips will provide one BIS interface card ordered together with
each BISx System at no extra cost compared to the BISx System alone
(if the customer orders the BIS interface card (e.g.) as an option
to the MP20/MP30 monitor without ordering a BISx System at the same
time the interface card will be regularly priced).
- Pricing is based on volume of "% of Total Systems Shipped with BIS"
and "% of Total Systems BIS Ready" except as follows:
o Discount for "% of Total Systems BIS Ready" takes effect upon
commencement of shipment of systems that meet this criterion.
Philips must document the percentage of systems in a letter to
Aspect. Upon receipt of the letter, Aspect will reduce the
Purchase Price of future BISx Systems, including those ordered
but not yet shipped, to the appropriate "% of Total Systems
BIS Ready" level.
o After availability of an appropriate label from Aspect,
qualification for the [**] "% of total systems BIS Ready" will
also require that all systems to be counted as BIS Ready have
a "BIS Ready" label of mutually agreed upon design included in
the shipment. It is not required to place the label on the
system. Philips must confirm the inclusion of this label in a
letter to Aspect upon commencement of shipment of systems with
this label. Upon receipt of the letter, Aspect will reduce the
Purchase Price of BISx Systems ordered in the future and of
those BISx Systems ordered but not yet shipped by Aspect, to
the appropriate "% of Total Systems BIS Ready" level.
The initial Purchase Price for BISx Systems, effective September 01, 2004, is
$[**], assuming "% of Total Systems BIS Ready" to be [**]%, and "% of Total
Systems Shipped with BIS" to be [**]%, based on Philips' presentation of current
shipment status.
- Philips will be responsible for providing Aspect with documentation,
on a quarterly basis, of the total number of BISx Systems sold in
each country. In North America, Philips will provide Aspect with the
total number of BISx Systems installed in the quarter just ended,
the locations of such BISx Systems and the dates of installation.
PAGE 6/8 ADDENDUM 3, FEBRUARY 3, 2006
C) BIS SENSORS:
DISPOSABLE BIS SENSORS
Aspect OEM List Price for disposable BIS Sensors: $[**]
SENSOR PURCHASE VOLUME PURCHASE PRICE PER SENSOR
--------------------- -------------------------
[**] $[**]
[**] $[**]
[**] $[**]
[**] $[**]
Disposable BIS Sensors and part numbers include:
SENSOR ASPECT PART NUMBER PHILIPS PART NUMBER
------------------------- ------------------ -------------------
BIS Sensor 186-0100 APB60100
BIS Quatro Sensor 000-0000-00 M1997A
BIS Pediatric Sensor 186-0110 M1998A
BIS Pediatric Sensor (XP) 186-0200-PH 989803143581
SEMI REUSABLE SENSOR SYSTEM
The Semi Reusable Sensor (SRS) System includes (**) Reusable Cable and (**)
Disposable Electrodes.
ASPECT OEM
ORDERABLE ASPECT PART PHILIPS PART LIST PRICE PURCHASE PRICE
PARTS/PRODUCTS NUMBER NUMBER (US$) (US$)
-------------- ----------- ------------ ---------- --------------
SRS System 186-0164-PH M4615A [**] [**]
BIS Dispenser 186-0197-PH 989803143961 [**] [**]
Holder
SENSOR START-UP KIT
The Sensor Start-up Kit contains 5 BIS Quatro Sensors.
ASPECT PART PHILIPS PART PURCHASE PRICE
ORDERABLE PARTS/PRODUCTS NUMBER NUMBER (US$)
------------------------ ---------- ------------ --------------
BIS Sensor Start-up Kit 186-0150-PH M1034-61651 [**]
PAGE 7/8 ADDENDUM 3, FEBRUARY 3, 2006
D) ASPECT SPARE PARTS/ACCESSORY PRICES
ASPECT
ORDERABLE ASPECT PART PHILIPS PART LIST PRICE PURCHASE PRICE
PARTS/PRODUCTS NUMBER NUMBER (US$) (US$)
---------------- ----------- ------------ ---------- -------------------
DSC-XP M1034-68102 [**] Same as volume
(exchange) discount price for
new DSC-XP as
specified in
Section (A)
BIS Engine M1034-68520 [**] Same as volume
(exchange) discount price for
new BIS Engine as
specified in
Section (A)
BISx System 186-0146-PH M1034-68521 [**] Same as volume
(exchange) discount price for
new BISx System as
specified in
Section (B)
PIC Cable 186-0131 M1034-61630 [**] [**]
(exchange)
Sensor Simulator [**] [**]
User Manual [**] [**]
Host Cable 175-0051 M1034-61660 [**]
Bulkhead 175-0052 M1034-47600 [**]
Connector
Rack Mount 186-0132 M1034-41200 [**]
PAGE 8/8 ADDENDUM 3, FEBRUARY 3, 2006
