EXHIBIT 10.3
OEM SUPPLY AGREEMENT
THIS OEM SUPPLY AGREEMENT (the "Agreement") is effective as of April 6, 1998
(the "Effective Date"), and is by and between:
(a) ATL Ultrasound, Inc., a corporation of the State of Washington doing
business as Advanced Technology Laboratories, having a place of business at
00000 Xxxxxxx-Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000 ("ATL"), and
(b) SonoSight, Inc., a corporation of the State of Washington, having a
place of business at Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
("SonoSight").
WHEREAS, ATL will manufacture handheld ultrasound devices for SonoSight for a
certain period of time following the Effective Date.
NOW, THEREFORE, in consideration of the terms and conditions in this Agreement
and of the terms and conditions in the Distribution Agreement between ATL and
SonoSight dated April 6, 1998, the parties agree as follows:
I. DEFINITIONS
1.0 Definitions. As used in this Agreement, the term "Product(s)" shall mean
the self contained highly portable hand carried ultrasonic imaging device having
the preliminary specifications described in Attachment 1.0. (The parties
acknowledge that the Products are still in a state of development and that
complete and final specifications will not be known until final acceptance
testing and clinical trials have been completed. At that time, the preliminary
Product specifications of Attachment 1.0 will be updated upon mutual written
agreement of the parties.)
II. SCOPE OF AGREEMENT
2.0. Exclusive Basis. Upon the Effective Date, ATL will manufacture the
Products exclusively for SonoSight for a period of up to five (5) years under
the terms of this Agreement, unless this Agreement is otherwise terminated under
the terms of this Agreement.
2.1. Attachment Updates. After the parties update the preliminary Product
specifications in Attachment 1.0, ATL will update the preliminary Cost Model in
Attachment 5.1. SonoSight understands that any subsequent updates or changes to
Attachment 1.0 may delay the production or delivery of Products to SonoSight.
III. AGREEMENT ADMINISTRATION
3.0. Agreement Administration. Upon the Effective Date, each party shall
designate an individual who shall be responsible for the administration of this
Agreement on behalf of that party. Any and all inquires related to this
Agreement, or the performance by the parties of their obligations under this
Agreement, including any updates to any Attachment, shall be directed to the
individuals designated by the parties. Each party shall have the right to
replace any individual previously designated by that party upon written notice
to the other party.
IV. CAPITAL EXPENDITURES AND MANUFACTURING EXPENSES
4.0. Capital Expenditures. ATL will incur costs for the purchase of capital
items related to the manufacture of the Products. Unless otherwise agreed upon
by the parties, ATL shall notify SonoSight before it purchases any item expected
to cost more than $2,000. SonoSight shall provide ATL with written approval
before any such item is purchased by ATL. If any item is expected to cost more
than $2,000, the parties shall identify such items as "Unique" or "Non-Unique."
"Unique" items are those items that are unique to the manufacture of the
Products. "Non-Unique" items are those items that may be used and shared by
ATL and SonoSight. All items that cost less than $2,000 shall be deemed Non-
Unique, unless otherwise agreed upon by the parties.
ATL will purchase approved Unique items and invoice SonoSight as ATL incurs such
costs. SonoSight shall reimburse ATL upon its receipt of such an invoice.
Unless otherwise agreed upon by the parties, SonoSight shall own all Unique
items for which it has paid. For all Non-Unique items over $2,000, the parties
shall agree upon ownership prior to ATL's purchase. If the parties agree that
SonoSight will own the Non-Unique item and approval has been given by SonoSight,
ATL will purchase the Non-Unique item and invoice SonoSight as ATL incurs such
costs. SonoSight shall reimburse ATL upon its receipt of such an invoice. If
the parties agree that ATL will own the Non-Unique item, ATL will purchase the
Non-Unique item and factor such costs into the Cost Model of Attachment 5.1.
SonoSight understands that any delay necessitated by the approval and agreement
process under this Section may delay the production or delivery of Products to
SonoSight.
4.1. Care and Removal of Capital Items. Unless otherwise agreed upon by the
parties, SonoSight shall be responsible for the general and preventative
maintenance of all items owned by SonoSight. ATL will provide SonoSight with
such maintenance services under the terms of a separate service agreement.
After the expiration or termination of this Agreement, SonoSight shall receive
all items for which it owns and the parties shall agree upon the removal of such
-2-
items. SonoSight shall be responsible for all costs and expenses related to the
removal of such items including, but not limited to, expenses related to the
repair of ATL's facilities caused by the removal of such items.
4.2. Manufacturing Expenses. ATL will incur manufacturing expenses such as,
but not limited to, indirect labor, direct labor, materials, and non-recurring
engineering expenses ("Manufacturing Expenses"). SonoSight shall be responsible
for all Manufacturing Expenses. ATL will invoice SonoSight for all
Manufacturing Expenses on a monthly basis from the Effective Date until
SonoSight provides ATL with notice that the Product is within ninety (90) days
of final production status (the "Start-up Phase"). After the Start-up Phase is
complete, or if SonoSight elects, until Product production commences, the
Manufacturing Expenses will be factored into the Cost Model of Attachment 5.1 at
a rate of ATL's cost per unit plus twenty percent (20%).
ATL will provide SonoSight with a quarterly budget report of its Manufacturing
Expense projections. ATL and SonoSight will meet on a quarterly basis to review
any Manufacturing Expenses that ATL believes will be greater than ten (10%) of
the Manufacturing Expenses projected in the most recent quarterly budget report.
4.3. Inventory. Product materials purchased by ATL will be treated as a
Manufacturing Expense and will correspond with the Product Volume Projections
described in Attachment 5.0. ATL may purchase Product material under this
Agreement using standard purchasing practices. Unless SonoSight specifies a
vendor for Product materials, ATL will purchase all Product materials from any
ATL approved vendor.
4.4. Prototype/Validation Products. All materials for prototype or validation
Products will be treated as a Manufacturing Expense.
4.5. Use of Common Materials. ATL will attempt, where possible, to use
materials, fixtures and procedures which are common to both ATL products and the
Products. ATL will not charge SonoSight for the costs of any material,
fixtures, and procedures used by ATL for ATL products. Where any such costs are
incurred by ATL which are applicable to both ATL products and Product features,
SonoSight shall reimburse ATL for only the portion of such costs which are
applicable to the Products.
V. PRODUCT QUANTITY, PRICING, PAYMENT, and CHANGES
5.0. Product Quantity. The specific quantity of Products manufactured by ATL
under this Agreement are described in the Product Volume Projections in
Attachment 5.0, which may be updated upon agreement of the parties.
-3-
5.1. Product Pricing. The price of Products manufactured by ATL under this
Agreement are described in the preliminary Cost Model of Attachment 5.1. After
Attachment 1.0 has been updated, ATL shall update the preliminary Cost Model of
Attachment 5.1 as provided in Sections 4.0. and 4.2. ATL and SonoSight shall
meet every three (3) months during the term of this Agreement to review Product
pricing. Unless otherwise agreed upon in writing by the parties, any price
change shall apply only to purchase orders placed after the effective date of
such price change.
5.2. Taxes. The price of Products manufactured by ATL under this Agreement do
not include applicable sales, excise, use, value added, or other taxes, duties,
or fees (including customs duties and broker charges if applicable) in effect or
later levied, which ATL may be required to pay or collect in connection with the
sale of the Products to SonoSight (excluding taxes based upon the income or
gross receipts of ATL). All such taxes, duties, and fees shall be paid by
SonoSight upon receipt of an invoice from ATL.
5.3. Product Payment. Unless otherwise agreed, all Products sold to SonoSight
by ATL under this Agreement shall be invoiced at the time of shipment. Payment
terms are net thirty (30) days of the invoice date. If SonoSight requests that
shipment be made other than F.O.B. ATL's manufacturing facility in Bothell,
Washington, the payment must be in an amount sufficient to pay for any
additional shipping costs. Overdue payments shall be charged interest at the
lesser of twelve percent (12%) per annum, or the maximum permitted by applicable
law.
5.4. Product Changes Notifications. SonoSight may submit Product changes to
ATL in the form of a written Product Change Notification ("PCN"). Each PCN
shall be accompanied by documentation that will enable ATL to implement the
change and to investigate the cost impact of the change. After ATL receives a
PCN and the appropriate documentation, ATL will use reasonable efforts to
prepare a cost impact report within five (5) business days. SonoSight
understands that any PCN may affect the price, production, or delivery of the
Products.
VI. PURCHASE ORDERS
6.0. SonoSight Purchase Orders. Subject to the provisions of Section 6.1,
SonoSight shall tender purchase orders to ATL for purchases under this
Agreement. SonoSight may request that ATL ship specific quantities of Products
on a weekly basis during each month. ATL will respond within two (2) weeks
after receipt of a SonoSight purchase order with estimated shipping schedules
based on shipping dates requested by SonoSight.
-4-
6.1. Controlling Terms. In the event that any documents issued by SonoSight
under this Agreement, including any SonoSight purchase order, contains terms in
addition to, in conflict with, or different than the terms of this Agreement,
the terms of this Agreement shall control. No term or condition in any document
issued by SonoSight shall be applicable to this Agreement unless expressly
agreed to in writing by ATL.
VII. ACCESSORY TESTING
7.0. Accessory Testing. Upon SonoSight's request, ATL will conduct accessory
testing, such as but not limited to VCRs and printers, on the Products prior to
delivery of the Products. Within thirty (30) days of ATL's receipt of a
purchase order under this Agreement, SonoSight shall notify ATL of SonoSight's
desire to have ATL test the Products with any such accessories. After SonoSight
provides ATL with such notice, SonoSight shall, at its own expense, deliver the
required accessories to ATL. SonoSight understands that any delay necessitated
by its delivery of any accessories to ATL for purposes of testing may delay the
production or delivery of Products to SonoSight.
7.1. Return of Accessories. Upon the expiration or termination of this
Agreement, ATL shall return to SonoSight any accessories that were provided by
SonoSight under Section 7.0.
VIII. DELIVERY AND SHIPPING
8.0. Delivery and Shipping. ATL shall deliver Products to SonoSight on the
dates specified by SonoSight in the purchase orders and agreed to by ATL.
Unless otherwise agreed, delivery shall be F.O.B. ATL's manufacturing facility
in Bothell, Washington.
8.1. Non-Standard Shipping. Upon the request of SonoSight and at SonoSight's
expense, ATL shall ship the Products to destinations outside the Seattle,
Washington area by air freight using standard containers defined by SonoSight
for the Products. Risk of loss shall pass to SonoSight upon delivery of
Products to a common carrier by ATL, with freight and other insurance coverage's
obtained per SonoSight's instructions. SonoSight shall be responsible for any
and all costs attendant to such shipment, such as customs charges and insurance.
If SonoSight requests ATL to make shipments outside of the United States,
SonoSight shall be responsible for obtaining any related permits or licenses,
including those required by United States export laws, or any other related
documents and shall bear all cost and expense related in any way to such
permits, licenses, or documents.
IX. INSPECTION, TESTING AND PRODUCT EXCHANGE
-5-
9.0. Inspection and Testing. ATL shall inspect and test every Product before
shipment in accordance with existing ATL standards. ATL shall provide SonoSight
with record of such testing upon SonoSight's reasonable request. At SonoSight's
expense, SonoSight or its duly authorized representative shall have the right
and opportunity to witness such inspection and/or tests, provided that this
right does not delay Product manufacture or shipments. ATL shall make
reasonable arrangements at its facilities for SonoSight to witness such
inspection and/or tests. SonoSight's failure to witness any inspection or test
shall not be a ground for rejection of any Product or shipment.
9.1. Acceptance. SonoSight will be deemed to have accepted the Products
shipped under this Agreement as conforming and undamaged unless SonoSight gives
written notice of such rejection within ten (10) days of Product receipt by
SonoSight (if ATL shipped the Product to SonoSight), or within ten (10) days of
Product receipt by SonoSight's customer (if ATL shipped the Product to
SonoSight's customer).
9.2. Product Warranty. For ninety (90) days from the date of Product shipment,
ATL warrants that the Products shipped by ATL under this Agreement will be free
from defects in material and workmanship. This warranty shall not apply to any
Product subjected to misuse or alteration by SonoSight or its customer.
9.3. Exchange Program. As SonoSight's exclusive remedy under the warranty of
Section 9.2, ATL shall provide a ninety (90) day exchange of faulty or defective
parts in Products delivered under this Agreement. SonoSight shall have the
right to exchange a faulty or defective part to ATL for free replacement,
provided SonoSight notifies ATL that it is returning a part under this exchange
program within ninety (90) days of shipment of the Product. Returns shall
utilize ATL's form for return authorization. Each party shall bear the cost of
parts shipped to the other under this exchange program.
9.4. Definition of Liability. ATL will use reasonable efforts to manufacture
Products for SonoSight in accordance with SonoSight's delivery schedule;
however, with the exception of the warranty provided in this Agreement, ATL will
have no liability to SonoSight or a third party for ATL's performance or non-
performance under this Agreement, or for the performance of any Product
manufactured by ATL under this Agreement.
9.5. Exclusions. EXCEPT FOR THE EXCHANGE PROGRAM OF SECTION 9.3 ABOVE, THE
PRODUCTS MADE AND DELIVERED UNDER THIS AGREEMENT CARRY NO WARRANTIES, EXPRESSED
OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET,
TRADEMARK, TRADE DRESS OR OTHER
-6-
INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY, OR WARRANTY ARISING FROM SAMPLES
PREVIOUSLY SUPPLIED, OR WARRANTY ARISING FROM ATL'S ABILITY TO MANUFACTURE
PRODUCTS BY DATES REQUIRED BY SonoSight. The parties understand and agree that
SonoSight will be performing all sales and after the sale servicing of the
Products it receives under this Agreement.
9.6. Indemnification. The warranty of Section 9.2 is solely for the benefit of
SonoSight, and may be asserted only by SonoSight. SonoSight shall be solely
responsible for any representations or warranties made by SonoSight to any
customer with respect to Products, services or delivery dates. SonoSight shall
defend, indemnify and hold harmless ATL, any subsidiary of ATL, and each of
their respective officers, directors, employees, agents, and representatives
from and against any and all claims, actions, damages, liens, liabilities, costs
and expenses (including, but not limited to, reasonable attorneys fees) arising
out of or in connection with its performance of any of its obligations under
this Agreement, the sale of any Products by SonoSight, or its agents,
representatives, or affiliates, and the performance or non-performance of any
Product (except as otherwise provided in this Agreement).
X. GOVERNMENT APPROVALS, COMPLIANCE WITH LAW AND GMP/QUALITY CONTROL AUDITS
10.0. Government Approvals. SonoSight shall be responsible for obtaining all
necessary governmental approvals and other necessary authorizations for the
promotion, marketing and sale of the Products and spare parts. ATL shall assist
SonoSight in such efforts by providing technical information and data to
SonoSight under the terms of a separate service agreement.
10.1. GMP/Quality Control Audits. ATL will use its reasonable efforts to
manufacture the Products to comply with the standards that ATL uses in the
manufacture of its own products. Upon request and after reasonable notice to
ATL, SonoSight may (a) inspect the storage and quality of parts for the
Products in ATL's facilities, and (b) assure itself of the adequacy and
effectiveness of the quality system applied by ATL. For these purposes,
SonoSight's representative may visit the facilities of ATL, at SonoSight's
expense, during reasonable times to conduct such inspections. During the term
of this Agreement, ATL will provide SonoSight with device history record
configuration documentation for all Products manufactured by ATL.
XI. PRODUCT SUPPORT
11.0. Product Support. Unless otherwise agreed upon by the parties, ATL shall
not provide any Product support to any end-user of the Products or to any
customer of SonoSight. ATL will provide SonoSight with Product spare parts
-7-
and Product repairs. Prices for such Product spare parts and Product repairs are
specified in Attachment 11.0. If SonoSight has no spare parts available, ATL
agrees to use its reasonable efforts to ship spare parts ordered by SonoSight
within 48 hours of its receipt of an order for such parts under the condition
that patient and/or operator safety is involved due to a problem which is solely
attributable to a manufacturing defect of the Product.
ATL shall provide Product spare parts to SonoSight after the date of Product
shipment for as long as ATL has an inventory of such parts. If ATL decides to
cease maintaining an inventory of such parts, it shall extend to SonoSight the
opportunity for SonoSight to make a last time purchase of such parts. If ATL
does not maintain an inventory of a spare part but knows of a third party source
for such part, it will assist SonoSight in arranging for supply of the part to
SonoSight by the third party source.
11.1. Parts Information. Upon SonoSight's request and expense, ATL shall
provide SonoSight with all information in the possession of ATL relating to the
manufacture of the Products including: all information concerning the set-up of
manufacture items for which SonoSight has paid, lists of parts, instructions,
test procedures, and related drawings and approved vendors of such parts for the
Products delivered hereunder.
11.2. Key Parts/Components. ATL shall continue to supply SonoSight with the
key parts/components described in Attachment 11.2 after the expiration or
termination of this Agreement for so long as such parts/components continue to
be made by ATL or continue to be made by an ATL vendor.
XII. MANUALS AND DOCUMENTATION
12.0. Manuals and Documentation. SonoSight shall be responsible for any and
all manuals and documentation for the Products.
XIII. PURCHASE OF DISCONTINUED PRODUCTS AND MATERIALS
13.0. Purchase of Discontinued Products. In the event that a Product or a
material is discontinued, SonoSight agrees to purchase from ATL, at ATL's cost,
(a) all discontinued Products that are finished and in ATL's possession; (b) all
discontinued material inventory, whether in raw form or work in progress, and
not returnable to the supplier or usable by ATL; (c) all discontinued materials
on order that cannot be canceled; and (d) any supplier cancellation or
restocking charges incurred with respect to the cancellation of discontinued
materials. ATL shall use reasonable efforts to cancel all applicable component
purchase orders, reduce component inventory through return for credit programs,
or allocate components for alternate programs if applicable. Notwithstanding
the above, SonoSight shall only purchase from ATL the discontinued Products and
-8-
materials which have been produced or procured by ATL reasonably in accordance
with the Product Volume Projections of Attachment 5.0. Delivery of any Products
or materials purchased by SonoSight under this Section shall be F.O.B. Bothell,
Washington.
13.1. Purchase of Unique Materials. Following delivery of the last Product
produced under this Agreement, SonoSight agrees to purchase from ATL, at ATL's
cost, all remaining materials which ATL possesses that are unique to the
Products. Delivery of such materials shall be F.O.B. Bothell, Washington.
Notwithstanding the above, SonoSight shall only purchase from ATL the remaining
materials which have been procured by ATL reasonably in accordance with the
Product Volume Projections of Attachment 5.0.
XIV. INDEMNIFICATIONS
14.0. Indemnification. SonoSight shall indemnify, defend and hold harmless
ATL, any subsidiary of ATL, and each of their respective officers, directors,
employees, agents, and representatives from and against any and all losses,
claims, actions, damages, judgments, liabilities, costs, and expenses, including
reasonable attorneys fees arising out of or relating to personal injury
(including death), or property damage relating in any way to the Products. The
indemnification will be contingent upon ATL giving SonoSight reasonable notice
of receipt of any claim and allowing SonoSight to assume control of the defense,
compromise, or settlement. The indemnification shall not extend to any losses,
claims, damages, costs or expenses arising out of ATL's negligence, or the
negligence of any third party. This indemnification shall survive the
expiration of this Agreement.
14.1. Intellectual Property Indemnification. SonoSight shall indemnify and
hold harmless ATL, any subsidiary of ATL, and each of their respective officers,
directors, employees, agents, and representatives from any and all liability,
loss, or damage that ATL may suffer as the result of claims, demands, costs, or
judgments by any third party that the Product violates its patent, copyright,
trade secret, trade dress, trademark, or any other intellectual property
right(s). The foregoing indemnification does not apply to any manufacturing
process used by ATL, and not specified by SonoSight, to manufacture the Product.
14.2. Limit of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES INCLUDING,
WITHOUT LIMITATION, LOST PROFITS, IRRESPECTIVE OF THE WAY IN WHICH SUCH DAMAGES
MAY ARISE, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
-9-
XV. CONFIDENTIALITY
15.0. Confidentiality. Any information disclosed by one party to the other
party in connection with the performance of this Agreement, and any other
information designated in writing by the disclosing party as confidential
(collectively, the "Confidential Information") shall be received and maintained
confidential by the receiving party using the same standard of care that the
receiving party uses to protect its own confidential information, but not less
than reasonable care. The Confidential Information may be used by the receiving
party only to perform its obligations under this Agreement, and shall not be
disclosed to a third party without the prior written consent of the disclosing
party. The disclosure of Confidential Information shall be restricted only to
the minimum number of employees of each party requiring access to the
Confidential Information to perform its obligations under this Agreement.
The provisions of this Section 15.0 shall not apply to Confidential Information
which is: (a) already known to the receiving party without an obligation of
confidentiality (it being understood that information of either party in the
possession of the other party prior to the Effective Date shall be covered by
this exception); (b) publicly known or becomes publicly known through no
unauthorized act of the receiving party; (c) rightfully received by the
receiving party from a third party; (d) disclosed to a third party by the
disclosing party without similar restrictions; (e) approved for disclosure by
the disclosing party; or, (f) required to be disclosed pursuant to a requirement
of a governmental agency or by law as long as the receiving party provides to
the disclosing party notice of the requirement prior to any disclosure.
Upon the termination of this Agreement for any reason, each party shall return
to the other party all Confidential Information of the other party, and cease
any further use of the Confidential Information.
XVI. DISPUTE RESOLUTION
16.0. Dispute Resolution. In the event of any dispute or disagreement between
the parties with respect to the performance or non-performance by ATL of any
obligation under this Agreement, the individuals designated by the parties under
Section 3.0, shall meet to resolve the dispute. In the event the individuals
are unable to resolve the dispute to the satisfaction of the parties within
thirty (30) days following the initial meeting of the individuals, SonoSight may
cancel or terminate this Agreement upon ninety (90) days' notice. The
cancellation or termination of this Agreement shall be the sole and exclusive
remedy available to SonoSight resulting from or arising out of the performance
or non-performance of any obligation of ATL under this Agreement.
-10-
XVII. MISCELLANEOUS
17.0. Entire Agreement. This Agreement including the attachments shall
constitute the full, complete, and entire understanding and agreement by and
between the parties with respect to the subject matter in this Agreement, and
supersedes all previous negotiations, commitments, and writings with respect to
the subject matter of this Agreement.
17.1. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Washington.
17.2. Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing, and shall be deemed to have been duly given
(a) on the date of service if served personally on the party to whom notice is
given; (b) on the day of transmission if sent by facsimile transmission to the
facsimile number given below; (c) on the business day after delivery to an
overnight courier service, or the express mail service maintained by the United
States Postal Service; or (d) on the third day after mailing if mailed to the
party to whom notice is to be given, by registered or certified mail, postage
prepaid, properly addressed, and return-receipt requested to the party as
follows:
If to ATL:
Advanced Technology Laboratories
00000 Xxxxxxx-Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxx Xxxx, Xx. Vice President Operations
Facsimile No. (425) 487- 7245
with copy to:
Advanced Technology Laboratories
00000 Xxxxxxx-Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: General Counsel
Facsimile No. (000) 000-0000
If to SonoSight:
SonoSight, Inc.
Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
Facsimile No. (425) ___-____
-11-
Any party may change its address by giving the other party notice of its new
address in the manner set forth above.
17.3. Modification of Agreement. No modification, amendment, or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each of the parties. The modification, amendment, or
waiver shall be effective only in the specific instance and for the purpose for
which given.
17.4. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. This Agreement, and any of the rights, interests, or obligations under
this Agreement shall not be assigned by either party without the prior written
consent of the other party which consent shall not be withheld unreasonably.
17.5. No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties, and is not intended to confer upon any other person any rights
or remedies.
17.6. Titles and Headings. The Section and Article headings in this Agreement
are inserted for convenience of reference only, and are not intended to
constitute a part of or to affect the meaning or interpretation of this
Agreement.
17.7. Attachments. The attachments to this Agreement shall be construed with
and as an integral part of this Agreement to the same extent as if they had been
set forth in full in this Agreement.
17.8. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal, or unenforceable, the enforceability
of the remaining provisions shall not in any way be affected or impaired. It is
the intention of the parties that they would have executed the remaining terms,
provisions, covenants, and restrictions without including any invalid, void, or
unenforceable provisions. In the event that any term, provision, covenant, or
restriction is held to be invalid, void, or unenforceable, the parties agree to
use their best efforts to find and employ an alternate means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant, or restriction.
17.9. No Waiver. The failure by either party at any time to enforce any of the
terms or conditions of this Agreement shall not constitute or be construed as a
waiver of the terms and conditions. Each party expressly reserves the right to
enforce the terms and conditions of this Agreement at any time.
17.10. Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be considered one and the same agreement,
-12-
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other party.
17.11. Force Majeure. No party shall be liable to the other party for any
failure to perform any obligation under this Agreement where such failure is due
to causes beyond the reasonable control of the party. Such causes include, but
are not limited to acts of war, government export controls, other governmental
acts, industrial dispute, lock-out, accident, fire, explosion, transport delays,
acts of a third party, or loss or damage to any equipment. Each party shall use
its best efforts to comply with its respective obligations under this Agreement
despite the intervention or occurrence of any such cause, and to resume
compliance with those obligations as soon as any such cause ceases to affect the
performance of its obligations under this Agreement.
17.12. Term and Termination. The term of this Agreement shall commence on the
Effective Date and continue until terminated as follows:
(a) This Agreement may be terminated in full or in part upon thirty (30)
days written notice:
(i) by SonoSight if ATL materially defaults in the performance of any
of its obligations under this Agreement and fails to remedy such
default to the reasonable satisfaction of SonoSight within such thirty
(30) day notice period; or
(ii) by ATL in the event SonoSight has defaulted in the performance of
any of its obligations under this Agreement, or under any other
agreement by and between ATL and SonoSight, and has not remedied the
default to the reasonable satisfaction of ATL within thirty (30) days
following the receipt of written notice specifying the default; or
(iii) by either party in the event the other party is acquired by or
acquires a competitor of the first party without the written consent
of the first party; or
(iv) upon written notice by either party in the event the other party
becomes insolvent, files for protection under the bankruptcy code,
makes an assignment for the benefit of creditors, has a receiver or
trustee appointed, or is unable to meet its financial obligations as
they come due; or
(v) by either party if SonoSight has no Product orders pending anytime
after its initial Product order, and
-13-
(b) SonoSight may terminate this Agreement in full or in part for any
reason or for no reason upon one hundred and eighty (180) days written notice,
and
(c) ATL may terminate this Agreement in full or in part for any reason or
for no reason after the exclusive five year period has expired.
Sections 14, 15, 16 and 17 shall survive termination of the Agreement. The
termination of this Agreement shall not affect any rights either party has
accrued at the time the termination becomes effective, including SonoSight's
right to conclude sales of Products where the selling process has been initiated
prior to the termination, provided the purchase order for such sale is place
with and accepted by ATL by the date of termination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
ATL Ultrasound, Inc. SonoSight, Inc.
By: _________________________ By: ____________________________
Title: ________________________ Title: ___________________________
Date: _______________________ Date: ___________________________
-14-
ATTACHMENT 1.0
Product Specifications
PCB
Arrays
End Unit
ATTACHMENT 5.0
Product Volume Projections
Q1 1998 -
Q2 1998 -
Q3 1998 -
Q4 1998 -
Q1 1999 -
Q2 1999 -
Q3 1999 -
Q4 1999 -
All SonoSight purchase orders shall fall within the Product Volume
Projections set-forth above; however, the Product quantity and Product
configuration in SonoSight purchase orders may vary as follows:
PRODUCT DELIVERY PERIOD AFTER PERMISSIBLE CHANGE TO PRODUCT VOLUME PROJECTIONS
ATL'SACCEPTANCE OF SONOSIGHT'S
FIRST PURCHASE ORDER:
----------------------------------------------------------------------------------------
30 days No change permitted.
----------------------------------------------------------------------------------------
30 - 90 days Projected Product Volumes may not increase in quantity
unless required materials are available to ATL. A 25%
decrease in the projected Product Volume quantity is
permitted. Product Volume projections shall be
reviewed on a monthly basis.
----------------------------------------------------------------------------------------
3 - 6 months Projected Product Volumes may increase or decrease in
quantity by 25%. Product Volume projections shall be
reviewed on a monthly basis.
----------------------------------------------------------------------------------------
6 - 9 months Projected Product Volumes may increase in quantity by
100% or decrease in quantity by 50%. Product Volume
projections shall be reviewed on a monthly basis.
----------------------------------------------------------------------------------------
9 months and beyond Projected Product Volumes may increase as required or
decrease in quantity by 100%. Product Volume
projections shall be reviewed on a monthly basis.
----------------------------------------------------------------------------------------
BUSINESS DAYS PRIOR TO THE PERMISSIBLE CHANGES TO PRODUCT CONFIGURATION
SHIP DATE SPECIFIED IN A
PURCHASE ORDER
----------------------------------------------------------------------------------------
0 - 5 No change permitted
----------------------------------------------------------------------------------------
6 - 10 25% of shippable Product may be re-configured
dependent on material availability
----------------------------------------------------------------------------------------
11 - 20 50% of shippable Product may be re-configured
dependent on material availability
----------------------------------------------------------------------------------------
For purposes of this Attachment 5.0, permissible Product configuration changes
include, but are not limited to, language configuration changes.
ATTACHMENT 5.1
Cost Model
Standard Cost
Volume Based Upon
Materials, Over Head, Labor
ATTACHMENT 11.0
Product Spare Part and Product Repair Price List
ATTACHMENT 11.2
Key Parts/Components
