ADDENDUM AND MODIFICATION, made this 19th day of May, 1999, to
Distribution and License Agreement, dated the 2nd day of December, 1998 (the
"Agreement"), by and between Medtronic Physio-Control Corporation, formerly
known as Physio-Control Corporation, ("Physio") and Cardiac Science, Inc.
("Cardiac Science").
WITNESSETH:
WHEREAS, pursuant to the Agreement, Physio was (a) appointed as the
exclusive distributor of the Products for sale to the Hospital Market in the
United States and Canada (the "Domestic Territory"), (b) granted a license to
incorporate the Software Technology into any Defibrillator-Monitor
manufactured by or for Physio, which license is exclusive for the Hospital
Market in the Domestic Territory, and (c) issued a warrant ("Warrant") to
purchase 200,000 shares of Cardiac Science common stock at a price of $3.00
per share through November 30, 1999 (the "Expiration Date"); and
WHEREAS, pursuant to the Agreement, Physio's exclusivity as a distributor
of the Products for sale to the Hospital Market in the Domestic Territory is
conditioned upon Physio purchasing a minimum number of Products or Software
Technology (or a combination of both), for sale to the Hospital Market in the
Domestic Territory, following the successful completion (and availability in
commercially reasonable quantities) of Cardiac Science's commercial version
of the Products; and
WHEREAS, pursuant to the Agreement, Physio's exclusivity with respect to
the use of the Software Technology in Defibrillator-Monitors for the Hospital
Market in the Domestic Territory is conditioned upon Physio maintaining its
exclusivity with respect to the sale of Products to the Hospital Market in
the Domestic Territory; and
WHEREAS, Physio and Cardiac Science wish to expand the territory in which
Physio (a) is the exclusive distributor of the Products for sale to the
Hospital Market, and (b) has an exclusive license to use the Software
Technology in Defibrillator-Monitors for the Hospital Market, to include the
United Kingdom (including Northern Ireland and Scotland), Ireland, France,
Germany, the Netherlands, Norway, Finland, Denmark and Sweden (collectively,
the "European Territory"); and
WHEREAS, the parties intend that Physio's exclusivity (a) as a
distributor of the Products for sale to the Hospital Market in the European
Territory be conditioned upon Physio purchasing a minimum number of Products
or Software Technology (or a combination of both), for sale to the Hospital
Market in the European Territory, following the successful completion (and
availability in commercially reasonable quantities) of the commercial, local
language version of the Products, and (b) with respect to the use of the
Software Technology in Defibrillator-Monitors for the Hospital Market in the
European Territory be conditioned upon Physio maintaining its exclusivity
with respect to the sale of Products to the Hospital Market in the European
Territory; and
1
WHEREAS, the parties wish to extend the Expiration Date of the Warrant;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties agree as follows:
1. EXPANSION OF EXCLUSIVE TERRITORY. The territory within which Physio
shall (a) be the exclusive authorized dealer and distributor of the Products
for sale to the Hospital Market, and (b) have the exclusive license to use
the Software Technology in Defibrillator-Monitors for the Hospital Market,
shall include the European Territory in addition to the Domestic Territory.
2. MINIMUM PURCHASES OF PRODUCTS AND SOFTWARE TECHNOLOGY TO RETAIN
EXCLUSIVITY. The following provisions shall be applicable with respect to
Physio retaining exclusivity for (a) the sale of Products to the Hospital
Market, and (b) the use of the Software Technology in Defibrillator-Monitors
for the Hospital Market, in the Domestic Territory and the European Territory.
2.1 SALE OF PRODUCTS - EXCLUSIVITY IN DOMESTIC TERRITORY. The
minimums contained in Section 2.1 of the Agreement for Physio to maintain
exclusivity as a distributor of Products for sale to the Hospital Market in
the Domestic Territory, shall apply only to aggregate purchases of Products
and Software Technology (or a combination of both) for the Domestic Territory.
2.2 SALE OF PRODUCTS - EXCLUSIVITY IN EUROPEAN TERRITORY.
Exclusivity for the sale of Products to the Hospital Market in the European
Territory is conditioned upon Physio purchasing for the European Territory at
least the following minimum number of Products and/or Software Technology (or
a combination of both), following successful completion (and availability in
commercially reasonable quantities) of the commercial version of the Products:
First 12 months 225
Second 12 months 300
Third 12 months 400
Fourth 12 months 550
Fifth 12 months 700
2
2.3 PERIOD TO CURE; CONSEQUENCES OF FAILURE TO CURE. The
provisions of the second and third paragraphs of Section 2.1 of the Agreement
shall apply separately with respect to the minimum purchases required
pursuant to Section 2.1 and Section 2.2 of this Addendum and Modification to
the Agreement. Cardiac Science's right to develop, manufacture and sell
disposable defibrillator parts with a Proprietary Chip embedded in the
connector component thereof compatible with the Products, in the event
Physio's distribution rights have been terminated in accordance with the
third paragraph of Section 2.1 of the Agreement, shall apply separately for
the Domestic Territory and the European Territory.
2.4 SOFTWARE TECHNOLOGY - EXCLUSIVITY. Physio's exclusive license
with respect to the use of the Software Technology in Defibrillator-Monitors
for the Hospital Market in the Domestic Territory as set forth in Section 4.1
of the Agreement, and in the European Territory, as set forth in Section 1 of
this Addendum and Modification to the Agreement, shall be treated as separate
licenses, so that exclusivity for each of the Domestic Territory and the
European Territory shall be dependent upon Physio separately maintaining its
exclusivity with respect to the sale of Products to the Hospital Market in
each such Territory. Accordingly, the reference in Section 4.1.1 of the
Agreement to Section 2.1 shall mean Section 2.1 of the Agreement as modified
by Section 2 of this Addendum and Modification to the Agreement.
3. COST OF DEMO UNITS FOR THE DOMESTIC AND EUROPEAN TERRITORY. Physio
and Cardiac Science agree that Physio may purchase up to 50 Demo Units of the
Products for the Domestic and European Territory at Manufactured Cost.
4. MARKETING SUPPORT FOR EUROPEAN TERRITORY. Cardiac Science, at its
discretion, shall provide the following marketing support for the Products in
the European Territory: professional journal advertising, product literature
translations and production, product and service training, marketing and
sales support at key cardiology and critical care congresses, and direct
marketing campaigns.
5. EXTENSION OF WARRANT EXPIRATION DATE. The Warrant Expiration Date is
hereby extended to November 30, 2000.
6. DEFINITIONS. Unless the context otherwise requires, (a) terms
defined in the Agreement and used herein shall have the same meaning as in
the Agreement, and (b) the term Exclusive Territory as used in the Agreement
shall include the Domestic Territory and the European Territory.
3
7. AGREEMENT IN FULL FORCE AND EFFECT. Except to the extent modified
herein the Agreement remains in full force and effect.
MEDTRONIC PHYSIO-CONTROL CORP. CARDIAC SCIENCE, INC.
By: [ILLEGIBLE] By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------
Title: Executive V.P. Xxxxxxx X. Xxxxx
Title: President & CEO
4
