THIRD AMENDMENT TO OEM PURCHASE AGREEMENT
Exhibit
10.1
THIRD
AMENDMENT TO OEM PURCHASE 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 Agreement dated July 29, 2003, Amendment
One to OEM Purchase Agreement dated August 10, 2004 (“Amendment One”) and Second
Amendment to OEM Purchase Agreement dated February 14, 2005 (collectively,
the
“OEM Purchase Agreement”).
WHEREAS,
CSI and GEMS-IT desire to supplement and further amend the OEM
Purchase Agreement as
set
forth herein.
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Construction.
Except
as provided in this Amendment, the terms and conditions set forth in the
OEM
Purchase 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 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 Agreement.
This
Amendment amends the OEM Purchase Agreement and not that certain OEM Purchase
and Supply Agreement entered into by the parties on July 29, 2003.
2. Section
1.5 is hereby amended by inserting the following sentence at the end of such
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
1.6 is hereby deleted in its entirety and replaced with the
following:
“Term
of Agreement.
This
Agreement will commence as of the Effective Date and continue until the latter
to occur of: (a) three (3) years after the date of the first delivery to GEMS-IT
by Cardiac Science of the OEM Products capable of commercial resale by GEMS-IT
in the United States and European countries accepting the CE Xxxx (the “First
Delivery Date) or (b) December 31, 2008 (the “Term”), unless terminated earlier
under the terms of this Agreement. If the First Delivery Date has not occurred
prior to December 31, 2005, GEMS-IT may at its option terminate this Agreement.
Renewal
Option.
After
the initial Term, this Agreement may be extended for up to two (2) additional
one-year periods at the option of GEMS-IT, provided that at least two thousand
one hundred and twenty five (2,125) units of OEM Products were purchased in
the
twelve- (12) month period immediately preceding each such additional
period. The parties agree to review and adjust, by mutual agreement
and in
good faith, the pricing of the OEM Products for any such additional periods,
to
take into account any material changes in the component or assembly costs of
the
OEM Products. If the parties are unable to mutually agree on such pricing
adjustment, the supply of OEM Products shall continue unabated, and the pricing
adjustment shall be resolved in accordance with the arbitration provision
contained in this Agreement, which pricing adjustment shall apply to all OEM
Products purchased during the extension.”
4. Section
2.16 is hereby deleted in its entirety and replaced with the
following:
““Parts”
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.”
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5. The
third
sentence of Section 3.4 is hereby deleted in its entirety and replaced with
the
following:
“During
the initial Term, GEMS-IT shall purchase from Supplier a minimum of four hundred
and twenty five (425) units of the OEM Products per calendar quarter (“Quarterly
Minimum Purchase”), commencing with the first full calendar quarter after the
First Delivery Date; provided, that (i) the OEM Products perform in accordance,
and fully comply, with the Specifications and (ii) all regulatory approvals
remain in full effect in accordance with Section 14.3. If any of the above
conditions are not satisfied, then GEMS-IT shall be released from the Quarterly
Minimum Purchase obligations for the quarter(s) in which such conditions are
not
satisfied. Any purchases in excess of one quarter’s Quarterly Minimum Purchase
will count toward the next Quarterly Minimum Purchase obligation that is not
released; therefore, GEMS-IT’s aggregate Quarterly Minimum Purchase requirement
over the initial Term will not exceed five thousand nine hundred and fifty
(5,950) units. If a Quarterly Minimum Purchase obligation is waived or released,
GEMS-IT shall still be entitled to carry forward any purchases in excess of
the
Quarterly Minimum Purchase obligation that would otherwise have been in
effect.”
6. Section
3.5 is hereby deleted in its entirety and replaced with the
following:
“The
Lead
Time for the OEM Products is two (2) weeks for
Order(s) of units of OEM Products that are within one hundred and ten percent
(110%) of the respective Quarterly Minimum Purchase obligation; provided,
however, that for the last four (4) weeks of the quarter, the Lead Time will
be
one (1) week for the remaining amount of the Quarterly Minimum Purchase
obligation.
Supplier will fully support GEMS-IT’s desire to deliver goods to its customers
within seven (7) days of order placement and 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, GEMS-IT will be released from the Quarterly Minimum Purchase for
such quarter.”
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7. Section
9.4.2 is hereby deleted in its entirety and replaced with the
following:
“Customer
and Warranty Service. Outside
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 OEM Product
for repair or replacement to Supplier’s facility in Minnetonka, MN or the then
current repair facility location, unless however, the repair is determined
by
the parties to be minor in nature, whereby based on the mutual agreement of
the
parties, qualified GEMS-IT service personnel may affect the minor repair on
behalf of Supplier. In such instances, Supplier shall provide the replacement
parts at no cost to GEMS-IT and GEMS-IT shall not charge Supplier any fee for
facilitating the repair. The parties agree to work together subsequent to the
launch of the OEM Product to define which minor repairs may be facilitated
by
GEMS-IT and to more precisely determine the parameters of the collaboration.
In
all other instances, 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 receipt of FDA clearance of the OEM Product, Cardiac Science
shall provide, at no cost to GEMS-IT, eighteen (18) OEM Products 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.
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 shall 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.
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Service
Training.
Within
the first year after the launch of the OEM Product, Supplier agrees conduct,
at
no cost to GEMS-IT, two (2) service training sessions at mutually agreed upon
date(s) in order to train qualified GEMS-IT service personnel to provide
post-warranty repair of OEM Products. Said training shall be conducted at
Supplier’s premises and the parties shall each bear its own travel costs. After
the initial year, Supplier agrees to conduct an annual service training session
at a mutually agreed upon location and date.
Service
Parts.
Outside
the United States and Canada, if Parts are required by either GEMS-IT or its
customers, GEMS-IT will inform Supplier and request direct shipment of such
Parts 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 to its own customers. The parties agree that a list of Parts,
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.
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 (regardless of brand), and a detailed
description of the root cause analysis of the reason for the report. 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, and a detailed description of the root cause analysis of the
reason for the return. Supplier shall promptly respond to GEMS-IT’s reasonable
inquiries regarding such RMAs and, if they involve GEMS-IT’s customers, the
resolution of such RMAs.
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Confidentiality
of Customer Information.
Supplier
agrees that any customer-related information obtained by Supplier as a result
of
its interaction with GEMS-IT customers 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 restrict Supplier in any way from doing business with,
from transmitting information, 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.”
8. 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 shall be mutually agreed upon by the
parties.”
9. Section
14.3 is hereby amended by inserting the following sentence after the sentence
“Supplier shall be responsible for providing all necessary objective evidence
and other documentation to GEMS-IT to support these filings.”:
“Supplier
shall provide GEMS-IT Regulatory Affairs with any proposed submission to the
US
Food & Drug Administration, no less than five (5) working days prior to the
proposed submission date, in order for GEMS-IT Regulatory Affairs to review
and
revise any such proposed submission with the intention of uncovering any errors
or omissions which might cause a delay in approval. Supplier shall consider
revising its proposed submissions to include any reasonable revisions that
GEMS-IT Regulatory Affairs shall make to any such submissions, but shall have
no
obligation to do so.”
10. Exhibit
C
is hereby amended by replacing “Responder 2000” with “OEM Products” each time
“Responder 2000” appears. The parties agree that the Exhibit C attached to
Amendment One is the Exhibit C in effect at the time of this
Amendment.
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11. The
portion of Exhibit C that begins “Each Responder 2000 defibrillator package
includes:” is hereby deleted in its entirety and replaced with the
following:
“Each
OEM
Product package includes:
| · | One OEM Product, one pair of defibrillation paddles, one rechargeable battery, one power cord and one user manual. |
| · |
Upon
request of GEMS-IT, Supplier agrees that certain additional items,
including without limitation patient cables, electrodes and Sp02
sensors,
will be kitted together with the OEM Product for an additional charge
of
two hundred and fifty dollars ($250) per package kitted. For example,
Supplier’s kitting an order for one Powerheart ECD package (which includes
one defibrillator, one user manual, one battery, & one power cord)
shall entitle Supplier to a fee of $250—regardless of the value of the
additional accessories to be shipped along with this one ECD package.
Supplier may purchase such additional items from GEMS-IT’s accessory
suppliers at the same prices at which GEMS-IT is entitled to purchase.
Supplier will transfer these accessories to GEMS-IT with no xxxx-up.
At
its sole discretion, GEMS-IT may choose to take over this kitting
responsibility from Supplier after first giving Supplier ninety (90)
days
notice of its intent.”
|
12. Exhibit
C
is hereby amended by inserting the following immediately below the Quantity
Purchase Volume schedule:
“Volume
discounts shall be determined by aggregating all purchases made by or through
GEMS-IT, its Affiliates or distributors, regardless of how such OEM Products
are
branded. The parties agree that the charges on all invoices for OEM Products,
regardless of the volume actually purchased, will remain at the pricing for
the
initial 1,000 units of an OEM Product, and within thirty (30) days following
the
end of any calendar year (including the year following the expiration of the
Term), Supplier will provide Purchaser with a written accounting of the
purchasing volume for all OEM Products as well as immediate payment to GEMS-IT
for any discounts earned during the previous year. GEMS-IT will then have the
opportunity to provide a written response to Supplier of whether it agrees
or
disagrees with such accounting; acceptance of the immediate payment shall not
be
construed as agreement with Supplier’s conclusions.”
13. Section
7
of Amendment One is hereby amended by deleting the following words from the
fourth sentence of the first paragraph: “in the United States and
Canada”.
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14. Section
7
of Amendment One is hereby amended by inserting a new subsection (d) to read
as
follows:
“(d) If
CSI
receives a request for OEM Products or Parts (provided, however, that this
shall
only be read as Supplies and Accessories in the United States and Canada),
CSI
will refer the request to GEMS-IT to provide such OEM Products or Parts.”
15. 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 ECD, 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.
16. 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.
17. 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.
18. 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.
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19. 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.
20. 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.
21. 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.
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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 | By: /s/ Xxxxxxxx Xxxxx | ||
|
|
|
||
|
Name:
Xxxxxxx X. Xxxxx
Title:
Chairman and CEO
|
Name:
Xxxxxxxx Xxxxx
Title:
Vice President & General Manager
Cardiology
Systems
|
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