Exhibit 10.13
DISTRIBUTION / SUPPLY AGREEMENT
THIS DISTRIBUTION / SUPPLY AGREEMENT (the "Agreement") is made and entered
into as of the 8TH day of SEPTEMBER 1997, between ENDOCARDIAL SOLUTIONS, INC.
(as defined below, "ESI"), a Minnesota corporation, and MEDTRONIC, INC. (as
defined below, "Medtronic"), a Minnesota corporation.
WITNESSETH:
WHEREAS, ESI manufactures and distributes diagnostic and mapping systems
for the treatment of ventricular and atrial arrhythmias; and
WHEREAS, Medtronic manufactures and distributes devices and systems which
treat ventricular and atrial arrhythmias; and
WHEREAS, ESI and Medtronic desire to provide Medtronic with certain rights
to distribute ESI's systems within agreed upon territories; and
WHEREAS, the parties desire to enter into this Agreement for that purpose.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained herein, and for other valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties mutually
agree as follows:
ARTICLE I
DEFINITIONS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following terms
have the meanings set forth or referenced below:
"AFFILIATE" of a specified person (natural or juridical) means a person
that directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. "Control"
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting power in the case of a business entity other than a corporation.
"ESI" means Endocardial Solutions, Inc. and its Affiliates.
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"CONFIDENTIAL INFORMATION" means know-how, trade secrets and other
unpublished or proprietary information disclosed (whether before or during the
term of this Agreement) by one of the parties (the "disclosing party") to the
other party (the "receiving party") or generated under this Agreement, excluding
information which:
(a) is now or comes to be in the public domain through no fault of the
receiving party;
(b) is released without restriction to the receiving party by the
disclosing party in writing;
(c) is lawfully obtained by the receiving party from third parties;
(d) can be demonstrated by competent proof to have been known by the
receiving party prior to any disclosure of Confidential Information by the
disclosing party;
(e) has been in the possession of the receiving party, as a result of
disclosure under this Agreement, for a period of five (5) years; or
(f) is required by law to be disclosed, provided that the receiving party
has given the disclosing party prompt written notice of such disclosure
requirement and has cooperated with the disclosing party so that the disclosing
party may seek a protective order or other appropriate remedy to avoid or limit
such disclosure.
All Confidential Information disclosed by one party to the other under this
Agreement shall be in writing and bear a legend "Proprietary," "Confidential" or
words of similar import or, if disclosed in any manner other than writing, shall
be preceded by an oral statement indicating that the information is Company
proprietary or confidential, and shall be followed by transmittal of a
reasonably detailed written summary of the information provided to the receiving
party with identification as Confidential Information designated as above within
thirty (30) days.
"FIELD OF USE" means diagnostic and mapping procedures for ventricular and
atrial arrhythmias.
"INTELLECTUAL PROPERTY" means all patents, trade names, trademarks, service
marks, copyrights and applications or registrations for any of the foregoing,
inventions, discoveries, know-how, trade secrets, data, information, technology,
processes, formulas, drawings, designs, computer programs, licenses, and all
amendments, modifications, and improvements to any of the foregoing.
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"MEDTRONIC" means Medtronic, Inc. and its Affiliates.
"MEDTRONIC COMPETITORS" means those entities set forth on the attached
Schedule 1.1 engaged in the manufacture or sale of devices or systems that are
marketed to the same class of persons (e.g., electrophysiologists, cardiologists
and cardiac surgeons) to whom Medtronic markets the Systems.
"MEDTRONIC TERRITORIES" means those countries included within Medtronic's
currently designated "Europe" and "Japan" sales regions as more fully described
on Schedule 1.2 hereto.
"NORTH AMERICA" means The United States of America and Canada, including
all territories and possessions thereof.
"SPECIFICATIONS" means the current specifications for the Systems, as may
be amended from time to time hereafter by ESI.
"SYSTEMS" means ESI's current and future capital equipment and software
systems designed and used for diagnosing and mapping ventricular and atrial
arrhythmias, including without limitation the current and future Ensite 3000
systems, Ensite catheters and all other disposable and reusable catheters.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof," "herein," and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provisions of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) References to a "Schedule" are, unless otherwise specified, to one of
the Schedules attached to or referenced in this Agreement, and
references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles or Sections of this Agreement.
(d) The term "person" includes any individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
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(e) The term "Dollars" or "$" shall refer to the currency of the United
States of America.
(f) The term "knowledge" means actual knowledge of a fact or the knowledge
which such person or its officers or employees could reasonably be
expected to have based on reasonable investigation and inquiry.
(g) All references to time shall refer to Minneapolis, Minnesota time.
ARTICLE 2
MEDTRONIC AS DISTRIBUTOR IN EUROPE AND JAPAN
2.1 APPOINTMENT.
(a) Subject to commencement of the term of this Agreement as set forth in
Article 5.1, ESI hereby appoints Medtronic, and Medtronic hereby accepts
appointment, as ESI's exclusive distributor, with the right to sell and
distribute the Systems in the Field of Use in the Medtronic Territories. ESI
represents and warrants to Medtronic that all other distributorship agreements
or sales representative agreements, if any, written or oral, with any third
party permitting the sale of Systems in the Field of Use in the Medtronic
Territories have been terminated at ESI's sole cost and expense.
(b) Medtronic may appoint subdistributors for the sale or distribution of
Systems in the Field of Use in the Medtronic Territories, and will provide to
ESI a list of such subdistributors from time to time. Notwithstanding such
appointment of subdistributors, Medtronic shall remain fully responsible for the
performance of all of its covenants and obligations hereunder, and any sales by
ESI to such Medtronic subdistributors shall be billed by ESI to Medtronic
directly.
(c) ESI shall promptly forward to Medtronic all leads for sales of Systems
in the Field of Use in the Medtronic Territories.
(d) During the term of Medtronic's distribution rights pursuant to this
Article 2. Medtronic shall not market or sell products which compete with the
Systems, as defined herein, in the Medtronic Territories.
2.2 REGULATORY APPROVALS.
(a) Medtronic will assist ESI in obtaining all necessary government or
regulatory approvals which are a prerequisite to the commercial sale of the
Systems in the Field of Use in the Medtronic Territories, provided that ESI
shall remain
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responsible for all costs associated with obtaining such government or
regulatory approvals.
(b) In Europe, ESI will be responsible for gaining, at ESI's cost and
expense and in ESI's name, the CE Xxxx under the appropriate Medical Device
Directive. Medtronic shall act as the ESI authorized representative in the
Medtronic Territories and Medtronic will be responsible for all dealings with
the appropriate Competent Authority such as Notification, Medical Device
Vigilance and national labeling issues, provided that translation and
preparation of such labels are subject to final review and verification by ESI,
and further provided that ESI will bear final legal responsibility for the
content of all its own labeling. For purposes of this Section 2.2, labeling
shall include labels, instructions for use, operating manuals, service and
maintenance manuals and promotional materials.
(c) Upon receipt of any notices of an adverse event from competent
authorities, Medtronic shall promptly inform ESI (and provide copies of all such
correspondence), and ESI in conjunction with Medtronic shall agree to the
appropriate disposition of such event.
2.3 PRICING.
(a) During the term of this Agreement, Medtronic will purchase the Systems
from ESI at the prices set forth in Schedule 2.3. At least six (6) months prior
to the second anniversary of this Agreement and annually thereafter, the parties
agree to negotiate any adjustments to the prices for the next one-year term
renewal. The following factors will be considered as the criteria for
determining any price adjustments;***/ If the parties cannot agree on a price,
the matter shall be submitted to arbitration pursuant to Article 9.15.
(b) Medtronic shall be entitled to purchase from ESI a reasonable number
of demonstration Systems, as mutually determined by ESI and Medtronic, at a
price equal to ESI's fully burdened manufacturing cost for a System, excluding
catheters which shall be purchased at the price set forth in Schedule 2.3,
reasonably determined in accordance with generally accepted accounting
principles (excluding freight, duties and customs, and any extraordinary
start-up costs). Such reasonable number of demonstration Systems shall be
consistent with the number of Medtronic "sales specialists" that Medtronic hires
to demonstrate and sell the Systems in the Medtronic Territories and shall in no
event be resold by Medtronic.
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***/ Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933.
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ESI may provide refurbished Systems for this purpose, however any refurbished
Systems shall be warranted and certified to be in new condition.
(c) (i) During the first two (2) years of this Agreement, payments made
by Medtronic for Systems purchased for resale by Medtronic pursuant to
Article 2.3(a) shall be due and payable in full within sixty (60) days
after the date of invoice by ESI. Any unpaid balance shall bear
interest at the rate of ***/ percent (***%) per month.
(ii) Within ninety (90) days prior to the third year of this
Agreement, the parties will review and mutually agree on payment terms
for the remaining term of the Agreement, which shall not be less than
forty-five (45) days or more than sixty (60) days. The parties will
consider such factors as customer payment practices within the
Medtronic Territory, cash flows, foreign currency, consignment
policies, etc. All payments will be in U.S. dollars, regardless of
the place of service or delivery.
(iii) Payments made by Medtronic for demonstration Systems shall be
due and payable in full within thirty (30) days after the date of
invoice by ESI. Terms shall be F.O.B. ESI's manufacturing facility
(currently in St. Xxxx, Minnesota).
(iv) Freight, duties and handling will be paid by Medtronic U.S. to
Kerkrade, The Netherlands or such other destinations designated by
Medtronic.
(d) ESI shall ensure the prices charged to Medtronic for the Systems and
disposable catheters shall be no less favorable than that price charged to other
distributors of the Systems in the Field of Use outside of the United States.
2.4 INSPECTION AND WARRANTY.
(a) In the event of any shortage, damage or discrepancy in or to a
shipment of Systems or in the event any of the Systems fail to comply with the
then current Specifications for the Systems, Medtronic shall report the same to
ESI and furnish such written evidence or other documentation as ESI reasonably
may deem appropriate. If the substantiating evidence delivered by Medtronic
demonstrates that such shortage, damage or discrepancy or non-conformity with
Specifications
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***/Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933.
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existed at the time of delivery of the Systems at the F.O.B. point, Medtronic
may return the Systems to ESI at ESI's expense, and at Medtronic's request ESI
shall use all reasonable efforts to promptly deliver replacement Systems to
Medtronic in accordance with the delivery procedures set forth herein.
(b) ESI represents and warrants to Medtronic that all Systems sold and
delivered to any account under this Agreement will have been manufactured, if
required by law, in accordance with FDA Good Manufacturing Practices, European
Medical Device Directive requirements, ISO 9000 series certification, and all
other applicable manufacturing requirements, and that continually during the
term of this Agreement no Systems delivered by ESI to Medtronic or to any
Medtronic account shall be adulterated or misbranded at the time of delivery
within the meaning of the U.S. Food, Drug and Cosmetic Act and regulations
thereunder. ESI shall cause Medtronic's regulatory personnel to be provided
with reasonable access from time to time to the facilities and records of ESI
for the purpose of confirming ESI's compliance with all applicable requirements
noted in this Article.
(c) ESI warrants to Medtronic and to Medtronic's customers the Systems in
accordance with the warranty attached hereto as Schedule 2.4. Medtronic shall
bear all responsibility for, and shall indemnify and hold ESI harmless from any
claim, action or loss which arises out of or results from any other warranties
made by Medtronic, its employees or agents with respect to the Systems.
(d) THE WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY ESI, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE, EXCEPT ESI SHALL ALSO PROVIDE WITH RESPECT TO SYSTEMS SOLD TO
MEDTRONIC OR TO MEDTRONIC'S CUSTOMERS SUCH OTHER WARRANTIES AS ESI CUSTOMARILY
PROVIDES TO ITS CUSTOMERS OR END-USERS OF THE SYSTEMS IN THE FIELD OF USE (A
COPY OF THE CURRENT VERSION OF SUCH CUSTOMER WARRANTY IS ATTACHED HERETO AS
SCHEDULE 2.4).
2.5 PERFORMANCE OBJECTIVES, SALES AND SERVICE.
(a) During the term of this Agreement, Medtronic agrees to purchase and
distribute the Systems and catheters set forth as a minimum total dollar amount
of Systems and catheters described in Schedule 2.5 ("Performance Objectives").
Six (6) months prior to the end of the 2nd anniversary of this Agreement and
annually thereafter, ESI and Medtronic shall negotiate in good faith the
Performance Objectives for the Medtronic Territories for the upcoming twelve
(12) month period. Progress towards Performance Objectives shall be reviewed on
an annual basis for years 1 through 3, and semi-annually thereafter. In the
event of Medtronic's sale to
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a successor in interest in that portion of the business to which this Agreement
relates, quarterly progress reviews would be conducted. The Performance
Objectives for the Medtronic Territories shall take into account such factors as
the size of the market, average selling prices of the Systems, potential
applications of the Systems, selling cycle, ESI's manufacturing capacity, size
of the relative sales forces, and other relevant factors. In the event the
parties are unable to agree upon the Performance Objectives for the Medtronic
Territories, then such dispute shall be settled by binding arbitration pursuant
to Article 9.15.
(b) Medtronic shall be responsible for selling, installing and "first-line
trouble shooting and servicing" all Systems in the Field of Use in the Medtronic
Territories, provided ESI shall be responsible for all software and hardware
repairs and servicing. ESI will provide an inventory of spare parts and a "hot"
spare System in Kerkrade, The Netherlands to support rapid turnaround for
repairs. The Systems shall be sold under ESI trademarks and trade names subject
to Medtronic's right to indicate its status as distributor thereof on sales and
marketing materials for the Systems. Medtronic shall be responsible for the
hiring and training of any technical customer engineers for the purpose of
performing services pursuant to this Section.
(c) Subject to Article 2.7 below, Medtronic shall be solely responsible
for providing customer and physician training to any purchaser of Systems for
use in the Field of Use in the Medtronic Territories.
(d) Medtronic shall be solely responsible for establishing the marketing,
selling and pricing strategies for the Systems in the Field of Use in the
Medtronic Territories. Such strategies will be available for review by ESI.
2.6 MARKETING.
(a) ESI, at ESI's cost and expense, shall provide Medtronic with an
initial commercially reasonable supply of Systems sales, marketing, advertising
and promotional materials in English and in five (5) languages for use in the
Medtronic Territories and with additional materials as changes to the collateral
materials occur from time to time. Medtronic shall have the right, at its cost
and expense and subject to the reasonable approval of ESI, to adapt or modify
the ESI sales, marketing, advertising and promotional materials and user manuals
to reflect the culture or business practices and languages of the particular
regions within the Medtronic Territories and to reflect Medtronic as the
exclusive distributor of the Systems, or as otherwise deemed appropriate by
Medtronic.
(b) ESI and Medtronic may jointly fund and participate in those trade
shows mutually agreed to by the parties. As further mutually agreed to by the
parties, employees of ESI and Medtronic, respectively, would be allowed to
interact with customers in the booth of the other. In addition, Medtronic shall
have the
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right to demonstrate the ESI System in its booths in connection with Medtronic's
cardiac disease and disorder management products.
2.7 TRAINING.
(a) ESI will, at its cost and expense, provide the initial technical
training of Medtronic's sales specialists and field service supervisors in the
use, installation, trouble shooting and service of the Systems on such date and
place as Medtronic shall designate in the Medtronic Territories. ESI shall also
provide, at its cost and expense, any additional training necessary with respect
to any enhancements or modifications made by ESI to the System. Medtronic will
be responsible for the cost and expense of ongoing training of its field sales
and service representatives, such training to be provided by ESI (i.e.,
Medtronic will pay travel costs for its sales personnel).
(b) ESI will provide training for the "customer trainers" (i.e., those
Medtronic personnel and other third parties engaged in training customers at
training sites) in the Medtronic Territories on such dates and at such places as
Medtronic shall designate to ESI (not to exceed once per quarter). ESI will
bear the cost of such training and Medtronic will bear the costs associated with
the Medtronic personnel and customers.
2.8 ORDERS.
(a) Medtronic and ESI shall jointly develop order and delivery procedures
and guidelines for the Systems, including quarterly forecasts that correspond to
Medtronic's fiscal periods. Medtronic's orders shall be given no less favorable
treatment by ESI than orders from customers in North America or any other
geographic region. The parties intend that Medtronic will maintain minimal
inventories of Systems and that, under most circumstances, ESI will ship Systems
directly to locations designated by Medtronic.
(b) Medtronic shall submit purchase orders for Systems to ESI in writing,
whether by mail, telecopier, telegram or otherwise, which shall, at a minimum,
set forth the product numbers, quantities, delivery dates, shipping instructions
and shipping addresses for all Systems ordered. All orders shall be subject to
acceptance in accordance with the terms of this Agreement by ESI at its office.
Each purchase order shall, upon acceptance by ESI, give rise to a contract
between Medtronic and ESI for the sale of the Systems ordered and shall be
subject to and governed by the terms of this Agreement. The terms and
conditions of this Agreement shall so govern and supersede any additional or
contrary terms set forth in Medtronic's purchase order or any ESI or Medtronic
acceptance, confirmation, invoice or other document unless duly signed by an
officer of Medtronic and an officer of ESI and
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expressly stating and identifying which specific additional or contrary terms
shall supersede the terms and conditions of this Agreement.
(c) No purchase order shall be modified or canceled except upon the mutual
agreement of the parties. Mutually agreed upon change orders shall be subject
to all provisions of this Agreement, whether or not the change order so states.
Notwithstanding the foregoing, any purchase order may be canceled by Medtronic
as to any Systems which are not delivered within sixty (60) days of the delivery
date requested by Medtronic, and any such cancellation shall not limit or affect
any contract remedies available to Medtronic with respect thereto. Any such
cancellation by Medtronic must be by written notice to ESI, given within fifteen
(15) business days after such sixtieth (60th) day.
(d) All deliveries of Systems shall be F.O.B. ESI's manufacturing facility
(currently St. Xxxx, Minnesota). Except as provided in Article 2.4 above, ESI
shall have no further responsibility after delivery of the Systems to the F.O.B.
point, and all risk of damage to or loss or delay of Systems shall pass to
Medtronic, upon their delivery to Medtronic at the F.O.B point. All Systems
deliveries shall be made by a common carrier specified by Medtronic or, in the
event that no carrier shall have been specified by Medtronic on or before the
date fifteen (15) days prior to the requested shipment date, a common carrier
reasonably selected by ESI.
(e) ESI shall promptly inform Medtronic of any modifications or
enhancements of the Systems or any other material changes in the Specifications
for the Systems. If such changes would affect the applicable regulatory
approvals of the Systems, Medtronic shall not be required to purchase such
Systems until such time as regulatory authorization is received and termination
of obligation to proceed is only enacted if regulatory status is adversely
affected or cannot be obtained within the specified period. Notwithstanding the
foregoing, ESI shall not, without Medtronic's consent, make any changes to the
Product which would make the System less useful or effective for the Field of
Use.
(f) ESI shall be responsible for packaging and any necessary sterilization
of Systems purchased under this Agreement in accordance with the Specifications.
2.9 UPGRADES. ESI shall make software and hardware upgrades and
replacement parts available to Medtronic for the Systems at prices and on terms
and conditions no less favorable than those offered to ESI's other distributors,
if any, in the Field of Use.
2.10 REPORTS. Medtronic shall provide ESI, on a quarterly basis, with
current customer lists for Systems sold or installed by Medtronic and physician
users (of which Medtronic is aware) of the Systems in the Field of Use in
the Medtronic Territories and such other information as the parties may mutually
agree upon.
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Medtronic will also periodically provide ESI with the customer name and address
for each System installation in the Field of Use in the Medtronic Territories
for warranty and regulatory purposes. Medtronic shall report any "adverse
incidents" (as defined by FDA regulations, Medical Devices Directive and
national regulations) promptly to ESI.
2.11 EXPORT/IMPORT APPROVALS.
(a) ESI shall be responsible for obtaining, at ESI's cost and expense, all
export licenses and permits as may be required to export the Systems from the
country of manufacture into the particular countries within the Medtronic
Territories.
(b) Medtronic shall be responsible for obtaining, at Medtronic's cost and
expense, all import licenses and permits as may be required to import the
Systems into particular countries within the Medtronic Territories as selected
by Medtronic in accordance with then prevailing laws and regulations of such
countries. All such filings and registrations of the Systems shall be in the
name of Medtronic, whenever feasible in accordance with prevailing laws and
regulations. ESI shall cooperate fully with Medtronic in its efforts to obtain
any such approvals.
ARTICLE 3
ESI SALES AND DISTRIBUTION
ESI retains all rights to the Systems not expressly granted to Medtronic.
ESI shall establish a direct sales force for Systems in North America through a
combination of ESI employees and/or independent third-party sales
representatives. ESI shall use its commercially reasonable best efforts to
ensure that any such independent third-party sales representatives of Systems in
North America are not Medtronic Competitors.
ARTICLE 4
FIRST OFFER FOR OTHER DISTRIBUTION RIGHTS
4.1 RIGHT OF FIRST OFFER OUTSIDE MEDTRONIC TERRITORIES.
(a) In the event that ESI proposes to enter into any distribution, sales
representative or similar license agreement with any third party regarding the
sale, distribution or licensing of the Systems in the Field of Use outside the
Medtronic Territories and North America (such regions to be described as (i)
Asia Pacific (excluding Japan), (ii) Australia/New Zealand, (iii) Central/South
America and (iv)
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the Middle East and Africa, ESI agrees it shall offer Medtronic a first right to
become ESI's exclusive distributor of the ESI System in each of such regions.
(b) Prior to entering into any discussions regarding such distribution,
sales representative or similar license agreement, ESI shall notify Medtronic in
writing of such intention to enter into such discussions, including the material
terms and provisions upon which ESI would be willing to enter into such a
distribution, sales representative or similar license agreement for such region
(for purposes of this Article 4. 1, "ESI's Notice"). For a period of thirty
(30) days after Medtronic's receipt of ESI's Notice (for purposes of this
Article 4.1, the "Exclusive Period"), ESI shall negotiate in good faith
exclusively with Medtronic regarding such distribution, sales representative or
similar license agreement for the applicable region specified in ESI's Notice.
During the Exclusive Period, ESI will not solicit offers from, negotiate with,
or provide information to any third party regarding any distribution, sales
representative or similar license relationship for Systems in such region.
(c) If Medtronic and ESI fail to reach mutual agreement upon the terms and
provisions of a definitive agreement for such distribution, sales representative
or license relationship during the Exclusive Period, then ESI may enter into a
definitive agreement for such distribution, sales representative or similar
license relationship with a third party for the applicable region specified in
ESI's Notice, provided that ESI may not enter into such definitive agreements
unless the terms and provisions thereof are, in the aggregate, no less favorable
to ESI than the terms and provisions proposed by Medtronic during the Exclusive
Period. If ESI fails to enter into such definitive agreement for the applicable
region within one hundred eighty (180) days after expiration of the Exclusive
Period, then Medtronic's first rights under this Article shall be reinstated and
ESI may not enter into any distribution, sales representative or similar license
relationship with respect to Systems in such region without first giving
Medtronic a new ESI's Notice and complying with the terms of this Article.
(d) In the event Medtronic declines the offer made pursuant to this
Article 4.1, ESI shall use commercially reasonable efforts to utilize existing
Medtronic distributors in the offered area prior to extending such offer to
other third parties.
(e) Medtronic's rights under this Article 4.1 shall terminate upon a
Change of Control of ESI. Notwithstanding the foregoing, Medtronic will
continue to have distribution rights to the Systems in any such region pursuant
to the terms of any then effective distribution agreement between ESI and
Medtronic pursuant and subject to Article 4.3.
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4.2 RIGHT OF FIRST OFFER OUTSIDE FIELD OF USE.
(a) In the event that ESI proposes to enter into any distribution, sales
representative or license agreement with any third party regarding the sale,
distribution or licensing of the Systems for use in enabling any cardiac
minimally invasive surgical procedures in cardiology (outside of the Field of
Use), neurology or urology procedures, then, prior to entering into any
discussions regarding such distribution, sales representative or licensing
agreement, ESI shall notify Medtronic in writing of such intention to enter into
such discussions, including the material terms and provisions upon which ESI
would be willing to enter into such a distribution, sales representative or
licensing agreement for such procedures (for purposes of this Article 4.2,
"ESI's Notice").
(b) For a period of thirty (30) days after Medtronic's receipt of ESI's
Notice (for purposes of this Article 4.2, the "Exclusive Period"), ESI shall
negotiate in good faith exclusively with Medtronic regarding such distribution,
sales representative or licensing agreement for the applicable procedures
specified in ESI's Notice. During the Exclusive Period, ESI will not solicit
offers from, negotiate with, or provide information to any third party regarding
any distribution, sales representative or licensing relationship for Systems for
such procedures.
(c) If Medtronic and ESI fail to reach mutual agreement upon the terms and
provisions of a definitive agreement for such distribution, sales representative
or licensing relationship, then ESI shall have one hundred eighty (180) days
from the earlier of expiration of the Exclusive Period or termination by
Medtronic of negotiations between ESI and Medtronic in which to negotiate and
enter into a definitive agreement for such distribution, sales representative or
licensing relationship with a third party for the applicable procedures
specified in ESI's Notice, provided that ESI may not enter into such definitive
agreements unless the terms and provisions thereof are, in the aggregate, no
less favorable to ESI than the terms and provisions proposed by Medtronic during
the Exclusive Period. If ESI fails to enter into such definitive agreement for
the applicable procedures within such 180-day period, then Medtronic's rights
under this Article shall be reinstated and ESI may not enter into any
distribution, sales representative or licensing relationship for the sale of
Systems for such procedures without first giving Medtronic a new ESI's Notice
and complying with the terms of this Article.
(d) Medtronic's rights under this Article 4.2 will terminate at the end of
the "Initial Term" (as defined below).
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ARTICLE 5
TERM AND TERMINATION
5.1 INITIAL TERM. The initial term (the "Initial Term") for Medtronic's
rights and obligations as the sales agent for Systems in the Medtronic
Territories shall commence on ESI's receipt of regulatory approval (CE Xxxx) for
the Systems in Europe and end five (5) years thereafter. If Medtronic has made
its first commercial sale of a System within ninety (90) days of CE Xxxx
approval, the Agreement shall automatically be extended for a two (2) year
period in addition to the five (5) year term.
5.2 RENEWAL TERM; PERFORMANCE OBJECTIVES. In the event Medtronic fails to
make its first commercial sale of a System within ninety (90) days of CE Xxxx
approval, the Initial Term of Medtronic's rights and obligations as exclusive
distributor for Systems in the Medtronic Territories may be renewed for up to
(a) two (2) additional one (1) year periods (each a "Renewal Term"), provided
Medtronic has met or exceeded the Performance Objectives set forth on Schedule
2.5, and thereafter to be established by the parties for the Medtronic
Territories for the then current Renewal Term and provided the parties mutually
agree to pricing and Performance Objectives for the Renewal Term.
5.3 CONVERSION TO NON-EXCLUSIVE FOR FAILURE TO MEET PERFORMANCE
OBJECTIVES. Subject to Article 7 hereof, if Medtronic fails to meet the
Performance Objectives for the Medtronic Territories, ESI shall have the right
to convert Medtronic's future rights and obligations as distributor for the
Medtronic Territories to a non-exclusive basis. ESI shall give Medtronic at
least thirty (30) days' prior written notice of any such intent to convert
Medtronic's distributor rights hereunder to non-exclusive, and Medtronic shall
have sixty (60) days in which to cure such failure to meet the Performance
Objectives or present ESI with reasonable evidence of a plan that will cure any
such failure to meet the Performance Objectives within an additional ninety (90)
days. In the event Medtronic does not cure such failure within such additional
ninety (90) days, ESI shall have the right to convert Medtronic's rights as
distributor in the Medtronic Territories to non-exclusive.
5.4 MEDTRONIC'S TERMINATION FOR ESI BREACH.
(a) Subject to Article 7 hereof, if ESI breaches any of its material
obligations under this Agreement then Medtronic shall be entitled to terminate
Medtronic's rights and obligations under this Agreement. Medtronic shall give
ESI thirty (30) days' written notice of any such intent to terminate, and ESI
shall have ninety (90) days in which to cure such material breach.
14
(b) Upon any such termination pursuant to Article 5.4(a) above, ESI will
repurchase from Medtronic, at a price equal to Medtronic's cost thereof,
Medtronic's entire inventory of Systems (including demonstration Systems),
accessories and related materials as of the termination date relating to
Medtronic's rights and obligations under Article 2 of this Agreement, as
applicable. Notwithstanding the foregoing, ESI shall not be obligated to
repurchase any Systems, accessories or related materials which are not in good
repair or which are not, due to any action or inaction by Medtronic, suitable
for their original intended purposes.
5.5 ESI'S TERMINATION FOR MEDTRONIC BREACH.
(a) Subject to Article 7 hereof and except as otherwise provided in
Article 5.3, if Medtronic breaches any of its material obligations under this
Agreement, then ESI shall be entitled to terminate Medtronic's rights and
obligations. ESI shall give Medtronic thirty (30) days' written notice of any
such intent to terminate, specifying whether such termination will apply to
Medtronic's rights and obligations, and Medtronic shall have ninety (90) days in
which to cure such material breach. Subject to Article 7 and further subject to
ESI's obligation to maintain sufficient inventory of the Systems to meet
Medtronic's orders, ensure that the Systems meet all applicable safety and
quality specifications and provide appropriate clinical proof supporting the
safety and efficacy of the Systems, Medtronic's failure to satisfy the
Performance Obligations set forth in Schedule 2.4 (a) shall be considered a
breach of material obligation and shall be subject to termination pursuant to
this Article 5.5.
(b) Upon any such termination pursuant to Article 5.5(a) above, ESI shall
have the option, exercisable within forty-five (45) days after such termination,
to repurchase from Medtronic, at Medtronic's cost, Medtronic's entire inventory
of Systems (including demonstration Systems), accessories and related materials,
as of the termination date relating to Medtronic's rights and obligations under
this Agreement, as applicable. In the event ESI fails to exercise such
repurchase option, Medtronic shall have the right to sell off its remaining
inventory of Systems for up to one hundred twenty (120) days from termination.
Notwithstanding the foregoing, ESI shall not be obligated to repurchase any
Systems, accessories or related materials which are not in good repair or which
are not, due to any action or inaction by Medtronic, suitable for their original
intended purposes.
5.6 RIGHTS AND OBLIGATIONS ON TERMINATION. In the event of termination of
all or a portion of this Agreement for any reason, the parties shall have the
following rights and obligations: In the event of the termination of
Medtronic's distribution rights with respect to all of the Medtronic Territories
in accordance with Article 5.4 or Article 5.5, (i) all purchase orders for
Systems which provide for delivery after the effective date of termination shall
be canceled, except that Medtronic shall be permitted to fill any outstanding
orders from customers made prior to the date of termination, (ii) Medtronic
shall assign, at ESI's cost and expense,
15
all regulatory approvals and files regarding sales of Systems in such geographic
area to ESI, and (iii) Medtronic and ESI shall cooperate to assure continued
service and support to customers in such geographic area who purchased Systems
from Medtronic. ESI hereby acknowledges Medtronic's right to continue to sell
Systems purchased from ESI to any person or entity in the Medtronic Territories
for up to one hundred twenty (120) days, at which time any remaining inventory
will be repurchased by ESI. If this Agreement is terminated for other than a
breach by ESI, Medtronic will reimburse ESI for any out-of-pocket restocking
fees and related cancellation charges.
ARTICLE 6
INDEMNIFICATION
6.1 ESI'S LIABILITY. ESI shall indemnify, defend and hold harmless
Medtronic and each of its subsidiaries, officers, directors, employees,
shareholders and distributors from and against and in respect of any and all
third party demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, interest and penalties, costs and expenses (including,
without limitation, reasonable legal fees and disbursements incurred in
connection therewith and in seeking indemnification therefor, and any amounts or
expenses required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) ("Indemnifiable
Losses"), resulting from, arising out of, or imposed upon or incurred by any
person to be indemnified hereunder by reason of (i) any breach of
representation, warranty, covenant or agreement on the part of ESI under this
Agreement, (ii) total or partial Systems recalls, (iii) alleged defects in
materials, workmanship, product performance or design of the Systems, but in any
event excluding matters for which Medtronic is responsible under Article 6.2
below, or (iv) any infringement claims by third parties of Intellectual
Property. ESI shall maintain product liability insurance or self-insurance in
such amounts as is advisable pursuant to ordinary good business practice for a
similar company in a similar type of business, and shall provide Medtronic with
evidence of this coverage.
6.2 MEDTRONIC'S LIABILITY. Medtronic shall indemnify, defend and hold
harmless ESI and each of its subsidiaries, officers, directors, employees,
shareholders and suppliers from and against and in respect of any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and in seeking indemnification therefor, and any amounts or expenses
required to be paid or incurred in connection with any action, suit, proceeding,
claim, appeal, demand, assessment or judgment) ("Indemnifiable Losses"),
resulting from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of (i) any breach of representation, warranty,
covenant or agreement on the part of Medtronic under this Agreement, (ii)
product claims whether written or oral, made
16
or alleged to be made, by Medtronic in its advertising, publicity, promotion or
sale of any Systems where such product claims were not provided by or approved
by ESI, or (iii) negligent handling by Medtronic of the Systems, but in any
event excluding matters for which ESI is responsible under Article 6.1 above.
6.3 THIRD PARTY CLAIMS.
(a) If a claim by a third party is made against any indemnified party,
such indemnified party shall promptly notify the indemnifying party of such
claim, provided however that failure to give timely notice shall not affect the
rights of the indemnified party so long as the failure to give timely notice
does not materially adversely affect the indemnifying party's ability to defend
such claim against a third party. The indemnifying party shall have the sole
right to manage, settle and defend such claim, at the expense of the
indemnifying party and with counsel chosen by the indemnifying party. The
indemnified party shall have the right to participate in such action, at its own
expense and with counsel of its own choice. The indemnified party shall provide
reasonable cooperation and assistance to the indemnifying party, at the expense
of the indemnifying party. The indemnified party shall not enter into any
agreement with respect to such claim or threatened claim without receipt of
prior written approval from the indemnifying party.
(b) In the event of a third party claim of Intellectual Property
infringement, ESI will (1) obtain a license for Medtronic, (2) modify the
Systems to make them noninfringing, or if (1) and (2) are not commercially
feasible, terminate the Agreement, provided however so long as ESI continues to
market, sell and distribute the Systems, ESI shall not have the right to
terminate the Agreement under this Section and shall continue to make Systems
available to Medtronic hereunder.
6.4 COOPERATION AS TO INDEMNIFIED LIABILITY. Each party hereto shall
cooperate fully with the other parties with respect to access to books, records
or other documentation within such party's control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim which may give
rise to indemnification hereunder.
ARTICLE 7
FORCE MAJEURE
7.1 FORCE MAJEURE. "Force Majeure" shall mean any event or condition, not
existing as of the date of signature of this Agreement, not reasonably
foreseeable as of such date and not reasonably within the control of either
party, which prevents in whole or in material part the performance by one of the
parties of its obligations hereunder, such as an act of God, act of government,
war or related actions, civil
17
insurrection, riot, sabotage, strike, epidemic, fire, flood, windstorm and
similar events.
7.2 NOTICE. Upon giving notice to the other party, a party affected by an
event of Force Majeure shall be released without any liability on its part from
the performance of its obligations under this Agreement, except for the
obligation to pay any amounts due and owing hereunder, but only to the extent
and only for the period that its performance of such obligations is prevented by
the event of Force Majeure.
7.3 SUSPENSION OF PERFORMANCE. During the period that the performance by
one of the parties of its obligations under this Agreement has been suspended by
reason of an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations (other than payment obligations)
hereunder to the extent that such suspension is commercially reasonable.
ARTICLE 8
INTELLECTUAL PROPERTY
8.1 TRADEMARK LICENSE. Medtronic shall have a royalty-free license to use
all trademarks, trade names and logotypes of ESI relating to the Systems solely
in connection with the sale or other distribution, promotion, advertising and/or
maintenance of the Systems in the Field of Use. Medtronic shall acquire no
right, title or interest in such ESI trademarks, trade names and logotypes,
other than as provided for above, and Medtronic shall not use any ESI
trademarks, trade names and logotypes as part of Medtronic's corporate or trade
name or permit any third party under Medtronic's control to do so without the
prior written consent of ESI. All fights under this Article 8.1 shall terminate
upon termination of this Agreement, subject to Article 5.6.
8.2 OWNERSHIP. ESI represents and warrants to Medtronic that as of the
Effective Date:
(a) It has the right to grant the rights and licenses granted to Medtronic
in this Agreement and the execution and performance of this Agreement by ESI and
the transactions contemplated herein do not conflict with any agreement to which
ESI is a party or by which it is bound;
(b) It is the exclusive owner or licensee of the Intellectual Property
necessary for the manufacture, use or sale of the Systems as contemplated herein
(excluding third party materials for which ESI may have non-exclusive rights);
18
(c) ESI warrants to Medtronic and to Medtronic's customers that Systems
sold by ESI do not infringe any currently issued patents, trade secrets,
trademarks or other intellectual property rights of any third party;
(d) It has no knowledge of any claim by a third person that manufacture,
use or sale of the Systems as contemplated in this Agreement infringes the
patent, copyright, trademarks, trade secret or other intellectual property
rights of any third person.
8.3 IMPROVEMENTS AND ENHANCEMENTS TO THE SYSTEMS. During the term of this
Agreement, ESI shall promptly inform and make available to Medtronic any
material invention, improvement, upgrading or modification relating to the
Systems or ESI's Intellectual Property relating to the Systems.
ARTICLE 9
MISCELLANEOUS
9.1 NON-DISCLOSURE. Except as permitted or required for performance by
the party receiving such Confidential Information of its rights or duties
hereunder, each party agrees (i) not to disclose or use any Confidential
Information of the other party obtained in connection with the performance of
this Agreement, and (ii) not to disclose or provide any of such Confidential
Information of the other party to any third party and to take appropriate
measures to prevent any such disclosure by its present and future employees,
officers, agents, subsidiaries or consultants.
9.2 RELATIONSHIP. This Agreement does not make either party the employee,
agent or legal representative of the other for any purpose whatsoever. Neither
party is granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.
9.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and the successors or assigns of the parties
hereto, provided that (i) the rights and obligations of ESI herein may not be
assigned except to an Affiliate or any person who succeeds to substantially all
of the assets and business of ESI to which this Agreement relates subject to the
provisions of Article 4.3, and (ii) the fights and obligations of Medtronic
herein may not be assigned except to an Affiliate or any person who succeeds to
substantially all of Medtronic's business. In the event of an assignment
pursuant to this Section 9.3, all interests and obligations created under this
Agreement shall continue uninterrupted. In the event of assignment to a
successor in ESI's interest, the parties agree to negotiate to extend the
Agreement or do a buyout of Medtronic's interest. Medtronic shall not,
19
however, be obligated to negotiate any change in the Agreement. In the event of
a sale of Medtronic's interest in that portion of the business to which this
Agreement relates, Medtronic shall present ESI with a plan for continued
distribution of ESI Systems. ESI shall have the right to terminate the
Agreement in the event Medtronic fails to meet the performance objectives for
the renewal period. No Medtronic Affiliate may assign the rights granted
herein. Notwithstanding the foregoing, ESI shall have the right to assign its
responsibility of servicing the Systems to third parties, provided ESI shall
retain the obligation of ensuring such service is provided pursuant to the terms
of this Agreement.
9.4 COMPLETE AGREEMENT. This Agreement and the Schedules hereto
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements whether written or oral
relating hereto. This Agreement supersedes all written correspondence,
including but not limited to all terms sheets, between Xxxxx Xxxxxxx and
Medtronic negotiating the terms directly related to the subject matter hereof.
9.5 GOVERNING LAW. Except as set forth in Article 9.15, the parties agree
that in the event of any dispute, the resolution of that dispute shall be
conducted in the state or federal courts in Minneapolis, Minnesota. The parties
agree that this contract is entered into and is to be performed in the State of
Minnesota. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Minnesota, including all matters of construction,
validity, performance and enforcement, without giving effect to principles of
conflict of laws.
9.6 SURVIVAL. All of the representations, warranties and covenants made
in this Agreement, and all terms and provisions hereof intended to be observed
and performed by the parties after the termination hereof, shall survive such
termination and continue thereafter in full force and effect.
9.7 WAIVER, DISCHARGE, AMENDMENT, ETC. The failure of any party hereto to
enforce at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the fight of the party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach.
Any amendment to this Agreement shall be in writing and signed by the parties
hereto.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.
9.9 TITLES AND HEADINGS; CONSTRUCTION. The titles and headings to
Articles herein are inserted for the convenience of reference only and are not
intended to be
20
a part of or to affect the meaning or interpretation of this Agreement. This
Agreement shall be construed without regard to any presumption or other rule
requiring construction hereof against the party causing this Agreement to be
drafted.
9.10 BENEFIT. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties to this Agreement or their
respective successors or assigns, any fights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.11 NOTICES. All notices or other communications to a party required or
permitted hereunder shall be deemed given if in writing and delivered personally
or sent by telecopy (with confirmation of transmission) or certified mail
(return receipt requested) to such party at the following addresses (or at such
other addresses as shall be specified by like notice):
If to Medtronic, to: Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx XX
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
Fax (000) 000-0000
with a copy to: Medtronic, Inc.
Corporate Center
0000 Xxxxxxx Xxxxxx XX
Xxxxxxxxxxx, XX 00000
Attention: Vice President Corporate Development
and Associate General Counsel
Fax (000) 000-0000
and if to ESI, to: Endocardial Solutions Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xx. Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Fax (000) 000-0000
with a copy to: Endocardial Solutions Inc.
0000 Xxxxxx Xxxx, Xxxxx 000
Xx. Xxxx, XX 00000-0000
Attention: Xxxxxx XxXxxxxx
Fax (000) 000-0000
Medtronic or ESI may change their respective above-specified recipient
and/or mailing address by notice to the other party given in the manner herein
21
prescribed. All notices shall be deemed given on the day when actually
delivered as provided above (if delivered personally or by telecopy) or on the
day shown on the return receipt (if delivered by mail).
9.12 ILLEGALITY. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
9.13 PUBLIC ANNOUNCEMENT. Each of the parties to this Agreement hereby
agrees with the other parties hereto that, except as may be required to comply
with the requirements of applicable law or any exchange upon which such party's
capital stock is listed or traded, no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by Medtronic and ESI. The foregoing shall not restrict either party's
communications with employees, customers or private investors.
9.14 EXECUTION OF FURTHER DOCUMENTS. Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably require to fully secure and/or evidence the rights or
interests herein.
9.15 DISPUTE RESOLUTION. Any dispute with respect to the determination of
the Transfer Prices pursuant to Article 2.3 or the Performance Objectives
pursuant to Article 5.2(b) which remains unresolved for a period of at least 90
days despite the parties' good faith efforts to negotiate a resolution thereof
may be submitted by either party to binding arbitration pursuant to the
commercial arbitration rules of the American Arbitration Association. The
arbitrator shall be an individual mutually agreed to by the parties, or if the
parties are unable to agree, selected by the AAA, who is knowledgeable and
experienced in the high technology medical device industry.
IN WITNESS WHEREOF, each of the parties has caused this Sales Agreement to
be executed in the manner appropriate to each, as of the date first above
written.
ENDOCARDIAL SOLUTIONS, INC. MEDTRONIC, INC.
By /s/ Xxxxx Xxxxxxx By /s/ Xxxxxxx X. XxXxxxx
------------------------- --------------------------
Its President/CEO Its V.P. Cardio Rythm
------------------------- --------------------------
22
ATTACHMENTS:
Schedule 1.1 - Medtronic Competitors
Schedule 1.2 - The Medtronic Territories
Schedule 2.3 - Pricing
Schedule 2.4 - ESI's System Product Warranty
Schedule 2.5 - Performance Objectives
Schedule 5.3 - Depreciation Schedule
23
Schedule 1.1
MEDTRONIC COMPETITORS
Medtronic Competitors include the following entities and their respective
affiliates:
***/
----------
***/ Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933.
24
Schedule 1.2
THE MEDTRONIC TERRITORIES
1. EUROPE. The European Territory shall include all of continental Europe,
the United Kingdom, Ireland and the Scandinavian geographies, Eastern
Europe, Serbia and Russia.
2. JAPAN.
25
Schedule 2.3
PRICING
Systems $***/
Catheters $***/
Other Products ***/
----------
***/Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933.
26
Schedule 2.4
ESI PRODUCT WARRANTY
1. WARRANTY AND RETURN PROCEDURE. ESI warrants to Medtronic and to
Medtronic's customers that, for a period of one (1) year from installation, the
Systems shall meet the Specifications therefor and shall be free of defects in
materials and workmanship. Medtronic shall promptly notify ESI in writing of
any System that does not meet such warranty, but in no event more than
forty-five (45) days after it has actual notice of the basis for such claim or
the expiration date of the warranty set forth above, whichever date is later.
Each such claim shall state the nature and details of the claim, the date the
cause of the claim was first observed and the serial number and order number of
the Systems concerned. Medtronic shall comply with ESI's RMA procedure with
respect to the return of any System subject to a warranty claim. Return of
defective Systems shall be at the expense of ESI.
2. WARRANTY EXCLUSIONS. ESI shall have no obligation to Medtronic or its
customers under this warranty if:
(a) The Systems in question have been modified in any manner without the
prior written consent of ESI;
(b) The defect is caused by the use of the Systems in combination with any
other unapproved hardware, software, medical device or product; or
(c) Repair or replacement of the Systems in question was necessitated in
whole or in part by catastrophe or the Systems were damaged or mishandled by
Medtronic, its customer or any other party who is not an employee or
representative of ESI.
3. REPAIR; REPLACEMENT PRODUCTS. If ESI confirms that the returned System
meets the above warranty, it shall promptly repair or replace such detective
System, at ESI's sole option, and shall bear the entire cost of such repair or
replacement Products and the shipping thereof if repair or replacement is not
commercially feasible, ESI will refund to Medtronic the amount paid for such
System.
4. THIRD PARTY MATERIALS. Notwithstanding the foregoing, any third party
materials provided as part of the Systems (software, hardware, etc.) will be
warranted solely to the extent warranted by the third party manufacturer.
5. SOLE REMEDY. The remedies set forth above are the exclusive remedies of
Medtronic and its customer for any breach of this warranty.
27
6. DISCLAIMER. THE WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY ESI,
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE. ANY DEFECTS IN SOFTWARE WHICH DO NOT AFFECT THE
SPECIFICATIONS ARE EXCLUDED FROM THIS WARRANTY.
28
Schedule 2.5
PERFORMANCE OBJECTIVES
Estimated Targets Non-Exclusivity Threshold Termination Threshold
Targeted Targeted Total Targeted Targeted Total Targeted Targeted Total
Systems Catheters Dollars Systems Catheters Dollars Systems Catheters Dollars
-------- --------- ------- -------- --------- -------- -------- --------- -------
1998
Units (***) (***) (***) (***) NA NA
Unit Price $ (***) $ (***) $ (***) $ (***)
------- ------- ------- ------- ------- ------- ------- ------- -------
Dollars $ (***) $ (***) $ (***) $ (***) $ (***) $ (***) NA NA NA
------- ------- ------- ------- ------- ------- ------- ------- -------
Dollars
(% of ESI Target) (***)% #VALUE!
1999
Units (***) (***) (***) (***) (***) (***)
Unit Price $ (***) $ (***) $ (***) $ (***) $ (***) $ (***)
------- ------- ------- ------- ------- ------- ------- ------- -------
Dollars $ (***) $ (***) $ (***) $ (***) $ (***) $ (***) $ (***) $ (***) $ (***)
------- ------- ------- ------- ------- ------- ------- ------- -------
Dollars
(% of ESI Target) (***)% (***)%
Progress towards Performance Objectives shall be reviewed on an annual basis for
years 1 through 3, and semi-annually thereafter. In the event of Medtronic's
sale to a successor in interest of that portion of the business to which this
Agreement relates, quarterly progress reviews would be conducted.
----------
***/Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of
1933.
