EXHIBIT 10.27
DISTRIBUTION AGREEMENT
BY AND BETWEEN:
GE Marquette Medical Systems Inc., a corporation organized under the laws of the
state of Wisconsin, United States of America, having its principal place of
business at 0000 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, 00000, Xxxxxx Xxxxxx of
America, (the "Company"), and CardioDynamics International Corporation, a
corporation organized and existing under the laws of the state of California,
having its principal office and place of business at 0000 Xxxxx Xxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Manufacturer").
The Company and the Manufacturer being individually referred to as the "Party",
and collectively referred to as the "Parties".
WITNESSETH:
WHEREAS, the Manufacturer is engaged in the design, manufacture, marketing,
sale, and servicing of certain Products (as hereinafter defined)
WHEREAS, the Manufacturer has a direct sales force targeted at sales to
congestive heart failure (CHF) and dialysis clinics (including CHF and dialysis
clinics within hospitals), and outpatient physician offices, and wishes to
increase the sales of the Products in the Territory (as hereinafter defined);
WHEREAS, the Company represents that it possesses the necessary resources,
expertise and organization to market, promote, purchase, and sell the Products
in the Territory;
WHEREAS, the Manufacturer represents that it possesses the necessary resources,
expertise and organization to manufacture and service the Products; and
WHEREAS, subject to the terms and conditions of this Distribution Agreement (the
"Agreement"), the Manufacturer wishes to appoint the Company, and the Company is
willing to accept such appointment, as distributor of the Products in the
Territory.
NOW THEREFORE, in consideration of the premises and the representations,
warranties, terms, conditions and mutual undertakings hereinafter set forth, the
Parties hereto agree as follows:
SPECIFIC TERMS
Effective Date: October 20, 1999
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Agreement Ref. No:
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ARTICLE 1 - DEFINITIONS
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For the purposes of this Agreement, the terms set out below shall have the
following meanings:
1.1 "Affiliate" shall mean any corporation or other business entity which
controls, is controlled by or is under common control with a party, but only for
so long as such entity controls, is controlled by or is under common control
with such party. An entity shall be regarded as in control of another entity if
it owns or controls at least fifty percent of the outstanding stock or other
voting rights of the subject entity entitled to vote for the election of
directors (or, in the case of an entity that is not a corporation, for the
election of the corresponding managing authority), or if it can appoint, dismiss
or otherwise control the actions of a majority of directors or any corresponding
managing authority.
1.2 "Operators and Service Manuals" shall mean the documents attached to this
Agreement as Exhibit A, as modified, reissued, amended, or updated from time to
time.
1.3 "Product" and "Products" shall each mean the XxxX.xxx Non-Invasive Cardiac
Output Monitor described in the Operator and Service Manuals attached as Exhibit
A and any modifications, enhancements, upgrades and accessories thereto and
their associated documentation.
1.4 "Territory" shall mean the countries and territories specified in Exhibit B
to this Agreement and such other countries as the Parties may agree to in
writing.
1.5 "Training Plan" shall mean the training to be provided in accordance with
Section 5 (j) and Exhibit D to this Agreement.
1.6 "Upgrade" shall have the meaning given to it in Section 2.3.
ARTICLE 2 - RIGHTS TO PRODUCT
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2.1 Appointment
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The Manufacturer hereby appoints the Company, and the Company hereby accepts the
appointment in the Territory, as the Manufacturer's exclusive distributor from
January 1, 2000 and its non-exclusive distributor prior to that date, for in-
hospital promotion and sale of the Products in the Territory. The Company shall
use its skill to sell, advertise and promote the in-hospital sale and use of the
Products throughout the Territory.
2.2 No Right to Distribute Outside Territory.
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The Company shall not, outside the Territory either (a) solicit or accept
orders, or (b) bid on tenders, or (c) establish an office for the purpose of
selling and/or servicing the Products.
2.3 Modifications, Enhancements, Upgrades.
-------------------------------------
In the event the Manufacturer modifies, enhances or upgrades a Product (each an
"Upgrade") during the term of this Agreement, the Manufacturer will provide the
Company with such Upgrades in accordance with Exhibit C as amended from time to
time This provision does not apply to new options, features or products offered
for sale by Manufacturer.
ARTICLE 3 - TERM
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The term of this Agreement shall commence on the date hereof and shall continue
until terminated in accordance with the provisions hereof (such period being the
"Agreement Period").
ARTICLE 4 - RESPONSIBILITIES OF COMPANY
---------------------------------------
During the Term of this Agreement, the Company shall
(a) promote and sell the Product within the Territory using such methods as it,
at its sole discretion deems appropriate, including the concentrating of sales
and marketing efforts on one or more areas of the Territory to the exclusion of
others: should the Company wish to exclude an area within the Territory such
area will be thereafter deleted from the definition of Territory.
(b) maintain an adequate organization, infrastructure and trained personnel in
order to perform its obligations under this Agreement and to achieve the
objectives set forth in this Agreement;
(c) within 2 weeks of the end of each quarter (31 March, 30 June, 30 September
and 31 December), commencing the first quarter after the signing of this
Agreement, or upon request from the Manufacturer (with at least five (5)
business days advance notice to Company) provide the Manufacturer with a
complete list of its customers for the Products, the amounts and serial numbers
purchased by such customers and financial statements relating to sales of the
Product and an order and sales forecast for the next quarter;
(d) notify the Manufacturer promptly of the existence and content of any law,
rule, regulation, or governmental or regulatory order of which it becomes aware
which conflicts or may conflict with any provision of this Agreement or
otherwise affect the sale of the Products in the Territory;
(e) comply with all applicable laws, rules, regulations or governmental or
regulatory orders regarding the Products;
(f) purchase the Products directly from Manufacturer;
(g) ensure that the Products bear the Manufacturer's name when sold to
customers;
(h) obtain at its own expense, any and all import and export licenses and
governmental approvals as necessary for the sale of the Products, and inform the
Manufacturer of the granting or withdrawal of said licenses or approvals;
(i) train and support purchasers of the Product to the level and training which
Manufacturer has made available to Company; and
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(j) provide the Manufacturer with a six (6) month rolling forecast on a
quarterly basis of its anticipated needs by Product model and month. Such
forecast are agreed to be for polling purposes only and are not binding upon
either party.
ARTICLE 5 - RESPONSIBILITIES OF MANUFACTURER
--------------------------------------------
The Manufacturer shall
(a) sell the Products and spare parts for Products to the Company for resale by
it to customers in the Territory at prices agreed between the Parties from
time to time and as set forth in Exhibit C to this Agreement;
(b) supply the Products and spare parts ordered by the Company in the
quantities and at the times specified by the Company in its purchase orders
within Manufacturer stated lead times, in accordance with the terms and
conditions set forth in this Agreement;
(c) sell to the Company spare parts for the Products and copies of all
Operators and Service Manuals which were issued or were available during the
Term as Company may order at the prices and on the terms and conditions
prevailing on the date of order or as specified in a separate Service Agreement,
which will supercede any service obligations within this agreement for a period
of seven (7) years following termination of this Agreement;
(d) make available the Operators and Service Manuals in English
(e) not alter the design of the Products in any fashion which would cease to
make the Products interchangeable with respect to form fit and function (except
with the prior written agreement of the Company which shall not be unreasonably
withheld);
(f) give the Company sixty days notice of any changes in the design of the
Products which will impact their operation, form, fit or function;
(g) ensure that the Products bear the Manufacturer's name when sold to the
Company;
(h) give Company one hundred eighty (180) days notice of any proposed
discontinuance of any spare parts for any Product and shall supply to Company at
the then prevailing price such number of those parts as may be ordered by
Company during that one hundred eighty (180) day period. If, prior to the end
of such period, Company provides Manufacturer with a forecast for orders for
such parts during the one hundred eighty (180) days following the date of that
forecast, Manufacturer will supply those parts to Company at the then prevailing
prices if Company agrees to purchase all such parts Manufacturer will, upon
request, use reasonable efforts to assist Company in making arrangements with
its vendors to ensure a continuing supply to Company of such specialized parts
or in developing alternative sources of supply for such items;
(i) identify and obtain, at its sole cost and expense, all regulatory approvals
required for the development, manufacture or sale of the Products in the
Territory. If Manufacturer reasonably determines that it is not in its best
interests to obtain all regulatory approvals required in some portions of the
Territory, Manufacturer shall promptly provide notice for such determination to
Company. Within thirty (30) days of receiving such notice, Company may notify
Manufacturer of its intention to obtain such regulatory approval. Manufacturer
shall provide a written response within fifteen (15) days receipt of such notice
indicating whether it approves of, or reasonably objects to Company's intent as
stated in such notice and its reasons for that decision; if Manufacturer fails
to respond to such notice within the permitted period it shall be deemed to
approve the Company's intent. The cost of obtaining such approval shall be
borne by Company, and Company will have exclusivity on all sales and
distribution of Products in that Territory. If such approvals are not obtained,
or if Manufacturer sends a notice of reasonable objection within the fifteen
(15) day period, the relevant portion shall be excluded from the Territory and
the Company shall not market, promote or sell the Products in such portion of
the Territory. Where Company is responsible for obtaining any regulatory
approvals, Manufacturer will reasonably cooperate with Company by providing, at
no charge to Company, any data or material in its possession that is reasonably
required to obtain such approvals including, but not limited to, non-proprietary
clinical testing material;
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(j) provide training courses in accordance with the Training Plan outlined in
Exhibit D;
(k) provide Company with Operators and Service Manuals as Company may
reasonably request;
(l) provide such telephonic technical support as Company may reasonably
request, or other technical support as Company and Manufacturer mutually deem
necessary to enable Company to perform its obligations under this Agreement;
(m) comply with all applicable export laws during the term of this Agreement;
and
(n) grant the Company and purchasers or users of the Products purchased through
the Company a perpetual, fully paid up, worldwide, irrevocable license to use in
the operation, maintenance and repair of such purchased Products, any software
and/or firmware supplied by Manufacturer to Company.
(o) support Company sales in the Territory by making available approximately
ten-percent (10%) of Manufacturer's aggregate direct sales efforts.
ARTICLE 6 - ORDERS AND ACCEPTANCE
---------------------------------
6.1 The Company shall submit to the Manufacturer purchase orders for the
Products in its standard format which shall specify the delivery dates and
identify the quantities to be delivered.
6.2 The Manufacturer will deliver the Products in the quantities and at the
destination specified by the Company in its purchase orders within sixty (60)
days of receipt of the purchase order or such other longer time specified in the
purchase order.
6.3 Prior to delivery of each Product ordered by Company pursuant to this
Agreement, Manufacturer will perform its standard factory acceptance test
applicable to such Product and, where applicable, will record in writing that
the Product ordered has satisfied the requirements of the test. Records of such
tests shall remain available for review by Company for a period of six (6)
months or such longer period as is required by applicable law. Product will be
deemed accepted by Company if not rejected by notice and returned to
Manufacturer in accordance with Section 9.1 within 45 days of shipment .
ARTICLE 7 -- DELIVERY AND TRANSFER OF TITLE
-------------------------------------------
7.1 Title to and risk of loss for a Product shall pass from the Manufacturer
to the Company on delivery f.o.b. to the Manufacturer's dock in San Diego,
California. The Manufacturer will ship the Products to that destination. All
further costs of insurance, shipping, duties, packaging, freight and additional
charges will be borne by Company.
7.2 In the event that Company incurs a penalty because of a late delivery of
the Products and the late delivery is attributable to a fault on the
Manufacturer, the Manufacturer shall reimburse the Company for the amount of
such penalty. The penalty shall not exceed the late delivery penalty which the
Company incurs by reason of late delivery attributable to the fault of the
Manufacturer and the total amount of the penalty will not exceed the price of
the Product. The above shall be in addition to any other remedies available to
the Company.
7.3 The delivery schedule confirmed by the Manufacturer will be binding upon
both parties, but the Company may, upon written notice, reschedule delivery by a
period of at least equal to the lead-time for such Product.(Such reschedule must
defer the delivery of the Products to a reschedule date no later than October 15
of the current year.) No other changes, including changes in the mix or
configuration of the Products, may be made to the purchase order without the
Manufacturer's prior written consent.
ARTICLE 8 - FINANCIAL CONDITIONS
--------------------------------
Prices
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8.1.1. The prices to be paid by the Company for the Products shall be those
set forth in Exhibit C, or as they may be amended by written agreement between
the Parties from time to time.
8.1.2 The Company shall pay any charges with respect to the delivery,
storage, transportation and insurance of the Products.
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8.1.3 Company and Manufacturer will review the prices six (6) months from the
date of this Agreement and every six (6) months thereafter; provided, however,
that in no event shall any increase in prices for a particular Product be
greater than the total percentage increase in the Manufacturer's cost in
making, assembling or purchasing for such Product.
8.1.4 Manufacturer will ensure that the prices are at least as low as the
prices at which it currently sells the Products or items equivalent to the
Products in the same or similar quantities and under the same or similar terms
and conditions to any other customers. If, during the Term, Manufacturer
reduces the price of such items it shall:
(i) promptly notify the Company in writing of such reduction; and
(ii) apply an equivalent reduction in price to all products ordered by the
Company that have not been previously shipped and invoiced at the time of such
reduction. The prices shall thereafter be adjusted to reflect such reduction.
8.2 Terms of Payment
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All payments from the Company to the Manufacturer shall be due within of sixty
(60) days after shipment of the Products in good working order and shall be in
US dollars by wire transfer, check or other instrument reasonably acceptable to
Manufacturer. All invoices unpaid after sixty (60) days are subject to
interest at the lesser of 10% per year, or the maximum lawful rate commencing
upon the date the payment is due.
8.3 Taxes
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All taxes (including income, sales or turnover taxes), duties, fees, charges or
assessments of any nature levied relating to the Products before shipment shall
be the responsibility of the Manufacturer; those levied after shipment, whether
levied against the Company, or against the Manufacturer or their respective
subcontractors, shall be the sole responsibility of the Company.
ARTICLE 9 - WARRANTIES AND INDEMNITY
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9.1 General Warranty
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The Manufacturer warrants each Product sold to the Company under this Agreement
against defects for the periods set out in Exhibit E. In the event of a breach
of this warranty, the Manufacturer's obligation is limited to replacing or
repairing, at its option, at a site to be designated by it in writing, any
Product (except expendable parts thereof) that was in the warranty period and
returned to Manufacturer in the original shipping carton or a replacement
shipping carton provided by Manufacturer at Manufacturer's expense under a
Material Return Authorization ("MRA") number to be issued by CardioDynamics to
the Company or customer as soon as Company or customer informs Manufacturer of
the breach of this warranty and, were found by Manufacturer to be defective in
proper usage. Manufacturer warrants that (a) the Products will (i) conform
materially to all relevant Operators and Service Manuals, specifications,
drawings, plans, instructions, samples or other descriptions furnished to the
Company, (ii) be fit and sufficient for the purpose(s) for which they were
manufactured and sold, (iii) be new and merchantable, (iv) be of good material
and workmanship and free from defects, whether latent or otherwise and (v) be
free from any claim of any nature by any third person. Manufacturer warrants
that any Service by Manufacturer will be performed in a competent manner and be
fit for any purpose for which Manufacturer knows or has reason to know Company
or Company's customers intend to use or rely upon such service.
9.2 Intellectual Property Warranty
------------------------------
The Manufacturer warrants that it owns all copyrights, patents, trademarks and
other intellectual property rights in the Products, that the Products do not
infringe the rights of any third parties and that it has full right and ability
to enter into this Agreement and to permit the Company to carry out its
obligations under this Agreement.
9.3 Year 2000
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Manufacturer expressly warrants that neither the performance nor the
functionality of any Product delivered to the Company will be affected in any
way by the advent of the year 2000 or otherwise by the use of any date
information, nor will the Product affect any other systems, products or
operations in any way by the advent of the year
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2000 or otherwise by the use of any date information.
9.4 Medical Device Laws
-------------------
Manufacturer warrants that the Products and their Manufacturer will comply with
all applicable medical device laws and regulations.
9.5 Fair Labor Standards Act
------------------------
Manufacturer warrants, and will certify, that the Products were produced in
compliance with the Fair Labor Standards Act of 1933, as amended, and any other
laws or regulations dealing with the wages, hours of working, conditions or
employees engaged in the production of the Products.
9.6 Environmental Safety
--------------------
Manufacturer warrants that each chemical substance contained in the Products
complies with all applicable federal, state and local environmental health and
safety laws, including, without limitation, the Toxic Substances Control Act,
Occupational Health and Safety Act, and Federal Hazardous Substances Act, as
each may be amended.
9.7 Product Safety
--------------
Manufacturer warrants that the Products comply with any applicable sections of
the Federal Food, Drug and Cosmetic Act, Federal Consumer Product Safety Act,
and Federal Communications Act, as each may be amended, and any other applicable
product safety law.
9.8 Indemnity
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If the Manufacturer breaches the warranty given in Section 9.2, or if the
Company is subject to any product liability claims arising out of the design and
manufacture of the Product, the Manufacturer will hold harmless and indemnify
the Company against all losses, damages, costs and expenses (including
attorney's reasonable costs and fees) that the Company may sustain as a result
of such breach. This indemnity is given on the conditions that (i) Buyer gives
Manufacturer prompt notice of such claim (provided, however, that any delay or
failure to notify Manufacturer of any claim shall not relieve Manufacturer of
its indemnification obligations under Section 9.2 except to the extent that the
defense of such action is materially prejudiced or materially adversely affected
by such delay or failure to notify), (ii) Manufacturer maintains the right to
sole control of the defense and all negotiations for settlement of such claim or
suit and (iii) Company agrees to cooperate with Manufacturer (provided, however,
that any failure to cooperate with Manufacturer shall not relieve Manufacturer
of its indemnification obligations under this Section 9.8 except to the extent
that the defense of such action is materially prejudiced or materially adversely
affected by such failure to cooperate). In the event of any claim as described
above which has been finally adjudicated in favor of a third party, Manufacturer
will have the option, at its own expense, either to procure for Company the
right to continue using said product or replace with a non-infringing product or
modify same so it becomes non-infringing, subject to reasonable approval of such
replacement part or modification by Company.
9.9 Manufacturer shall indemnify, defend and hold Company harmless from and
against all loss, damage or expense (including reasonable attorneys' fees)
caused by a defect in the design or manufacture, or a breach of any warranty in
this Article 9 (other than the warranty given at Section 9.2) of any of the
Products purchased under this Agreement provided that Company gives Manufacturer
prompt notice of such claim or suit (provided, however, that any delay or
failure to notify Manufacturer of any claim shall not relieve Manufacturer of
its indemnification obligations under Section 9.8 except to the extent that the
defense of such action is materially prejudiced or materially adversely affected
by such delay or failure to notify), the right to maintain sole control of the
defense and all negotiations for settlement of such claim or suit, and
cooperates with Manufacturer in the defense and/or settlement thereof.
9.10 Except as set forth in this Article 9, Manufacturer gives no other
warranties of any kind, express or implied, and all implied warranties of
merchantability and fitness for a particular purpose that exceed the scope of
the above warranties are disclaimed by Manufacturer and excluded from this
Agreement.
ARTICLE 10 - SERVICE
--------------------
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The parties agree to negotiate in good faith a definitive written agreement with
respect to service and service training.
ARTICLE 11-ADVERTISING AND PUBLICITY
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If so requested the Manufacturer shall make available its own advertising and
sales literature to the Company at cost plus carriage. The Company shall not use
the Manufacturer's name or any other trademark or trade name used or claimed by
the Manufacturer (all of which names or marks shall hereinafter be referred to
as the "Marks") in connection with any business conducted by the Company other
than dealing with the Products. The Manufacturer hereby grants to the Company a
royalty free non-exclusive license to use the Marks, but only with respect to
the sales of the Products. The Company shall include and shall not alter,
obscure or remove any trademark or trade name used or claimed by the
Manufacturer, or any markings, colors or other insignia which are contained on
or in or affixed to Product at the time of shipment. Both parties must approve,
in advance in writing, any advertising or promotional literature or announcement
to the press by the Company regarding the relationship or otherwise utilizing
either the Manufacturer's or Buyer's name or trademarks in advance in writing.
ARTICLE 12-LIMITATION OF LIABILITY
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Any provision herein to the contrary notwithstanding, in no event shall either
party be liable for indirect, incidental or consequential damages. Except in
respect of a claim which falls under the indemnity given at Section 9.8, breach
of the warranty given at Section 9.2, for which no limit applies, in no event
shall the liability of the Manufacturer arising in connection with any Product
sold hereunder (whether such liability arises from a claim based on agreement,
warranty, tort (including gross negligence) or otherwise) exceed the amount paid
by Buyer to CardioDynamics for such Product.
ARTICLE 13 - COMPETITION
------------------------
13.1 Co-Marketing
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Manufacturer agrees that, during the term of this Agreement, it will not
directly or indirectly sell, market or distribute the Products (or any stand-
alone products capable of functioning as a substitute to the Product) to any
party in the Territory, as specified in Exhibit B.
13.2 Further Agreements-Rights of Exclusivity
----------------------------------------
The parties intend to enter into good faith negotiations with respect to a
definitive written agreement pursuant to which, Company shall distribute
Manufacturer's products in Canada, Latin America, and Asia/Pacific.
Manufacturer agrees that neither it nor its Affiliates or representatives will:
(i) sell or transfer their respective companies, any significant interest in
their respective companies or any significant assets of their respective
companies to any third party, or enter into any agreement to do the same; or
(ii) make any offer to any third party, or commence or entertain discussions
with, or provide material non-public information to any third party (other than
with respect to the ongoing activities of Manufacturer's current distributors in
those territories) regarding the distribution of its products in those
territories. Manufacturer further agrees to promptly inform Company of any
proposal or other writing it may receive relating to any of the foregoing. In
order to provide a reasonable period for the parties to complete negotiation of
distribution agreement for these territories, this section will remain in force
until midnight December 1, 1999.
13.3 Non-competition
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In order to induce Manufacturer to enter into the transactions contemplated
hereby, and in consideration thereof, Company agrees that it shall not, directly
or indirectly, engage, whether as principal, agent, investor, distributor,
representative, partner, stockholder, consultant or otherwise, in any activity
or business venture, anywhere in the Territory, which involves (a) during the
term of this Agreement, the development, manufacture, distribution or sale of
non-invasive cardiac output measurement devices using the Thoracic Electrical
Bio-impedance method or (b) for a period of one (1) year following expiration or
termination of this Agreement, the distribution or sale of noninvasive cardiac
output measurement devices using the Thoracic Electrical Bio-impedance method.
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13.4 Scope of Restriction
--------------------
The parties agree that if, in any proceeding, a court or other authority shall
refuse to enforce any covenant herein set forth because such covenant covers too
extensive a geographic area or too long a period of time, such covenant shall be
deemed appropriately amended and modified in keeping with the intention of the
parties to the maximum extent permitted by law.
ARTICLE 14 - INITIAL PURCHASE
-----------------------------
14.1 On execution of this Agreement, Company will submit to Manufacturer a
purchase order of even date for 20 demonstration units of the XXXX.xxx
hemodynamic Monitor (model BZ 4110-101) and one additional patient cable, , and
case of sensors (50 patient applications) per unit for shipment on or before
October 15, 1999.
14.2 A minimum order of an additional 20 units of the Products (XxxX.xxx,
additional patient cable , and a case of sensors) will be ordered on or before
January 5, 2000 and a yearly minimum volume commitment for the purchase of
Products will be agreed between the parties. For Year 2000, the minimum volume
commitment is 68 units (20 units for the first quarter, and 16 units for each
subsequent quarter in Year 2000). The additional 20 units ordered on or before
January 15, 2000 will apply toward the minimum volume commitment for the Year
2000, and toward the minimum volume commitment for shipments prior to February
15, 2000 as specified in Article 17.2. In no event shall the minimum volume
commitment be less than the Company's mutually-agreed upon share of
Manufacturer's annual business objectives.
14.3 Company agrees to make available one Hewlett-Packard Model 340 (or
acceptable equivalent) Printer for each demonstration unit. Printers may be
purchased either from Manufacturer or from the Company's preferred printer
supplier.
ARTICLE 15 - RECALL AND PRODUCT COMPLAINTS
------------------------------------------
15.1 Recall
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In the event the Company, any of its subsidiaries, or its distributors should be
required or the Company should voluntarily decide to initiate a recall, product
withdrawal, or field correction of any Products Company shall notify
Manufacturer and provide a copy of its proposal, including the recall letter,
for Manufacturer's approval prior to initiation of such action which approval
will not be unreasonably withheld or delayed. In carrying out such a recall,
Manufacturer shall lead in the investigation to determine the cause and extent
of the problem.
In the event that Manufacturer or a regulatory agency reasonably believes that a
recall, product withdrawal, or field correction for Products may be necessary or
appropriate, Manufacturer shall notify Company through Company's designee to be
named, of Manufacturer's belief, and the parties shall fully cooperate with each
other concerning the necessity and nature of such action. All regulatory
authority contacts, as applicable, and coordination of any recall or field
correction activities will be handled by Manufacturer, with Company's
assistance, whether or not such action was initially requested by Manufacturer.
In the event that any Product is recalled as a result of (1) the supply by
Manufacturer of product that does not conform to any warranty in Article 9
including, without limitation, the specifications; (2) the negligent or
intentionally wrongful act of Manufacturer or its representatives, then
Manufacturer shall bear the following costs and expenses of such recall:
reasonable expenses related to communications and meetings with all required
regulatory agencies, reasonable expenses of replacement stock, the reasonable
cost of notifying customers and the reasonable costs associated with shipment of
recalled Products from customers and shipment of an equal amount of replacement
Products to those same customers. To the extent that the reason for any recall
of Products hereunder is in part the responsibility of Manufacturer and in part
the responsibility of Company then the expenses shall be allocated in an
equitable manner between the parties.
15.2 Product Complaints
------------------
Manufacturer will be responsible for the support and upkeep of the Products
unless specified in a separate Service Agreement. However, if any Product needs
engineering evaluation, Manufacturer will evaluate at no charge and supply a
written report summarizing the evaluation within fourteen (14) days of receipt
of the subject device. Furthermore, it will be the responsibility of
Manufacturer to resolve
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Product-related complaints. All complaints submitted through Company will be
transferred in a timely manner to Manufacturer for investigation and resolution.
Product complaints in which the Product is implicated in an event which resulted
in patient or user serious injury or death will be transferred to Manufacturer
within three working days. Manufacturer will provide Company with copies of all
correspondence related to Product-related complaints originated by Company.
ARTICLE 16 - CONFIDENTIALITY
----------------------------
16.1 Each of the parties shall at all times during and subsequent to the
Agreement Period keep and cause to be kept confidential, any confidential
information received by it from the other party. Such confidential information
received from the other party shall not be disclosed in any manner to any third
party; provided, however, the parties may disclose any confidential information
contemplated hereunder to third parties as necessary to have the Products
designed, manufactured, modified, improved, serviced or repaired; confidential
information shall be disclosed by the receiving party only to those employees or
third party contractors who need to know the same; such employees and third
parties to whom such Confidential information is disclosed shall be advised of
the confidential nature of such information and shall maintain the same in
confidence as the confidential information of the other party.
16.2 Confidential information shall consist of all confidential information
maintained in secrecy or confidence by the disclosing party as a valuable trade
secret or business information; all confidential information disclosed shall be
marked "confidential" by the disclosing party if in writing prior to disclosure.
16.3 Confidential information shall not include: (i) any information which is
generally available to the public through no breach of this Agreement; (ii) any
information which is lawfully received from a third party having rights to
disclose the same to the receiving party and which third party is free from
similar non-disclosure obligations as are set forth herein; (iii) any
information which is independently developed by the receiving party; (iv) any
information which is already known to the receiving party or its subsidiaries or
affiliates, or in their possession prior to disclosure by the other party. The
parties further agree that the party asserting as a defense that confidential
information was obtained in a manner set forth in clause (i), (ii), (iii) or
(iv) above shall bear the burden of proof in establishing such defense by a
preponderance of the evidence.
16.4 It shall not be a breach of this Article 16 if Confidential Information
is disclosed by the receiving party to comply with a legal or regulatory
requirement or with a court order, if that party promptly notifies the other
upon becoming aware of such requirement or order.
ARTICLE 17 - TERMINATION
------------------------
17.1 This Agreement shall expire at the end of the term specified in Article 3
unless otherwise agreed. In the absence of an extension or renewal agreement,
any transactions or activities within the scope of this Agreement engaged in
between the Parties following expiration or termination of this Agreement shall
be covered by the terms of this Agreement, but nothing in this Agreement shall
be deemed to require either Party to further continue such activities or
transactions, and either Party, at its sole discretion, may cease any such
further activities or transactions at any such time without liability to the
other.
17.2 This Agreement may be terminated prior to the completion of its term:
by agreement in writing between the Parties;
by either party upon sixty (60) days notice if the other is in material breach
of this Agreement, unless such breach is capable of cure and is not persistent,
in which case termination shall occur only if such material breach has not been
cured within that sixty (60) day period following receipt of a notice. The
notice shall specify the material breach in reasonable detail. For the purposes
of this Article 17.2 material breaches include, without limitation, failure of
the Products to conform to the Operators and Service Manuals in Exhibit A as
amended from time to time; the supply within the Territory by Manufacturer or by
any party other than the Company who has been so authorized by the Manufacturer
of the Products to any party other than the Company for in-hospital sales;
failure to deliver Products on time; failure to provide Service in a prompt and
efficient manner;
by either party, effective immediately upon notice, if the other Party becomes
the subject of
9
any bankruptcy proceedings, receivership, or other insolvency proceedings or
makes any assignment or other arrangement for the benefit of its creditors or
otherwise ceases to conduct its operations in the normal course of business;
by either party, effective immediately upon notice, if (i) the other attempts to
sell, assign, delegate, or transfer any of its rights and obligations under this
Agreement, except in the case of the Company, to any of the Company's
Affiliates, without having obtained the Company's prior written approval or (ii)
a material change occurs in the ownership or control of the Manufacturer which
is reasonably unacceptable to the Company; or (iii) either party utilizes the
services of a company or person reasonably unacceptable to the other party; or
(iv) either party acts in a manner reasonably deemed by the other party to
be detrimental to the best interests of the other party ;
by either party if the other fails to secure or renew any material license,
registration, permit, authorization or approval necessary for the conduct of its
business in the manner contemplated by this agreement, or if any such license,
registration, permit, authorization or approval is revoked or suspended and is
not cured within sixty (60) days of such failure, revocation;
by the Manufacturer, effective immediately upon notice, if Buyer fails to pay
any sums due under this agreement within thirty (30) days after the due date; by
the Manufacturer;
by the Manufacturer, effective immediately upon notice, if the Company fails to
order the minimum volume commitment of Products in accordance with Article 14;
by either party immediately if the parties fail to execute a mutually acceptable
Service Agreement by November 30, 1999; or
by either party if they fail to agree upon minimum volume commitments ("Minimum
Yearly Amount") by January 15, 2000 and, in respect to subsequent years, thirty
(30) days prior to the end of the twelve (12) month period covered by the then
existing Minimum Yearly Amount;
by Manufacturer upon sixty (60) days notice except for the November 15 date,
which would be five (5) days notice if the Company fails to order the
following minimum quarterly percentages of the Minimum Yearly Amount by:
February 15: at least 25% of the Minimum Yearly Amount;
-----------
May 15: at least 25% of the Minimum Yearly Amount (or a cumulative of 50%
------
of the Minimum Yearly Amount)
August 15: at least 25% of the Minimum Yearly Amount (or a cumulative of
---------
75% of the Minimum Yearly Amount)
November 15: at least 25% of the Minimum Yearly Amount (or a cumulative of
-----------
100% of the Minimum Yearly Amount)
by either party upon notice if any other distribution agreement between the
parties is terminated in accordance with the terms thereof by either party if
they fail to agree upon Minimum Yearly for the calendar year commencing January
1, 2001 by November 15, 2000.
ARTICLE 18 - RIGHTS AND OBLIGATIONS OF THE PARTIES ON TERMINATION
-----------------------------------------------------------------
18.1 Upon expiration or termination of this Agreement except as otherwise
requested by the Manufacturer, the Company shall immediately cease all sales and
other activities in connection with the Products;
within sixty (60) days of the expiration or termination of this Agreement a
final accounting shall be prepared by the Manufacturer and delivered to the
Company. Such final accounting shall indicate any and all amounts owed by the
Company to the Manufacturer as set off by any amount due by the Manufacturer to
the Company, at the effective date of expiration or termination. All payments
to be made pursuant to this Article shall be made within thirty (30) days of
receipt by the Company of the aforesaid final accounting;
Company shall, within sixty (60) days from the date of expiration or termination
of this Agreement return to the Manufacturer, free of charge (i) all of its
sales and service records concerning the Products, including, without
limitation, its customer list; and (ii) any and all proprietary items supplied
by the Manufacturer to the Company;
Manufacturer shall, at the Company's request, at any time after termination of
this Agreement due to Manufacturers breach, repurchase any of the Products or
spare parts, at the net price paid by the Company plus actual transportation
costs and import duties thereon, Manufacturer and the
10
Company hereby recognize and agree that, unless otherwise agreed between the
Parties, their responsibilities with respect to purchase orders for Products
accepted by the Manufacturer prior to the effective date of expiration or
termination of this Agreement, shall survive until fully performed,. At the date
of expiration or termination of this Agreement, the Company shall provide to the
Manufacturer a list of such pending purchase orders; and
18.2 The acceptance of any purchase order, or the sale of any Product(s) to
the Company after the expiration or the termination of this Agreement shall not
be construed as a renewal or extension thereof nor as a waiver of expiration or
termination. In the absence of a written agreement between the Parties, all
such transactions shall be individually governed by the terms and conditions of
this Agreement.
18.3 The Parties hereby agree that neither shall be liable to the other by
reason solely of expiration or termination of this Agreement for compensation,
reimbursement or damages on account of the loss of prospective profits on
anticipated sales or on account of expenditures, investments, leases or
commitments in connection with the business or goodwill of the Manufacturer or
the Company or otherwise.
ARTICLE 19 - INJUNCTIVE RELIEF
------------------------------
In the event of a breach or threatened breach by either party of any of the
provisions of Article 13 or Article 16, each party hereby consents and agrees
that the other party shall be entitled to an injunction or similar equitable
relief from any court of competent jurisdiction restraining such party from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be performed by such party under any
of such provisions, without the necessity of showing any actual damage or that
money damages would not afford an adequate remedy and without the necessity of
posting any bond or other security. Nothing herein shall be construed as
prohibiting any party from pursuing any other remedies at law or in equity which
it may have.
ARTICLE 20 - NOTICES
--------------------
All notices to be served on the Company or the Manufacturer pursuant to the
terms hereof shall be in writing and either personally delivered, sent by
prepaid registered air mail or facsimile transmissions (and in the case of
facsimile, such return receipt must show complete transmission to the correct
facsimile number) to the addresses as set forth in this Agreement. All notices
given pursuant hereto shall be effective upon receipt (if personally delivered)
or the date shown on the return receipt (if sent by registered mail or by
facsimile). Notices shall be sent to the attention of the persons identified
below. Any change of address or recipient of notice of a Party hereto shall be
notified in writing to the other Party.
Initial contact details for the Parties are:
The Manufacturer:
CardioDynamics International Corporation
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
If to Company:
GE Marquette Medical Systems, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Vice President of Marketing
Telecopier No.: (000) 000-0000
ARTICLE 21 - GOVERNING LAW MEDIATION ARBITRATION
------------------------------------------------
21.1 This Agreement shall be governed by, and in accordance with, the internal
laws of the State of Wisconsin USA, without giving effect to the conflict of
laws principles thereof.
21.2 The Parties agree that any controversy, claim or dispute between the
Parties arising out of or relating in any way to this Agreement which the
Parties are unable to resolve by mutual negotiation will be referred to the
Chief Executive Officer and General Counsel of the Manufacturer and the Vice
President of Marketing and General Counsel of the Company who will attempt to
resolve such controversy claim and dispute in a spirit of good faith and on
sensible commercial principles.
21.3 In the event of any controversy, dispute or difference between the
Parties hereto, reasonably estimated by either party not to exceed $100,000,
either party may give notice to the other in writing of the existence of such
controversy, dispute or difference specifying its nature and the
11
points at issue. If the same shall not be amicably resolved by negotiation as
set forth above within thirty (30) days from the receipt of such notice, either
party shall be entitled to have such controversy, dispute or difference finally
settled by arbitration, in accordance with the rules of the American Arbitration
Association in effect on the date of this Agreement. The arbitration shall be
conducted in Milwaukee, Wisconsin , USA, in the English language by a Tribunal
of three arbitrators appointed in accordance with such rules. The decision of
the arbitrators shall be based upon the rights and obligations of the Parties
set forth in this Agreement and shall be binding on the parties to the
arbitration proceeding and may be entered as a judgment in any court in any
country having jurisdiction.
ARTICLE 22 - MISCELLANEOUS
--------------------------
22.1 Entire Agreement
----------------
This Agreement and the exhibits referred to herein constitute the entire
agreement between the Parties with respect to the subject matter thereof and
supersede all prior statements, agreements, understandings, communications,
representations and/or promises, whether in writing or oral, of the Parties
relating thereto.
22.2 Access to records
-----------------
If Manufacturer provides Products to the Company valued at ten thousand dollars
($10,000) or more over a twelve (12) month period, it shall permit, during the
period of this Agreement and for four years after its termination or expiration,
the Comptroller General of the United States, Department of Health and Human
Services or his duly authorized representatives reasonable access to this
Agreement and such records as he may reasonably require under applicable law to
verify the nature, extent and costs of service provided under this Agreement.
To the extent Manufacturer subcontracts any work connected with manufacturing
the Products, its contracts with these subcontractors will provide for similar
access to the subcontractors' records.
22.3 Non-assignment
--------------
Neither party shall have the right to assign, delegate, sub-contract or
otherwise transfer any of its rights and obligations under this Agreement
without the prior written consent of the other, except to an Affiliate of such
party.
22.4 Amendment
---------
This Agreement may not be modified except by a written instrument duly signed by
authorized representatives of both Parties.
22.5 Waiver
------
No failure on the part of a Party hereto to exercise, and no delay in its
exercise of, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise by a Party of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
22.6 Severability
------------
If one or more of the provisions of this Agreement are at any time found to be
invalid by a court, tribunal or other forum of competent jurisdiction, or
otherwise rendered unenforceable, such decision shall not have the effect of
invalidating or voiding the remainder of this Agreement. This Agreement shall
be deemed amended by modifying or severing such provisions to the extent
necessary to render it valid, legal and enforceable while preserving its intent,
or if that is not possible, by substituting therefor another provision that is
valid, legal and enforceable which materially effectuates the Parties' intent.
Any such invalid or unenforceable provision or provisions shall be severable
from this Agreement so that the validity or enforceability of the remaining
provisions of this Agreement, or the validity of the provision(s) in question in
any other jurisdiction, shall not be affected thereby.
22.7 Independent Contractor
----------------------
This Agreement does not make either Party the employee, agent or legal
representative of the other for any purpose whatsoever. Neither Party is
granted the 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.
22.8 Amendment
---------
12
This Agreement cannot be amended, changed, modified or supplemented in any
manner whatsoever, except by agreement in writing executed by the Parties.
22.9 Force Majeure
-------------
If the performance of this Agreement or of any obligation hereunder (except
payment of monies due) is prevented, restricted or materially interfered with by
reason of fire or other casualty or accident; strikes or labor disputes;
inability to procure raw material, power or supplies; hurricanes, earthquakes,
floods, or Acts of God; war or other violence; any law, order, proclamation,
regulation, ordinance, demand or requirement of any governmental agency or
intergovernmental body; or any other act or condition whatsoever beyond the
reasonable control of the parties hereto, the party so affected, upon giving
notice to the other party, shall be excused from such performance during and to
the extent of such prevention, restrictions or interference.
22.10 Survival
--------
The provisions of Articles 5(c), 5(d), 8, 9, 12, 16, 18, 21 and 22.2 shall
survive the termination of this Agreement for whatever reason.
IN WITNESS WHEREOF, the Company and the Manufacturer have caused this
Agreement to be executed by their duly empowered representatives as of the date
first written above.
GE MARQUETTE MEDICAL SYSTEMS INC.
/s/ Xxxx Xxxxxxxxx
------------------------------
By: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
CARDIODYNAMICS INTERNATIONAL CORPORATION
/s/ Xxxxxxx X. Xxxxx
-------------------------------
By: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
13
EXHIBIT A
---------
Operator's and Service Manual
-----------------------------
Manufacturers Standard Operators Manual
A-1
EXHIBIT B
---------
The Territory
-------------
The United States including Puerto Rico and dependent territories.
Manufacturer appoints the Company as its authorized representative to promote
and sell the Products to hospitals in the Territory, with the following
exceptions:
(a) Congestive heart failure and dialysis clinics , including those based in
hospitals.
(b) Hospitals that are less than one hundred (100) beds and are not within
corporate partnerships with the Company (a list of hospitals to be provided
to the Manufacturer at the commencement of this agreement, and to be
updated on a quarterly basis during the term of this agreement).
In areas in the Territory in which the Manufacturer does not have representation
by direct sales representatives, the Company may promote and sell the Products
to all health care providers in mutually agreed upon areas. In the event the
Manufacturer hires a direct sales representative in an area in the Territory,
within three months of the date of hire of the direct sales representative, the
Company will confine its promotional and sales activities to hospitals with more
than 100 beds and all hospitals designated as corporate partner hospitals
(regardless of number of beds) in the area covered by the Manufacturer's new
sales representative. The Manufacturer's sales force and distributors have until
December 31, 1999 to complete sales within any of the Company's territory as
defined above. Otherwise, any sales in progress that are completed after
December 31, 1999 will be accounted toward the Company's minimum volume
commitment. The Company will provide to Manufacturer on no less than a
quarterly basis, a listing of all hospitals designated as corporate partner
hospitals within the Territory. The Manufacturer's sales force and distributors
will have 90 days from notice of a new corporate partner hospital, to complete
any sales in progress with that hospital. Otherwise, any sales that are
completed after 90 days will be accounted toward the Company's minimum volume
commitment.
B-1
EXHIBIT C
---------
Pricing
See attached Price List for List Prices of XxxX.xxx monitors and Accessories.
Transfer pricing to GEMMS will be as follows:
. 35% discount from list price for the XxxX.xxx Monitor
. 25% discount from list price for all accessories
Company and Manufacturer agree to review the Prices after the Products have been
distributed by Company for a period of six (6) months and every six (6) months
thereafter; provided, however, that in no event shall any increase in Prices for
a particular Product be greater than the percent increase in CardioDynamics'
cost of goods for such Product.
Furthermore, the Parties agree to review the level of discount on a yearly
basis, based on the level of commitment and participation by the Manufacturer's
salesforce as defined in Exhibit D.
C-1
EXHIBIT D
---------
Training Plan
-------------
A. Sales and Marketing. Manufacturer will train the designated sales,
clinical applications and marketing employees of Company in the use and
operation of the Products. Such training shall take place at a mutually agreed
upon place and time. Manufacturer's salesforce will provide approximately 10% of
their aggregate efforts toward sales support to the Company's salesforce for in-
hospital sales The Manufacturer's salesforce will receive commission and quota
credit on GEMMS sales of the Manufacturer's products into hospitals, paid by the
Manufacturer. The Manufacturer will provide reasonable market development
support toward establishing successful penetration of the Product in the
Territory.
B. Service. The parties will negotiate in good faith a definitive written
agreement with respect to the service and training to be provided by
Manufacturer to Company.
C. Quality Assurance. Manufacturer shall train Company's designated
employees, at a mutually agreeable time, at the Manufacture's facilities in San
Diego, California in the procedures used by Manufacturer to perform quality
assurance inspections of the Products.
D. Expenses. The training provided by Manufacturer described in this Exhibit
D will be provided without further charge to Company. At Company's option,
Manufacturer will make available training described in this Exhibit D at other
locations reasonably acceptable to Manufacturer, as Company may reasonably
request from time to time. All costs and expenses incurred by the parties in
connection with their travel to, or attendance at such training (including, but
not limited to, expenses for transportation, lodgings, and meals) shall be borne
by the party incurring those costs and expenses. Manufacturer shall provide
Company training of sufficient quality to enable the Company's employees to
perform the Company's obligations under this Agreement competently and
professionally.
D-1
EXHIBIT E
---------
Warranty Periods
----------------
[Manufacturers Standard Z-Care Service Policy]
E-1
