exv10w40



 





EXHIBIT 10.40




FINAL EXECUTABLE VERSION of OEM Purchase Agreement dated 7-29-03




OEM PURCHASE AGREEMENT




     This OEM Agreement (the “Agreement”) is made as of the 29th day of July, 2003 (the “Effective
Date”) between Cardiac Science, Inc., a Delaware corporation (“Supplier” or “Cardiac Science” or
“CSI”), a medical device developer and manufacturer of external defibrillators having its principal
place of business at 1900 Main Street, Irvine, CA 92614 and GE Medical Systems Information
Technologies, Inc., a Wisconsin corporation (“GEMS-IT”), having its principal place of business at
8200 W. Tower Avenue, Milwaukee, WI 53223. The parties hereby agree as follows:




	1.	 	SCOPE OF AGREEMENT






	 	1.1	 	General. This Agreement specifies the terms and conditions under
which Supplier will manufacture, sell, license and support the OEM Products listed in
Exhibit A to this Agreement. The OEM Products are regarded as “Original
Equipment Manufacturer” products that will be sold separately or incorporated into
GEMS-IT Products for resale worldwide under GEMS-IT’s private label. The OEM
Products and the GEMS-IT Products will be marketed, serviced, and supported by
GEMS-IT’s field organization and channel partners, subject to the marketing, service,
and support obligations of Supplier pursuant to this Agreement. Nothing in this
Agreement shall in any way limit the right of GEMS-IT to develop, produce, market, sell
and distribute any products whatsoever. Nothing is this Agreement shall in any way
limit the right of Cardiac Science to develop, produce, market, sell or distribute any
products that utilize its proprietary STAR® biphasic defibrillation technology and
proprietary RHYTHMx® software analysis algorithm and pacing technology, or any other
Cardiac Science technology, collectively (the “CSI Proprietary Technology”) as long as
Cardiac Science otherwise complies with its obligations set forth in Section 1.7 of
this Agreement. In connection with the execution of this Agreement and partially in
consideration of the agreements set forth herein, Cardiac Science has issued to GEMS-IT
that certain warrant dated the Effective Date to purchase 1,000,000 shares of common
stock, par value $0.001 per share, of Cardiac Science.
	 
	 	1.2	 	Project Scope. This Agreement includes an engineering and product
development project (the “Development Project”) whereby Cardiac Science, among other
things listed in the Specification and Development Project Plan set forth in Exhibit B,
will integrate its proprietary STAR® biphasic defibrillation technology and proprietary
RHYTHMx® software analysis algorithm and pacing technology collectively (the “CSI
Proprietary Technology”) into the OEM Products. The Development Project shall be
performed at Cardiac Science’s sole expense. The parties agree that time is of the
essence with respect to Cardiac Science’s completion of the Development Project and
commencement of deliveries of the OEM Products, and Cardiac Science shall make its
commercially reasonable best efforts to complete the Development Project and begin
deliveries of the OEM Products not later than twelve (12) months of the Effective Date.
	 
	 	1.3	 	GEMS-IT License. Under this Agreement GEMS-IT will deliver and
license (the “License”) to Cardiac Science the following relating to its existing
CardioServ basic and CardioServ SpO2 products on an as-is basis, without warranty of
any kind (including without limitation any warranty of merchantability or fitness for a
particular purpose): models, molds, overlay tools, equipment, copies of designs and
documentation and other materials that may reasonably be required by Cardiac Science
to complete the Development Project (the “GEMS-IT CardioServ Property”).
Supplier shall be







 




			
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	 	 	 	responsible for all costs and expense of transporting the GEMS-IT CardioServ
Property to its facilities and shall be responsible for all risk of loss once such
property is removed from GEMS-IT’s premises. Supplier shall adequately insure such
property while it is in its possession. GEMS-IT shall make the GEMS-IT CardioServ
Property available to Supplier for its use no later than ninety (90) days preceding
the date Cardiac Science has identified to GEMS-IT in writing as the date it
reasonably expects to be able to deliver the- first units of OEM Products (the
“Expected First Delivery Date”); provided, that Cardiac Science has provided GEMS IT
with written notice of the Expected First Delivery Date at least one hundred and
twenty (120) days preceding such date. If Cardiac Science has not been able to
deliver the first units of OEM Products by September 30, 2004, upon GEMS IT’s
request Cardiac Science shall promptly return all GEMS-IT CardioServ Property at its
costs and expense to a mutually agreed upon GEMS-IT location. For purposes of the
preceding two sentences, “delivery of the first units of OEM Products” shall mean
delivery meeting the requirements of the First Delivery Date as defined in Section
1.6 below. The License shall be free of royalty or any charge and shall be limited
to Cardiac Science’s use of the GEMS-IT CardioServ Property to manufacture the OEM
Products for GEMS-IT for exclusive worldwide sale by GEMS-IT. Cardiac Science shall
make no other use of the GEMS-IT CardioServ Property. Upon expiration of the Term of
this Agreement and in the event the Agreement is not renewed by mutual agreement of
the parties for an additional term, the license for the GEMS-IT CardioServ Property
shall survive beyond the original term and be free of cost, fees, licenses and
royalties to Cardiac Science. If the Agreement is terminated earlier than its Term,
Cardiac Science shall be obligated to promptly return the GEMS-IT CardioServ
Property in accordance with the applicable provisions above.
	 
	 	1.4	 	Manufacture Authority. Under this Agreement Cardiac Science shall
have the right to manufacture the OEM Products, which will include the GEMS-IT
CardioServ Property. Cardiac Science shall have no rights to, and shall not, label,
market, distribute or sell the OEM Products in the name or with the Marks of anyone
other than GEMS-IT (unless GEMS-IT directs otherwise). In addition, Cardiac Science
shall not permit or authorize any third party to do any of the foregoing.
	 
	 	1.5	 	Eligible Purchasers. This Agreement enables GEMS-IT, GEMS-IT
Affiliates and GEMS-IT Subcontractors to purchase OEM Products from Supplier under the
terms of this Agreement or any subsequent Product Addendum. Unless a Product Addendum
specifically refers to and amends a term of this Agreement, the terms and conditions of
this Agreement will control and take precedence over any conflicting terms in a Product
Addendum.
	 
	 	1.6	 	Term of Agreement. This Agreement will commence as of the Effective
Date and continue for a 3 year period (the “Term”) after the date of the first delivery
to GEMS IT by Cardiac Science of the OEM Products capable of commercial resale by
GEMS-IT in the United States and European countries accepting the CE Mark (the “First
Delivery Date”), unless terminated earlier under the terms of this Agreement. GEMS IT
may terminate this Agreement if Cardiac Science is not able to reasonable demonstrate
to GEMS IT that is has commenced Alpha testing (Phase 3 of the Development Project
Plan) by not later than June 15, 2004. In addition, if the First Delivery Date has
not occurred by not later than September 30, 2004, GEMS-IT may at its option terminate
this Agreement. After the initial Term, this Agreement may be renewed only upon the
written agreement of the parties.







 




			
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	 	1.7	 	Exclusive Relationship. This Agreement enables GEMS-IT to sell the OEM
Products on a worldwide exclusive basis. In consideration of GEMS-IT’s undertakings
set forth in this Agreement, including GEMS-IT’s minimum purchase obligations set
forth in Section 3.4 below, from and after the Effective Date until expiration of the
Term, Cardiac Science shall not (directly or indirectly through a third party)
develop, manufacture, license or sell any products that (i) incorporate the CSI
Proprietary Technology and (ii) provide the substantially the same functionality
(including user interface) as the OEM Products, without the prior written consent of
GEMS IT. For purposes of this section, Cardiac Science’s Powerheart CRM and Powerheart
AED products shall not be deemed to provide substantially the same functionality as
the OEM Products.






	2.	 	DEFINITIONS
	 
	 	 	The following capitalized terms will have these meanings throughout this Agreement.






	 	2.1	 	“Affiliate” means any person or entity directly or indirectly controlling,
controlled by, or under common control with a party to this Agreement. “Control”
shall be defined as direct or indirect power to direct or cause the direction of the
management or policies of another person or entity, whether through the ownership of
voting securities, by contract, or otherwise.
	 
	 	2.2	 	“CSI Proprietary Technology” means Cardiac Science’s proprietary STAR®
biphasic defibrillation technology, proprietary RHYTHMx® software analysis algorithm
and pacing technology, all of which shall be integrated into the OEM Products pursuant
to this Agreement.
	 
	 	2.3	 	“Development Project” shall have the meaning set forth in Section 1.2.
	 
	 	2.4	 	“Delivery Date” means the date specified in an Order for the delivery
of OEM Products by Supplier to the destination required under the Order.
	 
	 	2.5	 	“Documentation” means the user and technical manuals and other
documentation that Supplier will make available for the use of the OEM Products.
	 
	 	2.6	 	“Eligible Purchasers” mean those parties authorized to purchase OEM
Products under this Agreement as listed in Section 1.5 above.
	 
	 	2.7	 	“Forecast” means GEMS-IT’s estimate of its purchase requirements over a
six-month period, or such other period designated by the parties.
	 
	 	2.8	 	“GEMS-IT Products” means the GEMS-IT products or systems that will
incorporate the OEM Products and that will be marketed and sold to end-user customers
by GEMS-IT and its distributors.
	 
	 	2.9	 	“GEMS-IT Property” means all property, including without limitation,
the GEMS-IT CardioServ Property and all other models, tools, equipment, copies of
designs and documentation and other materials that may be furnished to Supplier by
GEMS-IT or on GEMS-IT’s behalf or separately paid for by GEMS-IT for use by Supplier in
connection with this Agreement.







 




			
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	 	2.10	 	“Intellectual Property Rights” means all rights in patents, copyrights,
moral rights, trade secrets, mask works, Marks and other similar rights.
	 
	 	2.11	 	“Lead Time” means the time between the date an Order is sent and the Delivery
Date.
	 
	 	2.12	 	“Marks” means the trademarks, service marks, trademark and service mark
applications, trade dress, trade names, logos, insignia, symbols, designs or other
marks identifying a party or its products.
	 
	 	2.13	 	“Noncomplying Product” means any OEM Product received by GEMS-IT that
does not materially comply and/or perform in accordance with the Specifications, or
otherwise does not materially comply with the requirements of an Order or other
provisions of this Agreement, including applicable warranties. Noncomplying Products
include, without limitation, dead-on-arrival products, overshipments and early
shipments.
	 
	 	2.14	 	“OEM Products” means the products listed in Exhibit A, all related
Documentation, Parts and other deliverables provided pursuant to this Agreement. For
the avoidance of doubt, Cardiac Science shall incorporate the CSI Proprietary
Technology into the OEM Products pursuant to the Development Project.
	 
	 	2.15	 	“Orders” means a written or electronic purchase order or release issued by
GEMS-IT to Supplier for purchase of the OEM Products.
	 
	 	2.16	 	“Parts” means the replacement parts, components, consumables or other products
that may be supplied in conjunction with or as additions to the OEM Products.
	 
	 	2.17	 	“Product Addendum” means an addendum to this Agreement entered into
between Supplier and an Eligible Purchaser naming additional OEM Products and product
specific requirements in addition to those requirements specified in this Agreement.
	 
	 	2.18	 	“Software” means any software or firmware included or bundled with the OEM
Products, as designated in the description of OEM Products in Exhibit A.
	 
	 	2.19	 	“Specifications” means the technical and functional requirements for
the OEM Products as specified or referenced in Exhibit B or as agreed to by the parties
in writing.
	 
	 	2.20	 	“Technical Information” means Supplier’s manufacturing information and
technology deemed necessary by GEMS-IT to support OEM Products and to exercise
any manufacturing rights provided under this Agreement, including, but not limited to:
(i) specifications, software, schematics, software source code, designs, drawings or
other materials pertinent to the most current revision level of manufacturing of the
OEM Products; (ii) copies of all inspection, manufacturing, test, verification and
quality control procedures and any other work processes; (iii) jig, fixture and tooling
designs; (iv) supplier history files; (v) support documentation; and (vi) any
additional technical information or materials agreed to by the parties.
	 
	 	2.21	 	“Technical Materials” means jigs, fixtures and tools used by Supplier
to manufacture the OEM Products, other than the GEMS-IT Property, and any production
software (including without limitation source code) used in such manufacture.







 




			
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	3.	 	ORDER AND SHIPMENT OF OEM PRODUCTS






	 	3.1	 	Orders. Each delivery of OEM Products will be initiated by an Order
issued to Supplier by GEMS-IT. Each Order will include: (i) unit quantity; (ii)
unit price; (iii) shipping destination; (iv) Delivery Date; and (v) other instructions
or requirements pertinent to the Order. GEMS-IT may schedule regular intervals for
deliveries by an appropriate Order setting forth the intervals. To the extent of any
inconsistency between the terms of an Order and the terms of this Agreement, the terms
specified in this Agreement will control and take precedence.
	 
	 	3.2	 	Order Acknowledgment. An Order will be deemed to have been placed as of
the date of receipt of the Order by Supplier. Supplier will promptly confirm the
receipt of an Order electronically or through facsimile to GEMS-IT within two (2)
working days after receipt by Supplier of the Order. Orders within Forecasts and Lead
Time requirements of this Agreement will be deemed accepted upon receipt by Supplier.
If a GEMS-IT Order exceeds the Forecast or shortens the Lead Time, Supplier will use
its commercially reasonable best efforts to fill such excess or accommodate such
shorter Lead Time.
	 
	 	3.3	 	Emergency Orders. If GEMS-IT deems it necessary, GEMS-IT may order
OEM Products by facsimile on an emergency basis (“Emergency Order”) subject to the
availability of such OEM Products in Supplier’s inventory. Supplier will use its
commercially reasonable best efforts to ship the Emergency Order to GEMS-ITs stipulated
destinations within 8 work hours after the receipt by Supplier. GEMS-IT will pay any
additional expenses related to such Emergency Orders.
	 
	 	3.4	 	Forecasts and Minimum Purchases. GEMS-IT will provide a six month
rolling Forecast of its projected Orders. Any quantities listed in any Forecast or
other correspondence between the parties are only estimates made as an accommodation
for planning purposes and do not constitute a commitment on GEMS-IT’s part to purchase
such quantity. GEMS-IT may revise any Forecasts in its sole discretion. During the
Term of the Agreement, GEMS-IT shall purchase from Supplier a minimum of four hundred
and twenty five (425) units of the OEM Products per calendar quarter, commencing with
the first full calendar quarter after the First Delivery Date; provided that (i) the
OEM Products are fully approved for sale throughout Europe by July 1st, 2004 in
accordance with Section 14.3, (ii) the OEM Products perform in accordance, and fully
comply, with the Specifications, and (iii) the aforementioned regulatory approvals
remain in full effect in accordance with Section 14.3. If any of the above conditions
are not satisfied, then GEMS IT’s minimum purchase obligations will be of no force and
effect. Any purchases in excess of a 425 unit minimum quarterly requirement will count
toward the next minimum quarterly purchase requirement (i.e. GEMS IT’s total minimum
purchase requirement over the Term of this Agreement (assuming the conditions set forth
above are satisfied) will not exceed 5,100 units).
	 
	 	3.5	 	Lead Time. Supplier will determine the Lead Time for each OEM Product
and will provide GEMS-IT with written notice of such Lead Time, which in no event will
exceed four (4) weeks without GEMS-IT’s prior written consent. Supplier must give
GEMS-IT no less than 30 days advance notice to approve or reject any proposed increase
in Lead Time. CSI and GEMS-IT will review lead-time reduction opportunities two
calendar quarters after date of first shipment.







 




			
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	 	3.6	 	Inventory Requirement. Supplier will maintain a protective inventory equal
to seventy- five (75) units or no less than two (2) weeks supply of each OEM Product.
If this inventory is depleted, Supplier will replenish the inventory as soon as
possible after depletion. In addition, Supplier will rotate its supply of OEM
Products in inventory to maintain a fresh stock of inventory.
	 
	 	3.7	 	Order Changes. GEMS-IT may, without charge, postpone, decrease,
increase, or cancel any Order by notice to Supplier at least thirty (30) days prior to
the Delivery Date. If GEMS-IT postpones, decreases, or cancels an Order after such
time period, Supplier will be entitled to reimbursement by GEMS-IT for actual costs
incurred by Supplier as a direct result of such postponement, decrease, or cancellation
that are not recoverable by Supplier within a reasonable period of time.
	 
	 	3.8	 	Shipment Requirements. All Orders are required to be shipped
complete. Freight expenses, insurance, and duties will be paid directly by GEMS-IT.
Supplier will give GEMS-IT immediate notice if it knows that it cannot meet a Delivery
Date or that only a portion of the OEM Products will be available for shipment to meet
a Delivery Date. If due to Supplier’s failure to make a timely shipment to meet a
Delivery Date, Supplier will pay for any resulting increase in the freight cost over
that which GEMS-IT would have been required to pay. For partial shipments, Supplier
will ship the available OEM Products unless directed by GEMS-IT to reschedule shipment.
If Supplier ships any OEM Product by a method other than as specified in the
corresponding Order, Supplier will pay any resulting increase in the cost of freight.
GEMS-IT may utilize drop shipment options to any GEMS-IT designated delivery
destination. If GEMS-IT designates a drop shipment location outside the country in
which the Order is placed, GEMS-IT agrees to pay any additional costs associated with
the shipment.
	 
	 	3.9	 	GEMS-IT Option To Accept Overshipments. If Supplier ships more OEM
Products than ordered, the amount of the overshipment may either be kept by GEMS-IT for
credit against future Orders or returned to Supplier pursuant to Article 6
below, at GEMS-IT’s election.
	 
	 	3.10	 	No Advance Shipment. If OEM Products are delivered two (2) days in
advance of the Delivery Date, GEMS-IT may, at its option, either return the OEM
Products pursuant to Article 6 below or keep the OEM Products with payment due
as provided in Section 4.3 below.
	 
	 	3.11	 	Title And Risk Of Loss. Shipments will be F.O.B. Cardiac Science’s
Minnetonka, MN factory or Copenhagen, Denmark warehouse facility. GEMS IT will elect
at which location it (or its designated carrier) will take delivery of the OEM Products
from Cardiac Science. Except as otherwise provided in this Agreement, associated
freight expenses and duties will be paid directly by GEMS-IT. Title to OEM Product
hardware and media ordered under this Agreement and risk of loss or damage will pass
from Supplier to GEMS-IT upon Supplier’s delivery of the OEM Products to the common
carrier specified by GEMS-IT, subject to the provisions in Sections 3.13 and 3.14 below
with respect to packing and handling.
	 
	 	3.12	 	Packing List. Each delivery of OEM Products to GEMS-IT must include a
packing list that contains at least:






	 	(a)	 	The Order number and the GEMS-IT part number;







 




			
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	 	(b)	 	The quantity of OEM Products or Parts shipped; and
	 
	 	(c)	 	The date of shipment.






	 	3.13	 	Packaging. Supplier must preserve, package, handle, and pack all OEM
Products so as to protect the OEM Products from loss or damage, in conformance with
good commercial practice, the Specifications, GEMS IT’s indication of “ship to” address
and method of transportation, government regulations, and other applicable standards.
	 
	 	3.14	 	Responsibility For Damage. Supplier will be liable for any loss or
damage due to its failure to properly preserve, package, handle, or pack OEM Products.
GEMS-IT will not be required to assert any claims for such loss or damage against the
common carrier involved.






	4.	 	PRICES AND PAYMENT TERMS






	 	4.1	 	OEM Product Prices. Supplier’s prices for the OEM Products are listed
in Exhibit C, in U.S. currency unless otherwise stated, and may not be
increased without GEMS-IT’s written consent. The prices for Parts will be Supplier’s
published prices, less any applicable discounts as set forth in
Exhibit C,
unless the parties agree to a price schedule for Parts. OEM Products and Parts will
also be subject to any applicable prompt payment discounts. Supplier and GEMS-IT
agree to review OEM Product prices annually. If, during the Term, Supplier
effectuates cost reductions in its manufacturing and delivery processes, it will pass
such reductions to GEMS-IT and amend the prices accordingly. GEMS-IT has an annual [ *
]% cost reduction target, but acknowledges that Supplier may not be able to achieve
such target and will not be liable to GEMS-IT for any such failure to achieve this
target as long as Supplier is using commercially reasonable efforts to reduce its costs
of manufacturing and delivering the OEM Products.
	 
	 	4.2	 	Changed Prices. If during the Term changed prices or price formulas are
put in effect by mutual agreement of GEMS-IT and Supplier, or reduced prices or price
formulas are otherwise put in effect by Supplier, such prices or price formulas (if
resulting in lower prices than the then current price) will apply to all Orders issued
by GEMS-IT after the effective date of such prices or price formulas and to all
unshipped Orders.
	 
	 	4.3	 	Payment Procedure. Payment for OEM Products will be 2% / 15, Net 75
days from the invoice date for the OEM Products following shipment by Supplier.
GEMS-IT will not be liable for payments or any costs related to unordered or
Noncomplying Products.
	 
	 	4.4	 	Sales Taxes And Duties. Prices are exclusive of all taxes or duties
after delivery to the designated destination (other than taxes levied on Supplier’s
income) that Supplier may be required to collect or pay upon shipment of the OEM
Products. Any such taxes or duties must appear as a separate item on Supplier’s
invoice. GEMS-IT agrees to pay such taxes or duties unless GEMS-IT is exempt from such
taxes or duties. Where applicable, GEMS-IT will provide Supplier with an exemption
resale certificate.






	5.	 	NONCOMPLYING PRODUCTS






	 	5.1	 	Acceptance. GEMS-IT shall inspect the OEM Products within a reasonable
period of time upon receipt at the shipping destination and may reject any Noncomplying
Products. GEMS-IT may elect in its sole discretion to return a Noncomplying Product for
replacement or repair at Supplier’s expense. In addition, GEMS-IT may return for repair







 




			
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	 	 	 	or replacement an entire lot of OEM Products if a tested sample of that lot
contains Noncomplying Products. Any OEM Products not rejected by written notice to
Supplier within sixty (60) days of GEMS-IT receipt shall be deemed accepted.
Acceptance by GEMS IT of any OEM Products shall in no way limit GEMS IT’s rights
under any applicable warranties for the OEM Products. Supplier shall provide
reasonable assistance to GEMS-IT in accordance with GEMS IT’s corrective action
procedures (which have been described to Supplier) in order to determine whether
any of the Products are Noncomplying Products. No returns will be accepted without
a Return Materials Authorization (“RMA”). GEMS-IT shall provide a SCAR report with
any non-complying product being returned. Other than as permitted in this Section
5.1 or under the terms of a warranty covering the OEM products, goods may not be
returned to Supplier without Supplier’s consent.
	 
	 	5.2	 	Repair Period. Supplier shall ship replacement or repaired OEM
Products to GEMS-IT as promptly as possible, but not later than ten (10) working days
after Supplier’s receipt of Noncomplying Product.






	6.	 	RETURN OF PRODUCTS






	 	6.1	 	Return Materials Authorization. All OEM Products returned by GEMS-IT
to Supplier must be accompanied by a RMA. Unless further verification is reasonably
required by Supplier, Supplier will supply an RMA within two work days after receiving
GEMS-IT’s written request.
	 
	 	6.2	 	Return Charges. All Noncomplying Products returned by GEMS-IT to
Supplier, and all replacement or repaired OEM Products shipped by Supplier to GEMS-IT
to replace Noncomplying Products, will be at Supplier’s risk and expense, including
transportation charges (round trip charges for replacement or repaired OEM Products).
	 
	 	6.3	 	Duty To Remove Marks Or Destroy Noncomplying Products. Supplier agrees
not to sell, transfer distribute or otherwise convey any part, component, product or
service bearing or incorporating GEMS-IT Marks, part numbers or other identifiers,
including any GEMS- IT packaging, copyrights or code, to any party other than to
Eligible Purchasers. Supplier will remove from all rejected, returned or unpurchased
OEM Products any such GEMS- IT Marks or identifiers, even if such removal would require
destruction of the OEM Products. Supplier further agrees not to represent that such
OEM Products are built for GEMS-IT or to GEMS-IT specifications. Supplier will defend
and indemnify GEMS-IT against any claims, losses, liabilities, costs or expenses that
GEMS-IT may incur as a result of Supplier’s breach of this obligation.






	7.	 	ENGINEERING PROCESS OR DESIGN CHANGES






	 	7.1	 	Supplier Proposed Changes. Supplier will not, without the prior
written consent of GEMS-IT, make or incorporate in OEM Products any of the following
changes (collectively, “Engineering Changes”):






	 	(1)	 	Process or design changes which affect the intended use,
function or quality of the OEM Products;
	 
	 	(2)	 	Geographical relocation of manufacturing processes; or







 





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	 	(3)	 	Process step discontinuances affecting the electrical performance, the
mechanical form, fit, or function, the environmental compatibility or chemical
characteristics, software compatibility, or the life, reliability, or quality
of OEM Products.






	 	7.2	 	Notice Of Proposed Change. Supplier will give GEMS-IT notice of any
proposed Engineering Change, and will provide evaluation samples and other
appropriate information as specified by GEMS-IT at least 90 days prior to the first
proposed shipment of any OEM Products involving an Engineering Change. Regardless of
whether GEMS- IT approves a proposed Engineering Change, Lead Time will not be changed
except as provided in Section 3.5 above.
	 
	 	7.3	 	GEMS-IT Proposed Changes. GEMS-IT may, from time to time, request
changes to Specifications. Such changes will not be effective unless agreed to in
writing by Supplier. If any such change reasonably and directly affects the prices
or delivery schedules of OEM Products, the Parties shall agree in writing to the
adjustment. In addition, if during the Term, Supplier develops enhancements to its
proprietary STAR® biphasic defibrillation technology and proprietary RHYTHMx®
software analysis algorithm and pacing technology, Supplier will provide GEMS IT with
prompt notice of such development. Supplier agrees to incorporate, at GEMS IT
reasonable request, such enhancements into the OEM Products; provided that such
incorporation does not materially increase the cost of manufacturing the OEM Products.
	 
	 	7.4	 	Safety Standard Changes. Supplier will immediately give notice to
GEMS-IT if any upgrade, substitution or other change to an OEM Product is required to
make that product meet applicable safety standards or other governmental statutes,
rules, orders or regulations, even those that are not defined as Engineering Changes in
Section 7.1 above. All affected OEM Products already purchased by GEMS-IT may,
at GEMS-IT’s election, either be returned to Supplier for upgrade to current revisions
or upgraded by Supplier or GEMS-IT in the field pursuant to the procedures outlined in
Section 14.6 below.






	8.	 	QUALITY






	 	8.1	 	Quality Program. Supplier agrees to maintain an objective quality
program for all OEM Products. Supplier’s program will be (i) in accordance with the
current revision of GEMS-IT’s Supplier Quality System Requirements, (ii) consistent
with regulatory requirements applicable for products of the same type as the OEM
Products and for the jurisdictions where regulatory approvals for the OEM Products have
been obtained, and (iii) if applicable, any additional or substitute quality
requirements agreed to by the parties. Supplier will, upon GEMS-IT’s request,
provide to GEMS-IT copies of Supplier’s program and supporting test documentation.
Supplier shall maintain device history records for each OEM Product shipped to GEMS-IT,
including the date of manufacture, identifying lot codes and serial numbers, and
provide that information to GEMS-IT upon request.
	 
	 	8.2	 	GEMS-IT’s Right To Inspect. GEMS-IT has the right to inspect, at
Supplier’s plant, the OEM Products and associated manufacturing processes.
Manufacturing processes may be inspected at any time during the Term. GEMS-IT’s
inspection may be for any reason reasonably related to this Agreement, including to
assure Supplier’s compliance with GEMS-IT’s requirements and with the regulatory
and quality provisions of this Agreement. GEMS-IT’s right of inspection will apply
as well to any vendor or subcontractor of Supplier. Supplier will inform such vendors
or subcontractors of GEMS-







 




			
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	 	 	 	IT’s right to inspect, and, if necessary, use all reasonable effort to secure
such rights for GEMS-IT.
	 
	 	8.3	 	Continuing Guarantee for SELLER as required by the FD&C Act and Other
Applicable Law. The articles comprising each shipment for delivery hereafter made
by Supplier to or on the order of GEMS-IT are hereby guaranteed by Supplier as of the
date of shipment or delivery to be on that date: (a) manufactured and released as
finished devices in accordance with the applicable provisions of the Federal Food, Drug
and Cosmetic Act (FDCA) as amended (21 U.S.C. Section 301 et seq.) relating to
adulterated or misbranded devices; (b) not an article which may not, under the
provisions of sections 404 or 405 of the FDCA, be introduced into interstate commerce;
(c) in compliance with the provisions of sections 510, 513, and 515 of the FDCA. This
guarantee is continuing and shall remain in full force and effect until revoked in
writing.
	 
	 	8.4	 	Compliance with Quality System Regulation. Supplier represents and
warrants that it is in substantial compliance with 21 CFR part 820 with respect to the
OEM Products existing as of the date of this Agreement, and Supplier shall
substantially comply with 21 CFR part 820 with respect to any future OEM Products which
may become subject to this Agreement. Supplier shall be responsible for obtaining CE
Marking for the OEM Products. Supplier also represents and warrants that it is in
substantial compliance with any and all quality-related laws, rules and regulations of
any other country worldwide with respect to the OEM Products existing as of the date of
this Agreement, and Supplier shall substantially comply with such laws, rules and
regulations with respect to any future OEM Products which may become subject to this
Agreement.






	9.	 	LIMITED WARRANTIES AND SUPPORT OBLIGATIONS






	 	9.1	 	Warranty Period. All warranties set forth in Section 9.2 below will
survive any inspection, delivery, acceptance, or payment by GEMS-IT and (except for the
warranty included in Section 9.2(2) below) will survive indefinitely. The warranty
included in Section 9.2(2) below shall be in effect for the one year period following
the date of shipment of the OEM Product to GEMS-IT’s end-user customers.
	 
	 	9.2	 	Limited Warranty. Supplier warrants that, during the applicable
Warranty Period, each OEM Product will:






	 	(1)	 	Be manufactured, processed, and assembled by Supplier or by
companies under Supplier’s direction.
	 
	 	(2)	 	Conform and perform in accordance with the Specifications, and
other criteria referred to in this Agreement or agreed to by the parties in
writing.
	 
	 	(3)	 	Be new, except as otherwise provided by the parties.
	 
	 	(4)	 	Be free from defects in design, material and workmanship.
	 
	 	(5)	 	Be free and clear of all liens, encumbrances, restrictions, and
other claims against title or ownership.







 




			
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	 	(6)	 	Not violate or infringe any third party Intellectual Property Rights, and
Supplier warrants that it is not aware of any facts upon which such claim
could be made. If Supplier learns of any claim or any facts upon which claim
could be made, it will promptly notify GEMS-IT of this information.






	 	9.3	 	Warranty Obligation. During the applicable Warranty Period, Supplier
shall be obligated to repair or replace any OEM Product that does not conform or
perform in accordance with the warranties set forth in Section 9.2 above. In addition,
GEMS IT shall have such other rights and remedies available at law or otherwise
available under this Agreement for breach of the foregoing warranties.
	 
	 	9.4	 	Service Availability. Supplier agrees to make its service personnel
available to GEMS- IT personnel (via phone and/or fax) during regular business hours at
no cost to GEMS-IT to address support obligations under this Agreement. If required, on
an emergency basis, Supplier agrees on a worldwide basis to make on-site service
available at an additional charge to GEMS-IT. The cost for on-site service shall be
mutually determined by the Parties on a case by case basis.






9.4.1 Warranty Service Logistics and Availability. Supplier agrees to make
its service personnel available to GEMS-IT personnel (via phone and/or fax) during
regular business hours at no cost to GEMS-IT to address support obligations under
this Agreement. If required, on an emergency basis, Supplier agrees on a worldwide
basis to make on-site service available at an additional charge to GEMS-IT. The cost
for on-site service shall be mutually determined by the Parties on a case by case
basis.




9.4.2 Customer Service.




	 	a.	 	Customer service calls will be handled by
GEMS-IT. If customer calls GEMS-IT with Product Warranty issue (GE
fields Warranty call), GEMS-IT will inform Supplier of Warranty call and
will receive a RMA from Supplier. GEMS IT’s customer will return the
product for repair or replacement to Supplier’s facility in Minnetonka,
MN (for Americas) or Copenhagen, Denmark (for Europe, Asia, Africa and
Middle East).
	 
	 	b.	 	If GEMS IT’s customer calls requiring in-field
service, GEMS-IT will bill customer as appropriate per GEMS-IT policies
(flat rate paid by GEMS-IT). GEMS-IT will inform Supplier of customer
issue and will receive a RMA from Supplier. GEMS-IT or its customer
will return product to Supplier facility as outlined in 9.4.2(a) above.
Supplier will repairs and returns product to customer. Supplier will
bill GEMS-IT flat rate per unit, which rate shall be negotiated with
annual adjustments based in CPI). GEMS-IT will bill customer for service
call.
	 
	 	c.	 	If customer calls requiring Parts, GEMS-IT will
inform Supplier and request direct shipment of Parts to GEMS-IT
customer. Supplier will bill GEMS-IT at agreed upon cost of Parts and
GEMS-IT will bill customer.






	 	9.5	 	Service Period. During the Term and for a period of at least [ * ]
following the last shipment to GEMS-IT of the applicable OEM Product ordered by GEMS-IT
hereunder, Supplier shall make available necessary replacement parts, technical support
and repair service (or at Supplier’s sole discretion, exchange units for the OEM
Products) for purchase by GEMS-IT and third party users of the OEM Products at
Supplier’s then- current prices for such replacement parts, technical support and
repair services and exchange units (unless otherwise covered by warranty or service
agreement).







 




			
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	 	9.6	 	DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, REGARDING ANY OEM PRODUCTS OR
THE GEMS-IT CARDIOSERVE PROPERTY, OR REGARDING THEIR MERCHANTABILITY OR THEIR FITNESS
FOR ANY PARTICULAR PURPOSE.






	10.	 	OBSOLESCENCE AND MANUFACTURING RIGHTS FOR DISCONTINUED PRODUCTS






	 	10.1	 	Buy Rights. Supplier acknowledges its obligation to manufacture, supply
and support the OEM Products without interruption for the Term of the Agreement. If,
however, Supplier seeks to discontinue the supply or support of any OEM Product during
the Term of the Agreement (a “Discontinued Product”), Supplier will give notice to
GEMS-IT no less than 12 months in advance of the last date the Discontinued Product can
be ordered. After receipt of notice of discontinuance, GEMS-IT may, at its option:






	 	(1)	 	Purchase from Supplier such quantity of the Discontinued
Product as GEMS-IT deems necessary for its future requirements; and
	 
	 	(2)	 	Manufacture the Discontinued Product under the manufacturing
rights granted in Section 10.2 below, without payment to Supplier of
any royalties or other charges.






	 	10.2	 	GEMS-IT’s Right To Manufacture. Subject to the terms of Section 10.1
above, Supplier grants to GEMS-IT during the Term of this Agreement, under Supplier’s
Intellectual Property Rights, a non-exclusive, world-wide, royalty-free license to use,
modify, reproduce, import, manufacture, distribute, offer for sale and sell the
Discontinued Product during the Term of this Agreement. GEMS-IT may sublicense these
rights to third parties, provided any such third party complies with the terms of this
Agreement and any associated obligations of confidentiality. In the event GEMS-IT
elects to exercise this right:






	 	(1)	 	Supplier will release to GEMS-IT all Technical Information or
other materials necessary for the manufacture of the Discontinued Product.
GEMS-IT will keep all Technical Information confidential in accordance with the
terms of Article 17 below.
	 
	 	(2)	 	Supplier will furnish to GEMS-IT all Technical Materials at
their book value within thirty (30) days after GEMS-IT has notified Supplier of
its exercise of its rights under this Article 10. If the materials
are not delivered within this time period, GEMS-IT will have the right to
collect such materials at Supplier’s plant or offices and Supplier agrees to
assist GEMS-IT in such collection. GEMS-IT will pay amounts due on such
materials within 35 days after receipt of Supplier’s invoice or receipt of the
materials, whichever is later. If GEMS-IT has to use measures to collect the
materials itself, it may deduct its costs from the book value of the materials.
	 
	 	(3)	 	Supplier will furnish to GEMS-IT within seven days after
GEMS-IT’s written request, the names and addresses of Supplier’s sources for
Parts not manufactured by Supplier, including the appropriate part numbers for
commercially available equivalents of electronic parts.







 




			
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	 	(4)	 	Supplier will furnish to GEMS-IT without charge all Parts
catalogues, schematics, material lists, engineering change orders, and
other servicing documentation deemed necessary by GEMS-IT to service and
support the Discontinued Product.
	 
	 	(5)	 	Supplier will assign to GEMS-IT any license rights it may have
with third parties for software, documentation or any intellectual property
used in the manufacture of the Discontinued Product.






	 	10.3	 	Return of CSI Information, Intellectual Property, etc. After the Term
of this Agreement, all information, intellectual property, and other property of CSI,
including but not limited to the CSI Proprietary Technology, shall be returned
immediately, and any licenses and other rights under this Section 10 shall immediately
cease.






	11.	 	MARKETING AND LICENSING






	 	11.1	 	Marketing Authority. Supplier hereby grants to GEMS-IT the exclusive
right to promote, sell and distribute OEM Products worldwide. GEMS-IT will have the
authority to market the OEM Products and the GEMS-IT Products containing the OEM
Products to the extent it deems appropriate, in its sole discretion. GEMS-IT will have
the right to use its own business and license terms for all marketing and distribution
of the OEM Products and GEMS-IT Products.
	 
	 	11.2	 	No Rights In Marks. Except as otherwise specified in the private
labeling section below, nothing in this Agreement should be construed to grant either
party any rights in the Marks of the other party. Supplier acknowledges, however, that
GEMS-IT may use the name of the OEM Products in advertising and marketing the OEM
Products or the GEMS-IT Products. The OEM Products will be affixed with applicable
patent numbers copyright notices, including Cardiac Science STAR® and
RHYTHMx® marks identifying the CSI Proprietary Technology, sufficient to give notice
as to the rights of the parties in their respective products.
	 
	 	11.3	 	Private Labeling. Supplier will ensure that the OEM Products sold to
GEMS-IT contain the GEMS-IT Marks, serial number and packaging specified by
GEMS-IT and conforming to GEMS-IT specifications for external appearance (which will
not require any material change in form or dimensions of the OEM Products or require
commercially unreasonable actions). GEMS-IT shall provide Supplier with a list of
sequential serial numbers to be applied to each OEM Product and shipping container by
Supplier and Supplier shall apply such numbers per GEMS-IT’s instructions. In addition,
and without limiting the foregoing, Supplier will ensure that each OEM Product label
includes the following statement: “Manufactured for GE Medical Systems Information
Technologies by Cardiac Science — STREET ADDRESS, CITY, STATE.” Except as provided
herein, Supplier will have no other right or license in any GEMS-IT Marks.
	 
	 	11.4	 	Documentation License. Supplier hereby grants GEMS-IT a
non-exclusive, non- transferable, worldwide fully paid up license to use, reproduce,
distribute and prepare derivative works in GEMS-IT’s name all Documentation and other
information, other than confidential information, furnished by Supplier under this
Agreement. GEMS-IT has the right to use or modify the Supplier’s Product documentation
or excerpts therefrom, for instance as follows: Functional description,
Instruction sheet and product labels, Operators aids, Promotion information, and
Product/Function description. Supplier shall provide GEMS-IT with this Product
documentation free of charge both as a print version







 




			
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and on data media in readable form. These rights with respect to the
Documentation will extend to GEMS-IT Subsidiaries and third party channels of
distribution. GEMS-IT may reproduce such Documentation without Supplier’s logo or
other identification of source, subject to affixing copyright notices to all copies
of Documentation. These rights with respect to the Documentation will extend to
GEMS-IT Subsidiaries and third party channels of distribution.




	12.	 	INTELLECTUAL PROPERTY PROTECTION






	 	12.1	 	Ownership. Except as expressly provided herein, neither Party grants
to the other Party any license or intellectual property right, either by implication,
estoppels or otherwise in and to its products, patents, trademarks, documentation or
confidential information. Except in the case of GEMS-IT’s need to service OEM Products,
GEMS-IT shall not: (a) reverse engineer, decompile, disassemble or otherwise tamper
with the OEM Products; (b) install, integrate, adapt or use the OEM Products except as
described in the Documentation; (c) remove or alter any proprietary designs notices or
Marks contained in or on the OEM Products, Documentation or related materials or (d)
authorize any third party, including any of GEMS-IT distributors or end user customers,
to do any of the foregoing.
	 
	 	12.2	 	Duty To Defend. Except in the event that GEMS-IT exercises its rights
to manufacture Discontinued Products pursuant to Article 10 hereof, Supplier will
defend, indemnify and hold harmless GEMS-IT, its Affiliates and its Subsidiaries,
subcontractors and customers from any claim that any OEM Product, any Software,
Documentation or a Supplier Mark, or any product provided as part of Supplier’s support
services constitutes an unauthorized use or infringement of any third party’s
Intellectual Property Rights. Supplier will pay all costs, damages and expenses
(including reasonable attorneys’ fees) incurred by GEMS- IT, its Subsidiaries,
subcontractors or customers and will pay any award with respect to any such claim or
agreed to in any settlement by Supplier of such a claim.
	 
	 	12.3	 	GEMS-IT’s Duty To Notify. GEMS-IT will give Supplier prompt notice of
any such claim or action, and will give Supplier the authority, information, and
reasonable assistance (at Supplier’s expense) necessary to defend. If Supplier does
not diligently pursue resolution of the claim nor provide GEMS-IT with reasonable
assurances that it will diligently pursue resolution, then GEMS-IT may, without in any
way limiting its other rights and remedies, defend the claim.
	 
	 	12.4	 	Remedies For Infringing Products. If the use or combination of any
product provided hereunder is enjoined (the “Infringing Product”), Supplier will, at
its sole expense and option:






	 	(1)	 	Procure for GEMS-IT and its customers the right to continue
using or combining the Infringing Product;
	 
	 	(2)	 	Replace the Infringing Product with a non-infringing product of
equivalent function and performance; or
	 
	 	(3)	 	Modify the Infringing Product to be non-infringing, without
detracting from function or performance.






	 	12.5	 	Limitations. Supplier will be relieved of its indemnification
obligations under this Article 12 to the extent that the claim arises solely
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compliance with a GEMS-IT Specification, provided that all implementations of
that Specification constitute an unauthorized use or infringement of a third party
Intellectual Property Right.




	13.	 	IMPORT / EXPORT COMPLIANCE






	 	13.1	 	Country Of Origin Certification. Upon GEMS-IT’s request, Supplier
will provide GEMS-IT with an appropriate certification stating the country of origin
for OEM Products, sufficient to satisfy the requirements of the customs authorities of
the country of receipt and any applicable export licensing regulations, including those
of the United States. In addition, Supplier will provide NAFTA certification (if
Supplier determines the OEM Products qualify).
	 
	 	13.2	 	Country Of Origin Marking. Supplier will mark each OEM Product, or the
container if there is no room on the OEM Product, with the country of origin in
accordance with U.S. Government regulations (Supplier shall only mark “Made in USA” on
products or containers if the product meets the U.S. Government Federal Trade
Commission requirements for use of such a label). Supplier will, in marking OEM
Products, comply with the requirements of the customs authorities of the country of
receipt.
	 
	 	13.3	 	Duty Drawback. If OEM Products delivered under this Agreement are
imported by the GEMS-IT as the importer of record in the country of receipt, Supplier
will, upon GEMS- IT’s request, provide GEMS-IT with documents required by the customs
authorities of the country of receipt to prove importation and to transfer duty
drawback rights to GEMS-IT.
	 
	 	13.4	 	Export Compliance.






	 	(a)	 	In performing its obligations under this Agreement, Supplier
shall comply with all applicable export laws, regulations and rules
administered by the United States Customs Service, the Bureau of Industry and
Security and the Food and Drug Administration, as well as all other applicable
federal, state or local laws, regulations or requirements of the United States
and any other nation. Supplier shall obtain all applicable permits and
licenses necessary to perform its obligations under this Agreement.
	 
	 	(b)	 	If Supplier obtains Bureau of Industry and Security commodity
classifications for the OEM Products, Supplier shall provide a copy of the
CCATS document, including any revisions thereto during the Term of this
Agreement. If Supplier obtains any U.S. Customs Rulings relating thereto,
Supplier shall provide copies of the resulting revisions.
	 
	 	(c)	 	Supplier shall indemnify and save harmless GEMS IT, its
affiliates, officers, directors, employees, successors and assigns from any and
against any losses, damages, liabilities, fines, penalties, and
expenses (including reasonable attorney’s fees) arising out of or resulting
from the failure to comply with this provision, provided that GEMS IT gives
Supplier prompt written notice of any such claim and requisite authority,
information and assistance to defend such claim.
	 
	 	(d)	 	During the Term and for a period of five (5) years thereafter,
Supplier shall keep accurate and complete export documentation records relating
the OEM Products in accordance with U.S. Export regulations and FDA
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requirements of any other similar agency of any other nation that will
have jurisdiction over Supplier as a result of its performance of its
obligations under this Agreement. If the U.S. Government or other government
or agency requests the production of such records, Supplier shall copy and
produce the records at no charge to GEMS IT.




	 	(e)	 	Upon reasonable advance notice to Supplier and during normal
business hours, GEMS IT may, at its option and expense, conduct audits at any
Supplier Service Location of documents relating to the OEM Products to assure
that Supplier is in compliance with all export and FDA laws, regulations and
requirements, including record keeping. GEMS IT may make copies of any records
it reviews during its audits. Further, upon reasonable advance notice to
Supplier, GEMS IT may request copies of any export documentation records
relating to the OEM Products, which Supplier will provide free of charge. If
an audit reveals non- compliance, undercharges or overcharges, Supplier
will take appropriate measures to rectify the situation and bring the
Supplier Service Location into compliance.
	 
	 	(f)	 	During the Term and for a period of five (5) years thereafter,
GEMS IT may request from Supplier copies of records deemed necessary to defend
against any claim related to this Section 13.4 made by a third party, including
federal, state or local government. Such records shall not be unreasonably
withheld.






	14.	 	GOVERNMENTAL COMPLIANCE






	 	14.1	 	Duty To Comply. Supplier agrees to comply with all federal, state,
local and foreign laws, rules, and regulations applicable to its performance of this
Agreement or to OEM Products. Without limiting the generality of the foregoing
sentence, Supplier represents that:






	 	(1)	 	Supplier will comply with all applicable equal employment
opportunity and non- discrimination requirements prescribed by
Presidential Executive Orders, including the requirements of
Executive Order 11246, the Vocational Rehabilitation Act, and the
Vietnam Era Veterans’ Readjustment Assistance Act;
	 
	 	(2)	 	Each chemical substance contained in OEM Products is on the
inventory of chemical substances compiled and published by the Environmental
Protection Agency pursuant to the Toxic Substances Control Act;
	 
	 	(3)	 	All OEM Products will be shipped in conformance with government
or freight regulations and requirements applicable to chemicals; and
	 
	 	(4)	 	Supplier will provide complete and accurate material safety
data sheets prior to shipping any OEM Product.






	 	14.2	 	Procurement Regulations. For OEM Products purchased under this
Agreement for incorporation into products to be sold under a federal contract or
subcontract, those applicable procurement regulations that are required by federal
statute or regulation to be inserted in contracts or subcontracts will be deemed
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	 	14.3	 	Regulatory Approvals. Supplier shall be solely responsible for
identifying, obtaining, and maintaining at its sole cost and expense all regulatory and
other necessary and/or appropriate approvals for the development, manufacture, or sale
of any OEM Product in the following countries: All European countries, Russia,
Turkey, South Africa, Egypt, Morocco, Tunisia, Algeria, Libya, Israel, Jordan, Syria,
Iraq, Iran, Saudi Arabia, Kuwait, Oman, Yemen, U.A.E., Qatar, Bahrain, China, Taiwan,
India, Pakistan, Afghanistan, South Korea, Australia, New Zealand, Singapore,
Indonesia, Malaysia, Thailand, Vietnam, Mexico, Brazil, Argentina, Chile, Peru,
Colombia and Bolivia. Supplier shall have obtained all such approvals by not later
than 30 days following the First Delivery Date. If any such approval is not
obtained, subsequently revoked, terminated or suspended, Supplier shall immediately
notify GEMS IT of such occurrence. If any such lack of obtainment, revocation,
termination or suspension lasts for more than thirty (30) days, a proportional
reduction in the minimum purchase obligations under Section 3.4 shall be made for any
calendar quarter in which such country-specific approvals are not in place for the full
duration of the calendar quarter (the “Pending Approvals”) as follows: minimum
purchase obligation shall equal 425 units less the product of 425 multiplied by the sum
of the “% reductions” for each specific Pending Approval calculated using the data set
forth on Exhibit D hereto. Cardiac Science shall obtain Regulatory Approval in the
United States in order to facilitate the sale of the OEM Products in such International
markets that require FDA clearance. Regulatory Approval in Canada and Japan shall be
sought based on mutual consent of both GEMS-IT and Supplier and only after such time as
both GEMS-IT and Supplier agree on the Specifications, and certain modification to the
form factor for the proposed OEM Product to be marketed in the aforementioned
countries. Failure to receive Regulatory Approval in Canada and Japan shall have no
proportional reduction in the minimum purchase obligation as outlined in Section 3.4
herein.
	 
	 	14.4	 	Complaint Handling. GEMS-IT will be responsible for the coordination
of customer complaint investigations. As determined by GEMS-IT, Supplier will
investigate customer complaints at no charge and supply GEMS-IT with a
written report summarizing the cause for the complaint and any corrective actions
required within 14 days of receipt by Supplier of such complaint, it being understood
that, depending on the nature of the complaint and investigation, the initial (14-day)
response may be limited in scope and then followed up by a complete response as soon as
reasonable practicable thereafter.
	 
	 	14.5	 	Duty to Report Incidents. GEMS-IT and Supplier shall inform each
other in writing, within 5 business days from knowledge of a reportable event, of all
incidents relating to the subject matter of the Agreement that must be reported
according to the FDA Medical Device Reporting regulation (21 CFR Part 803) or the
European Medical Device Vigilance regulations or that must be registered according to
other national regulations such as Canadian medical device regulations, including
without limitation incidents involving death or serious injury, malfunctions that, if
recurrent, may cause or contribute to death or serious injury or other material quality
problems or concerns. GEMS-IT will be responsible for reporting such incidents to the
appropriate regulatory authority. Supplier shall fully cooperate with GEMS-IT as may be
necessary to comply with any reporting obligations regarding such incidents or quality
concerns.
	 
	 	14.6	 	Recalls and Field Corrections. In the event of any recall, product
withdrawal or field correction of any OEM Product that is required by a governmental
agency, by Supplier, or by GEMS-IT for safety or efficacy reasons, the parties agree
that (a) they shall promptly notify each other and (b) they shall fully cooperate with
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	 	 	 	the necessity and nature of such action. GEMS-IT shall be the point of contact
for purchasers of any OEM Product (whether directly or through its distributors) and
shall be responsible for making any and all applicable regulatory authority contacts
and for coordination of any recall or field correction activities involving such OEM
Products, whether or not such action was requested by Supplier. In the event that
any OEM Product requires field correction or is recalled as a result of (a) the
supply by Supplier of a Noncomplying Product or (b) the grossly negligent or
intentionally wrongful act or omission of Supplier or its affiliates or their
representatives, then Supplier shall bear all costs and expenses, including but not
limited to the costs and expenses related to such recall or field correction,
communications and meetings with all required regulatory agencies, replacement
stock, service labor, installation, travel, notifying customers of such recall and
any replacement product to be delivered to those same customers, including shipping
costs. To the extent that any such recall or field correction is due in part to the
negligent or intentional acts or omissions of GEMS-IT, or the non-performance of the
GEMS-IT Products, GEMS-IT shall be responsible for such costs and expenses equitably
in proportion to its fault.
	 
	 	14.7	 	Regulatory Agency Inquiries. If the FDA or any other regulatory body
with authority over medical devices provides written notice to either party to inquire
about or investigate any OEM Product, the party notified shall use its best efforts to
give notice thereof to the other party within one working day of receipt of such
contact from the FDA or other body.
	 
	 	15.	 	FORCE MAJEURE EVENTS
	 
	 	15.1	 	Delaying Causes. Subject to the provisions of this Article, Supplier
will not be liable for any delay in performance under this Agreement caused by any “act
of God” or other cause beyond Supplier’s control and without Supplier’s fault or
negligence (a “delaying cause”). Notwithstanding the above, Supplier will not be
relieved of any liability for any delay or failure to perform its defense obligations
with respect to third party Intellectual Property Rights or furnish remedies for
Infringing Products as described in Article 12 above.
	 
	 	15.2	 	GEMS-IT Option. Supplier will immediately give GEMS-IT notice of any
delaying cause and its best estimate of the expected duration of such cause. In the
event of a delaying cause, GEMS-IT may act in its sole discretion to:






	 	(1)	 	Terminate this Agreement or any part hereof as to OEM Products not shipped; or
	 
	 	(2)	 	Suspend this Agreement in whole or in part for the duration of
the delaying cause, buy similar products elsewhere, and deduct from any
quantities specified under this Agreement the quantity so purchased.






	 	15.3	 	Resumption Of Agreement. If GEMS-IT elects to purchase other similar
products in the event of a delaying cause, GEMS-IT may resume performance under this
Agreement once the delaying cause ceases and extend the Term up to the length of time
the delaying cause endured. Unless GEMS-IT gives notice of termination as provided
above within 30 days after notice from Supplier of the delaying cause, GEMS-IT will be
deemed to have elected to suspend this Agreement for the duration of the delaying
cause.







 




			
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	 	16.	 	EVENTS OF DEFAULT
	 
	 	16.1	 	Notice Of Breach. If either party is in breach of any provision of
this Agreement, the nonbreaching party may, by notice to the breaching party, except as
otherwise prohibited by the United States bankruptcy laws, terminate the whole or any
part of this Agreement or any Order, unless the breaching party cures the breach within
30 days after receipt of notice in writing.
	 
	 	16.2	 	Causes Of Breach. For purposes of Section 16.1 above, the
term “breach” includes without limitation any:






	 	i.	 	Proceeding, whether voluntary or involuntary, in bankruptcy or insolvency by or
against a party that is not dismissed within 60 days of its filing;
	 
	 	ii.	 	Appointment, with or without a party’s consent, of a receiver
or an assignee for the benefit of creditors;
	 
	 	iii.	 	Failure by Supplier to make the minimum quarterly delivery of
OEM Products in accordance with the material requirements of this Agreement;
	 
	 	iv.	 	Failure by GEMS-IT to purchase and pay for the agreed upon
minimum quantity of the OEM Products for a given calendar quarter in
accordance with the provisions of Section 3.4.
	 
	 	v.	 	Failure by Supplier to replace or repair Noncomplying Products in a timely
manner as required by Articles 5, 6 & 9 above; or
	 
	 	vi.	 	Other failure by a party to comply with any material provision
of this Agreement with additional failure to provide the nonbreaching party,
upon request, with reasonable assurances of future performance.






	 	16.3	 	Rights Upon Breach. In addition to a party’s right to terminate this
Agreement upon breach, each party shall also have such other rights and remedies as may
be available to them at law or in equity or otherwise available under this Agreement.






	17.	 	CONFIDENTIAL INFORMATION






	 	17.1	 	Confidential Information. During the Term, a party (the “Recipient”)
may receive or have access to certain information of the other party (the “Discloser”)
that is marked as “Confidential Information,” including, though not limited to,
information or data concerning the Discloser’s products or product plans, business
operations, strategies, customers and related business information. The
Recipient will protect the confidentiality of Confidential Information with the
same degree of care as the Recipient uses for its own similar information, but no less
than a reasonable degree of care. Confidential Information may only be used by those
employees of the Recipient who have a need to know such information for the purposes
related to this Agreement. The parties acknowledge that all GEMS-IT Property,
Technical Information and Forecasts are deemed Confidential Information to be protected
for a term of three years from the date of disclosure.
	 
	 	17.2	 	Exclusions. The foregoing confidentiality obligations will not apply
to any information that is (a) already known by the Recipient prior to disclosure, (b)
independently







 




			
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developed by the Recipient prior to or independent of the disclosure, (c)
publicly available through no fault of the Recipient, (d) rightfully received from
a third party with no duty of confidentiality, (e) disclosed by the Recipient with
the Discloser’s prior written approval, or (f) disclosed under operation of law.




	18.	 	LIMITATION OF LIABILITY
	 
	 	 	UNLESS OTHERWISE STATED IN THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE FOR ANY SPECIAL OR
CONSEQUENTIAL DAMAGES OF THE OTHER ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT OR IN
FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH
DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE ABOVE, SUPPLIER WILL BE RESPONSIBLE
FOR ANY DAMAGES OF ANY KIND INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY CLAIM UNDER
ARTICLE 12 ABOVE AND SECTION 21.2 BELOW.
	 
	19.	 	TERMINATION






	 	19.1	 	Outstanding Orders. All Orders issued prior to the expiration of this
Agreement must be fulfilled pursuant to and subject to the terms of this Agreement,
even if the Delivery Dates are after expiration. Upon termination of this Agreement
for Supplier’s breach, GEMS-IT may cancel any outstanding Order or require Orders to be
fulfilled even if a Delivery Date is after the date of termination.
	 
	 	19.2	 	Return Of GEMS-IT Property. Except as expressly provided
otherwise in this Agreement, Supplier must return all GEMS-IT Property to GEMS-IT upon
expiration or termination. All such property must be in good condition, normal wear
and tear excepted. GEMS-IT will determine the manner and procedure for return. GEMS-IT
will bear all return freight costs if return is due to GEMS-IT convenience or an
uncured breach by GEMS-IT. Otherwise, Supplier will bear all such costs.
	 
	 	19.3	 	Continuation of License of GEMS-IT CardioServ Property. Upon expiration
of the Term of this Agreement and in the event the Agreement is not renewed by mutual
agreement of the parties for an additional term, the license of the GEMS-IT CardioServ
Property shall survive beyond the original term free of cost, fees, licenses and
royalties to Cardiac Science.
	 
	 	19.4	 	Surviving Provisions. Notwithstanding the expiration or early
termination of this Agreement, the provisions regarding Warranties in Article
9, Manufacturing Rights in Article 10, Marketing and Licensing in
Article 11, Intellectual Property in Article 12, Confidentiality in
Article 17, Limitation of Liability in Article 18, Transfer of GEMS-IT
CardioServ Property in Article 19, and the Miscellaneous provisions below will
each survive in accordance with their terms.






	20.	 	CRISIS MANAGEMENT






	 	20.1	 	Communications. Supplier must maintain the ability to contact GEMS IT
on a 24 hour a day, 7 day a week basis in order to communicate and manage crisis
situations that threaten to or interrupt the Supply Chain. Likewise, Supplier must be
available if GEMS IT wishes to contact Supplier on a 24/7 basis. Means of
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	 	 	 	are not limited to, phone, mobile phone or pager and interaction via email and
the Internet.
	 
	 	20.2	 	Business Contingency Plan (BCP). Supplier must share with GEMS IT a
BCP that includes Supplier’s plan for 24/7 communication with GEMS IT. The BCP will
also include basic information on Supplier’s upstream Supply Chain. For instance, this
information will include who Supplier’s Tier 1 and Tier 2 suppliers are, where they
are located and the means of transportation for this Supply Chain.






	21.	 	MISCELLANEOUS






	 	21.1	 	Notices. All notices to be given under this Agreement must be in
writing addressed to the receiving party’s designated recipient. Notices are validly
given upon the earlier of confirmed receipt by the receiving party or three days or
seven days for international notices after dispatch by courier or certified mail,
postage prepaid, properly addressed to the receiving party. Notices may also be
delivered by telefax and will be validly given upon oral or written confirmation of
receipt. Either party may change its address for purposes of notice by giving notice
to the other party in accordance with these provisions.
	 
	 	21.2	 	Indemnification. Supplier shall defend, indemnify, and hold harmless
GEMS-IT and its Affiliates from and against any losses, expenses, and liability
(including attorney fees) to third parties for any and all claims of personal injuries
and/or damages arising out of the use of any OEM Product if such injuries and/or
damages are attributable to any part of such OEM Product, provided that GEMS-IT
notifies Supplier promptly in writing of any and all such claims.
	 
	 	21.3	 	Exhibits. Each Exhibit attached to this Agreement is deemed a part of
this Agreement and incorporated herein wherever reference to it is made.





	 	 	 
	          Exhibit A:

	 	Product List
	          Exhibit B:

	 	Product Specifications & Development Project Plan
	          Exhibit C:

	 	Suppliers Prices
	          Exhibit D:

	 	GEMS-IT Anticipated OEM Product Unit Volume by Country







	 	21.4	 	Independent Contractors. The relationship of the parties
established under this Agreement is that of independent contractors and neither party
is a partner, employee, agent or joint venturer of or with the other. .
	 
	 	21.5	 	Assignment. Except for any assignment by GEMS IT to any Affiliate of
GEMS IT, neither this Agreement, nor any right, license, privilege or obligation
provided herein may be assigned, transferred or shared by either party without the
other party’s prior written consent, and any attempted assignment or transfer is void.
Any merger, consolidation, reorganization, transfer of substantially all assets of a
party, or other change in control or ownership will be considered an assignment for the
purposes of this Agreement (other than a merger of GEMS-IT with or into an Affiliate of
GEMS-IT). This Agreement will be binding on the successors and permitted assigns of the
parties and the name of the party appearing herein will be deemed to include the names
of such party’s successors or permitted assigns to the extent necessary to carry out
the intent of this Agreement.
	 
	 	21.6	 	No Waiver. The waiver of any term, condition, or provision of this
Agreement must be in writing and signed by an authorized representative of the waiving
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waiver will not be construed as a waiver of any other term, condition, or
provision except as provided in writing, nor as a waiver of any subsequent breach
of the same term, condition, or provision.




	 	21.7	 	Reference To Days. All references in this Agreement to “days” will,
unless otherwise specified herein, mean calendar days.
	 
	 	21.8	 	Headings. The Section headings used in this Agreement are for
convenience of reference only. They will not limit or extend the meaning of any
provision of this Agreement, and will not be relevant in interpreting any provision of
this Agreement.
	 
	 	21.9	 	No Publication. Other than as required by SEC regulations which
require disclosure of certain material events, neither party may publicize or disclose
the terms of this Agreement to any third party, without the written consent of the
other party. Without limiting the generality of the foregoing sentence, no press
releases may be made without the mutual written consent of each party.
	 
	 	21.10	 	Severability. If any provision in this Agreement is held invalid or
unenforceable by a body of competent jurisdiction, such provision will be construed,
limited or, if necessary, severed to the extent necessary to eliminate such invalidity
or unenforceability. The parties agree to negotiate in good faith a valid,
enforceable substitute provision that most nearly affects the parties’ original intent
in entering into this Agreement or to provide an equitable adjustment in the event no
such provision can be added. The other provisions of this Agreement will remain in
full force and effect.
	 
	 	21.11	 	Entire Agreement. This Agreement comprises the entire understanding
between the parties with respect to its subject matters and supersedes any previous
communications, representations, or agreements, whether oral or written. For purposes
of construction, this Agreement will be deemed to have been drafted by both parties. No
modification of this Agreement will be binding on either party unless in writing and
signed by an authorized representative of each party.
	 
	 	21.12	 	Governing Law. This Agreement will be governed in all respects by the
laws of the State of New York without reference to any choice of laws provisions.
	 
	 	21.13	 	Dispute Resolution. Any claim or controversy arising out of or
relating to the Agreement must be submitted and settled as set forth in this Section
21.13. If any party to this Agreement alleges that any other party to this Agreement
has breached any of the terms of this Agreement, then the party alleging breach will
inform the other party of such breach in writing. Upon receipt of such notice, the
allegedly non-performing party will have 30 days to cure the alleged breach. If the
parties do not agree that effective cure has been accomplished by the end of the 30-day
period, then upon written request of any party, a senior manager from each party will
meet in person and confer in good faith to resolve the dispute within 15 days of the
expiration of the prior 30-day period. If, after the above procedure, the dispute
remains unresolved, either party may submit the dispute to the office of the American
Arbitration Association (“AAA”) located in Chicago, Illinois for binding arbitration in
accordance with the AAA’s Commercial Arbitration Rules then in effect, as amended by
this Agreement. The law applicable to the arbitration, including the
administration and enforcement thereof, is the Federal Arbitration Act, 9 U.S.C.
§§ 1-16, as amended from time to time. The cost of the arbitration, including the
fees and expenses of the arbitrator(s), will be shared equally by the parties, with each
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	 	 	 	authority to apportion liability between the parties, but will not have the
authority to award any damages or remedies not available under the express terms
this Agreement. The arbitration award will be presented to the parties in writing,
and upon the request of either party, will include findings of fact and conclusions
of law. The award may be confirmed and enforced in any court of competent
jurisdiction. Any post-award proceedings will be governed by the Federal Arbitration
Act. Nothing in this Section 21.13 shall preclude either party from seeking interim
equitable relief in the form of a TRO or preliminary injunction. A request by a
party of a court for interim equitable relief shall not be deemed a waiver of the
obligation to arbitrate hereunder.
	 
	 	21.14	 	Insurance. During the term of this Agreement, Supplier shall maintain
at its own expense, commercial general liability insurance for bodily injury, death and
property loss and damage (including coverages for product liability, contractual
liability and personal injury liability) covering Supplier for claims, lawsuits or
damages arising out of its performance under this Agreement and any negligent or
otherwise wrongful acts or omissions by Supplier or any employee or agent of Supplier.
All such policies of insurance shall provide limits of liability in the minimum amount
of three million dollars ($3,000,000) per occurrence with an annual aggregate of at
least five million dollars ($5,000,000). Supplier shall provide GEMS IT with a copy of
certificates of insurance evidencing the existence of all coverage required hereunder.







 




			
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     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
thereunto duly authorized representatives as of the date first above written.



	 	 	 	 	 	 	 
	Cardiac Science, Inc.	 	GE Medical Systems
	 	 	 	 	Information Technologies, Inc.
	 
	 	 	 	 	 	 
	By:

	 	/s/ RAYMOND W. COHEN
	 	By:
	 	/s/ MICHAEL GENAU
	 

	 	 
	 	 	 	 
	Name: Raymond W. Cohen	 	Name: Michael Genau
	Title: President & CEO	 	Title: Vice President & General Manager
	 	 	 	 	Cardiology System








 




			
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