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*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
[EXECUTION COPY]
Exhibit 10.6
DISTRIBUTION AGREEMENT
This Distribution Agreement (this "Agreement"), is made effective as of
November 9, 2000 (the "Effective Date"), between Data Critical Corporation, a
Delaware corporation ("Data Critical"), and Medtronic Physio-Control, Corp., a
Washington corporation (together with its subsidiaries, "Medtronic").
Background
Data Critical develops, markets, manufactures and sells wireless enabled
communication products and services for medical devices. Medtronic manufactures
and sells medical devices and related services and products. The parties
mutually desire to appoint Medtronic as the exclusive distributor of certain of
Data Critical's products and services.
Therefore, the parties agree as follows:
1 Definitions.
1.1 "Affiliate" of a person or entity is another person or entity that
owns or controls directly or indirectly such person or entity, any
person or entity that controls or is controlled by or is under common
control with such person or entity, and each of person or entity's
senior executive officers, directors, partners and, for any entity
that is a limited liability company, that entity's managers and
members.
1.2 "Derivative Work" shall mean a work that is based on one or more
Products, such as a revision, modification, translation, abridgment,
condensation, expansion, or any other form in which such preexisting
works or any part thereof may be recast, transformed, or adapted, and
which, if prepared without authorization of the owner of the copyright
in such Product, would constitute a copyright infringement. For the
purposes of this Agreement, a Derivative Work shall also include any
compilation that incorporates such a Product.
1.3 "Documentation" shall mean user manuals and other written materials
that relate to a particular Product, including materials useful for
design (for example, logic manuals, flow charts, and principles of
operation), and machine-readable text or graphic files subject to
display or printout and product specifications.
1.4 "End User" shall mean any third party that obtains a unit of Product
solely for its own internal business purposes and not for further
distribution or resale; provided that solely for purposes of the
Minimum End User Requirements , "End Users" shall include any stocking
distributor of Medtronic. For the avoidance of doubt, "End User" shall
not include any OEM.
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1.5 "End User Warranty" shall mean Data Critical's original warranty, if
any, provided in the End User license provided with the Products, as
set forth in Annex G.
1.6 "Extended Service Contract" is defined in Section 4.4.2.
1.7 "Intellectual Property Rights" shall mean, collectively, worldwide
Patents, Trade Secrets, Copyrights, Trademarks, mask work rights,
moral rights, trade names, rights in trade dress, and all other
intellectual property rights and proprietary rights, whether arising
under the laws of the United States or any other state, country or
jurisdiction and all application and registration interests in and to
any of the foregoing, and also including all rights or causes of
action for infringement or misappropriation of any of the foregoing.
For purposes of this Agreement: (a) "Patents" shall mean all patent
rights and all right, title, and interest in all letters patent or
equivalent rights and applications, including provisional
applications, for letters patent or rights, industrial and utility
models, industrial designs, petty patents, patents of importation,
patents of addition, certificates of invention, and other government
issued or granted indicia of invention ownership, including any
reissue, extension, division, continuation, or continuation-in-part
applications throughout the world; (b) "Trade Secrets" shall mean all
right, title, and interest in all trade secrets and trade secret
rights arising under common law, state law, federal law, or laws of
foreign countries; (c) "Copyrights" shall mean all copyrights, and all
other literary property and authorship rights, and all right, title,
and interest in all copyrights, copyright registrations, certificates
of copyright and copyrighted interests throughout the world; and (d)
"Trademarks" shall mean all right, title, and interest in all
trademark, service mark, trade name, and trade dress rights arising
under the common law, state law, federal law, and laws of foreign
countries, and all right, title, and interest in all trademark,
service mark, trade name, and trade dress applications and
registrations interests throughout the world.
1.8 "Manufacturing and Design Documentation" shall mean materials, media,
and know-how of Data Critical or Medtronic, including materials and
media created by third-party contractors, suppliers, or licensors
acting at the request of Data Critical or Medtronic, specifically for
use in the manufacture and design of Products or the production of
improvements, including drawings, routings, bills of materials,
schematics, circuit diagrams, specifications, and test documents.
1.9 "Market" shall mean any hospital, hospital body, hospital department
or the functions performed by any of the foregoing. For clarity's
sake, "Market" shall not include clinics not affiliated with
hospitals, nursing homes and extended care facilities.
1.10 "Master Agreement" shall mean that certain agreement, dated as of May
31, 2000, between Medtronic and Data Critical, a copy of which is
attached hereto as Annex H.
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1.11 "Minimum End User Requirements" shall mean Medtronic's obligation to
sell to End Users an aggregate amount of Products having an aggregate
Transfer Price equal to [*].
1.12 "Minimums" shall mean the minimum quarterly aggregate Transfer Price
requirements set forth on Annex C (as modified from time to time in
accordance with Section 6.2), for which Medtronic is obliged to
purchase a minimum amount of Products (or any shortfall thereof)
pursuant to Section 3.3.1 and to pay for pursuant to Section 5.2.1.
1.13 "Network Products" is defined in Section 3.2.4.
1.14 "New Product" shall mean new versions of a Product that contain
significant enhancements or new functionality, and any standard Data
Critical product that is a wired or wireless alarm notification
product designed for use in the Market and that is not an existing
Product, and in each case any related Documentation.
1.15 "Original Equipment Manufacturer" or "OEM" shall mean a party that has
a written agreement with Data Critical to market, promote, sell,
offer, use, bundle or distribute, directly or indirectly, one or more
Data Critical products, including the Products, (i) in connection with
one or more of such party's products, and/or (ii) bearing labeling or
indicia which clearly identifies the Data Critical products (including
the Products) as products of such OEM, and not of Data Critical or any
third party.
1.16 "Parent" shall mean Medtronic, Inc. or any of its successors or
assigns.
1.17 "Part" shall mean any component, part, accessory for, or, to the
extent Data Critical charges therefor, any Updates of, a Product.
1.18 "Pre-Existing Contract" shall mean those bookings by Data Critical
prior to January 1, 2001 still requiring installation by Medtronic
after January 1, 2001.
1.19 "Products" shall mean the wired or wireless alarm notification systems
and products currently identified in Annex A hereto as the same may be
amended from time to time to add New Products that the Joint Review
Committee determines shall be subject to this Agreement in accordance
with Section 6.2, together with any Updates. The term "Products" shall
not include any Parts except for purposes of Section 2.1.2.
1.20 "Software" shall mean any software that is embedded in or supplied in
connection with any Product, together with any Updates.
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1.21 "Software License" shall mean, for each unit of StatView Product, a
license for the StatView system for a single bed to which such
StatView Product may be attached.
1.22 "Subdistributors" is defined in Section 3.1.2.
1.23 "Territory" shall mean the worldwide Market (exclusive of the
"Territory" as defined in the Master Agreement); provided, that
subject to the Master Agreement, nothing in this agreement shall
convey any rights to Medtronic to market, promote, sell, offer for
sale, have sold or offered for sale, use, bundle or otherwise
distribute directly or indirectly Data Critical's products (including
the Products) outside of the Territory.
1.24 "Transfer Price" shall mean, for any Product, the price of such
Product as set forth in Annex B, as amended from time to time pursuant
to Section 6.3.
1.25 "Updates" shall mean new versions, including maintenance releases, and
localizations and translations thereof, of a Product that contain bug
fixes, error corrections and minor enhancements, but not containing
significant enhancements or new functionality, and any related
Documentation.
2 Distributorship and License.
2.1 Exclusivity
2.1.1 Distribution. Subject to the terms and conditions of this
Agreement and pursuant to the license granted in Section
2.1.2, Data Critical hereby appoints Medtronic as Data
Critical's exclusive distributor for the marketing,
promotion, sale, offer, use and other distribution in the
Territory of (a) Products and (b) Software for bundled use
with such Products.
2.1.2 License. Subject to the terms and conditions of this
Agreement, Data Critical hereby grants to Medtronic the
exclusive license, without right to sublicense (except as
specifically provided in Sections 3.1.2 and 3.1.7 below), to
market, promote, sell, offer, use and otherwise distribute
in the Territory (a) Products and (b) Software for bundled
use with such Products.
2.2 Minimum End User Requirements.
2.2.1 Failure to Achieve Minimum End User Requirement. If
Medtronic fails to sell Products to End Users in amounts
sufficient to achieve its minimum End User Requirements for
[*], and has not cured such failure within [*], then [*],
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the following shall occur:
(a) subject to subparagraph (d) below, the appointment of
Medtronic as distributor under Section 2.1.1. and the
license granted under Section 2.1.2 shall remain
exclusive;
(b) subject to subparagraph (d) below, Medtronic shall
continue be obligated to comply with its Minimums;
(c) Medtronic shall have the right to sell any unsold
inventory held in stock; provided, that at Data
Critical's sole discretion and request, Medtronic shall
return inventory to Data Critical at such inventory's
original Transfer Price; and
(d) [*].
2.2.2 Understanding on Basis for Minimums. Medtronic's first-year
Minimums are based, in part, on the following:
(a) Data Critical represents and warrants that, to the best
of its knowledge, [*] provided by Data Critical to
Medtronic, as attached in Annex M, have been prepared
in good faith and are not materially misleading in the
light of the circumstances under which they were
prepared.
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(b) Data Critical represents and warrants that it is
unaware of any fact or circumstance specific to Data
Critical's business that would materially adversely
affect Data Critical's business as currently conducted.
(c) Data Critical's timely completion of the projected
Product roll-out as set forth in Annex A.
(d) [*].
The parties agree that any breach or inaccuracy of the above
representations, warranties or assumptions shall not be
deemed a breach of this Agreement, but instead will give
rise to a good faith renegotiation of the Minimums.
2.3 Limitations to Exclusivity
2.3.1 Exclusions. Notwithstanding Section 2.1, Data Critical
retains the right to distribute the Products and software
to: [*].
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2.3.2 Internal and Affiliate Use. Data Critical shall retain the
right to use, modify, have incorporated in other products,
reproduce, and have reproduced Products in the Territory for
its own internal use, for the purposes of research and
development, and for the benefit of (and sale, lease, or
other transfer to) any subsidiary or affiliate of Data
Critical; provided, however, that Data Critical shall ensure
that each such subsidiary or affiliate complies and agrees
in writing to comply with the terms of this Agreement. The
failure of such subsidiary or affiliate to comply with any
term of this Agreement shall be considered a material breach
of this Agreement by Data Critical only to the extent that
the failure of Data Critical to comply with such term would
be a material breach of this Agreement.
2.4 Technology Exclusivity. [*].
2.5 Change of Control. For purposes of this Section 2.5, "Change of
Control" shall mean, with respect to any person or entity, (i) a
merger, consolidation, amalgamation or other similar transaction with
an Acquiror whereby the direct or indirect shareholders of such person
or entity immediately before such
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transaction cease to own at least a majority of the outstanding
capital stock of such person or entity entitled to vote for the
directors of such person or entity, or (ii) a sale of all or
substantially all of the assets of such person or entity to an
Acquiror. For purposes of this Section 2.5, an "Acquiror" shall mean
any person or entity and its Affiliates other than Data Critical,
Medtronic, the Parent or a subsidiary of either that is the successor
entity in respect of a Change of Control.
(a) In the event of a Change of Control of Data Critical involving an
Acquiror that directly competes in the medical device market with
Medtronic, then (i) Medtronic shall have the right to elect to
terminate this Agreement by written notice delivered to Data
Critical within ten (10) days of Medtronic's receipt of notice of
such Change of Control, and upon such election shall have no
further obligations with respect to its Minimum End User
Requirements and Minimums, and (ii) the Acquiror shall have the
right to elect to terminate this Agreement effective six (6)
months after such Change of Control by written notice delivered
to Medtronic within ten (10) days of such Change of Control,
provided that the appointment of Medtronic as distributor under
Section 2.1.1 and the license granted under Section 2.1.2 shall
be non-exclusive and Medtronic shall have no further obligations
with respect to its Minimum End User Requirements and Minimums
during such six-month period.
(b) In the event of a Change of Control of Data Critical involving an
Acquiror that does not directly compete in the medical device
market with Medtronic, then this Agreement shall continue in full
force and effect unless Medtronic reasonably determines, based on
commercially reasonable standards, that such Change of Control
will result in significant commercial harm to Medtronic, in which
event Section 2.5(a) shall control.
(c) In the event of a Change of Control of either Medtronic or the
Parent involving an Acquiror that is either a vendor of Data
Critical listed in Annex A or directly competes in the medical
device market with Data Critical, then Data Critical shall have
the right to elect to terminate this Agreement effective six (6)
months after such Change of Control by written notice delivered
to Medtronic within ten (10) days after Data Critical's receipt
of notice of such Change of Control.
(d) In the event of a Change of Control of either Medtronic or the
Parent involving any other Acquiror, then this Agreement shall
continue in full force and effect in all respects.
Any termination of this Agreement pursuant to and in accordance with this
Section 2.5 shall not be deemed a breach of this Agreement by either party,
provided it shall not affect or diminish Medtronic's payment and purchase
obligations in respect of any period prior to termination of this Agreement.
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3 Distribution Services.
3.1 Medtronic Responsibilities. Medtronic shall perform its obligations
under this Section 3.1 in a professional and commercially reasonable
manner.
3.1.1 Marketing and Distribution Obligations. Medtronic shall use
its best commercially reasonable efforts to market, promote,
and distribute the Products. This obligation shall include
without limitation the use of mailings, telemarketing
programs, advertising, seminars, and other customary
marketing techniques. Should Medtronic enter into any
agreement, understanding or arrangement with any
manufacturer or third party supplier of networked monitoring
equipment, Medtronic shall not offer preferential pricing to
the End User specifically for any Network Product. For the
sake of clarity, nothing in this Agreement shall prohibit or
restrict Medtronic from (a) entering into any such
agreement, understanding or arrangement, or (b) bundling
Products with other products and charging an aggregate price
for such bundle. Notwithstanding the foregoing, Medtronic
shall promptly notify Data Critical of its entering into
such agreement, and Data Critical shall have the right, at
its election by written notice to Medtronic at any time
within thirty (30) days after receipt of such notice, to
terminate this Agreement effective six (6) months after the
date of such notice (it being understood that such election
of termination shall not affect Medtronic's Minimums for
such six-month period).
3.1.2 Subdistributors. Subject to the restrictions in the
following sentence, Medtronic shall be entitled to market,
promote, sell, offer, use and otherwise distribute the
Products in the Territory through subdistributors and other
third-party intermediaries (collectively,
"Subdistributors"), provided, that Medtronic shall ensure
that each Subdistributor acknowledges in writing the terms
and conditions of this Agreement and its obligation to
comply with the same, and does not perform any act which, if
performed by Medtronic, would be a material breach of this
Agreement by Medtronic. Medtronic shall use the
Subdistributors identified in Annex E and, from time to
time, any other Subdistributors that do not market or
distribute products that compete directly with the Products,
in each case as approved by Data Critical (such approval not
to be unreasonably withheld); provided that Medtronic shall
promptly deliver to Data Critical an amended Annex E that
sets forth the identity and address of each such additional
Subdistributor.
3.1.3 Inclusion in the Exchange. Subject to the restrictions set
forth in Section 3.1.1, as Medtronic is a participant in the
Global Healthcare Exchange, Medtronic shall use its best
efforts to include all of the Products it
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distributes, as soon as is reasonably practical, in the
Global Healthcare Exchange.
3.1.4 Inclusion in National Accounts Contracts. Subject to the
restrictions set forth in Section 3.1.1, Medtronic shall
include the Products that it distributes on the contracts
with its National Accounts and/or Hospital Buying Groups as
soon as is reasonably practical.
3.1.5 Installation. Exclusive of the training and support
described in Section 3.2.3, and in addition to the
obligations described in Section 4.3, Medtronic shall
exclusively provide all installation services and field
services in connection with each Product previously or
hereafter distributed by or for Data Critical (including by
Medtronic) at levels at or above those that Data Critical
generally offered with respect to the same or similar
products prior to the Effective Date. Data Critical shall
have no obligations to provide any installation services
directly to End Users. In addition:
(a) Medtronic shall provide all reasonable ongoing Product
and Software (including Updates of each) and other
training (e.g., sales or technical training) to
maintain a reasonable number of Medtronic sales and
training representatives at a level sufficient to
fulfill its duties under this Agreement. Such training
shall include and cover, as applicable, and without
limitation, the functionality, use, operation, and
limitations of the Products and Software; Product and
Software installation, testing, inspection, and
monitoring; and Product and Software trouble shooting,
maintenance, repair, and support. Each party shall bear
its own costs and expenses associated with developing
and conducting such training; and
(b) Medtronic shall maintain a qualified service
capability, furnish 24-hour, toll free, customer
service support to End Users for the Products.
3.1.6 Labeling and Proprietary Rights Notices. Medtronic shall
not alter the labeling set forth on those Products provided
to Medtronic by Data Critical. Medtronic shall not remove,
obscure or fail to reproduce any copyright or other
proprietary notices incorporated on or in any such products
by Data Critical or as otherwise required by Data Critical.
Notwithstanding the foregoing, Medtronic shall have the
right, subject to Data Critical's reasonable approval, to
affix or place its own labels and indicia on the Products.
3.1.7 Reports; Sales Forecasts. Within ten (10) business days
after the end of each calendar month during the term of this
Agreement, Medtronic shall
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provide Data Critical with a written report on the prior
months' sales, in a form to be mutually agreed upon by the
parties during the Transition Period or as determined by the
Joint Review Committee from time to time.
3.1.8 Import and Export Requirements. Medtronic shall, at Data
Critical's cost, register and maintain any import and export
licenses and permits that may be required due to the sale or
other distribution of the Products pursuant to this
Agreement in any country in which Data Critical has directed
and/or authorized Medtronic to market, promote, sell, offer,
use or otherwise distribute the Product, which authorization
shall not be unreasonably denied; provided, that Medtronic
may enter any other country in the Territory without Data
Critical's consent after obtaining full regulatory
compliance for any applicable Products at Medtronic's sole
cost and expense. Unless otherwise required by applicable
law, the licenses and permits shall be obtained in Data
Critical's name; provided, that, if Medtronic registers and
maintains such licensed and permits at its cost, then such
licenses and permits (but not any interest in any
Intellectual Property Rights of Data Critical) shall be in
Medtronic's name and shall be Medtronic's property.
Medtronic, at its cost, shall pay, customs charges and duty
fees that may be required due to the sale or other
distribution of the Products by Medtronic. Medtronic
acknowledges that any obligation of Data Critical to provide
Products under this Agreement, and any obligation of
Medtronic to market, promote, sell, offer, use or otherwise
distribute the Products, shall be subject in all respects to
all United States laws and regulations governing the license
and delivery of technology and products abroad by persons
subject to the jurisdiction of the United States. Medtronic
shall not export, directly or indirectly, any Products or
related information without first obtaining all required
licenses and approvals from the appropriate government
agencies. Without limiting the foregoing, Medtronic agrees
that it shall not, without authorization of the United
States Office of Export Licensing, export, re-export, or
otherwise deliver any Products (i) into (or to a national or
resident of) any other country to which the United States
has embargoed goods; or (ii) to anyone on the United States
Treasury Department's list of Specially Designated Nationals
or the United States Commerce Department's Table of Deny
Orders.
3.1.9 Sublicensing of Software; End User License.
(a) Medtronic understands and acknowledges that all
Software is licensed by Data Critical and not sold.
Medtronic shall sublicense End Users to use the
Software solely for such End Users' internal business
purposes and solely in combination with the applicable
Product purchased by such End User. Each such
sublicense shall be granted in a End User license
agreement acceptable to (and approved by) Data
Critical, but that at a minimum expressly
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provides that: (i) Data Critical may terminate such
End User license agreement upon written notice of
failure by such End User to comply with the terms of
such End User license agreement, (ii) within five (5)
days after termination of such End User license
agreement, such End User shall remove the Software from
such product and destroy such Software or return it to
Data Critical at such End User's expense, and (iii)
Data Critical shall be a third party beneficiary of the
End User license agreement, and the provisions of such
End User license agreement shall be enforceable by both
Data Critical and Medtronic. Such End User license
agreement shall form a part of the applicable purchase
agreement by End User for the applicable Product, or
shall otherwise be fully executed and in the possession
of Medtronic prior to distribution of the applicable
Product to the End User.
(b) Medtronic shall cause its sales and installation staff
to refrain from making, offering, stating or otherwise
communicating any representation or warranty in respect
of any Product or Software that is not contained in the
End User Warranty. Medtronic shall obtain from each End
User an acknowledgement of the limitations of the End
User Warranty and the limited nature of the
representations and warranties made by Data Critical in
respect of the Products.
3.1.10 Additional Restrictions. Medtronic may not, directly or
through any person or entity, in any form or manner, copy,
distribute, reproduce, incorporate, use or allow access to
the Products, including without limitation the Software, or
modify, prepare Derivative Works of, decompile, reverse
engineer, disassemble or otherwise attempt to derive source
code or object code from the Software, except as explicitly
permitted under this Agreement or otherwise agreed in
writing. Medtronic understands and agrees that, without Data
Critical's prior written consent with respect to each
specific instance, it is not authorized under this Agreement
to engage in rentals, leases, time-sharing or (with respect
to the Software) "silver master" sales (i.e., customer may
reproduce software) of Products, or to sublicense Products
to End Users or other third parties on a site license or
enterprise license basis.
3.1.11 Audit Rights. Medtronic shall maintain full and complete
records of distribution of Products by it or its
Subdistributors and records of prices charged to End Users
for Product installation and support, for at least three (3)
years after the distribution of such Products. Such records
shall constitute Confidential Information of Medtronic. Data
Critical shall be entitled, (a) no more than twice per year,
to review, and (b) no more than once per year, to audit,
such books and records upon thirty (30) days written notice
in order to confirm the accuracy of the amounts paid or
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payable. Any such audit and review shall be performed at
Data Critical's expense during normal business hours and at
the offices of Medtronic or its attorneys; provided, that
the entire reasonable cost of such audit and review shall be
paid solely by Medtronic if such audit or review, as
applicable, reveals an underpayment by Medtronic of more
than five percent (5%) of the amounts payable by Medtronic
to Data Critical in any six-month period. The auditor shall
sign a confidentiality agreement reasonably acceptable to
Medtronic; provided, that the auditor and Medtronic will use
best efforts to disclose all information to Data Critical
necessary for a full and complete audit of sales of Products
by Medtronic in accordance with this Section 3.1.11.
3.1.12 Reporting. Medtronic shall provide Data Critical with
prompt written notification of any complaints about any of
the Products that are made by End Users, any problems with
such Products or their use by End Users, and any material
malfunctions or failures of the Products of which Medtronic
becomes aware. Such written notification shall be the
property of Data Critical, and shall be considered to be
part of Data Critical's Confidential Information. Nothing in
this Section shall operate to convert Confidential
Information of Medtronic to Confidential Information of Data
Critical.
3.1.13 Comply with Law. Medtronic shall comply in all material
respects with all applicable laws, the failure to comply
with which would have a materially adverse effect on its
ability to perform hereunder or the realization by Data
Critical of the benefit of its bargain under this Agreement.
3.2 Duties of Data Critical. Data Critical shall perform its obligations
under this Section 3.2 in a professional and reasonable manner.
3.2.1 Product Manufacture. Data Critical or its licensed agent
shall manufacture the Products, Software and Parts in
conformity with their Manufacturing and Design Documentation
and this Agreement, and sell, provide, and ship such in new,
undamaged condition. Data Critical or its licensed agent
shall continue to manufacture and make the Parts available
to Medtronic for purchase hereunder or otherwise transfer
the appropriate technology and know-how to Medtronic, free
of charge and without prohibitions on use for such
manufacturing and availability purposes, to facilitate
Medtronic's manufacture thereof, in each case for a period
of five (5) years after any termination or expiration of
this Agreement or, in the case of government supply
contracts, as otherwise required by law. The prices payable
by Medtronic for all parts shall be [*]. [*].
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3.2.2 Promotional Materials. Data Critical will provide such
sales literature, advertising materials, promotional plans,
and other information, programs, and sales support as the
parties mutually agree are appropriate to assist Medtronic
in fulfilling Medtronic's duties under this Agreement.
3.2.3 Training and Support. Data Critical and Medtronic will
mutually agree during the Transition Period upon an initial
training program for the Products listed in Annex A as of
the Effective Date. Each party shall bear its own costs and
expenses associated with developing and conducting such
initial Product training. With respect to any New Product
(but specifically excluding current Products as of the
Effective Date), Data Critical will provide all reasonable
initial and other training (e.g., sales or technical
training) to train a reasonable number of Medtronic sales
and training representatives to enable their training of
their employees at a level sufficient to fulfill its duties
under this Agreement. Such New Product training shall
include and cover, as applicable, and without limitation,
the functionality, use, operation, and limitations of the
New Products and related Software; New Product and related
Software installation, testing, inspection, and monitoring;
and New Product and related Software trouble shooting,
maintenance, repair, and support. each party shall bear its
own costs and expenses associated with developing and
conducting such New Product training.
3.2.4 Service. Data Critical will maintain a qualified service
capability, furnish 24-hour, toll free, customer service
support to Medtronic for the Products described on Annex L,
as modified from time to time but in any event shall include
StatView and FlexView (the "Network Products"), and provide
reasonable warranty and non-warranty repairs for such
Network Products, at Medtronic's and any End User's request.
Such warranty repairs and service on and to the Network
Products shall be performed by Data Critical or its licensed
agents, and made available to Medtronic and the End User, in
compliance with the End User Warranty. Non-warranty repairs
and services will be made available to Medtronic and the End
Users in a commercially reasonable manner on the same rates
and terms as those services are available to Data Critical's
customers generally.
3.2.5 Comply with Law. Data Critical shall comply in all material
respects with all applicable laws, the failure to comply
with which would have a materially adverse effect on its
ability to perform hereunder or the realization by Medtronic
of the benefit of its bargain under this Agreement.
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3.2.6 Development of Products. It is understood that it is the
intent of Data Critical to develop new and innovative in-
hospital alarm notification products and technologies beyond
those set forth in Annex A.
3.2.7 Correct Product Defects. Data Critical shall establish and
enforce a corrective and preventative action procedure
allowing for the timely correction of product defects and to
ensure performance in compliance with the Products'
specifications.
3.2.8 Maintain Partnerships. Data Critical shall use best
commercially reasonable efforts to develop and maintain
partnerships with OEMs for the Products.
3.3 Supply of Products.
3.3.1 Orders. Medtronic shall initiate purchases under this
Agreement by submitting written purchase orders to Data
Critical. Such orders shall state radio frequencies (if
applicable), unit quantities, unit descriptions, requested
delivery dates, and shipping instructions. In the event that
Medtronic has not achieved its Minimum End User Requirements
for any calendar quarter by the tenth (10th) business day
prior to the end of such calendar quarter, then Medtronic
shall submit a written purchase order in accordance with
this Section 3.3.1 for that amount of units of Product
and/or Software Licenses as the parties mutually agree will
be required to be shipped in order for Medtronic to achieve
(and Data Critical to be paid) the full amount of the
Minimums for the entire quarter; provided, that if the
parties cannot agree by the fifth (5th) business day prior
to the end of such calendar quarter, the shortfall shall be
made up with shipments of Software Licenses. Data Critical
shall ship the Products subject to such deemed purchase
order no later than five (5) business days prior to the end
of such quarter in accordance with this Section 3.3. No
purchase order shall be binding upon Data Critical until
accepted by Data Critical in writing. Data Critical shall
accept or reject orders in whole or in part within five (5)
business days of its receipt thereof from Medtronic. Partial
shipment of an order shall not constitute acceptance of the
entire order. In the event that Data Critical is unable to
fill an accepted purchase order in accordance with the
schedule set forth therein, Data Critical shall use
commercially reasonable efforts to fill such order on an
allotment or scheduled release basis. This Agreement shall
govern all orders placed by Medtronic for the Products. No
terms on purchase orders, invoices or like documents
produced by Medtronic or Data Critical shall alter or add to
the terms of this Agreement.
3.3.2 Cancellations. Medtronic shall have no right to cancel
Product orders after shipment of such Products by Data
Critical.
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3.3.3 Lead Times. Data Critical shall deliver units of Products
on the earlier of the agreed-upon shipment date or thirty
(30) days after receipt of a purchase order by Data
Critical; provided, however, Data Critical shall provide
Medtronic with written notification of delays in shipment.
3.3.4 Packing, Shipping. All units of Products shipped by Data
Critical to Medtronic or an End User under this Agreement
shall be packaged in Data Critical's standard containers,
or, at Medtronic's expense, in accordance with instructions
provided by Medtronic, and shall be shipped to Medtronic's
address set forth above, or to an address specified in
Medtronic's purchase order. Unless otherwise requested by
Medtronic and agreed to in writing by Data Critical, such
units of Products shall be shipped by Data Critical in
conformance with the Company's standard shipping procedures.
Shipment shall be F.O.B. Data Critical's Bothell, Washington
facility or other licensed facility, as applicable. Title
and risk of loss shall pass to Medtronic at the F.O.B.
location (the "Delivery Point"). All customs duties,
freight, insurance and other shipping expenses from the
Delivery Point, as well as any other special packing
expenses requested by Medtronic, shall be borne by
Medtronic. Subject to Section 3.1.8, Medtronic agrees to
satisfy all import formalities pertaining to shipment of
units of the Products to destinations outside the United
States.
3.3.5 Inspection and Acceptance. Medtronic shall have fifteen
(15) working days (the "Inspection Period") after delivery
to visually inspect and test each Product, New Product or
Part shipped to Medtronic for patent defects. If Medtronic
determines that any Product, Software or Part is patently
defective, non-conforming, or does not comply with the terms
of this Agreement, Medtronic may reject such by notifying
Data Critical in writing of such rejection and requesting a
Returned Material Authorization ("RMA") number; provided,
that such written notification and request for an RMA number
must be sent by Medtronic before the expiration of the
Inspection Period. Data Critical shall promptly provide the
RMA number after its receipt of such request by Medtronic.
Within ten (10) days of receipt of the RMA number, Medtronic
shall return the defective Products, Software or Part to
Data Critical, at Data Critical's cost, in the same
condition as at the time of delivery to Medtronic, in the
same or equivalent shipping container, and with a written
description of the defect. Data Critical shall promptly
confirm or deny the defect. If Data Critical confirms the
defect, Medtronic shall not be required to remit payment for
such, or Data Critical shall promptly refund the amount
received from Medtronic for such, as applicable, unless Data
Critical promptly replaces such Product, Software or Part
with a new conforming replacement, at which time full
payment shall be made for such unit on a net thirty (30)
days basis.
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3.4 Regulatory Matters; Product Recalls. Each party shall maintain all
records and documentation required by all applicable foreign, U.S.
federal, state and local laws and regulations relating to the
Products. Medtronic shall provide Data Critical with such reports as
may be required by 21 CFR (S)821. All costs of any regulatory matters
or actions related to Data Critical's status as manufacturer of the
Products and all costs of any recall of the Products shall be borne by
Data Critical, except in instances where such costs arise in countries
in which Medtronic owns a license or permit pursuant to the first
proviso in Section 3.1.8 (excluding, however, any costs caused by a
failure of Products to perform in accordance with specifications).
Medtronic shall provide all other reasonable assistance reasonably
requested by Data Critical in connection with any recall action, at
Data Critical's expense.
3.5 End User Credit. Medtronic shall bear full liability to Data Critical
for all extensions of credit to End Users in connection with any
lease, license or purchase of a Product.
3.6 Device Tracking. During the Transition Period, Medtronic and Data
Critical shall mutually agree on a device tracking plan.
4 Transition Period; Warranty and Service Support.
4.1 Transition Period. During the period commencing on the Effective Date
and ending on December 31, 2000 (the "Transition Period"), the parties
shall undertake to negotiate in good faith each item set forth in
Annex J, which Annex J will be mutually agreed upon and delivered by
the parties no later than two weeks after the Effective Date.
4.2 Employees.
4.2.1 [*].
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4.2.2 [*].
4.2.3 Employee Intentions. Data critical covenants and agrees that
it shall [*].
4.2.4 Personnel Records. Following the Effective Date, Data
Critical shall provide Medtronic with copies of personnel
records of all Data Critical's employees who have accepted
employment with Medtronic and have executed written releases
authorizing release of such data.
4.2.5 Nonsolicitation of Employees. For a period of [*] shall not,
with the prior written consent of [*].
4.2.6 Absence of Litigation. Data Critical is not subject to any
order of, consent decree, settlement agreement or other
similar written agreement with, or to the knowledge of Data
Critical, overtly threatened investigation by, any
governmental entity, or any judgment, order, writ,
injunction, decree or award of any governmental entity or
arbitrator, including, without limitation, cease-and-desist
or other orders, in each case with respect to the employees
identified on Annex F.
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4.2.7 Labor Matters. Data Critical represents and warrants that
it is not a party to any collective bargaining agreement or
other labor union contract applicable to the employees
identified on Annex F.
4.2.8 Noncompete Agreements. Data Critical represents and
warrants that, to its knowledge, none of the employees
identified on Annex F are subject to any secrecy or
noncompetition agreement or any other agreement or
restriction of any kind with any party other than Data
Critical, that would impede the ability of such employee to
carry out fully the activities currently performed by such
employee in furtherance of the business of Medtronic.
4.2.9 Indemnification. Data Critical shall indemnify and hold
harmless Medtronic and Medtronic's Affiliates, and their
respective officers, directors, employees and insurers, from
and against any and all costs, damages, claims or
liabilities (including but not limited to reasonable
attorneys fees) that have arisen or may arise out of the
employment of the employees identified on Annex F by Data
Critical, excluding however any such costs, damages, claims
or liabilities that arise out of Medtronic's employment or
termination of such employees or a breach of this Agreement
by Medtronic.
4.2.10 Data Critical Employee Retention. Data Critical shall
retain certain sales, marketing and implementation
specialists to support Medtronic's marketing efforts in
connection with its obligations hereunder. The number,
identity and terms of employment of such Data Critical
employees shall be determined by Data Critical in its
commercially reasonable judgment.
4.2.11 [*].
4.3 Data Critical Installation Backlog. Medtronic assumes and agrees to
perform, in a timely and coordinated fashion commencing on January 2,
2001, all initial product installation and field service obligations
of Data Critical under the Pre-Existing Contracts, subject to the
provisions of this Agreement and of the Pre-Existing Contracts. Data
Critical shall provide to Medtronic all system
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components required for such initial product installation in a timely
fashion and in a quantity sufficient for Medtronic to perform its
obligations under this Section 4.3. Medtronic shall charge a standard
labor rate no less favorable than the lowest labor rate charged by
Medtronic for similar amounts of work (but in no case more than [*])
for installation by Medtronic of the Pre-Existing Contracts. Data
Critical shall invoice the End User under each Pre-Existing Contract
the amounts for installation set forth in such contract, or Data
Critical's then current installation charges, as applicable, and remit
an appropriate amount to Medtronic upon Data Critical's receipt
thereof.
4.4 Warranty.
4.4.1 Provision of Warranty Services. Data Critical shall provide
(a) warranty support directly to End Users of Data
Critical's Network Products pursuant to the terms and
conditions of the End User Warranty, which Data Critical
shall provide with each such Network Product, (b) warranty
support directly to Medtronic with respect to Products other
than Network Products on the terms and conditions of the End
User Warranty, and (c) any Extended Service Contract sold to
such End User by Medtronic pursuant to Section 4.4.2. In the
event that field service is required to fulfill Data
Critical's warranty obligations, Medtronic shall provide
such services for Data Critical and Data Critical shall pay
Medtronic a standard labor rate no less favorable than the
lowest labor rate charged by Medtronic for similar amounts
of work (but in no case more than [*]).
4.4.2 Extended Warranty. In addition to the warranty support
under the End User Warranty, End Users of Data Critical's
Network Products may obtain extended warranty services
consisting of 24-hour telephone support from Data Critical
("Additional Support") by entering into a separate extended
service contract with Medtronic (an "Extended Service
Contract"). Medtronic shall inform each End User of the
availability of such Additional Support, and may sell
Additional Support to an End User pursuant to an Extended
Service Contract obtained by Medtronic from Data Critical
for such End User. Medtronic shall promptly forward to Data
Critical (i) such Extended Service Contract after it is
executed by such End User, and [*]. Payment of such fee by
Medtronic to Data Critical shall be due within thirty (30)
days after the End User enters into such Extended Service
Contract.
4.5 Service Support. Data Critical and Medtronic shall provide
joint service support to End Users on terms and conditions
to be agreed upon by the parties during the Transition
Period, but in no event materially lower than on a level
commensurate
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with Data Critical policies in effect on the Effective Date
and as are provided by Data Critical to Medtronic.
4.6 Demonstration and Support Equipment. Medtronic may purchase
from Data Critical, at Medtronic's sole discretion, some or
all of Data Critical's current demonstration and support
equipment owned by Data Critical at their depreciated book
values (as such materials and equipment and the values
thereof are more fully set forth in the bill of sale
relating thereto). With respect to any marketing materials,
demonstration and support equipment leased by Data Critical,
Data Critical shall use its best commercial efforts to
assign such leases to Medtronic as soon as practicable after
the Effective Date. Data Critical shall, at its cost, use
all commercially reasonable efforts to provide Medtronic
with adequate supplies of product demonstration and other
marketing materials on an annual basis, as reasonably
requested by Medtronic, to be used by Medtronic for
demonstration and marketing purposes and not resale. Such
materials, to the extent they include Products, shall not
count towards Medtronic's Minimum End User Requirements
under this Agreement. If the parties mutually agree that
additional demonstration equipment is required, Medtronic
may, once per year, purchase such at Data Critical's cost.
4.7 Consents and Further Assurances. The parties' respective
obligations to assign and assume the obligations described
in this Section 4 shall be subject to the parties' obtaining
any required third party consents. The parties shall
cooperate to obtain such third party consents. Each party
shall cooperate reasonably with the other and shall execute
such further instruments, documents and agreements, as shall
reasonably be requested, to better evidence and reflect the
transactions described in this Agreement and to carry into
effect the intents and purposes of this Section 4.7.
5 Prices, Fees and Payment.
5.1 Distribution Payments. Medtronic shall pay to Data Critical [*]. Data
Critical shall submit an invoice to Medtronic upon shipment of
Products to Medtronic or its End Users. The invoice shall state the
amount to be paid by Medtronic for all Products [*].
5.2 Minimums.
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5.2.1 Notwithstanding the foregoing, Medtronic agrees to purchase,
pay for and take delivery of (either for its own account or
for the account of End Users) Products (including, as
appropriate, Software Licenses) each quarter having an
aggregate Transfer Price equal to the Minimums as required
under Section 3.3.1.
5.2.2 To the extent that the aggregate dollar amount paid by
Medtronic pursuant to Section 5.1 [*].
5.3 Warranty Fees. Medtronic shall pay to Data Critical the applicable
fees set forth in Section 4.4.2 above within thirty (30) days of the
end of the month in which such fees accrue; provided, that Data
Critical shall have first right to any End User warranty fee payments
received by Medtronic in satisfaction of Medtronic's payment
obligations pursuant to Section 4.4.2.
5.4 Payment and Reports. Except as otherwise specified in this Agreement
or as otherwise agreed between the parties in writing, all payments
hereunder shall be in United States dollars in immediately available
funds. Each such payment shall be accompanied by a report setting
forth in reasonable detail the basis for calculation of such payment,
except as otherwise agreed between the parties in writing.
5.5 Taxes. All prices, fees and other payments are exclusive of any
export, withholding, federal, state and local taxes, duties or excises
other than taxes based on Data Critical's net income. If Data Critical
pays any taxes, duties or excises which are not included in the fees
charged for a Product, Data Critical shall itemize such taxes, duties
or excises as a separate item on its invoices to Medtronic, and
Medtronic shall reimburse Data Critical for such taxes, duties or
excises; provided, that Medtronic shall not be required to make any
such reimbursement if it provides a valid tax exemption certificate to
Data Critical prior to shipment.
5.6 Late Payments. All amounts which are not timely paid by Medtronic as
required by this Agreement shall be subject to a late charge equal to
one and one-half percent (1.5%) per month (or, if less, the maximum
allowed by applicable law). In the event that any payment due
hereunder is overdue, Data Critical reserves the right to suspend
performance until such delinquency is corrected.
6 Joint Review Committee.
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6.1 Establishment and Makeup. Data Critical and Medtronic will form a
joint committee (the "Joint Review Committee") comprised of two
representatives from Data Critical and two representatives from
Medtronic. Each party shall freely appoint and remove its
representatives; [*].
6.2 Meetings and Duties. The Joint Review Committee shall meet no less
than once every six calendar months, commencing on January 15, 2001;
provided, that the Joint Review Committee shall meet as often as
necessary during the Transition Period. The Joint Review Committee
shall discuss and negotiate in good faith the following topics: [*];
(iii) a review of Medtronic's and Data Critical's performance of their
respective obligations under Sections 3; (iv) the proposed addition of
New Products to the scope of this Agreement and, to the extent so
added, the Minimums and Transfer Prices thereof; and (v) any other
topic proposed by any member of the Joint Review Committee.
6.3 Transfer Pricing. Any adjustment to the Transfer Price of a Product
as agreed by Joint Review Committee (a) shall be determined based on
historical aggregate purchase prices to the End Users and other
relevant commercial factors, inclusive of installation prices for any
Product, and (b) shall take effect only with respect to orders placed
by Medtronic from and after the first day of the second calendar
quarter, and shall stay in effect for the next four calendar quarters,
subject to adjustments as reasonably requested by either party to take
into account any supply shortages, component cost increases or similar
market events and disruptions.
6.4 Minimums and Minimum End User Requirements. The Joint Review
Committee shall not amend Annex C, modify the Minimums or otherwise
adjust Medtronic's Minimum End User Requirements hereunder in a manner
that [*].
6.5 Voting. The Joint Review Committee shall act by majority vote; all
four members must vote on every matter that is determined by majority
vote. In the event of a voting tie, then the matter shall be
determined by the mutual agreement of the Chief Executive Officer or
Chief Financial Officer of each of Medtronic and Data Critical, acting
reasonably and in good faith; provided, that neither executive
representative may be a member of the Joint Review Committee and that
Medtronic's executive representative may not also sit on
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Data Critical's board of directors. In the event that such executive
officers cannot agree within fifteen (15) days of submission of the
matter, then the parties shall seek binding arbitration under the
auspices of the American Arbitration Association. Such arbitration
shall take place in Seattle, Washington under a single arbitrator
mutually agreed to by the parties, and shall be concluded within sixty
(60) days of the end of the prior 15-day period.
7 Marketing, Promotion and Partner Relationships.
7.1 Mutual Obligations. Each of Data Critical and Medtronic, when and
where commercially appropriate in each party's good faith discretion,
shall promote the other's products and services in order to foster
commercial relationships and contacts with each other's customers and
contacts, and other potential marketing prospects. Such promotion
shall include, but shall not be limited to, using each other's name
and brand in its advertising and marketing literature, providing
mutual marketing and support at industry trade shows, and co-branding
products that incorporate or utilize both parties' Intellectual
Property Rights.
7.2 End User Information. All data, identifying characteristics and
similar information generated by any Product or transmitted to either
party by any End User (the "End User Information") shall remain, as
between Data Critical and Medtronic, the sole and exclusive property
of Data Critical; except whereby the information was generated solely
by a Medtronic product, in which case such information is also owned
by Medtronic. Subject to the foregoing, Medtronic hereby assigns all
its rights, title and interest in and to the End User Information to
Data Critical. Neither Medtronic nor any other person shall have any
right to keep, sell, offer to sell, or otherwise use such End User
Information without the prior written consent of Data Critical, which
consent shall be withheld in Data Critical's sole discretion.
8 Intellectual Property Rights.
8.1 Proprietary Rights. Except as expressly set forth in this Agreement,
Data Critical and/or its licensors shall retain all Intellectual
Property Rights in the Products and in all Derivative Works of the
Products. The Associated Software is licensed but not sold under this
Agreement, and all right, title and interest in and to the same,
including without limitation all Intellectual Property Rights in the
same, shall remain with Data Critical and/or its licensors, except as
expressly licensed in this Agreement. Medtronic shall retain, and
nothing in this Agreement shall entitled Data Critical to, any right,
title or interest, of any nature whatsoever, in the Intellectual
Property of Medtronic and all Derivative Works thereof.
8.2 License and Restrictions. Each party hereby grants to the other party
a non-exclusive right and license to use such of the granting party's
logos, trademarks, service marks, trade names and trade dress (for
purposes of this Section 8,
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collectively "Trademarks") that the granting party provides to the
other party under this Agreement, solely in connection with the
distribution and promotional obligations of the grantee party under
this Agreement, and subject to the provisions of this Agreement.
Neither party shall use any of a granting party's Trademarks on any
product or service or on any promotional or marketing materials,
without first submitting to the granting party a sample of any such
materials, which the granting party shall have the right to approve or
refuse within thirty (30) days of receipt of the same. The granting
party shall not unreasonably withhold or delay its approval, and such
approval shall be deemed to have been given unless written notice of
refusal is given by the granting party within such thirty (30) day
period.
8.3 Ownership. Each party shall retain all right, title and interest in
and to its Intellectual Property Rights, except for the limited rights
expressly set forth herein. All goodwill associated with the use of a
party's Intellectual Property Rights shall inure to the benefit of
such party.
9 Confidentiality. Confidential Information that is disclosed or created under
this Agreement shall be governed by the Confidentiality Agreements between
the parties, dated as of January 24, 2000 and July 10, 2000 ("Confidentiality
Agreements"), the terms of which are incorporated by this reference as if set
forth herein in their entirety, and copies of which are attached as Annex I.
In the event of a conflict between the Confidentiality Agreements and this
Agreement, the applicable provision(s) of this Agreement shall govern.
Notwithstanding any other provision of this Agreement or of the
Confidentiality Agreements, the parties' respective obligations with respect
to Confidential Information shall survive the expiration or earlier
termination of this Agreement for a period of no less than five (5) years
after the date of such expiration or termination, and shall be fully binding
on the parties during such period.
10 Warranties and Disclaimer.
10.1 Warranties by Data Critical. Data Critical represents, warrants and
covenants to Medtronic that:
10.1.1 Data Critical has the full power, right and authority to
enter into this Agreement and to perform its obligations
hereunder;
10.1.2 Data Critical is the owner or licensee of sufficient right,
title and interest in the Intellectual Property Rights
provided by Data Critical or used or incorporated by Data
Critical in the Products, and which may be necessary for
Data Critical to rightfully perform its obligations under
this Agreement; and
10.1.3 Data Critical is the owner or licensee of sufficient right,
title and interest in the materials, media, and know-how of
Data Critical, including
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materials and media created by third-party contractors,
suppliers, or licensors acting at the request of Data
Critical, specifically for use in the manufacture and design
of Products, including drawings, routings, bills of
materials, schematics, circuit diagrams, specifications, and
test documents. In addition to its obligations set forth in
Section 11, Data Critical shall indemnify, defend and hold
harmless Medtronic and its Affiliates, and their respective
officers, directors, employees, agents and insurers, from
and against any damages, claims, costs and expenses,
including without limitation reasonable attorney's fees,
that arise, in whole or in part, from the infringement or
interference of any of the Products, New Products, Parts,
Affiliated Software, or any components, or assemblies of any
of the foregoing, with any Intellectual Property Rights of
any third party.
10.2 Warranties by Medtronic. Medtronic represents, warrants and covenants
to Data Critical that:
10.2.1 Medtronic has the full power, right and authority to enter
into this Agreement and to perform its obligations
hereunder;
10.2.2 Medtronic is the owner or licensee of sufficient right,
title and interest in the Intellectual Property Rights
provided by Medtronic or which are necessary for Medtronic
to rightfully perform its obligations to grant the rights
granted by it under this Agreement;
10.2.3 Medtronic has obtained the rights to the Intellectual
Property Rights provided by Medtronic hereunder in writing
from its officers, employees and third parties, including
independent contractors, and subcontractors, to assign,
license, sublicense, transfer or grant any and all the
rights and licenses conveyed under this Agreement by
Medtronic;
10.3 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY DISCLAIMS
ALL WARRANTIES, EXPRESS AND IMPLIED, WITH RESPECT TO THE INTELLECTUAL
PROPERTY RIGHTS, PRODUCTS AND SERVICES PROVIDED UNDER OR IN CONNECTION
WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, EVEN
IF SUCH PARTY IS ADVISED OF SUCH PURPOSE, AGAINST INFRINGEMENT,
UNINTERRUPTED SERVICE AND ERROR-FREE SERVICE.
11 Indemnification. Each party (the "Indemnifying Party") shall indemnify,
defend and hold the other party (the "Indemnified Party") and its directors,
employees and agents harmless from and against all damages, claims, costs and
expenses, including without limitation reasonable attorney's fees, and losses
(individually and collectively, a "Claim") to the extent arising out of or
relating to: (i) the breach or
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alleged facts that if true would constitute a breach by the Indemnifying
Party or its agents of this Agreement, including without limitation any
warranty contained in this Agreement, (ii) the Indemnifying Party's or its
agents' business operations, or (iii) any negligence or willful misconduct in
the performance by the Indemnifying Party or its agents of the services to be
performed by such party hereunder; or (iv) any defect, negligence or willful
misconduct in the design, manufacturing or installation of any product or
equipment hereunder to the extent caused by the Indemnifying Party or its
agents; provided, however, that the Indemnified Party must (a) give the
Indemnifying Party prompt written notice of such Claim, (b) reasonably
cooperate with the Indemnifying Party at the Indemnifying Party's request and
expense, in the defense and/or settlement of such Claim, and (c) give the
Indemnifying Party the right to control the defense or settlement of such
Claim, except that the Indemnifying Party shall not enter into any settlement
that affects the Indemnified Party's rights or obligations without the
Indemnified Party's prior express written approval, which shall not be
unreasonably withheld or delayed.
12 Limitation of Liability. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
THIS AGREEMENT, OR THE INTELLECTUAL PROPERTY RIGHTS, PRODUCTS OR SERVICES
DESCRIBED OR CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION DAMAGES FOR
LOSS OF PROFITS OR REVENUES, OR THE COST OF PROCUREMENT OF SUBSTITUE GOODS
AND/OR SERVICES, REGARDLESS OF THE LEGAL OR EQUITABLE BASIS FOR SUCH DAMAGES,
WHETHER IN CONTRACT, TORT OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING
LIMITATIONS SHALL NOT APPLY FOR THE BENEFIT OF THE BREACHING PARTY IN THE
CASE OF ANY BREACH OF THE PROVISIONS OF THIS AGREEMENT RELATING TO
CONFIDENTIALITY.
13 Term and Termination.
13.1 Term. The initial term of this Agreement shall commence on the
Effective Date and shall continue thereafter for a period of three (3)
years, unless earlier terminated in accordance with this Section 13 or
Sections 2.2.1. or 2.4. Thereafter, the term of this Agreement shall
automatically renew for successive one (1) year terms unless and until
either party gives written notice of non-renewal within ninety (90)
days of the end of the then-current term.
13.2 Termination for Cause. Either party may terminate this Agreement by
written notice to the other party if such other party is in material
breach of this Agreement (including any of the exhibits hereto) and
has failed to cure such breach within thirty (30) days of written
notice thereof from the first party;
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provided, that such written notice describes such breach in reasonably
sufficient detail to enable the breaching party to identify the
breach.
13.3 Termination for Insolvency and Related Events. This Agreement shall
terminate, without notice, (i) upon the institution by or against
either party of insolvency, receivership or bankruptcy proceedings or
any other similar proceedings, (ii) upon either party's making an
assignment for the benefit of creditors, or (iii) upon either party's
dissolution or ceasing to do business.
13.4 Effect of Termination. Upon any expiration or termination of this
Agreement, each party shall promptly return to the other party or
destroy, at such other party's written instruction, all Confidential
Information of the other party (except that information necessary to
provide ongoing support obligations to End Users under agreements
existing as of the date of termination) and shall certify such
complete return and/or destruction in writing. All units of Products
in Medtronic's and its Subdistributors' possession at the time of
termination or expiration of this Agreement shall be promptly returned
to Data Critical at Medtronic's expense. Notwithstanding the
foregoing, Medtronic, and its Subdistributors, shall have the right to
(i) sell their inventories of Products and Software existing on the
effective date of termination or expiration, (ii) to continue to
service parties who purchased or otherwise acquired Products or
Software during the term of this Agreement, (iii) to fulfill
contractual obligations entered into prior to the effective date of
termination or expiration. In the event of any termination of this
Agreement prior to the end of any quarter, Medtronic's Minimums shall
be calculated on a pro rata basis for the portion of such quarter
during which this Agreement remains in effect, and any payment owing
by Medtronic to Data Critical pursuant to such Sections shall be paid
on the date of termination of this Agreement.
13.5 Survival. The provisions of Sections 3.1.6, 3.1.8, 3.1.11, 3.1.14,
3.2.5, 3.4, 3.5, 4.2.5, 4.2.9, 5.5, 5.6, 6.5, 7.2, 8.1, 8.3, 9, 11,
12, 13.4, 13.5 and 14 and any other provisions which by their nature
should survive, shall survive any expiration or termination of this
Agreement.
14 Miscellaneous.
14.1 Amendments and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the parties or their
respective permitted successors and assigns. Any amendment or waiver
effected in accordance with this Section 14.1 shall be binding upon
the parties and their respective successors and assigns.
14.2 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with applicable U.S. federal
law and the laws of the State of Washington, without regard to
conflict of laws principles and without regard to the United Nations
Convention on Contracts for the International Sale
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of Goods. Each of the parties hereby consents to the exclusive
jurisdiction and venue of the state and federal courts located in and
serving King County, Washington.
14.3 Independent Contractors. Each party is and at all times shall be an
independent contractor of the other party in all matters relating to
this Agreement, and nothing in this Agreement shall be construed to
create any other relationship. Each party and its employees are not
employees or agents of the other party for any purposes and have no
power or authority, whether apparent, actual, ostensible or otherwise,
to bind or commit the other party in any way.
14.4 Notice. Any notice required or permitted under this Agreement shall
be in writing and shall be delivered in person or by means evidenced
by a written confirmation to the applicable party at the address set
forth on the signature page below or to such other address as such
party provides by giving notice in accordance with this section.
Notices shall be effective only upon receipt.
14.5 Severability. If any provision of this Agreement is held to be
invalid, void or illegal, it shall be severed from this Agreement and
shall not affect, impair or invalidate any other provision, and it
shall be replaced, if practicable, by a provision which comes closest
to such severed provision in language and intent without being
invalid, void or illegal.
14.6 Assignment and Binding Effect. Other than as permitted pursuant to
Section 2.5, neither this Agreement nor any of the rights or
obligations hereunder may be transferred or assigned by either party
without the prior express written consent of the other party, and any
purported transfer or assignment in violation of this section shall be
void. This Agreement shall be binding upon and inure to the benefit of
each of the parties and their respective permitted successors and
assigns.
14.7 Attorneys' Fees. The prevailing party in any action to enforce this
Agreement shall be entitled to recover reasonable costs and expenses
in connection therewith including without limitation reasonable
attorneys' fees and expenses.
14.8 Cumulative of Remedies. All remedies available to either party for
breach of this Agreement are cumulative and may be exercised
concurrently or separately, and the exercise of any one remedy shall
not be deemed an election of such remedy to the exclusion of any other
remedy.
14.9 Force Majeure. Nonperformance of either party (except for the payment
of amounts due hereunder) shall be excused while and to the extent
that performance is rendered impossible by strike, fire, flood,
earthquake, governmental action, or any other reason where failure to
perform is beyond the reasonable control of the nonperforming party.
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14.10 Construction of Agreement. Each party has cooperated in the drafting
and preparation of this Agreement and no principles of construction
shall be applied against either party on the basis that such party
drafted this Agreement.
14.11 Headings and Titles. The headings and titles of the sections of this
Agreement are for convenience only and shall not in any way affect the
interpretation of this Agreement .
14.12 No Implied Waiver. No right under this Agreement or breach hereof may
be waived except in writing signed by the parties hereto. The failure
of either party to require performance of any provision of this
Agreement shall not be construed as a waiver of such party's rights to
insist on performance of such provision or any other provision at some
other time.
14.13 Integration and Modification. This Agreement, together with the
attached, constitute the entire agreement and understanding between
the parties regarding the subject matter addressed herein and
supersedes and replaces all prior negotiations, understandings and
agreements, proposed or otherwise, whether written or oral, concerning
the subject matter hereof. This Agreement may not be modified or
varied except by a written document signed by both of the parties.
14.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument. Facsimile signatures
shall be deemed originals.
[signature page follows]
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The parties have caused their duly authorized representatives to execute
and deliver this Distribution Agreement as of the Effective Date.
Data Critical Corporation Medtronic Physio-Control, Inc.
By: /s/ Jeffrey S. Brown By: /s/ David W. Shelton
------------------------------ --------------------------------
Name: Jeffrey S. Brown Name: David W. Shelton
---------------------------- ------------------------------
Title: President/CEO Title: Executive Vice President
--------------------------- -----------------------------
Address: 19820 North Creek Parkway Address: 11811 Willows Rd NE
------------------------- ---------------------------
#100 Bothell, WA 98011 Redmond, WA 98052
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Tel: 425-482-7050 Tel: 425-867-4554
----------------------------- -------------------------------
Fax: 425-482-7010 Fax: 425-867-4202
----------------------------- -------------------------------
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