EXHIBIT 10.16
Confidential Treatment Requested
SECOND AMENDMENT TO
DISTRIBUTION AND LICENSE AGREEMENT
THIS SECOND AMENDMENT TO DISTRIBUTION AND LICENSE AGREEMENT (this "Second
Amendment") is made as of this 19th day of January, 2000 between Data Critical
Corporation, a Delaware corporation ("DCC"), and GE Marquette Medical Systems,
Inc., a Wisconsin corporation (f/k/a Marquette Medical Systems, Inc.)
("Marquette").
WHEREAS, DCC and Marquette are parties to that certain Distribution and
License Agreement dated as of January 23, 1997 (the "Agreement"), as amended by
that certain Addendum dated as of September 14, 1998 (the "First Amendment").
WHEREAS, the parties wish to supplement and amend the Agreement and restate
the terms of the First Amendment.
NOW THEREFORE, in consideration of the mutual agreements contained in the
Agreement and in this Second Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. Amendments to Agreement.
A. Amendment to Section 7 of the Agreement. The second sentence of
Section 7 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"This Agreement shall be extended for an additional four-year term
following the Initial Term ("Successive Term"), except as this
Agreement may otherwise be terminated in accordance herewith."
B. Amendment to Section 21.10 of the Agreement. Section 21.10 of the
Agreement is hereby deleted in its entirety and replaced with the
following:
"21.10. Notices. Any notice required or permitted to be given to
another party hereto shall be given by sending such notice by
facsimile, registered mail or certified mail, postage prepaid to the
address set forth below, or to such other address as that party may
designate by like notice:
If to DCC: Data Critical Corp.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, VP Business Development
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Marquette: GE Marquette Medical Systems, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President for Marketing
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
GE Marquette Medical Systems, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
C. Amendment to Annex A to the Agreement. Annex A to the Agreement is
hereby deleted in its entirety and replaced by Annex A attached hereto
and incorporated by reference herein.
Section 2. Additional Marquette Obligations -- Installed Base List.
A. Delivery. Within 30 days of the execution of this Agreement,
Marquette shall deliver to DCC a list of its customers located in the
U.S. and Canada to whom it has sold any telemetry products or
equipment manufactured by it that are compatible with the Products, as
determined by Marquette (the "Installed Base List").
B. Limited Use and Confidentiality. DCC acknowledges and agrees that the
Installed Base List shall be considered Confidential Information of
Marquette pursuant to the Agreement. Notwithstanding anything to the
contrary, the Installed Base List shall be used by DCC for the sole
purpose of selling or leasing the Products to end users, and shall not
be used for any other purpose without the prior written consent of
Marquette. The Installed Base List shall be disclosed only to those
employees of DCC with a need to know, provided that any such persons
are informed of and agree to abide by the confidentiality provisions
of the Agreement and this Section 2.
C. No Warranty. Marquette make no warranties under this Agreement with
respect to the Installed Base List. The Installed Base List and all
information contained therein are provided AS IS. NO WARRANTIES,
INCLUDING BUT NOT LIMITED TO IMPLIED OR EXPRESS WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, SHALL APPLY TO
THE INSTALLED BASE LIST.
D. Equitable Relief. DCC acknowledges and agrees that its failure to
comply with the provisions of this Section 2 will cause irreparable
harm to Marquette, the dollar amount of which will be difficult to
determine. Therefore, DCC agrees that Marquette may seek and obtain
equitable relief, including without limitation any
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temporary or permanent injunction, with respect to any breach of this
Section 2 by DCC.
Section 3. Additional DCC Obligations
A. Quarterly Reports. No later than 30 days following the end of each
calendar quarter, beginning on the calendar quarter ending March 31,
2000, DCC shall provide a written report (each a "Quarterly Report")
to Marquette, in form agreeable to Marquette, setting forth the
following information:
(i) all Products installed by DCC or its affiliates in the
immediately preceding quarter;
(ii) the name of each Person for whom any such Product is installed
and the Products installed for each such Person;
(iii) the location to which each such Product was shipped;
(iv) the total Net Revenue (as defined below) to DCC from the
Products so installed;
(v) The royalties due for such quarter, as calculated pursuant to
Section 3.B hereof;
(vi) a detailed review of Product performance and customer
satisfaction for such quarter; and
(vii) additional sales opportunities with respect to sales of Products
by Marquette.
B. Royalty.
(i) Royalty Rate. DCC shall pay Marquette royalties in the amount of
[*] percent ([*]%) of the Net Revenue received by DCC for each
Product installed by it or any of its affiliates or agents to
any Person other than Marquette.
(ii) Payment of Royalties. Each Quarterly Report shall be accompanied
by payment of the royalty amounts (the "Royalty Payment") due
Marquette as calculated in the Quarterly Report. Payments due to
Marquette hereunder shall be paid in U.S. Dollars by corporate
check or wire transfer of immediately available funds to an
account designated by Marquette or in such other reasonable form
and at such other reasonable place as Marquette may hereafter
designate by notice
(iii) Net Revenue. As used herein, the term "Net Revenue" means the
"Gross Revenue" received by DCC but excluding, if separately
stated, sales taxes,
[*] Confidential treatment requested
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tariffs, duties and/or use taxes, installation fees, extended
warranty charges, freight, shipping insurance and shipping
costs. "Gross Revenue" shall mean consideration of all types
received by DCC from sales or leases of Products to any Person
(other than Marquette) including, but not limited to, money,
securities and in-kind contributions to research efforts, with
any consideration other than money being valued at its fair
market value on the date received by DCC.
C. Exclusivity.
(i) DCC covenants and agrees that it will not license or otherwise
make commercially available the View on Demand Feature (as
defined below) to or assist any other Person to develop a
product competitive with the View on Demand Feature. The
foregoing exclusivity shall expire as of any calendar quarter
for which the Net Revenues derived from the sum of (1) each
Product installed by DCC and (2) the value of all Products for
new installations shipped by DCC to Marquette and their
affiliates and agents, fall below the Targets set forth below or
any Subsequent Targets (as defined herein) for the relevant
period:
Period Target
------ ------
First Quarter 2000 $[*]
Second Quarter 2000 $[*]
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ $[*]
Fourth Quarter 2000 $[*]
Solely for purposes of calculating the Net Revenue derived from
each Product installed by DCC pursuant to clause (1) of this
Section 3.C(i), the Net Revenue derived from each such Product
shall be deemed to be $[*].
(ii) If the exclusivity granted hereunder has expired, the OEM Prices
set forth in Annex A to the Agreement, as amended hereby, may be
increased by no more than [*]% upon such expiration and annually
thereafter on each anniversary of the expiration of the
exclusivity.
(iii) Solely for purposes of this Section 3.C, Net Revenue shall not
include any Royalty Payments paid by DCC to Marquette hereunder.
In addition, to the extent that Net Revenues for any calendar
quarter exceed the applicable Target for such quarter, such
excess Net Revenue shall carry over into the next calendar
quarter and shall be added to the Net Revenue
[*] Confidential treatment requested
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for such quarter solely for the purposes of calculating the
Target for such quarter in accordance with this Section 3.C.
(iv) So long as the exclusivity granted hereunder remains applicable,
the parties hereto agree to negotiate in good faith and come to
mutual written agreement no later than December 1 of each year,
with respect to revised quarterly Targets applicable to each
calendar year during the Term of the Agreement (the "Subsequent
Targets"); provided, however, that upon the failure of the
parties to agree to such Subsequent Targets as of such December
1, the parties shall submit their dispute to the arbitration
provisions set forth in Section 20 of the Agreement, with any
such arbitration occurring in Chicago, Illinois.
(v) So long as the exclusivity granted hereunder remains applicable,
at least 25 days prior to (but no more than 30 days prior to)
the end of each calendar quarter, DCC shall deliver to Marquette
a written report (the "Exclusivity Report") setting forth (i)
the total number of Products installed by it to Persons (other
than Marquette) for the then current fiscal quarter as of the
date of the Exclusivity Report; (ii) the Net Revenue derived
from the Products so installed; (iii) DCC' s best estimate of
the Net Revenue to be derived from the Products so installed for
the remainder of the then current fiscal quarter.
(vi) DCC agrees to keep accurate and correct books and records
appropriate to determine the amount of royalties due Marquette
hereunder. Records with respect to each installation of Products
shall be retained for a period of three (3) years. During the
term of the Agreement, and for an additional period of three (3)
years thereafter, DCC agrees that its books, records and other
documents shall be available during normal business hours for
inspection by an independent certified public accountant
selected by Marquette and reasonably acceptable to DCC for the
sole purpose of verifying reports and payments due hereunder and
otherwise confirming DCC's performance of its obligations
hereunder; provided that such accountant shall first agree in
writing to maintain all information learned in such inspection
in strict confidence except as reasonably necessary to explain
to Marquette any breach by DCC hereunder. No such inspection
shall unreasonably interfere with normal business activities
conducted by DCC. If such review reveals an underpayment of
royalties due hereunder of more than five percent (5%), DCC
shall pay all of Marquette's costs associated with such review.
(vii) For purposes of this Agreement, the "View on Demand Feature"
shall mean the ability to use a button built into the patient's
telemetry pack to cause a current sample ECG waveform page to be
transmitted to the Product's assigned receiver(s).
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D. Infringement. DCC shall not use or incorporate into the Products or
other technology or items furnished hereunder any copyrighted,
patented or proprietary materials of any other Person without the
written authorization of such Person. DCC shall defend, indemnify and
hold Marquette, its affiliates or their customers harmless from any
and all claims, suit, or other proceeding ("Claims") brought against
Marquette, its affiliates or their customers that any Product or
process resulting from its use infringes or misappropriates any
patent, copyright or trade secret of any other Person. Marquette shall
notify DCC promptly in writing of any such Claim and shall grant to
DCC such authority, information and assistance at DCC's expense as may
be reasonably necessary for DCC to defend any such Claim; provided,
however, that any failure by Marquette to so promptly notify or
provide such authority, information, or assistance shall reduce the
indemnity hereunder solely to the extent that DCC is actually
prejudiced by such failure. DCC shall pay all damages and costs
awarded against Marquette, its affiliates or their customers with
respect to any such Claim, including reasonable attorneys fees. If use
of any Product or other item is enjoined, DCC shall, at its sole
expense, procure the right to continue using the Product or item,
replace the Product or item with a non-infringing equivalent, or with,
Marquette's written approval, remove the Product or item and refund
the purchase price and any transportation and installation cost.
Section 4. Representations and Warranties.
A. Representations and Warranties of DCC. DCC represents and warrants to
Marquette as follows:
(i) that DCC has full corporate power and authority to execute and
deliver this Second Amendment and to perform the transactions
contemplated hereunder;
(ii) that DCC has full right, power and authority to enter into and
perform this Second Amendment;
(iii) that the Product is, or will be made at no cost to Marquette,
functionally equivalent to the ▇▇▇▇▇▇.▇▇ version 2.0 software
previously provided to Marquette pursuant to the terms of the
First Amendment prior to amendment hereby and shall conform
strictly to the specifications attached hereto as Annex B;
(iv) that neither the performance nor the functionality of any
Product (including any related data or interface) will be
affected in any way by the advent of the year 2000, nor will any
Product (including any related data or interface) affect any
system or product of Marquette in any way by the advent of the
year 2000;
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(v) that, with respect to each Product delivered hereunder, as of
the date of such delivery, DCC shall have complied with all laws
and regulations applicable to such Products and this Agreement,
including without limitation:
(a) DCC shall represent and will certify on all invoices, that
the items were produced in compliance with the Fair Labor
Standards Act of 1938 as amended.
(b) Unless exempt, DCC shall comply with the equal opportunity
clause in 41 CFR 6-1.4 , the affirmative action clause
regarding disabled veterans and veterans of the Vietnam Era
in 41 CFR 60-250.4; the affirmative action clause regarding
handicapped workers in 41 CFR 60-74 14; any other provisions
required by the Office of Federal Contract Compliance
Programs as set forth in 41 CFR Chapter 60; the clauses
relating to small business, small disadvantaged business and
women owned small business in 48 CFR 52.219-9 and 52.219-13;
Executive Order 11141 concerning age discrimination, and any
others applicable Executive Orders.
(c) the Products shall comply with all applicable sections of
the Federal Food, Drug and Cosmetic Act, Federal Consumer
Product Safety Act, and Federal communications Act as
amended, and any other applicable product safety law and any
other applicable regulation thereunder.
B. Representations and Warranties of Marquette. Marquette represents and
warrants to DCC as follows:
(i) that it has full corporate power and authority to execute and
deliver this Second Amendment and to perform the transactions
contemplated hereunder; and
(ii) that Marquette has full right, power and authority to enter into
and perform this Second Amendment.
Section 5. Miscellaneous.
A. Except as otherwise defined or modified herein, all capitalized terms
used in this Second Amendment shall have the meanings set forth in the
Agreement.
B. The terms and provisions of the Agreement, as amended hereby, shall
remain in full force and effect. This Second Amendment hereby
supercedes and replaces the terms of the First Amendment and such
First Amendment shall hereafter be void and of no further force or
effect. All references to the Agreement contained therein shall mean
the Agreement, as amended hereby.
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C. This Second Amendment may be executed in one or more counterparts, all
of which shall be considered one and the same agreement.
D. This Second Amendment and the rights and obligations of the parties
hereto shall be governed by, and construed in accordance with, the
laws of the State of Washington, without regard to the conflicts of
law principles thereof.
IN WITNESS WHEREOF, Marquette and DCC have caused this Second Amendment to
be signed by their respective officers thereunto duly authorized all as of the
date first written above.
GE MARQUETTE MEDICAL SYSTEMS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President & General Manager
Global Marketing 1/19/00
DATA CRITICAL CORPORATION
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: 1/21/00
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