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Exhibit 10.2
(ASPECT MEDICAL SYSTEMS(R) LOGO)
(BRINGING INSIGHT OUT LOGO)
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
BISX LICENSE, DEVELOPMENT, AND SUPPLY AGREEMENT
BISx LICENSE, DEVELOPMENT AND SUPPLY
AGREEMENT (hereinafter "Agreement") dated
this 17th day of October, 2005 (the
"Effective Date"), by and between Aspect
Medical Systems, Inc., a Delaware
corporation with its principal offices located
at 141 Needham Street, Newton,
Massachusetts ("Aspect") and Spacelabs Medical,
Inc., a Delaware corporation, with offices
at 5150 220th Ave SE, Issaquah, WA
98029 ("Spacelabs") for the development,
purchase of products and the licensing
of software by Spacelabs from Aspect under
the terms and conditions contained in
this Agreement.
1. BACKGROUND
1.1 Aspect is a developer,
manufacturer and distributor of medical
devices, equipment and related hardware, software and
accessories,
including the BISx Device, a device adapted to process selected
EEG
measurements and display the results thereof ("BIS") on a host
patient
monitor system.
1.2 Spacelabs is a developer,
manufacturer and distributor of medical
devices, equipment and related hardware, software and
accessories,
including patient monitors and physiologic monitoring modules.
1.3 Spacelabs desires to use Aspect's
BISx technology in conjunction with
Spacelabs' Patient Monitoring Systems.
1.4 Aspect agrees to sell and/or
license to Spacelabs selected Aspect
Products, subject to the terms and conditions contained in this
Agreement.
2. DEFINITIONS
<TABLE>
<S>
<C>
Bispectral Index or BIS Aspect's proprietary
processed EEG parameter that may
be used as an aid in monitoring the effects of certain
anesthetic agents.
Spacelabs Patient
Spacelabs designed multi-parameter patient monitoring
Monitoring System(s) systems
including monitors and modules.
BISx Device
The integrated solution of Aspect's BIS processing
technology and digital signal conversion technology.
BISx Kit
BISx Device, Host Monitor Cable, and PIC designed for
use with Spacelabs Patient Monitoring Systems.
PIC or PIC Plus
Patient interface cable
Host Monitor Cable
The cable that connects the BISx Device to the
Spacelabs BISx Module. This cable will be designed by
Aspect, with assistance from Spacelabs.
</TABLE>
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<TABLE>
<S>
<C>
Host Cable Connector The
connector that will be integrated into the Host
Monitor Cable for connection to the Spacelabs BISx
Module.
Spacelabs BISx Module The Spacelabs
host device that provides power,
communication, and control to the BISx Kit.
BIS Sensor
A single-use disposable or semi-reusable sensor
manufactured by Aspect for use with the BISx Kit that
is required to generate the Bispectral Index.
Aspect Products
BISx Kit, BIS Sensors and any other product that can
be ordered by Spacelabs as listed in Exhibit A.
Software
Aspect software programs in binary code form that are
designed for use with the BISx Kit.
Party (ies)
Aspect and Spacelabs each individually or jointly.
Affiliate
With respect to either Aspect or Spacelabs, any other
business entity which, directly or indirectly,
controls, is controlled by, or is under common control
with Aspect or Spacelabs, respectively.
Specification
Technical Specification for the BISx Kit as attached
in Exhibit C.
BIS Ready
Spacelabs patient monitor that is capable of
communicating with the Spacelabs BISx Module.
</TABLE>
3. LICENSE.
3.1 Licenses - General.
Aspect agrees to sell to Spacelabs the Aspect Products listed
on
Exhibit A (Aspect Products and Purchase Prices). The components of
the
BISx Kits purchased from Aspect under this Agreement shall only
be
used in conjunction with the Spacelabs BISx Module which
Spacelabs
uses or sells, leases or otherwise makes available to
third-party
users in the regular course of business. The components of the
BISx
Kit shall only be resold, leased, rented, licensed or otherwise
transferred to third parties for use with Spacelabs BISx Modules or
as
replacement parts used in BISx Kits and Spacelabs shall only
sell
Aspect approved sensor products in connection with any BISx
Kits.
3.2 Aspect Software License.
Aspect hereby grants to Spacelabs and its Affiliates a
non-exclusive
and non-transferable license, with the right to sublicense only
to
purchasers of the Spacelabs BISx Module, during the term of the
Agreement to use the Software loaded in the BISx Kit and
related
documentation provided by Aspect solely in connection with
operation
of the components of the BISx Kit with the Spacelabs BISx Module.
All
rights sublicensed to Spacelabs customers to use the BISx Kit
shall
survive any termination of this Agreement as long as they are
in
compliance with applicable sublicense agreements.
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3.3 Distribution of BIS Sensors.
(a) Outside of the
United States
Aspect hereby grants to Spacelabs (and Spacelabs' Affiliates)
the
right to distribute outside the United States Aspect BIS
Sensors
purchased from Aspect. The parties acknowledge that neither
Aspect nor Spacelabs has the ability to control the actual and
specific use of the Aspect BIS Sensors by their customers.
(b) Within the United
States
Spacelabs may sell one box of twenty-five (25) Aspect BIS
Sensors
with each Spacelabs BISx Module sold by Spacelabs.
Spacelabs may also purchase Aspect BIS Sensors in the United
States for demonstration purposes. Aspect BIS Sensors purchased
for demonstration use may not be resold to customers.
3.4 Trademark License.
Aspect hereby grants to Spacelabs (and Spacelabs' Affiliates) a
nonexclusive, worldwide, royalty-free license (without the right
to
sublicense) to use Aspect's trademarks (as shown in Exhibit E) on
the
Spacelabs patient monitor screen display, the operator manuals
provided by Spacelabs to its customers, or other locations designed
to
designate or promote the inclusion of BIS technology in the
Spacelabs
Patient Monitoring Systems provided that Aspect shall have the
right
to terminate such license if such products do not satisfy
Aspect's
quality standards, provided Spacelabs has been given reasonable
notice
of such standards, an explanation of how Spacelabs has failed to
meet
such standards and a reasonable opportunity to cure such
failure.
Aspect shall have the right to use Spacelabs' trademarks only
with
Spacelabs' prior written consent, which consent shall be granted
in
Spacelabs' sole discretion. Neither Party shall have any other
right
to use, display or utilize the other Party's Trademarks for any
other
purpose or in any other manner.
3.5 Labeling.
Spacelabs Patient Monitoring Systems that have BIS capability shall
be
labeled with a mutually agreed on logo located in a mutually
agreed
upon location.
4. PRICES
4.1 Purchase Prices.
The prices of Aspect Products purchased by Spacelabs hereunder
(the
"Purchase Prices"), which are ordered during the term of the
Agreement, shall be as set forth in Exhibit A (Aspect Products
and
Purchase Prices).
4.2 Customization Costs.
Additional costs which have been agreed upon in writing (both NRE
and
incremental unit cost) for customization of the product (mold
color,
labeling) will be borne by Spacelabs. Spacelabs shall be
responsible
for any charges associated with scrap of inventory due to any
subsequent changes made to customized product.
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4.3 Competitive Products and "BIS
Ready" Price Discounts
If Spacelabs offers a directly competitive product to the BISx Kit
,
the discounts for "% of Systems BIS Ready" shown in Exhibit A will
be
eliminated. Only discounts based on volume of BISx Kits shipped
(with
[**]% of Systems BIS Ready) will be available from that time
forward.
Products that display a parameter claiming to be a measure of
the
hypnotic effect of anesthesia and sedation are considered to be
directly competitive products ("Competitive Products") for the
purposes of this Section 4.
4.4 Notwithstanding the provisions of
Section 4.3 above, in the event
Spacelabs advises Aspect that it has begun marketing a
Competing
Product because the Bispectral Index and/or the BISx Device are
no
longer sufficiently competitive from a technological or pricing
standpoint, the application of Section 4.3 shall be tolled for
a
period of up to six months from the date of such notification
(the
"Tolling Period"). During the Tolling Period:
-
Spacelabs shall promptly provide Aspect with written
documentation of the technological or pricing issues.
- Aspect
shall either provide documentation to (i) contest
such assertion by Spacelabs or (ii) correct the
technological or pricing issues identified by Spacelabs.
- Aspect
and Spacelabs shall agree in writing to the rationale
provided to address the assertion of non-competitiveness or
the proposal to correct the technological or pricing issues.
- In the
event Aspect is unable to successfully correct or
contest technological or pricing issues within the Tolling
Period, the provisions of Section 4.3 shall be deemed to be
void for the term of this Agreement.
- In the
event that Aspect does correct the technological or
pricing issue during such six-month period, the Tolling
Period shall end and the provisions of Section 4.3 shall
once again become in effect on a going forward basis.
5. DEVELOPMENT.
5.1 Project Management.
Each Party shall appoint a "Project Manager" who shall oversee
and
manage the joint project on a day-to-day basis.
The Project Managers shall meet regularly based on the project
needs
to assess the project status and discuss and resolve any issues
or
problems.
Each Party shall bear its own communication and travel costs.
5.2 Spacelabs Responsibilities.
(a) Spacelabs and
Aspect shall cooperate by the mutual provision of
information necessary for the development of compatible
Spacelabs
BISx Modules and BISx
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Kits. Spacelabs will assume the reasonable cost, as agreed to
in
writing by the two parties, which will not be unreasonably
withheld, for any custom modifications to the BISx Kit to meet
the technical requirements of the Spacelabs Patient Monitoring
Systems. Spacelabs will authorize work to be performed by
Aspect
through the Purchase Order process.
(b) Spacelabs will
develop and own all intellectual property rights
with respect to the necessary software for the Spacelabs BISx
Module to communicate with the BISx Device. This software will
allow the user to configure BIS parameters, and display the BIS
related information on the Spacelabs Patient Monitoring System.
(c) Spacelabs shall
integrate and test the integration of the
components of the BISx Kit with the Spacelabs BISx Module and
the
Spacelabs Patient Monitoring System.
(d) Spacelabs will
lend to Aspect a Spacelabs patient monitor and a
Spacelabs BISx Module for testing purposes only. Said Spacelabs
patient monitor and Spacelabs BISx Module will be provided to
Aspect, at Spacelabs' cost and expense, at the appropriate time
in the development process.
(e) Spacelabs will
identify a Host Cable Connector that will allow
the Host Monitor Cable to plug directly into the Spacelabs BISx
Module.
(f) Spacelabs will
provide Aspect with necessary mechanical interface
information to mechanically interface the BISx Kit to Spacelabs
BISx Module. This may include, but is not limited to,
mechanical
drawings or access to Spacelabs' third-party manufacturer of
connectors.
(g) Spacelabs will pay
any agreed to NRE associated with the
development of the Spacelabs Host Monitor Cable.
5.3 Aspect Responsibilities.
(a) Aspect shall
provide Spacelabs with a proposal and receive
Spacelabs authorization in writing before Aspect initiates any
billable work or tasks.
(b) Aspect shall
design, develop and test the BISx Kit according to
the mutually agreed Specifications.
(c) Upon Spacelabs
completing the integration of the BIS Kit into the
Spacelabs BISx Module, Aspect will verify the accurate display
of
BIS on the Spacelabs Patient Monitoring System. Once
successfully
verified, Aspect will provide Spacelabs with a certification
letter so indicating.
(d) Aspect will be
responsible for maintaining and returning the
Spacelabs Patient Monitor and Spacelabs BISx Module in the same
condition as received, subject to normal wear and tear. Aspect
shall return such items to Spacelabs within thirty (30) days of
receipt of written request for return from Spacelabs.
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(e) Aspect will be
responsible for developing the Software to insure
the terms of the Exclusivity section of this agreement are met.
6. MINIMUM PURCHASE VOLUME,
PURCHASE ORDERS, FORECASTS, AND DELIVERY.
6.1 Scheduled Order Products.
All Aspect Products purchased under the Scheduled Order Process
will
follow the process set forth in Exhibit B.
6.2 Discrete Purchase Order.
For products not identified as "Scheduled Order Products" in
Exhibit
B, and/or for orders of Scheduled Order Products that are in
addition
to previously forecasted need, Spacelabs will issue to Aspect
individual purchase orders ("Discrete Purchase Orders"). Each
such
Discrete Purchase Order shall be in the form of a written or
electronic communication and shall contain, at a minimum, the
following information: (i) a description of the product by part
number; (ii) the quantity of the product; (iii) the delivery date
or
shipping schedule; (iv) the location to which the product is to
be
shipped; (v) transportation instructions; and (vi) any special
instructions. Each Discrete Purchase Order shall provide an
order
number for billing purposes, and may include other instructions
and
terms as may be
appropriate under the circumstances. All Discrete
Purchase Orders shall be accepted or rejected by Aspect within
five
(5) business days of receipt. Except as provided below, Aspect
shall
use commercially reasonable good faith efforts to accept all
Discrete
Purchase Orders, to the extent practicable. In the event that
an
individual Discrete Purchase Order is neither accepted nor
rejected
within five (5) days by Aspect, such order shall be deemed to
have
been accepted by Aspect, unless Aspect establishes to
Spacelabs'
reasonable satisfaction that the order in question was not received
by
Aspect. In the event Spacelabs submits an order for product
with
changes in the Specifications which causes Aspect to be unable to
meet
the delivery schedule set forth in a proposed Discrete Purchase
Order,
the parties shall negotiate in good faith to agree upon a
delivery
schedule.
6.3 Forecast.
Upon the execution of this Agreement, Spacelabs shall provide
Aspect
with an initial six month forecast. Aspect shall make purchase
commitments to suppliers based upon open orders and the
forecast
(subject
to purchase commitments for long lead-time items and minimum
buys in accordance with the lead-times and lot sizes set forth
in
Exhibit B), and Spacelabs shall be responsible for all such
non-returnable components purchased in support of Spacelabs
then-current forecast and open purchase orders. For all other
purposes, however, the forecast shall be non-binding. Each week
after
the initial forecast, Spacelabs shall provide an updated forecast,
so
that a rolling forecast of twelve (12) months is always
maintained.
6.4 Reschedule of Discrete Purchase
Orders.
Spacelabs may reschedule all or part of a scheduled delivery under
a
Discrete Purchase Order in accordance with the table below
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<TABLE>
<CAPTION>
DAYS BEFORE P.O. DELIVERY PERCENTAGE RESCHEDULE
DATE
ALLOWANCE
------------------------- ---------------------
<S>
<C>
00 - 14
[**]
15 - 44
[**]%
> 45
[**]%
</TABLE>
6.5 Cancellation.
Discrete Purchase Orders may be terminated for convenience in whole
or
in part by Spacelabs in accordance with this provision.
Termination
hereunder shall be effected by the delivery to Aspect of a
"Purchase
Order Cancellation Notice" specifying the date upon which such
termination becomes effective. Spacelabs liability to Aspect
for
cancelled orders shall be as follows:
In the event of the cancellation of Discrete Purchase Orders by
Spacelabs, that is not superseded by another purchase order or
Scheduled Order, Spacelabs shall be liable for the payment of
cancellation charges based on the number of days prior to
scheduled
delivery date that written notice of cancellation is received
by
Aspect, as outlined below:
<TABLE>
<S>
<C>
> 8 weeks prior to acknowledged delivery
[**]
4-8 weeks prior to acknowledged delivery
[**]% of order value
2 - 4 weeks prior to acknowledged delivery
[**]% of order
value
< 2 weeks prior to acknowledged delivery
[**]% of order value
</TABLE>
6.6 Delivery.
Aspect shall use commercially reasonable efforts to ship the
product
to
fill purchase orders submitted by Spacelabs to the delivery
point
and by the delivery date requested in such purchase orders.
6.7 Shipment.
Aspect will ship products FOB origin.
6.8 Acceptance.
Within ten (10) business days after arrival at destination,
Spacelabs
shall conduct its inspection and inform Aspect in writing if
the
Aspect Product in the given shipment is non-conforming to the
Specification or in the number and type of product ordered.
Spacelabs
shall have the right to reject and return to Aspect for credit
any
Aspect Products in excess of quantities ordered, or the Aspect
Products that are damaged before shipment or that do not conform
to
the requirements of this Agreement.
7. GENERAL CONDITIONS OF THIS
AGREEMENT.
7.1 Exclusivity.
Neither Spacelabs nor Aspect shall create any products, nor assist
any
third party in the creation of any products, compatible with
the
Spacelabs BISx Module which would act
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as a substitute for the BISx Kit. Nothing in this Agreement shall
be
construed to grant Aspect any license to sell, distribute or
license
to any third party any Spacelabs specific components, including
the
enabling Software and portions of the Host Monitor Cable
customized
for Spacelabs. It is understood that Aspect sells, distributes,
and
licenses to other third parties both generic and customized Aspect
BIS
engines and BISx Kits to meet the needs of other OEM customers,
and,
subject to the exclusivity provisions of this Section 7.1, nothing
in
this Agreement shall prohibit Aspect from continuing to sell,
distribute, or license these products or components thereof to
customers other than Spacelabs.
8. ROYALTIES AND
COMMISSIONS.
8.1 Commissions on Sales of Aspect BIS
Sensors.
For each BIS Sensor sold by Aspect to Spacelabs customers in
the
United States deemed to be for use with Spacelabs BISx Module,
Aspect
shall pay Spacelabs a commission equal to[**] percent of the net
sales
revenue (invoice price after discounts) billed by Aspect for such
BIS
Sensors. Aspect shall pay such commissions to Spacelabs on a
calendar
quarter basis. With such quarterly payments, Aspect shall provide
to
Spacelabs a list of Spacelabs customers to which such sales were
made,
the number of sensors sold in that quarter, and the net revenue
billed
for the sale of the sensors by Aspect. This quarterly payment shall
be
provided to Spacelabs no later than 30 days following the end of
each
calendar quarter. In the event that Aspect's standalone BIS
monitors,
the BIS modules and/or the BISx kits for other manufacturers have
also
been installed at such sites in addition to Spacelabs BISx
Module,
Spacelabs will be entitled to a [**] percent commission only on
BIS
Sensor sales deemed to be for use with the Spacelabs BISx Module.
For
the purposes of this Section 8.1, BIS Sensors shall be deemed to
be
for use with Spacelabs BISx Modules on the basis of a pro rata
determination, based on the total number of BIS units of
different
types installed at such locations during the period according
to
Aspect's installed base records. To facilitate such
calculations,
Spacelabs will be responsible for providing Aspect with the
documentation required in Section 8.2, and Aspect shall be
responsible
for providing Spacelabs with accurate information regarding the
total
number of non-Spacelabs units which have been installed, and are
in
use, at such sites. Such information shall be auditable by an
independent auditor at Spacelabs' expense; provided, however, if
the
results of such audit reveal that the number of such
non-Spacelabs
units has been over reported by fifteen percent (15%) or more,
Aspect
shall reimburse Spacelabs for the cost of such audit.
8.2 Installed Base Reporting.
In the United States, Spacelabs will be responsible for
providing
Aspect with documentation, on a monthly basis for the month
just
ended, of the total number of Spacelabs BISx Modules shipped in
the
United States and the locations of such Spacelabs BISx Modules in
the
United States.
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Outside the United States, Spacelabs will be responsible for
providing
Aspect with documentation, on a monthly basis, for the month
just
ended, of the total number of Spacelabs BISx Modules shipped
outside
the United States and the country locations of such Spacelabs
BISx
Modules.
9. WARRANTY.
9.1 General.
Aspect warrants solely to Spacelabs that Aspect Products
(including
Software) delivered hereunder shall perform in accordance with
the
Specifications in Exhibit C (BISx Kit) and shall be free from
defects
in materials and workmanship, when given normal, proper and
intended
usage, for [**] months from the date of shipment of the BISx Kit
to
the Spacelabs end customer site or [**] months from the date of
shipment by Aspect to Spacelabs, whichever is sooner. This
warranty
shall not apply to expendable components and supply items, such
as,
but not limited to, cables (except for failures occurring within
180
days of receipt of shipment by Spacelabs), or disposable items such
as
a BIS Sensor after the expiration date marked on the BIS Sensor
packaging. Aspect shall not have any obligation under this
Agreement
to make repairs or replacements which result, in whole or in
part,
from catastrophe, fault or negligence of Spacelabs, or anyone
claiming
through or on behalf of Spacelabs, or from improper or
unauthorized
use of Aspect Products, or use of Aspect Products in a manner
for
which they were not designed.
9.2 Warranty Procedures.
Spacelabs shall notify Aspect of any Aspect Products which it
believes
to be defective during the applicable warranty period and which
are
covered by the warranties set forth in Section 9.1. At Aspect's
option, such Aspect Products shall be returned by Spacelabs to
Aspect's designated facility for examination and testing, or may
be
repaired on site by Aspect. Aspect shall either repair or
replace,
within thirty (30) days of receipt by Aspect, any such Aspect
Product
found to be defective and return these Products to Spacelabs.
Transportation and insurance costs shall be borne by Aspect.
Should
Aspect's examination and testing disclose that there was no
defect
covered by the foregoing warranty, Aspect shall so advise
Spacelabs
and dispose of or return the Aspect Product in accordance with
Spacelabs' instructions and at Spacelabs' expense, and Spacelabs
shall
reimburse Aspect for transportation and insurance costs.
9.3 Repair Warranty.
Aspect warrants its repair work and/or replacement parts for
the
duration of the original warranty period as set forth in Section
9.1
or at least [**] months, whichever is longer; provided, however,
if
the applicable law in any country in which such Aspect Products
are
repaired or replaced requires a longer warranty period for such
repaired or replaced items, the applicable warranty period offered
by
Aspect shall be increased by the amount necessary to comply with
such
laws.
9.4 DISCLAIMER OF WARRANTIES.
THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF ANY
OTHER
WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL,
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INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR
PURPOSE OR NONINFRINGEMENT.
10. SERVICE AND SUPPORT
10.1
Installation, Service, and Support.
Subject to the warranty provisions of Section 9, Spacelabs shall
be
responsible for providing installation, service (including repair)
and
support to its end customers for the Aspect Products Spacelabs
sells
to such customers, and, except as otherwise required by the
warranty
provisions herein, Spacelabs shall bear all related costs incurred
for
labor, parts, or travel to perform such service. Aspect shall
make
available world-wide technical and clinical support to
Spacelabs
during normal business hours (7AM - 5PM ET).
10.2 Central
Repair Service
For the term of this Agreement, Aspect agrees to provide
central
repair service (as opposed to field service) to Spacelabs for
Aspect
Products sold hereunder. For Aspect Product no longer under
warranty,
repair will be charged at Aspect's then current service rate for
labor
and materials.
10.3
Training.
Aspect agrees to provide training, without charge to Spacelabs,
at
mutually agreed upon times and locations in the United States,
Europe,
Asia and Latin America, to a mutually agreed upon number of
Spacelabs
personnel prior to the market release of the Spacelabs BISx Module
and
BISx Kit. Aspect shall provide additional training from
time-to-time
to Spacelabs personnel to keep Spacelabs up to date on product
and
clinical
applications changes.
10.4 Customer
In-service.
Aspect shall provide initial in-service support to Spacelabs
customers
within the United States with respect to BIS theory and algorithm,
BIS
sensor usage and clinical applications upon request. Spacelabs
shall
provide customer training on all other aspects of Spacelabs
products.
Spacelabs shall provide training to its customers outside the
Unites
States with respect to Aspect Products.
10.5 Service
Period.
For a period of seven (7) years following the last delivery to
Spacelabs of the applicable Aspect Product (excluding
refurbished
product) ordered by Spacelabs hereunder, Aspect shall use its
reasonable efforts to make available repair service (or at
Aspect's
sole discretion, exchange units or replacement parts for the
Aspect
Products) for purchase by Spacelabs and third-party users of
the
Aspect products at Aspect's then-current prices for such repair
services and exchange units. After expiry of this seven (7)
year
period, Aspect may, in its sole discretion, continue to supply
repair
services (and/or exchange units for the Aspect Products) subject
to
the mutual written agreement of the Parties.
10.6 Service
Records.
For a period beginning with the first shipment of BISx Kits
from
Aspect to Spacelabs,
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to ten years ten (10) years after the last shipment of new BISx
Kits
from Aspect to Spacelabs, Aspect shall maintain a complete record
of
all repair activities performed on any Aspect Products received
from
Spacelabs or Spacelabs customers for repair. Aspect shall make
such
records available for inspection by Spacelabs upon reasonable
written
notice.
11. QUALITY ASSURANCE
11.1
Certification Status.
Both parties agree to maintain, as applicable, ISO900x or
ISO13485,
European directive 93/42/EEC Annex II ("MDD AX-II")
certification
status and compliance with the U.S. Food and Drug
Administration's
("FDA") Quality System Regulation ("QSR"), the European Medical
Device
Directive ("MDD"), and other appropriate regulations pertinent to
the
development, manufacturing and marketing of medical products
similar
to the Aspect Products.
11.2 Aspect
Product Compliance.
All Aspect Products sold by Aspect under this Agreement shall
fully
comply with applicable laws and regulations, including the
above
quality requirements, and with the standards set forth in Exhibit
F.
11.3 QA and
Regulatory Audits.
Aspect shall permit Spacelabs' Quality Assurance department to
conduct
a reasonable audit of its facilities at a mutually agreed upon
date
after the date of this Agreement for the purpose of approving
its
status as an OEM supplier, and reasonable periodic audits
thereafter
for the purpose of confirming continuing compliance with
applicable
quality and regulatory requirements. Such audits shall be
scheduled
with at least thirty (30) days advance notice during normal
business
hours and shall not take place more than once per calendar year.
All
costs incurred by Spacelabs for such audits shall be the sole
responsibility of Spacelabs.
12. REGULATORY MATTERS.
12.1 Aspect
Products.
Aspect shall assume full regulatory responsibility for the
Aspect
Products, including obtaining and maintaining all applicable
governmental authorizations and regulatory approvals required
to
distribute the BISx Kit. In particular, Aspect shall be
responsible
for generating its own Device Master Record for the BISx Kit. The
BISx
Device
shall be labeled as manufactured by Aspect.
12.2 Spacelabs
BISx Module.
Spacelabs shall assume the regulatory responsibility for the
Spacelabs
BISx Module and the integrated system with the BISx Kit. Aspect
shall
provide commercially reasonable support to Spacelabs as required
in
the process of obtaining regulatory approvals by making available
to
Spacelabs any required information, data, certificates, or
technical
files in the requested formats as requested by the regulatory
authorities. The Spacelabs BISx Module shall be labeled as
manufactured by Spacelabs.
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12.3 Product
Complaints and Incident Reporting.
Spacelabs and Aspect shall inform each other (in writing) monthly
of
any and all customer complaints that have come to their
attention
during the prior month regarding the Spacelabs BISx Module, the
BISx
Kit or Aspect BIS Sensors that were used in conjunction with a
Spacelabs Patient Monitoring System and relating to Aspect
technology.
Both parties will cooperate and use reasonable efforts to resolve
such
customer complaints. Closure of any such customer complaints
relating
to the Spacelabs BISx Module will occur when Spacelabs notifies
Aspect
that the problem is resolved. Closure of any such customer
complaint
relating solely to Aspect Products or Aspect BIS Sensors will
occur
when Aspect notifies Spacelabs that the problem is resolved.
Spacelabs and Aspect shall inform each other in writing of all
incidents relating to Aspect Products or the Spacelabs BISx
Module,
within 48 hours of making a determination that such event
requires
reporting under any applicable regulatory or other governmental
reporting requirements, 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; provided, however, for the purposes
of
clarity, if such reportable event involves a third party product
into
which BIS, a BISx Device or other Aspect Product has been
incorporated, but the cause of reportable incident was some
other
aspect or
attribute of such third party product, then the notification
requirement in this paragraph shall not apply. Aspect will be
responsible for reporting such incidents to the appropriate
regulatory
authority for the BIS Sensors and BISx Devices. Spacelabs will
be
responsible for reporting such incidents to the appropriate
regulatory
authority for the Spacelabs BISx Module. Both parties shall
fully
cooperate with each other as may be necessary to comply with
any
reporting obligations regarding such incidents or quality concerns.
If
FDA or other authorities contact either party to inquire about
or
investigate the Products sold to Spacelabs under this Agreement,
the
contacted party, unless required to maintain confidentiality by
such
authorities, shall inform the other party immediately thereof.
The
parties shall cooperate closely to clear any regulatory issues
or
potential regulatory issues promptly.
12.4
Notifications to Spacelabs.
Aspect agrees to promptly inform Spacelabs of any official
observations of the FDA relating to any Aspect Product or the
manufacturing of such Aspect Product as well as Aspect's response
to
such findings. Aspect will immediately inform Spacelabs of any
Aspect
Product that does not meet the Specification or does not perform
as
intended, as well as any Medical Device Report ("MDR")
reportable
event of which it becomes aware.
12.5 Recall.
In the event that a corrective action (including notifications
or
recalls) is initiated with respect to any Aspect Product, and
such
action (i) is required to comply with applicable laws or
regulations,
(ii) is initiated by Aspect in its discretion for a reasonable
business purpose or for safety reasons or (iii) is the result
of
Aspect's failure to supply Aspect Products that conform in all
material respects to the applicable standards, Aspect shall
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be responsible for the repair or replacement of the Aspect
Products
without cost to Spacelabs. Aspect agrees to consult with Spacelabs
to
establish a reasonable process for managing the corrective action
and
Aspect shall be responsible for all reasonable out-of-pocket
expenditures incurred by Spacelabs if Aspect fails to take such
action. In the event that Aspect or Spacelabs is required to take
such
action to comply with applicable laws or regulations or such action
is
reasonably necessary for safety and efficacy reasons or for the
failure of the Aspects Products to comply with specifications
(other
than minor deviations from specifications) and fails to do so
within
10 days of being notified of the need for such action, Spacelabs
shall
have the right to take such action and Aspect shall reimburse
Spacelabs for all reasonable out-of-pocket expenditures incurred
in
connection with such action by Spacelabs. If it is determined by
an
arbitrator that such action was not necessary for safety reasons
or
for the failure of Aspect Products to comply with
specifications
(other than a minor deviation from such specifications),
Spacelabs
will return to Aspect any amounts previously paid to Spacelabs
by
Aspect in connection with such action.
