Cardiac Science 10-K 2006 FY Annual report

Exhibit 10.38

AMENDMENT ONE TO OEM PURCHASE AND SUPPLY AGREEMENT

     This Amendment (the “Amendment”) is made as of August 10, 2004, by and between Cardiac Science, Inc., a Delaware corporation (“Supplier” or “Cardiac Science” or “CSI”), a medical device developer and manufacturer of automated external defibrillators having its principal place of business at 1900 Main Street, Irvine, CA 92614 and GE Medical Systems Information Technologies, Inc., a Wisconsin corporation (“GEMS-IT”), having its principal place of business at 8200 W. Tower Avenue, Milwaukee, WI 53223. CSI and GEMS-IT may each be referred to herein as a “Party” and collectively, the “Parties”.

W I T N E S S E T H:

     WHEREAS, CSI and GEMS-IT are parties to an OEM Purchase and Supply Agreement dated July 29, 2003 and “Addendum 1” to the OEM Purchase and Supply Agreement dated as of March 24, 2004 (collectively, the “OEM Purchase and Supply Agreement”).

     WHEREAS, CSI and GEMS-IT desire to supplement and amend the OEM Purchase and Supply Agreement as set forth herein.

     NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, it is agreed as follows:

     1.  Construction. Except as provided in this Amendment, the terms and conditions set forth in the OEM Purchase and Supply Agreement shall remain unaffected by execution of this Amendment. To the extent any provisions or terms set forth in this Amendment conflict with the terms set forth in the OEM Purchase and Supply Agreement, the terms set forth in this Amendment shall govern and control. Terms not otherwise defined herein, shall have the meanings set forth in the OEM Purchase and Supply Agreement. This Amendment amends the OEM Purchase and Supply Agreement and not the OEM Purchase Agreement entered into by the Parties on July 29, 2003.

     2.   Section 14.5 of the OEM Purchase and Supply Agreement is deleted in its entirety and replaced with the following:

14.5 Duty to Report Incidents. GEMS-IT and Supplier shall inform each other in writing, within 5 business days from knowledge of a reportable event, of all incidents relating to the subject matter of the Agreement that must be reported according to the FDA Medical Device Reporting regulation (21 CFR Part 803) or the European Medical Device Vigilance regulations or that must be registered according to other national regulations such as Canadian medical device regulations, including without limitation incidents involving death or serious injury, malfunctions that, if recurrent, may cause or contribute to death or serious injury or other material quality problems or concerns. Supplier will be responsible for reporting such incidents to the appropriate regulatory authority. GEMS-IT shall fully cooperate with Supplier as may be necessary to comply with any reporting obligations regarding such incidents or quality concerns.

     3.   Section 14.6 of the OEM Purchase and Supply Agreement is deleted in its entirety and replaced with the following:

14.6 Recalls and Field Corrections.In the event of any recall, product withdrawal or field correction of any OEM Product that is required by a governmental agency, by Supplier, or by GEMS-IT for safety or efficacy reasons, the parties agree that (a) they shall promptly notify each other and (b) they shall fully cooperate with each other concerning the necessity and nature of such action. GEMS-IT shall be the point of contact for purchasers of any OEM Product (whether directly or through its distributors). Supplier shall be responsible for making any and all applicable regulatory contacts and for coordination of any recall or field correction activities involving such OEM Products. In the event that any OEM Product requires field correction or is recalled as a result of (a) the supply by Supplier of a Noncomplying Product or (b) the grossly negligent or intentionally wrongful act or omission of Supplier or its affiliates or their representatives, then Supplier shall bear all costs and expenses, including but not limited to the costs and expenses related to such recall or field correction, communications and meetings with all required regulatory agencies, replacement stock, service labor, installation, travel, notifying customers of such recall and any replacement product to be delivered to those same customers, including shipping costs. To the extent that any such recall or field correction is due in part to the negligent or intentional acts or omissions of GEMS-IT, GEMS-IT shall be responsible for such costs and expenses equitably in proportion to its fault.

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     4.   Section 9.1.1 of the OEM Purchase and Supply Agreement is deleted in its entirety and replaced with the following:

9.1.1 AED product: for seven (7) years from date of shipment of the OEM Product to GEMS-IT’s end user customers. Batteries are for four (4) years from date of installation into the AED device. Accessories and consumables for one (1) year or until expiration date, whichever is longer.

     5.   Exhibit A of the OEM Purchase and Supply Agreement is amended to provide for the addition of the OEM Products known as the “Powerheart AED G3” and “Powerheart AED G3 Pro”. The specifications for these OEM Products are attached hereto as Exhibit A. GEMS-IT has the right to sell these CSI branded OEM Products on a non-exclusive basis in the United States and Canada. GEMS-IT has no minimum purchase commitments with respect to the Powerheart AED G3 and Powerheart AED G3 Pro. CSI shall provide sales training and support to the GEMS-IT Sub-Acute team and shall also provide product specialists who shall be available, as necessary, to assist the GEMS-IT representatives sell these OEM Products.

     6.  CSI Roles and Responsibilities. To further define the role of CSI, and to more explicitly set forth CSI’s responsibilities and obligations with respect to the OEM Purchase and Supply Agreement and the OEM products, the Parties agree that CSI shall be responsible for:

        (a) Designing and manufacturing the OEM Products.

        (b) All European Medical Device Vigilance reporting and requirements. Notwithstanding CSI’s reporting obligations, in the event a customer reports to a governmental authority in Europe, GEMS-IT may respond with its own report.

          (c) Providing a copy of its design hazard analysis on the OEM Products to GEMS-IT with five (5) days of its production. The design hazard analysis will be used to perform health risk analysis.

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          (d) Performing all complaint investigations on the OEM Products and providing the results of such investigations to the GEMS-IT “Complaint Leader” via e-mail within fourteen (14) days of the conclusion of the investigation. The “Complaint Leader” will be the GEMS-IT employee who is responsible for the coordination and processing of complaint activities on the OEM Products. The results of any investigation will include any correction, corrective or preventive action, verification, and validation performed and/or recommended. The investigative results shall include information obtained in connection with any investigation performed at both the Copenhagen (Service repair) and Minnetonka facilities.

          (e) Ensuring that a CSI representative participates in all requested or required risk assessments. The CSI representative may be a member of CSI’s Service, Engineering, Quality Assurance or Regulatory Affair departments.

          (f) Notifying GEMS-IT (in writing) of any recall as soon as possible and in no event later than forty-eight (48) hours after a recall decision has been made by CSI or is required by a governmental agency.

          (g) Notifying GEMS-IT (in a written report) of any corrective action to be taken in connection with the OEM Products no later than fourteen (14) days after CSI determines that such corrective action will be taken.

          (h) Returning a Product to GEMS-IT or its distributor upon conclusion of the complaint investigation, if appropriate.

          (i) Providing its service work order number and a copy of the actual work order (including the results of CSI’s investigation) to GEMS-IT. The results of the CSI

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investigation shall include root cause analysis and any corrective or preventive action initiated.

          (j) Compiling monthly complaint data (with each complaint coded for trending) and providing such trend data to GEMS-IT upon written request from GEMS-IT.

     7.  GEMS-IT Roles and Responsibilities. To further define the role of GEMS-IT, and to more explicitly set forth GEMS-IT’s responsibilities and obligations with respect to the OEM Purchase and Supply Agreement, the Parties agree that GEMS-IT shall be responsible for:

          (a) Recording complaints received on the OEM Products pursuant to the GEMS-IT Quality Procedure — Global Product Complaint Handling and providing a copy of the Complaint to CSI within five (5) business days of its receipt.

          (b) Scheduling a Risk Assessment when required per GEMS-IT Risk
Management Guidelines.

          (c) Providing CSI with any adverse event and malfunction report via the
MedWatch 3500A form.

          (d) Returning a “repaired” OEM Product to GEMS-IT or its distributors, regardless of whether GEMS-IT or CSI repaired said Product.

          (e) Notifying its customers of any recall, corrective action initiated by CSI per the GEMS-IT Global Customer Notification Procedure.

          (f) Sending GEMS-IT or its distributors a replacement OEM Product, even if CSI is responsible for replacing said product due to non-conformance, defects or otherwise.

     8.  Governing Law. The validity, construction, performance and enforceability of this Amendment shall be governed in all respects by the laws of the State of New York, without reference to the choice-of-law provisions thereof.

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     9.   Counterparts; Facsimile. This Amendment may be executed simultaneously in multiple counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Execution and delivery of this Amendment by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Amendment by such party. Such facsimile copies shall constitute enforceable original documents.

     5.  Severability. In the event any provision of this Amendment shall be determined to be invalid or unenforceable under applicable law, all other provisions of this Amendment shall continue in full force and effect unless such invalidity or unenforceability causes substantial deviation from the underlying intent of the parties expressed in this Amendment or unless the invalid or unenforceable provisions comprise an integral part of, or in inseparable from, the remainder of this Amendment. If this Amendment continues in full force and effect as provided above, the parties shall replace the invalid provision with a valid provision which corresponds as far as possible to the spirit and purpose of the invalid provision.

     10.   Interpretation. This Amendment has been negotiated at arm’s length and between persons sophisticated and knowledgeable in the matters dealt with in this Amendment. Each party has been represented by experienced and knowledgeable legal counsel. Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this Amendment against the party that has drafted it is not applicable and is waived. The provisions of this Amendment shall be interpreted in a reasonable manner to effect the purposes of the parties and this Amendment.

     11.  Entire Agreement. The terms of this Amendment are intended by the parties to be the final expression of their agreement with respect to the subject matter hereof and may not be

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contradicted by evidence of any prior or contemporaneous agreement. The parties further intend that this Amendment constitute the complete and exclusive statement of its terms and shall supersede any prior agreement with respect to the subject matter hereof

     12.  Headings. The article and section headings contained in this Amendment are for reference purposes only and will not affect in any way the meaning or interpretation of this Amendment.

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

Cardiac Science, Inc.		GE Medical Systems Information Technologies, Inc.
By:	/s/ Raymond W. Cohen	By:	/s/ Matthias Weber
Name:	Raymond W. Cohen	Name:	Matthias Weber
Title:	Chairman and CEO	Title:	Vice President & General Manager Cardiology Systems
Dated:	11-4-04

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EXHIBIT A

SPECIFICATIONS FOR POWERHEART AED G3 AND POWERHEART AED G3 PRO

POWERHEART AED G3

DEFIBRILLATOR

Operation: Semi-automatic
Waveform: Biphasic truncated exponential
Energy (J) range available: Escalating Variable Energy (VE) 105J to 360J
Protocols: 5 energy protocols available
Factory default (Nominal): 200VE, 300VE, 300VE
Shock time cycle (Typical): Less than 55 seconds for three shock series
Controls: One-button operation
Voice prompts: Comprehensive voice instructions guide user through rescue process
Text screen: Displays written instructions to guide user through rescue process
Visible indicators: RescueReady Status Indicator, SmartGauge Battery Status Indicator, Service
Indicator, Pad Indicator, Text Display
Audible alerts: Voice Prompt, System Alert
Synchronized shock: Built-in automatic synchronization feature
Pacemaker pulse detection: Yes
Programmable: Yes, via ServiceLink^®
Pediatric capability: Yes

PADS

Minimum combined surface area: 228 cm²
Extended length of lead wire: 1.3m
Supplied: Self-checking, pre-connected to the AED
Type: Adult, pre-gelled, self-adhesive, disposable, non-polarized (identical pads can be placed in either position) defibrillation pads
Shelf life: 2 years

BATTERY

Type: IntelliSense^® lithium battery
Warranty: 4 year, full operational replacement

AUTOMATED SELF-TESTS

Daily: Battery, pads (presence and function), internal electronics, no energy charge, SHOCK/CONTINUE button, and software
Weekly: Battery, pads (presence and function), internal electronics, partial energy charge, SHOCK/CONTINUE button, and software

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Monthly: Battery, pads (presence and function), internal electronics, full energy charge cycle, SHOCK/CONTINUE burton, and software

EVENT DOCUMENTATION

Type: Internal memory
Internal memory: 34 minutes ECG data with event annotation
Playback: Viewable via RescueLink^® software via PC
Communications: Serial port or USB (via adapter) for PC with Windows
Clock synchronization: Precise synchronization of AED time to dispatch time

PHYSICAL DIMENSIONS

Height: 8 cm (3.3 in)
Width: 27 cm (10.6 in)
Depth: 31 cm (12.4 in)
Weight: 3.10 kg (6.6 lb)

POWERHEART AED G3 PRO

DEFIBRILLATOR

Operation: Semi-automatic and manual
Waveform: Biphasic truncated exponential
Energy (J) range available: Escalating Variable Energy (VE) 105J to 360J
Protocols: 5 energy protocols available
Factory default (Nominal): 200VE, 300VE, 300VE
Shock time cycle: Approximately 1 minute for three shock series
Control buttons: Automated (Shock) and manual
Voice prompts: Comprehensive voice instructions guide user through rescue process
Display content: Displays written instructions to guide user through rescue process, SmartGauge
Battery Status Indicator, Service Indicator, Pads Indicator, Text Display, ECG Display
Display specifications: Sharp “LO035O70H01.” 8.9 cm (3.5") diagonal transreflective TFT
display with 320 x 240 pixels (quarter VGA). Resolution is 4.47 dots/mm (113.5 dots/in.)
Visible indicators: RescueReady Status Indicator
Audible alerts: Voice Prompt, System Alert
Synchronized shock: Built-in automatic synchronization feature
Pacemaker pulse detection: Yes
Programmable: Yes, via ServiceLink^®
Pediatric capability: Yes

PADS

Minimum combined surface area 228 cm²

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Extended length of lead wire: 1.3 m
Supplied: Pre-connected to the AED
Type: Adult, pre-gelled, self-adhesive, disposable, non-polarized (identical pads can be placed in either position) defibrillation pads
Shelf life: 2 years

BATTERY

Type IntelliSense^® lithium battery
Warranty: 1 year or 12 hours of use, whichever occurs first

OPTIONS

3-Lead ECG Cable Kit
Rechargeable Battery

AUTOMATED SELF-TESTS

Daily: Battery, pads (presence and function), internal electronics, no energy charge, SHOCK button, and software
Weekly: Battery, pads (presence and function), internal electronics, partial energy charge, SHOCK button, and software
Monthly: Battery, pads (presence and function), internal electronics, full energy charge cycle, SHOCK button, and software

EVENT DOCUMENTATION

Internal memory: 60 minutes ECG data with event annotation
Multiple rescue: Yes
Playback: Viewable via RescueLink^® software via PC
Communications: Infrared Data Transfer for PC with Windows
Clock synchronization: Precise synchronization of AED time to dispatch time

PHYSICAL DIMENSIONS

Height: 8 cm (3.3 in)
Width: 27 cm (10.6 in)
Depth: 31 cm (12.4 in)
Weight: 3.1kg (6.9 lb)

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