Addendum To Oem Development & Purchase Agreement

CONFIDENTIAL TREATMENT REQUESTED EXHIBIT 10.3


CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH "[CONFIDENTIAL TREATMENT REQUESTED]." AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES EXCHANGE COMMISSION.


ADDENDUM TO OEM DEVELOPMENT AND PURCHASE AGREEMENT


This ADDENDUM TO OEM DEVELOPMENT AND PURCHASE AGREEMENT (this "Addendum") is entered into as of April 24, 2002 by and between CardioDynamics International Corporation, a California corporation with its principal offices located at 6175 Nancy Ridge Drive, Suite 300, San Diego, California ("CDIC") and GE Medical Systems Information Technologies, Inc., a Wisconsin corporation (formerly known as GE Marquette Medical Systems, Inc.) with its principal offices located at 8200 W. Tower Ave., Milwaukee, Wisconsin ("GE").


1. Background and Certain Amendments.


1.1 CDIC is a developer, manufacturer and distributor of medical devices, equipment, related hardware, software and related products and accessories.


1.2 GE is a developer, manufacturer and distributor of medical devices, equipment, related hardware, software and related products and accessories, including multi-parameter patient monitors.


1.3 CDIC and GE entered into that certain OEM Development and Purchase Agreement dated as of July 7, 2000, as amended (the "Agreement"), pursuant to which the parties agreed to (i) the integration of CDIC's impedance cardiography technology into GE's multi-parameter patient monitors, (ii) the sale and/or license of such integrated products and technologies by GE to its customers and (iii) the sale of CDIC sensors to GE customers, all upon the terms and conditions as set forth in the Agreement.


1.4 CDIC and GE desire to amend Sections 4.1 and 4.2 of the Agreement in the manner set forth in subparagraphs (a) and (b) of this Section 1.4, which amendments shall be effective only as long as this Addendum is effective. Upon termination or expiration of this Addendum without termination or expiration of the Agreement, Sections 4.1 and 4.2 of the Agreement shall revert to the language in effect before the effectiveness of this Addendum.


(a) The second sentence of Section 4.1 of the Agreement shall be
amended to read in its entirety as follows: "The CDIC ICG Module Kits and
components of the CDIC ICG Module Kits purchased from CDIC under this
Agreement shall be used only as components in, incorporated into, or
integrated with, the GE ICG Modules that GE sells or leases to third-Party
users in the regular course of business for use with GE Patient Monitors,
and such GE ICG Modules may be sold or leased by GE in any transaction other
than an "Installed Base Sale". For purposes of this Agreement, an "Installed
Base Sale" shall mean a direct sale or lease of a GE ICG Module to a
third-Party hospital end user located in the United States for use with a
previously purchased


CONFIDENTIAL TREATMENT REQUESTED


or leased GE Patient Monitor; provided, however, that under no circumstances
shall any such sale or lease to a hospital included within the GE MVP
Authorized Hospital program be deemed an Installed Base Sale." GE has
provided CDIC with a list of such hospitals included within the GE MVP
Authorized Hospital program and will update such list from time to time.
Such list shall be deemed to be Confidential Information within the meaning
of the Agreement.


(b) The first sentence of Section 4.2 of the Agreement shall be amended
to read in its entirety as follows: "CDIC hereby grants to GE a
non-exclusive, perpetual (subject to termination as provided in this
Agreement) and non-transferable worldwide license, with the right to
sub-license to purchasers/end-users of GE ICG Modules, to use the CDIC
Software and related CDIC Documentation provided by CDIC solely in
connection with operation of the components of CDIC ICG Module Kit in the GE
ICG Module subject to the limitations set forth in the second sentence of
Section 4.1 of this Agreement."


1.5 CDIC and GE desire to amend and restate Exhibit A of the Agreement in its entirety, and Exhibit A of this Addendum shall hereby constitute Exhibit A of the Agreement. The amendment to the Agreement effected by this Section 1.5 shall remain effective (unless expressly agreed otherwise) as long as the Agreement remains in effect regardless of whether this Addendum is terminated or otherwise expires.


1.6 CDIC and GE desire to amend that certain Omnibus Amendment entered into as of November 22, 2000 by and between CDIC and GE, and such Omnibus Amendment shall be amended by this Section 1.6 to provide that (i) from and after the date of this Addendum GE shall have no commitment to purchase any minimum quantity of "Products" or "OEM Products" under the "Agreements" (as such terms are defined in the Omnibus Amendment), (ii) GE shall have no obligation for "Placement" within the meaning of Paragraph 4 of the Omnibus Amendment and (iii) neither party shall have [CONFIDENTIAL TREATMENT REQUESTED] of the Omnibus Amendment. The amendment to the Agreement effected by this Section 1.6 shall remain effective as long as any "Agreement" (as such term is defined in the Omnibus Amendment) remains in effect regardless of whether this Addendum is terminated or otherwise expires.


1.7 CDIC and GE further desire to enter into this Addendum, pursuant to which CDIC shall be GE's exclusive distributor for Installed Base Sales upon the terms and conditions contained in this Addendum.


2. Definitions.


2.1 "GE ICG Modules" shall have the same meaning ascribed to the term "Marquette ICG Modules" in the Agreement.


2.2 "GE Patient Monitors" shall have the same meaning ascribed to the term "Marquette Patient Monitors" in the Agreement.


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2.3 "GE Software" means the software upgrade required to interface with the GE ICG Module and display ICG information on the GE Solar 7000/8000, 8000M and the GE DASH patient monitors. The required versions of each of these is listed below:


2.3.1 Solar 7000/8000 Version 7 Upgrade - 2002635-002


2.3.2 Solar 8000M Version 3 Upgrade - 2004816-44


2.3.3 Dash Software Upgrade (Version 3B) - 2009564-002


2.4 "Installed Base Sale" shall have the meaning set forth in Section 1.4 (a) above.


2.5 All other capitalized terms and phrases used in this Addendum which are not otherwise defined herein shall have their respective meanings ascribed to them in the Agreement.


3. Appointment of CDIC as Distributor of GE ICG Module and GE Software.


3.1 GE hereby appoints CDIC, during the term of this Addendum, as its exclusive distributor of the GE ICG Module solely for Installed Base Sales and as its non-exclusive distributor of the GE Software and RAC 2A hardware and associated accessories as defined in Appendix B solely for Installed Base Sales, and CDIC accepts such appointment for the term and upon the conditions and agreements set forth in this Addendum. Under the Agreement (as amended by Section 1.4 of this Addendum) GE is not authorized to make Installed Base Sales.


3.2 GE and CDIC acknowledge that in order for GE to provide GE ICG Modules to CDIC under this Addendum, GE will acquire CDIC ICG Module Kits from CDIC under the terms and conditions of the Agreement. CDIC agrees that under no circumstances shall GE be liable for failing to deliver GE ICG Modules in accordance with this Addendum if such failure is a result of CDIC's failure to deliver CDIC ICG Module Kits in accordance with the Agreement.


3.3 In performing its obligations hereunder as GE's distributor of the GE ICG Module and GE Software, CDIC agrees:


(i) To use its best efforts to further the promotion, marketing, sale
and distribution of the GE ICG Module and GE Software for Installed
Base Sales;


(ii) To maintain an adequate sales force whose duties include the sale
and support of the GE ICG Module and GE Software for Installed Base
Sales;


(iii) To respond promptly to all inquiries from customers and potential
customers, including complaints, and to promptly and effectively
process all acceptable customer orders;


(iv) To diligently investigate all leads with respect to potential
customers referred to CDIC by GE; and


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(v) To refrain from advertising the GE ICG Module and GE Software
or entering into any commitment to advertise the GE ICG Module
and GE Software without first obtaining written approval from
GE of the proposed advertising.


3.4 All offers and quotations made by CDIC to potential customers for the GE ICG Module and GE Software shall be issued in CDIC's name only. CDIC shall not make any offers or quotations, execute any agreements or documents, or make any commitments of any nature in the name of or on behalf of GE without the prior written consent of GE.


4. License.


4.1 License Grant. GE grants to CDIC a limited, non-exclusive license under the copyrights owned by GE in the GE Software to grant end-users a perpetual, non-exclusive, non-transferable end-user license to use the object code version of the GE Software solely in conjunction with GE Patient Monitors. By way of example, and without any limitation intended, GE does not grant any rights or licenses under any other intellectual property, including, but not limited to, trademarks or patents owned by GE. Except as authorized by GE above pursuant to the license grant, CDIC shall not disclose, furnish, transfer, distribute or otherwise make available the GE Software or any portion thereof in any form to any third party and shall not duplicate the GE Software or any part thereof. Title to and ownership of any and all proprietary rights in or related to the GE Software shall at all times remain with GE or its licensor(s). Nothing in this Addendum shall be construed as a sale of any rights in the GE Software. All references in this Addendum to sale, resale or purchase of a GE ICG Module or GE Software upgrade, or references of like effect, shall, with respect to the GE Software mean licenses or sublicenses of the GE Software pursuant to this Section 4.1. CDIC shall not disassemble, decompile or otherwise reverse-engineer the GE Software or any part thereof.


5. Prices.


5.1 Price for Modules. For each GE ICG Module that CDIC orders under this Addendum, (i) GE shall purchase the CDIC ICG Module Kit required for the GE ICG Module at a purchase price of [CONFIDENTIAL TREATMENT REQUESTED] and (ii) CDIC shall purchase the GE ICG Module from GE at a purchase price equal to the then applicable purchase price payable by GE for the GE ICG Module [CONFIDENTIAL TREATMENT REQUESTED], excluding taxes and shipping charges, which amount shall be payable by CDIC to GE no later than 45 days from the date that CDIC ships the module to their customer, as shown on the monthly report described in section 10.1.


5.2 Fees for GE Software Upgrades. For GE Software upgrades that CDIC orders under this Addendum, (i) the first [CONFIDENTIAL TREATMENT REQUESTED] licenses for each GE ICG Module shall be supplied to CDIC at no charge and (ii) for each license beyond the first [CONFIDENTIAL TREATMENT REQUESTED] licenses, CDIC shall pay GE a price equal to [CONFIDENTIAL TREATMENT REQUESTED], excluding taxes and shipping charges. CDIC shall pay any fees to GE no later than 45 days from the date that CDIC ships the module to their customer, as shown on the monthly report described in section 10.1. In connection with its quarterly payments under Section 5.3 below, CDIC shall provide to GE a list of customers to which such sales were made and the gross revenue collected ...