Memorandum of Understanding Between Natus Medical Inc. and The Ludlow Company LP (December 7, 2000)
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Summary
Natus Medical Inc. and The Ludlow Company LP entered into a five-year agreement where Ludlow will supply Natus with molded ear couplers and electrodes, manage design and production tooling, and ensure manufacturing at two locations. Ludlow will also warehouse inventory and provide pricing as previously agreed. Natus commits to purchasing minimum quantities of products each year and may reimburse Ludlow for certain costs if the agreement is canceled early, except for reasons under Ludlow's control. The agreement outlines mutual obligations to support product supply, manufacturing, and cost management.
EX-10.14 5 0005.txt MEMORANDUM OF UNDERSTANDING DATED DECEMBER 7, 2000 EXHIBIT 10.14 tyco The Ludlow Company LP - ------------- [address] Healthcare Ludlow Memorandum of Understanding --------------------------- Between Natus Medical Inc. of San Carlos California (Natus) and The Ludlow --------------------------------------------------- ---------- Company LP of Chicopee Massachusetts (Ludlow). - --------------------------------------------- Natus Medical Inc. and The Ludlow Company LP, the parties, desire to enter into an agreement. Both parties expect to receive certain benefits from this agreement and both parties accept obligations as part of this agreement. The term of this agreement will be five years from date of acceptance by both parties. Ludlow agrees to do the following for the benefit of Natus: 1. Supply "one piece molded Ear Couplers" and "Tab" style electrodes to Natus at pricing per letter from Paul Latka to Tom Waugh dated September 18, 2000. 2. Provide design input and manage the design and fabrication of production tooling at [***] for Natus designed injection molded Ear Coupler parts. 3. Design and have constructed at [***] production equipment to manufacture finished Natus Ear Coupler assemblies packaged similar to the current "Colorado Pack." 4. Demonstrate to Natus' satisfaction the ability to manufacture Ear Couplers at two Ludlow facilities. One facility will be Ludlow's [***] plant which will be called the Primary Manufacturing Location. An additional location will be chosen by Ludlow and will be referred to as the Secondary Manufacturing Location. 5. Give a minimum of six months notice of intention to move manufacturing locations for Natus products. In this case, manufacturing of Natus products will not cease at the original location until Natus validates and qualifies the new location. 6. Warehouse Natus-owned finished goods Ear Coupler inventory at two locations, one being Ludlow's Huntington Beach facility. If the alternate site is a Ludlow owned facility, there will be [***] to Natus for this service, otherwise [***] may [***] on its [***] to [***]. 7. Provide Natus with a [***] for Ear Couplers and Electrodes that are used in conjunction with Ear Couplers those [***] that are under [***] for the [***] of this agreement. [***] may [***] either increases or decreases on [***], such as [***], which are beyond [***]. In particular, [***] is under the [***] of [***] and only [***] will be [***]. 8. Share [***] with [***] as follows: If the [***] is the result of [***] by both Natus and Ludlow, each party will [***] of the [***]. If the [***] is achieved by actions of [***], [***] will [***] of the [***] and [***] will [***] of the [***]. In the case of a proposed [***], Ludlow will [***] the [***] of the individual component under question but will not [***] the [***] of the product. - -------------------------------------------------------------------------------- [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Natus agrees to do the following for the benefit of Ludlow: 1. Purchase a combination of foam and molded Ear Coupler/Electrode sets from Ludlow for the term of this agreement as outlined in the following table: Minimum Units Purchase Year Requirement --------- ---------------------- Year 2001 [***] Year 2002 [***] Year 2003 [***] Year 2004 [***] Year 2005 [***] 2. [***] for [***] initiated by Natus after various sign-off stages. These may include additional [***] to [***] equipment, or additional [***] for [***] or [***]. 3. [***] for [***] in capital equipment and engineering if this agreement is cancelled by Natus prior to it's expiration, unless the reason for the cancellation is due to poor quality or delivery, or other reasons that are controllable by Ludlow. In the event that Natus is [***] under this clause, the [***] will become the [***] of [***]. The parties have executed this Memorandum of Understanding on the 7/th/day of December, 2000. For: Natus Medical Inc. For: The Ludlow Company LP /s/ Thomas M. Waugh /s/ Lee Carrier - --------------------------------- ---------------------------- Signature Signature Name: Thomas M. Waugh Name: Lee Carrier --------------------------- --------------------- Title: Vice President, Operations Title: President -------------------------- --------------------- - -------------------------------------------------------------------------------- [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. The Ludlow Company LP [address] Tyco / Healthcare / Ludlow ================================================================================ 18 September 2000 Thomas Waugh Vice President, Operations Natus Medical Inc. 1501 Industrial Rd San Carlos, CA 94070-4111 Dear Tom: Estimates for the new Natus ear coupler and electrodes have been completed. The cost projections are based upon best guess information available at this time. The cost projections include the cost for a new production line for the ear couplers utilizing the molded ear coupler and [***] hydrogel. [***] for the molded ear coupler are also included in the estimate. Proposed Natus System - --------------------- One piece molded ear coupler: $[***] per pair "Tab" style electrode: $[***] per pouch of three electrodes ----- Total cost per procedure: $[***] Current Natus System - -------------------- Foam Ear coupler: $[***] per pair Snap style electrodes: $[***] per pouch of three electrodes ----- Total cost per procedure: $[***] Moving to the new system would result in a [***]% ($[***]) cost reduction per patient procedure. Attached are two spreadsheets detailing the total cost saving to Natus per year using realistic conversion rates from the current system to the new design over a five year period. In year five, we project complete conversion to the new molded design. Total savings over this time period are in excess of $[***]. Of course, a faster rate of conversion would yield great savings sooner. We look forward to reviewing this proposal and moving forward with the conversion. Best Regards, /s/ Paul Latka Paul Latka Director of Sales & Marketing OEM Medical Products - -------------------------------------------------------------------------------- [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Natus Product Conversion to Molded Ear Couplers/Tabs
Cost Comparison Current Foam Ear Coupler vs. Conversion to Molded Ear Coupler
- -------------------------------------------------------------------------------- [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.
