<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 2000
REGISTRATION NO. 333-86295
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 7
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ASPECT MEDICAL SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3845 04-2985553
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
TWO VISION DRIVE
NATICK, MASSACHUSETTS 01760
(508) 653-0603
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
NASSIB G. CHAMOUN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASPECT MEDICAL SYSTEMS, INC.
TWO VISION DRIVE
NATICK, MASSACHUSETTS
(508) 653-0603
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
SUSAN W. MURLEY, ESQ. LESLIE E. DAVIS, ESQ.
HALE AND DORR LLP TESTA, HURWITZ & THIBEAULT, LLP
60 STATE STREET 125 HIGH STREET
BOSTON, MASSACHUSETTS 02109 BOSTON, MASSACHUSETTS 02110
TELEPHONE: (617) 526-6000 TELEPHONE: (617) 248-7000
TELECOPY: (617) 526-5000 TELECOPY: (617) 248-7100
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ] __________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 7 to the Registrant's Registration Statement on Form S-1
(Commission File No. 333-86295) is being filed solely for the purpose of filing
Exhibits 3.5, 5.1, 10.3, 10.6, 10.7 and 10.26 thereto.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 7 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Natick,
Massachusetts on January 27, 2000.
ASPECT MEDICAL SYSTEMS, INC.
By: /s/ J. NEAL ARMSTRONG
------------------------------------
J. Neal Armstrong
Vice President and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 7 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NASSIB G. CHAMOUN* President, Chief Executive January 27, 2000
- --------------------------------------------------- Officer and Director
Nassib G. Chamoun (Principal Executive Officer)
/s/ J. BRECKENRIDGE EAGLE* Chairman of the Board of January 27, 2000
- --------------------------------------------------- Directors
J. Breckenridge Eagle
/s/ J. NEAL ARMSTRONG Vice President and Chief January 27, 2000
- --------------------------------------------------- Financial Officer (Principal
J. Neal Armstrong Financial and Accounting
Officer)
/s/ BOUDEWIJN L.P.M. BOLLEN* Director January 27, 2000
- ---------------------------------------------------
Boudewijn L.P.M. Bollen
/s/ STEPHEN E. COIT* Director January 27, 2000
- ---------------------------------------------------
Stephen E. Coit
/s/ EDWIN M. KANIA* Director January 27, 2000
- ---------------------------------------------------
Edwin M. Kania
/s/ LESTER J. LLOYD* Director January 27, 2000
- ---------------------------------------------------
Lester J. Lloyd
/s/ TERRANCE MCGUIRE* Director January 27, 2000
- ---------------------------------------------------
Terrance McGuire
/s/ DONALD STANSKI* Director January 27, 2000
- ---------------------------------------------------
Donald Stanski
*By: /s/ J. NEAL ARMSTRONG
---------------------------------------------
J. Neal Armstrong
Attorney-In-Fact
</TABLE>
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1** Restated Certificate of Incorporation of the Registrant.
3.2** Form of Restated Certificate of Incorporation to be in
effect upon the closing of the offering.
3.3** By-Laws of the Registrant, as amended.
3.4** Form of Amended and Restated By-laws of the Registrant to be
in effect upon the closing of the offering.
3.5 Certificate of Amendment to the Restated Certificate of
Incorporation of the Registrant (to be filed with the
Secretary of State of the State of Delaware immediately
prior to the effectiveness of this Registration Statement).
4.1** Specimen common stock certificate.
4.2** See Exhibits 3.2 and 3.4 for provisions of the Registrant's
certificate of incorporation and by-laws defining the rights
of holders of common stock.
5.1 Opinion of Hale and Dorr LLP.
10.1** 1998 Director Stock Option Plan, as amended.
10.2+** International Distribution Agreement, dated as of January
21, 1998, by and between the Registrant and Nihon Kohden
Corporation.
10.3+ International License Agreement, dated as of January 21,
1998, by and between the Registrant and Nihon Kohden
Corporation.
10.4** Trademark License Agreement, dated May 25, 1994, by and
between the Registrant and Aspect Electronics, Inc.
10.5** License Agreement, dated as of October 31, 1995, by and
between the Registrant and Siemens Medical Systems, Inc.
10.6+ Product Agreement, dated May 5, 1999, by and between the
Registrant and Drager Medizintechnik GmbH.
10.7+ OEM Development and Purchase Agreement, dated August 6,
1999, by and between the Registrant and Agilent
Technologies, Inc. (formerly part of Hewlett-Packard
Company).
10.8+** Letter Agreement, dated August 3, 1999, by and between the
Registrant and Agilent Technologies, Inc. (formerly part of
Hewlett-Packard Company).
10.9+** Distribution and License Agreement, dated as of April 1,
1996, between SpaceLabs Medical, Inc. and the Registrant.
10.10** Property Lease at 2 Vision Drive, by and between the
Registrant and Vision Drive, Inc., successor in interest to
Natick Executive Park Trust No. 2, dated September 8, 1994,
as amended, together with Subordination, Non-Disturbance and
Attornment Agreement, by and between the Registrant and
Teachers Insurance Association of America, dated June 15,
1995.
10.11** Lease Extension Agreement, dated as of August 7, 1997, by
and between the Registrant and Vision Drive, Inc.
10.12** Loan and Security Agreement, dated as of December 10, 1999,
by and between the Registrant and Imperial Bank; together
with an Intellectual Property Security Agreement, dated as
of December 10, 1999, by and between the Registrant and
Imperial Bank and a Securities Account Control Agreement,
dated as of December 10, 1999, by and between the Registrant
and Imperial Bank.
10.13** Promissory Note, dated February 18, 1997, as amended on
April 14, 1997, made in favor of the Registrant by Nassib G.
Chamoun, together with Pledge Agreement, dated as of
February 18, 1997, as amended on April 14, 1997, by and
between the Registrant and Nassib G. Chamoun.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.14** Promissory Note, dated May 1, 1997, made in favor of the
Registrant by Nassib G. Chamoun, together with Pledge
Agreement, dated as of May 1, 1997, by and between the
Registrant and Nassib G. Chamoun.
10.15** Promissory Note, dated May 1, 1997, made in favor of the
Registrant by Nassib G. Chamoun, together with Pledge
Agreement, dated as of May 1, 1997, by and between the
Registrant and Nassib G. Chamoun.
10.16** Form of Promissory Note made in favor of the Registrant by
certain directors and executive officers, together with Form
of Pledge Agreement, by and between the Registrant and
certain directors and executive officers, together with a
schedule of material terms.
10.17** Promissory Note, dated September 24, 1997, made in favor of
the Registrant by Jeffrey Barrett.
10.18** Promissory Note, dated April 10, 1998, made in favor of the
Registrant by Jeffrey Barrett, together with Pledge
Agreement, dated as of April 10, 1998, by and between the
Registrant and Jeffrey Barrett.
10.19** Series E Convertible Preferred Stock and Warrant Purchase
Agreement, dated December 17, 1998, by and among the
Registrant and the several purchasers named on Schedule I
thereto.
10.20** Fourth Amended and Restated Right of First Refusal and
Co-Sale Agreement, dated December 17, 1998, by and among the
Registrant and the several parties named on Schedules I, II
and III thereto.
10.21** Fourth Amended and Restated Registration Rights Agreement,
dated December 17, 1998, by and among the Registrant and the
several purchasers named on the signature pages thereto.
10.22** Fourth Amended and Restated Voting Agreement, dated December
17, 1998, by and among the Registrant and the several
parties named on Schedules I, II and III thereto.
10.23** Form of Warrant to purchase the Registrant's common stock,
together with schedule of Warrantholders.
10.24+** Supplier Agreement, dated August 13, 1999, between Novation,
LLC and the Registrant.
10.25+** Medical Products Distribution Agreement, dated October 1,
1999, between Hewlett-Packard Company and the Registrant.
10.26+ OEM Development and Purchase Agreement, dated December 22,
1999, by and between the Registrant and GE Marquette Medical
Systems, Inc.
23.1 Consent of Hale and Dorr LLP (contained in Exhibit 5.1).
23.2** Consent of Arthur Andersen LLP.
24.1** Power of Attorney.
27.1** Financial Data Schedule for fiscal year end December 31,
1998.
27.2** Financial Data Schedule for fiscal year end December 31,
1999.
</TABLE>
- ------------
+ Confidential treatment has been requested as to certain portions of this
Exhibit pursuant to Rule 406 promulgated under the Securities Act. Such
portions have been omitted and filed separately with the Securities and
Exchange Commission.
** Previously filed.
<PAGE> 1
Exhibit 3.5
CERTIFICATE OF AMENDMENT
TO THE
RESTATED
CERTIFICATE OF INCORPORATION
OF
ASPECT MEDICAL SYSTEMS, INC.
Pursuant to Section 242
of the General Corporation Law of
THE STATE OF DELAWARE
Aspect Medical Systems, Inc. (the "Corporation"), a corporation duly
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
By vote of the Board of Directors of the Corporation, a resolution was duly
adopted pursuant to Sections 141 and 242 of the General Corporation Law of the
State of Delaware, setting forth an amendment to the Restated Certificate of
Incorporation of the Corporation and declaring said amendment to be advisable
and directing that it be submitted to and be considered by the stockholders of
the Corporation for approval. The stockholders of the Corporation duly approved
said proposed amendment by written consent in lieu of a special meeting in
accordance with Sections 228 and 242 of the General Corporation Law of the State
of Delaware. The resolution setting forth the amendment is as follows:
RESOLVED: That Article FOURTH of the Corporation's Restated Certificate of
Incorporation, be, and hereby is, amended as follows:
1. by deleting the first paragraph in its entirety and inserting a
new first paragraph in lieu thereof which shall read in its
entirety as follows:
"FOURTH: The total number of shares that the Corporation
shall have authority to issue is 82,363,224 shares
consisting of 60,000,000 shares of Common Stock, par value
$0.01 per share (the "Common Stock"), and 22,363,224 shares
of preferred stock, par value $.01 per share (the "Preferred
Stock"), of which 406,898 shares have been designated Series
A-1 Convertible Preferred Stock (the "Series A-1 Preferred
Stock"), 3,800,428 shares have been designated Series B-1
Convertible Preferred Stock (the "Series B-1
<PAGE> 2
Preferred Stock"), 3,500,000 shares have been designated
Series C Convertible Preferred Stock (the "Series C
Preferred Stock"), 1,714,286 shares have been designated
Series D Convertible Preferred Stock (the "Series D
Preferred Stock"), 1,760,000 shares have been designated
Series E Convertible Preferred Stock (the "Series E
Preferred Stock"), 406,898 shares have been designated
Series A-2 Convertible Preferred Stock (the "Series A-2
Preferred Stock"), 3,800,428 shares have been designated
Series B-2 Convertible Preferred Stock (the "Series B-2
Preferred Stock"), 3,500,000 shares have been designated
Series C-2 Convertible Preferred Stock (the "Series C-2
Preferred Stock"), 1,714,286 shares have been designated
Series D-2 Convertible Preferred Stock (the "Series D-2
Preferred Stock") and 1,760,000 shares have been designated
Series E-2 Convertible Preferred Stock (the "Series E-2
Preferred Stock")."
2. by deleting Section B.5(a) in its entirety and inserting a new
Section B.5(a) in lieu thereof which shall read in its entirety
as follows:
"(a) The Corporation may, at its option, require all (and
not less than all) holders of shares of any series of
Preferred Stock then outstanding to convert their shares of
such series of Preferred Stock into shares of Common Stock,
at the then effective conversion rate pursuant to Section 4,
at any time on or after the closing (the "Closing") of the
sale of shares of the Corporation's Common Stock in a firm
commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), (i) on or before
June 30, 2000, resulting in at least $20,000,000 of
aggregate gross proceeds; and (ii) after June 30, 2000, (x)
at a price per share which equals or exceeds $14.00, which
number shall be appropriately adjusted for stock splits,
stock dividends, combinations, reorganizations,
recapitalizations and other similar events involving a
change in capital structure of the Corporation; and (y)
resulting in at least $20,000,000 of aggregate gross
-2-
<PAGE> 3
proceeds; PROVIDED that, in the event an underwritten public
offering does not meet the thresholds provided in this
paragraph (a), a vote of two-thirds (2/3) of the outstanding
shares of Preferred Stock may require all (and not less than
all) holders of shares of any series of Preferred Stock then
outstanding to convert their shares of such series of
Preferred Stock into shares of Common Stock, at the then
effective conversion rate pursuant to Section 4."
3. by deleting Section B.5(c) in its entirety and inserting a new
Section B.5(c) in lieu thereof which shall read in its entirety
as follows:
"(c) All certificates evidencing shares of Preferred Stock
which are required to be surrendered for conversion in
accordance with the provisions hereof shall, from and after
the date such certificates are so required to be
surrendered, be deemed to have been retired and canceled and
the shares of Preferred Stock presented thereby converted
into Common Stock for all purposes, notwithstanding the
failure of the holder or holders thereof to surrender such
certificates on or prior to such date. Upon the closing of
the sale of shares of Common Stock in a firm commitment
underwritten public offering meeting the requirements of
Section 5(a), the number of authorized shares of Series A-1
Preferred Stock, Series B-1 Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series A-2 Preferred Stock, Series B-2
Preferred Stock, Series C-2 Preferred Stock, Series D-2
Preferred Stock and Series E-2 Preferred Stock shall be
automatically reduced by the number of shares of Series A-1
Preferred Stock, Series B-1 Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series A-2 Preferred Stock, Series B-2
Preferred Stock, Series C-2 Preferred Stock, Series D-2
Preferred Stock and Series E-2 Preferred Stock that had been
designated as Series A-1 Preferred Stock, Series B-1
Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series A-2
Preferred Stock, Series B-2
-3-
<PAGE> 4
Preferred Stock, Series C-2 Preferred Stock, Series D-2
Preferred Stock and Series E-2 Preferred Stock and all
provisions included under Section 5 of this Article FOURTH
and all references to the Series A-1 Preferred Stock, Series
B-1 Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series A-2
Preferred Stock, Series B-2 Preferred Stock, Series C-2
Preferred Stock, Series D-2 Preferred Stock and Series E-2
Preferred Stock in this Restated Certificate of
Incorporation shall be deleted and shall be of no further
force or effect."
-4-
<PAGE> 5
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to the Restated Certificate of
Incorporation to be signed by its Vice President, Research and Development this
27th day of January, 2000.
ASPECT MEDICAL SYSTEMS, INC.
By: /s/ Philip H. Devlin
----------------------------------------
Philip H. Devlin
Vice President, Research and Development
-5-
<PAGE> 1
Exhibit 5.1
HALE AND DORR LLP
Counsellors at Law
60 State Street, Boston Massachusetts 02109
January 10, 2000
Aspect Medical Systems, Inc.
Two Vision Drive
Natick, Massachusetts 01760
RE: Registration Statement on Form S-1
----------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with a Registration
Statement on Form S-1 (Commission File No. 333-86295) (the "Registration
Statement") filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), for the
registration of 3,450,000 shares of Common Stock, $0.01 par value per share (the
"Shares"), of Aspect Medical Systems, Inc., a Delaware corporation (the
"Company"), including 450,000 Shares issuable upon exercise of an over-allotment
option granted by the Company.
The Shares are to be sold by the Company pursuant to an underwriting
agreement (the "Underwriting Agreement") to be entered into by and among the
Company and Morgan Stanley & Co. Incorporated, Deutsche Bank Securities, Inc.
and U.S. Bancorp Piper Jaffray, Inc., as representatives of the several
underwriters named in Schedule I to the Underwriting Agreement, the form of
which has been filed as Exhibit 1 to the Registration Statement.
We are acting as counsel for the Company in connection with the issue and
sale by the Company of the Shares. We have examined signed copies of the
Registration Statement as filed with the Commission. We have also examined and
relied upon the Underwriting Agreement, minutes of meetings of the stockholders
and the Board of Directors of the Company as provided to us by the Company,
stock record books of the Company as provided to us by the Company, the
Certificate of Incorporation and By-Laws of the Company, each as restated and/or
amended to date, and such other documents as we have deemed necessary for
purposes of rendering the opinions hereinafter set forth.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as copies, the authenticity of the originals of such latter documents and the
legal competence of all signatories to such documents.
We assume that the appropriate action will be taken, prior to the offer and
sale of the Shares in accordance with the Underwriting Agreement, to register
and qualify the Shares for sale under all applicable state securities or "blue
sky" laws.
<PAGE> 2
Aspect Medical Systems, Inc.
January 10, 2000
Page 2
We express no opinion herein as to the laws of any state or jurisdiction
other than the state laws of the Commonwealth of Massachusetts, the Delaware
General Corporation Law statute and the federal laws of the United States of
America. To the extent that any other laws govern the matters as to which we are
opining herein, we have assumed that such laws are identical to the state laws
of the Commonwealth of Massachusetts, and we are expressing no opinion herein as
to whether such assumption is reasonable or correct.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized for issuance and, when the Shares are issued
and paid for in accordance with the terms and conditions of the Underwriting
Agreement, the Shares will be validly issued, fully paid and nonassessable.
It is understood that this opinion is to be used only in connection with
the offer and sale of the Shares while the Registration Statement is in effect.
Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters. This opinion
is based upon currently existing statutes, rules, regulations and judicial
decisions, and we disclaim any obligation to advise you of any change in any of
these sources of law or subsequent legal or factual developments which might
affect any matters or opinions set forth herein.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act and to the use of our
name therein and in the related Prospectus under the caption "Legal Matters." In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Hale and Dorr LLP
HALE AND DORR LLP
<PAGE> 1
EXHIBIT 10.3
Aspect Medical Systems, Inc.
has requested that the marked portions of this agreement be granted confidential
treatment pursuant to Rule 406 under the Securities Act of 1933, as amended.
INTERNATIONAL LICENSE AGREEMENT
THIS AGREEMENT is made and entered into as of January 21, 1998 (the
"Effective Date"), by and between ASPECT MEDICAL SYSTEMS, INC. ("Aspect"), a
Delaware, U.S.A. corporation having offices at 2 Vision Drive, Natick,
Massachusetts 01760-2059, U.S.A., Attention: J. Breckenridge Eagle, Telecopy
No.: 1-508-647-2059, and NIHON KOHDEN CORPORATION ("NK"), a Japanese company
having offices at 31-4 Nishiochiai, 1-chome, Shinjuku-ku, Tokyo 161 Japan,
Attention: Hajime Yasuda, Telecopy No.: 81-3-5996-8097.
WHEREAS, Aspect possesses certain intellectual and industrial property
rights; and
WHEREAS, Aspect is willing to grant, and NK desires to acquire,
non-exclusive worldwide rights to use such rights in accordance with the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual promises,
terms and conditions hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Aspect and NK (the "Parties") do hereby agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the following definitions.
1.1 AFFILIATES. "Affiliates" of a Party hereto shall mean companies which are
controlled by, control or under common control with such Party. A company shall
be considered an "Affiliate" for only so long as such control exists. For the
purposes of this definition, partnerships or similar entities where a
majority-in-interest of its partners or owners are a Party hereto and/or
Affiliates of such Party shall also be deemed to be Affiliates of such Party.
1.2 AGREEMENT TERM. "Agreement Term" shall mean the period beginning on the
Effective Date and ending on the date of termination or expiration of this
Agreement, as the case may be.
1.3 BIS. "BIS"(TM) shall mean the Bispectral Index,(TM) which is Aspect's
proprietary processed EEG parameter that directly measures the hypnotic effects
of anesthetic and sedative agents on the brain.
<PAGE> 2
1.4 BUSINESS DAY. "Business Day" shall mean a day on which banks are open for
business in Natick, Massachusetts, U.S.A.
1.5 COMMENCEMENT DATE. "Commencement Date" shall mean the earlier of: (a)
May 1, 1999 (unless through no fault of NK, the MHW Approval has been delayed);
and (b) the MHW Approval Date.
1.6 CONTRACT YEAR. "Contract Year" shall mean the 12-month period commencing
on the Commencement Date, and then each 12-month period thereafter.
1.7 KIT. "Kit" shall mean Aspect's BIS Module Kit, as further described in
Exhibit A attached hereto and made a part hereof.
1.8 LICENSED TECHNOLOGY. "Licensed Technology" shall mean the Rights, the
Products and the Technical Information.
1.9 LICENSE TERM. "License Term" shall mean the period beginning on the
Commencement Date and ending on the date of termination or expiration of this
Agreement, as the case may be.
1.10 MHW APPROVAL DATE. "MHW Approval Date" shall mean the date on which NK
receives the approval of the Japanese Ministry of Health and Welfare to market
the Product in Japan.
1.11 PRODUCT. "Product" shall mean a BIS module.
1.12 RIGHTS. "Rights" shall mean:
(a) the patents listed on Exhibit B attached hereto and made a part hereof,
and all continuations, divisions, extensions and reissues thereof;
(b) the patent applications listed on Exhibit B hereto, and all continuations,
divisions, extensions and reissues thereof;
(c) any and all continuations, divisions, reissues, extensions and other
filings that Aspect may file with the governmental agency which issues patents
in any jurisdiction with respect to such patents and/or patent applications
described in parts (a) and (b) above of this definition; and
(d) all relevant copyrights and circuitry relating to the Software (as defined
in Section 2.6 below) or the Kits; and
-2-
<PAGE> 3
(e) any and all patents, patent applications, copyrights, mask work rights and
other intellectual property rights with respect to any inventions, which
patents, patent applications, copyrights, mask work rights and other rights (i)
are granted or to be granted to Aspect (either directly or through its
Affiliates, successors, assigns, agents or employees) and (ii) with respect to
which Aspect (either directly or through its Affiliates, successors, assigns,
agents or employees) shall have the right to grant licenses, sublicenses and
rights of the type described in Article 2 below;
PROVIDED, HOWEVER, that with respect to this definition, if any patents,
copyrights, mask work rights or other intellectual property rights have been or
are in the future issued, granted or registered based on or embodied in any
Product or any part of the Technical Information, such patents, copyrights, mask
work rights and other rights shall be deemed included in this definition.
1.13 TECHNICAL INFORMATION. "Technical Information" shall mean all trade
secrets, know-how, computer programs (including copyrights in said software),
knowledge, technology, means, methods, processes, practices, formulas,
techniques, procedures, technical assistance, designs, drawings, apparatus,
written and oral rectifications of data, specifications, assembly procedures,
schematics and other valuable information of whatever nature, whether
confidential or not, and whether proprietary or not, which is now in (or
hereafter, during the Agreement Term, comes into) the possession of Aspect and
which is necessary to the manufacture, assembly, sale, distribution, use,
installation, servicing or testing of the Product.
1.14 U.S. DOLLARS. "U.S. Dollars" shall mean lawful money of the United States
of America, in immediately available funds.
-3-
<PAGE> 4
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
2. GRANT OF RIGHTS AND LICENSES
Subject to all of the terms and conditions set forth in this Agreement:
2.1 USE OF RIGHTS.
(a) Aspect hereby grants to NK a non-exclusive, worldwide right and license
during the Agreement Term to practice the Rights in order to manufacture, use
and sell the Product as a component of multi-parameter module patient monitoring
systems manufactured by or for NK. Specifically, but without limitation, the
Rights may not be used to make, use or distribute the Product for incorporation
into stand-alone EEG/BIS monitors.
(b) During the Agreement Term, Aspect shall not grant, directly or indirectly,
the right and license described in Section 2.1(a) above to any other
manufacturer whose ultimate parent Affiliate has a principal place of business
in Japan.
(c) For the rights and licenses granted hereunder, NK shall pay Aspect a
license fee of [**] within thirty (30) days of the execution of this Agreement.
NK may [**] of said license fee in order to pay withholding tax levied by the
Government of Japan. NK agrees to send to Aspect tax payment certificates
indicating payment of such withholding tax so that Aspect can be allowed by the
tax authorities of the United States a tax credit in the amount of such
withholding tax deducted in Japan.
2.2 USE OF TECHNICAL INFORMATION.
(a) Aspect grants to NK a non-exclusive worldwide right and license during the
Agreement Term to use the Technical Information in connection with NK's exercise
of its rights and licenses granted in Section 2.1, and for no other purpose.
(b) As soon as practical after the Effective Date, Aspect shall provide to NK,
at no additional cost to NK, all of the Technical Information.
2.3 TRADEMARKS, SERVICE MARKS AND TRADE NAMES.
(a) NK shall be required to mark the Products with Aspect's trademarks,
service marks and trade names listed in Exhibit C hereto (the "Trademarks").
Aspect hereby grants NK the right to use the Trademarks on a non-exclusive basis
only for the License Term and solely for display or advertising purposes in
connection with the Products manufactured and sold in accordance with this
Agreement. During the License Term, NK may use, without Aspect's prior written
consent, trademarks, service marks and trade names in connection with the
Products other than the Trademarks; PROVIDED, HOWEVER, that the Trademarks are
always used in a manner which makes them at least as large and at least as
prominent as any other such trademarks, service marks or trade names appearing
on any such label, display or advertisement. Any use by NK of the Trademarks
shall be deemed to be a use of the same by Aspect. NK shall not at any time do
or permit any act to be done (including
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without limitation registering any of the Trademarks in its own name or the name
of any entity other than Aspect) which may in any way impair the rights of
Aspect in the Trademarks. Except as provided above, NK has no rights in the
Trademarks or of any goodwill associated therewith and NK agrees that, except as
expressly provided in this Agreement, it shall not acquire any rights in respect
thereof and that all such rights and goodwill are, and shall remain, vested in
Aspect.
(b) In order to comply with Aspect's quality control standards, NK shall: (i)
whenever it uses the Trademarks, include a statement that the Trademarks are
trademarks of Aspect; (ii) use the Trademarks in compliance with all relevant
laws and regulations; (iii) at Aspect's request, provide Aspect with samples of
the Products, so that Aspect can confirm that such Products are being
manufactured hereunder in a manner consistent with the quality standards which
Aspect applies in manufacturing BIS modules itself; and (iv) not modify any of
the Trademarks in any way and not use any of the Trademarks on or in connection
with any goods or services other than the Products.
2.4 RIGHT TO SUBLICENSE. NK shall not have the right to sublicense any of the
rights or licenses granted hereunder without Aspect's prior written consent,
which consent shall be withheld in Aspect's absolute discretion; PROVIDED,
HOWEVER, it is understood that NK shall have the right to grant sublicenses to
NK's Affiliates without Aspect's prior written consent. All sublicenses shall
not become effective until the sublicensee confirms in writing to Aspect that it
agrees to be bound by all of the terms and conditions contained in this
Agreement.
2.5 NO RIGHTS BY IMPLICATION. No rights or licenses with respect to Licensed
Technology are granted or deemed granted hereunder or in connection herewith,
other than those rights or licenses expressly granted in this Agreement.
2.6 SOFTWARE AND COMPUTER PROGRAMS. The Product includes circuitry and
software programs in binary code form which are designed for use with the
Product (the "Circuitry" and the "Software"). For the purpose of this Agreement,
the Circuitry and the Software shall not include any portion of the Product
which is proprietary to NK or which is developed by or licensed to NK,
independently of Rights and Technical Information provided by Aspect hereunder.
Aspect hereby grants to NK a non-exclusive and non-transferable worldwide
license, without the right to sublicense (except to purchasers of the Product
and NK's Affiliates which become sublicensees pursuant to Section 2.4 above),
during the Agreement Term to use the Circuitry, the Software and related
documentation provided by Aspect (the "Documentation") solely in connection with
operation of the Product. NK shall not disclose, furnish, transfer or otherwise
make available the Circuitry, the Software, the Documentation or any portion
thereof in any form to any third party (other than to purchasers of the Product
and NK's Affiliates which becomes sublicensees pursuant to Section 2.4 above)
and shall not duplicate the Circuitry, the Software, the Documentation or any
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part thereof, except in connection with NK's manufacture and assembly of the
Product in accordance with this Agreement. Title to and ownership of and all
proprietary rights in or related to the Circuitry, the Software, the
Documentation and all partial or complete copies thereof shall at all times
remain with Aspect or its licensor(s). This Agreement shall not be construed as
a sale of any rights in the Circuitry, the Software, the Documentation, any
copies thereof or any part thereof. All references in this Agreement to sale,
resale or purchase of the Products, or references of like effect, shall, with
respect to the Circuitry, the Software and the Documentation mean licenses or
sublicenses of the Circuitry, the Software and the Documentation pursuant to
this Section 2.6. NK shall not disassemble, decompile or reverse engineer the
Circuitry, the Software or any part thereof (except in the European Union and
Norway, and only to the extent that it has the right to do so pursuant to
applicable law in order to ensure interoperability with other software
programs). NK shall retain and shall not alter or obscure any notices, markings
or other insignia which are affixed to the Software, the Documentation or any
part thereof at the time of delivery of such Software or such Documentation.
2.7 NON-COMPETITION. NK confirms that is has not previously, directly or
indirectly, marketed or manufactured monitoring equipment, either as stand-alone
monitors or as modules for monitors, which were designed to monitor the depth of
anesthesia. NK confirms that it has not previously, directly or indirectly,
developed monitoring equipment, either as stand-alone monitors or as modules for
monitors, which was designed to: (i) monitor the depth or effects of anesthesia
being administered to patients; and (ii) indicate any index of the depth or
effects of anesthesia to assist anesthesiologists to evaluate the depth or
effects of anesthesia using EEG (electroencephalogram). Until the first (1st)
anniversary of the termination or expiration of this Agreement, as the case may
be, PROVIDED, HOWEVER that: (I) NK shall be permitted, at any time, to develop
monitoring equipment designed to monitor the depth or effects of anesthesia
using physiological measures other than EEG; (II) NK shall be permitted, at any
time, to market and manufacture monitoring equipment designed to monitor the
depth or effects of anesthesia using physiological measures other than EEG, so
long as such equipment has been developed and manufactured by NK; (III) NK shall
be permitted after the expiration or termination of this Agreement to
manufacture and market monitoring equipment developed and manufactured by NK or
by any third party that is designed to monitor the depth or effects of
anesthesia using physiological measures other than EEG; and (IV) NK shall be
permitted to continue to market and improve its existing EEG monitors and
modules. Specifically, it will not be considered a violation of this Section
3(f) for NK to market and improve its existing EEG monitors or modules that
display any of the following parameters of brain function: EEG, EEG trends, CSA,
DSA, EP, EMG, or NCV, subject to the terms and conditions of this Section 2.7.
2.8 CHANGES TO KITS AND PRODUCTS.
(a) From time to time during the Agreement Term, Aspect may introduce
improvements and modifications to the Kit. Aspect shall promptly deliver to NK
one reproducible copy of manufacturing drawings and engineering specifications
relating to such modification and improvement. NK may use, at its sole
discretion, each such modification or improvement under the terms and conditions
of this Agreement, without paying any additional amounts to Aspect. If NK
determines not to use such modification or improvement, Aspect shall continue to
supply NK with the Kit, but not as so modified or improved.
(b) Notwithstanding anything contained in this Agreement to the contrary,
Aspect reserves the right from time to time during the License Term to require
NK, after consulting with NK, to modify or improve the Product (including
without limitation the software programs used in connection with the Product) if
the modification or improvement reasonably relates to efficacy or patient
safety. NK shall implement those changes to the Products being manufactured or
to be manufactured and to modify and improve Products previously manufactured
and shipped to customers in
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order to incorporate such changes. In that event, Aspect agrees to repair or
replace Kits previously provided to NK or collected by NK from its customers,
free of charge, whether or not such repair or replacement occurs during the
relevant Warranty Period.
(c) Aspect shall immediately provide NK with a written notice upon Aspect
becoming aware of the occurrence of any of the following events: (i) Aspect
recalls any Kit, or ceases or suspends the sale of any Kit due to any problem
which relates to such Kit's efficacy or patient safety in any country outside
Japan; (ii) any defect of any Kit or the Licensed Technology, which relates to
such Kit's efficacy or patient safety, is published, reported or made known to
the public by any third party, or found by Aspect; or (iii) any Kit or the
Licensed Technology contributed to or caused a death or serious injury, or any
Kit or the Licensed Technology malfunctioned and if that malfunction occurred
again, it would be likely to contribute or cause a death or serious injury.
2.9 INTELLECTUAL PROPERTY MAINTENANCE FEES. Aspect shall keep current all
Rights relevant to the Products, and shall pay all fees and expenses in
connection therewith promptly as such fees and expenses become due and payable.
2.10 NO KNOWLEDGE OF THIRD PARTY CLAIMS. Aspect represents and warrants to NK
that Aspect knows of no claim by any third party of infringement by Aspect on
such party's patent, trademark, copyright, trade secret or other intellectual
property rights.
2.11 DISCLAIMER OF LIABILITY. ASPECT MAKES NO EXPRESS OR IMPLIED WARRANTY,
STATUTORY OR OTHERWISE, CONCERNING THE LICENSED TECHNOLOGY OR ANY OTHER
INFORMATION COMMUNICATED TO NK, INCLUDING WITHOUT LIMITATION NO WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, OR NO WARRANTIES AS TO QUALITY OR THE
USEFULNESS OF THE LICENSED TECHNOLOGY FOR ITS INTENDED PURPOSE; PROVIDED,
HOWEVER, if Aspect or NK shall discover any errors in the Licensed Technology
during the License Term, Aspect shall use commercially reasonable efforts to
correct such errors in the Licensed Technology without cost to NK.
IN NO EVENT, HOWEVER, SHALL ASPECT BE LIABLE TO NK FOR ANY SPECIAL,
CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR INDIRECT LOSSES OR DAMAGES RESULTING
FROM SUCH ERRORS IN THE LICENSED TECHNOLOGY.
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<PAGE> 8
Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
3. SALES BY ASPECT TO NK
3.1 OFFER AND ACCEPTANCE; PRICING.
(a) NK shall have the right to purchase from Aspect Kits at a transfer price
of US[**] per Kit. For each proposed purchase by NK from Aspect, NK shall
present a purchase order to Aspect (a "Purchase Order"). Each Purchase Order
shall be deemed an offer to purchase and, unless NK is notified in writing to
the contrary within five (5) Business Days after Aspect receives it, such
Purchase Order shall be deemed accepted by Aspect.
(b) Aspect's transfer prices shall be FCA (FREE CARRIER) Natick,
Massachusetts, U.S.A. Starting with the second (2nd) Contract Year, Aspect may
change those transfer prices; PROVIDED, HOWEVER, that: (i) such change may be
made only once a year effective as of the first day of April with the prior
written notice to be given by Aspect no later than the last day of December of
the preceding year, after consulting with NK; (ii) the annual increase shall be
no more than [**]; and (iii) no price change shall affect purchase orders
offered by NK and accepted by Aspect prior to the date such price change becomes
effective.
3.2 DELIVERY. Unless NK requests otherwise, all Kits ordered by NK shall be
packed for shipment and storage in accordance with Aspect's standard commercial
practices. It is NK's obligation to notify Aspect of any special packaging
requirements (which shall be at NK's expense if such requirement is in excess of
the scope of normal and necessary packaging for export). Aspect shall deliver
Kits into the possession of a common carrier designated by NK in Natick,
Massachusetts, U.S.A. no later than the date specified for such delivery on the
relevant purchase order. Risk of loss and damage to a Kit shall pass to NK upon
the delivery thereof to the common carrier designated by NK. If NK does not
designate a common carrier by the specified delivery date, then Aspect may do so
on NK's behalf. All claims for non-conforming shipments must be made in writing
to Aspect within thirty (30) days of the passing of risk of loss and damage.
3.3 METHOD OF PAYMENT
(a) All amounts due and payable with respect to Kits delivered by Aspect in
accordance with this Article 3 shall be paid in full within 30 days after the
date of Aspect's invoice therefor. All such amounts shall be paid in U.S.
Dollars by wire transfer, to such bank or account as Aspect may from time to
time designate in writing. All costs incurred in connection with such wire
transfer shall be the
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<PAGE> 9
responsibility of NK. Whenever any amount hereunder is due on a day which is not
a day on which banks in Natick, Massachusetts, U.S.A. are open for business (a
"Business Day"), such amount shall be paid on the next such Business Day.
Amounts hereunder shall be considered to be paid as of the day on which funds
are received by Aspect's bank. No part of any amount payable to Aspect hereunder
may be reduced due to any counterclaim, set-off, adjustment or other right which
NK might have or assert against Aspect, any other party or otherwise.
(b) All amounts due and owing to Aspect hereunder but not paid by NK on the
due date thereof shall bear interest (in U.S. Dollars) at the rate 18 per cent
per annum. Such interest shall accrue on the balance of unpaid amounts from time
to time outstanding from the date on which portions of such amounts become due
and owing until payment thereof in full.
3.4 LIMITED WARRANTY.
(a) With respect to the Kit, Aspect makes the warranties set forth in
Exhibit D attached hereto and made a part hereof. Under no circumstances shall
the warranties set forth in Exhibit D hereto apply to a Kit which has been
customized, modified, damaged or misused by NK or any third party without
Aspect's authorization. NK's sole remedy for a non-conforming Kit is, at
Aspect's election, the repair or replacement thereof.
(b) THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF ANY OTHER
WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE).
(c) EXCEPT AS PROVIDED IN SECTION 5.2 HEREIN, ASPECT'S LIABILITY ARISING OUT
OF THE MANUFACTURE, SALE OR SUPPLYING OF KITS OR THEIR USE OR DISPOSITION,
WHETHER BASED UPON WARRANTY, CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE
ACTUAL PURCHASE PRICE PAID BY NK FOR SUCH KITS.
(d) After expiration of the Warranty Period, Aspect shall undertake repairs of
Kits or shall provide parts for repairs by NK, at reasonable cost to NK. Both
parties shall agree on the charge for such repairs and parts.
3.5 PRIORITY OF AGREEMENT. In the event of any discrepancy between any
Purchase Order and this Agreement, the terms of this Agreement shall govern.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
3.6 MINIMUM PURCHASE REQUIREMENTS WITH RESPECT TO BIS SENSORS.
(a) NK' s minimum purchase of BIS sensors from Aspect under the international
distribution agreement between the Parties dated as of the date hereof for the
first (1st) Contract Year (as defined in this Agreement) shall be [**] per year
for each Product sold by NK hereunder. For the purpose of this provision, such
one year period for the minimum purchase of BIS sensors for each Product shall
separately commence on the first day of the month following the month when NK
resells such Product to NK's customers. To administer this provision, NK shall
inform Aspect from time to time (but no less frequently than quarterly), to the
extent such information is available to NK, of the names and addresses of
hospitals purchasing Products from NK and the number of Products sold by NK. On
or before the end of the first (1st) Contract Year, the Parties shall review
minimum sensor usage based on the actual experience during such Contract Year,
and shall adjust this requirement accordingly for subsequent Contract Years. For
the purposes of this provision, a "purchase" of sensors within a Contract Year
shall mean paying Aspect for such sensors on or before the last day of such
Contract Year.
(b) Failure to meet the minimum purchase requirement described in
Section 3.6(a) above shall constitute a material breach of this Agreement for
the purposes of Section 6.2 below. Termination shall be the only consequence of
NK failing to satisfy this minimum purchase requirement.
4. CONFIDENTIAL INFORMATION
4.1 CONFIDENTIALITY OBLIGATIONS. Each Party (the "disclosing Party") has a
proprietary interest in information which it discloses to the other Party (the
"receiving Party"), whether in connection with this Agreement or otherwise,
which is (a) a trade secret, confidential or proprietary information, (b) not
publicly known, and (c) annotated by a legend, stamp or other written
identification as confidential or proprietary information, or if disclosed
orally, is identified as confidential or proprietary by a written instrument
within 30 days of such disclosure (hereinafter referred to as "Proprietary
Information"). The receiving Party shall disclose the Proprietary Information of
the disclosing Party only to those of its agents and employees to whom it is
necessary in order properly to carry out their duties as limited by the terms
and conditions hereof. Both during and after the Agreement Term, all disclosures
by the receiving Party to its agents and employees shall be held in strict
confidence by such agents and employees. During and after the Agreement Term,
the receiving Party, its agents and employees shall not use the Proprietary
Information for any purpose other than in connection with discharging its duties
pursuant to this Agreement. The receiving Party shall, at its expense, return to
the
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disclosing Party the Proprietary Information of the disclosing Party as soon as
practicable after the termination or expiration of this Agreement. During the
Agreement Term and thereafter, all such Proprietary Information shall remain the
exclusive property of the disclosing Party. This Article 4 shall also apply to
any consultants or subcontractors that the receiving Party may engage in
connection with its obligations under this Agreement.
4.2 EXCEPTIONS. Notwithstanding anything contained in this Agreement to the
contrary, the receiving Party shall not be liable for a disclosure of the
Proprietary Information of the disclosing Party if the information so disclosed:
(a) was in the public domain at the time of disclosure without breach of this
Agreement; or (b) was known to or contained in the records of the receiving
Party from a source other than the disclosing Party at the time of disclosure by
the disclosing Party to the receiving Party and can be so demonstrated; or (c)
becomes known to the receiving Party from a source other than the disclosing
Party without breach of this Agreement by the receiving Party and can be so
demonstrated; or (d) was disclosed pursuant to court order or as otherwise
compelled by law.
5. INDEMNIFICATIONS
5.1 IN FAVOR OF ASPECT. NK hereby agrees to indemnify, defend and hold
harmless Aspect, its Affiliates and all officers, directors, employees and
agents thereof from all liabilities, claims, damages, losses, costs, expenses,
demands, suits and actions (including without limitation attorneys' fees,
expenses and settlement costs) (collectively, "Damages") arising out of: (i)
NK's failure to comply with relevant laws and regulations; (ii) personal
injuries and/or property damages resulting from the Product which relate to the
portion of the Product developed and manufactured by NK or which relate to the
failure of NK to incorporate the Kit within the Product in accordance with the
Technical Information provided by Aspect hereunder; or (iii) NK's making
representations or warranties with respect to the Kits which are not authorized
by Aspect hereunder.
5.2 IN FAVOR OF NK. Aspect hereby agrees to indemnify, defend and hold
harmless NK, its Affiliates and all officers, directors, employees and agents
thereof from all Damages arising out of: (i) the Products or the Kits infringing
on the intellectual property rights of third parties; (ii) use of the Trademarks
in accordance with Section 2.3(a) above which infringes on the trademark,
service mark or trade name rights of third parties; or (iii) personal injuries
and/or property damages resulting from the Product which relate to the portion
of the Product developed and manufactured by Aspect or which relate to NK's
incorporation of the Kit within the Product in accordance with the Technical
Information provided by Aspect hereunder; PROVIDED, HOWEVER, that:
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(a) Aspect shall have no obligation for any claim of infringement arising
from: (i) any combination by NK of the Product and/or the Kits with any other
product not supplied or approved in writing by Aspect (unless such combination
is a normal combination with other monitoring equipment or any part thereof),
where such infringement would not have occurred but for such combination; (ii)
the adaptation or modification of the Product and/or the Kits not performed or
not authorized by Aspect, where such infringement would not have occurred but
for such adaptation or modification; (iii) the misuse of the Product and/or the
Kits or the use of the Product and/or the Kits in an application for which they
were not designed by Aspect, where such infringement would not have occurred but
for such use or misuse; or (iv) a claim based on intellectual property rights
owned by NK or any of its Affiliates.
(b) In the event that the Products are held in a suit or proceeding to
infringe any intellectual property rights of a third party, and the use of the
Product or the Kits is enjoined or Aspect reasonably believes that it is likely
to be found to infringe or likely to be enjoined, Aspect shall, at its sole cost
and expense, either (i) procure for NK the right to continue manufacturing,
using and selling the Products and/or using and selling the Kits, or (ii)
replace the Product and/or the Kits with non-infringing Products of equivalent
functionality. If neither (i) or (ii) are practicable, either party may
terminate this Agreement, effective immediately, upon giving the other party
written notice. Upon such termination, Aspect shall refund to NK the Unused
Portion of the license fee described in Section 2.1(c) above, according to
Section 6.6 below.
(c) This Section 5.2 constitutes NK's exclusive remedy in the event that the
Product, the Kits and/or the Trademarks infringe on the intellectual property
rights of third parties.
5.3 INDEMNIFICATION PROCEDURES. The Party benefitting from an indemnity
hereunder (the "indemnified party") hereby agrees that: (a) the other Party (the
"indemnifying Party") shall have sole control and authority with respect to the
defense or settlement of any such claim; and (b) the indemnified Party and its
Affiliates, officers, directors, employees and agents thereof shall cooperate
fully with the indemnifying Party, at the indemnifying Party's sole cost and
expense, in the defense of any such claim. Any settlement of any such claims
that imposes any liability or limitation on the indemnifying Party shall not be
entered into without the prior written consent of the indemnifying Party.
5.4 PARTIAL INDEMNIFICATION. In the event a claim is based partially on an
indemnified claim described in Sections 5.1 and/or 5.2 above and partially on a
non-indemnified claim, or is based partially on a claim described in Section 5.1
above and partially on a claim described in Section 5.2 above, any payments and
reasonable attorney fees incurred in connection with such claims are to be
apportioned between the Parties in accordance with the degree of cause
attributable to each Party.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
6. TERMINATION OR EXPIRATION
6.1 EXPIRATION OF AGREEMENT. Unless it is terminated earlier pursuant to this
Article, this Agreement shall continue in full force and effect until it
automatically expires on the fourth (4th) anniversary of the Commencement Date.
Both parties shall discuss the renewal of this Agreement at least six (6) months
prior to such expiration of this Agreement.
6.2 TERMINATION FOR CAUSE. Upon the occurrence of a material breach or default
as to any obligation hereunder by either Party and the failure of the breaching
Party to promptly pursue (within thirty (30) days after receiving written notice
thereof from the non-breaching Party) a reasonable remedy designed to cure (in
the reasonable judgment of the non-breaching Party) such material breach or
default, this Agreement may be terminated by the non-breaching Party by giving
written notice of termination to the breaching Party, such termination being
immediately effective upon the giving of such notice of termination.
6.3 AFTER TERMINATION OR EXPIRATION. The Parties agree that, once this
Agreement is terminated or expires, NK shall immediately cease: (a) any use or
practice of the Licensed Technology; and (b) any development, manufacture, use
or sale of the Product; PROVIDED, HOWEVER, that: (i) NK shall have the right to
manufacture Products using the Kits which are in NK's possession at the time of
such termination or expiration; (ii) NK shall have the right to sell Products
which are in NK's possession at the time of such termination or expiration, and
manufactured by NK under 6.3(a) above, for a period of three (3) months after
such termination or expiration; PROVIDED, HOWEVER, that NK may, at its option,
within ten (10) days after the end of such three (3) month period, notify Aspect
that it has elected to extend this period for nine (9) additional months, in
which case NK shall pay Aspect US [**] for each module sold during such nine (9)
month period; (iii) Aspect or any third party designated by Aspect shall sell to
NK the parts necessary to repair the Products and shall grant to NK the right to
repair Products, for a period reasonably deemed that Products are used by the
customers; and (iv) Aspect or any third party designated by Aspect shall
continue to supply NK with BIS sensors to use with Products, for a period
reasonably deemed that Products are used by the customers.
6.4 PAYMENT OBLIGATIONS CONTINUE. Upon termination or expiration of this
Agreement, nothing shall be construed to release NK from its obligations to pay
Aspect any and all amounts accrued but unpaid pursuant to Article 3 above prior
to the date of such termination or expiration.
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Confidential Materials omitted and filed separately with
the Securities and Exchange Commission. Asterisks denote omissions.
6.5 NO DAMAGES FOR TERMINATION. The Parties agree that if either Party
terminates the other Party pursuant to this Article 6, then the terminating
Party shall not be liable for damages or injuries suffered by the other Party as
a result of that termination, unless otherwise expressly provided herein.
6.6 REFUND OF LICENSE FEE. In the event that this Agreement is terminated for
any reason (other than based on a material breach or default of NK in accordance
with Section 6.2 above), the Unused Portion of the license fee paid to Aspect by
NK under Section 2.1(c) of this Agreement shall be refunded to NK by Aspect. For
the purpose of this Agreement, "Unused Portion" shall mean the amount which
equals US [**] multiplied by a fraction, the numerator of which [**] in which
this Agreement is [**] in the period in which this Agreement is effective after
the [**] and the denominator of which is [**]. In no event may this fraction be
less than [**]. In the event that this Agreement is terminated before
Commencement Date (other than based on a material breach or default of NK in
accordance with Section 6.2 above), the full amount of such license fee [**]
shall be refunded to NK.
7. MISCELLANEOUS
7.1 NO INDIRECT DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT
LIMITED TO, LOSS OF PROFITS OR LOSS OF USE DAMAGES) ARISING OUT OF THE
MANUFACTURE, USE, SALE OR SUPPLYING OF THE PRODUCT OR KITS, EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.
7.2 ASSIGNMENTS. This Agreement and the rights and obligations hereunder may
not be assigned, delegated or transferred by either Party without the prior
written consent of the other Party; PROVIDED, HOWEVER, that the other Party's
consent shall not be required with respect to any assignment, delegation or
transfer by a Party to (i) an Affiliate of such Party; or (ii) the purchaser of
all or substantially all of the assets or stock of such Party, through merger,
consolidation or otherwise. To the extent permitted by this Agreement, this
Agreement shall be binding upon and inure to the benefit of the permitted
successors and assigns of both Parties.
7.3 GOVERNING LAW. This Agreement shall be construed and governed according
to, and any arbitration shall be conducted in accordance with, the laws of the
Commonwealth of Massachusetts, U.S.A., excluding its conflicts of laws
principles.
7.4 DISPUTE RESOLUTION. Any dispute, controversy or claim arising out of or
relating to this Agreement or to a breach hereof, including its interpretation,
performance or termination, shall be finally resolved by arbitration. The
arbitration shall be conducted by three (3) arbitrators, one to be appointed by
Aspect, one to be appointed by NK and a third being nominated by the two
arbitrators so selected or, if they cannot agree on a third arbitrator, by the
President of the American Arbitration Association. The arbitration shall be
conducted in English and in accordance with the commercial arbitration rules of
the United Nations Commission
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on International Trade Law. The arbitration, including the rendering of the
award, shall take place in Los Angeles, California, U.S.A. and shall be the
exclusive forum for resolving such dispute, controversy or claim. The decision
of the arbitrators shall be binding upon the parties hereto, and the expense of
the arbitration (including without limitation the award of attorneys' fees to
the prevailing party) shall be paid as the arbitrators determine. The decision
of the arbitrators shall be executory, and judgment thereon may be entered by
any court of competent jurisdiction. Notwithstanding anything contained in this
Section to the contrary, each Party shall have the right to institute judicial
proceedings against the other Party or anyone acting by, through or under such
other Party, in order to enforce the instituting Party's rights hereunder
through reformation of contract, specific performance, injunction or similar
equitable relief.
7.5 ENTIRE AGREEMENT. This Agreement supersedes and cancels any previous
agreements or understandings, whether oral, written or implied, heretofore in
effect and sets forth the entire agreement between Aspect and NK with respect to
the subject matter hereof. No modification or change may be made in this
Agreement except by written instrument duly signed by a duly authorized
representative of each Party.
7.6 NOTICES. All notices given under this Agreement shall be in writing and
shall be addressed to the Parties at their respective addresses and telecopy
numbers, and to the attention of the individuals set forth above. Either Party
may change its address, telecopy number and contact person for purposes of this
Agreement by giving the other Party written notice of its new address, telecopy
number or contact person. Any such notice if given or made by registered or
recorded delivery international air mail letter shall be deemed to have been
received on the earlier of the date actually received and the date fifteen (15)
calendar days after the same was posted (and in proving such it shall be
sufficient to prove that the envelope containing the same was properly addressed
and posted as aforesaid) and if given or made by telecopy transmission shall be
deemed to have been received at the time of dispatch, unless such date of deemed
receipt is not a day on which banks in the receiving party's home city are open
for business, in which case the date of deemed receipt shall be the next day on
which banks in the receiving party's home city are open for business.
7.7 WAIVERS. None of the conditions or provisions of this Agreement shall be
held to have been waived by any act or knowledge on the part of either Party,
except by an instrument in writing signed by a duly authorized officer or
representative of such Party. Further, the waiver by either Party of any right
hereunder or the failure to enforce at any time any of the provisions of this
Agreement, or any rights with respect thereto, shall not be deemed to be a
waiver of any other rights hereunder or any breach or failure of performance of
the other Party.
-15-
<PAGE> 16
7.8 RESPONSIBILITY FOR TAXES. Taxes now or hereafter imposed with respect to
the transactions contemplated hereunder (with the exception of income taxes or
other taxes imposed upon Aspect and measured by the gross or net income of
Aspect, and with the exception of withholding tax set forth in Section 2.1(c)
above) shall be the responsibility of NK, and if paid or required to be paid by
Aspect, the amount thereof shall be added to and become a part of the amounts
payable by NK hereunder.
7.9 SEVERABILITY. If any provision of this Agreement is declared invalid or
unenforceable by a court having competent jurisdiction, it is mutually agreed
that this Agreement shall endure except for the part declared invalid or
unenforceable by order of such court. The Parties shall consult and use their
best efforts to agree upon a valid and enforceable provision which shall be a
reasonable substitute for such invalid or unenforceable provision in light of
the intent of this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
7.11 RELATIONSHIP OF THE PARTIES.
(a) The relationship between Aspect and NK shall not be construed to be that
of employer and employee, nor to constitute a partnership, joint venture or
agency of any kind. Neither Party shall have any right to enter into any
contracts or commitments in the name of, or on behalf of, the other Party, or to
bind the other Party in any respect whatsoever.
(b) NK shall not obligate or purport to obligate Aspect by issuing or making
any affirmations, representations, warranties or guaranties with respect to Kits
to any third party, other than the warranties described in Exhibit D hereto.
7.12 LANGUAGE. All written material, correspondence, Technical Information,
notices and oral assistance supplied by either Party hereunder shall be in the
English language.
7.13 SURVIVAL OF CONTENTS. Notwithstanding anything else in this Agreement to
the contrary, the parties agree that Sections 2.7, 2.11, 3.3 and 3.4 and
Articles 4, 5, 6 and 7 shall survive the termination or expiration of this
Agreement, as the case may be.
-16-
<PAGE> 17
7.14 COMPLIANCE WITH LAWS. NK covenants that all of its activities under or
pursuant to this Agreement shall comply with all applicable laws, rules and
regulations. NK shall be responsible for obtaining all licenses, permits and
approvals which are necessary or advisable for sales of Products in all
jurisdictions and for the performance of its duties hereunder. In particular,
but without limitation, NK shall be responsible for all submissions to the MHW
which may be required to obtain marketing approval of the Product. NK shall use
its best efforts to obtain such MHW approvals as expeditiously as possible. NK
shall promptly give Aspect written notice of the MHW Approval Date. Aspect
shall: (i) fully comply with any applicable law, regulation and rule of
government of the United States and agencies or instrumentalities thereof; and
(ii) maintain all U.S. governmental approvals and licenses necessary to produce
and export the Kit.
-17-
<PAGE> 18
7.15 HEADINGS. Any headings contained herein are for directory purposes only,
do not constitute a part of this Agreement, and shall not be employed in
interpreting this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement under
seal.
ASPECT MEDICAL SYSTEMS, INC.
By /s/ J. B. Eagle
-----------------------------------
Name: J. B. Eagle
Title: Chairman
NIHON KOHDEN CORPORATION
By /s/ Kazuo Ogino
-----------------------------------
Name: Kazuo Ogino
Title: Prsident and Chief Executive
EXHIBIT A Description of BIS Module Kit
EXHIBIT B Patents and Patent Applications
EXHIBIT C Trademarks, Service Marks and Trade Names
EXHIBIT D Warranties for Kit
-18-
<PAGE> 19
EXHIBIT A
DESCRIPTION OF BIS MODULE KIT
The BIS `Module Kit' is designed specifically for OEM applications and allows
the integration of Aspect's BIS monitoring technology into OEM patient
monitoring systems. The BIS Engine will interface to the patient via the Aspect
BIS sensor and to the OEM equipment utilizing a serial (RS-232) 3-wire interface
and the necessary power connections.
The BIS module kits consists of a Digital Signal Converter (DSC-2) that is
placed in proximity to the patient and a small circuit board that resides in the
OEM equipment. The DSC-2 is a small (palm sized) front-end to the BIS Engine
circuit board that provides the patient interface and performs the high
performance analog to digital conversion of the EEG signals. The EEG signals are
transmitted in digital format from the DSC-2 to the BIS engine circuit board via
a 20 foot cable that is hard wired connected at the DSC-2.
The BIS Engine circuit board measures 3 x 4 inches. This board performs digital
signal processing on the digitized EEG signal and outputs the Bispectral Index
to the OEM system via the RS-232 serial connection. The board is constructed
using double sided surface mount techniques. The connections to the BIS Engine
circuit board are a serial interface (RS-232) and power.
Detailed Technical Specifications:
Digital Output: RS-232 Serial Output
(8 data, 1 stop, no parity 115 kBaud)
Parameters: BIS, Suppression Ratio,
EMG, Raw EEG
Electrical Safety: Conforms to UL 544, IEC-601-1
Power: 3.5 Watts Maximum
+5V (500 mA)
+12V (77 mA)
Artifact Rejection: Automatic
-19-
<PAGE> 20
Bispectral Index: 0-100 Scale
Digital Signal Converter (DSC-2)
Description: The DSC amplifies and digitizes the signal close to the patient to
minimize electrical interference.
Weight: 4.7 oz (0.13 kg)
Dimensions: 2.6 x 1.0 x 4.3 inches
(6.6 x 2.5 x 10.8 cm)
Cable Length: 23 ft (7.0 m) integral DSC cable, 1.5 ft (0.45) patient interface
cable.
BIS Engine PCB
Physical: 3x4 inch SMT PCB
Processing Power: 50 MFlops
Software Upgrades
The BIS engine software is stored in reprogrammable FLASH memory. Software
upgrades can be accomplished on-site or remotely via the serial interface.
Serial Identifier
Each BIS engine is given a unique serial identifier. This allows for electronic
identification of every BIS Engine.
-20-
<PAGE> 21
EXHIBIT B
PATENTS AND PATENT APPLICATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------- -------------------- -------------------------------------------- -------
US PATENT # PATENT DESCRIPTION
- -------------- -------------------- -------------------------------------------- -------
4,907,597 EEG BIS #1 Cerebral Bio-Potential Analysis Patents
- -------------- -------------------- covering adaption of bispectral analysis -------
5,010,891 EEG BIS #2 and means for extracting information for
- -------------- -------------------- diagnostic and monitoring applications -------
5,320,109 EEG BIS #3
- -------------- -------------------- -------
5,458,117 EEG BIS #4
- -------------- -------------------- -------------------------------------------- -------
5,381,804 A1000/A1050/DSC Interface to biopotential signal acquisition
- -------------- -------------------- -------------------------------------------- -------
5,305,746 ZipPrep Electrode Self-prepping electrode technology
- -------------- -------------------- -------------------------------------------- -------
pending BIS Sensor System Interface to BIS Disposable
Sensor/Electrode
- -------------- -------------------- -------------------------------------------- -------
pending BIS Sensor Disposable
BIS (Zip Prep) Sensor
- -------------- -------------------- -------------------------------------------- -------
</TABLE>
-21-
<PAGE> 22
EXHIBIT C
TRADEMARKS
Aspect(R)
ZIPPREP(TM)
Zipprep(TM)
A-1050(TM)
A-1000(TM)
A-2000(TM)
Bispectral Index(TM)
BIS(TM)
BIS(TM)
-22-
<PAGE> 23
EXHIBIT D
WARRANTY
Aspect warrants to the initial Purchaser that the BIS MODULE KIT ("Warranted
Product") will be free from defects in workmanship or materials, when given
normal, proper, and intended usage for a period of 18 months from the date of
its initial shipment to Purchaser, or 12 months from the date of resale by
Purchaser, whichever period first expires. Excluded from this warranty are
expendable components and supply items such as, but not limited to, electrodes,
cables, and prep solutions. Aspect's obligations under this warranty are to
repair or replace any Warranted Product or part thereof that Aspect reasonably
determines to be covered by this warranty and to be defective in workmanship or
materials provided that the Purchaser has given notice of such warranty claim
within the Warranty Period and the Warranted Product is returned to the factory
with freight prepaid. Repair or replacement of Products under this warranty does
not extend the Warranty Period.
To request repair or replacement under this warranty, Purchaser should contact
Aspect at 2 Vision Drive, Natick, Massachusetts 01760, 800-442-2051 or
508-647-2088. Aspect will authorize Purchaser to return the Warranted Product
(or part thereof) to Aspect. Aspect shall determine whether to repair or replace
Products and parts covered by this warranty and all Products or parts replaced
shall become Aspect's property. In the course of warranty service, Aspect may
but shall not be required to make engineering improvements to the Warranted
Product or part thereof. If Aspect reasonably determines that a repair or
replacement is covered by the warranty, Aspect shall bear the costs of shipping
the repaired or replacement Product to Purchaser. All other shipping costs shall
be paid by Purchaser. Risk of loss or damage during shipments under this
warranty shall be borne by the party shipping the Product. Products shipped by
Purchaser under this warranty shall be packaged in the original shipping
container or equivalent packaging to protect the Product. If Purchaser ships a
Product to Aspect in unsuitable packaging, any physical damage present in the
Product on receipt by Aspect (and not previously reported) will be presumed to
have occurred in transit and will be the responsibility of Purchaser.
Unless authorized or instructed by Aspect in advance, this warranty does not
extend to any Warranted Products or part thereof: that have been subject to
misuse, neglect or accident; that have been damaged by causes external to the
Warranted Product, including but not limited to failure of or faulty electrical
power; that have been used in violation of Aspect's instructions; that have been
affixed to any nonstandard accessory attachment; on which the serial number has
been removed or made illegible; that have been modified by anyone other than
Aspect; or that have been disassembled, serviced, or reassembled by anyone other
than Aspect, unless authorized by Aspect. Aspect shall have no obligation to
make repairs, replacements, or corrections which result, in whole or in part,
from normal wear and tear. Aspect
-23-
<PAGE> 24
makes no warranty (a) with respect to any products that are not Warranted
Products, (b) with respect to any products purchased from a person other than
Aspect or an Aspect-authorized distributor or (c) with respect to any product
sold under a brand name other than Aspect.
-24-
<PAGE> 25
THIS WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY FOR ASPECT'S PRODUCTS, EXTENDS
ONLY TO THE PURCHASER AND IS EXPRESSLY IN LIEU OF ANY OTHER EXPRESS OR IMPLIED
WARRANTIES INCLUDING WITHOUT LIMITATION ANY WARRANTY AS TO MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS OTHERWISE PROVIDED HEREIN, ASPECT'S
MAXIMUM LIABILITY ARISING OUT OF THE SALE OF THE PRODUCTS OR THEIR USE, WHETHER
BASED ON WARRANTY, CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE ACTUAL
PAYMENTS RECEIVED BY ASPECT IN CONNECTION THEREWITH. ASPECT SHALL NOT BE LIABLE
FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL LOSS, DAMAGE OR EXPENSE (INCLUDING
WITHOUT LIMITATION LOST PROFITS) DIRECTLY OR INDIRECTLY ARISING FROM THE SALE,
INABILITY TO SELL, USE OR LOSS OF USE OF ANY PRODUCT. EXCEPT AS SET FORTH
HEREIN, ALL PRODUCTS ARE SUPPLIED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER
EXPRESS OR IMPLIED.
-25-
<PAGE> 1
Drager/Aspect Product Agreement
Drager-Aspect Vers1.doc
20.04.99
Exhibit 10.6
Aspect Medical Systems, Inc.
has requested that the marked portions of this agreement be granted confidential
treatment pursuant to Rule 406 under the Securities Act of 1933, as amended.
Drager/Aspect Product Agreement
between
Aspect Medical Systems, Inc.
2 Vision Drive
Natick
MA 01760-2059
USA
- hereinafter called "Aspect" -
and
Drager Medizintechnik GmbH
Moislinger Allee 53 - 55
23558 Lubeck
Germany
- hereinafter called "Drager" -
- Aspect and Drager together hereinafter called "the Parties" -
<PAGE> 2
Drager/Aspect Product Agreement
20.04.99
- 2 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Whereas Aspect has a long-standing tradition of designing, manufacturing and
distributing neuromonitors including the BIS (Bispectral Index) and Sensors for
neuromonitors.
Whereas Drager has a long-standing tradition of designing, manufacturing and
distributing medical equipment.
Whereas Drager is in the process of designing a new anesthesia workplace.
Whereas Drager wishes to integrate Aspect's BIS technology and to offer a
Drager-BIS-Module as an option into this and other workplace solutions for the
[**] and [**]
Whereas Aspect desires to sell and Drager desires to purchase, on the terms and
conditions set forth below in this Agreement, certain quantities of Aspect BIS
Module Kits and the required Sensors manufactured by Aspect.
Now, therefore,
in consideration of the mutual covenants, terms and conditions hereinafter
expressed, the Parties agree as follows:
1. DEFINITIONS
1.1 The term "Aspect BIS Module Kits" shall mean Aspect's BIS Module Kits
as further defined in the specifications in Exhibit A.
The Parties hereto may change Exhibit A, to the extent it may then be
necessary to reflect a subsequent modification made pursuant to Clause
7 of this Agreement.
1.2 The term "Drager-BIS-Module" shall mean an Aspect BIS Module Kit that
is integrated by Drager into a Drager Workplace.
<PAGE> 3
Drager/Aspect Product Agreement
20.04.99
- 3 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
1.3 The term "Aspect BIS Sensor" shall mean a single use disposable sensor
for the use with the Aspect BIS Module Kits or the Aspect stand-alone
BIS monitor.
1.4 The term [**] shall mean a [**] that has been [**] in accordance with
[**] to [**] with the [**] Drager shall own all right, title, and
interest in any modifications (the "[**]" made to the [**] to [**] the
[**] for use in the [**]. The [**] will [**] Aspect BIS Module Kits
sold by Aspect [**]. The [**] may [**] in [**] depending upon
negotiations between the Parties (See Exhibit A, Section 1.5).
1.5 The term "Products" shall mean the Aspect BIS Module Kits, the
Drager-BIS-Modules, the Aspect's BIS Sensors,[**].
1.6 The term "Drager Workplace" shall mean a combination of devices for
[**] and [**] with a [**] and [**] to all [**]. The definition Drager
Workplace includes a [**] and a [**] for [**].
2. DRAGER'S RIGHTS TO PURCHASE AND SELL AND ASPECT'S RESPONSIBILITIES
2.1 Drager shall have the non-exclusive right during the term of this
Agreement to purchase the Aspect BIS Module Kit for the sole purpose of
integrating the Aspect BIS Module Kit into a Drager Workplace and
reselling the finished Drager-BIS-Module worldwide.
Subject to Clause 2.2 Drager shall have the exclusive right during the
term of this Agreement to purchase the [**] for the [**] of [**] the
[**] except in the USA. Aspect shall not have the right to manufacture
or distribute the [**] to [**].
Drager shall have the non-exclusive right during the term of this
Agreement to purchase the Aspect BIS Sensor for the non-exclusive
resale worldwide except in the USA.
2.2 Drager will sell the Drager-BIS-Module, the [**] and the Aspect BIS
Sensor through its designated distribution network, and Aspect shall
not with respect to the Drager-BIS-Module and the [**] make any sales
promotion, shall not establish any branch, shall not have any supply
depot or supply the Drager-BIS-Module or [**] to any party other than
Drager.
<PAGE> 4
Drager/Aspect Product Agreement
20.04.99
- 4 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
It is understood, however, that in the event that Drager distributes
[**] and [**] customers using [**] of the number of [**] used by [**].
Drager shall then grant Aspect a non-exclusive royalty-free right and
license under its rights to the [**] to [**] Aspect BIS Sensors that
have been [**] for use with [**] to [**].
2.3 Aspect agrees to provide all reasonable help for Drager with respect to
the design and/or integration of the Aspect BIS Module Kit into a new
Drager Workplace.
2.4 Drager agrees [**] the [**] for an [**] equipment.
2.5 Aspect shall obtain any official approvals, permits, licenses and other
consent required to sell Aspect's BIS Module Kit and Aspect's BIS
Sensor worldwide, at such time and in such manner as determined by
Aspect or required by Drager to serve reasonable commercial purposes of
both companies. Drager shall receive copies of any such documents.
Drager shall obtain any official approvals, permits, licenses and other
consent required to sell Drager products worldwide, in such time and in
such manner as determined by Drager. If necessary, Aspect shall receive
copies of any such documents belonging to the Drager-BIS-Module and the
[**]. Aspect will provide any reasonable support required by Drager to
obtain the necessary approvals for the Drager-BIS-Module and the [**].
2.6 The parties intend to agree on a co-marketing concept for the Products.
3. PRICES
3.1 The prices for Aspect BIS Module Kits and BIS Sensors shall be as set
forth in Exhibit B hereto. The price per product is FOB, Boston as per
Incoterms 1990. All prices for Aspect BIS Module Kits and BIS Sensors
are exclusive of all taxes, levies and assessments imposed on such
products purchased hereunder, excluding taxes based on Aspect's
possession thereof prior to the originally scheduled delivery and taxes
on Aspect's net income from the transaction. Drager intends to
introduce the new Drager anesthesia workplace to the market [**].
<PAGE> 5
Drager/Aspect Product Agreement
20.04.99
- 5 -
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
3.2 Prices, billing and all payments due hereunder shall be in US$.
3.3 September of each year with effect on 1st January of the following
year, the prices for Aspect's BIS Module Kit set forth in Exhibit B may
be adjusted by mutual Agreement. The first adjustment of prices may be
made prior to October 1, 2002 with effect on January 1, 2003.
The prices for Aspect's BIS Sensor will be based on the Sensor Price
Schedule set forth in Exhibit B applied to the prevailing List Price of
the BIS Sensor in the U.S.
Any adjustments to BIS Sensor prices may only be made prior to October
1 of each year for effect on January 1 of the following year. Assuming
[**] are requested [**] by [**] will be based on the Sensor Price
Schedule set forth in Exhibit B for the [**] to which will be [**]
required to [**] the [**] (See also Exhibit A, Section 1.5).
4. PURCHASE
4.1 All Products shall be ordered in writing, specifying the product type,
number of units, desired delivery date and means of shipment. Purchase
orders may be sent by facsimile machine. Such orders shall be
considered to have been accepted by Aspect only upon Aspect's issuance
of written acknowledgment confirming its acceptance of the purchase
order. Aspect's acknowledgment may be sent by facsimile machine and
shall state delivery date.
4.2 Ownership of, title to, and risk of loss with respect to any product
sold to Drager hereunder shall pass to Drager upon delivery to carrier
in Boston packed and ready for shipment to Drager. Aspect shall ship
products in a manner consistent with Aspect's usual shipping practices.
Transportation and shipping charges from Boston, including costs
incurred by Aspect relating to packing, storage, documentation and
similar items which result from special shipping instructions of
Drager, and the cost of any insurance which Drager may request in
connection with the products, shall be added to the price stated on
invoices and shall be paid by Drager at the time that payment of the
purchase price for such products is due and payable.
<PAGE> 6
Drager/Aspect Product Agreement
20.04.99
- 6 -
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
4.3 Drager shall have the right to handle the purchase of Products via
another company belonging to the Drager Group. Drager will inform
Aspect in writing with respect to such decision. Drager will further
ensure that this company will adhere to the provisions of this
Agreement.
5. FORECAST, DELIVERY TIME
5.1 Drager shall provide a non-binding quarterly rolling forecast for a
minimum of the successive two quarters.
5.2 Aspect shall ship the Products in lots of [**] units.
5.3 Aspect shall ship Aspect BIS Module Kits within (eight) 8 weeks of its
receipt of purchase orders therefore, assuming the quantity ordered is
reasonably consistent with the forecast.
5.4 Aspect shall ship [**] within (four) 4 weeks of its receipt of purchase
orders therefore, assuming the quantity ordered is reasonably
consistent with the forecast.
5.5 In the event of cancellation of any purchase order, Drager will be
liable to Aspect for the payment of reasonable cancellation charges.
6. PAYMENT; INSPECTIONS; RETURNS
6.1 All purchases hereunder shall be paid within thirty (30) days from date
of invoice to Drager.
6.2 All Products received by Drager shall conform in all material respects
to the specifications set forth in Exhibit A.
Receiving inspection by Drager may be performed on a sampling basis
which shall be in accordance with the Testing Specifications as
established in Exhibit C. Exhibit C will be negotiated later.
<PAGE> 7
Drager/Aspect Product Agreement
20.04.99
- 7 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Acceptance by Drager on a sampling basis shall not prejudice or
restrict the right of Drager to accumulate and return at Aspect's
expense for full credit or replacement (freight and insurance prepaid
to Drager) non-conforming Products discovered during Drager's
inspection process, which in no event shall extend beyond the warranty
period provided in Clause 8. Any such return must be made within 30
days of discovery of any such Products' nonconformance by Drager.
Aspect must be given the opportunity to inspect and/or correct Products
for which Drager shall request credit or replacement to enable Aspect
to determine for itself that said Products do not meet specifications,
and such credit or replacement shall be made by Aspect only if and when
it determines that Products do not meet specifications. No Product may
be returned without Aspect's approval, which, subject to the last
sentence of the preceding Paragraph under this Clause 6.2, shall not be
unreasonably withheld.
7. MODIFICATION OF PRODUCTS
7.1. Aspect shall inform Drager
(a) about planned modifications of Aspect's BIS Module Kit,
Aspect's BIS Sensors, [**] and modifications relating to BIS
of Aspect's stand alone Monitor,
(b) of any modification which will affect the approval of the
Products or the Drager Workplace and /or the proper function
within the Drager Workplace.
In case (b), Aspect shall not be allowed to modify Aspect's BIS Module
Kit, Aspect's BIS Sensor or [**] sold to Drager without Drager's prior
written consent. Additionally Drager shall have the right to decide if
Drager wishes to take over the modification. If Drager refuses to take
over the modification, Aspect shall be obliged to deliver the
unmodified Aspect BIS Module Kit, Aspect's BIS Sensors and [**] for a
period of eighteen (18) months beginning with the date Drager announces
its decision. After this eighteen-months period Aspect can cease to
deliver the unmodified Aspect BIS Module Kit, Aspect's BIS Sensors or
[**]. In the event that Aspect believes that a modification or
improvement relates to patient safety, Drager will accept these
modifications under the condition that Aspect will agree to repair or
replace Aspect's BIS Module Kits, Aspect's BIS Sensors or [**]
previously provided to Drager or Drager customers at no charge.
<PAGE> 8
Drager/Aspect Product Agreement
20.04.99
- 8 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
7.2. Drager shall promptly inform Aspect of any proposed modification which
will affect Aspect product approval.
7.3 Aspect agrees in principle to [**] of the [**] and [**] the [**] is
[**]. Aspect and Drager must agree on a mutually-acceptable time
schedule and on a mutually-acceptable price for the [**] Aspect shall
own all right title and interest in any [**] to the Aspect BIS Module
Kit pursuant to this Section 7.3.
8. WARRANTY
8.1 Subject to Exhibit E, Aspect hereby warrants to Drager that for a
period of twelve (12) months after each Product is sold by Drager, or
an authorized Drager Distributor and delivered to an end user, or
eighteen (18) months after such Products are received from Aspect by
Drager, whichever period shall be shorter, that such Products will
conform in all material respects to the specifications set forth in
Exhibit A and be free from any defects in workmanship and materials. In
the event of a breach of the warranty under this Section, Aspect's
responsibility and Drager's remedy shall first be repair or replacement
of the Product, at Aspect's option. In the event that, after Aspect has
attempted to repair or replace the product, the Product does not
conform to the warranty provided in this Section 8.1, Aspect will
refund the purchase price for such Product. This paragraph summarizes
Aspect's responsibility and Drager's sole remedy with respect to the
warranty set forth in this Section 8.1.
8.2 Notwithstanding the foregoing, Aspect's warranty as set forth above
does not cover:
(i) defects emanating from improper or unauthorized use or
maintenance of such products by Drager or any subsequent
purchaser thereof;
(ii) normal deterioration or normal wear and tear;
(iii) disposable items such as the [**] Aspect BIS Sensor after the
expiration date marked on the Sensor packaging
(iv) catastrophe, fault or negligence of Drager or anyone claiming
through or on behalf of Drager; or
(v) subject to Exhibit A, causes external to the Products
including without limitation power or air conditioning
failure.
<PAGE> 9
Drager/Aspect Product Agreement
20.04.99
- 9 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
8.3 THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN LIEU OF ANY OTHER
WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE).
9. QUALITY ASSURANCE
Aspect shall adhere to a quality assurance system in accordance with
the Quality Assurance Agreement as established in Exhibit D.
10. SERVICE
10.1 Drager assumes full responsibility to render service with respect to
the maintenance, repair, or replacement of Products, accessory items,
or parts therefor sold by Drager.
10.2 Aspect agrees to supply Drager, at Drager's expense, with any and all
special tools and equipment reasonably required for Drager to service,
maintain or test the Products sold hereunder. Drager agrees to make
payment for such items to Aspect within thirty (30) days from the date
of invoice.
10.3 Aspect shall adhere to the Service Agreement as per Exhibit E. Exhibit
E will be negotiated later.
11. TRAINING AND DOCUMENTS
Aspect personnel shall be made available free of charge for a
reasonable number of training sessions reasonably required by Drager
with respect to the sales and application know-how, the maintenance,
repair or replacement of the Products, or parts therefore.
Aspect will supply Drager free of charge with a reasonable quantity of
technical, sales and application materials for internal purposes in
English and German (if available) such as manuals and other technical
materials relating to the Aspect BIS Module Kits and Aspect's BIS
Sensors. Aspect will supply Drager at cost price with a reasonable
quantity of catalogues and literature relating to the Aspect BIS Module
Kits and Aspect's BIS Sensors.
<PAGE> 10
Drager/Aspect Product Agreement
20.04.99
- 10 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
Drager agrees to provide, at its own expense, and subject to Aspect's
prior written approval, translation and printing of technical, sales,
operation and service materials in the language(s) commonly used in the
areas where Drager will sell the Products.
Drager Lubeck will coordinate training and flow of information for all
Drager participants. Training will be held in English language.
12. REPLACEMENT PARTS
Subject to Exhibit E, Aspect agrees to supply Drager with replacement
parts for the Aspect BIS Module Kits sold hereunder for a period of ten
(10) years after the date of the last sale of Aspect BIS Module Kits by
Aspect to Drager hereunder. Prices for the replacement parts will be
set by Aspect in accordance with Clause 3. Drager shall make payment of
the replacement parts supplied hereunder within thirty (30) days from
the date of invoice.
13. PATENT INDEMNITY
13.1 (a) Except as provided below, Aspect shall defend and indemnify Drager
from and against any damages, liabilities, costs and expenses
(including reasonable attorneys' fees) arising out of any claim that
the Aspect BIS Module, the Aspect BIS Sensor or the [**] infringe a
valid patent or copyright or misappropriates a trade secret of a third
party, provided that (i) Drager shall have promptly provided Aspect
written notice thereof and reasonable cooperation, information, and
assistance in connection therewith, and (ii) Aspect shall have sole
control and authority with respect to the defense, settlement, or
compromise thereof. Should any Product become or, in Aspect's opinion,
be likely to become the subject of an injunction preventing its use as
contemplated herein, Aspect may, at its option, (1) procure for Drager
the right to continue using such product, (2) replace or modify such
product so that it becomes non-infringing, or, if (1) and (2) are not
reasonably available to Aspect after consultation in good faith with
Drager, then (3) terminate Drager's rights to the allegedly infringing
product and refund to Drager the amount which Drager has paid to Aspect
for such products which are in the possession of Drager or its
subdistributors. Drager will immediately inform Aspect as soon as
Drager becomes aware of any threatened or actual liability claim by a
third party relating to the Aspect BIS Module, the [**] and the Aspect
BIS Sensor.
<PAGE> 11
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
(b) Aspect shall have no liability or obligation to Drager hereunder
with respect to any patent, copyright or trade secret infringement or
claim thereof based upon (i) use of the Products by Drager in
combination with devices or products other than the Drager Workplace,
(ii) use of the Products in an application or environment for which
such Products were not designed or contemplated, (iii) modifications,
alterations or enhancements of the Products not created by or for
Aspect, or (iv) any claims of infringement of a patent, copyright or
trade secret in which Drager or any affiliate of Drager has an
interest. Drager shall indemnify and hold Aspect harmless from all
costs, damages and expenses (including reasonable attorneys' fees)
arising from any claim enumerated in clauses (i) through (iv) above,
provided that (i) Aspect shall have promptly provided Drager written
notice thereof and reasonable cooperation, information, and assistance
in connection therewith, and (ii) Drager shall have sole-control and
authority with respect to the defense, settlement or compromise
thereof. Aspect will immediately inform Drager as soon as Aspect
becomes aware of any threatened or actual liability claim by a third
party relating to Clause (iv) above.
(c) the foregoing states the entire liability of the Parties with
respect to infringement of patents, copyrights and trade secrets by the
Products or any part thereof or by their operation.
13.2 The obligation of the Parties hereto as set forth in this Clause 13
shall continue notwithstanding the termination of this Agreement.
14. TRADEMARK
Any Drager-BIS-Module or [**] sold by Drager under this Agreement shall
bear the trademark of Drager.
Drager is required to mark the Drager-BIS-Module and [**] additionally
to the Drager trademark with the Aspect BIS(TM) trademark as approved
by Aspect and in accordance with the following provisions:
(a) Ownership. Drager acknowledges and agrees that Aspect is the sole and
exclusive owner of all right, title and interest in and to the
following trademarks (the "Aspect Trademarks"): "Aspect", "BIS", "BIS
Sensor".
Drager recognizes the value of the Aspect Trademarks and the good will
associated with the Aspect Trademarks. Drager agrees that its use of
the
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Aspect Trademarks and any good will arising therefrom shall inure to
the benefit of Aspect. Nothing contained herein shall create, nor shall
be construed as an assignment of, any right, title or interest in or to
the Aspect Trademarks to Drager, other than the grant of a license in
Section 14(c) below; it being acknowledged and agreed that all other
right, title and interest in and to the Aspect Trademarks is expressly
reserved by Aspect. Drager shall keep the Aspect Trademarks free from
all liens, mortgages or other encumbrances. Drager agrees that it will
not attack or otherwise challenge the title, validity or any other
rights of Aspect in or to the Aspect Trademarks.
(b) Notice. All Products that use the Aspect Trademarks shall be
accompanied, where reasonable and appropriate, by a proprietary notice
with respect to Aspect consisting of the following elements:
1. The statement "[insert trademark(s)] is a proprietary trademark(s)
of Aspect."
2. Drager will include the "(TM)" or "(R)" symbol, as instructed by
Aspect, a reasonable time before the first prominent use of the Aspect
Trademark in the Products.
3. Drager shall reproduce copyright and trademark notices of Aspect in
the relating documents.
(c) License. Aspect hereby grants to Drager a nonexclusive, worldwide,
royalty-free license (without the right to sublicense) to use the
Aspect Trademarks to designate and promote Products. Drager shall have
no other right to use, display or utilize the Aspect Trademarks for any
other purpose or in any other manner.
(d) Quality Standards. Upon reasonable notice and request, Aspect may
inspect copies of the Products, advertising and promotional materials
on which the Aspect Trademarks are used so that Aspect may monitor
compliance with this Agreement. Quality standards are further described
in Exhibit D to this Agreement.
(e) Protection and Infringement. Drager agrees to cooperate with and assist
Aspect in obtaining, maintaining, protecting, enforcing and defending
Aspect proprietary rights in and to the Aspect Trademarks. In the event
that Drager learns of any infringement, threatened infringement or
passing-off of the Aspect Trademarks, or that any third party claims or
alleges that the Aspect Trademarks infringe the rights of the third
party or are otherwise liable to
<PAGE> 13
Drager/Aspect Product Agreement
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cause deception or confusion to the public, Drager shall be required to
notify Aspect giving the particulars thereof, and Drager shall provide
necessary information and assistance to Aspect in the event that Aspect
decides that proceedings should be commenced.
(f) Termination. In addition to the termination rights set forth in Section
21 hereof, in the event that Drager is in material breach of any
provision of this Section 14, Aspect may, upon 30 days written notice,
terminate the license granted in Section 14(c) if Drager does not cure
such breach or default within such 30-day period. The parties recognize
that curing such breach or default may require development of a new
version of the Product. If this is the case, then Drager will be deemed
to have cured such breach or default if, within the 30-day cure period,
Drager presents to Aspect a plan for revision of the Product that will
cure such breach or default, such plan is reasonably acceptable to
Aspect, and such revision is released and distributed within three
months following written notice of such breach or default.
In addition to the provisions of Section 21 hereof, upon termination of
the license granted in Section 14(c), or upon termination of this
Agreement, for whatever cause except Sections 21.5, 21.6 and 21.7:
1. Drager shall immediately cease and desist from any further use
of the Aspect Trademarks and any trademarks confusingly
similar thereto, either directly or indirectly;
2. All rights in the Aspect Trademarks granted to Drager
hereunder shall immediately revert to Aspect;
3. In the event that this Agreement is terminated for any reason
other than a material breach or material default by Drager,
Drager shall have a period of 30 days thereafter to dispose of
all of the unsold Products bearing the Aspect Trademarks and
advertising and promotional materials relating thereto which
had been completed by it prior to such termination, provided
such Products and materials were in the process of manufacture
more than 30 days before such termination.
<PAGE> 14
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
15. PRODUCT RECALL PROGRAM
In the event of any recall of the Product by Aspect or required by
Drager for safety or efficacy reasons resulting from Aspect's failure
to supply any BIS Module Kits, Aspect BIS Sensors, or [**] that (1)
conform in all material respects to the specifications set forth in
Exhibit A or (2) are free from defects in workmanship and materials,
Aspect agrees to repair or replace all recalled Products previously
supplied to Drager at no expense to Drager. Aspect also agrees to
consult with Drager to establish a reasonable process for managing the
recall. Drager will maintain all necessary sales records to facilitate
the recall.
16. PRODUCT LIABILITY
16.1 Aspect will indemnify, protect, and save Drager harmless from all
claims, demands, suit, or actions for damages to property or person
which may be sustained by any third party, and which are caused by any
defect or deficiency in the design or manufacture of any of the
Products sold to Drager under this Agreement.
The foregoing indemnity shall survive the expiration or termination of
this Agreement, but Aspect shall not be responsible for any loss or
damage caused by acts or omissions of Drager. Aspect shall have no
liability or responsibility of any kind to Drager under this Clause 16
for any claims, demands, suits, or actions unless Aspect shall have
been notified within 30 days time following notification to Drager of
any such claims, demands, suits, or actions and shall have an adequate
opportunity to defend. Aspect shall have the sole control and authority
with respect to the defense, settlement or compromise thereof.
Should Drager desire to have its own counsel participate in any such
action or suit, the cost of such counsel shall be borne exclusively by
Drager. The obligation of the Parties set forth in this Clause 16 shall
continue notwithstanding the termination of this Agreement.
<PAGE> 15
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
16.2 Drager will indemnify, protect, and save Aspect harmless from all
claims, demands, suit, or actions for damages to property or person
which may be sustained by any third party and which are caused by any
defect or deficiency in the design or manufacture of the Drager
Workplace or of that portion of the Drager-BIS-Module developed or
manufactured by Drager, or which relate to the failure of Drager to
incorporate the Aspect BIS Module Kit within the Drager-BIS-Module in
accordance with the technical information provided by Aspect, or
Drager's activities in connection with use or sale of the Products.
The foregoing indemnity shall survive the expiration or termination of
this Agreement, but Drager shall not be responsible for any loss or
damage caused by acts or omissions of Aspect. Drager shall have no
liability or responsibility of any kind to Aspect under this Clause 16
for any claims, demands, suits, or actions unless Drager shall have
been notified within [**] time following notification to Aspect of any
such claims, demands, suits, or actions and shall have an adequate
opportunity to defend. Drager shall have sole control and authority
with respect to the defense, settlement or compromise thereof.
Should Aspect desire to have its own counsel participate in any such
action or suit, the cost of such counsel shall be borne exclusively by
Aspect. The obligation of the Parties set forth in this Clause 16 shall
continue notwithstanding the termination of this Agreement.
17. [**] PROJECT
17.1 It is Drager's intention that the Product will become the [**] for
monitoring the level of hypnosis in Drager anesthesia Workplaces and it
is [**] of the [**]. However, Drager shall be free to provide
alternative technology in the event that
(i) necessary regulatory approvals for the Products are withdrawn
and will not be granted during a [**] period after withdrawn,
(ii) approvals have not been granted within a period of [**]
following the completion of the Drager-BIS-Module and
submission of the necessary requests for approvals to the
appropriate regulatory agencies
(iii) Aspect is unable to supply Aspect BIS Module Kits in
accordance with the specifications and is unable to
reinstitute supply within [**] days of written notification
<PAGE> 16
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
(iv) Aspect's market share worldwide for monitoring the effect of
anesthesia on the brain with BIS [**].
(v) Aspect stops or reduces marketing and product improvement
activities materially below the level currently performed.
17.2 Drager may offer in Drager anesthesia workplaces and in other Drager
products complementary parameters [**] to Aspect's Bispectral Index.
Any parameter claimed to be a measure of the hypnotic effect of
anesthetics based on processing of the continuous EEG, is considered to
be [**] will only be [**] to the BIS.
Notwithstanding the foregoing, Drager is free to offer EEG parameters
based on the continuous EEG such as median frequency, spectral edge
frequency, compressed spectral array (CSA) and/or density spectral
array (DSA), and may also offer evoked potentials, in addition to the
BIS.
17.3 In the event that the Aspect's BIS Module Kit sold to Drager contains
applications unique to Drager Aspect shall for the term of this
Agreement and for [**] after its termination refrain from selling
similar products to any third party.
18. FORCE MAJEURE
Neither Aspect nor Drager shall be liable for any delay in, or failure
of, performance hereunder due to any contingency reasonably beyond its
control, rendering performance commercially unreasonable including, but
not limited to, an act of God, war (declared or undeclared),
mobilization, riot, strike, labor dispute, fire, flood, shortages, or
failure or delays of energy, materials, supplies or equipment,
unavailability of transportation, goods or services, transportation
embargoes or delays, or breakdowns in machinery or equipment,
governmental restrictions or actions but shall not include any royalty
or other payment imposed or agreed to by Aspect or Drager resulting
from a third party claim of intellectual property right infringement or
violation as further described in Clause 13; provided, however, that
the Party affected shall exert its reasonable best efforts to eliminate
or cure or overcome any of such causes and to resume performance of its
covenants.
<PAGE> 17
Drager/Aspect Product Agreement
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19. SECRECY
19.1 If marked as "Confidential Information", Drager and Aspect are each
obliged to preserve in strict confidence any trade secrets,
confidential information and technical information of the other Party
and to refrain from disclosing, during the period of this Agreement and
any time after expiration of this Agreement, any such information to
third parties. Notwithstanding the foregoing, information which is
orally or visually disclosed to the recipient by the disclosing party,
or is disclosed in writing without an appropriate letter, proprietary
stamp or legend, shall constitute Confidential Information if the
disclosing party, within thirty (30) days after such disclosure,
delivers to the recipient a written document or documents describing
such Confidential Information and referencing the place and date of
such oral, visual or written disclosure and the names of the employees
or officers of the recipient to whom such disclosure was made.
Both Parties represent and warrant that they have exercised, and will
continue to exercise the same standard of due care in hiring,
supervising and selecting those employees to whom they disclose such
confidential information, so that the confidentiality of all such
information is protected. No such confidential information disclosed by
either party to the other in connection with this Agreement shall be
disclosed to any person or entity other than the recipient's employees
and contractors directly involved with the recipient's use of such
information who are bound by written agreement to protect the
confidentiality of such information, and such information shall be
otherwise protected by the recipient from disclosure to others with the
same degree of care accorded to its own proprietary information.
19.2 The Parties' obligation of non-disclosure shall not apply with respect
to such information, which
(1) is already known to the receiving Party before disclosure by
the divulging Party, providing that the receiving Party has
written records to substantiate its knowledge; or
(2) is in the public domain at the time of disclosure to the
receiving Party or, after such disclosure, enters into the
public domain through no fault of the receiving Party;
(3) is independently developed by the receiving Party without
reference to or reliance on the Confidential Information; or
<PAGE> 18
Drager/Aspect Product Agreement
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(4) is lawfully disclosed to the receiving Party by a third party
under circumstances permitting its unrestricted disclosure by
the receiving party.
Upon termination of this Agreement, each party shall promptly deliver
to the other all confidential information of the other party in the
possession or control of such party and all copies thereof. The
obligations under this Section 19 shall continue for both parties for a
period of 3 years after delivery by Aspect to Drager of the last
Product under this Agreement.
20. RELATIONSHIP BETWEEN THE PARTIES
During the term hereof, the relationship of the Parties is that of
seller (Aspect) and buyer (Drager).
Nothing herein contained shall be deemed to authorize or empower either
Party, its affiliates, its agents or employees, to act as agent for the
other Party or conduct business in the name, or for the account of the
other Party or any of its affiliates or otherwise bind it or them in
any manner.
21. TERM AND TERMINATION
21.1 This Agreement shall come into force when it has been duly signed by
both Parties and shall remain in force until December 31, 2005, unless
earlier terminated in accordance with the provisions hereof.
It shall be automatically renewed thereafter for additional periods of
one (1) calendar year each unless one Party gives at least twelve (12)
calendar months prior to the end of the original term hereof and each
one (1) year period thereafter a written notice to the other Party of
its intention to terminate. First notice of termination may not be
given until [**].
<PAGE> 19
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
21.2 Aspect shall have the right to terminate this Agreement, effective upon
the delivery of written notice to Drager, in the event Drager fails to
make any payment when due to Aspect pursuant to this Agreement or any
invoice for Products. Aspect will [**] to Drager after Drager's receipt
of Aspect's written demand for payment, provided Aspect has submitted
proof of delivery in order to rectify any payment problem or
discrepancy and has stated that the Agreement will be terminated if
Drager fails to make the due payment within the [**].
21.3 Furthermore, either Party may terminate this Agreement if the other
Party commits any material breach of its obligations hereunder (other
than payment defaults addressed in Clauses 21.2 hereof) and such breach
is not resolved within [**] after written notice thereof is given to
the Party in breach of this Agreement.
21.4 Should Drager or Aspect at any time during the period of this Agreement
be adjudged bankrupt or insolvent, or have a Receiver appointed in
respect of its assets or shall make any arrangement or composition with
its creditors or shall be wound up, whether voluntarily or
compulsorily, or make a general assignment for the benefit of
creditors, then in such event the other Party may, at its option,
terminate this Agreement effective upon giving notice thereof in
writing to the other. In the event either Drager or Aspect exercises
this option, said Party shall incur no liability or obligation with
respect to said termination.
21.5 In the event of the merger, consolidation or sale of substantially all
assets of Aspect to a competitor of Drager, Drager may, at its option,
terminate Section 17 of this Agreement effective upon giving notice
thereof in writing to Aspect. In the event Drager wishes to exercise
this option, Drager shall do so within 30 days following written notice
from Aspect of the merger, consolidation or sale of substantially all
assets of Aspect, and neither Aspect (or its successors) or Drager
shall incur liability or obligation with respect to said termination.
In the event of the merger, consolidation or sale of substantially all
assets of Drager to a company outside of the Drager-Group, Aspect may,
at its option, terminate this Agreement effective upon giving notice
thereof in writing to Drager. In the event Aspect exercises this
option, Aspect shall do so within 30 days following written notice from
Drager of the merger, consolidation or sale of substantially all assets
of Drager, and neither Drager (or its successors) or Aspect shall incur
liability or obligation with respect to said termination.
<PAGE> 20
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- 20 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
21.6 Subject to the second paragraph of this Section 21.6, in the event of
termination the Parties agree that Drager shall have the right to
purchase the Aspect BIS Module Kit and the [**] for [**] following
termination of the Agreement or Aspect BIS Sensors for [**] following
termination of the Agreement.
In the event of termination of the Agreement as a result of a material
breach of the Agreement by Drager in accordance with Sections 21.2 or
Section 21.3, Drager shall not be permitted to continue to purchase
[**] Aspect BIS Sensors beyond [**] termination of the Agreement. If
Aspect intends to [**] of the [**] the Parties shall [**] in good
faith.
21.7 In the event of termination, the Parties further agree to finalize
current sales projects. A complete list of these sales projects has to
be exchanged by the Parties no later than fourteen (14) days after the
termination.
21.8 Due to the fact that some Exhibits of this Agreement will be negotiated
later each Party shall have the right to terminate this Agreement if
the parties cannot reasonably agree on the content of one of these
Exhibits.
22. MISCELLANEOUS
22.1 This Agreement shall not be assignable either in whole or in part
without the prior written consent of the other Party except, subject to
Section 21.5, to a party that acquires all or substantially all of
either Parties' business by merger, sale of assets, or otherwise.
22.2 Subject to Clause 21.1 hereof, this Agreement shall inure to the
benefit of and be binding upon the Parties hereto.
22.3 The headings used herein are for ease of reference only and are not to
be used in interpretation or construction of this Agreement.
22.4 The provisions of this Agreement and its Exhibits shall not be
extended, varied, changed, modified or supplemented other than by
agreement in writing signed by the Parties hereto.
22.5 In the event of any inconsistency or conflict between the provisions of
this Agreement and any Purchase Order or other document, the provisions
of this Agreement shall prevail.
<PAGE> 21
Drager/Aspect Product Agreement
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- 21 -
22.6 All notices or other communications which shall or may be given
pursuant to this Agreement shall be in writing in the English language
and shall be delivered by personal delivery, certified mail, or telefax
at the address set forth below, or at such other address as such party
may hereafter designate in writing as the appropriate address for the
receipt of such notice.
To Aspect at:
Aspect Medical Systems, Inc.
2 Vision Drive
Natick
MA 01760-2059
USA
Tel.: 508-647-2072
Fax: 508-647-2059
Attention: J.Breckenridge Eagle
To Drager at:
Drager Medizintechnik GmbH
Moislinger Allee 53 - 55
D-23558 Lubeck
Federal Republic of Germany
Tel.: 451-882-2295
Fax: 451-882-2793
Attention: Business Unit Anaesthesia, Swen Grunitz-Post
All notices shall be deemed served on the day on which personally
served, or of by certified mail, or telefax on the date of actual
receipt.
21.7 The waiver by either Party hereto of any default hereunder or of any
breach of any covenant, agreement or condition contained herein shall
not be construed to constitute a waiver of any other default or breach
hereof whether similar or otherwise.
22.8 If any provision of this Agreement should be held unenforceable, or
illegal with respect to any jurisdiction, it (i) shall be deemed
severable from the other provisions which shall remain valid and
enforceable; and (ii) shall remain in effect in other jurisdiction
where such provision is otherwise enforceable and legal.
<PAGE> 22
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This Agreement may be executed simultaneously in multiple counterparts,
each of which shall be deemed an original and all of which together
shall constitute one and the same agreement.
22.10 Neither party shall have the right to sublicense any of the rights or
licenses granted under this agreement outside the company group without
the other's prior written consent.
21.11 Compliance with Laws. Drager shall comply with all laws, legislation,
rules, regulations, governmental requirements and industry standards
with respect to the Products, and the performance by Drager of its
obligations hereunder, existing in any jurisdiction into which Drager
directly or indirectly distributes the Products. Aspect shall inform
Drager if export of Aspect's BIS Module Kit or Aspect's Sensors are
restricted to any country or require certain permission in any country.
21.12 IN THE EVENT THAT U.S. LAW IS APPLIED TO THIS AGREEMENT, ASPECT OR
DRAGER SHALL NOT BE LIABLE FOR ANY LOSS OF DATA, LOSS OF PROFITS OR
LOSS OF USE OF THE PRODUCTS OR FOR ANY INDIRECT DAMAGES OF ANY KIND
(WHETHER SPECIAL, INCIDENTAL, CONSEQUENTIAL OR OTHER INDIRECT DAMAGES)
IN CONNECTION WITH THE USE OR PERFORMANCE OF THE PRODUCTS.
23. APPLICABLE LAW
This Agreement shall be governed, construed and interpreted in
accordance with the laws of Switzerland, without regard to its conflict
of laws principles.
The United Nations Convention on contracts for the International Sale
of Goods shall not apply.
24. DISPUTE SETTLEMENT, PLACE OF JURISDICTION
24.1 The Parties shall try to settle any dispute arising in connection with
this present Agreement amicably. In case of a local sales conflict a
task force of Drager and Aspect consisting of the persons named under
Clause 22.6 will take care of such dispute settlement.
24.2 In the event disputes cannot be settled amicably according to Clause
24.1, in connection with this present Agreement shall be exclusively
and finally settled by the courts of Zurich.
Natick, ......April 29, 1999..... Lubeck, .......May 5, 1999..............
J. Breckenridge Eagle [Illegible]
................................. ........................................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 23
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT A
of the Drager/Aspect Product Agreement
between Aspect Medical Systems, Inc.
and Drager Medizintechnik GmbH
Products
1.1 The Drager-BIS-Module will incorporate Aspect's BIS Module Kit.
Aspect's BIS 'Module Kit' is designed specifically for OEM applications
and allows the integration of Aspect's BIS monitoring technology into
OEM equipment. The BIS Engine will interface to the patient via the
Aspect BIS sensor and to the OEM equipment utilizing a serial (RS-232)
3-wire interface and the necessary power connections.
The BIS Module Kit consists of a Digital Signal Converter (DSC-2) that
is placed in proximity to the patient and a small circuit board that
resides in the OEM equipment. The DSC-2 is a small (palm sized)
front-end to the BIS Engine circuit board that provides the patient
interface and performs the high performance analog to digital
conversion of the EEG signals. The EEG signals are transmitted in
digital format from the DSC-2 to the BIS engine circuit board via a 12
foot cable that is hard wired connected at the DSC-2.
The BIS Engine circuit board measures 3 x 4 inches. This board performs
digital signal processing on the digitized EEG signal and outputs the
Bispectral Index to the OEM system via the RS-232 serial connection.
The board is constructed using double sided surface mount techniques.
The connections to the BIS Engine circuit board are a serial interface
(RS-232), power, and DSC connections.
<PAGE> 24
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and Exchange Commission. Asterisks denote omissions.
- 24 -
Detailed Technical Specifications:
Digital Output: [**]
Main Parameters: [**]
Electrical Safety: [**]
Power: [**]
Artifact Rejection: [**]
Bispectral Index: [**]
Digital Signal Converter (DSC-2)
Description: [**] to the [**]
Weight: [**]
Dimensions: [**]
Cable Length: [**]
BIS Engine PCB
Physical: [**]
Processing Power: [**]
Software Upgrades
[**] software is stored in [**]. Software upgrades can be accomplished
[**] via the [**].
Serial Identifier
Each [**] serial identifier. This allows for [**].
<PAGE> 25
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Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
[Graphic of Aspect BIS Module Kit and Sensor]
1.2 In addition to the main parameters indicated in Exhibit A, Section 1.1,
the Aspect BIS Module Kit shall also provide the [**].
When the Drager-BIS-Module is in use in a Drager Workplace System,
there will be a possibility to display each of the following [**] as
well as the [**] in the [**] when used for [**] and in [**].
1.3 Aspect shall ensure that all BIS enhancements that Aspect develops for
Aspect's stand alone BIS monitor will be available in the BIS Module
Kit sold to Drager as appropriate and as soon as reasonably possible.
Drager will agree to distribute a modified BIS Sensor in the event
Aspect determines that an enhancement to the BIS Module Kit requires
the use of a modified Sensor. All conditions, prices and so on won't be
changed for the new sensors. If this occurs, and if [**] in accordance
with Section 1.5 of Exhibit A, [**] to provide a [**] of the [**] for
the [**] use of [**]. Possible additional costs will be incorporated in
the transfer price for the [**] and reasonable volumes will be
required.
In the event that Aspect develops a different product involving a
different type of index, patient sensor, or application, Aspect and
Drager will develop a mutually-satisfactory new, or amended, agreement.
1.4 For integration into a Drager Workplace, Drager will design an Drager
Workplace specific Drager-BIS-Module. Aspect will grant all reasonable
help to Drager designing the Drager-BIS-Module.
1.5 On the [**]. The possibility to use [**] the original Aspect BIS
monitor will be negotiated later. Possible additional costs [**] will
be incorporated in the transfer price and [**] will be required.
1.6 Both Parties agree to work out a common technical requirement
specification for the Products. The latest version of this technical
requirement specification signed by both Parties will be the
specification of the Product to be manufactured by Aspect for Drager.
Natick, .....4/29/99............. Lubeck, .........May 5, 1999 ...........
J. Breckenridge Eagle [illegible]
................................. ........................................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 26
Drager/Aspect Product Agreement
20.04.99
- 26 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
of the Drager/Aspect Product Agreement
between Aspect Medical Systems, Inc.
and Drager Medizintechnik GmbH
PRICES AND DISCOUNTS
The price for one Aspect BIS Module Kit is US$[**].
The components consists of a [**] and [**] and a [**] and [**].
Drager shall have the right to manufacture on a royalty free basis the
circuit board based on design specifications provided by Aspect. In
this case the price for the remaining components is US$[**] for one
Aspect BIS Module Kit. The Parties will agree in the future on the
terms of a manufacturing license.
The price of the Aspect BIS Module Kit always includes 5 Sensors.
Drager agrees to supply these Sensors together with each
Drager-BIS-Module to its customers.
The Parties agree that Aspect will grant to Drager an additional
discount on the price of the Aspect BIS Module Kit depending on a
certain yearly quantity : Aspect will grant an additional discount of
[**] for a yearly quantity of more than [**] Aspect BIS Module Kits.
Aspect [**] the [**] subsequent to the date of this agreement, for
products sold by Aspect [**] to other customers of Aspect [**]. Aspect
will provide Drager with a [**] to [**] that [**] by other Aspect
customers.
The price to Drager for the Aspect-BIS-Sensor will be as follows:
The transfer price to Drager for the Aspect BIS Sensor will vary
between[**] of the List Price of the Aspect BIS Sensor in the United
States. This is equivalent to a discount off of Aspect's List price in
the United States for the BIS Sensor between [**].
<PAGE> 27
Drager/Aspect Product Agreement
20.04.99
- 27 -
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
As of January 1, 1999, the List Price for Aspect's BIS Sensor is
US$15.00 The actual amount of the discount off the U.S. List Price will
depend upon the volume of Aspect BIS Sensors shipped by Drager for use
with Drager-BIS-Modules. Prior to the shipment by Drager of the first
[**]Drager-BIS-Modules, the discount available to Drager for purchase
of the Aspect BIS Sensors will be set at [**] of Aspect's List Price
for the BIS Sensor in the United States. Following the shipment of the
first [**] Drager-BIS-Modules, the discount available to Drager will
depend upon the volume of Aspect BIS Sensors shipped each quarter
divided by the number of documented Drager-BIS-Modules installed minus
the first [**] Drager-BIS-Modules installed. Using this formula, the
Aspect BIS Sensor price schedule is as follows:
Sensor Shipments per module per quarter-Note 1 Discount off US List price
- ---------------------------------------------- --------------------------
up [**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
or more [**] [**]
Note 1: Sensor consumption rate calculated based on total Aspect BIS Sensors
shipped during the quarter divided by the average Drager-BIS Module installed
base during the quarter minus [**].
In the event that Drager requests that Aspect develop the Drager-BIS-Sensor,
Aspect will sell Drager-BIS-Sensors to Drager in accordance with the same
discount schedule as above, with possible additional costs as noted in Section
1.5 of Exhibit A.
According to Clause 2.1 of the Agreement Drager shall not distribute Sensors in
the USA. Therefore, Aspect will pay a commission to Drager of [**] of the
amounts paid by the customer for each Sensor shipped for use with a
Drager-BIS-Module in the USA.
Natick, .......4/29/99 ............ Lubeck, ......May 5, 1999 ......
J. Breckenridge Eagle [illegible]
................................... .................................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 28
Drager/Aspect Product Agreement
20.04.99
- 28 -
EXHIBIT C
of the Drager/Aspect Product Agreement
between Aspect Medical Systems, Inc.
and Drager Medizintechnik GmbH
TESTING SPECIFICATIONS FOR THE PRODUCTS
(to be negotiated later)
Natick, .......4/29/99 ................ Lubeck, ......May 5, 1999 .......
J. Breckenridge Eagle [illegible]
....................................... ..................................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 29
Drager/Aspect Product Agreement
20.04.99
- 29 -
EXHIBIT D
of the Drager/Aspect Product Agreement
between Aspect Medical Systems, Inc.
and Drager Medizintechnik GmbH
QUALITY ASSURANCE AGREEMENT
(to be negotiated later)
Natick, .......4/29/99 ................. Lubeck, ......May 5, 1999 ....
J. Breckenridge Eagle [illegible]
........................................ ...............................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 30
Drager/Aspect Product Agreement
20.04.99
- 30 -
EXHIBIT E
of the Drager/Aspect Product Agreement
between Aspect Medical Systems, Inc.
and Drager Medizintechnik GmbH
SERVICE AGREEMENT
(to be negotiated later)
Natick, .......4/29/99 ................. Lubeck, ......May 5, 1999 ....
J. Breckenridge Eagle [illegible]
........................................ ...............................
Aspect Medical Systems, Inc. Drager Medizintechnik GmbH
<PAGE> 1
Aspect Medical Systems, Inc.
has requested that the marked portions of this agreement be granted confidential
treatment pursuant to Rule 406 under the Securities Act of 1933, as amended.
Exhibit 10.7
ASPECT MEDICAL SYSTEMS, INC.
OEM DEVELOPMENT AND PURCHASE AGREEMENT
Agreement dated this Sixth day of August, 1999 , by and between Aspect
Medical Systems, Inc, a Delaware corporation with its principal offices located
at Two Vision Drive, Natick, Massachusetts ("Aspect") and Hewlett-Packard GmbH
("HP"), a German corporation with its principal offices located in Germany at
71034 Boblingen, Herrenberger Str. 110-140, for the purchase and/or license by
HP of products under the terms and conditions contained in this Agreement.
1. BACKGROUND.
(a) Aspect is a developer, manufacturer and distributor of medical
devices, equipment, accessories and related hardware, software
and related products and accessories.
(b) HP is a manufacturer of medical equipment, in particular of
multiparameter patient monitors.
(c) Aspect and HP intend to make available to HP customers a solution
to integrate Aspect's BIS technology with HP's patient monitors.
In a first phase of the cooperation Aspect and HP will develop
appropriate components in a joint project (the "BIS Project").
In the second phase of the cooperation, HP intends to purchase
and/or license specified products for integration with its own
systems and products. Aspect agrees to sell and/or license to HP
the products described below, subject to the terms and conditions
contained in this Agreement.
(d) It is the intention of both Parties to negotiate a separate,
independent distribution agreement (the "Distribution Agreement")
under which HP will also sell the Aspect 2000 BIS Monitor and
Aspect BIS Sensors in certain geographies.
2. DEFINITIONS.
"Aspect's Bispectral Index" or "BIS" is Aspect's proprietary processed
EEG parameter that measures the hypnotic effects of anesthetic and
sedative agents on the brain during surgery.
"HP Patient Monitors" means a family of multi-parameter modular
patient monitoring systems manufactured by or for HP. When the HP BIS
System is complete, HP Patient Monitors will display BIS data
(waveforms, numerics, status info), and provide setup and operation
information (user interface), alarming, and network connectivity.
"HP BIS System" is the sum of all components involved in integrating
the BIS with HP Patient Monitors.
1
<PAGE> 2
"HP BIS Module" is a standard size parameter module for HP Patient
Monitors to convert the data as delivered by the HP BIS Engine from
the BIS Protocol to the HP Patient Monitor's internal format.
"Module Cable" is a cable used to connect the HP BIS Engine to the HP
BIS Module.
"DSC Cable" is a cable used to connect the Digital Signal Converter to
the HP BIS Engine.
"HP BIS Engine" is the processing unit for deriving the BIS data from
the raw EEG signal and consists of Aspect's "BIS Engine" board
modified for HP and built into a housing with appropriate connectors
to connect to the DSC Cable and the Module Cable.
"Digital Signal Converter" (or "DSC") is used to amplify the analog
EEG signals as acquired by the BIS sensors and convert it from analog
to digital signals.
"Aspect BIS Module Kit" means the bundle of all components of the HP
BIS System that are developed and manufactured by Aspect and
licensed/sold to HP under this Agreement: DSC, DSC Cable, HP BIS
Engine, and Module Cable.
"Aspect BIS Sensor" means a single use disposable sensor manufactured
by Aspect for use with the Aspect A2000 BIS monitor or with the Aspect
BIS Module Kit and that is required to generate Aspect's Bispectral
Index.
"Sensor Startup Kit" is a set of Aspect BIS Sensors that may be part
of each HP BIS System sale by HP in selected geographies outside North
America.
"A2000" means Aspect's stand-alone BIS monitor for use with the Aspect
BIS Sensor and that generates Aspect's Bispectral Index.
"Aspect Products" means Aspect BIS Module Kits and any other product
that can be ordered by HP as listed in Exhibit A (Aspect Products and
Purchase Prices).
"Software" means Aspect software programs in binary code form which
are designed for use with the Aspect BIS Module Kit.
"BIS Protocol" is Aspect's proprietary communication protocol provided
for purposes of communication between the HP BIS Engine, the HP BIS
Module and HP Patient Monitors
"Documentation" means the BIS Engine Serial Interface Specification.
"Territory" shall mean all countries in which HP is permitted under
this Agreement to distribute Aspect Products.
"Party" or "Parties" shall mean Aspect and HP each individually or
jointly.
2
<PAGE> 3
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3. BIS MODULE DEVELOPMENT PROJECT.
3.1. PROJECT SCOPE
(a) Aspect and HP will be performing activities to develop a HP BIS
System. Aspect will modify Aspect's standard BIS Engine product
described in Exhibit B to create a HP BIS Engine. HP will develop
a HP BIS Module to interface with Aspect's modified BIS Engine.
(b) The following specifications/documents will be created and agreed
upon by both parties prior to completion of Phase 1 of the Module
Development Project:
- Functional Technical Specification (FTS): This is a
specification that defines the interface between the HP BIS
Engine and the HP BIS Module. This document is an HP
specification that is derived principally from
specifications and materials from Aspect.
- System Hazard Analysis: To be performed in Phase 1 of the
project.
- External Specification: Specification describing the HP BIS
Module and the Aspect BIS Module Kit as a system from the
customer's viewpoint.
- Project Plan: The project plan will include a detailed
project schedule, detailed project description, and other
information not included in the FTS.
3.2. PROJECT TIMING
The overall project duration is expected to be approximately [**]. The product
introduction is planned for [**]. The expected major project milestones are
described below:
August, 99 Start Project - Phase 1 - Definition
Dec, 99 Start Phase 2A - Specification
3.3. PROJECT PHASE DESCRIPTIONS
The following phases of the project closely correlate with the standard internal
project phases of the HP development process.
3
<PAGE> 4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
PHASE 1: PROJECT DEFINITION
Phase 1 defines the project at a high level.
The principal technical issues to resolve are the [**] requirements and the [**]
requirements for the [**].
At the end of Phase 1 the following documents are created: External
Specification (preliminary), Functional Technical Specification (preliminary),
an initial Hazard Analysis, and a detailed Project Schedule., In addition, HP
shall create internal Functional Plans, including a development plan,
verification and validation plan, manufacturing plan, marketing plan,and
regulatory plan.
PHASE 2A: SPECIFICATION
In Phase 2A the detailed design specifications are created: External
Specification (Final), Technical Specification (Final), Hazard Analysis (Final)
and definition of Aspect's Qualification Test Procedure (verification and
validation plan for all items identified under the Functional Technical
Specification).
PHASE 2B: DESIGN (IMPLEMENTATION)
The actual electrical, circuit schematics, and mechanical design and
implementation is performed in Phase 2B. The output of Phase 2B is a functional
prototype. This functional prototype is intended to be a faithful representation
of the product, including actual molded materials, electronics and software.
During this phase, the Outgoing Inspection Procedure from Aspect is also
defined.
PHASE 3: VERIFICATION
Design verification testing of software, electronics and mechanical components
is performed in Phase 3. Additionally EMI testing of the system is performed in
this phase of the project. Aspect will perform an [**] of the [**] as a [**]
with the BIS Module.
Clinical field trials are started in Phase 3. It is anticipated that field
trials of the BIS Module System will be conducted in [**] hospitals in Europe
and [**] hospitals in the US. The completion of field trials occurs by the end
of Phase 4.
During this phase, results of the Qualification Tests and Outgoing Inspection
will also be reviewed for all prototypes.
PHASE 4: VALIDATION
The following tasks are accomplished during Phase 4: Software Validation: Formal
validation testing of the BIS Module System.
4
<PAGE> 5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Manufacturing Pilot Build: It is expected that [**] systems will be built, of
which [**] units will be required at the beginning of Phase 3 for clinical field
trials. The systems will be used for clinical trials, engineering test, and for
sales demos. Final Test Procedure: Used to 100% test the Aspect BIS Module Kit
and HP BIS Module as a final test in manufacturing.
3.4 PROJECT MANAGEMENT.
(a) Each party shall appoint a "Project Manager" who oversees and
manages the joint project on a day-to-day basis.
(b) The Project Managers shall meet regularly based on the project
needs to assess the project status and discuss and resolve any
issues or problems. These meetings may be held face-to-face or as
telephone or video conferences.
(c) Both Parties' project teams shall conduct project meetings from
time to time as deemed useful.
(d) Each Party shall bear its own communication and travel costs.
(e) All communication in conjunction with this Agreement shall be
directed to the appropriate person and address as listed in
Exhibit C (Contact Persons/Addresses).
3.5. JOINT RESPONSIBILITIES.
(a) Both Parties will actively work together in performing a joint
Hazard Analysis for the HP BIS System at the beginning of the BIS
Project.
(b) Both Parties will generate a joint External Specification of the
HP BIS System.
(c) The parties will jointly develop and agree on a Verification and
Validation Plan for testing the performance and safety of the
entire BIS System prior to its release to shipment.
(d) The verification and validation of the HP BIS System will be
performed under HP's overall responsibility at HP's Boeblingen
premises. Aspect agrees to support this effort as defined in the
Verification and Validation Plan and as may be required in case
of problems. Verification and validation of Aspect's BIS Module
Kit will be performed by Aspect in Aspect's Natick facility.
After successful validation by HP of the HP BIS System, Aspect
will also validate the HP BIS System output and confirm in a
written certificate that the BIS value as displayed on the HP
Patient Monitor is equivalent to Aspect's BIS implementation.
(e) Both parties will inform each other of any planned change in its
products that may affect compatibility of the HP BIS System
components or the available regulatory approvals. The Change
Notification Agreement Form (attached as Exhibit D) will be used
for this purpose.
5
<PAGE> 6
(f) Both parties will provide each other reasonable engineering
consultation free of charge.
(g) Aspect and HP will provide each other free of charge with certain
number of prototypes and product samples for development,
verification and validation, and getting regulatory approvals.
3.6. HP RESPONSIBILITIES.
(a) HP shall develop the HP BIS Module according to the mutually
agreed Functional Technical Specification and External
Specification at HP's own cost.
(b) HP will take responsibility for the development, design and
performance of the HP BIS Module and for the combination of the
Aspect components (BIS Module Kit) with the HP components (HP BIS
Module, HP Patient Monitor) of the HP BIS System.
3.7. ASPECT RESPONSIBILITIES.
(a) Aspect shall develop the HP BIS Engine, the DSC Cable and the
Module Cable according to the mutually agreed specifications at
Aspect's own cost.
(b) Aspect will take responsibility for the development, design and
performance of the Aspect BIS Module Kit.
(c) Aspect shall make available the BIS Protocol specification to HP
for implementation into the HP BIS Module or otherwise into HP
Patient Monitors.
(d) Aspect will undertake reasonable efforts to maintain backward
compatibility for future versions of the BIS Protocol, however no
guarantee is given.
(e) Aspect will inform HP of future changes to the BIS Protocol as
early as possible and make available such changed BIS Protocol
specification to HP. The Change Notification Agreement Form
(attached as Exhibit D) will be used for this purpose.
Notwithstanding anything to the contrary in the Change
Notification Agreement Form, HP shall not withhold its approval
of any future changes to the BIS Protocol as provided in Section
3.7 (d).
4. PURCHASE AND SALE OBLIGATIONS; LICENSES.
(a) General. Subject to the terms and conditions of this Agreement,
Aspect agrees to sell to HP the Aspect Products listed on Exhibit
A (Aspect Products and Purchase Prices). For these products,
Aspect grants to HP or HP's subdistributors a non-exclusive,
worldwide distribution right for the term of this Agreement. HP
represents and warrants that the components of the Aspect BIS
Module Kits purchased from Aspect under this Agreement shall be
used as components in, incorporated into, or integrated with,
systems and products which HP sells or leases to third-party
users in the regular course of business. HP further certifies
that the components of the Aspect BIS Module Kits will only be
resold, leased, rented, licensed or otherwise transferred to
third parties for use as a part of an HP BIS System or as
replacement parts used in HP BIS Systems.
6
<PAGE> 7
(b) BIS Sensors. Apart from section 4.a., Aspect hereby grants HP the
right to distribute Aspect BIS Sensors solely to HP's customers
outside North America and solely for use with HP BIS Systems.
(c) Sensor Startup Kit. Aspect hereby grants HP the right to sell the
Sensor Startup Kit for use with the HP BIS System in geographies
outside North America.
(d) Software License. Aspect hereby grants to HP a non-exclusive and
non-transferable worldwide license, without the right to
sublicense (except to purchasers of HP BIS Systems and to HP's
subdistributors), during the term of the Agreement to use the
Software and related Documentation provided by Aspect solely in
connection with operation of the components of Aspect BIS Module
Kit in the HP BIS System. Thereafter, Aspect grants to HP a right
to use the Software and related Documentation used in conjunction
with the HP BIS Systems being sold by HP on the date of
termination with respect to service and support of installed HP
BIS Systems for a period of 10 years, after termination of the
Agreement. All rights granted to HP customers to use the HP BIS
System shall be irrevocable as long as such customers are in
compliance with the terms of use for such HP BIS Systems and does
not cure such non-compliant use within 90 days of being notified.
HP shall not disclose, furnish, transfer, distribute or otherwise
make available the Software, the Documentation or any portion
thereof in any form to any third party (other than to purchasers
of HP BIS Systems and to HP's subdistributors) and shall not
duplicate the Software, the Documentation or any part thereof
(other than for HP's internal use). Title to and ownership of and
all proprietary rights in or related to the Software, the
Documentation and all partial or complete copies thereof shall at
all times remain with Aspect or its licensor(s). This Agreement
shall not be construed as a sale of any rights in the Software,
the Documentation, any copies thereof or any part thereof. All
references in this Agreement to sale, resale or purchase of the
BIS Module Kits or the components thereof, or references or like
effect, shall, with respect to the Software and the Documentation
mean licenses or sublicenses of the Software and the
Documentation pursuant to this Section 4. HP shall not
disassemble, decompile or otherwise reverse engineer the Software
or any part thereof, except if Aspect is required under
applicable law to permit HP to reverse engineer any Software. In
such event, HP may reverse engineer the Software but only to the
extent Aspect is required to permit such reverse engineering. HP
shall retain and shall not alter or obscure any notices, markings
or other insignia which are affixed to the Software, the
Documentation or any part thereof at the time it receives such
Software or such Documentation.
(e) BIS Protocol License. Aspect hereby grants to HP a non-exclusive,
worldwide, irrevocable, royalty-free license to implement
Aspect's proprietary BIS Protocol and sell it to HP's end
customers as part of its products for use solely with the Aspect
BIS Module Kit.
7
<PAGE> 8
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
5. ROYALTIES.
(a) For each BIS Module Kit that HP is purchasing from Aspect HP
shall pay a purchase price for the BIS Module Kit and a royalty
fee as specified in Exhibit A (Aspect Products and Purchase
Prices).
(b) Within 30 days after the Effective Date, HP shall pay Aspect an
amount of [**] US$ as prepaid royalties, which will be credited
against the actual royalty component of the purchase price that
is due for the sale of the first [**] Aspect BIS Module Kits. It
is understood that [**] of this amount to [**] in connection with
the [**].
(c) In the event that the Agreement is terminated by HP because
Aspect is unable to deliver a HP BIS Engine before October
31st,[**](in accordance with Section 23.2, paragraph b), or in
the event Aspect fails to deliver the first [**] Aspect BIS
Module Kits for whatever reason, excluding breach by HP or
failure to order then Aspect shall refund HP according to the
following rules:
(i) Aspect shall refund to HP that part of the prepayment that
is not yet consumed by unit royalties, however not more than
[**] US$.
(ii) Aspect shall [**] of the [**] that is [**] for the [**]. For
purposes of [**] it is [**].
(d) Aspect agrees to [**] a [**] in accordance with the terms
outlined in [**] in accordance with Section 5 (c) in the event
that [**] as determined on a [**] and [**] following the [**] of
[**]. HP agrees to [**] for [**] in connection with [**]. At such
time as Aspect completes an initial public offering of its common
stock, the requirement to [**] will terminate.
6. SCOPE OF DELIVERY
(a) Purchase Orders. Purchase orders (via Fax, e-mail, other
electronic transmission or paper) for Aspect Products to be
purchased under this Agreement (the "Orders") must be received by
Aspect during the term of this Agreement and must specify a
delivery date in accordance with the lead-time schedule outlined
below under Section 6, paragraph e) All HP Purchase Orders will
make reference to the appropriate engineering drawing or
manufacturing reference numbers.
(b) Order Acknowledgements. HP purchase orders will be acknowledged
by Aspect within 5 days after receipt of the order, provided that
the order is technically correct and that the requested delivery
time is within the agreed lead time and that the latest forecast
provided by HP is not exceeded by more than [**] and the quantity
ordered does not exceed by more than [**] the quantity ordered in
the preceding month. If the requested delivery time is lower than
the agreed lead time, or if HP's latest forecast is exceeded by
more than [**], Aspect shall use reasonable efforts to complete
the order requirements and to acknowledge the order within 10
days of its receipt. Order acknowledgements shall not be
unreasonably withheld.
(c) Forecasts. HP shall furnish to Aspect a non-binding monthly
forecast during the term of this Agreement with the number and
type of Aspect Products for which HP expects to submit orders for
the following twelve months. Existing open purchase orders are
not usually reflected in these forecast numbers.
8
<PAGE> 9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(d) Cancellation Charges. In the event of the cancellation of any
Order by HP, HP shall be liable for the payment of cancellation
charges based on the number of days prior to scheduled delivery
that written notice of cancellation is received by Aspect, as
outlined below:
<TABLE>
<CAPTION>
<S> <C>
> 10 weeks prior to acknowledged delivery [**]
6 - 10 weeks prior to acknowledged delivery [**] of order value
4 - 6 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>
(e) Lead Times. Lead times for the Aspect BIS Module Kit are expected
to be 12 weeks.
7. PRICES.
(a) Purchase Prices. The prices of Aspect Products purchased by HP
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).
(b) Purchase Price Changes. In consideration of the market situation
and after consultation with HP, the Purchase Prices set forth in
Exhibit A (Aspect Products and Purchase Prices) will be reviewed
12 months after first delivery of production units and annually
thereafter. Any price increase will become effective only after
mutual agreement between both Parties, subject to the following:
(i) In the event the materials cost for the Aspect BIS Module
Kit increases by more than [**]. Aspect shall have the right
no more than once per year during the term of this Agreement
to increase the Purchase Price of the Aspect BIS Module Kit
by an equivalent amount by giving HP written notice of such
increase not less than [**] days prior to the date upon
which the increased Purchase Price is to become effective.
No Purchase Price increase shall apply to Orders for Aspect
Products accepted by Aspect prior to or during such [**] -
day period which are to be delivered within [**] days of the
date of such notice.
(c) Aspect may reduce the Purchase Price of any Aspect Product at any
time. Such reduction shall be applicable to all Aspect Products
not shipped at the time of the reduction.
(d) [**] the Purchases Prices [**] the [**] for [**] and based on
similar terms and conditions [**] that has entered into a [**]
the date of this agreement.
(e) Taxes. All prices for Aspect Products are exclusive of all
federal, state and local taxes, levies and assessments, and HP
shall be responsible for the payment of all such taxes, levies
and/or assessments imposed on Aspect Products purchased and/or
licensed by HP hereunder, excluding taxes based on Aspect's net
income
9
<PAGE> 10
from the transaction. HP shall be responsible for providing in a
timely manner all documentation, in the nature of exemption
certificates or otherwise, necessary to allow Aspect to refrain
from collections, such as sales tax, which it would otherwise be
obligated to make
8. TERMS OF PAYMENT.
(a) Invoices. HP shall pay to Aspect the Purchase Price of all Aspect
Products shipped hereunder within 30 days after the receipt of
Aspect's invoice. Nothing herein shall affect Aspect's right to
withhold shipment or otherwise exercise its rights under Section
24 (Termination) hereof in the event of HP's failure to make
payment when due for Aspect Products delivered to HP. Aspect's
invoices to HP for Aspect Products purchased under this Agreement
shall be addressed to:
Hewlett-Packard GmbH
Department ASC-AP
Postfach 1430
D-71004 Boeblingen
Germany
Late Payment Charge. Subject to applicable law, service and/or
interest charges not exceeding the lesser of 1-1/2% per month
or the highest amount permitted by law may, at the election of
Aspect, be assessed on amounts past due more than 30 days.
9. SHIPMENT AND DELIVERY.
(a) Delivery Location. Each shipment must indicate the exact address
of the recipient on the outside of the packaging as follows:
Hewlett-Packard GmbH
HSG-E Healthcare Solution Group Europe
c/o Js. Mueller Spedition GmbH
Eugen Zeyer Str. 1
D-75382 Althengstett
Germany
(b) All shipments hereunder shall be freight collect, F.C.A. point of
origin (Incoterms 1990). All Aspect Products shall be deemed
delivered and subject to HP's dominion and control when placed in
the possession of the carrier, packed and ready for shipment to
HP.. Aspect shall cooperate with HP in the documentation and
proof of loss claims promptly presented by HP to the appropriate
carrier and/or insurer.
(c) Delivery and Packaging Instructions Delivery and Packaging
requirements will need to conform to the standards outlined in
the HP Delivery and Packaging Standard (attached as Exhibit E)
10
<PAGE> 11
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(d) Delivery Date and Date of Dispatch. The requested delivery date
will be specified on the HP Purchase Order. Aspect will utilize
reasonable efforts to ensure that the order is delivered in
accordance with Aspect's order acknowledgement and that the the
date of dispatch is 10 days prior to the delivery date.
10. ACCEPTANCE.
Any Aspect Product shipped hereunder may be subjected to inspection and
performance testing by HP, in accordance with applicable product specifications
in effect at the time of delivery of such Aspect Products to HP. HP shall
provide written notice to Aspect of the rejection of any such Aspect Product
within [**] days of the date of receipt of any Aspect Product; if more than
[**]% of Aspect Products received in any single shipment do not pass HP's
inspection or performance testing HP may reject the entire shipment lot. Aspect
shall have [**] days from receipt of a notice from HP rejecting an Aspect
Product either, at its option, to make any necessary repairs to the defective
Aspect Product or to replace it. If Aspect replaces an Aspect Product, HP shall
dispose of the replaced Aspect Product in accordance with Aspect's instructions
and at Aspect's expense. HP's sole remedy for rejected Aspect Products shall be
limited to repair or replacement of such Aspect Products.
11. WARRANTY.
(a) General. Aspect warrants solely to HP that Aspect Products
(including Software) delivered hereunder shall perform
substantially in accordance with the specifications in Exhibit B
(Aspect's Standard Module Kit) or other applicable product
specifications as published by Aspect in effect at the time of
delivery of such Aspect Product (including Software), and shall
be free from defects in materials and workmanship, when given
normal, proper and intended usage, for twelve months from the
date of installation of the HP BIS System at HP's end customer
site, or eighteen months from the date of shipment by Aspect to
HP, whichever is less . Aspect agrees, during the applicable
warranty period, to repair or replace (at Aspect's option) all
defective Aspect Products within 30 days after date of return to
Aspect and without cost to HP. 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), fuses and bulbs (or disposable items such
as an Aspect BIS Sensor after the expiration date marked on the
Sensor packaging); nor shall Aspect have any obligation under
this Agreement to make repairs or replacements which are required
by normal wear and tear, or which result, in whole or in part,
from catastrophe, fault or negligence of HP, or anyone claiming
through or on behalf of HP, or from improper or unauthorized use
of Aspect Products, or use of Aspect Products in a manner for
which they were not designed, or by causes external to Aspect
Products such as, but not limited to, power or air conditioning
failure.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(b) Warranty Procedures. HP 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 paragraph (a). At Aspect's option, such Aspect Products shall
be returned by HP to Aspect's designated facility for examination
and testing, or may be repaired on site by Aspect. Aspect shall
either repair or replace, within 30 days of receipt by Aspect,
any such Aspect Product found to be so defective and promptly
return such Aspect Products to HP. Transportation and insurance
costs, and/or risk of loss or damage during shipments, shall be
borne by Aspect. Should Aspect's examination and testing not
disclose any defect covered by the foregoing warranty, Aspect
shall so advise HP and dispose of or return the Aspect Product in
accordance with HP's instructions and at HP's sole expense.
(c) Repair Warranty. Aspect warrants its repair work and/or
replacement parts for the duration of the original warranty
period as set forth in paragraph (a) or at least 6 months
whichever is longer.
(d) LIMITATION. THE PROVISIONS OF THE FOREGOING WARRANTIES ARE IN
LIEU OF ANY OTHER WARRANTY, WHETHER EXPRESS OR IMPLIED, WRITTEN
OR ORAL (INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE). THE FOREGOING WARRANTIES EXTEND TO HP ONLY
AND SHALL NOT BE APPLICABLE TO ANY OTHER PERSON OR ENTITY
INCLUDING, WITHOUT LIMITATION, CUSTOMERS OF HP.
12. SERVICE AND SUPPORT.
(a) Service and Support. HP shall be responsible for providing
installation, customer training, service and support (including
repair) to its end customers for the Aspect Products sold
hereunder and HP shall bear all related costs incurred for labor,
parts, or travel to perform such service.
(b) Central Repair Service. For the term of this Agreement, Aspect
agrees to provide central repair service to HP for Aspect
Products sold hereunder at a charge and as further detailed in
Exhibit F (Service/Repair).
(c) Excessive Failure Rate. If the Annual Failure Rate of Aspect's
BIS Module Kit excluding out-of-box failures and cables exceeds
the value as specified in Exhibit B (Aspect's Standard Module
Kit) by more than [**] then Aspect shall reimburse HP for any
additional cost (including material and labor, ) incurred by HP
for repairing the units in excess of the above limit.
(d) Service Period. For a period of [**] following the last delivery
to HP of the applicable Aspect Product ordered by HP hereunder,
Aspect shall make available repair service (or at Aspect's sole
discretion, exchange units for the Aspect Products) for purchase
by HP and third party users of the Aspect products at
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Aspect's then-current prices for such repair services and
exchange units. After expiry of this [**] 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.
(e) Service Reporting. Aspect shall maintain a complete record of all
repair activities performed on any Aspect products received for
repair, and will provide HP with a monthly report on all service
actions including failure and repair statistics at a sub-
assembly levelas laid down in Exhibit F (Service/Repair). Service
Reports for each product shall be sent electronically by email to
responsible procurement and technical marketing engineer (Contact
Persons shown in Exhibit C, Contact Persons / Addresses).
Rootcause analysis is to be performed and reported by Aspect in
case of abnormal failures, incidents and malfunctions.
13. QUALITY ASSURANCE.
(a) Both parties agree to maintain ISO900x, EN460x, 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 this
kind of medical product.
(b) All Products developed under this Agreement shall fully comply
with the above quality requirements and guidelines (MDD AX-II,
FDA QSR, etc.)
(c) If the actual Annual Failure Rate ("AFR") of the BIS Module Kit
or subcomponents thereof exceeds the expected value specified in
Exhibit B (Aspect's Standard Module Kit) by more than [**] then
Aspect agrees to investigate the root cause of the problem and
take the appropriate corrective actions to bring the AFR back
into the specified range.
14. REGULATORY MATTERS.
(a) 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 BIS Module Kit. Both Parties will work together to
develop a regulatory plan during phase 1 of the Project which
defines precisely what these regulatory and localization
requirements are for all countries where the HP BIS System is
intended to be sold. In particular, Aspect shall be responsible
for generating its own Device Master Record for the BIS Module
Kit and obtaining the CE-mark. It is understood that the BIS
Module Kit will be a component of the HP BIS System for which HP
assumes full regulatory responsibility as provided in Section 14
(c).
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(b) HP shall assume full regulatory responsibility for the HP
Products, including obtaining and maintaining all applicable
governmental authorizations and regulatory approvals required to
distribute the HP Patient Monitors and the HP BIS Module in all
countries in the Territory.
(c) HP shall assume the regulatory responsibility for the combination
of the Aspect and HP components in the HP BIS System. Aspect
shall fully support HP as required in the process of obtaining
regulatory approvals by making available to HP any required
information, data, certificates, or technical files in the
requested formats.
(d) For bringing the Aspect Products into the market in countries
affected by the European Medical Device Directive ("MDD"), Aspect
is the legally responsible manufacturer under the MDD as named in
detail in Exhibit C (Contact Persons/Addresses). The Aspect
Products shall be marked accordingly.
(e) HP and Aspect shall inform each other in writing immediately
about any event that may require incident reporting in any
country of the Territory.
(f) In the event of any recall of an Aspect Product required by a
governmental agency for safety or efficacy reasons, or requested
by Aspect at its sole discretion, which is the result of Aspect's
failure to supply Aspect Products that (1) conform in all
material respects to the applicable published specifications
(including the specifications set forth in Exhibit B (Aspect's
Standard Module Kit)) or (2) are free from defects in material
and workmanship (when given normal, proper and intended usage),
Aspect agrees to repair or replace at its own costs all Aspect
Products subject to the recall and previously delivered to HP.
Aspect also agrees to consult with HP to establish a reasonable
process for managing the recall and Aspect shall be [**]
(including, but not limited to [**] that are consistent with the
recall process agreed to by the Parties. In the event the recall
is not required by a governmental agency for safety or efficacy
reasons, but is instead requested by Aspect at its sole
discretion, Aspect will be responsible for determining the scope
of the recall, including the number of units, timeframe for the
recall, and criteria for completion. HP agrees to maintain all
necessary sales records to facilitate the recall.
(g) HP may at its sole discretion delegate some of the obligations
under this Section 14 to its subdistributors.
(h) For the purpose of facilitating product traceability, all
Products purchased from Aspect by HP will require identification
of an internal order number and tracking code.
15. PRODUCT CHANGES; DISCONTINUED PRODUCTS; FUTURE PRODUCTS; CONTINUED SUPPLY.
(a) Product Changes. Aspect shall have the right, at any time and
from time to time, to make substitutions and modifications to
Aspect Products, provided that such substitutions or
modifications will not materially affect form, fit or function of
Aspect
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Products. In the event that any proposed substitution or modification
affects, in Aspect's reasonable judgment, the form, fit or function of
a Aspect Product, Aspect shall give HP written notice of such proposed
substitution or modification at least [**] days prior to its taking
effect and HP shall have the right, during such [**] -day period and
for [**] days thereafter, to order Aspect Products without such
substitution or modification for delivery within [**] days after such
substitution or modification takes effect. Aspect shall give written
notice of any proposed change to the Aspect Products using the
Supplier Change Notification Agreement Form (attached as Exhibit D)
and provide the appropriate verification and validation information
evaluating the affect on the HP BIS System. Notwithstanding anything
to the contrary in the Change Notification Agreement Form, HP shall
not unreasonably withhold its approval of any such changes.
(b) Discontinued Products. Aspect agrees to notify HP in writing not less
than [**] in advance of the discontinuance of any Aspect Product. HP
shall be able to place orders for at least [**] after receipt of the
written notice in any case. In addition, HP shall be entitled to
determine its lifetime-buy quantities and place a corresponding last
purchase order.
(c) Future Products. The Aspect Products are designed for use in measuring
the effects of anesthetic and sedative agents on the brain during
surgery. In the event that Aspect develops a product involving a
different type of index, patient sensor, or application, Aspect and HP
agree to discuss a new agreement for the purchase of such new product
or products by HP.
(d) Continued Supply. In the event that (a) Aspect makes an assignment for
the benefit of creditors, or a receiver, trustee in bankruptcy or
similar officer is appointed to take charge of any or all of Aspect's
property, or Aspect files a voluntary petition under federal
bankruptcy laws or similar state statutes or such a petition is filed
against Aspect and is not dismissed within sixty (60) days, and (b)
Aspect fails to deliver Aspect Products ordered by HP under this
Agreement within [**] of the delivery date specified on a purchase
order complying with Section 4 and accepted by Aspect in accordance
with Section 4, upon request of HP, Aspect shall grant to HP, a
nonexclusive license to use the Manufacturing Materials to make and
have made the Aspect Products for use in the HP BIS System, until [**]
after Aspect is ready and able to deliver Aspect Products to HP under
the terms of this Agreement and has notified HP thereof. This includes
a non-exclusive license to use any tools, design documentation, or any
other manufacturing materials which may be necessary. The
manufacturing materials supplied by Aspect shall include a list of the
Aspect suppliers of parts for Aspect Products. Upon exercise by HP of
the manufacturing license set forth above, HP shall pay Aspect a
"Manufacturing License Fee" equal to the royalty specified on Exhibit
A (Aspect's Products and Purchase Prices).
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16. OWNERSHIP AND PROTECTION OF RESULTS.
(a) It is expressly agreed that neither Aspect nor HP will transfer to any
Party any patent rights, copyrights or intellectual property of any
kind that either Party owns at the effective date of this agreement.
(b) Aspect shall retain the title to and possession of any models,
patterns, dies, molds, jigs, fixtures, and other tools made for or
obtained in connection with this Agreement and solely related to the
Aspect Products, even if made for, obtained by or paid for by HP.
(c) If there are developments (including patentable inventions) conceived,
created or reduced to practice as part of the joint development
project then the rights to such developments shall be retained (a) by
Aspect if conceived, created or reduced to practice solely by Aspect,
or (b) by HP, if solely conceived, created or reduced to practice by
HP, or (c) jointly by HP and Aspect (without any duty to account to
the other) if jointly developed by HP and Aspect provided that:
HP shall assign to Aspect all rights to any development relating to
Aspect's BIS Module Kit
and Aspect shall assign to HP all rights to any development relating
to the HP Patient Monitor or HP BIS Module subject to Aspect's
retained rights to the BIS Protocol.
17. DOCUMENTATION AND TRAINING.
Aspect agrees to provide HP with such product literature, operations
and maintenance manuals, other information and training (including training to
avoid possible misrepresentation of Aspect's Bispectral Index) as is mutually
agreed, to enable HP properly to sell and maintain Aspect Products, provided
that in no event shall the source code or source listings of Aspect Software be
required to be disclosed or provided by Aspect to HP pursuant to this Section 17
or otherwise. Such training needs to begin at least three months prior to
introduction of the HP BIS System and will be defined as part of the Project's
marketing plan.
18. CONFIDENTIALITY.
No confidential information disclosed by either party to the other in
connection with this Agreement shall be disclosed to any person or entity other
than the recipient party's employees and contractors directly involved with the
recipient party's use of such information who are bound by written agreement to
protect the confidentiality of such information, and such information shall
otherwise be protected by the recipient party from disclosure to others with the
same degree of care accorded to its own confidential information of like
importance. In addition, each party and its representatives shall use the
confidential information only for the purposes specified under this Agreement
and such information shall not be used for any other purpose without the prior
written consent of the disclosing party. To be subject to this provision,
information must be delivered in writing and designated as proprietary or, if
initially delivered orally, must be confirmed
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<PAGE> 17
in writing as confidential within 30 days after the oral disclosure. Information
will not be subject to this provision if it is or becomes a matter of public
knowledge without the fault of the recipient party, if it was a matter of
written record in the recipient party's files prior to disclosure to it by the
other party, or if it was or is received by the recipient party from a third
person under circumstances permitting its unrestricted disclosure by the
recipient party. Upon termination of this Agreement, each party shall promptly
deliver to the other all confidential information of the other party in the
possession or control of such party and all copies thereof, provided that each
party may retain a copy thereof for archival purposes. The obligations under
this Section 18 shall continue for both parties for a period of 10 years after
delivery by Aspect to HP of the last Aspect Product under this Agreement. HP is
entitled to transmit confidential information of Aspect to Hewlett-Packard
Company and to its subsidiaries and affiliated companies. In this case these
companies may only use such information to the same extent as HP is entitled to
under this Agreement. HP will be responsible that these companies comply with
the confidentiality provisions of this Agreement.
19. INDEMNITIES.
19.1. INDEMNITIES BY ASPECT.
(a) Except as provided below, Aspect shall defend and indemnify HP
from and against any damages, liabilities, costs and expenses
(including reasonable attorneys' fees and court costs) arising
out of any claim that Aspect Products purchased and/or licensed
hereunder infringe any patent or copyright or misappropriate a
trade secret of a third party, provided that (i) HP shall have
promptly provided Aspect written notice thereof and reasonable
cooperation, information, and assistance in connection therewith,
and (ii) Aspect shall have sole control and authority with
respect to the defense, settlement, or compromise thereof. Should
any Aspect Products delivered hereunder become or, in Aspect's
opinion, be likely to become the subject of such a claim, Aspect
may, at its option, either (x) procure for HP the right to
continue purchasing and using such Aspect Products, or (y)
replace or modify such Aspect Products so that they become
non-infringing or if (x) and (y) are not reasonably available to
Aspect, then (z) terminate HP's rights under this Agreement to
purchase the allegedly infringing Product and refund to HP the
amount which HP has paid to Aspect for such Products which are in
the possession of HP, upon return of such Products in their
unopened packages to Aspect at its principal facility in the
United States (freight and insurance at Aspect's expense). In
such event, Aspect may withhold further shipments of infringing
or potentially infringing Aspect Products.
Aspect shall have no liability or obligation to HP hereunder with
respect to any patent, copyright infringement or trade secret
misappropriation or claim thereof based upon
(i) compliance with designs, plans or specifications of HP,
(ii) use of Aspect Products by HP in combination with devices or
products not purchased and/or licensed hereunder where the
Aspect Products would not themselves be infringing,
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(iii)use of the Aspect Products by HP in an application or
environment for which such Aspect Products were not designed
or contemplated, or
(iv) modifications of the Aspect Products by HP
(b) Aspect's liability hereunder shall not exceed the purchase and/or
license price paid by HP for the Aspect Products found to be
infringing. The foregoing states the entire liability of Aspect
with respect to infringement or misappropriation of patents,
copyrights and trade secrets by the Products or any part thereof
or by their operation.
(c) In the event that any claim is brought against HP as a result of
personal injuries and/or property damages resulting from that
portion of the HP BIS System developed and manufactured by
Aspect, and provided further that such claims do not arise as a
result of the misuse of the HP BIS System , or the use of the HP
BIS System in an application for which it was not designed by
Aspect, where such claim would not have occurred but for such
misuse or use, Aspect agrees that it shall indemnify and hold HP
harmless from and against any damages, liabilities, costs and
expenses arising out of such claim, provided that HP shall
promptly provide Aspect written notice thereof and reasonable
cooperation, information and assistance in connection therewith
and Aspect shall have sole control and authority with respect to
the defense, settlement or compromise.
19.2. INDEMNITIES BY HP.
(a) Except as provided below, HP shall defend and indemnify Aspect
from and against any damages, liabilities, costs and expenses
(including reasonable attorneys' fees and court costs) incurred by
Aspect as a result of or arising from HP's activities under this
Agreement, including, without limitation, product liability,
customer warranty and service claims, provided that
(i) Aspect shall have promptly provided HP written notice
thereof and reasonable cooperation, information and
assistance in connection therewith, and
(ii) HP shall have sole control and authority with respect to the
defense, settlement or compromise thereof, and provided
further that
(iii) HP shall not be liable to Aspect under this Section 19.2 to
the extent that such damages, liabilities, costs and
expenses arise from Aspect's negligence or a breach of any
representation or warranty by Aspect hereunder.
20. TRADEMARKS.
20.1. ASPECT TRADEMARKS.
(a) Ownership. HP acknowledges and agrees that Aspect is the sole and
exclusive owner of all right, title and interest in and to the
trademarks (the "Aspect Trademarks") identified on Exhibit H
(Aspect Trademarks). HP recognizes the value of the Aspect
Trademarks and the good will associated with the Aspect
Trademarks. HP agrees that its use of the Aspect Trademarks and
any good will
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arising therefrom shall inure to the benefit of Aspect. Nothing
contained herein shall create, nor shall be construed as an assignment
of, any right, title or interest in or to the Aspect Trademarks to HP,
other than the grant of a license in Section 20.1 (c) below; it being
acknowledged and agreed that all other right, title and interest in
and to the Aspect Trademarks is expressly reserved by Aspect. HP shall
keep the Aspect Trademarks free from all liens, mortgages or other
encumbrances. HP agrees that it will not attack or otherwise challenge
the title, validity or any other rights of Aspect in or to the Aspect
Trademarks.
(b) Notice. All HP BIS Systems that use the Aspect Trademarks shall
be accompanied, where reasonable and appropriate, by a
proprietary notice consisting of the following elements:
(i) The statement "[insert trademark(s)] is a trademark(s) of
Aspect Medical Systems, Inc."
(ii) HP will include the "(TM)" or "(R)" symbol, as instructed by
Aspect, after the first prominent use of the Aspect
Trademark in the HP Patient Monitor and related materials.
HP shall have a period of 30 days in which to begin to use
the "(R)" symbol in replacement of the "(TM)" symbol upon
receiving instruction to do so by Aspect. HP may continue to
deliver stocked literature before the change becomes
effective.
(iii) HP shall reproduce copyright and trademark notices of Aspect
on the "splash screen" or in the same location where HP
reproduces its own copyright notices .
(c) License. Aspect hereby grants to HP a nonexclusive, worldwide,
royalty-free license (without the right to sublicense) to use the
Aspect Trademarks to designate and promote Aspect Products in HP
BIS Systems. HP shall have no other right to use, display or
utilize the Aspect Trademarks for any other purpose or in any
other manner.
(d) Quality Standards.
(i) Upon reasonable notice and request, and at a mutually
acceptable date and location, Aspect may inspect the
advertising and promotional materials on which the Aspect
Trademarks are used so that Aspect may monitor compliance
with this Agreement.
(ii) Compliance. Aspect acknowledges the high standards of
quality and excellence established by HP with respect to
products bearing HP's trademarks. HP acknowledges the high
standards of quality and excellence established by Aspect
with respect to products bearing the Aspect Trademarks. HP
agrees that HP Patient Monitors with which the Aspect
Trademarks are used shall be of such quality so as to
maintain such high standards and to reflect well upon
Aspect. HP agrees to adhere to HP's own or the following
quality standards (whichever may be more rigorous) for use
of the Aspect Trademarks by HP:
- In order to ensure that Aspect Products and HP Patient
Monitors distributed under the Aspect Trademarks comply
with the consistent quality standards of Aspect, all
Aspect Products and HP Patient Monitors distributed by
or for HP
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
which bear an Aspect Trademark shall conform to those
standards which Aspect provides to HP in writing. HP
shall cause each major new release of such HP Patient
Monitors to comply with such standards or remove the
Aspect Trademark(s) from any such new release, which
does not comply with such standards. HP shall have a
period of 30 days in which to bring newly shipped HP
Patient Monitors into compliance with any standard
provided to it by Aspect following the date of this
Agreement.
- HP acknowledges that if Aspect Products or HP Patient
Monitor products bearing the Aspect Trademarks fail to
satisfy the quality standards set forth above, the
substantial good will which Aspect have built and now
possess in the Aspect Products and in the Aspect
Trademarks will be impaired.
(e) Protection and Infringement. HP agrees to cooperate with and
assist Aspect in obtaining, maintaining, protecting, enforcing
and defending Aspect' proprietary rights in and to the Aspect
Trademarks. In the event that HP learns of any infringement,
threatened infringement or passing-off of the Aspect Trademarks,
or that any third party claims or alleges that the Aspect
Trademarks infringe the rights of the third party or are
otherwise liable to cause deception or confusion to the public,
HP shall notify Aspect giving the particulars thereof, and HP
shall provide necessary information and assistance to Aspect in
the event that Aspect decides that proceedings should be
commenced.
(f) Termination. In addition to the termination rights set forth in
Section 23 hereof, in the event that HP is in material breach of
any provision of this Section 20, Aspect may, upon [**] written
notice, terminate the license granted in Section 20.1 (c) if HP
does not cure such breach or default within such [**] period. The
parties recognize that curing such breach or default may require
development of a new version of HP BIS System. If this is the
case, then HP will be deemed to have cured such breach or default
if, within the [**] cure period, HP presents to Aspect a plan for
revision of HP Product that will cure such breach or default,
such plan is reasonably acceptable to Aspect, and such revision
is released and distributed within three months following written
notice of such breach or default.
In addition to the provisions of Section 23 hereof, upon
termination of the license granted in Section 20.1 (c), or upon
termination of this Agreement, for whatever cause:
(i) HP shall immediately cease and desist from any further use
of the Aspect Trademarks and any trademarks confusingly
similar thereto, either directly or indirectly;
(ii) All rights in the Aspect Trademarks granted to HP hereunder
shall immediately revert to Aspect;
(iii) In the event that this Agreement is terminated for any
reason other than a material breach or material default by
HP, HP shall have a period of 30 days thereafter to dispose
of all of the unsold HP BIS Systems bearing the
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Trademarks and advertising and promotional materials
relating thereto which had been completed by it prior to
such termination, provided such HP BIS Systems and materials
were in the process of manufacture more than [**] before
such termination.
(g) Promotional Claims. The general form of any promotional claims by
HP regarding Aspect's Bispectral Index technology and/or the
integration of this technology in HP Patient Monitors, and the
specific form of the use of Aspect's trade names and trademarks,
and of intended use claims regarding Aspect's Bispectral Index
technology, in promotional material, advertisement, and/or in
written technical literature shall be subject to review and
approval by Aspect prior to its publication or display.
20.2. HP TRADEMARKS.
(a) The general form of any potential claim by Aspect that HP uses
Aspect's Bispectral Index technology as part of the HP Patient
Monitors, and the specific form of the use of HP's trade names
and trademarks in promotional material, advertisement, and/or in
written technical literature shall be subject to review and
approval by HP prior to its publication or display.
(b) Upon termination of this Agreement any reference to HP and it's
trademarks must be immediately removed from any literature or
other display and must no longer be distributed.
21. EXPORT.
HP shall not export, directly or indirectly, HP BIS Systems or other
products, information or materials provided by Aspect hereunder, to any
country for which the United States requires any export license or other
governmental approval at the time of export without first obtaining such
license or approval. It shall be HP's responsibility to comply with the
latest United States export regulations, and HP shall defend and indemnify
Aspect from and against any damages, fines, penalties, assessments,
liabilities, costs and expenses (including reasonable attorneys' fees and
court costs) arising out of any claim that HP BIS Systems or other
products, information or materials provided by Aspect hereunder were
exported or otherwise shipped or transported in violation of applicable
laws and regulations.
22. CO-MARKETING PROGRAM.
(a) HP and Aspect may agree to undertake co-marketing programs in certain
geographies.
(b) HP and Aspect have agreed on a co-marketing program in North America
as described in Exhibit G (Co-Marketing Program) to this Agreement.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
23. TERM; DEFAULT AND TERMINATION.
23.1. TERM AND RENEWAL.
The initial term of this Agreement shall commence on the date first
specified above (the "Effective Date") and shall continue for a period
of 6 years. The term of this Agreement shall be automatically renewed
for successive 12 month periods unless either party provides written
notice of termination to the other party at least 60 days prior to
expiration of the Agreement.
23.2. TERMINATION FOR GOOD CAUSE.
(a) The Agreement may be terminated by Aspect giving 30 days written
notice to HP in the event HP has not commercially introduced an
HP BIS System by October 31st 2001.
(b) The Agreement may be terminated by HP giving 30 days written
notice to Aspect if Aspect has failed to provide a BIS Module Kit
with the necessary regulatory approvals to HP by [**].
(c) Events of Default. The following shall constitute events of
default under this Agreement:
(i) if either Party assigns this Agreement or any of its rights
or obligations hereunder except in connection with the sale
of such Party's business to which this Agreement relates
(the word "assign" to include, without limiting the
generality thereof, a transfer of a majority interest in the
Party) without the prior written consent of the respective
other Party. Notwithstanding the foregoing, it is understood
that this Agreement shall be assigned to Agilent
Technologies GmbH, at Herrenberger Strasse 110 - 130,
D-71034 Boeblingen, Germany and that Aspect consents to such
assignment.; or
(ii) if either Party shall neglect or fail to perform or observe
any of its obligations to the other Party hereunder,
including, without limiting the generality thereof, the
timely payment of any sums dueor Aspect's inability to
deliver Aspect Products, and such failure is not cured
within [**] in the event of a default in the payment of
amounts owed the other Party) after written notice thereof
from the other Party; or
(iii) if there is (w) a dissolution, termination of existence,
liquidation, insolvency or business failure of either Party,
or the appointment of a custodian or receiver of any part of
either Party's property, if such appointment is not
terminated or dismissed within thirty (30) days; (x) a
composition or an assignment or trust mortgage for the
benefit of creditors by either Party; (y) the commencement
by either Party of any bankruptcy proceeding under
22
<PAGE> 23
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks
denote omissions.
the United States Bankruptcy Code or any other federal or
state bankruptcy, reorganization, receivership, insolvency
or other similar law affecting the rights of creditors
generally; or (z) the commencement against either Party of
any proceeding under the United States Bankruptcy Code or
any other federal or state bankruptcy, reorganization,
receivership, insolvency or other similar law affecting the
rights of creditors generally, which proceeding is not
dismissed within thirty (30) days.
(d) Remedies. Upon any event of default, and in addition to any other
remedies either Party may have at law or in equity, the
non-defaulting Party may cancel any outstanding Order, refuse to
make or take further Orders or deliveries, cancel any discount
given, and declare all obligations immediately due and payable.
The non-defaulting Party shall have all the remedies of a secured
party under the Uniform Commercial Code and any other applicable
law. The defaulting Party shall be liable for the other Party's
expense of retaking, holding, preparing for sale, selling and the
like, including reasonable attorneys' fees and legal expenses in
the event of default. Cancellation fees shall not be due and
payable.
23.3. INSURANCE.
Upon request, Aspect shall provide evidence of product liability,
general liability and property damage insurance against an insurable
claim or claims which might or could arise regarding Aspect products
purchased from Aspect. Such insurance will contain a minimum limit of
liability for bodily injury and property damage of not less than
2,000,000 (two million) US$.
24. GENERAL PROVISIONS.
(a) Force Majeure. In the event that either Party is prevented from
performing, or is unable to perform, any of its obligations under this
Agreement due to any act of God, fire, casualty, flood, war, strike,
lock out, failure of public utilities, injunction or any act,
exercise, assertion or requirement of governmental authority,
epidemic, destruction of production facilities, insurrection,
inability to procure materials, labor, equipment, transportation or
energy sufficient to meet manufacturing needs, or any other cause
beyond the reasonable control of the Party invoking this provision,
and if such Party shall have used its best efforts to avoid such
occurrence and minimize its duration and has given prompt written
notice to the other Party, then the affected Party's performance shall
be excused and the time for performance shall be extended for the
period of delay or inability to perform due to such occurrence.
(b) Publicity. Neither Party shall originate any publicity, news release
or other public announcement relating to this Agreement or the
existence of an arrangement between the Parties without the prior
written approval of the other Party, except as otherwise required by
law.
23
<PAGE> 24
(c) Waiver. The waiver by either Party of a breach or a default of any
provision of this Agreement by the other Party shall not be construed
as a waiver of any succeeding breach of the same or any other
provision, nor shall any delay or omission on the part of either Party
to exercise or avail itself of any right, power or privilege that it
has, or may have hereunder, operate as a waiver of any right, power or
privilege by such Party.
(d) No Agency. Nothing contained in this Agreement shall be deemed to
constitute either Party as the agent or representative of the other
Party, or both Parties as joint ventures or partners for any purpose.
Neither Party shall be responsible for the acts or omissions of the
other Party, and neither Party will have authority to speak for,
represent or obligate the other Party in any way without prior written
authority from the other Party.
(e) Survival of Obligations. All obligations of either Party which, by
their nature, require performance after the expiration or termination
of this Agreement, namely the sections on Royalties (5.(c)), Warranty
(11), Service and Support (12), Regulatory Matters (14), Ownership and
Protection of Results (16), Confidentiality (18), Indemnities (19),
Trademarks (20) shall survive the expiration or termination of this
Agreement and continue to be enforceable.
(f) LIMITATION ON LIABILITY. EXCEPT AS PROVIDED IN SECTION 19.1, ASPECT'S
LIABILITY ARISING OUT OF THE MANUFACTURE, SALE OR SUPPLYING OF ASPECT
PRODUCTS OR THEIR USE OR DISPOSITION, WHETHER BASED UPON WARRANTY,
CONTRACT, TORT OR OTHERWISE, SHALL NOT EXCEED THE AMOUNT OF
2,000,000.00 (TWO MILLION) US$. IN NO EVENT SHALL ASPECT BE LIABLE TO
HP OR ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL, OR OTHER INDIRECT DAMAGES (INCLUDING, BUT NOT LIMITED
TO, LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES) ARISING OUT
OF THE MANUFACTURE, SALE OR SUPPLYING OF ASPECT PRODUCTS.
(g) Severability. In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because
it is invalid or in conflict with any law of any relevant
jurisdiction, the validity of the remaining provisions shall not be
affected and the rights and obligations of the Parties shall be
construed and enforced as if the Agreement did not contain the
particular provisions held to be unenforceable.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
(i) Notices. Any notice or communication with regard to the termination of
or changes to this Agreement from one Party to the other shall be in
writing and either personally delivered or sent via certified mail,
postage prepaid and return receipt requested addressed, to such other
Party at the address of such Party specified in this Agreement or such
other address as either Party may from time to
24
<PAGE> 25
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
time designate by notice hereunder.
(j) Entire Agreement. This Agreement constitutes the entire agreement
between the Parties. No waiver, consent, modification or change of
terms of this Agreement shall bind either Party unless in writing
signed by both Parties, and then such waiver, consent, modification or
change shall be effective only in the specific instance and for the
specific purpose given. There are no understandings, agreements,
representations or warranties, expressed or implied, not specified
herein regarding this Agreement or the Aspect Products purchased
and/or licensed hereunder. Only the terms and conditions contained in
this Agreement shall govern the transactions contemplated hereunder,
notwithstanding any additional, different or conflicting terms which
may be contained in any Order or other document provided by one Party
to the other. Failure of Aspect to object to provisions contained in
any Order or other document provided by HP shall not be construed as a
waiver of the terms and conditions of this Agreement nor an acceptance
of any such provision. Retention by HP of Aspect Products delivered
hereunder shall be conclusively deemed to be a confirmation of the
terms and conditions hereof.
(k) Headings. Captions and headings contained in this Agreement have been
included for ease of reference and convenience and shall not be
considered in interpreting or construing this Agreement.
(l) Exhibits: The following Exhibits shall be part of this Agreement:
Exhibit A: Aspect Products and Purchase Prices
Exhibit B: Aspect's Standard Module Kit
Exhibit C: Contact Persons/Addresses Prices
Exhibit D: Change Notification Agreement
Exhibit E: Delivery and Packaging Standard
Exhibit F: Service/Repair
Exhibit G: Co-Marketing Program
Exhibit H: Aspect Trademarks
Exhibit I: [**]
IN WITNESS WHEREOF, this Agreement has been duly executed as a sealed
instrument as of the date specified above.
Aspect Medical Systems, Inc. Hewlett-Packard GmbH
By: /s/ J. Breckenridge Eagle By: /s/ Anthony [illegible]
-------------------------- ------------------------------
Title: Chairman Title: General Manager
----------------------- ---------------------------
Patient Monitoring Division
25
<PAGE> 26
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT (A):ASPECT'S PRODUCTS AND PURCHASE PRICES
<TABLE>
<CAPTION>
ORDERABLE ASPECT HP UNITS (EA) Aspect HP ROYALTIES
PARTS / PRODUCTS PART NO. ID Number CASES (PK) List Price Base Price (US$)
(US$) (US$) - Note A
- ---------------------------------- -------- --------- ---------- ---------- --------------- ---------
<S> <S> <C> <C> <C> <C> <C>
BIS MODULE KIT (new unit, includes tbd tbd 1 ea [**] [**] [**]
DSC, DSC Cable, HP BIS Engine,
Module Cable, User Manual)
Sensor Startup Kit 5 ea [**] [**]
DSC (replacement) [**] [**]
DSC Cable (replacement) [**] [**]
HP BIS Engine (replacement) [**] [**]
Module Cable (replacement) [**] [**]
User Manual [**] [**]
Service Manual [**] [**]
BIS Application Note (english) [**] [**]
BIS Application Note (french) [**] [**]
... [**]
BIS Brochure [**] [**]
[**]
</TABLE>
Note A:
The HP Purchase Price is the sum of the [**] (based on [**] and the [**] (based
on [**]. In addition to the [**] specified above, HP shall pay to Aspect for
each BIS Module Kit purchased an additional sum to allow Aspect to recover the
incremental costs for Aspect to provide the [**] (including the [**] in lieu of
[**]. It is currently estimated that these incremental costs will be [**] per
module kit.
26
<PAGE> 27
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT (B): ASPECT'S STANDARD MODULE KIT
ASPECT'S STANDARD BIS MODULE KIT.
Aspect's BIS 'Module Kit' is designed specifically for [**] and allows the [**]
and to the [**] and the necessary power connections.
The BIS Module Kit consists of a [**] that is placed in [**] that provides the
[**] the high performance analog to [**] of the [**] from the [**] that is [**]
at the [**].
The BIS Engine [**] on the [**] to the [**] via the [**] is constructed [**] to
the [**] are a [**]
Detailed Technical Specifications:
----------------------------------
Digital Output: [**]
[**]
Main Parameters: [**]
[**]
Electrical Safety: [**]
Power: [**]
[**]
[**]
Artifact Rejection: [**]
Bispectral Index: [**]
Digital Signal Converter (DSC-2)
--------------------------------
Description: [**]
27
<PAGE> 28
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Weight: [**]
Dimensions: [**]
[**]
Cable Length: [**]
BIS Engine PCB
Physical: [**]
Processing Power: [**]
Software Upgrades
[**] software is stored in [**]. Software upgrades can be [**] via the
[**].
Serial Identifier
[**] is given a [**]. This allows for [**] of every [**].
Annual Failure Rate
The current [**] rate for the [**] and the [**] of the Project, this
information will need to be [**]
28
<PAGE> 29
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit (C): Contact Persons/Addresses
Contact Persons and responsibilities at HP:
------------------------------------------
-------------- ------------- ---------------------- --------------------
Person Title Responsibility E-mail
Phone Number/
Fax Number
-------------- ------------- ---------------------- --------------------
[**] [**] [**] [**]
-------------- ------------- ---------------------- --------------------
MAILING ADDRESS: Hewlett-Packard GmbH
[**]
PHONE: [**]
INVOICE ADDRESS: Hewlett-Packard GmbH
29
<PAGE> 30
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Exhibit (C): Contact Persons/Addresses
Contact Persons and responsibilities at Aspect:
-----------------------------------------------
-------------- ------------- ---------------------- --------------------
Person Title Responsibility E-mail
Phone Number/
Fax Number
-------------- ------------- ---------------------- --------------------
[**] [**] [**] [**]
-------------- ------------- ---------------------- --------------------
MAILING ADDRESS: Aspect Medical Systems, Inc.
2 Vision Drive
Natick, MA 01760-2059
USA
30
<PAGE> 31
EXHIBIT (D): CHANGE NOTIFICATION AGREEMENT FORM
31
<PAGE> 32
- --------------------------------------------------------------------------------
Hewlett-Packard Medical Products Group
- --------------------------------------------------------------------------------
MPG SUPPLIER CHANGE NOTIFICATION AGREEMENT FORM
-------------------------------------------------------------------
NOTICE UNCONTROLLED IN PRINTED FORM UNLESS STAMPED IN RED
-------------------------------------------------------------------
DOCUMENT The document owner is listed below:
OWNERSHIP
--------------------------------- ---------------------------------
FUNCTION TITLE
--------------------------------- ---------------------------------
MPG Quality Department Quality System Engineer
--------------------------------- ---------------------------------
---------- ------------------ -------------------------
REVISION HISTORY
---------- ------------------ -------------------------
REV. # CHANGE ORDER # CHANGE SUMMARY
---------- ------------------ -------------------------
A 2920-1998-01-00009
---------- ------------------ -------------------------
B 2920-1998-01-00019 Revise footer to read
"HP Proprietary".
Separate "Contact for
Questions" and Return
To".
---------- ------------------ -------------------------
32
Rev. B Document Number: A-Q2920-00142 GRS#MF502 Page 1 of 2
Title: MPG Supplier Change Notification Agreement Form For HP Internal Use Only
<PAGE> 33
- --------------------------------------------------------------------------------
Hewlett-Packard Medical Products Group
- --------------------------------------------------------------------------------
MPG SUPPLIER CHANGE NOTIFICATION AGREEMENT FORM, continued
- --------------------------------------------------------------------------------
TO: FROM:
- -------------------------------------- ----------------------------------------
SUPPLIER NAME: DATE:
- -------------------------------------- ----------------------------------------
SUPPLIER FAX # OR ADDRESS:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
- --------------------------------------------------------------------------------
DEAR SUPPLIER, CONTRACTOR, OR CONSULTANT:
Hewlett Packards's Medical Products Group (MPG) manufactures in a regulated
environment, and is required to maintain procedures to ensure that all purchased
products and services conform to specified requirements. MPG has determined that
the product or service you supply to MPG impacts, directly or indirectly, the
quality of our finished devices. We ask that you agree to notify MPG of any
changes in the product or service, so that we can determine whether the change
may affect the quality of our finished devices. Although HP's standard purchase
order terms and conditions include this provision, the intent of this document
is to ensure direct supplier recognition and acceptance of this requirement.
TO ENSURE THAT MPG HAS YOUR AGREEMENT ON THIS REQUIREMENT, WE ASK THAT YOU
REVIEW AND SIGN THE AGREEMENT BELOW. IT IS REQUESTED THAT THE SIGNATORY BE THE
QUALITY MANAGER AND THE GENERAL MANAGER (OR DESIGNEE) DIRECTLY INVOLVED WITH THE
MANUFACTURER OF OUR PRODUCT.
- --------------------------------------------------------------------------------
CHANGE NOTIFICATION AGREEMENT
-----------------------------
Changes to product, components or services supplied to Hewlett Packard Medical
Products Group (MPG) will not be made without prior written notification to, and
written approval from, MPG. This includes, but is not limited to, the following
types of changes:
* Product or service design changes
* Production process changes that affect design and/or production specifications
* Change of manufacturing or service facility location
* Changes that have a significant impact upon your quality system
* Other
-----------------------------------------------------------------------
Notification must be made to each MPG purchasing location affected by this
change.
- --------------------------------------------------------------------------------
SUPPLIER COMMENTS:
------------------------------------------------------------
------------------------------------------------------------
- --------------------------------------------------------------------------------
QUALITY MGR: GENERAL MGR (OR DESIGNEE):
- -------------------------------------- ----------------------------------------
SIGNATURE: SIGNATURE:
DATE: DATE:
TITLE:
- -------------------------------------- ----------------------------------------
CONTACT FOR QUESTIONS: TELE:
- -------------------------------------- ----------------------------------------
RETURN TO:
- --------------------------------------------------------------------------------
STREET: CITY/STATE/ZIP:
TELE: FAX:
- --------------------------------------------------------------------------------
33
<PAGE> 34
EXHIBIT (E): DELIVERY AND PACKAGING STANDARD
34
<PAGE> 35
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
ORIGINATOR: HP/CPDE-ENGINEERING, G-BOBLINGEN
TABLE OF CONTENTS PAGE
----------------- ----
1. GENERAL
1.1. Applicability 2
1.2. Place of delivery 2
2. DEFINITIONS 2
3. IDENTIFICATION REQUIREMENTS 3
3.1. Delivery Note 3
3.2. Load Unit Label 4
3.3. Product Identification Label 5
3.4. Customs Declaration 5
3.5. Transport Declaration (Dangerous Goods) 5
4. PACKAGING REQUIREMENTS 6
4.1. Delivery Mode 6
4.2. Packages (Boxes) 6
4.3. Load Carriers (Pallets) 6
4.4. Dimensions 7
4.5. Load Unit Protection 7
4.6. Environmental Requirements 7
4.7. Transport Regulations (Dangerous Goods) 7
4.8. Treatment of Inconsistencies 8
5. REVISION CONTROL 8
35
<PAGE> 36
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
1. GENERAL
- ----------------
1.1. APPLICABILITY
This specification is applicable to all goods delivered to the premises
of Hewlett-Packard Businesses in Boblingen and Waldbronn with according
production plants and distribution centers in Europe.
Practices other than those stipulated herein must be ratified on a
case-by-case basis by the purchasing department concerned.
Hewlett-Packard reserves the right to reject deliveries that do not
comply with this specification.
1.2. PLACE OF DELIVERY
Since HP has several receiving locations in Europe it is essential that
goods be delivered to the address specified on the purchase order or in
the purchasing agreement.
2. DEFINITIONS
- --------------------
[Graphic depiction of track, load units, product labels, load
carrier/pallet, package/box and mother/box]
36
<PAGE> 37
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
3. IDENTIFICATION REQUIREMENTS
- ------------------------------------
3.1. DELIVERY NOTE:
no deliveries without a delivery note
delivery note has to be fixed on the outside of the load or handed out
by the freight forwarder
- --------------------------------------------------------------------------------
DELIVERY NOTE / LIEFERSCHEIN
Supplier:
Fa Meler u Sohne
Kaakonbachatr 34
8000 Monehen
Tel: (089) 2804-1999
- --------------------------------------------------------------------------------
SUPPLIER CODE 0055885
- --------------------------------------------------------------------------------
- -------------------------------------- ----------------------------------------
DELIVERY NOTE NO.: 349812 DATE: 16.01.1999
- -------------------------------------- ----------------------------------------
SHIP TO:
Hewlett-Packard GmbH
c/o Logistic Group International
Waldbronn Gebaude 5
Herronbarger Str. 124
71034 Boblingen
- --------------------------------------------------------------------------------
RECEIVING ENTITY/NAME: CPOE / Hohenstein
- --------------------------------------------------------------------------------
DESTINATION CODE BB14-4500
- --------------------------------------------------------------------------------
LOAD UNIT: 12 boxes on 3 pallets
- --------------------------------------------------------------------------------
BOX NO'S: 6016-XX001 - 6016-XXX12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
POS. HP ORDER NO. SECTION ITEM HP PART NO. QUALITY UNIT MEASURED
(9 digits) (3 digits) (4 digits) (shipped) (shipped)
- ---- ------------ ---------- ---------- ------------- ----------- --------------
[Graphic depiction of bar codes]
- ---- ---------------------------------------------------------------------------
01 N81853921 010. 0100 8120-6809 1000 EA
- ---- ------------ ---------- ---------- ------------- ----------- --------------
DESCRIPTION: Powercord: UK version
- --------------------------------------------------------------------------------
[Graphic depiction of bar codes]
- ---- ---------------------------------------------------------------------------
02 N81853821 0100 010 5964-6108 1200 EA
- ---- ------------ ---------- ---------- ------------- ----------- --------------
DESCRIPTION: Software & Accessories Broschore
- --------------------------------------------------------------------------------
COUNTRY OF ORIGIN Germany [Graphic depiction of bar codes]
- --------------------------------------------------------------------------------
OPTIONAL DATA PER BUSINESS
-----------
Legend: MUST DATA
-----------
37
<PAGE> 38
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
32. LOAD UNIT LABELS
(unique products only)
An adhesive label shall be affixed to each load unit. If a delivery is
consisting of multiple, separate load units, the individual load unit shall be
numbered consecutively (e.g., 1 of 7, 2 of 7, etc.)
- --------------------------------------------------------------------------------
LOAD UNIT LABEL/LADEENIHEITENAUSZEICHUNG
(UNIQUE PRODUCTS ONLY NUR SORTENREINE WARE)
Supplier:
Fa Meler u Sohne
Kaakonbachatr 34
8000 Monehen
Tel: (089) 2804-1999
- --------------------------------------------------------------------------------
SUPPLIER CODE 0055865
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DELIVERY NOTE NO.: 349912 DATE: 15.01.1999
- -------------------------------------- ----------------------------------------
SHIP TO:
Hewlett-Packard GmbH
c/o Logistic Group International
Waldbronn Gebaude 5
Herronbarger Str. 124
71034 Boblingen
- --------------------------------------------------------------------------------
RECEIVING ENTITY/NAME: CPOE / Josef Hohenstein
- --------------------------------------------------------------------------------
DESTINATION CODE B614-4500
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(p) HP PRODUCT TOTAL WEIGHT (kg)
NO.
- ----------------- ----------------- ----------------- ------------------
[Graphic depiction of bar codes]
- --------------------------------------------------------------------------------
C2530-84430 283
- ----------------- ----------------- ----------------- ------------------
- ----------------- ----------------- ----------------- ------------------
(q) QUANTITY: LOAD UNIT NO: SUPPLIER LOT NO.
- --------------------------------------------------------------------------------
[Graphic depiction of bar codes
- --------------------------------------------------------------------------------
Q6000 T12345878 987654
- ----------------- ----------------- ----------------- ------------------
- ----------------- ----------------- ----------------- ------------------
HP ORDER NO: SECTION: ITEM: COUNTRY OF ORIGIN:
(9-digits) (3-digits) (4-digits)
- --------------------------------------------------------------------------------
[Graphic depiction of bar codes]
- --------------------------------------------------------------------------------
N820-86975 010 0100 USA
- ----------------- ----------------- ----------------- ------------------
Box 1 of 3
- --------------------------------------------------------------------------------
OPTIONAL DATA PER BUSINESS
-----------
Legend: MUST DATA
-----------
38
<PAGE> 39
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
3.3. PRODUCT IDENTIFICATION LABELS
Each smallest package unit (picking unit) of an article must be labeled
on the outside and shall contain only parts having the same part number
belonging to the same order.
- --------------------------------------------------------------------------------
(p) HP PART NO:
- ---------------------------------- ------------------ --------------------------
[Graphic depiction of bar codes]
- --------------------------------------------------------------------------------
P9Z80-1250
- ---------------------------------- ------------------ --------------------------
DESCRIPTION: Monitor EX300 VGA
- ---------------------------------- ------------------ --------------------------
(q) QUANTITY: UNIT MEASURE: VOLUME (cdm)
- ---------------------------------- ------------------ --------------------------
[Graphic depiction of bar codes]
- --------------------------------------------------------------------------------
Q1 EACH 180
- ---------------------------------- ------------------ --------------------------
COUNTRY OF ORIGIN: SUPPLIER LOT NO: (s) SERIAL NO: (Range)
- ---------------------------------- ------------------ --------------------------
[Graphic depiction of bar codes]
- ---------------------------------- ------------------ --------------------------
GERMANY T12345678 2323444
- --------------------------------------------------------------------------------
OPTIONAL DATA PER BUSINESS
-----------
Legend: MUST DATA
-----------
3.4. CUSTOMS DECLARATION
For deliveries from Non-EU countries and customs relevant deliveries
from EU countries an Invoice must be attached with all infos for
customs declaration (Part number, Oder number, Quantity, Box quantity
and Box weight, Box number, Currency, Item-value and invoice-value,
Terms of Delivery, CoO, Terms of payment etc.).
Customs relevant deliveries must be notified on Boxes and Documents.
3.5. TRANSPORT DECLARATIONS (DANGEROUS GOODS)
Dangerous Goods must be notified on Boxes and Documents
39
<PAGE> 40
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
4. PACKAGING REQUIREMENTS
- -------------------------------
4.1. DELIVERY MODE
Goods shall be delivered on pallets, if
-- the volume exceeds 1 m(3)(35 cubic feet)
-- the weight exceeds 25 kg (66 lbs)
-- or the consignment consists of more than 5 package units
maximum weight per consignment unit: 1000 kg
(2200 lbs) incl. load carrier
4.2. PACKAGES (BOXES)
Individual packages shall not have a handling weight exceeding 15 kg
(33 lbs)
4.3. LOAD CARRIERS (PALLETS)
All goods shall be delivered on reusable four-way-entry flat pallets
made of untreated solid wood. Openings for the handling with pallet
jacks have to be kept open on the small sides (base runners lengthwise
only).
Pallets have to be accessible from four sides by regular material
handling devices. Dimensions must be (unless otherwise specified):
-- 1200 x 100 mm (industry pallets);
-- 1200 x 800 mm Euro pallet
In exceptional cases 40 x 48 inches.
[Graphic depiction of a load carrier (pallet)]
40
<PAGE> 41
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
4.4 DIMENSIONS
The goods shall be stacked on the pallet without overhang. A load unit
shall not exceed an overall height of 1930 mm (76 inches) - including
pallet. Additional restrictions on height may apply depending on the
destination, and the purchasing department in question must be
consulted regarding these restrictions.
4.5. LOAD UNIT PROTECTION
Shipment units shall be secured in such a way the good cannot slip or
the unit loose its integrity. This shall be ensured by the use of
shrink or stretch wrapping, banding, additional layer sheets,
interlocked stacking, etc., but shall not hinder the accessibility with
material handling devices (fork lifts or pallet jack). The products
shall not be damaged by the LoaD Unit Protection.
4.6. ENVIRONMENTAL REQUIREMENTS FOR PACKAGING
GENERAL POINTS
Packaging should be kept to the minimum amount required to preserve the
security and hygiene of the packaged products.
Additionally, any applicable legal norms (see appendix) as well as HP
specific regulations concerning environment, workplace safety and
workplace security are to be adhered to. (Refer also to HP's GENERAL
SPECIFICATION FOR ENVIRONMENT A-5951-1745-1).
REQUIREMENTS
-- Low material variety per packaging
-- Easy separability of the various materials
-- Avoidance of composite materials
-- Use of standard and reusable packaging
-- Material labeling (especially with plastics)
-- Handling labeling
-- Recommended packaging materials:
Paper, cardboard, corrugated cardboard, untreated wood, iron,
aluminum, glass, PE, PP, PS, PET, drying agents: silica gel,
active clay
-- Packaging materials and packaging aids to be avoided:
PVC (vinyl), wood chips, compressed fiberboard, wood shavings,
straw, loose fill materials, "bio" packaging materials based
on plant starch, "popcorn"
APPENDIX: EXCERPTS OF THE RELEVANT LEGAL NORMS FOR PACKAGING AND
PACKAGING WASTE
-- European Waste Guidelines (Europaische Abfallrahmenrichtlinie)
75/442/EWG
-- European Packaging Guidelines (Europaische
Verpackungsrichtlnie) 94/62/EG
-- European Decision 97/129/EG regarding the labeling of
packaging material
-- Industrial Recycling law (Kreislaufwirtschaftsgesetz) and
accompanying Waste Law
-- Transport of Hazardous Waste Law (Gefahrgutbeforderungsgesetz)
and accompanying Hazardous Waste Law (Gefahrgutrecht/e.g GGVS)
-- Packaging Act
-- Chemical Law (Chemikaliengesetz) and Hazardous Materials Act
(Gefahrstoffverordnung) "BGB"
-- CFC-Halon Prohibition Act (FCKW-Halon-Verbots-Verordnung)
4.7. TRANSPORT REGULATIONS (DANGEROUS GOODS)
41
<PAGE> 42
- -------------------------------------- ----------------------------------------
HEWLETT-PACKARD GMBH DELIVERY-AND PACKAGING STANDARD
HEWLETT-PACKARD EUROPE BV
- -------------------------------------- ----------------------------------------
4.8. TREATMENT OF INCONSISTENCIES
In many instances, the packaging is covered by the stipulations of the
HP product specification. In the event of inconsistencies arising with
the packaging regulations in the product specification or in existing
agreements, the supplier shall consult the purchasing department
concerned.
5. REVISION CONTROL
- -------------------------
- --------------------------------------------------------------------------------
Revision Changes Approved Date
- -------------- ---------------------------------- ------------------ -----------
D Completely revised; Peter Klement 28.04.1999
English Edition A-5961-3658-1
German Edition A-5961-3658-2
- -------------- ---------------------------------- ------------------ -----------
- --------------------------------------------------------------------------------
42
<PAGE> 43
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT (F): SERVICE/REPAIR
1. REPAIR STRATEGY:
FULL UNIT REPAIR:
- - Defective units will be shipped from HP GSL (Global Support Logistics) to
Aspect for repair.
- - Aspect repairs and ships the units within [**] to HP GSL after receipt.
Each repair unit will be labeled with an internal HP order number and
tracking number by Aspect. Tracking number and maybe other data must be
labeled as barcode on the shipment carton by Aspect.
2. Repair Price
Repair consists of [**]
To define for each product:
[**]
Goal for full unit exchange: [**]
Right for Aspect to [**]
To define: [**]
A table detailing the [**] will be defined preliminarily during [**].
3. Handling of Repair Costs:
[**] will pay the then current [**] for any defective unit that is returned to
Aspect. On a regular basis HP will determine the number of units under warranty
that have been replaced/repaired and [**].
Repaired units with "No trouble found" classification Aspect [**] for the
difference between [**] and the following amounts only [**].
43
<PAGE> 44
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT (G): CO-MARKETING PROGRAM
ASPECT/HP JOINT MARKETING PROGRAM - NORTH AMERICA
Both Parties have agreed on the following outline for a joint marketing program,
designed to encourage customers in North America to [**] to implementation of an
integrated BIS measurement module on HP Viridia patient monitors.
PROGRAM DETAILS:
Aspect's and HP's sales force in North America will offer the [**] and will
agree to [**] for the [**] of the [**] of the [**] at a price of [**] the
current list price for the [**], unless the Parties agree that [**] that the
[**] under this program should be [**]. The current list price for the [**], as
outlined below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Qty 1 Qty 2-5 Qty 6-12 Qty 13-19 Qty >20
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
List Price $ [**] [**] [**] [**] [**]
- --------------------------------------------------------------------------------
[**] $ [**] [**] [**] [**] [**]
- --------------------------------------------------------------------------------
</TABLE>
1. [**] to [**] to fulfill [**] by this program will be purchased at a [**]
of [**].
2. Customers taking advantage of this program will be [**] an [**] of [**] for
the [**] (to be defined) [**] of the [**] for [**] in North America [**],
although customer expectations need to be set [**]. There will be [**] to
the customer for this [**], although the customer may need to [**] to [**]
some of his [**] (see below).
3. Aspect and HP will jointly [**] for this [**] and [**] will provide
information on the expected cost to the customer of having to [**] in order
to be [**] with the [**].
4. [**] the [**] this program and who also purchase [**] under the program,
these new [**] will be [**] to the appropriate [**] (if necessary) at [**].
5. Both parties will [**] a [**] this program for customers who have recently
purchased the [**] was [**].
6. Aspect will for customers who [**] after the [**] and invoice the
customer.
44
<PAGE> 45
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
7. Aspect will [**] on a [**] for [**] of [**] as a result of this program
(account details to be defined).
8. Aspect will provide [**] of [**] this program on a [**].
9. HP will [**] of [**] of [**] from customers taking advantage of this
program. The methodology for the calculation and payment of these [**] will
be defined in the Distribution Agreement between the Parties.
10. [**] the [**] is [**] will be responsible for [**] at those sites under the
program. Aspect will be [**] for [**] of the [**].
11. The timing for implementation of this program will be determined by [**] of
[**] and [**] of [**], based on their [**] the [**] schedule. The current
expectation is that this could be done once the project has [**] of the
[**], at which point [**] has been defined and all risks are understood.
12. In the event that the [**] is [**], for whatever reason, [**] for [**]
under this program [**] the customer for any [**] for the [**] the list
prices defined above.
13. If development of the [**] is [**] such that [**] North American [**], both
Parties [**] with a [**] of [**]. [**] of [**] by both Parties in good
faith, [**] determined by reasons for the [**].
14. In the event that the customer [**] the [**] for [**] and [**] the customer
for any [**] made for the [**] the [**] the list prices defined above.
45
<PAGE> 46
EXHIBIT (H): ASPECT TRADEMARKS
46
<PAGE> 47
EXHIBIT (H): ASPECT TRADEMARKS
TRADEMARK REFERENCE
- --------- ---------
Aspect(R) None *
A-2000(TM) A-2000 is a trademark of Aspect Medical Systems, Inc.
Bispectral Index(R) Bispectral is a registered trademark of Aspect
Medical Systems, Inc.
BIS(R) BIS is a registered trademark of Aspect Medical
Systems, Inc. BIS logo is a registered trademark of
Aspect Medical Systems, Inc.
[graphic depiction of Aspect's BIS logo]
* This trademark is registered as a trademark to another company, and is used
under license by Aspect Medical Systems.
47
<PAGE> 48
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
EXHIBIT (I): [**]
[**]
WHEREAS
We, [**], herewith confirm that we have knowledge that Hewlett-Packard GmbH,
Herrenberger Str. 110-140, 71034 Boblingen, Germany ("HP") has granted Aspect
Medical Systems, Inc., 2 Vision Drive, Natick, MA 01760-2059, USA ("Aspect")
[**] under an "OEM Development and Purchase Agreement" (hereinafter referred to
as the "Agreement"), dated August 6th, 1999 and Aspect has certain contingent
obligations to refund portions of such prepayment in accordance with Section 5
(c) of this Agreement.
THEREFORE
We undertake, [**] under the Agreement. We undertake with [**] in accordance
with the Agreement, we shall [**].
[**] of the Agreement [**]. It is understood that the [**] of the Agreement.
48
<PAGE> 1
Exhibit 10.26
Aspect Medical Systems, Inc.
requests that the marked portions of this document be granted confidential
treatment pursuant to Rule 406 under the Securities Act of 1933.
PRIVILEGED AND CONFIDENTIAL
ATTORNEY-CLIENT AND WORK PRODUCT PRIVILEGES
FOR GE MARQUETTE ONLY
ASPECT MEDICAL SYSTEMS, INC.
OEM DEVELOPMENT AND PURCHASE AGREEMENT
Agreement dated this 22nd day of December, 1999, by and between Aspect
Medical Systems, Inc, a Delaware corporation with its principal offices located
at Two Vision Drive, Natick, Massachusetts ("Aspect") and GE Marquette Medical
Systems, Inc. ("Marquette"), a Wisconsin corporation with its principal offices
located at 8200 W. Tower Ave., Milwaukee, Wisconsin for the purchase and/or
license by Marquette of products under the terms and conditions contained in
this Agreement.
1. BACKGROUND.
1.1 Aspect is a developer, manufacturer and distributor of medical
devices, equipment, related hardware, software and related
products and accessories.
1.2 Marquette is a developer, manufacturer and distributor of
medical devices, equipment, related hardware, software and
related products and accessories, including multiparameter
patient monitors.
1.3 Marquette desires to integrate Aspect's BIS and EEG technology
into Marquette's multiparameter patient monitors.
1.4 Aspect agrees to sell and/or license to Marquette the products
described below, subject to the terms and conditions contained
in this Agreement.
2. DEFINITIONS.
"ASPECT'S BISPECTRAL INDEX" or "BIS" is Aspect's proprietary processed
EEG parameter that measures the hypnotic effects of anesthetic and
sedative agents on the brain during surgery.
"ASPECT'S EEG PARAMETERS" or "EEG" are Aspect's processed EEG
parameters including Spectral Edge frequency, Median Frequency,
Suppression Ratio, EMG and SQI (Signal Quality Index).
"MARQUETTE PATIENT MONITOR" means any multi-parameter modular patient
monitoring systems manufactured by or for Marquette. When the BIS/EEG
Module Development
<PAGE> 2
Project is complete, the Marquette BIS/EEG module will allow the
Marquette Patient Monitor to display BIS and certain EEG data
(waveforms, numerics, status info), and provide setup and operation
information (user interface), alarming, and network connectivity.
"MARQUETTE BIS/EEG MODULE" is the sum of all components involved in
integrating the BIS and EEG with Marquette Patient Monitors.
"DSC CABLE" is a cable used to connect the DSC-2 or DSC-4 to the
Marquette BIS/EEG Engine.
"MARQUETTE BIS/EEG ENGINE" is the processing unit for deriving the BIS
and EEG data from the raw EEG signal and consists of Aspect's "BIS
Engine" board modified for Marquette.
"DIGITAL SIGNAL CONVERTER-2" (or "DSC-2") is used to amplify the analog
EEG signals as acquired by the BIS sensors and convert it from analog
to digital signals. The DSC-2 is used by Marquette BIS/EEG Module
customers to obtain the BIS.
"DIGITAL SIGNAL CONVERTER-4" (or "DSC-4") is used to amplify the analog
EEG signals as acquired by the Zipprep electrodes and convert it from
analog to digital signals. The DSC-4 is used by Marquette BIS/EEG
Module customers to obtain 2 or 4-channel EEG data only.
"ASPECT BIS/EEG MODULE KIT" means the bundle of all components of the
Marquette BIS/EEG Module that are developed and manufactured by or for
Aspect and licensed/sold to Marquette under this Agreement: DSC-2,
DSC-4, DSC Cable, Marquette BIS/EEG Engine, and Module Cable.
"ASPECT BIS SENSOR" means a single use disposable sensor manufactured
by Aspect for use with the A2000 or with the Aspect BIS/EEG Module Kit
and that is required to generate Aspect's Bispectral Index.
"A2000" means Aspect's stand-alone BIS monitor for use with the Aspect
BIS Sensor and that generates Aspect's Bispectral Index.
"ASPECT PRODUCTS" means Aspect BIS/EEG Module Kit and any other product
that can be ordered by Marquette as listed in Exhibit A (Aspect
Products and Purchase Prices).
"SOFTWARE" means Aspect software programs in binary code form which are
designed for use with the Aspect BIS/EEG Module Kit.
"DOCUMENTATION" means the BIS Engine Serial Interface Specification.
"TERRITORY" shall mean all countries in which Marquette is permitted
under this Agreement to distribute Aspect Products.
"PARTY" or "PARTIES" shall mean Aspect and Marquette each individually
or jointly.
-2-
<PAGE> 3
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
3. BIS/EEG MODULE DEVELOPMENT PROJECT.
3.1 PROJECT TIMING. The overall project duration is expected to be
at least [**]. The product introduction is targeted for the
annual meeting of the [**], but if such target can not be
satisfied the product introduction shall be targeted for no
later than the annual meeting of [**]. A preliminary outline
of the development project is attached to this Agreement as
Exhibit C.
3.2 PROJECT MANAGEMENT.
(a) Each Party shall appoint a "Project Manager" who
shall oversee and manage the joint project on a
day-to-day basis.
(b) The Project Managers shall meet regularly based on
the project needs to assess the project status and
discuss and resolve any issues or problems. These
meetings may be held face-to-face or as telephone or
video conferences.
(c) Each Party shall bear its own communication and
travel costs.
(d) All communication in conjunction with this Agreement
shall be directed to the appropriate person and
address as listed in Exhibit D (Contact
Persons/Addresses).
3.3 MARQUETTE RESPONSIBILITIES.
(a) Marquette shall develop the Marquette BIS/EEG Module
according to mutually agreed specifications at
Marquette's own cost.
(b) Marquette shall develop, design and test the modular
integration of the components of the Aspect BIS/EEG
Module Kit with the Marquette Patient Monitors
3.4 ASPECT RESPONSIBILITIES.
(a) Aspect shall design, develop, and test the Aspect
BIS/EEG Module Kit according to the mutually agreed
specifications. The costs for Aspect to complete this
project, for which preliminary estimates are included
in Exhibit C, shall be borne by Marquette. [**] of
total estimated project costs shown on Exhibit C
shall be paid by Marquette within [**] days of the
date on which this Agreement is signed by both
parties; [**] of total estimated project costs, shown
on Exhibit C shall be paid [**] days thereafter, and
the final payment of the remaining actual project
costs (including labor at Aspect's standard labor
rates) shall be paid upon the project's completion.
Any [**] the [**] will be [**]; provided, however,
that Marquette shall not pay over [**] toward
non-recurring engineering ("NRE") and tooling to
Aspect.
-3-
<PAGE> 4
4. PURCHASE AND SALE OBLIGATIONS; LICENSES.
4.1 GENERAL. Subject to the terms and conditions of this
Agreement, Aspect agrees to sell to Marquette the Aspect
Products listed on Exhibit A (Aspect Products and Purchase
Prices). The components of the Aspect BIS/EEG Module Kits
purchased from Aspect under this Agreement shall only be used
as components in, incorporated into, or integrated with,
systems and products which Marquette sells or leases to
third-party users in the regular course of business. The
components of the Aspect BIS/EEG Module Kits shall only be
resold, leased, rented, licensed or otherwise transferred to
third parties for use as a part of an Marquette BIS/EEG Module
or as replacement parts used in Marquette BIS/EEG Modules and
Marquette shall only sell Aspect approved accessories
including cables and sensor products in connection with any
Marquette BIS/EEG Module. During the term of this Agreement,
Marquette agrees that it may offer complementary but not
directly competitive products to the Marquette BIS/EEG Module.
Marquette products other than the Marquette BIS/EEG Module
that display a parameter claiming to be a measure of the
hypnotic effect of anesthesia, are considered to be directly
competitive products for purposes of this Section 4.1.
4.2 DISTRIBUTION OF ASPECT BIS SENSORS. Aspect hereby grants to
Marquette a non-exclusive right to distribute Aspect BIS
Sensors solely to Marquette customers outside of North America
who have purchased Marquette BIS/EEG Modules. Prices for
Aspect BIS Sensors purchased by Marquette hereunder shall be
as set forth in Exhibit A (Aspect Products and Purchase
Prices).
4.3 ASPECT SOFTWARE LICENSE. Aspect hereby grants to Marquette a
non-exclusive and non-transferable worldwide license, without
the right to sublicense (except to purchasers of Marquette
BIS/EEG Modules), during the term of the Agreement to use the
Software and related Documentation provided by Aspect solely
in connection with operation of the components of Aspect
BIS/EEG Module Kit in the Marquette BIS/EEG Module.
Thereafter, Aspect grants to Marquette a right to use the
Software and related Documentation used in conjunction with
the Marquette BIS/EEG Modules being sold by Marquette on the
date of termination with respect to service and support of
installed Marquette BIS/EEG Modules for a period of 10 years,
after termination of the Agreement. All rights granted to
Marquette customers to use the Marquette BIS/EEG Modules shall
survive any termination of this Agreement as long as such
customers remain in compliance with the terms of use for such
Marquette BIS/EEG Modules. Marquette shall not disclose,
furnish, transfer, distribute or otherwise make available the
Software, the Documentation or any portion thereof in any form
to any third party (other than to purchasers of Marquette
BIS/EEG Modules and to Marquette's subdistributors) and shall
not duplicate the Software, the Documentation or any part
thereof (other than for Marquette's internal use as provided
above). Title to and ownership of any and all proprietary
rights in or related to the Software and the Documentation
therefor shall at all times remain with Aspect or its
licensor(s). Nothing in this Agreement shall be construed as a
sale of any rights in the Software or the Documentation. All
references in this Agreement to sale, resale or purchase of
the
-4-
<PAGE> 5
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Aspect BIS/EEG Module Kits or the components thereof, or
references of like effect, shall, with respect to the Software
and the Documentation mean licenses or sublicenses of the
Software and the Documentation pursuant to this Section 4.
Marquette shall not disassemble, decompile or otherwise
reverse engineer the Software or any part thereof, except if
Aspect is required under applicable law to permit Marquette to
reverse engineer any Software. In such event, Marquette may
reverse engineer the Software but only to the extent Aspect is
required to permit such reverse engineering. Marquette shall
retain and shall not alter or obscure any notices, markings or
other insignia affixed to the Software, the Documentation or
any part thereof at the time it receives such Software or such
Documentation.
4.4 EXCLUSIVITY. Except to the extent Marquette and Aspect may
agree in the future to undertake co-marketing programs
pursuant to Section 22, nothing in this Agreement shall be
construed to grant Aspect any license to sell, distribute or
license to any third party the Marquette BIS/EEG Module, the
Marquette BIS/EEG Engine, or the Aspect BIS/EEG Module Kit. It
is understood, however, that Aspect sells, distributes, and
licenses to other third parties both generic and customized
Aspect BIS/EEG Engines and Aspect BIS/EEG Module Kits to meet
the needs of other OEM customers, and nothing in this
Agreement shall prohibit Aspect from continuing to sell,
distribute, or license these products or components thereof to
customers other than Marquette.
4.5 STANDARD OF CARE; PRIORITY. In connection with Aspect's
performance of its obligations hereunder, Aspect shall use
commercially reasonable efforts in the performance of its
obligations hereunder and will do so with the same degree of
care, skill and prudence customarily exercised when engaged in
similar activities for itself.
5. ROYALTIES AND COMMISSIONS.
5.1 ROYALTIES ON PURCHASES OF ASPECT MODULE KITS. For each Aspect
BIS/EEG Module Kit that Marquette purchases from Aspect,
Marquette shall pay a royalty fee and a price for all
components of the Aspect BIS/EEG Module Kit. Royalty fees and
component prices are specified in Exhibit A (Aspect Products
and Purchase Prices); provided that the prices specified in
Exhibit A shall not apply to the [**] for the [**] a [**] in
[**] for [**] as part [**] agreement pursuant to [**], as [**]
will be [**] to [**] at the [**] described in Exhibit A.
Aspect BIS/EEG Module Kits sold by Aspect under this
Agreement, [**], will be priced based on the Royalty fees and
component prices specified in Exhibit A.
5.2 [**]. For [**] Aspect [**] by Aspect to Marquette [**] in
North America for [**] with [**] or with Aspect [**] as part
of any [**] pursuant to Section [**],
-5-
<PAGE> 6
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Aspect shall [**] Marquette a [**] to [**] of the [**] by
Aspect for [**] Aspect [**]. Aspect shall [**] such [**] to
Marquette on a [**]. With such [**], Aspect shall [**] to
Marquette a [**] of Marquette [**] to which such [**], the
[**] of [**] in that [**], and the [**] from the [**] of the
[**] by Aspect. This [**] shall be [**] to Marquette no later
than [**] the end of [**]. In the event that Aspect's
standalone BIS monitors and/or the BIS modules of other
manufacturers have also been installed at such sites in
addition to Marquette BIS modules, [**] will be [**] to a [**]
only on [**] for [**] with [**]. The Parties will agree upon a
reasonable [**] for [**] the number of [**] with [**] in such
an event (e.g. a [**] determination based on the [**] of [**]
of [**] at [**] during the period) and [**] the [**] to
Marquette accordingly. To facilitate [**], Marquette will be
responsible for providing Aspect with [**] of the [**],
the [**].
6. SCOPE OF DELIVERY
6.1 PURCHASE ORDERS. Purchase orders (via Fax, e-mail, other
electronic transmission or paper) for Aspect Products to be
purchased under this Agreement (the "Orders") must be received
by Aspect during the term of this Agreement and must specify a
delivery date in accordance with the lead-time schedule
outlined below under Section 6(e). All Marquette Purchase
Orders shall make reference to the appropriate engineering
drawing or manufacturing reference numbers. There is no
minimum volume commitment required for each purchase order.
6.2 ORDER ACKNOWLEDGEMENTS. Marquette purchase orders shall be
acknowledged by Aspect within 5 days after receipt of the
order, provided that the order is technically correct and that
the requested delivery time is within the agreed lead time and
that the latest forecast provided by Marquette is not exceeded
by more than [**] and the quantity ordered does not exceed by
more than [**] of the quantity ordered in the preceding month.
If the requested delivery time is less than the agreed lead
time, or if Marquette's latest forecast is exceeded by more
than [**], or if the quantity ordered exceeds by more than
[**] the quantity ordered in the preceding month, Aspect shall
use reasonable efforts to complete the requirements of such
nonconforming orders within seventy (70) days from the date it
receives such nonconforming order and to acknowledge such
orders within 10 days of its receipt. Order acknowledgements
shall not be unreasonably withheld.
6.3 FORECASTS. Marquette shall furnish to Aspect a non-binding
quarterly forecast during the term of this Agreement with the
number and type of Aspect Products for which Marquette expects
to submit orders for the following twelve months.
-6-
<PAGE> 7
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
6.4 CANCELLATION CHARGES. In the event of the cancellation of any
Order by Marquette, Marquette 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>
[Greater than] 10 weeks prior to acknowledged delivery [**]
6 - 10 weeks prior to acknowledged delivery [**] of order value
4 - 6 weeks prior to acknowledged delivery [**] of order value
2 - 4 weeks prior to acknowledged delivery [**] of order value
[Less than] 2 weeks prior to acknowledged delivery [**] of order value
</TABLE>
6.5 COMMITMENT. Except as set forth in Section 6.4, Marquette has
no commitment to purchase any minimum quantity of Aspect
Products or Aspect BIS Sensors pursuant to this Agreement.
Except as set forth in Section 6.4, unless agreed otherwise in
writing by the parties, Marquette shall not be responsible or
in any way liable to Aspect or any third party with respect to
any component purchase commitments or production arrangements
in excess of the amounts or in advance of the times necessary
to meet Marquette's delivery schedules set forth in its
Orders.
6.6 LEAD TIMES. Lead times for the Aspect BIS/EEG Module Kit are
expected to be [**] days. Late deliveries are subject to late
fees of [**] per month (pro-rated daily. In the event of late
deliveries by Aspect, Aspect will also promptly reimburse
Marquette for expedited shipment charges that Marquette incurs
as a direct result of late shipments of the Aspect BIS/EEG
Module Kit from Aspect .
7. PRICES.
7.1 PURCHASE PRICES. The prices of Aspect Products purchased by
Marquette 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).
7.2 PURCHASE PRICE CHANGES. In consideration of the market
situation and after consultation with Marquette, the Purchase
Prices set forth in Exhibit A (Aspect Products and Purchase
Prices) shall be reviewed 12 months after first delivery of
production units and annually thereafter. Any price adjustment
shall become effective only after mutual agreement between
both Parties. [**], Aspect shall have the right [**] during
the term of this Agreement to increase the Purchase Price of
the Aspect Products without the consent of Marquette by an
equivalent amount by delivering reasonable documentation
supporting such increase and by giving Marquette written
notice of the increase not less than [**] days prior to the
date upon which the increased Purchase Price is to become
effective. [**] shall apply to orders for Aspect Products
accepted by Aspect prior to or during such [**] day period
which are to be delivered within [**] days of the date of such
notice.
-7-
<PAGE> 8
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Notwithstanding anything to the contrary in this Section 7.2,
[**] unless [**] reasonable efforts to [**] of the [**] which
have [**] in [**] and, [**] reasonable efforts, was not [**]
to [**].
7.3 PURCHASE PRICE REDUCTIONS. Aspect may reduce the Purchase
Price of any Aspect Product at any time. Such reduction shall
be applicable to all Aspect Products shipped after the date of
the reduction. [**] the [**] of the [**] for the [**] by [**]
as provided in Section 7.2, Aspect shall reduce the Purchase
Prices for all Aspect Products (excluding license fees and
volume discounts) by not less than [**] per year. The first
price reduction will be effective on the [**] anniversary of
the introduction of the Marquette BIS/EEG Module, and the
second price reduction shall be effective on the [**]
anniversary of the introduction of the Marquette BIS/EEG
Module.
7.4 [**]. In no case shall the [**] by any other Party that has
[**] with Aspect [**] of this Agreement for [**] under [**]
terms and conditions.
7.5 TAXES. All prices for Aspect Products are exclusive of all
federal, state and local taxes, levies and assessments, and
Marquette shall be responsible for the payment of all such
taxes, levies and/or assessments imposed on Aspect Products
purchased and/or licensed by Marquette hereunder, excluding
taxes based on Aspect's net income from the transaction.
Marquette shall be responsible for providing in a timely
manner all documentation, in the nature of exemption
certificates or otherwise, necessary to allow Aspect to
refrain from collections, such as sales tax, which it would
otherwise be obligated to make.
8. TERMS OF PAYMENT.
8.1 INVOICES. Marquette shall pay to Aspect the Purchase Price for
all Aspect Products shipped hereunder within forty-five (45)
days after the receipt of Aspect's invoice. Nothing herein
shall affect Aspect's right to withhold shipment or otherwise
exercise its rights under Section 23 (Termination) hereof in
the event of Marquette's failure to make payment when due for
Aspect Products delivered to Marquette. Marquette shall have
the right to provide Aspect with a specific address to which
Aspect will send invoices for Aspect Products purchased under
this Agreement.
8.2 LATE PAYMENT CHARGE. Subject to applicable law, service and/or
interest charges not exceeding the lesser of [**] per month or
the highest amount permitted by law may, at the election of
Aspect, be assessed on amounts past due more than [**] days
(that is, more than [**] days after the payment due date as
specified in Section 8.1).
9. SHIPMENT AND DELIVERY.
9.1 DELIVERY LOCATION. Each shipment must indicate the exact
address of the recipient on the outside of the packaging as
follows:
-8-
<PAGE> 9
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
[TBD]
9.2 DELIVERY TERMS. All shipments hereunder shall be FOB Aspect's
Massachusetts point of origin (Incoterms 1990). All Aspect
Products shall be deemed delivered and subject to Marquette's
dominion and control only when placed in the possession of a
carrier designated by Marquette, properly packed and ready for
shipment to Marquette. Aspect shall cooperate with Marquette
in the documentation and proof of loss claims promptly
presented by Marquette to the appropriate carrier and/or
insurer.
9.3 DELIVERY DATE AND DATE OF DISPATCH. The requested delivery
date shall be specified on the Marquette Purchase Order
provided that such delivery date must be at least [**] days
after the date Aspect receives the Order; provided, however,
that Aspect shall use its reasonable efforts to deliver the
Order as early as reasonably possible (taking other customer
demands on Aspect into account). Aspect shall utilize
reasonable efforts to ensure that the order is delivered in
accordance with Aspect's order acknowledgement and that the
date of dispatch is ten (10) days prior to the delivery date.
Late delivery penalties to Aspect will apply as specified in
Section 6.6 of this Agreement.
10. ACCEPTANCE.
Any Aspect Product shipped hereunder may be subjected to inspection and
performance testing by Marquette, to confirm that it functions in accordance
with Aspect's applicable product specifications in effect at the time of
delivery of such Aspect Products to Marquette . Marquette shall provide written
notice to Aspect of the rejection of any such Aspect Product within [**] days of
the date of receipt of any Aspect Product. Aspect shall have [**] days from
receipt of a notice from Marquette rejecting an Aspect Product either, at its
option, to make any necessary repairs to the defective Aspect Product or to
replace it. If Aspect replaces an Aspect Product, Marquette shall dispose of the
replaced Aspect Product in accordance with Aspect's instructions and at Aspect's
expense. Marquette's sole remedy for rejected Aspect Products shall be limited
to prompt repair or replacement of such Aspect Products.
11. WARRANTY.
11.1 GENERAL. Aspect warrants solely to Marquette that Aspect
Products (including Software) delivered hereunder shall
perform substantially in accordance with the specifications in
Exhibit B (Aspect's Standard Module Kit) or other applicable
product specifications as published by Aspect in effect at the
time of delivery of such Aspect Product (including Software),
and shall be free from defects in materials and workmanship,
when given normal, proper and intended usage, for twelve (12)
months from the date of shipment of the Marquette BIS/EEG
Module at Marquette's end customer site or eighteen (18)
months from the date of shipment by Aspect to Marquette,
whichever is less. Aspect agrees, during the applicable
warranty period, to repair or replace (at Aspect's option) all
defective Aspect Products within thirty (30) days after the
date of return to Aspect and without cost (including shipping)
to Marquette. In the event that Aspect is unable to repair or
replace such defective Aspect Products
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<PAGE> 10
within such thirty (30) day period, Aspect agrees to refund to
Marquette the amounts paid to Aspect for such defective Aspect
Products. This warranty shall not apply to expendable
components and supply items, such as, but not limited to,
cables, fuses and bulbs (or disposable items such as an Aspect
BIS Sensor after the expiration date marked on the Sensor
packaging); nor shall Aspect have any obligation under this
Agreement to make repairs or replacements which are required
by normal wear and tear, or which result, in whole or in part,
from catastrophe, fault or negligence of Marquette, or anyone
claiming through or on behalf of Marquette, or from improper
or unauthorized use of Aspect Products, or use of Aspect
Products in a manner for which they were not designed, or by
causes external to Aspect Products such as, but not limited
to, power or air conditioning failure.
11.2 WARRANTY PROCEDURES. Marquette 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 11.1. At Aspect's option, such
Aspect Products shall be returned by Marquette 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 so defective and promptly
return such Aspect Products to Marquette. Transportation and
insurance costs shall be borne by Aspect. Should Aspect's
examination and testing not disclose any defect covered by the
foregoing warranty, Aspect shall so advise Marquette and
dispose of or return the Aspect Product in accordance with
Marquette's instructions and at Marquette's sole expense, and
Marquette shall reimburse Aspect for such transportation and
insurance costs.
11.3 REPAIR WARRANTY. Aspect warrants its repair work and/or
replacement parts for the duration of the original warranty
period as set forth in Section 10(a) or at least six (6)
months, whichever is longer.
11.4 DISCLAIMER OF WARRANTIES. THE PROVISIONS OF THE FOREGOING
WARRANTIES ARE IN LIEU OF ANY OTHER WARRANTY, WHETHER EXPRESS
OR IMPLIED, WRITTEN OR ORAL (INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12. SERVICE AND SUPPORT.
12.1 SERVICE AND SUPPORT. Marquette shall be responsible for
providing installation, customer training, service and support
(including repair) to its end customers for the Aspect
Products Marquette sells to such customers, and Marquette
shall bear all related costs incurred for labor, parts, or
travel to perform such service.
12.2 CENTRAL REPAIR SERVICE. For the term of this Agreement, Aspect
agrees to provide central repair service (as opposed to field
service) to Marquette for Aspect Products sold hereunder.
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<PAGE> 11
12.3 SERVICE TRAINING. Aspect agrees to provide initial service
training to a mutually agreed upon number of Marquette service
representatives prior to the market release of the EEG/BIS
module, as well as periodic (annually at a minimum) ongoing
training for existing and new Marquette service personnel.
12.4 SERVICE PERIOD. For a period of seven (7) years following the
last delivery to Marquette of the applicable Aspect Product
ordered by Marquette hereunder, Aspect shall use its
reasonable efforts to make available repair service (or at
Aspect's sole discretion, exchange units for the Aspect
Products) for purchase by Marquette 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.
12.5 SERVICE REPORTING. Aspect shall maintain a complete record of
all repair activities performed on any Aspect products
received for repair, and shall provide Marquette with a
quarterly report on all service actions including failure and
repair statistics at a sub-assembly level Service Reports for
each product shall be sent electronically by email to a
designated procurement and technical marketing engineer
(Contact Persons shown in Exhibit D, Contact Persons /
Addresses). Root cause analysis is to be performed and
reported by Aspect to Marquette in case of abnormal failures,
incidents and malfunctions.
13. QUALITY ASSURANCE.
13.1 CERTIFICATION STATUS. Both parties agree to maintain ISO900x,
EN460x, 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.
13.2 ASPECT PRODUCT COMPLIANCE. All Aspect Products sold by Aspect
under this Agreement shall fully comply with the above quality
requirements and guidelines (MDD AX-II, FDA QSR, etc.)
13.3 QA AND REGULATORY AUDITS. Aspect shall permit Marquette's
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 and guidelines.
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.
14. REGULATORY MATTERS.
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<PAGE> 12
14.1 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 Aspect BIS/EEG
Module Kit. Both Parties shall work together to develop a
regulatory plan which defines precisely what these regulatory
and localization requirements are for all countries where the
Marquette BIS/EEG Module is intended to be sold. In
particular, Aspect shall be responsible for generating its own
Device Master Record for the Aspect BIS/EEG Module Kit. It is
understood that the Aspect BIS/EEG Module Kit shall be a
component of the Marquette BIS/EEG Module. Marquette shall be
responsible for obtaining and maintaining all applicable
governmental authorizations and regulatory approvals required
to distribute the combination of Aspect and Marquette products
in the Marquette BIS/EEG Module as provided in Section 14.3.
14.2 MARQUETTE PATIENT MONITORS. Marquette shall assume full
regulatory responsibility for the Marquette Patient Monitors,
including obtaining and maintaining all applicable
governmental authorizations and regulatory approvals required
to distribute the Marquette Patient Monitors in all countries
in the Territory.
14.3 MARQUETTE BIS/EEG MODULE. Marquette shall assume the
regulatory responsibility for the combination of the Aspect
and Marquette components in the Marquette BIS/EEG Module.
Aspect shall fully support Marquette as required in the
process of obtaining regulatory approvals by making available
to Marquette any required information, data, certificates, or
technical files in the requested formats.
14.4 INTERNATIONAL REGULATORY RESPONSIBILITIES. For bringing the
Aspect Products into the market in countries affected by the
European Medical Device Directive ("MDD"), Aspect is the
legally responsible manufacturer under the MDD. The Aspect
Products shall be marked accordingly.
14.5 PRODUCT COMPLAINTS AND INCIDENT REPORTING. Marquette and
Aspect shall inform each other in writing immediately about
any event that may require incident reporting in any country.
Marquette and Aspect shall inform each other in writing within
two (2) business days of a customer complaint regarding the
Marquette BIS/EEG Module, the Aspect Products, or (within the
Territory) Aspect BIS Sensors. Both parties will cooperate and
use commercially reasonable efforts to resolve such customer
complaints. Closure of any customer complaint relating to the
Marquette BIS/EEG Module will occur when Marquette notifies
Aspect that the problem is resolved. Closure of any customer
complaint relating solely to Aspect Products or Aspect Sensors
will occur when Aspect notifies Marquette that the problem is
resolved.
14.6 RECALLS. In the event of any recall of an Aspect Product
required by either a governmental agency, by Aspect, or by
Marquette for safety or efficacy reasons which is the result
of Aspect's failure to supply Aspect Products that (1) conform
in all material respects to the applicable published
specifications (including the
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<PAGE> 13
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
specifications set forth in Exhibit B (Aspect's Standard
Module Kit)) or (2) are free from defects in material and
workmanship (when given normal, proper and intended usage),
Aspect agrees to repair or replace at its own costs all Aspect
Products subject to the recall and previously delivered to
Marquette. Aspect also agrees to consult with Marquette to
establish a reasonable process for managing the recall and
Aspect shall be [**] (including, but not limited to [**] that
are consistent with the recall process agreed to by the
Parties. In the event that Aspect at its sole discretion
requests a recall that is not required by a governmental
agency for safety or efficacy reasons, Aspect shall be
responsible for determining the scope of the recall, including
the number of units, timeframe for the recall, and criteria
for completion. Marquette agrees to maintain all necessary
sales records to facilitate the recall.
14.7 DELEGATION. Marquette may at its sole discretion delegate some
of the obligations under this Section 14 to its
sub-distributors.
14.8 TRACEABILITY. For the purpose of facilitating product
traceability, all Products purchased from Aspect by Marquette
shall require identification of an internal order number and
tracking code.
15. PRODUCT CHANGES; DISCONTINUED PRODUCTS; FUTURE PRODUCTS; CONTINUED
SUPPLY.
15.1 PRODUCT CHANGES. Aspect shall have the right, at any time and
from time to time, to make substitutions and modifications to
Aspect Products, provided that such substitutions or
modifications shall not materially affect form, fit, function,
reliability, serviceability, performance, functional
interchangeability or interface capability of Aspect Products.
In the event that any proposed substitution or modification
affects, in Aspect's reasonable judgment, the form, fit,
function, reliability, serviceability, performance, functional
interchangeability or interface capability of an Aspect
Product, Aspect shall give Marquette written notice of such
proposed substitution or modification at least [**] days prior
to its taking effect and Marquette shall have the right,
during such [**] day period and for [**] days thereafter, to
order Aspect Products without such substitution or
modification for delivery up to [**] days after such
substitution or modification takes effect. Aspect shall
provide the appropriate verification and validation
information for evaluating the effect of the change on the
Marquette BIS/EEG Module.
15.2 DISCONTINUED PRODUCTS. Aspect agrees to notify Marquette in
writing not less than [**] in advance of the discontinuance of
any Aspect Product. Marquette shall be able to place orders
for at least [**] after receipt of the written notice in any
case. In addition, Marquette shall be entitled to determine
its lifetime-buy quantities and place a corresponding last
purchase order.
15.3 FUTURE PRODUCTS. The Aspect Products are designed for use in
measuring the effects of anesthetic and sedative agents on the
brain during surgery. In the event that Aspect develops a
product involving this or a different type of index, patient
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<PAGE> 14
sensor, or application, Aspect and Marquette agree to discuss
in good faith a new agreement for the purchase of such new
product or products by Marquette.
16. OWNERSHIP AND PROTECTION OF RESULTS.
16.1 NO TRANSFER OF OWNERSHIP. It is expressly agreed that neither
Aspect nor Marquette shall transfer to the other Party any
patent rights, copyrights or other intellectual property of
any kind that either Party owns as of the Effective Date of
this Agreement.
16.2 MODELS, PATTERNS, DIES, ETC. Aspect shall retain the title to
and possession of any models, patterns, dies, molds, jigs,
fixtures, and other tools made for or obtained in connection
with this Agreement and related to the Aspect Products, even
if made for, obtained by or paid for by Marquette.
16.3 DEVELOPMENTS. If there are developments (including patentable
inventions) conceived, created or reduced to practice under
this Agreement then the rights to such developments shall be
retained (a) by Aspect if conceived, created and reduced to
practice solely by Aspect, or (b) by Marquette, if solely
conceived, created and reduced to practice by Marquette, or
(c) jointly by Marquette and Aspect (without any duty to
account to the other) if jointly developed by Marquette and
Aspect, provided that:
(i) Marquette shall assign to Aspect all rights
to any developments conceived, created or
reduced to practice by Marquette solely
relating to the Aspect BIS/EEG Module Kit;
and
(ii) Aspect shall assign to Marquette all rights
to any development solely relating to the
Marquette Patient Monitor.
17. DOCUMENTATION AND TRAINING.
Aspect agrees to provide Marquette with such product literature, operations and
maintenance manuals, and other information and training (including training to
avoid possible misrepresentation of Aspect's Bispectral Index) as is mutually
agreed, to enable Marquette to properly sell and maintain Aspect Products,
provided that in no event shall the source code or source listings of Aspect
Software be required to be disclosed or provided by Aspect to Marquette except
as provided in Section 25 (Source Code Escrow). Aspect agrees to give Marquette
the rights to use or reproduce its user documentation for incorporation into
Marquette documentation excluding source code or source listings as previously
mentioned. Such documentation should be provided in an electronic format. Aspect
shall be given the opportunity to review and approve Marquette documentation
that incorporates Aspect documentation prior to publication. The training Aspect
is required to provide Marquette under this Section 17 shall begin at least
three (3) months prior to introduction of the Marquette BIS/EEG Module and shall
be defined as part of the Project's marketing plan.
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<PAGE> 15
18. CONFIDENTIALITY.
No confidential information disclosed by either Party to the other in connection
with this Agreement shall be disclosed to any person or entity other than the
recipient Party's employees and contractors directly involved with the recipient
Party's use of such information who are bound by written agreement to protect
the confidentiality of such information, and such information shall otherwise be
protected by the recipient Party from disclosure to others with the same degree
of care accorded to its own confidential information of like importance. In
addition, each Party and its representatives shall use the confidential
information only for the purposes specified under this Agreement and such
information shall not be used for any other purpose without the prior written
consent of the disclosing Party. To be subject to this provision, information
must be delivered in writing and designated as proprietary or confidential, or
if initially delivered orally, must be identified at the time of disclosure, and
confirmed in writing as confidential within ten (10) days after such oral
disclosure. Information shall not be subject to this provision if it is or
becomes a matter of public knowledge without the fault of the recipient Party,
if it was a matter of written record in the recipient Party's files prior to
disclosure to it by the other Party, if it was or is received by the recipient
Party from a third person under circumstances permitting its unrestricted
disclosure by the recipient Party, or if it was independently developed by the
recipient Party without reference to the confidential information. Upon
termination of this Agreement, each Party shall promptly destroy all
confidential information of the other Party in the possession or control of such
Party and all copies thereof, provided that each Party may retain one copy
thereof for archival purposes. The obligations under this Section 18 shall
continue for both parties for a period of five (5) years after delivery by
Aspect to Marquette of the last Aspect Product under this Agreement, provided,
however that any source code disclosed pursuant to the Source Code Escrow
established under to Section 25 shall be maintained in confidence in perpetuity.
Marquette is entitled to transmit confidential information of Aspect to
Marquette subsidiaries and affiliated companies. In such, case these
subsidiaries and affiliated companies may only use such information to the same
extent as Marquette is entitled to use such information under this Agreement.
Marquette shall be responsible if any of these subsidiaries and affiliated
companies fail to comply with the confidentiality provisions of this Agreement.
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<PAGE> 16
19. WARRANTIES AND INDEMNITIES.
19.1 WARRANTIES BY ASPECT.
(a) Aspect represents and warrants that it either has all
rights, title and interest in, or valid licenses to,
the Aspect Products and any related intellectual
property rights thereto. Aspect represents and
warrants that it has not granted in the Territory any
exclusive licenses or exclusive sublicenses in the
Aspect Products that would prevent it from granting
Marquette the licenses set forth in Section 4.3
(Aspect Software License). Aspect also represents and
warrants that it has the right and authority to
engage in the joint development of the Marquette
BIS/EEG module as contemplated hereunder and that to
its knowledge such activity will not infringe upon or
misappropriate any third party's intellectual
property rights.
(b) Aspect warrants that it will deliver all Aspect
Products free from the rightful claims of any third
party for infringement of any Patents, Trademarks or
Copyrights or misappropriation of Trade Secrets.
Aspect also warrants that as of the date of this
Agreement, Aspect has received no notice of a claim
of infringement or misappropriation from any third
party regarding Aspect Products. Marquette's
exclusive remedy with respect to breach of any
warranty provided in this Section 19.1 shall be that
Aspect will defend at its own expense, and will pay
the costs and damages (including attorneys fees,
other professional fees and other costs of litigation
or settlement) made in settlement or awarded as a
result of, any action brought against Marquette or
any of Marquette's customers based on an allegation
of such infringement or misappropriation with respect
to any Aspect Product, provided that the
Indemnification Procedures set forth in Section 19.3
are followed. If an injunction is obtained against
Marquette's or its customers' use of an Aspect
Product by reason of an infringement or
misappropriation described above, or if in Aspect's
opinion an Aspect Product or any part thereof is
likely to become the subject of a claim of such
infringement or misappropriation, Aspect will, at its
option and its own expense procure the right for
Marquette and its customers to continue using such
Aspect Product, or replace or modify such Aspect
Product or any part thereof so that it becomes
non-infringing. If neither of the foregoing options
are reasonably available to Aspect, Aspect shall have
the right to discontinue supplying such Aspect
Products to Marquette. Aspect shall not have any
obligation to Marquette or its customers under any
provision of this Section if the infringement or
misappropriation claim is based upon the modification
of any Aspect Product not made by Aspect, the use of
Aspect Products in combination with any program or
equipment, or any part thereof, not furnished or
recommended in writing by Aspect, or the use of such
Aspect Products in a manner or environment, or for
any purpose, for which Aspect did not design or
license them.
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<PAGE> 17
(c) In the event that any claim is brought against
Marquette as a result of personal injuries and/or
property damages resulting from that portion of the
Marquette BIS/EEG Module developed and manufactured
by Aspect, and provided further that such claims do
not arise as a result of the misuse of the Aspect
Products, or the use of the Aspect Products in an
application for which it was not designed by Aspect,
where such claim would not have occurred but for such
misuse or use, Aspect agrees that it shall indemnify
and hold Marquette and its directors, officers,
employees, representatives and agents harmless from
and against any damages, liabilities, costs and
expenses (including attorneys' and other professional
fees and other costs of litigation) arising out of
such claim, provided that the procedures set forth in
Section 19.3 are followed.
19.2 WARRANTIES BY MARQUETTE.
(a) Marquette represents and warrants that it either has
all rights, title and interest in, or valid license
to, the Marquette Patient Monitor and any related
intellectual property rights thereto. Marquette also
represents and warrants that it has the right and
authority to engage in the development of the
Marquette BIS/EEG Module as contemplated hereunder
and that to its knowledge such activity will not
infringe upon or misappropriate any third party's
intellectual property rights or violate the terms of
any agreement Marquette has entered into with a third
party.
(b) Marquette warrants that as of the date of this
Agreement, Marquette has received no notice of a
claim of infringement or misappropriation from any
third party regarding the Marquette Patient Monitor
or any other Marquette-supplied component of the
Marquette BIS/EEG Module. Aspect's exclusive remedy
with respect to breach of any warranty provided in
this Section 19.2 shall be that Marquette will defend
at its own expense, and will pay the costs and
damages (including attorneys fees, other professional
fees and other costs of litigation or settlement)
made in settlement or awarded as a result of, any
action brought against Aspect or any of Aspect's
customers based on an allegation of such infringement
or misappropriation with respect to any Marquette
Patient Monitor or any other Marquette-supplied
component of the Marquette BIS/EEG Module, provided
that the Indemnification Procedures set forth in
Section 19.3 are followed. If an injunction is
obtained against Aspect's or its customers' use of a
Marquette Patient Monitor or any other
Marquette-supplied component of the Marquette BIS/EEG
Module by reason of an infringement or
misappropriation described above, or if in
Marquette's opinion a Marquette Patient Monitor or
any other Marquette-supplied component of the
Marquette BIS/EEG Module or any part thereof is
likely to become the subject of a claim of such
infringement or misappropriation, Marquette will, at
its option and its own expense procure the right for
Aspect and its customers to continue using such
Marquette Patient Monitor or any other
Marquette-supplied component of the Marquette
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<PAGE> 18
BIS/EEG Module, or replace or modify such Marquette
Patient Monitor or any other Marquette-supplied
component of the Marquette BIS/EEG Module or any part
thereof so that it becomes non-infringing. Marquette
shall not have any obligation to Aspect or its
customers under any provision of this Section 19.2 if
the infringement or misappropriation claim is based
upon the use of Marquette Patient Monitors or any
other Marquette-supplied component of the Marquette
BIS/EEG Modules in combination with any program or
equipment, or any part thereof, not furnished or
recommended in writing by Marquette, or the use of
such Marquette Patient Monitors or any other
Marquette-supplied component of the Marquette BIS/EEG
Modules in a manner or environment, or for any
purpose, for which Marquette did not design or
license them.
(c) In the event that any claim is brought against Aspect
as a result of personal injuries and/or property
damages resulting from the Marquette BIS/EEG Module,
and provided further that such claims do not arise as
a result of the defective design or operation of that
portion of the Marquette BIS/EEG Module developed or
manufactured by Aspect, Marquette agrees that it
shall indemnify and hold Aspect and its directors,
officers, employees, representatives and agents
harmless from and against any damages, liabilities,
costs and expenses (including attorneys' and other
professional fees and other costs of litigation)
arising out of such claim, provided that the
procedures set forth in Section 19.3 are followed.
19.3 INDEMNIFICATION PROCEDURES.
(a) In the event that any person intends to claim
indemnification pursuant to this Agreement, (an
"Indemnitee"), it shall promptly notify the
indemnifying Party (the "Indemnitor") in writing of
such alleged liability, provided that the failure to
promptly notify the Indemnitor shall not relieve the
Indemnitor of any obligation under this Agreement
except to the extent such failure to provide prompt
notice adversely impairs the Indemnitor's ability to
defend against the claim, suit or proceeding.
(b) The Indemnitor shall have the sole right to control
the defense and settlement thereof, provided, that
(i) the Indemnitor may not consent to imposition of
any obligation or restriction on the Indemnitee in
any settlement unless mutually agreed among Aspect
and Marquette (ii) Indemnitor shall keep Indemnitee
fully informed and permit the Indemnitee to
participate (at Indemnitee's expense) as the
Indemnitee may reasonably request and (iii)
Indemnitee may, without affecting its right to
indemnity hereunder, defend and settle any such
claim, suit or proceeding if Indemnitor declines to
defend against such claim, suit or proceeding or
Files for Bankruptcy. The Indemnitee shall cooperate
with the Indemnitor and its legal representatives in
the investigation of any action, claim or liability
covered by this Agreement.
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<PAGE> 19
(c) The Indemnitee shall not, except at its own cost,
voluntarily make any payment or incur any expense
with respect to any claim or suit without the prior
written consent of Indemnitor, which Indemnitor shall
not be required to give, provided that the Indemnitee
may, without affecting its right to indemnity
hereunder, defend and settle any such claim, suit or
proceeding if the Indemnitor declines to take
responsibility or Files for Bankruptcy.
20. TRADEMARKS.
20.1 TRADEMARKS.
(a) OWNERSHIP. Marquette acknowledges and agrees that
Aspect is the sole and exclusive owner of all right,
title and interest in, or has valid licenses to the
trademarks (the "Aspect Trademarks") identified on
Exhibit E (Aspect Trademarks). Aspect acknowledges
and agrees that Marquette is the sole and exclusive
owner of all right, title and interest in and to the
trademarks (the "Marquette Trademarks") identified on
Exhibit F (Marquette Trademarks). Each Party
recognizes the value of the other Party's Trademarks
and the good will associated with the other Party's
Trademarks. Marquette agrees that its use of the
Aspect Trademarks and any good will arising therefrom
shall inure to the benefit of Aspect. Aspect agrees
that its use of the Marquette Trademarks and any good
will arising therefrom shall inure to the benefit of
Marquette. Nothing contained herein shall create, nor
shall be construed as an assignment of, any right,
title or interest in or to the Aspect Trademarks to
Marquette, or the Marquette Trademarks to Aspect,
other than the grant of the licenses in Section 20.1
(c) below; it being acknowledged and agreed that all
other right, title and interest in and to the Aspect
Trademarks is expressly reserved by Aspect and its
licensors, and all other right, title and interest in
and to the Marquette Trademarks is expressly reserved
by Marquette. Each Party shall keep the other Party's
Trademarks free from all liens, mortgages or other
encumbrances. Each Party agrees that it shall not
attack or otherwise challenge the title, validity or
any other rights of the other Party in or to its
Trademarks.
(b) NOTICE. All Marquette BIS/EEG Modules that use the
Aspect Trademarks shall be accompanied, where
reasonable and appropriate, by a proprietary notice
consisting of the following elements:
(i) The statement "[insert trademark(s)] is a
trademark(s) of [or licensed to] Aspect
Medical Systems, Inc."
(ii) Marquette shall include the "(TM)" or "(R)"
symbol, as instructed by Aspect, after the
first prominent use of the Aspect Trademark
in the Marquette Patient Monitor and related
materials. Marquette shall have a period of
sixty (60) days in which to begin to use the
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Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
"(R)" symbol in replacement of the "(TM)"
symbol upon receiving instructions to do so
by Aspect for all new stock of such
materials. Marquette may continue to deliver
stocked literature before the change becomes
effective.
Marquette shall reproduce copyright and trademark notices of
Aspect on the "splash screen" or in the same location where
Marquette reproduces its own copyright and trademark notices .
(c) LICENSE. Each Party hereby grants to the other a
nonexclusive, worldwide, royalty-free license
(without the right to sublicense) to use the other
Party's Trademarks to designate and promote Aspect
Products in conjunction with Marquette BIS/EEG
Modules. 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.
(d) QUALITY STANDARDS.
(i) INSPECTION. Upon reasonable notice and
request, each Party will furnish to the
other samples of its applicable advertising
and promotional materials as necessary to
allow the requesting Party to monitor
compliance with this Agreement.
(ii) COMPLIANCE. Aspect acknowledges the high
standards of quality and excellence
established by Marquette with respect to
products bearing Marquette's trademarks.
Marquette acknowledges the high standards of
quality and excellence established by Aspect
with respect to products bearing the Aspect
Trademarks. Each Party agrees that Marquette
BIS/EEG Modules with which both parties'
Trademarks are used shall be of such quality
so as to maintain such high standards and to
reflect well upon both Parties. Each Party
agrees to adhere to its own or the following
quality standards (whichever may be more
rigorous) for use of the other Party's
Trademarks in connection with the Marquette
BIS/EEG Module:
- In order to ensure that the
Marquette BIS/EEG Module
distributed under both parties'
Trademarks complies with the
consistent quality standards of
each Party, all Marquette BIS/EEG
Modules distributed by or for
Marquette which bear an Aspect
Trademark shall conform to those
commercially reasonable standards
which Aspect provides to Marquette
in writing. Marquette shall cause
each major new release of such
Marquette BIS/EEG Modules to comply
with such standards or remove the
Aspect Trademark(s) from any such
new release, which does not comply
with such standards. Marquette
shall have a period of [**] in
which to bring newly manufactured
Marquette
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Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
BIS/EEG Modules into compliance
with any commercially reasonable
standard provided to it in writing
by Aspect following the date of
receipt of such standard.
- Each Party acknowledges that if
Marquette BIS/EEG Modules bearing
both Parties' Trademarks fail to
satisfy the quality standards set
forth above, the substantial good
will which each Party has built and
now possess in its own products and
Trademarks shall be impaired.
(e) PROTECTION AND INFRINGEMENT. Each Party agrees to
cooperate with and assist the other Party in
obtaining, maintaining, protecting, enforcing and
defending the other Party's proprietary rights in and
to its Trademarks. In the event that either Party
learns of any infringement, threatened infringement
or passing-off of the other Party's Trademarks, or
that any third party claims or alleges that the other
Party's Trademarks infringe the rights of the third
party or are otherwise liable to cause deception or
confusion to the public, the Party obtaining such
information shall notify the other Party giving the
particulars thereof, and if such claims or
allegations relate to this Agreement, the Marquette
BIS/EEG Module, the Aspect BIS/EEG Kit or Aspect
Products sold hereunder, shall provide necessary
information and assistance reasonably requested by
such other Party in the event that such other Party
decides that proceedings should be commenced.
(f) TERMINATION. In addition to the termination rights
set forth in Section 23 hereof, in the event that
either Party is in material breach of any provision
of this Section 20, the non-breaching Party may, upon
[**] days written notice, terminate the license
granted in Section 20.1 (c) if the breaching Party
does not cure such breach or default within such [**]
day period. In addition to the provisions of Section
23 hereof, upon termination of the license granted in
Section 20.1 (c), or upon termination of this
Agreement, for whatever cause:
(i) each Party shall immediately cease and
desist from any further use of the other
Party's Trademarks and any trademarks
confusingly similar thereto, either directly
or indirectly;
(ii) All rights in the Aspect Trademarks granted
to Marquette hereunder shall immediately
revert to Aspect, and all rights in the
Marquette Trademarks granted to Aspect
hereunder shall immediately revert to
Marquette;
(iii) In the event that this Agreement is
terminated for any reason other than a
material breach or material default by
Marquette, Marquette shall thereafter to
dispose of all of the unsold Marquette
Patient Monitors bearing the Trademarks and
advertising and promotional
-21-
<PAGE> 22
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
materials relating thereto which had been
completed by it prior to such termination,
provided such Marquette Patient Monitors and
materials were in the process of manufacture
before such termination.
(g) PROMOTIONAL CLAIMS. The general form of any
promotional claims by Marquette regarding Aspect's
Bispectral Index technology and/or the integration of
Aspect's Bispectral Index technology in Marquette
Patient Monitors, and the specific form of the use of
Aspect's trade names and trademarks, and of intended
use claims regarding Aspect's Bispectral Index
technology, in promotional material, advertisement,
and/or in written technical literature shall be
subject to review and approval by Aspect prior to its
publication or display. The general form of any
promotional claims by Aspect regarding Marquette's
Patient Monitors or the integration of Aspect's
Bispectral Index technology in Marquette Patient
Modules, and the specific form of the use of
Marquette's trade names and Trademarks, and of
intended use claims regarding the Marquette BIS/EEG
Modules, in promotional material, advertisement,
and/or in written technical literature shall be
subject to review and approval by Marquette prior to
its publication or display.
21. EXPORT.
Marquette shall not export, directly or indirectly, Aspect Products (including
when integrated into a Marquette Patient Monitor) or other products, information
or materials provided by Aspect hereunder, to any country for which the United
States requires any export license or other governmental approval at the time of
export without first obtaining such license or approval. It shall be Marquette's
responsibility to comply with the latest United States export regulations, and
Marquette shall defend and indemnify Aspect from and against any damages, fines,
penalties, assessments, liabilities, costs and expenses (including reasonable
attorneys' fees and court costs) arising out of any claim that Marquette Patient
Monitors or other products, information or materials provided by Aspect
hereunder were exported or otherwise shipped or transported in violation of
applicable laws and regulations.
22. CO-MARKETING PROGRAM.
Marquette and Aspect will undertake co-marketing programs in the future in
certain geographies, including North America, consistent with the goals and
principles outlined in Exhibit F to this Agreement. The Parties further agree to
utilize their best efforts to finalize a definitive co-marketing agreement to
implement the goals outlined in Exhibit F within [**] days following the date on
which this OEM Development and Purchase Agreement is signed by both Parties.
-22-
<PAGE> 23
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
23. TERM; DEFAULT AND TERMINATION.
23.1 TERM AND RENEWAL. The initial term of this Agreement shall
commence on the Effective Date and shall continue for a period
of three (3) years following introduction of the Marquette
BIS/EEG Module. The term of this Agreement shall be renewed
automatically for successive twelve (12) month periods, unless
either Party provides written notice of termination to the
other Party at least sixty (60) days prior to expiration of
the Agreement.
23.2 TERMINATION FOR GOOD CAUSE.
(a) TERMINATION BY ASPECT. The Agreement may be
terminated by Aspect giving [**] prior
written notice to Marquette in the event Marquette
has not commercially introduced a Marquette BIS/EEG
Module by October 31, 2001.
(b) TERMINATION BY MARQUETTE. The Agreement may be
terminated by Marquette giving [**] written notice
to Aspect if Aspect has failed to provide a Aspect
BIS/EEG Module Kit consistent with the specifications
outlined in Exhibit C to Marquette by December 31,
2000. Furthermore, Marquette will require prototype
Aspect BIS/EEG Module Kits in advance of the December
31, 2000 date, as follows in order to make the date
specified in Section 23.2(a): [**] then current
Aspect BIS/EEG Module Kit approximately 10-12 weeks
after the project commences; [**] then current Aspect
BIS/EEG Module Kits approximately five (5) months
thereafter; and approximately [**] then current
Aspect BIS/EEG Module Kits two (2) months thereafter.
Specific schedules and volumes for prototype Aspect
BIS/EEG Module Kits will be mutually agreed upon by
both Parties to meet the mutual timelines.
(c) MATERIAL COMPETITIVE FEATURES. Either Party may
terminate this Agreement if the other Party's [**] do
not [**] for [**] the [**] of [**] and [**] on the
[**] . In order to exercise its rights under this
Section 23.2(c), a Party must provide [**] prior
written notice to the other Party, specifying in
reasonable detail the [**] or [**] that are [**].
Following receipt of such notification, the notified
Party shall have [**] to [**] in [**]. If at the end
of such [**] period, the notified Party is unable to
do so, the notifying Party may terminate the
Agreement; provided, that no such notification shall
be effective prior to [**].
-23-
<PAGE> 24
23.3 EVENTS OF DEFAULT. The following shall constitute events of
default under this Agreement:
(i) if either Party assigns this Agreement or
any of its rights or obligations hereunder
without the prior written consent of the
respective other Party, except: (a) as
specifically permitted under this Agreement;
or (b) in connection with the sale or other
transfer of such Party's business to which
this Agreement relates (the word "assign" to
include, without limiting the generality
thereof, a transfer of a majority interest
in the Party) or
(ii) if either Party shall neglect or fail to
perform or observe any of its obligations to
the other Party hereunder, including,
without limiting the generality thereof, the
timely payment of any sums due, and such
failure is not cured within thirty (30) days
(ten (10) days in the event of a default in
the payment of amounts owed the other Party)
after written notice thereof from the other
Party; or
(iii) if there is (w) a dissolution, termination
of existence, liquidation, insolvency or
business failure of either Party, or the
appointment of a custodian or receiver of
any part of either Party's property, if such
appointment is not terminated or dismissed
within thirty (30) days; (x) a composition
or an assignment or trust mortgage for the
benefit of creditors by either Party; (y)
the commencement by either Party of any
bankruptcy proceeding under the United
States Bankruptcy Code or any other federal
or state bankruptcy, reorganization,
receivership, insolvency or other similar
law affecting the rights of creditors
generally; or (z) the commencement against
either Party of any proceeding under the
United States Bankruptcy Code or any other
federal or state bankruptcy, reorganization,
receivership, insolvency or other similar
law affecting the rights of creditors
generally, which proceeding is not dismissed
within thirty (30) days ("File for
Bankruptcy").
23.4 REMEDIES. Upon any event of default, and in addition to any
other remedies either Party may have at law or in equity, the
non-defaulting Party may terminate the Agreement, cancel any
outstanding Order, refuse to make or take further Orders or
deliveries, cancel any discount given, and declare all
obligations immediately due and payable. Any such termination
or other action taken by the non-defaulting Party pursuant to
this Section 23.4 shall not relieve the defaulting Party of
its obligations hereunder and the non-defaulting Party shall
retain all legal and equitable remedies after such
termination.
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<PAGE> 25
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
24. INSURANCE.
Upon request, Aspect shall provide evidence of product liability, general
liability and property damage insurance against an insurable claim or claims
which might or could arise regarding Aspect products purchased from Aspect. Such
insurance shall contain a minimum limit of liability for bodily injury and
property damage of not less than 2,000,000 (two million) US$.
25. SOURCE CODE ESCROW
25.1 Escrow Agent. Aspect warrants that the entire source code for
Software, together with all Documentation, as now exists or
hereafter becomes available including but not limited to, the
then current version(s) of Software necessary for the use,
maintenance, modification and enhancement of the Marquette
BIS/EEG Module will have been deposited and maintained at
Marquette's expense in an escrow account (the "Escrow
Account") pursuant to an agreement between an escrow agent
(the "Escrow Agent"), which Escrow Agent is reasonably
satisfactory to Marquette, and Aspect (the "Escrow
Agreement"). Such Escrow Agent shall be instructed to certify
in writing to Marquette within thirty (30) days from the
execution date hereof that such source code and Documentation
have been delivered to it. Such Escrow Agent shall be
instructed in writing by Aspect upon execution hereof to
deliver all such Software and Documentation to Marquette upon
written notice thereof by Marquette promptly after any of the
following occurrences:
(a) Aspect fails to repair or maintain the Software as it
is required to do under Sections 11 and 12.4 of this
Agreement;
(b) Aspect suspends or discontinues business or indicates
its intention to suspend or discontinue business.
25.2 Marquette's Right To Use Source Code. Upon the occurrence of
any of the above, Marquette shall have the right to use such
source code and Documentation solely to use, maintain,
support, or enhance the Marquette BIS/EEG Module.
25.3 Verification. Marquette shall have the right to verify at any
time, at its own cost, that the applicable version(s) of
Software is so deposited; and the right to engage a mutually
acceptable third party to test the Software source code to
assure Marquette that it is the applicable version(s) and that
it complies.
25.4 Disputes. Should there be any dispute as to whether Marquette
shall be entitled to receive any such source code and
Documentation, then such dispute shall be resolved in
accordance with the terms and conditions set forth in Section
26 (Dispute Resolution) of this Agreement.
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<PAGE> 26
26. DISPUTE RESOLUTION
26.1 GENERAL. Any dispute, controversy or claim arising out of or
relating to this Agreement or any related agreement or the
validity, interpretation, breach or termination thereof (a
"Dispute"), including claims seeking redress or asserting
rights under applicable law, shall be resolved in accordance
with the procedures set forth herein. Until completion of such
procedures, no Party may take any action not contemplated
herein to force a resolution of the Dispute by any judicial or
similar process, except to the limited extent necessary to;
(i) avoid expiration of a claim that might eventually be
permitted hereby; or (ii) obtain interim relief, including
injunctive relief, to preserve the status quo or prevent
irreparable harm.
26.2 WAIVER. In connection with any Dispute, the parties expressly
waive and forego any right to (i) punitive, exemplary,
statutorily, enhanced or similar damages in excess of
compensatory damages and (ii) trial by jury.
26.3 GOOD FAITH NEGOTIATIONS. Any Dispute relating to this
Agreement (a "Dispute") will be resolved first through good
faith negotiations between appropriate management-level
representatives of each Party having responsibility for the
sale or use of products involved.
26.4 MEDIATION. If within sixty (60) day the parties are unable to
resolve the dispute through good faith negotiation, either
Party may submit a Dispute for resolution by mediation
pursuant to the Center for Public Resources Model Procedure
for Mediation of Business Disputes as then in effect. The
mediation shall be conducted in New York City. Mediation will
continue for at least thirty (30) days unless the mediator
chooses to withdraw sooner. At the request of either Party,
the mediator will be asked to provide an evaluation of the
Dispute and the parties' relative positions. Each Party shall
bear its own costs of mediation effort.
26.5 ARBITRATION. After completion of any mediation effort, a Party
may submit the Dispute for resolution by arbitration pursuant
to the Non-Administered Arbitration Rules of the Center for
Public Resources as in effect on the date hereof, unless the
parties agree to adopt such rules as in effect at the time of
the arbitration. The arbitral tribunal shall be composed of
one arbitrator; and the arbitration shall be conducted in New
York. If the resolution of the Dispute is not found within the
terms of this Agreement, the arbitrator shall determine the
Dispute in accordance with the governing law of the Agreement,
without giving effect to any conflict of law rules or other
rules that might render such law inapplicable or unavailable.
The prevailing Party in any arbitration conducted under this
Section shall be entitled to recover from the other Party (as
part of the arbitral award or order) its reasonable attorneys'
fees and other costs of arbitration.
26.6 APPLICABLE LAW. The law applicable to the validity of this
arbitration provision, the conduct of the arbitration, the
challenge to or enforcement of any arbitral award or order or
any other question of arbitration law or procedure shall be
-26-
<PAGE> 27
governed exclusively by the Federal Arbitration Act, 9 U.S.C.
sections 1-16; however, the award can be modified or vacated
on grounds cited in the Federal Arbitration Act or, if the
arbitrator's findings of facts are not supported by
substantial evidence or the conclusions of law are erroneous,
under the laws of the State of New York. The place of
arbitration shall be in New York City. The parties agree that
the federal and state courts located in the State of New York
shall have exclusive jurisdiction over any action brought to
enforce this arbitration provision, and each Party irrevocably
submits to the jurisdiction of said courts. Notwithstanding
the foregoing sentence, either Party may apply to any court of
competent jurisdiction, wherever situated, for enforcement of
any judgment on an arbitral award.
26.7 TIME LIMIT. Except as time barred under any applicable statute
of limitation of lesser duration, any claim by either Party
shall be time-barred unless the asserting Party commences an
arbitration proceeding with respect to such claim within two
years after the cause of action has accrued.
26.8 PROVISIONAL OR INTERIM JUDICIAL MEASURES. Notwithstanding any
other provision of this Agreement, the parties expressly agree
that prior to the first meeting of the arbitrator either shall
have the right to apply to any state or federal court in the
State of New York or any other court that would otherwise have
jurisdiction, for provisional or interim measures.
26.9 CONSOLIDATED PROCEEDINGS. Each Party hereby consents to a
single, consolidated arbitration proceeding of multiple
claims, or claims involving more than two parties. The
prevailing Party or parties in any arbitration conducted under
this paragraph shall be entitled to recover from the other
Party or parties (as part of the arbitral award or order) its
or their reasonable attorneys' fees and other reasonable costs
of arbitration.
27. GENERAL PROVISIONS.
27.1 FORCE MAJEURE. In the event that either Party is prevented
from performing, or is unable to perform, any of its
obligations under this Agreement due to any act of God, fire,
casualty, flood, war, strike, lock out, failure of public
utilities, injunction or any act, exercise, assertion or
requirement of governmental authority, epidemic, destruction
of production facilities, insurrection, inability to procure
materials, labor, equipment, transportation or energy
sufficient to meet manufacturing needs, or any other cause
beyond the reasonable control of the Party invoking this
provision, and if such Party shall have used its best efforts
to avoid such occurrence and minimize its duration and has
given prompt written notice to the other Party, then the
affected Party's performance shall be excused and the time for
performance shall be extended for the period of delay or
inability to perform due to such occurrence.
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<PAGE> 28
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
27.2 PUBLICITY. Neither Party shall originate any publicity, news
release or other public announcement relating to this
Agreement or the existence of an arrangement between the
Parties without the prior written approval of the other Party,
except as otherwise required by law.
27.3 WAIVER. The waiver by either Party of a breach or a default of
any provision of this Agreement by the other Party shall not
be construed as a waiver of any succeeding breach of the same
or any other provision, nor shall any delay or omission on the
part of either Party to exercise or avail itself of any right,
power or privilege that it has, or may have hereunder, operate
as a waiver of any right, power or privilege by such Party.
27.4 NO AGENCY. Nothing contained in this Agreement shall be deemed
to constitute either Party as the agent or representative of
the other Party, or both Parties as joint venturers or
partners for any purpose. Neither Party shall be responsible
for the acts or omissions of the other Party, and neither
Party shall have authority to speak for, represent or obligate
the other Party in any way without prior written authority
from the other Party.
27.5 SURVIVAL OF OBLIGATIONS. All obligations of either Party under
Sections 4.3 (but only insofar as it relates to the rights of
Marquette customers to continue using Marquette BIS/EEG
Modules), 5 (Royalties), 11 (Warranty), 12 (Service and
Support), 14 (Regulatory Matters), 16 (Ownership and
Protection of Results), 18 (Confidentiality), 19
(Indemnities), 20 (Trademarks), 25 (Source Code Escrow), 26
(Dispute Resolution), and 27.6 (Limitation on Liability) shall
survive the expiration or termination of this Agreement and
continue to be enforceable.
27.6 LIMITATION ON LIABILITY. EXCEPT AS PROVIDED IN SECTION 19,
EACH PARTY'S LIABILITY ARISING OUT OF THE MANUFACTURE, SALE OR
SUPPLYING OF ASPECT PRODUCTS OR THEIR USE OR DISPOSITION,
WHETHER BASED UPON WARRANTY, CONTRACT, TORT OR OTHERWISE,
SHALL NOT EXCEED THE SUM OF (i) THE TOTAL ACTUAL PURCHASE
PRICE PAID BY MARQUETTE FOR ALL ASPECT PRODUCTS PURCHASED
HEREUNDER; (ii) ALL AMOUNTS PAID BY MARQUETTE TO ASPECT FOR
PROJECT DEVELOPMENT COSTS PURSUANT TO SECTION 3.4 OF THIS
AGREEMENT; AND (iii) ALL AMOUNTS PAID BY MARQUETTE TO ASPECT
FOR SERVICE AND SUPPORT PURSUANT TO SECTION 12 OF THIS
AGREEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR OTHER
INDIRECT DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF
PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES) ARISING OUT OF
THE MANUFACTURE, SALE OR SUPPLYING OF ASPECT PRODUCTS.
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<PAGE> 29
27.7 SEVERABILITY. In the event that any provision of this
Agreement is held by a court of competent jurisdiction to be
unenforceable because it is invalid or in conflict with any
law of any relevant jurisdiction, the validity of the
remaining provisions shall not be affected and the rights and
obligations of the Parties shall be construed and enforced as
if the Agreement did not contain the particular provisions
held to be unenforceable.
27.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts, without reference to conflict of laws
principles, and shall not be governed by the U.N. Convention
on Contracts for the International Sale of Goods.
27.9 NOTICES. Any notice or communication with regard to the
termination of or changes to this Agreement from one Party to
the other shall be in writing and either personally delivered
or sent via certified mail, postage prepaid and return receipt
requested addressed, to such other Party at the address of
such Party specified in this Agreement or such other address
as either Party may from time to time designate by notice
hereunder.
27.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties. No waiver, consent,
modification or change of terms of this Agreement shall bind
either Party unless in writing signed by both Parties, and
then such waiver, consent, modification or change shall be
effective only in the specific instance and for the specific
purpose given. There are no understandings, agreements,
representations or warranties, expressed or implied, not
specified herein regarding this Agreement or the Aspect
Products purchased and/or licensed hereunder. Only the terms
and conditions contained in this Agreement shall govern the
transactions contemplated hereunder, notwithstanding any
additional, different or conflicting terms which may be
contained in any Order or other document provided by one Party
to the other. Failure of Aspect to object to provisions
contained in any Order or other document provided by Marquette
shall not be construed as a waiver of the terms and conditions
of this Agreement nor an acceptance of any such provision.
27.11 HEADINGS. Captions and headings contained in this Agreement
have been included for ease of reference and convenience and
shall not be considered in interpreting or construing this
Agreement.
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<PAGE> 30
27.12 EXHIBITS: The following Exhibits shall be part of this
Agreement:
EXHIBIT A: Aspect Products and Purchase Prices
EXHIBIT B: Aspect's Standard BIS Module Kit
EXHIBIT C: Development Project
EXHIBIT D: Contact Persons/Addresses Prices
EXHIBIT E: Aspect and Marquette Trademarks
27.13 BENEFICIARIES. Except for the provisions of Section 19 hereof,
which are also for the benefit of the other Persons
indemnified, this Agreement is solely for the benefit of the
parties hereto and their respective affiliates, successors in
interest and permitted assigns and shall not confer upon any
other person any remedy, claim, liability, reimbursement or
other right in excess of those existing without reference to
this Agreement.
27.14 ASSIGNMENT. Neither Party may assign or delegate this
Agreement or any rights or obligations under this Agreement
without the prior written consent of the other, which shall
not be unreasonably withheld; provided, however, that
Marquette may, without the prior written consent of Aspect,
assign and delegate this Agreement and any or all of its
rights and obligations hereunder to any of its affiliates
within the GE Medical Systems division of General Electric
Company, and provided that either party shall have the right
to assign this Agreement in connection with a sale of the
business of such party to which this Agreement relates.
IN WITNESS WHEREOF, this Agreement has been duly executed as a sealed
instrument as of the date specified above.
Aspect Medical Systems, Inc. GE Marquette Medical Systems, Inc.
By: /s/ J. Breckenridge Engle By: /s/ Kevin King
------------------------------ ------------------------------
J. Breckenridge Engle Kevin King
Title: Chairman Title: Vice President and
--------------------------- General Manager of
Global Marketing
---------------------------
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<PAGE> 31
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
EXHIBIT A
ASPECT PRODUCTS AND PURCHASE PRICES
A) ASPECT BIS/EEG MODULE KIT:
Within thirty (30) days of the date of this Agreement, Marquette shall
[**] of the following [**] by giving Aspect written notice [**].
[**]:
List price for Aspect BIS/EEG Module Kit: [**] (includes [**] for
components and [**] for BIS license)
Volume discounts:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
QUANTITY
PER YEAR PRICE (COMPONENTS + LICENSE DISCOUNT
-------- --------------------------- --------
<S> <C> <C>
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
</TABLE>
- --------------------------------------------------------------------------------
Exceptions to [**].
[**]: Assumes [**] of [**] and [**]:
[**] (based on installed base of approximately [**] GE Marquette OR
monitors at [**] /unit)
[**] volume discounts according to the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
QUANTITY
PER YEAR PRICE (COMPONENTS ONLY) DISCOUNT
-------- ----------------------- --------
<S> <C> <C>
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
</TABLE>
- --------------------------------------------------------------------------------
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<PAGE> 32
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Composite volume discount schedule [**] - for illustration
purposes only:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRICE DISCOUNT
(COMPONENTS (COMPONENTS
QUANTITY AND LICENSE AND LICENSE)
PER YEAR NOTE A NOTE A
-------- ----------- ------------
<S> <C> <C>
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
</TABLE>
- --------------------------------------------------------------------------------
Note A: assumes imputed BIS license fee of [**] per unit
B) ASPECT BIS SENSOR:
Transfer price to Marquette for distribution solely to Marquette
customers outside North America and solely for use with Marquette BIS/EEG
Modules: [**] of Aspect's list price in the U.S.
C) ASPECT SPARE PARTS/ACCESSORY PRICES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Aspect Marquette
Orderable List Price Price
Parts/Products (US$) (US$) - Note A
-------------- ---------- --------------
<S> <C> <C>
DSC-2 [**] [**]
(replacement
BIC Engine PCB [**] [**]
(replacement)
Sensor Cable [**] [**]
(replacement)
DSC-4 [**] [**]
(replacement)
User Manual [**] [**]
</TABLE>
- --------------------------------------------------------------------------------
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<PAGE> 33
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
EXHIBIT B: SPECIFICATIONS ASPECT'S
STANDARD BIS MODULE KIT
Aspect's BIS Module Kit is designed specifically for OEM applications and allows
the integration of Aspect's BIS monitoring technology into OEM equipment. The
BIS Engine will interface to the patient via the Aspect BIS sensor and to the
OEM equipment utilizing a serial (RS-232) 3-wire interface and the necessary
power connections.
The BIS Module Kit consists of a Digital Signal Converter (DSC-2) that is placed
in proximity to the patient and a small circuit board that resides in the OEM
equipment. The DSC-2 is a small (palm sized) front-end to the BIS Engine circuit
board that provides the patient interface and performs the high performance
analog to digital conversion of the EEG signals. The EEG signals are transmitted
in digital format from the DSC-2 to the BIS engine circuit board via a 12 foot
cable that is hard wired at the DSC-2.
The small BIS Engine circuit board performs digital signal processing on the
digitized EEG signal and outputs the Bispectral Index to the OEM system via the
RS-232 serial connection. The board is constructed using double-sided surface
mount techniques. The connections to the BIS Engine circuit board are a serial
interface (RS-232), power, and DSC connections.
DETAILED TECHNICAL SPECIFICATIONS:
Digital Output: [**]
Main Parameters: [**]
Electrical Safety: [**]
Power: [**]
Artifact Rejection: [**]
Bispectral Index: [**]
DIGITAL SIGNAL CONVERTER (DSC-2)
Description: [**]
Weight: [**]
Dimensions: [**]
[**]
Cable Length: [**]
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<PAGE> 34
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
(a) BIS Engine PCB
Physical: [**]
Processing Power: [**]
(b) Software Upgrades
The BIS engine software is stored in reprogrammable FLASH memory. Software
upgrades can be accomplished on-site or remotely via the serial interface.
(c) Serial Identifier
Each BIS engine is given a unique serial identifier. This allows for electronic
identification/tracking of every BIS Engine.
-34-
<PAGE> 35
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
EXHIBIT C: DEVELOPMENT PROJECT -
PRELIMINARY OUTLINE
1. SCOPE
This preliminary outline describes a development project that Aspect would
perform for GE Marquette. This outline is based on notes from a meeting held at
Aspect on August 18, 1999. A more detailed project description needs to be
completed before the timetable and costs can be finalized.
2. DEVELOPMENT TIMETABLE
A detailed project schedule needs to be developed. It is planned that the total
elapsed time of the project will be approximately [**].
3. SOFTWARE PROJECT - [**]
Expanded BIS Engine Software Functionality: Aspect will [**] so that, in
addition to all of the functionality of the standard BIS Module Kit (described
in Attachment A), the system will [**] when a [**] is connected to the BIS
Engine circuit board. Upon connection of the [**], the BIS software will
automatically [**] processing. The BIS engine will then [**] including [**]. The
BIS engine will then transmit these [**] to the host system via the [**].
4. TASKS
Determine and Specify:
System Specifications (Aspect/GE Marquette) including hazard
analysis Software Specifications (Aspect)
Develop/Implement (Aspect)
Verification & Validation (Aspect)
After Aspect has validated the BIS/EEG module kit, GE Marquette will have the
responsibility to validate, with Aspect's assistance, the BIS/EEG module in the
GE Marquette system.
The approximate cost to complete this software project is [**].
DSC-4 Hardware Development Project
Conceptually, Aspect will [**] the [**] that is [**] . However, this [**]. A
preliminary review indicates that [**]. Additionally, there may be [**].
Therefore a small development budget needs to be established in order to bring
this product back on-line. An estimate of the project cost including engineering
and tooling is roughly [**]. A full review of the manufacturability of the DSC-4
needs to be completed before Aspect can commit to the actual development expense
and the transfer price of the DSC-4.
-35-
<PAGE> 36
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
EXHIBIT D: CONTACT PERSONS/ADDRESSES
CONTACT PERSONS AND RESPONSIBILITIES AT ASPECT:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
EMAIL
PHONE NUMBER/
PERSON TITLE RESPONSIBILITY FAX NUMBER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
[**] [**] [**] [**]
[**]
[**]
- --------------------------------------------------------------------------------------------------
[**] [**] [**] [**]
[**]
[**]
- --------------------------------------------------------------------------------------------------
[**] [**] [**] [**]
[**]
[**]
- --------------------------------------------------------------------------------------------------
[**] [**] [**] [**]
[**]
[**]
- --------------------------------------------------------------------------------------------------
[**] [**] [**] [**]
[**]
[**]
- --------------------------------------------------------------------------------------------------
</TABLE>
MAILING ADDRESS: Aspect Medical Systems, Inc.
2 Vision Drive
Natick, MA 01760-2059
USA
CONTACT PERSONS AND RESPONSIBILITIES AT GE MARQUETTE:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
EMAIL
PHONE NUMBER/
PERSON TITLE RESPONSIBILITY FAX NUMBER
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
MAILING ADDRESS: GE Marquette Medical Systems, Inc.
-36-
<PAGE> 37
EXHIBIT E: ASPECT TRADEMARKS
TRADEMARK REFERENCE
- --------- ---------
Aspect(R) None*
A-2000(TM) A-2000 is a trademark of Aspect Medical
Systems, Inc.
Bispectral Index(R) Bispectral is a registered trademark of
Aspect Medical Systems, Inc.
BIS logo is a registered trademark of
Aspect Medical Systems, Inc.
* This trademark is registered as a trademark to another company, and is used
under license by Aspect Medical Systems.
-37-
<PAGE> 38
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
EXHIBIT F: CO-MARKETING PROGRAM
a) Goals:
- to provide GE Marquette customers with access to BIS, and a seamless
transition from Aspect's A-2000 BIS monitor to GE Marquette's BIS
Module, during the period in which the BIS module is under
development by GE Marquette
- to ensure that the field organizations of both Aspect and GE
Marquette are properly incented to assist one another, and to work
in collaboration, to promote the BIS technology, irrespective of the
platform on which it is available.
- to minimize the likelihood that GE Marquette customers will be
disposed to delay purchasing BIS until GE Marquette completes the
development of a BIS module.
- to minimize the incremental costs to customers of exchanging one BIS
platform for another when the module becomes available; and
- to encourage existing GE Marquette customers to remain loyal to GE
Marquette, and to stimulate monitoring system sales to new
customers, by offering a BIS solution that address current and
future needs at a very attractive price.
b) Term: beginning immediately following an announcement by GE Marquette and
Aspect that GE Marquette intends to develop a BIS module until the module
is launched. It is understood that the module will be launched
approximately 2-3 months prior to becoming commercially available.
c) Proposed Pricing: Aspect list price [**] per monitor. Aspect's current
list prices vary from [**] per monitor depending on the number of monitors
purchased. In addition to outright sales, the parties will also make
available a fee-for-use program using equivalent terms. (Aspect would need
to do the fee-for-use program - Marquette would just submit the referral
to Aspect and Marquette would still exchange for the module at no module
charge.) In exchange, customers will receive A-2000 monitors initially; as
soon as the BIS module is available, the module will be exchanged for the
monitor.
d) Mechanics: following each sale under this program, Aspect will assume
responsibility for installation, in-service, and clinical support for the
A-2000. Following release of the BIS Module, Marquette will assume
responsibility for installation and in-service of the module, at which
time the used A-2000 will be returned to Aspect.
e) [**]: proceeds from sale of the BIS platform (i.e. the A-2000 followed by
the BIS Module) will be [**]. In the event GE Marquette fails to deliver a
BIS module within a suitable period of time as specified in the Agreement.
-38-
<PAGE> 39
Confidential Materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
f) Sales rep compensation: it is understood that a compensation program for
both field organizations will be established that appropriately ties rep
compensation to success of the program.
g) Elements of co-marketing program: customer lists to be shared, high
priority accounts to be jointly identified and developed, co-promotional
activities to be coordinated (e.g. trade shows, joint seminars and
customer presentations, etc.); reimbursements to Marquette due quarterly
with customer lists, selling price, number of sensors purchased by
customer.
h) Territory: U.S. and other countries to be discussed.
i) Possible role of MVP: in the event MVP acts as a distributor for Aspect,
the terms of their participation in the co-marketing program to be
negotiated.
j) Demonstration Equipment: for promotional purposes only (not to be sold to
any end-user), Marquette will require five (5) demonstration Aspect A-2000
Monitors. Terms of the transfer price for these demonstration units will
be negotiated.
k) BIS Sensor [**]: Marquette [**] BIS Sensors [**] as a result of the [**]
to a [**].
-39-
