Confidential Materials omitted and
filed separately with the
Securities and Exchange Commission. Asterisks denote
omissions.
Amendment 2
OEM Development and Purchase Agreement
This Amendment
2 to the Purchase Agreement dated the 30 th day of August, 2005, as amended (the
“Agreement”), by and between Aspect Medical Systems,
Inc. (“Aspect” or “Seller”) and General
Electric Company, acting by and through its GE Healthcare division
(“GE Healthcare” or “Buyer”) is made as of
this 15th day of April 2009 (“Amendment Effective
Date”)
Now, therefore,
for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agree as
follows:
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1.
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Capitalized terms used herein and
otherwise not defined have the meanings ascribed to such terms in
the Agreement.
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2.
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All
attachments to the Agreement are hereby superseded, deleted, and
replaced by the attachments to this Amendment.
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3.
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Section 20 of the Agreement,
currently reserved, is replaced by the following:
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20.
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Distribution of BIS
Sensors.
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a.
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In
addition to Buyer’s limited right to sell BIS Sensors as set
forth in Section 21(a), Buyer and Seller may agree during the
Term to select Buyer or one of its Affiliates as a distributor of
the BIS Sensor in a specified territory or country. In the event
Seller and one of Buyer’s Affiliates agrees to such
distribution rights, Buyer’s Affiliate and Seller shall
negotiate and execute a Distribution Agreement in a form which
shall be approved by both the Buyer’s and Seller’s
corporate headquarters. Within five (5) days of execution of
such a distribution agreement, Seller shall notify Buyer of the
final execution and the Buyer Affiliate shall be listed as a new
distributor of the BIS Sensor for the identified region or country
. Each distribution agreement executed by Seller and Buyer
Affiliate shall then be attached hereto and incorporated herein as
part of a new Exhibit to the Agreement.
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4.
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Section 1 part (f) “
Definitions .” will be replaced by the
following:
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Seller’s
proprietary processed EEG parameter that may be used as an aid in
monitoring the effects of certain anesthetic agents.
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Buyer
Patient Monitoring
System(s) or Buyer
Patient Monitors or
Buyer’s Patient Monitors
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Buyer-designed
multi-parameter patient monitoring systems, which may include
monitors and modules.
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Addendum
1 v 1.0
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Initials:
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1/16
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The integrated
solution of Seller’s BIS processing technology and digital
signal conversion technology, which can process either 2 or 4
channels of EEG.
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Consists of
either a 2 channel BISx Device or 4 channel BISx4 Device designed
for use with the Buyer Patient Monitoring Systems, a Host Monitor
Cable, and a PIC.
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A patient
interface cable designed for use with the Buyer Patient Monitoring
Systems
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The cable
designed or to be designed by Seller with Buyer’s assistance,
which will connect a BISx Device or BISx4 Device to the BISx Module
using an integrated host cable connector.
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That portion of
the Buyer Patient Monitoring System that provides power,
communication and control to the BISx Kit.
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All single-use
disposable or semi-reusable sensors manufactured by Seller for use
with the BIS/EEG Module Kit or a BISx Kit that is required to
generate the Bispectral Index.
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Aspect
Products or Products
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BISx Kit, BIS
Sensors and any other product that can be ordered by Buyer as
listed in Attachment D.
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Buyer and
Seller each individually or jointly.
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is the
processing unit for deriving the BIS and EEG data from the raw EEG
signal and consists of Seller’s “BIS Engine”
board modified for Buyer.
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means the
bundle of all components of the Buyer BIS/EEG Module or the BIS
Module that are developed and manufactured by or for Seller and
licensed/sold to Buyer under this Agreement:
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DSC-XP, DSC
Cable, Buyer BIS/EEG Engine, and module cable. “Digital
Signal Converter” or
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Addendum
1 v 1.0
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Initials:
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2/16
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“DSC” means the processing unit that
amplifies the analog EEG signals as acquired by the BIS sensors and
converts them from analog to digital signals. The DSC-XP is used by
Buyer BIS/EEG Module customers to obtain the BIS.
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means a single
use sensor that incorporates level-of-consciousness monitoring
technology developed by Buyer, as more fully described in the
attached product specifications.
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Smart Sensor
Technology or “SST”
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means the
Seller technology which may be used by Buyer’s Patient
Monitors to interface with the Custom Sensors.
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means the
component integrated into the Custom Sensor to enable use of the
SST.
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means the
sensor connector currently being used with the Custom Sensor, or
any replacement sensor connector where the change was made in
accordance with the terms of this Agreement.
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is the
processing unit for deriving Buyer’s proprietary processed
EEG parameter that measures the hypnotic effect of certain
anesthetics on the brain during general anesthesia.
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means the
mating connector to the Sensor Connector currently being used with
the Custom Sensor, or any replacement mating connector where the
change was made in accordance with the terms of this
Agreement.
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means a
purchase order released by Buyer for Products.
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means an
agreement that can be or has been, as applicable, executed between
the Seller and a Buyer’s wholly owned affiliate to govern the
distribution of the BIS Sensor in a specific region or country, the
negotiation of which shall, to the extent applicable, include the
provisions set forth in Attachment P.
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Addendum
1 v 1.0
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Initials:
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3/16
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Authorized
Representative
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means
Seller’s territory-specific and third-party channel of
distribution for BIS sensors and other Seller products.
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Multiparameter
Monitoring Sales
Opportunity
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means
commercial sales opportunities in which the end user customer is
making an initial choice between or among multiparameter monitoring
vendors, is interested in level of consciousness monitoring, and is
therefore selecting among level of consciousness monitoring
providers for general anesthesia, such as BIS and
Entropy.
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Means all
commercial sales opportunities other than a Multiparameter
Monitoring Sales Opportunity
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means the
integrated solution of Seller’s BIS Engine processing
technology and the DSC-XP. The BISx System includes a patient
interface cable and a host monitor cable.
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means all
components involved in integrating the BISx and/or BIS/EEG with
Buyer Patient Monitoring Systems.
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means either a
BISx Kit or a BIS/EEG Module Kit.
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The term of
this Agreement, as described in Section 2, unless earlier
terminated in accordance with this Agreement.
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Central
Procurement Facility(ies)
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means
Buyer’s principle location(s) for ordering and receiving
Product meant for further integration into Buyer’s product or
distribution through Buyer’s respective channels.
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5.
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Section 1 (b) of the
Agreement is hereby replaced by the following:
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(b)
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Parties . Seller expressly acknowledges that
this Agreement is not intended to govern or obligate General
Electric Company itself or
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Addendum
1 v 1.0
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Initials:
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4/16
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any
business, division or Affiliate of General Electric Company other
than General Electric Company’s GE Healthcare division.
Seller agrees that General Electric Company’s GE Healthcare
division’s Central Procurement Facilities may place a
Purchase Order under this Agreement. If any transaction-specific or
country-specific modifications to this Agreement are required to
facilitate the sale of the Products to any market where Buyer sells
or intends to sell Products, both parties agree to negotiate such
modifications in good faith, and to make only such modifications as
are required by local law or as are required for logistics
purposes. An “Affiliate” shall mean, with respect to
any specified party, any other legal entity that directly or
indirectly controls, is controlled by or is under common control
with, such specified party.
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6.
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Section 2 of the Agreement is
hereby replaced by the following:
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A)
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Initial Term.
The initial term of this
Agreement shall commence on the Effective Date and continue through
December 31st, 2011, unless earlier terminated as provided
herein.
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B)
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Extensions. The term of this Agreement shall
thereafter be renewed automatically for successive twelve
(12) month periods, unless either Party provides written
notice of termination to the other Party at least ninety
(90) days prior to expiration of the Agreement.
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7.
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Section 4, part (g) of the
Agreement is hereby replaced by the following:
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(g) BIS
Sensor Commission . For each Aspect BIS Sensor sold by Seller
to Buyer’s customers for use with Buyer’s BIS/EEG
Module or BISx, Seller shall pay Buyer [**] received by Seller for
such Aspect BIS Sensors less the revenue received from Distributors
(as identified in Attachment P or the relevant Distribution
Agreement). Sensor commission payments will be made quarterly and
shall be provided to Buyer no later than 60 days following the
end of each calendar quarter. Sensor commission will be paid for a
period of [**] full years for each Buyer BIS/EEG Module or BISx
from the date of installation at the customer site.
The sensor
commission in the US will be calculated [**]. Outside the US,
commission will be calculated by [**].
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Addendum
1 v 1.0
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Initials:
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5/16
In the event
that Aspect’s standalone BIS monitors, the BIS modules and/or
the BISx Systems of other manufacturers have also been installed at
such sites/regions in addition to Buyer Socket, Buyer will be
entitled to the commission [**]. A pro rata determination will be
based on the total number of BIS units of different types installed
at such locations during the period according to Seller’s
installed base records. Together with such quarterly payments,
Seller shall provide to Buyer a list of accounts or regions for
which Buyer is entitled to such commission, the related total
number of BIS units sold to such account or region, and the
percentage of Buyer Sockets used for the pro rata calculation to
back up the quarterly payment.
To facilitate
such sensor commission calculations, Buyer will provide Seller [**]
for Buyer’s Sockets by region at the individual account
level.
All such
information shall be treated as Seller / Buyer Confidential
Information (depending on which Party disclosed such information)
in accordance with the terms of this Agreement.
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8.
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Section 21(a) and (b) are
hereby replaced by the following:
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21.
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MARKETING AUTHORITY
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a.
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Seller hereby grants to Buyer and
its distributors, sub-distributors, field organization and channel
partners: (1) the exclusive, perpetual, irrevocable,
royalty-free right to promote, sell, resell, license, sub-license,
distribute and service the Products listed as “Exclusive
Products” on Attachment D and purchased from Seller on a
world-wide basis; (2) the limited, non-exclusive, perpetual,
irrevocable, royalty-free right to sell, resell, license,
sub-license, distribute and service limited quantities of the
Products listed as “BIS Sensors” on Attachment D and
purchased from Seller on a world-wide basis solely to [**];
(3) the limited, non-exclusive, perpetual, irrevocable,
world-wide, royalty-free right to sell, resell, license,
sub-license, distribute and service [**] (as listed on Attachment
D) solely to Buyer customers who have purchased a BIS/EEG Module
Kit or BISx Kit provided that this single box of sensors is sold
and delivered to the customer at the time of the purchase of the
BIS module or BISx technology and (4) the non-exclusive,
perpetual, irrevocable, royalty-free right to promote, sell,
resell, license, sub-license, distribute and service all other
Products purchased from Seller on a world-wide basis. The Products
may be promoted, sold, resold, licensed, sublicensed and
distributed by Buyer directly and/or indirectly through its
distributors, sub-distributors, field organization and channel
partners, and may be used
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Addendum
1 v 1.0
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Initials:
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6/16
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as
components in, or be incorporated into, or integrated with, systems
and products of Buyer, which Buyer, its distributors,
sub-distributors, field organization and/or channel partners sell
or lease to third party users in the regular course of business.
The provisions of this Section 21(a) will survive any change in
control of Seller and Seller agrees that, if it sells all or
substantially all of the assets relating to the business that
produces the Products, it will require that the purchaser of the
assets agrees to assume this Agreement as well.
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b.
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General . The components of the Buyer
BIS/EEG Module or BISx Systems shall only be resold, leased rented,
licensed or otherwise transferred to third parties for use as a
part of a Buyer BIS/EEG Module or BISx System or as replacement
parts used in Buyer BIS/EEG Modules or BISx Systems and Buyer shall
only sell Seller approved accessories including cables and sensor
products in connection with any Buyer BIS/EEG Module or BISx
System. During the Term of this Agreement, Buyer agrees that it may
offer complimentary but not directly competitive products to the
Buyer BIS/EEG Module and BISx System, with the exception of
Buyer’s Entropy module. Buyer products other than the Buyer
BIS/EEG Module, BISx System, and the Entropy module that display a
parameter claiming to be a measure of the hypnotic effects of
certain anesthetic agents on the brain during general anesthesia
are considered to be directly competitive products for purposes of
this Section, provided that such obligations of Buyer shall
terminate in the event Seller’s Products do not have material
competitive features for measuring the hypnotic effects of
anesthetic agents on the brain and Seller does not incorporate such
features into the Products within six (6) months of receipt of
notice of such deficiency.
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9.
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Section 21 part (f) shall
hereby be replaced by the following:
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f.
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Recognizing that the Buyer has a
product that is competitive to BIS, Buyer agrees to devote
“reasonable sales and marketing efforts” to support the
Buyer BIS/EEG Module and the BISx Kits but solely in connection
with Multiparameter Monitoring Sales Opportunities. Seller
acknowledges and agrees that Buyer has no obligation to provide
reasonable sales and marketing efforts, or otherwise promote,
discuss, or mention, Seller’s BIS technology in Other Sales
Opportunities. “Reasonable sales and marketing efforts”
shall mean:
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i.
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Buyer communicating to Buyer’s
Monitoring Solutions GMs in the respective pole organizations the
fact that Buyer has alternative product offerings for patient
consciousness monitoring, with a
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Addendum
1 v 1.0
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Initials:
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7/16
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reasonably detailed description of
the features, benefits and customer support available for each
product;
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ii.
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Buyer communicating to Buyer’s
Monitoring Solutions GMs in the respective pole organizations
responsible for selling Buyer’s multiparameter monitoring
product line: (1) that customers interested in consciousness
monitoring should be informed that Buyer has two technologies (BIS
and Entropy modules) that are available to meet their needs, and
(2) that sales representatives, distributors, and dealers
should permit customers to choose freely between these alternative
solutions; (3) that the BIS technology shall be fairly
represented offering marketing materials and literature provided by
Aspect, and (4) that customer requests for quotes and orders
will be processed in normal turnaround time.
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iii.
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In
the event that Buyer elects to display (e.g. at medical congresses,
tradeshows or seminars) or otherwise advertise (e.g. website,
journals, etc.) the availability of the Entropy module at the
annual meetings of the American Society of Anesthesiologists, the
European Society of Anesthesiologists, or the World Congress, Buyer
agrees to utilize commercially reasonable efforts within the
context of a complex worldwide organization to display or otherwise
advertise the availability of Buyer’s BIS monitoring
solutions for Buyer’s customers;
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iv.
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In
the event that Buyer elects to include the Entropy technology in
its multi-parameter monitoring advertisement(s) (e.g. website,
brochures, etc.), Buyer agrees to use commercially reasonable
efforts within the context of a complex worldwide organization to
also include the BIS technology;
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v.
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Buyer BIS/EEG Modules and BISx
Systems will be available to Buyer’s sales representatives,
dealers and distributors that sell the full Buyer monitoring
portfolio on the same basis that Buyer provides demonstration
equipment of its Entropy module for use in connection with
Multiparameter Monitoring Sales Opportunities;
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vi.
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Buyer will allow Seller to directly
demonstrate Buyer BIS/EEG Module or BISx Kit directly to end-users.
Buyer will sell to Seller a reasonable quantity of Buyer BIS/EEG
Module or BISx Kits which Seller may use for demonstration purposes
only. In the case of BISx Kits, Buyer will sell Seller a complete
BISx Kit for no more than 10% more than the original transfer price
between the Seller and Buyer. In the case of the BIS/EEG Module,
Buyer will sell Seller a complete BIS/EEG Kit for no more than 20%
more
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Addendum
1 v 1.0
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Initials:
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8/16
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than the original transfer price
between the Seller and Buyer. A reasonable quantity shall be
defined as no more than two (2) Buyer BIS/EEG Module or BISx
Systems per sales person or regional manager in Seller’s
Sales organization.
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Buyer and Seller will develop a
process to ensure the safe and effective demonstration process of
Buyer BIS/EEG Module or BISx Kits (including adequate training of
Seller’s Sales force). It is anticipated by Buyer and Seller
that such training will take no more than one day per calendar year
and that training will take place at a mutually agreed time, date
and location.
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Seller agrees
that its direct and indirect customers shall not be provided unfair
representations of the features, benefits and customer support
available for Entropy.
For the
avoidance of doubt, nothing in this Agreement or this section
prevents or limits Buyer from developing marketing materials,
clinical papers, sales materials, advertisements or promotions for
its Entropy technology, including, without limitation, comparisons
to Seller’s BIS technology. Buyer has no obligation to ensure
that such Entropy materials reference Aspect or its BIS
technology.
Any failure of
either party to comply with these provisions will be escalated to
the agreement managers and discussed at the next quarterly
meeting.
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10.
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Section 21 part (h) shall
be added to the Agreement as follows:
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(h). If there
is a reasonable belief that Buyer or Buyer’s Affiliate
may have violated Section 21(a) of the Agreement by selling
“BIS Sensors” to customers other than those identified
specifically in Section 21(a), the Parties agree to conduct a
good faith negotiation to identify a reasonable resolution to
the potential violation. If the Parties cannot agree to
a
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