VARIAN ASSOCIATES, INC.
EVALUATION AND DEVELOPMENT AGREEMENT WITH
COMPUMED, INC.
FOR THE AMORPHOUS SILICON IMAGING DEVELOPMENT SYSTEM
This Evaluation and Development Agreement ("Agreement") is entered into on
November 21, 1996 ("Effective Date"), between Varian Associates, Inc.,
through its Imaging Products business, located at 0000 Xxxxxx Xxx, Xxxx
Xxxx, Xxxxxxxxxx 00000 (collectively "VARIAN") and CompuMed, Inc. having
its principal place of business at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx Xxxxx, XX 00000 ("COMPANY").
WHEREAS, VARIAN is in the business of developing and manufacturing x-ray
imaging systems incorporating a large-area amorphous silicon sensor array
for use primarily in the medical field and has developed an evaluation and
demonstration system currently designated as VIP-540X/ARM;
WHEREAS, COMPANY is a medical systems company and has technical knowledge
and expertise that is valuable in evaluating and testing the performance of
x-ray imaging systems; and
WHEREAS, VARIAN and COMPANY desire to enter into an agreement to evaluate
and test the performance characteristics of the VIP-540X/ARM to further its
development by VARIAN, as well as to allow for interface development by
COMPANY.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, VARIAN and COMPANY agree as follows:
SECTION 1 - DEFINITIONS
-----------------------
1.1 "Imaging System" means VARIAN's prototype large-area amorphous silicon
sensor x-ray imaging development system designated as the VIP-540X/ARM.
1.2 "Clinical Use" means use involving: (i) the direct observation of
patients; (ii) the diagnoses of disease or other conditions in humans or
other animals; or (iii) the cure, mitigation, therapy, treatment, treatment
planning, or prevention of disease in humans or other animals to affect the
structure or function thereof.
1.3 "Non-Commercial Use" means activities by a Party that are unrelated to
the marketing or sale of products or services.
1.4 "Party" and "Parties" mean VARIAN and/or COMPANY, singly or
collectively.
1.5 "Test(s)" and "Testing" means all activities performed by COMPANY, its
agents or third parties, in cooperation with VARIAN under this Agreement
relating to the evaluation, characterization, testing and/or development of
the Imaging System. The Test to be tentatively performed are described in
Exhibit B.
1.6 "Test Results" means all data and information, including, without
limitation, any notes, records, logs, designs, drawings,
methods,procedures, apparatus, hardware and any modification and/or
improvement thereof resulting from or related to the Tests.
SECTION 2 - TERMS AND CONDITIONS
--------------------------------
2.1 Evaluation and Testing
----------------------
VARIAN shall transfer and deliver to COMPANY a total of 1 Imaging System,
as describe in Exhibit A, for the purpose of conducting Tests during the
term of this Agreement. COMPANY will notify VARIAN as to the location(s)
where the Testing of the Imaging System is to be conducted. COMPANY shall
not transfer and/or deliver the Imaging System to a third party without the
prior written approval of VARIAN, and any such transfer must be accompanied
by a written agreement obligating such third party to terms that are
substantially similar to those set forth herein.
VARIAN agrees to maintain the Imaging System in an operable condition by
providing service as needed, to COMPANY during the term of this Agreement
and to support the Testing and evaluation activities being conducted by
COMPANY.
COMPANY shall Test all functions and features of the Imaging System at no
cost to VARIAN, and shall provide the personnel, technical equipment and
resources necessary to generate the Test Results. COMPANY shall not permit
any third party to participate in conducting any of the Tests without the
prior written approval of VARIAN.
COMPANY agrees to provide VARIAN a written report describing the Tests and
summarizing the Test Results, as well as provide evaluations and
conclusions on at least a quarterly calendar basis, and to make
recommendations to modify or improve the Imaging System as it deems
appropriate. VARIAN will review all reports submitted by COMPANY relating
to the Tests and, at its sole discretion, will provide comments thereon.
COMPANY agrees to cooperate with VARIAN in carrying out and evaluating the
Tests and shall comply fully with the terms of this Agreement. VARIAN and
COMPANY will meet on a "as needed" basis.
SECTION 3 - CONFIDENTIALITY
---------------------------
3.1 Confidentiality
---------------
The Imaging System and Test Results shall be considered the confidential
and proprietary property of VARIAN. COMPANY agrees to treat the Imaging
System and Test Results as confidential under this Agreement and to protect
the Imaging System and Test Results against public disclosure to the same
extent that it protects its own proprietary information of like nature.
COMPANY may use Test Results only for purposes of analyzing and processing
the performance characteristics of the Imaging System, and shall not
publish, sell, or make available the Test Results, or any portion thereof,
without first obtaining the express written permission of VARIAN. Any
transfer of the Imaging System by Company to a third party shall require
the express assumption of the obligations of this Section 3 by such third
party.
3.2 Exclusions
----------
The provisions of confidentiality of this Section shall not apply to any
portion of the Test Results which: (a) corresponds in substance to that
developed by COMPANY prior to its receipt of or access to the same,
directly or indirectly, from VARIAN; (b) at the time of disclosure is, or
thereafter becomes, through no act or failure to act on COMPANY'S part,
generally known on a non-confidential basis in the x-ray tube industry; or
(c) which corresponds in substance to information heretofore or hereafter
furnished to COMPANY by others as a matter of right without restriction on
disclosure.
3.3 Public Announcements/News Releases. Neither Party shall issue any news
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release, public announcement, advertisement, or any other form of publicity
concerning the Imaging System or this Agreement without obtaining the prior
written approval from the other Party.
SECTION 4 - PATENT AND TECHNOLOGY RIGHTS
----------------------------------------
COMPANY agrees that VARIAN shall own and retain exclusive title and all
rights to all technology, inventions, processes, systems, methods
copyrights, and other intellectual property, whether patentable or
unpatentable, which is: (a) a modification, improvement, additions or
derivative work of the Imaging System: and/or (b) developed solely or
jointly from the conception or efforts of VARIAN employees or obligated
agents.
SECTION 5 - WARRANTY AND DISCLAIMER
-----------------------------------
VARIAN warrants that it has the right to transfer title to the Imaging
System. VARIAN makes no other warranty of any kind with respect to the
Imaging System, and disclaims any implied warranties of merchantability or
fitness for any particular purpose. THE IMAGING SYSTEM IS PROVIDED "AS
IS."
SECTION 6 - LIABILITY
---------------------
6.1 Indemnification
---------------
Each Party (the "Indemnifying Party") shall indemnify and hold harmless the
other Party (the "Indemnified Party"), and its officers, directors, agents
and employees, from any and all liabilities, claims, demands, damages,
settlements, losses and expenses (including attorneys' fees and costs)
incurred in connection with any claim against the Indemnified Party based
on any action or omission of the Indemnifying Party or its officers,
directors, agents or employees related to the obligations of the
Indemnifying Party under this Agreement.
6.2 Consequential Damages
---------------------
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY, OR ANY PARENT, AFFILIATE, AGENTS OR
EMPLOYEES THEREOF, BE LIABLE TO THE OTHER FOR ANY LOSS RESULTING FROM
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES, INCLUDING LOSS OF PROFITS OR
REVENUES, LOSS OF BUSINESS OPPORTUNITY, COST OF CAPITAL OR LOSS OF
GOODWILL.
SECTION 7 - TERM AND TERMINATION
--------------------------------
This Agreement shall have a term of one (1) year commencing on the
Effective Date as set forth above, and the Parties may extend the term for
an additional six (6) months by written agreement. This Agreement may be
terminated by either Party only for cause after providing at least thirty
(30) days prior written notice to the breaching Party. Such breaching
Party shall be given an opportunity to cure the breach within said thirty
(30) day period before the termination is effective.
In the event of termination due to breach by COMPANY: (i) the Tests and
related activities shall be promptly discontinued; (ii) COMPANY shall
discontinue using the Imaging System for the remaining term of the
Agreement; (iii) all Test Results and related proprietary information,
including any copies thereof, shall be promptly delivered to VARIAN; and
(iv) no refund shall be owed to COMPANY.
In the event of termination due to breach by VARIAN: (i) the Tests and all
related activities shall be promptly discontinued; (ii) the Imaging System
shall be returned to VARIAN; and (iii) VARIAN will refund the fee paid by
COMPANY pursuant to Paragraph 2.2.
Each Party may retain a single copy of the Test Results completed prior to
termination, subject to the confidentiality provisions of Section 3.
Neither Party shall be responsible nor liable to the other Party for any
costs associated with termination. Upon completion of the Test and/or
expiration of the Agreement, the obligations of the Parties shall cease and
COMPANY may freely dispose of the Imaging System, subject to the surviving
terms of this Agreement. The provisions of Sections 3, 4, 5, 6 and 10
shall survive the termination of the Agreement.
SECTION 8 - NOTICES AND INSTRUCTIONS
------------------------------------
All notices and instructions given by either Party under this Agreement to
the other shall be writing through each Party's authorized
representative(s). Any such notice or instruction shall be delivered in
person, by courier, overnight mail or facsimile to the address of the
representative designated by the Party. The date of service of notice or
instruction shall be that date on which the said notice or instruction is
received.
For VARIAN: For CompuMed, Inc.:
Varian Associates, Inc. CompuMed, Inc.
Imaging Products 0000 Xxxxxxxxx Xxx., Xxxxx 0000
0000 Xxxxxx Xxx, X/X X-000 Xxxxxxxxx Xxxxx, XX 00000
Xxxx Xxxx, XX 00000 Attn.: Xxx Xxxxxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
SECTION 9 - RELATIONSHIP OF THE PARTIES
---------------------------------------
COMPANY shall perform the Tests hereunder as in independent contractor,
retaining complete control over its personnel and operations, and
conforming to all statutory requirements with respect to said employees, as
well as providing all appropriate employee benefits.
SECTION 10 - GOVERNING LAW
--------------------------
The terms and conditions of this Agreement shall be construed and governed
by the substantive and procedural laws of the State of California.
SECTION 11 - ENTIRE AGREEMENT
-----------------------------
This Agreement and the other instruments and agreements referred to in this
Agreement constitute the entire understanding of the Parties and supersede
all other agreements and understandings between them relating to the
subject matter of this Agreement. All Exhibits to this Agreement shall be
considered incorporated into and a part of this Agreement. In the event of
any conflict between the terms of an Exhibit and the terms of the
provisions of this Agreement, the terms of the provision of this Agreement
shall prevail.
This Agreement has been executed by duly authorized representatives of the
Parties and has an Effective Date as indicated above.
VARIAN ASSOCIATES, INC. COMPUMED, INC.
Varian Imaging Products
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
----------------------------- ----------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxx Xxxxxxx
Title: General Manager Title: V.P., Chief Financial
Officer
Date: 12/10/96 Date: 11/21/96
ADDENDUM TO A.R.M. AGREEMENT
1. Varian will grant exclusive worldwide marketing rights
to CompuMed for the use of Varian amorphous silicon
technology in the assessment of appendicular* bone
mineral density, and computer-assisted arthritis
detection, for a period of 3 years from the date of
this agreement, with an option for a 2 year extension
based on mutually satisfactory sales targets. CompuMed
must have placed combined total orders with Varian for
at least $250,000 in amorphous silicon panels on or
before December 31,1998 to maintain these exclusive
rights.
2. Varian will make available to CompuMed a second
amorphous silicon panel (w/electronics) at no
additional charge for use at CompuMed's UMASS Medical
Center testing facility.
3. Varian agrees to provide CompuMed with 4x5" amorphous
silicon panel assemblies and display circuitry (not to
include correction circuitry) at a price not to exceed
$3,000-$4,000 each, and 8x10" with similar electronics
not to exceed $9,000 to $13,000 each. Due to custom
development and low volumes, pricing for the first 50
panels will be as follows: up to $5,500 each for the
4x5" amorphous silicon panel assemblies and display
circuitry (not to include correction circuitry), and
8x10" with similar electronics up to $15,000 each. The
order must consist of 75% or greater 4x5" panels for
the first 50.
4. To maintain the exclusive marketing rights described
above (in paragraph #1), CompuMed must place an order
for 100 panels committing to a delivery schedule of 25
panels per quarter, with delivery starting by 2nd
quarter 1998, 200 panels per year with quarterly
shipments starting 2nd quarter 1999, and 300 panels per
year with quarterly shipments starting 2nd quarter
2000.
5. This agreement is based on CompuMed being able to
arrange satisfactory lease financing for the A.R.M.
equipment.
6. CompuMed and Varian will work together to create
mutually satisfactory press releases that describe the
strategic relationship of CompuMed and Varian in
developing what are hoped to be the first amorphous
silicon detector-based bone densitometers, and
automated arthritis detection devices.
* "Appendicular" is defined for this agreement as legs, ankles and
feet, and arms, wrists and hands.
/s/ Xxxxx X. Xxxxxxx 12/10/96 /s/ Xxxxx Xxxxxxx 11/21/96
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For Varian Imaging Products Date: For CompuMed, Inc. Date:
