Exhibit 10.2

 

MARKETING AGREEMENT

 

THIS MARKETING AGREEMENT (the “Agreement”) is entered into and effective on
April 21, 2005 (the “Effective Date”), by and between R2 Technology, Inc., a
Delaware corporation having a principal place of business at 1195 Fremont Ave.,
Sunnyvale, California 94087 (“R2”), and Vital Images, Inc., organized under the
laws of Minnesota, having a principal place of business at 3300 Fernbrook Lane
N., Suite 200, Plymouth, Minnesota 55447 (“Vital”).

 

RECITALS

 

A.                                   R2 is engaged in the business of
developing, manufacturing, distributing and selling computer aided detection
software and hardware.

 

C.                                     The parties have previously entered into
a Product Distribution Agreement, dated November 28, 2002, as amended (the “Old
Agreement”), to develop and commercialize certain joint applications and now
desire to terminate the Old Agreement in its entirety and replace it with this
Agreement; and

 

D.                                    The parties desire to jointly market and
promote the R2 Lung CAD Product, as defined below, to current and prospective
Vital customers in accordance with the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:

 

DEFINITIONS

 

1.1 “CAD LUNG PROGRAM” MEANS AN ALGORITHM OR COMPUTER PROGRAM THAT SEARCHES A
TWO-DIMENSIONAL OR THREE-DIMENSIONAL IMAGE OF THE HUMAN LUNG AND RETURNS
SPECIFIC LOCATIONS AND/OR BOUNDARIES OF REGIONS IN THAT LUNG THAT PROBABLY
CONTAIN DISEASED TISSUE.

 

1.2 “COMMISSIONABLE TRANSACTION” SHALL MEAN ANY LICENSE OR OTHER TRANSFER OF ANY
RIGHT TO USE A R2 LUNG CAD PRODUCT FOR CONSIDERATION TO AN EXISTING OR
PROSPECTIVE CUSTOMER WHILE THIS AGREEMENT REMAINS IN EFFECT.

 

1.3 “CUSTOMER” MEANS A PERSON OR ENTITY IN THE TERRITORY  THAT HAS ACQUIRED A
VITAL WORKSTATION, INCLUDING A PERSON OR ENTITY THAT ACQUIRES SUCH VITAL
WORKSTATION IN THE SAME TRANSACTION IN WHICH RIGHTS TO AN R2 LUNG CAD PRODUCT
ARE ACQUIRED.

 

1.4 “IMAGECHECKER-LUNG VERSION 2” MEANS THE UPGRADE OF THE R2 LUNG CAD PRODUCT
WHICH WILL INCLUDE TEMPORAL COMPARISON FUNCTIONALITY AND WHICH WILL SEARCH
TWO-DIMENSIONAL OR THREE-DIMENSIONAL IMAGES OF THE HUMAN LUNG THROUGH THE VITAL
NODULE PROBE.

 

1.5 “INTELLECTUAL PROPERTY RIGHTS” MEANS ANY AND ALL CURRENT AND FUTURE TRADE
SECRETS, TECHNICAL KNOW-HOW, COPYRIGHTS, MORAL RIGHTS, PATENTS, PATENT
APPLICATIONS (INCLUDING ANY SUBSTITUTIONS, EXTENSIONS, REISSUES, RENEWALS,
DIVISIONS, CONTINUATIONS OR CONTINUATIONS-IN-PART) AND ANY AND ALL OTHER
WORLDWIDE INTELLECTUAL PROPERTY RIGHTS, WHETHER NOW KNOWN, OR HEREAFTER
RECOGNIZED, IN ANY JURISDICTION.

 

1.6 “NEW FEATURES” MEANS SIGNIFICANT IMPROVEMENTS OR ENHANCEMENTS, OTHER THAN
UPDATES AND/OR UPGRADES, TO THE OPERATING SYSTEM, APPLICATION SOFTWARE OR
HARDWARE COMPONENT OF A R2 LUNG CAD PRODUCT.

 

1.7 “PRODUCT REVENUES” MEANS ALL REVENUES GENERATED FROM THE LICENSE, PROVISION
OR SALE OF ALL R2 LUNG CAD PRODUCTS AND ALL R2 LUNG CAD PRODUCT - RELATED
UPGRADES, UPDATES, NEW FEATURES, MAINTENANCE, SUPPORT, HARDWARE SALES, TRAINING
AND INSTALLATION.

 

1.8 “QUARTER” MEANS EACH CALENDAR QUARTER.

 

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1.9 “R2 LUNG CAD PRODUCT” MEANS ANY CAD LUNG PROGRAM THAT R2 MAKES COMMERCIALLY
AVAILABLE AT ANY TIME DURING THE TERM OF THIS AGREEMENT, INCLUDING ANY RELATED
DOCUMENTATION, UPDATES, UPGRADES AND NEW FEATURES.

 

1.10 “TERRITORY” MEANS THOSE COUNTRIES, REGIONS OR GEOGRAPHICAL MARKETS
IDENTIFIED ON EXHIBIT A.

 

1.11 “TRADEMARKS” WITH RESPECT TO A PARTY MEANS THE TRADEMARKS, SERVICE MARKS,
LOGOS AND OTHER PROPRIETARY MARKS THAT SUCH PARTY MAY OWN OR HAVE THE RIGHT TO
LICENSE FROM TIME TO TIME.

 

1.12 “UPDATES” MEANS SOFTWARE BUG FIXES AND CORRECTIONS TO A R2 LUNG CAD PRODUCT
THAT R2 MAKES GENERALLY AVAILABLE FOR FIELD USE, IF ANY.  UPDATES DO NOT INCLUDE
IMPROVEMENTS OR ENHANCEMENT TO THE OPERATING SYSTEM, APPLICATIONS SOFTWARE OR
HARDWARE AND DO NOT INCLUDE NEW FEATURES.

 

1.13 “UPGRADES” MEANS A RELEASE OR VERSION OF A R2 LUNG CAD PRODUCT THAT
CONTAINS SIGNIFICANT IMPROVEMENTS TO PERFORMANCE OR FUNCTIONALITY OF EXISTING
FEATURES OF A CAD LUNG PROGRAM.  UPGRADES DO NOT INCLUDE NEW FEATURES.

 

1.14 “VITAL NODULE PROBE” MEANS A LUNG VISUALIZATION PROGRAM DEVELOPED BY VITAL.

 

1.15  “VITAL WORKSTATION” MEANS ANY VITAL WORKSTATION AND THE COMPONENTS
THEREOF, INCLUDING WITHOUT LIMITATION THE VITREA®, VITREA® 2 OR ANY SUCCESSOR
PRODUCT BRAND WORKSTATION, CONSISTING OF HARDWARE, DISPLAY DEVICES AND SOFTWARE,
INCLUDING VITREA®, VITREA® 2 OR SUCCESSOR SOFTWARE APPLICATIONS.

 

1.16 “WARRANTY PERIOD” MEANS THE PERIOD AFTER DELIVERY AND INSTALLATION OF THE
R2 LUNG CAD PRODUCT AT A CUSTOMER LOCATION DURING WHICH R2 AGREES TO PROVIDE
MAINTENANCE AND SUPPORT OF SUCH PRODUCT UNDER WARRANTY TO CUSTOMERS AT NO
ADDITIONAL CHARGE TO SUCH CUSTOMERS, BUT SUCH PERIOD SHALL IN NO EVENT BE LONGER
THAN ONE (1) YEAR FROM SUCH DELIVERY AND INSTALLATION.

 

In addition to the foregoing, terms such as “sale,” “purchase,” “distribute” and
variants and synonyms thereof, when used with reference to software herein, are
used for convenience only and refer to transactions involving the grant of a
software license for the R2 Lung CAD Product.

 

2. MARKETING

 

2.1 MARKETING, SALES AND APPOINTMENT.  R2 HEREBY APPOINTS VITAL, AND VITAL
HEREBY ACCEPTS SUCH APPOINTMENT, AS A NON-EXCLUSIVE MARKETING, PROMOTION AND
SALES REPRESENTATIVE IN THE TERRITORY FOR THE REFERRAL OF CUSTOMERS TO R2 FOR
R2’S SALE OF THE R2 LUNG CAD PRODUCT TO BOTH EXISTING AND PROSPECTIVE
CUSTOMERS.  VITAL SHALL PROMOTE AND MARKET THE R2 LUNG CAD PRODUCT TO THE
EXCLUSION OF ALL OTHER CAD LUNG PROGRAMS NOT OWNED BY R2 TO EXISTING CUSTOMERS
AS WELL AS PROSPECTIVE CUSTOMERS IN THE TERRITORY.   VITAL SHALL PROVIDE R2
DETAILED CONTACT AND PRODUCT INFORMATION REGARDING ITS CUSTOMERS AND PROSPECTIVE
CUSTOMERS SO THAT R2 CAN EFFICIENTLY MARKET AND SELL DIRECTLY TO SUCH EXISTING
AND PROSPECTIVE CUSTOMERS.  THE PARTIES SHALL PROMOTE AND MARKET THE R2 LUNG CAD
PRODUCT AS SET FORTH IN EXHIBIT B.  VITAL SHALL NEITHER ADVERTISE THE R2 LUNG
CAD PRODUCT OUTSIDE OF THE TERRITORY NOR SOLICIT ORDERS FROM OUTSIDE OF THE
TERRITORY WITHOUT R2’S PRIOR WRITTEN CONSENT.  VITAL SHALL COMPLY WITH THE
APPLICABLE POLICIES AND PROCEDURES OF R2 AS IN EFFECT FROM TIME TO TIME AND AS
COMMUNICATED TO VITAL.

 

2.2 AUTHORITY.  R2 SHALL LEAD THE SALE OF THE R2 LUNG CAD PRODUCT TO CUSTOMERS. 
EACH CUSTOMER SHALL EXECUTE A LICENSE AGREEMENT DIRECTLY WITH R2 FOR THE LICENSE
OF THE R2 LUNG CAD PRODUCT.  VITAL’S SOLE AUTHORITY SHALL BE (A) TO PROVIDE
SALES LEADS TO R2 FOR THE PURPOSE OF R2 SOLICITING ORDERS FOR THE R2 LUNG CAD
PRODUCT IN THE TERRITORY AND (B) TO PERFORM THE TASKS LISTED IN THIS AGREEMENT
OR SUCH OTHER TASKS AS THE PARTIES MAY MUTUALLY AGREE UPON FROM TIME TO TIME. 
VITAL SHALL NOT HAVE THE AUTHORITY TO MAKE ANY COMMITMENTS OR AGREEMENTS OR
INCUR ANY LIABILITIES WHATSOEVER ON BEHALF OF R2, NOR SHALL R2 BE LIABLE FOR ANY
ACTS, OMISSIONS TO ACT, CONTRACTS, COMMITMENTS, PROMISES OR REPRESENTATIONS MADE
BY VITAL, EXCEPT AS SPECIFICALLY AUTHORIZED UNDER THIS AGREEMENT OR IN WRITING
BY THE CHIEF EXECUTIVE OFFICER OR CHIEF FINANCIAL OFFICER OF R2.  UNLESS
OTHERWISE MUTUALLY AGREED UPON IN WRITING BY THE PARTIES, VITAL SHALL NOT BE
RESPONSIBLE FOR COMPLETING ANY CONTRACT FOR THE R2 LUNG CAD PRODUCT OR FOR
DELIVERING THE R2 LUNG CAD PRODUCT TO ANY POTENTIAL CUSTOMER.

 

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2.3 RELATIONSHIP.  EXCEPT AS MAY BE EXPRESSLY SET FORTH IN EXHIBIT C FOR THE
PROVISION OF FIRST LINE SUPPORT, VITAL SHALL CONDUCT ALL OF ITS BUSINESS IN
VITAL’S OWN NAME AND IN A BUSINESSLIKE AND PROFESSIONAL MANNER. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED TO CREATE AN AGENCY, JOINT VENTURE OR PARTNERSHIP
RELATION BETWEEN THE PARTIES HERETO. IT IS UNDERSTOOD AND AGREED THAT R2 AND
VITAL ARE NOT, BY REASON OF THIS AGREEMENT OR ANYTHING HEREIN CONTAINED,
CONSTITUTED OR APPOINTED THE AGENT OR REPRESENTATIVE OF THE OTHER PARTY FOR ANY
PURPOSE WHATSOEVER, NOR SHALL ANYTHING HEREIN CONTAINED BE DEEMED OR CONSTRUED
AS GRANTING TO R2 OR VITAL ANY RIGHT OR AUTHORITY TO ASSUME OR TO CREATE ANY
OBLIGATION OR RESPONSIBILITY, EXPRESS OR IMPLIED, FOR, ON BEHALF OF, OR IN THE
NAME OF THE OTHER PARTY, OR TO BIND COMPANY IN ANY WAY OR MANNER WHATSOEVER. THE
RELATIONSHIP OF THE PARTIES ESTABLISHED BY THIS AGREEMENT IS THAT OF INDEPENDENT
CONTRACTORS, AND NOTHING CONTAINED IN THIS AGREEMENT SHOULD BE CONSTRUED TO GIVE
EITHER PARTY THE POWER TO DIRECT OR CONTROL THE DAY-TO-DAY ACTIVITIES OF THE
OTHER.  ALL FINANCIAL AND OTHER OBLIGATIONS ASSOCIATED WITH EACH PARTY’S
BUSINESS ARE THE SOLE RESPONSIBILITY OF EACH PARTY.

 

2.4 MATERIALS.  R2 WILL PROVIDE ASSISTANCE TO VITAL IN THE FORM OF PROVIDING
REASONABLE QUANTITIES OF PROMOTIONAL AND OTHER MARKETING MATERIALS IN ENGLISH
AND SUCH OTHER LANGUAGES AS MAY BE AVAILABLE FROM TIME TO TIME.  VITAL SHALL BE
RESPONSIBLE FOR ANY TRANSLATION OF PROMOTIONAL AND MARKETING MATERIALS
DISTRIBUTED WITHIN THE TERRITORY THAT IT PRODUCES OR HAS PRODUCED (BUT IT HAS NO
OBLIGATION TO SO PRODUCE), AND IN THE EVENT THAT VITAL COMPLETES ANY SUCH
TRANSLATIONS, VITAL SHALL CERTIFY TO R2 THAT ANY SUCH TRANSLATIONS HAVE BEEN
APPROPRIATELY VERIFIED, IF, AND ONLY TO THE EXTENT THAT, SUCH VERIFICATION IS
REQUIRED BY A REGULATORY AGENCY IN THE COUNTRY FOR WHICH THE TRANSLATION WAS
MADE.  VITAL SHALL PROVIDE TO R2 FOR REVIEW AN EXAMPLE OF EACH ITEM OF
PROMOTIONAL, ADVERTISING AND EDUCATIONAL MATERIALS AND PROGRAMS AND OTHER
LITERATURE RELATING TO THE R2 LUNG CAD PRODUCT THAT VITAL INTENDS TO USE TO
MARKET AND PROMOTE THE R2 LUNG CAD PRODUCT AT LEAST THIRTY (30) DAYS PRIOR TO
THE COMMERCIAL RELEASE OF SUCH MATERIALS OR COMMENCEMENT OF SUCH PROGRAMS.  R2
RESERVES THE RIGHT TO REJECT ANY PROMOTIONAL MATERIALS THAT CONTAIN INACCURATE
CLAIMS REGARDING THE R2 LUNG CAD PRODUCT.

 

2.5 PRODUCT PRESENTATION.  EACH PARTY REPRESENTS AND WARRANTS THAT IT WILL:
(A) PRESENT THE R2 LUNG CAD PRODUCT FAIRLY TO POTENTIAL CUSTOMERS; (B) NOT
DISPARAGE THE OTHER PARTY, THE OTHER PARTY’S TRADEMARKS, OR THE OTHER PARTY’S
PRODUCTS OR SERVICES IN ANY MATERIAL RESPECT; (C) AVOID DECEPTIVE, MISLEADING OR
UNETHICAL BUSINESS PRACTICES; AND (D) AVOID FALSE OR MISLEADING REPRESENTATIONS
WITH REGARD TO THE R2 LUNG CAD PRODUCT.

 

2.6 TRADEMARKS.  VITAL RECOGNIZES AND CONCEDES FOR ALL PURPOSES THAT ALL
TRADEMARKS AFFIXED TO THE R2 LUNG CAD PRODUCT OR ANY ACCOMPANYING LABELS,
MARKETING MATERIALS, CONTAINERS AND CARTONS, WHETHER OR NOT REGISTERED,
CONSTITUTE R2’S EXCLUSIVE PROPERTY AND CANNOT BE USED EXCEPT IN CONNECTION WITH
PROMOTING AND MARKETING THE R2 LUNG CAD PRODUCT.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, R2 HEREBY GRANTS, AND VITAL HEREBY ACCEPTS, A
NON-EXCLUSIVE, NON-TRANSFERABLE, NON-ASSIGNABLE, ROYALTY-FREE LICENSE TO USE
R2’S TRADEMARKS SOLELY FOR PURPOSES OF MARKETING THE R2 LUNG CAD PRODUCT IN THE
TERRITORY AS SET FORTH IN THIS AGREEMENT; PROVIDED, HOWEVER, THAT VITAL WILL
PROVIDE R2 WITH SAMPLES OF EACH USE OF TRADEMARK PRIOR TO SUCH USE AND WILL
REFRAIN FROM ALL USES THAT R2 INFORMS VITAL ARE DETRIMENTAL TO R2’S INVESTMENT
IN SUCH TRADEMARKS.  VITAL AGREES TO STATE IN APPROPRIATE PLACES ON ALL
MATERIALS USING THE TRADEMARKS THAT THE TRADEMARKS ARE TRADEMARKS OF R2 AND TO
INCLUDE THE APPROPRIATE TRADEMARK SYMBOLS. R2 GRANTS NO OTHER RIGHTS THAN THOSE
EXPRESSLY GRANTED HEREUNDER, AND VITAL ACKNOWLEDGES R2’S EXCLUSIVE OWNERSHIP OF
THE TRADEMARKS AND THE RENOWN OF R2’S TRADEMARKS WORLDWIDE. VITAL SHALL PROMPTLY
INFORM R2 IN WRITING OF ANY KNOWN OR REASONABLY SUSPECTED VIOLATION OF R2’S
TRADEMARKS OR COPYRIGHTS.  VITAL AGREES THAT ANY USE OF R2’S TRADEMARKS, AND ALL
ASSOCIATED GOODWILL, SHALL INURE TO THE BENEFIT OF R2.  VITAL AGREES IT WILL NOT
USE, REGISTER OR OTHERWISE APPROPRIATE ANY NAME, MARK OR LOGO WHICH IS SIMILAR
TO OR MAY BE CONFUSED WITH ANY NAME, MARK OR LOGO LICENSED BY R2 HEREUNDER.

 

2.7 BRANDING.  IN THE EVENT THAT A CUSTOMER LICENSES THE IMAGECHECKER-LUNG
VERSION 2 OR ANY SUCCESSOR CAD LUNG PROGRAM OF R2,VITAL SHALL POSITION AN R2
TRADEMARK OF R2’S CHOOSING ON THE LAUNCH BUTTON OF THE VITAL WORKSTATION AS WELL
AS DISPLAY PROMINENTLY AN R2 TRADEMARK OF R2’S CHOOSING ON THE SCREEN OF THE
VITAL WORKSTATION WHEN APPROPRIATE, BUT THE FOREGOING SHALL NOT REQUIRE VITAL TO
RETROFIT OR MODIFY ANY VITAL WORKSTATION IN A CUSTOMER’S POSSESSION PRIOR TO THE
GRANT OF SUCH LICENSE.

 

2.8 CUSTOMER INSTALLATION AND TRAINING.  AS BETWEEN THE PARTIES, R2 SHALL BE
RESPONSIBLE FOR THE INSTALLATION AND ALL TRAINING IN THE USE OF THE R2 LUNG CAD
PRODUCT AT ALL CUSTOMER SITES.  R2 MAY OFFER ONE DAY OF CUSTOMER TRAINING FREE
OF CHARGE AT THE CUSTOMER SITE, AT DESIGNATED TRAINING CENTERS OR THROUGH ONLINE
METHODOLOGIES.

 

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2.9  SERVICE AND SUPPORT.    AS BETWEEN THE PARTIES, R2 WILL BE RESPONSIBLE FOR
PROVIDING IN-WARRANTY AND AFTER-WARRANTY TECHNICAL SUPPORT OF THE R2 LUNG CAD
PRODUCT IN ACCORDANCE WITH ITS STANDARD SUPPORT TERMS ( THE “R2 SOFTWARE
MAINTENANCE PROGRAM”), EXCEPT THAT VITAL WILL, PROVIDE FIRST-LEVEL TECHNICAL
SUPPORT OF THE R2 LUNG CAD PRODUCT TO CUSTOMERS, AS PART OF THE R2 SOFTWARE
MAINTENANCE PROGRAM AS SET FORTH IN EXHIBIT C.  R2 WILL PROVIDE SECOND-LEVEL
MAINTENANCE AND SUPPORT TO CUSTOMERS AS PART OF THE R2 SOFTWARE MAINTENANCE
PROGRAM FREE OF CHARGE DURING THE WARRANTY PERIOD AND THEREAFTER FOR CUSTOMERS
PURCHASING MEMBERSHIP IN THE R2 SOFTWARE MAINTENANCE PROGRAM, AS FURTHER SET
FORTH IN EXHIBIT C.  VITAL ACKNOWLEDGES THAT THE SUPPORT WILL BE PROVIDED TO
CUSTOMERS FREE OF CHARGE DURING THE WARRANTY PERIOD, AND R2 WILL ENDEAVOR TO
REQUIRE CUSTOMERS TO COMMIT TO AT LEAST ONE YEAR OF MEMBERSHIP IN THE R2
SOFTWARE MAINTENANCE PROGRAM BEYOND THE WARRANTY PERIOD.  NEW FEATURES, IF ANY,
MAY BE SUBJECT TO ADDITIONAL FEES TO CUSTOMERS FOR WHICH VITAL WILL RECEIVE A
SHARE OF THE LICENSE REVENUE DURING THE TERM OF THE AGREEMENT AS SET FORTH IN
THIS AGREEMENT.

 

2.10 TRAINING.  VITAL SHALL ENSURE THAT ITS SERVICE PERSONNEL ARE SUFFICIENTLY
SKILLED AND KNOWLEDGEABLE ABOUT THE R2 LUNG CAD PRODUCT.  R2 SHALL PROVIDE ALL
NECESSARY TRAINING TO VITAL REGARDING THE USE AND MAINTENANCE OF THE R2 LUNG CAD
PRODUCT AS REASONABLY NECESSARY, FOR VITAL TO FULFILL ITS SERVICE OBLIGATIONS TO
THE CUSTOMERS.  SUCH TRAINING SHALL TAKE PLACE AT THE DATES AND LOCATIONS AS
MUTUALLY AGREED BETWEEN THE PARTIES.

 

2.11 HARDWARE AND SUPPORT.  AS BETWEEN THE PARTIES, R2 SHALL PROVIDE THE 
HARDWARE PLATFORMS (“SERVERS”) TO THE CUSTOMERS FOR THE R2 LUNG CAD PRODUCT.  R2
WILL INSTALL THE SERVERS.  R2 WILL RETAIN ANY SERVER INSTALLATION FEES PAID BY
CUSTOMERS.  ANY SERVER SUPPORT OFFERED BY R2 TO ITS CUSTOMERS IS NOT ADDRESSED
IN THIS AGREEMENT, AND VITAL SHALL NOT BE ENTITLED TO SHARE IN ANY REVENUE
DERIVED BY R2 FROM OFFERING AND PERFORMING HARDWARE SUPPORT SERVICES.

 

2.12 PRODUCT ACCESS.  BEGINNING WITH THE RELEASE OF THE IMAGECHECKER-LUNG
VERSION 2, R2 LUNG CAD PRODUCTS WILL BE ACCESSED THROUGH THE VITAL NODULE PROBE.

 

2.13 IMAGECHECKER-LUNG VERSION 2 RELEASE AND INTEGRATION.  IT IS THE EXPECTATION
OF THE PARTIES THAT R2 WILL DELIVER THE IMAGECHECKER-LUNG VERSION 2 TO VITAL IN
FINAL FORM BY JUNE 30, 2005.  VITAL SHALL INTEGRATE SUCH PRODUCT WITH THE VITAL
WORKSTATION BY SEPTEMBER 1, 2005, PROVIDED THAT FOR EVERY DAY PAST JUNE 30, 2005
FOR WHICH R2 IS DELAYED IN DELIVERING THE IMAGECHECKER-LUNG VERSION 2 TO VITAL,
VITAL’S DEADLINE FOR INTEGRATION SHALL BE EXTENDED BY ONE (1) DAY.  R2 AGREES TO
PROVIDE REASONABLE ASSISTANCE TO VITAL IN SUCCESSFULLY INTEGRATING THE
IMAGECHECKER-LUNG VERSION 2 WITH THE VITAL WORKSTATION.

 

3. EXCLUSIVITY

 

3.1 BY R2.  R2 SHALL NOT LICENSE OR OTHERWISE PROVIDE ANY CAD LUNG PROGRAM OR
UNDERLYING TECHNOLOGY TO ANY VENDORS OF FREESTANDING WORKSTATIONS FOR SALE IN
THE UNITED STATES, CANADA OR EUROPEAN UNION AND IDENTIFIED ON EXHIBIT D
(“WORKSTATION VENDORS”).  NOTWITHSTANDING THE FOREGOING, R2 SHALL NOT BE
RESTRICTED FROM PROVIDING CAD LUNG PROGRAMS OR UNDERLYING TECHNOLOGY TO: (A) ANY
OTHER THIRD PARTY WORKSTATION VENDOR NOT LISTED IN EXHIBIT D; (B) ANY PACS
VENDOR IDENTIFIED ON EXHIBIT D THAT SELLS WORKSTATIONS IN CONJUNCTION WITH PACS
(“PACS VENDOR”); PROVIDED THAT R2 SHALL NOT PROVIDE THE CAD LUNG PROGRAMS OR
UNDERLYING TECHNOLOGY TO ANY PACS VENDOR FOR USE WITH SUCH VENDOR’S SALE OF
FREESTANDING WORKSTATIONS; (C) OR TO ANY THIRD PARTY OEM OR PACS COMPANY THAT IN
TURN CONTRACTS WITH ANY WORKSTATION VENDOR IDENTIFIED ON EXHIBIT D.

 

3.2 BY VITAL.  EXCEPT FOR AS SET FORTH IN THIS SECTION 3.2, DURING THE TERM,
VITAL SHALL NOT PROMOTE, MARKET OR SELL ANY CAD LUNG PROGRAM OR ANY UNDERLYING
TECHNOLOGY IN CONNECTION WITH ANY VITAL PRODUCT OR SERVICES (INCLUDING THE VITAL
WORKSTATION), OTHER THAN R2 LUNG CAD PRODUCTS.  R2 ACKNOWLEDGES THAT VITAL MAY
SELL ITS VITAL NODULE PROBE PRODUCT (AND ANY OTHER PRODUCT) TO THE EXTENT THAT
IT IS NOT A CAD LUNG PROGRAM OR A PRODUCT WITH SIMILAR FEATURES.  VITAL SHALL
NOT AGREE TO THE INTEGRATION OF THE VITAL NODULE PROBE TO ANY THIRD PARTY CAD
LUNG PROGRAM OR ONE DEVELOPED INTERNALLY BY VITAL, NOR SHALL IT AGREE TO PERMIT
OTHERS TO CONDUCT SUCH INTEGRATION.  VITAL SHALL NOT MAKE PUBLICLY AVAILABLE ANY
APPLICATION PROGRAMMING INTERFACES THAT WOULD ALLOW SUCH INTEGRATION BY A THIRD
PARTY.  VITAL AGREES THAT IT WILL NOT DEVELOP OR MARKET A TEMPORAL COMPARISON
PRODUCT DESIGNED FOR USE WITH A R2 LUNG CAD PRODUCT.

 

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4. GOVERNMENTAL APPROVALS

 

4.1 HEALTH AND SAFETY LAWS AND REGULATIONS.  BOTH PARTIES SHALL MONITOR THE
APPROPRIATE INFORMATION SOURCES CLOSELY FOR CHANGES IN LAWS AND REGULATIONS, AND
OTHER REQUIREMENTS RELATING TO THE R2 LUNG CAD PRODUCT, AND SHALL NOTIFY THE
OTHER PARTY PROMPTLY IN WRITING OF ANY AND ALL SUCH CHANGES OF WHICH IT BECOMES
AWARE.  IF R2 IS REQUIRED BY ANY REGULATORY AGENCY TO RECALL THE R2 LUNG CAD
PRODUCT, OR IF R2 OR A REGULATORY AUTHORITY INITIATES A RECALL OF THE R2 LUNG
CAD PRODUCT, VITAL SHALL COOPERATE WITH AND ASSIST R2 IN LOCATING, AND
RETRIEVING IF NECESSARY, RECALLED R2 LUNG CAD PRODUCTS FROM CUSTOMERS.

 

4.2 COMPLIANCE WITH LOCAL LAWS.  EACH PARTY AGREES TO COMPLY WITH ALL LOCAL LAWS
AND REGULATIONS APPLICABLE TO THE DISTRIBUTION OF THEIR RESPECTIVE PRODUCTS IN
EACH COUNTRY WITHIN THE TERRITORY.

 

5. PRICES AND CONSIDERATION

 

5.1 LICENSE FEES FOR THE R2 LUNG CAD PRODUCTS.  R2 SHALL HAVE SOLE AND EXCLUSIVE
CONTROL OVER ALL PRICES, DISCOUNTS, ALLOWANCES, REFUNDS, DEVELOPMENT,
SPECIFICATIONS, DELIVERY, AND OTHER TERMS GOVERNING THE LICENSING OF THE R2 LUNG
CAD PRODUCT, INCLUDING, WITHOUT LIMITATION, THE EXTENSION OF CREDIT.  VITAL
AGREES THAT IT SHALL QUOTE TO CUSTOMERS ONLY THE PRICES AND TERMS OF A LICENSE
FOR THE R2 LUNG CAD PRODUCT PROVIDED BY R2, AND VITAL SHALL NOT ALTER OR CHANGE
SUCH PRICES OR TERMS OF LICENSE UNLESS OTHERWISE AUTHORIZED BY R2 IN WRITING ON
A CASE-BY-CASE BASIS.  PRICES AND TERMS OF LICENSE QUOTED BY R2 ARE SUBJECT TO
CHANGE BY R2 AT ANY TIME UPON PRIOR WRITTEN NOTICE.  R2 SHALL RENDER ALL
INVOICES DIRECTLY TO THE CUSTOMERS AND SHALL SEND NOTIFICATION OF ALL
COMMISSIONABLE TRANSACTIONS TO VITAL AT THE SAME TIME AS IT MAKES COMMISSION
PAYMENTS PURSUANT TO SECTION 5.3. IT IS EXPRESSLY UNDERSTOOD BY VITAL THAT FULL
RESPONSIBILITY FOR ALL CONTRACTS FOR THE R2 LUNG CAD PRODUCT AND COLLECTION
RESTS WITH R2.  ALL ORDERS FOR THE R2 LUNG CAD PRODUCT SHALL BE TAKEN AND
CONTRACTS EXECUTED IN THE NAME OF R2, WHICH SHALL INVOICE CUSTOMERS AND CARRY
ACCOUNTS IN ITS OWN NAME AS CREDITOR.  VITAL SHALL HAVE NO AUTHORITY TO ACCEPT
OR RECEIVE ANY PAYMENTS FROM CUSTOMERS FOR THE R2 LUNG CAD PRODUCT, WHETHER
DIRECTLY OR INDIRECTLY, NOR ANY COMPENSATION IN KIND FOR THE R2 LUNG CAD
PRODUCT, AND SHALL NOT DO SO.

 

5.2 COMMISSIONS.  R2 SHALL PAY VITAL A COMMISSION (A “COMMISSION”) ON EACH
COMMISSIONABLE TRANSACTION AS FOLLOWS:

 

(a) Vital shall receive a minimum Commission equal to * of the software license
consideration received by R2 (excluding consideration received for support,
hardware sales, training and installation) in respect of each Commissionable
Transaction where Vital employees exclusively recommend the applicable Customer
to R2, but are not Active Participants, as defined below, in the sale or license
by R2 to such Customer; and

 

(b) Vital shall receive a further commission equal to * of the consideration
received by R2 (excluding support, hardware sales, training and installation) in
respect of each Commissionable Transaction in relation to which Vital actively
markets and  introduces R2 to Customers or prospective Customers or assists in
the sales process of such R2 Lung CAD Product.  The act of only providing a list
of Customers to R2 shall not qualify Vital for a commission under this Section
5.2 (b).  If R2 determines that Vital is not meeting the requirements to earn a
commission under this Section 5.2(b), then R2 shall notify Vital of its lack of
performance, so that Vital has the opportunity to earn such commission.

 

Notwithstanding the foregoing, the consideration payable to Vital for each
Commissionable Transaction for purposes of this Section 5.2 shall be reduced (a)
by * per person day of training for the R2 Lung CAD Product that R2 provides to
a Customer free of charge in accordance with Section 2.8 of this Agreement, and
(b) by * per person day of installation of the R2 Lung CAD Product that R2
provides at a Customer’s site in accordance with Section 2.8 of this Agreement.

 

5.3 PAYMENT OF COMMISSION.  UNLESS OTHERWISE AGREED BY THE PARTIES, COMMISSIONS
WITH RESPECT TO ANY PARTICULAR CONTRACT SIGNED BY A CUSTOMER RESULTING IN A
COMMISSIONABLE TRANSACTION SHALL BE DEEMED EARNED AT THE END OF THE CALENDAR
MONTH FOLLOWING R2’S RECEIPT OF A VALID CONTRACT OR PURCHASE ORDER FROM A
CUSTOMER AND PAYABLE WITHIN THIRTY (30) DAYS FOLLOWING THE CALENDAR MONTH IN
WHICH SUCH FEES ARE COLLECTED.THE PAYMENT OF COMMISSIONS SHALL BE IN U.S.
DOLLARS POST-CONVERSION AND SHALL BE MADE BY CHECK OR WIRE TRANSFER TO THE ORDER
OF VITAL.

 

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5.4 MAINTENANCE FEE SHARING.  IN EXCHANGE FOR PROVIDING FIRST-LEVEL SUPPORT OF
THE R2 LUNG CAD PRODUCT TO CUSTOMERS, VITAL WILL RECEIVE * OF THE R2 SOFTWARE
MAINTENANCE PROGRAM FEES ACTUALLY RECEIVED BY R2.  SUCH AMOUNTS SHALL BE PAYABLE
WITHIN THIRTY (30) DAYS FOLLOWING THE CALENDAR MONTH IN WHICH SUCH FEES ARE
COLLECTED.

 

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* Confidential Treatment Requested

 

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5.5 MINIMUM REVENUES.

 

(a) Sales to Customers shall generate for R2 certain specified minimum revenues
(the “Applicable Minimums”) payable to R2, net only of Commissions, on a
Quarterly basis from the Product Revenues as follows:

 

(I) STARTING WITH THE QUARTER ENDING SEPTEMBER 30, 2005 AND ENDING WITH THE
QUARTER ENDING MARCH 31, 2006 (THE “INITIAL PERIOD”), THE APPLICABLE MINIMUMS
SHALL BE AS FOLLOWS:  VITAL SHALL GENERATE FOR R2 PRODUCT REVENUES PER QUARTER
OF * (SUCH QUARTERLY AMOUNT BEING THE “GUARANTEED MINIMUM”); PROVIDED THAT ANY
PRODUCT REVENUES THAT VITAL GENERATES FOR R2, INCLUDING PRODUCT REVENUES RELATED
TO THE LN 1000 VERSION OF THE R2 LUNG CAD PRODUCT,  BETWEEN THE EFFECTIVE DATE
AND JUNE 30, 2005 SHALL COUNT AGAINST THE APPLICABLE MINIMUM FOR THE FIRST
QUARTER OF THE INITIAL PERIOD ; AND

 

(II) SUBSEQUENT TO THE INITIAL PERIOD AND SUBJECT TO THE PROVISIONS OF
SUBSECTION (III) BELOW, THE APPLICABLE MINIMUMS PER QUARTER FOR THE REMAINDER OF
THE TERM OF THE AGREEMENT (THE “SUBSEQUENT PERIOD”) SHALL BE EQUAL TO THE
APPLICABLE MINIMUM OF THE IMMEDIATELY PRECEDING QUARTER UNLESS THE PRODUCT
REVENUES GENERATED BY VITAL FOR R2 DURING THE PRECEDING QUARTER FELL BELOW THE
APPLICABLE MINIMUM FOR THAT QUARTER.  IN SUCH EVENT, THE APPLICABLE MINIMUM FOR
THE CURRENT QUARTER SHALL BE CALCULATED AS FOLLOWS:  THE LOWER OF (A) THE
APPLICABLE MINIMUM OF THE PRECEDING QUARTER MULTIPLIED BY THE PERCENT BY WHICH
THE PRODUCT REVENUES IN THE PRECEDING QUARTER FELL BELOW THAT QUARTER’S
APPLICABLE MINIMUM, UP TO A MAXIMUM DECLINE IN PERCENTAGE EACH QUARTER OF  *; OR
(B) * TIMES THE PRODUCT REVENUES GENERATED BY R2 DURING THE PRECEDING QUARTER
THROUGH ALL OTHER SALES, MARKETING AND DISTRIBUTION CHANNELS EXCLUDING REVENUES
GENERATED FROM CUSTOMERS UNDER THIS AGREEMENT (THE “NON-VITAL PRODUCT
REVENUES”).  IF DURING THE SUBSEQUENT PERIOD, PRODUCT REVENUES FOR A QUARTER
EXCEED THE ORIGINAL GUARANTEED MINIMUM AMOUNT, THEN THE APPLICABLE MINIMUM FOR
THE NEXT QUARTER WILL EITHER REMAIN UNCHANGED OR, IF THE APPLICABLE MINIMUM FOR
THAT QUARTER HAD BEEN REDUCED PER THE FORMULA SET FORTH ABOVE, THEN THE
APPLICABLE MINIMUM WILL RESET TO THE GUARANTEED MINIMUM AMOUNT.  SUBSEQUENT
QUARTERS WILL THEN BE AGAIN ADJUSTED AS SET FORTH IN THIS SUBSECTION (II) AND IN
SUBSECTION (III) BELOW.

 

(III) AT THE END OF EVERY FOURTH QUARTER DURING THE TERM OF THIS AGREEMENT, THE
PARTIES WILL EVALUATE VITAL’S PERFORMANCE DURING THOSE PAST FOUR (4) QUARTERS
AND WHETHER IN AGGREGATE VITAL HAS EXCEEDED THE GUARANTEED MINIMUMS FOR THE PAST
FOUR (4) QUARTERS (SUCH AGGREGATE EXCESS AMOUNT BEING THE “AGGREGATE EXCESS”)
AND WILL SET THE GUARANTEED MINIMUMS FOR THE SUBSEQUENT FOUR (4) QUARTERS.  IF
VITAL HAS EXCEEDED THE TOTAL GUARANTEED MINIMUM AMOUNT (MEANING WITHOUT TAKING
INTO ACCOUNT ADJUSTMENTS TO THE APPLICABLE MINIMUMS PER SUBSECTION (II) ABOVE),
FOR THOSE PAST FOUR (4) QUARTERS, IN AGGREGATE, THEN THE APPLICABLE MINIMUMS FOR
THE REMAINING QUARTERS DURING THE TERM OF THIS AGREEMENT (THE “REMAINING
QUARTERS”) SHALL BE READJUSTED TO EQUAL THE VALUE RESULTING FROM THE FOLLOWING
CALCULATION:  ((GUARANTEED MINIMUM*REMAINING QUARTERS) – AGGREGATE EXCESS)/
(REMAINING QUARTERS).  BY WAY OF EXAMPLE ONLY, IF, DURING THE FIRST FOUR
(4) QUARTERS OF THIS AGREEMENT, VITAL

 

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* CONFIDENTIAL TREATMENT REQUESTED

 

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HAS GENERATED PRODUCT REVENUES OF *, THE AGGREGATE EXCESS EQUALING, THEREFORE,
*, THEN THE APPLICABLE MINIMUMS (UNADJUSTED PER SUBSECTION (II))  FOR THE
REMAINING EIGHT (8) QUARTERS OF THE AGREEMENT SHALL BE * INSTEAD OF *.  THIS
FIGURE RESULTS FROM THE FOLLOWING CALCULATION: *.  NOTWITHSTANDING ANY OF THE
FOREGOING, SUCH READJUSTED APPLICABLE MINIMUMS MAY BE SUBSEQUENTLY REDUCED AFTER
READJUSTMENT UNDER THIS SECTION ACCORDING TO SECTION 5.5(A)(II), IF APPLICABLE.

 

(IV) IF THE AGREEMENT IS TERMINATED PRIOR TO THE END OF ANY FULL QUARTER, THEN
THE APPLICABLE MINIMUM FOR THE PERIOD BETWEEN THE IMMEDIATELY PRECEDING FULL
QUARTER AND THE DATE OF TERMINATION SHALL BE PRORATED TO REFLECT THE NUMBER OF
DAYS IN SUCH PERIOD IN RELATION TO THE NUMBER OF DAYS IN THE FULL QUARTER DURING
WHICH THE AGREEMENT WAS TERMINATED.

 

(V) IF FOR ANY QUARTER, VITAL HAS NOT ACHIEVED THE APPLICABLE MINIMUM, THEN
VITAL AGREES TO PAY R2 WITHIN THIRTY (30) DAYS AFTER THE END OF THE APPLICABLE
QUARTER THE DIFFERENCE BETWEEN THE APPLICABLE MINIMUM AND THE PRODUCT REVENUES
ACTUALLY GENERATED BY VITAL FOR SUCH QUARTER.  VITAL ACKNOWLEDGES AND AGREES
THAT THIS PAYMENT IS NOT A PENALTY, BUT IS PART OF THE CONSIDERATION FOR THE
GRANT OF THE PROMOTION RIGHTS AND OTHER BENEFITS GRANTED TO VITAL UNDER THIS
AGREEMENT RELATING TO THE LICENSING OF R2 LUNG CAD PRODUCTS TO CUSTOMERS IN THE
TERRITORY.

 

(VI) IF PRODUCT REVENUES GENERATED BY VITAL FALL BELOW THE APPLICABLE MINIMUMS
FOR TWO (2) QUARTERS IN A ROW, THE PARTIES SHALL MEET TO EVALUATE AND DISCUSS
METHODS TO RAISE PRODUCT REVENUES FOR THE REMAINING QUARTERS.

 

(VII) IF ANY PRODUCT REVENUES ARE NOT PAID TO R2 BY CUSTOMERS WITHIN SIX
(6) MONTHS OF THE CUSTOMERS’ RECEIPT OF AN INVOICE FROM R2, SUCH UNPAID PRODUCT
REVENUES WILL BE SUBTRACTED FROM ALL OTHER PRODUCT REVENUES USED TO MEET THE
APPLICABLE MINIMUM FOR THE QUARTER TO WHICH SUCH UNPAID PRODUCT REVENUES WERE
ORIGINALLY CREDITED.  SUBSEQUENTLY, IF R2 COLLECTS ANY UNPAID PRODUCT REVENUES
THAT HAVE BEEN SUBTRACTED FROM PRODUCT REVENUES USED TO MEET ANY APPLICABLE
MINIMUM, THEN SUCH SUBTRACTED PRODUCT REVENUES WILL BE ADDED TO THE TOTAL AMOUNT
OF PRODUCT REVENUES RECEIVED IN THE QUARTER IN WHICH SUCH SUBTRACTED PRODUCT
REVENUES ARE RECEIVED AND SHALL BE USED TO CALCULATE THE APPLICABLE MINIMUM FOR
THE QUARTER IN WHICH THEY ARE RECEIVED.  IF ANY UNPAID PRODUCT REVENUES THAT
HAVE BEEN SUBTRACTED FROM THE PRODUCT REVENUES ARE RECEIVED AFTER THE EXPIRATION
OF THIS AGREEMENT, SUCH PRODUCT REVENUES SHALL BE APPLIED AGAINST ANY PAYMENT BY
VITAL TOWARDS ANY APPLICABLE MINIMUM, AND R2 SHALL REFUND VITAL THE APPROPRIATE
AMOUNT OF SUCH APPLICABLE MINIMUM PAYMENT.

 

(b) All minimum fees owed to R2 from Vital under the Old Agreement, from
November 30, 2004 through the Effective Date, shall be cancelled as of the
Effective Date and replaced by the obligations set forth herein.

 

(c) Notwithstanding the foregoing terms of this Section 5.5, no Applicable
Minimum shall apply to a Quarter, nor shall such Applicable Minimum be deferred
to a subsequent period, if during all or any part of such Quarter: (i) any
United States regulatory

 

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* Confidential Treatment Requested

 

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agency, or R2, issues a recall of the R2 Lung CAD Product or Vital Workstation
as a result of the R2 Lung CAD Product installed thereon; (ii) the ability of
Vital to market and promote the R2 Lung CAD Product is significantly impaired by
any governmental action, riots, war, prolonged shortage of energy, epidemics,
fire, flood, hurricane, typhoon, earthquake, or other event of force majeure
beyond the reasonable control of Vital (“Force Majeure”); (iii) if use or sale
of the R2 Lung CAD Product is prohibited or restricted by any injunction or
other legal prohibition issued within the United States (except one which would
be cured by obtaining a permit or other applicable regulatory approvals); (iv)
the then available R2 Lung CAD Product cannot legally be made available on a
commercial basis in the United States or (v) there shall be no R2 Lung CAD
Product commercially available for order and installation in the United States.

 

5.6 AUDITS.  VITAL SHALL HAVE THE RIGHT, AT ITS OWN EXPENSE, TO HAVE AN
INDEPENDENT AUDITOR REASONABLY ACCEPTABLE TO R2 INSPECT R2’S ACCOUNTING RECORDS
IN ORDER TO VERIFY COMPLIANCE WITH THE TERMS OF THIS AGREEMENT.  SUCH
INSPECTIONS SHALL TAKE PLACE NOT MORE THAN ONCE A YEAR UPON NOT LESS THAN
FIFTEEN (15) DAYS PRIOR WRITTEN NOTICE, AND DURING THE R2’S NORMAL BUSINESS
HOURS.  R2 SHALL PROMPTLY PAY THE DIFFERENCE, PLUS INTEREST, ON ANY
UNDERPAYMENTS REVEALED IN THE AUDIT.  FURTHER, IF AN AUDIT REVEALS AN
UNDERPAYMENT OF MORE THAN *, R2 SHALL ALSO PAY THE COST AND EXPENSES RELATED TO
THE AUDIT.

 

5.7 INTEREST.  ANY PAYMENTS THAT ARE NOT TIMELY PAID AS PROVIDED HEREUNDER SHALL
BEAR INTEREST AT AN ANNUAL RATE EQUAL TO * PER MONTH OR THE MAXIMUM AMOUNT
PERMITTED BY LAW, WHICHEVER IS LESS, CALCULATED FROM THE DATE THE PAYMENT WAS
DUE UNTIL THE DATE THE PAYMENT IS RECEIVED.

 

5.8 EXPENSES.  EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, EACH PARTY SHALL
BE RESPONSIBLE FOR ALL EXPENSES INCURRED BY IT IN CONNECTION WITH THE
IMPLEMENTATION AND PERFORMANCE OF ITS DUTIES AND OBLIGATIONS UNDER THIS
AGREEMENT, INCLUDING, COMPENSATION, BONUSES AND BENEFITS, IF ANY, FOR ITS
PERSONNEL; COSTS AND EXPENSES ASSOCIATED WITH ESTABLISHING AND MAINTAINING ITS
MARKETING ORGANIZATION AND OFFICES; ADVERTISING AND PROMOTION EXPENSES; AND ANY
AND ALL TAXES, FEES, DUTIES, TARIFFS OR CHARGES IMPOSED ON IT.

 

6. REPORTING AND CUSTOMER COMPLAINTS

 

6.1 MEDICAL DEVICE REPORTING.  PURSUANT TO GOVERNMENTAL MEDICAL DEVICE REPORTING
REGULATIONS (E.G. THE FDA’S MEDICAL DEVICE REPORTING (MDR) REGULATIONS, THE
EUROPEAN MEDICAL DEVICE VIGILANCE GUIDELINES, AND ANY OTHER APPLICABLE MEDICAL
DEVICE REPORTING REGULATIONS), THE PARTIES MAY BE REQUIRED TO REPORT TO THE
APPLICABLE AGENCY INFORMATION THAT REASONABLY SUGGESTS THAT THE PRODUCTS
CONTEMPLATED HEREUNDER MAY HAVE CAUSED OR CONTRIBUTED TO THE DEATH OR SERIOUS
INJURY OR HAVE MALFUNCTIONED AND THAT THE DEVICE WOULD BE LIKELY TO CAUSE OR
CONTRIBUTE TO A DEATH OR SERIOUS INJURY IF THE MALFUNCTION WERE TO RECUR.  R2
SHALL BE PRIMARILY RESPONSIBLE FOR EVALUATING ANY SUCH REPORTABLE INCIDENTS THAT
RELATE TO THE R2 LUNG CAD PRODUCT.  EACH OF R2 AND VITAL AGREE TO SUPPLY TO THE
OTHER ANY INFORMATION RELATING TO SUCH REPORTABLE INCIDENTS PROMPTLY AFTER
BECOMING AWARE OF THEM SO THAT EACH OF R2 AND VITAL CAN COMPLY WITH GOVERNMENTAL
REPORTING REQUIREMENTS.

 

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* CONFIDENTIAL TREATMENT REQUESTED

 

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6.2 CUSTOMER COMPLAINTS.  EACH PARTY SHALL ADVISE THE OTHER OF ALL CUSTOMER
AND/OR REGULATORY COMPLAINTS ALLEGING PATIENT INJURY ATTRIBUTED TO A R2 LUNG CAD
PRODUCT WITHIN TWENTY FOUR (24) HOURS, AND OF ALL OTHER MATERIAL COMPLAINTS AS
PROMPTLY AS POSSIBLE BUT NOT MORE THAN FIVE (5) BUSINESS DAYS FOLLOWING THE DATE
A PARTY RECEIVES SUCH COMPLAINT.  EXCEPT AS AFORESAID, VITAL SHALL HAVE NO
OBLIGATION TO INVESTIGATE, MONITOR AND GIVE NOTIFICATIONS IN RESPECT OF CUSTOMER
AND/OR REGULATORY COMPLAINTS CONCERNING THE R2 LUNG CAD PRODUCT.  ANY NOTICE TO
VITAL UNDER THIS SECTION SHALL BE SENT VIA FACSIMILE AND EMAIL TO THE ATTENTION
OF THE MANAGER OF REGULATORY AFFAIRS AND THE SENIOR DIRECTOR OF OPERATIONS OR TO
SUCH OTHER ADDRESS OR PERSON AS VITAL MAY DESIGNATE, AND ANY NOTICE TO R2 UNDER
THIS SECTION SHALL BE SENT VIA FACSIMILE AND EMAIL TO THE ATTENTION OF R2’S VICE
PRESIDENT OF REGULATORY AFFAIRS OR TO SUCH OTHER ADDRESS OR PERSON AS R2 MAY
DESIGNATE.

 

7. INDEMNITY AND INSURANCE

 

7.1 R2 INDEMNITY.  SUBJECT TO SECTIONS 7.2 AND 7.4 BELOW, R2 AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS VITAL, ITS OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS, FROM AND AGAINST ANY AND ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND
EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, ATTRIBUTABLE TO CLAIMS, ACTIONS,
SUITS OR OTHER PROCEEDINGS (“CLAIMS”) BROUGHT BY A THIRD PARTY ALLEGING:
(A) THAT THE R2 LUNG CAD PRODUCT, AS DELIVERED TO VITAL, INFRINGES ANY THIRD
PARTY INTELLECTUAL PROPERTY RIGHT; (B) PRODUCT LIABILITY WITH RESPECT TO THE R2
LUNG CAD PRODUCT; (C) THAT ANY MATERIALS PROVIDED BY R2 TO VITAL UNDER
SECTION 2.4 ARE DECEPTIVE OR MISLEADING; OR (D) A FAILURE BY R2 TO COMPLY WITH
APPLICABLE LAW.

 

7.2 EXCLUSIONS.  NOTWITHSTANDING THE FOREGOING, R2 WILL HAVE NO LIABILITY FOR
INFRINGEMENT CLAIMS ARISING FROM: (A)ANY COMBINATION OF THE R2 LUNG CAD PRODUCT
WITH OTHER SOFTWARE OR PRODUCTS NOT PROVIDED OR AUTHORIZED BY R2, WHICH CLAIM
WOULD HAVE BEEN AVOIDED IF THE R2 LUNG CAD PRODUCT HAD NOT BEEN SO COMBINED; OR
(B) THE MODIFICATION OF THE R2 LUNG CAD PRODUCT, IN WHOLE OR IN PART, BY ANYONE
OTHER THAN R2 WHICH CLAIM WOULD HAVE BEEN AVOIDED IF THE R2 LUNG CAD PRODUCT HAD
NOT BEEN SO MODIFIED.

 

7.3 VITAL INDEMNITY.  SUBJECT TO SECTION 7.4 BELOW, VITAL AGREES TO DEFEND,
INDEMNIFY AND HOLD R2, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, FROM AND
AGAINST ANY AND ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND EXPENSES
ATTRIBUTABLE TO CLAIMS BROUGHT BY A THIRD PARTY ALLEGING: (A) DECEPTIVE OR
MISLEADING ADVERTISING OR SALES, MARKETING OR PROMOTIONAL PRACTICES BY VITAL, OR
ITS SUBCONTRACTORS, OTHER THAN ANY MADE IN RELIANCE ON THE CONTENT OF THE
MATERIALS PROVIDED TO VITAL UNDER SECTION 2.4; (B) NEGLIGENCE OR MISCONDUCT BY
VITAL, OR ITS SUBCONTRACTORS, IN CONNECTION WITH THE MARKETING OR PROMOTION OF
THE R2 LUNG CAD PRODUCT; OR (C) A FAILURE BY VITAL TO COMPLY WITH APPLICABLE
LAW.

 

7.4 PROCEDURE.  THE PARTY SEEKING INDEMNIFICATION, (“INDEMNITEE”) SHALL:
(A) PROMPTLY NOTIFY THE INDEMNIFYING PARTY (“INDEMNITOR”) IN WRITING OF ANY
CLAIM BROUGHT BY A THIRD PARTY FOR WHICH IT IS SEEKING INDEMNIFICATION;
(B) PROVIDE INDEMNITOR WITH SOLE CONTROL OF THE DEFENSE AND/OR SETTLEMENT
THEREOF; AND (C) PROVIDE INDEMNITOR, AT INDEMNITOR’S REQUEST AND EXPENSE, WITH
REASONABLE ASSISTANCE AND FULL INFORMATION WITH RESPECT THERETO.  INDEMNITEE
SHALL HAVE THE RIGHT TO PARTICIPATE, AT ITS OWN EXPENSE, WITH COUNSEL OF ITS OWN
CHOOSING IN THE DEFENSE AND/OR SETTLEMENT OF SUCH CLAIM, SUIT OR PROCEEDING. 
THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES IN THIS SECTION 7 SHALL NOT APPLY
TO AMOUNTS PAID IN SETTLEMENT OF ANY CLAIM, SUIT OR PROCEEDING IF SUCH
SETTLEMENT IS EFFECTED WITHOUT THE CONSENT OF INDEMNITOR, WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD OR DELAYED.

 

7.5 ADDITIONAL REMEDY.  IF THE R2 LUNG CAD PRODUCT IS HELD, OR IN R2’S
REASONABLE OPINION IS LIKELY TO BE HELD, TO INFRINGE OR MISAPPROPRIATE A THIRD
PARTY’S INTELLECTUAL PROPERTY RIGHTS, THEN R2 MAY AT ITS SOLE OPTION AND
EXPENSE: (A) PROCURE FOR THE CUSTOMERS THE RIGHT TO CONTINUE USING THE R2 LUNG
CAD PRODUCT; (B) REPLACE THE R2 CAD PRODUCT WITH A NON-INFRINGING,
FUNCTIONALLY-EQUIVALENT PRODUCT; OR (C) IF NEITHER OF THE FOREGOING IS
REASONABLY PRACTICABLE, TERMINATE THE CUSTOMER AGREEMENT AND THIS AGREEMENT AND
REFUND TO CUSTOMER THE AMOUNTS PAID FOR THE R2 LUNG CAD PRODUCT, LESS A
REASONABLE AMOUNT FOR PRIOR USE.

 

7.6 ENTIRE LIABILITY.  THE FOREGOING PROVISIONS OF THIS SECTION 7 STATE THE
ENTIRE LIABILITY AND OBLIGATIONS OF EACH PARTY, AND EACH PARTY’S EXCLUSIVE
REMEDY, WITH RESPECT TO ANY ACTUAL OR ALLEGED INFRINGEMENT OF OR
MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY RIGHT BY THE R2 LUNG CAD PRODUCT.

 

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7.7 INSURANCE.  EACH PARTY SHALL USE COMMERCIALLY REASONABLE EFFORTS TO ADD THE
OTHER PARTY TO ITS EXISTING INSURANCE POLICIES AS AN ADDITIONAL INSURED;
PROVIDED THAT SUCH ADDITION WOULD NOT MATERIALLY ALTER THE OTHER TERMS AND
CONDITIONS OF SUCH EXISTING INSURANCE POLICY.

 

8. OWNERSHIP

 

8.1 OWNERSHIP.  AS BETWEEN VITAL AND R2, R2 WILL OWN, AND HEREBY RETAINS, ALL
RIGHT, TITLE AND INTEREST IN AND TO THE R2 LUNG CAD PRODUCT, AND ANY
IMPROVEMENTS, ENHANCEMENTS, INTERFACE COMPONENTS, AND/OR DERIVATIVE WORKS
THEREOF, AND ALL INTELLECTUAL PROPERTY RIGHTS RELATING THERETO.  ANY AND ALL
REGISTRABLE AND PATENTABLE DESIGNS RELATING TO THE R2 LUNG CAD PRODUCT AND THE
RIGHT TO APPLY FOR PROTECTION THEREFORE SHALL BELONG EXCLUSIVELY TO R2.

 

9. WARRANTY

 

9.1 WARRANTY.  ALL PRODUCT WARRANTIES OFFERED BY R2 SHALL BE MADE DIRECTLY TO
THE CUSTOMERS.

 

9.2 DISCLAIMER OF WARRANTIES.  EXCEPT AS EXPRESSLY STATED IN SECTION 9.1, THE R2
PRODUCT IS PROVIDED “AS IS,” WITHOUT WARRANTY OF ANY KIND.  R2 MAKES NO
ADDITIONAL WARRANTIES OR CONDITIONS OF ANY KIND, WHETHER, EXPRESS, IMPLIED,
STATUTORY, OR OTHERWISE, AND R2 SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES
AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT WITH RESPECT TO THE R2 LUNG CAD PRODUCT PROVIDED HEREUNDER, AND
WITH RESPECT TO THE USE THEREOF.

 

10. LIMITATION OF LIABILITY

 

10.1 EXCEPT FOR AMOUNTS PAYABLE PURSUANT TO A PARTY’S INDEMNIFICATION
OBLIGATIONS, AND EXCEPT FOR A BREACH OF SECTION 2.6 OR 11.2, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, COST OF SUBSTITUTE
GOODS, OR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL, OR INDIRECT DAMAGES, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, INCLUDING NEGLIGENCE, ARISING OUT OF THIS
AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.  IN NO EVENT SHALL
THE TOTAL LIABILITY OF EITHER PARTY EXCEED THE AMOUNTS PAID BY VITAL TO R2
DURING THE TWELVE-MONTH PERIOD PRECEDING THE EVENT GIVING RISE TO THE
LIABILITY.  THE FOREGOING LIMITATIONS APPLY NOTWITHSTANDING OF THE FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY HEREIN.

 

11. CONFIDENTIALITY

 

11.1 DEFINITION.  FOR PURPOSES OF THIS AGREEMENT, “CONFIDENTIAL INFORMATION”
MEANS INFORMATION EXCHANGED BETWEEN R2 AND VITAL PURSUANT TO THIS AGREEMENT AND
THE PERFORMANCE OF THE PARTIES’ OBLIGATIONS HEREUNDER, ORALLY (IF REDUCED TO
WRITING AND DELIVERED TO THE OTHER PARTY WITHIN THIRTY (30) DAYS OF DISCLOSURE)
OR IN WRITING, IF MARKED TO INDICATE ITS CONFIDENTIAL NATURE OR IF OF A TYPE
THAT A REASONABLE PERSON WOULD EXPECT TO BE PROPRIETARY AND CONFIDENTIAL AND
SHALL INCLUDE THE TERMS OF THIS AGREEMENT.  CONFIDENTIAL INFORMATION SHALL NOT
MEAN INFORMATION WHICH IS (A) IN THE PUBLIC DOMAIN OR SUBSEQUENTLY ENTERS THE
PUBLIC DOMAIN THROUGH NO ACT OR OMISSION OF THE RECEIVING PARTY;
(B) SUBSEQUENTLY ACQUIRED FREE OF ANY CONFIDENTIALITY OBLIGATION BY THE
RECEIVING PARTY FROM A THIRD PERSON HAVING, TO THE RECEIVING PARTY’S KNOWLEDGE,
NO OBLIGATION OF CONFIDENTIALITY TO THE DISCLOSING PARTY; (C) KNOWN TO THE
RECEIVING PARTY AT THE TIME OF DISCLOSURE, AS ESTABLISHED BY COMPETENT PROOF; OR
(D) DEVELOPED INDEPENDENTLY BY OR ON BEHALF OF THE RECEIVING PARTY, WITHOUT
RELIANCE ON OR USE OF ANY CONFIDENTIAL INFORMATION OF THE OTHER. 
NOTWITHSTANDING THE ABOVE, BEFORE EITHER PARTY DISCLOSES CONFIDENTIAL
INFORMATION WHICH INCLUDES TECHNICAL OR SCIENTIFIC INFORMATION, IT WILL INFORM
THE OTHER PARTY OF THE GENERAL NATURE OF SUCH INFORMATION AND THE OTHER PARTY
MAY AGREE OR DECLINE TO RECEIVE SUCH INFORMATION, OR THE PARTIES MAY NEGOTIATE A
SEPARATE AGREEMENT COVERING SUCH INFORMATION.  EXCEPT AS TO TECHNICAL OR
SCIENTIFIC INFORMATION, WHICH A PARTY SO AGREES TO RECEIVE, NEITHER PARTY SHALL
HAVE ANY OBLIGATIONS WITH RESPECT TO ANY TECHNICAL OR SCIENTIFIC INFORMATION,
WHICH IT MAY LEARN WITHOUT REFERENCE TO THE OTHER PARTY’S CONFIDENTIAL
INFORMATION.

 

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11.2 OBLIGATIONS.  NEITHER PARTY SHALL USE THE CONFIDENTIAL INFORMATION OF THE
OTHER EXCEPT AS PERMITTED OR EXPRESSLY PROVIDED UNDER THIS AGREEMENT.  IN
ADDITION, EACH PARTY SHALL HOLD ALL CONFIDENTIAL INFORMATION OF THE OTHER IN
CONFIDENCE AND SHALL NOT PUBLISH, DISCLOSE OR DISSEMINATE THE SAME TO ANY OTHER
PERSON OR ENTITY EXCEPT AS SPECIFIED HEREIN.  EACH PARTY MAY DISCLOSE
CONFIDENTIAL INFORMATION OF THE OTHER TO ITS EMPLOYEES AND CONSULTANTS WHO ARE
BOUND BY CONFIDENTIALITY OBLIGATIONS AT LEAST AS PROTECTIVE AS THOSE STATED
HEREIN.  EACH PARTY SHALL TAKE THE SAME MEASURES TO PRESERVE THE CONFIDENTIALITY
OF THE CONFIDENTIAL INFORMATION OF THE OTHER AS IT DOES FOR ITS OWN CONFIDENTIAL
INFORMATION, BUT IN NO EVENT WITH LESS THAN REASONABLE CARE.  IN ADDITION TO THE
FOREGOING, EITHER PARTY MAY DISCLOSE CONFIDENTIAL INFORMATION DISCLOSED TO IT BY
THE OTHER PARTY TO THE EXTENT SUCH DISCLOSURE IS REQUIRED BY LAW, GOVERNMENT
AGENCY, GOVERNMENTAL REGULATION, COURT ORDER OR VALID DISCOVERY REQUEST IN
CONNECTION WITH A LEGAL PROCEEDING, PROVIDED THAT IF A PARTY IS REQUIRED TO
DISCLOSE ANOTHER PARTY’S CONFIDENTIAL INFORMATION IN CONNECTION THEREWITH, IT
SHALL PROVIDE THE OTHER PARTY WITH PRIOR WRITTEN NOTICE OF ANY SUCH DISCLOSURE
AND A REASONABLE OPPORTUNITY TO SEEK CONFIDENTIAL TREATMENT OR A PROTECTIVE
ORDER, IF APPROPRIATE.  IN THE EVENT THAT SUCH CONFIDENTIAL TREATMENT OR
PROTECTIVE ORDER IS NOT OBTAINED, THE PARTY REQUIRED TO DISCLOSE SUCH
CONFIDENTIAL INFORMATION SHALL DISCLOSE ONLY THAT PORTION OF THE CONFIDENTIAL
INFORMATION WHICH ITS COUNSEL ADVISES THAT IT IS LEGALLY REQUIRED TO DISCLOSE. 
FOR THE AVOIDANCE OF DOUBT, IF THIS AGREEMENT IS REQUIRED TO BE FILED WITH ANY
GOVERNMENTAL OR REGULATORY AGENCY, THE PARTY REQUIRED TO MAKE SUCH FILING SHALL
SEEK CONFIDENTIAL TREATMENT OF THE TERMS OF THIS AGREEMENT, AND SHALL IN ANY
EVENT, REDACT THOSE PORTIONS OF THE AGREEMENT THAT ITS LEGAL COUNSEL ADVISES MAY
BE REDACTED, BUT STILL COMPLY WITH SUCH FILING REQUIREMENT.

 

12. TERM AND TERMINATION

 

12.1 TERM.  THIS AGREEMENT SHALL COMMENCE ON THE EFFECTIVE DATE AND SHALL
CONTINUE IN FULL FORCE UNTIL THREE (3) YEARS AFTER THE LAST DAY OF THE FIRST
FULL CALENDAR MONTH DURING WHICH THE IMAGE-CHECKER-LUNG VERSION 2 IS FIRST
COMMERCIALLY AVAILABLE , UNLESS EARLIER TERMINATED AS SET FORTH IN THIS
SECTION 12.  THE PARTIES MAY RENEW THIS AGREEMENT FOR ADDITIONAL ONE (1) YEAR
TERMS UPON MUTUAL WRITTEN AGREEMENT.

 

12.2 TERMINATION FOR CAUSE.  IF EITHER PARTY BREACHES ANY OF ITS MATERIAL
OBLIGATIONS HEREUNDER, AND SUCH BREACH IS NOT CURED WITHIN THIRTY (30) DAYS
AFTER WRITTEN NOTICE FROM THE OTHER PARTY, THE NON-BREACHING PARTY SHALL BE
ENTITLED TO TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE.

 

12.3 TERMINATION FOR INSOLVENCY.  THIS AGREEMENT MAY BE TERMINATED BY EITHER
PARTY, ON NOTICE: (A) UPON THE INSTITUTION BY THE OTHER PARTY OF INSOLVENCY,
RECEIVERSHIP OR BANKRUPTCY PROCEEDINGS; OR ANY OTHER PROCEEDINGS FOR THE GENERAL
SETTLEMENT OF ALL OR SUBSTANTIALLY ALL OF ITS DEBTS; (B) UPON THE INSTITUTION OF
SUCH PROCEEDINGS AGAINST THE OTHER PARTY, WHICH ARE NOT DISMISSED OR OTHERWISE
RESOLVED IN ITS FAVOR WITHIN SIXTY (60) DAYS THEREAFTER; (C) UPON THE OTHER
PARTY’S MAKING A GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR (D) UPON
THE OTHER PARTY’S DISSOLUTION OR CEASING TO CONDUCT BUSINESS AS A GOING CONCERN,
OR UPON TAKING ACTION TO DISSOLVE OR TO CEASE BUSINESS AS A GOING CONCERN.

 

12.4 TERMINATION FOR ONGOING FORCE MAJEURE.  IF ANY OF THE EVENTS OF FORCE
MAJEURE DESCRIBED IN SECTION 5.5(C) OCCUR AND CONTINUE FOR A PERIOD OF IN EXCESS
OF SIXTY (60) DAYS, EITHER PARTY SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT
UPON WRITTEN NOTICE.

 

12.5 EFFECT OF TERMINATION.

 

(A) ACCRUED OBLIGATIONS.  EXPIRATION OR TERMINATION OF THIS AGREEMENT FOR ANY
REASON SHALL NOT RELEASE ANY PARTY HERETO FROM ANY LIABILITY WHICH, AT THE TIME
OF SUCH TERMINATION, HAS ALREADY ACCRUED TO THE OTHER PARTY OR WHICH IS
ATTRIBUTABLE TO A PERIOD PRIOR TO SUCH TERMINATION NOR PRECLUDE EITHER PARTY
FROM PURSUING ANY RIGHTS AND REMEDIES IT MAY HAVE HEREUNDER OR AT LAW OR IN
EQUITY WITH RESPECT TO ANY BREACH OF THIS AGREEMENT.  IN ADDITION, SO LONG AS
VITAL CONTINUES TO FULFILL ITS OBLIGATIONS UNDER THE R2 SOFTWARE MAINTENANCE
PROGRAM, IF NECESSARY, BEYOND THE TERM OF THIS AGREEMENT, R2 SHALL PAY TO VITAL
COMMISSIONS IN ACCORDANCE WITH SECTION 5.2 ON ALL COMMISSIONABLE TRANSACTIONS
THAT OCCUR DURING THE TERM OF THIS AGREEMENT BUT FOR WHICH PAYMENT FROM
CUSTOMERS IS NOT RECEIVED BY R2 UNTIL AFTER THE EXPIRATION OR TERMINATION OF
THIS AGREEMENT, IT BEING AGREED, HOWEVER, THAT VITAL SHALL IN NO EVENT HAVE
OBLIGATIONS UNDER THE R2 SOFTWARE MAINTENANCE PROGRAM WHICH EXTEND MORE THAN ONE
YEAR BEYOND THE END OF THE TERM OF THIS AGREEMENT.

 

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(B) LIMITATION ON LIABILITY.  IN THE EVENT OF TERMINATION BY EITHER PARTY IN
ACCORDANCE WITH ANY OF THE PROVISIONS OF THIS AGREEMENT, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER BECAUSE OF SUCH TERMINATION, FOR COMPENSATION, REIMBURSEMENT
OR DAMAGES ON ACCOUNT OF THE LOSS OF PROSPECTIVE PROFITS OR ANTICIPATED SALES OR
ON ACCOUNT OF EXPENDITURES, INVESTMENTS, LEASES, INVENTORY OR COMMITMENTS IN
CONNECTION WITH THE BUSINESS OR GOODWILL OF R2 OR VITAL.

 

(C) SURVIVAL.  THE PROVISIONS OF SECTIONS 1, 5.6, 5.7, 5.8, 6.1, 7.1-7.6, 8.1,
9.2, 10.1, 11, 12.5, 13 AND 14 AND ANY PAYMENT OBLIGATIONS SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT FOR ANY REASON.

 

13. TERMINATION OF OLD AGREEMENT

 

FROM THE EFFECTIVE DATE AND BEYOND, THIS AGREEMENT REPLACES IN ITS ENTIRETY THE
OLD AGREEMENT, AND, NOTWITHSTANDING ANY PROVISION THEREIN TO THE CONTRARY, THE
PARTIES AGREE AND HEREBY DO TERMINATE AND SUPERSEDE THE OLD AGREEMENT.

 

14. GENERAL

 

14.1 ASSIGNMENT.  NEITHER PARTY MAY ASSIGN OR TRANSFER THIS AGREEMENT OR ANY OF
ITS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT WITHOUT THE PRIOR WRITTEN
CONSENT OF THE OTHER PARTY, EXCEPT THAT EITHER PARTY MAY ASSIGN THIS AGREEMENT
IN THE CASE OF A MERGER, ACQUISITION, CHANGE OF CONTROL, SALE OF ALL OR
SUBSTANTIALLY ALL OF THE STOCK OR ASSETS OF THE ASSIGNING PARTY OR OTHER
REORGANIZATION; PROVIDED THAT ANY PERMITTED ASSIGNEE AGREES IN WRITING TO BE
BOUND BY THE TERMS OF THIS AGREEMENT.  SUBJECT TO THE FOREGOING, THIS AGREEMENT
SHALL BE BINDING ON AND INURE TO THE BENEFIT OF ANY PERMITTED ASSIGNEE.  ANY
ATTEMPTED ASSIGNMENT IN VIOLATION OF THIS SECTION 14.1 SHALL BE NULL AND VOID
FROM THE BEGINNING.

 

14.2 BASIS OF BARGAIN.  EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY
DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE
MATERIALLY BARGAINED FOR AND THAT SUCH WARRANTY DISCLAIMERS AND LIABILITY AND
REMEDY LIMITATIONS HAVE BEEN TAKEN INTO ACCOUNT AND REFLECTED IN DETERMINING THE
CONSIDERATION TO BE GIVEN BY EACH PARTY TO ENTER INTO THIS AGREEMENT.

 

14.3 COUNTERPART ORIGINALS.  THIS AGREEMENT MAY BE EXECUTED IN TWO (2) OR MORE
ENGLISH LANGUAGE COUNTERPARTS OR DUPLICATE ORIGINALS, ALL OF WHICH SHALL BE
REGARDED AS ONE AND THE SAME INSTRUMENT, AND WHICH SHALL BE THE OFFICIAL AND
GOVERNING VERSION IN THE INTERPRETATION OF THIS AGREEMENT.

 

14.4 ENTIRE AGREEMENT.  THE TERMS AND CONDITIONS HEREIN CONTAINED, INCLUDING
EXHIBITS, CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL
PREVIOUS AND CONTEMPORANEOUS AGREEMENTS AND UNDERSTANDINGS, WHETHER ORAL OR
WRITTEN, INCLUDING THE PARTIES’ TERM SHEET, WITH RESPECT TO THE SUBJECT MATTER
HEREOF.

 

14.5 EXPENSE OF DOING BUSINESS.  ANY AND ALL OBLIGATIONS ASSOCIATED WITH A
PARTY’S BUSINESS SHALL REMAIN THE SOLE RESPONSIBILITY OF THAT PARTY.  ANY AND
ALL SALES AND OTHER AGREEMENT BETWEEN A PARTY AND ITS CUSTOMERS ARE AND SHALL
REMAIN THAT PARTY’S EXCLUSIVE RESPONSIBILITY AND SHALL HAVE NO AFFECT ON THAT
PARTY’S OBLIGATIONS PURSUANT TO THIS AGREEMENT.  EACH PARTY SHALL BEAR THE
ENTIRE COST AND EXPENSE OF CONDUCTING ITS BUSINESS IN ACCORDANCE WITH THE TERMS
OF THIS AGREEMENT.

 

14.6 EXPORT.  THE PARTIES ACKNOWLEDGE THE PRODUCTS CONTEMPLATED BY THIS
AGREEMENT MAY BE SUBJECT TO THE EXPORT CONTROL LAWS AND REGULATIONS OF THE
UNITED STATES, AND ANY AMENDMENTS THEREOF.  EACH PARTY AGREES THAT IT WILL NOT
TRANSFER, DEAL WITH, EXPORT OR RE-EXPORT SUCH PRODUCTS DIRECTLY OR INDIRECTLY,
TO (A) ANY COUNTRIES THAT ARE SUBJECT TO UNITED STATES EXPORT RESTRICTIONS,
EXCEPT WITH APPROPRIATE UNITED STATES GOVERNMENT APPROVALS; (B) ANY THIRD PARTY
WHO A PARTY KNOWS OR HAS REASON TO KNOW WILL UTILIZE THEM IN THE DESIGN,
DEVELOPMENT OR PRODUCTION OF NUCLEAR, CHEMICAL OR BIOLOGICAL WEAPONS; OR (C) ANY
THIRD PARTY WHO HAS BEEN PROHIBITED FROM PARTICIPATING IN UNITED STATES EXPORT
TRANSACTIONS BY ANY FEDERAL AGENCY OF THE UNITED STATES GOVERNMENT.

 

14.7 FOREIGN CORRUPT PRACTICES ACT.  IN CONFORMITY WITH THE UNITED STATES
FOREIGN CORRUPT PRACTICES ACT REGARDING FOREIGN BUSINESS PRACTICES, R2 AND ITS
EMPLOYEES AND AGENT AS WELL AS VITAL AND ITS

 

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EMPLOYEES AND AGENTS SHALL NOT DIRECTLY OR INDIRECTLY MAKE A PAYMENT, PROMISE TO
PAY, OR AUTHORIZE PAYMENT, OR OFFER A GIFT, PROMISE TO GIVE OR AUTHORIZE THE
GIFT OF ANYTHING OF VALUE FOR THE PURPOSE OF INFLUENCING AN ACT OR DECISION
(INCLUDING A DECISION NOT TO ACT) OF AN OFFICIAL OF ANY GOVERNMENT OR
GOVERNMENTAL AGENCY OR FOR INDUCING SUCH OFFICIAL TO USE ANY INFLUENCE TO AFFECT
ANY SUCH GOVERNMENTAL ACT OR DECISION.

 

14.8 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF CALIFORNIA, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS.  THE PARTIES
EXPRESSLY EXCLUDE APPLICATION OF THE UNITED NATIONS CONVENTION FOR THE
INTERNATIONAL SALE OF GOODS.

 

14.9 INJUNCTIVE REMEDIES.  EACH PARTY ACKNOWLEDGES THAT DUE TO THE NATURE OF
PROPRIETARY INFORMATION, ANY BREACH OR THREATENED BREACH OF SECTIONS 2.5 OR 11
WOULD RESULT IN IRREPARABLE HARM TO THE NON-BREACHING PARTY, FOR WHICH THERE IS
NO ADEQUATE REMEDY AT LAW, AND THEREFORE, THE NON-BREACHING PARTY SHALL BE
ENTITLED TO APPLY FOR INJUNCTIVE OR OTHER EQUITABLE RELIEF TO RESTRAIN SUCH
MATERIAL BREACH IN ADDITION TO OTHER APPROPRIATE REMEDIES.

 

14.10 MODIFICATION.  NO ALTERATION, AMENDMENT, WAIVER, CANCELLATION OR ANY OTHER
CHANGE IN ANY TERM OR CONDITION OF THIS AGREEMENT SHALL BE VALID OR BINDING ON
EITHER PARTY UNLESS THE SAME SHALL HAVE BEEN MUTUALLY ASSENTED TO IN WRITING BY
BOTH PARTIES.

 

14.11 NO IMPLIED LICENSES.  EXCEPT FOR THE RIGHTS GRANTED BY THE EXPRESS TERMS
OF THIS AGREEMENT, EACH PARTY RESERVES AND RETAINS ALL RIGHT, TITLE, AND
INTEREST IN AND TO ITS PRODUCTS, TECHNOLOGY, AND ALL INTELLECTUAL PROPERTY
RIGHTS THEREIN AND NO RIGHT OR LICENSE SHALL BE DEEMED GRANTED BY IMPLICATION,
ESTOPPEL, OR OTHERWISE.

 

14.12 NOTICES.  ANY NOTICE REQUIRED OR PERMITTED TO BE GIVEN BY EITHER PARTY
UNDER THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE PERSONALLY DELIVERED OR
SENT BY COMMERCIAL COURIER SERVICE (E.G., DHL), OR BY REGISTERED OR CERTIFIED
MAIL BY THE U.S. POSTAL SERVICE, POSTAGE PREPAID, OR SENT BY FAX OR TELECOPY AND
CONFIRMED BY FIRST CLASS MAIL (REGISTERED OR CERTIFIED), POSTAGE PREPAID, TO THE
OTHER PARTY AT THE ADDRESS FIRST SHOWN ABOVE OR AT SUCH OTHER ADDRESS OF WHICH
SUCH PARTY GIVES NOTICE HEREUNDER.  IF MAILED, NOTICES WILL BE DEEMED EFFECTIVE
FIVE (5) WORKING DAYS AFTER DEPOSIT, POSTAGE PREPAID, IN THE MAIL.

 

14.13 PARTIAL INVALIDITY.  IF ANY PROVISION IN THIS AGREEMENT SHALL BE FOUND OR
BE HELD TO BE INVALID OR UNENFORCEABLE IN ANY JURISDICTION IN WHICH THIS
AGREEMENT IS BEING PERFORMED, THEN THE MEANING OF SAID PROVISION SHALL BE
CONSTRUED, TO THE EXTENT FEASIBLE, SO AS TO RENDER THE PROVISION ENFORCEABLE,
AND IF NO FEASIBLE INTERPRETATION WOULD SAVE SUCH PROVISION, IT SHALL BE SEVERED
FROM THE REMAINDER OF THIS AGREEMENT, WHICH SHALL REMAIN IN FULL FORCE AND
EFFECT.  IN SUCH EVENT, THE PARTIES SHALL NEGOTIATE, IN GOOD FAITH, A
SUBSTITUTE, VALID AND ENFORCEABLE PROVISION WHICH MOST NEARLY EFFECTS THE
PARTIES’ INTENT IN ENTERING INTO THIS AGREEMENT.

 

14.14 PRESS RELEASES.  THE PARTIES AGREE TO COOPERATE TO ISSUE A JOINT PRESS
RELEASE, APPROVED IN WRITING BY EACH PARTY, PROMPTLY AFTER EXECUTION OF THIS
AGREEMENT.

 

14.15 WAIVER.  THE FAILURE OR DELAY OF EITHER PARTY TO ENFORCE AT ANY TIME ANY
OF THE PROVISIONS OF THIS AGREEMENT, OR THE FAILURE TO REQUIRE AT ANY TIME
PERFORMANCE BY THE OTHER PARTY OF ANY OF THE PROVISIONS OF THIS AGREEMENT, SHALL
IN NO WAY BE CONSTRUED TO BE A PRESENT OR FUTURE WAIVER OF SUCH PROVISIONS, NOR
IN ANY WAY AFFECT THE RIGHT OF EITHER PARTY TO ENFORCE EACH AND EVERY SUCH
PROVISION THEREAFTER.  THE EXPRESS WAIVER BY EITHER PARTY OF ANY PROVISION,
CONDITION OR REQUIREMENT OF THIS AGREEMENT SHALL NOT CONSTITUTE A WAIVER OF ANY
FUTURE OBLIGATION TO COMPLY WITH SUCH PROVISION, CONDITION OR REQUIREMENT.

 

14.16 NON-SOLICITATION.

 

(a) Neither party shall solicit for employment, as an employee or a
self-employed independent contractor, during the term of this Agreement or
within six (6) months thereafter, any person who was employed by or a principal
of the other party at anytime during the then preceding six (6) month period.

 

(b) For purposes of this Section 14.16, the term “R2” shall include the R2 and
any of its affiliates and the term “Vital” shall include the Vital and any of
its affiliates.

 

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(c) Breach of this Section 14.16 shall require the violating party to pay to the
non-violating party, immediately following the retention of a person giving rise
to the violation, as liquidated damages and not as a penalty, a sum equal to one
hundred percent (100%) of such person’s cash salary or other cash compensation
(including any cash bonuses, awards or incentives) earned during the twelve (12)
month period ending on the date of such retention (annualized if such person was
employed or otherwise retained by the non-violating party for less than twelve
(12) months).

 

Exhibit A:

Territory

Exhibit B:

Marketing and Promotional Obligations

Exhibit C:

Maintenance and Support

Exhibit D:

Workstations and PACS Vendors

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized officers or representatives as of the date first above
written.

 

R2 Technology, Inc.

 

Vital Images, Inc.

 

 

 

 

 

 

By:

/s/ John D. Pavlidis

 

By:

/s/ Jay D. Miller

 

 

 

Print Name:

John D. Pavlidis

 

Print Name:

Jay D. Miller

 

 

 

Title:

President & CEO

 

Title:

President & CEO

 

 

 

Date:

April 22, 2005

 

Date:

April 21, 2005

 

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EXHIBIT A

TERRITORY

Worldwide, but only in jurisdictions for which all applicable government
regulatory approval has been granted.

 

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EXHIBIT B

MARKETING AND PROMOTIONAL OBLIGATIONS

 

Subject to the terms and conditions of this Agreement, Vital shall fulfill the
following obligations:

 

1.               PROMOTE THE LICENSING OF THE R2 LUNG CAD PRODUCT WITHIN THE
TERRITORY TO CUSTOMERS.

 

2.               SUPPORT LOCAL FIELD MARKETING EVENTS AND ACTIVITIES, INCLUDING,
WITHOUT LIMITATION, MAKING INTRODUCTIONS TO AND ARRANGING MEETINGS WITH
POTENTIAL CUSTOMERS ON BEHALF OF R2, AND TO ASSIST R2 IN THE PREPARATION AND
SUBMISSION OF PRESENTATIONS, PROPOSALS AND QUOTATIONS FOR CONTRACTS OR ORDERS
AND IN ASSESSING THE FINANCIAL STATUS OF CUSTOMERS AND POTENTIAL CUSTOMERS, AT
THE TIMES AND IN THE MANNER REASONABLY REQUESTED BY R2.

 

3.               ATTEND AT ITS OWN EXPENSE BUT NO MORE OFTEN THAN ONCE ANNUALLY
SALES REPRESENTATIVE MEETINGS AND TRAINING SESSIONS THAT ARE REASONABLY
CONDUCTED BY R2 FROM TIME TO TIME.

 

4.               NOT TO, WITHOUT R2’S PRIOR WRITTEN APPROVAL, ALTER, ENLARGE OR
LIMIT ORDERS, MAKE REPRESENTATIONS OR GUARANTEES CONCERNING R2’S PRODUCTS,
ACCEPT THE RETURN OF, OR MAKE ANY ALLOWANCE FOR SUCH PRODUCTS.

 

5.               IDENTIFY POTENTIAL CUSTOMERS.

 

6.               PROVIDE TO R2 MARKET FORECAST AND LICENSING INFORMATION
REGARDING THE R2 LUNG CAD PRODUCT, AS REASONABLY REQUESTED BY R2 FROM TIME TO
TIME.

 

7.               ASSIST R2 IN DEMONSTRATING THE R2 LUNG CAD PRODUCT TO CUSTOMERS
AND POTENTIAL CUSTOMERS.

 

8.               PROMOTE THE R2 LUNG CAD PRODUCT ON THE VITAL WEBSITE IN A
MANNER TO BE AGREED BY THE PARTIES.

 

9.               PARTICIPATE IN AGREED JOINT MARKETING AND PROMOTIONAL
ACTIVITIES, INCLUDING JOINT ADVERTISING, DIRECT MAIL OR WEB PROMOTIONS, WHERE
BOTH PARTIES SHALL SHARE COSTS APPROPRIATELY.

 

10.         PERMIT R2 TO PARTICIPATE IN THE DEMONSTRATION OF THE R2 LUNG CAD
PRODUCT IN VITAL’S BOOTHS AT VARIOUS EXHIBITIONS, INCLUDING RSNA AND HIMS, FREE
OF CHARGE.

 

11.         FURNISH PUBLIC CUSTOMER INFORMATION AS IS REASONABLY NECESSARY TO
ENABLE R2 TO SUPPLY THE R2 LUNG CAD PRODUCT THAT SHALL MEET CUSTOMERS’
REQUIREMENTS.

 

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EXHIBIT C

MAINTENANCE AND SUPPORT

 

A.                                   First Level Maintenance.  During the
Warranty Period and for so long as a Customer participates in the R2 Software
Maintenance Program, Vital shall provide telephone, email and on-site emergency
support during normal business days and normal business hours (as determined
locally by the time-zone and customs in the country in which the R2 Lung CAD
Product is installed).  If the problem reported by a Customer is due to a
misunderstanding of the documentation or improperly functioning hardware or
Vital Workstation software, Vital shall be solely responsible for resolving the
problem in accordance with the terms of R2 Software Maintenance Program.  If the
problem is not due to a misunderstanding of the documentation or improperly
functioning hardware or Vital Workstation software and its cause cannot be
determined by Vital despite commercially reasonable efforts to determine the
cause, Vital will attempt to duplicate the problem on its own demonstration unit
of the R2 Lung CAD Product.  If Vital determines that the problem reported by a
Customer is due to an error in the R2 Lung CAD Product that Vital is unable,
using commercially reasonable efforts, to resolve, Vital may notify R2 of such
error in accordance with Section B, below.

 

B.                                     Second Level Maintenance.  During the
Warranty Period and for so long as a Customer participates in the R2 Software
Maintenance Program, R2 shall use commercially reasonable efforts to provide
telephone and email support to Vital regarding the R2 Lung CAD Product during
R2’s normal business hours, and to provide a fix, patch or workaround for errors
that Vital is unable to resolve in accordance with Section A, above.  R2 may, in
its discretion, provide emergency on-site support to Customers.

 

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EXHIBIT D

 

WORKSTATION AND PACS VENDORS

 

1.                                       “Workstation Vendors”:

 

•                  *

 

•                  *

 

•                  *

 

•                  *

 

•                  *

 

•                  *

 

2.                                       “PACS Vendors”:

 

•                  *

 

•                  *

 

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* Confidential Treatment Requested

 

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