Exhibit 10.1
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [  *  ]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this “Agreement”) is made effective as of the date of the
last signature on the Agreement (“Effective Date”), by and between TomoTherapy
Incorporated, a Wisconsin corporation with its principal address at 1240 Deming
Way, Madison, WI 53717, USA (“TomoTherapy”), and Hitachi Medical Corporation, a
Japanese corporation with its principal address at 4-14-1 Soto-Kanda,
Chiyoda-ku, Tokyo 101-0021, Japan (“Hitachi”).
RECITALS
A. TomoTherapy manufactures and sells the TomoTherapy® Hi ·Art® treatment
system, which includes hardware, software, other equipment and related services
(the “Products”).
B. Hitachi manufactures Xenon gas detectors identified by model number CT-WD-5E,
rev NA (the “Detectors”).
C. TomoTherapy desires to purchase the Detectors from Hitachi in order to
incorporate them into the Products which will be distributed by TomoTherapy
directly or indirectly on a worldwide basis.
NOW, THEREFORE, for mutual consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1.0 SUPPLY OF DETECTORS
1.1 Orders.
A. Purchase Order. Subject to the terms and conditions herein, Hitachi agrees to
supply and deliver to TomoTherapy in non-exclusive basis, and TomoTherapy agrees
to purchase from Hitachi, the Detectors by purchase orders (“Purchase Orders”)
that TomoTherapy shall send to Hitachi. Purchase Orders shall contain, among
other things, Purchase Order number and date, quantification of Detectors
ordered, the TomoTherapy Part Number, price per unit, requested delivery dates
and delivery instructions and destination. Purchase Orders shall be issued at
least 90 days before the requested shipment date.
B. Order Acknowledgment. Within five (5) working days of its receipt of a
Purchase Order, Hitachi shall either send written acceptance of the Purchase
Order to TomoTherapy or written notice that the shipment may be delayed, with a
revised schedule for delivery.
C. Forecasts. Following execution of this Agreement, TomoTherapy shall provide
Hitachi with a forecast of the Detectors TomoTherapy plans to purchase from
Hitachi for the initial twelve (12) months following the Effective Date (the
“Initial Forecast”) and shall provide Hitachi with an update of such forecast
periodically every month for the following six (6) months thereafter
(collectively with the Initial Forecast, the “Forecasts”). The Forecasts are for
planning purposes only, and TomoTherapy shall not be bound to make the planned
purchases included in the Forecasts. TomoTherapy will commit to purchase the
number of Detectors specified in the first three (3) months of each Forecast via
the submission of one or more Purchase Orders for the detectors to be delivered
in those three (3) months.
D. Minimum Purchase. TomoTherapy agrees to purchase at least [ * ] Detectors in
every six months period starting with April 1 and October 1 (“Minimum Purchase
Quantity”) from Hitachi. In the event that TomoTherapy fails to purchase Minimum
Purchase Quantity, it shall be deemed to be a material breach of this Agreement
by TomoTherapy and Hitachi shall have the rights specified under Article 6 of
this Agreement.

 

 

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E. Capacity. Hitachi agrees that no Purchase Order from TomoTherapy shall go
unfilled for reason of lack of capacity of Hitachi to fulfill such Purchase
Order so long as the Purchase Order requests delivery of a quantity that is no
more than the guaranteed number of detectors available for any given month
according to the schedule below. For any Renewal Term, as defined in Section 6.1
herein, the capacity shall be discussed and determined by the parties at that
time. Should TomoTherapy request more detectors in the Purchase Order than
Capacity, the parties will discuss at that time the feasibility of Hitachi
filling such an order, and the TomoTherapy forecast for future order quantities.
The previous language not withstanding, the quantity limits discussed in this
Section 1.1E shall not apply in the case of a Last Time Buy, as defined in
Section 6.2.

      Date   Guaranteed Capacity
 
   
From the Effective Date through [ * ]
  [ * ] detectors per month
 
   
From [ * ] through [ * ]
  [ * ] detectors per month
 
   
From [ * ] through the expiration of the contract
  [ * ] detectors per month

F. Pricing and Payment of Invoices. The price for each Detector during the Term
of this Agreement is Japanese Yen [ * ]on FOB Japan basis. The parties agree
that the pricing structure will be renegotiated annually upon the anniversary
date of this Agreement, taking into consideration pricing adjustments due to
increases or decreases in raw materials, internal production costs, and the
estimated units needed by TomoTherapy during the impending Forecasts.
TomoTherapy shall pay all invoices issued under this Agreement in Japanese Yen
by telegraphic transfer through banks within 45 days from the date of invoice.
All bank charges incurred by TomoTherapy shall be born by TomoTherapy.
G. Delivery Terms. Delivery terms for the Detectors are FOB Japan. Title and
risk of loss of the Detectors transfers from Hitachi to TomoTherapy at the point
of FOB Japan.
H. Non-Conforming Detectors. In the event of a discrepancy concerning the
quality and/or quantity of Detectors ordered, and it appears that such
discrepancy was caused by negligence or other conduct on the part of Hitachi or
on the part of an individual or entity under Hitachi’s control, or if the
Detectors received by TomoTherapy do not otherwise conform to that ordered for
whatever reason, TomoTherapy may reject all or a portion of the Detectors so
received notwithstanding any prior payment by TomoTherapy for such Detectors.
The Detectors shall be considered to conform to TomoTherapy’s expectations if
they meet the specifications described in Appendix A hereto. TomoTherapy may
require Hitachi to (i) refund funds paid by TomoTherapy for the non-conforming
Detectors, (ii) replace such non-conforming Detectors with conforming Detectors
at Hitachi’s sole cost, or (iii) effect any other remedy as the parties may
agree. The choice of remedies (i) through (iii) contained in the immediately
foregoing sentence shall be upon mutual agreement of the parties.
I. Rejection. The Detectors deemed rejected by TomoTherapy will be reported to
Hitachi (and returned to Hitachi upon their request and at their cost) with a
Notice of rejection containing the reasons for and documentation supporting the
rejection. Within fourteen (14) days from Hitachi’s acceptance of notice of
rejection, Hitachi will supply replacement product at no additional cost.

 

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1.2 Technical Information and Support
A. Technical Information. Hitachi shall provide TomoTherapy with technical
information and technical support regarding the Detectors to be reasonably
considered necessary for the intended use of the Detectors. Such Technical
Information may include but is not necessarily limited to the Procurement
Specification attached hereto as Appendix A. The parties agree that should
TomoTherapy require significant time or resources from Hitachi with respect to
the provision of technical information under the terms of this section, Hitachi
shall have the ability to ask for reasonable NRE as compensation. The terms and
conditions of such NRE compensation will be negotiated by the parties in good
faith.
1.3 Quality and Specifications for Performance and Packaging.
A. Specifications and Certifications. Unless otherwise agreed by the parties in
writing, the Detectors sold to TomoTherapy shall conform to the performance
specifications set forth in Appendix A. With each shipment, Hitachi shall
provide TomoTherapy with a certification and corresponding test data
demonstrating that the Detectors in that shipment meet or exceed the performance
specifications set forth in Appendix A.
B. Notifications of Changes or Substitutions to Detectors. Hitachi shall provide
TomoTherapy with as much advanced written notice as possible of any change to
the form or function of the Detectors, but under no circumstances shall Hitachi
provide TomoTherapy with less than six (6) months prior notice. Hitachi must
obtain TomoTherapy’s prior written consent before making any material change
that might in any way affect quality of performance of the Detectors, including
but not limited to any change in raw material or component, or change in the
source of such raw material or component.
C. Quality Control and Quality Assurance. Hitachi shall maintain its
certification under ISO 9001 or an equivalent auditable quality program with
comparable requirements during the term of this Agreement. Hitachi shall
maintain a documented process database. Hitachi shall forward its quality
control and quality assurance reports from time to time to TomoTherapy upon
TomoTherapy’s request. TomoTherapy may at any time, with reasonable prior notice
to Hitachi, conduct an audit of Hitachi’s quality control, quality assurance and
manufacturing records and processes. If TomoTherapy identifies any material
deficiency during an audit or otherwise, Hitachi will be required to respond
with a corrective action plan to any such findings as soon as possible, and will
provide TomoTherapy with weekly updates as to the progress of such corrective
action plan.
D. Customer Complaints or Problems. TomoTherapy agrees to notify Hitachi of all
material customer complaints or problems regarding the Detectors. If TomoTherapy
determines that changes to the design, process, components, materials, assembly
or workmanship are beneficial or required to correct a quality or reliability
deficiency, the parties shall, upon notification of such circumstance,
immediately initiate discussions to resolve the problem as soon as possible.
Responses to requests for failure investigation and corrective action shall be
performed as soon as possible with Hitachi providing weekly updates to
TomoTherapy on the status of the investigation and resolution.
E. Detectors Packaging. Detectors to be shipped by Hitachi to TomoTherapy shall
be packaged according to the packaging requirements included in the Procurement
Specification attached as Appendix A hereto.
F. Warranty. Hitachi represents and warrants that the Detectors shall be free
from defects in design, process, components, materials, assembly and
workmanship, that the Detectors meet the performance specifications set forth in
Exhibit A,. Any Detector that does not meet the terms of this warranty during
either the first eighteen (18) months after such Detector is shipped by Hitachi
by FOB Japan basis or during the first twelve (12) months after the TomoTherapy
Product that includes the Detector was shipped from TomoTherapy to a TomoTherapy
customer, whichever is earlier, may, at Hitachi’s option, be returned to Hitachi
for a full refund or replaced by Hitachi. Either of the above options shall be
at Hitachi’s sole expense. Notwithstanding the foregoing, TomoTherapy
understands and accepts that the Detectors may not meet the Specifications in
exposure of high-energy (Mega Voltage) radiation which is beyond the energy
level (Kilo Voltage) of diagnostic X-ray CT systems, which is not in the scope
of Hitachi warranty. HITACHI DOES NOT MAKE AND HEREBY DISCLAIMS ANY WARRANTY IN
REPSECT OF THE DETECTORS OTHER THAN AS PROVIDED ABOVE IN THIS ARTICLE, WHETHER
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.

 

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1.4 Widespread Failure. For the purposes of this Agreement, “Widespread Failure”
means one or more related defects in the design, material, or workmanship of the
Detectors for which Hitachi is solely responsible, and which (a) are
substantially similar in nature or origin, (b) materially affect the Detector’s
safety or efficacy, and (c) are found in fifteen (15) percent of the installed
base of Detectors within any twelve (12) months period during the term of this
Agreement, except that ordinary wear and tear shall not, under any
circumstances, be deemed to give rise to an Widespread Failure situation. In the
event of an Widespread Failure, (a) Hitachi covenants that Detectors not yet
delivered to TomoTherapy will be upgraded, prior to delivery, to correct such
Widespread Failure, and (b) with respect to Detectors for which the warranty
under subsection F of Section 1.3 has expired, Hitachi will, at its own expense,
provide to TomoTherapy such replacement components for such Detectors or spare
parts as may be required to eliminate the defect giving rise to such Widespread
Failure. TomoTherapy will perform any work relating to the installation or other
use of such replacement components at its own expense. With respect to this
Section 1.4, Hitachi shall assume responsibility for any defects or problems
that otherwise fall within the definition of “Widespread Failure” that are due
to defects, flaws or omissions in any component of the Detectors supplied to
Hitachi by any of Hitachi’s vendors or suppliers.
2.0 REGULATION
2.1 Government Approvals. If applicable law in the sales territory of
TomoTherapy requires registration or listing of Detectors in order to offer them
for sale or to install them within the sales territory, such registration or
listing shall be sole responsibility of TomoTherapy, unless Hitachi, at its
option, elects to make such registration or listing in its own name. If such
registration or listing is to be obtained or made by TomoTherapy, Hitachi shall
cooperate and assist TomoTherapy in its efforts, and the costs of such
registration or listing shall be borne exclusively by TomoTherapy.
2.2 Export Control Regulations. Neither Hitachi nor TomoTherapy shall dispose of
any U.S. products, know-how, technical data, documentation, or other products or
materials furnished to it pursuant to this Agreement to any party or in any
manner which would constitute a violation of the export control regulations of
the United States now or hereafter in effect if the disposition was made by a
U.S. corporation, or a non-U.S. corporation subject to those regulations.
2.3 Safety, Performance or Regulatory Issues. Hitachi agrees to inform
TomoTherapy immediately of any safety, performance or regulatory issues relating
to any Detectors, whether sold to TomoTherapy, sold to a third party or in
Hitachi’s possession.
2.4 Conformance to Law. Hitachi warrants and represents that it follows local
Japanese law with respect to its manufacturing, sales, and other business
activities and that at this time, Hitachi is aware of no law or regulation
prohibiting the manufacture, sale, or export of the Detectors to TomoTherapy.
2.5 Compliance with U.S. Foreign Corrupt Practices Act. Hitachi shall not,
directly or indirectly, in the name of or on behalf of, or for the benefit of
TomoTherapy, offer, promise or authorize to pay, or pay any compensation to, or
give anything of value to, any official, agent or employee of any government or
governmental agency, or to any political party, or to any officer, employee or
agent thereof. Notwithstanding the provisions of Article 6.0 hereof, any breach
of the provisions of this Section 2.5 shall entitle TomoTherapy to terminate
this Agreement effective immediately upon notice, and with no further liability
whatsoever, to Hitachi.

 

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3.0 RELATIONSHIP BETWEEN THE PARTIES
3.1 Independent Purchaser Status. Hitachi is an independent contractor. Hitachi
shall not be considered an agent or legal representative of TomoTherapy for any
purpose, and Hitachi agrees that none of the Hitachi Parties shall be, or be
considered, an agent or employee of TomoTherapy. Hitachi further agrees that
none of the Hitachi Parties is granted, nor shall exercise, the right or
authority to assume or create any obligation or responsibility, including
without limitation contractual obligations and obligations based on warranties
or guarantees, on behalf of or in the name of TomoTherapy.
3.2 Controlled Entities. Hitachi’s obligations and responsibilities hereunder
shall apply to any person or entity owned or controlled by Hitachi.
3.3 TomoTherapy’s Sales Terms. TomoTherapy shall in no way be restricted in
determining, at its sole discretion, the prices, terms and conditions under
which the Detectors are sold to its customers.
4.0 INSURANCE, INDEMNIFICATION AND LIMITATION OF LIABILITY
4.1 Insurance. Hitachi shall secure and maintain in force continuously and
without interruption during the Term, the following insurance coverage: general
liability insurance, including product liability coverage, with per-occurrence
limits of at least One Million Dollars ($1,000,000).
4.2 Indemnification.

  a.  
Hitachi agrees to indemnify and hold harmless TomoTherapy from and against any
and all claims, losses, damages, liabilities, obligations, judgments,
settlements, costs and other expenses, of whatever form or nature, including,
without limitation, attorneys’ fees and other costs of legal defense, whether
direct or indirect, which TomoTherapy may sustain or incur from time to time as
a result of or related to any acts or omissions of Hitachi, including, without
limitation: (i) breach of any of the provisions of this Agreement or of a
representation or warranty made herein, (ii) a Widespread Failure, (iii) the
Detectors’ actual or alleged infringement of intellectual property rights,
including, without limitation, copyrights, trade secrets, trademarks, trade
names, patents and all other intellectual and industrial property rights of
every kind and nature throughout the world and however designated (the
“Intellectual Property Rights”), (iv) an actual or alleged failure of or defect
in the Detectors resulting in actual or alleged damages or injuries, (v) gross
negligence or other tortious conduct, (vi) representations or statements not
specifically authorized by TomoTherapy herein or otherwise in writing, or
(vii) violation by Hitachi of any applicable law, regulation or order. In case
of (iii) or (iv) above, TomoTherapy shall promptly inform of it to Hitachi and
place the case under Hitachi’s control.

  b.  
TomoTherapy agrees to indemnify and hold harmless Hitachi from and against any
and all claims, losses, damages, liabilities, obligation, judgments,
settlements, costs and other expenses, of whatever form or nature, including,
without limitation, attorneys’ fees and other costs of legal defense, whether
direct or indirect, which Hitachi may sustain or incur from time to time as a
result of or related to any acts or omissions of TomoTherapy, including, without
limitation, (i) breach of any of the provisions of this Agreement or of a
representation or warranty made herein, (ii) an actual or alleged failure of or
defect in the TomoTherapy product, excluding any defect in the Detectors,
resulting in actual or alleged damages or injuries, (iii) TomoTherapy’s
Products’ actual or alleged infringement of Intellectual Property Rights,
excluding any infringement in the Detectors, (iv) any modification of or
addition to the Detectors not provided or approved by Hitachi, (v) gross
negligence or other tortuous conduct, (vi) representations or statements made by
TomoTherapy not specifically authorized by Hitachi herein or otherwise in
writing, or (vii) violation by TomoTherapy of any applicable law, regulation or
order.

4.3 Hitachi Limitation of Liability. IN NO EVENT SHALL HITACHI BE RESPONSIBLE OR
LIABLE TO TOMOTHERAPY FOR LOST PROFITS, OR LOST BUSINESS OPPORTUNITIES, OR
INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF TOMOTHERAPY
OR ANY OTHERS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS
TERMINATION.

 

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4.4 TomoTherapy Limitation of Liability. UNDER NO CIRCUMSTANCES SHALL
TOMOTHERAPY BE LIABLE TO HITACHI FOR LOST PROFITS OR LOST BUSINESS
OPPORTUNITIES, NOR SHALL TOMOTHERAPY BE SUBJECT TO ANY CONSEQUENTIAL, SPECICAL,
PUNITIVE, INCIDENTAL, INDIRECT OR CONTINGENT DAMAGES WHATSOEVER WITH RESPECT TO
CLAIMS MADE HEREUNDER.
5.0 CONFIDENTIAL INFORMATION
5.1 Hitachi and TomoTherapy each may be referred to separately as (i) the
“Provider” in a context in which the Party being referred to is disclosing, has
disclosed, or will disclose information, and (ii) the “Receiver” in a context in
which the Party being referred to is receiving, has received, or will receive
information.
5.2 As used in this Agreement, “Confidential Information” means all information
consisting of or relating to the Provider’s: trade secrets, product designs,
patents, patents pending or contemplated and interpretation of patents,
copyright and copyright pending or contemplated, customer lists, product lines,
methods of business operation, technical information, including without
limitation, software and computer programs, economic information data,
specifications, know-how, process information, methods of manufacture, formulas,
structures, materials, components, designs, patterns, prototypes, models,
drawings, reports, notes, charts, graphs, distribution and sale relating to the
development and marketing of the Provider’s products and general business
operations..
5.3 Confidential Information includes without limitation all information that is
able to be disclosed, communicated, transferred, reproduced, represented,
contained, retained, recorded, or embodied orally, visually, electronically,
digitally, in writing, or through any other medium or means. In order to be
included as Confidential Information hereunder, (i) information disclosed in
written or other tangible form must at the time of disclosure be identified as
“Confidential”, “Secret,” or “Proprietary” or bear a similar legend, and
(ii) information disclosed in any other form must be identified as Confidential
Information hereunder in a written notice delivered by the Provider to the
Receiver within fourteen (14) days after the time of disclosure, provided that
such information shall be considered to be Confidential Information throughout
at least such fourteen (14) day period even if no such notice is ultimately
delivered.
5.4 Notwithstanding the foregoing, Confidential Information does not include any
information disclosed by the Provider to the Receiver hereunder which the
Receiver can convincingly demonstrate through, among other means, the production
of written records or other tangible materials (i) is, at the time of such
disclosure, already generally available to the public through no act or omission
in breach of this Agreement, (ii) becomes, subsequent to such disclosure,
generally available to the public through no act or omission in breach of this
Agreement, (iii) is, at the time of such disclosure, already in the Receiver’s
possession through lawful means, and was not obtained, directly or indirectly,
from the Provider or from a third party under an obligation to keep such
information confidential, (iv) comes, subsequent to such disclosure, into the
Receiver’s possession through lawful means and is not obtained, directly or
indirectly, from the Provider or from a third party under an obligation to keep
such information confidential, or (v) is, subsequent to such disclosure,
independently developed by employees of the Receiver who have not received such
information.
5.5 The Confidential Information shall (i) be the confidential property of the
Provider and be treated by the Receiver strictly and without exception as such,
(ii) be securely retained and protected by the Receiver without any loss or
misplacement throughout the period in which it is in the Receiver’s possession,
(iii) not be disclosed, directly or indirectly, by the Receiver to any party
other than the Provider without the Provider’s prior written approval, and
(iv) be used by the Receiver only for the Permitted Purpose and not for any
other purpose, reason, or application without the Provider’s prior written
approval.

 

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5.6 The Receiver shall use at least the same degree of care to protect and keep
confidential the Provider’s Confidential Information as the Receiver uses to
protect and keep confidential its own Confidential Information. If the Receiver
becomes legally compelled to disclose any of the Provider’s Confidential
Information, the Receiver shall immediately so notify the Provider in writing so
as to enable the Provider to respond to such compulsion. Each Party acknowledges
that its breach of this Agreement will cause irreparable harm to the other Party
for which money damages will not be a sufficient remedy. Accordingly, in the
event of a breach of this Section 5 by either Party, the other Party shall be
entitled to equitable relief, including without limitation injunctive relief, in
addition to any other legal or equitable remedy to which such Party may be
entitled.
5.7 Upon the Provider’s request, the Receiver shall (i) immediately return to
the Provider all copies of the Provider’s Confidential Information which are in
written or other tangible form, except for that portion of such Confidential
Information which consists of items (including without limitation summaries,
memoranda, correspondence, reports, notes, and other materials) that the
Receiver has generated itself based on such Confidential Information (the
“Derivatives”), (ii) immediately destroys all copies of such Confidential
Information which are in any other form except the Derivatives, and (iii) either
retain and continue to protect and keep confidential the Derivatives in
compliance with this Agreement or immediately destroy all copies of the
Derivatives, as the Provider may elect. An officer of the Receiver shall prepare
a written certification of each such destruction and promptly deliver such
certification to the Provider upon the completion of each such destruction.
5.8 Period of Confidentiality. The parties agree to keep any Confidential
Information, as defined herein, confidential for the term of this Agreement and
for a period of two (2) years after the termination or expiration of the
Agreement or any extension thereof. The previous statement notwithstanding, the
Receiver shall maintain the confidentiality of any information identified by the
Provider as a trade secret as long as the trade secret information remains a
protectable trade secret of the Provider.
6.0 TERM AND TERMINATION
6.1 Term. Unless terminated as provided in Section 6.2 hereof or by mutual
written consent, this Agreement shall continue in full force and effect for an
initial term expiring [ * ] years after the date hereof (the “Initial Term”),
and thereafter may be renewed for successive one (1) year terms (each a “Renewal
Term”) by mutual agreement of the parties at least six (6) months prior to the
expiration of the Initial Term or any Renewal Term (collectively, the “Term”).
6.2 Termination. This Agreement may be terminated prior to expiration of the
Initial Term or any Renewal Term, as provided in Section 6.1 hereof, by prior
notice to the other party as follows:
A. By either party, immediately if the other party should fail to perform any of
its obligations hereunder and should fail to remedy such nonperformance within
ninety (90) calendar days after receiving written demand therefore;
B. By either party, effective immediately upon the liquidation, dissolution or
termination of the other party’s existence or business, or if that party becomes
the subject of any voluntary or involuntary bankruptcy, receivership or other
insolvency proceedings or makes an assignment or other arrangement for the
benefit of its creditors,
C. By either party, effective immediately, if the other party should attempt to
sell, assign, delegate or transfer any of its rights and obligations under this
Agreement without having obtained the party’s prior written consent thereto
except as specified in Section 7.5 herein.

 

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6.3 Rights of Parties Upon Termination. The following provisions shall apply
upon the termination or nonrenewal of this Agreement:
A. Hitachi shall cease all manufacturing and other activities on behalf of
TomoTherapy and shall return to TomoTherapy and immediately cease all use of
Confidential Information previously furnished by TomoTherapy and then in
Hitachi’s possession. TomoTherapy, too, shall return to Hitachi and immediately
cease all use of Confidential Information previously furnished by Hitachi and
then in TomoTherapy’s possession.
B. TomoTherapy shall purchase any and all outstanding Purchase Orders and all
parts and materials that Hitachi has already placed the order with suppliers for
producing the Detectors based on the Forecasts provided by TomoTherapy for the
first three months beyond the Purchase Orders except for the case this Agreement
is terminated by TomoTherapy under Section 6.2.A above.
C. Upon termination by Hitachi for any reason other than TomoTherapy’s breach
pursuant to Section 6.2 hereof, TomoTherapy shall have the opportunity to do a
Last Time Buy of the Detectors from Hitachi. The Last Time Buy request shall be
in the form of a Purchase Order that identifies the order as the Last Time Buy,
and specifies the quantity and delivery schedule of the Last Time Buy Detectors.
The parties shall discuss and agree on the quantity and delivery schedule of the
Last Time Buy, with the understanding that the quantity of Detectors available
for purchase by TomoTherapy in the Last Time Buy will at minimum be equivalent
to the number of Detectors ordered during the last calendar year of the
Agreement. However, should Hitachi’s reason for termination be due to Hitachi’s
inability to source certain components of the Detectors such that continued
manufacture in the absence of other intervention would make it impossible for
Hitachi to fulfill the Last Time Buy request, the parties agree to the
following:

  i.  
Hitachi shall notify TomoTherapy as soon as possible about the impending supply
shortage. Hitachi and TomoTherapy will work together to try and locate an
alternate source for the components.

  ii.  
Hitachi agrees, with its commercial best effort basis, to work with its current
supplier to negotiate a similar Last Time Buy provision to make a last purchase
of the components from the supplier in an amount equivalent to at least enough
supply to provide TomoTherapy with a number of detectors equivalent to the
number of Detectors ordered by TomoTherapy under this Agreement during the last
six (6) calendar months of the Agreement prior to termination.

D. The following provisions survive termination or nonrenewal of this Agreement
for any reason: Section 1.3F, Section 2.2, Section 2.3, Section 3.2,
Article 4.0, Article 5.0, Section 6.3, Section 7.2, Section 7.4, Section 7.6,
and Section 7.8.
E. In the event TomoTherapy terminates the Agreement as the result of Hitachi’s
failure to perform or breach pursuant to Section 6.2, or in the event that
Hitachi terminates or fails to renew the Agreement based upon a decision to
cease manufacture of the Detectors, the parties shall negotiate in good faith
the possibility and terms and conditions of transfer of Hitachi’s manufacturing
Know-How and any other Hitachi Intellectual Property necessary for the
manufacture of the Detectors.
7.0 GENERAL PROVISIONS
7.1 Entire Agreement. This Agreement, including the Exhibits hereto, as it may
be amended from time to time, represents the entire agreement between the
parties concerning the subject matter hereof and supersedes all prior
discussions, agreements and understandings of every kind and nature between
them. Except as otherwise expressly set forth herein, no modification of this
Agreement will be effective unless in writing and signed by both parties.

 

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7.2 Notices. All notices under this Agreement shall be in writing and given by
registered mail, nationally recognized courier, facsimile, or by electronic
transmission addressed to the parties at the addresses set forth on the first
page of this Agreement, or to such other address of which either party may
advise the other pursuant to this Section 7.2. Notices will be deemed given when
sent.
7.3 Force Majeure. Neither party shall be in default hereunder by reason of any
failure or delay in the performance of any of its obligations under this
Agreement where such failure or delay arises out of any cause beyond the
reasonable control and without the fault or negligence of non-performing party.
Such causes shall include, without limitation, storms, floods, other acts of
nature, fires, explosions, riots, war, terrorism or civil disturbance, strikes
or other labor unrests, embargoes and other governmental actions or regulations
which would prohibit either party from ordering or furnishing Products or from
performing any other aspects of its obligations hereunder, delays in
transportation, and liability to obtain necessary labor, supplies or
manufacturing facilities.
7.4 Severability. If any provision of this Agreement is held invalid by any
tribunal in a final nonappealable decision, such provision shall be deemed
modified to eliminate the invalid element and, as so modified, such provision
shall be deemed a part of this Agreement as though originally included. The
remaining provisions of this Agreement shall not be affected by such
modification.
7.5 Nonassignment. This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the business interests of the parties and may
be assigned by either party only to the acquirer of substantially all of that
party’s assets in conjunction with such an acquisition, or with the written
consent of the other party.
7.6 Conciliation and Arbitration. Prior to commencing any legal action, all
disputes arising between the parties concerning (a) the rights and obligations
of the parties under this Agreement or (b) any damages suffered by a party
arising from a claimed breach by the other party shall be brought before a
conciliation committee of executives representing both parties. The committee
shall attempt to work out a recommendation for settlement of the dispute and
transmit such recommendation to both parties for due consideration not more than
60 days after one party gives the other party notice that a dispute exists. Any
dispute that cannot be settled amicably by conciliation within the 60-day period
shall be finally heard, settled, and decided under the Rules of the American
Arbitration Association in effect as of the Effective Date by three arbitrators
(one of whom may not be a citizen of the country of either party) appointed in
accordance with such Rules, and Wisconsin law shall govern the interpretation of
this Agreement. Service of any matters in reference to such arbitration shall be
given in the manner described in Section 7.2 above. Such arbitration shall be
conducted in English using the English language text of this Agreement, and the
arbitrators shall have a demonstrated fluency in both written and spoken
English. The arbitration shall be held in New York, New York state, unless the
parties shall otherwise mutually agree. The award in such arbitration shall be
final and enforceable in any court of competent jurisdiction.
7.7 Waiver. Both parties agree that the failure of either party at any time to
require performance by the other party of any of the provisions herein shall not
operate as a waiver of the right of the party to request strict performance of
the same or like provisions, or any other provisions hereof, at a later time.
7.8 No Third-Party Beneficiaries. Nothing herein, express or implied, is
intended or shall be construed to confer upon or give to any person, other than
the parties hereto and their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
7.9 Language. The English language version of this Agreement shall at all times
govern and control the interpretation and enforcement of this Agreement
notwithstanding the translation of this Agreement into any other language.
7.10 Currency. “Yen” shall mean the legal currency of Japan. All amounts
referred to in this Agreement and the Exhibits hereto shall be paid in such
currency unless specifically expressed otherwise.

 

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7.11 Recitals. The recitals hereto are an integral part of this Agreement and
are incorporated herein by reference.
7.12 Headings. Any headings used herein are for convenience in reference only
and are not a part of this Agreement, nor shall they in any way affect the
interpretation hereof.
7.13 Counterparts. This Agreement may be executed simultaneously in several
counterparts, including facsimile copies, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, TomoTherapy and Hitachi have caused this instrument to be
executed by their duly authorized employees, as of the date first above written.

              TOMOTHERAPY INCORPORATED   HITACHI MEDICAL CORPORATION
 
           
By:
  /Steve Books/   By:   /Kazuyoshi Miki/
 
           
 
           
Name:
  Steve Books   Name:   Kazuyoshi Miki
 
           
 
           
Its:
  Chief Operating Officer   Its:   Senior Vice President and Executive Officer
 
           
 
           
Date:
  June 19, 2008   Date:   June 25, 2008
 
           

 

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APPENDIX A
Procurement Specification for the Detectors
[ * ]

 

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