exv10w9







Exhibit 10.9




Execution Version




ORIGINAL EQUIPMENT MANUFACTURING AGREEMENT 

AND ENGINEERING SUPPORT AGREEMENT




between



Esaote S.p.A., a company organized under the laws of the Republic of Italy and with
registered seat in Genova, Italy (hereinafter referred to as “Esaote”)




 — of the one party —




and



TechniScan, Inc., a Utah corporation (hereinafter referred to as “TechniScan”)




 — of the other party —




     Esaote and TechniScan are hereinafter referred to individually as a “Party” and collectively
as the “Parties”



Recitals



WHEREAS, Esaote is a leading player in the market of ultrasound systems and has developed a
proprietary technology for such systems;



WHEREAS, Esaote manufactures and sells, inter alia, ultrasound systems for the examination of
the breast;



WHEREAS, TechniScan has developed a prototype of a device for the three dimensional imaging of
the whole breast using both reflection and transmission ultrasound to create tomographic
images of the female breast;



WHEREAS, TechniScan and Esaote have expressed the interest to solidify their relationship both
(i) through the acquisition by Esaote of an equity ownership interest in TechniScan pursuant to
a Stock Purchase Agreement dated on or about the date hereof (the “Stock Purchase Agreement” or
the “SPA”), (ii) through the execution of this original equipment manufacturing and engineering
support agreement (this “Agreement” or the “OEM Agreement”) for the development of a regulatory
approved and usable three dimensional imaging system of the whole breast using both reflection
and transmission ultrasound to create tomographic images of the female breast and (iii) through
the execution of an exclusive license and distribution Agreement under which Esaote will
distribute the Products (the “Distribution Agreement”).



WHEREAS,
on 20th November 2007 the Parties executed a term sheet setting
forth inter alia, the
basic principles of their possible co-operation in the field of ultrasound systems for breast
examination (hereinafter referred to as the “Term Sheet”);



WHEREAS, Esaote has provided and is continuing to provide engineering and design support and
original equipment manufacturing prototype equipment and supplies to TechniScan which




 









 







will be
treated as contribution in kind to TechniScan’s corporate capital for a value of US$1
million as recognized under the SPA and as anticipated under the Term Sheet;



WHEREAS, ESAOTE has provided an open-frame development system (i.e. a system with production
electronics and arrays but without the final covers and other customer features) to TechniScan
as anticipated under the Term Sheet as well as other components set
out in Annex 1 hereto;



NOW,
THEREFORE, the Parties enter into this Original Equipment Manufacturing Agreement and
Engineering Support Agreement as follows:




Article
1

Definitions



In addition to capitalized terms defined elsewhere in this Agreement the following words in
capital shall have the meaning set out below. Words importing the singular shall include the
plural and vice versa.





1.1. The term “Bankrupt” shall mean, with respect to either Party, if any of the following
events occurs: such Party (a) voluntarily becomes the subject of any proceedings relating
to its winding-up, liquidation, insolvency or for the appointment of a receiver or similar
officer for it, (b) involuntarily becomes the subject of any proceedings
relating to its winding-up, liquidation, insolvency or for the appointment of a
receiver or similar officer for it, which is not discharged in its favor with prejudice
within ninety (90) days thereafter; (c) makes an assignment for the benefit of all or
substantially all of its creditors, or enters into an agreement for the extension or
readjustment of all or substantially all of its obligations; (d) has filed against it,
a petition or other document seeking relief under bankruptcy laws, which is not
discharged within ninety (90) days thereafter; or (e) a temporary or permanent receiver
or liquidator is appointed over a Party or substantially all of such Party’s assets and
such appointment is not cancelled within ninety (90) days thereafter.




1.2. The term “Change of Control” shall mean (i) the consummation of the sale or
disposition by a Party of all or substantial all of such Party’s assets or (ii) the
consummation of a merger or consolidation of a Party with any other entity, other than a
merger or consolidation which would result in the voting securities of the Party
outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or its
parent) at least fifty percent (50%) of the total voting power represented by the voting
securities of the Party or such surviving entity or its parent outstanding immediately
after such merger or consolidation; and for the purposes of this Agreement, in the case of
Esaote shall mean the above AND, in addition, that such a change results in a stop of
Esaote’s supply and product development support under the OEM Agreement (for example, a
change in control resulting from a restructuring of ownership that does not affect the OEM
Agreement would NOT be considered “Change of Control” for Esaote). Notwithstanding the
foregoing, a “Change of Control” does not include any Change of



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Control that occurs as a result of the initial public offering of the stock of either Party
which generates gross proceeds of at least $10 million.




1.3. The term “Copyrights” shall mean all copyrights and copyrightable works, and all applications,
registrations and renewals in connection therewith.




1.4. The term “Esaote Product” shall mean the ultrasound system developed by Esaote and supplied by
Esaote, as specified in Annex 1 hereto.




1.5. The term “Esaote Technology” shall mean all Intellectual Property that is subject as of the
Effective Date, or becomes subject during the term of this Agreement, to Esaote’s control. For this
definition, Esaote shall be considered to control an Intellectual Property if Esaote owns or has a
license to it and also has the right to license or sublicense it to TechniScan.




1.6.
The term “Field of Use” shall mean the imaging of the whole breast using both reflection and
transmission ultrasound to create tomographic images of the breast.




1.7. The term “Industrial Designs” shall mean all features of shape, configuration, pattern,
ornament and the like that are or can be registered as designs or industrial designs and all
applications, registrations and renewals in connection therewith.




1.8. The term “Intellectual Property” shall mean, in any country or territory of the world, all
registered and unregistered Patents, Copyrights, Industrial Designs, Proprietary Information, and
Software, provided, however, that the term “Intellectual Property” does not include any
Trademarks.




1.9. The term “Modified Esaote Product” shall mean the Esaote Product (a) modified by Esaote
pursuant to Annex 1 in order to integrate the Esaote Products into the Products and (b) supplied by
Esaote.




1.10. The term “Patents” shall mean (a) all patents and patent applications (including provisional
applications and applications for a certificate of invention); (b) all reissues, substitutions,
confirmations, registrations, validations, re-examinations, additions, continuations,
continued prosecution applications, continuations-in-part, and divisions of, to or for any patent
or patent application; and (c) all term extensions, supplementary protection certificates and
other governmental actions that extend exclusive rights to an invention or technology beyond the
original patent expiration date.




1.11. The term “Products” shall mean any product having a two and three dimensional imaging system
of the whole breast using both reflection and transmission ultrasound to create tomographic images
of the breast — with a further reference to Annex 2 — Product Description.




1.12. The term “Program Technology” shall mean all Intellectual Property that is created,
conceived, discovered, or invented (i) jointly by employees of TechniScan and



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employees of Esaote, or other parties under obligation to assign such Intellectual
Property jointly to TechniScan or Esaote, and (ii) in the course of and in pursuance of
the Program.




1.13. The term “Proprietary Information” shall mean a Party’s trade secrets, know-how, data,
blue-prints, drawings, procedures, manuals, technical specifications, business plans,
manufacturing processes, clinical strategies, product specifications, scientific data, market
analyses, formulae, designs, training manuals and other non-public information (whether
business, financial, commercial, scientific, clinical, regulatory or otherwise) that the
Party treats as proprietary and uses commercially reasonable efforts
to protect.




1.14. The term “Software” means all computer software programs, including operating system
and applications software, implementations of algorithms and program interfaces, whether in
source code or object code form, and all documentation, including design documents,
flowcharts, training materials and user manuals, relating to the foregoing, and all
translations thereof.




1.15.
The term “TechniScan Technology” shall mean all
Intellectual Property that is subject as
of the Effective Date, or becomes subject during the term of this Agreement, to TechniScan’s
control. For this definition, TechniScan shall be considered to control an Intellectual
Property if TechniScan owns or has a license to it and also has the right to license or
sublicense it to Esaote.




1.16. The term “Trademarks” shall mean all trademarks, service marks, trade dress, logos,
labels, domain names, websites and trade names, together with all translations, adaptations,
derivations and combinations thereof (including all goodwill associated therewith), and all
applications, registrations and renewals in connection therewith.



Article 2

Scope of the Agreement



TechniScan and Esaote mutually acknowledge that the scope of this Agreement is the development of
the Products by:




     (a) the mutual contribution by Esaote and TechniScan of engineering and design support and the
contribution and sale of original equipment manufacturing prototype and final production equipment
and supplies by Esaote;



     (b) the sharing of technology and Intellectual Property in respect of the development and
starting-up of a process for the industrial manufacture of the Products to be sold at competitive
prices on the market;



     (c) the setting out of the Parties’ rights and obligations in respect of the development,
manufacturing and supply of the Products to any third party.



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Article 3

Coordination of activities



3.1. The Parties agree that Annex 2 sets out the program addressing the development steps in
respect of the realization (e.g., development, regulatory approval and commercialization) of the
Products and the work required in order to transform the Esaote Products into the Modified
Esaote Products. In particular, such program (hereinafter referred to as the “Program”) sets out
inter alia:



• the contribution in terms of technology, know-how, manpower, materials, assistance, etc. of each
of the Parties;



• the time schedule for development, sample production, tests and relevant milestones which are
necessary to periodically assess and verify the results from time to time obtained.



3.2. In the course of the Program, Esaote and TechniScan will meet at least every three months to
discuss and document specific problems that are identified with respect to completing the
Program. Esaote and TechniScan will assess the specific problems, consider possible solutions to
identified problems, define mutually agreeable deadlines to progress the work toward
commercialization, and carry out appropriate developmental work. Esaote and TechniScan will
exchange and evaluate samples on pilot or production versions of the Products and the Modified
Esaote Product during the development period and report to each other the results of tests,
experiments or production trials as they determine to be appropriate.




Article 4

Contribution by Esaote



In the framework of the Program outlined in Article 3 above Esaote’s tasks shall be as outlined
below:



4.1. Esaote will provide the following engineering support services, Esaote Products and Modified
Esaote Products:




     (a) the modification of the Esaote Product into the Modified Esaote Product;



     (b) the
supply of the Modified Esaote Product and a non-exclusive license to the executable
version of the related software exclusively for incorporation by TechniScan into the Products;



     (c) the contribution of engineering and design support and original equipment manufacturing
prototype equipment and supplies necessary to incorporate the Modified Esaote Products into the
Products and technical assistance related to the completion and manufacture of the Products
incorporating the Modified Esaote Products;



     (d) the supply of spare parts relevant to the Modified Esaote Products as provided in Article
6;



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     (e) the technical assistance on the Modified Esaote Products and spare parts including
training in the service, installation and application of Modified Esaote Product, to TechniScan’s
designated technical personnel;



     (f) the provision of seven intermediate prototypes of the Modified Esaote Product (described
as beam formers in the Term Sheet) as per Annex 1.



Article 5

Work incident to the realization of Modified Esaote Product



5.1. Esaote shall carry out the work incident to Modified Esaote Product in accordance with the
specifications set out in Annex 1 hereto and the Program; it being understood that TechniScan
shall timely provide Esaote with all TechniScan Technology — to the extent such TechniScan
Technology has not yet been transferred to Esaote prior to or upon the coming into force of this
Agreement — and shall proactively extend to Esaote all reasonable cooperation.



5.2. The work related to Modified Esaote Product shall be completed upon successful completion of
the last milestone under the Program.




Article 6

Prices and Terms of Payment; Sole Provider



6.1. During the development period, the prices for Modified Esaote Products shall be equal to
Esaote’s cost (including shipping, taxes, duties and tariffs). During the production period, the
prices for Modified Esaote Products shall be equal to Esaote’s cost plus a mark-up to be agreed in
good faith based on the best market price (estimated at 40% gross margin plus the cost of
insurance, freight, tariffs, duties and all other similar charges). Software from Esaote that is
distributed to end users of the Products shall be provided on a license (license to use) per
completed commercial version of the Product (generally between 0.5% and 2% per sale price of each
version of the Product). If the Parties do not otherwise agree, the license fee per unit of the
Product shall be 2.0% of the sales price of the Product. In addition to prices for Esaote Products
and Modified Esaote Products, TechniScan shall also pay Esaote in respect of its engineering fees
as provided in Article 7 and assistance fees as provided in Article 8.2.



6.2.
The prices set out in 6.1 above (the “Prices”) are calculated CIF Incoterms 2000 and shall be
denominated in and payable in Euros. Prices shall include final testing, packaging, insurance,
freight, taxes, duties, tariffs and similar charges.



6.3. Payment of the purchase price of Modified Esaote Product, software, units and spare parts,
exchange goods and replaced parts shall be made by TechniScan within sixty (60) days after
product shipment and invoice from Esaote.



6.4. Esaote reserves the right to sell Modified Esaote Products and spare parts therefor to
TechniScan through its US subsidiary, in which case the relevant invoice shall be issued by such
US subsidiary.




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6.5. Esaote or its US subsidiary shall be the sole provider of the Modified Esaote Product to
TechniScan and TechniScan shall not attempt, directly or indirectly, to procure or develop a
replacement or alternative during the term of this Agreement.




Article 7

Cost of Esaote Contribution



7.1. The prices for the Esaote contribution relating to engineering services as per Article 4 and
Article 6 will be equal to the cost for Esaote (and/or its affiliated company), which will include
total monthly salary rate, including base salary, employee benefits, taxes and other miscellaneous
costs of employing the relevant individuals. A list of relevant billing rates for Esaote personnel
is attached hereto as Annex 3. Esaote shall also be entitled to reimbursement in respect of its
direct out of pocket expenses, including reasonable travel and lodging and the actual costs of
personnel who are not employed by Esaote or any affiliate.



7.2. Payment of such fees shall be made by TechniScan (i) first, by deducting such amount from the
initial $1 million in-kind contribution under the Stock Purchase Agreement and (ii) after such
initial contribution has been fully used, within sixty (60) days after product shipment or agreed
upon engineering assistance and invoice from Esaote. Once the amount of the Esaote contribution
exceeds $1 million, Esaote shall notify TechniScan and the parties shall agree on whether Esaote
shall provide additional services and, if so, the pricing and other relevant terms thereof
consistent with the provisions in this Agreement.




Article 8

Approvals



8.1. Esaote agrees to co-operate with TechniScan, free of charge (except for direct costs), by
providing such reasonable documentation, technical information and data regarding the Modified
Esaote Products as may be requested by TechniScan to secure FDA approval and a CE Mark for the
Product. Esaote’s obligations hereunder shall not include any filing fees, clinical validation
activities or the hiring of any third party consultants or counsel.



8.2. With reference to the obtainment of the CE Mark, Esaote agrees to assist TechniScan to obtain
a CE Mark as per MDD 93/42/EEC. The extent of the assistance by Esaote and the related cost are set
out in Annex 4 hereto.



8.3. Furthermore, Esaote will discuss in good faith with TechniScan how to cooperate in the product
approvals, product registrations and/or regulatory licenses regarding the Products as may be
necessary under the laws in effect in any part of the world where TechniScan actually intends to
market the Product.




Article 9

Contribution by TechniScan



9.1. TechniScan’s obligations shall be as follows:




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(a) the supply of all required engineering and design support and original equipment manufacturing
prototype versions of the Product and supplies (other than those required of Esaote hereunder);



(b) the supply during the development period of a development version of the Product to Esaote
facility in Italy at no cost for Esaote with the aim of supporting the development program;



(c) provide the TechniScan Technology to Esaote to facilitate Esaote’s contributions hereunder; and



(d) use commercially reasonable efforts to obtain regulatory approval of Products.



9.2. In the event Esaote should request OEM support by TechniScan outside the scope of the
Program, TechniScan shall provide it under this Agreement and article 6 above shall apply,
mutatis mutandis, to the services thus provided by TechniScan. TechniScan shall provide a written
cost estimate but shall not begin work until approved in writing by Esaote.




Article 10

Development



10.1. Unless otherwise expressly set forth herein, TechniScan shall have sole responsibility for
defining, designing, specifying and selecting components, sub-assemblies and equipment for, and
integrating, manufacturing and testing the Products.



10.2. In case of any significant improvements, enhancements, developments and modifications related
to the Products, the Parties will negotiate in good faith the scope of the modifications required,
the activities necessary in relation to changes to the Esaote Modified Products, if any, and a new
program setting out the allocation of responsibilities applying mutatis mutandis the same
principles as under paragraph 3.1 above.




Article 11

Marketing



11.1. Without limiting paragraph 11.2 below Esaote and TechniScan agree that they will present the
Products to the market as result of their co-operation. It is the common wish of the Parties that
the Products be introduced into the market in January 2009.



11.2. TechniScan shall be responsible as manufacturer of the Products pursuant to MDD 93/42/EEC,
FDA regulations and all other legal requirements.



11.3. Esaote shall have the right to review, comment upon and approve any labels, regulatory
inserts, documentation and marketing materials relating to the Modified Esaote Product.




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Article 12

Licensing Rights and Royalty Obligations



12.1. During the term of this Agreement, Esaote grants to TechniScan an exclusive license (without
rights to sublicense, except as permitted under Section 12.5) to the Program Technology for use
within the Field of Use.



12.2. During the term of this Agreement, TechniScan grants to Esaote and/or its affiliates an
exclusive license (without rights to sublicense, except as permitted under Section 12.5) to the
Program Technology for use outside the Field of Use.



12.3. During the term of this Agreement, the Esaote Technology and the TechniScan Technology shall
be cross-licensed among the Parties by non exclusive licenses (without rights to sublicense, except
as permitted under Section 12.5), subject to the restrictions set forth in subparagraphs (a)-(c)
below, solely as necessary for the development, use, manufacture, marketing, promotion, sale,
distribution, import/export or commercialization of the Products, Esaote Products or Modified
Esaote Products pursuant to the Program. The scope of the foregoing cross-license granted to
TechniScan shall be in the Field, and the scope of the foregoing cross-license granted to Esaote
shall be outside the Field.



Furthermore, the cross-licenses under this Agreement are subject to the following restrictions
and covenants:




     (a) the cross-licenses do not permit and each Party covenants that it will not use and it will
cause the Program Technology, the Esaote Technology or the TechniScan Technology, as applicable,
not to be used in a manner that competes with any product or service of the other Party;



     (b) the cross-licenses do not include any Esaote Technology or TechniScan Technology that
requires a license fee or other consideration be conveyed to a third party or approval by a third
party, unless the Parties have mutually agreed to a resolution in writing regarding the payment of
such fees or consideration; and



     (c) with respect to the Esaote Technology and the TechniScan Technology, the licenses do not
permit and each Party covenants that it will not use, and it will not cause the other Party’s
technology to be used, unless it receives specific written approval from the other Party to use
such technology.


12.4. Except as expressly provided herein, no right or license, either expressed or implied, under
any Intellectual Property is granted hereunder, except for what is required for the Parties to
carry out their respective obligations hereunder as set forth in the licenses of this Article 12.



12.5. Neither Party is permitted to sublicense the Intellectual Property of the other Party to any
third party without the other Party’s prior written approval.




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Article 13

Intellectual Property Ownership



13.1. All rights in Esaote Technology prior to the Effective Date shall be the sole and exclusive
property of Esaote and all rights in TechniScan Technology prior to the Effective Date shall be the
sole and exclusive property of TechniScan.



13.2. With respect to inventions and discoveries, whether patentable or not, which may arise
hereunder, the following shall apply:





13.2.1 Intellectual Property, patentable or not, which (i) are made solely by employees of
Esaote, or other parties under obligation to assign their inventions to Esaote; and (ii)
result from activities in the course of and pursuant to the Program, shall be the exclusive
property of Esaote and shall be Esaote Technology.




13.2.2 Intellectual Property, patentable or not, which (i) are made solely by employees of
TechniScan, or other parties under obligation to assign their inventions to TechniScan;
and (ii) result from activities in the course of and pursuant to the Program, shall be the
exclusive property of TechniScan and shall be TechniScan Technology.




13.2.3 All Program Technology shall be the joint properly of Esaote and TechniScan but the
use thereof shall be subject to the limitations and exclusive licenses contained herein
during the term of this Agreement.


13.3. Each party agrees to provide, within thirty (30) days of its creation, a written notice to
the other Party specifying the nature of any Program Technology, the date of its creation and a
detailed description of it. The Parties agree to cooperate in good faith to agree on a course for
obtaining patent protection for Program Technology, if warranted. The cost for patent protection in
respect of any technology that has exclusive value to a party with an exclusive license hereunder
shall be borne solely by that party.



13.4. Each party agrees to obtain the cooperation of their respective employees in the preparation,
filing, and prosecution of patent applications directed to any inventions which may arise
hereunder.




Article 14

Standards



14.1. Esaote is a certified company complying with EN ISO 9001:2000, EN ISO 13485:2004, QSR rif.21
CFR part 820.1 FDA and Canadian Medical Device Regulations, therefore Esaote warrants that the
processes for the manufacture of Modified Esaote Product shall comply with the quality standards
specified in such regulations.




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Article 15

Warranty



15.1. Esaote warrants that all units of Modified Esaote Product delivered hereunder shall conform
to the agreed upon specifications, shall be new and be free from defects in design, material and
workmanship. The hardware warranty period for defects extends to a period of eighteen (18) months
after date of delivery or twelve (12) months after the date of first installation, whichever is
sooner; the spare parts/exchange goods hardware warranty and replaced parts warranty for defects
extends to a period of six (6) months after the date of first installation or twelve (12)
months after the date of delivery, whichever is sooner. In case of a warranty claim, TechniScan
shall notify Esaote in writing as soon as possible, but in no case later than fifteen (15) days
after the expiration of said warranty period. Units and spare parts shall be replaced or repaired
by Esaote at Esaote’s costs. The costs of building in and building out the defective parts will be
borne by TechniScan.



15.2. Costs of transportation associated with the shipment of Modified Esaote Products or spare
parts/exchange goods and replaced parts for repair or replacement under this warranty will be borne
by Esaote. Conversely, TechniScan shall bear the costs of transportation associated with the
shipment of the defective products/spare parts to Esaote.



15.3. The warranty does not extend to any units of Modified Esaote Product or spare parts/exchange
goods and replaced parts which have been subjected to misuse, neglect, incorrect wiring or
servicing, improper installation or any other reason related to the materials and workmanship.




Article 16

Liability



16.1 Indemnity Scope. Esaote shall indemnify and hold harmless TechniScan and its affiliates and
their respective shareholders, directors, officers, employees and agents from and against any and
all liabilities, damages, losses, penalties, fines, costs and expenses, including reasonable
attorneys’ fees, paid or incurred by them in connection with any claim based upon or arising from:
(i) any bodily injury, death or property damage resulting from any defect in the design,
engineering, fabrication, manufacture, label and label warnings (to the extent the label was
provided by Esaote), or documentation of the Modified Esaote Products or from the failure of such
Modified Esaote Product to conform to the applicable specifications or warranties therefor except to
the extent that such damage is due to or results from a defect of the Product; (ii) any infringement
or violation of a third-party’s patent, copyright, trademark, trade secret or other intellectual
property rights as a result of the use or distribution of the Modified Esaote Products (other than
due to any infringement that is attributable to the Product); (iii) any facts or circumstances that
would constitute a breach by Esaote of any of its representations, warranties or obligations under
this Agreement; (iv) any violation by Esaote of applicable laws, (v) any negligent or more culpable
act (including misstatements) or omission of Esaote or its affiliates or subcontractors or any of
their respective employees or agents relating to the activities subject to this Agreement or (vi)
Esaote’s obligations as a Licensee under Section 18.6 hereof.





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TechniScan shall indemnify and hold harmless Esaote and its affiliates and their respective
shareholders, directors, officers, employees and agents from and against any and all liabilities,
damages, losses, penalties, fines, costs and expenses, including reasonable attorneys’ fees, paid
or incurred by them in connection with any claim based upon or arising from: (i) any bodily injury,
death or property damage resulting from any defect in the design, engineering, fabrication,
manufacture, label (including the label warnings), or documentation of the Products or from the
failure of such Products to conform to the applicable specifications or warranties therefor except
to the extent that such damage is due to or results from a defect of the Modified Esaote Product;
(ii) any infringement or violation of a third-party’s patent, copyright, trademark, trade secret or
 other intellectual property rights as a result of the use or distribution of the Products (other
than due to any infringement that is attributable to the Modified Esaote Product); (iii) any facts
or circumstances that would constitute a breach by TechniScan of any of its representations,
warranties or obligations under this Agreement; (iv) any violation by TechniScan of applicable laws
or (v) any negligent or more culpable act (including misstatements) or omission of TechniScan or
its affiliates or subcontractors or any of their respective employees or agents relating to the
activities subject to this Agreement or (vi) TechniScan’s obligations as a Licensee under Section
18.6 hereof.



16.2 Defense. In the event of a claim by a party seeking indemnity under Section 16.1 (an
“Indemnitee”), such Indemnitee shall give the party from whom indemnity is sought (the
“Indemnitor”) prompt written notice of any claim with respect to which Indemnitor’s
indemnification obligations may apply, but any delay or failure of such notice on the part of the
Indemnitee shall not excuse Indemnitor’s indemnification obligations except to the extent that
Indemnitor’s legal position is prejudiced thereby. Indemnitor shall have the right to assume and
control the defense and settlement of any such claim; except that Indemnitee shall have the right
to assume and control, at Indemnitor’s expense, the defense and settlement of any such claim if:
(i) Indemnitee reasonably determines that there is a conflict of interest between Indemnitee and
Indemnitor with respect to such claim; (ii) Indemnitor fails to employ counsel reasonably
satisfactory to indemnitee to represent Indemnitee within a
reasonable time after Indemnitor’s
receipt of notice of the claim or (iii) in the reasonable opinion of counsel to Indemnitee, the
claim could result in Indemnitee becoming subject to injunctive or other non-monetary relief that
could have a material adverse effect on Indemnitee’s ongoing business. The Indemnitee shall have
the right to participate in the claim at its own expense, but in any event shall cooperate with
the Indemnitor in the investigation and defense of the claim.



16.3 Settlement. If Indemnitor is entitled to, and does, assume and control the defense and
settlement of any claim with respect to which its indemnification obligations apply, then
Indemnitor shall not settle such claim without Indemnitee’s prior written consent (which consent
shall not be unreasonably withheld or delayed), unless (i) the sole relief provided in such
settlement is monetary in nature and shall be paid in full by Indemnitor and (ii) such settlement
does not include any finding or admission of a violation by Indemnitee of any applicable laws or
third-party’s rights. Whenever Indemnitee assumes and controls the defense and settlement of a
claim with respect to which Indemnitor’s indemnification obligations apply, Indemnitor shall not
be liable for any settlement thereof effected by Indemnitee unless Indemnitee shall have obtained
Indemnitor’s prior written consent to the proposed settlement (which consent shall not be
unreasonably withheld or delayed).





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16.4 Insurance. Each Party shall maintain, from the effective date through the fifth
anniversary of the expiration date of the Term, a policy of insurance for product claims. Such
policy shall (i) have a per occurrence limit of at least $10 million and an annual aggregate limit
of at least $10 million, (ii) name the other Party as an additional insured and (iii) provide for
at least 30 days’ advance written notice to the other Party of cancellation or material change in
coverage. Each Party shall provide evidence of such coverage to the other Party promptly following
execution of this Agreement and annually thereafter. If a Party breaches its obligation to maintain
insurance, (x) the Party shall have the right to obtain coverage as required on the other Party’s
behalf and at the other Party’s expense, (y) the party obtaining the insurance shall have the right
to set-off the cost of such coverage against any payment owed to the other Party and (z) the other
Party shall indemnify the Party obtaining the insurance from and against all costs and expenses
associated with obtaining such coverage. Notwithstanding the foregoing, insurance requirement under
clause (i) above, TechniScan shall be able to maintain a policy of insurance for product claims
with a per occurrence limit of at least $1 million and an annual aggregate limit of at least $2
million until the Effective Date under the Distribution Agreement.



16.5 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY IN
RESPECT OF ANY INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING LOST PROFITS.




Article 17

Exclusive Supply, Non-Competition



17.1. For
a period of twenty-four (24) months of the execution of this Agreement (i) Esaote shall
not sell the Esaote Modified Product to potential competitors of TechniScan for application in
another Product and (ii) conversely TechniScan shall not buy from potential competitors of Esaote
in the ultrasound field any OEM products to be embedded in the Products.



17.2. The foregoing shall in no way restrict the Parties from:





	 	•	 	manufacturing, marketing, distributing and selling Products or Esaote Product either
during the term hereof or at any time thereafter;
	 
	 	•	 	in Esaote’s case, selling its current or future products which may include the Esaote
Modified Product or features thereof;
	 
	 	•	 	in Esaote’s case, enhancing the Products or the Esaote Product or developing any new
ultrasound dedicated system during the term hereof by using technical solutions or
configurations adopted for the Modified Esaote Product.





Article 18

Term and Termination




18.1. Term



This Agreement shall enter into force on February 11, 2008 (“Effective Date”) and shall initially
continue in effect for a period of 24 months and shall be automatically renewed for a farther





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period of 36 months unless any of the Parties sends the other a written notice at least six months
prior to the expiration.




18.2. Termination for cause



18.2.1 At any time during the term of this Agreement, if there is a material breach of any
obligation or warranty by a Party, the non-defaulting Party may, subject to a ninety (90)
days following the notification to the defaulting Party specifying the material breach,
terminate this Agreement, or at its option, suspend performance of its obligations
hereunder, unless the defaulting Party cures the material breach within the aforementioned
ninety (90) days period.



18.2.2 At any time during the term of this Agreement, a Party may (but shall not be
required to) immediately terminate this Agreement, if the other Party:





	 	•	 	becomes Bankrupt;
	 
	 	•	 	assigns this Agreement, or any right thereunder, except the right to payment;
provided that Esaote shall be entitled to delegate performance of its obligations to
one or more of its affiliated companies
	 
	 	•	 	undergoes a Change of Control.





18.3. Effect of Termination





18.3.1 Upon termination of this Agreement Esaote and TechniScan shall co-operate in
completing performance of all outstanding orders.




18.3.2 Termination or expiration of this Agreement shall not affect any orders placed by
TechniScan prior to such termination or expiration.




18.3.3 After termination or expiration of this Agreement TechniScan’s customers may
continue to use Modified Esaote Products for their intended purpose as permitted
hereunder, and for the sake of clarity, provided that such Modified Esaote Product was
supplied to TechniScan during the term of this Agreement, such use by the customer is
solely of the Modified Esaote Product integrated into a Product and such Product was sold
to the customer within six (6) months after the termination of
this Agreement.




18.3.4 The termination of this Agreement shall be without prejudice to:




          (a) any liabilities and/or rights of the Parties that have accrued prior to the
date of termination; and,




          (b)
any rights and/or obligations of the Parties hereunder that are expressly
destined to survive the termination of this Agreement pursuant to their own terms and
conditions.



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18.4. In any event of termination of this Agreement or Change of Control, each Party shall,
without further action, automatically be entitled to full use of any Program Technology under its
joint ownership interest, including the right to sublicense to any third party without the
obligation to account for or pay a royalty to the other Party hereunder.



18.5. At the request of either Party the Parties shall enter into an escrow agreement with an
escrow agent pursuant to a format which will be agreed by the Parties within three (3) months of
the date hereof and shall provide within thirty (30) days of such request deposit material to the
escrow agent consisting of any source code to any software as well as bills of material, drawings,
diagrams, and other documentation that may be related to the Products and/or any Program
Technology. The escrow agreement shall provide that the deposit materials shall be released to the
other Party if the Party providing the deposit materials becomes Bankrupt or is involved in a
Change of Control.



18.6. The Parties agree that a Party granting a license under Section 18.4 (“Licensor”) shall have
no obligation or liability to the other Party receiving the license and/or right to sublicense
under Article 16 hereof (“Licensee”) in respect of such license and that a Licensee shall accept a
license at its own risk. In addition, the Licensee shall indemnify and hold harmless the Licensor
of the technology in the manner provided under Article 16 hereof in connection with the use of
(including the licensee and sublicense of) any such technology licensed and used under Section
18.4.




Article 19

Confidentiality



19.1. Each Party shall keep confidential information that it receives from or on behalf of the
other Party including information about the other Party’s Intellectual Property (the
“Information”). All oral disclosure of Information shall be summarized in writing by the disclosing
Party and said summary shall be given to the other Party within 30
(thirty) days of the oral
disclosure; objections to the summary must be made in writing within 30 (thirty) days of receipt of
summary. The Party receiving Information agrees not to reproduce or disclose (including the filing
of any Patents) such Information to any third party or to use it only as required to carry out its
obligations hereunder and not for any other purpose unless authorized
by the disclosing Party. The
receiving Party agrees to restrict access of such Information to employees or agents who have a
need to know pursuant to their scope of employment or agency
arrangement and further agrees to
instruct its employees having access to such Information of receiving Party’s confidentiality
obligation. The receiving Party agrees to hold the disclosing Party’s Information in confidence and
to protect it with the same degree of care used in protecting its own Information but not less than
reasonable care. For the purpose of this paragraph, Esaote Technology shall be deemed Information
of Esaote and TechniScan Technology shall be deemed Information of TechniScan. If a Party files any
Patents containing the Information of the other Party in violation of this Article 19, then that
Party shall automatically assign to the other Party, without requiring any further action or
consideration, all right, title and interest in any claims in such Patent materially directed to
such Information.



19.2. This confidentiality obligation shall not apply to Information which is:





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	 	•	 	generally available from public sources or in the public domain through no fault of
the receiving Party;
	 
	 	•	 	received at any time from any third party without breach of a non-disclosure
obligation to the disclosing Party;
	 
	 	•	 	shown through competent evidence to have been developed independently by the
receiving Party without reliance on the disclosing Party’s Information or to have been
known to the receiving Party prior to its disclosure by disclosing Party;
	 
	 	•	 	required to be disclosed by law, except to the extent eligible for special
treatment under an appropriate protective order and subject to the receiving Party’s
obligation to notify the disclosing Party of the requirement in a timely manner; and
	 
	 	•	 	approved for disclosure by prior written consent of an authorized corporate
representative of disclosing Party.




19.3. The obligations under this Article 19 shall survive the termination of this Agreement for
a period of five (5) years.



19.4. No press release regarding this Agreement or its subject matter shall be allowed, unless
approved in advance by the other Party in writing.




Article 20

General




20.1. Applicable Law and Venue



This Agreement shall be construed under and governed by the laws of the State of New York, U.S.A.



The Parties agree that the proper venue for any legal proceeding between them shall be: (i) if the
proceeding is initiated by TechniScan: Genoa, Italy; and (ii) if the proceeding is initiated by
Esaote: Salt Lake City, Utah U.S.A. The Parties hereto do hereby waive any right to object to the
venue of any such proceeding.




20.2. Force Majeure



20.2.1 A Party shall not have breached this Agreement to the extent that its performance is
prevented by an event or condition that is beyond such Party’s reasonable control, which events
will include natural disasters or catastrophic events such as epidemics, nuclear accidents, fire,
flood, act or omissions by civil or military government authorities, such as foreign, currency
restriction or suspension of export or import licenses, war, riots, sabotage or revolutions (“Force
Majeure Events”). If a Party claims that a Force Majeure Event has occurred affecting its
performance, it shall promptly notify the other Party.




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20.2.2 If the Force Majeure Event continues for a cumulative period of ninety (90) days or more,
either Party may terminate this Agreement and/or any order by giving the other Party thirty (30)
days prior written notice. Termination shall be effective upon receipt of the notice, but it
shall not affect any outstanding orders placed by TechniScan.




20.3. Export Restrictions




TechniScan shall be responsible for taking appropriate steps to obtain necessary export
licenses, if any, relating to the export of Products, it being understood, however, that Esaote
shall provide TechniScan with reasonable assistance in this respect.



20.4. Entire Agreement




This
Agreement together with Annexes is the Parties’ entire agreement relating to the subject
matter herein. It supersedes all prior or contemporaneous oral or written communications,
proposals and representations with respect to its subject matter.



20.5.
Amendment



No modification to this Agreement and/or its Annexes(as signed off by the Parties) shall be
binding, unless in writing and signed by a duly authorized representative of the respective
Party.



20.6. Notices




All notices by either Party must be in writing. Unless otherwise expressly provided, a notice
shall be delivered either in person or by a means evidenced by a delivery receipt to the address
specified below. A notice will be effective upon receipt:



if to Esaote to:

Esaote S.p.A.

Via Siffredi, 58

16153 Genova — Italy

Attention: Luigi Satragno




if to TechniScan to:

TechniScan, Inc.

1011 East Murray Holladay Road

Salt Lake City, UT 84117

USA

Attention: President & CEO




20.7. Assignment




Except for the right of Esaote to assign its right to payment and the right to grant licenses to
its affiliates, neither Party shall assign its rights nor delegate performance of its obligations
under this Agreement to any third person, without the prior written consent of other Party, and
any attempted assignment without this consent shall be void.




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20.8. Waivers




Any waiver on the part of either Party hereto of any right or interest shall not imply the waiver
of any other right or interest, or any subsequent waiver.



20.9.
Severability




Any
provision of this Agreement which in any way contravenes applicable law shall be deemed
separable and shall not affect the validity of the remaining parts of
this Agreement.



20.10. Construction 



The order of precedence of documents shall be:





	•	–	this Agreement inclusive of its Annexes;
	 
	•	–	purchase orders.





General terms and conditions as well as pre-printed provisions on documents, including, without
limitation, on orders, shipping documents or invoices of either Party, shall not apply to this
Agreement.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURES ON FOLLOWING PAGE]





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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in duplicate by
their authorized officers on the dates and the places mentioned below:




	 	 	 
	

	 	






[Signature Page to Original Equipment and Manufacturing Agreement and

Engineering Support Agreement]





 









 







IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in duplicate by
their authorized officers on the dates and the places mentioned below:




	 	 	 
	

	 	 






[Signature Page to Original Equipment and Manufacturing Agreement and

Engineering Support Agreement]