exv10w10








Exhibit 10.10




Execution Version




DISTRIBUTION AGREEMENT



This
Distribution Agreement (“AGREEMENT”), made this 11th day of February 2008 by and between
TECHNISCAN, INC., a Utah corporation (hereinafter referred to as “SELLER”) and ESAOTE S.p.A., a
corporation organised and existing under the laws of the Republic of Italy with its principal
office at Via Siffredi 58, Genova, 16153 Italy (hereinafter referred to as “DISTRIBUTOR”)




RECITALS




     WHEREAS, SELLER is engaged in the development 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 (the “Products”).



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



     WHEREAS, on the date hereof SELLER and DISTRIBUTOR have entered into an original equipment
manufacturing and development agreement (the “OEM Agreement”) for the further development of the
Products that win provide for DISTRIBUTOR to provide certain required components to be included in
and integrated with the Products.



     WHEREAS,
SELLER expects that the Products shall be ready for sales by January 31, 2009.



     WHEREAS,
SELLER shall manufacture the Products and sell them in the US market and other markets
other than the Territory (as defined below).



     WHEREAS, SELLER wishes to appoint DISTRIBUTOR to exclusively distribute the Products in the
Territory and DISTRIBUTOR is willing to accept such appointment, on the terms and conditions set
forth herein.



     WHEREAS, at DISTRIBUTOR’S option, (i) SELLER will commit to negotiate in good faith an
agreement to market, sell, and distribute certain products of DISTRIBUTOR into certain markets in
the United States and (ii) SELLER will commit to negotiate in good faith an agreement to use
ESAOTE’s existing distribution organization in the US as a regional distributor of the Company’s
products into certain markets in the US.



     NOW THEREFORE, the Parties in consideration for the mutual premises contained herein hereby
agree as follows:



 









 






ARTICLE
1




Definitions




     All capitalized terms will have the meanings ascribed to such terms in this Article 1
or as otherwise defined herein. Words importing the singular shall include the plural and
vice versa.



     “Adverse Event” means any adverse health event to which a Product has or may have
contributed. The term is generally limited to those events that would be reportable to a
Regulatory Authority, e.g., Medical Device Reporting (MDR) to the FDA (U.S.) or Vigilance
Reporting to Competent Authorities (EU).



     “Agreement” shall mean the present Distribution Agreement and all its Annexes.



     “CE Mark” shall mean the European Union CE Mark as described in EEC Medical Directive
93/42 of June 14, 1993.



     “Bankruptcy” or “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.



     “Change of Control” for the purposes of this section for SELLER 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 patent) 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
section for DISTRIBUTOR shall mean the above AND, in addition, that
such a change results
in a stop of DISTRIBUTOR 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 constitute a Change of Control of DISTRIBUTOR.).
Notwithstanding the foregoing, a “Change of Control” does not include any Change of 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.



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     “Effective Date” shall mean the date when Product is ready for sale and the CE approval for
sale of the Products in the Territory has been obtained.



     “End User” shall mean any customer of Products in the Territory.



     “Field Action” means any action by a Party that meets the criteria of a “recall,”
“correction,” or “removal” as defined by
applicable Regulatory Law.



     “FDA” shall mean the United States Food and Drug Administration or any successor agency having
the authority to grant Marketing Approval in the United States.



     “Marketing
Approval” means, with respect to any country or jurisdiction, the act of the
applicable Regulatory Authority that is necessary under applicable Regulatory Laws for the
manufacture, marketing and sale of a product in that country or jurisdiction, and satisfaction of
all applicable regulatory and notification requirements and, to the extent applicable, the grant of
Pricing Approval.



     “Party” means Each of ESAOTE S.p.A. and TECHNISCAN, INC.



     “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, including those listed in Annex A hereto. Without limitation, the term Products includes
any new version of or replacements to the Products, and all updates, upgrades, and improvements
thereof.



     “Purchase Orders” shall have the meaning set forth in Article 4.1 of the Agreement.



     “Regulatory Authority” means, with respect to any country or jurisdiction, any Governmental
Authority involved in granting Marketing Approval or Pricing Approval or in administering
Regulatory Laws in that country or jurisdiction, including the FDA in the United States.



     “Regulatory Laws” means all Applicable Laws governing (i) the import, export, design, testing,
investigation, manufacture, sterilization, storage, distribution, marketing or sale of a product,
(ii) establishing recordkeeping or reporting obligations for Third-Party Complaints or Adverse
Events, (iii) Field Actions or (iv) similar regulatory matters.



     “Sales Literature” shall mean SELLER’s marketing and sales brochures, promotional materials,
and other sales support publications pertaining to the Products.



     “Specifications” means the Technical and operational capabilities of the Products as provided
in the Sales Literature, operating manuals or documentation for the Products.



     “Term” shall have the meaning set forth in Article 16.1 of the Agreement.



     “Territory” shall mean the territory of each of the countries of the European Union,
Switzerland, Norway, Ukraine and the CIS (Russian Federation of related countries).



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ARTICLE 2




Scope of the Agreement



2.1 SELLER hereby grants DISTRIBUTOR an exclusive right and license to: (i) promote, market, sell
and distribute the Products to End Users in the Territory during the Term directly and through its
dealer and distribution channels; (ii) use the Products as reasonably required in connection with
such marketing and distribution, including without limitation as necessary to provide service in
connection with such Products; (iii) sublicense End Users to use the Products; (iv) translate,
modify, and copy, in whole or in part, and distribute any of
SELLER’s Sales Literarure or other
marketing documentation pertaining to the Products at no additional charge and (v) such other
rights and license as may be reasonably required in connection with the foregoing, including a
license to SELLER’s patents, copyrights, trademarks, trade secrets and other intellectual property
rights related to the Products, as specified in the OEM Agreement. SELLER shall not directly or
indirectly sell or permit the promotion, marketing, sale or distribution of Products in the
Territory except as provided in this Agreement.



2.2 DISTRIBUTOR shall undertake at its own expense to (a) use commercially reasonable efforts to
promote the distribution of Products in the Territory and maintain an office and an adequate
marketing organization for such activities; (b) maintain close liaison with the End Users and
advise SELLER of any requirements expressed by End Users in a timely manner. DISTRIBUTOR shall have
the right to affix DISTRIBUTOR’s own label or marking on the Products; provided such label is not
larger than the label of SELLER and does not indicate DISTRIBUTOR as the manufacturer of the entire
Product.



2.3 SELLER shall, where reasonably requested by DISTRIBUTOR, be available and provide at its own
cost technical support to DISTRIBUTOR in its marketing and sales activities, road shows,
exhibitions, press reporting and interviews. All other marketing
activities expenses shall be borne
by DISTRIBUTOR. SELLER shall perform at its own cost (for its employees and expenses) two initial
instruction programs to DISTRIBUTOR’s sales organizations in the Territory.



2.4 If SELLER develops any new products during the Term of the Agreement, SELLER shall (i) provide
DISTRIBUTOR with advance written notice of such new products; and (ii) offer Distributor a right to
first negotiate to be the exclusive distributor of such new products in the Territory, before
offering such new products for sale to any other customer or
distributor in the Territory. If the
Distributor elects to distribute such new products, it shall give Seller a written notice within
fifteen (15) days from receipt of the notice of new products and the Parties agree to enter into
negotiations of such distribution arrangements within the following thirty (30) days. If the
Parties do not reach the Agreement within such term of thirty
(30) days then SELLER, shall be tree
to offer the right to distribute the new products to any third parties at no better terms and
conditions than the terms offered to DISTRIBUTOR.




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ARTICLE 3




Order Placing



3.1 DISTRIBUTOR will submit purchase orders (“Purchase Orders”) for the Products and any requested
spare parts for the Products to SELLER DISTRIBUTOR shall submit a Purchase Order in hard copy form
or as an electronic message which complies with the requirements of the Agreement. The Purchase
Orders shall include the following information: (a) Purchase Order number, (b) item part number,
(c) item description, (d) quantity, (e) price, (f) delivery date requested, and (g) shipment
destination.



3.2 Within ten (10) business days after receipt of a Purchase Order, SELLER shall acknowledge
receipt of such Purchase Order and accept such Purchase Order by confirming in writing, by any
means reasonably requested by DISTRIBUTOR, the delivery date, price and quantity for the ordered
items. Amendments to Purchase Orders can be agreed in writing by the parties if received at least
thirty (30) days before the estimated date of delivery. SELLER will use commercially reasonable
efforts to fulfill the requirements of any Purchase Order.



3.3 Each shipment shall include a packing list that contains the Purchase Order number, product
identification, proper shipping labeling and documentation, quantity
shipped and date of shipment.
The Products shall be delivered to the DISTRIBUTOR CIF to the destination defined by DISTRIBUTOR
within the Territory. SELLER shall make shipments in the quantities specified in each DISTRIBUTOR
Purchase Order. SELLER may make reasonable modifications to the Purchase Order due to circumstances
beyond the SELLER’s reasonable control (for example, limited availability of third party components
for the Products). DISTRIBUTOR shall have the right to terminate any modified Purchase Order.
SELLER shall reimburse DISTRIBUTOR for the reasonable amount of any cost, expense, liability or
cost which DISTRIBUTOR incurs by virtue of any rejection of a Purchase Order or the failure of
SELLER to timely deliver Products under a Purchase Order for any reason.



3.4 DISTRIBUTOR and/or the End User shall have a reasonable right of inspection to verify that the
Products conform to the product warranty in Article 8 and the applicable firm order. DISTRIBUTOR
shall notify SELLER in writing of any defect or nonconformity as soon as practicable.




     DISTRIBUTOR may only reject a delivered Product that is defective or does not conform to
Product specifications. If DISTRIBUTOR rejects any delivered Product, it shall return the defective
or nonconforming Product to SELLER in accordance with the reasonable procedures set forth by
SELLER. SELLER shall bear all costs of return (including freight and insurance) and shall either
replace the defective or nonconforming Product without charge (including payment of freight and
insurance for delivery of the replacement product) or, at DISTRIBUTOR’s request, refund to
DISTRIBUTOR the entire amount paid (including tax, freight and insurance) in connection with the
rejected Product.



     DISTRIBUTOR’s acceptance or deemed acceptance of any Product shall not be construed as a
waiver of its warranty or indemnification rights hereunder.



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3.5 DISTRIBUTOR shall purchase from SELLER the minimum quantity of Products contemplated by the
provisions of ANNEX B. The exclusive license provided hereunder shall convert to a non-exclusive
license if DISTRIBUTOR is unable to realize sales equal to or greater than the minimum quantity set
out in ANNEX B for two (2) consecutive years. If the license granted hereunder becomes
non-exclusive, no other distributor shall be granted distribution rights that are more favorable
than those provided to DISTRIBUTOR hereunder and no distribution rights shall be granted to a
competitor of DISTRIBUTOR. For purposes of this Section 3.5, a
“competitor of DISTRIBUTOR” shall
mean a manufacturer of ultrasound equipment and its affiliated companies. DISTRIBUTOR shall not be
responsible for any failure to achieve a sales level due to the failure of SELLER to deliver as
requested any Products ordered under Article 3.




ARTICLE 4




Price
List, Prices and Further Agreements Relating to the Products



PRICE LIST(s) is the Price List(s) (hereinbefore and hereinafter referred to as the “PRICE LIST”)
received by The DISTRIBUTOR as evidenced into the “Price List Acknowledgement” Form signed by the
DISTRIBUTOR for acceptance. This PRICE LIST is(are) an integral part of this appropriate AGREEMENT
(see ANNEX C). The prices of the Products are CIF (INCOTERMS 2000) packaging (with appropriate air
freight or sea shipping protection) included. All prices under the Agreement shall include
applicable sales, use, value-added, withholding and any other taxes, tariffs and duties. The prices
for Products shall be equal to 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). The Parties agree to evaluate the then-current Price List each year
in connection with the establishment of the sales targets under Section 3.5. In connection, with
such review, the Parties shall evaluate the market for the Products and the general market
conditions thereof; provided, that the Parties presently expect that the trends over time are that
prices will decline.




ARTICLE 5




Payment of Purchase Price



5.1 SELLER shall submit invoices to DISTRIBUTOR for each Product ordered and shipped in accordance
with the terms and conditions of the Agreement Each invoice shall include the applicable Purchase
Order number, identifying Product numbers, invoice quantity, unit
price, and total invoice amount.
Payments shall be made by the DISTRIBUTOR at SELLER’s domicile according to the agreed terms of
payment, without any deduction for cash discount, expenses, taxes,
levies, fees, duties, and the
like.



5.2 In consideration for the rights and licenses granted herein, DISTRIBUTOR will pay SELLER for
the Products in accordance with the amounts set forth in Annex C. All prices in the Agreement are
quoted in Euros unless otherwise agreed in writing by the Parties. The payment of the purchase price
of the Products shall be made in Euros within sixty (60) days after delivery to DISTRIBUTOR’s
designated destination.





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5.3 The prices set forth on Annex C include a perpetual, paid-up, worldwide, irrevocable license for
DISTRIBUTOR, and its End Users to use any related software/firmware (and updates thereto) which is
furnished by SELLER in connection with the Products for the operation, maintenance, and repair of
the Products.



5.4 Taxes. All prices under the Agreement shall include applicable sales, use, value-added,
withholding and any other taxes, tariffs and duties.




ARTICLE 6




Undertakings by DISTRIBUTOR




6.1 Specific undertakings by DISTRIBUTOR




DISTRIBUTOR undertakes:





	•	 	to use commercially reasonable efforts to market the Products in each country comprising the
Territory.
	 
	•	 	to purchase from SELLER and to keep at all times a reasonable inventory of spare parts
thereof in order to meet the recurring needs of the customers located in the Territory.
	 
	•	 	to deliver together with the Products one copy of the relevant official SELLER user manual,
which represents the technical and legal reference for system operation according to its
intended use.
	 
	•	 	to provide SELLER with all information that is legally in its possession which may
enable SELLER to solve any technical or quality problem relating to them;
	 
	•	 	to give to SELLER quarterly reports regarding the failures of the Products reported by
customers or by the end users thereof;
	 
	•	 	to use reasonable efforts to keep SELLER informed of laws and regulations relating to the
importation and the sale of the Products into and within the Territory;
	 
	•	 	to attend to registration required and specific to DISTRIBUTOR in order for DISTRIBUTOR to
distribute the Products with any Regulatory Authority in the Territory should such
registration become necessary under any law or regulation in effect from time to time in any
part of the Territory;
	 
	•	 	to assist SELLER in obtaining approvals for the Products from any Regulatory Authority in the
Territory, including to secure a CE Mark for the Products, as contemplated by the OEM
Agreement
	 
	•	 	to advertise the Products by publications in scientific journals, by direct mailings and by
participate in the major trade fairs held periodically or from time to time in the Territory;
	 




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	•	 	to sell the Products in the same condition in which they were received, without removing or
altering the trademarks or their serial numbers. DISTRIBUTOR shall, however, be entitled to
label or tag the Products as required under the laws or regulations in effect from time to
time in the Territory;
	 
	•	 	not to actively promote the sale of the Products outside of the Territory;
	 
	•	 	to bear any and all costs connected with the purchase of the Products, the resale thereof in
the Territory and the performance of the obligations incumbent upon DISTRIBUTOR under the
provisions of this Agreement.
	 
	•	 	not to disclose to any third party at any time during or after the expiration or early
termination of this Agreement, irrespective of the reasons for such early termination,
SELLER’s business or trade secrets of which DISTRIBUTOR may have acquired knowledge by reason
of the activities in which it will have engaged pursuant to the provisions of this Agreement;
	 
	•	 	to take care of the installation, commissioning, maintenance and/or repair of the Products
(including repairs covered by SELLER’s warranties and DISTRIBUTOR’s warranties to the
customers) bearing all costs arising therefrom;
	 
	•	 	to bear and maintain updated an adequate number and level of technical service people able to
install, maintain and repair medical devices in accordance with MDD 93/42/EEC and to fulfil
an appropriate training program to maintain such a level.





ARTICLE 7




Undertakings by SELLER




7.1 Specific Undertakings by SELLER



SELLER undertakes:





	•	 	to secure Marketing Approval from any Regulatory Authority in the Territory, including any
relevant licenses, consents or authorizations required under Regulatory Laws in effect at any
time in the Territory;
	 
	•	 	to assist DISTRIBUTOR and its customers (including the END USERS), as SELLER may deem
necessary or desirable, in seeking solutions to quality and technical problems relating to the
use and to the operation of the Products
	 
	•	 	to provide within sixty (60) days from the Effective Date adequate training to DISTRIBUTOR’s
designated technical personnel regarding the installation, use, operation, maintenance and
the repair of the Products. The SELLER shall provide, according to its own internal annual
scheduling, such training in English by making its personnel available at no charge or expense
to DISTRIBUTOR. All charges related to DISTRIBUTOR’s own personnel relating to training,
including but not limited to travel




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	 	 	and lodging expenses and wages of DISTRIBUTOR’s trainees, shall be paid by DISTRIBUTOR. At the
end of the course, each trainee shall receive a certificate of attendance and proficiency. Upon
request, SELLER shall offer a second training to DISTRIBUTOR’s designated employees including
but not limited to its designated field engineers and application specialists at SELLER’s cost
and expense within the first twelve (12) months of the Effective Date.
	 
	•	 	Further training on new Products, updates, upgrades and improvements thereof and ongoing
training of new DISTRIBUTOR personnel.
	 
	•	 	provide training to new DISTRIBUTOR sales, marketing and service personnel from time to time
as DISTRIBUTOR, may reasonably request.
	 
	•	 	to provide to DISTRIBUTOR the Products conform to the specifications described in Annex A,
new and free from defects in design, material and workmanship.
	 
	 	 	SELLER undertakes to repair Products or parts thereof no longer covered by its warranty for
the period beginning on the Effective Date and continuing until six (6) years from the date of
delivery to the Italian facilities of DISTRIBUTOR of the last order of Products at terms and
conditions to be agreed upon with DISTRIBUTOR.
	 
	•	 	SELLER undertakes to provide spare parts in relation to the Products for a period beginning
on the Effective Date and continuing until six (6) years from the date of delivery to the
Italian facilities of DISTRIBUTOR of the last order of Products, it being understood that
SELLER shall also guarantee that spare parts are at all times updated to the then current
version of the Products and fully compatible with all versions of the Products from time to
time sold by DISTRIBUTOR in the Territory.
	 
	•	 	The reliability and serviceability parameters MTBF (Mean Time Between Failure) determine both
customer satisfaction and service costs. The parties will agree on target MTBF, it being
understood that if the target MTBF is not attained, SELLER shall supply any additionally
required spare parts free of charge to DISTRIBUTOR and that, in the absence of agreement to
the contrary, the MTBF shall be one year.
	 
	•	 	SELLER will set up a dedicated phone number to provide technical coverage during
DISTRIBUTOR’s normal business hours in the Territory.
	 
	•	 	SELLER will provide complete service documentation, in English language to
DISTRIBUTOR.





ARTICLE 8




Warranties



8.1 SELLER warrants that the Products shall (i) conform to the applicable specifications, (ii) have
been manufactured in compliance with good manufacturing processes and Applicable Laws and (iii) be
free from defects in workmanship and materials. SELLER shall replace and/or


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 repair, free of charge (including transportation, and/or shipping costs), Products or parts
thereof which are found to be defective during the period stated below:





	•	 	New Devices: the earlier of (i) 12 Months from the date of first installation
or (ii) 18 months from the delivery date
	 
	•	 	Repair Devices: 6 Months for work carried out and for replaced material
	 
	•	 	Refurbished Devices: 3 Months (from the Installation date)
	 
	•	 	Exchange Spare Parts: 6 Months (from the Installation date)




DISTRIBUTOR shall notify SELLER in writing of such defects as soon as they are found and,
at SELLER’s request, shall return the defective Products or defective parts thereof to SELLER’s
US facilities. All pre-approved costs of transportation associated with the shipment of spare
parts for repair or replacement under this warranty and return of defective Products will be
borne by SELLER.



The warranty shall not, in any event, apply to malfunctions of the Products caused by misuse,
abuse, accident, transportation damages, alteration or improper repairs service by DISTRIBUTOR’s
personnel which damages the Product in a material respect.



The foregoing warranty shall not apply to components or products provided or manufactured by
DISTRIBUTOR pursuant to the OEM Agreement.



8.2 The software supplied by SELLER will be free from those defects which materially affect
performance of Products in accordance with the specifications.



8.3 In the event of software defects occurring within twelve (12) months after the date of first
clinical use or eighteen (18) months after delivery to DISTRIBUTOR, whichever is sooner,
SELLER shall, free of charge, provide a permanent solution for such defect ultimately within
60 days, and at least a workaround, ultimately within 15 days after receipt of notice thereof,
and shall provide DISTRIBUTOR with a corrected version of the software as soon as possible
thereafter, free of charge. SELLER shall be required to distribute all workarounds or updates
of software to END USERS at no additional cost to DISTRIBUTOR or any END USER.



8.4 SELLER and DISTRIBUTOR (as the case may be) undertake the commitments set out in Annex D
hereto.



8.5 This article 8 is without prejudice to what is provided for in article 9 below.




ARTICLE 9




Safety




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9.1 If one or more Product present a safety problem (that are problems pertaining to injury, death
or any hazard to human safety) including any Adverse Event or Field Action, DISTRIBUTOR shall
immediately notify SELLER in writing, specifying the nature of the
safety problem.



9.2 SELLER shall, upon mutually agreed upon terms and conditions, within five working days after
receipt of the notice as per Section 9.1 promptly make available to DISTRIBUTOR, either at
DISTRIBUTOR’s or DISTRIBUTOR’s customers location, such technical personnel and assistance as is
necessary to analyze and remedy the safety problem. SELLER shall then correct the safety problem in
the Product in DISTRIBUTOR’s inventory as well in the installed base (if case be) in a reasonable
delay, taking into account all relevant circumstances.



9.3 In case the safety problem is attributable to a design or manufacturing fault by SELLER,
support and actions under paragraph 9.2 shall be at no cost and expenses to DISTRIBUTOR or its
customers.



9.4 The
SELLER’s obligations under paragraph 9.3 shall survive the termination of this Agreement for
a period of three years or such longer period required under applicable law.



9.5 SELLER further undertakes to extend to DISTRIBUTOR all reasonable technical assistance which
may be requested by DISTRIBUTOR in respect of any safety problems affecting the Product which may
arise in the three-year period following the three-year term stipulated under paragraph 9.4.1
above; it being understood that DISTRIBUTOR shall reimburse to SELLER all relevant costs and
expenses.



9.6 When SELLER develops a remedy for the safety problem, all Products subsequently manufactured by
SELLER shall incorporate such remedy.



9.7 In the event that a safety problem is solely attributable to the DISTRIBUTOR or its employees,
agents or contractors, DISTRIBUTOR shall reimburse SELLER for the reasonable costs and expenses of
SELLER incurred pursuant to this Article 9.




ARTICLE 10




Serial Defects



10.1 SELLER warrants that the Products shall be free from epidemic faults. Epidemic faults are for
the purpose of this Agreement defined as defects which are the same or have the same cause or
effect and occur over a period of twelve (12) months with a class failure quantity of at least
three (3) in twenty (20) sequentially delivered units, within a period of one (1) year from the
delivery date of the last sequentially delivered unit to an END USER. In case of such epidemic
faults, SELLER shall repair or replace such, units and it further warrants that units not yet
delivered to end-user customers will be upgraded, and for units in the field upgraded components or
parts will be made available from SELLER at no charge and DISTRIBUTOR will be responsible for the
building in and building out of the said components or parts at SELLER’s expense; provided
DISTRIBUTOR shall request such assistance from SELLER as it may reasonably request.




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10.2 Excluded from SELLER’s warranty and liability for defects are all deficiencies which cannot be
proved to have their origin in bad material, faulty design or poor workmanship, i.e. those
resulting from normal wear and tear, improper handling or maintenance, failure to observe the
operating instructions. Also excluded are defects in components provided by DISTRIBUTOR or its
affiliates.




ARTICLE 11




Indemnification and Insurance



11.1 Scope. SELLER shall indemnify and hold harmless DISTRIBUTOR 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 Product to conform to the applicable Specifications or warranties therefor
(a “Product Claim”); (ii) any infringement or violation, of a third-party’s patent, copyright,
trademark, trade secret or other intellectual property rights
(“Intellectual Property Rights”) as a
result of the use or distribution of the Products; (iii) any facts or circumstances that would
constitute a breach by SELLER of any of its representations, warranties or obligations under this
Agreement; (iv) any violation by SELLER of Applicable Laws or (v) any negligent or more culpable act
(including misstatements) or omission of SELLER or its affiliates or subcontractors or any of their
respective employees or agents relating to the activities subject to
this Agreement. Notwithstanding
the foregoing, SELLER shall have no obligation to indemnify DISTRIBUTOR if and to the extent of the
negligence or intentional misconduct of DISTRIBUTOR and/or its employees, subcontractors, directors
and agents.



11.2 Defense. DISTRIBUTOR shall give SELLER prompt written notice of any claim with respect to
which SELLER’s indemnification obligations may apply, but any delay or failure of such notice shall
not excuse SELLER’s indemnification obligations except to the extent that SELLER’s legal position
is prejudiced thereby. SELLER shall have the right to assume and control the defense and
settlement of any such claim; except that DISTRIBUTOR shall have the right to assume and control,
at SELLER’s expense, the defense and settlement of any such claim if: (i) DISTRIBUTOR reasonably
determines that there is a conflict of interest between DISTRIBUTOR and SELLER with respect to
such Claim; (ii) SELLER fails to employ counsel reasonably satisfactory to DISTRIBUTOR to
represent DISTRIBUTOR within a reasonable time after SELLER’s receipt of notice of the claim or
(iii) in the reasonable opinion of counsel to DISTRIBUTOR, the claim could result in DISTRIBUTOR
becoming subject to injunctive or other non-monetary relief that could have a material adverse
effect on DISTRIBUTOR’s ongoing business. The Party not controlling the defense shall have the
right to participate in the claim at its own expense, but in any event shall cooperate with the
controlling Party in the investigation and defense of the claim.




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11.3 Settlement. If SELLER is entitled to, and does, assume and control the defense and settlement
of any claim with respect to which its indemnification obligations apply, then SELLER shall not
settle such claim without DISTRIBUTOR’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 SELLER and (ii) such settlement does not include
any finding or admission of a violation by DISTRIBUTOR of any Applicable Laws or Third-Party’s
rights. Whenever DISTRIBUTOR assumes and controls the defense and settlement of a claim with
respect to which SELLER’s indemnification, obligations apply, SELLER shall not be liable for any
settlement thereof effected by DISTRIBUTOR unless DISTRIBUTOR shall have obtained SELLER’s prior
written consent to the proposed settlement (which consent shall not be unreasonably withheld or
delayed).



11.4 Insurance. SELLER 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 DISTRIBUTOR as an additional insured and (ii) provide for at least 30 days’ advance
written notice to DISTRIBUTOR of cancellation or material change in coverage. SELLER shall provide
evidence of such coverage to DISTRIBUTOR promptly following execution of this Agreement and
annually thereafter. If SELLER breaches its obligation to maintain insurance, (x) DISTRIBUTOR shall
have the right to obtain coverage as required on SELLER’s behalf and at SELLER’s expense, (y)
DISTRIBUTOR shall have the right to set-off the cost of such coverage against any payment owed to
SELLER for product purchases and (z) SELLER shall indemnify DISTRIBUTOR from and against all costs
and expenses associated with, obtaining such coverage.




ARTICLE 12




Limitation of Liability



Except for the indemnity provided in Article 11 hereof, in no case shall either party be liable to
the other party for any indirect, exemplary, consequential or incidental damages arising out of or
connected with the delivery, installation, use, repair or performance of the Products.



DISTRIBUTOR authorizes the SELLER to use its company data for the fulfillment of all those
activities relative to the business relationship covered by the present AGREEMENT.




ARTICLE 13




Force Majeure



Neither party hereto shall be liable to the other one for failure to perform its contract
obligations hereunder caused by the occurrence of any event beyond its reasonable control or which
cannot reasonably be forecast or provided against and which cannot be overcome with due diligence
and affecting its ability to perform, including, without limitation, governmental regulations or
orders, outbreaks of a state of emergency, acts of God, acts of public authorities, or delays or
default




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caused by public carriers, war, warlike hostilities, civil commotion, fire, strikes, lockouts or
any other similar events.



In such event the time for performance shall be extended for the period of continuance of such
force majeure event, provided however that the Party raising such cause shall:





	•	 	promptly, after knowledge of the commencement thereof, notify the other Party in writing of
the nature of such cause and the expected delay,
	 
	•	 	continue to keep the other Party informed as to the force majeure event,
	 
	•	 	take all reasonable steps to eliminate such cause of the delay and
	 
	•	 	continue performance hereunder whenever such reason or cause is removed.




In the event any of such cause of force majeure shall continue for a period of 6 (six) months,
Parties hereto shall mutually discuss the matter and the course of action to be taken, provided
however that after this 6 (six) months period the Party not affected by the force majeure event
shall have the right to give notice to the other Party terminating this AGREEMENT.




ARTICLE 14




Confidentiality



The Parties agree that article 19 of the OEM Agreement shall apply, mutatis mutandis, to all
proprietary and trade secret information communicated by one party to the other under this
Agreement.




ARTICLE 15




Authority to Bind



The relationships of SELLER and DISTRIBUTOR arising from the Agreement are that of independent
contractor, and nothing herein will be construed to (a) give either Party the power to direct or
control the day-to-day activities of the other, (b) constitute the Parties as partners, joint
venturers, principal and agent, employer and employee, co-owners, franchisor and franchisee, or
otherwise as participants in a joint undertaking, or (c) allow either Party to create or assume any
obligation on behalf of the other Party for any purpose whatsoever. Except as otherwise set forth
herein, all financial and other obligations associated with each Party’s business are the sole
responsibility of such Party.




ARTICLE 16




Duration and Termination




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16.1 Term_of the Agreement. This Agreement will begin on the date hereof and will continue
in effect until five (5) years from Effective Date. The parties will, in any event, meet a least 6
(six) months prior to the date of expiration of this AGREEMENT, to negotiate the terms and
conditions for a possible extension or renewal thereof.


16.2 Events of Termination. (A) Either Party will have the right to terminate the Agreement
if: a) the other party breaches any material term or condition of the Agreement and fails to cure
such breach within ninety (90) days after written notice; or b) the other Party files for
Bankruptcy or c) in case of Change of Control.


16.3 Fulfilment of Orders upon Termination. Upon termination of this
Agreement DISTRIBUTOR shall have the right, at its sole discretion, to require SELLER to satisfy
(and upon request by DISTRIBUTOR SELLER agrees to satisfy)
SELLER’s obligations under all
outstanding Purchase Orders that have been accepted by SELLER prior to the effective date of
termination; and (ii) to the extent that DISTRIBUTOR has possession of units of the Products that
it has not distributed or sold to third parties, DISTRIBUTOR will have the right to market,
distribute, and sell such Products in the Territory pursuant to the terms hereof on a non-exclusive
basis. Notwithstanding anything herein to the contrary, in the event that DISTRIBUTOR is under
obligation, by statute to distribute or sell Products in the Territory to any End User after
expiration or termination of this Agreement, then the Parties shall negotiate in good faith to
agree upon the terms applicable to such situation, and if not agreed promptly, the delivery,
payment, support and other applicable terms and conditions of this Agreement will remain in effect
as to such End Users or countries, as the case may be, until such obligation ceases.



ARTICLE 17



Notices

Any notice called for by this AGREEMENT shall be in writing, in the English language, and shall be
given either by registered mail, return receipt requested, or by fax (with a confirmatory copy by
registered mail). Notices shall be deemed duly forwarded if addressed as follows:



	 	 	 
	AS TO DISTRIBUTOR TO:
	 	AS TO SELLER TO:
	Esaote S.p.A.
	 	TechniScan, Inc.
	Intl. Operation Office
	 	1011 East Murray Holladay Road
	Via di Caciolle 15
	 	Salt Lake City, UT 84117
	50127 FLORENCE – ITALY
	 	USA
	Tel: ++ 39 055 4229.1
	 	 
	Fax: ++39 055 4229.208
	 	Tel: ++ 801-521-0444
	E-mail:
international.sales@esaote.com
	 	Fax: ++                                         
	Attn. International Sales
	 	Email:sales@techniscanmedicalproducts.com
	 
	 	Attn. International Sales




Or to such other address as one party may indicate to the orter by like notice.


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ARTICLE 18


Governing Laws and Forum

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


18.2 The trade terms of this AGREEMENT shall be interpreted under the provisions of INCOTERMS 2000
(International Rules for the Interpretation of Trade Terms), to the extent that said provisions are
not in conflict with the provisions hereof.


18.3 The proper venue for any legal proceeding to decide any dispute arising out of this AGREEMENT,
its interpretation and performance, which cannot be amicably settled
by the Parties hereto, shall
be: (i) if the proceeding is initiated by SELLER: Genoa, Italy; and (ii) if the proceeding is
initiated by DISTRIBUTOR: Salt Lake City, Utah U.S.A. The Parties hereto do hereby waive any right
to object to the venue of any such proceeding.


ARTICLE 19


Earlier Undertakings

This AGREEMENT constitutes the entire understanding of the parties hereto with regard to its
subject matter. It supersedes and voids any prior agreement, written or oral. It may be amended
only by a written instrument signed by both parties.


Failure to enforce an obligation hereunder or failure to assert a breach thereof shall not be
regarded as a waiver or renunciation of such obligation or breach.



ARTICLE 20


Assignment

This AGREEMENT and the benefits of the rights herein granted to the DISTRIBUTOR shall be personal
to the Parties, who shall not have the right to assign their rights and obligations under this
AGREEMENT without the prior written consent of the other party; provided that the
DISTRIBUTOR shall be entitled to appoint as an additional distributor another company of its group,
it being understood that DISTRIBUTOR shall be liable jointly with the so appointed additional
distributor for performance by the latter of its obligations hereunder. Should any right or
obligation under this AGREEMENT be assigned by the DISTRIBUTOR upon
SELLER’s approval, the
DISTRIBUTOR shall remain responsible for the duly compliance with any and all the provisions of
this AGREEMENT by the assignee.


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
 SIGNATURE PAGE TO FOLLOW]



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IN WITNESS HEREOF, the parties hereto have caused this AGREEMENT to be executed by their duly
authorised representatives on the day and in the year first above written.



	 	 	 	 	 	 	 	 	 	 	 
	ESAOTE S.p.A.	 	 	 	TECHNISCAN, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	
	 	 	 		 	 




[Signature Page to Distribution Agreement]



 








 





IN WITNESS HEREOF, the parties hereto have caused this AGREEMENT to be executed by their duly
authorised representatives on the day and in the year first above
written.



	 	 	 	 	 	 	 	 	 	 	 
	ESAOTE S.p.A.	 	 	 	TECHNISCAN, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
		 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	dated: