**Exhibit 10.39**

 

DATED  March  20th 2004

 

 

(1)                                  **LONGPORT INCORPORATED**

 

(2)                                  **FUTURE SCAN INCORPORATED**

 

 

**DISTRIBUTION AGREEMENT**

 

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**THISAGREEMENT** is made the 20th day of March 2004

 

**BETWEEN**:

 

(1)                                  **LONGPORT INCORPORATED,**a corporation****incorporatedunder the laws of Delaware and having its principal place of business at 740South Chester Road, Swarthmore, PA 19081, (“**Longport**”);and

 

(2)          **FUTURE SCAN INCORPORATED**, a corporation****incorporatedunder the laws of  and having Delaware its principal place of business at , 720 Benjamin Fox Pavilion Jenkintown, PA 19046  (“FUTURE SCAN”).

 

**WHEREAS**:

 

(A)                              Longportdevelops, supplies and supports B-scan ultrasound scanning equipment (the “**Equipment**”) and software (the “**Software**”)detailed in Schedule 1 (together, the “**Scanner**”which expression extends to any versions, derivatives, parts, aspects andingredients thereof from time to time as specifically outlined in Schedule 1)which has been designed for the purpose of imaging the human skin andunderlying few centimeters soft tissue, detecting the onset of certainconditions that impact this region and allowing the monitoring of the rate andextent of change to skin tissue induced by treatments or through naturalprocesses.

 

(B)                                Longportwishes to appoint FUTURE SCAN as a distributor of the Scanner and FUTURE SCAN agrees to accept suchappointment on the terms set out in this Agreement, which, for the avoidance ofdoubt, shall include the Terms and Conditions attached hereto.

 

**IT ISHEREBY AGREED** as follows:

 

1.                                       **DEFINITIONS**

 

1.1                                 In this Agreement thefollowing expressions shall have the following meanings:

 

### **“ApplicationTraining”**means clinical training on the use of the scanner; suchtraining will only be provided to individuals who have previously successfullycompleted “System

 

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### **Training”.Fees over and above Longport’s agreed selling price will under normalcircumstances be charged for this “Application Training” (see Schedule 3);**

### ** **

### **“Business Day”**means any day on whichbanks are open to conduct business in the United States of America;

### ** **

**“FUTURE SCAN Group”** means together FUTURESCAN and every holding company or subsidiary of FUTURE SCAN;

 

“**Effective Date**” means five business days after signature ofthis Agreement

 

“**Longport Group**” means together Longport and every holdingcompany or subsidiary of Longport;

 

“**Order**” means any order for the Scanner placed with Longportby FUTURE SCAN from time to time in accordance with this Agreement;

 

**“Parties”** mean the parties to thisAgreement namely, Longport and FUTURE SCAN;

 

“**Restricted Information**” has the meaning attributed to it inCondition 21 of the Terms and Conditions;

 

**“Sub-agent”** shall mean a subsidiary salesor distribution agent appointed by FUTURE SCAN;

 

**“System Training”**shall mean instructionoffered by Longport on the general use of the scanner hardware and software.

 

“**Terms and Conditions**” has the meaning attributed to them in Schedule 2,and;

 

“**Territory**” means the United States of America.

 

1.2                                 Any reference in thisAgreement to any statute or statutory provision shall be construed as includinga reference to that statute or statutory provision as from time to time amendedmodified extended or re-enacted whether before or after the date of thisAgreement and to

 

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all statutoryinstruments orders and regulations for the time being made pursuant to it orderiving validity from it and so far as may be applicable any past statutoryprovisions as from time to time amended modified extended or re-enacted whichsuch provision has directly or indirectly replaced.

 

1.3                                 Except so far as thecontext otherwise requires words denoting the singular shall include the pluraland vice versa and words denoting any one gender shall include all genders andwords denoting persons shall include bodies corporate, unincorporated,associations, partnerships and individuals.

 

1.4                                 Unless otherwisestated definitions of the parties included in the statement of parties inClause 1 of this Agreement and any definitions included in any particularClauses, or Schedules also apply in the remainder of this Agreement.

 

1.5                                 Headings to Clausesare included for ease of reference only and shall have no effect on theinterpretation or construction of this Agreement.

 

2.                                       **APPOINTMENT**

 

2.1                                 Subject to the termsof this Agreement, Longport hereby appoints FUTURE SCAN as a non-exclusivedistributor into all applicable medical markets for the “Scanner” across theTerritory and FUTURE SCAN hereby accepts such appointment.

 

2.2                                 For the avoidance ofdoubt, Longport shall be entitled at any time or from time to time to sell theScanner direct to customers in the Territory.

 

2.3                                 For the duration ofthis Agreement the FUTURE SCAN Group shall obtain the Scanner only fromLongport.

 

2.4                                 FUTURE SCAN shall not,during this Agreement without the prior written consent of Longport, beinvolved directly or indirectly whether on its own account or for or throughany other person, including its sub-agents, in the manufacture, sale,distribution, promotion or marketing in the Territory of any ultrasound basedproduct which (a) competes or (b) is capable of competing with theScanner.

 

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2.5                                 For the duration ofthis Agreement, FUTURE SCAN shall not seek customers for the Scanner outsidethe Territory and will not establish or maintain any branch or distributiondepot for the Scanner outside the Territory.

 

2.6                                 In addition, theappointment of FUTURE SCAN is subject to the Terms and Conditions.

 

3.                                      **UNDERTAKINGS AND OBLIGATIONS**

 

3.1                                 The FUTURE SCAN Groupundertakes to Longport :

 

(a)                                  notto register or assert any rights to :

 

(i)                                     any trade mark, patent, registered design,internet domain name or other intellectual property rights owned from time totime by any member of the Longport Group;

 

(ii)                                  the design of the Scanner or any inventioncontained therein;

 

(b)                                 notto be involved in any activity for the duration of this Agreement which maybring the  intellectual property rightsor other rights of Longport or Longport the entity into question or disrepute;

 

(c)                                  bringto the attention of Longport any improper or wrongful use of the Scanner or anypossible infringement of Longport’s intellectual property rights, or any faultsor defects in the Scanner which have become known to FUTURE SCAN;

 

(d)                                 shallcomply fully with the requirements of all relevant regulatory bodies and shallensure that it does not take any action or make any representation which mayimpede Longport in obtaining or continuing subsistence of any such approval;and

 

(e)                                  toattend the initial training courses on the use of the Scanner, and any furthertraining courses required in the event that Longport produces an update,enhancement or modification to the Scanner.

 

3.2                                 FUTURE SCAN and its Sub-Agentshall not through any means state or imply that FUTURE SCAN has the anyexclusive distribution rights in the Territory.

 

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3.3                                 The FUTURE SCAN Groupand Longport Group undertake to each other during the continuance of thisAgreement as well as after its termination to maintain the confidentialityobligations contained in Condition 21 of Schedule 2.

 

3.4                                 For the duration ofthis Agreement, FUTURE SCAN and Longport agree not to issue press releases or otherannouncements that mentions the other party or its interests without firstseeking the written authorization, and whenever possible the agreement of theother party. Neither party should unnecessary delay announcements by the otherparty and should give good reason why they have requested editorial changes,including when appropriate reference to this Agreement. Whenever a significantevent occurs involving Longport and FUTURE SCAN, both parties shall co-ordinatethe issuance of appropriate press releases in a timely manner. For theavoidance of doubt the events described in Clause 7.1, subject to Clause 7.6,shall be considered a significant event.

 

4.                                       **RESTRICTIVE COVENANTS**

 

4.1                                 The FUTURE SCAN Grouphereby warrants and undertakes in favor of Longport :

 

(a)                                  notfor a period of 36 months after the date of termination of this Agreementhowsoever arising to be directly or indirectly (whether as a shareholder,partner, consultant, employee, agent or principal or in any other capacity)engaged concerned or interested in any business or company carrying on withinthe Territory the business of the manufacture, distribution or sale of anyultrasound device which is capable of competing with the Scanner, except that FUTURESCAN may be beneficially interested in the securities in any company carryingon within the Territory such a business if such securities are listed on arecognized Stock Exchange and the FUTURE SCAN Group together with any associateneither holds nor is beneficially interested in more than a total of five percent of all the securities in that company;

 

(b)                                 notat any time after the termination of this Agreement to use or hold itself outas using any of the corporate or trading names of Longport or any colorableimitation or derivative thereof;

 

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(c)                                  notfor a period of 12 months after the termination of this Agreement to directlyor through any other person to employ or seek to entice away from theemployment of Longport any person who was at any time during the twelve monthsprior to the termination of this Agreement employed by Longport; and

 

(d)                                 notat any time after the Termination of this Agreement to represent it or permitit to be held out as being in any way connected with or interested in thebusiness of Longport.

 

4.2                                 The parties to thisAgreement agree that the restrictions set out in Clause 4.1 are separate andseverable undertakings and are reasonable in the circumstances and necessaryfor the protection of the legitimate interests of Longport and the goodwill of FUTURESCAN.  If, however, any part of Clause4.1 is found to be invalid or unenforceable for any reason then the remainderof Clause 4.1 shall continue in full force and effect.

 

**5.**                                      **DURATION**

 

5.1                                 Subjectto Clause 12 below, this Agreement shall commence on the Effective Date andshall continue for an initial period expiring on the third anniversary afterthe Effective Date (“the Initial Term”).

 

**6.****                                      SUPPLY**

 

6.1                                 Subject to Clause 7.6below and Condition 14 (Force Majeure) of the Terms and Conditions, Longportshall use all reasonable endeavors to supply the Scanner to FUTURE SCAN inaccordance with each Order placed by FUTURE SCAN.

 

6.2                                 Longport shall beentitled at any time or from time to time to make such modifications to the specificationof the Scanner as it may in its sole discretion think fit. Whenever possibleLongport will review any change in specification with FUTURE SCAN before theyare implemented.

 

6.3                                 FUTURE SCAN shall inrespect of each Order for the Scanner to be supplied hereunder be responsiblefor :

 

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(a)                                  ensuring the accuracy of the Order;

 

(b)                                 providingLongport with any information which is reasonably necessary in order to enableLongport to fulfill the Order;

 

6.4                                 Upon receipt andconfirmation of each Order Longport shall, as soon as is reasonablypracticable, inform FUTURE SCAN of Longport’s estimated delivery date for theorder.  Longport shall use all reasonableendeavors to meet the delivery date, normally four months after receipt oforder, but time of delivery shall not be of the essence and accordinglyLongport shall have no liability to FUTURE SCAN if, notwithstanding suchendeavors, there is any delay in delivery. Longport shall however advise FUTURESCAN of any expected delivery delays at the earliest practical opportunity.

 

6.5                                 The terms of thisAgreement, which includes the Schedules attached hereto, shall apply to theexclusion of any other terms and conditions including any implied by trade,custom, practice or course of dealing. Purported provisions to the contrary are excluded.

 

7.                                       **PAYMENTS**

 

7.1                                 On signature of thisAgreement FUTURE SCAN shall provide Longport with an initial order for 100Scanners  at a cost of $20,000 perScanner. A 20% advance payment shall be made for these units, however half ofthis advance payment shall be deferred until the first 10 scanners aredelivered.  Within 5 business days fromthe date of applying FUTURE SCAN’s and Longport’s authorized signature to thisAgreement, Longport shall receive from FUTURE SCAN half of the advance payment($200,000) by wire transfer for these Scanners. Longport shall immediatelynotify FUTURE SCAN of the receipt of the transfer of these funds.

 

7.2                                 This agreed selling priceof $20,000 per Scanner excludes any applicable taxes and duties and does notinclude any end user customer training and it is expected that FUTURE SCAN orone of its sub-agents shall provide the first level of direct customer supportin both application and customer support matters.

 

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7.3                                The first 10 unitscovered by this Agreement shall be delivered by Longport to FURTURESCAN within120 days of signature of this Agreement. Within 5 business days of receipt ofthese first 10 Scanners FUTURE SCAN shall pay to Longport the outstanding depositof $200,000 and the residue amount due on these first 10 scanners ($160,000).

 

7.4                                 Future scan shall take delivery of theremaining 90 scanners at a rate of approximately 10 per month following theacceptance of the first ten scanners; however, all scanners shall be acceptedand paid for in full by FUTURE SCAN, no longer than 11 months following thedelivery date of the first 10 scanners.

 

7.5                                 Upon FUTURE SCAN accepting the last of the ordered100 scanners, Longport shall issue to FUTURE SCAN 200,000 warrants.  Each warrantshall entitle FUTURE SCAN to purchase one common share of restricted stock ofLongport, Inc., at  the price of $1.75 per share, for a periodof one year from the date of issue of the warrant.  In the event that thecommon stock trades at or above a price of  $3.50 per share for aperiod of 5 consecutive trading days, following the date of the issue of thewarrant, FUTURE SCAN has sixty calendar days from the last  date of thefive consecutive trading days to exercise any or all of the warrants.  Anywarrants not exercised during this time period shall be canceled at the end ofthis time period.

 

7.6                                 This Agreement shallnot be considered consummated until the payments described in 7.1 are receivedby Longport. If Longport does not receive the payment described in Clause 7.1within 5 business days of signature of this Agreement, this Agreement willautomatically be null and void.

 

7.7                                 Between the time ofsignature of this Agreement and the day that the initial deposit of the$200,000 is received by Longport, no press release or announcement shall bemade by either party in regard to this Agreement. Further, if any partybelieves that the other party, any company, sub-agent or any individualassociated with that party has directly or indirectly gained or tried to gain orenabled an opportunity for any third party to gain any benefit from theexistence of this Agreement before it has been announced to the public at largethis Agreement can be made null and void, subject to Clause 10.3.

 

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7.8                                 FUTURE SCAN’s normalpurchase price for the Scanner shall be $20,000 per unit when ordered inquantities of 10 units or greater, excluding any applicable taxes and duties. A20% advance payment shall be made when each order is placed. This price doesnot include end user customer training and it is expected that FUTURE SCAN orone of its sub-agents shall provide the first level of direct customer supportin both application and operational matters. Service support, trainingprovision as well as component costs available through Longport are defined in Schedule 3of this Agreement.

 

7.9                                 Longport has the rightto change the purchase price for future orders. Not withstanding this Clause7.9 it is recognized that FUTURE SCAN can purchase additional scanners at a setprice of $20,000 until September 3rd 2004.

 

8.**                                       MARKETING**

 

8.1                                 FUTURE SCAN shall useits best endeavors to promote the sale of the Scanner throughout the Territory.

 

8.2                                 FUTURE SCAN shall beentitled to market, resell or lease the Scanner to its customers at such pricesas it may determine.

 

8.3                                 FUTURE SCAN shallrespond promptly to all enquiries from prospective customers.

 

8.4                                 In connection with thepromotion and marketing of the Scanner FUTURE SCAN :

 

(a)                                  shallnot misrepresent Longport and shall make clear in all dealings with customersand prospective customers that it is acting as distributor of the Scanner andnot as Longport’s agent, and shall use all reasonable endeavors to protect thegood name and reputation of Longport throughout the Territory;

 

(b)                                 shallcomply with all legal requirements from time to time in force relating to thestorage and sale of the Scanner;

 

(c)                                  informLongport in writing of its selling price current from time to time;

 

(d)                                 provideLongport on a quarterly basis (or on such other basis as agreed from time totime) with a report, in such form as Longport may reasonably require, of salesof the Scanner which it has made in the preceding 3 months and containing suchother information as Longport may reasonably require;

 

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(e)                                  from time to time consult with Longport’srepresentatives for the purpose of assessing the market in the Territory andpermit them to;

 

(i)                                     inspectany premises or documents used by FUTURE SCAN in connection with the sale ofthe Scanner; or

 

(ii)                                  accompany FUTURE SCAN on visits to customersor potential customers, subject to the agreement of the customer;

 

(f)                                    atthe request of Longport provide to it copies of such sales catalogues, salesbrochures and sales manuals as relate to the Scanner;

 

(g)                                 use in relation to the Scanner only suchadvertising promotional and selling materials as are approved in advance inwriting by Longport;

 

(h)                                 maintainan active and suitably trained sales force;

 

8.5                                 In connection with thepromotion and marketing of the Scanner, Longport shall :

 

(a)                                  provideFUTURE SCAN with literature in English in relation to the Scanner. The cost ofthis literature shall be borne by Longport if requested in reasonablequantities and in Longport’s standard format, but at FUTURE SCAN’s expense ifliterature is requested in quantities greater than thought reasonable byLongport or if requested in a FUTURE SCAN specified format;

 

(b)                                 supportFUTURE SCAN by means of comprehensive website coverage, which shall include thecontact details of FUTURE SCAN and links to any appropriate FUTURE SCANwebsite(s);

 

(c)                                  provideFUTURE SCAN with access to a global network of research activities, includingopportunities for FUTURE SCAN to participate in local activities; and

 

(d)                                 provideFUTURE SCAN with general marketing, clinical and technical support and insightsinto development activities and new products.

 

9.                                       **WARRANTIES**

 

9.1                                                                                 Longport warrants and undertakes in favor of FUTURESCAN that :

 

(a)                                  Longportis the owner with full title guarantee of each Scanner sold or offered for saleto FUTURE SCAN pursuant to this Agreement;

 

(b)                                 allScanners delivered hereunder shall be of satisfactory quality and fit for thepurpose for which they are stated by Longport to be designed;

 

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(c)                                  Longport’sScanner technology has FDA marketing clearance (FDA Ref K990238);

 

(d)                                 Scannerssupplied will be UL kite marked and UL listed under the appropriate medicaldevice category; and

 

(e)                                  theScanner manufacture will be undertaken by an FDA registered company.

 

9.2                                 FUTURE SCAN warrantsin favor of Longport that it has all necessary power and authority to enterinto this Agreement and to perform the obligations set out herein and that thisAgreement has been properly authorized and constitutes binding obligations onit.

 

9.3                                 In the event of anybreach of Longport’s warranty in Clause 11.1 (whether by reason of defectivematerials, production faults or otherwise) Longport’s liability shall belimited to replacement of the Scanner in question.

 

9.4                                 Notwithstandinganything to the contrary in this Agreement, Longport shall not, except inrespect of death or personal injury caused by Longport’s negligence, be liableto FUTURE SCAN by reason of any representation or implied warranty, conditionor other term or any duty at common law, or under the express terms of thisAgreement for any consequential loss or damage (whether for loss of profit orotherwise and whether occasioned by the negligence of Longport or its employeesor agents or otherwise) arising out of or in connection with any act oromission of Longport to the manufacture or supply of the Scanner, its resale byFUTURE SCAN or its use by any customer.

 

9.5                                 Longport shall provideproduct liability insurance with reputable insurance companies in the amount ofat least $5 million per claim or series of connected claims.

 

10.                                 **TERMINATION**

 

10.1                           Longport shall be entitledwithout prejudice to its other rights, to terminate this Agreement by notice inwriting to FUTURE SCAN in the event that :

 

(a)                                  FUTURESCAN commits any breach of its obligations hereunder and fails to remedy suchbreach within fifteen (15) Business Days of receipt of notice from Longportrequiring the remedy thereof.

 

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(b)                                 FUTURESCAN makes any arrangement with its creditors or an order is made or aresolution is passed for the winding-up of FUTURE SCAN (other than solely forthe purpose of amalgamation or reconstruction) or a receiver, administrator oradministrative receiver or other officially appointed officer or manager isappointed to the whole or any part of its assets or undertaking orcircumstances arise which entitle the Court or a creditor to appoint a receiveror manager or administrator or administrative receiver or other officialofficer or manager or which entitle the Court to make a winding-up order of if FUTURESCAN takes or suffers any similar or analogous action in consequence of debt;or

 

(c)                                  FUTURESCAN is found to have made any material misrepresentation concerning theScanner or Longport.

 

(d)                                 Longportreceives no new orders for Scanners from FUTURE SCAN within a six-month periodof Longport supplying all Scanners due under previous orders.

 

(e)                                  FUTURESCAN shall be responsible for the actions of all its sub-agents, and allsub-agents shall be obliged to sign Agreements with FUTURE SCAN that protectthe interests of Longport. If any sub-agent is found or believed to be damagingthe interests of Longport or Longport the entity then Longport can insist that FUTURESCAN or that sub-agent correct the damaging action or potential damaging actionwithin fifteen business days of receiving written notice from Longport. If suchcorrective action does not occur to Longport’s satisfaction then FUTURE SCANshall terminate its agreement with that sub-agent immediately, failure to do sowill be considered a breach of this Agreement.

 

10.2                           Where Longport hasterminated this Agreement in accordance with Clause 10.1 FUTURE SCAN shall haveno claim or action against Longport in respect of an Order or part of an Orderso cancelled and, with regard to any uncancelled part of an Order, a right onlyto receive that proportion of the price which the completed part of an Orderbears to the uncompleted part.

 

10.3                           If a dispute arises out ofor in connection with this Agreement either party may by written notice requirethe other party to resolve the dispute by negotiation in good faith.  Where such a notice is given, each partyshall use their best endeavors to resolve the dispute.  In the event that such a dispute is notresolved within 15 business days after the said notice was given, the aggrievedparty shall immediately refer the matter to the American

 

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ArbitrationAssociation (“AAA”) to resolve the dispute through a binding arbitration. Sucharbitration shall be conduced in the State of Pennsylvania. The aggrieved partyshall pay all direct AAA costs incurred prior to the arbitration hearing, butthe AAA shall have the right to rule on how these and all other costsdirectly incurred in the arbitration process are finally proportioned.

 

This Agreementshall be governed by and construed in accordance with Delaware law.

 

11.                                 **CONSEQUENCES OF TERMINATION**

 

11.1                           Upon termination of thisAgreement :

 

(a)                                  Longportshall be entitled, but not obliged, to repurchase from FUTURE SCAN all or partof any order of the Scanner then held by FUTURE SCAN for a price equal to thelower of cost or net realizable value provided that :

 

(i)                                     Longportshall be responsible for arranging and for the cost of, transport andinsurance; and

 

(ii)                                  FUTURESCAN may sell the Scanner for which it has accepted orders from customers priorto the date of termination or in respect of which Longport does not, by writtennotice given to FUTURE SCAN within 10 Business Days after the date oftermination exercise its right of repurchase and for those purposes and to thatextent the provisions of this Agreement shall continue in full force andeffect;

 

(b)                                 FUTURESCAN shall, at its own expense, within 30 Business Days send to Longport anyadvertising, promotional or sales material relating to the Scanner (and allcopies thereof) then in the possession of FUTURE SCAN;

 

(c)                                  outstandingunpaid invoices rendered by Longport in respect to the Scanner shall becomeimmediately payable by FUTURE SCAN and invoices in respect to the Scannerordered prior to termination but for which an invoice has not been submittedshall be payable immediately upon submission of an invoice;

 

(d)                                 FUTURESCAN shall cease to promote, market or advertise the Scanner or to make any useof the Restricted Information (as defined in Condition 21 of the Terms andConditions) other than for the purpose of selling all or part of any

 

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consignment of theScanner in respect of which Longport does not exercise its right of repurchase;

 

(e)                                  FUTURESCAN shall have no claim against Longport for compensation for loss ofdistribution rights, loss of goodwill or any similar loss; and

 

(f)                                    subjectas otherwise provided herein and to any rights or obligations which have accruedprior to termination neither party shall have any further obligation to theother under this Agreement.

 

11.2                           Termination of thisAgreement shall be without prejudice to any right or remedy which eitherLongport or FUTURE SCAN may have against the other in respect of the breachconcerned or any other breach.

 

11.3                           Termination of thisAgreement shall be without prejudice to any obligations expressed to continueto apply notwithstanding any such termination.

 

12.**                                 INDEMNITY**

 

Bothparties shall forthwith on demand indemnify and keep each other indemnifiedfrom and against any and all actions, claims, demands, costs, liabilities,losses, damages or expenses (including loss of profit, legal expenses andconsequential loss and damage) :

 

(a)                                  sustainedby either party or for which each member may be liable as a result of thefailure of the other party to perform its obligations hereunder;

 

(b)                                 sustainedby Longport or for which Longport may be liable as a result of any action takenby FUTURE SCAN in relation to the Scanner prior to resale of the Scannerincluding any modification or alteration to the Scanner;

 

(c)                                  inrespect of any breach of either parties obligations of confidentiality pursuantto Clause 3.3 or Condition 21 of Schedule 2; and

 

(d)                                 inrespect of any default, act, omission or other breach of this Agreement ornegligence of Longport or FUTURE SCAN or their respective employees or agents(including sub-agents).

 

13.                                 **SEVERANCE**

 

If atany time any one or more of the provisions of this Agreement or any partthereof is held by any Court or other competent authority to be void orotherwise unenforceable for

 

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anyreason under applicable law, such provision shall be deemed omitted herefromand the validity and/or enforceability of the remaining provisions of thisAgreement shall not in any way be affected or impaired thereby.

 

14.                                 **ENTIRE AGREEMENT**

 

ThisAgreement together contains the entire agreement between the parties withrespect to the supply of the Scanner by Longport to FUTURE SCAN and supersedesall previous agreements and understandings between the parties with respectthereto.  This Agreement shall prevailover any terms or conditions of sale of FUTURE SCAN and may not be modifiedexcept by an instrument in writing signed by the duly authorizedrepresentatives of the parties.

 

15.                                 **PARTNERSHIP**

 

Nothingin this Agreement shall be deemed to constitute an agency or partnershiprelationship between the parties.

 

16.                                 **ASSIGNMENT**

 

ThisAgreement is personal to the parties to the Agreement and save as set out belowneither of the Parties may assign its rights and obligations under thisAgreement whether in whole or in part without the prior written consent of theother save that Longport may (without the need for such prior written consent)assign its rights and obligations to any other company within the LongportGroup, and FUTURE SCAN may assign within the FUTURE SCAN Group.

 

17.                                 **NOTICES**

 

Anynotice or consent required or permitted to be given hereunder shall be validlygiven if delivered personally or sent by recorded delivered US Mail to theregistered office of the party concerned appearing in the definitions on thefirst page of this letter or by facsimile transmission to the facsimilenumber given below (or such other address as may be notified by one party tothe other in accordance with this paragraph) :

 
| **Longport  Incorporated** |   | Fax Number: 610-328-7017 |
|----------------------------|--------|--------------------------|

 

Markedfor the attention of Michael Boyd and Paul Wilson

 

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| **Future  Scan****Incorporated** |   | Fax Number: 215-794-2490 |
|----------------------------------|--------|--------------------------|

 

Markedfor the attention of PhilipGoodman

 

Anysuch notice shall be deemed to have been given when it was personally deliveredor served or, if sent by US Mail, seventy-two hours after it was posted (andproof of due posting shall be sufficient evidence of delivery) or if sent byfacsimile transmission, at the time when the transmission was sent providedthat it is sent during normal office hours on a business day.

 

**INWITNESS** whereof the parties have executed this Agreement theday and year first before written

 

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**SCHEDULE 1**

 

**The Scanner**

 

(as at the Effective Date)

 

shall consist of thefollowing (a) :

 

A.                                   TheEquipment

 

**I.****                                EPISCAN-I-200High Resolution Ultrasound Scanner**

 
| Consisting of: |       | Proprietary  Ultrasound / 200 MHz ADC PCI Board |                                 |
|----------------|------------|-------------------------------------------------|--------------------------------------|
|           |       | 17” TFT Screen                             |                                 |
|           |       | Read / Write CD  / DVD Drive                    |                                 |
|           |       | 40 Gb Hard Disk  Drive                          |                                 |
|           |       | Blue Tooth  Enabled                             |                                 |
|           |       | Wireless  Communication (802.11b)               |                                 |
|           |       | Multicard Reader                                |                                 |
|           |       |                                            | Compact flash  types I & II |
|           |       |                                            | Smartmedia                           |
|           |       |                                            | Panasonic  Securedigital Memory Card |
|           |       |                                            | Sony Memory  Stick                   |
|           |       | 10 / 100 network  port                          |                                 |
| ** **     | ** ** | **Wipeable  Keyboard**                          | ** **                           |
|                |            |                                                 |                                      |  |

 

**II.****                            20MHz-Center Frequency Probe**

 
|   |   | 15mm scan length               |   |
|--------|--------|--------------------------------|--------|
|   |   | Integrated scan  control       |   |
|   |   | Scan Rate ~1  frame per second |   |

 

B.                                     **The Software**

 

**I.****                               **OperatingSystem Windows XP or similar

 

**II.****                           **Longport’sProprietary Software V3.00 Dec 2002 or subsequent updates (b)

 

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(a) Specificationmay change without notice

(b) Thescanner purchase price includes two additional software licenses allowing thesystem user to view images on in-house PCs or laptops. End users shall howevernot distribute Longport’s software to any third party.

 

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**SCHEDULE 2**

 

# **Terms and Conditions**

# ** **

1.                                       **DEFINITIONS**

 

“**Conditions**” means these terms and conditions and “Condition”shall be construed accordingly;

 

“**Agreement**” means the agreement between Longport and FUTURESCAN for the sale and purchase of the Scanner and these Conditions;

 

“**Price**” means the price set by Longport for the Scanner fromtime to time, exclusive of sales tax, and any charges for special packaging ofthe Scanner but inclusive of any charges made under the terms of freight setout in Condition 5 of these Terms and Conditions.

 

2.                                       **MAKING THE AGREEMENT**

 

TheseConditions shall apply to and form part of the Agreement between Longport and FUTURESCAN for the distribution of the Scanner. No terms and/or conditions, which Longport or FUTURE SCAN may seek toimpose shall apply or have effect, unless agreed in writing by both parties.

 

3.                                       **QUOTATIONS AND ACCEPTANCE OF ORDERS**

 

Anyprice quotation made by Longport and notified to FUTURE SCAN shall remain openfor a period of 120 Business Days and an agreement will only be establishedwhen Longport has accepted FUTURE SCAN’s order in writing.

 

4.                                       **SALES LITERATURE**

 

Thespecification of the Scanner shall be as set out in Longport’s salesliterature, which Longport reserves the right to update from time to time inaccordance with any update, enhancement or modification made to theScanner.  While Longport takes everyprecaution in the preparation of its literature these documents are for FUTURESCAN’s general guidance and information only and shall not give rise to anywarranty, representation or liability on the part of Longport.

 

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**5.****                                      PRICE**

 

5.1                                 **Calculation of Price**

 

ThePrice is calculated on a free carrier basis (as set out in ICC Incoterms 2000)and includes the cost of packaging, carriage and insurance to the time at whichany Scanner is delivered to the carrier for carriage to FUTURE SCAN butexcludes all costs thereafter.

 

5.2                                 **Change in Rates of Insurance and Transit Charges**

 

ThePrice is based on current rates of insurance and other transit charges and forthe normal route for carriage.  Anyincrease in these charges or variation in such route shall entitle Longport toincrease the Price for the Scanner by a corresponding sum.

 

5.3                                 **Delay or Failure in Making Payment**

 

If FUTURESCAN fails to pay the price for any Scanner within 15 Business Days after thedate of the relevant invoice, Longport shall be entitled (without prejudice toany other right or remedy it may have) to :

 

(a)                                  cancelor suspend any further delivery to FUTURE SCAN under any Order; and

 

(b)                                 chargeFUTURE SCAN interest on the price at the rate of 4 per cent. per annum above USbase rate in force from time to time from the date the payment became due untilactual payment in full is made. Any interest so accrued shall be separatelyinvoiced by Longport and paid by FUTURE SCAN with 15 business days after thedate of the relevant invoice, non-payment of any such invoice shall be treatedin the same manner as a Scanner related invoice.

 

5.4                                 Allpayments shall be made by FUTURE SCAN in US Dollars to such bank account asLongport may from time to time notify in writing to FUTURE SCAN.

 

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6.                                       **DELIVERY**

 

6.1                                 **Place of Delivery**

 

Longportagrees to deliver or arrange delivery of the Scanner to the carrier or otherthird party nominated by FUTURE SCAN at the place of delivery set out in thisAgreement or, if not so nominated or set out, such person or place notified toLongport by FUTURE SCAN and in such manner as Longport decides is appropriatein the circumstances.  FUTURE SCAN agreesto pay all costs and comply with all requirements relating to the Scanner aftersuch time.  Longport shall not beresponsible or liable in any way for the costs of any carriage after suchdelivery or for non-delivery or delay in such carriage, any loss of or damageto the Scanner during such carriage or the act or omission (negligent orotherwise) of the carrier or other third party in connection with any suchcarriage.

 

6.2                                 **Time of Delivery**

 

Deliveryshall take place when the Scanner is delivered to the carrier or other thirdparty nominated by FUTURE SCAN as set out in Condition 6.1.  Longport shall use its reasonable endeavorsto meet any estimated or requested dates for delivery but shall not be liablein any way for any failure to meet any such date.  The time of delivery shall not be of theessence of this Agreement, subject to Clause 6.4 of the Agreement.

 

6.3                                 **Delivery of Scanner Not Accepted**

 

In theevent of the carrier or other third party nominated by FUTURE SCAN as set outin Condition 6.1 not accepting delivery of the Scanner, Longport shall be freeto store the Scanner at the risk and expense of FUTURE SCAN and/or to re-sellwithout prejudice to Longport’s rights and remedies against FUTURE SCAN.

 

7.                                       **TITLE AND RISK**

 

7.1                                 **Title in Scanner**

 

Legaland beneficial title in the Scanner shall remain in Longport until Longport hasreceived payment in full for the Scanner.

 

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**7.2****                               Seller’sLicense to Enter Premises**

 

Forthe purpose of recovery of the Scanner at any time after payment thereforeshall have become due and before legal and beneficial title therein has passed,FUTURE SCAN grants Longport an irrevocable license to enter on any FUTURE SCANGroup premises where the Scanner is situated (or is reasonably thought to besituated) to repossess it and FUTURE SCAN agrees to pay any costs ofrepossession.

 

7.3                                 **Risk in Scanner**Notwithstanding the above, risk in theScanner shall pass to FUTURE SCAN at the time of delivery of the goods to thecarrier of other third party nominated by FUTURE SCAN.

 

8.                                       **PRODUCT WARRANTY**

 

The Scanner,excepting the probe, will be supplied with a one-year limited warranty providedby Longport. If during that period the Scanner develops a fault the unit so affectedwill be repaired or replaced, at Longport’s discretion, free of charge. Thisprovision does not include Scanners that have been incorrectly used orotherwise damaged by the user or other party. The probe will be provided with athree month limited warranty under the same terms.

 

Units requiringrepair under warranty shall be returned to a Longport’s facility. End usersshall advise Longport of any fault by phone, e-mail, fax or through Longport’sWEB site and if the reported problem cannot be corrected by simple remedialactions (e.g. confirming connecting power cords have not come loose, power isbeing provided from the wall socket, system software is being used andinterpreted correctly etc), which will be undertaken in conjunction with phoneand or e-mail communications, the unit or component will be collected byLongport or an agent of Longport for repair or replacement. If the unit cannotbe repaired or replaced within four business days Longport will provide a loansystem, unit the original unit is either repaired or permanently replaced.

 

No unit shall bereturned to Longport without the end-user first obtaining a return referencefrom Longport.

 

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If a unit isreturned without the end user first obtaining a return reference Longport shallautomatically level an administration charge as defined in Schedule 3.

 

If a unit isreturned to Longport and is found to have no fault or one that simple remedialaction as illustrated above would have solved, then Longport will have a rightto charge a set administration as defined in Schedule 3 fee plus obtainreimbursement for shipping fees incurred.

 

9.                                       **PRODUCT UPDATES**

 

Longport shalloffer to FUTURE SCAN and or its subagents all appropriate product updates.Where these updates are in the form of software updates to the scanner programthese shall be offered free of charge for the twelve months following productpurchase.

 

10.                                 **SELLER’S RESERVATION**

 

If theScanner arrives in such state, through damage in transit or otherwise as wouldentitle FUTURE SCAN to reject the Scanner, Longport reserves the right torepair or replace the Scanner.

 

**11.**                               **EXCLUSIONS AND LIMITATIONS OF LIABILITY**

 

**11.1**                        **No Liability for indirect Loss**

 

Longportshall not in any circumstances be liable for any claim, whether arising inagreement, tort or otherwise, for consequential, economic, special or otherindirect loss including without limitation losses calculated by reference toprofits, agreements, business, goodwill, income, production or accruals andwhether or not arising out of any liability of FUTURE SCAN to any other party.

 

11.2                           **Liability for Death and Personal Injury**

 

Notwithstandinganything to the contrary in this Agreement, nothing in this Agreement shallexclude, restrict or limit Longport’s liability for death or personal injuryresulting from Longport’s negligence. Longport shall provide product liabilityinsurance with reputable insurance companies in the amount of at least $5million per claim or series of connected claims.

 

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11.3                           **Acceptance by Buyer**

 

FUTURESCAN accepts that the limitations and exclusions set out in these Conditionsare reasonable having regard to all the circumstances including, withoutlimitation, the Price.

 

11.4                           **Condition to Survive Termination of this Agreement**

 

ThisCondition 11 (Exclusions and Limitations of Liability) shall survive thetermination of this Agreement for whatever cause.

 

12.                                 **EXAMINATION AND CLAIMS**

 

12.1                           **Examination of Scanner by Buyer**

 

FUTURESCAN, its sub-agents or end user customers shall upon delivery as set out inCondition 6.1 (Place of Delivery) examine the Scanner and shall promptly notifyLongport, and the carrier where relevant, of any damage or defect reasonablyapparent on reasonable examination of the Scanner.  Claims in respect of any loss of or damage tothe Scanner in transit shall be made within the period set out in Condition 17(Loss or Damage in Transit).  Claims inrespect of any other damage, defect or shortage must be made within 10 BusinessDays following the time at which the Scanner is delivered as set out inCondition 6.1 (Place of Delivery). Notwithstanding the above, claims for defects pursuant to Condition 8(Seller’s Reservation) must be made within 10 Business Days after any suchdefect is discovered.

 

12.2                           **Buyer to Notify Seller if Scanner Not Delivered**

 

FUTURESCAN or its sub-agents shall notify Longport if the Scanner is not deliveredwithin 72 hours of the expected date of delivery as notified by Longport.

 

12.3                           **Claims and Notifications to be in Writing**

 

Allclaims and notifications pursuant to this Condition 12 must be made to Longportby FUTURE SCAN in writing within the relevant period set out above, giving fulldetails of any alleged loss, damage, defect, shortage or delay.  Longport shall not be obliged to consider anyclaim not made in accordance with this Condition.

 

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12.4                           **Longport to be Given Opportunity to Inspect Scanner**

 

In allcases where complaints of damage, defects or shortages are made, FUTURE SCANmust afford Longport a reasonable opportunity to inspect the Scanner before anyuse is made of it by FUTURE SCAN.

 

12.5                           **No Return of Scanner Without Longport’s Consent**

 

In nocircumstances may the Scanner be returned to Longport by FUTURE SCAN withoutthe prior written consent of Longport. The administration charge specified in Schedule 3 by Longport maybe deducted from any credit allowed by Longport, or paid to Longport by FUTURESCAN upon demand, where the Scanner is returned and no damage, defect, shortageon the part of Longport is found.

 

13.                                 **DUTY OF CARE OF FUTURE SCAN**

 

13.1                           **Distributor to Comply with Statutory and Common Law Duties**

 

FUTURESCAN and/or its sub-agents shall be responsible for all health, safety andother safety requirements in connection with the delivery, use or storage ofthe Scanner and shall comply with all relevant statutory provisions or otherregulations relating to the Scanner for the period after risk in the Scanner haspassed to FUTURE SCAN pursuant to Condition 7.3 (Risk in Scanner).

 

14.                                 **INSURANCE**

 

FUTURESCAN shall effect and maintain insurance of the Scanner at its own expense atall times after risk in the Scanner shall have passed to FUTURE SCAN untiltitle in the Scanner shall have passed under Condition 7 (Title and Risk) toits full replacement value against all risks.

 

**15.****                               TRADEMARKS**

 

FUTURESCAN shall ensure that any trade marks of Longport or other words or marksaffixed to or used in relation to the Scanner are not obliterated, obscured oromitted without Longport’s prior written consent.  FUTURE SCAN shall not add, affix or use anyadditional words or marks to or in relation to the Scanner without Longport’sprior written consent.  FUTURE SCAN shallnot process or alter the Scanner without Longport’s prior written consent tothe continued use on or in relation to the Scanner of any trade marks ofLongport or any other words or marks affixed to or used in relation to theScanner.

 

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16.                                 **FORCE MAJEURE**

 

Longportand FUTURE SCAN shall not be liable for any loss, damage or otherwise as adirect or indirect result of the failure to perform or delay in performing anyof its obligations nor shall there be a breach of the Agreement as a result ofthe occurrence of any cause whatsoever beyond its control, including withoutlimitation acts of God, war, hostilities, riot, terrorism, explosion, accident,flood, sabotage, lack of adequate fuel, power, raw materials, containers,transportation or labor, strike, lock-out or injunction (provided that Longportor FUTURE SCAN or FUTURE SCAN’s sub-agents shall not be required to settle alabor dispute against their own best judgment) compliance with Federal andState laws, regulations or orders, breakage or failure of machinery orapparatus, or any other cause, whether or not of the class or kind enumerated,which affects performance of the Agreement arising from or attributable toacts, events, non-happenings, omissions or accidents beyond the reasonablecontrol of the party affected.

 

17.                                 **SUB-CONTRACTORS**

 

Longportshall be entitled to sub-contract the performance of the whole or part of thisAgreement without prior notice to or the consent of FUTURE SCAN.  In any contract of which these Conditionsform the basis Longport contracts for and on behalf of itself and itssub-contractors.

 

18.                                 **SPECIAL PACKING**

 

Anadditional charge will be made to FUTURE SCAN for any special packagingrequired or requested by FUTURE SCAN.  FUTURESCAN or its sub-agents shall retain all scanner packaging for the purposes ofreturning the Scanner to Longport, in accordance with the provisions of thisAgreement.

 

**19.****                               LOSSOR DAMAGE IN TRANSIT**

 

Longportshall repair or replace free of charge any Scanner lost or damaged in transitor not delivered in accordance with this Agreement provided that FUTURE SCANshall give Longport written notice of any loss, damage or non-delivery(together with full details of the loss, damage or non-delivery) at least 2Business Days prior to the latest date on which notification of any such loss,damage or non-delivery must be made to any carrier in accordance with thatcarrier’s conditions of carriage and, in any event, no later than 10

 

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BusinessDays after the time at which the Scanner is delivered as set out in Condition6.1 (Place of Delivery) or is due to have been so delivered under thisAgreement.

 

20.                                 **SAFETY**

 

FUTURESCAN and its sub-agents shall comply fully with all user instructions andsafety recommendations issued by Longport in relation to the Scanner and shallemploy an adequate number of suitably qualified personnel to operate theScanner and Longport shall not be liable to FUTURE SCAN as a result of FUTURESCAN failing fully to observe the provisions of this Condition, save wheredeath or personal injury results from Longport’s negligence.

 

21.                                 **CONFIDENTIAL INFORMATION**

 

21.1                           Exceptas provided by Conditions 21.2 and 21.3, FUTURE SCAN and Longport shall at alltimes during the continuance of this Agreement and after its termination :

 

(a)                                  usetheir best endeavors to keep all Restricted Information confidential andaccordingly not to disclose any Restricted Information to any other person; and

 

(b)                                 notuse any Restricted Information for any purpose other than the performance ofthe obligations under this Agreement.

 

21.2                           AnyRestricted Information may be disclosed by FUTURE SCAN or Longport to :

 

(a)                                  anycustomer or prospective customer of FUTURE SCAN;

 

(b)                                 anygovernmental or other authority or regulatory body; or

 

(c)                                  anyemployees of FUTURE SCAN or Longport or of any of the aforementioned persons,

 

tosuch an extent only as is necessary for the purposes contemplated by thisAgreement or as is required by law and subject in each case to FUTURE SCAN orLongport using their best endeavors to ensure that the person in question keepsthe same confidential and does not use the same except for the purposes forwhich the disclosure is made.

 

21.3                           AnyRestricted Information may be used by the receiving party for any purpose ordisclosed by the receiving party to any other person, to the extent only thatit is at the date

 

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hereof, orhereafter becomes public knowledge through no fault of the receiving party(provided that in doing so the receiving party shall not disclose anyRestricted Information which is not in the public domain).

 

21.4                           For thepurpose of this Condition 21, “Restricted Information” means all information(whether written, oral or in electronic form) relating to Longport or FUTURESCAN and their businesses :

 

(a)                                  deliveredto the other party under this Agreement;

 

(b)                                 otherwisein the possession or under the control of the receiving party, and includingwithout limitation any drawings, designs, specifications relating to theScanner and/or any modification of the Scanner; and

 

(c)                                  forthe benefit of doubt the terms of this Agreement shall also be consideredrestricted information, but its existence shall not.

 

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**Schedule 3**

 

**Support Services and Price Schedule**

 

**1****                                         OptionalScanner Services and Ancillary Components**

 

Longport will alsoprovide enhanced product support packages and application training courses forwhich additional fees may be charged.

 

**SystemTraining and Direct Support**

 

“System training” to beundertaken as close as practical to the delivery date of the Scanner. The “systemtraining” shall either be undertaken at Longport offices or those of the enduser. Whereas the end users offices are within 150 miles radius of Longport’soffices no additional charge for on-site training shall be made.

 

System training will takeone full working day (~5 hours). The training course will provide tuition to amaximum of five individuals. (If end users wish more than five people to attendthis course an additional fee may be charged.)

 

Direct customer supportfor twelve months from the date of purchase. This “customer support” shall takethe form of direct telephone (1-800 number) and e-mail support as well asWEB based capabilities. Additional visits to customer’s facilities shall beundertaken at Longport’s discretion, it would however be expected that afollow-up visit to every end user facility will normally be made within twomonths of system training.

 

Customer Support shallonly be provided via individuals who have attended and passed the “systemtraining” course.

 

Product warranty shall beas described in Clause 8 of the Terms and Conditions.

 

Cost $2,000 per scanner

 

**ExtendedThree-Year Warranty.**This will extend the product warranty tothree years (excepting the probe) **Cost $2,200per system.**

 

**SoftwareUpdates. $500 per year** after the first year or **$800 for two years** if paid in advance.

 

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**ProbeExchange.** The probe(s) will be supported beyond the warrantyperiod through an exchange system, where faulty probes will be returned toLongport and exchanged for replacement units. (Longport shall ship thereplacement probe within two business days of receipt of the faulty unit andpayment.) Each replacement unit will be provided with a three-month warranty. **Cost $500 per exchange**. (Price assumesprobe has not been damaged by improper use or handling.)

 

**AdditionalProbes.**Additional probe will be supplied at a cost of **$4,000 per unit**.

 

**AncillaryEquipment.**

 

Longport can supply thefollowing ancillary equipment.

 

•                                          Cartwith medical grade UPS(c) **$1,000 perunit.**

 

•                                          Printers/ digital cameras price on application

 

•                                          ProbeMembranes $25.00 per box of 100 (exclude shipping)

 

•                                          Ultrasoundcoupling jell $36.00 per case of 12 bottles (excluding shipping)

 

**AdministrationFee.**The administration fee to be charged to users thatreturn goods****without obtaining areturn reference or return goods that are found not to be at fault will be $50,this fee excludes any shipping costs incurred by Longport.

 

**ClinicalApplication Training** Longport is developing a series ofclinical training courses.

 

Initially a woundassessment and prevention package will be offered. This course will undertakenat the user’s premises or at Longport’s offices over two full days (timeincludes system training). This training package will include consultation onScanner protocols for wound assessment / prevention outside of the trainingcourse. The cost of the course will be **$3,500per facility**  (five peopleattending course).

 

(It is also possible toprovide this course to a group of facilities, price on application.)

 

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(c) If FUTURE SCAN,one of its sub-agents or any end user wishes to supply their own UPS to operatewith the Scanner they must advise Longport of the unit they intend to use andobtain written approval from Longport on the suitability of that unit. Failureto do this could invalidate the Scanner warranty and negate Longport’s productliability responsibility.

 

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Other clinical trainingcourses will be added. Also, additional courses will be run for staff membersthat joined subsequent to the system training or could not attend for otherreasons. These courses will be run at single venues every few months.

 

**DataAchieving and Third Party Image Assessment**

 

Packages can be developedto address the needs of individual centers or groups who require remote dataachieving and or third party image assessment.

 

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| **SIGNED** by                 |
|-------------------------------|
|                          |
| for and on  behalf of         |
| **LONGPORT  INCORPORATED**    |
| Authorized  Signatory         |
|                          |
|                          |
|                          |   |
| Paul D. Wilson,               |
| President and  Director       |
|                          |
| in the presence  of :         |
|                          |
| Witness :                     |
| Signature                     |   |   |
|                          |
|                          |
| Name                          |
|                          |
|                          |
| **SIGNED**  by                |
|                          |
| for and on  behalf of         |
| **FUTURE  SCAN INCORPORATED** |
| Authorized  Signatory         |
|                          |
|                          |
|                          |   |
| Dr David A  Goodman           |
| President                     |
|                          |
| in the presence  of :         |
|                          |
|                          |
| Witness :                     |
| Signature                     |   |   |
|                          |
|                          |
| Name                          |
|                               |  |  |  |  |  |

 

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