EXHIBIT 10.4


 


*** CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT (INDICATED BY ASTERISKS) HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER 17 C.F.R. SECTIONS
200.80(B)(4), 200.83 AND 230.406.


 


ADDENDUM TO SOFTWARE LICENSE AGREEMENT


 


This ADDENDUM TO SOFTWARE
LICENSE AGREEMENT (“Addendum”) is made this 30th day of November 2004 (the
“Effective Date”) by and between SEGAMI CORPORATION, a Maryland corporation with
its principal offices at 8325 Guilford Road, Suite B, Columbia, MD 21046 (“Segami”),
and DIGIRAD CORPORATION, a Delaware corporation with its principal offices at
13950 Stowe Drive, Poway CA 92064 (“Digirad”).


Recitals


 


WHEREAS, Segami and
Digirad are parties to that certain Software License Agreement, dated June 16,
1999, as amended November 15, 2001 (as may be amended, restated, replaced or
superceded, the “Agreement”, pursuant to which Segami has licensed to Digirad
and supported certain software for use and distribution in connection with
Digirad products; and


WHEREAS, the parties
hereby wish to amend the Agreement and its Exhibits in certain respects as set
forth below.


NOW, THEREFORE, in
consideration of the promises and mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree to the following amended terms and
conditions as follows:


Agreement


 


1.             Exhibits A and D to the Agreement shall be replaced in their entirety by Exhibit A-1, and Exhibit D-l, respectively, attached hereto.   Exhibit B-1, and Exhibit C-l  are additions to
the terms of the Agreement.


 


2.             Anything
to the contrary in the Agreement notwithstanding, effective as stated herein,
Digirad, and not Segami, will be responsible for developing and employing
software required (a) for the acquisition of the images (effective as of
April 1, 2005); and (b) to perform iterative SPECT reconstruction
(effective as of the Effective Date).  The
definitions of “Base Software” and “Interface Development” stated in
section 1 of the Agreement are amended to exclude any functional reference
to the acquisition of images or iterative SPECT reconstruction.   As a
result, effective April 1, 2005, except for “bug fixes” (i.e., corrections of malfunctions in
Segami’s original software), (a) Segami shall not support the original
acquisition software it had developed for Digirad; (b) Digirad shall
assume complete responsibility for acquisition and iterative SPECT reconstruction;
and (c) neither the Base Software nor the Interface Development, as
revised, shall support or interface with previous versions.  Changes required in Segami’s software to
allow Digirad’s own acquisition software to interface with Segami’s software
are described in Exhibit B-1 attached
hereto.  To determine whether the source
of any overall software malfunction resides in the acquisition or iterative
SPECT reconstruction


 


1





















 


software, on the one hand, or the Base Software or
Interface Development, on the other hand, Digirad’ s acquisition software shall
be tested against Segami’s software version v5.310, copies of which shall be
maintained by both Digirad and Segami; and Digirad’s iterative SPECT reconstruction
software shall be tested against Segami’s software v5.308b, copies of which
shall also be maintained by both Digirad and Segami.  If the malfunction does not occur in such a
test, the malfunction is presumptively determined to be caused by the Base
Software and/of Interface Development.


 


3.             The
Base Software shall be available for license in (a) SPECT- enabled
configurations and (b) non-SPECT -enabled configurations, restricted to
upgrades of licenses sold to Digirad customers prior to January 1, 2005.


 


4.             Section 1
of the Agreement is amended to add the following definition:  “End-Users.” 
Customers of Digirad, who have acquired Products directly from Digirad
or from Digirad authorized distributors for their own use (and not for
unauthorized redistribution or, remarketing, timesharing, or service bureau
use) in accordance with the terms of End-User License Agreements.


 


5.             The
following subsection 2(d) is added to Section 2 of the Agreement:


 


(d)                                 Web
Vue License and Fee.  Effective as of
January 1, 2005, and subject to all the terms of this Agreement, Segami grants
to Digirad a nonexclusive, worldwide license to sublicense to an unlimited
number of End-Users (including Digirad Imaging Solution physician customers) in
connection with the sale and use of the Products unlimited access to Web Vue, a
program that enables remote viewing of data processed by Mirage software (and
its successor programs) via a web browser. 
The Web Vue License shall be free to Digirad until December 31, 2005.  Thereafter, the annual License Fee to Digirad
for the Web Vue License shall be $ 
***   per year, payable no later
than ten (l0) days after the beginning of any calendar year in advance.


 


6.             The
second sentence of section 3.2 of the Agreement is deleted and replaced by the
following:


 


Digirad shall pay such additional minimum License Fees
to Segami stated in Exhibit A-1 as
follows.  Upon sublicense to End-Users,
Digirad shall place a written order for the acquisition of new licenses from
Segami.  At the time of order, Digirad
shall pay a deposit of $ ***  per
licensed unit ordered.  The balance of
any License Fee for each licensed unit ordered shall be paid within ninety (90)
days of the order placed with Segami.  Notwithstanding
the foregoing provision, all orders for upgrades or revised versions


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


 


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of the Base Software to existing End-Users shall be
paid in full at the time of order by Digirad.


 


7.             The
License Fees described in Section 3.2 of the Agreement are amended as set forth
in Exhibit A-1 attached hereto.


 


8.             The
following subsections 4.1.1 and 4.1.2 are hereby added to Section 4 of the
Agreement, entitled “Interface


Development”:


 


“4.1.1 Additional Interface Feature.  Segami also agrees to undertake and complete
the code design, programming and testing of an additional interface feature,
under the same terms and conditions as stated in this Section 4, that will
allow the database of its current Base Software and the future product to
replace in the market the Base Product (also currently marketed under the name
Mirage but subject to change in name) to add new patient data and retrieve old
patient data (the “Additional Interface Feature”).  The specifications for this Additional
Interface Feature are set forth in the Exhibit
B-1.  The delivery schedule
for the Additional Interface Feature shall be as set forth in the attached Exhibit C-1.  Segami shall undertake the completion of the
Additional Interface Feature on the same terms and conditions as stated in this
Section 4, except that no additional payment shall be due therefore from
Digirad.  Segami shall provide a limited
number of developer license keys to Digirad for the purpose of Digirad’s
development and testing of its acquisition software and integration with the
Additional Interface Feature.  Digirad
may not transfer, loan, of otherwise provide access to the developer keys
except for the limited purpose stated herein. 
Such developer license keys shall be returnable on demand to Segami.”


 


“4.1.2  Cardiogram
beta testing.  In connection with
Segami’s development, programming and testing of the new cardiac package
Cardiogram (specifications for which are stated in Exhibit D-l), Segami will make pre-production versions of Cardiogram
available to Digirad for beta testing no later than December 31, 2004, without
any additional charge.


 


9.             Section
7(3) of the Agreement is deleted.


 


10.           The
following subsection 10.4 is hereby added to Section 10 of the Agreement,
entitled, “Termination”:


 


“10.4 This Agreement shall automatically terminate on
January 1, 2010, unless an extension is mutually agreed to by the parties.”


 


3





















 


11.           The
following subsection 10.5 is hereby added to Section 10 of the Agreement:


 


“‘In the event that the total License Fees (consisting
of any and all payments made by Digirad to Segami, exclusive only of the flat
license fee for the Web Vue product identified in Section 2(d)) paid to Segami
in any calendar year during the term of this Agreement, commencing with the
calendar year of 2005, do not meet or exceed                  
***                  
($      ***       ),
Segami shall have the right to increase all prices in Exhibit A-1 for the Base Software by $    ***
     per unit effective January 1st of the
following year.  If thereafter the total
License Fees (consisting of any and all payments made by Digirad to Segami, exclusive
only of the flat license fee for the Web Vue product identified in Section
2(d))) paid to Segami in any calendar year equal or exceed                  
***                  
($    ***      ), then the per
unit prices set forth in Exhibit A
shall again apply.


 


12.           The
following subsection 13.1 is hereby added to Section 13 of the Agreement,
entitled “Warranties”:


 


“13.1 Segami warrants that the Base Software will be
compatible with and work on Microsoft Windows 2000 software.”


 


13.           Section
15.13 is amended to replace the existing addresses of Digirad, Segami and
Segami’s legal counsel with the following addresses:


 


David Sheehan,
President

Digirad Corporation

13950 Stowe Drive

Poway, CA 92064


 


Philippe
Briandet, President

Segami Corporation

8325 Guilford Road

Suite B

Columbia, MD 21046-2818


 


Copy to:

Christopher S.  Young, Esq.

BTLG

6731 Columbia Gateway Drive

Suite 110

Columbia MD 21046


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


 


4





















 


14.           Section
15.4 of the Agreement is amended to provide for one (1) arbitrator only in the
event of arbitration.


 


15.           This
Addendum shall be governed by and interpreted as part of the Agreement and its
general terms and conditions.  All
capitalized terms in this Addendum shall have the same definition as the same
capitalized terms in the Agreement.


 


16.           Except
as expressly stated herein, all other terms and conditions of the Agreement
shall remain in full force and effect.


 


IN WITNESS WHEREOF, the
undersigned who are duly authorized to execute and enter into this Addendum,
intending to be legally bound hereby, have executed this Addendum as of the
date first written above.


	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SEGAMI CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Debra Doyce

  	
   

  	
  By:

  	
  /s/ Philippe
  Briandet

  	
   

  
	
   

  	
   

  	
   

  	
  Philippe
  Briandet, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Debra Doyce

  	
   

  	
  By:

  	
  /s/ Richard
  L. Conwell

  	
   

  
	
   

  	
   

  	
  Richard
  Conwell

  
	
   

  	
   

  	
  Senior Vice
  President

  
	
   

  	
   

  	
  of Technology

  
						



 


5





















 


EXHIBIT
- A-1

(Replaces Exhibit A to the Agreement)


 


PRICING
SCHEDULE I


 


EFFECTIVE
UNTIL DECEMBER 31, 2004


 


	
  Fees:

  	
   

  	
  Planar Imaging

  	
   

  	
  SPECT Imaging

  	
   

  
	
  Units 1-20

  	
   

  	
  $  *** /unit

  	
   

  	
  +$  *** /unit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21-50

  	
   

  	
  $  *** /unit

  	
   

  	
  +$  *** /unit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  51-100

  	
   

  	
  $  *** /unit

  	
   

  	
  +$  *** /unit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  101-250

  	
   

  	
  $  *** /unit

  	
   

  	
  +$  *** /unit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  251 plus

  	
   

  	
  $  *** /unit

  	
   

  	
  +$  *** /unit

  	
   

  



 


Quantity pricing for the
software shall be solely dependent upon the number of planar imaging units
purchased, and shall be cumulative until December 31, 2004.  A minimum fee payment of                     
***                    
($   ***   ) shall be paid by Digirad to Segami
each Agreement year through June 30, 2004, and each Agreement year shall be
defined as July 1 - June 30.  The
first Agreement year shall begin July 1, 1999. 
Any shipments made to Digirad prior to July 1, 1999 shall be
credited toward the minimum requirement fee payment for the first Agreement
year of July 1, 1999 - June 30, 2000. 
All such minimum fee payments shall be payable in advance quarterly to
Segami, and shall be credited towards actual fee payments, through June 30,
2004.


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


 


A-1





















 


PRICING
SCHEDULE II


 


EFFECTIVE
AS OF JANUARY 1, 2005


 




	
  Unit /
  Per Year:

  	
   

  	
  Price Per Unit

  	
   

  
	
  Units 1 - 50

  	
   

  	
  $  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Units 51 - 100

  	
   

  	
  $  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Units 101 and above

  	
   

  	
  $  ***

  	
   

  






 


Quantity pricing shall apply to
each copy of the Base Software licensed to any End-user, with or without SPECT
functionality, regardless of the nature of the Product with which it is
bundled, and shall also apply to software used by an End-User as part of an
independent cardiac processing workstation. 
Quantity pricing for the software shall be solely dependent upon the
number of copies of Base Software distributed, and shall be cumulative for each
Agreement Year, which shall be defined as January 1 through December 31.  The first Agreement Year shall begin on
January 1, 2005.


 


If Digirad places a Purchase
Order and pays in advance for a total of seventy-five (75) copies of the Base
Software on or before January 10, 2005, a         
***          percent price discount
shall apply to the total purchase price.


 


Except for the “Shine” feature, existing Digirad
customers shall be able to upgrade their existing Base Software with all
additional software features described in Exhibit
D-1 at no additional cost.  Existing
Digirad customers whose Base Software does not now include SPECT will not
receive new Base Software that is SPECT-enabled unless Digirad pays an
additional $  ***   to
Segami per customer.  For all existing
Digirad customers who receive an upgrade, Digirad shall provide its own
acquisition module if an acquisition is required, and Digirad shall ensure that
the display hardware is capable of, or upgraded to capability, with at the
least 1280 x 1024 graphics resolution and is Open GL compatible.


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


II-1





















 


EXHIBIT
B-1

(Addendum to Exhibit B to the Agreement)


 


SPECIFICATIONS


 


I.              Mirage Acquisition Button


The processing button that is labeled “Acquisition” in
Mirage (and/or its successor program) shall be configurable so that it will
call the Digirad acquisition instead of Digirat_A.exe.


II.            Number of Heads and Orbit Range


Digirad will label its Interfile headers with the key “originating
system” being set to “Digirad” instead of “Mirage”.  This will tell Segami’s software that this is
a Digirad file and that Segami’ s software should allow the import of studies
that are labeled with rotations other than 180° or 360°.


Segami will make modifications so that the key “number
of detector heads” can have a value of 1, 2, 3, 4 or 5 instead of just 1 or 2.


Segami will also account for the “H3_COR_X” and “H3_COR_Y”
fields in its processing stream and properly COR correct studies based upon
these fields.


III.           Requirements for Mirage patient database
interface


Introduction


Digirad acquisition
applications and Segami’s processing applications share the same patient
database (Mirage Patient Database).


Patient database
management (creation, maintenance) is done from the processing application.


Digirad acquisition application accesses the patient
database by calling API functions (the interface) implemented by Segami.


Interface
Requirements


A-
Database information access

Acquisition needs to access                     
***          :


 


***


***


***


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


 


B-1





















 


B-
Dataset import

Acquisition needs also to                     
***                     
..


 


***


***


***


 


                     ***
                    
will be provided by Segami.


C- Dataset
export

Acquisition needs also to have access                     
***                     .


 


***


***


***


 


D-
Problem tracking


***


***


 


E-
Miscellaneous requirement


***


***


***


 










*** Portions of this page have been
omitted pursuant to a request for Confidential Treatment and filed separately
with the commission.


 


B-2





















 


EXHIBIT
C-1

(Addendum to Exhibit C to the Agreement)


 


DELIVERY
SCHEDULE


 


Deliveries


 


	
  Exhibit B-1
  Item II.

  	
   

  	
  November 30,
  2004

  
	
  Exhibit B-1
  Item III.

  	
   

  	
  November 30,
  2004*

  
	
  Exhibit B-1
  Item I.

  	
   

  	
  November 30,
  2004

  
	
  Shine (see
  D1-3):

  	
   

  	
  January 1,
  2005

  
	
  Interfile
  (see D1-3):

  	
   

  	
  January 1,
  2005

  
	
   

  	
   

  	
   

  
	
  Enhancements
  to the base software (code-named Oasis):

  	
   

  	
  April 1,
  2005

  
	
  Cardiogram
  (see D1-5):

  	
   

  	
  April 1,
  2005

  
	
  Qube (see D1-5):

  	
   

  	
  April 1,
  2005

  
	
  Enhancements
  to the first-pass program (see D1-5):

  	
   

  	
  July 1,
  2005

  



 










*      Or 5 working days after
execution of the contract, whichever comes last.


 


C-1





















 


EXHIBIT
D-1

(Addendum to Exhibit D to the Agreement)


 


SEGAMI’S
BASE SOFTWARE

(AS DESCRIBED IN THE AGREEMENT DATED JUNE 16, 1999)


Planar
Imaging:


 


1.             Acquisition


 


Simultaneous
acquisition of one study while processing a second study


 


2.             Processing


 


Renal function:  Renogram curves, ERPF, & GFR


Pulmonary
quantitation

Gated blood pool L VEF & R VEF calculation


Regional
ventricular function, e.g.  phase & amplitude analysis


Gastric
emptying & esophageal reflux

First-pass RNV - calculation of LV & RV ejection fraction

First-pass cardiac shunt calculation

Frames - move, copy, delete, format (for printing)

Perform math functions on image :frames, e.g.  spatial & temporal filters


 


3.             Output/Archive/Other


File transfer
via Ethernet link to network server in DICOM 3 compliant format

Additional bit-mapped (BMP) file format, for file transfer

Printer output drivers to common printers including PostScript

Storage on standard recording media, e.g.,
hard disk, CDROM-R/W, etc.

On-line, context sensitive help - index with references to specific
instructions

Complete set of manuals in electronic form.

Documentation of governmental &/or other regulatory approval, U.S.  or foreign


 


4.             Database


Access
database storage of patient information

Search features

DICOM compliant fields


 


SPECT
plus Planar Imaging (all features listed above);


 


Transverse
axial, sagittal and coronal reconstruction for bones, lungs, liver, etc.

Oblique reconstruction, e.g.  for cardiac and brain

Choice of reconstruction, e.g.  for cardiac and brain

Choice of reconstruction filters & ability to change parameters

Gated cardiac SPECT - calculation of left ventricular ER & volumes

Surface & volume rendered 3-D display

Display of wall thickening.


 


D-1





















 


ADDITIONS
TO SEGAMI’S BASE SOFTWARE

(AS AGREED UPON IN THE ADDENDUM DATED NOVEMBER      ,
2004)


 


1.                                       All
modifications incorporated into the Base Software by Segami since June 16,
1999.


 


2.                                       Effective
as noted in Section 2 of the Addendum, acquisition and iterative reconstruction
will be supplied by Digirad.


 


3.                                       As
of the Effective Date of the Amendment, the following features shall be added
to each Base Software copy, purchased under pricing schedule II:


 


a.                                       Shine:
 a Poisson noise removal function


b.                                      Interfile:
 Import/Export facility translating the
Mirage proprietary format to/from the standard “Interfile” format


 


4.                                       No
later than April 1, 2005, the Base Software known as “Mirage” shall be replaced
with a new software product (code named “Oasis”) with the following additional
features:


 


a.                                       Improved
accuracy (e.g., increased use of floating
point)


b.                                      Improved
resolution (defined as up to 1600 x 1200, and no less than 1280x1024)


c.                                       Improved
use of screen


d.                                      Improved
3D visuals through Open GL


e.                                       Stereo
support


 


5.                                       Oasis
shall include a completely redesigned cardiac package (named Cardiogram and
Qube, with phase analysis), replacing MyoSPECT, and shall include (a) a new
screen capture mechanism which will allow rendering in any resolution and
distribution over a web server, (b) extended functionality of the First Pass
program, and (c) an AppHook with static screen capture.


 


D-2