Document:

<PAGE>   1
                                                                    Exhibit 10.9

                          ASPECT MEDICAL SYSTEMS, INC.
      has requested that the marked portions of this agreement be granted
 confidential treatment pursuant to Rule 406 under the Securities Act of 1933,
                                  as amended."

                       DISTRIBUTION AND LICENSE AGREEMENT

                                     BETWEEN

                             SPACELABS MEDICAL, INC.

                                       AND

                          ASPECT MEDICAL SYSTEMS, INC.
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
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<S>                                                                                                              <C>
ARTICLE I -       DEFINITIONS.....................................................................................1
         1.1      "Best Price"....................................................................................1
         1.2      "Bispectral Index"..............................................................................1
         1.3      "BIS Software"..................................................................................1
         1.4      "Digital Signal Converter"......................................................................1
         1.5      "Four Channel Digital Signal Converter".........................................................2
         1.6      "Fully Burdened Costs"..........................................................................2
         1.7      "International Territory".......................................................................2
         1.8      "Losses"........................................................................................2
         1.9      "Module"........................................................................................2
         1.10     "Monitor".......................................................................................2
         1.11     "Monitor Products"..............................................................................2
         1.12     "Proprietary Information".......................................................................2
         1.13     "Sensor"........................................................................................2
         1.14     "Sensor Products"...............................................................................2
         1.15     "Specifications"................................................................................3
         1.16     "United States Territory".......................................................................3
         1.17     "ZipPrep Electrode Product".....................................................................3
         1.18     "ZipPrep Technology"............................................................................3

ARTICLE II -      DISTRIBUTION RIGHTS TO MONITOR..................................................................3
         2.1      Appointment.....................................................................................3
         2.2      Claims..........................................................................................3
         2.3      Approvals.......................................................................................4
         2.4      Promotion.......................................................................................4
         2.5      Demonstration...................................................................................5
         2.6      Installation and Training.......................................................................5
         2.7      Service.........................................................................................6
         2.8      Training by Aspect..............................................................................6
         2.9      Marketing Support in the International Territory................................................6
         2.10     Provision of Spare Parts........................................................................6
         2.11     Right of Aspect to Contact Customers............................................................7
         2.12     Purchase Price..................................................................................7
         2.13     International Purchase Requirements.............................................................8
         2.14     Forecasts.......................................................................................9
         2.15     Orders..........................................................................................9
         2.16     Shipment.......................................................................................10
         2.17     Labeling.......................................................................................10
         2.18     Title and Risk of Loss.........................................................................10
         2.19     Payment........................................................................................10
         2.20     Warranty.......................................................................................10
         2.21     Warranty Claims................................................................................11
</TABLE>
<PAGE>   3
<TABLE>
<CAPTION>
<S>                                                                                                             <C>
         2.22     Customer Complaints............................................................................12
         2.23     Recalls........................................................................................12
         2.24     Product Liability..............................................................................12
         2.25     Claimed Infringement...........................................................................13
         2.26     Clinical Testing...............................................................................14
         2.27     Restrictive Covenant...........................................................................14
         2.28     Improvements...................................................................................14
         2.29     Obsolete Products..............................................................................15

ARTICLE III -     DISTRIBUTION RIGHTS TO SENSOR PRODUCTS.........................................................15
         3.1      Appointment....................................................................................15
         3.2      Availability...................................................................................15
         3.3      Promotion......................................................................................16
         3.4      Purchase Price.................................................................................16
         3.5      Additional Payments............................................................................16
         3.6      Forecasts......................................................................................17
         3.7      Orders.........................................................................................17
         3.8      Shipment.......................................................................................17
         3.9      Labeling.......................................................................................18
         3.10     Title and Risk of Loss.........................................................................18
         3.11     Payment........................................................................................18
         3.12     Warranty.......................................................................................18
         3.13     Warranty Claims................................................................................19
         3.14     Customer Complaints............................................................................19
         3.15     Recalls........................................................................................19
         3.16     Product Liability..............................................................................19
         3.17     Claimed Infringement...........................................................................20
         3.18     Improvements...................................................................................21
         3.19     Failure to Supply..............................................................................21
         3.20     Restrictive Covenant...........................................................................22
         3.21     Obsolete Products..............................................................................22

ARTICLE IV -      RIGHTS TO BISPECTRAL INDEX.....................................................................23
         4.1      Licenses.......................................................................................23
         4.2      Development Efforts............................................................................23
         4.3      BIS Software Maintenance.......................................................................24
         4.4      Commercialization Obligation...................................................................24
         4.5      Regulatory Process.............................................................................24
         4.6      Quality Control................................................................................24
         4.7      Royalties......................................................................................25
         4.8      License to Manufacture Four Channel Digital Signal Converter...................................25
         4.9      Reports and Payment............................................................................25
         4.10     Customer Complaints............................................................................25
         4.11     Product Liability of SMI.......................................................................26
         4.12     Product Liability of Aspect....................................................................26
         4.13     Claimed Infringement of SMI Technology.........................................................26
</TABLE>
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<TABLE>
<CAPTION>
<S>                                                                                                             <C>
         4.14     Claimed Infringement of Aspect Technology......................................................27
         4.15     Digital Signal Converter.......................................................................28
         4.16     Restrictive Covenant...........................................................................28
         4.17     Right of Aspect to Contact Customers...........................................................29

ARTICLE V -       COMMUNICATIONS.................................................................................29
         5.1      Communications.................................................................................29

ARTICLE VI -      TERMINATION....................................................................................30
         6.1      Term...........................................................................................30
         6.2      Termination by SMI.............................................................................30
         6.3      Termination for Breach.........................................................................30

ARTICLE VII -     CONFIDENTIALITY................................................................................31

ARTICLE VIII -    MISCELLANEOUS..................................................................................32
         8.1      Trademarks and Trade Names.....................................................................32
         8.2      Records........................................................................................32
         8.3      Publicity......................................................................................32
         8.4      Force Majeure..................................................................................33
         8.5      Relationship Between Parties...................................................................33
         8.6      Notices........................................................................................33
         8.7      Entire Agreement...............................................................................34
         8.8      Severability...................................................................................34
         8.9      Assignments....................................................................................34
         8.10     Governing Law..................................................................................34
         8.11     Compliance with Laws...........................................................................34
         8.12     Waivers and Extensions.........................................................................34
         8.13     Counterparts...................................................................................35
         8.14     Consents.......................................................................................35
         8.15     Limitation of Liability........................................................................35
</TABLE>
<PAGE>   5
                       DISTRIBUTION AND LICENSE AGREEMENT

         THIS DISTRIBUTION AND LICENSE AGREEMENT (the "Agreement") is made as of
April 1, 1996 between ASPECT MEDICAL SYSTEMS, INC., a Delaware corporation with
its principal place of business at 2 Vision Drive, Natick, Massachusetts
01760-2059 ("Aspect") and SPACELABS MEDICAL, INC., a California corporation with
its principal place of business at 15220 NE 40th Street, Redmond, Washington
98073 ("SMI").

         A. Aspect has developed certain EEG monitoring technology for measuring
the effects of anesthesia on the brain and SMI desires to market and distribute
products employing such technology;

         B. Aspect and SMI desire to enter into an agreement that supersedes all
prior agreements between them, including but not limited to the Distribution and
License Agreement dated as of June 30, 1994.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the parties hereto agree as follows:

                             ARTICLE I - DEFINITIONS

         As used in this Agreement, the following terms shall have the following
meanings:

         1.1 "Best Price" means the lowest price on which Aspect charges any
other third party for a product for an "unbundled sale" of the product to a
third party which is buying similar quantities of such product under similar
terms and conditions. An "unbundled sale" means that the product is sold by
Aspect without being sold in, as part of, or as a condition to, the sale, lease,
loan, consignment or other disposition of any other product.

         1.2 "Bispectral Index" means Aspect's index which is incorporated in
Aspect's A-1000 and A-1050 monitors used to monitor the hypnotic effects of
anesthetics on the brain.

         1.3 "BIS Software" means Aspect's software which computes the
Bispectral Index.

         1.4 "Digital Signal Converter" means an interface device that connects
to and accepts input from the Sensor or EEG electrodes, converts the signal into
digital form and inputs it into the Monitor or Module.

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         1.5 "Four Channel Digital Signal Converter" means a Digital Signal
Converter developed by SMI under this Agreement that utilizes four EEG channels
for use with the Module.

         1.6 "Fully Burdened Costs" means the direct and indirect costs to
manufacture a product, which costs are determined in accordance with generally
accepted accounting principles. Direct costs shall include direct materials and
direct labor costs associated with manufacturing the product. Indirect costs
mean the party's allocable overhead expenses which are applicable to the direct
costs of manufacturing the product.

         1.7 "International Territory" means all countries and territories of
the world other than Japan and the United States Territory.

         1.8 "Losses" means any claims, liability, suits, judgments, costs and
expenses (including but not limited to fines, penalties and reasonable
attorneys' fees).

         1.9 "Module" means an integral EEG module that (i) can be incorporated
into SMI's patient monitoring equipment, and (ii) incorporates the Bispectral
Index. The term "Module" specifically excludes interface devices that allow data
from any Monitor to be displayed on other patient monitoring equipment.

         1.10 "Monitor" means Aspect's EEG monitors which includes the
Bispectral Index, and all models of the EEG monitor, including those designated
by Aspect as its A-1000, A-1050, and A-2000 monitors (and such other
designations as Aspect may give to subsequently developed models of the
Monitor).

         1.11 "Monitor Products" means the Monitors and the related products
listed on Schedule A to this Agreement.

         1.12 "Proprietary Information" means all proprietary information and
materials of a party, whether or not patentable, which are communicated to,
learned of, or otherwise acquired by the other party during the course of this
Agreement.

         1.13 "Sensor" means Aspect's disposable EEG sensor comprised of an
array of electrodes known by Aspect as its ZipPrep disposable EEG sensor. The
Sensor is designed and configured to detect EEG signals utilized for purposes of
determining the Bispectral Index. The term "Sensor" specifically excludes
individual, stand alone electrodes.

         1.14 "Sensor Products" means the Sensor and the ZipPrep Electrode
Product, collectively.

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<PAGE>   7
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         1.15 "Specifications" means the product specifications established from
time to time by Aspect for its Monitor Products and Sensor Products.

         1.16 "United States Territory" means the United States of America
excluding its territories and protectorates.

         1.17 "ZipPrep Electrode Product" means the ZipPrep snap electrode
configuration that utilizes the ZipPrep Technology.

         1.18 "ZipPrep Technology" means the self-prepping electrode technology
which is proprietary to Aspect.

                   ARTICLE II - DISTRIBUTION RIGHTS TO MONITOR

         2.1 Appointment. Subject to the terms and conditions of this Agreement,
Aspect hereby appoints SMI as its exclusive distributor of the Monitor Products
for the International Territory. Aspect will refer promptly to SMI all inquiries
Aspect receives, including but not limited to orders, E-mail, etc. regarding
Monitor Products from within the International Territory. This appointment shall
commence on the date of this Agreement [**] of this Agreement, provided,
however, that SMI's exclusive rights to distribute the Monitor in the
International Territory may be extended for [**] in accordance with the
provisions of Section 2.13(b) of the Agreement.

         2.2 Claims. Aspect shall provide SMI with the text of any marketing
claims which are approved and/or cleared by the FDA; by providing the text of
such marketing claims to SMI, Aspect will be deemed to represent to SMI that
such claims have been approved and/or cleared by the FDA. Aspect may choose to
provide to SMI the text of other marketing claims which Aspect has determined
are permitted under applicable federal and state laws and regulations; by
providing the text of such other marketing claims to SMI, Aspect will be deemed
to represent to SMI that such claims are permitted under all applicable federal
and state laws and regulations governing such claims for use in the
International Territory. SMI shall have the right in the International Territory
(unless additional clearance is needed from applicable international regulatory
agencies), but not in the United States Territory, to make claims which are the
same or equivalent to the claims provided by Aspect. SMI shall defend, indemnify
and hold Aspect harmless from any and all Losses resulting from any breach of
its obligations set forth in this Section. In addition and notwithstanding any
other provisions of this Agreement, if a party breaches its obligations under
this Section, the other party shall have the right to immediately terminate this
Agreement in accordance with the provisions of Section 6.3. Aspect shall defend,
indemnify and hold SMI harmless from any and all Losses arising from SMI's use
of the text of claims which have been provided to SMI by Aspect or from

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<PAGE>   8
SMI's use of the text of claims in marketing materials which have been approved
in writing by Aspect as contemplated in this Section. In the event SMI elects to
incorporate in SMI's marketing materials the text of claims provided by Aspect
hereunder, SMI will provide Aspect copies of such materials for Aspect's
approval. Aspect will not unreasonably withhold such approval and will respond
to SMI within three business days of its receipt of such materials. If Aspect
fails to respond within three business days, such materials will be deemed to
approved by Aspect. The text of any claims which are "provided" by Aspect to SMI
as contemplated in this Section, must be designated by Aspect in writing as
claims which SMI may use in its own marketing materials.

         2.3 Approvals. Aspect, at its sole expense, shall be responsible for
obtaining the following safety approvals for the Monitors and the Sensor
Products, both individually and when used as a system: (a) UL Mark for Canada
("C UL"); (b) Mark for European Countries (compliance with EMC and/or Medical
Device Directive as required to sell into all countries in the European Union);
and (c) Underwriters Laboratory ("UL"). In connection with obtaining such safety
approvals, SMI shall be responsible for any required translation of the human
interface contained in the Monitor Products. At SMI's request, Aspect shall work
with SMI to implement any required translation of the human interface contained
in the Monitor Products, provided that (a) any direct costs incurred by Aspect
in translating or coding foreign language translations shall be reimbursed by
SMI as long as such costs have been approved in advance in writing by SMI, and
(b) SMI shall assist Aspect in validating such translation. SMI, at its sole
expense, shall be responsible for obtaining all other regulatory and marketing
approvals for the Monitor Products in those countries in the International
Territory in which SMI elects to distribute the Monitors. In addition, SMI shall
be responsible for obtaining safety approvals in those countries in the
International Territory in which SMI elects to distribute the monitors other
than those countries covered by the "C UL," the "CE," or the "UL" approvals. If
any language translations or product design changes are required in order for
SMI to obtain these additional safety, regulatory and marketing approvals,
Aspect shall assist SMI with such translations or changes, and SMI shall
reimburse Aspect for the reasonable and necessary costs associated with such
translations as long as such costs are approved in writing in advance by SMI.
Aspect, at its sole expense, shall be responsible for obtaining FDA clearance or
approval for the Monitor Products and Sensor Products for the United States
Territory. Aspect shall promptly apply for the approvals and clearances for
which it is responsible and shall diligently pursue such approvals and
clearances.

         2.4      Promotion.

                  (a) Promotion of Monitor Products. SMI shall use reasonable
efforts to promote the sale of the Monitor Products, and shall do so using the
Aspect name.

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<PAGE>   9
Such promotion shall include carrying the Monitor Products in its International
Price List.

                  (b) Advertising and Sales Promotional Material. Subject to
Section 2.2, Aspect shall provide SMI with reasonable quantities of certain
advertising and sales promotional material developed for Aspect's U.S. products
at no charge to SMI. At its expense and in its discretion, SMI may translate
these materials into the language or languages of its customers and provide
Aspect with at least one copy of all such materials. SMI shall be responsible
for the printing of all such materials. Aspect will provide SMI, at no charge to
SMI, any existing or available backup materials necessary to reproduce the
promotional materials of Aspect relating to the Monitor, Bispectral Index, or
Sensor, including but not limited to files, disks and artwork.

                  (c) Reimbursement. In no event shall either party be
responsible for any punitive, incidental or consequential damages, including
lost profits or lost sales, incurred by the other part and relating to the other
party's use of the promotional materials created in accordance with Sections 2.2
and 2.4; provided, however, that the foregoing limitation shall not limit or
modify a party's obligation under Section 2.2. If SMI receives notice that the
FDA intends to assess a fine, fee, assessment or other penalty, or receives any
notification from the FDA relating thereto, SMI shall promptly inform Aspect and
provide it with copies of all correspondence, notices and other materials
received by SMI from the FDA with respect thereto.

         2.5 Demonstration. SMI shall keep available at all reasonable times for
demonstration purposes sufficient numbers of Monitor Products as are necessary
for appropriate sales promotion. Such demonstration Monitor Products shall be in
a condition appropriate for sales promotion.

         2.6 Installation and Training. At its expense, SMI shall install the
Monitor Products on the premises of its customers of the Monitor Products and
shall train the employees of such customers to operate the Monitor Products. At
no charge to SMI, Aspect shall provide one copy of each user and technical
manual for each Monitor it ships to SMI and upon request shall provide SMI with
reasonable additional quantities of user and technical manuals. At its expense
and in its discretion, SMI may translate all user manuals (and any other manuals
required to sell the Monitor Products) into the language or languages of its
customers and shall provide Aspect both with copies of all such materials and
the master copy required to produce additional manuals. If SMI requests Aspect
to translate the human interface contained in the Monitor into a language other
than those languages required for the safety approvals listed in clauses (a),
(b) and (c) of Section 2.3 of this Agreement, Aspect shall perform such
translation at the expense of SMI and SMI shall reasonably cooperate with Aspect
in validating such translation. The costs of any such translation shall be
approved in writing in advance by SMI.

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         2.7 Service. SMI shall render prompt, workmanlike and willing service
with respect to the Monitor Products and shall use reasonable efforts to handle
satisfactorily all matters relating to the sale and servicing of the Monitor
Products in the International Territory. To facilitate timely customer service,
SMI may request support from Aspect. If such support is requested and approved
in writing by SMI and provided by Aspect, Aspect may, at its sole discretion,
bill SMI at Aspect's then current rates offered to similarly situated licensees
acquiring such services on similar terms and conditions for field or service
time and for reasonable expenses, provided that no charges shall be made for
services rendered by telephone (and Aspect hereby agrees to provide commercially
reasonable levels of telephone support). Aspect shall provide such support in a
prompt, workmanlike and willing manner. In addition, SMI shall use a method for
handling customer complaints which is the same or similar to that established by
SMI for its own products. SMI shall use reasonable efforts to maintain a supply
of spare parts and consumables to service the Monitor Products at levels
consistent with those maintained by SMI for its own products.

         2.8 Training by Aspect. Aspect shall train designated groups of
employees of SMI at times mutually agreeable to the parties (a) in the use,
marketing and sale of the Monitor Products at Aspect's facilities, provided that
Aspect shall not be required to conduct more than six such training sessions per
calendar year, and (b) in the servicing of the Monitor Products at Aspect's
facilities, provided that Aspect shall not be required to conduct more than six
such training sessions per calendar year. The direct out-of-pocket costs of
reasonable and necessary travel, lodging and meals for these training sessions
shall be borne by SMI. The internal costs incurred by Aspect for these training
sessions shall be borne by Aspect. Additional training sessions shall be
conducted with the mutual consent of both parties, and SMI shall be required to
reimburse Aspect at Aspect's then current billing rates for all Aspect employees
and consultants involved.

         2.9 Marketing Support in the International Territory. If SMI requests
Aspect to provide extraordinary marketing support (e.g. a lecture in the
International Territory by an Aspect representative, or protocol development in
the field) in the International Territory, over and above what Aspect is
required to provide under the other provisions by this Agreement, and over and
above what Aspect customarily provides to its own customers, then SMI will
reimburse Aspect for such support. The parties will agree on the costs, scope
and schedule for any extraordinary marketing support in advance and in writing
prior to Aspect's provision of such support.

         2.10 Provision of Spare Parts. Aspect shall provide SMI a reasonable
and adequate number of spare parts at no charge and on consignment for servicing
of warranty claims on the Monitor Products during the period in which SMI
maintains rights to distribute the Monitor. At the end of each calendar quarter,
SMI shall account to Aspect for the disposition and use of such spare parts, and
shall return to

                                      - 6 -
<PAGE>   11
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

Aspect all parts returned to SMI by its customers which were replaced with the
consigned spare parts. SMI's return of such parts to Aspect shall be at Aspect's
expense. SMI shall purchase spare parts from Aspect for servicing the
non-warranty claims during the period in which SMI maintains rights to
distribute the Monitor for the purpose of providing service to its customers. At
such time as SMI's rights to distribute the Monitor expire, at SMI's option,
Aspect will have the right and responsibility to furnish spare parts for the
Monitor Products directly to customers of SMI, provided that SMI shall provide
to Aspect promptly at such time all customer records and information necessary
for Aspect to provide such customers with spare parts. Alternatively, SMI may
elect to purchase spare parts from Aspect for the purpose of servicing
non-warranty claims of its customers.

         2.11 Right of Aspect to Contact Customers. SMI shall notify Aspect on a
quarterly basis of each customer order in the International Territory for any
Monitor. Aspect shall have the right to contact the customers of SMI solely for
the purpose of assessing and ensuring customer satisfaction with the Monitor
Products. Aspect shall advise SMI of all contacts relating to its assessment of
customer satisfaction with the Monitor Products on a regular basis. Information
provided by SMI to Aspect pursuant to this Section 2.11 shall constitute
Proprietary Information of SMI. Aspect shall provide SMI with the information it
obtains from each such customer, on an ongoing basis.

         2.12     Purchase Price.

                  (a) The purchase price for Monitors, with the exception of (i)
purchases of units for demonstration, loaner and similar purposes, and (ii) the
[**] Monitors purchased by SMI upon execution of this Agreement, shall be [**]
for the [**]; the price of the [**] and any [**] shall be [**] of Aspect's
material costs for the [**] or such [**] for such Monitor(s), [**]. The purchase
price for the [**] Monitors purchased by SMI upon execution of this Agreement,
and for [**] Monitors purchased for demonstration, loaner and similar purposes
during the first year of this Agreement, shall be [**] per Monitor.

                  (b) The purchase price for each other Monitor Product (other
than Monitors) for the International Territory shall be Aspect's United States
list price existing from time to time less that percentage discount as is set
forth on Schedule A to this Agreement. The particular purchase price for each
order shall be determined at the time of order. Aspect (i) shall [**] and (ii)
shall provide SMI with [**] of any

                                      - 7 -
<PAGE>   12
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

price increase. Aspect's price increases will not be effective on any SMI orders
that have been subject to a written price quotation provided to a customer
within 60 days of receipt by SMI of the notification of such increase. Aspect
shall have the right to review the documentation relating to any such price
quotations.

                  (c) Aspect shall provide SMI reasonable sales records, sales
reports and cost and pricing information upon request to enable SMI to confirm
the accuracy of the prices charged by Aspect under this Section 2.12. SMI shall
be entitled to audit such information and records pursuant to Section 8.2.

         2.13     International Purchase Requirements.

                  (a) To maintain its exclusive right to distribute the Monitor
Products in the International Territory under this Agreement, SMI agrees to
purchase for resale to customers in the International Territory the following
minimum number of Monitors during the time periods indicated below. Purchases of
Monitors for demonstration, loaner, or other similar purposes do not count
towards SMI's minimum purchase requirements.

<TABLE>
<CAPTION>
                          PERIOD                               NUMBER OF MONITORS
<S>                                                    <C>
First Year (expiring on April 1, 1997, the                            [**]
first anniversary of this Agreement)                   (Upon execution of this Agreement)
                                                                      [**]
                                                       (during the remainder of the year.)
Second Year                                                           [**]
Third Year                                                            [**]
</TABLE>

Note A: SMI will [**] to be purchased by SMI upon execution of this Agreement
[**] from the April 1, 1996 effective date of this Agreement through the date
SMI executes this Agreement. In the third year, SMI's minimum number of Monitors
will [**] for that period. On a quarterly basis, [**]. SMI shall be deemed to
have met the minimum Monitor purchase requirements if [**] for that year. In
calculating Aspect's sales of Monitors for this purpose, the parties will [**]
on an [**] at a [**] then current list [**].

                                      - 8 -
<PAGE>   13
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

                  (b) SMI shall be entitled to an automatic extension, as
described in the balance of this paragraph, of its exclusive rights to
distribute the Monitors in the International Territory if SMI's purchase of
Monitors for distribution in the International Territory are equal to or greater
than [**] in the U.S. This extension shall be granted automatically for the [**]
if SMI's Monitor purchases for International Territory in the [**] for the [**]
and shall continue for the [**] continue to [**] for the [**] if SMI's Monitor
purchases for the International Territory during the [**] continue to [**] in
the [**]. Prior to the end of [**], Aspect and SMI will in good faith discuss
mutually satisfactory, commercially reasonable terms for extending SMI's
exclusive rights to distribute the Monitor in the International Territory for an
additional period of time under this Agreement.

                  (c) SMI's compliance with the minimum purchase requirements
for each year of this Agreement will be jointly confirmed by the parties as soon
as practicable following the end of the year, but in no event more than [**]
following the end of the year. If SMI fails, with respect to any year, to meet
the minimum purchase requirements set forth above, Aspect may, on written notice
to SMI, elect to terminate SMI's right to distribute the Monitor. Upon receipt
of any such termination notice, SMI will have [**] within which to purchase
sufficient quantities of the Monitors to satisfy the minimum purchase
requirements. If Aspect elects not to terminate SMI's distribution rights
notwithstanding the failure of SMI to meet its total minimum purchase
requirements with respect to any year, Aspect shall have the right to terminate
such rights if, during the next succeeding year, SMI fails to meet a total
minimum purchase requirement equal to the sum of (i) the [**] for the [**] plus
(ii) the [**] by which the [**] for the [**] by SMI during the preceding year.

         2.14 Forecasts. At least [**] to the [**] of each [**], upon Aspect's
request, SMI shall provide Aspect with an estimated forecast of its requirements
of Monitor Products for such [**] broken out on a monthly basis and on an area
basis. Such forecasts shall be furnished solely for planning purposes and shall
not constitute a commitment to purchase.

         2.15 Orders. All orders for Monitor Products shall be in writing.
Aspect shall fill each order from SMI within [**] after its receipt of the
order, provided that the aggregate of all orders placed by SMI during any
calendar quarter does not exceed the aggregate of the orders required to be
filled by Aspect during the immediately preceding calendar quarter by more than
[**]. In any event Aspect shall (i) fill orders during the calendar quarter up
to an aggregate of [**] of the aggregate amount of the orders required to be
filled by Aspect during the preceding calendar quarter, and (ii) Aspect shall
use reasonable efforts to fill the remaining portion of the order(s) as soon as
practicable thereafter. All sales of the Monitor Products shall be subject to
the terms and conditions of this Agreement, which terms and conditions shall
control to the extent that they conflict with the terms of any purchase order or
order confirmation. No terms in any purchase order for the Monitor Products
shall affect the dealings between the parties except as specifically set forth
in this Section 2.15, or as otherwise agreed in a written document signed by
both parties.

                                      - 9 -
<PAGE>   14
         2.16 Shipment. Aspect shall ship the Monitor Products from its
manufacturing facility to the destinations specified by SMI. Freight and
insurance charges prepaid by Aspect shall be added to the purchase price for the
Monitor Products or billed separately to SMI. SMI shall be responsible for
payment of all export and import duties, local taxes and similar charges with
respect to the Monitor Products.

         2.17 Labeling. All Monitor Products shall be labeled and packaged in
the manner standard for Aspect unless otherwise requested by SMI. SMI will pay
any incremental costs incurred by Aspect to modify, at SMI's request, the
labeling or packaging of Monitor Products shipped to SMI or its customers, if
such costs are approved writing in advance by SMI.

         2.18 Title and Risk of Loss. Title and ownership of the Monitor
Products shall pass to SMI upon delivery of the Monitor Products to the
destination(s) specified by to SMI pursuant to Section 2.16 of this Agreement.
Risk of loss to the Monitor Products following delivery of the Monitor Products
to a common carrier at Aspect's manufacturing facility shall be borne by SMI,
which shall reimburse Aspect for all claims of loss or damage to the Monitor
Products in transit. Aspect shall cooperate with and assist SMI in processing
all claims for loss or damage to the Monitor Products.

         2.19 Payment. Aspect shall invoice SMI for the Monitor Products upon
delivery to a common carrier for shipment. The terms of payment granted to SMI
shall be net 60 days from the date of invoice. All payments by SMI to Aspect
shall be in the currency of the United States.

         2.20 Warranty. Aspect warrants to SMI that each Monitor Product
(including expendable and supply items such as, but not limited to, electrodes,
cables and prep solutions) sold by it to SMI (a) shall be in good working
condition and free from defects in material and workmanship when given normal,
proper and intended usage and (b) with respect to the Monitor Products listed on
Schedule A, shall conform to its Specifications for the period of time set forth
on Schedule A to this Agreement for such Monitor Product measured from the date
of shipment of such Monitor Product to SMI or other destination designated by
SMI. For all other consumable supplies (including expendable and supply items
such as, but not limited to, electrodes, cables, and prep solutions) provided by
Aspect for use with the Monitor Products which were manufactured by third
parties, Aspect shall pass on the manufacturers warranties provided that Aspect
has the right to do so. Aspect shall not be responsible for defects which are
not due to a breach of Aspect's warranty such as, but not limited to, defects
due to fault or negligence on the part of the customer or SMI, or improper or
unauthorized use of the Monitor by the customer or SMI.

                                     - 10 -
<PAGE>   15
         EXCEPT AS PROVIDED IN THIS AGREEMENT, ASPECT DISCLAIMS ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE MONITOR
PRODUCTS, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM
THE BREACH OF THIS AGREEMENT, INCLUDING A BREACH BY ASPECT OF THE ABOVE STATED
WARRANTY. NOTHING IN THIS LIMITATION WILL BE DEEMED TO LIMIT ASPECT'S
OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS SMI IN ACCORDANCE WITH
SECTIONS 2.2, 2.4, 2.23, 2.24, 2.25 AND 8.11.

         SMI shall undertake reasonable and appropriate action permitted or
required by the laws and regulations of the International Territory to ensure
that Aspect's limits of warranty responsibility as set forth above are valid and
enforceable against whomever they are applicable, to the extent permitted by
applicable law.

         2.21 Warranty Claims. Under its warranty, Aspect shall repair or
replace, at its discretion, each demonstrably defective part returned by SMI,
provided that such parts shall have been returned to Aspect with all charges
prepaid by SMI within the time provided by and substantially in accordance with
Aspect's current instructions and procedures relating to returns. The
replacement part will come from Aspect's stock and may be new or refurbished. In
the case of refurbished parts, the warranty set forth in Section 2.20 of this
Agreement shall apply as if such parts were new. Aspect shall respond promptly
to any claims by SMI that any Monitor Product fails to conform to the warranty
set forth in Section 2.20. For allowed warranty claims, SMI shall pay for
transportation of Monitor Products (or components thereof) from the customer's
facility to the facility designated by Aspect, and Aspect shall pay for
transportation of replacement or repaired parts from Aspect's manufacturing
facility to the customer's facility. The party obligated to pay for such
transportation shall be responsible for all shipping costs, taxes, export and
import duties and other costs associated with the transportation of the parts.
If the returned part is not demonstrably defective, Aspect shall return the part
to SMI if SMI so requests; in that case, the costs of transportation shall be
borne by SMI. All labor costs for replacement of the defective part in the field
shall be borne by SMI.

         2.22 Customer Complaints. SMI shall provide Aspect, on a quarterly
basis, with a written report of all customer complaints which require written
notifications to, or follow-up with, any regulatory agency, and follow-up
activities conducted by SMI relating to the Monitor Products. SMI shall notify
Aspect immediately of any complaints involving death or serious injury (MDR
reports) or of any other material complaints relating to the safety or efficacy
of the Monitor Products.

                                     - 11 -
<PAGE>   16
         2.23 Recalls. Upon receipt of any information relating to the safety or
efficacy of the Monitor Products, Aspect shall consult with SMI in an effort to
arrive at a mutually acceptable procedure for taking appropriate action, it
being understood that the ultimate decision-making authority shall rest with
Aspect, provided, however, that Aspect shall comply with all laws, regulations
and FDA and other agency guidelines regarding recalls. SMI agrees to follow any
reasonable recall or general corrective action procedures submitted to it by
Aspect and Aspect shall indemnify, defend and hold harmless SMI from any Losses
arising from any such recall or general corrective action. SMI shall be
responsible for maintaining sales records sufficient to effect any required
recall or general corrective action.

         2.24 Product Liability. Aspect hereby agrees to indemnify, defend and
hold harmless SMI, its affiliates, directors, officers, employees and agents,
from and against Losses arising out of or in connection with the marketing, sale
or service of any Monitor Product, including, but not limited to, any actual or
alleged injury, damage, death or other consequence occurring to any person as a
result, directly or indirectly, of the possession or use of any such Monitor
Product, whether claimed by reason of breach of warranty, negligence, product
defect or otherwise, and regardless of the form in which such claim is made,
provided that such Losses arise from or are related to (a) a defect in the
design, manufacture or repair (to the extent the repair is performed by Aspect
or its agents other than SMI and SMI's subdistributors) of a Monitor Product or
the use of the Bispectral Index in accordance with its claims or (b) the
negligence, recklessness or intentional misconduct of Aspect. If SMI becomes
aware of a product liability claim which might give rise to a right or
obligation of indemnification and defense as provided herein, SMI shall promptly
notify Aspect. Aspect shall control and bear the full expense of the defense
against or settlement of such claim. SMI shall cooperate in such action if
reasonably necessary and requested by Aspect. In no event shall Aspect settle
any matter involving SMI without the prior written consent of SMI, which consent
shall not be unreasonably withheld. SMI may, in its own discretion, be
represented in the defense or settlement of any such claim by counsel of its own
choosing at its sole expense.

         2.25     Claimed Infringement.

                  (a) Aspect hereby agrees to indemnify, defend and hold
harmless SMI, its affiliates, directors, officers, employees and agents, from
and against all Losses arising out of or in connection with any claim by a third
party that the manufacture, use or sale of a Monitor Product infringes any
intellectual property right claimed by such third party and relating to the
intellectual property rights owned by such party. If SMI becomes aware of an
infringement allegation which might give rise to a right or obligation of
indemnification and defense as provided herein, SMI shall promptly notify
Aspect. Aspect shall control, bear the full expense of and retain all proceeds
of the defense against or settlement of such allegation. SMI shall cooperate in
such action if reasonably necessary and requested by Aspect. In no

                                     - 12 -
<PAGE>   17
event shall Aspect settle any matter involving SMI without the prior written
consent of SMI, which consent will not be unreasonably withheld or delayed. SMI
may, in its own discretion, be represented in the defense or settlement of any
such allegation by counsel of its own choosing at its sole expense.

                  (b) Should any Monitor Product become the subject of an
injunction preventing its use or sale as contemplated herein, Aspect shall, at
its option (and in addition to its obligations under subsection 2.25(a)),
promptly (1) procure for SMI the right to continue to use and sell such Monitor
Product, (2) replace or modify such Monitor Product so that it becomes
non-infringing or, if options (1) and (2) are not reasonably available to
Aspect, then (3) terminate SMI's license to the allegedly infringing Monitor
Product and refund to SMI the amounts paid to Aspect for all Monitor Products,
parts or supplies in the possession of SMI or its subdistributors, upon the
return of the Monitor Products to Aspect. In addition, Aspect may undertake any
of the foregoing options (1), (2) and (3) if Aspect determines, in its
reasonable opinion, that a Monitor Product is likely to become the subject of an
injunction preventing its use or sale as contemplated herein.

                  (c) Aspect shall have no liability or obligation to SMI
hereunder with respect to any patent, copyright, trade secret or other
intellectual property infringement or claim thereof, to the extent such
liability or obligation is based upon (i) use or sale of a Monitor Product in
combination with devices or products not provided by Aspect, (ii) use of other
than the most recently mandatory released version of any software in a Monitor
Product or (iii) modifications, alterations or enhancements of a Monitor Product
not created by or for Aspect. SMI shall indemnify and hold Aspect harmless from
all costs, damages and expenses (including reasonable attorneys' fees) arising
from any claim enumerated in the preceding sentence. The limitations set forth
in the foregoing clause (ii) shall only apply to the extent Aspect has made the
most recently released version of the software available to SMI at no cost to
SMI for incorporation in Monitor Products which are then in SMI's possession or
have been previously distributed by SMI and the liability or obligation arises
after Aspect makes such revised version available to SMI. SMI will return the
PromCards for any such infringing software to Aspect upon receipt of replacement
PromCards; if the infringing PromCards are not returned to Aspect within six (6)
months of SMI's receipt of the replacement PromCards, Aspect will have the right
to charge SMI a reasonable amount for such unreturned PromCards.

                                     - 13 -
<PAGE>   18
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         2.26 Clinical Testing. If SMI desires to conduct any clinical testing
of the Monitor, where the data from such testing is expected to be presented at
a public forum or be published, SMI shall advise Aspect and no such clinical
testing shall occur unless Aspect shall first have approved the protocols for
such clinical testing. Aspect shall not unreasonably delay or withhold its
approval of such clinical testing.

         2.27 Restrictive Covenant. During the term of the appointment set forth
in Section 2.1 of this Agreement, SMI will not directly engage in, and will use
good faith and reasonable efforts to prevent its subdistributors from engaging
in, the sale of any products competitive with the Monitor, Aspect's Digital
Signal Converter(s), or the Bispectral Index (a "Competitive Monitor Product"),
except for the Module, an SMI EEG module which does not incorporate technology
competitive with the Bispectral Index, or SMI's Four Channel Digital Signal
Converters for which SMI has paid Aspect the license fee specified in Article IV
of this Agreement. Furthermore, in the event that SMI directly engages in the
sale of any Competitive Monitor Product, or fails (within thirty (30) days after
notice from Aspect) to use good faith and reasonable efforts to prevent a
subdistributor from engaging in the sale of any Competitive Monitor Product,
Aspect shall have the right to terminate the right of SMI to distribute Monitor
Products, effective thirty (30) days after delivery of written notice to SMI. In
the event that SMI fails to prevent a subdistributor from engaging in the sale
of any Competitive Monitor Product Aspect shall have the right to terminate the
right of SMI to distribute Monitor Products in the country for which the
subdistributor is responsible. SMI's obligation to prevent its subdistributors
from breaching the foregoing restrictive covenant shall not require SMI to take
any action which is illegal under any applicable laws or which could reasonably
be expected to expose SMI to liability in damages to the subdistributor or the
subdistributor's customers.

         2.28 Improvements. In the event that Aspect develops an improved
version of the software embedded in the Monitor, Aspect shall supply such
upgrades to SMI to meet customer requirements. SMI shall be required to pay for
all software upgrades to the Monitor affected through the use of the PromCard
and all related shipping charges. The price to SMI of software upgrades will be
set at [**]. SMI agrees to use reasonable efforts to make the software upgrades
to the Monitor relating to improved performance of the Bispectral Index
available to its customers which have purchased the Monitor. If Aspect requests
that SMI provide the software upgrade free of charge to SMI customers that have
purchased the Monitor, and so informs SMI in writing, SMI agrees to take all
reasonable steps to distribute the software upgrade at no cost to the SMI
customers which have purchased the Monitor. Aspect shall provide updated
software to SMI in the form of a PromCard. Aspect will charge SMI a reasonable
cost for each PromCard, but will issue a credit to SMI

                                     - 14 -
<PAGE>   19
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

 for the cost of the PromCard when each old PromCard is returned. In such event,
all reasonable shipping expenses incurred by SMI to send the software upgrade to
SMI customers will be borne by Aspect.

         2.29 Obsolete Products. In the event Aspect elects to discontinue the
production of a particular model of Monitor Product because such Monitor Product
has been replaced by later models, Aspect shall provide SMI not less than six
(6) months prior written notice (the "Notice Period") of such discontinuance,
and shall fill such orders for the discontinued Monitor Product(s) as SMI
reasonably determines prior to the end of the Notice Period, will be required to
enable SMI to meet the requirements of its subdistributors and customers.

              ARTICLE III - DISTRIBUTION RIGHTS TO SENSOR PRODUCTS

         3.1 Appointment. Subject to the terms and conditions of this Agreement,
Aspect hereby appoints SMI as (a) a nonexclusive distributor of the Sensor for
the International Territory, (b) a nonexclusive distributor of the Sensor for
Japan, and (c) a nonexclusive distributor of the ZipPrep Electrode Product in
the United States Territory, the International Territory and Japan. SMI shall
not distribute the Sensor in the United States Territory; provided, however,
that Aspect agrees to sell to SMI (at the same price that Sensors are sold to
[**] in the International Territory) a limited number of Sensors that SMI may
distribute in the [**]. Aspect shall not be required to sell SMI more than [**]
of the expected requirements for Sensors (established by Aspect's consumption
rate for Sensors) for new Modules sold by SMI in the [**]. By way of example, if
SMI has an installed base of [**] Modules in the [**] at the end of 1996, and
sells [**] new Modules in the [**] in 1997 to increase the installed base from
[**], and Aspect's consumption rate for Sensors is [**] Sensors/year per system,
SMI may distribute [**] Sensors in the [**] in 1997. This appointment shall
commence on the date of this Agreement and shall expire on the [**] anniversary
of this Agreement.

         3.2 Availability. Aspect agrees to use reasonable efforts to pursue and
receive 510(K) clearance from the FDA for the Sensor Products and to make the
Sensor Products available for commercial distribution by SMI for use with
Monitor Products and Modules. Except as provided by law, SMI at its sole expense
and in its reasonable discretion, shall be responsible for obtaining the
necessary regulatory and marketing approvals for the Sensor for all countries in
the International Territory in which the Monitor or Module will be distributed.
In the event that SMI is prohibited from obtaining such approvals, SMI shall
reimburse Aspect for Aspect's reasonable

                                     - 15 -
<PAGE>   20
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

 costs incurred in assisting SMI to obtain such approvals, provided that SMI
shall approve all expenses in writing and advance.

         3.3 Promotion. SMI shall use reasonable efforts to promote the sale of
the Sensor in the International Territory and Japan under Aspect's ZipPrep
trademark. Aspect shall provide SMI with reasonable quantities of its
advertising and sales promotion material at no charge to SMI. At its expense and
in its discretion, SMI may translate Aspect's advertising and sales promotion
material into the language or languages of its customers and provide Aspect with
copies of all such materials. Aspect shall not provide copies of such translated
material to its other customers, including distributors, nor permit the
customers or distributors to use them, but shall own the copyright to such
translations (which rights SMI will be deemed to assign to Aspect upon creation
of the translations). Aspect hereby grants SMI a royalty free license to use
such translations during the term of this Agreement throughout the International
Territory.

         3.4 Purchase Price. The purchase price for the Sensor Products shall be
[**] for the [**] existing from time to time (the "International and Japanese
Sensor Purchase Price"), but in no event [**] for the Sensor Products. SMI's
purchase price for Sensor Products shall be determined at each anniversary of
this Agreement and be based on [**] over the prior [**]. Aspect agrees to
provide SMI reasonable sales records and reports upon request to enable SMI to
confirm the accuracy of the prices charged by Aspect under this Section 3.4. SMI
may audit this information in accordance with Section 8.2.

         3.5 Additional Payments. Aspect shall make the following payments to
SMI with respect to Net Sales (as defined below) in the United States Territory:

                  (a) During the term of this Agreement, Aspect shall pay to SMI
[**] of the [**] in the [**] sold to accounts at which [**], provided that if
[**], the payment to SMI shall be [**] and/or [**] to such [**]. By way of
illustration, if (i) [**] to Account X in a year, (ii) [**] to Account X, and
(iii) [**] has previously [**] to Account X, then the additional payment shall
be determined as follows:

                                     - 16 -
<PAGE>   21
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

                          Number of Units Sold by
                                   [**]
[**]                     Total Number of Unit Sold                        = [**]
                           by SMI and Aspect to
                              Account X [**]

                  (b) As used in subsection (a), "Net Sales" means the gross
revenues realized by Aspect from or on account of the sales of Sensors sold in
the United States Territory to the accounts described in subsection (a), less
(i) credits or allowances, if any, actually granted on account of price
adjustments, rejection or return of items previously sold, (ii) excises, sales
taxes, duties or other taxes or franchise taxes imposed upon and paid with
respect to such sales (excluding income taxes), and (iii) separately itemized
insurance and transportation costs incurred in shipping products.

         3.6 Forecasts. Beginning with the quarter in which Aspect and SMI
anticipate that the Sensor Products will become commercially available, at least
four weeks prior to the commencement of each quarter, upon Aspect's request, SMI
shall provide Aspect with a forecast of its requirements of Sensors for such
quarter and for the ensuing three quarters broken out on a monthly basis and for
the International Territory, United States Territory and Japan. Such forecasts
shall be furnished solely for planning purposes and shall not constitute a
commitment to purchase.

         3.7 Orders. Promptly after the receipt from Aspect of written
notification of the availability of the Sensor Products for commercial
distribution, SMI shall order Sensor Products from Aspect when and as needed in
order to fulfill its responsibilities under this Agreement. All orders shall be
in writing. Aspect shall fill each order from SMI within 90 days after receipt
of the order, provided that the aggregate of all orders placed by SMI during any
calendar quarter does not exceed the aggregate of the orders required to be
filled by Aspect during the immediately preceding calendar quarter by more than
[**]. In any event, Aspect shall (i) fill orders during the calendar quarter up
to an aggregate of [**] of the aggregate amount of the orders required to be
filled by Aspect during the preceding calendar quarter, and (ii) Aspect shall
use reasonable efforts to fill the remaining portion of the order(s) as soon as
practicable thereafter. All sales of the Sensor Products shall be subject to the
terms and conditions of this Agreement, which terms and conditions shall control
to the extent that they conflict with the terms of any purchase order or order
confirmation.

                                     - 17 -
<PAGE>   22
         3.8 Shipment. Aspect shall ship the Sensor Products F.O.B. its
manufacturing facility to the destinations specified by SMI. Freight and
insurance charges prepaid by Aspect shall be added to the purchase price for the
Sensor Products or billed separately to SMI. SMI shall be responsible for
payment of all export and import duties, local taxes and similar charges with
respect to the Sensor Products.

         3.9 Labeling. All Sensor Products shall be labeled and packaged in the
manner standard for Aspect unless otherwise requested by SMI. SMI will pay any
incremental costs incurred by Aspect to modify, at SMI's request, the labeling
or packaging of Sensor Products shipped to SMI or its customers, if such costs
are approved in writing in advance by SMI.

         3.10 Title and Risk of Loss. Title and ownership of and risk of loss to
the Sensor Products shall pass to SMI upon delivery of the Sensor Products to a
common carrier at Aspect's manufacturing facility. Aspect shall cooperate with
SMI in processing all claims for loss or damage to the Sensor Products.

         3.11 Payment. Aspect shall invoice SMI for the Sensor Products upon
delivery to a common carrier for shipment. The terms of payment granted to SMI
shall be net 60 days from the date of invoice. All payments by SMI to Aspect
shall be in the currency of the United States.

         3.12 Warranty. Aspect warrants to SMI that each Sensor Product sold by
it to SMI (a) shall be in good working condition and free from defects in
material and workmanship when given normal, proper and intended usage and (b)
shall conform to its Specifications for a period of six (6) months from the date
of shipment of the Sensor Products to SMI. For all other consumable supplies
provided by Aspect for use with the Monitor Products which were manufactured by
third parties, Aspect shall provide the manufacturers warranties to SMI. Aspect
shall not be responsible for defects which are not due to a breach of Aspect's
warranty such as, but not limited to, defects due to fault or negligence on the
part of the customer or SMI, or improper or unauthorized use of the Sensor
Products by the customer or SMI.

         EXCEPT AS PROVIDED IN THIS AGREEMENT, ASPECT DISCLAIMS ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE SENSOR
PRODUCTS, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER
PARTY BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING FROM
THE BREACH OF THIS AGREEMENT, INCLUDING A BREACH BY ASPECT OF THE ABOVE STATED
WARRANTY. NOTHING IN THIS LIMITATION WILL BE DEEMED TO LIMIT ASPECT'S
OBLIGATIONS TO DEFEND, INDEMNIFY OR

                                     - 18 -
<PAGE>   23
HOLD HARMLESS SMI IN ACCORDANCE WITH SECTIONS 2.2, 2.25, 3.15, 3.16 AND 8.11.

         SMI shall undertake all reasonable and appropriate actions permitted or
required by laws and regulations of the Territory to ensure that Aspect's limits
of warranty responsibility as set forth above are valid and enforceable against
whomever they are applicable to the extent permitted by applicable law.

         3.13 Warranty Claims. Under its warranty, Aspect shall replace each
demonstrably defective Sensor Product and other consumable supplies provided by
Aspect for use with the Sensor Product, returned by SMI, provided that such
Sensor Products shall have been returned to Aspect with all charges prepaid by
SMI (or destroyed by SMI or its customers at Aspect's request) within the time
provided by and substantially in accordance with Aspect's current instructions
and procedures relating to returns. Aspect shall respond promptly to any claims
by SMI that any Sensor Product and consumable supplies fails to conform to the
warranty set forth in Section 3.12. For allowed warranty claims, Aspect shall
pay for transportation of replacements from Aspect's manufacturing facility to
SMI customer. The party obligated to pay for such transportation shall be
responsible for all shipping costs, taxes, export and import duties and other
costs associated with the transportation of Sensor Products. If the returned
Sensor Product is not demonstrably defective, Aspect shall return the Sensor
Product if SMI so requests; in that case, the costs of transportation shall be
borne by SMI. All labor costs for replacement of the defective Sensor Products
in the field shall be borne by SMI.

         3.14 Customer Complaints. SMI shall provide Aspect, on a quarterly
basis, with a written report of all customer complaints which require written
notification to, or follow up with, any regulatory agency, and follow up
activities conducted by SMI relating to the Sensor. SMI shall notify Aspect
immediately of any complaints involving death or serious injury (MDR reports) or
of any other material complaints relating to the safety or efficacy of the
Sensor Products.

         3.15 Recalls. Upon receipt of any information relating to the safety or
efficacy of the Sensor Products, Aspect shall consult with SMI in an effort to
arrive at a mutually acceptable procedure for taking appropriate action, it
being understood that the ultimate decision-making authority shall rest with
Aspect, provided, however, that Aspect shall comply with all laws, regulations
and FDA and other agency guidelines regarding recalls. SMI agrees to follow any
reasonable recall or general corrective action procedures submitted to it by
Aspect and Aspect shall indemnify, defend and hold harmless SMI from any Losses
arising from any such recall or general corrective action. SMI shall be
responsible for maintaining sales records sufficient to effect any required
recall or general corrective action.

                                     - 19 -
<PAGE>   24
         3.16 Product Liability. Aspect hereby agrees to indemnify, defend and
hold harmless SMI, its affiliates, directors, officers, employees and agents,
from and against all Losses arising out of or in connection with the marketing
or sale of any Sensor Product, including, but not limited to, any actual or
alleged injury, damage, death or other consequence occurring to any person as a
result, directly or indirectly, of the possession or use of any such Sensor
Product, whether claimed by reason of breach of warranty, negligence, product
defect or otherwise, and regardless of the form in which such claim is made,
provided that such Losses arise from or are related to (a) a defect in the
design or manufacture of the Sensor Product or improper written instructions for
use of the Sensor Product provided by Aspect, or (b) the negligence,
recklessness or intentional misconduct of Aspect. If SMI becomes aware of a
product liability claim which might give rise to a right or obligation of
indemnification and defense as provided herein, SMI shall promptly notify
Aspect. Aspect shall control and bear the full expense of the defense against or
settlement of such claim. SMI shall cooperate in such action if reasonably
necessary and requested by Aspect. In no event shall Aspect settle any matter
involving SMI without the prior written consent of SMI, which consent will not
be unreasonably withheld or delayed. SMI may, in its own discretion, be
represented in the defense or settlement of any such claim by counsel of its own
choosing at its sole expense.

         3.17     Claimed Infringement.

                  (a) Aspect hereby agrees to indemnify, defend and hold
harmless SMI, its affiliates, directors, officers, employees and agents, from
and against all Losses arising out of or in connection with any claim by a third
party that the manufacture, use or sale of a Sensor Product infringes any
intellectual property right claimed by such third party and relating to the
intellectual property rights owned by such party. If SMI becomes aware of an
infringement allegation which might give rise to a right or obligation of
indemnification and defense as provided herein, SMI shall promptly notify
Aspect. Aspect shall control, bear the full expense of and retain all proceeds
of the defense against or settlement of such allegation. SMI shall cooperate in
such action if reasonably necessary and requested by Aspect. In no event shall
Aspect settle any matter involving SMI without the prior written consent of SMI,
which consent shall not be unreasonably withheld or delayed. SMI may, in its own
discretion, be represented in the defense or settlement of any such allegation
by counsel of its own choosing at its sole expense.

                  (b) Should any Sensor Product become the subject of an
injunction preventing its use or sale as contemplated herein, Aspect shall (in
addition to its obligations under Section 3.17), at its option, promptly (1)
procure for SMI the right to continue to use and sell such Sensor Product, (2)
replace or modify such Sensor Product so that it becomes non-infringing or, if
options (1) and (2) are not reasonably available to Aspect, then (3) terminate
SMI's license to the allegedly infringing Sensor Product and refund to SMI the
amounts paid to Aspect for all Sensor Products in the

                                     - 20 -
<PAGE>   25
possession of SMI or its subdistributors, upon the return of the Sensor Products
to Aspect. In addition, Aspect may undertake any of the foregoing options (1),
(2) and (3) if Aspect determines, in its reasonable opinion, that a Sensor
Product is likely to become the subject of an injunction preventing its use or
sale as contemplated herein.

                  (c) Aspect shall have no liability or obligation to SMI
hereunder with respect to any patent, copyright, trade secret or other
intellectual property infringement or claim thereof, to the extent such
liability or obligation is based upon (i) use or sale of a Sensor Product in
combination with devices or products not provided by Aspect, or (ii)
modifications, alterations or enhancements of a Sensor Product not created by or
for Aspect. SMI shall indemnify and hold Aspect harmless from all costs, damages
and expenses (including reasonable attorneys' fees) arising from any claim
enumerated in the preceding sentence.

         3.18 Improvements. In the event that Aspect develops an improved
version of the Sensor Products, the rights set forth in this Agreement with
respect to the Sensor Products shall apply to the improved version of the Sensor
Products at such time as the improved version of the Sensor Products first
becomes available for commercial distribution. Notwithstanding the foregoing, in
the event that Aspect is able to document an increase in the cost to manufacture
the improved version of the Sensor Products, Aspect shall be entitled to a
commensurate increase in the International and Japanese Sensor Product Purchase
Price.

         3.19 Failure to Supply. If, at any time during the term of this
Agreement, Aspect shall fail to supply SMI with Sensors in accordance with
Section 3.7, Aspect and SMI shall meet to discuss the situation promptly
following written notice from SMI of Aspect's failure to supply, and shall
cooperate in good faith to resolve the reason for the failure to supply. If
Aspect and SMI are unable to agree on a resolution within 30 days of Aspect's
receipt of SMI's written notice of Aspect's failure to supply, and if Aspect is
unable to meet SMI's requirements for Sensors within such period, SMI shall have
the right (in addition to its other rights and remedies hereunder) to choose one
of the following options for meeting its customers' requirements for Sensors:

                  (a) SMI may elect to manufacture its Sensor requirements. In
the event SMI elects this option, SMI will not be required to pay Aspect a
royalty during the period in which SMI is manufacturing the Sensor. However,
when Aspect is once again able to supply SMI with its requirements for Sensors,
Aspect may do so on the same terms that existed prior to the interruption of
supply, provided that SMI will be allowed to continue to manufacture Sensors for
a sufficiently long period of time to recover its investment in establishing
Sensor production. For this purpose, "sufficiently long" means the point at
which SMI's investment in tooling and non-recurring engineering costs to
establish Sensor production equals SMI's gross

                                     - 21 -
<PAGE>   26
margin per Sensor (calculated using its Fully Burdened Costs) multiplied by the
total quantity of Sensors produced by SMI; or

                  (b) SMI may select an alternative electrode set to provide BIS
functionality, provided that the alternative electrode set will maintain the
closed nature of the BIS Software system to the reasonable satisfaction of
Aspect through a proprietary connector or other means. When Aspect is once again
able to supply SMI with its requirements for Sensors, Aspect may do so on the
same terms that existed prior to the interruption of supply, provided that SMI
will be allowed to continue to utilize the alternative electrode set for up to
60 days.

         In the event the failure to supply exceeds one year, SMI will have the
right to utilize an alternative electrode set of its own choosing on a
royalty-free basis in perpetuity. Notwithstanding anything to the contrary in
this Agreement, the foregoing rights of SMI shall not apply if Aspect's failure
to supply SMI is excused pursuant to Section 8.4 of this Agreement. At any time
during the term of this Agreement, Aspect will, at SMI's request, deposit into
escrow all drawings, diagrams, schematics, source code and other proprietary
information which may be necessary or desirable to enable SMI to exercise its
rights under this Section 3.19. The escrow of such material shall be made
pursuant to an escrow agreement with an independent third party escrow agent, on
terms and conditions which are consistent with this Section 3.19, and which are
reasonable and customary for escrow transactions of this type. SMI shall pay the
fees of the escrow agent for establishing and maintaining the escrow.

         3.20 Restrictive Covenant. Except as provided in Section 3.19, during
the term of the appointment set forth in Section 3.1 of this Agreement, SMI will
not directly engage in, and will use good faith and reasonable efforts to
prevent its subdistributors from engaging in, the sale in the International
Territory or Japan or in the United States Territory of any products that are
competitive with the Sensor (a "Competitor Sensor Product"). In addition, SMI
agrees that it will not promote or market the ZipPrep electrode product for use
as an EKG electrode. The restriction set forth in this section shall not apply
to the sale of electrode products compatible with SMI's own EEG products or Four
Channel Digital Signal Converter, provided that these products are used for EEG
monitoring only without the Bispectral Index. Furthermore, in the event that SMI
directly engages in the sale of any Competitor Sensor Product, or fails (within
thirty (30) days after notice from Aspect) to use good faith and reasonable
efforts to prevent a subdistributor from engaging in the sale of any Competitive
Sensor Product, Aspect shall have the right to terminate the right of SMI to
distribute the Sensor Products, effective thirty (30) days after delivery of
written notice to SMI. SMI's obligation to prevent its subdistributors from
breaching the foregoing restrictive covenant shall not require SMI to take any
action which is illegal under any applicable law or which could reasonably be
expected to expose SMI to liability and damages to the subdistributor or the
subdistributor's customers.

                                     - 22 -
<PAGE>   27
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

         3.21 Obsolete Products. In the event Aspect elects to discontinue the
production of a particular model of a Sensor Product because such Sensor Product
has been replaced by later models, Aspect shall provide SMI not less than six
(6) months prior written notice (the "Notice Period") of such discontinuance,
and shall fill such orders for the discontinued Sensor Product(s) as SMI
reasonably determines, prior to the end of the Notice Period, will be required
to enable SMI to meet the requirements of its subdistributors and customers.

                     ARTICLE IV - RIGHTS TO BISPECTRAL INDEX

         4.1 Licenses. Subject to the terms and conditions of this Agreement,
Aspect hereby grants to SMI a non-exclusive license to the Bispectral Index for
the purposes of developing, manufacturing, marketing and selling the Module
worldwide. This license shall commence on the date of this Agreement and shall
expire on the tenth anniversary of this Agreement. Prior to the expiration of
this license, Aspect and SMI agree to negotiate in good faith concerning
commercially reasonable terms under which SMI may elect to renew the license.
SMI shall have the right to grant sublicenses to third party distributors for
the sole purpose of marketing and selling the Module. Subject to Section 4.16,
in the event Aspect obtains PMA approval of the Bispectral Index, Aspect hereby
grants to SMI, and SMI accepts, a nonexclusive royalty free license to reference
and use information in the Aspect PMA to enable SMI to file for and obtain PMA
approval of the Module from the FDA. SMI may continue to reference and use the
same PMA information in support of changes or modifications to the Module
subsequently proposed by SMI. In addition, in consideration of SMI's payment of
a license fee of [**] due upon execution of this Agreement, Aspect hereby grants
SMI a fully paid, perpetual and worldwide license to use the source code for low
level communication and control interface to the Field Programmable Gate Array
("FPGA"), in accordance with the provisions of Schedule B, and to incorporate
such source code in the Module.

         4.2 Development Efforts. SMI agrees to use reasonable efforts to
develop the Module. The development shall be conducted at and/or coordinated
from the facilities of SMI. Aspect agrees to provide such assistance and such
information about the Bispectral Index, the ZipPrep Technology and other Aspect
technology as SMI reasonably requests in order to develop the Module. SMI shall
be responsible for all costs incurred in developing the Module in excess of
costs incurred in delivering the items and services set forth in Schedule B, and
shall reimburse Aspect for both its internal and reasonable out-of-pocket
expenses. The role of Aspect and SMI with respect to the (i) development of
modifications to the BIS Software to be incorporated in SMI's Module, (ii) the
source code license for the FPGA and low level drivers which control the FPGA,
and (iii) for the development of a Four Channel

                                     - 23 -
<PAGE>   28
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

Digital Signal Converter, are set forth in detail in Schedule B. SMI agrees to
mark the Four-Channel Digital Signal Converter and the Module in the form of
"Licensed under U.S. Pat. No. 5,381,804; 4,907,597; 5,010,891; 5,320,109;
5,458,117; 5,368,041; and other patents pending" at a location and in a manner
on the products sufficient to meet the requirements of 35 U.S.C. 287. In
addition, [**] that the [**] will contain the following [**] which the [**]
between (a) [**] or (b) [**]. The Module will also [**], which the Module [**].

         4.3 BIS Software Maintenance. In addition, SMI will pay Aspect an
annual maintenance fee of [**] per year, payable in advance upon execution of
this Agreement and on the first and second anniversary of this Agreement. In
consideration of this maintenance fee, Aspect shall provide SMI up to [**],
shall reasonably assist SMI in debugging and utilizing the software and shall
provide software updates to BIS Software. Upon request by SMI, Aspect will, on
or about the third anniversary of this Agreement, negotiate in good faith on
commercially reasonable terms under which Aspect would agree to continue to
provide software maintenance support. SMI shall have the sole responsibility to
develop all other software for the Module.

         4.4 Commercialization Obligation. Subsequent to development of the
Module, SMI agrees to use reasonable efforts to (a) obtain necessary regulatory
approvals for the marketing and sale of the Module in the International
Territory, in those countries in which it elects to commercially distribute the
Module, (b) provide for commercial production of the Module and (c) diligently
market the Module after receipt of the necessary regulatory approvals,
including, but not limited to, listing the Module in all of SMI's standard price
lists and promoting and selling the Module at a level of effort and expense
similar to the levels devoted to SMI's own patient monitoring equipment.

         4.5 Regulatory Process. SMI shall provide Aspect with an advance copy
of any regulatory filing relating to the Modules and Aspect shall have the right
to make comments and suggestions on any such regulatory filing, provided that
SMI shall only be required to provide portions of such filings describing or
relating to the Bispectral Index. Any comments or suggestions made by Aspect
shall be given due consideration by SMI in its discretion and changes to the
regulatory filings specifically requested by Aspect shall not be unreasonably
refused. Aspect agrees to promptly provide such comments (in any event within
thirty (30) days of its receipt

                                     - 24 -
<PAGE>   29
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

 of the proposed filing), and agrees that such filings shall be the Proprietary
Information of SMI.

         4.6 Quality Control. Aspect shall furnish SMI the executable code for
the Bispectral Index. SMI shall have no right to the source code for the
Bispectral Index and shall have no right to modify the Bispectral Index. Prior
to the first commercial sale of a Module, Aspect shall test Modules at the
facilities of either Aspect or SMI and Aspect and SMI shall determine and
implement the most efficient method for such testing.

         4.7 Royalties. SMI shall pay Aspect upon execution of this Agreement,
either a prepaid royalty of [**], which shall authorize [**], or a prepaid
royalty of [**], which shall authorize [**]; in either case, SMI shall also pay
Aspect prepaid royalties of [**] when Aspect completes the modifications to the
BIS software in accordance with the Specifications set forth in Schedule B, and
prepaid royalties of [**] when the modified BIS software is validated in
accordance with Schedule B. At any time after the date of this Agreement through
[**] from the date of this Agreement, SMI may, at its election, prepay an
additional royalty of [**], which shall authorize SMI to sell an additional [**]
Modules. In addition, at any time from the date of this Agreement through the
[**] anniversary of the date of this Agreement, SMI may prepay an additional
royalty of [**] to Aspect, which shall authorize SMI to sell an additional [**]
Modules. For any Module sales in excess of the amounts authorized by the
foregoing prepaid royalties, Aspect shall grant SMI commercially reasonable
royalty price and payment terms, which terms [**] to any [**], in its product in
a [**] to that [**] any and in any event such royalty will not exceed [**] per
Module sold by SMI.

         4.8 License to Manufacture Four Channel Digital Signal Converter. In
consideration of SMI's payment of a prepaid license fee of [**] payable on
execution of this Agreement, an additional [**] license fee payable on
completion of the electronic and mechanical design reviews between Aspect and
SMI, and an additional [**] license fee payable when fully functional prototypes
of the Four-Channel Digital Signal Converter are tested and meet the
specifications set forth in Schedule B, Aspect hereby grants SMI a worldwide,
nonexclusive, fully-paid, perpetual and irrevocable license to develop,
manufacture, market and sell the Four Channel Digital Signal Converter. SMI may
only use the Four Channel Digital Signal Converter in conjunction with the
Module for the EEG and Bispectral Index.

         4.9 Reports and Payment. SMI shall deliver to Aspect within 30 days
after the end of each quarter a written report showing its sales of Modules
during such quarter. All sales shall be segmented in each such report on a
country-by-country

                                     - 25 -
<PAGE>   30
basis. SMI, simultaneously with the delivery of each such report, shall tender
payment in United States dollars of all royalties shown to be due thereon.

         4.10 Customer Complaints. To the extent related to the Bispectral Index
or its performance, SMI shall provide Aspect, on a quarterly basis, with a
written report of all customer complaints which require written notification to,
or follow up with, any regulatory agency, and follow up activities conducted by
SMI relating to the Module. SMI shall notify Aspect immediately of any
complaints involving death or serious injury (MDR reports) or any other
complaints relating to the safety or efficacy claims of the Bispectral Index.

         4.11 Product Liability of SMI. SMI hereby agrees to indemnify, defend
and hold harmless Aspect, its affiliates, directors, officers, employees and
agents, from and against all Losses arising out of or in connection with the
marketing or sale of any Module, including, but not limited to, any actual or
alleged injury, damage, death or other consequence occurring to any person as a
result, directly or indirectly, of the possession or use of any such Module,
whether claimed by reason of breach of warranty, negligence, product defect or
otherwise, and regardless of the form in which such claim is made, provided that
such Losses are due to (a) a defect in the design or manufacture of the Module
(excluding defects in the BIS Software, the Bispectral Index or other products
provided by Aspect hereunder) or modifications to the BIS Software made by SMI
or (b) the negligence, recklessness or intentional misconduct of SMI. If Aspect
becomes aware of a product liability claim which might give rise to a right or
obligation of indemnification and defense as provided herein, Aspect shall
promptly notify SMI. SMI shall control and bear the full expense of the defense
against or settlement of such claim. Aspect shall cooperate in such action if
reasonably necessary and requested by SMI. In no event shall SMI settle any
matter involving Aspect without the prior written consent of Aspect, which
consent shall not be unreasonably withheld or delayed. Aspect may, in its own
discretion, be represented in the defense or settlement of any such claim by
counsel of its own choosing at its sole expense.

         4.12 Product Liability of Aspect. Aspect hereby agrees to indemnify,
defend and hold harmless SMI, its affiliates, directors, officers, employees and
agents, from and against all Losses arising out of or in connection with the
marketing or sale of any Module, including, but not limited to, any actual or
alleged injury, damage, death or other consequence occurring to any person as a
result, directly or indirectly, of the possession or use of any such Module,
whether claimed by reason of breach of warranty, negligence, product defect or
otherwise, and regardless of the form in which such claim is made, provided that
such Losses arise from or are related to (a) a defect in the design or
manufacture of the BIS Software or the Bispectral Index as delivered by Aspect
or as modified by Aspect, or (b) the negligent, recklessness or intentional
misconduct of Aspect. If SMI becomes aware of a product liability claim which
might give rise to a right or obligation of indemnification and defense as

                                     - 26 -
<PAGE>   31
provided herein, SMI shall promptly notify Aspect. Aspect shall control and bear
the full expense of the defense against or settlement of such claim. SMI shall
cooperate in such action if reasonably necessary and requested by Aspect. In no
event shall Aspect settle any matter involving SMI without the prior written
consent of SMI, which consent shall not be unreasonably withheld or delayed. SMI
may, in its own discretion, be represented in the defense or settlement of any
such claim by counsel of its own choosing at its sole expense.

         4.13 Claimed Infringement of SMI Technology. SMI hereby agrees to
indemnify, defend and hold harmless Aspect, its affiliates, directors, officers,
employees and agents, from and against all Losses arising out of or in
connection with any claim by a third party that the manufacture, use or sale of
a Module infringes any intellectual property right claimed by such third party
and relating to the intellectual property rights owned by such party.
Notwithstanding the preceding sentence, SMI will not be required to indemnify,
defend or hold Aspect harmless from Losses which arise from the BIS Software,
the Bispectral Index or other products provided by Aspect hereunder, except to
the extent such Losses result from the use or sale of the BIS Software,
Bispectral Index or other Aspect products in combination with products which are
provided by parties other than Aspect. If Aspect becomes aware of an
infringement allegation which might give rise to a right or obligation of
indemnification and defense as provided herein, Aspect shall promptly notify
SMI. SMI shall control, bear the full expense of and retain all proceeds of the
defense against or settlement of such allegation. Aspect shall cooperate in such
action if reasonably necessary and requested by SMI. In no event shall SMI
settle any matter involving Aspect without the prior written consent of Aspect,
which consent shall not be unreasonably withheld or delayed. Aspect may, in its
own discretion, be represented in the defense or settlement of any such
allegation by counsel of its own choosing at its sole expense.

         4.14     Claimed Infringement of Aspect Technology.

                  (a) Aspect hereby agrees to indemnify, defend and hold
harmless SMI, its affiliates, directors, officers, employees and agents, from
and against all Losses arising out of or in connection with any claim by a third
party that the BIS Software, the Bispectral Index or other products provided by
Aspect hereunder infringes any intellectual property right claimed by such third
party and relating to the intellectual property rights owned by such party. If
SMI becomes aware of an infringement allegation which might give rise to a right
or obligation of indemnification and defense as provided herein, SMI shall
promptly notify Aspect. Aspect shall control, bear the full expense of and
retain all proceeds of the defense against or settlement of such allegation. SMI
shall cooperate in such action if reasonably necessary and requested by Aspect.
In no event shall Aspect settle any matter involving SMI without the prior
written consent of SMI, which consent shall not be unreasonably withheld or
delayed. SMI may, in its own discretion, be

                                     - 27 -
<PAGE>   32
represented in the defense or settlement of any such allegation by counsel of
its own choosing at its sole expense.

                  (b) Should any BIS Software or the Bispectral Index become the
subject of an injunction preventing its use or sale as contemplated herein,
Aspect shall, at its option (and in addition to its obligations under subsection
4.13(a)), promptly (1) procure for SMI the right to continue to use and sell
such BIS Software or Bispectral Index, (2) replace or modify such BIS Software
or Bispectral Index so that it becomes non-infringing or, if options (1) and (2)
are not reasonably available to Aspect, then (3) terminate SMI's license to the
allegedly infringing BIS Software or Bispectral Index and refund to SMI the
amounts paid to Aspect for all BIS Software or the Bispectral Index in the
possession of SMI or its subdistributors, upon the return of the BIS Software or
Bispectral Index to Aspect. In addition, Aspect may undertake any of the
foregoing options (1)(2) and (3) if Aspect determines, in its reasonable
opinion, that the BIS Software or Bispectral Index is likely to become the
subject of an injunction preventing its use or sale as contemplated herein.

                  (c) Aspect shall have no liability or obligation to SMI
hereunder with respect to any patent, copyright, trade secret or other
intellectual property infringement or claim thereof, to the extent such
liability or obligation is based upon (i) use or sale of BIS Software or the
Bispectral Index in combination with devices or products not provided by Aspect,
(ii) use of other than the most recently released version of any software
included in the BIS Software or the Bispectral Index or (iii) modifications,
alterations or enhancements of the BIS Software or Bispectral Index not created
by or for Aspect. SMI shall indemnify and hold Aspect harmless from all costs,
damages and expenses (including reasonable attorneys' fees) arising from any
claim enumerated in the preceding sentence. The limitations set forth in the
foregoing clause (ii) shall only apply to the extent Aspect has made the most
recently released version of the software available to SMI at no cost to SMI for
incorporation in the BIS Software or Bispectral Index which are then in SMI's
possession or have been previously distributed by SMI and the liability or
obligation arises after Aspect makes such revised version available to SMI.

         4.15 Digital Signal Converter. Aspect agrees to sell to SMI, and SMI
agrees to purchase exclusively from Aspect, the Digital Signal Converters (the
DSC II, or Aspect's next generation Digital Signal Converter, such as a
one-channel Digital Signal Converter, which may take the place of the DSC II) to
be used in conjunction with the Module and the Monitor. In addition, SMI at its
option may distribute the Four Channel Digital Signal Converter for use with the
Module in configurations with Bispectral Index, EEG, or both capabilities
enabled. In either case, the Bispectral Index will only be operated through the
use of the Sensor except for failure to supply

                                     - 28 -
<PAGE>   33
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

pursuant to Section 3.20. The price for each Digital Signal Converter
manufactured by Aspect shall be [**] of the [**] for such [**] from time to time
in effect, or (b) [**]. Aspect's obligation to sell Digital Signal Converters to
SMI shall be in effect during the term of the license set forth in Section 4.1
above. The provisions of Sections 2.14 and 2.15 (regarding forecasts and orders)
and 2.16, 2.18 and 2.19 (regarding shipment, risk of loss and payments) shall
apply with respect to Digital Signal Converters.

         4.16 Restrictive Covenant. During the term of the appointment set forth
in Section 4.1, SMI will not directly engage in, and will use good faith and
reasonable efforts to prevent its sublicensees and subdistributors from engaging
in, the sale anywhere in the world of any EEG Module that incorporates the
technology that can be used to measure the hypnotic effects of anesthetics on
the brain, provided that the foregoing restriction shall not apply to an EEG
module that includes spectral edge frequency (SEF) as long as SMI or any
sublicensee or subdistributor does not market or promote such SEF product for
use in anesthesia monitoring. Furthermore, in the event that SMI directly
engages in the sale of such a competitive product, or fails (within thirty (30)
days after notice from Aspect) to use good faith and reasonable efforts to
prevent a subdistributor or sublicensee from engaging in the sale of any such
competitive product), Aspect shall have the right to terminate the right of SMI
to distribute the Module, effective thirty (30) days after delivery of written
notice to SMI. SMI's obligation to prevent its subdistributors and sublicensees
from breaching the foregoing restrictive covenant shall not require SMI to take
any action which is illegal under any applicable laws or which could reasonably
expected to expose SMI to liability and damages to the subdistributor or
sublicensee, or the subdistributor or sublicensee's customers.

         4.17 Right of Aspect to Contact Customers. After the first Sensor
shipment, SMI shall notify Aspect on a monthly basis of each customer order in
the United States territory for any Module. Aspect shall have the right to
contact the customers of SMI solely for the purpose of selling the Sensor in the
United States territory. All information provided by SMI to Aspect pursuant to
this Section 4.17 shall constitute Proprietary Information of SMI.

                           ARTICLE V - COMMUNICATIONS

         5.1 Communications: Aspect and SMI agree that during the first 3 years
of this Agreement, a working group composed of senior personnel at Aspect and at
SMI will meet on a quarterly basis to discuss the relationship between the
parties and to review issues relating to the Agreement including, but not
limited to the following:

                                     - 29 -
<PAGE>   34
                  (a) to review the extent to which the Agreement has met the
objectives of the parties;

                  (b) to monitor performance measures (such as the number of
units sold, the number on consignment, average selling prices, Sensor
consumption rates, etc.);

                  (c) to monitor compliance with the terms of the Agreement on
the part of both Aspect and SMI;

                  (d) to identify steps that might be taken to improve the
Agreement, or the way in which the Agreement is administered, to better meet the
objectives of both parties; and

                  (e) to coordinate joint and separate market development
activities, and to plan new initiatives designed to accelerate development of
the market.

         It is expected that the composition of the working group may change
over time (for example, development personnel will be included initially during
the period in which the Module is under development), but SMI and Aspect agree
to identify at least one senior member of their respective organizations who
will have primary oversight responsibility for the Agreement and who will attend
all of the quarterly meetings to provide continuity over time. It is understood
that the parties will identify mutually convenient times and locations to hold
the quarterly meetings to minimize the cost and the time required of company
personnel, and that a preliminary schedule of quarterly meetings will be
established within ninety (90) days after this Agreement is signed.

                            ARTICLE VI - TERMINATION

         6.1 Term. This Agreement shall commence on the date first set forth
above and shall continue for a term of ten (10) years, subject to earlier
termination as provided herein.

         6.2 Termination by SMI. SMI shall have the right, at any time following
the second anniversary of this Agreement, to terminate this Agreement in its
entirety or to terminate the provisions of any of Articles II, III or IV of this
Agreement, on six months prior written notice to Aspect.

         6.3      Termination for Breach.

                  (a) If SMI breaches the provisions of this Agreement relating
to the making or promotion of claims, Aspect shall have the right to terminate
this Agreement immediately upon written notice to SMI. Aspect shall be entitled
to

                                     - 30 -
<PAGE>   35
terminate this Agreement by written notice to SMI in the event that SMI shall
fail to make any required payment, and shall fail to remedy such default within
30 days after notice thereof by Aspect. SMI shall be entitled to terminate this
Agreement by written notice to Aspect if Aspect shall fail to fill an order for
Monitor Products or Sensor Products in accordance with the terms of Sections
2.15 or 3.7 and shall fail to remedy such default within 30 days after notice of
default from SMI; provided, however, if SMI elects to use the remedies provided
by Section 3.19, such remedies will be in lieu of SMI's right to terminate this
Agreement for Aspect's failure to supply the Sensor Products. In addition,
except for a breach by SMI of its minimum purchase requirements set forth in
Sections 2.12 of this Agreement, which breach will be governed by the provisions
of that Section 2.12, either party shall be entitled to terminate this Agreement
by written notice to the other party in the event that the other party shall be
in material default of any of its other obligations hereunder, and shall fail to
remedy any such default within 90 days after notice thereof by the non-breaching
party. Notwithstanding the foregoing provisions of this Section 6.3 relating to
payment or other breaches by SMI of this Agreement, (a) if such breach relates
to Monitor Products, the provisions of Article II shall terminate and the
distribution rights of SMI to the Sensor shall continue, but the other
provisions of this Agreement shall remain in effect; (b) if such breach relates
to the Sensor the provisions of Article III shall terminate, but the other
provisions of this Agreement shall remain in effect; and (c) if such breach
relates to the Modules, the provisions of Article IV shall terminate, but the
other provisions of this Agreement shall remain in effect.

                  (b) Effect of Expiration or Termination. Upon any expiration
or termination of this Agreement, neither party shall be relieved of any
obligations incurred prior to such expiration or termination. In the event of
any expiration or termination of this Agreement, each party shall return to the
other party all tangible Proprietary Information of the other party, provided
that SMI shall be entitled to retain one copy of any such tangible Proprietary
Information as is necessary to service its customers of Monitor Products, Sensor
Products and Modules.

                          ARTICLE VII - CONFIDENTIALITY

         Each party shall maintain the Proprietary Information of the other
party in confidence, and shall not disclose, divulge or otherwise communicate
such Proprietary Information to others, or use it for any purpose, except
pursuant to, and in order to carry out, the terms and objectives of this
Agreement, and hereby agrees to exercise every reasonable precaution to prevent
and restrain the unauthorized disclosure of such Proprietary information by any
of its directors, officers, employees, consultants, subcontractors, sublicensees
or agents. Without limiting the generality of the foregoing, neither party
shall, without the prior written consent of the other party, (i) make any
disclosures to any third party concerning the Module development program
conducted under this Agreement, or (ii) provide advance

                                     - 31 -
<PAGE>   36
notice, whether written or oral, concerning product introductions to sales
representatives or customers that is inconsistent with its policies and
procedures for introducing its own new products. The foregoing provisions shall
not apply to any Proprietary Information disclosed hereunder which: (a) was
known or used by the receiving party prior to its date of disclosure to the
receiving party, as evidenced by the prior written records of the receiving
party; (b) either before or after the date of the disclosure to the receiving
party is lawfully disclosed to the receiving party by an independent,
unaffiliated third party rightfully in possession of the Proprietary
Information; (c) either before or after the date of the disclosure to the
receiving party becomes published or generally known to the public through no
fault or omission on the part of the receiving party; or (d) is required to be
disclosed by the receiving party to comply with applicable laws, to defend or
prosecute litigation or to comply with governmental regulations, provided that
the receiving party provides prior written notice of such disclosure to the
other party and takes reasonable and lawful actions to avoid and/or minimize the
degree of such disclosure. This Section shall survive the expiration or
termination of this Agreement.

                          ARTICLE VIII - MISCELLANEOUS

         8.1 Trademarks and Trade Names. SMI shall not use the Aspect name or
any other trademark or trade name used or claimed by Aspect (all of which names
or marks shall hereinafter be referred to as "Aspect Proprietary Marks") in
connection with any business conducted by SMI other than in dealing with the
Monitor Products, the Sensor Products and the Module or unless otherwise
approved in writing by Aspect. In the event the Module bears Aspects's
trademarks, the Module must meet Aspect's reasonable quality standards; Aspect
acknowledges that SMI's current line of monitor products meets such quality
standards, and the Module will be deemed to meet Aspect's quality standards if
it is of a quality substantially equivalent to the current quality standards for
SMI's monitor products. Aspect shall not use the SMI name or any other trademark
or trade name used or claimed by SMI (all of which names or marks shall
hereafter be referred to as the "SMI Proprietary Marks"). The "Aspect
Proprietary Marks" and "SMI Proprietary Marks" shall hereinafter be referred to
as the "Proprietary Marks". Each party agrees that its use of the Proprietary
Marks of the other party shall not create in its favor any right, title or
interest therein and acknowledges the other party's exclusive right, title and
interest in the Proprietary Marks of the other party. Each party shall use the
trademarks of the other party in compliance with all relevant laws and
regulations and not modify any of the other party's trademarks in any way.
Neither party shall take any action calculated or likely to prejudice, affect,
impair or destroy the title and interest of the other party in the Proprietary
Marks.

         8.2 Records. Each party shall keep, and shall require all affiliates to
keep, full, true and accurate books of accounts and other records containing all
information and data which may be necessary to ascertain and verify the data
required to be

                                     - 32 -
<PAGE>   37
maintained or furnished pursuant to the terms of this Agreement. During the term
of this Agreement and for a period of one year following its termination, each
party shall have the right from time to time (not to exceed once during each
calendar year) to have an accounting firm inspect such books, records and
supporting data of the other party during reasonable business hours at such time
as is approved in advance by the other party, provided that such accounting firm
executes a standard nondisclosure agreement in a form reasonably acceptable to
the other party.

         8.3 Publicity. Neither party shall originate any publicity, news
release or other public announcement, written or oral, relating to this
Agreement or the existence of an arrangement between the parties, without the
prior written consent of the other party except as otherwise required by law (in
which case, such party shall use reasonable efforts to provide a copy of such
information to the other party prior to the required legal disclosure and
provide a reasonable opportunity for review and comment).

         8.4 Force Majeure. In the event that either party is prevented from
performing, or is unable to perform, any of its obligations under this Agreement
due to any act of God, acts or omissions of any government or any agency
thereof, compliance with request, recommendations, rules, regulations or orders
of any international government or agency thereof, fire, storm, flood,
earthquake, accident, war, rebellion, insurrection, riots, sabotage, invasion,
quarantine, strikes, lockouts, disputes or differences with workers,
transportation embargoes or failure of public facilities, and if such party
shall have used reasonable efforts to avoid such occurrence and minimize its
duration and shall have given proper written notice to the other party, then the
affected party's performance shall be excused and the time for performance shall
be extended for the period of delay or inability to perform due to such
occurrence.

         8.5 Relationship Between Parties. The relationship between the parties
is that of independent contractors, and nothing in this Agreement shall be
construed to constitute either party as an employee, partner or agent of the
other party. Without limiting the foregoing, neither party shall have authority
to act for or to bind the other party in any way, to make representations or
warranties or to execute agreements on behalf of the other party or to represent
that the other party is in any way responsible for the acts or omissions of such
party.

         8.6 Notices. All notices, demands, requests, consents, approvals or
other communications required or permitted to be given hereunder or which are
given with respect to this Agreement shall be in writing and may be personally
served, deposited in certified mail postage prepaid, or deposited with an
overnight courier service, or sent via facsimile transmission, addressed as
follows:

                                     - 33 -
<PAGE>   38
                  If to Aspect:    Aspect Medical Systems, Inc.
                                   2 Vision Drive
                                   Natick, MA  01760-2059
                                   Telecopy: (508) 653-6788
                                   Attn: President

                  If to SMI:       SpaceLabs Medical, Inc.
                                   15220 NE 40th Street
                                   P.O. Box 97013
                                   Redmond, WA  98073
                                   Telecopy: (206) 883-7091
                                   Attn:         James W. Bowra,
                                                 Director, Business Development
                                   Copy to:      Eugene V. DeFelice
                                                 General Counsel

or to such other address or person as either party shall have specified most
recently by written notice provided in accordance with this Section 8.6. Notice
shall be deemed given on the date of service if personally served. Notice mailed
as provided herein shall be deemed given on the fifth business day following the
date so mailed. Notice deposited with an overnight courier service shall be
deemed given on the next business day following the date so deposited. Notice
sent via facsimile transmission shall be deemed given when acknowledged by the
recipient.

         8.7 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements of the parties, including but not limited to the
Distribution and License Agreement between them dated as of June 30, 1994, which
is hereby terminated in its entirety. No waiver, consent, modification,
amendment or change of the terms of this Agreement shall bind either party
unless in writing and signed by both parties.

         8.8 Severability. In the event that any provision of this Agreement is
held by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the validity
of the remaining provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular provisions held to be unenforceable.

         8.9 Assignments. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written consent of
the other party, except to a party who acquires all or substantially all of the
business of the assigning party by merger, sale of assets or otherwise.

                                     - 34 -
<PAGE>   39
         8.10 Governing Law. This Agreement shall be governed by and construed
as a sealed instrument in accordance with the laws of the Commonwealth of
Massachusetts.

         8.11 Compliance with Laws. Each party agrees to comply with all laws
and regulations that may be applicable to such party's performance hereunder,
including but not limited to the Food, Drug and Cosmetics Act and good
manufacturing practices regulations. Each party (the "Indemnitor") agrees to
defend, indemnify and hold harmless the other party from all Losses arising out
of the Indemnitor's failure to comply with any applicable law or regulation.

         8.12 Waivers and Extensions. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any obligations or acts shall
be deemed an extension of the time for performance of any other obligations or
acts.

         8.13 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument.

         8.14 Consents. Whenever any provision of this Agreement requires one
party to seek the prior approval or consent of the other party, the parties
agree that such consents or approvals will not be withheld unreasonably.

         8.15 Limitation of Liability. Neither party shall be responsible to the
other party for any punitive, incidental or consequential damages, including
lost profits or lost sales, arising from or related to a breach of this
Agreement; provided, however, that nothing herein shall be deemed to limit or
modify either party's obligations to indemnify the other party from any Losses
asserted by third parties, to the extent such indemnity is contractually
required hereunder.

         IN WITNESS WHEREOF, the parties hereto have set their hand and seal as
of July 24, 1996.

                                   ASPECT MEDICAL SYSTEMS, INC.

                                   By:      /s/J. Breckenridge Eagle
                                   Its:     President

                                   SPACELABS MEDICAL, INC.

                                   By:      /s/James W. Bowra
                                            James W. Bowra
                                   Its:     Director, Business Development

                                     - 35 -
<PAGE>   40
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

SCHEDULE A
                                                               SpaceLabs Pricing

<TABLE>
<CAPTION>
                     Confidential Materials omitted and filed separately
                     with the Securities and Exchange Commission.
                     Asterisks denote omissions.
                                                                                  Aspect's           SpaceLabs
Prod. No.            Product Description                                          U.S. Price         Intl. Price
-----------------    ---------------------------------------------------------    ---------------    ---------------
<S>                  <C>                                                          <C>                <C>
Monitoring System
Components
                     A-1000(TM) 4-channel EEG monitoring system. Supplied with
                     one A-1000 4-channel EEG monitor, one A-1000 4-channel EEG
                     digital signal converter, one power cord, one digital
                     signal converter cable, and one electrode starter kit.
                     (Monitor and digital signal converter include 15 months
                     warranty.)
186-0026             A-1000 4-channel EEG monitoring system, German                                  [**]
                     language, UL/cUL, TUV, CEemc, 50 Hz
186-0039             A-1000 4-channel EEG monitoring                                                 [**]
                     system, English language, UL/cUL, TUV, CEemc,
                     60 Hz
186-0040             A-1000 4-channel EEG monitoring system, French                                  [**]
                     language, UL/cUL, TUV, CEemc, 60 Hz
186-0041             A-1000 4-channel EEG monitoring system, French                                  [**]
                     language, UL/cUL, TUV, CEemc, 50 Hz
186-0042             A-1000 4-channel EEG monitoring system, English                                 [**]
                     language, UL/cUL, TUV, CEemc, 50 Hz
186-0051             A-1000 4-channel EEG monitoring system,                                         [**]
                     ENGLISH language, CE, 50 Hz
186-0058             A-1000 4-channel EEG monitoring system, French                                  [**]
                     language, CE, 50 Hz
</TABLE>

                                     - 36 -
<PAGE>   41
<TABLE>
<CAPTION>
                     Confidential Materials omitted and filed separately
                     with the Securities and Exchange Commission.
                     Asterisks denote omissions.
                                                                                  Aspect's           SpaceLabs
Prod. No.            Product Description                                          U.S. Price         Intl. Price
-----------------    ---------------------------------------------------------    ---------------    ---------------
<S>                  <C>                                                          <C>                <C>
186-0060             A-1000 4-channel EEG monitoring system, German                                  [**]
                     language, CE, 50 Hz
186-0053             A-1050(TM) 2-channel EEG Brain Monitor system,                                  [**]
                     English language, UL/cUL, TUV, CEemc, 60Hz
                     Supplied with one A-1050 2-channel EEG monitor, one A-1050
                     2-channel EEG digital signal converter (DSC-2), one power
                     cord. (Monitor and digital signal converter include 15
                     months warranty.)
                                                                                                     *Discount %

186-0008             A-1000 4-channel EEG digital signal converter (DSC). For
                     use with A-1000 4-channel EEG monitor only. (Includes 15
                     months warranty).
186-0045             A-1050 2-channel EEG digital signal converter                [**]               [**]
                     (DSC-2) (includes 15 months warranty.)
186-0009             Digital Signal Converter cable (20 feet) to connect [**]
                     [**] A-1000 EEG monitor to A-1000 4-channel EEG digital
                     signal converter.
186-0025             Female Snap EEG Lead Wires with safety                       [**]               [**]
                     connector 24" long, 10 leads per set
186-0055             A-1050 Two channel Referential patient Interface             [**]               [**]
                     Cable (PIC)
186-0014             Printrex printer (115V) compatible for use with the          [**]               [**]
                     A-10xx.
186-0011             Printer interface cable (6 feet), DB25 parallel port.        [**]               [**]
                     Centronics 36, isolated ground, shield.
186-0015             Permanent thermal paper for use with Printrex                [**]               [**]
                     printer.  Provided in 100 feet rolls.  (4 rolls/case)
186-0016             Permanent thermal paper for use with Printrex                [**]               [**]
                     printer.  Provided in 100 feet rolls.  (8 rolls/case)
186-0043             Starter kit with Zipprep(TM)Self-Prepping                    [**]               [**]
                     Disposable Electronics; 1 case containing 300
                     electrodes (75 box, 4 boxes/case)
</TABLE>

                                     - 37 -
<PAGE>   42
<TABLE>
<CAPTION>
                     Confidential Materials omitted and filed separately
                     with the Securities and Exchange Commission.
                     Asterisks denote omissions.
                                                                                  Aspect's           SpaceLabs
Prod. No.            Product Description                                          U.S. Price         Intl. Price
-----------------    ---------------------------------------------------------    ---------------    ---------------
<S>                  <C>                                                          <C>                <C>
185-0043             Starter kit with Zipprep(TM)Self-Prepping                      [**]               [**]
                     Disposable Electrodes:
                     * 1 Box (75) electrodes
                     * 15 alcohol swaps
                     * 1 Set (5) leadwires
                     * 15 gaude pads
</TABLE>

*Discount Off Prevailing U.S.A. Price List

                                     - 38 -
<PAGE>   43
          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

                                   SCHEDULE B

              Aspect Development Activities for the SMI BIS Module

BIS SOFTWARE DEVELOPMENT

         Scope. Aspect shall provide to SMI the standard Aspect BIS Software (in
binary form) along with suitable documentation in a form reasonably acceptable
to SMI and sufficient to enable SMI to use the BIS Software for execution in the
Module. In addition, Aspect shall provide FPGA source code, and source code
which controls the following elements of the Digital Signal Converter (the "Low
Level Interface Source Code"): Digital Signal Converter interface code including
acquisition and control (impedance checking, self test initiation and
termination).

     [**] The design of this [**] has been provided to [**] in the form of [**].
This will be the [**] as shown below:

[**]           [**]
[**]                         [**]   [**]
[**]                [**]            [**]       [**]

               [**]                            [**]
[**]                                           [**]
[**]                [**]
[**]

                             [**]

     [**]. This field [**] contains much of the [**] to the [**] and other [**].
     [**]  for the [**] in the [**].

     [**]. This is the [**] which executes the [**].

     [**]. This is an [**] which contains both the [**] and the code for the
     [**].

     [**]. [**] is required.

     [**]. between the [**] and the [**] in the [**] which provides [**] to the
[**] per second.

     [**]. These are the same [**] in the [**] also provides the [**], including
software [**].

     [**]. provides a working [**] for support of [**] on the [**] and can be
[**] using the [**] provides a [**] to the [**] which would be required to [**]
in the [**] in the event that the [**].

     [**]. shall be done in accordance to a [**] in consultation with Aspect.

     [**]. for the [**] will be [**], subject to [**] of such [**].

     DELIVERABLE ITEMS. Aspect wiLl deliver the following items to SMI on the
dates indicated:

     [**]

     [**]

     [**]

     [**] on a [**].

     [**] report from [**] after receipt [**]

     - Procedures and specifications for required equipment and fixtures for
       production line testing of [**]

     - Procedures for [**] in the event of a [**]

     - Updates to procedures and specifications for the above as reasonably
       required for the development effort; PROVIDED, HOWEVER, that if the
       provision of such updates would require Aspect to expend a material
       amount of additional labor (a "Significant Update") and the Significant
       Update is not the result of a defect in the deliverables provided by
       Aspect, then Aspect and SMI must agree on reasonable additional fees to
       be paid by SMI for the Significant Update before Aspect will be required
       to provide it.

     - Other documents as may be needed for implementation of the above items;
       PROVIDED, HOWEVER, that if the provision of such documents would require
       Aspect to expend a material amount of additional labor (a "Significant
       Document"), and the need for the Significant Document [**] provided by
       Aspect, then Aspect and SMI must agree on reasonable additional fees to
       be paid by SMI for the Significant Document before Aspect will be
       required to provide it.

     [**]

     SCOPE. Aspect will provide up to [**] for the design of the [**] during the
first year of the Agreement. [**] of such [**] shall have the right to [**]
regarding [**] shall have the burden of [**].

     TASKS.

     - [**] to serve as a [**].

     - Consulting on the [**].

     - [**] of the [**] of the [**].

     [**] will be [**], subject to [**] of such [**].

     [**]. The following will be provided to [**] on the dates indicated:

     - [**] for the [**]

     - [**] for the [**]

     - [**] including a list of [**]

     - [**] current [**]

[**]

     Aspect warrants that the engineering support services to be provided by it
under this Attachment B shall be performed in a willing and workmanlike manner,
and that the deliverables it provides hereunder will be free from defects in
design, material and workmanship. Aspect shall, at its costs and expense, repair
or replace any services or deliverables which breach the foregoing warranty. It
is understood that the foregoing warranties do not apply to the BIS Software
(which is subject to the warranty set forth in Section 2.20, [**] Source Code
[**] Low Level Interface [**]. EXCEPT AS SET FORTH HEREIN, ASPECT DISCLAIMS ALL
OTHER WARRANTIES WITH RESPECT TO SUCH SERVICES AND DELIVERABLES, WHETHER EXPRESS
OR IMPLIED, ORAL OR WRITTEN, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

                                     - 39 -<PAGE>   1
                                                                   EXHIBIT 10.24

                          ASPECT MEDICAL SYSTEMS, INC.
      has requested that the marked portions of this agreements be granted
        confidential treatment pursuant to Rule 406 under the Securities
                                   Act of 1933

                                              FOR PURCHASES DIRECT FROM SUPPLIER
                                          NOT SUBJECT TO COMPETITIVE BID PROCESS

                               SUPPLIER AGREEMENT

                                     BETWEEN

                                  NOVATION, LLC

                                       AND

                                 ASPECT MEDICAL
                                 --------------
                                  ("SUPPLIER")

                                     MS90690
                                     --------
                           (CONTRACT NUMBER GOES HERE)
                           ---------------------------

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            PAGE
                                                                                                            ----

<S>                                                                                                         <C>
1.   INTRODUCTION............................................................................................1
a.   Purchasing Opportunities for Members....................................................................1
b.   Supplier................................................................................................1
c.   Contract Prices; Non-Price Specifications; Committed Programs...........................................1

2.   BASIC TERMS.............................................................................................1
a.   Purchase of Products....................................................................................1
b.   Optional Purchasing Arrangement.........................................................................1
c.   Market Competitive Terms................................................................................2
d.   Changes in Contract Prices..............................................................................2
e.   Notification of Changes in Pricing Terms................................................................2
f.   Underutilized Businesses................................................................................2

3.   TERM AND TERMINATION....................................................................................2
a.   Term....................................................................................................2
b.   Termination by Novation.................................................................................3
c.   Termination by Supplier.................................................................................3

4.   PRODUCT SUPPLY..........................................................................................3
a.   Delivery and Invoicing..................................................................................3
b.   Product Fill Rates; Confirmation and Delivery Times.....................................................3
c.   Bundled Terms...........................................................................................3
d.   Discontinuation of Products; Changes in Packaging.......................................................4
e.   Replacement or New Products.............................................................................4
f.   Member Services.........................................................................................4
g.   Product Deletion........................................................................................4
h.   Return of Products......................................................................................5
i.   Failure to Supply.......................................................................................5

5.   PRODUCT QUALITY.........................................................................................5
a.   Free From Defects.......................................................................................5
b.   Product Compliance......................................................................................5
c.   Patent Infringement.....................................................................................6
d.   Product Condition.......................................................................................6
e.   Recall of Products......................................................................................6
f.   Shelf Life..............................................................................................6

6.   CENTURY COMPLIANCE......................................................................................6
a.   Definitions.............................................................................................6
b.   Representations.........................................................................................7
c.   Remedies................................................................................................7
d.   Noncompliance Notice....................................................................................7
e.   Survival................................................................................................8
</TABLE>

<PAGE>   3

<TABLE>
<CAPTION>
<S>                                                                                                         <C>
7.  REPORTS AND OTHER INFORMATION REQUIREMENTS...............................................................8
a.   Report Content..........................................................................................8
b.   Report Format and Delivery..............................................................................8
c.   Other Information Requirements..........................................................................9

8.  OBLIGATIONS OF NOVATION..................................................................................9
a.   Information to Members..................................................................................9
b.   Marketing Services......................................................................................9

9.  MARKETING FEES...........................................................................................9
a.   Calculation.............................................................................................9
b.   Payment.................................................................................................9

10. ADMINISTRATIVE DAMAGES..................................................................................10

11  NONPAYMENT OR INSOLVENCY OF A MEMBER....................................................................11

12. INSURANCE...............................................................................................11
a.   Policy Requirements....................................................................................11
b.   Self-Insurance.........................................................................................11
c.   Amendments, Notices and Endorsements...................................................................11

13. COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION................................................11
a.   Compliance With Law....................................................................................11
b.   Government Program Participation.......................................................................12

14. RELEASE AND INDEMNITY...................................................................................12

15. BOOKS AND RECORDS; FACILITIES INSPECTIONS...............................................................12

16  USE OF NAMES, ETC.......................................................................................13

17. CONFIDENTIAL INFORMATION................................................................................13
a.   Nondisclosure..........................................................................................13
b.   Definition.............................................................................................13

18  MISCELLANEOUS...........................................................................................13
a.   Choice of Law..........................................................................................13
b.   Not Responsible........................................................................................14
c.   Third Party Beneficiaries..............................................................................14
d.   Notices................................................................................................14
e.   No Assignment..........................................................................................14
f.   Severability...........................................................................................14
g.   Entire Agreement.......................................................................................15
</TABLE>

<PAGE>   4

                             INDEX OF DEFINED TERMS

<TABLE>
<CAPTION>
                                                                                                         PAGE
                                                                                                         ----

<S>                                                                                                      <C>
   Agreed Percentage......................................................................................10
   Calendar-Related........................................................................................7
   Century Noncompliance...................................................................................7
   Clients.................................................................................................1
   Confidential Information...............................................................................14
   Contract Prices.........................................................................................1
   Effective Date..........................................................................................2
   FDA....................................................................................................12
   Federal health care program............................................................................12
   Gregorian calendar......................................................................................7
   Guidebook...............................................................................................9
   Indemnitees............................................................................................12
   Legal Requirements.....................................................................................12
   Marketing Fees..........................................................................................9
   Members.................................................................................................1
   Non-Price Specifications................................................................................1
   Novation................................................................................................1
   Novation Database.......................................................................................1
   Products................................................................................................1
   Reporting Month.........................................................................................8
   Special Conditions......................................................................................1
   Supplier................................................................................................i
   Systems.................................................................................................7
   Term....................................................................................................3
   timely..................................................................................................8
</TABLE>

<PAGE>   5

                                  NOVATION, LLC

                               SUPPLIER AGREEMENT

1.   INTRODUCTION.

     a.   PURCHASING OPPORTUNITIES FOR MEMBERS. Novation, LLC ("Novation") is
engaged in providing purchasing opportunities with respect to high quality
products and services to participating health care providers ("Members").
Members are entitled to participate in Novation's programs through their
membership or other participatory status in any of the following client
organizations: VHA Inc., University HealthSystem Consortium, and HealthCare
Purchasing Partners International, LLC (collectively, "Clients"). Novation is
acting as the exclusive agent for each of the Clients and certain of each
Client's subsidiaries and affiliates, respectively (and not collectively), with
respect to this Agreement. A current listing of Members is maintained by
Novation in the electronic database described in the Guidebook referred to in
Subsection 7.c below ("Novation Database"). A provider will become a "Member"
for purposes of this Agreement at the time Novation adds the provider to the
Novation Database and will cease to be a "Member" for such purposes at the time
Novation deletes the provider from the Novation Database.

     b.   SUPPLIER. Supplier is the manufacturer of products listed on Exhibit
A, the provider of installation, training and maintenance services for such
products, and the provider of any other services listed on Exhibit A (such
products and/or services are collectively referred to herein as "Products").

     c.   CONTRACT PRICES; NON-PRICE SPECIFICATIONS; COMMITTED PROGRAMS. A
description of the Products and pricing therefor ("Contract Prices") is attached
hereto as Exhibit A, the other specifications are attached hereto as Exhibit B
("Non-Price Specifications"), and the Special Conditions are attached hereto as
Exhibit C ("Special Conditions").

2.   BASIC TERMS.

     a.   PURCHASE OF PRODUCTS. Novation and Supplier hereby agree that Supplier
will make the Products available for purchase by the Authorized Distributors at
the Contract Prices for resale to the Members in accordance with the terms of
this Agreement; provided, however, that this Agreement will not constitute a
commitment by any person to purchase any of the Products.

     b.   OPTIONAL PURCHASING ARRANGEMENT. Novation and Supplier agree that each
Member will have the option of purchasing the Products under the terms of this
Agreement or under the terms of any other purchasing or pricing arrangement that
may exist between such Member and Supplier at any time during the Term;
provided, however, that, regardless of the arrangement, Supplier will comply
with Sections 7 and 9 below. If any Member uses any other purchasing or pricing
arrangement with Supplier when ordering products covered by any contract between
Supplier and Novation, Supplier will notify such Member of the pricing and other
significant terms of the applicable Novation contract.

<PAGE>   6

     c.   MARKET COMPETITIVE TERMS. Supplier agrees that the prices, quality,
value and technology of all Products purchased under this Agreement will remain
market competitive at all times during the Term. Supplier agrees to provide
prompt written notice to Novation of all offers for the sale of the Products
made by Supplier during the Term on terms that are more favorable to the offeree
than the terms of this Agreement. Supplier will lower the Contract Prices or
increase any discount applicable to the purchase of the Products as necessary to
assure market competitiveness. If at any time during the Term Novation receives
information from any source suggesting that Supplier's prices, quality, value or
technology are not market competitive, Novation may provide written notice of
such information to Supplier, and Supplier will, within five (5) business days
for Novation's private label Products and within ten (10) business days for all
other Products, advise Novation in writing of and fully implement all
adjustments necessary to assure market competitiveness.

     d.   CHANGES IN CONTRACT PRICES. Unless otherwise expressly agreed in any
exhibit to this Agreement, the Contract Prices will not be increased and any
discount will not be eliminated or reduced during the Term. In addition to any
changes made to assure market competitiveness, Supplier may lower the Contract
Prices or increase any discount applicable to the purchase of the Products at
any time.

     e.   NOTIFICATION OF CHANGES IN PRICING TERMS. Supplier will provide not
less than sixty (60) days' prior written notice to Novation and not less than
forty-five (45) days' prior written notice to all Members of any change in
pricing terms permitted or required by this Agreement. For purposes of the
foregoing notification requirements, a change in pricing terms will mean any
change that affects the delivered price to the Member, including, without
limitation, changes in list prices, discounts or pricing tiers or schedules.
Such prior written notice will be provided in such format and in such detail as
may be required by Novation from time to time, and will include, at a minimum,
sufficient information to determine line item pricing of the Products for all
affected Members.

     f.   UNDERUTILIZED BUSINESSES. Certain Members may be required by law,
regulation and/or internal policy to do business with underutilized businesses
such as Minority Business Enterprises (MBE), Disadvantaged Business Enterprises
(DBE), Small Business Enterprises (SBE), Historically Underutilized Businesses
(HUB) and/or Women-owned Business Enterprises (WBE). To assist Novation in
helping Members meet these requirements, Supplier will comply with all Novation
policies and programs with respect to such businesses and will provide, on
request, Novation or any Member with statistical or other information with
respect to Supplier's utilization of such businesses as a vendor, distributor,
contractor or subcontractor.

3.   TERM AND TERMINATION.

     a.   TERM. This Agreement will be effective as of the effective date set
forth in Exhibit D attached hereto ("Effective Date"), and, unless sooner
terminated, will continue in full force and effect for the initial term set
forth in the Non-Price Specifications and for any renewal terms set forth in the
Non-Price Specifications by Novation's delivery of written notice of renewal to
Supplier not less than ten (10) days prior to the end of the initial term or any
renewal term, as

<PAGE>   7

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

applicable. The initial term, together with the renewal terms, if any, are
collectively referred to herein as the "Term."

     b.   TERMINATION BY NOVATION. Novation may terminate this Agreement at any
time for any reason whatsoever by delivering not less than [**] prior written
notice thereof to Supplier. In addition, Novation may terminate this Agreement
immediately by delivering written notice thereof to Supplier upon the occurrence
of either of the following events:

(1)  Supplier breaches this Agreement; or

(2)  Supplier becomes bankrupt or insolvent or makes an unauthorized assignment
or goes into liquidation or proceedings are initiated for the purpose of having
a receiving order or winding up order made against Supplier, or Supplier applies
to the courts for protection from its creditors.

Novation's right to terminate this Agreement due to Supplier's breach in
accordance with this Subsection is in addition to any other rights and remedies
Novation, the Clients or the Members may have resulting from such breach,
including, but not limited to, Novation's and the Clients' right to recover all
loss of Marketing Fees resulting from such breach through the date of
termination and for [**] thereafter.

     c.   TERMINATION BY SUPPLIER. Supplier may terminate this Agreement at any
time for any reason whatsoever by delivering not less than [**] prior written
notice thereof to Novation.

4.   PRODUCT SUPPLY.

     a.   DELIVERY AND INVOICING. On and after the Effective Date, Supplier
agrees to deliver Products ordered by the Members to the Members, FOB
destination, and will direct its invoices to the Members in accordance with this
Agreement. Supplier agrees to prepay and absorb charges, if any, for
transporting Products to the Members. Payment terms are [**]. Supplier will make
whatever arrangements are reasonably necessary with the Members to implement the
terms of this Agreement; provided, however, Supplier will not impose any
purchasing commitment on any Member as a condition to the Member's purchase of
any Products pursuant to this Agreement.

     b.   PRODUCT FILL RATES; CONFIRMATION AND DELIVERY TIMES. Supplier agrees
to provide product fill rates to the Members of greater than [**], calculated as
line item orders. Supplier will provide confirmation of orders from Members via
the electronic data interchange described in the Guidebook referred to in
Subsection 7.c below within two (2) business days after placement of the order
and will deliver the Products to the Members within ten (10) business days after
placement of the order.

<PAGE>   8

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

     c.   BUNDLED TERMS. Supplier agrees to give Novation prior written notice
of any offer Supplier makes to any Member to sell products that are not covered
by this Agreement in conjunction with Products covered by this Agreement under
circumstances where the Member has no real economic choice other than to accept
such bundled terms.

     d.   DISCONTINUATION OF PRODUCTS; CHANGES IN PACKAGING. Supplier will have
no unilateral right to discontinue any of the Products or to make any changes in
packaging which render any of the Products substantially different in use,
function or distribution. Supplier may request Novation in writing to agree to a
proposed discontinuation of any Products or a proposed change in packaging for
any Products at least [**] prior to the proposed implementation of the
discontinuation or change. Under no circumstances will any Product
discontinuation or packaging changes be permitted under this Agreement without
Novation's agreement to the discontinuation or change. In the event Supplier
implements such proposed discontinuation or change without Novation's agreement
thereto in writing, in addition to any other rights and remedies Novation or the
Members may have by reason of such discontinuation or change, (i) Novation will
have the right to terminate any or all of the Product(s) subject to such
discontinuation or change or to terminate this Agreement in its entirety
immediately upon becoming aware of the discontinuation or change or any time
thereafter by delivering written notice thereof to Supplier; (ii) the Members
may purchase products equivalent to the discontinued or changed Products from
other sources and Supplier will be liable to the Members for all reasonable
costs in excess of the Contract Prices plus any other damages which they may
incur; and (iii) Supplier will be liable to Novation and the Clients for any
loss of Marketing Fees resulting from such unacceptable discontinuation or
change plus any other damages which they may incur.

     e.   REPLACEMENT OR NEW PRODUCTS. Supplier will have no unilateral right to
replace any of the Products listed in Exhibit A with other products or to add
new products to this Agreement. Supplier may request Novation in writing to
agree to a replacement of any of the Products or the addition of a new product
that is closely related by function or use to an existing Product at least [**]
prior to the proposed implementation of the replacement or to the new product
introduction. Under no circumstances will any Product replacement or new product
addition to this Agreement be permitted without Novation's agreement to the
replacement or new product.

     f.   MEMBER SERVICES. Supplier will consult with each Member to identify
the Member's policies relating to access to facilities and personnel. Supplier
will comply with such policies and will establish a specific timetable for sales
calls by sales representatives to satisfy the needs of the Member. Supplier will
promptly respond to Members' reasonable requests for verification of purchase
history. If requested by Novation or any Members, Supplier will provide, at
Supplier's cost, on-site inservice training to Members' personnel for pertinent
Products.

     g.   PRODUCT DELETION. Notwithstanding anything to the contrary contained
in this Agreement, Novation may delete any one or more of the Products from this
Agreement at any time, at will and without cause, upon not less than [**] prior
written notice to Supplier.

<PAGE>   9

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

     h.   RETURN OF PRODUCTS. Any Member, in addition to and not in limitation
of any other rights and remedies, will have the right to return Products to
Supplier under any of the following circumstances: (1) the Product is ordered or
shipped in error; (2) the Product is no longer needed by the Member due to
deletion from its standard supply list or changes in usage patterns, provided
the Product is returned at least [**] prior to its expiration date and is in a
re-salable condition; (3) the Product is received outdated or is otherwise
unusable; (4) the Product is received damaged, or is defective or nonconforming;
(5) the Product is one which a product manufacturer or supplier specifically
authorizes for return; and (6) the Product is recalled. Supplier agrees to
accept the return of Products under these circumstances without charge and for
full credit.

     i.   FAILURE TO SUPPLY. In the event of Supplier's failure to perform its
supply obligations in accordance with the terms of this Section 4, the Member
may purchase products equivalent to the Products from other sources and Supplier
will be liable to the Member for all reasonable costs in excess of the Contract
Prices plus any other damages which they may incur. In such event, Supplier will
also be liable to Novation and the Clients for any loss of Marketing Fees
resulting from such failure plus any other damages which they may incur. The
remedies set forth in this Subsection are in addition to any other rights and
remedies Novation, the Clients or the Members may have resulting from such
failure.

5.   PRODUCT QUALITY.

     a.   FREE FROM DEFECTS. Supplier warrants the Products against defects in
material, workmanship, design and manufacturing. Supplier will make all
necessary arrangements to assign such warranty to the Members. Supplier further
represents and warrants that the Products will conform to the specifications,
drawings, and samples furnished by Supplier or contained in the Non-Price
Specifications and will be safe for their intended use. If any Products are
defective and a claim is made by a Member on account of such defect, Supplier
will, at the option of the Member, either replace the defective Products or
credit the Member. Supplier will bear all costs of returning and replacing the
defective Products, as well as all risk of loss or damage to the defective
Products from and after the time they leave the physical possession of the
Member. The warranties contained in this Subsection will survive any inspection,
delivery, acceptance or payment by a Member. In addition, if there is at any
time wide-spread failure of the Products, the Member may return all said
Products for credit or replacement, at its option. This Subsection and the
obligations contained herein will survive the expiration or earlier termination
of this Agreement. The remedies set forth in this Subsection are in addition to
and not a limitation on any other rights or remedies that may be available
against Supplier.

     b.   PRODUCT COMPLIANCE. Supplier represents and warrants to Novation, the
Clients and the Members that the Products are, if required, registered, and will
not be distributed, sold or priced by Supplier in violation of any federal,
state or local law. Supplier represents and warrants that as of the date of
delivery to the Members all Products will not be adulterated or misbranded
within the meaning of the Federal Food, Drug and Cosmetic Act and will not
violate or cause

<PAGE>   10

a violation of any applicable law, ordinance, rule, regulation or order.
Supplier agrees it will comply with all applicable Good Manufacturing Practices
and Standards contained in 21 C.F.R. Parts 210, 211, 225, 226, 600, 606, 610,
640, 660, 680 and 820. Supplier represents and warrants that it will provide
adequate warnings and instructions to inform users of the Products of the risks,
if any, associated with the use of the Products. Supplier's representations;
warranties and agreements in this Subsection will survive the expiration or
earlier termination of this Agreement.

     c.   PATENT INFRINGEMENT. Supplier represents and warrants that sale or use
of the Products will not infringe any United States patent. Supplier will, at
its own expense, defend every suit which will be brought against Novation or a
Member for any alleged infringement of any patent by reason of the sale or use
of the Products and will pay all costs, damages and profits recoverable in any
such suit. This Subsection and the obligations contained herein will survive the
expiration or earlier termination of this Agreement. The remedies set forth in
this Subsection are in addition to and not a limitation on any other rights or
remedies that may be available against Supplier.

     d.   PRODUCT CONDITION. Unless otherwise stated in the Non-Price
Specifications or unless agreed upon by a Member in connection with Products it
may order, all Products will be new. Products which are demonstrators, used,
obsolete, seconds, or which have been discontinued are unacceptable unless
otherwise specified in the Non-Price Specifications or the Member accepts
delivery after receiving notice of the condition of the Products.

     e.   RECALL OF PRODUCTS. Supplier will reimburse Members for any cost
associated with any Product corrective action, withdrawal or recall requested by
Supplier or required by any governmental entity. In the event a product recall
or a court action impacting supply occurs, Supplier will notify Novation in
writing within twenty-four (24) hours of any such recall or action. Supplier's
obligations in this Subsection will survive the expiration or earlier
termination of this Agreement.

     f.   SHELF LIFE. Sterile Products and other Products with a limited shelf
life sold under this Agreement will have the longest possible shelf life and the
latest possible expiration dates. Unless required by stability considerations,
there will not be less than an eighteen (18) month interval between a Product's
date of delivery by Supplier to the Member and its expiration date.

6.   CENTURY COMPLIANCE.

     a.   DEFINITIONS. For purposes of this Section, the following terms have
the respective meanings given below:

     (1)  "Systems" means any of the Products, systems of distribution for
Products and Product manufacturing systems that consist of or include any
computer software, computer firmware, computer hardware (whether general or
special purpose), documentation, data, and other similar or related items of the
automated, computerized, and/or software systems that are provided by or through
Supplier or utilized to manufacture or distribute the Products provided by or
through Supplier pursuant to this Agreement, or any component part thereof, and
any services provided by or through Supplier in connection therewith.

<PAGE>   11

     (2)  "Calendar-Related" refers to date values based on the "Gregorian
calendar" (as defined in the Encyclopedia Britannica, 15th edition, 1982, page
602) and to all uses in any manner of those date values, including without
limitation manipulations, calculations, conversions, comparisons, and
presentations.

     (3)  "Century Noncompliance" means any aspects of the Systems that fail to
satisfy the requirements set forth in Subsection 6.b below.

     b.   REPRESENTATIONS. Supplier warrants, represents and agrees that the
Systems satisfy the following requirements:

     (1)  In connection with the use and processing of Calendar-Related data,
the Systems will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results.

     (2)  In connection with providing Calendar-Related data to and accepting
Calendar-Related data from other automated, computerized, and/or software
systems and users via user interfaces, electronic interfaces, and data storage,
the Systems represent dates without ambiguity as to century.

     (3)  The year component of Calendar-Related data that is provided by the
Systems to or that is accepted by the Systems from other automated,
computerized, and/or software systems and user interfaces, electronic
interfaces, and data storage is represented in a four-digit CCYY format, where
CC represents the two digits expressing the century and YY represents the two
digits expressing the year within that century (e.g., 1996 or 2003).

     (4)  Supplier has verified through testing that the Systems satisfy the
requirements of this Subsection including, without limitation, testing of each
of the following specific dates and the transition to and from each such date:
September 9, 1999; September 10, 1999; December 31, 1999; January 1, 2000;
February 28, 2000; February 29, 2000; March 1, 2000; December 31, 2000; January
1, 2001; December 31, 2004; and January 1, 2005.

     c.   REMEDIES. In the event of any Century Noncompliance in the Systems in
any respect, in addition to any other remedies that may be available to Novation
or the Members, Supplier will, at no cost to the Members, promptly under the
circumstances (but, in all cases, within thirty (30) days after receipt of a
written request from any Member, unless otherwise agreed by the Member in
writing) eliminate the Century Noncompliance from the Systems.

     d.   NONCOMPLIANCE NOTICE. In the event Supplier becomes aware of (i) any
possible or actual Century Noncompliance in the Systems or (ii) any
international, governmental, industrial, or other standard (proposed or adopted)
regarding Calendar-Related data and/or processing, or Supplier begins any
significant effort to conform the Systems to any such standard, Supplier will
promptly provide the Members with all relevant information in writing and will
timely provide the Members with updates to such information. Supplier will
respond promptly and fully to inquiries by the Members, and timely provide
updates to any responses provided to the Members,

<PAGE>   12

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

with respect to (i) any possible or actual Century Noncompliance in the Systems
or (ii) any international, governmental, industrial, or other standards. In the
foregoing, the use of "timely" means promptly after the relevant information
becomes known to or is developed by or for Supplier.

     e.   SURVIVAL. Supplier's representations, warranties and agreements in
this Section will continue in effect throughout the Term and will survive the
expiration or earlier termination of this Agreement.

7.   REPORTS AND OTHER INFORMATION REQUIREMENTS.

     a.   REPORT CONTENT. Within [**] after the end of each full and partial
month during the Term ("Reporting Month"), Supplier will submit to Novation a
report in the form of a diskette containing the following information in form
and content reasonably satisfactory to Novation:

     (1)  the name of Supplier, the Reporting Month and year and the Agreement
number (as provided to Supplier by Novation);

     (2)  with respect to each Member (described by LIC number (as provided to
Supplier by Novation), health industry number (if applicable), full name, street
address, city, state, zip code and, if applicable, tier and committed status),
the number of units sold and the amount of net sales for each Product on a line
item basis, and the sum of net sales and the associated Marketing Fees for all
Products purchased by such Member directly or indirectly from Supplier during
the Reporting Month, whether under the pricing and other terms of this Agreement
or under the terms of any other purchasing or pricing arrangements that may
exist between the Member and Supplier;

     (3)  the sum of the net sales and the associated Marketing Fees for all
Products sold to all Members during the Reporting Month; and

     b.   REPORT FORMAT AND DELIVERY. The reports required by this Section will
be submitted electronically in Excel Version 7 or Access Version 7 and in
accordance with other specifications established by Novation from time to time
and will be delivered to:

Novation
Attn:  SRIS Operations
220 East Las Colinas Boulevard
Irving, TX  75039

     c.   OTHER INFORMATION REQUIREMENTS. In addition to the reporting
requirements set forth in Subsections 7.a and 7.b above, the parties agree to
facilitate the administration of this Agreement by transmitting and receiving
information electronically and by complying with the information requirements
set forth in Exhibit E attached hereto. Supplier further agrees that,

<PAGE>   13

except to the extent of any inconsistency with the provisions of this Agreement,
it will comply with all information requirements set forth in the Novation
Information Requirements Guidebook ("Guidebook"). On or about the Effective
Date, Novation will provide Supplier with a current copy of the Guidebook and
will thereafter provide Supplier with updates and/or revisions to the Guidebook
from time to time.

8.   OBLIGATIONS OF NOVATION.

     a.   INFORMATION TO MEMBERS. After the execution of this Agreement,
Novation, in conjunction with the Clients, will deliver a summary of the
purchasing arrangements covered by this Agreement to each Member and will, from
time to time, at the request of Supplier, deliver to each Member reasonable and
appropriate amounts and types of materials supplied by Supplier to Novation
which relate to the purchase of the Products.

     b.   MARKETING SERVICES. Novation, in conjunction with the Clients, will
market the purchasing arrangements covered by this Agreement to the Members.
Such promotional services may include, as appropriate, the use of direct mail,
contact by Novation's field service delivery team, member support services, and
regional and national meetings and conferences. As appropriate, Novation, in
conjunction with the Clients, will involve Supplier in these promotional
activities by inviting Supplier to participate in meetings and other reasonable
networking activities with Members.

9.   MARKETING FEES.

     a.   CALCULATION. Supplier will pay to Novation, as the authorized
collection agent for each of the Clients and certain of each Client's
subsidiaries and affiliates, respectively (and not collectively), marketing fees
("Marketing Fees") belonging to any of the Clients or certain of their
subsidiaries or affiliates equal to the Agreed Percentage of the aggregate gross
charges of all net sales of the Products to the Members directly or indirectly
from Supplier, whether under the pricing and other terms of this Agreement or
under the terms of any other purchasing or pricing arrangements that may exist
between the Members and Supplier. Such gross charges will be determined without
any deduction for uncollected accounts or for costs incurred in the manufacture,
provision, sale or distribution of the Products, and will include, but not be
limited to, charges for the sale of products, the provision of installation,
training and maintenance services, and the provision of any other services
listed on Exhibit A. The "Agreed Percentage" will be defined in the Non-Price
Specifications.

     b.   PAYMENT. On or about the Effective Date, Novation will advise Supplier
in writing of the amount determined by Novation to be Supplier's monthly
estimated Marketing Fees. Thereafter, Supplier's monthly estimated Marketing
Fees may be adjusted from time to time upon written notice from Novation based
on actual purchase data. No later than the tenth (10th) day of each month,
Supplier will remit the monthly estimated Marketing Fees for such month to
Novation. Such payment will be adjusted to reflect the reconciliation between
the actual Marketing Fees payable for the second month prior to such month with
the estimated Marketing Fees actually paid during such prior month. Supplier
will pay all estimated and adjusted Marketing Fees by check made payable to
"Novation, LLC." All checks should reference the

<PAGE>   14

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

Agreement number. Supplier will include with its check the reconciliation
calculation used by Supplier to determine the payment adjustment, with separate
amounts shown for each Client's component thereof. Checks sent by first class
mail will be mailed to the following address:

Novation
75 Remittance Dr., Suite 1420
Chicago, IL  60675-1420

Checks sent by courier (Federal Express, United Parcel Service or messenger)
will be addressed as follows:

The Northern Trust Company
801 S. Canal St.
4th Floor Receipt & Dispatch
Chicago, IL  60607
Attn:  Novation, Suite 1420
Telephone:  (312) 630-8100, #9

10.  ADMINISTRATIVE DAMAGES. Novation and Supplier agree that Novation would
incur additional administrative costs if Supplier fails to provide notice of
change in pricing terms as required in Subsection 2.e above, fails to provide
reports as required in Section 7 above, or fails to pay Marketing Fees as
required in Section 9 above, in each case within the time and manner required by
this Agreement. Novation and Supplier further agree that the additional
administrative costs incurred by Novation by reason of any such failure to
Supplier is uncertain, and they therefore agree that the following schedule of
administrative damages constitutes a reasonable estimation of such costs and
were determined according to the principles of just compensation:

1st failure................................................................[**]
2nd failure:...............................................................[**]
3rd failure:...............................................................[**]
4th failure:...............................................................[**]
5th failure:...............................................................[**]
6th & each subsequent failure:.............................................[**]

Novation's right to recover administrative damages in accordance with this
Section is in addition to any other rights and remedies Novation or the Clients
may have by reason of Supplier's failure to pay the Marketing Fees or provide
the reports or notices within the time and manner required by this Agreement.

11.  NONPAYMENT OR INSOLVENCY OF A MEMBER. If a Member fails to pay Supplier for
Products, or if a Member becomes bankrupt or insolvent or makes an assignment
for the benefit of creditors or goes into liquidation, or if proceedings are
initiated for the purpose of having a

<PAGE>   15

          Confidential Materials omitted and filed separately with the
         Securities and Exchange commission. Asterisks denote omissions.

receiving order or winding up order made against a Member, or if a Member
applies to the court for protection from its creditors, then, in any such case,
this Agreement will not terminate, but Supplier will have the right, upon prior
written notice to Novation and the Member, to discontinue selling Products to
that Member.

12.  INSURANCE.

     a.   POLICY REQUIREMENTS. Supplier will maintain and keep in force during
the Term product liability, general public liability and property damage
insurance against any insurable claim or claims which might or could arise
regarding Products purchased from Supplier. Such insurance will contain a
minimum combined single limit of liability for bodily injury and property damage
in the amounts of not less than 2,000,000 per occurrence and [**] in the
aggregate; will name Novation, the Clients and the Members, as their interests
may appear, as additional insureds, and will contain an endorsement providing
that the carrier will provide directly to all named insured copies of all
notices and endorsements. Supplier will provide to Novation, within fifteen (15)
days after Novation's request, an insurance certificate indicating the foregoing
coverage, issued by an insurance company licensed to do business in the relevant
states and signed by an authorized agent.

     b.   SELF-INSURANCE. Notwithstanding anything to the contrary in Subsection
12.a above, Supplier may maintain a self-insurance program for all or any part
of the foregoing liability risks, provided such self-insurance policy in all
material respects complies with the requirements applicable to the product
liability, general public liability and property damage insurance set forth in
Subsection 12.a. Supplier will provide Novation, within fifteen (15) days after
Novation's request: (1) the self-insurance policy; (2) the name of the company
managing the self-insurance program and providing reinsurance, if any; (3) the
most recent annual reports on claims and reserves for the program; and (4) the
most recent annual actuarial report on such program.

     c.   AMENDMENTS, NOTICES AND ENDORSEMENTS. Supplier will not amend, in any
material respect that affects the interests of Novation, the Clients or the
Members, or terminate said liability insurance or self-insurance program except
after thirty (30) days' prior written notice to Novation and will provide to
Novation copies of all notices and endorsements as soon as practicable after it
receives or gives them.

13.  COMPLIANCE WITH LAW AND GOVERNMENT PROGRAM PARTICIPATION.

     a.   COMPLIANCE WITH LAW. Supplier represents and warrants that to the best
of its knowledge, after due inquiry, it is in compliance with all federal, state
and local statutes, laws, ordinances and regulations applicable to it ("Legal
Requirements") which are material to the operation of its business and the
conduct of its affairs, including Legal Requirements pertaining to the safety of
the Products, occupational health and safety, environmental protection,
nondiscrimination, antitrust, and equal employment opportunity. During the Term,
Supplier will: (1) promptly notify Novation of any lawsuits, claims,
administrative actions or other proceedings

<PAGE>   16

asserted or commenced against it which assert in whole or in part that Supplier
is in noncompliance with any Legal Requirement which is material to the
operation of its business and the conduct of its affairs and (2) promptly
provide Novation with true and correct copies of all written notices of adverse
findings from the U.S. Food and Drug Administration ("FDA") and all written
results of FDA inspections which pertain to the Products.

     b.   GOVERNMENT PROGRAM PARTICIPATION. Supplier represents and warrants
that it is not excluded from participation, and is not otherwise ineligible to
participate, in a "Federal health care program" as defined in 42 U.S.C. ss.
1320a-7b(f) or in any other government payment program. In the event Supplier is
excluded from participation, or becomes otherwise ineligible to participate in
any such program during the Term, Supplier will notify Novation in writing
within three (3) days after such event, and upon the occurrence of such event,
whether or not such notice is given to Novation, Novation may immediately
terminate this Agreement upon written notice to Supplier.

14.  RELEASE AND INDEMNITY. SUPPLIER WILL RELEASE, INDEMNIFY, HOLD HARMLESS,
AND, IF REQUESTED, DEFEND NOVATION, THE CLIENTS AND THE MEMBERS, AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, REGENTS, AGENTS, SUBSIDIARIES, AFFILIATES AND
EMPLOYEES (COLLECTIVELY, THE "INDEMNITEES"), FROM AND AGAINST ANY CLAIMS,
LIABILITIES, DAMAGES, ACTIONS, COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS' FEES, EXPERT FEES AND COURT COSTS) OF ANY KIND
OR NATURE, WHETHER AT LAW OR IN EQUITY, INCLUDING CLAIMS ASSERTING STRICT
LIABILITY, ARISING FROM OR CAUSED IN ANY PART BY (1) THE BREACH OF ANY
REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUPPLIER CONTAINED IN THIS
AGREEMENT; (2) THE CONDITION OF ANY PRODUCT, INCLUDING A DEFECT IN MATERIAL,
WORKMANSHIP, DESIGN OR MANUFACTURING; OR (3) THE WARNINGS AND INSTRUCTIONS
ASSOCIATED WITH ANY PRODUCT. SUCH OBLIGATION TO RELEASE, INDEMNIFY, HOLD
HARMLESS AND DEFEND WILL APPLY EVEN IF THE CLAIMS, LIABILITIES, DAMAGES,
ACTIONS, COSTS AND EXPENSES ARE CAUSED BY THE NEGLIGENCE, GROSS NEGLIGENCE OR
OTHER CULPABLE CONDUCT OF INDEMNITEES; PROVIDED, HOWEVER, THAT SUCH
INDEMNIFICATION, HOLD HARMLESS AND RIGHT TO DEFENSE WILL NOT BE APPLICABLE WHERE
THE CLAIM, LIABILITY, DAMAGE, ACTION, COST OR EXPENSE ARISES SOLELY AS A RESULT
OF AN ACT OR FAILURE TO ACT OF INDEMNITEES. THIS SECTION AND THE OBLIGATIONS
CONTAINED HEREIN WILL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS
AGREEMENT. THE REMEDIES SET FORTH IN THIS SECTION ARE IN ADDITION TO AND NOT A
LIMITATION ON ANY OTHER RIGHTS OR REMEDIES THAT MAY BE AVAILABLE AGAINST
SUPPLIER.

15.  BOOKS AND RECORDS; FACILITIES INSPECTIONS.. Supplier agrees to keep,
maintain and preserve complete, current and accurate books, records and accounts
of the transactions contemplated by this Agreement and such additional books,
records and accounts as are necessary to establish and verify Supplier's
compliance with this Agreement. All such books, records and accounts will be
available for inspection and audit by Novation representatives at any time
during the Term and for two (2) years thereafter, but only during reasonable
business hours and upon reasonable notice. Novation agrees that its routine
audits will not be conducted more frequently than twice in any consecutive
twelve (12) month period, subject to Novation's right to conduct

<PAGE>   17

special audits whenever it deems it to be necessary. In addition, Supplier will
make its manufacturing and packaging facilities available for inspection from
time to time during the Term by Novation representatives, but only during
reasonable business hours and upon reasonable notice. The exercise by Novation
of the right to inspect and audit is without prejudice to any other or
additional rights or remedies of either party.

16.  USE OF NAMES, ETC. Supplier agrees that it will not use in any way in its
promotional, informational or marketing activities or materials (i) the names,
trademarks, logos, symbols or a description of the business or activities of
Novation or any Client or Member without in each instance obtaining the prior
written consent of the person owning the rights thereto; or (ii) the existence
or content of this Agreement without in each instance obtaining the prior
written consent of Novation.

17.  CONFIDENTIAL INFORMATION.

     a.   NONDISCLOSURE. Supplier agrees that it will:

     (1)  keep strictly confidential and hold in trust all Confidential
Information, as defined in Subsection 17.b below, of Novation, the Clients and
the Members;

     (2)  not use the Confidential Information for any purpose other than the
performance of its obligations under this Agreement, without the prior written
consent of Novation;

     (3)  not disclose the Confidential Information to any third party (unless
required by law) without the prior written consent of Novation; and

     (4)  not later than thirty (30) days after the expiration or earlier
termination of this Agreement, return to Novation, the Client or the Member, as
the case may be, the Confidential Information.

     b.   DEFINITION. "Confidential Information," as used in Subsection 17.a
above, will consist of all information relating to the prices and usage of the
Products (including all information contained in the reports produced by
Supplier pursuant to Section 7 above) and all documents and other materials of
Novation, the Clients and the Members containing information relating to the
programs of Novation, the Clients or the Members of a proprietary or sensitive
nature not readily available through sources in the public domain. In no event
will Supplier provide to any person any information relating to the prices it
charges the Members for Products ordered pursuant to this Agreement without the
prior written consent of Novation.

18.  MISCELLANEOUS.

     a.   CHOICE OF LAW. This Agreement will be governed by and construed in
accordance with the internal substantive laws of the State of Texas and the
Texas courts will have jurisdiction over all matters relating to this Agreement;
provided, however, the terms of any agreement between Supplier and a Member will
be governed by and construed in accordance with the choice of law and venue
provisions set forth in such agreement.

<PAGE>   18

     b.   NOT RESPONSIBLE. Novation and the Clients and their subsidiaries and
affiliates will not be responsible or liable for any Member's breach of any
purchasing commitment or for any other actions of any Member. In addition, none
of the Clients will be responsible or liable for the obligations of another
Client or its subsidiaries or affiliates or the obligations of Novation or
Supplier under this Agreement.

     c.   THIRD PARTY BENEFICIARIES. All Clients and Members are intended third
party beneficiaries of this Agreement. All terms and conditions of this
Agreement which are applicable to the Clients will inure to the benefit of and
be enforceable by the Clients and their respective successors and assigns. All
terms and conditions of this Agreement which are applicable to the Members will
inure to the benefit of and be enforceable by the Members and their respective
successors and assigns.

     d.   NOTICES. Except as otherwise expressly provided herein, all notices or
other communications required or permitted under this Agreement will be in
writing and will be deemed sufficient when mailed by United States mail, or
delivered in person to the party to which it is to be given, at the address of
such party set forth below:

If to Supplier:

To the address set forth by Supplier on the signature page of this Agreement

If to Novation:

Novation
Attn:  General Counsel
220 East Las Colinas Blvd.
Irving, TX  75039

or such other address as the party will have furnished in writing in accordance
with the provisions of this Subsection.

     e.   NO ASSIGNMENT. No assignment of all or any part of this Agreement may
be made without the prior written consent of the other party; except that
Novation may assign its rights and obligations to any affiliate of Novation. Any
assignment of all or any part of this Agreement by either party will not relieve
that party of the responsibility of performing its obligations hereunder to the
extent that such obligations are not satisfied in full by the assignee. This
Agreement will be binding upon and inure to the benefit of the parties'
respective successors and assigns.

     f.   SEVERABILITY. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement will be prohibited by or invalid
under applicable law, such provision will be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement. Each party will, at its own

<PAGE>   19

expense, take such action as is reasonably necessary to defend the validity and
enforceability of this Agreement and will cooperate with the other party as is
reasonably necessary in such defense.

     g.   ENTIRE AGREEMENT. This Agreement, together with the exhibits listed
below, will constitute the entire agreement between Novation and Supplier. This
Agreement, together with the exhibits listed below and each Member's purchase
order will constitute the entire agreement between each Member and Supplier. In
the event of any inconsistency between this Agreement and a Member's purchase
order, the terms of this Agreement will control, except that the Member's
purchase order will supersede Sections 4 and 5 of this Agreement in the event of
any inconsistency with such Sections. No other terms and conditions in any
document, acceptance, or acknowledgment will be effective or binding unless
expressly agreed to in writing. The following exhibits are incorporated by
reference in this Agreement:

Exhibit A  Product and Service Description and Pricing

Exhibit B  Non-Price Specifications

Exhibit C  Special Conditions

Exhibit D  Effective Date

Exhibit E  Other Information Requirements

[Other Exhibits Listed, if any]  EXHIBIT F

SUPPLIER:  Aspect Medical Systems, Inc.

ADDRESS:   2 Vision Dr
           Natick, MA 01760

SIGNATURE: /s/ J. Neal Armstrong

TITLE:     VP & CFO                                  DATE:    8/13/99

NOVATION, LLC

SIGNATURE: /s/ Edward Peterson

TITLE:     Group Sr. Vice President                  DATE:     8/10/99

<PAGE>   20
         Confidential materials omitted and filed separately with the
       Securities and Exchange Commission. Asterisks denote omissions.

                                    EXHIBIT A

                                     ASPECT
                              MEDICAL SYSTEMS, INC.
                            1999 Sales Options A-2000
                               Revenue Units Only

Novation
A-2000 Monitor $[**]
Sensors $[**] per case
     (case of [**] at $[**] each)

<TABLE>
<S>                                <C>

--------------------------------   ------------------------------------------------------------------------------
     Price Per Monitor                                                         Sensor Contract Pricing Schedule*
--------------------------------                                                   Annual Volume        Unit
                  Total Cost Per                                                    per Monitor        Price
Number of OR's       Monitor                                                       -------------       -----
--------------    --------------   Pricing Without Sensor Purchase Agreement          1  -  251        $[**]
                                   ------------------------------------------------------------------------------
    1 OR              $[**]
  2-5 OR's            $[**]        Pricing With Sensor Purchase Agreement           252  -  299        $[**]
 6-12 OR's            $[**]                                                         300  -  359        $[**]
13-29 OR's            $[**]                                                         360  -  407        $[**]
  20" OR's            $[**]                                                         408  -  455        $[**]
--------------------------------                                                    456  -  503        $[**]
                                                                                         >  504        $[**]
                                   ------------------------------------------------------------------------------
</TABLE>

1.   SENSOR CONTRACT PRICING SCHEDULE
*    Customers must issue a P.O. which commits to a 12 month minimum purchase
     volume of a minimum of [**].
     Sensor shipments must be rounded up to the nearest multiple of 25.

Customers who use more sensors than contracted for during the 12 month period,
which begins and has its anniversary on the date of the contract, will receive a
year-end rebate from Aspect. For example: Customer who signs an agreement to
purchase 300 sensors per year at $[**] but uses 456 sensors for the year will
receive a rebate equal to $[**] (i.e. the difference Between $[**] and $[**] per
sensor times the total sensors used).

[Illegible Text]

2.   RENTAL AGREEMENT OPTION:
(a)  $[**] per month monitor rental
(b)  $[**] per Sensor
(c)   [**] Months minimum rental

<PAGE>   21

         Confidential materials omitted and filed separately with the
       Securities and Exchange Commission. Asterisks denote omissions.

                        1999 Fee For Use Pricing Schedule
                            Assumes Monthly Purchases
                              FOR INTERNAL USE ONLY

LIST PRICING       A-2000 Monitor $[**]
                   Sensors @ $[**] per case of [**] ($[**]/sensor)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Total Value Per Monitor:              $[**]
Number of Monitors:                    [**]
Number of Sensor Purchases/Year:       [**]

               ----------------------------------------------------------------
               12 Months     24 Months     36 Months     48 Months    60 Months
Annual Sensor  ---------     ---------     ---------     ---------    ---------
    Usage
 Per Monitor   Unit Price    Unit Price   Unit Price    Unit Price   Unit Price
-------------  ----------    ----------   ----------    ----------   ----------
<S>              <C>           <C>          <C>           <C>          <C>
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
-------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------
Total Value Per Monitor:                $[**]
Number of Monitors:                     $[**]
Number of Sensor Purchases/Year:        $[**]

               ----------------------------------------------------------------
               12 Months     24 Months     36 Months     48 Months    60 Months
Annual Sensor  ---------     ---------     ---------     ---------    ---------
    Usage
 Per Monitor   Unit Price    Unit Price   Unit Price    Unit Price   Unit Price
-------------  ----------    ----------   ----------    ----------   ----------
<S>              <C>           <C>          <C>           <C>          <C>
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
-------------------------------------------------------------------------------
</TABLE>

<PAGE>   22
         Confidential materials omitted and filed separately with the
       Securities and Exchange Commission. Asterisks denote omissions.

                        1999 Fee For Use Pricing Schedule
                            Assumes Monthly Purchases
                              FOR INTERNAL USE ONLY

LIST PRICING       A-2000 Monitor $[**]
                   Sensors @ $[**] per case of [**] ($[**]/sensor)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Total Value Per Monitor:              $[**]
Number of Monitors:                    [**]
Number of Sensor Purchases/Year:       [**]

               ----------------------------------------------------------------
               12 Months     24 Months     36 Months     48 Months    60 Months
Annual Sensor  ---------     ---------     ---------     ---------    ---------
    Usage
 Per Monitor   Unit Price    Unit Price   Unit Price    Unit Price   Unit Price
-------------  ----------    ----------   ----------    ----------   ----------
<S>              <C>           <C>          <C>           <C>          <C>
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
-------------------------------------------------------------------------------

<CAPTION>
------------------------------------------------------------------------------
Total Value Per Monitor:                $[**]
Number of Monitors:                      [**]
Number of Sensor Purchases/Year:         [**]

               ----------------------------------------------------------------
               12 Months     24 Months     36 Months     48 Months    60 Months
Annual Sensor  ---------     ---------     ---------     ---------    ---------
    Usage
 Per Monitor   Unit Price    Unit Price   Unit Price    Unit Price   Unit Price
-------------  ----------    ----------   ----------    ----------   ----------
<S>              <C>           <C>          <C>           <C>          <C>
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
    [**]         $[**]         $[**]        $[**]         $[**]        $[**]
-------------------------------------------------------------------------------
</TABLE>

<PAGE>   23

         Confidential materials omitted and filed separately with the
       Securities and Exchange Commission. Asterisks denote omissions.

                        1999 Fee For Use Pricing Schedule
                            Assumes Monthly Purchases
                              FOR INTERNAL USE ONLY

LIST PRICING       A-2000 Monitor $[**]
                   Sensors @ $[**] per case of [**] ($[**]/sensor)

USAGE AGREEMENTS:

-    Customer will be invoiced for [**] sensors per month per monitor to meet
     minimum commitment of [**] sensors per monitor per year. Sensor shipments
     must be rounded up to the nearest multiple of [**].
-    Warranty and software upgrades are included with each usage agreement for
     the life of the agreement.
-    After the minimum commitment is met, pricing reverts to the then current
     Sensor Pricing Schedule.
<PAGE>   24
         Confidential materials omitted and filed separately with the
       Securities and Exchange Commission. Asterisks denote omissions.

                                    EXHIBIT B

                            Non-Price Specifications

     The term of the contract is three (3) years, commencing on September 01,
1999 through August 30, 2002, with [**] one-year renewals. Pricing will be firm
from [**].

     Aspect Medical agrees to pay Novation a marketing fee to be defined as [**}
on all Novation contracted sales.

     Warranty as expressed in 5(a) is valid from one [**] from the date
purchase.
<PAGE>   25

                                   EXHIBIT C

                               SPECIAL CONDITIONS

                                      N/A

<PAGE>   26

                                    EXHIBIT D

                                 EFFECTIVE DATE

This Agreement will be effective on September 01, 1999 Through August 30, 2002.

<PAGE>   27

                                    EXHIBIT E

                         OTHER INFORMATION REQUIREMENTS

     Novation and Supplier desire to facilitate contract administration
transactions ("Transactions") by electronically transmitting and receiving data
in agreed formats in substitution for conventional paper-based documents and to
assure that such Transactions are not legally invalid or unenforceable as a
result of the use of available electronic technologies for the mutual benefit of
the parties.

     The parties agree as follows:

1.   PREREQUISITES.

     a.a   DOCUMENTS; STANDARDS. Each party will electronically communicate to
or receive from the other party all of the required documents listed in the
Novation Electronic Communication Requirements Schedule attached hereto
(collectively "Documents"). All Documents will be communicated in accordance
with the standards set forth in the applicable sections of the Novation
Information Requirements Guidebook ("Guidebook"). Supplier agrees that the
Guidebook is the Confidential Information of Novation and will not disclose
information contained therein to any other party.

     a.b.  THIRD PARTY SERVICE PROVIDERS. Document swill be communicated
electronically to each party, as specified in the Guidebook, through any third
party service provider ("Provider") with which either party may contract or
VHAseCure.net(TM). Either party may modify its election to use, not use or
change a Provider upon thirty (30) days' prior written notice. Each party will
be responsible for the costs of any Provider with which it contracts, unless the
parties otherwise mutually agree in writing.

     a.c.  SIGNATURES. Each party will adopt as its signature an electronic
identification consisting of symbol(s) or code(s) which are to be affixed to or
contained in each Document transmitted by such Party ("Signatures"). Each party
agrees that any Signature of such party affixed to or contained in any
transmitted Document will be sufficient to verify such party originated and
intends to be bound by such Document. Neither party will disclose to any
unauthorized person the Signatures of the other party.

2.   TRANSMISSIONS.

     b.a.  VERIFICATION. Upon proper receipt of any Document, the receiving
party will promptly and properly transmit a functional acknowledgement in
return, unless otherwise specified in the Guidebook.

     b.b.  ACCEPTANCE. If acceptance of a Document is required by the
Guidebook, any such Document which has been properly received will not give
rise to any obligation unless and until the party initially transmitting such
Document has properly received in return an Acceptance Document (as specified
in the Guidebook).

<PAGE>   28

     b.c.   GARBLED TRANSMISSION. If any properly transmitted Document is
received in an unintelligible or garbled form, the receiving party will
promptly notify the originating party (if identifiable from the received
Document) in a reasonable manner. In the absence of such a notice, the
originating party's records of the contents of such Document will control.

3.   TRANSACTION TERMS.

     c.a.   CONFIDENTIALITY. No information contained in any Document or
otherwise exchanged between the parties will be considered confidential, except
to the extent provided by written agreement between the parties, or by
applicable law.

     c.b.   VALIDITY; ENFORCEABILITY. Any Document properly transmitted pursuant
to this Agreement will be considered, in connection with any Transaction, to be
a "writing" or "in writing" and any such Document when containing, or to which
there is affixed, a Signature ("Signed Documents") will be deemed for all
purposes to have been "signed" and to constitute an "original" when printed from
electronic files or records established and maintained in the normal course of
business.

4.   STANDARDS.

ASC x 12 - Novation Information Requirements Guidebook

5.   THIRD PARTY SERVICE PROVIDERS.

(If the parties will be transmitting Documents directly, insert "NONE")

<TABLE>
<CAPTION>
COMPANY                   VAN NAME                             ADDRESS                            TELEPHONE
-------                   --------                             -------                            ---------
                                                                                                  NUMBER
                                                                                                  ------

<S>                       <C>                                  <C>                                <C>
Novation                  AT&T                                 12976 Hollander Drive              800/624-5672
                          Bridgeton, MO  63044
</TABLE>

6.   CONTRACT PRICING (PHARMACY).

Supplier will transmit contract pricing information electronically, to include
new contracts, contract renewals and any changes to a current contract. This
will be sent in a timely manner and in compliance with ANSI ASC X12-845 (Price
Authorization) and Novation Contract Pricing Guidelines. Contract pricing
information will include the following:

                                      -2-
<PAGE>   29

Supplier Identification Number
     HIN (Health Industry Number if Supplier is a HIN subscriber)
     DEA Number (if HIN is not available)
Supplier Assigned Number (if HIN and DEA are not available)
Supplier Name
Supplier Contract Number
MFG Contract Number
Contract Effective Date
Contract Expiration Date
Member(s) (Member name, HIN or DEA number, Member start/stop dates)
Product Identifier
     NDC
     UPC (if NDC is not available)
Trade Name
Package Count
Package UOM
Selling Unit Price
Item Contract Effective Date
Item Contract Expiration Date

7.   CONTRACT PRICING (MEDICAL/SURGICAL).

Supplier will communicate contract pricing information electronically, to
include new contracts, contract renewals and any changes to the current
contract. This will be sent in a timely manner and in compliance with the
Guidebook.

                                       -3-

<PAGE>   30
            NOVATION ELECTRONIC COMMUNICATION REQUIREMENTS SCHEDULE

This form is being completed by:                             Date:

--------------------------------                             ----------------
         (Your Name)

Your Company Name:                                           Your Title:

--------------------------------                             ----------------

Phone:                       E-mail:
      ----------------------        -----------------

Fax:
    ------------------------

Please complete the following questionnaire. Your answers to the following will
be used for planning purposes by the Novation Information Services staff. If
your company can already send the listed electronic information, please note
this in the date field.

<TABLE>
<CAPTION>
                                                                     WHEN WILL YOUR COMPANY
                                                                      MEET THIS REQUIREMENT
NOVATION REQUIREMENT              NOVATION EXPECTATION                     (MM/DD/YY)
---------------------      ----------------------------------     -----------------------------
<S>                        <C>                                    <C>
REQUIREMENT 1:             This only applies to new contracts,    Your Novation product manager
  New Contract Launch      unless your company never provided     will address this as new
                           this information. If needed, your      contracts are negotiated.
  See Section 4.2          Novation product manager will
                           contact you.
                           DUE AT CONTRACT SIGNING
-----------------------------------------------------------------------------------------------
REQUIREMENT 2:             Novation must receive contract item    Date: ____/____/____
  Ongoing Contract         and pricing updates as prices change,
  Maintenance              and when items are added or deleted    Will send information via
                           from contract.                           (check one):
  See Section 4.3          DUE 60 DAYS PRIOR TO THE EFFECTIVE       ( ) EDI 832
                           DATE OF THE LINE ITEM                    ( ) Novation Interim File
                           ADD/DELETE/CHANGE                      Format
-----------------------------------------------------------------------------------------------
REQUIREMENT 3A:            Current paper reports must be          Date: ____/____/____
  Summary Sales            converted to electronic reporting
   Reporting               IMMEDIATELY. This will not be needed   You will report sales by
                           once your company can report line          ( ) LIC or ( ) HIN
  See Section 4.4.2        item sales. See Requirement 3B.        One or the other MUST BE USED
                           Due at the first contract reporting
                           period.
-----------------------------------------------------------------------------------------------
REQUIREMENT 3B:            Instead of monthly summary reports,    Date: ____/____/____
  Detailed Line Item       detailed line item reports will be     You will report sales by
   Sales Reporting         sent electronically. Plan for a 90-    ( ) LIC Number or ( ) HIN
                           day testing period before stopping     ( ) Interim File or
   See Section 4.4.3       Requirement 3A.                        ( ) EDI 867
                           BEGIN TESTING WITHIN 120 DAYS OF       If using Interim file,
                           CONTRACT EFFECTIVE DATE                proposed date for converting
                                                                  to EDI. Date:
                                                                  ____/____/____
                                                                  One or the other MUST BE USED
-----------------------------------------------------------------------------------------------
REQUIREMENT 4:             You must be able to receive and        Date: ____/____/____
  Membership               process periodic membership updates.
                           DUE IMMEDIATELY
  See Section 4.5
-----------------------------------------------------------------------------------------------
REQUIREMENT 5:             Details which members have and have    Date: ____/____/____
  Commitment Forms         not signed your contract enrollment
                           forms, if needed.
                           DUE IMMEDIATELY, IF APPLICABLE
  See Section 4.6
-----------------------------------------------------------------------------------------------
REQUIREMENT 6:             Able to update Sale Representative     Date: ____/____/____
</TABLE>

<PAGE>   31
<TABLE>
<CAPTION>

---------------------      ----------------------------------     -----------------------------
<S>                        <C>                                    <C>
  Sales Representative     information from a Business Partner
   Contact Information     Repository System download.
                           DUE WITHIN 30 DAYS OF CONTRACT
  See Section 4.7          SIGNING
-----------------------------------------------------------------------------------------------
REQUIREMENT 7:             Able to update the items on contract   Date: ____/____/____
  Product Cross-           with competitive cross-reference
   referencing             information
                           DUE WITHIN 90 DAYS OF CONTRACT
  See Section 4.8          SIGNING
-----------------------------------------------------------------------------------------------
Business Partner           Able to connect to Novation BPRS       Date: ____/____/____
  Repository System        via the VHAseCURE.neta.                How many of your company
  (BPRS) Access            DUE WITHIN 60 DAYS OF CONTRACT         employees need access to your
                           SIGNING                                Novation BPRS site? ______
  See Section 3.0
-----------------------------------------------------------------------------------------------
</TABLE>
                           RETURN WITHIN 30 DAYS TO:

          Bill King, Manager, Supply Partner Operations, Novation LLC,
                  220 East Las Colinas Blvd., Irving, TX 75039
  Telephone: (972) 581-5022, Fax: (972) 581-5154, E-mail: bking@novationco.com

<PAGE>   32

                                    Exhibit F

                                   Exceptions

SUPPLIER NAME:      ASPECT MEDICAL SYSTEMS, INC.
               -----------------------------------------------------------------

PRINTED NAME:       J. Neal Armstrong
               -----------------------------------------------------------------

AUTHORIZED SIGNATURE:  /s/ J. Neal Armstrong
                      ----------------------------------------------------------

TITLE:  Vice President and Chief Financial Officer
       -------------------------------------------------------------------------

DATE:             6/15/99
      --------------------------------------------------------------------------

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Page           Paragraph            Exception
No.            No.
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
1              2. a.                Is changed to read as follows:
                                    PURCHASE OF PRODUCTS. Novation and Supplier hereby agree that Supplier will make the
                                    Products available for purchase by the Members at the Contract Prices in accordance
                                    with the terms of this Agreement; provided, however, that this Agreement will not
                                    constitute a commitment by any person to purchase any of the Products.

1              2.b.                 Is changed to read as follows:
                                    OPTIONAL PURCHASING ARRANGEMENT. Novation and Supplier agree that each Member will
                                    have the option of purchasing the Products under the terms of this Agreement or
                                    under the terms of any other purchasing or pricing arrangement that may exist
                                    between such Member and Supplier at any time during the Term; Supplier will use its
                                    best efforts to report to Novation sales of Products to Members in accordance
                                    with Sections 7 and 9 below. If any Member uses any other purchasing or pricing
                                    arrangement with Supplier when ordering products covered by any contract between
                                    Supplier and Novation, Supplier will notify any such Member included in the most
                                    recent database supplied by Novation of the pricing and other significant terms of
                                    the applicable Novation contract.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 1 of 7 Pages

<PAGE>   33

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
2              2.c.                 Is changed to read as follows:
                                    MARKET COMPETITIVE TERMS.  Supplier agrees that the prices, quality, value and
                                    technology of all Products purchased under this Agreement will remain market
                                    competitive at all times during the Term. Supplier will [**] applicable to the
                                    purchase of the Products as necessary to assure market competitiveness. During the
                                    term of this Agreement, Supplier agrees to offer Products under this Agreement [**].
                                    If at any time during the Term Novation receives information from any source
                                    suggesting that Supplier's prices, quality, value or technology are not market
                                    competitive, Novation may provide written notice of such information to Supplier,
                                    and Supplier will, within [**] advise Novation in writing of and fully implement
                                    all adjustments necessary to assure market competitiveness.
------------------------------------------------------------------------------------------------------------------------
2              2.d.                 Is changed to read as follows:
                                    CHANGES IN CONTRACT PRICES. Subject to Subsection 2.e. below, unless otherwise
                                    expressly agreed in any exhibit to this Agreement, the Contract Prices will not be
                                    increased and any discount will not be eliminated or reduced during the Term. In
                                    addition to any changes made to assure market competitiveness, Supplier may lower
                                    the Contract Prices or increase any discount applicable to the purchase of the
                                    Products at any time.
------------------------------------------------------------------------------------------------------------------------
2              2.f.                 Is changed to read as follows:
                                    UNDERUTILIZED BUSINESSES. Certain Members may be required by law, regulation and/or
                                    internal policy to do business with underutilized businesses such as Minority
                                    Business Enterprises (MBE), Disadvantaged Business Enterprises (DBE), Small Business
                                    Enterprises (SBE), Historically Underutilized Businesses (HUB) and/or
                                    Women-owned Business Enterprises (WBE). To assist Novation in helping Members meet
                                    these requirements, Supplier will use its best efforts to comply with all Novation
                                    policies and programs with respect to such businesses and will use its best efforts
                                    to provide, on request, Novation or any Member with statistical or other information
                                    with respect to Supplier's utilization of such businesses as a vendor, distributor,
                                    contractor or subcontractor.
------------------------------------------------------------------------------------------------------------------------
3              3.b.                 Is changed to read as follows:
                                    TERMINATION BY NOVATION. Novation may terminate this Agreement at any time for any
                                    reason whatsoever by delivering not less than [**] prior written notice thereof to
                                    Supplier. In addition, Novation may terminate this Agreement immediately by
                                    delivering written notice thereof to Supplier upon the occurrence of either of the
                                    following events:

                                    (0)1     Supplier breaches this Agreement and any such breach, except for a monetary
                                    breach or breach of Section 13, which will warrant immediate termination, is not
                                    cured within [**] after written notice from Novation to Supplier; or

                                    (0)2     Supplier becomes insolvent or goes into liquidation or proceedings are
                                    initiated by Supplier or against Supplier for the purpose of having a receiving
                                    order or winding up order made against Supplier, or Supplier applies to the courts
                                    for protection from its creditors.

                                    Novation's right to terminate this Agreement due to Supplier's  breach in accordance
                                    with this Subsection is in addition to any other rights and remedies Novation, the
                                    Clients or the Members may have resulting from such breach, including, but not
                                    limited to, Novation's and the Clients' right to recover all loss of Marketing
                                    Fees resulting from such breach through the date of termination.

------------------------------------------------------------------------------------------------------------------------
3              3.c.                 Is changed to read as follows:
                                             TERMINATION BY SUPPLIER.  Supplier may terminate this Agreement at any time
                                    for any reason whatsoever by delivering not less than [**] prior written notice thereof
                                    to Novation. In addition, Supplier may terminate this agreement immediately by
                                    delivering written notice thereof to Novation upon the occurrence of either of the
                                    following events:

                                    (1)      Novation breaches this Agreement and any such breach, except for a breach
                                    of Section 13, which will warrant immediate termination, is not cured within [**]
                                    after written notice from Supplier to Novation; or

                                    (2)      Novation becomes insolvent or goes into liquidation or proceedings are
                                    initiated by Novation or against Novation for the purpose of having a receiving
                                    order or winding up order made against Novation, or Novation applies to the courts
                                    for protection from its creditors.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 2 of 7 Pages

<PAGE>   34

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
3              4.a.                 Is changed to read as follows:
                                    DELIVERY AND INVOICING. On and after the Effective Date, Supplier agrees to deliver
                                    Products ordered by the Members to the Members, FOB destination, and will direct its
                                    invoices to the Members in accordance with this Agreement. Supplier agrees to prepay
                                    and add to the invoice charges, if any, for transporting Products to the Members.
                                    Payment terms are Net 30 days. Supplier will make whatever arrangements are reasonably
                                    necessary with the Members to implement the terms of this Agreement; provided, however,
                                    Supplier will not impose any purchasing commitment on any Member as a condition to
                                    the Member's purchase of any Products pursuant to this Agreement, unless Member enters
                                    into an Agreement with Supplier that requires minimum purchases.
------------------------------------------------------------------------------------------------------------------------
3              4.b.                 Is changed to read as follows:
                                    PRODUCT FILL RATES; CONFIRMATION AND DELIVERY TIMES.  Supplier agrees to provide
                                    product fill rates to the Members of greater than ninety-five percent (95%),
                                    calculated as line item orders. All products shall be ordered in writing, specifying
                                    the product type, number of units, desired delivery date and means of shipment.
                                    Purchase orders may be sent by fascimile machine. Such orders shall be considered to
                                    have been accepted by Supplier unless Supplier otherwise notifies Member. Supplier's
                                    notification may be verbal or sent by fascimile machine.
------------------------------------------------------------------------------------------------------------------------
4              4.d.                 Is changed to read as follows:
                                    DISCONTINUATION OF PRODUCTS; CHANGES IN PACKAGING.  Supplier will have no unilateral
                                    right to discontinue any of the Products or to make any changes in packaging which
                                    render any of the Products substantially different in use, function or distribution.
                                    Supplier shall [**] any Products which may [**] any of the Products [**] to the [**].
                                    In the event Supplier [**] in addition to any other rights and remedies Novation or
                                    the Members may have by reason of such [**], (i) Novation will have the [**] any or
                                    all of the Product(s) subject to such [**] any of the products [**] this Agreement
                                    [**] of the [**] which may [**] any of the Products [**] or any time thereafter
                                    [**] to Supplier.
------------------------------------------------------------------------------------------------------------------------
4              4.e.                 Is changed to read as follows:
                                    REPLACEMENT OR NEW PRODUCTS. Supplier will have no unilateral right to replace any
                                    of the Products listed in Exhibit A with other products or to add new products to
                                    this Agreement. Supplier may [**], and such agreement shall [**] of any of the
                                    Products or the [**] product that is [**] to the [**] of the [**] or to the [**]any
                                    Product [**] product [**] to this Agreement be [**] agreement, and such agreement
                                    shall [**] to the [**] product.
------------------------------------------------------------------------------------------------------------------------
5              4.g.                 This subsection is deleted in its entirety.
------------------------------------------------------------------------------------------------------------------------
5              4.h.                 Is changed to read as follows:
                                    RETURN OF PRODUCTS. Any Member, in addition to and not in limitation of any other
                                    rights and remedies, will have the right to return Products to Supplier under any of
                                    the following circumstances: (1) the Product is [**]; (2) the Product is
                                    [**] or is [**]; (3) the Product is [**], or is [**]; (4) the Product is [**] or the
                                    [**]; and (5) the Product is [**]. Supplier agrees to accept the return of Products
                                    under these circumstances without charge and for full credit.
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
5              4.i.                 Is changed to read as follows:
                                    FAILURE TO SUPPLY. In the event of Supplier's failure to perform its supply
                                    obligations in accordance with the terms of this Section 4, Novation may terminate
                                    this Agreement in accordance with the terms of Subsection 3.b. The remedies set
                                    forth in this Subsection are in addition to any other rights and remedies Novation,
                                    the Clients or the Members may have resulting from such failure.
------------------------------------------------------------------------------------------------------------------------
5              5.a.                 This subsection is deleted in its entirety and replaced with the following:
                                    WARRANTY.  Subject to the limitations set forth in this Section 5, Supplier warrants
                                    to the Members that all Products purchased from Supplier shall be free from defects
                                    in materials and workmanship, when given normal, proper and intended usage and
                                    maintenance, for a period of one year from the date of shipment to Member. Supplier
                                    agrees during the warranty period to replace or repair all defective Products to
                                    proper operating condition in accordance with Supplier's published specifications
                                    for such Products. All defective parts must be returned, transportation prepaid, to
                                    Supplier's offices in Natick, MA. All replaced parts shall become Supplier's
                                    property on an exchange basis. Replacement parts may be new or refurbished, at the
                                    election of Supplier.

                                    The foregoing warranties shall not apply to expendable components, nor shall Supplier
                                    have any obligation under this Agreement to make repairs or replacements which are
                                    required by normal wear and tear, or which result, in whole or in part, from catastrophe,
                                    fault or negligence, or from improper or unauthorized use or repair of the Products,
                                    or use of the Products in a manner for which they were not designed, or by causes external
                                    to the Products such as, but not limited to, power or air conditioning failure.

                                    EXCEPT AS STATED ABOVE, SUPPLIER DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED,
                                    WRITTEN OR ORAL, WITH RESPECT TO THE PRODUCTS, INCLUDING WITHOUT LIMITATION ALL
                                    IMPLIED WARRANTIES OF FITNESS FOR ANY PARTICULAR PURPOSE.

                                    SUPPLIER'S LIABILITY FOR DAMAGES TO MEMBER FOR ANY CAUSE WHATSOEVER, REGARDLESS OF
                                    THE FORM OF ANY CLAIM OR ACTION, SHALL NOT EXCEED THE AGGREGATE PRICE PAID FOR
                                    PRODUCTS UNDER THIS AGREEMENT. SUPPLIER SHALL IN NO EVENT BE LIABLE FOR ANY LOSS OF
                                    DATA, PROFITS OR USE OF THE PRODUCTS OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
                                    CONSEQUENTIAL DAMAGES ARISING HEREUNDER.

                                    IN NO EVENT WILL SUPPLIER BE LIABLE TO MEMBERS OR OTHER THIRD PARTIES FOR ANY DAMAGES,
                                    INCLUDING BUT NOT LIMITED TO: (i) DAMAGES CAUSED BY MEMBER'S FAILURE TO PERFORM ITS
                                    COVENANTS AND RESPONSIBILITIES; (ii) DAMAGES CAUSED BY REPAIRS OR ALTERATIONS DONE
                                    WITHOUT SUPPLIER'S WRITTEN APPROVAL; (iii) DAMAGES DUE TO DETERIORATION DURING PERIODS
                                    OF STORAGE BY MEMBER OR ITS CUSTOMERS; OR (iv) LOSS OF DATA, PROFITS OR USE OF THE
                                    PRODUCTS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE
                                    USE OR PERFORMANCE OF THE PRODUCTS.

                                    NOVATION WARRANTIES.  Novation acting on its own behalf only, shall extend a written
                                    warranty at least as favorable to its customers as the warranty extended to it by
                                    Supplier above, in connection with each sale or license of Products. Novation shall
                                    perform and fulfill all of the terms and conditions of each such warranty. All labor
                                    costs for warranty work shall be borne by Novation and shall not be passed on to
                                    customers. Novation shall promptly notify Supplier of all warranty claims.

                                    INDEMNIFICATION BY NOVATION.  To the extent a claim or action is brought against
                                    Supplier based on or related to Novation's failure to observe or perform its
                                    obligations under this Agreement, including its obligation to notity customers of
                                    limitations and disclaimers of warranties and liabilities, Novation shall defend and
                                    hold Supplier harmless from and against any and all damages, costs and expenses,
                                    including reasonable attorneys' fees, suffered by or awarded against Supplier.
------------------------------------------------------------------------------------------------------------------------
6              5.c.                 This subsection is deleted in its entirety and replaced with the following:
                                    INFRINGEMENT INDEMNIFICATION BY SUPPLIER. Upon prompt notification in writing of any
                                    action (and all prior related claims) brought against Novation based on a claim that
                                    the Products infringe any valid United States patent, trademark, copyright or trade
                                    secret, Supplier shall defend such action at its expense and pay all costs and
                                    damages finally awarded in such action or settlement which are attributable to such
                                    claim, provided that the failure to so notify the Supplier shall not relieve it from
                                    any obligation which it may have hereunder or otherwise, except to the extent such
                                    failure prejudices the Supplier's rights in any way. Supplier shall have sole
                                    control of the defense of any such action and all negotiations for its settlement or
                                    compromise. Novation shall cooperate fully with Supplier in the defense, settlement
                                    or compromise of any such action. In the event that a final injunction is obtained
                                    against Novation's use of the Product by reason of infringement of a valid United
                                    States patent, copyright or trade secret, or if in the opinion of Supplier the
                                    Product is likely to become the subject of a successful claim of such infringement,
                                    Supplier may, at its option and expense, (i) procure for Novation the right to
                                    continue using the Product, (ii) replace or modify the Product so that it becomes
                                    non-infringing (so long as its functionality is essentially unchanged), or (iii) if
                                    neither (i) or (ii) are reasonably available to Supplier, terminate the AGREEMENT
                                    FOR THE PRODUCT.

                                    Notwithstanding the foregoing, Supplier shall have no liability to Novation to the
                                    extent that any infringement or claim thereof is based upon (i) use of any Product
                                    in combination with equipment or software not supplied by Supplier where the Product
                                    would not itself be infringing, (ii) compliance with designs, specifications or
                                    instructions of Novation or any or its Members (while it is understood by the parties
                                    that Novation does not currently and does not intend to provide designs, specifications
                                    or instructions), (iii) use of any Product in an application or environment for
                                    which it was not designed or not contemplated hereunder, (iv) modifications of the
                                    Products by anyone other than Supplier, or (v) any claims of infringement of any
                                    patent, copyright or trade secret in which Novation or any affiliate or customer of
                                    Novation has an interest or license.

                                    THE FOREGOING INDEMNIFICATION PROVISIONS STATE THE ENTIRE LIABILITY OF SUPPLIER
                                    WITH RESPECT TO INFRINGEMENT OR ALLEGED INFRINGEMENT OF PATENTS, COPYRIGHTS,
                                    TRADEMARKS, TRADE SECRETS AND OTHER INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS
                                    BY THE PRODUCTS.

                                    INFRINGEMENT INDEMNIFICATION BY NOVATION.  Novation shall indemnify, defend and hold
                                    harmless Supplier against all claims, liabilities, damages, expenses, judgments
                                    and losses (including reasonable attorneys' fees) arising from (i) infringement or
                                    alleged infringement of any patent, copyright, trade secret, trademark or other
                                    intellectual property or proprietary right as a result of compliance by Supplier with
                                    the designs, specifications or instructions of Novation or any of its Members (while it
                                    is understood by the parties that Novation does not currently and does not intend to
                                    provide designs, specifications or instructions), (ii) Novation's breach of any
                                    of its obligations hereunder, and (iii) Novation's use and/or misuse of the Products
                                    (while it is understood by the parties that Novation does not currently and does not
                                    intend to use the Product).

                                    OWNERSHIP OF PATENT AND TRADEMARKS.  All patents, trademarks, trade names, copyrights
                                    and designs in relation to the Products and the literature supplied in connection
                                    therewith shall be and remain the property of Supplier and no rights to duplicate
                                    such property shall accrue to Novation, the Clients or Members as a result of this
                                    Agreement unless expressly provided herein or unless written permission is granted
                                    by Supplier.

                                    Supplier represents and warrants that, to the best of its knowledge, the products do
                                    not infringe any United States patent, trademark, copyright or trade secret of any
                                    third party.
------------------------------------------------------------------------------------------------------------------------
6              5.f.                 Is changed to read as follows:
                                    SHELF LIFE. Sterile Products and other Products with a limited shelf life sold under
                                    this Agreement will have the longest possible shelf life and the latest possible
                                    expiration dates. Unless required by stability considerations, there will not be
                                    less than a [**] interval between a Product's date of delivery by Supplier to the
                                    Member and its expiration date.
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>   35

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
6              6.a. through e.      Is changed to read as follows:
                                        a.   DEFINITIONS. FOR PURPOSES OF THIS SECTION, THE FOLLOWING TERMS HAVE THE
                                    RESPECTIVE MEANINGS GIVEN BELOW:

                                        (1)  "SYSTEMS" MEANS ANY OF THE PRODUCTS, SYSTEMS OF DISTRIBUTION FOR PRODUCTS
                                    [**] THAT CONSIST OF OR INCLUDE ANY [**] (WHETHER GENERAL OR SPECIAL PURPOSE),
                                    THAT ARE PROVIDED BY OR THROUGH SUPPLIER PURSUANT TO THIS AGREEMENT, OR ANY [**]
                                    PROVIDED BY OR THROUGH SUPPLIER IN CONNECTION THEREWITH.

                                        (2)  "CALENDAR-RELATED" REFERS TO DATE VALUES BASED ON THE "GREGORIAN CALENDAR"
                                    (AS DEFINED IN THE ENCYCLOPEDIA BRITANNICA, 15TH EDITION, 1982, PAGE 602) AND TO ALL
                                    USES IN ANY MANNER OF THOSE DATE VALUES, INCLUDING WITHOUT LIMITATION MANIPULATIONS,
                                    CALCULATIONS, CONVERSIONS, COMPARISONS, AND PRESENTATIONS.

                                        (3)  "CENTURY NONCOMPLIANCE" MEANS ANY ASPECTS OF THE SYSTEMS THAT FAIL TO
                                    SATISFY THE REQUIREMENTS SET FORTH IN SUBSECTION 6.B BELOW.

                                        b.   REPRESENTATIONS. SUPPLIER WARRANTS, REPRESENTS AND AGREES THAT THE SYSTEMS
                                    SATISFY THE FOLLOWING REQUIREMENTS:

                                        (1)  IN CONNECTION WITH THE USE AND PROCESSING OF CORRECTLY ENTERED AND FORMATTED
                                    CALENDAR-RELATED DATA, THE SYSTEMS WILL NOT MALFUNCTION, WILL NOT CEASE TO FUNCTION,
                                    WILL NOT GENERATE INCORRECT DATA, AND WILL NOT PRODUCE INCORRECT RESULTS.

                                        (2)  IN CONNECTION WITH PROVIDING CALENDAR-RELATED DATA TO AND ACCEPTING
                                    CORRECTLY ENTERED AND FORMATTED CALENDAR-RELATED DATA FROM OTHER AUTOMATED, COMPUTERIZED,
                                    AND/OR SOFTWARE SYSTEMS AND USERS VIA USER INTERFACES, ELECTRONIC INTERFACES, AND DATA
                                    STORAGE, THE SYSTEMS REPRESENT DATES WITHOUT AMBIGUITY AS TO CENTURY.

                                        (3)  THE YEAR COMPONENT OF CALENDAR-RELATED DATA THAT IS PROVIDED BY THE SYSTEMS
                                    TO OR THAT IS ACCEPTED BY THE SYSTEMS FROM OTHER AUTOMATED, COMPUTERIZED, AND/OR
                                    SOFTWARE SYSTEMS AND USER INTERFACES, ELECTRONIC INTERFACES, AND DATA STORAGE IS
                                    REPRESENTED IN A FOUR-DIGIT CCYY FORMAT, WHERE CC REPRESENTS THE TWO DIGITS
                                    EXPRESSING THE CENTURY AND YY REPRESENTS THE TWO DIGITS EXPRESSING THE YEAR WITHIN
                                    THAT CENTURY (E.G., 1996 OR 2003).

                                        (0)3 SUPPLIER HAS VERIFIED THROUGH TESTING THAT THE SYSTEMS SATISFY THE
                                    REQUIREMENTS OF THIS SUBSECTION INCLUDING, WITHOUT LIMITATION, TESTING OF EACH OF
                                    THE FOLLOWING SPECIFIC DATES AND THE TRANSITION TO AND FROM EACH SUCH DATE:
                                    SEPTEMBER 9, 1999; SEPTEMBER 10, 1999; DECEMBER 31, 1999; JANUARY 1, 2000; FEBRUARY
                                    28, 2000; FEBRUARY 29, 2000; MARCH 1, 2000; DECEMBER 31, 2000; JANUARY 1, 2001;
                                    DECEMBER 31, 2004; AND JANUARY 1, 2005.

                                        c.   REMEDIES. IN THE EVENT OF ANY CENTURY NONCOMPLIANCE IN THE SYSTEMS IN ANY
                                    RESPECT, IN ADDITION TO ANY OTHER REMEDIES THAT MAY BE AVAILABLE TO NOVATION OR THE
                                    MEMBERS, SUPPLIER WILL, AT NO COST TO THE MEMBERS, PROMPTLY UNDER THE CIRCUMSTANCES
                                    (BUT, IN ALL CASES, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM
                                    ANY MEMBER, UNLESS OTHERWISE AGREED BY THE MEMBER IN WRITING) ELIMINATE THE CENTURY
                                    NONCOMPLIANCE FROM THE SYSTEMS.

                                        d.   NONCOMPLIANCE NOTICE. IN THE EVENT SUPPLIER BECOMES AWARE OF (i) ANY
                                    POSSIBLE OR ACTUAL CENTURY NONCOMPLIANCE IN THE SYSTEMS OR (ii) ANY INTERNATIONAL,
------------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>   36

          Confidential Materials omitted and filed separately with the
        Securities and Exchange Commission. Asterisks denote omissions.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
9              7.b.                 IS CHANGED TO READ AS FOLLOWS:
                                    REPORT FORMAT AND DELIVERY. THE REPORTS REQUIRED BY THIS SECTION WILL BE SUBMITTED
                                    ELECTRONICALLY IN EXCEL 97 OR ACCESS 97 AND IN ACCORDANCE WITH OTHER SPECIFICATIONS
                                    ESTABLISHED BY NOVATION FROM TIME TO TIME AND WILL BE DELIVERED TO:

                                    NOVATION
                                    ATTN:  SRIS OPERATIONS
                                    220 EAST LAS COLINAS BOULEVARD
                                    IRVING, TX  75039
------------------------------------------------------------------------------------------------------------------------
9              7.c.                 IS CHANGED TO READ AS FOLLOWS:
                                    OTHER INFORMATION REQUIREMENTS.  IN ADDITION TO THE REPORTING REQUIREMENTS SET FORTH
                                    IN SUBSECTIONS 7.a AND 7.b ABOVE, THE PARTIES AGREE, TO THE EXTENT PRACTICAL, TO
                                    FACILITATE THE ADMINISTRATION OF THIS AGREEMENT BY TRANSMITTING AND RECEIVING
                                    INFORMATION ELECTRONICALLY.
------------------------------------------------------------------------------------------------------------------------
9              9.a.                 IS CHANGED TO READ AS FOLLOWS:
                                    CALCULATION.  SUPPLIER WILL PAY TO NOVATION, AS THE AUTHORIZED COLLECTION AGENT FOR
                                    EACH OF THE CLIENTS AND CERTAIN OF EACH CLIENT'S SUBSIDIARIES AND AFFILIATES,
                                    RESPECTIVELY (AND NOT COLLECTIVELY), MARKETING FEES ("MARKETING FEES") BELONGING TO
                                    ANY OF THE CLIENTS OR CERTAIN OF THEIR SUBSIDIARIES OR AFFILIATES EQUAL TO THE
                                    AGREED PERCENTAGE OF THE AGGREGATE GROSS CHARGES OF ALL NET SALES OF THE PRODUCTS TO
                                    THE MEMBERS DIRECTLY OR INDIRECTLY FROM SUPPLIER, WHETHER UNDER THE PRICING AND
                                    OTHER TERMS OF THIS AGREEMENT OR UNDER THE TERMS OF ANY OTHER PURCHASING OR PRICING
                                    ARRANGEMENTS THAT MAY EXIST BETWEEN THE MEMBERS AND SUPPLIER.[**] WILL BE DETERMINED
                                    [**] OF THE PRODUCTS [**] AND THE PROVISION OF ANY OTHER SERVICES LISTED ON EXHIBIT
                                    A. [**] THE DUE DATE OF THE INVOICE. THESE [**] WILL BE MADE [**] WILL BE [**]. THE
                                    "AGREED PERCENTAGE" WILL BE DEFINED IN THE NON-PRICE SPECIFICATIONS.
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
10             10                   IS CHANGED TO READ AS FOLLOWS:
                                    ADMINISTRATIVE DAMAGES. NOVATION AND SUPPLIER AGREE THAT NOVATION WOULD INCUR
                                    ADDITIONAL ADMINISTRATIVE COSTS IF SUPPLIER FAILS TO PROVIDE NOTICE OF CHANGE IN
                                    PRICING TERMS AS REQUIRED IN SUBSECTION 2.e ABOVE, FAILS TO PROVIDE REPORTS AS
                                    REQUIRED IN SECTION 7 ABOVE, OR FAILS TO PAY MARKETING FEES AS REQUIRED IN SECTION 9
                                    ABOVE, IN EACH CASE WITHIN THE TIME AND MANNER REQUIRED BY THIS AGREEMENT. NOVATION
                                    AND SUPPLIER FURTHER AGREE THAT THE ADDITIONAL ADMINISTRATIVE COSTS INCURRED BY
                                    NOVATION BY REASON OF ANY SUCH FAILURE TO SUPPLIER IS UNCERTAIN, AND THEY THEREFORE
                                    AGREE THAT THE FOLLOWING SCHEDULE OF ADMINISTRATIVE DAMAGES CONSTITUTES A REASONABLE
                                    ESTIMATION OF SUCH COSTS AND WERE DETERMINED ACCORDING TO THE PRINCIPLES OF JUST
                                    COMPENSATION:

                                    1ST FAILURE:  [**]
                                    2ND FAILURE:  [**]
                                    3RD FAILURE:  [**]
                                    4TH FAILURE:  [**]
                                    5TH FAILURE:  [**]
                                    6TH & EACH SUBSEQUENT FAILURE: [**]

                                    NOVATION'S RIGHT TO RECOVER ADMINISTRATIVE DAMAGES IN ACCORDANCE WITH THIS SECTION
                                    IS IN ADDITION TO ANY OTHER RIGHTS AND REMEDIES NOVATION OR THE CLIENTS MAY HAVE BY
                                    REASON OF SUPPLIER'S FAILURE TO PAY THE MARKETING FEES OR PROVIDE THE REPORTS OR
                                    NOTICES WITHIN THE TIME AND MANNER REQUIRED BY THIS AGREEMENT.
------------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>   37

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
<S>            <C>                  <C>
11             12.a.                IS CHANGED TO READ AS FOLLOWS:
                                    POLICY REQUIREMENTS. SUPPLIER WILL MAINTAIN AND KEEP IN FORCE DURING THE TERM
                                    PRODUCT LIABILITY, GENERAL PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE AGAINST
                                    ANY INSURABLE CLAIM OR CLAIMS WHICH MIGHT OR COULD ARISE REGARDING PRODUCTS
                                    PURCHASED FROM SUPPLIER. SUCH INSURANCE WILL CONTAIN A MINIMUM COMBINED SINGLE LIMIT
                                    OF LIABILITY FOR BODILY INJURY AND PROPERTY DAMAGE IN THE AMOUNTS OF [**]. SUPPLIER
                                    WILL PROVIDE TO NOVATION, WITHIN FIFTEEN (15) DAYS AFTER NOVATION'S REQUEST, AN
                                    INSURANCE CERTIFICATE INDICATING THE FOREGOING COVERAGE, ISSUED BY AN INSURANCE
                                    COMPANY LICENSED TO DO BUSINESS IN THE RELEVANT STATES AND SIGNED BY AN AUTHORIZED
                                    AGENT.
------------------------------------------------------------------------------------------------------------------------
12             12.c.                IS CHANGED TO READ AS FOLLOWS:
                                    AMENDMENT, NOTICES AND ENDORSEMENTS. SUPPLER WILL NOT AMEND, IN ANY MATERIAL RESPECT
                                    THAT AFFECTS THE INTERESTS OF NOVATION, THE CLIENTS OR THE MEMBERS, OR TERMINATE SAID
                                    LIABILITY INSURANCE OR SELF-INSURANCE PROGRAM EXCEPT AFTER THIRTY (30) DAYS' PRIOR
                                    WRITTEN NOTICE TO NOVATION.
------------------------------------------------------------------------------------------------------------------------
12             14                   Is changed to read as follows:
                                    RELEASE AND INDEMNITY. SUPPLIER WILL RELEASE, INDEMNIFY, HOLD HARMLESS, AND, IF
                                    REQUESTED, DEFEND NOVATION AND THE CLIENTS AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
                                    REGENTS, AGENTS, SUBSIDIARIES, AFFILIATES AND EMPLOYEES (COLLECTIVELY, THE
                                    "INDEMNITEES"), FROM AND AGAINST ANY CLAIMS, LIABILITIES, DAMAGES, ACTIONS, COSTS
                                    AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES, EXPERT FEES
                                    AND COURT COSTS) OF ANY KIND OR NATURE, WHETHER AT LAW OR IN EQUITY, INCLUDING
                                    CLAIMS ASSERTING STRICT LIABILITY, ARISING FROM OR CAUSED IN ANY PART BY (1) THE
                                    BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUPPLIER CONTAINED
                                    IN THIS AGREEMENT; (2) THE CONDITION OF ANY PRODUCT, INCLUDING A DEFECT IN MATERIAL,
                                    WORKMANSHIP, DESIGN OR MANUFACTURING; OR (3) THE INSTRUCTIONS ACCOMPANYING ANY PRODUCT.
                                    SUCH OBLIGATION TO RELEASE, INDEMNIFY, HOLD HARMLESS AND DEFEND WILL APPLY UNLESS
                                    SUCH INDEMNIFICATION, HOLD HARMLESS AND RIGHT TO DEFENSE WILL NOT BE APPLICABLE
                                    TO THE EXTENT THE CLAIM, LIABILITY, DAMAGE, ACTION, COST OR EXPENSE ARISES AS A
                                    RESULT OF AN ACT OR FAILURE TO ACT OF INDEMNITEES. THIS SECTION AND THE OBLIGATIONS
                                    CONTAINED HEREIN WILL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS
                                    AGREEMENT. THE REMEDIES SET FORTH IN THIS SECTION ARE IN ADDITION TO AND NOT A LIMITATION
                                    ON ANY OTHER RIGHTS OR REMEDIES THAT MAY BE AVAILABLE AGAINST SUPPLIER. SUPPLIER SHALL
                                    HAVE THE SOLE CONTROL AND AUTHORITY WITH RESPECT TO THE DEFENSE, SETTLEMENT OR
                                    COMPROMISE THEREOF.

                                    NOVATION WILL PROMPTLY NOTIFY SUPPLIER OF ANY CLAIM UNDER THIS SECTION 14, PROVIDED
                                    THAT THE FAILURE TO SO NOTIFY THE SUPPLIER SHALL NOT RELIEVE IT FROM ANY OBLIGATION
                                    IT MAY HAVE UNDER THIS SECTION 14 OR OTHERWISE, EXCEPT TO THE EXTENT SUCH FAILURE
                                    PREJUDICES THE SUPPLIER'S RIGHTS IN ANY WAY.

------------------------------------------------------------------------------------------------------------------------
13             17.a. THROUGH        THIS SECTION IS DELETED IN ITS ENTIRETY AND REPLACED WITH THE FOLLOWING:
               b.                   CONFIDENTIALITY.

                                      a.    PROPRIETARY INFORMATION. EACH PARTY AGREES AND ACKNOWLEDGES THAT IN ORDER TO
                                    FURTHER THE PERFORMANCE OF THIS AGREEMENT, THEY WILL BE REQUIRED TO DISCLOSE TO EACH
                                    OTHER CERTAIN CONFIDENTIAL INFORMATION WHICH WILL BE IDENTIFIED AS SUCH IN WRITING
                                    ("CONFIDENTIAL INFORMATION"), INCLUDING BUT NOT LIMITED TO THE PRICES AND USAGE OF
                                    THE PRODUCTS. IN NO EVENT WILL SUPPLIER PROVIDE TO ANY PERSON ANY INFORMATION
                                    RELATING TO THE PRICES IT CHARGES THE MEMBERS FOR PRODUCTS ORDERED PURSUANT TO THIS
                                    AGREEMENT WITHOUT THE PRIOR WRITTEN CONSENT OF NOVATION.

                                      b.    PROTECTION OF PROPRIETARY INFORMATION. THE RECEIVING PARTY AGREES TO PROTECT
                                    THE CONFIDENTIALITY OF THE DISCLOSING PARTY'S CONFIDENTIAL INFORMATION WITH AT LEAST
                                    THE SAME DEGREE OF CARE THAT IT UTILIZES WITH RESPECT TO ITS OWN SIMILAR PROPRIETARY
                                    INFORMATION, INCLUDING WITHOUT LIMITATION AGREEING:

                                      (i)    NOT TO DISCLOSE OR OTHERWISE PERMIT ANY OTHER PERSON OR ENTITY ACCESS TO, IN
                                    ANY MANNER, THE CONFIDENTIAL INFORMATION, OR ANY PART THEREOF IN ANY FORM
                                    WHATSOEVER, EXCEPT THAT SUCH DISCLOSURE OR ACCESS SHALL BE PERMITTED TO AN EMPLOYEE
                                    OF THE RECEIVING PARTY REQUIRING ACCESS TO THE CONFIDENTIAL INFORMATION IN THE
                                    COURSE OF HIS OR HER EMPLOYMENT IN CONNECTION WITH THIS AGREEMENT AND WHO HAS SIGNED
                                    AN AGREEMENT OBLIGATING THE EMPLOYEE TO MAINTAIN THE CONFIDENTIALITY OF THE
                                    CONFIDENTIAL INFORMATION OF THIRD PARTIES IN THE RECEIVING PARTY'S POSSESSION;

                                      (ii)  TO NOTIFY THE DISCLOSING PARTY PROMPTLY AND IN WRITING OF THE CIRCUMSTANCES
                                    SURROUNDING ANY SUSPECTED POSSESSION, USE OR KNOWLEDGE OF THE CONFIDENTIAL
                                    INFORMATION OR ANY PART THEREOF AT ANY LOCATION OR BY ANY PERSON OR ENTITY OTHER
                                    THAN THOSE AUTHORIZED BY THIS AGREEMENT; AND

                                      (iii) NOT TO USE THE CONFIDENTIAL INFORMATION FOR ANY PURPOSE OTHER THAN AS
                                    EXPLICITLY SET FORTH HEREIN.

                                      c.    EXCEPTIONS. NOTHING IN THIS SECTION 17 SHALL RESTRICT THE RECEIVING PARTY
                                    WITH RESPECT TO INFORMATION OR DATA, WHETHER OR NOT IDENTICAL OR SIMILAR TO THAT
                                    CONTAINED IN THE CONFIDENTIAL INFORMATION, IF SUCH INFORMATION OR DATA: (i) WAS
                                    RIGHTFULLY POSSESSED BY THE RECEIVING PARTY BEFORE IT WAS RECEIVED FROM THE
                                    DISCLOSING PARTY; (ii) IS INDEPENDENTLY DEVELOPED BY THE RECEIVING PARTY WITHOUT
                                    REFERENCE TO THE DISCLOSING PARTY'S INFORMATION OR DATA; (iii) IS SUBSEQUENTLY
                                    FURNISHED TO THE RECEIVING PARTY BY A THIRD PARTY NOT UNDER ANY OBLIGATION OF
                                    CONFIDENTIALITY WITH RESPECT TO SUCH INFORMATION OR DATA, AND WITHOUT RESTRICTIONS
                                    ON USE OR DISCLOSURE; OR (iv) IS OR BECOMES PUBLIC OR AVAILABLE TO THE GENERAL
                                    PUBLIC OTHERWISE THAN THROUGH ANY ACT OR DEFAULT OF THE RECEIVING PARTY.

------------------------------------------------------------------------------------------------------------------------
14             18.a.                IS CHANGED TO READ AS FOLLOWS: CHOICE OF LAW.
                                    THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
                                    SUBSTANTIVE LAWS OF THE STATE OF DELAWARE.
------------------------------------------------------------------------------------------------------------------------
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<PAGE>   38

<TABLE>
<CAPTION>
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<S>            <C>                  <C>
14             18.c.                IS CHANGED TO READ AS FOLLOWS:
                                    THIRD PARTY BENEFICIARIES. SUBJECT TO THE PROVISION OF THIS AGREEMENT ALL CLIENTS AND
                                    MEMBERS ARE INTENDED THIRD PARTY BENEFICIARIES OF THIS AGREEMENT. ALL SECTIONS OF THIS
                                    AGREEMENT WHICH BY THEIR TERMS SPECIFICALLY APPLY TO CLIENTS WILL INURE TO THE
                                    BENEFIT OF AND BE ENFORCEABLE BY THE CLIENTS AND THEIR RESPECTIVE SUCCESSORS AND
                                    ASSIGNS. ALL SECTIONS OF THIS AGREEMENT WHICH BY THEIR TERMS SPECIFICALLY APPLY TO
                                    MEMBERS WILL INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE MEMBERS AND THEIR
                                    RESPECTIVE SUCCESSORS AND ASSIGNS.
------------------------------------------------------------------------------------------------------------------------
15             18.e.                IS CHANGED TO READ AS FOLLOWS:
                                    NO ASSIGNMENT. IN THE EVENT OF ANY ASSIGNMENT OR PROPOSED ASSIGNMENT OF THIS
                                    AGREEMENT BY SUPPLIER, OR ANY SUCCESSOR OF SUPPLIER, SUPPLIER SHALL NOTIFY NOVATION
                                    IN WRITING (THE "NOTICE") AND REQUEST THAT NOVATION NOTIFY SUPPLIER, OR ANY
                                    SUCCESSOR OF SUPPLIER, IN WRITING WITHIN 20 DAYS OF RECEIPT OF THE NOTICE THAT
                                    NOVATION DOES NOT CONSENT TO THE ASSIGNMENT. NOTWITHSTANDING ANY OTHER PROVISION OF
                                    THIS AGREEMENT, THE SOLE REMEDY OF NOVATION FOR ANY ASSIGNMENT OR PROPOSED
                                    ASSIGNMENT OF THIS AGREEMENT WITHOUT THE CONSENT OR APPROVAL OF NOVATION SHALL BE TO
                                    TERMINATE THIS AGREEMENT, WITHOUT PENALTY OR PREJUDICE TO SUPPLIER OF ANY KIND. ANY
                                    ASSIGNMENT OF ALL OR ANY PART OF THIS AGREEMENT BY EITHER PARTY WILL NOT RELIEVE
                                    THAT PARTY OF THE RESPONSIBILITY OF PERFORMING ITS OBLIGATIONS HEREUNDER TO THE EXTENT
                                    THAT SUCH OBLIGATIONS ARE NOT SATISFIED IN FULL BY THE ASSIGNEE. THIS AGREEMENT WILL
                                    BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES' RESPECTIVE SUCCESSORS AND
                                    ASSIGNS.
------------------------------------------------------------------------------------------------------------------------
15             18.g.                IS CHANGED TO READ AS FOLLOWS:
                                    ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE EXHIBITS LISTED BELOW, WILL
                                    CONSTITUTE THE ENTIRE AGREEMENT BETWEEN NOVATION, MEMBERS AND SUPPLIER. THIS
                                    AGREEMENT, TOGETHER WITH THE EXHIBITS LISTED BELOW AND EACH MEMBER'S PURCHASE ORDER
                                    WILL CONSTITUTE THE ENTIRE AGREEMENT BETWEEN EACH MEMBER AND SUPPLIER. IN THE EVENT
                                    OF ANY INCONSISTENCY BETWEEN THIS AGREEMENT AND A MEMBER'S PURCHASE ORDER, THE TERMS
                                    OF THIS AGREEMENT WILL CONTROL UNLESS AGREED UPON IN WRITING BY SUPPLIER. NO
                                    OTHER TERMS AND CONDITIONS IN ANY DOCUMENT, ACCEPTANCE, OR ACKNOWLEDGMENT WILL BE
                                    EFFECTIVE OR BINDING UNLESS EXPRESSLY AGREED TO IN WRITING. THE FOLLOWING EXHIBITS
                                    ARE INCORPORATED BY REFERENCE IN THIS AGREEMENT:

                                    EXHIBIT A                          PRODUCT AND SERVICE DESCRIPTION AND PRICING

                                    EXHIBIT B                          NON-PRICE SPECIFICATIONS

                                    EXHIBIT C                          SPECIAL CONDITIONS

                                    EXHIBIT D                          EFFECTIVE DATE

                                    EXHIBIT E                          OTHER INFORMATION REQUIREMENTS

                                    EXHIBIT F                          EXCEPTIONS

                                    [OTHER EXHIBITS LISTED, IF ANY]
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Page 7 of 7 Pages

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