PURCHASE AGREEMENT

Note Purchase Agreement

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ASPECT MEDICAL SYSTEMS INC

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Title: PURCHASE AGREEMENT
Governing Law: New York Date: 11/10/2005
Industry: Medical Equipment and Supplies Sector: Healthcare

PURCHASE AGREEMENT, Parties: aspect medical systems inc

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Exhibit 10.1

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission.

Asterisks denote omissions.

PURCHASE AGREEMENT NO. __________

THIS AGREEMENT is made as of this 30th day of August 2005 ("Effective

Date"), between General Electric Company, a corporation organized under the laws

of the State of New York, acting by and through its GE Healthcare division

("Buyer" or "GE Healthcare"), and Aspect Medical Systems Inc., a corporation

organized under the laws of the State of Delaware (together with its Affiliates

(as hereinafter defined), "Seller").

WHEREAS, Seller is a developer, manufacturer and distributor of medical

devices, equipment, related hardware, software and related products and

accessories; and

WHEREAS, Buyer wishes to have Seller sell certain products to Buyer in

accordance with the requirements of Buyer as more fully set forth in the terms

and conditions of this Agreement, including its Attachments and schedules.

WHEREAS, Buyer and Buyer's Affiliates have entered into a number of

agreements with Seller, which include, but are not limited to, that certain OEM

Development and Purchase Agreement dated December 22, 1999 ("Marquette OEM

Purchase Agreement"), that certain OEM-Purchase Agreement for Aspect BIS

technology dated September 1, 2000 ("DO OEM Purchase Agreement"), that certain

OEM-Purchase Agreement for Custom Datex-Ohmeda Sensors dated September 1, 2000

("DO Custom OEM Purchase Agreement"), and that certain Aspect/Datex-Ohmeda

Principles of Research and Development Cooperation agreement dated September 1,

2000 ("Cooperation Agreement" and together with the Marquette OEM Purchase

Agreement, the DO OEM Purchase Agreement and the DO Custom OEM Purchase

Agreement, the "Prior Agreements").

NOW THEREFORE, Seller and Buyer agree as follows:

1. INTRODUCTION AND DEFINITIONS

(a) Scope. THIS AGREEMENT AND ITS ATTACHMENTS AND SCHEDULES STATE THE TERMS

AND CONDITIONS UNDER WHICH SELLER SHALL SELL TO BUYER, AND BUYER SHALL PURCHASE

FROM SELLER, THOSE PRODUCTS IDENTIFIED IN ATTACHMENT D, AS WELL AS ALL

COMPONENTS, SPARE PARTS, SERVICE TOOLS, MANUALS, SOFTWARE LICENSES, DATA AND

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INTERFACES WITH RESPECT THERETO (THE "PRODUCTS"). UNLESS OTHERWISE EXPRESSLY

STATED, REFERENCES TO THIS "AGREEMENT" INCLUDE ALL ATTACHMENTS AND SCHEDULES.

(b) Parties. Seller expressly acknowledges that this Agreement is not

intended to govern or obligate General Electric Company itself or any business,

division or Affiliate of General Electric Company other than General Electric

Company's GE Healthcare division. Seller agrees that General Electric Company's

GE Healthcare division and any domestic or international Affiliate of General

Electric Company that operates as part of General Electric Company's GE

Healthcare division may place a Purchase Order under this Agreement, and that

any such Affiliate shall be entitled to the same rights and obligations of

"Buyer" as if it were an original signatory hereto. If any transaction-specific

or country-specific modifications to this Agreement are required to facilitate

the sale of the Products to any such Affiliate, both parties agree to negotiate

such modifications in good faith, and to make only such modifications as are

required by local law or as are required for logistics purposes. An "Affiliate"

shall mean, with respect to any specified party, any other legal entity that

directly or indirectly controls, is controlled by or is under common control

with, such specified party.

sole agreement effective for the purchase of Products after the Effective Date,

regardless of any inconsistent information contained on or incorporated into any

purchase order. As of the Effective Date, and notwithstanding any requirements

of notice prior to termination, the parties agree that the Prior Agreements

shall be terminated, and effective only for determining the parties' respective

rights and obligations with respect to any products or services ordered, or

information exchanged or obtained, under such agreements. Notwithstanding the

foregoing, and without determining whether any party has violated any of its

obligations, or acted contrary to the prohibitions, contained in any of the

foregoing agreements, the parties specifically agree that each party and its

Affiliates are relieved of: (i) any obligation to exchange confidential

information, experiences and know-how and to conduct good faith negotiations as

set forth in the Cooperation Agreement; and (ii) except as provided in Section

21(b), any restrictions on their ability to offer competitive products or to

offer, initiate development, promote or market, including without limitation, as

set forth in the penultimate sentence of Section 4.1 of the Marquette OEM

Purchase Agreement and as set forth in Sections 11.7 and 11.8 of the DO OEM

Purchase Agreement, and are hereby released from any liability that they may

have incurred as a result of any violations of any such obligations or

restrictions.

(d) No Obligation. Notwithstanding anything to the contrary in this

Agreement, it is the express understanding of the parties that Buyer shall have

no obligation to purchase Products exclusively from the Seller, and may use

other suppliers for any and all products that perform the same or similar

function as the Products.

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(e) Documents. The following attachments are an integral part of this

Agreement (the "Attachments"). The provisions of each Attachment shall be

incorporated by reference into and be deemed to be a part of this Agreement. If

any conflict exists between the provisions of this Agreement and of the

Attachments, or between the provisions of Attachments themselves, the order of

precedence shall be:

1. This Agreement

2. Attachment D (Product Schedule)

3. Attachment A (Product Specifications)

4. Attachment C (Quality Systems Certifications)

5. Attachment F (Standard Terms and Conditions)

6. Attachment B (Quality Plan)

7. Attachment H (Seller Change Notice Form)

8. Attachment M (Purchased Material Quality Requirements)

9. Attachment N (Seller Trademarks)

10. Attachment O (Buyer Trademarks)

(f) Definitions.

"BISx System" means the integrated solution of Seller's BIS Engine

processing technology and the DSC-XP. The BISx System includes a patient

interface cable and a host monitor cable.

"Buyer BIS/EEG Engine" is the processing unit for deriving the BIS and EEG

data from the raw EEG signal and consists of Seller's "BIS Engine" board

modified for Buyer.

"Buyer BIS/EEG Module" is all components involved in integrating the BIS

and EEG with Buyer Patient Monitors.

"Buyer Patient Monitor" means any multi-parameter patient monitoring system

manufactured by or for Buyer.

"BIS/EEG Module Kit" means the bundle of all components of the Buyer

BIS/EEG Module that are developed and manufactured by or for Seller and

licensed/sold to Buyer under this Agreement: DSC-4, DSC-XP, DSC Cable, Buyer

BIS/EEG Engine, and module cable. "Digital Signal Converter" or "DSC" means the

processing unit that amplifies the analog EEG signals as acquired by the BIS

sensors and converts them from analog to digital signals. The DSC-XP is used by

Buyer BIS/EEG Module customers to obtain the BIS.

"Custom Sensor" means a single use sensor that incorporates

level-of-consciousness monitoring technology developed by Buyer, as more fully

described in the attached product specifications.

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"BIS Sensor" means a single use disposable sensor developed and

manufactured by Seller for use with the A2000, the BIS/EEG Module Kit or the

BISx System and that is required to generate Seller's Bispectral Index.

"Bispectral Index" or "BIS" is Seller's proprietary processed EEG parameter

that measures the hypnotic effects of anesthetic and sedative agents on the

brain.

"Smart Sensor Technology" or "SST" means the Seller technology which may be

used by Buyer Patient Monitors to interface with the Custom Sensors.

"Sensor Connector" means the sensor connector currently being used with the

Custom Sensor, or any replacement sensor connector where the change was made in

accordance with the terms of this Agreement.

"Entropy module" is the processing unit for deriving Buyer's proprietary

processed EEG parameter that measures the hypnotic effects of anesthetic and

sedative agents on the brain.

"Cable Connector" means the mating connector to the Sensor Connector

currently being used with the Custom Sensor, or any replacement mating connector

where the change was made in accordance with the terms of this Agreement.

"Purchase Order" means a purchase order released by Buyer for Products.

2. TERM

(a) Initial Term. The term of this Agreement is from the Effective Date

through December 31, 2008 (the "Initial Term" and, together with any Extension

Term (as hereinafter defined), the "Term").

(b) Extensions. The then current Term shall automatically renew for all of

the Products for additional one year periods (the "Extension Term(s)") unless

one party notifies the other party three (3) months prior to the expiration of

the Term that it intends to terminate the Agreement at the end of the then

current Term.

3. QUANTITIES

(a) Forecast. At least quarterly, Buyer shall submit to Seller forecasts of

its anticipated Product needs for the next twelve (12) months. Any such forecast

shall not be binding in any way on Buyer and may be modified at any time by

Buyer in its sole discretion. During any month, any failure by Seller to deliver

in a timely manner an amount of Products equal to the

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greater of one hundred fifty (150) units or thirty percent (30%) more than the

greatest quantity of such Products ordered in any one of the three (3) preceding

months (the "Guaranteed Amounts") will subject Seller to the charges set forth

in Section 12. If Buyer orders Products in excess of the Guaranteed Amounts or

requests a delivery time that is less than the applicable lead time, Seller

shall exercise commercially reasonable efforts to deliver the Products so

ordered within the delivery time requested by Buyer, provided that if Seller is

not able to supply the quantity of Products ordered by Buyer, and Seller is

permitted to sell similar products to other customers, Seller shall allocate

such products on a pro-rata basis among all of its customers of the applicable

products that also ordered products in excess of their guaranteed amounts.

(b) Commitment. Buyer's commitment to purchase Products from Seller shall

be limited to Purchase Orders released by Buyer and accepted by Seller pursuant

to Section 5. Unless agreed otherwise in writing by the parties, Buyer shall not

be responsible or in any way liable to Seller or any third party with respect to

any material commitments or production arrangements in excess of the amounts or

in advance of the times necessary to meet Buyer's delivery schedules set forth

in its accepted Purchase Orders.

Order by Buyer for products other than sensors, Seller has the right to charge a

cancellation charge based on actual damages caused to Seller. The maximum amount

of damage may not, however, exceed the following charges listed below. The

cancellation charges are based on the number of days prior to the scheduled

delivery date that written notice of cancellation is received by Seller, as

outlined below:

<TABLE>

<S> <C>

> 8 weeks prior to acknowledged delivery [**]

6 - 8 weeks prior to acknowledged delivery [**]% of order value

4 - 6 weeks prior to acknowledged delivery [**]% of order value

2 - 4 weeks prior to acknowledged delivery [**]% of order value

< 2 weeks prior to acknowledged delivery [**]% of order value

</TABLE>

In the event of the cancellation of any Purchase Order by Buyer for Custom

Sensors or BIS Sensors, Seller has the right to charge a cancellation charge

based on actual damages caused to Seller. The maximum amount of damage may not,

however, exceed the following charges listed below. The cancellation charges are

based on the number of days prior to the scheduled delivery date that written

notice of cancellation is received by Seller, as outlined below:

<TABLE>

<S> <C>

> 4 weeks prior to acknowledged delivery [**]

3 - 4 weeks prior to acknowledged delivery [**]% of order value

2 - 3 weeks prior to acknowledged delivery [**]% of order value

1 - 2 weeks prior to acknowledged delivery [**]% of order value

< 1 week prior to acknowledged delivery [**]% of order value

</TABLE>

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(d) Lead Times. Lead times for the Products are set forth in Attachment D.

Notwithstanding the foregoing, it is Seller's intention to operate with lead

times for BIS/EEG Module Kits and BISx Systems of less than four (4) weeks and

lead times for BIS Sensors of less than three (3) business days.

4. PRICING

(a) Price Protection. The prices specified in Attachment D for Products

(the "Prices") are firm for the Term and include all reasonable charges,

packaging, date of manufacture and bar code labeling. In no event shall the

Prices be increased by Seller without the express written consent of Buyer.

(b) Software/Firmware. The Price includes a perpetual, paid-up, worldwide,

license to Buyer and its distributors, sub-distributors, field organization,

channel partners and customers or users of the Products or Buyer's products

containing Products to use, in the operation, of the Products, any software

and/or firmware supplied by Seller to Buyer or incorporated into the Products.

Seller hereby grants to Buyer all sublicense rights required to sell the

Products in accordance with this Agreement. All rights granted hereunder shall

survive any termination of this Agreement as long as the applicable party

remains in compliance with the terms of use for such Products. Buyer shall not

duplicate the software or any part thereof. Title to and ownership of any and

all proprietary rights in or related to the software shall at all times remain

with Seller or its licensor(s). Nothing in this Agreement shall be construed as

a sale of any rights in the software. Buyer shall not disassemble, decompile or

otherwise reverse engineer the software or any part thereof, except if Seller is

required under applicable law to permit Buyer to reverse engineer any software.

In such event, Buyer may reverse engineer the software but only to the extent

Seller is required to permit such reverse engineering. Buyer shall retain and

shall not alter or obscure any notices, markings or other insignia affixed to

the software or any part thereof at the time it receives such software.

support for integration efforts of the Products into Buyer's other products, to

Buyer free of charge. If Buyer requests engineering support for purposes of

modifying a custom sensor, and for which Buyer's prior approval has been

provided, Buyer shall pay for such engineering support at Seller's standard

billing rates, which are currently US $[**] per hour. Seller shall have the

right to change such rates charged to Buyer by no more than the average

percentage change in the wage level of the engineering support staff, but not

more than ten percent (10%) per year during the Term of this Agreement.

(d) Price Reductions. Seller represents to Buyer that the Prices are as low

as the prices at which Seller is currently selling items similar to the Products

in the same or similar quantities under substantially similar terms and

conditions. If during the Term, Seller reduces the price of

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such similar items, Seller shall: (i) promptly notify Buyer in writing of such

reduction; and (ii) apply an equivalent reduction in Price to all Products

ordered by Buyer which have not been previously shipped and invoiced at the time

of such reduction. The Prices shall thereafter be adjusted to reflect such

reduction for as long as Seller sells such products at the reduced price or

until the Prices are further reduced pursuant to this Agreement.

(e) Cost Reductions. Buyer and Seller shall undertake a program to achieve

reductions in the cost of Products by utilizing cost-effective design, lower

cost components, new technology, productivity improvements and automation of the

manufacturing process. To assist each other in this joint program, Buyer and

Seller shall meet periodically to discuss the feasibility and potential savings

from alternative actions. Seller agrees to evaluate the impact of any cost

reduction realized based on such program on future prices for Products sold

after the term of this Agreement.

(f) Sales Taxes And Duties. Prices are exclusive of all taxes or duties

after delivery to the designated destination (other than taxes levied on

Seller's income) that Seller may be required to collect or pay upon shipment of

the Products. Any such taxes or duties must appear as a separate item on

Seller's invoice. Buyer agrees to pay such taxes or duties unless Buyer is

exempt from such taxes or duties. Where applicable, Buyer will provide Seller

with an exemption resale certificate. If Seller is the importer of record in the

country of receipt, Seller shall, upon Buyer's request, provide Buyer the

document required by the customs authorities of the country of receipt to prove

importation and to transfer duty drawback rights to Buyer.

(g) BIS Sensor Commission. During the term of this Agreement, for each BIS

Sensor sold by Seller to Buyer's customers in the United States for use with

Buyer BIS/EEG Modules and BISx Systems (regardless of whether such Products were

sold under this Agreement or any of the Prior Agreements), Seller shall pay

Buyer a commission equal to [**] percent ([**]%) of the sales revenue realized

by Seller for such BIS Sensors. Seller shall pay such commissions to Buyer on a

calendar quarterly basis. With such quarterly payments, Seller shall provide to

Buyer a list of Buyer customers to which such sales were made, the number of BIS

Sensors sold in that quarter, and the revenue realized from the sale of the BIS

Sensors by Seller. All such information shall be treated as Seller Confidential

Information in accordance with the terms of this Agreement. This quarterly

payment shall be provided to Buyer no later than thirty (30) days following the

end of each calendar quarter. In the event that Seller's standalone BIS monitors

and/or the BIS modules of other manufacturers have also been installed at such

sites in addition to Buyer BIS/EEG Modules and BISx Systems, Buyer will be

entitled to a [**] percent ([**]%) commission only on BIS Sensor sales intended

for use with Buyer BIS/EEG Modules and BISx Systems. The parties will agree upon

a reasonable basis for estimating the number of BIS Sensor sales intended for

use with Buyer BIS/EEG Modules and BISx Systems in such an event (e.g. a pro

rata determination based on the total number of BIS units of different types

installed at such locations during the period) and will calculate the total BIS

Sensor commissions due to Buyer accordingly. To facilitate such calculations,

Buyer will be responsible for providing Seller with

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documentation, on a quarterly basis, of the total number of Buyer BIS/EEG

Modules and BISx Systems installed, the locations of such Buyer BIS/EEG Modules

and BISx Systems, and the dates of installation. All such information shall be

treated as Buyer Confidential Information in accordance with the terms of this

Agreement.

(h) Audit. Seller shall keep full and accurate records and books of account

containing all necessary information to calculate the commission due hereunder.

Seller shall permit an independent certified public accountant to examine its

records and books of account for the two (2) year period prior to the date of

the audit to determine compliance with Section 4(g). Any examination shall be at

the expense of Buyer, shall occur during regular business hours at Seller's

offices and shall not interfere unreasonably with Seller's regular activities.

Buyer shall give Seller at least thirty (30) days notice of the date of each

such examination and the name of the accountant who will be conducting the

examination. Seller agrees to pay Buyer any amounts owning as a result of

Seller's non-compliance with the payment provisions of Section 4(g), and Buyer

shall return any amounts overpaid by Seller, within fourteen (14) days of the

date of the examination report, which details such non-compliance. In the event

such amounts owed by Seller to Buyer during the audited period exceeds five

percent (5%) of total commissions due, Seller shall pay the costs of such

examination.

5. PURCHASE ORDER RELEASES

(a) Contents. A Purchase Order may consist of an electronic message

pursuant to Section 15 or a written communication from Buyer to Seller that

complies with the requirements of this Agreement. Purchase Orders released by

Buyer shall reference this Agreement, identify the delivery date or dates and

identify the quantities to be released for delivery within the lead times

specified in Attachment D. REGARDLESS OF FORM, EVERY PURCHASE ORDER IS DEEMED TO

INCLUDE THIS AGREEMENT, INCLUDING BUYER'S STANDARD TERMS AND CONDITIONS SET

FORTH IN ATTACHMENT F.

(b) Acceptance. Seller shall accept Purchase Orders if they are placed by

Buyer under agreed prices and other conditions of this Agreement. Seller may

reject any Purchase Order of Buyer if the requested delivery time is shorter

than the agreed upon lead time, the quantity ordered exceeds the Guaranteed

Amounts or the Purchase Order is not otherwise in compliance with this

Agreement.

within five (5) days after receipt of the Purchase Order, provided that the

Purchase Order is technically correct and that the requested delivery time is

within the agreed lead time and the Guaranteed Amounts. All other Purchase Order

acknowledgements shall not be unreasonably withheld.

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(d) Changes. Buyer may change the quantities and delivery dates on

individual Purchase Orders one time without penalty (provided that the delivery

date(s) for the original quantity of ordered Products are rescheduled within

three (3) months of the original delivery date and such Purchase Orders cannot

be subsequently canceled).

6. DOCUMENTATION

(a) Seller agrees to provide Buyer with such product literature, operations

and maintenance manuals, and other information and training as is mutually

agreed, to enable Buyer to properly sell and maintain Products, provided that in

no event shall the source code for source listings of any software of Seller be

required to be disclosed or provided by Seller to Buyer and provided that Buyer

shall be responsible for providing Seller with product literature and operations

and maintenance manuals for the Custom Sensors. Seller hereby grants to Buyer

the right to use or reproduce its user documentation for incorporation into

Buyer's documentation (excluding source code or source listings as previously

mentioned) without charge. Such documentation shall be provided in electronic

format. Seller shall be given the opportunity to review and approve Buyer

documentation that incorporates Seller documentation prior to publication.

Unless agreed otherwise in writing by Buyer, each Product that is a sensor shall

include instructions for use. If any change in the Product (other than the

Custom Sensor) requires a change in the documentation, Seller shall promptly

notify Buyer of the change and provide a revised reproducible master copy

without charge. Seller shall promptly revise and update any such documentation

for agency or regulatory requirements.

7. TRAINING

Service Training. Seller agrees to provide periodic (annually at a minimum)

ongoing training for existing and new Buyer service personnel.

8. SPARE PART TESTING AND CONTINUING AVAILABILITY

(a) Testing. Seller shall test all repaired Products and spare parts using

the test plan or procedure set forth on Attachment B or, if not specified on

Attachment B, then the highest quality test plan or procedure used by Seller to

test products similar to the Products.

(b) Duration. Seller guarantees that either compatible spare parts or

compatible replacement products will be available on reasonable commercial terms

for a period of at least seven (7) years from the delivery by Seller of the

Product in question.

supply and support the Products without interruption for the Term. If, however,

Seller plans to remove any of the Products (including spare parts and

components) from its product line, it shall notify Buyer about the intended

removal in writing at least six (6) months in advance. Before the

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expiration of the six (6) months notice period, Buyer shall have the right to

place a final order for the applicable Products (including spare parts and

components) required by Buyer. Seller shall use its reasonable efforts to

deliver the Products so ordered, however the delivery times regarding such final

order shall be agreed separately between the parties.

9. COMMERCIAL TERMS

Provisions concerning delivery, transportation, packaging, freight

insurance, risk of loss, title, and other commercial terms are contained in

Buyer's Standard Terms and Conditions set forth in Attachment F.

10. INVOICES/PAYMENT

(a) Content of Invoice. Seller's invoices shall contain the Purchase Order

release number, item number on such release, Buyer's part number, invoice

quantity, unit of measure, unit price, total invoice amount, name of Seller,

phone number, address to which remittance should be sent, and such other

information as may reasonably be required by Buyer.

(b) Payment. Unless otherwise agreed in writing, and except for disputed

amounts, payment for all Products shall be made by Buyer in the currency

specified in Attachment D by SWIFT transfer within sixty (60) days from shipment

date of the Products to Buyer's premises or such other destination as may have

been specified in the Purchase Order, provided that the quantity and quality of

the Products delivered conforms to this Agreement and the respective Purchase

Order. Any late payments shall bear interest at one percent (1%) per month.

11. WARRANTY/REPAIR

(a) Terms. The terms of the warranties of Seller with respect to Products

are stated in Attachment F. Seller additionally represents and warrants that the

Products (excluding the Custom Sensor) have received the 510(k) certifications

and CE mark. Seller's warranties set forth in the warranty section of Attachment

F for Products other than BIS Sensors and Custom Sensors shall be for the lesser

of: (a) [**] months following the date such Product is received by the end user

or (b) [**] months after the date such Product is received by Buyer, and for BIS

Sensors and Custom Sensors shall be [**] months from the date of manufacture.

Seller agrees that the date of shipment for BIS Sensors and Custom Sensors shall

be less than three (3) months from the date of manufacture.

(b) Return of Non-conforming or Defective Product. Buyer may return to

Seller without prior authorization any Product that does not conform or perform

in accordance with the warranties contained herein. Any such Product shall be

returned to Seller's facility or authorized service center, with all

transportation charges paid by Seller and the risk of loss

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passing to Seller when the Product is delivered to the carrier of Seller's

choice. Seller will return the replacement or repaired Products as soon as

possible but in no event later than thirty (30) days after receipt of the

non-conforming or defective Product. The warranty on such returned Products

shall be the greater of the remainder of the original warranty period or [**]

months from the date such returned Product is received by the Buyer, unless a

shorter warranty is provided in Attachment D.

replaced by Seller pursuant to the terms of this Agreement, Seller shall

promptly refund or credit Buyer for any payment Buyer made with respect to such

Product. Buyer may elect to take such credit on any open invoices of Seller.

(d) Records. Seller shall maintain serial and/or lot number and date of

shipment records for all Products so that, for tracing or recall purposes, the

manufacturing and delivery of the Products can be identified.

12. PERFORMANCE MEASUREMENTS

(a) Product Quality. Seller and Buyer are committed to quality in the

performance of this Agreement. Accordingly, all Products shall be manufactured

and tested in accordance with the quality plan set forth in Attachment B. With

reasonable advance notice, Buyer may request to perform an audit of Seller's

manufacturing facilities to verify that Seller's operations for manufacturing

the Products are consistent with industry standards and in conformance with the

requirements of this Agreement.

(b) Delivery. Seller shall notify Buyer immediately if Seller ever has

reason to believe that any Product will not be delivered as ordered, or a

shipment will not be made as scheduled. Late deliveries are subject to late fees

of one percent (1%) per month (pro rated daily) if the Product was ordered with

the required lead times listed in Attachment D. In the event of late deliveries

by Seller, Seller will also promptly reimburse Buyer for expedited shipment

charges that Buyer incurs as a direct result of late shipments of the Products

from Seller.

13. COMPLIANCE

(a) General. Seller shall comply with all applicable laws and regulations

in manufacturing and furnishing Products to Buyer with the intended distribution

of such Products in the countries listed under such Products on Attachment D.

Such laws may include, but not be limited to, United States and foreign medical

device laws, labor laws, employment opportunity laws, environmental laws,

import/export laws, and product safety laws. Seller shall ensure that its

Products comply with the electro-magnetic product standards identified in

Attachment A. Seller shall keep Buyer informed of the status of all required

approvals and will provide to Buyer

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evidence of all such compliance upon request. Seller shall maintain quality

control procedures in compliance with the requirements of the following quality

systems, including but not limited, ISO 13485, EN 46001, US GMP 21 CFR 820 (the

"US GMP") and the Council Directive 93/42/EEC concerning medical devices

promulgated by the Council of the European Communities as amended (the "MDD").

If Seller receives additional regulatory approvals, it shall promptly update

Attachment D; if Buyer wishes to distribute the Products in countries in

addition to those listed on Attachment D, Buyer shall be responsible for

obtaining all required certifications and approvals, and Seller shall provide

Buyer with all information necessary for Buyer to obtain and maintain such

certifications and approvals.

(b) Product Certification. Seller shall maintain at its expense all

regulatory approvals listed on Attachment D and all UL, IEC, CE and CSA or

equivalent listings acceptable to Buyer for all Products. Unless otherwise

agreed to in writing, if a party proposes a change in purchase specifications

pursuant to Section 14, such party shall be responsible for any additional

product certification costs that may be necessary.

regarded as the manufacturer of the Custom Sensors. Seller warrants that the

Custom Sensors conform to the requirements established in the MDD and will

affix, at the direction of Buyer, the Buyer's CE mark to all Custom Sensors and

packaging. Buyer agrees that the appropriate labeling of the Custom Sensors and

the obtaining of registrations, tests and/or approvals from relevant

authorities, where necessary, is the responsibility of Buyer and will be done at

Buyer's cost. Buyer shall, during the term of this Agreement for so long as it

sells the Custom Sensor, keep all regulatory approvals for the Custom Sensor in

full force and effect at Buyer's expense. Seller agrees to deliver to Buyer all

information reasonably required by Buyer to obtain and maintain regulatory

approvals including but not limited to the MDD CE marking and the US FDA 510(k).

(d) Any act or notification of authorities, that might lead to cancellation

or modification of any approvals or certifications, shall be immediately

communicated to the other party in writing and the parties will jointly agree on

appropriate corrective measures.

(e) Seller Certification. Seller shall notify Buyer in writing if Seller is

qualified as a small business concern, small disadvantaged business concern, or

women-owned small business concern as defined in 48 CFR 52.219-8.

(f) Seller's Quality Systems Certifications is attached hereto as Exhibit

C. From time to time, Seller may make changes to its Quality Systems

Certifications. The Seller shall maintain this quality system and certifications

for the duration of this Agreement and design, manufacture, examine, mark and

pack the Products in accordance with this quality system.

(g) Seller's Quality Plan is attached hereto as Exhibit B. From time to

time, Seller may make changes to its Quality Plan. The Seller shall maintain

this Quality Plan for the duration of

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this Agreement and design, manufacture, examine and pack the Products in

accordance with this Quality Plan.

(h) Buyer reserves the right, by itself, through its appointed

representative or independent third parties, during regular business hours and

following reasonable notice to Seller, to inspect Seller's physical facilities

and Seller's quality control procedures in order to assure compliance with the

Specifications, quality requirements and other applicable regulations and

standards. In the event that Buyer believes that the quality procedures applied

by Seller are insufficient as to ensure consistent acceptable quality, Buyer

shall inform Seller of any nonconformities and Seller agrees to investigate the

nonconformities and to determine appropriate corrective actions. Seller agrees

to notify Buyer for any such corrective action taken. Seller agrees to take all

appropriate measures in order to ensure compliance of its sub-suppliers with the

foregoing.

(i) Seller guarantees that all Products (other than the Custom Sensor) at

the time of shipment are:

a. manufactured and released as finished devices in accordance with

the applicable provisions of the Federal Food, Drug and Cosmetic

Act (FDCA) as amended (21 U.S.C. section 301 et seq.) relating to

adulterated or misbranded devices;

b. not an article which may not, under the provisions of sections

404 or 405 of the FDCA, be introduced into interstate commerce;

and

c. in compliance with the provisions of sections 510, 513 and 515 of

the FDCA.

14. CHANGES IN PURCHASE SPECIFICATIONS

(a) Buyer-Proposed Changes. Buyer may propose changes in Attachment A by

submitting the proposed changes (identifying those changes which it deems

mandatory to make the Product suitable for use) to the agreement manager of

Seller, utilizing the Product Change Notice (PCN). Seller shall respond in

writing to the agreement manager of Buyer within ten (10) days after receipt of

such changes with the following information, as applicable: (i) lead time

required to implement proposed changes; (ii) impact of proposed changes on

pricing of Product, including parts and tools; (iii) impact of proposed changes

on scrap material and work in process; and (iv) non-recurring engineering

charges to implement proposed changes. Within no more than ten (10) days after

Buyer receives Seller's response to Buyer's proposed changes, the parties shall

begin negotiations with respect to the changes to Attachment A and any related

changes to the price and delivery schedules. If the parties fail to negotiate

appropriate changes to the Agreement, the terms in effect prior to the

commencement of the negotiations shall remain in full force and effect.

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(b) Seller-Proposed Changes - Custom Sensors. Seller may not make any

changes to Buyer's engineering designs for a Custom Sensor without obtaining

Buyer's written consent, as evidenced in a Supplier Change Notice (SCN). Changes

to a Custom Sensor proposed by Seller, both material and process changes, which

may affect regulatory compliance or safety or materially affect form, fit,

function, reliability, serviceability, performance, interchangeability or

interface with Buyer's equipment must be submitted along with a written Seller

Change Notice (SCN) utilizing the form that can be found at www.gesmp.com, at

least ninety (90) days before the change is implemented. If Seller makes any

such change to a Custom Sensor without such documentation, Seller shall, in

addition to any other costs, expenses or damages incurred by Buyer, be

responsible for labor and material costs to repair or replace said Custom Sensor

regardless of whether the Custom Sensor is in or out of warranty. A change shall

be deemed to be material if such substitution or modification requires any

modifications or adjustments of Buyer's products that work with the Custom

Sensor.

right, at any time and from time to time, to make substitutions and

modifications to the Products other than Custom Sensors, provided that such

substitutions or modifications shall not affect regulatory compliance or safety

or materially affect form, fit, function, reliability, serviceability,

performance, functional interchangeability or interface capability of the

Products. In the event that any proposed substitution or modification materially

affects the form, fit, function, reliability, serviceability, performance,

functional interchangeability or interface capability of a Product, Seller shall

give Buyer written notice of such proposed substitution or modification using

the Buyer SCN process at least ninety (90) days prior to its taking effect and

Buyer shall have the right, during such ninety (90) day period and for ninety

(90) days thereafter, to order Products without such substitution or

modification for delivery up to ninety (90) days after such substitution or

modification takes effect. Seller shall provide the appropriate verification and

validation information for evaluating the effect of the change on the Products.

A substitution or modification shall be deemed to be material if such

substitution or modification requires any modifications or adjustments of

Buyer's products that work with the Products.

15. ELECTRONIC DATA INTERCHANGE

(a) Access. Buyer, in its sole discretion, may permit Seller to have

on-line access to designated computer systems of Buyer in order to facilitate

Seller's ability to perform its obligations under this Agreement. If such access

is granted, Seller shall give to Buyer the names of Seller's employees who have

a legitimate business need for such access to Buyer's computer systems, and

Buyer shall provide a separate user identification code for each person. Seller,

at its own expense, shall provide and maintain any hardware, telecommunications

services and software not furnished by Buyer, which are needed to communicate

reliably with Buyer's computer systems. Buyer, in its sole discretion, may

terminate Seller's access to Buyer's computer network at any time.

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(b) Use Restrictions. Seller shall ensure that: (i) computer access is

limited to those employees with a legitimate business need whose names have been

furnished to Buyer; and (ii) such employees with access agree to keep any

information so obtained strictly confidential, to use such information only to

perform Seller's contract obligations to Buyer and to cease accessing Buyer's

computer systems when no longer required to perform work under this Agreement.

Seller shall promptly notify Buyer if it becomes aware of any unauthorized

access to Buyer's computer systems or unauthorized use of the information on the

systems.

shall be considered a writing delivered in connection with this Agreement.

Electronic documents shall be considered signed by a party if they contain an

agreed upon electronic identification symbol or code. Electronic documents shall

be deemed received by a party when accessible by the recipient on the computer

system.

16. TERMINATION

(a) Termination of Purchase Order. Buyer may terminate any Purchase Order

in whole or in part at any time upon written notice to Seller, subject to the

other terms of this Agreement.

(b) Termination of Purchase Agreement. If Buyer terminates any Purchase

Order for cause, or if there is a breach of any material term of this Agreement

by either party and such breaching party fails to correct such breach within

thirty (30) days after receiving written notice of such breach from the

non-breaching party, the non-breaching party may terminate this Agreement and

all unfilled Purchase Orders without any liability except for the price of any

Products previously delivered and accepted by Buyer (subject to any set-off

available to Buyer). Either party may also terminate this Agreement immediately

by giving written notice to the other party if: (i) the other party fails to

meet its financial obligations as they become due, or if any proceeding under

the bankruptcy or insolvency laws is brought against the other party, or a

receiver is appointed for the other party or the other party makes an assignment

for the benefit of creditors or (ii) there has been an effective change in

control of the Seller. Upon ninety (90) days prior written notice to Buyer,

Seller shall also have the right to terminate its obligation to provide Custom

Sensors under this Agreement in the event that Buyer does not purchase at least

thirty percent (30%) of its annual volume of Custom Sensors from Seller. If

Seller terminates its obligation to provide Custom Sensors, Seller shall also

have the right to terminate all rights granted to Buyer for the SST.

Any such termination shall not relieve the breaching party of its obligations

and the non-breaching party shall retain all legal and equitable remedies after

such termination. A material breach shall include, without limitation, the

failure to comply with any Attachment and/or the failure of Seller to comply

with applicable product quality and delivery obligations.

<PAGE>

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17. INFORMATION

(a) Confidential Information. During the Term, a party (the "Recipient")

may receive or have access to certain information of the other party (the

"Discloser") that is Confidential Information of the Discloser. For purposes of

this Agreement, "Confidential Information" shall mean any information disclosed

by the Discloser to the Recipient, whether technology-related or

business-related, whether furnished before or after the Effective Date and

irrespective of the form of communication, that is considered competitive,

confidential or proprietary in nature including, though not limited to,

information or data concerning the Discloser's products or product plans,

business operations, strategies, customers and related business information,

design documents, drawings, engineering information, financial analysis,

forecasts, formulae, hardware configuration information, know-how, ideas,

inventions, market information, marketing plans, processes, products, product

plans, research, specifications, software, source code and trade secrets. The

Recipient will protect the confidentiality of Confidential Information with the

same degree of care as the Recipient uses for its own similar information, but

no less than a reasonable degree of care. Confidential Information may only be

used by those employees of the Recipient who have a need to know such

information for the purposes related to this Agreement, and the Recipient shall

inform such employees of the confidential nature of such Confidential

Information and the obligations of the Recipient hereunder. The Recipient agrees

to be responsible for any breach of this Agreement by it or its employees to the

same extent as though such employees were parties hereto. The parties

acknowledge that all forecasts and the terms of this Agreement are deemed

Confidential Information to be protected for a term of three years from the date

of disclosure and that all other Confidential Information shall be protected

indefinitely.

(b) Exclusions. The foregoing confidentiality obligations will not apply to

any information that is (a) already known by the Recipient prior to disclosure

other than pursuant to another agreement between the parties, (b) independently

developed by the Recipient prior to or independent of the disclosure, (c)

publicly available through no fault of the Recipient, (d) rightfully received

from a third party with no duty of confidentiality, (e) disclosed by the

Recipient with the Discloser's prior written approval, (f) disclosed under

operation of law, or (g) with respect to the terms of this Agreement, disclosed

pursuant to a confidentiality agreement to existing and potential investors,

strategic partners and acquirers.

party shall return all Confidential Information of the other party and all

copies thereof (in any media) unless a party is required to retain such material

under applicable laws or regulations. All information consisting of documents,

notes and other writings prepared by one party based on non-public data of the

other party shall be destroyed.

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(d) Each party shall not, and each party shall ensure that its officers and

employees will not, whether during the term or after the termination of this

Agreement, use any Confidential Information of the other party or any of its

Affiliates or their products, technology, designs or tools for other purposes

than the fulfillment of such party's obligations hereunder.

(e) Seller shall not during the term of this Agreement or thereafter sell

to third parties any products that are manufactured in accordance with

proprietary technical specifications, technology, designs or tools provided by

Buyer.

(f) In case of unauthorized use by either party, its Affiliates or

employees of the such non-public technologies, designs or tools of the other

party, the Recipient shall be obliged to compensate any costs, damages and

losses incurred by the Discloser due to such unauthorized use.

(g) The obligations set forth in this Section shall continue even after the

expiration of this Agreement.

18. AGREEMENT MANAGER/NOTICES

(a) Managers. Each party shall appoint an agreement manager as the point of

contact for all matters relating to performance of this Agreement. Buyer's

agreement manager shall be Marianne Metso and Seller's agreement manager shall

be Joan Rubin. Either party may change its agreement manager by providing notice

of such change to the other party. The managers agree to meet quarterly to

discuss issues related to this Agreement. Additional meetings can be called by

either party upon thirty (30) days prior written notice.

(b) Addresses. Any notice required under this Agreement shall be sent by

fax (with the original to promptly follow by applicable national mail service or

a nationally recognized overnight courier), by a nationally recognized overnight

courier, or transmitted electronically pursuant to the terms of Section 15.

Notices will be deemed given on the date delivered to the recipient if sent by

fax or overnight courier (it being agreed that the sender shall retain proof of

transmission or delivery, as the case may be), or when accessible electronically

if sent electronically under Section 15. Notices shall be sent to the persons

identified below (or as otherwise directed in writing by a party):

Buyer: GE Healthcare

P.O. Box 900

FI-00510 Helsinki, Finland

Attention: Marianne Metso

Fax: 358 9 140597

Seller: Aspect Medical Systems, Inc.

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141 Needham Street

Newton, MA 02464

Attention: Joan Rubin

Fax: 617 559-7400

19. DISPUTE RESOLUTION

All disputes with respect to any Purchase Order or this Agreement shall be

resolved as set forth in Attachment F.

20. [Reserved]

21. MARKETING AUTHORITY

a. Seller hereby grants to Buyer and its distributors, subdistributors,

field organization and channel partners: (1) the exclusive, perpetual,

irrevocable, royalty-free right to promote, sell, resell, license, sub-license,

distribute and service the Products listed as "Exclusive Products" on Attachment

A and purchased from Seller on a world-wide basis; (2) the non-exclusive,

perpetual, irrevocable, royalty-free right to promote, sell, resell, license,

sub-license, distribute and service the Products listed as "non-US Products" on

Attachment A and purchased from Seller on a world-wide basis (except for the

United States) solely to Buyer customers outside of United States who have

purchased BIS/EEG Modules or BISx Systems from Buyer; and (3) the non-exclusive,

perpetual, irrevocable, royalty-free right to promote, sell, resell, license,

sub-license, distribute and service all other Products purchased from Seller on

a world-wide basis. The Products may be promoted, sold, resold, licensed,

sublicensed and distributed by Buyer directly and/or indirectly through its

distributors, subdistributors, field organization and channel partners, and may

be used as components in, or be incorporated into, or integrated with, systems

and products of Buyer, which Buyer, its distributors, sub-distributors, field

organization and/or channel partners sell or lease to third party users in the

regular course of business. The provisions of this Section 21(a) will survive

any change in control of Seller and Seller agrees that, if it sells all or

substantially all of the assets relating to the business that produces the

Products, it will require that the purchaser of the assets agrees to assume this

Agreement as well.

b. General. The components of the Buyer BIS/EEG Module or BISx Systems

shall only be resold, leased, rented, licensed or otherwise transferred to third

parties for use as a part of a Buyer BIS/EEG Module or BISx System or as

replacement parts used in Buyer BIS/EEG Modules or BISx Systems and Buyer shall

only sell Seller approved accessories including cables and sensor products in

connection with any Buyer BIS/EEG Module or BISx System. During the term of this

Agreement, Buyer agrees that it may offer complementary but not directly

competitive products to the Buyer BIS/EEG Module and BISx System, with the

exception of Buyer's Entropy module. Buyer products other than the Buyer BIS/EEG

Module, BISx System,

<PAGE>

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and the Entropy module that display a parameter claiming to be a measure of the

hypnotic effect of anesthesia and sedation are considered to be directly

competitive products for purposes of this Section, provided that such

obligations of Buyer shall terminate in the event Seller's Products do not have

material competitive features for measuring the hypnotic effects of anesthetic

and sedative agents on the brain and Seller does not incorporate such features

into the Products within six (6) months of receipt of notice of such deficiency.

c. Seller shall not directly or indirectly provide the Products listed as

"Exclusive Products" on Attachment A to any third party during the Term or

thereafter, unless requested to do so in writing by Buyer.

d. Exclusivity. Except to the extent Buyer and Seller may agree in the

future to undertake co-marketing programs, Seller shall not, directly or

indirectly, sell, distribute or license to any third party the Buyer BIS/EEG

Module, the Buyer BIS/EEG Engine, the Buyer BISx Systems or the Custom Sensor.

It is understood, however, that Seller sells, distributes, and licenses to other

third parties both generic and customized BIS/EEG engines, BIS/EEG module kits

and BISx systems to meet the needs of other OEM customers, and nothing in this

Agreement shall prohibit Seller from continuing to sell, distribute, or license

these products or components thereof to customers other than Buyer.

e. Buyer shall not disclose, furnish, transfer, distribute or otherwise

make available the SST or any portion thereof in any form to any third party

(other than making the use of the SST available to purchasers of Custom Sensors

and to Buyer's distributors, sub-distributors, field organizations, channel

partners and Affiliates that are distributing the Custom Sensors) and shall not

use the SST or any part thereof (other than for Buyer's internal use), except as

permitted under Section 23. Title to and ownership of any and all proprietary

rights in or related to the SST shall at all times remain with Seller and/or its

licensor(s). Nothing in this Agreement shall be construed as a sale of any

rights in the SST. All references in this Agreement to sale, resale or purchase

of the Products or the components thereof, or references or like effect, shall,

with respect to the SST mean licenses or sublicenses of the SST.

f. Recognizing that the Buyer has a product that is competitive to BIS,

Buyer agrees to devote "reasonable sales and marketing efforts" to support the

Buyer BIS/EEG Module and the BISx Systems. "Reasonable sales and marketing

efforts" shall mean:

i. Buyer communicating to Buyer's Monitoring Solutions GMs in the

respective pole organizations the fact that Buyer has alternative

product offerings for patient consciousness monitoring, with a

reasonably detailed description of the features, benefits and customer

support available for each product;

ii. Buyer communicating to Buyer's Monitoring Solutions GMs in the

respective pole organizations, first, that customers interested in

consciousness monitoring should be informed that Buyer has two

technologies (BIS and Entropy modules) that are

<PAGE>

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available to meet their needs, and second, that sales representatives,

distributors, and dealers should permit customers to choose freely

between these alternative solutions;

iii. In the event that Buyer elects to display or otherwise advertise the

availability of the Entropy module at any of the following meetings:

the annual meetings of the American Society of Anesthesiologists, the

European Society of Anesthesiologists, the Japanese Society of

Anesthesiologists, and the World Congress, Buyer agrees to utilize

commercially reasonable efforts within the context of a complex

worldwide organization to display or otherwise advertise the

availability of Buyer BIS monitoring solutions for Buyer customers;

iv. Buyer's customers interested in BIS technology shall be provided a

fair representation of the features, benefits and customer support

available with BIS;

v. Buyer BIS/EEG Modules and BISx Systems will be available to Buyer's

sales representatives, dealers and distributors on the same basis that

Buyer provides demonstration equipment of its Entropy module;

vi. if a Buyer customer requests BIS, Buyer will submit the quote for the

Buyer BIS/EEG Module or BISx System within the normal Buyer turnaround

time;

vii. all of Buyer's customer requests for BIS and BIS product support will

be fulfilled within the normal Buyer turnaround time; and

viii. any other matters agreed to in writing by the agreement managers.

Seller agrees that its direct and indirect customers shall not be provided

unfair representations of the features, benefits and customer support available

for Entropy.

Any failure of either party to comply with these provisions will be escalated to

the agreement managers and discussed at the next quarterly meeting.

g. The Products shall be packed, marked and labeled by Seller in accordance

with the reasonable instructions given by Buyer. In case no instructions have

been given, the Products shall be packed with due care to avoid damages during

shipment. If any Products (or component) that is marked with Buyer's or its

Affiliate's name, product numbers, trademark, or other identifiers are rejected

or otherwise returned to Seller, Seller shall remove such trademarks or

identifiers (unless such Products are being repaired in accordance with this

Agreement), even if the removal would require destruction of the Product.

22. TRADEMARKS

a. Ownership. Buyer acknowledges and agrees that Seller is the sole and

exclusive owner of all right, title and interest in, or has valid licenses to

the trademarks (the "Seller's Trademarks") identified on Attachment N (Seller's

Trademarks). Seller acknowledges and agrees that Buyer is the sole and exclusive

owner of all right, title and interest in and to the trademarks (the "Buyer's

Trademarks") identified on Attachment O (Buyer's Trademarks). Each party

recognizes the value of the other party's Trademarks and the good will

associated with the

<PAGE>

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other party's Trademarks. Buyer agrees that its use of the Seller Trademarks and

any good will arising therefrom shall inure to the benefit of Seller. Seller

agrees that its use of the Buyer's Trademarks and any good will arising

therefrom shall inure to the benefit of Buyer. Nothing contained herein shall

create, nor shall be construed as an assignment of, any right, title or interest

in or to the Seller's Trademarks to Buyer, or the Buyer's Trademarks to Seller,

other than the grant of the licenses in Section 22 below; it being acknowledged

and agreed that all other right, title and interest in and to the Seller's

Trademarks is expressly reserved by Seller and its licensors, and all other

right, title and interest in and to the Buyer's Trademarks is expressly reserved

by Buyer. Each party shall keep the other party's Trademarks free from all

liens, mortgages or other encumbrances. Each party agrees that it shall not

attack or otherwise challenge the title, validity or any other rights of the

other party in or to its Trademarks.

b. License. Subject to the restrictions set forth in this Section 22,

Seller hereby grants to Buyer and its distributors, subdistributors, field

organization and channel partners the nonexclusive, worldwide, royalty-free

license (without the right to sublicense) to use Seller's Trademarks in

connection with the authority granted to such parties in Section 21(a) and (f).

Subject to the restrictions set forth in this Section 22, Buyer hereby grants to

Seller the nonexclusive, worldwide, royalty-free license (without the right to

sublicense) to use Buyer's Trademarks in connection with the manufacture and

packaging of the Custom Sensor in accordance with the terms of this Agreement.

Neither party shall have any other right to use, display or utilize the other

party's Trademarks for any other purpose or in any other manner.

c. Termination. In addition to the termination rights set forth in Section

16 hereof, in the event that either party is in material breach of any provision

of this Section 22, the non-breaching party may, upon thirty (30) days written

notice, terminate the license granted in Section 22 (b) if the breaching party

does not cure such breach or default within such thirty (30) day period. In

addition to the provisions of Section 16 hereof, upon termination of the license

granted in Section 22 (b), or upon termination of this Agreement, for whatever

cause:

(i) each party shall immediately cease and desist from any further use

of the other party's Trademarks and any trademarks confusingly similar thereto,

either directly or indirectly;

(ii) All rights in the Seller's Trademarks granted to Buyer hereunder

shall immediately revert to Seller, and all rights in the Buyer's Trademarks

granted to Seller hereunder shall immediately revert to Buyer;

(iii) In the event that this Agreement is terminated for any reason

other than a material breach or material default by Buyer, Buyer shall

thereafter have the right to dispose of all of the unsold Products bearing the

Trademarks and advertising and promotional materials

<PAGE>

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relating thereto which had been completed by it prior to such termination,

provided such Products and materials were in the process of manufacture before

such termination.

d. Promotional Claims. The general form of any promotional claims by Buyer

regarding Seller's Bispectral Index technology and/or the integration of

Seller's Bispectral Index technology in Buyer's Patient Monitors, and the

specific form of the use of Seller's trade names and trademarks, and of intended

use claims regarding Buyer's Bispectral Index technology, in promotional

material, advertisement, and/or in written technical literature shall be subject

to review and approval by Seller prior to is publication or display. The general

form of any promotional claims by Seller regarding Buyer's Patient Monitors or

the integration of Seller's Bispectral Index technology in Buyer's Patient

Modules, and the specific form of the use of Buyer's trade names and Trademarks,

and of intended use claims regarding the Products in promotional material,

advertisement, and/or in written technical literature shall be subject to review

and approval by Buyer prior to its publication or display.

23. PRODUCT DEVELOPMENT AND TECHNICAL INFORMATION

a. Seller shall provide Buyer with all information in its possession that

is necessary for the interfacing of the Products with the Buyer BIS/EEG Modules

or Buyer's Patient Monitors.

b. Seller shall keep Buyer informed of the manufacturer of the Sensor

Connectors and/or Cable Connectors used with the Custom Sensor. Seller agrees

that Buyer may purchase the Sensor Connectors and/or Cable Connectors directly

from the manufacturer. If the manufacturer is not able to manufacture sufficient

quantities of connectors for Buyer using the tooling and molds used for Seller's

requirements of connectors or if the connectors are different than the

connectors sold for use with Seller's products, Buyer may pay the manufacturer

to acquire additional tooling and molds to manufacture the connectors for Buyer.

During the Term Seller hereby grants to Buyer and its Affiliates a

non-exclusive, non-transferable (except as provided in Section 26(c)),

irrevocable and royalty-free worldwide license, without the right to sublicense,

for Buyer, its Affiliates, distributors, sub-distributors, field organization

and channel partners to sell, market and distribute Sensor Connectors and/or

Cable Connectors.

c. Upon expiration of this Agreement or a termination for any reason other

than on the grounds of an uncured breach or failure by Buyer as provided in

Section 16, Seller hereby grants to Buyer, its Affiliates, distributors or

sub-distributors a non-exclusive, non-transferable (except as provided in

Section 26(c)), perpetual, irrevocable and royalty-free worldwide license,

without the right to sublicense, to use the SST solely for purposes of

manufacturing or having manufactured sensors to be used to measure Buyer's

proprietary processed EEG parameter that measures the hypnotic effects of

anesthetic and sedative agents on the brain or interfacing such

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sensor to Buyer Patient Monitors and distributing object code versions of the

SST for use with such sensor.

d. Further upon termination or expiration of this Agreement, Seller hereby

grants to Buyer and its Affiliates a non-exclusive, non-transferable (except as

provided in Section 26(c)), perpetual, irrevocable and royalty-free worldwide

license, without the right to sublicense, to manufacture, have manufactured or

purchase Sensor Connectors and/or Cable Connectors and the right for Buyer, its

Affiliates, distributors, sub-distributors, field organization and channel

partners the right to sell, market and distribute these products.

Any equipment and tools provided or paid for by Buyer and used in the

manufacture of the Products shall remain the property of Buyer. Such equipment

or any equipment which Buyer has designed or which has been designed for Buyer

for its purposes and paid for by Buyer, may not be used for the manufacture of

any other products supplied to anyone but Buyer. Seller shall store such

equipment and tools and mark them as Buyer's property.

e. Future Products. The Products are designed for use in measuring the

effects of anesthetic and sedative agents on the brain. In the event that Seller

develops a product involving this or a different type of index, patient sensor,

or application for which Seller has not granted any third party exclusive

rights, Seller and Buyer agree to discuss in good faith adding new product to

this Agreement for the purchase of such new product or products by Buyer.

f. Seller shall provide reasonable engineering support to Buyer free of

charge. If Buyer requests engineering support that exceeds a reasonable amount,

the parties will mutually agree on possible reimbursement for Seller.

g. For a period of ten (10) years following the last delivery to Buyer of

the applicable Product ordered hereunder, Seller shall make available repair

services (or at Seller's sole discretion, exchange units for the Products) for

purchase by Buyer and end users of the Products at Seller's then-current list

prices for such repair services and exchange units.

h. Seller shall maintain a complete record of all repair activities

performed on any Products received for repair, and shall provide Buyer with a

quarterly report on all service actions including failure and repair statistics

at a sub-assembly level. Root cause analysis is to be performed and reported by

Seller to Buyer in the case of abnormal failures, incidents and malfunctions.

24. PRODUCT COMPLAINTS, EVENT REPORTING AND FIELD RECALLS

a. Product Complaints. Buyer shall be responsible for resolving all product

complaints relating to the Custom Sensors using Buyer's existing product

complaint policies and

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procedures. Both parties shall cooperate and work together to resolve all

product complaints relating to the other Products sold to Buyer. Closure of any

product complaint relating to the other Products will occur when Buyer notifies

Seller that the complaint is resolved. Each party shall promptly inform the

other in writing of any product complaints and shall keep the other party

advised of their progress in resolving such complaints and any and all steps

taken to resolve such complaints. Within one week of the resolution of a product

complaint, the party responsible for resolving such complaint shall supply the

other with a written report summarizing the root cause and any corrective

actions required.

b. Duty to Report Incidents. Buyer and Seller shall inform each other in

writing, within two (2) business days of becoming aware of a reportable event,

in accordance with FDA Medical Device Reporting regulation (21 CFR Part 803) or

the European Medical Device Vigilance regulations or that must be registered

according to other national regulations such as Canadian medical devices

regulations (SOR/98-282), including without limitation incidents involving death

or serious injury, malfunctions that, if recurrent, may cause or contribute to

death or serious injury or other material quality problems or concerns, of all

incidents relating to the subject matter of the Agreement. Buyer will be

responsible for reporting such incidents to the appropriate regulatory authority

for the Custom Sensors. Seller will be responsible for reporting such incidents

to the appropriate regulatory authority for all other Products. Both parties

shall fully cooperate with each other as may be necessary to comply with any

reporting obligations regarding such incidents or quality concerns. If FDA or

other authorities contact either party to inquire about or investigate the

Products sold to Buyer under this Agreement, the contacted party, unless

required to maintain confidentiality by such authorities, shall inform the other

party immediately thereof. The parties shall cooperate closely to clear any

regulatory issues or potential regulatory issues promptly.

c. Recalls. In the event that a corrective action (including notifications

or recalls) is required with respect to any Product, and such action (i) is

required by Seller to comply with applicable laws or regulations, (ii) is

determined by Seller in its discretion for a reasonable business purpose or for

safety reasons or (iii) is the result of Seller's failure to supply Products

that conform in all material respects to the applicable standards, Seller shall

be responsible for the repair or replacement of the Products without cost to

Buyer, its Affiliates, distributors and sub-distributors. Seller agrees to

consult with Buyer to establish a reasonable process for managing the corrective

action and Seller shall be responsible for all reasonable out-of-pocket

expenditure (including shipping and labor costs) incurred by Buyer, its

Affiliates, distributors and subdistributors if Seller fails to take such

action. In the event that Seller is required to take such action to comply with

applicable laws or regulations or such action is reasonably necessary for safety

and efficacy reasons and for the failure of the Products to comply with

specifications (other than a minor deviation from such specifications) and fails

to do so, Buyer shall have the right to take such action and Seller shall

reimburse Buyer for all reasonable out-of-pocket expenditures (including

shipping and labor costs) incurred in connection with such action by Buyer. If

it is determined by an arbitrator that such action was not necessary for safety

and

<PAGE>

-25-

efficacy reasons and for the failure of the Products to comply with

specifications (other than a minor deviation from such specifications), Buyer

shall return any amounts paid to Buyer by Seller in connection with such action.

d. Record Retention/Maintenance. Seller shall maintain serial and/or lot

number and date of shipment records for each Product and Buyer shall maintain

serial and/or lot number and date of shipment records for each Product so that,

if necessary for tracing or recall purposes, the manufacturing and delivery of

the Products can be identified. Each party shall give its assistance to the

other party in tracing or recall situations by making the records available.

Each party shall promptly make such records available to the other party if any

authority in any country requests such records from such party. Each party shall

be responsible for record keeping under any and all medical device reporting

regulations such as (US) 21 CFR Part 803, (European Union) MDD regulations and

under the record keeping requirements of any other country as may be applicable

and shall retain quality records for at least seven (7) years from the date of

the last shipment of the applicable Product.

e. Regulatory Agency Inquiries. If the FDA or any other regulatory body

with authority over medical devices provides written notice to either party to

inquire about or investigate any Product sold to the Buyer, the party notified

shall use its best efforts to give notice thereof to the other party within two

(2) business days of receipt of such contact from the FDA or other body.

f. Survival. All subsections of this Section 24 shall survive term

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