SUPPLY AND DISTRIBUTION AGREEMENT

2. 1

Product definition

a)

The VC s5i System complying with following specifications :

b)

The VC s5i/GE System based on the VC s5i as defined in Section 2.1 a) and customized for GEHC (herein after referred to as “Customization”), including but not be limited to optimized integration of the s5i with the GEHC Cardiovascular system as further defined in Attachment A.

In order to interface the VC s5i/GE System with the GEHC Cardiovascular system, a specific SW User Interface will be loaded on GEHC Touchscreen-type integrated cath lab control station Trademarked by GEHC as “Innova Central”) as further defined in Attachment A.

The IVUS connectivity feature on Innova will be branded by GEHC as “Innova IVUS”. Where applicable, a tag line “Powered by Volcano” shall be added to clarify that IVUS imaging will be performed by Volcano. The Innova IVUS feature shall not be considered as part of the s5i/GE supplied by VC.

c)

Regulatory Approvals, Manuals and languages

(ii)

Prior to Product Introduction, VC shall use commercially reasonable efforts to obtain all applicable regulatory approvals and clearance for the Products to be distributed by GEHC in the People Republic of China, and provide the Products to GEHC including the corresponding labeling in Chinese:

(iii)

As soon as practical, VC shall make its best efforts to obtain approvals and clearance to distribute the s5i in all other major countries in the Territory such as China, major Asian countries, ANZ, Canada and Latin America (i.e. CCC & SFDA for China, CSA & CDMAS for Canada). When VC obtains such regulatory approvals and clearance for its s5i system, VC shall immediately make them available to GEHC for both the s5i and s5i/GE systems, including Graphical User interface messages, Safety related messages, labels and User Manuals, translated in the appropriate language.

(iv)

If GEHC identifies a business opportunity in a market or country not initially considered by VC, the Parties should discuss and agree if VC should proceed with the regulatory approval process and how VC for its agents, representatives or distributors) will provide GEHC End Users with application training and disposables.

(v)

When VC introduces improvements or new features to the s5i (such as an evolution of the s5i platform to support mechanically rotating transducer design), VC shall immediately make such improvements available to GEHC for both the s5i and s5i/GE systems. VC selling price to GEHC for any improvements or new features (additional options) to the s5i will be determined by mutual agreement between

(i)

VC and GEHC shall define and pursue jointly agreed integration and development objectives as relates to the s5i/GE in order to optimize the clinical efficacy and workflow combined technologies. VC and GE HC shall [CONFIDENTIAL] their efforts on system integration and development.

(ii)

VC will define, design, specify, select components, sub-assemblies, equipments, integrate and qualify them into a system, manufacture, test, procure the appropriate regulatory approvals and supply the Products to GEHC hereunder and as per the terms of this Agreement. VC will run the engineering development programs under its quality and regulatory framework for s5i and s5i/GE with inputs and reviews from GEHC side. VC will provide the required information to GEHC for the purpose of GEHC complying with its internal Product development / introduction processes (Milestones per GEHC’s Phase Review Discipline) and complying with applicable laws and regulations in relation with the Products and any parts thereof.

(iii)

The Parties agree that VC shall comply with the following development milestones:

Date

Task

[CONFIDENTIAL]

Date

Task

[CONFIDENTIAL]

Date

Task

[CONFIDENTIAL]

(iv)

GEHC and VC will jointly define the required performances for the Products to meet end user expectations and tenders requirements and shall agree on a set of minimum achievable specifications that will be translated into a contractual “Purchase Specification” and a contractual “Factory Acceptance Test” at the latest prior to the Delivery of the first Pilot.

(v)

VC agrees at all times to offer GEHC a competitive Product with regards to other existing systems available on the market.

(i)

During the Term of this Agreement and subject to Article 3, GEHC will purchase from VC, and VC will sell to GEHC, the Products, and GEHC will distribute the Products under VC trademarks, subject to the terms of this Agreement. Subject to Article 3, VC shall be required to supply the s5i/GE to GEHC exclusively, and to supply the s5i to GEHC non-exclusively. Except for the 8 pilots as further described in Article 5, GEHC’ commitment to purchase Products from VC shall be limited to firm Purchase Orders released by GEHC and accepted by VC pursuant to Article 8.

(ii)

Distribution will be performed by GEHC directly or through other members of the GEHC Group.

3.1

Subject to Section 3.8, during the Term of this Agreement and subject to the Conditions below, VC will grant non-exclusive distribution rights to GEHC for the s5i System in the Territory.

3.2

So long as GE forecasts to purchase a minimum of [CONFIDENTIAL] units of the s5i/GE during the first 12 months post Product Introduction (the “Exclusivity Period”), VC will grant exclusive distribution rights to GEHC for the s5i/GE System in the Territory during that 12 month Exclusivity Period.

During this Exclusivity Period, VC will not sell, lease, loan, license, transfer or otherwise provide, or grant any distribution, or other rights to provide, directly or indirectly, the s5i/GE to any manufacturer, distributor, customer or other third party in the Territory, and will not pursue similar implementations as for the s5i / GE defined herein with any of the GEHC competitors in the Territory.

The Exclusivity Period shall start at the earlier of August 15, 2006 or Product Introduction, provided however that a delay in Product Introduction is not solely caused by VC, in which case the Exclusivity Period start date may be extended by 6 weeks, or longer if mutually agreed by the parties. During the Exclusivity Period, GEHC will not pursue similar implementations with any of the VC’s competitors.

Subject to Section 3.8, after the Exclusivity Period and during the Term of the Agreement, GEHC shall retain the rights to distribute the s5i/GE on a non-Exclusive basis in the Territory.

The Parties may consider extending the Exclusivity Period in exchange for certain minimum volume purchase commitments from GEHC. Similar implementations with non-competing third parties may be pursued with the reasonable consent of both parties.

3.3

Japan distribution rights for the 5i and s5i/GE will be subject to separate negotiation and agreement, should parties desire to pursue.

3.4

Exclusivity and distribution rights shall continue in the event of any change of control of VC ownership.

3.5

VC acknowledges that at the time of signature of this Agreement, and subject to exceptions identified in Attachment M, it does not have, shall not maintain and shall stop any contractual obligations with third parties which contractually put VC in breach of its obligations in this Agreement, or contractual obligations which refrain VC from entering into this Agreement and from appointing GEHC as an exclusive distributor for the s5i/GE and as a non-exclusive distributor for the s5i in the Territory as per the terms herein.

3.6

VC agrees that it will not, without the prior written consent of GEHC in each instance: use the name, trade name, trademark, trade device, service mark, logo, symbol or any abbreviation, contraction or simulation thereof, owned by GEHC or by companies of the General Electric group, in any advertising, marketing, promotional materials, publicity, client list, press release, case studies, references, Internet posting, or otherwise. GEHC will consult VC prior to releasing advertising, marketing, promotional materials or issuing a press release all using the name, trade name, trademark, trade device, service mark, logo, symbol or any abbreviation, contraction or simulation thereof, owned by VC.

3.7

During the Exclusivity Period a defined in Section 3.2, GEHC will not distribute a competing product to the s5i/GE (IVUS integrated with a GEHC Innova System). Subject to Section 23.3 (iii), GEHC obligation not to distribute a competing product to the s5i/GE (IVUS integrated with a GEHC Innova System) will not apply in the event (i) where a company of GEHC Group acquires a company or part thereof already offering such a product or when (ii) GEHC exceptionally resells a competing product as requested by one of its End User. In the event GEHC Group acquires a company or part thereof already offering such a product, the Exclusivity Period shall terminate immediately.

3.8

VC shall retain the right to market and distribute products similar to the s5i in all the countries and territories in the world. Notwithstanding anything to the contrary herein contained, VC shall not have the right to distribute products in the Territory containing key features or attributes considered as part of the Product’s Customization for GEHC, specifically optimized integration of the s5i with the GEHC Cardiovascular system and the SW User IF on a GEHC Touchscreen-type integrated cath lab control station Trademarked by GEHC as “Innova Central”), GEHC trade name, trademark, logo, color theme, user interfaces.

4.1.

VC responsibilities

Throughout the duration of this Agreement, and notwithstanding anything herein contained, VC shall be responsible and bear the corresponding costs for:

o  CE Marking

o  US FDA Approval

o  UL/CSA

o  CMDCAS (Canada)

o  SDA (China)

o  CCC(China)

o  English

o  German

o  French

o  Spanish

o  Portuguese

o  Italian

o  Chinese

o  PQRs: Significant quality or technical issue

o  CSOs: Customer Satisfaction issues

o  PSRs: Safety issues

4.2.

GEHC responsibilities

Throughout the duration of this Agreement, and notwithstanding anything herein contained, GEHC shall be responsible and bear the corresponding costs for:

•

Offer ongoing service under a GEHC service contract for the s5i and s5i/GE systems sold by GEHC.

•

Providing its expertise and support to VC in relation with certification in countries requiring a local representative (FDA 510K, MHW, SDA).

•

Obtaining the appropriate regulatory approvals for the “Innova IVUS” SW feature as defined in Section 2.1 b).

•

Loading the “Innova IVUS” SW feature onto the CardioVascular systems to be interfaced with the s5i/GE.

•

Providing support to VC in its negotiation with its key suppliers for the purpose of reducing costs and selling Prices to GEHC as well as improving suppliers lead-times and payment terms.

•

Validating the Service and Operator Manuals satisfactorily drafted by VC.

•

Collecting End-User and service feedbacks from the Pilot sites and communicating them to VC.

•

Defining and developing collaterals to promote the Products, including brochures, datasheets, trade shows.

•

Providing training to its own GEHC’ designated Sale, Service personnel subject to Article 10

•

Communicating to VC all field complaints related to the Products and allowing VC to have direct access to GEHC customers, personal or representatives for the sole purpose of solving such complaints.

•

Regularly providing VC with market feedbacks on Products specifications and performances for the purpose of improving the Products competitiveness.

5.1

Subject to the term of this Agreement including Product Definition Section 2.1 and pursuant to the Purchase Orders for Pilots attached in Attachment J, GEHC is willing to purchase and take delivery from VC of a total quantity of 8 pilot “Products”, (collectively referenced herein as “Pilots”). The period starting from delivery of the first Pilot to the delivery of the last one is defined as the “Pilot Phase”.

It is agreed that certain features of the Products or certain components of the software package, including but not limited to Virtual Histology, may not be available at Pilot phase or at Product Introduction as further described in Section 2.2. The parties agree that Pilots that are sold prior to fully meeting the Product Definition per Section 2.1, will be upgraded by Volcano as soon as practicable, at no cost to GEHC or the end-user.

5.2

The purpose of GEHC installing the Pilots at End-Users sites will be to ensure that:

•

The processes between GEHC and VC are in place before entering in full production (Logistics — shipping, PQRs — CSOs — PSRs handling, spare parts ordering).

5.3

The VC selling price to GEHC for the 8 above-mentioned Pilots is subject the conditions of Article 7. All invoices will be settled according to the terms defined in Article 13. For these 8 pilots, VC should provide upgrades kits to Full Production level (as defined in section 2.1) at no cost to GEHC, GEHC covering the logistics and labor costs.

5.4

Subject to the final approval of milestones identified in Article 2.2(iii), these 8 Pilots should start with 4 external evaluation units as soon as possible to be delivered by VC not later than May 1, 2006. These 4 external evaluation Pilots shall be installed and supported jointly by VC and GEHC engineering group, until such Pilots have been updated to the level of production units. GEHC shall have, at its discretion, the ability to order any combination of s5i and s5i/GE Products for the Pilot Phase such that the total of units ordered does not exceed 8 units. VC agrees to upgrade any Pilot units, at GEHC’s discretion, to s5i/GE units at no cost to GEHC, with GEHC covering the logistics and labor costs.

In addition to the above-mentioned quantity, the number of Pilots may be extended by a mutually defined amount to seek broader customer feedback from varying market segments of interventional radiology and interventional cardiology. For such additional Pilots, VC shall provide upgrades kits to Full Production level (as defined in Section 2.1) at no cost to GEHC, GEHC covering the logistics and labor costs.

5.5

Notwithstanding anything to the contrary herein contained, GEHC will not be obliged to take Delivery of any Pilots or Products unless:

6.1

The Parties agree that this Agreement will enter into the “Production Phase”, when GEHC estimates that sufficient feedbacks have been collected during the Pilot Phase, that the Product meets End User expectations, that all risks identified are retired, and that all issues are fixed and processes stabilized. GEHC and VC shall therefore agree in writing on an updated and fixed Purchase Specification and to a Factory Acceptance Test in order to reflect the required changes identified during the Pilot Phase. The Parties will work to finalize such Purchase Specification and Factory Acceptance Test at the latest 30 days after the Delivery of the last Pilot. Should the Parties fail to agree on the same by this date, GEHC will have the right to terminate this Agreement with a thirty days prior written notice, without any liability whatsoever. After agreement on the Purchase Specification and Factory Acceptance Test, such documents will be considered as Attachment B and an integral part of this Agreement and GEHC will then release forecasts and Purchase Orders to VC subject to the following provisions:

6.2.

Estimated volume. Subject to Section 6.3 below, GEHC’ anticipated volume at the signature date of this Agreement is estimated to be [CONFIDENTIAL] to [CONFIDENTIAL] Products during year 2006, and [CONFIDENTIAL] to [CONFIDENTIAL] units during year 2007. Despite the indicative nature of such estimate, VC represents and warrants herein that it has the capacity and expertise necessary to manufacture and deliver to GEHC the presently estimated volume of Products, and any increase up to 20 percent of such volume.

6.3.

Forecast . Notwithstanding anything to the contrary herein contained including Section 6.5, any forecast of GEHC’ requirements for Products shall not be binding in any way on GEHC. Any such forecast may be modified at any time by GEHC in its sole discretion.

6.4.

Commitment . During the production phase, GEHC’ commitment to purchase Products from VC shall be limited to firm Purchase Orders released by GEHC and accepted by VC pursuant to Article 8. Unless agreed otherwise in writing by the Parties, VC will not manufacture or assemble any Products, nor procure required materials except pursuant to accepted Purchase Orders or the provisions of Section 6.5. Unless agreed otherwise in writing by the Parties, GEHC shall not be responsible or in any way liable to VC or any third party with respect to any material commitments or production arrangements in excess of the amounts defined in Section 6.5.

6.5.

GEHC forecasts and orders to VC will consist of:

•

Individual Purchase Orders to be communicated by GEHC to VC at least two weeks prior to Delivery. GEHC shall use its best efforts to communicate the Individual Purchase Orders as soon as reasonably possible, to allow VC to better plan its production.

6.6.

Any failure by VC to deliver the Purchase Orders in accordance with the dates set forth in GEHC Purchase Orders and acknowledged by VC in accordance with Section 8.2, will subject VC to the provisions set forth in Section 15.3.

7.1

Pricing . VC selling price to GEHC for the s5i and s5i/GE Products shall be Ex-works Rancho Cordova, CA, USA (the “Prices’’). Prices shall include all packaging, date of manufacture and bar code labeling which GEHC may request from time to time. In no event shall the Prices be increased by VC throughout the duration of this Agreement.

All prices referred to in this Agreement will be quoted in USD unless agreed otherwise in writing by the Parties.

Prices shall correspond to configurations of the s5i and s5i/GE allowing basic operation of the systems without the need for additional accessories. The Product shall consist of elements as defined in section 2.1. Selling prices for additional accessory parts (for more elaborate configurations) shall be agreed upon prior to Product Introduction.

Per the schedule below, the Prices shall be based on the actual volume of s5i and s5i/GE units (taken together) purchased by GEHC during a Calendar Year:

Number of Products

Price per unit

s5i and s5i/GE units taken together

s5i/GE or s5i

purchased by GEHC during a Calendar Year.

[CONFIDENTIAL] to [CONFIDENTIAL] units

$ [CONFIDENTIAL]

[CONFIDENTIAL] to [CONFIDENTIAL] units

$ [CONFIDENTIAL]

[CONFIDENTIAL] units and more

$ [CONFIDENTIAL]

7.2

Mid Year and Year End Reconciliation. At the beginning of the Year, GEHC may decide to purchase the Products at a pre-discounted price (ie. $ [CONFIDENTIAL] or $ [CONFIDENTIAL] per unit).

At the end of the calendar year, and based on the actual volume of Products purchased by GEHC either a balance rebate will be issued by VC to GEHC or a refund will be issued by GEHC to VC.

In order to minimize the Year End balance amount due by one Party to the other Party, the Parties may decide to perform a Mid Year Reconciliation and adjust the prices for the remaining of the calendar year accordingly.

For the remaining of the calendar year following the Product Introduction, minimum quantities required for GEHC to be qualified for discounted Price shall be Prorata temporis to the remaining of the calendar year. For the avoidance of doubt, if Product Introduction occurs on April 30th, 2006, the price of $ [CONFIDENTIAL] / unit should be effective if GEHC orders at least 2/3 of [CONFIDENTIAL] units = [CONFIDENTIAL] Product during the remaining of 2006, and the Price of $ [CONFIDENTIAL] / unit should be effective if GEHC orders at least 2/3 of [CONFIDENTIAL] units = [CONFIDENTIAL] Product during the remaining of 2006. External Evaluation units and Pilots ordered by GEHC, whether shipped before or after the Product Introduction shall be included in the overall GEHC volume.

7.3

Image Co-Registration Service.

The [CONFIDENTIAL] of the Innova Fluoro Images and the IVUS images will significantly increase the clinical value of the IVUS [CONFIDENTIAL] to the End User, thus could represent a higher value proposition for VC’s IVUS Catheters offering, driving usage and/or catheters pricing.

[CONFIDENTIAL] VC agrees to buy [CONFIDENTIAL] from GEHC as follows:

o  

From the date of Products installation until the [CONFIDENTIAL] month anniversary of such Installation, VC shall purchase from GEHC [CONFIDENTIAL] for each [CONFIDENTIAL] s5i/GE or s5i units sold by GEHC (directly through GEHC or indirectly through GEHC agents, distributors and representatives)

o  

Passing the [CONFIDENTIAL] month anniversary of a s5i/GE or s5i installation, GEHC agrees to provide [CONFIDENTIAL] to VC for [CONFIDENTIAL] .

o  

For the purpose of establishing the number of [CONFIDENTIAL] to be purchased by VC, VC shall be responsible for consolidating the number of [CONFIDENTIAL] by Country, Region and provide a quarterly reporting to GEHC. VC may also use the number of [CONFIDENTIAL] .

o  

Quarterly, VC shall pay GEHC for the corresponding number of [CONFIDENTIAL] .

o  

In countries where VC founds it impractical to manually consolidate the [CONFIDENTIAL] . VC shall establish a report based on [CONFIDENTIAL] .

o  

For the purpose of consolidating the [CONFIDENTIAL] .

o  

GEHC shall have the right to audit [CONFIDENTIAL] . For countries where such [CONFIDENTIAL] does not exist, GEHC shall have the audit rights over VC records relating to the calculation of the [CONFIDENTIAL] .

o  

Parties acknowledge that all of the s5i and s5i/GE systems contemplated in this agreement are to be completed as [CONFIDENTIAL] . Units placed on “ [CONFIDENTIAL] ” or “ [CONFIDENTIAL] ” shall not be allowed as part of this formal agreement. In situations where a customer insists on a [CONFIDENTIAL] agreement for the s5i/GE (not an s5i) configuration in a GE cath lab, VC and GEHC may mutually agree to offer a [CONFIDENTIAL] agreement (under a VC catalogue number, not a GEHC catalogue number). In this case, VC will have all responsibility for the sales process and system installation, warranty and start-up (which may be subcontracted to GE) and a fixed, on-time, unlimited [CONFIDENTIAL] would be paid to GEHC as follows: $ [CONFIDENTIAL] . at time of installation and $ [CONFIDENTIAL] 12 months following installation (due on s5i/GE only). Note that since the s5i/GE would be delivered under a VC catalogue number, no [CONFIDENTIAL] would be due to GEHC on future [CONFIDENTIAL] .

7.4

Software/Firmware . The Price of all Pilots and Products include a perpetual, paid- up, worldwide, irrevocable license for GEHC, GEHC Group, its End-Users, its customers, Representatives to use in the operation, maintenance and repair of the Products any related software/firmware which is furnished to GEHC, GEHC Group, its End-Users, Representatives or other users of GEHC products containing the Products.

7.5

Cost Reductions . During the Term of the Agreement, GEHC and VC shall undertake a program to achieve reductions in the cost of Products by utilizing cost-effective design, lower cost components, new technology, alternative sources, specification or features trade-off, productivity improvements and automation of the manufacturing process. To assist each other in this joint program, GEHC and VC shall determine the feasibility and potential savings from alternative actions, and shall share (as necessary) the required cost data, expertise in selecting materials, components, alternative sources and manufacturing processes for analysis. VC and GEHC shall use their commercially reasonable efforts in this joint cost reduction

program to further reduce the Prices by at least [CONFIDENTIAL] a year without altering VC margin. Any saving resulting from any cost reduction program specifically enabled by virtue of GEHC’s purchasing power, buying agreements, partnerships with other common vendor, etc.. will result into a [CONFIDENTIAL] allocation of the savings to VC, and a [CONFIDENTIAL] allocation of the savings to GEHC in the form of a reduction of the Prices given in Section 7.1  .  . Furthermore, any saving resulting from any cost reduction program identified and pursued by VC alone or by collaboration between VC and GEHC that also results in material changes affecting fit / function / form, Service, Reliability, Functionality of the Product which, in turn, force GEHC to dedicate resources to re-qualify the Product and/or its spare parts and/or re-train field service personnel will result into a [CONFIDENTIAL] allocation of the savings to VC, and a [CONFIDENTIAL] allocation of the savings to GEHC in the form of a reduction of the Prices given in Section 7.1. Such [CONFIDENTIAL] allocation to GEHC is intended as consideration / reimbursement for required dedication of resources to adapt to product changes. For the avoidance of doubt, any cost reduction which is pursued by VC alone or together with GEHC that does not affect fit / function / form, Service, Reliability, Functionality and does not require re-qualification of the Product or changes in spare parts or field service training by GEHC would result in [CONFIDENTIAL] of the cost savings being allocated to VC.

8.1.

Contents . A purchase order released by GEHC for Products or spare parts (“Purchase Orders”) may consist of a hard copy in the form set forth in Attachment F, an electronic message or other written communication from GEHC to VC, which complies with the requirements of this Agreement. Purchase Orders released by GEHC are subject to the terms and conditions of this Agreement and are considered an integrate part thereof, and shall identify the delivery date or dates and the quantities to be released for Delivery within the lead times specified in Article 6 or in Attachment D. REGARDLESS OF FORM, EVERY PURCHASE ORDER IS DEEMED TO INCLUDE GEHC’ STANDARD TERMS AND CONDITIONS OF PURCHASE SET FORTH IN ATTACHMENT F.

Notwithstanding anything else to the contrary in this Agreement, if a Purchase Order released by GEHC already contains or refers to Standard Terms and Conditions of Purchase, such Standard Terms and Conditions of Purchase shall prevail over Attachment F.

8.2.

Acceptance . Within 2 business days from receipt of a Purchase Order, VC shall acknowledge receipt of such Order by ensuring it has the necessary stock of component parts for its own production, and confirming by any mean defined by GEHC, the delivery date and quantity for the ordered items. VC may not reject any Purchase Order of GEHC unless, in accepting a Purchase Order, VC would violate any law or regulatory body

8.3.

Changes .

Subject to Article 6, GEHC may change the quantities, configurations, and delivery dates on individual Purchase Orders for Products without penalty as long as GEHC notifies VC of the changes at least two weeks prior to Delivery.

9.1.

Customer Copies . Unless agreed otherwise in writing by GEHC, each Product delivered by VC shall include a Pre-installation Manuel in English, a set of Operator Manuals in English, French, German, Spanish and any additional language as defined in Article 4, a set of Service Manuals in English, containing all applicable drawings, schematics, software license(s), software documentation, spare part lists, theory of operation, service troubleshooting diagnostics, and instructions necessary for the installation, operation, maintenance and repair of the Product. The documentation shall be in a format acceptable to GEHC.

9.2.

GEHC Master Copy . VC shall provide to GEHC at no additional charge a complete set of reproducible master copies of all documentation listed above, which GEHC may reproduce without charge. If any change in the Product requires a change in the documentation, VC shall promptly notify GEHC of the change and provide a revised reproducible master copy without charge.

10.1

VC shall provide any necessary personnel and equipment to train GEHC’ employees, Representatives with respect to the installation, operation, maintenance and repair of the Products. Such training shall be at VC’s facility and be provided at no cost to GEHC, for a maximum of 10 persons at a time and for maximum of 6 sessions a year.

10.2

VC shall not pay for travel and living expenses incurred by GEHC employees, and those of its Representatives. If VC provides training at GEHC’ designated location (other than VC’s facility), GEHC shall reimburse VC for the reasonable travel and living expenses incurred by VC’s personnel to conduct such training at such location; provided , however, that such reimbursement shall be limited to the amount estimated by VC, and approved by GEHC in advance.

11.1.

Testing . VC shall test all repaired Products and spare parts using the highest quality test plan or procedure used by VC to test products similar to the Products.

11.2.

Duration . For 10 (ten) years after the last manufacturing date of the Product, VC shall maintain the capability of repairing Products (including the know-how to repair spare parts and qualified employees) and/or of furnishing replacement products, and of furnishing all spare parts, service tools, documentation and instruments necessary to effectively service the Product(s). As rapid technology evolution may make maintaining 10 years of spare parts impossible, VC agrees to supply either complete sub-assemblies or new units that are functionally equivalent, where appropriate.

11.3.

If a spare part becomes obsolete impeding VC from supplying such spare part to GEHC for the remaining of the 10 years period as defined in Section 11.2, VC is committed, in the order of priority to (i) inform GEHC by written notice with acknowledgement of receipt the obsolescence of such Spare part which shall not be earlier than 6 months from such notice, (ii) propose to GEHC a replacing product fully compatible (regarding fit, form and function) with the Spare part concerned (iii) propose to GEHC the name of another supplier having the ability and the desire to manufacture the Spare part concerned if possible, or (iv) propose to GEHC a last buy which conditions (price, delivery date, etc.) will have to be agreed by both Parties, and (v) to promptly transfer to GEHC all instruments, tools and documentation necessary to service such spare part(s).

11.4.

Emergency: In case of emergency (e.g.. if GEHC does not have any more spare parts available), VC shall make it commercially reasonable efforts to deliver any Spare part for the Product within 24 hours of GEHC’ request and send it to the location designated by GEHC.

11.5.

Spare parts Pricing. Spare parts list, corresponding pricing, lead-time and reparability should be agreed upon between GEHC and VC prior to entering in the Full Production Phase. Such list and pricing shall be listed in Attachment D. Prices for spare parts should be defined in such a way that the total Prices of all spare parts necessary to build one Product should not exceed USD [CONFIDENTIAL] .

11.6.

VC shall repair any spare part returned by GEHC within one (1) week from reception date.

11.7.

Field related complaints. Throughout the duration of this Agreement and for ten years following the last manufacturing date of the Product, VC shall perform the second level of support to GEHC and handle field related complaints (recurrent technical issues, technical related Customer complaints, product safety issues) related to the Products. This activity will consist into analyzing, developing and implementing technical fixes and closing field complaints related to the Product as communicated by GEHC to VC:

o VC shall complete the assessment within 5 Days from notification

o VC shall do its commercially reasonable effort to implement a fix within 30 Days from notification

o VC shall complete the assessment within 5 Days from notification

o VC shall do its commercially reasonable effort to implement a fix within 30 Days from notification

o shall complete the assessment within 2 Days from notification

o VC shall do its commercially reasonable effort to implement a fix within 30 Days from notification

13.1

Content of Invoice . VC’s invoices shall contain the Purchase Order release number, item number on such release, gehc part number, invoice quantity, unit of measure, unit price, total invoice amount, (excluding VAT), VAT amount, total invoice amount (including VAT), VAT registration number, name of VC, phone number, address to which remittance should be sent, and such other information as may be required by GEHC.

13.2

Payment by GEHC .

Subject to Article 5 and 6, during the Production Phase, GEHC shall settle the invoice within [CONFIDENTIAL] days from invoice date after receiving both the orders items and an invoice prepared in accordance with the terms of this Agreement.

13.3

Payment by VC of GEHC’s Image Co-Registration Services .

Subject to Section 7.3, VC shall settle the payment of Image Co-Registration Services due to GEHC within [CONFIDENTIAL] days following close of Quarter. Payments shall be made to:

14.1.

Terms . VC warrants that the Products to be delivered under the Agreement will be free from defects in material, manufacturing workmanship, and title. Product warranties and all remedies for warranty failures are granted for a period of eighteen (18) months from Product delivery date or twelve (12) months from Product installation date, Which ever occurs the first. Any goods or parts furnished to GEHC during the warranty period of a Product to correct a warranty failure in the said Product shall be warranted for an additional eighteen (18) month period from parts delivery or three (3) months from part installation date, which ever occurs the first.

14.2

Return of Non-conforming or Defective part of a Product .

GEHC may return any non-conforming or defective part of a Product under warranty to VC with VC prior authorization. In such case, any such part of a Product shall be returned to VC’s facility or authorized service center, with all transportation charges paid by VC and the risk of loss passing to VC when the part of the Product is delivered to the carrier of VC’ choice. If GEHC elect to return any non-conforming or defective part of a Product under warranty to VC without VC prior authorization, transportation charges shall be paid by GEHC and the risk of loss passing to VC when the part of the Product is delivered to VC.

14.3.

Repairs / Replacement / Credit . If any Product or part thereof is found to be defective or non-conforming during the warranty period (Defective Part), VC shall within five (5) working days from the date of reception of the Defective Part in its premises unless a longer period is mutually agreed upon, repair or replace the Defective Part. The list of repairable Parts shall be agreed upon between the Parties.

14.4

Trouble Shooting Report . For any claim under warranty and for all repairable parts (as defined in Attachment D), GEHC shall attach a troubleshooting report detailing the findings, Product history (Serial number and installation date of the Product, Serial Number of the Defective Part) and all information required to define if the warranty was still applicable when the failure occurred. As part of the program, a troubleshooting report template will be developed and agreed upon by GEHC and VC. It shall include the proper warranty conditions allowing GEHC Field Engineer to only return spare parts under warranty. A blank template of this troubleshooting report shall be included with all returnable (all parts with a unit price higher than $500) or repairable spare parts as defined in Attachment D supplied by VC to GEHC. Spare Parts shall be labeled with the appropriate level of information (Manufacturing date or Serial Number) to allow GEHC or VC to establish if a defective part is still under warranty.

14.5

Emergency: In case of emergency and upon GEHC notification, VC shall be able to ship at GEHC designated location, a replacement for a non-conforming or Defective Part of a Product under warranty. If the corresponding non-conforming or Defective Part has not been returned by GEHC to VC within thirty (30) days from GEHC’ notification, VC shall be allowed to invoice GEHC for the Price of such part.

14.6

All repaired of replaced spare parts to be sent to GEHC, should be processed in accordance with Attachment H.

15.1.

Product Quality . VC is committed to quality in the performance of this Agreement, and acknowledges that the delivery of quality Products is of the essence to this Agreement. All Products and spare parts shall be manufactured in accordance with the following principles:

The quality goal for all Products at the time of installation at an End-User location is zero “Failure On Installation” Product (“FOl”). A FOI Product is a Product that fails (does not meet the Purchase Specifications) within one week of turn over of the Product to an End-User.

The quality goal for all spare parts at the time of a service intervention at an End-User location is zero “Failure On Arrival” Spare part (“FOA”). A FOA Spare part is a Spare part that fails within one week from service intervention.

15.2

Product Reliability . The Mean Time Between Failure (Herein referred to as “MTBF”) for the Products shall not be less than [CONFIDENTIAL] for the System, a failure being defined as a Malfunction of the software or hardware which totally prevents the use of the system for its fundamental clinical usage and when such malfunction cannot be recovered unless making the parts replacement / software upgrade by the authorized service engineers. Failures caused by normal wear and tear and user-induced damage will not be subject to this measurement. If the Reliability of the Products is lower than the above minimum targets, VC shall promptly submit to GEHC a written corrective action plan, which at a minimum contains an analysis of the root cause(s) and specific actions taken or planned to correct the reliability weakness, including but not limited to the development of an FMI as defined in Section 4.1.

15.3

Late Deliveries . VC acknowledges that timely delivery of conforming Products is of the essence of this Agreement. VC shall notify GEHC immediately if VC ever has reason to believe that any Product will not be delivered as ordered, or a shipment will not be made as scheduled. In connection with this notification:

The delivery goal for all Products is 100% on-time delivery. This rate shall be calculated periodically by GEHC as the number of on-time deliveries Ex-Works VC Facility or within five days prior to the scheduled delivery date during a rolling three month period divided by the total number of deliveries during the same period. If on-time delivery falls below 95%, VC shall consult with GEHC and promptly develop a corrective action plan satisfactory to GEHC in its reasonable discretion.

Notwithstanding anything to the contrary herein, If VC on-time delivery falls below 80%, GEHC may, without incurring any liability or cancellation fee, partially or totally cancel its orders for the Products late for Delivery by more than 5 days from the originally scheduled delivery date, unless the delay is due to GEHC’ breach of this Agreement or Force Majeure.

16.5.

Customs Compliance . VC agrees to provide GEHC with all necessary information and assistance to complete the Product’s Data Records («PDR») and all other customs documentation required by law. This information shall include, without being limited to, the Product, spare parts or Option descriptions and characteristics, part number, dimensions, weight, dangerous goods information, country of origin, name of Original Equipment Manufacturer («OEM»)

17.1.

GEHC-Proposed Changes . GEHC may propose changes to the Purchase Specifications or to the Product or part thereof by submitting the proposed changes (identifying those changes which it deems mandatory to make the Product suitable for use) to the Agreement Manager of VC, utilizing the Product Change Notice (PCN). VC shall respond in writing to the agreement manager of GEHC 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 GEHC receives VC’s response to GEHC’ proposed changes, the Parties shall begin negotiations with respect to the above changes 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.

17.2

VC-Proposed Changes . VC may not make any changes to the Product affecting form, fit, function, reliability, serviceability performance, functional interchangeability, options or spare parts interchangeability or interface capability without obtaining GEHC’ prior written approval by submitting a change notice, at least ninety (90) days before the change Is implemented. If VC makes any such change to a Product without GEHC’ written approval, VC shall be responsible for the costs incurred by GEHC in order to fix such issue. When GEHC realize that it will have to incur some major costs or expenses due to some VC unproved changes, GEHC shall not engage major costs and expenses without immediately notifying VC, and the Parties shall define the best course of action to repair or replace the affected products or part thereof at GEHC’ facility or GEHC’ End-User site regardless of whether the Product is in or out of warranty. VC shall then be responsible for the corresponding direct costs, expenses or damages, labor and material costs to be further incurred by GEHC (excluding indirect damages or lost of revenues) in order to repair the affected Products.

18.1.

Access . GEHC, in its sole discretion, may permit VC to have on-line access to designated computer systems of GEHC in order to facilitate VC’s ability to perform its obligations under this Agreement. If such access is granted, VC shall give to GEHC the names of VC’s employees who have a legitimate business need for such access to GEHC’ computer systems, and GEHC shall provide a separate user identification code for each person. VC, at its own expense, shall provide and maintain any hardware, telecommunications services and software not furnished by GEHC, which are needed to communicate reliably with GEHC’ computer systems. GEHC, in its sole discretion, may terminate VC’s access to GEHC, computer network at any time.

18.2.

Use Restrictions . VC shall ensure that: (i) computer access is limited to those employees with a legitimate business need whose names have been furnished to GEHC; and (ii) such employees with access agree to keep any information so obtained strictly confidential, to use such information only to perform VC’s contract obligations to GEHC and to cease accessing GEHC’ computer systems when no longer required to perform work under this Agreement. VC shall promptly notify GEHC if it becomes aware of any unauthorized access to GEHC’ computer systems or unauthorized use of the information on the systems.

18.3.

Legal Effect . Any document properly transmitted by computer access 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. Electronic documents that can possibly lead to one Party’s material breach of this Agreement, shall be acknowledged by the receiving Party.

20.1

Ownership of Pre-Existing VC Intellectual Property . Subject to the license and ownership rights set forth in this Agreement, sole and exclusive right title and interest to current VC products, all Patents and all other intellectual property rights associated with the current VC products, including any copyrights or trade secrets, shall remain with VC (“Pre-existing VC Intellectual Property”).

20.2

Ownership of GEHC Intellectual Property . Sole and exclusive right, title and interest to all GEHC products and any intellectual property contained therein or related thereto, including any patents, copyrights or trade secrets, shall remain with GEHC (“Pre-existing GEHC Intellectual Property”).

20.3

Ownership of Inventions and Improvements

(i)

VC Inventions. VC shall have and retain sole and exclusive, right, title and interest to all inventions, improvements, discoveries and know-how which, during the term of this Agreement, are solely made by, or solely at the expense of, VC during the term of this Agreement are solely made by, or solely at the expense of VC, its employees, sublicensees, contractors or agents acting under authority from VC (“VC Inventions”, together with all intellectual property rights associated therewith and together with the Pre-existing VC Intellectual Property, the “VC Intellectual Property”).

(ii)

GEHC Inventions. GEHC shall have and retain sole and exclusive right, title and interest to all products, inventions, improvements, adaptations, enhancements, interfaces, documentation, discoveries and know-how which, during the term of this Agreement, are solely made by, or solely at the expense of, GEHC, its employees, sublicensees, contractors or agents acting under authority from GEHC (“GEHC Inventions”, together with all intellectual property rights associated therewith and together with the Pre-existing GEHC Intellectual Property, the “GEHC Intellectual Property”).

(iii)

Joint Inventions. In the event that VC and GEHC desire to engage in the joint development of a new product / feature (“Joint Inventions”), VC and GEHC shall negotiate in good faith to agree upon the terms under which the parties will jointly develop such Joint Invention. Including, without limitation the allocation of development expenses and responsibilities, maintenance and support responsibilities, joint ownership of intellectual property rights, with both parties having unrestricted royalty-free rights to use the technology. There shall be reciprocal indemnity for intellectual property contributed by the other party plus maximum cap on intellectual property liability commensurate with each party’s potential upside benefit. The parties shall use their reasonable efforts to agree upon reasonable terms governing the treatment of Joint Inventions within thirty (30) days of electing to create Joint Inventions.

(iv)

Subject to Section 20.3.(i) and 20.3 (ii), and unless agreed otherwise during the Term of this Agreement, VC and GEHC shall have joint rights over jointly developed improvements and enhancements to the Product.

21.1

All Necessary License Rights . Subject to the provisions of this Agreement, including Section 21.2 herein, VC hereby grants to GEHC all license rights to any of the VC Intellectual Property necessary to allow GEHC to perform its obligations and exercise its rights under this Agreement, including but not limited to those set forth in Article 2 above. The Term of each license granted under this Section 21.1 shall be concurrent with the Term, but shall survive indefinitely and irrevocably with respect to Products marketed, distributed and sold prior to termination of this Agreement or as provided under Section 22.4.

(i)

Subject to Section 21.2 (ii) below, VC hereby grants to GEHC a non-exclusive, fully-paid royalty free, perpetual license (with right to sublicense, the “ License ”) to VC Intellectual property, to use , execute, reproduce, display, perform, distribute, modify, create derivative works of, make, have made, market, offer for sale, sell, import and sub-license the Products land parts thereof) incorporating, or covered; by, VC Intellectual Property.

(ii)

The License shall only become effective in the event that (i) if VC ceases operations or Files for Bankruptcy without appointing a successor reasonably acceptable to GEHC, or (ii) if VC materially and repeatedly breaches its maintenance and support obligations under Article 11 thus preventing GEHC to service existing installations of the Products. In addition, the parties agree that if this Agreement is terminated or rejected by a party in bankruptcy, then all rights and licenses granted under or pursuant to this Agreement shall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code and any similar Laws in any other country in the Territory, licenses of rights to “intellectual property” as defined under U.S. Bankruptcy Code. The Parties agree that all intellectual property rights licensed hereunder, including, without limitation, any technology, software, patents or patent applications in any country of a Party covered by the license grants under this Agreement, are part of the “intellectual property” as defined under the Bankruptcy Code subject to the protections afforded the non-terminating Party under Section 365(n) of the Bankruptcy Code, and any similar law or regulation in any other country.

(iii)

Technical Information. Upon the occurrence of any of the events in Section 21.2 (ii) above, the License shall automatically become effective without the requirement of any action by either party, and VC shall promptly make available to GEHC, at no cost to GEHC, access to all source code and spare parts suppliers necessary to service all Product(s) or spare parts delivered during the Term of this Agreement. GEHC shall thereafter have full right to use such information for the sole purpose of repairing or replacing spare parts and supporting the installed Product base without any claim on VC’s part for additional compensation for such use. However, GEHC shall be responsible for the cost of the repair or replacement of spare parts by third party spare parts suppliers.

22.1

VC hereby covenants that it will not knowingly include in any of the Products and any parts or sub-assemblies thereof or End User documentation anything that, nor will VC knowingly enter into a situation where the sale or distribution by GEHC of any of the Products or End User documentation as approved by VC, or the use of such products or documentation by GEHC’ End Users, infringes, or includes any product or parts or sub-assemblies thereof that infringes, any third party’s patent,

22.2

VC warrants that the Product shall be delivered free of any claim of third parties for infringement of any intellectual property rights patent or copyright. VC, at its own expense, shall defend, indemnify and hold harmless GEHC and its directors, officers, employees, agents, successors and assigns, and defend any action brought against same with respect to any claim, demand, debt, liability, damage, cost, loss or expense, including attorneys’ fees and expenses, based on a claim that the development, promotion, manufacture, use, sale or other disposition of, or servicing of the Product furnished under this Agreement, by VC, infringes or violates any patent, copyright, trade secret, license, or other proprietary right of any third party. VC shall control such defense and all negotiations relative to the settlement of any such claim; provided, however, that VC shall not enter into any settlement or compromise that adversely affects any rights of or imposes any obligation or liability on GEHC without the prior consent of GEHC. Upon VC’s request and at VC’s expense, GEHC will provide VC with the assistance, information, and authority reasonably necessary to perform the above defense, and VC shall reimburse GEHC for reasonable out-of-pocket and legal expenses incurred in providing such assistance. GEHC shall promptly provide VC with written notice of any claim which GEHC believes fails within the scope of this Article; provided, however, that failure by GEHC to provide such notice shall not affect VC’s obligations under this Article to the extent that VC is not materially prejudiced thereby.

22.4.

In the event that the Product, or any portion thereof, is held to constitute an infringement and its use is enjoined, VC shall have the obligation to, at its option and at its own expense: (i) modify the infringing Product without impairing in any respect the functionality or performance, so that it is non-infringing; (ii) procure for GEHC the right to continue to use the infringing Product; or (iii) replace the Product with an equally suitable, non-infringing replacement subject to GEHC reasonable acceptance testing. If none of the foregoing alternatives are available to VC, GEHC shall receive, in addition to its rights and remedies available to it under this Agreement and pursuant to law, a repayment of all m