OEM Development and Purchase Agreement

Aspect Medical Systems, Inc.

requests that the marked portions of this document be granted confidential

treatment pursuant to Rule 406 under the Securities Act of 1933.





PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT AND WORK PRODUCT PRIVILEGES FOR GE MARQUETTE ONLY





ASPECT MEDICAL SYSTEMS, INC.



OEM DEVELOPMENT AND PURCHASE AGREEMENT



Agreement dated this 22nd day of December, 1999, by and between Aspect Medical Systems, Inc, a Delaware corporation with its principal offices located at Two Vision Drive, Natick, Massachusetts ("Aspect") and GE Marquette Medical Systems, Inc. ("Marquette"), a Wisconsin corporation with its principal offices located at 8200 W. Tower Ave., Milwaukee, Wisconsin for the purchase and/or license by Marquette of products under the terms and conditions contained in this Agreement.



1. BACKGROUND.



1.1 Aspect is a developer, manufacturer and distributor of medical

devices, equipment, related hardware, software and related

products and accessories.



1.2 Marquette is a developer, manufacturer and distributor of

medical devices, equipment, related hardware, software and

related products and accessories, including multiparameter

patient monitors.



1.3 Marquette desires to integrate Aspect's BIS and EEG technology

into Marquette's multiparameter patient monitors.



1.4 Aspect agrees to sell and/or license to Marquette the products

described below, subject to the terms and conditions contained

in this Agreement.



2. DEFINITIONS.



"ASPECT'S BISPECTRAL INDEX" or "BIS" is Aspect's proprietary processed

EEG parameter that measures the hypnotic effects of anesthetic and

sedative agents on the brain during surgery.



"ASPECT'S EEG PARAMETERS" or "EEG" are Aspect's processed EEG

parameters including Spectral Edge frequency, Median Frequency,

Suppression Ratio, EMG and SQI (Signal Quality Index).



"MARQUETTE PATIENT MONITOR" means any multi-parameter modular patient

monitoring systems manufactured by or for Marquette. When the BIS/EEG

Module Development







Project is complete, the Marquette BIS/EEG module will allow the

Marquette Patient Monitor to display BIS and certain EEG data

(waveforms, numerics, status info), and provide setup and operation

information (user interface), alarming, and network connectivity.



"MARQUETTE BIS/EEG MODULE" is the sum of all components involved in

integrating the BIS and EEG with Marquette Patient Monitors.



"DSC CABLE" is a cable used to connect the DSC-2 or DSC-4 to the

Marquette BIS/EEG Engine.



"MARQUETTE BIS/EEG ENGINE" is the processing unit for deriving the BIS

and EEG data from the raw EEG signal and consists of Aspect's "BIS

Engine" board modified for Marquette.



"DIGITAL SIGNAL CONVERTER-2" (or "DSC-2") is used to amplify the analog

EEG signals as acquired by the BIS sensors and convert it from analog

to digital signals. The DSC-2 is used by Marquette BIS/EEG Module

customers to obtain the BIS.



"DIGITAL SIGNAL CONVERTER-4" (or "DSC-4") is used to amplify the analog

EEG signals as acquired by the Zipprep electrodes and convert it from

analog to digital signals. The DSC-4 is used by Marquette BIS/EEG

Module customers to obtain 2 or 4-channel EEG data only.



"ASPECT BIS/EEG MODULE KIT" means the bundle of all components of the

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

Aspect and licensed/sold to Marquette under this Agreement: DSC-2,

DSC-4, DSC Cable, Marquette BIS/EEG Engine, and Module Cable.



"ASPECT BIS SENSOR" means a single use disposable sensor manufactured

by Aspect for use with the A2000 or with the Aspect BIS/EEG Module Kit

and that is required to generate Aspect's Bispectral Index.



"A2000" means Aspect's stand-alone BIS monitor for use with the Aspect

BIS Sensor and that generates Aspect's Bispectral Index.



"ASPECT PRODUCTS" means Aspect BIS/EEG Module Kit and any other product

that can be ordered by Marquette as listed in Exhibit A (Aspect

Products and Purchase Prices).



"SOFTWARE" means Aspect software programs in binary code form which are

designed for use with the Aspect BIS/EEG Module Kit.



"DOCUMENTATION" means the BIS Engine Serial Interface Specification.



"TERRITORY" shall mean all countries in which Marquette is permitted

under this Agreement to distribute Aspect Products.



"PARTY" or "PARTIES" shall mean Aspect and Marquette each individually

or jointly.







Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.





3. BIS/EEG MODULE DEVELOPMENT PROJECT.



3.1 PROJECT TIMING. The overall project duration is expected to be

at least [**]. The product introduction is targeted for the

annual meeting of the [**], but if such target can not be

satisfied the product introduction shall be targeted for no

later than the annual meeting of [**]. A preliminary outline

of the development project is attached to this Agreement as

Exhibit C.



3.2 PROJECT MANAGEMENT.



(a) Each Party shall appoint a "Project Manager" who

shall oversee and manage the joint project on a

day-to-day basis.



(b) The Project Managers shall meet regularly based on

the project needs to assess the project status and

discuss and resolve any issues or problems. These

meetings may be held face-to-face or as telephone or

video conferences.



(c) Each Party shall bear its own communication and

travel costs.



(d) All communication in conjunction with this Agreement

shall be directed to the appropriate person and

address as listed in Exhibit D (Contact

Persons/Addresses).



3.3 MARQUETTE RESPONSIBILITIES.



(a) Marquette shall develop the Marquette BIS/EEG Module

according to mutually agreed specifications at

Marquette's own cost.



(b) Marquette shall develop, design and test the modular

integration of the components of the Aspect BIS/EEG

Module Kit with the Marquette Patient Monitors



3.4 ASPECT RESPONSIBILITIES.



(a) Aspect shall design, develop, and test the Aspect

BIS/EEG Module Kit according to the mutually agreed

specifications. The costs for Aspect to complete this

project, for which preliminary estimates are included

in Exhibit C, shall be borne by Marquette. [**] of

total estimated project costs shown on Exhibit C

shall be paid by Marquette within [**] days of the

date on which this Agreement is signed by both

parties; [**] of total estimated project costs, shown

on Exhibit C shall be paid [**] days thereafter, and

the final payment of the remaining actual project

costs (including labor at Aspect's standard labor

rates) shall be paid upon the project's completion.

Any [**] the [**] will be [**]; provided, however,

that Marquette shall not pay over [**] toward

non-recurring engineering ("NRE") and tooling to









4. PURCHASE AND SALE OBLIGATIONS; LICENSES.



4.1 GENERAL. Subject to the terms and conditions of this

Agreement, Aspect agrees to sell to Marquette the Aspect

Products listed on Exhibit A (Aspect Products and Purchase

Prices). The components of the Aspect BIS/EEG Module Kits

purchased from Aspect under this Agreement shall only be used

as components in, incorporated into, or integrated with,

systems and products which Marquette sells or leases to

third-party users in the regular course of business. The

components of the Aspect BIS/EEG Module Kits shall only be

resold, leased, rented, licensed or otherwise transferred to

third parties for use as a part of an Marquette BIS/EEG Module

or as replacement parts used in Marquette BIS/EEG Modules and

Marquette shall only sell Aspect approved accessories

including cables and sensor products in connection with any

Marquette BIS/EEG Module. During the term of this Agreement,

Marquette agrees that it may offer complementary but not

directly competitive products to the Marquette BIS/EEG Module.

Marquette products other than the Marquette BIS/EEG Module

that display a parameter claiming to be a measure of the

hypnotic effect of anesthesia, are considered to be directly

competitive products for purposes of this Section 4.1.



4.2 DISTRIBUTION OF ASPECT BIS SENSORS. Aspect hereby grants to

Marquette a non-exclusive right to distribute Aspect BIS

Sensors solely to Marquette customers outside of North America

who have purchased Marquette BIS/EEG Modules. Prices for

Aspect BIS Sensors purchased by Marquette hereunder shall be

as set forth in Exhibit A (Aspect Products and Purchase

Prices).



4.3 ASPECT SOFTWARE LICENSE. Aspect hereby grants to Marquette a

non-exclusive and non-transferable worldwide license, without

the right to sublicense (except to purchasers of Marquette

BIS/EEG Modules), during the term of the Agreement to use the

Software and related Documentation provided by Aspect solely

in connection with operation of the components of Aspect

BIS/EEG Module Kit in the Marquette BIS/EEG Module.

Thereafter, Aspect grants to Marquette a right to use the

Software and related Documentation used in conjunction with

the Marquette BIS/EEG Modules being sold by Marquette on the

date of termination with respect to service and support of

installed Marquette BIS/EEG Modules for a period of 10 years,

after termination of the Agreement. All rights granted to

Marquette customers to use the Marquette BIS/EEG Modules shall

survive any termination of this Agreement as long as such

customers remain in compliance with the terms of use for such

Marquette BIS/EEG Modules. Marquette shall not disclose,

furnish, transfer, distribute or otherwise make available the

Software, the Documentation or any portion thereof in any form

to any third party (other than to purchasers of Marquette

BIS/EEG Modules and to Marquette's subdistributors) and shall

not duplicate the Software, the Documentation or any part

thereof (other than for Marquette's internal use as provided

above). Title to and ownership of any and all proprietary

rights in or related to the Software and the Documentation

therefor shall at all times remain with Aspect or its

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

sale of any rights in the Software or the Documentation. All

references in this Agreement to sale, resale or purchase of







Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.





Aspect BIS/EEG Module Kits or the components thereof, or

references of like effect, shall, with respect to the Software

and the Documentation mean licenses or sublicenses of the

Software and the Documentation pursuant to this Section 4.

Marquette shall not disassemble, decompile or otherwise

reverse engineer the Software or any part thereof, except if

Aspect is required under applicable law to permit Marquette to

reverse engineer any Software. In such event, Marquette may

reverse engineer the Software but only to the extent Aspect is

required to permit such reverse engineering. Marquette shall

retain and shall not alter or obscure any notices, markings or

other insignia affixed to the Software, the Documentation or

any part thereof at the time it receives such Software or such



4.4 EXCLUSIVITY. Except to the extent Marquette and Aspect may

agree in the future to undertake co-marketing programs

pursuant to Section 22, nothing in this Agreement shall be

construed to grant Aspect any license to sell, distribute or

license to any third party the Marquette BIS/EEG Module, the

Marquette BIS/EEG Engine, or the Aspect BIS/EEG Module Kit. It

is understood, however, that Aspect sells, distributes, and

licenses to other third parties both generic and customized

Aspect BIS/EEG Engines and Aspect BIS/EEG Module Kits to meet

the needs of other OEM customers, and nothing in this

Agreement shall prohibit Aspect from continuing to sell,

distribute, or license these products or components thereof to

customers other than Marquette.



4.5 STANDARD OF CARE; PRIORITY. In connection with Aspect's

performance of its obligations hereunder, Aspect shall use

commercially reasonable efforts in the performance of its

obligations hereunder and will do so with the same degree of

care, skill and prudence customarily exercised when engaged in

similar activities for itself.



5. ROYALTIES AND COMMISSIONS.



5.1 ROYALTIES ON PURCHASES OF ASPECT MODULE KITS. For each Aspect

BIS/EEG Module Kit that Marquette purchases from Aspect,

Marquette shall pay a royalty fee and a price for all

components of the Aspect BIS/EEG Module Kit. Royalty fees and

component prices are specified in Exhibit A (Aspect Products

and Purchase Prices); provided that the prices specified in

Exhibit A shall not apply to the [**] for the [**] a [**] in

[**] for [**] as part [**] agreement pursuant to [**], as [**]

will be [**] to [**] at the [**] described in Exhibit A.

Aspect BIS/EEG Module Kits sold by Aspect under this

Agreement, [**], will be priced based on the Royalty fees and

component prices specified in Exhibit A.



5.2 [**]. For [**] Aspect [**] by Aspect to Marquette [**] in

North America for [**] with [**] or with Aspect [**] as part

of any [**] pursuant to Section [**],





Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.





Aspect shall [**] Marquette a [**] to [**] of the [**] by

Aspect for [**] Aspect [**]. Aspect shall [**] such [**] to

Marquette on a [**]. With such [**], Aspect shall [**] to

Marquette a [**] of Marquette [**] to which such [**], the

[**] of [**] in that [**], and the [**] from the [**] of the

[**] by Aspect. This [**] shall be [**] to Marquette no later

than [**] the end of [**]. In the event that Aspect's

standalone BIS monitors and/or the BIS modules of other

manufacturers have also been installed at such sites in

addition to Marquette BIS modules, [**] will be [**] to a [**]

only on [**] for [**] with [**]. The Parties will agree upon a

reasonable [**] for [**] the number of [**] with [**] in such

an event (e.g. a [**] determination based on the [**] of [**]

of [**] at [**] during the period) and [**] the [**] to

Marquette accordingly. To facilitate [**], Marquette will be

responsible for providing Aspect with [**] of the [**],

the [**].



6. SCOPE OF DELIVERY



6.1 PURCHASE ORDERS. Purchase orders (via Fax, e-mail, other

electronic transmission or paper) for Aspect Products to be

purchased under this Agreement (the "Orders") must be received

by Aspect during the term of this Agreement and must specify a

delivery date in accordance with the lead-time schedule

outlined below under Section 6(e). All Marquette Purchase

Orders shall make reference to the appropriate engineering

drawing or manufacturing reference numbers. There is no

minimum volume commitment required for each purchase order.



6.2 ORDER ACKNOWLEDGEMENTS. Marquette purchase orders shall be

acknowledged by Aspect within 5 days after receipt of the

order, provided that the order is technically correct and that

the requested delivery time is within the agreed lead time and

that the latest forecast provided by Marquette is not exceeded

by more than [**] and the quantity ordered does not exceed by

more than [**] of the quantity ordered in the preceding month.

If the requested delivery time is less than the agreed lead

time, or if Marquette's latest forecast is exceeded by more

than [**], or if the quantity ordered exceeds by more than

[**] the quantity ordered in the preceding month, Aspect shall

use reasonable efforts to complete the requirements of such

nonconforming orders within seventy (70) days from the date it

receives such nonconforming order and to acknowledge such

orders within 10 days of its receipt. Order acknowledgements

shall not be unreasonably withheld.



6.3 FORECASTS. Marquette shall furnish to Aspect a non-binding

quarterly forecast during the term of this Agreement with the

number and type of Aspect Products for which Marquette expects

to submit orders for the following twelve months.







Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.





6.4 CANCELLATION CHARGES. In the event of the cancellation of any

Order by Marquette, Marquette shall be liable for the payment

of cancellation charges based on the number of days prior to

scheduled delivery date that written notice of cancellation is

received by Aspect, as outlined below:



[Greater than] 10 weeks prior to acknowledged delivery [**]

6 - 10 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

[Less than] 2 weeks prior to acknowledged delivery [**] of order value



6.5 COMMITMENT. Except as set forth in Section 6.4, Marquette has

no commitment to purchase any minimum quantity of Aspect

Products or Aspect BIS Sensors pursuant to this Agreement.

Except as set forth in Section 6.4, unless agreed otherwise in

writing by the parties, Marquette shall not be responsible or

in any way liable to Aspect or any third party with respect to

any component purchase commitments or production arrangements

in excess of the amounts or in advance of the times necessary

to meet Marquette's delivery schedules set forth in its



6.6 LEAD TIMES. Lead times for the Aspect BIS/EEG Module Kit are

expected to be [**] days. Late deliveries are subject to late

fees of [**] per month (pro-rated daily. In the event of late

deliveries by Aspect, Aspect will also promptly reimburse

Marquette for expedited shipment charges that Marquette incurs

as a direct result of late shipments of the Aspect BIS/EEG

Module Kit from Aspect .



7. PRICES.



7.1 PURCHASE PRICES. The prices of Aspect Products purchased by

Marquette hereunder (the "Purchase Prices") which are ordered

during the term of the Agreement shall be as set forth in

Exhibit A (Aspect Products and Purchase Prices).



7.2 PURCHASE PRICE CHANGES. In consideration of the market

situation and after consultation with Marquette, the Purchase

Prices set forth in Exhibit A (Aspect Products and Purchase

Prices) shall be reviewed 12 months after first delivery of

production units and annually thereafter. Any price adjustment

shall become effective only after mutual agreement between

both Parties. [**], Aspect shall have the right [**] during

the term of this Agreement to increase the Purchase Price of

the Aspect Products without the consent of Marquette by an

equivalent amount by delivering reasonable documentation

supporting such increase and by giving Marquette written

notice of the increase not less than [**] days prior to the

date upon which the increased Purchase Price is to become

effective. [**] shall apply to orders for Aspect Products

accepted by Aspect prior to or during such [**] day period

which are to be delivered within [**] days of the date of such







Confidential Materials omitted and filed separately with the Securities and

Exchange Commission. Asterisks denote omissions.





Notwithstanding anything to the contrary in this Section 7.2,

[**] unless [**] reasonable efforts to [**] of the [**] which

have [**] in [**] and, [**] reasonable efforts, was not [**]

to [**].



7.3 PURCHASE PRICE REDUCTIONS. Aspect may reduce the Purchase

Price of any Aspect Product at any time. Such reduction shall

be applicable to all Aspect Products shipped after the date of

the reduction. [**] the [**] of the [**] for the [**] by [**]

as provided in Section 7.2, Aspect shall reduce the Purchase

Prices for all Aspect Products (excluding license fees and

volume discounts) by not less than [**] per year. The first

price reduction will be effective on the [**] anniversary of

the introduction of the Marquette BIS/EEG Module, and the

second price reduction shall be effective on the [**]

anniversary of the introduction of the Marquette BIS/EEG



7.4 [**]. In no case shall the [**] by any other Party that has

[**] with Aspect [**] of this Agreement for [**] under [**]

terms and conditions.



7.5 TAXES. All prices for Aspect Products a ...