the customer in the application of any recommended solution or workaround to such problem or bug.  For outside the US, on-site response may be provided by Vital Images at an additional charge.

 

1.3                                  Government Approval .  “Government Approval” shall mean any approvals, licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other government entity, foreign or domestic, necessary for use, marketing, sale or distribution of the Products in a regulatory jurisdiction, including without limitation the U.S. Food and Drug Administration (“FDA”).

 

1.4                                  Products .  “Products” shall mean only those software products in object code form as described in Exhibit A and any related user documentation as released from time to time by Vital Images, including any later authorized releases or versions of such software or documentation during the term of this Agreement.

 

1.5                                  Second Level Maintenance .  “Second Level Maintenance” shall mean electronic or telephone response provided by Vital Images to Toshiba or the Dealer Associates to deal with any problem or software bug in the Products that cannot be handled by Toshiba or the Dealer Associate alone under the First Level Maintenance for such customers in the Territory who have installed the Products that are under Vital Images’ standard warranty or under a Toshiba or Dealer Associate current software maintenance contract.

 

1.6                                  Services .  “Services” shall mean the software support and maintenance services described in Article 6 and Exhibit E hereof.

 

1.7                                  Service Level Agreements. “Service Level Agreements” shall mean any agreements to be executed between Vital Images and Toshiba or a Dealer Associate, which define any applicable terms and conditions for Services.

 

1.8                                  Territory .  “Territory” shall mean the area described in Exhibit B.

 

1.9                                  Vitrea ® .  “ Vitrea ® ” shall mean 2-D, 3-D and 4-D medical visualization software marketed by Vital Images under the name “ Vitrea ® .”

 

1.10                            Vitrea ®  fX . “ Vitrea ®  fX ” shall mean 2-D, 3-D, and 4-D medical visualization software marketed by both Toshiba and Vital Images under the name “ Vitrea ®  fX ” for AquilionOne.

 

1.11                            ViTALConnect ® .   ViTALConnect ®   shall mean 2-D and 3-D medical visualization software accessible via a web interface marketed by Vital Images under the name ViTALConnect ® .

 

1.12                            ViTAL Enterprise Workstation shall mean 2-D, 3-D, and 4-D medical visualization software accessible via a web interface or workstation and is expandable to Vital Images broader Enterprise solution marketed by Vital Images under the name ViTALEnterprise .

 

1.13                            Installation . With regard to Vitrea fX in Japan, “First Level Installation” shall mean unloading, assembling and powering up the applicable computer workstation(s), installing the Products onto such computer workstation(s) in its factory before shipping the Products to the customer sites and integrating such computer workstation(s) onto the customer’s computer network. With regard to the other Products, “First Level Installation” shall mean unloading, assembling and powering up the applicable computer workstation(s), installing the Products onto such computer workstation(s) and integrating such computer workstation(s) onto the customer’s computer network.

 

1.14                            Second Level Installation .  “Second Level Installation” shall mean working with the customer and non-Toshiba OEM’s to link non-Toshiba equipment to the computer workstation(s) on which the Products have been installed.

 

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ARTICLE 2:  APPOINTMENT

 

2.1                                  Scope .  Vital Images hereby appoints Toshiba, and Toshiba hereby accepts such appointment, as Vital Images’ nonexclusive reseller of the Products during the term of this Agreement in the Territory, in connection with sales of Toshiba’s medical equipments, subject to all the terms and conditions of this Agreement.  All sublicenses of the Products are one-time sublicenses, whether or not they are granted on a term or perpetual basis, and after the initial sublicense of any Product to a customer, Toshiba or the Dealer Associates may not sublicense any Products that are returned by that customer, provided that Toshiba may reinstall Products without paying an additional license fee when such reinstallation is in connection with a customer trade-in or upgrade of equipment purchased from Toshiba and it is the same customer for which the software was initially licensed, or, for Vitrea fX in Japan, a failed hardware replacement.   With regard to Vitrea fX in Japan, Toshiba may, at its discretion, install it as an accessory for computer workstation(s) sold in connection with Toshiba CT equipment (hereinafter collectively called as “Toshiba CT System(s)”) distributed, sold, leased or otherwise disposed by Toshiba in Japan, but may not distribute, sell, lease or otherwise dispose of the Products in any other manner.

 

2.2                                  Dealer Associates .  Effective with the signing of this Agreement, Toshiba hereby appoints and Vital Images consents to the appointment of, the Toshiba subsidiaries and distributors listed in Exhibit C as its agents to market and distribute the Products within the Territory (collectively “Dealer Associates”). Provided, however, Toshiba shall remain fully liable for the performance of such Dealer Associates and Toshiba hereby indemnifies and holds Vital Images harmless from all damages, losses, costs or expenses  (excluding any consequential or incidental damages) arising in any manner from any act or omission on the part of such Dealer Associates if such act or omission constitutes a breach of this Agreement.  Toshiba shall advise Vital Images in writing of any such appointment agreement with any Dealer Associates.

 

2.3                                  Use of Terms .  The terms “sale”, “purchase”, “distribution”, “resale”, “reseller” and “Dealer” are used herein for convenience only and refer to the sale of software licenses for the Products.  Toshiba hereby acknowledges Vital Images retains all right, title and interest in and to the copyrights and other intellectual property rights in the Products (except as otherwise agreed between the parties in a separate agreement concerning one or more options incorporated in the Products) and that such Products are to be distributed to Toshiba’s and Dealer Associate’s customers in compliance with such acknowledgment.

 

ARTICLE 3:  GENERAL OBLIGATIONS OF TOSHIBA

 

3.1                                  Marketing .  Toshiba and the Dealer Associates shall have the following obligations with respect to the marketing and distribution of the Products:

 

(a)                                   To use its commercially reasonable best efforts to further the promotion, marketing and distribution of the Products in the Territory;

 

(b)                                  To perform the First Level Installation for customers in the Territory with respect to the Products, and to ensure that only authorized versions of the Products are installed as supplied by Vital Images for customers in the Territory.

 

(c)                                   To promptly respond to all inquiries or complaints from customers; outside of the United States, to provide all necessary and appropriate First Level Maintenance of the Products; and to cooperate with Vital Images in the provision of the Second Level Maintenance;

 

(d)                                  To provide Vital Images with appropriate details of all complaints and bugs found in the Products, whether such complaints or bugs were discovered by Toshiba, any of its Dealer Associates or customers thereof;

 

(e)                                   To reasonably investigate possible leads with respect to potential customers in the Territory who are referred to Toshiba by Vital Images;

 

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(f)                                   To maintain an adequately trained and staffed sales and technical support group for the marketing and distribution of the Products in the Territory, for the First Level Installation in the United States, and for the First Level Installation and First Level Maintenance outside the United States;

 

(g)                                  To provide appropriate sales staff for training by Vital Images in the United States, and both sales and technical support staff for training by Vital Images outside of the United States, at mutually-agreeable locations;

 

(h)                                  To provide Vital Images with reports of its activities and other information regarding the Products in the Territory in such detail and with such frequency as is reasonably agreed between both parties;

 

(i)                                      To conduct its business in a professional manner, which will reflect positively upon Vital Images and its Products;

 

(j)                                      To provide Vital Images with customer registration information at the time Toshiba issues Vital Images a Purchase Order, with the exception of sales by Toshiba in Japan and by Toshiba Medical Systems Europe B.V. “TMSE” who will use best efforts to provide customer information with the purchase order;

 

(k)                                   To abide by all applicable laws and regulations in the Territory, including, if applicable, the U.S. Export Administration Regulations; and

 

(l)                                      To apprise all customers of the terms of Section 2.3 of this Agreement regarding the ownership of intellectual property embodied in the Products and obtain from all customers a written license agreement containing all of the terms and conditions (except those not related to the protection of Vital Images) contained in Exhibit J to this Agreement, or other similar terms and conditions that protect Vital Images to the same degree as the terms and conditions contained in Exhibit J, except as set forth in Exhibit E.

 

3.2                                  Toshiba Demonstration License.   To enable Toshiba to better perform its marketing and distribution of the Products and Toshiba’s medical equipments, and to assist it with its product development and training activities, Vital Images will grant to Toshiba and/or its Dealer Associates an unlimited number of royalty free software licenses, for the latest version of the Products solely for their own customer and trade show demonstration, promotional and training uses (including a minimum of eight (8) copies for each Toshiba America and Japan Training Academy), subject to the Terms and Conditions for the Demonstration License attached hereto as Exhibit D .  This Demonstration License will be valid for the term of this Agreement, and will include upgrades and updates to the Products.  Toshiba and the Dealer Associates will provide all hardware related to the Demonstration Licenses, and must track the location of all Demonstration Licenses.

 

3.3                                  Promotional Materials .  Vital Images shall furnish Toshiba with a reasonable quantity of Vital Images data sheets, brochures and other marketing materials for the Products in the English language for use by Toshiba and its Dealer Associates.

 

(a)                                   Upon request of Toshiba or its Dealer Associates, Vital Images shall provide Toshiba and the Dealer Associates with sufficient quantities of promotional materials and any revision(s) thereof, at no charge.

 

(b)                                  In lieu of providing such promotional materials directly, Vital Images, at its discretion, may provide Toshiba with an electronic media copy of same with a nonexclusive, nontransferable right and license to use same, without modification of any kind, for the local reproduction of such materials solely for purposes of Toshiba’s performance under this Agreement.

 

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(c)                                   If Toshiba or its Dealer Associates believes that non-English language versions of such promotional materials or non-English language advertising of the Products are necessary or desirable for effective marketing of the Products in the Territory, Toshiba shall arrange and pay for the preparation of such non-English language materials, which shall be subject to the prior review and written approval of Vital Images. If Toshiba or its Dealer Associates believe that non-English language versions of user’s manual of the Products are necessary in the Territory and upon request of Toshiba or its Dealer Associates and the agreement of Vital Images, acting reasonably, Vital Images shall provide such translated version to Toshiba or its Dealer Associates which made such request, at the expense of Toshiba; provided that if such translated version is necessary for Regulatory compliance in the Territory, in the reasonable opinion of Vital Images, Vital Images shall provide it to Toshiba or its Dealer Associates at no charge. In all cases, Vital Images shall be the sole and exclusive owner of the copyrights in any such materials, regardless of language.

 

(d)                                  Toshiba and the Dealer Associates will not remove any marks of Vital Images or attributions to Vital Images from the promotional materials provided, even if the materials are combined with other materials not from Vital Images.

 

(e)                                   Toshiba and Vital Images may create joint promotional material for certain markets.  This material must be approved by both parties prior to distribution.

 

3.4                                  Reverse Engineering .  Toshiba shall not reverse engineer, decompile or disassemble the Products and shall not allow any other person to do so, nor, except as expressly permitted hereunder, copy the Products.

 

3.5                                  Expenses .  Except as otherwise specified in this Agreement, Toshiba and its Dealer Associates assume full responsibility for all its own costs and expenses incurred in carrying out its obligations under this Agreement, including but not limited to all rents, salaries, commissions, advertising, demonstrations, travel and accommodations.

 

ARTICLE 4:  GENERAL OBLIGATIONS OF VITAL IMAGES

 

4.1                                  Development and Integration .  Continued collaboration on product is a shared goal of the parties.  Vital Images will use reasonable and prompt commercial efforts to integrate new Products as defined in the Development Agreement  into its Product solution, when and if such Products are made commercially available.

 

4.2                                  Market Awareness .  Vital Images will use reasonable commercial efforts to promote awareness of the Products for use in the radiology and cardiology market through tradeshows and other marketing venues.  At a minimum, Vital Images will attend the trade shows set forth in Exhibit G to this Agreement.  Vital Images will exercise its best efforts to attend other trade shows that are not set forth in Exhibit G , provided that Toshiba gives Vital Images reasonable advance notice sufficient to allow Vital Images to send representatives to such shows.  For the shows that are set forth in Exhibit G , if Vital Images will have a separate booth in any trade show in which Toshiba also participates, Vital Images will provide such workstations and qualified personnel for the Toshiba booth in addition to its own. Vital Images will exercise its reasonable efforts to provide such workstations and qualified personnel for the Toshiba booth for the trade shows that are not set forth in Exhibit G , provided that Toshiba gives Vital Images reasonable advance notice sufficient to allow Vital Images to provide such workstations and qualified personnel. Furthermore, Vital Images will exercise its best efforts to have its booth located adjacent to TAMS’ booth where both participate.  Vital Images will also advise TAMS of any trade shows in which Vital Images participates.  Any exhibits prepared by Vital Images for Toshiba’s booth at trade shows must show the Vital Images products working in conjunction with Toshiba’s images from Toshiba’s CT equipment, but Vital Images is not precluded from presenting

 

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additional exhibits that show its products working in conjunction with images from other CT manufacturers.

 

4.3                                  Support .  During the term of this Agreement, Vital Images agrees to maintain an adequate number of trained sales, applications and service support personnel to perform its duties under this Agreement.  Included within Vital Images’ support responsibilities are the following:

 

(a)                                   Vital Images has available global support for customers who wish to purchase such support in accordance with (i) any Service Level Agreements between TAMS and Vital Images, and (ii) any Service Level Agreements or other agreements for support between Toshiba, Toshiba Medical Systems Europe B.V. (“TMSE”) or the other Dealer Associates and Vital Images.

 

(b)                                  Vital Images agrees to share statistics and customer information for own call center support to Toshiba users

 

(c)                                   To promptly  respond to all inquiries or complaints from Toshiba or its Dealer Associates; outside of the United States, to provide all appropriate Second Level Maintenance of the Products to Toshiba or its Dealer Associates.

 

4.4                                  Training . During the term of this Agreement Vital Images will provide training at its headquarters location, or such other location mutually agreed between the parties, for Toshiba and Dealer Associate personnel in the function, application, installation and the First Level Maintenance of the Products and in the provision of assistance to Vital Images for Second Level Maintenance, provided, however, Toshiba or the Dealer Associates shall pay the salaries and all transportation and living expenses for its staff.  Toshiba and the Dealer Associates in aggregate may place up to four (4) staff members in any of Vital Images’ regularly-scheduled training classes, upon at least two weeks’ advance notice to Vital Images, provided space is available.  With regard to Vitrea fX in Japan, Vital Images grants to Toshiba the right to produce and copy training materials, either in English or Japanese, modifying Vital Images’ materials.

 

4.5                                  Customer Training .  In the US market, Vital Images will provide training in the form of 8 education units per Vitrea and Vitrea fX license to be used according to the course equivalences outlined in Exhibit E.  Training shall include an overview of the Vital Images developed tools and features of the products purchased by the customer.  Training in non-US markets will be available for an additional charge per session.  Vital Images is under no obligation to provide applications training to end users beyond twelve (12) months from the license issuance date of the related software at the end users site or twelve (12) months from receipt of purchase order for training sold separately.

 

4.6                                  Hardware Validation. Vital Images shall take measures prior to the release of any new version Vitrea, Vitrea fX or ViTALConnect or ViTAL Enterprise software to ensure that compatible hardware are rigorously tested and validated to determine a market ready recommended hardware specification that assures optimal performance of the software. Such recommended hardware specification shall be advised to Toshiba or its Dealer Associate before or upon release of the new version software.

 

ARTICLE 5:  ORDERS FOR PRODUCTS AND SERVICES

 

5.1                                  Purchase Orders .  Toshiba shall cause its Dealer Associates, and itself shall use its best efforts to submit purchase orders for the Products and Services to Vital Images in writing (preferably by facsimile or other electronic means) at least fifteen (15) days prior to the requested delivery date, which orders shall include the following information:

 

(a)                                   An identification of the Products and Services ordered;

 

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(b)                                  Quantity of Products and Services;

 

(c)                                   Requested delivery dates;

 

(d)                                  Shipping instructions and shipping address; and

 

(e)                                   With the exception of sales by Toshiba in Japan and by TMSE, who will use best efforts to provide customer information with the purchase order, the defined Customer Information to process the license request; which includes, end user name, end user address, Products to be delivered, maintenance coverage dates and products covered for software maintenance contracts and

 

(f)                                     If applicable, any relevant export control information or documentation to enable Toshiba and Vital Images to comply with applicable U.S. export control laws.

 

With regard to Products for Japan, Toshiba may order Products to Vital Images and pay for the Products, through the following Toshiba’s agent (“Agent”).

 

Agent:

Toshiba America, Inc. (Boston)

24 New England Executive Park,

Burlington MA, 01803, U.S.A.

Attention: Branch Manager

 

For the purpose of this Agreement, Toshiba hereby appoints Agent as its authorized agent having an authority to perform any and all of Toshiba’s obligations and undertakings under this Agreement under its own name and on behalf of Toshiba, including, without limitation:

 

(a) to submit purchase orders for the Products for Japan;

(b) to receive shipments of the Products for Japan and invoices therefore;

(c) to make payments due to the Vital Images for the Products for Japan purchased;

(d) to confirm and follow up deliveries of the Products for Japan; and

(e) to return the defective or non-conforming Products for Japan.

 

Notwithstanding anything else contained herein, Toshiba shall remain directly liable to the Vital Images for all actions taken by Agent. Toshiba may, at its sole discretion but with at least forty-five (45) days prior written notice to the Vital Images, withdraw all of the authority of Agent provided above.  Upon receipt of such notice, the parties shall agree upon alternative procedural arrangements in order to ensure the orderly and timely supply of the Products to Toshiba hereunder and payment therefor.

 

5.2                                  Acceptance of Orders – All purchase orders from Toshiba and the Dealer Associate are subject to acceptance in writing by Vital Images, which acceptance shall not be unreasonably withheld and shall be delivered by reply facsimile or by e-mail. Vital Images may withhold its acceptance only if (a)  the lead time for delivery is less than ten (10) days; (b) Toshiba or the Dealer Associate who has submitted the purchase order is delinquent in its payments to Vital Images under this Agreement; or (c) Toshiba or the Dealer Associate show has submitted the purchase order is in breach of this Agreement. Failure to respond to each purchase order by Vital Images within  five (5) business days from receipt of such purchase order shall be deemed acceptance of such purchase order by Vital Images. Vital Images will provide to Toshiba monthly reports no later than 15 days from the end of each month listing all purchase orders and amounts of such purchase orders placed by each Dealer Associate during the prior month. Such report shall also list all service contracts and options purchased by each Dealer Associate during such month.

 

5.3                                  Delivery .  All deliveries of the Products shall be from Vital Images’ facilities unless otherwise agreed in writing between the parties.  Vital Images shall bear shipping charges for the shipment of any Products to its destination specified in the purchase order.  All risk of damage to or loss or delay of the Products shall pass to Toshiba or the Dealer Associate upon their delivery to a common carrier.

 

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5.4                                  Modification of Orders .  No accepted purchase order may be modified or canceled later than thirty (30) days before the scheduled delivery date, except upon the written agreement of both parties, provided, however, any price decrease or increase for the Products shall be implemented upon the effective date of such decrease or increase and therefore, will apply to any purchase order for which delivery has not yet taken place. Furthermore, Vital Images will, at no additional cost to Toshiba and the Dealer Associate, ship its latest authorized version or release of a Product in response to any accepted purchase order.  Toshiba’s and the Dealer Associate’s purchase orders or mutually-agreed change orders shall be subject to all provisions of this Agreement, whether or not the purchase order or change order so states, and any terms and conditions of such purchase order or change order which conflict with the terms and conditions of this Agreement shall be deemed excluded and of no legal effect as between the parties.

 

5.5                                  Purchase Commitment .  Toshiba annual purchase commitment is set forth on Exhibit F attached hereto and incorporated herein by this reference.  Vital Images shall ship to Toshiba and/or its Dealer Associates during the Term of this Agreement such Products as are identified in and in accordance with the purchase orders submitted by Toshiba and/or its Dealer Associates.  In the event of a Change of Control of Vital Images, as defined in Section 18.11 of this Agreement, Toshiba may, in its sole discretion, be relieved of its minimum purchase Commitment set forth in this Agreement. In such case, Toshiba will provide Vital Images with thirty (30) days’ prior written notice of its intent to be relieved of its minimum purchase Commitments.  Upon relief of the minimum purchase Commitment, the pricing set forth in this Agreement shall expire and Section 4.1, Section 4.2, this Section 5.5, and the fourth sentence of Section 7.1 shall no longer be in effect.

 

5.6           Product Changes . Vital Images may do any of the following upon sixty (60) days’ prior written notice (or such sooner notice as practicable, if required for regulatory or legal reasons) to Toshiba:

 

(a)                                   Alter the specifications for any Product or any new release thereof, provided, however, that Toshiba has the option to request Vital Images to continue to provide Products without such alteration for any purchase orders submitted by Toshiba and/or Dealer Associates prior to the date that Vital Images notifies Toshiba of such alteration, unless such prior Product has been discontinued for regulatory or other legal reasons;

 

(b)                                  Except as set forth below, discontinue the production of any Product. However, such discontinuation will not release or modify Vital Images’ obligations for warranty and service support specified in this Agreement;

 

(c)                                   Discontinue the development of any new release of a Product, if such new release has not been announced publicly; or

 

(d)                                  Commence the development and distribution of new software products having features, which may make any Product wholly or partially obsolete, provided Toshiba is granted  the right to continue to purchase the obsolete Products for a period of at least one year from the date that the new software products are commercially introduced by Vital Images, unless such prior Product has been discontinued for regulatory or other legal reasons or this Agreement terminates before the expiration of such one-year period.

 

Notwithstanding the foregoing, at all times throughout the term of this Agreement, Vital Images must have available for Toshiba Vitrea or Vitrea fX or a successor software of Vitrea or Vitrea fX ®   that will have specifications that are at least equal to or better than those for the version of Vitrea or Vitrea fX ®  software existing as of the date of this Agreement, and give at least six (6) months’ prior written notice (or such sooner notice as practicable, if required for regulatory or legal reasons) to Toshiba before discontinuing the production of Vitrea or Vitrea fX ® . The following associated options shall also be subject to this provision: 3D Angiography, CT Perfusion, CT Colonography, Endovascular Planning (when and if available), CT Cardiac, Cardiac Functional Analysis, SUREPlaque, VScore, Peripheral Vessel Probe, Nodule Probe, Dynamic Volume 4D Brain Perfusion, * * * and * * *.” Toshiba’s minimum purchase commitments will end in the event Vital Images discontinues the production of

 

* * * Confidential Treatment has been requested, the portion indicated has been redacted and the redacted portion has been separately filed with the Securities and Exchange Commission.

 

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Vitrea or Vitrea fX ®  and does not provide Toshiba with a successor product acceptable to Toshiba.   Such discontinuation will not release or modify Vital Images’ obligations for warranty and service support specified in this Agreement.

 

5.7                               Installation of Products .  Unless otherwise agreed in writing by Vital Images, for outside the U.S., all deliveries of the Products shall be directly to Toshiba or the Dealer Associates, unless the parties agree that Vital Images shall ship the Products directly to the customers, and Toshiba and the Dealer Associates shall then have the sole responsibility for the First Level Installation of such Products into a customer’s computer system in the Territory in accordance with the standards and specifications established by Vital Images from time to time and provided to Toshiba and the Dealer Associates hereunder. If the Products need to be integrated with non-Toshiba equipment, Vital Images will perform the Second Level Installation, upon request from Toshiba, or the Dealer Associates or the customers, to ensure proper integration. For the U.S., installation, the respective responsibilities shall be as set forth in Exhibit K.

 

5.8                               Distribution Report .  Name, address, telephone and facsimile numbers of customers who purchased the Product and Service contracts in each calendar quarter shall be provided by Toshiba and TMSE to Vital Images within thirty (30) days after the end of such quarter.

 

ARTICLE 6:  SOFTWARE MAINTENANCE SERVICES

 

6.1                                  Software Maintenance Agreements .  For each customer purchasing a license for the Products in the Territory, Toshiba and/or the Dealer Associates shall use its reasonable best efforts to persuade such customer to purchase annual or long-term software maintenance services under a software maintenance program. Such software maintenance services shall include updates and upgrades  to the Vitrea ® , Vitrea fX and other applicable Products that have been purchased by the customer, free of charge to the customer, for so long as Toshiba and/or Dealer Associate is current in its payment of fees for software maintenance services.  Included in software maintenance services is the provision of updates, which are new versions of the products that include enhancements and upgrades and are released to Vital Images’ general installed base, and corrections, which are fixes to errors in the Products that are reported by Vital Images customers and are released to Vital Images’ general installed base. It is agreed between the parties that newly released options to Vitrea ®   or Vitrea fX except for those listed in Exhibit E and purchased by the customer, shall be excluded from such updates and upgrades, unless explicitly agreed between the parties.  Provided, however, even after the Warranty Period (hereinafter defined in Section 9.1(a)), upon written request from Toshiba or its Dealer Associates for any particular end-user, for up to six (6) months after the expiration date of the Warranty Period, Vital Images shall, without charge, upgrade or update such end-user’s Product to its latest version available within the end-user’s Warranty Period, with downward compatibility.  Further, regardless of whether a customer is under a warranty or software maintenance program, in the event Vital Images issues a correction related to a patient safety issue resulting in a product recall or similar governmental action, Vital Images shall provide such correction to the customers affected at no charge with prior written notice to Toshiba.

 

6.2                               First Level Maintenance Service .   Toshiba and/or the Dealer Associates shall provide the First Level Maintenance to customers outside the United States.  Vital Images shall provide First Level Maintenance to customers within the United States, unless defined otherwise in a Service Level Agreement.

 

6.3                               Second Level Maintenance Service .   Vital Images shall provide the Second Level Maintenance to Toshiba and the Dealer Associates.   In accordance with their technical ability, and based upon their prior experience and training by Vital Images, except for the United States, Toshiba and/or the Dealer Associates shall use their reasonable best efforts to assist Vital Images in providing the Second Level Maintenance for the benefit of customers in the Territory.  Toshiba shall pay Vital Images to provide Second Level Maintenance at the amounts set forth in Exhibit E .

 

6.4                                  Customer Contact .  Except as set forth in Section 6.3 outside the U.S., and Sections 6.2 and 6.3 within the U.S., Toshiba and/or the Dealers Associates shall have the primary responsibility for direct contact with customers in the Territory in regard to the function, application, installation or maintenance of the

 

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Products under the First Level Maintenance and the Second Level Maintenance, provided that Vital Images may contact directly any customer not enrolled in support to enter into a support and maintenance  agreement.

 

ARTICLE 7:  PRICES AND PAYMENTS

 

7.1                                 Prices .  Toshiba and the Dealer Associates shall pay Vital Images in accordance with the prices for the Products and the Services as specified in the Product Price List, Exhibit E hereto. All Product Price List prices are for shipment from Vital Images’ facilities to its destination.  Any special packing or handling shall be at the sole expense of Toshiba.

 

In recognition of the purchase commitments made by Toshiba and its Dealer Associates pursuant to Section 5.5 of this Agreement, Vital Images hereby covenants and agrees that the transfer price charged to Toshiba and its Dealer Associates for the standalone Products and Product for Japan shall at all times be lowest transfer price charged by Vital Images to anyone, except for governmental customers, research sites, training sites, show sites, luminaries, collaborators, and resolution of customer satisfaction issues.  If Vital Images provides a lower transfer price to an entity not set forth above, the parties shall meet to discuss whether to adjust the pricing set forth herein.

Toshiba is free to resell the Products and maintenance support services at any price at which Toshiba deems appropriate. Vital Images will not coerce or otherwise dictate such resale price.

 

7.2                                 Payment Terms .  For each order of the Products or Services Toshiba and/or its Dealer Associates, who ordered such Products or Services, shall pay for Product in accordance with the Product Price List in U.S. Dollars within forty-five (45) days of the date of shipment or forty-five (45) days from the invoice date whichever is later. Notwithstanding the foregoing, if a Service Level Agreement is agreed for Services in the US market, payment terms may be set forth in the Service Level Agreement. With regard to Products sold in Japan, Toshiba shall seek an exemption from withholding tax obligations to the extent available under applicable tax treaties between U.S.A. and Japan, and Vital Images shall reasonably cooperate with Toshiba in completing and executing any documents necessary for obtaining such exemption, including, without limitation, providing Toshiba with the U.S. residency certificates, completing and executing relevant documents to be submitted to applicable taxation authorities.

 

7.3                                  Overdue Payments .  If and for so long as any payment from Toshiba to Vital Images under this Agreement shall be overdue:

 

(a)                                   Interest at twelve percent (12%) per annum or the highest rate permitted under applicable law, whichever is lower, shall become due on all balances outstanding that are past due by more than 30 days from the date that Vital Images provides written notice to Toshiba or Dealer Associate, as the case may be, of such past due amount, provided, however, that if payment is not made by the expiration of such 30-day period, the above-mentioned interest will be paid beginning the original due date of the payment; and

 

(b)                                  Vital Images reserves the right to withhold or suspend shipment of the Products to Toshiba and/or the Dealer Associate if there is an unsettled outstanding balance owed by Toshiba or the Dealer Associate to Vital Images, provided, however, that Vital Images shall first provide Toshiba or the Dealer Associate, as the case may be, with 30-days prior written notice and opportunity to cure before withholding or suspending shipment under this paragraph. Any such withholding or suspension will be effected only against the Dealer Associate that has an unsettled outstanding balance, and not other Dealer Associates or Toshiba.

 

ARTICLE 8:  APPROVALS; ADVERSE REACTIONS; PRODUCT RECALLS

 

8.1                                 Government Approval .  Vital Images shall make diligent efforts to prepare and file all applications required to obtain all necessary Government Approval for each country in the Territory specified in Exhibit B hereto, the Principal Countries, where such Government Approval has not already been

 

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obtained.  For all other countries in the Territory, if any, Vital Images shall diligently prepare and file all applications required to obtain all necessary Government Approval for each such country as Vital Images, in its sole discretion, deems necessary.  Vital Images shall keep Toshiba apprised of its progress with respect to any such applications.  Toshiba shall furnish Vital Images with such assistance and cooperation as may be reasonably requested in connection with the securing of such Government Approval.  Notwithstanding the above, with regard to the Products for Japan, it is understood between the parties that Toshiba will (i) be a legal manufacturer solely for the purpose of Government Approval of the Toshiba CT System incorporating the Products as option (provided that Toshiba’s status or appearance as such legal manufacturer and this Article 8.1 shall not affect the provisions in Article 3.4 nor Vital Images’s status as the developer of the Products and owner of all rights therein), and (ii) be required to file all applications required to obtain all necessary registration and/or Government Approval, including, without limitation, approval under the Pharmaceutical Affairs Laws of Japan as may be amended from time to time, for the Toshiba CT System to be sold by Toshiba in Japan.  Vital Images shall furnish Toshiba with such assistance and cooperation as may be reasonably requested in connection with the securing of such Government Approval.

 

8.2                                  Compliance . Vital Images  shall  comply with all applicable regulatory requirements.  However, Toshiba shall provide all information within its possession  to Vital Images necessary for Vital Images to comply with its medical device reporting requirements to the FDA or any other comparable regulatory body elsewhere in the world.  Toshiba shall maintain records of distribution in case of recalls and handling of feedback to meet regulatory requirements.  Vital Images shall comply with all health registration laws, regulations and orders of any government entity within the Territory and with all other governmental requirements relating to the promotion, marketing and sale of the Products in each country in the Territory.  Toshiba shall submit all advertising claims to Vital Images for written approval prior to their first use by any party, such consent not to be unreasonably withheld. Toshiba will comply with all applicable regulatory requirements applicable to Toshiba’s marketing and sale of the Products.

 

8.3                                  Adverse Event Reporting .  Toshiba shall advise Vital Images, by telephone or facsimile, or other electronic communication means within twenty-four (24) hours or in case the event occurred a day before or on a national holiday or weekend, then the next working business day after it becomes aware of any adverse event (which is defined as personal injury or death) from the use of any Product or malfunction of any Product.  Unless otherwise required by applicable local laws, Toshiba shall advise Vital Images of any such adverse event prior to any report or filing being made by Toshiba with the FDA or any other comparable regulatory body elsewhere in the world. Vital Images shall appoint an Authorised Representative according to the European Union Medical Devices Directive MDD 93/42/EEC as set forth in Exhibit I .

 

8.4                                  Corrective Action .

 

(a)           Notice of Corrective Action .  If Vital Images believes that a corrective action with respect to the Products is desirable or required by law, or if any governmental agency having jurisdiction (including, without limitation, the FDA) shall request or order any corrective action with respect to the Products, including any recall, customer notice, restriction, change, corrective action or market action or any Product change, Vital Images shall promptly notify Toshiba and the Dealer Associates.  Any and all corrective actions shall be conducted at the expense of Vital Images, except costs associated with notifying customers of such corrective action.  Toshiba and/or the Dealer Associates shall maintain complete and accurate records, for such periods as may be required by applicable law, of all Products they sold.  The parties shall cooperate fully with each other in effecting any corrective action with respect to the Products pursuant to this Article 8.4, including communication with any customers and Toshiba shall cause its Dealer Associates, and itself shall comply with all reasonable directions of Vital Images’ regarding such corrective action.  This Article 8.4 shall not limit the obligations of either party under law regarding any corrective action with respect to the Products required by law or properly mandated by governmental authority.  With regard to the Products for Japan,  if a corrective action with respect to the Products incorporated in the Toshiba CT Systems is required by law, or if any governmental agency having jurisdiction (including, without limitation, Ministry of Health,

 

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Labour and Welfare) shall request or order any corrective action with respect to the Products incorporated in the Toshiba CT Systems, including any recall, customer notice, restriction, change, corrective action or market action or any Product change, TOSHIBA shall promptly notify Vital Images.  Any and all corrective actions shall be conducted at the expense of Vital Images, except costs associated with notifying customers of such corrective action.  Toshiba shall maintain complete and accurate records, for such periods as may be required by applicable law, of all Toshiba CT Systems they sold.  The parties shall cooperate fully with each other in effecting any corrective action with respect to the Products pursuant to this Article 8.4, including communication with any customers and Vital Images shall comply with all reasonable directions of TOSHIBA’ regarding such corrective action.  This Article 8.4 shall not limit the obligations of either party under law regarding any corrective action with respect to the Products required by law or properly mandated by governmental authority.

 

(b)          Refund .  If any Products are required to be returned to Vital Images pursuant to this Article 8.4 and no replacement is provided therefore by Vital Images, Vital Images shall refund to Toshiba’s or the Dealer Associate’s customers any unearned license fees paid to Toshiba or the Dealers Associates (the amount of the license fee each such customer paid for the products, less a reasonable value for use determined by prorating the license fee paid on a thirty-six (36) month straight-line amortization method). Vital Images shall indemnify Toshiba or the Dealer Associate from any actions made by Toshiba’s or the Dealer Associate’s customers claiming reimbursement of license fees, whether or not in excess of the amount specified in this paragraph.

 

ARTICLE 9:  WARRANTIES AND REPRESENTATIONS; INDEMNIFICATION

 

9.1                                  Product Warranties to Customers .  Vital Images hereby authorizes Toshiba and the Dealer Associates to pass through to its customers Vital Images’ standard software warranties as set forth below.

 

(a)                                   Limited Warranty .

 

(i) Vital  Images warrants to Toshiba and the Dealer Associates for * * * months from the license issuance date, or * * *months from the Delivery date, except for Toshiba in Japan where Vital Images warrants for * * *months from the license issuance date or * * *months from the Delivery date, whichever expires first (the “Warranty Period”), that the Products, when properly installed and operated, will perform the functions described in the functional specifications for the Products, as contained in the applicable written documentation for the Products, and that such Product shall be upgraded or updated to its latest version with the assurance of downward compatibility. Vital Images shall have no obligation under this provision if (a) the Products have not been properly installed, used or maintained (except for any maintenance performed by Vital Images), in accordance with Vital Images’ then-applicable operating manuals; or (b) the Products have been modified in any manner by anyone other than Vital Images, or are used or combined with other computer software programs (other than standard operating software) not approved by Vital Images, hardware not validated by Vital Images and without the prior written consent of Vital Images; or (c) the Products have been distributed to a customer with any warranties or representations, oral or written, made by Toshiba or any third party beyond those expressly set forth herein., however Vital Images will nevertheless be responsible for performing its warranty obligations to the extent set forth in this paragraph, but not for the additional warranties made by Toshiba or any third party.

 

(ii) Toshiba may offer its customers an extended software Warranty at the time of issuing Vital Images a Purchase Order, subject to the pricing set forth in Exhibit E and the terms set forth in Article 9.1(a)(i), and subject to Toshiba’s paying Vital Images with the software order.

 

* * * Confidential Treatment has been requested, the portion indicated has been redacted and the redacted portion has been separately filed with the Securities and Exchange Commission.

 

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(iii)   The warranty for sale of any Product in Germany will be * * * months from installation, subject to Toshiba’s paying Vital Images an amount equal to * * * of the maintenance fees that would have been paid for the * * *months of the warranty period in Germany, had the warranty not been extended pursuant to this Article 9.1(a)(ii).

 

(iv) Toshiba may include annual or long-term software maintenance services for the Products as part of Toshiba’s service contract proposals to its customers. However, if the Toshiba customers do not wish to sign up to such extended software maintenance or software maintenance services, Toshiba is not precluded from offering its medical equipments or service contract without such software maintenance.

 

(b)                                  Exclusive Remedy .  Vital Images’ entire liability for any warranty claim made by Toshiba or the Dealer Associates under Section 9.1(a) above during the Warranty Period , and Toshiba’s and its Dealer Associates’ exclusive remedy for any such claim, shall be for Vital Images, at its option, to either (i) replace any defective media which prevents the Products from satisfying the limited warranty described in Section 9.1(a); or (ii) attempt to correct any material and reproducible errors reported by Toshiba or the Dealer Associate. Toshiba will have the right to return the affected licenses and receive a refund of the license fees paid by the customers of Toshiba and the Dealer Associates for the affected Products if Vital Images, after exercising all reasonable commercial efforts, is unable to correct the errors within 30 days (unless otherwise agreed by the parties) from the date it receives notice of such error. Such refund will be provided no later than 60 days from the date of Toshiba’s written request for refund.  Vital Images does not warrant that the operation of the Products will be uninterrupted or error-free, that all errors in the Products will be corrected, that the Products will satisfy customer’s requirements or that the Products will operate in the combinations which such customer may select for use.

 

(c)                              Warranty Extension .  Replacement or correction of all or any part of the Products does not extend the Warranty Period.  However, if Vital Images is unable to correct an error by the deadline by which it projected such correction, the warranty will be extended for the number of days for which the error remains uncorrected beyond such deadline Notwithstanding the foregoing, and notwithstanding Section 9.1(a) above, in the event that the Products have been installed on a hardware platform which has been recommended in writing by Vital Images, and do not perform because the Products are not compatible with such hardware, the Warranty Period shall not commence until the date on which all issues defined in the customer’s warranty claim regarding the hardware have been resolved. Vital Images and its third party licensors expressly disclaim any commitment to provide maintenance or support of the Products beyond the Warranty Period, in the absence of entering into a separate software maintenance arrangement with Vital Images and except to the extent stated in Section 6.1 for the 6 month post warranty grace period. Furthermore, the Products are derived from and include software from third party licensors, who make no warranty, express or implied, regarding the Products, who disclaim any and all liability for the Products and who will not undertake to provide any information or support regarding the Products.

 

(d)                                  Maintenance Obligations .  As part of its First Level Maintenance obligations outside the U.S., Toshiba shall and it shall cause its Dealer Associates to promptly inform Vital Images of any claims made by their customers in the Territory under such software warranties.  All such warranty claims shall state the nature and details of the claim, the date the cause of the claim was first observed and the serial number of the Products concerned, if any.  Further, all such warranty claims must be received by Vital Images before the expiration of the Warranty Period for such customer, or will be handled as part of Maintenance and Support for customers who remain current in their fees for Maintenance and Support.

 

* * * Confidential Treatment has been requested, the portion indicated has been redacted and the redacted portion has been separately filed with the Securities and Exchange Commission.

 

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9.2                                  Warranty to Toshiba .  Vital Images hereby represents and warrants to Toshiba:

 

(a)                                   Vital Images owns or has the lawful right from others to grant the rights to market and distribute the Products as set forth in this Agreement;

 

(b)                                  Vital Images has entered into an agreement with PointDx, Inc. and has procured any necessary license from PointDx, Inc. to fulfill its obligations under this Agreement. Vital Images has no knowledge of any claim of infringement by the Products of any third party int