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Assignment And Assumption Agreement (supply Agreement)

Requirements Supplier Agreement

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 This Requirements Supplier Agreement involves

HESKA CORP | Beaver Creek, CO | Cuattro International Merger Subsidiary, Inc | Cuattro Veterinary USA, LLC | Cuattro Veterinary, LLC | Cuattro, LLC | Edwards, CO | Heska Corporation | Heska Imaging Global, LLC | Heska Imaging International, LLC | Heska Imaging US, LLC | Loveland, CO

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Title: ASSIGNMENT AND ASSUMPTION AGREEMENT (Supply Agreement)
Governing Law: Colorado     Date: 8/8/2016
Industry: Biotechnology and Drugs     Sector: Healthcare

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Exhibit 10.1

 

Execution Version

 

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act. Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment .

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

(Supply Agreement)

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this " Agreement ") is made and entered as of the Closing (defined below) (the " Effective Date "), by and among Heska Imaging US, LLC , a Delaware limited liability company formerly known as Cuattro Veterinary U.S.A., LLC (" Imaging US "), Heska Imaging Global, LLC , a Delaware limited liability company (" Imaging Global "), Cuattro, LLC , a Colorado limited liability company (" Cuattro ") and Heska Imaging International, LLC , a Delaware limited liability company formerly known as Cuattro Veterinary, LLC (" Imaging International ").

WHEREAS, Imaging US and Cuattro are parties to that certain Supply Agreement dated as of February 24, 2013, and all amendments thereto (the " Supply Agreement ");

WHEREAS, Cuattro is a party to that certain Agreement and Plan of Merger among Heska Corporation (" Heska "), its wholly-owned subsidiary Cuattro International Merger Subsidiary, Inc., a Delaware corporation (" Merger Sub ") , Imaging International, Kevin S. Wilson and all members of Imaging International, including Cuattro, dated as of March 14, 2016 (the " Merger Agreement "), pursuant to which Merger Sub will merge with and into Imaging International with Imaging International surviving such merger as a wholly-owned subsidiary of Heska (the " Merger "), which following the Closing under the Merger Agreement (the " Closing ") will be called Heska Imaging International, LLC;

WHEREAS, it is a condition of the obligations of the parties to the Merger Agreement to consummate the Merger and the other transactions contemplated by the Merger Agreement that the Supply Agreement be assigned to Global Imaging and amended as set forth herein;

WHEREAS, to facilitate the transactions between its affiliate, Heska, and Cuattro, as contemplated by the Merger Agreement, which are of potential benefit to Imaging US, Imaging US is willing to enter into this Agreement to assign the Supply Agreement to Imaging Global and to amend the Supply Agreement on the terms and conditions of this Agreement;

WHEREAS, Section 18.7 of the Supply Agreement requires Cuattro's prior written consent before Imaging US may assign its rights under the Supply Agreement, and, to induce Heska to enter into the Merger Agreement, which Heska would not do unless Cuattro enters into this Agreement, Cuattro is willing to enter into this Agreement to consent to Imaging US's assignment of the Supply Agreement to Imaging Global and to amend the Supply Agreement on the terms and conditions of this Agreement; and

NOW, THEREFORE, for and in consideration of the Closing, the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

 


 

1.      Assignment and Assumption . Effective as of the Closing, Imaging US hereby assigns, sells, transfers and sets over to Imaging Global all of Imaging US's right, title, benefit, privileges and interest in and to the Supply Agreement, and all of Imaging US's burdens and obligations in connection with the Supply Agreement (collectively, the " Assignment "). Imaging Global hereby accepts the Assignment and assumes and agrees for the benefit of Imaging US and Cuattro to be bound by, observe, perform, pay and discharge all of Imaging US's duties, liabilities, obligations, terms, provisions and covenants solely to the extent they are to be observed, performed, paid or discharged on and after the Effective Date, in connection with the Supply Agreement (collectively, the " Assumption ").

2 .      Consent and Agreement of Cuattro . In accordance with Section 18.7 of the Supply Agreement, Cuattro hereby consents to the Assignment and Assumption. Cuattro further acknowledges and agrees that all of Cuattro's burdens and obligations under the Supply Agreement shall survive the assignment and assumption of the Supply Agreement in accordance with the terms and conditions thereof. The Assignment and Assumption shall not relieve Imaging US of responsibility for the performance of any accrued obligation which it has as of the Effective Date.

3 .      Amendments to Supply Agreement . In accordance with Section 18.6 of the Supply Agreement:

3.1     Amendment to Territory . Effective as of the Closing, the definition of "Territory" in Exhibit B to the Supply Agreement is hereby amended to read as follows: ""Territory" shall be defined as the Market throughout the world."

3.2     Amendment to Allow Subdistributors . Effective as of the Closing, the following sentence is hereby added as the final sentence of Section 1.1 of the Supply Agreement: "Notwithstanding any provision of this Agreement to the contrary, Heska Imaging Global, LLC (" Imaging Global "), as successor in interest to Vet USA, may appoint its Affiliate, Heska Imaging US, LLC (" Imaging US "), as a subdistributor to exercise all the rights, and fulfill all of the obligations, under this Agreement in the portion of the Territory comprising the United States, and may appoint its affiliate, Heska Imaging International, LLC (" Imaging International ") as a subdistributor to exercise all of the rights, and fulfill all of the obligations, under this Agreement in the portion of the Territory outside the United States, and, upon such appointments, all references to "Vet USA" in this Agreement shall be deemed to refer to Imaging US with respect to the portion of the Territory comprising the United States and Imaging International with respect to the portion of the Territory outside the United States."

4.     Appointment of Subdistributors .

4.1     Appointment of Imaging US . Effective as of the Closing, in accordance with Section 1.1 of the Supply Agreement and as authorized herein, Imaging Global hereby appoints Imaging US as its subdistributor under the Supply Agreement with respect to the portion of the Territory comprising the United States (the " US Territory ") to hold and exercise all of Imaging Global's rights under the Supply Agreement with respect to the US Territory, and

 

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Imaging US hereby accepts such appointment and agrees, for the benefit of Cuattro, to perform all of Imaging Global's obligations under the Supply Agreement with respect to the US Territory.

4.2     Appointment of Imaging International . Effective as of the Closing, in accordance with Section 1.1 of the Supply Agreement and as authorized herein, Imaging Global hereby appoints Imaging International as its subdistributor under the Supply Agreement with respect to the portion of the Territory outside the United States (the " International Territory ") to hold and exercise all of Imaging Global's rights under the Supply Agreement with respect to the International Territory, and Imaging International hereby accepts such appointment and agrees, for the benefit of Cuattro, to perform all of Imaging Global's obligations under the Supply Agreement with respect to the International Territory.

5.      No Other Consideration . The assignments and rights granted by Imaging US to Imaging Global in this Agreement are to facilitate, and in consideration of, the transactions contemplated by the Merger Agreement, and no other consideration shall be given by Imaging Global or received by Imaging US in connection with this Agreement or the transactions contemplated by the Merger Agreement.

6.      Remaining Terms . All parties acknowledge that a true, correct and complete copy of the Supply Agreement, together with all amendments thereto, is attached hereto as Exhibit A . Except as specifically modified pursuant to this Agreement, all terms and provisions of the Supply Agreement shall remain in full force and effect as set forth therein. Nothing in this Agreement shall constitute or be construed to be a termination of the Supply Agreement.

7.      Further Actions . Each of the parties hereto covenants and agrees, at its own expense, to execute and deliver, at the request of the other parties hereto, such further instruments of transfer and assignment and to take such other action as such other parties may reasonably request to more effectively consummate the Assignment and Assumption contemplated by this Agreement.

8.      Amendment and Waiver . No provision of this Agreement may be amended, modified, supplemented or waived except by an instrument in writing executed by all of the parties hereto or, in the case of an asserted waiver, executed by the party against which enforcement of the waiver is sought. The rights and remedies of the parties to this Agreement are cumulative and not alternative.

9.      Assignment . Neither this Agreement nor any right created hereby is assignable by any of the parties hereto without the prior written consent of the other parties; provided , that the Supply Agreement, as amended hereby, shall continue to be assignable on the terms and conditions set forth in Section 18.7 thereof.

10.     Governing Law . This Agreement will be governed by, and construed in accordance with, the laws of the State of Colorado without reference or regard to the conflicts of law rules thereof.

 

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11.      Counterparts . This Agreement may be executed in any number of counterparts and by facsimile, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

12.     Integration . This Agreement, together with the Supply Agreement, constitutes the sole and entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter, including without limitation (i) that certain Management Agreement, dated November 1, 2012, by and between Cuattro and Imaging International, as amended by that certain Amendment to Management Agreement, dated December 31, 2012; and (ii) that certain License Agreement, dated December 31, 2009, by and between Cuattro and Imaging International.

 

[Signature Page Follows]

 

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

"IMAGING US"

 

"IMAGING GLOBAL"

 

 

 

 

 

Heska Imaging US, LLC

 

Heska Imaging Global, LLC

 

 

 

 

 

By:

/s/ Jason Napolitano

 

By:

/s/ Jason Napolitano

 

Jason Napolitano, Chief Financial Officer

 

 

Jason Napolitano, Chief Operating Officer

 

 

"CUATTRO"

 

"IMAGING INTERNATIONAL"

 

 

 

 

 

Cuattro, LLC

 

Heska Imaging International, LLC

 

 

 

 

 

By:

/s/ Kevin S. Wilson

 

By:

/s/ Jason Napolitano

 

Kevin S. Wilson, Manager

 

 

Jason Napolitano, Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Assignment and Assumption Agreement (Supply Agreement)]

 

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EXHIBIT A

 

 

Supply Agreement

 

 

[Attached]

 

Ex. A


 

March 4, 2013

 

Cuattro, LLC

PO Box 4605

Edwards, CO 81632

 

 

Attention: Kevin Wilson - Member, Officer

 

 

Re:    Supply Agreement by and between Heska Imaging US, LLC (" Heska Imaging ") and Cuattro, LLC ("Cuattro")

 

Dear Mr. Wilson:

 

It has come to my attention that the Supply Agreement dated February 22, 2013 which was executed between Cuattro and Heska Imaging via electronic signatures on February 24, 2013 (the "Incomplete Agreement") did not include the Master Warranty and Support Terms and Conditions ("MWSTC") we had previously agreed to in Exhibit C. I apologize for the oversight in closing documents. To remedy this situation, we subsequently executed the attached Supply Agreement dated February 24, 2013 with the MWSTC we had previously agreed to in Exhibit C properly included, with typographical errors related to Cuattro's legal name and address corrected on page 18 and with both of our signatures on the same page executing the document as authorized signatories on behalf of each of Cuattro and Heska Imaging, as applicable (the "Complete Agreement").

 

This letter will constitute our understanding that the Incomplete Agreement will have no further force or effect and that the Complete Agreement shall supersede in its entirety the Incomplete Agreement, with the Complete Agreement from and after its date of execution to be deemed for all purposes to be the duly authorized, executed and delivered, and legally binding and enforceable, agreement between Heska Imaging and Cuattro with respect to the subject matter covered by the Complete Agreement.

 

 

 

Very truly yours,

 

 

 

 

 

HESKA IMAGING US, LLC

 

 

 

 

 

 

 

 

 

By:

/s/ Jason Napolitano

 

 

Its:

Chief Financial Officer

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

CUATTRO, LLC

 

 

 

 

 

By:

/s/ Kevin Wilson

 

 

Its:

Member, Officer

 

 

 

 


 

 

SUPPLY AGREEMENT

This Supply Agreement (the " Agreement ") is made and entered into as of February 24, 2013 (the " Effective Date ") by and among Cuattro, LLC , a Colorado limited liability company (" LLC "), and Heska Imaging US, LLC , a Delaware limited liability company formerly known as Cuattro Veterinary U.S.A., LLC (" Vet USA "). In this Agreement LLC and Vet USA may be individually referred to as a "Party" and collectively as the "Parties."

RECITALS:

A.Vet USA has entered into that certain Amended and Restated Master License Agreement with LLC dated as of February 22, 2013 (" License Agreement ") whereby Vet USA has the right to sublicense the software described in the License Agreement (the " Software ").

B.LLC designs, develops and procures software and hardware components. LLC may sell the software and components individually or it may assemble, inspect, test and then deliver as "ready for shipment" digital imaging products.

C.Vet USA wishes to use the Software in connection with its sale or lease of the products which it purchases from LLC.

D.Vet USA wishes to minimize its costs by using LLC's existing and future technologies, maintenance, research, development, and deployment infrastructure and expertise.

E.Vet USA is also interested in reducing its costs by ordering all of its major components from LLC. The Parties believe this will enable LLC to obtain volume discounts and reduced pricing, for the benefit of Vet USA and LLC.

F.Vet USA wishes LLC to provide it with its digital imaging products and technical help. After a product or Software is delivered and accepted by Vet USA, Vet USA wishes LLC to provide warranty and support to Vet USA in support of those products.

G.Vet USA and LLC previously entered into that certain Management Agreement dated as of November 1, 2012 (the " Management Agreement "), which Management Agreement is superseded in its entirety by this Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants and conditions set forth in this Agreement, the Parties to this Agreement agree as follows:

1. Appointments .

1.1    LLC hereby appoints Vet USA to be the exclusive distributor either for itself or through authorized third party or affiliated distributors, representatives or resellers (" Distributors ") of the Products to Customers, in the Territory, as those terms are defined in Exhibit A "Products" and Exhibit B "Market, Territory, Customers"; with exclusive rights to sell, rent, license or otherwise provide Products (including the third party equipment sold to Vet USA by LLC (the "Equipment") included in, and services related to, the Products) to such Customers.

 

 


 

(a)Vet USA accepts such appointment and Vet USA agrees to use reasonable commercial efforts to actively market and sell the Products to Customers.

(b)Vet USA agrees to use reasonable commercial efforts to ensure that Distributors adhere to the terms of this Agreement and the License Agreement.

1.2    Vet USA hereby agrees that LLC shall be its exclusive provider of Services (as defined in Section 3 of this Agreement) and Software licensed under the License Agreement.

2. Termination; Post-Termination Supply .

2.1     Term . The initial term of this Agreement shall commence as of the Effective Date and continue through December 31, 2022 (" Initial Term "). Commencing on January 1, 2023, this Agreement shall continue on a year-to-year basis unless on or before September 30 of any calendar year (i) Vet USA notifies LLC in writing that it wishes to terminate the Agreement, provided, that such termination shall be effective as of December 31 st of the third calendar year following the year in which such notification is given (such period, a " Vet USA Cancellation Term "), or (ii) LLC notifies Vet USA in writing that it wishes to terminate the Agreement, provided, that such termination shall be effective as of December 31 st of the fifth calendar year following the year in which such notification is given (such period, an " LLC Cancellation Term "). During a Vet USA Cancellation Term or LLC Cancellation Term, Vet USA shall be free to develop, but not commercialize or sell, Competitive Products (as defined in Section 10.5 below); provided, however, that in no case shall those Competitive Products developed during such period be based upon Confidential Information of LLC, the Intellectual Property of LLC, the Products, or benchmarks or derivatives of the Products.

2.2     Termination for Cause . Notwithstanding Section 2.1, this Agreement may be terminated before the expiration of the Initial Term and/or any renewal term as follows (each of the following a termination for " Cause "):

(a)Either Party may terminate this Agreement by delivering written notice to the other Party upon the occurrence of any of the following events: (i) a receiver is appointed for the other Party or its property; (ii) if the other Party makes a general assignment for the benefit of its creditors; (iii) if the other Party commences, or has commenced against it, proceedings under any bankruptcy, insolvency or debtor's relief law, which proceedings are not dismissed within ninety (90) days; (iv) if the other Party is liquidated or dissolved, (v) if the other Party becomes unable to make payment of amounts due to creditors in a timely and dependable fashion;

(b)Either Party may terminate this Agreement effective upon written notice to the other if the other Party violates any covenant, agreement, representation or warranty contained herein in any material respect or defaults or fails to perform any of its obligations or agreements hereunder in any material respect, or fails to make any payment when due, which violation, default or failure is not cured within ninety (90) days after notice thereof from the non-defaulting Party stating its intention to terminate this Agreement by reason thereof; or

(c)Either Party may terminate this Agreement effective upon written notice to the other if the License Agreement is terminated or voided for any reason; provided, however, that termination of this Agreement pursuant to this Section 2.2(c) will only be deemed for Cause if the License Agreement was terminated for Cause in accordance with its terms.

 

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2.3     Failure to Meet Minimum Annual Volume . If, during calendar year 2013 or 2014 Vet USA does not purchase the Minimum Annual Volume (as defined in Section 9.3 below) for such calendar year, Vet USA will pay to LLC the amount due for such shortfall pursuant to the pricing terms and conditions set forth in this Agreement (the " Take or Pay Payment "). LLC shall invoice Vet USA for the amount of such Take or Pay Payment within thirty (30) days following the end of each calendar year in which such Take or Pay Payment has accrued, and Vet USA shall pay the Take or Pay Payment amount within thirty (30) days after receipt of such invoice. Beginning in calendar year 2015 and thereafter, in the event Vet USA does not purchase the Minimum Annual Volume in any calendar year, (i) LLC shall have the right, but not the obligation, to terminate this Agreement upon ninety (90) days written notice to Vet USA on or before April 30 th of the following calendar year, and (ii) LLC shall be free of exclusivity obligations hereunder and may sell all Products to Customers or any third party thereafter.

2.4     Post Termination Supply Period . For five (5) years from the date of termination of the Agreement, LLC shall make available the Products, Support, and Services (“Post Termination Supply Period”). During the Post Termination Supply Period both LLC and Vet USA shall be free of exclusivity and commercialization obligations hereunder. If the Agreement is terminated by LLC for Cause, there will be no obligation of LLC under Post Termination Supply Period. During Post Termination Supply Period, Vet USA shall have the right to sell off or otherwise distribute any Products that Vet USA held in inventory as of termination of this Agreement to any existing or future Customer; provided, however, any Products purchased by Vet USA from LLC during the Post Termination Supply Period may only be sold or otherwise distributed to existing Customers to repair or replace Products owned by such Customers prior to termination of this Agreement.

(a)In the event that the Agreement is terminated by LLC pursuant to Section 2.3 above, then, during the Post Termination Supply Period, Vet USA shall (i) have the right (but not the obligation) to purchase Products, Support and Services, without the obligations under Section 1.1(a), under pricing terms for Products, Support and Services that shall be set under the rate provided for in this Agreement, multiplied by 1.65, rather than as set forth in Section 6 below.

(b)In the event that the Agreement is terminated (i) by Vet USA for Cause, or (ii) pursuant to a Vet USA Cancellation Term or LLC Cancellation Term, then at Vet USA's option in its sole discretion Vet USA's rights and benefits (but not its obligations under the second sentence of Section 1.1) to purchase Products, Support, and Services hereunder, and LLC's obligation to provide such Products, Support and Services, shall continue for the Post Termination Supply Period, at the prices and costs set forth in Section 6 below.

2.5     Payment Obligations . All monies owed to LLC for purchases of Products prior to termination shall become immediately due and payable and no cancellation or termination of this Agreement shall serve to release Vet USA or its successors or assigns from any payment obligations under this Agreement. Failure by LLC at any time to require payment from Vet USA under this Agreement shall not affect LLC's right to require payment at a later date. All orders received by LLC prior to termination shall be filled in accordance with, and subject to the terms and conditions hereof, and Vet USA shall make all payments with respect thereto as provided herein.

2.6     Survival of Obligations . The provisions of Sections 2.4, 2.5, 3.4, 3.5, 6, 7, 8.5, 8.6, 9, 10.7, 11, 12, 13, 14, 16, 17, and 18 and such other provisions that by their nature survive termination, shall survive during the Post Termination Supply Period. The provisions that by their

 

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nature survive termination, shall survive the expiration or termination of this Agreement and the Post Termination Supply Period and continue to be enforceable in accordance with their respective terms and conditions set forth in this Agreement.

3. Services . In making the Services available during this Agreement, LLC shall use substantially the same degree of care as it employs in making the same Services available for its own operations to its other customers. During the Initial Term of this Agreement and any renewal term (and with respect to Sections 3.4 and 3.5, also during the Post Termination Supply Period), LLC shall provide Vet USA with the following with respect to the Products (collectively, the " Services "):

3.1     Product Development . LLC will source, test, develop, and perform product research and development, including without limitation, that specified in Section 8, development of specifications and pricing targets.

3.2     Training . LLC will provide Vet USA with a reasonable amount of training (not to exceed five (5) days per calendar year) in the proper use and day to day routine support of the Products, as may be reasonably requested by Vet USA, in order for Vet USA to be able to exercise its rights herein. Training will be scheduled by mutual agreement as to frequency, date, and location. Costs for round trips, meals, lodging, and other expenses of the dispatched personnel of LLC for training shall be borne by Vet USA.

3.3     Support Materials . As they are available for general release, LLC will make available to Vet USA, for download in electronic format, LLC's customer service materials, training materials, troubleshooting materials, and marketing materials, for use by Vet USA in developing its own materials. LLC agrees to cooperate with Vet USA by providing documents and information necessary for regulatory filings.

3.4     PACS and Data Hosting . LLC shall provide to Vet USA, to the extent reasonably requested and paid for pursuant to this Agreement and the License Agreement, the services to be provided by Vet USA to a Customer as listed under Exhibit C "Master Warranty and Support Terms and Conditions" (" MWSTC ") that is in force and enforceable with that Customer, or otherwise reasonably necessary from time to time to distribute and support Products in accordance with this Agreement, including but not limited to, the services set forth under the PACS and Data Hosting portion of Exhibit A.

3.5     Logistics and Management . LLC shall provide to Vet USA, to the extent reasonably requested and paid for pursuant to this Agreement and the License Agreement the logistics and management services set forth on Exhibit D; provided, however, that if after one year from the commencement of this Agreement, or earlier by mutual written agreement, Vet USA requests in writing to remove a specific service set forth on Exhibit D, following ninety (90) days notice, LLC shall cease to provide such service and shall not be obligated to provide such service thereafter.

 

4. [Intentionally omitted] .

 

5.Software Products . LLC will provide Vet USA the licenses to Software, for Customers in the Territory, subject to payment of all amounts when due, in accordance with the terms and conditions of the License Agreement and MWSTC. Software excludes the operating system of the computer CPU.

 

 

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Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act. Omitted information, marked “[***]” in this exhibit, has been filed with the Securities and Exchange Commission together with such request for confidential treatment .

 

 

5.1     Updates and Fixes . LLC will correct or cause to be corrected any failure of Software to perform substantially in accordance with LLC's documentation, including corrections for programming errors, bug fixes and error corrections, either by updating or replacing the Software or by taking appropriate corrective action.

5.2     Compatibility Updates . LLC will provide or cause to be provided such updates to the Software as are necessary to make the Software compatible with new releases of the Equipment and operating systems approved by LLC on which the Software is licensed to run; provided, however, that LLC shall ensure that the Software is compatible with at least one version of the Equipment and operating systems that are then currently supported by their manufacturers. Updates shall be provided to Vet USA via Internet upload and will include necessary documentation.

5.3     Software Support . During the term of this Agreement and during the Post Termination Supply Period, LLC agrees to use commercially reasonable efforts to provide to Vet USA the support offered to Customers in the Software Support Agreement of MWSTC (" Support ") during the Initial Support Term and any Renewal Support Option (as defined in the MWSTC) for which Vet USA has paid pursuant to Section 6.3 hereof. Notwithstanding anything in this Section 5.3, Support shall end on the final day of the Post Termination Supply Period, unless otherwise agreed to in writing, in advance, by and between LLC and Vet USA or LLC and Customer(s).

6.Compensation . In consideration of LLC's performance pursuant to this Agreement, Vet USA agrees to pay LLC as follows:

6.1    Subject to Section 2.4 above, LLC agrees to the provide Vet USA the following services on an ongoing basis. The services in (a), (b), (c) and (f) shall be at the lower of the prices set forth below or the prices, terms and discounts offered to other resellers or distributors of LLC, excepting only those human medical distributors or resellers located, and for distribution, in China (the "MFN Pricing"):

(a)A fee of [***] for each Study under Data Hosting (as defined and limited by MWSTC);

(b)A fee of [***] for each Data Migration (as defined and limited by MWSTC). Such Data Migration shall only occur upon LLC's receipt of a purchase order from Vet USA;

(c)A fee of [***] for adding each DICOM Node (as defined and limited by MWSTC). Such DICOM Node addition shall only occur upon LLC's receipt of a purchase order from Vet USA;

(d)An annual fee, payable on March 1 of each calendar year, of [***] for Data Hosting usage and availability, including any upgrades, updates, fixes, or enhancements, if any, of Data Hosting;

(e)Timely payment of License Agreement fees;

(f)A fee of [***], plus reimbursable, actual, documented travel expenses and incidentals submitted on an expense form, for performance of an on-

 

 

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site installation, service call, warranty call, demonstration, or education of a Vet USA customer by an LLC employee; and

6.2    The price for those portions of the Products not otherwise set forth in Section 6.1 above, at LLC's cost (see Section 11 "Prices");

6.3    A monthly fee for the Support services set forth in Section 5.3. The monthly fee shall be at LLC's cost for services provided. LLC’s cost shall be allocated pro rata on the basis of total gross revenues amongst Vet USA and all affiliates of LLC being provided such Support; provided, however, LLC may make a one time election upon written notice to Vet USA to change such allocation to the basis of total time spent providing Support among Vet USA and all affiliates of LLC being provided such services from time to time. The monthly fee for Support will be invoiced monthly and payable net 30 days from the date of Vet USA's receipt of each such invoice. Such fees shall be payable by Vet USA only for so long as such services are being provided to Vet USA.

6.4    A monthly logistics and management fee for the services set forth on Exhibit D to this Agreement. The monthly fee shall be at LLC's cost for services provided. For any specific LLC cost that is solely for the benefit of Vet USA, 100% of that cost will be allocated to Vet USA. For any specific LLC cost that is for the benefit of Vet USA and another affiliate of LLC, such cost shall be allocated pro rata on the basis of total gross revenues among Vet USA and all affiliates of LLC being provided such services from time to time, to be invoiced monthly and payable net 30 days from the date of Vet USA's receipt each such invoice. Such fees shall be payable by Vet USA only for so long as such services are being provided to Vet USA.

7.Disclaimer, Limited Liability . EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY'S LIABILITY ARISING OUT OF THIS AGREEMENT EXCEED FOUR MILLION DOLLARS. EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY ARISING OUT OF, OR OTHERWISE RELATING TO, THIS AGREEMENT, FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, COLLATERAL, PUNITIVE, EXEMPLARY, OR INDIRECT DAMAGES SUFFERED BY THE OTHER PARTY OR ANY THIRD PARTY INCLUDING, WITHOUT LIMITATION, LOSS OF GOODWILL, LOSS OF PROFITS OR REVENUES, LOSS OF SAVINGS, LOSS OF USE, INTERRUPTION OF BUSINESS, INJURY OR DEATH TO PERSONS OR DAMAGE TO PROPERTY, WHETHER BASED ON BREACH OF CONTRACT, TORT OR ARISING IN EQUITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

8.Research and Development Obligations of LLC . During the term of this Agreement, LLC will continue to perform its usual and customary research and development activities in the ordinary course of business. When not limited or prohibited by contractual limitations, provided that LLC uses commercially reasonable efforts to avoid such limitations, any results of LLC's research and development efforts that can be commercialized in the Territory will be added to "Products" on Exhibit A of this Agreement, at Vet USA's option.

8.1     LLC Modification and Upgrades to Products . LLC will use commercially reasonable efforts to update the Products so that they will be competitive in the Territory. LLC

 

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agrees to use commercially reasonable efforts to provide Vet USA with such new Equipment or Software modifications or upgrades, under terms that are reasonable and negotiated in good faith between the Parties. In the event that such upgrades or modifications include substantial development work, LLC will provide an estimate and a scope of work to Vet USA for the non-recurring eng


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