SERVICES AND CO-MARKETING AGREEMENT
EXHIBIT
10.12
This
Services and Co-Marketing Agreement (“Agreement”)
is
entered into this 1st day of March, 2004 (the “Effective
Date”),
by
and between VirtualScopics LLC, a New York limited liability company with its
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(“VirtualScopics”),
and
Chondrometrics GmbH (“Chondrometrics”),
a
German limited liability company, with its current principal place of business
at Munich, Germany. This
Agreement, together with those certain Consulting Agreements between
VirtualScopics and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, dated January 1, 2004 and March 1, 2004,
respectively, supercede, and replace entirely, that certain Preliminary Service
Agreement between VirtualScopics and Chondrometrics, dated January 30, 2004
(the
“Preliminary
Agreement”).
RECITALS:
A. Chondrometrics
conducts and commercializes medical research with particular emphasis on
cartilage degeneration as it relates to the development of Osteoarthritis.
Chondrometrics has existing relationships with entities in need of research
services to assist in understanding human disease progressions of
Osteoarthritis, and/or the efficacy of disease modifying osteoarthritic
drugs.
B. Chondrometrics
currently distinguishes itself from its competitors due to Chondrometrics’
status in its industry as the sole provider of cartilage degeneration medical
research services validating its findings with highly regarded peer reviews
and
industry publications.
C. VirtualScopics
is in the business of developing image-based biomarkers and image analysis
software tools (such software and tools, together with any documentation, and
modifications, updates, and enhancements to the foregoing, the “VirtualScopics
Technology”)
as
well as providing customers regulatory compliant image analysis services and
field operations to accelerate both drug efficacy testing and drug discovery.
VirtualScopics has existing relationships covering a broad range of disease
areas including Osteoarthritis.
D. VirtualScopics
and Chondrometrics desire to leverage their research and commercial capabilities
by co-marketing each other’s services and abilities, with the goal of expanding
each party’s customer base and visibility in the industry, and gaining economic
benefits resulting therefrom.
E. In
consideration of and relying upon the covenants and obligations herein,
including VirtualScopics’ obligation to make certain payments to Chondrometrics
as further set forth in this Agreement, Chondrometrics
(1) has permitted, and is permitting, as the case may be, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(CEO and CSO of Chondrometrics) to execute two consulting agreements with
VirtualScopics relating to services that were provided by ▇▇. ▇▇▇▇▇▇▇▇ from
January 1, 2004 through February 29, 2004, and services that will be provided
from March 1, 2004 through December 31, 2006 (collectively, the “Consulting
Agreements”),
thereby releasing ▇▇. ▇▇▇▇▇▇▇▇ from certain of his obligations to Chondrometrics
so that ▇▇. ▇▇▇▇▇▇▇▇ may perform his obligations under the Consulting
Agreements, (2) temporarily is replacing ▇▇. ▇▇▇▇▇▇▇▇ Chondrometrics with
outside expert personnel in connection with certain of ▇▇. ▇▇▇▇▇▇▇▇’▇
obligations as CEO/CSO of, (3) is permitting ▇▇. ▇▇▇▇▇▇▇▇ to use certain of
Chondrometrics’ resources in his work under the Consulting Agreements, and (4)
is losing its distinction as the sole provider in its industry of cartilage
degeneration medical research services capable of validating its technology
and
findings through peer reviews and publications, thereby diminishing
Chondrometrics’ potential revenue stream to the extent such revenues are derived
by such distinction.
THEREFORE,
for
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions.
Capitalized
terms not defined elsewhere in this Agreement shall have the meanings ascribed
to them in this Section 1.
1.1.
“Cartilage
Analysis”
means a
manual, semi-automated or automated process for segmenting MR images to quantify
the volume or other morphological parameters of total cartilage or cartilage
sub-regions in Research Trials and Clinical Trials for
Osteoarthritis.
1.2.
“Non-Cartilage
Analysis”
means a
manual, semi-automated or automated process for segmenting MR images to quantify
characteristics of tissues related to Osteoarthritis other than cartilage,
including, but not limited to, Bone Marrow Edema, Meniscus, and
Fluid.
1.3.
“Clinical
Trial”
means
Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
of understanding the efficacy of a disease modifying osteoarthritic drug in
humans, intended and/or required to be submitted to a regulatory body as part
of
a drug approval submission. The paying entity for a Clinical Trial can be a
pharmaceutical, biotechnology, or medical device company, or a governmental
or
non-governmental research agency.
1.4.
“Research
Trial”
means
Cartilage Analysis and Non-Cartilage Analysis that is performed for the purpose
of understanding human cartilage physiology or disease progressions of
Osteoarthritis. The paying entity for a Research Trial can be a pharmaceutical,
biotechnology, or medical device company, or a governmental or non-governmental
research agency. Results from a Research Trial are not intended or required
to
be submitted to a government regulatory body as part of a drug approval
submission.
1.5.
“Trial
Commitment”
means
each contract or agreement with respect to which Research Trial or Clinical
Trial services are being by provided by VirtualScopics or Chondrometrics, as
the
case may be.
(a) “Gross
Revenues”
means
all amounts actually collected by VirtualScopics, net of any discounts or other
sales incentives, and any sales tax collected, for each Research Trial
Commitment and each Clinical Trial Commitment during the term of the Commitment.
However, Gross Revenues shall not include (a) amounts collected for any Clinical
Trial Commitment pursuant to which (i) solely Non-Cartilage Analysis is being
provided, or (ii) Cartilage Analysis is being provided by a third party, or
(b)
amounts collected under the following Clinical Trial Commitment or Research
Trial Commitment entered into by VirtualScopics prior to January 1, 2004: (1)
the Pfizer
GARP Study commencing in 2002, (2) the Pfizer BOIS Study commencing in 2002,
(3)
the Pfizer KANON Study commencing in 2002, and (4) the DePuy Meniscus Study
started in 2003). All other amounts collected under Trial Commitments
(net
of
any discounts or other sales incentives, any sales tax collected,
and
subject to the exclusions specified in clause (a) above), including all amounts
collected from January 2005 onwards, will be included in Gross Revenues,
irrespective of the date of commencement.
1.6.
“Intellectual
Property Rights”
means
any and all rights in and to all patents, patent applications, copyrights,
trademarks, trade secrets, know-how and any other proprietary
rights.
1.7.
“Marketing
Materials”
of a
party means those materials being used by such party to promote itself and
its
business, and which are delivered to the other party for marketing purposes
as
contemplated in Sections 2.4 and 3 hereof. Marketing Materials include, without
limitation (a) marketing brochures or other printed materials generally
promoting such party, its staff and resources, and the research and other
service capabilities of such party, (b) publications, if any, relating to work
performed by such party, its owners, employees, or agents, pertaining to
Osteoarthritic research as well as any other research that may be relevant
in
sales pitches to prospects in the Osteoarthritis field, (c) web site materials,
and (d) any other documentation or information that may be useful in promoting
such party to third parties.
1.8.
“Osteoarthritic
Initiative”
means
the government and industry sponsored study using imaging and image analysis
to
determine end-points for detecting progression of Osteoarthritis.
2. Collaborative
Work for Research Trials.
2.1.
Proposals.
Throughout the Term (as defined in Section 11.1 hereof), VirtualScopics and
Chondrometrics intend to submit separate Research Trial proposals to third
parties for project contracts and grant proposals (each, a “Project”).
Unless otherwise agreed to by the parties, VirtualScopics will provide
Non-Cartilage Analysis and/or Cartilage Analysis, and Chondrometrics will
provide solely Cartilage Analysis for each Project. Each party will solicit
and
separately negotiate client Projects; provided, however, (a) in no event will
a
party provide services to a third party if such party, to the best of such
party’s knowledge, should have reason to believe that the third party already is
receiving, or is contracting to receive, the same or similar services from
the
other party, and (b) each party will consult with the other party as necessary
to prevent providing overlapping or conflicting services to the other party’s
clients.
2.2.
Osteoarthritis
Initiative.
Each
party intends to submit a proposal for a Project to the Osteoarthritis
Initiative. In this instance, VirtualScopics’ Project will specify that
VirtualScopics is to provide Non-Cartilage Analysis, including end-points of
interest, and Chondrometrics’ Project will specify that Chondrometrics is to
provide Cartilage Analysis. Further, if Chondrometrics is unable to finalize
a
Project with the Osteoarthritic Initiative that meets Chondrometrics’ financial
expectations, Cartilage Analysis may alternatively be provided by VirtualScopics
under a separate Project upon the parties’ mutual written agreement. Thereafter,
from time to VirtualScopics and Chondrometrics may each submit additional
separate proposals to the Osteoarthritic Initiative based on the parties’ mutual
agreement and under the same conditions formulated above.
2.3.
Generally.
Each of
VirtualScopics and Chondrometrics agrees not submit a Research Trial proposal
to, or otherwise solicit Research Trial business from, the Osteoarthritic
Initiative, without giving written notice to each other. VirtualScopics
maintains the right to analyze the cartilage images of the Osteoarthritic
Initiative analyzed by Chondrometrics for comparative and publication purposes,
including a collaborative publication with ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
2.4.
Co-Marketing
Efforts.
Each of
VirtualScopics and Chondrometrics agrees to exercise commercially reasonable
best efforts to market and promote the other party’s Research Trial capabilities
with the goal of establishing numerous Projects throughout the Term.
2.5.
Other
Commitments.
Nothing
herein shall restrict either party’s ability to continue providing Research
Trial services.
3. Marketing
for Clinical Trials and Research Trials.
3.1.
Throughout the Term each party will exercise commercially reasonable best
efforts to market and promote VirtualScopics’ Non-Cartilage Analysis and
Cartilage Analysis services for Clinical Trials and Research Trials, and the
collaborative efforts of VirtualScopics and Chondrometrics. VirtualScopics
will
perform any such Cartilage Analysis using a Clinical Trial or Research Trial
approach, as the case may be, that has been cross-validated in accordance with
a
methodology designed by ▇▇. ▇▇▇▇▇▇▇▇ pursuant to the Consulting Agreements.
3.2.
At a
minimum, Chondrometrics’ obligations hereunder require that it:
(a) distribute
VirtualScopics’ Marketing Materials to existing clients and prospects, when
clients and prospects actively demand services for quantitative analysis of
cartilage in the context of Clinical Trials and Research Trials;
(b) distribute
VirtualScopics’ Marketing Materials to existing clients and prospects, when
clients and prospects show interest in services for quantitative analysis of
non-cartilage parameters in the context of Research Trials or Clinical Trials;
and
(c) assist
VirtualScopics in preparing and distributing joint press releases promoting
VirtualScopics and the collaborative efforts of VirtualScopics and
Chondrometrics.
3.3.
Chondrometrics shall be prohibited from marketing or otherwise promoting any
third party’s Non-Cartilage Analysis or Cartilage Analysis services for Clinical
Trials. Further, Chondrometrics will not provide any Clinical Trial services,
and will refer all such potential business to VirtualScopics.
4. Payments.
In
consideration of the successful performance of all mutual covenants contained
in
this Agreement, including the consideration described in Recital E, the parties
agree to the following:
4.1.
VirtualScopics shall pay Chondrometrics an upfront guaranteed payment (each
a
“Guaranteed
Payment”)
during
the first three (3) years of the Term as follows:
(a) First
Year Guaranteed Payment:
$110,700, payable (i) $55,350 on the Effective Date, and (ii) $55,350 within
six
months thereafter;
(b) Second
Year Guaranteed Payment:
$75,000, payable on the first anniversary of the Effective Date;
(c) Third
Year Guaranteed Payment:
$60,000, payable on the second anniversary of the Effective Date.
Notwithstanding
the foregoing, Chondrometrics acknowledges its receipt of $27,675 as partial
payment of the $55,350 payment obligation in clause (a)(i) above, which amount
was paid to Chondrometrics by VirtualScopics on March 10th, 2004 pursuant to
the
Preliminary Service Agreement.
4.2.
VirtualScopics shall pay Chondrometrics seven percent (7%) of Gross Revenues
generated by VirtualScopics (the “Marketing
Fee”),
which
amounts during the first three years of the Term shall not be payable unless
and
until the Guaranteed Payment for such year has been recouped fully. During
the
first three years of the Term, the Marketing Fee for each year will be deducted
from the Guaranteed Payment for such year, and the balance remaining, if any,
will be payable within thirty (30) days after the end of such year. The
Marketing Fee for the fourth and fifth year of the Term will be calculated
at
the end of each year, and will be payable within thirty (30) days after the
end
of each such yearly period.
4.3.
For
so long as amounts are owed under this Section 4, and for a period of one year
thereafter, VirtualScopics shall maintain and make available to Chondrometrics,
no more than once per year, and upon ten calendar days written request, such
records as are required to establish accurate payments due under this Agreement.
Chondrometrics shall, at its expense, have the right to have an auditor inspect
such records on a confidential basis during normal business hours. Such
inspection is solely for the purpose of verifying the accuracy of payments
due
under this Section 4.
4.4.
The
above payments and fees have been established in U.S. Dollars based on a U.S.
Dollar to Euro exchange rate band of $1.10 to $1.30 per Euro. If the U.S. Dollar
to Euro exchange rate deviates from this band, the parties agree in good faith
to renegotiate such payments and fees to establish the appropriate U.S. Dollar
value of this Agreement.
4.5.
Each
payment hereunder shall be due notwithstanding termination of this Agreement,
except that the foregoing shall not apply if the Agreement is terminated (a)
by
VirtualScopics or its successors under Section 11.3 hereof, (b) due to the
termination of the March 2004 Consulting Agreement by VirtualScopics pursuant
to
Sections 3(b), (d), or (e) of that agreement, or (c) due to the termination
by
▇▇. ▇▇▇▇▇▇▇▇ of the March 2004 Consulting Agreement (other than pursuant to
Section 3(b) thereunder). If after termination of this Agreement VirtualScopics
is obligated to make any payment by virtue of this Section 4.5, then Section
3.4
hereof shall survive termination of this Agreement, and Chondrometrics shall
comply with such provision for the duration of each twelve month period
corresponding with any such payment.
5. Ownership;
Publicity.
Except
as
set forth in the Consulting Agreements, nothing in this Agreement shall confer
on either party any right, title, license or other interest in or to the
Intellectual Property Rights of the other party. Each party hereby consents
to
the other party’s use of such party’s Marketing Materials, and to the other
party’s use of such party’s trademarks; provided, that all uses shall be solely
as contemplated by this Agreement.
6. Confidentiality.
6.1.
Confidential
Information.
With
respect to each party, “Confidential
Information”
of such
party means any and all information existing as of the date of this Agreement
or
thereafter developed in which such party (and its affiliates or subsidiaries)
has a proprietary interest or a business reason for guarding against
unauthorized disclosure, including but not limited to, all facts, opinions,
conclusions, projections, software, technical data, trade secrets, know-how,
and
other information relating to research and development, methods of distribution,
customer information activities, work in process, marketing, financial or
personnel matters related to such party, its present or future products,
services, technology, customers, employees, investors, prospects, markets or
business, whether communicated orally, electronically or in writing, or obtained
by the other party through observation or examination of such party’s business.
VirtualScopics’ Confidential Information shall include, without limitation, the
VirtualScopics Technology.
6.2.
Exclusions.
Confidential Information does not include any information that at the time
of
disclosure (a) is or becomes generally available to the public through no fault
of the receiving party or a third party with a duty not to disclose; (b) is
already known to the receiving party as evidenced by its written records; or
(c)
is disclosed to the receiving party by a third party not known by the receiving
party to be bound by a confidentiality agreement with the disclosing
party.
6.3.
Obligations.
Chondrometrics and VirtualScopics each agree that it shall,
indefinitely:
(a) hold
the
other party’s Confidential Information in strictest confidence;
(b) use
the
other party’s Confidential Information only for purposes permitted under this
Agreement, and for no other purpose whatsoever;
(c) disclose
the other party’s Confidential Information only to those of such party’s
employees, agents or contractors with a need to know, and permit such employees,
agents or contractors to use the other party’s Confidential Information only in
connection with the purposes referred to above;
(d) take,
and
require such party’s employees, agents and contractors to take, all precautions
reasonably necessary to keep the other party’s Confidential Information
confidential and protect the other party’s Confidential Information from theft,
unauthorized duplication or discovery;
(e) advise
such party’s employees and agents who receive the other party’s Confidential
Information that they may only use, and are required to protect, such other
party’s Confidential Information as set forth above, and require any and all
contractors to sign a non-disclosure agreement in a form substantially
equivalent to the form of non-disclosure agreement attached hereto as
Exhibit
A.
Chondrometrics and VirtualScopics are responsible for the safe-keeping of the
Confidential Information disclosed by it to their employees, agents and
contractors;
(f) notify
the receiving party immediately upon discovery of any use or disclosure of
the
disclosing party’s Confidential Information in violation of this Agreement, or
any other breach of the confidentiality obligations herein, and cooperate fully
with the disclosing party to assist it in regaining possession of the
Confidential Information and to prevent further disclosure or use of the
Confidential Information in violation of this Agreement; and
(g) in
the
event that the receiving party is required by law to disclose any part or all
of
the disclosing party’s Confidential Information, immediately notify the
disclosing party in writing, and fully cooperate with the disclosing party
in
its efforts to protect from or limit the disclosure of the Confidential
Information.
6.4.
Return
of Confidential Information.
At any
time upon request by the disclosing party or immediately on the termination
of
this Agreement (whichever event occurs first), the non-disclosing party shall
return to the disclosing party all of the disclosing party’s Confidential
Information, whether in written, electronic or other form.
7. Non-Solicitation.
7.1.
Except as agreed by VirtualScopics and Chondrometrics, VirtualScopics and
Chondrometrics agree that, during the Term and for a period of six months
thereafter, neither shall directly or indirectly, by itself or with any other
person, persons, partnership, company or any other entity, whether as owner,
shareholder, partner, employee or independent contractor, solicit,
recruit or hire, or in any manner attempt to solicit, recruit or hire, any
person employed by the other or any parent, subsidiary or affiliate of the
other
to leave such employment or to induce any such person to breach his or her
employment agreement.
7.2.
VirtualScopics and Chondrometrics agree that the covenant in Section 7.1 hereof
constitutes an independent covenant, which shall be enforceable by the other
notwithstanding any other right or remedy that the other party may have under
any other provision of this Agreement or otherwise.
8. Representations
and Warranties.
8.1.
Chondrometrics represents and warrants to VirtualScopics that:
(a) Chondrometrics
is a corporation, duly organized and validly existing in Germany;
(b) Chondrometrics
is not subject to any agreement, order, decree, security interest, whether
or
not perfected, or other document that would affect, prohibit or restrict the
execution or delivery of this Agreement or the performance by Chondrometrics
of
its obligations under the terms and conditions of this Agreement;
(c) this
Agreement constitutes Chondrometrics’ valid and binding obligation and is
enforceable in accordance with its terms, subject only to the laws affecting
creditors’ rights;
(d) there
are
no known suits or proceedings or other litigation of any kind pending or
threatened against Chondrometrics that could adversely affect Chondrometrics’
ability to perform its obligations under this Agreement;
(e) there
are
no known violations of any laws, rules or regulations of any governmental agency
that could affect Chondrometrics’ ability to perform its obligations under this
Agreement;
(f) in
performing hereunder, Chondrometrics will comply materially with German and
applicable international laws, rules, and regulations, and, if advised by
VirtualScopics of Chondrometrics’ failure to comply materially with applicable
U.S. law, such that VirtualScopics has a good faith reason to believe that
VirtualScopics, its business, or the continuation of this Agreement will be
impaired, Chondrometrics will take reasonable steps (taking into account
Chondrometrics’ available resources) to comply materially with such U.S. law;
(g) Chondrometrics
will not misrepresent to third parties the relationship between Chondrometrics
and VirtualScopics created hereunder, and will not make any statement or omit
to
make any statements or otherwise act or fail to act in any manner that may
(i)
portray VirtualScopics in a negative light, or (ii) result in a misstatement
of
fact regarding VirtualScopics or any services provided or to be provided by
VirtualScopics;
(h) all
services provided by Chondrometrics to third parties as contemplated hereunder
will be performed by Chondrometrics in a diligent and conscientious manner,
using reasonable care; and
(i) Chondrometrics
has no knowledge of any facts that if true would have a material adverse affect
upon the business currently conducted by Chondrometrics or its ability to
perform its obligations under this Agreement.
8.2.
VirtualScopics represents and warrants to Chondrometrics that:
(a) VirtualScopics
is a corporation, duly organized and validly existing in the State of New York;
(b) VirtualScopics
is not subject to any agreement, order, decree, security interest, whether
or
not perfected, or other document that would affect, prohibit or restrict the
execution or delivery of this Agreement or the performance by VirtualScopics
of
its obligations under the terms and conditions of this Agreement;
(c) this
Agreement constitutes VirtualScopics’ valid and binding obligation and is
enforceable in accordance with its terms, subject only to the laws affecting
creditors’ rights;
(d) there
are
no known suits or proceedings or other litigation of any kind pending or
threatened against VirtualScopics that could adversely affect VirtualScopics’
ability to perform its obligations under this Agreement;
(e) there
are
no known violations of any laws, rules or regulations of any governmental agency
that could affect VirtualScopics’ ability to perform its obligations under this
Agreement;
(f) in
performing hereunder, VirtualScopics will comply materially with all applicable
U.S. laws, rules, and regulations, and, if advised by Chondrometrics of
VirtualScopics’ failure to comply materially with applicable German and/or other
international laws, such that Chondrometrics has a good faith reason to believe
that Chondrometrics, its business, or the continuation of this Agreement will
be
impaired, VirtualScopics will take reasonable steps (taking into account
VirtualScopics’ available resources) to comply materially with such German
and/or other international laws;
(g) VirtualScopics
will not misrepresent to third parties the relationship between Chondrometrics
and VirtualScopics created hereunder, and will not make any statement or omit
to
make any statements or otherwise act or fail to act in any manner that may
(i)
portray Chondrometrics in a negative light, or (ii) result in a misstatement
of
fact regarding Chondrometrics or any services provided or to be provided by
Chondrometrics;
(h) all
services provided by VirtualScopics to third parties as contemplated hereunder
will be performed by VirtualScopics in a diligent and conscientious manner,
using reasonable care; and
(i) VirtualScopics
has no knowledge of any facts that if true would have a material adverse affect
upon the business currently conducted by VirtualScopics or its ability to
perform its obligations under this Agreement.
9. Disclaimer,
Limitation of Liability.
9.1.
Disclaimer.
EXCEPT
AS OTHERWISE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT, EACH PARTY HEREBY
DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING,
WITHOUT LIMITATION (a) ANY WARRANTY OF NON-INFRINGEMENT OR THAT THE SERVICES
BEING PROVIDED BY SUCH PARTY WILL BE ERROR-FREE; OR (b) ANY AND ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9.2.
Limitation
of Liability.
EXCEPT
FOR BREACHES OF CONFIDENTIALITY, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING THE LOSS
OF
PROFITS, REVENUE, DATA, OR USE OR COST OF PROCUREMENT OF SUBSTITUTE GOODS
INCURRED BY THE OTHER PARTY OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT
OR TORT OR BASED ON A WARRANTY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
10. Indemnification.
10.1.
Each party agrees to indemnify and hold harmless the other party, and such
other
party’s officers, members, agents, employees, successors, and assigns harmless
from and against any claims, actions, demands, liabilities, losses, damages,
judgments, settlements, costs and expenses (including reasonable attorneys'
fees) arising from or relating to (a) a material breach of the indemnifying
party’s representations and warranties hereunder, (b) the indemnified party’s
use of the indemnifying party’s Marketing Materials (provided the indemnified
party’s use was in accordance with this Agreement), and (c) the acts or
omissions of the indemnifying party, including without limitation, the
indemnifying party’s provision of image analysis services. Each party warrants
that it will incur only reasonable and necessary attorney’s fees and will apply
only reasonable and necessary resources to cure or prevent damages that may
have
been caused by the other party, with the intention of keeping indemnification
amounts within reasonable limits.
10.2.
The
indemnifying party shall defend and hold harmless the indemnified party with
counsel chosen and paid for by the indemnifying party upon receipt of prompt
written notice of the claim from the indemnified party (provided, that failure
to provide prompt notice shall not relieve the indemnifying party of its
indemnification obligations, except to the extent it has been damaged thereby),
and the indemnified party will reasonably cooperate in the defense of the action
or proceeding at the indemnifying party’s expense. Upon the indemnifying party
assuming the defense of any such claim, the indemnified party’s counsel may
thereafter participate in an advisory capacity at the indemnified party’s sole
cost. Neither party may enter into any settlement or compromise that may require
the other party to admit liability, pay any monies out-of-pocket, or assume
any
other material obligation or relinquish any material right, without the prior
written consent of the other party, not to be unreasonably withheld or
delayed.
11. Term
and Termination.
11.1.
Term
of Agreement. This
Agreement shall take effect on the Effective Date and shall remain in effect
until December 31st,
2008,
unless and until terminated in accordance with this Section (the “Term”).
11.2.
Termination
Upon Mutual Agreement.
This
Agreement may be terminated upon the mutual agreement of VirtualScopics and
Chondrometrics.
11.3.
Termination
for Cause by Either Party.
Either
party, as applicable, shall have the right, in addition to and without prejudice
to any other rights or remedies, to terminate this Agreement:
(a) for
a
material breach of this Agreement by the other party, which is not cured within
thirty (30) days of receipt by the party in default of a notice specifying
the
breach and requiring its cure; or
(b) effective
immediately upon written notice if (i) all or a substantial portion of the
assets of the other party are transferred to an assignee for the benefit of
creditors to a receiver or to a trustee in bankruptcy, (ii) a proceeding is
commenced by or against the other party for relief under the bankruptcy or
similar laws, and such proceeding is not dismissed within thirty (30) days,
(iii) the other party is adjudged bankrupt, (iv) the other party dissolves
or
otherwise ceases to operate its business, or (iv) the other party materially
breaches its obligations under Section 6 hereof.
11.4.
Termination
upon Termination of a Consulting Agreement.
This
Agreement shall terminate upon the termination of the March 2004 Consulting
Agreement if such agreement is terminated prior to its scheduled expiration
date, including the expiration date of any renewal term. However, this Agreement
will continue if the March 2004 Consulting Agreement expires on December 31,
2006, and is not thereafter renewed. Notwithstanding the foregoing, the parties
may mutually agree in writing to continue this Agreement notwithstanding such
early termination of the Consulting Agreement.
11.5.
Obligations
on Termination.
Upon
termination of this Agreement, each party shall promptly return to the other
party all marketing materials of such party, and any and all Confidential
Information in its possession, in any form. The parties shall have no further
obligations under terms this Agreement, but Sections 6, 7, 9, 10, and 13 hereof,
and any other provision that by its nature survives termination, shall survive
termination of this Agreement.
12. Insurance.
Each
party will obtain and maintain throughout the Term and thereafter, insurance
coverages of the types and in the amounts as are customary in such party’s
industry (within the primary territory within which such party operates), and
otherwise as necessary to cover its obligations and potential liabilities
hereunder.
13. General.
13.1.
Assignment.
Neither
party may assign or transfer its rights or delegate its obligations under this
Agreement without the other party’s prior written consent, which will not be
unreasonably withheld, except that VirtualScopics shall be permitted to assign
any of its rights and obligations under this Agreement in connection with any
merger, consolidation, or sale of all or substantially all of VirtualScopics’
assets. Any attempted assignment contrary to the foregoing shall be null and
void.
13.2.
Entire
Agreement.
This
Agreement, together with any Exhibits attached hereto, and that certain
Ancillary Agreement between VirtualScopics and Chondrometrics dated as of the
date hereof, constitutes the final, complete, and exclusive understanding
between the parties, and replaces and supersedes all previous oral or written
agreements, understandings, or arrangements between the parties with respect
to
the subject matter of this Agreement. This Agreement may not be modified or
amended except by a writing signed by an authorized officer of each party to
this Agreement.
13.3.
Notices.
Except
as otherwise provided in this Agreement, notices required to be given pursuant
to this Agreement shall be effective when received, and shall be sufficient
if
given in writing, hand delivered, sent by facsimile with confirmation of
receipt, sent by First Class Mail, return receipt requested (for all types
of
correspondence), postage prepaid, or sent by overnight courier service and
addressed as follows:
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VirtualScopics
LLC
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Attn:
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To:
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Chondrometrics
GmbH
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Attn:
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13.4.
Independent
Contractor.
The
parties shall, and at all times will be independent contractors of one another.
Nothing in this Agreement shall be deemed to create an employer/employee,
principal/agent, or joint venture relationship. Neither party has the authority
to enter into any contracts on behalf of the other party or otherwise act on
behalf of the other party.
13.5.
Governing
Law; Jurisdiction; No Trial by Jury.
(a) With
respect to matters pertaining to (i) Section 1 hereof (Definitions), (ii)
Sections 2.4, 3.1, and 3.3 hereof (marketing provisions), as well as the
provision of marketing-related services and Trial-related services within the
United States, (iii) issues relating to intellectual property, including without
limitation, Section 5 hereof (Ownership; Publicity), and the existence,
validity, or enforcement of a party’s rights in any existing or future
intellectual property, including any issues regarding interpretation of the
relevant provisions herein, (iv) Section 6 hereof (Confidentiality), (v) Section
7 hereof (Non-Solicitation), (vi) Section 9 hereof (Disclaimer; Limitation
of
Liability), (vii) Section 10 hereof (Indemnification), and (viii) any
intentional material breach of this Agreement by Chondrometrics, this Agreement
shall be governed by New York law, without regard to conflicts of law
principles. The federal and state courts located in Monroe County, New York
shall have exclusive jurisdiction over any such claim brought under this
Agreement, and the parties hereby consent to the personal jurisdiction of such
courts.
(b) With
respect to matters pertaining to (i) Sections 2.1, 2.2, 2.3 and 2.5 hereof
(Research Trials), (ii) Section 3.2 hereof, including the provision of
marketing-related services and Trial-related services outside of the United
States, (iii) Section 4 hereof (Payments), (iv) Section 8 hereof
(Representations and Warranties), (v) Section 11 hereof (Term and Termination),
including any intentional material breach of this Agreement by VirtualScopics,
but excluding any intentional material breach of this Agreement by
Chondrometrics, (vi) Section 12 hereof (Insurance), and (vii) Sections 13.1,
13.2, 13.3, 13.4, 13.6, 13.7, 13.8, 13.9, and 13.10 hereof, German law shall
apply. The courts located in Munich, Germany shall have exclusive jurisdiction
over any such claim brought under this Agreement, and the parties hereby consent
to the personal jurisdiction of such courts.
13.6.
Severability.
In case
any provision of this Agreement is held to be invalid, unenforceable, or
illegal, that provision shall be severed from this Agreement, and such
invalidity, unenforceability, or illegality will not affect any other provisions
of this Agreement.
13.7.
Waiver.
The
failure of either party to enforce any provisions of this Agreement is not
a
waiver of the provisions or of the right of that party to subsequently enforce
that, or any other, provision of this Agreement.
13.8.
Injunctive
Relief.
VirtualScopics
and Chondrometrics acknowledge that the financial hardship to the non-breaching
party as a result of a breach of this Agreement may be difficult or impossible
to measure in dollars and that no remedy at law will be adequate to compensate
the non-breaching party for such violation; therefore, the non-breaching party
shall be entitled to injunctive relief as well as any other applicable remedies
at law or in equity, and the breaching party waives the defense of adequate
remedy at law, acknowledging that no such remedy exists. Should a court of
competent jurisdiction declare any of the covenants set forth in this
Agreement unenforceable
due to an unreasonable restriction, duration, geographical area or otherwise,
the parties agree that such court shall be empowered and shall grant the
non-breaching party injunctive relief to the extent reasonably necessary to
protect its interests. The parties further agree that the breaching party will
not require the non-breaching party to post a bond in such situations as the
posting of a bond is unnecessary.
13.9.
Attorneys’
Fees.
In
the
event of any dispute between the parties arising out of this Agreement, the
substantially prevailing party shall be entitled to recover its reasonable
attorneys’ fees and costs from the non-substantially prevailing
party
13.10.
Force
Majeure.
Neither
Chondrometrics nor VirtualScopics shall be responsible for any failure or delay
in the performance of its obligations under this Agreement which is caused
by
acts of God, flood, fire, war or public enemy.
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Agreement on the date set forth
above.
| CHONDROMETRICS GMBH | VIRTUALSCOPICS LLC | |||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
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[Signature] |
[Signature] |
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| Title: | Chief Executive Officer | Title: | Chief Operating Officer | |
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| By: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | By: | ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
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Exhibit
A
Form
of Non-Disclosure Agreement