Service Agreement - Digirad Corp. and Universal Servicetrends Inc.
DIGIRAD CORPORATION
SERVICE AGREEMENT
THIS SERVICE AGREEMENT ("Agreement") is entered into as of August 25,
2000, ("Effective Date"), by and between Digirad Corporation, a Delaware
corporation, located at 9350 Trade Place, San Diego, California 92126-6334
("DIGIRAD") and Universal Servicetrends, Inc., a Delaware Corporation, located
at c/o Servicetrends 3655 Kennesaw 75 Parkway, ste. 135, Kennesaw, GA 30144
("USI").
RECITALS
A. DIGIRAD manufactures certain gamma camera products, and
associated support components for use in the medical industry as well as
provides nuclear medicine imaging services.
B. USI is an individual service provider that specializes in
servicing products to the medical industry.
C. DIGIRAD wishes to appoint USI, and USI wishes to accept such
appointment as USI for all Products distributed.
In consideration of the foregoing and the promises and covenants
contained herein and other good and valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF USI.
1.1 APPOINTMENT. DIGIRAD hereby appoints USI as DIGIRAD's
exclusive service provider of Products (defined below) for purchasers in the
medical industry in the territory described in attached Exhibit A ("Territory"),
and USI hereby accepts such appointment. USI agrees to service the Products only
within the Territory. Notwithstanding the foregoing, for any reasonable reason,
including, but not limited to, poor performance in a region or non-cooperation
of the USI in the Territory or for effecting any part of Section 6.3 of this
Agreement, Digirad may amend Exhibit A at any time by deleting a region by
giving written notice of such amendment to USI. Such notice shall be effective
immediately.
1.2 PRODUCTS. The product and its options subject to this
Agreement ("Products", are set forth on the list attached as Exhibit B ("List").
1
<Page>
2. EXCLUSIVITY TERM:
2.1 EXCLUSIVITY TERM. The "Exclusivity Term" shall be ***
years *** may terminate the agreement after *** year with *** days written
notice to the ***
3. OBLIGATIONS OF USI.
3.1 BEST EFFORTS. USI agrees to use its best efforts to
service Products in the Territory.
3.2 USI TRAINING AND COOPERATION. USI shall participate
at USI's travel, lodging expense in training courses and seminars conducted by
DIGIRAD at locations and times agreeable to both DIGIRAD and USI to inform
service providers on the servicing of the Products.
3.3 COMPLIANCE. USI shall comply with all applicable
laws, regulations or restrictions (collectively, "Applicable Laws") relevant to
this Agreement and the subject matter hereof and shall actively assist DIGIRAD
in its compliance with same. USI shall immediately cease distribution of any
Product, Spare Part (as defined below) or any other activity under this
Agreement with respect thereto upon written notice by DIGIRAD in connection with
any adverse or unexpected results or any actual or potential government action
relevant to any Product or Spare Part.
3.4 MODIFICATIONS. USI shall promptly notify DIGIRAD in
writing as to any issues or problems with the Product or Spare Parts encountered
by any of USI's customers, employees, agents or affiliates and any resolutions
arrived at for those problems. USI shall communicate in writing with DIGIRAD any
and all modifications, design changes or improvements of the Products or Spare
Parts suggested by any customers, employees, agents, or affiliates of USI. USI
further agrees that DIGIRAD shall have any and all right, title and interest in
and to any such suggested modification, design change or improvement without
payment of additional consideration for such either to USI or its employees,
agents or affiliates. USI further agrees that DIGIRAD, in its sole discretion,
shall determine the implementation or not of any such suggested modification,
design change or improvement.
3.5 RECALLS. For the term of this Agreement and for such
additional time periods as specified by DIGIRAD in accordance with applicable
regulations promulgated by the U.S. Food & Drug Administration, USI shall
maintain records of all Product and Spare Parts sales and customers sufficient
to adequately administer a recall or replacement of any Product or Spare Part
and shall fully cooperate with DIGIRAD in any effort of DIGIRAD to recall or
replace any Product or Spare Part thereof.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<Page>
4. PRODUCT SERVICE.
4.1 SERVICE. Service ("Service") shall be defined as the
duty and function of installing, maintaining and repairing Products such that an
end-user has use and function of such Products to the fullest extent.
4.2 SERVICE ASSIGNED TO USI. USI shall Service all
Products located in the Territory ("Service Assignment"). Any parts or Products
replaced by USI shall be returned to DIGIRAD. DIGIRAD hereby delegates to USI
DIGIRAD's obligations under any DIGIRAD Service Agreement with any end-user
provided, however, that DIGIRAD may rescind such delegation at any time.
4.3 SERVICE LEVEL COMMITMENT. USI agrees to at all times
maintain a Field Service Representative staff proficient and professional in the
Service of Products. Furthermore, USI agrees to provide for adequate Territory
coverage and a Field Service Representative staffing level appropriate to assure
that costs to DIGIRAD for such Service are held to a reasonable and logical
amount.
4.4 SPARE PARTS PURCHASE. Subject to the terms of this
Agreement for which DIGIRAD shall supply USI with spare parts ("Spare Parts"),
USI agrees to satisfy solely, through USI's purchase of spare parts from
DIGIRAD, one hundred percent (100%) of USI's requirements for Spare Parts for
Servicing all Digirad Products.
4.5 DELIVERY DATE. Delivery date shall mean a date for
which delivery of Spare Parts Kit and Other Spare Parts is quoted by DIGIRAD
pursuant to a Supply Agreement Purchase Order and an Other Spare Parts Purchase
Order.
4.6 APPLICABLE LAWS AND REGULATIONS. USI will ascertain
and comply with all applicable laws and regulations and standards of industry or
professional conduct in connection with the use, distribution, installation or
promotion of Other Spare Parts, including without limitation, those applicable
to product claims, labeling, approvals, registrations and notification.
4.7 FEE FOR SERVICE PROVIDED BY USI. If DIGIRAD delegates
its obligations to USI for Service to be performed by DIGIRAD pursuant to: (1) a
DIGIRAD Service Agreement; or (2) the warranty of the Products; or (3) an
agreement between DIGIRAD and an end-user for Service on an as-needed basis,
DIGIRAD shall pay USI a fee of *** *** for that period of time Service is
actually performed on Products *** *** *** *** All such costs will be
documented, receipted and invoiced per the field service purchase order, ("Field
Service Purchase Order" as shown in exhibit "D"). *** ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
3
<Page>
5. REPORTS AND RECORDS.
5.1 PARTS AND SERVICE REPORTS.
(A) FIELD SERVICE AND ACTIVITY REPORT. USI will
provide to DIGIRAD *** , a detailed report outlining troubleshooting, service
and maintenance activities in support of the Products. This report will include
any trends, observations and recommendations gained from the USI's Field Service
organization.
(B) OTHER PARTS AND SERVICE REPORTS. USI agrees
to work in good faith with DIGIRAD to initiate and provide other reports, as
appropriate, to support the Service of the Products and to satisfy the inventory
management needs of DIGIRAD. Such request from DIGIRAD shall not be unreasonable
and USI shall not unreasonably withhold such written requested reports.
5.2 ADDITIONAL RECORDS. USI shall accurately maintain all
records as necessary or appropriate to satisfy Applicable Law or to establish
USI's compliance with the provisions of this Agreement or as otherwise
reasonably requested by DIGIRAD, and shall provide DIGIRAD and its
representatives *** to same (including the right to make copies of such records)
during the term hereof, and for *** years after the termination of this
Agreement.
6. TERM AND TERMINATION.
6.1 TERM OF AGREEMENT. This Agreement shall become
effective as of the Effective Date and shall extend for *** months unless sooner
terminated as provided herein (the "Initial Term").
6.2 TERMINATION. In the event of any material breach by a
party, the non-breaching party may terminate this Agreement if such breach
remains uncured *** days after the breaching party's receipt of written notice
of such breach from the non-breaching party or immediately if such breach is of
an incurable nature. Notwithstanding the foregoing, in the event that USI (i) is
adjudicated bankrupt or insolvent or a receiver for its property is appointed or
USI or any Member Company is subject to the commencement of proceedings of any
nature against it under bankruptcy, insolvency or debtor's relief laws (which
proceeding is not vacated or set aside within sixty (60) days of commencement),
(ii) voluntarily files a bankruptcy petition, or otherwise seeks relief under
bankruptcy, insolvency or debtor's relief laws (which filing is not withdrawn
within one hundred twenty (120) days of filing), (iii) provides services outside
the Territory on Digirad Products,) (iv) purchases Spare Parts from other than
DIGIRAD, (iv) materially breaches a provision of this Agreement of a non-curable
nature (including, without limitation), (v) makes a non-permitted assignment,
transfer or delegation of this Agreement, (vi) fails to comply with Applicable
Laws in connection herewith, or (vii) repeats a breach of the same provision
hereof, DIGIRAD may, in its sole determination and at its option, terminate this
entire Agreement by giving written notice effective as of the date thereof.
DIGIRAD, in its sole discretion, may terminate this Agreement with *** days
written
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
4
<Page>
notice in the event of the dissolution, merger or consolidation of the USI or
any other transaction or series of related transactions effecting a change in
fifty percent (50%) or more of the ownership or voting control of the USI or the
transfer of all or substantially all of a USI's business, assets or stock in
whatever form of corporate transaction or transactions (a "Corporate Sale").
Acceptance or satisfaction of any Service order by DIGIRAD after notice of
breach, termination or expiration shall not be construed as a revival renewal or
extension of this Agreement nor as a waiver or withdrawal of any notice of
termination, expiration or breach.
6.3 NO TERMINATION DAMAGES. Neither USI nor DIGIRAD shall
by reason of any permitted termination or expiration hereunder be liable to the
other for, and each shall release and hold the other harmless from, all claims
of any nature, including (without limitation) claims for compensation,
reimbursement or damages on account of the loss of prospective profits on
anticipated sales, or on account of expenditures, investments, leases or
commitments in connection with the business or goodwill of either party,
resulting from or arising out of such termination or expiration, or for any
other indirect, special or consequential damages.
6.4 RECLAMATION AND REPURCHASE OF INVENTORY. Upon
termination of this Agreement, USI will, within *** days, return to DIGIRAD all
inventory of Spare Parts which have not been invoiced by DIGIRAD for payment by
USI. Upon termination of this Agreement, *** *** ***
6.5 EFFECT OF TERMINATION OR EXPIRATION. Notwithstanding
any other provision hereof, the provisions of this Agreement which by their
nature create rights or obligations that should survive the expiration or
termination of this Agreement in its entirety, or the expiration or termination
of any Sections hereof, shall so survive, including (without limitation) the
rights and obligations under Sections 6.3, 7, 8, 9, 10, and 11 and the
obligation to pay any purchase price, invoices and charges for Spare Parts
hereunder. DIGIRAD and USI agree to satisfy and remit to one another all
properly invoiced payments for Spare Parts and/or Service within *** days of
termination or expiration of this Agreement in its entirety or any Section or
Sections hereof. Within *** days after the expiration or the termination of this
Agreement in its entirety for any reason, the parties shall promptly return to
one another all property and other materials of the other party in their
respective possessions, including all media (and copies thereof) containing
confidential information of DIGIRAD and including without limitation all
marketing materials, customer lists, placement records, and service records.
Upon termination or expiration, if USI has any right, title or interest in any
Mark (as defined in Section 7), USI shall immediately assign all such right,
title and interest in and to such Mark to DIGIRAD and shall take all necessary
action to ensure that DIGIRAD obtains the full benefit thereof. Termination is
not the sole remedy under this Agreement and, whether or not termination is
effected, all other remedies shall remain available.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
5
<Page>
7. CONFIDENTIAL INFORMATION AND PROPRIETARY RIGHTS.
7.1 CONFIDENTIALITY. The proprietary information exchange
agreement between USI and DIGIRAD, shall remain in effect throughout the term of
this Agreement and shall survive the term of this Agreement.
7.2 TRADEMARK RIGHTS. DIGIRAD hereby grants to the USI
the nonexclusive limited right to use its trade names, trademarks, service marks
and other trade designations, including the name "Digirad" or Digirad
Corporation", ("Marks") solely in connection with the service of Products as
provided for herein. USI shall submit any materials prepared by USI which
describe Products or use Marks to DIGIRAD for written approval prior to release.
DIGIRAD shall use its best efforts to respond to such requests for approval
within *** business days. DIGIRAD reserves the right to reject any such
materials which DIGIRAD, in its sole discretion, deems potentially injurious to
DIGIRAD's business. USI SHALL NOT (i) alter or remove any Marks applied to or
used in conjunction with a Product by DIGIRAD, (ii) attach any additional trade
name, trademark, service mark or other trade designation to any Product, (iii)
use any Marks as part of USI's name or mark or in any other manner as would
cause a reasonable person to infer that USI has an affiliation with DIGIRAD
other than the rights provided under this Agreement to service Products or (iv)
use any Mark in a way that implies USI is an agent, franchise, representative or
branch of DIGIRAD. USI shall immediately change or discontinue the use of any
Marks on written request from DIGIRAD. At no time during or after the term of
this Agreement shall USI challenge or assist others to challenge DIGIRAD's
ownership or registration of any Mark or attempt to use or register any
trademark, service mark, trade name or other trade designation which is
confusingly similar to any Mark of DIGIRAD. USI shall, on termination or
expiration of this Agreement, cease the use of DIGIRAD's Marks and shall
surrender to DIGIRAD all price lists, catalogs, promotional literature and
similar items.
7.3 PUBLICITY AND PRESS RELEASES. Except to the extent
necessary under applicable laws, *** that no press releases or other publicity
relating to the existence or substance of the matters contained herein will be
made without ***
8. INSURANCE. Upon execution of this Agreement, DIGIRAD shall
provide USI with evidence of product liability insurance as required to cover
its obligations and activities under this Agreement, and USI shall provide
DIGIRAD with evidence of product liability insurance for USI as required to
cover their obligations and activities under this Agreement. Such insurance
shall be issued by a reputable carrier and on terms reasonably acceptable to the
other party. USI and DIGIRAD agree to maintain at least such coverage during the
term hereof and for *** years thereafter and to provide the other party with ***
days prior written notice of any change, and immediate written notice of
cancellation with respect thereto. Insurance coverage by USI and DIGIRAD shall
be for at least *** for each claim under such policy and for at least *** in the
aggregate.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
6
<Page>
9. INDEMNIFICATION.
9.1 DIGIRAD. DIGIRAD agrees to indemnify, defend and hold
harmless USI and its officers, directors, stockholders, affiliates, employees
and agents against any and all threatened or pending claims, actions, losses and
damages of any kind (including all costs and expenses and reasonable attorneys'
fees) arising in any manner out of any of DIGIRAD's activities contemplated by
the Agreement and due to the extent of (a) the intentional wrong or negligence
of DIGIRAD, (b) any defect in the Products existing at the time of delivery to
end user, (c) DIGIRAD's breach of the terms hereof or (d) any claims by a third
party that Products infringe upon intellectual property rights of such third
party.
9.2 USI. USI agrees to indemnify, defend and hold
harmless DIGIRAD and its officers, directors, stockholders, affiliates,
employees and agents against any and all threatened or pending claims, actions,
losses and damages of any kind (including all costs and expenses and reasonable
attorneys' fees) arising in any manner out of any of USI's activities
contemplated by the Agreement and due to the extent of (a) the intentional wrong
or negligence of USI, (b) any change or alteration of the Products by the USI
coming into existence after the time of delivery, or (c) USI's breach of the
terms hereof.
10. RELATIONSHIP BETWEEN PARTIES. The relationship between USI and
DIGIRAD under this Agreement is intended to be that of independent contractors.
Nothing in this Agreement is intended to be construed so as to constitute USI
and DIGIRAD as partners or joint venturers, or either party hereto as the
employee, agent or legal representative of the other party. USI agrees that it
shall not hold itself out as an agent of DIGIRAD or claim or represent that it
is operating or doing business as a DIGIRAD sales office, nor shall USI purport
to pledge the credit of or enter into any agreement or commitment for DIGIRAD.
This Agreement does not convey nor shall USI claim any property interest in
DIGIRAD's corporate name, Marks, patents, patent applications, trade secrets,
processes or other proprietary or intangible property rights. Each party shall
be obligated to use its reasonable commercial efforts to assure that its
employees, or other persons whose services it may require, comply with all of
the terms of this Agreement. DIGIRAD is in no manner associated with or
otherwise connected with the actual performance of this Agreement on the part of
USI, nor with USI's employment of other persons or incurring of expenses.
11. MISCELLANEOUS.
11.1 NOTICES. All notices, orders, authorizations,
approvals, reports and other communications required or permitted herein shall
be in writing and shall be delivered personally (which shall include delivery by
courier or reputable overnight delivery service) or sent by certified or
registered mail, postage prepaid, return receipt requested or sent by facsimile
transmission. Items delivered personally or by facsimile transmission shall be
deemed delivered on the date of delivery; items sent by certified or registered
mail shall be deemed delivered three (3) days after mailing. The address of the
parties for purposes of this provision are as follows (as may be amended
pursuant to a notice delivered hereunder):
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
2
<Page>
USI: DIGIRAD:
Universal Servicetrends, Inc.
c/o Servicetrends Digirad Corporation
3655 Kennesaw 75 Parkway 9350 Trade Place
Suite 135 San Diego, CA 92126-6334
Attn: Robert E. Buscher, Attn: President & CEO
Chief Executive Officer Phone: (858) 578-5300
Phone: 770-970-5009 Fax: (858) 549-7714
Fax No.: 770-970-5004
11.2 ASSIGNMENT, TRANSFER, AMENDMENT AND WAIVER. USI shall
not delegate any duties or assign or transfer any rights under this Agreement
without DIGIRAD's prior written consent in its sole discretion. A Corporate Sale
(as defined in Section 6.2) of USI shall be deemed an assignment requiring prior
written consent by DIGIRAD. Subject to the foregoing, this Agreement shall bind
and inure to the benefit of the parties and their respective successors and
assigns. No modification, amendment, termination, supplement or waiver of this
Agreement shall be binding unless made in writing clearly identified as a
modification, amendment, termination, supplement or waiver and signed by USI and
an authorized representative of DIGIRAD. No waiver shall be implied from conduct
or a failure to enforce rights or a delay in enforcing rights, including any
delay by DIGIRAD in exercising or asserting its right to terminate this
Agreement due to USI's breach of its obligations hereunder.
11.3 ENTIRE AGREEMENT. This Agreement represents the
entire agreement between the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous representations, understandings,
discussions, negotiations, correspondence, commitments and agreements, whether
written or oral. USI has not relied on any representation, agreement or
understanding not expressly set forth herein. In the event that any provision of
this Agreement is determined to be illegal or otherwise unenforceable, such
provision shall be construed as if it were written so as to be legal and
enforceable to the maximum extent possible, the entire Agreement shall not fail
on account thereof, and the balance of the Agreement shall be continued in full
force and effect, all so as to effectuate to the greatest extent possible the
parties' intent. No person not a party to this Agreement shall have any rights
by reason of this Agreement nor shall any party hereto have any obligations or
liabilities to such other person by reason of this Agreement. All exhibits
(INCLUDING, BUT NOT LIMITED TO, THE STANDARD TERMS AND CONDITIONS ATTACHED
HERETO AS EXHIBIT E) referred to herein are deemed incorporated by this
reference as if fully set forth herein.
11.4 FURTHER ASSURANCES. Each party hereto agrees to
execute, acknowledge and deliver such further instruments, and to do all such
other acts, as may be necessary or appropriate in order to carry out the
purposes and intent of this Agreement.
11.5 FORCE MAJEURE. Except for the obligation to pay
amounts due and owing by USI, neither party shall be liable for any delay for
failure in performance due to any reason or unforeseen circumstances beyond the
affected party's reasonable control, including acts of God
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
8
<Page>
or public authorities, war and war measures, civil unrest, fire, earthquakes,
epidemics, inevitable accidents, delays in transportation, delivery or supply,
labor disputes, excessive demand for Products or other interruption in the
manufacture, supply or distribution of Products. The obligations and rights of
the excused party shall be extended on a day-to-day basis for the time period
equal to the period of the excusable delay.
11.6 GOVERNING LAW. The parties agree that this Agreement
shall be governed by and construed under the internal laws of the State of
California, as applicable to agreements made and to be performed in such state,
without regard to principles of conflicts of law.
11.7 DISPUTE RESOLUTION.
a. ARBITRATION. All disputes that in any manner arise out of or
relate to this Agreement or its subject matter shall be resolved *** *** *** The
parties shall have the right to conduct discovery in accordance with the laws of
California. *** *** Arbitration shall take place in San Diego, California,
unless the parties otherwise agree. Notwithstanding the foregoing, no action
involving professional malpractice allegations, and no action brought by a third
party shall be subject to this arbitration provision.
b. ATTORNEYS' FEES. In the event of any action or proceeding
(including, without limitation, arbitration) brought by *** ***
11.8 CAPTIONS. Section captions are inserted for
convenience only and in no way are to be construed to define, limit or affect
the construction or interpretation hereof
11.9 BASIS OF BARGAIN. ALL PARTIES RECOGNIZE AND AGREE
THAT THE WARRANTY DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS
AGREEMENT ARE MATERIAL BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE
BEEN TAKEN INTO ACCOUNT AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE
GIVEN BY EACH PARTY UNDER THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO
ENTER INTO THIS AGREEMENT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
9
<Page>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.
Universal Servicetrends, Inc. a DIGIRAD CORPORATION, a
Delaware Corporation Delaware Corporation
By: /s/ Robert E. Buscher By: /s/ Robert E. Johnson
---------------------------------- --------------------------------
Name: Robert E. Buscher Name: Robert E. Johnson
-------------------------------- --------------------------------
Title: Chief Executive Officer Title: V.P. Sales & Customer Service
------------------------------- --------------------------------
[SIGNATURE PAGE TO DISTRIBUTION AGREEMENT]
10
<Page>
EXHIBIT A
"TERRITORY"
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
B-1
<Page>
EXHIBIT B
"PRODUCTS LIST"
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
B-2
<Page>
EXHIBIT C
"PRODUCT SPECIFICATIONS"
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<Page>
EXHIBIT D
"FIELD SERVICE PURCHASE ORDER"
To be developed
<Page>
EXHIBIT E
"STANDARD TERMS AND CONDITIONS"
THE TERMS CONTAINED HEREIN AND IN THE ATTACHED SERVICE AGREEMENT (THE
"AGREEMENT") BETWEEN DIGIRAD AND USI APPLY TO ALL SPARE PARTS AND RELATED
ARRANGEMENTS BETWEEN DIGIRAD AND USI. THESE TERMS SHALL BE APPLICABLE WHETHER OR
NOT ATTACHED TO OR ENCLOSED WITH SPARE PARTS SOLD HEREUNDER. REFERENCES BELOW TO
SECTIONS AND EXHIBITS ARE REFERENCES TO THE AGREEMENT. ANY CHANGES IN THE TERMS
CONTAINED HEREIN MUST SPECIFICALLY BE AGREED TO IN WRITING BY AN AUTHORIZED
REPRESENTATIVE OF DIGIRAD AS PROVIDED IN THE AGREEMENT.
1. Orders.
USI shall submit any order ("Order") for Spare Parts in writing to
DIGIRAD at the address set forth in the Agreement, which Order shall reference
the Agreement and shall set forth the quantities, descriptions, applicable
purchase price and requested delivery date for the Spare Parts ordered together
with commercially reasonable shipping instructions and an assigned USI or Member
Company purchase order number, or some other mutually verifiable method. All
Orders are subject to written acceptance by DIGIRAD in its sole discretion.
DIGIRAD will use its best efforts to provide written acceptance of such Orders
within *** business days of receipt. DIGIRAD shall not be liable for failure to
make or delay any shipment or delivery.
2. Inspection.
USI shall promptly inspect the Spare Parts upon receipt and either
accept, or reject and describe deficiencies in writing within *** days of
receipt. Spare Parts shall be deemed accepted by USI as fully conforming unless
DIGIRAD receives a written notice of deficiencies within such *** day period.
DIGIRAD reserves the right to make shipments in installments. Each shipment
hereunder shall be a separate and independent transaction and shall be invoiced
by DIGIRAD and payable by USI separately.
3. Terms of Payment and Delivery.
3.1 Payment Terms. All Spare Parts are sold *** with the net
amount of the invoice (including all freight, transportation, insurance and
similar charges) due within *** days from the invoice date, which shall be the
*** USI may take a *** on the total invoice if paid within *** of invoice. USI
shall owe DIGIRAD a late charge of *** on any delinquent balance hereunder,
provided that in no event shall this monthly charge exceed the maximum amount
allowed by law. USI shall pay all costs and expenses incurred by DIGIRAD in
collecting delinquent amounts (including late charges) under this Section 3,
including attorneys' fees and costs. DIGIRAD may accept partial payment on any
invoice, which shall not constitute a waiver of DIGIRAD's right to collect the
balance or an accord and satisfaction not withstanding DIGIRAD's endorsement of
USI's check.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<Page>
DIGIRAD may at any time, either generally or with respect to any specific Order,
change the amount or duration of credit to be allowed to USI by DIGIRAD, which
may include requiring cash or letter of credit in advance of shipment or
delivery or delaying or stopping acceptance of Orders from or shipments to USI,
in the event USI has failed to pay previous amounts when due or USI's financial
condition or creditworthiness, performance under this Agreement, or other
actions make such action appropriate in DIGIRAD's reasonable sole judgment
without waiving its claim for damages or other remedies. USI shall not take any
credit or offset whatsoever against amounts owed to DIGIRAD without DIGIRAD's
prior written authorization. Unless otherwise required by law, all prices shall
be quoted and billed exclusive of federal, state and local excise, sales and
similar assessments, taxes and charges. Such assessments, taxes and charges
shall be the sole responsibility of USI and, if required to be paid by DIGIRAD,
shall appear as additional items on invoices. If exemption from such taxes or
charges is claimed, USI must provide a certificate of exemption and similar
documentation at the time the Order is submitted to DIGIRAD. If shipments are
delayed by USI, payments shall become due on the date that is *** days from the
date that DIGIRAD is prepared to make shipment. Spare Parts held at USI's
request shall be at the risk and expense of USI, including *** *** charge for
any Spare Parts being held over *** days.
3.2 Risk of Loss and Title. All risk of loss or damage in transit
of Spare Parts shall pass to USI upon DIGIRAD's delivery to a carrier with
insurance regardless of any provisions for the payment of freight or insurance
or the form or content of shipping documents. In DIGIRAD's sole discretion,
transportation, insurance and similar charges shall be collected or, if prepaid,
shall be subsequently billed to USI. USI must file all claims for loss or damage
in transit with the carrier. USI shall receive title to the Spare Parts only
upon payment in full for each respective Spare Part.
4. Recalls, Discontinuances and Alterations of Spare Parts.
4.1 Recalls and Discontinuances. DIGIRAD has at any time by
written notice to USI, the right to recall or discontinue any Spare Parts in
USI's inventory or in the marketplace. Such Spare Parts may include Spare Parts
ordered but not yet shipped. USI agrees to return all such Spare Parts to
DIGIRAD at the "ship to" address listed on DIGIRAD's written recall or
discontinuance notice in accordance with DIGIRAD's written instructions and at
DIGIRAD's expense. Recalled Spare Parts shall be returned by USI to DIGIRAD
within *** days from the delivery of the written notice from DIGIRAD.
Discontinued or altered Spare Parts shall be returned by USI to DIGIRAD within
*** days from the delivery of the written notice from DIGIRAD.
4.2 Return Procedure and Terms. In order to return Spare Parts
under all other conditions, except those specifically stated in the Section 4.1
herein, USI shall obtain a return goods authorization number ("RGA") from an
authorized representative of DIGIRAD. All authorized returns must be received in
their original container by DIGIRAD within *** days of the issue date of the RGA
which shall be conspicuously borne on such container. DIGIRAD shall not accept
Spare Parts not authorized to be returned. Any non-authorized Spare Parts shall
be shipped back to USI with transportation and similar charges collect or, if
USI fails
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<Page>
to accept the return shipment, DIGIRAD shall store such returned Spare Parts and
be entitled to charge USI for the costs of storage and handling. All returned
Products and Spare Parts shall be subject to inspection or testing by DIGIRAD.
USI shall not be entitled to any credit if the returned Spare Parts have been,
in DIGIRAD's sole reasonable determination, improperly handled, stored,
transported or used.
4.3 AMOUNT OF CREDIT. A credit may be allowed for properly
returned Spare Parts in the Section 4.1 herein based on the applicable purchase
price for the Spare Part. For all other conditions, except those specifically
stated in the Section 4.1 herein, a credit may be allowed for properly returned
Spare Parts based on the applicable purchase price for the Spare Part less any
applicable restocking or other appropriate charges. All returns shall be shipped
F.O.B. destination, freight, insurance, packing, restocking and other charges
prepaid, on a carrier and with insurance selected by DIGIRAD.
4.4 ALTERATIONS. DIGIRAD may make alterations to the Spare Parts
at any time which DIGIRAD deems necessary or appropriate to comply with industry
standards or Applicable Laws or as DIGIRAD may otherwise determine to be
reasonable, necessary or appropriate, and such altered Spare Parts shall be
deemed to fully conform herewith.
5. LIMITED EXPRESS WARRANTY AND DISCLAIMER OF ALL OTHER WARRANTIES.
5.1 WARRANTY. For that time which is the earlier of (a) *** after
Spare Part ships or (b) the date on which the Spare Parts are installed and
accepted by end-users, DIGIRAD warrants to USI that Spare Parts sold to USI
shall (i) be free from defects in workmanship and materials when transported,
stored, handled, used and serviced in compliance with DIGIRAD's written
materials for a period of *** months and (ii) shall conform in all material
respects with the Specifications.
5.2 LIMITATION OF WARRANTY. DIGIRAD's sole liability under this
warranty is limited to repairing the Spare Part, furnishing a replacement Spare
Part, or issuing a credit for any such Spare Part, all at DIGIRAD's sole option,
provided that: (a) DIGIRAD is promptly notified in writing of the defect in any
Spare Part within the warranty period as provided above; (b) such Spare Parts
are returned to DIGIRAD's warehouse in accordance with the Section 4 hereof and
in a condition suitable for testing; and (c) DIGIRAD's examination of such items
shall disclose to its reasonable satisfaction that the Spare Parts are defective
and such defective state has not been caused by misuse, misapplication, abuse,
neglect, alteration, accidents improper storage, transportation or handling, an
act of God or other causes reasonably beyond DIGIRAD's control or occurring
subsequent to the time of delivery of the Spare Parts to a carrier by DIGIRAD.
Modification of a Spare Part by USI or any other party shall invalidate the
above warranty. Any repair or replacement shall not extend the period within
which such warranty can be asserted. The warranty herein may be asserted by USI
only and not by USI's customers, end-users or other third persons and applies
only to Spare Parts used in the Territory. DIGIRAD shall notify USI in writing
if such Spare Parts are not subject to warranty adjustment and, unless
disposition instructions as to such Spare Parts are received from USI within ***
days of such
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<Page>
notification, such Spare Parts shall be returned to USI freight, packing,
insurance and other charges collect.
5.3 DISCLAIMER OF ALL OTHER WARRANTIES. USI ACKNOWLEDGES AND
AGREES THAT THE PROVISIONS OF THIS WARRANTY AND THE INDEMNIFICATION PROVISIONS
OF SECTION 9 OF THE AGREEMENT CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY AVAILABLE
TO IT WITH REGARD TO DEFECTIVE SPARE PARTS. EXCEPT FOR THE EXPRESS WARRANTY
PROVIDED IN THIS SECTION, ALL WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
AND ALL OBLIGATIONS AND REPRESENTATIONS AS TO PERFORMANCE, INCLUDING ALL
WARRANTIES WHICH MIGHT ARISE FROM COURSE OF DEALING OR CUSTOM OF TRADE AND
INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR AS TO NON-INFRINGEMENT, ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED,
BY DIGIRAD. NO AGENT, EMPLOYEE OR REPRESENTATIVE OF DIGIRAD HAS ANY AUTHORITY TO
MAKE ANY AFFIRMATION, REPRESENTATION OR WARRANTY FOR DIGIRAD WITH RESPECT TO THE
SPARE PARTS OTHER THAN SPECIFICALLY PROVIDED HEREIN.
5.4 USI OBLIGATIONS. USI shall not make any representations, or
extend any warranties, express or implied, relating to the use, effectiveness or
safety of the Spare Parts, except as expressly set forth in any end-user
warranty furnished by DIGIRAD (if any). All other agreements between USI and its
customers and their patients are the exclusive responsibility of USI and any
commitment made by USI to such customers and/or patients with respect to the
delivery, performance, suitability or other matters relating to the Spare Parts
are USI's sole responsibility/. DIGIRAD may, at its sole discretion, include
with Spare Parts shipped under this Agreement a copy of its standard end-user
warranty. DIGIRAD reserves the right to amend (without notice) the terms and
conditions of the end-user warranty. USI shall ensure that the end-user warranty
included is passed through with the Spare Parts to the end-users thereof. Any
end-user warranty is solely for the benefit of the end-user, and shall become
effective on the date the end-user accepts the Spare Part by the end-user's
signature on the Customer Delivery and Acceptance Report attached hereto as
Exhibit P of the Agreement.
5.5 LIMITATION OF LIABILITY. IN THE EVENT THAT A SPARE PART DEFECT
OR MALFUNCTION DIRECTLY OR INDIRECTLY CAUSES ANY DAMAGES OR INJURIES, DIGIRAD'S
LIABILITY SHALL BE LIMITED-SOLELY TO: (A) THE REPAIR OR REPLACEMENT OF THE SPARE
PART OR GIVING CREDIT FOR THE SPARE PART HEREUNDER IF THE APPLICABLE WARRANTY
PERIOD DESCRIBED IN THAT CLAUSE HAS NOT EXPIRED; OR (B) INDEMNIFICATION OF USI
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9 OF THE AGREEMENT. IF A COURT OF
COMPETENT JURISDICTION SHALL FIND THAT ANY CLAUSE OF THIS SECTION IS
UNCONSCIONABLE OR OTHERWISE UNENFORCEABLE, IT IS AGREED THAT DIGIRAD'S LIABILITY
SHALL BE LIMITED SOLELY TO AN AMOUNT EQUAL TO DIGIRAD'S REPLACING THE
MALFUNCTIONING OR DEFECTIVE SPARE PART. THE DAMAGE LIMITATION PROVIDED IN THE
AGREEMENT AND THE REMEDIES STATED HEREIN SHALL BE EXCLUSIVE AND SHALL BE USI'S
SOLE REMEDIES. NO
<Page>
ACTION AGAINST DIGIRAD FOR BREACH HEREOF SHALL BE COMMENCED MORE THAN ONE (1)
YEAR AFTER THE ACCRUAL OF THE CAUSE OF ACTION. INDEPENDENTLY OF ANY OTHER
LIMITATION HEREOF, IT IS AGREED THAT IN NO EVENT SHALL DIGIRAD BE LIABLE WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR SPECIAL, INCIDENTAL,
EXEMPLARY, CONSEQUENTIAL OR INDIRECT DAMAGES OR FOR LOSS OF ANTICIPATED PROFITS
TO DISTRIBUTOR, DISTRIBUTOR'S CUSTOMERS, END-USERS OR ANY OTHER PERSON.