**Exhibit 10.34**

 

CERTAIN MATERIAL(INDICATED BY THREE ASTERISKS) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TOA REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION.

 

**SALESREPRESENTATIVE AGREEMENT**

 

 

THIS SALES REPRESENTATIVEAGREEMENT (“Agreement”) is made effective as of August 18, 2000, by and betweenOrthoLogic Corp., a Delaware corporation (hereinafter referred to as“OrthoLogic”), with its principal place of business at 1275 West WashingtonStreet, Tempe, Arizona  85281, and DePuyAcroMed, Inc., an Ohio corporation (hereinafter referred to as “DePuyAcroMed”), with its principal place of business at 325 Paramount Drive,Raynham, Massachusetts 02767.

 

 

**BACKGROUND**

 

WHEREAS, DePuy AcroMed isengaged in the business of developing, manufacturing, marketing and sellingimplants, instruments and other products for use in spinal, neuro, cranialand/or orthopaedic surgical procedures.

 

WHEREAS, OrthoLogic isengaged in the business of developing, manufacturing, marketing and sellingbone growth stimulation products utilizing combined magnetic field technology.

 

WHEREAS, OrthoLogic andDePuy AcroMed desire to enter into a sales representative agreement pursuant towhich OrthoLogic shall appoint DePuy AcroMed as its exclusive salesrepresentative to sell OrthoLogic’s bone growth stimulation products, as morefully set forth below.

 

NOW, THEREFORE, inconsideration of the mutual promises, covenants and agreements hereinafter setforth, the parties hereto agree as follows:

 

 

**1.0**                               **DEFINITIONS**

 

The following words shallhave the following meanings when used in this Agreement:

 

1.1                                 “Affiliate”of a Party shall mean any entity or person that directly or indirectlycontrols, is controlled by or is under common control with such party.  For purposes of this definition, “control”shall mean the possession, directly or indirectly, of the power to direct orcause the direction of the management and policies of an entity, whetherthrough the ownership of voting securities, by contract or otherwise.

 

1.2                                 “Agreement”shall mean this Sales Representative Agreement, as it may be amended in writingby mutual agreement of the parties from time to time.

 

1.3                                 “ApprovedOrder” shall mean an order for which OrthoLogic has received a commitment forpayment from any patient or third party payer.

 

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1.4                                 “CompetingProduct” means an external lumbar spinal bone growth stimulation product.

 

1.5                                 “Customers”shall mean all purchasers of the Products in the Territory.

 

1.6                                 “Improvement”shall mean any adaptation, change, redesign, improvement, modification ordevelopment to any Product, the specifications therefore, the raw materials orthe method or process of manufacture or production of any Product.

 

1.7                                 “Party”and “Parties” mean DePuy AcroMed and OrthoLogic, singly and/or collectively.

 

1.8                                 “Products”mean OrthoLogic’s spinal bone growth stimulation products for lumbarapplications utilizing Combined Magnetic Field (CMF) technology, along with anyImprovements thereto.  All such Productscurrently in existence are identified on Exhibit A.  Exhibit A identifying the Productssubject to this Agreement shall be modified in writing as additional Products,including Improvements and variations thereto, become available.

 

1.9                                 “NewProducts” means those OrthoLogic bone growth electrical stimulation productsdeveloped, designed, intended or sold for the spine market which perform asignificantly different function or perform in a significantly different manneror perform for a significantly different indication from Products.

 

1.10                           “SalesQuota” shall mean the number of Products in either units or dollars shown on ExhibitC.

 

1.11                           “SalesMinimum” shall mean 80% of the Sales Quota.

 

1.12                           “Territory”shall mean the spinal market throughout the world.

 

 

**2.0****                              ****APPOINTMENT**

 

2.1                                 Subjectto the terms and conditions of this Agreement, OrthoLogic hereby appoints DePuyAcroMed, and DePuy AcroMed hereby accepts appointment, as the exclusive salesagent of the Products in the Territory for the Term (as hereinafter defined).

 

2.2                                 DePuyAcroMed acknowledges that OrthoLogic is currently utilizing employed salesrepresentatives in various territories. OrthoLogic agrees to terminate thesales activities currently being handled by such representatives as soon aspracticable, which shall be completed in any event no later than January 1,2001.

 

2.3                                 DePuyAcroMed further acknowledges that OrthoLogic has contractual relationships withthe nine distributors listed on Exhibit B. OrthoLogic agrees toterminate its contracts with the nine distributors as soon as is commerciallyfeasible, consistent with the terms of such existing contracts betweenOrthoLogic and each of such distributors.

 

 

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2.4                                 DePuyAcroMed acknowledges that OrthoLogic also has an agreement with Vision Quest, adurable medical equipment supplier (“DME”) based in California, and understandsthat Vision Quest will continue to sell Products consistent with the terms andprovisions of such agreement.  At anytime more than 12 months after the signing of this Agreement, OrthoLogic shall,at DePuy AcroMed’s request, terminate, phase out or allow to expire,OrthoLogic’s agreement with Vision Quest consistent with the terms of any suchagreement, at DePuy AcroMed’s sole discretion.

 

2.5                                 DePuyAcroMed may appoint one or more third parties as subagents or subdistributors(individually and collectively, “Distributors”) to act on its behalf, includingwithout limitation, the DePuy AcroMed sales network now or as may beestablished from time to time, provided that DePuy AcroMed shall remainresponsible for all of its obligations under this Agreement.  DePuy AcroMed shall notify OrthoLogic inwriting of all Distributors appointed pursuant to this Section, provided thatOrthoLogic shall treat the identity of DePuy AcroMed’s Distributors as DePuyAcroMed Confidential Information pursuant to the provisions of Article 18.  DePuy AcroMed shall not knowingly appointany Distributors to sell the Products that are engaged in the marketing and/orselling of Competing Products.  Promptlyafter the execution of this Agreement, DePuy AcroMed shall request itsDistributors to discontinue the marketing of any products that compete directlywith the Products.  To the extent thatany DePuy AcroMed Distributor either continues to market such CompetingProducts or is unable to market the Products, the Parties shall consult witheach other to consider appropriate actions that might be taken to address suchcircumstances.  During the time periodwhen any DePuy AcroMed Distributor either continues to market CompetingProducts or is unable to market the Products and DePuy AcroMed does not coverthe affected sales territory, then OrthoLogic may use its employees or otherdistributors to market Products in such DePuy AcroMed Distributor’s territory;provided that OrthoLogic shall terminate or discontinue marketing efforts insuch territory promptly after DePuy AcroMed or one of its Distributors is ableto service such territory.

 

2.6                                 ProvidedOrthoLogic has first offered the New Products in writing to DePuy AcroMed andDePuy AcroMed has declined the opportunity to market the New Products inwriting, OrthoLogic may freely negotiate with other parties to market the NewProducts.  DePuy AcroMed shall haveninety (90) days from receipt of OrthoLogic’s written offer within which toaccept or reject any such opportunity to market New Products.  In the case in which OrthoLogic had firstoffered the New Products to DePuy AcroMed and the parties were unable tonegotiate mutually acceptable terms, OrthoLogic is free to contract with otherparties provided OrthoLogic does not accept terms inferior to DePuy AcroMed’slast offer.  In the case in which thethird party’s offered final terms are equal to or inferior to DePuy AcroMed’slast offer, OrthoLogic will contract with DePuy AcroMed under the terms ofDePuy AcroMed’s last offer.

 

**3.0****                              ****EXCLUSIVITY**

 

3.1                                 Duringthe Term (as hereinafter defined), OrthoLogic shall not enter into anyother  distribution, marketing, salesrepresentative or like agreement related to the Products in the Territoryexcept as provided in Article 9 or as identified in Section 2.5.

 

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**4.0**                               **TERM AND TERMINATION**

 

4.1                                 Theterm (“Term”) of this Agreement shall be ten (10) years from the date firstwritten above.

 

4.2                                 ThisAgreement may be terminated by either Party if a Party files a voluntarypetition for bankruptcy or reorganization, is the subject of an involuntarypetition for bankruptcy which is not dismissed within 60 days, has its affairsplaced in the hands of a receiver, enters into a composition for the benefit ofcreditors, or is deemed insolvent by a court of competent jurisdiction.

 

4.3                                 ThisAgreement may also be terminated if a Party is in material breach of thisAgreement provided the non-breaching Party has provided at least forty-five(45) days prior written notice identifying the breach and such breach has notbeen cured within said forty-five (45) days.

 

4.4                                 ThisAgreement may be terminated by DePuy AcroMed upon 120 days’ prior writtennotice to OrthoLogic.

 

4.5                                 ThisAgreement may be terminated by OrthoLogic upon 120 days’ prior written noticeto DePuy AcroMed if the prior three (3) month average Net Sales Price (asdefined in Section 12.1) for the Products ever becomes less than $***.

 

4.6                                 ThisAgreement may be terminated immediately by DePuy AcroMed upon written notice toOrthoLogic if DePuy AcroMed, its Affiliates or OrthoLogic receive a notice thata third party has filed suit alleging that any Product infringes in whole or inpart any aspect of any U.S. patent or reissues or re-examinations thereof.

 

4.7                                 Theprovisions of this Agreement set forth in Section 4.8 and Articles 14, 17, 18,19, 20, and any other provisions which by their terms survive termination, andany remedies for the breach thereof, shall survive the termination of thisAgreement under the terms hereof.

 

4.8                                 Notwithstandingthe termination of this Agreement for any reason, each Party hereto shall beentitled to recover any and all damages (other than punitive, exemplary,multiplied or consequential (including lost sales or lost profits) damages)that such Party shall have sustained by reason of the breach by the other Partyhereto of any of the terms of this Agreement. Termination of this Agreement for any reason shall be without prejudiceto DePuy AcroMed’s right to receive all payments accrued and unpaid on theeffective date of termination and shall not release either Party hereto fromany liability which at such time has already accrued or which thereafteraccrues from a breach or default prior to such expiration or termination, noraffect in any way the survival of any other right, duty or obligation of eitherParty hereto which is expressly stated elsewhere in this Agreement to survivesuch termination.

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

 

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**5.0**                               **OBLIGATIONS OF ORTHOLOGIC**

 

5.1                                 OrthoLogicshall use commercially reasonable efforts to supply Products for customerorders on a timely basis.  If Productsbecome unavailable during the Term for any reason, except where demand exceeds125% of the non-binding rolling 12-month forecast updated on a quarterly basis,for more than 15 days (which need not be consecutive) in any period of fourconsecutive weeks, the Sales Quotas applicable to that year, pursuant to Article9 below, shall be renegotiated to reduce the same in an amount equal to (i) theaverage monthly volume of orders received by OrthoLogic during the precedingsix months, multiplied by (ii) the number of consecutive four-week periodsduring which such Products are unavailable for any 15 days.  If Products become unavailable due, in wholeor in part, to a circumstance affecting OrthoLogic’s ability to manufactureProducts, and the Products continue to be unavailable due to such circumstancefor more than any 15 days in a given four consecutive weeks, the presidents ofthe Parties or their designated representatives shall meet to determine thebest means to make Products available to the market, and in that regard, willconsider, in part, the possibility that DePuy AcroMed will manufacture or havemanufactured Products until production by OrthoLogic has resumed.  DePuy AcroMed wants assurance of continuedsupply of Product.  If OrthoLogic cannotsupply the Product necessary to meet demand for a continuous period of 30 days,then DePuy AcroMed shall have the right to any and all licenses, manufacturingplans, and technology, etc. that would allow DePuy AcroMed to find analternative source for the supply of such Product until OrthoLogic can resumeadequate supply of Product.  OrthoLogichereby grants DePuy AcroMed an irrevocable, perpetual, non-exclusive paid up,royalty free license and/or right to all licenses, manufacturing plans and knowhow related to the Products, which DePuy AcroMed agrees to exercise on theterms set forth in this Section 5.1.

 

5.2                                 OrthoLogicwill be responsible for Product development, testing, quality control, supply,distribution, regulatory approvals and clearances, customer service, shipping,patient fitting and billing.  Additionally,OrthoLogic shall display a jointly branded (OrthoLogic and DePuy AcroMed)Product prominently at all appropriate trade shows and conventions whereOrthoLogic maintains a booth, at no cost to DePuy AcroMed.

 

5.3                                 OrthoLogicshall report to DePuy AcroMed any and all complaints received by OrthoLogic andany and all medical device reports prepared by OrthoLogic with respect toProducts within the time required by applicable law and regulations, and, inany case, within a reasonably prompt time following OrthoLogic’s receipt orpreparation of the same.  OrthoLogicshall maintain a record of all complaints it receives consistent withguidelines and requirements of the U.S. Food and Drug Administration (“FDA”) orany other governmental agency or instrumentality that may have jurisdictionover the Products, including if a “CE” mark or other European regulatoryclearance or approval is obtained for any Product, the applicable guidelinesand requirements of the European Union.

 

5.4                                 AtDePuy AcroMed’s request and pursuant to a mutually determined training program,OrthoLogic shall assist DePuy AcroMed in providing training in the use andbenefits of the Product to DePuy AcroMed’s domestic field sales force.  OrthoLogic will supply each of DePuyAcroMed’s and its respective Distributors’ existing and future salesrepresentatives with an initial Product demonstration unit at no cost to DePuyAcroMed or such Distributor.

 

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Replacement or additionalProduct demonstration units will be made available to DePuy AcroMed for use byits sales representatives or Distributors, at a cost of $*** each.

 

5.5                                 OrthoLogicshall comply with the requirements for DePuy AcroMed approval set forth inSection 6.3 below, and with the meeting requirements set forth in Section 6.4below.

 

5.6                                 OrthoLogicshall maintain adequate and competent personnel to manufacture, store anddeliver, perform patient fitting, and to prepare invoices and any othermanufacturer-generated materials necessary to enable OrthoLogic to invoicepurchasers and third-party payors in connection with the sale of Products, andsuch manufacture, storage, sales, delivery, patient fitting and invoices shallbe undertaken and effected in a manner that does not violate any applicablefederal, state or foreign laws and regulations, and otherwise, in a manner thatis in accordance with the provisions of OrthoLogic’s Corporate ComplianceProgram.  OrthoLogic shall performpatient fittings within 48 hours of the prescribing physician’s request forpatient fitting, provided that an Approved Order for the patient has beenreceived by OrthoLogic.

 

5.7                                 OrthoLogicshall use diligent efforts, at its sole cost and expense, to obtain andmaintain patents covering the Products in the United States and foreigncountries which DePuy AcroMed, and OrthoLogic agree constitute substantialmarkets for the Products.  OrthoLogicshall keep DePuy AcroMed informed on a current basis of the status of any sucheffort.

 

5.8                                 Exceptas provided in Section 6.10, OrthoLogic shall pay all expenses, costs,overhead, debts and obligations incurred by OrthoLogic in its fulfillment ofits obligations under this Agreement. Such expenses shall include travel, room and board, and entertainment.  Under no circumstances shall DePuy AcroMedbe liable to reimburse OrthoLogic or any of its sales representatives ordistributors for any of such expenditures incurred by OrthoLogic or its salesrepresentatives or distributors.

 

**6.0****                              ****OBLIGATIONSOF DEPUY ACROMED**

 

6.1                                 Subjectto OrthoLogic’s rights pursuant to Article 9, DePuy AcroMed may initiate,conduct, suspend or terminate DePuy AcroMed’s activities relating to themarketing and sale of Products as DePuy AcroMed, in its sole and absolutediscretion, deems appropriate and adequate, provided that such activities areconducted in a manner that does not violate any applicable federal, state orforeign laws and regulations.  Subjectto, and without limiting the scope of DePuy AcroMed’s discretion pursuant tothe foregoing, DePuy AcroMed may undertake marketing and sales activities,including conducting advertising, distributing marketing literature anddisplaying Products at professional and trade shows, as DePuy AcroMed deemsdesirable to (i) maximize sales of the Products in the United States, (ii)achieve the Sales Minimums set forth in Article 9 below, and (iii) promote andobtain orders for the Products.  Inconnection with its activities hereunder, DePuy AcroMed shall not solicit anypatients directly with respect to Products.

 

6.2                                 DePuyAcroMed, with the assistance of OrthoLogic, shall train DePuy AcroMed’sdomestic field sales force with respect to the use of the Products.

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission.  Confidentialtreatment has been requested with respect to the omitted portions.

 

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6.3                                 Allwritten sales, promotion, training, customer education and marketing materialsand press releases issued by DePuy AcroMed or OrthoLogic and relating toProducts or the sale of Products shall be approved in writing by bothOrthoLogic and DePuy AcroMed prior to use in the marketplace.

 

6.4                                 Representativesof DePuy AcroMed and OrthoLogic, respectively, shall meet at least once duringSeptember of each year, on a day and at a location mutually convenient, in aneffort to develop a mutually acceptable marketing plan for Products for thefollowing sales year.  The finalmarketing plan rests solely with DePuy AcroMed.  Expenses shall be shared as provided in Section 6.10.  The Parties agree to meet, within four weeksfollowing the execution and delivery of this Agreement by the Parties todevelop a mutually acceptable marketing plan for the balance of calendar year2000.

 

6.5                                 DePuyAcroMed will be responsible for representing Products in the marketplace andproviding customer education and other related services.  Additionally, DePuy AcroMed shall display ajointly branded product at all appropriate trade shows and conventions at whichDePuy AcroMed maintains a booth, at no cost to OrthoLogic.

 

6.6                                 DePuyAcroMed shall promptly route directly to OrthoLogic all inquiries relating toProducts, including medical product inquiries, technical inquiries, productcomplaints, safety or compliance issues, billing issues, adverse reactions andadverse events.  DePuy AcroMed shallalso route directly to OrthoLogic any requests received from customers forno-charge or discounted Products for indigent patients.

 

6.7                                 DePuyAcroMed will report to OrthoLogic any and all complaints from any source andmedical device reports received with respect to Products within the timerequired by applicable law and regulations. DePuy AcroMed will maintain a record of all complaints it receivesconsistent with FDA guidelines.

 

6.8                                 DePuyAcroMed shall display and deliver only Products that are marked and packaged byOrthoLogic or as otherwise specified in advance by mutual agreement of theParties.

 

6.9                                 DePuyAcroMed or its employees and Distributors shall provide from the treatingphysician, or direct the treating physician or the physician’s staff to providedirectly to OrthoLogic, a written prescription order form and any requiredsupporting documentation for the purchase of the Product and when required to processthe order, provide original versions of such documents.   The parties understand and acknowledge that(1) DePuy AcroMed’s employees and Distributors are responsible for providingthe written prescription order forms to the treating physicians and requestingthat any additional supporting documentation be furnished directly toOrthoLogic; and (2) DePuy AcroMed’s employees and Distributors shall notcomplete any sections of the written prescription order forms that must becompleted by the treating physician or maintain a copy of any completed writtenorders or other documentation containing confidential patient medicalinformation in their files.

 

6.10                           So longas they are pursuant to a budget capped at 2% of projected sales for the

 

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next year and agreed toby the Parties in advance, DePuy AcroMed and OrthoLogic will share, on a 50-50basis, the direct expenses (excluding direct employees and related travelexpenses) relating to marketing and promotional materials relating to theProducts, including printed promotional materials, and video productions.

 

6.11                           Exceptas provided in Section 6.10, DePuy AcroMed shall pay all expenses, costs,overhead, debts and obligations incurred by DePuy AcroMed in its fulfillment ofits obligations under this Agreement. Such expenses shall include travel, room and board, andentertainment.  Under no circumstancesshall OrthoLogic be liable to reimburse DePuy AcroMed or any of itsDistributors for any of such expenditures incurred by DePuy AcroMed or itsDistributors.

 

6.12                           DePuyAcroMed shall be responsible for all compensation, payroll taxes, facilitiesand related expenses for employees of DePuy AcroMed.

 

6.13         DePuy AcroMed shall provide a list ofall employees and Distributors that will provide services in connection withthis Agreement.  During the term of thisAgreement, DePuy AcroMed agrees that its current and future employees andDistributors shall receive compliance training on any OrthoLogic compliancepolicies and procedures which are not encompassed by DePuy AcroMed’s existingcorporate compliance program.  Any suchcompliance training on OrthoLogic compliance policies shall be conducted byOrthoLogic.  OrthoLogic shall submitcompliance training materials to DePuy AcroMed’s counsel for approval prior topresenting same to the DePuy AcroMed sales force.

 

6.14                           DePuyAcroMed understands and acknowledges that, from time to time, OrthoLogic mayrequire changes to its compliance program to encompass changes in third-partypayor requirements or any other changes required by law.  To the extent such changes are not reflectedin DePuy AcroMed’s existing compliance program, DePuy AcroMed shall provide anysupplemental compliance training materials furnished by OrthoLogic to DePuyAcroMed’s employees and Distributors.

 

6.15                           IfOrthoLogic determines that any employee or Distributor of DePuy AcroMed is (a)acting in a manner in violation of OrthoLogic ‘s compliance program; or (b) isacting in a manner that is detrimental to the operations of OrthoLogic’scustomers and patients; then OrthoLogic shall notify DePuy AcroMed in writing,of the name of the employee or Distributor and the basis for suchdetermination.  Within fifteen (15)business days of such written notice, DePuy AcroMed shall review the matter,and shall notify OrthoLogic of the action DePuy AcroMed proposes to take withrespect to such employee or Distributor. If following any remedial action by DePuy AcroMed, OrthoLogic requeststhe removal of the employee or Distributor from providing any services underthis Agreement, DePuy AcroMed shall promptly remove the employee or Distributorfrom providing any services under this Agreement.

 

 

**7.0****                              ****ORTHOLOGICSPECIALISTS**

 

From January 1, 2001until the end of the Term, OrthoLogic will maintain at OrthoLogic’s expense, 10full-time employees or the equivalent thereof in the field, who shall be

 

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available to assist DePuyAcroMed with its sales of Products. Each of such specialists shall be reasonably acceptable to DePuy AcroMedand they shall be assigned so as to provide coverage in all of DePuy AcroMed’s10 sales regions.  OrthoLogic will beginputting these specialists in place as soon as this Agreement is executed butthe Parties understand that it will take until the end of 2000 to complete theprocess.

 

**8.0****                              ****PATIENTSERVICE AND REIMBURSEMENT**

 

8.1                                 OrthoLogicshall be responsible for processing all U.S. orders for Products once a validprescription order form and any required supporting documentation is obtainedfrom a physician by DePuy AcroMed.  Thisprocessing by OrthoLogic includes the prior authorization of the prescriptionwith the patient’s insurance company and the generation of any additionalpaperwork required to process the prescription for payment.

 

8.2                                 OrthoLogicshall be responsible for the negotiation of Product reimbursement pricing forits managed care payor contracts, HCFA (Medicare) and State Medicaid programsand with any future third-party payor identified by OrthoLogic.  Product pricing for sales in any countryother than the United States shall be mutually agreed upon by the Partiesbefore the Parties begin marketing Products in that country.

 

8.3                                 OrthoLogicwill also be responsible for the placement of Products on patients in the U.S.once the authorization from the patient’s insurance company is received.

 

**9.0****                              ****SALESMINIMUMS AND SALES QUOTAS**

 

9.1                                 Duringthe initial period comprised of 2001 and that portion of 2000 after DePuyAcroMed has commenced sales, and each calendar year thereafter, (each a“Measurement Period”), insofar as DePuy AcroMed desires that its exclusiverights granted hereunder not be subject to conversion to non-exclusive rights,pursuant to this Section 9.1, DePuy AcroMed shall obtain, directly or throughits Distributors, customer orders for the Products in quantities that equal orexceed Sales Minimums in either units or dollars applicable to each MeasurementPeriod, or, to the extent of any shortfall, make payment to OrthoLogic in accordancewith Section 9.3 below.  Accordingly, iftotal orders for Products received by OrthoLogic during any Measurement Perioddo not equal or exceed the Sales Minimums in either units or dollars applicableto such Measurement Period, and DePuy AcroMed does not make payment toOrthoLogic with respect to the shortfall pursuant to Section 9.3 below,OrthoLogic may, at its option, convert DePuy AcroMed’s exclusive worldwiderights to non-exclusive rights.  Anysuch notice (each a “Conversion Notice”) shall (i) include a statement byOrthoLogic advising that the Sales Minimum applicable to a period identified insuch notice has not been achieved, (ii) specify the volume or, as the case maybe, dollar amount, of the deficiency, (iii) state the total amount of OrthoLogicNet Profit (as defined below) applicable to the deficiency, and (iv)communicate OrthoLogic’s intention to convert DePuy AcroMed’s rights tonon-exclusive rights pursuant to this Article 9, unless DePuy AcroMed makespayment to OrthoLogic with respect to the deficiency pursuant to Section9.3.  Any failure by DePuy AcroMed toachieve Sales Minimums in either units or dollars or make payment to OrthoLogicwith respect to the shortfall, pursuant to Section 9.3 below, shall entitleOrthoLogic to exercise its foregoing option, but shall not

 

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constitute a breach byDePuy AcroMed of any of its obligations under this Agreement, and shall notentitle OrthoLogic to terminate this Agreement or to claim or receive paymentfor any damages or equitable relief.  IfDePuy AcroMed’s rights are converted to non-exclusive rights, OrthoLogic mayeither assign direct sales employees or appoint third-party independentdistributors, or both, to promote the Products anywhere in the world.

 

9.2                                 If,as of November 1 of each year, DePuy AcroMed is not tracking the Sales Minimumsin either units or dollars, the presidents of each of the Parties, or theirdesignated representatives, shall meet by November 15 of each applicable yearto discuss available options for remedy.

 

9.3                                 DePuyAcroMed shall have the option, in its sole and absolute discretion, to retainits exclusive rights notwithstanding a failure to achieve the Sales Minimums ineither units or dollars during any Measurement Period by making payment toOrthoLogic, within 45 days of DePuy AcroMed’s receipt of a Conversion Noticefrom OrthoLogic concerning such failure, equal to the total of OrthoLogic NetProfits applicable to the volume of Products, or, as the case may be, grosssales dollar volume, deficiency.  Forpurposes hereof, “OrthoLogic Net Profits” shall mean the (i) amount by whichthe average sales price at which OrthoLogic sold the Products to customerswithin the United States during the three months preceding such ConversionNotice exceeds (ii) the sum of the average direct and indirect manufacturingcosts incurred by OrthoLogic to manufacture Products during such three-monthperiod, plus the ***%, ***% or ***% sales commissions that would have beenpayable to DePuy AcroMed, as appropriate, multiplied by (iii) the number ofunits comprising the deficiency of achieving the Sales Minimum or, in the eventsuch deficiency is measured in dollars, the number of units, based upon theforegoing average sales price, which are represented by such sales dollardeficiency, whichever is less.

 

9.4                                 SalesQuotas for the Products for August 1, 2000 through December 31, 2000 and thefull year 2001 will be set forth on Exhibit C attached hereto.  For purposes of determining whether DePuyAcroMed has met its Sales Minimums and Sales Quotas in either units or dollars,it shall be entitled to include sales by OrthoLogic’s sales representatives,OrthoLogic’s distributors and Vision Quest, and if OrthoLogic is unable tosupply Products for at least 10 days during any 30-day period in amountsconsistent with DePuy AcroMed’s then current forecast pursuant to Section 10.1,one month’s quota will be deducted from the Sales Minimum for the current year.Sales Quotas for the initial Measurement Period shall be prorated to the extentactual sales commence later than August 1, 2000.

 

9.5                                 OrthoLogicand DePuy AcroMed will agree upon Sales Quotas for 2002 by October 31, 2001.Sales Quotas for subsequent years that the Agreement is in effect will beestablished in the same manner.  If theparties are unable to agree on Sales Quotas within 10 business days, theneither Party may send the other Party a written notice invoking the right toarbitrate and, the parties shall engage in arbitration as provided in Section19.2 in order to set Sales Quotas.  Sucharbitration shall take place within 60 days of receipt of such notice.  The parties shall continue to use theprevious year’s Sales Quotas until Sales Quotas are set through arbitration.

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

 

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**10.0****                       ****ORDERS,DELIVERIES AND FORECASTS**

 

10.1                           DePuyAcroMed will supply OrthoLogic with a non-binding written 12-month rollingProduct forecast, in units, updated on a quarterly basis.  Such forecast shall be provided toOrthoLogic promptly after the execution of this Agreement for 2000 and no laterthan October 1 of each year, beginning October 1, 2000 with respect to the nextcalendar year.  DePuy AcroMed shall alsosupply OrthoLogic with a written quarterly update no later than 15 days afterthe beginning of each quarter with respect to such quarter.

 

10.2                           DePuyAcroMed shall submit requests for quotes, sales inquiries and customercomplaints on such forms as may be approved in advance by OrthoLogic for suchpurpose.  All orders are subject towritten acceptance by OrthoLogic at its principal offices.  DePuy AcroMed shall have no liability forany order cancelled by a customer.

 

10.3                           DePuyAcroMed shall not be entitled to accept payments on behalf of OrthoLogic, norshall DePuy AcroMed issue quotations describing OrthoLogic Products or quoteprices to customers other than as set forth in OrthoLogic’s published pricelists.

 

10.4                           OrthoLogicshall ship and deliver Products ordered through DePuy AcroMed tocustomers.  All costs of transportationand shipping shall be paid by OrthoLogic, or OrthoLogic, at its option, maybill customers for costs of transportation and shipping.  In no event will DePuy AcroMed beresponsible for costs of transportation and shipping.

 

10.5                           OrthoLogicshall promptly provide a patient fitting date confirmation upon acceptance ofany Approved Order.  OrthoLogic shallexert commercially reasonable efforts to meet the ship date stated on thecustomer quotation; provided, however, that shipment of the Products is subjectto availability and to OrthoLogic’s normal lead times as quoted to DePuyAcroMed and/or Customers from time to time. In case of any delay or failure in delivery resulting in ordercancellation, in addition to DePuy AcroMed’s other remedies under this Agreement,a per unit adjustment will be made to DePuy AcroMed’s annual Sales Quotas.

 

**11.0**                        **PRODUCT PRICE**

 

11.1                           DePuyAcroMed shall market and promote the Products in accordance with OrthoLogic’sstandard price list in effect from time to time.

 

11.2                           Pricesestablished in the OrthoLogic price list are exclusive of all sales or usetaxes, tariffs, customs duties and other government charges, shipping and/ormailing costs and insurance.  DePuyAcroMed shall not bear any responsibility for the expenses listed in the precedingsentence.

 

**12.0****                       ****COMMISSIONS**

 

12.1                           For allOrthoLogic Products, “Net Sales Price” shall be the amount invoiced to thepatient or any other purchaser or any third party payor, less any trade or cashdiscounts, returns, taxes, tariffs, customs duties and other governmentcharges, shipping and/or mailing

 

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costs and insurance tothe extent they are included in the invoice price.

 

12.2                           OrthoLogicwill pay to DePuy AcroMed a commission equal to ***% of the Net Sales Price forall sales of Products up to and including the respective annual Sales Quota. IfDePuy AcroMed exceeds the annual Sales Quota in either units or dollars, thenOrthoLogic will pay DePuy AcroMed a commission equal to ***% of the Net SalesPrice for all sales of Products exceeding the respective annual Sales Quota.OrthoLogic agrees to pay DePuy AcroMed commissions of ***% of the Net SalesPrice for all ***.  OrthoLogic agrees topay DePuy AcroMed commissions of ***% of the Net Sales Price for ***.

 

12.3                           A saleof a Product shall be deemed to have occurred at the time that OrthoLogic hasinvoiced the patient or any other purchaser or the third party payor for theProduct. All commissions payable hereunder shall accrue monthly on the last dayof each calendar month with respect to all Products invoiced during suchmonth.  Commissions shall be paidmonthly on or before the last day of each calendar month with respect to allProducts invoiced during the preceding month. Commission payments shall also reflect any appropriate adjustments inaccordance with Section 12.1. Each commissions payment shall be accompanied bya statement showing the commissions accrued and adjustments made for thepreceding month and any other information necessary for the properdetermination of the amount of commissions payable hereunder.

 

12.4                           OrthoLogicshall furnish DePuy AcroMed with a report by the 20th day of each month, whichshall include (i) a list of accounts that have placed orders for Products withthe Net Sales Price and third party payor reimbursement rates for Products;(ii) a list of accounts where Products have been invoiced during the month; and(iii) disposition of all orders placed during the month.

 

12.5                           OrthoLogicshall keep accurate books of account containing information which may be necessaryfor the purpose of demonstrating the commissions payable to DePuy AcroMed. Saidbooks shall be available to DePuy AcroMed during normal business hours uponwritten request to OrthoLogic and may be audited and inspected by anindependent public accountant selected by and paid for by DePuy AcroMed for thepurpose of verifying the statements of OrthoLogic and the commissions paid toDePuy AcroMed.  If the independentpublic accountant conducting the audit determines that an underpayment incommissions has occurred, then OrthoLogic shall pay the outstanding amount dueto DePuy AcroMed within thirty (30) days. If the underpayment in commissions totals 2% or more of the amount due,then OrthoLogic shall also pay the reasonable costs of the audit.  If the outstanding amount of unpaidcommissions is not paid to DePuy AcroMed within thirty (30) days, then theunpaid amount of commissions shall accrue interest at the greater of 1-1/2% permonth or the legal rate allowed by statute.

 

**13.0****                       ****REPRESENTATIONSAND WARRANTIES**

 

13.1                           ProductWarranties.  OrthoLogic representsand warrants to DePuy AcroMed that

 

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***Certain information on this page has been filed separately with theSecurities and Exchange Commission. Confidential treatment has been requested with respect to the omittedportions.

 

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all Products supplied inconnection with this Agreement shall be of merchantable quality, free frommaterial defects in material and workmanship, and shall be manufactured andprovided in accordance and conformity with the specifications for the Productsand in compliance with this Agreement. OrthoLogic represents and warrants that it shall comply with allmaterial present and future statutes, laws, ordinances and regulations relatingto the manufacture, assembly, packaging, labeling and supply of the Product,including, but not limited to, those enforced by the FDA (including compliancewith Quality System Regulations) and International Standards Organization Rules9,000 et seq.

 

13.2                           Executionand Performance of Agreement. OrthoLogic and DePuy AcroMed each represents and warrants to the otherthat it has full right, power and authority to enter into and perform itsobligations under this Agreement. OrthoLogic and DePuy AcroMed each further represents and warrants to theother that the performance of its obligations under this Agreement will notresult in a violation or breach of, and will not conflict with or constitute adefault under any agreement, contract, commitment or obligation to which suchParty or any of its Affiliates is a party or by which it is bound and that ithas not granted and will not grant during the term of this Agreement or anyrenewal thereof, any conflicting rights, license, consent or privilege withrespect to the rights granted herein.

 

13.3                           IntellectualProperty.  OrthoLogic represents andwarrants to DePuy AcroMed that OrthoLogic owns all of the rights, title andinterest in and to or otherwise has the necessary licenses to use theOrthoLogic patents, OrthoLogic trademarks, know-how and all other intellectualproperty that appear on or are otherwise used in connection with the Products;no academic institution, member of an academic institution, corporation orother entity, or any local, state or federal government holds any propertyrights inconsistent with OrthoLogic’s property rights in any Product; themanufacture, use and sale of the Products in accordance with the terms of thisAgreement does not infringe any third party’s rights under any patent; the useof the OrthoLogic trademarks by DePuy AcroMed hereunder does not and will notinfringe the rights of any third party; OrthoLogic has received no notice orclaim with respect to infringement of a third party’s intellectual propertyrights, including but not limited to a notice letter either notifyingOrthoLogic of a third party’s patent or alleging infringement of a third partypatent; and OrthoLogic is presently aware of no infringement by any third partyof any OrthoLogic patent or any OrthoLogic trademark.

 

13.4                           Compliance.

 

a.                                       DePuyAcroMed represents and warrants that neither DePuy AcroMed nor any of itsemployees or Distributors that provide services under this Agreement have beenexcluded, debarred or otherwise are ineligible for participation in federalhealthcare programs (as defined in 42 U.S.C. Section 1320a-7(i)) or have beenconvicted of a criminal act related to healthcare (as defined in 42 U.S.C.Section 1320a-7(i)).

 

b.                                      DePuyAcroMed represents and warrants that neither DePuy AcroMed nor, to itsknowledge, any of its employees or any representatives of any of itsdistributors engaged to provide services hereunder owns or operates a MedicarePart B durable medical equipment, prosthetics, orthotics, and medical supplysupplier business or works, in any manner, for any

 

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physician or hospitalthat is in a position to refer or recommend OrthoLogic or the Products coveredby this Agreement.

 

c.                                       DePuyAcroMed represents and warrants that it has implemented a corporate complianceprogram, a copy of which has been provided to OrthoLogic.  On an annual basis, DePuy AcroMed shallprovide a written certification to OrthoLogic that annual compliance trainingon the DePuy AcroMed compliance program has been furnished to all relevantDePuy AcroMed employees and Distributors providing services under thisAgreement.

 

 

**14.0****                       ****INDEMNIFICATION**

#  

14.1                           Indemnificationby OrthoLogic.  OrthoLogic shallindemnify and hold harmless DePuy AcroMed, its Affiliates and their respectiveofficers, directors, employees, agents and representatives from and against anyand all damages, liabilities, claims, costs, charges, judgments and expenses(collectively “Damages”) incurred by such person(s) that arise out of or resultfrom claims by third parties:  (a) tothe extent caused by the fault or negligence of OrthoLogic, its Affiliates ortheir respective officers, employees or agents; (b) related to any Products assupplied by OrthoLogic, or arising from or related to any claimed hazard ordefect in any Products whether manufacturing, design or otherwise, includingbut not limited to OrthoLogic’s failure to warn of hazards, or express orimplied warranties made by OrthoLogic; (c) of failure by OrthoLogic to complywith the terms of the applicable OrthoLogic Product warranty; (d) failure byOrthoLogic to comply with applicable laws and/or regulations relating to themanufacture, sale and/or transport of any Product; (e) that any Productssupplied by OrthoLogic infringes any patent, copyright, trade secret or otherproprietary right of a third party; (f) any other matter which is theresponsibility of OrthoLogic as determined in accordance with applicable law ofthe jurisdiction relating to the sale of any Products by OrthoLogic which isthe subject of claim or dispute; or (g) related to termination of OrthoLogic’ssales representatives, distributors or agents as contemplated in Article 2.

 

14.2                           Indemnificationby DePuy AcroMed.  DePuy AcroMedshall indemnify and hold harmless OrthoLogic, its Affiliates and theirrespective officers, directors, employees, agents and representatives from andagainst any and all Damages incurred by such person(s) that arise out of orresult from claims by third parties to the extent caused by the fault ornegligence of DePuy AcroMed or its respective officers, employees or agents.

 

14.3                           Claims.   Promptly after receipt by a DePuy AcroMedor an OrthoLogic indemnitee of information concerning the commencement of anyclaim, demand, action, suit or proceeding (collectively, “Action”) which is thesubject of the other Party’s indemnification obligations hereunder, theindemnitee shall notify the other Party of the commencement of the Action.  Any failure to provide such notice shallonly relieve the other Party of its indemnification obligations hereunder tothe extent it has been materially prejudiced by such failure.  The indemnifying Party shall have sole rightto select and retain attorneys to assert or negotiate, and the sole right tocontrol, the defense and any settlement of the Action, to the extent of suchParty’s corresponding indemnification and defense obligations, except thatunder no circumstances shall the indemnifying Party enter into any settlementthat involves an admission

 

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of liability, negligenceor other culpability by the indemnitee, or requires the indemnitee tocontribute to the settlement. Without limiting the indemnifying Party’sforegoing right to select and retain attorneys and to sole control of thedefense and settlement of such Action, the indemnitee may, at its own expense,participate in the defense of, or otherwise consult with counsel of its ownchoice in connection with, an Action that is the subject of the other Party’s indemnificationand defense obligations.

 

14.4                           Infringement.  DePuy AcroMed shall promptly informOrthoLogic of any infringement of OrthoLogic’s patents or trademarks concerningthe Products which may come to the attention of DePuy AcroMed.  In such event, OrthoLogic shall take allnecessary action, consistent with prudent business judgment, to restrain suchinfringement, and to recover damages therefor. Any damages awarded because of losses incurred by DePuy AcroMed shall bethe property of DePuy AcroMed. Otherwise, any damages recovered from such action shall be the propertyof OrthoLogic.  DePuy AcroMed agrees tocooperate, at OrthoLogic’s expense for any reasonable out-of-pocket expensesincurred by DePuy AcroMed, in all stages of such action.  If OrthoLogic fails to take action toenforce its patents, trademarks or other intellectual property rights and DePuyAcroMed’s ability to sell the Products is adversely affected, DePuy AcroMed’sSales Quota shall be reduced to the extent DePuy AcroMed’s performance isadversely affected by OrthoLogic’s failure.

 

**15.0****                       ****INSURANCE**

 

15.1                           OrthoLogicagrees to procure and maintain in full force and effect during the term of thisAgreement valid and collectible insurance policies in connection with itsactivities as contemplated hereby, which policies shall provide coverage forproduct liability relating to use of the Products in an amount not less than $1million per occurrence and $3 million in the aggregate and for professionalliability and comprehensive general liability in an amount not less than $1million per occurrence and $3 million in the aggregate.  The product liability and general liabilitypolicies (but not the professional liability policy) shall name DePuy AcroMed asan additional insured vendor.  Upon DePuyAcroMed’s request, OrthoLogic shall provide to DePuy AcroMed certificate ofcoverage or other written evidence reasonably satisfactory to DePuy AcroMed ofsuch insurance coverage.  Such insurancepolicy shall provide that in the event such insurance coverage should bematerially adversely changed or terminated for any reason, the insurerthereunder will give OrthoLogic and DePuy AcroMed ten (10) days’ prior notice.The existence of such coverage shall in no way limit OrthoLogic’s liability orobligations hereunder.

 

**16.0****                       ****COMPETITION**

 

16.1                           Duringthe Term, DePuy AcroMed shall not sell an external lumbar spinal bone growthstimulation product that competes with the Product.  If a Distributor appointed by DePuy AcroMed engages in the saleof a Competing Product, such activity shall not constitute a breach of thisAgreement by DePuy AcroMed.

 

16.2                           IfDePuy AcroMed terminates the Agreement upon 120 days’ written notice toOrthoLogic, pursuant to the provisions of Section 4.4, or if OrthoLogicterminates this Agreement for material breach by DePuy AcroMed which remainsuncured by DePuy AcroMed

 

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after receipt of writtennotice of breach, then the obligation set forth in Section 16.1 shall continuefor a period of 90 days after termination of the Agreement.  The foregoing covenant not to compete shallnot apply in the European Union (“EU”).

 

16.3                           IfOrthoLogic terminates the Agreement upon 120 days’ written notice to DePuyAcroMed pursuant to the provisions of Section 4.5, then DePuy AcroMed shall berelieved, immediately upon receipt of such notice of the obligations set forthin Sections 16.1 and 16.2.

 

**17.0****                       ****PATENTS,TRADEMARKS AND TRADENAMES**

 

17.1                           BothOrthoLogic and DePuy AcroMed acknowledge that neither has any rights in anypatents, know-how, copyrights, trademarks, trade names, or insignia owned bythe other anywhere in the world.  BothOrthoLogic and DePuy AcroMed undertake that they will not assert any rights inany such intellectual properties arising by reason of this Agreement or the useof any such intellectual properties hereunder. Each Party shall use the other Party’s trademarks and trade names inconnection with its activities hereunder but only as and to the extentexpressly authorized by this Agreement.

 

17.2                           Ifeither Party desires to use the trademark(s) and/or name of the other Party inan advertisement, marketing materials, or promotional literature, or inconnection with any product or service, such Party must first seek the priorwritten approval of the Party owning the rights to such trademark and/orname.  Such approval shall be within thesole discretion of the other Party. Nothing in this Agreement shall beconstrued as conferring any general license right to use any name, trade name,trademark, or other designation (including contraction, abbreviation orsimulation) of either Party by the other Party in advertising, publicity orother promotional activities, or in connection with a product.

 

17.3                           Upontermination or expiration of this Agreement, each Party shall as soon aspracticable deliver to the other Party or its designee free of charge, orcertify destruction of, any and all materials, including signs, advertisingmatter and catalogues containing such trademarks or trade names of such otherParty then in its possession or in the possession of its employees or agentsand shall cease from making further use of any such materials, trademarks ortrade names.

 

17.4                           ThisArticle 17 shall survive termination of this Agreement, however arising.

 

**18.0****                       ****CONFIDENTIALITY**

 

18.1                           As usedherein, “Confidential Information” shall mean all confidential or proprietaryinformation that is reduced to writing, marked as confidential and given to oneParty by the other Party relating to such other Party or any of its Affiliates,including information regarding any of the products of such other party or anyof its Affiliates, information regarding its advertising, distribution,marketing or strategic plans or information regarding its costs, productivityor technological advances.  NeitherParty shall, for three (3) years after such exchange, use or disclose to thirdparties any Confidential Information of the other (except to the extentreasonably necessary to exercise its rights or comply with its obligations underthis Agreement) and each Party shall insure that its employees, officers andagents shall not use or

 

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disclose to third partiesany Confidential Information of the other (except to the extent reasonablynecessary to exercise its rights or comply with its obligations under thisAgreement) provided, however, that DePuy AcroMed may disclose ConfidentialInformation of OrthoLogic to DePuy AcroMed’s Affiliates and consultants if suchpersons are informed of the confidential nature of such information and areunder an obligation to keep such information confidential.  Confidential Information shall not includeinformation that (i) was already known to the receiving Party at the time ofits receipt thereof, as evidenced by its written records, (ii) is disclosed tothe receiving party after its receipt thereof by a third Party who has a rightto make such disclosure without violating any obligation of confidentiality,(iii) is or becomes part of the public domain through no fault of the receivingParty or (iv) is required to be disclosed to comply with applicable laws orregulations or an order of a court or regulatory body having competentjurisdiction, provided the receiving Party gives sufficient notice to thedisclosing Party in a time period sufficient to contest the requirement.  All Confidential Information shall remainthe property of the disclosing Party. Neither Party shall make copies of any Confidential Information of theother Party without prior written consent and shall return to the disclosingParty promptly upon request or at its option, destroy all ConfidentialInformation along with all copies made hereof and all documents or thingscontaining any portion of any Confidential Information.

 

18.2                           Exceptas otherwise provided in this Agreement, each of the Parties agrees that itshall restrict the dissemination of the other Party’s Confidential Informationonly to those persons whose knowledge of such information is reasonablynecessary to the performance of the obligations of the Parties under thisAgreement.  The obligations of thisArticle 18 shall continue for a period of three (3) years from the date oftermination of this Agreement.

 

**19.0****                       ****DISPUTERESOLUTION**

 

19.1                           Mediation.(a)  Any dispute, controversy or claimarising out of or related to this Agreement, or the interpretation,application, breach, termination or validity thereof, which claim would, butfor this provision, be submitted to arbitration as provided pursuant to Section19.2 of this Agreement shall, before submission to arbitration, first bemediated through non-binding mediation in accordance with the Model Proceduresfor the Mediation of Business Disputes promulgated by the CPR Institute forDispute Resolution, or successor (“CPR”) then in effect, except where thoserules conflict with these provisions, in which case these provisionscontrol.  A mediation can be initiatedupon either Party sending a written notice to the other Party stating an intentto initiate mediation.  The mediationshall be conducted in Chicago, Illinois and shall be attended by a seniorexecutive with authority to resolve the dispute from each Party.

 

(b) The mediator shall beneutral, independent, disinterested and impartial and shall be selected from aprofessional mediation firm such as ADR Associates for JAMS/ENDISPUTE or DPR.

 

(c)  The Parties shall promptly confer in aneffort to select a mediator by agreement. In the absence of such an agreement within 10 days of initiation of themediation, the mediator shall be selected by CPR in accordance with thisAgreement as follows:  CPR shall providethe Parties with a list of at least 15 names. Each Party shall exercise challenges for cause, two peremptory

 

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challenges, and rank theremaining candidates within 5 working days of receiving the CPR list.  The Parties may together interview the threetop-ranked candidates for no more than one hour each and, after the interviews,may each exercise one peremptory challenge. The mediator shall be the remaining candidate with the highest aggregateranking.

 

(d)                                 Themediator shall confer with the Parties to design procedures to conclude themediation within no more than 45 days after initiation.  Under no circumstances may the commencementof arbitration under Section 19.2 below be delayed more than 45 days by themediation process specified herein absent contrary agreement of the Parties.

 

(e)  Each Party agrees not to use the period orpendency of the mediation to disadvantage the other Party procedurally orotherwise.  No statements made by eitherside during the mediation may be used by the other or referred to during anysubsequent proceedings.

 

(f)  Each Party has the right to pursueprovisional relief from any court, such as attachment, preliminary injunction,replevin, etc., to avoid irreparable harm, maintain status quo, or preserve thesubject matter of the arbitration, even though mediation has not been commencedor completed.

 

19.2                           Arbitration/DisputeResolution. (a)  Any controversy orclaim arising out of or relating to this Agreement or the validity, inducement,or breach thereof, shall be settled by arbitration before a single arbitratorin accordance with the Commercial Arbitration Rules of the American ArbitrationAssociation (“AAA”) then pertaining, except where those rules conflict withthis provision, in which case this provision controls.  The Parties hereby consent to thejurisdiction of the federal district court for the district in which the arbitrationis held for the enforcement of this provision and entry of judgment on anyaward rendered hereunder.  Should suchcourt for any reason lack jurisdiction, any court with jurisdiction shallenforce this clause and enter judgment on any award.

 

(b)  The arbitrator shall be an attorney who hasat least 15 years of experience with a law firm or corporate law department ofover 25 lawyers or was a judge of a court of general jurisdiction for at least10 years.  The arbitration shall be heldin Chicago, Illinois and in rendering the award the arbitrator must apply thesubstantive law of Illinois (except where that law conflicts with this clause),except that the interpretation and enforcement of this arbitration provisionshall be governed by the Federal Arbitration Act.  The arbitrator shall be neutral, independent, disinterested, andimpartial and shall abide by The Code of Ethics for Arbitrators in CommercialDisputes approved by the AAA.  Within 45days of the initiation of arbitration, the Parties shall reach agreement uponand thereafter follow procedures assuring that the arbitration will beconcluded and the award rendered within no more than eight months from theselection of the arbitrator.  Failingsuch agreement, the AAA will design and the Parties will follow procedures thatmeet such a time schedule.

 

(c)  Each Party has the right before, or if thearbitrator cannot hear the matter within an acceptable period, during thearbitration, to seek and obtain from the appropriate court provisional remediessuch as attachment, preliminary injunction, replevin, etc., to avoidirreparable harm, maintain the status quo or preserve the subject matter of thearbitration.

 

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(d)  EACH PARTY HERETO WAIVES ITS RIGHT TO TRIALOF ANY ISSUE BY JURY.  THE DECISION OFTHE ARBITRATOR SHALL BE BINDING UPON THE PARTIES.  THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE, EXEMPLARY,MULTIPLIED OR CONSEQUENTIAL (INCLUDING LOST SALES OR LOST PROFITS) DAMAGES, ANDEACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO SEEK SUCH DAMAGES.  NO PARTY MAY SEEK OR OBTAIN PREJUDGMENTINTEREST OR ATTORNEY’S FEES OR COSTS.

 

**20.0****                       ****MISCELLANEOUS**

 

20.1                           Publicity.  Neither Party hereto shall originate anypublicity, news release, or other announcement, written or oral, whether to thepublic press, the trade, DePuy AcroMed’s or OrthoLogic’s Customers orotherwise, relating to this Agreement, or to performance hereunder or theexistence of an arrangement between the Parties without the prior written approvalof the other Party hereto, save only such announcements as in the opinion ofcounsel for the party making such announcement is required by law to bemade.  In the event disclosure isrequired by applicable law, then the Party required to so disclose suchinformation shall, to the extent possible, provide to the other Party for itsapproval a written copy of such public disclosure at least two (2) businessdays prior to disclosure. Notwithstanding the foregoing, OrthoLogic may issue a press release withrespect to its entering into this Agreement, provided that OrthoLogic shallprovide to DePuy AcroMed a copy of the proposed press release no less than five(5) business days prior to its proposed release.  The contents of such press release shall be subject to DePuyAcroMed’s consent, such consent not to be unreasonably withheld ordelayed.  Neither Party shall use thename of the other Party or any of its Affiliates for advertising or promotionalpurposes without the prior written consent of such Party.

 

20.2                           Headings.  The Article and Section headings containedin this Agreement are for reference purposes only and shall not affect in anyway the meaning and interpretation of this Agreement.

 

20.3                           Notices.  All notices and other communications requiredor permitted to be given under this Agreement shall be in writing and shall beconsidered given and delivered when personally delivered to the party to whomsuch notice or communication is addressed or one (1) business day afterposting with an overnight courier or when confirmation is received if sent byfacsimile or five (5) business days after deposit in the United States mail,postage prepaid, return receipt requested, properly addressed to a party at theaddress set forth below, or at such other address as such party shall havespecified by notice given in accordance with this Section:

 
| If to OrthoLogic: |   | OrthoLogic Corp.                              |
|-------------------|--------|-----------------------------------------------|
|              |   | 1275 West Washington  Street                  |
|              |   | Tempe, Arizona  85281                    |
|              |   | Attention:  Thomas R. Trotter, President |
|              |   | Facsimile No.  602-286-5284                   |
|              |   |                                          |
| with a copy to:   |   | Quarles & Brady LLP                       |

 

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|                 |   | One East Camelback Road            |
|----------------------|--------|------------------------------------|
|                 |   | Suite 400                          |
|                 |   | Phoenix, Arizona  85012       |
|                 |   | Attention: P. Robert  Moya, Esq.   |
|                 |   | Facsimile No.  602-230-5598        |
|                 |   |                               |
| If to DePuy AcroMed: |   | DePuy AcroMed, Inc.                |
|                 |   | 325 Paramount Drive                |
|                 |   | Raynham, Massachusetts  02767      |
|                 |   | Attention:  President         |
|                 |   | Facsimile No.:  508-828-3400       |
|                 |   |                               |
| with a copy to:      |   | DePuy AcroMed, Inc.                |
|                 |   | 325 Paramount Drive                |
|                 |   | Raynham, Massachusetts  02767      |
|                 |   | Attention:  Corporate Counsel |
|                 |   | Facsimile No.:  508-828-3789       |

 

20.4                           Failureto Exercise.  The failure of eitherParty to enforce at any time for any period any provision hereof shall not beconstrued to be a waiver of such provision or of the right of such Partythereafter to enforce each such provision. The waiver of any term or conditionhereof must be in writing, and any such waiver shall not be construed as awaiver of any other term or condition of this Agreement.

 

20.5                           Assignment.  This Agreement, or any of the rights andobligations created herein, shall not be assigned or transferred, in whole orin part, by either Party hereto without the prior written consent of the otherParty; provided, however, that either Party shall have the right to assign anyor all of its rights or obligations under this Agreement to any Affiliate, or asuccessor to that part of its business to which this Agreement relates, withoutsuch prior written consent.

 

20.6                           Severability.  In the event that any one or more of the provisions (or any part thereof)contained in this Agreement or in any other instrument referred to herein,shall, for any reason, be held to be invalid, illegal or unenforceable in anyrespect, then to the maximum extent permitted by law, such invalidity,illegality or unenforceability shall not affect any other provision of thisAgreement or any other such instrument. Any term or provision of this Agreement which is invalid, illegal orunenforceable in any jurisdiction shall, to the extent the economic benefitsconferred by this Agreement to both Parties remain substantially unimpaired,not affect the validity, legality or enforceability of any of the terms orprovisions of this Agreement in any other jurisdiction.

 

20.7                           Relationshipof the Parties.  The relationship ofDePuy AcroMed and OrthoLogic established by this Agreement is that ofindependent contractors, and nothing contained herein shall be construed to (i)give either Party any right or authority to create or assume any obligation ofany kind on behalf of the other or (ii) constitute the Parties as partners,joint venturers, co-owners or otherwise as participants in a joint or commonundertaking.

 

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20.8                           EntireAgreement.  It is the desire andintent of the Parties to provide certainty as to their future rights andremedies against each other by defining the extent of their undertakingsherein.  This Agreement constitutes andsets forth the entire agreement and understanding between the Parties withrespect to the subject matter hereof and is intended to define the full extentof the legally enforceable undertakings of the Parties hereto, and no promise,agreement or representation, written or oral, which is not set forth explicitlyin this Agreement is intended by either Party to be legally binding.  Each Party acknowledges that in deciding toenter into this Agreement and to consummate the transactions contemplatedhereby it has not relied upon any statements, promises or representations,written or oral, express or implied, other than those explicitly set forth inthis Agreement.  This Agreementsupersedes all previous understandings, agreements and representations betweenthe Parties, written or oral, with respect to the subject matter hereof.

 

20.9                           Counterparts. This Agreement may be executed in one or more counterparts, each of which shallbe deemed an original, but all of which together shall constitute one and thesame instrument.

 

20.10                     Compliancewith Law.  Each Party in theperformance of this Agreement, warrants that it and all its directors, officersor employees shall comply with all applicable local, state, federal andinternational laws, executive orders, regulations, ordinances, or similarrequirements of the national government or government entity which may now orhereafter govern the performance of the parties hereunder.  This includes, but is not limited to, thelaws of the United States pertaining to procurement integrity, anti-kickbackprocedures, and other standards of ethical conduct pertaining to gratuities,gifts, entertainment, and employment of government officials and otherrequirements.  Such required conductalso includes, without limitation, compliance at that Party’s expense with allapplicable import and/or export control laws and regulations and any other lawsand regulations pertaining to export, import, sale and resale or otherdistribution of the Products.

 

20.11                     Debarment.  By signing this Agreement, either Partyshall have the right to automatically terminate this Agreement in the eventthat the other Party is debarred, excluded, suspended or otherwise determinedto be ineligible to participate in federal health care programs (collectively,“Debarred” or “Debarment”). Accordingly, each Party shall provide the other Party with immediatenotice if it (i) receives notice of action or threat of action with respect toits Debarment during the term of this Agreement; or (ii) becomes Debarred.  Upon receipt of such notice, this Agreementshall automatically terminate without further action or notice.

 

20.12                     Expenses.  Each Party shall pay all of its own fees andexpenses (including all legal, accounting and other advisory fees) incurred inconnection with the negotiation and execution of this Agreement and thearrangements contemplated hereby.

 

20.13                     Modificationsand Amendments.  This Agreementshall not be modified or otherwise amended except pursuant to an instrument inwriting executed and delivered by each of the Parties hereto.

 

20.14                     Construction.  The Parties have participated jointly in thenegotiation and drafting

 

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of this Agreement. In theevent an ambiguity or question of intent or interpretation arises, thisAgreement shall be construed as if drafted jointly by the Parties and nopresumption or burden of proof shall arise favoring or disfavoring any Party byvirtue of the authorship of any of the provisions of this Agreement.

 

20.15                     GoverningLaw.  This Agreement and itsperformance shall be governed by and construed in accordance with the laws ofthe State of Illinois, without regard to conflict of laws, principles, exceptthat the arbitration provisions set forth in Article 19 shall be governed bythe provisions of the Federal Arbitration Act.

 

20.16                     Incorporationof Exhibits.  The Exhibitsidentified in this Agreement are incorporated herein by reference and made apart hereof.

 

20.17                     BindingAgreement.  This Agreement is notbinding on either Party unless and until signed by both Parties.

 

IN WITNESS WHEREOF, theParties hereto intending legally to be bound hereby, have each caused thisAgreement to be duly executed as of the date first above written.

 
|   | ORTHOLOGIC CORP     |
|--------|---------------------|
|   |                |
|   | By:                 | /s/ Thomas Trotter |
|   |                | Name:  Thomas Trotter |
|   |                | Title:  President |
|   |                |
|   | DEPUY ACROMED, INC. |
|   |                |
|   | By:                 | /s/ Earl R. Fender |
|   |                | Name:  Earl R. Fender |
|   |                | Title:  President |

 

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