EX-10.3 5 file004.txt ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT 10.3 ASSIGNMENT AND ASSUMPTION AGREEMENT ----------------------------------- This AGREEMENT is made and entered into as of April 12, 2002 (the "Agreement"), by and between Bionix, L.L.C., a Delaware limited liability company ("Assignor") and Orthometrix, Inc., a Delaware corporation ("Assignee"). W I T N E S S E T H WHEREAS, Assignor and Novotec Maschinen GmbH, a German corporation ("Novotec") have entered into a certain Distribution Agreement, dated October 1, 1999 (the "Novotec Agreement"); and WHEREAS, Assignor has agreed to assign to Assignee all right, title, and interest of Assignor in, to and under the Novotec Agreement. NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Assignor hereby assigns and transfers, as of the day and year first above written (the "Closing Date"), all of Assignor's right, title and interest, arising from and after the Closing Date, under and pursuant to the Novotec Agreement. 2. Assignee hereby assumes, from and after the Closing Date, and agrees to pay, discharge and perform, as and when the same shall become due, all of the obligations of Assignor, arising from and after the Closing Date, pursuant to the Novotec Agreement. 3. Assignee shall have whatever rights Assignor has relating to the Novotec Agreement, including the rights to contest in good faith the legality, validity or enforceability of the Novotec Agreement. 4. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 5. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 6. This Agreement and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors, legal beneficiaries and permitted assigns. This Agreement may not be assigned by any party except with the prior written consent of the other party hereto, which shall not be unreasonably withheld. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. BIONIX, L.L.C. By: /s/ Reynald Bonmati -------------------------------- Name: Reynald Bonmati Title: President ORTHOMETRIX, INC. By: /s/ James Baker -------------------------------- Name: James Baker Title: Corporate Secretary and Director DISTRIBUTION AGREEMENT BETWEEN NOVOTEC MASCHINEN GMBH AND BIONIX, L.L.C. DISTRIBUTION AGREEMENT (the "Agreement") dated as of October 1, 1999, by and among NOVOTEC MASCHINEN GMBH, a German corporation having its principal place of business at Durlacherstrasse 35, D-75172 Pforzheim, Germany ("Novotec"); and BIONIX L.L.C., a Delaware limited liability company having its principal place of business at 106 Corporate Park Drive, Suite 106, White Plains, New York 10604, U.S.A. (the "Distributor"); WHEREAS, Novotec is engaged in the business of developing and manufacturing musculoskeletal diagnostic and therapeutic devices ("Devices"), including various types of body exercise and performance measurement devices under patent application; WHEREAS, Distributor is engaged in the business of, among other things, marketing and selling health care systems; NOW THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Novotec and the Distributor hereby agree as follows: Section 1. APPOINTMENT OF DISTRIBUTOR (a) Novotec hereby designates and appoints the Distributor as the exclusive Distributor in the Territory (as defined below) of all Devices (as defined below), and the Distributor hereby agrees to act as such distributor. The term "Territory" shall mean the countries and markets listed on Exhibit A attached hereto. The term "Devices" shall mean the devices listed on Exhibit B attached hereto. The Distributor agrees to use its good faith reasonable best efforts to promote the sale of the Devices in the Territory for which it is the distributor hereunder. (b) Delivery dates for the Devices shall be separately negotiated and agreed upon by the Distributor and Novotec with respect to each purchase order submitted by the Distributor. Novotec reserves the right to refuse a delivery date which is within 90 days of the purchase order, provided, however, that Novotec shall deliver spare parts as soon as possible after they are ordered by the Distributor. (c) Novotec shall not directly or indirectly offer or sell any Devices in the Territory to or through anyone other than the Distributor, and Novotec shall refer to the Distributor all inquiries and orders for Devices which it may receive from any person or entity. (d) Except for sales of Devices pursuant to this Agreement, the Distributor agrees that during the Term (as defined below) of this Agreement, it will not distribute or otherwise sell any device which competes with any Device. (e) Novotec covenants and agrees that (A) it will supply the Distributor with a sufficient quantity of each Device on a timely basis to enable the Distributor to fill all orders from its customers for such Device, and (B) each Device supplied by Novotec will meet all performance and other standards established by Novotec in the product brochures and other materials relating to such Device. Section 2. PRICES (a) The price to be paid by the Distributor to Novotec for any Device (without computer, printer or special accessories) to be purchased by the Distributor as a demonstration system or for immediate resale to a customer is listed on Exhibit B. (b) Payment terms for each Device purchased by the Distributor shall be net sixty (60) days, or net ten (10) business days following receipt by the Distributor of payment for such Device from its customer, whichever is shorter. (c) All payments pursuant to this Agreement shall be in U.S. dollars. Section 3. TERM Subject to the provisions of Section 4 hereof, this Agreement shall have an initial term ending on September 30, 2003 (the "Initial Term'), and may be reviewed for an indefinite number of successive one-year terms (each such additional term, a "Renewal Term") in accordance with the following provisions. At any time during the period beginning 180 days prior to, and ending 90 days prior to, the end of the Initial Term or any Renewal Term, Novotec, by written notice to the Distributor, or the Distributor, by written notice to Novotec, may elect to extend the term of this Agreement for the succeeding Renewal Term; provided, however, that if at the time of such election, the party electing to so extend the term is in material breach of its obligations under this Agreement, the other party shall have the right to reject such election. The Initial Term and any Renewal Terms shall constitute the "Term" of this Agreement. Section 4. TERMINATION (a) Upon the occurrence of (i) an Act of Bankruptcy with respect to the Distributor, or (ii) a Material Breach by the Distributor with respect to its Obligations to Stratec, which Material Breach continues for a period of 90 days following written notice thereof from Novotec to the Distributor, Novotec may elect to end the Term of this Agreement with respect to all Devices. (b) Upon the Occurrence of (i) an Act of Bankruptcy with respect to Novotec, or (ii) a Material Breach by Novotec, which Material Breach continues for a period of 90 days following written notice thereof from the Distributor to Novotec, the Distributor may elect to end the Term of this Agreement with respect to all Devices. (c) The provisions of Sections 6, 7, 11 and 13 of this Agreement shall survive the termination of this Agreement pursuant to Section 3 hereof or this Section 4. (d) As used in this Agreement: The term "Act of Bankruptcy" shall mean, with respect to any party: (i) The filing of an application by such party for, or a consent to, the appointment of a trustee or receiver of all or substantially all of such party's assets; (ii) The filing by such party of a voluntary petition in any Bankruptcy Proceeding or the filing of a pleading in any court of record admitting in writing such party's inability to pay such party's debts as they come due; (iii) The making by such party of a general assignment for the benefit of creditors. (iv) The filing by such party of an answer admitting the material allegations of, or such party's consenting to, or defaulting in answering, any Bankruptcy Proceeding filed against such party; or (v) The entry of an order, judgment or decree by any court of competent jurisdiction adjudicating such party a bankrupt or appointing a trustee or receiver of all or substantially all of such party's assets. The term "Bankruptcy Proceeding" shall mean any bankruptcy or similar proceeding under the laws of any jurisdiction, including the United States, any state or any foreign country. The term "Material Breach" shall mean, (i) with respect to Novotec, the failure of Stratec to perform its material obligations under this Agreement; and (ii) with respect to the Distributor, the general failure of the Distributor to use its good faith reasonable best efforts to promote the Devices. Section 5. LICENSES (a) Novotec hereby grants to the Distributor a license, including rights to sublicense (the "Novotec License"), to market, sell and service each Device in the Territory and in connection therewith to use all technology owned by Novotec or over The term "Bankruptcy Proceeding" shall mean any bankruptcy or similar proceeding under the laws of any jurisdiction, including the United States, any state or any foreign country. The term "Material Breach" shall mean, (i) with respect to Novotec, the failure of Stratec to perform its material obligations under this Agreement; and (ii) with respect to the Distributor, the general failure of the Distributor to use its good faith reasonable best efforts to promote the Devices. Section 6. LICENSES (a) Novotec hereby grants to the Distributor a license, including rights to sublicense (the "Novotec License"), to market, sell and service each Device in the Territory and in connection therewith to use all technology owned by Novotec or over which it has any rights, to the extent of such rights which may be licensed by Novotec (the "Novotec Technology"). (b) The term "Technology" shall mean all present and future technical information and know-how, including trade secrets, patents, trademarks, copyrights, proprietary data and other information and materials necessary or useful for the marketing and servicing of any Device. (c) (left intentionally blank) (d) The parties acknowledge and agree that it is their intent that the Novotec License be governed by Section 365(n) of the United States Bankruptcy Code, as a license of intellectual property, as defined in Section 101(35A) of the Bankruptcy Code. (e) Stratec covenants and agrees that during the Term it will not transfer or sell any Novotec Technology for use in the Territory to anyone other than the Distributor, or grant any license to anyone other than the Distributor to use the Novotec Technology in the Territory or to market and service any Device in the Territory. Section 7. (left intentionally blank) Section 8. WARRANTY (a) Novotec warrants that the Devices shall be free from defects in material and workmanship. Novotec's warranty period shall be 12 months from the date of shipment to the end-user's facility; provided, however, that in no case shall Novotec's warranty period extend beyond 14 months from the date of shipment from Novotec's facility; provided, further, that if Novotec grants to any purchaser or user of a Device any warranty which extends beyond the warranty contained in this Section 8, the Distributor shall also receive the benefits of such extended warranty. (b) Except as specifically provided herein, there are no other warranties, expressed or implied, including, but not limited to, any implied warranties or merchantability or fitness for a particular purpose. Defective or damaged goods shall be repaired or replaced at the expense of Novotec. Novotec shall bear any transportation costs of the defective or damaged goods and their replacements. In no event shall Novotec be liable for loss of profits, indirect, or consequential damages arising out of the use of Devices. Novotec's software and hardware designed for use with a Device are warranted to execute the programming instructions when properly installed in the Device. Novotec does not warrant that the operation of a Device, the software, or the hardware will be uninterrupted or error free. (c) The provisions of this Section 8 shall in no way limit the indemnification obligations of Novotec under Section 13 hereof. Section 9. SERVICE (a) Subject to the provisions of this Section 9, the Distributor shall provide all installation and maintenance service, including warranty service, with respect to all Devices sold by the Distributor pursuant to this Agreement. All service shall be performed in a workmanlike manner, consistent with industry standards, and in accordance with Novotec's service manual. If any service call performed by the Distributor is covered by Novotec's warranty, Novotec will promptly provide the Distributor with all necessary parts at no cost to the Distributor. For service calls not covered by Novotec's warranty, the Distributor shall establish its own charges for parts and labor, and Novotec will sell Device's parts to the Distributor at the prices listed on Exhibit C for such Device.* (b) Novotec shall provide the Distributor at no cost with such technical advice and information as may be necessary for a full understanding and maintenance of Devices, and the Distributor shall have the right from time to time, at times agreed with Novotec to send up to four employees to Novotec's manufacturing facility for instruction and training free of charge two times per year. The Distributor shall pay travel, lodging and personal expenses incurred by such employees. The Distributor may send additional employees at its own expense. Section 10. SPECIFICATIONS In partial consideration for the Distributor agreeing to act as the distributor for the Devices. Novotec agrees to transfer and deliver to the Distributor copies of all specifications, plans, blueprints and related items for all Devices and any improvements and enhancements thereof ("Specifications"). Such Specifications shall become the property of the Distributor and may be used by the Distributor for any purpose not prohibited by the terms of this Agreement. Section 11. GOVERNMENTAL APPROVALS (a) Novotec and the Distributor deem it advisable to increase the amount of such coverage, Novotec will obtain such additional insurance to the extent available on commercially reasonable terms. Novotec and the Distributor may also agree to decrease the amount of such coverage, provided, however, that in no event shall coverage be reduced below $4,000,000. ------------------- * Confidential treatment requested (b) Novotec agrees that upon request from the Distributor, Novotec will promptly submit certificates of insurance to the Distributor evidencing the coverage required by this Agreement. Such insurance shall be with companies reasonably acceptable to the Distributor and Novotec will use its best efforts to have such insurance policies provide that they may not be cancelled or materially changed except on at least 30 days' prior written notice to the Distributor. Section 11. INDEMNIFICATION (a) Novotec hereby agrees to indemnify and hold harmless the Distributor, its subsidiaries and affiliates and its and their agents, officers, directors, employees, representatives, successors and permitted assignees from and against any and all claims, suits, actions or proceeding for loss, injury, damage or liability, including reasonable attorneys' fees, in any way resulting from, arising out of or related to the development and/or manufacture of any Device by Novotec (including any design or other defect). (b) Novotec represents and warrants that its Devices do not and will not infringe upon the patent, trademark, copyright or other intellectual property rights of any third party. Novotec agrees to indemnify and hold the Distributor and its customers harmless from and against all damages, liabilities, costs and expenses, including reasonable attorney's fees, arising from any claim of a third party of infringement of patent, trademark, copyright or other intellectual property rights in the manufacture, use or sale of such Devices. Novotec shall undertake the defense of any such claim of infringement by counsel of its choice and at its expense. The Distributor shall assist Novotec to the extent reasonably required for such defense. In case the manufacturing, marketing, sale or use of any Device or component thereof is held by a court to constitute or involve the infringement of a patent, trademark or copyright, Novotec shall at its own cost either procure for the Distributor or its customers the right to continue using such Device, or replace the same with a comparable non-infringing product, or modify the Device so that it becomes non-infringing, or accept the return of such Devices and refund the purchase price plus transportation costs and duties paid thereon. Novotec covenants and agrees to use its best efforts to protect all intellectual property against relating to the Devices. Section 12. REPRESENTATIONS AND WARRANTIES Novotec represents and warrants to the Distributor that the Distributor is its sole and exclusive distributor in the Territory, and that it has no distribution arrangement in effect in the Territory with any other person or entity. Section 13. ASSIGNMENT No party hereto may assign, delegate or otherwise transfer this Agreement, or any of its rights and obligations hereunder, or any portion thereof without the prior written consent of the other parties, except as specifically contemplated hereby. Subject to the foregoing, this Agreement shall inure to the benefit of the parties and their respective permitted successors and assigns. Section 14. ARBITRATION Any controversy or claim arising out of or relating to this Agreement, or any breach thereof, including, without limitation, any claim that any of this Agreement, or any part thereof, is invalid, illegal or otherwise voidable or void, shall be submitted to arbitration in New York, New York in accordance with the rules of the American Arbitration Association. Any award or determination of the arbitration tribunal shall be final, nonappealable, and conclusive upon the parties, and judgment thereon may be entered by any court of competent jurisdiction. Section 15. REMEDIES No remedy conferred herein is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and may be exercised singly or concurrently, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. Section 16. CONFIDENTIALITY Any confidential or proprietary information regarding the Devices and the Novotec Technology shall be held in confidence by each party and shall not be disclosed to any third party by such party except as contemplated by this Agreement. The Distributor may make disclosures of such information in connection with the implementation of any of the licensing arrangements contemplated by Sections 5 hereof (provided that the recipients of such information are bound by like obligations of confidentiality). Section 17. NOTICES All notices given by the parties hereunder shall be in writing and shall be personally delivered or mailed by registered or certified mail, return receipt requested, by overnight courier or by facsimile transmission to the intended recipient thereof at the address or facsimile number set forth below. Any such notice shall be deemed to have been duly given when delivered personally or by overnight courier and/or given by confirmed facsimile or five days after mailing. The addresses and facsimile numbers of the parties for purposes of this Agreement are as follows: If to Distributor: Bionix, L.L.C. 106 Corporate Park Drive, Suite 106 White Plains, NY 10604 Attention: President Fax No.: (914) 636-3549 If to Novotec: Novotec Maschinen GmbH Durlacherstrasse 35 D-75172 Pforzheim, Germany Attention: Geschaftsfuhrer Fax No.: 49-7231-1454-22 Or such other address as any party shall designate in writing to the others. Section 18. ENTIRE AGREEMENT This Agreement is the entire agreement among the parties hereto relating to the subject matter hereof, and it cancels and supersedes all earlier agreements, written or oral relating to the subject matter hereof. No waiver, modification or change of any of the terms of this Agreement shall be valid unless in writing and signed by duly authorized representatives of the parties. Section 19. SEVERABILITY If any term or provision of this Agreement shall at any time be held to be void, invalid or unenforceable, such term or provision shall be construed as severable from this Agreement, and the remainder of this Agreement shall be carried out as if such void, invalid or unenforceable terms or provisions were not contained herein. Section 20. AUTHORITY Each party represents and warrants to the others that the execution and delivery of this Agreement and the performance of the provisions hereof by such party have been duly authorized by all necessary corporate action and that this Agreement has been duly and validly executed and delivered by such party and constitutes a valid and legal binding agreement enforceable against such party in accordance with its terms. Section 21. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to the choice of law principles of such laws. Section 22. LANGUAGE This Agreement is in the English language only, and no translation into any other language will or shall be taken into consideration in the interpretation of this Agreement. Section 23. RELATIONSHIP OF PARTIES The relationship between Novotec and the Distributor is that of independent contractors. No party hereto is an agent, partner or employee of the other and no party has any right or any other authority to enter into any contract or undertaking in the name of or for the account of the other or to assume or create any obligation of any kind, express or implied, on behalf of the other, nor will the act or omissions of either create any liability for the other. This Agreement shall in no way constitute or give rise to a partnership between the parties. Section 24. HEADINGS The headings contained in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision hereof. Section 25. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument, and any parry may execute this Agreement by signing any such counterpart. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written. BIONIX, L.L.C., By: /s/ Reynald Bonmati ------------------------------ Name: Reynald Bonmati Title: President NOVOTEC MASCHINEN GMBH By: /s/ Hans Schiessl ------------------------------ Name: Hans Schiessl Title: Geschaffsfurer EXHIBIT A --------- TERRITORY --------- Countries: United States of America and Canada ("North America"); Mexico, Central and South America and the Caribbean ("Latin America"); Markets: All markets in the above countries. EXHIBIT B --------- Device Distributor Price (F.O.B. Pforzheim) Galileo 100 * Galileo 900 * Galileo 2000 * Galileo Platform * ------------------------ * Confidential treatment requested