LICENSE AGREEMENT
AGREEMENT, dated April 21, 1997, by and between Arrhythmia Research
Technology, Inc., a Delaware corporation having an office and place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
referred to as "ART") and Softheart, Inc., a Vermont corporation having an
office and place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter referred to as "Softheart").
WHEREAS, Softheart is the developer and the owner of all rights
(including all patents and copyrights) in and to certain software for
catheterization laboratory recording or signal acquisition from a patient; and
WHEREAS, ART develops, manufactures and markets hardware, firmware and
software for products sold as medical devices under authorization of the
United States Food and Drug Administration (the "FDA"); and
WHEREAS, ART desires an exclusive license to sell Softheart's software
in ART's products under Softheart's authorization from the FDA pursuant to
Section 510(k) of the Medical Device Amendments to the Food Drug and Cosmetic
Act; and ART desires to reproduce and distribute such software to third
parties in binary machine-readable form for use in ART's products.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
hereinafter defined:
1.1 "AFFILIATE" means with respect to either party, any company,
individual, corporation, partnership, association, or business that
now or hereafter directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with such party. The term "control" including the terms
"controlling," "controlled by," and "under common control with" means
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person or entity,
whether through the ownership of voting shares, by contract or
otherwise.
1.2 "ART EQUIPMENT" means equipment manufactured, supplied or sold from
time to time by ART suitable for catheterization laboratory recording
or signal acquisition from a patient.
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1.3 "BASIC SOFTWARE PACKAGE" means a sublicense granted by ART to a
Permitted End User allowing such end user the right to use one copy of one
or more of the Licensed Products in a transaction involving the sale,
lease, loan or other transfer of a single unit of integrated ART Equipment
which has been integrated with a single copy of the Exclusive Licensed
Product.
1.4 "COPYRIGHTS": See Section 15.1.
1.5 "DISPUTE": See Section 18.3.
1.6 "ERROR" means (1) any defect which causes an incorrect functioning or
nonfunctioning of Licensed Software, or (2) an incorrect or incomplete
statement or diagram in Documentation, if either such defect renders the
Licensed Software inoperable, causes the Licensed Software to substantially
fail to meet the specifications thereof, causes the Documentation to be
inaccurate or inadequate in any material respect, causes incorrect results,
or causes incorrect functions to occur.
1.7 "ESCROW AGENT": See Section 12.
1.8 "EXCLUSIVE LICENSED PRODUCT" means the Licensed Product known as
Softheart's "ON-LINE CATH LAB ANALYSIS COMPUTER PROGRAM," identified on
Exhitib A as being licensed exclusively to ART.
1.9 "EXHIBIT" means, when followed by a letter, the exhibit attached to
this Agreement bearing that letter and by such reference fully incorporated
in this Agreement.
1.10 "INTELLECTUAL PROPERTY RIGHTS" means any and all property rights,
rights of ownership and proprietary rights of any kind or nature, including
exclusionary rights existing from time to time anywhere in the world under
patent law, copyright law, trade-secret law, trademark law, unfair
competition law, or otherwise.
1.11 "LICENSED MARKS" means the trademarks of Softheart described in
Exhibit C.
1.12 "LICENSED PRODUCT" means the executable code version of the Licensed
Software and a single printed or disk version of the User Documentation in
form for formatting, reproduction and subsequent delivery to Permitted
End-Users, each reproduction of the foregoing made pursuant to this
Agreement.
1.13 "LICENSED SOFTWARE" means the executable code for the computer
program identified in Exhibit A, to be modified, corrected, enhanced and
updated from time to time as hereinafter provided or otherwise, including
Upgrades. Licensed Software shall be deemed to include the Source Code for
such programs only as and when ART may become entitled to a license to use
it in accordance with the provisions of Section 14 below.
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1.14 "MAINTENANCE MODIFICATIONS" means any modifications or revisions,
other than enhancements or Upgrades, to Code or Documentation that correct
Errors or provide incidental corrections.
1.15 "NET REVENUE" means the invoice price for the ART Equipment and all
related software, including all components of the cath lab recorder system,
the Licensed Software, and all items that require the use of the Licensed
Software when operated in conjunction with the ART Equipment. "Net
Revenue" is exclusive of freight and delivery charges, sales taxes, value
added taxes, import or export duties included in the invoice price and
identified as such, and reflects allowances for returns and cash discounts
shown on the invoice or otherwise allowed to customers in accordance with
normal trade practices (but without deductions for uncollectible accounts).
1.16 "NON-EXCLUSIVELICENSED PRODUCTS" means those Licensed Products
identified on Exhibit A (other than the Exclusive Licensed Product).
1.17 "OTHER EQUIPMENT" means equipment not manufactured, supplied or sold
by ART suitable for catherization laboratory recording or signal
acquisition from the patient.
1.18 "PERMITTED END-USER(S)" means person(s) or entity(ies) in the
business of providing health care or other person(s) or entity(ies) (such
as medical educators) mutually agreed upon by ART and Softheart.
1.19 "SECTION" means, when followed by a numeral, the section or
subsection of this Agreement bearing that numeral, and when not followed by
a number, the section or subsection of this Agreement where such term
appears.
1.20 "SOFTWARE CONVERSION AGREEMENT" means the Software Conversion
Agreement of even date herewith between ART and Softheart which is annexed
hereto as Exhibit D.
1.21 "SOURCE CODE" means computer programming code, other than object
code, and related source code level system documentation and flow charts,
comments and procedural code such as job control language, which may be
printed out or displayed in a form readable and understandable by a skilled
programmer.
1.22 "SUIT": See Section 18.1.
1.23 "TERM": See Section 13.
1.24 "UPGRADE" means (i) a derivative of a Licensed Product which renders
an existing Licensed Product obsolete or unmarketable, (ii) a revision or
modification of a Nonexclusive Licensed Product that Softheart elects to
separately price or market, (iii) or a derivative of a Licensed Product
which, in the mutual judgment of the parties, should be offered to
existing end-users as an upgrade to one or more
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existing Licensed Products. Upgrade does not include (i) new products that
are capable of operating independently from the On-Line Cath Lab Analysis
Computer Program and including basic functionality not included in the
Licensed Products. It is specifically contemplated that the Windows
Upgrade which is the subject of the Software Conversion Agreement shall be
deemed an "Upgrade".
1.25 "USER DOCUMENTATION" means documentation that describes the function
and use of the Licensed Software in sufficient detail to permit use of the
Licensed Software, but does not include (a) instructions concerning the
substantive field in which the computer program is used, or (b)
instructions concerning the use of a computer system(s), or (c)
instructions concerning use of software (E.G., operating systems) other
than the Licensed Software.
1.26 "WINDOWS UPGRADE" means the software upgrade, described in the
Software Conversion Agreement of even date herewith, which will convert
the Licensed Software to a Windows operating system.
1.27 "VALUE-ADDED TRANSACTION" means a transaction whereby (a) ART grants
a license to use one or more of the Licensed Products to a Permitted End
User in conjunction with a sale, lease, loan or other transfer of ART
Equipment or has previously granted such a license, or (b) where ART grants
to a Permitted End User or has previously granted to such end user, a
license to use the On-Line Cath Lab Analysis Computer Program without
modifications, to be sold as an "add-on" product for Other Equipment.
2. SUBLICENSE RIGHTS.
2.1 Subject to all of the terms and conditions of this Agreement,
Softheart hereby grants to ART the exclusive (except as set forth in
Section 2.2), non-transferable (except as set forth in Section 27) right
and license to market and sublicense the Exclusive Licensed Product only
to Permitted End Users, and a non-exclusive, non-transferrable right and
license to market and sublicense the Non-Exclusive Licensed Products only
to Permitted End-Users, in each case only as part of a Value Added
Transaction.
2.2 ART may duplicate the Licensed Products for the purpose of furnishing
copies to Permitted End-Users in the valid exercise of the foregoing
license. In connection therewith, ART may make translations of the User
Documentation and reproductions thereof as set forth in the preceding
sentence. ART shall not directly or indirectly market, sublicense,
transfer, encumber, assign, duplicate or otherwise make any use of the
Licensed Software or Products, in whole or in part, except as expressly
provided in this Agreement. This license does not grant to ART the right
to modify the Licensed Software or the Licensed Products, with the sole
exception that ART may, subject to the approval of Softheart which shall
not be unreasonably withheld, modify and create derivative works of the
User Documentation manuscript delivered by Softheart for the purpose of
including instructions as to the use of the Exclusive Licensed Product on
ART Equipment or
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use of the On-Line Cath Analysis Computer Program without modification on
Other Equipment.
2.3 Except in the situation in which ART has terminated this Agreement for
cause as provided in Section 14 below, during the term of this Agreement
and for a period of one (1) year thereafter, ART shall not directly or
indirectly, independently or in combination with any person or entity,
market, separately or as a component of any equipment or system, any
computer programs that are functionally equivalent to the Licensed
Software. In the event ART terminates/cancels this Agreement for cause,
ART shall be permitted to develop and market, separately or as a component
of any equipment or system, computer programs that are functionally
equivalent to the Licensed Software.
2.4 During the term of this Agreement, Softheart shall not market the
Exclusive Licensed Product, nor shall Softheart encumber, assign (except as
provided in Section 27 hereof) or transfer any rights in the Licensed
Products. However, nothing contained herein shall prevent or prohibit
Softheart from using any subroutines or other portions of the Licensed
Software and Products and incorporating them into any software or products
so long as said software or products do not become the functional
equivalent of the Licensed Product from which the subroutines or portions
were derived. Softheart shall not license, sublicense, grant rights in or
otherwise permit the sale of, the On-Line Cath Lab Analysis Computer
Program to or by other original equipment manufacturers (OEMs).
2.5 Nothing herein shall convey to ART any right in the Licensed Products
or Licensed Software other than those rights expressly granted herein.
Subject to the limitations set forth above, Softheart retains all rights
and ownership in the Licensed Software and Products not expressly granted
to ART in this Agreement.
3. COMPENSATION.
Each party shall pay to the other the amounts specified in Exhibit B with
respect to the Licensed Products. Compensation will be earned by Softheart
at the time of the collection of the proceeds of a sale by ART.
4. PAYMENT.
Not later than the thirtieth (30th) day after the end of each calendar
month in which compensation is due by either party, each party owing
compensation to the other shall provide the other party with a detailed
written report of its sales activities with respect to the Licensed
Products for the calendar month then ended, in form and substance
reasonably satisfactory to the receiving party, which report shall be
accompanied by payment of the compensation payable under Section 3 due for
such period.
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5. TAXES.
Each party shall pay or reimburse the other party for all federal, state
and local sales, excise, or similar taxes based on the receipt of the
payments to be made hereunder (excluding, however, any tax on the income of
the recipient).
6. CONDITIONS OF SUBLICENSING.
The right of ART to sublicense Licensed Products is subject to the
following conditions:
6.1 ART shall not sublicense any Licensed Product except pursuant to
a written sublicense agreement that contains such terms and
conditions as shall be reasonably acceptable to Softheart,
including but not limited to those mandatory terms and conditions
set forth on Exhibit E attached hereto.
6.2 ART shall be exclusively responsible for all warranty
obligations, returns and customer service and support for any
Licensed Product sublicense by ART, and for any On-Line Cath Lab
Analysis Computer Program sold as an "add-on" product for Other
Equipment (as further described in Exhibit A) licensed by
Softheart provided such license is pursuant to a license
agreement that contains such terms and conditions as shall be
reasonably acceptable to ART, but without regard to any pricing
terms. Upon termination or expiration of this Agreement, ART
shall remain liable for warranty, support and service for the
period of any warranty given to its customers in connection with
the sublicense or service of any Licensed Product.
6.3 ART shall use its best efforts to market and promote the Licensed
Products.
6.4 ART shall be required to meet certain minimum sales requirements
during the Term of this Agreement as follows: (i) during each
of the first two (2) years following the completion of the
Windows Upgrade identified in the Software Conversion Agreement,
ART shall be required to sell three (3) cath lab systems
incorporating the Licensed Product; (ii) during the third and
fourth years during the Term of this Agreement, ART shall be
required to sell a total of fifteen (15) cath lab systems
incorporating the Licensed Product; and (iii) during each
two-year period thereafter, ART shall be required to sell a
total of twenty-four (24) cath lab systems incorporating the
Licensed Product.
7. ADVERTISING AND PROMOTION
7.1 ART will assume full costs and responsibility of all of its
advertising, promotional, and selling expenses, including, but
not limited to,
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correspondence with customers, travel and entertaining expenses,
salaries and commissions of salesmen and agents.
7.2 Softheart shall forward to ART for its handling a copy of all
inquiries regarding the Exclusive Licensed Product or ART
Equipment received along with a copy of any acknowledgments
Softheart may have made. Softheart shall make available to ART
such sales, product and technical information as it shall have
available to assist in handling such inquiries. ART will supply
Softheart with information as to the disposition of all referred
inquiries.
7.3 Promotional, advertising and marketing materials for the Licensed
Software shall give appropriate recognition to Softheart.
7.4 Softheart shall retain sole ownership of all goodwill associated
with the Licensed Products, as represented and symbolized by the
Licensed Marks.
8. WARRANTIES.
8.1 Softheart warrants, represents and covenants to ART that (a) the
Licensed Software, as delivered by Softheart, used in accordance
with the User Documentation and operated on the ART Equipment, or
other DOS- and or Windows-compatible equipment recommended by
Softheart, as applicable, and in the operating environment set
forth in the User Documentation, will operate properly and
substantially in accordance with the specifications for the K3
System Software (Version 3.0) or any other applicable
documentation for new versions of the Licensed Software delivered
by Softheart to ART; and (b) Softheart has the right to grant the
rights to use, reproduce, distribute and sublicense the Licensed
Software, User Documentation and Licensed Marks as set forth in
this Agreement. If Softheart is able to cure each breach of the
warranties set forth in the preceding sentence within sixty (60)
days after notice thereof, then ART's sole and exclusive remedy,
and Softheart's sole and exclusive obligation, for breach of the
warranty set forth in clause (a) of the preceding sentence shall
be to deliver promptly corrections to the Licensed Software
necessary to make the Licensed Software operate in accordance
with the User Documentation, and ART's sole and exclusive remedy,
and Softheart's sole and exclusive obligation, for breach of the
warranty set forth in clause (b) of the preceding sentence shall
be to perform as set forth in Section 18.1 below. If Softheart
is unable to cure each breach within sixty (60) days after notice
thereof, ART shall be entitled to exercise all rights and
remedies of ART, subject to any limitations set forth herein.
8.2 ART ACKNOWLEDGES THAT NO EXPRESS WARRANTIES HAVE BEEN MADE BY
SOFTHEART EXCEPT FOR THE LIMITED WARRANTIES MADE IN THE PRECEDING
PARAGRAPH. THESE LIMITED WARRANTIES AND THE
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ASSOCIATED LIMITED REMEDIES ARE PROVIDED IN LIEU OF ALL OTHER
WARRANTIES AND REMEDIES. SOFTHEART DISCLAIMS ALL IMPLIED
WARRANTIES, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
9. LIMITATION OF LIABILITY.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY
TO PERSONS OR DAMAGE TO PROPERTY, ARISING FROM OR RELATING TO THIS
AGREEMENT, UNDER ANY LEGAL THEORY INCLUDING WITHOUT LIMITATION
WARRANTY, TORT, CONTRIBUTION AND INDEMNITY, REGARDLESS OF WHETHER SUCH
PARTY IS ADVISED, HAS OTHER REASON TO KNOW, OR IN FACT KNOWS OF THE
POSSIBILITY THEREOF. NOTHING IN THIS SECTION 9 SHALL LIMIT THE
PARTIES' RESPECTIVE OBLIGATIONS UNDER SECTION 18.
10. CONSULTING SERVICES AND SUPPORT.
10.1 For the shorter of the "useful life" of the Licensed
Software or for the term specified in Paragraph 13 hereof, Softheart,
at no charge to ART, shall furnish to ART all Maintenance
Modifications to such Licensed Software. Such Maintenance
Modifications shall, upon their availability, become part of such
Licensed Software for purposes of this Agreement. As used herein,
"useful life" shall mean the period of time between the acceptance of
the Licensed Software by ART and one year after the introduction of a
new product or new industry standard operating system which makes the
current Product obsolete or such other event as the parties may
mutually agree. In the event ART elects to continue to support the
Licensed Software for more than one (1) year after the introduction of
a new product or a new industry standard operating system, then ART
shall pay Softheart for Maintenance Modifications at Softheart's
standard rates in effect from time to time as provided in Section 10.2
below.
10.2 Upon the request of ART from time to time, Softheart shall
provide reasonable consulting services, software changes or new
products, and technical support with respect to the Licensed Software.
In addition, at ART's request, Softheart shall provide training and
marketing support with respect to the Licensed Software, including
personnel for presentations. ART shall pay for services provided
pursuant to this Section at Softheart's standard rates in effect from
time to time (which rates are currently $110 per person per hour).
Such rates shall not increase by more than 10% per year. Travel time
shall be billed
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at the rate of 35% of Softheart's standard rates in effect from time
to time. ART shall pay or reimburse Softheart's reasonable
out-of-pocket travel, lodging and meal expenses incurred in providing
such services. Invoices shall be issued monthly and shall be due and
payable within thirty (30) days after the date thereof, after which
late charges at the rate of 1% per month shall accrue.
Consulting fees shall be reviewed by the parties at the end of the
fifth year of the term of this Agreement and, if such fees are not
competitive with rates within the software industry, then the parties
shall renegotiate the fees payable to Softheart at such time.
11. CHANGES AND ENHANCEMENTS.
11.1 Upon making corrections or providing solutions for the
Licensed Products as required under Section 8, Softheart
shall provide ART with the executable code on magnetic
media incorporating such corrections and solutions and
any changes to the User Documentation necessitated
thereby. ART shall promptly deliver to its existing
licensees any such corrections or solutions which affect
patient care issues, and may at its discretion deliver
other corrections and solutions.
11.2 Softheart shall provide ART with executable code and
supporting User Documentation for any modifications,
enhancements and new versions of the Licensed Products
made by Softheart in the ordinary course of its business
at no additional charge. ART at its discretion may
incorporate such items into all copies of Licensed
Products sublicensed thereafter, subject to all of the
terms and conditions of this Agreement. In addition, if
Softheart agrees to provide enhancements or customizations
requested by ART, ART shall pay Softheart's ordinary rates
in effect from time to time, plus all out-of-pocket
expenses, which shall be quoted in advance.
12. SOURCE CODE.
12.1 Softheart shall keep and maintain current in escrow a diskette
or CD ROM of the Source Code for the Licensed Products, as well as any
Enhancements, Updates and corrections, and shall keep there all related
documentation (such as descriptions of the general program architecture,
module design specifications and FDA applications when applicable) and all
instructions reasonably necessary to permit a skilled programmer or analyst
to support, enhance, and modify the Licensed Software without the help of
any other person or reference to any other materials, to the extent
Softheart develops and maintains such materials in the ordinary course of
its business. Softheart will deliver the Source Code to a Third Party in
Austin, Texas, acceptable to Softheart and ART, or any successor thereof,
who shall act as Escrow Agent ("Escrow Agent"). The Escrow Agent shall be
paid by ART. Provided ART is not in material breach of this Agreement, ART
will be
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entitled to obtain the Source Code from Escrow Agent if (i) Softheart fails
to provide the services set forth in Sections 8.1(a), and does not provide
reasonable efforts to cure such failure within thirty (30) days after
notice thereof; or (ii) Softheart makes the Source Code generally available
to any other party; or (iii) Softheart ceases doing business for any
reason; or (iv) Softheart commits any act of bankruptcy (except for a
Chapter 11 proceeding) within the meaning of the Federal Bankruptcy Laws;
or if bankruptcy (except for a Chapter 11 proceeding), receivership,
insolvency, reorganization, dissolution, liquidation or other similar
proceeding shall be instituted by or against Softheart; or if a bankruptcy
proceeding is converted into a Chapter 7 proceeding. In the event ART
receives the Source Code in the manner provided hereunder, ART shall have,
subject to all the terms and conditions of this Agreement, a fully paid-up
license to use and modify the Source Code, subject to the terms of this
Agreement, solely for purposes of maintaining, operating and/or upgrading
the Licensed Products, but nothing herein contained shall relieve ART from
any obligation to pay License Fees. ART shall have the right at any time
to contact the Escrow Agent for purposes of confirming the existence of the
Source Code. ART will at all times be entitled to remove temporarily the
Source Code from the Escrow Agent's facilities, under the Escrow Agent's
and Softheart's supervision, if Softheart so desires, in order to verify
that Softheart has complied with its obligations under this Section. ART
will bear all expenses related to such verification, and will also pay
Escrow Agent's related out-of-pocket expenses unless the Source Code is
not current and complete, in which case Softheart shall reimburse ART for
all such expenses.
12.2 Softheart shall, from time to time as requested by ART, deliver
directly to ART, or arrange for the release from Escrow and delivery to
ART, those portions of the Source Code that involve interfaces to ART
Equipment, as may be necessary for the development, manufacture and/or
support of the ART Equipment.
13. TERM.
This Agreement shall take effect on the date hereof and, except for those
provisions that shall survive the expiration or termination of this
Agreement, shall extend for fifteen (15) years from and after the date
hereof (the "Commencement Date").
14. TERMINATION.
14.1 The following procedures shall govern termination of this
Agreement if either party fails to cure any material breach of
any material obligation under this Agreement:
(a) The nonbreaching party shall give the breaching party
written notice describing the breach and a 45-day cure
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period commencing upon receipt of the notice (except a
10-day cure period as to any default of a payment
obligation).
(b) The breaching party shall be deemed to have cured such
breach if within the applicable cure period it takes steps
reasonably adequate to alleviate any damage to the
nonbreaching party resulting from the breach (which in the
case of Licensed Software shall include repairs,
corrections or solutions as set forth in Section 8) and to
prevent a similar future breach.
(c) If a breach has not been cured at the end of its applicable
cure period, then upon written notice given by the
nonbreaching to the breaching party within ninety (90) days
after the expiration of the cure period this Agreement
shall terminate immediately without the need for further
action on the part of the nonbreaching party.
14.2 Upon expiration of this Agreement or termination of this
Agreement in accordance with the procedures set forth in
Section 14.1, then:
(a) The rights granted to ART under Section 2 shall immediately
cease and terminate, and ART shall immediately cease using
and return to Softheart all copies of the Licensed Products
and Software in its possession other than such copies as
are reasonably necessary in furtherance of its support
obligation in respect thereof; provided, however, that ART
shall have a period of sixty (60) days following
termination to sell off any ART Equipment containing the
Exclusive Licensed Product; and provided further, however,
that all other rights and obligations of the parties shall
survive termination or expiration; and
(b) Within thirty (30) days after the effective date of
termination, the parties shall pay to each other any
amounts owed pursuant to this Agreement.
14.3 A failure of either party to make any payment due under this
Agreement within thirty (30) days after notice that such payment
is overdue shall be deemed to be a material breach of a material
obligation of this Agreement.
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14.4 The failure of ART to meet the minimum sales requirements set
forth in Section 6.4 shall be deemed to be a material breach of
a material obligation of this Agreement.
14.5 ART may terminate this Agreement for its convenience upon ten
(10) days' notice to Softheart, subject to the provisions of
Section 2.3. ART shall not market, sell, license, transfer,
distribute or otherwise deal or do business in any computer
software that is the functional equivalent of the Exclusive
Licensed Product for the duration of the Term and one year
thereafter.
15. PROPRIETARY RIGHTS.
15.1 ART recognizes and shall not contest Softheart's exclusive
ownership, right, title and interest in and to Softheart's
copyrights in the Licensed Software, the Licensed Products and
the User Documentation (the "Copyrights"). Softheart may, but
shall not be required to, maintain registrations of the
Copyrights with the United States Copyright Office. ART shall
not be deemed to acquire any right, title or interest in any of
the Copyrights or any other intellectual property rights in the
Licensed Software, the Licensed Products and the User
Documentation during or after the term of this Agreement.
15.2 ART shall keep each and every item to which Softheart retains
title free and clear of all claims, liens and encumbrances, and
any act of ART purporting to create such a claim, lien or
encumbrance shall be void. ART hereby assigns to Softheart all
of its right, title and interest, if any, in and to any changes,
additions, derivatives and enhancements made by ART to the
Licensed Software, Licensed Products and the User Documentation
or other materials provided by Softheart, and shall execute all
documents and instruments reasonably requested by Softheart to
effectuate such assignment. Under no circumstances (a) shall
ART acquire any rights in any translations of the Licensed
Products, nor (b) shall Softheart have any rights in any
derivatives prepared by ART in accordance with Paragraph 2.2 to
the extent that the same do not violate any of Softheart's
proprietary rights. ART recognizes that Softheart represents
that the Licensed Software, Licensed Products and the User
Documentation and related materials, techniques and procedures
furnished or disclosed by Softheart to ART hereunder embody
exceptionally valuable trade secrets, and they are, and shall
remain, the sole property of Softheart. ART shall not create or
attempt to create, by decompilation, disassembly or reverse
engineering, the source programs for the
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Licensed Software and Licensed Products from the object programs
or other information made available by Softheart. ART shall not
disclose or divulge or communicate the Licensed Software,
Licensed Products, the User Documentation or any portion thereof
to any person except (a) ART may disclose the User Documentation
and may demonstrate and/or display the Licensed Products to the
extent necessary or useful to marketing, interface development,
distribution and support of the Licensed Products, and (b) ART
may make copies of the Licensed Products available for
evaluation purposes (pursuant to a written evaluation agreement
that contains such terms and conditions as shall be reasonably
acceptable to ART and Softheart, including but not limited to
those mandatory terms and conditions set forth on Exhibit E
attached hereto) to the extent necessary or useful to marketing
and distribution of the Licensed Products.
15.3 ART will not alter, deface, remove, cover up, or mutilate in any
manner whatsoever any copyright or other proprietary notice
which Softheart may incorporate in or attach or affix to the
Licensed Software and/or User Documentation.
15.4 Softheart hereby grants to ART for the term of this Agreement a
nontransferable (except as set forth in Section 27), fully
paid-up license to use the Licensed Marks in connection with the
marketing, distribution and sublicensing of Licensed Products
pursuant to the terms and conditions of this Agreement, but for
no other purpose. Softheart shall provide ART with such
documentation and other assistance as may be reasonably required
to fully exercise these rights in the Licensed Marks. ART shall
acquire no rights in the Licensed Marks by its permitted use
thereof. Any promotional or technical material referring to
Softheart, the Licensed Products and the Licensed Marks shall be
submitted in advance to Softheart for approval, which approval
shall not be unreasonably withheld, conditioned or delayed.
Upon any termination of this Agreement or the license granted
hereunder, ART shall cease using the Licensed Marks and shall
return to Softheart, or at ART's option, destroy the originals
and all materials bearing the Licensed Marks or permanently
remove or obliterate the Licensed Marks.
16. OBLIGATIONS IN THE EVENT OF SUSPECTED INFRINGEMENT BY THIRD PARTIES.
Each party shall provide the other with ten (10) days' notice prior to
taking any action regarding the infringement or possible infringement
of any Exclusive Licensed Product. During such ten-day period, the
other party
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may in its sole discretion institute any suit or action which it may think
fit in response to such infringement or possible infringement, and the
notifying party if it desires may join as plaintiff in such suit or action
provided that it agrees in writing to pay one-half of the costs of such
suit or action. If the other party fails to institute such suit or action,
the notifying party may institute such suit or action. As to either party
that chooses not to join as plaintiff, it shall cooperate at no
out-of-pocket expense to it in connection with such suit or action taken.
The party initiating the suit or action shall have the sole right to employ
counsel and to direct the handling of the claim and litigation and the
settlement thereof; except to the extent of any claim made against the
other party. Unless the parties otherwise agree, money damages shall be
applied first toward the repayment of the expenses incurred in bringing and
maintaining the suit or action or otherwise terminating the infringement,
including without limitation: (i) out-of-pocket expenses incurred in
connection with the suit or action, and (ii) reasonable attorney's fees,
and then to the payment of the compensation that would have been due under
this Agreement in respect of the Exclusive Licensed Product but for the
infringing acts. The balance of any recovery shall be split among the
parties in the same proportion as their respective payment of the costs of
the suit or action, with such equitable adjustments as the governing
tribunal shall deem appropriate to compensate Softheart for the portion, if
any, of the recovery attributable to Softheart's residual rights in the
Exclusive Licensed Product.
17. ACCESS TO RECORDS.
17.1 At its cost, each party shall be entitled to inspect the other
party's books and records for purposes of verifying the amount
of compensation due such party under this Agreement upon
reasonable notice and during normal business hours.
17.2 Each party shall, upon notice, be entitled to audit during
normal business hours the books and records of the other
pertaining or related to sales of Licensed Products for the
purpose of verifying any reports or statements and otherwise
determining the amount of compensation due. If the difference
between the amount of compensation paid by a party and the
amount determined to be due pursuant to such audit is greater
than $1500 or five percent (5%) of the amount paid, the
non-auditing party shall promptly reimburse the other the
reasonable cost of the audit.
18. INDEMNIFICATION.
18.1 Softheart warrants that it is the owner of the Licensed
Software, User Documentation and Licensed Marks, and that the
use, reproduction, distribution and sublicensing of the Licensed
14
Products (in accordance with the User Documentation), User
Documentation and Licensed Marks as expressly permitted by this
Agreement will not infringe upon any intellectual property right
of any third party. Softheart shall, at its own expense,
defend ART and any permitted End User against any claim, suit
or proceeding (hereunder "Suit") brought against ART or any
Permitted End User to the extent it is based upon a claim,
whether rightful or otherwise, that the Licensed Software, User
Documentation and Licensed Marks or any part thereof, furnished
and used as permitted by this Agreement, constitutes an
infringement of any intellectual property right of a third
party. Softheart shall pay all damages and costs (including
reasonable attorneys' fees) awarded against ART and/or any
Permitted End User in connection with such Suit not later than
such time that ART or the Permitted End User is obligated to
pay such amounts. Softheart's obligations under this Section
18.1 are conditioned upon Softheart having full control over
the defense and settlement of such claim or Suit, written notice
given by ART within twenty (20) days of receipt of any claim,
suit or actual knowledge by an officer of such a claim or suit,
and ART's full cooperation in the defense of such claim at
Softheart's expense. Softheart shall not be obligated to pay or
reimburse ART for any out-of-pocket expense incurred by ART in
the defense unless authorized in writing by Softheart. In
defending against such claim or action, Softheart may (i)
consent; (ii) settle; (iii) procure for ART and Permitted End
Users the right to continue using the Licensed Software and
Products as the case may be; or (iv) modify or replace the
Licensed Software or Licensed Products, as the case may be,
so that it no longer infringes; provided, however, Softheart
shall have no authority to take any of the foregoing actions
if they would in any way bind ART for any monetary
obligation or cause a diversion of ART resources or
employees. If Softheart concludes in its judgment that none
of the foregoing options is reasonable, then (i) Softheart
will refund or credit to ART the license fees paid by ART
under this Agreement; (ii) ART will return the original and
all whole or partial copies of the Licensed Software and the
Licensed Products to Softheart; and (iii) the license
granted hereunder will terminate. Softheart has no liability
with respect to patent infringement arising out of features
of the Licensed Software made to ART's order or
specification or use of the Licensed Software in combination
with software or equipment (including ART Equipment) not
developed exclusively by Softheart, if such infringement
would have been avoided by the use of the Licensed Products
alone.
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18.2 ART warrants that it is and will be the owner of all
intellectual property rights in all ART Equipment used in
combination with the Licensed Software and Products and that
the use of the ART Equipment in combination with the
Licensed Products in accordance with instructions provided
by ART will not infringe upon any Intellectual Property
Right of any third party. ART shall, at its own expense,
defend Softheart against any claim, suit or proceeding
(hereunder "Suit) brought against Softheart to the extent it
is based upon a claim, whether rightful or otherwise, that
the use of the ART Equipment in combination with the
Licensed Products in accordance with instructions provided
by ART, constitutes an infringement of any Intellectual
Property Right of any third party. ART shall pay all
damages and costs (including reasonable attorneys' fees)
awarded against Softheart and/or any Permitted End User in
connection with such suit not later than such time that
Softheart or the Permitted End User is obligated to pay such
amounts. ART's obligations under this Section 18.2 are
conditioned upon ART having full control over the defense
and settlement of such claim or suit, written notice given
by Softheart within twenty (20) days of receipt of any
claim, suit or actual knowledge by an officer of such a
claim or suit, and Softheart's full cooperation in the
defense of such claim at ART's expense. ART shall not be
obligated to pay or reimburse Softheart for any
out-of-pocket expense incurred by Softheart in the defense
unless authorized in writing by ART. In defending against
such claim or action, ART may (i) consent; (ii) settle;
(iii) procure the right for itself and Permitted End Users
to use the ART Equipment in combination with the Licensed
Products; or (iv) modify or replace the ART equipment so
that its use in combination with the Licensed Products no
longer infringes; provided, however, ART shall have no
authority to take any of the foregoing actions if they would
in any way bind Softheart for any monetary obligation or
cause a diversion of Softheart's resources or employees.
This paragraph states the entire obligation of ART regarding
infringement of intellectual property rights as a result of
use of the Licensed Products in combination with ART
Equipment, and will survive the termination of this
Agreement.
18.3 If either party defends the other party in a lawsuit,
arbitration, negotiation or other proceeding ("Dispute")
concerning a claim pursuant to this Agreement, the indemnified
party shall have the right to participate, at its own expense,
except as otherwise provided in this Agreement, jointly with
the indemnifying party in the defense. Each party shall be
notified promptly in writing by the other of any such claims to
which these indemnification
16
provisions apply and the indemnified party shall provide
reasonable assistance (at its expense) in defending such suit.
19. FORCE MAJEURE.
Performance by the parties of their respective obligations hereunder
(except the obligation to pay money) shall be subject to force
majeure, acts of God, and other causes beyond the reasonable control
of the parties, including, but not limited to, insurrection, riots,
fires, war and warlike operations, explosions, accidents, governmental
acts in sovereign and/or contractual capacity, acts of the public
enemy, raw material shortages and allocations, epidemics, and laws
and/or specific regulations or restrictions of any government (or
agency or subdivision thereof) having jurisdiction over any of the
subject matter of this Agreement. The foregoing shall not excuse,
however, any failure to perform an obligation hereunder that exceeds
ninety (90) days.
20. LEGAL COMPLIANCE.
Each of the parties will comply with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings
and charges thereunder) in connection with the manufacture and sale of the
Licensed Products.
21. SEVERABILITY.
If any portion of this Agreement is held illegal, invalid and
unenforceable, the legality, validity or enforceability of the
remainder shall be unaffected. If any provision of this Agreement is
found by any court of competent jurisdiction to be illegal or
unenforceable, then such provision shall be deemed modified (and the
parties hereby jointly request a court to reform such provision) as
necessary to make it legal and enforceable in a manner approximating
the intention of the parties as closely as possible, and the remaining
provisions of this Agreement shall be unaffected and shall remain in
full force and effect provided there is no material adverse effect on
any of the parties.
22. NOTICES.
Any notice required or permitted to be given under this Agreement
shall be in writing, and shall be deemed sufficiently given when
delivered in person or transmitted by telex, or when actually received
when sent by certified, registered or express mail, postage prepaid,
to the addresses given below or sent by telecopy to the telecopier
numbers set forth below:
Softheart: Softheart, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ATTN: ▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., (▇▇▇) ▇▇▇-▇▇▇▇
17
ART: Arrhythmia Research Technology, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ATTN: ▇. ▇. ▇▇▇▇▇▇▇,
(▇▇▇) ▇▇▇-▇▇▇▇
Either party hereto may change its address for the purpose of notice
hereunder by giving written notice of such change of address to the
other party in the manner specified herein. To the extent any notice
provision in any other agreement, instrument or document required to
be executed or executed by the parties in connection with the
transaction contemplated herein contains a notice provision that is
different from the notice provision contained in this Section 22 with
respect to matters arising under such other agreement, instrument or
document, the notice provision in such other agreement, instrument or
document shall control.
23. GOVERNING LAW.
This Agreement shall be governed and interpreted by the laws of the State
of Texas without reference to any conflicts of laws.
24. ENTIRE AGREEMENT.
This Agreement, together with all exhibits specifically referenced herein,
constitutes the entire agreement between the parties concerning the subject
matter hereof. No prior or contemporaneous representations, inducements,
promises or agreements, oral or otherwise, between the parties with
reference thereto shall be of any force or effect. No modification or
amendment to this Agreement shall be valid or binding unless reduced to
writing and duly executed by the party or parties to be bound thereby.
25. TRADITIONAL WARRANTIES.
ART and Softheart each warrant to the other that:
(a) the warranting party is a duly organized and existing legal
entity under the laws of the jurisdiction of its incorporation;
(b) the warranting party has full power and authority to enter into
this Agreement;
(c) the execution and performance of this Agreement does not and will
not violate or interfere with any other agreement of the
warranting party;
(d) the person executing this Agreement on behalf of the warranting
party has actual authority to bind the warranting party to the
license agreement.
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26. INDEPENDENT PARTIES.
The parties are independent contractors. No partnership or joint venture
is intended to be created by this Agreement, nor any principal-agent or
employer-employee relationship.
27. ASSIGNMENT.
No party may assign any right or delegate any duties under this Agreement,
and any purported assignment or delegation shall be null and void and a
breach of this Agreement, except for the following or as otherwise provided
herein:
(a) either party may assign this Agreement with the express prior
written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that it will
not be unreasonable to withhold consent of an assignment to a
competitor of the non-assigning party or when the financial
condition of the proposed assignee is of a nature that it appears
unable to fulfill its obligations under this Agreement.
(b) either party may assign this Agreement to an Affiliate of that
party, provided that the Affiliate in question agrees in writing
to comply with the assigning party's obligations under, and to
be bound by, this Agreement; and
(c) either party may assign all of its rights indivisibly in
connection with a sale or other disposition of substantially all
the assets of the party's business relating to the Licensed
Software to a single acquiring entity, provided that the
acquiring entity agrees in writing to comply with the assigning
party's obligations under, and to be bound by, this Agreement.
Any assignments permitted by this Section 27 shall be subject to all
the terms and conditions of this License Agreement.
28. REMEDIES.
Except as otherwise provided in this Agreement, the remedies set forth
in this Agreement are not exclusive, and either party shall be
entitled alternatively or cumulatively to any remedy available under
this Agreement or otherwise as may be available under applicable law
or in equity.
29. NO WAIVER.
The failure of either party at any time to require performance by the
other party of any provision of this Agreement shall in no way affect
the right of such party to require performance of that provision. Any
waiver by either party of any breach of any provision of this
Agreement shall not be construed as a
19
waiver of any continuing or succeeding breach of such provision, a
waiver of the provision itself or a waiver of any right under this
Agreement.
30. BINDING ON SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns permitted by this Agreement.
31. SECTION HEADINGS.
The section headings contained herein are for reference purposes only
and shall not in any way control the meaning or interpretation of this
Agreement.
32. SOLICITATION AND HIRING OF EMPLOYEES.
During the term of this Agreement and for a period of one year after
its termination for any reason, neither party shall solicit employment
of or employ any person known to an officer of such party to have been
an employee of the other within three months prior to such
solicitation or employment.
33. INTERPRETATION.
This Agreement has been mutually negotiated, and therefore shall be
deemed to have been negotiated and prepared at the joint request,
direction, and construction of all parties, at arms length, with the
advice and participation of counsel for each party, and shall be
interpreted in accordance with the terms without favor to any party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representative on the 21 day of April, 1997.
SOFTHEART, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
---------------------------------
▇. ▇. ▇▇▇▇▇▇▇, President and CEO
21
EXHIBIT A
LICENSED SOFTWARE
1. BASIC SOFTWARE PACKAGE (KNOWN AS THE "K3 SYSTEM SOFTWARE")
On-Line Cath Lab Analysis Computer Program modified to run on ART
Equipment(1)
Enhanced Report Generator (excluding coronary angiography) Computer
Program(2)
Exportable List of Materials Used to Generate Computer Program(2)(3)
2. On-Line Cath Lab Analysis Computer Program without Modifications, to be
sold as an "add-on" product for Other Equipment
3. Coronary Angiography Reporting Package(2)
4. Inventory Management Package(2)
The Basic Software Package shall be converted from a DOS environment to a
Windows 95 or NT environment by Softheart pursuant to the Software Conversion
Agreement.
--------------------
(1) Exclusive Licensed Product
(2) Nonexclusive Licensed Product
(3) Not subject to any compensation from ART to Softheart
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EXHIBIT B
1. With respect to purchase orders for the Licensed Products received by ART
prior to the completion of the conversion of the Licensed Software to a Windows
format pursuant to the Software Conversion Agreement, the License Fees will be
as follows:
ITEM LICENSE FEE (% OF NET REVENUE)
---- ------------------------------
K3 Level I (if Softheart software is used) 2%
K3 Level II 8%
K3 Level III 9%
Upgrade (Level I to II) 20%
Extra Workstation 25%
Add-On System 20%
Upgrade (Level II to III) 10%
Coronary Reporting 50%
Inventory Program 50%
2. With respect to purchase orders for the Licensed Products received by
ART subsequent to the completion of the conversion of the Licensed Software to a
Windows format pursuant to the Software Conversion Agreement, the License Fees
will be as follows:
ITEM LICENSE FEE (% OF NET REVENUE) MINIMUMS
---- ------------------------------ --------
K3 Level I (if Softheart Software is used) 2.5%
K3 Level II 12% 8,000
K3 Level III 12% 9,000
Upgrade (Level II to III) 12% 1,000
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Extra Workstation 40% 2,000
Upgrade (Level I to Level II) 50% 8,000
Coronary Reporting 50% 4,000
Inventory Program 50% 1,500
3. Pursuant to the terms of the Software Conversion Agreement, ART has
agreed to advance to Softheart $145,000 for the conversion of the DOS-based
software to Windows-based software. ART and Softheart hereby agree that, until
such time as the Windows Upgrade is complete and accepted, the License Fees due
to Softheart for products other than the Coronary Reporting and Inventory
programs will be credited against the $145,000 until such time as there is a
zero balance. After the Windows based software is completed and accepted by
ART, and if the total reimbursement of the $145,000 conversion fee has not been
recouped by ART, portions of the license fees in the amount of $2,000 per unit
for products sold, other than Coronary Reporting and Inventory programs, will be
credited against such remaining amount until total reimbursement is received by
ART. At all times, all fees not credited to the advance to Softheart will be
paid directly to Softheart in accordance with Section 4 hereof. In the event ART
terminates the Software Conversion Agreement pursuant to Section 9.1 thereof,
then ART shall be entitled to recoup any payments actually made to Softheart
prior to the termination in addition to the amount of ART's subsequent
conversion and development costs; PROVIDED, HOWEVER, that the aggregate amount
of the payments made to Softheart and the subsequent development costs shall not
exceed $175,000. Amounts recouped by ART pursuant to Section 6 of the Software
Conversion Agreement shall be in addition to the $175,000 and shall be recouped
after ART has realized the full $175,000.
24
EXHIBIT C
LICENSED MARKS
--------------
SOFTHEART
SOFTHEART, INC.
---------------
---------------
25
EXHIBIT D
SOFTWARE CONVERSION AGREEMENT
THIS AGREEMENT, made and entered into as of the ___ day of April, 1997,
by and between Arrhythmia Research Technology, Inc., a Delaware corporation
having an office and place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "ART") and Softheart, Inc., a Vermont
corporation having an office and place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "Softheart").
WHEREAS, ART is the exclusive licensee, pursuant to a License Agreement
with Softheart of even date herewith (the "License Agreement"), of certain
existing software which operates under the DOS operating system, for cardiac
catheterization laboratory signal acquisition from a patient, data analysis
and storage; and
WHEREAS, Softheart agrees to upgrade the existing software known as the
K-3 System Software (Version 3.0) by converting it to run under the
Window-Registered Trademark- NT or 95 operating system.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings hereinafter defined:
1.1 "EXISTING SOFTWARE" shall mean the software and documentation
of the current K-3 System Software (Version 3.0).
1.2 "WINDOWS UPGRADE" shall mean the Existing Software (except the
On-Line Cath Lab Analysis Computer Program without modifications, to be sold
as an "add-on" product) upgraded to operate under the Windows NT or 95
operating system, recognizing that there will be differences in program
interfaces and flow because of opportunities provided by and limitations of
the Windows environments, and because of mutually agreed upon changes, which
may include but are not necessarily limited to, changing program flow to
facilitate ease of use, providing flexible program structures that allow
integration of future enhancements and product developments.
2. DUTIES OF SOFTHEART.
2.1 Softheart shall modify the Existing Software to create the
Windows Upgrade in accordance with the timetable and milestones for
performance as set forth in Schedule A attached hereto and made a part
hereof. The Windows Upgrade shall be subject to ART's acceptance as set
forth in Paragraph 3.2 below.
2.2 Softheart shall correct any deliverables rejected as set forth
in Paragraph 3.2 and resubmit the same to ART within sixty (60) days after
rejection for ART's acceptance as provided in Paragraph 3.2 below. If
Softheart fails to cure as set forth in Paragraph 3.2 hereof, Softheart shall
be deemed to have breached a material provision of this Agreement.
1
3. DUTIES OF ART.
3.1 ART shall identify a Beta test hospital, negotiate the
financial arrangements, and provide and install the equipment required to
test the Windows Upgrade. ART shall pay Softheart's reasonable and necessary
out-of-pocket expenses in connection with any travel which may be required to
and from the test site during the Beta test phase of the software
developments.
3.2 ART shall promptly accept or reject the Windows Upgrade and all
deliverables and tasks. If, within thirty (30) days of receipt of the
Windows Upgrade and all deliverables and tasks, ART determines that the
Windows Upgrade and all deliverables and tasks do not substantially comply
with the Specifications set forth in Paragraph 1.2, ART may return the
Windows Upgrade and all deliverables and tasks with a report detailing the
reasons for its unacceptability. Softheart shall have a period of sixty (60)
days within which to cure any such non-compliance with the Specifications as
described in Paragraph 1.2. The Windows Upgrade and all deliverables and
tasks shall be deemed to be accepted by ART if (i) a system is sold with the
upgraded software, or (ii) ART fails to reject the upgrade within thirty (30)
days of receipt of the Windows Upgrade and all deliverables and tasks or any
cure provided for hereunder.
4. PROPRIETARY RIGHTS.
ART acknowledges and agrees that the Windows Upgrade embodies and
constitutes valuable proprietary information and trade secrets of Softheart.
ART agrees that this Agreement in no way confers title, ownership, or
proprietary rights in the Windows Upgrade to ART, and that all such title,
ownership and proprietary rights belong to and shall remain with Softheart.
Softheart shall be obligated to obtain such copyrights, patents, and
trademarks as are necessary at its sole expense.
5. COMPENSATION.
5.1 ART shall advance to Softheart One Hundred Forty-Five Thousand
and No/100 Dollars ($145,000), payable as follows:
(a) Thirty Thousand Seven Hundred Twenty-Five and No/100
Dollars ($30,725) upon execution of this Agreement; and
(b) Six Thousand Seven Hundred Twenty-Five Dollars ($6,725) on
the last day of the month next succeeding the execution of this Agreement and
on the last day of the next sixteen (16) months following such next succeeding
month. The seventeen monthly payments shall be subject to the provisions of
Paragraph 3 of Exhibit B of the License Agreement.
5.2 For travel required as set forth herein, or as otherwise
requested by ART, ART will pay for the reasonable and actual costs of travel
and living accommodations of Softheart's employees and/or consultants in
accordance with ART's then applicable expense reimbursement policies for
corporate officers.
5.3 All amounts due and payable to Softheart hereunder shall be
inclusive of all applicable taxes.
2
6. FDA AUTHORIZATION.
6.1 Softheart shall have full responsibility for obtaining FDA
510(k) authorization of the use of the Windows Upgrade as part of or in
connection with ART products, if necessary. It is presently contemplated that
a "letter to file" and the associated documentation will be adequate to
retain the current FDA authorization. However, in the event that a new 510(k)
becomes necessary, Softheart will prepare the application and provide
whatever further information the FDA may require. All out-of-pocket expenses
shall be paid or reimbursed by ART upon presentation of adequate
documentation. To the extent that FDA compliance requires a commitment of
time by Softheart beyond that which is necessary for 510(k) authorization,
the parties shall negotiate a new fee arrangement for the FDA aspect of
this Agreement only and ART shall be entitled to recoup its fees and
expenses at the rate of $2,000 per unit for products sold, other than
Coronary Reporting and Inventory programs, as provided in Paragraph 3 of
Exhibit B of the License Agreement.
6.2 Softheart shall indemnify ART to the extent described in this
Paragraph 6.2 for any and all liability, loss, expenses (including, but not
limited to, attorneys' fees), actions or damages of any kind or nature
incurred by ART as a result of any claim or proceeding against ART by any
person not a party to this Agreement or any governmental authority (including
the FDA) which claim or proceeding is based in whole or in part on an
allegation that the use of the Windows Upgrade violates the Medical Device
Amendments to the Food, Drug and Cosmetic Act, or any rules, regulations or
orders promulgated or issued thereunder, but only to the extent that such
claim or proceeding is based on a finding by the FDA that the sale or
marketing of the Windows Upgrade violates such Medical Device Amendments;
provided ART promptly notifies Softheart of any such claim or proceeding in
writing and gives Softheart the opportunity to defend or settle any such
claim or proceeding. If Softheart successfully defends or settles such claim,
it shall have no further liability under this Paragraph 6.2. To the extent
that such third-party liability is not based on Softheart's negligence,
willful misfeasance or willful malfeasance, ART's remedies shall be limited
to terminating this Agreement as provided in Paragraph 9.1(b) below or
obtaining access to the Source Code as set forth in Paragraph 11 hereof.
7. WARRANTY.
7.1 Softheart warrants and represents that:
(a) The Windows Upgrade meets or will meet the specifications
of Paragraph 1.2 of this Agreement. The Windows Upgrade runs or will
run on the PC operating under the current version of Windows NT or
95; and there are or will be no substantial errors, malfunctions or
defects in the Windows Upgrade or any portion thereof.
(b) The Windows Upgrade and all portions of the foregoing are
or will be created solely by Softheart pursuant to this Agreement.
(c) The Windows Upgrade and all portions thereof do not or
will not infringe any patents, copyrights, trade secrets, or other
proprietary rights of any third parties, and Softheart has or will
have no reason to believe that any such infringement exists or claims
thereof can be made by third parties.
(d) Softheart has the right to enter into this Agreement, to
grant to ART the rights and licenses set forth herein, and to perform
all other obligations of this
3
Agreement.
7.2 If Softheart is in breach of any warranty or representation
hereunder, Softheart shall return to ART the Existing Software and all monies
paid to Softheart hereunder.
8. CONFIDENTIALITY.
8.1 All information, documentation, and software, including the
Existing Software, Windows Upgrade and all portions thereof shall be held in
confidence by Softheart and may not be used by Softheart (other than for
performance of services hereunder) nor disclosed to third parties without the
prior written consent of ART; provided, however, that nothing contained
herein shall prevent or prohibit Softheart from using any subroutines or
portions of the Windows Upgrade and incorporating them into any software or
products so long as said software or products do not become the functional
equivalent of the Windows Upgrade.
8.2 The terms and conditions of this Agreement may not be disclosed
or made available by either party hereto to third parties without the prior
written consent of the other party. However, nothing contained herein shall
prevent either party from complying with applicable law, regulation, or court
order.
9. TERMINATION AND CANCELLATION.
9.1 This Agreement may be terminated/canceled upon the occurrence
of one or more of the following events, and the terminating/canceling party
shall not be liable to the other party for the rightful exercise of its
rights of termination/cancellation:
(a) By either party if the other party seeks protection under
the bankruptcy laws (other than as a creditor), or makes any
assignment for the benefit of creditors, or a trustee is appointed
for all or any portion of such party's assets; or
(b) By either party if the other party is in default of any
material provision of this Agreement and such default is not cured
within thirty (30) days after receipt of written notice of default
by such other party.
9.2 If this Agreement is terminated/canceled by ART pursuant to
Paragraph 9.1, all amounts paid to Softheart pursuant to Paragraph 5.1, if
any, shall be recouped by ART pursuant to the provisions of Paragraph 3 of
Exhibit B of the License Agreement. ART shall further be entitled to recoup
all subsequent development costs, up to $175,000 when aggregated with the
amounts previously paid pursuant to Paragraph 5.1. If this Agreement is
terminated/canceled by Softheart pursuant to Paragraph 9.1, then Softheart
shall be entitled to retain all amounts previously paid by ART.
10. INDEMNITIES.
10.1 Softheart shall indemnify and hold harmless ART and its
customers against any claims that the Windows Upgrade, or any portion
thereof, infringes any patent, copyright, trade secret, or other proprietary
right and shall defend and/or settle any cause of action related thereto. If
ART and/or its customers are enjoined from exercising any rights and licenses
granted hereunder, Softheart shall obtain for ART and its customers the right
to continue to exercise such rights and licenses at no cost to ART or its
customers.
4
10.2 Softheart shall indemnify and hold ART harmless against any
and all liability for personal injury and property damage arising out of or
related to the performance of this Agreement by Softheart or its employees,
agents, or representatives. This Paragraph 10.2 does not relate to the
performance or non-performance of the Windows Upgrade.
10.3 In the event of any claim hereunder with respect to the
Windows Upgrade which has been delivered to and accepted by ART in accordance
with Paragraph 3.2 hereof, Section 18 of the License Agreement shall control.
11. SOURCE CODE.
Provided ART is not in material breach of this Agreement, Softheart
shall deliver to ART a machine readable form of the Source Code for the
Windows Upgrade, as well as any enhancements, updates and corrections and, to
the extent Softheart develops such materials in the ordinary course of its
business, all related documentation (such as descriptions of the general
program, architecture, module design specifications and FDA applications when
applicable) and all instructions reasonably necessary to permit a skilled
programmer to support, enhance and modify the Windows Upgrade, if (i)
Softheart fails in a material respect to perform in accordance with the
timetable and milestones set forth in Schedule A, and does not provide
reasonable efforts to cure such failure within sixty (60) days after notice
thereof; (ii) Softheart makes the source code generally available to any
other party; (iii) Softheart ceases doing business for any reason; (iv)
Softheart commits any act of bankruptcy (except for a Chapter 11 proceeding)
within the meaning of the Federal Bankruptcy Laws; or if bankruptcy (except
for a Chapter 11 Proceeding), receivership, insolvency, reorganization,
dissolution, liquidation or other similar proceedings shall be instituted by
or against Softheart; or if a bankruptcy proceeding is converted into a
Chapter 7 proceeding; or (v) Softheart fails to correct any substantial error
in the Windows Upgrade and does not cure such failure within sixty (60) days
after notice thereof as provided in Paragraph 3.2 hereof. In the event ART
receives the source code in the manner provided hereunder, ART shall have,
subject to all the terms and conditions of this Agreement, a fully paid-up
license to use and modify the Source Code, subject to the terms of this
Agreement, solely for purposes of completing, maintaining, operating and/or
upgrading the Widows Upgrade.
12. ASSIGNMENT. This Agreement and all rights or obligations of
Softheart hereunder may not be assigned, subcontracted, or transferred by
Softheart without the prior written consent of ART, which consent will not be
unreasonably withheld.
13. NOTICES. All notices required to be given pursuant to this
Agreement shall be deemed given when actually delivered, if delivered in
person, or three days after being deposited in the United States mail,
certified mail/return receipt requested, postage prepaid and addressed to the
receiving party as follows:
For Softheart: Softheart, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: President
For ART: Arrhythmia Research Technology, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
5
ATTN: President
14. ENTIRE AGREEMENT. This Agreement is the entire agreement between
the parties relating to the subject matter hereof and supersedes all prior
agreements, proposals, representations, and commitments. This Agreement may
be amended only by an instrument executed by the authorized representatives
of both parties hereto.
15. GOVERNING LAW. This Agreement shall be interpreted in its entirety
in accordance with the substantive laws of the State of Texas without
reference to any conflicts of law.
16. ARBITRATION. ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE
SUBJECT TO BINDING ARBITRATION PURSUANT TO THE RULES THEN OBTAINING OF THE
AMERICAN ARBITRATION ASSOCIATION IN PITTSBURGH, PENNSYLVANIA AND JUDGMENT ON
THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized representatives and have caused this Agreement to
become effective as of the date first above written.
SOFTHEART, INC.
By:
---------------------------------
▇▇▇ ▇▇▇▇▇▇▇, M.D., President
ARRHYTHMIA RESEARCH TECHNOLOGY, INC.
By:
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▇.▇. ▇▇▇▇▇▇▇, President and CEO
software agreement
6
EXHIBIT E
Mandatory Terms of End User Licenses
All sublicense agreements for the sublicensing by ART of each copy of
the Licensed Products (the "Licensed Copy") shall include written provisions
in substance to the effect that:
(1) Only a non-exclusive, nontransferable right to use the
Licensed Copy on a single computer (designated by serial number or
equivalent) is granted to the ART customer, only for the purpose of
processing data in the course of the ART customer's business as a licensed
provider of medical care.
(2) The ART customer acquires no title to the Licensed Copy, and
all copies thereof, and title to the Licensed Copy, or any intellectual
property therein is retained by licensor or Softheart, Inc., as applicable.
(3) The ART customer may not copy the Licensed Copy, except for
backup and archival purposes, and the ART customer shall include on all
copies of the Licensed Copy all copyright and other proprietary notices or
legends included on the Licensed Copy when it was shipped to the ART customer.
(4) The ART customer may not reverse assemble, decompile or
otherwise attempt to derive source code from the Licensed Copy.
(5) Although copyrighted, the Licensed Copy is unpublished and
contains proprietary and confidential information of Softheart, Inc. and is
considered by ART and Softheart, Inc. to embody valuable trade secrets. The
ART customer will hold the Licensed Copy in confidence and shall protect the
confidentiality of the Licensed Copy with at least the same degree of care
with which the ART customer protects its own similar confidential information
or the confidential information of its patients.
(6) Softheart, Inc. is the direct and intended third party
beneficiary of the license agreement and may enforce it directly against the
ART customer, provided however, that ART shall not be liable to the ART
customer for any actions or omission of Softheart, Inc. in connection with
said enforcement, and provided, further, that Softheart, Inc. shall not be
liable to the ART customer for any general, special, direct, indirect,
consequential, incidental or other damages arising out of or related to the
Licensed Copy.
(7) Upon termination of the license for the Licensed Copy, the ART
customer shall return to licensor or Softheart, Inc. all copies of the
Licensed Copy, or, at their option, certify that the ART customer has
destroyed all such copies.
