MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT
TABLE OF CONTENTS
Page
PARTIES...................................................................... 1
PREAMBLE..................................................................... 1
1. DEFINITIONS......................................................... 1
1.1 Affiliate.................................................. 1
1.2 CNAV....................................................... 1
1.3 CNAV Order................................................. 2
1.4 Cost Plus.................................................. 2
1.5 Current Customer........................................... 2
1.6 Direct Competitor.......................................... 2
1.7 Distributor Agreement...................................... 2
1.8 HCIS Vendor................................................ 2
1.9 IMNET FILM OSS............................................. 2
1.10 Intellectual Property...................................... 2
1.11 License Fees............................................... 2
1.12 MegaSAR Equipment.......................................... 2
1.13 MegaSAR 420 Inventory...................................... 2
1.14 MegaSAR Product............................................ 3
1.15 Note....................................................... 3
1.16 Prepaid License Fee........................................ 3
1.17 [Deleted.]................................................. 3
1.18 Provider................................................... 3
1.19 Stock Pledge Agreement..................................... 3
1.20 Term....................................................... 3
1.21 Territory.................................................. 3
1.22 Unit....................................................... 3
2. GRANT OF MANUFACTURING LICENSE...................................... 3
2.1 MegaSAR Product Manufacturing License...................... 3
2.2 Transition Support......................................... 4
2.3 Restrictions on Use and Disclosure of Intellectual Property 4
2.4 Restrictions on Use and Disclosure of Software............. 4
3. GRANT OF DISTRIBUTION LICENSE....................................... 5
3.1 MegaSAR Product Distribution License....................... 5
3.2 Payment for Distribution License........................... 5
3.3 Appointment of Distributors................................ 5
4. LICENSE FEES........................................................ 5
4.1 Prepaid License Fee........................................ 5
4.2 Additional License Fees.................................... 5
4.3 Quarterly Payments......................................... 5
4.4 Records.................................................... 5
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5. SALE OF MEGASAR 420 INVENTORY AND MEGASAR EQUIPMENT................. 6
5.1 MegaSAR 420 Inventory; IMNET as Exclusive Supplier......... 6
5.2 Maintenance of MegaSAR 420 Inventory Records............... 6
5.3 Payment for MegaSAR Equipment.............................. 6
6. FUTURE PURCHASES OF MEGASAR PRODUCTS BY IMNET....................... 7
6.1 Appointment as Distributor................................. 7
6.2 Agreement to Manufacture MegaSAR Products.................. 7
6.3 IMNET Quotation, Time and Material Services................ 8
6.4 Price for MegaSAR Products................................. 8
6.5 Maintenance. ............................................. 8
6.6 Spare Parts................................................ 8
6.7 CNAV and the CNAV Order.................................... 8
6.8 Price Changes for MegaSAR Products......................... 9
6.9 Prices are FOB Licensee's Location......................... 9
6.10 Purchase Orders............................................ 9
6.11 Title/Insurance............................................ 9
6.12 Payment Terms.............................................. 9
6.13 Acceptance of MegaSAR Products............................. 9
6.14 Documentation.............................................. 9
6.15 Source Code Escrow......................................... 10
7. AMENDMENT TO THE DISTRIBUTOR AGREEMENT.............................. 11
7.1 Agreement to Amend Distributor Agreement................... 11
7.2 Settlement of Amounts Due IMNET............................ 11
8. CERTAIN RESTRICTIVE COVENANTS....................................... 11
8.1 No Sales or Sales-Based Compensation to Direct Competitors. 11
8.2 No Sales or Sales-Based Compensation to Current Customers.. 11
8.3 No Sales or Sales-Based Compensation to HCIS Vendors....... 12
8.4 No Sales or Sales-Based Compensation to Providers.......... 12
8.5 No Competing Products...................................... 12
9. IMNET'S REPRESENTATIONS AND WARRANTIES.............................. 12
9.1 Binding Obligation......................................... 12
9.2 Ownership Interests........................................ 13
9.3 Good Standing.............................................. 13
9.4 No Infringement............................................ 13
9.5 Substantial Compliance..................................... 13
9.6 No Third Party Payments.................................... 13
9.7 Exception to Warranties and Representations for Generally A
Technology................................................. 13
9.8. IMNET Indemnity as to Infringement......................... 13
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10. LICENSEE'S REPRESENTATIONS AND WARRANTIES........................... 14
10.1 Binding Obligation......................................... 14
10.2 Good Standing.............................................. 14
10.3 Licensee Indemnity as to Infringement...................... 15
10.4 [Deleted.]................................................. 15
10.5 Authorization to Bind Licensee............................. 15
11. EQUIPMENT LIMITED WARRANTY...........................................15
11.1 Limited Warranty............................................15
11.2 Warranty Claim Procedures...................................15
11.3 IMNET Provided Warranty Service.............................16
11.4 Changes in Specifications...................................16
11.5 Warranty May be Void in Certain Circumstances...............16
11.6 Limitations on Warranty.....................................16
11.7 Limitation on Liability.....................................16
12. FURTHER LIMITATIONS OF LIABILITY.................................... 17
13. DATA AND PROPRIETARY RIGHTS......................................... 17
13.1 IMNET to Honor Licensee Rights............................. 17
13.2 Notice of Unauthorized Use or Misappropriation............. 17
14. TRADEMARKS AND TRADE NAMES.......................................... 17
14.1 IMNET Acknowledges Trademarks and Trade Names.............. 17
15. TERMINATION.........................................................18
15.1 Right to Terminate.........................................18
15.2 Termination Does not Affect Pre-Termination Obligations....18
15.3 Termination by IMNET Hereunder -- Effect on Licenses.......18
16. TRAINING............................................................19
17. APPLICABLE LAW......................................................19
17.1 Georgia Law to Apply.......................................19
17.2 Export.....................................................19
18. INDEPENDENT CONTRACTORS.............................................19
19. ASSIGNMENT..........................................................19
20. SOLICITATION OF EMPLOYEES...........................................20
21. NOTICES.............................................................20
22. DISPUTE RESOLUTION..................................................21
22.1 Disputes to be Referred to Chief Executive Officers........21
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22.2 Arbitration................................................21
22.3 Final and Binding Determination............................21
23. INTERPRETATION......................................................21
24. LEGAL FEES..........................................................22
25. GENERAL.............................................................22
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EXHIBIT 10.35
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of this Agreement which have been redacted are
marked with brackets ("[ ]"). The omitted material has been filed
separately with the Securities and Exchange Commission.
MANUFACTURING AND DISTRIBUTION LICENSE AGREEMENT
This Manufacturing and Distribution License Agreement ("Agreement"),
dated July 12, 1996 is by and among IMNET Systems, Inc., a Delaware
corporation, having its principal place of business in Atlanta, Georgia
("IMNET"), SoftNet Systems, Inc., a New York corporation, having its principal
place of business in Lake Forest, Illinois ("SoftNet") and SoftNet's
wholly-owned subsidiary, Micrographic Technology Corporation, a Delaware
corporation ("MTC") having its principal place of business in Mountain View,
California. SoftNet and MTC are hereinafter jointly and severally referred to as
"Licensee".
W I T N E S S E T H:
WHEREAS, IMNET has developed and owns certain proprietary intellectual
property rights in microfilm retrieval devices; and
WHEREAS, SoftNet and MTC, acting together, desire for MTC to acquire
the exclusive worldwide manufacturing right to such devices; and
WHEREAS, SoftNet and MTC, acting together, also desire for MTC to
acquire a nonexclusive right to distribute such devices; and
WHEREAS, IMNET desires to grant such manufacturing and distribution
rights;
NOW, THEREFORE, in consideration of the covenants, promises, payments
and other valuable consideration contained in this Agreement, the parties hereto
hereby agree as follows:
1. DEFINITIONS
1.1 Affiliate. "Affiliate" means any person (or affiliated group of
persons) which under the term of this Agreement controls, is controlled by or is
under common control with either IMNET or SoftNet but only for so long as such
entity controls, is controlled by or is under common control with IMNET or
SoftNet, as appropriate.
1.2 CNAV. "CNAV" is an acronym for a specific department of the French
Social Security Administration.
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1.3 CNAV Order. "CNAV Order" means orders for an aggregate of 11
MegaSAR 420s (an IMNET developed MegaSAR Product) which have been placed with
IMNET through Advisoft Consulting ("Advisoft"), which is a Current Customer.
1.4 Cost Plus. "Cost Plus" means the actual cost incurred by Licensee
of manufacturing a MegaSAR Product, computed on the basis set forth on Exhibit
1.4, plus 15%.
1.5 Current Customer. "Current Customer" means one of the entities
identified on Exhibit 1.5. IMNET hereby represents that all the entities
identified on Exhibit 1.5 are either current IMNET customers, current
distributors of IMNET products, or customers of IMNET distributors.
1.6 Direct Competitor. "Direct Competitor" means the document
management or imaging system vendors who directly compete with IMNET in
providing document imaging and electronic patient record systems for use in
healthcare.
1.7 Distributor Agreement. "Distributor Agreement" means the
Distributor Agreement between IMNET and SoftNet (or successor) dated March 19,
1993, as amended.
1.8 HCIS Vendor. "HCIS Vendor" means a provider of software systems
specifically designed for use by Providers, as opposed to more general purpose
types of software which are also incidentally also used by Providers. Examples
of providers of software designed for general business use are Microsoft and
IBM. However, the term "HCIS Vendor" does include, without limitation, Cerner
Corporation, IDX Systems Corporation, Integrated Medical Systems, Inc., PHAMIS,
Inc., HBO & Company, and Citation Systems, Inc.
1.9 IMNET FILM OSS. "IMNET FILM OSS" means the software identified as
such on Exhibit 1.10.
1.10 Intellectual Property. "Intellectual Property" means the patent,
copyright, trade secret and confidential proprietary information of IMNET which
is utilized in the manufacture, installation, operation and service of MegaSAR
Products and is generally identified on Exhibit 1.10 hereto.
1.11 License Fees. "License Fees" shall mean the Prepaid License Fee
and all amounts payable by Licensee in accordance with Section 4.2 hereof.
1.12 MegaSAR Equipment. "MegaSAR Equipment" means certain tooling,
tools and other equipment used in the manufacture of the MegaSAR listed on the
"IMNET Systems Net Book Value Report" as previously provided to Licensee (the
"NBV Report").
1.13 MegaSAR 420 Inventory. "MegaSAR 420 Inventory" means the IMNET
MegaSAR inventory described on a listing previously provided to Licensee. It
includes the raw materials, work in progress and finished goods (less finished
goods required for current IMNET orders) identified on that list.
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1.14 MegaSAR Product. "MegaSAR Product" means a microfilm (or other
film) retrieval device, including the existing MegaSAR 420 Microfilm Jukebox,
which incorporates all or part of, or is derived from, the Intellectual
Property, or which performs substantially all of the functions such MegaSAR
Microfilm Jukeboxes perform. It does not include IMNET Products prior to the
MegaSAR 420, and Licensee shall have no rights to manufacture or distribute such
prior products
1.15 Note. "Note" means the obligation of the Licensee to pay
$2,909,627 as set forth in accordance with the note attached hereto as Exhibit
1.15, and the Stock Pledge Agreement, and executed concurrently herewith by
Licensee.
1.16 Prepaid License Fee. "Prepaid License Fee" means the amount to be
paid to IMNET pursuant to Section 4.1 hereof.
1.17 [Deleted.]
1.18 Provider. "Provider" means a hospital, medical or dental clinic,
medical laboratory, physician's office, physician practice group, nursing home,
or other licensed provider of medical, dental, hospital or nursing home
services, and those businesses whose primary business is providing management
services to such providers, such as Med Partners, Medaphis, or Renal Care Group,
Inc.
1.19 Stock Pledge Agreement. "Stock Pledge Agreement" means the
agreement for pledge of IMNET Common Stock and proceeds from the sale thereof by
Licensee, a copy of which is attached hereto as Exhibit 1.19.
1.20 Term. "Term" means the period from the date hereof until the first
to occur of (i) termination of this agreement pursuant to Section 19.1 or (ii)
November 21, 2011.
1.21 Territory. "Territory" is worldwide.
1.22 Unit. "Unit" means (i) a MegaSAR Product or a portion thereof; or
(ii) the IMNET FILM OSS or a derivative for retrieving and displaying a
particular image from microfilm (or other film). The combination of a MegaSAR
Product and an IMNET FILM OSS or its derivative shall be considered a single
Unit. For example, a single IMNET FILM OSS (or derivative) sold in combination
with eight MegaSAR Products (or derivatives) would equal eight Units.
2. GRANT OF MANUFACTURING LICENSE
2.1 MegaSAR Product Manufacturing License. IMNET hereby grants to
Licensee a single exclusive, perpetual worldwide license to use the IMNET
Intellectual Property solely to develop, manufacture, distribute, install and
maintain MegaSAR Products subject to the terms and conditions of this Agreement.
Notwithstanding the foregoing, IMNET retains the right to complete the
manufacture of MegaSAR 420s to complete the CNAV Order. IMNET also retains full
manufacturing rights regarding all software which is part of the Intellectual
Property;
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provided, however, that Licensee shall retain ownership of any modifications to
the Intellectual Property made by Licensee.
2.2 Transition Support. IMNET has made confidential written
recommendations to Licensee regarding those IMNET manufacturing or engineering
personnel that Licensee may wish to consider employing as MTC employees to aid
in Licensee's activities with the MegaSAR Products. IMNET will assist Licensee
in the transfer of the know-how related to the Intellectual Property, for up to
six months from the date hereof using its then existing employees experienced in
manufacturing and engineering of the MegaSAR 420.
2.3 Restrictions on Use and Disclosure of Intellectual Property. During
the Term in the Territory, Licensee may use the Intellectual Property only for
the purpose of developing, manufacturing, distributing, installing and
maintaining MegaSAR Products in accordance with this Agreement. Furthermore,
Licensee agrees not to use, or to permit other persons to use, such Intellectual
Property except in accordance with the terms of this Agreement. Licensee shall
safeguard the certain "confidential" portions of the Intellectual Property
(identified as such on Exhibit 1.10) against disclosure to third parties by
using at least the same degree of care as it uses for its own proprietary
information of similar nature. Except as necessary to support Licensee's efforts
hereunder, Licensee shall restrict access to such confidential Intellectual
Property to individuals who are employees or agents of Licensee and who are
bound by written agreement to protect the confidentiality of such Intellectual
Property, Licensee's counsel and accountants who reasonably have need to know
such information in connection with the purposes of this Agreement. Parties who
receive knowledge of the confidential portions of the Intellectual Property
shall be bound by written agreement to protect the confidentiality of such
information. Licensee shall not be obligated to maintain confidentiality of such
confidential Intellectual Property (i) which is, or becomes, publicly available
without fault on the part of Licensee; or (ii) which is disclosed to Licensee by
a third party without similar restrictions.
2.4 Restrictions on Use and Disclosure of Software. The right to
exploit certain software provided to Licensee hereunder as part of the
Intellectual Property is a non-exclusive license for use of the software by
Licensee, Licensee's end-user customers or end-user customers of authorized
Licensee subdistributors on a single system utilizing MegaSAR Products. Such
software may be modified or copied in whole or in part by Licensee for purposes
of providing copies for distribution, for backup purposes, for demonstrations,
and for development of MegaSAR Products. The software may only be utilized as an
integral part of MegaSAR Products. The source code to the IMNET FILM OSS and
MegaSAR.exe which is provided to Licensee hereunder shall not be copied for
distribution to third parties or otherwise made available by Licensee to any
third party. Neither title to nor ownership of the software and other
Intellectual Property is hereby transferred to Licensee; provided, however, that
Licensee shall retain ownership of any modifications to the Intellectual
Property made by Licensee. Licensee agrees to take appropriate action by
instruction or agreement with its employees who are permitted access to the
Intellectual Property to fulfill its obligations hereunder. At its risk and
expense, Licensee or Licensee's subdistributor may modify the software delivered
hereunder so as to meet the needs of Licensee or any end-user customer or
subdistributor. All such modifications shall be the property of Licensee or
Licensee's subdistributors as applicable. Licensee may sublicense to any
subdistributor or end-user any software (other than IMNET FILM OSS and
MegaSAR.exe source code) furnished to Licensee under this Agreement and an
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[ ] - Confidential Treatment Requested
authorized subdistributor may sublicense such software to any end-user. All such
sublicenses must be in writing, prohibit further transfers or sublicensing by
end-users, and be approved in advance as to form by IMNET for presentation to
end-user customers.
3. GRANT OF DISTRIBUTION LICENSE
3.1 MegaSAR Product Distribution License. IMNET grants to Licensee a
single non-exclusive, non-transferable, perpetual, worldwide license to market,
distribute and sell MegaSAR Products. Licensee acknowledges and agrees that
IMNET retains the right to market, distribute and sell MegaSAR Products.
3.2 Payment for Distribution License. In consideration of the marketing
and distribution rights granted pursuant to this Agreement, Licensee hereby
agrees to make the payments of the License Fees pursuant to Article 4 below, as
well as all other payments due hereunder and under the Note.
3.3 Appointment of Distributors. Licensee may appoint subdistributors
to assist Licensee in exploiting the distribution rights granted to it
hereunder, and shall provide IMNET with notice of the appointment of such
subdistributors upon their appointment. Any such subdistributor shall be
required to abide by the provisions of Articles 2.3, 2.4 and 8 hereof, and
Licensee and such subdistributor must acknowledge in writing that IMNET has the
right to enforce such provisions directly against such subdistributor.
4. LICENSE FEES
4.1 Prepaid License Fee. Licensee will pay IMNET a Prepaid License Fee
in the amount of $1,000,000 which is a non-refundable prepaid license fee
evidenced by the Note. Licensee shall have no further license fee obligations in
connection with the initial sale of the first 250 Units.
4.2 Additional License Fees. In addition to the Prepaid License Fee,
IMNET shall be entitled to receive a License Fee on each Unit sold by Licensee,
during the Term of this Agreement, beginning with the 251st Unit sold. The
License Fee shall be [ ] per Unit.
4.3 Quarterly Payments. Throughout the term of this Agreement, Licensee
shall provide quarterly reports (by the 30th of the month following the end of
the calendar quarter for which the report is prepared) to IMNET, specifying the
number of Units sold and a computation and payment of any License Fees (or
credits against the Prepaid License Fee) then due to IMNET. The obligation to
pay License Fees shall continue after the term of this Agreement so that IMNET
receives payment for all Units sold by Licensee during the Term, even if
delivery of such Units occurs after expiration of the Term.
4.4 Records. Licensee shall keep accurate records relating to License
Fees due IMNET hereunder. Upon request of IMNET, but not more than once per
year, at IMNET's
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expense, Licensee shall permit IMNET to have an independent certified public
accountant examine those of Licensee's records which relate to its obligation to
pay License Fees (and its obligations) hereunder. The accounting firm shall
provide a copy of its report to Licensee.
5. SALE OF MEGASAR 420 INVENTORY AND MEGASAR EQUIPMENT
5.1 MegaSAR 420 Inventory; IMNET as Exclusive Supplier. IMNET agrees to
sell to Licensee and Licensee agrees that when and if Licensee requires
inventory parts for the purposes of manufacturing the MegaSAR 420, Licensee will
first order the required parts from IMNET and to the extent such parts are
unavailable, Licensee will then order the required part from a vendor of its
choice. The purchase price for each item of the MegaSAR 420 Inventory will be
the lower of cost or market (LCM) on the date the order is placed by Licensee,
plus shipping. If the parties cannot agree on the market value of the MegaSAR
Inventory at the time the order is placed, both parties agree to submit such
question to the certified public accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or in the
event of its refusal or inability to act, then to another "Big Six" accounting
firm mutually agreeable to IMNET and Licensee, or failing such agreement, to an
accounting firm selected by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The determination of the MegaSAR
Inventory's value in question by the accounting firm so retained shall be final
and binding upon both parties. Payment terms for MegaSAR Inventory ordered by
Licensee shall be net 30 days. Prices are FOB IMNET's headquarters and are
exclusive of taxes, duties, shipping and insurance, all of which shall be paid
by Licensee. Title shall pass to Licensee upon delivery. In the absence of
specific instructions, IMNET will insure MegaSAR 420 Inventory against risk of
loss or damage until received by Licensee at the receiving location designated
by Licensee.
5.2 Maintenance of MegaSAR 420 Inventory Records. IMNET shall maintain
accurate records regarding the MegaSAR 420 Inventory not delivered to or placed
within the control of Licensee hereunder.
5.3 Payment for MegaSAR Equipment. Within 30 days of the execution of
the Agreement, Licensee shall inspect such MegaSAR Equipment and either agree to
accept or reject each item on the NBV Report. For those items accepted by
Licensee, IMNET agrees to sell to Licensee, and Licensee agrees to purchase from
IMNET, the MegaSAR Equipment. The purchase price for the MegaSAR Equipment is
set forth on the NBV Report. The purchase price shall be added to the sums due
under the Note, by an amendment to the Note, and Licensee shall make payment for
the MegaSAR Equipment in accordance with the terms of the Note. IMNET represents
and warrants that it has good, valid and marketable title to the MegaSAR
Equipment purchased by Licensee and that none of the MegaSAR Equipment is
subject to any mortgage, pledge, lien, security interest, conditional sale
agreement or encumbrance of any kind. IMNET also represents and warrants that
the MegaSAR Equipment purchased by Licensee is in adequate operating condition
and repair and conforms to its respective manufacturers' specifications, subject
to normal wear and tear.
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6. FUTURE PURCHASES OF MEGASAR PRODUCTS BY IMNET
6.1 Appointment as Distributor. Licensee hereby grants to IMNET a
single non-exclusive, non-transferable, worldwide license to market, distribute
and sell MegaSAR Products (other than those which constitute part of the
Intellectual Property, as to which IMNET has retained rights) during the Term.
6.2 Agreement to Manufacture MegaSAR Products.
6.2.1 All MegaSAR Products developed and manufactured by
Licensee shall utilize the IMNET FILM OSS, or shall be fully compatible
with the IMNET FILM OSS and MegaSAR.exe in all respects.
6.2.2 For at least the first five years of this Agreement,
Licensee shall manufacture the MegaSAR 420 or its functional equivalent
(the "MegaSAR 420"), and offer it for sale.
6.2.3 In the event that Licensee decides to discontinue the
manufacture of MegaSAR Products after the five (5) year period
described above, Licensee shall:
6.2.3.1 provide IMNET with 120 days prior notice
of Licensee's decision;
6.2.3.2 return all Intellectual Property provided to
Licensee by IMNET by the effective date of Licensee's
discontinuance of the manufacture of MegaSAR products.
Licensee's right to manufacture and distribute MegaSAR
products shall terminate on that date;
6.2.4 In the event that Licensee decides to sell or license
its rights to any derived technology or intellectual property derived
from the Intellectual Property to any third party, IMNET shall be given
the right to match any bona fide offer from such third party to
purchase or otherwise license such rights. Licensee shall provide IMNET
with such information concerning such offer as may be reasonably needed
to assess such offer and IMNET shall have ten (10) business days from
its receipt in which to agree to the terms of the third party offer. In
the event that IMNET either declines such terms, or fails to respond
within the ten day period, Licensee's obligation under this
subparagraph shall expire with respect to such third party's offer. Any
transferee shall be bound by Licensee's obligations pursuant to this
Agreement regarding any such derived technology, including Sections
2.3, 2.4 and Article 8.
6.2.5 During such time as Licensee's right to manufacture
MegaSAR Products is in effect, IMNET will provide Licensee with
information regarding all relevant corrections, updates, "bug fixes",
new releases, and new versions of IMNET FILM OSS and MegaSAR.exe. All
such material shall be subject to the terms and conditions of the
Agreement. Licensee shall promptly update the IMNET FILM OSS and
MegaSAR.exe (or equivalent) used by it in connection with MegaSAR
Products. In no event shall Licensee require more than eight weeks to
implement corrections, updates, "bug fixes"
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and new releases. In the event of a release of a new version, Licensee
shall implement an update within no more than three months.
6.3 IMNET Quotation, Time and Material Services. IMNET will provide
certain specified MegaSAR Product development assistance to Licensee in
accordance with Exhibit 6.3. The purpose of these services will be to assist
Licensee in integrating the IMNET FILM OSS to Licensee's existing document
management solution known as "Coed". A brief description of the scope of the
work to be done by IMNET is also attached hereto as part of Exhibit 6.3. Other
work will be done by IMNET for Licensee, as agreed in the future on a "time and
materials" basis at IMNET's regular rates in accordance with IMNET's standard
agreements for such services.
6.4 Price for MegaSAR Products. Licensee hereby agrees to manufacture
and to make available for sale to IMNET MegaSAR Products. The price to IMNET for
each MegaSAR 420 shall be the lower of (i) the current cost of IMNET ("IMNET's
Cost"), computed as set forth on Exhibit 6.4 per unit (as adjusted annually to
reflect changes in the Producer Price Index); or (ii) Cost Plus. The price for
other MegaSAR Products shall be as may be mutually agreed upon by the parties at
the time of such MegaSAR Product's introduction. IMNET's orders for Units shall
be given at least equal priority to Licensee's other preferred customers, i.e.,
"most favored customer" status, with regard to scheduling, delivery, returns,
pricing, support, service, and all other aspects of manufacturing, delivery,
installing and maintaining such products.
6.5 Maintenance. IMNET, its distributors and end users shall receive
warranty, maintenance and installation service at prices and on other terms no
less favorable to IMNET, its distributors and such customers than those granted
by Licensee to its other preferred end user customers.
6.6 Spare Parts. Licensee will make available all spare parts to IMNET
so as to permit IMNET to continue to support its existing MegaSAR customers.
Licensee will make available spare parts to IMNET at Cost Plus, except for any
MegaSAR 420 Inventory which has been delivered to Licensee, but for which
Licensee has not yet paid in accordance with Section 5.1. These latter parts
will be provided to IMNET at no charge other than shipping. Licensee will
maintain an adequate supply of spare and replacement parts and maintain and
replenish such supply as necessary for the performance by Licensee of its
obligations hereunder.
6.7 CNAV and the CNAV Order. IMNET is retaining at least 11
MegaSAR-420s for delivery to Advisoft for redelivery pursuant to the CNAV Order.
To the extent that CNAV orders additional MegaSAR Products through Advisoft, and
IMNET has no others in stock, IMNET will order such MegaSAR Products from
Licensee. IMNET agrees not to sell such MegaSAR Products to Advisoft at a
discount level below the discounts currently being offered to Advisoft without
Licensee's prior approval. All amounts received by IMNET for such
Licensee-supplied MegaSAR Products shall be promptly "passed through" to
Licensee. These "passed through" revenues shall apply solely to MegaSAR Products
ordered by Advisoft for CNAV, and not to other IMNET software such as the IMNET
FILM OSS. Similarly, the right granted to Licensee to participate in lieu of
IMNET in such equipment sales to CNAV shall not
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apply to other departments of the French government that may order products
through Advisoft, other IMNET distributors, or IMNET.
6.8 Price Changes for MegaSAR Products. Licensee will provide 30 days'
advance written notice to IMNET of any changes in prices for MegaSAR Products.
Within 15 days of receipt of such notice, IMNET will furnish Licensee a list of
quotations already submitted to customers or potential clients. Licensee will
honor the previously prevailing prices for any orders against such quotations
which have been submitted to Licensee for delivery within 90 days of the date of
order acceptance by Licensee.
6.9 Prices are FOB Licensee's Location. Prices are FOB Licensee's
manufacturing and development center which is located in Mountain View,
California and are exclusive of all taxes and duties. IMNET shall pay taxes and
duties associated with the sale of the MegaSAR Products by it, exclusive of
taxes based on Licensee's income.
6.10 Purchase Orders. Purchase orders must be on IMNET's approved form
and are subject to written acceptance by Licensee, which will not be
unreasonably withheld or delayed. They must incorporate this Agreement by
reference. Any change to previously accepted purchase orders will be treated as
new purchase orders submitted for acceptance by Licensee. Purchase orders and
confirmations sent via facsimile will be accepted by Licensee and IMNET. IMNET
will provide good faith confidential estimates of the number of each model of
MegaSAR Products it anticipates that it will purchase, but shall not be required
to purchase such quantities until it submits a purchase order, and such order is
accepted by Licensee.
6.11 Title/Insurance. Title in MegaSAR Products and risk of loss shall
pass to IMNET upon Delivery (FOB Licensee's factory). In the absence of specific
instructions Licensee will insure all MegaSAR Products for delivery against all
risk or loss or damage until received by IMNET at the receiving location
designated by IMNET. IMNET shall reimburse Licensee for the actual cost of such
insurance.
6.12 Payment Terms. Payment for MegaSAR Products will be made in
accordance with Exhibit 6.12.
6.13 Acceptance of MegaSAR Products. MegaSAR Products ordered by IMNET
hereunder shall be deemed to have been "Accepted" by IMNET when they pass
Licensee's standard test procedures (including manufacturer's standard setup
diagnostics) at IMNET or IMNET's customer site, thereby demonstrating that they
perform in accordance with specifications.
6.14 Documentation. Licensee will supply IMNET, at no charge, with a
set of technical instructional and operational manuals in the English language
with each MegaSAR Product purchased hereunder. Additional MegaSAR Product
documentation shall be provided by Licensee at then-prevailing Licensee
literature prices as determined from time to time by Licensee. Upon termination
of this Agreement, IMNET agrees to return to Licensee any documentation in
IMNET's possession which was provided by Licensee at no charge to IMNET.
341063.4
9
6.15 Source Code Escrow.
6.15.1 IMNET shall place a copy of the source code for the
IMNET FILM OSS and MegaSAR.exe with an independent escrow agent. The
escrow agent shall be authorized to release the source code to Licensee
if and when Licensee has the right thereto as provided below.
6.15.2 Provided that Licensee is not then in default under the
terms of this Agreement, the escrow agent shall provide to Licensee one
complete copy of the source code for the IMNET FILM OSS and
MegaSAR.exe, brought up to date as of the delivery of such source code
upon occurrence of any one or more of the following events:
6.15.2.1 IMNET ceases, for any reason, to do
business; or
6.15.2.2 The undisputed failure by IMNET, following
not less than 30 days written notice from Licensee clearly
indicating the alleged failure by IMNET to maintain the IMNET
FILM OSS and MegaSAR.exe and such failure substantially
impairs Licensee's or its customers' ability to operate and
use the IMNET FILM OSS or MegaSAR.exe in accordance with
IMNET's specifications. If such failure is disputed, such
notice must be supplemented by an arbitrated decision, as
defined below, or by a court order resolving the dispute; or
6.15.2.3 A case shall be commenced by or against I
MNET under the United States Bankruptcy Act.
6.15.3 Notwithstanding anything herein to the contrary, in the
event that any of the source code documentation contains source code of
software licensed to IMNET and sublicensed to Licensee, Licensee will
be required to demonstrate to the satisfaction of the escrow agent that
it is properly licensed by such licensor or Licensee to obtain access
to such source code. In the event that the escrow supplied by the
escrow agent contains third-party development tools (e.g., compilers),
Licensee shall be responsible for obtaining licenses from such third
parties for the use of such products.
6.15.4 Any request to the escrow agent for the release of
Intellectual Property source code shall include (i) a copy of any
default notice sent to IMNET as set forth above, along with proof of
delivery of such notice to IMNET; (ii) written demand that the source
code be released and delivered to Licensee, along with specific
delivery instructions; (iii) written affirmation by Licensee that the
source code supplied will be used only in accordance with the terms of
this Agreement; (iv) a copy of the Agreement, and proof that all
payments to Licensee under the Agreement are current; and (v) any fees
due the escrow agent for the escrow and/or release of the source code
being provided.
6.15.5 Upon taking possession of the source code hereunder,
Licensee agrees that such source code shall be subject to the
restriction on use, transfer, sales and reproduction placed on the
Intellectual Property by this Agreement.
341063.4
10
6.15.6 This escrow obligation will commence on the date the
Intellectual Property is delivered to Licensee and expire one year
after termination of the License granted herein. IMNET shall utilize
its Escrow Agent, Fort ▇▇▇▇ Escrow Services, Inc. of Clarkston, Georgia
as escrow agent under this Agreement.
6.15.7 Licensee shall use the source code and related material
only for the maintenance of Intellectual Property licensed from IMNET.
It is expressly understood that this Section pertains to the right to
use the Intellectual Property and that no rights to ownership of the
source code shall pass from IMNET to Licensee, unless expressly agreed
upon herein in writing. It is also expressly understood that this
source code is the confidential and secret asset of IMNET and the
source code will be secured by Licensee and not reproduced or copied,
or be made available to any other party. It is also expressly
understood that the source code will either be returned to IMNET or
destroyed once the default which gave Licensee access to the source
code is removed.
UNDER NO CIRCUMSTANCES IS THE SOURCE CODE TO BE SOLD, TRANSFERRED, OR
COPIED BY LICENSEE.
7. AMENDMENT TO THE DISTRIBUTOR AGREEMENT
7.1 Agreement to Amend Distributor Agreement. Concurrently with the
execution and delivery of this Agreement, the Note and the Stock Pledge
Agreement, the Distributor Agreement shall be amended by the execution of
Exhibit 7.1.
7.2 Settlement of Amounts Due IMNET. Concurrently herewith, and as a
condition to the amendment to the Distributor Agreement, SoftNet acknowledges it
owes IMNET $377,752.12, representing all amounts previously due to IMNET under
the Distributor Agreement. The details of the amount due IMNET, and the invoices
which are to be satisfied by this payment, are specified on Exhibit 7.2. IMNET
will accept such payment, made under the Note, as full payment of all amounts
due under the referenced invoices. Each of IMNET and Licensee hereby represent
to the other that they are aware of no outstanding invoices or credits to be
obtained against any such invoices except as specified herein and on Exhibit 7.2
arising from the Distributor Agreement.
8. CERTAIN RESTRICTIVE COVENANTS
8.1 No Sales or Sales-Based Compensation to Direct Competitors. During
the Term in the Territory, neither Licensee nor any Affiliate of Licensee will
(i) sell, license or lease MegaSAR Products to Direct Competitors; or (ii)
provide any direct or indirect compensation to such Direct Competitors based on
(or otherwise in connection with) the purchase, license or lease by Direct
Competitors, end-users or distributors of MegaSAR Products. This clause shall
not be read to prohibit sales, licensing or leasing of MegaSAR Product to
end-users of software products licensed for them by Direct Competitors.
8.2 No Sales or Sales-Based Compensation to Current Customers. During
the Term in the Territory, neither Licensee nor any Affiliate of Licensee will
(i) sell, license or lease
341063.4
11
MegaSAR Products to Current Customers (including Current Customers which are
IMNET's authorized distributors); or (ii) provide any direct or indirect
compensation to such Current Customers based on (or otherwise in connection
with) the purchase, license or lease by end-users or distributors of MegaSAR
Products.
8.3 No Sales or Sales-Based Compensation to HCIS Vendors. During the
Term in the Territory, neither Licensee nor any Affiliate of Licensee will (i)
sell, license or lease MegaSAR Products to HCIS Vendors; or (ii) provide any
direct or indirect compensation to such HCIS Vendors based on (or otherwise in
connection with) the purchase, license or lease by end-users or distributors of
MegaSAR Products.
8.4 No Sales or Sales-Based Compensation to Providers. During the Term
in the Territory, neither Licensee nor any Affiliate of Licensee will (i) sell,
license or lease MegaSAR Products to Providers; or (ii) provide any direct or
indirect compensation to any person based on (or otherwise in connection with)
the purchase, license or lease by Providers of MegaSAR Products.
8.5 No Competing Products. During the Term in the Territory, Licensee
acknowledges and agrees that neither Licensee nor any Affiliate of Licensee will
develop, manufacture, or sell, license or lease any product which performs
substantially the same functions as a Unit, unless a License Fee is paid thereon
to IMNET as though such product were a Unit.
8.6 [Deleted.]
9. IMNET'S REPRESENTATIONS AND WARRANTIES
IMNET hereby makes the following representations and warranties to
Licensee and enters into the following covenants:
9.1 Binding Obligation. This Agreement constitutes the valid and
binding obligation of IMNET enforceable against IMNET in accordance with its
terms, except as such enforceability may be limited by insolvency, bankruptcy,
reorganization or other laws affecting creditors' rights and by general
equitable principles. The execution, delivery and performance of this Agreement
by IMNET will not (i) conflict with or result in the breach or termination of,
or constitute a default under, any lease agreement, commitment or other
instrument or any order, judgment or decree to which IMNET is a party or by
which it is bound; (ii) constitute a violation by IMNET of any applicable law or
regulation; or (iii) result in the creation of any lien, charge or encumbrance
upon any of the Intellectual Property, MegaSAR 420 Inventory or MegaSAR
Equipment, licensed and/or sold to Licensee under this Agreement. No consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority or other third party is required to be obtained on the
part of IMNET in connection with this Agreement, except such consents,
approvals, etc., as have been obtained. IMNET is currently solvent, and the
transactions contemplated in this Agreement will not render it insolvent.
341063.4
12
9.2 Ownership Interests. IMNET owns sufficient right, title and
interest in and to the Intellectual Property, MegaSAR 420 Inventory, and MegaSAR
Equipment to enter into and perform its obligations under this Agreement. IMNET
has full right, title and interest in and to the MegaSAR Equipment and the
MegaSAR 420 Inventory, except "components on order" inventory. IMNET represents
and warrants that the right, title and interest to the Intellectual Property is
free and clear of all liens and encumbrances and further warrants that there are
no existing copyrights, trade secrets or similar property rights of others which
are or will be infringed upon or interfered with by the grants made in this
Agreement.
9.3 Good Standing. IMNET is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to carry on its business as presently
conducted and has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated herein.
9.4 No Infringement. None of the Intellectual Property infringes on any
patents, trademarks or copyrights or any other rights (including Intellectual
Property rights) or any person or violate the terms of any license or sublicense
for such Intellectual Property. IMNET has no reasonable basis to believe there
are any claims of third parties to the use of any such Intellectual Property,
nor does IMNET know of have any reasonable basis to believe that there exists
any basis for any such claim or claims.
9.5 Substantial Compliance. All of the software delivered to Licensee
hereunder will substantially comply with the performance representations
regarding such software as set forth in the user or instruction manuals and
related documentation associated with each such program. Similarly, the
Intellectual Property is sufficient, when taken together with adequate know-how,
to enable a business whose employees and agents are reasonably competent in such
matters to manufacture a MegaSAR 420 as currently designed. A MegaSAR 420, as
currently designed, manufactured to current manufacturing specifications will,
when completed and tested, perform in substantial compliance with its written
specifications.
9.6 No Third Party Payments. Except as set forth herein, IMNET is not
currently required nor will Licensee be required to pay any entity or third
party any fees or License Fees or other compensation in order to utilize the
Intellectual Property to manufacture MegaSAR 420, as currently designed.
9.7 Exception to Warranties and Representations for Generally Available
Technology. The warranties and representations of IMNET herein set forth with
regard to the Intellectual Property do not apply to Intellectual Property, such
as basic software or materials or components, that is readily available on the
open market at published prices and which may be purchased by Licensee on
substantially the same terms and conditions as those on which such products are
available to IMNET.
9.8. IMNET Indemnity as to Infringement. IMNET shall defend and
indemnify Licensee against, at IMNET's expense, any suit against Licensee to the
extent based on a claim or infringement of a U.S. patent or other intellectual
property right by the Intellectual Property provided Licensee: (i) notifies
IMNET promptly in writing of the claim; (ii) gives IMNET sole control of the
defense and settlement of same, subject to Licensee's right to participate in
such
341063.4
13
defense and settlement described below; and (iii) provides to IMNET all
available information, assistance and authority to defend. Licensee shall be
permitted to participate in such defense and settlement, but shall not have
authority as to any settlement which is fully paid by IMNET. Should any MegaSAR
Product or any portion become, or in Licensee's opinion be likely to become, the
subject of a claim of such infringement by Intellectual Property, Licensee shall
permit IMNET at IMNET's option either: (i) to obtain for Licensee the right to
sell or license and use such MegaSAR Product; (ii) replace or modify the
Intellectual Property so that it becomes non-infringing; or (iii) reimburse
Licensee for that portion of the License Fees paid regarding the allegedly
infringing Intellectual Property, less depreciation (an equal amount per year
over the Term) for use, damage and obsolescence, and accept its return. However,
IMNET shall have no responsibility to defend or indemnify against any claim
based upon (i) use of any MegaSAR Product in combination with any device,
software or data (not a part of the Intellectual Property); (ii) use of any
MegaSAR Product in practicing any process; or (iii) the result of IMNET's
compliance with designs or specifications of Licensee. THE FOREGOING STATES THE
ENTIRE LIABILITY OF IMNET WITH REGARD TO INFRINGEMENT BY INTELLECTUAL PROPERTY.
10. LICENSEE'S REPRESENTATIONS AND WARRANTIES
Licensee hereby makes the following representations and warranties to
IMNET and enters into the following covenants:
10.1 Binding Obligation. This Agreement constitutes the valid and
binding obligation of each of SoftNet and MTC enforceable against them in
accordance with its terms, except as such enforceability may be limited by
insolvency, bankruptcy, reorganization or other laws affecting creditors' rights
and by general equitable principles. The execution, delivery and performance of
this Agreement by Licensee will not (i) conflict with or result in the breach or
termination of, or constitute a default under, any lease agreement, commitment
or other instrument or any order, judgment or decree to which Licensee is a
party or by which it is bound; or (ii) constitute a violation by Licensee of any
applicable law or regulation. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority or other
third party is required to be obtained on the part of Licensee in connection
with this Agreement, except such consents, approvals, etc., as have been
obtained. Each Licensee is currently solvent, and the transactions contemplated
in this Agreement will not render either insolvent.
10.2 Good Standing. SoftNet is a corporation duly organized and validly
existing and in good standing under the laws of the State of New York, has full
corporate power and authority to carry on its business as presently conducted,
and has full corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated herein. MTC is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware, has full corporate power and authority to carry on its business as
presently conducted, and has full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated herein.
341063.4
14
10.3 Licensee Indemnity as to Infringement. Licensee shall defend and
indemnify IMNET against, at Licensee's expense, any suit against IMNET to the
extent based on a claim or infringement of a U.S. patent or other intellectual
property right (other than those which are a part of the Intellectual Property)
by any MegaSAR Product, provided IMNET: (i) notifies Licensee promptly in
writing of the claim; (ii) gives Licensee sole control of the defense and
settlement of same, subject to IMNET'S right to participate in such defense and
settlement described below; and (iii) provides to Licensee all available
information, assistance and authority to defend. IMNET shall be permitted to
participate in such defense and settlement, but shall not have authority as to
any settlement which is fully paid by Licensee. Should any MegaSAR Product or
any portion become, or in Licensee's opinion be likely to become, the subject of
a claim of such infringement, IMNET shall permit Licensee at Licensee's option
either: (i) to obtain for IMNET the right to sell or license and use such
MegaSAR Product; (ii) replace or modify the MegaSAR Product so that it becomes
non-infringing; or (iii) grant IMNET credit for such MegaSAR Product less
depreciation (an equal amount per year over the life of the MegaSAR Product as
established by Licensee) for use, damage and obsolescence, and accept its
return. However, Licensee shall have no responsibility to defend or indemnify
against any claim based upon (i) use of any MegaSAR Product in combination with
any non-Licensee device, software or data where such use in combination forms
the basis of the claim of infringement; (ii) use of any MegaSAR Product in
practicing any process; (iii) the result of Licensee's compliance with designs
or specifications of IMNET. THE FOREGOING STATES THE ENTIRE LIABILITY OF
LICENSEE WITH REGARD TO INFRINGEMENT BY MEGASAR PRODUCTS.
10.4 [Deleted.]
10.5 Authorization to Bind Licensee. Written documents executed on
behalf of either of MTC or SoftNet may be relied upon by IMNET as having been
executed by Licensee.
11. EQUIPMENT LIMITED WARRANTY
11.1 Limited Warranty. For a period of 90 days from the date of
Acceptance by IMNET of MegaSAR Products, or for a period of 90 days after
shipment of such MegaSAR Products to any end-user customer of IMNET (or an IMNET
distributor) (provided such shipment is made no more than 30 days after
Licensee's delivery to IMNET), such MegaSAR Product shall be free from defects
in material and workmanship. Any MegaSAR Product which complies with current
specifications (those in effect at the date of delivery) shall not be considered
defective. Licensee's sole liability and IMNET's sole and exclusive remedy for a
breach of warranty is limited to (at Licensee's sole option and expense) repair
or replacement of the MegaSAR Products or part thereof which is returned to
Licensee's plant or designated repair depot, or refund of the price paid by
IMNET or its end-user customer, if delivered to the end-user.
11.2 Warranty Claim Procedures. IMNET or its end-user shall notify
Licensee in writing of the defective MegaSAR Products within the warranty
period. Freight expenses, duties and tariffs for MegaSAR products returned by
IMNET will be prepaid by IMNET. Licensee shall pay for shipment back to IMNET or
the customer of IMNET, including duties and tariffs,
341063.4
15
if any, provided, however, that if Licensee's inspection discloses that the
returned MegaSAR Products or part(s) are not defective within the terms of this
warranty, Licensee's standard maintenance/repair charges shall be paid by IMNET
or the customer in addition to all shipping expenses.
11.3 IMNET Provided Warranty Service. IMNET will perform warranty
service on all MegaSAR Products it has sold to date, and those sold pursuant to
the CNAV Order. IMNET will provide other service only on an agreed-upon basis
and will accept full payment for such service in accordance with the then
current warranty service schedule of Licensee, or as otherwise agreed in
advance.
11.4 Changes in Specifications. Subject to other provisions herein,
including Section 6, Licensee reserves the right, on 30 day notice, to make
changes in Equipment and specifications without any obligation to incorporate
those changes in any MegaSAR Products previously delivered to IMNET.
11.5 Warranty May be Void in Certain Circumstances. THE ABOVE
WARRANTIES DO NOT EXTEND AND SHALL NOT APPLY TO: MegaSAR Products which have
been repaired or modified by third parties without prior written approval or by
IMNET not in compliance with Licensee approved procedures and practices. MegaSAR
Products subjected to accident, neglect or misuse, to unusual physical,
environmental or electrical stress or MegaSAR Products improperly installed
including interconnection to foreign equipment.
11.6 Limitations on Warranty. THE FOREGOING WARRANTIES AND REMEDIES ARE
MADE ONLY TO AND FOR THE BENEFIT OF IMNET, ARE EXCLUSIVE, AND ARE EXPRESSLY IN
LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. LICENSEE NEITHER ASSUMES
NOR AUTHORIZES ANY OTHER PERSON TO ASSUME FOR IT ANY OTHER LIABILITY IN
CONNECTION WITH THE SALES, INSTALLATION OR USE OF ITS PRODUCTS. NO
REPRESENTATION OR OTHER AFFIRMATION OF FACT INCLUDING BUT NOT LIMITED TO
STATEMENTS REGARDING CAPACITY, SUITABILITY FOR USE OR PERFORMANCE OF PRODUCTS,
WHETHER MADE BY IMNET EMPLOYEES OR OTHERWISE, WHICH IS NOT CONTAINED IN THIS
AGREEMENT, SHALL BE DEEMED TO BE A WARRANTY BY LICENSEE FOR ANY PURPOSE OR GIVE
RISE TO ANY LIABILITY OF LICENSEE WHATSOEVER. NEITHER IMNET NOR LICENSEE WARRANT
THAT USE OF MEGASAR PRODUCTS WILL BE UNINTERRUPTED OR ERROR-FREE.
11.7 Limitation on Liability. NEITHER IMNET NOR LICENSEE SHALL HAVE
LIABILITY FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING FROM
OPERATION OF MEGASAR PRODUCTS, EVEN IF ADVISED OF THE POSSIBILITY THEREOF.
341063.4
16
12. FURTHER LIMITATIONS OF LIABILITY
12.1 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER IMNET NOR LICENSEE
SHALL BE LIABLE FOR ANY LOSS OR DAMAGE CLAIMED TO HAVE RESULTED FROM USE,
OPERATION, OR PERFORMANCE OF THE MEGASAR PRODUCTS AND REGARDLESS OF THE FORM OF
ACTION, EXCEPT FOR LOSS OR DAMAGE CAUSED BY THE SOLE GROSS NEGLIGENCE OF
LICENSEE.
12.2 IN NO EVENT SHALL LICENSEE OR IMNET BE LIABLE TO THE OTHER OR ITS
END-USER CUSTOMERS FOR (i) ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES; (ii) ANY DAMAGES RESULTING FROM LOSS OF USE, DATA OR PROFITS; OR (iii)
ANY CLAIM, WHETHER IN CONTRACT OR TORT, THAT AROSE MORE THAN ONE YEAR PRIOR TO
INSTITUTION OF SUIT THEREON, EVEN IF LICENSEE WAS ADVISED, KNEW, OR SHOULD HAVE
KNOWN OF THE POSSIBILITY THEREOF.
12.3 THE FOREGOING LIMITATIONS ON LIABILITY SHALL BE EFFECTIVE, EVEN IF
THE REMEDIES PROVIDED HEREIN ARE JUDICIALLY DEEMED TO FAIL IN THEIR ESSENTIAL
PURPOSE. IMNET'S AND LICENSEE'S LIABILITY RELATING TO PERFORMANCE OF MEGASAR
PRODUCTS SHALL IN NO EVENT EXCEED THE PURCHASE PRICE OF THE MEGASAR PRODUCTS
PURCHASED.
13. DATA AND PROPRIETARY RIGHTS
13.1 IMNET to Honor Licensee Rights. Licensee may supply data relating
to MegaSAR Products, portions of which are proprietary and will be so marked.
IMNET agrees to abide by such markings and agrees it will not reverse engineer,
disassemble or decompile any MegaSAR Products in whole or in part. Licensee
retains for itself exclusively proprietary rights (other than those retained by
IMNET as to Intellectual Property but including manufacturing rights) in and to
all designs, engineering details and other data pertaining to MegaSAR Products
provided to IMNET, and to all discoveries, inventions, patent rights, products
and all other property rights arising out of work done by Licensee. A copyright
notice of any data by itself does not constitute or evidence a publication or
public disclosure.
13.2 Notice of Unauthorized Use or Misappropriation. IMNET will notify
Licensee in writing of any unauthorized use or misappropriation of Licensee
proprietary data and will cooperate in any action taken by Licensee to recover
or protect Licensee proprietary data.
14. TRADEMARKS AND TRADE NAMES
14.1 IMNET Acknowledges Trademarks and Trade Names. IMNET concedes and
recognizes the rights of Licensee to, and shall have no right or license in, the
trademarks or trade names used with or affixed to any MegaSAR Products, other
than "MegaSAR", as to which IMNET retains the interest specified at Exhibit
1.10. IMNET specifically agrees to refrain from using such phrase or other
trademarks or trade names as a part of IMNET's (or
341063.4
17
such reseller) name or ▇▇▇▇ or in any other manner which would cause a
reasonable person to infer that IMNET (or such reseller) has any affiliation
with Licensee Equipment and licensed Software. IMNET further agrees that it and
its resellers will not affix any Licensee trademarks or tradenames to any
product other than MegaSAR Products. IMNET shall be free to market product lines
other than those of Licensee.
15. TERMINATION
15.1 Right to Terminate. Either party shall have the right to terminate
this Agreement upon the occurrence of any of the following events which each
agrees will constitute essential and substantial violation of this Agreement and
just cause for such termination:
15.1.1 The other party neglects or fails to make any payment
due and such payment is not made within 15 days after written notice
thereof has been given to the defaulting party.
15.1.2 The other party defaults in any material obligation,
other than a payment, hereunder, which default has not been cured
within 30 days after written notice thereof has been given to the
defaulting party.
15.1.3 The other party (i) assigns this Agreement or any of
its rights hereunder except as provided in this Agreement; (ii) is
adjudged a bankrupt, makes an assignment for the benefit of creditors,
or a receiver, trustee in bankruptcy or similar officer is appointed to
take charge of all or part of its property; (iii) ceases to conduct its
business as a going concern or in the normal course of business,
including entering into a composition for the benefit of creditors; or
(iv) neglects or fails to perform or observe any of its existing or
future essential obligations hereunder, and such condition(s) is not
remedied within 30 days after written notice thereof has been given to
the defaulting party.
15.2 Termination Does not Affect Pre-Termination Obligations.
Termination of this Agreement shall not affect either party's pre-termination
obligations hereunder. Any such termination shall be without prejudice to the
enforcement of any undischarged obligations existing at the time of termination.
The provisions of Articles 2.3, 2.4, 4.4, 6.15, 9.8, 10.3, 10.5, 11, 12, 13, 15,
17, and 20 through 25 shall survive termination. Article 1 shall survive as
necessary to interpret the other surviving Articles.
15.3 Termination by IMNET Hereunder -- Effect on Licenses. In the event
IMNET terminates this Agreement pursuant to Section 15.1, the licenses granted
pursuant to Articles 2 and 3 hereof shall also terminate concurrently with this
Agreement.
15.4 Liquidated Damages. In the event that IMNET breaches the exclusive
manufacturing rights granted hereunder, or IMNET materially defaults on its
payment obligations for MegaSAR Products, this agreement will be terminated upon
Licensee's notice to IMNET as set forth above, and IMNET will pay to Licensee
(upon such termination), as liquidated damages, a sum equal to $4,000.00
multiplied by 250 less the number of Units sold.
341063.4
18
16. TRAINING
Licensee's customer training courses shall be open to attendance by
IMNET, IMNET's distributors and end-user customers at Licensee's then-prevailing
rates. The time and location for all training courses shall be specified by
Licensee. IMNET, IMNET'S distributor and/or IMNET's customers shall be
responsible for all expenses of training to include, but not be limited to,
travel, lodging, subsistence and miscellaneous expenses.
17. APPLICABLE LAW
17.1 Georgia Law to Apply. IMNET and licensee acknowledge that IMNET
currently has its principal offices in Atlanta, Georgia, U.S.A. Furthermore,
Licensee acknowledges that IMNET has executed this Agreement in Georgia. This
Agreement and the obligation of the parties hereunder shall be interpreted,
construed and enforced in accordance with the laws of the State of Georgia,
U.S.A.
17.2 Export. Each party agrees that it will comply with all United
States laws and regulations regarding re-export licenses or the control or
regulation of re-exportation of technical data including MegaSAR Products.
Licensee and IMNET agree not to transfer or license any technical data or
MegaSAR Products covered by this Agreement to any party if such transfer or
license would constitute a violation of any laws or regulations of the United
States.
18. INDEPENDENT CONTRACTORS
The relationship of IMNET and Licensee established by this Agreement is
that of independent contractors, and nothing contained in this Agreement shall
be construed to (i) give either party the power to direct and control the
day-to-day activities of the other; (ii) constitute the parties as partners,
joint ventures, co-owners or otherwise as participants in a joint or common
undertaking; or (iii) allow the other to create or assume any obligation on
behalf of the other for any purpose whatsoever. Performance by each party of all
sales and other agreements between each party and its customers are that party's
exclusive responsibility and shall have no effect on such party's obligations
under this Agreement. Each party shall be solely responsible for, and shall
indemnify and hold either party free and harmless from, any and all claims,
damages or lawsuits (including attorney's fees) arising out of the acts of that
party, its employees or its agents.
19. ASSIGNMENT
19.1 Neither party may assign this Agreement nor any interest herein,
in whole or in part without the prior written consent of the other party, which
will not be unreasonably withheld or delayed. Each acknowledges and agrees that
the other may assign its rights and obligations to another corporation without
the consent of the other party:
341063.4
19
19.1.1 in connection with the sale of substantially
all of the transferring party's assets; or
19.1.2 in connection with a change in ownership of the
transferring company.
19.2 A transfer or assignment shall be deemed agreed to only if the
transferee assumes all of the transferring party's obligations hereunder. In the
latter event, the transferor shall not be relieved of such obligations.
19.3 Any assignment or transfer of this Agreement or any interest
herein to a Current Customer, Direct Competitor, HCIS Vendor, or Provider shall
be valid only with IMNET's prior written consent, which will not be unreasonably
withheld or delayed.
20. SOLICITATION OF EMPLOYEES
Neither IMNET nor Licensee shall solicit the service or hire employees
of the other during the Term or for a period of one year after the expiration of
the Term. Nothing in this Section shall prevent either party from offering
employment to any employee of the other party who responds to a publicly made
advertisement of employment, provided that such advertisement is not an attempt
to solicit, entice, or induce any employee of the other party to seek employment
with the advertising party or otherwise circumvent the advertising party's
obligations hereunder.
21. NOTICES
Notice shall be deemed given (i) when received, if hand delivered and a
receipt is executed; or (ii) when receipt is executed, if given in writing and
actually delivered or deposited in the United States mail in registered or
certified form with return receipt requested postage paid. All notices shall be
given to the notified party at the addresses set forth below. The address for
notice may be changed by notice.
If to IMNET: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
IMNET Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: T. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ III, Esq.
Arnall Golden & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
341063.4
20
If to MTC or SoftNet: c/o SoftNet Systems, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
22. DISPUTE RESOLUTION
22.1 Disputes to be Referred to Chief Executive Officers. If a dispute
arises hereunder, then IMNET and Licensee each agree that, prior to commencing
litigation or termination of this Agreement, such party will cause the dispute
to be brought to the attention of its chief executive officer. The chief
executive officer of IMNET is currently ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. The chief executive
officer of Licensee is currently ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
22.2 Arbitration. All disputes, controversies, claims, etc. in
connection with this Agreement or any breach thereof shall be finally settled by
arbitration in Atlanta, Georgia, applying Georgia law, conducted in accordance
with the then-current Commercial Arbitration Rules (the "Rules") of the American
Arbitration Association. Either party may give notice, in accordance with this
Agreement, of its intention to submit such dispute, etc. to arbitration, which
shall take place before a single arbitrator experienced in the software industry
and appointed by the American Arbitration Association in accordance with the
Rules (the "Arbitrator"). Each party to the arbitration is to pay an equal part
of all costs, including any deposits, associated with the arbitration, except
that each party shall be responsible for its own attorneys' fees. Licensee and
IMNET agree that all legal action or proceeding with respect to this Agreement
shall be finally settled by arbitration and the enforcement of the arbitration
provisions of this Agreement may be initiated in the courts of the State of
Georgia (including the United States District Court for the Northern District of
Georgia). Licensee and IMNET hereby subject themselves to and accept that with
regard to any such action of law or in equity, the prevailing party shall be
entitled to be reimbursed for reasonable attorney's fees, costs and expenses.
22.3 Final and Binding Determination. The determinations of such
Arbitrator will be final and binding upon the parties to the arbitration, and
judgment upon the award rendered by the Arbitrator may be entered in any court
having jurisdiction, or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be. The
Arbitrator shall set forth with specificity the grounds for the decision in the
award.
23. INTERPRETATION
This Agreement will not be construed against either IMNET or Licensee
by reason of the authorship of any provisions hereof.
341063.4
21
24. LEGAL FEES
If any action at law or in equity, such as a suit for damages, is
necessary to enforce the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and expenses in addition to any
other relief to which such prevailing party may be entitled.
25. GENERAL
This Agreement, with Exhibits, and the Distributor Agreement, as
amended, constitute the entire agreement and understanding, and supersedes all
prior proposals, negotiations and communications, oral or written, between the
parties relating to the subject matter hereof. This Agreement may be amended
only expressly and in writing signed by the duly authorized representatives of
the parties. Unless otherwise stated, all prices and dollar amounts in this
Agreement are expressed in U.S. Dollars.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on their behalf as of the day and year first above written.
IMNET: LICENSEE (SoftNet and MTC):
SOFTNET:
IMNET Systems, Inc. SoftNet Systems, Inc.
By: ____________________________ By: ___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
MTC:
Micrographic Technology Corporation
By: ___________________________
Name: ___________________________
Title:___________________________
341063.4
22
EXHIBITS
Exhibit 1.4 Computation of Cost (excludes amortization of
License Fees)
Exhibit 1.5 Current Customers
Exhibit 1.10 Intellectual Property
Exhibit 1.15 Note
Exhibit 1.19 Stock Pledge and Security Agreement
Exhibit 6.3 Quotation for Development Services
Exhibit 6.4 Computation of IMNET's Cost
Exhibit 6.12 Payment Terms
Exhibit 7.1 Second Amendment to Distributor Agreement
Exhibit 7.2 Settlement Amounts
341063.4
i
EXHIBIT 1.4
COMPUTATION OF LICENSEE'S COST
"Cost shall be defined as the sum of the following:
1. ▇▇▇▇ of Materials required to assemble one (1) MegaSAR Product
2. Standard Cost of Labor and Overhead
"Labor" shall include overhead applied as a percentage of direct labor. The
Calculation of Cost shall be subject to review and approved by IMNET. If IMNET
and Licensee cannot agree on the Calculation of Cost, both parties agree to
submit such calculation to the certified public accounting firm of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, or in the event of its refusal or inability to act, then to another
"Big Six" accounting firm mutually agreeable to IMNET and Licensee, or, failing
such agreement, then to an accounting firm selected by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The
determination by the arbitrator of the calculation shall be binding on both
parties.
341063.4
i
[ ] - CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 1.5
Current Customers
CONFIDENTIAL
Advisoft Consulting
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
[ ]
▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
[ ]
Cerner Corporation
Attn: ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[ ]
Datacom Imaging Systems
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
[ ]
Emory Clinic
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
[ ]
IDX Systems Corporation
Attn: ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
[ ]
Mint
Attn: ▇.▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇
McLaren Health Care Corp.
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phamis Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
[ ]
Software AG of Austria
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Software AG of Belgium
Bid Du Souverain 360
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Software AG of Far East
Shinjuku ▇ ▇▇▇▇▇, ▇▇
▇-▇-▇ ▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Software AG of ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
[ ]
EXHIBIT 1.10
INTELLECTUAL PROPERTY
1. Patents
a) Patent No. 5,367,382 "On Line Microfilm Storage and
Retrieval System", dated November 22, 1994
b) Patent No. 4,364,529, "Leader Pin", dated December 2, 1982
c) Patent Application, Serial No. 08/51,800, "An Improved
Microfilm Storage and Retrieval System, filed November 22,
1995
2. Trademarks
a) MegaSAR(R), registration number 1,887,812, registered April
14, 1995
3. Source Code
a) FILM OSS
b) diagnostic routines (both manufacturer and customer level)
c) megasar.exe modules
i) motion control
ii) scanning
iii) video
iv) communication with OSS
v) error recovery
vi) status/error message reporting
vii) initialization
viii) interface module for Galil controller board set
4. Executables
a) all of the above, plus
b) third party compression software
341063.4
i
c) third party motion control software (Galil drivers)
5. Third Party Hardware
a) Sensors
b) Galil motion controller board
c) amplifiers
6. Documentation
a) multiple levels of assembly and sub-assembly [joints?]
(manufacturing has a list of all the IMNET drawings
b) PC board artwork, bills of materials
c) documentation relating the third party "stuffing" of PC
boards
d) assembly procedures
e) documentation relating to "bring it up" and "test and debug"
procedures
f) copies of user and technical documentation for MegaSAR and
for third party hardware and software
MTC shall be responsible for all third party licenses.
341063.4
ii
EXHIBIT 1.15
PROMISSORY NOTE
$2,909,627 July 12, 1996
FOR VALUE RECEIVED, each of SoftNet Systems, Inc., a New York
corporation ("SoftNet"), and SoftNet's wholly-owned subsidiary, Micrographic
Technology Corporation, a Delaware corporation ("MTC") (collectively, the
"Maker"), jointly and severally promise to pay to the order of IMNET Systems,
Inc., a Delaware corporation, ("Holder"), at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or, at the Holder's option at such other place as may be
designated from time to time by the Holder, the principal sum of Two Million
Nine Hundred Nine Thousand Six Hundred Twenty-Seven and No/100th Dollars
($2,909,627) in lawful money of the United States of America, first to occur of
(i) any sale or sales by SoftNet of shares of IMNET Common Stock (to the extent
of such proceeds) (in which event the proceeds from sales of IMNET Common Stock
shall be applied first against amounts due hereunder); or (ii) July 11, 1997.
Interest shall accrue on the unpaid principal amount of this Note for
each day from and including the earlier of (i) the date on which SoftNet
delivers to Holder an executed representation letter in form satisfactory to
Holder that confirms SoftNet's ability to sell its stock in Holder pursuant to
Rule 144 under the Securities Act of 1933, as amended; or (ii) two (2) business
days after Holder's release of its 1996 fiscal year earnings and audited
financial statements, until paid at a per annum rate (calculated for the actual
number of days elapsed over a year consisting of 365 or 366 days as the case may
be) equal to (i) so long as no Event of Default (defined below) shall have
occurred and be continuing, the Note Rate and (ii) otherwise, the Post Default
Rate. The "Note Rate" means the Prime Rate, as published daily in the "Money
Rates" table of The Wall Street Journal. The "Post Default Rate" means two
percent (2%) over the Note Rate. Each change in the Prime Rate shall become
effective on the business day on which the change in the Prime Rate is published
in The Wall Street Journal. On the due date unpaid principal balance and all
accrued but unpaid interest shall be paid in full. In no event shall the rate of
interest on this Note exceed the rate of interest that, if exceeded could, under
applicable law, result in (i) civil or criminal penalties being imposed on the
Holder or (ii) the Holder being unable to enforce payment of (or if collected,
to retain) all or part of such amount or the interest payable thereon (the
"Highest Lawful Rate").
If any installment of this Note shall fall due on a Saturday, Sunday
or a banking holiday, such installment shall be paid on the next day that is not
a Saturday, Sunday or banking holiday together with interest thereon for the
additional days at the applicable rate.
The Holder of this Note may declare all indebtedness evidenced by this
Note to be immediately due and payable whenever such Holder has the right to do
so under any security agreement or other agreement, now or hereafter in effect,
pursuant to which payment of the indebtedness evidenced by this Note is secured
or, irrespective of the terms or existence of any such security agreement or
other agreement, upon the happening of any of the following events (each an
"Event of Default"): (1) nonpayment when and as the same becomes due, whether by
acceleration or otherwise, of principal of, or interest on, this Note after five
(5) days' written
341063.4
i
notice or; (2) default by the Maker in the payment or performance of any
obligation, term or condition, or there shall occur an event of default or
equivalent event, under any other agreement between the undersigned and the
Holder; (3) the filing by or against the Maker of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, relief as a debtor or other relief under the bankruptcy, insolvency or
similar laws of the United States or any state or territory thereof or any
foreign jurisdiction, now or hereafter in effect; (4) the making of any general
assignment by the Maker for the benefit of creditors; or (5) the appointment of
a receiver or trustee for the Maker or for any assets of the Maker, including,
without limitation, the appointment of, or taking possession by, a "custodian",
as defined in the Federal Bankruptcy Code.
No failure by the Holder to exercise, and no delay in exercising, any
right or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by the Holder of any right or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right or remedy. The rights and remedies of the Holder as herein specified are
cumulative and not exclusive of any other rights or remedies which the Holder
may otherwise have.
No modifications, rescission, waiver, forbearance, release or
amendment of any provision of this Note shall be made, except by a written
agreement duly executed by the Maker and the Holder.
THE MAKER HEREBY WAIVES DILIGENCE, PRESENTMENT, PROTEST, DEMAND,
DISHONOR AND NONPAYMENT OF THIS NOTE.
This Note shall be construed under, and governed by, the laws of the
State of Georgia, without regard to principles of conflicts of laws. The Maker
agrees to pay all costs and expenses incurred by the Holder in enforcing this
Note, including, without limitation, reasonable attorney's fees actually
incurred.
Payment of this Note is secured pursuant to that certain Stock Pledge
And Security Agreement, dated of even date herewith, between the Maker and the
Holder (the "Stock Pledge Agreement") and by any other collateral granted in any
security agreement or other documents as may have been or may hereafter be
executed in favor of the Holder by the Maker of this Note or any other party.
MAKERS:
SOFTNET SYSTEMS, INC.
By: _____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
[CORPORATE SEAL]
341063.4
ii
MICROGRAPHIC TECHNOLOGY CORPORATION
By: _____________________________________
Its: _____________________________________
[CORPORATE SEAL]
341063.4
iii
EXHIBIT 1.19
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT, (this "Stock Pledge
Agreement"), made and entered into as of the 12th day of July, 1996, by and
among SOFTNET SYSTEMS, INC., a New York corporation ("SoftNet") and SoftNet's
wholly-owned subsidiary, Micrographic Technology Corporation, a Delaware
corporation ("MTC") (collectively, "Pledgor"), and IMNET SYSTEMS, INC., a
Delaware corporation ("Secured Party").
W I T N E S S E T H:
WHEREAS, SoftNet owns 277,770 shares of the issued and outstanding
Common Stock (the "Stock") of Secured Party; and
WHEREAS, Pledgor is indebted to Secured Party in the amount of Two
Million Nine Hundred Nine Thousand Six Hundred Twenty-Seven Dollars ($2,909,627)
(the "Loan"); and
WHEREAS, Pledgor has simultaneously herewith executed and delivered to
Secured Party a Promissory Note (the "Note") dated as of the date hereof,
evidencing the Loan; and
WHEREAS, Pledgor and the Secured Party have entered into that certain
Manufacturing and Distribution License Agreement, dated as of July 12, 1996, and
the related Second Amendment to Distributor Agreement, and certain other
documents (collectively, the "Agreement"), whereby Pledgor has agreed to
undertake certain actions for the benefit of, and make payments to, Secured
Party from and after the date hereof; and
WHEREAS, in order to induce the Secured Party to accept the Note and to
enter into the Agreement, Pledgor has agreed to secure its obligations under the
Note and the Agreement with 77,200 shares of the Stock and proceeds from the
sale thereof by Pledgor (collectively, the "Collateral").
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Stock Pledge Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
is hereby agreed as follows:
1. Stock Pledge and Creation of Security Interest. Concurrently
herewith Pledgor has delivered the Collateral to Secured Party, with each
certificate accompanied by fully executed stock powers, with signatures
guaranteed. Pledgor hereby pledges, hypothecates, assigns, transfers and sets
over and continues to pledge, hypothecate, assign, transfer and set over unto
Secured Party, and hereby grants and continues to grant to Secured Party a
security interest in, the Collateral to secure performance and payment of the
obligations and indebtedness of Pledgor to Secured Party evidenced by the Note.
2. Representations, Warranties and Covenants. Pledgor hereby
represents, warrants and covenants in favor of the Secured Party that: Pledgor
owns and has full power and authority to pledge and assign the Collateral and
will have such authority with respect to any substituted or additional
Collateral that may be hereafter delivered to the Secured Party; the Collateral
is not subject to the interest of any third person (other than the security
interest granted hereunder);
341063.4
i
Pledgor will defend the Collateral against the claims and demands of all third
persons (other than the security interest granted hereunder); the Collateral is
and will be genuine, free from forgery, counterfeit, and all adverse liens,
claims, conditions precedent, conditions subsequent, and encumbrances (other
than the security interest granted hereunder); and Pledgor will immediately
deliver any certificates, stock powers or instruments evidencing any of the
Collateral to the Secured Party to be held by the Secured Party hereunder.
3. Further Assurances. Pledgor shall do, make, procure, execute and
deliver all acts, things, writings, and assurances as the Secured Party may at
any time request to protect, perfect, assure or enforce its interests, rights
and remedies created by, provided in or arising from this Agreement, including
without limitation the execution of blank transfer powers and any Uniform
Commercial Code financing statements deemed necessary or appropriate by the
Secured Party and any applications, certificates or other documents the Secured
Party may request in connection with the obtaining of any consent, approval,
qualification or authorization of any governmental authority necessary or
appropriate for the effective exercise of any rights or remedies under this
Agreement.
4. Event of Default. The failure of Pledgor to make any required
payment when due under the Promissory Note or any other indebtedness to the
Secured Party will constitute a default by Pledgor under this Agreement (herein
also referred to as an "Event of Default").
5. Remedies Upon Event of Default. Upon the occurrence of an Event of
Default hereunder, the Secured Party may, in its sole discretion and without
notice to or demand upon Pledgor, declare immediately due and payable the
Promissory Note secured hereby and exercise any one or more of the rights and
remedies granted pursuant to this Agreement or provided by law. In furtherance
of the Secured Party's rights and remedies hereunder and not in limitation
thereof, the Secured Party shall have full power and authority to sell, assign,
transfer and deliver the whole of the Collateral, or any part thereof, in such
order as the Secured Party may elect, at public or private sale in accordance
with the Georgia Uniform Commercial Code, or other applicable law or agreement,
at such price or prices, and upon such terms and conditions as the Secured Party
in its sole discretion may determine, and to apply the proceeds remaining after
deducting all costs of sale, in payment or reduction of the Promissory Note in
such order as the Secured Party, in its sole discretion, may determine. At any
such sale, the Secured Party may, if it be the highest bidder, purchase any or
all of the Collateral so sold, free from any right of redemption in Pledgor, and
may apply any unpaid portion of the Promissory Note on account of or in full
satisfaction of the purchase price. Upon the occurrence of an Event of Default
hereunder, the Secured Party also shall have the right to surrender, redeem or
collect any of the Collateral and apply the proceeds thereof to the Promissory
Note in such order as the Secured Party, in its sole discretion, may determine.
If any notification to Pledgor of an intended disposition by the Secured Party
of any of the Collateral is required by law, such notification, if mailed, shall
be deemed reasonably and properly given if mailed at least ten (10) days before
such disposition. For the purposes aforesaid, the Secured Party is authorized in
Pledgor's name to sign and execute any transfer, conveyance or instrument in
writing which may be necessary or lawful in the premises.
6. Additional Rights of Secured Party upon Event of Default. At any
time after an Event of Default has occurred, the Secured Party in its name or in
the name of its nominee or of Pledgor may, in its discretion and without notice
to or demand upon Pledgor: (l) collect by legal proceedings or otherwise all
dividends, interest, principal payments and other sums now
341063.4
ii
or hereafter payable upon or on account of the Collateral; (2) enter into any
renewal, modification, extension, substitution, reorganization, deposit, merger,
or consolidation agreement, or any agreement in any way relating to or affecting
the Collateral, and in connection therewith may deposit or surrender control of
such Collateral thereunder, accept other property in exchange for such
Collateral and do and perform such acts and things as it may deem proper, and
any money or property received in exchange for such Collateral or otherwise
shall be either applied to the Promissory Note or thereafter held by the Secured
Party as Collateral pursuant to the provisions hereof in a non-interest bearing
or cash collateral account unless and until such application will cause
Promissory Note to be paid in full; (3) make any compromise, settlement or
release the Secured Party deems desirable or proper with reference to the
Collateral; (4) insure, process and preserve the Collateral; (5) cause the
Collateral to be transferred to its name or to the name of its nominee with or
without disclosing that such Collateral is subject to the lien and security
interest hereunder; (6) exercise as to such Collateral all the rights, powers
and remedies of an owner; (7) perform any obligation of Pledgor hereunder; and
(8) send any Collateral, whether pledged or transferred to the Secured Party by
Pledgor or some other Person, to the Persons who pledged such Collateral or to
any other Person or agent for collection, sale, redemption or substitution
without liability for loss in transit or for any act or default of the Person to
whom such Collateral may be sent, except Secured Party shall be liable for the
loss or wrongful transfer of the Collateral resulting from the negligent or
intentional misconduct of Secured Party or its agents, all without releasing,
impairing, affecting or lessening the liability of Pledgor, but the Secured
Party shall have no obligation to do any of the foregoing. In furtherance of the
foregoing, Pledgor hereby appoints the Secured Party as their lawful
attorney-in-fact to carry out the foregoing acts including the authority to
redeem or collect and give full receipt for any distributions declared, paid,
payable, or issued in respect of the Collateral and to endorse Pledgor's name on
any of the Collateral and on all proceeds therefrom that may come into the
Secured Party's possession and to deposit or otherwise collect the same.
7. Receipt of Cash Dividends. Unless and until the occurrence of an
Event of Default hereunder, Pledgor shall be entitled to receive any and all
cash dividends or other cash distributions on the Collateral and/or exercise any
and all voting powers pertaining to any of the Shares (and give written consents
in lieu of voting thereon) for all purposes not inconsistent with the terms
hereof. Upon the occurrence of an Event of Default hereunder, the Secured Party
or its nominee may, in its discretion and upon notice to Pledgor, exercise all
voting powers pertaining to any and all of the Shares (and give written consents
in lieu of voting thereon) and may exercise such power in such manner as the
Secured Party, in its sole discretion, shall determine, but such voting power
shall not vest in Secured Party unless and until Secured Party or its nominee
actually gives notice to Pledgor that the Secured Party has elected to exercise
the same. The exercise by the Secured Party of any of its rights and remedies
under this paragraph shall not be deemed a disposition of Collateral under
Article 9 of the Uniform Commercial Code nor an acceptance by the Secured Party
of any of the Collateral in satisfaction of the Promissory Note.
8. Security Interest Absolute. This Agreement and the lien, security
interest and security title conveyed hereunder shall remain in full force and
effect without regard to, and shall not be released, suspended, terminated,
modified or otherwise affected by any circumstance or occurrence whatsoever,
including without limitation any of the following (whether or not Pledgor
consent thereto or have notice thereof): (i) any change in or waiver of the
time, place or manner of payment, or any other term, of the Promissory Note or
either of the Promissory Note, any waiver of or any renewal, extension,
increase, amendment or modification of or
341063.4
iii
addition or supplement to or deletion from, or any other action or inaction
under or in respect of, the Promissory Note or either of the Promissory Note or
any other document, instrument or agreement referred to therein or any
assignment or transfer of the Promissory Note or either of the Promissory Note;
(ii) any bankruptcy, insolvency, liquidation or other like proceeding or
occurrence relating to Secured Party; (iii) any failure of the Secured Party to
exercise any right or remedy against any Person other than Pledgor liable for
the Promissory Note; (iv) any other act or failure to act by the Secured Party
which may adversely affect Pledgor; or (v) any other circumstance which might
otherwise constitute a defense against, or a legal or equitable discharge of,
Pledgor's liability under this Agreement or the Secured Party's lien, security
interest or security title hereunder.
9. Release of Shares. So long as no Event of Default shall have
occurred and be continuing, as of the date that a payment of principal is made
under the Promissory Note, a number of the Shares shall be released from the
pledge hereunder and delivered by the Secured Party to Pledgor. The number of
Shares to be so released shall be calculated by multiplying the number of Shares
held by the Secured Party under the pledge (immediately before the release) by a
fraction, the numerator of which shall be the amount of the principal being paid
on that date and the denominator of which is the sum of the numerator and the
principal to be paid in the future.
10. Waivers. Pledgor hereby waives: (i) notice of acceptance of this
Agreement by the Secured Party; (ii) notice of presentment, protest and notice
of dishonor or non-payment as to the Promissory Note or any other instrument
which evidences the Promissory Note, and (iii) notice of any acceleration of the
Promissory Note. Pledgor further waives any right Pledgor may have, by statute
or otherwise (such as by Official Code of Georgia Annotated ss. 10-7-24), to
require that the Secured Party seek recourse first against any other Person, or
to realize upon any collateral for the Promissory Note other than the Collateral
pledged hereunder, as a condition precedent to enforcing the Secured Party's
lien, security interest and security title under this Agreement in the
Collateral. Pledgor further consents and agrees that, without notice to or
consent by Pledgor and without affecting or impairing this Agreement and the
lien, security interest and security title granted hereunder, the Secured Party
may compromise or settle, or may waive, amend or supplement in any manner the
provisions of either of the Promissory Note or any other document, instrument,
guaranty, or agreement relating to or securing the Promissory Note (other than
this Agreement) or may release, surrender, exchange, modify or compromise any
and all collateral securing the Promissory Note (other than the Collateral) or
in which the Secured Party may at any time have a lien, or may refuse to enforce
its rights or may make any compromise or settlement or agreement therefor, in
respect of any or all of such collateral. Pledgor expressly waives any and all
rights of subrogation, reimbursement, indemnity or contribution and any other
claim which Pledgor may now or hereinafter have against any other Person
directly or contingently liable on the Promissory Note arising from the
existence, performance or enforcement of this Agreement by or against Pledgor or
with respect to any of the Collateral.
11. Taxes and Other Costs. Pledgor agrees to pay all taxes, charges,
liens and assessments against the Collateral, and upon the failure of Pledgor to
do so the Secured Party, at its option, may pay any of them and shall be the
sole judge of the legality or validity thereof and the amount necessary to
discharge the same. All advances, charges, costs, taxes, liens, assessments, and
expenses, including reasonable attorney's fees, incurred or paid by the Secured
Party in exercising any right, power or remedy conferred in this Agreement, or
in the
341063.4
iv
enforcement thereof, shall become a part of the Promissory Note secured hereby
and shall bear interest from the date incurred or paid by Secured Party at the
lesser of (i) the highest rate of interest Pledgor has contracted to pay to the
Secured Party under the Promissory Note or (ii) the highest rate permissible
under applicable law.
12. Termination. This Agreement and the assignment and security
interest conveyed hereunder shall remain in full force and effect until such
time as the Promissory Note have been paid in full.
13. Rights Cumulative. The rights, powers and remedies given to the
Secured Party by this Agreement shall be in addition to all rights, powers and
remedies given to the Secured Party by virtue of any statute or rule of law and
all such rights, powers and remedies are cumulative and not alternative, and may
be exercised and enforced successively or concurrently. Any forbearance or
failure or delay by the Secured Party in exercising any right, power or remedy
hereunder shall not be deemed to be a waiver of such right, power or remedy, and
any single or partial exercise of any right, power or remedy hereunder shall not
preclude the further exercise thereof; and every right, power and remedy of the
Secured Party hereunder shall continue in full force and effect until such
right, power or remedy is specifically waived by an instrument in writing
executed by the Secured Party.
14. Miscellaneous. Words importing the singular number shall include
the plural number and vice versa, and any pronoun used shall be deemed to cover
all genders. "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof. The terms "Pledgor"
and "Secured Party" as used in this Agreement shall include, where applicable,
the heirs, legal representatives, successors and assigns of those parties. If
any provision hereof or the application thereof to any Person or circumstance
shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such provisions to Persons or circumstances
other than those to which it is invalid or unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and shall be
enforced to the fullest extent permitted by law. The internal laws of the State
of Georgia shall govern the construction of and the interests, rights and duties
of the parties to this Agreement shall be construed under, and governed by, the
laws of the State of Georgia, without regard to principles of conflicts of laws.
This Agreement is intended to be an instrument under seal.
WITNESS the hand and seal of Pledgor as of the 30th day of June, 1996.
PLEDGORS:
SOFTNET SYSTEMS, INC.
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
[SEAL]
341063.4
v
MICROGRAPHIC TECHNOLOGY CORPORATION
By: ______________________________
Its: ______________________________
[SEAL]
SECURED PARTY:
IMNET SYSTEMS, INC.
By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
341063.4
vi
EXHIBIT 6.4
COMPUTATION OF IMNET'S COST
"IMNET's Cost" shall be defined as IMNET's actual cost to manufacture
the MegaSAR 420, as agreed to by both IMNET and Licensee within thirty (30) days
of the date hereof of this Agreement. If Licensee and IMNET cannot agree on the
calculation of IMNET's Cost, both parties agree to submit such calculation to
the certified public accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, or in the event of its
refusal or inability to act, then to another "Big Six" accounting firm mutually
agreeable to IMNET and Licensee, or, failing such agreement, then to an
accounting firm selected by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The determination by the arbitrator
of the calculation shall be binding on both parties.
341063.4
i
EXHIBIT 6.12
IMNET'S PAYMENT TERMS
Payment for MegaSAR Products
40% due on acceptance of an order by Licensee.
30% due on advice from Licensee that the MegaSAR Products ordered by IMNET are
ready for shipment.
30% due on successful completion of acceptance testing as described in Section
6.13.
341063.4
i
EXHIBIT 7.1
IMNET Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
SECOND AMENDMENT TO DISTRIBUTOR AGREEMENT
THIS SECOND AMENDMENT TO DISTRIBUTOR AGREEMENT ("Second
Amendment") is to that certain Distributor Agreement dated March 28, 1993 and
later amended by that certain Amendment to Distributor Agreement dated June 20,
1996 (the "Amendment") and is made effective the later of the two dates below
written by and between IMNET SYSTEMS, INC. ("IMNET"), with its corporate address
and principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇ and SOFTNET SYSTEMS, INC. ("SoftNet" or "Distributor"), with its corporate
address at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WHEREAS, the above parties have entered into a Manufacturing and
Distribution License Agreement specific to IMNET's MegaSAR; and
WHEREAS, the above parties mutually desire to modify the terms and
conditions of the Distributor Agreement, as previously amended to accommodate
the above agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein made
and undertaken, IMNET and Distributor, intending to be legally bound, do hereby
agree to the following:
1. Distributor will substitute Software licenses in lieu of any commitment
to purchase Equipment made in the Amendment on a dollar for dollar
basis.
2. The following references to "Equipment" are stricken from the
Agreement:
a) Section 1.3 (definition of "Equipment");
b) The second sentence of Section 2.4 is stricken in its
entirety and replaced with the following:
"Distributor's prices for IMNET Software to its customers
shall be no less than the prices listed in the IMNET Price
List.";
c) The final sentence of Section 6.1.2;
d) Section 6.1.6 shall be stricken in its entirety;
e) Section 14 ("Equipment Warranty") shall be stricken in its
entirety.
3. Sections 3.0 and 5.2 of this Amendment shall be stricken in their
entirety.
341063.4
i
[ ] - Confidential Treatment Requested
4. Section 5.3 is amended to delete the words "and Equipment".
5. SoftNet provided a Purchase Order for Software in an amount equal to
the Balance on June 28, 1996. Payment of the amount of the Purchase
Order shall be in accordance with the Note issued pursuant to the
Manufacturing and Distribution License Agreement executed as of June
30, 1996 (the "Note").
6. IMNET shipped the Software specified on the Purchase Order on or before
June 30, 996.
7. The parties agree to reconcile SoftNet's account under the Distributor
Agreement by making the payments and issuing the credits described on
the attachment to this Second Amendment (which shall be the same as
Exhibit 7.2 to the Manufacturing and Distribution License Agreement).
Payments due IMNET from SoftNet shall be made in accordance with the
terms and conditions of the Note.
8. In general, the party performing services under the Distributor
Agreement should be the party receiving revenue for those services;
however, services performed by IMNET in the support of SoftNet's
prospective customer, R4 Services, Inc., will be provided to SoftNet
for such customer free of charge up to a maximum of [ ], calculated
based on the rates used in IMNET's current quotation to SoftNet. Any
additional services will be billed to SoftNet at rates as are mutually
agreed upon.
9. Unless otherwise herein modified, changed, deleted or added, all other
terms and conditions of the Agreement, as amended, remain as originally
stated.
IN WITNESS WHEREOF, the parties hereto have executed this SECOND
AMENDMENT TO DISTRIBUTOR AGREEMENT as of the later of the dates below.
IMNET SYSTEMS, INC. SOFTNET SYSTEMS, INC.
By: _____________________________ By: _____________________________
Title: _____________________________ Title: _____________________________
Date: July 12, 1996 Date: July 12, 1996
341063.4
ii
