CONFIDENTIAL TREATMENT EXHIBIT 10.21
WEB SOFTWARE LICENSING AND DEVELOPMENT AGREEMENT
This Web Software Licensing and Development Agreement is entered into as of
September 10, 1999 (the "Effective Date") between AWARE, Inc. ("AWARE") and eMed
Technologies Corporation ("EMED"), formerly known as ACCESS Radiology
Corporation.
Background
----------
1. EMED is in the business of providing integrated hardware and software
systems and services with respect to the transmission and interpretation of
medical images.
AWARE develops and licenses proprietary computer software that is useful for
compression and web-based viewing of digital images.
2. AWARE and EMED are parties to a Software Licensing and Development
Agreement dated May 30, 1997 (the "1997 Agreement"). The 1997 Agreement provides
for the licensing of various software by AWARE to EMED on the terms set forth
therein. Among other things, the 1997 Agreement contemplated the development,
licensing and marketing of certain new software, referred to in the 1997
Agreement as the "Joint Product". The 1997 Agreement sets forth procedures under
which the Joint Product would be developed and licensed, royalties would be
negotiated, and ownership of intellectual property would be determined.
3. The development efforts contemplated with respect to the Joint Product by
the 1997 Agreement have now resulted in the initial commercial release of a
software application for the web-based viewing and distribution of medical
images and related information. This release having occurred, AWARE and EMED now
wish to provide for definitive terms upon which this new software will be
licensed and marketed, and upon which further development work relating to the
new software will proceed.
NOW, THEREFORE, the parties agrees as follows:
CONFIDENTIAL TREATMENT
1
I. MODIFICATION OF THE 1997 AGREEMENT.
1.01. Termination of Joint Product Provisions. Article III of the 1997
---------------------------------------
Agreement, which provides for various matters relating to the "Joint Product" as
defined therein, shall terminate upon the execution of this Agreement. In
addition, references to the Joint Product in Articles IV, V and VI of the 1997
Agreement shall have no further force or effect upon the execution of this
Agreement. The rights and obligations of AWARE and EMED with respect to the Web
Product and the related Licensed Software (as defined in Section 2.01 of this
Agreement), and with respect to the Joint Product (as defined Article III of
this Agreement)shall be governed exclusively by this Agreement, and not by the
1997 Agreement. The rights and obligations of AWARE and EMED with respect to the
"Compression Software" (as defined in the 1997 Agreement) shall be governed
exclusively by the 1997 Agreement, and not by this Agreement.
1.02 Survival of the 1997 Agreement. The 1997 Agreement shall survive the
-------------------------------
execution of this Agreement and shall continue to govern the rights and
obligations of the parties with respect to the "Compression Software" (as
defined in the 1997 Agreement), except to the extent expressly modified by this
Agreement. The references to "Schedule I" in Sections 1.01, 1.03(b), 1.04(a),
and 2.02(b) of the 1997 Agreement are amended to refer to "the documentation
separately supplied by AWARE".
II. LICENSING OF SOFTWARE; PAYMENTS.
2.01 Grant of License. Subject to the terms of this Agreement, AWARE grants to
-----------------
EMED the following rights, under any patent, copyright, trade secret or other
proprietary right (other than any trademark) of AWARE, whether presently held or
hereafter acquired, with respect to (i) the proprietary web-based image viewing
and distribution software identified on Schedule I and any upgrades or
modifications thereof (the "Web Product") and (ii) any other web-based image
viewing or distribution software developed by AWARE pursuant to this Agreement
(such software and the Web Product being referred to collectively as the
"Licensed Software"):
CONFIDENTIAL TREATMENT
2
(a) The right to use the Licensed Software for internal purposes and
in support of users of EMED products for Medical Use, and to use and make
available the Licensed Software as part of EMED's product line and for
integration with other components of EMED products.
(b) The right to grant sublicenses of the Licensed Software for
Medical Use to users of EMED products and to original equipment
manufacturers or other parties which utilize toolkits to create derivative
products for Medical Use which are in turn licensed to end users.
Sublicenses of software will be granted in compliance with the procedures
set forth in Section 6.01.
(c) The right to modify the Licensed Software to create new releases
and new products for Medical Use, and to grant sublicenses of software as
modified for Medical Use to users and to original equipment manufacturers
or other parties which utilize toolkits to create derivative products for
Medical Use which will in turn be licensed to end users. Sublicenses of
software will be granted in compliance with the procedures set forth in
Section 6.01.
For purposes of the Agreement, "Medical Use" means the compression,
transmission, viewing or other processing of medical images. The rights granted
to EMED shall be exclusive to the extent set forth in Article III.
2.02. License Fees. (a) License fees payable to AWARE with respect to the Web
------------
Product will be determined based upon the terms on which the Web Product is made
available to customers. EMED expects to offer the Web Product to customers under
a plan in which the customer's initial payment upon installation of the Web
Product would be [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] Licenses granted under
such a plan are referred to as "Subscription Sales". Customers are also expected
to be offered the [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] License fees payable
with respect to Subscription Sales will be calculated as provided in subsection
(b) below, and license fees payable with respect to all other sales of licenses
of
CONFIDENTIAL TREATMENT
3
the Web Product will be calculated as provided in subsection (c) below.
(b) With respect to each Subscription Sale of the Web Product, EMED will pay
to AWARE [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.] of Net Client License Revenue (as
defined in subsection (d) below) attributable to licenses of the client portion
of the Web Product. These fees are in addition to, and not in lieu of, the
license fees payable for compression software under the 1997 Agreement.
(c) With respect to sales of the Web Product other than Subscription Sales,
EMED will pay to AWARE [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] of Net Software License
Revenue.
(d) Net Client License Revenue means amounts paid to EMED in Subscription
Sales for [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] (excluding taxes, shipping, insurance,
the interest portion of payments under rental or leasing arrangements, actual
customer returns, customs duties, and any charges for services).
(e) Net Software License Revenue means amounts paid to EMED by customers for
[*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] (excluding taxes, shipping, insurance, the
interest portion of payments under rental or leasing arrangements, actual
customer returns, customs duties, and any charges for services), [*THE
CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
] "High End Storage and Network Hardware" is defined in
Schedule II.
CONFIDENTIAL TREATMENT
4
(f) No royalties shall be payable under this Section 2.02 for beta testing
installations, or demonstration or loaner units. The duration of beta testing
will be limited to a period of time no longer than that which is determined by
EMED to be reasonably necessary for satisfaction of the requirements for
commercial marketing of the product or release being tested. Loaner units will
be provided for a period of time no longer than that which is reasonably
necessary for the customer to assess the functionality and desirability of the
product or release being loaned. EMED will not make the Web Product available
without charge except for (i) beta testing installations, demonstration or
loaner units and (ii) copies of client software provided to radiologists in
connection with Subscription Sales, and EMED will not make the Web Product
available without charge to assist in selling other products or in generating
revenues from other sources.
2.03. Payments. (a) Promptly after the end of each calendar quarter, EMED will
--------
deliver to AWARE a statement setting forth, for such quarter, the number of
copies of server software included in Subscription Sales, Net Client License
Revenue, and Net Software License Revenue. Each quarterly statement shall be
accompanied by payment of license fees due. EMED will use its best efforts to
provide such statement and pay license fees due within 30 days of the end of
each calendar quarter. Each quarterly statement and payment of license fees
shall be provided no later than 60 days after the end of the relevant calendar
quarter.
(b) EMED will keep complete books of account containing all particulars that
may be necessary to determine the amounts payable to AWARE hereunder. Such books
and supporting data shall be open for inspection for one year following the
calendar year to which they pertain, at reasonable times and upon reasonable
notice, by an independent auditor for purposes of verifying the statements
delivered pursuant to subsection (a) above. AWARE will not conduct more than one
such inspection for books and supporting data relating to any single calendar
year. The results of any inspection shall be made available to EMED. If the
agreed results of an inspection show an underpayment or overpayment, then EMED
shall pay to AWARE the amount of any underpayment and AWARE shall pay to EMED
the amount of any overpayment. If the agreed results of such inspection show
that EMED has underpaid AWARE by [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.] then EMED shall
pay to AWARE the reasonable and
CONFIDENTIAL TREATMENT
5
documented out of pocket costs of conducting such inspection, and allow
inspection of the books and supporting data for the prior two years. AWARE shall
otherwise bear the costs it incurs in performing any inspection.
2.04. Other Products. With respect to Licensed Software that may be developed
--------------
in the future, the parties will negotiate in good faith to determine definitive
terms. It is the intention of the parties that license fees shall be consistent
with the rate of [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of Net Software License
Revenue as described in this Agreement.
III. MARKETING FOR NON-MEDICAL USE.
3.01 AWARE shall have the exclusive right to market software and other
components included in the Web Product and any other software developed pursuant
to this Agreement (the "Joint Product"), under any patent, copyright, trade
secret or other proprietary right of EMED (other than any trademark), whether
presently held or hereafter acquired, for all uses other than Medical Use. AWARE
shall have the following rights with respect to the Joint Product, which EMED
hereby grants to AWARE.
(a) The right to use the Joint Product for internal purposes and in
support of users of AWARE products, and to use and make available the Joint
Product as part of AWARE's product line and for integration with other
components of AWARE products, in all cases for uses other than Medical Use.
Medical Use includes grants of licenses to indemnity insurance companies,
and AWARE will not grant any such licenses.
(b) The right to make and have made, use and have used, and sell,
lease or otherwise transfer the Joint Product, and to grant sublicenses of
the software and other intellectual property included in the Joint Product
to users of AWARE products in which such software is included, in all cases
for uses other than Medical Use. Users to whom sublicenses are granted may
include original equipment manufacturers
CONFIDENTIAL TREATMENT
6
or other parties which utilize toolkits to create derivative products for
any use other than for Medical Use, which will in turn be licensed to end
users. Sublicenses of software will be granted in compliance with the
procedures set forth in Section 7.01.
(c) The right to modify the Joint Product and the software included
in it to create new releases and new products, to make and have made, use
and have used, and sell, lease or otherwise transfer products including
modifications, and to grant sublicenses of software as modified to users of
AWARE products in which such software is included, in all cases for uses
other than Medical Use. Users to whom sublicenses are granted may include
original equipment manufacturers or other parties which utilize toolkits to
create derivative products for any use other than for Medical Use, which
will in turn be licensed to end users. Sublicenses of software will be
granted in compliance with the procedures set forth in Section 7.01.
3.02. AWARE shall pay royalties to EMED for licenses granted under this
Article III in amounts to be agreed between EMED and AWARE, and at intervals and
under procedures substantially the same as those set forth for payments by EMED
in Section 2.03. The royalties payable to EMED shall be a percentage (the
"Royalty Percentage") of amounts paid to AWARE for license of the Joint Product.
The Royalty Percentage shall be a percentage of not less than [*The confidential
portion has been omitted and filed separately with the Securities and Exchange
Commission.] which shall reflect the contribution of EMED during the term of
this Agreement to aspects of the Joint Product developed for uses other than
Medical Use. The Royalty Percentage will be determined based upon the principle
that the Royalty Percentage will be fixed at [*The confidential portion has been
omitted and filed separately with the Securities and Exchange Commission.] if
EMED contributes little or nothing to during the term of this Agreement to
aspects of the Joint Product developed for uses other than Medical Use, and will
approach [*The confidential portion has been omitted and filed separately with
the Securities and Exchange Commission.] if EMED contributes significantly to
such aspects. The exact percentage will depend on the mutual agreement of the
parties as to the significance of EMED's contribution. Promptly upon completion
of the functional product descriptions and design specifications
CONFIDENTIAL TREATMENT
7
for the Joint Product, AWARE and EMED will negotiate in good faith to reach
agreement on the Royalty Percentage. As it is not contemplated that EMED will
contribute development efforts to aspects of the Joint Product other than
Medical Use, if no agreement is reached within [*The confidential portion has
been omitted and filed separately with the Securities and Exchange Commission.]
days, the Royalty Percentage shall be fixed at [*The confidential portion has
been omitted and filed separately with the Securities and Exchange Commission.]
Except as agreed in writing with EMED, AWARE will not make the Joint Product
available without charge.
IV. EXCLUSIVITY
4.01 Exclusivity Commitments. (a) EMED shall have the exclusive right to use
-----------------------
and sublicense software developed or owned by AWARE for Medical Use to the
extent set forth herein. From the date of this Agreement until the termination
of exclusivity as provided in Section 6.01, AWARE will not (except as expressly
permitted by this Agreement) supply for Medical Use or permit any person to use
for Medical Use (i) the Web Software or any modification or improvement of the
Web Software or (ii) any other dynamic HTML or plug-in product that is
developed, owned or licensed by AWARE. AWARE will take reasonable steps to
assure compliance with this exclusivity commitment by third parties to whom
AWARE provides software. Notwithstanding anything contained in this Agreement,
AWARE may provide its ADSL, SDSL, HFC and any other general data communication
product to third parties for Medical Use or any other purpose.
(b) From the date of this Agreement until the termination of exclusivity as
provided in Section 6.01, AWARE will be the exclusive supplier to EMED of web-
based image viewing and distribution software for use in EMED products. EMED
will not independently develop any such software and will not include any such
software (other than that developed by or in cooperation with AWARE under this
Agreement) in the Web Product or any product that is competitive with the Web
Product. The parties understand and agree that home, diagnostic and intensive
care unit viewers are complementary to the Web Product and are therefore not
within the scope of the foregoing restrictions.
CONFIDENTIAL TREATMENT
8
4.02. Exceptions. (a) Licenses of software for Medical Use which have been
----------
previously granted and for which all license fees have been invoiced as of the
date of this Agreement shall continue in effect notwithstanding Section 4.01.
However, AWARE will not provide upgrades or new releases for any software
subject to such licenses except as expressly permitted in this Section 4.02.
(b) Notwithstanding Section 2.01, AWARE may continue to perform its
contractual obligations to a party previously identified to EMED by AWARE
through July 30, 2000.
(c) Notwithstanding section 2.01, AWARE may until December 30, 1999 grant to a
second party previously identified to EMED by AWARE, licenses for Medical Use of
compression libraries and plugins, and may permit such party to include copies
of such software in equipment made available to end users. During the period
from the effectiveness of this agreement until December 30, 1999 AWARE shall
not improve in any material way the functionality of the software licensed to
this party.
4.03. Transition. Promptly after the date of this Agreement, AWARE will
----------
publicly announce that it has enlarged its exclusive relationship with EMED and
that EMED and AWARE are making a commitment to the Web Product. This
announcement will be subject to review by EMED before its release. EMED may
disclose the relationship between AWARE and EMED contemplated by this Agreement
in technical and product oriented marketing materials without review by AWARE.
EMED may disclose this Agreement and the relationship contemplated hereby in
filings with securities regulators to the extent set forth in Section 7.06. All
other public announcements by EMED that refer to AWARE will be subject to review
by AWARE prior to their release.
V. DUTIES OF EMED AND AWARE
5.01. Duties of EMED. EMED will use its best efforts to maximize the market
--------------
and sales volume for the Web Product. EMED will dedicate full-time engineering
management, and make substantial and continued resources available for sales,
marketing, support, installation and training for the Web Product. EMED will
continue to make modifications to its core image server (Compression Server)
products to accommodate greater functionality, performance,
CONFIDENTIAL TREATMENT
9
and reliability of the complete product offering. EMED will also either develop
or source other products that improve the functionality and marketability of
EMED's web and client/server products as appropriate in the judgment of EMED.
5.02. Duties of AWARE. AWARE will continue to provide primary engineering
---------------
application development for EMED's web-based image viewing and distribution
software for use in EMED products including the client software and dynamic HTML
generation applications included in the Web Product. AWARE's responsibilities
will specifically include bug fixes, work-arounds and other software support as
needed to cause the Licensed Software to perform in accordance with its
specifications. AWARE will also make available, upon request by EMED, additional
applications, additional features on existing applications, and changes to core
technology as specified by EMED. AWARE will dedicate to these activities a
minimum of [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.] qualified full-time software engineers
who are knowledgeable in compression and web technology, a part time test
engineer, and additional engineering management resources as required.
5.03. Meetings. Management of AWARE and EMED will meet on a monthly basis to
---------
review technical and market progress towards meeting goals and objectives.
VI. TERM
6.01. Term; Effect of Expiration. (a) The initial term of this Agreement shall
--------------------------
extend until December 31, 2005. The term of this Agreement may be renewed by
mutual agreement of the parties.
(b) If the term of this Agreement shall expire (and this Agreement shall not
have been terminated for breach pursuant to Section 6.02), the licenses granted
in Section 2.01 and Section 3.01 shall remain in effect for five years from the
date of expiration; provided that such licenses shall be modified so that they
are no longer exclusive.
(c) AWARE and EMED agree that the royalties and license fees payable under
this Agreement shall be modified effective upon modification of the licenses
granted
CONFIDENTIAL TREATMENT
10
hereunder pursuant to subsection (b) above. AWARE and EMED further agree
that the appropriate amount of such modified royalties and license fees cannot
be determined as of the date of this Agreement. AWARE and EMED shall negotiate
in good faith for at least three months after effectiveness of license
modification pursuant to subsection (b) to reach agreement on modified license
fees and royalties. If, at any time after the end of such three month period,
either party shall determine in its judgment that negotiations are unlikely to
result in an acceptable outcome, such party may initiate arbitration to
determine modified fees and royalties pursuant to the procedures specified in
Section 8.01.
6.02. Termination for Breach. (a) If EMED shall materially breach its
-----------------------
obligations under this Agreement, and such material breach shall be continuing
for at least 60 days after delivery of a notice by AWARE describing such breach,
then AWARE may by a separate notice terminate this Agreement for breach under
this Section 6.02(a).
(b) If AWARE shall materially breach its obligations under this Agreement, and
such material breach shall be continuing for at least 60 days after delivery of
a notice by EMED describing such breach, then EMED may by a separate notice
terminate this Agreement for breach under this Section 6.02(b).
(c) With respect to the obligations of AWARE and EMED under Sections 5.01 and
5.02, "material breach" means willful failure of a party to allocate the
resources required by the Section 5.01 or 5.02 (as the case may be) to the
performance of such party's responsibilities.
(d) Termination for breach under this Section 6.02 shall not be an exclusive
remedy, but shall be in addition to any other remedies that either party may
have.
6.03. Effect of Termination for Breach. (a) If AWARE shall terminate this
---------------------------------
Agreement for breach pursuant to Section 6.02, then the license granted to EMED
pursuant to Section 2.01 shall immediately terminate and EMED shall cease using
or marketing the Licensed Software and the Web Product; provided that EMED shall
fulfill any maintenance obligations existing as of the effective date of such
termination. Upon the effectiveness of such a termination,
CONFIDENTIAL TREATMENT
11
the exclusivity obligations of AWARE pursuant to Article III shall terminate.
(b) If EMED shall terminate this Agreement for breach pursuant to Section
6.02, then the license granted to EMED pursuant to Section 2.01 and the
exclusivity provisions binding upon AWARE pursuant to Article IV shall remain in
effect, and the exclusivity obligations of EMED pursuant to Article IV shall
terminate. In such event, AWARE shall continue to provide bug fixes, work-
arounds and other software support as needed to cause the Licensed Software to
perform in accordance with its specifications. Also in such event, EMED shall
retain source code delivered under Section 7.03, AWARE shall deliver to EMED any
additional source code of the Licensed Software not previously delivered under
Section 7.03, and EMED shall continue to have the right to modify the Licensed
Software. For so long as the license granted under Section 2.01 continues in
effect pursuant to this subsection (b), EMED shall pay license fees as provided
in Section 2.02. Upon the effectiveness of any termination by EMED for breach
under Section 6.02(b), the license granted to AWARE under Article III shall
terminate.
6.04. Additional Surviving Terms. All payment obligations accrued prior to
--------------------------
any termination or expiration of this Agreement shall survive such termination
or expiration. All sublicenses granted to any end user in accordance with this
Agreement prior to any termination or expiration of this Agreement shall survive
such termination or expiration. If EMED holds a continuing license under this
Agreement, EMED shall also continue to have the rights set forth in Section 7.03
with respect to such license. The provisions of Sections 6.05, 7.02, 7.05, 7.06,
8.01, 8.02, 8.03 and 8.12 shall survive any termination or expiration of this
Agreement.
6.05. Intellectual Property. AWARE and EMED shall negotiate in good faith
----------------------
for at least three months after effectiveness of expiration or termination of
this Agreement to reach agreement on specific definition of the intellectual
property owned by each party in accordance with the principles set forth in
Section 7.02. If, at any time after the end of such three month period, either
party shall determine in its judgment that negotiations are unlikely to result
in an acceptable outcome, such party may initiate arbitration to determine
ownership of intellectual
CONFIDENTIAL TREATMENT
12
property pursuant to the procedures specified in Section 8.01.
VII. INTELLECTUAL PROPERTY
7.01. Software Licensing Procedures. (a) The procedures set forth in this
------------------------------
Section 67.01 shall govern the granting of sublicenses of software under this
Agreement.
(b) Each of AWARE and EMED shall assign a unique number to each copy made
by it of Licensed Software or any other software provided to it by the other
party, whether for internal use or for sublicense to a user. Each of AWARE and
EMED shall keep full, clear and accurate records of all copies that it makes of
any such software and the identity and location of each third party to whom any
such software is provided. Each of EMED and AWARE may examine records of the
other party not more than once in any calendar quarter, during normal business
hours and upon reasonable notice.
(c) Sublicenses of software granted under this Agreement shall include the
following provisions. Such terms may be set forth in a reasonably prominent
printed or electronic document that accompanies the software being sublicensed
and states that by use of such software, the user agrees to the terms set forth
in the document. Sublicenses may be granted directly, or by a reseller or other
intermediary. The provisions required by this subsection (c) are:
(i) a provision restricting the sublicensee's use of the licensed
software to its own business and professional purposes, provided that any
sublicensee of a toolkit may use it to create new applications to be
licensed to end users as part of the sublicensee's product;
(ii) a provision requiring the sublicensee to take all reasonable
precautions to keep the licensed software and any related documentation
confidential;
(iii) a provision prohibiting the sublicensee from reproducing
(except for backup copies), reverse engineering, translating or creating
other versions of the licensed software, provided that any sublicensee of a
toolkit may use it to create new applications to
CONFIDENTIAL TREATMENT
13
be licensed to end users as part of the sublicensee's product;
(iv) a provision acknowledging that ownership of the licensed
software remains exclusively with the grantor of the license or its
suppliers;
(v) a provision limiting the other party's liability to the
sublicensee to at least the same extent that the liability of the grantor
to the sublicensee is limited, and disclaiming warranties on behalf of the
other party at least to the extent disclaimed on behalf of the grantor; and
(vi) a provision stating that AWARE or EMED (as the case may be) is
an intended third party beneficiary of the foregoing to the extent any
materials or information delivered to the sublicensee originated with or
are derived from materials or information supplied by AWARE or EMED (as the
case may be), and shall have the right to enforce and shall be entitled to
the benefit of any of the foregoing provisions as they relate to such
materials or information.
Each party will use reasonable efforts to enforce license agreements executed by
its customers. In no event shall source code be released to any sublicensee.
(d) Notwithstanding this Section 7.01 or any other provision of this
Agreement, software may be licensed to the Government of the United States of
America, or an agency or instrumentality thereof, under an agreement containing
software licensing terms generally used by the United States Government (or the
agency or instrumentality to which the software is licensed) for procurement of
commercial software.
7.02. Ownership. (a) As between EMED and AWARE, AWARE owns any software
---------
developed solely by AWARE or by any employee, consultant or other person acting
on AWARE's behalf (other than EMED) under this Agreement, including any
inventions, concepts, specifications, know-how and ideas embodied in such
software, together with all proprietary rights therein ("AWARE Intellectual
Property"). As between EMED and AWARE, EMED owns and shall continue to own those
concepts, specifications, know-how, and ideas
CONFIDENTIAL TREATMENT
14
embodied in the design and functionality of the Web Product and conceived solely
by EMED, and as applied in the Web Product for Medical Use, and any software
developed solely by EMED or by any employee, consultant or other person acting
on EMED's behalf (other than AWARE) under this Agreement, including any
inventions, concepts, specifications, know-how and ideas embodied in any of the
foregoing, together with all proprietary rights therein ("EMED Intellectual
Property"). As between EMED and AWARE, the parties shall jointly own any
software or other intellectual property jointly developed by the parties under
this Agreement and not allocated between them above, including any inventions,
concepts, specifications, know-how and ideas embodied therein, together with all
proprietary rights therein ("Joint Intellectual Property"). Whether or not any
intellectual property is jointly developed shall be determined in accordance
with United States patent or copyright law as applicable; provided that in no
event shall either party have an obligation to account to the other except as
specifically provided in this Agreement.
(b) AWARE shall have the right to file and prosecute patent or copyright
applications on AWARE Intellectual Property and EMED shall have the right to
file and prosecute patent or copyright applications on EMED Intellectual
Property. The parties will cooperate in the filing and prosecution of patent or
copyright applications on Joint Intellectual Property, provided that neither
party shall file any such patent or copyright application without the prior
written consent of the other. Each party will cooperate with the other party in
the filing and prosecution by the other party of any patent or copyright
application that complies with this subsection (b), including by executing and
delivering or causing its officers and employees to execute and deliver (all at
the expense of the filing party) any documentation reasonably necessary or
appropriate for the filing and prosecution of such an application and the
vesting of rights as provided in this Agreement.
(c) The exclusivity obligations of the parties under Article IV shall not in
any way be affected by the ownership of AWARE Intellectual Property, EMED
Intellectual Property, or Joint Intellectual Property as provided in this
Section 7.02, or by the filing of any patent or copyright application or the
grant or issuance of any
CONFIDENTIAL TREATMENT
15
patent or copyright. Neither party shall market, sell, license or distribute any
Joint Intellectual Property except to the extent that such Joint Intellectual
Property is covered by a license granted to such party hereunder.
7.03 Source Code. Copies of source code of all Licensed Software will be made
-----------
available to EMED by AWARE upon completion of each release or patch in which
such source code is included. The fact that AWARE has provided access to source
code shall in no way affect proprietary rights to source code or software, and
all source code shall continue to be owned by the party that owned it prior to
disclosure. All source code is "Confidential Information" as that term is used
in Section 7.06 and shall be subject to the restrictions set forth in Section
7.06. EMED will maintain source code revision control procedures with which both
AWARE and EMED will comply. These procedures will be designed to achieve, among
other things, compliance with "Good Manufacturing Practices" as defined by the
U.S. Food and Drug Administration and documentation of the ownership of source
code disclosed by either party. Provision of source code to EMED shall not
affect AWARE's obligations to provide engineering resources and support under
Section 5.01. Should AWARE wish to utilize its license rights pursuant to
Section 3.01, AWARE will notify EMED of such intentions and copies of source
code of Joint Products will be made available to AWARE by EMED upon completion
of each release or patch in which such source code is included. The fact that
EMED has provided access to source code shall in no way affect proprietary
rights to source code or software, and all source code shall continue to be
owned by the party that owned it prior to disclosure. All source code is
"Confidential Information" as that term is used in Section 7.06 and shall be
subject to the restrictions set forth in Section 7.06.
7.04. Representations. (a) AWARE represents to EMED that AWARE has full
---------------
authority to enter into this Agreement and grant the licenses and rights set
forth herein.
(b) EMED represents to AWARE that EMED has full authority to enter into this
Agreement and grant the licenses and rights set forth herein.
7.05. Indemnities. (a) AWARE will, at its expense, defend against, hold EMED
-----------
harmless from, and pay any final judgment against EMED or any customer of EMED
arising out
CONFIDENTIAL TREATMENT
16
of (x) any claim that the Licensed Software infringed a copyright,
a patent or a trade secret of a third party, unless in the case of third party
patent claims, (i) AWARE can show that the patent claimed to have been infringed
was not known to Aware at the time of delivery to EMED of the infringing portion
of Licensed Software or (ii) such patent was infringed in order to comply with
an EMED design or specification or (iii)such patent would not be infringed by
the use of Licensed Software alone and not in combination with any EMED
software; or (y) out of marketing by AWARE of AWARE products (including any
product liability claim unless such product liability claim is caused by
designs, specifications or software provided by EMED); provided that (i) EMED
notifies AWARE in writing of such claim or action, and (ii) AWARE has sole
control of the defense and settlement of such claim or action. In defending
against such claim or action to the extent it relates to software provided by
AWARE, AWARE may, at its option, agree to any settlement in which AWARE shall
either (1) procure for EMED and all customers of EMED the right to continue
using the software at issue; or (2) modify or replace such software so that it
no longer infringes, to the extent that the exercise of such option does not
result in a material adverse change in the operational characteristics of such
software, and equivalent functions and performance provided by AWARE remain
following implementation of such option. If AWARE concludes in its judgment
that none of the foregoing options is reasonable, AWARE may remove the software
at issue and any other component supplied by AWARE rendered unusable as a result
of such removal and pay to EMED damages arising therefrom, including damages
incurred by reason of EMED's inability to perform its obligations under
sublicenses; provided that AWARE's liability for damages arising from such
inability shall be [*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]
(b) EMED will, at its expense, defend against, hold AWARE harmless from, and
pay any final judgment against AWARE or any customer of AWARE arising out of (x)
any claim that any software licensed to AWARE by EMED hereunder infringed a
copyright, a patent or a trade secret of a third party, unless in the case of
third party patent claims, (i) EMED can show that the patent claimed to have
been infringed was not known to EMED at the time of delivery to AWARE of the
infringing software or (ii) such patent was infringed in order to comply with an
AWARE
CONFIDENTIAL TREATMENT
17
design or specification or (iii) such patent would not be infringed by the use
of the software licensed by EMED alone and not in combination with any AWARE
software; or (y) out of marketing by EMED of EMED products (including any
product liability claim unless such product liability claim is caused by
designs, specifications or software provided by AWARE) provided that (i) AWARE
notifies EMED in writing of such claim or action, and (ii) EMED has sole control
of the defense and settlement of such claim or action. In defending against such
claim or action to the extent it relates to software provided by EMED, EMED may,
at its option, agree to any settlement in which EMED shall either (1) procure
for AWARE and all customers of AWARE the right to continue using the software at
issue; or (2) modify or replace such software so that it no longer infringes, to
the extent that the exercise of such option does not result in a material
adverse change in the operational characteristics of such software, and
equivalent functions and performance provided by EMED remain following
implementation of such option. If EMED concludes in its judgment that none of
the foregoing options is reasonable, EMED may remove the software at issue and
any other component supplied by EMED rendered unusable as a result of such
removal and pay to AWARE damages arising therefrom, including damages incurred
by reason of AWARE's inability to perform its obligations under sublicenses;
provided that EMED's liability for damages arising from such inability shall be
[*THE CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.]
(c) If EMED shall determine in its judgment that the concepts, specifications,
know-how, and ideas embodied in the design and functionality of the Licensed
Software infringe or conflict with a patent or copyright not known to EMED on
the date of this Agreement, then EMED shall notify AWARE and the parties will
discuss in good faith whether the Licensed Software can be modified or other
steps may be taken to avoid such infringement. If EMED determines in its
judgment that no such modification or other steps can be reasonably implemented,
EMED may by notice terminate the obligations of AWARE and EMED under this
Agreement with respect to the affected portion of the Licensed Software, and the
indemnity of EMED in subsection (b) above shall apply only to those claims
relating to the affected portion of the Licensed Software of which AWARE or
CONFIDENTIAL TREATMENT
18
EMED had notice prior to the date of the first notice regarding infringement
delivered by EMED.
7.06. Confidentiality. As used in this Agreement, "Confidential
---------------
Information" means (i) all confidential information, proprietary software, trade
secrets, know-how, and all other intellectual property that is subject to the
licenses granted in this Agreement and in which proprietary rights would be
adversely affected by disclosure and (ii) all other confidential or proprietary
information (including without limitation financial information and business
information such as customer lists) that is or has been disclosed by AWARE to
EMED or by EMED to AWARE. AWARE and EMED agree that they will not, and will not
permit their respective officers, employees, agents and representatives to,
without first obtaining the written consent of the other party, use, sell or
disclose any Confidential Information, except as expressly contemplated hereby
and except that Confidential Information may be disclosed by the party that owns
it unless such disclosure would adversely affect the proprietary nature of
Confidential Information subject to any of the licenses granted hereunder.
Either party may disclose Confidential Information to potential customers, and
to other third parties to the extent necessary to permit any such third party to
assist in manufacture or integration of the Web Product, provided that any such
potential customer or third party to whom Confidential Information is disclosed
shall execute a confidentiality agreement no less restrictive than this Section
7.06. "Confidential Information" does not include (i) information that is or
becomes (other than by disclosure in violation of this Agreement) generally
available to the public, (ii) information that the receiving party can show was
known to the receiving party prior to its disclosure by the other party, or
(iii) information required to be disclosed by law or regulation or by judicial
process or administrative order, provided that prompt notice and an opportunity
to seek a protective order is given to the other party prior to disclosure.
AWARE and EMED agree that this Agreement and the Schedules hereto are
Confidential Information subject to this Section 7.06. AWARE consents to the
disclosure of the relationship contemplated by this Agreement in filings by EMED
with the U.S. Securities and Exchange Commission and state securities
authorities, and the filing of this Agreement and the 1997 Agreement as related
exhibits; provided that EMED shall diligently seek confidential treatment of all
CONFIDENTIAL TREATMENT
19
pricing information and shall promptly deliver a copy of all such filings to
AWARE.
VIII. GENERAL.
8.01. Arbitration. Any controversy or claim arising out of or relating to this
-----------
Agreement, or the breach thereof, shall be settled by arbitration administered
by the American Arbitration Association in Boston, Massachusetts under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
Arbitration as specified in this Section 8.01 shall be the sole and exclusive
procedure for the resolution of disputes between the parties arising out of or
relating to this Agreement or the breach thereof; provided, however, that a
party, without prejudice to such procedure, may file a complaint to seek a
preliminary injunction or other provisional judicial relief, if in its judgment
such action is necessary to avoid irreparable damage or preserve the status quo.
Despite such action the parties will continue to participate in good faith in
the procedures specified in this Section 8.01. AWARE and EMED agree that any
breach of Sections 4.01, 4.02, 7.01 or 7.06 would cause irreparable harm and
that the aggrieved party shall be entitled to equitable relief in the nature of
an injunction for any such breach, without posting of a bond or other surety.
8.02. Limitation of Warranties. THE OBLIGATIONS OF AWARE AND EMED EXPRESSLY
-------------------------
STATED IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES OR CONDITIONS
EXPRESS OR IMPLIED. TO THE EXTENT ALLOWABLE TO BY LAW, THIS EXCLUSION OF ALL
OTHER WARRANTIES AND CONDITIONS EXTENDS TO IMPLIED WARRANTIES OR CONDITIONS OF
MERCHANTABLE QUALITY AND FITNESS FOR A PARTICULAR PURPOSE, OR AGAINST
INFRINGEMENT AND THOSE ARISING BY STATUTE OR OTHERWISE IN LAW, OR FROM A COURSE
OF DEALING OR USAGE OF TRADE.
8.03. Limitation of Liability. EMED AND AWARE AGREE THAT, EXCEPT AS EXPRESSLY
------------------------
STATED OTHERWISE IN SECTION 7.05. THE LIABILITY OF EITHER OF THEM TO THE OTHER,
IF ANY, UNDER ANY THEORY OF LAW OR EQUITY, ARISING OUT OF, OR IN ANY WAY RELATED
TO THIS AGREEMENT OR THE FULFILLMENT OF ANY OF THE OBLIGATIONS OF EITHER OF THEM
UNDER THIS AGREEMENT, IS LIMITED TO MONEY DAMAGES NOT TO EXCEED THE TOTAL AMOUNT
PAID OR PAYABLE BY EMED TO AWARE UNDER THIS AGREEMENT.
CONFIDENTIAL TREATMENT
20
8.04. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts.
8.05. Assignment. (a) Subject to EMED's right to grant sublicenses
----------
hereunder, EMED may not assign this Agreement or any rights hereunder without
the prior written consent of AWARE, except that, without such consent and upon
notice to AWARE, (i) EMED may assign all of its rights hereunder to a
corporation or other legal entity that acquires substantially all of EMED's
assets or where EMED is consolidated or merged, but then only upon the express
assumption by such transferee or its successor of the obligations set forth in
this Agreement and (ii) EMED may grant security interests in the rights of EMED
under this Agreement to secure the obligations of EMED to a bank or other
financial institution which has extended credit to EMED.
(b) AWARE may not assign this Agreement or any rights hereunder without
the prior written consent of EMED, except that, without such consent and upon
notice to EMED, (i) AWARE may assign all of its rights hereunder to a
corporation or other legal entity that acquires substantially all of AWARE's
assets or where AWARE is consolidated or merged, but then only upon the express
assumption by such transferee or its successor of the obligations set forth in
this Agreement and (ii) AWARE may grant security interests in the rights of
AWARE under this Agreement to secure the obligations of AWARE to a bank or other
financial institution which has extended credit to AWARE.
(c) This Agreement is binding upon, and inures to the benefit of, the
successors and permitted assigns of the parties.
8.06. Effect of Waiver. The waiver or failure of either party to exercise
----------------
in any respect any right provided for in this Agreement shall not be deemed
a waiver of any further or future right hereunder.
CONFIDENTIAL TREATMENT
21
8.07. Headings. The headings used in this Agreement are for convenience of
--------
reference only and are not to be used in interpreting the provisions of this
Agreement.
8.08. Complete Agreement. This Agreement is the exclusive statement of the
------------------
understanding between the parties with respect to its subject matter. It
supersedes all prior agreements, negotiations, representations and proposals,
written or oral, relating to the subject matter hereof. No provisions of this
Agreement may be changed or modified except by an agreement in writing signed by
the party to be bound. No provision of any purchase order or other instrument
issued by EMED or any invoice or other form issued by AWARE that is inconsistent
with the provisions of this Agreement shall be binding or affect this Agreement
unless signed by both parties.
8.09. Severability. If any provision of this Agreement is invalid or
------------
unenforceable in any particular case, such case shall not invalidate or render
unenforceable any other part of this Agreement. This Agreement shall be
construed as not containing the particular provision or provisions held to be
invalid or unenforceable to the extent of the particular case, and the rights
and obligations of the parties hereto shall be construed and enforced
accordingly.
8.10. Effectiveness of Agreement; Counterparts. This Agreement is effective
----------------------------------------
when executed by both parties. This Agreement may be executed in counterparts,
each of which shall constitute one and the same instrument.
8.11. Notices. All notices provided for in this Agreement shall be in writing
-------
or facsimile, addressed to the appropriate party at the respective address set
forth below or to such other then-current address as is specified by notice, as
follows:
to AWARE:
AWARE, Inc.
00 Xxxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
CONFIDENTIAL TREATMENT
22
to EMED:
EMED Technologies Corporation
00 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Notices sent by certified mail, return receipt requested to the address
specified pursuant to this Section 7.11 shall be effective three business days
after deposit in the U.S. Mail with postage prepaid. Notice delivered by any
other means shall be effective upon receipt.
7.12. No Agency. AWARE and EMED are independent contractors and separate legal
---------
entities and shall in no way be interpreted as partners, joint venturers,
agents, employees or legal representatives of each other for any purposes.
Neither party shall be responsible for or bound by any act of the other party or
the other party's agents, employees or any persons in any capacity in its
service.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
first date set forth above.
EMED TECHNOLOGIES
CORPORATION AWARE, INC.
By: /s/Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
----------------- --------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxx
Title: Chief Technology Title: Senior Vice President
Officer
CONFIDENTIAL TREATMENT
23
Schedule 1
Description of Technology
The Web Product accepts medical images, reports, and other information from
various sources, and makes them available for distribution over the web to thin
web clients. Reports are collected and linked with the original studies
(images). The Web Product includes the application defined by EMED, and user
interfaces, features, and web server technology developed by EMED which handles
the image, text, voice and administrative input required for systems operation.
The Web Product further includes HTML generation, web plug-in, compression, and
end-user application software, using core components developed and owned by
AWARE, Inc. In addition, the product consists of user and technical
documentation which have been provided by both parties.
CONFIDENTIAL TREATMENT
24
