EXHIBIT 10.15
DISTRIBUTION AND DEVELOPMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of
November 15, 2000 (the "Effective Date") by and between STENTOR, INC., a
Delaware corporation ("Stentor") and IDX SYSTEMS CORPORATION, a Vermont
corporation ("IDX").
WITNESSETH
WHEREAS, Stentor is in the business of developing and marketing
products and services to automate the viewing and archiving of medical images;
and
WHEREAS, IDX, through its Radiology and Imaging Systems Division,
has developed products and services to automate the management of radiology
practices and departments; and
WHEREAS, IDX and Stentor desire to develop integration between their
current products and services and certain future products and services to be
developed by Stentor and IDX to create a comprehensive, state-of-the-art medical
image management system, initially applicable to radiology practices, but
possibly extended to cardiology, pathology, opthamology, orthopedics, emergency
departments and other similar practices that could make use of the system;
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement, unless otherwise defined in this
Agreement, shall have the meanings ascribed to them on Schedule 1 attached
hereto.
2. TERM AND TERMINATION
2.1 Term. This Agreement shall be in effect for an initial term of five
(5) years (the "Initial Term") and shall automatically renew for
additional, successive two (2) year terms unless earlier terminated
by either of IDX or Stentor by giving written notice of such party's
election not to renew this Agreement not later than one (1) year
prior to the expiration of the Initial Term or six (6) months prior
to the expiration of any then current successive term.
2.2 Termination. Notwithstanding the provisions of Section 2.1, this
Agreement may be terminated:
2.2.1 by Stentor if IDX shall have defaulted under or breached any
material term of this Agreement and shall not have cured such
breach within one hundred twenty (120) days after receiving
written notice from Stentor specifying the nature of such
default or breach; or
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2.2.2 by IDX if Stentor shall have defaulted under or breached any
material term of this Agreement and shall not have cured such
breach within one hundred twenty (120) days after receiving
written notice from IDX specifying the nature of such default
or breach; or
2.2.3 by either party upon receipt of a notice from the other party
that such other party requires a composition or other similar
arrangement with creditors, files for bankruptcy or is
declared bankrupt.
2.3 Termination of Restrictions.
2.3.1 Stentor may elect to terminate Section 6.1.1, as its sole and
exclusive remedy in lieu of any damages under this Agreement,
if:
2.3.1.1 a Material Adverse Change occurs with respect to II)X;
or
2.3.1.2 IDX fails, for any two (2) consecutive calendar years,
to meet the minimum sales goals of sales of the XXXX
System to IDXrad Customers or LastWord Customers set
forth in Exhibit C and as may be agreed to and set
forth in the Marketing Plan.
2.3.2 If IDX fails after March 31, 2002, to meet the mutually agreed
to goals of sales of the XXXX System to IDXrad Customers for a
calendar quarter as set forth in the Marketing Plan and does
not cure such failure by the end of the next calendar quarter
by licensing a XXXX System to that number of IDXrad Customers
equal to the sum of the number of IDXrad Customers by which
IDX missed the goal plus the goal for the subsequent calendar
quarter, then Stentor may elect to terminate Section
6.1.1(ii), as its sole and exclusive remedy in lieu of any
damages under this Agreement
2.3.3 If any of [**] is acquired, becomes Controlled by, obtains
Control of, or becomes under common Control with a Person that
is or becomes authorized to be a distributor of the XXXX
System by Stentor as permitted under this Agreement, and such
company demonstrates its intention to permanently cease doing
business under or market its products under a name or xxxx
similar to [**], as applicable, then Stentor may terminate
Section 6.1.1(ii) only with respect to [**] as applicable.
2.3.4 IDX may elect to terminate Section 6.1.2, as its sole and
exclusive remedy in lieu of any damages under this Agreement,
if:
2.3.4.1 a Material Adverse Change occurs with respect to
Stentor; or
2.3.4.2 IDX fails, for any two (2) consecutive calendar years,
to meet the minimum sales goals of sales of the XXXX
System to IDXrad
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Customers or LastWord Customers set forth in the
Exhibit C and as may be agreed to and set forth in
the Marketing Plan.
2.4 Change of Control. If Stentor shall sell all or substantially all of
its assets or IDX shall sell all or substantially all of the assets
of its Radiology Information Systems Division business, then upon
the election of the other party, the party selling its assets shall
be obligated to assign this Agreement to the successor to its assets
and to cause such successor to assume its performance under this
Agreement. Regardless of whether this Agreement is assigned, the
party not selling its assets may elect to terminate the Agreement
upon not less than eighteen (18) months prior written notice.
2.5 Effect of Termination; Survival. In the event that this Agreement is
validly terminated as provided herein, then each of the parties
shall be relieved of their duties and obligations arising under this
Agreement after the date of such termination, except for their
respective obligations to provide support services to existing
customers under Section 8.1, and such termination shall be without
liability to the terminating party; provided, however, that the
obligations of the parties set forth in Sections 8.1, 9.1, 9.2, 10.1
- 10.21 hereof shall survive any such termination and shall be
enforceable hereunder; provided, further, however, that nothing in
this Section 2.5 shall relieve Stentor or IDX of any liability for a
breach of this Agreement. Furthermore, termination of this Agreement
shall not affect i) any license or subscription rights granted by
either party prior to such termination or ii) a party's right to
continue providing services pursuant to customer agreements entered
into prior to such termination, provided, however, that each party
shall continue to make payments pursuant to Section 7.
2.6 Intellectual Property. All rights and licenses granted under or
pursuant to this Agreement are, and shall otherwise be deemed to be,
for purposes of Section 365(n) of the United States Bankruptcy Code
(the "Code"), licenses to rights to "intellectual property" as
defined in the Code. A party receiving such rights under this
Agreement shall retain and may fully exercise all of its rights and
elections under the Code. The parties further agree that, in the
event of the commencement of a bankruptcy proceeding by or against a
party under the Code, the other party shall be entitled to retain
all of its rights under this Agreement.
3. OPERATIONAL MANAGEMENT
Stentor and IDX shall each appoint an executive with the title of vice
president or higher to oversee performance under this Agreement. These two
executives shall meet not less frequently than once each calendar quarter during
the Initial Term (and more frequently as needed) and shall produce not later
than five (5) business days after the end of each such calendar quarter a
written report to the boards of directors of IDX and Stentor setting forth in
detail:
3.1 the accomplishments of Stentor and IDX during the preceding calendar
quarter in performing this Agreement;
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3.2 plans for managing the relationship between IDX and Stentor during
the next calendar quarter;
3.3 any items of dispute or disagreement between IDX and Stentor;
3.4 plans for resolving any dispute or disagreement between DX and
Stentor;
3.5 any changes proposed to be made to the Marketing Plan or Development
Plan; and
3.6 such other items as may be deemed appropriate by such executives.
4. PRODUCT DEVELOPMENT
4.1 Product Development.
4.1.1 Development of the XXXX System. It is the goal of this
Agreement that the parties shall use their commercially
reasonable efforts to develop a comprehensive,
state-of-the-art medical image management system for radiology
practices and departments with functionality and features
substantially equivalent or superior to any competitive
medical image management system available during the term of
this Agreement. To accomplish that goal, Stentor and IDX shall
carry out their obligations to develop the XXXX System
pursuant to the Development Plan. A party's material failure
to deliver a minimum development requirement (as set forth on
Exhibit A) by a milestone set forth in the Development Plan
shall constitute a material breach of this Agreement.
4.1.2 Joint Testing. The parties shall cooperate to jointly test any
software used in connection with the XXXX System to ensure the
functionality of such software prior to distribution thereof
to any customer.
4.1.3 Development Plan. Within thirty (30) days of the Effective
Date, IDX and Stentor shall mutually develop the Development
Plan, which shall contain minimum development requirements
described on the Development Plan Outline, attached hereto as
Exhibit A. IDX and Stentor shall update the Development Plan
every calendar quarter during the term of this Agreement
unless earlier updated as necessary to maintain the commercial
reasonableness thereof. The Development Plan, as updated from
time to time, shall describe activities and responsibilities
for one-year periods initially commencing on the Effective
Date. Not later than three (3) months prior to the expiration
of the initial one-year term of the Development Plan, and
thereafter not later than three (3) months prior to the
expiration of each successive one-year period, the parties
shall commence work on a revised Development Plan for the
following one-year period. The Development Plan, as updated
from time to time, including updating of the minimum
development requirements, shall be executed by the parties and
shall become subject to this Agreement.
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Should the parties have failed to agree upon and execute a
revised or updated Development Plan at the time of the
expiration of the then current Development Plan, the parties
shall continue to perform under the terms of the then current
Development Plan until such time as the parties shall agree
upon a revised Development Plan. Notwithstanding anything
contained herein or in any Development Plan to the contrary,
at all times during the Term, Stentor shall continue to fund
the development and support of the iSite Viewer, iDiagnostic
Viewer and iVault products as provided in the Development Plan
as initially adopted, and DX shall continue to develop and
support Imaging Suite, ConnectR, and the Imaging Suite Lite
Version as provided in the Development Plan as initially
adopted.
4.1.4 Early Releases and Testing. DX and Stentor shall deliver to
each other for testing, development and integration purposes
only, copies of the earliest test releases of all development
deliverables provided for in the Development Plan prior to
delivery thereof to any other customers or Distribution
Partners.
4.1.5 Demonstration Products. Each party shall develop demonstration
versions of its products for use in selling its products to
the other party's customers and prospects.
4.1.6 Resolution of Programming Errors. Stentor shall be responsible
for correcting all programming errors in Stentor Products, and
IDX shall be responsible for correcting all programming errors
in IDX Products. The Development Plan shall designate Stentor
and IDX personnel to coordinate the resolution of any
programming errors. To accomplish this goal, Stentor and IDX
agree to resolve programming errors as follows:
Category 1 Programming Error: A Category 1 Programming Error
is an error that causes the software to fail to operate. If a
category 1 programming error occurs in the XXXX System
software, IDX and Stentor agree to conduct a conference call
in an effort to resolve the error as soon as possible but no
later than one business day.
Category 2 Programming Error: A Category 2 Programming Error
is an error that substantially affects the proper operation of
the main functions of the XXXX System software but does not
cause the software to fail to operate. If a Category 2
Programming Error occurs, IDX and Stentor agree to conduct a
conference call in an effort to resolve the error as soon as
possible but no later than one week.
Category 3 Programming Error: A Category 3 Programming Error
causes the software to function incorrectly under a particular
set of circumstances, although the error does not
substantially affect the proper operation of the main
functions of the XXXX System. If a Category 3
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Programming error occurs, the party responsible for the
programming error agrees to eliminate the programming error in
the next software update of the XXXX System.
5. LICENSES AND OWNERSHIP
5.1 Ownership; In General. Except for the rights expressly granted
herein to Stentor, IDX reserves and retains all right, title and
interest (including without limitation patents, trade secrets and
copyrights) in the IDX Products, and all customizations, additions,
modifications, changes, enhancements, improvements, and derivative
works thereof made by IDX or on behalf of IDX, and all rights
therein and copies thereof. Except for the rights expressly granted
herein to IDX, Stentor reserves and retains all right, title and
interest (including without limitation patents, trade secrets and
copyrights) in the Stentor Products, and all customizations,
additions, modifications, changes, enhancements, improvements, and
derivative works thereof made by Stentor, or on behalf of Stentor,
and all rights therein and copies thereof
5.2 Ownership to works created under the Development Plan. Any
Intellectual Property developed by Stentor and any derivative works
of Stentor Products, whether developed by Stentor, IDX or a
contractor of either party, pursuant to the Development Plan shall
be owned by Stentor. Any Intellectual Property developed by IDX and
any derivative works of IDX Products, whether developed by Stentor,
IDX or a contractor of either party, pursuant to the Development
Plan shall be owned by IDX. Any Intellectual Property jointly
developed by IDX and Stentor pursuant to the Development Plan shall
be jointly owned by IDX and Stentor and each of IDX and Stentor
shall be free to use such Intellectual Property without interference
from the other party and without any obligation to pay any royalties
or account for any profits, except as otherwise provided for in this
Agreement. Notwithstanding the foregoing, the parties shall jointly
own any and all patent rights to any work created pursuant to the
Development Plan that combines at least one component of the IDX
Products and one component of the Stentor Products and shall
cooperate in the filing of any application(s) related to such
rights, including, without limitation, the choice of counsel to
prosecute such application(s). Nothing in this Agreement shall
require either party to create any Intellectual Property not a part
of the XXXX System. If either party creates any Intellectual
Property that is not a part of the XXXX System, but may be used in
connection with the XXXX System without the material assistance of
the other party, the creating party shall own any and all patent
rights to the combination of such Intellectual Property and the XXXX
System, and such patent rights shall not be licensed to the other
party under this Agreement except by written amendment hereto
executed by both parties; provided that each party hereby agrees
that if it offers to license the right to resell or sublicense any
such Intellectual Property and the patent rights, if any, thereto,
to any Person, it shall offer to license the right to resell or
sublicense such Intellectual Property and patent rights, if any, to
the other party on the most favorable terms offered to any other
Person.
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5.3 IDX Products.
5.3.1 IDX hereby grants to Stentor a non-exclusive, non-transferable
(except as provided in Sections 2.4 and 10.14) term license to
market and sublicense, and in connection therewith to sell,
offer for sale, copy, use, distribute, perform, display,
modify, make derivative works of and Merge, the IDX Products,
in whole or in part, only as they may be Merged into the XXXX
System, and only to Persons that are not Stentor License
Exclusion Customers. Stentor License Exclusion Customers
include all IDXrad Customers and LastWord Customers except:
(i) any IDXrad Customer or LastWord Customer that is a
Pre-existing Stentor Customer; (ii) any IDXrad Customer or
LastWord Customer that does not use IDXrad or LastWord as
their primary radiology information system or primary clinical
information system, respectively; and (iii) any IDXrad
Customer or LastWord Customer that becomes a Stentor Customer
prior to becoming an IDXrad Customer or LastWord Customer.
Notwithstanding the limited scope of this license, Stentor may
communicate with, and demonstrate, perform and display the
XXXX System to, Stentor License Exclusion Customers to make
them aware of the availability of the XXXX System from IDX and
to provide information to Stentor License Exclusion Customers
regarding the XXXX System. Stentor License Exclusion Customers
that exist as of the Effective Date are listed on the initial
Stentor License Exclusion Customer List, attached hereto as
Exhibit B. IDX shall provide an updated Stentor License
Exclusion Customer List to Stentor within fifteen (15) days of
the end of each calendar quarter. If the parties determine
that any customers not listed on the initial Stentor License
Exclusion Customer List meet the definition of a Stentor
License Exclusion Customer, then any such customers shall be
added to the Stentor License Exclusion Customer List, or if
the parties determine that any customers listed on the initial
Stentor License Exclusion Customer List do not meet the
definition of a Stentor License Exclusion Customer, then any
such customers shall be removed from the Stentor License
Exclusion List.
5.3.2 IDX also hereby grants to Stentor a non-exclusive,
non-transferable (except as provided in Sections 2.4 and
10.14) term license to sublicense one or more Distribution
Partners to market and sublicense, and in connection therewith
to sell, offer for sale, copy, use, distribute, perform, and
display, the IDX Products, in whole or in part, only as they
may be Merged into the XXXX System, to any Person, including
Stentor License Exclusion Customers.
5.4 Stentor Products. Stentor hereby grants to DX a non-exclusive,
non-transferable (except as provided in Sections 2.4 and 10.14) term
license to market and sublicense (including through one or more
Distribution Partners acceptable to Stentor), and in connection
therewith to sell, offer for sale, copy, use, distribute, perform,
display, modify, make derivative works of and Merge, the Stentor
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Products, in whole or in part, only as they may be Merged into the
XXXX System. From the Effective Date until December 31, 2001,
Stentor's license granted to IDX in Section 5.4 only extends to
IDXrad Customers and LastWord Customers. IDXrad Customers and
LastWord Customers that exist as of the Effective Date are listed on
the initial IDXrad and LastWord Customer List, attached hereto as
Exhibit B. Any Person that becomes an IDXrad Customer or LastWord
Customer during the Term shall be added to the IDXrad and LastWord
Customer List. After December 31, 2001, Stentor's license granted to
IDX in Section 5.4 extends to any Person. IDX shall provide an
updated IDXrad and LastWord Customer List to Stentor within fifteen
(15) days of the end of each calendar quarter. If the parties
determine that any customers listed on the initial IDXrad and
LastWord Customer List fail to meet the definition of an IDXrad
Customer or LastWord Customer, then such customers shall be removed
from the IDXrad and LastWord Customer List, or if any customers not
listed on the initial IDXrad and LastWord Customer List do meet the
definition of an IDXrad Customer or LastWord Customer, then such
customers shall be added to the IDXrad and LastWord Customer List.
5.5 Territory. This Agreement and the licenses granted hereunder shall
apply to the parties only in the [**] (the "Territory"); provided
that, notwithstanding any restriction to the contrary in this
Agreement, Stentor may enter into an Agreement with another Person
to Provide a medical imaging management system for radiology
practices and departments (that is not the XXXX System) in the [**]
if (i) it is necessary for Stentor to do so in order for Stentor to
enter into an agreement encompassing other [**] countries that are
not at that time included in the Territory and (ii) Stentor offers
IDX the same terms offered any other Person in the [**] if such
terms are more favorable than the terms offered hereunder. Neither
party may distribute or sell the XXXX System in any country not
included in the Territory without the written consent of the other,
which shall not be unreasonably withheld. If a party desires to
extend the Territory to another country, it shall give the other
party written notice of its request to do so. The party requested to
extend the Territory to another country shall have one month from
the date of its receipt of such written notice to elect to extend
its performance and six months from such election to implement any
development or business requirements necessary to extend its
performance under this Agreement to such country. If a party
withholds its consent, then the other party may enter into an
agreement with any other Person with respect to the development and
distribution and sale of a system similar to the XXXX System in such
country; provided that this Agreement shall remain in full force and
effect in the Territory.
5.6 Expansion of Licenses.
5.6.1 If Stentor notifies IDX that a Stentor License Exclusion
Customer is interested in licensing a XXXX System, but not
from IDX, then a representative of Stentor's senior management
who is at least a Vice President and a representative of IDX's
senior management who is at least
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a Vice President shall jointly contact that Stentor License
Exclusion Customer in regard to licensing a MINIS System. If
the Stentor License Exclusion Customer does not express an
interest in licensing a XXXX System from IDX within thirty
(30) days of such joint contact, as determined by a subsequent
joint contact by the Stentor and IDX representatives, then
such customer shall not be considered an Stentor License
Exclusion Customer for purposes of the limitation on the
license granted to Stentor in Section 5.3.1 of this Agreement.
5.6.2 If at the end of any calendar year the number of IDXrad
Customers that became IDXrad Customers in that year that have
also licensed a XXXX System is less than [**] percent [**]% of
the total number of IDXrad Customers that became IDXrad
Customers in that year, then the new IDXrad Customers that
have not also licensed a XXXX System shall not be considered
Stentor License Exclusion Customers for purposes of the
limitation on the license granted to Stentor in Section 5.3.1
of this Agreement.
5.6.3 If, prior to December 31, 2001, IDX notifies Stentor that a
Person that is neither an IDXrad Customer or LastWord Customer
is interested in licensing a XXXX System, but not from
Stentor, then a representative of Stentor's senior management
who is at least a Vice President and a representative of IDX's
senior management who is at least a Vice President shall
jointly contact that prospect in regard to licensing a XXXX
System. If the prospect does riot express an interest in
licensing a XXXX System from Stentor within thirty (30) days
of such joint contact, as determined by a subsequent joint
contact by the Stentor and IDX representatives, then the
license granted to IDX pursuant to Section 5.4 shall extend to
such prospect
6. MARKETING OF THE XXXX SYSTEM
6.1 Certain Restrictions on Marketing Rights.
6.1.1 Restrictions on Stentor. Stentor shall not (i) Provide to any
Person located in the Territory a medical imaging management
system for radiology practices or departments other than the
XXXX System; or (ii) authorize or license [**], or the
successor of any of them, to Provide the XXXX System or the
Stentor Products in the Territory. If in a particular
instance, the use of ConnectR in the XXXX System as a means to
provide data exchange between the XXXX System and a non-IDX
system would be technologically impractical, then Stentor may
modify the XXXX System in such instance to use a component
other than ConnectR as a means to provide such data exchange.
The restriction set forth in this Section 6.1.1(i) shall not
apply to (a) Stentor's sale or license of the Stentor
Component Technology to the extent that the Stentor Component
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Technology is not used in a medical imaging management system
that includes substantially similar functionality to the XXXX
System or (b) Stentor's sale or license to non-IDXrad
Customers and non-LastWord Customers of a version of iSite
that contains only the workflow, worklist and API
functionality of the current iSite version 1.1.1 offering
(i.e. it shall contain no third party vendor workflow or
reconciliation built into iSite), and that cannot be used by a
third party to build functionality competitive to the XXXX
System other than the functionality substantially similar to
that contained in the current iSite version 1.1.1.
6.1.2 Restrictions on IDX. IDX shall not (i) Provide to any Person
located in the Territory a medical imaging management system
for radiology practices or departments other than the XXXX
System, except that this restriction shall not prohibit IDX
from cooperating with any Person that Provides products and
services similar to the Stentor Products for the purpose of
deploying such products and services to implement a medical
imaging management system, on a case-by-case basis to any
IDXrad Customer or LastWord Customer, including without
limitation by development of data exchange or interfaces, if
such IDXrad. Customer or LastWord Customer requests IDX to do
so; (ii) Provide Imaging Suite to any Person in the Territory
except (A) IDXrad Customers or LastWord Customers and (B) IDX
Customers other than IDXrad Customers and LastWord Customers
to enable other IDX products to distribute medical images, if
only a subset of the components of Imaging Suite is used and
the subset of components operates as a background service,
such that there is no display of the Imaging Suite brand to
the customer; or (iii) market the XXXX System except through
IDX's RISD sales organization or with the active involvement
of a member of IDX's RISD sales organization in any creation
of a sales quote, configuration, or sales demonstration.
6.1.3 Imaging Suite Workflow Engine. The restrictions contained in
Section 6.1.2 shall not apply to the "workflow engine"
component of the Imaging Suite when used or licensed by IDX
separate from the other components of Imaging Suite as Merged
with any other MX application and without the display of the
Imaging Suite brand.
6.2 Marketing Plan; Joint Marketing Duties.
6.2.1 Marketing Plan. Within thirty (30) days of the Effective Date,
IDX and Stentor shall mutually develop and, during the Term,
shall regularly update a marketing plan for marketing the XXXX
System in general (the "Marketing Plan"). The Marketing Plan
shall obligate IDX to make commercially reasonable efforts to
make presentations about the XXXX System to appropriate
representatives of all of IDX's IDXrad Customers and LastWord
Customers before December 31, 2001, and shall describe
detailed activities and responsibilities (including without
limitation, with respect to implementation) and sales
forecasts over the initial two-year
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period of this Agreement, but shall be updated not less
frequently than every three (3) months. Not less than three
(3) months prior to the expiration of the initial two-year
period, and thereafter three (3) months prior to the
expiration of each successive two-year period of the Initial
Term, the parties shall commence work on a revised Marketing
Plan for the following two-year sales forecast period. The
initial and each revised two-year Marketing Plan shall be
executed by the parties and shall be subject to the terms of
this Agreement. Should the parties have failed to agree upon
and execute a revised Marketing Plan at the time of the
expiration of the then current Marketing Plan, the parties
shall continue to perform under the terms of the then current
Marketing Plan until such time as the parties shall agree upon
a revised Marketing Plan. When marketing the XXXX System to
IDXrad Customers and LastWord Customers, IDX shall be
responsible for hardware used during any pilot period offered
by IDX. The Marketing Plan shall include sales goals for sales
of the XXXX System to IDXrad Customers as set forth on Exhibit
C.
6.2.2 Joint Marketing Materials. At their joint expense, shared
equally, Stentor and IDX shall develop and produce product
marketing documentation and materials similar in kind and
quality to that currently provided by Stentor and DX to their
respective sales prospects for the purpose of promoting and
marketing the M]MS System.
6.2.3 User Groups and Trade Shows. Stentor shall provide for
featured participation by IDX at Stentor's user group meetings
involving the Stentor Products, and IDX shall provide for
featured participation by Stentor at IDX's user group meetings
involving the IDXrad and LastWord products. In accordance with
the Marketing Plan, Stentor and IDX shall publicize the
alliance created hereby at appropriate trade shows.
6.2.4 Non-revenue Arrangements. IDX and Stentor shall each cooperate
with the other on any non-revenue generating implementations
of the XXXX System for public relations or research purposes,
provided that neither party shall be obligated to provide any
implementation or support services for a non-revenue
generating implementation initiated by the other party.
6.3 Use of Stentor Names and Marks. IDX may use the following names and
marks in all customer communications pertaining to the marketing,
support and distribution of the XXXX System and in accordance with
Stentor's reasonable branding standards in effect from time to time:
Stentor, iSite, iSyntax, and DTS. IDX shall use the xxxx "Stentor"
and applicable Stentor Product marks, without alteration of the
graphical representation of such marks specified by Stentor, in
connection with all sales of the XXXX System containing any Stentor
Products in addition to any other marks or tradenames that IDX
chooses to use in connection with the XXXX System. Stentor shall
provide to IDX, for IDX's use in accordance with this Section,
additional proprietary trademarks, as developed, for the Stentor
Products.
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6.4 Use of IDX Names and Marks. Stentor may use the following names and
marks in all customer communications pertaining to the marketing,
support and distribution of the XXXX System and in accordance with
IDX's reasonable branding standards in effect from time to time:
Imaging Suite and ConnectR. Stentor shall use the xxxx "Imaging
Suite", without alteration of the graphical representation of such
xxxx specified by IDX, in connection with all sales of the XXXX
System and Stentor Products containing the Imaging Suite in addition
to any other marks or tradenames that Stentor chooses to use in
connection with the XXXX System and Stentor Products. IDX shall
provide to Stentor, for Stentor's use in accordance with this
Section, additional proprietary trademarks, as developed, for the
IDX Products.
6.5 License Terms. Each party shall have the authority, to the extent
expressly provided in this Agreement, to market, sell, resell and
distribute the XXXX System pursuant to its own terms and conditions
so long as such terms and conditions contain provisions as
protective of the other party as those set out in Exhibit D. Each
party shall obligate its Distribution Partners to license the XXXX
System under terms that are protective as those set forth in Exhibit
D.
7. COMPENSATION
7.1 Compensation; Payment. IDX and Stentor shall be entitled to
compensation for their respective licensing to the other of their
respective rights and technology incorporated into the XXXX System
as set forth in Exhibit E. The Royalties set forth in Exhibit E only
apply to the XXXX System. Stentor hereby warrants that the
compensation retained by or paid to any Person authorized by Stentor
to distribute the XXXX System shall not exceed [**]% of Net Revenue
for an existing customer of the Person and [**]% of Net Revenue for
other customers.
7.2 Payments. Any payment to be made by a party pursuant to this
Agreement shall be made no later than sixty (60) days after payment
is due from the customer on which the payment is based, and shall be
made by delivery of a check, payable to the order of the party
entitled to payment or by wire transfer of immediately available
funds to an account designated by such party.
7.3 Late Fees. Each party agrees to pay late fees equal to one and
one-half percent (1 1/2%) per month on all amounts due but not paid
within the time provided in Section 7.2.
7.4 Certification; Independent Auditor. Not later than the fifteenth
(15th) day after the end of each calendar quarter, each party shall
deliver to the other a statement setting forth the customers to
which the XXXX System was licensed in such quarter and the
calculation of the payments due for the previous quarter, or if none
so stating, and signed by an executive officer of the party
furnishing the statement. Stentor and DX agree to permit the other
party, annually at its own expense, to engage a mutually acceptable
independent auditor to confirm the accuracy of any payments made
under this Agreement. Stentor and MX each
12
agree to maintain books and records of its sales required to conduct
such audit and to cooperate with the independent auditor in auditing
such books and records.
8. SERVICES
8.1 Customer Implementation and Support Services. Each of IDX and
Stentor shall implement the XXXX System for their respective
customers without the assistance of the other. Stentor and MX shall
each provide to the other party reasonable assistance in the
distribution of hardware from. those hardware manufacturers with
which they each have reseller or distributor relationships so long
as doing so does not violate the applicable reseller or distributor
agreement or applicable law. IDX shall provide the first line of
support for all customers to which IDX has sold the XXXX System,
provided that Stentor shall provide the second line of support for
any issue requiring access to or modification of the Source Code to
any Stentor Product. Stentor shall provide the first line of support
for all customers to which Stentor has sold the XXXX System,
provided that IDX shall provide the second line of support for any
issue requiring access to or modification of the Source Code to any
DX Product. Stentor and IDX shall each comply with the other party's
implementation requirements with respect to the other party's
products and each shall use commercially reasonable efforts to
provide support for its products in accordance with its internal
support procedures. IDX and Stentor shall each provide the other
sufficient training to ensure proper implementation of each party's
component portions of the XXXX System.
8.2 Service Quality. All support services provided by either party shall
be performed in a good and workmanlike manner and consistent with
standards generally applicable in the healthcare clinical
information systems industry and consistent with the reasonable and
customary support standards maintained in the healthcare clinical
information systems industry.
8.3 Uptime Performance Guarantee.
8.3.1 Stentor Uptime Performance Guarantee. After March 31, 2001, if
Stentor elects to offer an "uptime performance guarantee" and
a defect in an IDX Product is the sole cause of "unscheduled
downtime" (as defined in the Stentor Uptime Performance
Guarantee attached hereto as Exhibit F), then DX shall use its
commercially reasonable efforts to cure such defect. IDX's
obligation to use its commercially reasonable efforts to cure
such defect shall be Stentor's sole and exclusive remedy, in
lieu of any damages that might be caused by breach of this
Agreement arising from or related to unscheduled downtime
caused by a defect in an IDX Product.
8.3.2 IDX Uptime Performance Guarantee. If IDX elects to offer an
"uptime performance guarantee" substantially equivalent to the
Stentor Uptime Performance Guarantee, and a defect in a
Stentor Product is the sole cause of "unscheduled downtime"
(as defined in the IDX uptime performance guarantee), then
Stentor shall use its commercially reasonable efforts to
13
cure such defect. Stentor's obligation to use its commercially
reasonable efforts to cure such defect shall be Stentor's sole
and exclusive remedy, in lieu of any damages that might be
caused by breach of this Agreement arising from or related to
unscheduled downtime caused by a defect in an Stentor Product.
8.4 Reference Sites. IDX agrees to introduce Stentor to Stentor License
Exclusion Customers reasonably acceptable to both IDX and Stentor so
that Stentor may request that such customers act as reference sites
for the XXXX System for potential Stentor XXXX System prospects.
9. WARRANTIES
THE PARTIES MAKE THE FOLLOWING REPRESENTATIONS AND WARRANTIES, ALL OF
WHICH SHALL BE FOR AND COMPLETE AS OF THE EFFECTIVE DATE AND THE DATE OF ANY AND
ALL DELIVERIES HEREIN. EXCEPT FOR THE EXPLICIT WARRANTIES MADE IN THIS
AGREEMENT, THERE ARE NO WARRANTIES MADE BY EITHER PARTY IN CONNECTION WITH THE
SUBJECT MATTER OF THIS AGREEMENT AND EACH PARTY SPECIFICALLY DISCLAIMS ANY
IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND TITLE.
9.1 IDX Warranties.
9.1.1 Encumbrances. The IDX Products shall be free and clear of all
liens, restrictions, claims, charges, security interests, or
other encumbrances of any nature whatsoever which might affect
or adversely impact on Stentor's use of the IDX Products as
permitted under this Agreement.
9.1.2 Ownership; Right to License. IDX owns or otherwise has
adequate rights to make the grants of the licenses to the IDX
Products to Stentor hereunder and possesses all rights and
interests in the IDX Products necessary to enter into this
Agreement; provided that Stentor acknowledges that licenses to
certain products of Microsoft, Oracle and Amzi used with the
IDX Products must be obtained directly by Stentor or customers
to which Stentor sells the XXXX System.
9.1.3 No Infringement. IDX Products and all components thereof do
not infringe upon the intellectual property rights, including
without limitation the patent, copyright, trademark or trade
secret rights, of any third parties. The sole and exclusive
remedy for breach of this warranty shall be as set forth in
Section 10.6.
9.1.4 Functional Performance. The DX Products shall perform
substantially as described in their documentation.
14
9.1.5 Anti-Virus Testing. IDX represents and warrants that the IDX
Products will be tested prior to shipping for known computer
viruses in accordance with commercially reasonable industry
standards, including the use of industry standard anti-virus
detection software, and IDX represents and warrants that the
IDX Products shall be free of viruses.
9.2 Stentor Warranties.
9.2.1 Encumbrances. The Stentor Products shall be free and clear of
all liens, restrictions, claims, charges, security interests,
or other encumbrances of any nature whatsoever which might
affect or adversely impact on IDX's use of the Stentor
Products as permitted under this Agreement.
9.2.2 Ownership; Right to License. Stentor owns or otherwise has
adequate rights to make the grants of the licenses to the
Stentor Products to IDX hereunder and possesses all rights and
interests in the Stentor Products necessary to enter into this
Agreement.
9.2.3 No Infringement. Stentor Products and all components thereof
do not infringe upon the intellectual property rights,
including without limitation the patent, copyright, trademark
or trade secret rights, of any third parties. The sole and
exclusive remedy for breach of this warranty shall be as set
forth in Section 10.6.
9.2.4 Functional Performance. The Stentor Products shall perform
substantially as described in their documentation.
9.2.5 Anti-Virus Testing. Stentor represents and warrants that the
Stentor Products will be tested prior to shipping for known
computer viruses in accordance with commercially reasonable
industry standards, including the use of industry standard
anti-virus detection software, and Stentor represents and
warrants that the Stentor Products shall be free of viruses.
10. MISCELLANEOUS
10.1 Confidentiality.
10.1.1 Confidential Information. Each of IDX and Stentor will
receive or learn from, information, both orally and in
writing, concerning the business of Stentor or IDX,
respectively, including, without limitation, financial,
technical and marketing information, data, and information
related to the development of technology and services relating
to business plans, customers, and markets, which information
is deemed, in the case of Stentor, proprietary to Stentor and,
in the case of IDX, proprietary to DX. Both parties hereby
agree, as set forth below, to protect such information,
whether furnished before, on or after the date of this
Agreement, as it protects its own similar confidential
information, but never less than by commercially reasonable
efforts, and not to disclose such information to
15
anyone except as otherwise provided for in this Agreement.
Such information, in whole or in part, together with analyses,
compilations, programs, reports, proposals, studies or any
other documentation prepared by the parties, as the case may
be, which contain or otherwise reflect or make reference to
such information, is hereinafter referred to as "Confidential
Information". Each party hereby agrees that the Confidential
Information will be used solely for the purpose of this
Agreement and not for any other purpose. Each party further
agrees that any Confidential Information pertaining to the
other party is the sole and exclusive property of such other
party, and that the receiving party shall not have any right,
title, or interest in or to such Confidential Information
except as expressly provided in this Agreement. Each party
further agrees to protect and not to disclose to anyone
(except as provided in this Agreement) for any reason
Confidential Information pertaining to the other party;
provided, however, that: (a) such Confidential Information may
be disclosed to the receiving party's respective officers,
directors, employees, agents, or representatives
(collectively, "Representatives") on a "need to know" basis
for the purpose of this Agreement on the condition that (i)
each of such Representatives will be informed by the receiving
party of the confidential nature of such Confidential
Information and will agree to be bound by the terms of this
Agreement and not to disclose the Confidential Information to
any other person and (ii) each party agrees to accept full
responsibility for any breach of this Section 10.1.1 by its
respective Representatives; and (b) Confidential Information
pertaining to the other party may be disclosed upon the prior
written consent of the other party. Each party hereby agrees,
upon the request of the other party, to promptly deliver to
the other party at the other party's cost the Confidential
Information pertaining to such other party, without retaining
any copies thereof. Specifically and without limitation, each
party agrees to notify the other party promptly in writing
upon any officer or director learning of any unauthorized
disclosure or use of the Confidential Information.
10.1.2 Non-Confidential Information. The term "Confidential
Information" shall not include any information: (i) which at
the time of disclosure or thereafter is generally available to
or known by the public (other than as a result of a disclosure
directly or indirectly by the receiving party); (ii) is
independently developed by the receiving party, without
reference to or use of, the Confidential Information of the
other party; (iii) was known by the receiving party as of the
time of disclosure without a breach of confidentiality; (iv)
is lawfully learned from a third party not under obligation to
the disclosing party; or (v) is required to be disclosed
pursuant to a subpoena, court order or other legal process,
whereupon the receiving party shall provide prompt written
notice to the other party prior to such disclosure.
16
10.2 No-Solicitation. During the first year of the term of this
Agreement; neither party, nor any Affiliate within its
Control, shall solicit to hire any individual who had been in
the employ of the other party or any of the other party's
Affiliates until such time as one (1) year has passed since
such individual was in the employ of the other party.
10.3 Regulatory Matters. Each party shall adopt, implement, and
maintain appropriate and compliant policies, procedures, and
practices necessary to comply with laws and regulations
(including without limitation the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA") and the Federal Food,
Drug and Cosmetic Act (the "FDA Act")) applicable to it in its
business and applicable to it as a business partner of a
customer of the other to whom products or services are
provided under this Agreement. The parties agree to amend this
Agreement to contain any provisions necessary to be included
as a result of such business partner status. Each party agrees
to timely develop and include in its respective products
covered by this Agreement the functionality required to
support the minimum necessary standards applicable users of
its products as required by HIPAA.
10.4 No Consequential Damages. In no event shall either party or
any Affiliate of either party be liable hereunder for any
consequential, special, incidental, punitive or indirect
damages (including without limitation loss of profit, revenue,
business opportunity or business advantage), whether based
upon a claim or action of tort, contract, warranty,
negligence, strict liability, breach of statutory duty, or any
other legal theory or cause of action, even if advised of the
possibility of such damages.
10.5 Limitation of Liability. Neither party shall be liable to the
other for damages or costs under this Agreement in excess of
payments received from the other under this Agreement;
provided that this limitation shall not apply to either
party's indemnification obligation pursuant to Section
10.6(iii), and further provided that the limitation of
liability applicable to either party's indemnification
obligation pursuant to Section 10.6(i) shall be an aggregate
of Ten Million Dollars ($10,000,000) and each party shall
carry liability insurance against all risks sufficient to
cover such indemnification obligation. Each party must provide
certificates of such insurance coverage upon request of the
other and shall not change or alter such coverage without
notice to the other party.
10.6 Indemnification. Each party (an "Indemnifying Party") will
indemnify the other party, its officers, employees, and agents
(each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against, and hold each Indemnified
Party harmless from, all claims, suits, judgments, losses,
damages, fines or costs (including reasonable legal fees and
expenses) ("Losses") resulting from any claim, suit, or demand
by any third party ("Third Party Claim") for injuries to or
deaths of persons or loss of or damage to property arising out
of: (i) the Indemnifying Party's products or services as
marketed by the Indemnified Parties, unless the Indemnified
Parties shall have acted outside the scope of their rights
17
under this Agreement; (ii) the Indemnifying Party's
performance or willful misconduct of the Indemnifying Party,
its employees, officers, or agents in connection with the
Indemnifying Party's performance, of this Agreement, except to
the extent caused by the negligence of any Indemnified Party,
and (iii) that the Indemnifying Party's products, or any
component thereof, whether used alone or in combination with
any other item as intended, designed, suggested or induced by
the Indemnifying Party or its agents, infringes or violates
any patents, copyrights, trademarks, trade secrets, licenses,
or other proprietary rights of any third party.
10.6.1 The Indemnifying Party's obligations under this
Section 10.6 will survive the termination of this
Agreement.
10.6.2 Each Indemnified Party shall give an Indemnifying
Party prompt written notice of any Third Party Claim
of which such Indemnified Party has knowledge
concerning any Losses as to which such Indemnified
Party may request indemnification hereunder. If the
Indemnifying Party acknowledges in writing its
obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from
such Third Party Claim, then the Indemnifying Party
shall be entitled to assume and control the defense
of such Third Party Claim at its expense and through
counsel of its choice if it gives notice of its
intention to do so to the Indemnified Party within
five (5) days of the receipt of such notice from the
Indemnified Party; provided, however, that if there
exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the
judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to
represent both the Indemnified Party and the
Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, at the expense
of the Indemnifying Party. In the event the
Indemnifying Party exercises the right to undertake
any such defense against any such Third Party Claim
as provided above, the Indemnified Party shall
cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party, at the
Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in the
Indemnified Party's possession or under the
Indemnified Party's control relating thereto as is
reasonably required by the Indemnifying Party.
Similarly, in the event the Indemnified Party is,
directly or indirectly, conducting the defense
against any such Third Party Claim, the Indemnifying
Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified
Party, at the Indemnified Party's expense, all such
witnesses, records, materials and information in the
Indemnifying Party's possession or under the
Indemnifying Party's control relating thereto as is
reasonably required by the Indemnified Party. No such
Third Party Claim may be settled by the Indemnifying
Party without the prior written consent of the
Indemnified Party.
18
10.6.3 In no event shall the Indemnifying Party be liable to
an Indemnified Party for any indirect, incidental,
special, punitive, exemplary or consequential damages
arising out of or otherwise relating to this
Agreement, even if the Indemnifying Party has been
advised of the possibility or likelihood of such
damages.
10.6.4 The Indemnifying Party's obligations to indemnify as
set forth in Section 10.6(iii) shall not apply to any
claim to the extent that it arises from (i) any
modifications, changes, additions, or enhancements to
the Indemnifying Party's products that have not been
made directly by the Indemnifying Party or have not
been made at its express direction or under its
direct oversight, control or supervision, (ii) any
such modifications made by the Indemnifying Party at
the request or to the specification of the
Indemnified Party, the Indemnified Party's Customers,
or any of their agents.
10.7 Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10.8 Further Assurances and Documents. IDX and Stentor shall take
all actions and do all things, including without limitation
the execution and delivery of instruments and documents,
necessary to effectuate the purposes and intent of this
Agreement.
10.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be
given or made (and shall be deemed to have been duly given or
made upon receipt) by delivery in person, by courier service,
by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance
with this Section 10.9):
(a) if to Stentor:
Stentor, Inc.
000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0X
Xxxxx Xxx Xxxxxxxxx, XX 00000
Attention: Oran Muduroglu
Facsimile: 000-000-0000
19
(b) if to DX:
IDX Systems Corporation
0000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Facsimile: 000-000-0000
With a copy to: General Counsel at the same
address
10.10 Public Announcements. Except as required by law, governmental
regulation or by the requirements of any securities exchange
on which the securities of a party hereto are listed, no party
to this Agreement shall make, or cause to be made, any press
release or public announcement, not including routine
advertisements subsequent to an initial joint announcement, in
respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without
the prior written consent of the other party, consent which
shall not be unreasonably withheld, and the parties shall
cooperate as to the timing and contents of any such press
release or public announcement.
10.11 Headings. The descriptive headings contained in this Agreement
are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
10.12 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law,
governmental regulation or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
10.13 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and
undertakings, both written and oral, with respect to the
subject matter hereof.
10.14 Assignment. This Agreement shall be binding upon the parties
and their respective successors, representatives and permitted
assigns and their Affiliates Controlled by them, respectively.
Except as provided in Section 2.4, neither party may assign
this Agreement without the prior written consent of the other
party, except that either party hereto may assign its rights
hereunder to an Affiliate of such party and IDX may assign
this Agreement to any Person that acquires all or
substantially all of the assets of IDX's Radiology Information
Systems Division
20
and IDX shall be relieved of any obligation or liability
hereunder. If IDX shall sell or transfer any of its assets,
other than the assets of IDX's Radiology Information Systems
Division, to a Person that is not an Affiliate of IDX, then
such Person shall not have any obligations or liabilities
under this Agreement and the assets transferred shall not be
encumbered by or subject to this Agreement in any way.
10.15 No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and
their permitted assigns and successors and nothing herein,
express or implied, is intended to or shall confer upon any
other person or entity, any legal or equitable right, benefit
or remedy of any nature whatsoever under or by reason of this
Agreement.
10.16 Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by, or on behalf of,
each of the parties.
10.17 Governing Law. This Agreement shall be governed by the laws of
the State of California without regard to its conflict of laws
provisions.
10.18 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to
be an original but all of which taken together shall
constitute one and the same agreement.
10.19 Dispute Resolution. If a dispute, controversy; or claim
arising out of or related to this Agreement or with the
relationship of the parties arises, then the parties shall
attempt to resolve the dispute by means of the procedure set
forth in this Section. The party believing itself aggrieved
(the "Requesting Party") will call for progressive management
involvement in the negotiation of the dispute by notice to the
other party. Such a notice will be without prejudice to the
Requesting Party's right to any other remedy permitted by this
Agreement. The parties will use their best efforts to arrange
personal meetings or telephone conferences as needed, at
mutually convenient times and places, between negotiators for
the parties at the following successive management levels,
each of which will have a period of allotted time as specified
below in which to attempt to resolve the dispute:
Level Stentor IDX Allotted Time
----- ---------------------- ---------------------- ----------------
First Stentor Vice President Vice President of 10 Business Days
Development for RISD
Second CEO General Manager of RISD 10 Business Days
Third CEO President 30 Days
The allotted time for the first-level negotiators will begin
on the effective date of the Requesting Party's notice. If a
resolution is not achieved by negotiators at any
21
given management level at the end of their allotted time, then
the allotted time for the negotiators at the next management
level, if any, will begin immediately. If a resolution is not
achieved by negotiators at the final management level within
their allotted time, then the parties' CEO's shall engage in a
mediation session using one or more third-party mediators
mutually acceptable to the parties within thirty (30) days.
The dispute resolution requirements set forth in this Section
10.19 shall not apply to claims arising out of or related to:
(a) any infringement or misappropriation of Stentor's or IDX's
Intellectual Property, and (b) any violation of the
confidentiality obligations set forth in Section 10.1.
10.20 Waiver of Jury Trial. Each of the parties hereto irrevocably
and unconditionally waives trial by jury in any legal action
or proceeding relating to this Agreement or the transactions
contemplated hereby and for any counterclaim therein.
10.21 No Joint Venturer Status. None of the provisions of this
Agreement is intended to create, nor shall any provision in
this Agreement be deemed or construed to create, any
relationship between Stentor and IDX other than that of
independent entities contracting with each other under this
Agreement solely for the purpose of effecting the provisions
of this Agreement. Neither of the parties, nor any of their
employees, shall be construed to be the partner, joint
venturer, agent, employer or representative of the other.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized signatories
thereunto duly authorized as of the day and year first above written.
IDX SYSTEMS CORPORATION STENTOR, INC.
By: __________________________________ By: _______________________________
[Signature of Authorized Agent] [Signature of Authorized Agent]
Print Name and Title: Print Name and Title:
22
SCHEDULE 1
TO
DEVELOPMENT AND DISTRIBUTION AGREEMENT
DEFINITIONS
"AFFILIATE" means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such specified Person.
"CHANGE OF CONTROL" means any event, transaction or occurrence, with the
exception of an initial public offering, as a result of which either of IDX or
Stentor (i) shall cease to own or control, directly or indirectly through any of
its respective Affiliates, a majority of the voting rights associated with
ownership of its respective voting stock or (ii) shall cease to have the
ability, directly or indirectly, through one or more of its Affiliates, to elect
a majority of its respective board of directors.
"CONNECTR" means the product currently marketed by IDX under the trademark
"ConnectR."
"CONTROL" including the terms "Controlling," "Controlled by," and "under common
Control with," means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise, with the
exception of an initial public offering.
"DEVELOPMENT PLAN" means the Development Plan to be created pursuant to the
Development and Distribution Agreement.
"IDIAGNOSTIC VIEWER" means the product to be developed under the Development
Plan and currently referred to as iDiagnostic Viewer.
"DISTRIBUTION PARTNER" means any Person that has the right to market,
cooperatively market, distribute, resell, sublicense, license, sell or otherwise
provide a party's products or services, including by way of example and not in
limitation, any reseller, distributor, licensee, customer, contractor, service
provider, co-marketer, outsourcing vendor, or other information technology
company.
"DYNAMIC TRANSFER SYNTAX" or "DTS" means the product currently marketed by
Stentor under the marks Dynamic Transfer Syntax or DTS.
"IDX" means IDX Systems Corporation, IDX Information Systems Corporation, IDX
Investment Corporation, and their present and future Affiliates.
"IDX CUSTOMER" means any customer of DX that is licensed to use any product sold
by DX and any and all entities that have access to such product through such
customer, including without limitation IDXrad Customers and LastWord Customers.
1
"IDX DRIVERS" means the DX modality drivers for downloading demographics and
exam information to the imaging scanners in accordance with DICOM Modality
Worklist standard, and the uploading of study specific information from the
imaging scanner to the Imaging Suite in accordance with the DICOM Perform
Procedure Step standard.
"IDX PRODUCTS" means the products currently marketed as Imaging Suite and
ConnectR, the DX Drivers, and any derivative works or future versions thereof.
"IDXRAD" means the products currently marketed by DX under the xxxx IDXrad and
future versions thereof containing substantially similar functions.
"IDXRAD CUSTOMER" means (i) any customer of IDX that is licensed to use IDXrad
and (ii) any and all entities that have access to IDXrad databases through such
customer.
"IMAGING SUITE" means the product currently marketed by DX under the xxxx
Imaging Suite.
"IMAGING SUITE LITE VERSION" means a version of Imaging Suite for installation
by Stentor at a non-IDXrad or LastWord site that does not require the
installation and configuration of the IDXrad system, but that can be operated in
concert with a pre-existing non-IDX radiology information system or healthcare
information system.
"ISITE" means the product currently marketed by Stentor under the xxxx iSite.
"ISYNTAX SERVER" means the product currently marketed by Stentor under the xxxx
iSyntax Server.
"IVAULT" means the product to be developed under the Development Plan and
currently referred to as the iVault.
"INTELLECTUAL PROPERTY" means, without limitation, know-how, trade secrets,
inventions (whether or not patentable), ideas, materials, discoveries,
techniques, plans, designs, formulas, processes, invention disclosures,
technology, data or information, software and documentation therefor, hardware,
source code (including all programmers' notes), procedures, methods, works and
other documentation and information and the right. to xxx and recover damages
for past, present and future infringement of such intellectual property.
"LASTWORD" means the product currently marketed by IDX under the trademark
LastWord and future versions thereof containing substantially similar functions.
"LASTWORD CUSTOMER" means (i) any customer of IDX that is licensed to use
LastWord and (ii) any and all entities that have access to LastWord databases
through such customer.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the business,
properties, results of operations, condition (financial or otherwise) of an
applicable Person (other than changes that are the result of economic factors
affecting the economy as a whole or changes that are the result of factors
generally affecting the specific industry or markets in which a party competes).
2
"MERGE" means the process of merging all or a portion of existing software or
documentation into other software or documentation or adding to existing
software or documentation, including without limitation by application program
interfaces, so that the resulting software or documentation contains
functionality that is substantially more or different from that of the existing
software or documentation.
"XXXX SYSTEM" means the medical imaging management system consisting of the
combination of both Imaging Suite and ConnectR and at least one of the Stentor
Products, as described in the Development Plan and on the diagram attached to
the Agreement as Exhibit G. The XXXX System shall not include any products,
features or functionality not described in either the Development Plan or the
diagram attached as Exhibit G.
"PERSON" means any individual, partnership, firm, corporation, association,
trust, limited liability company, limited liability partnership, unincorporated
organization or other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
"PRE-EXISTING STENTOR CUSTOMER" means any Stentor Customer that existed as of
the Effective Date of this Agreement.
"PROVIDE" means to market, sell, license, cooperatively market, or otherwise
distribute, including through one or more Distribution Partners.
"REGULATORY REQUIREMENTS" means all federal and state laws and regulatory
requirements applicable to the use by IDX, IDX Customers, Stentor, and Stentor
Customers of the XXXX System from time to time during the term of the
Development and Distribution Agreement, including without limitation those
applicable to billing and claims submittal, managed care, data transmission,
security and privacy, and program requirements generally applicable to
healthcare organizations, such as those involving accreditation.
"STENTOR COMPONENT TECHNOLOGY" means Stentor's proprietary technology to
distribute data and images, including enhancements and improvements thereto,
including, but not limited to, technology used in iSyntax to distribute
image(s), or portions thereof, by transforming the image(s) into a flexible
hierarchical representation and by distributing, to a client, only the transform
data necessary to reconstruct the portion(s) of the image(s) desired at the
client.
"STENTOR CUSTOMER" means any customer of Stentor that is licensed to use any
product sold by Stentor and any and all entities that have access to such
product through such customer, but shall not include any customer that is in an
evaluation period and not obligated to pay fees to Stentor for the Stentor
Product.
"STENTOR LICENSE EXCLUSION CUSTOMER" means all IDXrad Customers and LastWord
Customers except: (i) any IDXrad Customer or LastWord Customer that is a
Pre-existing Stentor Customer; (ii) any IDXrad Customer or LastWord Customer
that does not use IDXrad or LastWord as their primary radiology information
system or primary clinical information system, respectively; (iii) any IDXrad
Customer or LastWord Customer that becomes a Stentor Customer prior to becoming
an IDXrad Customer or LastWord Customer; or (iv) any IDXrad Customer or
3
LastWord Customer that ceases to remain a Stentor License Exclusion Customer
pursuant to Section 5.6.
"STENTOR PRODUCTS" means the products marketed by Stentor and currently known as
the iDiagnostic Viewer, DTS, iSite Viewer, iSyntax Server, iVault, any future
versions thereof, and any derivative works or future versions thereof.
4
EXHIBIT A
MINIMUM DEVELOPMENT REQUIREMENTS
[**]
EXHIBIT B
IDX CONFIDENTIAL AND PROPRIETARY
IDXrad and LastWord Customer List
IDX HOUSE ACCOUNTS LISTING STATE
IDXRAD CUSTOMERS
[**]
IDX SYSTEMS CORPORATION CONFIDENTIAL
Page 1
[**]
IDX SYSTEMS CORPORATION CONFIDENTIAL
Page 2
[**]
IDX SYSTEMS CORPORATION CONFIDENTIAL
Page 3
[**]
IDX SYSTEMS CORPORATION CONFIDENTIAL
Page 4
[**]
IDX SYSTEMS CORPORATION CONFIDENTIAL
Page 5
EXHIBIT C
Minimum Sales Goals
The Marketing Plan shall include the following minimum sales goals:
Sale of the MINIS System, or any component thereof, by either party to IDXrad
Customers or LastWord Customers as follows:
[**]
These sales goals assume that Stentor has developed iSite Version 2.0 as
described in the Development Plan and that it is available for general release
no later than March 31, 2001. The timing of these sales goals shall be delayed
by one month for each month or portion of a month that the general release of
iSite Version 2.0 is delayed beyond March 31, 2001.
EXHIBIT D
REQUIRED END USER AGREEMENT PROVISIONS
End user agreements shall contain provisions as protective of the parties as the
following provisions:
1. IN NO EVENT SHALL [IDX's/Stentor's] SUPPLIERS AND LICENSORS BE LIABLE FOR
ANY DAMAGES OF ANY KIND OR NATURE, INCLUDING DIRECT, INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL, ARISING OUT OF THE USE OF ANY
SOFTWARE SUPPLIED BY COMPANY, ITS SUPPLIERS OR LICENSORS. THE LICENSEE
UNDERSTANDS AND AGREES THAT THE SOFTWARE PROVIDED BY [IDX/Stentor] TO LICENSEE
CONTAINS SOFTWARE THAT IS THE COPYRIGHTED PRODUCT AND A TRADE SECRET OF
[IDX/Stentor] OR ITS SUPPLIERS AND LICENSORS, AND THAT LICENSEE WILL NOT USE ANY
SUCH SOFTWARE IN VIOLATION OF THE RESTRICTIONS CONTAINED IN THIS AGREEMENT AND
WILL NOT DISCLOSE THE SOFTWARE TO ANYONE OTHER THAN ITS EMPLOYEES OR AGENTS AS
REASONABLY NECESSARY FOR THE PURPOSE OF THIS AGREEMENT AND ON THE CONDITION THAT
IT ACCEPTS FULL RESPONSIBILITY FOR ANY BREACH HEREOF BY ANY SUCH INDIVIDUAL. THE
FOREGOING AGREEMENTS ARE FOR THE EXPRESS BENEFIT OF [IDX/Stentor], ITS SUPPLIERS
AND LICENSORS, AND MAY BE ENFORCED BY [IDX/Stentor], AND ITS SUPPLIERS AND
LICENSORS.
2. QUALIFIED MODALITY
[IDX/STENTOR] shall provide Customer a list of medical imaging equipment or
modalities ("Qualified Modalities") for Customer's use with the XXXX System
Software/Services. Customer shall contact [IDX/Stentor] immediately if any
additional modalities are added or a modification to an existing Qualified
Modality occurs. A modification to a Qualified Modality includes any type of
change, enhancement or upgrade to that modality, including software upgrades or
revisions. Customer accepts full responsibility for any failure or any other
adverse consequences that may occur if Customer uses XXXX System Software with
any modality other than a Qualified Modality.
3. SERVICE EQUIPMENT
Service Equipment: shall mean all equipment supplied to or used by Customer in
conjunction with the XXXX System Software/Services.
Access To Service Equipment: Customer shall provide remote network access to the
Service Equipment and XXXX System Software, including providing to [IDX/Stentor]
the necessary security information to access the Service Equipment over a
network. In addition, Customer shall provide to [IDX/Stentor] personnel physical
access to all Service Equipment and XXXX System Software subsequent to receipt
of reasonable notice by [IDX/Stentor].
E-Mail Services: The Customer shall allow outgoing e-mail from Service Equipment
either through the customers SMTP e-mail services or shall allow service
equipment to access the [IDX/Stentor] SMTP e-mail service.
November 15, 2000
1
No Modification to Service Equipment: Customer agrees not to modify, in any way,
or tamper with the Service Equipment and any software operating on the Service
Equipment. Customer may access Service Equipment during installation, in
accordance with specific instructions from [IDX/Stentor] personnel. In addition,
Customer may access Service Equipment for system administration of XXXX System
Software to assign user identifications and grant user passwords. Customer
agrees not to load any additional software on Service Equipment.
4. PROPRIATARY RIGHTS AND CONFIDENTIALITY
Ownership: Customer acknowledges and agrees that Stentor-IDX owns the sole and
exclusive worldwide right, title and interest in and to the XXXX System
Software/Services, and XXXX Documentation as well as all worldwide intellectual
property rights therein and all copies thereof, in whole and in part, subject
only to Customer's limited licensed rights to receive and use such XXXX System
Software/Services, and XXXX Documentation as permitted by this Agreement.
Duty of Confidentiality: To protect [IDX/Stentor] Proprietary Information,
Customer agrees that Customer will not decompile, reverse engineer, disassemble
or otherwise reduce the XXXX System Software/Services to a human perceivable
form or permit any other party to do so. Customer may not modify, adapt,
translate, rent, lease, sell, sublicense, loan, resell for profit, distribute,
time-share [except as either IDX or Stentor specifically allows customer to
allow access to third parties] or create any derivative works based upon, the
XXXX System Software/Services, and otherwise any and all information, regardless
of form, that is confidential, proprietary and/or a trade secret of
[IDX/Stentor] ("[IDX/Stentor] Proprietary Information") or any portion thereof
or permit any other party to do so.
Customer shall limit disclosure of [IDX/Stentor] Proprietary Information to its
employees who have a need to know the information in connection with the receipt
of the XXXX System Software/Services. Customer may permit members of its medical
community to observe operation of the XXXX System Software/Services on a limited
basis if they have a need to do so. In no event and under no circumstances shall
Customer reproduce, in any form, XXXX System Software and Documentation. In
addition, Customer shall not reproduce computer screen displays generated by the
iSiteTM client software. Customer shall not disclose [IDX/Stentor] Proprietary
Information to other parties (except members of its medical community as
described above) or use [IDX/Stentor] Proprietary Information for purposes other
than use of the XXXX System Software/Services, except that it may disclose or
use:
a) any information that [IDX/Stentor] expressly authorizes it, in
writing, to disclose;
b) any information that is, through no breach of this or any other
agreement with [IDX/Stentor], in the public domain; and any
information that it is required by law to disclose.
Customer agrees to take appropriate action to bind all employees and consultants
regarding their obligations under this Agreement with respect to use, copying,
modification, confidentiality, protection and security of the [IDX/Stentor]
Proprietary Information. Customer agrees that any use or attempted use of
[IDX/Stentor] Proprietary Information in violation of the restrictions of this
Agreement is a material breach of the Agreement which will cause irreparable
harm to [IDX/Stentor], entitling [IDX/Stentor] to injunctive relief in addition
to all legal remedies. The
November 15, 2000
2
duty of confidentiality set forth in this Section shall survive three (3) years
subsequent to termination the agreement.
5. WARRANTY DISCLAIMER:
EXCEPT FOR THE FOREGOING EXPRESS WARRANTIES OF ANY), [IDX/STENTOR] MAKES NO
WARRANTIES, EITHER EXPRESS OR IMPLIED, UNDER THIS AGREEMENT AND HEREBY DISCLAIMS
ALL IMPLIED WARRANTIES, INCLUDING ANY WARRANTIES REGARDING MERCHANTABILITY,
FITNESS FOR PURPOSE OR CORRESPONDENCE WITH DESCRIPTION. THERE IS NO WARRANTY
THAT THE [IDX/STENTOR] PROPRIETARY SOFTWARE IS FREE FROM PROGRAMMING ERRORS.
[IDX/Stentor] shall have no liability and responsibility under the [express
warranties] if:
a) The XXXX Licensed Software/Service has been altered or damaged by
accident, neglect, misuse or other abuse;
b) Customer has failed to provide an operating environment (e.g., air
temperature, electrical surge protection, etc.) for the computer
equipment operating the XXXX System that complies with general
industry standards for the safe operation of computer equipment;
c) Customer has loaded unauthorized software onto the computer
equipment operating the XXXX System;
d) The XXXX Licensed Software/Service is operating in conjunction with
a modality that is not a Qualified Modality;
e) The XXXX Licensed Software/Service is not the latest update released
to Customer; or
f) The Customer has failed to notify [IDX/Stentor] in writing, during
the License Term, of any defect Customer contends is a breach of
warranty.
6. LIMITED LIABILITY:
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY LOST PROFITS, LOSS
OF BUSINESS OR FOR INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE OR
SPECIAL DAMAGES SUFFERED BY CUSTOMER, IT'S CUSTOMERS, EMPLOYESS AND PATIENTS OR
OTHERS ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE XXXX SYSTEM SOFTWARE /
SERVICES, DOCUMENTATION OR ANY OTHER STENTOR PRODUCTS OR SERVICES, FOR ALL
CAUSES OF ACTION OF ANY KIND (INCLUDING BUT NOT LIMITED TO TORT, CONTRACT,
NEGLIGENCE, STRICT PRODUCT LIABILITY AND BREACH OF WARRANTY) EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. STENTOR'S LIABILITY WILL IN
NO EVENT EXCEED THE TOTAL DOLLARS PAID BY CUSTOMER FOR XXXX SYSTEM
SOFTWARE/SERVICES.
November 15, 2000
3
CONFIDENTIAL Page 1
EXHIBIT E
To Distribution and Development Agreement by and between Stentor, Inc. and IDX
Systems Corporation
COMPENSATION TERMS
1. Stentor shall pay Royalties to IDX on sale of XXXX Systems by Stentor or a
Stentor Distribution Partner, as follows:
A. If Stentor Provides a XXXX System to any End User, Stentor
shall pay IDX an amount equal to [**]% of the greater of (i)
[**] for such XXXX System and (ii) [**]; provided that if
after the Effective Date but prior to December 31, 2001, IDX
Provides IDXrad or LastWord to the same customer after Stentor
Provides a XXXX System to that customer, Stentor shall pay IDX
an amount equal to 45% of the greater of (i) [**] for such
XXXX System or (ii) [**] to such customer.
B. If a Stentor Distribution Partner Provides a XXXX System to an
IDXrad Customer or a LastWord Customer that is a Stentor
License Exclusion Customer, Stentor shall pay IDX an amount
equal to [**]% of the greater of (i) [**] for such XXXX System
or (ii) [**].
C. If a Stentor Distribution Partner Provides a XXXX System to
any person who (i) is not an IDXrad Customer or a LastWord or
(ii) an IDXrad or LastWord Customer that is not a Stentor
License Exclusion Customer, Stentor shall pay IDX an amount
equal to [**]% of the greater of (i) [**] for such XXXX
System, or (ii) [**].
2. IDX shall pay Royalties to Stentor on sale of XXXX Systems by IDX or an
IDX Distribution Partner, as follows:
A. If IDX Provides a XXXX System to an IDXrad Customer or
LastWord Customer, IDX shall pay Stentor an amount equal to
[**]% of the greater of (i) Net Revenue of IDX for such XXXX
System or ii) [**].
B. If IDX or an IDX Distribution Partner Provides a XXXX System
to any person who is not an IDXrad Customer or LastWord
Customer, IDX shall pay Stentor an amount equal to [**]% of
the greater of (i) [**] for such XXXX System or (ii) [**].
3. Stentor in its discretion shall determine its own List Price for a XXXX
System not later than December 31 of each Calendar year during the term of this
Agreement. This Stentor List Price will be used to calculate [**] as set forth
below. The sole effect of the Stentor List Price on IDX will be to make this
royalty calculation. IDX retains complete discretion over prices relating to the
XXXX System licensed by IDX.
4. For the purposes of this Exhibit E the defined terms set forth below shall
apply. In the case of any conflict or inconsistency between the defined terms in
this Exhibit and those defined in the Agreement, those set forth in this Exhibit
shall govern and control with respect to this Exhibit, and those set forth in
the Agreement shall govern and control with respect to the Agreement.
The following table is provided for convenience in applying the above payment
obligations and is intended to be duplicative. If there is any conflict between
the above rules and this table, the above rules shall govern and control.
November 15, 2000
CONFIDENTIAL Page 2
Royalty
End User Sold By Paid To Royalty
---------------------------------------------------------------------------------------------------------------------------------
IDXrad Customer or LastWord Customer IDX Stentor [**]% of the greater of [**] OR [**]
IDXrad Customer or LastWord Customer that Stentor Distribution IDX [**]% of the greater of [**] OR [**]
is a Stentor License Exclusion Customer Partner
Any End User (but see the last row in Stentor IDX [**]% of the greater of [**] OR [**]
this table if such customer subsequently
becomes an IDXrad Customer or LastWord
Customer between the Effective Date and
December 31, 2001)
Not an IDXrad Customer or LastWord IDX Stentor [**]% of the greater of [**] OR [**]
Customer
Not an IDXrad Customer or LastWord Stentor Distribution IDX [**]% of the greater of [**] OR [**]
Customer or an IDXrad Customer or Partner
LastWord Customer that is not a Stentor
License Exclusion Customer
Pre-existing Stentor Customer who becomes IDX Stentor [**]% of the greater of [**] OR [**]
an IDXrad Customer or LastWord Customer
and subsequently or concurrently buys all
or part of a XXXX System
Stentor Customer who becomes an IDXrad Stentor IDX [**]% of the greater of [**] or [**]
Customer or LastWord Customer after the paid for all XXXX System components (regardless of their
Effective Date but prior to December 31, date of sale) and payments are made from the date the
2001 customer becomes an IDX Customer
5. Stentor shall pay a royalty to IDX for each IDX Driver licensed to an End
User by either Stentor or a Stentor Distribution Partner equal to the greater of
(i) [**]% of [**] or (ii) $[**] (the "Driver Minimum") for each imaging
device to which such IDX Driver(s) is connected. IDX in its discretion shall set
the [**] not later than December 31 of each Calendar year during the
term of this Agreement provided that the [**] shall not be increased
by more than the annual increase in the Consumer Price Index, all items, all
urban consumers, U.S. city average for such year + [**]%.
DEFINED TERMS
Exhibit E to Distribution and Development Agreement by and between Stentor,
Inc. and IDX Systems Corporation
"AGREEMENT" means the Development and Distribution Agreement between IDX and
Stentor of which this Exhibit E is a part.
"AUTHORIZED LICENSOR" means a Party or a Distribution Partner of a Party
authorized pursuant to the Agreement.
"CONTROL" (including similar terms such as "Controlling," "Controlled by") shall
have the meaning set forth in Rule 12b-2 promulgated under the Securities
and Exchange Act of 1934.
"DISTRIBUTION PARTNER" means a person authorized by a Party to distribute the
XXXX System pursuant to the Agreement.
"END USER" means a person to whom an Authorized Licensor Provides a XXXX System.
"GROSS REVENUE" means [**] charged by an Authorized Licensor to an End User for
[**]. "Revenue" does not include [**] charged by an Authorized Licensor to
an End User for [**]. "IDXRAD
November 15, 2000
CONFIDENTIAL Page 3
CUSTOMER" means (i) any customer of IDX that is licensed
to use IDXrad and (ii) any and all entities that have access to IDXrad
databases through such customer.
"LASTWORD CUSTOMER" means (i) any customer of IDX that is licensed to use
LastWord and (ii) any and all entities that have access to LastWord
databases through such customer.
"IDX DRIVER" shall have the meaning set forth in the Agreement.
"MAINTAINING" means error correction, updates, and new versions of the XXXX
System and its components.
"XXXX SYSTEM" means a system consisting of the XXXX System (as defined in the
Agreement), plus all other component items Provided by an Authorized
Licensor in connection therewith, such as equipment, software, and
services obtained from a Third Party.
"MINIMUM ROYALTY BASE" in connection with [**].
"NET REVENUE" [**].
"PARTY" means IDX Systems Corporation or Stentor Incorporated.
"PRE-EXISTING STENTOR CUSTOMER" means any Stentor Customer that existed as of
the Effective Date of this Agreement.
"PROVIDE" (and similar terms such as "Providing") shall have the meaning set
forth in the Agreement.
"ROYALTY" means the fee to be paid to a Party by a Party when such Party
Provides a XXXX System under the Agreement.
"STENTOR CUSTOMER" means any customer of Stentor that is licensed to use any
product sold by Stentor and any and all entities that have access to such
product through such customer, but shall not include any customer that is
in an evaluation period and not obligated to pay fees to Stentor for the
Stentor Product
"STENTOR LICENSE EXCLUSION CUSTOMER" means all IDXrad Customers and LastWord
Customers except: (i) any IDXrad Customer or LastWord Customer that is a
Pre-existing Stentor Customer; (ii) any IDXrad Customer or LastWord
Customer that does not use IDXrad or LastWord as their primary radiology
information system or primary clinical information system, respectively;
(iii) any IDXrad Customer or LastWord Customer that becomes a Stentor
Customer prior to becoming an IDXrad Customer or LastWord Customer; or
(iv) any IDXrad Customer or LastWord Customer that ceases to remain a
Stentor License Exclusion Customer pursuant to Section 5.6.
"STENTOR LIST PRICE" means the price that Stentor lists for retail sale of a
XXXX System as set pursuant to this Exhibit E.
"THIRDPARTY", when referred to in the context of a discussion of a particular
Authorized Licensor, means any person not Controlled by, Controlling, or
under common Control with such Authorized Licensor, as the context
requires.
"THIRDPARTY COSTS" means all of the actual costs of any good or services of a
XXXX System Provided by an Authorized Licensor, if such costs are payable
to a Third Party, but does not include royalties paid to IDX or Stentor.
November 15, 2000
Exhibit E to the Amendment to the Distribution and Development Agreement
I. SCOPE.
A. Payment Structure
Payments between the parties will consist of four components: (1) Initiation
Royalties paid upon execution of a new customer agreement, (2) Sustaining
Royalties paid over the life of a customer agreement, (3) a fee for dormant
archives and (4) one-time true-up payments for outstanding liabilities.
B. Transition to New Payment Structure
Contracts signed after June 30, 2003 will be covered solely by the provisions
described in this Exhibit and not by the payment provisions of the un-amended
Agreement. Contracts signed prior to July 1, 2003 will be treated as follows:
1. All royalties recorded and paid prior to July 1, 2003 will be
retained.
2. Royalties paid since July 1, 2003 shall be reversed as described in
Section V.C.1 below
3. Contracts signed prior to July 1, 2003 will not be subject to an
Initiation Royalty or any Sustaining Royalty for Managed Study
Volume incurred prior to July 1, 2003
4. Contracts signed prior to July 1, 2003 will be subject to Sustaining
Royalties beginning July 1, 2003. Their studies will be included in
Managed Study Volume for purposes of determining the Sustaining Tier
Rate.
II. CALCULATING INITIATION ROYALTIES.
The party entering into a contract subject to these terms (the "Contracting
Party") will pay to the other party an "Initiation Royalty" at the end of each
calendar quarter. Such Initiation Royalty will be based on new customer
contracts (both ASP and capital purchase contracts for the XXXX System) that the
Contracting Party enters into during the year. The Initiation Royalty will be
calculated by multiplying the "Average Annual Studies" times the "Initiation
Tier Rate."
Initiation Royalty = Average Annual Studies x Initiation Tier Rate
A. Definition of Average Annual Studies
Average Annual Studies is the sum of projected average annual studies for all
XXXX System contracts for Diagnostic and/or Archive products signed during a
quarter.
Contracts shall include both (1) new contracts and (2) additional
volume/duration contracts for an existing customer. For each contract included
in the calculation, its contribution shall be the higher of total DICOM
forecasted diagnostic or stored studies, summed for all years of the
1
contract term (not to exceed 7 years), divided by the years of the contract term
(not to exceed 7 years). Such projection will be based on the Contracting
Party's good faith estimate at the time of execution of the agreement. Each
Party shall estimate in advance the Average Annual Studies it expects to sign
during the ensuing year ("Estimated Average Annual Studies"). That estimate
shall be the basis for determining the Initiation Tier Rate as defined below.
Average Annual Studies =Total of (Number of estimated studies under a
given contract or up to seven years) / number of years in contract (for up to
seven years))
Example for 3 contracts signed in Q1'2004 (studies in thousands):
Avg. Yrl Yr2 Yr3 Yr4 Yr5
Contract #1 125 75 100 150 150 000
Xxxxxxxx #0 300 300 300 300 000
Xxxxxxxx #0 267 100 300 400
---
692
Average Annual Studies = 692
B. Definition of Initiation Tier Rate
For Diagnostic and/or Archive Contracts:
The Initiation Tier Rate is the rate charged per Average Annual Study to compute
the Initiation Royalty each quarter. The rate for Diagnostic and/or Archive
contracts will be based on Estimated Average Annual Studies as follows:
Average Annual Studies (thousands) IDX Stentor
--------------------------------- ----- -------
0-1,000 $1.50 $0.50
1,000-1,999 $1.25 $0.42
2,000-2,999 $1.00 $0.33
3,000-3,999 $0.75 $0.25
4,000+ $0.50 $0.17
Assuming that IDX and Stentor each projected an Estimated Average Annual Study
of 2,250K, then using the example above, IDX would pay Stentor an Initiation
Royalty of 692,000 x $1.00 = $692,000. If Stentor had signed the same number of
Average Annual Studies, it would pay IDX an Initiation Royalty of 692,000 x
$0.33 = $228,000.
If a portion of Average Annual Studies were for contracts that are either
"Diagnostic-only Studies" or "Stored-only Studies", the Initiation Royalty for
that portion would be the applicable Initiation Tier Rate times 50%.
C. Adjustment to actual signed Average Annual Studies
At the end of each calendar year the parties shall compare "Actual Average
Annual Studies" to Estimated Average Annual Studies. If Actual Average Annual
Studies places the party in a different Initiation Tier Rate than it used during
the year to pay Initiation Royalties, the party
2
shall make an adjustment payment to the other in the amount of Actual Average
Annual Studies times the difference in the Initiation Tier Rates.
For Enterprise Contracts:
For Enterprise contracts, the calculations would be made as above, except the
Initiation Tier Rate would be based on Diagnostic and/or Archive Average Annual
Studies for that quarter, the Initiation Royalty per study would be [**]% of the
Diagnostic and/or Archive amount, and the Enterprise studies used to compute the
royalty will be based on viewed studies rather than total DICOM studies (the
Average Annual Viewed Enterprise Studies). For example, if two Enterprise
contracts were signed in the same quarter as the above example, and the Average
Annual Viewed Studies totaled [**], then the Initiation Royalty for IDX would
be: [**] x ($[**] x [**]%) = $[**]. A similar adjustment to actual studies would
be made as described above.
III CALCULATING SUSTAINING ROYALTY.
A Contracting Party will pay to the other party an ongoing royalty each quarter
based on total new managed studies for that quarter, whether from ASP or Capital
contracts for the XXXX System, (the "Sustaining Royalty"). The Sustaining
Royalty is separate from and in addition to the Initiation Royalty. The
Sustaining Royalty will be calculated by multiplying the [**] times the
Sustaining Tier Rate.
Sustaining Royalty = [**] x [**]
A. Definition of Managed Study Volume
Managed Study Volume means the quarterly sum, across all customers who are in
live clinical use of total XXXX System DICOM actual new stored Studies plus, for
customers which are not archiving, [**]. Managed Study Volume excludes totals
from customer contracts that have been terminated, under which the customer is
not paying maintenance, or dormant archives that are subject to the dormant
archive fee described below. Studies that the Contracting Party deems to be
"Diagnostic-only Volume" or "Stored-only Volume" will be itemized separately.
B. Definition of Sustaining Tier Rate
The Sustaining Tier Rate is the per study royalty rate applied to Managed Study
Volume to compute the Sustaining Royalty each quarter. The Sustaining Tier Rate
is based on Quarterly Managed Study Volume as follows:
Managed Study Volume
IDX Stentor
0-625,000 $[**] $[**]
626,000-1,249,000 $[**] $[**]
1,250,000-1,875,000 $[**] $[**]
1,876,000-2,499,000 $[**] $[**]
2,500,000+ $[**] $[**]
3
For Diagnostic-only Volume and Stored-only Volume:
For the portion(s) of Managed Study Volume that were either "Diagnostic-only
Volume" or "Stored-only Volume," the Sustaining Royalty will be the applicable
Sustaining Tier Rate times [**]%.
For Enterprise Contracts:
For Enterprise contracts, the calculations will be done as above, except the
Sustaining Tier Rate will be based on Diagnostic and/or Archive Managed Study
Volume for that quarter, the Sustaining Royalty per study will be [**]% of the
Diagnostic and/or Archive amount, and the Enterprise studies used to compute the
royalty will be based on [**] rather than [**]. For example, if the Enterprise
Viewed Studies Volume totaled [**] for the quarter, then the Enterprise
Sustaining Royalty for IDX would be: [**] x ($[**] x [**]%) = $[**].
Example of Sustaining Royalty.
For the example outlined below, a Managed Study Volume of [**] studies for the
quarter is assumed, broken down as follows:
Managed Study Volume: [**]
---------
Stored Volume [**]
Diagnostic-only Volume [**]
Stored-only Volume [**]
The Managed Study Volume of [**] would result in a Sustaining Tier rate of $[**]
for TDX and $[**] for Stentor, and the Sustaining Royalty payable by IDX and
Stentor would be:
IDX Stentor
--------- -------
Stored Volume $ [**] $ [**]
[**]
Diagnostic-only Volume $ [**] $ [**]
[**]
Stored-only Volume $ [**] $ [**]
[**]
--------- -------
TOTAL SUSTAINING ROYALTY $ [**] $ [**]
V. ADDITIONAL FEES.
X. XXXX System Dormant Archive Fee
In the event that a customer's XXXX System archive is a "Dormant Archive" as
defined by either (1) no longer storing new XXXX System studies or (2) storing
new studies at a quarterly rate of 10 percent or less of their highest quarterly
Managed Study Volume (the "Maximum Managed Study Volume"); an ongoing quarterly
payment will be owed to the supporting party until such time that the archive is
no longer on-line. The Dormant Archive Fee shall be based on the
4
customer's highest annual [**] volume during its contract term, divided by [**]
(the "Dormant Archive Volume") and then multiplied by the following fee per
study:
1. For Stentor Customers: $[**] per quarter per Dormant Archive Volume
($[**] per year).
2. For IDX Customers: $[**] per quarter per Dormant Archive Volume ($[**]
per year).
B. Prior Contract "True Up"
1. IDX and Stentor have agreed to a one-time correction of outstanding
royalty compensation and service fees for 2003. The following
corrections represent both parties' best efforts to a) reconcile
royalty calculations (including restatement of net revenue as
required) that were exchanged prior to July 1, 2003 under the
previous agreement, b) calculate royalty compensation under this new
agreement for July 1, 2003 through September 30, 2003, including
royalties paid from July 1, 2003 to September 30, 2003, c) finalize
service fees associated with Stentor Disaster Recovery Service, and
reconcile outstanding fees owed to Stentor by IDX for these services
in 2003. The parties agree that all royalties through September 30,
2003 are therefore paid in full and not subject to future
adjustments.
2. Summary of one-time corrections.
a. June 30,2003 and Prior royalty compensation corrections:
i. IDX has a debit to Stentor in the amount of $ [**]
ii. Stentor has a debit to IDX in the amount of $ [**]
b. July 1, 2003 through September 30, 2003, previous contract
payment reversal:
i. IDX has a credit to Stentor in the amount of $ [**]
ii. Stentor has a credit to IDX in the amount of $ [**]
c. July 1,2003 through September 30, 2003 new royalty
compensations:
i. IDX has a debit to Stentor in the amount of $[**]
ii. Stentor has a debit to IDX in the amount of $ [**]
d. Device Driver royalty compensation correction:
i. Stentor has a debit to IDX in the amount of $ [**]
e. Service Fees for Stentor Disaster Recovery Service
i. IDX has a debit to Stentor in the amount of $ [**]
5
2. Stentor agrees to pay the balance of $[**] in cash within 60 days of
the Amendment Effective Date.
6
EXHIBIT F
STENTOR UPTIME PERFORMANCE GUARANTEE
As an Application Service Provider (ASP), Stentor, Inc. provides image
distribution on a per-use basis. The ASP model insulates the institution from
hardware and software obsolescence and enables Stentor to guarantee [**]% uptime
performance for iSite.
IN THE EVENT THAT STENTOR IS UNABLE TO MEET OUR [**]% UPTIME PERFORMANCE
GUARANTEE PER MONTH, WE WILL DISCOUNT THAT MONTH'S FEE AS FOLLOWS:
UPTIME PERFORMANCE DISCOUNT
------------------ --------
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
[**] [**]
1) Every [**]% deviation will provide a [**]% discount for that month's
fee
2) Uptime performance less than [**]% will provide [**]
SYSTEM UPTIME TERMS AND DEFINITIONS
- STENTOR guarantees it's authorized and licensed users of iSite
server that the product is [**]% available per month as defined in
the following terms and conditions.
- All time is measured in an increment of one-hour units. Fractions
are truncated.
- One month is defined as a calendar month. For example, April has 30
days but May has 31 days, therefore, actual required time for this
guarantee will be variable.
- Customer supplied equipment refers to any devices that STENTOR did
not supply directly to customers (network cables, fibers, hubs,
hospital network, telephone lines etc.)
- STENTOR CUSTOMER SUPPORT REPRESENTATIVES are anyone who is
authorized to respond to customer outage situations (e.g., This can
include third party agents who are authorized to perform the
response tasks).
Stentor Uptime Performance Guarantee - Confidential - 9/18/2000 November 15,
2000
1
- [**]% UPTIME means the Stentor iSite system is functionally
accessible by all authorized users for [**]% of the time when an
access is requested by the devices that are connected to the server.
Availability is measured AT THE STANDARD POINT OF DEMARCATION
(SPOD), AND outside of the scheduled and external downtime periods
as defined in this document.
- CUSTOMER'S DESIGNATED CONTACT is a contact person at the customer
site that shall judge STENTOR's uptime claims.
- The STANDARD POINT OF DEMARCATION (SPOD) is defined at the network
connection interface installed at the iSite server computer
hardware. For example if 100 Base T network hardware is being used,
the Ethernet contact pins on the Ethernet card installed on the
iSite server shall be "our" uptime responsibility. The pins on the
connector and beyond are customer's uptime domains. This is the
demarcation point that QA procedure uses.
- DOWNTIME shall be categorized into three modes: Unscheduled
Downtime, Scheduled Downtime, and External Downtime.
- UNSCHEDULED DOWNTIME shall begin upon notification of Stentor by an
authorized customer representative that the iSite server could not
be accessed beyond the SPOD. This instance of unscheduled downtime
shall be predicated on the fact that there was no advance
notification by STENTOR in the 24-hour period prior to the outage.
The cause of outage must be originated within the STENTOR supplied
equipment and software. The unscheduled downtime shall commence upon
the first response by a STENTOR customer service representative to
the notification from the authorized customer representative
regarding the down system issue and a trouble ticket has been logged
- SCHEDULED DOWNTIME shall be defined as the period that iSite servers
are inaccessible due to scheduled system maintenance. Scheduled
downtime shall be scheduled at STENTOR's discretion with
notification to the customer's designated contact. Typical scheduled
downtime includes preventative maintenance and system upgrades.
Automatic and scheduled re-boot and restart shall be categorized
under the scheduled down time so long as the frequency and time of
occurrence has been communicated to the customer's designated
contact. The scheduled downtime shall begin when access to the iSite
server is completely impaired, and does not include the duration of
notification period.
- EXTERNAL DOWNTIME shall be defined as when iSite servers are
inaccessible due to events that are not in STENTOR's control. These
events shall include, but are not limited to, events due to natural
causes such as prolonged power failures, electrical surges due to
lightening, flood, fire, and manual shutdowns at the sole discretion
of the customer without prior notification to Stentor, Inc. Note,
however, that any failure in the iSite server computer that STENTOR
supplies is subject to Unscheduled Downtime measurement.
- STENTOR shall express uptime and downtime metrics based on a
percentage number based on hourly increments through one calendar
month.
- All downtime ENDS when a STENTOR customer support representative has
confirmed and recorded the resumption time of the availability
and/or received one heartbeat report back from the server, provided
there are not external problems beyond the SPOD which prevent the
heartbeat report from reaching STENTOR.
- Uptime metrics shall be measured in "total round-trip" manner. A
system is considered "up" if an image can be "pushed" to the iSite
server and the same image can be
Stentor Uptime Performance Guarantee - Confidential - 9/18/2000 November 15,
2000
2
accessible within 30 minutes of the initial "push". If there is
criteria is not met than the system shall be considered down.
- Uptime percentage (measured in hours) = (Unscheduled Downtime
hours)/(Number of hours in a given month) * 100.
Informational: Aggregate Uptime Table
ANNUAL ... AND IN ONE CALENDAR MONTH,
UPTIME APPROXIMATE DURATION THAT CAN BE WE CAN AFFORD TO GO DOWN
RATE DOWN PER ASTRONOMICAL YEAR. APPROXIMATELY THIS LONG.
----- -------------------------------- ------------------------------
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
ASSUMPTIONS
The following assumptions are being made:
- There is a way to continuously measure and monitor the uptime in a
round-trip manner. The proposal for this is included in my
"Heart-Beat" monitor definitions.
- We assume that hardware is sufficiently reliable and do not perform
hardware specific tests other than setting up an acceptable
selection criteria. The computer hardware we have chosen has a
minimum MTBF value of 45,000 hours or greater (approximately 5
years). The system MTBF for the purpose of uptime guarantee shall be
based on the minimum MTBF component installed on the entire system.
For example, if an Ethernet card has a MTBF of 20,000 hours but the
rest of the systems have a MTBF of 100,000 hours then the entire
system is deem to fail within 20,000 hours, and we shall reject a
choice of such hardware. Under these selection criteria, this author
assumes that more than 99.99% of the hardware in the field shall
operate continuously.
- If a recoverable failure occurs on a redundant component, this event
shall not be considered a downtime. For example, if a one of the
RAID-5 volume goes down, but the system is available, then that is
not considered as a system failure so long as we are meeting the
Uptime criteria, and we can recover from this condition during the
Scheduled downtime. Likewise, if we supply a cluster of redundant
servers and one of the server goes down, that is not considered as a
down-time so long as the user can access the active server
transparently.
- All iSite Server hardware is supplied to the customer as part of the
Stentor Service Agreement. The supplied hardware is covered under
Stentor's Service Agreement with [**].
* Only Stentor approved software may be resident on the
iSite Server. The presence of non Stentor approved
software residing on the iSite Server will invalidate
the [**]% uptime guarantee.
Stentor Uptime Performance Guarantee - Confidential - 9/18/2000 November 15,
2000
3
* If the customer is supplying their own hardware for the
iSite Server, that hardware must be purchased to
Stentor's specification, only Stentor approved software
applications may reside on said server, and the customer
must provide a [**] service agreement equivalent to
Stentor's service agreement with [**].
Stentor Uptime Performance Guarantee - Confidential - 9/18/2000 November 15,
2000
4
EXHIBIT G
CONPONENTS OF THE IDX/STENTOR INTEGRATED PRODUCT OFFERING
[FLOW CHART OF CONPONENTS OF THE IDX/STENTOR INTEGRATED PRODUCT OFFERING]
AMENDMENT TO DISTRIBUTION AND DEVELOPMENT AGREEMENT
This Amendment ("Amendment") is made effective as of January 1, 2004
(the "Amendment Effective Date") by and between, STENTOR, INC., a Delaware
corporation ("Stentor"), and IDX SYSTEMS CORPORATION, a Vermont
corporation ("IDX").
RECITALS
A. Stentor and IDX entered into a Distribution and Development
Agreement dated November 15, 2000 (the "Original Agreement"), pursuant to
which they agreed (i)i to engage in development to facilitate the
integration of certain Stentor products for archiving and viewing medical
images and certain IDX products for automating the management of work flow
in radiology practices and departments, and (ii) thereby to offer an
integrated system for medical image management.
B. The parties have succeeded in offering such integrated system in
North America, and now wish to amend certain provisions of the Original
Agreement (as amended, including as amended by this Amendment, the
"Agreement") for the remainder of the Initial Term, ending November 15,
2005.
C. Among other things, the parties wish to continue their
relationship during the remainder of the Initial Term (from January 1,
2004 to November 15, 2005) on a different basis such that, subject to the
terms and conditions of the Agreement, (i) each party (each a "Licensee
Party") would have the worldwide right (but no obligation) to distribute
the designated products of the other party (each a "Licensor Party") as
part of the XXXX System on a nonexclusive basis using the Licensee Party's
own branding, (ii) each Licensor Party would use commercially reasonable
efforts to make available APIs to allow the Licensee Party to make calls
to data elements of such Licensor Party products as part of the XXXX
System, and (iii) each Licensor Party would continue to provide
second-level support to the Licensee Party.
NOW, THEREFORE, in consideration of the mutual covenants and other
terms and conditions set forth herein, the parties hereby agree as
follows:
AGREEMENT
1. Sections 4.1.1 through 4.1.5 will be deleted in their entirety and replaced
with the following:
4.1.1 Additional API Request Process.
(a) As soon as reasonably practicable, but in no event later than
January 9, 2004, IDX may provide to Stentor a detailed list of Stored Data
Elements of Stentor to which IDX would like to interface. As soon as
reasonably practicable, but in no event later than January 30, 2004,
Stentor shall respond to
1
such list with an indication as to (a) whether it believes it is
commercially practicable to permit IDX to interface to such Stored Data
Elements and (b) if so, the estimated schedule for any development that
would reasonably be required in connection with making available access to
such Stored Data Elements (e.g., developing the related APIs). If the
parties cannot agree on the commercial practicability and development
schedule for the requested Stored Data Elements, the parties shall meet no
later than February 9, 2004 and use commercially reasonable efforts to
reach agreement by February 13, 2004. If the parties cannot agree by
February 13, 2004, each party may escalate the matter, and the parties
will engage in mediation to resolve the dispute, in accordance with the
process set forth in Section 10.19. Stentor shall undertake commercially
reasonable efforts to implement the mutually agreed APIs by version 3.5 of
the Stentor Products, which Stentor anticipates being released in
approximately the third calendar quarter of 2004, and to the extent
commercially reasonable efforts would not allow inclusion in version 3.5
but would in the subsequent version, by such subsequent version. The
period between the Amendment Effective Date and the release of version 3.5
of the Stentor Product is referred to herein as the "Catch-Up Period".
Thereafter, during the remainder of the Initial Term, each party (as
Licensee Party) may (no more often than twice a year) make a request for
additional Stored Data Elements of the Licensor Party to which the
Licensee would like to interface, and the Licensor Party will respond with
an indication as to (i) whether it believes it is commercially practicable
to permit the Licensee Party to interface to such Stored Data Elements,
and (ii) if so, the estimated schedule for any development that would be
reasonably required in connection with making available such Stored Data
Elements (e.g., developing related APIs). If the parties cannot agree on
such issues, each party may escalate the matter, and the parties will
engage in mediation to resolve the dispute, in accordance with the process
set forth in Section 10.19. The parties anticipate that the work described
above will require approximately one engineer (full-time equivalent) after
the Catch-Up Period, and that Stentor likely will need to devote
additional resources during the Catch-Up Period. For purposes of this
Section 4.1.1, "Stored Data Elements" means (A) in the case of Stentor,
data elements stored by Stentor that are received by Stentor either
through interface messaging, such as HL7, or through DICOM messages
associated with an image, or the Stentor-stored output of functional
events generated by routines provided or accessed by Stentor (e.g.,
measurements, 3D analysis outputs), and (B) in the case of IDX, data
elements stored by IDX that are received by IDX or the IDX-stored output
of functional events generated by routines provided or accessed by IDX.
(b) Each party (as Licensee Party) shall, at the Licensor Party's
request, dedicate resources to be and remain knowledgeable about and up to
date on the products of the other party (i.e., the Stentor Products or IDX
Products, as applicable), including their APIs. Such efforts shall include
dedicating no less than one (1) person to working on APIs with the
Licensor Party and having such person(s) attend training sessions at the
Licensor Party's request regarding APIs.
2
(c) Each party (as Licensee Party) shall use commercially
reasonable efforts to make use of existing APIs of the Licensor Party
before requesting access to additional data elements or the development of
any new APIs of the Licensor Party. In any event, the Licensor Party will
have no obligation to make available any data element, provide any API or
engage in any other activity that would or could reasonably affect the
existing or future integrity, stability, compatibility, functionality or
performance of any product (including any data used by a product).
(d) Each party (as Licensee Party) may use data elements and APIs
made available by the Licensor Party (including any related materials or
information) solely as part of the XXXX System to allow the Licensee Party
products included in the XXXX System to interface to data stored by the
Licensor Party's products included in the XXXX System. The above
limitation shall not apply to data elements and APIs supporting industry
standards, e.g., DICOM Query Retrieve.
(e) Should either party (as Licensee Party) enter into any
agreement with a third party that involves access to or use of any data
element or APIs of the Licensor Party by a product or service of the third
party, the Licensee Party shall not include any exclusivity or other
similar provision affecting the right of the third party and the Licensor
Party to work together or to have the third-party product or service
interface with products of the Licensor Party.
4.1.2 Early Test Participation. To the extent consistent with third-party
contractual obligations, each Licensor Party shall provide to the Licensee
Party the opportunity to participate in early testing programs for new
releases of the Stentor Products (in the case of Stentor) or IDX Products
(in the case of IDX) to be available to the Licensee Party for use as part
of the XXXX System. The parties acknowledge and agree that the purpose of
such participation is intended to permit the Licensee Party to provide
feedback at the alpha or beta product stage no later than any other
customer of the Licensor Party. The parties also acknowledge and agree
that participation in such early testing is subject to the reasonable
requirements of the Licensor Party, including, but not limited to, testing
only in a non-production environment on a separate server, appropriate
disclaimers of liability and warranties, reasonable confidentiality and
security terms, the receipt of useful feedback from the Licensee Party,
and the availability of a competent technical coordinator at the Licensee
Party for such testing.
4.1.3 Web Compatibility. IDX acknowledges that Stentor is migrating to a
Web services-based platform that will not support existing APIs. The
general release of the version of the Stentor Products that does not
support existing APIs will in no event occur earlier than November 15,
2005. IDX acknowledges that for Stentor Products not on the
above-mentioned Web services-based platform, Stentor's commercially
reasonable efforts to provide support, as specified in Section 8.1 of the
Agreement, shall thereafter be limited to bug fixes (i.e., correction of
errors and nonconformity with Stentor' s published documentation). Stentor
3
acknowledges and agrees that it will maintain backwards compatibility of
existing APIs from the Amendment Effective Date until November 15, 2005,
except for reasonable changes required for maintenance or support purposes
(e.g., to resolve unintended API conflicts).
2. Sections 5.1 and 5.2 shall be replaced in their entirety with the following,
which shall be deemed to be effective as of the Effective Date of the
Original Agreement:
5.1 Ownership; In General. Except for the rights expressly granted
herein to Stentor, IDX reserves and retains all right, title and interest
(including without limitation patents, trade secrets and copyrights) in
the IDX Products, and all customizations, additions, modifications,
changes, enhancements, improvements, and derivative works thereof made by
IDX or by a third party on behalf of IDX, and all rights therein and
copies thereof. Except for the rights expressly granted herein to IDX,
Stentor reserves and retains all right, title and interest (including
without limitation patents, trade secrets and copyrights) in the Stentor
Products, and all customizations, additions, modifications, changes,
enhancements, improvements, and derivative works thereof made by Stentor,
or by a third party on behalf of Stentor, and all rights therein and
copies thereof.
5.2 Ownership to Works Created Under the Development Plan.
(a) Any Intellectual Property developed by Stentor and any
derivative works of Stentor Products developed by Stentor or a third party
contractor of Stentor pursuant to the Development Plan shall be owned by
Stentor. Any Intellectual Property developed by IDX and any derivative
works of IDX Products developed by IDX or a third party contractor of IDX
pursuant to the Development Plan shall be owned by IDX. Any Intellectual
Property jointly developed by IDX and Stentor (i.e., patents or trade
secrets as to which employees or contractors of both parties are joint
inventors or copyrightable subject matter as to which the parties or their
employees or contractors are joint authors) pursuant to the Development
Plan shall be jointly owned by IDX and Stentor and each of IDX and Stentor
(or any successor to, or assignee of, or licensee of IDX or Stentor) shall
be free to use such Intellectual Property without interference from the
other party and without any obligation to make any payment or account for
any profits, except as otherwise provided for in this Agreement. Such
joint ownership shall apply only to the specific modules, elements or
other subject matter that are the result of the joint development, and not
to other modules, elements or other subject matter. Notwithstanding any
previous assertions by the parties to the contrary, the provisions in this
Amendment set forth the parties' understanding and intent with respect to
the ownership of Intellectual Property.
(b) Each party believes that it has not made and that it will not
make any patent application for a patent constituting a Conflicting Patent
that covers the core technology of the other party. "Conflicting Patent"
means such a patent that is applied for before or within one year after
the Amendment Effective Date for an invention made before the Amendment
Effective Date resulting from joint
4
development efforts under the Development Plan where the invention (i) is
based on the technology of the other party and (ii) is directed toward and
embodied in a PACS system (in the case of IDX as patent holder) or a
product for automating the management of work flow in radiology practices
and departments (in the case of Stentor as patent holder). If a party
believes that an issued patent of the other party is a Conflicting Patent,
then the parties shall discuss in good faith the facts and circumstances
regarding such patent and whether such patent constitutes a Conflicting
Patent and, if so, the possibility of a license of such patent. If the
parties cannot reach agreement as to the appropriate treatment of such
patent, then either party may submit the matter to a mutually agreeable
third party for nonbinding mediation in accordance Section 10.19.
3. Section 5.3.1 shall be replaced in its entirety with the following:
5.3.1 IDX hereby grants to Stentor a non-exclusive, non-transferable
(except as provided in Sections 2.4 and 10.14) term license to market and
sublicense, and in connection therewith to sell, offer for sale, copy,
use, distribute, perform, display, modify, make derivative works of and
Merge, the IDX Products, only as they may be Merged into the XXXX System,
provided that (subject to Section 5.6) Stentor may do so only to Persons
that are not Stentor License Exclusion Customers. Notwithstanding the
limited scope of this license, Stentor may communicate with, and
demonstrate, perform and display the XXXX System to, Stentor License
Exclusion Customers to make them aware of the availability of the XXXX
System from IDX and to provide information to Stentor License Exclusion
Customers regarding the XXXX System. "Stentor License Exclusion Customers"
shall mean those customers in the Territory or [**] that meet the
definition of "Stentor License Exclusion Customers" in the Agreement and
have been included in the parties' list of Stentor License Exclusion
Customers as of the Amendment Effective Date (an initial version of which
shall be provided by the parties no later than fifteen (15) business days
after execution of this Amendment), as such list may be modified by the
parties from time to time in accordance with the Agreement.
4. Section 5.4 and 5.5 shall be replaced in their entirety with the following:
5.4 Stentor Products. Stentor hereby grants to IDX a non-exclusive,
non-transferable (except as provided in Sections 2.4 and 10.14) term
license to market and sublicense (including through one or more
Distribution Partners acceptable to Stentor), and in connection therewith
to sell, offer for sale, copy, use, distribute, perform, display, modify,
make derivative works of and Merge, the Stentor Products, only as they may
be Merged into the XXXX System.
5.5 Territory. This Agreement, including the licenses granted hereunder,
shall apply to the parties worldwide, provided that the Parties will be
subject to certain restrictions in the Territory (as well as in [**] as
set forth in Section 6.1. The "Territory" is redefined to mean [**].
5
5. The parties acknowledge and agree that nothing in the Agreement restricts the
use of the XXXX System by either party (as Licensee Party) to, or changes the
pricing for, any particular field of use (i.e., there is no restriction on
use in, or difference in pricing for use in, medical specialties other than
radiology), provided that the foregoing will not imply any obligation to
provide (a) additional support as a result of use outside radiology, (b) any
APIs to support use outside radiology, or (c) any products designed for use
outside radiology (i.e., other than the Stentor Products and IDX Products
included in the XXXX System).
6. Section 5.6 shall be replaced in its entirety with the following:
5.6 Treatment of Stentor License Exclusion Customers. If a Stentor
License Exclusion Customer (other than existing customers of Stentor as
set forth in Attachment A, which Attachment A will be completed within
fifteen (15) business days after execution of this Amendment) seeks to
acquire the XXXX System from Stentor, Stentor will inform the customer
that it should contact IDX:. If the customer nonetheless expresses an
interest in acquiring the XXXX System from Stentor, Stentor will notify
IDX and will refrain for a period of forty-five (45) days (after such
notice) from sales activities targeted at the customer. Forty-five (45)
days after Stentor has provided the above-referenced notice to IDX,
Stentor may contact the customer and, if the customer remains interested
in acquiring the XXXX System from Stentor, the customer shall be deemed
not to be a Stentor License Exclusion Customer. Should the customer (other
than the customers set forth in Attachment A) then purchase the XXXX
System from Stentor, Stentor shall (unless the parties otherwise agreed)
pay IDX [**] percent [**%] above the normal royalty for such XXXX System
for the remainder of the Interim Term, and shall further pay IDX half of
the commission that would normally be payable to Stentor's sales force for
making such sale if the customer were not a Stentor License Exclusion
Customer. This Section 5.6 shall apply to customers within the Territory
and [**] but not elsewhere. Stentor acknowledges that it will provide IDX
with appropriate current and future product information required for IDX
to effectively represent the XXXX System to prospective customers, when
Stentor provides such information generally to Stentor's own sales force,
and promptly respond to IDX inquiries regarding the XXXX System, with the
objective that IDX sales representatives should be no less informed about
the XXXX System than their Stentor counterparts. IDX acknowledges that
Stentor will provide the information and related training to IDX's sales
trainers and that IDX is responsible for disseminating the information to
IDX's sales representatives.
7. The following Section 5.7 will be added to the Agreement: 6
Each party (as Licensee Party) acknowledges that the other party (as
Licensor Party) will have control over its own APIs, including the right
to negotiate licenses for the APIs with third parties. Notwithstanding the
above, this Section 5.7 shall not be construed to prevent, or require
additional payment for, any APIs licensed or otherwise provided by the
Licensor Party to the Licensee Party from being used by the Licensee Party
in connection with Providing a XXXX System
6
under the Agreement, even if such use includes providing the APIs to a
third party, provided that such third party has entered into the Licensor
Party's form of license agreement with respect to such APIs (which form
will not require third party-by-third party execution by the Licensor
Party) and provided that a copy of each such license agreement is
delivered to the Licensor Party. The parties acknowledge that the
foregoing does not apply to industry standard interfaces such as DICOM
Query Retrieve.
8. The parties agree that the IDX Drivers (including any updates and upgrades to
IDX Drivers and any new IDX Drivers) will, effective as of the Amendment
Effective Date, be included in the licenses granted and the services provided
by IDX to Stentor (to the same extent as the other IDX Products) and that no
separate license or maintenance fees will be payable with respect thereto.
9. The following sentences shall be added to Section 6.1.1 after the first
sentence of Section 6.1.1 (i.e., the sentence beginning "Stentor shall not
(i) Provide" and ending "Stentor Products in the Territory"):
Stentor shall not authorize or license [**], or the successor of any of
them, to Provide the XXXX System or the Stentor Products in [**]. Nothing
in this Section 6.1.1 shall be construed to prohibit or disturb any
relationship between Stentor and any third party (including a third party
that may become a successor to [**]) to the extent such relationship was
not and is not formed in breach of the Agreement (and, for purposes of
this Section 6.1.1, "successor" of an entity means the business operation
of such entity, but does not include the other business operations of such
third party).
10. Section 6.2 is deleted in its entirety.
11. The obligations set forth in Sections 6.3 and 6.4 regarding the use of the
other party's marks are no longer in effect. The rights set forth in
Sections 6.3 and 6.4 regarding the use of the other party's marks will
remain in effect only until December 31, 2004. After such time, the
affected party shall not use any of the names, marks or branding of the
other party in or with the affected party's products or in marketing,
support or distribution activities (including press or public relations
materials). Nothing in the foregoing shall be deemed to prohibit a party
from making factual descriptions regarding the other party's products in
general materials about such party and its products (provided that the
materials are not designed for marketing, press or public relations
purposes).
12. Section 7.1 shall be replaced in its entirety with the following:
7.1 Compensation; Payment. IDX and Stentor shall be entitled to
compensation for their respective licensing to the other of their
respective rights and technology incorporated into the XXXX System as set
forth in the amended Exhibit E attached to the Amendment. The compensation
schedule set forth in the amended Exhibit E will become effective as of
December 31, 2003 (and the "true
7
ups" contemplated by such amended Exhibit E will constitute the final
resolution of any royalties, reimbursements or other payments required for
the period before December 31, 2003 and are due and payable as of December
31, 2003).
13. The parties acknowledge that, while their rights under this Agreement with
respect to the other's products (i.e., the IDX Products and Stentor
Products) are worldwide as of the Amendment Effective Date, the parties'
support obligations as to countries outside the Territory will not be
materially greater than such obligations as to countries in the Territory
(e.g., IDX would not be obligated to fix a [**] bug, but would be obligated
to address a technical error that could also occur in a country in the
Territory) unless the other party agrees to pay for the additional support
work (the cost of which additional work the parties will negotiate in good
faith, and, if the parties are unable to agree on such cost, the party will
carry out the work on a time and materials basis, at reasonable rates and on
other terms and conditions which are, as a whole, no less favorable to the
other party than those made available to comparable customers of the party
doing the work for comparable work).
14. IDX and Stentor represent and warrant that their statements in Sections
9.1.3 and 9.2.3, respectively, with respect to patents are true, to such
party's knowledge, up to and as of the Amendment Effective Date, and the
parties make no further representations and warranties as to
noninfringement of patents.
15. Section 10.1 shall be replaced in its entirety with the following, which
shall be deemed to be effective as of the Effective Date of the Original
Agreement:
10.1.1 Confidential Information. Each Party (as "Receiving Party") shall
use the same care and measures to prevent the unauthorized disclosure and
dissemination of the Confidential Information of the other Party (as
"Disclosing Party") as the Receiving Party uses for its own confidential
information or material of a similar nature. Such measures may include
instructing and requiring recipients of Confidential Information to
maintain the confidentiality of such Confidential Information and
restricting disclosure of such Confidential Information to those
representatives of the Receiving Party and its affiliates, its and their
contractors, suppliers and licensees, and other authorized third parties
who have a "need to know" consistent with the purposes for which such
Confidential Information is disclosed, if and to the extent the Receiving
Party uses such measures for its own confidential information or material
of a similar nature. The Receiving Party further agrees not to remove or
destroy any proprietary rights or confidentiality legends or markings
placed upon any documentation or other materials by the Disclosing Party.
"Confidential Information" means any technology, information and materials
related to research, products, services, hardware or software, inventions,
processes, designs, drawings, engineering or other technology that is
supplied or licensed by either party after the Effective Date (as the
Disclosing Party) to the other party (as the Receiving Party) and which is
designated in writing as proprietary or confidential (or with a similar
designation) or, if disclosed orally or by demonstration, is designated as
confidential or proprietary at the time of
8
disclosure and summarized in a writing so designated within thirty (30)
days of the initial disclosure.
10.1.2 Non-Confidential Information; Permitted Disclosures. Confidential
Information shall not include, however, information or material which (i)
is or becomes available to the relevant public other than as a result of a
wrongful act or omission by the Receiving Party, (ii) was available to the
Receiving Party (without a duty of confidentiality owed to the Disclosing
Party with respect to such information or material) prior to its receipt
from the Disclosing Party, (iii) becomes available to the Receiving Party
from a Person not otherwise bound by a confidentiality agreement with the
Disclosing Party with respect to such information or material, or (iv) was
independently developed by the Receiving Party without use of the
Disclosing Party's Confidential Information. Further, notwithstanding
Section 10.1.1, the Receiving Party may disclose the Disclosing Party's
Confidential Information in the event that the Receiving Party is required
(by the disclosure requirements of any rule, regulation, or form of any
governmental authority or securities exchange or by interrogatories,
requests for information or request for documents by any governmental
authority or other party in legal proceedings, subpoenas, civil
investigative demands, or other similar processes) to disclose such
Confidential Information, provided that the Receiving Party so required
shall provide the Disclosing Party with prompt written notice of any such
requirement so that the Disclosing Party may object to production and seek
a protective order or other appropriate remedy, and/or waive compliance
with the provisions of this Agreement. If the Disclosing Party objects to
production and seeks a protective order or other appropriate remedy, the
Receiving Party shall exercise commercially reasonable efforts (at the
sole expense of the Disclosing Party) to cooperate, including, without
limitation, by cooperating with the Disclosing Party to obtain an
appropriate protective order or other reasonable assurance that
confidential treatment will be accorded such Confidential Information.
10.1.3 Residuals. Notwithstanding anything in the Agreement to the
contrary, either party may use or disclose residual information for any
purpose, including without limitation use in development, manufacture,
promotion, sale and maintenance of its products and services, provided
that this right to residual information does not constitute and shall not
imply a license under any patents or copyrights of the other party.
"Residual information" means any information that is retained in the
unaided memories of a party's personnel without ongoing use of the
tangible embodiment of the other party's Confidential Information. An
individual's memory is unaided if the individual has not intentionally
memorized the Confidential Information for the purpose of retaining and
subsequently using or disclosing it.
16. The following sentences shall be added to the end of Section 10.3:
Each party shall apply for and use commercially reasonable efforts to
obtain by December 2004 the necessary regulatory and other approvals and
clearances (e.g.,
9
Food and Drug Administration 510(k) premarketing approvals or clearances
or the equivalent) required for its activities hereunder (including the
sale or license of the XXXX System) at each party's own sole expense and
responsibility. Each party shall reasonably confer and cooperate with the
other party to assist the other party in complying with any applicable
export control regulations. Each party agrees that, if and for so long as
it uses or operates under any regulatory or other approvals or clearances
of the other (a) it will comply strictly with the other party's quality
system requirements, including those for integration, installation,
training and support, as required to maintain the XXXX System in
compliance with such regulatory or other approvals or clearances, and (b)
it will not Provide the XXXX Systems unless it is in compliance with the
regulatory or other approvals or clearances.
17. Section 10.6 (but not Section 10.6.1 through 10.6.4) shall be replaced in
its entirety with the following:
Each party (an "Indemnifying Party") will defend the other party, its
officers, employees, and agents (each an "Indemnified Party") against, and
pay any damages (including costs and attorneys' fees) awarded against an
Indemnified Party by a court of competent jurisdiction (or pay any
settlement of such claim agreed to by the Indemnifying Party) ("Losses")
resulting from, any claim, suit, or demand by any third party ("Third
Party Claim") (i) for injuries to or deaths of persons or loss of or
damage to property arising out of the Indemnifying Party's products or
services as provided to the Indemnified Party, unless the Indemnified
Parties shall have acted outside the scope of their rights under this
Agreement or the injuries, death, loss or damage results from an act or
omission of the Indemnified Party; (ii) for injuries to or deaths of
persons or loss of or damage to property arising out of the willful
misconduct of the Indemnifying Party, its employees, officers, or agents
in connection with the Indemnifying Party's performance of this Agreement,
except to the extent caused by the negligence of any Indemnified Party;
and (iii) that the Indemnifying Party's products, or any component
thereof, as provided to the Indemnified Party infringes any patents,
copyrights, trademarks, trade secrets or other proprietary rights of the
third party.
18. Section 10.6.2 shall be replaced in its entirety with the following:
An Indemnified Party shall notify the Indemnifying Party promptly of any
claim for which the Indemnifying Party is responsible and shall cooperate
with the Indemnifying Party in every commercially reasonable way to
facilitate the defense of any such claim, provided that the Indemnified
Party's failure to notify the Indemnifying Party shall not diminish the
Indemnifying Party's obligations under this Section except to the extent
that the Indemnifying Party is materially prejudiced as a result of such
failure. The Indemnified Party shall authorize and allow Indemnifying
Party to have sole control of the defense and settlement of the claim,
provided that that the Indemnifying Party shall not, without the consent
of the Indemnified Party, enter into any settlement or agree to any
disposition that imposes an obligation on the Indemnified Party that is
not wholly discharged or dischargeable by the Indemnifying Party, or
imposes any conditions or
10
obligations on the Indemnified Party other than the payment of monies that
are readily measurable for purposes of determining the monetary
indemnification or reimbursement obligations of Indemnifying Party. An
Indemnified Party shall at all times have the option to participate in any
matter or litigation through counsel of its own selection and at its
expense.
19. The addresses for the parties in Section 10.9 shall be replaced with the
following:
Stentor, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Oran Muduroglu
Facsimile: 000-000-0000
With a copy to the Corporate Counsel of Stentor.
IDX Systems Corporation 40 IDX Drive
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: President
Facsimile: 000-000-0000
With a copy to the General Counsel of IDX.
20. The following sentences shall be added to the end of Section 10.10:
Without limitation of the generality of the foregoing, the parties
acknowledge that the requirements of this Section 10.10 apply to
statements concerning the relationship between IDX and Stentor--for
example "end-of-life" plans for the XXXX System, limitations on further
development of the XXXX System, and limitations on support for the XXXX
System. The parties will work together to agree on how such matters will
be described and will instruct appropriate marketing and sales personnel
to be consistent with such mutually agreed to descriptions in their
marketing and sales activities.
21. Section 10.14 shall be replaced in its entirety with the following:
10.14 Assignment. This Agreement shall be binding upon the parties and
their respective successors and permitted assigns and their Affiliates
Controlled by them, respectively. Neither party may assign this Agreement
without the prior written consent of the other party, except that either
party hereto may assign this Agreement to any Person that acquires all or
substantially all of the assets of (i) in the case of IDX, IDX's Radiology
Information Systems Division, and IDX shall be relieved of any obligation
or liability hereunder, or (ii) in the case of Stentor, Stentor's PACS
business, and Stentor shall be relieved of any obligation or liability
hereunder. If (i) IDX shall sell or transfer any of its assets, other than
the assets of IDX's Radiology Information Systems Division, to a Person
that is not an Affiliate of IDX, or if (ii) Stentor shall sell or transfer
any of its assets, other than the assets of the PACS business, to a Person
that is not an Affiliate of Stentor, then such Person shall not have any
obligations or liabilities under this
11
Agreement and the assets transferred shall not be encumbered by or subject
to this Agreement in any way.
22. The following sentence shall be added to the end of Section 10.19:
Except as provided herein, no civil action with respect to any dispute,
claim or controversy arising out of or relating to this Agreement may be
commenced until the matter has been submitted for mediation as described
below. Either party may commence such mediation by providing to the other
party a written request for mediation, setting forth the subject of the
dispute, claim or controversy and the relief requested. The parties will
cooperate with one another in selecting a mediator and in scheduling the
mediation proceedings. The parties covenant that they will participate in
the mediation in good faith, and that they will share equally in its
costs. All offers, promises, conduct and statements, whether oral or
written, made in the course of the mediation by any of the parties, their
agents, employees, experts and attorneys, and by the mediator, are
confidential, privileged and inadmissible for any purpose, including
impeachment, in any litigation or other proceeding involving the parties,
provided that evidence that is otherwise admissible or discoverable shall
not be rendered inadmissible or non-discoverable as a result of its use in
the mediation. Notwithstanding the foregoing, either party may seek
equitable relief, whether or not prior to commencement of the mediation
(e.g., to preserve the status quo pending the completion of the mediation
process or to prevent irreparable harm). Except for such an action to
obtain equitable relief, neither party may commence a civil action with
respect to the matters submitted to mediation until after the completion
of the initial mediation session, or forty-five (45) days after the filing
of the written request for mediation, whichever occurs first. Mediation
may continue after the commencement of a civil action, if the parties so
desire. The provisions of this Section 10.19 may be enforced by any court
of competent jurisdiction, and the party prevailing in the enforcement
action shall be entitled to an award of fees, costs and expenses,
including attorney's fees, as the court ordering the enforcement may
determine to be equitable.
23. Continuation of Provisions. Except as expressly set forth herein, all other
terms and conditions of the Original Agreement shall remain in full force
and effect. In the event of any inconsistency or conflict between this
Amendment and the Original Agreement, the terms, conditions and provisions
of this Amendment shall supersede the Original Agreement and shall govern
and control. Except as expressly defined or otherwise modified herein, all
capitalized terms in this Amendment have the same meanings as set forth in
the Original Agreement. If a defined term is defined both in this Amendment
and in the Original Agreement, then the term shall have the meaning set
forth in this Amendment.
24. Authorization. Each party represents and warrants that it possesses the
right and capacity to enter into this Amendment. Each party represents and
warrants to the other party that this Amendment has been duly authorized,
executed and delivered by it and constitutes its valid and legally binding
agreement with respect to the subject matter contained herein.
25. Entire Agreement. The Original Agreement, as amended by this Amendment,
constitutes the complete and exclusive statement of the agreement between
the parties and supersedes all
12
prior and contemporaneous proposals and understandings, oral and written,
relating to the subject matter contained therein.
IN WITNESS THEREOF, the parties have executed this Amendment by their duly
authorized representatives.
STENTOR, INC. IDX SYSTEMS CORPORATION
[Signature of Authorized Agent] [Signature of Authorized Agent]
13
Exhibit E to the Amendment to the Distribution and Development Agreement
I. SCOPE.
A. Payment Structure
Payments between the parties will consist of four components: (1) Initiation
Royalties paid upon execution of a new customer agreement, (2) Sustaining
Royalties paid over the life of a customer agreement, (3) a fee for dormant
archives and (4) one-time true-up payments for outstanding liabilities.
B. Transition to New Payment Structure
Contracts signed after June 30, 2003 will be covered solely by the provisions
described in this Exhibit and not by the payment provisions of the un-amended
Agreement. Contracts signed prior to July 1, 2003 will be treated as follows:
1. All royalties recorded and paid prior to July 1, 2003 will be
retained.
2. Royalties paid since July 1, 2003 shall be reversed as described in
Section V.C.1 below
3. Contracts signed prior to July 1, 2003 will not be subject to an
Initiation Royalty or any Sustaining Royalty for Managed Study
Volume incurred prior to July 1, 2003
4. Contracts signed prior to July 1, 2003 will be subject to Sustaining
Royalties beginning July 1, 2003. Their studies will be included in
Managed Study Volume for purposes of determining the Sustaining Tier
Rate.
II. CALCULATING INITIATION ROYALTIES.
The party entering into a contract subject to these terms (the "Contracting
Party") will pay to the other party an "Initiation Royalty" at the end of each
calendar quarter. Such Initiation Royalty will be based on [**] and [**] for the
XXXX System) that the Contracting Party enters into during the year. The
Initiation Royalty will be calculated by multiplying the "Average Annual
Studies" times the "Initiation Tier Rate."
Initiation Royalty = [**] x [**]
A. Definition of Average Annual Studies
Average Annual Studies is the sum of [**] for all
XXXX System contracts for Diagnostic and/or Archive products signed during a
quarter.
Contracts shall include both (1) new contracts and (2) additional
volume/duration contracts for an existing customer. For each contract included
in the calculation, its contribution shall be the higher of [**] summed for all
years of the
1
contract term (not to exceed 7 years), divided by the years of the contract term
(not to exceed 7 years). Such projection will be based on the Contracting
Party's good faith estimate at the time of execution of the agreement. Each
Party shall estimate in advance the Average Annual Studies it expects to sign
during the ensuing year ("Estimated Average Annual Studies"). That estimate
shall be the basis for determining the Initiation Tier Rate as defined below.
Average Annual Studies =Total of (Number of estimated studies under a
given contract or up to seven years) / number of years in contract (for up to
seven years))
Example for 3 contracts signed in Q1'2004 (studies in thousands):
Xxx. Xx0 Xx0 Xx0 Xx0 Xx0
Contract #1 [**] [**] [**] [**] [**] [**]
Contract #2 [**] [**] [**] [**] [**] [**]
Contract #3 [**] [**] [**] [**]
---
[**]
Average Annual Studies = 692
B. Definition of Initiation Tier Rate
For Diagnostic and/or Archive Contracts:
The Initiation Tier Rate is the rate charged [**] to compute the Initiation
Royalty each quarter. The rate for Diagnostic and/or Archive contracts will be
based on Estimated Average Annual Studies as follows:
Average Annual Studies (thousands) IDX Stentor
--------------------------------- ----- -------
0-1,000 $[**] $[**]
1,000-1,999 $[**] $[**]
2,000-2,999 $[**] $[**]
3,000-3,999 $[**] $[**]
4,000+ $[**] $[**]
Assuming that IDX and Stentor each projected an Estimated Average Annual Study
of [**], then using the example above, IDX would pay Stentor an Initiation
Royalty of [**] x $[**] = $[**]. If Stentor had signed the same number of
Average Annual Studies, it would pay IDX an Initiation Royalty of [**] x $[**] =
$[**].
If a portion of Average Annual Studies were for contracts that are either
"Diagnostic-only Studies" or "Stored-only Studies", the Initiation Royalty for
that portion would be the applicable Initiation Tier Rate times [**]%.
C. Adjustment to actual signed Average Annual Studies
At the end of each calendar year the parties shall compare "Actual Average
Annual Studies" to Estimated Average Annual Studies. If Actual Average Annual
Studies places the party in a different Initiation Tier Rate than it used during
the year to pay Initiation Royalties, the party
2
SECOND AMENDMENT
TO DISTRIBUTION AND DEVELOPMENT AGREEMENT
This Second Amendment (the "Second Amendment") of the Distribution and
Development Agreement (the "Original Agreement") between STENTOR, INC., a
Delaware corporation ("Stentor") and IDX SYSTEMS CORPORATION, a Vermont
corporation ("IDX") is made effective as of November 16, 2004 (the "Second
Amendment Effective Date").
RECITALS
A. Stentor and IDX entered into the Original Agreement on November 15,
2000.
B. The parties amended the Original Agreement effective January 1, 2004
(the "First Amendment").
C. The parties wish to further amend the Original Agreement as amended.
NOW, THEREFORE, in consideration of the mutual covenants and other terms
and conditions set forth below, the parties agree as follows:
SECOND AMENDMENT
1. Section 2.1 of the Original Agreement is hereby deleted in its entirety and
replaced with the following:
2.1 Term. This Agreement shall be in effect for an initial term beginning
on the Effective Date and ending November 15, 2015 (the "Initial Term")
and shall automatically renew for additional successive two (2) year terms
unless earlier terminated by either of IDX or Stentor by giving written
notice of such party's election not to renew this Agreement not later than
one (1) year prior to the expiration of the Initial Term or six (6) months
prior to the expiration of any then current successive term.
2. As of the Second Amendment Effective Date, Section 2.3 of the Original
Agreement shall be of no force and effect and shall be deleted in its entirety.
3. Section 4.1.3 of the Original Agreement, as amended by the First Amendment,
is hereby deleted in its entirety and replaced with the following:
4.1.3 Support Commitments.
4.1.3.1 IDX shall use Stentor's client-side ActiveX API for Stentor
Products and IDX Products developed for release subsequent to
November 15, 2005. IDX acknowledges that Stentor's obligation
to provide support for Stentor Products released prior to
November 15, 2005 (i.e, the 3.x versions), as specified in
Section 8.1 of the Agreement, shall thereafter be limited to
commercially reasonable efforts to provide bug fixes (i.e.,
correction of errors and nonconformity with Stentor's
published documentation). Stentor acknowledges and agrees that
it will maintain backwards compatibility of
1.
existing APIs as it pertains to support of 3.x versions from
the Amendment Effective Date until November 15, 2005, except
for reasonable changes required for maintenance or support
purposes (e.g., to resolve unintended API conflicts).
4.1.3.2 Each party shall use commercially reasonable efforts to
develop and, not later than the dates specified in Exhibit
4.1.3.2, include in a commercially-ready new version or
versions of the XXXX System to be delivered by Stentor, the
enhancements and other features described in Exhibit 4.1.3.2
attached hereto. For the avoidance of doubt, the term
"commercially-ready" means that the new version shall have
successfully exited alpha and beta testing and be suitable in
quality for general release to customers.
4.1.3.3 The parties shall work to close any missing material
functionality in current server-side APIs of the XXXX System
that have not yet been replicated to client-side APIs or MSMQ
methods by November 15, 2005. To facilitate this process, IDX
shall provide an interim material gap analysis of IDX version
10.4 relative to Stentor release 3.5 based on IDX's
then-current knowledge no later than December 31, 2004 and
March 31, 2005, with a complete and final material gap
analysis delivered to Stentor by June 30, 2005.
4.1.3.4 Stentor shall provide reasonable resources to accomplish the
work required by this Section 4.1.3 of the Original Agreement,
as amended by this Second Amendment, and shall keep IDX
informed on a current basis of Stentor's resource planning and
actual work progress. Stentor's current plans call for the
dedication of three FTEs (full-time equivalents) to the work.
The parties shall meet on a quarterly basis to discuss
staffing and resource allocation with respect to these
obligations. Furthermore, (1) Stentor shall ensure that its
variable bonus programs at both the executive and engineering
level carry a reasonable level of financial incentives with
respect to these obligations (of approximately 20% of the
variable bonus amount), (2) the Stentor CEO shall provide to
the IDX CEO a monthly status report regarding the progress of
the work described in this Section 4.1.3, and (3) the Stentor
CEO shall engage a mutually acceptable strategic relationship
consultant (a) the fees for whom the parties will equally
share, and (b) with whom the parties agree to meet at least
three times during 2005.
4. As of November 15, 2005, Sections 5.3.1 and 5.3.2 of the Original Agreement,
as amended by the First Amendment, shall be of no force and effect, and shall be
deleted in their entirety and replaced with the following:
5.3.1 IDX hereby grants to Stentor a non-exclusive, non-transferable
(except as provided in Sections 2.4 and 10.14) term license to market and
sublicense, and in connection therewith to sell, offer for sale, copy,
use, distribute, perform, display, modify, make derivative works of and
Merge, the IDX Products, in whole or in part, only as they may be Merged
into the XXXX System.
2.
5.3.2. IDX also hereby grants to Stentor a non-exclusive, non-transferable
(except as provided in Sections 2.4 and 10.14) term license to sublicense
one or more Distribution Partners to market and sublicense, and in
connection therewith to sell, offer for sale, copy, use, distribute,
perform, and display, the IDX Products, in whole or in part, only as they
may be Merged into the XXXX System, to any Person.
5. As of November 15, 2005, Section 5.5 of the Original Agreement, as amended by
the First Amendment, shall be of no force and effect, and shall be deleted in
its entirety and replaced with the following:
5.5 Territory. This Agreement, including the licenses granted hereunder,
shall apply to the parties worldwide. The "Territory" shall mean the [**].
Notwithstanding anything to the contrary in the Original Agreement, as
amended by the First Amendment, the following process shall be added to
the provisions of Section 5.6 of the Original Agreement, as amended by the
First Amendment, in order to give full effect to that Section. Stentor's
Chief Executive Officer shall implement a process (which shall include a
written policy, for all sales personnel, that will be distributed within
twenty days of the execution and delivery of this Second Amendment and
will include a warning that a violation of this policy may result in
termination of employment) by which Stentor personnel will make him aware,
within 5 working days of learning that a Stentor Exclusion Customer is
considering or has expressed an interest in, acquiring the XXXX System
from Stentor. Upon learning of such interest, Stentor's Chief Executive
Officer shall promptly telephone or otherwise contact IDX's Chief
Executive Officer to discuss how best to address any concerns the customer
may have with the products or services such customer is receiving from
IDX. Stentor's sole activity with respect to such customer during the
45-day period referenced in Section 5.6 shall be working with IDX to
address and resolve such concerns, and Stentor's sole contact with such
customer during such 45-day period shall be at IDX's specific request,
except that Stentor may return the calls and emails of the customer solely
in order to direct the customer to IDX. Through November 15, 2005, Stentor
shall take all commercially reasonable steps to respond to IDX's requests
for Stentor to assist IDX in strengthening IDX's relationships with any
Stentor Exclusion Customer, and Stentor shall refrain from any activity
that would disturb or otherwise adversely affect IDX's relationships with
such Stentor Exclusion Customer. As of November 15, 2005, Section 5.6 of
the Original Agreement, as amended by the First Amendment, shall be of no
force and effect and shall be deleted in its entirety, and the preceding
sentences in this Section 6 shall be of no further force and effect and
shall be deleted in their entirety.
6. As of May 31, 2005, Section 6.1.1 of the Original Agreement, as amended by
the First Amendment, shall be of no force and effect and shall be deleted in its
entirety.
7. Sections 6.1.2 and 6.1.3 of the Original Agreement are hereby deleted in
their entirety.
8. Section 7.1 of the Original Agreement, as amended by the First Amendment, is
hereby deleted in its entirety and replaced with the following:
7.1 Compensation Payment. IDX and Stentor shall be entitled to
compensation for their respective licensing to the other of their
respective rights and technology incorporated into the XXXX System as set
forth in Exhibit E as amended by this Second
3.
Amendment. The amendments to Exhibit E as set forth in this Second
Amendment shall become effective on January 1, 2005.
9. As of November 15, 2004, Section 8.4 of the Original Agreement shall be of
no force and effect and shall be deleted in its entirety.
10. Section 16 of the First Amendment is hereby amended by changing in the first
sentence thereof, "December 2004" to "December 2005" and by inserting, at the
end of the said first sentence, the phrase, "with regard to the version 4.x and
higher".
In addition, the parties will work in good faith to address the parties'
respective regulatory compliance obligations in light of the new API structure
in version 4.x (and later) of the Stentor product. The parties shall apply their
mutual best efforts for 45 days following the execution and delivery of this
Second Amendment to reach agreement on the question of whether the most
effective way to ensure legal compliance by IDX in distributing version 4.x (and
later), while at the same time achieving an efficient operational solution for
both IDX and Stentor, would be either (a) for IDX to obtain its own clearance
for the sale of version 4.x and higher or (b) to sell under a new clearance, to
be obtained by Stentor, for the elements of version 4.x and higher to be
provided to IDX by Stentor.
If, after such 45 days, the parties have not reached agreement by
executing and delivering a further addendum to the Original Agreement to
evidence such agreement, the parties shall submit the dispute to a neutral third
party attorney selected by counsel for each of the parties, who shall have
significant applicable regulatory experience (the "Arbitrator"). Within 30 days
thereafter the Arbitrator shall decide upon and produce a written plan for
regulatory compliance by IDX and Stentor in distributing version 4.x and higher,
with a view towards creating the most efficient operational processes for both
IDX and Stentor, and the parties shall thereafter be bound to follow such plan
at their own expense.
The parties shall each be responsible for their own costs in this process
and shall each be responsible to pay one-half of the costs of the Arbitrator.
The parties shall each make available to each other and to the Arbitrator their
respective experts, including attorneys, managers, technicians and consultants
to assist them in their work under this process.
11. Section 20 of the First Amendment is hereby amended by deleting all but the
last sentence thereof. The following sentences are hereby added to the end of
Section 10.10 of the Original Agreement as amended by the First Amendment:
In recognition that it is important to avoid confusion among customers
and prospects, and to afford the parties opportunity to prepare for
announcements, the parties shall, when practicable and feasible, provide
advance notice and opportunity for comment to each other prior to all
public announcements concerning the subject matter of this Agreement and
the subject of IDX's or Stentor's strategy affecting sale of the XXXX
System. In making any such announcements, the parties shall endeavor,
consistent with their business interests and legal requirements, to be
attentive to the business concerns of the other.
4.
12. As of November 15, 2005, the following defined terms shall be deleted from
Schedule 1 of the Original Agreement: "Pre-Existing Stentor Customer" and
"Stentor License Exclusion Customer."
13. Exhibit E of the Original Agreement, as amended by the First Amendment, is
hereby amended as follows: Beginning January 1, 2005, and for each calendar year
thereafter during the Initial Term, each Initiation Tier Rate used to calculate
the per-quarter Initiation Royalty payable by a party, and each Sustaining Tier
Rate used to calculate the per-quarter Sustaining Royalty payable by such party
each quarter, as set forth in Exhibit E, shall be reduced by [**] per cent [**]%
once such party has paid the other party total compensation with respect to
Exhibit E that equals the amounts set forth in the table below for the
applicable calendar year:
CALENDAR YEAR 2005 2006 2007 2008 2009-2014
(AND FOR
ANY RENEWAL
TERM
CALENDAR
YEARS)
Total IDX $[**] $[**] $[**] $[**] $[**]
payments to
Stentor that
trigger [**]%
per-study
royalty
reduction
Total Stentor $[**] $[**] $[**] $[**] $[**]
payments to
IDX that
trigger [**]%
per-study
royalty
reduction
For the avoidance of doubt, such reductions shall not be cumulative. For
example, if Stentor has paid IDX a total of $[**] of Exhibit E-based
compensation in calendar 2005 by June 30, 2005, the Initiation Tier Rate for
Average Annual Studies in the [**] unit tier would drop from $[**] to $[**] for
the purposes of calculating the Initiation Royalty for the remaining portion of
2005. Beginning on January 1, 2006, this Initiation Tier Rate would be reset at
$[**] unless and until Stentor had paid IDX total compensation of $[**] under
Exhibit E in calendar 2006, at which point the rate would be reduced to $[**]
for the remainder of 2006, and so on for each subsequent calendar year. With
respect to calculation of the Sustaining Royalty as set forth in Exhibit E, the
Managed Study Volume shall be deemed to be the highest Managed Study Volume
achieved by a party in any quarter prior to such calculation.
14. Except as expressly set forth herein, all other terms and conditions of the
Original Agreement, as amended by the First Amendment, shall remain in full
force and effect. In the event of any inconsistency or conflict between this
Second Amendment and the Original Agreement as amended by the First Amendment,
the terms and conditions of this Second Amendment shall govern and control.
Except as expressly defined or modified herein, all capitalized terms in this
Second Amendment shall have the same meanings as set forth in the Original
Agreement as amended by the First Amendment. If a defined term is defined both
in this Second Amendment and in the Original Agreement as amended by the First
Amendment, then the term shall have the meaning set forth in this Second
Amendment.
5.
15. Each party represents and warrants that it possesses the right and capacity
to enter into this Second Amendment. Each party represents and warrants that
this Second Amendment has been duly authorized, executed and delivered by it and
constitutes its valid and legally binding agreement with respect to the subject
matter contained herein.
16. The Original Agreement, as amended by the First Amendment and this Second
Amendment, constitutes the complete and exclusive statement of the agreement
between the parties and supersedes all prior and contemporaneous proposals and
understandings, oral and written, relating to the subject matter contained
therein.
17. Notwithstanding anything to the contrary, nothing contained in this Second
Amendment shall have any effect upon any undertaking, commitment, or agreement
made by Stentor to any IDX customer, and by this Agreement, IDX does not
undertake to perform any such obligation of Stentor.
18. The exchange of signed, faxed copies (including counterparts) of this Second
Amendment is sufficient for this Second Amendment to be effective.
IN WITNESS WHEREOF, the parties' duly authorized representatives have
executed this Second Amendment.
STENTOR, INC. IDX SYSTEMS CORPORATION
Title:
[Signature of Authorized Agent] [Signature of Authorized Agent]
6.
EXHIBIT 4.1.3.2
SUPPORT OBLIGATIONS
The following obligations will be performed by Stentor, unless otherwise
provided in this Exhibit 4.1.3.2.
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DELIVERY [**]-TARGETED FOR STENTOR [**]
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1. iExport [**]:
1.1 iExport will [**] Stentor shall [**]. Stentor shall [**]. Stentor will
[**]. In any event, the companies shall [**].
1.2 iExport shall [**]. iExport will [**].
1.3 iExport queue shall [**].
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2. [**], will be made available to IDX [**] to make it available to IDX.
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3. [**]:
3.1. [**] that indicates [**] in the [**].
3.2. [**] an event that is [**]. The event will include:
3.2.1. [**]
3.2.2. [**]
3.2.3. [**]
3.2.4. [**]
3.2.5. [**]
3.3. [**]
3.3.1. [**]
3.3.2. [**]
3.3.3. [**]
3.4. [**].
3.5. [**] the system.
3.6. [**] that is [**].
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4. [**]:
4.1. [**].
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5. [**] in the First Amendment.
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7.
-------------------------------------------------------------------------------
DELIVERY [**]- TARGETED FOR STENTOR [**]
-------------------------------------------------------------------------------
6. Stentor will [**].
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7. Support for [**].
7.1. Support for [**].
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8. [**] will be [**] within which [**] will be [**].
-------------------------------------------------------------------------------
9. Stentor will [**]. Stentor also [**]. Stentor [**].
-------------------------------------------------------------------------------
10. [**].
10.1. Provide [**].
10.2. Provide [**].
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10.3. IDX and Stentor [**].
10.4. [**], Stentor will [**]:
10.4.1. [**] information.
10.4.2. [**] information.
10.4.3. [**] information.
10.4.4. [**] information.
10.5. [**] information [**].
10.6. [**], IDX will [**].
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