EXHIBIT 12.1
FINAL CONFIDENTIAL
VALUE ADDED RESELLER AGREEMENT
BY AND BETWEEN
APPLIED VOICE RECOGNITION, INC. (AVRI) ("VAR")
AND
LERNOUT & HAUSPIE SPEECH PRODUCTS N.V. ("L&H")
Effective Date: September 30, 1998 Initial Term: Through December 31, 1999
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VAR CORPORATE NAME: Applied Voice Recognition, Inc. (VAR)
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Incorporated under the Laws of:
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Address: 0000 Xxxx Xxx Xxxxx, Xxxxx XXX
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Xxxxxxx, Xxxxx 00000
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Phone: Fax:
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VAR NOTICES ADDRESS:
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Attention:
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Phone: Fax:
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L&H CORPORATE NAME: Lernout & Hauspie Speech Products N.V.
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Incorporated under the Laws of: Belgium
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Address: Sint-Krisbllnetrast 7
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8900 xxxxx, BELGIUM
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Phone: 33/67.22.8888 Fax: 32/67.20.8489
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L&H NOTICES ADDRESS:Same as above Attn: Legal Department, AND COPY TO:
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Lernout & Hauspie Speech Products USA, Inc.
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00 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000
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Attention: Contract Manager
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Phone: 781/203-5000 Fax: 781/000-0000
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THIS AGREEMENT IS GOVERNED BY THE ATTACHED TERMS AND CONDITIONS. VAR AND L&H
ACKNOWLEDGE THAT THEY HAVE READ AND AGREE TO BE BOUND BY THE ATTACHED TERMS AND
CONDITIONS. IN WITNESS WHEREOF, THIS AGREEMENT HAS BEEN DULY EXECUTED BY THE
PARTIES HERETO, AS OF THE EFFECTIVE DATE.
VAR: L&H:
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman & CEO Title: Senior Vice President
FINAL CONFIDENTIAL
RECITALS:
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WHEREAS, L&H is engaged in developing and licensing dictation software programs
for use in the medical field;
WHEREAS, AVRI is a software development and solutions provider. AVRI builds,
packages and sells applications and solutions that utilize voice tools which
include, but may not be limited to, speech recognition, voice authentication,
voice verification, speech-to-text, language modeling, vocabulary creation,
dictionary creation and audio compression.
WHEREAS, AVRI desires to obtain certain rights, as hereinafter described, in
said software programs and its related documentation and;
WHEREAS L&H is willing to grant to AVRI said rights with respect to said
software programs;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
ARTICLE I: DEFINITIONS
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The following terms shall have the meanings ascribed to them herein whenever
they are used in this Agreement, unless otherwise clearly indicated by the
context.
1.1 "Software" shall mean the Software delivered to VAR hereunder, as
described in Addendum A, to be adapted to work with the VAR Product;
Documentation for the Software, which is customarily provided by L&H as a
part of the Software; and all Corrections of the Software. This shall
include enhancements and upgrades of the Software, provided that VAR is
current on all maintenance payments that become due hereunder.
1.2 "Documentation" shall mean those visually-readable materials, in English,
developed by or for L&H for use in connection with the Software.
Documentation includes operating instructions, input information and
format specifications.
1.3 "Corrections" shall mean changes made in the Software and/or
Documentation.
1.4 "End User" shall mean the customers of VAR or of Third Parties, who will
only be granted the right to use the Software in standalone form or in
connection with the VAR Product.
1.5 "VAR Product" shall mean the application(s) made or services provided by
VAR, as identified in Addendum A.
1.6 "Third Party" shall include original equipment manufacturers,
distributors, system houses, value added resellers and other such
entities engaged in doing business with VAR, and who acquire the VAR
Product incorporating the Software, for distribution purposes only.
1.7 "Services" shall mean the speech-to-text transcription services which are
more fully described in Addendum A.
1.8 "Services Software" shall mean the software delivered to VAR hereunder,
as specified in Addendum A, which shall be used with the Services.
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ARTICLE II: BACKGROUND REQUIREMENTS OF A VAR LICENSE
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2.1 This license is intended to allow a Value Added Reseller (VAR) to make and
distribute copies of the Software and Services Software for restricted use
by the VAR's and Third Parties' End Users, and to resell the Services to
End Users.
2.2 The Software may only be distributed and used in conjunction with
substantial value added products or services provided by the VAR.
2.3 The VAR is required to submit a prototype copy of its complete proposed
VAR Product, including the desired implementation of Software and the
proposed VAR end user license to L&H for review and approval prior to any
distribution of copies of the Software, incorporated in the VAR Product.
L&H shall complete such review within ten (10) days after receipt of the
VAR Product and shall at that time either provide written notice of
acceptance of the VAR Product, or provide reasonable requests to VAR for
changes that should be incorporated in order for L&H to accept the VAR
Product. Once VAR has made such changes in an acceptable manner, L&H shall
then accept the VAR Product. L&H shall not unreasonably withhold its
approval of the revised VAR Product.
2.4 At the moment the VAR Product has been approved by L&H and the required
royalties are paid, VAR may distribute the Software as component parts of
its VAR Product for use in accordance with the approved VAR end user
license.
2.5 VAR shall provide the Services with the Services Software to End Users,
in accordance with L&H's standard terms and conditions, a copy of which is
attached hereto as Addendum D.
ARTICLE III: GRANT OF LICENSE
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3.1 In consideration for the payments made under this Agreement, L&H hereby
grants to VAR and VAR accepts from L&H, a world-wide non-exclusive, non-
transferable license, subject to all applicable terms and conditions
hereof, to:
a) use the Software solely in connection with VAR's development,
distribution and provision of technical support for the VAR Product
incorporating the Software;
b) make copies of the Software with the sole purpose to incorporate into
the VAR Product;
c) distribute to End Users, directly or indirectly through Third Parties,
copies of the Software incorporated into the VAR Product;
d) distribute copies of the Software to End Users in shrink-wrap,
standalone form, according to the terms and conditions of L&H's
current Authorized Reseller program;
e) incorporate all or part of the Documentation into the VAR Product
documentation, provided VAR properly incorporates and references L&H's
trademarks and copyrights in the documentation.
f) make copies of the Services Software for distribution to End Users for
use with the Services;
3.2 All distributions by Third Parties in accordance with Article 3.1c shall
be pursuant to written agreements that incorporate applicable terms and
conditions hereof.
3.3 In consideration for the non-refundable pre-payment to which VAR has
committed hereunder, L&H hereby grants to VAR the exclusive right to use
the Services in conjunction with language models developed through the
performance of the Services, using data received from VAR, into the non-
hospital solutions market within North America. This exclusivity shall
expressly exclude Services for hospitals (e.g., and specifically for
radiology, pathology and emergency medicine). Within thirty (30) days
after the
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Effective Date of this Agreement, VAR shall submit a list of proposed
exclusive language model specialties of approval or rejection by L&H.
Exclusivity granted for a specific language model shall be valid for a
period of six (6) months after the first installation of that language
model specialty developed using VAR's data, for use with the Services. If
VAR is in breach of any term of this Agreement, this exclusivity shall
automatically revert to a non-exclusivity.
ARTICLE IV: ROYALTIES/PAYMENTS
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4.1 In consideration for the rights granted hereunder, VAR shall make royalty
payments to L&H for each royalty-bearing copy of the Software, pursuant to
Addendum C.
4.2 VAR shall make payments to L&H for the Services performed hereunder,
pursuant to Addendum C.
ARTICLE V: MAINTENANCE
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5.1 L&H, upon request of VAR, agrees to provide maintenance to VAR throughout
the term of this Agreement, at the cost as defined in Addendum C.
5.2 If End Users desire maintenance from L&H, End Users may enter into a
yearly maintenance agreement with L&H, and such maintenance shall be
offered at L&H's then-current maintenance costs.
ARTICLE VI: WARRANTY
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6.1 L&H warrants that it has the right to grant the licenses and rights
contained in this Agreement.
6.2 L&H warrants that the Software will function substantially in accordance
with the specifications set forth in the Documentation. VAR acknowledges
that the Software is of such complexity that it may have inherent defects
and agrees that if any deviations from the specification exist, as VAR's
exclusive remedy and L&H's sole responsibility, L&H shall use its best
efforts to eliminate promptly any signification deviations reported to it
by VAR in writing. This warranty shall expire nine (9) months after the
Effective Date of this Agreement. Deviations discovered after the
expiration of the warranty period shall be handled under maintenance, as
set forth in Addendum C.
6.3 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, L&H MAKES AND VAR
RECEIVES, NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. L&H
DOES NOT WARRANT THAT ANY OR ALL FAILURES, DEFECTS OR ERRORS WILL BE
CORRECTED, OR WARRANT THAT THE FUNCTIONS CONTAINED IN THE SOFTWARE AND/OR
SERVICES SOFTWARE WILL MEET END USER'S REQUIREMENTS. VAR ACKNOWLEDGES THAT
L&H HAS MADE NO REPRESENTATIONS REGARDING WARRANTY OR LIABILITY OTHER THAN
AS STATED IN THIS AGREEMENT.
6.4 In the event L&H is unable to correct the deviations reported in writing
by VAR during the Warranty Period within three (3) months after the
receipt of such written notice, and provided that VAR has given L&H the
information and cooperation needed in order to correct the deviations,
there will be mutual consent to terminate this Agreement, if, based on the
deviations, this Agreement fails of its particular purpose.
ARTICLE VII: INDEMNITY
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7.1 L&H shall indemnify and defend VAR against any claim that the Software
infringes any third party copyright when used in accordance with the terms
of this Agreement, provided however that VAR shall
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give L&H prompt notice of such claim and shall give information, reasonable
assistance and authority to defend or settle the claim. L&H shall have the
right, at its option, either to obtain for VAR the right to continue using
the Software, substitute other software with equivalent functional
capabilities, modify the Software so that it is no longer infringing while
retaining equivalent functions, or terminate this Agreement and refund the
amounts paid hereunder by VAR.
7.2 L&H shall have no liability to VAR or End Users in the event infringement
of any intellectual property right arises from components of a VAR Product
which are not derived directly from the Software operating on the VAR
Product but which are introduced into a VAR Product by VAR, or which result
from compliance with VAR's designs specifications or instructions or from
modification by VAR of the Software.
ARTICLE VIII: TERM
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8.1 The Initial Term of this Agreement shall commence on the Effective Date
herein and shall continue until December 31, 1999. Thereafter, this
Agreement shall be automatically renewed for one (1) year periods unless
terminated or canceled as provided in Section 8.2 or 8.2:
8.2 This Agreement may be terminated for cause, as follows:
a) by L&H, if VAR fails to make timely payments or provide royalty
reports as required hereunder, and any such failure is not remedied
within thirty (30) days after receipt of written notice;
b) by L&H, if VAR expressly or impliedly repudiates this license by
refusing to observe the restricted use or confidentiality requirements
as mentioned in this Agreement, L&H may terminate this Agreement
immediately, by providing written notice to VAR stating such breach;
c) by either party, if a party ceases its business activities as a result
of bankruptcy, dissolution, liquidation, or other causes, the other
party may immediately terminate this Agreement by providing written
notice to that party.
8.3 After the Initial Term as defined hereabove, this Agreement may be
terminated by either party without cause by giving the other party a
ninety (90) days written notice.
8.4 Any termination or cancellation of this Agreement shall promptly terminate
VAR's rights as defined in Article III, provided however that such
termination shall not terminate or affect sublicenses previously and
properly granted to End Users, being it that such termination is not due
to breach of contract by VAR. If End Users desire to have continued
maintenance of the Software from L&H, L&H will make such support available
to the End User under L&H's standard terms and conditions for such
support.
8.5 No termination or cancellation of this Agreement shall affect the
obligation of VAR to collect and distribute to L&H all payments, which
have become or will be due from End Users and any other payments which
have become due hereunder.
8.6 For the purposes of this Agreement "immediately" shall mean five (5) days
after postal date of a written notice or the date of delivery of the
courier mail company, whichever comes first.
ARTICLE IX: LIABILITY
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9.1 Limitation on Darrages:
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In no event will L&H be liable for any loss of or damage to revenues,
profits or goodwill or other special, incidental indirect or consequential
damages of any kind, resulting from its performance or failure to perform
pursuant to the terms of this Agreement or any of the attachments hereto or
resulting from the furnishing, performance, or use or loss of use of any
Software or Services Software or other materials
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delivered to VAR hereunder, including, without limitation, any
interruption of business, whether resulting from breach of contract,
breach of warranty, or any other cause (including negligence), even if L&H
has been advised of the possibility of such damages.
9.2 Maximum Liability:
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L&H's total liability to VAR from any and all causes shall be limited to
the total amount of royalties actually paid by VAR to L&H, including but
not limited to the non-refundable pre-paid royalties to which VAR has
committed hereunder.
L&H's limitation of liability is cumulative with all VAR's payments being
aggregated to determine satisfaction of the limit. The existence of more
than one claim will not enlarge or extend the limit.
ARTICLE X: CONFIDENTIAL INFORMATION
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10.1 Each party agrees not to disclose any trade secrets or confidential
information transferred to it by the other party which are identified in
writing as confidential ("Trade Secrets"). Each party shall take the same
action and utilize at least the same precautions in preventing
unauthorized disclosures of the other party's Trade Secrets as it uses
with regard to its own secrets and confidential information of similar
nature.
10.2 The obligation of each party not to use or disclose Trade Secrets of the
other party shall survive the termination or cancellation of this
Agreement. However, neither party shall be obligated to protect Trade
Secrets of the other party under any provision of this Agreement in the
event the aforesaid:
a) are known to or developed by the receiving party without restriction
independently of the disclosing party.
b) are or become generally known to the public by other than a breach of
duty hereunder by the receiving party.
c) which the disclosing party agrees in writing is free of such
restrictions,
d) which at the time of disclosure to the receiving party was known to
such party free of restrictions.
The obligation of one party not to use or disclose said Trade Secrets of
the other party will remain in effect until one of these exceptions
occurs.
10.3 Since unauthorized transfer of either party's Trade Secrets will
substantially diminish their value and injure a party in ways that may not
be remedied fully by money, one party's breach of these Article X
obligations may entitle the other party to equitable relief (including
orders for specific performance and injunctions) as well as monetary
damages.
10.4 In consideration for the exclusivity granted to VAR under section VAR
shall provide L&H with data from its third parties and end users,
including but not limited to printed and electronic medical reports.
Notwithstanding any other provision of this Agreement to the contrary, L&H
may utilize any data submitted to L&H by VAR pursuant to this Agreement on
a royalty-free basis in its normative databases, and to incorporate such
data in studies, analyses and products prepared by L&H, to develop
language models and to otherwise be used in its normal business, without
any restriction other than those mentioned in this Section 10.4. No such
data as released by L&H will be identified as originating from VAR, nor
will it identify any patient, provider or payor, nor will such data be
utilized in any study, report or publication without first being mixed
with a significant body of other data such that neither VAR nor any
patient, provider or payor can be identified, unless VAR expressly
consents in writing. L&H's rights to use such data shall survive the
termination of this Agreement perpetually. All products, studies and
analyses using said data shall be and remain the sole property of L&H.
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ARTICLE XI: RESTRICTED USE
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11.1 VAR shall not use or distribute or have distributed the Software or
Documentation as such, or in connection with or on any equipment or
services other than the VAR Product. VAR shall not use or distribute or
have distributed the Services Software except in connection with the
Services.
11.2 VAR shall not recreate generate or reverse-engineer any portion or
version of any delivered Software or Services Software or attempt any of
the foregoing or aid, abet or permit others to do so, provided, however,
if such is permitted by local law, all results shall be the sole property
of L&H. VAR is not allowed to make any derivative works based on or make
any modifications to the Software or Services Software, provided, however
that VAR shall be entitled to modify knowledge bases and templates within
the Software to make them specific to the VAR Product and End Users
preferences.
11.3 VAR expressly agrees not to commercialize the SOftware in a manner which
enables a third party to make, use, or distribute additional applications
other than the VAR Product.
11.4 VAR acknowledges that unauthorized reproduction or use of any (delivered)
Software or Services Software as provided in this Article XI is a breach
of a material obligation of this Agreement and is subject to any available
remedies for such breach.
ARTICLE XII: TITLE AND RIGHTS TO SOFTWARE AND MODIFICATIONS AND VAR PRODUCT
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12.1 The grant of license and distribution rights to VAR under Article III
hereof are VAR's only rights to the Software, Services Software and
Documentation. Title, interests and rights to all delivered Software,
Services Software and Documentation shall always remain in L&H or its
licensor. Furthermore, the grant of such license shall not restrict
licensing by L&H in any manner, and L&H shall have full rights, use and
access to any modifications jointly developed by VAR and L&H as a result
of the Interconnect of the Software to the VAR Product.
12.2 Title, interests and rights to the VAR Product shall always remain in VAR,
excluding L&H's intellectual property rights incorporated therein.
ARTICLE XIII: TAXES
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13.1 The Software and Services Software licensed hereunder are intended
principally for use by End Users and therefore should be exempt from
sales, use, excise and other similar taxes. However, if such tax, or any
import duty, or export duty, should be imposed on L&H directly as a result
of VAR's sales of the VAR Product, VAR shall either bear such tax or duty
by a direct payment to the taxing authority or shall reimburse L&H for
such tax or duty paid by L&H.
ARTICLE XIV: USE OF LOGO & MARKETING
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14.1 VAR agrees to include the L&H Corporate Logo to its products using the
Software, or any other relevant logo at the request of L&H. This logo must
appear on the packaging of the VAR Product, and be mentioned in the
accompanying user documentation. VAR's use of the L&H Corporate Logo must
be approved by L&H in accordance with Section 2.3.
14.2 VAR agrees to issue with L&H a joint press release from time to time as
mutually agreed upon by the parties. All press releases must be approved
in writing by L&H and VAR prior to release.
14.3. The parties agree to work together in god faith to identify opportunities
for co-marketing of the Software and VAR Product and Services Software and
Services. All such co-marketing shall be subject to the approval of both
parties, on a case-by-case basis.
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ARTICLE XV: MISCELLANEOUS
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15.1 This Agreement shall be deemed to have been entered into and shall be
construed, governed and interpreted in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to principles of
conflict of law.
15.2 The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions, and this Agreement shall
be construed in all respects as if such invalid or unenforceable
provisions were omitted.
15.3 The failure of either party to insist, in any one or more instances, upon
the performance of any of the terms of this Agreement or to exercise any
right hereunder, shall not be construed as a waiver of the future
performance of any such term or the future exercise of such right.
15.4 Whenever any occurrence (e.g. an event of force majeure) is delaying or
threatens to delay L&H's timely performance under this Agreement, L&H
will promptly give notice thereof, including all relevant information with
respect thereto, to VAR.
15.5 It is hereby agreed that the rights and obligations of the parties hereto
contained in Articles XX XXXX, XX, X, XX, XXX, XXXX, XX and the Addenda
referenced therein, shall survive and continue after any termination or
cancellation of this Agreement and shall bind the parties, their
successors, their assigns and their legal representatives.
15.6 This Agreement sets forth and shall constitute the entire agreement
between VAR and L&H with respect to the subject matter thereof, and shall
supersede any and all prior agreements, understandings, promises and
representations made by one party to the other concerning the subject
matter herein and the terms and conditions applicable thereto. This
Agreement may not be released, discharged, supplemented, interpreted,
amended or modified in any manner except by an instrument in writing
signed by a duly authorized officer or representative of each of the
parties hereto as is specially provided elsewhere in this Agreement.
15.7 In making and performing this Agreement, the parties act and shall act at
all times as independent contractors and nothing contained in this
Agreement shall be construed or implied to create the relationship of
partner or of employer and employees between the parties. At no time shall
either party make commitments for or in the name of the other party.
15.8 VAR is nt allowed to assign the license rights granted hereunder without
L&H's prior written consent, which shall not be unreasonably withheld.
15.9 All notices under this Agreement shall be sent to the address here above
mentioned. All such notices shall be deemed to be received by the other
party three (3) days after the postal date or on the date of signature of
the receipt of delivery by a courier mail company.
15.10 The Addenda referenced in this Agreement, and the specifications
referenced therein, as well as other documentation referenced in this
Agreement which define the obligations of the parties are a part of this
Agreement with the same force and effect as if fully set forth herein.
15.11 All disputes, claims, and/or requests for specific contractual
performance, or other equitable relief, or damages or any other matters in
question between the parties arising out of this Agreement shall be
submitted for arbitration, provided that the parties have first made their
best faith efforts to resolve such matters together. Demand shall be made
to the American Arbitration Association ("AAA") and shall be
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conducted in New York, New York by a panel of three (3) arbitrators. L&H
and VAR shall each choose one (1) panel member, from a panel of persons
having experience with and knowledge of electronic computers, computer
software and the computer business. The third member shall be an
independent party, chosen by the first two members. At least one member of
the panel must have a legal background. Arbitration shall be in accordance
with the commercial rules of the AAA. The Award of the Arbitrators shall
be final and judgement may be entered upon it in any court having
jurisdiction thereof, and the prevailing party shall be entitled to costs
and reasonable attorney's fees arising out of Arbitration.
15.2 The parties agree that VAR shall have no obligation to utilize the
Services, if in VAR's sole opinion, the Services are not appropriate to
the business plan of VAR. VAR shall notify L&H by December 31, 1998 of
their decision to use the Services.
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ADDENDUM A
SOFTWARE AND SERVICES SOFTWARE FUNCTIONAL SPECIFICATION
AND SERVICES
Software and Services Software Functional Specification
1.1. VAR agrees having received the Software, having the following
reference:
L&H VOICE XPRESS FOR MEDICINE(TM) GENERAL MEDICINE EDITION V1.1
L&H VOICE XPRESS FOR MEDICINE(TM) EMERGENCY MEDICINE EDITION V1.1
L&H VOICE XPRESS FOR MEDICINE(TM) MENTAL HEALTH EDITION V1.1
L&H VOICE XPRESS FOR MEDICINE(TM) PATHOLOGY EDITION V1.1
L&H VOICE XPRESS FOR MEDICINE(TM) PRIMARY CARE EDITION V1.1
L&H VOICE XPRESS FOR MEDICINE(TM) RADIOLOGY EDITION V1.1
1.2. VAR agrees having received the Services Software, having the
following reference:
CORRECTIONIST SOFTWARE - NOT WEB-BASED
L&H has provided VAR with a version of the Correctionist Software
that is not web-based. VAR may further provide the Correctionist
Software to its End Users. This software assists in the review and
editing of draft documents produced by the Services. This beta
version of the Correctionist Software is provided "AS IS" without
warranty of any kind. End Users who wish to use the Services will
use this software for correction of draft documents. Audio data
relating to these draft documents will be played through methods
that the End User has traditionally used.
1.3. Reference is made to the Documentation as provided for in the
Software and Services Software.
1.4. Furthermore, by signing this Agreement, VAR accepts that the
Software and Services Software meets the functional
specification(s).
B. SERVICES:
Speech-to-text transcription services employing telephony speech recognition
technology for use in the healthcare industry, which is designed to enable
VAR and VAR's End Users to increase productivity of their labor forces and
reduce costs. This service is capable of receiving audio files and
processing these into draft documents. Audio files will typically be
captured via a digital recording source of agreed quality and sent for
processing via e-mail.
VAR's End User must have a method of displaying draft text on a computer
screen and playing back the source audio which relates to this draft text.
VAR shall provide the Transcription Correctionist Software to the End User
which the End User will use to view composite audio/text documents which
display text in a cursor-synchronized fashion. L&H has provided VAR with a
Gold Master CD-ROM that contains this software, which VAR can copy and
provide to its customers as needed.
To provide the Services, approximately twenty (20) reports and the related
way files are processed at no additional cost for each speaker, which are
secured from the individual or institution by VAR. From the reports and the
related language models, voice profiles are created for the individual
users. Once the profile is created, a transcription is created from the
profile each time the person dictates to an acceptable device. Acceptable
devices include a telephone, Dictaphone or Xxxxxx digital recording system,
certain handheld digital recordings, etc. The Services take the doctor's
recorded audio as its input and deliver a composite audio-text draft as its
output. The value proposition to the End User is that it should be able to
derive a 2-3x productivity gain.
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ADDENDUM B
VAR PRODUCT & SERVICE LANGUAGE MODELS
A. VAR PRODUCT
The Software will be incorporated into the following application(s):
VOICECOMMANDER(TM) 99: An integrated medical transcription suite which uses
continuous speech for data entry of patient encounters. This continuous
speech dictation product is targeted towards the medical transcription
market.
VOICECOMMANDER(TM) DIGITAL RECORDER OR PDA: AVRI will bundle a handheld
digital recorder with the Software to develop a product that will be
marketed to the healthcare industry.
B. SERVICE LANGUAGE MODELS
Language models will promptly be developed using VAR's data, during the
provision of the Services. VAR may use such language models as it further
uses the Services, subject to L&H's approval, which approval shall not be
unreasonably withheld. Each specialty language model must be submitted to
L&H for approval prior to use, as set forth in Section 2.3. of this
Agreement. Upon acceptance of the language model by L&H, VAR shall be
authorized to provide the Services with the approved language model.
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ADDENDUM C
ROYALTIES, SERVICE FEES
SUPPORT AND TRAINING
1. QUANTITY AND PAYMENT COMMITMENTS
A) VAR hereby commits to a non-refundable pre-payment in amount of $300,000
US Dollars ($300,000 USD).
B) VAR will therefore pay to L&H the above-described payment, in full, on or
before December 15, 1998. This non-refundable pre-payment will be
credited against Software royalty payments and Service Fees as described
in this Agreement.
2. ROYALTIES
A) The pricing for the Software and the royalties shall be as follows:
SOFTWARE SRP VAR VAR PRICE
DISCOUNT* (ROYALTY)
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L&H Voice Xpress for Medicine - General Medicine $499 50% $249.50
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L&H Voice Xpress for Medicine - Emergency Medicine $1,499 50% $749.50
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L&H Voice Xpress for Medicine - Mental Health $1,499 50% $749.50
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L&H Voice Xpress for Medicine - Pathology $1,499 50% $749.50
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L&H Voice Xpress for Medicine - Primary Care $1,499 50% $749.50
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L&H Voice Xpress for Medicine - Radiology $1,499 50% $749.50
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* In consideration for the non-refundable pre-payment on royalties as
described in Section 1 above, VAR shall be entitled to receive a VAR
discount as defined here.
The parties agree to review the royalty pricing as set forth above at the
moment that the VAR Product is commercially available and make
adjustments if mutually deemed appropriate.
B) The number of royalty-bearing copies shall be calculated as follows:
I) FOR SOFTWARE (EXCLUDING L&H VOICE XPRESS FOR MEDICINE(TM) GENERAL
MEDICINE EDITION) INCORPORATED INTO THE VAR PRODUCT: The number of
royalty-bearing copies equals the number of VAR Products that are
sold by VAR, multiplied by the number of copies of Software
integrated into the VAR Product multiplied with the number of voice
profiles licensed for each copy of the Software.
II) FOR THE L&H VOICE XPRESS FOR MEDICINE(TM) GENERAL MEDICINE EDITION
SOFTWARE: The number of royalty-bearing copies equals the number of
VAR Products that are sold by VAR, multiplied by the number of
workstations on which the VAR Product incorporating the Software
shall run. A workstation may have up to six (6) users.
III) FOR SOFTWARE (EXCLUDING L&H VOICE XPRESS FOR MEDICINE(TM) GENERAL
MEDICINE EDITION) SOLD IN STANDALONE FORM: The number of royalty-
bearing copies shall equal the number of copies of the Software
sold, multiplied by the number of voice profiles licensed for each
copy.
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VAR AGREEMENT (04) (09/19/98)
FINAL CONFIDENTIAL
IV) FOR SOFTWARE SOLD IN STANDALONE FORM: The number of royalty-bearing
copies shall equal the number of copies of the Software sold. Each
workstation shall have one (1) copy of the Software installed, with
a maximum of six (6) users.
C) Royalties due shall be paid on a quarterly basis. VAR will provide L&H
with calendar quarterly reports showing the number of sites where the VAR
Product incorporating the Software were installed during that quarter,
the number of workstations and/or users at each site, as appropriate, and
the gross revenues associated with each such site installation,
commencing three (3) months after the Effective Date of this Agreement.
These quarterly reports shall be provided to L&H within ten (10) days
after each quarter. VAR shall, at the same time, transfer the amount of
royalties due to L&H for all such royalties due, or if VAR's non-
refundable pre-payment has not yet been exhausted, credit the amount of
royalties due.
D) VAR shall keep a separate register in which it shall record the exact
number of installed sites and the gross revenues from each installed
site, and any other information relevant for determining the amount of
royalties payable.
L&H shall have the right to conduct an audit of VAR's records relative to
the performance of this Agreement, no more than once yearly. Such audit
shall be conducted by a mutually acceptable auditing firm, independent of
the parties. VAR's approval of the time and place for the audit requested
by L&H shall not be unreasonably withheld.
Any audit shall be performed during normal business hours. In the event
that such audit reveals an underpayment to L&H, VAR shall pay L&H such
underpayment within thirty (30) days, as well as the audit costs. Those
audit costs shall only be paid by VAR if the underpayment is greater than
five percent (5%) for the applicable quarter(s).
3. SERVICE FEES
A) Service Fees due to L&H shall be calculated on the basis of accuracy and
the savings derived from the use of the Services, as set forth below. For
the purposes of this Agreement, the parties agree that the fully-weighted
cost of transcription services is nine cents ($0.09) per line. The
parties shall split the assumed cost savings 50/50, as outlined below.
i) First six (6) months of this Agreement:
ACCURACY % COST SERVICE FEE
LEVEL SAVINGS SAVINGS DUE TO L&H
---------------------------------------------------------------
**85%* 0% n/a n/a
---------------------------------------------------------------
85% - 89% 40% $0.036 $ 0.018
---------------------------------------------------------------
90% - 94% 50% $0.045 $0.0225
---------------------------------------------------------------
95% + 60% $0.054 $ 0.027
---------------------------------------------------------------
** Less than
ii) After the first six (6) months of this Agreement, the parties hereto
shall review the results of the first six months and if the
assumptions on cost and cost savings hold true, the pricing beyond the
first six months shall be as set forth in the following grid. If the
assumptions were incorrect, the parties shall negotiate in good faith
to determine the pricing changes that will be necessary.
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VAR AGREEMENT (04) (09/19/98)
FINAL CONFIDENTIAL
ACCURACY % COST SERVICE FEE
LEVEL SAVINGS SAVINGS DUE TO L&H
--------------------------------------------------------------
**85%* 0% n/a n/a
---------------------------------------------------------------
85% - 89% 50% $ 0.045 $0.0225
---------------------------------------------------------------
90% - 94% 60% $ 0.054 $ 0.027
---------------------------------------------------------------
95% + 65% $0.0585 $0.02925
---------------------------------------------------------------
* If the accuracy is below 85%, VAR shall not use the Services, unless
otherwise agreed upon in writing by the parties.
** Less than
The parties agree to review equivalent pricing methods on a case-by-case
basis. If different pricing models are agreed upon, such shall be set
forth in writing and signed by both parties.
B) ACCURACY: For the purposes of this Agreement, "accuracy" shall mean the
number of words in a transcribed line which are accurately transcribed
relative to the original dictation, divided by the total number of words
in that line and multiplied by one hundred (100). For the avoidance of
doubt, if End Users fail to dictate punctuation, such punctuation will
not appear in resulting transcripts. Similarly, if End Users mistakenly
dictate words which are not intended to be in the eventual report
(stammers, corrections, etc.), and if these words appear in the resulting
documents, they will not be counted as errors.
C) LINES AND CHARACTERS: For the purposes of this Agreement, a "line" shall
be defined as a sixty-five (65) character line of text generated by an
End User. In the case of a partial line that is more than 32 characters
long, the full line shall be charged for. For the purposes of this
Agreement, a "character" shall mean any printed character, symbol,
keystroke, carriage return, or any of the foregoing generated by voice
commands.
4. MOST FAVORED NATIONS PRICING
In the event that L&H provides royalty pricing in a VAR agreement with terms
and conditions substantially similar to this Agreement to any other person
or party more favorable than these provided to VAR hereabove, VAR's royalty
pricing shall be automatically amended and revised without further action of
the parties, commensurate with such royalty pricing, so long as VAR is in
compliance with the terms and conditions of this Agreement.
5. MAINTENANCE
A) Maintenance will be available to VAR during the term of this agreement,
at a cost to VAR of ten percent (10%) of the royalties due to L&H per
quarter, with a minimum quarterly maintenance fee of Three Thousand Five
Hundred US Dollars ($3,500 USD). Maintenance for the first year of this
Agreement, for a total of Fourteen Thousand US Dollars ($14,000 USD), may
be credited against the non-refundable pre-payment to which VAR has
committed hereabove. Maintenance shall consist of the following services:
I) TELEPHONE SUPPORT
L&H shall provide telephone consulting services to VAR's designated
personnel to assist such personnel in resolving problems, obtaining
clarification relative to the Software and Documentation and
providing assistance regarding suspected defects or errors in the
Software or Documentation. Said services shall be provided during
normal business hours (Eastern Time), Mondays through Fridays
(excluding US legal holidays) and L&H shall furnish the names,
telephone and fax numbers of its personnel, as well as a list of the
current holidays.
II) WRITTEN SUPPORT
L&H agrees to diligently work for the resolution of defects and
errors in the Software and/or Documentation.
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VAR AGREEMENT (04) (09/19/98)
III) UPDATES
For the purposes of this Agreement, "Updates" shall mean corrections and
bug fixes made to the Software, Documentation, Services Software and
Services. L&H shall keep VAR advised of the status of all Updates made
by L&H or L&H's licensor for the Software and Documentation, and Updates
to the Services Software and Services during the term of this Agreement.
At the request of VAR, L&H shall provide one (1) copy of the current
release of the Software incorporating such Updates.
IV) ACCESS TO SENIOR DEVELOPER
L&H shall provide VAR with access to a senior developer who will be
VAR's main point of contact for support. L&H will identify this person
within sixty (60) days after the Effective Date of this Agreement and
shall provide VAR with such person's contact information at that time.
V) TOOLS
VAR has expressed an interest in the following L&H tools which may be of
use to VAR in porting their product to the L&H Software, which shall be
provided to VAR upon request, provided that VAR is current on
maintenance payments:
. Voice recognition tool-sets that allow the creation of applications
. Voice authentication and verification tool-set
. Speech-to-text tool-set
. Context creation tool-set
. Vocabulary creation tool-set
. Audio compression and expansion tool-set
B) EXCEPTIONS TO MAINTENANCE PROGRAM
The following items are expressly excluded from the maintenance program and
shall, as such, be invoiced at the then-current engineering fees:
i) Maintenance of software not delivered by L&H;
ii) Repairs caused by other causes than normal use or repairs caused by
force majeure (such as, but not limited to, fire, flood, failure of
electric power or air conditioning);
iii) Repairs required by the fact that maintenance has been performed by a
third party, not authorized by L&H.
iv) ON-SITE IMPLEMENTATION AND INTERCONNECT SUPPORT: VAR shall be
responsible for the interconnect and implementation of its customers'
systems. In the event that VAR requires L&H's assistance with the
interconnect or implementation of a customer's system, L&H will
provide on-site support at a rate of One Thousand US Dollars ($1,000
USD) per day, plus reasonable travel and lodging expenses.
6. UPGRADES AND ADDITIONAL LANGUAGE VERSIONS
For the purposes of this Agreement, "Upgrades" shall be defined as any
modification(s) or enhancement(s) to the Development Software which provide
new feature(s) or function(s). VAR and L&H agree to negotiate in good faith
to determine the applicable pricing and other relevant terms for Upgrades.
Provided that VAR has met all its obligations under this Agreement at the
moment the Upgrade becomes commercially available, VAR shall be entitled to
favored pricing for such upgrade.
In the event that L&H makes commercially available additional language
versions of the Software, the parties agree to negotiate in good faith to
determine the applicable pricing and other relevant terms for such additional
language versions.
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VAR AGREEMENT (04) (09/10/98)
7. TRANING
L&H requires VAR to attend, at VAR's expense, periodic training sessions, at
least one per year, designed to introduce the proper techniques and
information to properly license the Software. Cost of the training sessions
is $1,250 per day, and said sessions may be two or three days long and may be
conducted two or three times per year. In consideration to the non-refundable
pre-payment on royalties to which VAR has committed hereabove, L&H shall
provide VAR with one (1) week of training at no cost. Such training shall be
conducted at L&H's facilities in Burlington, Massachusetts and VAR shall
cover its travel costs associated with attending such training. VAR may
attend such training with up to six (6) employees.
8. OTHER FEES
Any support or training provided by L&H under this Agreement, except as
otherwise provided for herein, will be invoiced at the end of each month in
which said services are provided. Unless othewise provided in writing, all
invoices are payable within thirty (30) days after invoice date.
9. LATE PAYMENTS
Failing payment on time as mentioned here above, VAR shall be deemed to be in
default, such without any notice or injunction being required. In such case,
VAR shall be liable for interest at the rate of twelve percent (12%) per
annum of the total amount due.
10. VALIDITY
If this Agreement is not signed on or before September 30, 1998, the pricing
in this offer is subject to change.
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VAR AGREEMENT (04) (09/10/98)
