MASTER AGREEMENT
This Agreement is entered into as of this 25th day of March, 1997 (the
"Agreement"), by and between LifeRate Systems, Inc., a corporation organized
under the laws of the State of Minnesota (the "Company"), Xxxxxxx X. Xxxxxxx,
M.D., a resident of the State of Oregon ("Furnary") and APF, LLC, an Oregon
limited liability company ("APF, LLC" and together with Furnary collectively
called "APF").
RECITALS:
The Company and APF are parties to a certain "CORIS" Computer Software
Purchase Agreement dated July 2, 1995 (the "Purchase Agreement") relating to,
among other things, the sale by APF to the Company of certain computer software
developed by APF ("CORIS"), the payment of certain royalties to APF and the
provision of certain assistance to the Company by APF in the development and
implementation of CORIS with the Company's products.
The Company and APF desire to amend the Purchase Agreement in certain
respects as provided herein.
In addition, the Company and APF have agreed to enter into a certain
consulting agreement and certain other arrangements as provided herein.
AGREEMENT:
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and APF agree as follows:
1. Agreement to Amend Purchase Agreement; Consulting Agreement; Option.
1.1. Amendment of Purchase Agreement. Subject to the terms and
conditions hereof, at the Closing, the Company and APF shall
enter into the Modification Agreement in the form attached
hereto as Exhibit A, pursuant to which the Purchase Agreement
shall be amended as provided therein (the " Amendment").
1.2. Consulting Agreement. Subject to the terms and conditions
hereof, at the Closing, the Company and APF shall enter into
the Consulting Agreement in the form attached as Exhibit B
(the "Consulting Agreement").
1.3. Option. Subject to the terms and conditions hereof, at the
Closing, the Company shall issue to APF, in consideration of
services rendered to date to the Company by APF, an Option in
the form of Exhibit C (the "Option").
2. Closing.
2.1. The closing of the matters provided for in this Agreement
shall take place at the offices of Xxxxxxxxxxx Xxxxx &
Xxxxxxxx, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx,
Xxxxxxxxx 00000, at 11:00 a.m., Minneapolis time, on or about
March 24th, 1997, or as soon as practical thereafter (the
"Closing") or at such other place or different time or day as
may be mutually acceptable to APF and the Company, provided
that all other conditions to the Closing as provided in this
Agreement have been met to the reasonable satisfaction of, or
waived by, APF or the Company, as the case may be. The date
and time on which the Closing occurs is referred to as the
"Closing Date."
3. Representations and Warranties by the Company.
Except as disclosed in the Disclosure Schedule attached hereto as
Exhibit D, the Company hereby represents and warrants to APF as
follows:
3.1. Organization, Standing, Etc. The Company is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Minnesota and has the requisite corporate
power and authority to own or lease its properties and to
carry on its business as it is now being conducted. The
Company has the requisite corporate power and authority to
execute this Agreement, the Amendment, the Consulting
Agreement and the Option (collectively called the "Major
Agreements") and to issue the shares issuable upon exercise of
the Option (the "Option Shares") and to perform its
obligations under the Major Agreements.
3.2. Governing Instruments. The copies of the charter documents of
the Company, and all amendments thereto (collectively, the
"Charter Documents"), delivered to legal counsel for APF prior
to the execution of this Agreement, are true and complete
copies of the duly and legally adopted Charter Documents
currently in effect.
3.3. Capital Stock.
(a) The authorized and outstanding capital stock of the
Company as of the date hereof is set forth in the
Company's Annual Report on Form 10-KSB, for the year
ended December 31, 1996 ("Form 10-KSB"). All of the
outstanding shares of the Company were duly
authorized and validly issued and are fully paid and
nonassessable.
(b) There are no outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments,
convertible securities or other agreements or
arrangements of any character or nature whatever,
other than this Agreement, under which the Company is
obligated to issue any securities of any kind
representing an ownership interest in the Company,
except as set forth in the Form 10-KSB. The issuance
of the Option does not constitute an event, under any
anti-dilution provisions of any securities issued (or
issuable pursuant to outstanding rights, warrants or
options) by the Company or any agreements with
respect to the issuance of securities by the Company,
which will either increase the number of shares
issuable pursuant to such provisions or decrease the
consideration per share to be received by the Company
pursuant to such provisions.
(c) Except as set forth on the Form 10-KSB, no holder of
any securities of the Company is entitled to any
preemptive or similar rights to purchase any
securities of the Company from the Company.
3.4. Corporate Acts and Proceedings. Each of the Major Agreements
has been duly authorized by all necessary corporate action on
behalf of the Company, and, when delivered at the Closing,
will be duly executed and delivered by authorized officers of
the Company, and will be the valid and binding agreement on
the part of the Company and enforceable against the Company in
accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and to judicial
limitations on the enforcement of the remedy of specific
performance and other equitable remedies. The Option Shares,
when issued upon the exercise of the Option, will be duly
authorized, validly issued and outstanding, fully paid,
nonassessable and free and clear of all pledges, liens and
encumbrances.
4. Representations and Agreements of APF.
APF hereby represents and warrants to the Company as follows:
4.1. Acts and Proceedings. Each of the Major Agreements has been
duly authorized by all necessary action on the part of APF,
has been duly executed and delivered by APF, and is a valid
and binding agreement of APF and enforceable against APF in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization
or other similar laws affecting the enforcement of creditor's
rights generally and to judicial limitations on the remedy of
specific enforcement and other equitable remedies.
4.2. No Intellectual Property Rights. APF confirms, acknowledges
and agrees that APF does not own, or claim any ownership or
other any right, title or interest in, any intellectual
property rights related to the Purchase Agreement, except for
the license provided in Section 4.2 of the Purchase Agreement,
or any other intellectual property of the Company, including,
but not limited to, any inventions, patents, copyrights, trade
secrets, trademarks or confidential information embodied in
source code or object code.
5. Conditions of APF's Obligations.
The obligation of APF to enter into the transactions contemplated
hereby at the Closing is subject to the fulfillment by the Company or
waiver by APF prior to or on the Closing Date of the conditions set
forth in this Section 5.
5.1. Representations and Warranties. The representations and
warranties of the Company under this Agreement shall be true
in all material respects as of the Closing Date with the same
effect as though made on and as of such date.
5.2. Compliance with Agreement. The Company shall have performed
and complied with all agreements or conditions required by
this Agreement to be performed and complied with by it prior
to or as of the Closing Date.
5.3. Certificate of Officers. The Company shall have delivered to
APF a certificate, dated as of each Closing Date, executed by
the President certifying to the satisfaction of the conditions
specified in Sections 5.1 and 5.2.
5.4. Supporting Documents. Legal counsel for APF shall have
received the following:
(a) a copy of resolutions of the Board of Directors
authorizing and approving the execution, delivery and
performance of the Major Agreements, all such
resolutions to be certified by an officer of the
Company;
(b) a Certificate of Incumbency executed by an officer of
the Company certifying the names, titles and
signatures of the officers authorized to execute the
Major Agreements and further certifying that the
Charter Documents of the Company delivered to legal
counsel for APF at the time of the execution of this
Agreement have been validly adopted and have not been
amended or modified; and
(c) such additional supporting documentation and other
information with respect to the transactions
contemplated hereby as legal counsel for APF may
reasonably request.
6. Conditions of the Company's Obligations.
The obligation of the Company to enter into the transactions
contemplated hereby at the Closing is subject to the fulfillment or
waiver by the Company prior to or on the Closing Date of the conditions
set forth in this Section 6.
6.1. Representations and Warranties. The representations and
warranties of APF contained in Section 4 shall be true and
correct on and as of the Closing with the same force and
effect as if such representations and warranties had been made
on and as of the Closing.
7. Covenants of the Company.
7.1. Professional Fees. The Company agrees to reimburse APF for the
reasonable out-of-pocket expenses of APF, upon receipt of
reasonable documentation, incurred during 1996 and 1997 and
through the date of Closing in connection with the
renegotiation of the Purchase Agreement and the other matters
covered by the Major Agreements. Within 30 days of Closing,
APF shall submit to the Company a final statement of the
out-of-pocket expenses incurred by Furnary through the Closing
and the Company shall reimburse Furnary such expenses within
ten days of the receipt of such statement.
7.2. Transfers of Business.
(a) The Company agrees that, simultaneously upon entering
into any agreement to (i) sell substantially all of
its assets to another party, or (ii) effect any
merger, reorganization or business combination
involving a change in control of, or business
combination involving, the Company, the other party
to such transaction shall assume the unperformed
obligations of the Company to APF under the Major
Agreements, and such assumption agreement shall be
subject to the approval of APF, which consent shall
not be unreasonably withheld; it being understood
that APF's approval of such assumption agreement
shall be limited to obtaining reasonable assurance
that such assumption agreement obligates such other
party to the same extent as the Company is then
obligated under the Major Agreements.
(b) The Company agrees that, simultaneously upon entering
into any agreement to sell or transfer a material
portion of its business to another party which
includes one or more "Products" (as such term is
defined in the Purchase Agreement), including without
limitation the exclusive assignment of intellectual
property relating to, or the exclusive grant of
manufacturing or marketing rights regarding, a
Product, then the other party to such transaction
shall assume, to the extent appropriate given the
nature of such sale or transfer, the unperformed
royalty obligations of the Company to APF under the
Purchase Agreement (as amended by the Amendment)
relating to such transferred Product, and such
assumption agreement shall be subject to the approval
of APF, which consent shall not be unreasonably
withheld; it being understood that (i) APF's approval
of such assumption agreement shall be limited to
obtaining reasonable assurance that such assumption
agreement appropriately obligates such other party to
pay royalties to APF regarding such transferred
Product consistent with the terms of the Purchase
Agreement (as amended by the Amendment) and (ii) no
approval is required under this Action 7.2 (b) for
the granting of any sublicenses or non-exclusive
licenses of, or any non-exclusive marketing or
manufacturing rights regarding, any Products.
7.3. Term Insurance. Within 90 days after the Closing Date, the
Company agrees to consider in good faith the possibility of
purchasing term insurance on the life of Furnary with the
proceeds to be used either to buyout the remaining term of the
royalties payable to Furnary under the Purchase Agreement, as
amended, or to fund future royalties. The Company reserves the
sole discretion to make this determination. The Company will
promptly inform APF of its decision.
7.4. Board of Directors.
(a) The Company agrees that, beginning upon the Closing
Date and continuing for so long as the Company has an
obligation to pay APF a royalty on the Products or
APF owns (or has the right to acquire) at least 1% of
the Company's outstanding shares of common stock (the
"Board Period"), the Company will use its best
efforts to have Furnary elected to the Board of
Directors, including: (i) the Company shall nominate
Furnary for election to the Company's board of
directors (the "Board") at each meeting of
shareholders of the Company at which directors are to
be elected and (ii) subject to the exercise of its
fiduciary duties, the Board shall recommend the
election of Furnary as a director. The Company agrees
to use it best efforts to have Furnary elected to the
Board within 90 days after the Closing Date.
(b) In the event that Furnary is not serving as a
director during any portion of the Board Period,
Furnary shall be granted "observer" status by the
Board, which shall include the right to receive
notice of all Board meetings, to receive all
materials distributed to the Board, to attend all
Board meetings and to participate in discussions at
such meetings, provided that in no event shall
observer status be construed to xxxxx Xxxxxxx the
right to vote in any action taken by the Board.
7.5. Reimbursement. The Company agrees to reimburse APF for the
following expenses, upon receipt by the Company of reasonable
documentation:
(a) as set forth in Section 5.2 of the Purchase
Agreement, the expenses incurred by Furnary in
connection with his attendance at certain industry
meetings;
(b) beginning on January 1, 1999 and continuing so long
the Consulting Agreement remains in effect, the
reasonable cost of one secretary, for up to eight
hours per business day;
(c) beginning on January 1, 1999 and continuing so long
the Consulting Agreement remains in effect,
reasonable travel expenses of Furnary's spouse (coach
class air fare), accommodations and meals, when
accompanying Furnary on up to four industry meeting
trips to American Heart Association, Society of
Thoracic Surgeons, American College of Cardiology and
American Association of Thoracic Surgeons; and
(d) personal computer costs up to $5,000 per year so long
as the Consulting Agreement remains in effect.
7.6. Role Recognition. The Company agrees to take reasonable and
appropriate measures to recognize the role of Furnary in the
development of the Company's products and systems, including,
but not limited to, references to Furnary as the "architect
and co-inventor" of the Company's products and systems.
7.7. Reexamination of "CORIS". Within 90 days after the Closing
Date, the Company will reexamine the CORIS trademark dispute
with the Cordis Corporation, which is currently in the
disclosure phase at the U.S. Patent and Trademark Office, and
will consider aggressively pursuing legal action to retain the
rights to the CORIS trademark.
7.8. Donation of System. In addition to the rights granted to APF
pursuant ot Section 4.2 of the Purchase Agreement, the Company
will make available to APF one complete LifeRate system which
shall be donated in the name of APF to a hospital system or
practice designated by APF (the "Hospital").
(a) The LifeRate system shall include all components and
applications of the LifeRate system identified on
Exhibit E, and all upgrades listed on such exhibit
(collectively, the "System"). APF may designate up to
three different hospital systems or practices to
receive different components of the System.
(b) During the period of five years after installation,
the Hospital shall not pay any license fees for the
System, but shall be responsible for payment of the
installation, interface and maintenance costs
identified in Exhibit E.
7.9. No Security Interests. So long as the Company has an
obligation to pay APF a royalty under the Purchase Agreement,
the Company agrees not to pledge or grant a security interest
in the Company's intellectual property.
7.10. Repricing Existing Options. The Company agrees to amend all of
Furnary's outstanding options, including the 26,000 granted
under the Purchase Agreement and the 10,333 independently
granted to Furnary, to have an exercise price of $2 5/8, which
was the closing price on March 4, 1997.
8. Miscellaneous.
8.1. Definitions. Any capitalized term defined in one of the other
Major Agreements and not otherwise defined herein shall have
the meaning ascribed to it in such other Major Agreement.
8.2. Changes, Waivers, Etc. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or
terminated orally, but only by a statement in writing signed
by the party against which enforcement of the change, waiver,
discharge or termination is sought.
8.3. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in
writing and shall be mailed by certified mail with return
receipt as follows:
(a) if to APF, to:
APF, LLC
c/o Xxxxxxx X. Xxxxxxx, M.D.
0000 X.X. Xxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
with a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Xxxx Xxxxxx
(b) if to the Company, to:
LifeRate Systems, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: 000-000-0000
and such notices and other communications shall for all
purposes of this Agreement be treated as being effective or
having been given if delivered personally, or, if sent by
mail, when received. Any party may change its address for such
communications by giving notice thereof to the other parties
in conformity with this Section.
8.4. Survival of Representations, Warranties, Agreements, Etc. All
representations, warranties, covenants and agreements
contained herein or in any certificate delivered pursuant to
this Agreement shall survive the execution and delivery of
this Agreement or such certificate, as the case may be, any
investigation at any time made by APF or on its behalf, and
the closing of the transactions contemplated by this
Agreement. All statements contained in any certificate,
instrument or other writing prepared by or on behalf of the
Company and delivered by the Company pursuant to this
Agreement or in connection with or in contemplation of the
transactions herein contemplated shall constitute
representations and warranties by the Company hereunder.
8.5. Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon
and be enforceable by the successors and permitted assigns of
the parties hereto; provided, however, that APF may not assign
all or a portion his or its rights and obligations hereunder,
except by operation of law, without the prior written consent
of the Company, which shall not be unreasonably withheld.
8.6. Entire Agreement. This Agreement, the schedules hereto, the
documents referenced herein and the exhibits thereto,
constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements
or understandings, inducements or conditions, express or
implied, written or oral, between the parties with respect
hereto and thereto. The express terms hereof control and
supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.
8.7. Other Remedies. Any and all remedies herein expressly
conferred upon a party shall be deemed cumulative with, and
not exclusive of, any other remedy conferred hereby or by law
on such party, and the exercise of any one remedy shall not
preclude the exercise of any other.
8.8. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy
accruing to any party under this Agreement shall impair any
such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an
acquiescence thereto, or of a similar breach or default
thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the
part of any party hereto of any breach of default under the
Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set
forth in such writing.
8.9. Construction of Agreement. This Agreement has been negotiated
by the respective parties hereto and their attorneys and the
language hereof shall not be construed for or against any
party. A reference in this Agreement to any section shall
include a reference to every section the number of which
begins with the number of the section to which reference is
specifically made. The titles and headings herein are for
reference purposes only and shall not in any manner limit the
construction of this Agreement which shall be considered as a
whole. A reference to a section means a section of this
Agreement, unless the context expressly otherwise requires.
8.10. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Minnesota.
8.11. Counterparts. This Agreement may be executed concurrently in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
8.12. Injunctive Relief. The parties acknowledge that it will be
impossible to measure the damages that would be suffered upon
any breach of Section 7 of this Agreement and that in the
event of any such failure, there shall not exist an adequate
remedy at law. Either party shall, therefore, be entitled to
obtain specific performance of the other party's obligations
under Section 7 and to obtain immediate injunctive relief.
Such other party shall not urge, as a defense to any
proceeding for such specific performance or injunctive relief,
that there exists an adequate remedy at law.
IN WITNESS WHEREOF, each of the Company and APF has caused this
Agreement to be executed by its duly authorized representatives in counterpart.
COMPANY: LIFERATE SYSTEMS, INC.
By:_____________________________________
Its:____________________________________
APF: APF, LLC
By:_____________________________________
Its: Manager
________________________________________
Xxxxxxx X. Xxxxxxx, M.D.
