DISTRIBUTION AND LICENSE AGREEMENT

 

DISTRIBUTION AND LICENSE AGREEMENT

This Distribution and License Agreement (this “ Agreement ”) is made effective May 28, 2009 (the “ Effective Date ”) by and between RemoteMDx, Inc., a Utah corporation (“ Licensor ”), and euromicron AG, a German corporation (“ Licensee ”).  Licensor and Licensee may be referred to herein as a “party” or together as the “parties.”

WHEREAS , Licensor holds all rights in certain patents (as defined below, the “ Patents ”) and other intellectual property and has the right to grant the licenses contemplated by this Agreement;

WHEREAS , Licensor, under the Patents, has developed and holds all rights necessary to manufacture, market and distribute a GPS-based tracking device used by law enforcement agencies and commonly known as TrackerPAL (as defined below, the “ RemoteMDx Product ”);

WHEREAS , concurrently with this Agreement, Licensee has agreed to purchase certain securities from Licensor pursuant to that Securities Purchase Agreement dated as of May 28, 2009 (the “ Securities Purchase Agreement ”), and Licensor has agreed to issue and sell such securities;

WHEREAS , concurrently with this Agreement, Licensee has entered into a separate Distribution and License Agreement with Volu-Sol Reagents Corporation (“ Volu-Sol ”) dated as of May 28, 2009 (the “ Volu-Sol Agreement ”) to distribute a certain GPS-based tracking device to be developed for use in the health-care industry;

WHEREAS , Licensor desires to grant to Licensee, and Licensee desires to accept, an exclusive license to manufacture, market and distribute the RemoteMDx Product  in the Territory (as defined below), subject to the terms and conditions of this Agreement.

NOW, THEREFORE , in consideration of the premises and the mutual covenants and promises set forth in this Agreement, the legal sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1.            Definitions.

.  The following terms when used in this Agreement shall have the meanings set forth below.

1.1.           “ Business Day ” means any day, other than Saturday or Sunday, on which commercial banks in the United States of America are open for business.

1.2.           “ Distributors ” has the meaning set forth in Section 2.6.

1.3.           “ Exercise Date ” has the meaning set forth in Section 2.7.

1.4.           “ Implementation Plan ” has the meaning set forth in Section 3.2(c).

1.5.           “ Intellectual Property Rights ” means any and all now known or hereafter known (a) rights associated with works of authorship throughout the world, including but not limited to copyrights and moral rights, (b) trademarks, service marks, trade name and logo rights and similar rights, (c) trade secret rights and know-how, (d) patent rights, designs, algorithms and other intellectual property rights, (e) domain names and Internet keywords and (f) all other intellectual and industrial property rights (of every kind and nature throughout the world and however designated), whether arising by operation of law, contract, license, or otherwise, and (g) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues thereof now or hereafter in force (including any rights in any of the foregoing).

 

1.6.           “ Know How ” means the accumulation of skills, processes, information, experience and documents related to the Licensed Intellectual Property and needed to enable Licensee, itself or through third-party sublicensees, to practice the Licensed Intellectual Property to manufacture, service and sell the RemoteMDx Product, including, but not limited to, any and all materials, technical information, blueprints, process documents, drawings, CAD-CAM and other electronic files, supplier lists, specifications, trade secrets, Know How, techniques, discoveries, processes, procedures, methods, protocols, designs, diagrams, test results, studies, raw material sources, data, formulation, production technology and other such materials.

1.7.           “ Licensed Intellectual Property ” means all Intellectual Property Rights in and to the RemoteMDx Product, including without limitation the Patents, the Licensed Trademarks, the Product Documentation and any Product Marketing Materials.

1.8.           “ Licensed Trademarks ” means the trademarks of Licensor set forth on Exhibit B , as amended from time to time by mutual agreement of Licensor and Licensee.

1.9.           “ Licensee Monitoring Center ” has the meaning set forth in Section 3.2(b).

1.10.         “ Local Communications and Customer Service Center ” has the meaning set forth in Section 3.2(a).

1.11.         “ Milestones ” has the meaning set forth in Section 2.7.

1.12.         “ Modifications ” has the meaning set forth in Section 7.5.

1.13.         “ New Trademarks ” means any trademark or trade name, whether registered or not, created by or licensed to Licensee for use in connection with the RemoteMDx Product, but New Trademarks excludes Licensed Trademarks.

1.14.         “ Patents ” means all patents used in the design or manufacture of the RemoteMDx Product and listed on Exhibit A .

1.15.         “ Product Documentation ” means all designs, specifications, manuals, instructions, drawings and other such work created by Licensor describing the manufacture and performance of the RemoteMDx Product (including such materials relating to Software incorporated into the RemoteMDx Product).

1.16.         “ Product Marketing Materials ” has the meaning set forth in Section 2.3.

1.17.         “ Purchase Order ” has the meaning set forth in Section 4.3.

1.18.         “ Qualified Developer ” has the meaning set forth in Section 2.4.

1.19.         “ RemoteMDx Product ” means the GPS-based personal tracking system used by law enforcement agencies to track individuals subject to their jurisdiction and currently marketed under the trademark TrackerPAL, the Software incorporated into such product, all improvements, modifications and derivatives based on such product or Software, and all Intellectual Property Rights in any of the foregoing, including, without limitation, such rights in the Patents.

1.20.         “ RemoteMDx Product Warranty ” has the meaning set forth in Section 4.17.

1.21.         “ Software ” means the entire software application developed by Licensor to provide functionality to the RemoteMDx Product and to monitor and manage the RemoteMDx Product in the form used by Licensor as of the Effective Date (including all software and firmware incorporated into the RemoteMDx Product), expressed in a fully compiled or assembled series of instructions in machine language, which will guide the operation of a processor; modifications and improvements made thereto by Licensor and commercially released from time to time; and all documentation, manuals, instructions and other similar work prepared by Licensor that is reasonably necessary to permit Licensee to operate the Software in the manner intended, as further described on Exhibit E-1 , but Software does not include Third Party Software.

1.22.         “ Source Code ” means, at any time during the Term, the then-latest version of the Software expressed in a source or human-readable language, and all documentation, manuals, instructions and other similar work prepared by Licensor that is reasonably necessary to permit a skilled programmer to make changes to the Source Code as contemplated by this Agreement.

1.23.         “ Start-up Services ” means the services provided by Licensor as set forth on Exhibits D-1, D-2, D-3 and D-4 for the purpose of establishing one or more Licensee Monitoring Center(s) as further described in Section 3.2(b).

1.24.         “ Sublicensees ” has the meaning set forth in Section 2.6.

1.25.         “ Supplied Product ” has the meaning set forth in Section 4.7.

1.26.         “ Term ” has the meaning set forth in Section 9.1.

1.27.         “ Territory ” means the countries listed on Exhibit C .

1.28.         “ Third Party Software ” means all software licensed by Licensor from third parties, other than open source software, that is integrated into the Software or the RemoteMDx Product, as set forth on Exhibit F as the same shall be updated from time to time and in any event promptly after Licensor obtains any new Third Party Software.

1.29.         “ Translated Materials ” means documents, Software, training materials, product materials, scripts, technical documentation and related information that has been translated by Licensee for use in the Territory.

 

1.30.         “ Upgrade ” has the meaning set forth in Section 3.4.

1.31.         “ Warranty Procedures ” has the meaning set forth in Section 4.17.

2.            License Grants .

2.1.            Product License .  Licensor hereby grants to Licensee (including its present and future affiliates), and Licensee accepts, an exclusive, sublicensable and transferable (subject to the provisions hereof) license under the Licensed Intellectual Property to make, have made, market, distribute, sell and otherwise commercially exploit the RemoteMDx Product in the Territory during the Term, subject to all the terms and conditions of this Agreement.  As used in this Agreement, “exclusive” means that Licensor shall not, during the Term, have any right to make, have made, market, distribute, sell or otherwise commercially exploit the RemoteMDx Product in the Territory or to authorize any affiliate or third party to do so.

2.2.            Trademark Licenses .

 

2.3.            Copyright License .  Promptly after the Effective Date and from time to time during the Term upon reasonable written request from Licensee, Licensor shall furnish Licensee with electronic data files of artwork and information to create materials for use in connection with the marketing, distribution and sale of the RemoteMDx Product (“ Product Marketing Materials ”).  Licensor hereby grants to Licensee (including its present and future affiliates), and Licensee accepts, under Licensor’s copyrights and other Intellectual Property Rights relating to the Product Marketing Materials, a non-exclusive, sublicensable and transferable (subject to the provisions hereof) right to use, reproduce, prepare derivative works (including translations) of, display and distribute the Product Marketing Materials in the Territory during the Term in connection with the RemoteMDx Product.  If Licensor objects in writing to any versions of the Product Marketing Materials prepared or used by Licensee, the parties shall cooperate in good faith to resolve Licensor’s concerns.  Licensee agrees to place such notices on Product Marketing Materials and translated versions thereof as are reasonably requested by Licensor to protect its copyrights in such materials and in the Licensed Trademarks used therein.  Nothing in this Section 2.3 shall prevent or restrict Licensee from freely creating, distributing or using any marketing materials for RemoteMDx Products that do not incorporate the Licensed Trademarks and that do not infringe on Licensor’s copyrights or other Intellectual Property Rights.

2.4.            Software License .

 

2.5.            Technology Transfer .  Licensor hereby grants to Licensee (including its present and future affiliates), and Licensee accepts, an exclusive, sublicensable and transferable (subject to the provisions hereof) license to the Know How to make, have made, market, distribute, sell and otherwise commercially exploit the RemoteMDx Product in the Territory during the Term, subject to all the terms and conditions of this Agreement.  If this Agreement terminates for any reason prior to the termination of the Volu-Sol Agreement, the license granted in Sections 2.4 and 2.5 shall survive the termination of this Agreement, without the requirement of any additional fee or payment, and shall continue in force until the Volu-Sol Agreement terminates, including any wind-down period provided therein.

2.6.            Sublicenses .  Licensee shall have the right to grant written sublicenses consistent with the terms of this Agreement to third parties with the appropriate skills and qualifications to exercise such sublicenses (“ Sublicensees ”).  Licensee may appoint third-party distributors, resellers, dealers and sales representatives for the RemoteMDx Product in the Territory (“ Distributors ”).  Licensee shall require each Sublicensee and Distributor to agree in writing that it will comply with the applicable restrictions of this Agreement, and shall take commercially reasonable measures to ensure that all Sublicensees and Distributors comply with such terms.  For purposes of clarity, Qualified Developers alone are permitted to obtain Source Code or modify the Software or RemoteMDx Product without Licensor’s prior written consent.

2.7.            Milestones; Conversion to Nonexclusive License .

 

3.            Licensor’s Services .

3.1.            Transfer of Know How .  Within thirty (30) days of the Effective Date, Licensor shall make available and disclose to Licensee or its designated representatives all Know How in Licensor’s possession, custody or control.  In addition, Licensor shall promptly disclose to Licensee all additional Know How as it becomes available during the Term of the Agreement.

3.2.            Establishment of Monitoring Centers; Software .

3.3.            Software Services .

3.4.            Upgrades to RemoteMDx Product and Software .  On at least a quarterly basis, Licensor shall notify Licensee in writing of any upgrades or modifications to the Software or the RemoteMDx Product developed by Licensor (directly or indirectly) that have been made available to its own customers (including any bug-fixes) (each an “ Upgrade ”).  Licensor shall (a) describe such Upgrades and their purpose or functionality in detail in such notice, and (b) without any additional charge to Licensee, provide the Upgrade to Licensee in the format agreed upon by the parties, so that such Upgrade may be used by Licensee according to the terms of this Agreement.  Any Upgrade to the RemoteMDx Product or Software shall be deemed part of the RemoteMDx Product or Software for purposes of this Agreement.  Licensor reserves the right to modify the RemoteMDx Product at any time.  Licensee may continue to distribute the prior version of a RemoteMDx Product but will use reasonable efforts to adopt an Upgrade when feasible.  If Licensor includes Third Party Software in any Upgrade, Licensor shall use commercially reasonable efforts to ensure the interoperability of such Third Party Software with the Software as it then exists.  

3.5.            Additional Assistance .  From time to time, Licensee may request the services of Licensor for any training, technical support assistance, marketing assistance, custom development, and other services.  Licensor shall give reasonable consideration to such requests, and the parties will reasonably cooperate to agree upon the assistance to be provided by Licensor, subject to payment as described in Section 3.6.

 

3.6.            Professional Services Rates and Fees .  Except as expressly provided in this Agreement, Licensee agrees to pay Licensor for any training, technical support assistance, marketing assistance, custom development, and other services provided by Licensor to Licensee or its customers under this Agreement at reasonable rates agreed upon by such parties in writing.  Licensee agrees to reimburse Licensor for its reasonable travel expenses, provided that Licensee may adopt reasonable travel policies from time to time regarding expenses that will be reimbursed.

4.              Supply Agreement .

4.1.            Manufacture and Supply .  Licensor agrees that it will supply Licensee with the quantities of RemoteMDx Product when so requested by Licensee and as agreed upon under a Purchase Order, subject to the terms and conditions of this Agreement and Licensor’s reasonable inventory limitations.  For purposes of clarity, nothing in this Section  4 shall be construed to require Licensee to purchase any RemoteMDx Product from Licensor.

4.2.            Sales Forecasts .  Within three (3) months after Licensee places RemoteMDx Products in service with customers in the Territory, Licensee shall provide to Licensor a written non-binding forecast for its expected sales of RemoteMDx Products during the then-following fiscal quarter.  Thereafter, within sixty (60) days after the beginning of each of Licensee’s fiscal quarters, Licensee shall deliver to Licensor a non-binding, rolling forecast of its expected orders for RemoteMDx Products in each of the following two fiscal quarters.

4.3.            Purchase Orders .  Licensee may order RemoteMDx Products by submitting to Licensor a purchase order that sets forth at minimum (a) a unique purchase order number, (b) a description of the RemoteMDx Products to be purchased, including any model number and all necessary technical information (including the country in the Territory in which the unit will be deployed if applicable), (c) the quantity of RemoteMDx Products requested, (d) the delivery address and mode of shipment, (e) the delivery date and (f) the bill-to address (a “ Purchase Order ”).  The price for any RemoteMDx Product ordered hereunder shall be as set forth on Exhibit H attached hereto.  This Agreement shall govern each Purchase Order, and any conflict or inconsistency between the terms of this Agreement and a Purchase Order shall be resolved in favor of this Agreement.  No terms in any Purchase Order that conflict with this Agreement and no additional or conflicting terms in any acknowledgement or acceptance from Licensor shall govern.

4.4.            Acceptance of Purchase Orders .  Licensor shall notify Licensee within five (5) Business Days of receipt of any Purchase Order setting forth either (a) its acceptance of the Purchase Order; or (b) any proposed amendments to the delivery date and/or quantities of the RemoteMDx Product ordered.  Licensor shall use commercially reasonable efforts to fulfill Licensee’s requests for RemoteMDx Product, provided that Licensor may reject a Purchase Order if Licensee is past due on any undisputed payments owed.  Failure by Licensor to notify Licensee within five (5) Business Days of receipt of a Purchase Order shall be deemed acceptance of the Purchase Order by Licensor.

 

4.5.            Lead Times .  Unless otherwise expressly agreed to in writing by Licensor, Purchase Orders for RemoteMDx Products must allow for at least forty five (45) days from the date of receipt of the Purchase Order to the date of requested shipment of such Products, unless the number of units of RemoteMDx Products under such Purchase Order exceeds 500, in which case the Purchase Order must allow for at least ninety (90) days from the date of receipt of the Purchase Order to the date of requested shipment of such Products.

4.6.            Cancellations .  A Purchase Order may be canceled, in whole or in part, upon written notice by Licensee at any time prior to thirty (30) days before the applicable delivery date(s) specified in the applicable Purchase Order.  Licensee shall reimburse Licensor for the actual costs incurred by Licensor that are directly related to the cancelled Purchase Order and that cannot be mitigated by Licensor within a reasonable time through returns, reuse or other commercially reasonable measures.  Licensee shall have no right to cancel a Purchase Order within thirty (30) days of the delivery date specified in the applicable Purchase Order.  In no event shall Licensee be liable for any incidental, special, consequential or punitive damages for cancellation of any Purchase Orders submitted under this Agreement.

4.7.            Shipment; Delivery .  Licensor shall ship RemoteMDx Products in accordance with each binding Purchase Order (each such Product so shipped by Licensor including any Software included therewith, a “ Supplied Product ”).  Unless otherwise expressly agreed by Licensor, all Supplied Product deliveries shall be made FCA Incoterms 2000, Licensor’s place of shipment, with shipping costs and insurance paid by Licensee.  Title to Supplied Products shall pass to Licensee upon full payment for the Supplied Products.  Licensee shall bear all risk of loss or damage to Supplied Products during transit, and is responsible for filing any necessary claims with the carrier or insurance company.  All Supplied Products will be new unless the applicable Purchase Order expressly states that a Supplied Product is reconditioned, provided that such reconditioned Supplied Product will remain subject to the RemoteMDx Warranty as if it were new.

4.8.            Inspection; Acceptance .  Notwithstanding any written confirmation from the supplying party, all Supplied Products supplied hereunder shall be received by Licensee subject to inspection and performance testing in a commercially reasonable manner.  Licensee shall have ten (10) Business Days from the date of receipt of each shipment of the Supplied Products to determine to its reasonable satisfaction whether the Supplied Products are of the correct count and conform to the applicable Product Documentation (the “ Inspection Period ”).  Licensee’s failure to provide notice of acceptance or rejection (pursuant to Section 4.9 below) to Licensor prior to the end of the applicable Inspection Period shall be deemed acceptance.  The acceptance of any Supplied Product shall in no way limit Licensee’s rights under any warranty or for indemnification hereunder.

 

4.9.            Rejection .

4.10.         Invoices .  Except as expressly provided herein, Licensor shall invoice Licensee for the Supplied Products price upon shipment of the Supplied Products under each Purchase Order.

4.11.         Payment .