SELECT SERIES LICENSE AGREEMENT WITH PRELUDE EXHIBIT

SELECT SERIES LICENSE AGREEMENT WITH PRELUDE EXHIBIT

This Agreement, entered into on December 29, 2006, is between INFORMATION DATA MANAGEMENT, INC. ("IDM"), an Illinois corporation with executive offices in Rosemont, Illinois, and HemaCare Corporation ("Customer"), a corporation with executive offices in Van Nuys, California, under which IDM is licensing its proprietary software to Customer on a non-exclusive basis for Customer’s own use, in accordance with the following terms and conditions:

1.     Definitions .    As used in this Agreement, the following definitions shall apply:

• • 1.1.            "Agreement" shall mean this agreement, including all schedules hereto and all modifications and addenda duly executed by both parties.

    1.2.            "Software" shall mean (i) The products and their component parts, in object code form, as described in Schedule A; (ii) Updates and Upgrades supplied by IDM under this Agreement; and (iii) permitted copies thereof.

    1.3               "Updates" shall mean error corrections and maintenance releases to the Software.

    1.4               "Upgrades" shall mean Software enhancements that accomplish incidental, structural, functional and performance improvements (such as software to incorporate new FDA recommended blood screening tests) for which IDM does not impose a separate charge, are reasonably necessary for the Customer’s operations, generally offered, and not considered a New System.  In the event that due to a change in Customer’s operations or blood screening procedures, it becomes necessary for IDM to incur a large, unanticipated expense for a Software enhancement, Customer may request and the parties shall negotiate in good faith as to whether an additional charge is appropriate and what that charge should be.

    1.5               "Documentation" shall mean (i) the written materials supplied by IDM relating to the Software or its operation or application, as described in Schedule A; (ii) any enhancements thereto furnished by IDM; and (iii) permitted copies thereof.

    1.6               "Source Code" shall mean the human readable form of the Software, including all comments and procedural code such as job control language.

    1.7.            "Third Party Software" shall mean all operating systems and utilities owned by third parties and used in connection with the Software, as described in Schedule B.

    1.8.            "Hardware" shall mean the supported hardware configuration specified in Schedule B.

    1.9               "Authorized Location(s)" shall mean the site(s) of the original installation of the Software specified in Schedule C, which may be updated via written notice to IDM if the site(s) is relocated.

    1.10         "Successful Draw" shall mean each venipuncture that results in a blood product, specifically excluding QNS products and bilateral voided sticks.

    1.11         "New System" shall mean new software, incorporating  significant new technologies, processes and methodologies and for which IDM imposes a separate licensing fee.

  2.                Ownership of Software .    IDM retains full ownership rights to the Software, all object code, source code, and all related Confidential Information (defined in paragraph 12), trade secrets, trademarks, service marks, patents, and copyrights, and Customer acknowledges that it obtains no ownership rights to the Software under the terms of this Agreement.

  3.                License to Use Software .    IDM hereby grants to Customer a personal, non-exclusive, non-transferable license to use of the Software for purposes of processing information belonging to Customer and relating to Customer’s internal business.  The Software may be installed and used only by employees of or consultants on site, or other location as permitted by Customer. No third party personnel are permitted to use the Software. This license shall include the right to use the Documentation supplied by IDM, and shall include the right to receive Updates and Upgrades of the Software as such are released in the ordinary course of IDM’s business.   The Interlude Symphony product is considered an Upgrade for Customer with training subject to Section 8 of this contract.  Use of this License is restricted to Customer remaining within the 50,001 to 100,000 per year successful draw rate.  Annually, Customer must certify in writing, the number of Successful Draws for the previous twelve (12) month period.

  4.                Reproduction and Modification .    IDM will supply Customer with one copy of the Software.  Customer may reproduce the Software as required for archival and disaster recovery purposes. All copies of the Software shall contain all of IDM’s copyright and any other restrictive and proprietary notices in form and content as they appear on the Software provided hereunder to Customer.  Customer shall not reverse assemble or reverse compile the Software in whole or in part, or permit or allow any other party to do so.  Modification, adaptation, or enhancement of the Software for the benefit of Customer by a party other than IDM may interfere with IDM’s ability to fulfill its support obligations hereunder, as well as its proprietary rights in the Software, and is not

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• permitted without prior written consent of IDM.  Any such modification, adaptation, enhancement or other derivative work shall be property of IDM and Customer shall execute any and all documents necessary to assign such to IDM.

  5.                Hardware and Third-Party Software .    For the primary and disaster recovery system, the Customer will purchase the Hardware and the Third-Party Software identified in Schedule B and priced on Schedule E.  Payment will be due upon receipt of invoice.  IDM will install such Hardware and/or Third-Party Software.  All costs relating to the shipment of the Hardware and Third-Party Software, including freight and insurance costs, shall be borne by Customer.

  6.                Installation .    As identified on Schedule C, IDM will install the Software and Third-Party Software on the Hardware at Authorized Location(s) designated by Customer, and will conduct IDM’s standard test procedures on the Software to ensure that installation is complete.

  7.                Acceptance .    The Software and Hardware will be deemed accepted by Customer when the Software has been installed on the Hardware and passed the customer’s installation qualification and operation qualification procedures.

  8.                Training .    IDM will conduct Train the Trainer classes to train up to 5 employees designated by Customer on the proper operation of the Software, at a time and place to be agreed upon by the parties.  Travel, lodging & meal costs related to training, whether incurred by IDM or Customer shall be approved by Customer before any cost shall be incurred, however the costs incurred will be the responsibility of the Customer.  It is Customer’s responsibility to ensure that employees using the Software have been properly trained. When Upgrades to the Software are released, IDM will offer additional training on Symphony products  to the Customer. Training classes on such Upgrades to be held at IDM’s office.  If such training classes exceed two days, IDM is entitled to charge Customer no more than $1,000 per day for each additional day of training. Training class, travel, and lodging expenses are to be the responsibility of the Customer.

  9.                System Support .    Customer Support is offered at execution of this Agreement pursuant to the terms of the IDM Support Agreement, attached as Schedule D.

  10.          Data Protection .    It is the customer’s responsibility to perform daily backups of the data on the system used by the Software so that the likelihood of data loss is minimized.  Customer shall be solely responsible for backup software and hardware.  Customer shall provide safe storage of all backup tapes and/or disks.  Customer shall be responsible for keeping its computer system free of viruses.

  11.          Fees and Costs.

  • 11.1          Customer agrees to purchase the following:

    See Schedule E.

    11.2          The fees do not include any sales tax and Customer shall be obligated to pay any such sales tax.

    11.3          The Software License and Maintenance Fee includes any Upgrades and Updates to the Software, which shall be provided to Customer per Schedule E.  If IDM withdraws the Software, without providing an equivalent or better solution at no additional cost, with no additional implementation or migration fees and with no increase in support fees or otherwise ceases to offer support services, IDM will refund a prorated portion of the software License and Maintenance fee using a rate of .86 per donation based on 60,000 donations per year over the seven year term of this agreement, unless an Article 17 release is invoked.

    11.4          If Customer does not implement Updates and/or Upgrades within 270 days after delivery, IDM reserves the right to increase support fees to reasonably reflect the increased cost of supporting outdated Software.  This additional fee may not exceed $1,000 a month.  Additional services beyond those described in this Agreement will be billed at IDM’s then-standard hourly rates.  Customer agrees to pay IDM’s reasonable costs and expenses, including travel costs, associated with any services performed by IDM outside of IDM’s corporate offices.  Invoice terms are net 30 days, and interest will be charged on overdue invoices at the rate of 12% per annum.

  12.          Confidential Information .    The terms and conditions of the Confidentiality Agreement dated January 18, 2006 entered into by the parties, are incorporated into the terms and conditions of this Agreement..

  13.          Warranties and Disclaimer .

  • 13.1            Limited Warranty.    IDM warrants that for a period of two hundred seventy (270) days from the date of First Productive Use, (First Productive Use is defined as the initial use of the Software to access the database information to register donors/patients, process blood products or track test results and/or financial data in the production environment.) (Warranty Period)

    • (i)                the Software will perform in substantial accordance with the IDM’s RFI Response dated February 6, 2006;

      (ii)             the media conveying the Software, e.g., flashdrives and CD Roms if any, will be free from defects in materials and workmanship under normal use,

      (iii)          the Software received by the Customer will operate on properly installed and functioning hardware with third party software, all as identified and configured as set forth in Schedule  B, which IDM represents is hardware that is in place in at least one other IDM customer with a similar number of successful draws at the time this agreement is executed;

      (iv)         Third party software currently required for the proper operation of the Software has been identified in Schedule B.

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• • If subsequent Updates or Upgrades of the Software require additional hardware or software to maintain reasonable performance, IDM’s release notes will alert the Customer with reasonable notice.

• • System and Software Performance.   The recommended hardware and software requirements set forth in Schedules A & B shall be sufficient to run and operate the Software at performance levels that are reasonable given the Customer’s size and the draw rate of not more than 100,000 per year.

    13.2           If existing or future applicable regulations require an Update of the Software, IDM shall use its best reasonable commercial efforts to provide a copy of such an Update to Customer as promptly as possible without any additional cost to Customer.  Pursuant to the FDA’s Medical Device Reporting Policy, 21C.F.R. Part 803, IDM will notify Customer immediately in the event of a reported product-related death, serious injury, or serious illness.  IDM agrees to notify Customer immediately of any communication received from or provided to the U.S. Food and Drug Administration or other regulatory authority relating to any actual or potential regulatory action, warning letter, or violation of law concerning any Product furnished to Customer under this Agreement.  If existing or future applicable regulations or regulatory guidelines require an Update of the Software, IDM shall promptly notify Customer of such fact and will issue such Update in a timely manner.

    13.3           THERE ARE NO OTHER EXPRESS OR IMPLIED  WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE) REGARDING THE SOFTWARE, MAGNETIC MEDIA, DOCUMENTATION, SOFTWARE COPIES, THIRD-PARTY SOFTWARE, OR HARDWARE, EXCEPT FOR ANY IMPLIED WARRANTIES WHICH CANNOT BE DISCLAIMED UNDER APPLICABLE LAW. ANY SUCH IMPLIED WARRANTIES ARE LIMITED IN DURATION TO NINETY (90) DAYS FROM INSTALLATION OF THE SOFTWARE.   IDM DOES NOT WARRANT THAT THE OPERATION OF THE SOFTWARE WILL BE COMPLETELY UNINTERRUPTED OR COMPLETELY ERROR-FREE.

    Remedies for Breach of Warranty . If during the Warranty Period the Software does not conform to the warranty, Customer’s exclusive remedy and IDM’s sole liability shall be that IDM shall, at its option, use commercially reasonable efforts to correct the Software, replace such Software free of charge or, if neither of the foregoing is commercially practicable, terminate this Agreement and refund to Customer the License portion of the fee paid with respect to the applicable Software. The warranty set forth above is made to and for the benefit of Customer only.  No action for any breach of warranties under this Agreement may be commenced more than two  years following the breach of the applicable warranty.  The warranty will apply only if:

    (a)   the Software has been properly installed and used at all times and in accordance with the IDM’s specifications;

    (b)   no modification, alteration or addition has been made to the Software by persons other than IDM or IDM’s authorized representative;

    (c)   Customer has not requested modifications, alterations or additions to the Software; and

    (d)   the Software has not been

    • (i) subject to accident, unusual physical, electrical or electromagnetic stress, neglect, misuse, failure of electric power, air conditioning or humidity control, or

      (ii) operated with other media not meeting or not maintained in accordance with the manufacturer’s specifications.

  14.          Limitation of Liabilities .

  • 14.1        IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS, LOST DATA, OR OTHER CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR INDIRECT DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES.

    14.2        EXCEPT FOR THE DUTY TO INDEMNIFY AGAINST THIRD PARTY CLAIMS, WILFUL MISCONDUCT AND FRAUD, IDM’S LIABILITY TO CUSTOMER FOR ANY AND ALL CLAIMS IN ANY WAY RELATED TO THE SOFTWARE OR THIS AGREEMENT SHALL NOT EXCEED THE LICENSE FEE PAID BY THE CUSTOMER

    14.3        IN THE CASE OF INDEMNIFICATION FOR BREACH OF WARRANTY OR NEGLIGENCE, AS DESCRIBED IN PARAGRAPH 16, IDM’S LIABILITY, INCLUDING BUT NOT LIMITED TO ALL DAMAGES, COSTS FEES AND EXPENSES, SHALL BE LIMITED TO $3,000,000.  IDM AGREES TO MAINTAIN INSURANCE WITH A MINIMUM OF $3,000,000 IN AGGREGATE LIABILITY INSURANCE AND SHALL ADD CUSTOMER AS AN ADDITIONAL INSURED ON SAID INSURANCE POLICY AT THE REQUEST OF CUSTOMER.

  15.            Indemnification .

  • 15.1       IDM may defend at customers option, indemnify and hold harmless Customer, its employees, agents, officers, and directors from and against any claims, liability, damages, losses, fees and expenses, arising from a claim that the Software, when used as authorized and in accordance with the Documentation, infringes upon any third party’s patent, copyright or trade secret rights. IDM  will also defend, indemnify and hold harmless Customer, its employees, agents, officers, and directors from and against any liability, damages, losses, fees and expenses to the extent, and in such proportion, that such liability, damages, attorney fees, losses, fees and expenses are caused by or arise from IDM’s negligence or breach of agreement and are not caused by or do not arise from Customer’s negligence or violation of its obligations under this Agreement. Customer will defend, indemnify and hold harmless IDM, its employees, agents, officers, and directors from and against liability, damages, losses, fees and expenses to the extent, and in such proportion, that such liability, damages, losses, attorney fees, fees and

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• • expenses are caused by or arise from Customer’s negligence or breach of its obligations under this Agreement and are not caused by or do not arise from IDM’s negligence or breach of agreement.

    15.2      If any third party makes a claim covered by this Section against an indemnitee with respect to which such indemnitee intends to seek indemnification under this Section, such indemnitee shall give notice of such claim to the indemnifying party, including a brief description of the amount and basis for the claim, if known.  Upon receiving such notice, the indemnifying party shall be obligated to defend such indemnitee against such claim, and shall be entitled to assume control of the defense of the claim with counsel chosen by the indemnifying party, reasonably satisfactory to the indemnitee.  Indemnitee shall cooperate fully with, and assist, the indemnifying party in its defense against such claim in all reasonable respects.  The indemnifying party shall keep the indemnitee fully apprised at all times as to the status of the defense.  Notwithstanding the foregoing, the indemnitee shall have the right to employ its own separate counsel in any such action, but the fees and expenses of such counsel shall be at the expense of such indemnitee.  The indemnifying party may not settle a claim under this Section without the consent of the indemnitee, which consent shall not be unreasonably withheld, except that the indemnifying party may settle without the consent of the indemnified party if (a) the settlement entails no finding or admission of any violation of the rights of any third party by the indemnified party; (b) the settlement has no effect on any other claims that may be made by the indemnified party, and (c) no injunctive or other equitable relief is entered against the indemnified party (other than the cessation of use of the Software), and the settlement is otherwise for money damages for which the indemnified party is fully indemnified.  Notwithstanding the foregoing, the indemnitee shall retain, assume, or reassume sole control over all expenses relating to every aspect of the defense that it believes is not the subject of the indemnification provided for in this Section.  Until both (a) the indemnitee receives notice from indemnifying party that it will defend, and (b) the indemnifying party assumes such defense, the indemnitee may, at any time after ten business days from the date notice of claim is given to the indemnifying party by the indemnitee, resist or otherwise defend the claim or, after consultation with and consent of the indemnifying party, settle or otherwise compromise or pay the claim.  The indemnifying party shall pay all costs of indemnitee arising out of or relating to that defense and any such settlement, compromise, or payment.  The indemnitee shall keep the indemnifying party fully apprised at all times as to the status of the defense.  Following indemnification as provided in this Section, the indemnifying party shall be subrogated to all rights of the indemnitee with respect to the matters for which indemnification has been made.  The indemnitee shall undertake to repay any advanced funds to the extent that it is ultimately determined that the indemnitee is not entitled to such indemnification.

  16.            Term and Termination .    This Agreement shall commence as of the date by which both parties have signed this Agreement, and shall terminate on March 31, 2014. Either party shall have the right to terminate this Agreement in the event that:  (i) the other party becomes insolvent or bankrupt, or files a voluntary petition under the Bankruptcy Code, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors, or ceases to be a going concern ; or (ii) the other party becomes subject to bankruptcy, reorganization, insolvency, receivership or trusteeship proceedings in any federal or state court, in which proceedings are not dismissed within ninety days after filing.  In addition, either party shall have the right to terminate the Agreement in the event that the other party commits a material breach of its obligations under this Agreement and such breach continues for a period of thirty (30) days after written notice of such breach has been given. Upon termination, the license granted to Customer hereunder shall terminate and all copies of all Software and Documentation are to be returned or caused to be returned by Customer to IDM at the address indicated in this Agreement, and Customer shall certify in writing that all copies of the Software and Documentation have been returned. Paragraphs 1, 2, 12, 13.3, 15, 16 and 19-28 shall survive the termination of the Agreement.

  17.          Software Escrow .    The parties agree that within thirty (30) days after selection of a mutually acceptable commercial software escrow company and execution by the parties of the selected escrow agent’s escrow deposit and maintenance agreements, IDM will deposit and thereafter maintain with the escrow agent copies of the Source Code for the most current release, and the previous release, of the Software.  So long as Customer is receiving support services, IDM will deposit a copy of the Source Code for each Upgrade or Update delivered to Customer no later than thirty (30) days after delivery of the Upgrade or Update to Customer for use in its production environment.  Escrow Agent shall return to IDM the Source Code for the oldest release of the Software if and when more than two full releases of the Source Code have been deposited.

  The escrow agent shall deliver all copies of the Source Code for the Software to Customer (upon compliance with the release procedures set forth in the escrow agreement) in the following circumstances:

  • a.)                     IDM fails or refuses to provide maintenance and support services to Customer for the Software in breach of its obligations under the provisions of this agreement relating to support services (which breach has continued for a period of fifteen (15) days following written notice thereof by Customer to IDM, provided however if more than fifteen (15) days are reasonably required to remedy such material breach, then IDM shall have an additional period of time to remedy such breach provided IDM immediately implements a workaround ;

    b.)                    IDM discontinues support or maintenance for the Software without pr