Software Distribution Agreement

EXHIBIT 10.18


SOFTWARE DISTRIBUTION AGREEMENT


by and between


STEREOTAXIS INC., UNITED STATES OF AMERICA


- hereinafter referred to as "Stereotaxis" -
and


SIEMENS AKTIENGESELLSCHAFT, BERLIN AND MUNCHEN,
Federal Republic of Germany


- hereinafter referred to as "Siemens" -


concerning the "3D Pre-Operative Image Navigation" software


CONFIDENTIAL TREATMENT


REQUESTED BY STEROTAXIS, INC.


ARTICLE 1 - DEFINITIONS .................................................... 3


ARTICLE 2 - LICENSE GRANT .................................................. 5


ARTICLE 3 - COPYRIGHT, TRADEMARKS, TITLE ................................... 6


ARTICLE 4 - SUPPLY OF LICENSED SOFTWARE AND SOFTWARE DOCUMENTATION ......... 7


ARTICLE 5 - TIMELINES ...................................................... 8


ARTICLE 6 - WARRANTY ....................................................... 8


ARTICLE 7 - INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES .................. 9


ARTICLE 8 - PRICE, PAYMENT ................................................. 13


ARTICLE 9 - AUDITING RIGHTS ................................................ 14


ARTICLE 10 - MAINTENANCE .................................................... 14


ARTICLE 11 - CONFIDENTIALITY ................................................ 15


ARTICLE 12 - LIMITATION OF LIABILITY ........................................ 18


ARTICLE 13 - FORCE MAJEURE .................................................. 19


ARTICLE 14 - ARBITRATION .................................................... 19


ARTICLE 15 - SUBSTANTIVE LAW ................................................ 20


ARTICLE 16 - TERM OF THE AGREEMENT .......................................... 20


ARTICLE 17 - TERMINATION .................................................... 20


ARTICLE 18 - EXPORT REGULATIONS ............................................. 22


ARTICLE 19 - MISCELLANEOUS .................................................. 22


PREAMBLE


WHEREAS, Siemens and Stereotaxis have entered into an extended collaboration agreement to improve interventional procedures in the cardiac cathlab by enabling visualization and navigation with pre-operative anatomical 3D images (hereinafter referred to as the "Extended Collaboration Agreement");


WHEREAS, Siemens and Stereotaxis do not intend for any provision of this Agreement to alter or amend the rights or obligations provided under the Extended Collaboration Agreement;


WHEREAS, Siemens has developed the Siemens "Pre-operative Imaging Component" software and/or is the owner of or is entitled to dispose of the proprietary rights of and/or titles to such software product;


WHEREAS, Stereotaxis desires to obtain license and distribution rights in such software product;


WHEREAS, Siemens is willing to license such software product to Stereotaxis as consideration for license fees stated herein and on the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained Stereotaxis and Siemens agree as follows:


ARTICLE 1 - DEFINITIONS


Wherever used in this Agreement, unless otherwise indicated expressly in the context of this Agreement, the following terms shall have the following meanings ascribed to them:


1.1 "Agreement" shall mean this software distribution agreement including
all Annexes and any matters specifically incorporated herein by
reference and made a part hereof.


1.2 "End-user" shall mean the customer of Stereotaxis who uses the Licensed
Software as embedded within the Product for its own medical or
scientific purposes.


CONFIDENTIAL TREATMENT
REQUESTED BY STEREOTAXIS, INC.


1.3 "Licensed Software" shall mean the software program presently known as
3D Pre-Operative Image Navigation V1.00 in Object Code and finally and
conclusively described in ANNEX 1 and all Updates thereto.


1.4 "Software Documentation" shall mean the information needed to draft
End-user manuals and all other information related to the Licensed
Software, as set-out in ANNEX 2 and all Updated Software Documentation
thereto. Siemens will provide this in machine-readable form.


1.5 "Effective Date" shall mean the date on which the last of the Parties
has executed this Agreement.


1.6 "Hardware" shall mean the hardware equipment as described in ANNEX 3.


1.7 "Object Code" shall mean code for the Licensed Software resulting from
translation of source code into machine readable format appropriate for
operation on the Hardware.


1.8 "Product" shall mean the Stereotaxis Navigant system or similar or
extended successor systems.


1.9 "Reference Environment" shall mean a system consisting of the Hardware
and the software described in ANNEX 1 and shall be used for testing the
Licensed Software and for communicating, duplicating and reproducing
errors of the Licensed Software.


1.10 "Updated Software Documentation" shall mean any change in the Software
Documentation that is needed because of an Update or changes of the
Hardware.


1.11 "Update" shall mean a new release of the Licensed Software that
incorporates error corrections; software changes due to vendor-
required Hardware changes, or for migration to higher versions of
Windows software or DICOM networking standard, improved performance
and other minor changes, none of which will delete any functionality.
Improved performance will only be part of Updates, if and to the
extent Siemens is contractually allowed to license such improvement
to Stereotaxis. It is designated by a change in the second digit to
the right of the decimal point in the Licensed Software version
number.


1.12 "Affiliate" shall mean a corporation, company or other entity


(i) more than fifty percent (50%) of whose outstanding shares or
securities representing the right to vote for the election of
the board of directors or a similar managing authority or a
supervisory board are, or


(ii) which does not have outstanding shares or securities, as may
be the case in a partnership, joint venture or unincorporated
association, but more than fifty percent (50%) of the
ownership interest representing the right to make decisions
for such entity is


now or hereafter, owned or controlled directly or indirectly, by
Stereotaxis or its parent companies or Siemens, respectively, but such
corporation, company or other entity shall be deemed to be an Affiliate
only so long as such ownership or control exists.


1.13 "Party" shall mean either Siemens or Stereotaxis.


1.14 "Parties" shall mean both Siemens and Stereotaxis.


ARTICLE 2 - LICENSE GRANT


2.1 Subject to the terms of this Agreement and without limiting the rights
of the parties under the Extended Collaboration Agreement, Siemens
hereby grants to Stereotaxis for the term of this Agreement subject to
the payment of the license fees as set forth in Article 8 a
non-exclusive, non-transferable, worldwide license to use, copy,
distribute to End-users and to sublicense End-users the right to use
the Licensed Software.


2.2 Subject to the terms of this Agreement, Siemens hereby grants to
Stereotaxis for the term of this Agreement, subject to the payment of
the license fees as set forth in Article 8, a non-exclusive,
non-transferable, worldwide license to use, copy, change, translate and
distribute to End-users the Software Documentation as part of an
End-user manual that is handed over to the End-user. There shall be no
reference in End-user manuals as to the origin of the Software
Documentation.


CONFIDENTIAL TREATMENT
REQUESTED BY STEREOTAXIS, INC.


2.3 Each licensing of Licensed Software to End-users shall be subject to
legally binding, written license agreements the terms and conditions of
which shall contain appropriate terms that are substantially similar to
the terms of Articles 2, 3 and 11 of this Agreement.


2.4 If the Parties agree to incorporate freeware, shareware or open source
software into the Licensed Software, no license fee shall be charged to
Stereotaxis for the use of such freeware, shareware or open source
software. Stereotaxis acknowledges and agrees that Siemens provides no
warranties and shall have no liability whatsoever in respect of
Stereotaxis's possession and/or use of the freeware, shareware or open
source software. Regarding such portions of Licensed Software,
Stereotaxis hereby accepts the specific license conditions either being
part of the Software Documentation or accompanying the Hardware ("Open
Source Conditions"). Upon request of Stereotaxis, Siemens shall provide
a copy of the source code of the open source software, if required by
the Open Source Conditions. To the extent there is a conflict between
this Agreement and the Open Source Conditions, the terms of the Open
Source Conditions shall prevail over the terms and conditions of this
Agreement with regard to the open source software.


ARTICLE 3 -- COPYRIGHT, TRADEMARKS, TITLE


3.1 All rights, title and interest in and to the Licensed Software (and any
part thereof) and the Software Documentation (and any part thereof),
other than those expressly granted herein, shall remain wholly vested
in Siemens or its third party licensors. Stereotaxis acknowledges that
it has no rights whatsoever in respect of the Licensed Software and
Software Documentation save for those expressly granted to it by this
Agreement.


3.2 Nothing in this Agreement entitles either Party to use any trademark of
the other Party or its Affiliates or any other mark confusingly similar
thereto, without the express written consent of the other Party.


3.3 Stereotaxis shall in any case use reasonable efforts to safeguard the
Licensed Software and the Software Documentation in its possession and
control the rights therein with the same degree of case as is used with
respect to Stereotaxis's own equally important software, documentation
and rights therein, but at least with


reasonable care.


Other than as permitted hereunder, as contemplated under the Extended Collaboration Agreement or required by law, Stereotaxis shall not copy, translate, modify, create derivative works, disassemble, reverse engineer, decompile, attempt, directly or indirectly, to otherwise obtain or create source code of the Licensed Software or otherwise use the Licensed Software and Software Documentation


3.4 Stereotaxis agrees that using, distributing, copying, duplicating or
otherwise reproducing all or any part of the Licensed Software other
than in accordance with this Agreement, and Stereotaxis's failure to
perform its obligations for End-users as set forth in this Agreement,
may be considered a material breach of this Agreement.


3.6 In case of Siemens' knowledge or reasonable assumption that, as a
result of an action or inaction by Stereotaxis a third party is using
or has used the Licensed Software or Software Documentation without
proper authorization, then upon receipt of written request from
Siemens, Stereotaxis shall confirm in writing whether such third party
is an End-user or not. If such third party is an End-user, then Siemens
and Stereotaxis shall mutually decide on the proper course of action to
address the potential infringement. If such third party is not an
End-user, then Stereotaxis shall reasonably assist Siemens in enforcing
its rights (which assistance shall not include preparation for or
participation in litigation) against such third party, and shall
furnish all available information thereto which Stereotaxis is
permitted to disclose.


ARTICLE 4 - SUPPLY OF LICENSED SOFTWARE AND SOFTWARE DOCUMENTATION


4.1 Siemens will supply to Stereotaxis the Object Code of the Licensed
Software and Software Documentation on CD or other electronic form as a
master copy. During the term of this Agreement, Stereotaxis may use,
copy and distribute the Licensed Software and the Software
Documentation. Stereotaxis shall provide to Siemens on a quarterly
basis a list of the number of new End-users. Siemens may audit
Stereotaxis in accordance with Section 9 below.


4.2 Siemens will without undue delay make available to Stereotaxis any new
Update for licensing under the terms and conditions of this Agreement.


CONFIDENTIAL TREATMENT
REQUESTED BY STEREOTAXIS, INC.


ARTICLE 5 - TIMELINES


Both Parties will use commercially reasonable efforts to meet the
timelines set forth in Annex 1. As part of these efforts, Siemens will
support Stereotaxis, at no cost to Stereotaxis, in Stereotaxis's
integration of the Licensed Software into the Product by providing
assistance with respect to the Licensed Software, including, but not
limited to, providing error corrections on a timely basis for any
errors identified in the Licensed Software, during Stereotaxis's
initial integration testing and subsequent Alpha and Beta testing with
potential End-users.


ARTICLE 6 - WARRANTY


6.1 Siemens warrants that the Licensed Software: 1) is free of viruses
and/or programming devices (e.g. license keys) that are designed to (a)
disrupt the use of the Licensed Software, or any system with which the
Software operates, or (b) destroy or damage data or make data
inaccessible or delayed; and 2) as originally delivered by Siemens to
Stereotaxis, is free from and will remain free from substantial
non-conformities in design, material and workmanship during the
warranty period of twelve months from the date of delivery. The
Licensed Software is considered free from such non-conformities if it
operates in substantial conformance with the Software Documentation. In
the event of a breach of the foregoing warranties, Siemens shall
perform maintenance service as defined in Article 10, below, at no cost
to Stereotaxis or any End-user, during the warranty period of twelve
months from the date of delivery and thereafter on a fee-paid basis as
defined in Article 6.2, below.


6.2 With respect to an End-user, such cost-free maintenance period shall
start at the time such End-user's sublicense of the Licensed Software
commences for such End-user. The maintenance shall be provided without
cost to Stereotaxis or its End-users for twelve (12) months from the
End-user's sublicensing of the Licensed Software, after which Siemens
may charge for its performance of maintenance services as described in
Annex 5.


6.3 UNLESS EXPLICITLY STATED IN THIS AGREEMENT, SIEMENS MAKES NO WARRANTIES
RELATED TO THE LICENSED SOFTWARE OR SOFTWARE DOCUMENTATION EITHER,
EXPRESS, STATUTORY, OR IMPLIED INCLUDING


BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES ARISING
FROM COURSE OF DEALING OR USAGE OF TRADE.


ARTICLE 7 - INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES


7.1 (A) Except as set forth below in this Article, and subject to the
conditions and limitations stated below in this Article, Siemens shall
be liable for any claim, suit, action or proceeding brought against
Stereotaxis, or an End-user, by a third party to the extent it is based
on: a) any alleged infringement of patents, trademarks or copyrights of
a third party and protected under the laws of the USA or Germany b) any
alleged unlawful or improper disclosure or use or misappropriation of a
trade secret; or (c) any alleged violation of any other intellectual
property or moral right, in any such case, asserted against Stereotaxis
or an End-user by virtue of Stereotaxis's or an End-user's use,
distribution or possession of the Licensed Software or Software
Documentation or respective updates as provided in this Agreement
(hereinafter collectively referred to as "Claim(s)").


(B) If, as a result of such a Claim, Stereotaxis becomes enjoined or it
is likely, in Siemens' reasonable opinion, that Stereotaxis will become
enjoined from using the Licensed Software, Software Documentation,
Updates and/or Updated Software Documentation, Siemens shall at its
election and its cost - except as set forth below in this Article, and
subject to the conditions and limitations stated below in this Article:
(i) procure for Stereotaxis the right to continue to use the Licensed
Software, Software Documentation, Updates and/or Updated Software
Documentation as provided in this Agreement; (ii) provide Stereotaxis
with a non-infringing replacement product and/or documentation, or
modify the Licensed Software, Software Documentation, Updates and/or
Updated Software Documentation so that it becomes non-infringing,
provided that the replacement/modified Licensed Software and/or Updates
meet substantially the same performance and functional specifications
provided in the Software Documentation or Updated Software
Documentation; or, only if options (i) and (ii) are not possible
despite the exercise of commercially reasonable efforts, (iii) upon
return of the infringing Licensed Software at Siemens request, refund
to Stereotaxis the purchase price actually paid. Except with respect to
the obligations in the following paragraph (C), upon Siemens' execution
of one of the options set out in this Section, Siemens shall be
relieved of any further obligation or liability to Stereotaxis as a
result


CONFIDENTIAL TREATMENT
REQUEST BY STEREOTAXIS, INC.


of any such infringement and Siemens shall not be obligated to deliver
any replacement Licensed Software if Siemens has met the requirements
to exercise option (iii) above. Any modified or replacement software
and/or documentation provided under this Article 7 shall be subject to
all of the terms and conditions of this Agreement, including without
limitation, the provisions of this Article 7.


(C) Siemens agrees to defend and to the extent a Claim is asserted
against Stereotaxis or an End-user, indemnify and hold the End-user and
Stereotaxis, its officers, directors, shareholders, agents and
employees (collectively, "Stx Indemnified Parties") harmless from and
against any and all loss, cost, damage or liability, including counsel
fees and costs, arising out of or related to any Claim. Siemens shall
control and direct the investigation, defense and settlement of each
such Claim and Stereotaxis agrees, at Siemens' request and expense, to
reasonably cooperate with Siemens in connection with the foregoing and
in Siemens' efforts to mitigate any potential damages, costs and
expenses i ...