Software Development And License Agreement

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EXHIBIT 10.29


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT (U.S.)


THIS AGREEMENT, made effective as of the 27th day of January, 1998 , hereafter "Effective Date") by and between Quinton instrument Company, a corporation incorporated under the laws of the State of Washington of the United States of America, having its principal offices at 3303 Monte Villa Parkway, Bothell, Washington 98021, and any divisions or subsidiaries thereof thereinafter referred to as "Quinton"), and Zymed Incorporated, a corporation incorporated under the laws of the State of California of the United States of America and having a principal place of business at 20 North Aviador Street, Camarillo, California 93010-8348 (hereinafter "Zymed"), whereby Quinton and Zymed agree as follows:


WITNESSETH


WHEREAS, Zymed is engaged in the development, manufacture, marketing and sale of ambulatory electrocardiogram monitoring systems and related products and has developed a software package for performing beat detection and classification of ECGs as well as an arrhythmia analysis software package;


WHEREAS, Quinton is engaged in the development, manufacture, marketing and sale of medical devices and instrumentation, including the type of products manufactured by Zymed and is currently developing and intends to market instrumentation which is capable of utilizing the software packages developed by Zymed; and


WHEREAS, Zymed is the owner of the software package for performing beat detection and classification of ECGs as well as an arrhythmia analysis software package and Zymed has all of the right, title and interest necessary for the transfer of the rights as set forth herein and desires to non-exclusively license the software packages to Quinton on the terms and conditions contained herein.


NOW, THEREFORE, the parties further agree as follows:


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SECTION 1: DEFINITIONS


As used in this Agreement, the following terms, singularly or plurally, shall be deemed to have the following meanings:


1(A) "Affiliate Companies," singular or plural, shall mean any parent or subsidiary or related company of Quinton or American Home Products Corporation (AHPC) or any subsidiary or division of any division or subsidiary of AHPC or any parent or subsidiary or related company of Company or any subsidiary or division of any division or subsidiary of Company. As used herein, an Affiliate Company is not a third party.


1(B) "Arrhythmia Analysis package" shall mean an arrhythmia analysis software package, including the algorithm therefore, and all related documentation as marketed by Zymed.


1(C) "Beat Detection and Classification package" shall mean an ECG beat detection and classification software package, including the algorithm therefore, and all related documentation as marketed by Zymed.


1(D) "Confidentiality Period" shall extend for five (5) years beyond the expiration or termination of this Agreement.


1(E) "End User" shall mean a customer, researcher, clinician or other health care worker that will use the Product which incorporates the Licensed Product therein or any purchasing group, hospital, clinic or physician or similar business entity that may acquire rights to use the Product which incorporates the Licensed Product therein.


1(F) "Enhancement" shall mean any improvement in the features, function or operation of the Licensed Product including the addition of a single beat editing feature.


1(G) "Environmental Description" shall mean the required operating systems, third party software packages, memory configurations and the complete hardware and software setup and configurations.


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1(H) "Governmental Approval" shall mean the approval of regulatory and/or governmental agencies of the United States or other country, such as the Food and Drug Administration or any successor which has or have the authority to substantially restrict the sale, lease or other transfer of the Products to End Users in the Territory unless the approval from such agency is received.


1(I) "International License Agreement" shall mean a separate license agreement for the Licensed Product for all countries outside the Territory as defined herein.


1(J) "Licensed Product" singularly or plurally shall mean the Arrhythmia Analysis package and Beat Detection and Classification package, individually or collectively, and all related documentation or any Enhancements thereof.


1(K) "Product" shall mean any Quinton cardiology product having the Licensed Product primarily integrated therewith, operational therewith or added thereto for use by an End User and shall not include any sale or transfer of a stand alone Licensed Product for use independently of the Quinton cardiology product except with the express written consent of Zymed.


1(L) "Object Code" shall mean software in object or other non-humanly understandable format.


1(M) "Royalty" and "Royalties" shall mean the royalty payments defined in Paragraphs 5(A) and 5(B) hereof.


1(N) "Source Code" shall mean software in the C + + programming language, in source or other humanly understandable format.


1(O) "Territory" shall mean the United States including all states, territories and possessions thereof.


1(P) "Software" shall mean the Licensed Products developed by Zymed in accordance with generally accepted software development practices and which is used to assist the physician in the diagnosis and functional evaluation of coronary artery disease.


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SECTION 2: ZYMED'S OBLIGATIONS


2(A) Zymed shall provide Quinton, within ninety (90) days of the Effective Date of this Agreement, two complete and current versions of the Beat Detection and Classification package and the Arrhythmia Analysis as set forth in Exhibit A, and further including the Environmental Description therefore and all development, interface, operation and testing requirements and all verification and validation documentation necessary for Quinton's GMP requirements. Zymed shall promptly provide any subsequent updates, Enhancements or modifications thereof to Quinton if Quinton is not in breach of this agreement.


2(B) Within thirty (30) days of the Effective Date of this Agreement, Zymed shall supply Quinton with the currently existing complete technical information and publications, including user and service manuals, and existing product specifications and marketing literature for the related Zymed products and the Licensed Products which shall be provided to Quinton by Zymed under this Agreement. Any such submission under this paragraph shall be promptly updated in subsequent submissions promptly after such information and publications are updated, enhanced or revised by Zymed.


2(C) Within sixty (60) days of the Effective Date of this Agreement, Zymed shall place a copy of the Source Code and Object Code as well as all related documentation which is necessary or desirable to assist Quinton in the modification, development and/or maintenance of the Licensed Products into escrow pursuant to the escrow agreement attached hereto as Exhibit "B" and incorporated herein by this reference. The code and materials placed in escrow shall be promptly updated by Zymed whenever any of the materials contained therein are updated or modified by Zymed. The costs of such escrow shall be paid by Zymed and Quinton shall be allowed periodic access to the escrowed materials as reasonably desired by Quinton. Any such access shall be coordinated with reasonable notice to Zymed to provide Zymed with the opportunity to accompany Quinton during the inspection of the escrow materials.


2(D) Within sixty (60) days of the Effective Date of this Agreement, Zymed shall provide specifications for a complete engineering test system for the Licensed Products, including but not limited to code development and test system (compiler, debugger) and any utilities necessary to create the test system at Quinton. Source code will be provided only for sample interface C + + code, no


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assembly source codes or algorithm C + + codes will be provided unless it is reasonably required to perform reliable testing of the Licensed Product or Product.


2(E) Zymed shall review and provide comments and assistance at no charge to Quinton concerning Quinton's validation and incorporation of the Licensed Product into the Products and other test results of each version of the Licensed Product and Product prior to the submission of such test results to the U.S. Food and Drug Administration or other agency or regulatory body, as needed, and prior to Quinton's first commercial release of each version of the Product. The rights in such test results shall be owned solely by Quinton, and such evaluations by Zymed shall be completed within thirty (30) days after the receipt by Zymed of such test results from Quinton. The decision to submit the test results to the FDA and/or any other agency for Governmental Approval to market each version of the Product or Licensed Product shall be at the sole discretion of Quinton. Should Zymed disagree with any of the results obtained by Quinton or the methodology used by Quinton, the parties hereto shall meet and attempt in good faith to resolve any such disputes.


2(F) Zymed shall provide reasonable assistance to Quinton for compliance with Quinton's requirements relating to vendor qualification and to assist Quinton in preparing applications for and obtaining Governmental Approval as needed for each version of the Product or Licensed Product by promptly assisting Quinton to prepare for and respond to the FDA's or other governmental agencies' questions or inquiries during the approval process relating specifically to the development, operation and/or maintenance of the Licensed Product. Such assistance shall include the provision of a copy of any validation and verification documents of Zymed for the current version of the Licensed Product and all supporting documentation therefor, but shall not require the provision of documentation relating to the development, operation and/or maintenance of the Quinton Product. Zymed shall further provide Quinton with a copy of any Zymed 510(k) relating to the Licensed Products for use by Quinton in the satisfaction of Quinton's GMP requirements and obtaining Governmental Approval for the Product and Licensed Product.


SECTION 3: QUINTON OBLIGATIONS


3(A) As consideration for the research and development and development related services provided by Zymed for the Licensed Product, the further development by Zymed, including any


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engineering development, assistance or support necessary to modify the Licensed Product for use with the Product and as incentive to perform the work necessary to modify the existing Software to provide the functions and features set forth in Exhibit A Quinton shall pay Zymed within ten (10) days of the Effective Date of this Agreement an advanced Royalty payment ("Advanced Royalty") of thirty-five thousand dollars ($35,000.00). The Advanced Royalty payment shall be an advanced payment for the Royalties payable as set forth in Section 5 hereof.


3(B) Quinton shall perform at its sole cost and expense all testing of the Products and Licensed Products that Quinton deems necessary for the Governmental Approval and/or commercialization of the Products.


3(C) Quinton shall use commercially reasonable efforts to obtain such Governmental Approval for the Product in the United States and shall keep Zymed advised of Quinton's progress towards such Governmental Approval by periodic progress reports.


3(D) In the event Quinton decides to withdraw all versions of the Product from the market during the term of this Agreement, or discontinue development of the Product prior to the release of the Product, Quinton shall promptly notify Zymed of such decision and Zymed may terminate this Agreement in accordance with the provisions of Paragraph 10(B)(i).


SECTION 4: OWNERSHIP AND LICENSE


4(A) Zymed hereby grants and Quinton accepts a non-exclusive, Royalty-bearing, revocable upon termination, license to incorporate and license the Beat Detection and Classification package as an integral part of a Product for use by a third party or an End User in the Territory.


4(B) Zymed hereby grants and Quinton accepts a non-exclusive, non-Royalty-bearing, paid-up, irrevocable license to incorporate, modify or otherwise transfer the right to use and license the technical information and publications, including the user and service manuals, and product specifications for the Beat Detection and Classification package to a third party or an End User in the Territory.


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4(C) Zymed hereby grants and Quinton accepts a non-exclusive, Royalty-bearing, revocable upon termination, license to incorporate and license the Arrhythmia Analysis package as an integral part of a Product for use by a third party or an End User in the Territory.


4(D) Zymed hereby grants and Quinton accepts a non-exclusive, non-Royalty-bearing, paid-up, irrevocable license to incorporate, modify or otherwise transfer the right to use and license the technical information and publications, including the user and service manuals, and product specifications for the Arrhythmia Analysis package to a third party or an End User in the Territory.


4(E) The termination or revocation of the licenses granted to Quinton above shall not affect the ability of Quinton, Affiliate Companies, third parties and/or End Users to continue using Products having Licensed Products therein which are properly licensed under this Agreement prior to termination, and termination also shall not affect the ability of Quinton and Affiliate Companies to continue providing customer support to its End Users or third parties who obtained Products having Licensed Products therein which were properly licensed under this Agreement prior to termination. Additionally, the termination or revocation of the licenses granted to Quinton above shall not affect the ability of Quinton, Affiliate Companies and/or End Users to transfer Products having Licensed Products therein for which a Royalty was previously paid to Zymed by Quinton or Affiliate Companies or for which an order has been received by Quinton or Affiliate Companies and for which a Royalty will be paid upon shipment of the Product having the Licensed Products therein.


4(F) The termination or revocation of the licenses granted to Quinton above shall not affect the ability of Zymed to continue providing support to Quinton to enable Quinton to continue providing customer support to Affiliate Companies, third parties or its End Users who obtained Products having Licensed Products therein which are properly licensed under this Agreement prior to termination.


SECTION 5: ROYALTIES


5(A) As consideration for the exercise of the license of the Licensed Product, maintenance of the Licensed Product and other rights granted herein from Zymed to Quinton, Quinton agrees to pay Zymed a Royalty of two hundred dollars ($200.00) for each unit of the Arrhythmia Analysis package of the Licensed Product sold, leased, sublicensed, or otherwise transferred to a third party or an End


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User ("Royalty") during the Term of this Agreement in the Territory. For the purpose of determining the amount of Royalty payments due hereunder, a unit shall be deemed to be sold, leased, sublicensed, or otherwise transferred to a third party or an End User when invoiced. Quinton agrees to invoice as soon as is customary. If no Licensed Product is operational in the Product when sold, leased, sublicensed, or otherwise transferred to the third party or End User, but is subsequently made available, altered or otherwise modified by Quinton to become operational or is subsequently added to a previously transferred Product, a Royalty shall then be payable when invoiced to the third party or End User by Quinton for such Licensed Product.


5(B) As consideration for the exercise of the license of the Licensed Product, maintenance of the Licensed Product and other rights granted herein from Zymed to Quinton, Quinton agrees to pay Zymed a Royalty of fifty dollars ($50.00) for each unit of the Beat Detection and Classification package of the Licensed Product sold, leased, sublicensed, or otherwise transferred to a third party or an End User ("Royalty") during the Term of this Agreement in the Territory. For the purpose of determining the amount of Royalty payments due hereunder, a unit shall be deemed to be sold, leased, sublicensed or otherwise transferred to a third party or an End User when invoiced. Quinton agrees to invoice as soon as is customary. If no Licensed Product is operational in the Product when sold, leased, sublicensed, or otherwise transferred to the third party or End User, but is subsequently made available, altered or otherwise modified by Quinton to become operational or is subsequently added to the Product, a Royalty shall then be payable when invoiced to the third party or End User by Quinton for such Licensed Product.


5(C) Within thirty (30) days of the written acceptance of the Licensed Product or the availability of the Licensed Product, whichever is later, Quinton may order from Zymed, engineering development and sales demonstration p ...