Software Development & License Agreement

Exhibit 10.2


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT


This SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT is entered into as of the date set forth on the signature page between AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, an educational organization having its principal place of business at 6300 N. River Road, Rosemont, Illinois 60018 ("AAOS"), individually and on behalf of its Task Force on Data Management (hereinafter "MODEMS Task Force"), and Summit Medical, having its principal place of business at 10900 Red Circle Drive, Minnetonka, MN 55343 ("Developer").


WHEREAS, AAOS formed the MODEMS Task Force, comprised of representatives of the AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS (AAOS), the COUNCIL OF MUSCULOSKELETAL SPECIALTY SOCIETIES (COMSS) of the AAOS, and the COUNCIL OF SPINE SOCIETIES (COSS), for the purposes of the development of the MODEMS (Musculoskeletal Outcomes Data Evaluation and Management System) system and questionnaires; and


WHEREAS, AAOS, on behalf of the MODEMS Task Force, owns or is the joint owner of copyright rights in certain Patient Outcomes Questionnaires identified in Schedule A attached hereto ("the Questionnaires"); and


WHEREAS, AAOS owns all rights, interest, and goodwill in the name and collective service mark AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS and owns the exclusive rights in the collective service marks identified in Schedule B attached hereto, including MODEMS for the uses identified therein ("the Marks"); and


WHEREAS, AAOS desires to have Developer develop, market, and support a computer software program which will enable orthopaedic surgeons and other practitioners to gather patient outcomes information and submit the information to the MODEMS Outcomes Study Database as provided herein ("the Software"); and


WHEREAS, Developer desires to develop the Software;


NOW, THEREFORE, AAOS and Developer agree as follows:


COPYRIGHT AND TRADEMARK LICENSE - -------------------------------


1. AAOS, on behalf of the MODEMS Task Force, hereby grants Developer a non-exclusive license (1) to utilize the Questionnaires and the contents thereof for use in the Software, and to prepare derivative works therefrom, and (2) to develop and sell Software that allows end-users to collect and submit patient outcomes data to the MODEMS database developed and owned by AAOS, provided that:


a. Developer satisfies the Certification Requirements set forth in
Schedule C below and pays the administrative and/or license fees as
required by paragraphs 23, 24, and 25.


b. Developer advises AAOS on a biweekly basis of the progress of its
design and development activities.


c. Developer shall not use the Questionnaires or any part thereof in
connection with the development of any computer software program other than
the program authorized herein, and shall not use the Questionnaires or any
part thereof in connection with the development of any database software or
system for any other organization or entity without the express written
consent of AAOS. Provided, however, that nothing in this Agreement shall
prohibit and Developer is free to develop its own outcomes questionnaires
or database independently; provided that it may not contain or be based
upon the MODEMS questionnaires or database, and Developer obtains separate
permission to use any third party questionnaires or structure.


d. Developer shall not copy or provide copies of the Questionnaires
or any data resulting from the use of the Software to any third party
without the express written permission of AAOS. Provided, however, that


i. This limitation does not apply to individual questions and
portions of the Questionnaires which Developer has separate permission
to use unless data for these individual questions was collected via
MODEMS questionnaires; and


ii. Developer may distribute copies of the Questionnaires which
it obtains from AAOS to prospective customers for their evaluation as
part of Developer's marketing efforts.


Further provided, however, that Developer may not continue to use any portions of the Questionnaire owned by AAOS without the written permission of AAOS or pursuant to a subsequent agreement.


e. Developer shall be permitted to offer, sell, or distribute the
Software only to end-users who are members of the AAOS or members of a
society belonging to COMSS or COSS.


f. Developer shall not make its program source code for the Software
available to any party other than AAOS for review, copying, or
dissemination without the prior written approval of the MODEMS Task Force.


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT - PAGE 2
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g. Developer agrees to and does hereby assign to the AAOS all
copyright in that portion of computer code in the Software which contains
or embodies the Questionnaires.


2. Developer agrees that all proprietary rights in the Questionnaires, including but not limited to all copyright rights, are and shall remain in the AAOS.


3. Developer agrees that it shall not make any changes in the structure, text, or contents of the Questionnaires without the prior written consent of the AAOS. In the event that the AAOS consents to and Developer makes any such changes or revisions, Developer agrees to and hereby assigns any and all rights in such modifications and in any derivative works it may create therefrom, including all computer code, to AAOS, including but not limited to all copyright rights.


4. Notwithstanding the provisions of paragraph 3, AAOS agrees that all copyright rights in the Software shall remain the sole property of Developer except as provided in this Agreement. Furthermore, AAOS acknowledges that its copyright in the Questionnaires extends only over the original text of questions it and its joint authors have developed and the selection, organization, and revised wording of the Questionnaires, but not over pre-existing sections apart from the Questionnaires which were created by third parties, and that Developer may obtain independently the right to use these pre-existing sections from the copyright owners.


5. AAOS will only provide Developers with this license to use the Questionnaires, to develop and sell software which enables end-users to contribute to the MODEMS database, and to use the Marks if they meet the Certification requirements set forth in Schedule C attached hereto and pay the administrative fee and license fee set forth in paragraphs 23 and 24. However, after January 1, 1997, AAOS may license other software developers to use the Questionnaires to develop software for intra-office use without obtaining Certification, provided that such software may not enable end-users to contribute to the MODEM database and such licensees may not use the Marks in connection with their goods.


6. AAOS hereby grants Developer a non-exclusive right to use the Marks in connection with the offering and sale of the Software. Provided, however, that Developer must include on any of its packaging, advertising, and Software in which AAOS or the MODEMS questionnaires are referred to documentation the following statement:


VISTA [Software product name] has been certified by the MODEMS Task Force
of the American Academy of Orthopaedic Surgeons as acceptable for obtaining
and submitting MODEMS(TM) patient outcomes information as part of the
MODEMS Program. However, the licensing and use of this Software


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT - PAGE 3
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does not automatically qualify practitioners for participation in this
Program. Practitioners may only participate in or subscribe to the
information generated by the MODEMS(TM) database by contacting the MODEMS
Task Force directly. Eligibility for participation will be subject to the
requirements of the MODEMS Task Force.


The MODEMS Task Force warrants only that Certified Software will permit
practitioners to enter and transmit outcomes questionnaire information to
the MODEMS(TM) database. The MODEMS Task Force specifically disclaims any
other warranty of any kind as to said software, including but not limited
to any warranty as to the fitness of said software for any other purpose,
quality, or accuracy of said software.


7. AAOS will provide the Developer with a copy of the AAOS membership mailing list for the purpose of marketing the Software, provided that the Developer may not use the mailing list for any other purpose or for sending any information, advertising, or proposals other than those dealing with the offering or sale of the Software. Breach of this limitation shall be considered a material breach of this agreement and shall result in the automatic termination of this License Agreement.


DEVELOPMENT OF PRACTITIONER SOFTWARE - ------------------------------------


8. Software to be Developed. In accordance with this Agreement,
------------------------ Developer shall use commercially reasonable efforts to design and develop the Software, or enhance Developer's existing software to function in accordance with the specifications, descriptions, and requirements set forth in Schedule E and G attached hereto, and to modify the Software as required by Paragraph 18. AAOS shall provide Developer with copies of the scoring algorithms required for development of the Software upon receipt by AAOS of the $10,000 administrative fee set forth in paragraph 23.


9. User's Manual. Developer will prepare a User's Manual for use by end-
------------- users and AAOS personnel in operating the Software.


10. Completion Date of the Software. The Software shall be designed,
------------------------------- developed, and delivered to AAOS for certification review within thirty (30) days of the execution of this Agreement for review and approval.


CERTIFICATION PROCESS - ---------------------


11. AAOS Certification Required. The License set forth herein will only
--------------------------- be effective after Developer has obtained certification of the Software from the
----- AAOS.


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT - PAGE 4
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12. Submission of Materials for Certification. Developer must submit the
----------------------------------------- following materials for review by the AAOS:


a. Developer shall submit to AAOS two (2) copies of the Software in
a machine readable format along with one (1) copy of the User Manual for
review. These materials must either be accompanied by, or Developer must
have previously submitted to the AAOS a check in the amount set forth in
subsection b below.


b. Developer must pay to AAOS a non-refundable administrative fee of
$10,000, as set forth in paragraph 23, upon execution of this Agreement.


c. Developer must identify a particular representative, officer, or
employee as liaison whom the AAOS may contact with any questions concerning
the Software or Certification process.


13. Requirements For Certification. In order for the Software to be
------------------------------ granted Certification by AAOS, it must meet the Certification Requirements set forth in Schedule C attached hereto.


14. Certification Procedures. AAOS shall cooperate with Developer in
------------------------ reviewing the use and testing the Software to ensure that the Software operates, meets, or continues to meet the Certification Requirements set forth in Schedule C and the specifications and requirements set forth in Schedule E. For this purpose, AAOS will identify a person who will serve as liaison between AAOS and Developer. AAOS will approve the Software or provide Developer with a written statement setting forth any required changes, modifications, or additions. Such required changes will be limited to ensure that the Software complies with the functions set forth in Schedule E and herein, and will expressly not include any new functions or functionality.


15. Effect of Certification. Upon certification of the Software by the
----------------------- AAOS, the certification requirement of this License Agreement shall be considered fully satisfied and the license contained herein fully granted, provided the other terms, including the payment of the license fee, are satisfied. In addition, upon certification of the Software and consistent with any requirements that may be promulgated from time to time by the AAOS, AAOS shall permit Developer to use the MODEMS trademark and the MODEMS certified vender service mark during such period as the Software shall remain certified by the AAOS. Further, Developer may not announce, offer, market, or sell the Software before receiving certification from AAOS, or, as modified by Paragraph 17, after it receives notice that the Software is no longer certified by the AAOS. Provided further that AAOS expressly disclaims any and all responsibility for the development, marketing, sale, or use of


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT - PAGE 5
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the Software except that AAOS has certified that the Software as reviewed by AAOS may be used to collect and submit data to the MODEMS database.


16. Effect of Premature Marketing. In the event Developer announces,
----------------------------- offers, markets, or sells the Software before receiving certification from AAOS, Developer shall be required to pay to AAOS a penalty of $2,000, payable immediately to AAOS, regardless of whether or not Developer receives certification.


17. Effect of Non-Certification. In the event Developer or the Software
--------------------------- fails to satisfy the requirements for certification or is otherwise refused certification, Developer may not offer or sell any Software which includes a code developed using the Questionnaires. Provided, however, that in such case Developer may enter into a separate agreement with AAOS for the offering and sale of Software which permits use of the Questionnaires to compile a local, individual practice outcomes study database for which Developer will be required to pay to AAOS an annual fee and royalties.


POST-DEVELOPMENT RESPONSIBILITIES AND RIGHTS - --------------------------------------------


18. Modifications To Questionnaires, Specifications and Software: AAOS
------------------------------------------------------------------ Ongoing Right to Assess Quality. In the event AAOS makes any changes in the - ------------------------------- questionnaires or the database or Software specifications, it will advise the Developer of such changes. These changes shall be incorporated by Developer in all copies of the Software licensed by Developer after the modifications to the Software are approved pursuant to an additional certification review pursuant to paragraph 14 above. Developer shall advise AAOS of the completion of said modifications and their incorporation in the Software within thirty (30) days after its receipt of notice of the modifications. AAOS expressly maintains its on-going right to assess the quality of all services and Software Developer is providing to end-users.


19. Failure To Make Modifications. If Developer fails to incorporate
----------------------------- changes in the Questionnaires in the Software, fails to make changes required to meet modified specifications, or fails to advise AAOS of the completion of said modifications within a reasonable time, AAOS may terminate this license upon ten (10) days written notice.


20. Ownership. All title to and all rights and interest in the Software
--------- and User's Manual, all versions thereof, any copies thereof, and any modifications, customizations, revisions, or upgrades thereto are and shall remain the sole property of Developer, except that all rights in the Questionnaires, including any modifications or revisions thereto, and in all code embodying said Questionnaires are and shall remain the sole property of AAOS. The parties agree that all modifications and customization made to the Software constitute derivative works (as defined by Section 101 of the U.S. Copyright Act), all rights in which shall also be


SOFTWARE DEVELOPMENT AND LICENSE AGREEMENT - PAGE 6
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owned by the owner of the copyright in the Software or Questionnaires, respectively.


21. Registration and Protection of Rights. AAOS agrees to provide
------------------------------------- Developer with assistance and documents necessary to enable Developer to perfect and protect its rights in the Software, the User's Manual, and any derivative works, including registration of copyright therein and any trademark used for the Software. AAOS and Developer shall each pay its own expenses in connection with these activities.


22. Registration and Protection of Rights. Developer agrees to provide
------------------------------------- AAOS with assistance and documents necessary to enable AAOS to perfect ...